Rolls-Royce:financial analysis - Essay Example

? MIDDLESEX BUSINESS SCHOOL ACC221 MANAGERIAL FINANCE AND ACCOUNTING GROUP ASSIGNMENT Financial Report: Rolls-Royce GROUP PLC Table of Contents Table of Contents 2 Executive Summary 3 1. Background to Rolls-Royce Company 4 1.1 History 4 1.2 Strategies 4 1.3 Products 5 1.3.1Civil Aerospace 5 1.3.2 Defence Aerospace 5 1.3.3 Marine 6 1.3.4 Energy 6 1.4 Customers 6 1.5 Market Competition 6 4.1 Strengths 10 4.2 Weaknesses 13 References 15 Appendices 16 Executive Summary The success of an investment in depends largely on the information available to the investor about the certain investment option. The underlying factors that signal the possibility of success in a company’s stock are difficult to untangle, and necessitate business insight coupled with financial analysis of the investment option with regard to all key factors that make for a comprehensive scorecard. The work of investment advisors in consultancy firms primarily entails analysis of investment options to offer factual and professional opinion on the viability of the investment. The purpose of this report is to analyse Rolls-Royce Company as an investment opportunity based on the 2010 annual report, five-year summary of financial ratios and strengths and weaknesses for the international reputable engine making company. Financial analysis: Rolls-Royce GROUP PuBLIC LIMITED Company 1. Background to Rolls-Royce Company 1.1 History Rolls and Royce came together to create the brand Rolls-Royce. Fredrick Royce was an electrical equipment manufacturer, and Charles Rolls was a baron who was intrigued by Royce’s engineering and together they formed the brand (Rowland & Henley, 1968). Royce would build the car and Rolls would sell them. Initially the cars promotion at the time was through racing, where the car’s reputation for durability and performance was founded. The war period made the company a formidable force in the aero-engine manufacture. In 2004, the company celebrated its 100th anniversary. Over the years, Rolls-Royce had much corporate realignments with other auto manufacturers. Presently, the company employs almost 30,000 people and runs operations in over 50 countries specializing in engine manufacturing (DailyMonitor, 2008). 1.2 Strategies Rolls-Royce has an overriding mission of achieving a strategic vision of sustainable development. In the business of producing advanced and high quality power systems, the firm wishes to incorporate the principles of unending development and concern for interrelated socio-economic factors such as social responsibility, environment, safety and health. Through a consistent business strategy, Rolls-Royce has amassed profits of over 2 billion US dollars over the last two decades (Rolls-Royce, 2011). In more detail, the group’s business strategy seeks to address global markets, increase investment in technology, develop a competitive product and service base, and give value to its customers by providing related services. In addition to these strategic principles, Rolls-Royce wishes to mitigate the environmental impact of its products by efforts to roll back the environmental impacts of its products, reducing the environmental impact of the existing product lines and production of more environmentally friendly products in future. To keep this vision in view, the company is more proactive in its strategy formulation, to keep pace with globalized economic dynamisms (The Times, 2009). 1.3 Products 1.3.1Civil Aerospace Rolls-Royce invests in many forms of transport systems for land, air and sea. The firm also invests in energy generation projects some including nuclear power. Rolls-Royce’s civil aerospace business is fully dedicated to the manufacture of aircraft engines, and has over 13,000 aircraft engines in use around the globe, with a Rolls-Royce powered plane leaving or landing every two and a half seconds (Rolls-Royce, 2011). The aerospace segment at Rolls-Royce targets airlines, freight operators, lessors and corporate operators. 1.3.2 Defence Aerospace Rolls-Royce is a reputable global provider of aero-engine providers, and the second biggest in the world, with a presence in over a hundred countries (Rolls-Royce, 2011). Rolls-Royce engines in defence aerospace number at almost twenty thousand, and are their use in defence ranges from transport, combat, training to even unmanned space vessels. 1.3.3 Marine Rolls-Royce makes designs and supply’s engines for marine use in running naval vessels and gas and oil exploitation systems. Over seventy thousand navies use Rolls-Royce engines around the world, among the 2,500 customers of Rolls-Royce marine products and services, which extend to the installation of equipment on marine vessels (Rolls-Royce, 2011). 1.3.4 Energy Rolls-Royce futuristic energy segment of its wide product portfolio focuses on building of gas turbines, compressors and diesel power units to its global customers (Rolls-Royce, 2011). The company is also making inroads into the nuclear power segment, a bold move that will consolidate the company’s position in the energy generation sector. 1.4 Customers Customers for the Rolls-Royce products vary across a number of platforms and segments of the company’s product chain. Government in almost all countries in the world make use of Rolls-Royce engine systems in either the aircraft defence systems or the marine. Corporate customers on the other hand buy Rolls-Royce products mainly in the airline industry and the oil and gas mining sectors. Retail customers around the world use some of the numerous and reputable Rolls-Royce brand of vehicles which are especially popular in the luxury car market segment. 1.5 Market Competition Prospects for growth in the civil aviation scene have attracted the attention of many global players. The air transport industry is a trillion dollar industry, with unprecedented potential growth in the coming years (The Times, 2009). One of Rolls-Royce products lines touches on this highly competitive segment of the transport industry. In the recent past Rolls-Royce has faced stiff competition for the manufacturing of aero-engines, and a strategic realignment is necessary to foster its presence as a global favourite. Lately as well, the company has had to adjust to the dynamisms of the luxury car market, which has taken a downturn after the 2008 global economic crisis. Overall, Rolls-Royce needs to maintain its profitability and consolidate its global businesses in a time when century-old manufacturing enterprises are reporting a streak of losses. 2. Corporate Governance Corporate governance is the process of directing, managing, and controlling a company for the benefit of all its stakeholders (Marc, 2012). 2.1 Subjective View of Corporate Governance Simply put, corporate governance is the synergistic symbiotic interaction of elements within a body corporate to deliver on its mission in a way that exhibits organizational harmony and concurrence for all stakeholders. Corporate governance requires the cooperation of the management, board, workers, shareholders, and other shareholders to prevent collision between all parties that have a stake in the company. The conceptual ramifications upon which corporate governance is attainable include well-defined processes, policy guidelines, laws and institutional establishments that have an impact in the way a company runs. Principles of corporate governance require that a company offers equitable rights and treatment of its shareholders, protect the interests of other shareholders, integrity and ethics, disclosure and transparency, and well-defined roles and responsibilities of the board (Marc, 2012). 2.2 Corporate Governance at Rolls-Royce Rolls-Royce has adopted the changes suggested by the Financial Reporting Committee on May of 2010 as in the Combined Code. The intention of the changes was to increase the management’s accountability to the shareholders, and increase the effectiveness of the board of directors that re-elections occur on an annual basis. The company expresses its willingness to incorporate the changes into the company. Rolls-Royce has adapted the two-tiered Board of Directors, as is common practise in continental Europe. A two-tiered board consists primarily of executive board members who run the day-to-day operations of the company and non-executive board members who assume a largely advisory position in the organisation. 3. Analysis of Financial Ratios of Rolls-Royce 3.1 Calculated Results Table 1: Calculated Results of Financial Ratios for the 2006-2010 five year period 2010 2009 2008 2007 2006 Liquidity Ratios Current ratio 1.36 1.49 1.10 1.53 1.67 Quick/acid test ratio 1.03 1.10 0.79 1.06 1.31 Net working capital ratio 0.66 0.81 0.33 0.70 0.99 Gearing Ratios Debt ratio 75% 75% 83% 69% 75% Long term debt ratio 1.61 1.60 2.30 0.89 1.32 Activity Ratios Total assets turnover 0.68 0.68 0.60 0.65 0.66 Profitability Ratios Gross profit margin 20% 20% 20% 19% 23% Equity/Investor Ratio Return on investment 3.00% 14% -9.00% 5.00% 9.00% Return on capital employed 17.30% 17.20% 17.10% 17.20% 16.00% 3.2 Analysis of the Financial Ratios 3.2.1 Liquidity ratios Liquidity ratio indicates the capacity of the company to meet its financial as and when they fall due. A high liquidity ratio is a clear indicator that a firm’s cash position is good. Rolls-Royce is in a good liquidity position, its current ratio is well above any short-term payment demands creditors may claim on the company, according to the cash ratio. The quick ratio considers the fact that some of the current assets are not easily convertible to meet a company’s deadline. However, for Rolls-Royce, the firm is still in a good liquidity position, and has no threat for defaulting short-term payments. Over the last five years, Rolls-Royce has maintained a good liquidity position. 3.2.2 Gearing ratios/Leverage ratio Gearing ratio measures the level of external financing to a company. A high financial gearing ratio indicates a greater risk for a company, as it indicates that a firm depends extensively on external debt, which it might have problems in paying. The debt ratio shows the amount of creditor financing in a business, for instance, external creditors finance 75% of the assets, and the position has been maintained over a number of years, been the highest in 2008 at 83%, probably due to the financial crisis which may have resulted in solicitation of more external funding by the company. The long-term debt ratio measures the extent of non-owner funding in relation to the net assets. 3.2.3 Activity ratios The ratios measure how well the organization is using its assets to generate revenue. The total assets turnover ratio measures the effectiveness of a company is generating revenue using the company’s assets. For the past two years, Rolls-Royce has been able to generate revenues that are 68% of the assets, which is an improvement from 2008, when it reported the lowest asset turnover ratio of 60% of the assets, probably due to the adverse economic conditions in the global economic crisis. 3.2.4 Profitability Ratios Profitability ratios help to determine how well the company makes use of various funds to generate returns. A high profitability ratio means the firm is more effective in generating income and vice versa. Rolls-Royce has maintained a consistent profitability of 20% over the last five years, even during the 2008 global economic crisis. 3.2.5 Equity/Investor ratios The equity ratio measures the level of return investors in the firm expect on their investments. Return on investment shows how efficient a firm is in generating returns using the total assets. For Rolls-Royce, the company has consistently increased its efficiency in generating returns for its shareholders. 3.3 Comments on the Rolls-Royce Financial Ratios The ratio analysis of Rolls-Royce indicates a consistent yet sustainable profitability in the company’s operations, which even managed to retain an appreciable level of return in the severe economic crisis of 2008. Investor ratio indicates a continued growth in the value of shareholders equity. The health of the company and its ability to meet its obligations to creditors is well above board. The ratios emphasize the company’s resilience in wild market conditions, and its ability to remain profitable in any market environments. 4. Strengths and Weakness of Rolls-Royce 4.1 Strengths Rolls-Royce has a great corporate governance structure, which is up to date and in line with industry best practice. A recent testimony to this fact is the high rank the company carries on with the Dow Jones sustainability index. Rolls-Royce took the pole position for the eighth time in a row, beating some industry averages by over 40 percentage points in some categories (Rolls-Royce, 2011). Dow Jones measures the broader impact of corporate entities to all stakeholders ranging from the market performance, environmental concern by the company and corporate social responsibility of the company. Of the three scales, Rolls-Royce easily surpassed industry averages, and top in two of them to take the best overall position in the UK (Rolls-Royce, 2011). Rolls-Royce has an excellent record for its commitment to environmental issues, social responsibility and business acumen. Its performance on many rating scales pitches it as a stable and investment grade company (by Moody’s and Standard and Poor’s) (Rolls-Royce, 2011). The Dow Jones sustainability index give the group the highest rating for its environmental reporting, currently independently assessed by Deloitte. Detailed financial analysis of Rolls-Royce indicates that strong foundations in its investments portfolio, which keeps it profitable in all market conditions, underlie the company. The profitability of Rolls-Royce during the 2008 economic crisis is testament to this fact. Rolls-Royce was able to report a 20% profit margin despite a diminished activity, which was 5% less for the total assets turnover. Return on investors’ equity has also been on a growth streak over the five-year period, only experiencing a minor downturn in the year 2008, when the economic depression was forcing many companies into receivership. Rolls-Royce is in a leadership position in the engine manufacturing business (DailyMonitor, 2008). Rolls-Royce has a global manufacturing and market network globally, and is in the top positions in the manufacture of engines for aircrafts, marine vessels and high-end cars. The large proportion of the global market segment puts Rolls-Royce in a prime position to overcome economic challenges and ensure sustainable growth. Rolls-Royce has a great revenue record even in depressed economic conditions. The sheet amount of profits the company generates is a good indicator that the company is very vibrant economically, and that its overall strategic landscape is delivering on the company’s mission for sustainability and development. In fact, over the last two decades, the company has made profits in excess of 1 trillion US dollars, which is no small feat given the current economic turbulences and volatile market dynamisms. Rolls-Royce has built a huge and loyal following in client base, with the number of orders for supply of its products running into billions of pounds every year. The relationships with its variegated clientele will help Rolls-Royce have a more predictable future in the engine manufacturing business. For instance, Rolls-Royce just signed a deal with the royal navy to help build its next generation of marine equipment. The Rolls-Royce has a well-diversified product portfolio, which makes the company profitable even when some segments of the industry are having problems turning a profit. The company also runs maintenance activities for its global clients in maintaining and installing some of the equipment, especially in the marine segment of engine manufacturing. The future of some of Rolls-Royce’s areas of specialization holds a lot of promise for the engine manufacturer. Sectors such as defence aerospace, aircraft engine market, and demand for alternative fuel sources (DataMonitor, 2008), which fall into the company’s product range, keeps the company in its path towards attaining its long-term goals of sustainability and development. 4.2 Weaknesses Rolls-Royce is experiencing slow growth in some markets such as Africa and some countries like UK in comparison to other global market performances. Despite an upbeat performance overall over the past few decades, the company has reported declining sales in some countries, which impacts negatively on its general performance. One of Rolls-Royce future performance boosters will be the aero-engine production industry. However, the fluctuations and unpredictability in the oil industry affect profoundly the price of jet fuel, which in turn slows down the viability of the industry for growth in the group’s revenue. 5. Summary, Conclusions and Recommendations 5.1 Summary of Findings Rolls-Royce has maintained a consistent strategy of sustainable development over the years. The product range for the company is broad, and covers engine making in all areas of transportation including air, road, sea and spacecraft engine manufacture and design. According to independent assessments by rating organizations, both globally and locally, Rolls-Royce ranks high for its credit position, social responsibility and environmental concern. The company’s corporate governance statement indicates the highest level of compliance with international standards. Rolls-Royce’s global reputations extend beyond its product line and touches on environmental concerns and social responsibility the company exhibits. Dow Jones sustainability index, as well as the ratings by international credit organizations such as Moody’s and Standard and Poor put the firm in the highest echelons of corporate performance. According to the annual report, Rolls-Royce gets an unreserved and highest rating for the truthfulness and fairness of its financial statements from its auditor. The organization, in an effort to remain true to its environmental conservation agenda is in a contract with Deloitte, a reputable audit and consultancy firm, to assess the environmental impact in relation to the company’s operations. Rolls-Royce enjoys a wide client base ranging from governments, organizations, and individuals. The customer base makes billions of orders every year, which grow each year. In addition, Rolls-Royce offers services to many of its customers, especially in the marine segment of the business, where the company does installation of new equipment. The future of Rolls-Royce business operations is conceivably promising, although the company still faces numerous challenges and possible risks. For instance, the aero engine manufacturing segment is expected to grow worldwide, although turbulences in the fuel industry may affect this prospect. Rolls-Royce also needs to rethink its operations in some markets which report lower growth potential according to the recent years’ record, for instance in the UK and Africa. According to the analysis of the company’s financial statements using financial ratios the firms overall financial health is well above global average. The financial ratios also indicate a consistency in unpredictable market climates. Rolls-Royce was able to remain profitable and avoid bailout when most multinationals of its size were shutting down their operations and seeking government bailouts. 5.2 Conclusion Rolls-Royce annual report gives it an unmodified audit report, meaning that the financial statements are true and fair in all material respects, and the auditor did not have to make any modifications on the statements whatsoever. In addition, Rolls-Royce’s performance in all aspects are indicators of a thriving multinational with a successful strategy of sustainability and development, cross-cutting all areas relating to the best form of corporate governance. 5.3 Recommendations Rolls-Royce has a high rating externally, a proven strategy in sustainability and development, consistent profitability record, promising and sustainable future growth areas, a well-formulated corporate governance statement, and a growing return on the investors’ equity. The impeccable management performance for the company is indisputable, with the accumulated profits of over one trillion over the last twenty years. Therefore, Rolls-Royce is a sound investment option, which offers the promise of a consistent and positive return for its investors. Consequently, the client can make the investment in the company. References DataMonitor, 2008, ‘Rolls-Royce: Company Profile’, DataMonitor, Viewed 18 February, 2012, http://favormall.net/clientimages/38996/avileadcomp-rollsroyce.pdf Marc, G 2012, International Corporate Governance, Prentice Hall. Rolls-Royce, 2010, Annual Report 2010: Teamwork and Technology, Rolls-Royce Group Plc., Westerham Press. Rolls-Royce, 2011, ‘Home Page’, Rolls-Royce. Com, Viewed 18 February, 2012, http://www.rolls-royce.com/ Rowland J, and Henley, M 1968, The Rolls-Royce Men: The Story of Charles Rolls and Henry Royce, Lutterworth Press. The Times, 2009, ‘Competing within a changing world’, The Time, Viewed 18 February, 2012, http://www.rolls-royce.com/Images/competition_tcm92-11184.pdf Appendices A table of figures used, FIGURES IN ‘000,000 GBP 2010 2009 2008 2007 2006 Current assets 9,824 9,374 9,412 7,253 6,780 Current liabilities 7,178 6,312 8,573 4,754 4,064 Inventories 2,429 2,432 2,600 2,203 1,447 Total liabilities 12,255 11,640 12,698 7,910 8,073 Total assets 16,234 15,422 15,229 11,459 10,798 Non-current liabilities 6,410 6,048 5,817 3,156 3,599 Net assets 3,979 3,782 2,531 3,549 2,725 Sales 11,085 10,414 9,082 7,435 7,156 Gross profit 2,200 2,111 1,771 1,432 1,629 Net profit before tax 702 2,957 -1,892 733 1,391 Earnings after tax 543 2,217 -1,345 600 994 Formulae Current Ratio = Current Assets Current Liabilities Quick Ratio/Acid Test Ratio = Current Assets - Inventories Current Liabilities Net Working Capital Ratio = Net Working Capital Net Assets Debt Ratio = Total Liabilities Total Assets Long Term Debt Ratio = Non-Current Liabilities Net Assets Total Assets Turnover = Sales Total Assets Gross Profit Margin = Gross Profit Sales Return on Investment= Net Profit after tax Total Assets Return on Capital Employed= Net Profit after tax Net Assets Calculations and Answers (Using consolidated amounts) 2010 2009 2008 2007 2006 Liquidity Ratios Current ratio 9824/7178 =1.36 9374/6312 =1.49 9412/8573 =1.10 7253/4754 =1.53 6780/4064 =1.67 Quick/acid test ratio (9824-2429)/ 7178 =1.03 (9374-2432)/6312 =1.10 (9412-2600)/8573 =0.79 (7253-2203)/4754=1.06 (6780-1447)/4064 =1.31 Net working capital ratio (9824-7178)/9824 =0.66 (9374-6312)/9374 =0.81 (9412-8573)/9412 =0.33 (7253-4754)/7253=0.70 (6780-4064)/6780 =0.99 Gearing Ratios Debt ratio 12255/16234*100 =75% 11640/15422*100=75% 12698/15229*100=83% 7910/11459*100=69% 8073/10798*100 =75% Long term debt ratio 6410/3979 =1.61 6048/3782 =1.60 5817/2531 =2.30 3156/3549 =0.89 2725/7156 =1.32 Activity Ratios Total assets turnover 11085/16234 =0.68 10414/15422 =0.68 9082/15229 =0.60 7435/11459 =0.65 7156/10798 =0.66 Profitability Ratios Gross profit margin 2200/11085*100 =20% 2111/10414*100=20% 1771/9082*100 =20% 1432/7435*100 =19% 1629/7156*100 =23% Equity/Investor Ratio Return on investment 543/16234*100 =3.00% 2217/15422*100=14% -1345/15229*100 =-9.00% 600/11459*100 =5.00% 994/10798*100 =9.00% Return on capital employed* 17.30% 17.20% 17.10% 17.20% 16.00% *As in the company annual report, using after-tax underlying profit, divided by the average net assets during the year, adjusted for net cash, net post-retirement deficit and goodwill previously written off. It represents a measure of the return the Group is making on its investments. PART A: Reading and Extracting Information from Annual Report 1. What is the name of your Company? Answer: Rolls-Royce Group Plc. 2. What is the financial year of your Company? Answer: 2010 3. What are the principal activities of your Company as shown in the Directors’ Report? Answer: Aerospace, Marine, and Energy 4. List all the directors in office at the date of the Directors’ Report. Answer: Sir Simon Robertson - Non-Executive Chairman Sir John Rose - Chief Executive Helen Alexander CBE - Non-Executive Director Peter Byrom-Non - Executive Director Iain C Conn Non - Executive Director Peter Gregson - Non-Executive Director James Guyette - President and Chief Executive of Rolls-Royce North America Inc. John McAdam - Non-Executive Director John Neil- Non - Executive Director John Rishton - Non - Executive Director Andrew Shilston - Finance Director Colin Smith - Director, Engineering and Technology Ian Strachan - Non-Executive Director Mike Terrett - Chief Operating Officer Tim Rayner - General Counsel and Company Secretary 5. List all the members of the audit committee. Answer: Ian Strachan (Chairman) Iain Conn John Neil John Rishton 6. Who are the independent auditors? Answer: Audit firm: KPMG Audit Plc. Audit partner: A J Sykes 7. State the type of audit report issued by the independent auditors to the members of your Company. Answer: Tick the best answer. A. Unmodified audit report B. Modified unqualified audit report C. Qualified audit report D. Disclaimer audit report E. Adverse audit report 8. When and where is the annual general meeting? Answer: Date: May 6, 2011, 11.00am Location: Queen Elizabeth II Conference Centre, London 9. Who is the company secretary and where is the registered office? Answer: Company secretary: Tim Ryner Registered office: 65 Buckingham Gate, London, SW1E 6AT 10. Who is the shareholder with the highest number of shares? Answer: Name of the shareholder: Invesco Limited Number of shares held: 6.91% of the shares, 655,000,000 shares 11. List all the components of the financial statements. Follow the terms used in the annual report. Answer: Consolidated Income Statement Revenue Gross Profit Operating Profit Profit Before Financing and Taxation Profit Before Taxation Profit for the year Earnings per ordinary share attributable to shareholders Payments to ordinary shareholders in respect to the year Consolidated Balance Sheet ASSETS Non-current assets Current assets Total assets Current liabilities Non-current liabilities Total liabilities Net assets EQUITY Equity attributable to ordinary shareholders Total equity 12. Which category of non-current asset has the highest value? Answer: Name: Intangible assets Amount:2,884,000,000 pounds Extracted from: Balance Sheet, page 84, Note 8 Details on Pg 104 13. Which category of current liability has the lowest value? Answer: Name: Other financial liabilities Amount: 105,000,000 pounds Extracted from: page 85, Note 16 (to provide “Note” number, if applicable) 14. How much is the issued and paid-up share capital and what is the number of shares in issue? Answer: Amount: 374,000,000 pounds Number of shares: 1,872,000,000 shares Nominal value per share: 20p 15. How much is the trade receivable (net)? Answer: Amount: 3,943,000,000 pounds Extracted from: Note 12 (to provide “Note” number, if applicable) Page number: Page 109 16. How much is the borrowings under current liabilities and how much is the total borrowings? Answer: Amount of borrowings under current liabilities: 717,000,000 pounds Amount of total borrowings: 1,852,000,000 pounds 17. List all the intangible assets, item by item in details. Answer: Goodwill-1,108 Certification costs and participation fees-496 Development expenditure-630 Recoverable engine costs-346 Software and Other-304 Total-2,884 18. How much is the total accumulated depreciation for property, plant and equipment? Answer: Amount: 1,810,000,000 pounds Extracted from: Note 9 Page number: pg. 106 19. How much is the working capital? Answer: Formula for working capital: Current Assets-Current Liabilities Amount for working capital: 9,824 – 7,178 = 2,646 million BBP 20. State the accounting policy for inventories. Answer: Accounting policy: Inventory is stated at net realizable value Extracted from: balance sheet, Note number 11 Page number: 109 21. List three (3) subsidiaries existed at the reporting date. Answer: Name Composite Technology & Applications Limited Rolls-Royce Goodrich Engine Control Systems Limited Turbine Surface Technologies Limited (UK and France) Percentage of interest held Composite Technology & Applications Limited 51% Rolls-Royce Goodrich Engine Control Systems Limited 50% Turbine Surface Technologies Limited (UK and France) 50% Extracted from: Annual report 2010, Page number: Pg. 138 22. What are the depreciation method and depreciation rate for vehicles? Answer: Depreciation method: Carrying Value basis Extracted from: Note 9 Page number: Pg. 106 Depreciation rate: 25% Extracted from: Note 9 Page number: pg. 106 23. How much is the finance costs? Answer: Amount: 885,000,000 pounds Extracted from: Note 3 , Pg. 100 Page number: Pg. 84 24. How much is the cost of sales? Answer: Amount: 8,885,000 pounds Extracted from: Note 2, Pg. 97 Page number: Pg. 84 25. How much is the employee benefit expense and what is the average number of persons employed? Answer: Amount of employee benefit expense: 3,000,000 GBP Extracted from: Annual Report, Business Review Page number: Number of persons employed: 38,900 Extracted from: Annual Report, Business Review Page number: pg. 07 26. How much is the net cash from/(used in) operating activities? Answer: Amount: 1,378,000,000 pounds Extracted from: Notes 3,8,9,10,16,20,24 Page number: Pg. 86 27. How much is the dividend paid? Answer: Amount: 16 pence Extracted: income statement, Note 16 Page number: 84 28. How much is the interest received? Answer: Amount: 23,000,00 GBP Extracted from: Income statement, Note number 3 Page number: Pg. 84 29. How much is the total comprehensive income for the year attributable to the equity shareholders of the Company? Answer: Amount: 480,000,000 GB pounds Extracted from: Consolidated Statement of comprehensive income, Note N/A Page number: Pg. 84 30. List all the equity items shown in the Consolidated Statement of Changes in Equity. Answer: Share capital Share premium Capital redemption reserves Holding reserves Other reserves Retained earnings Non-controlling interests Reference Rolls-Royce, 2010, Annual Report 2010: Teamwork and Technology, Rolls-Royce, Westerham Press. Read More