2007 - Cobham plc · 12 Interim Results 2007 Acquisition Update Board has confidence that...

Interim Results 20071



Highlights

Solid order intake, order book of £1.7bn

Strong organic revenue growth of 7.8% across the technology divisions

Success with several significant R&D projects; PV up to 6.2%

Strong underlying EPS growth of 10.3% (15.3% at constant translation exchange)

Acquisitions remain a key element of the growth strategy


Summary Profit and Loss Account

0.3pts6.2%5.9%PV Spend %**

9.1%86.178.9Profit before Taxation**

0.9pts16.9%16.0%Margin

1.0%83.482.6Trading profit**

(4.5)%493.8517.2Revenue

(33.5)%575.3865.5Orders Received*

Growth

Unaudited Half Year to

30/06/07£m


30/06/06£m

AuditedYear to

31/12/06£m

1,390.5

1,015.7

186.3

18.3%

6.0%

182.9

* H1 2006 includes £326m of Sentinel orders** Note: See Appendix for definitions, including underlying, used throughout this presentation


Shareholder Returns

28.0%29.4%Underlying Tax Rate

52.6%4.12p2.70 pFree Cash Flow Per Share

10%1.22p1.11 pDividend Per Share

4.40p6.80 pFully Diluted

4.43p6.87 pBasic

10.3%5.48p4.97 pUnderlying

Earnings Per Share

Growth

UnauditedHalf Year to

30/06/07£m


30/06/06£m

Audited Year to

31/12/06£m

28.7%

11.66 p

13.13 p

13.00 p

3.75 p

9.20 p


Earnings Per Share Growth

5.9

5.7

5.5

5.3

5.1

4.9

4.7

4.5

4.3

(5.0)% (1.0)% 16.3% 10.3%

4.97

0.250.05

0.81 5.48

pen

ce

2006 Half Year FX Translation FX Transaction Growth 2007 Half Year

15.3% OrganicGrowth


Cash Flow

57.783.4Change in Net Borrowings/Cash

53.6%46.730.4Free Cash Flow from Business

4.0pts75.1%71.1%Operating Cash Flow/Trading Profit

6.6%61.357.5Operating Cash Flow

0.9%81.680.9Trading Profit (ex. JV)

Growth


30/06/07£m


30/06/06£m

Audited Year to

31/12/06£m

181.6

153.0

84.3%

103.8

169.2

Net cash £58.6m


Revenue and Profit

1.0%83.482.6(4.5)%493.8517.2Cobham Group16.9%16.0%Margin

(5.2)%9.19.6(2.0)%94.596.4Flight Operations & Services (CFOS)

9.6%10.0%Margin

5.5%77.273.2(2.8)%396.3407.7Technology Divisions

19.5%18.0%Margin

(1.4)(1.5)

1.6(1.8)

3.0-

13.1-

Other businesses*FSTA Bid Costs

4.2%86.382.8(2.6)%490.8504.1Operating Divisions

GrowthUnaudited H1 2007

UnauditedH1 2006Growth

Unaudited H1 2007

UnauditedH1 2006£m

Trading ProfitRevenue

* ERA Technology, Slingsby Aviation, Atlas Composites, Applied Composites, Property and Head Office, Countermeasures companies (discontinued operations)


Technology Divisions Revenue Growth

Impact of using spot rate to account for hedged revenues

420

400

390

380

370

360

350

340

330

410(6.5)% (4.6)% 0.5% 7.9%

407.7

26.4

32.4 396.3

£m

H1 2006 FX Translation FX Transaction Growth H1 2007

7.8% OrganicGrowth

18.8

2.0

0.6

Disposals Acquisitions

(0.1)%


Technology Divisions Revenue Growth

10.3%77.273.27.8%396.3407.7Technology Divisions

19.5%18.0%

12.412.761.973.0Life Support20.0%17.4%Margin

21.823.394.0100.7Defence Electronic Systems

23.2%23.1%Margin

20.813.4119.5100.8Avionics & Surveillance

17.4%13.3%Margin

18.420.080.892.0Antennas22.8%21.7%Margin

3.83.840.141.2Air Refuelling & AME9.5%9.2%Margin

OrganicGrowth

Unaudited H1 2007

UnauditedH1 2006

OrganicGrowth

Unaudited H1 2007

UnauditedH1 2006£m



19.5%18.0%



23.2%23.1%Margin


17.4%13.3%Margin

18.420.080.892.0Antennas22.8%21.7%Margin


OrganicGrowth

Unaudited H1 2007

UnauditedH1 2006

OrganicGrowth

Unaudited H1 2007

UnauditedH1 2006£m


8a


Technology Divisions Trading Profit Growth

78

74

72

70

68

66

64

76

(5.1)% (0.4)% 0.7% 11.1%

73.2

3.7

8.1 77.2£

m

2006 H1 FX Translation FX Transaction Growth 2007 H1

10.3% OrganicGrowth

0.3

0.5

0.6


(0.8)%

9


US$ Transaction Exposure & Hedging

Chelton Ltd

CDC

Total 2007

2007

2009 to 2014

FRL$13m

$155m

2007 and 2008 Exposures:

Hedging in place:

$151m

$114m

Historic averageeffective rate

2003 $1.48 : £12004 $1.59 : £12005 $1.70 : £12006 $1.77 : £1

97% hedged for 2007

Dollar/Euro exposure predominantly hedged with $29m at 1.29 for 2007 and $15m at 1.36 for the first 6m of 2008

Avionics and Surveillance

FRA

$60m

2008

-$3m

$14m

$33m

$32m

$10m

$6m$102m

$70m

-$5m

$117m 97% hedged for 2008Total 2008

Avg hedge rate $1.92: £1



10


Acquisition Update

Board has confidence that acquisitions will drive significant growth

$2.6bnEstimated Acquisition Cost$2.1bnEstimated Acquisition Cost

B- Avionics

L,M- Defence ElectronicsPrime Divestment

B- Defence Electronics

M- Life Support

M- AntennasPrivate Equity

B- Defence Electronics

M,B,B- Antennas

M- AR&AMEB- Defence Electronics

B- Life SupportPrivate Companies

M, B- Antennas

M- Antennas

M- Defence Electronics

L- Antennas

Public Companies

L- Defence Electronics

SIZEACTIVE PIPELINEOWNERSHIPSIZEMISSED/PASSED

Patriot Antennas acquisition completed - $45m

L >$500M M $100-$500M B(Bolt on/Bolt In) < $100M11


Exceptional Profits from Portfolio Restructuring

£14.6mAvailable to invest on further exceptional restructuring

£(5.5m)

£(2.5)m£(1.0)m£(0.9)m£(0.5)m£(0.6)m

Restructuring costs, H1 2007Wimborne Site RestructuringLife Support IntegrationClosure of Falcon Special Air ServicesRacal Antennas IntegrationOther

£20.1m

£5.6m£14.5m

Exceptional Profits on Disposals20052006

12


2007 H1 Financial Highlights

7.8% organic revenue growth across technology divisions; 4 divisions operating well above pro-forma growth

Technology divisions trading margin increased by 3.5 points since H1 2005 to 19.5%

Strong underlying EPS growth of 10.3% (15.3% at constant translation exchange)

Strong operating cash conversion; up 4.0 points to 75.1%

Dividend CAGR of 14% over the 27 years since 1980

Acquisitions remain a key element of the growth strategy

13


Group Revenue Analysis

Geography

Domain

Civil 40%(2006: 39%)

Other 5%(2006: 7%)

Military Aerospace 31%(2006: 33%)

Military Land 24%(2006: 21%)

MainlandEurope17%(2006: 16%)

Australia12%(2006: 12%)

UK 13% (2006: 16%)

USA 47%(2006: 45%)

RoW 11%(2006: 11%)

Civil = non military aviation & marine

14


Military Aerospace Overview

Market Update

US DoD budgeting in 2008 – 104 helicopters, 44 fixed wingUSAF CAGR 2008 – 2013 is ~3% Continued focus on capability upgradesNegotiations with Saudi on Typhoon progressingUK DIS V2 will confirm aerospace as a critical capabilityIndia MMRCA requirement for 126 fighters

Business Highlights

Defence Electronic successes on F-22; F-18 and F-16 radar and EWSDB launcher, V-22 refuelling probe and F-22 fuel tanks move to full rate productionFollow on order for C-17 On Board Inert Gas Generation SystemFSTA moves to financial competition – contract close “as quickly as possible”

31% Group Revenue

15


Military Aerospace –Selected Programme Positions

Antennas, Air Refuelling Pods, Avionics

Up to £1bn2009- 2019KC-X Tanker

Opportunity

Antennas, Avionics Equipment$50-$100m2008- 2013TH-57/67 Trainer Helicopter

Antennas, Avionics Equipment$200m-$400mto 2017Global Hawk

Communications & Life Support Equipment, External Fuel Tanks

$170m-$190mto 2017F-22

Antennas, Avionics, Fuel Tanks, Wing Pods

$50m-$65mto 2012F-18E/F&G

Refuelling Probe, Life Support Equipment, Avionics

$1.9bn-$2.2bnto 2017F-35

Antennas, Life Support Equipment£30m-£40m2008- 2012C27-J Transport

Antennas, Air Refuelling Pods, Avionics

£50m - £160mto 2017A400M

Antennas, Avionics, Aux Mission Equipment

£75m-£95mto 2014Gripen

Antennas, Radomes, Life Support Equipment Aux Mission Equipment

£200m-£300mto 2013Eurofighter Typhoon

ProductsEstimated Cobham Value

TimingProgramme

Value of selected programmes £1.7bn to £3bn

16


Military Land Overview

Market Trends

US DoD shows strong Army growth over next 2-3 yearsInvestment account (Procurement and RD&T) core growth >10%SASC have added $4bn for MRAPs; $2.7bn for unfunded army requirementsStrong demand in RoW markets for LUV and MRAPs

Business Highlights

US Marine Corps - $30m antenna contract for communication mastsCDC wins Queen’s Award for Enterprise – 300% growth in 5 yearsNew communication systems orders received from UK MoD, Egypt and NZMicroclimate cooling systems for US Army Stryker – 5000 now fieldedCOM-231 antenna IDIQ received – output increased to 400/month

24% Group Revenue

17


Military Land – Selected ProgrammePositions

Value of selected programmes £310m to £660m

Communication EquipmentUp to $3bn2009- 2019Vehicle Intercom

Opportunity

Antennas$150m-$300mto 2012COM-201/231 Antenna

Communications Equipment$100m-$130mto 2017Integrated Digital Soldier System

Life Support Equipment, mINCAN

$6m-$75mto 2012Stryker

Vehicle Intercom, Antennas, Life Support Equipment,

$300m-$600mto 2014HMMWV

Vehicle Intercom, Life Support Equipment

$70m-$210mto 2010MRAP

ProductsEstimated Cobham value

TimingProgramme

19


Civil Aviation & Marine Overview

Market Trends

Commercial aerospace CAGR 2008 – 2013 is >6% Boeing 787 first flight scheduled for December 2007A380 enters service with Singapore airlines on 25 OctoberTrend for satellite communications strong in Civil and Marine applications

Business Highlights

HGA7001 satellite communications system selected for B787, B777 and B747-8Increased demand for audio management systems Airbus A380 & single aisle productsSelected to supply Eclipse Very Light Jet antenna suiteEFIS now system of choice with Bell, AgustaWestlandFive year A$300m award for Qantas B717 fleetStrong demand for marine SATCOM systems world-wideFive Dash 8 aircraft delivered for Australian Coastguard – ahead of schedule

40% Group Revenue

19


Civil Aviation & Marine –Selected Opportunities

Value of selected programmes £790m to £1.9bn

Opportunity

Antennas$500m-$1bnto 2017Marine SOTM

AvionicsNot disclosedto 2017Robinson

Antennas, Avionics$100m-$200mto 2017Agusta/ AgustaWestland

Antennas, Avionics$70m-$110mEurocopter (Civil)

Antennas, Avionics$40m-$150mto 2017Eclipse VLJ

Antennas, Life Support Equipment, Avionics

$38m-$350mto 2027Airbus A380

Antennas, Life Support Equipment

$40m-$150mto 2027Boeing 787

ProductsEstimated Cobham value

TimingProgramme

20


Strategy Progress Update

Sold 9 companies since ’05 ~ £246m

Acquired 12 companies ~ £230m

HR, Strategy, M&A

Finance, BD, supply chain

Technology, procurement, IT,

3.5 % point increase intechnology division margin

PV increased to 6.2%

Technology division organic growth 7.8%

Focus

Capabilities

Performance

21


Core PV activities

• Next generation Radars• High capacity comms links• Electronic Counter Measures

1: MMICs • JSF, F-22, F-18 retrofit, SPEAR• UAVs, JSTARS, P-8A• RIVET JOINT, classified programs

Land SeaAir

!!!! ! !

• ‘Office in the sky’• Covert military vehicle fit• Train installations

2: Low-profileSATCOMantenna

• Airbus, Boeing, Regional Jets• US Army programs• UK, India, Europe

!!!! !

• Tactical UGV, UAV• Border Surveillance• Video Flashlight

3: COFDM • Talon, CUTLASS, Skylite B• SBINet, Eastern Europe• First Responder orders

!!!! !!

• Wireless intercom• Naval boarding parties• Hazardous environments

4: MeshedNetworkedradio

• Selected by Middle-East Army• Ordered by RNZN • Emergency responders

!!!! !

Technology Applications Programmes/Platforms

Continued investment in market driven innovation

!!!! = initial route to market ! = subsequent market

22


Operational Improvements Progressduring 2007

Reducing labour costs, cycle times and improving working capital

A combination of site consolidation, reorganisation, integration and business lean activities

Examples includeMore than 20% space improvement on air refuelling probes in Wimborne

50% reduction in labour costs following site integration at Life Support Florida

Military antenna lead times reduced by 40% in CDES

SATCOM system lead times reduced by a factor of 3 and WIP reduced by 65%

Improvements have enabled increased investment in technology, innovation and technology division margins

3.5pts to 19.5% since the first half of 2005

23


Outlook and Summary

A great set of results

Our strategy is on track

Very strong prospects for organic and acquisitive growth

24


Appendices

IR Calendar

US Defence Budget Outlook

Cash Flow

US$ Exchange Rates

Cobham Involvement in FSTA

Air Refuelling & Auxiliary Mission Equipment Programmes

Ship set values

Definitions

Glossary

Cautionary statement

25


IR Calendar

Site Tours/Investor Days

Farnborough

20082007

DecNovOctSepAugJulJunMayAprMarFebJanDecNovOctSep

DSEi, London

Major Shows

30

CDC, Blackburn, UK (TBC)

22REMEC, San Diego, USA

Investor Day, London(TBC)

57 7611

Announcements/AGM

14-20

InterimsAGM &Interim

ManagementStatement

InterimManagementStatement

11-14

PrelimsTradingUpdate

Interims

tbctbc

7tbc

26


US Defence Budget Outlook

Investment Account SpendingBudget Authority, Current $m

FY

Base growth* 1.9% 4.5% 13.1% 6.2% 2.2% (0.8%) 2.2% (0.6%)

Total growth 5.2% 17.2% 10.3% 2.8% (0.4%) (3.0%) (0.6%) (3.1%)

164.9173.5

203.3

224.2 230.5 229.6 222.6 222.2214.4

ProcurementRDT&ESupplemental

CAGR 07 - 09 : 6.5%CAGR 05 - 07 : 11.0%

CAGR 07 - 13 : 0.9%

Source: Bank of America Securities*Core DoD Procurement & RDT&E budget

2005 2006 2007 2008 2009 2010 2011 2012 2013

27


Technology Divisions Revenue and Profit


19.5%18.0%



23.2%23.1%Margin


17.4%13.3%Margin

18.420.080.892.0Antennas22.8%21.7%Margin


OrganicGrowth

Unaudited H1 2007

UnauditedH1 2006

OrganicGrowth

Unaudited H1 2007

UnauditedH1 2006£m


28


Cash Flow

Net cash £58.6m at 30/06/07

Audited Year to 31/12/06


30/06/06


30/06/07£m £m £m

181.6 Trading Profit (ex. JV) 80.9 81.6

(7.4) Movements in working capital (20.2) (19.3)

(16.8) Movements in provisions (4.6) (1.3)

35.0 Depreciation and other non-cash adjustments 17.6 16.2

(39.4) Capital expenditure (16.2) (15.9)

153.0 Operating cash flow 57.5 61.3

84.3% Operating cash flow/Trading Profit 71.1% 75.1%

(7.3) Net Interest (4.7) 0.4

4.3 Dividends received from JVs 3.0 1.6

(46.2) Tax (25.4) (13.9)

Restructuring Costs (2.7)

103.8 Free cash flow 30.4 46.7

(39.7) Dividends paid - -

64.1 Net cash flow from business 30.4 46.7

61.1 Net acquistion costs (2006 - net disposals) 22.9 (0.1)

6.9 Proceeds from issue of shares 5.1 3.5

37.1 FX 25.0 7.6

169.2 Decrease/(increase) in net borrowings 83.4 57.7

29


Cobham Group Revenue Growth

530

500

490

480

450

440

430

520 517.2

27.1

31.5 493.8

£m


6.0% OrganicGrowth

29.4

2.2


510

470

4600.6

Impact of using spot rate to account for hedged revenues

30


Cobham Group Trading Profit Growth

84

78

76

74

72

82

£m


6.8% OrganicGrowth


80

82.6

3.8

6.2 83.4

1.5

0.5

0.6

31


Flight Operations & Services Revenue Growth

97

94.5

94

93.5

93

95.5

£m

H1 2006 FX Translation Loss of Pass Through

H1 2007Acquisitions

95

96.4

0.8

1.3

94.5

0.2

96

96.5

32


US$/£ Translation Exchange Rates

2.00641.95721.84961.7168Balance Sheet(closing rate)

1.96931.84231.7891n/aIncome Statement(average rate)

H1Full YearH1Opening

20072006

£400k PBT translation impact for every 1 cent movement

33


Cobham Involvement in FSTA

Establishment Phase Operational Phase

FRL manufacture and deliver pods

FRA convert aircraft No. 3-’n’

FC ITS FSD CE

FC = Financial CloseITS = FC + 43 months Introduction to serviceFSD = FC + 102 months Full service dateCE = FC + 324 months Concession end

FRL through Life Support contract for Pods

34


Air Refuelling & Auxiliary Mission Equipment Programmes

➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼25-50 p.a.Aftermarket

➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼25-50F35 - probe

➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼>100JF17

➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼75-100Small Diameter Bomb

➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼>100Eurofighter

Decision late 07 early 08n/aKC30

➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼>135HC130 Recapitalisation

➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼75-100FSTA

➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼<25RAAF A330 MRTT

➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼75-100A400M

➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼50-75V22

➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼➼Su-30

›2012

201220112010200920082007Est. Total Programme Value (£m)

Programme/Platform

AR & AME Revenue

Net cash of £58.6m at 30/06/07Good programme and earnings visibility

Refu

ellin

gA

ME

35


Ship Set Values

Programme / Platform

AR & AME Antennas

Avionics &

Surveillance

Defence

Electronic

Systems Life Support

Flight

Operations &

Services

20

06

20

08

20

10

20

12

Sh

ip S

et

Valu

es

US

$

F15 ➼➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ ➼➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ $600k

F16 ➼➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ ➼➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ $700k

F/A 18 E/F/G ➼➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ ➼➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ $800k

F22 ➼➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ ➼➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ $950k

F35 ➼➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ ➼➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ $700k

Eurofighter Typhoon ➼➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ ➼➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ $1,050k

Hawk ➼➼➼➼ ➼ ➼➼➼ ➼➼➼➼ ➼➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ $275k

T50 ➼➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ ➼➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ $190k

Gripen ➼➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ ➼➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ $760k

C17 ➼➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ ➼➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ $600k

C130 / KC130 ➼➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ ➼➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ $3,300k

KC135 ➼➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ ➼➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ $2,960k

C-160 ➼➼➼➼ ➼➼➼➼ ➼➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ $420k

ASTOR Sentinel R ➼➼➼➼ ➼➼➼➼ ➼➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ $520k

B2 ➼➼➼➼ ➼ ➼➼➼ ➼➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ $1,360k

P3/EP-3E ➼➼➼➼ ➼ ➼➼➼ ➼➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ $1,150k

Predator ➼➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ ➼➼➼➼ $300k

Global Hawk ➼➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ ➼➼➼➼ $2,030k

EH101 / VH71 ➼➼➼➼ ➼➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ ➼➼➼➼ $1,200k

UH60 ➼➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ ➼➼➼➼ $1,000k

NH90 ➼➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ ➼➼➼➼ ➼ ➼➼➼ $170k

MD902 ➼➼➼➼ ➼ ➼➼➼ ➼➼➼➼ ➼ ➼➼➼ $200k

EC120 ➼➼➼➼ ➼➼➼➼ ➼ ➼➼➼ ➼➼➼➼ ➼ ➼➼➼ $190k

EC135 ➼➼➼➼ ➼➼➼➼ ➼ ➼➼➼ ➼➼➼➼ ➼ ➼➼➼ $250k

EC155 ➼➼➼➼ ➼➼➼➼ ➼ ➼➼➼ ➼➼➼➼ ➼ ➼➼➼ $375k

TH 57 ➼➼➼➼ ➼ ➼➼➼ ➼➼➼➼ ➼ ➼➼➼ $330k

ALH ➼➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ ➼➼➼➼ ➼ ➼➼➼ $360k

Lynx ➼➼➼➼ ➼➼➼➼ ➼ ➼➼➼ ➼➼➼➼ ➼ ➼➼➼ $180k

Apache ➼➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ ➼➼➼➼ ➼ ➼➼➼ $180k

V22 ➼➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ ➼➼➼➼ ➼ ➼➼➼ $540k

A380 ➼➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ ➼➼➼➼ ➼ ➼➼➼ $220k

B787 ➼➼➼➼ ➼ ➼➼➼ ➼➼➼➼ ➼ ➼➼➼ $150k

Type 45 Destroyer ➼➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ ➼➼➼➼ ➼ ➼➼➼ $300k

Aegis DPYIDV ➼➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ ➼➼➼➼ ➼ ➼➼➼ $2,200k

Light Vehicle ➼➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ ➼➼➼➼ ➼ ➼➼➼ $10k

Amoured Fighting Vehicle ➼➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ ➼➼➼➼ ➼ ➼➼➼ $20k

Tanks ➼➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ ➼ ➼➼➼ ➼➼➼➼ ➼ ➼➼➼ $50k

Naval

Land

Rotary

UAV

Military Fast

Jets /

Trainers

Medium /

Large Military

Commercial

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Definitions

Free cash flow is cash generated by the business before dividends, movements in funding and FX, acquisitions and disposals and dividends to shareholders

Free Cash Flow

Defined as free cash flow/average number of shares in issue

Operating cash flow is defined as cash generated from operations, including the deduction of capital expenditure, but excluding cash flows from acquisitions and disposals.

Operating cash conversion is defined as operating cash flow as a percentage of trading profit, excluding profit from joint ventures.

Organic growth represents the growth of the business for the period that it was within the Group’s control, translated at constant exchange rate. Results related to the period where the business was not owned in the prior period are shown as ‘acquisition’ contributions.

Free Cash Flow per share

Operating Cash Flow

OperatingCash conversion

Organic growth

To assist with the understanding of earnings trends, trading profit (formerly underlying operating profit) and underlying earnings have been defined to exclude the impact of the amortisation of intangible assets recognised upon acquisition and the impact of the marking to market of foreign exchange derivatives not realised in the period.

All underlying measures also include the revenue and operational results of both continuing and discontinued businesses until the point of sale, but exclude exceptional profits or losses arising from portfolio restructuring and integration activities undertaken in the period and exceptional costs directly associated with terminated acquisitions. Any impairments of goodwill and mark to market of inventory upon acquisition would also be excluded from underlying measures but none exist in the current or comparative period.

Underlying

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Glossary

AME Auxiliary Mission EquipmentCOFDM Coded Orthogonal Frequency Division MultiplexingDIS Defence Industrial StrategyEFIS Electronic Flight Instrument SystemFIST Future Inventory Soldier TechnologyFSTA Future Strategic Tanker AircraftHMMWV High-Mobility Multipurpose Wheeled Vehicle IDIQ Indefinite Delivery Indefinite Quantity awardJSTARS Joint Surveillance Target Attack Radar System LUV Light Utility VehiclemINCAN Miniature Interference Cancellation SystemMMA Multi-mission Maritime Aircraft MMIC Monolithic Microwave Integrated CircuitMRAP Mine Resistant Ambush Protected vehicleSASC Senate Armed Service Committee SATCOM Satellite CommunicationSBINet Secure Border Initiative componentSDB Small Diameter BombSOTM Satellite Communications On The MoveSPEAR Scaleable Panel for Efficient Affordable RadarsUAV/UGV Uninhabited Aerial Vehicle/Uninhabited Ground VehicleVIS Vehicle Intercom SystemVLJ Very Light Jet

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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 operations 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 operates; 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

Cautionary statement

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2007 - Cobham plc · 12 Interim Results 2007 Acquisition Update Board has confidence that...

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