2010 Preliminary Results Agenda Introduction Andy Stevens Chief - - PowerPoint PPT Presentation

The most important thing we build is trust

2010 Preliminary Results

3 March 2011

Cobham plc 1

Agenda

• Introduction

Andy Stevens

Chief Executive Officer

• Financial Results

Warren Tucker

Chief Financial Officer

• Business Review

Andy Stevens

• Q&A

Cobham plc 2

Summary Profit and Loss Account

Note: See Appendix for definitions, including underlying, used throughout this presentation.

Order book £2.5bn – order intake up 7% at constant translation exchange in technology divisions Year to 31/ 12/ 09 Year to 31/ 12/ 10 Growth £m £m Revenue

1,880.4

1,902.6

1.2%

Trading Profit

337.0

348.4

3.4%

Trading Margin

17.9%

18.3%

0.4pts

Underlying Profit before Taxation

295.3

306.1

3.7%

Underlying Earnings Per Share

18.80p

19.68p

4.7%

PV Spend %

5.3%

4.5%

(0.8)pts

Cobham plc

Underlying Earnings Per Share Growth

3

18.80 19.68 17.0 17.5 18.0 18.5 19.0 19.5 20.0

2009 FX Translation Growth FX Transaction Other margin effects Interest, tax &

• ther

2010 pence

(1.1)% 1.3% 3.8% at constant translation exchange 0.9% 2.4% 1.2% 4.7%

Cobham plc 4

Cash Flow

Net Debt £326.1m, Net Debt:EBI TDA 0.8x

Year to 31/ 12/ 09 Year to 31/ 12/ 10 Growth £m £m Trading Profit (ex. JV)

330.9

342.4

3.5%

Operating Cash Flow

293.2

271.4

(7.4% )

Operating Cash conversion

88.6%

79.3%

(9.3)pts

Free Cash Flow from Business

221.4

218.6

(1.3% )

Decrease in Net Debt

228.7

86.5 Dividend per Share

5.45p

6.00p

10.1%

Cobham plc 5

Technology Divisions’ Revenue Growth

CDS: Cobham Defence Systems, CAS: Cobham Avionics and Surveillance, CMS: Cobham Mission Systems

2 (1.6)% (1.2)%

CDS CDS CAS CAS CMS CMS

1,654 1,630 500 1,000 1,500 2,000

2009 FX Translation Net Acquisitions Defence/ Security Commercial/ Other 2010

£m

(1.6)% Organic Growth

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Technology Divisions’ Organic Revenue Growth Cycle Over the Medium Term

Excludes FX, Acquisitions and Disposals. 2005, 2006, 2007, 2008 and 2009 are proforma numbers for illustration purposes

5 Year Full Year CAGR 5.5%

500 1,000 1,500 2,000 2005 2006 2007 2008 2009 2010 £m

Commercial /Other Defence & Security

13.2% 10.3% 0.6% (1.6)%

(1.6)% (1.2)% (16)% 7%

5.8%

Cobham plc 7

Cobham Avionics and Surveillance

• Continued strong demand for wireless video

link products and hand-held ‘MINEHOUND’ mine detector

• Increased deliveries to Airbus of long range

SATCOM antennas and successful flight test

• n the Boeing 787 and the Airbus A400M

aircraft

• Selection to provide the complete avionics

suite for the new SK105 Skylander commuter aircraft and first orders for new helicopter autopilot and stability augmentation system

• Selected to partner with Rockwell Collins to

provide the passenger address system on the new C919 Chinese single aisle aircraft

Excludes FX, Acquisitions and Disposals. Prior year are pro forma numbers for illustration purposes

Cobham plc 8

Cobham Mission Systems

Excludes FX, Acquisitions and Disposals. Prior year are pro forma numbers for illustration purposes

• Shipments of fifth generation refuelling

equipment for Australian, UK, Saudi Arabian and UAE air forces and UK FSTA

• An initial order for the new Vehicle Active

Gunner’s Restraint System for Stryker armoured fighting vehicle

• £18m order for the supply of Ejector Release

Units and Carrier Bomb Light Stores for 57 Hawk trainer aircraft to India

• Award by the US Air Force of the base year
• f a five year agreement, with a total

estimated value of US$50m, for crew- breathing oxygen regulator overhaul kits

• Transfer to the new Wimborne, UK facility

completed

Cobham plc 9

Cobham Defence Systems

Excludes FX, Acquisitions and Disposals. Prior year are pro forma numbers for illustration purposes

• Further orders and deliveries of electronic

warfare equipment to disrupt enemy radar and communications

• Awarded an IDIQ contract worth up to

$1.6bn to provide advisory and assistance services to the Missile Defense Agency

• A multi-million pound, long-term agreement

to provide a suite of antennas for the indigenous Korean Utility Helicopter

• US$40m deal to provide major radio

frequency and microwave components for Aegis surveillance and fire control radar

• Receipt of a delayed US$21m contract to

provide vehicle intercom systems and Eagle radios to a Middle East customer

Cobham plc 10

Cobham Aviation Services

Excludes FX, Acquisitions and Disposals. Prior year are pro forma numbers for illustration purposes

• Flying hours on the Australian Sentinel

programme remaining at close to 100% with the Surveillance Information Management System successfully brought into service

• Two new aircraft brought into service in for

resource industry and air freight contracts

• Modification and systems integration of four

B350 aircraft under the MFTS Royal Navy rear crew training contract

• 30 strong team of engineers in Madrid

working on aircraft modifications for the first two A330s for the UK FSTA programme

• Contracts worth some £12m to upgrade and

support key air traffic control systems and

• perations for the UK MoD

Cobham plc

Excellence in Delivery Programme is on Track

• The Excellence in Delivery programme is about transforming our operations to provide

better customer delivery and improved efficiency

• The programme is on track
• In 2010 we delivered cost savings of over £10m including Excellence in Delivery
• By the end of 2013, Excellence in Delivery run rate savings remain at £65m per annum,

for a total implementation cost of £131m

• Excellence in Delivery is pivotal to our future growth

11

Cobham plc 12

• Revenue momentum has been impacted by programme delays and US Government

Continuing Resolution, but the cycles in commercial business and Mission Systems have turned positive

• Cost control has delivered earnings per share growth
• Cash generation remains strong
• We continue to invest: Excellence in Delivery, technologies and portfolio optimisation
• We are prudently configured with further cost savings in 2011, against the backdrop of

the Continuing Resolution in the US

Financial Highlights

Cobham plc 13

Agenda

• Introduction

Andy Stevens

Chief Executive Officer

• Financial Results

Warren Tucker

Chief Financial Officer

• Business Review

Andy Stevens

• Q&A

Cobham plc

Moved the Business Forward Despite 2010 Being a Challenging Year for Top Line Growth

• Good performance in some businesses

– Some order slippage and continuing softness in certain commercial markets, albeit that is now improving

• I mproved order intake in all three Technology Divisions

– Aggregate 7% increase in orders received and Group order book increase to £2.5bn

• Generated further cost efficiencies

– Excellence in Delivery, procurement savings and prior year integrations

14

Cobham plc

Focused on Bringing New Innovative Technology to the Market

• Continued focus on PV and new product development

– Focused on generating a good return in the current environment

• Selected on new programmes/ platforms, winning positions in faster growing

geographies

– Chinese C919, Skylander 105, US Missile Defence Agency Support Services (MiDAESS), Indian Air Force Hawk, Korean light utility helicopter

• Growing content on important existing platforms
• CH-53K helicopter, Aegis surveillance and fire control radar system, F-35, F-18,

A350

• Completed three acquisitions in homeland security markets for US$175m
• Further strengthening technology and routes to market

15

Strengthening technology through targeted PV investment and acquisitions

Cobham plc

Our Strategy

Focus on Defence, Security & Commercial markets Sell technically differentiated products & services Build sustainable scale positions Actively manage the portfolio

• Maintain an appropriately focused portfolio on the defence, security and commercial markets,

such that we can add value and manage risk across the portfolio

• Sell technically differentiated products and services that meet customer’s needs in markets that

have attractive characteristics, and in which we can maintain a sustainable competitive advantage

• Continue to provide core Tier 3 capabilities and selectively offer Tier 2 to meet customer needs
• Develop and maintain top 3 positions in our markets
• Build or maintain scale positions in these markets to ensure we have the necessary scale to

support investment, maintain market leadership and deliver long term business growth

• Actively manage the portfolio, exiting businesses that do not fit with our strategy
• Acquire businesses that build scale, allow us to exploit our existing capabilities in adjacent

segments or deliver distinctive technologies or capabilities to accelerate our organic growth

Deliver operational excellence

• Achieve Excellence In Delivery for our customers, capturing cost synergies through simplifying

and standardising processes, integrating operations and building operational capabilities

• Invest in our talent

1 2 3 4 5

16

Making good progress against the strategy

Cobham plc

Focus on Defence, Security & Commercial Markets

• Revenue by destination & market sector remain stable - 61% USA, 77% defence & security
• Getting positions on contracts for US government agencies, e.g. US$1.6bn MiDAESS

contract and large homeland security agency contracts

• Coordinating cross business programme pursuits through offices in Washington DC & India
• Driving aftermarket business which now accounts for 15% of technology division revenue

US Defence / Security 53%

(2009: 55%)

Non US Defence / Security 15%

(2009: 14%)

Commercial/ GA 9%

(2009: 9%)

Other Communication 9%

(2009: 10%)

Aviation Services 14%

(2009: 12%)

1

USA 61% (2009: 62%) Other EU countries 12% (2009: 12%) Australia 10% (2009: 8%) UK 9% (2009: 9%) RoW 8% (2009: 9%)

17

Cobham plc

Sell Technically Differentiated Products & Services

18

• Successful trials of 5th generation AAR refuelling pods being offered into US$35bn US

tanker programme & Global Hawk development contract

• Launch of fully portable & networked unattended ground sensor for covert surveillance
• Demonstration of 100 user radio system for DARPA’s Wireless Network after Next
• Cobham’s lightest, smallest and lowest cost SwiftBroadband solution already sold to 23

airlines – positioned on all new major air transport aircraft with upgrade opportunities

• Developing US Army Multi-spectral Sea and Land Target Simulator worth up to US$56m

2

Cobham plc

Build Sustainable Scale Positions

19

• Defence Communications business integrated with Surveillance in CAS division to focus on

growing Integrated Force Protection market

• Antenna Systems integrated with SATCOM in CAS division to leverage cross selling
• Personal locator beacon & emergency locator transmitter product lines combined
• Mission Systems & Aviation Services management combined, bringing together major

projects & systems engineering

3

Defence Communications Antenna Systems Avionics and Surveillance Beacons Defence Systems Mission Systems Aviation Services Aerospace and Security Defence Systems Mission Systems Aviation Services

£666m £647m £594m £273m

Intercompany eliminations not shown

Cobham plc

Deliver Operational Excellence

20

4

Location of 14 principal manufacturing locations

• The Excellence in Delivery programme is about transforming our operations to provide

better customer delivery and improved efficiency

• 14 principal locations announced which will account for 80% of manufacturing profit
• Announced closure of nine facilities supporting 2011 saving of £21m
• Investing in people, processes, tools & facilities

Cobham plc

Actively Manage the Portfolio

21

• Intend to divest businesses & product lines representing up to 15% technology division

revenue

• Proceeds to date of £29m
• Completed three acquisitions in homeland security markets for US$175m

Corp Ten tracking and surveillance devices - micro-sized satellite modem Telerob advanced bomb disposal robots and threat response vehicles Rvision advance electo-optical and infrared imaging systems

5

Cobham plc 22

Defence, Security and Commercial Markets

Well positioned in faster growing market segments

Market size US$bn

310 19 60

50 100 150 200 250 300 350 400 450

Defence

83 42 43

50 100 150 200 250 300 350 400 450

Security

88 43

50 100 150 200 250 300 350 400 450

Commercial

US UK ROW US Europe ROW OE Aftermarket

Growth outlook: ~ 2% CAGR Variation by programme (e.g., JSF) Growth outlook: ~ 7% CAGR Variation by country & sub-segment Growth outlook: ~ 4% CAGR Variation by platform (e.g., 787)

~ $390bn ~ $170bn ~ $130bn

Sources:

• i. U.S. DoD budget data: comprised of FY2005-FY2011

Department of Defense budget plans

• ii. International spending figures: Stockholm

International Peace Research Institute (SIPRI), World Monetary Fund Sources:

• i. U.S. Government : 2011 U.S. Office Of Management And

Budget Report – Analytical Perspectives, Budget Of The U.S. Government

• ii. Third Party Research: Homeland Security Research

Corporation, Society General via Cross Asset Research, Morgan Keagan, Frost and Sullivan, International Biometric Group

• iii. Publically available information from company annual reports:

L-1 identity solutions, Smiths Detection Sources:

• i. OEM platform sales revenue: (Boeing, Airbus, Embraer)
• ii. Third party research: Ascend, Aerostrategy, Forecast

International

• iii. Multiple News Agencies: (used to track up to date delivery
• rders in CSP database)

Cobham plc

HI GHER LOWER BUI LDI NG SCALE I N TOP 3 Commercial Systems (Avionics & Beacons) Aviation Services MARKET GROWTH Life Support

Continuing to Strengthen Market Positions and Focus on C4ISR

Defence/ Security Commercial

Size of bubble represents Cobham revenue

Analytic Solutions

We are technically diverse, innovative and agile by design because that’s what our customers want

Antenna Systems Sensor Systems

C4ISR

Mission Equipment Aerospace Comms Tactical Comms & Surveillance

23

Cobham plc 24

Technology in Action Unmanned Ground Systems

Cobham plc 25

Summary

• Generated earnings growth from flat Group revenue

– Efficiencies of over £10m, including savings from on-track Excellence in Delivery programme – Configured prudently for 2011 against backdrop of Continuing Resolution

• Making good progress against the strategy

– Benefiting from strategic investments in technologies, Excellence in Delivery and portfolio optimisation – Getting positions on larger contract vehicles in addition to traditional business

• Excellence in Delivery programme will transform and simplify operations

– Focused on delivering outstanding service to customers & improving efficiency – It will increase Cobham’s competitiveness

• Positioned to grow faster than our markets in the medium term

– Transition to a more C4ISR centric business largely complete

Cobham plc 26

• Investor Relations Calendar
• Key Performance Indicators
• Ship set values
• Surveillance and Mesh Network Capability Example
• US DoD Investment Spending
• Excellence in Delivery
• Shareholder returns
• Cash flow summary
• Revenue and profit
• Technology Divisions’ Revenue & Trading Profit
• Foreign Exchange Transaction Exposure
• US$/£ Exchange Rates
• Reconciliation of IFRS to Underlying Result
• Restated Segmental Results Half Year Ended 30 June 2010
• Restated Segmental Results Full Year to December 2010
• Definitions
• Glossary
• Cautionary Statement

Appendices

Cobham plc 27

Investor Relations Calendar

2011 - 2012 May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr Announcements I nvestor Days

8 Prelim inary Results 6 AGM & I nterim Managem ent Statem ent 4 I nterim Results 1 4 I nterim Managem ent Statem ent 7 W im borne, UK Site Visit 2 6 AGM & I nterim Managem ent Statem ent

Cobham plc 28

Key Performance Indicators

Year to 31/ 12/ 06 Year to 31/ 12/ 07 Year to 31/ 12/ 08 Year to 31/ 12/ 09 Year to 31/ 12/ 10 5 year CAGR £m £m £m £m £m Technology Divisions Organic Revenue Growth

5.8% 13.2% 10.3% 0.6%

(1.6)%

5.5%

Earnings Per Share Growth (constant translation)

10.7% 15.9% 13.1% 12.5%

3.8%

11.1%

Operating Cash Conversion

84.3% 81.1% 106.1% 88.6%

79.3% PV Spend % *

5.1% 5.2% 5.3% 5.3%

4.5% Defence/ Security (1.6)% Commercial (1.2)% (1.6)%

* PV has been restated on a proforma basis for the impact of Cobham Analytic Solutions

Cobham plc 29

Ship Set Values

US tanker valued at US$1bn over the life of the programme

Programme / Platform Ship Set Values US$k F16 $800 - $1,100 F/A 18 E/F/G $800 - $4,600 F22 $1,400 F35 $1,200 Eurofighter Typhoon $1,500 Hawk $600 T50 $220 Gripen 250-500 C17 $600 C130 / KC130 $700 - $4,000 ASTOR Sentinel R $1,200 B2 $1,400 Predator/Reaper $500 AMRAAM $220 AARGM $140 PAC3/Patriot $200 Global Hawk $2,300 EH101 $230 Apache $580 CH 53K $400 MH-60 $500 V22 $1,200 A380 $220 A350 $100 B787 $150 EDG 1000 $2,600 Aegis DPYIDV $2,400 Naval Military Fast Jets / Trainers Medium / Large Military UAV / Missiles Rotary Commercial

$

Cobham plc 30

Increasing Ship Set Value on F-35

Estimated > 3,000 aircraft to be produced - Cobham ship set value still increasing

2040

Ship Set Value Aircraft Production

$1,200

$20 $410 $500 $700 $950 $1,000

$0 $400 $800 $1,200 $1,600 $2,000 2 4 2 5 2 6 2 7 2 8 2 1 2 1 1 2 1 2 2 1 3 2 1 4 2 1 5 2 1 6 2 1 7 Ship Set Value US$k 50 100 150 200 250 Aircraft

Some reduction in LRIP

Cobham plc

Surveillance and Mesh Network Capability Example

SOLO Transmitter SOLO Transmitter Camera Camera Camera Camera Mobile surveillance Mobile surveillance Camera Camera Camera Camera Camera Car Camera Car Camera Camera Camera Camera Camera Camera Mobile surveillance Mobile surveillance SOLO Transmitter SOLO Transmitter

Key

Mesh 1 Mesh 2 SOLO link out

Police command Police command Police command Police command

Cobham plc 32

US DoD Investment Spending $Bn

79 78 84 98 102 103 68 72 76 77 80 79 80 73 70 69 105 113 124 133 137 75 6 147 150 160 175 181 183 185 188 197 203 207 2005 2006 2007 2008 2009 2010 2011CR 2012E 2013E 2014E 2015E Procurement RDT&E

Source: FY2010-FY2012 per the FY2012 Department of Defense budget proposal released February 14, 2011. FY2013-FY2015 per the National Defense Budget Estimates (“Green Book”) Note: All years exclude supplementals Note: Figures represent discretionary outlays expressed in current prices Source: JP Morgan

2005–2010 CAGR = 4.4% 2 1 1 – 2 1 5 C A G R = 2 . 3 %

Cobham plc

Why Excellence in Delivery?

• We have been progressively simplifying, standardising and integrating
• ur business since 2005
• We have now demonstrated substantial benefits from our new processes

and systems through initial implementation activities across our business

• Excellence in Delivery will deliver a step change in our performance to
• ur customers, making us more responsive and able to fully exploit our

scale

• Excellence in Delivery will reduce our operating costs by £65m annually

by the end of 2013 for a one off investment of £131m

• This is the next step in our development that we can now take with the

capabilities and market positions we have, and one which we would undertake irrespective of the current market conditions

33

Cobham plc

EiD Aims to Take us Further Towards a Simplified, Standardised and Scale Organisation

• Roll out our Standard Operating Framework across

a set of principal sites

• Integrate some of our smaller (production) facilities

into the principal sites to increase the coverage of

• ur Standard Operating Framework
• Lock down the standard processes with

a single standard Cobham Enterprise Resource Planning (ERP) system and capture scale economies and reduce complexity further through implementation of shared services 1 2 3

34

Cobham plc

EiD Will Deliver Significant Benefits Beyond the Immediate Cost Reductions

• EiD will transform our operational performance and will deliver significant non

financial benefits:

• World class delivery and quality performance will be an additional

differentiator with our customers giving us scope to accelerate revenue growth

• Streamlined processes will reduce product development cycles and reduce

time to market providing greater flexibility to meet customer needs

• Improved engineering efficiency will create further capacity for new product

development

• Lower costs will allow further pricing opportunities with customers as well as

investment funds to support further product development and selling capabilities

• Standardised operating model will enable significantly greater synergy

benefits from acquisitions, and lower risk and more rapid integration

• Our profitability will be improved by £65m per year by the end of 2013

35

Cobham plc 36

Shareholder Returns

Year to 31/12/09

Year to 31/ 12/ 10 Growth

Underlying Tax Rate 27.8%

26.5% Earnings Per Share

Underlying 18.80p

19.68p 4.7%

Basic 16.26p

13.27p

Diluted 16.17p

13.20p Dividend Per Share

5.45p

6.00p 10.1% Free Cash Flow Per Share

19.38p

19.00p (2.0% )

Cobham plc 37

Cash Flow Summary

Year to 31/12/09

Year to 31/ 12/ 10

£m

£m Trading Profit (excluding joint ventures)

330.9

342.4

Depreciation and other movements 47.8 57.9 Decrease/(Increase) in working capital and provisions (8.2) (71.8) Net Capital expenditure (77.3) (57.1)

Operating cash flow

293.2

271.4

Taxation paid (31.2) (21.6) Dividends received from JVs 5.2 6.0 Interest (45.8) (37.2)

Free cash flow

221.4

218.6

Dividends paid (58.3) (64.6) Restructuring costs (7.8) (13.4) Acquisition payments less disposal proceeds and other related costs (32.2) (5.9) Settlement of commercial dispute (28.8) Movements in funding and exchange movements 105.6 (19.4)

Decrease in net debt

228.7

86.5 Net Debt

412.6

326.1 Net Debt : EBI TDA

1.0

0.8

Cobham plc 38

Revenue and Profit

£m Year to 31/12/09

Year to 31/ 12/ 10 Growth

Year to 31/12/09

Year to 31/ 12/ 10 Growth

Technology Divisions 1,653.7

1,630.1 (1.4)%

305.6

310.3 1.5%

Margin 18.5%

19.0% Cobham Aviation Services 230.9

273.5 18.4%

31.3

36.4 16.3%

Margin 13.6%

13.3%

Operating Divisions

1,879.6

1,902.5 1.2%

336.9

346.7 2.9%

Head Office and Other businesses 0.8

0.1

0.1

1.7

Cobham Group

1,880.4

1,902.6 1.2%

337.0

348.4 3.4%

Margin 17.9%

18.3%

Intercompany eliminations not shown

Revenue Trading Profit

Cobham plc 39

Technology Divisions’ Revenue and Trading Profit

£m Year to 31/12/09

Year to 31/ 12/ 10 Organic Growth

Year to 31/12/09

Year to 31/ 12/ 10

Cobham Avionics and Surveillance 487.3

447.4 (7.4)%

84.6

72.2

Margin 17.4%

16.1% Cobham Defence Systems 873.0

859.2 (2.2)%

164.4

169.0

Margin 18.8%

19.7% Cobham Mission Systems 317.0

344.1 7.8%

56.8

69.2

Margin 17.9%

20.1%

Technology Divisions

1,653.7

1,630.1 (1.6)%

305.6

310.3

Margin 18.5%

19.0%

Intercompany eliminations not shown

Revenue Trading Profit

Cobham plc 40

Foreign Exchange Transaction Exposure

Historic average effective rate 2007 $1.83 : £1 2008 $1.93 : £1 2009 $1.70 : £1 2010 $1.58 : £1

Dollar/Euro exposure predominantly hedged for 2011 with $36m @ 1.37 & 2012 $26m @ 1.33

2013 to 2014

Hedging in place

$183m $52m 92% hedged for 2011 Avg hedge rate $1.56: £1 $83m Avg hedge rate $1.61: £1 2012

Hedging in place

Avg hedge rate $1.60: £1 2011 Total $199m

Cobham plc 41

US$/£ Exchange Rates

£0.8m PBT translation impact for every 1 cent movement

2010

Opening Full Year F ull Year

Income Statement (average rate) n/a 1.56

1.55

Balance Sheet (closing rate) 1.44 1.61

1.57

2009

Cobham plc 42

Reconciliation of IFRS to Underlying Result

Year to 31/12/09

Year to 31/ 12/ 10

£m

£m Operating profit

286.6

230.1

Business restructuring 7.7

17.5

Unrealised losses/(gains) on revaluation of currency instruments (42.9)

2.8

Amortisation of intangible assets arising on acquisition 78.7

63.3

Settlement of commercial dispute

• 28.8

M&A related adjustments 6.9

5.9 Trading profit

337.0

348.4

Net finance expense (41.7)

(42.3) Underlying profit before taxation

295.3

306.1

Cobham plc 43

Group Revenue and Trading Profit Re-stated Segmental Results - Half year

£m H1 2009

H1 2010 Organic Growth

H1 2009

H1 2010

Cobham Aerospace and Security 372.6

342.3 (4.1)%

77.0

75.3

Margin 20.7%

22.0% Cobham Defence Systems 326.4

334.2 2.6%

43.9

45.7

Margin 13.4%

13.7% Cobham Mission Systems 147.7

157.7 8.7%

23.5

26.5

Margin 15.9%

16.8%

Technology Divisions

842.5

832.6 1.0%

144.4

147.7

Margin 17.1%

17.7% Cobham Aviation Services 111.4

131.3 4.6%

15.3

15.7

Margin 13.7%

12.0% Head Office and Other Businesses 0.4

0.1

2.0

3.8 Cobham Group

952.1

963.4 1.6%

161.7

167.2

Margin 17.0%

17.4%

Intercompany eliminations not shown

Revenue Trading Profit

Cobham plc 44

Group Revenue and Trading Profit Re-stated Segmental Results – Full Year

£m Year to 31/12/09

Year to 31/ 12/ 10 Organic Growth

Year to 31/12/09

Year to 31/ 12/ 10

Cobham Aerospace and Security 714.7

646.9 (7.7)%

158.7

143.4

Margin 22.2%

22.2% Cobham Defence Systems 654.7

665.8 (0.3)%

97.0

101.9

Margin 14.8%

15.3% Cobham Mission Systems 290.3

320.8 9.8%

50.1

65.1

Margin 17.3%

20.3%

Technology Divisions

1,653.7

1,630.1 (1.6)%

305.6

310.3

Margin 18.5%

19.0% Cobham Aviation Services 230.9

273.5 7.2%

31.3

36.4

Margin 13.6%

13.3% Head Office and Other Businesses 0.8

0.1

0.1

1.7 Cobham Group

1,880.4

1,902.6 (0.3)%

337.0

348.4

Margin 17.9%

18.3%

Intercompany eliminations not shown

Revenue Trading Profit

Cobham plc

US Defence / Security 25% Non US Defence / Security 28% Commercial Aerospace/ GA 23% Other Comms 24%

53% revenue defence/ security 44% US revenue

Divisional Revenue Re-stated Analysis – Full Year

45

Aerospace and Security Defence Systems Mission Systems

US Defence / Security 63% Non US Defence / Security 30% Commercial Aerospace/ GA 4% Other Comms 3%

93% revenue defence/ security 68% US revenue 97% revenue defence/ security 97% US revenue US Defence / Security 96% Non US Defence / Security 1% Commercial Aerospace/ GA 2% Other Comms 1%

Cobham plc 46

Definitions

Underlying 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 as operating profit from continuing operations excluding the impacts of certain transaction related costs and business restructuring costs as detailed below. Also excluded are the marking to market of currency instruments not realised in the period, impairments

• f intangible assets and items deemed by the Directors to be of an exceptional nature such as the settlement of a long-

standing commercial dispute. Transaction related costs excluded from trading profit and underlying earnings include the amortisation of intangible assets recognised on acquisition, the writing off of the pre-acquisition profit element of inventory written up on acquisition and costs charged post acquisition related to acquired share options. Transaction related costs also include other direct costs associated with business combinations and direct costs arising from any terminated acquisitions or disposals. Business restructuring costs comprise exceptional profits or losses arising on disposals actually completed, as well as exceptional costs or profits associated with the restructuring of the Group’s business and site integrations. This includes costs associated with the Excellence in Delivery programme. All underlying measures include the revenue and

• perational results of both continuing and discontinued businesses until the point of sale of the operation.

Net debt is defined as the net of cash and cash equivalents less borrowings at the balance sheet date. Underlying Tax Rate The underlying tax rate is based on underlying profit before tax, excluding the share of post tax income from joint ventures. Free Cash Flow 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 per share Operating Cash Flow Organic revenue growth PV Investment Technology divisions 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 tangible fixed assets. Operating cash conversion is defined as operating cash flow as a percentage of trading profit, excluding profit from joint ventures. Free cash flow is operating cash flow after net interest and taxation. Organic revenue growth is defined as revenue growth stated at constant translation exchange, excluding the incremental effect of acquisitions and disposals. Company funded R&D expenditure as a percentage of technology division revenues Cobham’s technology divisions comprise Cobham Avionics and Surveillance, Cobham Defence Systems and Cobham Mission Systems

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Glossary

AAR Air-to-air refuelling AARGM Advanced Anti-Radiation Guided Missile Acq Acquisition AGM Annual General Meeting AMRAAM Advanced Medium-Range Air-to-Air Missile C4ISR Command, Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance CAGR Compound Annual Growth Rate CAS Cobham Avionics and Surveillance CAvS Cobham Aviation Services CDS Cobham Defence Systems CMS Cobham Mission Systems DoD Department of Defense DARPA Defense Advanced Research Projects Agency EBITDA Earnings Before Interest Tax Depreciation and Amortisation EPS Earnings Per Share ERP Enterprise Resource Planning EW Electronic Warfare FX Foreig n Exchange GA General Aviation IDDQ Indefinite Delivery Definite Quantity IDIQ Indefinite Delivery Indefinite Quantity IED Improvised Explosive Device IFRS International Financial Reporting Standards JSF Joint Strike Fighter MIDAESS Missile Defence Agency Engineering and Support Services MFTS Military Flying Training Services OCI Organisational Conflict of Interest OE Original Equipment PBT Profit Before Tax PV Private Venture (Company funded R&D) R&D Research & Development RDT&E Research, Development, Test and Evaluation RoW Rest of World SATCOM Satellite Communication SOF Standard Operating Framework UAV Unmanned Aerial Vehicle WnAN Wireless network After Next

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Cautionary Statement

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

• perations and business of Cobham plc (Cobham) and to certain of Cobham’s plans and objectives with respect to

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

• perates; changes in government priorities due to programme reviews or revisions to strategic objectives; changes

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.

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