Review of performance for 2022

Managing risk and uncertainty Principal Risks The Group Risk Register prioritises material risks to the delivery of BMT’s strategy, see table overleaf. BMT considers all material risks and while some are outside the immediate control of the company, over the last couple of years we have demonstrated resilience in responding to significant market shocks including COVID-19, the breakout of war in Europe, and volatile economic and political conditions in our core markets, With many governments nursing high debt levels, we understand that the timing and scope of government and commercial spending may be impacted. While we remain heavily weighted towards the UK Defence market, we continue to enjoy the status of critical engineering delivery partner (EDP) due to our proven track record on delivery and the quality of our designs. We balance the UK market and industry concentration risk through maintaining a global footprint, working across several sectors (including commercial shipping, critical infrastructure and environment), providing a diverse portfolio of services and capabilities. We have accelerated our digital transformation, supported by new technologies. We are also transforming our organisational structure to ensure we maximise utilisation across our wide range of capabilities, and ensure more consistent governance processes. Attracting and retaining the best people is essential to ensure we can deliver. We have invested in Talent Acquisition resources and campaigns. Our Global Mobility programme and Careers Map initiatives enable opportunities across the organisation, and we are investing in digital skills training to help our employees optimise a range of tools. We continue to strengthen our project risk assessment process, growing our technical assurance capabilities and processes to help mitigate the risk of committing to onerous contracts. Through the development of a Global Project Management Office (PMO) we will ensure more consistent application of project management processes across our portfolio. Being debt free, we put a significant focus on cashflow and carefully manage our financial exposures, including longterm liabilities, through pro-active funding strategies. We work closely with our Pension Trustees to ensure we meet our commitments, and support the appointment of a Fiduciary Investment Manager to optimise returns in a volatile market. Emerging Risks Emerging risks and opportunities are those that are developing or are changing, with the full impact being evaluated. We expect that the global economic downturn with recession or sluggish growth in major economies including the UK, continued geopolitical tensions, volatility in energy supplies, and persistent inflationary headwinds will drive investment decisions by governments and companies. Therefore, we expect a greater focus on national security, on energy resilience, and on cost balanced with the environmental impacts. We will continue working with key governmental agencies and companies to mitigate the risks in these areas, and we have several innovation projects and campaigns targeted to support our customers and stakeholders address these priorities. Notwithstanding the economic challenges, climate change resulting in more extreme weather events and national commitments to net zero goals will continue to influence economic policy in the medium to long-term. We continue to assess our ESG risks and opportunities to reduce our carbon footprint. We use our broad engineering expertise to help our customers reduce their environmental impacts as they transition to clean energy. Risk Appetite To achieve our growth strategy, we take a balanced approach to risk. In areas including pipeline growth, organisational and digital transformation, and innovation we are willing to accept a higher level of risk and return. In matters of compliance, ethics, cybersecurity, financial management, and safety - our risk appetite remains low, with a more cautious approach to management. The Board has ultimate responsibility for determining the nature and extent of the risks that the business is willing to take and that the risks are effectively managed across the group. The risk management process continues to evolve and strengthen in line with our governance structures. 33