Slide 1: 2015 Half Year Results
© BAE Systems 2015 2015 HALF YEAR RESULTS 30 July 2015 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
© BAE Systems 2015 BAE SYSTEMS INSPIRED WORK lan King
Slide 3: 2015 Half Year Overview
© BAE Systems 2015 2015 Half Year Overview 2015 Half Year Sales £8,472m Good performance continued into first half 2015 Underlying EBITA £800m Underlying EPS 17.1p Indications of improving market environment Dividend per share 8.4p Challenges remain: Order backlog £37.3bn − Progressing militar
Slide 4: Key Markets - US
© BAE Systems 2015 Key Markets - US TRADING ENVIRONMENT Market outlook starting to clear − Encouraging signs of growth returning − Planning assumptions not yet changed Commercial aerospace electronics developing well Intelligence & Security review underway US combat vehicles outlook stabilis
Slide 5: Key Markets - UK
© BAE Systems 2015 Key Markets - UK TRADING ENVIRONMENT Business performing well Budget constraints, but stable SDSR anticipated later this year MILITARY AIR F-35 production rate increasing Typhoon capability expansion underway − Weapons clearance and E-Scan radar MARITIME Coherent UK na
Slide 6: International markets
© BAE Systems 2015 International markets KSA High volume of support activity Tornado and Typhoon achieving high availability AUSTRALIA Naval workload challenge post LHD Reviewing options for Williamstown facility MBDA Strong order intake and contracts pending Good growth outlook OTHER MA
Slide 7: Applied Intelligence
© BAE Systems 2015 Applied Intelligence Successful SilverSky integration Rapid pace of AI expansion − Increased product development activity − Recruitment - 900 staff intake in first half Active order pipeline − Well set for second half performance 7
Slide 8: Peter Lynas
© BAE Systems 2015 Peter Lynas 8
Slide 9: 2015 Half Year Financial Summary
© BAE Systems 2015 2015 Half Year Financial Summary 2015 2014 Half Year Half Year Sales £8,472m £7,611m Underlying EBITA (1) £800m £802m Underlying Finance Costs (2) £(107)m £(89)m Underlying Earnings per Share (3) 17.1p 17.7p Operating Business Cash Flow £(349)m £287m (4) Net Debt £(1,939)m £(1,032
Slide 10: Balance Sheet
© BAE Systems 2015 Balance Sheet (£m) 30 Jun 15 31 Dec 14 Movement drivers: Intangible fixed assets 9,870 9,983 - amortisation Tangible fixed assets 1,682 1,718 Investments 215 236 - dividends paid Working capital (3,433) (4,466) - utilisation of customer advances, provisions Pension deficit (4,774)
Slide 11: Pension Deficit (IAS 19)
© BAE Systems 2015 Pension Deficit (IAS 19) (£bn) 30 Jun 15 31 Dec 14 30 Jun 14 Assets 23.8 23.8 22.1 Liabilities (30.0) (30.6) (26.9) Pension Deficit (6.2) (6.8) (4.8) Group share of deficit (4.8) (5.4) (3.7) UK – real discount rate 0.5% 0.4% 0.9% Bond yields 3.8% 3.6% 4.2% Inflation rate 3.3% 3.2%
Slide 12: Net Cash / (Debt)
© BAE Systems 2015 Net Cash / (Debt) (£m) Opening Net Debt (1,032) Electronic Systems 139 Operating business cash flow (349) Cyber & Intelligence 42 Platforms & Services (US) (20) Interest & Tax (154) Platforms & Services (UK) (296) Equity dividends paid (389) Platforms & Services (Int’l) (49) HQ (1
Slide 13: Electronic Systems
© BAE Systems 2015 Electronic Systems 2015 2014 Half Year Half Year Sales $1,897m $1,849m • Sales up 3% Commercial up 12%, Defence stable Underlying EBITA $285m $238m • Margin performance ahead of guidance, Margin 15.0% 12.9% benefitted from strong programme execution • Further cash conversion imp
Slide 14: Cyber & Intelligence
© BAE Systems 2015 Cyber & Intelligence 2015 2014 Half Year Half Year Sales $1,351m $1,359m • Overall sales stable US down 2% on IT Services reductions Underlying EBITA $79m $99m Applied Intelligence up 16% on SilverSky acqn. Margin 5.9% 7.4% • Margin reflects first half investment for growth an
Slide 15: Platforms & Services (US)
© BAE Systems 2015 Platforms & Services (US) 2015 2014 Half Year Half Year Sales $2,022m $2,295m • Sales down 12% in line with guidance; like- for-like reduction 9% Underlying EBITA $140m $154m GCV completion Margin 6.9% 6.7% • Margin performance in line with guidance Cash flow $(30)m $132m • Cash
Slide 16: Platforms & Services (UK)
© BAE Systems 2015 Platforms & Services (UK) 2015 2014 • Sales up 25% Half Year Half Year c.£300m on Radar & DASS equipment Second half weighting for Saudi Typhoon Sales £3,544m £2,844m deliveries Underlying EBITA £355m £393m • Margin performance reflects 2014 Typhoon Tranche 2 production Marg
Slide 17: Platforms & Services (International)
© BAE Systems 2015 Platforms & Services (International) 2015 2014 Half Year Half Year Sales £1,621m £1,576m • Sales, like-for-like, up 6% Second half weighting in Saudi & Australia Underlying EBITA £155m £157m • Margin after small shipbuilding rationalisation Margin 9.6% 10.0% charge • Cash flow p
Slide 18: 2015 Guidance - Trading
© BAE Systems 2015 2015 Guidance - Trading 2014 Actual (1) 2015 Guidance (2) Sales Margin Sales Margin Electronic Systems 2,415 15.4% stable 12% - 14% Cyber & Intelligence 1,658 9.2% c.5% 8% - 10% Platforms & Services (US) 2,689 4.4% c.(10)% 6% - 8% Platforms & Services (UK) 6,623 11.7% c.10% 10% -
Slide 19: 2015 Guidance - Cash Utilisation
© BAE Systems 2015 2015 Guidance - Cash Utilisation 2015 2015 (£bn) Half Year Guidance Operating items: • Net capital expenditure, disposals & depr’n - (0.1) • Working capital - provision utilisation (0.1) (0.2) - advances movement (net) (0.6) (0.2) – (0.7) - other working capital movements (0.1) -
Slide 20: Ian King
© BAE Systems 2015 BAE SYSTEMS INSPIRED WORK lan King 20
Slide 21: Summary
© BAE Systems 2015 Summary 2015 Half Year Sales £8,472m Large order backlog Underlying EBITA £800m Broad international customer base Underlying EPS 17.1p Dividend per share 8.4p Business resilience demonstrated through challenging period Order backlog £37.3bn US/UK defence budgets now stabil
Slide 22: Supplementary Information
© BAE Systems 2015 Supplementary Information 22
Slide 23: 2015 Half Year Financial Summary
© BAE Systems 2015 2015 Half Year Financial Summary (£m, backlog £bn) Underlying Cash Order Sales EBITA Margin Flow Backlog Electronic Systems 1,246 187 15.0% 139 3.7 Cyber & Intelligence 887 52 5.9% 42 2.0 Platforms & Services (US) 1,328 92 6.9% (20) 3.9 Platforms & Services (UK) 3,544 355 10.0% (2
Slide 24: Like-for-Like Sales & Underlying EBITA - Group
© BAE Systems 2015 Like-for-Like Sales & Underlying EBITA - Group (£m) Sales Underlying EBITA Half Year Half Year 2015 2014 Yr-on-Yr 2015 2014 Yr-on-Yr Continuing Businesses 8,472 7,611 11% 800 802 -% Foreign exchange: USD 272 25 Other (71) (4) Adjusted for foreign exchange 8,472 7,812 8% 800 823 (3
Slide 25: Reconciliation of Earnings
© BAE Systems 2015 Reconciliation of Earnings (£m) 2015 2014 2015 2014 Half Year Half Year Half Year Half Year Underlying Underlying Reported Reported Underlying EBITA 800 802 800 802 Non-recurring items (24) - EBITA 776 802 Amortisation/Impairment (65) (88) Underlying Finance Costs (107) (89) (107)
Slide 26: Working Capital Movements
© BAE Systems 2015 Working Capital Movements – Reconciliation to Cash Flow (£m) Cash 30 Jun 15 31 Dec 14 Mvmt F/X M&A Other Flow Inventories 723 690 (33) 7 (4) - (36) Receivables – current 3,076 2,850 Receivables – non-current 336 347 Total Receivables 3,412 3,197 (215) 45 (1) (11) (248) Payables –