REG - Galliford Try PLC - Half-year Report <Origin Href="QuoteRef">GFRD.L</Origin> - Part 2
14/02/2018 07:05
- Part 2: For the preceding part double click ID:nRSN8004Ea
deficit payments and changes in working capital 55.1 69.2 62.2
Deficit funding payments to pension schemes (4.0) (3.6) (6.4)
Net cash generated from operations before changes in working capital 51.1 65.6 55.8
Decrease /(increase) in inventories 0.2 (0.6) (0.5)
(Increase)/decrease in developments (75.5) (26.4) 107.3
Decrease/(increase) in trade and other receivables 19.3 (74.8) (118.9)
(Decrease)/increase in trade and other payables (15.2) (2.3) 85.5
Net cash (used in)/generated from operations (20.1) (38.5) 129.2
Interest received 5 4.8 1.8 5.3
Interest paid 5 (8.4) (7.2) (15.3)
Income tax paid (3.7) (7.2) (12.9)
Net cash (used in)/generated from operating activities (27.4) (51.1) 106.3
Cash flows from investing activities
Dividends received from joint ventures 2.1 7.0 7.4
Acquisition of PPP and other investments (4.1) (7.2) (8.6)
Proceeds from PPP and other investments 5.1 - 0.5
Proceeds from disposal of subsidiary - - 2.6
Acquisition of property, plant and equipment (1.4) (5.1) (5.1)
Business combinations (12.7) - (12.8)
(Debt) acquired with acquired subsidiary undertakings - - (2.8)
Proceeds from sale of property, plant and equipment 0.3 - 0.7
Net cash used in investing activities (10.7) (5.3) (18.1)
Cash flows from financing activities
Net proceeds from issue of ordinary share capital - - 0.1
Purchase of own shares (0.9) (1.7) (2.0)
Increase/(decrease) in borrowings 0.1 (19.1) 23.9
Net dividends paid to Company shareholders (52.6) (46.4) (72.8)
Net cash used in financing activities (53.4) (67.2) (50.8)
Net (decrease)/increase in cash and cash equivalents (91.5) (123.6) 37.4
Cash and cash equivalents at beginning of period 203.7 166.3 166.3
Cash and cash equivalents at end of period 12 112.2 42.7 203.7
Notes to the condensed consolidated half year financial statements
for the half year ended 31 December 2017 (unaudited)
1 Basis of preparation
The Company is a public limited company incorporated in England and Wales and
domiciled in the UK. The address of its registered office is Cowley Business
Park, Cowley, Uxbridge, Middlesex, UB8 2AL. The Company has its primary
listing on the London Stock Exchange. This condensed consolidated half year
financial information was approved for issue on 14 February 2018.
This condensed consolidated half year financial information does not comprise
statutory financial statements within the meaning of Section 434 of the
Companies Act 2006. Statutory financial statements for the year ended 30 June
2017 were approved by the board of directors on 13 September 2017 and
delivered to the Registrar of Companies. The report of the auditors on those
financial statements was unqualified, did not contain an emphasis of matter
paragraph and did not contain any statement under Section 498 of the Companies
Act 2006.
This condensed consolidated half year financial information has been reviewed,
not audited. The auditors' review opinion is included in this report.
This condensed consolidated half year financial information for the half year
ended 31 December 2017 has been prepared in accordance with the Disclosure
Guidance and Transparency Rules of the Financial Conduct Authority and with
IAS 34, "Interim financial reporting" as adopted by the European Union. The
condensed consolidated half year financial information should be read in
conjunction with the annual financial statements for the year ended 30 June
2017, which have been prepared in accordance with IFRSs as adopted by the
European Union.
The Group's activities, together with the factors likely to affect the future
development, performance and position of the business are set out in this half
year report. The annual financial statements for the year ended 30 June 2017
included the Group's objectives, policies and processes for managing capital,
its financial risk management objectives, details of its financial instruments
and hedging activities and its exposure to credit risk and liquidity risk.
The Group meets its day to day working capital requirements through its bank
and other debt facilities. The Group's forecasts, taking into account the
board's future expectations of the Group's performance, indicate that there is
substantial headroom within the bank facilities and the Group will continue to
operate within the covenants of those facilities.
- Part 2: For the preceding part double click ID:nRSN8004Ea
- (4.0) - (92.5)
Group revenue 355.9 215.9 504.1 319.5 823.6 6.7 0.4 1,402.5
Segment result:
Pre-exceptional profit/(loss) from operations before share of joint ventures' 66.1 10.2 3.0 4.2 7.2 2.0 (6.3) 79.2
profit
Share of joint ventures' profit 14.8 0.6 - - - 0.1 - 15.5
Pre-exceptional profit/(loss) from operations * 80.9 10.8 3.0 4.2 7.2 2.1 (6.3) 94.7
Exceptional items (see note 4) - - - (25.0) (25.0) - - (25.0)
Share of joint ventures' interest and tax (7.0) (0.2) - - - (0.1) - (7.3)
Profit/(loss) before finance costs, amortisation and taxation 73.9 10.6 3.0 (20.8) (17.8) 2.0 (6.3) 62.4
Finance income 4.2 0.6 - - - - - 4.8
Finance costs (20.6) (2.7) - (1.6) (1.6) (0.5) 16.2 (9.2)
Profit/(loss) before amortisation and taxation 57.5 8.5 3.0 (22.4) (19.4) 1.5 9.9 58.0
Amortisation of intangibles - (0.7) (0.5) - (0.5) - (0.5) (1.7)
Profit before taxation 57.5 7.8 2.5 (22.4) (19.9) 1.5 9.4 56.3
Income tax expense (9.8)
Profit for the period 46.5
Half year ended 31 December 2016
Construction
Linden Partnerships & Regeneration Building Infrastructure Total PPP Central Total
Homes £m £m £m £m Investments £m £m
£m £m
Group revenue and share of joint ventures' revenue 407.6 144.3 492.2 249.8 742.0 12.8 0.9 1,307.6
Share of joint ventures' revenue (53.0) (9.4) (0.5) - (0.5) (9.4) - (72.3)
Group revenue 354.6 134.9 491.7 249.8 741.5 3.4 0.9 1,235.3
Segment result:
Profit/(loss) from operations before share of joint ventures' profit 66.1 3.6 1.4 1.2 2.6 (0.2) (7.0) 65.1
Share of joint ventures' profit 8.2 1.3 0.1 - 0.1 - - 9.6
Profit/(loss) from operations * 74.3 4.9 1.5 1.2 2.7 (0.2) (7.0) 74.7
Share of joint ventures' interest and tax (3.2) (0.4) - - - (0.1) - (3.7)
Profit/(loss) before finance costs, amortisation and taxation 71.1 4.5 1.5 1.2 2.7 (0.3) (7.0) 71.0
Finance income 1.2 0.3 - 0.2 0.2 - 0.1 1.8
Finance costs (22.4) (1.2) (0.2) (0.1) (0.3) (0.4) 16.0 (8.3)
Profit/(loss) before amortisation and taxation 49.9 3.6 1.3 1.3 2.6 (0.7) 9.1 64.5
Amortisation of intangibles (0.5) - (0.5) - (0.5) - (0.5) (1.5)
Profit before taxation 49.4 3.6 0.8 1.3 2.1 (0.7) 8.6 63.0
Income tax expense (12.0)
Profit for the period 51.0
Year ended 30 June 2017 (audited)
Construction
Linden Partnerships & Regeneration Building Infrastructure Total PPP Central Total
Homes £m £m £m £m Investments £m £m
£m £m
Pre-exceptional Group revenue and share of joint ventures' revenue 937.4 330.2 1,014.1 555.2 1,569.3 25.0 0.7 2,862.6
Exceptional items (note 4) - - - (42.4) (42.4) - - (42.4)
Group revenue and share of joint ventures' revenue 937.4 330.2 1,014.1 512.8 1,526.9 25.0 0.7 2,820.2
Share of joint ventures' revenue (132.6) (10.8) (0.8) - (0.8) (13.9) - (158.1)
Group revenue 804.8 319.4 1,013.3 512.8 1,526.1 11.1 0.7 2,662.1
Segment result:
Pre-exceptional profit/(loss) from operations before share of joint ventures' 148.9 14.0 (12.1) 11.1 (1.0) 2.3 (15.5) 148.7
profit
Share of joint ventures' profit 21.4 0.9 0.1 - 0.1 0.1 - 22.5
Pre-exceptional profit/(loss) from operations * 170.3 14.9 (12.0) 11.1 (0.9) 2.4 (15.5) 171.2
Exceptional items (note 4) - - - (87.9) (87.9) - (1.0) (88.9)
Share of joint ventures' interest and tax (8.0) (0.4) - - - (0.1) - (8.5)
Profit/(loss) before finance costs, amortisation and taxation 162.3 14.5 (12.0) (76.8) (88.8) 2.3 (16.5) 73.8
Finance income 4.2 0.7 - 0.2 0.2 - 0.2 5.3
Finance costs (44.5) (3.1) (0.2) (0.8) (1.0) (0.8) 32.2 (17.2)
Profit/(loss) before amortisation and taxation 122.0 12.1 (12.2) (77.4) (89.6) 1.5 15.9 61.9
Amortisation of intangibles (0.9) (0.2) (1.0) - (1.0) - (1.1) (3.2)
Profit before taxation 121.1 11.9 (13.2) (77.4) (90.6) 1.5 14.8 58.7
Income tax expense (10.0)
Profit for the year 48.7
* Pre-exceptional profit from operations is stated before finance costs,
amortisation, exceptional items, share of joint ventures' interest and tax and
taxation.
Inter-segment revenue, which is priced on an arm's length basis, is eliminated
from Group revenue above. In the half year to 31 December 2017 this amounted
to £38.6m (31 December 2016: £46.9m; 30 June 2017: £84.7m) of which £9.6m
(31 December 2016: £18.4m; 30 June 2017: £28.0m) was in Building, £17.9m
(31 December 2016: £16.9m; 30 June 2017: £33.3m) was in Infrastructure, and
£11.1m (31 December 2016: £11.6m; 30 June 2017: £1.3m) was in central
costs.
Half year ended 31 December 2017
Construction
Linden Partnerships & Regeneration Building Infrastructure Total PPP Central Total
Homes £m £m £m £m Investments £m £m
£m £m
Balance Sheet
Goodwill and intangible assets 52.5 35.1 46.1 37.2 83.3 - 6.5 177.4
Working capital employed 660.2 70.0 (98.7) 32.5 (66.2) 23.7 (213.2) 474.5
Net (debt)/cash (560.6) (57.2) 110.2 (65.7) 44.5 (13.7) 502.1 (84.9)
Net assets 152.1 47.9 57.6 4.0 61.6 10.0 295.4 567.0
Total Group liabilities (2,741.9)
Total Group assets 3,308.9
Half year ended 31 December 2016 (Restated - note 2) Construction
Linden Partnerships & Regeneration Building Infrastructure Total PPP Investments Central Total
Homes £m £m £m £m £m £m £m
£m
Balance Sheet
Goodwill and intangible assets 52.9 5.9 47.2 37.2 84.4 - 7.4 150.6
Working capital employed 681.9 55.8 (92.7) (10.4) (103.1) 21.6 (94.9) 561.3
Net (debt)/cash (620.4) (26.9) 102.3 8.5 110.8 (14.5) 437.2 (113.8)
Net assets 114.4 34.8 56.8 35.3 92.1 7.1 349.7 598.1
Total Group liabilities (2,470.4)
Total Group assets 3,068.5
Year ended 30 June 2017 (audited) Construction
Linden Partnerships & Regeneration Building Infrastructure Total PPP Investments Central Total
Homes £m £m £m £m £m £m £m
£m
Balance Sheet
Goodwill and intangible assets 52.5 35.8 46.6 37.2 83.8 - 7.0 179.1
Working capital employed 619.9 44.9 (122.9) (20.6) (143.5) 20.6 (152.7) 389.2
Net cash/(debt) (500.8) (39.3) 131.9 5.5 137.4 (11.8) 421.7 7.2
Net assets 171.6 41.1 55.6 22.1 77.7 8.8 276.0 575.5
Total Group liabilities (2,468.5)
Total Group assets 3,044.0
4 Exceptional items
Group Half year to Half year to Year to 30 June 2017
31 December 2017 31 December 2016 (audited)
£m £m £m
Group revenue - charge on legacy contracts - - (42.4)
Cost of sales - charge on legacy contracts 25.0 - (45.5)
Administrative expenses - abortive merger costs - - (1.0)
Loss from operations 25.0 - (88.9)
In light of the compulsory liquidation of Carillion and the impact on our
funding obligations in respect of the AWPR joint venture, we have reassessed
the out-turn position on the contract. The withdrawal of Carillion increases
our participation in both costs and estimated recovery claims, and we have
increased our provision accordingly, which we have shown as an exceptional
item.
Half year to
31 December 2017
£m
Profit before income tax 56.3
Charge on legacy contracts 25.0
Pre-exceptional profit before income tax 81.3
In May 2017, the Group released an update in respect of Group trading and
legacy contracts in Construction. This indicated that following a thorough
reappraisal of the costs to complete and recoveries from these contracts, it
was established that there was an increased anticipated liability to conclude
these contracts and consequently, a one-off charge of £98.3m had been
incurred, of which approximately 80% was related to two major infrastructure
joint venture projects (contracted in 2014 and earlier). One of these projects
is largely practically complete, while the other, which represents the larger
proportion of the estimated charge, is scheduled to complete in mid-2018. A
charg
After making enquiries, the directors have a reasonable expectation that the
Group has adequate resources to continue in operational existence for the
foreseeable future. Accordingly, they continue to adopt the going concern
basis in preparing the condensed consolidated half year financial
information.
The preparation of interim financial statements requires management to make
judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets and liabilities, income
and expense. Actual results may differ from these estimates. In preparing
these condensed interim financial statements, the significant judgements made
by management in applying the Group's accounting policies and the key sources
of estimation uncertainty were the same as those that applied to the
consolidated financial statements for the year ended 30 June 2017.
2 Accounting policies
Except as described below, the accounting policies applied are consistent with
those of the annual financial statements for the year ended 30 June 2017.
(i) Taxes on income in the interim periods are accrued using the tax rate
that would be applicable to expected annual earnings.
As announced in the annual financial statements for the year ended 30 June
2017, in 2016 the IFRS Interpretations Committee released an update in respect
of IAS32 'Financial instruments: presentation' specifically in relation to
offsetting and cash pooling. This clarified that in order to offset bank
account balances, an entity must have both a legally enforceable right and an
intention to do so. As the Group maintains separate bank accounts with both
cash and overdrawn balances, the Group's consolidated financial statements
have been prepared without offsetting these balances with positive cash
balances included within cash and cash equivalents (see note 12) and overdrawn
balances included within financial liabilities - current borrowings. On a
consistent basis with this presentation at 31 December 2017, we have increased
both cash and cash equivalents and bank overdrafts by £942.2m at 30 June 2017.
The Group has restated its 31 December 2016 financial statements with the cash
and cash equivalent and bank overdrafts balances increasing by £1,084.3m.
3 Segmental reporting
Segmental reporting is presented in the condensed consolidated half year
financial statements in respect of the Group's business segments, which are
the primary basis of segmental reporting. The business segmental reporting
reflects the Group's management and internal reporting structure. Segmental
results include items directly attributable to the segment as well as those
that can be allocated on a reasonable basis. As the Group has no material
activities outside the UK, segment reporting is not required by geographical
region.
The chief operating decision-makers ("CODM") have been identified as the
Group's Chief Executive and Finance Director. The CODM review the Group's
internal reporting in order to assess performance and allocate resources.
Management has determined the operating segments as Linden Homes; Galliford
Try Partnerships and Regeneration; Construction, including Building and
Infrastructure; and PPP Investments.
The CODM assess the performance of the operating segments based on a measure
of adjusted earnings before finance costs, amortisation, exceptional items and
taxation. This measurement basis excludes the effects of non-recurring
expenditure from the operating segments, such as restructuring costs and
impairments when the impairment is the result of an isolated, non-recurring
event. Interest income and expenditure are included in the result for each
operating segment that is reviewed by the CODM. Other information provided to
them is measured in a manner consistent with that in the financial
statements.
Primary reporting format - business segments
Half year ended 31 December 2017
Construction
LindenHomes£m Partnerships & Regeneration £m Building£m Infrastructure£m Total£m PPPInvestments£m Central£m Total£m
Group revenue and share of joint ventures' revenue 436.8 223.5 504.1 319.5 823.6 10.7 0.4 1,495.0
Share of joint ventures' revenue (80.9) (7.6) - - - (4.0) - (92.5)
Group revenue 355.9 215.9 504.1 319.5 823.6 6.7 0.4 1,402.5
Segment result:
Pre-exceptional profit/(loss) from operations before share of joint ventures' profit 66.1 10.2 3.0 4.2 7.2 2.0 (6.3) 79.2
Share of joint ventures' profit 14.8 0.6 - - - 0.1 - 15.5
Pre-exceptional profit/(loss) from operations * 80.9 10.8 3.0 4.2 7.2 2.1 (6.3) 94.7
Exceptional items (see note 4) - - - (25.0) (25.0) - - (25.0)
Share of joint ventures' interest and tax (7.0) (0.2) - - - (0.1) - (7.3)
Profit/(loss) before finance costs, amortisation and taxation 73.9 10.6 3.0 (20.8) (17.8) 2.0 (6.3) 62.4
Finance income 4.2 0.6 - - - - - 4.8
Finance costs (20.6) (2.7) - (1.6) (1.6) (0.5) 16.2 (9.2)
Profit/(loss) before amortisation and taxation 57.5 8.5 3.0 (22.4) (19.4) 1.5 9.9 58.0
Amortisation of intangibles - (0.7) (0.5) - (0.5) - (0.5) (1.7)
Profit before taxation 57.5 7.8 2.5 (22.4) (19.9) 1.5 9.4 56.3
Income tax expense (9.8)
Profit for the period 46.5
Half year ended 31 December 2016
Construction
LindenHomes£m Partnerships & Regeneration £m Building£m Infrastructure£m Total£m PPPInvestments£m Central£m Total£m
Group revenue and share of joint ventures' revenue 407.6 144.3 492.2 249.8 742.0 12.8 0.9 1,307.6
Share of joint ventures' revenue (53.0) (9.4) (0.5) - (0.5) (9.4) - (72.3)
Group revenue 354.6 134.9 491.7 249.8 741.5 3.4 0.9 1,235.3
Segment result:
Profit/(loss) from operations before share of joint ventures' profit 66.1 3.6 1.4 1.2 2.6 (0.2) (7.0) 65.1
Share of joint ventures' profit 8.2 1.3 0.1 - 0.1 - - 9.6
Profit/(loss) from operations * 74.3 4.9 1.5 1.2 2.7 (0.2) (7.0) 74.7
Share of joint ventures' interest and tax (3.2) (0.4) - - - (0.1) - (3.7)
Profit/(loss) before finance costs, amortisation and taxation 71.1 4.5 1.5 1.2 2.7 (0.3) (7.0) 71.0
Finance income 1.2 0.3 - 0.2 0.2 - 0.1 1.8
Finance costs (22.4) (1.2) (0.2) (0.1) (0.3) (0.4) 16.0 (8.3)
Profit/(loss) before amortisation and taxation 49.9 3.6 1.3 1.3 2.6 (0.7) 9.1 64.5
Amortisation of intangibles (0.5) - (0.5) - (0.5) - (0.5) (1.5)
Profit before taxation 49.4 3.6 0.8 1.3 2.1 (0.7) 8.6 63.0
Income tax expense (12.0)
Profit for the period 51.0
Year ended 30 June 2017 (audited)
Construction
LindenHomes£m Partnerships & Regeneration £m Building£m Infrastructure£m Total£m PPPInvestments£m Central£m Total£m
Pre-exceptional Group revenue and share of joint ventures' revenue 937.4 330.2 1,014.1 555.2 1,569.3 25.0 0.7 2,862.6
Exceptional items (note 4) - - - (42.4) (42.4) - - (42.4)
Group revenue and share of joint ventures' revenue 937.4 330.2 1,014.1 512.8 1,526.9 25.0 0.7 2,820.2
Share of joint ventures' revenue (132.6) (10.8) (0.8) - (0.8) (13.9) - (158.1)
Group revenue 804.8 319.4 1,013.3 512.8 1,526.1 11.1 0.7 2,662.1
Segment result:
Pre-exceptional profit/(loss) from operations before share of joint ventures' profit 148.9 14.0 (12.1) 11.1 (1.0) 2.3 (15.5) 148.7
Share of joint ventures' profit 21.4 0.9 0.1 - 0.1 0.1 - 22.5
Pre-exceptional profit/(loss) from operations * 170.3 14.9 (12.0) 11.1 (0.9) 2.4 (15.5) 171.2
Exceptional items (note 4) - - - (87.9) (87.9) - (1.0) (88.9)
Share of joint ventures' interest and tax (8.0) (0.4) - - - (0.1) - (8.5)
Profit/(loss) before finance costs, amortisation and taxation 162.3 14.5 (12.0) (76.8) (88.8) 2.3 (16.5) 73.8
Finance income 4.2 0.7 - 0.2 0.2 - 0.2 5.3
Finance costs (44.5) (3.1) (0.2) (0.8) (1.0) (0.8) 32.2 (17.2)
Profit/(loss) before amortisation and taxation 122.0 12.1 (12.2) (77.4) (89.6) 1.5 15.9 61.9
Amortisation of intangibles (0.9) (0.2) (1.0) - (1.0) - (1.1) (3.2)
Profit before taxation 121.1 11.9 (13.2) (77.4) (90.6) 1.5 14.8 58.7
Income tax expense (10.0)
Profit for the year e of £87.9m in respect of these two projects was classified as an
exceptional item, comprising all costs and provisions for those projects in
the year.
In March 2017, the Group announced that it had approached the Board of Bovis
Homes Group Plc (Bovis) and had proposed an all share merger
between Galliford Try plc and Bovis. Subsequently, in April 2017, the Group
announced that this proposal was no longer being considered. During
this period, £1.0m of professional fees were incurred in respect of the
proposal and these have been treated as an exceptional item.
5 Net finance costs
Group Half year to Half year to Year to 30 June 2017
31 December 2017 31 December 2016 (audited)
£m £m £m
Interest receivable on bank deposits - - 0.2
Interest receivable from joint ventures 4.7 1.7 4.9
Other 0.1 0.1 0.2
Finance income 4.8 1.8 5.3
Interest payable on borrowings (8.9) (7.8) (16.4)
Unwind of discounted payables (0.3) (0.5) (0.7)
Other - - (0.1)
Finance costs (9.2) (8.3) (17.2)
Net finance costs (4.4) (6.5) (11.9)
6 Income tax expenses
The taxation expense on pre-exceptional profit for the period of 17.9% (31
December 2016: 19.0%) reflects the estimated effective tax rate for the full
financial year to 30 June 2018.
7 Earnings per share
Basic and diluted earnings per share
Basic earnings per share is calculated by dividing the earnings attributable
to ordinary shareholders by the weighted average number of ordinary shares
outstanding during the year, excluding those held by the Employee Share Trust,
which are treated as cancelled.
Under normal circumstances, the average number of shares is diluted by
reference to the average number of potential ordinary shares held under option
in the period. The dilutive effects amounts to the number of ordinary shares
which would be purchased using the aggregate difference in value between the
market value of shares and the share option price. Only shares that have met
their cumulative performance criteria are included in the dilution
calculation. The Group has two classes of potentially dilutive ordinary
shares: those share options granted to employees where the exercise price is
less than the average market price of the Company's ordinary shares during the
year and the contingently issuable shares under the Group's long term
incentive plans. A loss per share cannot be reduced through dilution, hence
this dilution is only applied where the Group has reported a profit.
Half year to 31 December 2017 Half year to 31 December 2016 Year to 30 June 2017 (audited)
Earnings Weighted average number of shares Per share amount pence Earnings £m Weighted average number of shares Per share amount pence Earnings £m Weighted average number of shares Per share amount pence
£m
Basic EPS - pre-exceptional
Pre-exceptional earnings attributable to ordinary shareholders 66.7 82,538,548 80.8 51.0 82,416,735 61.9 120.2 82,464,513 145.8
Basic EPS
Earnings attributable to ordinary shareholders post exceptional items 46.5 82,538,548 56.3 51.0 82,416,735 61.9 48.7 82,464,513 59.1
Effect of dilutive securities:
Options 528,264 787,900 430,141
Diluted EPS - pre-exceptional 66.7 83,066,812 80.3 51.0 83,204,635 61.3 120.2 82,894,654 145.0
Diluted EPS 46.5 83,066,812 56.0 51.0 83,204,635 61.3 48.7 82,894,654 58.7
8 Dividends
The following dividends were paid and recognised by the Company in each
accounting period presented:
Half year to 31 December 2017 Half year to 31 December 2016 Year to 30 June 2017 (audited)
£m pence per share £m pence per share £m pence per share
Previous year net final 52.6 64.0 46.4 56.0 46.4 56.0
Current period interim - - - - 26.4 32.0
Dividend recognised in the year 52.6 64.0 46.4 56.0 72.8 88.0
The net dividends paid in the period consists of the previous years' final
dividends of £53.1m less previous years' dividends refunded by the Employee
Share Trust of £0.5m.
The following dividends were declared by the Company in respect of each
accounting period presented:
Half year to 31 December 2017 Half year to 31 December 2016 Year to 30 June 2017 (audited)
£m pence per share £m pence per share £m pence per share
Interim 23.2 28.0 26.4 32.0 26.4 32.0
Final - - - - 53.0 64.0
Dividend relating to the year 23.2 28.0 26.4 32.0 79.4 96.0
The interim dividend for 2018 of 28.0p per share was approved by the board on
14 February 2018 and has not been included as a liability as at 31 December
2017. This interim dividend will be paid on 6 April 2018 to shareholders who
are on the register at the close of business on 16 March 2018.
9 Goodwill
Goodwill is allocated to the Group's cash-generating units (CGUs) identified
according to business segment.
The goodwill is attributable to the following business segments:
31 December 2017 31 December 2016 30 June 2017 (audited)
£m £m £m
Linden Homes 52.5 52.5 52.5
Partnerships & Regeneration 30.6 5.8 30.6
Building 40.0 40.0 40.0
Infrastructure 37.2 37.2 37.2
160.3 135.5 160.3
As stated in the annual financial statements for the year ended 30 June 2017,
detailed impairment reviews were carried out for all business segments.
Consideration has been given as to whether any events have occurred since the
year ended 30 June 2017 which would give rise to an impairment and none have
been identified.
10 Developments
31 December 2017 31 December 2016 30 June 2017 (audited)
£m £m £m
Land 510.6 553.6 456.6
Work in progress 287.2 293.7 266.0
797.8 847.3 722.6
11 Trade and other receivables
31 December 2017 31 December 2016 30 June 2017 (audited)
£m £m £m
Amounts falling due within one year:
Trade receivables 159.4 165.3 214.1
Less: Provision for impairment of receivables (0.2) (0.9) (0.3)
Trade receivables - net 159.2 164.4 213.8
Amounts recoverable on construction contracts 304.1 302.0 274.0
Amounts due from joint venture undertakings 138.9 163.0 141.7
Other receivables 11.3 42.5 27.5
Prepayments and accrued income 148.5 124.3 152.5
762.0 796.2 809.5
Amounts falling due after more than one year:
Amounts due from joint venture undertakings 120.0 73.3 106.9
Other receivables 19.9 0.4 4.8
139.9 73.7 111.7
12 Cash and cash equivalents
31 December 31 December 30 June 2017
2017 2016 (audited)
(Restated - note 2)
£m £m £m
Cash and cash equivalents excluding bank overdrafts 1,350.7 1,127.0 1,145.9
Current borrowings - bank overdrafts (1,238.5) (1,084.3) (942.2)
Cash and cash equivalents per the statements of cash flows 112.2 42.7 203.7
Current borrowings - obligations under finance leases and hire purchase (0.3) (0.2) (0.3)
contracts
Non-current borrowings (196.8) (156.3) (196.2)
Net (debt)/cash (84.9) (113.8) 7.2
The restatement in 2016 is explained in note 2.
In February 2014 the Group agreed a five-year £400m unsecured revolving
credit facility with HSBC Bank plc, Barclays Bank plc, The Royal Bank of
Scotland plc and Abbey National Treasury Services plc (Santander). In February
2015, the Group agreed a one-year extension on the facility, to 2020. In March
2016 the Group agreed an increase in the facility to £450m and in December
2016, the Group agreed a further two-year extension to February 2022. The
facility provides long-term finance and bonding facilities and is subject to
covenants over interest cover, gearing (adjusted to take account of
development land payables) and minimum consolidated tangible net assets.
Interest is calculated by aggregating margin, LIBOR and relevant costs.
In February 2017, the Group issued £100m ten year unsecured notes purchased
at a fixed rate of interest of 4.03% to investors advised by Pricoa Capital
Group, expiring in February 2027. The agreement provides long-term finance at
a fixed rate of interest and is subject to the same covenants as the revolving
credit facility above.
13 Trade and other payables
31 December 2017 31 December 30 June 2017
2016 (audited)
£m £m £m
Payments received on account on construction contracts 111.8 85.2 109.4
Trade payables 367.7 343.5 375.0
Development land payables 89.0 137.8 98.2
Amounts due to joint venture undertakings 13.1 24.0 31.8
Other taxation and social security payable 15.1 20.3 18.3
Other payables 19.0 19.8 11.4
Accruals and deferred income 527.1 465.0 576.0
1,142.8 1,095.6 1,220.1
14 Other non-current liabilities
31 December 2017 31 December 30 June 2017
2016 (audited)
£m £m £m
Development land payables 99.8 55.5 46.3
Other payables - 0.5 0.1
Accruals and deferred income 47.0 45.8 50.5
146.8 101.8 96.9
15 Retirement benefit obligations
The amounts recognised in the balance sheet are as follows:
31 December 31 December 30 June 2017
2017 2016 (audited)
£m £m £m
Fair value of plan assets 248.0 246.0 242.9
Present value of defined benefit obligations (250.7) (256.6) (246.1)
(Deficit)/surplus in scheme recognised as non-current (liability)/asset (2.7) (10.6) (3.2)
The principal actuarial assumptions used to calculate the liabilities as at 31
December 2017 have been set in a consistent manner to those adopted at 30 June
2017. These assumptions will change as market conditions change over time.
An actuarial loss of £3.3m (31 December 2016: £9.7m; 30 June 2017: £5.0m)
has been taken to the condensed consolidated statement of comprehensive
income.
16 Financial instruments
The Group's activities expose it to a variety of financial risks. The
condensed consolidated half year financial statements do not include all
financial risk management information and disclosures required in the annual
financial statements; they should be read in conjunction with the Group's
financial statements for the year ended 30 June 2017.
There have been no significant changes in the risk management policies since
the year end.
Financial liabilities - derivative financial liabilities
The fair value of interest rate swaps is detailed below:
31 December 2017 31 December 2016 30 June 2017 (audited)
£m £m £m
Non-current liabilities 1.4 3.0 2.0
Fair value estimation
Specific valuation techniques used to value financial instruments are defined
as:
i. Level 1 - Quoted market prices or dealer quotes in active
markets for similar instruments.
ii. Level 2 - The fair value of equity securities and interest
rate swaps is calculated as the present value of the estimated future cash
flows based on observable yield curves.
iii. Level 3 - Other techniques, such as discounted cash flow
analysis, are used to determine fair value for the remaining financial
instruments.
The following table presents the Group's assets and liabilities that are
measured at fair value:
31 December 2017 31 December 2016 30 June 2017 (audited)
Level 2 Level 3 Total Level 2 Level 3 Total Level 2 Level 3 Total
£m £m £m £m £m £m £m £m £m
Assets
Other investments
- Shared equity receivables - 0.6 0.6 - 0.7 0.7 - 0.7 0.7
Total - 0.6 0.6 - 0.7 0.7 - 0.7 0.7
Liabilities
Derivatives used for hedging (1.4) - (1.4) (3.0) - (3.0) (2.0) - (2.0)
Total (1.4) - (1.4) (3.0) - (3.0) (2.0) - (2.0)
The director's valuation of our PPP portfolio at 30 June 2017 was £31.3m.
This valuation is performed on an annual basis.
There were no transfers between levels during the period. The valuation
techniques used to derive Level 2 fair values are consistent with those set
out in the 30 June 2017 financial statements. Level 3 fair values are
determined using valuation techniques that include inputs not based on
observable market data.
Fair value measurements using significant unobservable inputs (Level 3)
31 December 2017 (£m) 31 December 2016 (£m) 30 June 2017 (audited) (£m)
Opening balance 0.7 0.7 0.7
Unwind of discount on shared equity receivables - - -
Impairment - - -
Disposals (0.1) - -
Closing balance 0.6 0.7 0.7
The valuation process for Level 3 is consistent with that disclosed in the 30
June 2017 audited report.
The key assumptions used in Level 3 valuations include future house price
movements, the expected timing of receipts, credit risk and discount rates.
The typical repayment period is 10-15 years and the timing of receipts is
based on historical data. The discount rate of 5.5% and future house price
movements used to compute the fair value (typically 2.5%) are based on local
market conditions. If receipts were to occur earlier than expected, the fair
value would increase.
The total impact in the period of Level 3, taken to the income statement, is
£Nil (31 December 2016: £Nil; 30 June 2017: £Nil) in cost of sales and
£Nil (31 December 2016: £Nil; 30 June 2017: £Nil) in finance income.
17 Guarantees and contingent liabilities
Galliford Try plc has entered into financial guarantees and counter
indemnities in respect of bank and performance bonds issued in the normal
course of business on behalf of Group undertakings, including joint
arrangements and joint ventures, amounting to £361.8m (31 December 2016:
£353.6m; 30 June 2017 £353.3m).
Disputes arise in the normal course of business, some of which lead to
litigation or arbitration procedures. The directors make proper provision in
the financial statements when they believe a liability exists. While the
outcome of disputes and arbitration is never certain 48.7
* Pre-exceptional profit from operations is stated before finance costs,
amortisation, exceptional items, share of joint ventures' interest and tax and
taxation.
Inter-segment revenue, which is priced on an arm's length basis, is eliminated
from Group revenue above. In the half year to 31 December 2017 this amounted
to £38.6m (31 December 2016: £46.9m; 30 June 2017: £84.7m) of which £9.6m (31
December 2016: £18.4m; 30 June 2017: £28.0m) was in Building, £17.9m (31
December 2016: £16.9m; 30 June 2017: £33.3m) was in Infrastructure, and £11.1m
(31 December 2016: £11.6m; 30 June 2017: £1.3m) was in central costs.
Half year ended 31 December 2017
Construction
LindenHomes£m Partnerships & Regeneration £m Building£m Infrastructure£m Total£m PPPInvestments£m Central£m Total£m
Balance Sheet
Goodwill and intangible assets 52.5 35.1 46.1 37.2 83.3 - 6.5 177.4
Working capital employed 660.2 70.0 (98.7) 32.5 (66.2) 23.7 (213.2) 474.5
Net (debt)/cash (560.6) (57.2) 110.2 (65.7) 44.5 (13.7) 502.1 (84.9)
Net assets 152.1 47.9 57.6 4.0 61.6 10.0 295.4 567.0
Total Group liabilities (2,741.9)
Total Group assets 3,308.9
Half year ended 31 December 2016 (Restated - note 2) Construction
LindenHomes £m Partnerships & Regeneration£m Building£m Infrastructure£m Total £m PPP Investments£m Central £m Total£m
Balance Sheet
Goodwill and intangible assets 52.9 5.9 47.2 37.2 84.4 - 7.4 150.6
Working capital employed 681.9 55.8 (92.7) (10.4) (103.1) 21.6 (94.9) 561.3
Net (debt)/cash (620.4) (26.9) 102.3 8.5 110.8 (14.5) 437.2 (113.8)
Net assets 114.4 34.8 56.8 35.3 92.1 7.1 349.7 598.1
Total Group liabilities (2,470.4)
Total Group assets 3,068.5
Year ended 30 June 2017 (audited) Construction
LindenHomes£m Partnerships & Regeneration£m Building£m Infrastructure£m Total£m PPP Investments£m Central £m Total£m
Balance Sheet
Goodwill and intangible assets 52.5 35.8 46.6 37.2 83.8 - 7.0 179.1
Working capital employed 619.9 44.9 (122.9) (20.6) (143.5) 20.6 (152.7) 389.2
Net cash/(debt) (500.8) (39.3) 131.9 5.5 137.4 (11.8) 421.7 7.2
Net assets 171.6 41.1 55.6 22.1 77.7 8.8 276.0 575.5
Total Group liabilities (2,468.5)
Total Group assets 3,044.0
4 Exceptional items
Group Half year to 31 December 2017£m Half year to 31 December 2016£m Year to 30 June 2017(audited)£m
Group revenue - charge on legacy contracts - - (42.4)
Cost of sales - charge on legacy contracts 25.0 - (45.5)
Administrative expenses - abortive merger costs - - (1.0)
Loss from operations 25.0 - (88.9)
In light of the compulsory liquidation of Carillion and the impact on our
funding obligations in respect of the AWPR joint venture, we have reassessed
the out-turn position on the contract. The withdrawal of Carillion increases
our participation in both costs and estimated recovery claims, and we have
increased our provision accordingly, which we have shown as an exceptional
item.
Half year to 31 December 2017£m
Profit before income tax 56.3
Charge on legacy contracts 25.0
Pre-exceptional profit before income tax 81.3
In May 2017, the Group released an update in respect of Group trading and
legacy contracts in Construction. This indicated that following a thorough
reappraisal of the costs to complete and recoveries from these contracts, it
was established that there was an increased anticipated liability to conclude
these contracts and consequently, a one-off charge of £98.3m had been
incurred, of which approximately 80% was related to two major infrastructure
joint venture projects (contracted in 2014 and earlier). One of these projects
is largely practically complete, while the other, which represe, the directors believe
that the resolution of all existing actions will not have a material adverse
effect on the Group's financial position.
18 Related party transactions
Transactions between the Group and its joint ventures and jointly controlled
operations are disclosed as follows:
Group
Sales to Purchases from Amounts owed by Amounts owed to
related parties related parties related parties related parties
31 Dec 31 Dec 30 Jun 31 Dec 31 Dec 30 Jun 31 Dec 31 Dec 30 Jun 31 Dec 31 Dec 30 Jun
2017 2016 2017 2017 2016 2017 2017 2016 2017 2017 2016 2017
£m £m (audited) £m £m (audited) £m £m (audited) £m £m (audited)
£m £m £m £m
Trading transactions
Joint ventures 5.4 21.7 61.7 - 0.1 0.4 24.1 21.2 33.4 13.1 12.3 11.7
Jointly controlled operations 20.9 21.1 50.6 - 0.1 0.1 7.9 3.9 7.7 19.2 11.7 20.1
Interest and dividend income from related parties Loans to related parties
31 Dec 31 Dec 30 Jun 31 Dec 31 Dec 30 Jun
2017 2016 2017 2017 2016 2017
£m £m (audited) £m £m (audited)
£m £m
Non-trading transactions
Joint ventures 6.8 8.8 12.3 234.8 207.7 215.2
Principal risks and uncertainties
The directors consider that the principal risks and uncertainties which may
have a material impact on the Group's performance in the second half of the
financial year remain the same as those outlined on pages 20 and 21 of the
Group's annual report and financial statements for the year ended 30 June
2017. These can be summarised as health, safety, environmental and
community; people; supply chain; macro environment; markets; and corporate.
Forward looking statements
Certain statements in this half year report are forward looking. Such
statements should be treated with caution as they are based on current
information and expectations and are subject to a number of risks and
uncertainties that could cause actual events of outcomes to differ materially
from expectations.
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 Guidance 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.
The directors confirm that these condensed consolidated half year financial
statements have been prepared in accordance with IAS 34 as adopted by the
European Union; and that the interim management report herein gives a true and
fair view of the assets, liabilities, financial position and profit of the
Group as required by DTR 4.2.4 and includes a fair review of the information
required by DTR 4.2.7 and DTR 4.2.8 namely:
· an indication of important events that have occurred during
the six months and their impact on the condensed set of financial statements,
and a description of the principal risks and uncertainties for the remaining
six months of the financial year; and
· material related party transactions in the first six months
and any material changes in the related party transactions described in the
last annual report.
The directors of Galliford Try plc are:
Peter Ventress
Non-Executive Chairman
Peter Truscott Chief
Executive
Graham Prothero Finance Director
Terry
Miller Senior
Independent Director
Gavin Slark Non
executive director
Jeremy Townsend Non executive director
Signed on behalf of the Board
Peter Truscott
Chief Executive
Graham Prothero
Finance Director
14 February 2018
Independent review report to Galliford Try plc
Report on the condensed consolidated half year financial statements
Our conclusion
We have reviewed Galliford Try plc's condensed consolidated half year
financial statements (the "interim financial statements") in the half year
report of Galliford Try plc for the 6 month period ended 31 December 2017.
Based on our review, nothing has come to our attention that causes us to
believe that the interim financial statements are not prepared, in all
material respects, in accordance with International Accounting Standard 34,
'Interim Financial Reporting', as adopted by the European Union and the
Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority.
What we have reviewed
The interim financial statements comprise:
· the condensed consolidated balance sheet as
at 31 December 2017;
· the condensed consolidated income statement
and condensed consolidated statement of comprehensive income for the period
then ended;
· the condensed consolidated statement of
cash flows for the period then ended;
· the condensed consolidated statement of
changes in equity for the period then ended; and
· the explanatory notes to the interim
financial statements.
The interim financial statements included in the half year report have been
prepared in accordance with International Accounting Standard 34, 'Interim
Financial Reporting', as adopted by the European Union and the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority.
As disclosed in note 1 to the interim financial statements, the financial
reporting framework that has been applied in the preparation of the full
annual financial statements of the Group is applicable law and International
Financial Reporting Standards (IFRSs) as adopted by the European Union.
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the directors
The half year report, including the interim financial statements, is the
responsibility of, and has been approved by, the directors. The directors are
responsible for preparing the half year report in accordance with the
Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority.
Our responsibility is to express a conclusion on the interim financial
statements in the half year report based on our review. This report, including
the conclusion, has been prepared for and only for the company for the purpose
of complying with the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority and for no other purpose.
We do not, in giving this conclusion, accept or assume responsibility for any
other purpose or to any other person to whom this report is shown or into
whose hands it may come save where expressly agreed by our prior consent in
writing.
What a review of interim financial statements involves
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 enquiries, 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, 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.
We have read the other information contained in the half year report and
considered whether it contains any apparent misstatements or material
inconsistencies with the information in the interim financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants
London
14 February 2018
a) The maintenance and integrity of the Galliford Try plc
website is the responsibility of the directors; the work carried out by the
auditors does not involve consideration of these matters and, accordingly, the
auditors accept no responsibility for any changes that may have occurred to
the interim financial statements since they were initially presented on the
website.
b) Legislation in the United Kingdom governing the preparation
and dissemination of financial statements may differ from legislation in other
jurisdictions.
This information is provided by RNS
The company news service from the London Stock Exchange
nts the larger
proportion of the estimated charge, is scheduled to complete in mid-2018. A
charge of £87.9m in respect of these two projects was classified as an
exceptional item, comprising all costs and provisions for those projects in
the year.
In March 2017, the Group announced that it had approached the Board of Bovis
Homes Group Plc (Bovis) and had proposed an all share merger
between Galliford Try plc and Bovis. Subsequently, in April 2017, the Group
announced that this proposal was no longer being considered. During
this period, £1.0m of professional fees were incurred in respect of the
proposal and these have been treated as an exceptional item.
5 Net finance costs
Group Half year to 31 December 2017£m Half year to 31 December 2016£m Year to 30 June 2017(audited)£m
Interest receivable on bank deposits - - 0.2
Interest receivable from joint ventures 4.7 1.7 4.9
Other 0.1 0.1 0.2
Finance income 4.8 1.8 5.3
Interest payable on borrowings (8.9) (7.8) (16.4)
Unwind of discounted payables (0.3) (0.5) (0.7)
Other - - (0.1)
Finance costs (9.2) (8.3) (17.2)
Net finance costs (4.4) (6.5) (11.9)
6 Income tax expenses
The taxation expense on pre-exceptional profit for the period of 17.9% (31
December 2016: 19.0%) reflects the estimated effective tax rate for the full
financial year to 30 June 2018.
7 Earnings per share
Basic and diluted earnings per share
Basic earnings per share is calculated by dividing the earnings attributable
to ordinary shareholders by the weighted average number of ordinary shares
outstanding during the year, excluding those held by the Employee Share Trust,
which are treated as cancelled.
Under normal circumstances, the average number of shares is diluted by
reference to the average number of potential ordinary shares held under option
in the period. The dilutive effects amounts to the number of ordinary shares
which would be purchased using the aggregate difference in value between the
market value of shares and the share option price. Only shares that have met
their cumulative performance criteria are included in the dilution
calculation. The Group has two classes of potentially dilutive ordinary
shares: those share options granted to employees where the exercise price is
less than the average market price of the Company's ordinary shares during the
year and the contingently issuable shares under the Group's long term
incentive plans. A loss per share cannot be reduced through dilution, hence
this dilution is only applied where the Group has reported a profit.
Half year to 31 December 2017 Half year to 31 December 2016 Year to 30 June 2017 (audited)
Earnings£m Weighted average number of shares Per share amount pence Earnings £m Weighted average number of shares Per share amount pence Earnings £m Weighted average number of shares Per share amount pence
Basic EPS - pre-exceptional
Pre-exceptional earnings attributable to ordinary shareholders 66.7 82,538,548 80.8 51.0 82,416,735 61.9 120.2 82,464,513 145.8
Basic EPS
Earnings attributable to ordinary shareholders post exceptional items 46.5 82,538,548 56.3 51.0 82,416,735 61.9 48.7 82,464,513 59.1
Effect of dilutive securities:
Options 528,264 787,900 430,141
Diluted EPS - pre-exceptional 66.7 83,066,812 80.3 51.0 83,204,635 61.3 120.2 82,894,654 145.0
Diluted EPS 46.5 83,066,812 56.0 51.0 83,204,635 61.3 48.7 82,894,654 58.7
8 Dividends
The following dividends were paid and recognised by the Company in each
accounting period presented:
Half year to 31 December 2017 Half year to 31 December 2016 Year to 30 June 2017 (audited)
£m pence per share £m pence per share £m pence per share
Previous year net final 52.6 64.0 46.4 56.0 46.4 56.0
Current period interim - - - - 26.4 32.0
Dividend recognised in the year 52.6 64.0 46.4 56.0 72.8 88.0
The net dividends paid in the period consists of the previous years' final
dividends of £53.1m less previous years' dividends refunded by the Employee
Share Trust of £0.5m.
The following dividends were declared by the Company in respect of each
accounting period presented:
Half year to 31 December 2017 Half year to 31 December 2016 Year to 30 June 2017 (audited)
£m pence per share £m pence per share £m pence per share
Interim 23.2 28.0 26.4 32.0 26.4 32.0
Final - - - - 53.0 64.0
Dividend relating to the year 23.2 28.0 26.4 32.0 79.4 96.0
The interim dividend for 2018 of 28.0p per share was approved by the board on
14 February 2018 and has not been included as a liability as at 31 December
2017. This interim dividend will be paid on 6 April 2018 to shareholders who
are on the register at the close of business on 16 March 2018.
9 Goodwill
Goodwill is allocated to the Group's cash-generating units (CGUs) identified
according to business segment.
The goodwill is attributable to the following business segments:
31 December 2017 31 December 2016 30 June 2017 (audited)
£m £m £m
Linden Homes 52.5 52.5 52.5
Partnerships & Regeneration 30.6 5.8 30.6
Building 40.0 40.0 40.0
Infrastructure 37.2 37.2 37.2
160.3 135.5 160.3
As stated in the annual financial statements for the year ended 30 June 2017,
detailed impairment reviews were carried out for all business segments.
Consideration has been given as to whether any events have occurred since the
year ended 30 June 2017 which would give rise to an impairment and none have
been identified.
10 Developments
31 December 2017 31 December 2016 30 June 2017 (audited)
£m £m £m
Land 510.6 553.6 456.6
Work in progress 287.2 293.7 266.0
797.8 847.3 722.6
11 Trade and other receivables
31 December 2017 31 December 2016 30 June 2017 (audited)
£m £m £m
Amounts falling due within one year:
Trade receivables 159.4 165.3 214.1
Less: Provision for impairment of receivables (0.2) (0.9) (0.3)
Trade receivables - net 159.2 164.4 213.8
Amounts recoverable on construction contracts 304.1 302.0 274.0
Amounts due from joint venture undertakings 138.9 163.0 141.7
Other receivables 11.3 42.5 27.5
Prepayments and accrued income 148.5 124.3 152.5
762.0 796.2 809.5
Amounts falling due after more than one year:
Amounts due from joint venture undertakings 120.0 73.3 106.9
Other receivables 19.9 0.4 4.8
139.9 73.7 111.7
12 Cash and cash equivalents
31 December2017 31 December2016(Restated - note 2) 30 June 2017(audited)
£m £m £m
Cash and cash equivalents excluding bank overdrafts 1,350.7 1,127.0 1,145.9
Current borrowings - bank overdrafts (1,238.5) (1,084.3) (942.2)
Cash and cash equivalents per the statements of cash flows 112.2 42.7 203.7
Current borrowings - obligations under finance leases and hire purchase contracts (0.3) (0.2) (0.3)
Non-current borrowings (196.8) (156.3) (196.2)
Net (debt)/cash (84.9) (113.8) 7.2
The restatement in 2016 is explained in note 2.
In February 2014 the Group agreed a five-year £400m unsecured revolving credit
facility with HSBC Bank plc, Barclays Bank plc, The Royal Bank of Scotland plc
and Abbey National Treasury Services plc (Santander). In February 2015, the
Group agreed a one-year extension on the facility, to 2020. In March 2016 the
Group agreed an increase in the facility to £450m and in December 2016, the
Group agreed a further two-year extension to February 2022. The facility
provides long-term finance and bonding facilities and is subject to covenants
over interest cover, gearing (adjusted to take account of development land
payables) and minimum consolidated tangible net assets. Interest is calculated
by aggregating margin, LIBOR and relevant costs.
In February 2017, the Group issued £100m ten year unsecured notes purchased at
a fixed rate of interest of 4.03% to investors advised by Pricoa Capital
Group, expiring in February 2027. The agreement provides long-term finance at
a fixed rate of interest and is subject to the same covenants as the revolving
credit facility above.
13 Trade and other payables
31 December 2017 31 December 2016 30 June 2017(audited)
£m £m £m
Payments received on account on construction contracts 111.8 85.2 109.4
Trade payables 367.7 343.5 375.0
Development land payables 89.0 137.8 98.2
Amounts due to joint venture undertakings 13.1 24.0 31.8
Other taxation and social security payable 15.1 20.3 18.3
Other payables 19.0 19.8 11.4
Accruals and deferred income 527.1 465.0 576.0
1,142.8 1,095.6 1,220.1
14 Other non-current liabilities
31 December 2017 31 December 2016 30 June 2017(audited)
£m £m £m
Development land payables 99.8 55.5 46.3
Other payables - 0.5 0.1
Accruals and deferred income 47.0 45.8 50.5
146.8 101.8 96.9
15 Retirement benefit obligations
The amounts recognised in the balance sheet are as follows:
31 December2017 31 December2016 30 June 2017(audited)
£m £m £m
Fair value of plan assets 248.0 246.0 242.9
Present value of defined benefit obligations (250.7) (256.6) (246.1)
(Deficit)/surplus in scheme recognised as non-current (liability)/asset (2.7) (10.6) (3.2)
The principal actuarial assumptions used to calculate the liabilities as at 31
December 2017 have been set in a consistent manner to those adopted at 30 June
2017. These assumptions will change as market conditions change over time.
An actuarial loss of £3.3m (31 December 2016: £9.7m; 30 June 2017: £5.0m) has
been taken to the condensed consolidated statement of comprehensive income.
16 Financial instruments
The Group's activities expose it to a variety of financial risks. The
condensed consolidated half year financial statements do not include all
financial risk management information and disclosures required in the annual
financial statements; they should be read in conjunction with the Group's
financial statements for the year ended 30 June 2017.
There have been no significant changes in the risk management policies since
the year end.
Financial liabilities - derivative financial liabilities
The fair value of interest rate swaps is detailed below:
31 December 2017£m 31 December 2016 £m 30 June 2017 (audited)£m
Non-current liabilities 1.4 3.0 2.0
Fair value estimation
Specific valuation techniques used to value financial instruments are defined
as:
i. Level 1 - Quoted market prices or dealer quotes in active markets
for similar instruments.
ii. Level 2 - The fair value of equity securities and interest rate
swaps is calculated as the present value of the estimated future cash flows
based on observable yield curves.
iii. Level 3 - Other techniques, such as discounted cash flow analysis,
are used to determine fair value for the remaining financial instruments.
The following table presents the Group's assets and liabilities that are
measured at fair value:
31 December 2017 31 December 2016 30 June 2017 (audited)
Level 2£m Level 3£m Total£m Level 2£m Level 3£m Total£m Level 2£m Level 3£m Total£m
Assets
Other investments
- Shared equity receivables - 0.6 0.6 - 0.7 0.7 - 0.7 0.7
Total - 0.6 0.6 - 0.7 0.7 - 0.7 0.7
Liabilities
Derivatives used for hedging (1.4) - (1.4) (3.0) - (3.0) (2.0) - (2.0)
Total (1.4) - (1.4) (3.0) - (3.0) (2.0) - (2.0)
The director's valuation of our PPP portfolio at 30 June 2017 was £31.3m.
This valuation is performed on an annual basis.
There were no transfers between levels during the period. The valuation
techniques used to derive Level 2 fair values are consistent with those set
out in the 30 June 2017 financial statements. Level 3 fair values are
determined using valuation techniques that include inputs not based on
observable market data.
Fair value measurements using significant unobservable inputs (Level 3)
31 December 2017 (£m) 31 December 2016 (£m) 30 June 2017 (audited) (£m)
Opening balance 0.7 0.7 0.7
Unwind of discount on shared equity receivables - - -
Impairment - - -
Disposals (0.1) - -
Closing balance 0.6 0.7 0.7
The valuation process for Level 3 is consistent with that disclosed in the 30
June 2017 audited report.
The key assumptions used in Level 3 valuations include future house price
movements, the expected timing of receipts, credit risk and discount rates.
The typical repayment period is 10-15 years and the timing of receipts is
based on historical data. The discount rate of 5.5% and future house price
movements used to compute the fair value (typically 2.5%) are based on local
market conditions. If receipts were to occur earlier than expected, the fair
value would increase.
The total impact in the period of Level 3, taken to the income statement, is
£Nil (31 December 2016: £Nil; 30 June 2017: £Nil) in cost of sales and £Nil
(31 December 2016: £Nil; 30 June 2017: £Nil) in finance income.
17 Guarantees and contingent liabilities
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