The gyro-magnetic compass was designed to combine the best aspects of the gyrocompass and the magnetic compass, by using a gyro-control to smooth out perturbations of the magnetic system, in particular those arising during fast turns and complicated manoeuvrings. Initially, this had been successfully tried in aircraft and was then applied to marine compasses in the 1950s. These trials resulted in the development of the AGM 5 by 1952. This compass was an immediate success and was widely fitted as the standard compass on ships.

The remaining parts of the system comprise a binnacle and compass, gyro unit, control console, a ribbon repeater with dimmer unit, two supply switches and some cables. Beneath the removable hood of the binnacle is a compass with a card of 5 inch (127 mm) diameter that is marked in points and in degrees (0-360).