REG - Balfour Beatty PLC - Balfour Beatty PLC Half-Year Results 2017 <Origin Href="QuoteRef">BALF.L</Origin> - Part 3
16/08/2017 07:06
- Part 3: For the preceding part double click ID:nRSP0957Ob
operations 22 (8) 14 20 (27) (7) 50 (48) 2
Profit/(loss) for the period from discontinued operations 1 5 6 (6) 2 (4) (2) 24 22
Profit/(loss) for the period 23 (3) 20 14 (25) (11) 48 (24) 24
Attributable to
Equity holders 23 (3) 20 14 (25) (11) 48 (24) 24
Non-controlling interests - - - - - - - - -
Profit/(loss) for the period 23 (3) 20 14 (25) (11) 48 (24) 24
1 Before non-underlying items (Note 7).2 Re-presented to classify the Group's 49% interests in Dutco Balfour Beatty LLC and BK Gulf LLC as discontinued operations.
Notes 2017 first half unaudited pence 2016 first half unaudited2pence 2016year audited2 pence
Basic earnings/(loss) per ordinary share
- continuing operations 9 2.0 (1.3) 0.2
- discontinued operations 9 0.9 (0.3) 3.3
9 2.9 (1.6) 3.5
Diluted earnings/(loss) per ordinary share
- continuing operations 9 2.0 (1.3) 0.2
- discontinued operations 9 0.9 (0.3) 3.3
9 2.9 (1.6) 3.5
Dividends per ordinary share proposed for the period 10 1.2 0.9 2.7
2 Re-presented to classify the Group's 49% interests in Dutco Balfour Beatty LLC and BK Gulf LLC as discontinued
operations.
Condensed Group Statement of Comprehensive Income
For the half-year ended 30 June 2017
2017 first half unaudited 2016 first half unaudited 2016 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 (11) 31 20 (31) 20 (11) (32) 56 24
Other comprehensive (loss)/income for the period
Items which will not subsequently be reclassified to the income statement
Actuarial gains/(losses) on retirement benefit net liabilities 14 - 14 22 - 22 (121) 1 (120)
Tax on above 4 - 4 (4) - (4) 2 - 2
18 - 18 18 - 18 (119) 1 (118)
Items which will subsequently be reclassified to the income statement
Currency translation differences (9) (10) (19) 42 11 53 51 41 92
Fair value revaluations - PPP financial assets (2) (20) (22) 22 20 42 27 10 37
- cash flow hedges 5 8 13 (36) (86) (122) (16) (92) (108)
- Available-for-sale investments in mutual funds 2 - 2 - - - 1 - 1
Recycling of revaluation reserves to the income statement on disposal^ - - - - 9 9 (17) 9 (8)
Tax on above (1) 2 1 4 11 15 (1) 15 14
(5) (20) (25) 32 (35) (3) 45 (17) 28
Total other comprehensive income/(loss) for the period 13 (20) (7) 50 (35) 15 (74) (16) (90)
Total comprehensive income/(loss) for the period 2 11 13 19 (15) 4 (106) 40 (66)
Attributable to
Equity holders 13 4 (67)
Non-controlling interests - - 1
Total comprehensive income/(loss) for the period 13 4 (66)
^ 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 30 June 2017
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 2016 audited 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
Total comprehensive income/(expense) for the period - - - 55 - 58 (52) 6 1 (139) 1 (70)
Joint ventures' and associates' dividends - - - (22) - - - - - 22 - -
Ordinary dividends - - - - - - - - - (6) - (6)
Movements relating to share-based payments - - - - - - - - 2 2 - 4
Reserve transfers relating to disposals - - - 1 - - - - - (1) - -
At 31 December 2016 345 65 22 184 44 (30) 25 135 17 (50) 5 762
Total comprehensive income/(expense) for the period - - - 11 - 3 (2) (9) 1 9 - 13
Joint ventures' and associates' dividends - - - (27) - - - - - 27 - -
Ordinary dividends - - - - - - - - - (12) - (12)
Movements relating to share-based payments - - - - - - - - - 2 - 2
Reserve transfers relating to disposals - - - 13 - - - - - (13) - -
At 30 June 2017 345 65 22 181 44 (27) 23 126 18 (37) 5 765
Condensed Group Balance Sheet
At 30 June 2017
Notes 2017 first half unaudited£m 2016 first halfunaudited3£m 2016 year audited£m
Non-current assets
Intangible assets - goodwill 11 911 896 937
- other 267 226 225
Property, plant and equipment3 173 174 181
Investment properties3 47 23 36
Investments in joint ventures and associates 4.2 630 583 628
Investments 43 45 45
PPP financial assets 14 159 432 163
Trade and other receivables 12 217 146 180
Retirement benefit assets 15 - 27 -
Deferred tax assets 68 70 54
Derivative financial instruments 20 2 3 3
2,517 2,625 2,452
Current assets
Inventories and non-construction work in progress 95 127 101
Due from construction contract customers 384 382 380
Trade and other receivables 12 1,043 994 1,066
Cash and cash equivalents - infrastructure concessions 17.2 154 25 7
- other 17.2 689 703 762
Current tax assets - - 8
Derivative financial instruments 20 3 1 1
2,368 2,232 2,325
Assets held for sale - 56 -
2,368 2,288 2,325
Total assets 4,885 4,913 4,777
Current liabilities
Due to construction contract customers (531) (476) (542)
Trade and other payables 13 (1,746) (1,741) (1,752)
Provisions (169) (165) (147)
Borrowings - non-recourse loans 17.3 (45) (15) (47)
- other 17.3 (40) (77) (56)
Current tax liabilities (9) (26) (18)
Derivative financial instruments 20 (4) (14) (6)
(2,544) (2,514) (2,568)
Liabilities held for sale - (40) -
(2,544) (2,554) (2,568)
Non-current liabilities
Trade and other payables 13 (166) (132) (151)
Provisions (96) (98) (126)
Borrowings - non-recourse loans 17.3 (401) (398) (193)
- other 17.3 (488) (511) (533)
Liability component of preference shares (101) (99) (100)
Retirement benefit liabilities 15 (208) (123) (231)
Deferred tax liabilities (85) (63) (80)
Derivative financial instruments 20 (31) (101) (33)
(1,576) (1,525) (1,447)
Total liabilities (4,120) (4,079) (4,015)
Net assets 765 834 762
Equity
Called-up share capital 345 345 345
Share premium account 65 65 65
Special reserve 22 22 22
Share of joint ventures' and associates' reserves 181 150 184
Other reserves 184 176 191
Retained profits (37) 72 (50)
Equity attributable to equity holders of the parent 760 830 757
Non-controlling interests 5 4 5
Totalequity 765 834 762
3 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.
Condensed Group Statement of Cash Flows
For the half-year ended 30 June 2017
Notes 2017first halfunaudited£m 2016first halfunaudited£m 2016yearaudited#£m
Cash flows generated from/(used in) in operating activities
Cash generated from/(used in):
- continuing operations - underlying1 17.1 21 (93) (132)
- non-underlying 17.1 (14) (6) (15)
- discontinued operations 17.1 - - -
Income taxes received (1) 8 11
Net cash generated from/(used in) operating activities 6 (91) (136)
Cash flows (used in)/generated from investing activities
Dividends from: - joint ventures and associates - infrastructure concessions 8 13 20
- joint ventures and associates - other 19 8 23
Interest received - infrastructure concessions 2 15 19
Interest received - other# 4 5 13
Acquisition of businesses, net of cash and cash equivalents acquired 18.1 - (3) (6)
Purchases of: - intangible assets - infrastructure concessions (56) (5) (6)
- intangible assets - other (3) - (5)
- property, plant and equipment - infrastructure concessions3 - (10) (14)
- property, plant and equipment - other (13) (15) (27)
- investment properties3 (6) (19) (32)
- other investments (3) (1) (1)
Investments in and long-term loans to joint ventures and associates (21) (24) (37)
Loans repaid from joint ventures and associates - 4 -
PPP financial assets cash expenditure 14 (2) (14) (31)
PPP financial assets cash receipts 14 9 18 39
Disposals of: - investments in joint ventures - infrastructure concessions - 33 155
- investments in joint ventures - other 18.2 4 49 2
- subsidiaries net of cash disposed, separation and transaction costs - infrastructure concessions - - 17
- subsidiaries net of cash disposed, separation and transaction costs - other - 2 14
- property, plant and equipment 3 5 9
- other investments 3 6 5
Net cash (used in)/generated from investing activities (52) 67 157
Cash flows from/(used in) financing activities
Purchase of ordinary shares 16 (1) (4) (4)
Proceeds from: - other new loans - infrastructure concessions 17.4 210 36 65
- other new loans - other 17.4 - 75 52
Repayments of: - loans - infrastructure concessions 17.4 (2) (12) (25)
- loans - other 17.4 (50) - (1)
Ordinary dividends paid - - (6)
Interest paid - infrastructure concessions (7) (12) (24)
Interest paid - other# (15) (22) (41)
Preference dividends paid (6) (11) (12)
Net cash from financing activities 129 50 4
Net increase in cash and cash equivalents 83 26 25
Effects of exchange rate changes (10) 50 80
Cash and cash equivalents at beginning of period 768 663 663
Net increase in cash within assets held for sale - (14) -
Cash and cash equivalents at end of period 17.2 841 725 768
1 Before non-underlying items (Note 7).
3 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.
# Re-presented to show interest received and paid in relation to the Group's offset arrangement on a net basis.
Notes to the financial statements
1.1 Basis of accounting
The condensed Group financial statements for the half-year ended 30 June 2017 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 2016, 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 15
August 2017. 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 2016
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 2016 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 2.27 on pages 117 and 118 of the Annual Report and Accounts 2016.
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 21.
1.4 Adoption of new and revised standards
There are no new or revised standards that have been adopted in the current period.
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 30 June 2017:
· IFRS 9 Financial Instruments
· IFRS 14 Regulatory Deferral Accounts
· IFRS 15 Revenue from Contracts with Customers
· IFRS 16 Leases
· IFRS 17 Insurance Contracts
· Amendments to the following standards:
o IAS 40 Transfers of Investment Property
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 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 Classifications to IFRS 15 Revenue from Contracts with Customers
o IFRIC 22 Foreign Currency Transactions and Advance Consideration
o IFRIC 23 Uncertainty over Income Tax Treatments
o Annual improvements to IFRS Standards 2014 - 2016
1.5 Accounting standards not yet adopted by the Group continued
The Directors have completed the impact assessment of IFRS 9 and have concluded that under the new standard, the Group will
be able to continue to record movements in its PPP financial assets through Other Comprehensive Income (OCI) using the fair
value through OCI category. This is because these financial assets are held within a business model whose objective at
Group level is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of
the financial asset meet the "solely payments of principal and interest on the principal outstanding" criterion. Therefore,
there will be no quantitative impact on the Group upon adoption of IFRS 9 at 1 January 2018.
The Directors continue to assess the impact of IFRS 15 and IFRS 16 but do not expect the other standards above to have a
material quantitative effect.
The assessment of IFRS 15 is progressing and the Group will be conducting a review of all its contracts in conjunction with
its budgetary cycle in the fourth quarter of the year.
The Group has chosen not to adopt any of the above standards and interpretations earlier than required.
2 Exchange rates
The following key exchange rates were applied in these financial statements.
Average rates
£1 buys 2017 first halfunaudited 2016 first halfunaudited 2016 year audited 1 July 2016 - 30 June 2017 % change 31 Dec 2016 - 30 June 2017 % change
US$ 1.27 1.41 1.35 (9.9)% (5.9)%
HK$ 9.84 10.98 10.51 (10.4)% (6.4)%
Euro 1.17 1.27 1.23 (7.9)% (4.9)%
Closing rates
£1 buys 2017 first halfunaudited 2016 first halfunaudited 2016 year audited 1 July 2016 - 30 June 2017 % change 31 Dec 2016 - 30 June 2017 % change
US$ 1.30 1.33 1.23 (2.3)% 5.7%
HK$ 10.12 10.30 9.57 (1.7)% 5.7%
Euro 1.14 1.19 1.17 (4.2)% (2.6)%
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, housing investments
and other concessions.
3.1 Income statement - performance by activity from continuing operations
For the half-year ended 30 June 2017 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 3,408 519 264 - 4,191 10 - 4,201
Share of revenue of joint ventures and associates (512) (15) (128) - (655) (2) - (657)
Group revenue 2,896 504 136 - 3,536 8 - 3,544
Group operating profit/(loss)^ 9 16 - (16) 9 - -
Share of results of joint ventures and associates 15 - 15 - 30 - -
Profit/(loss) from operations^ 24 16 15 (16) 39 - -
Non-underlying items
- include results from certain legacy Engineering Services (ES) contracts within Construction Services - - - - -
- include results from Rail Germany within Construction Services - - - - -
- amortisation of acquired intangible assets (2) - (3) - (5)
- other non-underlying items (2) - - (3) (5)
(4) - (3) (3) (10)
Profit/(loss) from operations 20 16 12 (19) 29
Investment income 20
Finance costs (37)
Profit before taxation 12
^ Presented before non-underlying items for underlying operations (Note 7).
3 Segment analysis continued
3.1 Income statement - performance by activity from continuing operations
For the half-year ended 1 July 2016 unaudited ConstructionServices2 £m SupportServices£m InfrastructureInvestments£m Corporateactivities£m Total 2 £m Rail Germany£m Certain legacy ES contracts£m Total 2£m
Revenue including share of joint ventures and associates 3,036 548 299 - 3,883 88 5 3,976
Share of revenue of joint ventures and associates (467) (13) (169) - (649) (4) - (653)
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 12 - 14 - 26 - -
(Loss)/profit from operations^ (54) 11 70 (16) 11 1 (4)
Non-underlying items
- include results from certain legacy 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 (7) (12) 1 (3) (21)
(11) (12) (2) (3) (28)
(Loss)/profit from operations (65) (1) 68 (19) (17)
Investment income 40
Finance costs (38)
Loss before taxation (15)
^ Presented before non-underlying items for underlying operations (Note 7).
2 Re-presented to classify the Group's 49% interests in Dutco Balfour Beatty LLC and BK Gulf LLC as discontinued
operations.
For the year ended 31 December 2016 audited ConstructionServices2 £m SupportServices£m InfrastructureInvestments£m Corporateactivities£m Total 2 £m Rail Germany£m Certain legacy ES contracts£m Total 2£m
Revenue including share of joint ventures and associates 6,537 1,103 575 - 8,215 150
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