REG - Serco Group PLC - Half Year Results <Origin Href="QuoteRef">SRP.L</Origin> - Part 5

SercoAnnouncement

29/10/2014 12:02

- Part 5: For the preceding part double click  ID:nRSL8461Od 


                                           (0.5%)                (1%)                                           
 Mortality                20.7 - 27.8*     Increase by one year  +2%                                            
 
 
*Post retirement mortality range for male and female, current and future pensioners. 
 
16.          Share-based payments 
 
In accordance with IFRS 2, a charge of £3.1m (30 June 2013: £5.9m, 31 December 2013: £2.9m) relating to the fair value of
share schemes granted since 7 November 2002, has been charged to the condensed consolidated income statement. 
 
Notes to the condensed set of financial statements 
 
17.          Reconciliation of operating profit to net cash inflow from operating activities 
 
                                                                                        Six months ended30 June 2014(unaudited)£m  Six months ended30 June 2013(unaudited and restated)£m  Year ended 31 December 2013(unaudited and restated)£m  
 Operating profit for the period                                                        9.9                                        125.1                                                   143.8                                                  
 Adjustments for:                                                                                                                                                                                                                                 
 Share of profits in joint ventures                                                     (13.8)                                     (23.0)                                                  (47.1)                                                 
 Share-based payment expense                                                            3.1                                        5.9                                                     2.9                                                    
 Exceptional impairment of intangible assets and property, plant and equipment          4.6                                        -                                                       9.6                                                    
 Depreciation and impairment of property, plant and equipment                           22.8                                       21.2                                                    47.7                                                   
 Amortisation and impairment of intangible assets                                       19.1                                       24.6                                                    46.1                                                   
 Profit on disposal of subsidiaries and operations                                      (2.2)                                      -                                                       (19.2)                                                 
 Profit on disposal of property, plant and equipment                                    (0.2)                                      (0.1)                                                   -                                                      
 Loss on disposal of intangible assets                                                  0.1                                        -                                                       1.0                                                    
 Movement in provisions                                                                 11.5                                       (9.2)                                                   7.4                                                    
 Release of deferred consideration in relation to prior year acquisition - exceptional  -                                          -                                                       (10.3)                                                 
 Other non cash movements                                                               (1.4)                                      (0.9)                                                   (6.2)                                                  
 Operating cash inflow before movements in working capital                              53.5                                       143.6                                                   175.7                                                  
 (Increase)/decrease in inventories                                                     (3.6)                                      (8.0)                                                   7.2                                                    
 Increase in receivables                                                                (68.7)                                     (96.3)                                                  (66.0)                                                 
 Increase/(decrease) in payables                                                        73.7                                       (5.9)                                                   (90.2)                                                 
 Cash generated by operations                                                           54.9                                       33.4                                                    26.7                                                   
 Tax received/(paid)                                                                    4.1                                        (8.8)                                                   (18.8)                                                 
 Net cash inflow from operating activities                                              59.0                                       24.6                                                    7.9                                                    
 
 
18.          Related party transactions 
 
Transactions between the Company and its wholly owned subsidiaries, which are related parties, have been eliminated on
consolidation and are not disclosed in this note.  Transactions between the Group and its joint venture undertakings are
disclosed below. 
 
                                           Six months ended30 June 2014(unaudited)£m  Six months ended30 June 2013(unaudited)£m  Year ended 31 December 2013(audited)£m  
 Royalties and management fees receivable  0.9                                        1.1                                        2.1                                     
 Dividends receivable                      14.7                                       24.5                                       51.5                                    
                                           15.6                                       25.6                                       53.6                                    
 
 
The following receivable balances were held relating to joint ventures: 
 
                              At 30 June2014(unaudited)£m  At 30 June2013(unaudited)£m  At 31 December2013(audited)£m  
 Current:                                                                                                              
 Loans and other receivables  0.1                          0.1                          0.4                            
 Non-current:                                                                                                          
 Loans and other receivables  9.3                          2.6                          9.5                            
 
 
19.          Contingent liabilities 
 
The Group provides support in relation to bonding and other finance arrangements of its joint ventures up to a maximum
value of £26.5m (31 December 2013: £26.0m, 30 June 2013: £27.0m). The actual commitment outstanding at 30 June 2014 is
£22.7m (31 December 2013: £22.6m, 30 June 2013: £22.9m). 
 
In addition to this the Company and its subsidiaries have provided performance guarantees and indemnities relating to
performance bonds and letters of credit issued by its banks on its behalf, in the ordinary course of business.  These are
not expected to result in any material financial loss. 
 
The Group operates in many territories where the tax treatment of items is not certain, and it can and does take many years
to resolve issues with the appropriate tax authorities or courts.  Specifically, a potential liability exists in relation
to withholding tax on a historic acquisition for an amount of £36.0m, including £9.0m of interest. No provision has been
made for this liability as based on external advice we do not consider it probable that a payment will be required. 
 
The Group is aware of other claims and potential claims which involve or may involve legal proceedings against the Group.
The Directors are of the opinion, having regard to legal advice received and the Group's insurance arrangements, that it is
unlikely that these matters will in aggregate have a material effect on the Group's financial position. 
 
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