BAE Systems 55 Annual Report 2017 Looking forward Forward-looking information reflecting the organisational changes described on page 52 is provided later in this report. 56 Re-presentation 58 Segmental of 2017 results looking forward The Saudi Arabian In-Kingdom Industrial Our existing Hawk Mk127 Lead-in MBDA Participation programme continues to make Fighter sustainment contracts continue In March, MBDA secured a contract from the good progress. During 2017, there has been to perform strongly. UK and French governments for a three-year further capability and knowledge transfer on The Capability Assurance Programme to concept phase of the Future Cruise/Anti-Ship the Typhoon and Hawk platforms. The first upgrade the Hawk fleet to meet the training Weapon, which will prepare for the Hawk aircraft assembled in Saudi Arabia requirements of the fifth-generation F-35 replacement of the existing missiles deployed will come off the production line in 2018 Lightning II is progressing ahead of schedule, by the UK and French armed forces. This for delivery to the Royal Saudi Air Force. with 20 of the 33 aircraft modified at the end contract follows on from the joint UK-France We have commenced discussions with of 2017. During 2017, the Australian Air Force 2016 programme for the mid-life refurbishment the new Saudi Arabian Military Industries customer declared achievement of initial of their current inventory of missiles. (SAMI) organisation to explore how we can operating capability and has commenced In July, MBDA finalised the financing collaborate to deliver further In-Kingdom training with the aircraft. package to secure effectivity of the Qatari Industrial Participation. All of these activities In June, the Commonwealth announced contracts signed in 2016, which will supply are aligned with our long-term industrialisation that we have been selected as the preferred air defence systems and anti-ship missiles strategy, as well as the Saudi Arabian tenderer for the Jindalee Operational Radar for the naval surface fleet along with coastal government’s National Transformation Network upgrade programme. If successful, defence systems. Plan and Vision 2030. the expected value of the contract over the The German Ministry of Defence and Australia initial award term of ten years is approximately MBDA have entered into a formal negotiation We have continued to provide in-service A$1.0bn (£0.6bn). process for the German ground-based air support to the Navy’s two Landing Helicopter Following down-select in 2016 as one of defence system, TLVS, a key element of the Docks under a four-year support contract two tenderers for the Land 400 Phase 2 German defence strategy. Lockheed Martin awarded in 2014. Final acceptance of these Combat Reconnaissance Vehicle programme, will be the joint venture partner with MBDA vessels is expected in 2018. we have completed the Risk Mitigation on this programme. HMAS Stuart, the final Anzac Class frigate Activity contract and submitted our final Significant progress has been made in to be modernised under the Anti-Ship Missile proposal to the Commonwealth in August. securing positions on a number of fast jet Defence programme, has been accepted into Customer evaluation is ongoing, with final platforms. The Meteor Beyond Visual Range service by the Commonwealth. preferred tender selection anticipated in the Air-to-Air Missile is already in operational The scope of activities for the next five years first half of 2018. service on Gripen with the Swedish Air Force of sustainment and upgrade of the Anzac Our tender response for the Commonwealth’s and has now achieved qualification for both fleet under the Warship Asset Management nine-ship SEA 5000 Future Frigate programme Typhoon and Rafale aircraft. A contract has Alliance has been agreed and contracts was submitted in August. The Commonwealthbeen received to procure further Brimstone totalling A$561m (£324m) have been continues to fund Schedule Protection Activity missiles to equip Typhoon. Integration of awarded to BAE Systems. to support its evaluation timetable and we MBDA missiles on F-35 Lightning II has anticipate a preferred tender selection in the progressed well, with successful Advanced The next upgrade cycle for the Anzac frigate first half of 2018. Short Range Air-to-Air Missile qualification fleet, the Mid-Life Capability Assurance firings achieved and contracts received from Programme, has commenced, with the first Oman the UK to integrate Meteor. ship, HMAS Arunta, being docked at our The Oman Typhoon and Hawk aircraft In December, MBDA entered into a contract Henderson shipyard during the second half programme, being undertaken by Platforms with Qatar for the supply of Brimstone and of the year. The upgrade programme is & Services (UK), completed delivery of the Meteor missiles. The contract is subject to planned to run through to 2023. first eight Typhoon aircraft and all eight financing conditions and receipt by MBDA The delayed JP 2008 Phase 3F programme Hawk trainer aircraft in 2017. The remaining of first payment which are expected to be to provide enhanced defence satellite four Typhoon aircraft are scheduled to be fulfilled no later than mid-2018. communications services was formally accepted delivered in 2018. by the Commonwealth in November. We will Separately, we continue to fulfil our legacy Success in both domestic and export markets continue to provide in-service support to the industrial participation obligations in Oman has significantly increased MBDA’s production system under a five-year support contract. through delivery of an agreed training and volumes resulting in the requirement to expand knowledge transfer programme. production capacities. A new manufacturing Mobilisation activities for sustainment of the facility is fully operational in Bolton, UK, and Regional F-35 Lightning II fleet continues to a capacity enhancement is under way in progress at our Williamtown facility, with an Bourges, France. increased scope following the announcement in August that BAE Systems was assigned the role of F-35 Regional Warehouse provider for the Asia-Pacific region.