Annual Report PDF - Black Sun Plc

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Directors’ Report: Business ReviewKey home markets in detail continuedSaudi ArabiaMarket contextRegional tensions continueto ensure that defence andsecurity remain a high priorityfor the Kingdom of Saudi Arabia(KSA). In 2009, defenceexpenditure was 10.9% of GDP.Our positionBAE Systems acts as the prime contractor forthe UK/KSA government-to-government defenceagreement and also holds certain direct contractswith the Saudi government. Progress is ongoingto modernise the Saudi armed forces in line withthe 2005 UK/KSA Understanding Document, andthe Group continues to support the operationalcapability of the Royal Saudi Air Force (RSAF) andRoyal Saudi Naval Forces (RSNF) through the SaudiBritish Defence Co-operation Programme (SBDCP).Investing in Saudi industryBAE Systems continues to develop its presencein Saudi Arabia and remains committed todeveloping a greater indigenous capabilityin-Kingdom. The business is pursuing a policyof transferring technology and work to SaudiEconomic Offset companies in areas such as theTornado Programmed Depot Maintenance andUpgrade facility.26 www.baesystems.com
OutlookRegional tensions combined with enduring high oil prices resultin robust budgets and increasing opportunities. The linking ofdefence and security procurement to indigenous industrialdevelopment and in-Kingdom job creation for Saudi nationalswill continue as a strategic objective for the KSA government.BAE Systems continues to invest in Saudi industry to helpdeliver on this requirement.Opportunities in actionThe RSAF is now the sixth air force in the worldto be flying Typhoon aircraft.In 2007, a contract to supply 72 Typhoon aircraftto KSA was agreed and 18 were delivered by theend of 2010 in line with the programme.In 2009, to support continued aircraft availability,the governments of the Kingdom of Saudi Arabiaand the UK reached agreement on detailedarrangements under the Salam support solutionto provide support for operations by the RSAFTyphoon fleet for a three-year period.Building on BAE Systems’ knowledge andexperience gained working alongside the RoyalAir Force in supporting the UK’s Typhoon fleet,the Salam support solution provides a fullavailability service contract – the first of its kindfor Typhoon. The contract includes training in theUK for RSAF Typhoon pilots and multi-skilledaircraft technicians. In support of the contract,BAE Systems continues to invest in local Saudicompanies, develop an industrial technologytransfer plan and train Saudi nationals to assistin the provision of Readiness & Sustainment.OpportunitiesBAE Systems is seeking to extend its activities to support allSaudi military and paramilitary forces.In the air domain, availability contracting and additional supporton the Salam Typhoon contract represent opportunities forthe business.In the land and maritime domains, there are a number ofnear-term direct programme prospects for vehicle artillerysystems and maritime equipment.The security market continues to mature and near-termopportunities are expected in Intelligence, Surveillanceand Reconnaissance.Financial statements Governance Segmental performanceGroup performanceStrategyOverviewBAE Systems Annual Report 2010 27
Page 1 and 2: Annual Report 2010Total Performance
Page 3 and 4: BAE Systems at a glanceBAE Systems
Page 5 and 6: Contents1. Overview2010 performance
Page 7 and 8: p16p36p18p45For more information on
Page 9 and 10: …across multiplehome markets…BA
Page 11 and 12: made in embedding these principles
Page 13 and 14: esponding effectively to customers
Page 15 and 16: total PerformanceTotal Performance
Page 17 and 18: THE EXECUTIVE COMMITTEEThe Executiv
Page 19 and 20: The home markets in which the Group
Page 21 and 22: UNDERLYING EBITA 1,3 (£M)2,5002,00
Page 23 and 24: Programme ExecutionThe Group’s pe
Page 25 and 26: SAUDI ARABIAp26No.1in-country defen
Page 27 and 28: OutlookAfter exceptional growth in
Page 29: OutlookIn the air domain, the SDSR
Page 33 and 34: OutlookThe Australian government ha
Page 35 and 36: OutlookThe Indian government has em
Page 37 and 38: Subcontractors and other suppliersS
Page 39 and 40: Research and Development (R&D)The G
Page 41 and 42: Income statement - continuing opera
Page 43 and 44: Cash flowReconciliation of cash inf
Page 45 and 46: Balance sheetsummaRy balance sheet2
Page 47 and 48: The Group’s interest rate managem
Page 49 and 50: Directors’ Report: Business Revie
Page 51 and 52: EMPLOYEE ENQUIRIESTO ETHICS HELPLIN
Page 53 and 54: assessed by our Business Developmen
Page 55 and 56: Diversity and inclusionGoalWe are w
Page 57 and 58: CommunityGoalOur goal is to support
Page 59 and 60: the Business Development Adviser Po
Page 61 and 62: As with any system of internal cont
Page 63 and 64: GovErnmEnT cuSTomErSThe Group’s l
Page 65 and 66: lawS anD rEGulaTionSThe Group is su
Page 67 and 68: conSorTia anD JoinT vEnTurESThe Gro
Page 69 and 70: Land & Armaments Programmes & Suppo
Page 71 and 72: The business continues to invest in
Page 73 and 74: BAE Systems is on schedule to deliv
Page 75 and 76: not matched against the UK governme
Page 77 and 78: All 200 Tactica land vehicles have
Page 79 and 80: Directors’ ReportGovernance5. Gov
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7. Michael Hartnall9. Roberto Quart
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Board, regardless of gender. Compan
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Board Performance - 2010 oBjectives
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oles and resPonsiBilitiesThe role o
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from the Nominations Committee if t
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Risk management and internal contro
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Audit Committee reportMembersMichae
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Policy on non-audit services Provid
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Risk managementThe Committee review
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Non-executive succession planningAs
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GovernanceThe members of the Commit
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Non-Executive Directors’ FeesComm
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2010 remuneration reviewThe 2010 re
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Whilst the Plan is primarily aimed
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stRuCtuRe of individual exeCutive d
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Performance in 2010The structure of
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PeRfoRmanCe Condition - PsP tsRThe
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estrict - scheme benefits to the va
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Non-executive directors’ appointm
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table b: shaRe oPtions and long-teR
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table b: shaRe oPtions and long-teR
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table d: Post-RetiRement benefitsAc
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Rights and obligations of the Speci
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Statement of directors’ responsib
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Independent auditor’s report to t
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Consolidated statement of comprehen
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Consolidated cash flow statementfor
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1. Accounting policies continuedpri
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1. Accounting policies continuedAn
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1. Accounting policies continuedRev
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3. Segmental analysisThe Group repo
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3. Segmental analysis continuedAnal
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4. Operating costs continuedFees pa
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7. Employees and directorsThe weekl
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8. Tax continuedTax recognised in o
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8. Tax continuedFuture changes in t
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11. Intangible assetsGoodwill£mPro
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11. Intangible assets continuedThe
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13. Investment property£mCostAt 1
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14. Equity accounted investments co
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16. Trade and other receivables con
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19. Loans and overdrafts continuedT
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21. Retirement benefit obligations
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24. Share capital and other reserve
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25. Share-based paymentsDetails of
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25. Share-based payments continuedC
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27. Net (debt)/cash (as defined by
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29. Acquisition of subsidiaries con
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30. Financial risk management conti
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30. Financial risk management conti
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Company balance sheetas at 31 Decem
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1. Accounting policies continuedIn
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7. CreditorsDue within one yearAmou
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12. ReservesSharepremiumaccount£mO
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Movement in net (debt)/cash (as def
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ShareGiftThe Orr Mackintosh Foundat
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