Slide 1: BAE Systems 2010 Half Year Results
BAE Systems 2010 Half Year Results 29 July 2010 1
Slide 2: Introduction - First half 2010
Introduction - First half 2010 Continued good performance 25,000 • Good programme execution 20,000 • Delivering planned performance 15,000 +9% Sales • Supports outlook for full year 10,000 5,000 £m 0 Market environment 2005 2006 2007 2008 2009 2010 • Government expenditure constraints • SDSR publica
Slide 3: George Rose
George Rose 3
Slide 4: Financial Highlights
Financial Highlights • Sales - continuing £10,643m • Underlying EBITA* - continuing £1,114m • Underlying earnings per share** - continuing 20.4p • Cash flow from operating activities £(185)m • Net debt £(1,202)m • Order book £43.6bn • Dividend per share 7.0p * earnings before amortisation and impair
Slide 5: Income Statement
Income Statement First Half First Half First Half First Half 2010 2009 2010 2009 Continuing Operations: Underlying Underlying Reported Reported 10,643 9,747 10,643 9,747 Sales Underlying EBITA 1,114 978 1,114 978 Loss on disposal of business - (9) Regulatory penalties (18) - EBITA 1,096 969 Finance
Slide 6: Balance Sheet
Balance Sheet 30/06/10 31/12/09 Intangible fixed assets 11,547 11,302 Tangible fixed assets 2,758 2,663 Investments 698 852 Working capital (5,668) (6,974) Pension deficit (4,950) (4,410) Tax assets & liabilities 1,140 877 Financial assets & liabilities (125) (45) Net (debt) / cash (1,202) 403 Net a
Slide 7: Pension Deficit - (IAS 19)
Pension Deficit - (IAS 19) £bn 30 Jun 10 31 Dec 09 30 Jun 09 Pension assets 15.0 15.0 12.6 Pension liabilities (21.3) (20.6) (18.5) Pension deficit, net (6.3) (5.6) (5.9) Group share of deficit, pre-tax * (4.9) (4.4) (4.5) Group share of deficit, post-tax (3.4) (3.0) (3.1) Real Discount Rates UK 2.2
Slide 8: Operating Business Cash Flow
Operating Business Cash Flow First Half 2010 Cash flow from operating activities (185) Capital expenditure (net) (143) Dividends from equity accounted investments 24 Contribution to Trust (re pensions) (25) Operating business cash flow (329) Electronics, Intelligence & Support 267 Land & Armaments 4
Slide 9: Movement in Net Cash/(Debt)
Movement in Net Cash/(Debt) First Half 2010 Net Cash 31 December 2009 403 Operating business cash flow (329) Interest and taxation (340) Equity dividends paid (335) Acquisitions and disposals 90 Net purchase of equity shares (466) Foreign exchange and other movements (225) Net Debt 30 June 2010 (1,2
Slide 10: Operating Groups
Operating Groups Sales * 19% 24% International Electronics, Sales by activity Intelligence & Support 38% 43% Platforms & Readiness & Products Sustainment 28% 29% Programmes Land & & Support Armaments Underlying EBITA * 19% 25% International Electronics, Intelligence & Support 13% 6% Electronic Cyber
Slide 11: Electronics, Intelligence & Support
Electronics, Intelligence & Support First Half First Half 2010 2009 SALES Cyber & Readiness & Sales $3,998m $4,274m Security Sustainment Underlying EBITA $451m $400m Margin 11.3% 9.4% Electronic Order book $7.2bn $7.4bn Systems Cash flow $407m $190m 11
Slide 12: Land & Armaments
Land & Armaments First Half First Half 2010 2009 SALES Readiness & Sales $4,684m $4,807m Sustainment Underlying EBITA $481m $391m Margin 10.3% 8.1% Platforms & Products Electronic Order book $10.3bn $15.3bn Systems Cash flow $708m $245m 12
Slide 13: Programmes & Support
Programmes & Support First Half First Half 2010 2009 SALES Readiness & Sales £3,035m £2,399m Sustainment Underlying EBITA £316m £277m Platforms & Products Cyber & Margin 10.4% 11.5% Security Electronic Systems Order book £23.7bn £21.2bn Cash flow £(50)m £(47)m 13
Slide 14: International
International First Half First Half 2010 2009 SALES Readiness & Sales £2,078m £1,416m Platforms & Products Sustainment Underlying EBITA £218m £160m Margin 10.5% 11.3% Electronic Systems Order book £9.6bn £10.8bn Cash flow £(553)m £122m 14
Slide 15: HQ & Other Businesses – Research Centres
HQ & Other Businesses First Half First Half 2010 2009 • Head Office Sales £141m £133m • Regional Aircraft Underlying EBITA £(32)m £11m • Shared Services Cash flow * £(462)m £(278)m – Research Centres – Property Management * 2010 includes payment of the US regulatory penalty (£266m) 15
Slide 16: Financial Summary
Financial Summary • Sales - continuing £10,643m • Underlying EBITA* - continuing £1,114m • Underlying earnings per share** - continuing 20.4p • Cash flow from operating activities £(185)m • Net debt £(1,202)m • Order book £43.6bn • Dividend per share 7.0p * earnings before amortisation and impairmen
Slide 17: Ian King
Ian King 17
Slide 18: Business resilience
Business resilience • Customer support and services • New growth markets – security • Key programme participation - large order book • Broad home market base • Performance focus Continued efficiency improvements to benefit customers and shareholders 18
Slide 19: Customer support and services
Customer support and services Sales* by activity Customer support and services characteristics Platforms & Products • Multi-year contracts • Strong incumbent positions Readiness & Sustainment • Intimacy with end-user 49% Customer Support & Services • Track record of delivering savings Electronic Sys
Slide 20: Readiness and Sustainment activities
Readiness and Sustainment activities • Provision of spares, repairs • Management of bases and facilities – Holston in the US and Portsmouth dockyard in the UK • Combined maintenance and upgrade – Military aircraft – Vehicle reset, eg Bradley and Bulldog – UK naval refit and US naval sustainment • Op
Slide 21: Cyber & Security
Cyber & Security • Strong position in high priority cyber sector • Focus on information based intelligence solutions – Intercept, retention and monitoring – Intelligence-led operations – Counter-fraud – Cyber security – Counter IED • Key capability provider to US, UK and Australian agencies • Pursui
Slide 22: Key programmes
Key programmes 60 Typhoon deliveries Combat aircraft programmes 50 40 Aircraft 30 20 • Typhoon 10 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 250 200 F-35 deliveries • F-35 150 Aircraft 100 50 0 2010 2011 2012 2013 2014 2015 2016 2017 Naval programmes • Type 45 • QEII Carrier Type 45 QEII Carrier
Slide 23: US defence
US defence • US market remains strong • Significant changes in programme priorities already announced • Further growth in modernisation spend to be funded from cost savings • BAE Systems efficiency enhancement actions already underway 23
Slide 24: Global Home Market Positions
Global Home Market Positions United Kingdom • 39,200 people Sweden • Largest supplier to MoD • 1,400 people • 57 business locations • 5 business locations India • Developing home market position United States • 40,800 people • 4th largest supplier to DoD Australia Saudi Arabia • 126 locations in 38
Slide 25: Efficiency improvement
Efficiency improvement • Cost reduction measures driven by – Drive to improve efficiency – Reducing volumes in land sector • Pre-emptive actions already generating benefits – Improving RoS in business – Savings flowing to customers • Rationalisation actions underway – Reduced manpower and overhead –
Slide 26: Summary
Summary 50 40 Key growth drivers Underlying 30 +14% EPS 20 • Customer support and services pence 10 • Cyber and security 0 2005 2006 2007 2008 2009 2010 • Combat aircraft programmes • Electronic systems 20 • Home market and export opportunities DPS 15 • Enhanced performance pence 10 +9% 5 0 2005 200