REG - Balfour Beatty PLC - Balfour Beatty 2016 Full Year Results <Origin Href="QuoteRef">BALF.L</Origin> - Part 3
16/03/2017 07:06
- Part 3: For the preceding part double click ID:nRSP6150Zb
2016 statutory 1,896 3,330 386 - - 5,612 1,076 235 6,923
2015 statutory 2,050 2,931 430 - - 5,411 1,234 310 6,955
Statutory growth (%) (8)% 14% (10)% - - 4% (13)% (24)% -%
2016 performance+ 1,894 3,427 249 967 315 6,852 1,103 575 8,530
2015 performance retranslated+ 2,024 3,500 276 897 222 6,919 1,264 616 8,799
Performance CER growth (%) (6)% (2)% (10)% 8% 42% (1)% (13)% (7)% (3)%
Order book (£bn)
2016 2.1 5.5 0.2 1.5 0.3 9.6 3.1 - 12.7
2015 1.9 4.1 0.2 1.2 0.5 7.9 3.1 - 11.0
Growth (%) 11% 34% - 25% (40)% 22% - - 15%
2016 2.1 5.5 0.2 1.5 0.3 9.6 3.1 - 12.7
2015 retranslated 1.9 5.0 0.2 1.4 0.6 9.1 3.1 - 12.2
CER growth (%) 11% 10% - 14% (50)% 5% - - 4%
+Performance revenue is underlying revenue from continuing operations including share of joint ventures and associates as
set out in section (e).
Forward-looking statements
This announcement may include certain forward-looking statements, beliefs or opinions, including statements with respect to
Balfour Beatty plc's business, financial condition and results of operations. These forward-looking statements can be
identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "anticipates",
"targets", "aims", "continues", "expects", "intends", "hopes", "may", "will", "would", "could" or "should" or, in each
case, their negative or other various or comparable terminology. These statements are made by the Balfour Beatty plc
Directors in good faith based on the information available to them at the date of this announcement and reflect the Balfour
Beatty plc Directors' beliefs and expectations. By their nature these statements involve risk and uncertainty because they
relate to events and depend on circumstances that may or may not occur in the future. A number of factors could cause
actual results and developments to differ materially from those expressed or implied by the forward-looking statements,
including, without limitation, developments in the global economy, changes in UK and US government policies, spending and
procurement methodologies, and failure in Balfour Beatty's health, safety or environmental policies.
No representation or warranty is made that any of these statements or forecasts will come to pass or that any forecast
results will be achieved. Forward-looking statements speak only as at the date of this announcement and Balfour Beatty plc
and its advisers expressly disclaim any obligations or undertaking to release any update of, or revisions to, any
forward-looking statements in this announcement. No statement in the announcement is intended to be, or intended to be
construed as, a profit forecast or profit estimate or to be interpreted to mean that earnings per Balfour Beatty plc share
for the current or future financial years will necessarily match or exceed the historical earnings per Balfour Beatty plc
share. As a result, you are cautioned not to place any undue reliance on such forward-looking statements.
Group Income Statement
For the year ended 31 December 2016
2016 2015
Notes Underlyingitems1£m Non-underlying items (Note 8)£m Total£m Underlying items1£m Non-underlyingitems(Note 8)£m Total £m
Continuing operations
Revenue including share of joint ventures and associates 8,530 153 8,683 8,235 209 8,444
Share of revenue of joint ventures and associates 15 (1,748) (12) (1,760) (1,471) (18) (1,489)
Group revenue 6,782 141 6,923 6,764 191 6,955
Cost of sales (6,503) (136) (6,639) (6,609) (189) (6,798)
Gross profit 279 5 284 155 2 157
Gain on disposals of interests in investments 20.2 65 - 65 95 - 95
Amortisation of acquired intangible assets 8 - (9) (9) - (10) (10)
Other net operating expenses (332) (49) (381) (403) (65) (468)
Group operating profit/(loss) 12 (53) (41) (153) (73) (226)
Share of results of joint ventures and associates 14 55 1 56 47 (3) 44
Profit/(loss) from operations 67 (52) 15 (106) (76) (182)
Investment income 6 75 - 75 52 - 52
Finance costs 7 (82) - (82) (69) - (69)
Profit/(loss) before taxation 60 (52) 8 (123) (76) (199)
Taxation 9 (12) 4 (8) (11) 4 (7)
Profit/(loss) for the year from continuing operations 48 (48) - (134) (72) (206)
Profit/(loss) for the year from discontinued operations - 24 24 (1) 1 -
Profit/(loss) for the year 48 (24) 24 (135) (71) (206)
Attributable to
Equity holders 48 (24) 24 (135) (71) (206)
Non-controlling interests - - - - - -
Profit/(loss) for the year 48 (24) 24 (135) (71) (206)
1 Before non-underlying items (Note 8).
Notes 2016 pence 2015 pence
Basic earnings/(loss) per ordinary share
- continuing operations 10 - (30.2)
- discontinued operations 10 3.5 0.1
10 3.5 (30.1)
Diluted earnings/(loss) per ordinary share
- continuing operations 10 - (30.2)
- discontinued operations 10 3.5 0.1
10 3.5 (30.1)
Dividends per ordinary share proposed for the year 11 2.7 -
Group Statement of Comprehensive Income
For the year ended 31 December 2016
2016 2015
Group£m Share of joint ventures and associates£m Total£m Group£m Share of joint ventures and associates£m Total£m
(Loss)/profit for the year (32) 56 24 (250) 44 (206)
Other comprehensive (loss)/income for the year
Items which will not subsequently be reclassified to the income statement
Actuarial (losses)/gains on retirement benefit liabilities (121) 1 (120) (86) (4) (90)
Tax on above 2 - 2 15 - 15
(119) 1 (118) (71) (4) (75)
Items which will subsequently be reclassified to the income statement
Currency translation differences 51 41 92 29 3 32
Fair value revaluations - PPP financial assets 27 10 37 (13) (170) (183)
- cash flow hedges (16) (92) (108) 8 21 29
- available-for-sale investments in mutual funds 1 - 1
Recycling of revaluation reserves to the income statement on disposal^ (17) 9 (8) (15) (5) (20)
Tax on above (1) 15 14 1 33 34
45 (17) 28 10 (118) (108)
Total other comprehensive loss for the year (74) (16) (90) (61) (122) (183)
Total comprehensive (loss)/income for the year (106) 40 (66) (311) (78) (389)
Attributable to
Equity holders (67) (389)
Non-controlling interests 1 -
Total comprehensive loss for the year (66) (389)
^ Recycling of revaluation reserves to the income statement on disposal has no associated tax effect.
Group Statement of Changes in Equity
For the year ended 31 December 2016
Called-upsharecapital£m Sharepremiumaccount£m Specialreserve£m Shareof jointventures'andassociates'reserves £m Otherreserves£m Retainedprofits/(losses)£m Non-controllinginterests£m Total£m
At 1 January 2015 345 64 23 340 140 315 3 1,230
Total comprehensive (loss)/income for the year - - - (78) 5 (316) - (389)
Joint ventures' and associates' dividends - - - (69) - 69 - -
Issue of ordinary shares - 1 - - - - - 1
Movements relating to share-based payments - - - - (1) (12) - (13)
Minority interest - - - - - - 1 1
Reserve transfers relating to joint venture and associate disposals - - - (13) - 13 - -
Other transfers - - (1) 16 - (15) - -
At 31 December 2015 345 65 22 196 144 54 4 830
Total comprehensive (loss)/income for the year - - - 40 44 (151) 1 (66)
Ordinary dividends - - - - - (6) - (6)
Joint ventures' and associates' dividends - - - (43) - 43 - -
Movements relating to share-based payments - - - - 3 1 - 4
Reserve transfers relating to joint venture and associate disposals - - - (9) - 9 - -
At 31 December 2016 345 65 22 184 191 (50) 5 762
Group Balance Sheet
At 31 December 2016
Notes 2016 2015
£m £m
Non-current assets
Intangible assets - goodwill 12 937 844
- other 13 225 222
Property, plant and equipment2 181 163
Investment properties2 36 4
Investments in joint ventures and associates 14 628 671
Investments 45 44
PPP financial assets 163 402
Trade and other receivables 15 180 114
Deferred tax assets 54 58
Derivative financial instruments 3 -
2,452 2,522
Current assets
Inventories and non-construction work in progress 101 144
Due from construction contract customers 380 379
Trade and other receivables 15 1,066 885
Cash and cash equivalents - infrastructure concessions 19.2 7 20
- other 19.2 762 646
Current tax receivable 8 4
Derivative financial instruments 1 1
2,325 2,079
Total assets 4,777 4,601
Current liabilities
Due to construction contract customers (542) (472)
Trade and other payables 16 (1,752) (1,700)
Provisions (147) (126)
Borrowings - non-recourse loans 19.3 (47) (22)
- other 19.3 (56) (13)
Current tax payable (18) (20)
Derivative financial instruments (6) (11)
(2,568) (2,364)
Non-current liabilities
Trade and other payables 16 (151) (130)
Provisions (126) (80)
Borrowings - non-recourse loans 19.3 (193) (363)
- other 19.3 (533) (470)
Liability component of preference shares (100) (98)
Retirement benefit liabilities 17 (231) (146)
Deferred tax liabilities (80) (53)
Derivative financial instruments (33) (67)
(1,447) (1,407)
Total liabilities (4,015) (3,771)
Net assets 762 830
Equity
Called-up share capital 345 345
Share premium account 65 65
Special reserve 22 22
Share of joint ventures' and associates' reserves 184 196
Other reserves 191 144
Retained profits (50) 54
Equity attributable to equity holders of the parent 757 826
Non-controlling interests 5 4
Totalequity 762 830
2 Re-presented to show assets that are held by the Group to generate rental income and/or capital appreciation separately
from property, plant and equipment. These assets meet the definition of investment properties and have been reclassified
accordingly.
Group Statement of Cash Flows
For the year ended 31 December 2016
Notes 2016 2015
£m £m
Cash flows used in operating activities
Cash used in:
- continuing operations - underlying1 19.1 (132) (84)
- non-underlying 19.1 (15) (54)
- discontinued operations 19.1 - 3
Income taxes received 11 6
Net cash used in operating activities (136) (129)
Cash flows from investing activities
Dividends received from joint ventures and associates
- infrastructure concessions 20 45
- other 23 24
Interest received - infrastructure concessions 19 16
Interest received - other 20 5
Acquisition of businesses, net of cash and cash equivalents acquired 20.1 (6) (3)
Purchases of: - intangible assets - infrastructure concessions (6) (23)
- intangible assets - other (5) (20)
- property, plant and equipment - infrastructure concessions2 (14) (9)
- property, plant and equipment - other (27) (27)
- investment properties2 (32) (4)
- other investments (1) (2)
Investments in and long-term loans to joint ventures and associates (37) (79)
Capital repayment from infrastructure concession joint venture - 7
Short-term loans to joint ventures and associates - (11)
Loans repaid from joint ventures and associates - 2
PPP financial assets cash expenditure (31) (75)
PPP financial assets cash receipts 39 30
Disposals of: - investments in joint ventures - infrastructure concessions 20.2 155 104
- investments in joint ventures - other 2 21
- subsidiaries net of cash disposed, separation and transaction costs - infrastructure concessions 17 23
- subsidiaries net of cash disposed, separation and transaction costs - other 14 16
- property, plant and equipment 9 7
- other investments 5 10
Net cash from investing activities 164 57
Cash flows from financing activities
Purchase of ordinary shares (4) (17)
Proceeds from: - issue of ordinary shares - 1
- other new loans - infrastructure concessions 19.4 65 79
- other new loans - other 19.4 52 -
Repayments of: - loans - infrastructure concessions 19.4 (25) (11)
- loans - other 19.4 (1) (1)
Ordinary dividends paid 11 (6) -
Interest paid - infrastructure concessions (24) (19)
Interest paid - other (48) (32)
Preference dividends paid (12) (11)
Net cash used in financing activities (3) (11)
Net increase/(decrease) in cash and cash equivalents 19.4 25 (83)
Effects of exchange rate changes 80 1
Cash and cash equivalents at beginning of year 663 727
Net decrease in cash within assets held for sale - 18
Cash and cash equivalents at end of year 19.2 768 663
1 Before non-underlying items (Note 8).
2 Re-presented to show assets that are held by the Group to generate rental income and/or capital appreciation separately
from property, plant and equipment. These assets meet the definition of investment properties and have been reclassified
accordingly.
Notes to the financial statements
1 Basis of accounting
The annual financial statements have been prepared on a going concern basis and in accordance with International Financial
Reporting Standards (IFRS) as adopted by the European Union and therefore comply with Article 4 of the EU IAS Regulation
and with those parts of the Companies Act 2006 that are applicable to companies reporting under IFRS. The Group has applied
all accounting standards and interpretations issued by the International Accounting Standards Board (IASB) and
International Financial Reporting Interpretations Committee as adopted by the European Union and effective for accounting
periods beginning on 1 January 2016. The presentational currency of the Group is sterling.
The financial information in this announcement, which was approved by the Board of Directors on 15 March 2017, does not
constitute the Company's statutory accounts for the years ended 31 December 2016 or 2015, but is derived from those
accounts. Statutory accounts for 2015 have been delivered to the Registrar of Companies and those for 2016 will be
delivered following the Company's Annual General Meeting. The auditor has reported on the 2016 accounts; the report is
unqualified, did not draw attention to any matters by way of emphasis without qualifying the report and did not contain
statements under Section 498(2) or (3) of the Companies Act 2006.
Whilst the financial information included in this preliminary announcement has been computed in accordance with IFRS, this
announcement does not itself contain sufficient information to comply with IFRS. The Company expects to publish full
financial statements for the Group that comply with IFRS in April 2017.
2 Going concern
The Directors have acknowledged the guidance 'Going Concern and Liquidity Risk: Guidance for Directors of UK Companies
2009' published by the Financial Reporting Council in October 2009 and consider it reasonable to assume that the Group has
adequate resources to continue for the foreseeable future and, for this reason, have continued to adopt the going concern
basis in preparing the financial statements. Further information is provided within the Other Financial Items section.
3 Accounting policies
3.1 Judgements and key sources of estimation uncertainty
The Group's principal judgements and key sources of uncertainty are set out in Note 2.27 of the Annual Report and Accounts
2016.
Across Construction Services there remain a small number of 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 swing 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 number of significant contracts in Hong Kong where the range of
potential outcomes could result in a materially positive or negative swing to profitability. The majority of these claims
are expected to reach commercial settlement by 2018.
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 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 IFRS 10, IFRS 12 and IAS 28: Investment Entities: Applying the Consolidation Exemption
o Improvements to IFRSs (2012 - 2014).
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 2016:
· 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 IAS 7 Disclosure Initiative
o IAS 12 Recognition of Deferred Tax Assets for Unrealised Losses
o IAS 40 Transfers of Investment Property
o IFRS 2 Classification and Measurement of Share-based Payment Transactions
o IFRS 4 Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts
o IFRS 10 and IAS 28: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
o Clarifications to IFRS 15 Revenue from Contracts with Customers
o IFRIC 22 Foreign Currency Transactions and Advance Consideration
o Improvements to IFRSs (2014 - 2016).
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 2016 2015 Change
US$ 1.35 1.53 (11.8)%
HK$ 10.51 11.84 (11.2)%
Euro 1.23 1.37 (10.2)%
Closing rates
£1 buys 2016 2015 Change
US$ 1.23 1.48 (16.9)%
HK$ 9.57 11.43 (16.3)%
Euro 1.17 1.36 (14.0)%
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 also includes the Group's housing development division.
5.1 Total GroupIncome statement - performance by activity from continuing operations ConstructionServices SupportServices InfrastructureInvestments Corporateactivities Total Rail Germany Certain legacy ES contracts Total
2016£m 2016£m 2016£m 2016£m 2016£m 2016£m 2016£m 2016£m
Revenue including share of joint ventures and associates 6,852 1,103 575 - 8,530 150 3 8,683
Share of revenue of joint ventures and associates (1,381) (27) (340) - (1,748) (12) - (1,760)
Group revenue 5,471 1,076 235 - 6,782 138 3 6,923
Group operating profit/(loss)^ (50) 33 62 (33) 12 1 (6)
Share of results of joint ventures and associates 27 1 27 - 55 - -
Profit/(loss) from operations^ (23) 34 89 (33) 67 1 (6)
Non-underlying items
- include results from certain legacy Engineering Services (ES) contracts within Construction Services (6) - - - (6)
- include results from Rail Germany within Construction Services 1 - - - 1
- amortisation of acquired intangible assets (3) - (6) - (9)
- other non-underlying items (26) (12) - - (38)
(34) (12) (6) - (52)
Profit/(loss) from operations (57) 22 83 (33) 15
Investment income 75
Finance costs (82)
Profit before taxation 8
^ 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
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 profit/(loss)^ (234) 23 91 (33) (153) (3) (8)
Share of results of joint ventures and associates 5 1 41 - 47 1 -
Profit/(loss) 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)
Profit/(loss) 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).
Assets and liabilities by activity ConstructionServices SupportServices InfrastructureInvestments Corporateactivities Total
2016£m 2016£m 2016£m 2016£m 2016£m
Due from construction contract customers 247 133 - - 380
Due to construction contract customers (492) (50) - - (542)
Inventories and non-construction work in progress 30 47 24 - 101
Trade and other receivables - current 882 93 45 46 1,066
Trade and other payables - current (1,421) (218) (57) (56) (1,752)
Provisions - current (126) (5) (3) (13) (147)
Working capital from continuing operations* (880) - 9 (23) (894)
* Includes non-operating items and current working capital.
Total assets 2,306 476 1,080 915 4,777
Total liabilities (2,534) (322) (449) (710) (4,015)
Net assets/(liabilities) (228) 154 631 205 762
5 Segment analysis continued
5.1 Total Group
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 assets/(liabilities) (158) 198 753 37 830
Other information - continuing operations ConstructionServices SupportServices InfrastructureInvestments Corporateactivities Total
2016£m 2016£m 2016£m 2016£m 2016£m
Capital expenditure on property, plant and equipment 17 3 14 7 41
Depreciation 14 11 2 3 30
Gain on disposals of interests in investments (Note 20.2) - - 65 - 65
2015£m 2015£m 20152£m 2015£m 20152£m
Capital expenditure on property, plant and equipment2 14 12 10 - 36
Depreciation 16 16 2 1 35
Gain on disposals of interests in investments - - 95 - 95
2 Re-presented to show assets that are held by the Group to generate rental income and/or capital appreciation separately
from property, plant and equipment. These assets meet the definition of investment properties and have been reclassified
accordingly.
Performance by geographic destination - continuing operations UnitedKingdom UnitedStates Rest ofWorld Total
2016£m 2016£m 2016£m 2016£m
Revenue including share of joint ventures and associates 3,465 3,533 1,685 8,683
Share of revenue of joint ventures and associates (202) (104) (1,454) (1,760)
Group revenue 3,263 3,429 231 6,923
Non-current assets excluding financial assets and deferred tax assets 948 919 140 2,007
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 1,060 764 80 1,904
5 Segment analysis continued
5.2 Infrastructure Investments
Underlying profit from operations1 Group2016£m Share of jointventures andassociates+(Note 14)2016£m Total2016£m Group2015£m Share of jointventures andassociates+(Note 14)2015£m Total2015£m
UK^ 6 14 20 3 30 33
North America 16 13 29 17 8 25
Infrastructure Fund - - - - 3 3
Gain on disposals of interests in investments 65 - 65 95 - 95
87 27 114 115 41 156
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