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News Release

Transition To International Financial Reporting Standards

28 Apr 2005

Following the EUs adoption of International Financial Reporting Standards (IFRS), BAE Systems plc (the group) will be adopting IFRS in its consolidated accounts for accounting periods from 1 January 2005. The first financial information to be reported by the group in accordance with IFRS will be for the six months ending 30 June 2005. To enable comparisons to be made between accounts to be prepared for 2005 under IFRS, BAE Systems is today identifying the changes to the 2004 accounts that arise when prepared under IFRS rather than the accounting standards (UK GAAP) used to prepare previously published accounts.

Details of the changes to the groups accounts are contained in the full text of todays IFRS transition statement.

Highlights:


  • Underlying earnings per share for 2004 up 2.2% to 18.4p compared to the figure announced in February.

  • The guidance for 2005 results stated at the February Preliminary Announcement under UK GAAP remains unchanged under IFRS

  • No effect on the groups trading cash flows.

  • Underlying profits to be used as key measure of operating performance with some redefinition.

  • Pension deficit and Regional Aircraft assets and related debt now included on Balance Sheet.


Changes arising from restatements

   Income statement for the year to 31 December 2004
  UK GAAP IFRS  
   EBITA1 1,013m 1,053m +3.9%
   EPS (underlying)2 18.0p 18.4p +2.2%
   EPS (basic) (16.0)p (0.6)p  
       
   Balance sheet as at 31 December 2004
       
   Net cash/(debt) 5m (668)m  
   Net assets 4,738m 2,665m  

1 Earnings before interest, tax, goodwill impairment and amortisation of intangible assets

2 Earnings before interest, tax, goodwill impairment and amortisation of intangible assets adjusted for the fair value of acquired inventories and pension financing credit


For further information, please contact:


Charlotte Lambkin (Group Communications Director)
Tel: +44 1252 383 836
Andy Wrathall (Investor relations)
Tel: +44 1252 383 820
Richard Coltart (Press relations)
Tel: +44 1252 383 074

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