Mouchel Annual Results Summary 2014

Mouchel Annual Results
For the year ended 30 September 2014
Mouchel, the international infrastructure and business services group, announces its audited
results for the year ended 30 September 2014. Mouchel has had an excellent year and at the
end of September had a record order book of £3.1bn (2013: £1.7bn).
Financial highlights
Profit before tax
Net debt
Income statement – on an underlying
Underlying operating profit2
Underlying operating margin2
Underlying profit before tax3
Income statement – as reported
Order book
Operating profit
Operating margin
Business highlights
Business performance ahead of Board expectations.
Record order book of £3.1bn, up 82% on September 2013, with £2bn of new work
wins in the year.
In addition to the order book there is a strong contract pipeline of £2.9bn, and leads
and prospects in excess of £8bn.
Mouchel successfully mobilised 3 large contracts across the Group.
Completed bank re-financing on 15 January 2015. New three year facilities of £125m
(increase of £30m) will provide finance for the significant growth opportunities the
business is experiencing.
Grant Rumbles, Chief Executive of Mouchel, commented:
Our focus on delivering our strategy has resulted in another year of strong growth in
revenue and profit with good cash conversion. The record order book of £3.1bn reflects the
outcome of a successful year of bidding and winning projects and large contracts in the UK,
Australia and the Middle East. All large contracts secured during 2013 have been
successfully mobilised providing a strong platform for Mouchel to assist clients with their
investment programmes over the next five to ten years. This is an exciting time for our
industry and for Mouchel as the planned investment in road Integrated Infrastructure
Services is the largest witnessed since the 1970s.
About Mouchel
Mouchel is an international infrastructure and business services Group. We help to transform
and sustain essential public services. We work in partnership with public and private sector
clients to improve the day-to-day lives of millions of people. Mouchel provides advisory,
design, project delivery and managed services associated with infrastructure and business
services across the highways and transportation, local government, emergency services,
property and utilities markets across the world. We have more than 6,500 people based in
the UK, Middle East and Australia.
Results for the year
Revenue was up 11% to £616.6m (2013: £555.3m) with underlying operating profit3 up 10%
to £31.9m (2013 restated1: £28.9m) Net underlying operating margin has remained at 5.2%
(2013 restated1 : 5.2%). Net interest costs were £7.7m (2013 restated1 : £7.5m). Underlying
profit before tax was up 22% to £20.3m (2013 restated1: £16.6m). During the year Mouchel
won in excess of £2bn of new business with significant contract wins for EM Highway Services
Ltd (EM) and DownerMouchel.
At the end of September the order book was £3.1bn (2013 : £1.7bn), up 82%.
Group operating profit was up 22% to £24.2m (2013 restated1: £19.9m) and profit before tax
was up 33% to £16.5m (2013 restated1: £12.4m).
Underlying cash generated from operating activities was £32.6m (2013: £39.3m), 102%
(2013 restated1: 136%) converted from underlying operating profit2.
Cash outflows in respect of restructuring, onerous leases, settlement of a legacy legal claim
and pension contributions were £14.7m (2013: £20.1m). Net debt at the end of the year was
£39.5m (2013: £45.5m) a reduction of 13%.
Employee numbers at the end of September were 6,523 (2013: 6,509) with the average
number of employees being 6,232 compared to last year of 6,648. Although the numbers are
similar to 2013 a greater proportion of the headcount is related to Integrated Infrastructure Services.
Review of developments
The Group’s financial position is strong, ending the year with the largest order book in
Mouchel’s history and also exceeding its full-year budget expectations and completing a bank
refinancing on 15 January 2015.
The Group continues to make good progress against its strategic objectives. By focusing on its
core strengths and sectors in which it holds a leading position, Mouchel has won contracts
across all areas of the business, including, in December 2013, the Highways Agency’s (HA)
Area 9 Asset Support Contract (ASC). This is the company’s largest-ever contract, worth up to
£0.9bn for the initial five-year contract period, with a potential extension valued at up to
£0.6bn for a further three years.
Collaboration is fundamental to Mouchel’s strategic approach. A number of its contracts are
delivered through joint ventures and collaborative relationships with a range of partners. The
Group’s specialist Highways Asset Services division, EM, achieved BS11000 accreditation for
four of its contracts in the 2013 financial year and it is the first supplier to attain the
certification with a local authority. EM is now working to bring the Area 9 ASC contract,
mobilised on 1 July 2014, under the BS11000 umbrella. Mouchel’s engineering consultancy
business was also awarded BS11000 accreditation in July 2014.
BS11000 is based on the concept that companies working together can often achieve much
more than they can alone. This recently introduced British Standard provides a framework
specification for creating successful, sustainable, collaborative relationships enabling
companies to develop and manage their interactions with other organisations to provide
maximum benefit for all.
Looking ahead, the need for continuing collaboration with clients and other members of the
supply chain will place a greater emphasis on having the right people and the right skills in
place. To be ready for those challenges and to support growth in the business, Mouchel has
developed a framework for career progression based on experience and recognised
professional qualifications. It is investing in the continuous development of its project
management community, as well as recruiting suitably experienced people. The Group is also
currently working towards corporate Associated Project Management accreditation.
People are the Group’s most important asset and their development and wellbeing is integral
to its strategy. In September 2013, the Group aligned itself with the Department of Health’s
wellbeing agenda by committing to its construction and engineering sectors’ ‘Health Pledge’.
Mouchel is working towards Investors in Diversity accreditation and, in September 2014, for
the third consecutive year, the Group sponsored the Community Organisation Award for
Disability at the National Diversity Awards.
In addition, for the third year running, the Group took part in the Global Corporate Challenge,
an international workplace health initiative aimed at improving the health and quality of life
of employees across the globe.
For the eighth consecutive year, Best Companies has managed the Group’s annual employee
survey. Conducted in January 2014, Mouchel has recorded its best results since 2009, showing
an improvement in all eight factors used to measure employee engagement. This increase has
placed Mouchel in the Best Companies’ ‘Ones to Watch’ category.
The health and safety of Mouchel’s employees is a top priority. The Group secured a further
Gold Award from the Royal Society for Prevention of Accidents (RoSPA) during the year, which
is the 9th consecutive award for Mouchel. The RoSPA Gold Medal recognises a very high level
of performance and demonstrates a well-developed occupational health and safety
management system with outstanding control of risk and very low levels of error, harm and
The Group took another step closer to becoming a low carbon business in May after being
awarded the Carbon Trust Standard (CTS), a voluntary certification and mark of excellence
that recognises organisations that have taken real action on climate change by reducing its
carbon emissions. Just five months later, in October 2014, the Group won the Best Absolute
Carbon Reduction Award at the CTS Bearers Awards after reducing its carbon footprint by
38.5% over the past three years, between 1 October 2010 and 30 September 2013.
Mouchel has also made a large investment this year in its ICT. Its 10-month £5.5m ICT
investment programme was completed at the end of October 2014. Mouchel now has the
infrastructure in place that allows employees to share data across the business more reliably
and securely and easily and, ultimately, to compete more effectively at any time of the day or
night, regardless of geography.
Integrated Infrastructure Services (IIS)
Mouchel’s IIS business operates across a wide range of market sectors at different levels of
maturity including highways, water, maritime, environment and energy; and across a number
of geographies including the UK, Middle East and Australia, which are discussed in more detail
Revenue in the year was up 21% to £470.9m (2013: £387.9m) and divisional underlying
operating profit4was up 27% to £35.9m (2013: £28.3m), primarily driven by growth in the
Highways business.
Mouchel is a leading services provider in the Highways market in the UK, Australia and the
Middle East providing the full range of Integrated Infrastructure Services including, advisory,
design, integrated asset maintenance and infrastructure improvement services across this
In the UK, Mouchel supports the HA, Transport Scotland, Northern Ireland Roads Service and
Transport for London (TfL) to maintain and improve the strategic road network. It also
supports a number of local authorities delivering similar services for their local road networks.
Following an announcement by the Department for Transport in July 2013, the strategic road
network has attracted increased future funding, with a commitment to invest more than
£15bn by 2021 and more than £12bn on maintenance. This marks the largest increase in
infrastructure funding since the 1970s.
The increased investment from the HA and TfL, two of Mouchel’s largest clients, is putting
increasing demands on the industry’s capacity and capability. To address this demand,
Mouchel has invested in additional design resources and, to provide for the most efficient
and effective use of these resources, has reorganised the way in which they operate. In
addition, EM, had increased the number of its design centres around the country.
In addition to the increased infrastructure investment, there are new procurement models
coming to market with greater emphasis on collaboration and an increased focus on customer
outcomes. Mouchel is well placed to meet these changing requirements, having delivered a
large number of its contracts alongside partners and suppliers for many years.
One example of the new procurement model is the HA’s Collaborative Delivery Framework,
under which Mouchel has been awarded contracts on Lot 1 (Professional Services) and Lot 2
(Construction Schemes to £25m). With an emphasis on collaborative behaviours and working
across the industry, this framework sets the standard for future procurement and delivery.
The HA’s transformation from an executive agency to a government-owned company
responsible for managing, operating and improving the strategy network is underway and
Mouchel is working with the HA to support it through this journey. In December 2013, EM
secured the HA’s five-year Area 9 ASC (with the option to extend by a further three years).
This is the company’s largest-ever contract, worth £0.9bn for the initial five-year contract
period, with a potential extension valued at up to £0.6bn for a further three years. This
followed close on the success of EM’s Area 3 ASC contract award. Both Area 3 and Area 9
contracts were successfully mobilised in the year. EM has the largest share of the HA’s ASCs
and it is also the top performing service provider in the ASC community according to the HA’s
Performance Management Framework (PMF) scores. These reaffirm Mouchel’s position as a
leading partner of choice for the HA’s strategic highway network.
In the local authority sector, Norfolk County Council, England’s third largest county, awarded
Mouchel a seven-year contract worth up to £5m per annum to provide highways,
environmental, transport and development consultancy services. The contract was
successfully mobilised in April. Mouchel also won a four-year engineering services
consultancy contract worth £6m with the local authorities in Bournemouth and Poole.
In the year, Mouchel has also secured its first one-year extension to its strategic highways and
transportation partnership contract with Leeds City Council; the first of seven potential oneyear contract extensions. In Shropshire, building on the successful delivery of highway
consultancy services since 2000, a further extension to this contract has been awarded
through to 2015. Mouchel has also been awarded a two-year extension to its contract for the
procurement of roads, transportation and environmental professional services with Stirling,
Falkirk and Clackmannanshire councils in Scotland. EM has been delivering highways
maintenance services to the London Borough of Croydon since 2011 and this contract has
been extended for a further two years.
The Group also continues to provide highway services to Oldham, Lincolnshire and Knowsley
councils. This broad base of experience and capability across the local authority market holds
significant opportunities for growth with up to 40 local authorities across England expected
to bring their road management and maintenance contracts to market over the next few
For the second consecutive year, Mouchel has been ranked as the top consultant for roads in
the Chartered Institute of Highways & Transportation’s (CIHT’s) Consultants File, with our
Intelligent Transport Systems (ITS) business maintaining its consistently high ranking as an
industry-leading ITS consultant.
The business recently gained recognition from the HA and Cabinet Office for its work on the
M1 Smart Motorways project, particularly for its leading-edge use of Building Information
Modelling (BIM). This technology is becoming a requirement for all government-funded work
and is providing a platform to drive collaboration and improved efficiency in delivery.
Mouchel has won a number of awards this year for the Birmingham Box Phase 3 of the HA’s
Smart Motorways programme, which went live before Easter 2014. In particular, Mouchel has
been recognised for its innovative work on the vital capacity enhancement between Junction
5 and the M6/M5 interchange at Junction 8 near Walsall which also includes the iconic, fondly
known ‘Spaghetti Junction’. Formal awards include the HA Supplier Recognition Award for
Supply Chain Management in association with supply chain partner, Ramboll; and both the
CIHT and Institute of Highway Engineers major projects award.
Mouchel has continued its work on the 10-year National Roads Telecommunications System
(NRTS) Private Finance Initiative (PFI) contract where it helps the HA to manage and develop
its 7,000km telecommunications network. The Group’s excellent performance has been
demonstrated by its high Managing Success Toolkit (MST) performance scores – delivering
‘highly satisfied’ or ‘totally satisfied’ results against all performance criteria – and has led to
it securing new contract opportunities.
Further success has come on the back of Mouchel’s Taranto traffic enforcement software
product reinforcing its position as the leading provider of road-user charging enforcement
solutions in the UK.
Recognising this position, Capita selected Mouchel to provide Taranto software for TfL’s
Congestion Charge Zone and Low Emissions Zone. From October 2015, Mouchel will provide
the entire enforcement software solution for TfL across London, including traffic enforcement
on red route, bus lane and yellow box junctions.
French Operator Sanef has also chosen Taranto for the M25 Dartford crossing. This is the first
location to introduce barrier-free electronic tolling in the UK and operations commenced on
1 December 2014. Building on this success, Taranto has also been selected by Sanef as the
solution to enable barrier-less tolling on the planned six-lane toll bridge over the River
Mersey, Liverpool.
Mouchel's water business projects and revenue is mainly associated with the Asset
Management Process (AMP) investment cycle. With expenditure beginning to slow down as
the AMP5 period winds down, the business is actively participating in the AMP6 bidding
process in readiness for the start of the next cycle in April 2015. Mouchel has secured
positions on a number of frameworks including providing engineering and technical services
to Irish Water, Ireland’s newly established national water utility, and specialist modelling
consultancy services to Yorkshire Water and South West Water.
It has also secured a contract to provide technical support to international water consultant,
MWH Global, in managing and delivering Southern Water’s £2bn AMP6 investment
Environment and Energy
The environment and energy businesses represent a key part of Mouchel’s infrastructure
business with clients procuring a single service or multiple services as part of an integrated
solution. The markets across environment and energy consultancy remain strong in the UK
and elsewhere and Mouchel is focused on growing its presence in both of these markets. The
environmental business also provides Mouchel with the in-house capability of supporting its
highways infrastructure services business.
The environment business continues to provide land referencing support for High Speed 2
(HS2), the £32bn high-speed rail link between London and Birmingham. This builds on the
market-leading services provided by Mouchel to Crossrail and Thames Water for the Thames
Tideway Tunnel project which gained government approval in September 2014.
In September Mouchel was awarded a further land referencing contract from Transport for
Greater Manchester to support the planned expansion of the Manchester Metrolink.
The recent award from Irish energy company EirGrid to help them to secure planning
permission from landowners for the company’s electricity line upgrade has allowed the
business to further broaden its services in the energy market.
Mouchel is exploring growth its business in this area, having invested in the recruitment of
several senior maritime experts over the past year.
The business is currently pursuing opportunities in the Middle East and is engaged in
delivering a number of large, multi-disciplinary port infrastructure projects, including in the
Kingdom of Saudi Arabia, where the Maritime business presented a masterplan outlining an
expansion strategy for the Red Sea Gateway Terminal. This strategy supports the vision of
quadrupling the port’s capacity providing an additional 3km of quay wall to allow the berthing
of additional mega vessels of the largest container class in the world.
Middle East
Mouchel’s business in the Middle East is moving forward at a rapid pace anticipating strong
growth through the investment in infrastructure in the Group’s core Middle East markets. It
currently has a strong list of opportunities at the preferred bidder stage.
For the past four years, Mouchel has managed more than 1,300km of high-speed road
network in Abu Dhabi under its Zone 3 contract and is currently preferred bidder for a further
three-year extension of this contract. In addition, Mouchel has been managing for the past
12 months a further 1,200km of highways on the island of Abu Dhabi, thus totalling 2,500km
of network and roads currently being managed and improved.
The market is buoyant, allowing Mouchel to select where and what to bid for in the region.
The business enjoys a strong pipeline of opportunities in highway design, management and
maintenance, water and sewerage, ports and coastal development and in improving the
‘liveability’ of urban areas.
In Australia, the Group’s joint venture, DownerMouchel, will have more than doubled the size
of its business when the full annualised revenue comes forward following three significant
contract awards in Eastern Australia. These are collectively valued at more than A$1bn over
the lifetime of the contracts.
The joint venture, which provides similar integrated design, management and delivery
services to those of EM operating in the UK, has successfully maintained its 100% win rate.
DownerMouchel’s most recent award was a five-year contract (with an option for a two-year
extension) to maintain the Intelligent Transport Systems (ITS) assets in the Sydney Metro
West Zone and regional New South Wales for Roads and Maritime Services; which was
mobilised in October 2014. Other wins in the period include a five-year Roads Asset
Management Contract in South East Queensland, a seven-year Stewardship Maintenance
Contract for roads in Sydney West Zone and, most recently, a four and a half year contract for
Design and Delivery of Project Services in the Sydney North Zone. The three contracts were
fully mobilised in March of this year. These recent wins further consolidate DownerMouchel’s
position as the market leader in integrated roads contracts in Australia. Mouchel anticipates
that further bidding opportunities will come to market in 2015, most likely in New South
Wales and Victoria.
In Western Australia, DownerMouchel manages around 40% of the strategic road network
through its three Integrated Service Agreement contracts covering the Perth Metropolitan,
Mid-West & Gascoyne and Kimberly areas. The joint venture secured one-year extensions
during this period for both its Perth Metro and Mid-West & Gascoyne contracts.
Collaborative working across the Group has supported these recent successes in Australia,
drawing on expertise from across the business during the bid process, through mobilisation
and into the contracts, helping to establish and embed the Causeway IT business
management system used by EM in the UK.
Mouchel Business Services (MBS)
MBS is one of the leading providers of outsourced professional and support services to
councils and other public bodies such as the police, fire and rescue services, the NHS, schools
and academies and, more recently, to higher education.
Revenue in the year was down 13% to £145.7m (2013: £167.4m) and divisional underlying
operating profit4was down 49% to £2.7m (2013: £5.3m). The decreases are largely due to the
loss of the Milton Keynes contract in 2013.
The business has delivered according to the Group's expectations and has a healthy pipeline
with a number of active bids. The division completed the implementation of the OneMouchel
Transformation project in January, which has improved efficiency and service delivery.
Mouchel has had a number of noteworthy successes during the year. In July, Lincolnshire
County Council awarded joint venture VinciMouchel, a five-year contract valued at between
£35m to £45m to provide the Council’s property services; the contract commences on 1 April
The Department of Health (DoH) has awarded Mouchel a one-year extension to its five-year
contract valued at £4m for its work on the Centre for Workforce Intelligence (CfWI). Mouchel
is commissioned by the DoH, Health Education England and Public Health England to deliver
evidenced-based research, intelligence, tools and resources to inform workforce planning
policy decisions at a local and national level across the NHS and social care.
In November Mouchel renegotiated its contract with its joint venture partner, Oldham
Metropolitan Borough Council, leading to a three-year extension of the 12-year contract,
adding a further £50m of revenue to the business. As part of its renegotiations, Mouchel has
this year taken on responsibility for strategic property services as well as operational services
creating a more customer-focused, integrated service that has generated cost savings of 20%
for the Council.
In Lincolnshire, Mouchel also had its highways and transportation professional services
contract extended by a further year adding £5m of revenue and pushing the end date of the
contract to March 2016. Its schools contracts within the County have also been extended by
a further year.
An increase in soft market testing is beginning to translate into a greater number of bidding
opportunities, especially in the local government market. However, while there are some
larger opportunities on the horizon these are still relatively small in number. The
procurement trend has also moved towards more single-service line opportunities across all
of the Group’s markets.
The Schools and Academy market is buoyant with an increasing number of academy trusts
seeking to outsource their back offices. Mouchel secured a payroll contract this year with
the Nicholas Postgate Academy Trust, comprising five schools based in Redcar and Cleveland.
Mouchel provides services to some 1,500 educational establishments across more than 40
different local authority areas. During the last annual renewal period, 96% reconfirmed their
contracts with Mouchel.
The Schools and Academy team rolled out a new pilot education extranet, CONNECT-ED, this
year with 15 schools and academies as well as a new procurement website, Mouchelbuy, that
allows Mouchel clients to buy a range of goods and services at market-leading prices. The
introduction of these services, which will be rolled out nationally in the first quarter of the
2015 financial year, are expected to help accelerate growth in the schools and academies
business. Mouchel’s breakthrough this year into the Higher Education market, with its
University of East London win, has led to an increasing number of enquiries from universities,
opening up a range of opportunities.
In the Health market, in addition to securing a one-year extension from the DoH, the CfWI has
been given permission to trade under licence, enabling it to augment its impact across the
wider NHS, social care and other public sector markets. Commissions to share CfWI expertise
and materials are already being considered under the new licence.
Mouchel is currently bidding for a place on the NHS England Lead Provider Framework on
commissioning support; set up to provide expertise, skills and resources to clinical
commissioning groups to help improve the delivery and quality of services to patients.
Mouchel is bidding as ‘MBED’ – a consortium including BDO LLP, Dr Foster Intelligence and
The Property Consulting team has made some headway into the Scottish Health market,
winning a contract with the Scottish National Blood Transfusion Service and joint venture
Seacole National Centre Ltd, to provide independent tester services for the development of
the new National Centre just outside Edinburgh. Mouchel’s work on this high-profile project
has led to a range of enquiries from other Scottish bodies.
The Police market for back office services is growing significantly. Mouchel’s Pensions team
further reinforced its dominance in the market by securing two more police contracts during
the period. Nottinghamshire Police and North Wales Police have both awarded the Pensions
team administration and payroll contracts; the former is for five-years with an option for two
12-month extensions, while the latter contract is for three-years, also with an option for two
12-month extensions. These wins bring the total number of Mouchel police pension clients
to 12.
Mouchel’s Payroll team added to this success in December when it was announced as
preferred bidder to deliver a fully managed payroll service for the 7,500 officers and staff at
Merseyside Police after scoring top marks in all three key areas of assessment:
solution/technical quality, price and presentation; the go-live date has been deferred to April
The UK property market has been making a strong recovery this past year. While the strongest
UK market is new build housing, opportunities in Mouchel's core public sector property
market are recovering as is evident from Lincolnshire County Council’s recent five-year
contract award to Mouchel’s joint venture with Vinci, VinciMouchel. There is also an
increasing pipeline of opportunities.
While remaining selective about the opportunities that the business bids for, Mouchel
continues to win a constant flow of new work and is expecting its revenue and market position
to continue to improve. Mouchel is well positioned to target future growth opportunities
across its markets and emerging markets.
Despite an improvement in the number of opportunities in the marketplace, public sector
clients remain under continuing pressure to drive down their costs while maintaining the
same levels of service. Competition in the back office and property market is intense with
associated margin erosion. Although Mouchel remains well placed to compete, with efficient
and client-focussed operations.
Group outlook
The year has produced a record order book, of £3.1bn. The large integrated infrastructure
services contracts, secured over the past 18 months, allow Mouchel to support its clients to
deliver the largest investment in highways infrastructure since the 1970s. In addition,
Mouchel is currently bidding £2.9bn of additional new work and is tracking in excess of £8bn
of leads and prospects.
Financial review
An analysis of the underlying results for 2014 is set out below:
Underlying operating profit1
Operating profit
Finance income
Finance expense
Profit before tax
Profit after tax
Underlying profit before tax3
Total revenue
An analysis of revenue and underlying operating profit is set out below:
Services “IIS”
Mouchel Business
Services “MBS”
Underlying operating
margin % Revenue
Debt and financing
At the year-end net debt stood at £39.5m (2013: £45.5m)
On 15 January 2015 the Group completed a refinancing with five banks to raise new facilities
of £125m of which £95m are cash facilities and £30m are bonding facilities. These new
facilities replaced £95m of total facilities.
The new facilities expire in April 2018.
Analysis of non-underlying items
Management uses underlying profit to measure and manage the financial performance of
the Group on a day-to-day basis. The table below summarises the items the Board
considers to be of a non-underlying nature:
Acquisition transaction costs
Amortisation of intangible assets arising from business
Release of legal, onerous contract, WIP and other
Movement in restructuring provisions
Costs relating to restructuring activities
Total non-underlying items
Acquisition transaction costs relate to the acquisition of 50% of EM in February 2013.
A reconciliation between underlying profit before pension costs and statutory operating profit
is set out below:
Underlying operating profit before pension scheme cost1
Less total non-underlying items above
Pension scheme costs
Statutory operating profit
A tax credit arises on the profit for the year principally due to the recognition of
brought forward losses and release of over-provisions of tax relating to previous years.
Cash flow
A summary of the Group’s cash flow is set out below:
Cash generated from operations before working capital
Working capital movements
Underlying cash generated from operations
Restructuring and onerous lease costs
Settlement of legacy legal claim
Contributions to defined benefit pension schemes and pension
administration costs
Overseas tax paid
Net cash generated from operating activities
The net deficit on the Group’s defined benefit schemes before associated tax credits, as
defined by IAS19 Accounting for pension costs, was £55.7million (2013: £53.0 million).
Adjusting for the associated deferred tax asset, the deficit was £44.6m (2013: £42.0m).
The Group operates four defined benefit schemes, “the Schemes”. The three main Schemes
were closed to future accrual on 31 December 2010. Employees are now offered membership
of a defined contribution pension scheme. The triennial valuation at 31 March 2013 was
finalised in June 2014.
The one continuing Scheme is a sectionised, multi-employer, final salary scheme for EM that
has a small surplus of £0.8m. The pension costs of this scheme are recoverable in the
During the year the Group adopted IAS19 (Revised 2011) which increased administration costs in the
Consolidated Income Statement with a corresponding restatement of the actuarial movements in the
Consolidated Statement of Comprehensive Income. There is no impact on the net liability on the
Consolidated Balance Sheet. A further adjustment reducing administration costs by £0.8m in the year
to 30 September 2013 is a presentational adjustment, not directly linked to the introduction of IAS19
(Revised 2011). The Consolidated Income Statement, Consolidated Statement of Comprehensive
Income and Consolidated Statement of Cash Flows have been restated accordingly.
Underlying operating profit excludes pension scheme costs, items considered to be one off or nonrecurring in nature and the amortisation of intangible assets arising from business combinations.
Underlying profit before tax excludes items considered to be one-off, or non-recurring, in nature and
the amortisation of intangible assets arising from business combinations.
Divisional underlying operating profit is earnings before interest, tax before pension scheme costs and
non-underlying items and the allocation of corporate overheads.