REG - Balfour Beatty PLC - RESULTS FOR THE HALF-YEAR ENDED 27 JUNE 2014 <Origin Href="QuoteRef">BALF.L</Origin> - Part 4
29/10/2014 11:41
- Part 4: For the preceding part double click ID:nRSK7414Oc
(50) (4) (54) (51) 12 (39)
Taxation on non-underlying items 6 6 1 - 1 1 1 2
Non-underlying (loss)/profit after tax (27) (24) (49) (4) (53) (50) 13 (37)
(Loss)/profit for the year from discontinued operations (41) (38) (73) 4 (69) (80) 29 (51)
^ Includes £3m gain relating to UK facilities management. Refer to Note 19.2.
1 Before non-underlying items (Note 7).
2 Re-presented to classify Rail Italy as a discontinued operation.
Major classes of assets and liabilities included within discontinued operations held for sale Rail disposal group2014first half Rail disposal group2013first half UK facilities management disposal group 2013 Total discontinued operations2013first half Rail disposal group2013year
unaudited £m unaudited £m first half unaudited £m audited £m
unaudited £m
Non-current assets
Intangible assets - goodwill 4 - 64 64 -
- other 1 3 6 9 2
Property, plant and equipment 27 40 4 44 42
Investments in joint ventures and associates 7 8 8 16 8
Trade and other receivables - 3 3 6 -
Retirement benefit assets - - 8 8 -
Deferred tax assets - - 1 1 -
39 54 94 148 52
Current assets
Inventories and non-construction work in progress 13 16 25 41 13
Due from construction contract clients 67 100 - 100 73
Trade and other receivables 61 71 121 192 74
Current tax assets 1 - - - -
Cash 24 16 - 16 19
166 203 146 349 179
Total assets classified as held for sale 205 257 240 497 231
Current liabilities
Due to construction contract clients (30) (44) - (44) (47)
Trade and other payables (109) (122) (108) (230) (120)
Provisions (8) (7) (2) (9) (10)
Current tax liabilities (3) (2) (7) (9) (3)
(150) (175) (117) (292) (180)
Non-current liabilities
Trade and other payables (3) (5) (7) (12) (4)
Provisions - (4) (1) (5) (3)
Borrowings (1) - - - -
Retirement benefit liabilities (23) (31) - (31) (30)
Deferred tax liabilities (2) (3) - (3) (2)
(29) (43) (8) (51) (39)
Total liabilities classified as held for sale (179) (218) (125) (343) (219)
Net assets of disposal group 26 39 115 154 12
Included within the Group's cash flow for the period ended 27 June 2014 are: net £21m operating cash outflows (2013: first
half £38m 2, full-year £18m 2); net £8m investing cash outflows (2013: first half £8m 2, full-year £10m 2); and net £1m
financing cash outflows (2013: first half £1m 2, full-year £1m 2) relating to the Rail disposal group. Included within
the Group's cash flow for the period ended 27 June 2014 are: net £6m operating cash outflows (2013: first half £5m inflow,
full-year £7m inflow); and net £nil investing cash inflows (2013: first half £7m outflows, full-year £139m inflows)
relating to the UK facilities management disposal group.
2 Re-presented to classify Rail Italy as a discontinued operation.
10 Earnings/(loss) per ordinary share
2014 first half unaudited 2013 first half unaudited 2 2013 year audited 2
Earnings/(loss) Basic Diluted Basic £m Diluted £m Basic£m Diluted£m
£m £m
Continuing operations
Earnings 11 11 10 10 16 16
Amortisation of acquired intangible assets net of tax 7 7 11 11 21 21
Other non-underlying items net of tax 9 9 24 24 99 99
Underlying earnings 27 27 45 45 136 136
Discontinued operations
Loss (38) (38) (69) (69) (51) (51)
Amortisation of acquired intangible assets net of tax - - 1 1 2 2
Other non-underlying items net of tax 24 24 52 52 35 35
Underlying loss (14) (14) (16) (16) (14) (14)
Total operations
Loss (27) (27) (59) (59) (35) (35)
Amortisation of acquired intangible assets net of tax 7 7 12 12 23 23
Other non-underlying items net of tax 33 33 76 76 134 134
Underlying earnings 13 13 29 29 122 122
Basic Diluted Basic Diluted Basic Diluted
m m m m m m
Weighted average number of ordinary shares 686 687 685 685 685 686
Earnings/(loss) per share Basic Diluted Basicpence Dilutedpence Basicpence Dilutedpence
pence pence
Continuing operations
Earnings per ordinary share 1.6 1.6 1.5 1.5 2.5 2.5
Amortisation of acquired intangible assets net of tax 1.0 1.0 1.6 1.6 3.0 3.0
Other non-underlying items net of tax 1.3 1.3 3.5 3.5 14.4 14.4
Underlying earnings per ordinary share 3.9 3.9 6.6 6.6 19.9 19.9
Discontinued operations
Loss per ordinary share (5.5) (5.5) (10.1) (10.1) (7.6) (7.6)
Amortisation of acquired intangible assets net of tax - - 0.2 0.2 0.3 0.3
Other non-underlying items net of tax 3.5 3.5 7.6 7.6 5.2 5.2
Underlying loss per ordinary share (2.0) (2.0) (2.3) (2.3) (2.1) (2.1)
Total operations
Loss per ordinary share (3.9) (3.9) (8.6) (8.6) (5.1) (5.1)
Amortisation of acquired intangible assets net of tax 1.0 1.0 1.8 1.8 3.3 3.3
Other non-underlying items net of tax 4.8 4.8 11.1 11.1 19.6 19.6
Underlying earnings per ordinary share 1.9 1.9 4.3 4.3 17.8 17.8
2 Re-presented to classify Rail Italy as a discontinued operation (Note 9).
11 Dividends on ordinary shares
2014 first half unaudited 2013 first half unaudited 2013 year audited
Per share Amount Per share Amount Per share Amount
pence £m pence £m pence £m
Proposed dividends for the period
Interim 2013 - - 5.6 38 5.6 38
Final 2013 - - - - 8.5 58
Interim 2014 5.6 38 - - - -
5.6 38 5.6 38 14.1 96
Recognised dividends for the period
Final 2012 - 58 58
Interim 2013 - - 38
Final 2013 58 - -
58 58 96
The interim 2014 dividend will be paid on 5 December 2014 to holders on the register on 10 October 2014 by direct credit
or, where no mandate has been given, by cheque posted on 4 December 2014 payable on 5 December 2014. The ordinary shares
will be quoted ex-dividend on 9 October 2014.
2014 2013 2013
first half first half year
unaudited unaudited audited
£m £m £m
Dividends on ordinary shares 58 58 96
Other dividends to non-controlling interests - - 1
Total recognised dividends for the period 58 58 97
12 Intangible assets - goodwill
Cost£m Accumulated impairment Carrying amount£m
losses
£m
At 1 January 2013 audited 1,299 (139) 1,160
Currency translation differences 53 (8) 45
Impairment charges in respect of Mainland European rail business (Note 7) - (38) (38)
Reclassified to assets held for sale (137) 137 -
Reclassified to assets held for sale and subsequently sold (64) - (64)
At 28 June 2013 unaudited 1,151 (48) 1,103
Currency translation differences (62) 8 (54)
Currency translation differences - on assets reclassified as held for sale 3 (3) -
Business acquired - prior year (1) - (1)
At 31 December 2013 audited 1,091 (43) 1,048
Currency translation differences (21) 2 (19)
Impairment charges in respect of Mainland European rail business (Note 7) - (20) (20)
Reclassified to assets held for sale (Note 9) (24) 20 (4)
At 27 June 2014 unaudited 1,046 (41) 1,005
13 Trade and other receivables
2014 2013 2013
first half first half year
unaudited unaudited audited
£m £m £m
Current
Trade receivables 884 912 827
Less: Provision for impairment of trade receivables (25) (20) (26)
859 892 801
Other receivables 83 70 76
Due from joint ventures and associates 31 30 28
Due from jointly controlled operations 6 2 3
Contract retentions receivable ^ 190 204 198
Accrued income 30 22 21
Prepayments 65 56 47
Due on acquisitions 15 - 16
Due on disposals 56 - -
1,335 1,276 1,190
Non-current
Trade receivables 2 2 2
Other receivables 6 9 2
Due from joint ventures and associates 11 5 11
Contract retentions receivable ^ 103 82 98
Due from jointly controlled operations 1 - -
Due on acquisitions - 17 -
123 115 113
1,458 1,391 1,303
Comprising
Financial assets 1,393 1,335 1,256
Non-financial assets - prepayments 65 56 47
1,458 1,391 1,303
^ Include £290m (2013: first half £284m; full-year £295m) construction contract retentions receivable.
Based on prior experience, an assessment of the current economic environment and a review of the financial circumstances of
individual clients, 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 £117m (2013: first half £110m, full-year £108m) 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
2014 2013 2013
first half first half year
unaudited unaudited audited
£m £m £m
Current
Trade payables and other payables 974 930 857
Accruals 988 1,096 1,044
Deferred income 9 15 6
Advance payments on contracts * 11 20 14
VAT, payroll taxes and social security 80 98 115
Due to joint ventures and associates - 15 1
Dividends on preference shares 5 5 5
Dividends on ordinary shares 58 58 -
Due on acquisitions 3 5 4
2,128 2,242 2,046
Non-current
Trade and other payables 103 90 112
Accruals 32 15 20
Deferred income 1 2 7
Due to joint ventures and associates 27 25 27
Due on acquisitions 14 17 16
177 149 182
2,305 2,391 2,228
Comprising
Financial liabilities 2,156 2,277 2,025
Non-financial liabilities 149 114 203
2,305 2,391 2,228
* Include £8m (2013: first half £15m; full-year £11m) 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 £149m (2013: first half £125m, full-year £148m) 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 2013 audited 217 280 45 542
Income recognised in the income statement
- construction contract margin - 1 - 1
- interest income (Note 5) 6 8 2 16
Losses recognised in the statement of comprehensive income
- fair value movements (10) (14) - (24)
Other movements
- cash expenditure - 18 9 27
- cash received (9) (14) (2) (25)
At 28 June 2013 unaudited 204 279 54 537
Income recognised in the income statement
- interest income (Note 5) 6 9 2 17
(Losses)/gains recognised in the statement of comprehensive income
- fair value movements (4) (7) 10 (1)
Other movements
- cash expenditure - 22 13 35
- cash received (10) (11) (13) (34)
- disposal of interest in CNDR - (99) - (99)
At 31 December 2013 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- disposal of interest in Knowsley (8)(197) (10)- (2)- (20)(197)
At 27 June 2014 unaudited - 216 71 287
16 Retirement benefit liabilities
Principal actuarial assumptions for the IAS 19 accounting valuations of the Group's principal schemes 2014 2013 2013year
first half first half audited %
unaudited unaudited
% %
Discount rate on obligations 4.20 4.60 4.35
Inflation rate - RPI 3.25 3.30 3.30
- CPI 2.05 2.30 2.10
Future increases in pensionable salary - certain members of the Balfour Beatty Pension Fund that have a protected right to a defined benefit membership 2.05 2.30 2.10
- other members - 4.80 -
- Railways Pension Scheme 2.05 2.30 2.10
Amounts recognised in the Balance Sheet 2014 2013 2013
first half first half year
unaudited unaudited 4 audited
£m £m £m
Present value of obligations (3,287) (3,133) (3,229)
Fair value of plan assets 2,890 2,788 2,795
Liability in the Balance Sheet (397) (345) (434)
4 Restated to reflect the effects of IAS 19 Employee Benefits (Revised).
Analysis of liability 2014 2013 2013
first half first half year
unaudited unaudited 4 audited
£m £m £m
Balfour Beatty Pension Fund (284) (238) (323)
Railways Pension Scheme (39) (33) (38)
Other schemes * (74) (74) (73)
Liability in the Balance Sheet (397) (345) (434)
* Available-for-sale investments in mutual funds of £61m (2013: first half £59m, full-year £60m) are held by the Group to
satisfy the Group's deferred compensation obligations.
4 Restated to reflect the effects of IAS 19 Employee Benefits (Revised).
Movement in retirement benefit liabilities for the period 2014 2013 2013
first half first half year
unaudited unaudited 2, 4 audited 2£m
£m £m
At beginning of period (434) (333) (333)
Currency translation differences 1 (6) 1
Current service cost from continuing operations (5) (20) (30)
Curtailment cost - ceasing future accrual - - (51)
- restructuring - (1) (1)
Net finance cost - continuing operations (8) (6) (9)
Actuarial movements - on obligations from reassessing the difference between RPI and CPI - 38 74
- on obligations from other financial actuarial movements (58) (62) (135)
- on obligations from a change in the demographic assumptions - - (28)
- on obligations from experience adjustments (9) (1) 16
- on assets 85 (30) (44)
Contributions from employer - regular funding 2 15 23
- ongoing deficit funding - continuing operations 25 32 50
- ongoing deficit funding - discontinued operations - 1 2
- conditional deficit funding - 4 7
Contributions from members - - (1)
Benefits paid 3 5 8
Total defined benefit charges charged to income statement - discontinued operations - (4) (11)
Reclassified to liabilities held for sale 1 31 30
Reclassified to assets held for sale and subsequently sold - (8) (2)
At end of period (397) (345) (434)
2 Re-presented to classify Rail Italy as a discontinued operation (Note 9).
4 Restated to reflect the effects of IAS 19 Employee Benefits (Revised).
The investment strategy of the Balfour Beatty Pension Fund (BBPF) and the sensitivity analysis of the Group's retirement
benefit obligations and assets to different actuarial assumptions are set out in Note 28 on pages 129 to 130 and 134 of the
Annual Report and Accounts 2013.
A formal triennial funding valuation of the BBPF was carried out as at 31 March 2013. As a result the Group agreed with
effect from April 2013 to make revised total deficit payments of £50m per annum, increasing to: £55m per annum from April
2016; £60m per annum from April 2017; and £65m per annum from April 2018 to May 2020, increasing each year by CPI (minimum
0% and capped at 5%) plus 200% of any increase in the Company's dividend in excess of capped CPI. If the Company makes any
one-off return of value to shareholders such as a special dividend, share buy-back, capital payment or similar before the
next actuarial valuation is agreed, there will be an additional increase in the deficit payment for the following year
only, calculated as the regular deficit payment for that year multiplied by 75%, multiplied by the value of the one-off
return of value, divided by the total of the regular dividends for the year in which the one-off return was made. The
Group has the ability to use surplus funds in the defined benefit section of the BBPF to pay its contributions towards
future service benefits in the defined benefit and defined contribution sections of the scheme.
On 31 August 2013 the majority of members of the BBPF ceased to accrue future defined benefits and became deferred members
resulting in a curtailment charge of £53m, recognised as a non-underlying item, of which £2m related to discontinued
operations. During 2013 various group restructurings resulted in an additional £1m curtailment charge.
17 Share capital
During the half-year ended 27 June 2014, 73,862 ordinary shares were issued following the exercise of savings-related share
options and 318,840 ordinary shares were issued following the exercise of executive share options for an aggregate cash
consideration of £0.9m.
During the half-year ended 27 June 2014, 538,075 ordinary shares were purchased for £1.6m by the Group's employee
discretionary trust to satisfy awards under the Balfour Beatty Performance Share Plan and the Balfour Beatty Deferred Bonus
Plan.
18 Notes to the Statement of Cash Flows
18.1 Cash (used in)/generated from operations
Continuing operations
Underlying items 2014first halfunaudited Non-underlying Items(Note 7) 2014first halfunaudited Discontinued operations2014first halfunaudited Total2014first halfunaudited Total2013first halfunaudited 2 Total2013
£m £m £m £m £m yearaudited 2£m
Profit/(loss) from continuing operations 37 (21) - 16 3 46
Loss from discontinued operations - - (42) (42) (65) (44)
Share of results of joint ventures and associates - continuing operations (42) 1 - (41) (30) (71)
Dividends received - discontinued operations - - - - - (1)
Depreciation of property, plant and equipment 23 - - 23 31 56
Amortisation of other intangible assets 4 10 - 14 20 35
Pension deficit payments
- ongoing deficit funding (25) - - (25) (33) (52)
- conditional deficit funding - - - - (4) (7)
Pension curtailment cost - ceasing future accrual - - - - - 53
Pension curtailment cost - restructuring - - - - 1 1
Movements relating to share-based payments 4 - - 4 4 6
Gain on disposal of interests in investments (51) - - (51) (45) (82)
Loss/(profit) on disposal of property, plant and equipment 1 - - 1 (5) (6)
Contingent consideration for acquisitions - - - - (4) (4)
Net (gain)/loss on disposal of other businesses - - (4) (4) 4 (11)
Goodwill impairment in respect of Mainland European rail businesses - - 20 20 38 38
IFRS 5 impairment charge in respect of Mainland European rail businesses - - 10 10 - -
Other non-cash items - - - - 2 (1)
Operating cash flows before movements in working capital (49) (10) (16) (75) (83) (44)
Increase in operating working capital (191) (15) (5) (211) (153) (118)
Due from construction contract clients (103) - 4 (99) (99) (81)
Due to construction contract clients (11) - (15) (26) 10 33
Inventories and non-construction work in progress (19) (5) (2) (26) (16) 2
Trade and other receivables (140) - 10 (130) (215) (192)
Trade and other payables 78 1 1 80 179 148
Provisions 4 (11) (3) (10) (12) (28)
Cash used in operations (240) (25) (21) (286) (236) (162)
2 Re-presented to classify Rail Italy as a discontinued operation (Note 9).
18.2 Cash and cash equivalents 2014first half 2013first half 2013year
unaudited£m unaudited£m audited £m
Cash and deposits 362 481 472
Term deposits 49 50 67
Bank overdrafts (27) - (78)
Non-PPP cash and cash equivalents 384 531 461
PPP cash balances 46 31 65
430 562 526
18.3 Analysis of net cash/(borrowings)
2014first half 2013first half 2013year
unaudited£m unaudited£m audited £m
Non-PPP cash and cash equivalents 384 531 461
Finance leases (2) (3) (3)
US private placement loans (206) (231) (212)
Liability component of convertible bonds (224) - (221)
Loans under committed facilities expiring in more than one year (262) (485) -
Other short-term loans (77) (1) (91)
(387) (189) (66)
PPP cash and cash equivalents 46 31 65
PPP term deposits greater than three months - 2 -
PPP non-recourse project finance loans with final maturity between 2027 and 2037 (270) (413) (419)
(224) (380) (354)
Net borrowings (611) (569) (420)
18.4 Analysis of movement in net (borrowings)/cash PPP2014 Other2014 2014 2013first halfunaudited£m 2013
first halfunaudited first halfunaudited first half yearaudited£m
£m £m unaudited £m
Opening net borrowings (354) (66) (420) (333)
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