REG - Rolls-Royce Holdings - ROLLS-ROYCE HOLDINGS PLC 2016 HALF YEAR RESULTS <Origin Href="QuoteRef">RR.L</Origin> - Part 4
28/07/2016 07:07
- Part 4: For the preceding part double click ID:nRSb4559Fc
(32) (71) (71)
Net fair value losses on foreign currency contracts (2,162) - (61) - (1,217) -
Financial RRSAs - foreign exchange differences and changes in forecast payments (8) - (3) - (13) -
Financial charge relating to financial RRSAs (2) (2) (2) (2) (8) (8)
Net fair value losses on commodity contracts - - (28) - (89) -
Financing on post-retirement scheme deficits (19) - (18) - (33) -
Net foreign exchange losses (171) - - - - -
Other financing charges (18) (17) (11) (11) (25) (25)
(2,422) (61) (155) (45) (1,456) (104)
Net financing (2,386) (54) (69) (17) (1,341) (60)
Analysed as:
Net interest payable (35) (35) (28) (28) (59) (59)
Net fair value (losses)/gains on derivative contracts (2,155) - (89) 24 (1,306) -
Net post-retirement scheme financing 3 - 13 - 32 -
Net other financing (199) (19) 35 (13) (8) (1)
Net financing (2,386) (54) (69) (17) (1,341) (60)
5 Taxation
The effective tax rate for the half year is 17.6% (2015 half-year (16.1)%, full year 47.5%).
The Summer Budget 2015 announced that the UK corporation tax rate will reduce to 19% from 1 April 2017 and 18% from 1 April
2020; these reductions were substantively enacted on 26 October 2015. As the reductions were substantively enacted prior to
the year end, the 2015 closing deferred tax balances were calculated at 18%.
A subsequent reduction in the rate to 17%, effective from 1 April 2020, was announced in the 2016 Budget. The proposed
further reduction in the rate to 17% will be reflected when the relevant legislation is substantively enacted.
6 Earnings per ordinary share (EPS)
Basic EPS are calculated by dividing the profit attributable to ordinary shareholders by the weighted average number of
ordinary shares in issue during the period, excluding ordinary shares held under trust, which have been treated as if they
had been cancelled. Diluted EPS are calculated by adjusting the weighted average number of ordinary shares in issue during
the period for the bonus element of share options.
Half-year to 30 June 2016 Half-year to 30 June 2015 Year to 31 December 2015
Basic Potentially dilutive share options 1 Diluted Basic Potentially dilutive share options Diluted Basic Potentially dilutive share options Diluted
Profit attributable to ordinary shareholders (£m) (1,772) - (1,772) 360 - 360 83 - 83
Weighted average shares (millions) 1,832 9 1,841 1,845 15 1,860 1,839 12 1,851
EPS (pence) (96.72p) - (96.72p) 19.51p (0.16p) 19.35p 4.51p (0.03p) 4.48p
1 As there is a loss on continuing operations, the effect of potentially dilutive ordinary shares is anti-dilutive and
consequently diluted EPS is the same as basic EPS.
The reconciliation between underlying EPS and basic EPS is as follows:
Half-year to 30 June 2016 Half-year to 30 June 2015 Year to 31 December 2015
Pence £m Pence £m Pence £m
Underlying EPS / Underlying profit attributable to ordinary shareholders re-presented 4.20 77 18.27 337 58.73 1,080
Total underlying adjustments to profit before tax (note 2) (123.03) (2,254) (7.00) (129) (69.17) (1,272)
Related tax effects 22.11 405 8.24 152 14.95 275
EPS / Profit attributable to ordinary shareholders (96.72) (1,772) 19.51 360 4.51 83
Diluted underlying EPS 4.18 18.12 58.35
7 Payments to shareholders in respect of the period
Payments to shareholders in respect of the period represent the value of C Shares to be issued in respect of the results
for the period. Issues of C Shares were declared as follows:
Half-year to 30 June 2016 Year to 31 December 2015
Pence per £m Pence per £m
share share
Interim (issued in January) 4.6 85 9.27 170
Final (issued in July) 7.10 131
4.6 85 16.37 301
8 Intangible assets
Goodwill£m Certification costs and participation Development expenditure£m Contractual aftermarket rights£m Customer relationships£m Software£m Other£m Total£m
fees£m
Cost:
At 1 January 2016 1,589 1,145 1,730 799 456 616 543 6,878
Exchange differences 195 19 84 - 56 10 46 410
Additions - 39 54 90 - 25 24 232
At 30 June 2016 1,784 1,203 1,868 889 512 651 613 7,520
Accumulated amortisation:
At 1 January 2016 86 373 691 394 139 325 225 2,233
Exchange differences 12 3 33 - 19 5 24 96
Charge for the period - 32 71 19 23 36 18 199
Impairment - - 2 - - - - 2
At 30 June 2016 98 408 797 413 181 366 267 2,530
Net book value at:
30 June 2016 1,686 795 1,071 476 331 285 346 4,990
31 December 2015 1,503 772 1,039 405 317 291 318 4,645
Certification costs and participation fees, development expenditure and contractual aftermarket rights have been reviewed
for impairment in accordance with the requirements of IAS 36 Impairment of Assets. Where an impairment test was considered
necessary, it has been performed on the following basis:
· The carrying values have been assessed by reference to value in use. These have been estimated using cash flows from
the most recent forecasts prepared by management, which are consistent with past experience and external sources of
information on market conditions over the lives of the respective programmes.
· The key assumptions underlying cash flow projections are assumed market share, programme timings, unit cost
assumptions, discount rates, and foreign exchange rates.
· The pre-tax cash flow projections have been discounted at 9-11% (2015 full year 9-11%), based on the Group's weighted
average cost of capital.
· No impairment is required on this basis. However, a combination of changes in assumptions and adverse movements in
variables that are outside the Company's control (discount rate, exchange rate and airframe delays), could result in
impairment in future periods.
9 Property, plant and equipment
Land and buildings£m Plant and equipment£m Aircraft and engines£m In course of construction£m Total£m
Cost:
At 1 January 2016 1,375 3,894 339 708 6,316
Exchange differences 91 222 5 34 352
Reclassification of joint ventures to joint operations 7 87 - - 94
Additions 6 47 21 117 191
On disposal of businesses - (3) - - (3)
Reclassifications 15 75 29 (119) -
Disposals (4) (29) (41) (1) (75)
At 30 June 2016 1,490 4,293 353 739 6,875
Accumulated amortisation:
At 1 January 2016 416 2,284 125 1 2,826
Exchange differences 27 117 2 - 146
Reclassification of joint ventures to joint operations 1 52 - - 53
On disposal of businesses - (1) - - (1)
Charge for the period 28 154 13 - 195
Impairment - - - 1 1
Disposals (4) (22) (37) - (63)
At 30 June 2016 468 2,584 103 2 3,157
Net book value at:
30 June 2016 1,022 1,709 250 737 3,718
31 December 2015 959 1,610 214 707 3,490
10 Financial assets and liabilities
Other financial assets and liabilities comprise:
Derivatives
Foreign exchange contracts£m Commodity contracts£m Interest rate contracts£m Total£m Financial RRSAs£m Other£m C Shares£m Total£m
At 30 June 2016
Non-current assets 8 2 341 351 - - - 351
Current assets 44 1 - 45 - - - 45
Current liabilities (443) (30) - (473) (17) - (31) (521)
Non-current liabilities (3,324) (53) (9) (3,386) (97) (14) - (3,497)
(3,715) (80) 332 (3,463) (114) (14) (31) (3,622)
At 30 June 2015
Non-current assets 129 - 56 185 - - - 185
Current assets 46 - 1 47 - - - 47
Current liabilities (157) (22) - (179) (13) - (26) (218)
Non-current liabilities (629) (37) (88) (754) (141) - - (895)
(611) (59) (31) (701) (154) - (26) (881)
At 31 December 2015
Non-current assets 3 - 80 83 - - - 83
Current assets 29 - - 29 - - - 29
Current liabilities (244) (39) - (283) (19) - (29) (331)
Non-current liabilities (1,428) (65) (67) (1,560) (91) - - (1,651)
(1,640) (104) 13 (1,731) (110) - (29) (1,870)
Derivative financial instruments Half-year to 30 June 2016 Half-year to 30 June2015 Year to 31 December 2015
Foreign exchange£m Commodity£m Interest rate£m Total£m Total£m Total£m
At January 1 (1,640) (104) 13 (1,731) (630) (630)
Currency options at inception 1 (33) - - (33) (20) (20)
Movements in fair value hedges - - 319 319 (83) (35)
Movements in other derivative contracts (2,161) 6 - (2,155) (89) (1,306)
Contracts settled 119 18 - 137 121 260
At period end (3,715) (80) 332 (3,463) (701) (1,731)
(1,731)
1 The Group wrote currency options to sell USD and buy GBP as part of a commercial agreement. The fair value of this
option on inception was treated as a discount to the customer.
Financial risk and revenue sharing arrangements (RRSAs) and other financial liabilities Financial RRSAs Other
Half-yearto 30 June2016£m Half-yearto 30 June2015£m Year to31 December2015£m Half-yearto 30 June2016£m
At January 1 (110) (145) (145) --
Exchange adjustments included in OCI 4 (5) - -
Additions - - - (14)
Financing charge 1 (2) (2) (8) -
Exchange adjustments - excluded from underlying results 1 (8) (3) 8 --
Cash paid to partners 2 1 35 -
At period end (114) (154) (110) (14)
(14)
1 Included in net financing.
Fair values of financial instruments equate to book values with the following exceptions:
Half-year to 30 June 2016 Half-year to 30 June 2015 Year to 31 December 2015
Book value Fair value Book value Fair value Book value Fair value
£m £m £m £m £m £m
Borrowings (3,332) (3,320) (2,206) (2,293) (3,302) (3,312)
Fair values
The fair value of a financial instrument is the price at which an asset could be exchanged, or a liability settled, between
knowledgeable, willing parties in an arms-length transaction. Fair values have been determined with reference to available
market information at the balance sheet date, using the methodologies described below.
· Unlisted non-current investments primarily comprise bank deposits where the fair value approximates to the book
value.
· The fair values of trade receivables and payables, short-term investments and cash and cash equivalents are assumed
to approximate to cost either due to the short-term maturity of the instruments or because the interest rate of the
investments is reset after periods not exceeding six months.
· Fair values of derivative financial assets and liabilities are estimated by discounting expected future contractual
cash flows using prevailing interest rate curves. Amounts denominated in foreign currencies are valued at the exchange rate
prevailing at the balance sheet date. These financial instruments are included on the balance sheet at fair value, derived
from observable market prices (Level 2 as defined by IFRS 13 Fair Value Measurement).
· Borrowing and financial RRSAs are carried at amortised cost. Fair values are estimated by discounting expected future
contractual cash flows using prevailing interest rate curves (Level 2 as defined by IFRS 13). Amounts denominated in
foreign currencies are valued at the exchange rate prevailing at the balance sheet date. For financial RRSAs, the
contractual cash flows are based on future trading activity, which is estimated based on latest forecasts.
Borrowings
During the period, the Group has repaid £325m of short-term borrowings, including the £200m 73/8% Notes, which matured in
June.
11 Pensions and other post-retirement benefits
The net post-retirement scheme deficit as at 30 June 2016 is calculated on a year to date basis, using the latest valuation
as at 31 December 2015, updated to 30 June 2016 for the principal schemes.
Movements in the net post-retirement position recognised in the balance sheet were as follows:
UK schemes Overseas schemes Total
£m £m £m
At 1 January 2016 1,043 (1,120) (77)
Exchange adjustments - (139) (139)
Current service cost (84) (26) (110)
Past service credit/(cost) 2 (10) (8)
Net financing 21 (18) 3
Contributions by employer 88 40 128
Actuarial gains /(losses)1 457 (111) 346
Other - (2) (2)
At 30 June 2016 1,527 (1,386) 141
Analysed as:
Post-retirement scheme surpluses - included in non-current assets 1,540 5 1,545
Post-retirement scheme deficits - included in non-current liabilities (13) (1,391) (1,404)
1,527 (1,386) 141
141
1 The net actuarial gains in the UK arose principally due to changes in the yield curves used to value the assets and the
liabilities.
12 Contingent liabilities
On 6 December 2012, the Company announced that it had passed information to the Serious Fraud Office (SFO), following a
request from the SFO for information about allegations of malpractice in overseas markets. On 23 December 2013, the Company
announced that it had been informed by the SFO that it had commenced a formal investigation. Since the initial
announcement, the Company has continued its investigations and is engaging with the SFO and other authorities in the UK,
the USA and elsewhere in relation to the matters of concern.
The consequence of these disclosures will be decided by the regulatory authorities. It is too early to predict the
outcomes, but these could include the prosecution of individuals and of the Group. Accordingly, the potential for fines,
penalties or other consequences cannot currently be assessed. As the investigation is ongoing, it is not yet possible to
identify the timescale in which these issues might be resolved.
In connection with the sale of its products the Group will, on some occasions, provide financing support for its customers -
generally in respect of civil aircraft. The Group's commitments relating to these financing arrangements, which are spread
over many years, relate to a number of customers and a broad product portfolio and are generally secured on the asset
subject to the financing. These include commitments of US$3.6bn (31 December 2015 $3.1bn) to provide borrowing facilities
to enable customers to purchase aircraft (of which approximately US$317m could be called in 2016). These facilities may
only be used if the customer is unable to obtain financing elsewhere and are priced at a premium to the market rate.
Consequently the directors do not consider that there is a significant exposure arising from the provision of these
facilities.
Commitments on delivered aircraft in excess of the amounts provided are shown in the table below. These are reported on a
discounted basis at the Group's borrowing rate to reflect better the time span over which these exposures could arise.
These amounts do not represent values that are expected to crystallise. The commitments are denominated in US dollars. As
the Group does not generally adopt cash flow hedge accounting for future foreign exchange transactions, this amount is
reported, together with the sterling equivalent at the reporting date spot rate. The values of aircraft providing security
are based on advice from a specialist aircraft appraiser.
30 June 2016 31 December 2015
£m $m £m $m
Gross contingent liabilities 253 339 269 399
Value of security1 (114) (153) (136) (201)
Indemnities (77) (103) (79) (118)
Net commitments 62 83 54 80
Net commitments with security reduced by 20% 2 91 122 78 115
1 Security includes unrestricted cash collateral of: 35 47 35 52
2 Although sensitivity calculations are complex, the reduction of the relevant security by 20% illustrates the sensitivity
of the contingent liability to changes in this assumption.
Contingent liabilities exist in respect of guarantees provided by the Group in the ordinary course of business for product
delivery, performance and reliability. The Group has, in the normal course of business, entered into arrangements in
respect of export finance, performance bonds, countertrade obligations and minor miscellaneous items. Various Group
undertakings are parties to legal actions and claims which arise in the ordinary course of business, some of which are for
substantial amounts. As a consequence of the insolvency of an insurer as previously reported, the Group is no longer fully
insured against known and potential claims from employees who worked for certain of the Group's UK-based businesses for a
period prior to the acquisition of those businesses by the Group. While the outcome of some of these matters cannot
precisely be foreseen, the directors do not expect any of these arrangements, legal actions or claims, after allowing for
provisions already made, to result in significant loss to the Group.
13 Related party transactions
Transactions with related parties are shown on page 156 of the 2015 Annual Report. Significant transactions in the current
financial period are as follows:
Half-yearto 30 June2016 Half-yearto 30 June2015 Year to31 December2015
£m £m £m
Sales of goods and services to joint ventures and associates 887 859 1,896
Purchases of goods and services from joint ventures and associates (1,072) (1,120) (2,266)
Included in sales of goods and services to joint ventures and associates are sales of spare engines amounting to £35m
(2015: half-year £13m, full-year £189m).
Profit recognised in the year on such sales amounted to £21m (2015: half-year £13m, full-year £71m), including profit on
current year sales and recognition of profit deferred on similar sales in previous years.
14 Post-balance sheet events
On 11 July 2016, the Group announced that it will purchase the outstanding 53.1% shareholding in Industria de Turbo
Propulsores SA ("ITP") owned by SENER Grupo de Ingeniería SA ("SENER"). Rolls-Royce will pay SENER a total consideration
of E720m, subject to due diligence, for the outstanding 53.1% of ITP. This follows a decision by SENER to exercise its put
option. Under the existing shareholder agreement, consideration will be settled over a two year period following completion
in eight equal, evenly spaced instalments. The agreement allows flexibility to settle up to 50% of the consideration in the
form of Rolls-Royce shares. Final consideration as to whether the payments will be settled in cash, or cash and shares will
be determined by Rolls-Royce during the payment period. Completion, which is subject to regulatory clearances, is expected
in early 2017.
Principal risks and uncertainties
Whilst the Group has a consistent strategy and long performance cycles, it continues to be exposed to a number of risks and
has an established, structured approach to identifying, assessing and managing those risks.
The principal risks facing the Group for the remaining six months of the financial year are unchanged from those reported
on pages 55 and 56 of the Annual Report 2015, as set out below:
Product failure
Product not meeting safety expectations, or causing significant impact to customers or the environment through failure in
quality control.
Business continuity
Breakdown of external supply chain or internal facilities that could be caused by destruction of key facilities, natural
disaster, regional conflict, insolvency of a critical supplier or scarcity of materials which would reduce the ability to
meet customer commitments, win future business or achieve operational results.
Competitive position
The presence of large, financially strong competitors in the majority of our markets means that the Group is susceptible to
significant price pressure for original equipment or services even where our markets are mature or the competitors are few.
Our main competitors have access to significant government funding programmes as well as the ability to invest heavily in
technology and industrial capability.
Political risk
Geopolitical factors that lead to an unfavourable business climate and significant tensions between major trading parties
or blocs which could impact the Group's operations. For example: explicit trade protectionism, differing tax or regulatory
regimes, potential for conflict, or broader political issues.
Major programme delivery
Failure to deliver a major programme on time, within budget, to specification, or technical performance falling
significantly short of customer expectations, or not delivering the planned business benefits, would have potentially
significant adverse financial and reputational consequences, including the risk of impairment of the carrying value of the
Group's intangible assets and the impact of potential litigation.
Compliance
Non-compliance by the Group with legislation or other regulatory requirements in the regulated environment in which it
operates (eg. export controls; offset; use of controlled chemicals and substances; and anti-bribery and corruption
legislation) compromising our ability to conduct business in certain jurisdictions and exposing the Group to potential
reputational damage, financial penalties, debarment from government contracts for a period of time, and/or suspension of
export privileges or export credit financing, any of which could have a material adverse effect.
Market and financial shock
The Group is exposed to a number of market risks, some of which are of a macro-economic nature (eg. foreign currency, oil
price, exchange rates) and some of which are more specific to the Group (eg. liquidity and credit risks, reduction in air
travel or disruption to other customer operations). Significant extraneous market events could also materially damage the
Group's competitiveness and/or creditworthiness. This would affect operational results or the outcomes of financial
transactions.
IT vulnerability
Breach of IT security causing controlled or critical data to be lost, made inaccessible, corrupted or accessed by
unauthorised users.
Talent and capability
Inability to attract and retain the critical capabilities and skills needed in sufficient numbers and to effectively
organise, deploy and incentivise our people to deliver our strategy, business plan and projects.
Going concern
After making enquiries, the directors have a reasonable expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future. There have been no significant changes to the basis described on page 57
of the Annual Report 2015. For this reason they continue to adopt the going concern basis in preparing the consolidated
financial statements.
Payments to shareholders
The Company makes payments to shareholders in the form of redeemable C Shares which shareholders may either choose to
retain or redeem for a cash equivalent. On 4 January 2017, 46 C Shares, with a total nominal value of 4.6p, will be
allotted for each ordinary share to those shareholders on the register on 21 October 2016. The final day of trading with
entitlement to C Shares is 19 October 2016. Our Registrar, Computershare Investor Services PLC, operates a C Share
Reinvestment Plan (CRIP), and can, on behalf of shareholders, use the cash proceeds of redemption to purchase ordinary
shares from the market. Shareholders wishing to redeem their C Shares, or participate in the CRIP, must lodge instructions
with our Registrar to arrive no later than 5.00 pm on 1 December 2016. The payment of C Shares redemption monies will be
made on 6 January 2017.
Statement of directors' responsibilities
The directors confirm that, to the best of their knowledge:
· the condensed consolidated half-year financial statements have been prepared in accordance with IAS 34 Interim
Financial Reporting as adopted by the EU;
· the interim management report includes a fair review of the information required by:
(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred
during the first six months of the financial year and their impact on the condensed consolidated half-year financial
statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and
(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the
first six months of the current financial year and that have materially affected the financial position or performance of
the entity during that period; and any changes in the related party transactions described in the last Annual Report that
could do so.
The directors of Rolls-Royce Holdings plc at 11 February 2016 are listed in its 2015 Annual Report 2015 on pages 58 to 61.
Since that date, the following changes have taken place:
· Bradley Singer was appointed as a Non-executive director on 2 March 2016; and
· Helen Alexander retired as a Non-executive director at the conclusion of the AGM on 5 May 2016.
By order of the Board
Warren East David Smith
Chief Executive Chief Financial Officer
27 July 2016 27 July 2016
Independent review report to Rolls-Royce Holdings plc
Introduction
We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report
for the six months ended 30 June 2016 which comprises the condensed consolidated income statement, the condensed
consolidated statement of comprehensive income, the condensed consolidated balance sheet, the condensed consolidated cash
flow statement, the condensed consolidated statement of changes in equity and the related explanatory notes. We have read
the other information contained in the half-yearly financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the company in accordance with the terms of our engagement to assist the company in meeting
the requirements of the Disclosure and Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("the UK
FCA"). Our review has been undertaken so that we might state to the company those matters we are required to state to it
in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility
to anyone other than the company for our review work, for this report, or for the conclusions we have reached.
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 DTR of the UK FCA.
As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by
the EU. The condensed set of financial statements included in this half-yearly financial report has been prepared in
accordance with IAS 34 Interim Financial Reporting as adopted by the EU.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the
half-yearly financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of
Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for
use in the UK. 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 Ireland) and consequently
does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an
audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial
statements in the half-yearly financial report for the six months ended 30 June 2016 is not prepared, in all material
respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FCA.
Jimmy Daboo
for and on behalf of KPMG LLP
Chartered Accountants
15 Canada Square
London E14 5GL
27 July 2016
Appendix: Derivation of summary funds flow statement from reported cash flow statement
£m £m Source
Reported operating profit 237
Realised gains on settled derivatives (131) Reported to underlying adjustment (note 2)
Net unrealised fair value to changes to derivatives (4) Reported to underlying adjustment (note 2)
Foreign exchange on contract accounting (32) Reported to underlying adjustment (note 2)
Revaluation of trading assets and liabilities (40) Reported to underlying adjustment (note 2)
Effect of acquisition accounting 62 Reported to underlying adjustment (note 2)
Exceptional restructuring 68 Reported to underlying adjustment (note 2)
Other (2) Reported to underlying adjustment (note 2)
Adjustments to reported operating profit (79)
Underlying profit before financing 158
Underlying financing (54) Underlying income statement (note 2)
Underlying profit before tax 104
Depreciation of property, plant and equipment 196 Cash flow statement
Amortisation of intangible assets 201 Cash flow statement
Acquisition accounting (62) Reversal of underlying adjustment (above)
Depreciation and amortisation 335
Increase in inventories (339) Cash flow statement
Increase in trade and other receivables (465) Cash flow statement, excluding £6m receipts on the Energy disposal in 2014
Increase in trade and other payables 529 Cash flow statement, excluding £15m exceptional restructuring
Revaluation of trading assets 40 Reversal of underlying adjustment (above)
Movement on net working capital (235)
Additions of intangible assets (232) Cash flow statement
Purchases of property, plant and equipment (307) Cash flow statement
Expenditure on property, plant and equipment and intangible assets (539)
Realised gains 131 Reversal of underlying adjustment (above)
Net unrealised fair value to changes to derivatives 4 Reversal of underlying adjustment (above)
FX on contract accounting 32 Reversal of underlying adjustment (above)
Reported restructuring (68) Reversal of underlying adjustment (above)
Other 2 Reversal of underlying adjustment (above)
Underlying financing 54 Reversal of charge in underlying profit before tax (above)
Loss on disposal of property, plant and equipment 2 Cash flow statement
Joint ventures (37) Joint venture dividends less share of results - cash flow statement
Increase in provisions 86 Cash flow statement
Cash flows on other financial assets and liabilities (139) Cash flow statement
Share based payments 14 Cash flow statement
Disposal of property, plant and equipment 10 Cash flow statement
Other investments in joint ventures and associates (11) Cash flow statement
Net interest (48) Interest received and paid - cash flow statement
Net funds of JVs reclassified to JOs (4) Net cash and borrowings reclassified - cash flow statement
Purchase of ordinary shares for share schemes (20) Cash flow statement
Other 8
Trading cash flow (327)
Net defined benefit plans - operating charge 118 Cash flow statement
Cash funding of defined benefit plans (128) Cash flow statement
Contributions to defined benefit schemes in excess of PBT charge (10)
Tax (62) Taxation paid - cash flow statement
Free cash flow (399)
Exceptional restructuring expenditure (15) Reversal of adjustment (above)
Shareholder payments (168) Redemption of C Shares - cash flow statement
Increase in share in joint ventures (154) Cash flow statement
Other acquisitions/disposals 7 Disposals of businesses - cash flow statement, and receipts on Energy disposal (above)
Exchange gain on net funds 128 Cash flow statement
Change in net funds (601)
This table shows the derivation free cash flow, an alternative performance measure, to the movement in net funds shown on
page 29. The movement in net funds table shows the change in cash and cash equivalents which represents the most directly
reconcilable line item shown in the financial statements required by IFRS.
Free cash flow is a measure of financial performance of the business's cash flow to see what is available for distribution
among those stakeholders funding the business (including debt holders and shareholders). Free cash flow is calculated as
trading cash flow less recurring tax and post-employment benefit expenses, It excludes payments made to shareholders,
amounts spent (or received) on business acquisitions, exceptional restructuring costs and foreign exchange changes on net
funds. The Board considers that free cash flow reflects cash generated from the Group's underlying trading.
This information is provided by RNS
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