UK market Whilst the group is subject to uncertainties including the forthcoming general election, guidance is unchanged. The spending round announced in September re-emphasised the UK's commitment to strong defence and security, with a 2.6% real terms increase in the MoD budgets from 2019-20 to 2020-21. Manufacturing on the Type 26 programme continues to increase following cut steel on the second ship in August. US market In the US following the two-year budget agreement that was signed in July, Congress passed a Continuing Resolution for funding through 21 November. The group's US-based portfolio is well aligned to customer priorities and growth areas and the business has continued to grow its backlog. On the Paladin M109A7, the company is meeting the revised delivery plan. International In Saudi Arabia, following the updates in September from the German government regarding export licences, the group continues to work closely with industry partners and the UK government to fulfil contractual support arrangements. The ban on new exports still exists to March 2020, but the agreement to sustain existing contracts has been extended to December 2020. No material changes to consensus expected The group’s outlook for 2019 remains unchanged and continues to target >£3bn of free cash flow over the three-year period 2019-2021. Overall, underlying EPS is expected to grow by a mid-single digit percent. 2019 net debt is to be broadly unchanged from last year. Guidance is provided on current expected operational performance and an exchange rate of US$1.30. Our view Execution is improving, which should drive positive earnings and cash momentum. Contract wins in recent years have improved visibility. The discount to US peers reflects the higher political risk and exposure to Saudi (14% sales). CY19e P/E of 12.8x, falling to 12.1x. CY20e DPS yield of 4.2%, FCF yield of 6.4%.