Annual Report 2023 Summary
Applying advanced technology to protect and secure
Chairman’s statement
Record performance, slightly above market expectations, robust cash and a record closing order book with strong revenue cover for the coming financial year.
Highlights presentation video
Financial highlights FY2022/23
Adjusted operating profit (£m)
Order intake (£m)
Net funds / (debt) (£m)
Total revenue (£m)
Operational highlights FY2022/23
- Record adjusted operating profit of £19.1m (2022: £15.5m) on record revenue of £182.7m (2022: £137.8m).
- An especially strong performance from within the Communications and Intelligence division, driven by significant uplift in UK MOD activity at MCL.
- Improved performance within Sensors and Effectors, with Chess delivering an improved performance.
- Strong order intake of £220.9m (2022: £186.4m) leading to a record closing order book of £329.1m (2022: £291.0m). That underpins a record 80% of current market revenue expectations for 2023/24 (78% equivalent figure for 2022/23).
- Dividend increased by 10%.
- Net funds higher than market expectations at £15.6m (2022: £11.0m).
Measuring our progress
Indicates the change in total Group revenue compared with prior years.
Why is it important?
Revenue growth gives a quantified indication of the rate at which the Group’s business activity is expanding over time.
Results
33%
Comment on results
The Group revenue was markedly up on last year, increasing from £137.8m to £182.7m with strong contribution from both divisions. At Communications and Intelligence this was driven by the strong performance at MCL with higher UK MOD activity. At Sensors and Effectors this was mostly a result of increased deliveries by Chess.
Change in Group operating profit before exceptional items, amortisation of other intangible assets, research and development expenditure credits and non-trading exchange differences, including marking forward exchange contracts to market.
Why is it important?
The adjusted operating profit trend provides an indication of whether additional revenue is being gained without profit margins being compromised and whether any acquisitions are value enhancing.
Results
23%
Comment on results
On the back of the much stronger revenue performance, the trading result of the Group improved significantly.
Order book visibility, based on expected revenue during the year to come, provides a measure of confidence in the likelihood of achievement of future forecasts.
Why is it important?
Order book visibility, based on expected revenue during the year to come, provides a measure of confidence in the likelihood of achievement of future forecasts.
Results
80%
Comment on results
This is a further improvement on the last two years, reflecting the continuing progress in the size and longevity of the order book, with orders now stretching out to 2032. The order book cover for 2023/24 had further increased to over 90% by mid-July 2023.
Annual change in earnings per share, before exceptional items, amortisation of other intangible assets and non-trading exchange differences including marking forward exchange contracts to market, all net of tax.
Why is it important?
Change in adjusted earnings per share is an absolute measure of the Board’s management of the Group’s return to shareholders (net of tax and interest).
Results
17%
Comment on results
The 17% increase compares to a 23% increase in the adjusted operating profit, partly offset by slightly higher net interest charge and higher tax rate.
Net cash generated from operations (net of interest and net capital expenditure) before tax as compared to the profit before tax and interest, excluding amortisation of other intangible assets over a rolling four-year period.
Why is it important?
Operating cash conversion measures the ability of the Group to convert profit into cash.
Results
87%
Comment on results
The conversion in the last year maintains a high conversion ratio and was as a result of strong cash control in Communications and Intelligence and a marked turnaround at Chess within the Sensors and Effectors division. Some of this improvement was partly offset by inventory build in both of our overseas subsidiaries, at EID due to the timing of deliveries and at ELAC for its Italian sonar project.
Total sales to markets outside the UK, Germany and Portugal.
Why is it important?
International markets are important to the organic growth of the business and reduce our dependence on domestic markets.
Results
£63.9m
Comment on results
The increase in 2023 export revenue is driven by higher export sales in Sensors and Effectors, especially for land environment customers of Chess and naval customers of SEA.
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Annual report 2023
August 2023
