Cobham Regulatory News (COB)

11 November 2013

Cobham INTERIM MANAGEMENT STATEMENT

Current Trading

The Group's trading performance in the first ten months of the year has been in line with the Board's expectations.

The US defence/security market, which accounts for just over one third of Group revenue, has remained highly uncertain during the period, with continued weakness principally in the Group's short cycle businesses. This has been partially offset by growth in commercial markets, which also account for just over one third of Group revenue. Underlying demand in the non-US defence/security market has been satisfactory.

Through its ongoing Excellence in Delivery (EiD) programme, the Group continues to focus on operational improvement, while proactively managing its cost base. The programme remains on track to achieve its previously announced year-on-year efficiency savings.

Mergers and Acquisitions

In July, the Group announced it had acquired full ownership of its joint venture, FB Heliservices (FBH), for a cash consideration of £74m, together with the assumption of the joint venture partner's share of net debt in the business. The acquisition has strengthened Cobham's presence in an attractive market and is highly complementary to the Group's existing fixed wing Aviation Services business. Both FBH and the Group's May 2013 acquisition, Axell Wireless, have traded in line with expectations and good progress is being made in integrating them into the Group.

Financial Position

The Group has achieved solid cash conversion in the first ten months of the year and has maintained its conservatively geared balance sheet. At the end of October 2013, after payment for the acquisition of FBH, Cobham had net debt of £520m (30 June 2013: £484m).

Outlook

Consistent with the Group's current trading performance, the full year outlook for 2013 remains unchanged, with Group revenue expected to decline organically by low-to-mid single digits and operating margins to be slightly lower than in 2012, as previously stated.

At its interim results, the Group cautioned that the outlook for the US defence/security market was highly uncertain. This remains the case, with the budgetary environment showing signs of further deterioration. As a result, the Group is now planning for organic revenue to decline by low-to-mid single digits in 2014. Cobham will take further actions as appropriate to substantially mitigate the impact of organic revenue declines on the Group's trading margin.

The Group has leading positions in its markets and innovative technology and know-how, which it can leverage across defence/security and commercial markets. It is making tangible progress against its strategic objectives, including placing considerable focus on further operational improvement and streamlining of the business through its EiD programme, and on bringing more balance to its portfolio. As a result, the Board continues to anticipate that the Group can deliver mid-single digit organic revenue growth from 2015. Cobham continues to benefit from a cash generative business model and a strong balance sheet, which will enable it to maintain its long standing policy of a 10% progressive annual dividend increase.

Cobham's preliminary results for the year ended 31 December 2013 will be announced on 6 March 2014.

- ends -

ENQUIRIES 

NOTES

1. Cobham will hold a conference call for analysts and investors on its Interim Management Statement at 08:30 (UK time) on Monday, 11 November 2013. Participants will be Bob Murphy, Chief Executive Officer and Simon Nicholls, Chief Financial Officer.

The dial-in number for the conference call is +44 (0) 1452 555566 and the conference ID is # 98171167. The conference call will be recorded for playback and available at www.cobhaminvestors.com for seven days after the event.

2. 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; audio, video and data communications, including satellite communications; defence electronics; life support and mission equipment.

3. 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 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.