4 Underlying operating profit and separately disclosed items
Underlying operating profit
Underlying operating profit is a non GAAP measure. A
reconciliation of underlying operating profit is set out below:
Restated
Six months Six months Year ended
ended 31 ended 31 28 February
August 2014 August 2013 2014
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Operating profit as reported 691 7,250 1,276
Other separately disclosed
items:
Group:
* New business and new contract set up costs 113 - -
* Transaction costs - 416 480
* Restructuring costs 952 323 1,905
* Impairment of property, plant and equipment - - 12,970
* Amortisation of acquired intangibles 1,969 111 221
Included in share of post-tax
profits of associates and
joint ventures:
700 - -
* Transaction costs
* Amortisation of acquired intangibles 1,193 - -
-------------- ------------- --------------
Underlying operating profit 5,618 8,100 16,852
-------------- ------------- --------------
Separately disclosed items
New business and new contract set up costs comprise costs of
investing in major new business areas or major new contracts to
commence or accelerate development of our business presence. These
costs include marketing costs, establishment costs, legal and
professional fees, losses and certain staff and training costs. The
costs in the current period were in relation to the development of
business at London Southend Airport.
Transaction costs comprise costs of making investments or costs
of financing transactions that are not permitted to be debited to
the cost of investment or as issue costs. These costs include costs
of any aborted transactions.
Restructuring costs comprise costs of integration plans and
other business reorganisation and restructuring undertaken by
management. Costs include cost rationalisation, brand
harmonisation, site closure costs, certain short term duplicated
costs, asset write downs and other costs related to the
reorganisation and integration of businesses. These are principally
expected to be one off in nature. The costs in the current period
were principally in relation to site restructuring in Stobart
Energy.
Impairment of property, plant and equipment charges are
considered to be non-recurring, due to their nature, and outside of
the normal activities of the Group.
Amortisation of acquired intangibles comprises the amortisation
of intangible assets identified as fair value adjustments in
acquisition accounting.
Separately disclosed finance costs of GBP8,096,000 comprise the
costs associated with early repayment of debt balances. Costs
include repayment fees, associated issue costs written off and
directly related professional fees. The costs in the period were
incurred in connection with the repayment of a GBP100,000,000
variable rate loan with M&G Investment Management Limited and
repayment of a substantial proportion of a property loan with GE
Real Estate Finance Limited (see note 10).
5 Partial disposal of the transport & distribution division
The Group disposed of a controlling interest in a substantial
proportion of the transport and distribution division on 10 April
2014. The Group has retained a 49% interest in the business, which
is accounted for as an associate in the period. The environmental
transport business unit, which was previously part of the transport
& distribution division, was also retained.
The results of the disposed business have been reported
separately as a single amount presented within discontinued
operations. The operation represented a separate major line of
business.
The consideration received for disposal of the business was
GBP239,700,000, comprising of cash of GBP190,600,000, including
GBP13,700,000 for the issue of a licence premium, loan notes of
GBP5,000,000 and fair value of the remaining 49% of the business of
GBP44,100,000. The loan notes were repaid on 24 April 2014. The
profit on disposal recorded within discontinued operations was
GBP10,436,000 after deducting fees and other costs directly related
to the disposal.
The accounting for the Group's share of the results of the
remaining 49% of the business requires identification of the fair
value of the investee's identifiable assets and liabilities
including intangible assets. The accounting for the share of the
associate is provisional in this Interim Statement.
The share of the results of the associate of GBP1,083,000,
included in the Condensed Consolidated Income Statement total of
GBP1,360,000, includes a share of transaction costs of GBP700,000
and a share of amortisation of intangible assets of GBP1,193,000.
These costs are separately disclosed items in accordance with the
policies set out in note 4.
6 Taxation
Taxation on profit on ordinary activities
Total tax charged in the income Restated
statement from continuing and Six months Six months
discontinued operations ended 31 ended 31 Year ended
August August 28 February
2014 2013 2014
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Current income tax:
UK Corporation tax 443 2,434 2,925
Overseas tax - 127 536
Adjustment in respect of prior
years 745 - (1,001)
------------- ------------ --------------
Total current tax 1,188 2,561 2,460
------------- ------------ --------------
Deferred tax:
Origination and reversal of
temporary differences (1,793) (111) (581)
Impact of change in rate - (1,302) (3,700)
Adjustment in respect of prior
years - 35 1,300
------------- ------------ --------------
Total deferred tax (1,793) (1,378) (2,981)
------------- ------------ --------------
Total (credit)/charge in the
income statement from continuing
and discontinued operations (605) 1,183 (521)
============= ============ ==============
Included in the above tax charge for the current period is a
total current tax charge on continuing operations of GBP745,000
(2013: GBP2,434,000), total deferred tax credit on continuing
operations of GBP1,793,000 (2013: GBP750,000) and total tax credit
on continuing operations in the income statement of GBP1,048,000
(2013: GBP1,684,000 charge).
A reduction in the UK corporation tax rate from 23% to 21%
(effective from 1 April 2014) was substantively enacted on 2 July
2013. The March 2013 Budget announced that the UK corporation tax
rate will further reduce to 20% by 2015. The reduction in the rate
to 20% (effective from 1 April 2015) was substantively enacted on 2
July 2013.
This will reduce the Group's future current tax charge
accordingly. The deferred tax liability at 31 August 2014 has been
calculated based on the rate of 20% substantively enacted at the
balance sheet date.
7 Dividends
A final dividend of 4.0p per share (2013: 4.0p) totalling
GBP13,249,153 (2013: GBP13,890,703 paid on 6 July 2013) was
declared on 21 May 2014 and was paid on 4 July 2014. GBP13,249,153
was paid in cash and GBPnil (2013: GBP334,478) was satisfied by
issue of shares under a scrip offer.
An interim dividend of 2.0p (2013: 2.0p) per share totalling
GBP6,558,517 (2013: GBP6,952,711 paid on 6 December 2013) was
declared on 23 October 2014 and will be paid on 5 December 2014.
This is not recognised as a liability at 31 August 2014.
8 Earnings per share
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