REG - Balfour Beatty PLC - Balfour Beatty 2015 full-year results <Origin Href="QuoteRef">BALF.L</Origin> - Part 3
15/03/2016 07:05
- Part 3: For the preceding part double click ID:nRSO0684Sb
cash flows within the infrastructure concessions.
Following the construction business contract reviews carried out in the year, risk-based provisions were recognised on
specific contracts. The risk-based provisions are recognised to reflect an increased level of prudence in estimating
specific contract completion costs. In 2014, the risk-based provisions were recognised across the broader UK construction
portfolio, and generally covered the smaller contracts.
Across Construction Services there are several long-term and complex projects where the Group has incorporated significant
judgements over contractual entitlements. The range of potential outcomes could result in a materially positive or negative
change to underlying profitability and cash flow. In the UK, the majority of these contracts are within Major Projects.
Outside the UK, this primarily relates to a small number of contracts in Hong Kong which have been recorded at break-even.
Several of these claims are expected to reach commercial settlement in 2016.
3.2 Adoption of new and revised standards
The following accounting standards, interpretations and amendments have been adopted by the Group in the current period:
· Amendments to the following standards:
o IAS 19 Employee Benefits: Defined Benefit Plans: Employee Contributions
o Improvements to IFRSs (2010 - 2012)
o Improvements to IFRSs (2011 - 2013).
The above new and amended standards do not have a material effect on the Group.
3.3 Accounting standards not yet adopted by the Group
The following accounting standards, interpretations and amendments have been issued by the IASB but had either not been
adopted by the European Union or were not yet effective in the European Union at 31 December 2015:
· IFRS 9 Financial Instruments
· IFRS 14 Regulatory Deferral Accounts
· IFRS 15 Revenue from Contracts with Customers
· IFRS 16 Leases
· Amendments to the following standards:
o IFRS 10 and IAS 28: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
o IFRS 10, IFRS 12 and IAS 28: Investment Entities: Applying the Consolidation Exemption
o IFRS 11 Accounting for Acquisitions of Interests in Joint Operations
o IAS 1 Disclosure Initiative
o IAS 16 and IAS 38: Clarification of Acceptable Methods of Depreciation and Amortisation
o IAS 16 and IAS 41: Agricultural: Bearer Plants
o IAS 27 Equity Method in Separate Financial Statements
o Improvements to IFRSs (2012 - 2014).
The Directors continue to assess the impact of IFRS 9, IFRS 15 and IFRS 16 but do not expect the other standards above to
have a material quantitative effect.
4 Exchange rates
The following key exchange rates were applied in these financial statements.
Average rates
£1 buys 2015 2014 Change
US$ 1.53 1.65 (7.3)%
HK$ 11.84 12.76 (7.2)%
Euro 1.37 1.24 10.5%
Closing rates
£1 buys 2015 2014 Change
US$ 1.48 1.56 (5.1)%
HK$ 11.43 12.09 (5.5)%
Euro 1.36 1.28 6.3%
5 Segment analysis
Reportable segments of the Group:
Construction Services - activities resulting in the physical construction of an asset.
Support Services - activities which support existing assets or functions such as asset maintenance and refurbishment.
Infrastructure Investments - acquisition, operation and disposal of infrastructure assets such as roads, hospitals,
schools, student accommodation, military housing, offshore transmission networks, waste and biomass and other concessions.
This segment now also includes the Group's housing development division which has moved from Construction Services.
5.1 Total GroupIncome statement - performance by activity from continuing operations ConstructionServices SupportServices InfrastructureInvestments Corporateactivities Total Rail Germany Certain legacy ES contracts Total
2015£m 2015£m 2015£m 2015£m 2015£m 2015£m 2015£m 2015£m
Revenue including share of joint ventures and associates 6,388 1,259 588 - 8,235 179 30 8,444
Share of revenue of joint ventures and associates (1,168) (25) (278) - (1,471) (18) - (1,489)
Group revenue 5,220 1,234 310 - 6,764 161 30 6,955
Group operating (loss)/profit^ (234) 23 91 (33) (153) (3) (8)
Share of results of joint ventures and associates 5 1 41 - 47 1 -
(Loss)/profit from operations^ (229) 24 132 (33) (106) (2) (8)
Non-underlying items
- include results from certain legacy ES contracts within Construction Services (8) - - - (8)
- include results from Rail Germany within Construction Services (2) - - - (2)
- amortisation of acquired intangible assets (4) - (6) - (10)
- other non-underlying items (37) (13) (4) (2) (56)
(51) (13) (10) (2) (76)
(Loss)/profit from operations (280) 11 122 (35) (182)
Investment income 52
Finance costs (69)
Loss before taxation (199)
^ Presented before non-underlying items for underlying operations (Note 8).
5 Segment analysis continued
5.1 Total Group continued
Income statement - performance by activity from continuing operations ConstructionServices+ SupportServices InfrastructureInvestments+ Corporateactivities Total RailGermany Certain legacy ES contracts Total
2014£m 2014£m 2014£m 2014£m 2014£m 2014£m 2014£m 2014£m
Revenue including share of joint ventures and associates 6,597 1,273 570 - 8,440 291 62 8,793
Share of revenue of joint ventures and associates (1,168) (26) (296) - (1,490) (39) - (1,529)
Group revenue 5,429 1,247 274 - 6,950 252 62 7,264
Group operating (loss)/profit^ (217) 49 81 (26) (113) (22) (88)
Share of results of joint ventures and associates 8 1 46 - 55 (1) -
(Loss)/profit from operations^ (209) 50 127 (26) (58) (23) (88)
Non-underlying items
- include results from certain legacy ES contracts within Construction Services (88) - - - (88)
- include results from Rail Germany within Construction Services (23) - - - (23)
- amortisation of acquired intangible assets (5) - (6) - (11)
- other non-underlying items (66) (27) (3) (5) (101)
(182) (27) (9) (5) (223)
(Loss)/profit from operations (391) 23 118 (31) (281)
Investment income 64
Finance costs (87)
Loss before taxation (304)
^ Presented before non-underlying items for underlying operations (Note 8).
+ £10m of costs relating to the acceleration of the completion of construction works were included within Infrastructure
Investments.
Assets and liabilities by activity ConstructionServices SupportServices InfrastructureInvestments Corporateactivities Total
2015£m 2015£m 2015£m 2015£m 2015£m
Due from construction contract customers 234 145 - - 379
Due to construction contract customers (426) (46) - - (472)
Inventories and non-construction work in progress+ 51 67 26 - 144
Trade and other receivables - current 687 104 59 35 885
Trade and other payables - current (1,343) (240) (59) (58) (1,700)
Provisions - current (92) (7) (7) (20) (126)
Working capital from continuing operations* (889) 23 19 (43) (890)
* Includes non-operating items and current working capital.
Total assets+ 1,983 524 1,339 755 4,601
Total liabilities (2,141) (326) (586) (718) (3,771)
Net (liabilities)/assets (158) 198 753 37 830
+ Inventory relating to development and housing land and work in progress amounting to £26m (2014: £37m) was previously
included in Construction Services. This is now presented within Infrastructure Investments.
5 Segment analysis continued
5.1 Total Group
Assets and liabilities by activity ConstructionServices SupportServices InfrastructureInvestments Corporateactivities Total
2014^£m 2014£m 2014£m 2014£m 2014£m
Due from construction contract customers 406 156 - - 562
Due to construction contract customers (317) (33) - - (350)
Inventories and non-construction work in progress 82 84 - 4 170
Trade and other receivables - current 807 104 55 - 966
Trade and other payables - current (1,596) (278) (75) (10) (1,959)
Provisions - current (89) (15) - (16) (120)
Working capital from continuing operations* (707) 18 (20) (22) (731)
Classified as net assets held for sale (2) - - - (2)
Adjusted working capital* (709) 18 (20) (22) (733)
* Includes non-operating items and current working capital.
Total assets 2,419 491 1,530 804 5,244
Total liabilities (2,274) (365) (701) (674) (4,014)
Net assets 145 126 829 130 1,230
^ Includes net assets held for sale of £13m relating to the Rail disposal group.
Other information - continuing operations ConstructionServices SupportServices InfrastructureInvestments Corporateactivities Total
2015£m 2015£m 2015£m 2015£m 2015£m
Capital expenditure on property, plant and equipment 14 12 14 - 40
Depreciation 16 16 2 1 35
Gain on disposals of interests in investments (Note 21.2) - - 95 - 95
2014£m 2014£m 2014£m 2014£m 2014£m
Capital expenditure on property, plant and equipment 15 11 23 - 49
Depreciation 25 15 2 1 43
Gain on disposals of interests in investments - - 93 - 93
Performance by geographic destination - continuing operations UnitedKingdom UnitedStates Rest ofWorld Total
2015£m 2015£m 2015£m 2015£m
Revenue including share of joint ventures and associates 3,843 3,238 1,363 8,444
Share of revenue of joint ventures and associates (185) (170) (1,134) (1,489)
Group revenue 3,658 3,068 229 6,955
Non-current assets excluding financial assets and deferred tax assets 1,051 764 80 1,895
2014£m 2014£m 2014£m 2014£m
Revenue including share of joint ventures and associates 4,271 3,123 1,399 8,793
Share of revenue of joint ventures and associates (329) (180) (1,020) (1,529)
Group revenue 3,942 2,943 379 7,264
Non-current assets excluding financial assets and deferred tax assets 1,135 709 128 1,972
5 Segment analysis continued
5.2 Infrastructure Investments
Underlying profit from operations1 Group2015£m Share of jointventures andassociates+(Note 15)2015£m Total2015£m Group2014£m Share of jointventures andassociates+(Note 15)2014£m Total2014£m
UK^ 3 30 33 2 40 42
North America 17 8 25 15 6 21
Infrastructure Fund - 3 3 - - -
Infrastructure - - - (2) - (2)
Gain on disposals of interests in investments 95 - 95 93 - 93
115 41 156 108 46 154
Bidding costs and overheads (24) - (24) (27) - (27)
91 41 132 81 46 127
+ The Group's share of the results of joint ventures and associates is disclosed net of investment income, finance costs
and taxation.
^ Including Singapore and Australia.
1 Before non-underlying items (Note 8).
6 Investment income
Continuing operations 2015£m 2014£m
Subordinated debt interest receivable 24 29
Interest receivable on PPP financial assets 24 26
Other interest receivable and similar income 4 9
52 64
7 Finance costs
Continuing operations 2015£m 2014 £m
Non-recourse borrowings - bank loans and overdrafts 19 20
Preference shares - finance cost 11 11
- accretion 2 2
Convertible bonds - finance cost 5 5
- accretion 6 6
US private placement - finance cost 11 10
Other interest payable - loans under committed facilities - 6
- other bank loans and overdrafts 1 -
- commitment fees 6 5
- other finance charges 5 6
Net finance cost on pension scheme assets and liabilities (Note 18) 3 16
69 87
8 Non-underlying items
2015£m 2014£m
Items (charged against)/credited to profit
8.1Continuing operations
8.1.1 Trading results of Rail Germany (including £13m (2014: £15m) of other net operating expenses and £nil (2014: £1m) of finance cost) (3) (23)
8.1.2 Results of certain legacy ES contracts (8) (88)
8.1.3 Amortisation of acquired intangible assets (10) (11)
8.1.4 Other non-underlying items:
- Build to Last transformation costs (2014: restructuring and reorganisation costs) (23) (23)
- restructuring costs relating to Heery and Rail Germany (9) -
- cost of implementing the shared service centre in the UK (8) (14)
- impairment of assets within Rail Germany (7) (30)
- gain on disposal of Signalling Solutions Ltd 16 -
-impairment of IT intangible asset (2014: Oracle R12 intangible asset) (17) (21)
- loss on disposal of parts of Rail Germany (3) -
- pension fund settlement gain 3 2
- impairment of goodwill and other costs relating to Blackpool Airport (4) (1)
- Rail Germany regulatory matters - (6)
- cost incurred in relation to the aborted merger discussions with Carillion plc - (7)
Total other non-underlying items from continuing operations (52) (100)
(73) (222)
8.1.5 Share of results of joint ventures and associates - trading gain of £1m and impairment of assets of £4m in respect of Rail Germany (3) (1)
8.1.6 Share of results of joint ventures and associates - goodwill impairment in respect of Middle East - (1)
Charged against loss before taxation from continuing operations (76) (224)
8.1.7 Tax on items above 4 1
Non-underlying items credited against loss for the year from continuing operations (72) (223)
8.2 Discontinued operations
8.2.1 Amortisation of acquired intangible assets - (8)
8.2.2 Other non-underlying items:
- gain on disposal of Parsons Brinckerhoff 5 234
- loss on disposal of Rail Italy (4) -
- goodwill impairment in respect of Rail Italy - (24)
- other - (3)
Total other non-underlying items from discontinued operations 1 207
Credited to (loss)/profit before taxation from discontinued operations 1 199
8.2.3 Tax on items above - 19
Non-underlying items credited to (loss)/profit for the year from discontinued operations 1 218
Charged against (loss)/profit for the year (71) (5)
8 Non-underlying items continued
Continuing operations
8.1.1 Rail Germany was reclassified from discontinued operations in 2014 and has continued to be presented as part of the
Group's non-underlying items within continuing operations. Refer to Note 10. In 2015, Rail Germany generated a loss before
tax excluding share of joint ventures and associates of £3m (2014: £23m).
8.1.2 The Group has continued to present the results of certain external legacy Engineering Services (ES) contracts in
non-underlying items. These contracts were classified as non-underlying items in 2014 as the performance of these contracts
was linked to poor legacy management and in regions where ES has withdrawn from tendering for third-party work. These
contracts resulted in a loss before tax for the Group of £8m in 2015 (2014: £88m). No tax credit has been recognised on
this loss.
8.1.3 The amortisation of acquired intangible assets from continuing operations comprises: customer contracts £6m (2014:
£6m); customer relationships £3m (2014: £4m); and brand names £1m (2014: £1m).
8.1.4.1 The Group launched its Build to Last transformation programme in February 2015. The transformation programme is
aimed to drive continual improvement across all of the Group's businesses and realise operational efficiencies. As a result
of this programme, restructuring costs of £23m were incurred in 2015 relating to: Construction Services UK £11m; Support
Services UK £6m; other UK entities £3m; and other non-UK entities £3m. These restructuring costs comprise: redundancy costs
£12m; external advisers £4m; property-related costs £5m; and other restructuring costs £2m.
In 2014, the Group incurred restructuring costs relating to legacy transformation programmes of £23m relating to:
Construction Services UK £11m; other UK entities £3m; and other non-UK entities £9m. These restructuring costs comprise:
redundancy costs £13m; external advisers £5m; property-related costs £1m; and other restructuring costs £4m.
8.1.4.2 In 2015, following the disposal of Parsons Brinckerhoff (PB) on 31 October 2014, the Group incurred £4m of costs
relating to restructuring the continuing operations of Heery Inc. which was previously reliant on PB for its back office
functions.
In 2015, additional restructuring costs of £5m were incurred in Rail Germany relating to the restructuring of overheads
post completion of disposal of parts of the business. These restructuring costs comprise redundancy costs of £1m and other
restructuring costs of £4m.
Both Heery and Rail Germany are included within the Construction Services segment.
8.1.4.3 In 2015, transitioning other operating companies to the UK shared service centre in Newcastle-upon-Tyne and
increasing the scope led to incremental costs of £8m (2014: £14m).
8.1.4.4 An assessment of the carrying value of assets within Rail Germany was carried out in 2015 following an agreement to
sell parts of Rail Germany to Tianjin Keyvia Electric Co Ltd. This agreement remains subject to various approvals at the
year end. The assessment resulted in an impairment charge of £11m, of which £4m was recognised at the joint venture level.
In 2014, an impairment charge of £30m was recognised on the parts of Rail Germany which were sold to Rhomberg Sersa Rail
Group in January 2015.
8 Non-underlying items continued
Continuing operations continued
8.1.4.5 On 27 May 2015, the Group disposed of its 50% interest in Signalling Solutions Ltd for a cash consideration of
£18m, resulting in a £16m gain in 2015. Refer to Note 21.2.6.
8.1.4.6 In 2015, an impairment charge of £17m was recorded to write-down intangible assets in relation to costs capitalised
in the transformation of the Group's UK IT estate from a federated to a more centralised model. Refer to Note 14. In 2014,
an impairment charge of £27m was recorded to write-down the cost capitalised in relation to the Oracle R12 software within
intangible assets, £21m of which was recorded within continuing operations.
The charge was recognised in the following segments: Construction Services £9m; Support Services £7m; and Corporate £1m.
8.1.4.7 On 31 January 2015, the Group disposed of parts of its Rail Germany business for a cash consideration of £5m
resulting in a £5m loss in 2015. Refer to Note 21.2.1.
On 12 March 2015, the Group also disposed of its 25% interest in Baoji BaoDeLi Electrification Equipment Ltd for a cash
consideration of £4m resulting in a £2m gain in 2015. Refer to Note 21.2.4.
8.1.4.8 A settlement gain of £3m (2014: £2m) was recognised in relation to the Balfour Beatty Pension Fund following a
commutation exercise commenced in 2014. Refer to Note 18.
8.1.4.9 In 2015, an impairment charge of £4m was recorded to write-down the entire goodwill relating to Blackpool Airport.
Blackpool Airport Ltd went into creditors' voluntary liquidation on 16 October 2014 which resulted in costs of £1m in 2014.
Blackpool Airport is reported within Infrastructure Investments. Refer to Note 13.
8.1.4.10 During 2014, Rail Germany booked costs of £6m in relation to allegations of historical anti-competitive behaviour
occurring in Schreck-Mieves GmbH, a company acquired by Balfour Beatty in 2008.
8.1.4.11 In 2014, costs of £7m were incurred in relation to the aborted merger discussions with Carillion plc.
8.1.5 In 2015, the joint venture within Rail Germany generated a trading gain of £1m for the Group (2014: loss of £1m). In
addition to this, a £4m impairment charge was recognised on the joint venture following an agreement to sell parts of Rail
Germany to Tianjin Keyvia Electric Co Ltd. Refer to Note 8.1.4.4.
8.1.6 In 2014, a goodwill impairment charge of £1m was recognised in relation to the Group's investment in one of its joint
ventures in the Middle East.
8.1.7 The non-underlying items charged against Group operating profit from continuing operations gave rise to a tax credit
of £4m comprising: £2m charge on the results of Rail Germany and £nil on certain legacy Engineering Services contracts; £4m
credit on amortisation of acquired intangible assets; and £2m credit on other non-underlying items (2014: £1m credit
comprising: £4m charge on the results of Rail Germany; £4m credit on amortisation of acquired intangible assets; and £1m
credit on other non-underlying items).
8 Non-underlying items continued
Discontinued operations
8.2.1 There were no amortisation charges on acquired intangible assets from discontinued operations in 2015. In 2014, £8m
of amortisation was charged comprising of: customer contracts £1m; customer relationships £2m; and brand names £5m.
8.2.2.1 On 31 October 2014, the Group disposed of its 100% interest in its professional services business, PB, resulting in
a gain on disposal of £234m. In 2015, the Group finalised the cash consideration due on this disposal amounting to
additional consideration for the Group of £16m of which £7m was recognised as a receivable at the date of disposal in the
prior period. In accordance with the stock purchase agreement, the Group received cash of £20m relating to historic tax
matters (£16m of which was recognised as a current tax receivable in the prior period) and the Group also released an
indemnity provision relating to an historic legal claim of £3m which was successfully settled during the period. Offsetting
this additional non-underlying gain on disposal are separation costs incurred during the period of £4m, of which £2m were
paid during the period, and the write-off of a deferred tax asset of £7m resulting in an overall net gain of £5m.
Transaction costs of £9m, which were accrued in the prior period, were paid in the year. Refer to Note 21.2.9.
8.2.2.2 On 11 March 2015, as part of the ongoing process to exit the Mainland European rail businesses, the Group disposed
of Rail Italy for a cash consideration of £5m, resulting in a £4m loss being recognised in the year. Refer to Note 21.2.3.
8.2.2.3 Rail Italy met the criteria to be classified as held for sale at 27 June 2014. Rail Italy was carried at the lower
of cost and net realisable value which resulted in a goodwill impairment of £24m in 2014, of which £4m arose after its
transfer to assets held for sale.
8.2.3 The non-underlying items charged against profit from discontinued operations gave rise to a tax credit of £nil
comprising: £nil on amortisation of acquired intangible assets; and £nil on other non-underlying items (2014: £19m
comprising: £2m on amortisation of acquired intangible assets; and £17m on other non-underlying items).
9 Taxation
Continuing operations UnderlyingItems12015£m Non-underlyingitems(Note 8)2015£m Total2015£m Total2014£m
Total UK tax 15 - 15 (15)
Total non-UK tax (4) (4) (8) 12
Total tax charge/(credit) 11 (4) 7 (3)
Continuing operationsx
UK current tax
- corporation tax for the year at 20.25% (2014: 21.5%) 3 - 3 1
- adjustments in respect of previous periods (5) - (5) (14)
(2) - (2) (13)
Non-UK current tax
- non-UK tax on profits for the year 3 1 4 6
- adjustments in respect of previous periods (5) - (5) (20)
(2) 1 (1) (14)
Total current tax (4) 1 (3) (27)
UK deferred tax
- current year charge/(credit) 8 - 8 (7)
- adjustments in respect of previous periods 4 - 4 3
- UK corporation tax rate change 5 - 5 2
17 - 17 (2)
Non-UK deferred tax
- current year (credit)/charge (7) (5) (12) 9
- adjustments in respect of previous periods 5 - 5 17
(2) (5) (7) 26
Total deferred tax 15 (5) 10 24
Total tax charge/(credit) from continuing operations 11 (4) 7 (3)
x Excluding joint ventures and associates.
1 Before non-underlying items (Note 8).
The Group tax charge excludes amounts for joint ventures and associates (refer to Note 15), except where tax is levied at
the Group level.
In addition to the Group tax charge, tax of £49m is credited (2014: £77m charged) directly to other comprehensive income,
comprising: a deferred tax credit of £16m (2014: £54m charge); and a deferred tax credit in respect of joint ventures and
associates of £33m (2014: £23m charge).
10 Discontinued operations and assets held for sale
Rail disposal group
In 2013, following a strategic review in light of low activity levels and the commoditisation of work, the Group decided to
divest all of its Mainland European rail businesses over time. The Group had been actively marketing its Mainland European
rail businesses and accordingly, when it was probable that these businesses would be sold within a year, or were sold or
abandoned, they met the criteria to be classified as an asset held for sale.
To also be classified as discontinued, an operation must represent a separate major line of business. Other than the
Mainland European rail businesses there were no significant Group operations in Mainland Europe and therefore by exiting
these businesses, the Group was exiting from a separate major geographical operation and they met the criteria to be
classified as discontinued operations.
On 8 January 2014 the Group disposed of its Rail business in Scandinavia for a cash consideration of £2m. The disposal
resulted in a £nil gain being recognised as a non-underlying item, comprising a £nil gain/loss in respect of the fair value
of net assets disposed, including cash disposed of £9m, a £1m gain on recycling currency translation reserves to the income
statement, and costs incurred and indemnity provisions of £1m.
On 27 June 2014, following progression of talks with potential purchasers, it became highly probable that Rail Italy would
be disposed within a year and met the criteria to be classified as an asset held for sale. Accordingly a £24m goodwill
impairment charge was recognised in the year as a non-underlying item. Refer to Note 8.2.2.3. On 11 March 2015, the Group
completed the sale of Rail Italy for a net consideration of £3m. Refer to Note 21.2.3.
In 2014, Rail Germany was reclassified from discontinued operations and its performance was included within non-underlying
items as part of continuing operations. The Group has presented Rail Germany outside of underlying items as it remains
committed to exiting its Mainland European rail businesses as soon as possible and does not consider its operations part of
the Group's underlying activity. When initially classified as a discontinued operation on 28 June 2013 the German business
was being marketed to be sold as an entire unit.
Subsequently it became apparent that this would not be possible and disposal of part of the business was agreed in November
2014. As a result, Rail Germany did not satisfy the criteria under IFRS 5 Non-current Assets Held for Sale and Discontinued
Operations for it to remain as a discontinued operation in 2014. However, the parts of Rail Germany which were subject to
sale to Rhomberg Sersa Rail Group at December 2014 were classified as assets and liabilities held for sale at 31 December
2014. The sale subsequently completed in January 2015. Refer to Note 21.2.1.
There are no remaining operations within the Rail disposal group classified as discontinued operations or held for sale at
31 December 2015 following the completion of the sales of parts of Rail Germany on 31 January 2015 and of Rail Italy on 11
March 2015.
The Rail disposal group was part of the Construction Services segment.
10 Discontinued operations and assets held for sale continued
Parsons Brinckerhoff
On 28 October 2014, shareholder approval was granted for the disposal of the Group's 100% interest in Parsons Brinckerhoff.
The deal subsequently completed on 31 October 2014 for an agreed cash consideration of £812m. The disposal resulted in a
net non-underlying gain of £234m being recognised within discontinued operations in 2014.
In 2015, the Group finalised the cash consideration due on this disposal amounting to additional consideration for the
Group of £16m of which £7m was recognised as a receivable at the date of disposal in the prior period. In accordance with
the stock purchase agreement, the Group received cash of £20m relating to historic tax matters (£16m of which was
recognised as a current tax receivable in the prior period) and the Group also released an indemnity provision relating to
an historic legal claim of £3m which was successfully settled during the period. Offsetting this additional non-underlying
gain on disposal are separation costs incurred during the period of £4m, of which £2m were paid during the period, and the
write-off of a deferred tax asset of £7m resulting in an overall net gain of £5m. Transaction costs of £9m, which were
accrued in the prior period, were paid in the year. Refer to Note 21.2.9.
Results of the discontinued operations included within the Group Income Statement
Rail disposal group 2015 Parsons Brinckerhoff2014£m Raildisposalgroup2014£m Totaldiscontinued operations2014£m
£m
Revenue including share of joint ventures and associates 1 1,266 23 1,289
Share of revenue of joint ventures and associates - (13) - (13)
Group revenue 1 1,253 23 1,276
Underlying group operating (loss)/profit (1) 38 1 39
Share of results of joint ventures and associates - - - -
Underlying (loss)/profit from operations and before tax (1) 38 1 39
Taxation on underlying loss - (14) (1) (15)
Underlying (loss)/profit after tax (1) 24 - 24
Non-underlying items:
- gain on disposal+ 1 234 - 234
- amortisation of acquired intangible assets - (8) - (8)
- other non-underlying items - - (27) (27)
1 226 (27) 199
Taxation on non-underlying items - 13 6 19
Non-underlying profit/(loss) after tax 1 239 (21) 218
Profit/(loss) for the year from discontinued operations - 263 (21) 242
+ Includes £5m gain in 2015 relating to Parsons Brinckerhoff. Refer to Note 21.2.9.
10 Discontinued operations and assets held for sale continued
Major classes of assets and liabilities included within net assets held for sale
There are no remaining assets or liabilities held for sale within the Rail disposal group as at 31 December 2015. At 31
December 2014, assets and liabilities held for sale include Rail Italy and parts of Rail Germany which were sold in January
2015. Refer to Note 21.
Raildisposalgroup2015
£m
At 1 January 2015 13
Movements in the year within net assets held for sale (2)
Net assets disposed - Rail Italy (Note 21.2.3) (6)
- parts of Rail Germany (Note 21.2.1) (5)
At 31 December 2015 -
Included within the Group's cash flows for the year ended 31 December 2015 are: net £nil operating cash outflows (2014:
£1m); and net £1m investing cash inflows (2014: £9m outflows) relating to the Rail disposal group.
Included within the Group's cash flows for the year ended 31 December 2015 are: net £3m operating cash inflows (2014: £43m
outflows); net £25m investing cash inflows (2014: £703m); and net £nil financing cash outflows (2014: £1m) relating to
Parsons Brinckerhoff.
11 Earnings per ordinary share
2015 2014
Earnings Basic£m Diluted£m Basic£m Diluted£m
Continuing operations
Loss (206) (206) (302) (302)
Amortisation of acquired intangible assets - net of tax credit of £4m (2014: £4m) 6 6 7 7
Other non-underlying items - net of tax charge of £nil (2014: £3m) 66 66 216 216
Underlying loss (134) (134) (79) (79)
Discontinued operations
Earnings - - 242 242
Amortisation of acquired intangible assets - net of tax credit of £nil (2014: £2m) - - 6 6
Other non-underlying items - net of tax credit of £nil (2014: £17m) (1) (1) (224) (224)
Underlying (loss)/earnings (1) (1) 24 24
Total operations
Loss (206) (206) (60) (60)
Amortisation of acquired intangible assets - net of tax credit of £4m (2014: £6m) 6 6 13 13
Other non-underlying items - net of tax credit of £nil (2014: £14m) 65 65 (8) (8)
Underlying loss (135) (135) (55) (55)
Basicm Dilutedm Basicm Dilutedm
Weighted average number of ordinary shares 685 685 686 686
Earnings per share
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