BAE Systems Says Overseas Tax Settlement Will Benefit Earnings

(Alliance News) - BAE Systems PLC on Thursday said it will record a 5 pence per share benefit to ...

Alliance News 18 July, 2019 | 8:53AM
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(Alliance News) - BAE Systems PLC on Thursday said it will record a 5 pence per share benefit to annual underlying earnings per share due to the settlement of foreign tax matters, partly offset by a provision relating to European Union's decision on UK government's exemption on some overseas income.

In February, the company said underlying earnings per share is expected to grow by mid-single digit compared to the 2018 underlying earnings of 42.9p, assuming a USD1.30 sterling exchange rate.

Shares in BAE were up 0.1% at 519.00p each on Thursday morning.

The aerospace and defence company said it has reached agreements in respect of the overseas tax matters, without specifying the countries or issues involved. This resulted in a one off non-cash benefit to 2019 earnings per share.

Separately, BAE said it has decided to record a provision to earnings per share following the EU Commission's decision that the UK's Controlled Foreign Company tax regime partially represented state aid.

In April, the European Commission ruled that UK's financing exemption under its Controlled Foreign Company regime was a type of state aid. The financing exemption allowed certain types of financing income to not be allocated to taxable profits of the UK parent company.

The tax settlement and EU's state aid ruling is not expected to have a material impact on BAE Systems' underlying tax rate in future years, it said.

By Tapan Panchal; tapanpanchal@alliancenews.com

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Securities Mentioned in Article
Security Name Price Change (%) Morningstar Rating
BAE Systems PLC 549.00 GBX 0.11
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