At 1 January 2000 a total of 64,443,839 shares remained to be issued to former GEC shareholders as part of the consideration for the acquisition of MES, pending the receipt of the necessary declaration required pursuant to the company’s Articles of Association concerning the nationality of the allotee. All such shares were issued during 2000.

The 7.75p (net) cumulative redeemable preference shares of 25p each are convertible into ordinary shares of 2.5p each at the option of the holder on 31 May in any of the years up to 2007, on the basis of 0.47904 ordinary shares for every preference share. During the year 3,093,328 shares were converted for 1,481,827 ordinary shares.

The company may redeem all of the remaining preference shares at any time after 1 July 2007 and, in any case, will redeem any remaining shares on 1 January 2010, in each case at 100p per share together with any arrears and accruals of dividend. The maximum redemption value of the preference shares, ignoring any arrears or accruals of dividend, is therefore £266m and this amount has been disclosed on the face of the balance sheet as the total of non-equity shareholders’ funds.

The preference shares carry voting rights at a general meeting of the company only where the preferential dividend is six months or more in arrears, or where a motion is to be proposed which abrogates, varies or modifies the rights of the preference shareholders, or where a motion is to be proposed for the winding up of the company. On a winding up, holders of the preference shares are entitled, after repayment of the capital paid up on the special share and in priority to any payment to any other class of shareholder, to the return of amounts paid up or credited as paid up on the preference shares together with a premium of 75p per share, and all arrears of preferential dividends.

At 1 January 2000 8,176,158 warrants to subscribe for ordinary shares were outstanding, exercisable at six monthly intervals until 15 November 2000. All such warrants were exercised during the year, at the subscription price of 550p for four ordinary shares.

Under the BAE SYSTEMS Executive Share Option Scheme the BAE SYSTEMS Joint Venture Executive Share Option Scheme (JV) and the BAE SYSTEMS International Executive Share Option Scheme (INT), options to purchase ordinary shares of 2.5p each are exercisable not later than ten years and normally not earlier than three years from the date of the grant. The number of options exercised (in accordance with the Rules of the Scheme) and outstanding at 31 December 2000, together with their exercise prices rounded to the nearest penny, was as follows:

Under the BAE SYSTEMS SAYE Share Option Scheme and the BAE SYSTEMS Joint Venture SAYE Share Option Scheme for employees, options to purchase ordinary shares of 2.5p each are exercisable normally on completion of the related savings contracts. The number of options exercised (in accordance with the Rules of the Scheme) and outstanding at 31 December 2000, together with their exercise prices rounded to the nearest penny, was as follows: