2001 Preliminary Results 14 February 2002
Financial Highlights • Profit before interest* £1,260m • Profit before interest* £1,260m • Fully diluted earnings per share* 23.4p • Fully diluted earnings per share* 23.4p • Dividend per share up 5.9% 9.0p • Dividend per share up 5.9% 9.0p • Operating cash flow £510m • Operating cash flow £510m • Net debt £831m • Net debt £831m • Order book £43.8bn • Order book £43.8bn * Excluding exceptional items and goodwill amortisation
Profit and Loss Account 2000 2001 12,185 13,138 Sales (including share of JV sales) 1,250 1,260 Underlying Profit before interest * 950 1,260 Profit before interest ** (91) (177) Interest 859 1,083 Profit before tax** (307) (518) Exceptional items £ millions * Before Nimrod charge and excluding exceptional items and goodwill amortisation ** Excluding exceptional items and goodwill amortisation
Restated Balance Sheet 31/12/01 31/12/00 Fixed assets 10,358 10,142 Working capital (906) (1,372) Net cash (899) (831) Provisions (1,476) (1,281) Net assets 7,077 6,658 Minority interest (20) (100) Shareholder funds 6,977 6,638 £ millions
Operating Cash Flow 2001 Profit before interest* 1,260 less Exceptional Items (136) Net capital expenditure (214) Depreciation 239 Movements in provisions (207) Customer stage payments 405 Movements in other working capital (871) Other items (incl. J/V profits/dividend) 34 Operating cash flow 510 * Excluding exceptional items and goodwill amortisation £ millions
Non-operating Cash Flow 2001 - Acquisitions 135 Disposals (189) Net interest (381) Tax and dividends 30 Net proceeds from equity issues (37) Other items (442) Non operating cash flow £ millions
Programmes 16% of Group sales 2000 2001 Sales £2,430m £2,310m PBIT * £303m £138m Margin 12.5% 6.0% Order book £10.1bn £10bn Cash flow £ 868m £(212)m * before Nimrod charge
Programmes Sector Growth 3500 Astute £m 3000 Type 45 Future Systems 2500 Gripen Nimrod 2000 Hawk 1500 Tornado/Harrier & US Typhoon 1000 AY 500 0 2001 2004* * Estimated
Customer Solutions and Support 15% of Group sales 2000 2001 Sales £1,844m £2,042m PBIT £434m £414m Margin 23.5% 20.3% Order book £2.8bn £2.6bn Cash flow £ 554m £405m
International Partnerships 13% of Group sales 2000 2001 Sales £1,858m £1,816m PBIT £117m £102m Margin 6.3% 5.6% Order book £6.3bn £5.6bn Cash flow £18m £255m
Avionics 7% of Group sales 2000 2001 Sales £1,133m £1,027m PBIT £107m £109m Margin 9.4% 10.6% Order book £2.8bn £2.9bn Cash flow £ 43m £70m
North America 18% of Group sales 2000 2001 Sales £1,674m £2,577m PBIT £165m £250m Margin 9.9% 9.7% Order book £2.4bn £2.4bn Cash flow £168m £119m
Operations 9% of Group sales 2000 2001 Sales £1,331m £1,277m PBIT £(33)m £39m Margin (2.5)% 3.1% Order book £4.6bn £3.8bn Cash flow £127m £(74)m
Commercial Aerospace 22% of Group sales 2000 2001 Sales £2,868m £3,021m PBIT £149m £220m Margin 5.2% 7.3% Order book £16.1bn £20.1bn Cash flow £ 31m £118m
Financial Summary Profit before interest * £1,260m Profit before interest * £1,260m Margin 9.6% Margin 9.6% Net debt £831m Net debt £831m Operating cash flow £510m Operating cash flow £510m Diluted earnings per share* 23.4p Diluted earnings per share* 23.4p Dividend per share 9.0p Dividend per share 9.0p Order book £43.8bn Order book £43.8bn Order book £43.8bn * Excluding exceptional items and goodwill amortisation
John Weston
Agenda • 2001 Report 2001 Report • Market environment Market environment • • Strategic development Strategic development •
2001 Report 2001 Report 2001 Report MM1091
Key Points • Company transformation Company transformation • – Transatlantic position established Transatlantic position established – – European Joint Ventures successfully restructured – European Joint Ventures successfully restructured – A line drawn under Regional Aircraft market exposure A line drawn under Regional Aircraft market exposure – • • Growth secured by large order book Growth secured by large order book • • Well positioned for emerging opportunities Well positioned for emerging opportunities – C4ISR – C4ISR – US budget growth US budget growth – – Homeland Security – Homeland Security – Growth in Air, Sea Systems and S3I Growth in Air, Sea Systems and S3I – • Commercial aircraft down • Commercial aircraft down- -cycle managed cycle managed - - poised for upturn poised for upturn • • Fundamentally improved the risk profile of the company going for Fundamentally improved the risk profile of the company going forward ward
Revised Operational Structure Steve Mogford Mike Turner Mark Ronald COO COO COO & President BAE SYSTEMS NA • Avionics Avionics • • Controls • Controls • Air Systems • Air Systems • International • International Partnerships Partnerships • Information Systems • Information Systems • Sea Systems Sea Systems • • Shared Services • Shared Services • RO Defence • RO Defence • Technologies Services • Technologies Services • CS&S CS&S • • Aerostructures Aerostructures • • Aircraft Services • Aircraft Services • Information & Information & • • C4ISR • C4ISR Group Group Electronic Systems Electronic Systems • Future Carrier PCO Future Carrier PCO • Integration Integration • Capital • Capital • Ventures Ventures •
Programmes - Air Systems • MRA4 MRA4 • – Cost to complete stabilised – Power on achieved December 2001 – Interest from US Navy for MMA requirement • Typhoon Typhoon • – Production aircraft first flight imminent – Cost to complete review across total programme – Significant activity to address entry into service – Much improved baseline for 2002 • Hawk Hawk • – Australian deliveries completed – UK MFTS requirement progressing
Programmes - Air Systems • Gripen Gripen • – Hungary contract signed to lease 14 aircraft Hungary contract signed to lease 14 aircraft – – Czech Republic selected 24 aircraft Czech Republic selected 24 aircraft – – Poland RFI for up to 60 aircraft Poland RFI for up to 60 aircraft – – Austria requirement for 30 aircraft Austria requirement for 30 aircraft – – Marketing joint venture formalised Marketing joint venture formalised – • F • F- -35 JSF 35 JSF – Requirement for circa 3,000 aircraft in US and UK – Deliveries from 2008 – SDD programme worth circa £1.9bn to BAE SYSTEMS – Additional export opportunities • F • F- -22 22 – Low Rate Initial Production authorised * Based on US & UK programme excluding exports * Based on US & UK programme excluding exports
Programmes - Military Aircraft Sustaining Engineering • Order intake activity recovered to planned level • Order intake activity recovered to planned level - Order intake 400 £m 300 200 100 0 1997 1998 1999 2000 2001
Programmes - Sea Systems • Astute Astute • – Programme baseline established – Hull build progressing – 2nd boat build commenced • Type 45 Destroyer • Type 45 Destroyer – Platform procurement strategy agreed – Design programme progressing well – Platform sub-contract negotiations continue • Future Carrier • Future Carrier – Good performance on first phase study – UK MoD procurement strategy reviewed – Second study phase approach re-structured – Doubled funding available over half the original time
Programmes - C4ISR • C4ISR organisation C4ISR organisation • – New structure facilitates pan company approach • IFPA IFPA • – Extended range Indirect Fire Precision Attack capability – Winning contractor for MoD assessment phase • Watchkeeper • Watchkeeper – Systems definition contract for British Army’s next generation battlefield UAV based ISTAR system • TRACER / FRES • TRACER / FRES – TRACER cancelled - released from undertakings – UK and US requirements being redefined – Teams forming for replacement programmes
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