Slide 1: BAE Systems 2012 Half Year Results
BAE Systems 2012 Half Year Results 2 August 2012 All statements other than statements of historical fact included in this document, including, without limitation, those regarding the financial condition, results, operations and businesses of BAE Systems and its strategy, plans and objectives and the
Slide 2: Ian King
BAE SYSTEMS lan King 2 © BAE Systems 2012
Slide 3: US defence
US defence Budget environment 10 year deficit reduction plan – Significant defence budget savings targeted – BAE Systems assuming circa $600bn – Risk of sequestration Business performance Support Solutions ‒ Good visibility eg Naval sustainment programmes ‒ New business wins eg Radford Land –
Slide 4: Cyber & Intelligence
Cyber & Intelligence Intelligence & Security US Government market growth rate lower Well positioned on continued high priority activities Strong bid pipeline Business remains robust BAE Systems Detica Some increase in UK Government security activity Developing strategy to address growth
Slide 5: UK defence
UK defence Budget environment Difficult but stable equipment environment post SDSR Budget in balance with equipment plan Business performance Large order book in military air, naval ships and submarines Performing well with good programme execution Cost reduction continues 5 © BAE Systems
Slide 6: International Markets
International Markets • KSA – Budgets approved – £1.6bn training aircraft contract signed – Increasing business opportunities • Norway – £0.5bn CV90 contract signed • Oman – Typhoon proposal submitted • India – M777 opportunity progressing – Continued Hawk order intake 6 © BAE Systems 2012
Slide 7: Summary
Summary 2012 First Half Sales by Activity 9% 14% Cyber and Electronics Intelligence • Challenging environment Services • US market uncertainty 43% Military & – Further budget reductions anticipated Technical Services 34% – Overhanging Sequestration risk Platforms • UK market stabilised 2012 First Ha
Slide 8: Peter Lynas
Peter Lynas 8 © BAE Systems 2012
Slide 9: Financial Highlights
Financial Highlights Sales (1) £8,334m - 10% Underlying EBITA (1,2) £939m - 3% Underlying Earnings per Share (1,3) 18.8p Operating Business Cash Flow £742m Net Debt £(1,230)m Order Backlog £40.0bn Dividend per Share 7.8p + 4% (1) Continuing operations (2) Earnings before amortisation and impairment
Slide 10: Summary Income Statement (continuing operations)
Summary Income Statement (continuing operations) £m First Half First Half First Half First Half 2012 2011 2012 2011 Underlying Underlying Reported Reported Sales 8,334 9,229 8,334 9,229 EBITA 939 968 957 913 Amortisation / impairment - goodwill (39) (22) - other intangibles (125) (126) Finance costs
Slide 11: Balance Sheet
Balance Sheet £m 30 Jun 12 31 Dec 11 Intangible fixed assets 11,231 11,465 Tangible fixed assets 2,593 2,626 Investments 755 788 Working capital (5,772) (5,677) Pension deficit (4,699) (4,217) Tax assets & liabilities 1,031 975 Financial assets & liabilities (206) (219) Net debt (1,230) (1,439) Asse
Slide 12: Pension Deficit (IAS 19)
Pension Deficit (IAS 19) £bn 30 Jun 12 31 Dec 11 30 Jun 11 Assets * 18.6 18.1 17.9 Liabilities (24.5) (23.3) (21.9) Pension Deficit (5.9) (5.2) (4.0) Group share of deficit, pre-tax (4.7) (4.2) (3.2) Real Discount Rates UK 1.7% 1.9% 2.0% bond yields 4.4% 4.8% 5.5% inflation rate 2.7% 2.9% 3.5% US 1.
Slide 13: Operating Cash Flow
Operating Cash Flow For the six months ended 30 June 2012 (£m): Cash flow from operating activities * 940 Capital expenditure (net) (189) Dividends from equity accounted investments 16 Contribution to Trust (re: pensions) (25) Operating business cash flow 742 Electronic Systems 105 Cyber & Intellige
Slide 14: Movement in Net Debt
Movement in Net Debt For the six months ended 30 June 2012 (£m): Opening Net Debt (1,439) Operating business cash flow 742 Interest and Tax (124) Equity dividends paid (367) Acquisitions & disposals 18 Foreign exchange and other movements (60) Closing Net Debt (1,230) 14 © BAE Systems 2012
Slide 15: Capital Allocation
Capital Allocation Gross Net £bn Debt Cash Debt 31 December 2011 (3.2) 1.8 (1.4) Cash Flow - 0.2 0.2 Debt issuance - term debt (0.4) 0.4 - Debt redemption - commercial paper 0.3 (0.3) - 30 June 2012 (3.3) 2.1 (1.2) Pre-financing of 2014 debt (0.4) Near-term cash utilisation includes: - commercial pa
Slide 16: Capital Allocation
Capital Allocation Pension funding obligations Organic investment Maintain Working investment Sustainable dividends capital grade volatility rating Return capital to shareholders M&A activity Conservative balance sheet management 16 © BAE Systems 2012
Slide 17: Electronic Systems
Electronic Systems 2012 SALES First Half First Half 2012 2011 Commercial 17% Sales $1,862m $1,975m Underlying EBITA $259m $278m Margin 13.9% 14.1% Defence 83% Cash flow $166m $167m Order backlog $5.6bn $5.6bn * * 2011 order backlog as at 31 December 2011 17 © BAE Systems 2012
Slide 18: Cyber & Intelligence
Cyber & Intelligence 2012 SALES First Half First Half Detica $223m 2012 2011 Sales $1,126m $1,053m Underlying EBITA $85m $89m Margin 7.6% 8.4% Cash flow $33m $108m US $903m Order backlog $1.6bn $1.7bn * * 2011 order backlog as at 31 December 2011 18 © BAE Systems 2012
Slide 19: Platforms & Services (US)
Platforms & Services (US) 2012 SALES Support Solutions First Half First Half 2012 2011 Sales $3,554m $4,342m Land & Underlying EBITA $298m $414m Armaments Margin 8.4% 9.5% Cash flow - $181m Platforms 26% Order backlog $14.3bn $13.6bn * Military & Technical Services 74% * 2011 order backlog as at 31
Slide 20: Platforms & Services (US)
Platforms & Services (US) Land & Support Armaments Solutions First Half First Half First Half First Half 2012 2011 2012 2011 Sales $2,048m $2,871m $1,506m $1,471m Underlying EBITA $175m $297m $123m $117m Margin 8.5% 10.3% 8.2% 8.0% Cash flow $(65)m $43m $65m $138m Order backlog $8.7bn $8.4bn * $5.6b
Slide 21: Platforms & Services (UK)
Platforms & Services (UK) 2012 SALES Maritime First Half First Half 2012 2011 Sales £2,651m £3,052m Air Underlying EBITA £420m £310m Margin 15.8% 10.2% Cash flow £243m £3m Platforms 62% Order backlog £19.5bn £18.7bn * Military & Technical Services 38% * 2011 order backlog as at 31 December 2011 21 ©
Slide 22: Platforms & Services (International)
Platforms & Services (International) 2012 SALES MBDA, India KSA First Half First Half 2012 2011 Sales £1,573m £1,756m Australia Underlying EBITA £161m £211m Margin 10.2% 12.0% Cash flow £568m £(175)m Platforms 38% Order backlog £8.1bn £8.3bn * Military & Technical Services 62% * 2011 order backlog a
Slide 23: 2012 Guidance
2012 Guidance 2011 Actual Guidance Sales Margin 2012 Sales Margin Electronic Systems 2,645 14.6% stable - (5)% 12% - 14% Cyber & Intelligence 1,399 9.7% stable 8.5% - 9.5% Platforms & Services (US) 5,305 9.0% (8)% - (12)% 8.0% - 9.0% Platforms & Services (UK) 6,258 10.5% stable 10% - 12% Platforms &
Slide 24: Handouts
Handouts 24 © BAE Systems 2012
Slide 25: Financial Summary
Financial Summary For the six months ended 30 June (£m): Underlying Cash Sales EBITA Margin flow Electronic Systems 1,181 164 13.9% 105 Cyber & Intelligence 714 54 7.6% 21 Platforms & Services (US) 2,254 189 8.4% - Platforms & Services (UK) 2,651 420 15.8% 243 Platforms & Services (International) 1,
Slide 26: Like-for-Like Sales & Underlying EBITA - Group
Like-for-Like Sales & Underlying EBITA - Group £m Sales Underlying EBITA First Half First Half First Half First Half 2012 2011 Yr-on-Yr 2012 2011 Continuing Businesses 8,334 9,229 (10)% 939 968 Foreign Exchange: USD 98 10 Other (24) (4) Adjusted for Foreign Exchange 8,334 9,303 (10)% 939 974 Transac
Slide 27: Like-for-Like Sales & Underlying EBITA by sector
Like-for-Like Sales & Underlying EBITA by sector $m Sales Underlying EBITA First Half First Half First Half First Half 2012 2011 Growth 2012 2011 Electronic Systems - reported 1,862 1,975 (6)% 259 278 Foreign Exchange (4) (1) Acquisitions (29) (11) 2 - Electronic Systems - adjusted 1,833 1,960 (6)%
Slide 28: Like-for-Like Sales & Underlying EBITA by sector
Like-for-Like Sales & Underlying EBITA by sector £m Sales Underlying EBITA First Half First Half First Half First Half 2012 2011 Yr-on-Yr 2012 2011 Platforms & Services (UK) - reported 2,651 3,052 (13)% 420 310 Foreign Exchange - - Platforms & Services (UK) - adjusted 2,651 3,052 (13)% 420 310 Platf
Slide 29: Reconciliation of Earnings
Reconciliation of Earnings £m First Half First Half First Half First Half 2012 2011 2012 2011 Underlying Underlying Reported Reported Underlying EBITA 939 968 939 968 Gain / (loss) on disposal of businesses 18 (6) Regulatory penalties - (49) EBITA 939 968 957 913 Amortisation / Impairment (164) (148
Slide 30: Working Capital Movements – Reconciliation to Cash Flow
Working Capital Movements – Reconciliation to Cash Flow Cash £m 30/6/12 31/12/11 Mvmt F/x M&A Other Flow Inventories 794 716 (78) (6) (26) - (110) Receivables - current 3,499 3,369 (130) Receivables - non-current 271 314 43 Total receivables 3,770 3,683 (87) (28) (31) (1) (147) Payables - current (8