JR-PORT-email

JOSE RODRIGUES

1Jose RodRigues | PoRtfolio

senior Creative Artworker to assist with various project, ranging from layouts within approved design style through to technical artworking. Joined the studio for a short-term booking and we extended and re-booked to assist with project specific needs.

My responsibilities included: > Production of new property sales material, choosing new images and updating copy, table data and floor plans (indesign)

> tidying up of property floor plans to be dropped into marketing flyers along with corresponding property image for new planned development (illustrator/indesign)

> local area map updates (illustrator)

> Creation of sydney suburb map (illustrator)

> Production of long format document (indesign)

BENCH CREATIVE


BENCH CREATIVE

3

Available in a range of urban design variations reflecting natural earthy tones and colour palettes, the Brindabella is a beautiful yet practical home built in consideration of strict ACT building codes. Catering to the needs and wants of the modern family, this spacious two storey home comes equipped with a number of rooms and break out spaces.

The contrasting tones and textures of the home’s façade make for a stylish and dramatic first impression. Yet where the Brindabella really stands apart, is in delivering on cutting edge style and sophistication without foregoing practicality or space. A glass filled entryway creates an open and welcoming feel, enriching the home with an abundance of light. This sense of warmth is further amplified in the living room area, a space that lends

itself perfectly to both entertaining and relaxing family moments.

Located on the ground floor for maximum privacy, the luxurious master bedroom comes equipped with a semi-exposed ensuite and walk in wardrobes. This opulent resort-style master suite provides the perfect sanctuary for parents or couples wanting to unwind in peace away from the home’s remaining three bedrooms.

Designed with entertaining in mind, the Brindabella’s hallway leads to a formal living room and alfresco dining space which act as the perfect dwelling areas for socialising with guests. The combined kitchen, family and dining area is the epicentre of the home, helping ensure that the whole family starts and ends the day together.

DESCRIPTION OF ENTRY

2 RAWSON HOMES EXHIBITION/PROJECT HOME $350,001 AND OVER

“Where the Brindabella really stands apart, is in delivering on cutting edge style and sophistication without foregoing practicality or space.”

The first floor has been created with practical, everyday living in mind. Upstairs you will find the remaining three bedrooms along with a separate media room or study area, acting as the perfect private zone for children and teenagers. Planned with families in mind, a second ensuite and separate bathroom allow for plenty of recreational space for children of all ages.

The Brindabella model is adaptable and functional, offering a variety of floor plan options and façade styles. Averaging 25.4 square meters in size, it can be tailored to suit a range of block sizes, personal tastes, life stage requirements and streetscapes. If you’re in search of a home that offers the spacious and stylish lifestyle you’ve always wanted, you need look no further than the Brindabella.

3RAWSON HOMES EXHIBITION/PROJECT HOME $350,001 AND OVER

MATERIAL MANUFACTURER/COLOURS

Hebel Taubmans - White Pearl

Cladding Taubmans - Pebble Bay

Timber Screening - Deco Wood Kwila Natural

Feature Columns Crème Alpenia Limestone

Roofing Colorbond – Wallaby

Windows Colorbond – Basalt

Fascia Colorbond – Wallaby

Gutter Colorbond – Wallaby

Downpipes Colorbond - Surfmist

Front Door Lumina LUM 1NS (clear glazing) - Colorbond Basalt

Rear Door Aluminum Bi-fold Doors - Colorbond Basalt

Internal Doors Flush panel door with painted finish

Front Door Furniture Gainsborough Omni back to back (stainless steel)

External Door FurnitureCarla lever handle & 1951 deadlock and Amelia lever handle & 1951 deadlock in satin chrome finish

Internal Door Furniture 105 AME Amelia lever handle in satin chrome finish

Carpets TBA

Main Flooring TBA

Insulation Bradford R3.5 batts to ceilings & R2.0 batts to external walls

Kitchen Bench Top Caesarstone 80mm – Bianco Drift 6131

Island Bench Top Caesarstone 80mm – Bianco Drift 6131

Kitchen Cupboards Polytec melamine – Polar White in sheen finish

Island Bench Cupboards Polytec melamine – Polar White in sheen finish

Kitchen Splashback Feature window (clear glazed)

Kitchen Sink Clark Evolution 1.75 end bowl sink (over mount)

Kitchen Tapware Dorf Jovian pull down sink mixer

LIST OF MATERIALS


Oven/CooktopWestinghouse 900mm WFE914SA stainless steel multifunction upright cooker with 5 burner gas hob

Rangehood Westinghouse 750mm EFG750X/A stainless steel integrated rangehood

Dishwasher Westinghouse WSU6603XR dishwasher

Microwave Westinghouse WMS281SB microwave

Bathroom Vanity Top Caesarstone 40mm – Bianco Drift 6131

Bathroom Cupboards Polytec melamine - Natural Oak in matt finish

Basins Fowler Regent Inset

Toilet Suites Stylus - Prima closed coupled toilet suite

Shower Screens Fully frameless with clear glass

Bath 1700mm Blanc freestanding bath

TapwareWall mounted Stylus pin chrome mixer & Caroma Liano tapware to basin and bath Caroma Mystic handheld shower with rail to shower

Accessories Caroma Cosmo towel rail and toilet roll holder

Bathroom Floor Tile TBA

Bathroom Wall Tile TBA

Bathroom Feature Tile TBA

Laundry Bench Top Caesarstone 40mm – Bianco Drift 6131

Laundry Cupboards Polytec – Polar White in sheen finish

Laundry Sink Clark 45 litre stainless steel tub

Laundry Floor Tile TBA

MATERIAL MANUFACTURER/COLOURS


FAMILY4.85 X 3.85

LIN

GARAGE

PORCH

ENTRYLOUNGE3.95 X 2.90

ALFRESCOINCLUDED

KITCHEN3.45 X 2.58 LAUNDRY

WC

WMSTFR

DW

S

P

BED 43.00 X 3.00

BATH

BIR

BIR

DINING3.75 X 2.85

ST

ENS

BIR

BED 23.38 X 3.10

BED 33.34 X 3.00

LIN

BED 14.17 X 3.90

LEISURE3.99 X 3.50

WIR

Ground Floor 84.33m² Porch 1.40m² Total 26.3 Squares

First Floor 111.97m² Alfresco 14.51m² Overall Width 10.100m

Garage 32.48m² Total 244.68m² Overall Length 14.460m

2 26.3 4 2

KINGSTON 26


BED 53.00 X 3.00

BIR

ENS

2ND LIVING3.85 X 3.10

ALFRESCOINCLUDED

DINING3.75 X 2.66

FAMILY4.50 X 3.85

DWSFR

P

GARAGE

PORCH

ENTRY LOUNGE3.95 X 2.90

LIN

LAUNDRY

WC

WMS T

ST

BED 14.20 X 3.34

MEDIA4.50 X 2.62BED 4

3.00 X 3.00

BED 33.00 X 3.00

BED 23.29 X 3.00

BIR

BIR

BIR

ENS

BATHRM LIN

BIR

KITCHEN3.45 X 2.48

Ground Floor 112.14m² Porch 1.40m² Total 27.7 Squares

First Floor 93.84m² Alfresco 18.00m² Overall Width 10.100m

Garage 32.47m² Total 257.85m² Overall Length 20.340m

2 27.7 5 3

KINGSTON 28


FACADE OPTIONS

CLASSIC

MAJESTIC

REGAL


TREND

VOGUE


Jose RodRigues | PoRtfolio

BENCH CREATIVE


senior Creative Artworker to assist with roll-out of retail shopping centres seasonal campaigns and various project, ranging from layouts within approved design style through to technical artworking. Joined the studio for a short-term booking and was due to extend to assist with project specific needs.

My responsibilities included: > Creation of adverts for various print and digital mediums ; ABuZZ and oAMM media, outdoor signage and facebook/web tiles (indesign)

> image retouching (Photoshop)

> Client copy amendments (indesign)

DDI AUSTRALIA

5

1 2 54

3

3

1 2 54


DDI AUSTRALIA

1. outdoor signage2. oAMM horizontal3. oAMM landscape 4. facebook event tile5. Web tile


Barratt developments is one of the largest residential property development companies in the united Kingdom.

Barratt has been a long-standing client of Addison for some years and has gone through several design updates over the years and this was the last edition we produced for them.

typically the fundamental elements remained the same but the look and feel has evolved to give it a more modern and upmarket approach to reflect on its new and modern architecture and not just a development company that has been around for ages.

losing the overall dark green brand colour and using the cleaner white approach gave an instant more modern approach to the design and also dramatically minimised print cost and production time.

throughout the years and development of the design means constant updating of the graphical elements such as chart and diagrams which is taken on by the production department as well as the ever evolving copy according to the way the company wishes to market their cooperation year after year.

BARRATT DEVELOPMENTS



8

1. RevenueAn analysis of the Group’s revenue is as follows:

Notes2013

£m2012

£m

Sale of goods 2,442.2 2,162.3Contract accounting revenue 164.0 161.1Revenue as stated in the income statement 2,606.2 2,323.4Lease income 32 2.6 3.4Finance income 5 12.8 16.9Forfeit deposits 0.7 0.5Other income 19.9 16.6Total revenue 2,642.2 2,360.8

Sale of goods includes £517.2m (2012: £448.9m) of revenue generated where the sale has been achieved using part-exchange incentives.

Proceeds received on the disposal of part-exchange properties, which are not included in revenue, were £304.9m (2012: £271.5m).

2. Segmental analysisThe Group consists of two separate segments for management reporting and control purposes, being housebuilding and commercial developments. The segments are considered appropriate for reporting under IFRS 8 ‘Operating Segments’ since these segments are regularly reviewed internally by the Board without further significant categorisation. The Group presents its primary segment information on the basis of these operating segments. As the Group operates in a single geographic market, Britain, no secondary segmentation is provided.

House- building

Units

Commercial developments

Units

2013 Total Units

House- building

Units


Units

2012 Total Units

Residential completions 13,246 – 13,246 12,637 – 12,637Income statement £m £m £m £m £m £mRevenue 2,592.6 13.6 2,606.2 2,286.8 36.6 2,323.4Cost of sales (2,236.9) (10.1) (2,247.0) (1,997.7) (29.5) (2,027.2)Gross profit 355.7 3.5 359.2 289.1 7.1 296.2Administrative expenses – non-exceptional (103.0) (3.5) (106.5) (99.5) (5.6) (105.1)Profit from operations before exceptional items 252.7 – 252.7 189.6 1.5 191.1Administrative expenses – exceptional (2.8) – (2.8) – – –Profit from operations 249.9 – 249.9 189.6 1.5 191.1Share of post-tax profit/(loss) from joint ventures and associates – non-exceptional 7.7 (0.1) 7.6 0.7 (0.3) 0.4Exceptional loss on joint ventures – (5.4) (5.4) – – –Loss on re-measurement of joint venture interest on acquisition of control – – – (10.7) – (10.7)Profit from operations including post-tax profit/(loss) from joint ventures and associates 257.6 (5.5) 252.1 179.6 1.2 180.8Finance income 12.8 16.9Finance costs – non-exceptional (80.8) (97.7)Finance costs – exceptional (79.3) –Profit before tax 104.8 100.0Tax (29.8) (32.6)Profit for the year from continuing operations 75.0 67.4

102 BARRATT DEVELOPMENTS PLC Annual Report and Accounts 2013

ACCOUNTS FINANCIAL STATEMENTS • NOTES TO THE FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

2. Segmental analysis (continued)

Balance sheet

House- building

£m


£m

2013 Total

£m

House- building

£m


£m

2012 Total

£m

Segment assets 4,442.0 60.1 4,502.1 4,443.5 79.5 4,523.0Elimination of intercompany balances (34.6) (39.2)

4,467.5 4,483.8Deferred tax assets 92.1 118.6Current tax assets 0.4 0.4Cash and cash equivalents 294.4 150.3Consolidated total assets 4,854.4 4,753.1Segment liabilities (1,425.2) (42.2) (1,467.4) (1,437.0) (38.2) (1,475.2)Elimination of intercompany balances 34.6 39.2

(1,432.8) (1,436.0)Loans and borrowings (348.4) (343.3)Consolidated total liabilities (1,781.2) (1,779.3)

Other information £m £m £m £m £m £m

Capital additions 2.0 – 2.0 2.0 0.4 2.4Depreciation 1.6 – 1.6 1.5 0.1 1.6

3. Exceptional itemsIn the year ended 30 June 2013 there were the following exceptional items:

Debt refinancingOn 14 May 2013, the Group agreed a comprehensive refinancing package. The Group entered into a new £700m revolving credit facility, reducing to £550m in June 2016 and maturing in May 2018. The Group will retain the US$80m of private placement notes that were issued in May 2011 and mature in August 2017 and the £100m term loan that was drawn in July 2011, of which 25% is scheduled to be repaid in 2019, 25% in 2020 and the balance in 2021. As a result of this refinancing the Group has incurred fees of £14.9m which are being amortised over the life of the facilities. In addition, the Group has accelerated the amortisation of refinancing fees previously capitalised of £7.8m.

The Group’s private placement notes that were issued in 2007 and 2008 (which amounted to £151.9m equivalent), together with the associated foreign exchange swaps, were cancelled with effect from 2 July 2013. The interest make-whole of £53.0m has been recognised as an exceptional charge in the income statement as the Group was irrevocably committed to this repayment as at 30 June 2013. The Group has cancelled £55m nominal value of interest rate swaps resulting in an exceptional interest charge of £18.5m.

As a result of the refinancing, total exceptional finance costs were £79.3m with a related tax credit of £18.8m.

Part sale of non-current available for sale financial assetOn 13 May 2013, the Group entered into a joint venture, Rose Shared Equity LLP (‘Rose’), with a fund managed by Anchorage Capital Group LLC (‘Anchorage’). The Group disposed of the majority of its own equity share loans that originated in the period from 1 January 2009 to 31 December 2011 into the joint venture at no gain or loss. Anchorage acquired a 50% interest in Rose for £33.7m. The Group has recognised exceptional administrative costs related to fees upon this transaction and the comprehensive debt refinancing of £2.8m with a related tax credit of £0.6m.

Impairment of inventory relating to investments accounted for using the equity methodAt 30 June 2013, the Group conducted an impairment review of its share of the inventories included within its investments accounted for using the equity method. This resulted in an impairment charge for the year of £5.4m with a related tax credit of £1.3m. Further details are given in note 14.

In the year ended 30 June 2012, there was the following exceptional item: Loss on re-measurement of joint venture interest on acquisition of controlIn 2006, the Group entered into a joint venture agreement to develop sites in Greater Manchester including one in Hattersley. The Group’s joint venture partner went into liquidation in March 2012 and on 9 May 2012 the Group acquired its share for £1. As required by IFRS 3 (Revised) ‘Business Combinations’, the Group has disposed of its share in the joint venture entities and acquired the entities as subsidiaries resulting in an exceptional loss of £10.7m. Further details are provided in note 33.

103BARRATT DEVELOPMENTS PLC Annual Report and Accounts 2013

Our aim is to be recognised as the nation’s leading housebuilder, creating communities where people aspire to live.

•Total completions, including joint ventures, up 6.3% to 13,663 (2012: 12,857) for the full year

•Private average selling price up by 6.0% to £213,900 (2012: £201,800)

•Revenue up 12.2% to £2,606.2m (2012: £2,323.4m)

•Operating profit before operating exceptional items up 32.2% to £252.7m (2012: £191.1m)

•Operating margin before operating exceptional items increased to 10.4% (2012: 9.5%) in the second half and 9.7% (2012: 8.2%) for the full year

•Profit before tax and exceptional items up 73.7% to £192.3m (2012: £110.7m). After exceptional items of £87.5m (2012: £10.7m), profit before tax was £104.8m (2012: £100.0m)

•Significant reduction in net debt to £25.9m (2012: £167.7m)

•Good opportunities in the land market with 18,536 plots (2012: 12,085 plots) approved for purchase in the year

Revenue

£2,606.2m(2012: £2,323.4m)

Operating profit before operating exceptional items

£252.7m(2012: £191.1m)

Adjusted earnings per share before exceptional items

14.6p1

(2012: 8.1p)

Net debt

£25.9m(2012: £167.7m)

1 Basic earnings per share 7.7p (2012: 7.0p). VISIT OUR ONLINE REPORT AT:www.annualreport.barrattdevelopments.co.uk

WELCOME TO BARRATT DEVELOPMENTS PLC

PERFORMANCE HIGHLIGHTS

FIVE YEAR RECORD2013 2012 2011 2010 2009

Group revenue (£m) 2,606.2 2,323.4 2,035.4 2,035.2 2,285.2Profit/(loss) before tax (£m) 104.8 100.0 (11.5) (162.9) (678.9)Share capital and equity (£m) 3,073.2 2,973.8 2,930.1 2,900.2 2,331.6Per ordinary share:

Basic earnings/(loss) per share (pence1) 7.7 7.0 (1.4) (14.5) (89.1)Dividend (interim paid and final proposed (pence)) 2.5 – – – –1 Earnings per share for the year ended 30 June 2009 was adjusted to reflect the Rights Issue on 22 September 2009 as required by IAS 33 ‘Earnings per Share’.

FINANCIAL CALENDARThe following dates have been announced or are indicative of future dates:

Announcement

2013 Annual General Meeting and Interim Management Statement 13 November 20132013/14 Interim/half year results February 2014Interim Management Statement May 20142013/14 Annual Results Announcement September 2014

GROUP ADVISERSRegistrarsCapita RegistrarsThe Registry34 Beckenham RoadBeckenhamKentBR3 4TU

Registered AuditorDeloitte LLPLondon

SolicitorsSlaughter and May

Brokers and Investment BankersCredit Suisse Securities (Europe) LimitedUBS Investment Bank

COMPANY INFORMATIONRegistered in England and Wales. Company number 604574Registered address: Barratt House, Cartwright Way, Forest Business Park, Bardon Hill, Coalville, Leicestershire LE67 1UF

OTHER INFORMATION

FIVE YEAR RECORD, FINANCIAL CALENDAR, GROUP ADVISERS AND COMPANY INFORMATION

75234_Addison_Cover_v2.indd 2 20/09/2013 11:23

Report of the DirectorsGroup OverviewAt a glance 02Our business model 04Chairman’s Statement 06Group Chief Executive’s Review 08Our progress 14

Business ReviewBusiness Review 18Group Finance Director’s Review 30Managing Risk 34

Corporate GovernanceBoard of Directors and Company Secretary 40Letter from the Chairman 42Corporate Governance 43Letter from the Chairman of theNomination Committee 47Report of the Nomination Committee 47Letter from the Chairman of theAudit Committee 51Report of the Audit Committee 51Remuneration Committee 56Going concern 56Post balance sheet events 56Remuneration Report 57Other statutory information 79Statement of Directors’ responsibilities 83

Accounts Financial StatementsIndependent auditor’s report to the members of Barratt Developments PLC 84Consolidated income statement 85Statements of comprehensive income 86Statements of changes in Shareholders’ equity 87Balance sheets 89 Cash flow statements 90 Accounting policies 91Impact of standards and interpretations in issue but not yet effective 98Critical accounting judgements and key sources of estimation uncertainty 99Notes to the financial statements 102

Other information Five year record, financial calendar, Group advisers and Company information IBC

Cautionary statement regarding forward-looking statementsThe Group’s reports including this document and written information released, or oral statements made, to the public in future by or on behalf of the Group, may contain forward-looking statements. Although the Group believes that its expectations are based on reasonable assumptions, any statements about future outlook may be influenced by factors that could cause actual outcomes and results to be materially different.

Report of the DirectorsPages 2 to 83 inclusive comprise the Report of the Directors which has been drawn up and presented in accordance with and in reliance upon English company law and liabilities of the Directors in connection with that report shall be subject to the limitations and restrictions provided by such law.

Notice regarding limitations on Director liability under English LawUnder the Companies Act 2006, a safe harbour limits the liability of Directors in respect of statements in and omissions from the Report of the Directors contained on pages 2 to 83. Under English Law the Directors would be liable to the Company (but not to any third party) if the Report of the Directors contains errors as a result of recklessness or knowing misstatement or dishonest concealment of a material fact, but would not otherwise be liable.

Links to further information are illustrated with the following markers:

For further information seewww.barrattdevelopments.co.uk

02 ABOUT US 04 THE WAY WE WORK

16 DELIVERING OUR SUSTAINABILITY OBJECTIVES

08 GROUP CHIEF EXECUTIVE’S

REVIEW

25 COMMUNITY ENGAGEMENT

22 BARRATT LONDON

18 BUSINESS REVIEW

For further information


WHAT’S INSIDE CONTENTS

-15-10

-505

10152025

% H

PI

2002 20122010 20112009200820072006200520042003

HALIFAX UK QUARTERLY HPI

80

100

120

140

160

180

200

Thou

sand

s

2003 20122010 2011200920082007200620052004

NEW HOMES COMPLETED – PRIVATE ENTERPRISE

20

30

40

50

% m

ortg

age

to e

arni

ngs

2003 201320122010 2011200920082007200620052004

MORTGAGE TO EARNINGS RATIO

We continue to deliver against our objectives of building profitability, maintaining an appropriate capital structure and driving return on capital employed.

UK HOUSING MARKETThe UK housing market remained relatively stable during the first nine months of our financial year and showed material signs of improvement during our final quarter.

We have seen an increase in the availability of higher loan to value mortgages and increasingly competitive mortgage rates, largely resulting from the Bank of England’s Funding for Lending Scheme.

Government support for the UK housebuilding industry has remained strong with a number of initiatives in place designed to support house purchases and stimulate economic growth. Housing formed a prominent part of the March 2013 Budget with a range of new measures announced, in particular, to improve the supply of mortgage finance. In April 2013, Help to Buy (Equity Loan) was launched, the Government only equity share product available on new build. Since then, we have seen a significant

De Lacy Fields, Chesterton, a development of 3, 4 and 5 bedroom homes using local stone render.

Dennis and Sophia Clarke and their daughter Dennia moved into Zest, Keresley, using FirstBuy.

SUMMARY• The UK housing market remained relatively stable during our first

three quarters and showed material signs of improvement during our final quarter.

• We improved operating margin by 1.5%, profit before tax before exceptional items by 73.7% to £192.3m and reduced net debt to £25.9m.

• We work with many partners to design and build high quality homes that meet the needs of our customers and their communities.

Source: Halifax UK quarterly house price index, Lloyds Banking Group

Source: Halifax quarterly mortgage affordability, Lloyds Banking Group

Source: Department for Communities and Local Government Table 212 House building: permanent dwellings started and completed, by tenure, Great Britain (quarterly)

REPORT OF THE DIRECTORS BUSINESS REVIEW


BUSINESS REVIEW

step-up in levels of consumer interest and a strengthening of sales rates.

The Government is also putting in place longer term reforms to the planning system designed to increase the supply of new homes.

In 2012, the number of private industry housing completions has increased to 103,220 (2011: 99,980) according to the Department for Communities and Local Government. In the year ended 30 June 2013, according to the Bank of England, the total number of mortgage approvals for home purchases was 638,174 (2012: 617,676).

OUR PERFORMANCE We continue to deliver against our objectives of increasing profitability, maintaining an appropriate capital structure and driving return on capital employed (‘ROCE’).

We delivered an increase in profit from operations before operating exceptional items by 32.2%

to £252.7m (2012: £191.1m) at a margin of 9.7% (2012: 8.2%). This increase was mainly driven by an increasing proportion of sales from more recently acquired higher margin land and cost control. After operating exceptional items of £2.8m (2012: £nil), our profit from operations was £249.9m (2012: £191.1m).

Profit before tax and exceptional items increased by 73.7% to £192.3m (2012: £110.7m). After exceptional items of £87.5m primarily related to our refinancing (2012: £10.7m related to the acquisition of a joint venture), our profit before tax was £104.8m (2012: £100.0m). Our basic earnings per share were 7.7p (2012: 7.0p).

Our net debt as at 30 June 2013 was significantly reduced to £25.9m (30 June 2012: £167.7m).

HousebuildingOur housebuilding business has traded well throughout the year. Net private

De Lacy Fields, Chesterton, a development of 3, 4 and 5 bedroom homes using local stone render.

Reflections, a contemporary development of 184 homes in Plymouth.

Revenue

£2,606.2m(2012: £2,323.4m)

Profit from operations

before operating exceptional items

£252.7m(2012: £191.1m)

Net debt

£25.9m(2012: £167.7m)


Board

Regional management

Group management

Divisional management

Group support

Site management

Internal audit and assurance

First line: Operational management

Second line: Group support

Third line: Independent assurance

Overall stewardship

Info

rmat

ion

and

risk

repo

rtin

g

Policy and review

1

2

3

4

5

6

7

Assurance lines of defence

We believe that effective risk management is critical to the achievement of our strategic objectives and our long-term performance. Risk management is embedded at all levels of our business and is an integral part of our day-to-day operations. We continually assess our exposure to risk and seek to ensure that risks are appropriately mitigated.

ROLES AND RESPONSIBILITIESThe Board is responsible for the overall stewardship of our system of risk management and internal control. It has established the level of risk that is acceptable in the pursuit of our strategic objectives and has set policies and delegated authority levels to provide the framework for assessing risks and ensuring that they are escalated to the appropriate levels of management, including up to the Board where appropriate, for consideration and approval.

The roles and responsibilities of the Board, its committees and all levels of management from a risk management perspective are summarised as follows:

1. BOARD RESPONSIBILITIES ACTIONS UNDERTAKEN

Board • Strategic leadership• Determines the level of risk acceptable, assesses

key risks and seeks to ensure that they are appropriately managed and mitigated

• Sets delegated authority levels• Approves policies and procedures

• Set the strategic direction for the Group• Issue and review risk management policy• Annually review effectiveness of risk management

and internal control systems• Review key risks and responses

Audit Committee • Reviews the effectiveness of internal controls, including systems to identify, assess and monitor risks

• Review key areas of accounting judgement• Receive regular reports on internal and external audit• Biannually assess risk management and internal

control systems

Nomination Committee • Ensures an appropriate balance of skills, knowledge and experience on the Board

• Review the composition of the Board and consider succession planning

Remuneration Committee • Ensures the appropriate incentivisation of the senior executive population

• Review the remuneration of the senior executives and the appropriateness of incentive schemes

2. GROUP MANAGEMENT RESPONSIBILITIES ACTIONS UNDERTAKEN

Executive Committee • Monitors performance and changes in key risks facing the business and provides regular reports to the Board

• Responsible for ensuring that the risk management policy is implemented and embedded within the business and appropriate actions are taken to manage risks

• Implement strategic direction of the Group• Three year plan process incorporating annual budgeting• Regular performance reviews• Biannual review of internal assessment of risk management

and control self-certification• Review results of assurance activities


REPORT OF THE DIRECTORSBUSINESS REVIEW

Risk managementMANAGING RISK

2. GROUP MANAGEMENT RESPONSIBILITIES ACTIONS UNDERTAKEN

Operations Committee • Review of regional operating performance • Review of regional performance, risks and mitigation plans

Health and Safety Committee • Reviewing the effectiveness of health and safety policies and establishing controls and procedures to manage these risks

• Implement health and safety policies and procedures approved by the Board

• Review results of assurance activities

Risk Committee • Consideration of identified risks and their mitigation • Review risk action plans

Treasury Operating Committee • Management of liquidity and counterparty risk and ensuring that treasury policies are implemented and embedded within the business

• Implement treasury policies and procedures approved by the Board

Land Committee • Reviewing and authorising all proposed land acquisitions to manage land acquisition risk

• Review of land acquisition proposals and post-investment appraisals

3. REGIONAL MANAGEMENT RESPONSIBILITIES ACTIONS UNDERTAKEN

Regional management • Responsible for risk identification, management and control within their region

• Ensuring that divisional risk management responsibilities are appropriately discharged

• Review divisional performance including regular site visits with review and challenge of performance, risks and their mitigation

• Biannual review of internal assessment of risk management and control self-certification

4. DIVISIONAL MANAGEMENT RESPONSIBILITIES ACTIONS UNDERTAKEN

Divisional management • Business planning to support strategic objectives• Maintain an effective system of risk management

and internal control within their division

• Monthly board meetings and regular site reviews to review performance, risks and their mitigation

• Quarterly site valuation and valuation reviews• Biannual risk management, control self-certification

and risk escalation

5. SITE MANAGEMENT RESPONSIBILITIES ACTIONS UNDERTAKEN

Site management • Maintain an effective system of risk management and internal control upon their site including construction risks, subcontractor risks and health and safety

• Day-to-day management of their site

6. GROUP SUPPORT FUNCTIONS

RESPONSIBILITIES ACTIONS UNDERTAKEN

Support functions • Guidance and advice to operational management to help with risk identification, quantification and mitigation including legal and regulatory requirements, product design and technical specifications, Human Resources, Commercial, IT, Procurement, Finance and Insurance

• Provide guidance, support and challenge for management including: regular financial and performance reviews; the review and authorisation of product design/technical specifications; and training, guidance and policies

• Centrally maintained IT systems• Centralised procurement for key material supplies• Develop and implement approved strategy for insurable risk

7. INTERNAL AUDIT AND ASSURANCE

RESPONSIBILITIES ACTIONS UNDERTAKEN

Internal audit • Independent review of the effectiveness of risk management and compliance with internal controls

• Reporting to the Audit Committee upon the effectiveness of key controls

• Regular operational, financial and commercial audits • Regular reports to the Audit Committee and meetings

with the Audit Committee without management presence• Review of biannual risk management and control

self-certification

Health and Safety • Independent audit of health and safety procedures and controls on sites and within divisional offices

• Regular site audits • Regular reports to Health and Safety Committee,

Board, Executive and Operations Committees• Attend divisional board meetings

Group architects • Ensuring all properties are designed in accordance with relevant legislation and best practice design

• Regular site audits• Approval process for non-standard properties





Cobham Aviation services combines superior performance, extensive aviation knowledge and advanced technology to provide specialist aviation solutions to defence, government and commercial customers worldwide.

Cobham has also been a long-standing client of Addison for a decade and again has gone through a number of design updates over the years to keep the identity of the company looking sharper and ever evolving like its technology.

the fundamental elements of each of these projects remain the same with the images and graphics supporting the design, adapt and change with each and every publication.

the design and production departments play their part in creating these elements and have an understanding of each others skill sets. When an issue occurs regarding an image or key design element no longer fits the desired effect then we communicate these issues and revise the design to fit or alter them to better and greater effect.

the front cover of this report is an example of how a great hero image was to be used to showcase how some of Cobham’s technology was used to benefit the Burj Khalifa, dubai, but the image had to be extended above the building where the image fell short being used at this scale.

COBHAM


COBHAM

11

Dear Shareholder

A key focus during 2013 has been the appointment of two Directors, one Executive, one Non-executive. Both of these appointments were managed in conjunction with Korn/Ferry Whitehead Mann, recruitment consultants who have signed up to the voluntary Code of Conduct for executive search firms. Korn/Ferry provided a shortlist of candidates for these roles. The shortlisted candidates were interviewed by myself and separately by Mike Wareing, Alison Wood and John Patterson before meeting the Executive Directors.

As mentioned last year, a fresh look at talent and succession further down the management chain has been undertaken during the year and significant progress made, which has been described in the talent management section of the CR&S report on page 33.

J Devaney Nomination Committee Chairman

Membership and attendance

Number of meetings attended/held

J Devaney (Chairman) 4/4

M Beresford1 2/2

D Flint2 2/2

M Hagee 4/4

J Patterson 4/4

M Ronald 4/4

M Wareing3 3/4

A Wood 4/41 M Beresford retired from the Board (and hence the Nomination Committee)

on 25 April 2013.2 D Flint joined the Nomination Committee on joining the Board on 1 May 2013.3 M Wareing had been hospitalised before the February meeting, which he could

not attend.

Other attendeesCEO, by invitation.

Role and focusThe Nomination Committee’s main duties are to: • Review the structure, size and composition of the Board; and• Consider succession planning for Directors and other

senior executives.

Highlights of 2013• Evaluated the balance of skills, knowledge and experience

of the Board;• Considered external appointments to subsidiary boards;• Considered succession planning to ensure the Group is

well positioned for the future;• Conducted a thorough and comprehensive search for two

new Non-executive Directors, one yet to be appointed; and• Conducted an effectiveness review.

Priorities for 2014• Conclude Non-executive Director search to replace

John Patterson who will stand down at the conclusion of the 2014 AGM.

42 Cobham plc Annual Report and Accounts 2013

Corporate Governance Report continued

Nomination Committee

Overview

100048911-Cobham-AR13-06-Compliance-BoD-Corp-Gov-140314-JR.indd 42 14/03/2014 17:45

2005 2020 20252010 20152013

J Devaney

D Flint

J Patterson

M Ronald

M Hagee

M Wareing

A Wood

1st term 2nd term 3rd term

Board succession planning

The Committee’s terms of reference, which were reviewed during the year, are available on the Company’s website at www.cobhaminvestors.com or on application to the Company Secretary.

The Committee is cognisant of the need for diversity, including gender diversity, when considering the composition of the Board. In recruiting for Board roles, targets have been set around ensuring a proportion of female applicants are included in the candidate pool for Non-executive Director positions. For the recent recruitment, the profile has included the requirement for a diverse geographical background and commercial market experience. Elsewhere in the business, diversity in the workforce is taken very seriously and a full report on current strategy is set out in the diversity and inclusion section in the CR&S report on page 34.

The current Board composition, in relation to the Non-executive Directors, as of 31 December 2013, is set out in the table below identifying the skills and experience of the Board members. Succession planningSuccession planning takes place at Board and senior management level on a regular basis to ensure that the Group is managed by executives with the necessary skills, experience and knowledge. The Board has a role to play in overseeing the development of management resources in the Group. Specifically, the Board wants to see depth and quality in management and robust processes are in place to help the Board in this task.

Succession planning for Non-executive Directors is based on maintaining a depth of knowledge and experience on the Board. The Nomination Committee actively manages Non-executive Director succession, having regard to anticipated retirement dates for existing Directors, and initiates focused searches for Non-executive Directors as positions are required.

The current Board composition in relation to the Non-executive Directors, as of 31 December 2013, in terms of length of service and current term is shown diagrammatically in the table adjacent.

IndependenceYears with Cobham Skills Experience

Leadership Strategy

UK Corporate

Governance Corporate Engineering Defence Finance US Market UK Listings HR

J Devaney 3 • • • • • • • •R Murphy 1 • • • • • • • • •S Nicholls 0 • • • • • • • •D Flint • 0 • • • • • • • • •M Hagee • 5 • • • •J Patterson • 8 • • • • • •M Ronald • 7 • • • • • • •M Wareing • 3 • • • • • • • • •A Wood • 2 • • • • • • • •

Directors’ professional developmentOn appointment, Directors undertake a structured induction programme, in the course of which they receive information about the operations and activities of the Group, the role of the Board and the matters reserved for its decision, the Group’s corporate governance practices and procedures and their duties, responsibilities and obligations as Directors of a listed public limited company. This is supplemented by visits to key locations and meetings with, and presentations by, senior executives.

Training for Directors is available as required and is provided mainly by means of external courses, internal computer based training, briefing from specific consultants or in-house presentations. In addition, Directors’ knowledge of the legal and regulatory environment is updated through the provision of information by the Group’s advisers and by means of regular updates from the Company Secretary and the legal team.

43Cobham plc Annual Report and Accounts 2013

Corporate Governance

www.cobham.com

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Aerospace and Security 42%

Defence Systems 17%

Mission Systems 20%

Aviation Services 21%

Aerospace and Security 44%

Defence Systems 15%

Mission Systems 25%

Aviation Services 16%

Cobham operates from 14 principal manufacturing locations, with nine in the USA, three in the UK and two in continental Europe, as well as satellite locations and sales offices across the world that provide a permanent presence in faster growth markets. In addition, Aviation Services operates from airport bases in Australia, the UK and elsewhere in the world.

The Group leverages its innovative technology, know-how and understanding of customer needs to build and maintain leading positions in the second and third tiers of the global defence/security and commercial aerospace, marine and land markets.

Provides aircraft and in-building communication equipment, law enforcement and national security monitoring solutions, and satellite communication equipment for land, sea and air applications.

Operating locationsUnited States, United Kingdom, Denmark, France, South Africa, Finland and Sweden

Revenue

£744m(2012: £697m)

Revenue

£309m(2012: £323m)

£1,790m £318m

Trading profit

£132m(2012: £149m)

Trading profit

£47m(2012: £45m)

Provides critical technology for network centric operations, moving information around the digital battlefield with customised and off-the-shelf solutions for people and systems to communicate on land, sea and in the air.

Operating locationsUnited States and Mexico

See page 14 See page 16

Divisional percentages for revenue and trading profit exclude non-core activities, head office results and eliminations:

see note 4 on page 90


Group at a Glance

The Group in 2013 Revenue Trading profit

Aerospace and Security (CAS) Defence Systems (CDS)

100048911-Cobham-AR13-01-At-a-glance-140314-JR.indd 2 14/03/2014 17:54

US defence/security 37%

Non US defence/security 28%

Commercial 35%

Markets

USA 45% Australia 14%

UK 13% Asia 7%

Other EU 16% RoW 5%

Geography

Revenue

£358m(2012: £373m)

Revenue

£365m(2012: £327m)

Trading profit

£74m(2012: £81m)

Trading profit

£48m(2012: £38m)

Provides safety and survival systems for extreme environments, nose-to-tail refuelling systems and wing-tip to wing-tip mission systems for fast jets, transport aircraft and rotorcraft, and provides remote controlled robots and fully equipped bomb disposal vehicles for homeland security and military applications.

Operating locationsUnited States, United Kingdom and Germany

Delivers outsourced aviation services for military and civil customers worldwide through military training, special mission flight operations, outsourced commercial aviation and aircraft engineering.

Operating locationsAustralia and United Kingdom

See page 18 See page 20


Strategic Report

www.cobham.com

Rebalancing the portfolio for sustainable organic revenue growth

Mission Systems (CMS) Aviation Services (CAvS)

100048911-Cobham-AR13-01-At-a-glance-140314-JR.indd 3 14/03/2014 17:54

Delivering on our seven strategic priorities enables us to generate sustainable top and bottom line growth, relative to the markets in which we operate, while consistently generating good free cash flow and creating shareholder value.

Improve understanding of our markets and customers’ future needs, aligning PV investments with these priorities.

1.Innovation with insight

Why this is important: Our differentiated technology and know- how are a key competitive advantage in our markets. Having a thorough understanding of market opportunities and our customers’ future needs optimises our ability to closely align our technology investments to customer requirements.

Remain focused on the second and third tiers of global defence/security markets, and commercial aerospace, marine and land markets.

2.Focus on components and subsystems

Why this is important: Our innovative technology and know-how are focused on tier two (subsystems) and tier three (components) segments of our markets, where we have a competitive edge. This enables us to provide comprehensive solutions for our customers’ complex technology problems.

Identify adjacent markets where our existing technology and know-how can be leveraged to meet the needs of new customers.

3.Leverage our technology

Why this is important: Accessing adjacent commercial markets allows us to leverage our existing technology and know-how, thereby increasing revenue and shareholder returns. This also brings more balance to our portfolio and enables us to provide sustainable growth through business cycles.

Use mergers and acquisitions to shift the emphasis of the portfolio ahead of market movements to remain exposed to faster growing markets.

4.Focus on M&A

Why this is important: Utilising our strong free cash flow and the Group’s balance sheet, we acquire businesses that are complementary to, and reinforce, our differentiated technology and know-how. We achieve this through a rigorous and disciplined approach to investment. Our strategic objective is to use M&A to bring more balance to the portfolio.

Group PV investment

Target: 6%

6.2%(2012: 5.3%)

During the year, we invested over £150m in acquisitions, primarily Axell for up to £85m, including contingent consideration, and the £74m acquisition of the outstanding 50% stake in FBH, the helicopter joint venture. These acquisitions bring differentiated and complementary technology and know-how in growing and attractive markets.

Group organic revenue growth

Target: mid-single digit organic revenue growth from 2015

(4)%(2012: (1)%)

See page 9 for more information. See page 23 for more information. See page 11 for more information.


Our Strategy and Key Performance Indicators

Our strategic priorities focus on

100048911-Cobham-AR13-02-Our-strategy-140314-JR.indd 12 14/03/2014 17:52

Drive a culture of continuous improvement from an integrated, streamlined business through Excellence in Delivery.

5.Operational excellence

Why this is important: Alongside financial benefits, EiD has delivered a number of significant operating and customer benefits, including improved productivity, shortened manufacturing lead times and improved levels of quality. It has resulted in a simpler, more scalable business and a sharper focus on the customer, with enhanced internal communication and collaboration.

Improve programme execution across customer and PV funded projects to achieve sector leading customer delivery and operational performance.

6.Programme execution

Why this is important: Programme management is a core competency focus and enables us to meet customer expectations and deliver growth.

Ensure the right capabilities are in place in changing markets by increasing investment to build essential skills and capabilities.

Cobham’s progress is monitored with a score card of financial and non-financial metrics. The following are considered the most important:

7.Invest in skills and capabilities

Why this is important: The delivery of our strategy depends on the right people, skills and capabilities being in place. We have continued to increase our investment in learning and development to build the essential skills and capabilities from which to drive future growth, by attracting, training and retaining the best talent.

Key Performance Indicators

Operational excellence is one of a number of tools with which we drive, improve and monitor our health & safety performance.

Staff safety – major accident incident rate*

Target: zero

326(2012: 666)* Per 100,000 employees

We have undertaken considerable work to enhance functional excellence in project and programme management across the diverse range of customer and internally funded activities, together with an increased focus on lifecycle management.

Voluntary staff turnover

Target: <10%

6.9%(2012: 8.7%)

Return on invested capital

Target: >10%

15.3%(2012: 18.1%)

Operating cash conversion

Target: >80%

85%(2012: 104%)

See page 24 for more information

Underlying EPS growth

Target: high single digit

(4)%(2012: 3%)

See page 24 for more information

Key performance indicator used by management.

Used as a measure for determining executive remuneration.

For definitions, see page 140.See pages 9 and 34 for more information. See page 8 for more information. See pages 8 and 30 for more information.


Strategic Report

www.cobham.com

100048911-Cobham-AR13-02-Our-strategy-140314-JR.indd 13 14/03/2014 17:52

Delivers outsourced aviation services for military and civil customers worldwide through military training, special mission flight operations, outsourced commercial aviation and aircraft engineering.

In 2013, the UK Ministry of Defence awarded Aviation Services a five year base contract extension worth £165m through to 2019 for essential operational readiness training. Cobham has extensive understanding of front-line needs and technology know-how, providing training to service personnel operating platforms including some of the UK’s most modern equipment, such as the Eurofighter Typhoon aircraft and Type 45 Destroyer.


Aviation Services

100048911-Cobham-AR13-03-Divisional-spreads-140314-JR.indd 20 14/03/2014 17:48

0

100

200

300

400

2012

32729 9 365

Acquisitions and currency

translation

Organic growth

2013

Divisional revenue£m

Non US defence/security 47%

Commercial aerospace/

general aerospace 53%

Australia 65%

UK 25%

Other EU 4%

Asia 4%

RoW 2%

Revenue by geography

0%

10%

20%

2012

11.6 0.21.3 13.1

Acquisitions and currency

translation

Organic growth

2013

Divisional trading margin

During 2013, Cobham Aviation Services was awarded an AUS$150m scope expansion to its current Boeing 717 (B717) regional QantasLink contract. This sees the fleet of B717s operated by Cobham increase from 13 to 18 aircraft and the establishment of new operating bases in Australia.

RevenueTotal revenue increased by £38m due to organic growth of 3% and the FBH acquisition, which was completed in the year. This was partly offset by an adverse translation impact from the Australian dollar.

Trading margin The Division’s trading margin of 13.1% (2012: 11.6%) including joint ventures, benefited from the end of lower margin FSTA conversion work. The prior year trading margin also included UK redundancy costs.

Other performance highlights• Three of five additional B717 aircraft

under contract for QantasLink have now entered service with the remaining two to commence operations in the first half of 2014;

• Modification of five Dash 8 surveillance aircraft for Australian Customs and Border Protection Command was completed enabling search and rescue operations as part of the Sentinel contract;

• Modification and mobilisation of three aircraft to provide ongoing support to the Ok Tedi mine in Papua New Guinea until 2019;

• FB Heliservices’ transition into Cobham Helicopter Services has progressed well. Business development activities are focused on Helicopter Services’ existing international footprint, with its training and support contract in Trinidad and Tobago expanded from the beginning of 2014.

Revenue by market


Strategic Report

www.cobham.com

Highlights

100048911-Cobham-AR13-03-Divisional-spreads-140314-JR.indd 21 14/03/2014 17:48


COBHAM


stock spirits group is a drinks business operating in Poland, the Czech Republic, italy, slovenia and Croatia. it is listed on the london stock exchange and is a constituent of the ftse 250 index.

this was stock spirits groups first ever annual report. it was a real pleasure to see the companies full measure of expertise coming to the fore in this project. Not only did we get to dictate the whole direction of the design but being a consultants firm as well, was able to give them full guidance in how to report their companies strategic business and annual accountable figures.

starting a whole annual report from the ground upwards has its own obstacles to overcome from image shots and model contracts to the strategic business model and general content. All of which was overcome but takes a huge collaborative team effort and the client to fully appreciate the complexity of the task at hand when producing a report of this manner.

everything had to be produced from new; grids, typography style sheets, charts, graphs, graphics, images, content – future and past, and most importantly a full report of the annual accounts which all needs to be pulled together from a number of different departments, Managing directors and all within a given time line.

STOCK SPIRITS GROUP


STOCK SPIRITS GROUP

14

1Żołądkowa Gorzka

Poland

Produced since 1950 to an unchanged blend

of ingredients, inspired by traditional methods

which date back to 1822, this is a traditional

Polish vodka-based flavoured liqueur made

using the time honoured practice of infusing

herbs in alcohol.

Made from selected herbs, spices and dried fruits, including oranges, cloves, cinnamon and nutmeg, then matured in vats before bottling, its distinctive aroma and lightly bitter-sweet taste have made it a household name brand in Poland and one of the Group’s flagship products. It is available in a variety of blends, including traditional, mint and its new flavour, black cherry, which was launched in 2014.

Żołądkowa Gorzka is the second largest brand by volume and value1 in the flavoured vodka and vodka-based liqueurs category in Poland and has also been introduced to other international markets. It has received numerous international awards, including two golden stars for Żołądkowa Gorzka Tradycyjna (Traditional) and Żołądkowa Gorzka Czarna Wiśnia (Black Cherry) from the International Taste & Quality Institute awards 2014 (ITQI awards 2014).

Lubelska

Poland

The number one brand by volume and value

in the Polish flavoured vodka and vodka-based

liqueurs category1, with a range of ten flavours

and a “Three Grains” clear vodka.

Lubelska’s success is built on continuous trendsetting in flavour innovation, developing a fun, contemporary range of flavours with particular appeal to younger adults and female drinkers, who enjoy the brand in shots or cocktails.

Lubelska Trzy Zboża (Three Grains) won a silver medal in the 2014 International Spirits Challenge (ISC) and its new flavour, Lubelska Antonówka (Apple) won a golden star from the ITQI awards 2014.1906

Poland

1906 is the leading brand by volume and value1

in the economy sector in Poland and is sold

in over thirty countries around the world.

An outstanding, clear vodka which is made through a process of quadruple distillation. It was created to honour the 100th anniversary of the opening of the first spirit production plant Rektyfikacja Lubelska in the city of Lublin in Poland.

million+9 litre equivalent cases sold during the calendar year.

18 Stock Spirits Group Annual Report 2014

OUR “MILLIONAIRE” BRANDS*

Żołądkowa Czysta de Luxe

Poland

This crystal clear vodka is the number one brand

by volume and value in the Polish market1, the 7th

biggest vodka brand in the world by volume2 and

the best-selling vodka in Stock Spirits’ portfolio3.

Produced to an original recipe using selected grain, a six-step distillation and filtration process over natural carbon filters ensures an exceptionally smooth, high quality vodka.

Żołądkowa Czysta de Luxe has received many international awards, including a gold medal at the International Quality Institute’s Monde Selection 2014 awards in Brussels, two golden stars from the ITQI awards 2014, and a silver medal in the 2014 ISC.

Božkov

Czech Republic

The Božkov brand range includes rum**,

vodka, vodka-based flavoured liqueurs,

gin and other flavoured liqueurs such as

apple, apricot, cherry and peppermint.

Božkov Tuzemský is the best-selling member of the Božkov range. It is a Czech domestic rum with a distinctive, fine aroma, subtle golden colour and a delicious flavour. A versatile drink, typically served straight in shots but also used for mixed drinks, and to add flavour for culinary purposes.

Božkov Tuzemský is the number one spirits brand by volume2 in the Czech Republic and the number one brand by volume and value4 in the Czech off-trade domestic rum category. In 2014, Božkov Tuzemský won a bronze medal in the ISC awards and Božkov “Special” flavour won two gold stars in the 2014 ITQI awards.

Božkov Vodka is the number three spirits brand by volume2 in the Czech Republic and the number one brand by volume and value4 in the Czech off-trade vodka category.

Stock Prestige

Poland

Stock Prestige is a premium vodka launched

in Poland in 2009. Stock Prestige is the result

of combining 130 years of experience in

producing top quality spirits with the most

recent technological advancements.

Stock Prestige achieved growth ahead of the premium category during 2014, growing its share of both volume and value.1.

A six-step distillation process with additional chilled filtration results in a high quality vodka with an exceptionally smooth taste. The raw materials used for Stock Prestige undergo careful selection and a multi-step control process.

The brand has won several international awards, including a prestigious gold medal and best in class trophy for Stock Prestige grapefruit and a silver medal for Stock Prestige clear in the 2014 ISC. The clear and grapefruit variant were also awarded two gold stars in the ITQI awards 2014.

* A “millionaire” brand is one which sold more

than one million 9 litre equivalent cases during

the calendar year.

** Tuzemsky is a local form of rum.

Source1. Nielsen total Poland off-trade, MAT December 2014.

2. IWSR 2013 data.

3. Stock Spirits Group internal volume sales data.

4. Nielsen total Czech Republic off-trade,

MAT December 2014.

Stock Spirits Group Annual Report 2014 19

58%

Poland3

Other markets

% of Group net sales revenue

Net sales revenue €m

2013

2014 -18.5%168.0

206.2

EBITDA before exceptionals €m

2013

2014 -19.0%53.1

65.5

Our largest market is Poland, where we remain the number one spirits producer with an overall volume share of 37.3% (38.0% 2013)2 of the vodka and vodka-based flavoured liqueurs market, 9.1 volume share points ahead of our nearest competitor.

2014 has been a very tough year in Poland, largely as a result of the 15% excise duty increase posted by the government on 1 January 2014. This significant increase resulted in total product shelf prices increasing by over 7%, accelerating the decline in total market volumes -4.3% versus 2013,2 and resulting in severe disruption within the market supply chain. The main impacts on customers’ supply chain were that many wholesale customers entered the year with exceptionally high inventory levels, resulting in higher demands for promotional support from these customers and heightened competition between spirits producers to encourage the “sell through” of their products to the end retail stores, and ultimately to consumers. Throughout this period of disruption, we have endeavoured to maintain our focus on value creation, not to pursue volume share in isolation. Following the duty increase, Stock has increased average prices per litre ahead of the market and ahead of our main competitors.

In line with our experience of previous excise duty increases in other markets, it is always difficult to predict when the market will return to “normal” and whilst consumption has not declined as much as expected, the disruption in the customers’ supply chain has taken longer to unwind than we originally assumed and, as a consequence, we revised our full year profit guidance for the Group in the latter part of 2014.

As we enter 2015, the trading environment remains tough and we expect that it will take a little more time before the customers’ supply chain returns to a more normal position. However, the continued success of our core brands and new product launches provides some comfort that consumer dynamics remain robust, and combined with a relatively strong economy, we remain confident that our strategy will continue to deliver strong results in the medium to long term.

Despite the overall market volume decline in 2014, Poland remains the 3rd largest vodka market in the world by value and 4th by volume, and vodka (both clear, flavoured and vodka-based flavoured liqueurs) remains the principal spirit category, accounting for approximately 87% of the overall spirits market.1

Source

1,2. Nielsen, total Poland, total off-trade, total vodka,

flavoured vodka & vodka-based liqueurs MAT Dec 2014.

3. IWSR 2013.


REGIONAL REVIEW

Poland

Our financial results in Poland reflect a decline in both net sales revenue and EBITDA. The second half of 2014 was particularly affected by the excise duty increase and the buy forward in the final quarter of 2013. This had the effect of increasing net sales revenue and EBITDA in 2013 at the expense of 2014, with an estimated EBITDA impact of around €5m. In addition, we were unable to fully implement planned price increases due to the competitive landscape. We did, however hold our EBITDA margin at 31.6%, broadly the same level as 2013.

Core brands In regular vodka, we grew our total value share whilst conceding a small amount of volume share. Żołądkowa Czysta de Luxe once again grew volume share and value share, retaining the number one position in clear vodka. Stock Prestige grew volume and value on its clear and flavoured variants, taking the number one position in premium vodka. Lubelska and Żołądkowa Gorzka (ŻG) retained their number one and number two positions in the flavoured category with a combined value share of 54.3%. ŻG the number two brand in the category,

retained an 8.2% value share point lead over the number three branded competitor.

New product development The Group continued to launch new products into the Polish market in 2014 with a number of successful launches that will provide 2015 value share growth. 2014 witnessed the addition of two new flavours, Orange and Peach, to the successful Lubelska range, and the launch of a new Żołądkowa Gorzka Black Cherry variant.

Stock Prestige launched a limited edition “Black” pack celebrating 130 years of the Stock brand name, reinforcing the premium qualities of this “millionaire” brand. The launch helped us to grow volume and value share in the premium segment ahead of the competition.

Point of sale innovation Early in the year, we completed the rollout of the innovative fridge programme, which commenced in 2013, positioning 20,000 fridges in the best traditional trade stores. These represent over 50% weighted volume distribution. This has allowed us to strengthen our distribution further, support

this important trade channel and satisfy consumers’ desire to enjoy chilled vodka. Results from this innovation have been encouraging with positive feedback from both consumers and store owners. Our ability to launch new products has been enhanced by this initiative, allowing products to be showcased to their best advantage.

Recognition of our distribution capability In September 2013 we announced the agreement with Beam Suntory to distribute their portfolio in Poland on an exclusive basis, with distribution commencing shortly afterwards.

We are delighted that after the first year of distribution we have grown both value and volume share of the Beam Suntory brands ahead of the market, in this fast growing and important category.

This is a very exciting development for Stock Polska and provides us with an excellent platform to develop more of our own premium brands in addition to satisfying the strategic objectives of Beam Suntory.

#1Stock Spirits is the market leader

with 37.3% market share

87%Vodka (both clear, flavoured

and vodka-based liqueurs) accounts for 87% of the spirits market

3rd

Poland is the third largest vodka market in the world by value


Key brandsSignificant work has been undertaken on reviewing opportunities for the development of our business in new markets. We have not been able to conclude a transaction during 2014, but will continue to pursue a number of opportunities in which we are currently engaged.

The Group undertook a partial refinancing during the year and this has resulted in considerable savings on finance costs. We also completed the corporate restructuring, as laid out in our IPO prospectus, to bring the Group in line with other PLC organisations.

The Group enjoys support from a diverse group of shareholders, and we have continued to engage actively through investor events and meetings during the year. I have met with a number of our major shareholders during the year and I am delighted with the support they provide. We remain committed to returning value to our shareholders and have begun paying dividends as envisioned in our prospectus. I am delighted that we are recommending a final dividend of €0.025 per share for approval at the Annual General Meeting.

I would also like to take this opportunity to personally thank Karim Khairallah and Oaktree Capital Management, who fostered the creation of Stock Spirits Group, for being such supportive

Overall, we faced a challenging year, primarily because of the 15% duty increase in Poland. However, what pleases me most about the year is that we continued to invest in our strong leadership brands in Poland, the Czech Republic and Italy. These leading brands finished the year with strong market share and consumer loyalty.

I am also encouraged by the success of our new product development (NPD) programme. This strength in NPD continues to be a major asset for the Group and demonstrates our understanding of consumer trends as well as underscoring our strength in innovation and the scale of distribution in the markets in which we operate.

That distribution scale has also won us agreements with Beam Suntory, Inc. in Poland and with Diageo plc in the Czech Republic. These agreements have benefitted the brand owners and ourselves as we have achieved significant value growth in the first year of our relationships. It is a testament to our delivery that we have signed a new agreement with Beam Suntory, Inc. for the distribution of their brands in Croatia and Bosnia.

As Chairman of Stock Spirits Group PLC, I am pleased to present our Annual Report and Accounts for the year ended December 2014.


CHAIRMAN’S STATEMENT

What pleases me most about the year is that we continued to invest in our strong leadership brands in Poland, the Czech Republic and Italy.

shareholders for over seven years until partial divestiture at our IPO. Karim served as a Non-Executive Director after the IPO until the full divestment by Oaktree in April 2014.

PeopleI would like to recognise the commitment of all our employees and thank them for their contribution to the Group’s performance and support during this challenging year.

There have been no changes to the remuneration policy which was approved at the AGM in 2014, details of which are contained within the Corporate Governance section of this report, and the interests of Executive Directors and senior managers remain completely aligned to shareholders.

GovernanceThe Group is committed to high levels of corporate governance, and I personally place great emphasis on this area. The routine of the Board and its sub committees has settled since the IPO and evaluations have been undertaken of the Board and all the committees, and I thank the Executive and Non-Executive Directors with whom I serve for their support and insight in helping to run the Group.

I commend to your attention the special section on Corporate Governance as well as the reports from our Committee chairmen of Remuneration, Audit and Nomination.

The Board receives input from a number of external advisors who have been invaluable in helping to shape our policies and processes. I would like to thank EY for the service they have provided as our external auditors for the last eight years, and their support throughout the IPO process. We look forward to working with KPMG, our proposed incoming auditors, subject to the approval of our shareholders.

Looking aheadIn spite of the difficult environment we have navigated our way through in 2014, I firmly believe that the outlook for Stock Spirits Group is very promising. We have the right strategy, exceptional brands, a strong financial structure, leading edge production capability and distribution and a proven executive team, to lead the business forward.

Jack Keenan Chairman12 March 2015


Our goal is to become Central and Eastern Europe’s leading spirits company – commanding a major stake in each of our core operating markets and making our presence felt in the wider global market.

Our goal

Strategic report

Chairman’s statement 02

Chief Executive Officer’s statement 04

Group at a glance 08

Our business model 10

Strategy and KPIs 12

Our markets 14

Spirits market overview 16

Our “millionaire” brands 18

New product development 20

Our heritage 22

Regional reviews

Poland 24

Czech Republic 26

Italy 28

Other 29

Operations 30

Our people 31

Corporate responsibility 32

Financial review 34

Principal risks 38

Directors and Company Secretary 42

Senior management 44

Corporate governance

Chairman’s letter 46

Corporate governance framework 47

Audit Committee report 52

Nomination Committee report 57

Directors’ remuneration report 58

Directors’ report 71

Statement of Directors’ responsibilities 74

Independent auditor’s report 75

Financial statements 79

Notes to the accounts 85

Shareholders’ information 140

Useful links 141

* Stock Spirits Group uses alternative performance measures as key financial indicators to assess the underlying

performance of the Group. These include adjusted EBITDA, adjusted EBIT and adjusted free cash flow.

The narrative in the Annual Report & Accounts is based on these alternative measures and an explanation

is set out in note 7 to the consolidated financial statements included in the Annual Report & Accounts.

** Interim dividend of €0.0125 paid on 26 September 2014 and proposed final dividend for 2014 of €0.025.

9 litre cases (2013: 17.4m 9 litre cases)

Total revenue (2013: €340.5 million)

Adjusted EBITDA* (2013: €83.7 million)

€66.4m

14.4m

Adjusted EBIT* (2013: €74.4 million)

Dividend per share** (2013: €nil)

€55.4m

€0.0375

€292.7m

Operating profit(2013: €47.7 million)

€53.6m

Profit for the year (2013: €8.9 million)

Basic and diluted earnings per share (2013: €0.05)

€35.8m

€0.18

For more informationwww.stockspirits.com

Contents

HIGHLIGHTS


STOCK SPIRITS GROUP


thales group is a french multinational company that designs and builds electrical systems and provides services for the aerospace, defence, transportation and security markets.

Addison produced thales groups quarterly magazine which was also translated into four european languages; french, german, italian and spanish. each quarter the magazine would have it's own theme all of which would generate a considerable amount of work to produce.

the main task would be to design and produce the master english version, bearing in mind the translations that would follow. Not only was there translations but the smaller than A4 format also lead to a number of challenges bearing in mind the length of some of the translated copy. the production of these reports meant we had to be very organised in our workflow and timing schedules.

there was a number of style sheets which had to be produced to give it a magazine type of style which is different to the typical reports produced at Addison. Very often type styles would then have to be adjusted, when translated into another language. Many a chart or graphic had to be produced and these to would have to be translated. A number of extra checks and procedures where put into place to make sure accuracy and integrity was maintained throughout the whole project.

THALES

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THALES

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the new Big Business?

DataBigF

or Joseph Hellerstein, a computer scientist at the University of California in Berkeley, the world is currently entering “the industrial revolution of data”1. The amount of stored data in the world has

doubled approximately every 40 months since the 1980s2, but today it is becoming ever more complex. Never before has so much data been produced, through ubiquitous mobile devices of course, but also via ever-increasing numbers of security cameras, satellites, chemical sensors and wireless networks. Clearly new ways to both stock and analyse data have become essential.

Data – the new commodity?So important has this management of information become that at the 2012 World Economic Forum held in January in Davos, Switzerland, data was labelled for the first time as an economic asset that could become as important as gold3. Indeed, according to the magazine The Economist, the data management and analytics industry is now worth more than $100 billion and is growing at almost 10% a year – around twice as fast as the software business as a whole4.

What place is there for Thales in this new industry? The Group is one of the leading contributors to large-scale civil and military systems, creating command and control (C2) systems in domains as varied as transport, intelligence and homeland security. These C2 systems acquire and store large quantities of information and process this data to create value for decision-makers.

Whether the information comes from Thales sensors, customer databases or open sources (the Internet), the data which feeds the C2 systems is growing exponentially, in particular unstructured data such as text, images and videos.

Companies such as Thales now face two challenges: how to store these ever-increasing quantities of data, and how to analyse this information. Businesses will soon be defined by how well they perform in this domain. According to a report produced by MIT, companies that make decisions based entirely on automated data analysis achieve productivity gains of around 5-6% compared with other companies5.

New insights, new servicesBy simplifying the way data is stored and accessed (document-oriented or key/value rather than the rigid relational model), Big Data systems enable rapid treatment of much larger historic data sources, and analysis across multiple unstructured databases. For Thales, this could make it possible to cross-cue data from IT system repositories with normal pattern models established via automated learning or a set of rules, in order to detect abnormal behaviour. This approach could, for example, be used to detect failures before they occur on key equipment in large installations.

As with all revolutions, however, the move towards Big Data is not without risks. According to Jean-François Marcotorchino, VP Scientific Director, Thales DSC “the data-centred economy

With data exploding in both quantity and complexity, successful businesses of the future will be defined by how they order, filter and analyse the information they collect and how they transform this knowledge into successful solutions. The principles of Big Data may well provide the answers, and Thales is poised to benefit from this revolution.

BIG DATA

7 LOGIN//Q2 2012

Bigis only just beginning, and the technical, infrastructural and business-model implications still need to be clearly defined. Nevertheless, the potential is extraordinary, which explains the current huge interest in this subject.”

With new technologies come new needs. Capturing and analysing data makes no sense if you do not know what you want to achieve. If the desired outcomes are not clear at the beginning, Big Data will only make the complex even more complex. Massive, automated exploitation of datasets may be technically achievable, but the key to success in Big Data applications will be the skill sets of the people working in this field. As a recent study in the Harvard Business Review concluded: “Big Data, no matter how comprehensive or well analysed, needs to be complemented by Big Judgement”6.

The revolution may just have begun, but Thales is determined to be one of the leaders. Discover in the next two pages how the Group is positioning itself.

1 http://radar.oreilly.com/2008/11/the-commoditization-of-massive.html.

2 The World’s Technological Capacity to Store, Communicate, and Compute Information, Martin Hilbert and Priscila López (2011), Science: martinhilbert.net/WorldInfoCapacity.html.

3 http://www.weforum.org/reports/big-data-big-impact-new-possibilities-international-development.

4 http://www.economist.com/node/15557443.5 Erik Brynjolfsson: Strength in Numbers: How Does Data-Driven

Decision-making Affect Firm Performance?’.6 Shah, Horne and Capella. 2012. Good Data Won’t Guarantee Good

Decisions. Harvard Business Review http://hbr.org/2012/04/good-data-wont-guarantee-good-decisions/ar/1.

The data-centred economy is only just beginning, and the technical, infrastructural and business-model implications still need to be clearly defined. Nevertheless, the potential is extraordinary, which explains the current huge interest in this subject.Jean-François MarcotorchinoVP Scientific Director, Thales DSC

Capturing and using personal data is already a problematic area, and Big Data has the power to make this grey area even more complex. Will data become monopolised and monetised by just a handful of international corporations? And will improved analysis lead to unwanted correlation of data from previously unlinked sources (e.g. financial and medical records)?For Daniel Pays, VP, Director of the advanced R&D centre at Thales Communications & Security,

POTENTIAL ETHICAL PROBLEMS?

acceptance of the Big Data movement needs “a concerted effort between industry and the social sciences, and the certainty that it will comply with national and international laws and regulations”. “As a supplier of these products and systems, or as an operator of security services, Thales has an important role to play. Effective trust mechanisms and privacy protection are critical to the success of Big Data,” he concludes.

ABOVE A selection of graphs produced by the CeNTAI lab at Thales, representing connections and influence on social media services.

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How the event was organised: five zonesSpace3D radar and optical observation applications, satellite broadband and payload processing, the space rover, Milsatcom architecture, reflectarray antennas in flat panels, high-speed digital processing for meteorological satellite instruments, CMOS and CDD detectors and more.

Civil AerospaceAvionics computing and electrical systems, fly-by-wire systems, cartography applications, airport security, the electronic flight bag, wireless media streaming and future cockpit displays integrating HUD with synthetic vision.

Ground TransportationCritical infrastructure supervision, the gate of the future, security applications for passengers, tracks and stations, traffic optimisation applications, an urban rail signalling system and a rail network management solution for mobile dispatchers.

SecurityCloud computing and mobile phone security, an indoor positioning system, a multiple person real-time tracking and identification system, the smarter, safer city application, enhanced fingerprint acquisition, command and control systems, cryptographic key management and more.

DefenceCybersecurity solutions, the design system for ballistic missile defence systems, the underwater battle lab, the new tactile and 3D command and control interfaces, new military communications and security systems, enhanced UAV tactical and strategic systems technologies, early warning and smart radar systems, new software defined radio technologies, military networking systems and much more besides.

The first Group-wide Technodays, held at the Palais des Congrès in Paris from February 15-17, presented nearly 100 innovations from Thales’s five markets, and attracted more than 3,500 visitors.

A dedicated live blog enabled those who could not be present in Paris to follow the event from their desks. Featuring product overviews, video segments and interviews with VIP visitors, it attracted more than 10,000 unique visitors and generated 50,000 page views over the period of the event. (http://intranet.applications.corp.thales/wp/technodays/en)

TECHNODAYS 2012

Innovation on display

LIVE BLOG ALSO A SUCCESS

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Innovation is of enormous strategic importance to the Thales Group – indeed, it is one of the three pillars of the Group’s strategy, alongside growth and performance – and underpins the continued leadership of our company in each of our five markets.Marko Erman SVP, Research and Technology

16 LOGIN//Q2 2012

In March, the SESAR Joint Undertaking announced the winners of the 2012 SESAR Project Awards. The panel was unanimous in its decision to award the prize in the Best in Class category to the Navigation Infrastructure Rationalisation project, led by Chama Ben Khelifa of Thales.

Who is involved in the programme? SESAR is a Europe-wide joint undertaking that brings together around 110 partners and more than 2,000 experts. Its mandate is to prepare the standards and develop and validate the necessary operational procedures, technologies and prototypes for Europe’s future air traffic management systems. Industry players such as Airbus and Thales are working alongside Eurocontrol, Air Navigation Service Providers including NORACON (NORth European and Austrian CONsortium) and DSNA (France’s ANSP), and airport operators.

What is Thales’s role?Thales is playing a leading role in SESAR, with an involvement in 160 of the programme’s 302 projects and its 18 work packages. And the level of our R&D investments makes us the second-largest industry contributor after Eurocontrol. Why are we so heavily involved? Because the SESAR programme is a strategic opportunity for Thales to deploy our solutions in all three areas: ATM (where we’re No. 1 worldwide), avionics (European No. 1) and space (European No. 1).

How can we make the most of our investment in this programme? Internally, it’s a great opportunity to promote teamwork across the organisation, with over 250 of the Group’s experts involved from ten legal entities and four divisions (Air Operations, Avionics, Defence and Security C4I Systems, Space).

Externally, SESAR is forcing us to reinvent the way we cooperate with partners such as the European Commission, Airbus, DSNA and Eurocontrol. Instilling a culture of collaboration to support the convergence of technologies

is crucial to the programme’s success. And we’re learning a lot, particularly in terms of development methods and project management. At the same time, we’re being very careful to ensure that this high level of involvement delivers value for us and a return on our investment in terms of contracts in Europe, and that we’re able to reuse SESAR developments for other customers around the world.

Thales is also closely involved in the American NextGen programme. What opportunities is this opening up for Thales? SESAR and NextGen are the two most ambitious ATM modernisation initiatives of recent decades. By working on both sides of the Atlantic, we’re in an ideal position to develop the most advanced, interoperable solutions, and achieving that convergence will be a tremendous opportunity to boost our competitive performance at global level. Thales has already won four contracts under the NextGen programme.

HONOURS AT THE SESAR PROJECT AWARDS 2012

THE SESAR PROGRAMME

Thales is active in the fields of avionics, ATM and space but also in simulation, communication, security and surface transportation. Our ambition is to use this unique position and our long experience with our customers around the world to help shape tomorrow ’s sky.Jean-Loïc Galle, SVP, Air Operations

BELOW The winning teams at the 2012 SESAR Project Awards.Military OPS Center

ANSPATC

AirlineOperationCenter

Vehicules

Airport

METServiceProvider

Flow Management Center

17 LOGIN//Q2 2012

SWIM: The intranet of the airways

SWIM (System Wide Information Management) is the backbone of the SESAR programme, the secure system that will make

it possible to exchange all the necessary data reliably and according to standardised procedures. This secure intranet dedicated to air traffic management will be accessible to all operators and air traffic controllers as well as to pilots, airports and airlines.

All these stakeholders will benefit by having access to reliable projections about flights and weather conditions, the most up-to-date

aeronautical information and reports on traffic status and the capacity of the different control centres and airports. They will all have access to the same information at the same time, with operational views tailored to their specific needs.

Enabling this level of heightened interoperability requires a more service-oriented architecture which is safer and more secure, as well as offering additional functional capabilities as the various systems share more and more information. Thales’s leadership position in the SWIM work package is crucial in that the interoperability of its air traffic management products will be a key success factor in the future.”

Peter Howlett, Thales director of SESAR ATC projects

Initial 4D is a first step towards 4D trajectory management (latitude, longitude, altitude and time), one of the key

components of the SESAR programme. It’s a combination of new procedures relying on new technologies that enable aircraft systems and ground-based air traffic control systems to communicate via datalinks.

These datalinks will be used to exchange trajectory prediction data between pilots and controllers and uplink route information and time constraints to i4D-enabled aircraft, with time errors of less than 10 seconds at certain points. This in turn will improve traffic sequencing in the most congested parts of Europe’s airspace. In the approach phase, it will enable controllers to begin the sequencing procedure earlier in the flight and manage the descent phase more efficiently by minimising

i4D: air traffic management takes on a new dimension

the need for tactical interventions at low altitudes.

The programme was launched two years ago with our partners, Airbus, NORACON and Eurocontrol MUAC (Maastricht Upper Area Control Centre).

So where are we today? On 10 February, we conducted the first 4D trajectory flight trial along a route spanning four flight information regions (FIRs) between Maastricht, Copenhagen, Malmö and Stockholm. The Thales systems – ground systems at Malmö and avionics systems that had been specially modified for i4D and installed on the test aircraft – worked perfectly.

All procedures, datalink communications and ground-to-ground coordination tasks were successfully tested. At each of the selected waypoints, the aircraft was well within its time constraint, with an error of just a few seconds. ”

SESAR programme objectives

• Increase the capacity of the air traffic management system to cope with a projected doubling of traffic volumes by 2030

• Improve safety by a factor of 10

• Reduce the environmental impact of air traffic by 10%

• Make the ATM system more cost efficient by reducing operating costs by 50%.

Richard Houdebert, Thales leader for the SWIM work package

BELOW The component elements of the SWIM network.

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How is Thales involved in the protection of the environment?Thales participates in various national and transnational environmental programmes as part of an overall strategy of incorporating environmental criteria into the design of its products and services. The Manage HSE1 process, which was introduced in 2011, is starting to make serious inroads into our culture. For example, the Group now systematically includes environmental factors in the design and development of its products and services. The principles of eco-design can be applied effectively if everybody involved buys into the Group’s strategy from the outset – starting at the bid phase and continuing through development, manufacturing, purchasing and support. We are setting up an international network of Product HSE managers to help to make this process evolve into a specialised engineering discipline in its own right. Thales University is providing a specialised training course (ECODES) to support us in this effort.

What is eco-design exactly?Eco-design is an approach to the design of a product with special consideration for the environmental impacts of the product with the aim of improving its environmental performance over its whole lifecycle, which is usually divided into the procurement (or raw materials), manufacture, use and disposal stages. Eco-design begins at the time of the definition of product characteristics, because the design phase actually determines 80% of future impacts and offers the greatest degree of liberty.

How does it work?The goal is to turn environmental challenges into new opportunities by identifying hazardous substances at the design phase, finding alternatives to restricted or prohibited substances, using different materials, saving energy, planning for end-of-life disposal and recycling, and so on. Most of our design teams are already up to speed on energy efficiency and environmentally responsible materials. Now we need to take the effort to the next level, consolidate the progress we have made and continue to get the message across.

One approach is to assess the overall environmental impact of our products over their entire life cycle. Another approach is more selective and involves assessing the environmental impacts (energy consumption, CO2 emissions, use of natural resources, etc.) for specific phases in the life cycle (manufacturing, distribution, use, disposal, etc.).

The deployment of eco-design in our R&D and factories has created numerous initiatives, reducing the environmental impacts of our products, as well as lighting the way for further innovation and fostering creativity. There is also a “Roadmap” to guide the eco-design approach, which provides a detailed evaluation of the performance of all eco-design activities on an annual basis and then sets the new objectives to attain.

1 Health Safety & Environment.

The Technodays 2012 event was also the opportunity for Thales to demonstrate how an environmentally conscious approach to our business is part of the Group’s innovation. Login spoke to Sandrine Bouttier Stref, Thales Group Environment Director, who explains why eco-design plays an important role in the process.

Specific examples

Smart RadarsThe Smart Radar Processing solution acts as a filter for windfarms located near any civil or military surface radar installations. By removing false alarms caused by the wind turbines, it enables windfarms to be co-located near radar installations, and therefore offers greater opportunities for governments to meet their green energy targets.

Thales is also currently exploring a solution to develop ground-based radars that can generate their own power from the sun and the wind. In addition to using clean energy, radar components will contain gallium nitride (GaN), a new material whose unique properties can help reduce the environmental impact of electrical and electronic equipment.

TECHNODAYS 2012

Green innovation and eco-design

Smarter Safer CityThis solution offers a multitude of simulation models for cities, some of which can help authorities to reduce pollution in urban areas. One of the key benefits of this system is that it intelligently recreates city flows (cars, public

transport, pedestrians, etc.), enabling better management and optimisation as well as reduction of traffic congestion and travel times. The system also allows CO2 emission modelling to reduce the environmental impact of cities.

interview with Sandrine Bouttier Stref

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Interview with Luc Lallouette

S ESAR (Single European Sky ATM Research) is the technology component of the Single European Sky initiative, launched by the European Commission in 2000 to harmonise air

traffic management in Europe by 2025. To find out more, we talked to Luc Lallouette, Thales SESAR Project Director.

Why is SESAR so important? Europe has over 440 airports, which together handle close to 26,000 flights a day and more than 1.4 billion passengers a year. And while some airports have upgraded their ATM systems, many of them still rely on outdated tools and technologies that are out of place in the digital age.

Plus, the European authorities need to respond to the inevitable congestion of our skies, with air traffic volumes expected to more than double by 2030. The European Commission launched the Single European Sky initiative to address these issues, and SESAR is the component of the programme focusing on new technology.

The ultimate objective is to transition from conventional pilot-controller communications to a digital system combining Europe’s ground equipment with systems installed on board aircraft, thereby defragmenting European airspace. This integrated approach will lead to new concepts of operations such as “business trajectories” – flight paths optimised for each operator’s own criteria, with automatic trajectory deconfliction and delegation of new responsibilities.

The ambitious project is being conducted alongside the NextGen programme, which aims to modernise air traffic management in the United States. In a nutshell, the idea is to make air transport safer, cleaner, more efficient – and ultimately less costly for airlines to manage.

As the world leader in air traffic management, Thales is more closely involved in the SESAR programme – and bringing more new ideas to the table – than any other industry player. Spotlight on the latest developments in a game-changing research and development programme.

SESARTHE SESAR PROGRAMME

for safer, cleaner, more efficient skies in Europe


THALES

JOSE RODRIGUES

+61 411 541 069

[email protected]

JR-PORT-email

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