Rolls Royce Holding Harvard Case Solution & Analysis

Introduction

Rolls Royce holding is an engineering public company incorporated in Feb 2011,primarily responsible for the delivery of better power and propulsion system for the changing world. The segments of the company includecivil aerospace that is engaged in the manufacturing, development, marketing as well as the sales of commercial aero engines and aftermarket services which have made it the world’s second largest maker of aircraft engines. In addition to this, another segment is defense aerospace which is engaged in the manufacturing, sales, marketing and development of the military aero engines as well as aftermarket services, and caters to trainer aircraft, combat aircraft and helicopter sectors. Power system is another segment or division engaged in the manufacturing, development and sales of power engines and reciprocating engines. Marine division is engaged in the manufacturing, development, sales and marketing of marine power propulsion system. In last, nuclear division is engaged in the manufacturing, development, sales and marketing of the nuclear systems for the naval propulsion and power generation system.

The integrated power system that has been built developed, marinated and addressed the growing international demand for energy and transport. As the society tends to be more integrated and the population would be expanding, also the world would become affluent. The global demand for the requirements of advanced engineering solution would most likely grow. These trends are long term and must need long term investment due to which the company would get opportunity to explore for the long term profitable growth.

Dividend policy of Rolls Royce Holding Company

            Evidently, the company hugely understands the importance and significance of the dividend or return to its shareholders or investors, and the company also understands that it is important forbuilding a strong credit rating. These are compatible with the company’s growth aspiration. There are many obligations and rights which are associated with the different share classes which the company offers to its shareholders or investors;

  1. Ordinary shares
  2. Special shares
  3. C-shares

Theholders of the ordinary shares tend to receive bonus issues of the dividend or C shares and on liquidation might share the company’s asset.

Rolls Royce Holding Harvard Case Solution & Analysis

The special shares bestowno dividend rights to the shareholders, but if the winding event occurs, it has to be reimbursedin precedence to other shares at the nominal value.

In addition to this, the voting rights are limited to C shares and they attract a 75 percent dividend of Londoninterbank offered rate (LOBOR) on the nominal value of 0.1p of each share that tends to be paid on yearly basis.

Foreign exchange policy of Rolls Royce holding company

The company does not believe in applying hedging accounting in respect of the commodity swaps and forward foreign exchange contract in order to manage the forecast exposure of the cash flow transactionsdenominated in the foreign commodities and currencies respectively.

The company applies hedge accounting in respect of the transaction that has been entered for the purpose of managing the fair value and exposure of borrowing cash flow. The company held forward foreign exchange contracts so that it would better manage the fair value borrowing exposure denominated in the international currency that has been selected with the intent as fair value hedges.......................

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