Slide 1: 2015 Preliminary Results
© BAE Systems 2016 2015 Preliminary Results 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 mark
Slide 2: Sir Roger Carr, Chairman
© BAE Systems 2016 Sir Roger Carr Chairman 2
Slide 3: Ian King, Chief Executive
© BAE Systems 2016 Ian King Chief Executive 3
Slide 4: 2015 - Overview
© BAE Systems 2016 2015 - Overview 2015 2014 Solid performance in 2015 underpinned by: Sales £17,904m £16,637m • Broad geographic base of business Underlying EBITA £1,683m £1,702m • Strong customer support franchises Underlying EPS 40.2p 38.0p • Good programme execution Dividend per share 20.9p 20.5
Slide 5: Key Markets - US
© BAE Systems 2016 Key Markets - US • Bipartisan agreement lifting BCA budget caps:- − increased FY 2016 defence budget • Good Electronic Systems performance − strong EW position - EPAWSS and C-130J wins − continued ISR demand − commercial electronics growth • Ship repair - transitioning for ‘tilt t
Slide 6: Key Markets - UK
© BAE Systems 2016 Key Markets - UK SDSR • Positive outcome Military Air • Typhoon − Kuwait agreement − Typhoon major unit rate reduced • F-35 production rate increasing • Hawk − KSA batch 1 deliveries on track for 2016 − KSA batch 2 contract award − Indian production support Maritime • QEC Carriers
Slide 7: Key Markets - International
© BAE Systems 2016 Key Markets - International KSA • High volume of training and support activity • Good Tornado / Typhoon availability • Hawk Batch 2 confirms enhanced training requirement Australia • Williamstown shipyard rationalisation / impairment • Efficiency enhancement measures India • HAL H
Slide 8: Cyber
© BAE Systems 2016 Cyber Intelligence US govt support & Security Cyber & Intelligence UK Services Applied Intl Services & Solutions Intelligence Commercial Solutions • Rapid pace of Applied Intelligence expansion − Order intake up 28% − Increased product development activity − Recruitment - 1,200 em
Slide 9: Peter Lynas, Group Finance Director
© BAE Systems 2016 Peter Lynas Group Finance Director 9
Slide 10: 2015 Financial Summary
© BAE Systems 2016 2015 Financial Summary 2015 2014 Sales £17,904m £16,637m Underlying EBITA (1) £1,683m £1,702m Underlying Finance Costs (2) £(194)m £(204)m Underlying Earnings per share (3) 40.2p 38.0p Operating Business Cash Flow £681m £1,191m Net Debt £(1,422)m £(1,032)m Order backlog £36.8bn £4
Slide 11: Balance Sheet
© BAE Systems 2016 Balance Sheet (£m) 31 Dec 31 Dec 2015 2014 Drivers Intangible fixed assets 10,117 9,983 FX, amortisation & impairments Tangible fixed assets 1,818 1,718 FX, investment in Maritime facilities Investments 256 236 Working capital (3,896) (4,466) Utilisation of customer advances, prov
Slide 12: Pension Deficit (IAS 19)
© BAE Systems 2016 Pension Deficit (IAS 19) (£bn) 31 Dec 30 Jun 31 Dec 2015 2015 2014 Assets 23.8 23.8 23.8 Liabilities (29.4) (30.0) (30.6) Pension deficit (5.6) (6.2) (6.8) Group share of deficit (4.5) (4.8) (5.4) UK – real discount rate 0.7% 0.5% 0.4% Bond yields 3.9% 3.8% 3.6% Inflation rate 3.2
Slide 13: Net Cash / (Debt)
© BAE Systems 2016 Net Cash / (Debt) (£m) Electronic Systems 323 2015 Opening Net Debt (1,032) Cyber & Intelligence 93 Platforms & Services (US) 100 Operating business cash flow 681 Platforms & Services (UK) 220 Interest & Tax (289) Platforms & Services (Int’l) 164 Equity dividends paid (655) HQ (21
Slide 14: Capital Allocation
© BAE Systems 2016 Capital Allocation Pension funding legal obligation capital expenditure, R&D, Organic investment business development sustainable cover of around Dividends two times earnings Return of capital M&A when appropriate & balance sheet value enhancing bolt-on acquisitions allows ; must
Slide 15: Electronic Systems
© BAE Systems 2016 Electronic Systems 2015 2014 Sales $4,030m $3,978m • Sales up 1% Commercial up 7%, Defence stable Underlying EBITA $605m $614m • Margin performance ahead of guidance Margin 15.0% 15.4% benefitted from strong programme execution Cash flow $494m $405m 2014 included 50 bps from
Slide 16: Cyber & Intelligence
© BAE Systems 2016 Cyber & Intelligence 2015 2014 Sales $2,824m $2,731m • Overall sales up 3% US down 1% - government IT services Underlying EBITA $221m $252m Applied Intelligence up 31% - Silversky (13%) Margin 7.8% 9.2% and organic growth (18%) Cash flow $142m $206m • Margin slightly below gui
Slide 17: Platforms & Services (US)
© BAE Systems 2016 Platforms & Services (US) 2015 2014 Sales $4,246m $4,430m • Sales down 4%, ahead of guidance; like-for-like reduction 1% Underlying EBITA $271m $192m GCV completion Margin 6.4% 4.4% increased ship repair / munitions activity Cash flow $152m $242m • Margin performance in line w
Slide 18: Platforms & Services (UK)
© BAE Systems 2016 Platforms & Services (UK) 2015 2014 Sales £7,405m £6,623m • Sales up 12% c.£400m on Radar & DASS equipment Underlying EBITA £721m £772m Saudi aircraft deliveries Margin 9.7% 11.7% increased Submarines activity Cash flow £220m £173m • Margin performance reflects UK pension
Slide 19: Platforms & Services (International)
© BAE Systems 2016 Platforms & Services (International) 2015 2014 Sales £3,742m £3,572m • Sales, like-for-like, up 9% increased Saudi support activity Underlying EBITA £335m £366m • Margin reflects £53m Australian shipbuilding Margin 9.0% 10.2% impairment & rationalisation charges Cash flow £164m
Slide 20: 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 21: 2016 Guidance - Trading : Earnings Per Share
© BAE Systems 2016 2016 Guidance - Trading : Earnings Per Share 2015 Underlying, as reported 40.2p Adjusted for: - Overseas tax provision release (2.6)p - UK tax provision release (1.7)p - foreign exchange (1) 0.7p (3.6)p 2015 Underlying, adjusted 36.6p In aggregate, underlying EPS to be 5% - 10% hi
Slide 22: Cash Guidance
© BAE Systems 2016 Cash Guidance (£bn) 2016 2015 Guidance 2017 Operating items: Net capital expenditure, disposals & depr’n (0.1) (0.2) Some capex > dep’n Working capital - provision utilisation (0.2) (0.1) No major items - advances movement (net) (0.5) (0.3) – (0.6) Broadly neutral - other working
Slide 23: Ian King, Chief Executive
© BAE Systems 2016 Ian King Chief Executive 23
Slide 24: Summary
© BAE Systems 2016 Summary 2015 2014 Sales £17,904m £16,637m • Solid performance in 2015 Underlying EBITA £1,683m £1,702m • Broad geographic base of business Underlying EPS 40.2p 38.0p • Resilience demonstrated Dividend per share 20.9p 20.5p • Well positioned for continued attractive returns Order b
Slide 25: Supplementary Information
© BAE Systems 2016 Supplementary Information 25
Slide 26: Underlying EPS Bridge
© BAE Systems 2016 Underlying EPS Bridge 45.0 1.7 40.0 2.6 0.8 pence 0.3 1.0 1.3 35.0 0.9 30.0 40.2 38.0 25.0 20.0 2014 Tax rate Commercial Australian Pension Trading Tax Tax 2015 shipbuilding ratex / costs volumes/mix releases releases charges impairment (incl Typhoon) - overseas - UK 26
Slide 27: 2015 Financial Performance – As Reported
© BAE Systems 2016 2015 Financial Performance – As Reported (£m / £bn backlog) Underlying Cash Order Sales EBITA Margin Flow Backlog Electronic Systems 2,638 396 15.0% 323 4.2 Cyber & Intelligence 1,848 145 7.8% 93 2.4 Platforms & Services (US) 2,779 177 6.4% 100 3.9 Platforms & Services (UK) 7,405
Slide 28: Segment Changes – 2015 Full Year
© BAE Systems 2016 Segment Changes – 2015 Full Year (£m) Sales Underlying EBITA Old GEOINT New Old GEOINT New Structure Transfer Structure Structure Transfer Structure Electronic Systems 2,638 284 2,922 396 41 437 Cyber & Intelligence 1,848 (284) 1,564 145 (41) 104 Platforms & Services (US) 2,779 -
Slide 29: 2015 Financial Performance – Restated
© BAE Systems 2016 2015 Financial Performance – Restated (£m / £bn backlog) Underlying Cash Order Sales EBITA Margin Flow Backlog Electronic Systems 2,922 437 15.0% 370 4.3 Cyber & Intelligence 1,564 104 6.6% 46 2.3 Platforms & Services (US) 2,779 177 6.4% 100 3.9 Platforms & Services (UK) 7,405 721
Slide 30: Like-for-Like Sales & Underlying EBITA
© BAE Systems 2016 Like-for-Like Sales & Underlying EBITA Sales Underlying EBITA 2015 2014 Yr-on-Yr 2015 2014 Yr-on-Yr As Reported 17,904 16,637 8% 1,683 1,702 (1)% Foreign exchange: USD 446 44 AUD (72) (5) EUR (72) (6) Other (65) (18) Adjusted for foreign exchange 17,904 16,874 6% 1,683 1,717 (2)%
Slide 31: Reconciliation of Earnings
© BAE Systems 2016 Reconciliation of Earnings (£m / pence EPS) 2015 2014 2015 2014 Underlying Underlying Reported Reported Underlying EBITA 1,683 1,702 1,683 1,702 Non-recurring items 26 - EBITA 1,709 1,702 Amortisation/Impairment (186) (354) Underlying Finance Costs (194) (204) (194) (204) Pensions
Slide 32: Working Capital Movements - reconciliation to Cash Flow
© BAE Systems 2016 Working Capital Movements - reconciliation to Cash Flow (£m) Movement analysed between: 31 December Cash 2015 2014 Mvmt F/X M&A Other Flow Inventories 726 690 (36) (26) (4) - (6) Receivables – current 2,940 2,850 Receivables – non-current 275 347 Total Receivables 3,215 3,197 (18)