2. INTRODUCTION 4
2.1 Definitions 5
2.2 Methodology 5
2.3 Abbreviations 5
2.4 Political 7
2.5 Market Positioning 8
2.6 UK Economy 9
2.7 Market Factors 12
2.7.1 Defence White Papers and Reviews 12

3. MARKET SIZE AND TRENDS 16
3.1 Chapter Summary 17
3.2 Market Size 17
3.3 PPP/PFI 25
3.4 Market Segmentation 27
3.4.1 Aircraft and Spacecraft Defence Equipment 27
3.4.1.1 Strength of the Royal AirForce 32
3.4.2 Sea Defence Equipment 33
3.4.2.1 Strength of the UK Royal Navy 36
3.4.3 Land Defence Equipment 37
3.4.3.1 Strength of the British Army 40
3.5 Market Trends 41

4. SUPPLY SOURCES 45
4.1 Chapter Summary 46
4.2 Production 46
4.3 Imports 47
4.4 Exports 49

5. INDUSTRY STRUCTURE 54
5.1 Chapter Summary 55
5.2 Industry Development 55
5.3 Structure by Employment 58
5.4 Structure by Turnover 61
5.5 Defence Contracts 63
5.6 Company Profiles 64
5.6.1 AgustaWestland International 65
5.6.2 BAE Systems 67
5.6.2.1 BAE Systems Land Systems (Weapons & Vehicles) 71
5.6.3 GKN 74
5.6.3.1 GKN Aerospace Services 75
5.6.4 Westland Helicopters 77
5.6.5 Thales UK 79
5.6.6 Rolls-Royce 81
5.6.7 Smiths Group 85

6. FORECAST 88
6.1 Chapter Summary 89
6.2 Market Size 89
6.3 Industry 95

7. FURTHER SOURCES & CONTACTS 97
7.1 Trade Associations 98
7.2 Trade Magazines 98
7.3 Trade Exhibitions 100

LIST OF TABLES

1: The UK Defence Departmental Expenditure Limits, 2004/2005-2008/09 19
2: Total Managed Expenditure, by Category, 2004/2005-2008/09 19
3: DEL, by Government Department, 2004/2005-2008/09 21
4: Planned MoD Capital Employed, 2004/05-2007/08 22
5: Defence Equipment Expenditure Outturn in the UK, 2003/04-2007/08 22
7: MoD Payments on PFI Projects: 2008/2009 26
8: MoD Payments on PFI Projects over £25 million: 2009/2010 27
9: Defence Aircraft and Spacecraft Expenditure Outturn in the UK, 2003/04-2007/08 28
10: Number of Service Aircraft Accidents, by Type of Aircraft, 1996-2006 29
11: Royal Air Force Defence Output Cost, 2007/08 and 2008/09 31
12: Total Strength of UK Royal Air Force, by Gender, 2005-2009 32
13: % of Royal Air Force Officers, by Gender, 2005-2009 32
14: Defence Shipbuilding and Repair Expenditure Outturn in the UK, 2003/04-2007/08 33
15: Naval Service Defence Output Cost, 2007/08 and 2008/09 35
16: Total Strength of UK Naval Service, by Gender, 2005-2009 36
17: % of Navy Officers, by Gender, 2005-2009 36
18: Defence Land Equipment Expenditure Outturn in the UK, 2003/04-2007/08 37
19: Defence Armoured Fighting Vehicles, 2008 39
20: Army Defence Output, 2007/08 and 2008/09 40
21: Total Strength of UK Army Service, by Gender, 2005-2009 41
22: % of Army Officers, by Gender, 2005-2009 41
23: Defence Spending 2009 43
24: Intramural and Extramural Gross Expenditure on MoD Research & Development,
2003/04- 2007/2008 44
25: UK Imports of Defence Equipment, 2003-2007 48
26: UK Imports of Defence Equipment, by Type, 2003-2007 48
27: UK Exports of Defence Equipment, 2003-2007 51
28: Identified Orders of UK Export Defence Equipment and Services, by Type, 2004-2008 51
29: UK Exports of Defence Equipment, by Type, 2003-2007 52
30: Analysis of the Changes in the Structure of the Weapons and Ammunition Industry,
2004-2008 56
31: Analysis of the Changes in the Structure of the Weapons and Ammunition Industry,
2009 57
32: Analysis of the Changes in the Structure of the Air, Spacecraft and Related
Machinery Industry, 2009 57
33: Analysis of the Changes in the Structure of the Shipbuilding and Repairing Industry,
2004-2008 58
34: Analysis of the Changes in the Structure of the Ship and Floating Structures Industry,
2009 58
35: Analysis of the Employment Structure of the Weapons and Ammunition Manufacturing Industry, 2007 and 2008 59
36: Analysis of the Employment Structure of the Weapons and Ammunition Manufacturing Industry, 2009 59
37: Analysis of the Employment Structure of Air, Spacecraft and Related Machinery
Industry, 2009 60
38: Analysis of the Employment Structure of the Shipbuilding and Repair Industry, 2007
and 2008 60
39: Analysis of the Employment Structure of Building of Ships and Floating Structures
Industry, 2009 61
40: Analysis of the Financial Structure of the Weapons and Ammunition Manufacturing
Industry, 2007 and 2008 61
41: Analysis of the Financial Structure of the Weapons and Ammunition Manufacturing
Industry, 2009 62
42: Analysis of the Financial Structure of the Air, Spacecraft and Related Machinery Manufacturing Industry, 2009 62
43: Analysis of the Financial Structure of the Shipbuilding and Repair Industry, 2007 and
2008 63
44: Analysis of the Financial Structure of Building of Ships and Floating Structures Manufacturing Industry, 2009 63
45: Financial Analysis of AgustaWestland International, 2004-2008 66
46: Key Financial Ratios for AgustaWestland International, 2004-2008 67
47: Financial Analysis of BAE Systems, 2005-2009 70
48: Turnover Analysis of BAE Systems, by Business Segment, 2008 and 2009 71
49: Key Financial Ratios for BAE Systems, 2005-2009 71
50: Financial Analysis of BAE Systems Land Systems (Weapons & Vehicles), 2004-2008 73
51: Key Financial Ratios for BAE Systems Land Systems (Weapons & Vehicles),
2004-2008 73
52: Financial Analysis of GKN, 2005-2009 75
53: Key Financial Ratios for GKN, 2005-2009 75
54: Financial Analysis of GKN Aerospace Services, 2003-2007 77
56: Financial Analysis of Westland Helicopters, 2004-2008 78
57: Key Financial Ratios for Westland Helicopters, 2004-2008 79
58: Financial Analysis of Thales UK, 2004-2008 81
59: Key Financial Ratios for Thales UK, 2004-2008 81
60: Financial Analysis of Rolls-Royce, 2005-2009 83
61: Financial Analysis of Rolls-Royce, by Business Segment, 2008 and 2009 84
62: Key Financial Ratios for Rolls-Royce, 2005-2009 84
63: Financial Analysis of Smiths Group, 2005-2009 86
64: Turnover Analysis of Smiths Group, by Business Segment, 2008 and 2009 87
65: Key Financial Ratios for Smiths Group, 2005-2009 87
66: Forecast Total Managed Expenditure, by Category, 2009/10-2013/14 91
67: Forecast UK DEL on Defence, 2009/10-2013/14 92
68: Major Equipment Projects of Post Main Gate Project, 2008 93
69: Estimated Payment under MoD PFI Contracts, based on Signed Defence Deals as
of February 2010 95