Cobham Plc: Corporate Responsibility Report 2004

CCCooobbbhhhaaammm ppplllccc CCCooorrrpppooorrraaattteee RRReeessspppooonnnsssiiibbbiiillliiitttyyy RRReeepppooorrrttt 222000000444 Cobham plc: Corporate Responsibility Report 2004 Cobham designs and manufactures equipment, specialised systems and components supplied to the aerospace, defence, homeland security, search and rescue and communications markets and operates, modifies and maintains aircraft for military training, special mission flight operations and outsourced freight and passenger services 2004 Revenue by Operating Group 2004 Revenue by Origin Flight Ops ROW UK £188m ASG £ 211m £233m £386m USA Othe r EU Chelton £355m £184m £409m Total £983m 2004 Average Employees by Operating Group 2004 Average Employees by Region 9.9% 0.3% 2.4% UK Flight Ops 2.9% Other EU 17 % ASG USA 44.8% 36% Canada South Africa Chelton 28.5% 47% Australia Total 9,863 ROW 11.2% This report covers 99% by turnover of Cobham’s 100% owned subsidiaries 2 Cobham plc: Corporate Responsibility Report 2004 3 Cobham plc: Corporate Responsibility Report 2004 4 Cobham plc: Corporate Responsibility Report 2004 Message from Chief Executive data collection and reporting processes to meet the requirement. This is the Group’s second The Global Reporting Initiative is currently being Corporate Responsibility used to guide future Corporate Responsibility (CR) report and covers the reporting strategy. As part of this review the financial year 2004. measures reported will be validated against the Group’s operations, its strategic goals and risk As a global manufacturer, profile. This review will also assist in preparing Cobham is serious about the for the requirements of the Operating and need to operate in an Financial Review. economically, environmentally and socially responsible way. Our Once this phase is complete consideration can be Corporate Framework sets out principles for given to the setting of targets. employees at all levels to guide our business operations. These principles include policies on Completion of a revised organisation-wide business ethics, fraud, equal opportunities, health corporate framework and the setting of and safety, environment, community involvement policies in the CR area and whistle blowing. The revision of the Corporate Framework is complete. The Group’s policies on CR are Through the products and services Cobham supplies included on the Cobham plc website in our 2003 to the defence market we are supporting national Corporate Responsibility Report. and global security. In our civil markets we are contributing to communication and travel, both of Using the Cobham internet website to which are increasingly important in the global communicate with stakeholders and economy. facilitate CR awareness and continual improvement within the Group Perhaps our most significant contribution is through Including a CR report on the website has been the wealth we create in employing 10,000 people seen as a useful addition by stakeholders. across the group and through the jobs we support in Suggestions as to how the report can be our supply chain. improved have been received and these will be incorporated in the next CR report where In our first Corporate Responsibility report we set practicable. out some objectives for 2004. Progress has been made against each of these objectives as described A message board has also been created on the below. employee section of the website where queries can be raised and details of achievements Refinement of the data collection and posted. reporting system Improvements have been implemented to aid those completing the information and those 2004 Highlights responsible for collating and verifying the data. A seminar was organised for Cobham CR Verification of CR performance as part of representatives in the UK & the rest of Europe. the Cobham assurance process With attendees from all sectors, the seminar The processes used to obtain and report CR data covered the drivers and key elements of CR. The were reviewed at a number of subsidiaries during seminar gave the attendees the chance to the year as part of the internal assurance develop their CR network, discuss common programme. Further work will be performed in issues and review Cobham’s CR Key Performance this area in 2005. Indicators. Attendees were also given an update on environmental legislation. Expansion of key performance indicators and the setting of performance targets FR Aviation Ltd (UK) achieved the British Safety Progress towards achievement of this goal has Council’s 5-Star Award for the company's safety been slow. The range of KPIs has been & environment management system. This increased but subsidiaries are still developing the prestigious award for safety, health and 5 Cobham plc: Corporate Responsibility Report 2004 environment management performance is Objectives for 2005 recognised nationally and internationally. Our objectives for 2005 seek to build on the progress A further six companies in the Group achieved made in 2004 as follows: certification to ISO 14001 for their environmental management systems, making a total of thirteen 1. Review of key performance indicators representing 39% of the Group by turnover. 2. Internal verification of data provided 3. Report data on training, absence and diversity at management levels 4. Report further information on complaints Direct Economic impacts 2004 2003 £m £m Distribution to stakeholders Employees (wages, salaries and retirement costs) 302.6 270.2 Government – taxes and social security costs 36.4 33.3 Providers of capital - bank loans & overdraft 10.4 12.2 - finance leases 1.6 0 - other borrowings 0.8 0.5 Community investment 0.04 0.04 Dividends 34.6 31.3 Total distributed to stakeholders 386.4 347.5 6 Cobham plc: Corporate Responsibility Report 2004 Looking after our workforce “As always, the strength of the Group is based on the skill and dedication of all of its employees and, on behalf of the Board, I thank them sincerely” Gordon Page, Chairman The Group is committed to equal opportunities for all facilitates the development of new ideas and employees regardless of sex, race, colour, nationality practices that add value to the business, promotes or ethnic origin, disability, and other forms of employee commitment and helps to focus company discrimination. Where employees become disabled, and employee expectations. In-house newsletters, our policy is to take all reasonable steps, including intranet, extranet and internet communications, retraining, to ensure that they can remain in company announcements and team meetings all play employment wherever practicable. a part in this process. Cobham is also committed to supporting employees UK employees are given the opportunity to become through effective human resources management, shareholders in the company through the Cobham training and career development opportunities as Savings Related Share Option Scheme (2004). In well as providing a safe and healthy working addition, a new share scheme, the Cobham Share environment. Incentive Plan, has been implemented which will enable employees of UK participating companies to The importance of employee development and buy Cobham shares out of pre-tax income. training is recognised and employees are encouraged to take advantage of available and relevant training The average number of employees has increased in programmes and opportunities for advancement. 2004 to 9,863 from 8,990 in 2003. Of the increase of 873, 535 relate to companies acquired during The Group encourages employee participation and 2004. Wages, salaries and costs rose from £255.6m consultation at all levels and also the sharing of in 2003 to £290.0m in 2004, an average increase relevant business information. Such an approach per employee of 3.4%. The Group’s Employees 2004 2003 5000 5000 4000 4000 3000 3000 2000 2000 1000 1000 No. of EmployeesNo. of EmployeesNo. of 0 0 UK Other EU USA ROW UK Other EU USA ROW ASG Chelton Flight Ops ASG Chelton Flight Ops 7 Cobham plc: Corporate Responsibility Report 2004 In 2004 additional performance measures were Employee Benefits introduced. However, these were not provided by all Cobham companies provide a variety of benefits subsidiaries and are therefore not reported here. It over and above those required by the law. is hoped that all subsidiaries will report on the these These vary around the group. Examples include measures in 2005. birthday lunches, suggestion schemes, long service awards, bonus schemes, occupational The additional measures will enable us to identify health services, flex time and "make-up" time diversity within the different elements of our schemes, family days for staff and their children, workforce, to measure absence and to measure increases to pension contributions, and after training hours. hour social functions. Employee Turnover Employee Representation Average employee turnover, defined as the 18% of Cobham’s employees are represented by number of employees leaving employment an independent trade union organization or other divided by the average number of employed, is bona fide representative group. In addition, 3.11. The level of employee turnover is there are established representative structures considered to be an indicator of the satisfaction through which Cobham employees are of our employees. High levels of turnover might encouraged to communicate their needs to indicate underlying problems in a business; management. Relevant forums include equally very low levels of turnover might make it employee representative groups, suggestion difficult for the

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