FY19A adj. EPS 50.8p (45.8p excl. one-off tax benefit vs cons. 45.3p) Revenue of £20,109m; in line with consensus (£19,825m); representing CER growth + 7%. Adj. EBITA of £2,117m; in line with cons. (£2,097m) / INVe (£2047m); adj. EBITA margin of 10.5% (INVe 10.5%). Adj. EPS of 45.8p; in line with cons. (45.3p) / INVe (45.0p) (excludes one-off tax benefit at 5p/share). Final dividend of 13.8 p/share; total 23.2p/share for the year, a 5% increase vs FY18. Net debt £743m vs INVe £919m (excl. acquisitions); aided by working capital inflows: FCF £850m vs INVe £746m. Key highlights Electronic Systems posted a strong performance, with margins the highest in some years at 15.5% (INVe 15%), highlights include c.£566m of production contracts on F-35, c.£302m of APKWS. Order cover at 70% (vs 70%). US backlog grew 12%, representing a book-to-bill of 1.12x. New pension deficit recovery plan: £1bn, one-off, debt-funded payment. Ongoing funding in line with existing commitments. Outlook: No changes expected to consensus estimates 2020 adj. EPS expected to grow mid-single digits (assuming $1.30/GBP): INVe: +3.5% to 47.3p, our unchanged estimate. The medium-term objective for FCF has been evolved: £3.5bn-3-8bn in 3 years 2020-22, with c.£1bn expected in 2020. Our view Contract wins in recent years have improved visibility and execution is improving – driving positive earnings and cash momentum – we forecast an adj. EPS CAGR 2019-23E +4% (vs 2015-18 +2%); and c.£3.9bn of FCF cumulative 2020-22E. Our forecasts currently exclude the two acquisitions announced 20 Jan that came free as a result of the Raytheon-UTC merger regulatory process – both are high-quality and build on strength in Electronic Systems to offer upside from synergies. Valuation: CY20E P/E 13.5x falling to 13x in CY21E, EV/EBITDA 8.6x falling to 8.3x; CY20E DPS yield 3.8%. Results presentation at 0900 today: webcast at investors.baesystems.com See table overleaf for divisional variance.