Hello everyone, and welcome to Melrose's half year results for 2026. The last six months have been a busy and an important period for the group as we've continued to execute our growth strategy as a leading global aerospace technology business.

We've maintained our positive momentum against a backdrop of strong civil and defense demand. Now before we get started, I'd like to welcome Ross McCluskey to his first set of results as Melrose CFO.

We're delighted to have Ross on board and leading strongly right from the start. We delivered a good first half performance with continued growth in revenue and profit.

We also maintained our increasing cash trajectory with a strong year-on-year improvement in free cash flow. The markets we serve continue to evolve, and the underlying demand story remains compelling.

On the civil side, order backlogs are at record levels with production ramping up, and the aftermarket continues to perform strongly. In defense, ongoing conflicts and geopolitical uncertainty is driving up spending commitments and stimulating the rapid development of emerging technologies.

In May, we had an incident at our Garden Grove facility in California. This site is a global market leader in the production of aerospace acrylic products, and the issue involved the storage of an associated chemical.

Now most importantly, the incident was managed carefully with no reported injuries or contamination, and we're working hard with regulators now and our customers to resume full production in a safe and timely manner. I'll come back to this in more detail later.

More broadly, I'm encouraged by the progress we're making in the areas we're investing for future growth. We've identified target opportunities where we have proprietary technology and a clear opportunity to win, particularly in engines additive and in defense uncrewed vehicles.

Stepping back, our technology is in demand both from existing positions and emerging opportunities. We are navigating challenges along the way, but we have a clear path to unlocking value within Melrose.

It's about execution, and this is where our focus remains. Let's turn now to some highlights from the first half.

From a financial perspective, we delivered a 10% increase in revenue, and that top-line growth translated into a 16% improvement in operating profit to nearly £350 million. We also generated a £67 million year-on-year improvement in free cash flow relative to last year.

Operationally, our priority is always to keep our people, the flying public, and our armed forces safe. In the first half, we had a 25% reduction in total incident rate, and this means safety incidents are now down over 65% over the last 3 years.

As we've said previously, our inventory levels are higher than we would like due to supply chain issues, and we're addressing this systematically. In the first half, we reduced DIO by 7 days.

Finally, we improved productivity by a further 230 basis points in the first half. Our operational improvements are being driven by our lean operating model that we call the Brilliant Basics.

This model is becoming increasingly embedded across our business and is central to delivering production ramp-up successfully and profitably. I'll give some examples of this in action shortly.

We've had a busy first half. This includes expanding our engine fan blade repair business in San Diego, which is serving a growing installed fleet.

This builds on our recent investments and reinforces our position in an attractive and growing aftermarket. In defense, we're participating broadly across a range of emerging uncrewed programs.

This includes BAE Systems' collaborative combat aircraft, the Bronte-X, that was unveiled at the Farnborough International Airshow last week, and where we're deeply involved in both design and production. Finally, additive fabrication, our breakthrough technology that helps address forging and casting constraints within the industry.

Here, we've continued to make good progress, including development work with Pratt & Whitney on the F-135 program. Before we get further into the H1 results, it's important we cover the incident at Garden Grove.

For context, our Garden Grove facility is a global leader in the production of aerospace transparencies, including fighter jet canopies and passenger cabin windows for civil aircraft. We have proprietary technology and know-how built up over 60 years, and we produce a significant proportion of the world's aerospace-grade acrylic.

We've invested significantly in the site alongside the US government, who've underpinned this with a $150 million expansion to double our F-35 output. Now at the end of May, we had a thermal incident within one of the storage tanks for the MMA chemical we use in our acrylic production process.

To ensure safety, production was immediately halted, and the local emergency services evacuated nearby residents and businesses. Over the course of 5 days, we worked alongside local agencies to contain the risks, and I'm relieved to say there were no reported injuries, contamination, or leaks.

As the diagram at the bottom of this slide shows, our Garden Grove site operates in two connected parts. First, we make the base acrylic using MMA and our proprietary production technology.

We then take that base acrylic and form, laminate, coat, and assemble it into canopies and windows. We've been working very closely with regulators and with the full support of our customers and the US government to restore operations safely.

The manufacturing side reopened in July with now around 500 employees back at work producing transparencies for customers using existing material and third-party sourced acrylic. In parallel with this, we're working hard to restart the base acrylic production, and we have some important weeks ahead.

Our work here is being done in close cooperation with the regulators, as well as customers and the US government, who recognize the strategic importance of the site's production within the US industrial base. Beyond the formal regulatory approvals required, we'll give the local community safety reassurance, and we're also exploring some form of compensation for the disruption caused by the evacuation.

We're also addressing a range of ongoing legal cases regarding the incident. Now we're making progress here with managing the situation across multiple stakeholders.

However, there are still uncertainties about the timing of acrylic production restarting, wider regulatory and legal costs, and our insurance coverage is under review. With all of this in mind, we have paused the current share buyback until the situation is clearer.

Let me now hand over to Ross to take us through our H1 results in more detail.

Thanks Peter, and good morning. I'm delighted to have the opportunity to talk about my first set of interim results as Melrose CFO, having joined the group in early May.

We have delivered a good set of results in the first half with revenue, profit, and cash in line with our expectations pre the impact of Garden Grove. Group revenue grew by 10% on a constant currency basis, led by a strong performance in the engines division.

Group operating profit was up 16% to £347 million, driven by positive revenue growth and the continued focus on operational and efficiency improvements underpinned by our Brilliant Basics program. This enabled us to deliver a 50 basis points increase in H1 margin to 18.5%, while EPS improved by over 20% versus the same period last year.

We delivered positive free cash flow in the first half of £30 million, resulting in the maintenance of our leverage ratio at 1.8 times EBITDA. This positive cash position was achieved despite a net cash outflow from factoring in the first half.

Our results in H1 were impacted by the Garden Grove incident in late May. Group revenue and profit were £60 million and £9 million lower respectively, and adjusting for this impact, we would have delivered revenue growth of 11% and operating profit growth of 19%.

Turning to slide 7 and focusing on our engines division. We were pleased by the performance of engines in H1 with broad-based growth across the product lines.

Revenue was up 19% with OE accelerating to 23% and aftermarket continuing at the mid-teen levels we saw in 2025. As you can see, we've provided some additional clarity on the drivers of our revenue growth.

Our civil RRSPs grew by 18% with notable growth in the GTF, GEnx, and V2500 platforms. Within this, variable consideration increased to £206 million, in line with our full year expectations of £340 to £380 million.

We've continued to make commercial progress in our RRSPs, as seen with the recent agreement with Pratt & Whitney to include low pressure compressor vanes on the 1500 and 1900 engine platforms. Government partnership growth of 29% was strong, primarily driven by work on the RM12 engine for the Gripen, including the delivery of the first upgraded engine to the Swedish armed forces as part of the enhanced performance program.

This reinforces our position as a core strategic partner to the FMV. Repairs continues to perform well with growth of 27%, supported by higher fan blade volumes, and with the recent contracts announced with Rolls-Royce and Pratt & Whitney providing additional opportunities to grow share.

Our site in Johor, Malaysia delivered a particularly strong H1, while our San Diego site completed its first repair of a highly engineered blisk component, demonstrating its strong technical capability. It should be noted that we are lapping a period of tariff disruption for our repairs business in H1 2025.

We delivered positive operational leverage in the first half with profit growth of 21% and margin expansion of 40 basis points, or 100 basis points excluding variable consideration. Overall, a strong performance from the engines division.

Turning to structures on slide 8. Reported revenue grew by 4%, while profit declined by 1%.

Adjusting for Garden Grove, growth would have been 6% and 13% respectively. Defense grew strongly, up 14% driven by the F-35, C-130, and NH90, and the benefits of work done to ensure the portfolio is sustainably priced.

Defense continues to develop commercial opportunities underpinned by positive momentum in NATO members' spending commitments. Later in the presentation, Peter will talk about opportunities we are developing across both our engines and structures business for uncrewed vehicles, where we continue to work with a number of partners.

On the civil side of the business, revenue was marginally lower, down 1%. This was primarily driven by a reduction in customer inventory, notably on the A320 platform.

Growth in widebody benefited from good momentum from the A350, while business jet revenue was solid despite ongoing supply chain challenges. We also made progress securing additional aftermarket opportunities, particularly in EWIS.

Margins for structures demonstrated solid progress on an underlying basis, improving by 50 basis points excluding Garden Grove. Again, our Brilliant Basics program has contributed to margin expansion, as evidenced by our H1 productivity improvement of 3 percentage points and 12% improvement in the cost of poor quality.

We've also made progress in improving the productivity at one of our Netherlands manufacturing sites. Overall, end market demand remains buoyant with Airbus and Boeing recording over 1,300 new orders in the first half.

We are also encouraged by the double-digit percentage increases in H1 deliveries from both, demonstrating some gradual easing of the broader supply chain challenges. This bodes well for an improved civil outlook into H2 2026 and beyond as the volume ramp builds.

Let's move on to our cash performance for H1 on slide 9. We are pleased to report a positive free cash flow performance in H1 of £30 million, representing a £67 million improvement versus the same period in prior year.

Importantly, this was achieved despite a reduction in our factoring balance, which resulted in a net cash outflow of £50 million in H1. Pre-factoring, our cash flow in the period would have been positive £28 million, and I will come back to our approach to factoring shortly.

Our year-on-year improvement in cash was driven by a number of key factors, namely improvements in underlying profit generation, the anticipated reductions in GTF PMI payment and restructuring cash spend, and a net neutral working capital position versus outflow in H1 prior year. It should be noted that we did benefit from an unexpected timing acceleration of some customer receipts at the end of June, worth about £20 to £25 million.

Within H1, we incurred exceptional cash costs of £5 million in relation to the Garden Grove incident. On a net basis, our cash impact resulting from Garden Grove was actually a net positive £7 million, with an operational working capital unwind more than offsetting the incurred cash costs.

I'll come back to our outlook for H2 for Garden Grove shortly. Capital expenditure was up slightly versus prior year to £52 million, and we continue to anticipate an acceleration of spend in H2 on capex in line with our full year guidance of £120 to £140 million.

Net interest and tax increased by around £7 million versus prior year due to higher cash interest costs, and the GTF payment of £27 million was in line with our full year guidance of £50 million, and we continue to expect to resolve this issue within the £200 million envelope advised to us by Pratt & Whitney. Just as a reminder, our underlying cash generation is seasonally weighted towards H2.

Turning to page 10, you can see the bridge to our net debt number of £1.53 billion as at the end of June, equivalent to 1.8 times net debt to EBITDA, which is down from 2 times at this time last year. Our period end leverage sits well within our stated leverage policy of 1.5 to 2 times EBITDA.

During the first half, we have returned around £130 million to shareholders, £60 million of which was with dividends, with the rest coming from our share buyback programs. The previous £250 million program was completed in Q1, and £12 million of the current £175 million program has been spent.

As communicated in our announcement this morning, we have paused the £175 million program until we achieve greater clarity on the impact of Garden Grove. As I mentioned, I'd like to take the opportunity to address our approach to factoring.

Importantly, we continue to believe it represents an efficient source of capital for the group. In terms of future guidance, we are clarifying that we will cap the growth in our year-end balance to be no more than the growth in group annual revenue, excluding the impact of FX.

To aid understanding, we are now providing a guidance range of our full year expected balance based upon the group's growth outlook. To enhance our disclosure clarity, our cash flow presentation will now split out movements pre and post-factoring, and you saw this on our previous slide.

I've also included an additional slide in the appendix, which provides a further bridge of our factoring balance between cash and FX. Now turning our attention to the Garden Grove incident.

Peter has already spent some time discussing what has happened, and I will now address the financial split between operational and exceptional impacts. Operationally, our H1 impact was a negative £60 million on revenue, £9 million on profit, and positive £12 million on cash.

Now given the uncertainty regarding the timing for full resumption of site acrylic production, we are guiding to a monthly run-rate impact for H2. Based on anticipated levels of activity, we expect the site to deliver at around about 50% of its normal monthly revenue, which will impact top line by around about £6 million per month.

We expect this to fully flow to profit and cash, given we are operating with higher production costs from bought-in acrylic and a change in business mix towards repair. The actual site-level cash impact for H2 will depend upon the timing of full production opening and the rebuild of WIP and working capital.

From an exceptionals perspective, we incurred £13 million of P&L costs in H1 from the initial response, recovery, and advisory costs, £5 million of which was paid in cash in H1. For H2, we currently anticipate additional exceptional costs of between £25 and £30 million.

This excludes the impact of any potential legal, regulatory, or compensation scheme processes, nor does it include the potential for any insurance-related recoverability. We are closely monitoring the situation, but given the uncertainty that persists, we have made the appropriate decision to pause our current buyback program until we have greater clarity.

We will, of course, provide further updates as appropriate. Turning to our outlook for 2026 on page 12.

At a group level, we are reiterating our full year guidance for the current year, excluding the impact of Garden Grove I just outlined. We continue to expect robust revenue growth in 2026 driven by OE volume ramp and the strength of the aftermarket.

We are guiding to revenue from between £3.75 billion to £3.95 billion, which at the midpoint represents like-for-like revenue growth of circa 10%, in line with our H1 performance. This revenue growth continues to be weighted towards engines.

We are guiding to a pre-Garden Grove operating profit of between £700 and £750 million, and at the midpoint, this represents profit growth of 16%, again in line with our H1 delivery. Underlying cash flow is expected to be in the £150 to £200 million range.

To wrap up, we have delivered a good performance in H1, while managing through the Garden Grove situation from May. Revenue and profit both grew by double-digit percentages with margin expansion and positive free cash flow.

While the precise impacts of Garden Grove are difficult to quantify at this stage, we have taken steps to provide additional financial flexibility. With that, I will hand back to Peter.

Thanks Ross. I'll now talk about the longer-term outlook and the progress we're making executing our growth strategy.

Let's start by briefly touching on our markets. The headline message here is that the structural growth drivers remain very strong.

Indeed, the challenge for the industry is not demand, but supply. On the civil OE side, backlogs have continued to grow in H1 with encouraging orders for widebodies as well as the A320.

The major OEMs are now targeting strong build-rate increases every year to the end of the decade, and this will drive growth in both our civil structures and engines businesses. Engine flying hours, which drive our aftermarket business and our RRSP portfolio, have also remained strong.

The conflict in Iran and increasing jet fuel prices has raised concerns about potential aftermarket reductions in 2027 and beyond. However, flying activity has been resilient, and the outlook remains positive, especially given constrained shop visit capacity.

RRSPs give us good exposure here, as we have an aftermarket entitlement on over 70% of global flying hours. Defense largely speaks for itself.

We're continuing to see increasing commitments across NATO, particularly with a greater proportion of European nations' GDP being allocated, as well as further investment in the US. This is benefiting our existing platform positions, such as the F-35 and Gripen, both in OE and the aftermarket, as well as driving rapid developments in uncrewed vehicles and missiles, which are attractive growth markets for us going forwards.

Stepping back, demand is our friend, and our focus is on executing our strategy to capitalize on our position in these growing markets. As many of we have a clear and consistent growth strategy which is built around the three waves shown on this slide.

The first is delivering growth from our existing platform positions. We have embedded technology on all the world's leading aircraft, and as production rates increase and the aftermarket continues to expand, we will grow alongside our customers.

Around 90% of the value we'll create over the next few years will come from these existing positions. The second wave is expanding in targeted new opportunities where we have differentiated technology and a clear right to win.

We're deploying capital selectively in these areas, such as additive fabrication, and around 10% of our financial plan to 2029 is driven by these opportunities. The third wave is positioning the business for the next generation of aircraft.

Here, our technology continues to be in demand in both civil and defense programs, creating opportunities for growth over the longer term. Three clear waves to create value.

Let's now turn to the first and most important of these, delivering growth from our existing platform positions, starting with engines. Engines' strong performance in the first half was driven by continued growth on our core programs, including the GTF, GEnx, and XWB, together with the ongoing cash contribution from our portfolio of 19 RRSPs.

In H1, we expanded our scope within the GTF program, and more broadly were encouraged by the reduction in GTF AOGs, the GTF Advantage entering service, and progress with the hot section plus upgrades. We remain confident that the GTF program will become cash positive for us in 2028.

We've continued to strengthen the business operationally and commercially, including new multi-year repair agreements with both Rolls-Royce and Pratt & Whitney, and we're expanding our blade manufacturing capacity in North Charleston to support future growth in advanced engine components. We're facing significant demand growth in engines, and it's essential that we deliver the ramp-up successfully for all stakeholders.

The key to this is our lean operating model which we call the Brilliant Basics. This focuses on the core elements of operational excellence: daily management, breakthrough delivery, and problem solving.

Our approach is gaining traction and is driving improvements in quality, delivery, inventory, and productivity. We're also applying the Brilliant Basics in cooperation with our customers and supply chain partners.

A great example of this is working alongside GE at our Tallassee facility, where we manufacture GEnx fan cases for Boeing 787. We ran three kaizen events at the heart of the operation, and these delivered a 90% reduction in inspection times, improved yield in the core composites workflow, and a roadmap for increased autoclave throughput.

You can see us in the photo in front of one of them here. This event underpins the planned production ramp-up from around 5 cases per week today to around 10 cases per week in the years ahead.

More broadly, we're investing heavily in production capacity and automation to increase our build rates for the GEnx, XWB, and GTF, ensuring we're ready to support the strong OE ramp-up of these important engines. Going forward, we'll therefore benefit from increasing engine production rates, growing aftermarket activity, and higher RRSP cash generation from newer engines entering shop visits where we have a greater share.

Let's turn now to structures. The story here is similar in many respects.

Unprecedented civil and defense backlogs provide a long runway for future growth, especially as we're now the world's largest independent structures business. Industry production rates are increasing, although they're still constrained by supply chain issues.

In the first half, we continued to invest in capability, capacity, and automation across our full portfolio of aerostructures, wiring, transparencies, landing gear, and ice protection systems. We're increasingly leveraging our global footprint to serve customers locally and cost-effectively, too.

For example, in the first half, we progressed our global hub for wiring in Mexico, and we started producing glass windows in China for the aftermarket. Operationally, I'm encouraged by the progress we've made in the Netherlands in recent months.

Following the production transfers we discussed at the full year results, output and productivity have improved significantly. As with engines, these improvements are being driven by Brilliant Basics.

A good example here is Hoogeveen, where we've applied our lean tools to supplier quality management. By working systematically with our problem-solving approach, we've achieved an 80% reduction in customer issues linked to supplier parts, driving both better delivery performance and lower costs.

Looking beyond the first half, the opportunity remains clear. Our focus is on converting record order backlogs into profitable growth and increasing cash flow, expanding our participation in the aftermarket, and continuing to drive operational improvements through lean, digitalization, and AI.

Now alongside this existing platform growth, we're also progressing the second wave of our strategy, investing in targeted new opportunities. Let's now turn to that.

A good example of our new opportunities is the defense uncrewed aerial vehicle market, or DUAVs. This is a rapidly evolving market given the changing nature of warfighting that we've seen in Ukraine and Iran.

It's a dynamic and growing market, and it's attractive for us as we have three distinct routes to market that leverage GKN Aerospace capabilities. The first is on the structures side, where we're building on our established strength in advanced composites and structures.

We're participating across a range of national programs and platform sizes with a combination of deep engineering design capability and our production capabilities in key NATO sovereign nations, including UK, US, Netherlands, Sweden, Norway, and Germany. Examples here include Anduril's Fury program and BAE's Bronte-X program, which I mentioned earlier.

The second path is on the engine side. Here, we're developing a range of engines for uncrewed applications, starting at the lower end of the thrust range and building on our established capability as the engine's OEM for the European Gripen fleet.

Now in the center of this slide is what's effectively a new market for us, combining our structures and engines capabilities to deliver integrated systems and establish us as an integrated OEM player in this field. The flagship development here is our work with the Swedish FMV to bring a one-way effector platform to market.

This vehicle will take flight next year. Put together, we're addressing a range of sophisticated operational needs by leveraging GKN's technologies and capabilities.

Another example of where we're investing significantly is engines additive fabrication. At its core, this proprietary technology is about creating a new way of manufacturing structural components for gas turbines, and we've developed a proprietary manufacturing capability that provides an alternative approach for a range of components.

Put simply, we're able to manufacture and assemble complex structural components in new ways. As part of the solution, we use our patented laser metal deposition technology, which is attracting substantial interest across the industry.

Here, we print structural components using robots and lasers to melt titanium or superalloy wire in inert gas chambers. We produce near final form parts, which are then machined to use with very high buy-to-fly ratios.

Today, we're the only company with a certified additive manufactured structural part on commercial aircraft engines, namely the GTF fan case mount ring. We're now working on expanding the portfolio by gaining more certifications, and with some good momentum in the pipeline in H1.

We're also now producing 100% of that GTF fan case mount ring using additive, and we're working on improving productivity, reducing cost, and proving repeatability at scale. We're exploring a modular factory approach that would enable us to rapidly scale production wherever it's needed to.

Now this is technology that is in demand today and will become increasingly important for the future. It strengthens our position on existing platforms, expands our scope with customers, and creates attractive opportunities for the longer term.

This brings me to the final wave of growth: next generation. This slide shows that we're already deeply embedded across many of the programs that will shape the future of flight within both civil and defense.

On the civil structures side, we're working closely with customers on the next generation of single-aisle aircraft. This builds on our expertise in advanced composite structures, where we already manufacture some of the world's largest load-bearing components.

Programs such as the Wing of Tomorrow and SusWings are defining future aircraft design, with developments such as folding wings coupled with new materials and manufacturing methods. In civil engines, we're the only design partner positioned on both current next-generation single-aisle engine development programs, that's the CFM RISE and next-gen GTF.

We're also involved with the Rolls-Royce UltraFan, plus longer-term EU projects in hydrogen electric propulsion. Across these programs, we're leveraging our expertise in advanced composites, lightweight structural component design, and of course, additive fabrication.

On the defense side, we're involved in the next generation of combat aircraft through programs such as GCAP, alongside opportunities in missiles and canister systems. In defense engines, we're building on our established position supporting the Gripen fighter fleet, while also developing propulsion technologies for the next generation of uncrewed platforms and future combat aircraft with partners including Pratt & Whitney and GE.

We are playing an influential role across our markets, and we're doing this as a design-led tier-one partner alongside our customers, and also often with government support. These next-generation opportunities are important for long-term growth.

This covers the three waves of our strategy, and I'd now like to turn to how all this contributes to growing cash flow. As we've said before, there are three key drivers of our free cash flow.

These are clear and consistent. The first is growing operating profit.

You've heard us talk about the production ramp, the continued growth of the aftermarket, our operational improvement programs, and our expansion into new areas. Growing profit in our core business combined with strong cash conversion remains a foundation of our free cash flow story.

The second is our RRSP portfolio. Today, 17 of our 19 RRSP programs are cash generative, and as those engine fleets continue to mature and move further into their aftermarket phase, the associated cash generation will continue to increase.

The third is the GTF. As we've discussed, the program remains in its investment phase today, but we expect it to become cash positive in 2028.

As the fleet matures and GTF Advantage penetration increases, the program will become an increasingly important cash contributor. It's also worth stepping back and looking at what drives the RRSP cash generation more broadly.

In the near term, we'll benefit from continued growth of our newer engine programs: the GTF, GEnx, and XWB. As those fleets grow and shop visit volumes increase, our higher program shares on these engines will provide a growing contribution to aftermarket cash flows.

At the same time, the mature engine fleets continue to generate valuable aftermarket cash flows through extended in-service lives before slowly declining late in the decade. We're already investing in the next generation engines and expect this to ramp up steadily in the early 2030s, pending any decisions we make on future RRSPs.

All of these drivers underpin our confidence in the path to £600 million of free cash flow in 2029, with cash generation continuing to grow thereafter. In closing, it's fair to say it's been a busy and an important first half for us.

We've maintained positive momentum with our financial performance, particularly with improved H1 operating cash flow. The incident at Garden Grove has been challenging, and while we've made progress, there are uncertainties for us to navigate carefully from here.

That said, we have a clear strategy to capture market growth and expand our technologies. We're therefore confident of unlocking value from Melrose, and our focus remains on executing our plan with grip and determination.

With that, we'll open to questions.

Great, thank you very much, and good morning both. Thanks for the presentation.

Firstly, for Peter, thanks for the update and talking about the next generation of engines. I think I'm right in saying you're on the demonstrator for the next generation.

How confident do you feel on the prospect of those being RRSP structures? Then secondly, for Ross, if that's okay, of the additional 25 to £30 million of exceptional costs expected in the second half, how much is likely to be cash paid in FY '26 rather than later periods, if you've got any sense or visibility on that?

Thank you.

Morning, Sam. Thanks for the questions.

I think NextGen is a pretty exciting development for us. As you've suggested, we're on both the current NextGen development programs, which is the NextGen GTF and CFM RISE.

We're also have been historically involved with the UltraFan, and indeed there's some discussion about exactly what might happen with that going forwards as it relates to single-aisle as well. From our perspective, we're involved, we're in demand, and we're uniquely placed across all of those platforms.

I think what's going to happen as we go forward is clearly there's an intersection with those engines and the airframes that they sit on. The key thing for us is that we're involved in all of them.

I think there's a question mark also, as you mentioned, which is whether or not they're going to be RRSPs. I think we need to make a decision when the time comes about whether or not we want to be involved in the RRSPs, at what extent, on a number of engines or go harder on one.

The key thing is we're involved, we're shaping it, and our technology is very much in demand. Choices to come, I think, and right now getting going supporting the customers with those developments in an evolving market.

Sam, just to pick up your second question in terms of exceptional costs. Just to be clear, all of these costs in terms of exceptionals are cash costs, there's no asset write-downs or anything of that nature in that 25 to £30 million worth of guidance.

In essence, I would expect all of that to be a cash cost in H2. There'll be a bit of payment terms that manifest in itself into 2027.

Of course, you've got the unwind of the cash costs versus the P&L charge for the exceptionals in the first half of the year. More generally, we would expect to have some exceptional costs for Garden Grove in 2027.

We're not providing any particular guidance on that at this stage, but we will in due course, of course, come back to that particular point.

Great. Thank you very much.

That's really helpful.

Yes, thank you for taking my call, and welcome, Ross. The first question I have is on payables, please.

Could you just help us understand the driver behind the significant increase that we see in the first half of this year, that the £89 million cash inflow that we see from receivables and payables, whether an underlying driver behind that? The second question is on the buyback.

You highlight Garden Grove as a 30 to £65 million cash issue for this year. Why does that mean that you have to fully cancel the £175 million buyback, that the scale of the two things seems a little different there, maybe you can help me square that difference?

Thirdly, on factoring. Can I just confirm with this clarification in your plan here, is does that reflect a change in the plan itself, or are you just helping us understand better what your original plan was?

Within the 2029 guidance, should we assume something like £75 million of factoring in that £600 million number? Thank you very much.

I think they're for me. All right.

Thanks, Ian. Look, let me deal with the buyback question first, if I can.

Look, what we sought to do today in terms of clarifying, quantifying the impact of Garden Grove, you can see our H1 and H2 impacts. As we mentioned in the statement today as well, the impact of any potential regulatory investigations or indeed civil litigation is uncertain, right?

As a result, given that, we've taken the appropriate decision to pause, right? Pause is the appropriate word rather than cancellation, Ian.

Once we have got clearer clarity, we'll come back and revisit that at the right time. Secondly, if I come back to factoring.

Look, I think there was potentially some ambiguity about how we've guided in the past, and I just wanted to be very, very clear in terms of how we're going to approach it and how I want to guide to it going forward. In essence, our factoring balance at the year end will grow by no more than the revenue growth of the business.

Implicitly, that was within the financial guidance that the team had given already for 2026, there's no change to the 150 to £200 million range off the back of that clarification, nor indeed is there any change to the impact that would have on the 2029 cash guidance either. I think the number be therefore for £75 million for 2029, of course, that will depend upon the revenue growth that you see in your model in that particular year.

I'll leave that to you to assess. Effectively, the growth in '29 would be commensurate to the growth in revenue that you've put into your model for that particular year.

As for payables, look, no particular change in strategy on that. It's a timing point, as ever.

Big cash flows within this industry, particularly at the half year end. It has been very much business as usual interpretation on that movement in payables.

Thank you very much. Apologies for using the wrong word.

I should have said pause, as you say. Thank you.

Thanks.

Yes, good morning, Peter and Ross. I've got three questions, please.

First one, just on Garden Grove, if either of you wants to take this. Just the insurance, I know you're probably in negotiations, it's probably sensitive, but is there any color you can give on what a typical insurance policy covers, which elements of the various costs you may incur?

The second one is for Ross. I know you've only been there 2 months, and frankly, you've probably been firefighting a bit on Garden Grove, but just curious, any first impressions you've got on the finance function, anything you think you could do differently or improve?

Then for you, Peter, please. The organic growth was very strong in both in defense, in both engines and structures.

Could you just speak to that a little bit in each division, just pull out which specific things are driving that level of organic growth, and the sustainability in each division? Thank you.

Do you want to go first? Go

on. Let's stick Why don't I go first?

Look, yeah, thanks, David, first of all, for the question. As you say, it's been a pretty active first, not even quite yet 3 months actually within the business.

Look, what I would say is very much what I've seen since I've been here has absolutely validated the choice that I made to join the company during the course of 2025. It's a great team, it's a fantastic business.

We've got two very strong subcomponents of the Melrose business, which are in very attractive market and spaces with plenty of roadway and roadmap ahead of themselves. Look, as you heard from Peter already, the drivers of growth that we see look forward to accelerating over the course of the coming years.

Candidly, from a finance perspective, I'm actually really delighted by the team that I've inherited from Matthew. We've got a lot of very strong people technically within the central team, as well as within my divisional resource as well.

As ever, there's opportunities for us to get better, but it's a very strong, solid foundation in our finance team. One thing I think we have sought to do hopefully as part of today's presentation is just be clearer on a few areas and just be more precise.

What we're doing, clearly on the cash flow reporting and splitting out factoring is just a small example, and we'll look to try and refine and hopefully improve on that going forward as well. That's what I would say on that.

Want to take insurance as well?

Yeah.

David, look, you kind of mentioned it already. A clearly very active and dynamic situation within Garden Grove.

As a multi-jurisdictional business in multiple markets, we have a range of different insurance policies that are in place that cover a number of different exposures. All of our insurance companies and providers have been notified of the incident, and we're working with them as you'd expect me to say at this stage until we've got full clarity on the situation.

Our insurance remains under review, which is exactly what we said today.

Defense? Good morning, David.

Just on the defense side, you're right, it's very strong and encouraging performance in both businesses. I think the key thing is it's broad-based, and it's on our existing platforms.

Specifically on structures, that's obviously the F-35 as well as the European platforms coming through. It's partly volume, but also, as we've been working very hard on getting this portfolio where it needs to be, there's some impact of price reading through as well on that.

On the engine side, it is the continuation of supporting, in particular, the Gripen jet. As you may recall, we are the sole provider for the Gripen fleet in terms of propulsion, we look after that as it runs, not only in terms of new production, but also in terms of what is a very busy aftermarket, for obvious reasons, given what's happening to the east of the continent right here.

The other point I'd say about the defense business in engines is we've got a heavy position on the F-135 with Pratt & Whitney, and you've heard some news about that, as well as actually the ducts business, where we make a whole range of structural components frankly for pretty much all of the world's fighter fleet. Broad-based, very much right now the existing platforms reading through with increased demand.

I think as we see going forwards, we'll get more of a mix shift towards some of these new developments which we touched on today, and of course you've seen more broadly with very rapidly developing technologies, particularly around uncrewed, and we're excited about the role we'll play in that.

Thank you, very clear.

thank you very much for taking my question. It also relates to the pause on the buyback program.

When would you think you'd be in a position to know if you are able to resume that buyback program? Or looking at the various growth initiatives that you highlighted, are you also thinking about a change of capital allocation priorities, maybe more geared to reinvestment behind this new growth initiative rather than financial engineering, if I can call it that?

Looking at the 2029 target and beyond, you mentioned also your interest in the next participating in all the major next-generation aircraft and engines. What would be the size of the R&D development investment requirements beyond the 2029 hurdles, please?

Do you want to get the first one, and I'll go on NextGen?

Sure. Just, first of all, in terms of capital allocation policy and prioritization.

If we think about prioritization, the way we first look at is investment in the business, ordinary returns to shareholders, share buyback. That's the kind of priorities as we look at it.

Certainly from, as we said here today as management, the guidance that we've given for capital spend this year is between £120 and £140 million. That will be a good acceleration versus what we spent in prior years.

We're very much open to making sure we're spending the right amount of money in the right place, both from a maintenance perspective as well as supporting the future growth in the business as well. That is, and will always remain, our top priority.

In terms of the buyback itself and timing of that, look, very much a TBD. Part of that may depend in terms of the status of the compensation fund.

What I would say is that the extent to which litigation does happen in the US, it does tend to be a relatively mid-term issue for companies to deal with. Of course, as we go through, things will become clearer and I can give as much guidance of that in due course.

Great. Specifically on the NextGen point and around future RRSPs and investment.

I go back really to the first question that Sam asked around the development here. We're really very much in demand in NextGen, and we're pleased to be playing a role in all of the current programs, which again, NextGen GTF, the CFM RISE, and are involved also with the UltraFan and have been historically.

We're broad-based, and we're very unusual in that respect, being the market leader in lightweight structural components in pretty much all the flying fleet. The starting point is that our technology is in demand.

The market and the next generation single-aisle architecture is very much in debate at the moment in the industry, as and of course there's this intersection between airframes as well, particularly if you go for the open fan rotor. That will evolve.

The key thing for us is that we're on all the engine programs that matter, we're pleased to be leaning in. We are investing right now in maintaining that position and working with those customers, and it will evolve.

I think what will happen is by the time we get to the 2029, '30 timeframes, there'll be greater clarity, and then we will decide as Melrose as to where we play based on the market at the time, and also based on whether or not we want to go, as I said, deep on one engine, perhaps do two engines, and at what percentage share as well. I think we've got great optionality, our technology is in demand, and we will do what is in the interest of our shareholders at the time as the market evolves.

We're in a great position on NextGen and are excited to play our role. I would also say actually that we're playing a role on the structures side as well in terms of NextGen, which we talked about.

All to follow, but all to play for.

Thank you.

Morning, guys. Thank you for the question.

I've got a few. Peter, could you talk a little bit about the A350, where you are in production, how you're seeing that play out into the second half?

You probably saw that last week Airbus commented they were considering raising production. I think they'll end up doing it.

What would that mean for you? How much investment do you think you would have to put in to get to 16, 17, 18 a month on the A350, and how we could think about that?

Secondly, you talked about the geared turbofan, sorry, the GTF program turning positive from a free cash flow perspective in '28. Could you frame that a little bit, how negative is it now?

Could you help us size a little bit that inflection? Then, a lot of the kind of questions that we've had from people this morning have been around 2029 and that £600 million, and, there was I think there was space and concern that that would come under pressure.

Could you talk a little bit about your conviction of that and, how the big building blocks of getting that? Thank you.

Thanks, good morning to you, Ben. Firstly on the A350, I think it's a good story, isn't it?

The production rates have been constrained by supply chain. Airbus have themselves talked about, particularly the center fuselage, and some of the challenges coming out the back of Spirit.

It's great that the demand is there, but we're starting to see read-through in production, and we've got a long way to go in terms of building into those rates with what we're at, at about six or so today, aren't we? The first step is to make sure that we step up to the initial rate, which was rate 12 was the original guidance.

We're absolutely ready to do that and well-positioned to support Airbus with that, looking forward to doing so. I think much above rate 12, 13, those sorts of rates is going to require further investment in term in terms of our facilities, and I think that holds true across the broader industrial base.

As we move towards those targets towards the back end of the decade, we'll obviously be working very closely with Airbus to make sure we're ready. It's a positive story on A350, an important platform for us going forwards.

As we've a deep composite technology on that platform. In terms of the GTF, the first thing I'd say about the GTF is that we're seeing some really encouraging progress.

You've probably picked up the AOGs as a result of the PMI issue, they're down 25% year on year, and that's a function of the availability of spare parts as well as turnaround times as well. That part of the program is going well.

As we've given guidance specifically to effectively the costs of that program, the effectively the putting the PMI right, those tailing away into next year. More broadly than that, the program is still in a phase of development.

We've got the GTF Advantage now coming into service, the first of those engines going to Airbus as we speak, and the hot section plus will also upgrade the performance. In fact, the target here is to double the time on the wing with a combination of those two things.

As we play forward on the GTF, you're getting a number of factors: you're getting the AOG cost coming down, you're getting the development costs come down, but most importantly, you're also getting paid-for shop visits by the program being replaced by cash-generative and profitable shop visits being paid for by customers. That inflection of all those drivers is coming through as we'd expect, and I'd say we're ahead of where we expected on the AOG in particular.

That inflection point happens in 2028. As we've never guided to that, and nor should we do so given the fact we're a program share partner.

The GTF is in encouraging for us and an important part of our future cash flows going forwards. Then finally on the 600 million, Ben, I just I think the key thing here, as I've said in the presentation a few minutes ago, is that the underlying drivers for that free cash flow increase, a significant increase from where we are, are absolutely intact.

That's the growing operating profit, it's the RRSPs, and the GTF that we've touched on. I think it is fair to say that the there are some moving pieces within that relative to what we originally set out a couple of years ago.

We've clearly got some headwind around FX as we sit here today. The build rates have been sticky, but on the other side, you've obviously got defense demand, and clearly we've had some encouraging news on the aftermarket from our OEM customers recently.

In the round, we can see absolutely those drivers coming through and are confident of that £600 million free cash flow target.

Very clear. Thank you.

Hi. Good morning, gentlemen.

I'm going to be boring. I have three follow-ups on things that we just discussed a little bit before.

Let's go to Garden Grove and the operational impact. You have to be the primary source, not a sole supplier.

Do you see that the second source of canopies, particularly for the F-35, is taking market share, and do you think that if that's the case, would that be temporary and you can win that back? Second question would be with regard to the free cash flow and the target of 600 million.

Can you help us a little bit with the direction of travel over the next years? We understand the drivers, I think, but can you help us as well with a quantification of the direction of travel, or what would you expect '27, '28, '29?

Is it V-shaped, U-shaped, S-shaped, linear? I don't know, I leave that to you.

Then the last point, if I look at your balance sheet and your cash generation in the last few years, can you remind us why you had share buybacks in the first place, please?

Maybe I'll start with the last question, if I may,

because in terms of the share buybacks,

it's historic, that your question there. Look, at the end of the day, we have been very clear and confident, and we remain so, about the cash generation of this business.

If you think about staying within a guidance range of the leverage that we have, we stepped forward with a share buyback to demonstrate real confidence of the cash coming through, and we retain that confidence. We have the balance sheet to do it.

We believe it's a good use of our capital to do that, and a very good signal about, as I say, that confidence in our cash trajectory. That remains absolutely the case.

I think what Ross has outlined here is an appropriate decision just to put that onto pause pending what we've talked about in Garden Grove. Let's be clear, we've got a capital allocation policy which we've again reinforced today: first and foremost, investing in the business, secondly, ordinary returns, and then the share buyback.

If cash is a bit under pressure with uncertainty, as we've got with Garden Grove, it's a natural place and a sensible place for us to pause that buyback. That hopefully gives you the context.

I think as it relates to the 600 million, again, I'll try to give a view then and you may or may not want to add to that, Ross. In terms of the shape, what we've said is that we're going to get consistent operating profit growth, that's going to come through as we see, we've talked about the build rates, the aftermarket going through, and the RRSPs would also there'll be a more of an uptick as we get the new engines coming through.

The big inflection point is the one that we've just talked about and Ben asked about, which is the GTF, and that's the that means that it is back-end loaded because you go from being effectively cash negative in 2027 to being cash positive and then increasingly cash positive going forwards. Beyond that, it's a sort of linear progression from here, steady growth in our cash flows with that step-up as the GTF comes across.

The only other factor, of course, is what we've got with as it relates to Garden Grove, which we'll come back and guide on that.

Yeah. Then

finally on the Garden Grove side, look, we are a cornerstone provider to the F-35. I think that's evident from the fact that the US government have invested $150 million alongside us to double our capacity.

We've got proprietary capability, which includes in particularly not just the acrylic production, but also coating. What we're doing right now is working very closely, hand in glove, with the US government and the JPO to make sure that we're able to support the fleet.

That does mean we're doing more repairs, but we are the cornerstone provider for that with our proprietary technology, and we're very much in demand. The key thing is how we get this site up and running again safely in a timely manner.

Frankly, the US government are providing outstanding support with us in that regard.

Super. Thank you so much.

Yes, good morning. Thank you for taking my questions.

First one is on Garden Grove. Does restarting full production there require a single approval from the various regulators who are working together, or do you need separate sign-offs effectively from each regulator individually?

The local healthcare agency, as well as the Environmental Protection Agency, for example. Then my second question is on aftermarket growth within engines, which was 15%.

I believe that engine OEMs have reported growth a little bit higher than that in the first half of this year, sort of 20 to 30% is what we've seen elsewhere. Are there any particular reasons why that H1 growth might be a little softer at Melrose and within engines?

I think on the Garden Grove one, it's a fairly straightforward answer. There are multiple regulators involved here at a federal, state, and at a local level, and we're working very closely with all of them.

I have to say the intensity and the operational grip and focus of the team has been very strong and will remain so to make sure we're managing all stakeholders, but it is multifaceted to be straightforward about it. We're working with them all, and frankly, that's one of the reasons why we can't be more specific about the startup timing.

The point about the aftermarket, I think, is interesting. Clearly, we are an RRSP partner, and therefore the cash flows sometimes are not exactly aligned with the timing of our customers in terms of their performance, and we're obviously going to see continued progression in the second half.

I think the other thing I would say just very specifically is that clearly we have a broad portfolio, but the one engine that we're not on from an aftermarket perspective is the LEAP, which I think had a particularly strong performance in the first half if you look at GE and Safran's results. What we can say clearly is we've got embedded positions on all of these engines, and the aftermarket growing and performing strongly in terms of shop visits, scope, and profitability is good news for Melrose, and it'll come through.

Thank you. Very clear, thanks.

Yes, good morning. Garden Grove again.

Can I just sort of make sure I've got it right? What I'm trying to do is work out what the bucket of contingent cost might be.

It was 5 days, there were no leaks, no contamination, no injury. Presumably, there was an exclusion zone around.

Any idea how big that was or how many people were involved? It seems to me that the potential buckets of contingent costs would be compensation for 5 days of being mucked around, lost earnings, or something; required extra oversight; potentially penalties for letting it happen in the first place.

I'm trying to figure out whether there's a path to anyone can claim long-term harm. Any comments on any of that?

Sure. Let me take that.

Good morning. Look, in terms of the incident itself.

If you take the market reports at the time, the estimate is somewhere between 50 and 60,000 people were evacuated from the vicinity of the facility over the Memorial Day weekend period. That in essence is the disruption that has been caused by the incident.

As far as, the compensation program that we are, considering and debating is very much around, making sure that we help to put the community right for some of the costs and which were incurred as part of that. One example, for instance, would be, individuals who took out a hotel during that period of evacuation, obviously they've incurred out-of-pocket expenses.

As Peter said, we've been operating within the Garden Grove community for decades. We're an important part of that community.

We employ over 500 people on the site as well, and we want to be doing the right thing for there, not just for today, but for tomorrow and the many years thereafter as well. Look, I'm not going to go through the specific parts of, potential kind of compensation program or indeed litigation because, they are live, complex, and multifaceted.

Some of the points that you raised are perfectly valid to be considering as part of, the overall situation as we look to resolve it.

Thank you. If I could just ask one longer-term question, which is in terms of obviously it's very encouraging for you that you're basically on, all two/three, if we include Rolls-Royce, NextGen platforms.

I just suppose about a comment on the sustainability of being on all three, both from a, competitive standpoint of whether those partners are happy with that, and secondly, in the end for you, a financial requirement that would be needed at the point that we get to the development of that, next-generation engine?

Indeed. As we've said, the market is evolving, and we're not exactly sure, I don't think anyone is exactly sure, what the shape will be, whether it be two or three engines that will ultimately come to market.

The key thing for us is our technology is in demand, we're the global market leader in lightweight structural components and on pretty much all engines that are out there today. I think our additive fabrication is something that is particularly interesting to our OEM partners here because it's not only about security of supply and moving away in some cases from forgings and castings, but frankly you can design components differently if you use additive fabrication, and that's very much part of the development discussion.

I think in terms of the competitive position between the platforms, that's not for me obviously to discuss here, but I think it's driven by technology. If we're providing something that is important to each of those programs, that's a good place to be.

I think the final point is it comes back really to almost the original question about what does this mean for us going forwards. I imagine that we're going to have a decision to make, or a series of decisions to make, at Melrose about what next-generation single-aisles we get into and on what basis, whether that be with RRSPs, whether that be more on a more traditional kind of straightforward supply basis, and we will play that as it comes forward.

Right now, there is very much demand for our technology, and we'll make decisions as the market evolves with shareholders' interests in at the center of that. Those decisions, I think, will need to be made towards the back end of this decade.

The key thing I come back to again is we're around the table, more than that, we've got sleeves rolled up working on NextGen single-aisle, and excited about the developments, whether that be open fan rotor, ducted, two or three engines, in whichever way the market evolves. We will be involved.

Great. Thank you.

Hi Peter and hi Ross. Thanks for taking the last questions.

I'm sorry, I will come back just on the Garden Grove, just fewer clarification on my side. I do understand that the timing is very uncertain because of regulatory approval, but do you have any visibility about meeting dates with authority and regulators that could lead to clearing the production side and so to restart the production?

If you can give any details about where are you in your negotiation, and is there any milestone that you can share with us just to prove the visibility? That's the first question.

The second one is just I would like to come back on the potential impact on guidance and the £6 million monthly impact on operating profit and cash. Do you see any mitigating action that could offset the impact on the guidance, or should we take this £6 million monthly impact as a base case?

The last question is just on the additive fabrication progress. Do you have any color on your capex plan, is it still in line with your initial expectation, and do you see any room to move forward the industrialization phase?

Thank you so much.

Shall I go first? In terms of the regulator, look, Cameron, we can't give any further guidance here.

This is a we're involved in these processes. What I can tell you is that we've got clear plans to basically start production again by making some adjustments to and some additional safety and protocols, etc.

We're working through. We're confident we've got some plans that will enable us to start, but at the same time, they need to go through the regulator, and there's obviously legal processes going on as well.

I'm sure you'll understand that we can't give any more detail in terms of the timing. What we've tried to do today is explain the impact, say we're working at pace, and as soon as we get anything more from the regulator in terms of certainty of when we can start, we will come back and discuss that with the market and obviously update the market.

Not much more we can say on that particular point, except to say we're all over it. Safety first, but it is dependent clearly on wider processes.

Do you want to get the guidance one?

I will do. Look, in terms of the guidance and the £6 million, that is our net number, i.e., taking into consideration all of the dynamics that are at play at the moment, including our mitigants as well as how we're redeploying the team as well.

That's our net number for the monthly run rate. Then

we'll just finish on additive fabrication, and I'm pleased to have the opportunity to talk about it because this is technology, I've alluded to it as it relates to NextGen single-aisle, but it's actually also in demand not only in terms of aerospace, but increasingly actually in industrial gas turbines, which are obviously very much in demand because of the data center market amongst other things. This is a technology which has the potential and is indeed already in some cases displacing traditional forgings and castings, which is a very constrained market and in many ways is gating production.

We are undergoing the further development of this technology in terms of its certification and in terms of its industrialization, and I touched on that. Relative to the economics of this, there's no great change to what we've said before.

We have made a commitment that this is something that will generate net positive impact of £50 million in 2029, and we're on track with that. That impact will come from penetration of the technology, so that's new business for us using this technology, as well as actually savings as we insource components that we were currently buying in a constrained market.

No change to the guidance, but some very encouraging progress as we as we've announced today and in recent press releases.

Thank you very much.