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TWO NEW CONTRACTS HELP BAE SYSTEMS ACHIEVE RECORD GROWTH IN MINE-PROTECTED VEHICLES BUSINESS

03-05-2007

BENONI, South Africa - New contracts from the US Army and Sweden have helped BAE Systems Land Systems OMC achieve record growth. During the past two years the company has achieved international sales, worth R900 million, of its world-leading mine protected armoured and peacekeeping vehicles.

In the past few months, BAE Systems has won two major export contracts for 267 vehicles worth more than R630 million.

The US Army has ordered 169 of the South African RG31 Mk5 mine-protected vehicles worth US$63 million (about R453 million at current exchange rates). These are additional to an operational fleet of 242 vehicles which were ordered through General Dynamics Land Systems, Canada.

Sweden's defence procurement agency Försvarets Materielverk (FMV) has placed a follow-on order for 98 RG32M mine-hardened patrol vehicles worth ¬21 million (R196 million). FMV placed an initial order for 102 similar vehicles in 2005.

"Since BAE Systems purchased a major share in the company in 2004, Land Systems South Africa's annual turnover has quadrupled from R300 million to over R 1.2 billion in 2006. BAE Systems has reinvested the profits into the South African business, enabling it to take on more export work," said Johan Steyn, managing director of BAE Systems Land Systems South Africa.

Besides the US and Sweden, other export customers that have placed orders with the company over the last couple of years include Canada, Italy, the United Arab Emirates and the United Nations.

"The combination of increased export revenues and reinvested profits, have enabled us to retain, develop and expand our capabilities so that we can better serve local requirements and be well positioned to support South Africa's future local military vehicle programmes, as well as providing further scope for growth," said Steyn.

Through BAE Systems' re-investment, Land Systems South Africa has strengthened its capacity and capabilities for both local and international customers, expanded its under-roof factory space at the Benoni plant by 20 percent, upgraded facilities, installed new machines at its Gear Ratio plant in Alrode and created about 200 jobs.

Black Economic Empowerment (BEE) bases have also been strengthened by Land Systems OMC targeting support to BEE companies in its dealer and supplier networks, as well as upping its social responsibility activities and skills-training programmes.

"Our BEE partners, DGD Technologies, were already in place with a 25% shareholding when we became part of BAE Systems while our activities since then have also expanded our dealer network to 68% BEE companies," says Thami Mbele, Director and General Manager of Land Systems OMC.

"Our employment diversity is ahead of the requirements specified in the draft local Defence Industry Charter and in 2006 we increased our spent with BEE suppliers to 38% of our total supplier spend," Mbele said.

About BAE Systems
BAE Systems is a global defense and aerospace company, delivering a full range of products and services for air, land, and naval forces, as well as advanced electronics, information technology solutions, and customer support services. BAE Systems, with 88,000 employees worldwide, had 2006 sales that exceeded $25 billion.

For further information, please contact:
Natasha Pheiffer, BAE Systems
Tel: +27 (0)11 747 3381
natashap@baesystemsomc.co.za


Shannon Smith, BAE Systems
Tel: +1 703-907-8257 Mobile: +1 703-967-3854
shannon.n.smith@baesystems.com



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