Strong order intake: as of 30 September 2022, the order book was £678m (30 April 2022: £488m), with an FX tailwind of £40m arising from the strong US$, up £150m or a 31% increase on a constant currency basis since the interims. Order cover for FY23 is building strongly, with Countermeasures & Energetics having 93% expected revenue cover while the shorter-cycle Sensors & Information sector is at a healthy 60% (divisional details on page 2). Forecasts underpinned, plus upside potential from FX & tax: We leave our forecasts unchanged; however, current FX rates, particularly US$, provide positive tailwinds to our forecast horizon. This is more pronounced in the medium-term given that the order book for Countermeasures & Energetics spans out c.18 months and hedges are positioned at c.$1.30. There is also a potential UK tax tailwind with rates not increasing to 25%; this could positively impact the Group’s ETR by 1% in FY23 and by 2% in FY24 and beyond – we note that one third of Group profits are generated in the UK. Balance sheet flexibility: Net debt/EBITDA was <0.5x through the year and no material impact is expected from increasing rates. Management has built a strong balance sheet, a premium in a leverage-adverse market, providing optionality for selective M&A (with a c.£160m facility secured to Dec 2024). Our view: This is a positive update. The order book growth provides strong visibility and further evidence that management are executing in a difficult operational environment. Longer-term potential remains, particularly with current geo-political tension. A strong balance sheet and scarcity value (a mid-teens margin, quality defensive, with strong cash conversion), combined with the shift in the NATO defence outlook allows confidence in the equity story. Our 430p TP implies >40% upside.