REG - Balfour Beatty PLC - Balfour Beatty 2016 half-year results <Origin Href="QuoteRef">BALF.L</Origin> - Part 2
19/08/2016 13:09
- Part 2: For the preceding part double click ID:nRSQ3657Ha
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.
INDEPENDENT REVIEW REPORT TO BALFOUR BEATTY PLC
Introduction
We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report
for the six months ended 1 July 2016 which comprises the Condensed Group Income Statement, the Condensed Group Statement of
Comprehensive Income, the Condensed Group Statement of Changes in Equity, the Condensed Group Balance Sheet, the Condensed
Group Statement of Cash Flows and the related explanatory notes. We have read the other information contained in the
half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with
the information in the condensed set of financial statements.
This report is made solely to the Company in accordance with the terms of our engagement to assist the Company in meeting
the requirements of the Disclosure and Transparency Rules (the DTR) of the UK's Financial Conduct Authority (the UK FCA).
Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this
report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to
anyone other than the Company for our review work, for this report, or for the conclusions we have reached.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are
responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FCA.
As disclosed in Note 1.1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by
the EU. The condensed set of financial statements included in this half-yearly financial report has been prepared in
accordance with IAS 34 Interim Financial Reporting as adopted by the EU.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the
half-yearly financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of
Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for
use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible
for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less
in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently
does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an
audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial
statements in the half-yearly financial report for the six months ended 1 July 2016 is not prepared, in all material
respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FCA.
Stephen Wardell
for and on behalf of KPMG LLP
Chartered Accountants
15 Canada Square,
London E14 5GL
16 August 2016
Condensed Group Income Statement
For the half-year ended 1 July 2016
2016 first half unaudited 2015 first half unaudited 2015 year audited
Notes Underlyingitems1£m Non-underlying items (Note 7)£m Total£m Underlyingitems1£m Non-underlying items (Note 7)£m Total£m Underlying items1£m Non-underlyingitems(Note 7)£m Total £m
Continuing operations
Revenue including share of joint ventures and associates 4,024 93 4,117 4,085 106 4,191 8,235 209 8,444
Share of revenue of joint ventures and associates 4.1 (790) (4) (794) (714) (11) (725) (1,471) (18) (1,489)
Group revenue 3,234 89 3,323 3,371 95 3,466 6,764 191 6,955
Cost of sales (3,139) (86) (3,225) (3,381) (94) (3,475) (6,609) (189) (6,798)
Gross profit/(loss) 95 3 98 (10) 1 (9) 155 2 157
Gain on disposals of interests in investments 19.2 52 - 52 84 - 84 95 - 95
Amortisation of acquired intangible assets - (4) (4) - (5) (5) - (10) (10)
Other net operating expenses (162) (27) (189) (202) (16) (218) (403) (65) (468)
Group operating loss (15) (28) (43) (128) (20) (148) (153) (73) (226)
Share of results of joint ventures and associates 4.1 20 - 20 8 - 8 47 (3) 44
Profit/(loss) from operations 5 (28) (23) (120) (20) (140) (106) (76) (182)
Investment income 5 40 - 40 26 - 26 52 - 52
Finance costs 6 (38) - (38) (36) - (36) (69) - (69)
Profit/(loss) before taxation 7 (28) (21) (130) (20) (150) (123) (76) (199)
Taxation 8 7 1 8 (4) 3 (1) (11) 4 (7)
Profit/(loss) for the period from continuing operations 14 (27) (13) (134) (17) (151) (134) (72) (206)
Profit/(loss) for the period from discontinued operations - 2 2 (1) 2 1 (1) 1 -
Profit/(loss) for the period 14 (25) (11) (135) (15) (150) (135) (71) (206)
Attributable to
Equity holders 14 (25) (11) (135) (15) (150) (135) (71) (206)
Non-controlling interests - - - - - - - - -
Profit/(loss) for the period 14 (25) (11) (135) (15) (150) (135) (71) (206)
1 Before non-underlying items (Note 7).
Notes 2016 first half unaudited pence 2015 first half unauditedpence 2015year audited pence
Basic (loss)/earnings per ordinary share
- continuing operations 9 (2.0) (22.0) (30.2)
- discontinued operations 9 0.4 0.1 0.1
9 (1.6) (21.9) (30.1)
Diluted (loss)/earnings per ordinary share
- continuing operations 9 (2.0) (22.0) (30.2)
- discontinued operations 9 0.4 0.1 0.1
9 (1.6) (21.9) (30.1)
Dividends per ordinary share proposed for the period 10 0.9 - -
Condensed Group Statement of Comprehensive Income
For the half-year ended 1 July 2016
2016 first half unaudited 2015 first half unaudited+ 2015 year audited
Group£m Share of joint ventures and associates£m Total£m 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 period (31) 20 (11) (158) 8 (150) (250) 44 (206)
Other comprehensive income/(loss) for the period
Items which will not subsequently be reclassified to the income statement
Actuarial gains/(losses) on retirement benefit net liabilities 22 - 22 (133) - (133) (86) (4) (90)
Tax on above (4) - (4) 26 - 26 15 - 15
18 - 18 (107) - (107) (71) (4) (75)
Items which will subsequently be reclassified to the income statement
Currency translation differences 42 11 53 - - - 29 3 32
Fair value revaluations - PPP financial assets 22 20 42 (16) (159) (175) (13) (170) (183)
- cash flow hedges (36) (86) (122) 15 37 52 8 21 29
Recycling of revaluation reserves to the income statement on disposal^ - 9 9 (15) 1 (14) (15) (5) (20)
Tax on above 4 11 15 - 24 24 1 33 34
32 (35) (3) (16) (97) (113) 10 (118) (108)
Total other comprehensive income/(loss) for the period 50 (35) 15 (123) (97) (220) (61) (122) (183)
Total comprehensive income/(loss) for the period 19 (15) 4 (281) (89) (370) (311) (78) (389)
Attributable to
Equity holders 4 (370) (389)
Non-controlling interests - - -
Total comprehensive income/(loss) for the period 4 (370) (389)
+ Re-presented to show the share of comprehensive income/(loss) relating to the Group's joint ventures and associates
separately from the rest of the Group.
^ Recycling of revaluation reserves to the income statement on disposal has no associated tax effect.
Condensed Group Statement of Changes in Equity
For the half-year ended 1 July 2016
Other reserves
Called-upsharecapital£m Sharepremiumaccount£m Specialreserve£m Shareof jointventures'andassociates'reserves £m Equity component of preference shares and convertible bonds£m Hedging reserves£m PPP financial assets£m Currency translation reserve£m Other£m Retainedprofits£m Non-controllinginterests£m Total£m
At 1 January 2015 audited 345 64 23 340 44 (74) 101 55 14 315 3 1,230
Total comprehensive (expense)/income for the period - - - (89) - 15 (34) - - (262) - (370)
Joint ventures' and associates' dividends - - - (23) - - - - - 23 - -
Movements relating to share-based payments - - - - - - - - (3) (3) - (6)
Reserve transfers relating to disposals - - - (6) - 1 (6) - - 11 - -
At 26 June 2015 345 64 23 222 44 (58) 61 55 11 84 3 854
Total comprehensive income/(expense) for the period - - - 11 - 1 (9) 32 - (54) - (19)
Joint ventures' and associates' dividends - - - (46) - - - - - 46 - -
Issue of ordinary shares - 1 - - - - - - - - - 1
Movements relating to share-based payments - - - - - - - - 2 (9) - (7)
Minority interest - - - - - - - - - - 1 1
Reserve transfers relating to disposals - - - (7) - (1) 6 - - 2 - -
Other transfers - - (1) 16 - - - - - (15) - -
At 31 December 2015 345 65 22 196 44 (58) 58 87 13 54 4 830
Total comprehensive (expense)/income for the period - - - (15) - (30) 19 42 - (12) - 4
Joint ventures' and associates' dividends - - - (21) - - - - - 21 - -
Movements relating to share-based payments - - - - - - - - 1 (1) - -
Reserve transfers relating to disposals - - - (10) - - - - - 10 - -
At 1 July 2016 345 65 22 150 44 (88) 77 129 14 72 4 834
Condensed Group Balance Sheet
At 1 July 2016
Notes 2016 first half unaudited£m 2015 first halfunaudited£m 2015 year audited£m
Non-current assets
Intangible assets - goodwill 11 896 824 844
- other 226 235 222
Property, plant and equipment 197 162 167
Investments in joint ventures and associates 4.2 583 699 671
Investments 45 47 44
PPP financial assets 15 432 365 402
Trade and other receivables 13 146 108 114
Retirement benefit assets 16 27 - -
Deferred tax assets 70 73 58
Derivative financial instruments 3 - -
2,625 2,513 2,522
Current assets
Inventories and non-construction work in progress 127 151 144
Due from construction contract customers 382 449 379
Trade and other receivables 13 994 941 885
Cash and cash equivalents - infrastructure concessions 18.2 25 16 20
- other 18.2 703 724 646
Current tax assets - 2 4
Derivative financial instruments 1 1 1
2,232 2,284 2,079
Assets held for sale 12 56 - -
2,288 2,284 2,079
Total assets 4,913 4,797 4,601
Current liabilities
Due to construction contract customers (476) (385) (472)
Trade and other payables 14 (1,741) (1,969) (1,700)
Provisions (165) (152) (126)
Borrowings - non-recourse loans 18.3 (15) (14) (22)
- other 18.3 (77) - (13)
Current tax liabilities (26) (5) (20)
Derivative financial instruments (14) (13) (11)
(2,514) (2,538) (2,364)
Liabilities held for sale 12 (40) - -
(2,554) (2,538) (2,364)
Non-current liabilities
Trade and other payables 14 (132) (109) (130)
Provisions (98) (78) (80)
Borrowings - non-recourse loans 18.3 (398) (329) (363)
- other 18.3 (511) (464) (470)
Liability component of preference shares (99) (97) (98)
Retirement benefit liabilities 16 (123) (231) (146)
Deferred tax liabilities (63) (38) (53)
Derivative financial instruments (101) (59) (67)
(1,525) (1,405) (1,407)
Total liabilities (4,079) (3,943) (3,771)
Net assets 834 854 830
Equity
Called-up share capital 345 345 345
Share premium account 65 64 65
Special reserve 22 23 22
Share of joint ventures' and associates' reserves 150 222 196
Other reserves 176 113 144
Retained profits 72 84 54
Equity attributable to equity holders of the parent 830 851 826
Non-controlling interests 4 3 4
Totalequity 834 854 830
Condensed Group Statement of Cash Flows
For the half-year ended 1 July 2016
Notes 2016first halfunaudited£m 2015first halfunaudited£m 2015yearaudited£m
Cash flows used in operating activities
Cash used in:
- continuing operations - underlying1 18.1 (93) 2 (84)
- non-underlying 18.1 (6) (37) (54)
- discontinued operations 18.1 - (1) 3
Income taxes received 8 6 6
Net cash used in operating activities (91) (30) (129)
Cash flows from investing activities
Dividends from: - joint ventures and associates - infrastructure concessions 13 15 45
- joint ventures and associates - other 8 8 24
Interest received - infrastructure concessions 15 10 16
Interest received - other 5 5 5
Acquisition of businesses, net of cash and cash equivalents acquired 19.1 (3) (3) (3)
Purchases of: - intangible assets - infrastructure concessions (5) (15) (23)
- intangible assets - other - (16) (20)
- property, plant and equipment - infrastructure concessions (29) (2) (13)
- property, plant and equipment - other (15) (10) (27)
- other investments (1) (3) (2)
Investments in and long-term loans to joint ventures and associates (24) (61) (79)
Capital repayment from infrastructure concession joint venture - - 7
Short-term loans to joint ventures and associates - (3) (11)
Loans repaid from joint ventures and associates 4 1 2
PPP financial assets cash expenditure 15 (14) (38) (75)
PPP financial assets cash receipts 15 18 15 30
Disposals of: - investments in joint ventures - infrastructure concessions 19.2 33 71 104
- investments in joint ventures - other 19.2 49 20 21
- subsidiaries net of cash disposed, separation and transaction costs - infrastructure concessions - 23 23
- subsidiaries net of cash disposed, separation and transaction costs - other 2 3 16
- property, plant and equipment 5 2 7
- other investments 6 8 10
Net cash from investing activities 67 30 57
Cash flows from/(used in) financing activities
Purchase of ordinary shares 17 (4) (7) (17)
Proceeds from: - issue of ordinary shares - - 1
- other new loans - infrastructure concessions 18.4 36 33 79
- other new loans - other 18.4 75 - -
Repayments of: - loans - infrastructure concessions 18.4 (12) (4) (11)
- loans - other 18.4 - - (1)
Interest paid - infrastructure concessions (12) (9) (19)
Interest paid - other (22) (19) (32)
Preference dividends paid (11) (5) (11)
Net cash from/(used in) financing activities 50 (11) (11)
Net increase/(decrease) in cash and cash equivalents 26 (11) (83)
Effects of exchange rate changes 50 6 1
Cash and cash equivalents at beginning of period 663 727 727
Net (increase)/decrease in cash within assets held for sale (14) 18 18
Cash and cash equivalents at end of period 18.2 725 740 663
1 Before non-underlying items (Note 7).
Notes to the financial statements
1.1 Basis of accounting
The condensed Group financial statements for the half-year ended 1 July 2016 have been prepared in accordance with the
Disclosure and Transparency Rules of the Financial Conduct Authority and with IAS 34 Interim Financial Reporting as adopted
by the European Union. The condensed Group financial statements should be read in conjunction with the financial statements
for the year ended 31 December 2015, which were prepared in accordance with International Financial Reporting Standards
(IFRS) as adopted by the European Union.
The condensed Group financial statements have been reviewed, not audited, and were approved for issue by the Board on 16
August 2016. The financial information included in this report does not constitute statutory accounts for the purposes of
Section 434 of the Companies Act 2006. A copy of the Group's audited statutory accounts for the year ended 31 December 2015
has been delivered to the Registrar of Companies. The independent auditor's report on those accounts was unqualified, did
not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying the
report and did not contain a statement under Section 498(2) or (3) of the Companies Act 2006.
The condensed Group financial statements have been prepared on the basis of the accounting policies set out in the Annual
Report and Accounts 2015 except as described in Note 1.4 below.
1.2 Judgements and key sources of estimation uncertainty
The Group's principal judgements and key sources of estimation uncertainty remain unchanged since the year-end and are set
out in Note 2.26 on pages 105 and 106 of the Annual Report and Accounts 2015.
1.3 Going concern
Having made appropriate enquiries and reviewed medium-term cash forecasts, the Directors consider it reasonable to assume
that the Group has adequate resources to continue for a period of not less than 12 months from the date of this report and,
for this reason, have continued to adopt the going concern basis in preparing the half-year condensed Group financial
statements. Refer to Note 22.
1.4 Adoption of new and revised standards
The following revised standards have been adopted in the current period and do not have a material effect on the Group:
· 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 Improvements to IFRSs (2012 - 2014).
1.5 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 1 July 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 IFRS 2 Classification and Measurement of Share-based Payment Transactions
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.
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.
2 Exchange rates
The following key exchange rates were applied in these financial statements.
Average rates
£1 buys 2016 first halfunaudited 2015 first halfunaudited 2015 year audited 26 June 2015 - 1 July 2016 % change 31 Dec 2015 - 1 July 2016 % change
US$ 1.41 1.53 1.53 (7.8)% (7.8)%
HK$ 10.98 11.87 11.84 (7.5)% (7.3)%
Euro 1.27 1.36 1.37 (6.6)% (7.3)%
Closing rates
£1 buys 2016 first halfunaudited 2015 first halfunaudited 2015 year audited 26 June 2015 - 1 July 2016 % change 31 Dec 2015 - 1 July 2016 % change
US$ 1.33 1.57 1.48 (15.3)% (10.1)%
HK$ 10.30 12.20 11.43 (15.6)% (9.9)%
Euro 1.19 1.41 1.36 (15.6)% (12.5)%
3 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 which moved from Construction Services from the
second-half of 2015.
3.1 Income statement - performance by activity from continuing operations
For the half-year ended 1 July 2016 unaudited ConstructionServices£m SupportServices£m InfrastructureInvestments£m Corporateactivities£m Total£m Rail Germany£m Certain legacy ES contracts£m Total£m
Revenue including share of joint ventures and associates 3,177 548 299 - 4,024 88 5 4,117
Share of revenue of joint ventures and associates (608) (13) (169) - (790) (4) - (794)
Group revenue 2,569 535 130 - 3,234 84 5 3,323
Group operating (loss)/profit^ (66) 11 56 (16) (15) 1 (4)
Share of results of joint ventures and associates 6 - 14 - 20 - -
(Loss)/profit from operations^ (60) 11 70 (16) 5 1 (4)
Non-underlying items
- include results from certain legacy Engineering Services (ES) contracts within Construction Services (4) - - - (4)
- include results from Rail Germany within Construction Services 1 - - - 1
- amortisation of acquired intangible assets (1) - (3) - (4)
- other non-underlying items
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