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2015 Full Year Results

Today we have announced the Group’s financial results for 2015 and confirmed that we delivered another year of solid performance, broadly in line with the guidance set out in our Trading Statement in November.
Today we have announced the Group’s financial results for 2015 and confirmed that we delivered another year of solid performance, broadly in line with the guidance set out in our Trading Statement in November.
 
Headline figures include:
  • Sales increased by 8% to £17.9bn from increased aircraft deliveries to Saudi Arabia, trading of Radar and DASS equipment on the European Typhoon programme and increased activity across the UK naval business.  There was a £0.2bn benefit from exchange translation.
  • Underlying EBITA of £1,683m was £19m lower and included the impact of previously announced Typhoon production slowdown and Australian shipyard impairment and rationalisation charges. 
  • Underlying earnings per share of 40.2p included the release of two tax provisions. One of 2.6 pence, that we signalled in our November trading statement and a second, of 1.7 pence.
 
Recognising the importance of dividends to our shareholders and the strength of our business, we have increased the dividend for the year to 20.9 pence, up 2% from 2014. This is the 12th consecutive year we have grown our dividend.
 
Our business benefits from a large order backlog and a broader geographic presence than many of our peers, with strong positions in a number of the world’s largest accessible markets.  Our portfolio is balanced between products and platforms on one hand and well established support businesses on the other – enduring support and sustainment contracts accounted for more than 40% of Group sales in 2015. We have again seen good programme execution, underpinned by the quality of our technology and engineering capability and we continue to drive innovation through ongoing investment in R&D.
 
The environment for defence spending in our key UK and US markets is improving.  In the UK, the positive outcome from the SDSR and budget commitments to defence spending have provided greater certainty with an increased £178 billion defence equipment and support plan over the next ten years. In the US, the Bipartisan Agreement is expected to enhance the funding environment for our US businesses through 2017.
 
In the UK, our businesses continue to perform well, benefiting from strong programme execution and stability in customer requirements and we are working constructively with the government to implement the commitments set out in the SDSR.
 
In the US, our electronics business performed well and grew in 2015, with new business wins including contracts to upgrade the electronic warfare systems for the US Air Force’s F-15 and to upgrade electronics for US special ops C-130J aircraft. As a major supplier of electronic equipment on the F-35, we benefit from the commitment to increase production output for both US and international customers.
 
We continue to grow in commercial electronics, with broadly based flight and engine control activities.
 
Our US land and manpower services activities performed solidly in 2015, supporting our expectations for an improved outlook for these businesses off a now stabilised base.
 
This is the 50th year of our relationship with the Kingdom of Saudi Arabia and we were pleased to be awarded the contract for 22 Hawk Advanced Jet Trainer Aircraft. This forms part of an enhancement to the Kingdom’s pilot training capacity.
 
We achieved sales and order growth of around 30% in Applied Intelligence and we expect to see good growth continue as cyber security becomes increasingly important to governments and commercial customers.
 
Technology is a key and sustainable attribute of this business. Recognising the potential of an emergent new technology we agreed the acquisition of a 20% interest in Reaction Engines, which is working on a radical new aerospace engine concept with the potential to revolutionise hypersonic flight and the economics of space access.
 
In terms of our outlook; excluding the tax provision releases made in 2015, and adjusting for an assumed exchange rate of $1.45 to the pound, would give a 2015 EPS figure of 36.6p. Against that figure, we expect the Group’s underlying earnings per share for 2016 to be some 5 to 10% higher.
 
So to sum up, this is another solid set of results. We have demonstrated resilience through an extended period of economic challenge and our business environment is improving. In 2016 and beyond, we are well placed to continue to generate attractive returns for our shareholders.
 
 
 
 
 
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BAE Systems Corporate Blog 18 February 2016