3 March 2011 The most important thing we build is trust 2010 Preliminary Results
Agenda • Introduction Andy Stevens Chief Executive Officer • Financial Results Warren Tucker Chief Financial Officer • Business Review Andy Stevens • Q&A 1 Cobham plc
Summary Profit and Loss Account Year to Year to 31/ 12/ 09 31/ 12/ 10 Growth £m £m Revenue 1,880.4 1,902.6 1.2% Trading Profit 348.4 337.0 3.4% Trading Margin 18.3% 17.9% 0.4pts Underlying Profit before Taxation 295.3 306.1 3.7% Underlying Earnings Per Share 18.80p 19.68p 4.7% PV Spend % 4.5% 5.3% (0.8)pts Order book £2.5bn – order intake up 7% at constant translation exchange in technology divisions Note: See Appendix for definitions, including underlying, used throughout this presentation. 2 Cobham plc
Underlying Earnings Per Share Growth 0.9% (1.1)% 2.4% 1.2% 1.3% 4.7% 20.0 19.68 19.5 19.0 18.80 pence 18.5 18.0 3.8% at constant translation exchange 17.5 17.0 2009 FX Translation Growth FX Other margin Interest, tax & 2010 Transaction effects other 3 Cobham plc
Cash Flow Year to Year to 31/ 12/ 09 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 79.3% 88.6% (9.3)pts Free Cash Flow from Business 218.6 221.4 (1.3% ) Decrease in Net Debt 228.7 86.5 Dividend per Share 5.45p 6.00p 10.1% Net Debt £326.1m, Net Debt:EBI TDA 0.8x 4 Cobham plc
Technology Divisions’ Revenue Growth 2,000 1,654 2 0 1,630 (1.6)% (1.2)% 1,500 CMS CMS (1.6)% Organic Growth CAS CAS £m 1,000 500 CDS CDS 0 2009 FX Translation Net Acquisitions Defence/ Commercial/ 2010 Security Other CDS: Cobham Defence Systems, CAS: Cobham Avionics and Surveillance, CMS: Cobham Mission Systems 5 Cobham plc
Technology Divisions’ Organic Revenue Growth Cycle Over the Medium Term 5 Year Full Year CAGR 5.5% 2,000 0.6% (1.6)% 10.3% 13.2% 1,500 (16)% (1.2)% Commercial 5.8% /Other £m (1.6)% 7% 1,000 Defence & Security 500 0 2005 2006 2007 2008 2009 2010 Excludes FX, Acquisitions and Disposals. 2005, 2006, 2007, 2008 and 2009 are proforma numbers for illustration purposes 6 Cobham plc
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 on 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 7 Cobham plc
Cobham Mission Systems • 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 of 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 Excludes FX, Acquisitions and Disposals. Prior year are pro forma numbers for illustration purposes 8 Cobham plc
Cobham Defence Systems • 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 Excludes FX, Acquisitions and Disposals. Prior year are pro forma numbers for illustration purposes 9 Cobham plc
Cobham Aviation Services • 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 operations for the UK MoD Excludes FX, Acquisitions and Disposals. Prior year are pro forma numbers for illustration purposes 10 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
Financial Highlights • 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 12 Cobham plc
Agenda • Introduction Andy Stevens Chief Executive Officer • Financial Results Warren Tucker Chief Financial Officer • Business Review Andy Stevens • Q&A 13 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 Strengthening technology through targeted PV investment and acquisitions 15 Cobham plc
Our Strategy • Maintain an appropriately focused portfolio on the defence, security and commercial markets, Focus on Defence, 1 such that we 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 Sell technically 2 have attractive characteristics, and in which we can maintain a sustainable competitive advantage differentiated products & services • 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 sustainable 3 • Build or maintain scale positions in these markets to ensure we have the necessary scale to scale positions support investment, maintain market leadership and deliver long term business growth • Achieve Excellence In Delivery for our customers, capturing cost synergies through simplifying Deliver operational 4 and standardising processes, integrating operations and building operational capabilities excellence • Invest in our talent • 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 the portfolio segments or deliver distinctive technologies or capabilities to accelerate our organic growth Making good progress against the strategy 16 Cobham plc
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