BAE-annual-report-2014

AT BAE SYSTEMS,
WE PROVIDE SOME
OF THE WORLD’S
MOST ADVANCED,
TECHNOLOGY-LED
DEFENCE, AEROSPACE
AND SECURITY
SOLUTIONS.
We employ a skilled workforce of 83,400
people 1 in 40 countries. Working with
customers and local partners, we
develop, engineer, manufacture and
support products and systems to deliver
military capability, protect national
security and people, and keep critical
information and infrastructure secure.
FOR
FURTHER
INFORMATION
VISIT
BAESYSTEMS.COM
CONTENTS
STRATEGIC REPORT
2014 at a glance 01
Outlook for 2015 03
Chairman’s letter 04
Our business at a glance 06
Group Strategic Framework 10
How our business works 12
Chief Executive’s review 14
Performance against our 2014 objectives 18
Financial review 22
Segmental performance 27
Electronic Systems 28
Cyber & Intelligence 31
Platforms & Services (US) 34
Platforms & Services (UK) 37
Platforms & Services (International) 40
Responsible business 43
How we manage risk 48
Principal risks 50
The Strategic Report was approved by the
board of directors on 18 February 2015.
David Parkes, Company Secretary
GOVERNANCE
Governance summary 54
Board of directors 56
Corporate Governance Report 58
Audit Committee Report 61
Corporate Responsibility
Committee Report 64
Nominations Committee 66
Remuneration Committee Report 67
Annual Remuneration Report 69
Preface to the Directors’
Remuneration Policy 83
Directors’ Remuneration Policy 84
Directors’ Report 93
Independent Auditor’s Report 98
FINANCIAL STATEMENTS
Index to the financial statements 101
INVESTOR RESOURCES
Shareholder information 164
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 liability of the directors of BAE Systems plc so that their liability is solely to BAE Systems plc.
COVER IMAGE: Taranis, the stealthy unmanned
combat vehicle demonstrator which successfully
completed a second phase of flight testing in
2014, with Typhoon, the advanced multi-role/
swing-role combat aircraft.
1. Including share of equity accounted investments.