Business Analysis of BAE Systems
Business Analysis of BAE Systems
Contents
Introduction 2
Sources of Information 3
Sources Used 3
BAe Systems Annual Report 3
www.baesystems.com 3
http://fame.bvdep.com/ 3
www.hemscott.com 3
Sources Not Used 3
Newspapers etc. 3
www.FT.com 4
Datastream 4
The Impact of FRS 3 5
Profit and Loss Account 5
Continuing and Discontinued Operations 5
Exceptional Items 5
Extraordinary Items 6
Earnings per Share 6
Segmental Reporting 6
Note of Historical Cost Profit and Loss 6
Statement of Total Recognized Gains and Losses 6
Reconciliation of Movements in Shareholders Funds 7
Comparative Figures 7
Conclusion 7
Performance Analysis of BAe Systems plc 8
Profitability Ratios 9
Return on Capital Employed 9
Net Profit Margin 10
Sales/Capital Employed 10
Liquidity Ratios 10
Current Ratio 10
Liquidity Ratio 11
Gearing and Interest Cover 11
Efficiency Ratios 11
Net Assets Turnover 11
Stock Turnover 11
Investor Ratios 12
Earnings per Share 12
Dividends per Share 12
Dividend Cover 13
P/E Ratio 13
Dividend Yield 13
The Future 14
Appendix 15
Bibliography 16
Comparison growth between BAe and the FTSE 100 17
Fame Company Analysis 18
Introduction
The purpose of this assignment is to summarise, from the point of view of the investor or advisor, three main areas with reference to BAe Systems plc. These are:
* Sources of Information available to assist the investor, and their relative usefulness.
* The Impact of FRS 3, notable whether this regulation makes the BAe Systems report more user friendly to the potential investor, and hence more useful.
* Performance Analysis. A thorough analysis of the past 5 years results using financial ratios.
* Future Prospects. Building from the previous topic, a discussion of the future prospects of the company, based on their past performance.
Sources of Information
Sources Used
BAe Systems Annual Report
The Annual Report is obviously of immense usefulness to those wanting to undertake detailed analysis of the progress of the company. Not only does the report provide an overview of the management philosophy, but vastly detailed financial information on the actual performance of the company.
www.baesystems.com
The BAe website should be the first port of call for investors or advisors. All recent company accounts are published on the site, along with news of recent events, joint ventures, product launches, etc. This is a vital source of information for all interested parties, particularly as the website is the easiest means of obtaining a company report.
http://fame.bvdep.com/
Fame is an excellent website which offers a vast amount of information on virtually any PLC for the investor. The web site contains a summation of Profit and Loss, and Balance Sheets for the previous 10 years, as well as a large number of graphing tools, comparisons, lists of subsidiaries, etc. Possibly the most useful aspect for the investor is a list of all the important financial ratios calculated over the past 10 years. This site is second in usefulness only to the BAe Systems website, and was the major source of information for portions of this assignment.
www.hemscott.com
Hemscott is a useful site, which provides a summary page about a company, along with a useful company map, allowing the user to explore the company structure. This sight lacks the depth of financial information that the other two provide, and is more use to those wanting superficial information than deep analysis.
Sources Not Used
Newspapers etc.
Traditionally the archives of the Financial Times and other broadsheets would have been searched to provide historic information for the investor. With the advent of the Internet, this source of information has now been rendered less useful for deep analysis, as too time consuming, particularly as the FT is now available on-line.
www.FT.com
The Financial Times site is a wealth of information for anyone researching company history and activity. For a report such as this, focusing on accounting rather than more subjective data, this site has limited use.
Datastream
Datastream is a very useful source of information, including most of the information for an analysis such as this. The site was not used as all the necessary information was found elsewhere.
The Impact of FRS 3
The aim of this section of the report is to analyse the impact of the FRS 3 legislation on the BAe Systems Annual report, and specifically to examine whether the changes introduced have made this report more useful to the investor or advisor. The impact of FRS 3 is divided into several areas, which will be listed below.
Profit and Loss Account
Continuing and Discontinued Operations
FRS 3 dictates that the Profit and Loss Account differentiates between continuing operations, acquisitions, and discontinued operations. The purpose of this is to allow users of the accounts to assess the financial performance of the various areas of business in which the company operates, and to allow the user to gain a clearer picture of potential future income streams from these operations. In view of the very large scope of BAe Systems operations, this aspect of FRS 3 should allow the user to gain a much clearer view of the current state of business affairs within the company. BAe currently has 88 subsidiaries, a number that is highly likely to change due to the one off "project" nature of a large defence and aerospace business. It is therefore very useful to the investor to have a clear picture of the current state of play within such a large corporate structure.
Exceptional Items
Exceptional items differ from Extraordinary items in that they are an inherent part of the business of the company, but due to the amounts involved should be reported separately to explain the resulting profit or loss for the period. The effect of FRS 3 on exceptional items is to make their reporting clearer, as all exeptionals have to be reported in the Profit and Loss Account either as separate items, or as an aggregate of similar exeptionals with a note, rather than appearing simply appearing as a netted figure. This step should allow BAe investors to have a clearer picture of the financial performance of the company. Following on from the paragraph above, BAe is a large multinational company with many subsidiaries, and as such is likely to have a number of acquired and discontinued operations at any given year end. The exceptional items occurring from these acquisitions and disposals is likely to have a material effect on the reported results, therefore it is in the best interests of the shareholder to be made aware of each individual item, rather than a simple netted figure. For example BAe included a charge to the Profit and Loss Account of £268 m for the year ended '99, composed of 4 items, compared with a gain of £288 m for the year ended '98 composed of 6 items.
Extraordinary Items
An extraordinary item is an item that is highly unusual, and falls outside the normal scope of operations of the company. The treatment applied to extraordinary items under FRS 3 is to require that they be shown on the face of the Profit and Loss Account. Formerly exceptional items may have been hidden as a note under the Profit and Loss Account, and so have been less obvious to the non-financial shareholder. This regulation provides a clearer picture of the financial affairs of the company, so is useful to the user.
Earnings per Share
FRS 3 dictates that earnings per share are stated, and that it is calculated on profit attributable to equity shareholders of the company. If the company decided to calculate EPS under any other basis, they would have to state the basis, and why this was used. In order to allow shareholders to compare their investments on a like for like basis, either with other investments, or over a period of years, it is vital that the means of comparison, EPS, are the same. FRS 3 either ensures the measure used is consistent, or the shareholders understand that a different calculation has been used. BAe declare 4 different EPS figures, allowing a range of choices for the user, but the first is the EPS figure dictated by FRS 3, allowing an easy comparison for users with limited financial knowledge.
Segmental Reporting
It is important for the user of accounts to have a full understanding of the sectors and countries in which a company operates, in order to have an understanding of the risk involved. The effect of this portion of FRS 3 is to include a full Segmental report in the accounts, and to note the effect of any new acquisition, etc, on the segmentation of the company.
Note of Historical Cost Profit and Loss
This item is an abbreviated restatement of the Profit and Loss account. The effect of this statement is to show the profit or loss figure as if no revaluation of assets had occurred. This statement is useful to the user, as it allows them to compare more easily one company with another on the same basis, by comparing historic costs, rather than predictions of future values, etc.
Statement of Total Recognized Gains and Losses
FRS 3 introduces the Statement of Total Recognized Gains and Losses to the accounts for the first time. The effect of this statement is to highlight items which regulations dictate must be sent to reserves, rather than appearing in the Profit and Loss Account, or the Balance Sheet. This again clarifies for the user the Return on Equity, and how it was achieved within the company. For instance, in the '99 accounts, items such as Currency Translation, Revaluation of Land and Buildings and Deferred Taxation are recognized. These items would ...
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Statement of Total Recognized Gains and Losses
FRS 3 introduces the Statement of Total Recognized Gains and Losses to the accounts for the first time. The effect of this statement is to highlight items which regulations dictate must be sent to reserves, rather than appearing in the Profit and Loss Account, or the Balance Sheet. This again clarifies for the user the Return on Equity, and how it was achieved within the company. For instance, in the '99 accounts, items such as Currency Translation, Revaluation of Land and Buildings and Deferred Taxation are recognized. These items would formally have been recognized in Notes to the Accounts, so this Statement adds considerably to the clarity and ease of use of the accounts to shareholders.
Reconciliation of Movements in Shareholders Funds
This reconciliation is designed to show movements that may not have been shown in either the Profit and Loss Account, or the Statement of Total Recognized Gains and Losses. This would include entries in the '99 accounts such as New Share Capital Subscribed, and shares issued in relation to a merger. Once again these items would have been recognized else where, in Notes to the accounts, but are presented here in a clearer, easier to use and more recognizable format.
Comparative Figures
FRS 3 requires that comparative figures be given for all primary statements in the company accounts, and any notes that accompany these statements. These comparatives are of considerable use and convenience to those using the accounts. Whilst comparisons are available by accessing previous years accounts, producing comparatives allows much easier use of the accounts to assess trends, etc.
Conclusion
In conclusion, FRS 3 makes a considerable change to the format of the annual Company Report. In all areas information is more clearly presented, and easier to use, particularly for the non-accountant. The effect of large amounts of new information can, in some cases, make a confusing situation less clear, but in the case of FRS 3 this has been avoided buy easily understood formats and style of presentation. The Annual Report of BAe Systems has been made clearer, and significantly more informative, particularly for the non-financial investor by the introduction of FRS 3, and as such, adds to shareholder knowledge and value.
Performance Analysis of BAe Systems plc
It is the purpose of this section of the report to analyse the performance of the company using financial ratios, as listed below. All ratios calculated have been included, but only the most significant will be discussed.
LIQUIDITY RATIOS
31/12/1999
31/12/1998
31/12/1997
31/12/1996
31/12/1995
Average
Current Ratio
.2
.51
.67
.52
.65
.51
Liquidity Ratio
0.97
.17
.13
.05
.04
.07
Shareholders Liquidity Ratio
2.32
0.75
0.6
0.72
0.29
0.93
Solvency Ratio (%)
42.22
22.32
21.01
21.92
2.14
23.92
Asset Cover
5.09
0.08
7.53
1.18
6.99
0.17
Gearing (%)
72.49
47.57
80.53
68.87
364.44
86.78
Shareholders Funds per Empl. (Unit)
45742.57
43440.86
40000
36021.28
21090.91
57259.12
Working Capital per Employee (Unit)
8851.49
7397.85
54539.17
42617.02
52454.55
33172.02
Total Assets per Employee (Unit)
345227.72
94623.66
90345.62
64361.7
73750
213661.7
Interest Cover
3.83
8.43
2.97
4.51
2.44
4.43
PROFITABILITY RATIOS
31/12/1999
31/12/1998
31/12/1997
31/12/1996
31/12/1995
Average
Profit Margin (%)
6.52
3.82
3.16
6.57
4.08
6.83
Return on Shareholder Funds (%)
6.24
48.17
3.25
25.1
25.22
23.59
Return on Capital Employed (%)
4.36
20.63
4.96
0.55
5.68
9.236
Return on Total Assets (%)
2.63
0.75
2.78
5.5
3.06
4.94
Sales/Capital Employed (%)
68
60
56
60
39
56
Salaries/Turnover (%)
23.46
8.84
6.02
7.81
9.65
9.15
EFFICIENCY RATIOS
31/12/1999
31/12/1998
31/12/1997
31/12/1996
31/12/1995
Average
Stock Turnover
4.52
4.88
3.69
3.71
2.64
3.88
Debtors Turnover
1.8
33.37
5.4
5.04
4.11
1.94
Debtor Collection (days)
30.94
0.94
67.61
72.45
88.82
54.152
Creditors Payment (days)
88.57
67.85
47.67
57.77
80.11
68.39
Net Assets Turnover (£)
0.67
.49
.57
.6
.39
.344
Fixed Assets Turnover (£)
0.77
2.79
3.31
3.07
3.17
2.62
Turnover per Employee (Unit)
39465.35
51440.86
67442.4
37531.9
30477.27
45271.6
Average Remun. Per Year (Unit)
32712.87
28537.63
26820.28
24489.36
25636.36
27639.3
Profit per Employee (Unit)
9089.11
20924.73
5299.54
9042.55
5318.18
9934.82
INVESTORS RATIOS
31/12/1999
31/12/1998
31/12/1997
31/12/1996
31/12/1995
Average
Dividends per share (p)
8
6.5
4.9
3.9
3.1
5.28
Eps (p) 1
30.8
29.4
25
7.4
2.2
22.96
Dividend cover
3.85
4.52
5.10
4.46
3.94
4.37
Market price (p)
500
425
320
200
-
289
P/e ratio
6.23
4.46
2.80
1.49
-
0.99
Dividend yield
.60%
.53%
.53%
.95%
-
.32%
Earnings yield
6.16%
6.92%
7.81%
8.70%
-
5.92%
Reproduced from http://fame.bvdep.com
Excluding goodwill amortisation and exceptional items
Profitability Ratios
It should be noted in all analysis below that in the year ended '98 the company sold an investment in Orange plc, realising an exceptional profit of £368 million, causing a distortion of results, and hence ratio's throughout that year. There is also a similar distortion in the year ended '96, so the ratio's most reliable for the forecasts of past and future trends are the years '95, '97 and '99.
Return on Capital Employed
ROCE has moved between 20.63% ('98) to 4.36% for the year ended '99, with an average figure of 9.23%. The figure for the years '99, '97 and '95 would appear to be the most reliable figures in this group, moving between 4.36% and 5.68%. This figure would appear to give a low return to shareholders and lenders, but due to the interest cover and gearing figures reviewed below, it can be assumed that due to the large size of the company and it's borrowings, a low rate of interest has been negotiated. Also, as mentioned below the high, and sometimes very high level of gearing has led to a much higher return to shareholders than the ROCE figure would indicate, as observed in Return on Shareholders Funds, in the table above. The probable cause of the low ROCE figure is the low Net Profit Margin figure, which will be discussed below.
Net Profit Margin
The companies Net Profit Margin has moved in the range of 3.16% to 13.82% over the last 5 years. As above the figures most reliable for analyse are the years '99, '97 and '95. The range then becomes 3.16% to 6.52%. This is a relatively low figure compared with the ideals of a smaller business, but it should be remembered that BAe turned over in excess of 7 billion pounds for the last financial year, producing a large profit from a low margin.
For a company involved in large scale project and tender work the profit margin will be eroded by the need to produce a competitive quote against global competition, and the need to finance massive Research and Development spending in order to keep the company at the fore front of technology. The company employs a highly skilled workforce, with an average wage of £34,500 for the year ended '99, which although eroding the profit margin, allows the company to keep their global position.
The rise in Profit Margin this year to 6.52%, has been helped by a net decrease in Debtors of £122 million, and a decrease in Stocks of £100 million, as seen in the Cash Flow Statement, and the Debtor Collection Days, and the Stock Turnover days in the table above. As mentioned in Liquidity Ratio, below, the company is working toward a leaner, more efficient structure, which if successful, should produce a continued increase in Net Profit Margin in years to come.
Sales/Capital Employed
This figure has risen virtually ever year, and gives a good indication of increasing efficiency within the company, as has been highlighted above and below. This figure also gives a clearer view of the efficiency of the company than those involving profit, as this figure excludes any extraordinary or exceptional items that may otherwise distort the view of the finances of the company through ratio analysis. The continued rise of this ratio will allow the company to increase their ROCE figure, which becomes even more desirable as they continue to reduce their gearing.
Liquidity Ratios
Current Ratio
The Current Ratio has moved in a band of 1.2 - 1.67:1 between '95 and '99, with '99 being the lowest year at 1.2. Although the apocryphal normal is 2:1, this should by no means be an absolute figure. BAe is a very large company engaged in large-scale projects, therefore the level of net current assets will change over time depending upon the level of completion of WIP, etc. The company has maintained a Current Ratio of a similar size over the last 5 years, so this level must be sustainable, as long as the current decreasing trend does not continue.
Liquidity Ratio
The Liquidity Ratio proves that the decline in the Current Ratio is attributable to a reduction in stock, as the Liquidity Ratio, whilst declining slightly, has not fallen in proportion with the Current Ratio. More advanced stock control techniques, such as JIT, are contributing to this reduction by allowing the company to carry less stock, allowing them to reduce costs.
Gearing and Interest Cover
Gearing has moved over a wide range over the last 5 years, from 364% to 72%. The year that gearing reached 364% would have been a major cause of concern to both shareholders and creditors, as the amount of debt that the company had, had placed the shareholders under considerable risk. This is borne out buy the interest cover figures, which show a low figure of 2.44 times for the year ended '95. Happily, in later years, the company has pursued a policy of reducing gearing, ending in a much less risky figure of 72% gearing, with interest cover of 3.83 times. As with the current ratio, the interest cover has fluctuated over the previous five years due to the cyclical nature of the aerospace and defence market. The interest cover figure seams lower than is desire able, but has been sustained over a period of five years and is therefore sustainable, as long as a persistent downward movement in profits is not encountered.
Efficiency Ratios
Net Assets Turnover
The figures presented for Net asset Turnover have over the last 5 years got gradually worse. The reason for this decline has been the rapid expansion of the company, notably last year with the purchase of MES. This purchase gave rise to Goodwill of £6554 million that will continue to distort the true Net Asset Value until all this, and any future Goodwill has bee fully amortized. The figures presented above for Sales/Capital Employed give a less distorted view of efficiency, as they have been prepared using a Net Tangible Asset figure.
Stock Turnover
The Stock Turnover figure for BAe has risen reasonably steadily from a figure of 2.64 times P/A for the year ended '95 to 4.52 times P/A in '99. These figures again highlight the improvements in efficiency noted in Liquidity above, and should indicate continued increases in the Net Profit Margin.
Debtor and Creditor Payments
The Debtor Collection ratio for BAe has improved considerably from a peak of 88.82 days in '95 to 30.94 days in '99. This again shows increases in efficiency, as the company is clearly reducing the time the average debtor takes to pay the company. Unlike the average company, BAe customers are on the whole governments, or very large companies, so a more lenient credit control policy is unlikely to boost sales.
The Creditor Payment Ratios show a fall from '95 to '97 followed by a rise to a new peak of 88.57 days in '99. As BAe is the world's leading aerospace business, this rise is more likely to be caused by BAe using corporate muscle to impose credit terms on it's suppliers than by an inability to pay creditors on time.
The combination of short Debtor payment terns, and long Creditor terms is a considerable factor in the low Current ratio, as the Debtors are being reduced every year, whilst the creditors are increasing. This does not show a working capital problem, but is a side effect of corporate policy.
Investor Ratios
Earnings per Share
In calculating EPS the figures used has been EPS excluding goodwill amortisation and exceptional items, as BAe felt that this gave a more true and fair view of the earnings per share.
The aim off all companies should be to increase the EPS figure every year, and in line with this BAe produced near straight-line growth from 12.2p in '95, rising to 30.8p in '99. This growth has clearly pleased investors, and has caused all other Investment ratios to be satisfactory.
Dividends per Share
Dividends have increased every year since '95, and have in fact more than doubled. This is in line with good corporate policy of distributing income to the shareholders, and increasing dividends with profits. The dividends are not growing at a rate that will endanger reinvestment in the company, as shown by Dividend cover, below.
Dividend Cover
Dividend Cover has risen from 3.94 times in '95 to 5.1 times in '97, and has fallen to 3.85 times in '99. All of the figures above are comfortably within the company budget, so as long as the trend to increase dividends does not eat into reinvestment within the company, this is a policy that will keep shareholders happy.
P/E Ratio
The P/E ratio has risen consistently from a low of 11.49 in '96 to a figure of 16.23 in '99. This is consistent with the Stock Market, and the company shareholders, being happy with the policies and results of the company, causing an excess of demand over supply for the company's shares.
Dividend Yield
This has been within a band of 1.60% to 1.95%, which is consistent with a FTSE 100 company. This low figure indicates confidence in the future income streams expected from the company, as investors are investing in the company in the expectation of future capital growth, rather than current dividends.
The Future
BAe is the largest civil and aerospace manufacturer in the world, and clearly wishes to remain so. They have outperformed the FTSE 100 over the last 5 years, as shown buy the graph in the Appendices, they have an order book of £36.6 billion, a rise of 30% on the previous year, a steady rise in the P/E ratio and therefore the confidence of the City. In short all the factors point to a growing, successful company. There are however several factors that have to be borne in mind in the long and short term.
* Profit Margin. This must be maintained, and not aloud to slip in the face of competition from other global players. Any slip in margin threatens an already low ROCE, with an impact on dividends as the push toward lower gearing continues.
* The Economy. The end of the Cold War has caused a reduction in the Defence budget of all the major world powers. This has made BAe more reliant on sales in the civil aerospace sector, which would be hit by any downturn in the world economy, particularly in the US.
* Return on Assets. The drive for more efficiency within the company must continue in order to use the assets within the company more effectively. This should be helped by the continued expansion of the company as they benefit from economies of scale. Any gains in efficiency will also improve the profit margin, and hence EPS.
Appendix
Bibliography
FTSE 100 chart
Fame report
Company Accounts for the year ended 31 December 1999
Bibliography
"Accounting Standards 1999/2000" The Chartered Institute of Accountants
www.Hemscot.com
http://fame.bvdep.com
www.baesystems.com
"Business Accounts" David Cox
"The Interpretation of Financial Statements" Donald Haliday
www.yahoo!.com/finance/
Comparison growth between BAe and the FTSE 100
Fame Company Analysis
BAE SYSTEMS PLC
R/O Address: Warwick House, PO Box 87 Registered No: 01470151
Farnborough Aerospace Center Type of company: Public, Quoted
Farnborough, Hants Date of incorporation: 31/12/1979
GU14 6YU Accounting Ref.Date: 12/31
R/O Phone: 01252 - 373232 Accounts Type: Group
R/O Post Code: GU14 6YU Company Status: Live
Web site: www.bae.co.uk
Latest Turnover: 7,043,000th GBP Number of Holdings: 0
Latest No of Employees: 50,500 Number of Subsid. : 88
Activities: Defence - comprising the design and production of military aircraft and aerostructures and an electronic defence system and ordnance business. The Group also provides through life support for aircraft and defence systems. Commercial aerospace - comp
992 SIC UK codes: Primary Code: 3530 - Manufacture of aircraft and spacecraft
Secondary Code(s): 2960, 3320, 3530, 7011
981 SIC UK codes: Primary Code: 3290 - Ordnance and small arms
Secondary Code(s): 32902, 34430, 35102, 36400, 61900
Peer Group: 3530 - Manufacture of aircraft and spacecraft (VL: Very Large Companies)
USED PEER GROUP: Standard PG 30 Companies
PROFILE 31/12/1999 31/12/1998 31/12/1997 31/12/1996 31/12/1995 31/12/1994 31/12/1993 31/12/1992 31/12/1991 31/12/1990 Average
th GBP mil GBP mil GBP mil GBP mil GBP mil GBP mil GBP mil GBP mil GBP mil GBP mil GBP
Turnover 7,043,000 7,042 7,267 6,464 5,741 7,153 10,760 9,977 10,562 10,540 8,255
Profit (Loss) before Taxation 459,000 973 230 425 234 211 -237 -1,201 -81 376 139
Net Tangible Assets (Liab.) 4,173,000 4,395 4,637 4,029 4,118 4,596 5,954 6,489 4,929 4,666 4,799
Shareholder Funds 7,360,000 2,020 1,736 1,693 928 876 1,731 1,780 2,697 2,534 2,336
Profit Margin (%) 6.52 13.82 3.16 6.57 4.08 2.95 -2.21 -12.05 -0.78 3.57 2.56
Return on Shareholder Funds (%) 6.24 48.17 13.25 25.10 25.22 24.09 -13.70 -67.48 -3.01 14.84 7.27
Return on Capital Employed (%) 4.36 20.63 4.96 10.55 5.68 4.59 -3.99 -18.52 -1.65 8.06 3.47
Liquidity Ratio 0.97 1.17 1.13 1.05 1.04 0.96 0.78 0.85 0.72 0.69 0.94
Gearing (%) 72.49 147.57 180.53 168.87 364.44 442.47 243.96 285.62 98.33 148.38 215.27
Number of Employees 50,500 46,500 43,400 47,000 44,000 56,400 96,800 108,500 123,200 127,900 74,420
PROFIT & LOSS ACCOUNT 31/12/1999 31/12/1998 31/12/1997 31/12/1996 31/12/1995 31/12/1994 31/12/1993 31/12/1992 31/12/1991 31/12/1990 Average
th GBP mil GBP mil GBP mil GBP mil GBP mil GBP mil GBP mil GBP mil GBP mil GBP mil GBP mil GBP
Turnover 7,043,000 7,042 7,267 6,464 5,741 7,153 10,760 9,977 10,562 10,540 8,255
UK Turnover 1,250,000 793 788 917 1,088 1,642 1,080
Overseas Turnover 5,793,000 6,249 6,479 5,547 4,653 5,511 5,705
Cost of Sales -885 -885
Total Expenses -6,527,000 -6,565 -6,809 -5,997 -5,538 -7,182 -10,781 -7,057
Gross Profit 7,153 9,875 8,514
Other Expenses -7,182 -9,896 -8,539
Operating Profit 516,000 477 458 467 203 -29 -21 296
Other Income 105,000 339 238 122 221 477 8 216
Exceptional Items 288 -349 -43 -28 -33
Profit (Loss) before Interest 621,000 1,104 347 546 396 448 -13 -1,075 119 514 301
Interest Paid -162,000 -131 -117 -121 -162 -237 -224 -126 -200 -138 -162
Profit (Loss) before Tax 459,000 973 230 425 234 211 -237 -1,201 -81 376 139
Taxation -131,000 -280 -69 -114 -94 -71 6 272 -26 -98 -61
Profit (Loss) after Tax 328,000 693 161 311 140 140 -231 -929 -107 278 78
Extraordinary Items 138 17 41 6 -18 37
Minority Interests -4,000 -1 -2 -2
Profit (Loss) for Period 324,000 692 161 309 278 140 -214 -888 -101 260 96
Dividends -223,000 -135 -106 -88 -74 -62 -52 -47 -105 -86 -98
Retained Profit (Loss) 101,000 557 55 221 204 78 -266 -935 -206 174 -2
Discontinued Operations
Depreciation 254,000 150 161 164 169 350 350 286 236
Audit Fee 2,989 1 1 1 2 1 2 3 3 2 2
Non-Audit Fee
Amortization of Goodwill 9,046 9
Remuneration 1,652,000 1,327 1,164 1,151 1,128 1,283 2,061 2,028 2,167 2,010 1,597
Directors' Remuneration 2,891 2 2 2 2 3 2 2
Highest Paid Director 770 0 0 0 1 0
Number of Employees 50,500 46,500 43,400 47,000 44,000 56,400 96,800 108,500 123,200 127,900 74,420
BALANCE SHEET 31/12/1999 31/12/1998 31/12/1997 31/12/1996 31/12/1995 31/12/1994 31/12/1993 31/12/1992 31/12/1991 31/12/1990 Average
th GBP mil GBP mil GBP mil GBP mil GBP mil GBP mil GBP mil GBP mil GBP mil GBP mil GBP
Fixed Assets
Tangible Assets 2,167,000 1,604 1,424 1,446 1,533 1,717 3,106 3,257 2,990 2,894 2,214
Land & Building 1,070,000 766 756 778 765 827
Fixtures & Fittings 0 0 0 0 0 0
Plant & Vehicles 1,097,000 838 668 668 768 808
Other Fixed Assets
Intangible Assets 6,365,000 322 3,344
Investments 660,000 596 773 657 280 451 425 431 430 388 509
Fixed Assets 9,192,000 2,522 2,197 2,103 1,813 2,168 3,531 3,688 3,420 3,282 3,392
Current Assets
Stock & W.I.P. 1,559,000 1,442 1,970 1,743 2,171 2,560 3,348 3,448 2,781 2,830 2,385
Stock 682,000 682
W.I.P. 877,000 877
Trade Debtors 597,000 211 1,346 1,283 1,397 40 1,804 1,427 1,274 1,042
Bank & Deposits 811,000 308 204 149 235 306 382 181 366 327
Other Current Assets 5,275,000 4,567 2,544 2,447 2,029 2,798 3,364 1,560 1,601 1,539 2,772
Group Loans (asset) 159,000 80 32 33 21 65
Directors Loans (asset) 0 0 0 0 0 0
Other Debtors 383,000 3,421 661 684 730 1,176
Investm. & Other Cur. Assets 4,733,000 1,066 1,851 1,730 1,278 2,132
Current Assets 8,242,000 6,528 6,064 5,622 5,832 5,704 6,712 7,194 5,990 6,009 6,390
Current Liabilities
Trade Creditors -1,709,000 -1,309 -949 -1,023 -1,260 -1,135 -1,807 -3,249 -2,024 -2,731 -1,720
Short Term Loans & Overdrafts -2,157,000 -284 -233 -523 -192 -156 -375 -420 -1,628 -663
Bank Overdrafts -219 -152 -105 -151 -157
Group Loans (short t.) -132,000 -20 -63 -83 -75
Director Loans (short t.) 0 0 0 0
Hire Purch. & Leas. (Short t.) -4,000 -3 -5 -5 -8 -5
Hire Purchase (short t.)
Leasing (short t.) -4,000 -3 -5 -5 -8 -5
Other Short Term Loans -2,021,000 -42 -13 -330 -33 -488
Total Other Current Liabilities -3,030,000 -2,740 -2,442 -2,150 -2,075 -1,985 -2,482 -769 -2,037 -266 -1,998
Corporation Tax -147,000 -232 -73 -29 -37 -104
Dividends -160,000 -84 -62 -50 -42 -80
Accruals & Def. Inc. (sh. t.) -1,660,000 -1,613 -1,537 -1,273 -1,397 -1,496
Social Securities & V.A.T. -66,000 -42 -19 -13 -29 -34
Other Current Liabilities -997,000 -769 -751 -785 -570 -774
Current Liabilities -6,896,000 -4,333 -3,624 -3,696 -3,527 -3,276 -4,289 -4,393 -4,481 -4,625 -4,314
Net Current Assets (Liab.) 1,346,000 2,195 2,440 1,926 2,305 2,428 2,423 2,801 1,509 1,384 2,076
Net Tangible Assets (Liab.) 4,173,000 4,395 4,637 4,029 4,118 4,596 5,954 6,489 4,929 4,666 4,799
Working Capital 447,000 344 2,367 2,003 2,308 1,465 1,541 2,003 2,184 1,373 1,604
Total Assets 17,434,000 9,050 8,261 7,725 7,645 7,872 10,243 10,882 9,410 9,291 9,781
Total Assets less Cur. Liab. 10,538,000 4,717 4,637 4,029 4,118 4,596 5,954 6,489 4,929 4,666 5,467
Long Term Liabilities
Long Term Debt -1,155,000 -898 -1,097 -691 -1,093 -1,142 -2,882 -1,386 -1,036 -925 -1,231
Group Loans (long t.) 0 0 0
Director Loans (long t.) 0 0 0
Hire Purch. Leas. (long t.) -14,000 0 0 -32 -91 -27
Hire Purchase (long t.)
Leasing (long t.) -14,000 -32 -91 -46
Other Long Term Loans -1,141,000 -898 -1,097 -659 -1,002 -959
Total Other Long Term Liab. -1,938,000 -1,793 -1,804 -1,632 -2,097 -2,568 -1,341 -3,085 -929 -885 -1,807
Accruals & Def. Inc. (l. t.) -36,000 -14 -11 -20 -18 -20
Other Long Term Liab. -506,000 -687 -728 -814 -1,077 -762
Provisions for Other Liab. -1,396,000 -1,092 -1,065 -798 -1,002 -1,071
Deferred Tax -77,000 -38 -3 -2 -2 -24
Other Provisions -1,319,000 -1,054 -1,062 -796 -1,000 -1,046
Balance Sheet Minorities -85,000 -6 -13 -10 -238 -267 -322 -134
Long Term Liabilities -3,178,000 -2,697 -2,901 -2,336 -3,190 -3,720 -4,223 -4,709 -2,232 -2,132 -3,132
Total Assets less Liabilities 7,360,000 2,020 1,736 1,693 928 876 1,731 1,780 2,697 2,534 2,336
Shareholders Funds
Issued Capital 140,000 111 111 110 110 110 105 105 256 197 136
Total Reserves 7,220,000 1,909 1,625 1,583 818 766 1,626 1,675 2,441 2,337 2,200
Share Premium Account 212,000 110 59 38 27 89
Revaluation Reserves 0 324 764 787 222 419
Profit (Loss) Account 1,339,000 1,273 600 556 367 300 133 653
Other Reserves 5,669,000 202 202 202 202 466 1,493 1,205
Shareholders Funds 7,360,000 2,020 1,736 1,693 928 876 1,731 1,780 2,697 2,534 2,336
CASH FLOW STATEMENT 31/12/1999 31/12/1998 31/12/1997 31/12/1996 31/12/1995 31/12/1994 31/12/1993 31/12/1992 31/12/1991 31/12/1990 Average
th GBP mil GBP mil GBP mil GBP mil GBP mil GBP mil GBP mil GBP mil GBP mil GBP mil GBP mil GBP
Net Cash In (Out) flow Operat. Activ. 419,000 -506 378 612 134 207
Net Cash In (Out) flow Ret. on Invest. -32,000 94 13 -22 -31 4
Taxation -81,000 -136 -22 -29 -12 -56
Net Cash Out (In) flow Investing Activ. -43 -43
Capital Expenditure & Financ. Invest. -132,000 419 -183 62 42
Acquisition & Disposal -1,333,000 -411 -88 -109 -485
Equity Dividends Paid -100,000 -55 -68 -54 -69
Management of Liquid Resources 234,000 785 -121 -460 110
Net Cash Out (In) flow from Financing 1,686,000 -127 106 -55 -143 293
Increase (Decrease) Cash & Equiv. 661,000 63 15 -55 -95 118
FINANCIAL RATIOS 31/12/1999 31/12/1998 31/12/1997 31/12/1996 31/12/1995 31/12/1994 31/12/1993 31/12/1992 31/12/1991 31/12/1990 Average
Current Ratio 1.20 1.51 1.67 1.52 1.65 1.74 1.56 1.64 1.34 1.30 1.51
Liquidity Ratio 0.97 1.17 1.13 1.05 1.04 0.96 0.78 0.85 0.72 0.69 0.94
Shareholders Liquidity Ratio 2.32 0.75 0.60 0.72 0.29 0.24 0.41 0.38 1.21 1.19 0.81
Solvency Ratio (%) 42.22 22.32 21.01 21.92 12.14 11.13 16.90 16.36 28.66 27.27 21.99
Asset Cover 15.09 10.08 7.53 11.18 6.99 6.89 3.55 7.85 9.08 10.04 8.83
Gearing (%) 72.49 147.57 180.53 168.87 364.44 442.47 243.96 285.62 98.33 148.38 215.27
Shareholders Funds per Empl. (Unit) 145,743 43,441 40,000 36,021 21,091 15,532 17,882 16,406 21,891 19,812 37,782
Working Capital per Employee (Unit) 8,851 7,398 54,539 42,617 52,455 25,975 15,919 18,461 17,727 10,735 25,468
Total Assets per Employee (Unit) 345,228 194,624 190,346 164,362 173,750 139,574 105,816 100,295 76,380 72,643 156,302
PROFITABILITY RATIOS 31/12/1999 31/12/1998 31/12/1997 31/12/1996 31/12/1995 31/12/1994 31/12/1993 31/12/1992 31/12/1991 31/12/1990 Average
Profit Margin (%) 6.52 13.82 3.16 6.57 4.08 2.95 -2.21 -12.05 -0.78 3.57 2.56
Return on Shareholder Funds (%) 6.24 48.17 13.25 25.10 25.22 24.09 -13.70 -67.48 -3.01 14.84 7.27
Return on Capital Employed (%) 4.36 20.63 4.96 10.55 5.68 4.59 -3.99 -18.52 -1.65 8.06 3.47
Return on Total Assets (%) 2.63 10.75 2.78 5.50 3.06 2.68 -2.32 -11.05 -0.87 4.05 1.72
Interest Cover 3.83 8.43 2.97 4.51 2.44 1.89 -0.07 -8.54 0.60 3.72 1.98
Stock Turnover 4.52 4.88 3.69 3.71 2.64 2.79 3.21 2.89 3.80 3.72 3.58
Debtors Turnover 11.80 33.37 5.40 5.04 4.11 178.83 5.53 7.40 8.27 28.86
Debtor Collection (days) 30.94 10.94 67.61 72.45 88.82 2.04 66.00 49.31 44.12 48.03
Creditors Payment (days) 88.57 67.85 47.67 57.77 80.11 57.92 61.30 118.86 69.95 94.57 74.46
Net Assets Turnover 0.67 1.49 1.57 1.60 1.39 1.56 1.81 1.54 2.14 2.26 1.60
Fixed Assets Turnover 0.77 2.79 3.31 3.07 3.17 3.30 3.05 2.71 3.09 3.21 2.85
Salaries/Turnover (%) 23.46 18.84 16.02 17.81 19.65 17.94 19.15 20.33 20.52 19.07 19.28
Turnover per Employee (Unit) 139,465 151,441 167,442 137,532 130,477 126,826 111,157 91,954 85,731 82,408 122,443
Average Remun. per Year (Unit) 32,713 28,538 26,820 24,489 25,636 22,748 21,291 18,691 17,589 15,715 23,423
Profit per Employee (Unit) 9,089 20,925 5,300 9,043 5,318 3,741 -2,448 -11,069 -657 2,940 4,218
Credit Score & Rating
Current QuiScore (Year ending 31/12/1999) 49 Normal
Previous Period's QuiScore (Year ending 31/12/1998) 57 Normal
QuiRating (£) 100000
The calculations are based on accounts for relevant periods.
The QuiScore and QuiRating have been devised by Qui Credit assessment Ltd.
They must be interpreted and used in the light of the information provided by Qui Credit Assessment Ltd.
31/12/1999 31/12/1998 31/12/1997 31/12/1996 31/12/1995 31/12/1994 31/12/1993 31/12/1992 31/12/1991 31/12/1990 Average
th GBP mil GBP mil GBP mil GBP mil GBP mil GBP mil GBP mil GBP mil GBP mil GBP mil GBP mil GBP
Turnover 7,043,000 7,042 7,267 6,464 5,741 7,153 10,760 9,977 10,562 10,540 8,255
Profit (Loss) before Taxation 459,000 973 230 425 234 211 -237 -1,201 -81 376 139
Net Tangible Assets (Liab.) 4,173,000 4,395 4,637 4,029 4,118 4,596 5,954 6,489 4,929 4,666 4,799
Shareholder Funds 7,360,000 2,020 1,736 1,693 928 876 1,731 1,780 2,697 2,534 2,336
HISTORICAL QUISCORE & RATING 31/12/1999 31/12/1998 31/12/1997 31/12/1996 31/12/1995 31/12/1994 31/12/1993 31/12/1992 31/12/1991 31/12/1990 Average
th GBP mil GBP mil GBP mil GBP mil GBP mil GBP mil GBP mil GBP mil GBP mil GBP mil GBP mil GBP
QuiScore 49 57 53 51 47 41 34 31 49 43 46
Comment 0 0 0 0 0 0 0 0 0 0 0
QuiRating (£) 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000
Directors
Mr. J.P. Weston (8/16/1951) Managing Director 23/05/2000
Mr. M.J. Turner (8/5/1948) Managing Director 23/05/2000
Mr. G.W. Rose (3/24/1952) Finance Director 23/05/2000
Mr. S.L. Mogford (6/27/1956) Director 23/05/2000
Dr U. Cartellieri (9/21/1937) Director 23/05/2000
Mr. K.C. Brown (1/14/1943) Director 23/05/2000
Mr. M. Lester (3/10/1940) Director 23/05/2000
Mr. R.D. Lapthorne (4/25/1943) Director 23/05/2000
Sir R.C. Hampel (5/31/1932) Director 23/05/2000
Sir R.A. Biggam (7/8/1938) Director 23/05/2000
The Lord T.A. Fermor-Hesketh (10/28/1950) Director 23/05/2000
Sir R.H. Evans (7/9/1942) Director 23/05/2000
Mr. P.O. Gershon (1/10/1947) Director 23/05/2000
Sir C.B. Masefield (1/7/1940) Director 23/05/2000
Mr. D.S. Parkes (12/20/1963) Company Secretary 23/05/2000
Holdings
There is no Holdings information available for this company.
Shareholders
.
Subsidiaries
. Jointly Owned OS 02762965 1
2. Immediate J 02653776 1
3. Wholly Owned J 00236538 1
4. Wholly Owned J 02606542 1
5. Immediate W 02690233 1
6. Wholly Owned W 02690234 1
7. Wholly Owned W 02769240 1
8. Wholly Owned J 03097907 1
9. Wholly Owned K 02511679 1
0. Wholly Owned J 00782928 1
1. Wholly Owned J 00999757 1
2. Immediate J 02385987 1
3. Wholly Owned S 02659066 1
4. Immediate W 02672582 1
5. Immediate J 02536912 1
6. Wholly Owned OS 02280710 1
7. Wholly Owned J 02775320 1
8. Immediate OS 02521302 1
9. Immediate OS 02606556 1
20. Wholly Owned K 03129256 1
21. Wholly Owned M 02279305 1
22. Immediate OS 02653637 1
23. Immediate J 00782930 1
24. Wholly Owned J SC028545 1
25. Wholly Owned W 00212802 1
26. Immediate OS 00753964 1
27. Wholly Owned OS 02279211 1
28. Wholly Owned W 00650233 1
29. Wholly Owned W 00774349 1
30. Immediate S 00462923 1
31. Wholly Owned W 02368457 1
32. Wholly Owned M 02327158 1
33. Immediate OS 02280701 1
34. Wholly Owned J 02957981 1
35. Wholly Owned W 00147649 1
36. Wholly Owned M SC139258 1
37. Jointly Owned S 02401817 1
38. Wholly Owned M 02341236 1
39. Wholly Owned J 02562179 1
40. Jointly Owned FS 1
41. Wholly Owned W 02494322 1
42. Wholly Owned J 01842252 1
43. Wholly Owned K 01982319 1
44. Wholly Owned M SC018652 1
45. Wholly Owned J 03097905 1
46. Immediate L 01277236 1
47. Immediate W 00711945 1
48. Jointly Owned J 01001553 2
49. Immediate W 02392608 2
50. Wholly Owned OS 00318151 2
51. Wholly Owned J 01996687 2
52. Wholly Owned J 02433236 2
53. Wholly Owned J 02863702 2
54. Wholly Owned W 02659111 2
55. Wholly Owned J 01104681 2
56. Jointly Owned J 02536529 2
57. Immediate OS SC139257 2
58. Wholly Owned K 02580179 2
59. Wholly Owned W 00392544 2
60. Wholly Owned K 02197292 2
61. Wholly Owned M 01875726 2
62. Jointly Owned S 01801574 2
63. Wholly Owned K 02719786 2
64. Wholly Owned K 02597103 2
65. Wholly Owned W 02467132 3
66. Wholly Owned M 01420787 3
67. Wholly Owned M 02049353 3
68. Wholly Owned S 01463150 3
69. Wholly Owned S 03278728 3
70. Wholly Owned M 01490298 3
71. Wholly Owned S 02538448 3
72. Wholly Owned S 01462555 3
73. Wholly Owned M 01490440 3
74. Wholly Owned S 02004538 3
75. Immediate M 01764875 3
76. Wholly Owned M 00206666 3
77. Wholly Owned J 01841283 3
78. Wholly Owned K 02019990 3
79. Wholly Owned J 02100456 3
80. Immediate S 01530395 3
81. Jointly Owned J 03635234 3
82. Wholly Owned S 02387514 3
83. Wholly Owned M 01610537 3
84. Wholly Owned S 02467164 3
85. Wholly Owned M 01508428 3
86. Jointly Owned K 02319285 3
87. Immediate M 01451297 4
88. Wholly Owned W 02761545 4
Miscellaneous Data
Account made up date: 31/12/1999 JW accounting date: 31/12/1999
Annual return date: 23/05/2000 JW annual return date: 23/05/2000
Date of last transaction at Companies House: 7/27/2000
Date of last change of name: 5/5/2000
Document filing dates
5/05/2000 Change of Name
4/08/1992 Change in Reg. Office
1/05/2000 Change in Memo & Arts
5/11/2000 Change in Share Capital
4/04/2000 Change of Directors
27/03/1997 Charge Lodged
/04/1996 Charge Lodged
5/09/1995 Charge Lodged
22/12/1994 Charge Lodged
5/10/1994 Charge Lodged
22/03/1993 Charge Lodged
24/02/1993 Charge Lodged
6/02/1993 Charge Lodged
7/01/1993 Charge Lodged
0/07/1992 Charge Lodged
3/07/1992 Charge Lodged
22/04/1992 Charge Lodged
7/05/1991 Charge Lodged
0/01/1991 Charge Lodged
4/12/1990 Charge Lodged
25/10/1990 Charge Lodged
5/09/1990 Charge Lodged
29/06/1990 Charge Lodged
/03/1990 Charge Lodged
4/02/1994 Mem.Satisfaction Lodged
2/02/1994 Mem.Satisfaction Lodged
20/08/1993 Mem.Satisfaction Lodged
1/05/1993 Mem.Satisfaction Lodged
25/07/2000 A/c filed at CRO
31/12/1999 Accounts
23/05/2000 Annual Return
Previous Names:
5/5/2000 BRITISH AEROSPACE PUBLIC LIMITED COMPANY/BAE SYSTEMS PLC
2/31/1981 BRITISH AEROSPACE LIMITED/BRITISH AEROSPACE PUBLIC LIMITED COMPANY
Bankers
LLOYDS TSB BANK PLC
Auditors
KPMG AUDIT PLC
Previous Auditors
KPMG AUDIT PLC (1998, 1997, 1996)
KPMG (1995)
KPMG PEAT MARWICK (1994, 1992, 1991, 1990)
Primary Trading Address:
. PO Box 87
Warwick House
Farnborough Aerospace Center
Farnborough
Hants
GU14 6YU
Phone Number: 01252 - 373232
Other Trading Addresses:
2. Samlesbury Aerodrome (S419)
Balderstone
Blackburn
Lancashire
BB2 7LF
Phone Number: 01252 - 373232
3. Marsh La
Preston
Lancashire
PR1 8UD
Phone Number: 01252 - 373232
4. British Aerospace Airbus
New Filton House
Filton
Bristol
Avon
BS99 7AR
Phone Number: 01252 - 373232
5. Filton Airfield
Bristol
Avon
BS34 7QW
Phone Number: 01252 - 373232
29
Charles Trevor
