Slide 1: 2016 Half Year Results
© BAE Systems 2016 2016 Half Year Results 28 July 2016 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 a
Slide 2: Ian King, Chief Executive
© BAE Systems 2016 Ian King Chief Executive 2
Slide 3: 2016 – Half Year Overview
© BAE Systems 2016 2016 – Half Year Overview 2016 2015 Half Year Half Year • Good performance in first half 2016 Sales £8,714m £8,472m • Some political and economic uncertainty Underlying EBITA £849m £800m Underlying EPS 17.4p 17.1p • Market environment improving Dividend per share 8.6p 8.4p • Large
Slide 4: Key Markets - US
© BAE Systems 2016 Key Markets - US • Outlook improving • Electronic Systems – performing well • Electronic Warfare - strong position • ISR – continued demand • Commercial electronics growth • Ship repair - transitioning for ‘tilt to Pacific’ • San Diego dry dock - on track • Commercial Ships – rema
Slide 5: Key Markets - UK
© BAE Systems 2016 Key Markets - UK Military Air • Typhoon • Typhoon deliveries continue • Kuwait – long lead funding • Typhoon capability development and support • Hawk • KSA deliveries commenced • Indian deliveries continue • Renewed UK support contracts • F-35 production rate increasing • Anglo –
Slide 6: Key Markets - International
© BAE Systems 2016 Key Markets - International KSA • High Tornado / Typhoon availability • SBDCP - renewal discussions underway Australia • Business stable after 2015 actions MBDA • Order backlog - underpins future growth India • Hawk batch 3 – negotiations underway • M777 prospect 6
Slide 7: Cyber
© BAE Systems 2016 Cyber Intelligence and Security • Solid performance in a competitive market • Momentum maintained from 2015 Applied Intelligence • Strong order intake and sales growth • Investment in product development and brand 7
Slide 8: Peter Lynas, Group Finance Director
© BAE Systems 2016 Peter Lynas Group Finance Director 8
Slide 9: 2016 Half Year Financial Summary
© BAE Systems 2016 2016 Half Year Financial Summary 2016 2015 Half Year Half Year Sales £8,714m £8,472m Underlying EBITA (1) £849m £800m Underlying Finance Costs (2) £(120)m £(107)m Underlying Earnings per share (3) 17.4p 17.1p Operating Business Cash Flow £(20)m £(349)m Net Debt £(2,036)m £(1,939)m
Slide 10: Balance Sheet
© BAE Systems 2016 Balance Sheet (£m) 30 Jun 31 Dec 2016 2015 Drivers Intangible fixed assets 10,704 10,117 FX Tangible fixed assets 1,993 1,818 FX Investments 224 256 Working capital (3,324) (3,896) Utilisation of customer advances Pension deficit (6,066) (4,501) Lower discount rates Tax assets & l
Slide 11: Pension Deficit (IAS 19)
© BAE Systems 2016 Pension Deficit (IAS 19) (£bn) 30 Jun 31 Dec 2016 2015 (1) Assets 23.8 22.0 Liabilities (30.4) (26.9) Pension deficit (6.6) (4.9) Group share of deficit (6.1) (4.5) UK – real discount rate 0.2% 0.7% Bond yields 3.1% 3.9% Inflation rate 2.9% 3.2% US – bond yields 3.7% 4.5% (1) Duri
Slide 12: Net Cash / (Debt)
© BAE Systems 2016 Net Cash / (Debt) (£m) 2016 Electronic Systems 105 Half Year Cyber & Intelligence 33 Opening Net Debt (1,422) Platforms & Services (US) (33) Operating business cash flow (20) Platforms & Services (UK) (154) Interest & Tax (169) Platforms & Services (Int’l) 178 HQ (149) Equity divi
Slide 13: Electronic Systems
© BAE Systems 2016 Electronic Systems Half Year: 2016 2015 (1) Sales $2,067m $2,112m • Sales slightly lower 2nd half weighting of CMWS & EW Underlying EBITA $300m $323m Commercial +15% Margin 14.5% 15.3% • Margin performance in line with guidance Cash flow $150m $257m • Cash flow reflects invent
Slide 14: Cyber & Intelligence
© BAE Systems 2016 Cyber & Intelligence Half Year: 2016 2015 (1) Sales $1,194m $1,136m • Sales increased by 5% US up 4% Underlying EBITA $25m $41m Applied Intelligence up 16% (2) Margin 2.2% 3.6% • Margin performance reflects first half investment Cash flow $47m $19m and brand campaign in Applie
Slide 15: Platforms & Services (US)
© BAE Systems 2016 Platforms & Services (US) Half Year: 2016 2015 Sales $1,844m $2,022m • Sales down 9% per guidance lower US ship repair activity Underlying EBITA $123m $140m increased CV90 Norway deliveries Margin 6.7% 6.9% • $49m charge on commercial shipbuild Cash flow $(47)m $(30)m • Cash p
Slide 16: Platforms & Services (UK)
© BAE Systems 2016 Platforms & Services (UK) Half Year: 2016 2015 Sales £3,664m £3,544m • Sales up 3% • Margin Underlying EBITA £414m £355m 2015 included 50bps dilution for Typhoon Margin 11.3% 10.0% equipment 2016 includes benefit on Astute from pricing of Cash flow £(154)m £(296)m Batch 1, and
Slide 17: Platforms & Services (International)
© BAE Systems 2016 Platforms & Services (International) Half Year: 2016 2015 Sales £1,739m £1,621m • Sales up 7% increased support in Saudi Arabia Underlying EBITA £158m £155m • Margin reflects higher margin MBDA weapon Margin 9.1% 9.6% systems deliveries in 2nd half year Cash flow £178m £(49)m •
Slide 18: 2016 Guidance - Trading
© BAE Systems 2016 2016 Guidance - Trading 2015 Actual (1) 2016 Guidance (2) Sales Margin Sales Margin Electronic Systems 2,922 15.0% low single digit 13% - 15% Cyber & Intelligence 1,564 6.6% low single digit 7% - 9% Platforms & Services (US) 2,779 6.4% c.(10)% 7% - 8% Platforms & Services (UK) 7,4
Slide 19: Cash Guidance
© BAE Systems 2016 Cash Guidance (£bn) 2016 2016 Half Year Guidance 2017 Operating items: Net capital expenditure, disposals & depr’n (0.1) (0.2) Some capex > dep’n Working capital - provision utilisation (0.1) (0.1) No major items - advances movement (net) (0.6) (0.3) – (0.6) Broadly neutral - othe
Slide 20: Ian King, Chief Executive
© BAE Systems 2016 Ian King Chief Executive 20
Slide 21: Summary
© BAE Systems 2016 Summary 2016 2015 Half Year Half Year • Good performance in first half 2016 Sales £8,714m £8,472m • Some political and economic uncertainty Underlying EBITA £849m £800m Underlying EPS 17.4p 17.1p • Market environment improving Dividend per share 8.6p 8.4p • Robust strategy Order b
Slide 22: Supplementary Information
© BAE Systems 2016 Supplementary Information 22
Slide 23: 2016 Half Year Financial Performance
© BAE Systems 2016 2016 Half Year Financial Performance (£m / £bn backlog) Underlying Cash Order Sales EBITA Margin Flow Backlog Electronic Systems 1,443 209 14.5% 105 4.7 Cyber & Intelligence 833 18 2.2% 33 2.2 Platforms & Services (US) 1,287 86 6.7% (33) 4.4 Platforms & Services (UK) 3,664 414 11.
Slide 24: EPS Bridge
© BAE Systems 2016 EPS Bridge 20 0.4 1.1 pence 0.4 0.2 0.6 15 17.1 17.4 10 2015 F/X Tax Incremental Commercial All 2016 Half Year Rate borrowing Shipbuild other Half Year costs 24
Slide 25: Like-for-Like Sales & Underlying EBITA
© BAE Systems 2016 Like-for-Like Sales & Underlying EBITA Half Year Sales Underlying EBITA 2016 2015 Yr-on-Yr 2016 2015 Yr-on-Yr As Reported 8,714 8,472 3% 849 800 6% Foreign exchange: USD 187 21 EUR 18 1 Other 8 - Adjusted for foreign exchange 8,714 8,685 0% 849 822 3% Transactions: Acquisitions &
Slide 26: Reconciliation of Earnings (Half Year)
© BAE Systems 2016 Reconciliation of Earnings (Half Year) (£m / pence EPS) 2016 2015 2016 2015 Underlying Underlying Reported Reported Underlying EBITA 849 800 849 800 Non-recurring items - (24) EBITA 849 776 Amortisation/Impairment (43) (65) Underlying Finance Costs (120) (107) (120) (107) Pensions
Slide 27: Working Capital Movements - reconciliation to Cash Flow
© BAE Systems 2016 Working Capital Movements - reconciliation to Cash Flow (£m) Movement analysed between: 30 Jun 31 Dec Cash 2016 2015 Mvmt F/X M&A Other Flow Inventories 766 726 (40) (58) - (11) 29 Receivables – current 3,286 2,940 Receivables – non-current 310 275 Total Receivables 3,596 3,215 (3