REG - Balfour Beatty PLC - Half Year Results <Origin Href="QuoteRef">BALF.L</Origin> - Part 4
12/08/2015 07:01
- Part 4: For the preceding part double click ID:nRSL7766Vc
intangible assets - (5) (8)
7.2.2 Other non-underlying items:
- (loss)/gain on disposal of other businesses (2) 4 -
-gain/(loss) on disposal of Parsons Brinckerhoff 4 (2) 234
- goodwill impairment in respect of Rail Italy - (20) (24)
- impairment of assets within Rail Italy - - (2)
- restructuring charges in respect of discontinued businesses - - (1)
Total other non-underlying items from discontinued operations 2 (18) 207
Credited to/(charged against) (loss)/profit before taxation from discontinued operations 2 (23) 199
7.2.3 Tax on items above - 8 19
Non-underlying items (charged against)/credited to (loss)/profit for the period from discontinued operations 2 (15) 218
Charged against (loss)/profit for the period (15) (80) (5)
2 Re-presented to classify Parsons Brinckerhoff as a discontinued operation (Note 9).
3 Re-presented to include results of Rail Germany, which no longer meets the definition of a discontinued operation, as
non-underlying items within continuing operations.
4 Re-presented to show the results of certain legacy Engineering Services contracts as non-underlying items.
5 Restated to correct prior period error relating to the recognition of contract losses in the UK construction business
(Note 1.7).
7 Non-underlying items continued
Continuing operations
7.1.1 Rail Germany was reclassified from discontinued operations in the second half of 2014 and its results have been
presented as part of the Group's non-underlying items within continuing operations. This is because Rail Germany no longer
met the definition of discontinued operations at 31 December 2014 under IFRS 5 Non-current Assets Held for Sale and
Discontinued Operations, however the Group remains committed to exiting the business. In the first half of 2015, Rail
Germany generated a loss before tax excluding share of joint ventures and associates of £2m (2014: first half £12m,
full-year £23m).
7.1.2 The Group has presented the results of certain external legacy Engineering Services (ES) contracts as non-underlying.
This is because the performance of these ES contracts is linked to poor legacy management and in regions where ES has
withdrawn from tendering for third-party work due to the problematic delivery of these contracts and the size and nature of
the losses are exceptional to the extent that they distort the underlying performance of the Group. These contracts
resulted in a loss before tax for the Group of £1m in the first half of 2015 (2014: first half £33m, full-year £88m). No
tax credit has been recognised on this loss (2014: first half £5m credit, full-year £nil).
7.1.3 The amortisation of acquired intangible assets from continuing operations comprises: customer contracts £3m (2014:
first half £3m, full-year £6m); customer relationships £1m (2014: first half £2m, full-year £4m); and brand names £1m
(2014: first half £nil, full-year £1m).
7.1.4.1 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, in the first half of 2015 restructuring costs of £12m were incurred relating to:
Construction Services UK £7m; Support Services UK £2m; and other UK entities £3m. These restructuring costs comprise:
redundancy costs £6m; external advisers £1m; and property related costs £5m.
7.1.4.2 In the first half of 2015, transitioning other operating companies to the UK shared service centre in
Newcastle-upon-Tyne and increasing the scope led to incremental costs of £5m (2014: first half £6m, full-year £14m).
7.1.4.3 In the first half of 2015, following the disposal of Parsons Brinckerhoff on 31 October 2014, the Group incurred
£4m of costs relating to restructuring the continuing operations of Heery Inc. which was previously reliant on Parsons
Brinckerhoff for its back office functions.
In the first half of 2015 other restructuring costs of £7m were also incurred (2014: first half £6m, full-year £23m)
relating to: Construction Services UK £1m (2014: first half £nil, full-year £11m); other UK entities £2m (2014: first half
£2m, full-year £3m); and other non-UK entities £4m (2014: first half £4m, full-year £9m).
The total first half 2015 restructuring costs comprise: redundancy costs £3m (2014: first half £3m, full-year £13m);
external advisers £3m (2014: first half £2m, full-year £5m); other property related costs £nil (2014: first half £nil,
full-year £1m); and other restructuring costs £5m (2014: first half £1m, full-year £4m).
7.1.4.4 On 27 May 2015, the Group disposed of its 50% interest in Signalling Solutions Limited for a cash consideration of
£17m, resulting in a £15m gain in the first half of 2015. Refer to Note 19.2.6.
7.1.4.5 In the first half of 2015, a settlement gain of £1m (2014: first half £nil, full-year £2m) was recognised in
relation to the Balfour Beatty Pension Fund following the continuation of a commutation exercise commenced in 2014.
7.1.4.6 In 2014, an assessment of the carrying value of assets within Rail Germany was carried out, which resulted in an
impairment of £10m in the first half of the year and a further £20m in the second half of the year.
7 Non-underlying items continued
Continuing operations continued
7.1.4.7 In the second half of 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.
7.1.4.8 In the second half of 2014, costs of £7m were incurred in relation to the aborted merger discussions with Carillion
plc.
7.1.4.9 In the second half of 2014, an impairment charge of £21m was recorded to write down the cost capitalised in
relation to the Oracle R12 software within intangible assets.
7.1.4.10 Blackpool Airport Ltd went into creditors' voluntary liquidation on 16 October 2014 which resulted in costs of £1m
in the second half of 2014.
7.1.5 In the first half of 2014, a goodwill impairment charge of £1m was recognised in relation to one of the Group's
investments in a joint venture in the Middle East.
7.1.6 In the second half of 2014, joint ventures and associates within Rail Germany generated a loss of £1m for the Group.
7.1.7 The non-underlying items charged against Group operating profit from continuing operations gave rise to a tax credit
of £3m comprising: £2m credit on amortisation of acquired intangible assets and £1m credit on other non-underlying items
(2014: first half £8m credit comprising: £5m credit on results of certain legacy ES contracts; £nil on the results of Rail
Germany; £3m credit on amortisation of acquired intangible assets and £nil on other non-underlying items, full-year £1m tax
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).
Discontinued operations
7.2.1 The amortisation of acquired intangible assets from discontinued operations comprises: customer contracts £nil (2014:
first half £nil, full-year £1m); customer relationships £nil (2014: first half £2m, full-year £2m); and brand names £nil
(2014: first half £3m, full-year £5m).
7.2.2.1On 11 March 2015, as part of the ongoing process to exit the Mainland European rail business, the Group disposed of
Rail Italy for a cash consideration of £5m, resulting in a £3m loss being recognised in the period. Refer to Note 19.2.3.
In addition, the Group received a refund of £1m from pension contributions made in previous years in relation to Balfour
Beatty WorkPlace, which was the Group's UK facilities management business disposed in 2013.
7.2.2.2 On 31 October 2014, the Group disposed of its 100% interest in Parsons Brinckerhoff, resulting in a gain on
disposal of £234m. In the first half of 2015, the Group finalised the cash consideration due on the disposal of PB,
amounting to an additional consideration for the Group of £16m of which £7m was recognised as a receivable at the date of
disposal in the prior period. Offsetting this net gain of £9m within non-underlying items are separation costs of £5m which
are being incurred in the year in relation to separation activities to fully separate the remainder of the Group and PB.
Refer to Note 19.2.7.
7.2.2.3 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 £20m arose in the first
half and £4m arose after its transfer to assets held for sale.
7.2.2.4 In the second half of 2014, an assessment of the carrying value of assets within Rail Italy was carried out in the
year which resulted in an impairment of £2m.
7 Non-underlying items continued
Discontinued operations continued
7.2.2.5 In the second half of 2014, restructuring costs of £1m were incurred in respect of discontinued businesses relating
to Rail Italy. These fully relate to redundancy costs.
7.2.3 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 (2014: first half £nil, full-year £2m) and £nil on other
non-underlying items (2014: first half £8m, full-year £17m).
8 Taxation - continuing operations
Underlyingitems2015 Non-underlyingitems(Note 7)2015first halfunaudited1£m Total2015first halfunaudited£m 2014 first half unaudited2,3£m 2014 year audited£m
first halfunaudited1 £m
Total UK tax 10 - 10 (17) (15)
Total non-UK tax (6) (3) (9) 2 12
Total tax charge/(credit) from continuing operationsx 4 (3) 1 (15) (3)
UK current tax - - - (8) (13)
Non-UK current tax 1 - 1 (4) (14)
Total current tax 1 - 1 (12) (27)
UK deferred tax 10 - 10 (9) (2)
Non-UK deferred tax (7) (3) (10) 6 26
Total deferred tax 3 (3) - (3) 24
Total tax charge/(credit) from continuing operationsx 4 (3) 1 (15) (3)
x Excluding joint ventures and associates.
1 Before non-underlying items (Note 7).
2 Re-presented to classify Parsons Brinckerhoff as a discontinued operation (Note 9).
3 Re-presented to include results of Rail Germany, which no longer meets the definition of a discontinued operation, as
non-underlying items within continuing operations (Note 7).
In addition to the Group tax charge above, tax of £50m is credited (2014: first half £13m charge, full-year £77m charge)
directly to other comprehensive income, comprising: a deferred tax credit of £26m in respect of actuarial losses on
retirement benefits (2014: first half £5m charge, full-year £54m charge) and a deferred tax credit in respect of joint
ventures and associates of £24m (2014: first half £8m charge, full-year £23m charge).
On 8 July 2015, the Chancellor announced that the rate of corporation tax will decrease to 19% from 1 April 2017 and to 18%
from 1 April 2020. As these tax rates were not substantively enacted at the balance sheet date, the rate reduction is not
yet reflected in these financial statements in accordance with IAS 10, as it is a non-adjusting event occurring after the
reporting period.
The future rate change to 18% is estimated to give rise to a reduction in the Group's net deferred tax asset of £8m during
the second half of the year, with £5m being charged to the income statement and £3m being charged to reserves. The actual
impact will be dependent on the Group's deferred tax position at that time.
9 Discontinued operations
Rail disposal group
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 has been actively marketing its Mainland European rail
businesses and accordingly, when it was probable that these businesses would be sold within a year and met the criteria to
be classified as an asset held for sale, or were sold or abandoned, they would form part of the Rail disposal group and be
disclosed as discontinued operations.
To be classified as a discontinued operation, the businesses must represent a separate major line of business or
geographical area of operation. 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 met the criteria to classify these businesses as discontinued operations.
On 8 January 2014 the Group disposed of Rail 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 a discontinued operation and held for sale. A £24m
goodwill impairment charge was recognised in the year as a non-underlying item. Refer to Note 7.2.2.3. On 11 March 2015,
the Group completed the sale of Rail Italy for a cash consideration of £5m. Refer to Note 19.2.3.
Rail Germany was reclassified from discontinued operations in the second half of 2014 and is now being presented as part of
the Group's non-underlying items within 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 in 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 and completed in January 2015. 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 at 31 December 2014 and the comparative information for the half-year ended 27 June 2014
has been restated accordingly. The parts of Rail Germany, which were subsequently sold to in January 2015, have been
included as part of the Group's assets and liabilities held for sale.
There are no remaining operations within the Rail disposal group classified as discontinued operations or held for sale at
26 June 2015.
The Rail disposal group was part of the Construction Services segment.
9 Discontinued operations continued
Parsons Brinckerhoff
On 28 October 2014 shareholder approval was granted for the disposal of the Group's 100% interest in Parsons Brinckerhoff
(PB). 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 in 2014. In the first half of 2015, the Group finalised the cash consideration due on the disposal of PB,
amounting to an additional consideration for the Group of £16m. Refer to Notes 7.2.2.2 and 19.2.7.
Parsons Brinckerhoff represented the majority of the Group's Professional Services segment.
Results of the discontinued operations included within the Condensed Group Income Statement
Rail disposal group2015first halfunaudited£m Parsons Brinckerhoff2014first halfunaudited2£m Rail disposal group 2014first halfunaudited3£m Totaldiscontinued operations2014first halfunaudited2,3 Parsons Brinckerhoff2014year audited£m Rail disposal group 2014yearaudited Totaldiscontinued operations2014yearaudited
£m £m £m
Revenue including share of joint ventures and associates 1 744 9 753 1,266 23 1,289
Share of revenue of joint ventures and associates - (7) - (7) (13) - (13)
Group revenue 1 737 9 746 1,253 23 1,276
Underlying group operating (loss)/profit (1) 25 (1) 24 38 1 39
Share of results of joint ventures and associates - - - - - - -
Underlying (loss)/profit from operations (1) 25 (1) 24 38 1 39
Net finance costs - (1) - (1) - - -
Underlying (loss)/profit before tax (1) 24 (1) 23 38 1 39
Taxation on underlying (loss)/profit - (7) (1) (8) (14) (1) (15)
Underlying (loss)/profit after tax (1) 17 (2) 15 24 - 24
Non-underlying items:
- amortisation of acquired intangible assets - (5) - (5) (8) - (8)
- net gain on disposal of businesses 2+ - 1 4^ 234 - 234
- other non-underlying items - (2) (20) (22) - (27) (27)
2 (7) (19) (23)^ 226 (27) 199
Taxation on non-underlying items - 2 6 8 13 6 19
Non-underlying profit/(loss) after tax 2 (5) (13) (15)^ 239 (21) 218
Profit/(loss) for the period from discontinued operations 1 12 (15) -^ 263 (21) 242
^ Includes £3m gain relating to UK facilities management.
+ Includes £4m gain relating to Parsons Brinckerhoff (refer to Note 19.2.7) and £1m gain relating to UK facilities
management (Note 19.2.8).
2 Re-presented to classify Parsons Brinckerhoff as a discontinued operation.
3 Re-presented to include results of Rail Germany, which no longer meets the definition of a discontinued operation, as
non-underlying items within continuing operations (Note 7).
9 Discontinued operations 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 26 June 2015.
At 27 June 2014, assets and liabilities held for sale include Rail Germany and Rail Italy. At 31 December 2014, assets and
liabilities held for sale include Rail Italy and the parts of Rail Germany which were sold in January 2015. Refer to Notes
19.2.1 and 19.2.3.
Rail disposal group2014first halfunaudited £m Rail disposal group2014year audited £m
Non-current assets
Intangible assets - goodwill 4 -
Intangible assets - other 1 -
Property, plant and equipment 27 -
Investments in joint ventures and associates 7 -
Deferred tax assets - 1
39 1
Current assets
Inventories and non-construction work in progress 13 2
Due from construction contract customers 67 14
Trade and other receivables 61 24
Current tax assets 1 1
Cash 24 18
166 59
Total assets classified as held for sale 205 60
Current liabilities
Due to construction contract customers (30) (1)
Trade and other payables (109) (39)
Provisions (8) (2)
Borrowings - (3)
Current tax liabilities (3) -
(150) (45)
Non-current liabilities
Trade and other payables (3) -
Provisions - -
Borrowings (1) -
Retirement benefit liabilities (23) (2)
Deferred tax liabilities (2) -
(29) (2)
Total liabilities classified as held for sale (179) (47)
Net assets of disposal group 26 13
Included within the Group's cash flows for the period ended 26 June 2015 are: net £1m operating cash outflows (2014: first
half £1m, full-year £1m); net £nil investing cash inflows (2014: first half £nil, full-year £9m outflows) and £2m of
foreign exchange movement relating to the Rail disposal group.
Included within the Group's cash flows for the period ended 26 June 2015 are: net £nil operating cash outflows (2014: first
half £18m, full-year £43m); net £8m investing cash inflows (2014: first half £110m outflows, full-year £703m inflows); and
net £nil financing cash outflows (2014: first half £1m, full-year £1m) relating to Parsons Brinckerhoff.
Included within the Group's cash flows for the period ended 26 June 2015 are: net £1m investing cash inflows (2014: first
half £nil, full-year £14m outflows) relating to the UK facilities management disposal group.
10 Earnings per ordinary share
2015 first half unaudited 2014 first half unaudited2,3,4,5 2014 year audited
Earnings Basic£m Diluted£m Basic£m Diluted£m Basic£m Diluted£m
Continuing operations
Loss (151) (151) (43) (43) (302) (302)
Amortisation of acquired intangible assets net of tax 3 3 3 3 7 7
Other non-underlying items net of tax 14 14 62 62 216 216
Underlying (loss)/earnings (134) (134) 22 22 (79) (79)
Discontinued operations
Earnings 1 1 - - 242 242
Amortisation of acquired intangible assets net of tax - - 3 3 6 6
Other non-underlying items net of tax (2) (2) 12 12 (224) (224)
Underlying (loss)/earnings (1) (1) 15 15 24 24
Total operations
Loss (150) (150) (43) (43) (60) (60)
Amortisation of acquired intangible assets net of tax 3 3 6 6 13 13
Other non-underlying items net of tax 12 12 74 74 (8) (8)
Underlying (loss)/earnings (135) (135) 37 37 (55) (55)
Basicm Dilutedm Basicm Dilutedm Basicm Dilutedm
Weighted average number of ordinary shares 687 687 686 687 686 686
Earnings per share Basicpence Dilutedpence Basicpence Dilutedpence Basicpence Dilutedpence
Continuing operations
Loss per ordinary share (22.0) (22.0) (6.2) (6.2) (43.9) (43.9)
Amortisation of acquired intangible assets net of tax 0.5 0.5 0.5 0.5 1.1 1.1
Other non-underlying items net of tax 2.1 2.1 8.9 8.9 31.3 31.3
Underlying (loss)/earnings per ordinary share (19.4) (19.4) 3.2 3.2 (11.5) (11.5)
Discontinued operations
Earnings per ordinary share 0.1 0.1 - - 35.3 35.3
Amortisation of acquired intangible assets net of tax - - 0.5 0.5 0.8 0.8
Other non-underlying items net of tax (0.2) (0.2) 1.7 1.7 (32.6) (32.6)
Underlying (loss)/earnings per ordinary share (0.1) (0.1) 2.2 2.2 3.5 3.5
Total operations
Loss per ordinary share (21.9) (21.9) (6.2) (6.2) (8.6) (8.6)
Amortisation of acquired intangible assets net of tax 0.5 0.5 1.0 1.0 1.9 1.9
Other non-underlying items net of tax 1.9 1.9 10.6 10.6 (1.3) (1.3)
Underlying (loss)/earnings per ordinary share (19.5) (19.5) 5.4 5.4 (8.0) (8.0)
2 Re-presented to classify Parsons Brinckerhoff as a discontinued operation (Note 9).
3 Re-presented to include results of Rail Germany, which no longer meets the definition of a discontinued operation, as
non-underlying items within continuing operations (Note 7).
4 Re-presented to show the results of certain legacy Engineering Services contracts as non-underlying items (Note 7).
5 Restated to correct prior period error relating to the recognition of contract losses in the UK construction business
(Note 1.7).
11 Dividends on ordinary shares
2015 first half unaudited 2014 first half unaudited 2014 year audited
Per sharepence Amount£m Per sharepence Amount£m Per sharepence Amount£m
Proposed dividends for the period
Interim 2014 - - 5.6 38 5.6 38
Final 2014 - - - - - -
Interim 2015 - - - - - -
- - 5.6 38 5.6 38
Recognised dividends for the period
Final 2013 - 58 58
Interim 2014 - - 38
Final 2014 - - -
- 58 96
Whilst the Board continues to recognise the importance of the dividend to its shareholders, in order to ensure balance
sheet strength is maintained during the transformation programme it will not be recommending an interim dividend payable
for 2015. The Board will look to reinstate the dividend in March 2016, at an appropriate level.
2015first halfunaudited£m 2014first halfunaudited£m 2014yearaudited£m
Dividends on ordinary shares of the Company - 58 96
Other dividends to non-controlling interests - - -
Total recognised dividends for the period - 58 96
12 Intangible assets - goodwill
Cost £m Accumulatedimpairmentlosses£m Carryingamount £m
At 1 January 2014 audited 1,091 (43) 1,048
Currency translation differences (21) 2 (19)
Impairment charges in respect of Mainland European rail businesses (Note 7) - (20) (20)
Reclassified to assets held for sale relating to Rail Italy (24) 20 (4)
At 27 June 2014 unaudited 1,046 (41) 1,005
Currency translation differences 45 3 48
Reclassified from assets held for sale relating to Rail Germany 113 (113) -
Reclassified to assets held for sale and subsequently sold (227) - (227)
At 31 December 2014 audited 977 (151) 826
Currency translation differences (13) 11 (2)
At 26 June 2015 unaudited 964 (140) 824
The Group has conducted a full impairment assessment on the cash generating units within Construction Services as at 26
June 2015, following contract performance deteriorations in both the UK and US construction businesses in the first half of
2015.
The Group's impairment review is sensitive to changes in the key assumptions used. The major assumptions that result in
significant sensitivities are the discount rate and the long-term growth rate.
In light of the significant losses incurred within Construction Services UK in the first half of 2015 and 2014 full-year,
the Group has considered whether a reasonable possible change in assumptions would lead to an impairment of the goodwill in
that CGU and concluded that it would not. The stabilisation and recovery of Construction Services UK to more normal levels
of performance is however a key assumption underpinning the cash flow forecasts used to assess the recoverable amount of
the related goodwill.
Using a pre-tax discount rate of 14.1% and revenue growth rate of 3.25% the recoverable amount of the remaining goodwill in
Balfour Beatty Construction Group Inc. is £369m based on value in use, with consequent headroom of £14m. A 1.0% increase in
the discount rate and a 1.0% reduction in the growth rate would lead to an impairment of £52m.
A full detailed impairment review will be conducted at 31 December 2015.
13 Trade and other receivables
2015first halfunaudited£m 2014first halfunaudited£m 2014yearaudited£m
Current
Trade receivables 540 884 583
Less: provision for impairment of trade receivables (21) (25) (26)
519 859 557
Other receivables 43 83 56
Due from joint ventures and associates 36 31 33
Due from joint operations 19 6 29
Contract retentions receivable+ 217 190 210
Accrued income 47 30 39
Prepayments 60 65 42
Due on acquisitions - 15 -
Due on disposals - 56 -
941 1,335 966
Non-current
Trade receivables 2 2 -
Other receivables 2 6 7
Due from joint ventures and associates 17 11 16
Due from joint operations 3 103 4
Contract retentions receivable+ 78 1 84
Prepayments 6 - -
108 123 111
Total trade and other receivables 1,049 1,458 1,077
Comprising
Financial assets 983 1,393 1,035
Non-financial assets - prepayments 66 65 42
1,049 1,458 1,077
+ Including £292m (2014: first half £290m, full-year £291m) construction contract retentions receivable.
Based on prior experience, an assessment of the current economic environment and a review of the financial circumstances of
individual customers, the Directors believe no further credit risk provision is required in respect of trade receivables.
The Directors consider that the carrying values of current trade and other receivables approximate their fair values. The
fair value of non-current trade and other receivables amounts to £101m (2014: first half £117m, full-year £107m) and has
been determined by discounting future cash flows using yield curves and exchange rates prevailing at the reporting date.
14 Trade and other payables
2015first halfunaudited£m 2014first halfunaudited£m 2014yearaudited£m
Current
Trade and other payables 1,005 974 905
Accruals 836 988 961
Deferred income 12 9 5
Advance payments on contracts* 5 11 1
VAT, payroll taxes and social security 85 80 79
Dividends on preference shares 5 5 5
Dividends on ordinary shares - 58 -
Due to joint ventures and associates 18 - -
Due on acquisitions 3 3 3
1,969 2,128 1,959
Non-current
Trade and other payables 66 103 65
Accruals 17 32 24
Deferred income 2 1 3
Due to joint ventures and associates 11 27 27
Due on acquisitions 13 14 15
109 177 134
Total trade and other payables 2,078 2,305 2,093
Comprising
Financial liabilities 1,975 2,156 1,972
Non-financial liabilities 103 149 121
2,078 2,305 2,093
* Including £nil (2014: first half £8m; full-year £nil) advances on construction contracts.
The Directors consider that the carrying values of current trade and other payables approximate their fair values. The fair
value of non-current financial liabilities included above amounts to £93m (2014: first half £149m, full-year £123m) and has
been determined by discounting future cash flows using yield curves and exchange rates prevailing at the reporting date.
15 PPP financial assets
Schools£m Roads£m Other £m Total £m
At 1 January 2014 audited 196 193 66 455
Income recognised in the income statement
- interest income (Note 5) 5 7 2 14
Gains recognised in the statement of comprehensive income
- fair value movements 4 7 2 13
Other movements
- cash expenditure - 19 3 22
- cash received (8) (10) (2) (20)
- disposal of interest in Knowsley (197) - - (197)
At 27 June 2014 unaudited - 216 71 287
Income recognised in the income statement
- construction contract margin - 1 - 1
- interest income (Note 5) - 9 3 12
Gains recognised in the statement of comprehensive income
- fair value movements - 25 41 66
Other movements
- cash expenditure - 20 190 210
- cash received - (11) (6) (17)
At 31 December 2014 audited - 260 299 559
Income recognised in the income statement
- construction contract margin - 1 - 1
- interest income (Note 5) - 8 4 12
Losses recognised in the statement of comprehensive income
- fair value movements - (14) (2) (16)
Other movements
- cash expenditure - 21 17 38
- cash received - (12) (3) (15)
- disposal of interest in Thanet - - (214) (214)
At 26 June 2015 unaudited - 264 101 365
16 Retirement benefit liabilities
Principal actuarial assumptions for the IAS 19 accounting valuations of the Group's principal schemes 2015first halfunaudited£m 2014first halfunaudited£m 2014yearaudited£m
Discount rate on obligations 3.65 4.20 3.60
Inflation rate - RPI 3.15 3.25 2.95
- CPI 1.75 2.05 1.55
Future increases in pensionable salary 1.75 2.05 1.55
Amounts recognised in the Balance Sheet 2015first halfunaudited£m 2014first halfunaudited£m 2014yearaudited£m
Present value of obligations (3,550) (3,287) (3,518)
Fair value of plan assets 3,319 2,890 3,390
Liability in the Balance Sheet (231) (397) (128)
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