Slide 1: BAE Systems 2009 Preliminary Results
BAE Systems 2009 Preliminary Results 18 February 2010 1
Slide 2: Overview - 2009
Overview - 2009 +21% 25,000 20,000 15,000 • Continued good performance Sales 10,000 5,000 – Good programme execution £m 0 – Strong cash generation 2004 2005 2006 2007 2008 2009 • Well positioned +17% 2,500 – Large forward order book 2,000 – Broad portfolio of programmes Underlying 1,500 – Multiple l
Slide 3: Business characteristics
Business characteristics Platforms and Readiness & Products Sustainment 40% 40% IT & Cyber Electronics & 7% Equipment 13% Analysis of 2009 sales by activity 3
Slide 4: Business characteristics: Platforms & Products
Business characteristics Platforms & Products – Surface ships and submarines – Guided weapons and radar Readiness & – Aircraft and vehicles Sustainment 40% 40% IT & Cyber Electronics & 7% Equipment 13% Analysis of 2009 sales by activity 4
Slide 5: Business characteristics: Readiness & Sustainment
Business characteristics Readiness & Sustainment – Mission preparation Platforms and – Capability provision Products – Through-life support 40% 40% IT & Cyber Electronics & 7% Equipment 13% Analysis of 2009 sales by activity 5
Slide 6: Business characteristics: Electronics & Equipment
Business characteristics Platforms and Readiness & Products Sustainment 40% 40% 13% IT & Cyber Electronics & Equipment 7% – Electronic systems – Equipment Analysis of 2009 sales by activity 6
Slide 7: Business characteristics: IT & Cyber
Business characteristics Platforms and Readiness & Products Sustainment 40% 40% 7% IT & Cyber Electronics & – Border & transport security Equipment – Cyber security 13% – IT products & services Analysis of 2009 sales by activity 7
Slide 8: George Rose
BAE SYSTEMS George Rose
Slide 9: Financial Highlights
Financial Highlights • Sales £22,415m • Underlying EBITA * £2,220m • Underlying earnings per share ** 40.7p • Cash inflow from operating activities £2,232m • Net cash £403m • Order book £46.9bn • Dividend per share 16.0p * earnings before amortisation and impairment of intangible assets, finance cos
Slide 10: Income Statement
Income Statement 2009 2008 2009 2008 Underlying Underlying Reported Reported Sales 22,415 18,543 22,415 18,543 Underlying EBITA 2,220 1,897 2,220 1,897 Profit on disposed businesses 68 238 Pension accounting gain 261 Regulatory penalties (278) EBITA 2,271 2,135 Finance (Expense)/Income (707) 697 (70
Slide 11: Balance Sheet
Balance Sheet 31/12/09 31/12/08 Intangible fixed assets 11,253 12,306 Tangible fixed assets 2,663 2,558 Investments 852 1,040 Working capital (6,839) (5,825) Pension deficit (4,410) (3,325) Tax assets & liabilities 850 256 Financial assets & liabilities (45) 240 Net cash 403 39 Net assets 4,727 7,28
Slide 12: Operating Business Cash Flow
Operating Business Cash Flow 2009 Cash inflow from operating activities 2,232 Capital expenditure (net) (489) Dividends from equity accounted investments 77 Contribution to Trust (re pensions) (225) Operating business cash flow 1,595 Electronics, Intelligence & Support 380 Land & Armaments 480 Progr
Slide 13: Movement in Net Cash
Movement in Net Cash 2009 Net Cash 31 December 2008 39 Operating business cash flow 1,595 Interest and taxation (536) Equity dividends paid (534) Acquisitions and disposals (254) Net purchase of equity shares (20) Foreign exchange and other movements 113 Net Cash 31 December 2009 403 £ millions 13
Slide 14: Pension Deficit - (IAS 19)
Pension Deficit - (IAS 19) £bn 31 Dec 08 30 Jun 09 31 Dec 09 Pension assets 13.1 12.6 15.0 Pension liabilities (17.3) (18.5) (20.6) Pension deficit, net (4.2) (5.9) (5.6) Group share of deficit, pre-tax * (3.3) (4.5) (4.4) Group share of deficit, post-tax (2.2) (3.1) (3.0) Real Discount Rates UK 3.4
Slide 15: UK Discount Rates and Inflation
UK Discount Rates and Inflation 8.0% 7.5% 7.0% 6.5% Nominal AA Corporate Bond Yield 6.0% 5.5% 5.0% 4.5% 4.0% 3.5% Nominal Inflation Rate 3.0% 2.9% (10 yr avg ) 2.5% 2.0% 1.5% Real Discount Rate 1.0% 31 Dec 1999 31 Dec 2000 31 Dec 2001 31 Dec 2002 31 Dec 2003 31 Dec 2004 31 Dec 2005 31 Dec 2006 31 De
Slide 16: Operating Groups
Operating Groups Sales * 19% 25% International Electronics, Sales by activity Intelligence & Support 40% 40% Platforms & Readiness & Products Sustainment 27% 29% Programmes Land & & Support Armaments Underlying EBITA * 19% 25% International Electronics, Intelligence & Support 7% 13% IT & Electronics
Slide 17: Electronics, Intelligence & Support
Electronics, Intelligence & Support SALES Electronic Support 2009 2008 Solutions Solutions Sales $8,826m $8,260m Underlying EBITA * $900m $937m Information Platform Solutions Solutions Margin 10.2% 11.3% IT & Readiness & Order book $7.3bn $7.5bn Cyber Sustainment Cash flow $595m $704m Electronics &
Slide 18: Land & Armaments
Land & Armaments SALES Global Tactical Global Combat 2009 2008 Systems Systems Sales $10,550m $11,869m Security & Underlying EBITA * $946m $1,049m Survivability US Combat Systems Margin 9.0% 8.8% Readiness & Order book $12.6bn $16.7bn Sustainment Cash flow $752m $865m Platforms & Products Electronic
Slide 19: Programmes & Support
Programmes & Support SALES Naval 2009 2008 Systems & Sales £6,298m £4,638m Security Air Underlying EBITA £670m £491m Margin 10.6% 10.6% Readiness & Order book £24.3bn £19.8bn Sustainment Cash flow £285m £651m Platforms & Electronics & Products Equipment IT & Cyber 19
Slide 20: International
International SALES MBDA, Saab, CS&S 2009 2008 Air Astana International Sales £4,253m £3,333m Underlying EBITA £442m £435m Australia Margin 10.4% 13.1% Platforms & Order book £11.6bn £11.0bn Products Readiness & Sustainment Cash flow £816m £163m Electronics & Equipment 20
Slide 21: HQ & Other Businesses
HQ & Other Businesses 2009 2008 • Regional Aircraft Sales £254m £235m • Shared Services Underlying EBITA * £(71)m £(101)m – Research Centres – Property Management Cash flow £(366)m £(66)m • Head Office * excludes regulatory penalties of £278m 21
Slide 22: Financial Summary
Financial Summary • Sales £22,415m • Underlying EBITA * £2,220m • Underlying earnings per share ** 40.7p • Cash inflow from operating activities £2,232m • Net cash £403m • Order book £46.9bn • Dividend per share 16.0p * earnings before amortisation and impairment of intangible assets, finance costs
Slide 23: Ian King
BAE SYSTEMS lan King 23
Slide 24: Agenda
Agenda • Markets – US – UK • Strategy update – Framework – Actions 24
Slide 25: US defence
US defence • Overall FY10 defence budget better than anticipated – addressing higher manpower related costs – continued high cost of overseas operations • Core investment account spend DoD funding – internal planning assumes flat / reducing $ bn Supplemental 800 693 708 / Operations – FY11 slightly
Slide 26: UK defence market
UK defence market Challenging environment • Significant budget constraints continue – Public expenditure constraints – Meeting cost of overseas operations • Progressive approach to align procurement to budget – Programme stretch - eg Carriers – Salam Typhoon diversions a significant alleviation • Re
Slide 27: UK defence market: successes and opportunities
UK defence market … but successes continue • Industrial strategy for naval shipbuilding determined – New Terms of Business Agreement signed – Carrier manufacturing contracts signed • New support agreements for Typhoon, Harrier, torpedoes and Type 45 • Through-life support strategy delivering for all
Slide 28: Group Strategic Framework - 2010
Group Strategic Framework - 2010 Our vision is to be the premier global defence, security and aerospace company Our mission is to deliver sustainable growth in shareholder value through our commitment to Total Performance for all our customers Our Strategy Our Group Strategic Objective is Total Perf
Slide 29: Group Strategic Framework - 2010
Group Strategic Framework - 2010 Our vision is to be the premier global defence, security and aerospace company Our mission is to deliver sustainable growth in shareholder value through our commitment to Total Performance for all our customers Our Strategy Our Group Strategic Objective is Total Perf
Slide 30: Group Strategic Framework - 2010
Group Strategic Framework - 2010 Our vision is to be the premier global defence, security and aerospace company Our mission is to deliver sustainable growth in shareholder value through our commitment to Total Performance for all our customers Our Strategy Our Group Strategic Objective is Total Perf
Slide 31: EI&S - Driving growth from innovation and technology
EI&S - Driving growth from innovation and technology Grow our EI&S Implement our Establish in the UK Grow our home Implement our Continue to global land sustainably markets in the global initiatives in develop our global business both systems strategy profitable through- Kingdom of Saudi Security, m
Slide 32: Land & Armaments
Land & Armaments Grow our EI&S Implement our global Establish in the UK Grow our home Implement our Continue to business both sustainably markets in the global initiatives in develop our global organically and via land systems profitable through- Kingdom of Saudi Security, markets acquisitions and s
Slide 33: Sustainable business in the UK
Sustainable business in the UK Grow our EI&S Implement our Establish in the UK Grow our home Implement our Continue to business both global land markets in the global initiatives in develop our global sustainably profitable organically and via systems strategy Kingdom of Saudi Security, markets acqu
Slide 34: Kingdom of Saudi Arabia
Kingdom of Saudi Arabia Grow our EI&S Implement our Establish in the UK Grow our home Implement our Continue to business both global land sustainably global initiatives in develop our global markets in the organically and via systems strategy profitable through- Security, markets acquisitions and an
Slide 35: Australia
Australia Grow our EI&S Implement our Establish in the UK Grow our home Implement our Continue to business both global land sustainably global initiatives in develop our global markets in the organically and via systems strategy profitable through- Security, markets acquisitions and and deliver on o
Slide 36: India
India Grow our EI&S Implement our Establish in the UK Grow our home Implement our Continue to business both global land sustainably global initiatives in develop our global markets in the organically and via systems strategy profitable through- Security, markets acquisitions and and deliver on our l
Slide 37: Implementing the global initiatives
Implementing the global initiatives Grow our EI&S Implement our Establish in the UK Grow our home Implement our Continue to business both global land sustainably markets in the develop our global global initiatives in organically and via systems strategy profitable through- Kingdom of Saudi markets
Slide 38: Rest of World markets
Rest of World markets Grow our EI&S Implement our Establish in the UK Grow our home Implement our Continue to develop business both global land sustainably markets in the global initiatives in our global markets organically and via systems strategy profitable through- Kingdom of Saudi Security, acqu
Slide 39: Broadly based business
Broadly based business • Well defined strategy – Focus on defence, security and aerospace • Programme diversity – Large portfolio of programmes – Through-life support • Market diversity – Leading positions in multiple home markets – All armed forces, government security • Continuously evolving capab
Slide 40: Summary
Summary 50 +10% 40 Underlying 30 EPS • Further progress against strategy 20 – broad base of business pence – multi-Home Market positions 10 0 2004 2005 2006 2007 2008 2009 • Good visibility – large order book 20 +10% – realistically based plans 15 DPS 10 • Continued good performance pence 5 – delive