5 August 2010 The most important thing we build is trust 2010 Interim Results
Agenda • Introduction Andy Stevens Chief Executive Officer • Financial Results Warren Tucker Chief Financial Officer • Business Review Andy Stevens • Q&A 1 1 2010 Interim Results Cobham plc
Summary Profit and Loss Account Full Year 2009 H1 2009 H1 2010 Growth £m £m £m 1,880.4 Revenue 952.1 963.4 1.2% Trading Profit 167.2 337.0 161.7 3.4% 17.9% Margin 17.0% 17.4% 0.4pts Profit before Taxation 144.6 295.3 141.2 2.4% 18.80p Underlying Earnings Per Share 8.96p 9.29p 3.7% 5.3% PV Spend % 5.4% 4.7% (0.7)pts Order book £2.5bn – order intake up 5% in technology divisions 2 2 2010 Interim Results Cobham plc Note: See Appendix for definitions, including underlying, used throughout this presentation.
Earnings Per Share Growth 0.1% 1.5% 1.6% 5.0% (2.7)% (3.0)% 1.2% 3.7% 10.0 9.5 9.29 pence 8.96 9.0 3.9% 8.5 3.6% at constant translation exchange 8.0 H1 2009 FX Translation Growth FX Other margin Interest Pension Tax rate & H1 2010 Transaction effects Finance other Charge 3 3 2010 Interim Results Cobham plc
Cash Flow and Dividend Full Year 2009 H1 2009 H1 2010 Growth £m £m £m Trading Profit (ex. JV) 164.7 330.9 159.2 3.5% Operating Cash Flow 135.1 293.2 139.1 (2.9% ) 88.6% Operating Cash conversion 87.4% 82.0% (5.4)pts 213.6 Free Cash Flow from Business 95.1 102.7 8.0% 228.7 Decrease in Net Debt 199.8 39.3 5.45p Dividend per Share 1.48p 1.628p 10.0% Net Debt £373.3m, Net Debt:EBI TDA 0.9x 4 4 2010 Interim Results Cobham plc
Technology Divisions’ Revenue Growth 1,000 843 2% 5 833 3% 23 CMS 750 CMS 1.0% Organic Growth CAS CAS £m 500 250 CDS CDS 0 H1 2009 FX Translation Acquisitions Defence/ Commercial/ H1 2010 Security Other 5 5 2010 Interim Results Cobham plc
Technology Divisions’ Organic Revenue Growth Cycle Over the Medium Term 4 Year Full Year CAGR 7.4% , 5 Year Half Year CAGR 6.3% 2,000 0.6% 10.3% 13.2% 1,500 5.8% £m 1,000 1.0% 0.6% 14.3% 7.8% 8.3% H2 500 H1 0 2005 2006 2007 2008 2009 2010 Excludes FX, Acquisitions and Disposals. Prior year are proforma numbers for illustration purposes 6 6 2010 Interim Results Cobham plc
Cobham Avionics and Surveillance Other US Defence / Acq Mix / Comms Security Translation Organic 34% 13% 2009 H1 FX Growth 2010 H1 Revenue £m 237.0 254.8 (5.2) (12.6) Non US Commercial Defence / Trading Profit £m 38.5 42.5 Aerospace/ Security GA 24% Margin 16.7% 0.2pts (0.7)pts 16.2% 29% 37% revenue defence/ security 35% US revenue 4 year organic revenue CAGR 8.3% • Continued demand for surveillance 600 equipment but uneven orders and (3.0)% 10.2% revenue in H1 17.5% 9.6% 400 • Strong sales of the Minehound IED £m 1.6% (4.9)% 9.2% 20.4% H2 detector 2.1% 200 • New SATCOM products and market H1 opportunities with some signs of 0 market improvement 2005 2006 2007 2008 2009 2010 • Small aircraft and helicopter markets remain fragile – unlikely to improve significantly in 2010 Excludes FX, Acquisitions and Disposals. Prior year are proforma numbers for illustration purposes 7 7 2010 Interim Results Cobham plc
Cobham Mission Systems Commercial Other Aerospace/ Acq Mix / Comms GA Translation Organic 9% 4% 2009 H1 FX Growth 2010 H1 Non US Defence / Revenue £m 162.7 (3.4) 12.0 171.3 Security 30% Trading Profit £m 27.0 29.1 US Defence / Security Margin 17.0% 16.6% - 0.4pts 57% 87% revenue defence/ security 67% US revenue 4 year organic revenue CAGR 1.1% • Successful delivery of next generation 400 air refuelling pods – good order 8.6% (8.9)% backlog (7.2)% 13.9% 300 £m H2 • Increasing deliveries of Eurofighter 7.3% 200 21.8% (7.5)% weapons carriage and release (7.5)% 4.0% products 100 H1 • Orders and revenue from 2009 Air 0 Warrior cooling systems IDDQ 2005 2006 2007 2008 2009 2010 Excludes FX, Acquisitions and Disposals. Prior year are proforma numbers for illustration purposes 8 8 2010 Interim Results Cobham plc
Cobham Defence Systems Commercial Other Acq Mix / Aerospace/ Comms Translation Organic GA 1% Non US 2009 H1 FX Growth 2010 H1 3% Defence / Revenue £m 436.6 (9.2) 6.4 433.8 Security 10% Trading Profit £m 74.9 79.9 US Military / Government Margin 17.2% 0.3pts 0.9pts 18.4% 86% 96% revenue defence/ security 89% US revenue 4 year organic revenue CAGR 11.4% • Growth held back by delays in award 1,000 of some contracts 9.5% 10.8% 8.4% 750 • First Missile Defence Agency IDIQ 17.1% awards under MIDAESS – Cobham 1.5% 6.0% £m 500 13.2% successful 0.0% 45.7% H2 250 • Good performance from microwave, H1 composites and tactical 0 communications in H1 – C4ISR a 2005 2006 2007 2008 2009 2010 priority market for customers Excludes FX, Acquisitions and Disposals. Prior year are proforma numbers for illustration purposes 9 9 2010 Interim Results Cobham plc
Cobham Aviation Services Acq Mix / Commercial Translation Organic Aerospace/ 2009 H1 FX Growth 2010 H1 GA 33% Revenue £m 111.4 14.8 5.1 131.3 Non US defence/ Trading Profit £m 15.3 15.7 Security 67% Margin 12.0% 13.7% (0.3)pts (1.4)pts 67% revenue defence/ security 27% UK revenue, 65% Australia 4 year organic revenue CAGR 1.7% • Good growth in Australia from 300 government Sentinel contract (3.2)% 9.6% (1.5)% 2.5% • Australian regional services benefiting 200 H2 from improving economy – further £m 4.6% 1.6% (4.3)% 0.0% 4.8% opportunities for growth 100 • More uncertain outlook in UK – H1 potential for broader participation in 0 MFTS 2005 2006 2007 2008 2009 2010 Excludes FX, Acquisitions and Disposals. Prior year are proforma numbers for illustration purposes 10 10 10 2010 Interim Results Cobham plc
Financial Highlights • Trend in orders and revenue is positive • Robust margin control in H1; resilient earnings • Strong operating cash conversion; £103m of Free Cashflow • Business efficiency opportunities underpin 2010 and beyond • Continued 10% increase in dividend 11 11 11 2010 Interim Results Cobham plc
Agenda • Introduction Andy Stevens Chief Executive Officer • Financial Results Warren Tucker Chief Financial Officer • Business Review Andy Stevens • Q&A 12 12 12 2010 Interim Results Cobham plc
Business Review • The comprehensive business review considered: – Our markets – Our operational delivery • We asked ourselves how: – Further synergies and cost efficiencies can be extracted – Future integration and standardisation savings should be invested – To refine our portfolio towards the areas where we have the greatest competitive advantage and opportunities for growth – What the appropriate focus is for acquisitions • I t delivered the following five strategic priorities 13 2010 Interim Results Cobham plc
Our Strategy • Maintain an appropriately focused portfolio on the defence, security and commercial markets, such Focus on Defence, 1 that we can can add value and manage risk across the portfolio Security & Commercial markets • Sell technically differentiated products and services that meet customer’s needs in markets that have Sell technically attractive characteristics, and in which we can maintain a sustainable competitive advantage 2 differentiated • Continue to provide core Tier 3 capabilities and selectively offer Tier 2 to meet customer needs products & services • Develop and maintain top 3 positions in our markets Build sustainable 3 • Build or maintain scale positions in these markets to ensure we have the necessary scale to support scale positions investment, maintain market leadership and deliver long term business growth • Achieve Excellence In Delivery for our customers, capturing cost synergies through simplifying and Deliver operational standardising processes, integrating operations and building operational capabilities 4 excellence • Attract, develop and retain superior talent and manage it across the business • Actively manage the portfolio, exiting businesses that do not fit with our strategy Actively manage 5 • Acquire businesses that build scale, allow us to exploit our existing capabilities in adjacent segments or the portfolio deliver distinctive technologies or capabilities to accelerate our organic growth 14 14 2010 Interim Results Cobham plc
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