Good morning, everybody. Welcome to our FY '25 interim results. Thank you all very much for being here in person for making the effort. We appreciate it. And for those online as well, thanks for joining. I'm joined with -- by our CEO, Steve Wadey; and our new CFO, Martin Cooper. And without further ado, I'll hand over to them. But thank you very much.

Great. Thank you, Stephen, and I'd like to add my welcome to you for joining our half year results today. It's great to be with you and look forward to your questions later. Now I know many of you do know him well, but I'm really delighted to introduce Martin Cooper, our new group CFO, who formally joined us in September. And it's been really great to have Martin onboard, and I'm really enjoying working with him. We've achieved a good first half performance across the group. This is being delivered, thanks to our incredible people, who are committed and have delivered our high-value services and products that are critical to national defense and security priorities. This picture is a great example. The 10-year EUR 284 million contract signed in August to deliver Aerial Training Services, where we play a vital role supporting the operational readiness of the German Armed Forces. Our strategy is working, and we have a good long-term outlook to deliver enduring value for our customers' mission and our shareholders. Our agenda today is as follows. I'll start by giving you a review of our first half performance. Martin will then provide a commentary on our financial results. I'll come back and give you a strategic outlook. And we'll then open up for questions, both here in the room and online. So our review of the first half. Let's start with our headlines for today. First of all, I'm very pleased that we have delivered good, consistent operational and financial performance across the whole group against a backdrop of significant political change and an evolving threat landscape. Secondly, we remain on track to deliver GBP 2.4 billion of organic revenue at approximately 12% margin by FY '27. And our visibility to the achievement of this goal is increasing. And finally, with our strong balance sheet and continued discipline on capital allocation, we're announcing today an extension of our GBP 100 million share buyback program by a further GBP 50 million. In summary, we are well positioned and have a clear strategy to deliver long-term sustainable growth and compelling value for shareholders. Moving on to our financial performance. We secured more than GBP 1 billion of orders in the half, demonstrating high demand for our capabilities with a book-to-bill ratio of 1.3. Revenue is up 7% through consistent operational performance, up 8% on an organic constant currency basis. Operating profit is up 7% with stable margin of 11.3%. This has been achieved through strong program execution across EMEA Services. And pleasingly, our performance in Global Solutions, including Avantus, has been in line with our expectations. We've achieved good cash conversion at 84% with leverage at 0.6x, excluding the benefit of the GBP 112 million sale of Cody Technology Park, of which the proceeds have now been received in our second half. And as I've just mentioned, we've extended our share buyback program and maintained our dividend growth at 7%, increasing shareholder returns. Overall, we've delivered a good first half performance and are on track to deliver our full year guidance. This performance has been underpinned by a number of significant highlights, operational highlights across the group, including the EUR 284 million contract in Germany that I mentioned earlier. Major highlights include commencing the next phase of work on the DragonFire laser weapon program to accelerate the deployment of this disruptive counter-drone technology onto Royal Navy warships in 2027. We delivered critical work to NATO. This includes a maritime exercise in Portugal to experiment with the integration of autonomous systems. And we commenced the design of Formidable Shield 2025, which will be NATO's largest integrated air and missile defense exercise. In Australia, we continue to perform under the major service provider contract, winning $148 million of new orders to provide engineering services on critical land and munition programs, such as the new Naval Strike Missile. In the U.K., we won a 3-year contract worth up to GBP 150 million to help deliver the next generation of tactical communications for the British Army, adopting new technologies to enable better and faster decision-making on the battlefield. Our U.S. business achieved more than 10% on contract growth across our major 5-year programs that provide engineering services and mission support for the Space Development Agency, Strategic Capabilities Office and the Tethered Aerostat Radar System program for Homeland Security. And I'm really pleased that we won a significant Aerial Target Systems contract from the U.S. Army, a brilliant example of our strategy in action, entering the U.S. market as a prime contractor by leveraging our world-leading expertise in aerial targets and training services across the group. Now whilst each of these highlights are significant in their own right, many are just the start of programs that underpin our long-term outlook. And I'll come back to that later in this presentation. So with that, I'll hand over to Martin, who can take us through our financial results.

Thanks, Steve, and good morning, everyone. It's just over 2 months since I joined QinetiQ, and I have already been able to get to see many of the operations and business sites firsthand, enabling me to get a clear view on the value drivers, capabilities and opportunities that lie ahead. Many of you will know that I've worked most of my career in the defense and security sector. And I truly value the critical importance of what we do for our customers. Here at QinetiQ, the depth of embedded capability in our teams, the technology innovation we perform and our differentiation and, hence, opportunity set going forward is outstanding. And there are a number of areas we can help the external market to better understand the high-quality, critical and enduring nature of what we do. These are the main reasons I joined, and I'm delighted to be here working with Steve and the wider team and bringing my skill sets to the business to further build on what has been a strong multiyear period of growth for QinetiQ. My near-term focus will be on driving further value-accretive organic growth and continue to strengthen core business processes. So as we grow in scale and complexity, we do so from firm, cost-effective foundations. So turning to the results for the half. I'll start with the financial highlights before moving on to the key financial metrics at a group level and details on our two reporting segments. I'll finish with outlook and capital allocation. For reference, the dollar rate for the half averaged $1.29 compared to $1.25 last half, which has provided a headwind to the reported growth rates of around 0.5% for revenue and profit. And as usual, the technical guidance is in the backup material. And I'll be very happy to take questions at the end. So on to the numbers. Reflecting the strong demand environment for our 6 distinctive offerings, we booked over GBP 1 billion of order intake, up 9% on a strong comparator last year. Backlog remained flat versus FY '24 at GBP 2.9 billion. Revenue increased to GBP 947 million, a 7% reported increase, resulting in a book-to-bill of 1.3x. Program execution on the backlog and milestone adherence was good across our major contracts, driving the strong revenue and underlying operating profit growth both at 7%. Underlying basic earnings per share at 14.2p increased by 6% as the higher effective tax rate more than offset the ongoing benefit from the buyback program. Turning that profit into cash was much improved at 84%. It underpins our full year guidance of circa 90%-plus. Good business performance and cash generation allows for effective and value-creating deployment of capital. Shareholder returns have increased in the period with excellent progress made against our buyback program with GBP 46 million of shares retired and the GBP 32 million final dividend paid. Return on capital remains strong and at the top end of our mid-term guide of 15% to 20%. And as Steve referenced, in the continuation of our disciplined, value-enhancing capital allocation, we are maintaining our 7% progressive dividend and an increase to the current buyback program of GBP 50 million, which we expect to roll on after the completion of the existing program in January. So a good reported first half in line with full year expectations, all delivered against a geopolitical transition in the U.K. and an FX headwind. Moving to the key group financials, starting with orders, which grew 10% on an organic basis. Orders booked in the period included: the 10-year contract to provide Aerial Training Services in Germany, as mentioned by Steve at the start; continued demand on our Engineering Delivery Partner program; and in the U.S., the next year of funding was received for FY '24 contracts won, together with new business and on-contract growth on the Space Development Agency and Strategic Capabilities Office programs. During H1, we received GBP 133 million of new contract awards in the U.S., of which GBP 61 million were multiyear and unfunded. This is lower than the prior year, which included the major order wins for SDA, SCO and TARS. The chart at the bottom right highlights that we closed the period with a robust funded order backlog of GBP 2.9 billion. With the additional U.S. unfunded backlog of GBP 0.6 billion, we have a total position of GBP 3.5 billion, providing excellent visibility for future growth. Revenue for the half at GBP 947 million grew 8% on an organic basis as we executed effectively on our order backlog. At around 46% of our expected full year guidance, this is in line with our usual cadence and underpins confidence in our full year guide. Growth was driven by strong performance in our engineering delivery contracts in the U.K. and Australia, together with increased volumes in aerial targets across the world. As we look to the second half, our revenue under contract is at a similarly high level to last year of approximately 90%. Our good program execution and milestone adherence led to a 7% increase in underlying operating profit to GBP 107 million at 11.3% operating margin, consistent with last half year and our guide for the year. At the right, you will see a table reconciling underlying operating profit from segments to statutory profit, covering the key points. Income from research and development expenditure credits is in line with last half year. Amortization of intangibles is down on a reported basis due to FX impact as the intangibles primarily related to the U.S. and Australia acquisitions in recent years. As outlined in May, the digital platform represents a discrete multiyear investment project to enable our global growth strategy and our AUKUS customer needs. We continue to expect around GBP 25 million to GBP 30 million of additional spend over the next 3 years, which will fade through to completion. The values here reflects the implementation costs. All recurring costs such as licenses and maintenance are reported within the underlying cost base. And as a reminder, and as outlined in the release following the sale and leaseback of the Farnborough site under IFRS 16 and right-of-use accounting, a one-off noncash accounting loss of approximately GBP 30 million is expected to be recognized as a specific adjusting item at the full year. Turning now to the segmental splits of the group performance, starting with EMEA Services. Orders grew 16% to GBP 730 million at a book-to-bill of 1.2x. This drove funded order backlog up to GBP 1.6 billion, excluding LTPA, providing visibility on our sales growth expectations. Revenue growth at 10% was driven primarily by execution on the EDP framework contract and growth in the Australia sector. Operating profit grew to GBP 83 million on continued good operational performance, delivering margins at 11.5%, consistent with the outturn for FY '24. Next to Global Solutions, which posted total orders of GBP 304 million at a book-to-bill of 1.3x as we saw good order flow from U.S. funding on FY '24 contract wins and on-contract growth, together with strong aerial targets orders. As referenced earlier, new unfunded orders in the period reduced due to a higher year prior comparator. Funded order backlog is up 17% on year-end to stand at GBP 0.4 billion. Together with the strong U.S. unfunded orders of GBP 0.6 billion, we have confidence and visibility in Global Solutions' growth in the coming years. Global Solutions revenue was in line with last year's half with a number of moving dynamics. There was increased revenue from the TARS and SDA contracts, which led to growth in the legacy Avantus business. The U.S. robot CRS(I) program completed, but that was offset by higher levels in our targets in other product lines. On the back of this sales mix change, margins increased slightly. So overall, Global Solutions and EMEA Services have delivered in line with our expectations in the half and are well positioned to carry that through to year-end. Cash generation was strong with GBP 131 million of net cash flow, which equates to a conversion ratio of 84%, a particularly good performance, given the FY '24 high cash conversion of 104% was in large part driven by early receipts from FY '25. CapEx spend was GBP 49 million in the half tracking in line with our annual projected GBP 90 million to GBP 120 million spend as we continue our investment in infrastructure and capability enhancements. GBP 21 million of this relates to investment in the LTPA. And as a reminder, the LTPA CapEx is funded through the contract. This means that although QinetiQ funds upfront investment, it is paid back through depreciation over the contract. To complete the cash analysis, the movement in net debt is shown here. We generated GBP 47 million of free cash flow and delivered a significant step-up in shareholder returns at GBP 78 million. This increase in shareholder returns meant the leverage ratio increased marginally from year-end to 0.6x. For clarity, this excludes the impact of the sale and leaseback of the Farnborough site, the proceeds were received at the end of October, and all things being equal, lowers the leverage by 0.2x. So pulling all that together and moving on to the outlook. On the back of a good half, our guidance for the full year is unchanged with us expecting to deliver high single-digit organic revenue growth compared to FY '24 at a stable operating profit margin and cash conversion at circa 90%-plus. Our FY '27 outlook is also unchanged with us on track to achieve GBP 2.4 billion of organic revenue at approximately 12% margin with high levels of cash conversion. And to help you with your models, we have provided an estimate in the statement of the net debt movement expected at year-end, taking into account the sale and leaseback and the extended buyback program. Finally then, let me turn to capital allocation. We continue to see the business delivering strong cash flow and the focus and priority is unchanged from the prelims in May with the near-term actions prioritized on driving program performance, investment in the business and organic growth. Alongside our progressive dividend policy, we continue to see buybacks as a compelling component of shareholder returns, as illustrated by the progress made on the current program and our announcement today of extending that by a further GBP 50 million. We are comfortable with our balance sheet position. And it gives us flexibility for growth and enables the potential for further shareholder returns as we look to deploy capital in the most value-enhancing manner. In summary, this has been a good financial half, underpinning our full year and FY '27 guidance. Our high backlog and opportunity sets are a strong indicator of our prospects. Good operational performance is seeing that translated into consistent sales and profit growth. And through our capital allocation, we are demonstrating that we will allocate our growing returns in ways that continue to create value. Finally, I would like to thank all our teams for delivering for our customers and this half year result. Before handing back to Steve, I'd like to clarify that going forward, we will drop our pre-close statements in April and October and instead move to a more normalized reporting cycle of a Q1 update in July aligned to AGM, interim results in November, the Q3 trading update in January and the preliminary results in May. With that, back to you, Steve.

Great. Thank you, Martin. So let me now take you through our strategic outlook. The global threat environment continues to evolve and there is rising global instability. Ongoing conflicts in Ukraine and the Middle East as well as growing tensions in the Indo-Pacific are accelerating the pace and expanding the breadth of the threat, further stretching allied capability across the globe. In two of our three home countries, new governments have or are taking office, the Labour government in the U.K. and the Republicans in the U.S., following last week’s election. And in Australia, there will be an election early in the new year. In this period of political change, the importance of international cooperation through alliances such as NATO and AUKUS will continue as our governments look to respond to the highest threat environment for a generation whilst balancing fiscal pressures and budget prioritization. Within this world of significant tension and change, the need for strong national defense and security capability will endure, focused on building greater resilience and rapid modernization to stay ahead of the threat. Our strategy and unique value proposition are well matched to respond to these market dynamics. Within this geopolitical context, the changing character of warfare is driving our customers’ capability and investment priorities, shown on the left hand of this slide. Irrespective of the current market dynamics, these priorities will continue to drive demand for our differentiated capabilities, research and development, engineering services, test and training and cyber and intelligence. Let me give you four examples. Achieving technological superiority is driving the need for autonomous systems and human machine teaming. These next-generation systems are as a result of long-term R&D into disruptive technologies as seen by our pivotal role in the U.S. Army’s Robotic Combat Vehicle program. The proliferation of drones is accelerating capabilities into service by adapting systems to new missions. Our expertise in engineering services has recently been used to help adapt a Royal Navy air defense missile for use against ground or surface targets. The need to maintain operational readiness requires test and training against highly representative threat scenarios. As a global leader in test and training, demand is increasing for our unique capabilities as demonstrated by the German and Spanish Air Forces both coming to the U.K. for their long-range missile firings. Finally, national security requires an edge in the cyberspace to enable superiority in the battle space. As an embedded partner of scale in both the U.K. and the U.S., we have a critical role to support our defense and intelligence customers with our cyber and data intelligence solutions. Our differentiated capabilities are highly relevant and critical to meeting the enduring needs of national defense and security. By focusing on our customers’ needs, partnering with industry and investing in our capabilities, we have progressively won larger, longer-term programs, enabling us to deliver consistent performance and attractive returns. Today, our combined healthy order backlog and pipeline is worth more than GBP 15 billion, approximately 8x our FY ‘24 revenue. To give you an insight into our pipeline, I’ve shown 10 examples of our major growth drivers that are both a mix of renewals and new business opportunities. Let me highlight three of them. In the U.K., negotiations on the long-term partner agreement are going well. And next year, subject to government approvals, we remain on track to secure the contract extension through to 2033, continuing in our role as the U.K.’s strategic partner for test and evaluation. In Australia, the government has identified Test and Evaluation, Certification and System Assurance, known as TECSA, as a sovereign priority. And our formation of Team TECSA is a great example of industrial leadership, bringing together the best of industry and academia for the benefit of our Australian customer. And in the U.S., based on our strong delivery on the TARS program, our border surveillance system for Homeland Security, we have a significant opportunity to provide the equivalent program in Poland through a U.S. Foreign Military Sales. Whilst we may not win all of the examples shown, our pipeline is robust and prudent with many additional growth opportunities beyond the GBP 11 billion identified. We have significant revenue visibility, underpinning our confidence in delivering long-term sustainable growth for many years to come. In order to stay relevant for the long term, we remain focused on investing capital into our people, technology and capabilities. As announced in April, I made a number of new leadership team appointments: Martin as Group CFO and also Iain Stevenson as Chief Operating Officer. Both are making a significant and positive impact in the business. In delivering for our customers, the single biggest contributor is our people. We continue to make progress, creating an environment where they can all thrive with our highest-ever level of employee engagement. Cutting-edge technology is a key enabler of our growth. And we continue to invest approximately GBP 20 million per year in R&D, aligned to our customers’ priorities. Developing industrial partnerships as a route to market for our technology is critical to delivering attractive returns. Good examples are our laser technology with MBDA in the U.K., autonomy with Oshkosh in the United States and electric drives with RENK worldwide. To create more value for our customers and support further growth opportunities, we’re investing in our digital platform to improve the exchange of technology and information as well as collaborative working across the company. As an example, the Team TECSA opportunity that I’ve just mentioned will benefit from increasing collaboration and leveraging capability between the U.K. and Australia. As Martin just said, investing in the business and organic growth is core to our growth strategy, building an integrated and differentiated company that delivers long-term value for our customers and our shareholders, enabled by our talented people. So pulling this together, we have a clear investment case, which is unchanged. Our company has a robust purpose-driven strategy. We are focused on our AUKUS customers and their allies with a unique value proposition, which is aligned to their priorities and highly relevant to the enduring and evolving threat. By continuing to execute this strategy, underpinned by disciplined capital allocation, we will see increasing demand for our capabilities and achieve our guidance, shown on the right of this slide, delivering high single-digit organic revenue growth at good operating margin with high cash conversion and attractive return on capital employed. We are a differentiated company with a good long-term outlook, delivering attractive returns to our shareholders. So in summary, faced with continued and rising global instability, I’m incredibly proud of the outstanding skills and capabilities of our people, fulfilling our purpose by serving the national security interests of our customers. Building on our strong track record, we have delivered good, consistent operational and financial performance across the group. We remain on track to deliver GBP 2.4 billion of organic revenue at approximately 12% margin by FY ‘27. And our visibility to the achievement of this goal is increasing. And with a strong balance sheet and continued discipline on capital allocation, we are increasing returns for our shareholders with a 7% dividend growth and extending our share buyback program by a further GBP 50 million. In summary, we are well positioned and have a clear strategy to deliver long-term sustainable growth and compelling value for shareholders. Thank you. And Martin and I would be now happy to take any questions. A - Steve Wadey: So we'll take questions first in the room and then we'll go online. And just in terms of protocol, if you can say who you are and your organization and then we'll answer your questions. Sam?

Sam Burgess, Citi. Just three, if I may. Firstly, I know that continuing resolutions have impacted the U.S. business in the past. Any thoughts on whether a GOP sweep could make that revenue a bit more predictable? Secondly, I know that in the -- I noted that in the revenue by customer slide, the level of DoD revenue is halved year-on-year and government agencies seem to have substantially increased. Is that a change in the customer at Avantus? And then finally, just on the Army training transformation contract, I know that several prospective contractors have dropped their bids. Any color on how you think about that contract and why QinetiQ are best placed to deliver on it?

Okay, great. Sam, I'm happy to take all of those. I'm already thinking, "What can Martin answer in those?" But maybe I'll start.

I'm ready if you...

I will start on each of them and then maybe we'll get some sort of builds from Martin. I think, first of all, on the continuing resolution, and obviously, you're right and it's fresh news today with the throughput of both houses last night, I think the main thing I would say is, and we said this in May, we planned for it. We planned for what would happen with the U.K. election. We planned for what would happen with the U.S. election. Therefore, we've assumed a level of disruption in our guidance. So irrespective of what this means from a continuing resolution, we're confident that we will execute in line with the guidance that we have given. In terms of your second question, the mix, good spot in the appendix, where you can see the balance change, is exactly what you said. If you remember that the Avantus customer base includes intelligence agencies, includes Homeland Security, not just DoD. DoD was more the legacy, and we've seen some of those programs such as CRS(I), if you remember, come to a conclusion at the beginning of this year. So again, what you see there in the difference between U.S. DoD and other U.S. customers is exactly what we planned in terms of the mix of the business changing post the acquisition. On the ACTS, I think that you saw it on our pipeline chart of one of the 10 major opportunities. And those pipeline opportunities, we really consider those as high-quality, good contracts that we can go with. And I think that takes me to a broader point that our strategy and our discipline only really considers those high-quality contracts. So they've got to be in line with our strategy. Training is absolutely central to our strategy around create it, test it, use it from a value proposition. And I've also got to meet all of our financial hurdles in terms of margin or capital and returns. So ACTS for us is absolutely on point as a strategy. The British Army have a real need for innovation and partnership. If you've followed the story of the current Chief of General Staff, he's looking at objectives to significantly multiply the lethality of the army. A program like ACTS is an integral part to that. We believe we've got a really strong team. We're delighted to be partnering with KBR and PA Consulting. We've got a very compelling value proposition. We've got a track record of partnership. We have many long-term partnerships that we're adding value to our customers. So yes, we're pretty excited. We're one of, we believe, now four remaining teams left in that competition. We think the requirement will endure. We look forward to the down select. But it's on point strategically and it will meet our financial hurdles. Otherwise, we wouldn't be proceeding with a program like that. Hopefully, that answers. And Martin, you can think about where you'd like to navigate.

Just I'll very much leave three to you, Steve, as you've covered. I think just to build out on one and two, I think on the CR, at the start of the year in May then, Steve and Heather, quite rightly sort of around lessons learned, and we planned appropriately for a CR. I think it's about 10 out of the last 11 years there's been a CR. So everyone is well versed to it and used to it. It's all about the extended length. And I guess that's your point, Sam, is hopefully, it might be a bit shorter in coming years if -- given where it is. But I think also in our review, we don't feel that our orders and sales to go will be too impacted because we've done a good scrub of that. So we feel good around navigating the CR this year. And I think just to the second point, again as I sort of referenced in my script, but to give you some more color, I mean, on the Space Development Agency, the TARS contracts, they have been some of our major revenue growth drivers in the second half, which were obviously non-direct DoD. And similarly, on the order intake, I think you'll continue to see that. So some of our major orders, as we said, on the SDA, over $45 million of orders booked in the first half, high numbers on the SCO and TARS as well as we see that on-contract growth. So I think you'll continue to probably see that mix shift carry on.

It's Joel Spungin from Investec. I just got a couple, so maybe can I just start with the margins? Obviously, you highlighted obviously margin in EMEA Services were down a little bit, up in Global Solutions. And you explained the mix affecting the Global Solutions margin. I was just wondering within EMEA Services, you said it was in line. Why were your expectations that the margins in EMEA Services would come down in the first half? And is this the sort of pattern that we should expect for the full year, i.e., a continuation of higher margins in solutions, lower margins in services?

Yes, sure. I mean, I think if you look at the exit rate of the half and the full year number, that was 11.5%, which is exactly what we've delivered. So that's why it was in line with our expectations. As ever, you get contracts rolling on and off in the year, in the last first half of last year, there were a couple of contracts that rolled off that led to some risk retirements and profit, but that's just natural. So 11.5% is what we ended last year. That's why we guided to that level, so very comfortable, nothing to flag. So I'd expect a fairly similar level in that sort of 11%-ish range for the full year. And similarly, on Global Solutions, again this is a bit more driven by the product mix. As I said, the CRS(I) program, as I think a lot of you know, wasn't a very high-margin program. And that's been replaced by some other programs, like the aerial targets, which generate more normalized profits, so again, fairly similar. So we didn't want to make a big thing up or down about either of those. There's no -- it's just normal course of business.

Maybe if I just had one more question, just on the sale of the Farnborough site. I was just wondering, is that very much -- I mean, obviously, it's a one-off. But are there other assets in the portfolio that you could look to do something similar with? Or is that this pretty much it?

I mean, if you look back over the last 3 or 4 years, you will have seen a number of property disposals. This is the last and it's certainly the biggest. The number of sites that we now own as a company is very few and we lease our sites. And I think this is a very good example of our strategy in action and the discipline on capital allocation. Our business isn't really being a landlord. You will have seen from the announcement, our occupation on the site will come down to about 1/3 of the site, which meant, in terms of investment and management, it was quite a significant activity. So it's much better that we've got a world leader property developer nurturing and growing that site. And they've got some great plans that are kicking into action now, which will be the principal tenant, but other tenants will benefit from that. And it means that we can put our capital to work where our shareholders and we would want it, which is on investing the business and following through on the capital allocation policy. So we're very pleased with that deal and it's in line with our strategy. But there aren't another two or three of those to come, unfortunately.

David Farrell from Jefferies. A few questions from me. Reading an interview with Shawn Purvis last night, he talked about an expansion into Huntsville in Alabama. And that's being significant for QinetiQ's U.S. growth strategy. Can you just talk about what the significance of that is, please?

Yes. So it's a good point, actually, David. So if you understand the industrial landscape and the customer landscape in the U.S., Huntsville, Alabama is a major growing area. It's called Rocket City, actually, if you want to get into the colloquial term. And actually, we want to build presence there. The U.S. Army is dominant, NASA and space is dominant around that area. And we've strategically decided as we've gone through our reset last year and we focused our growth on national defense and security priorities to make sure that we're focused on the customers down there. So I mentioned one of the operational highlights that I'm delighted, we sort of pointed to it in May and it happened, was winning this Aerial Target Systems contract, ATS-3. That is the U.S. Threat System Management Office based in Huntsville. So this is about building proximity to our customers and looking to expand and grow on areas aligned with our strategy. So Shawn will have been talking about that. And I think we opened the office maybe 10 days ago. And that's going to build our capability and our presence aligned to that customer.

A couple more follow-ups. We've obviously got the defense review ongoing in the U.K. as a result of the change of government. Can you maybe talk to kind of how it might be impacting your intelligence business, in particular, the award of contracts that are coming through perhaps or not coming through?

Yes, I think -- I mean, it's not dissimilar to my answer to Sam's question about continuing resolution. Again, and you heard Heather and I talk about this in May. We knew that we were going to an election. I think the day before our results, I think it was announced. And in setting our guidance for the year, we did plan for a level of short-term disruption. And I think we have seen a small slowdown in that area, but nothing that fundamentally sort of questions or challenges our view. I mean, we're very pleased, if you look at the current U.K. government posture, pleased to see its commitment to the 2.5%. We wait for clarity of exactly when that will come. The fact that the defense sector has been identified as one of the eight priority growth sectors, I think that's very important, something not just in my role as Chief Executive of QinetiQ but leading the defense growth partnership for the U.K. is something I'm very pleased to see. And within the SDR, both on defense and intelligence, we put a very strong input into the SDR as a company. And we've had some great dialogue on that submission. I think our core thesis going in is we need to focus more on innovation and partnerships to achieve more with whatever resource defense in the U.K. gets allocated through the comprehensive spending review. And I think that reinforces one of the core messages I was trying to get across today is that whatever the outcome of that SDR, it will underline and drive the importance of our enduring capabilities, research and development, test and training, engineering services and, to your point, cyber and intelligence. So I think let's park any short-term disruption, which is quite frankly normal through a new administration on SDR and focus on the long term. And with a really healthy backlog and pipeline, we're confident on our in-year guidance and the multiyear guidance that we've shared.

And maybe a final one for Martin. I think this time last year, you grew at 16% or 19% organic revenue growth. We've obviously seen 8% today. It's really impressive. How are you delivering that? Is that headcount? Is it greater amount of pass-through revenue coming through? Is it better utilization of assets? How can you really break it down for us to understand the drivers of growth?

Yes, so good -- it's a very good question. I mean, I think if you look at -- there's a question, I think, at the full year about headcount growth in EMEA. And that was strong last year. In the first half, that stabilized, it's not grown as much. But we've obviously exited that rate with a higher number of people. So that throughput, we are seeing increased task order work, back to Steve's point, around demand environment. There is a little bit around some of the nature of contracts. So it's quite hard to unpack. But if you stand back around the fact that our guidance is 7% to 9%, this is bang in line with what we'd expect to be doing. So there will always going to be puts and takes of the different portfolio. We're seeing some good growth in Australia in the first half, for instance, around some of the engineering services work, some high-growth task orders as well. On the flip side, some programs have dropped off. So that's the nature of where we are now. So on a headcount basis, it's not grown so much in the first half, but we came out with a strong backlog and the exit rate from last year to deliver that. And so that's why I think we're tracking at the rate we are.

I would just build on that. I think Martin is absolutely right. And if you remember, and Heather broke this down, the 16% had some other factors like high inflation benefit. So you can't quite compare the 16% with today's environment of 8%. But Martin's core message is absolutely right. We're in line exactly with what we planned, good programs, good program execution. You should also remember on resourcing that when we win certain programs, when we won the TARS contract in America, the resource came with it because we were replacing -- we displaced an incumbent. So yes, some of our program execution is through recruitment of new programs. But some of it, we bring the resource with the contract win. So you have a mix effect.

And sorry, to be clear, it was the fact that you had a high hurdle last year to go up against, not that the 8% should be higher?

Yes, absolutely.

Yes. But to your point, it's absolutely in line with what we guided. We gave the rationale of why we would be in the 7% to 9% category, and we're in the middle point.

Richard Paige from Deutsche Numis. A couple for me, please. On the -- you've obviously made no secret on strategically, you focused around the AUKUS agreement. We're obviously seeing European spending increase in recapitalization there. To what extent is that an opportunity for the business, please?

Yes, I think a couple of things, Richard. Thanks for your question. I think, first of all, yes, we've said AUKUS is important. But I'd just like to clarify because sometimes the word AUKUS means different things. First of all, I'd start by clarifying our strategy right from 2016 has been focused on AUKUS nations, so the demands of Australia, the U.K. and the U.S. And I think the core strategy was launched about focusing on each of those countries. AUKUS as a partnership, as you're right, brings two additional sort of vectors. It brings the nuclear submarine program and it brings other disruptive technologies, what's known for the experts in the room as Pillar 1 and Pillar 2. And I think that sometimes I say that deliberately, Richard, because I think people think, well, is our whole strategy based on AUKUS Pillar 1 and AUKUS Pillar 2? No, it's focused on those three countries and the benefit of the Pillar 1 and Pillar 2 agreement. You'll also notice that we've been very clear that our strategy refers to AUKUS and its allies. We have presence in Germany. We have presence in Canada. And we nurture opportunities with those countries. You will have seen in the last couple of years, talking about NATO and the importance of NATO, one of the operational highlights I shared today. I think it's very meaningful. If you can go and look at the experimentation exercise online, it was called NATO's REPMUS excise. It was a huge exercise, 13 or 14 nations in Portugal looking at how do you fundamentally force-multiply a maritime force through the integration of autonomous drones? And in fact, the team that were part of designing and running that exercise, 2 weeks later, they were in Australia, doing exactly the same on a program called Autonomous Warrior. And now we've got Formidable Shield coming back to the U.K. next year on a significant contract in the half. And we're preparing for that. So yes, AUKUS, because the core three countries are AUKUS countries. But I think it's a lot more than that. And I think NATO, Germany, Canada, other opportunity, I've referred to Poland today, a great opportunity. We've got a strong reference, brilliant performance execution going on in the U.S. on our TARS program. And the U.S. and Poland have just signed an MOU in the summer. And they won another repeat effectively of the TARS system in Poland. And we're the only multisite provider in the world of Tethered Aerostat Radar System. So there's an opportunity through a U.S. FMS program to provide a repeat. So it's a great question because when you look at this 10-year pipeline, you'll hear a lot of opportunities that aren't just what people might be perceiving as AUKUS. Thanks for your question, Richard.

And secondly, targets, phenomenal growth again in the period, the framework contract we've just mentioned in the prior questions in the U.S. To what extent are you able to leverage those opportunities to other parts of the business?

Sorry, in what sense?

In the sense of being able to build on that with bringing other parts of QinetiQ's offering?

Well, I think it's a great question. And I tried to bring out that, for many years, our strategy is not running independent businesses in independent three countries. It's about the power of collaboration to create value internally that brings value to our customers externally. And I'm genuinely delighted with the win of ATS-3 in America because it proves your very point. It proves your very point that we -- well, a, we acquired brilliantly with the ATS program. We integrated it well into the company. We acquired well with Air Affairs and also with our business in Germany. And the ATS-3 win in America is about leveraging capability. We took our people and our skills in Australia, Germany and the U.K., and we're able to put a proposition, to the earlier point from Sam, which was very compelling to the U.S. Army. So we've leveraged capability and got effectively an additional return on that investment now through the contract that we've won, and we'll execute that as we go into the coming months and years. So that principle of leveraging capability is core to many of our opportunities. And therefore, internal collaboration on this pipeline and everything that sits within this pipeline is a key enabler. It's also why we've invested in our discrete digital platform to enhance the way we collaborate internally within the company, within obviously security constraints, to drive this growth. So yes, thanks for the question again because it illustrates leveraging is key to the additional value that will be created through this strategy.

I think, Richard, one thing, just to perhaps build on that as well, I mean, if you think about your sort of your first part and your second half and you link to the huge capitalization going on in many countries now of aircraft, the threat around there around uncrewed systems and various other things, everything that we do, looking forward, be it through targets, test and evaluation, testing things, is all going to become very, very highly relevant for a lot of countries who haven't necessarily had to do this for a long time or done it. So we do feel we're very well positioned. And to Steve's point, for me, those two questions are quite closely aligned across the whole getting platforms into service.

I was about to say I'm conscious you want to get Martin involved, so I was going to ask a simple National Insurance question obviously.

Simple, I'll stick to target. So sure, Richard, go for it.

I'm assuming it isn't a major factor for you. We just want to check that in terms of the U.K. changes...

Yes, I mean, on our basis calculation at the moment, we think it will be around a GBP 7 million impact. I mean, we'll look to be able to cover that off in the coming years through efficiency in the business. So we don't expect any major impact to our guidance at all. Obviously, it will only kick in for FY '26 for us, coming on the 1st of April. But we don't expect a material impact to guidance for that. We'll look to cover that off. And there has also been some tweaks around RDEC as well. So we might be able to get a little bit more of RDEC credit out.

Any more questions in the room? Okay, should we go online? Are there any questions online? There are.

[Operator Instructions] We do have a question from George Mcwhirter from Berenberg.

Two, please. Just following on from Richard's question on the target business, at the CMD last year, I think you mentioned that the threat representation business generated about AUD 200 million of revenue. So following this USD 95 million aerial target contract, what growth rate do you think that the targets business can generate in the next 3 to 5 years? I assume it's probably likely higher than the group average? And the second question is just on capital allocation. So the balance sheet remains pretty underlevered despite the expansion of the share buyback. So how are you thinking about the share buyback versus M&A? And what does the M&A pipeline look like?

Okay. Maybe I'll take the targets point. Maybe, Martin, you can do capital allocation, I'll come back with a few thoughts on that as well. So well remembered, George, we did talk in our Capital Markets Day about the importance of targets. And you've seen through the results that Martin brought it out financially that our targets business is growing. In fact, we should broaden the term. We call it our global threat representation business, not just targets. It's targets, it's the services of targets and it's also our airborne training services. And you're right in terms of the rough scale. And I think to keep it simple, this is just one of many contracts in the airborne target and services area that supports to our ongoing growth. And you're right that we would probably expect to see growth rates there, as we have over many years, that are slightly higher within our normal Global Solutions growth rates. And the reason for that is, in fact, is what Martin just said. As our various customers are training and enhancing their operational readiness, they need more representative threats to train against. And that's why we're seeing the increasing demand. So the ATS-3 contract is just one good example, created through leverage across the group, where we're actually fulfilling that increasing demand. And I think you'll remember from the Capital Markets Day, we said we're probably in the top 2 or 3 leaders in the world now on providing threat representation. And we do expect that market to grow. We've just done an independent study looking at worldwide trends in threat representation. And we see it as a really good underpin for the future as part of our strategy. And my last point, George, on it would be let's just remember why we focused on threat representation. And it's because it's an integral part of the core enduring capabilities that we see for our customers. So if you are a world leader in test and training, you need to be able to represent the threat for our customers to test and train against. And that's why we effectively chose to vertically integrate into this area and then expand across the world because we knew over a long-term cycle that this would see increasing demand. So hopefully, that answers your question, George.

I'll just build on the targets as well. The $95 million was a framework contract. We wouldn't expect all that to come to us, so just don't build all that into us, although we expect to grow the business, as you said. But just for clarity, not all that $95 million will come our way, unfortunately. Right, on to capital allocation, I mean, I think it's really a reiteration, George, of my statement message as you've just heard. I mean, Steve and I are very happy with the leverage that we currently sit at, at around a sort of 0.4, 0.5x once you take into account of the sale and leaseback number. We're very strongly of the view that at the moment, we're focusing on organic growth, as you heard, and investing in the business and driving the best business performance we can on an organic basis. And within that, we'll also maintain a very balanced capital allocation framework. So you have the ongoing CapEx spend that we've outlined and including with the R&D and OpEx spend at sort of around GBP 120 million a year. You've got your progressive dividend at 7% growth. That's consuming around GBP 55 million to GBP 60 million a year. And then at the moment, we have the buyback program ongoing, which is, obviously, we see a very compelling value at the moment and that utilizes most of the free cash flow and keeps the leverage as it is whilst also giving us flexibility for growth going forward but also for further shareholder returns, should they meet our criteria. And at the moment, they certainly do.

I don't want to repeat what Martin said, I fully agree. As we said in May, George, our focus is organic in the near term. We've got a really good capital allocation policy. You've seen the discipline in that with what we've presented and the additional share buyback today. And the focus absolutely is on investing in the business and investing in those opportunities in the pipeline to drive our sort of underpinning -- underlying long-term growth. Of course, acquisitions are part of the long-term strategy. And if they're value-accretive at the right time, we'll consider them in the future. But that's not our focus. Right now, it's absolutely on the organic growth that both of us have reinforced. Hopefully, that answers your question, George.

Yes, that’s really helpful.

[Operator Instructions] There appears to be no further questions over the call, so I'd like to hand the call back over to Mr. Wadey for any additional or closing remarks.

Great. Thank you. First of all, just come back to the room, has anybody got any follow-up or additional questions here? Okay, great. Well, thank you for your time. Good set of results. And if you've got any further questions, happy to follow them through after the event. Thank you.

Thank you.