REG - Balfour Beatty PLC - RESULTS FOR THE HALF-YEAR ENDED 27 JUNE 2014 <Origin Href="QuoteRef">BALF.L</Origin> - Part 2
29/10/2014 11:41
- Part 2: For the preceding part double click ID:nRSK7414Oa
the US, with developing businesses in Australia, Canada, the Middle
East, South Africa and South East Asia.
With proven expertise in delivering infrastructure critical to support communities and society today and in the future, our
key market sectors focus on infrastructure - transportation (roads, rail and aviation), power and energy, water, and
complex buildings (both commercial and social).
Balfour Beatty employs 40,000 people around the world.
Additional information
A presentation to analysts and investors will be made at 9:00 (UK time) via webcast. Please register by visiting
http://www.balfourbeatty.com/webcast.
Alternatively you can dial in using the numbers and password below:
+44 (0) 20 3003 2666 - Standard International Access
0808 109 0700 - UK Toll Free
Password - Balfour Beatty
The financial report for the half-year ended 27 June 2014 can also be viewed on our website at
www.balfourbeatty.com/results.
Publication on website
A copy of this announcement will be made available subject to certain restrictions relating to persons resident in
restricted jurisdictions on Balfour Beatty's website at www.balfourbeatty.com by no later than 12 noon (London time) on 12
August 2014.
The content of the website referred to in this announcement is not incorporated into and does not form part of this
announcement.
INDEPENDENT REVIEW REPORT TO BALFOUR BEATTY PLC
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 27 June 2014 which comprises the Condensed Group Income Statement, the Condensed GroupStatement of
Comprehensive Income, the Condensed Group Statement of Changes in Equity, the Condensed Group Balance Sheet, the Condensed
Group Statement of Cash Flows and related Notes 1 to 26. 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 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. Our work has been undertaken so that we might state to the Company those matters we are required to state
to it in an independent review 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 formed.
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 Disclosure and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
As disclosed in Note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by
the European Union. The condensed set of financial statements included in this half-yearly financial report has been
prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting," as adopted by the European
Union.
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 United Kingdom. A review of interim financial information consists of making inquiries, 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 27 June 2014 is not prepared, in all material
respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and
Transparency Rules of the United Kingdom's Financial Conduct Authority.
Deloitte LLP
Chartered Accountants and Statutory Auditor
London, United Kingdom
10 August 2014
Condensed Group Income Statement
For the half-year ended 27 June 2014
2014 first half unaudited 2013 first half unaudited 2 2013 year audited 2
Notes Underlying items 1 Non-underlying items(Note 7) Total Underlyingitems 1£m Non-underlyingitems(Note 7)£m Total £m Underlyingitems 1 £m Non-underlyingitems(Note 7) £m Total £m
£m £m £m
Continuing operations
Revenue including share of joint ventures and associates 4,851 - 4,851 4,956 - 4,956 10,090 - 10,090
Share of revenue of joint ventures and associates 4 (677) - (677) (645) - (645) (1,373) - (1,373)
Group revenue 4,174 - 4,174 4,311 - 4,311 8,717 - 8,717
Cost of sales (3,827) - (3,827) (3,924) - (3,924) (7,857) - (7,857)
Gross profit 347 - 347 387 - 387 860 - 860
Gain on disposals of interests in investments 19 51 - 51 45 - 45 82 - 82
Amortisation of acquired intangible assets - (10) (10) - (16) (16) - (30) (30)
Other net operating expenses (403) (10) (413) (408) (35) (443) (812) (125) (937)
Group operating (loss)/profit (5) (20) (25) 24 (51) (27) 130 (155) (25)
Share of results of joint ventures and associates 4 42 (1) 41 30 - 30 71 - 71
Profit/(loss) from operations 37 (21) 16 54 (51) 3 201 (155) 46
Investment income 5 30 - 30 33 - 33 65 - 65
Finance costs 6 (45) - (45) (40) - (40) (81) - (81)
Profit/(loss) before taxation 22 (21) 1 47 (51) (4) 185 (155) 30
Taxation 8 5 5 10 (2) 16 14 (49) 35 (14)
Profit/(loss) for the period from continuing operations 27 (16) 11 45 (35) 10 136 (120) 16
Loss for the period from discontinued operations 9 (14) (24) (38) (16) (53) (69) (14) (37) (51)
Profit/(loss) for the period 13 (40) (27) 29 (88) (59) 122 (157) (35)
Attributable to
Equity holders 13 (40) (27) 29 (88) (59) 122 (157) (35)
Non-controlling interests - - - - - - - - -
Profit/(loss) for the period 13 (40) (27) 29 (88) (59) 122 (157) (35)
1 Before non-underlying items (Note 7).
2 Re-presented to classify Rail Italy as a discontinued operation (Note 9).
Notes 2014 2013 first halfunaudited 2 pence 2013 yearaudited 2pence
first halfunaudited
pence
Basic earnings/(loss) per ordinary share
- continuing operations 10 1.6 1.5 2.5
- discontinued operations 10 (5.5) (10.1) (7.6)
(3.9) (8.6) (5.1)
Diluted earnings/(loss) per ordinary share
- continuing operations 10 1.6 1.5 2.5
- discontinued operations 10 (5.5) (10.1) (7.6)
(3.9) (8.6) (5.1)
Dividends per ordinary share proposed for the period 11 5.6 5.6 14.1
2 Re-presented to classify Rail Italy as a discontinued operation (Note 9).
Group Statement of Comprehensive Income
For the half-year ended 27 June 2014
2014 2013first halfunaudited 3 £m 2013
first halfunaudited yearaudited£m
£m
Loss for the period (27) (59) (35)
Other comprehensive income/(expense) for the period
Items which will not subsequently be reclassified to the income statement
Retirement benefit liabilities - actuarial movements 18 (55) (114)
- tax (4) 12 17
14 (43) (97)
Items which will subsequently be reclassified to the income statement
Currency translation differences (28) 77 (14)
Fair value revaluations - PPP financial assets 64 (124) (192)
- cash flow hedges (23) 86 120
- available-for-sale investments in mutual funds 1 3 7
Recycling of revaluation reserves to the income statement on disposal @ (8) (10) (21)
Tax on above (9) 8 20
(3) 40 (80)
Total other comprehensive income/(expense) for the period 11 (3) (177)
Total comprehensive expense for the period (16) (62) (212)
Attributable to
Equity holders (16) (62) (212)
Non-controlling interests - - -
Total comprehensive expense for the period (16) (62) (212)
@ Recycling of revaluation reserves to the income statement on disposal has no associated tax effect.
3 Re-presented to reflect the recycling of revaluation reserves to the income statement in the statement of comprehensive
income instead of the statement of changes in equity.
Condensed Group Statement of Changes in Equity
For the half-year ended 27 June 2014
Other reserves
Called-up Share Special Share Equity Hedging PPP Currency Merger Other Retained profits 3, 4 Non- Total 3, 4
share premium reserve of joint component of reserves financial assets translation reserve £m £m controlling £m
capital account £m ventures' preference £m £m reserve £m interests
£m £m and shares £m £m
associates' and convertible bonds£m
reserves 3
£m
At 1 January 2013 audited 344 63 25 337 17 (109) 93 21 249 18 252 3 1,313
Total comprehensive income/(expense) for the period - - - (16) - 33 (19) 69 - 2 (131) - (62)
Ordinary dividends - - - - - - - - - - (58) - (58)
Joint ventures' and associates' dividends - - - (13) - - - - - - 13 - -
Movements relating to share-based payments - - - - - - - - - (1) 4 - 3
Reserve transfers relating to disposals of joint ventures and associates - - - 14 - - - - - - (14) - -
At 28 June 2013 unaudited 344 63 25 322 17 (76) 74 90 249 19 66 3 1,196
Total comprehensive income/(expense) for the period - - - (1) 1 17 (13) (82) - 3 (75) - (150)
Ordinary dividends - - - - - - - - - - (38) (1) (39)
Joint ventures' and associates' dividends - - - (34) - - - - - - 34 - -
Issue of ordinary shares - 1 - - - - - - - - - - 1
Issue of convertible bonds - - - - 26 - - - - - - - 26
Movements relating to share-based payments - - - - - - - - - - 1 - 1
Reserve transfers relating to disposals of joint ventures and associates - - - (11) - - - - - - 11 - -
Other transfers - - (1) 2 - 3 (5) - - - 1 - -
At 31 December 2013 audited 344 64 24 278 44 (56) 56 8 249 22 - 2 1,035
Total comprehensive income/(expense) for the period - - - 55 - 16 (7) (26) - - (54) - (16)
Ordinary dividends - - - - - - - - - - (58) - (58)
Joint ventures' and associates' dividends - - - (14) - - - - - - 14 - -
Issue of ordinary shares - 1 - - - - - - - - - - 1
Movements relating to share-based payments - - - - - - - - - (2) 5 - 3
Reserve transfers relating to disposals of joint ventures and associates - - - (22) - - - - - - 22 - -
Other transfers - - (1) - - - - - - - 1 - -
At 27 June 2014 unaudited 344 65 23 297 44 (40) 49 (18) 249 20 (70) 2 965
3 Re-presented to reflect the recycling of revaluation reserves to the income statement in the statement of comprehensive
income instead of the statement of changes in equity.
4 Restated to reflect the effects of IAS 19 Employee Benefits (Revised).
Condensed Group Balance Sheet
As at 27 June 2014
Notes 2014 2013first half unaudited 4, 5 £m 2013
first half unaudited yearaudited
£m £m
Non-current assets
Intangible assets - goodwill 12 1,005 1,103 1,048
- other 208 204 204
Property, plant and equipment 213 204 208
Investments in joint ventures and associates 4 679 672 666
Investments 93 99 95
PPP financial assets 15 287 537 455
Trade and other receivables 13 123 115 113
Deferred tax assets 123 136 122
2,731 3,070 2,911
Current assets
Inventories and non-construction work in progress 161 146 135
Due from construction contract clients 721 644 631
Trade and other receivables 13 1,335 1,276 1,190
PPP term deposits greater than three months - 2 -
Cash and cash equivalents - PPP subsidiaries 46 31 65
- other 411 531 539
Current tax assets 17 4 8
Derivative financial instruments 1 3 2
2,692 2,637 2,570
Assets held for sale 9 205 497 231
2,897 3,134 2,801
Total assets 5,628 6,204 5,712
Current liabilities
Due to construction contract clients (342) (361) (360)
Trade and other payables 14 (2,128) (2,242) (2,046)
Provisions (93) (97) (100)
Borrowings - non-recourse loans (4) (8) (9)
- other (367) (489) (170)
Current tax liabilities (39) (31) (33)
Derivative financial instruments (11) (18) (19)
(2,984) (3,246) (2,737)
Liabilities held for sale 9 (179) (343) (219)
(3,163) (3,589) (2,956)
Non-current liabilities
Trade and other payables 14 (177) (149) (182)
Provisions (89) (109) (93)
Borrowings - non-recourse loans (266) (405) (410)
- other (431) (231) (435)
Liability component of preference shares (95) (93) (94)
Retirement benefit liabilities 16 (397) (345) (434)
Deferred tax liabilities (4) (5) (18)
Derivative financial instruments (41) (82) (55)
(1,500) (1,419) (1,721)
Total liabilities (4,663) (5,008) (4,677)
Net assets 965 1,196 1,035
Equity 5
Called-up share capital 344 344 344
Share premium account 65 63 64
Special reserve 23 25 24
Share of joint ventures' and associates' reserves 297 322 278
Other reserves 5 304 373 323
Retained profits 4 (70) 66 -
Equity attributable to equity holders of the parent 963 1,193 1,033
Non-controlling interests 2 3 2
Total equity 965 1,196 1,035
4 Restated to reflect the effects of IAS 19 Employee Benefits (Revised).
5 Re-presented to amalgamate the equity component of preference shares into other reserves.
Condensed Group Statement of Cash Flows
For the half-year ended 27 June 2014
Notes 2014 2013 2013
first half first half year
unaudited unaudited 6, 7£m audited £m
£m
Cash flows from operating activities
Cash used in:
- continuing operations - underlying 6 (240) (189) (83)
- non-underlying 6 (25) (20) (75)
- discontinued operations 6 (21) (27) (4)
18.1 (286) (236) (162)
Income taxes paid (8) (9) (13)
Net cash used in operating activities (294) (245) (175)
Cash flows from investing activities
Dividends received from:
- joint ventures and associates 14 13 47
- discontinued operations - - 1
Interest received 16 15 28
Acquisition of businesses 19.1 (3) (14) (14)
Purchase of:
- intangible assets - other relating to infrastructure concessions (13) - (20)
- intangible assets - other (8) (11) (18)
- property, plant and equipment - relating to infrastructure concessions (15) (2) (11)
- property, plant and equipment - other (25) (34) (71)
- other investments (3) (10) (12)
Investments in and loans made to joint ventures and associates (4) (17) (51)
Loans repaid to joint ventures and associates 1 - 2
PPP financial assets cash expenditure 7 15 (22) (27) (62)
PPP financial assets cash receipts 7 15 20 25 59
Disposal of:
- investments in joint ventures - 81 103
- subsidiaries, net of cash and cash equivalents disposed 19.2 20 (7) 152
- property, plant and equipment - underlying 3 13 11
- property, plant and equipment - non-underlying - - 8
- other investments 6 13 20
Net cash (used in)/from investing activities (13) 38 172
Cash flows from financing activities
Purchase of ordinary shares (2) (2) (2)
Proceeds from:
- issue of ordinary shares 1 - 1
- convertible bonds - - 246
- US private placement 18.4 - 231 231
- other new loans 18.4 281 47 110
- finance leases - - 1
Repayment of:
- loans 18.4 (18) (9) (408)
- finance leases - (1) (2)
Investment in term deposits greater than three months - (2) -
Ordinary dividends paid - - (96)
Ordinary dividends paid - non-controlling interest - - (1)
Interest paid (28) (30) (56)
Preference dividends paid (5) (5) (11)
Net cash from financing activities 229 229 13
Net (decrease)/increase in cash and cash equivalents (78) 22 10
Effect of exchange rate changes (13) 24 3
Cash and cash equivalents at beginning of period 526 532 532
Net increase in cash within assets held for sale 9 (5) (16) (19)
Cash and cash equivalents at end of period 18.2 430 562 526
6 Re-presented to separately identify cashflows from underlying and non-underlying continuing operations and discontinued
operations.
7 Re-presented to separately identify PPP financial assets cash inflows and outflows which were previously disclosed in the
Notes.
Notes to the Financial Statements
1 Accounting policies
1.1 Basis of accounting
The condensed Group financial statements for the half-year ended 27 June 2014 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 2013, 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 10
August 2014. 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 Company's audited statutory accounts for the year ended 31 December
2013 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 2013 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 page 103 of the Annual Report and Accounts 2013.
In respect of the available-for-sale financial assets, in addition to judgement on discount rates, judgement is also
required when assessing the non-market related cash flows within the PPP concessions.
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 23.
1.4 Adoption of new and revised standards
The following new and revised standards have been adopted in the current period and do not have a material effect on the
Group:
· IFRS 10 Consolidated Financial Statements
· IFRS 11 Joint Arrangements
· IFRS 12 Disclosure of Interests in Other Entities
· IFRIC 21: Levies
· Amendments to the following standards:
o IFRS 10, IFRS 11 and IFRS 12: Transition Guidance
o IFRS 10, IFRS 11 and IFRS 12: Investment Entities
o IAS 27 Separate Financial Statements
o IAS 28 Investments in Associates and Joint Ventures
o IAS 39 Novation of Derivatives and Continuation of Hedge Accounting
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 27 June 2014:
· IFRS 9 Financial Instruments
· IFRS 14 Regulatory Deferral Accounts
· IFRS 15 Revenue from Contracts with Customers
· Amendments to the following standards
o IFRS 11: Accounting for Acquisitions of Interests in Joint Operations
o IAS 16 and 38: Clarification of Acceptable Methods of Depreciation and Amortisation
o IAS 16 and 41: Agricultural: Bearer Plants
o IAS 19 Employee Benefits: Defined Benefit Plans: Employee Contributions
o Improvements to IFRSs (2010 - 2012)
o Improvements to IFRSs (2011 - 2013).
The Group does not expect the above standards to have a material quantitative effect.
1.6 Change in accounting estimates
In line with the Group's accounting policy for PPP concession companies, as set out on page 102 of the Annual Report and
Accounts 2013, movements in the fair value of PPP financial assets attributable to non-market related changes in future
cash flow assumptions are recognised in the income statement. For the period ended 27 June 2014 this has given rise to a
fair value gain of £15m (2013: first half £nil, full-year £nil) which has been recognised within underlying profit from
operations.
1.7 Re-presentation of comparative information
Discontinued operations
The Income Statement has been re-presented to classify Rail Italy as part of discontinued operations. Refer to Note 9.
IAS 19 Employee Benefits (Revised)
Subsequent to the 2013 half-year, as a result of adopting IAS 19 Employee Benefits (Revised), the Railway Pension Scheme
liability was revalued resulting in a £5m reduction to the retirement benefit liability with deferred tax assets and
opening retained profits for the 2013 first-half being restated accordingly. The 2013 year-end has not been restated nor
has the 2013 half-year income statement been restated as both were restated in accordance with IAS 19 Employee Benefits
(Revised) in the relevant reporting period.
Recycling of revaluation reserves
The 2013 first half Statement of Comprehensive Income and the Statement of Changes in Equity have been re-presented to
disclose the recycling of the revaluation reserves in other comprehensive income. This was previously shown within the
Statement of Changes in Equity.
Segmental analysis
The 2013 first half and full-year segmental analysis has been re-presented to include the net non-recourse borrowings
directly attributable to Infrastructure Investments within the Infrastructure Investments segment. All other net debt is
classified within Corporate activities.
2 Exchange rates
The following key exchange rates were applied in these financial statements.
Average rates
£1 buys 2014 2013 2013 28 June 2013 - 27 June 2014 % change 31 Dec 2013-27 June 2014 % change
first half unaudited first half unaudited yearaudited
US$ 1.67 1.54 1.57 8.4% 6.4%
Euro 1.22 1.18 1.18 3.4% 3.4%
Closing rates
£1 buys 2014 2013 2013 28 June 2013 - 27 June 2014 % change 31 Dec 2013-27 June 2014 % change
first half unaudited first half unaudited yearaudited
US$ 1.70 1.52 1.65 11.8% 3.0%
Euro 1.25 1.17 1.20 6.8% 4.2%
3 Segment analysis
Reportable segments of the Group
· Professional Services - the provision of project management, architectural, design or other technical services
performed by the Group as a consultant.
· 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 refurbishments.
· Infrastructure Investments - acquisition, operation and disposal of infrastructure assets such as PPP concessions,
student accommodation and airports.
3.1 Income statement - performance by activity from continuing operations
For the half-year ended 27 June 2014 unaudited Professional Services Construction Support Services Infrastructure Investments Corporate Total
£m Services £m £m activities £m
£m £m
Revenue including share of joint ventures and associates 802 3,163 615 271 - 4,851
Share of revenue of joint ventures and associates (8) (510) (12) (147) - (677)
Group revenue 794 2,653 603 124 - 4,174
Underlying group operating profit/(loss) 1 26 (79) 22 40 (14) (5)
Share of results of joint ventures and associates - 10 - 32 - 42
Underlying profit/(loss) from operations 1 26 (69) 22 72 (14) 37
Non-underlying items
- amortisation of acquired intangible assets (5) (2) - (3) - (10)
- other non-underlying items - Group (2) (4) (4) - - (10)
- other non-underlying items - joint ventures and associates - (1) - - - (1)
Profit/(loss) from operations 19 (76) 18 69 (14) 16
Investment income 30
Finance costs (45)
Profit before taxation 1
1 Before non-underlying items (Note 7).
3.1 Income statement - performance by activity from continuing operations continued
For the half-year ended 28 June 2013 unaudited Professional Services Construction Support Infrastructure Investments Corporate Total 2
£m Services 2 Services £m activities £m
£m £m £m
Revenue including share of joint ventures and associates 870 3,140 648 295 3 4,956
Share of revenue of joint ventures and associates (8) (433) (18) (186) - (645)
Group revenue 862 2,707 630 109 3 4,311
Underlying group operating profit/(loss)1 26 (52) 16 47 (13) 24
Share of results of joint ventures and associates - 13 1 16 - 30
Underlying profit/(loss) from operations1 26 (39) 17 63 (13) 54
Non-underlying items
- amortisation of acquired intangible assets (6) (6) - (4) - (16)
- other non-underlying items (14) (10) (8) - (3) (35)
Profit/(loss) from operations 6 (55) 9 59 (16) 333
Investment income
Finance costs
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