Investor Overview

Financial highlights

A strong financial performance, delivering our fifth consecutive year of revenue growth.

Read more in our Annual Report and Accounts 2021.

Read more in our Annual Report and Accounts 2021.

Strategic progress

Our achievements over the last five years:

• c.70% revenue growth, c.40% underlying operating profit growth
• More than doubled our order backlog
• Invested significantly to drive organic growth: LTPA, R&D, Digitisation
• Strategy-led portfolio decisions: Seven acquisitions and three disposals
• Increased international share of revenue from 21% to 33%
• Delivering sustainably and responsibly – 28% reduction in Scope 1 & 2 emissions since FY19

Our ambition for the next five years:

• The same level of growth to deliver >£2bn revenue at stable margins
• Strong Return on Capital Employed
• Investment to drive continued organic growth: LTPA, R&D, Digitisation, ESG
• Continued disciplined acquisition strategy – both in acquisition and delivery
• Significant growth in our international markets, targeting >50% of our revenue from international
• Net Zero plan published and making good progress

Six home and priority markets

By focusing on our core target markets and offerings, we have an addressable market of over £20bn per annum.

The UK, US and Australia are our home countries and collectively represent 90% of our revenue. We also have a significant presence in our three priority countries of Canada, Germany and Belgium.

UK
The March 2021 Integrated Review placed science and technology at the heart of the UK's defence policy, with innovation cited as critical to UK success. Over the next four years, the UK will invest over £6.6bn in research and development to develop next generation and emerging technologies in areas such as cyber, space, directed energy weapons, and advanced high-speed missiles.

As the UK seeks to develop and deploy next generation capabilities faster than their adversaries, we are well positioned to support them in applying mission-led innovation to achieve this. Our unrivalled expertise in Research & Development and Test & Evaluation combined with our recent investment to modernise UK test ranges will help our customers generate and assure new and emerging technologies at pace.

US
The US maintains the largest defence budget worldwide, with the FY21 budget of $741bn, more than the next ten largest countries combined. Despite the impact of COVID-19, the FY22 budget request of $753bn is broadly flat in real terms.

In the US, we are a market leader in robotics, autonomy and advanced sensing solutions, an area of budget growth, delivering value to our customers through the rapid development and deployment of disruptive solutions. We have ambitious growth plans in the US. This is underpinned by a relevant offering with a growing need to provide actionable intelligence into war fighters’ hands quicker and a push to develop and integrate multiple autonomous and semi-autonomous systems as the US seeks to invest in next generation technologies to maintain a technological advantage.

 

Australia
Australia published its Defence Strategic Update and Force Structure Plan in July 2020, placing an increased emphasis on force readiness and capability modernisation. Despite the economic impact of COVID-19, the Defence Strategic Update stated that defence spending would rise to AUD 74bn by 2029-30, from AUD 42bn in 2020-21, with AUD 270bn of investment to modernise defence capabilities over the next decade.

With growing expertise in Test & Evaluation and Engineering Services in Australia and the ability to leverage expertise from across the wider Group, we see many opportunities to support the Australian forces in modernising sovereign defence capabilities as they seek to deter adversaries and maintain stability in the region.

Other international markets
In order to achieve our ambition of growing international revenue to more than 50% of Group revenue, we aim to drive growth in our three home countries and in our three priority countries of Canada, Germany and Belgium. Leveraging Group-wide capabilities is a critical part of our international growth strategy which supports allies in developing sovereign defence capabilities.

Six distinctive offerings

We focus on partnering with our customers, to deliver mission-led innovation through the six distinctive offerings shown below.

We optimise our capabilities internally, through leveraging our technology and engineering solutions globally; so that we can maximise growth opportunities externally, through single routes to market in six home and priority countries. By applying this operating model, we are scaling our company and accelerating our global growth.

An example of how this approach is driving growth from our distinctive offering of test & evaluation: In the UK we committed £400m of capital investment to modernise the LTPA’s key capabilities.

• These capabilities delivered Formidable Shield 2021, NATO’s biggest air defence training exercise, testing our response to the world’s most challenging ballistic missile threats.
• Our Australian business has leveraged these world-class skills to build local capability and win new contracts to design, build and operate a new unmanned air systems test range in Queensland, shown in the middle left picture above.
• Based on this success, we have chosen to invest $8m to create a sovereign engineering and integration centre in Australia, which will leverage our target & robotic capabilities from Canada, the UK and the US to drive further growth.

Read more in our Annual Report and Accounts 2021.

A unique investment case

By focusing on our customer's needs and evaluating all investment opportunities with the same rigour we aim to deliver sustainable and attractive returns to shareholders.

Our investment case is underpinned by five key attributes:

Read more in our Annual Report and Accounts 2021.