Results for the year ending 31 December Dr Julian Blogh, Chairman Douglas Caster, Chief Executive David Jeffcoat, Finance Director

Transcription

1 Results for the year ending 31 December 2005 Dr Julian Blogh, Chairman Douglas Caster, Chief Executive David Jeffcoat, Finance Director

2 2005 Overview Sales m Another strong year with high revenue and profit growth All divisions contributed to growth Margins continued to improve 105% cash conversion and strong balance sheet Investment in growth market sectors Strong order book of 500m (UK GAAP) (IFRS) (IFRS) PBT* m (UK GAAP) (IFRS) (IFRS) EPS* pence * before amortisation of intangibles arising on acquisition and loss on financial instruments (UK GAAP) (IFRS) (IFRS)

3 Financial Review

4 Profit & Loss Growth Sales 342.4m 310.7m +10% Operating profit* 51.1m 43.3m +18% Profit before tax** 47.4m 40.1m +18% Earnings per share** 50.7p 43.7p +16% Dividend per share 15.9p 13.8p +15% * before amortisation of intangibles arising on acquisition ** before amortisation of intangibles arising on acquisition and loss on financial instruments

5 2005 Sales Analysis Sales by Destination Sales by Sector Europe 11% (2004: 11%) N America 42% (2004: 35%) Civil equipment 13% (2004: 15%) Civil aircraft equipment 9% (2004: 8%) Sonar 26% (2004: 24%) UK 39% (2004: 42%) RoW 8% (2004: 12%) Defence equipment 12% (2004: 13%) Sales 342m Military aircraft equipment 10% (2004: 11%) Battlespace IT 30% (2004: 29%)

6 Operating Profit Progression 2005 OP* 51.1m Acquisitions + 2.1m Improved margins + 7.9m 2004 OP* 43.3m Sales Growth + 2.0m Currency transaction - 5.2m Currency translation + 1.0m * before amortisation of intangibles arising on acquisition

7 Cash Flow m Operating profit* Capital expenditure less depreciation (0.5) (0.4) Net capitalised development costs (0.7) (1.5) Working capital reduction Other 0.1 (0.1) Operating cash flow Cash conversion 105% 108% Net debt * before amortisation of intangibles arising on acquisition

8 Investing for Growth Dividend 9.6m Cash generated 49.6m Share issues 1.4m Capex 7.2m Acquisitions 36.6m Cash for investing 61.2m Currency 3.3m Interest 2.9m Extra debt 10.2m R&D 17.4m Tax 13.0m

9 Operational Review

10 Developments in Defence Market UK Defence Industrial Strategy UK Armed Forces need sovereign operational independence Capability upgrades rather than new platforms Electronics is key to providing enhanced capability International solutions required technology transfer for UK support Innovative capabilities of Tier 2+ businesses recognised US Quadrennial Defense Review and FY07 Defense Budget Capability needed to wage simultaneous campaigns near peer and prolonged irregular No major weapon cancellations announced affordability not addressed US must be a robust and dependable partner possible benefit to UK on technology transfer? FY07 budget request $439bn procurement and R&D up >5% increase in R&D to fund continuing transformation high electronics content for first time supplementary for Iraq includes funds for equipment procurement

11 Aircraft & Vehicle Systems Overview Financial results Revenue 84.4m +10.2% Profit 15.9m +7.1% Order book 133.9m +85.1% Operating margin 18.9% despite currency impact Investing in Airbus and Boeing programmes Strong order book for Airbus and Eurofighter 25% of Group sales 31% of Group OP Market trends Civil aircraft build rates increasing Civil aerospace aftermarket buoyant Important military aircraft programmes continuing Continuing focus on mobility, smart munitions and capability upgrades Business highlights Selected for A400M active noise cancellation system Boeing 787 development milestones achieved Initial production contract for Small Diameter Bomb Teamed for Warrior turret upgrade competition

12 Positioning for Armoured Vehicle Electronics Strategic emphasis Fundamental change in vehicle types Capability upgrades require electronic systems International solutions Multi-programme approach for Ultra performing on ETS, Terrier positioning for Warrior competition teamed for FRES development Importance of teaming Close relationship with CTAI for Warrior joint venture between BAES and GIAT Teamed with Lockheed Martin for FRES electronic architecture TDP Internal teaming to share domain knowledge Aircraft & Vehicle Systems with Information & Power Systems Status In production for ETS indirect vision system Successful HUMS trials for British Army In development for Terrier vision equipment Prototype systems for new CTAI turret demonstrated Undertaking funded studies for FRES electronic architecture

13 Aircraft & Vehicle Systems Selected Opportunities Programme Estimated date Estimated Ultra value Products Eurofighter tranche m HiPPAG for missile cooling Joint Strike Fighter 2007 $100m+ HiPPAG for weapons ejection Joint Strike Fighter 2006 $100m+ Engine inlet ice protection FRES armoured vehicle electronics Warrior turret upgrade m+ 10m Indirect vision system Power controls HUMS capability Crew controls Power distribution Boeing 787 production orders 2007 $10m pa+ WIPS Proximity sensor electronics

14 Information & Power Systems Overview Financial results Revenue 117.3m +3.1% Profit 18.1m +20.3% Order book 127.9m +4.7% Low transit power equipment demand Strong demand for ADSI systems and software Increasing activity at Heathrow T5 34% of Group sales 35% of Group OP Market trends Battlespace IT demand is strong situational awareness is key system of systems solutions required Continuing investment in airport IT systems international demand increasing Coastal and border surveillance demand rising minor warships required oil field surveillance to protect assets Business highlights ADSI contracts for both JSS and CLIP programmes ADSI systems for local airspace management Under contract for FRES electronic architecture studies Won airport IT integration contract at Shanghai

15 Ultra s Airport IT Integration Capability Container tracking Airport data switching Baggage data distribution hub Baggage Systems Baggage tracking & reconciliation World tracer Airport check-in Self-service check-in Departure control Load Plan Airline System Airline check-in Boarding gate management Passenger screening Passenger profiling Operational Systems Airport Operations System Dynamic signage Flight information Airport data base Resource planning Data warehouse Public address Ground Transportation Road transport Inter-terminal Rail transport Retail Systems Retail MIS Car parks WAN LAN Information Interchange Message Management Central Data Base Security Common lounge Safety mgmt & retrieval facility Back Office Systems Resource rostering Billing Enterprise Maintenance management Metering management Access control Utilities control Utilities/ Environment High voltage system Water Ground lighting Noise monitoring Air monitoring Apron Services Integrated building monitoring Fire alarm Lifts & escalators Building Systems Integration Heating/ventilation Lighting Expedited arrivals CCTV Facilities and Utilities Systems Existing Ultra offering New Ultra offering Third party offering

16 Information & Power Systems Selected Opportunities Programme Estimated date Estimated Ultra value Products Astute batch /7 10m+ Power equipment Signature management systems UK aircraft carrier equipment m+ Signature management systems Power equipment Minor warship combat system JSS and CLIP additional funding 2006/ m $40m Command & control system Navigation system Weapons direction control ADSI systems ADSI function enhancements FRES development next phase 2007/8 15m Electronic architecture MoD Air Movement Order 2006/7 10m Airport IT for MoD internal airline

17 Tactical & Sonar Systems Overview Financial results Revenue 140.8m +16.9% Profit 17.1m +27.8% Order book 239.0m +18.9% Sales included 6 RN torpedo defence systems Higher sonobuoy sales in H2 Operating margin increased to 12.2% 41% of Group sales 34% of Group OP Market trends International demand for high capacity communications equipment Improved submarine tactical communications capability required Commitment to new airborne anti-submarine warfare platforms Special forces, homeland security and first responders well funded Business highlights Data link contract received for Watchkeeper UAV Sonobuoy receiver award for USN P-8A aircraft High capacity radio contracts from US, Canada and South Korea UK Mine Disposal System contract received

18 UK Mine Disposal System System solution Expendable remotely operated vehicle Shipborne control station (transportable) On-board guidance and navigation system Explosive warhead to neutralise mine UK variant of existing SEAFOX design Importance of teaming Important to offer international best of breed Atlas Elektronik SEAFOX system proven in service Babcock for shipfitting and logistic support Scope of supply Modify existing SEAFOX design for UK requirement Technology transfer to the UK Sixteen ship installations and war-stock of vehicles Ten year support and upgrade capability Contract value > 35m with delivery

19 Tactical & Sonar Systems Selected Opportunities Programme Estimated date Estimated Ultra value Products Loitering munition for British Army - system definition m UAVs with warheads Control stations Multi-static active ASW system m New sonobuoy type Aircraft system upgrades Litening pod for UK Eurofighter aircraft US torpedo defence system m+ $20m+ Surveillance and targeting pod Technology transfer and support Torpedo detection Countermeasure system High capacity tactical radios export 2006/7 $20m+ High capacity tactical radio systems Secure comms upgrade for UK Tornado aircraft m Communications control system Cryptographic protection

20 Summary & Outlook

21 Summary and Outlook Large defence budgets, with focus on achieving force superiority Buoyant civil aerospace and airport IT markets Broad spread of niches and programmes, with proven implementation capability High quality of earnings Strong balance sheet, capable of funding further acquisitions Record 500m order book gives good visibility Growth to continue in 2006

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23 Appendices

24 Aircraft & Vehicle Systems Programme Status F-35 Joint Strike Fighter F/A-18 E/F Tornado updates Eurofighter Small Diameter Bomb Boeing 787 Dreamliner Airbus existing range Engineering Tank System Terrier Future Rapid Effects System Future Combat System Airbus A400M Warrior turret upgrade Feasibility Development Production Support

25 Information & Power Systems Programme Status T45 degaussing Astute power equipment CV(F) Virginia Littoral Combat Ship degaussing Rolls-Royce reactor control LHR Terminal 5 system integration UltraTrak LHR, Aus & NZ London Underground power Shanghai Airport IT integration JSS & CLIP additional funding ADSI for ADAM cells UK submarine weapon interfacing Feasibility Development Production Support

26 Tactical & Sonar Systems Programme Status Nimrod acoustic system NH90 ASW equipment MH60 system upgrade P-8A ASW equipment SSTD UK SSTD export US Navy torpedo defence system UK mine destructor programme T45 bow sonar Army radios US and Korea KG40AR cryptographic equipment Watchkeeper UAV datalinks RTOF submarine communications Feasibility Development Production Support

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