REG - Balfour Beatty PLC - Full Year Results <Origin Href="QuoteRef">BALF.L</Origin> - Part 5

Balfour BeattyAnnouncement

25/03/2015 07:12

- Part 5: For the preceding part double click  ID:nRSY3723Id 

acquisitions completed in earlier years was £3m, £1m relating
to the acquisition of Subsurface Group Inc. (Subsurface) and £2m relating to other acquisitions. 
 
21.2 Contingent consideration arrangements 
 
 Contingent consideration recoverable/(payable)  ParsonsBrinckerhoffInc.£m  Subsurface£m  Total£m  
 At 1 January 2014                               16                         (1)           15       
 (Recovered)/paid during the year                (15)                       1             (14)     
 Released to the income statement                (1)                        -             (1)      
 At 31 December 2014                             -                          -             -        
 
 
21.3 Current year disposals 
 
 Notes   Disposal date    Entity/business                                     Percentagedisposed %  Cashconsideration£m  Net assetsdisposed £m  Amount recycled fromreserve£m  Direct costs incurred,indemnityprovisionscreated andfair valueuplift  £m  Underlying gain £m  Non-underlying gain £m  
 21.3.1  8 January 2014   Rail Scandinavia                                 *  100                   2                    (2)                    1                              (1)                                                                       -                   -                       
 21.3.2  22 May 2014      Consort Healthcare (Durham) Holdings Ltd         ^  50                    55                   (43)                   15                             -                                                                         27                  -                       
 21.3.3  30 May 2014      Transform Schools (Knowsley) Holdings Ltd        *  100                   42                   (10)                   (8)                            -                                                                         24                  -                       
 21.3.4  1 October 2014   Consort Healthcare (Mid Yorkshire) Holdings Ltd  ^  50                    62                   (12)                   (8)                            -                                                                         42                  -                       
 21.3.5  31 October 2014  Parsons Brinckerhoff                             *  100                   812                  (498)                  (11)                           (69)                                                                      -                   234                     
                                                                                                    973                  (565)                  (11)                           (70)                                                                      93                  234                     
 
 
* Subsidiary. 
 
^ Joint venture. 
 
21.3.1 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/loss being recognised as a non-underlying item, comprising a £nil gain/loss in respect of
the fair value of net assets disposed and a £1m gain on recycling currency translation reserves to the income statement.
Costs of disposal incurred and indemnity provisions of £1m were charged to the income statement which resulted in the
overall £nil gain/loss. The disposal included cash disposed of £9m. 
 
21.3.2 On 22 May 2014 the Group disposed of its 50% interest in Consort Healthcare (Durham) Holdings Ltd (CHDHL) for an
agreed cash consideration of £55m, including a settlement of short-term loans due from joint ventures of £5m. On this date
the Group ceased to jointly control CHDHL by virtue of a put/call structure with a preferred bidder. The disposal was
completed on 30 June 2014 and the proceeds were received in July 2014. This disposal resulted in a net gain of £27m being
recognised within underlying operating profit in the income statement, comprising a gain of £12m in respect of the disposal
of the investment in the joint venture and a £15m gain in respect of revaluation reserves recycled to the income
statement. 
 
21.3.3 On 30 May 2014 the Group disposed of its 100% interest in Transform Schools (Knowsley) Holdings Ltd (TSKHL) for an
agreed cash consideration of £42m. On this date the Group ceased to jointly control TSKHL by virtue of a put/call structure
with a preferred bidder. The disposal of the subsidiary was completed on 12 June 2014. This disposal resulted in a net gain
of £24m being recognised within underlying operating profit, comprising a gain of £32m in respect of the fair value of net
assets disposed and an £8m loss in respect of revaluation reserves recycled to the income statement. The disposal included
cash disposed of £8m. 
 
21.3.4 On 1 October 2014 the Group disposed of its 50% interest in Consort Healthcare (Mid Yorkshire) Holdings Ltd for an
agreed cash consideration of £62m. This disposal was completed on 1 October 2014 and resulted in a gain of £42m being
recognised within underlying operating profit, comprised of a £50m gain in respect of the disposal of the investment in the
joint venture and an £8m loss in respect of revaluation reserves recycled to the income statement. 
 
21.3.5 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 with the
proceeds being received on that day. The disposal resulted in a net non-underlying gain of £234m being recognised within
discontinued operations after incurring separation costs of £24m and transaction costs of £45m. The net gain comprises a
gain of £314m before disposal costs in respect of the fair value of net assets disposed and a £11m loss in respect of
reserves recycled to the income statement. This disposal includes cash disposed of £42m. Additional consideration may be
received based on the agreement of the final working capital position of Parsons Brinckerhoff. 
 
21.3.6 During the year the Group finalised the cash consideration due on the disposal of its UK facilities management
business, Balfour Beatty WorkPlace (BBW), amounting to an additional consideration for the Group of £1m. At the same time,
an agreement was reached to discharge the Group's obligation for which a provision of £14m had been made in return for a
payment by the Group of £9m. This resulted in a non-underlying gain on disposal of £6m, which was fully offset with an
impairment charge for an intangible asset of £6m (refer to Note 14). The net non-underlying gain on disposal recognised in
the year was therefore £nil (2013: £16m gain). Costs of £6m incurred in 2013 were subsequently settled in 2014. 
 
22 Contingent liabilities 
 
The Group and certain subsidiary undertakings have, in the normal course of business, given guarantees and entered into
counter-indemnities in respect of bonds relating to the Group's own contracts and given guarantees in respect of their
share of certain contractual obligations of joint ventures and associates and certain retirement benefit liabilities of the
Balfour Beatty Pension Fund and the Railways Pension Scheme. Guarantees are treated as contingent liabilities until such
time as it becomes probable payment will be required under the terms of the guarantee. 
 
Provision has been made for the Directors' best estimate of known legal claims, investigations and legal actions in
progress. The Group takes legal advice as to the likelihood of success of claims and actions and no provision is made where
the Directors consider, based on that advice, that the action is unlikely to succeed, or that the Group cannot make a
sufficiently reliable estimate of the potential obligation. 
 
23 Related party transactions 
 
The Group has contracted with, provided services to, and received management fees from, certain joint ventures and
associates amounting to £673m (2013: £777m). These transactions occurred in the normal course of business at market rates
and terms. In addition, the Group procured equipment and labour on behalf of certain joint ventures and associates which
were recharged at cost with no mark-up. The amounts due from or to joint ventures and associates at the reporting date are
disclosed within Notes 16 and 17 respectively. 
 
The Group recharged the Balfour Beatty Pension Fund with the costs of administration and advisers' fees borne by the Group
amounting to £7m in 2014 (2013: £8m). 
 
24 Principal risks and uncertainties 
 
The nature of the principal risks and uncertainties which could adversely impact the Group's profitability and ability to
achieve its strategic objectives include: external risks arising from the continued or residual effects of the global
economic downturn and the complex and evolving legal and regulatory environments in which the Group operates; strategic
risks which may arise as the Group moves into new territories and expands through acquisitions; organisation and management
risks including business conduct and people related risks; and operational risks arising from bidding, project execution,
supply chain and health, safety and sustainability matters. 
 
25 Events after the reporting date 
 
On 31 January 2015, the Group completed the sale of Jumbotec, Austria and Track (which constituted parts of Rail Germany)
to Rhomberg Sersa Rail Group for a net consideration of £nil after taking into account cash that will transfer with the
business. The deal was announced on 14 November 2014, and a non-underlying loss on disposal was estimated at that time at
£25m. At 31 December 2014, in light of the consideration expected to be received on completion of the deal, the Group
recognised an impairment of £30m to write down the net assets of these businesses to the consideration expected. This has
been recognised as a non-underlying item. Refer to Note 8.1.4.3. 
 
On 16 February 2015, the Group announced the sale of an 80% interest in the Thanet offshore transmission (OFTO) project for
£40m to Equitix. The consideration is consistent with the Directors' valuation at 31 December 2014. The Group retains a 20%
interest in the joint venture. 
 
On 18 February 2015, the Group announced the acquisition of the Gwynt y Môr offshore transmission (OFTO) project, in which
the Group will be joint venture partners with Equitix. The Group's stake is £28m which represents 60% of equity required. 
 
On 11 March 2015, the Group completed the sale of Rail Italy for net cash consideration of £3m to Alpiq InTec AG. The
consideration reflected the Group's carrying value of the business at 31 December 2014. 
 
This information is provided by RNS
The company news service from the London Stock Exchange