Cobham 80th Anniversary, 1934 - 2014

Results Centre

Preliminary Results

Underlying results** 1
Order intake
£2,084.0m £2,148.0m       
Revenue   £1,943.9m £2,072.0m        
Operating profit
£225.0m £332.2m       
Profit before tax
£175.2m £280.4m        
Earnings per share (EPS) 9.0p 16.5p    
Free cash flow 3 £50.7m £105.5m      
Net debt/EBITDA    3.0x  2.9x      
Statutory results          
Operating (loss)/profit   £(779.1)m £12.0m      
Loss before tax £(847.9)m  £(39.8)m       
Basic EPS (52.8)p (2.8)p      
Net debt   £1,028.2m £1,206.8m      
Full year dividend per share    2.03p 11.18p      

** Underlying results are presented to assist with the understanding of the Group's performance trends.  These measures are defined in the notes on page 4 and reconciled to GAAP measures in this statement on page 21.

2016 Results 

  • Underlying operating profit: impacted by weakness in management and financial controls; contractual and commercial failures and, in a few businesses, more challenging market conditions
  • Balance sheet review: impairments of £573.8m and other charges of £236.8m, including KC-46, as announced on 16 February 2017
  • Dividend policy: final dividend for 2016 suspended, as announced on 11 January 2017.  No dividend will be recommended in respect of 2017

2017 Priorities

  • Management focus: better control and execution, improved customer relationships, simplification of systems, processes and reporting, combined with strong and visible leadership

Actions to address balance sheet

  • Financial position: targeting a net debt/EBITDA gearing ratio of 1.5x
  • Rights Issue: Board to raise £500m, by way of a Rights Issue, which is fully underwritten on a standby basis; anticipated to be launched during second quarter of 2017


  • 2017: outlook unchanged from 16 February 2017 announcement
  • Medium term: leverage Cobham's strong capabilities and market positions into improved operating and financial performance, from a business model that produces an attractive and sustainable returns profile

The following notes apply throughout these preliminary results:

  1. To assist with the understanding of earnings trends, the Group has included within its published financial statements non-GAAP measures including underlying operating profit (previously called trading profit) and underlying profit. All underlying measures include the operational results of all businesses including those held for sale until the point of sale.  The non-GAAP measures used do not include the impact of items described below which are not considered to reflect the day to day operating results of the Group.  Underlying  measures are therefore considered to provide a more comparable view year-on-year, having removed the distorting effects of the excluded items which are more clearly understood when presented separately.

    Underlying operating profit has been defined as operating profit from continuing operations excluding the impacts of business acquisition and divestment related activity and business restructuring costs as detailed below. Also excluded are changes in the marking to market of non-hedge accounted derivative financial instruments, gains and losses arising on dividend related foreign exchange contracts and other items deemed by the Directors to be of an exceptional, non-operating nature including impairment of intangible assets.

    Business acquisition and divestment related items excluded from underlying operating profit and underlying profit include the amortisation of intangible assets arising on business combinations, gains or losses arising on business divestments, adjustments to businesses held for sale, the writing off of the pre-acquisition profit element of inventory written up on acquisition and other direct costs associated with business combinations and terminated divestments.

    Business restructuring costs relate to the restructuring of the Group’s portfolio which are incremental to normal operations. Where restructuring costs are incurred as a result of the on-going execution of Group strategy, such costs are included within administrative expenses and are not excluded from underlying results.

    In 2016 additional exceptional items excluded from underlying results due to their unusual size and incidence arose out of the January 2017 Balance Sheet review and include revisions to the carrying value of assets, additional contract loss provisions and legal and other provisions.

    Underlying profit before taxation is defined as underlying operating profit less net underlying finance costs, which exclude business acquisition and divestment related items and non-recurring finance costs (such as costs associated with the early repayment of senior notes following the June 2016 Rights Issue).

    A reconciliation of the statutory results to the respective underlying measures is shown on page 21.

  2. Restatement relates to the reflection of the bonus element of the June 2016 Rights Issue on the prior period  average number of shares and EPS.

  3. Free cash flow is defined as net cash from operating activities plus dividends received from joint ventures, less cash flows related to the purchase or disposal of property, plant, equipment and intangible assets but excluding payments relating to business acquisition and divestment related activities. Operating cash conversion is defined as operating cash flow as a percentage of underlying operating profit excluding the share of post-tax profits of joint ventures and associates.

    A reconciliation of underlying operating profit to operating cash is shown on page 21.  

    Net debt is defined as the net of borrowings less cash and cash equivalents at the balance sheet date.

  4. Organic revenue is defined as revenue stated at constant translation exchange rates, excluding the incremental effect of acquisitions and divestments.

  5. Private Venture (PV or company funded R&D – Research and Development) measures exclude Aviation Services, where, due to the nature of its business, there is no R&D activity.    

David Lockwood, Cobham Chief Executive Officer, said:

“Given the reality of Cobham's current financial performance and our high leverage coming into the year, we have announced actions today to strengthen the balance sheet.  This is needed to reassure our customers, to give us the flexibility to drive operational improvements and to provide us with a sustainable platform for the future.

"Cobham has a portfolio of businesses with leading positions in attractive markets, differentiated technologies and know-how, and an enviable customer list.  This gives us confidence that Cobham can be reinvigorated over time, as our actions release its potential and demonstrate the value in our businesses."