================================= ======== ========== ========== ========== ====== ====== ======
GBP0.8m of the above amounts relating to 2011 are included
within provisions for liabilities and charges (note 13) and GBP4.8m
is included within trade receivable and unbilled revenue provisions
(note 10).
Management use underlying profit to measure and manage the
financial performance of the Group on a day-to-day basis.
Underlying profit excludes material income and charges considered
to be one-off or non-recurring in nature. Underlying profit also
excludes the amortisation of intangible assets arising from
business combinations. The Group presents these items as
exceptional in a separate column in the Income Statement so that
the underlying and statutory performance can be seen clearly.
(1) The economic slow down in Dubai resulted in the decision to
close our Dubai operations following our significant presence
reduction in 2009. As a result, the Group incurred restructuring
charges of GBP0.1m (2010: GBP5.2m) mainly in respect of
redundancies and surplus property provisions. No further asset
impairment charges were recorded in the Middle East in the year
(2010: GBP10.0m).
(2) Restructuring costs were incurred in 2010 and 2011, to
ensure that we had the right organisational structure, staffing
levels and office portfolio.
(3) Recovery of amounts provided for during the year ended 31
July 2009 as a result of a customer terminating our contract and
that after protracted negotiations have been recovered in the year
to 31 July 2011.
(4) For the year ended 31 July 2011, costs relate to defences
against unsolicited approaches from Costain, Interserv and others
during the second half of the year. For the year ended 31 July
2010, bid defence costs relate to the unsolicited approach in
December 2009 from VT Group plc.
(5) Pension scheme settlement/curtailment gain on the Teesside
Pension Scheme arising from a customer contract change (see note
16).
(6) Costs incurred to 31 July 2011 in relation to the potential
disposal of non-core parts of Regulated Industries, being the
Middle East, Rail and Energy businesses. Further costs will also be
incurred in the first half of the new year.
(7) The loss relates to a Business Process Re-engineering
project undertaken across four Municipalities in the United Arab
Emirates and involves the review of current business processes,
identification and documentation of best practice processes, staff
training and implementation. This project was entered into in April
2010 and represented a significant departure for the Group in that
this was the first contract of its kind undertaken by the Group
within the Middle East to establish a Middle Eastern Consulting
business. The project value is circa 86.4m AED (approx GBP14.9m).
The Group has decided to disband the unit and capability as this
project completes. The project is substantially complete but a
number of tasks remain to be finished. Contained within the loss
reported are provisions to reflect further costs to complete. The
Group has received some monies - 13.4m AED (GBP2.3m) but there is
72.5m AED (GBP12.0m) trade receivables and unbilled revenue
outstanding on this project at 31st July 2011. In addition, the
Group is reporting the trade receivables and unbilled revenue
discounted to recognise that the monies are not expected to be
received until the next calendar year (see note 10). Management
believes the amounts will be recovered in full. However, there can
be no certainty in this respect.
(8) Finance costs include the write off of unamortised loan
issue costs in respect of the existing and old unsecured revolving
credit facility (GBP3.6m and GBP2.2m respectively) and additional
costs incurred in addressing potential covenant breaches (GBP1.4m)
highlighted in the 31 July 2010 Annual Report and Accounts.
(9) The Group recorded GBP4.0m of provisions against unbilled
revenue in the year relating to the joint venture with Holleran, as
Holleran went into administration and has subsequently been
liquidated making the recovery from the customers complicated and
protracted.
(10) The Group does not consider the amortisation of intangible
assets arising from business combinations to be part of the
underlying business performance and therefore treats them as
exceptional costs.
The tax effect of the exceptional items is a credit of GBP1.8m
(2010: GBP10.5m) in the Consolidated Income Statement. In both the
years 2011 and 2010, this credit, which is at a lower rate than the
standard rate of corporation tax, reflects a prudent assessment in
respect of the creation of deferred tax assets on carried forward
losses. The credit from 2011 is also effected by exceptional items
of expenditure, including the impairment of goodwill, which are not
tax deductible.
4 Finance income/(costs)
2011 2010
GBPm GBPm
============================================================ ====== ======
Interest income 0.4 0.2
Net interest receivable on retirement benefit obligations
(note 16) 0.7 -
============================================================ ====== ======
Interest receivable 1.1 0.2
============================================================ ====== ======
Interest expense:
- interest payable on bank facilities (0.1) (0.1)
- interest payable on other loans - (0.1)
- interest payable on revolving credit facility and term
loans (6.4) (5.5)
- amounts payable on interest rate hedges and recycled from
equity (note 12) (3.6) (3.9)
- interest payable on bonds (0.4) (0.3)
- net interest payable on retirement benefit obligations
(note 16) - (0.1)
Amortisation of loan issue costs (1.3) (1.1)
Less interest capitalised on intangible assets - 0.2
------------------------------------------------------------ ------ ------
Finance costs (excluding exceptionals) (11.8) (10.9)
Exceptional finance costs relating to current and previous
revolving credit facility (see note 3) (7.2) -
============================================================ ====== ======
Finance costs (19.0) (10.9)
------------------------------------------------------------ ------ ------
Net finance costs (17.9) (10.7)
============================================================ ====== ======
There were no unamortised loan issue costs at 31 July 2011.
5 Employees and Directors
Staff costs during the year were as follows:
2011 2010
GBPm GBPm
====================== ===== =====
Wages and salaries 247.4 309.3
Social security costs 21.5 23.3
Other pension costs 16.6 16.0
Share-based payments 0.7 (0.2)
====================== ===== =====
286.2 348.4
====================== ===== =====
Staff costs include GBP3.0m (2010: GBP18.8m) relating to
exceptional staff costs.
Staff costs exclude redundancy and other exit costs which have
been charged against the provision brought forward (see note
13).
Staff costs include temporary staff.
The average number of people (including Executive Directors and
temporary staff) employed during the year was as follows:
Government
and Business Management Regulated Group
Highways Services Consulting Industries Functions Total
2011 Number Number Number Number Number Number
============ ======== ============= =========== =========== ========== =======
Total staff 2,894 4,291 301 1,667 249 9,402
============ ======== ============= =========== =========== ========== =======
Government
and Business Management Regulated Group
Highways Services Consulting Industries Functions Total
2010 Number Number Number Number Number Number
============ ======== ============= =========== =========== ========== =======
Total staff 3,470 4,359 448 1,911 237 10,425
============ ======== ============= =========== =========== ========== =======
6 Taxation
a Analysis of tax charge for the year
2011 2010
GBPm GBPm
=========================================================== ===== =====
Corporation tax charge for the year (0.1) (0.4)
Adjustment in respect of prior years 2.5 0.1
=========================================================== ===== =====
Current tax credit/(charge) 2.4 (0.3)
=========================================================== ===== =====
Deferred tax (charge)/credit for the year (4.9) 2.2
Deferred tax charge arising from the change in rate on the
opening balance (1.3) (0.7)
Total deferred tax (charge)/credit (6.2) 1.5
=========================================================== ===== =====
Tax (charge)/credit for the year (3.8) 1.2
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