BAE-annual-report-2014

Strategic Report
The review confirmed the importance of maintaining the
breadth of our geographic balance, continued investment
in the development of our wide product offering and
the value of the service relationships we enjoy with
the armed forces of the countries in which we operate.
We will manage the Group’s business portfolio to address
changes in markets and emerging opportunities. Whilst
still a relatively small segment of the Group, prospects
for growth in our Applied Intelligence business, which
capitalises on our deep intelligence roots and benefits
from our wide commercial reach, are encouraging.
In electronics, the leading-edge capability we have
in military areas was considered to offer material
opportunities for further penetration of the civil aircraft
and adjacent commercial markets. The review also
encompassed our commitment to apprenticeships,
lifetime learning and bench-strength development to
ensure we continue to attract and retain the finest
engineering talent available in the marketplace.
Looking back, it has been a year of steady progress
and achievement. We now look to 2015 with confidence
based on the existing programmes in which we are
engaged and the depth of order backlog we have secured.
With some reliance on anticipated naval and aircraft
orders, there is, however, no room for complacency in
a world where competitive pressures are increasing,
customer demands for service and value unrelenting,
and government finances constrained. We will respond
to these challenges with energy, enthusiasm and vigour,
recognising that we cannot rely on past achievement
for future success. Picking up the pace, valuing the
customer, driving down costs and preserving quality
will be the watchwords of the business model and the
hallmarks of our performance.
Directors
I succeeded Sir Richard Olver as Chairman of the Board
on 1 February 2014 and Sir Richard stepped down from
the Board on that date.
On 1 February 2014, Linda Hudson retired as President
and Chief Executive Officer of BAE Systems, Inc. and
as an executive director of BAE Systems plc. Linda made
a material contribution to both the development of our
US operations and its important role within the Group.
On the same date, Jerry DeMuro was appointed as
President and Chief Executive Officer of BAE Systems,
Inc. and as an executive director of BAE Systems plc.
Paul Anderson, a non-executive director, retired from
the Board on 31 December 2014 after six years of
service. Throughout the two terms of his appointment,
Paul made a major contribution to the strategic thinking
of the Company in addition to chairing the Corporate
Responsibility Committee.
DIVIDEND (PENCE)
+2%
2014 20.5
2013
20.1
2012
19.5
2011
18.8
2010
17.5
On behalf of colleagues and shareholders, I thank both
Linda and Paul for all they have done for the Company
and wish them well for the future.
Ian Tyler has now taken over the role of chairman of the
Corporate Responsibility Committee.
During the course of the year, the Nominations Committee
commenced a long-term succession planning review and
agreed that our immediate priority was to search for a
replacement for Paul who would have a general
management background, international experience, be
capable of assuming responsibility for the Remuneration
Committee and improve the diversity of the Board. The
search is now in process.
Dividend
The Board has recommended a final dividend of 12.3p
per share making a total of 20.5p per share for the year,
an increase of 2% over 2013. At this level, the annual
dividend is covered 1.85 times by underlying earnings
(2013 2.1 times). Subject to shareholder approval at the
2015 Annual General Meeting, the dividend will be paid
on 1 June 2015 to holders of ordinary shares registered
on 17 April 2015.
Sir Roger Carr, Chairman
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
BAE Systems
Annual Report 2014
05