2011 Preliminary Results - Cobham · Cash Flow and Dividend Year to 31/12/10 Year to 31/12/11...

The most important thing we build is trust7 March 2012

2011 Preliminary Results

Agenda

• Highlights of the year John Devaney

Executive Chairman

• Business results Warren Tucker

Chief Financial Officer

• Summary John Devaney

Cobham plc1


• Q&A

7 March 2012

Highlights of the Year

• Orders have been robust, with a return to modest organic revenue growth for core businesses

• Out performed our markets, controlled costs and invested in Excellence in Delivery

• Underlying EPS growth of 13% at constant translation exchange rates

•

Cobham plc

• £150m share buy back completed

• US Defence/Security procurement normalising

• Recommended one-off step change in full year dividend of 33.3%

7 March 20122

Agenda


Executive Chairman




Cobham plc3


• Q&A

7 March 2012

Summary Profit and Loss Account

Year to

31/12/10

Year to

31/12/11 Change

£m £m

Revenue 1,902.6 1,854.4 (2.5%)

Core Revenue 1,630.0 1,633.6 0.2%

Cobham plc4

Note: * Core business. See Appendix for definitions, including underlying, used throughout this presentation.

Order intake improving - order book £2.5bn

7 March 2012

Trading Profit 348.4 364.9 4.7%

Trading Margin 18.3% 19.7% 1.4pts

Underlying Profit before Taxation 306.1 327.9 7.1%

Underlying Earnings Per Share 19.68p 22.05p 12.0%

PV Spend % * 5.0% 5.2% 0.2pts

22.05

20.5

21.0

21.5

22.0

22.5

1.0%(0.6)% 1.3% 2.9% 12.0%7.4%

Underlying Earnings Per Share Growth

Cobham plc

19.68

18.0

18.5

19.0

19.5

20.0

20.5

2010 FX Translation Margin improvement

Interest Tax Share Buyback 2011

pence

5

12.6% at constant translation exchange

7 March 2012

Cash Flow and Dividend

Year to

31/12/10

Year to

31/12/11 Growth

£m £m

Operating Cash Flow 271.4 337.1 24.2%

Operating Cash conversion 79.3% 94.8% 15.5pts

Free Cash Flow from Business * 218.6 287.9 31.7%

Cobham plc6

Net Debt £232.5m, Net Debt:EBITDA 0.5x

7 March 2012Note: *Excludes Excellence in Delivery ** Based on Underlying Earnings

Free Cash Flow from Business * 218.6 287.9 31.7%

Decrease in Net Debt 86.5 93.6

Dividend per Share 6.00p 8.00p 33.3%

Dividend Cover ** 3.3x 2.8x

Cobham Aerospace and Security

• Lower land based vehicle revenue in US

Cobham plc7 7 March 2012

• Lower land based vehicle revenue in US

• Deliveries of Radio and Audio Integration Management System increased with Airbus narrow and wide body production rates

• Strong demand continued for wireless video links including ‘Safe City’ initiatives, sports and movie events, including 2012 Olympics

• Selected to supply complete avionics suite on SK105 Skylander commuter aircraft, with first deliveries in 2012

• New SATCOM products developed in anticipation of rapid growth in Ka band market

Cobham Mission Systems


• Shipments of fifth generation A330MRTT aerial refuelling equipment for the UK, Australia, Saudi and UAE air forces

• Wins on new US KC-46 and Brazilian KC-390 aerial refuelling programmes, with significant initial contract awards

• First deliveries of new B787 commercial aircraft, utilising Cobham’s nitrogen system, with aircraft deliveries scheduled to increase in 2012

• Opportunities for Telerob unmanned ground systems being pursued in US market, with continuing interest in the global market

Cobham Defence Systems


• Lower revenue from land based antennas and airborne electronic warfare products

• First low rate electronic warfare production deliveries on the F-35, as subsystems completed development and qualification

• Strong growth on missile guidance subsystems, particularly for the AARGM and AMRAAM programmes

• Completion of first integrated radar subsystems for Apache Block III helicopter -programme enters production in 2012

• US Government release of next tranche of Wideband Global Satellite awards

Cobham Aviation Services


• Extension of key resource sector contracts, including contracts for more or larger aircraft

• Conversion work commenced on UK tanker programme, with the first two A330MRTT aircraft starting modification

• AUD500m order received to extend and expand the B717 QantasLink contract, with additional revenue from 2012

• €45m JV contract to provide helicopter air reconnaissance capability to the Dutch Caribbean Coastguard, starting in 2012

Financial Highlights

• Modest organic revenue growth in core businesses with a strong performance in commercial and non US defence/security markets

• Excellence in Delivery is achieving real operational improvements and better than expected efficiency savings

• Underlying EPS growth of 13% at constant translation exchange rates

Cobham plc

• Recommended one-off step change in full year dividend of 33.3%

• Strong balance sheet and a highly cash generative business model give strategic flexibility

7 March 201211

A year ago

Defence/Security

• US uncertain – short term paralysis

• RoW – good prospects

Commercial

• Large aircraft – robust

• General aviation/maritime - fragile

Our Markets

Today

• Budget approved, procurement more normal, medium and long term being clarified

• Prospects � RFPs � awards � strong growth

• Strong and improving

• Improving with world economy

Cobham plc7 March 201212

Stronger businesses in improving markets

USA 52%(2010: 55%)

Other EU countries 15%

(2010: 14%)

Australia 13%(2010: 12%)

UK 10%(2010: 10%)

RoW 10%(2010: 9%)

Core Business Revenue 2011

US Defence / Security44%

(2010: 48%)

Non US Defence / Security

28%(2010: 25%)

Commercial28%

(2010: 27%)

Aerospace and Defence Trends

0

50

100

150

200

250

US D

oD

Investm

ent Acc

ounts ($bn)

US DoD growth

Procurement RDT&E

-

200

400

600

800

1,000

1,200

1,400

Larg

e A

ircraft D

eliv

eries

Large aircraft deliveries growth

Cobham plc

2005 2009 2014 (E)

Defe

nce

Spending ($bn)

Rest of world defence growth

7 March 201213

Source: based on Goldman Sachs estimates. Includes Saudi Arabia, India, Brazil, Australia, Israel

Source: Merrill Lynch and Economist Intelligence Unit data as at March 2012.

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

2010 2011E 2012E 2013E 2014E 2015E

YoY

Gro

wth

%

General aviation/maritime - global GDP growth

Procurement RDT&E

Source: Merrill Lynch data as at March 2012.Source: OMB, Morgan Stanley Research, E = US DoD Estimates

Structural Drivers of Cobham’s Growth

• Geographic reach• Operations on five continents, with strengthening brand and customer engagement• Many export opportunities, including India, Middle East and South America

• Market diversity• Large addressable defence, security and commercial markets• Technology adaptable to multiple markets, e.g. OBIGGS for military and commercial

• Portfolio of platform and programme positions• Positions on platforms that span space, aerospace, land and maritime• Technology in demand for new and retrofit applications, with ageing aircraft fleets

Cobham plc

• Technology in demand for new and retrofit applications, with ageing aircraft fleets

• Alignment with commercial and defence/security priorities• Increasing demand for data, connectivity and bandwidth

• Counter-terrorism & homeland security• Large events e.g. Olympics, World Cup, Oscars, disaster recovery • Unmanned systems • Communication on the move and in remote parts of the world

• Increased investment in keeping people safe• Customer imperative to reduce operating costs• Delivery of products with higher functionality, with reduced size, weight and power usage

7 March 201214

Technology InvestmentRadio and Audio Integration Management System (RAIMS)


PV investment of US$14m in RAIMS upgrade for A350 & A380: estimated US$250m revenue

• Integration of nine sites

• Improvements to production operations at 10 principal sites

• Big improvements in operational metrics confirm the size of the

Operational ExcellenceA strong performance

Metrics from Orchard Park

July (start)-Dec 2011

Inventory

turns

Productivity

improvement

Cobham

goal

20-40%

25-50%

117%

31%

Cobham plc

confirm the size of the opportunity

• Positive reactions from employees and customers

• Savings in programme execution costs have been reinvested in additional scope

16

A foundation for the future with traction across the organisation

7 March 2012

Manufacturing

lead time

reduction

First pass yield

improvement

25-50%

10-30%

17%

28%

Excellence in DeliveryEfficiency savings increased by £10m to £75m per annum

Exit run-rate for 2013 is £75m

9 9

30 3442 42

0

5560

6575

Benefits

Original plan

Actual/forecast

Exceptional costs

Original plan

Actual/forecast


2010 2011 2012 2013

Cumulative

cost 23 62 106 131

-26-34

-25-23

-46

-39-44

-25

Increased efficiency savings with cumulative costs unchanged

Unchanged

from

original

plan

Additional efficiencies from:

• Increased supply chain scope • Plans for additional site integrations

Acquisitions and Divestments

£m

2011 Acquisitions

Jan TeleRob 68

Feb Corp Ten 15

Oct Trivec Avant 90

173

2011 Divestments

Feb Engineering Consultancy Group 13

Cobham plc

• Three 2011 bolt-in acquisitions consistent with technology focus

• Maintaining a disciplined approach with robust financial criteria

• Acquisitions focus on technology and market leading positions

7 March 201218

Long term record of exceeding cost of capital

Feb Engineering Consultancy Group 13

Nov Analytic Solutions 220

Market Positions Being Strengthened

HIGHER

PlannedDivestment

Aviation Services

MARKET GROWTH

Antenna Systems

TacticalComms &

Surveillance

(TC&S)

Sensor Systems

AerospaceComms

LifeSupport

2007 Today

Mission

Equipment

HIGHER

MARKET GROWTH

Cobham plc

• Transformation achieved over the last four years

• Strategy is to build scale Strategic Business Units (SBUs)

• Excellence in Delivery improves ability to integrate acquisitions

7 March 201219

LOWER

BUILDING SCALE IN TOP 3

Moving towards more balance between defence/security and commercial markets

LOWER

Agenda


Executive Chairman




Cobham plc20


• Q&A

7 March 2012

Summary

• Out performed our markets, controlled costs and invested in Excellence in Delivery

• Stronger businesses in improving markets

• Moving the strategy forward

Cobham plc21

• Confident that we will continue to make progress over the medium term

7 March 2012

Appendices

• Investor Relations Calendar

• Key Performance Indicators

• 10 Year CAGRs

• Revenue and Profit – Divisional Summary

• US DoD Investment Spending

• Ship set values

• Surveillance and Mesh Network Capability Example

• Technology Investment – IP Mesh Radios

• Excellence in Delivery


• Excellence in Delivery

• Shareholder returns

• Cash flow summary

• Core Business Revenue Growth

• Group Revenue Analysis

• Foreign Exchange Transaction Exposure

• US$/£ Translation Exchange Rates

• Reconciliation of IFRS to Underlying Result

• Revenue and Profit – Basis for 2012 reporting

• Definitions

• Glossary

• Cautionary Statement

22

Investor Relations Calendar

2012 2013

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

7PreliminaryResults

26AGM&

Interim

8 InterimResults

7 Interim

ManagementStatement

Cobham plc

InterimManagementStatement

Statement

23 7 March 2012

Key Performance Indicators

Year to

31/12/06

Year to

31/12/07

Year to

31/12/08

Year to

31/12/09

Year to

31/12/10

Year to

31/12/11 CAGR

Core Business Organic Revenue Growth 4.0% 10.6% 9.5% 0.9% 0.7% 0.3% 4.2% (1)

Defence / Security 9.8% 0.5% (3.2)% 2.2% (2)

Commercial (16.4)% 1.4% 9.6% (2.4)% (2)

Earnings Per Share Growth (constant translation) 10.7% 15.9% 13.1% 12.5% 3.8% 12.6% 11.4% (1)


Operating Cash Conversion 84.3% 81.1% 106.1% 88.6% 79.3% 94.8% 89.0% (3)

PV Spend - Core Business % 6.3% 5.6% 5.8% 6.0% 5.0% 5.2% 5.7% (3)

(1) CAGR over 6 years

(2) CAGR over 3 years

(3) Average over 6 years

10 Year CAGRs

722 735

833 832

9701,012

1,061

1,467

1,880 1,903 1,854

Group Revenue (10 yr CAGR 9.9%)Group Revenue (10 yr CAGR 9.9%)Group Revenue (10 yr CAGR 9.9%)Group Revenue £m

10 yr CAGR 9.9%

7.258.28

9.00 9.12

10.58

11.66

13.09

15.42

18.8019.68

22.05

Group Revenue (10 yr CAGR 9.9%)Group Revenue (10 yr CAGR 9.9%)Group Revenue (10 yr CAGR 9.9%)Underlying EPS (p)

10 yr CAGR 11.8%

Cobham plc

2.322.56

2.823.10

3.413.75

4.50

4.96

5.45

6.00

8.00

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Group Revenue (10 yr CAGR 9.9%)Group Revenue (10 yr CAGR 9.9%)Group Revenue (10 yr CAGR 9.9%)Dividend per Share (p)

10 yr CAGR 13.2%

7 March 201225

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

2.69

7.39 7.30

8.95

10.92

9.20

11.81

17.83

19.38 19.00

25.74

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Free Cash Flow per Share (p)

10 yr CAGR 25.3%

£m

Year to

31/12/10

Year to

31/12/11 Growth

Year to

31/12/10

Year to

31/12/11 Growth

Cobham Aerospace and Security 681.8 637.0 (6.6)% 155.7 152.5 (2.1)%

Margin 22.8% 23.9%

Cobham Defence Systems 361.7 323.9 (10.5)% 53.2 57.9 8.8%

Margin 14.7% 17.9%

Revenue Trading Profit

Revenue and ProfitDivisional Summary

Cobham plc

Cobham Mission Systems 320.8 371.8 15.9% 65.1 87.5 34.4%

Margin 20.3% 23.5%

Cobham Aviation Services 273.5 308.1 12.7% 36.4 44.1 21.2%

Margin 13.3% 14.3%

Head Office and eliminations (7.8) (7.2) 1.7 (1.6)

Core Group businesses 1,630.0 1,633.6 0.2% 312.1 340.4 9.1%

Margin 19.1% 20.8%

Non core businesses 272.6 220.8 36.3 24.5

Cobham Group 1,902.6 1,854.4 (2.5)% 348.4 364.9 4.7%

Margin 18.3% 19.7%

26 7 March 2012

64 6873

76

78 79 79 75 71 6976 77 79

81150

200

250

Investm

ent Accounts ($bn)

Procurement RDT&E

US DoD Investment Spending $Bn

Cobham plc

62 6075 76 79 78 84

99 101 103 102 105 99 105 106 109111

41 49

57 6468 73

0

50

100

US DoDInvestm

ent Accounts ($

27

Note: All years exclude supplementalsNote: Figures represent discretionary outlays expressed in current pricesSource: OMB, Morgan Stanley Research, E = US DoD Estimates

7 March 2012

Ship Set Values

Rota ryRo ta ryRo ta ryRo ta ry US$k

EH101 400-600

Apache 580

CH47 (Chinook) 50

CH 53K 410

S 61 420

MH60/UH 60 250-550

V22 1,000

Commerc ia lCommerc ia lCommerc ia lCommerc ia l

A320 60

Military/Fast Jet TrainersMilitary/Fast Jet TrainersMilitary/Fast Jet TrainersMilitary/Fast Jet Trainers US$k

F16 400 - 800

F/A 18 E/F/G 700-3,500

F35 1,100

Eurofighter Typhoon 1,400

Hawk 500

Rafale 165

PC-7 160

T50 220

Gripen 180-500


A320 60

A350 130

A380 250

B737 130

B777 25

B787 110 - 150

C919 35

G650 30

SK105 350

Nava lNava lNava lNava l

EDG 1000 2,600

Aegis DPYIDV 2,600

Gripen 180-500

Medium/Large MilitaryMedium/Large MilitaryMedium/Large MilitaryMedium/Large Military

A400M 3,000

C17 500

C130 /KC130 700-3,500

UAV/MissilesUAV/MissilesUAV/MissilesUAV/Missiles

Predator/Reaper 300-650

AMRAAM 140

AARGM 160

PAC3 /Patriot 100

Standard Missile 75

Global Hawk 1,800-2,300

SOLO Transmitter

SOLO Transmitter

Key

Mesh 1

Mesh 2

SOLO link out

Policecommand

Policecommand

Surveillance and Mesh Network Capability Example

Cobham plc

SOLO Transmitter

SOLO Transmitter

CameraCamera

CameraCamera

Mobile surveillance

Mobile surveillance

CameraCameraCameraCamera

Camera CarCamera Car

CameraCamera

CameraCamera

CameraCamera

Mobile surveillance

Mobile surveillance

TransmitterTransmitter

Policecommand

Policecommand

7 March 201229

Technology InvestmentIP Mesh Radios

• IP Mesh radios provide the flexibility of a fluid self-healing mesh combined with non-line of sight characteristics

• Since 2009 widely used in both law enforcement and commercial applications, including open cast mines and airports


airports

• Potential for airborne, fixed and ground mobile security applications, as well as commercial marine applications for early threat detection on gas and oil wells

Over three years weight reduced by 85%, power usage by 50%, volume by 90%

Why Excellence in Delivery?

• We have been progressively simplifying, standardising and integrating our business since 2005

• We have now demonstrated substantial benefits from our new processes and systems through initial implementation activities across our business

• Excellence in Delivery will deliver a step change in our performance to our customers, making us more responsive and able to fully exploit our scale

Cobham plc

scale

• Excellence in Delivery will deliver efficiency savings of £75m annually by the end of 2013 for a one off investment of £131m

• This is the next step in our development that we can now take with the capabilities and market positions we have, and one which we would undertake irrespective of the current market conditions

31 7 March 201231

EiD Aims to Take us Further Towards a Simplified, Standardised and Scale Organisation

• Roll out our Standard Operating Framework across a set of principal sites

• Integrate some of our smaller (production) facilities into the principal sites to increase the coverage of our Standard Operating Framework

• Lock down the standard processes with

1

2

3

Cobham plc

• Lock down the standard processes with a single standard Cobham Enterprise Resource Planning (ERP) system and capture scale economies and reduce complexity further through implementation of shared services

3

32 7 March 201232

EiD Will Deliver Significant Benefits Beyond the Immediate Cost Reductions

• EiD will transform our operational performance and will deliver significant non financial benefits:

• World class delivery and quality performance will be an additional differentiator with our customers giving us scope to accelerate revenue growth

• Streamlined processes will reduce product development cycles and reduce time to market providing greater flexibility to meet customer needs

• Improved engineering efficiency will create further capacity for new product

Cobham plc

• Improved engineering efficiency will create further capacity for new product development

• Lower costs will allow further pricing opportunities with customers as well as investment funds to support further product development and selling capabilities

• Standardised operating model will enable significantly greater synergy benefits from acquisitions, and lower risk and more rapid integration

• Our profitability will be improved by £75m per year by the end of 2013

33 7 March 201233

Shareholder Returns

Year to

31/12/10

Year to

31/12/11 Growth

Underlying Tax Rate 26.5% 25.5%

Earnings Per Share


Underlying 19.68p 22.05p 12.0%

Basic 13.27p 16.80p

Diluted 13.20p 16.76p

Dividend Per Share 6.00p 8.00p 33.3%

Free Cash Flow Per Share 19.00p 25.74p 35.5%

Cash Flow Summary

Year to

31/12/10

Year to

31/12/11

£m £m

Trading Profit (excluding joint ventures) 342.4 355.5

Depreciation and other movements 69.3 69.2

Pension contributions in excess of service cost (11.4) (48.8)

(Increase)/Decrease in working capital and provisions (71.8) 11.0

Net Capital expenditure (57.1) (49.8)

Operating cash flow 271.4 337.1

Taxation paid (21.6) (24.3)


Taxation paid (21.6) (24.3)

Dividends received from JVs 6.0 8.1

Interest (37.2) (33.0)

Free cash flow 218.6 287.9

Dividends paid (64.6) (69.4)

Restructuring costs (13.4) (37.0)

Acquisition payments less disposal proceeds, other related costs and loans to JVs (5.9) 71.1

Settlement of commercial dispute (28.8) 6.0

Issue of share capital less purchase of treasury shares 7.1 (159.5)

Exchange movements (26.5) (5.5)

Decrease in net debt 86.5 93.6

Net Debt 326.1 232.5

Net Debt : EBITDA 0.8 0.5

Core Business Revenue Growth

(21) 20 (38) 42

CDSCDS

CMSCMS

CAVS CAVS

1,630 1,633

1,000

1,500

£m 0.3% Organic Growth0.3% Organic Growth

(3)% 10%


CAS CAS

CDS

0

500

2010 FX Translation Net Acquisitionsand disposals

Defence/Security

Commercial/Other

2011

Group Revenue Analysis

Other EU countries 14%

(2010: 12%)

Australia 12%(2010: 10%)

UK 9%(2010: 9%)

RoW 9%(2010: 8%)

Other


USA 56%(2010: 61%)

US Defence / Security48%

(2010: 53%)

Non US Defence / Security

25%(2010: 21%)

Commercial/GA18%

(2010: 17%)

Other Communication

9%(2010: 9%)

Foreign Exchange Transaction Exposure

Historic averageeffective rate

2008 $1.93 : £12009 $1.70 : £12010 $1.58 : £12011 $1.56 : £1

2012 Total $149m

93% hedged for 2012

Cobham plcJanuary 2012

Dollar/Euro exposure predominantly hedged for 2012 with $40m @ 1.36 & 2013 $24m @ 1.39

Hedging in place $139m

$64m

Avg hedge rate $1.59: £1

2013

Hedging in place

Avg hedge rate $1.59: £1

Avg hedge rate $1.62: £1$48m2014

38

US$/£ Translation Exchange Rates

2011

Opening Full Year Full Year

Income Statement

(average rate) n/a 1.55 1.60

2010

Cobham plc39

£0.8m PBT translation impact for every 1 cent movement

7 March 2012

Balance Sheet

(closing rate) 1.61 1.57 1.55

Reconciliation of IFRS to Underlying Result

Year to

31/12/10

Year to

31/12/11

£m £m

Profit before taxation 189.3 234.3

Business restructuring - primarily Excellence in Delivery 17.5 31.9

Unrealised movements in non-hedge accounted derivative financial instruments 2.8 5.4

Amortisation of intangible assets arising on acquisition 63.3 68.0

Settlement of commercial dispute 28.8 (6.0)


Settlement of commercial dispute 28.8 (6.0)

M&A related adjustments 5.9 4.1

Business divestments and similar income (1.5) (27.1)

Debt and interest rate swap cancellation costs relating to original financing of

divested business - 15.4

Unwinding of acquisition related discounting - 1.9

Underlying profit before taxation 306.1 327.9

Revenue and Profit With Brand ChargeBasis for 2012 Reporting

£m

Year to

31/12/10

Year to

31/12/11 Growth

Year to

31/12/10

Year to

31/12/11 Growth

Cobham Aerospace and Security 681.8 637.0 (6.6)% 148.1 146.9 (0.8)%

Margin 21.7% 23.1%

Cobham Defence Systems 361.7 323.9 (10.5)% 49.2 54.7 11.2%

Margin 13.6% 16.9%

Revenue Trading Profit


Cobham Mission Systems 320.8 371.8 15.9% 61.6 84.2 36.7%

Margin 19.2% 22.6%

Cobham Aviation Services 273.5 308.1 12.7% 34.1 41.5 21.7%

Margin 12.5% 13.5%

Head Office and eliminations (7.8) (7.2) 22.5 15.1

Core Group businesses 1,630.0 1,633.6 0.2% 315.5 342.4 8.5%

Margin 19.4% 21.0%

Non core businesses 272.6 220.8 32.9 22.5

Cobham Group 1,902.6 1,854.4 (2.5)% 348.4 364.9 4.7%

Margin 18.3% 19.7%

Brand charges applied to revenue at 1% (with minor exceptions)

Definitions

Core businesses

Underlying

All numbers referring to ‘core businesses’ exclude Analytic Solutions, which was divested in November 2011 and Commercial Systems which the Group plans to divest.

To assist with the understanding of earnings trends, the Group has included within its published statements trading profit and underlying earnings results. Trading profit has been defined as operating profit from continuing operations excluding the impacts of certain transaction related costs and business restructuring costs as detailed below. Also excluded are the marking to market of non-hedge accounted derivative financial instruments not realised in the period and items deemed by the Directors to be of an exceptional nature. Underlying earnings are defined as trading profit less net underlying finance expense, which excludes the unwinding of acquisition related discounting, and after deducting taxation and non-controlling interests.

Transaction related costs excluded from trading profit and underlying earnings include the amortisation of intangible assets recognised on acquisition, the writing off of the pre-acquisition profit element of inventory written up on acquisition and other direct costs associated with business combinations and divestments.

Cobham plc42

Business restructuring costs

Business restructuring costs comprise exceptional costs or profits associated with the restructuring of the Group’s businesses including costs associated with the Excellence in Delivery programme.

Operating Cash Flow Operating cash flow is defined as cash generated from operations, 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, excluding profit from joint ventures. Free cash flow is operating cash flow after net interest, taxation and dividends received from joint ventures.

Net debt is defined as the net of cash and cash equivalents less borrowings at the balance sheet date.

Free Cash Flow per share

Organic revenue growth

PV Investment

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

Organic revenue growth is defined as revenue growth stated at constant translation exchange rates, excluding the incremental effect of acquisitions and divestments.

Private Venture (PV or company funded R&D – Research and Development) measures exclude Aviation Services, where there is no technology investment.

7 March 2012

Glossary

AARGM Advanced Anti-Radiation Guided MissileAMRAAM Advanced Medium-Range Air-to-Air MissileC4ISR Command, Control, Communications, Computers, Intelligence, Surveillance and ReconnaissanceCAGR Compound Annual Growth RateCAS Cobham Aerospace and SecurityCAvS Cobham Aviation ServicesCDS Cobham Defence SystemsCMS Cobham Mission SystemsDoD Department of DefenseEBITDA Earnings Before Interest Tax Depreciation and AmortisationEiD Excellence in DeliveryEPS Earnings Per ShareERP Enterprise Resource PlanningFX Foreign ExchangeGA General AviationIFRS International Financial Reporting StandardsIP Internet Protocol

Cobham plc43

IP Internet ProtocolJSF Joint Strike FighterJV Joint VentureM&A Mergers & AcquisitionsOEM Original Equipment ManufacturerPBT Profit Before TaxPV Private Venture (Company funded R&D)RAIMS Radio and Audio Integration Management SystemR&D Research & DevelopmentRDT&E Research, Development, Test and EvaluationRFP Request for ProposalRoW Rest of WorldSATCOM Satellite CommunicationSBU Strategic Business UnitSOF Standard Operating FrameworkUAV Unmanned Aerial Vehicle

7 March 2012

Notes Page


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

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

Cobham plc48

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 currency 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.

7 March 201248

2011 Preliminary Results - Cobham · Cash Flow and Dividend Year to 31/12/10 Year to 31/12/11...

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