|Quoting RichardPrice (Reply 41):|
with the increase in profitability over the past few years (2005 was nearly 40% up on years previous)
Oddly enough, RP, and just as a matter of interest, the apparent profit increase was actually the result of the accounting change. The bean-counters are sometimes way ahead of us mere mortals.
Please read this bit again:-
"These changes contributed € 289 million to Net Income (FY 2004: € 185 million) or € 0.36 to earnings per share (FY 2004: € 0.23)."
What that means is that, previously, BAE's 20% share of Airbus' profits was credited to BAE before the annual profit was assessed.
Under the new rules, it was assessed as part of EADS' profit. However, after a short period (probably a split second ) it had to be paid out to BAE as a dividend.
So EADS' true profit remained roughly in line with the previous year; but the accounting change (counting BAE's entitlement as in the possession of EADS for a moment in time) produced an increase. On paper, at any rate...........