Highlights
£2.4bn order book, unchanged at constant translation exchange - headline order intake significantly reduced by divestments
Organic revenue broadly flat - Group revenue reduced by divestments
Underlying EPS up 3.2% at constant translation exchange, supported by ahead of plan Excellence in Delivery benefits and a lower underlying tax rate
Thrane & Thrane acquisition brings further strength in commercial markets and is ahead of plan, with integration progressing well
Strong operating cash conversion of 104% and good free cash flow of £273m, before Excellence in Delivery costs, with robust balance sheet and net debt/EBITDA of 0.9 times
Recommended full year dividend increase of 10%, in line with long standing progressive policy, to 8.8 pence per share
Commenting on the results and outlook, Bob Murphy, Chief Executive Officer, said:
"We have delivered a good set of results in market conditions that continue to be challenging.
"The US defence/security market remains highly uncertain and we expect a period of declining, then flat, US Government budgets consistent with previous down cycles. As set out in our November 2012 Interim Management Statement, our plans are based on Group revenue declining organically by low-to-mid single digits in 2013, as the decrease in defence/security revenue is only partially offset by growth in commercial markets. In 2013, Group operating margins are expected to be slightly lower than in 2012.
"Excellence in Delivery has achieved £48m of savings to the end of 2012. The majority of savings from the additional restructuring of the cost base announced in November 2012 will be re-invested to generate incremental organic revenue and gain market share, while slightly increasing operating margins. On the basis of current market trends, we continue to anticipate a return to modest organic growth from 2014, rising above mid single digit growth thereafter. The Group has a highly cash generative business model and robust balance sheet. These also allow us to invest in carefully selected acquisitions to bring more balance between our defence/security and commercial businesses, promoting long term revenue growth through the cycles, and underpin the Group's policy of paying a 10% progressive annual dividend increase."
