FY upgrades: We upgrade our FY19E adj. EBIT by 2%, to £43.8m. Sensors & Information benefited from strong trading in the year, ahead of investment planned for FY20. Operational management has improved; given that the period end was yesterday, financial management has also clearly improved vs history, which should inspire greater confidence. We upgrade FY19E adj. EPS by 9%, driven by the underlying operating improvement combined with lower interest from improved intra-period net debt volatility and lower tax due to the geographical mix of profits. Net debt materially better: Improved cash generation, better working capital management and timing of investment, as well as lower-than-expected exceptionals, have resulted in FY19 net debt of £76m, vs our estimate of £92m. We upgrade FY20E net debt by £9m, as approximately half of the FY19E improvement is due to the timing of capex that will now fall next year. This overall improvement results in a FY20E net debt/EBITDA of 1.1x. AVCAD contract milestone: Chemring has received a contract award for 75 prototype units under the US DoD’s AVCAD Program of Record to develop a handheld man-portable, battery-operated, aerosol and vapor detector. This is a clear positive signal and removes uncertainty at the early stages of this competitive programme, where Chemring’s contract is worth c.$800m including options over 10 years. Deliveries are expected to commence during FY20 and while not financially material near-term, we see this as an encouraging sign of progress, de-risking assumptions and improving visibility. Valuation: Our TP increases to 245p (from 225p). Shares are trading on a FY20E P/E 15x, falling to 14x in FY21E, and EV/EBITDA of 9x falling to 8x. We reiterate our BUY.