Slide 1: BAE Systems 2010 Preliminary Results
BAE Systems 2010 Preliminary Results 17 February 2011 1
Slide 2: Overview - 2010
Overview - 2010 • Performing well 25,000 20,000 15,000 • Significant change in markets Sales 10,000 – Funding pressures 5,000 – Some clarity emerging – Affordability / cost focus prevails £m 0 2004 2005 2006 2007 2008 2009 2010 • Resilient core defence business – Underpinned by efficiency improvemen
Slide 3: George Rose
BAE SYSTEMS George Rose wy [oe <
Slide 4: Financial Highlights
Financial Highlights • Sales - continuing £22,392m • Underlying EBITA* - continuing £2,214m • Underlying earnings per share** - continuing 40.8p • Cash flow from operating activities £1,535m • Net debt £(242)m • Order book £39.7bn • Dividend per share 17.5p * earnings before amortisation and impairm
Slide 5: Income Statement
Income Statement 2010 2009 2010 2009 Continuing Operations: Underlying Underlying Reported Reported Sales 22,392 21,990 22,392 21,990 Underlying EBITA 2,214 2,197 2,214 2,197 Profit on disposal of businesses 1 68 Pension accounting gains 2 261 Regulatory penalties (18) (278) EBITA 2,199 2,248 Financ
Slide 6: Balance Sheet
Balance Sheet 31/12/10 31/12/09 Intangible fixed assets 11,216 11,306 Tangible fixed assets 2,848 2,663 Investments 798 852 Working capital (6,641) (7,002) Pension deficit (3,146) (4,410) Tax assets & liabilities 580 896 Financial assets & liabilities (10) (45) Net (debt) / cash (242) 403 Net assets
Slide 7: Operating Business Cash Flow
Operating Business Cash Flow 2010 Cash flow from operating activities 1,535 Capital expenditure (net) (364) Dividends from equity accounted investments 71 Contribution to Trust (re pensions) (25) Cash held for charitable contribution to Tanzania (30) Operating business cash flow 1,187 Electronics, I
Slide 8: Movement in Net Cash/(Debt)
Movement in Net Cash/(Debt) 2010 Net Cash 31 December 2009 403 Operating business cash flow 1,187 Interest and taxation (525) Acquisitions and disposals (88) Equity dividends paid (574) Net purchase of equity shares (520) Foreign exchange and other movements (125) Net Debt 31 December 2010 (242) £ m
Slide 9: Pension Deficit - IAS 19
Pension Deficit - IAS 19 £bn 31 Dec 10 30 Jun 10 31 Dec 09 Pension assets 17.2 15.0 15.0 Pension liabilities (21.3) (21.3) (20.6) Pension deficit, net (4.1) (6.3) (5.6) Group share of deficit, pre-tax * (3.1) (4.9) (4.4) Group share of deficit, post-tax (2.1) (3.4) (3.0) Real Discount Rates UK 2.1%
Slide 10: 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% Nominal Inflation Rate 3.5% 3.0% 2.8% (11 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 Dec
Slide 11: Operating Groups
Operating Groups Sales * 20% 25% International Electronics, Intelligence & Support Group sales by activity 29% 26% Platforms Programmes Land & & Support Armaments Readiness & Sustainment Underlying EBITA * 21% 29% International Electronics, Intelligence Electronic Services & Support Systems Cyber an
Slide 12: Electronics, Intelligence & Support
Electronics, Intelligence & Support Sales Cyber and 2010 2009 Intelligence Readiness & Sustainment Sales $8,734m $8,826m Underlying EBITA $1,032m $900m Electronic Systems Margin 11.8% 10.2% Electronic Support Order book $7.5bn $7.3bn Solutions Solutions Cash flow $878m $595m Platform Intelligence &
Slide 13: Land & Armaments
Land & Armaments Sales Readiness & 2010 2009 Sustainment Sales $9,162m $10,550m Underlying EBITA $933m $946m Platforms Electronic Margin 10.2% 9.0% Systems US Order book $9.2bn $12.6bn Cash flow $1,326m $752m UK Sweden South Africa 13
Slide 14: Programmes & Support
Programmes & Support Sales Readiness & 2010 2009 Sustainment Sales £6,680m £6,298m Platforms Cyber and Intelligence Underlying EBITA* £529m £670m Electronic Systems Margin* 7.9% 10.6% Naval Order book £21.1bn £24.3bn Cash flow £227m £285m Systems & Security Air * 2010 includes T&T OPV charge (£100m)
Slide 15: International
International Sales Readiness & 2010 2009 Platforms Sustainment Sales £4,534m £3,828m Underlying EBITA £478m £419m Electronic Systems Margin 10.5% 10.9% MBDA, India Order book £9.1bn £11.0bn Air Astana KSA Cash flow £195m £813m Australia 15
Slide 16: HQ & Other Businesses
HQ & Other Businesses 2010 2009 • Head Office Sales £278m £254m • Regional Aircraft Underlying EBITA £(65)m £(71)m • Shared Services Cash flow * £(665)m £(366)m – Research Centres – Property Management * 2010 includes payment of regulatory penalties (£296m) 16
Slide 17: Financial Summary
Financial Summary • Sales - continuing £22,392m • Underlying EBITA* - continuing £2,214m • Underlying earnings per share** - continuing 40.8p • Cash flow from operating activities £1,535m • Net debt £(242)m • Order book £39.7bn • Dividend per share 17.5p * earnings before amortisation and impairment
Slide 18: Ian King
BAE SYSTEMS lan King wy 18
Slide 19: Key Points
Key Points • Core business resilience and strength – UK and US market outlook – Sustainable business positions – underpinned by strength in Readiness & Sustainment – Underpinned by cost reduction and efficiencies • New business – Services – Growing position in Cyber and Intelligence – Home market de
Slide 20: US defence market environment
US defence market environment • Tough environment Programme • Increased procurement emphasis on: opportunities – programme performance and relevance – cost not capability driven • Further Bradley modernisation • 2011 Budget • AAV upgrade – remains subject to ‘continuing resolution’ • Next generation
Slide 21: UK Strategic Defence and Security Review - Summary
UK Strategic Defence and Security Review - Summary Royal Air Force Royal Navy Army Security • Typhoon and JSF fast jet fleet • 7 Astute class submarines • Restructured Army (5 brigades) • Focus on counter-terrorism • Harrier retired by 2011 • Successor programme (CASD) • One high readiness brigade •
Slide 22: Group Strategic Framework - 2011
Group Strategic Framework - 2011 Our vision is to be the premier global defence and security company Our mission is to deliver sustainable growth in shareholder value through our commitment to Total Performance Our values are - Trusted, Innovative and Bold Our Strategy - Operate and grow in the defe
Slide 23: Strategic Actions - 2011
Strategic Actions - 2011 Invest and grow Invest and grow in Sustain our Implement the Develop new Implement in Services Electronic Platform positions home market home markets rationalisation including Systems strategy to grow and grow our and efficiency Readiness & our business export business progr
Slide 24: Strategic Actions - 2011
Strategic Actions - 2011 Invest and grow Invest and grow in Sustain our Implement the Develop new Implement in Services Electronic Platform positions home market home markets rationalisation including Systems strategy to grow and grow our and efficiency Readiness & our business export business progr
Slide 25: Strategic Actions - 2011
Strategic Actions - 2011 Invest and grow Invest and grow in Sustain our Implement the Develop new Implement in Services Electronic Platform positions home market home markets rationalisation including Systems strategy to grow and grow our and efficiency Readiness & our business export business progr
Slide 26: Strategic Actions - 2011
Strategic Actions - 2011 Invest and grow Invest and grow in Sustain our Implement the Develop new Implement in Services Electronic Platform positions home market home markets rationalisation including Systems strategy to grow and grow our and efficiency Readiness & our business export business progr
Slide 27: Strategic Actions - 2011
Strategic Actions - 2011 Invest and grow Invest and grow in Sustain our Implement the Develop new Implement in Services Electronic Platform positions home market home markets rationalisation including Systems strategy to grow and grow our and efficiency Readiness & our business export business progr
Slide 28: Strategic Actions - 2011
Strategic Actions - 2011 Invest and grow Invest and grow in Sustain our Implement the Develop new Implement in Services Electronic Platform positions home market home markets rationalisation including Systems strategy to grow and grow our and efficiency Readiness & our business export business progr
Slide 29: Summary
Summary 50 Performing well 40 Underlying EPS • Good financial performance 30 pence • Strong cash flow 20 – enabling £1.1bn return of capital 10 0 2005 2006 2007 2008 2009 2010 Outlook • Improving market visibility • Rebasing Land business 20 DPS • Cost reduction 15 pence – mitigate near term top lin