REG - BAE SYSTEMS PLC - Final Results <Origin Href="QuoteRef">BAES.L</Origin> - Part 3
19/02/2015 07:01
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86 (1,071)
Cash and cash equivalents at 1 January 2,222 3,334
Effect of foreign exchange rate changes on cash and cash equivalents 5 (41)
Cash and cash equivalents at 31 December 2,313 2,222
Comprising:
Cash and cash equivalents 2,308 2,222
Cash and cash equivalents (included within assets held for sale) 5 6 -
Overdrafts (1) -
Cash and cash equivalents at 31 December 2,313 2,222
NOTES TO THE ACCOUNTS
1. PREPARATION
The consolidated financial statements of BAE Systems plc have been prepared on
a going concern basis and in accordance with EU-endorsed International
Financial Reporting Standards (IFRS) and the Companies Act 2006 applicable to
companies reporting under IFRS.
The consolidated financial statements are presented in pounds sterling and,
unless stated otherwise, rounded to the nearest million. They have been
prepared under the historical cost convention, as modified by the revaluation
of available-for-sale financial assets, and other relevant financial assets
and financial liabilities (including derivative instruments).
Changes in accounting policies
With effect from 1 January 2014, the Group has adopted the following new
standards and amendments to existing standards:
- IFRS 10, Consolidated Financial Statements
- IFRS 11, Joint Arrangements
- IFRS 12, Disclosure of Interests in Other Entities
- IAS 27, Separate Financial Statements (revised 2011)
- IAS 28, Investments in Associates and Joint Ventures (revised 2011)
With the exception of new disclosure requirements, none of these have impacted
the consolidated financial statements of the Group.
There are no other EU-endorsed IFRSs or IFRIC interpretations that are not yet
effective that are expected to have a material impact on the Group.
IFRS 15, Revenue from Contracts with Customers, issued in May 2014, is not yet
EU endorsed. Management is in the process of reviewing the impact that this
will have on the Group.
IFRS 9, Financial Instruments, issued in July 2014, is not yet EU endorsed. It
is not expected to have a material impact on the Group.
2. SEGMENTAL ANALYSIS
Sales and revenue by reporting segment
Combined sales of Less: Add: Revenue
Group and share of equity accounted investments sales by equity sales to equity
accounted investments accounted investments
2014 20131 2014 20131 2014 20131 2014 20131
£m £m £m £m £m £m £m £m
Electronic Systems 2,415 2,466 (74) (61) 74 61 2,415 2,466
Cyber & Intelligence 1,085 1,243 - - - - 1,085 1,243
Platforms & Services (US) 3,266 3,912 (83) (68) - - 3,183 3,844
Platforms & Services (UK) 6,623 7,174 (1,207) (1,176) 1,104 1,078 6,520 7,076
Platforms & Services (International) 3,572 4,063 (793) (873) - - 2,779 3,190
HQ 279 306 (279) (306) - - - -
17,240 19,164 (2,436) (2,484) 1,178 1,139 15,982 17,819
Intra-group sales/revenue (603) (984) - - 51 29 (552) (955)
16,637 18,180 (2,436) (2,484) 1,229 1,168 15,430 16,864
Reporting segment result
Underlying Non-recurring Amortisation of Impairment of intangible assets Reporting
EBITA2 items3 intangible assets segment result
2014 20131 2014 2013 2014 2013 2014 2013 2014 20131
£m £m £m £m £m £m £m £m £m £m
Electronic Systems 373 346 - - (14) (15) (1) (4) 358 327
Cyber & Intelligence 123 115 - - (58) (63) - (425) 65 (373)
Platforms & Services (US) 147 229 - 7 (18) (21) (169) (458) (40) (243)
Platforms & Services (UK) 772 915 - - (84) (84) - - 688 831
Platforms & Services (International) 366 429 - (1) (10) (6) - - 356 422
HQ4 (79) (109) - - - - - - (79) (109)
1,702 1,925 - 6 (184) (189) (170) (887) 1,348 855
Financial expense of equity accounted investments (30) (8)
Taxation expense of equity accounted investments (18) (41)
Operating profit 1,300 806
Finance costs (418) (384)
Profit before taxation 882 422
Taxation expense (130) (246)
Profit for the year 752 176
1. Re-presented for the transfer of the UK Munitions business from Platforms &
Services (US) to Platforms & Services (UK) from 1 January 2014.
2. Earnings before amortisation and impairment of intangible assets, finance
costs and taxation expense (EBITA) excluding non-recurring items.
3. In 2014, Platforms & Services (International) comprises a £47m gain upon
acquisition of an additional 59% shareholding in Saudi Development and
Training Company and control of the company, and a £47m charge against the
carrying value of Aircraft Accessories and Components Company upon
classification of the business as held for sale (see note 5).
4. In 2014, the HQ reporting segment includes a £30m benefit (2013 £nil) from
re-assessment of a long-term liability. In 2013, there was a £32m charge in
respect of a US contract pricing dispute.
3. FINANCE COSTS
2014 2013
£m £m
Interest income 28 48
Gain on remeasurement of financial instruments at fair value through profit or loss 99 51
Foreign exchange gains 114 117
Financial income 241 216
Interest expense on bonds and other financial instruments (177) (197)
Facility fees (4) (11)
Net present value adjustments (48) (20)
Net interest expense on retirement benefit obligations (147) (186)
Loss on remeasurement of financial instruments at fair value through profit or loss (75) (146)
Foreign exchange losses (208) (40)
Financial expense (659) (600)
Finance costs (418) (384)
Additional analysis
2014 2013
£m £m
Finance costs:
Group (418) (384)
Share of equity accounted investments (30) (8)
(448) (392)
Analysed as:
Underlying interest (expense)/income:
Group (201) (180)
Share of equity accounted investments (3) 1
(204) (179)
Other:
Group:
Net interest expense on retirement benefit obligations (147) (186)
Fair value and foreign exchange adjustments on financial instruments and investments (70) (18)
Share of equity accounted investments:
Net interest expense on retirement benefit obligations (8) (9)
Fair value and foreign exchange adjustments on financial instruments and investments (19) -
(448) (392)
4. EARNINGS PER SHARE
2014 2013
£m Basic Diluted pence £m Basic Diluted pence
pence per share pence per share
per share per share
Profit for the year attributable to equity shareholders 740 23.4 23.3 168 5.2 5.2
(Deduct)/add back:
Re-assessment of existing tax provisions (51) -
Non-recurring items - (6)
Net interest expense on retirement benefit obligations, post tax 126 153
Fair value and foreign exchange adjustments on financial instruments and investments, post tax 72 14
Amortisation and impairment of intangible assets, post tax 156 165
Impairment of goodwill 161 865
Underlying earnings, post tax 1,204 38.0 37.9 1,359 42.0 41.8
Millions Millions Millions Millions
Weighted average number of shares used in calculating basic earnings per share 3,165 3,165 3,234 3,234
Incremental shares in respect of employee share schemes 10 14
Weighted average number of shares used in calculating diluted earnings per share 3,175 3,248
5. HELD FOR SALE
In August, the Group announced an agreement for the proposed sale of its 75%
holding in BAE Systems Land Systems South Africa Proprietary Limited (LSSA)
for cash consideration of 641 million Rand (£36m), subject to closing
adjustments. The proposed disposal, which is conditional upon receiving
regulatory and other approvals, is expected to complete during 2015.
Accordingly, LSSA is presented as held for sale at 31 December 2014.
As part of a planned reorganisation of the Group's portfolio of interests in a
number of industrial companies in Saudi Arabia, BAE Systems expects to
complete the disposal of its 85.7% shareholding in Aircraft Accessories and
Components Company (AACC) during 2015, subject to the satisfaction of certain
regulatory approvals. Accordingly, AACC is presented as held for sale at 31
December 2014.
LSSA1£m AACC Total
£m £m
Intangible assets 19 - 19
Property, plant and equipment 9 - 9
Inventories 7 11 18
Receivables 12 9 21
Deferred tax assets 3 - 3
Cash and cash equivalents 6 - 6
Assets held for sale 56 20 76
Payables (9) (8) (17)
Deferred tax liabilities (2) - (2)
Provisions (4) - (4)
Liabilities held for sale (15) (8) (23)
1. The carrying value of LSSA includes a non-controlling interest of £5m.
6. RETIREMENT BENEFIT OBLIGATIONS
UK US and Total
£m other £m
£m
Total IAS 19 deficit at 1 January 2014 (4,272) (266) (4,538)
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