FY20 earnings modestly better, a dividend for FY19 and order backlog to >£46bn. H1 trading has delivered £895m of EBITA, a 10% YoY decline, on sales that increased by 4% on a constant currency basis to £9.9bn; in line with expectations given the pre-close update. An underlying operating margin of 9.0% (1H19 10.6%) reflects inefficiencies due to COVID-19 restrictions. FY20 earnings are now expected to be a mid-single digit percentage lower than in 2019 (we have -7%) on slightly lower tax and a 1.25 cable rate. The directors have declared an interim dividend of 13.8p per share in respect of the year ended 31 December 2019, payable in September, being the value of the dividend proposed but subsequently deferred earlier in the year. In addition, an unchanged interim dividend of 9.4p is declared. In 2020 the Group now expects free cash flow, excluding the £1bn pension payment, to be approximately £800m for the full year, close to original guidance allowing for the lower earnings (we have it at £848m). The US Radios and Military GPS acquisitions are on track. The Group’s share of the pre-tax accounting net post-employment benefits deficit increased to £6.0bn (31 December 2019 £4.5bn). The increase was mainly driven by the impact of lower discount rates which increased liabilities, partially offset by contributions paid (including the Group’s injection of £1bn into the scheme). The deficit funding programme will complete in 2021 with the final £250m payment, ahead of the next triennial valuation exercise. Encouragingly, the order backlog has increased to £46.1bn. Trading on multi-year, long-term contracts in the Air sector was offset by a 7% increase in the US business and a foreign exchange benefit. Valuation The shares are trading on a CY21E P/E of c.10x falling to c.9x, and EV/EBITDA of c.7x falling to c.6x, with a dividend yield of c.5%. Our target price is unchanged at 600p. Buy reiterated.