2020 Full-year results video still
full-year results
Thanks to the outstanding efforts of our employees and close cooperation with our customers, suppliers and trades unions, we have delivered a strong set of results against a challenging backdrop of the global pandemic. Throughout 2020, we focused on keeping our people safe and supporting our communities, whilst continuing to deliver for our customers. In 2021, we will continue to drive operational performance, progress our sustainability agenda and invest in high-end discriminating technologies to meet our customers’ priorities, which will ensure we are well positioned to grow the business and contribute to the economic prosperity of the countries in which we operate. Charles Woodburn, Chief Executive
Financial performance measures as defined by the Group
  2020 2019
Sales  £20,862m £20,109m
Underlying EBITA  £2,132m £2,117m

Underlying earnings per share
excluding one-off tax benefit (2019 only)

46.8p 45.8p
including one-off tax benefit (2019 only) 46.8p 50.8p
Free cash flow
excluding £1bn pension contribution (2020 only)
£1,367m £850m
including £1bn pension contribution (2020 only) £367m £850m
Net debt  £(2,718)m £(743)m
Order intake £20,915m £18,447m
Order backlog £45.2bn £45.4bn
Post-employment benefits and dividend
  2020 2019
Dividend per share  23.7p 9.4p
Dividend per share - in respect of 2019 performance 13.8p -
Group’s share of the net post-employment benefits deficit £(4.5)bn £(4.5)bn
Financial performance measures defined in IFRS
  2020 2019
Revenue £19,277m £18,305m
Operating profit £1,930m £1,899m
Basic earnings per share 40.7p 46.4p
Net cash flow from operating activities £1,166m £1,597m
Order book £36.3bn £37.2bn

Our financial highlights

Financial performance measures as defined by the Group
  • Sales increased by £0.8bn to £20.9bn, a 4% increase, excluding the impact of currency translation.
  • Underlying EBITA increased to £2,132m, a 1% increase on a constant currency basis.
  • Underlying earnings per share increased by 2% to 46.8p, excluding the impact of the prior year one off tax benefit.
  • Free cash flow was £367m after the impact of the £1bn contribution into the UK pension scheme. Excluding this contribution free cash flow was £1.4bn.
  • Net debt increased to £2,718m, following the £1bn bond issuance to fund the UK pension scheme, and the $2.2bn (£1.7bn) acquisitions of the Airborne Tactical Radios and Military Global Positioning System businesses.
  • Order intake increased to £20.9bn.
  • Order backlog of £45.2bn.
Financial performance measures defined in IFRS
  • Revenue increased by £1.0bn to £19.3bn.
  • Operating profit increased by £31m to £1,930m, including the non-recurring credit of £19m (2019 £27m charge).
  • Basic earnings per share decreased by 12% to 40.7p. 2019 included the impact of the one-off tax benefit of £161m.
  • Net cash flow from operating activities decreased by £431m to £1,166m, including the effect of the £1bn contribution to the UK pension scheme.
  • Order book of £36.3bn (2019 £37.2bn).
Post-employment benefits and dividend
  • Group’s share of the pre-tax accounting net post-employment benefits deficit was in line with the prior year at £4.5bn.
  • Final dividend of 14.3p per share making a total of 23.7p per share in respect of the year ending 31 December 2020. The total of 37.5p per share for the year includes an interim dividend of 13.8p per share in respect of the year ended 31 December 2019, which was originally proposed as a 2019 final dividend but subsequently deferred in the light of the COVID-19 pandemic.


Operational and strategic key points

  • Contract secured to support the production of 38 Typhoon aircraft for the German Air Force
  • Qatar Typhoon and Hawk aircraft programme met its contractual milestones in the year
  • F-35 programme Lots 12 to 14 contract definitised following price agreement. 126 rear fuselage assemblies completed in the year, below the contracted level as a result of COVID-19 disruption. Ramp up to full-rate production in 2021
  • Governments of Italy and Sweden committed to working with the UK to develop next-generation combat air capability
  • A further six Hawk aircraft assembled in Saudi Arabia were accepted and entered service in Kingdom
  • The design and production readiness phase of the Hunter Class Frigate programme for the Royal Australian Navy continues to make good progress
  • Sale of Advanced Electronics Company to Saudi Arabian Military Industries completed in February 2021
  • The fourth Astute Class submarine, HMS Audacious, left our Barrow site in April to begin sea trials with the Royal Navy
  • Construction of the first two Dreadnought Class submarines continues to advance
  • The build phase of the River Class Offshore Patrol Vessel programme is now complete, with the fourth ship, HMS Tamar, handed over to the Royal Navy in March, and HMS Spey, the fifth and final ship, handed over in October
  • Construction of the first two City Class Type 26 frigates for the Royal Navy continues to progress
  • Acquisition of Techmodal, a UK data consultancy and digital services business, completed in August
  • Announcement of a 15-year agreement with the UK Ministry of Defence to supply the Next Generation Munitions Solution between 2023 and 2037
  • RBSL has secured its share of the Mechanised Infantry Vehicle Boxer programme
Electronic Systems
  • Airborne Tactical Radios and Military Global Positioning System acquisitions completed, performing well and integrations are progressing
  • F-35 electronic warfare systems for Lot 12 completed, surpassing cumulative programme deliveries of 800 electronic warfare systems as of year end
  • Successful demonstration of APKWS® ground-launch capability
  • Terminal High Altitude Area Defense (THAAD) seeker executing at full-rate production, and receipt of additional order to design and manufacture next-generation infrared seekers
  • Continued classified work
  • Demand in the commercial business lines of Controls & Avionics Solutions and Power & Propulsion Solutions has been negatively impacted by COVID-19
Platforms & Services (US)
  • Delivery of the first production Armored Multi-Purpose Vehicles took place in the second half; one of each of the five variants delivered by year end
  • Amphibious Combat Vehicle programme moved to full-rate production phase after Initial Operational Capability declared
  • Delivery of more than 50 production Bradley A4 vehicles
  • New US Navy contract modifications totalling $114m (£83m) for Mk45 Mod 4 upgrades
  • Initial deliveries of Virginia Payload Module tubes completed
  • Ship Repair secured more than $1bn (£0.7bn) in US Navy maintenance and modernisation orders
  • Ordnance Systems received $233m (£170m) in modernisation contracts
  • Contracted to provide five 57Mk3 and ten 40Mk4 naval gun systems for the UK Royal Navy’s Type 31 frigates
  • Operational delays and disruptions related to the COVID-19 pandemic were experienced across manufacturing and shipyard facilities
Cyber & Intelligence
Intelligence & Security
  • US-based Intelligence & Security business continues to maintain its bid pipeline, perform on existing contracts and win new orders. All three businesses delivered a book to bill1 ratio of over one.
  • Awarded a seven-year, $495m (£362m) contract on Instrumentation Range Support Programme
  • Multi-year Indefinite Delivery, Indefinite Quantity contract received to provide electronic hardware and engineering services for a US government customer
  • Our Federated Secure Cloud technology approach and processes are being employed to maintain and secure US Army Cyber Command’s virtual desktop infrastructure
Applied Intelligence
  • Strong order intake, revenue and profitability performance in the core underlying business driven by the Government business unit
  • Significant profit growth year-on-year due to cycling the restructuring of the Technology & Commercial business in 2019
  • Sale of the US-based software-as-a-service business completed in November
1. Ratio of Order intake to Sales.
Guidance for 2021
Whilst the Group is subject to geopolitical and other uncertainties, the following guidance is provided on current expected operational performance.
The guidance is based on the measures used to monitor the underlying financial performance of the Group. Reconciliations from these measures to the financial performance measures defined in International Financial Reporting Standards for 2020 are provided in the Group financial review on pages 14 to 19.
Group guidance
With a strong year behind us against a challenging backdrop of the global pandemic, we look forward to another year of top line growth, with a year of margin expansion and good cash flow, all reflected in our Group guidance. Guidance is provided on the basis of an exchange rate of $1.35:£1.
For the year ending 31 December 2021, the Group’s sales are expected to grow in the 3% to 5% range over 2020. Excluding the impact of foreign exchange, we expect growth to be between 5% to 7%.
Sales growth is expected in Air and Electronic Systems, including the full year impact of the acquisitions, partially offset by continued weakness in commercial aerospace revenues. Approximately 80% of expected sales is already in Order backlog.
Underlying EBITA is expected to increase in the range of 6% to 8%. Excluding the impact of foreign exchange, we anticipate growth in excess of 10%, with improved performance in Platforms & Services (US), continued expansion in Applied Intelligence, and a full year of contribution from the acquisitions in Electronic Systems.
Finance costs are expected to be approximately £270m with an effective tax rate expected to be around 18%, and non-controlling interest expected to be around £85m.
Underlying earnings per share is expected to increase in the range of 3% to 5%. A 10 cent movement in the exchange rate impacts underlying EPS by around 2 pence.
Free cash flow for 2021 is anticipated to be in excess of £1bn, with a three-year target for 2021 to 2023 in excess of £4bn.

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Kristina Anderson
Director, Media Relations
Corporate Communications

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