Annual Report 2015 Welcome to the BAE Systems Annual Report 2015

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Annual Report 2015 Welcome to the BAE Systems Annual Report 2015 Annual Report 2015 Welcome to the BAE Systems Annual Report 2015 Further information can be found online by visiting baesystems.com Cautionary statement: All statements other than statements of historical fact included in this document, including, without limitation, those regarding the financial condition, results, operations and businesses of BAE Systems and its strategy, plans and objectives and the markets and economies in which it operates, are forward-looking statements. Such forward-looking statements, which reflect management’s assumptions made on the basis of information available to it at this time, involve known and unknown risks, uncertainties and other important factors which could cause the actual results, performance or achievements of BAE Systems or the markets and economies in which BAE Systems operates to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. BAE Systems plc and its directors accept no liability to third parties in respect of this report save as would arise under English law. Accordingly, any liability to a person who has demonstrated reliance on any untrue or misleading statement or omission shall be determined in accordance with Schedule 10A of the Financial Services and Markets Act 2000. It should be noted that Schedule 10A and Section 463 of the Companies Act 2006 contain limits on the Cover liability of the directors of BAE Systems plc so that their liability is solely to BAE Systems plc. Hawk aircraft at RAF Valley. Strategic report | BAE Systems at a glance (i) At BAE Systems, we provide some of the world’s most advanced technology defence, aerospace and security solutions. We employ a skilled workforce of 82,500 people1 in over 40 countries. Working with customers and local partners, our products and services deliver military capability, protect people and national security, and keep critical information and infrastructure secure. 1. Including share of equity accounted investments. BAE Systems | Annual Report 2015 Strategic report | BAE Systems at a glance (ii) Our business Sales1 by domain BAE Systems has strong, established positions in the air, maritime and land domains, as well as a growing position in cyber security. Air Maritime Land Cyber 53% 28% 13% 6% – Manufacture, development, – Design and manufacture – Design, manufacture, – Supply of cyber, intelligence upgrade and in-service support of complex warships upgrade and support of and security capabilities to of Typhoon combat aircraft tracked and amphibious US government agencies – Design and manufacture combat vehicles – Design and manufacture of submarines – Supply of defence-grade of avionics equipment for – Manufacture of ammunition cyber solutions for the – Provision of ship repair and military aircraft and precision munitions for commercial market modernisation services in US, UK and other armed forces – In-service support of Tornado the US – Supply of cyber, intelligence combat aircraft – Design and manufacture of and security capabilities to – Provision of in-service artillery systems and missile UK and other government – Design and manufacture support to surface ships launchers for US, UK and agencies of avionics equipment for and facilities management other armed forces commercial aircraft in the UK – Design and manufacture – Design and manufacture of missiles and missile of naval gun systems, systems through a 37.5% torpedoes, radars, and interest in MBDA naval command and combat systems – Manufacture, development, upgrade and in-service support of Hawk trainer aircraft – Design and manufacture of sub-assemblies and electronic systems for F-35 Lightning II combat aircraft – Development of next-generation unmanned air systems H G F C F A A D A A E E C B D D B C B C B A Typhoon 33% A Complex warships 24% A Combat vehicles 44% A US government 61% B Defence avionics 21% B Submarines 21% B Munitions 27% B Commercial 24% C Tornado 13% C US ship repair 21% C Weapon systems 5% C UK and other governments 15% D Commercial avionics 8% D UK naval support 12% D Other 24% E Weapon systems 8% E Weapon systems 8% F Hawk 7% F Other 14% G F-35 Lightning II 6% H Other 4% P(iv) Our key products and services BAE Systems | Annual Report 2015 Strategic report | BAE Systems at a glance (iii) Sales1 for 2015 £17.9bn Sales1 by destination Sales1 by activity BAE Systems has leading positions in its principal markets BAE Systems has a diverse portfolio, broadly balanced in the US, UK, Saudi Arabia and Australia. between an enduring services and support business, long-term platforms programmes, electronic systems, and activities in cyber and intelligence. A US 36% A Military and technical 42% D services and support E A B UK 23% A C Saudi Arabia 21% B Platforms 37% D Australia 3% C C Electronic systems 14% E Other2 17% D Cyber 7% D C B P11 P24 B Our markets Segmental performance Employees1 by location 33,800 29,600 5,700 Employees1 3,500 82,500 US UK Saudi Arabia Australia Other1 9,900 1. Including share of equity accounted investments. P48 2. Includes £1.4bn (8%) of sales generated under the Typhoon workshare agreement with Eurofighter Jagdflugzeug GmbH. Our people BAE Systems | Annual Report 2015 Strategic report | BAE Systems at a glance (iv) Our key products and services BAE Systems has strong, established positions supplying defence equipment, electronics and services, and cyber, intelligence and security solutions for governments. We also have a growing position in adjacent commercial markets, including avionics and cyber security. Typhoon manufacture F-35 Lightning II design Unmanned and future air Air support and training and development and manufacture system capabilities Provision of support to operational Manufacture of major Typhoon Design and manufacture of Development of future air system capability. The Group provides assemblies. Aircraft assembly and sub-assemblies, including the aft capabilities, including unmanned air maintenance, support and training expansion of the capabilities of aircraft fuselage and empennage, in the systems, with the potential for a joint for Typhoon aircraft in service with in service with the Royal Air Force and UK and provision of equipment, unmanned combat air system the UK and Saudi Arabian air forces. Royal Saudi Air Force. including the electronic warfare programme with France. Under the Saudi British Defence suite, in the US. BAE Systems has a Co-operation Programme, the Group significant workshare on the world’s has contracts to provide manpower, largest defence programme. logistics and training, as well as training aircraft, including Hawk, and upgrades to Tornado aircraft in Saudi Arabia. The Group provides support for Hawk aircraft in service in 14 countries. Defence avionics equipment Commercial avionics Complex warships Submarines Design and manufacture of avionics equipment Design and manufacture of two Design and manufacture of seven equipment across a range of US and Design and manufacture of avionics 65,000 tonne aircraft carriers and Astute Class nuclear-powered attack other Western military aircraft equipment across multiple commercial three Offshore Patrol Vessels for the submarines for the Royal Navy, together programmes, including a leadership aircraft platforms, including engine and Royal Navy, together with design, with design, and anticipated position in the electronic warfare flight controls, and cabin and cockpit and anticipated manufacture, on manufacture, of nuclear-powered market. BAE Systems has been selected systems, together with aftermarket the Royal Navy’s Type 26 frigate submarines to carry the UK’s Trident by Boeing to design and manufacture support services. BAE Systems is a programme. The aircraft carriers nuclear deterrent. The third of class a new electronic warfare system for major supplier to Boeing. are expected to complete sea trials Astute boat, Artful, is now being the US Air Force’s F-15 fleet. in 2017 and 2019, respectively. operated by the Royal Navy, with the final boat expected to enter service towards the middle of the next decade. Ship repair and naval support Weapon systems Combat vehicles Cyber security Provision of naval and commercial ship Design and manufacture of naval gun Products and services include upgrade Delivery of a broad range of services repair and modernisation services in systems, torpedoes, radars, naval of US Army tracked vehicles, including to enable the US military and the US, UK and Australia, together with command and combat systems, artillery Bradley Fighting Vehicles, design and government to recognise, manage support to the navies of the US, UK and systems, missile launchers and, through manufacture of the US Army’s M109 and defeat threats. Support to UK Australia. In the US, BAE Systems has a 37.5% interest in MBDA, missiles self-propelled howitzer and Armored and other government agencies in facilities located on the East, West and and missile systems. Multi-Purpose Vehicle, design, their intelligence missions. Provision of Gulf coasts, as well as Hawaii, and is manufacture and support of the defence-grade solutions for commercial investing in new dry dock facilities at CV90 combat vehicle for international cyber applications worldwide. its San Diego shipyard to support customers, and vehicle upgrade and the US Navy’s increased focus on support to the British Army. Asia-Pacific operations. BAE Systems | Annual Report 2015 Strategic report | Directors’ report | Financial statements 01 Contents Strategic report Chairman’s BAE Systems at a glance (i)
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