13th Sep 2005 07:04
Cobham PLC13 September 2005 INTERIM RESULTS FOR THE HALF YEAR ENDED 30 JUNE 2005 AND STRATEGIC REVIEW Cobham plc, the aerospace and defence company, today announces strong first halfresults: RestatedIFRS Basis 2005 2004 Change Orders £697.4m £552.4m +26.2%Revenue £516.3m £459.8m +12.3%Underlying1 operating margin 14.4% 14.2% +0.2ptsUnderlying profit before tax £69.6m £60.5m +15.0%Underlying earnings per share2 4.41p 3.85p +14.5%Basic earnings per share2 3.37p 3.81pInterim dividend2 1.01p 0.92p +10%1 For definition of 'underlying' see Results below2 Restated to reflect the share sub-division of 11 July 2005 •Excellent growth in revenue, underlying operating profit and earnings per share •Group margins maintained; H1 in line with expectations and reflecting the normal trading pattern •Robust performances in Antennas, Microwave, Avionics and Air Refuelling •Remec initial performance ahead of company expectations •Strong order book growth providing excellent visibility - now standing at £1.5bn •Cash conversion 80.3% •Four Microwave and Life Support acquisitions completed in the period Strategic review completed with creation of six business divisions and intentionto sell Countermeasures companies. Gordon Page, CBE, Chairman, commented,"Cobham has completed a strategic review of its business portfolio and concludedthat further focus on leading technology positions will enable it to takegreater advantage of opportunities in the aerospace and defence market worldwide. By targeting investment in technology and acquisitions, the Group willcontinue to deliver excellent returns to shareholders. Strong first half resultsserve to underline confidence for the full year." ENQUIRIESCobham plc Telephone: +44 (0) 1202 882020Allan Cook, Chief ExecutiveWarren Tucker, Group Financial Director Weber Shandwick Square Mile Telephone: +44 (0) 207 067 0702Susan Ellis,Kirsty Raper Notes:The basis of the transition of reporting by Cobham plc to International Financial Reporting Standards has been described in Cobham news release 126b dated 7 June 2005. This is available in the Investor Relations section at www.cobham.com under "latest news". An extract of the Interim Statement is attached. A presentation of the resultswill be available as a webcast by 4.30pm on 13 September, and the publishedreport as a download file on 28 September, at www.cobham.com. 13 September 2005 INTERIM RESULTS FOR THE HALF YEAR ENDED 30 JUNE 2005 AND STRATEGIC REVIEW Introduction Cobham has made good progress in the first half of 2005 with double digitunderlying earnings growth. Robust performances were achieved in the Antennas,Avionics, Microwave and Air Refuelling divisions and operational improvements,including those in Countermeasures, offset the impact of adverse currencymovements. The Group order book stands at a record £1.5bn, reflecting success in winningnew orders and the strong 'book to bill' ratio of the Antennas, Microwave andAvionics divisions. Cobham continued to make acquisitions in faster growingniche market sectors and completed the acquisitions of Remec and Koch. A strategic review of the Group businesses has been completed. The Board hasconcluded that the business portfolio should be more focused on key markets andadditional emphasis should be placed on value added technologies. The Groupstructure has therefore been streamlined in this direction. Results The results are presented for the first time under IFRS and comparatives havebeen restated accordingly. Cobham Countermeasures and Cobham Fluid Systems aretreated in the results as discontinued businesses. To assist with theunderstanding of earnings trends, trading profit and underlying earnings havebeen defined to exclude the impact of the amortisation of intangible assetsrecognised on acquisition and the impact of the marking to market of foreignexchange derivatives not realised in the period. The results on these variousbases are as follows: Total revenue comprises the following: Unaudited Unaudited Unaudited Restated Half Restated Half Year to Year to Year to£m 30.6.05 30.6.04 31.12.04--------------------------------------------------------------------------------Revenue from continuing activities 501.8 449.0 952.1Revenue from discontinued businesses 14.5 10.8 26.9--------------------------------------------------------------------------------Total Revenue 516.3 459.8 979.0-------------------------------------------------------------------------------- Total trading profit comprises the following: Unaudited Unaudited Unaudited Half Year Restated Restated to Half Year Year to £m 30.6.05 30.6.04 31.12.04--------------------------------------------------------------------------------Trading profit from continuing activities 72.6 65.2 149.3Trading profit from discontinued businesses 1.7 0.0 1.5--------------------------------------------------------------------------------Trading Profit 74.3 65.2 150.8-------------------------------------------------------------------------------- The underlying profit before tax is as follows: Unaudited Unaudited Unaudited Restated Restated Half Year Half Year Year to £m to 30.6.05 30.6.04 31.12.04--------------------------------------------------------------------------------Profit on continuing operations before taxation 52.5 60.5 141.6Profit on discontinued operations before taxation 0.4 (0.8) (0.2)Amortisation of intangible assets on business combination 2.7 0.8 1.7Loss on revaluation of derivative financial instruments 14.0 - ---------------------------------------------------------------------------------Underlying Profit before Taxation 69.6 60.5 143.1-------------------------------------------------------------------------------- The underlying profit as used in the calculation of underlying EPS is as follows: Unaudited Unaudited Unaudited Restated Restated Half Year Half Year Year to £m to 30.6.05 30.6.04 31.12.04--------------------------------------------------------------------------------Profit after taxation attributable to equity shareholders 37.7 42.4 100.9Amortisation of intangible assets on business combination 1.9 0.5 1.2Loss on revaluation of derivative financial instruments 9.8 - ---------------------------------------------------------------------------------Underlying Profit after Taxation 49.4 42.9 102.1--------------------------------------------------------------------------------Underlying Earnings per Ordinary Share 4.41p 3.85p 9.16p The results for the period based on the Group's operations (including discontinued businesses) on an underlying IFRS basis are as follows: Revenue for the first half of the year has increased by 12.3% to £516.3m (2004:£459.8m). Underlying operating Group margin was maintained when compared withthe first half of 2004 with improvements in Chelton being offset by a decline,as anticipated, of underlying margin in the Flight Operations & Servicesbusiness. Costs associated with share based payments as more schemes fall underthe scope of IFRS 2 and the effect of foreign currency transactions were offsetby operational improvements. Underlying profit before tax increased 15.0% to£69.6m (2004: £60.5m). Underlying earnings per share increased 14.5% to 4.41p(2004: 3.85p). The effective tax rate on underlying profit before taxation is 28.4% (2004:28.3%). Cash generated by operating activities at £75.2m was 2.5% lower than thesame period in 2004, which included a receipt of dividends of £5.0m from a jointventure company. Net debt increased from £166.2m at the end of 2004 to £319.8mas at 30 June 2005, primarily driven by the acquisition of Remec. An interim dividend of 1.01p, representing a 10% increase year on the comparableperiod last year, will be paid on 12 December 2005 to all shareholders on theregister as at 11 November 2005. Operating review Aerospace Systems 2004 Restated under IFRSOrders received £244.7m £198.8m +23.1%Revenue £180.6m £169.6m +6.5%Margin 14.4% 14.4%Underlying operating profit3 £26.0m £24.5m +6.3%3 a reconciliation is shown in note 4 to the financial statements. Aerospace Systems showed strong performance for the first half of the year withrevenue and operating profit up by 6%. Order intake was up significantly at 23%in the period demonstrating long term growth prospects. Life Support has been strengthened with the completion of the acquisition ofKoch in June 2005. Koch will be managed by Conax, Florida, US, and has productscomplementary to the personal survival equipment produced by this division. Inaddition, Carleton won a US$200m order for passenger service units for theBoeing 787 in July 2005. In Air Refuelling (AR) and Auxiliary Mission Equipment good progress has beenmade in delivering AR Pods to the Air Force Special Operations Command programmeand to Lockheed Martin for the US Marine Corps C-130J. The order book hasimproved with Typhoon tranche two orders for weapons carriage and releaseproducts totalling over £90m for deliveries over the next five years. The firstweapons carriage and release hardware has been delivered to Boeing to supportthe small diameter bomb programme. In Fluid and Air Cobham continues to provide fluid delivery components for arange of military and commercial programmes. The successful first flight of theAirbus A380 was a major milestone and achievement for Cobham as the aircraftfuel pumps provider. The first Boeing 787 fuel pumps were shipped in August2005. Chelton 2004 Restated under IFRSOrders received £331.4m £241.1m +37.5%Revenue £236.6m £196.5m +20.4%Margin 17.3% 16.3% +1.0ptsUnderlying operating profit3 £40.8m £32.0m +27.6% Chelton reported first half revenue up 20% and underlying operating profit up23%. Growth is market and technology driven and the policy of investment inavionic research and development has brought success with new products offeringincreased capability. Orders received are up 5% excluding Remec. Antennas made the first deliveries of Chelton's high speed data SATCOM systemfor Embraer and Gulfstream. The system provides an office-in-the-sky capabilityincluding internet and high quality voice and data link communications. Systemswith increased capability will shortly be delivered for a military application. Development of the mINCAN(R) interference cancellation system has led to furthersales, including one to the US Coast Guard communications update (Rescue 21)programme. A derivative is being developed for an US Army programme and widermilitary interest is now being shown. Military antenna successes continue with Chelton winning a contract to supplycommunication antennas for the A400M. In Avionics significant orders have been received from the US Army for tacticalcommunications equipment. Customer evaluation of the new Wulfsberg Flitelineavionics suite has started and is expected to result in orders. Sales of theCOSPAS-SARSAT compliant search and rescue beacon products have been strong. The law enforcement and national security market has seen increasing levels ofinterest, driven by the continuing threat of terrorism and the war in Iraq.Demand for unmanned ground and airborne vehicle microwave systems has exceededexpectations. Microwave business saw increased demand as a consequence of new productsentering production to support network centric systems. The war on terrorism andthe focus on command, control, communications, computers and intelligence (C4I)data links has contributed to the urgency for this improved technology. The acquisition of Remec has resulted in increased presence in this area and thecompany has secured, for instance, key wins on F-35 (where the Cobham ship setvalue has increased from US$270K to US$470K), F-18 Growler, DDX Multi-MissionSurface Combatant ship, Common Data Link, Aerial Common Sensor, and the USCoastguard Deepwater programme. Remec's performance in the first two months hasexceeded expectation in orders, revenue and profit. Although not in the reporting period, selected assets of the MicrowaveDevelopment Company (MDC) were acquired on 1 August for US$13.6m and will beabsorbed into the existing microwave business in New Hampshire, US, furtherstrengthening the Group's passive microwave capability. Flight Operations & Services 2004 Restated under IFRSOrders received £121.3m £112.6m +7.8%Revenue £99.1m £ 93.7m +5.8%Margin 8.9% 10.7% -1.8ptsUnderlying operating profit3 £8.8m £10.0m -12.0% Flight Operations & Services' orders grew by 8%. First half revenue is up 6%.Underlying operating profit was down by £1.2m reflecting increased bid activityin UK and Australia, and a greater bias towards H2 in 2006. The announcement of a new twelve year Coastwatch contract for the Australiancustoms service, expected to be signed in June 2005, has been delayed untillater this year. The current contract runs until June 2007. A 20 year £50mcontract has been won, with Northrop Grumman and BAE SYSTEMS, to providelogistic support at RAF Waddington for the E-3D Sentry (AWACS) aircraft. Acontract, initially worth approximately AUS$100m, to operate and maintain afleet of eight Boeing 717s for up to three years on behalf of Qantas inAustralia has also been agreed. Strategic Review During the last six months the Group has carried out an in depth strategicreview and determined that maximum shareholder value can be achieved by focusingthe future direction of the Group in five divisions aligned to key technologysectors and one in a service sector. The Cobham Services Division will includeelectronic warfare and flying training, navigation aid calibration, specialmission operations and aircraft operation, modification and maintenance ofmilitary aircraft. The five technology divisions will be: • Cobham Antennas• Cobham Defence electronic Systems• Cobham Air Refuelling and Auxiliary Mission Equipment• Cobham Life Support• Cobham Avionics and Surveillance This strategy has the following key objectives to: • consolidate and enhance market leadership• radically increase collaboration across the Group and within divisions• increase investment in technology and focus in R&D expenditure• exit businesses that do not align with the focused portfolio• achieve significant efficiency improvements which will allow further re-investment in technologies• introduce a flatter, simplified, management structure, which will improve customer focus, business transparency, and drive improvements in working capital, lean manufacturing, and procurement• strengthen the Group's upper quartile aerospace and defence margins• enhance organic profit growth throughout the market cycles Together, achievement of these objectives will enhance return on investedcapital, a key metric for shareholders. In line with this strategy Cobham announces that the process of sellingCountermeasures (FRC and Wallop Defence) is under way. This follows the earliersale, completed on 1 August 2005, of the trade and assets of the ProductsDivision of Cobham Fluid Systems. Countermeasures and this part of Cobham FluidSystems have been identified as discontinued businesses on the face of theincome statement and comparative data has been restated to match this treatment. The portfolio will continue to be reviewed to confirm that remaining businesseshave the market position and technology to deliver superior profitable growth.Cobham will report its 2005 full year figures in the current format, but willprovide a comparative baseline for the new divisions. Reflecting these developments a flatter organisation structure will beintroduced to bring a more unified approach to the Group. In order to capturefurther market opportunities and business performance improvements, AndyStevens, is appointed Group Chief Operating Officer. Alex Hannam is appointed Group Managing Director of the Cobham Services Divisionwhich includes Flight Operations & Services. Five divisional managing directors/presidents of the technology divisions willbe appointed and will report directly to the Chief Executive. The divisions willcontinue to be wholly responsible for their growth and operating performance. In order to support business activity and processes, Group functions for HumanResources, Strategic Development, Internal Audit, Mergers and Acquisitions, andLegal, are being further strengthened. Outlook Excellent first half results have been achieved. The second half is expected tobe stronger than the first half in line with the pattern of previous years. TheGroup continues to expect margins for the full year to be around 15.5% (UK GAAP:16%). Cobham looks forward to reporting continued progress at the end of thefinancial year. The development of Cobham's strategy, organisational structure and operationaleffectiveness as set out in this announcement marks an important evolutionarystep in the development of the Group and reflects the fact that it has trebledrevenue between 1997 and this year. With key enabling technologies and products, the Group is well positioned totarget growing markets within Aerospace and Defence. These include: airrefuelling with proven probe and drogue technology; network centric capabilitywhere it has a strong presence in helicopter, fixed wing aircraft and groundbased vehicle communications and data links; and, life support with airborne gasgeneration and aircrew equipment. The focus on technology based divisions willenhance Group performance. Cobham plcConsolidated IFRS Income StatementFor the Half Year ended 30 June 2005 Unaudited Unaudited Unaudited Half Restated Half Restated Year£m Note Year to 30.6.05 Year to 30.6.04 to 31.12.04----------------------------------------------------------------------------------------------Continuing Operations Revenue 501.8 449.0 952.1 Cost of sales (367.6) (326.3) (693.4)---------------------------------------------------------------------------------------------- Gross Profit 134.2 122.7 258.7 Selling and distribution costs (28.5) (25.2) (52.8)Administrative expenses (48.0) (34.2) (60.9)---------------------------------------------------------------------------------------------- Group Operating Profit 57.7 63.3 145.0 Share of post-tax results of joint ventures and associates 1.6 1.1 2.6---------------------------------------------------------------------------------------------- 59.3 64.4 147.6----------------------------------------------------------------------------------------------Comprises Trading profit from continuing operations 3 72.6 65.2 149.3Realised exchange gains in the period # (10.6) - -Amortisation of intangible assets arising on acquisition (2.7) (0.8) (1.7)---------------------------------------------------------------------------------------------- 59.3 64.4 147.6---------------------------------------------------------------------------------------------- Finance income 5.0 2.6 23.4Finance expense (8.4) (6.5) (29.4)Realised exchange gains in the period # 10.6 - -Loss on revaluation of currency instruments # 5 (14.0) - -----------------------------------------------------------------------------------------------Profit on Continuing Operations before Taxation 52.5 60.5 141.6Tax on continuing operations (14.7) (17.4) (40.5)---------------------------------------------------------------------------------------------- Profit on Continuing Operations after Taxation 37.8 43.1 101.1 Discontinued Operations Profit/(loss) after taxation from discontinued operations 8 0.4 (0.5) 0.1----------------------------------------------------------------------------------------------Profit after Taxation for the Period 38.2 42.6 101.2---------------------------------------------------------------------------------------------- Profit attributable to equity shareholders 37.7 42.4 100.9Profit attributable to minority interests 0.5 0.2 0.3----------------------------------------------------------------------------------------------Profit after Taxation for the Period 38.2 42.6 101.2---------------------------------------------------------------------------------------------- Earnings per Ordinary Share + -basic 3.37p 3.81p 9.05p -fully diluted 3.34p 3.78p 8.99p Earnings per Ordinary Share from Continuing Operations -basic 3.33p 3.85p 9.04p -fully diluted 3.31p 3.83p 8.98p Dividend per Ordinary Share (as restated under IFRS) 2.18p 1.98p 2.90p # Exchange gains and losses in comparative periods have not been restated as allowed under transitional arrangements of IAS39 and remain within administrative expenses for these periods. Similarly currency instruments have not been recognised at fair values in the comparative periods. Cobham plcConsolidated IFRS Balance SheetAs at 30 June 2005---------------------------------------------------------------------------------------------- Unaudited Unaudited Unaudited as at Restated as at Restated as £m Note 30.6.05 30.6.04 at 31.12.04---------------------------------------------------------------------------------------------- Non-Current AssetsIntangible assets 589.8 377.1 397.9Property, plant and equipment 227.1 239.8 237.8Investment properties 4.1 4.1 4.1Investments in joint ventures and associates 15.0 8.8 14.2Other debtors 8.3 2.5 7.3Deferred taxation assets 26.1 20.4 20.4---------------------------------------------------------------------------------------------- 870.4 652.7 681.7---------------------------------------------------------------------------------------------- Current AssetsInventories 207.3 200.9 183.9Trade and other receivables 225.5 194.5 226.4Derivative financial instruments 5 5.6 - -Cash and cash equivalents 98.8 65.2 101.3Assets classified as held for sale 8 28.9 - ----------------------------------------------------------------------------------------------- 566.1 460.6 511.6---------------------------------------------------------------------------------------------- Current LiabilitiesLoans and overdrafts (265.0) (58.3) (116.2)Trade and other payables (219.7) (235.1) (209.7)Corporation tax (52.5) (45.6) (48.4)Liabilities classified as held for sale 8 (14.8) - ----------------------------------------------------------------------------------------------- (552.0) (339.0) (374.3)---------------------------------------------------------------------------------------------- Non-Current LiabilitiesBorrowings (156.8) (167.0) (151.3)Other creditors (4.7) (18.1) (11.4)Derivative financial instruments 5 (2.1) - -Deferred taxation liabilities (60.4) (16.8) (28.1)Provisions for liabilities and charges (27.2) (11.1) (17.9)Retirement benefit obligation (69.2) (69.1) (69.1)---------------------------------------------------------------------------------------------- (320.4) (282.1) (277.8)----------------------------------------------------------------------------------------------Net Assets 564.1 492.2 541.2---------------------------------------------------------------------------------------------- Total Shareholders' Equity 562.3 491.1 539.9Minority interest in equity 1.8 1.1 1.3----------------------------------------------------------------------------------------------Total Equity 564.1 492.2 541.2---------------------------------------------------------------------------------------------- Net debt (319.8) (160.1) (166.2)Gearing 56.7% 32.5% 30.7% Notes: + Earnings per share have been calculated using 1,119,363,050 (30 June 2004 : 1,113,093,890, 31 December 2004 : 1,114,482,710) ordinary shares, being the weighted average number in issue during the six months to 30 June 2005, adjusted for the share split described in note 6, excluding those held by the qualifying employees share ownership trust (QUEST). Details of underlying earnings per ordinary share are shown in note 3. This report is being sent to shareholders and will be available to members of the public at the company's registered office at Brook Road, Wimborne, Dorset BH21 2BJ, UK. This interim report and the comparative figures for the year ended 31 December 2004 do not constitute full accounts within the meaning of the Companies Act 1985. Full accounts for that year, which include an unqualified audit report and no statements under sections 237(2) or (3) of the Companies Act 1985, have been delivered to the Registrar of Companies. Of the total tax charge, £5.1m (30 June 2004: £5.3m) relates to tax on UK operating activities, the remainder relates to overseas operations. Cobham plcConsolidated IFRS Cash Flow StatementFor the Half Year ended 30 June 2005---------------------------------------------------------------------------------------------- Unaudited Unaudited Unaudited Half Restated Half Restated Year£m Note Year to 30.6.05 Year to 30.6.04 to 31.12.04---------------------------------------------------------------------------------------------- Cash flows from Operating Activities Cash generated from operations 2 75.2 77.1 163.9Corporation taxes paid (11.2) (13.2) (22.9)Interest paid (8.7) (6.9) (11.6)----------------------------------------------------------------------------------------------Net Cash from Operating Activities 55.3 57.0 129.4----------------------------------------------------------------------------------------------Net Cash used in Investing Activities 2 (191.0) (53.2) (105.0)---------------------------------------------------------------------------------------------- Cash flows from Financing Activities Issue of share capital 5.0 4.9 4.9Dividends paid - - (32.3)Dividends paid to minority interests (0.8) (0.2) (0.3)Increase in borrowings 163.9 (47.8) 6.7Repayment of obligations under finance leases (11.8) - (4.4)----------------------------------------------------------------------------------------------Net Cash from Financing Activities 156.3 (43.1) (25.4)----------------------------------------------------------------------------------------------Net increase/(decrease) in Cash and Cash Equivalents 20.6 (39.3) (1.0) Cash and Cash Equivalents at start of Period 101.3 106.1 106.1Initial application of IFRS accounting for financial instruments (5.2) - -----------------------------------------------------------------------------------------------Cash and Cash Equivalents at start of Period as restated 96.1 106.1 106.1Exchange movements (14.6) (1.6) (3.8)----------------------------------------------------------------------------------------------Cash and Cash Equivalents at end of Period + 102.1 65.2 101.3---------------------------------------------------------------------------------------------- + Cash and cash equivalents include £3.3m cash held in discontinued businesses as detailed in note 8. Reconciliation of Net Cash Flow to Movement in Net Debt---------------------------------------------------------------------------------------------- Unaudited Unaudited Unaudited Half Restated Half Restated Year£m Year to 30.6.05 Year to 30.6.04 to 31.12.04----------------------------------------------------------------------------------------------Increase/(decrease) in cash in the period 20.6 (39.3) (1.0)(Increase)/decrease in debt and lease financing* (153.0) 35.4 (6.8)Exchange movements (16.0) (1.6) (3.8)---------------------------------------------------------------------------------------------- Movement in Net Debt in the Period (148.4) (5.5) (11.6) Net Debt at beginning of Period (166.2) (154.6) (154.6)Initial application of IFRS accounting for financial instruments (5.2) - -----------------------------------------------------------------------------------------------Net Debt at beginning of Period as restated (171.4) (154.6) (154.6)----------------------------------------------------------------------------------------------Net Debt at end of Period ** (319.8) (160.1) (166.2)----------------------------------------------------------------------------------------------* Includes conversion of aircraft operating lease to finance lease of £14.9m in half year to 30.6.04 and year to 31.12.04.** Net debt includes £3.2m net cash held in discontinued businesses as detailed in note 8. Cobham plcStatement of Recognised Income and ExpenseFor the Half Year ended 30 June 2005 ---------------------------------------------------------------------------------------------- Unaudited Unaudited Unaudited Half Restated Half Restated Year£m Year to 30.6.05 Year to 30.6.04 to 31.12.04---------------------------------------------------------------------------------------------- Profit for the period 38.2 42.6 101.2 Translation differences on investments in overseas subsidiaries (3.3) 3.2 10.1Actuarial loss on pensions * - - (4.7)Movement on deferred tax relating to pension liability - (0.5) 1.4----------------------------------------------------------------------------------------------Total Recognised Income for the Period 34.9 45.3 108.0---------------------------------------------------------------------------------------------- * Actuarial gains/losses on pensions are only recognised on performance of an actuarial valuation at each year end. Statement of Changes in EquityFor the Half Year ended 30 June 2005 ---------------------------------------------------------------------------------------------- Unaudited Unaudited Unaudited Half Restated Half Restated Year£m Note Year to 30.6.05 Year to 30.6.04 to 31.12.04---------------------------------------------------------------------------------------------- Total Equity at start of Period as previously stated 541.2 470.8 470.8 Initial application of IFRS accounting for currency instruments 5 12.5 - -Initial application of IFRS accounting for financial instruments (4.4) - ----------------------------------------------------------------------------------------------- Total Equity at start of Period as restated 549.3 470.8 470.8 Total recognised income for the period 34.9 45.3 108.0Profit attributable to minority interest (0.5) (0.2) (0.3)Dividends authorised (24.5) (22.0) (32.3) Increase in called up share capital 0.1 0.1 0.1Increase in share premium account 5.9 5.2 6.7Increase/(decr ease) in other reserves (1.6) (7.0) (12.0)Increase in minority interest 0.5 - 0.2----------------------------------------------------------------------------------------------Total Equity at end of Period 564.1 492.2 541.2---------------------------------------------------------------------------------------------- Notes to the Interim Reportfor the half year ended 30 June 2005 -------------------------------------------------------------------------------- 1. Accounting policies -------------------------------------------------------------------------------- Accounting policies remain as published in the financial statements for the yearended 31 December 2004 except as noted below. Accounting Convention These unaudited financial statements have been prepared in accordance with thoseInternational Financial Reporting Standards (IFRS) that are anticipated to beused in preparation of the forthcoming annual financial statements. Theseinclude standards both endorsed and yet to be endorsed by the European Union. All prior period comparatives have been restated in accordance with IFRS and areunaudited. An explanation of how the transition to IFRS has affected thereported financial position, financial performance and cash flows, and detailsof exemptions taken under IFRS1 have been provided in a News Release dated 7June 2005. Reconciliations of comparative data as shown in these unauditedfinancial statements to that previously prepared on a UK GAAP basis and areconciliation of Net Assets at 1 January 2005 have been presented in a NewsRelease dated 13 September 2005. Copies of these News Releases are available onthe company's website at www.cobham.com. These unaudited financial statements have been prepared under the historicalcost convention, as modified by the revaluation of certain fixed and currentassets, financial assets and financial liabilities held for trading andderivative contracts. Basis of Consolidation The group financial statements include the financial statements of the parentcompany and of all its subsidiaries made up to the end of the financial period.Joint ventures and associates are accounted for using the equity method andinclude the group's share of the total recognised gains and losses of jointventures and associates from the date that significant influence or jointcontrol commences until the date significant influence ceases. Businesses acquired are accounted for as acquisitions, with effect from the datecontrol passes. Those disposed of are accounted for up until the point of theirdisposal. Deferred Taxation Deferred tax is accounted for using the balance sheet liability method inrespect of temporary differences arising between the tax bases of assets andliabilities and their carrying values in the financial statements. Timingdifferences arise primarily from the recognition of the provision for thedeficit on group's defined benefit pension schemes and the difference betweenaccelerated capital allowances and depreciation. In principle, deferred taxliabilities are recognised for all taxable temporary differences and deferredtax assets are recognised to the extent that it is probable that taxable profitswill be available against which deductible temporary differences can beutilised. Deferred tax is calculated at the tax rates that are expected to apply to theperiod when the asset is realised or the liability is settled. Deferred tax ischarged or credited to the income statement except when it relates to itemscredited or charged directly to equity, in which case the deferred tax is alsodealt with in equity. Dividends Dividends are recognised as a liability in the period in which they are fullyauthorised. Intangible Fixed Assets Goodwill Goodwill arising on consolidation represents the excess of cost of acquisitionover the group's interest in the fair value of the identifiable assets andliabilities of a subsidiary or joint venture at the date of acquisition. Goodwill arising on acquisitions of subsidiary undertakings and joint venturesis capitalised and reviewed for impairment at least annually. Any impairment isrecognised immediately in the income statement and cannot be subsequentlyreversed. On disposal of a subsidiary or joint venture, the attributable amount ofgoodwill is included in the determination of the profit or loss on disposal. Goodwill arising on acquisitions before the date of transition to IFRS has beenretained at the previous UK GAAP amounts subject to being tested for impairmentat that date. Goodwill arising on acquisitions prior to 1998 has been writtenoff to reserves, but will be charged to the income statement on any subsequentdisposal of the business to which it is related. Research and Development Research expenditure not chargeable to customers is written off as incurred.Development costs are written off as incurred until it can be demonstrated thatthe conditions for capitalisation as described in IAS38 are met, at which pointfurther costs are capitalised as intangible assets and amortised over theasset's estimated useful life. Other intangible fixed assets Intangible assets other than goodwill which are acquired by the group are statedat cost less accumulated amortisation and impairment losses. Such intangibleassets are amortised over the asset's estimated useful life. Non-current assets held for sale Non-current assets (and disposal groups) classified as held for sale aremeasured at the lower of carrying amount and fair value less costs to sell.These items are so classified if their carrying amount will be recovered througha sale transaction rather than through continuing use. Share Based Remuneration For grants made under the group's share based remuneration schemes, amountswhich reflect the fair value of options awarded as at the time of grant arecharged to the Income Statement. The valuation of the options utilises amethodology based on the Black-Scholes model, modified where required to allowfor the impact of market related performance criteria. Leasing Leases are classified as finance leases whenever the terms of the lease transfersubstantially all the risks and rewards of ownership to the lessee. All otherleases are classified as operating leases. Foreign Currencies Transactions in foreign currencies are translated at the exchange rate ruling atthe date of the transaction. Monetary assets and liabilities denoted in foreigncurrencies are retranslated at the exchange rate ruling at the balance sheetdate and any exchange differences arising are taken to the income statement. In order to manage its exposure to certain foreign exchange risks the groupenters into forward contracts and options which are accounted for as derivativefinancial instruments. For consolidation purposes the assets and liabilities of overseas subsidiaryundertakings and joint ventures are translated at the closing exchange rates.Income statements of such undertakings are consolidated at the average rates ofexchange during the year. Exchange differences arising on these translations aretaken to reserves. Financial Instruments Receipts and payments on financial instruments are recognised on an accrualsbasis, over the life of the instruments. Finance costs associated with debtissuances are charged to the income statement over the life of theinstruments. The group's activities expose it primarily to the financial risks of changes inforeign currency exchange rates and interest rates. The group uses foreignexchange forward contracts, interest rate swap contracts and net asset hedges toreduce these exposures. The group does not use derivative financial instrumentsfor speculative purposes. Hedge accounting principles are used for interest rate swaps and net investmenthedges. For net investment hedges and cash flow interest rate swaps, movementsin fair value are held in equity until such time as the underlying amounts inthe contracts crystallise. At that time, amounts held in equity will be recycledto the income statement. Movements in fair value of fair value interest rateswaps are recognised through the income statement. The group manages foreign currency exposures on a macro basis and is unable toapply hedge accounting to these instruments. Thus contracts which give rise toan asset or liability are recognised at fair value at the balance sheet date andany change in the fair value is recognised in the income statement. Derivatives embedded in other financial instruments or other host contracts aretreated as separate derivatives when their risks and characteristics are notclosely related to those of host contracts and the host contracts are notcarried at fair value with unrealised gains or losses reported in the incomestatement. Impairment losses The carrying amounts of the group's assets are reviewed at least annually todetermine whether there is any indication of impairment. If any such indicationexists, the asset's recoverable amount is estimated. An impairment loss is recognised where the carrying value of an asset or itscash generating unit exceeds its recoverable amount. Such losses are recognisedin the income statement unless the asset is recorded at a revalued amount inwhich case it is treated as a revaluation decrease. An impairment loss is reversed only to the extent that the asset's carryingamount does not exceed the carrying amount that would have been determined, netof depreciation or amortisation, if no impairment loss had been recognised. Areversal is recognised in the income statement unless the asset is recorded at arevalued amount in which case it is treated as a revaluation increase. 2. Notes to the Consolidated IFRS Cash Flow Statement---------------------------------------------------------------------------------------------- Unaudited Unaudited Unaudited Half Restated Half Restated Year£m Year to 30.6.05 Year to 30.6.04 to 31.12.04----------------------------------------------------------------------------------------------Cash flows from Operating Activities Profit after Taxation for the Period 38.2 42.6 101.2 Adjustments for:Tax 14.7 17.1 40.2Finance income (5.1) (2.7) (23.5)Finance expense 9.8 7.4 31.2Loss on revaluation of currency instruments 14.0 - -Share of post tax profits from joint ventures and associates (1.6) (1.1) (2.6)Depreciation 22.9 19.6 42.7Amortisation of intangibles 4.3 1.3 3.2Profit on sale of fixed assets - (0.2) (0.1)Pension credit (2.7) (1.5) (7.3)Share based payments 1.4 - 1.3---------------------------------------------------------------------------------------------- Operating cash flows before movements in working capital 95.9 82.5 186.3 Increase in working capital (20.7) (5.4) (22.4)----------------------------------------------------------------------------------------------Cash generated by Operations 75.2 77.1 163.9---------------------------------------------------------------------------------------------- Cash flows from Investing Activities Interest received 5.1 0.7 4.3Dividends received from joint venture 0.7 5.0 5.0Proceeds on disposal of fixed assets 0.4 0.1 1.1Purchase of property, plant and machinery (17.2) (22.0) (40.6)Purchase of intangible fixed assets - (0.2) (0.2)Acquisition of subsidiaries net of cash acquired (178.4) (36.5) (69.5)Investment in joint ventures - - (4.3)Expenditure on product development (1.6) (0.5) (1.0)Short term investments held for sale - 0.2 0.2----------------------------------------------------------------------------------------------Net Cash used in Investing Activities (191.0) (53.2) (105.0)---------------------------------------------------------------------------------------------- 3 Earnings Reconciliation----------------------------------------------------------------------------------------------To assist with the understanding of earnings trends, trading profit and underlyingearnings have been defined to exclude the impact of the amortisation of intangibleassets arising on acquisition and the impact of the marking to market of foreignexchange derivatives not realised in the period.---------------------------------------------------------------------------------------------- The trading profit is as follows:---------------------------------------------------------------------------------------------- Unaudited Unaudited Unaudited Half Restated Half Restated Year£m Year to 30.6.05 Year to 30.6.04 to 31.12.04---------------------------------------------------------------------------------------------- Operating profit from continuing operations 59.3 64.4 147.6Realised exchange gains in the period 10.6 - -Amortisation of intangible assets arising on acquisition 2.7 0.8 1.7----------------------------------------------------------------------------------------------Trading profit from continuing operations 72.6 65.2 149.3Trading profit from discontinued operations 1.7 0.0 1.5----------------------------------------------------------------------------------------------Trading Profit (Underlying Operating Profit) 74.3 65.2 150.8---------------------------------------------------------------------------------------------- The underlying profit before tax is as follows:---------------------------------------------------------------------------------------------- Unaudited Unaudited Unaudited Half Restated Half Restated Year£m Year to 30.6.05 Year to 30.6.04 to 31.12.04---------------------------------------------------------------------------------------------- Profit on Continuing Operations before Taxation 52.5 60.5 141.6Amortisation of intangible assets arising on acquisition 2.7 0.8 1.7Loss on revaluation of currency instruments 14.0 - ----------------------------------------------------------------------------------------------- Underlying Profit before Taxation from Continuing Operations 69.2 61.3 143.3Underlying Profit before Taxation from Discontinued Operations 0.4 (0.8) (0.2)----------------------------------------------------------------------------------------------Underlying Profit before Taxation 69.6 60.5 143.1---------------------------------------------------------------------------------------------- The underlying profit as used in the calculation of underlying EPS is as follows:---------------------------------------------------------------------------------------------- Unaudited Unaudited Unaudited Half Restated Half Restated Year£m Year to 30.6.05 Year to 30.6.04 to 31.12.04---------------------------------------------------------------------------------------------- Profit after Taxation attributable to Equity Shareholders 37.7 42.4 100.9Amortisation of intangible assets arising on acquisition (after tax) 1.9 0.5 1.2Loss on revaluation of currency instruments (after tax) 9.8 - -----------------------------------------------------------------------------------------------Underlying Profit after Taxation 49.4 42.9 102.1----------------------------------------------------------------------------------------------Underlying Earnings per Ordinary Share 4.41p 3.85p 9.16p 4 Analysis of Trading Profit by Division -------------------------------------------------------------------------------------------------- Flight Aerospace Operations FSTA Bid£m Systems Chelton and Services Costs Total-------------------------------------------------------------------------------------------------- Unaudited Half Year to 30.6.05Operating profit from continuing operations 18.6 33.2 8.8 (1.3) 59.3Realised exchange gains in the period 5.7 4.9 - - 10.6Amortisation of intangible assets arising on acquisition - 2.7 - - 2.7-------------------------------------------------------------------------------------------------- Trading profit from continuing operations 24.3 40.8 8.8 (1.3) 72.6Trading profit from discontinued operations 1.7 - - - 1.7--------------------------------------------------------------------------------------------------Total trading profit 26.0 40.8 8.8 (1.3) 74.3-------------------------------------------------------------------------------------------------- Unaudited Restated Half Year to 30.6.04Operating profit from continuing operations 24.5 31.2 10.0 (1.3) 64.4Amortisation of intangible assets arising on acquisition - 0.8 - - 0.8-------------------------------------------------------------------------------------------------- Trading profit from continuing operations 24.5 32.0 10.0 (1.3) 65.2Trading profit from discontinued operations 0.0 - - - 0.0--------------------------------------------------------------------------------------------------Total trading profit 24.5 32.0 10.0 (1.3) 65.2-------------------------------------------------------------------------------------------------- Unaudited Restated Year to 31.12.04Operating profit from continuing operations 63.1 68.0 18.8 (2.3) 147.6Amortisation of intangible assets arising on acquisition - 1.7 - - 1.7-------------------------------------------------------------------------------------------------- Trading profit from continuing operations 63.1 69.7 18.8 (2.3) 149.3Trading profit from discontinued operations 1.5 - - - 1.5--------------------------------------------------------------------------------------------------Total trading profit 64.6 69.7 18.8 (2.3) 150.8-------------------------------------------------------------------------------------------------- 5 Derivative financial instruments -------------------------------------------------------------------------------------------------- Currency Net translation investment Other interest Unaudited Half£m derivatives hedge derivative Year to 30.6.05-------------------------------------------------------------------------------------------------- Movement in fair values Initial application of IFRS accounting for currency instruments 17.9 0.9 - 18.8Fair value gain/(loss) in period (14.0) 0.8 (2.1) (15.3)--------------------------------------------------------------------------------------------------Fair value at 30 June 2005 3.9 1.7 (2.1) 3.5-------------------------------------------------------------------------------------------------- Balance Sheet analysisDerivative financial instruments - assets 3.9 1.7 - 5.6Derivative financial instruments - liabilities - - (2.1) (2.1)--------------------------------------------------------------------------------------------------Fair value at 30 June 2005 3.9 1.7 (2.1) 3.5-------------------------------------------------------------------------------------------------- Effect of initial application of IFRS accounting for currency instrumentsInitial application of IFRS accounting for currency instruments 17.9 0.9 - 18.8Initial application of IFRS hedge accounting - (0.9) - (0.9)-------------------------------------------------------------------------------------------------- 17.9 - - 17.9Deferred tax impact (5.4) - - (5.4)-------------------------------------------------------------------------------------------------- Net impact to Total Equity at start of period 12.5 - - 12.5-------------------------------------------------------------------------------------------------- Net asset and other interest derivatives are accounted for using IFRS hedge accounting.Movements in fair values are matched against the corresponding liabilities or reflected inreserves as appropriate. Currency instruments are not accounted for using IFRS hedge accounting and movements in fairvalues are reflected in the Income Statement. 6 Events after the balance sheet date -------------------------------------------------------------------------------- On 8 July 2005 the ordinary shares of Cobham plc were subdivided such that eachexisting ordinary share was replaced by ten new ordinary shares. The newsubdivision of share capital has been made to improve liquidity in the tradingof Cobham plc shares. On 27 June 2005, the company announced the sale, subject to regulatoryapproval, of the trade and assets of its Cobham Fluid Systems productsdivision. This sale was successfully completed on 29 July 2005. On 1 August 2005 the company announced the purchase of selected assets ofMicrowave Development Company for consideration of US $13.6m. On 1 August 2005 a new £300m revolving credit facility was announced whichreplaced existing facilities. The new facility takes advantage of favourablemarket conditions and will result in reduced annual costs. 7 Acquisitions of Subsidiaries -------------------------------------------------------------------------------- The acquisitions during the half year to 30 June 2005 were as follows: By the Chelton Group • REMEC Defense and Space Inc in the USA in May for US $256m • Vector Fields Ltd in the UK in June for £1.7m • WA Systems Ltd in the UK in January for £1m plus £350k contingent consideration • Mastsystem Int'l Oy in Finland in February for €12m • TCRMA in France In January for €475k By the Aerospace Systems Group • H Koch & Sons Co in the USA in June for US $51m All acquisitions were for 100% of the share capital of the acquired company. As at 30 June 2005, fair values of assets and liabilities acquired relating toREMEC, Vector Fields and Koch acquisitions are provisional and subject to potential subsequent adjustment. 8 Discontinued operations-------------------------------------------------------------------------------- On 28 June 2005 the board resolved to dispose of the Group's Countermeasures operations and negotiations with several interested parties are taking place. These operations which are expected to be sold within 12 months, have been classified as a disposal group held for sale and presented separately in the balance sheet. The operations are included in the Aerospace Systems division in the Group's segmental analysis. The proceeds of disposal are expected to exceed the book value of the related net assets and accordingly no impairment losses have been recognised on the classification of these operations as held for sale. The results of this business are reported within discontinued operations. Further, as described in note 6, the sale of the trade and assets of the Cobham Fluid Systems products division was announced on 27 June 2005. The results of this division have therefore also been included within discontinued operations. The results of the discontinued operations as described above which have been included in the consolidated income statements are as follows: Unaudited Unaudited Unaudited Half Restated Half Restated Year£m Year to 30.6.05 Year to 30.6.04 to 31.12.04----------------------------------------------------------------------------------------- Revenue 14.5 10.8 26.9Expenses (14.1) (11.6) (27.1)----------------------------------------------------------------------------------------- Profit from discontinued operations before tax 0.4 (0.8) (0.2)Tax - 0.3 0.3----------------------------------------------------------------------------------------- Post Tax results from Discontinued Operations 0.4 (0.5) 0.1----------------------------------------------------------------------------------------- Cash flows from Discontinued Operations Net Cash used in Operating Activities (2.4) 1.9 5.7Net Cash used in Investing Activities (1.6) (6.4) (8.2)Net Cash used in Financing Activities (1.2) 0.4 (0.2)----------------------------------------------------------------------------------------- (5.2) (4.1) (2.7)----------------------------------------------------------------------------------------- Earnings per Ordinary Share of Discontinued Operations -basic 0.04p -0.04p 0.01p -fully diluted 0.04p -0.04p 0.01p The major classes of assets and liabilities of the Countermeasures operations classified asheld for sale are as follows: Unaudited Half£m Year to 30.6.05-------------------------------------------------------------------------------- Property, plant and equipment 18.5Inventories 2.2Trade and other receivables 4.9Cash and cash equivalents 3.3--------------------------------------------------------------------------------Total assets classified as held for sale 28.9-------------------------------------------------------------------------------- Loans and overdrafts (0.1)Trade andother payables (14.0)Corporation tax liabilities (0.7)-------------------------------------------------------------------------------- Total liabilities associated with assets classified as held for sale (14.8)-------------------------------------------------------------------------------- Book value of related Net Assets held for sale 14.1-------------------------------------------------------------------------------- Cobham plcConsolidated Balance Sheet as at 31 December 2003 ------------------------------------------------------------------------------------------------------------------------ UK GAAP under Long Post Under Reformat IFRS Devel Empl- term balance Unaud UK to present -opment oyment contr sheet Taxa -ited GAAP IFRS -ation Costs benefits - acts events -tion Other IFRS £m £m £m £m £m £m £m £m £m £m------------------------------------------------------------------------------------------------------------------------Fixed Assets Non-Current AssetsIntangible Intangible assets 345.9 345.9 assets 2.6 - - - - - 348.5Tangible Property, plant assets 228.1 (4.1) 224.0 and equipment 0.9 224.9 4.1 4.1 Investment properties 4.1Investments Investments in joint in joint ventures 12.3 ventures: 14.9 1.6 16.5 and associates (4.2) - Investment in associate 1.6 (1.6) - -Investment - - - Other investments - 6.3 6.3 Other debtors (2.4) - 3.9 Deferred taxation 21.1 21.1 assets 21.1 ------------------------------------------------------------------------------------------------------------ 590.5 27.4 617.9 2.6 - (6.6) - - 0.9 614.8Current Assets Current AssetsStocks 190.0 - 190.0 Inventories 190.0Debtors: - Amounts falling 184.5 due within Trade and other one year 184.5 184.5 receivables - 0.0 - - - 184.5 Amounts falling due after more than one year 6.3 (6.3) - Available for sale Investments 0.1 0.1 investments 0.1Cash at bank Cash at bank and in hand 106.1 106.1 and in hand - 106.1 ------------------------------------------------------------------------------------------------------------ 487.0 (6.3) 480.7 - - - - - - 480.7 ------------------------------------------------------------------------------------------------------------Creditors: Amounts falling due within one year Current LiabilitiesBorrowing (80.4) (80.4) Loans and overdrafts (0.1) (80.5)Other Trade and creditors (259.8) 33.8 (226.0) other payables - (1.1) 22.3 - (0.1) (204.9) (33.8) (33.8) Corporation tax - - - - - - (33.8) ------------------------------------------------------------------------------------------------------------ (340.2) - (340.2) - (1.1) - 22.3 - (0.2) (319.2) ------------------------------------------------------------------------------------------------------------ Net Current Assets 146.8 (6.3) 140.5 ----------------------------Total Assets less Current Liabilities 737.3 21.1Creditors: Amounts falling due after more Non-Current than one year Liabilities Borrowings (180.2) - (180.2) Borrowings (180.2) Other Other creditors (11.7) (11.7) creditors (0.8) (12.5) Deferred taxation (18.4) (18.4) liabilities (0.7) 0.6 0.7 (4.6) 1.8 (20.6) Provisions for Liabilities (20.9) (20.9) and Charges - (20.9) Retirement benefit (70.3) (70.3) obligation (1.0) - (71.3) ------------------------------------------------------------------------------------------------------------ (191.9) (109.6) (301.5) (0.7) (0.4) 0.7 - (4.6) 1.0 (305.5) Provisions for Liabilities and Charges (39.3) 39.3 - ----------------------------- Net assets excluding pension liabilities 506.1 (49.2) 456.9 ----------------------------- Deficit on group pension schemes (49.2) 49.2 -------------------------------------------------------------------------------------------------------------------------Net assets including pension liabilities 456.9 - 456.9 Net Assets 1.9 (1.5) (5.9) 22.3 (4.6) 1.7 470.8------------------------------------------------------------------------------------------------------------------------ Capital and Capital and Reserves Reserves equity including non interests equity interests Called up Called up share share capital 27.8 - 27.8 capital 27.8Share premium Share premium account 76.8 76.8 account 76.8 - Retranslation reserve 0.2 0.2Revaluation Revaluation reserve 1.7 1.7 reserve (0.5) 1.2Other Other reserve 0.7 0.7 reserve - 0.7Profit and Profit and loss account 348.8 348.8 loss account 1.9 (1.5) (5.9) 22.3 (4.1) 1.5 363.0------------------------------------------------------------------------------------------------------------------------ Shareholders' Shareholders' Funds 455.8 - 455.8 Funds 1.9 (1.5) (5.9) 22.3 (4.6) 1.7 469.7Minority Minority interest interest (equity) 1.1 1.1 (equity) 1.1------------------------------------------------------------------------------------------------------------------------ 456.9 - 456.9 1.9 (1.5) (5.9) 22.3 (4.6) 1.7 470.8------------------------------------------------------------------------------------------------------------------------ Cobham plcConsolidated Balance Sheetas at 30 June 2004 UK GAAP under Opening Share Under Reformat IFRS balance Develop Business Goodwill Based Unaud UK to present adjust -ment combin- amortisa Foreign Paym Taxa -ited GAAP IFRS -ation -ments costs ations -tion exchange -ents -tion Other IFRS £m £m £m £m £m £m £m £m £m £m £m £m------------------------------------------------------------------------------------------------------------------------ Fixed Non-Current Assets AssetsIntangible Intangible assets 362.7 362.7 assets 2.6 0.1 1.4 10.3 - - - 377.1 Property,Tangible plant and assets 242.9 (4.1) 238.8 equipment 0.9 0.1 239.8 Investment 4.1 4.1 properties 4.1 InvestmentsInvestments in joint in joint ventures and ventures: 12.1 1.0 13.1 associates (4.2) - 0.1 - - - (0.2) 8.8Investment in associate 1.0 (1.0) - - OtherInvestment - - - investments - Other 4.9 4.9 debtors (2.4) - - - - 2.5 Deferred 20.4 20.4 taxation assets 20.4------------------------------------------------------------------------------------------------------------------------ 618.7 25.3 644.0 (3.1) 0.1 1.4 10.4 - - - (0.1) 652.7Current Current Assets AssetsStocks 200.9 - 200.9 Inventories 200.9Debtors: - Amounts falling due within Trade and other one year 194.5 194.5 receivables 0.0 - - 0.0 - - - 194.5 Amounts falling due after more than one year 4.9 (4.9) - Available forInvestments - - sale investments -Cash at Cash at bank and bank and in hand 65.2 65.2 in hand (0.0) (0.0) - - 65.2------------------------------------------------------------------------------------------------------------------------ 465.5 (4.9) 460.6 - - - - - - - - 460.6------------------------------------------------------------------------------------------------------------------------Creditors: Amounts falling due within Current one year Liabilities Loans and Borrowings (58.2) (58.2) overdrafts (0.1) - (58.3) Other Trade and other creditors (287.9) 45.6 (242.3) payables 21.0 - - 0.0 - - (13.8)(235.1) Corporation (45.6) (45.6) tax - - - (0.0) - - - (45.6)------------------------------------------------------------------------------------------------------------------------ (346.1) - (346.1) 20.9 - - - - - - (13.8)(339.0)------------------------------------------------------------------------------------------------------------------------Net Current Assets 119.4 (4.9) 114.5 ---------------------------- Total Assets less Current Liabilities 738.1 20.4Creditors: Amounts falling due after more than one Non-Current year Liabilities Borrowings (167.0) - (167.0)Borrowings (0.0) (167.0) Other Other creditors (17.3) (17.3) creditors (0.8) - - (18.1) Deferred taxation (12.3) (12.3) liabilities(2.1) (0.0) (2.0) - - 0.1 (0.8) 0.3 (16.8) Provision for liabilities (11.1) (11.1) and Changes - - - (11.1) Retirement benefit (68.1) (68.1) obligation (0.1) - (69.1)------------------------------------------------------------------------------------------------------------------------ (184.3) (91.5) (275.8) (3.9) - (2.0) - - 0.1 (0.8) 0.3 (282.1) Provisions for Liabilities and Charges (23.4) 23.4 - ---------------------------- Net assets excluding pension liabilities 530.4 (47.7) 482.7 ---------------------------- Deficit on group pension schemes (47.7) 47.7 -------------------------------------------------------------------------------------------------------------------------Net assets including pension liabilities 482.7 - 482.7 Net Assets 13.9 0.1 (0.6) 10.4 - 0.1 (0.8)(13.6) 492.2------------------------------------------------------------------------------------------------------------------------Capital and Capital and Reserves Reserves including including non equity non equity interests interestsCalled up Called up share share capital 27.9 - 27.9 capital - 27.9Share premium Share premium account 81.6 81.6 account 0.2 0.2 - 82.0 Retranslation - reserve - 0.0 (7.0) - (0.0) - (7.0)Revaluation Revaluation reserve 1.7 1.7 reserve (0.5) 1.2Other reserve 0.9 0.9 Other reserve - - - - - - 0.9Profit and loss Profit and loss account 369.5 369.5 account 14.2 0.1 (0.6) 10.4 7.0 (0.1) (0.8)(13.6) 386.1 ------------------------------------------------------------------------------------------------------------------------Shareholders' Shareholders' Funds 481.6 - 481.6 Funds 13.9 0.1 (0.6) 10.4 - 0.1 (0.8)(13.6) 491.1Minority interest Minority (equity) 1.1 1.1 interest 1.1------------------------------------------------------------------------------------------------------------------------ 482.7 - 482.7 13.9 0.1 (0.6) 10.4 - 0.1 (0.8)(13.6) 492.2------------------------------------------------------------------------------------------------------------------------ Cobham plcConsolidated Balance Sheetas at 31 December 2004------------------------------------------------------------------------------------------------------------------------ UK GAAP under Opening Share- Reformat IFRS balance Develop Business Goodwill Foreign based Un- Under under present adjust -ment combin amortis exch pay Tax audited UK GAAP IFRS -ation -ments costs -ations -ation -ange -ments -ation Other IFRS £m £m £m £m £m £m £m £m £m £m £m £m------------------------------------------------------------------------------------------------------------------------ Fixed Assets Non-Current AssetsIntangible Intangible assets 373.8 373.8 assets 2.6 0.2 3.2 20.9 (2.8) - - - 397.9 Property, Tangible plant and assets 241.0 (4.1) 236.9 equipment 0.9 237.8 Investment 4.1 4.1 properties 4.1 InvestmentsInvestments in joint in joint ventures and ventures: 16.3 1.0 17.3 associates (4.2) - 0.1 - - - 1.0 14.2Investment in associate 1.0 (1.0) - - OtherInvestment - - - investments - Other 9.6 9.6 debtors (2.4) (0.0) - - 0.1 7.3 Deferred taxation 20.4 20.4 assets 20.4 ------------------------------------------------------------------------------------------------------------ 632.1 30.0 662.1 (3.1) 0.2 3.2 21.0 (2.8) - - 1.1 681.7Current Current Assets Assets Stocks 183.9 - 183.9 Inventories 183.9Debtors: - Amounts falling due Trade and within one other year 227.7 227.7 receivables 0.0 - - (0.0) - - (1.3) 226.4 Amounts falling due after more than one year 9.6 (9.6) - Available for sale Investments - - investments -Cash at Cash at bank and bank and in hand 101.3 101.3 in hand (0.0) 0.0 - - 101.3 ------------------------------------------------------------------------------------------------------------ 522.5 (9.6) 512.9 - - - - - - - (1.3) 511.6 ------------------------------------------------------------------------------------------------------------Creditors: Amounts falling Current due within Liabilities one year Loans and Borrowings (116.1) (116.1) overdrafts (0.1) - (116.2) Trade and Other other creditors (281.1) 48.4 (232.7) payables 21.0 - (0.0) 0.0 - - 2.0 (209.7) (48.4) (48.4) Corporation - - - (0.0) - - - (48.4) tax ------------------------------------------------------------------------------------------------------------ (397.2) - (397.2) 20.9 - - - - - - 2.0 (374.3) ------------------------------------------------------------------------------------------------------------Net Current Assets 125.3 (9.6) 115.7 ----------------------------Total Assets less CurrentLiabilities 757.4 20.4Creditors: Amounts falling due after more than one year Non-Current Liabilities Borrowings (151.3) - (151.3) Borrowings (0.0) (151.3) Other Other creditors (10.6) (10.6) creditors (0.8) - - (11.4) Deferred taxation (20.2) (20.2) liabilities (2.1) (0.1) (4.4) - - 0.1 (1.6) 0.2 (28.1) Provisions for liabilities (17.9) (17.9) and Charges (17.9) Retirement benefit (68.1) (68.1) obilgation (1.0) - (69.1) ------------------------------------------------------------------------------------------------------------ (161.9) (106.2) (268.1) (3.9) (0.1) (4.4) - - 0.1 (1.6) 0.2 (277.8) Provisions for Liabilities and Charges (38.1) 38.1 - ---------------------------- Net assets excluding pension liabilities 557.4 (47.7) 509.7 ---------------------------- Deficit on group pension schemes (47.7) 47.7 -------------------------------------------------------------------------------------------------------------------------Net assets including pension liabilities 509.7 - 509.7 Net Assets 13.9 0.1 (1.2) 21.0 (2.8) 0.1 (1.6) 2.0 541.2------------------------------------------------------------------------------------------------------------------------ Capital and Capital and Reserves Reserves including including non non equity equity interests interests Called up Called up share share capital 27.9 - 27.9 capital - 27.9Share premium Share premium account 81.6 81.6 account 0.2 1.7 - 83.5 Retrans -lation - reserve - 0.0 (11.4) - 0.0 - (11.4)Revaluation Revaluation reserve 1.7 1.7 reserve (0.5) 1.2Other Other reserve 0.3 0.3 reserve - - - - - - 0.3Profit and Profit and loss loss account 397.1 397.1 account 14.2 0.1 (1.2) 21.0 8.6 (1.6) (1.6) 1.8 438.4------------------------------------------------------------------------------------------------------------------------Shareholders' Shareholders' Funds 508.6 - 508.6 Funds 13.9 0.1 (1.2) 21.0 (2.8) 0.1 (1.6) 1.8 539.9Minority Minority interest interest (equity) 1.1 1.1 (equity) 0.2 1.3------------------------------------------------------------------------------------------------------------------------ 509.7 - 509.7 13.9 0.1 (1.2) 21.0 (2.8) 0.1 (1.6) 2.0 541.2------------------------------------------------------------------------------------------------------------------------ Cobham plcConsolidated IFRS Balance SheetReconciliation from 31 December 2004 to 1 January 2005--------------------------------------------------------------------------------------------------------- Initial Initial application of application of Initial IFRS accounting IFRS accounting application of Unaudited for financial for financial IFRS accounting Unaudited IFRS instruments - instruments for currency IFRS 31.12.04 reclassification - retranslation instruments 1.1.05 £m £m £m £m £m---------------------------------------------------------------------------------------------------------Non-Current AssetsIntangible assets 397.9 397.9Property, plant and equipment 237.8 237.8Investment properties 4.1 4.1Investments in joint ventures and associates 14.2 14.2Other investments - -Other debtors 7.3 (2.2) 5.1Deferred taxation asset 20.4 20.4--------------------------------------------------------------------------------------------------------- 681.7 (2.2) - - 679.5---------------------------------------------------------------------------------------------------------Current AssetsInventories 183.9 183.9Trade and other receivables 226.4 7.4 (3.1) 230.7Derivatives and financial instruments - 18.8 18.8Cash and cash equivalents 101.3 (5.2) (2.8) 93.3Assets classified as held for sale - ---------------------------------------------------------------------------------------------------------- 511.6 2.2 (5.9) 18.8 526.7--------------------------------------------------------------------------------------------------------- Current LiabilitiesLoans and overdrafts (116.2) (116.2)Trade and other payables (209.7) 0.8 (208.9)Corporation tax (48.4) 0.1 (48.3)Liabilties classified as held for sale - ---------------------------------------------------------------------------------------------------------- (374.3) - 0.9 - (373.4)---------------------------------------------------------------------------------------------------------Non-Current LiabilitiesBorrowings (151.3) (0.9) (152.2)Other creditors (11.4) (11.4)Deferred taxation liabilities (28.1) 0.6 (5.4) (32.9)Provisions for liabilities and charges (17.9) (17.9)Retirement benefit obligation (69.1) (69.1)--------------------------------------------------------------------------------------------------------- (277.8) - 0.6 (6.3) (283.5)------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Net Assets 541.2 - (4.4) 12.5 549.3---------------------------------------------------------------------------------------------------------Capital and Reserves including non equity interestsCalled up share capital 27.9 27.9Share premium account 83.5 83.5Currency translation differences on overseas operations (11.4) (11.4)Revaluation reserve 1.2 1.2Other reserve 0.3 0.3Profit and loss account 438.4 (4.4) 12.5 446.5---------------------------------------------------------------------------------------------------------Total Shareholders' Equity 539.9 - (4.4) 12.5 548.0Minority interest in equity 1.3 1.3---------------------------------------------------------------------------------------------------------Total Equity 541.2 - (4.4) 12.5 549.3--------------------------------------------------------------------------------------------------------- This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Cobham