REG - ITV PLC - Half-year Report <Origin Href="QuoteRef">ITV.L</Origin> - Part 2
27/07/2016 07:06
- Part 2: For the preceding part double click ID:nRSa3217Fa
(2015: £208 million) reflecting 19% growth in internal revenue and 152%
increase in external revenue driven by organic growth from our dramas and the
acquisition of TwoFour Group and Mammoth Screen. Programming sales to
Broadcast benefited from new drama deliveries including Beowulf, Tutankhamun
and Houdini & Doyle along with returning entertainment programmes Saturday
Night Takeaway and Love Island. Off-ITV revenue grew strongly with successful
deliveries including The Jump, Friday Night Dinner and Raised by Wolves all
for Channel 4, Poldark and Moorside for BBC and Agatha Raisin for Sky.
ITV America had total revenue down in the first half by 34% to £96 million
(2015: £145 million). This was predominantly a result of the phasing of
deliveries for Hell's Kitchen (returning in 2017) and Duck Dynasty (expected
in the second half of 2016) along with the non-returning scripted commission
Texas Rising. Our acquisitions continue to do well with new and returning
deliveries Alone, Killing Fields and Pawn Stars. In the first half both our
returning scripted dramas, The Good Witch and Aquarius, aired in the US.
Studios RoW also showed strong growth in total revenue, up 156% to £184
million (2015: £72 million). We have benefited from Talpa Media, which we
acquired on 30 April 2015, significantly strengthening our position as a
leading international producer. Talpa continues to perform strongly and in the
first half had the benefit of a four-year licensing agreement for The Voice in
China. First half deliveries from Studios RoW include I'm A Celebrity… Get Me
Out Of Here! in Australia, The Chase in Australia and Norway and Keeping the
Nation Safe in Denmark.
Global Entertainment revenue increased 11% in the period to £79 million (2015:
£71 million) as we continued to grow our portfolio of programmes and formats
to distribute internationally. First half revenue growth was supported by our
strong programme slate including Mr Selfridge, Hell's Kitchen, Coronation
Street, Thunderbirds Are Go!, The Good Witch and Aquarius.
Reflecting its strong revenue growth ITV Studios' adjusted EBITA increased 42%
to £121 million (2015: £85 million). The adjusted EBITA margin increased to
19% (2015: 17%) driven by our revenue mix in the first half, but over the full
year will be more in line with 2015.
ITV Studios has continued to deliver many creative successes in the period
through its ongoing investment in the creative pipeline, building upon the
existing strong portfolio of programmes and formats. We remain on track to
deliver double-digit total revenue growth and adjusted EBITA growth over the
full year driven by our acquisitions.
Acquisitions
On 29 February 2016 the Group acquired a 100% controlling interest in UTV
Limited, which owns the television assets of UTV Media plc, for £100 million.
This further strengthens ITV's free to air business and enables us to run a
more efficient network. On 11 July 2016, ITV agreed to sell UTV Ireland which
is not part of the ITV Network for E10 million, subject to regulatory
approval.
Since 2012 we have acquired a number of content businesses in the UK, US and
creative locations across Europe, developing a strong portfolio of programmes
that return and travel. As we have grown in size and expanded our network
relationships and distribution capability, this has helped to strengthen our
creative talent pool and build our reputation as a leading European producer
and the largest unscripted independent production company in the US.
We generally structure our deals with earnouts or with put and call options in
place for the remainder of the equity, capping the maximum consideration
payable. By basing a significant part of the consideration on future
performance in this way, not only can we lock in creative talent and ensure
our incentives are aligned, but we also reduce our risk by only paying for the
actual, not expected, performance delivered over time. The majority of
earnouts or put and call options are dependent on the seller remaining within
the business, the most significant of which is for Talpa. Where consideration
paid or contingent consideration payable in the future is employment linked,
it is treated as an expense in our statutory results rather than as capital.
All consideration of this type is excluded from adjusted profit after tax and
adjusted EPS as, in our view, these items are part of capital consideration.
Acquisitions - 2012 to 2016 (Undiscounted)
Company Geography Genre Initial consideration(£m) Additional consideration paid in 2016 (£m) Expected future payments*(£m) Total expected consideration**(£m) Expected payment period Total maximum consideration**(£m)
2016
UTV UK& Ireland Broadcast TV 100 - - 100 100
Total for 2016 100 - - 100 100
Total for 2012-2015 Content 760 3 316 1,079 2016-2021 1,835
Total 860 3 316 1,179 1,935
* Undiscounted and adjusted for foreign exchange. All future payments are
performance related.
** Undiscounted and adjusted for foreign exchange, including the initial cash
consideration and excluding working capital adjustments.
The table above sets out the initial consideration payable on our
acquisitions, our expected future payments based on our current view of
performance and the total maximum consideration payable which is only payable
if exceptional compound earnings growth is delivered.
We closely monitor the forecast performance of each acquisition and where
there has been a change in expectations, we adjust our view of potential
future commitments through the income statement. At 31 December 2015, our
expected future payments were £303 million. The increase is as a result of
changes in our estimates and foreign exchange.
Total expected consideration for all acquisitions since 2012 has increased by
£116 million since 31 December 2015, primarily as a result of our acquisition
of UTV Limited.
Net Financing costs
Six months to 30 June 2016£m 2015£m
Financing costs directly attributable to loans and bonds (10) (3)
Cash-related net financing costs - (1)
Cash-related financing costs (10) (4)
Adjusted financing costs (10) (4)
Mark-to-market on swaps and foreign exchange 1 (2)
Imputed pension interest (2) (5)
Unrealised foreign exchange and other net financial losses (10) -
Net financing costs (21) (11)
Adjusted financing costs increased to £10 million (2015: £4 million), due to
increased borrowing costs associated with the acquisition of Talpa and to fund
the payment of the 2015 special dividend in May. Over the full year we expect
adjusted financing costs to be around £25 million.
Net financing costs are adjusted to reflect the underlying funding costs of
the business providing a more meaningful comparison of how the business is
managed and funded on a day-to-day basis. These adjustments include
mark-to-market on swaps and foreign exchange, imputed pension interest and
other financial losses. The financial losses in 2016 relate to unrealised
foreign exchange losses on the unhedged portion of the Eurobond.
Profit before tax
Adjusted profit before tax, after financing costs, was up 9% at £425 million
(2015: £391 million). Profit before tax is adjusted to reflect the impact of
production tax credits, net exceptional items, amortisation of intangible
assets and the adjustments to net financing costs, to reflect the underlying
performance of the business. Statutory profit before tax decreased by 6%,
largely as a result of the exceptional items described below and a full six
months amortisation of the intangible assets acquired in the purchase of
Talpa, particularly The Voice.
Profit before tax (PBT)
Six months to 30 June - on a continuing basis 2016£m 2015£m
Profit before tax 309 327
Production tax credits 14 5
Exceptional items (net) 54 30
Amortisation and impairment of intangible assets* 37 22
Adjustments to net financing costs 11 7
Adjusted profit before tax 425 391
* In respect of intangible assets arising from business combinations.
Production tax credits are recognised in adjusted PBT as in our view they
relate directly to the production of programmes and reflect the way the
business is managed and measured on a day-to-day basis. The ability to access
these tax credits is fundamental when assessing the viability of investment
decisions in high-end drama. ITV considers these to be part of the overall
cost of production rather than a corporate tax item. In 2016 significant tax
credits were available to us because of our investment in high-end drama in
the UK, for example Victoria and Poldark.
Exceptional items are set out in the table below. Operating exceptional items
largely relate to acquisition related expenses which are predominantly
performance based employment linked consideration, in particular regarding
Talpa as discussed above. Over the full year we expect exceptional items to be
around £115 million which excludes one-off costs that may be incurred in
relation to our £25 million targeted overhead cost savings for 2017.
Exceptional items
Six months to 30 June 2016£m 2015£m
Operating exceptional items:
Acquisition related expenses (54) (31)
Non-operating exceptional items: - 1
Total exceptional items (net) (54) (30)
Amortisation and impairment of intangible assets acquired through business
combinations is not included within adjusted earnings. However, amortisation
of software licences and development is included as management considers these
assets to be core to supporting the operations of the business.
Tax
The total adjusted tax charge for the period was £85 million (2015: £81
million), corresponding to an effective tax rate on adjusted PBT of 20% (2015:
21%) which is in line with the standard UK corporation tax rate of 20% (2015:
20.25%). The adjustments made to reconcile the tax charge with the adjusted
tax charge are the tax effects of the adjustments made earlier to reconcile
PBT and adjusted PBT.
Six months to 30 June 2016£m 2015£m
Tax charge (63) (68)
Production tax credits (14) (5)
Charge for exceptional items (1) (1)
Charge in respect of amortisation of intangible assets* (6) (5)
Charge in respect of adjustments to net financing costs (2) (1)
Other tax adjustments 1 (1)
Adjusted tax charge (85) (81)
Effective tax rate on adjusted profits 20% 21%
* In respect of intangible assets arising from business combinations. Also
reflects the cash tax benefit of tax deductions for US goodwill. In 2015 this
was included in Other tax adjustments.
Cash tax paid in the year was £33 million (2015: £68 million), the majority of
which is paid in the UK. The 2016 cash figure is net of £22 million production
tax credits received in the period. The cash tax paid is lower than the
interim tax charge for 2016 largely due to the tax treatment of allowable
pension contributions and the timing of cash tax refunds including production
tax credits.
ITV is a responsible business, and we take a responsible attitude to tax,
recognising that it affects all of our stakeholders. We seek at all times to
comply with the law in each of the jurisdictions in which we operate, and to
build open and transparent relationships with those jurisdictions' tax
authorities. Our tax strategy is in line with that of the business and its
commercial activities, and within our overall governance structure, the
governance of tax and tax risk is given a high priority by the Board and Audit
Committee, including through the operation of the Tax & Treasury Committee.
EPS
Overall, adjusted profit after tax was up 10% at £340 million (2015: £310
million). Adjusted basic earnings per share was 8.5p (2015: 7.7p), up 10%. The
weighted average number of shares was slightly higher than 2015 at 4,011
million (2015: 4,004 million). Diluted adjusted EPS in the first half was 8.4p
(2015: 7.6p) reflecting a weighted average diluted number of shares of 4,031
million (2015: 4,034 million).
The table below reconciles basic to adjusted EPS and the adjustments are
explained in the previous sections.
Six months to 30 June Reported £m Adjustments£m Adjusted£m
EBITDA* 424 14 438
Exceptional items (operating) (54) 54 -
Amortisation and impairment of intangible assets (40) 37 (3)
Operating profit 330 105 435
Net financing costs (21) 11 (10)
Profit before tax 309 116 425
Tax (63) (22) (85)
Profit after tax 246 94 340
Loss from discontinuing operations (net of tax) (3) 3 -
Earnings 243 97 340
Shares(million), weighted average 4,011 4,011
EPS (p) 6.1p 8.5p
* £14 million adjustment relates to production tax credits.
Dividend per share
The Board's dividend policy was to deliver at least 20% growth in the full
year ordinary dividend to 2016 to achieve a more normal dividend cover of
between 2.0 and 2.5x adjusted earnings per share. In line with this policy,
the Board has declared an interim dividend for 2016 of 2.4p, up 26%. The
interim dividend is expected to be roughly a third of the full year dividend.
Cash generation
Profit to cash conversion
Six months to 30 June 2016£m 2015£m
Adjusted EBITA 438 400
(Increase)/Decrease in programme rights and other inventory distribution rights (20) 24
(Increase)/Decrease in receivables (40) 7
Decrease/(Increase) Production tax credits 7 (5)
Decrease in payables (7) (34)
Working capital movement (60) (8)
Depreciation 15 13
Share-based compensation and pension service costs 7 8
Cash flow generated from operations before exceptional items 400 413
Acquisition of property, plant and equipment and intangible assets (23) (25)
Adjusted cash flow 377 388
Profit to cash ratio six months to 30 June 86% 97%
Profit to cash ratio 12 months rolling 86% 92%
Note: Except where disclosed, management views the acquisition of operating
property, plant and equipment and intangibles as necessary ongoing investment
in the business.
ITV remains highly cash generative reflecting our continued tight management
of working capital balances. In the period we generated £377 million (2015:
£388 million) of operational cash from £438 million (2015: £400 million) of
adjusted EBITA, which equates to a strong profit to cash ratio of 86%. The
ratio has declined slightly from the prior period as a result of an increase
in programme rights as we continue to invest in our creative pipeline, an
increase in receivables because of the strong advertising performance in June
and the four-year licensing agreement for The Voice in China for which the
majority of revenue is recognised up front.
Free cash flow
Six months to 30 June 2016£m 2015£m
Adjusted cash flow 377 388
Net interest paid (6) (8)
Adjusted cash tax (55) (68)
Pension funding (47) (66)
Free cash flow 269 246
Note: Adjusted cash tax is total cash tax paid excluding receipt of production
tax credits which are included within adjusted cashflow.
After payments for interest, cash tax and pension funding, our free cash flow
also remained strong in the period, up 9% to £269 million (2015: £246
million).
Overall, after £566 million of dividends (ordinary and special) and £97
million of acquisition related costs as well as pension deficit contributions
of £47 million, we ended the first half with net debt of £796 million,
compared to net debt of £319 million at 31 December 2015 and net debt of £540
million at 30 June 2015.
Funding and liquidity
Debt structure and liquidity
Our balance sheet strength, together with our strong free cash flow, enables
us to continue to invest in opportunities to grow the business and make
returns to our shareholders. To preserve our financial flexibility we have put
a number of facilities in place. We have a £525 million Revolving Credit
Facility in place until 2019 provided by a number of core relationship banks.
We also have two bilateral loans in place until 2017 totalling £250 million
(may be extended until 2018 at ITV's option). This, along with a £300 million
bilateral financing facility and a £75 million invoice discounting facility,
both of which are free of financial covenants, provides us with sufficient
liquidity to meet the requirements of the business in the medium to long-term.
Of the total £1,150 million facilities in place, £315 million was drawn down
at 30 June 2016.
Our policy is to maintain at least £250 million of available liquidity at any
point.
Leverage
Our objective is to run an efficient balance sheet. Our priority is to invest
to drive organic growth and make acquisitions in line with our strategic
priorities. We will balance this investment with attractive returns to
shareholders.
Over time we will continue to look to increase our balance sheet leverage and
we believe maintaining leverage below 1.5x reported net debt to adjusted
EBITDA will optimise our cost of capital, allow us to make returns to our
shareholders in line with our policy and enable us to retain flexibility to
continue to invest in the business. As at 30 June 2016, reported net debt to
adjusted EBITDA on a rolling 12 month basis was 0.9x.
We also look at an adjusted measure of net debt, taking into consideration all
of our financial commitments which reflects how credit rating agencies look at
our balance sheet. At 30 June 2016 adjusted net debt was £1,521 million (30
June 2015: £1,447 million) reflecting an increase in expected contingent
payments on acquisitions as a result of the acquisitions we have made over the
last 12 months, a lower pension deficit under IAS 19 and undiscounted
operating lease commitments which mainly relate to broadcast transmission
contracts and property. As at 30 June 2016 adjusted net debt to adjusted
EBITDA was 1.6x.
2016£m 2015£m
Net debt at 30 June (796) (540)
Expected contingent payments on acquisitions (316) (287)
Pension deficit (IAS 19R) (64) (285)
Operating leases (345) (335)
Adjusted net debt at 30 June (1,521) (1,447)
Adjusted net debt to adjusted EBITDA* 1.6x 1.7x
* On a rolling 12 month basis.
Financing
We are financed using debt instruments and facilities with a range of
maturities. Borrowings at 30 June 2016 were repayable as follows:
Amount repayable
£m Maturity
£161 million Eurobond 161 Jan 2017
£525 million Revolving Credit Facility 65 Various
£150 million Bilateral Loan 150 Mar 2017/2018
£100 million Bilateral Loan 100 Jun 2017/2018
E600 million Eurobond 495 Sep 2022
Finance leases 6 Various
Total debt repayable on maturity 977
Ratings
We are rated investment grade by two ratings agencies: BBB- by Standard and
Poor's and Baa3 by Moody's Investor Services. The factors that are taken into
account in assessing our credit rating include our degree of operational
gearing, exposure to the economic cycle, as well as business and geographical
diversity. Continuing to execute our strategy will strengthen our position
against all these metrics.
Foreign exchange
As ITV continues to grow internationally, we are increasingly exposed to
foreign exchange on our overseas operations. We do not hedge our exposure to
revenues and profits generated overseas, as this is seen as an inherent risk.
We may elect to hedge our overseas net assets, where material. To date we have
hedged a significant portion of the Euro net assets arising from the Talpa
acquisition.
ITV is also exposed to foreign exchange risk on transactions we undertake in a
foreign currency. Our policy is to hedge a portion of any transaction that is
either a firm commitment for up to five years forward or a highly probable
forecast for up to 18 months, depending on the level of certainty we have on
the final size of the transaction.
Finally, ITV is exposed to foreign exchange risk on the re-translation of
foreign currency loans and deposits. Our policy is to hedge such exposures
where there is an expectation that any changes in the value of these items
will result in a realised cash movement over the short to medium term.
Pensions
IAS 19
The aggregate IAS 19 deficit of the defined benefit schemes at 30 June 2016
was £64 million (31 December 2015: £176 million). The reduction is due to
substantial gains in asset values as a result of ITV's significant holding in
long-dated UK gilts and deficit funding contributions of £47 million. These
more than offset the increase in pension liabilities as a result of falling
discount rates. Pensions continue to be paid from the Scheme based on actual
requirements.
Actuarial valuation
The last actuarial valuation was undertaken in 2014. On the basis adopted by
the Trustee, the combined deficits as at 1 January 2014 amounted to £540
million and is estimated to be at a similar level today.
Deficit funding contributions
Following completion of the actuarial valuations, the Group has agreed to make
deficit funding contributions in order to eliminate the deficits in each
section. From 1 January 2016 the contributions are paid on the following
basis:
Section A - £5.0 million per month until 31 May 2021
Section B - £0.15 million per month until 28 February 2023
Section C - £0.3 million per month until 31 July 2021
In addition to these contributions, payments are made into Section A as a
result of the SDN and LTC Pension Funding Partnership. The total expected
contribution for 2016 is £80 million, a £10 million reduction in deficit
funding contributions payable in 2015, which will be paid more evenly
throughout the year.
The Group's deficit funding contributions in the first half of 2016 were £47
million (2015: £66 million).
Ian Griffiths
Group Finance Director
Risks & Uncertainties
ITV continues to apply the risk management framework outlined in the 2015
Annual Report and Accounts (pages 46-51).
When preparing the Interim results the High Impact Low Likelihood (HILL) risks
and Strategic risks as reported in the 2015 Annual Report and Accounts were
reviewed to ensure they remained appropriate and adequate. No significant new
risks were identified. ITV is currently reviewing its risk identification and
monitoring processes. Below is a summary of the key risks.
The outcome of the EU referendum has created some uncertainty in the markets
in which we operate. There are several areas of our business that could be
affected by issues such as: business and consumer confidence, access to the EU
single market and free movement of our staff. The extent of any impact is
currently unknown but going forward we will closely monitor and evaluate any
potential areas of risk.
High Impact Low Likelihood (HILL) risks
HILL risks are of low inherent likelihood but there would be major consequence
were the risk to materialise. They are categorised according to risk theme.
Risk Theme HILL Risks
Financial ITV loses its credit status or lines of funding with existing lenders or there is a collapse of a major bank impacting financial arrangements/availability of credit.
There is a major collapse in investment values leading to a material impact on the pension scheme deficit.
Operational A significant event removes a number of the key management team from the business on a long-term or permanent basis.
Reputation An event with public interest that causes significant reputational and brand damage.
There is a major health and safety incident that results in a significant loss of human life.
A major incident results in ITV being unable to continue with scheduled broadcasting for a sustained period.
There is a significant or unexpected change in regulation or legislation.
Strategic risks
Strategic risks are those that would impact the successful execution of the
strategy. They are categorised according to risk theme and mapped to ITV's
strategic priorities.
1. Maximising: Maximise audience and revenue share from free-to-air and VOD
business.
2. Growing: Grow international content business.
3. Building: Build a global pay and distribution business
Risk Theme Strategic Risks Strategic Priorities
The Market There is a major decline in advertising revenue and ITV does not build sufficient non-NAR revenue streams to offset the financial impact of this decline. 1 2 3
The television market moves significantly towards pay television as a preferred model, negatively impacting ITV's free-to-air revenue. 1 3
A faster than expected shift to Video on Demand (VOD) or other new technologies causes a sustained loss of advertising revenue. 1 2 3
Organisation, Structure and Processes ITV fails to evolve its organisational structure and culture to ensure that it is capable of delivering continued growth from the new businesses or revenue streams and fails to attract, develop and retain key creative, commercial and management talent with the skills required for the ongoing business. 1 2 3
There is significant loss of programme rights or ITV fails to identify and obtain the optimal rights packages. 1 2 3
ITV fails to create and own a sufficient number of hit programmes/formats across its international portfolio of content companies. 1 2 3
ITV fails to resource, financially, creatively and operationally, the new growth businesses, in particular online and international content. 1 2 3
ITV remains heavily reliant on legacy systems, which could potentially restrict the ability to grow the business. These systems and processes may not be appropriate for non-advertising revenue or international growth. 1 2 3
Technology There is a sustained cyber/viral attack causing prolonged system denial or major reputational damage, for example the ability to broadcast our channels or the availability of the ITV Hub or ITV loses a significant volume of personal or sensitive data. 1 2 3
A significant high profile incident or series of events such as transmission incidents or a major regulatory breach causes significant reputational and/or commercial damage. 1 2 3
ITV fails to ensure appropriate business continuity planning and resilience within its core systems, processes, platforms and technology infrastructure. 1 2 3
Condensed Consolidated Interim Financial Statements
Our objective is to make ITV's financial statements less complex, more
relevant to shareholders and provide readers with a clearer understanding of
what drives financial performance of the Group. We have grouped notes under
five key headings: 'Basis of Preparation', 'Results for the Year', 'Operating
Assets and Liabilities', 'Capital Structure and Financing Costs' and 'Other
Notes'. The aim of the text in boxes is to provide commentary on each section,
or note, in plain English.
Condensed Consolidated Income Statement
For the six month period to 30 June Note 2016£m 2015£m
Revenue 2.1 1,503 1,356
Operating costs (1,173) (1,019)
Operating profit 330 337
Presented as
Earnings before interest, tax, amortisation (EBITA) before exceptional items 2.1 424 395
Operating exceptional items (54) (31)
Amortisation of intangible assets (40) (27)
Operating profit 330 337
Financing income 2 3
Financing costs (23) (14)
Net financing costs (21) (11)
Share of profit/(losses) of joint ventures and associated undertakings - -
Gain on sale and impairment of subsidiaries and investments (exceptional items) - 1
Profit before tax 309 327
Taxation (63) (68)
Profit from continuing operations 246 259
Loss after tax for the period from discontinuing operation 2.3 (3) -
Profit for the period 243 259
Profit attributable to
Owners of the Company 243 257
Non-controlling interests - 2
Profit for the period 243 259
Earnings per share
Basic earnings per share 2.2 6.1p 6.4p
Diluted earnings per share 2.2 6.1p 6.4p
Earnings per share from continuing operations
Basic earnings per share 2.2 6.1p 6.4p
Diluted earnings per share 2.2 6.1p 6.4p
Condensed Consolidated Statement of Comprehensive Income
For the six month period to 30 June 2016£m 2015£m
Profit for the period 243 259
Other comprehensive income/(expense)
Items that are or may be reclassified to profit or loss
Revaluation of available for sale financial assets 3 -
Exchange differences on translation of foreign operations (net of hedging) 42 (3)
Net gain /(loss) on cash flow hedges 7 (6)
Items that will never be reclassified to profit or loss
Remeasurement of gains on defined benefit pension schemes 67 -
Income tax charge on items that will never be reclassified (12) 3
Other comprehensive income/(expense) for the period, net of income tax 107 (6)
Total comprehensive income for the period 350 253
Total comprehensive income attributable to
Owners of the Company 350 251
Non-controlling interests - 2
Total comprehensive income for the period 350 253
Condensed Consolidated Statement of Financial Position
Note 30 June 2016£m 31 December 2015£m 30 June 2015£m
Non-current assets
Property, plant and equipment 240 239 251
Intangible assets 3.1 1,634 1,500 1,503
Investments in joint ventures, associates and equity investments 36 30 19
Derivative financial instruments 4.3 1 8 12
Distribution rights 55 29 14
Deferred tax asset - - 38
1,966 1,806 1,837
Current assets
Programme rights and other inventory 370 373 369
Trade and other receivables due within one year 535 531 492
Trade and other receivables due after more than one year 36 33 74
Trade and other receivables 571 564 566
Current tax receivable 12 13 -
Derivative financial instruments 4.3 14 1 4
Cash and cash equivalents 4.1 181 294 201
Assets held for sale 3.2 8 - -
1,156 1,245 1,140
Current liabilities
Borrowings 4.2 (231) (11) (574)
Derivative financial instruments 4.3 (6) (5) (10)
Trade and other payables due within one year (775) (786) (798)
Trade payables due after more than one year (57) (48) (31)
Trade and other payables (832) (834) (829)
Current tax liabilities (94) (69) (52)
Provisions 3.3 (27) (28) (15)
Liabilities held for sale 3.2 (2) - -
(1,192) (947) (1,480)
Net current (liabilities)/assets (36) 298 (340)
Non-current liabilities
Borrowings 4.2 (746) (602) (167)
Derivative financial instruments 4.3 - (6) (12)
Defined benefit pension deficit 3.4 (64) (176) (285)
Deferred tax liabilities (97) (79) (65)
Other payables (105) (89) (54)
Provisions 3.3 (4) (5) (5)
(1,016) (957) (588)
Net assets 914 1,147 909
Attributable to equity shareholders of the parent company
Share capital 403 403 403
Share premium 174 174 174
Merger and other reserves 221 221 228
Translation reserve 84 35 16
Available for sale reserve 9 6 7
Retained (losses)/earnings (8) 275 30
Total equity attributable to equity shareholders of the parent company 883 1,114 858
Non-controlling interests 31 33 51
Total equity 914 1,147 909
Ian Griffiths
Group Finance Director
Condensed Consolidated Statement of Changes in Equity
Attributable to equity shareholders of the parent company
Share capital£m Share premium £m Merger and other reserves(a)£m Translation reserve£m Available for sale reserve£m Retained profits/ (losses)£m Total £m Non-controlling interests£m Total equity £m
Balance at 1 January 2016 403 174 221 35 6 275 1,114 33 1,147
Total comprehensive income for the period
Profit for the period - - - - - 243 243 - 243
Other comprehensive income/ (expense)
Revaluation of available for sale financial assets - - - - 3 - 3 - 3
Net gain on cash flow hedges - - - 7 - - 7 - 7
Exchange differences on translation of foreign operations (net of hedging) - - - 42 - - 42 - 42
Remeasurement of gains on defined benefit pension schemes - - - - - 67 67 - 67
Income tax on other comprehensive income - - - - - (12) (12) - (12)
Total other comprehensive income - - - 49 3 55 107 - 107
Total comprehensive income for the period - - - 49 3 298 350 - 350
Transactions with owners, recorded directly in equity
Equity dividends - - - - - (566) (566) (2) (568)
Movements due to share-based compensation - - - - - 7 7 - 7
Tax on items taken directly to equity - - - - - (2) (2) - (2)
Purchase of own shares via employees' benefit trust - - - - - (20) (20) - (20)
Total contributions by and distributions to owners - - - - - (581) (581) (2) (583)
Total transactions with owners - - - - - (581) (581) (2) (583)
Changes in non-controlling interests - - - - - - - - -
Balance at 30 June 2016 403 174 221 84 9 (8) 883 31 914
(a) Movements reported in merger and other reserves include put option for
the acquisition of non-controlling interests.
Attributable to equity shareholders of the parent company
Share capital£m Share premium £m Merger and other reserves(a)£m Translation reserve£m Available for sale reserve£m Retained profits/ (losses)£m Total £m Non-controlling interests£m Total equity £m
Balance at 1 January 2015 403 174 228 25 7 177 1,014 50 1,064
Total comprehensive income for the period
Profit for the period - - - - - 257 257 2 259
Other comprehensive income/ (expense)
Net loss on cash flow hedges - - - (6) - - (6) - (6)
Exchange differences on translation of foreign operations (net of hedging) - - - (3) - - (3) - (3)
Income tax on other comprehensive income - - - - - 3 3 - 3
Total other comprehensive income - - - (9) - 3 (6) - (6)
Total comprehensive income for the period _ _ _ (9) _ 260 251 2 253
Transactions with owners, recorded directly in equity
Equity dividends - - - - - (383) (383) (1) (384)
Movements due to share-based compensation - - - - - 7 7 - 7
Purchase of own shares via employees' benefit trust - - - - - (31) (31) - (31)
Total contributions by and distributions to owners - - - - - (407) (407) (1) (408)
Total Transactions with owners - - - - - (407) (407) (1) (408)
Changes in non-controlling interests - - - - - - - - -
Balance as at 30 June 2015 403 174 228 16 7
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