2008 Preliminary Results Agenda Financial Results Warren Tucker - - PowerPoint PPT Presentation
5 March 2009 The most important thing we build is trust 2008 Preliminary Results Agenda Financial Results Warren Tucker Chief Financial Officer Market Update and Business Overview Allan Cook Chief Executive Q&A 1 2008
The most important thing we build is trust
5 March 2009
5 March 2009 2008 Preliminary Results 1 Cobham plc
5 March 2009 2008 Preliminary Results 2 Cobham plc
Note: See Appendix for definitions, including underlying, used throughout this presentation. * Prior year restated due to SPARTA
40.2%
1,663.9
1,186.6
Orders Received
17.8%
15.42p
13.09p
Underlying Earnings Per Share
18.1%
243.8
206.5
Profit Before taxation
0.1pts
5.7%
5.6%
PV Spend % *
(1.5)pts
17.2%
18.7%
Margin
26.6%
251.6
198.8
Trading Profit
38.2%
1,466.5
1,061.1
Revenue £m £m Growth Year to 31/ 12/ 08 Year to 31/ 12/ 07
5 March 2009 2008 Preliminary Results 3 Cobham plc
0.62 0.30 0.09 1.32 15.42 13.09
8.0 9.0 10.0 11.0 12.0 13.0 14.0 15.0 16.0 17.0 2007 FX Translation FSTA Project Costs FX Transaction Growth 2008
pence
13.1 % at constant translation exchange
2.3% 0.7% 4.7% 10.1%
5 March 2009 2008 Preliminary Results 4 Cobham plc
10.0% 4.95p
4.50p
Dividend per Share (719.2)
77.0
Decrease/ (I ncrease) in Net Debt 51.5% 202.9
133.9
Free Cash Flow from Business 25.0pts 106.1%
81.1%
Operating Cash conversion 66.3% 260.5
156.6
Operating Cash Flow 27.3% 245.6
193.0
Trading Profit (ex. JV) £m £m Growth Year to 31/ 12/ 08 Year to 31/ 12/ 07
* @£= US$1.42. Year end rate £= US$1.44
5 March 2009 2008 Preliminary Results 5 Cobham plc
Year to 31/12/07
Year to 31/ 12/ 08
£m
£m Trading Profit (excluding joint ventures)
193.0
245.6
Depreciation and other movements 33.8 34.5 Decrease/(Increase) in working capital and provisions (27.6) 35.4 Net capital expenditure (42.6) (55.0)
Operating cash flow
156.6
260.5
Taxation paid (23.3) (58.2) Dividends received from joint ventures 3.2 8.9 Other (3.7) (2.2)
Free cash flow
133.9
202.9
Dividends paid (43.8) (52.7) Acquisition payments less disposal proceeds (17.7) (616.6) Movements in funding and exchange movements 4.6 (252.8)
Decrease/ (increase) in net debt
77.0
(719.2)
5 March 2009 2008 Preliminary Results 6 Cobham plc
17.2%
18.7% Margin
26.6% 251.6
198.8
38.2% 1,466.5
1,061.1
Cobham Group
(2.3)
(3.4)
(1.0)
(1.1) Head Office & Other
25.6% 253.9
202.2
38.2% 1,467.5
1,062.2
Operating Divisions
11.2%
11.4% Margin
13.2% 24.8
21.9
15.3% 221.9
192.5 Cobham Aviation Services 18.4%
20.7% Margin
27.1% 229.1
180.3
43.2% 1,245.6
869.7 Technology Divisions
Growth 2008
2007
Growth 2008
2007
£m Trading Profit Revenue
5 March 2009 2008 Preliminary Results 7 Cobham plc
5 March 2009 2008 Preliminary Results 8 Cobham plc
9.6% 17.5% 10.2% (7.2)% 13.9% 8.6% 10.8% 17.1% 8.4% 5.8% 13.2% 10.3%
5 March 2009 2008 Preliminary Results 9 Cobham plc
Note: Intercompany eliminations not shown.
18.4%
20.7% Margin
229.1
180.3
10.3% 1,245.6
869.7
Technology Divisions
17.3%
20.6% Margin
52.2
54.1
8.6% 302.0
262.8 Mission Systems 19.9%
24.9% Margin
105.2
74.8
10.8% 529.3
299.9 Defence Systems 16.6%
15.9% Margin
71.7
51.9
10.2% 432.8
326.9 Avionics and Surveillance
2008
2007
Organic Growth 2008
2007
£m Trading Profit Revenue
5 March 2009 2008 Preliminary Results 10 Cobham plc
Dollar/Euro exposure predominantly hedged for 2009 & 10 with $58m @ 1.45
5 March 2009 2008 Preliminary Results 11 Cobham plc
USA 55% UK 10% Australia 10% RoW 10% Mainland Europe 15%
5 March 2009 2008 Preliminary Results 12 Cobham plc
Aviation Services 15% Other Communication 11% Commercial/ GA Aerospace 13% Non US Military/ Government 17% US Military/ Government 44%
5 March 2009 2008 Preliminary Results 13 Cobham plc
H1 2 0 0 8 H2
$38m $240m £13m + £3m contingent $372m + $35m deferred $425m $26m USA USA UK USA USA USA Fixed wing autopilots Electronic warfare technology and subsystems Specialist cellular communications for intelligence Intelligence, scientific, systems engineering and technical assistance services RF, Microwave components & sub systems Digital equipment, including video surveillance and high definition and wireless video technologies Avionics and Surveillance Defence Systems Avionics and Surveillance Defence Systems Defence Systems Avionics and Surveillance S-TEC (January) Sensor & Antenna Systems Lansdale (February) MMI Research (April) SPARTA (June) M/A-COM (September) GMS (October)
Consideration Location Activity Division Company
5 March 2009 2008 Preliminary Results 14 Cobham plc
5 March 2009 2008 Preliminary Results 15 Cobham plc
5 March 2009 2008 Preliminary Results 16 Cobham plc
– Core defence US$664bn – Homeland security US$43bn – National security
2010, then ‘flat’
recapitalisation
important to national security
intelligence and defence areas
upgrades with technology
driver for Cobham
5 March 2009 2008 Preliminary Results 17 Cobham plc
5 March 2009 2008 Preliminary Results 18 Cobham plc
5 March 2009 2008 Preliminary Results 19 Cobham plc
$0.2m AMRAAM Missile $0.2m T50 $0.2m A380
$1m V-22 $2m Global Hawk
$1.5m Typhoon 2008 $2.3m $1m Current Ship Set Value US$ F/ A-18 F-35 2020+ 2020 2018 2016 2014 2012 2010 Platform/ Programme
I n order book Service life US$200m over aircraft life VIS-X US$1.5bn over programme life VIC-3
5 March 2009 2008 Preliminary Results 20 Cobham plc
5 March 2009 2008 Preliminary Results 21 Cobham plc
– US$1bn order for six C-130J tactical transporters – US$2.1bn agreement for eight Boeing P-8I maritime patrol aircraft – US$10bn MMRCA tender to replace MiG-21 – Follow on order for BAE Systems Hawk AJT – AgustaWestland VVIP AW-101 – Refuelling
– Digital Universal Control Harness vehicle intercoms for 7,000 vehicles – Future Infantry Solider as a System: 350,000 soldiers – Mine detection systems (hand held & vehicle mounted)
– Homeland security, space, satellite, SATCOM/VSAT, slip rings for aviation and wind farms
– Working with Hindustan Aeronautics, Bharat Electronics, Tata and Alpha Design Technologies
Between US$750k & US$3m per aircraft Between US$10m & US$150m Up to US$10m in 2010 Contract values to Cobham
5 March 2009 2008 Preliminary Results 22 Cobham plc
Microwave Assemblies MMI Cs Components I ntegrated Subsystems I ntegrated Microwave Assemblies (I MAs) Line Replaceable Units (LRU’s) Antenna Subsystems T/ R Modules Broadband High Power Transmit Antennas & Arrays Broadband High Power Amplifier Subsystems
5 March 2009 2008 Preliminary Results 23 Cobham plc
5 March 2009 2008 Preliminary Results 24 Cobham plc
5 March 2009 2008 Preliminary Results 25 Cobham plc
5 March 2009 2008 Preliminary Results 26 Cobham plc
13 29
2009 Dec Nov Oct Sep Aug Jul Jun May Apr Mar Feb Jan
4 6 6 5
I nterim s AGM & I nterim Managem ent Statem ent I nterim Managem ent Statem ent Prelim s Cobham Sensor System s Cobham Analytic Solutions ( SPARTA)
5 March 2009 2008 Preliminary Results 27 Cobham plc SAS Lansdale, SPARTA M/ A-COM
High Low Building Scale I n Top 3 Vehicle Com m unications Air Refuelling C4 I SR* SATCOM Avionics Surveillance Mission Equipm ent Aviation Services
Size of bubble represents Cobham revenue * Radar, EW, ISR, Missiles, CNI
Market Grow th Life Support
Avionics & Surveillance Mission System s Defence System s
MMI Research, GMS A3 5 0 &3 8 0 RAI MS
LENS renamed Surveillance
5 March 2009 2008 Preliminary Results 28 Cobham plc
Programme / Platform 2006 2008 2010 2012 Ship Set Values US$ F16 X X X X $1,000k F/A 18 E/F/G X X X X $2,300k F22 X X X X $1,400k F35 X X X $950k Eurofighter Typhoon X X X X $1,500k Hawk X X X X $600k T50 X X X X $190k Gripen X X X X $760k Rivet Joint X X $4,350k A330 X X X $6,000k C17 X X X X $600k C130 / KC130 X X X X $3,300k KC135 X X X X $2,960k C-160 X X X X $420k ASTOR Sentinel R X X X X $520k B2 X X X X $1,360k Predator X X X X $300k AMRAAM X X X X $220k Global Hawk X X X X $2,030k UAV / Missiles Military Fast Jet/ Trainers Medium / Large Military Programme / Platform 2006 2008 2010 2012 Ship Set Values US$ EH101 / VH71 X X X X $1,200k MD902 X X X $200k EC120 X X X X $190k EC135 X X X X $300k EC155 X X X X $375k TH 57 X X X $330k ALH X X X X $360k Lynx X X X X $240k Apache X X X X $180k V22 X X X X $1,000k A380 X X X $220k B787 X X $150k Type 45 Destroyer X X X X $300k Sampson Radar X X X X $3,000k EDG 1000 X X X $4,000k Aegis DPYIDV X X X X $2,200k Light Vehicle X X X X $20k Amoured Fighting Vehicle X X X X $70k Tanks X X X X $50k Land Rotary Commercial Naval
5 March 2009 2008 Preliminary Results 29 Cobham plc
Source: White House Office of Management and Budget, Feb ’09
5 March 2009 2008 Preliminary Results 30 Cobham plc
Source: White House Office of Management and Budget, Feb ’09
5 March 2009 2008 Preliminary Results 31 Cobham plc
Source: White House Office of Management and Budget, Feb ’09
5 March 2009 2008 Preliminary Results 32 Cobham plc
Year to 31/12/07
Underlying Tax Rate 28.8%
Underlying 13.09p
Basic 11.61p
Diluted 11.55p
4.50p
11.81p
5 March 2009 2008 Preliminary Results 33 Cobham plc
5 March 2009 2008 Preliminary Results 34 Cobham plc
5 March 2009 2008 Preliminary Results 35 Cobham plc
5 March 2009 2008 Preliminary Results 36 Cobham plc
£0.7m PBT translation impact for every 1 cent movement
Income Statement (average rate) n/a 2.00
Balance Sheet (closing rate) 1.96 1.99
5 March 2009 2008 Preliminary Results 37 Cobham plc
2005 £5.6 m 2006 £14.5 m 2007 £(7.7)m
Wimborne Site Restructuring £(2.1)m North American Avionics Restructuring £(2.9)m North American Mission Systems Restructuring £(2.4)m Adjustment to profit on divestment FR HI-Temp £2.9 m £(4.5)m
£7.9 m
5 March 2009 2008 Preliminary Results 38 Cobham plc
5 March 2009 2008 Preliminary Results 39 Cobham plc
Year to 31/12/07
Year to 31/ 12/ 08 Operating profit
165.8
128.5
Portfolio restructuring 9.5
7.4
Unrealised losses on revaluation of currency instruments 5.7
59.5
Amortisation of intangible assets arising on acquisition 13.8
46.8
Acquisition related adjustments: Cost charged post-acquisition for acquired share options
Fair value adjustments to inventory on acquisition 0.1
3.9
Costs associated with terminated acquisition 3.9
198.8
251.6
Net finance (expense)/income 7.7
(7.8) Underlying profit before taxation
206.5
243.8
5 March 2009 2008 Preliminary Results 40 Cobham plc
Free cash flow is cash generated by the business before movements in funding and FX, acquisitions and disposals and dividends to shareholders Free Cash Flow Defined as free cash flow/average number of shares in issue Operating cash flow is defined as cash generated from operations, adjusted for cash flows from the purchase or disposal of fixed assets. Operating cash conversion is defined as operating cash flow as a percentage of trading profit, excluding profit from joint ventures. Operating cash conversion is defined as operating cash flow as a percentage of trading profit, excluding profit from joint ventures. Organic growth represents the growth of the business for the period that it was within the Group’s control, translated at constant exchange rate. Growth achieved in the first twelve months of ownership within the Group is shown as ‘acquisition’ contribution. Company funded R&D expenditure as a percentage of technology division revenues Free Cash Flow per share Operating Cash Flow Operating Cash conversion Organic growth PV Investment The underlying tax rate is based on underlying profit before tax, excluding the share of post tax income from joint ventures. Underlying Tax Rate To assist with the understanding of earnings trends, the Group has included within its published statements trading profit and underlying earnings results. Trading profit and underlying earnings have been defined to exclude the impacts of certain acquisition related charges, portfolio restructuring costs, the mark-to-market of currency instruments not realised in the period and impairments of goodwill. Acquisition related charges excluded from trading profit and underlying earnings include the amortisation of intangible assets recognised on acquisition, such as customer relationships, technology and software and the like, the writing off of the pre- acquisition profit element of inventory written up on acquisition, costs charged post acquisition, which relate to purchasing the shares of acquired companies and, in the prior year, direct costs associated with the exceptional terminated acquisition. Portfolio restructuring costs comprise exceptional profits arising on business divestments, which have funded exceptional costs associated with the restructuring of the Group’s business and site integrations. Both the divestments and the integration activity originate from the Group’s strategy announcement in September 2005. Underlying
5 March 2009 2008 Preliminary Results 41 Cobham plc
A&D Aerospace & Defence AJT Advanced Jet Trainer C4ISR Command, control, communications, computers, intelligence, surveillance and reconnaissance IMA Integrated Microwave Assembly LRU Line Replaceable Unit MMIC Monolithic Microwave Integrated Circuit MMRCA Medium Multi-Role Combat Aircraft OEM Original Equipment Manufacturer PV Private Venture (Company funded research & development) SATCOM Satellite Communication T/R Transmit/Receive VSAT Very Small Aperture Terminal VVIP Very, Very Important People
5 March 2009 2008 Preliminary Results 42 Cobham plc
For the purposes of the following disclaimers, references to this “document” shall be deemed to include references to the presenters’ speeches, the question and answer session and any other related verbal or written communications. This document contains certain “forward-looking statements” with respect to the financial condition, results of
these items. Forward-looking statements are sometimes but not always identified by their use of a date in the future or such words as “anticipates”, “aims”, “due”, “could”, “may”, “should”, “expects”, “believes”, “intends”, “plans”, “targets”, “goal”, or “estimates”. By their very nature, forward-looking statements are inherently unpredictable, speculative and involve risk and uncertainty because they relate to events and depend on circumstances that may or will occur in the future. There are various factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements. These factors include, but are not limited to, changes in the economies, political situations and markets in which the Group
in the regulatory and competition frameworks in which the Group operates; the impact of legal or other proceedings against or which affect the Group; changes to or delays in programmes in which the Group is involved; the completion of any acquisitions and divestitures and changes in exchange rates. All written or verbal forward- looking statements, made in this document or made subsequently, which are attributable to Cobham or any other member of the Group or persons acting on their behalf are expressly qualified in their entirety by the factors referred to above. Cobham does not intend to update these forward-looking statements.