Cobham Regulatory News (COB)

06 November 2014

Cobham INTERIM MANAGEMENT STATEMENT

Current Trading

The Group's trading performance in the first nine months of the year has been in line with the Board's expectations with underlying market conditions remaining largely unchanged in the period since the Group's interim results announcement in August.

The Group is seeing good order momentum from its short cycle businesses, broadly as anticipated, and has continued to make progress towards the achievement of its various significant aerial refuelling engineering milestones. Further progress is still required in the remainder of 2014 to achieve the outstanding engineering milestones.

Cobham has continued to proactively drive cost reduction, in part through its Excellence in Delivery (EiD) programme. The Group continues to expect that EiD will deliver the anticipated year-on-year efficiency savings in 2014 with integration and rationalisation activity substantially completed by the year end.

Contract Awards

Cobham has recently announced two significant contract awards, both within Cobham Aviation Services, as follows:

· A new contract with the Australian Maritime Safety Authority to provide an airborne search and rescue capability from 2016. Potentially this is worth in excess of AUS$700m over 15 years, including a three year option period. Under the contract, Cobham will acquire, modify, commission and operate four Bombardier Challenger CL-604 jet aircraft. These will be fitted with sophisticated electronic equipment to provide real-time information to the customer;

· A contract extension with Chevron Australia Pty Ltd to 2020 for the ongoing provision of flights to support its operations, potentially worth over AUS$160m. As part of this contract extension, Cobham will introduce the next generation Embraer 190 jet aircraft, the first to be used in this market.

Aeroflex

The Group is pleased to have completed the acquisition of Aeroflex in September, as previously announced. The business is trading in line with the Group's expectations and the integration programme, which will generate cost savings and operational efficiency improvements, is progressing according to plan. The acquisition will be significantly accretive to underlying earnings in 2015 and will deliver good cash flow generation. Cobham continues to expect that Aeroflex's returns will beat the Group's cost of capital in the third full year of ownership.

Financial Position

At the end of September Cobham's net debt had increased to £1.2bn (30 June 2014: £0.3bn), driven by the acquisition of Aeroflex.

Following the completion of the Aeroflex acquisition, Cobham has put in place US$930m of medium term fixed rate debt, with maturities covering three to ten years. This private placement debt substantially replaces the short-term and variable senior unsecured bridge loan facility, which was entered into to provide finance for the Aeroflex acquisition.

Outlook

Consistent with the current trading performance, the Group continues to anticipate that organic revenue will decline by low-to-mid single digits in 2014. This is against a background of ongoing challenges in defence/security markets, partially offset by strong growth in commercial markets. This also assumes continued good order momentum in the Group's short cycle businesses in both defence/security and commercial markets.

On the basis of a moderating rate of decline in the US defence/security market, increasing revenue from non-US defence/security markets and continued strong growth in commercial markets, the Board continues to anticipate that Cobham can deliver mid-single digit organic revenue growth from 2015. This is further underpinned by the significant and strategic acquisition of Aeroflex, which brings complementary technology and increases the Group's exposure to attractive commercial end markets.

Cobham's preliminary results for the year ended 31 December 2014 will be announced on 5 March 2015.

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ENQUIRIES

NOTES

1. Cobham protects lives and livelihoods with its differentiated technology and know-how. The Group offers an innovative range of technologies and services to solve challenging problems across commercial, defence and security markets, from deep space to the depths of the ocean. It has market leading positions in air-to-air refuelling; aviation services; wireless; audio, video and data communications, including satellite communications; defence electronics; life support and mission equipment.

2. This document contains 'forward-looking statements' with respect to the financial condition, results of operations and business of Cobham and to certain of Cobham's plans and objectives with respect to these items.

Forward-looking statements are sometimes but not always identified by their use of a date in the future or such words as 'anticipates', 'aims', 'due', 'could', 'may', 'should', 'expects', 'believes', 'intends', 'plans', 'targets', 'goal', or 'estimates'. By their very nature forward-looking statements are inherently unpredictable, speculative and involve risk and uncertainty because they relate to events and depend on circumstances that may or will occur in the future.

There are various factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements. These factors include, but are not limited to, changes in the economies, political situations and markets in which the Group operates; changes in government priorities due to programme reviews or revisions to strategic objectives; changes in the regulatory or competition frameworks in which the Group operates; the impact of legal or other proceedings against or which affect the Group; changes to or delays in programmes in which the Group is involved; the completion of acquisitions and divestitures and changes in commodity prices, inflation or currency exchange rates.

All written or verbal forward-looking statements, made in this document or made subsequently, which are attributable to Cobham or any other member of the Group or persons acting on their behalf are expressly qualified in their entirety by the factors referred to above. Cobham does not intend to update these forward-looking statements.