REG - BAE SYSTEMS PLC - Half Yearly Report <Origin Href="QuoteRef">BAES.L</Origin> <Origin Href="QuoteRef">RR.L</Origin> - Part 3
06/09/2014 22:42
- Part 3: For the preceding part double click ID:nRSe8045Nb
37 42
Deferred tax assets 950 901
13,011 13,512
Current assets
Inventories 690 680
Trade and other receivables including amounts due from customers for contract work 3,054 3,038
Current tax 8 8
Other financial assets 74 81
Cash and cash equivalents 1,374 2,222
Assets held for sale 5 - 140
5,200 6,169
Total assets 18,211 19,681
Non-current liabilities
Loans (2,459) (2,524)
Trade and other payables (1,035) (1,160)
Retirement benefit obligations 6 (3,898) (3,665)
Other financial liabilities (70) (59)
Deferred tax liabilities (4) (7)
Provisions (473) (403)
(7,939) (7,818)
Current liabilities
Loans and overdrafts (100) (402)
Trade and other payables (6,505) (7,074)
Other financial liabilities (94) (81)
Current tax (520) (497)
Provisions (277) (391)
(7,496) (8,445)
Total liabilities (15,435) (16,263)
Net assets 2,776 3,418
Capital and reserves
Issued share capital 88 89
Share premium 1,249 1,249
Other reserves 4,652 4,868
Retained earnings - deficit (3,252) (2,825)
Total equity attributable to equity holders of the parent 2,737 3,381
Non-controlling interests 39 37
Total equity 2,776 3,418
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable to equity holders of the parent
Issued Share Otherreserves1£m Retained earnings Total Non-controlling Total
share premium £m £m interests equity
capital £m £m £m
£m
At 1 January 2014 89 1,249 4,868 (2,825) 3,381 37 3,418
Profit for the period - - - 429 429 5 434
Total other comprehensive income for the period - - (217) (258) (475) (1) (476)
Share-based payments - - - 22 22 - 22
Net purchase of own shares (1) - 1 (237) (237) - (237)
Ordinary share dividends - - - (383) (383) (2) (385)
At 30 June 2014 88 1,249 4,652 (3,252) 2,737 39 2,776
At 1 January 2013 90 1,249 5,079 (2,698) 3,720 54 3,774
Profit for the period - - - 411 411 4 415
Total other comprehensive income for the period2 - - 364 247 611 (1) 610
Share-based payments - - - 26 26 - 26
Net purchase of own shares (1) - 1 (93) (93) - (93)
Ordinary share dividends - - - (380) (380) (12) (392)
At 30 June 20132 89 1,249 5,444 (2,487) 4,295 45 4,340
1 The net decrease comprises translation reserve decrease £182m (2013 increase
£311m), hedging reserve decrease £35m (2013 increase £53m) and capital
redemption reserve increase £1m (2013 £1m).
2 Restated for the updated fair value of longevity swaps following
consideration of the impact of the adoption of IAS 19 (revised 2011), Employee
Benefits, and IFRS 13, Fair Value Measurement.
NOTES TO THE CONDENSED HALF-YEARLY FINANCIAL STATEMENTS -
CONDENSED CONSOLIDATED BALANCE SHEET
5. Property, plant and equipment and assets held for sale
In the period, the Group completed the sale and leaseback of two properties in
Saudi Arabia generating £441m in cash, of which £418m was received in the
period. At 31 December 2013, one of the properties was included in property,
plant and equipment and the other in assets held for sale.
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)
Actual return on assets excluding amounts included in interest expense 209 169 378
Increase in liabilities due to changes in assumptions and experience (523) (239) (762)
Additional contributions in excess of service cost 148 - 148
Recurring contributions above/(below) service cost 21 (6) 15
Net interest expense (90) (8) (98)
Foreign exchange adjustments - 12 12
Movement in US healthcare schemes - (1) (1)
Total IAS 19 deficit at 30 June 2014 (4,507) (339) (4,846)
Allocated to equity accounted investments and other participating employers 1,109 - 1,109
Group's share of IAS 19 deficit excluding Group's share of amounts allocated to equity accounted investments and other participating employers at 30 June 2014 (3,398) (339) (3,737)
Represented by:
Pension prepayments (within other receivables) 91 70 161
Retirement benefit obligations (3,489) (409) (3,898)
(3,398) (339) (3,737)
The net increase in liabilities due to changes in assumptions and experience
reflects, in the UK, a 0.2 percentage point decrease in the real discount rate
to 0.9% and, in the US, a 0.6 percentage point decrease in the nominal
discount rate to 4.3%, partially offset by experience gains in the UK pension
schemes.
Certain of the Group's equity accounted investments participate in the Group's
defined benefit schemes as well as Airbus SAS, the Group's share of which was
disposed of in 2006. As these schemes are multi-employer schemes, the Group
has allocated a share of the IAS 19 pension deficit to its equity accounted
investments and other participating employers using a consistent allocation
method intended to reflect a reasonable approximation of their share of the
deficit. The allocation method for all schemes is based on the BAE Systems
Pension Scheme's schedule of contributions agreed with the sponsoring
employers and trustees as part of the triennial funding valuations performed
in 2011. The Group's share of the IAS 19 pension deficit allocated to the
equity accounted investments is included in the balance sheet within equity
accounted investments. In the event that an employer who participates in the
Group's pension schemes fails or cannot be compelled to fulfil its obligations
as a participating employer, the remaining participating employers are obliged
to collectively take on its obligations. The Group considers the likelihood of
this event arising as remote.
NOTES TO THE CONDENSED HALF-YEARLY FINANCIAL STATEMENTS -
OTHER INFORMATION
7. Equity dividends
Six months ended Six months ended
30 June 2014 30 June 2013
£m £m
Prior year final 12.1p dividend per ordinary share paid in the period (2013 11.7p) 383 380
The directors have declared an interim dividend of 8.2p per ordinary share
(2013 8.0p), totalling £259m (2013 £258m). The dividend will be paid on 1
December 2014 to shareholders registered on 24 October 2014. The ex-dividend
date is 23 October 2014.
Shareholders who do not at present participate in the Company's Dividend
Reinvestment Plan and wish to receive the final dividend in shares rather than
cash should complete a mandate form for the Dividend Reinvestment Plan and
return it to the registrars no later than 10 November 2014.
8. Fair value measurement
Fair value of financial instruments
Certain of the Group's financial instruments are held at fair value.
The fair value of a financial instrument is the price that would be received
to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the balance sheet date.
The fair values of financial instruments held at fair value have been
determined based on available market information at the balance sheet date,
and the valuation methodologies listed below:
- the fair values of forward foreign exchange contracts are calculated by
discounting the contracted forward values and translating at the appropriate
balance sheet rates;
- the fair values of both interest rate and cross-currency swaps are
calculated by discounting expected future principal and interest cash flows
and translating at the appropriate balance sheet rates; and
- the fair values of loans and overdrafts have been estimated by discounting
the future cash flows to net present values using appropriate market-based
interest rates prevailing at 30 June.
Due to the variability of the valuation factors, the fair values presented at
30 June may not be indicative of the amounts the Group would expect to realise
in the current market environment.
Fair value hierarchy
The fair value measurement hierarchy is as follows:
- Level 1 - Quoted prices (unadjusted) in active markets for identical assets
or liabilities;
- Level 2 - Inputs other than quoted prices included within level 1 that are
observable for the asset or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices); and
- Level 3 - Inputs for the asset or liability that are not based on observable
market data (i.e. unobservable inputs).
Carrying amounts and fair values of certain financial instruments
Carrying amounts
30 June 2014 31 December 2013
£m £m
Financial instrumentsmeasured at fair value:
Non-current
Available-for-sale financial assets 3 3
Other receivables1 218 211
Other financial assets 37 42
Other financial liabilities (70) (59)
Loans (295) (307)
Trade and other payables1 (236) (237)
Current
Other financial assets 74 81
Other financial liabilities (94) (81)
Financial instruments not measured at fair value:
Non-current
Loans (2,164) (2,217)
Current
Cash and cash equivalents 1,374 2,222
Loans and overdrafts (100) (402)
1 Represents US deferred compensation plan assets and liabilities.
Financial assets and liabilities in the Group's consolidated balance sheet are
either held at fair value or their carrying value approximates to fair value,
with the exception of loans, most of which are held at amortised cost.
The fair value of total loans estimated using market prices at 30 June 2014 is
£2,811m (31 December 2013 £3,088m).
All of the financial assets and liabilities measured at fair value are
classified as level 2 using the fair value hierarchy. There were no transfers
between levels during the period.
9. Related party transactions
Transactions with related parties are shown on page 179 of the Annual Report
2013. The more significant transactions in the period are disclosed below:
Six months ended Six months ended
30 June 30 June
2014 2013
£m £m
Sales to equity accounted investments 435 528
Purchases from equity accounted investments 57 55
30 June 31 December
2014 2013
£m £m
Amounts owed by equity accounted investments 94 56
Amounts owed to equity accounted investments 552 563
10. Annual General Meeting
The Annual General Meeting of BAE Systems plc will be held on 7 May 2015.
Cautionary statement:
All statements other than statements of historical fact included in this
document, including, without limitation, those regarding the financial
condition, results, operations and businesses of BAE Systems and its strategy,
plans and objectives and the markets and economies in which it operates, are
forward-looking statements. Such forward-looking statements which reflect
management's assumptions made on the basis of information available to it at
this time, involve known and unknown risks, uncertainties and other important
factors which could cause the actual results, performance or achievements of
BAE Systems or the markets and economies in which BAE Systems operates to be
materially different from future results, performance or achievements
expressed or implied by such forward-looking statements. BAE Systems plc and
its directors accept no liability to third parties in respect of this report
save as would arise under English law. Accordingly, any liability to a person
who has demonstrated reliance on any untrue or misleading statement or
omission shall be determined in accordance with section 90A of the Financial
Services and Markets Act 2000. It should be noted that section 90A contains
limits on the liability of the directors of BAE Systems plc so that their
liability is solely to BAE Systems plc.
This information is provided by RNS
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