Next generation submarines and surface ships providing the Royal Navy with state-of-the-art
Contracts to support military aircraft and naval ships – multi-role land vehicles for the US
military – world-leading defence and commercial electronic systems and cyber defence.
All underpinning the future of these businesses – and the thousands of jobs and supply
chain companies they support – over many decades.
Geopolitical uncertainty, rising terrorism and heightened international tensions continue to
underline the importance of national security and defence – against this background, it has
never been more important to serve and protect those that serve and protect us.
I am pleased to say – since we last met –that the success of our business model, has been
rewarded by our share price increasing by over 30%, and enabled us to provide you with a
2% increase in dividend.
Whilst I know many of you here today will have been pleased to hear of the continued
success of your company – some of you will have genuine reservations about both what we
do and where we do it.
As always, there will be an opportunity to put questions to the Board a little later this morning
and I and my team will seek to respond clearly, honestly and courteously.
I would ask that in the same spirit you reciprocate for the benefit of all other shareholders
Whilst we may not always agree – I am certain that mutual respect and good manners will
always produce the most valuable exchanges.
For my part – during the course of the year – I have visited our businesses in the United
States – the Middle East – India – Australia and of course – the UK.
Wherever I go – our people are consistently enthusiastic, appreciative of their opportunities
and mindful of their responsibilities – to hone our competitive edge – deliver products and
services of the highest quality and develop innovative solutions to our customers’ toughest
Most of all – they are clear on our stringent ethical standards and overriding principles – to
trade scrupulously – account conservatively and act with integrity in a highly regulated
In each country I have also spent time with senior government leaders to reinforce the
strength of the partnerships we have which are at the heart of our business model.
All of our defence customers are – of course – approved by government and our products
exported under strict regulation.
Without exception I have found the relationships to be strong with a clear appreciation of our
considerable skills and capabilities – matched by our own recognition – that closer
cooperation in supporting industrialisation of their countries will be essential to our joint
success in the years ahead.
We have had considerable success in our export activities and we continue to receive
unstinting support from the UK and US Governments in our campaigns.
The Kingdom of Saudi Arabia remains an important market for the Group, where we work as
prime contractor to the UK government to fulfil its obligations under government to
government agreements on defence and security co-operation.
A judgment on the Judicial Review into the process followed by the UK government in
granting defence export licences to the Kingdom of Saudi Arabia is expected in the near
BAE Systems is not a party to the proceedings and – as you would expect – we cannot
comment on the potential outcome in advance of that judgment.
The future of our business of course rests on our ability to recruit, train, develop and retain
the best people and invest in next-generation technologies.
The strength of our order book enables us to plan and invest in our business, products and
people – whilst the cutting edge nature of the work that we do continues to offer an
unparalleled appeal to engineers, scientists and technologists of the highest calibre.
This year we have over 2,000 apprentices in the UK – more than ever before – receiving the
finest training available – no better example than the £16m investment we made in a new
state of the art training centre in Samlesbury – where I had the privilege to host a visit by His
Royal Highness The Prince of Wales earlier this year.
Orderly succession planning at all levels of the business is equally important – including
planning for the retirement of our CEO, Ian King.
As we announced earlier this year, Ian will retire from the Company on 30 June, after a long
and distinguished career of some 40 years in the defence industry and more than 8 years as
Charles Woodburn, Chief Operating Officer, will succeed Ian as CEO from 1st July, having
been recruited into the Company last year in preparation for such a transition.
Ian will retire leaving a legacy of disciplined operational and financial performance – ethical
behaviour – a burgeoning order book – a track record of delivering shareholder value and a
strong leadership team – including fellow executive directors Peter Lynas and Jerry DeMuro
– without whom this would not have been possible.
Charles brought with him impeccable engineering credentials, broad international experience
in the oil and gas industry and fresh perspectives that build on our existing strengths.
Whilst Charles will have an enviable inheritance – there will be much to do – delivering on
our existing commitments and new projects – increasing our international competitiveness – developing our technology – growing our talent pool and deepening our customer relationships.
I can assure you – however – that evolution not revolution will be the order of the day.
In a few minutes I will hand over to Ian King who will bring you up to date on the company’s
Then I’ll deal with the formal resolutions detailed in the Notice of Meeting. Finally, I’ll take
questions you may have on the business of the meeting.
questions you may have on the business of the meeting.
I will aim to finish the meeting by no later than one o’clock, when lunch will be available.
I’ll now introduce the members of the Board.
Our Chief Executive, Ian King, is sitting immediately to my right. Next to him is Peter Lynas,
Group Finance Director. Next to Peter is Nick Rose, who is our Senior Independent Director
and also the Chairman of the Audit Committee. Next to him are three non-executive
directors, Harriet Green, Ian Tyler, who is chairman of the Board’s Corporate Responsibility
Committee, and Elizabeth Corley.
Turning to my left, we have the Company Secretary, David Parkes. Then Jerry DeMuro, the
President and CEO of our US business and Charles Woodburn our COO and CEO
designate. Next to Charles is Paula Rosput Reynolds, a non-executive director who chairs
the Remuneration Committee. And finally, Chris Grigg who is also a non-executive director.
I will now hand over to Ian King to give you a more detailed review of the Company’s
performance in 2016.