Annual Report 019 2 - BAE Systems

1 Annual Report 2019. BAE Systems plc Who we are 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 87,800 people1. in more than 40 countries. We help our customers to stay a step ahead when protecting people and national security, critical infrastructure and vital information. We also work closely with local partners to support economic development through the transfer of knowledge, skills and technology. Further information can be found online by visiting Shareholder 232 information 1.

2 Including share of equity accounted investments. Strategic Report Governance Who we are Directors' Report Strategic Report Our business at a glance 02 Chairman's governance letter 82. Our key products and services 04 Board governance 84. Group financial highlights 06 Board of directors 86. Board information 88. Governance disclosures 89. Audit Committee Report 91. Operational Governance 08 key points Operational key points 08 Board Chairman's letter 10. 84 governance Chief Executive's review 14. Corporate Responsibility Committee Report 95.

3 Group strategic framework 18. Nominations Committee Report 99. Our markets 20. Remuneration Committee Report 102. How our business works 24. Annual remuneration Report at a glance 107. Our stakeholders 26. Financial statements Annual remuneration Report 109. Companies Act Section 172 28. Directors' remuneration policy 131. Sustainability 34. Statutory and other information 146. Group financial review 44. Guidance for 2020 52. Independent Auditor's Report 151. Segmental review 53. Electronic Systems 54 Financial statements Cyber & Intelligence 58 Group accounts Platforms & Services (US) 62 Preparation 158.

4 Air 66 Consolidated income statement 160. Maritime 70 Consolidated statement Segmental looking forward 74 of comprehensive income 161. How we manage risk 76 Consolidated statement Our principal risks 78 of changes in equity 162. Consolidated balance sheet 163. Consolidated cash flow statement 164. Notes to the Group accounts 165. Company accounts Company statement of comprehensive income 226. Company statement of changes in equity 226. Segmental Company balance sheet 227. 53 review Notes to the Company accounts 228.

5 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.

6 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.

7 BAE Systems plc Annual Report 2019 01. Our business at a glance BAE Systems has strong, established positions in the air, maritime, land and cyber domains. Air Maritime Land Manufacture, development, upgrade and Design and manufacture of submarines Design, manufacture, upgrade and support in-service support of Typhoon combat aircraft Design and manufacture of complex warships of tracked and amphibious combat vehicles Workshare partner for the design and Provision of naval ship repair and Manufacture of ammunition and precision manufacture of major sub-assemblies modernisation services in the US munitions for US, UK and other armed forces and Systems .

8 And provision of support Design and manufacture of electric and hybrid Provision of in-service support to surface for F-35 Lightning II combat aircraft electric drive Systems ships and facilities management in the UK. Design, manufacture and support of Design and manufacture of artillery Systems Design, manufacture and support of electronics equipment for military aircraft and missile launchers for US, UK and other naval gun Systems , torpedoes, radars, In-service support of Tornado combat aircraft and naval command and combat Systems armed forces Manufacture.

9 Upgrade and in-service support Design and delivery of training Systems and of Hawk trainer aircraft services for maritime platforms and equipment Development of next-generation unmanned air Systems and defence information Systems Design, manufacture and support of avionics equipment for commercial aircraft Design and manufacture of missiles and missile Systems through a interest in MBDA. H. G E A D A. A. F. B. E D. D B. C C B. C. A Typhoon 21% A Submarines 30% A Combat vehicles 39%. B F-35 Lightning II 12% B Complex warships 17% B Munitions 10%.

10 C Defence electronics 21% C US naval ship repair 17% C Commercial 6%. D Tornado 12% D UK naval support 14% D Weapon Systems /other 45%. E Commercial avionics 10% E Other 22%. F Weapon Systems 14%. G Hawk 3%. H Other 7%. Sales1 by domain Sales1 by domain Sales1 by domain 52% 25% 18%. 02 BAE Systems plc Annual Report 2019. 2019 sales1 2019 revenue 20,109m 18,305m Sales1 by destination Sales1 by activity BAE Systems has leading positions in its BAE Systems has a diverse portfolio, broadly principal markets the US, UK, the Kingdom balanced between an enduring services and Strategic Report of Saudi Arabia and Australia as well as support business, long-term platform and established positions in a number of other product programmes, electronic Systems , international markets.