BAE-annual-report-2014

Financial statements
11. RESERVES
Share
premium
account
£m
Statutory
reserve
£m
Other
reserves
£m
Profit
and loss
account
£m
At 31 December 2013 1,249 202 88 2,279
Profit for the year – – – 1,183
Dividends paid – – – (642)
Share-based payments – – – 37
Purchase of own shares – – 2 (281)
Movements in hedging reserve – – 10 –
At 31 December 2014 1,249 202 100 2,576
Statutory reserve
Under Section 4 of the British Aerospace Act 1980, this reserve may only be applied in paying up unissued shares of the Company to be
allotted to members of the Company as fully paid bonus shares.
Other reserves
Other reserves for the Company comprise: capital reserve £24m (2013 £24m); hedging reserve £6m credit (2013 £4m debit); capital
redemption reserve £3m (2013 £1m) and non-distributable reserve arising from property disposals to other Group undertakings £67m
(2013 £67m). The non-distributable reserve arising from property disposals to other Group undertakings relates to the revaluation
surplus realised by the Company on properties which were sold to other Group companies as part of operational reorganisations in prior
years. Amounts within this reserve are transferred to the profit and loss account as distributable when the related properties are
disposed of outside the Group, or written down following impairment.
Profit and loss account
The Company’s profit for the financial year was £1,183m (2013 £758m). The non-distributable portion of the profit and loss account is
£196m (2013 £196m).
Own shares held
Own shares held, including treasury shares and shares held by BAE Systems Employee Share Option Plan (ESOP) Trust, are recognised
as a deduction from retained earnings.
BAE Systems ESOP Trust
The Group has an ESOP discretionary trust to administer the share plans and to acquire Company shares, using funds loaned by the
Group, to meet commitments to Group employees. A dividend waiver was in operation for shares within the ESOP Trust, other than those
owned beneficially by the participants, for the dividends paid in June and December 2014.
At 31 December 2014, the ESOP held 1,509,844 (2013 1,451,631) ordinary shares of 2.5p each with a market value of £7m
(2013 £6m). The shares held by the ESOP are recorded at cost and deducted from retained earnings until such time as the shares vest
unconditionally to employees.
Dividend waivers were in operation for the dividends paid in June and December 2014 over shares in the Group All-Employee Free
Shares Plan Trust other than those shares owned beneficially by participants. A dividend waiver was also in operation for the dividends
paid in June and December 2014 over shares within the Company’s Share Incentive Plan Trust other than those shares owned
beneficially by the participants.
12. OTHER INFORMATION
Employees
The total number of employees of the Company at 31 December 2014 was 1,189 (2013 831). Total staff costs, excluding charges for
share-based payments, were £128m (2013 £102m).
Directors’ emoluments
Under Schedule 5 of the Large and Medium-Sized Companies and Groups (Accounts and Reports) Regulations 2008 (Schedule 5), total
directors’ emoluments, excluding Company pension contributions, were £6,601,189 (2013 £6,289,295); these amounts are calculated
on a different basis to emoluments in the Annual Remuneration Report which are calculated under Schedule 8 of the Large and
Medium-sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013 (Schedule 8 (2013)). These emoluments
were paid for their services on behalf of the BAE Systems Group. No emoluments related specifically to their work for the Company.
Under Schedule 5, the aggregate gains made by directors from the exercise of share options in 2014 as at the date of exercise was
£739,401 (2013 £1,909,962) and the net aggregate value of assets received by directors in 2014 from Long-Term Incentive Plans as
calculated at the date of vesting was £nil (2013 £129,722); these amounts are calculated on a different basis from the valuation of
share plan benefits under Schedule 8 (2013) in the Annual Remuneration Report.
Company audit fee
Fees payable to the Company’s auditor for the audit of the Company’s annual accounts totalled £1,669,000 (2013 £1,621,000).
Related party transactions
Details of related party transactions are detailed in note 30 to the Group accounts.
The Company also has a related party relationship with its directors and key management personnel, and pension schemes.
STRATEGIC REPORT GOVERNANCE
FINANCIAL STATEMENTS
BAE Systems
Annual Report 2014
163