Melrose Industries Plc (MROSY) Q2 2026 Earnings Call Transcript

Melrose Half Year Results Webcast 31st July 2026

Melrose Peter Dilnot, Chief Executive Officer Ross McCluskey, Chief Financial Officer

Questions From Sam Burgess, Goldman Sachs Ian Douglas-Pennant, UBS David Perry, JP Morgan Aymeric Poulain, Kepler Cheuvreux Benjamin Heelan, Bank of America Stephen Klepp, BNP Paribas Joe Orchard, Rothschild & Co Redburn Charles Armitage, Citi Mark Fielding, RBC Marie-Ange Riggio, Morgan Stanley

Introduction & Key Highlights Peter Dilnot, Chief Executive Officer Hello everyone and welcome to Melrose 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 the backdrop of strong civil and defence 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 defence 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 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 Defence uncrewed vehicles. So 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 £350m. We also generated a £67m 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 three 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 seven days. And 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 and I'll give some examples of this in action shortly. From a commercial perspective, 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 defence we're participating broadly across a range of emerging uncrewed programmes. This includes BAE Systems collaborative combat aircraft Brontanax that was unveiled at the Farnborough International Airshow last week and where we're deeply involved in both design and production. And finally, additive fabrication, our breakthrough technology that helps address forging and casting constraints within the industry and here we've continued to make good progress including development work with Pratt & Whitney on the F135 programme. Before we get further into the H1 results it's important that 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 $150m expansion to double our F35 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 five 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 US Government to restore operations safely. The manufacturing side reopened in July with 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 recognise 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's still uncertainties about the timing of acrylic production restarting, wider regulatory and legal costs and our insurance coverage is under review. So with all this in mind we have paused the current share buyback until the situation is clearer. So let me now hand over to Ross to take us through our H1 results in more detail. ...................................................................................... Financial Review Ross McCluskey, Chief Financial Officer 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 £347m driven by positive revenue growth and the continued focus on operational and efficiency improvements underpinned by our Brilliant Basics programme. 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 £13m 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 was £16m and £9m 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 focussing on our Engines division. We are 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 £206m in line with our full year expectations of £340m to £380m. We have 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 programme. This reinforces our position as a core strategic partner to the FMV. Repairs continue 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. So overall a strong performance from the Engines division. Turning to Airframes 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. Defence grew strongly up 14% driven by the F35, C130 and NH90 and the benefits of work done to ensure the portfolio is sustainably priced. Defence continues to develop commercial opportunities underpinned by positive momentum in NATO members spending commitments and later in the presentation, Peter will talk about opportunities we are developing across both

our Engines and Airframes 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 Airframes demonstrated solid progress on an underlying basis improving by 50 basis points excluding Garden Grove. And again our Brilliant Basis programme 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 and 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 nine. We are pleased to report a positive free cash flow performance in H1 of £13m representing a £67m 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 £15m in H1. Pre-factoring our cash flow in the period would have been positive £28m 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 £20m to £25m. Within H1 we incurred exceptional cash costs of £5m in relation to the Garden Grove incident. On a net basis our cash impact resulting from Garden Grove was actually a net positive £7m with an operational working capital unwind more than offsetting the incurred cash costs. And I'll come back to our outlook for H2 for Garden Grove shortly. Capital expenditure was up slightly versus prior year to £52m and we continue to anticipate an acceleration of spend in H2 on capex in line with our full year guidance of £120m to £140m. Net interest and tax increased by around £7m versus prior year due to higher cash interest costs and the GTF payment of £27m was in line with our full year guidance of £50m and we continue to expect to resolve this issue within the £200m envelope advised to us by Pratt & Whitney. And 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 £1.53bn 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. And during the first half we have returned around £130m to shareholders, £60m of which was with dividends with the rest coming from our share buyback programmes. The previous £250m programme was completed in Q1 and £12m of the current £175m programme has been spent. As communicated in our announcement this morning we have paused the £175m programme 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. And 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 financials, split between operational and exceptional impacts. Operationally our H1 impact was a negative £16m on revenue, £9m on profit and positive £12m 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 £6m 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 £13m of P&L costs in H1 from the initial response, recovery and advisory costs, £5m of which was paid in cash in H1. For H2 we currently anticipate additional exceptional costs of between £25m and £30m. 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've made the appropriate decision to pause our current buyback programme 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 £3.75bn to £3.95bn 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 £700m and £750m 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 £150m to £200m range. So 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. And with that I will hand back to Peter. ...................................................................................... Strategic Prospects and Growth Outlook Peter Dilnot, Chief Executive Officer Thanks Ross. I'll now talk about the longer-term outlook and the progress we're making on 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 A220. 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 Airframes and Engines businesses. Engine flight 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. Our RRSPs give us good exposure here as we have an aftermarket entitlement on over 70% of global flying hours. Defence 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 F35 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. So stepping back demand is our friend and our focus is on executing our strategy to capitalise on our position in these growing markets.

As many of you know 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 defence programmes creating opportunities for growth over the longer term. So 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 programmes 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 programme 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 programme will become cash positive for us in 2028. We've continued to strengthen the business operationally and commercially including new multiyear repair agreements with both Rolls Royce and Pratt & Whitney and we're expanding our blade manufacturing capacity in North Charlestown 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 and the key to this is our lean operating model which we call the Brilliant Basics. This focusses 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. And 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 road map 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 five 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 Airframes. The story here is similar in many respects. Unprecedented civil and defence backlogs provide a long runway for future growth especially as we're now the world's largest independent airframes business. Industry production rates are increasing although they're still constrained by supply chain issues. In the first half we continue 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 and 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, digitalisation and AI. Now alongside this existing platform growth we're also progressing the second wave of our strategy, investing in targeted new opportunities. So let's now turn to that. A good example of our new opportunities is the Defence Uncrewed Aerial Vehicle market or DUAVs. This is a rapidly evolving market given the changing nature of war fighting 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 Airframes side where we're building on our established strength in advanced composites and structures. We're participating across a range of national programmes 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 Thunder programme and BAE's Brontanax programme which I mentioned earlier. The second path is on the Engines 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 engines OEM for the European Gripen fleet. Now in the centre of this slide is what is effectively a new market for us combining our Airframes 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. So 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 turbine engines both in aerospace and in industrial gas turbines. The availability of largescale sophisticated forgings and castings is an industry constraint, 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 wire deposition technology which is attracting substantial interest across the industry. Here we print structural components using robots and lasers to melt titanium or super alloy 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 too. 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. And this brings me to the final wave of growth, next generation. This slide shows that we're already deeply embedded across many of the programmes that will shape the future flight within both civil and defence.

On the civil airframe 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. Programmes 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 programmes. That's the CFM RISE and Next Gen GTF. We're also involved with Rolls-Royce UltraFan plus longer-term EU projects in hydrogen electric propulsion. Across these programmes we're leveraging our expertise in advanced composites, lightweight structural component design and of course additive fabrication. On the defence side we're involved in the next generation of combat aircraft through programmes such as GCAP alongside opportunities in missiles and canister systems. In defence 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. So 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. So 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 programmes 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 programmes 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. And the third is the GTF. As we've discussed the programme 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 programme 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 programmes the GTF, GEnx and XWB. As those fleets grow and shop visit volumes increase, our higher programme 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 £600m of free cash flow in 2029 with cash generation continuing to grow thereafter. So in closing it's fair to say it's been a busy and 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. And with that we'll open to questions. ...................................................................................... Questions and Answers Telephone Operator Good morning everyone and welcome to the Melrose Half Year Results call. We shall now start today's Q&A session. To ask a question please press * followed by one on your telephone keypad now. If you change your mind, please press * followed by two to remove yourself from the question queue. When preparing to ask your question please ensure your device is unmuted locally. The first question today comes from Sam Burgess of Goldman Sachs. Your line is now open please go ahead. ...................................................................................... Sam Burgess, Goldman Sachs 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? And then secondly for Ross if that's okay of the additional £25m to £30m of exceptional costs expected in the second half. How much is likely to be cash paid in FY26 rather than later periods if you've got any sense or visibility on that? Thank you.

...................................................................................... Peter Dilnot, Chief Executive Officer Morning Sam. Thanks for the questions. I think next gens are a pretty exciting development for us. As you've suggested we're on both the current next gen development programmes which is the next gen GTF and CFM RISE. And we also have been historically involved with the UltraFan and there's some discussion about exactly what might happen with that going forwards as it relates to single aisle as well. So 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. And the key thing for us is that we're involved in all of them. I think there's a question mark also about as you mentioned which is whether or not they're going to be RRSPs. And 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. So choices to come, I think. And right now getting going supporting the customers with those developments in an evolving market. ...................................................................................... Ross McCluskey, Chief Financial Officer And 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. So there's no asset write downs or anything of that nature in that £25m to £30m worth of guidance. And in essence I would expect all of that to be a cash cost in H2. There'd be a bit of payment terms that manifest itself into 2027. But 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. I mean more generally you know 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. ...................................................................................... Sam Burgess, Goldman Sachs Great. Thank you very much. That's really helpful. ...................................................................................... Telephone Operator Thank you. The next question comes from Ian Douglas-Pennant of UBS. Your line is now open. Please go ahead.

...................................................................................... Ian Douglas-Pennant, UBS Yes. Thank you for taking my call and welcome Ross. So 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 £89m cash inflow that we see from receivables and payables. Was there an underlying driver behind that? The second question is on the buyback. So you highlight Garden Grove as a £30m to £65m cash issue for this year. Why does that mean that you have to fully cancel the £175m buyback? The scale of the two things seems a little different there. Maybe you can help me square that difference. And thirdly on factoring, can I just confirm with this clarification in your plan here, does that reflect a change in the plan itself or are you just helping us understand better what your original plan was? And within the 2029 guidance, should we assume something like £75m of factoring in that £600m number? Thanks very much. ...................................................................................... Ross McCluskey, Chief Financial Officer Okay. I think they’ll all for me. All right. Thanks Ian. So let me deal with the buyback question first if I can. So look what we sought to do today in terms of clarifying and quantifying the impact of Garden Grove, you can see our you know 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. And as a result, given that, we're taking the appropriate decision to pause. And pause is the appropriate word rather than cancellation, Ian. And once we've got greater clarity, we'll come back and revisit that at the right time. Secondly, if I come back to factoring, look you know, 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 going forward. So 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. So there's no change to the £150m to £200m range off the back of that clarification, nor indeed is there any change to the impact that that would have on the 2029 cash guidance either. I think you know the number you've there for £75m for 2029, of course, that will depend upon the revenue growth that you see in your model in a particular year. So I'll leave that to you to assess. But effectively, the growth in ‘29 would be commensurate to the growth in revenue that you put into your model for that particular year.

As for payables, look there's no particular change in strategy on that. There's a timing point as ever. Big cash flows within this industry, particularly at the half year end. So it is being very much as business-as-usual interpretation on that movement in payables. ...................................................................................... Ian Douglas-Pennant, UBS Thank you very much. And apologies for using the wrong word. I should have said pause, as you say. Thank you. ...................................................................................... Telephone Operator Thank you. The next question is from David Perry of JP Morgan. Your line is now open. Please go ahead. ...................................................................................... David Perry, JP Morgan 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 colour 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 mean, I know you've only been there two 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? And then for you, Peter, please. The organic growth was very strong in both - in defence, in both Engines and Airframes. 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. ...................................................................................... Peter Dilnot, Chief Executive Officer Do you want to go first? ...................................................................................... Ross McCluskey, Chief Financial Officer Yeah, sure, I'll go first. Look, yeah, thanks, David, first of all, for the question. And as you say, it's been a pretty active first, not even quite yet three months yet, actually, within the business. So look, you know, what I would say is very much what I've seen since I've been here has absolutely validated the choice that I'd made to join the company during the course of 2025. You know, it's a great team. It's a fantastic business. We've got two very strong subcomponents of

the Melrose business, which, you know, really are, you know, in very attractive market and spaces with plenty of roadmap ahead of themselves. And look as you heard from Peter already, you know, the drivers of growth will be more accelerating over the course of the coming years. You know, candidly, from a finance perspective, I'm actually really delighted by the team that I've inherited from Matthew. We have a lot of very strong people technically within the central team, as well as within my divisional resource as well. So as ever, you know, 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. So, you know, what we're doing, you know, 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. So that's what I would say on that. But - will I take insurance as well? So, you know, David, look, you kind of mentioned it already, clearly a very active and dynamic situation within Garden Grove. You know, as a multijurisdictional business in multiple markets, you know 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 you know expect me to say at this stage until we've got full clarity in the situation, you know, our insurance remains under review, which is exactly what we said today. Defence? ...................................................................................... Peter Dilnot, Chief Executive Officer Yeah, good morning, David. Just on the defence 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. So specifically on airframe, that's obviously the F35, as well as the European platforms coming through. It's partly volume, but also, as you know, we've been working very hard on getting this portfolio where it needs to be. So there's some impact of price reading through as well on that. And 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. So 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. So the other point I'd say about the defence business in Engines is we've got a heavy position on the F135 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. So broad-based, very much right now, the existing platforms reading through with increased demand.

And 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're playing in that. ...................................................................................... David Perry, JP Morgan Thank you very clear. ...................................................................................... Telephone Operator Thank you. The next question is from Aymeric Poulain, of Kepler Cheuvreux. Your line is now open. Please go ahead. ...................................................................................... Aymeric Poulain, Kepler Cheuvreux Yes, thank you very much for taking my question. It also relates to the pause on the buyback programme. When would you think you'd be in a position to know if you are able to resume that buyback programme? 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 like that? And looking at the ‘29 target and beyond, you mentioned also your interest in 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 on those, please? ...................................................................................... Peter Dilnot, Chief Executive Officer Do you want to get the first one and I'll go on next gen? ...................................................................................... Ross McCluskey, Chief Financial Officer Yeah, sure. So just first of all, in terms of capital allocation policy and prioritisation, so we think about prioritisation, the way we first look at is investment in the business, ordinary returns to shareholders, share buyback. So that's the kind of the priorities as we look at it. You know, certainly from, you know, as we sit here today as management, you know, the guidance that we've given for capital spend this year is between £120m and £140m, that would be good acceleration versus what we spent in prior years. And you know 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. So that is and will always remain our top priority.

In terms of the buyback itself, and timing of that, look very much at TBC. 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 midterm issue for companies to deal with. But of course, you know, as we go through, things will become clearer. And I can give as much guidance as that in due course. ...................................................................................... Peter Dilnot, Chief Executive Officer Great. So specifically on the next gen point and around future RRSPs and investment, I mean, I'll go back really to the first question that Sam asked around the development here. We're really very much in demand in next generation, we're pleased to be playing a role in all of the current programmes, which again, next gen GTF, CFM RISE, and we’re involved also with the UltraFan and have been historically. So 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. So 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 you know. And of course, there's this intersection between airframes as well, particularly if you go for the open fan rotor, and that will evolve. The key thing for us is that we're on all of the engine programmes 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. And 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. So 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. But we're in a great position on next gen and are excited to play our role. And I would also say actually, that we're playing a role on the airframe side as well, in terms of next gen, which we talked about. So all to follow, but all to play for. ...................................................................................... Aymeric Poulain, Kepler Cheuvreux Okay, thank you. ...................................................................................... Telephone Operator Thank you. The next question comes from Benjamin Heelan of Bank of America. Your line is now open. Please go ahead.

...................................................................................... Benjamin Heelan, Bank of America Yeah, morning, guys. Thank you for the question. I've got a few. First of all, 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? And you probably saw that last week Airbus commented they were considering raising production. I think they'll end up doing it. But 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 gear turbo – sorry the GTF programme 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 inflexion? And then a lot of the kind of questions that we've had from people this morning have been around our 2029 and that's £600m. And I think there was clearly some concern that that would come under pressure. Can you talk a little bit about your conviction and how you've been building blocks of getting there? Thank you. ...................................................................................... Peter Dilnot, Chief Executive Officer Thanks. Good morning to you, Ben. So firstly, on the A350, I think it's a good story, isn't it? I mean, the production rates have been constrained by supply chain. Airbus have themselves talked about, particularly the centre fuselage and some of the challenges coming out of the back of Spirit. And so it's great that the demand is there, but we're starting to see it 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? So 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 terms of our facilities. And I think that holds true across the broader industrial base. And 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. But it's a positive story on A350, an important platform for us going forwards. And as you know, we have a deep composite technology on that platform. In terms of the GTF, I mean, 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. So that part of the programme is going well. And as you know, we've given guidance specifically to effectively the costs of that programme, effectively putting the PMI right, those tailing away into next year. More broadly than that, the programme 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. And in fact, the target here is to double the time on the wing with a combination of those two things. So as we play forward on the GTF, you're getting a number of factors, you're getting the AOG costs coming down, you're getting the development costs come down. But most importantly, you're also getting paid for shop visits by the programme being replaced by cash generative and profitable shop visits being paid for by customers. So that inflexion 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. So that inflexion point happens in 2028. As you know, we've never guided to that, and nor should we do so given the fact we're a programme share partner. But the GTF is encouraging for us and an important part of our future cash flows going forwards. And then finally, on the £600m, Ben, I think the key thing here, as I 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. So that's the growing operating profits, the RRSPs and the GTF that we've touched on. I think it's fair to say that 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 defence demand. And clearly, we've had some encouraging news on the aftermarket from our OEM customers recently. So in the round, we can see absolutely those drivers coming through and are confident of that £600m free cash flow target. ...................................................................................... Benjamin Heelan, Bank of America Very clear. Thank you. ...................................................................................... Telephone Operator Thank you. The next question comes from Stephen Klepp, of BNP Paribas. Your line is now open. Please go ahead. ...................................................................................... Stephen Klepp, BNP Paribas Yeah, 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. I mean, you have been the primary source, not a sole supplier. Do you see that the second source of canopy, particularly for the F35, 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 regards to the free cash flow and the target of £600m. I mean, can you help us a little bit with the direction of travel over the next years? I mean, we understand the drivers, I think. But can you help us as well with a quantification of the direction of travel for what would except - ‘27, ‘28, 29? Is it V-shaped, U-shaped, S-shaped, linear? I don't know. I'll leave that to you. And then the last point. I mean, 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? ...................................................................................... Peter Dilnot, Chief Executive Officer Maybe I'll start with the last question, if I may, because in terms of the share buybacks, it's historic, 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. And if you think about staying within a guidance range of the leverage that we have, we step 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 was a good use of our capital to do that and a very good signal about, as I say, that confidence in our cash trajectory. So that remains absolutely the case. And 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. But 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. And so 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. So that hopefully gives you the context. I think as it relates to the £600m, again, I'll sort of give a view there, you may or may not want to sort of add to that, Ross. But 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've seen. We've talked about the build rates, the aftermarket going through. And the RRSPs would also – there'll be more of an uptick as we get the new engines coming through. The big inflexion point is the one that we've just talked about and Ben asked about, which is the GTF. And 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. So 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. I mean, the only other factor, of course, is what we've got as it relates to Garden Grove, which we'll come back and guide on that. And then finally, on the Garden Grove side, look, we are a cornerstone provider to the F35. I think that's evident from the fact that the US Government have invested $150m alongside us to

double our capacity. We've got proprietary capability, which includes in particular not just the acrylic production, but also coating. And 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 doesn't 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. So the key thing is how we get this site up and running again safely and in a timely manner. And frankly, the US Government are providing outstanding support with us in that regard. ...................................................................................... Stephen Klepp, BNP Paribas Super. Thank you so much. ...................................................................................... Telephone Operator Thank you. The next question is from Joe Orchard of Rothschild & Co Redburn. Your line is now open. Please go ahead. ...................................................................................... Joe Orchard, Rothschild & Co Redburn Yes. Good morning. Thank you for taking my questions. First one is on Garden Grove. And does restarting production there, does that require a single approval from the various regulators who are working together, or do you need separate sign-offs effectively from each regulator individually? So the local health care agency as well as the Environmental Protection Agency, for example. And then my second question is on aftermarket growth within Engines, which was 15%. And I believe that engine OEMs have reported growth a little bit higher than that in the first half of this year. There's sort of 20% to 30% what we've seen elsewhere. Are there any particular reasons why that H1 growth might be a little softer at Melrose and within Engines? ...................................................................................... Peter Dilnot, Chief Executive Officer So 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. But 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. ...................................................................................... Joe Orchard, Rothschild & Co Redburn Okay, thank you. Very clear. Thanks. ...................................................................................... Telephone Operator Thank you. The next question is from Charles Armitage of Citi. Your line is now open. Please go ahead. ...................................................................................... Charles Armitage, Citi Yes, good morning. Garden Grove again. Can I just sort of make sure I've got it right? And what I'm trying to do is work out what the bucket of contingent cost might be. So it was five 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? And it seems to me that the potential buckets of contingent costs would be compensation for five days of being mucked around lost earnings or something, required extra oversight, potentially penalties for letting it happen in the first place. But I'm trying to figure out whether there's a path to anyone can claim long-term harm. Any comments on any of that? ...................................................................................... Ross McCluskey, Chief Financial Officer Sure. Let me take that. So good morning. Look, in terms of the incident itself, so if you take the market reports at the time, the estimate is somewhere between 50,000 and 60,000 people were evacuated from the vicinity of the facility over the Memorial Day weekend period. So that in essence is the disruption that has been caused by the incident. And as far as the compensation programme 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 in which were

incurred as part of that. So one example, for instance, would be you know individuals who took out a hotel during that period of evacuation. Obviously, they've incurred out-of-pocket expenses. And 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 in the site as well. And we want to be doing the right thing for them - not just for today, but for tomorrow and the many years thereafter as well. I'm not going to go through the specific parts of potential compensation programme or indeed litigation, because they are live, complex, and multifaceted. But 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. ...................................................................................... Charles Armitage, Citi Okay, thank you. ...................................................................................... Telephone Operator Thank you. The next question is from Ian Douglas-Pennant of UBS. Your line is now open. Please go ahead. ...................................................................................... Ian Douglas-Pennant, UBS Thank you very much. I've got another one on Garden Grove, please, but it's a slightly different angle. Are there any kind of longer-term strategic, I guess, takeaways from this issue? Is there a review of other facilities to make sure that something similar couldn't happen there? And does this have implications to the capex budget going forward? Thank you. ...................................................................................... Peter Dilnot, Chief Executive Officer Ian, thanks for your additional question here. And I welcome the opportunity to address it, actually. The first thing is, as we've outlined, the most important priority for us is safety and ensuring that we operate the right way. And indeed, we're pleased with the performance we've had and the improvements we've driven in this regard demonstrably over the last few years. The other piece I'd say is from a capex perspective, our first priority is always investing in the business. And a good chunk of our capex every year is related to maintenance. And specifically in Garden Grove, actually, we've invested fairly heavily in this site, over £25m over the last few years. So, the point is that we've had an incident here. We need to step back and look at it and learn from it. And indeed, as you'd expect, what we've done immediately is have a review of our processes, anything that's similar across our global estate. That work is complete. But we will redouble our efforts, making sure that we're staying right on top of this.

As we sit here today, what we can say is that we don't expect any major uplift in our capital programmes as a result of this incident, because we operate safely in line with the law and the regulation. This is an unfortunate incident. We can, of course, learn from it and we will learn from it. But I don't think it takes us off course or indeed raises questions more broadly about what we've invested in and the business that we build and how we run it. ...................................................................................... Ian Douglas-Pennant, UBS Thank you very much. ...................................................................................... Telephone Operator Thank you. The next question is from Mark Fielding of RBC. Your line is now open. Please go ahead. ...................................................................................... Mark Fielding, RBC Hi, thank you. Sorry, I feel actually awful just labouring with another Garden Grove question, but I just wanted a couple of clarifications. First one, when we think about the future cash profile, the implication is, with the comments you made on the first half cash, that there was about a £20m working capital unwind benefit. I assume we have to model that reversing as you restart production, just to check that we get in the right place in the future? ...................................................................................... Ross McCluskey, Chief Financial Officer Yeah, that's correct, yes. So there will be a rebuild of WIP and also, you know, typically the canopies in particular that we produce for the F35 are multi-month. Right. So as we get back in to a full kind of new canopy production mode, there will be a build back up again of working capital. Yes. ...................................................................................... Mark Fielding, RBC Perfect. And then in terms of the acrylic, is there any issue with the wider market? I mean, you say you're a key provider around acrylic availability. And I suppose in that context, in the £6m per month cost, can you give some sense of the scale of how - overhead recovery is I assume the big part of that, but how big is the sort of impact of having to buy an acrylic?

...................................................................................... Peter Dilnot, Chief Executive Officer So just in terms of the acrylic market overall, I think it's fair to say in the supply chain and aerospace overall at the moment, things are tight. I think we all know that and it's actually constraining production, not specifically around acrylic, but around many, many factors. So the whole industry is in - across defence and civil is clearly needing to ramp up. And therefore, straightforwardly acrylic does fall into that category of where there is a shortage of capacity if something happens like this. And we are a very significant producer of acrylic to the global market. So what we're doing right now is in conjunction with our customers and we're working very closely with them, if there is acrylic available in the market, we're sourcing that or they are sourcing it, and then we are processing that and we're up and running shipping transparencies to our customers now using inventory that we've either got in or WIP we've got in our own facilities. Of course, we do this at Luton as well here, or where we can do is we buy it from third sources. And that will continue. But the key thing is, in order to make the volumes that we want to and need to for our customers, we do need to get the main facility of making acrylic up in Garden Grove up and running. And that's been our focus. We are working very closely with the regulators. We've got a path forward to do that safely and in a timely manner. And we need to do that in to meet customer demand. We support many different aircraft here, and that's our responsibility going forward. By the way, we're confident that we'll be able to do that and resume production. It's a question of when. Yeah. ...................................................................................... Ross McCluskey, Chief Financial Officer And look when we think about the financial impact in the £6m for the second half of the year monthly based upon the timing of production resumption, there's a few factors going on there. First of all, as you said, from an overhead perspective, you know we have kept all of our team within the site for a number of reasons. One is the right thing to do. And two, it means that we are able to respond very, very quickly as soon as we get MMA production back up and running to get back going again. So you know that's an important consideration. In terms of why we're seeing the full drop through into profit from the £6m impact on revenue, there's two drivers there, one of which is you know the increased costs associated with buying in acrylic from elsewhere. The second aspect is because the mix that we're doing as well in business is changing. Of course, you know as we mentioned, we're moving away from producing new canopies to repairing existing canopies that have been damaged in the past through its life of use. And both of those drivers are having an impact on the £6m. You can imagine commercially, I'm not going to go into the split between the two of those, but that's the key drivers.

...................................................................................... Mark Fielding, RBC 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 2/3, if we include Rolls-Royce, next-gen platforms. I just suppose just 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 we get to the development of that you know next generation engine. ...................................................................................... Peter Dilnot, Chief Executive Officer 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 that our technology is in demand, so we're the global market leader in lightweight structural components and on pretty much all engines that are out there today. And 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 away 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 you know 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 programmes, that's a good place to be. I think that the final point 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 you know at the centre of that, and those decisions, I think, will need to be made towards the back end of this decade. But the key thing I'll 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. ...................................................................................... Mark Fielding, RBC Great. Thank you. ......................................................................................

Telephone Operator Thank you. And the last question today comes from Marie-Ange Riggio of Morgan Stanley. Your line is now open. Please go ahead. ...................................................................................... Marie-Ange Riggio, Morgan Stanley Hi, Peter and Hi, Ross. Thanks for taking the last questions. I'm sorry, I will come back just on the Garden Grove, just a few clarifications on my side. I do understand that the timing is very uncertain because of regulatory approval, but do you have any visibility about, like, meetings dates with authority and regulators that could lead to clearing the production side and so to restart the production? If you can give, like, any details about where are you in your negotiation and is there a milestone that you can share with us just to improve the visibility? So, that's the first question. The second one is just I would like to come back on the potential impact on guidance and the £6m 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 £6m monthly impact as a best case? And the last question is just on the additive fabrication progress. Do you have any colour on your capex plan? Is it still in line with your initial expectation? And do you see any room to move forward the industrialisation phase? Thank you so much. ...................................................................................... Peter Dilnot, Chief Executive Officer So, I'll go first, shall I? So, in terms of the regulator, look, we can't give any further guidance here. 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. So, 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. So, 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. Did you want to get the guidance?

...................................................................................... Ross McCluskey, Chief Financial Officer Yeah, I would. Look, in terms of the guidance and the £6m, 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 you know how we're redeploying the team as well. So, that's our net number for the monthly run rate. ...................................................................................... Peter Dilnot, Chief Executive Officer And then we'll just finish on additive fabrication and I'm pleased to have the opportunity to talk about it because this is a technology, I've alluded to it as it relates to next gen 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 centre market amongst other things. So, 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. And we are undergoing the further development of this technology in terms of its certification and in terms of its industrialisation, 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 £50m in 2029. And we're on track with that. And they say 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're currently buying in a constrained market. So, no change to the guidance, but some very encouraging progress as we've announced today and in recent press releases. ...................................................................................... Marie-Ange Riggio, Morgan Stanley Thank you very much. ...................................................................................... Telephone Operator Thank you. And with that, this concludes today's Melrose Half Year Results call. Thank you all for joining. Have a great weekend and you may now disconnect your lines. ......................................................................................

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