Cobham increases its 2015 full year dividend by 5%

3 March 2016

Robust performance driven by the full year contribution from the Aeroflex acquisition; integration accelerated and anticipated to be complete by the end of 2017 with total costs and benefits in line with original expectations

Group order intake up 13% and book-to-bill of 1.04x; Group benefiting from multi-year orders on missile programmes

Total revenue growth of 12% and trading profit increase of 16%; Group organic revenue declined 1%, with good non-US defence/security growth offset by commercial headwinds

Group trading margin of 16.0% (2014: 15.5%) with benefits including cost efficiencies and non-repeat of 2014 £15m aerial refuelling provision largely offsetting reduced shorter cycle commercial volumes

Private Venture investment increased to £138m or 8.2% of revenue (2014: £97m or 6.7%); technology investment closely aligned to attractive market opportunities

Statutory profit and EPS include non-underlying charges associated with the acquisition and integration of Aeroflex, net profit from divestments and goodwill impairment

Cash conversion of 71% (2014: 73%) reflects continued investment in PV and capital expenditure and an outflow from working capital, partially driven by increases in inventory on development programmes and in shorter cycle businesses

Net debt reduction to £1,207m (2014: £1,223m) includes benefit of divestments but also £80m adverse foreign exchange impact and accelerated Aeroflex integration costs

Proactive portfolio divestments to allow increased focus on core capabilities; Surveillance divestment completed in early 2016

Bob Murphy, Chief Executive Officer, said:

"We have delivered a robust performance in 2015 in challenging conditions with increased headwinds in some of our commercial markets towards the end of the year which had an adverse impact on earnings and cash generation. We have continued to deliver on our strategic objectives and made excellent progress with the integration of the Aeroflex business. In addition, we have enhanced our focus by divesting a number of businesses in certain markets and with technologies which did not fit our growth strategy, although this will have a dilutive impact on earnings this year.

"In 2016, we anticipate that trading in our defence and security portfolio will be stable, reflecting our expectations for overall trends in global spending in these markets. Demand conditions in some of our commercial markets remain subdued and, with the current macroeconomic uncertainty, there is no underlying improvement anticipated in these markets.  Given these factors, we will continue to manage our cost base proactively together with increased focus on cash generation and debt reduction.  We expect an earnings bias to the second half of the year.

"The Board remains confident that the continued investment in technology and know-how will enable the Group to maintain its leading positions in markets with good prospects, leaving Cobham well placed to deliver growth over the medium term."