Released: 21/02/2008
RNS Number:4389O
BAE SYSTEMS PLC
21 February 2008
BAE Systems plc
Preliminary Announcement 2007
Results in brief
Results from continuing operations 2007 2006
Sales1 £15,710m £13,765m
EBITA2 £1,477m £1,207m
Operating profit £1,177m £1,054m
Underlying earnings3 per share 31.0p 23.8p
Basic earnings per share4 26.0p 19.9p
Order book5 £38.6bn £31.7bn
Other results including discontinued operations
Dividend per share 12.8p 11.3p
Cash inflow from operating activities £2,162m £778m
Net cash as defined by the Group £700m £435m
Highlights
- Good financial performance
- Continued growth from US businesses
- Leadership position established in global land systems sector
- Underlying earnings3 per share up 30% to 31.0p
- Dividend increased 13.3% to 12.8p per share for the year
Outlook
We have excellent forward visibility and a further year of good growth is
anticipated in 2008, including a full year contribution from the former Armor
Holdings business. In addition, part-year contributions are expected following
the anticipated completion in 2008 of the proposed acquisitions of MTC
Technologies and Tenix Defence.
1 including share of equity accounted investments
2 earnings before amortisation and impairment of intangible assets, finance
costs and taxation expense
3 earnings excluding amortisation and impairment of intangible assets, non-cash
finance movements on pensions and financial derivatives, and uplift on acquired
inventories (see note 5)
4 basic earnings per share in accordance with International Accounting Standard
33
5 including share of equity accounted investments' order books and after the
elimination of intra-group orders of £1.4bn (2006 £1.0bn)
"BAE Systems once again performed well in 2007. Each of the four business
sectors delivered good profitability underpinned by good programme schedule and
cost performance across the Group."
BAE Systems once again performed well in 2007, demonstrating the significant
fundamental strengths and quality of the business. EBITA2 increased by 22% to
£1,477m on sales1 of £15,710m, up 14% compared with 2006. Underlying earnings3
per share increased 30% to 31.0p for the year. The Group had net cash of £700m
at year end, having invested $4.5bn (£2.2bn) excluding fees in the acquisition
of Armor Holdings, Inc. during the year.
Each of the four business sectors delivered good profitability with return on
sales exceeding 8.5% in all sectors. This profitability stems from good
programme cost and schedule performance across the Group.
Underlying this performance are principles of ethical conduct, good governance,
our values and policies and processes that guide the Group's business and the
behaviour of its people, with a clear system of delegated authority within a
'One Company' approach. BAE Systems is determined that the business policies and
processes mandated across the organisation align with global best practice.
BAE Systems is a global company with a strategy currently focused around six
home markets. Together these home markets were responsible for generating 85% of
Group sales in 2007 (2006 84%).
The Group is benefiting from a well executed strategy with good profitable
growth generated from substantial business operations in its home markets and
especially the United States. A notable success is the very strong growth in the
land systems business in recent years. Following the earlier acquisitions of
Alvis in 2004 and United Defense in 2005, the acquisition of Armor Holdings in
2007 has established BAE Systems as having a clear leadership position in the
land sector.
Our multi-home market business focus continues to generate opportunities for
growth, especially in the Kingdom of Saudi Arabia where the Group has a growing
home market position.
United States
BAE Systems is a valued, trusted and high-performing part of the US defence
industrial base and is one of the top ten largest defence companies in the US.
In the US, the Group is a market leader in advanced information technology,
intelligence analysis, geospatial exploitation software, and the development of
knowledge-based systems. In addition, BAE Systems continues to see strong demand
for sophisticated electronic warfare and protection systems, and in its support
solutions business the ship repair facilities have remained fully utilised.
In the land systems sector, further contracts to reset Bradley combat vehicles
and other US tracked vehicles to 'as new' condition were awarded, providing
extended visibility of throughput at the current high level of activity. In
addition to the high volume of reset activity, strong demand for vehicle
upgrades with new digital systems continues, in part driven by the move in the
US to modular forces requiring the fielding of a common standard of more capable
vehicles.
To complement BAE Systems' tracked vehicle position in the US, the Group has
been executing a wheeled vehicle strategy to meet a valuable, near-term, urgent
operational requirement for Mine Resistant Ambush Protected (MRAP) vehicles.
This has resulted in the establishment of a new assembly facility for the RG33
mine protected vehicle in York, Pennsylvania, alongside the Bradley reset
facility. Following the substantial contract award for RG33 MRAP vehicles in
2007, manufacturing volume has increased rapidly in the last months of 2007 with
the completion of 23 vehicles in October rising to 102 in December.
The acquisition of Armor Holdings, Inc. delivered further progress as regards
the wheeled vehicle strategy. The business is a key player in the tactical
wheeled vehicle market and in the increasingly vital areas of armour protection
and survivability. With strong demand for its products, notably for the Family
of Medium Tactical Vehicles (FMTV) and the Caiman mine protected vehicle
derivative, the Armor Holdings acquisition is well on track to deliver our
required return on investment.
BAE Systems has worked across its global businesses rapidly to design, produce
and deliver vehicles to protect the armed forces. The Group's role on the MRAP
programme involves collaboration across sites and businesses globally including
the integration of the former Armor Holdings' capabilities. The programme brings
together more than 35 years of experience in mine protected wheeled vehicle
expertise and highly survivable combat platforms.
In December 2007, the Group announced the proposed acquisition of MTC
Technologies, Inc. MTC complements BAE Systems' existing readiness and
sustainment capabilities in the US.
United Kingdom
The Group's UK-based businesses are performing well with good programme schedule
and cost performance. This performance improvement included a recovery to
profitable trading for the land systems business in the UK.
BAE Systems continues to make progress in developing integrated through-life
support business in partnering arrangements with the UK MoD and the UK's armed
forces. Benefits are now apparent as some of the earlier programme relationships
mature. For example, the National Audit Office has concluded that the partnered
support arrangements for the Tornado combat aircraft have contributed to a 51%
reduction in cost per flying hour and cost savings over the past five years of
£1.3bn. BAE Systems is similarly involved in support for a number of other UK
air platforms and is addressing through-life support for the UK's armoured
fighting vehicle fleet. The Group identifies further opportunities to develop
such arrangements in air, land and naval support.
The UK government's commitment to the new Carrier programme in July enabled BAE
Systems to enter into a Framework Agreement with VT Group for the establishment
of a joint venture which would, subject to completion, bring together BAE
Systems' and VT Group's respective surface warship building and surface warship
through-life support operations.
Other home markets
Saudi Arabia continues to be an important home market for BAE Systems, building
on a performance track record established over many decades. The large programme
of support for Tornado is being maintained and the modernisation of existing
assets continues. In September 2007, under the new defence co-operation
programme known as 'Project Salam', contracts were signed between the UK
government and the Kingdom of Saudi Arabia for the supply of 72 Typhoon
aircraft.
We continue to invest within Saudi Arabia in both the expansion of the Kingdom's
industrial capability and new secure residential accommodation. The first of two
new compounds for our employees is now being occupied in Riyadh.
In Sweden, production of the CV90 infantry fighting vehicle is underway for the
Dutch Army, continuing the good export performance of this business.
In Australia, the Group continues to build on its position as a through-life
capability partner to the Australian Defence Force, including a follow-on
multi-year support contract for the Hawk aircraft.
The selection by Australia of the FMTV as the basis for the Land 121 vehicle
programme will generate substantial industrial involvement in Australia. BAE
Systems is also a major sub-contractor on the Australian Wedgetail Airborne
Early Warning and Control programme, where we are jointly engaged with Boeing
and the customer to re-baseline this programme.
In January 2008, the Group announced the proposed acquisition of Tenix Defence,
a leading Australian defence contractor. The acquisition will more than double
BAE Systems' presence in Australia, making it the largest in-country supplier to
the Australian Defence Force. The organisations are an excellent fit and have
largely complementary programmes and capabilities. This acquisition is a
significant step in the implementation of the Group's strategy to develop as the
premier global defence and aerospace company by growing the business in
Australia, one of the Group's six home markets.
In South Africa, the land systems OMC business is achieving growth through
exports with its RG31 and RG32 mine protected vehicles.
Summarised income statement from continuing operations
2007 2006
£m £m
Sales1 15,710 13,765
EBITA2 1,477 1,207
Amortisation (149) (105)
Impairment (148) (34)
Net finance costs1 93 (174)
Taxation expense1 (373) (248)
Profit for the year 900 646
Basic earnings per share 26.0p 19.9p
Underlying earnings3 per share 31.0p 23.8p
Dividend per share 12.8p 11.3p
Exchange rates
2007 2006
£/e - average 1.461 1.467
£/$ - average 2.002 1.844
£/e - year end 1.361 1.484
£/$ - year end 1.988 1.957
Segmental analysis
Sales1 EBITA2
2007 Restated4 2007 Restated4
£m 2006 £m 2006
£m £m
Electronics, Intelligence & Support 3,916 4,007 429 429
Land & Armaments 3,538 2,115 312 168
Programmes & Support 5,327 4,615 456 342
International Businesses 3,359 3,428 435 415
HQ & Other Businesses 243 295 (155) (147)
Intra-group (673) (695) - -
15,710 13,765 1,477 1,207
Sales1 increased 14% from £13,765m to £15,710m. Sales in the full year from the
Armor Holdings business, acquired in July 2007, were £725m. Like for like
growth, after adjusting for the impact of exchange translations and acquisitions
and disposals, was also 14%. US-led businesses were responsible for 47% of sales
and sales generated from home markets represented 85% of the Group total.
EBITA2 increased 22% to £1,477m (2006 £1,207m). The growth includes the benefit
of five months trading from the Armor Holdings business, acquired in July 2007,
which contributed EBITA2 of £77m in the year. Translation of US$ generated
results decreased EBITA2 by £47m when compared with 2006. US-led businesses
delivered 50% of the Group's EBITA2.
Return on sales (EBITA2 adjusted for uplift on acquired inventories expressed as
a percentage of sales) for the Group increased from 8.8% to 9.5%.
Amortisation and impairment
The impairment charge of £148m includes £145m in respect of the goodwill
associated with the Group's Insyte business.
Order book1 increased to £38.6bn, primarily on the award of the Saudi Typhoon
contract, MRAP orders and the acquisition of Armor Holdings.
Net finance costs1
Financial income, including the Group's share of the finance costs of equity
accounted investments, was £93m (2006 £174m financial expense). The underlying
net interest charge of £38m (2006 £157m) was offset by a net credit of £131m
(2006 increased by a net charge of £17m) arising from pension accounting,
marked-to-market revaluation of financial instruments and foreign currency
movements. Finance costs were reduced in 2007, primarily as a result of the
benefit of the October 2006 Airbus net disposal proceeds (£1.2bn).
Underlying interest cover based on EBITA2 increased from 7.7 times to 39 times.
Taxation
The Group's effective tax rate for continuing operations for the year was
unchanged from 2006 at 26%.
Earnings per share
Underlying earnings3 per share from continuing operations for 2007 increased by
30% to 31.0p.
Basic earnings per share, in accordance with IAS 33 Earnings per Share, from
continuing operations, increased by 31% to 26.0p (2006 19.9p).
Dividend
The Board is recommending a final dividend of 7.8p per share (2006 6.9p),
bringing the total dividend for the year to 12.8p per share (2006 11.3p), an
increase of 13.3%.
The proposed dividend is covered 2.4 times by earnings3 from continuing
operations (2006 2.1 times), which is consistent with the Group's policy of
growing the dividend whilst maintaining a long-term sustainable earnings cover
of approximately two times.
Cash flows
Cash inflow from operating activities was £2,162m (2006 £778m), which is after
£76m (2006 £441m) special contributions to the UK pension schemes.
There was an outflow from net capital expenditure and financial investment of
£262m (2006 £141m).
Dividends from equity accounted investments, primarily MBDA, Gripen
International, Eurofighter and Saab, amounted to £78m.
The resulting operating business cash inflow of £1,978m (2006 £782m) gave rise
to free cash inflow, after interest, preference dividends and taxation, of
£1,801m (2006 £490m).
On 31 July 2007, the Group acquired Armor Holdings, Inc. for $4.5bn (£2.2bn)
excluding fees. Net cash outflow from all acquisitions and disposals was
£2,112m.
In the period, 33 million shares were purchased under the buyback programme
announced in October 2006, generating a cash outflow of £152m. In May, £750m,
before costs, was raised following the placing of new ordinary shares to part
finance the proposed acquisition of Armor Holdings, Inc.
Conversion of the outstanding 260 million 7.75p (net) cumulative redeemable
preference shares into ordinary shares removed the debt element of these
preference shares, giving rise to an increase in reported cash of £245m.
The Group's net cash at 31 December 2007 was £700m, a net inflow of £265m from
the net cash position of £435m at the start of the year.
Summary and outlook
BAE Systems has a successful track record of identifying and addressing market
opportunities through organic investments and acquisitions. Following the
acquisition of Armor Holdings the Group has maintained a strong balance sheet
and is performing well. The Group continues to look for further value enhancing
opportunities across its home markets and remains focused on delivering good
business performance and generating value, to the benefit of customers and
shareholders.
The Group is continuing to deliver its strategy with strong financial and
programme performance. It is delivering value for money and capability to its
customers and is well positioned for the future with an established footprint in
six home markets. BAE Systems is a quality business based on a strong, well
balanced portfolio and is well-positioned to continue to deliver shareholder
value in line with our long-term plans.
We have excellent forward visibility and a further year of good growth is
anticipated in 2008, including a full year contribution from the former Armor
Holdings business. In addition, part-year contributions are expected following
the anticipated completion in 2008 of the proposed acquisitions of MTC
Technologies and Tenix Defence.
Reconciliation of cash inflow from operating activities to net cash
2007 2006
£m £m
Cash inflow from operating activities 2,162 778
Capital expenditure (net) and financial investment (262) (141)
Dividends received from equity accounted investments 78 145
Operating business cash flow 1,978 782
Interest and preference dividends (65) (207)
Taxation (112) (85)
Free cash flow 1,801 490
Acquisitions and disposals (1,574) 1,330
Debt acquired on acquisition of subsidiary (538) -
Issue/(purchase) of equity shares 603 (71)
Equity dividends paid (396) (346)
Dividends paid to minority interests (1) -
Preference share conversion 245 6
Other non-cash movements 57 (11)
Foreign exchange 36 323
Movement in cash on customers' account5 32 (9)
265 1,712
Opening net cash/(debt) as defined by the Group 435 (1,277)
Closing net cash as defined by the Group 700 435
Analysed as:
Term deposits - non-current - 4
Term deposits - current 164 503
Cash and cash equivalents 3,062 3,100
Loans - non-current (2,197) (2,776)
Loans - current (283) (308)
Overdrafts - current (16) (26)
Loans and overdrafts - current (299) (334)
Cash on customers' account5 (included within payables) (30) (62)
Closing net cash as defined by the Group 700 435
Operating business cash flow
Restated4
2007 2006
£m £m
Electronics, Intelligence & Support 302 273
Land & Armaments 10 137
Programmes & Support 807 449
International Businesses 678 171
HQ & Other Businesses 181 (225)
Discontinued businesses - (23)
1,978 782
1 including share of equity accounted investments
2 earnings before amortisation and impairment of intangible assets, finance
costs and taxation expense
3 earnings excluding amortisation and impairment of intangible assets, non-cash
finance movements on pensions and financial derivatives, and uplift on acquired
inventories (see note 5)
4 restated following changes to the Group's organisational structure
5 cash on customers' account is the unexpended cash received from customers in
advance of delivery which is subject to advance payment guarantees unrelated to
Group performance
Electronics, Intelligence & Support
The Electronics, Intelligence & Support business group, with 30,600 employees1
and its headquarters in the US, is a provider of defence and aerospace systems,
sub-systems and services. It comprises two operating groups: Electronics &
Integrated Solutions and Customer Solutions.
Financial highlights
- Like for like organic sales1 growth of 7% over 2006
- Return on sales improved to 11%
2007 2006 2005
Sales1 £3,916m £4,007m £3,697m
EBITA2 £429m £429m £324m
Return on sales 11.0% 10.7% 8.8%
Cash inflow3 £302m £273m £323m
Order intake1 £4,178m £4,311m £3,659m
Order book1 £3.5bn £3.4bn £3.5bn
Key points
- Continued leadership in the provision of electronic warfare systems
- New markets developing for the HybriDrive(R) propulsion systems
- Stable demand for ship repair services
Looking forward
2008 should see continued organic growth with an anticipated part-year
contribution from the proposed acquisition of MTC Technologies.
Profitable growth is anticipated in the electronic warfare and other defence and
aerospace electronics activities, based on the business' strong legacy
technology and services positions, combined with its continued investments in
key capabilities. Ship repair activity is expected to remain stable. Growth in
the IT and services businesses is dependent on the near-term priorities of the
US Department of Defense.
Electronics, Intelligence & Support
During 2007, Electronics, Intelligence & Support achieved EBITA2 of £429m (2006
£429m) on sales1 of £3,916m (2006 £4,007m) and generated operating cash inflow3
of £302m (2006 £273m).
In 2006, the return on sales benefited from a £61m pension-related accounting
gain.
In 2007, US$ translations decreased sales1 and EBITA2 when compared with 2006 by
£296m and £35m respectively.
In August, BAE Systems completed the sale of its Inertial Products business for
$140m (£70m). In December, the Group agreed to sell its Surveillance and Attack
business in Lansdale, Pensylvannia for a cash consideration of $240m (£121m).
Also in December, the Group announced the proposed $448m (£225m) acquisition of
MTC Technologies, Inc., a company providing technical and professional services,
and equipment integration and modernisation for the US military and intelligence
agencies.
Electronics & Integrated Solutions (E&IS)
E&IS designs, develops and produces electronic systems and sub-systems for a
wide range of military and commercial applications. The operating group is
focused on four primary capabilities: electronic warfare, commercial and
military avionics, flight and engine controls, and tactical and national network
systems.
During 2007, E&IS delivered its 100th F-22A electronic warfare (EW) system, the
first F-35 Lightning II (Joint Strike Fighter) EW system and its 1,000th Common
Missile Warning System to protect US Army helicopters and aircraft from
heat-seeking missiles. E&IS continued its role with the US Department of
Homeland Security to develop a commercial version of BAE Systems Directed
Infrared Countermeasures (DIRCM) system, JETEYETM, which seeks to defeat the
threat of shoulder-fired anti-aircraft missiles.
The Thermal Weapon Sight (TWS) programme achieved a production rate of more than
1,500 units per month, surpassing 18,000 total deliveries by the year end. The
microbolometer technology that underpins TWS was also used to secure important
night vision goggle and remote weapon stations contracts.
E&IS received a contract for the production of 50 fire fielding units of the
Terminal High Altitude Area Defense (THAAD) missile, supporting the transition
to production of this ballistic missile defence system.
Building on its strong legacy in C4ISR4 systems, E&IS has begun initial
deployment of its First InterCommTM system, which enables emergency services
first responders to communicate more effectively using their existing radios and
frequencies. The business received an order to build more than 1,000 helmet
assemblies for Typhoon and introduced new helmet-mounted, heads-up display
technology.
BAE Systems' commercial hybrid propulsion business continues to grow and reveal
new opportunities. HybriDrive(R) propulsion technology is in daily service on
more than 1,100 transit buses in the United States and Canada, and ten
prototypes are scheduled to enter the London bus fleet in 2008. Orders were
received for an additional 1,500 systems in 2007 from New York City, Toronto,
Ottawa and Houston.
As part of its initiative to integrate commercial and defence capabilities, E&IS
demonstrated the first hybrid electric drive system for ground combat vehicles
as part of the US Army's Future Combat Systems (FCS) programme and has developed
and demonstrated a common modular power system to meet the increasing electric
power demand on board military vehicles.
E&IS continues to focus on through-life product and logistics support for the US
military through its Readiness & Sustainment efforts. An on-site presence at
Warner Robins Air Force Base and Tobyhanna Army Depot provides a first-hand
perspective to forecast and develop upgrades.
Customer Solutions
Customer Solutions comprises three lines of business: BAE Systems Information
Technology (IT); Technology Solutions and Services (TSS); and BAE Systems Ship
Repair.
Customer Solutions integrates communications systems, builds and maintains
precision tracking radars, and is one of the largest service providers to the US
Navy. The business is also a leader in US air and missile defence systems.
BAE Systems IT capabilities include enterprise-wide managed IT operations,
mission-critical application development and lifecycle information assurance
solutions and analytical services. TSS provides services and solutions, system
and sub-system integration, equipment sustainment, and operations and
maintenance. BAE Systems Ship Repair is the leading non-nuclear ship repair
company in the US providing conversion and modernisation services principally in
the home ports of the US Navy.
BAE Systems IT operates within the large US government information technology
market and continues to deliver mission-enabling support to its customers. BAE
Systems ranked sixth in Computerworld's 'Best Places to Work in IT' for 2007.
Contract successes include an award as a prime contractor for the General
Services Administration (GSA) Alliant government-wide acquisition contract, a
ten-year, $50bn (£25bn) multiple award/indefinite-delivery indefinite-quantity
(IDIQ) programme designed to provide full IT lifecycle support services in
support of the US defence, intelligence and civilian government markets. The
business was also awarded a competitive $120m (£60m), five-year contract to
develop applications for the US Department of Labor. A variety of contracts were
secured by winning re-competes and new business to provide key services such as
network implementation and operation, and lifecycle software development
engineering to the US government.
TSS won more than 98% of its re-competes, including technical support to the US
Missile Defense Agency and Federal agencies, US Air Force range radar depot and
engineering support work, and US Navy communications station operations and
maintenance in Hawaii. TSS expanded into adjacent markets by supporting the US
Army with critical personnel for the global war on terror and by obtaining the
integrator role for the new US Air Force Battle Control System.
BAE Systems Ship Repair secured a five-year, multi-ship multi-option contract
from the US Navy to maintain and repair all Arleigh Burke-class destroyers
homeported or visiting San Diego, with a total potential value in excess of
$150m (£75m). Ship Repair also secured a three-year contract from the US Navy
for work on three newly commissioned San Antonio-class amphibious transport dock
ships and a contract from the US Navy for modernisation of the Ticonderoga-class
guided missile cruiser USS Bunker Hill.
1 including share of equity accounted investments
2 earnings before amortisation and impairment of intangible assets, finance
costs and taxation expense
3 net cash inflow from operating activities after capital expenditure (net) and
financial investment, and dividends from equity accounted investments
4 Command, Control, Communications, Computing, Intelligence, Surveillance and
Reconnaissance
Land & Armaments
The Land & Armaments business group, with 20,700 employees1 and its headquarters
in the US, is a leader in the design, development, production, through-life
support and upgrade of armoured combat vehicles, tactical wheeled vehicles,
naval guns, missile launchers, artillery systems and intelligent munitions.
Financial highlights
- Like for like organic sales growth of 41% over 2006
- Post-acquisition sales of $1.5bn from Armor Holdings
- Success in wheeled vehicle market
- Order book growth on core products and urgent operational requirements
2007 2006 2005
Sales1 £3,538m £2,115m £1,270m
EBITA2 £312m £168m £42m
Return on sales 8.8% 7.9% 3.3%
Cash inflow3 £10m £137m £168m
Order intake1 £4,535m £2,964m £1,541m
Order book1 £7.3bn £4.9bn £4.4bn
Key points
- High volume of vehicle reset and upgrade activity
- UK business returned to profitability
- Wheeled armoured vehicle successes
- Good progress in next-generation combat vehicle programmes
Looking forward
Further organic growth is anticipated in 2008 together with a full year's
contribution from the former Armor Holdings business.
In the near term, US Land & Armaments operations are expected to continue to
benefit from operational requirements in Iraq and Afghanistan and the Group's
investment made in the wheeled vehicle market. In the longer term, the outlook
will be dependent on the land sector continuing to be a priority area of spend
for the US and the UK.
UK operations will continue their emphasis on performance improvements, seeking
to secure an integrator role on the Future Rapid Effect System (FRES) programme
and on reaching resolution on a mutually beneficial, sustainable munitions
contract with the UK MoD.
The businesses in Sweden and South Africa aim to deliver growth through both new
domestic government business and building on their track record of securing
export orders.
Land & Armaments
During 2007, Land & Armaments achieved EBITA2 of £312m (2006 £168m) on sales1 of
£3,538m (2006 £2,115m) and generated operating cash inflow3 of £10m (2006
£137m). The 2007 results showed strong organic growth on core products in
addition to success in winning new business in the mine-protected vehicle
market. The results include five months of operations from the former Armor
Holdings, Inc. business.
At the end of July, BAE Systems completed the $4.5bn acquisition of Armor
Holdings, Inc. This acquisition has enhanced the Land & Armaments global land
systems business, most notably in the increasingly important tactical wheeled
vehicle sector, together with technology in the vital areas of armour and
survivability. Sales and EBITA2 from the acquired business amounted to $1,452m
(£725m) and $155m (£77m) respectively.
United States
During the year, US Army contracts were secured for the refurbishment and
upgrade of Bradley, M88 Hercules improved recovery vehicles and M113 fighting
vehicles totalling $2.3bn (£1.2bn).
As expected, during the first half of 2007, the US Army announced its intention
to terminate the M113 fighting vehicle programme. Sales of M113 vehicles in 2007
totalled $105m (£52m).
BAE Systems is one of several companies providing the US Army and Marine Corps
with new Mine Resistant Ambush Protected (MRAP) wheeled vehicles. In February
2007, the US business received an initial order for 94 MRAP vehicles. Following
evaluation and testing, follow-on awards have been received for 3,485 MRAP
vehicles with a total value of $2.2bn (£1.1bn). MRAP vehicles are produced as
4x4 and 6x6 wheeled vehicles including the Heavy Armed Ground Ambulance and
Special Operation variants. BAE Systems has been awarded approximately 35% of
all MRAP vehicle orders placed to date.
BAE Systems continued to make substantial progress on the Manned Ground Vehicles
of the Future Combat Systems programme. Land & Armaments delivered the
Non-Line-of-Sight Mortar (NLOS-M) prototype firing platform in early 2007. Test
firing of the Non-Line-of-Sight Cannon (NLOS-C) continues at the Yuma Proving
Ground with the first pre-production prototype delivery scheduled for May 2008.
October saw the opening of a temporary facility as well as the commencement of
construction for a 150,000 square foot NLOS-C integration facility in Elgin,
Oklahoma. The new facility will be adjacent to the US Army Field Artillery
School at Fort Sill and is targeted for completion in early 2009.
Development of the 155mm Advanced Gun System (AGS) and the Long Range Land
Attack Projectile for the US Navy's DDG-1000 programme continues, with design,
integration and production awards secured totalling $386m (£194m). Land &
Armaments conducted a successful interim baseline review in August of AGS and
production is ramping-up at a new production site in Alabama. Land & Armaments
is designing and testing a Vertical Launching System that will enable the US
Navy's DDG-1000 to launch a wide range of missiles.
Land & Armaments is also providing a 57mm medium-calibre gun for the DDG-1000,
the US Navy's Littoral Combat Ship and the Coast Guard's Deepwater programme.
More to follow, for following part double-click [nRN1U4389O]