Interims Results 2015 Progressing Our Strategy Agenda Introduction - - PowerPoint PPT Presentation

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ADVANCED ELECTRONIC SOLUTIONS AVIATION SERVICES COMMUNICATIONS AND CONNECTIVITY MISSION SYSTEMS

Interims Results 2015

Progressing Our Strategy

Cobham plc Cobham plc

Agenda

6 August 2015 1

• Introduction

Bob Murphy Chief Executive Officer

• Financial Results

Simon Nicholls Chief Financial Officer

• Business Review

Bob Murphy Chief Executive Officer

• Q&A

Cobham plc Cobham plc

Agenda

2

• Introduction

Bob Murphy Chief Executive Officer

• Financial Results

Simon Nicholls Chief Financial Officer

• Business Review

Bob Murphy Chief Executive Officer

• Q&A

6 August 2015

Cobham plc Cobham plc

Financial Highlights

3

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

* At 31 December 2014

H1 2015 H1 2014 Change £m £m Order Intake 960.1 728.2 31.8% 29.5% Revenue 1,048.2 834.1 25.7% 24.0% Trading Profit 160.3 129.7 23.6% 22.9% Trading Margin 15.3% 15.5% (0.2)pts Underlying Profit before Taxation 134.9 117.6 14.7% 16.6% Underlying Earnings Per Share 9.3p 8.7p 7.7% 9.3% Operating Cash Conversion 77.1% 63.9% 13.2pts Net Debt (1,236.6) (1,222.7) * Dividend per Share 3.05p 2.904p 5.0% Constant FX Change

6 August 2015

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Cobham Communications & Connectivity (CCC)

4

Non-US Defence & Security

(H1 2014: 22%)

US Defence & Security

(H1 2014: 15%)

Commercial

(H1 2014: 63%)

• 32% revenue increase driven by:
• £102m from test business of Aeroflex, with strong underlying demand for new products
• Healthy growth of 13% in commercial aerospace and 6% in US defence/security driven by

demand for large transport platforms and increased shipments in Surveillance, respectively

• Overall 1% organic decline driven by oil and gas sector in SATCOM and lower demand for in-

building wireless products

• £9m trading profit increase reflecting:
• Strong acquisition performance, partially offset by lower volume in commercial marine and land
• Cost increase in composites development programme of £3m
• PV increased to 12% of revenue to drive future growth; focused on commercial markets

2015

()

2014

(constant FX)

Change

%

Revenue £m 408.9 310.5 31.7% Trading Profit £m 58.2 49.3 18.1% Trading Margin 14.2% 15.9% (1.7)pts

Note: US$ revenue 37%, EUR & DKK revenue 35%

6 August 2015

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Cobham Mission Systems (CMS)

5

Non-US Defence & Security

(H1 2014: 38%)

US Defence & Security

(H1 2014: 53%)

Commercial

(H1 2014: 9%)

• Total revenue £21m higher, with organic growth of 14% including:
• Re-start of C-130 production for USMC and USAF
• Increased engineering and development revenue, primarily on the US KC-46 aerial refuelling

tanker

• Encouraging order flow on missile actuation and weapons carriage and release products
• Lower A330MRTT production from in-year phasing
• Profitability and margin on track; continue to reflect high level of ongoing engineering and

development activity in aerial refuelling

2015

()

2014

(constant FX)

Change

%

Revenue £m 167.1 146.3 14.2% Trading Profit £m 24.9 21.4 16.4% Trading Margin 14.9% 14.6% 0.3pts

Note: US$ revenue 74%

6 August 2015

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Cobham Advanced Electronic Solutions (CAES)

6

Non-US Defence & Security

(H1 2014: 4%)

US Defence & Security

(H1 2014: 93%)

Commercial

(H1 2014: 3%)

• Consolidated portfolio delivered 46% increase in total revenue:
• Significant contribution of £104m from Aeroflex microelectronics business, bringing increased

commercial exposure

• Organic revenue 9% lower with certain programmes nearing end of production life in existing

business

• Aeroflex contribution drives trading profit increase, with trading margin stable:
• Reflects ongoing mix change away from production to development programmes
• Offset by benefits from integration savings and continuous improvement activities

2015

()

2014

(constant FX)

Change

%

Revenue £m 275.9 188.8 46.1% Trading Profit £m 40.3 27.8 45.0% Trading Margin 14.6% 14.7% (0.1)pts

Note: US$ revenue 99%

6 August 2015

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Cobham Aviation Services (CAvS)

7

Non-US Defence & Security

(H1 2014: 53%)

Commercial

(H1 2014: 47%)

• Organic revenue increase driven by:
• Helicopter Services the primary driver, with increased revenue from rotary wing support contracts in

Trinidad & Tobago and Qatar

• Commercial revenue in Australia broadly unchanged; some demand weakness from natural

resources sector but key contract renewals and entry into service of next generation E190 aircraft

• Completion of second Special Mission detachment for RSAF and ongoing AMSA mobilisation ahead
• f flying operations commencing in H2 2016
• Total trading profit increased by £3m from increased activity and higher margin from

revenue mix and efficiencies

2015

()

2014

(constant FX)

Change

%

Revenue £m 203.0 197.7 2.7% Trading Profit £m 28.4 25.4 11.8% Trading Margin 14.0% 12.8% 1.2pts

Note: AU$ revenue 56%

6 August 2015

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Revenue and Profit

Sector Summary at Constant Exchange1

8

(1) = 2014 data presented at 2015 exchange rates.

Revenue Trading Profit £m H1 2015 H1 2014 Change H1 2015 H1 2014 Change Cobham Communications and Connectivity 408.9 310.5 31.7% 58.2 49.3 18.1%

Margin 14.2% 15.9%

Cobham Mission Systems 167.1 146.3 14.2% 24.9 21.4 16.4%

Margin 14.9% 14.6%

Cobham Advanced Electronic Solutions 275.9 188.8 46.1% 40.3 27.8 45.0%

Margin 14.6% 14.7%

Cobham Aviation Services 203.0 197.7 2.7% 28.4 25.4 11.8%

Margin 14.0% 12.8%

Head Office and Eliminations (6.7) 1.9 8.5 6.5 Exchange

• (11.1)
• (0.7)

Cobham Group - as reported 1,048.2 834.1 25.7% 160.3 129.7 23.6%

Margin 15.3% 15.5%

6 August 2015

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129.7 160.3

7.9 7.9 31.3 13.4 1.0 0.7

Trading Profit Bridge

2014 to 2015

9

£m

6 August 2015

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Reconciliation of Trading to Reported Profit

10

H1 2015 H1 2014 £m £m Trading profit 160.3 129.7 Underlying net finance costs (25.4) (12.1) Underlying profit before taxation 134.9 117.6 Taxation charge on underlying profit (2015: 21.5%; 2014: 20.0%) (29.0) (23.5) Underlying profit after taxation for the period 105.9 94.1 Business restructuring (23.8) (13.1) Movements in non-hedge accounted derivative financial instruments (0.4) 5.7 Amortisation of intangible assets arising on business combinations (85.3) (48.6) Exceptional legal costs

• (0.8)

Other business acquisition and divestment related items (21.1) (4.2) Non-underlying finance costs

• (2.4)

Taxation on non-underlying items 22.5 15.4 (Loss)/profit after taxation for the period (2.2) 46.1

6 August 2015

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Cash Flow

11

Note: Depreciation and amortisation shown net of profit/loss on sale of property, plant and equipment and excluding amortisation of acquired intangibles.

H1 2015 H1 2014 £m £m Trading profit 160.3 129.7 Depreciation and amortisation 41.6 33.9 Pension contributions in excess of pension charges (8.0) (8.9) Increase in working capital (7.0) (48.6) Net capital expenditure (58.0) (25.7) Other items (5.3) 2.5 Operating Cash Flow 123.6 82.9 Underlying net interest paid (24.0) (11.6) Taxation paid (13.6) (18.8) Business restructuring costs (16.5) (13.4) Free Cash Flow 69.5 39.1 Dividends paid (87.7) (75.5) Acquisition payments less divestment proceeds and other related costs (4.8) (23.2) Placing and net settlement of treasury shares (8.3) 183.7 Exchange movements 17.4 16.0 Increase in Net Debt (13.9) 140.1 Opening Net Debt (1,222.7) (453.4) Closing Net Debt (1,236.6) (313.3) Net Debt: EBITDA 2.9 0.9

6 August 2015

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Working Capital

12

Inventories Receivables Payables Current Working Capital Non-current Total Working Capital £m £m £m £m £m £m

Opening Balance Sheet 431.4 436.6 (503.6) 364.4 17.1 381.5 Underlying Cash Outflow/(Inflow) 23.6 (21.5) 4.9 7.0

• 7.0

FX (6.2) (11.0) 11.4 (5.8) 0.3 (5.5) Acquisitions and Disposals (7.6) (4.3) 2.6 (9.3) (3.3) (12.6) Non-Underlying Items (20.6) (30.1) 73.2 22.5 15.4 37.9 Closing Balance Sheet 420.6 369.7 (411.5) 378.8 29.5 408.3

6 August 2015

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Balance Sheet

13 6 August 2015

30/06/2015 31/12/2014 £m £m

Intangible assets 1,842.7 1,997.2 Property, plant and equipment 380.4 390.0 Other non-current assets 99.2 91.0 Non Current Assets 2,322.3 2,478.2 Inventories 420.6 431.4 Trade and other receivables < 1 year 369.7 436.6 Trade and other payables < 1 year (411.5) (503.6) Current Working Capital 378.8 364.4 Net current tax liabilities (134.4) (118.8) Net debt (1,236.6) (1,222.7) Provisions (122.0) (67.4) Retirement benefit obligations (83.8) (102.0) Other assets / liabilities (137.0) (219.4) Net Assets 987.3 1,112.3

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Summary

• Strong revenue and earnings growth in the first half, driven by Aeroflex
• Modest organic revenue growth due to short-term headwinds in

commercial markets

• Good progress in resolving the technical issues on our major aerial

refuelling development programmes

• Improving cash conversion
• Completed successful refinancing of short-term borrowings associated

with the Aeroflex transaction on a long-term basis

• Comfortable headroom under committed borrowing facilities
• Interim dividend increase of 5%

6 August 2015 14

Cobham plc Cobham plc

Agenda

6 August 2015 15

• Introduction

Bob Murphy Chief Executive Officer

• Financial Results

Simon Nicholls Chief Financial Officer

• Business Review

Bob Murphy Chief Executive Officer

• Q&A

Cobham plc Cobham plc

Today’s Agenda

• Delivering Second Half Performance
• Market Update

– Commercial – US Defence & Security – Non-US Defence & Security

• Strategy Update
• Summary

6 August 2015 16

Cobham plc Cobham plc

Delivering Second Half Performance

Anticipating Increased Short Cycle Market Demand

17

Orders Revenue

• Anticipate stronger second half

short cycle orders building on Q2 momentum

‒ Communications & Connectivity Sector ‒ Advanced Electronics Solutions Sector

• Higher short cycle shipments
• AAR deliveries on track
• Driving Sales, Inventory, Operations

Planning (SIOP) discipline and agility

Trading Profit Operating Cash

• Higher commercial short cycle

revenue drives improved profit

• Synergy benefits being secured
• Proactive cost control measures
• Increased profit drives H2 cash
• Driving working capital equation to

achieve 80% cash conversion target

• Investing capex in Aviation Services

to support growth (AMSA win)

Convert Short Cycle Orders to Revenue & Deliver AAR

6 August 2015

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Recapitalising Aerial Refuelling Capability

A330MRTT A400M KC-46 KC-390

Scope

• Wing Pods
• Fuselage Refuelling

Unit (centreline)

• Wing Dispense

Equipment (pods)

• Hose Drum Unit

(centreline)

• Wing Aerial

Refuelling Pods

• Centreline Drogue

System

• Body Fuel Tanks
• Wing Pods
• Refuelling Probe

Key Milestones

• Production continues; >60

pods currently in service

• June 2015: South Korea

selects A330MRTT

• Feb 2015: Successful

simultaneous AAR demonstration with F/A-18’s

• Continued production ramp
• Dec 2014: EMD1 first flight
• Summer 2015: first flight
• f KC-46 tanker
• August 2017: 18 KC-46

aircraft delivered to USAF

• Feb 2015: First flight
• 2018: KC-390 Initial

Operating Capability (IOC)

Programme Lifecycle

• 30+ aircraft on order with

additional orders likely

• Deliveries anticipated thru

2025 and beyond

• 33 aircraft current orders

with AAR capability; expect additional AAR orders

• Deliveries anticipated thru

2020 and beyond

• 179 aircraft for USAF with

follow-on order potential

• Deliveries anticipated thru

FY2027

• 60 committed orders with

additional orders likely

• Deliveries anticipated thru

2020 and beyond

18

Providing A Critical Capability and In Service Support

Leveraging Common Technology Across Platforms

6 August 2015

Cobham plc Cobham plc

Today’s Agenda

• Delivering Second Half Performance
• Market Update

– Commercial – US Defence & Security – Non-US Defence & Security

• Strategy Update
• Summary

19 6 August 2015

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6% 3% 5% 9% 8%

H1 2015 27% 41% 2011 H1 2015

We Operate In Three Principal Markets

Creating a Better Balanced Portfolio

20

Commercial Revenue (% of Group) US Defence & Security Non-US Defence & Security

Aviation

Services

Wireless Marine Space Aviation

Products

8% 10% 9% 5% 3% 6% 41% 48% 35% 25% 24% 73% 59% 2011 H1 2015

Other

US & Non-US Defence & Security Revenue (% of Group)

Portfolio Shape Better Aligned to Growth Strategy

6 August 2015

18%

Cobham plc Cobham plc

CCC 64% CMS 2% CAES 14% CAvS 20%

• 737/A320 and widebody aircraft ramp up
• Strong 4G/LTE rollout, 5G development underway
• Demand for commercial high throughput satellites

– Global Xpress and Thor 7 constellations

• Soft demand and pricing for natural resources

Well Positioned in our Commercial Markets

Connectivity and Specialist Aviation Services Enable Future Growth

6 August 2015 21

Growth Underpinned by Differentiated Technology

Drivers of Growth CCC

• SATCOM
• Wireless
• Strong positions for SATCOM, avionics and communications components
• Virtualised solutions for wireless equipment testing

CAvS

• Airline Services
• Regional Services
• Demand for gravel kit jet services to the resource sector
• Targeted fleet modernisation and service enhancements for key customers

CAES

• Microelectronics
• Semiconductors
• Strong demand for Hi-Rel products for commercial space programmes
• Medical imaging (CT & X-ray Hi-Rel components)

CMS

• Pneumatic Systems
• Actuation Systems
• Fuel tank inerting positions and emergency actuation deliveries
• Incremental growth from securing new contract for precision valves

Commercial Revenue

41% of H1 2015 Revenue

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CCC 17% CMS 28% CAES 55%

• Moderating downturn should temper historic declines
• Some Congressional momentum for potential relief

from BCA caps, but remains very unclear

• Expect a Continuing Resolution in FY16
• Modernisation of Electronic Warfare capability is US

DoD imperative to combat perceived shortfall

• Key franchise platforms remain well funded

US Defence & Security Beginning to Stabilise

Programme Positioning Key for the Future

6 August 2015 22

Investment Targeted on DoD Priority Areas

US Defence & Security Revenue

35% of H1 2015 Revenue

Drivers of Growth CAES

• Microelectronics
• Strong Microelectronics position on F-35
• Critical connectivity subsystems on major missile platforms

CMS

• Air-to-Air Refuelling
• Actuation Systems
• Positions on US DoD aerial refuelling tankers: KC-46, KC-135, KC-10, KC-130
• Increasing missile actuation

CCC

• Antennas
• Surveillance
• Year over Year short cycle bookings improvement

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CCC 28% CMS 21% CAES 6% CAvS 45%

• Increased regional tensions driving increased defence

expenditure in the Middle East

• Intensifying of NATO involvement in Middle East
• Force structure modernisation across Southeast Asia
• Increased political focus on border protection and

surveillance operations

Regional Tension Drives Non-US Defence & Security

Middle East And Asia Driving Overall Market Growth

6 August 2015 23

Strong Programme Positions Support Future Growth

Non-US Defence & Security Revenue

24% of H1 2015 Revenue

Drivers of Growth CAvS

• Special Mission
• Heliservices
• Pilot training for EW for Royal Saudi AF & General Atomics teaming agreement
• 12 year A$640 million AMSA contract to begin in the second half of 2016

CCC

• Antennas
• Avionics
• Military aircraft communications equipment sales in Middle East and Asia

CMS

• Air-to-Air Refuelling
• Weapons Carriage
• Aerial Refuelling platform wins in growing Middle Eastern and Asian markets
• Weapons Carriage and Release systems and munitions subsystems primarily

in Middle Eastern markets

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Today’s Agenda

• Delivering Second Half Performance
• Market Update

– Commercial – US Defence & Security – Non-US Defence & Security

• Strategy Update
• Summary

6 August 2015 24

Cobham plc Cobham plc

We Have a Clear Strategy

Positioning for Long Term Growth

25

Key Success Drivers

• 1. Enhance strategic focus and balance of portfolio
• 2. Connectivity underpins future growth
• 3. Focus on our customers
• 4. Sustained investment in technology
• 5. Continuously invest in people, tools & processes
• 6. Drive continuous improvement culture
• 7. Execute Aeroflex integration plan and synergy

Another Period of Strategic Progress

Strategic Objective

The Group will build and maintain leading positions in its chosen markets by leveraging innovative technology and know-how with a deep insight into customer needs.

6 August 2015

Cobham plc Cobham plc

2012

2013

2014

2015+ Building a Portfolio for Sustained Growth

26

Strengthening Positions in Long-Term Growth Markets

37% 28% 35% 48% 25% 27%

Acquisitions

Beacons Aviation Displays

Divestments

PXI Modules and Software

35% 24% 41%

Sharpening Our Strategic Focus, Connectivity 60% of our Portfolio

6 August 2015

RFMW Components 2011

US Defence & Security RoW Defence & Security Commercial

Revenue Contribution

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Summary

• Reconfirming 2015 guidance that assumes:

– Anticipated improvement in demand conditions in our short cycle, commercial land and marine markets – Continued good progress on aerial refuelling programmes

• Aeroflex integration and synergy on track
• Sharpening the strategic focus of our portfolio
• Driving organic execution and cash generation
• Interim dividend up 5%

Making Good Strategic Progress

27

Delivering Growth

6 August 2015

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APPENDICES

Cobham Interim Results 2015

6 August 2015 29

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Appendices Table of Contents

• Investor Calendar
• Group Revenue Analysis
• Revenue Bridge
• Trading Margin Bridge
• Underlying Earnings Per Share
• Group Financial KPIs
• Shareholder Returns
• Capital Expenditure and Depreciation
• Pension Deficit Movement
• Credit Facilities
• Credit Facilities – Maturity Profiles
• Covenants
• Exchange Rates
• Foreign Exchange Transaction Exposure
• Ship Set Values
• Definitions
• Glossary
• Cautionary Statement
• Notes

30 6 August 2015

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Investor Relations Calendar

6 August 2015 31

2015 2016 Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Results

5 Trading Update 3 Prelim Results 28 AGM & AGM Statement 4 Interim Results

Investor Events

15 – 18 DSEI Defence & Security Equipment Exhibition, London 1 Capital Markets Day, London 11 - 15 Farnborough Airshow

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48% 11% 14% 11% 11% 5% 35% 24% 41%

Group Revenue Analysis

6 August 2015 32

Non-US Defence & Security

(H1 2014: 28%)

US Defence & Security

(H1 2014: 34%)

Commercial

(H1 2014: 38%)

USA

(H1 2014: 42%)

UK

(H1 2014: 14%)

Other EU

(H1 2014: 15%)

Australia

(H1 2014: 15%)

Asia

(H1 2014: 8%)

RoW

(H1 2014: 6%)

Cobham plc Cobham plc

CCC CCC CMS CMS CAES CAES CAvS CAvS 11 10 191 13 11

834 1,048

H1 2014 FX Translation Divestments Acquisitions Defence/ Security Commercial H1 2015

Revenue Bridge

6 August 2015 33

£m 2.4% (3.5%) 0.3% organic growth

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Trading Margin Bridge

2014 to 2015

34

15.5% 15.3% 0.8% 0.7% 0.2% 0.1% 0.3% 1.3%

6 August 2015

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Underlying Earnings Per Share

(1.6)% (4.2)% (1.8)% 12.7% 1.8% 0.8%

Year-on-year change

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Group Financial KPIs

6 August 2015 36

Year to 31/12/11 Year to 31/12/12 Year to 31/12/13 Year to 31/12/14 H1 2014 H1 2015 Organic Revenue Growth (0.6%) (0.6%) (4.0%) (1.5%) (3.9%) 0.3% Defence / Security (3.5%) (1.5%) (8.8%) (5.1%) (10.0%) 2.4% Commercial 7.6% 1.9% 6.9% 5.3% 7.6% (3.5%) Earnings Per Share Growth (constant translation) 12.6% 3.2% (4.2%) (11.3%) (11.6%) 9.3% Operating Cash Conversion 94.8% 104.5% 85.4% 72.6% 63.9% 77.1% PV Spend % 4.9% 5.3% 6.2% 6.7% 6.6% 8.4% Return on Invested Capital % 19.4% 18.1% 15.3% 12.4% 12.3% 10.4%

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Shareholder Returns

6 August 2015 37

Full Year 2014 H1 2015 H1 2014 Growth Earnings Per Share 18.5p Underlying 9.3p 8.7p 7.7% 2.6p Basic (0.2)p 4.2p 2.6p Diluted (0.2)p 4.2p 10.65p Dividend Per Share 3.05p 2.904p 5.0%

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Capital Expenditure and Depreciation

6 August 2015 38

(1) Shown net of proceeds on disposal of property, plant and equipment. (2) Depreciation excludes amortisation of acquired intangibles but includes amortisation of other intangibles of £2.4m (2014: £2.2m). Shown net of profit/loss on sale of property, plant and equipment.

£m Net Capex(1) Depn(2) Net Capex(1) Depn(2) Cobham Communications and Connectivity 9.2 9.5 6.2 6.8 Cobham Mission Systems 1.1 2.7 3.6 2.5 Cobham Advanced Electronic Solutions 8.1 8.5 3.2 5.9 Cobham Aviation Services 33.6 19.6 11.1 17.4 Head Office 6.0 1.3 1.5 1.2 Core Businesses 58.0 41.6 25.6 33.8 Non Core Businesses

• 0.1

0.1 Cobham Group 58.0 41.6 25.7 33.9 H1 2015 H1 2014

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Pension Deficit Movement

6 August 2015 39

HY to June 2015 FY to Dec 2014 £m £m Opening Deficit (102.0) (87.3) Service Cost (3.3) (5.5) Admin Cost (0.3) (0.6) Net Finance Cost (1.7) (3.6) Total Employer Contributions 11.6 23.0 Other Actuarial Variations 11.9 (27.7) FX impact

• (0.3)

Closing Deficit (83.8) (102.0) Primary Assumptions Discount Rate 3.8% 3.5% Price Inflation Rate 3.4% 3.2% Salary Inflation Rate 3.7% 3.5% Life Expectancy of Male aged 65 in 2045 25.5yrs 25.5yrs

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Credit Facilities

6 August 2015 40

Loan / Facility Usage £m £m US$ Loan Notes Fixed rate (Mar 2016) 51.5 51.5 Floating rate (May 2017) 31.8 31.8 Fixed rate (Oct 2017) 47.7 47.7 Floating rate (Feb/Mar 2018) 66.8 66.8 Fixed rate (Mar 2019) 100.1 100.1 Fixed rate (Oct 2019) 114.5 114.5 Fixed rate (Oct 2020) 28.0 28.0 Fixed rate (Oct 2021) 159.0 159.0 Fixed rate (Oct 2024) 270.2 270.2 869.6 869.6 Bank Facilities US$90m multi-currency revolving credit agreement (Oct 2016) 57.2 54.9 US$75m credit agreement (Dec 2016) 47.7 47.7 EUR70m multi-currency revolving facility (Jun 2017) 49.6 42.0 DKK525m multi-currency revolving facility (Oct 2018) 49.9 16.5 US$270m multi-currency revolving credit agreement (Oct 2018) 171.7 164.9 AUS$90m revolving credit facility (Oct 2018) 44.0 26.3 US$185m bi-lateral credit agreement (Oct 2018) 117.6 117.6 US$40m Schuldschein agreement (May 2020) 25.4 25.4 EUR131m Schuldschein agreement (May 2020) 92.8 92.8 EUR4m Schuldschein agreement (May 2022) 2.8 2.8 658.7 590.9 Total Committed Facilities 1,528.3 1,460.5 Overdrafts 0.1 0.1 Finance Leases 0.1 0.1 Gross Debt 1,528.5 1,460.7 Cash (224.1) Net Debt 1,528.5 1,236.6

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200 400 600 800 1,000 1,200 1,400 1,600 1,800 Dec 15 Dec 16 Dec 17 Dec 18 Dec 19 Dec 20 Dec 21 Dec 22 Dec 23 Dec 24 £m Mar, Oct, Dec Feb, Mar, Oct Oct

Net Debt at June 2015 £1,237m

May, Jun, Oct Mar, Oct Oct May, Oct

Credit Facilities – Maturity Profile

6 August 2015 41

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Covenants

6 August 2015 42

(1) For covenant purposes net debt is typically expressed at average translation rates. (2) EBITDA includes pro forma adjustments in respect of acquisitions and divestments.

Jun-15 Dec-14 Jun-14 Dec-13 Net Debt (£m) - Balance Sheet (1,236.6) (1,222.7) (313.3) (453.4) Net Debt (£m) - Average Rate (1) (1,242.4) (1,159.2) (333.6) (479.6) EBITDA (2) - rolling 12 months (£m) 422.5 440.2 366.3 395.0 Net Debt to EBITDA (not to exceed 3.5 times) 2.9 2.6 0.9 1.2 EBITA - rolling 12 months (£m) 323.7 297.6 300.6 322.4 Net Interest - rolling 12 months (£m) 41.9 28.4 21.4 27.0 Interest Cover (to exceed 3 times) 7.7 10.5 14.0 11.9

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Exchange Rates

• Translation impact

– 2015 underlying PBT at June closing rates would be c.£3.5m lower – Movements in exchange do not impact

• rganic performance comparisons

– Translation risk not hedged as generally impact is only crystallised to the extent that profit is not reinvested in the business and is repatriated to the UK – Risk partly mitigated by matching the currency profile of debt to that of the functional currencies of our operations

• Transaction impact

– Mostly hedged where we have costs or revenues that are not in underlying functional currency of the business – See next slide “Foreign Exchange Transaction Exposure” highlighting US$/£ and US$/DKK forward coverage

6 August 2015 43

Average rate Closing rate % change June 2015 US$ 1.53 1.57 (3)% AUS$ 1.95 2.05 (5)% EUR 1.37 1.41 (3)% DKK 10.19 10.53 (3)% Dec 2014 US$ 1.65 1.56 5% AUS$ 1.83 1.91 (4)% EUR 1.24 1.29 (4)% DKK 9.25 9.60 (4)% June 2014 US$ 1.67 1.71 (2)% AUS$ 1.83 1.81 1% EUR 1.22 1.25 (2)% DKK 9.09 9.31 (2)% Revenue PBT Net Debt £m £m £m US$ 7 1 7 AUS$ 1 EUR / DKK 2 1 10 1 8 Impact of pro rata 1 cent movement

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Foreign Exchange Transaction Exposure

6 August 2015 44

2015 Total $159m Hedging in place $159m $/£ -98% $/DKK - 100% hedged for 2015 Average hedge rates $1.59: £1 $1:DKK 5.75 2016 Hedging in place Average hedge rates $1.53: £1 $1:DKK 5.47 Average hedge rates $1.56: £1 $1:DKK 5.34 $48m 2017 to 2022

Transaction Exposure:

Historic average effective rate 2011 $ 1.56 : £1 2012 $1.59 : £1 2013 $1.59 : £1 2014 $1.61 :£1

Dollar/Euro exposure predominantly hedged for 2015 with $56m @ 1.28

$129m $126m $43m $125m $28m $/DKK $/£

Cobham plc Cobham plc

Missile

US $k AMRAAM 50-150 AARGM 120 PAC3/Patriot 210 Standard Missile 90-125 THAAD 2,000

Commercial Aircraft

A320 60-100 A350 130 A380 260 B737 50-110 B777 50 B787 105-150 C919 90 G650 30 MRJ 50

Military Fast Jet

US $k F-16 500-1000 F/A-18 E/F/G 1,000-2,700 F-35 1,200 Typhoon 1,400 Hawk 600 Rafale 160 PC-7 140 T-50 100-150 Gripen 180-500

Medium/Large Military Aircraft

Sentry E-2D 250 Poseidon P-8 880 C-130/KC-130 300-3,200

Satellite

Boeing 702 500-5,000

Rotorcraft

US $k EH101 550-775 EC175 80-170 Apache 500 CH-47 Chinook 90 CH-53K 400 S-61 40 MH60/UH60 350-850 V-22 500-1,100

UAV

Predator/Reaper 250-700 Global Hawk 1,700-2,000

Naval

EDG1000 1,200-1,400 Aegis 2,200-4,500

Ship Set Values

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Cobham plc Cobham plc Underlying To assist with the understanding of earnings trends, the Group has included within its published financial statements non-GAAP measures including trading profit and underlying earnings results. Trading profit has been defined as operating profit from continuing operations excluding the impacts of business acquisition and divestment related activity and business restructuring costs as detailed below. Also excluded are changes in the marking to market of non-hedge accounted derivative financial instruments, impairments of intangible assets and items deemed by the Directors to be of an exceptional nature. Underlying earnings are defined as trading profit less net underlying finance costs, which excludes acquisition related items, and after deducting associated taxation and non-controlling interests. Business acquisition and divestment related items Business acquisition and divestment related items excluded from trading profit and underlying earnings include the amortisation of intangible assets recognised on acquisition, adjustments to businesses held for sale, the writing off of the pre-acquisition profit element of inventory written up on acquisition, and other direct costs associated with business combinations and terminated divestments. Business restructuring costs Business restructuring costs relate to the restructuring of the Group’s portfolio which are incremental to normal operations. Operating cash flow Operating cash flow is defined as net cash from operating activities before payment of tax, interest, restructuring costs and M&A related costs but after cash flows from the purchase or disposal of property, plant, equipment and intangible assets. Operating cash conversion is defined as operating cash flow as a percentage of trading profit. Free cash flow Free cash flow is defined as net cash from operating activities less cash flows related to the purchase or disposal of property, plant, equipment and intangible assets but excluding payments relating to M&A related activities. Net debt Net debt is defined as the net of borrowings less cash and cash equivalents at the balance sheet date. Organic revenue growth Organic revenue growth is defined as revenue growth stated at constant translation exchange rates, excluding the incremental effect of acquisitions and divestments. PV investment PV (Private Venture) or company funded R&D (Research and Development) measures exclude Aviation Services, where there is no R&D activity. Invested capital Invested capital comprises net assets adjusted to exclude net debt, retirement benefit obligations, derivative financial instruments, current and deferred tax, provisions and other financial assets. Intangible assets recognised on business combinations are grossed up to original cost before amortisation and an adjustment is also made to reinstate historic goodwill previously written off directly to reserves. Return on invested capital Trading profit as a percentage of the average invested capital during the period. 46

Definitions

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Glossary

47

4G Fourth Generation 5G Fifth Generation AAR Air-to-Air Refuelling AARGM Advanced Anti-Radiation Guided Missile AESA Active Electronically Scanned Array (radar) AGM Annual General Meeting AMDR Air and Missile Defence Radar AMRAAM Advanced Medium-Range Air-to-Air Missile AMS Aeroflex Microelectronic Solutions AMSA Australian Maritime Safety Authority ATS Aeroflex Test Solutions BCA Budget Control Act BD Business Development BEU Battery Electronics Unit C4ISR Command, Control, Communications, Computers, Intelligence, CAES Cobham Advanced Electronic Solutions CAGR Compound Annual Growth Rate CAPEX Capital Expenditure CAS Cobham Aerospace and Security CAvS Cobham Aviation Services CCC Cobham Communications and Connectivity CDMA Code Division Multiple Access CFIUS Committee on Foreign Investment in the United States CMS Cobham Mission Systems CT Computed Tomography DAS Distributed Antenna System DoD Department of Defence DSEI Defence and Security Equipment International EBITA Earnings Before Interest Tax and Amortisation EBITDA Earnings Before Interest Tax Depreciation and Amortisation EDGE Enhanced Data rates for GSM Evolution EiD Excellence in Delivery EMD Engineering, Manufacturing and Development E-Scan Electronically Scanned EU European Union EVP Executive Vice President EW Electronic Warfare FBH FB Heliservices FIFO Fly-In Fly-Out FSTA Future Strategic Tanker Aircraft FX Foreign Exchange GDP Gross Domestic Product GPRS General Packet Radio Service GSM Global System for Mobile communications GX Global Xpress HD High Definition HiRel High Reliability HSR Hart–Scott–Rodino (Antitrust Improvements Act) HSXPA Third Generation High Speed Packet Access IMS Interim Management Statement IOC Initial Operating Capability IP Internet Protocol JV Joint Venture KPI Key Performance Indicator LCM Life-Cycle Management LRIP Low Rate Initial Production LTE Long Term Evolution M&A Mergers & Acquisitions M2M Machine-to-Machine MENA Middle East and North Africa MRJ Mitsubishi Regional Jet MRTT Multi Role Tanker Transport NATO North Atlantic Treaty Organisation OCF Operating Cash Flow PAC 3 Patriot Advanced Capability-3 PBT Profit Before Tax PCI Peripheral Component Interconnect PM Programme Management PP Private Placement PTS Points PV Private Venture (Company funded R&D) PXI PCI eXtensions for Instrumentation R&D Research & Development RDT&E Research, Development, Test & Evaluation RF Radio Frequency RF/MW Radio Frequency / Microwave RoW Rest of World RSAF Royal Saudi Air Force SAR Search-And-Rescue SATCOM Satellite Communication SEWIP Surface Electronic Warfare Improvement Program SSA Special Security Agreement SWAP-C Space, Weight, Power and Cooling SWP Strategic Workforce Planning TC&S Tactical Communications & Surveillance TD-SCDMA Time Division Synchronous Code Division Multiple Access THAAD Terminal High Altitude Area Defence UAV Unmanned Aerial Vehicle UMTS Universal Mobile Telecommunications System USAF United States Air Force USMC United States Marine Corps WCDMA Wideband Code Division Multiple Access WIP Work In Process YTD Year-to-Date

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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 currency exchange rates. All written or verbal forward-looking statements, made in this document or made subsequently, which are attributable to Cobham or any

• ther 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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Notes Page

49 6 August 2015