Britain has reached agreement over the rising cost of providing Saudi Arabia with Typhoon Eurofighter jets, British defence company BAE Systems said on Wednesday.

BAE, working in close co-operation with the British government, signed a 4.5-billion pounds deal in 2007 to supply 72 Eurofighter Typhoon jets to Saudi Arabia.

Nearly half the planes have been delivered, but the contract has faced obstacles over rising costs.

"Both governments have now agreed price escalation terms relating to the Typhoon aircraft under the Salam programme," BAE said in a statement, a day before the company publishes its annual earnings.

BAE, which did not give any precise figures on Wednesday, added that cash settlement was expected to follow the new pricing agreement.

"This is an equitable outcome for all parties," said BAE Systems chief executive Ian King.

"I am pleased that we have been able to conclude this negotiation which builds on our long standing relationship with this much valued customer."

BAE builds the Typhoons in co-operation with Airbus Group and Italian defence group Finmeccanica.

Shares in BAE were trading 0.94-percent higher at 441.7 pence after Wednesday's announcement, while London's benchmark FTSE 100 index was down 0.41 percent to 6,768.01 points in afternoon deals.

The agreement is a boost for BAE after the United Arab Emirates pulled out of talks with the British government to purchase Typhoon Eurofighters last December.

BAE, hit by government cutbacks to military spending, is looking to push on after the collapse in late 2012 of a planned mega-merger with European aerospace giant EADS, before it was renamed Airbus Group.