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3
PRIDE
Progress
Values
• We aim for continuous improvement and to respond quickly to change.
• We promote the principle of sustainable development.
• We seek to lead the development of our professions.
Respect
• We respect our environment and the communities in which we work.
• We value the rich diversity of all peoples and cultures.
• We treat each other with respect.
Integrity
• We promise only what we can deliver.
• We behave ethically and take responsibility for our actions.
• We promote a culture of safety.
Drive
• We endeavour to exceed the expectations of our customers.
• We work hard and encourage fun and fulfilment.
• We work for, and expect, success.
Excellence
• We uphold high technical, professional and safety standards.
• We seek to innovate and develop creative solutions.
• We are proud of our achievements.
Mott MacDonald Group Limited
Directors Chief Financial Officer Registered office
Keith Howells Chairman Ed Roud Mott MacDonald House
Richard Williams Managing Director 8-10 Sydenham Road
Kevin Stovell Strategic Development Director Company Secretary Croydon CR0 2EE
Guy Leonard Director Philip Gregory
Kevin Dixon Director Registered No. 1110949
Mark Austen Non-executive Auditors
Claire Smith Non-executive Grant Thornton UK LLP t +44 (0)20 8774 2000
Grant Thornton House f +44 (0)20 8681 5706
Melton Street w www.mottmac.com
Euston Square
London NW1 2EP
About Mott MacDonald
Global management, engineering
and development consultancy
Whole-life multidisciplinary service offering
Over 14,000 staff worldwide
Independent and wholly employee owned
Principal offices in nearly
12
core business sectors
50 countries, projects in 140
1
Chairman’s statement
Performance of £1 per share was paid in December. The fair
Our long-established business model of diversity value of ordinary shares at 31 December 2010
by geography, sector and discipline has been a key increased by 40p to £8.80.
driver in holding our gross revenue above £1bn in
2010. This is a sound result given the continuing People
mixed picture in the world economy and the fact Our ability to deliver success for our customers is
that project lead times tend to put our type of totally dependent on the talent, commitment and
business further down the line in emerging from contribution of our highly skilled and motivated
recession. Overall in 2010 we delivered sustained people – our biggest asset. Harnessing our business
achievement, steady business performance and diversity and staff mobility has held overall staff
ongoing investment despite tough conditions in numbers stable in 2010, albeit the global pattern has
some of our larger markets. shifted with reductions in Europe offset by increases
in North America, the Middle East, South Asia and
Customers Asia Pacific. Consequently we ended the year
“
We are responding to our customers’ needs with with 14,400 total staff, including agency staff and
innovative thinking and added value solutions independent consultants.
to help them make their investment go further.
Central to this is our focus on aligning our business Looking ahead
Overall we delivered ever more closely with our customers, many of Measures we have taken to get closer to customers
sustained achievement, whom operate internationally. We have therefore and position ourselves for future opportunities
steady business strengthened our local and regional management – coupled with our financial stability – mean we are
performance and ongoing and deepened our understanding of where and how well placed for the coming year. We will continue
”
investment despite tough our customers are developing their businesses so using our broad professional and global reach to
conditions in some of our we can provide the presence and skills to match. keep our business stable and help us retain talented
larger markets. This, coupled with our strategy to gear up in areas staff by sharing work around the Group. At the same
where we see major future opportunities, has led time we aim to keep on improving how we run our
us to add several new offices, niche services and business, from looking after our staff and supporting
acquisitions during the year. our customers to cutting our carbon footprint.
Our approach remains one of optimism tempered
Independent recognition by the same degree of caution and prudence that
In 2010 our projects and people received has helped us sustain our performance to date.
120 external awards – 20% up on our previous
record – recognising achievements in innovation,
health and safety, training, value engineering and
business performance. These demonstrate our
level of professional excellence and the regard in
which our peers and customers hold us. Highlights Keith Howells
include being named International Consultant of Chairman
the Year for the third year running by the Association 2 March 2011
for Consultancy & Engineering/New Civil Engineer
and winning the title Project Management Company
of the Year from the Europe-wide Association for
Project Management.
Dividend and fair value
Our 2010 operating and financial results
demonstrated stability and resilience amid ongoing
global economic uncertainty. As a result a dividend
2
Corporate responsibility
We believe that working to achieve the greatest • Improve attractiveness of Mott MacDonald as
benefit for our customers, staff, society and the the employer of choice.
environment is central to sustaining a robust • Be aware of the Group’s cultural and linguistic
and healthy business. We report annually on diversity and assure inclusion and integration.
our corporate responsibility performance. Our
2009/2010 report showed we largely achieved the All goals attained. Access to courses for young
25 goals we set ourselves the previous year and professionals and managers extended. Diversity
we are acting to realise the very few not on target. monitoring now global. A Sunday Times top 10 best
These goals and our assessment are shown here big employer in the UK for the third year running.
– the full report is available at www.mottmac.com/ Keith Howells
corporateresponsibility. Our communities Group Chairman
•Progress three Community Support Programme
Our customers projects and identify a project to start in 2011/12.
• Improve customer satisfaction by 1%. •Continue support for staff charitable activities.
• Maintain ISO 9001 certification for quality •Match/exceed 2008 charitable donations in 2009.
management. •Continue promoting our professions to young
• Extend practice leadership networks to all regions people through school and college programmes.
to improve the quality of service. •Work with customers and partner organisations
• Continue encouraging and recognising innovation to maximise the local benefits of projects.
and excellence through awards.
• Recruit talented staff and continually train them Three Community Support Programme projects
to ensure availability of cutting-edge expertise. in train. Charitable giving rose slightly. Continuing
support for staff engaged in community initiatives.
All goals attained. Two new practice managers Launched an apprenticeship scheme in London to
appointed. Our projects and people won 75 external benefit local young people as well as the company.
awards in 2009 and 120 in 2010.
Risk, safety and ethics management
Sustainability • Embed the CLASS management system globally.
• Reduce carbon emissions per employee by 5%. • Reduce lost time accidents and further improve
• Maintain ISO 14001 certification for environmental reporting of near misses.
management. • Extend certification to OHSAS 18001 for health
• Ensure every office has an environmental and safety management.
action plan. • Continue to strengthen Group guidance on
• Use available tools to measure the whole-life ethical behaviour.
carbon footprint of projects. • Make decisions based on knowledge of the risks.
• Spread best practice on integrating sustainability
into project planning and implementation. All goals attained. CLASS workshops held worldwide
for all staff. Reported near misses doubled while lost
All goals attained. Like-for-like carbon emissions time accidents reduced. Ethics training is mandatory
per employee were 26% lower. We launched our and a director is responsible for ethics compliance.
sustainable design methodology INDUS, backed by
industry-first carbon and cost measurement tools.
Our staff
•Maintain and improve availability and quality
of training. Keith Howells
•Extend diversity monitoring to the entire Group. Chairman
•Carry out staff surveys and act on the results. 2 March 2011
3
Operating review
Business and market review North America (Hatch Mott MacDonald) grew by
The global economic slowdown which significantly nearly 9%, with profit up 15%. About half of this
reduced market opportunity in the second half of growth was due to currency and half due to growth
2009 has continued to adversely affect the Group’s in the business. One of the main drivers was strong
core markets in 2010. Lower market volumes and growth in Canada. In the US, the business units
competitive pricing pressures have resulted from in the West and North East also grew, albeit more
this and these have held back growth and reduced moderately, but in the South there was a reduction
underlying profits. in both revenues and profits. Workload for 2011 is
varied across the business units but overall the order
Richard Williams However the Group’s diversified business model book remains sound with the business budgeting to
Group Managing Director has proved to be robust, with certain geographic grow profitably.
and market sectors continuing to offer opportunity
for profitable growth. Middle East and South Asia
The region comprises three geographic business
A brief review of performance is set out below, using units in India, Pakistan and the Middle East, with
results from the management accounts. Underlying the global Oil, Gas and Petrochemicals business
revenue and profit exclude the effects of exchange making a fourth.
and acquisitions.
The region represents about 20% of the Group’s
Overall at Group level, gross revenue increased by gross revenue. In broad terms, gross revenue
about 2%. This was primarily due to exchange and increased by around 12% over 2009 with underlying
acquisitions, with a 0.3% underlying increase in the profit flat. Oil, Gas and Petrochemicals had a good
business. The impact of the depressed markets on year. The other business units moved forward but
profit is more significant with underlying profit from fell short of planned growth levels. Contracted
operations reducing by 19% excluding the impact workload for 2011 is up on the equivalent position
from exchange and acquisitions. at this time last year and all units are budgeting
profitable growth.
Europe and Africa
The business units in this region represent about Asia Pacific and Australia
55% of the Group’s revenue. 2010 continued to The region started 2010 as three geographic
be a challenging year for them due to the impact business units in Hong Kong/Macau, Southeast
of the economic downturn. Gross revenue was Asia (Singapore, Malaysia, Indonesia and
down 6% compared to the prior year, but Thailand) and China/Taiwan. During the year,
underlying profit was down by over 30%, principally selective acquisitions coupled with organic start-up
due to debt provisions, tighter margins and lower businesses in Australia have led to a fourth unit
than anticipated staff utilisation in some parts of now being established. The region is small,
the business. representing only about 5% of the Group’s gross
revenue, but has significant potential to grow.
In the second half of the year the business has
reduced staff levels to balance resource against Although the businesses in Hong Kong and
available workload. Little growth in workload is Singapore underpin the region’s financial
expected in 2011 due to market conditions. performance, China and Taiwan have both
performed well, with Indonesia and Malaysia
North America also showing good signs of future progress.
The business units in this region represent about And operations are now firmly positioned in
20% of the Group’s revenues. Markets remained Australia for strong organic growth. Performance
challenging in 2010 but our principal business in in 2010 was slightly ahead of budget both in
4
Operating review
revenues and profit. Contracted workload for Although our markets face short term pressures as
2011 is well up on the equivalent position at this governments seek to tackle their fiscal deficits by
time last year. constraining investment in infrastructure, the long
term outlook for our business remains positive given
Market position the long term infrastructure needs of both developed
In its 2010 survey of British consultants, the UK’s and developing countries.
New Civil Engineer magazine (NCE) ranked us 3rd
“
in terms of both fees rendered and staff numbers.
The strength of our technical diversity was
recognised in the market sector rankings where we
were in the top ten in a number of sectors including: Richard Williams The Group’s diversified
power, tunnels, railways, telecommunications, Group Managing Director business model has
ports/airports, water, project management, roads 2 March 2011 proved robust, with
and bridges, geotechnics, buildings, defence, certain geographic and
”
flooding/coastal work, transport planning, market sectors continuing
environment and waste management. to offer opportunity for
profitable growth.
The USA’s Engineering News Record ranked us
13th in the Top 200 International Design Firms
and 16th in the Top 150 Global Design Firms lists.
We were also ranked as the global number one
infrastructure finance technical advisors.
Looking forward
The challenges we have faced during 2010 look
set to continue for the coming year but we are
well positioned to respond effectively and to move
forward in 2011. Our order book remains strong
and we have a sound financial position.
Economic prospects remain uncertain as many
governments seek to reduce budget deficits and
balance fiscal stimulus against tight budgetary
control. The impact of this economic tension is
a reduction in infrastructure investment in the near
term. As a result, trading conditions continue to
be depressed in our core markets. Our strategy of
holding a diversified business portfolio has helped
us to respond to these difficult trading conditions
and we fully expect that it will continue to do
so in the coming year.
Business priorities for us in the coming year are to
maintain our market share, grow the order book and
reverse the downturn in profits and margins that we
have seen in the past 12 months.
5
Financial review
Performance The movement in reserves was mainly the net effect
Gross revenue in 2010 was £1,035m (2009: of retained profit of £22.5m, less a dividend payment
£1,016m) – a good result, given the significant of £8.7m, and a pension credit net of tax of £28.0m
slowdown that occurred in some of the Group’s recognised in the statement of recognised gains
markets during the year. The increase mainly and losses.
came from acquisitions and exchange, with a 0.3%
underlying increase in the business. The Group’s Gearing and cash flow
business model of market and geographic diversity At 31 December 2010, net cash was £52.8m, down
was the main driver keeping gross revenue above on last year (£68.6m) partly due to working capital
Ed Roud £1 billion and at similar levels to last year, despite slippage and partly due to spend on acquisitions
Group Chief Financial Officer the prevailing depressed market conditions. and new offices.
The operating profit in the management accounts The working capital slippage relates to the UK
was down 19% on last year due to lower volumes, and Middle East and is a temporary matter of cash
competitive pricing and high business development flow timing rather than being indicative of a
costs. Lower staff utilisation also contributed to the liquidity issue.
fall in profits.
Net gearing remained at nil throughout the year,
Despite the competitive pressures on underlying with the Group continuing to generate good cash
operating profit, profit before tax of £49.3m was flow from its operations.
up on last year (£45m). The increase in profit in
the financial accounts is due to a reduction in costs The Group renewed its bank facilities during the
such as FRS17 pension funding costs, bonuses year and as a result has £60m of committed
and the contribution to the Employee Trust which facilities in place till December 2014 for funding
appear in the financial accounts but not the future operational requirements, acquisitions and
management accounts. strategic growth initiatives. It also has bond
facilities to provide tender bonds, performance
The effective tax rate was 33%, largely unchanged bonds and advance payment bonds in the normal
on the previous year. It is high due to a larger course of business.
proportion of Group profits coming from countries
which currently have high tax rates. There is also Summary
a decreasing benefit from R&D due to depressed The strong balance sheet and the bank facilities
UK markets. in place provide a firm foundation for the Group,
as it seeks to maintain a competitive position in
Return on capital employed (ROCE) has fallen the prevailing depressed markets caused by global
slightly from 37% to 35%, largely due to margin economic pressures.
pressure. Notwithstanding the fall in ROCE, the
Group’s other key ratios have remained robust with
working capital days at 55 (2009: 48) moving up
slightly in the year but still at acceptable levels and
liquidity ratios remaining very good.
Ed Roud
Equity and reserves Group Chief Financial Officer
Group net worth of £72.8m increased during the 2 March 2011
year to £125.4m. There was an increase of £9.8m
from the issue of new shares and an increase of
£42.8m in reserves.
6
Directors’ report
The directors present their report, together with the Profit attributable to parent company shareholders
audited financial statements of the Group and the before dividend is £22.5m.
company for the year ended 31 December 2010.
An interim dividend of £8.7m was paid to
Date of annual general meeting: 2 April 2011. shareholders on 17 December 2010.
Registration The directors do not recommend the payment of
Mott MacDonald Group Limited is a company a final dividend.
registered in England and Wales with registered
number 1110949. The £13.8m retained profit has been transferred Philip Gregory
to reserves. Group Company Secretary
Principal activities and business review
Mott MacDonald is one of the world’s leading Directors
engineering, management and development As at 31 December 2010 the directors of the
consultancies. company were as follows:
Its core business sectors are buildings, Kevin Dixon
communications, education, environment, health, Keith Howells
industry, international development, oil and gas, Guy Leonard
power, transport, urban development and water. Kevin Stovell
Richard Williams
We are an independent employee owned company Mark Austen (Non-executive)
engaged in public and private sector development Claire Smith (Non-executive)
in 140 countries across Europe, the Americas,
Middle East, Asia, Australasia and Africa. Peter Wickens resigned as chairman and director on
31 December 2010. Keith Howells was appointed as
Our drivers are to add value and deliver benefits Group Chairman on 1 January 2011.
for our customers who include national and local
governments, health and education bodies, transport Acquisitions and disposals
operators, industry, utilities, developers, contractors, The Group acquired various businesses and entities
banks, commercial companies, funding agencies as listed in note 11 to the financial statements.
and non-governmental organisations.
Employment policies
The chairman’s statement, corporate responsibility The company actively encourages employees to
statement and operating and financial reviews play a part in developing the company’s business
report both on Mott MacDonald’s performance and in enhancing its performance.
during the past year and its prospects for the future,
covering a number of key performance indicators Increasing share ownership among senior staff
which are monitored by the board. These reports worldwide is a key element of this policy. At the end
cover the principal subsidiary undertakings and the of 2010 the total number of employee shareholders
countries in which they operate. was 2,259, an increase of 107 during the year.
7
Directors’ report
In addition to operating various performance pay International Financial Reporting
schemes, the company recognises individual Standards
“
contributions through merit bonuses and annual The Group has the option to prepare financial
awards. statements under International Financial Reporting
Standards for the year ended 31 December 2010.
The company proactively informs staff on general,
Group policy is to employ, financial and economic factors influencing the Following consideration of this matter, the directors
”
develop and promote staff Group, as well as on all matters affecting them have decided to continue to apply UK Accounting
based solely on aptitude, directly. Standards and achieve alignment with International
ability and work ethic. Financial Reporting Standards over a period of time,
This is achieved through our intranet, staff councils by following the convergence programme of the
and briefings, chairman’s emails, letters, local UK Accounting Standards Board.
and global staff newsletters and copies of all the
company’s corporate magazines and reports plus Going concern
our strategic plan summary. After considering the Group’s future prospects,
its cash flow forecasts and bank facilities available,
Group policy is to employ, develop and promote the directors have full expectation that the Group
staff based solely on aptitude, ability and work has adequate resources to continue in operational
ethic. As a result, our staff come from a very wide existence for the foreseeable future.
diversity of backgrounds.
For this reason they continue to adopt the going
The company wishes to ensure that no concern basis in preparing the financial statements.
discrimination occurs, either directly or indirectly,
against individuals with disability on the grounds of Business risk
that disability in relation to recruitment, promotion, A comprehensive risk management process is
training, benefits, terms and conditions of operated which encompasses risks for the Group,
employment and dismissal. for each business unit and for the divisions
within each business unit, as well as for major or
Wherever possible, reasonable adjustments will be technically challenging projects.
made to either the workplace, workstation or working
environment to help the disabled employee cope This process includes the generation of risk logs,
with their disability. identification and implementation of mitigation
measures and periodic review of these. During
Charitable and political contributions 2010, we improved our processes for staff travel
During the year Mott MacDonald made donations to and security risks.
recognised UK registered charities of £275,398. The
Group made no contributions to UK political parties. The key corporate risks highlighted in the risk
register are the potential for uninsured claims,
Redemption of shares health and safety incidents, a severe economic
On 15 December, 103,900 £0.01 convertible downturn in our UK and North American
deferred shares were redeemed for £1,039 under businesses, loss of reputation and pension scheme
the provisions of the articles of association. funding.
8
Directors’ report
Our risk management process is designed to Statement of directors’ responsibilities
highlight the drivers of these risks and the The directors are responsible for preparing the
action required to mitigate their impact on the annual report and the financial statements in
business so that effective action can be taken accordance with applicable law and regulations.
on a timely basis. Company law requires the directors to prepare
financial statements for each financial year.
We have directives in place which define our policies
and processes and aim to ensure that risks are Under that law the directors have elected to prepare
managed effectively. financial statements in accordance with United
Kingdom Accounting Standards (United Kingdom
Our quality, environment and safety (QES) system, Generally Accepted Accounting Practice).
applied to all projects, is also designed to promote
risk management through various planning, checking Under company law the directors must not approve
and review processes. the financial statements unless they are satisfied
that they give a true and fair view of the state of
Financial risk affairs of the company and the profit or loss of the
The Group has a variety of controls and processes company for that period.
to ensure that liquidity risk, credit risk and exchange
risk are effectively managed to minimise risk of In preparing these financial statements, the directors
financial loss. The more important aspects are: are required to:
• For investments, all counterparties must meet the • select suitable accounting policies and then
Group’s minimum credit rating of A-1 long term apply them consistently
and P-1 short term. • make judgments and estimates that are
• There is no speculative use of derivatives, reasonable and prudent
currency or other instruments. • state whether applicable UK Accounting
• In evaluating transaction exchange rate risk, the Standards have been followed, subject to any
Group matches currency earnings with currency material departures disclosed and explained in
costs, with the net exposure hedged with forward the financial statements
currency contracts where possible. • prepare the financial statements on the going
• In evaluating translation exchange rate risk, the concern basis unless it is inappropriate to
Group matches currency assets with currency presume that the company will continue in
liabilities and does not use hedging instruments. business.
At the year end the transaction exposure after The directors are responsible for keeping adequate
matching was £1.1m and the translation exposure accounting records that disclose with reasonable
after matching was £73.7m. There is no material accuracy at any time the financial position of the
interest rate risk at the year end. The Group hedges company and enable them to ensure that the
interest rate exposures where necessary. financial statements comply with the Companies
Act 2006.
9
Directors’ report
They are also responsible for safeguarding the
assets of the company and hence for taking
reasonable steps for the prevention and detection
of fraud and other irregularities.
In so far as each of the directors is aware:
• there is no relevant audit information of which
the company’s auditors are unaware; and
• the directors have taken all steps that they ought
to have taken to make themselves aware of any
relevant audit information and to establish that
the auditors are aware of that information.
The directors are responsible for the maintenance
and integrity of the corporate and financial
information included on the company’s website.
Legislation in the United Kingdom governing
the preparation and dissemination of financial
statements may differ from legislation in other
jurisdictions.
Auditors
Grant Thornton UK LLP offer themselves for
reappointment as auditors in accordance with
section 485 of the Companies Act 2006.
Approved by the board of directors and signed
on its behalf:
Philip Gregory
Group Company Secretary
2 March 2011
10
Independent auditor’s report
We have audited the financial statements of Opinion on financial statements
Mott MacDonald Group Limited for the year ended In our opinion the financial statements:
31 December 2010 which comprise the Group
profit and loss account, the Group statement of • give a true and fair view of the state of the
total recognised gains and losses, the Group Group’s and the parent company’s affairs as at
reconciliation of shareholders’ funds, the Group and 31 December 2010 and of the Group’s profit for
parent company balance sheets, the Group cash the year then ended;
flow statement and the related notes. The financial • have been properly prepared in accordance with
reporting framework that has been applied in their United Kingdom Generally Accepted Accounting
preparation is applicable law and United Kingdom Practice; and
Accounting Standards (United Kingdom Generally • have been prepared in accordance with the
Accepted Accounting Practice). requirements of the Companies Act 2006.
This report is made solely to the company’s Opinion on other matter prescribed by the
members, as a body, in accordance with Chapter Companies Act 2006
3 of Part 16 of the Companies Act 2006. Our audit In our opinion the information given in the directors’
work has been undertaken so that we might state report for the financial year for which the financial
to the company’s members those matters we are statements are prepared is consistent with the
required to state to them in an auditor’s report and financial statements.
for no other purpose. To the fullest extent permitted
by law, we do not accept or assume responsibility to Matters on which we are required to
anyone other than the company and the company’s report by exception
members as a body, for our audit work, for this We have nothing to report in respect of the following
report, or for the opinions we have formed. matters where the Companies Act 2006 requires us
to report to you if, in our opinion:
Respective responsibilities of directors
and auditors • adequate accounting records have not been kept
As explained more fully in the statement of directors’ by the parent company, or returns adequate for
responsibilities set out on page 9, the directors our audit have not been received from branches
are responsible for the preparation of the financial not visited by us; or
statements and for being satisfied that they give a • the parent company financial statements are not
true and fair view. Our responsibility is to audit and in agreement with the accounting records
express an opinion on the financial statements in and returns; or
accordance with applicable law and International • certain disclosures of directors’ remuneration
Standards on Auditing (UK and Ireland). Those specified by law are not made; or
standards require us to comply with the Auditing • we have not received all the information and
Practices Board’s (APB’s) Ethical Standards for explanations we require for our audit.
Auditors.
Stephen Maslin
Scope of the audit of the financial Senior Statutory Auditor
statements for and on behalf of Grant Thornton UK LLP
A description of the scope of an audit of financial Statutory Auditor, Chartered Accountants
statements is provided on the APB’s website at London
www.frc.org.uk/apb/scope/private.cfm. 2 March 2011
Note: The maintenance and integrity of the Mott MacDonald
website is the responsibility of the directors: the work carried out by
the auditors does not involve consideration of these matters and,
accordingly, the auditors accept no responsibility for any changes that
may have occured to the financial statements since they were initially
presented on the website.
11
Mott MacDonald Group Limited
Group profit and loss account
for the year ended 31 December 2010
2010 2009
Notes £000 £000
Gross revenue 2 1,035,069 1,016,267
Continuing operations:
ongoing 1,026,872 1,016,267
acquisitions 11(d) 8,197
Cost of sales (633,146) (608,737)
Gross profit 401,923 407,530
Administrative expenses (351,933) (359,427)
Group operating profit 2(a), 3 49,990 48,103
Continuing operations:
ongoing 51,220 48,103
acquisitions 11(d) (1,230)
Profit on disposal of other fixed asset investments – 1,412
Income from other fixed asset investments 125 4
Income from current asset investments 720 468
Profit on ordinary activities before interest 50,835 49,987
Net interest receivable 6 78 47
Other finance cost 22(c) (1,582) (5,000)
Profit on ordinary activities before taxation 2(a) 49,331 45,034
Tax on profit on ordinary activities 7(a) (16,150) (14,654)
Profit on ordinary activities after taxation 33,181 30,380
Profit attributable to:
Parent company shareholders 19(a) 22,517 21,438
Minority interests 10,664 8,942
33,181 30,380
12
Mott MacDonald Group Limited
Group statement of total recognised gains and losses
for the year ended 31 December 2010
2010 2009
Notes £000 £000
Profit attributable to parent company shareholders 19(a) 22,517 21,438
Exchange adjustments on translation of net assets 19(a) 701 70
Actuarial gain/(loss) on pension scheme 19(a), 22(c) 43,551 (13,870)
Deferred tax on actuarial (gain)/loss 7(c), 19(a) (11,785) 3,922
Deferred tax on additional pension contributions 7(c), 19(a) (2,959) (2,800)
Deferred tax rate change on opening pension scheme deficit 7(c), 19(a) (842) –
Increase in valuation of current asset investments 19(a) 382 550
Total recognised gains and losses for the year 51,565 9,310
Group reconciliation of shareholders’ funds
for the year ended 31 December 2010
2010 2009
Notes £000 £000
Total recognised gains and losses for the year 51,565 9,310
Dividends 8, 19(a) (8,735) (7,997)
Undistributed total recognised gains and losses 42,830 1,313
New share capital issued 18 9,825 7,371
Total movement during the year 52,655 8,684
Shareholders’ funds at 1 January 72,790 64,106
Shareholders’ funds at 31 December 125,445 72,790
13
Mott MacDonald Group Limited
Group balance sheet
at 31 December 2010
2010 2009
Notes £000 £000
Fixed assets
Intangible assets 9 30,026 24,214
Tangible assets 10 18,161 17,953
Other fixed asset investments 11(a) 135 97
48,322 42,264
Current assets
Debtors 12 325,250 295,401
Investments 11(a) 20,543 15,573
Cash at bank and in hand 26 62,935 79,093
408,728 390,067
Creditors: amounts falling due within one year 13 (241,119) (237,547)
Net current assets 167,609 152,520
Total assets less current liabilities 215,931 194,784
Creditors: amounts falling due after more than one year 14 (12,112) (10,354)
Provisions for liabilities 17 (14,665) (13,778)
189,154 170,652
Minority interests (32,346) (25,674)
Net assets excluding pension liability 156,808 144,978
Pension liability 22(c) (31,363) (72,188)
Net assets including pension liability 125,445 72,790
Capital and reserves
Called up share capital 18 17,732 16,562
Share premium account 19(a) 63,472 54,817
Revaluation reserve 19(a) 932 550
Capital redemption reserve 19(a) 150 150
Other reserves 19(a) 548 548
Profit and loss account 19(a) 42,611 163
Shareholders’ funds 125,445 72,790
These financial statements were approved by the Board of Directors on 2 March 2011.
K J Howells
Chairman
14
Mott MacDonald Group Limited
Company balance sheet
at 31 December 2010
2010 2009
Notes £000 £000
Fixed assets
Investment in subsidiary undertakings 11(b) 349,841 349,768
Current assets
Debtors 12 56,358 41,005
Cash at bank and in hand 8 8
56,366 41,013
Creditors: amounts falling due within one year 13 (155) (1,498)
Net current assets 56,211 39,515
Total assets less current liabilities 406,052 389,283
Creditors: amounts falling due after more than one year 14 (250,000) (250,125)
Net assets 156,052 139,158
Capital and reserves
Called up share capital 18 17,732 16,562
Share premium account 19(b) 63,472 54,817
Revaluation reserve 19(b) 2,831 2,831
Capital redemption reserve 19(b) 150 150
Profit and loss account 19(b) 71,867 64,798
Shareholders’ funds 156,052 139,158
These financial statements were approved by the Board of Directors on 2 March 2011.
K J Howells
Chairman
15
Mott MacDonald Group Limited
Group cash flow statement
for the year ended 31 December 2010
2010 2009
Notes £000 £000
Cash inflow from operating activities 25(a) 27,080 48,781
Returns on investments and servicing of finance 25(b) (4,770) (1,899)
Taxation (18,675) (15,940)
Capital expenditure and financial investment 25(c) (13,485) (5,241)
Acquisitions and disposals 25(d) (5,868) (464)
Dividends paid 8 (8,735) (7,997)
Cash (outflow)/inflow before financing (24,453) 17,240
Financing 25(e) 7,112 7,369
(Decrease)/increase in cash in the year (17,341) 24,609
Reconciliation of net cash flow to movement
in net funds
(Decrease)/increase in cash in the year 26 (17,341) 24,609
Decrease in debt and lease financing 25(e) 736 2
Change in net funds arising from cash flows 26 (16,605) 24,611
New finance leases – (46)
Finance leases acquired with subsidiaries 26 (41) (72)
Loans acquired with subsidiaries – (430)
Translation difference 26 857 1,221
Movement in net funds in the year (15,789) 25,284
Net funds at beginning of year 26 68,578 43,294
Net funds at end of year 26 52,789 68,578
16
Mott MacDonald Group Limited
Notes to the financial statements
at 31 December 2010
1. Accounting policies
Basis of preparation
The financial statements are prepared under the historical cost convention modified to include the revaluation
of investments.
The financial statements are prepared in accordance with applicable accounting standards under UK GAAP
(‘Generally Accepted Accounting Practice’).
In accordance with Financial Reporting Standard 18 ‘Accounting Policies’, the directors have reviewed
the circumstances of the Group and considered the appropriateness of its accounting policies. These have
remained unchanged from the previous year.
After considering the Group’s future prospects, its cash flow forecasts and bank facilities available, the
directors have full expectation that the Group has adequate resources to continue in operational existence
for the foreseeable future. For this reason they continue to adopt the going concern basis in preparing the
financial statements.
The principal accounting policies of the Group are set out below.
Basis of consolidation
The Group financial statements consolidate the financial statements of Mott MacDonald Group Limited and
its subsidiary undertakings drawn up to 31 December using the acquisition method of accounting. The Group
profit and loss account includes the results of subsidiary undertakings acquired for the period from the date
of their acquisition.
Where subsidiary undertakings have financial year ends other than 31 December, the Group financial
statements consolidate their results and net assets based on management accounts drawn up to
31 December.
The profit attributable to members of the company is stated after deducting the proportion attributable to
minority shareholders.
No profit and loss account is presented for Mott MacDonald Group Limited as permitted by Section 408 of
the Companies Act 2006.
Associated companies are accounted for using the equity method of accounting with the share of profits for
the year reflected in the profit and loss account and share of net assets at the year end reflected in the
balance sheet.
The Group’s share of the results of other fixed asset investments is restricted to dividends, which are
recognised to the extent that at the balance sheet date, they were received or declared as a final dividend
in a general meeting.
17
Mott MacDonald Group Limited
Notes to the financial statements
at 31 December 2010
1. Accounting policies (continued)
Goodwill
Goodwill represents the excess of the fair value of the consideration given over the fair values of the
identifiable net assets acquired.
Purchased goodwill, whether positive or negative, arising on acquisitions on or after 1 January 1998 is
capitalised and amortised through the profit and loss account over the directors’ estimate of its useful life,
subject to a maximum of twenty years. Impairment reviews are carried out at the end of the first full year after
an acquisition and if events or circumstances indicate that the carrying value of goodwill will not be recovered
in full. Any diminution in value is charged through the profit and loss account.
Positive goodwill on acquisitions prior to 1 January 1998 was set off directly against reserves.
If a subsidiary or business is subsequently sold or closed, any goodwill arising on acquisition that was written
off directly to reserves or that has not been amortised is taken into account in determining the profit or loss on
sale or closure and charged or credited to the profit and loss account as appropriate.
Where, for acquisitions prior to 1 January 1998, the fair value of net assets acquired exceeded the
purchase consideration, the difference was treated as negative goodwill and taken directly to reserves as
a capital reserve.
Tangible fixed assets
Tangible fixed assets are stated at cost, net of depreciation and any provision for impairment.
Depreciation is provided to write off the costs less estimated residual value of all tangible fixed assets
over their estimated economic lives. The depreciation rates used are as follows:
Freehold buildings 2% on a straight line basis
Fixtures, fittings and equipment 10% – 33% on a straight line basis
Motor vehicles 25% on a straight line basis
Leased assets straight line basis over the period of the lease term
Gross revenue
The term ‘gross revenue’ used in these financial statements is the same as the statutory definition of turnover
contained in Companies Act 2006, Section 474.
Gross revenue represents the fair value of the consideration receivable in respect of services provided during
the year, inclusive of direct expenses incurred but excluding Value Added Tax.
Gross revenue is recognised in the profit and loss account by reference to the stage of completion of the
contract at the balance sheet date, provided that a right to consideration has been obtained through
performance.
Consideration accrues as contract activity progresses by reference to the value of work performed, which
coincides with costs incurred, and this is estimated by reference to costs incurred to date compared to
expected lifetime costs. Hence gross revenue represents the cost appropriate to the stage of completion
of each contract plus attributable profits, less amounts recognised in previous years where relevant.
Full provision is made for losses on all contracts in the year in which they are first foreseen.
18
Mott MacDonald Group Limited
Notes to the financial statements
at 31 December 2010
1. Accounting policies (continued)
Gross revenue (continued)
Amounts recoverable on contracts represent the excess work done to date including attributable profit over
cumulative progress payments received and receivable. Where the progress payments received and receivable
exceed the value of the work done to date, the excess is shown within creditors as payments on account.
Research and development
Research and development costs are charged to the profit and loss account in the year that they are incurred.
Fixed asset investments
Fixed asset investments other than associates are carried in the Group and company balance sheets at cost
less any provision for impairment. Investments in associates are carried in the company balance sheet at an
amount which approximates to net asset value.
Current asset investments
Current asset investments in MHACE Insurance Company Limited, the Group’s captive insurance company,
are stated at market value at the balance sheet date and the difference between cost and market value is
taken to the revaluation reserve. Any reduction in value in excess of the amounts previously credited to the
revaluation reserve is charged to the profit and loss account.
The investments are managed on behalf of the Group by external investment advisors and Group management
do not actively participate in the investment process. As a result, it is considered inappropriate to classify such
investments as liquid resources in the cash flow statement.
Taxation
Current tax including UK corporation tax is provided on amounts expected to be paid (or recovered) using the
tax rates and laws that have been enacted or substantially enacted by the balance sheet date.
Deferred taxation
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the
balance sheet date where transactions or events have occurred at that date that will result in an obligation
to pay more, or a right to pay less or to receive more tax, with the following exceptions:
G provision is made for tax on gains arising from the revaluation (and similar fair value adjustments) of fixed
assets and gains on disposal of fixed assets that have been rolled over into replacement assets, only to the
extent that, at the balance sheet date, there is a binding agreement to dispose of the assets concerned.
However, no provision is made where, on the basis of all available evidence at the balance sheet date, it is
more likely than not that the taxable gain will be rolled over into replacement assets and charged to tax only
where the replacement assets are sold;
G provision is made for deferred tax that would arise on remittance of the retained earnings of foreign
subsidiaries and associates only to the extent that, at the balance sheet date, dividends have been declared
and paid or declared as a final dividend in a general meeting;
G deferred tax assets are recognised only to the extent that the directors consider that it is more likely than not
that there will be suitable taxable profits from which the future reversal of the underlying timing differences
can be deducted.
19
Mott MacDonald Group Limited
Notes to the financial statements
at 31 December 2010
1. Accounting policies (continued)
Deferred taxation (continued)
Deferred tax is measured on an undiscounted basis at the tax rates that are expected to apply in the periods in
which timing differences reverse, based on tax rates and laws enacted or substantially enacted at the balance
sheet date.
Dividends
Dividends are only reflected in the financial statements to the extent that at the balance sheet date, they are
declared and paid or declared as a final dividend in a general meeting.
Foreign currencies
Transactions in foreign currencies are recorded at the rate of exchange ruling at the date of the transaction
or at the contracted rate if the transaction is covered by a forward exchange contract. Monetary assets and
liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the balance sheet
date or if appropriate at the forward contract rate with the related gains or losses being recognised in the profit
and loss account.
The Group’s interests in the net assets and liabilities of foreign undertakings are translated into sterling using
the closing rate method and the exchange difference arising on the retranslation of opening net assets is taken
as a movement on reserves. All other translation differences are taken to the profit and loss account.
The profit and loss accounts of foreign undertakings are translated at the average rate of exchange prevailing
through the year. The exchange difference arising between translating the profit and loss accounts at the
average rate and the Group’s interests in the net assets of such foreign undertakings at the closing rate of
exchange are recorded as a movement in reserves.
Leasing and hire purchase commitments
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and
rewards of ownership to the lessee. All other leases are classified as operating leases.
Assets held under finance lease and hire purchase contracts are capitalised as if they had been purchased
outright. The amount capitalised is the present value of the minimum lease payments payable during the term
of the lease. The interest element of the rental obligation is charged to the profit and loss account over the
period of the lease and represents a constant proportion of the balance of capital repayments outstanding.
Rentals paid under operating leases are charged to income on a straight line basis over the lease term.
20
Mott MacDonald Group Limited
Notes to the financial statements
at 31 December 2010
1. Accounting policies (continued)
Pensions
The Group operates a number of pension schemes throughout the world. These are described more fully later
in the financial statements.
Pension costs charged against operating profit for the defined contribution schemes are the contributions
payable in respect of the accounting period.
All defined benefit schemes are now closed to future accrual of benefits and the surpluses or deficits are
determined by the actuary.
Scheme assets are measured at fair values. Scheme liabilities are measured on an actuarial basis using the
‘Attained Age’ method and are discounted at appropriate high quality corporate bond rates. The net surplus
or deficit, adjusted for deferred tax, is presented separately from other net assets on the balance sheet. A net
surplus is recognised only to the extent that it is recoverable by the Group.
The current service costs and costs from settlements and curtailments are charged against operating profit.
Past service costs are spread over the period until the benefit increases vest. Interest on scheme liabilities
and the expected return on scheme assets are included in other finance costs. Actuarial gains and losses are
reported in the statement of total recognised gains and losses.
Derivative financial instruments (‘derivatives’)
Derivative financial instruments are used by the Group mainly for the management of its foreign currency and
interest rate exposures. Gains or losses in respect of these arrangements are recognised in the profit and loss
account on maturity.
21
Mott MacDonald Group Limited
Notes to the financial statements
at 31 December 2010
2. Gross revenue and segmental analysis
Gross revenue is attributable to one continuing activity, the provision of consulting services.
Gross revenue, operating profit, profit on ordinary activities before taxation and net assets in the financial
statements are analysed as follows:
(a) Analysis by origin:
2010 Europe Middle East Asia Pacific
and and and
Africa Americas South Asia Australasia Total
£000 £000 £000 £000 £000
Gross revenue 646,681 257,823 72,990 57,575 1,035,069
Operating profit/(loss) 23,153 22,219 5,116 (498) 49,990
Profit/(loss) on ordinary
activities before taxation 22,745 21,886 5,113 (413) 49,331
Net assets/(liabilities)
excluding net funds 92,664 5,395 7,130 (1,170) 104,019
Net funds (note 26) 31,105 10,702 3,120 7,862 52,789
Net assets excluding
pension liability 123,769 16,097 10,250 6,692 156,808
Pension liability (note 22(c)) (30,025) (1,338) – – (31,363)
Net assets including
pension liability 93,744 14,759 10,250 6,692 125,445
2009 Europe Middle East Asia Pacific
and and and
Africa Americas South Asia Australasia Total
£000 £000 £000 £000 £000
Gross revenue 670,611 229,918 72,201 43,537 1,016,267
Operating profit 24,435 16,930 5,424 1,314 48,103
Profit on ordinary activities
before taxation 21,632 16,629 5,445 1,328 45,034
Net assets excluding net funds 56,921 6,979 7,767 4,733 76,400
Net funds (note 26) 55,083 8,046 1,351 4,098 68,578
Net assets excluding
pension liability 112,004 15,025 9,118 8,831 144,978
Pension liability (note 22(c)) (70,853) (1,335) – – (72,188)
Net assets including
pension liability 41,151 13,690 9,118 8,831 72,790
22
Mott MacDonald Group Limited
Notes to the financial statements
at 31 December 2010
2. Gross revenue and segmental analysis (continued)
(b) Gross revenue by destination:
2010 2009
£000 £000
Europe and Africa 485,814 535,726
Americas 262,898 233,658
Middle East and South Asia 213,180 190,807
Asia Pacific and Australasia 73,177 56,076
1,035,069 1,016,267
3. Operating profit
This is stated after charging/(crediting):
2010 2009
£000 £000
Auditors’ remuneration – audit services – principal auditor of parent company
– and UK subsidiaries 232 250
– audit services – associates of principal auditor
– for audit of overseas subsidiaries 247 200
479 450
– audit services – non-principal auditors for audit
– of subsidiary companies 292 279
771 729
– non-audit services – principal auditor of parent
– company and UK subsidiaries
taxation – 3
other 37 28
– non-audit services – associates of principal
– auditor
taxation 6 5
other 20 3
63 39
In addition to the above, the auditors received £57,000 (2009 – £Nil) in relation to
due diligence work which is capitalised in the balance sheet as part of
cost of acquisitions.
Foreign exchange (gains)/losses (4,277) 6,632
Depreciation 9,474 9,037
Amortisation of goodwill 6,702 6,154
Operating lease rentals – vehicles and equipment 583 564
– land and buildings 24,613 23,233
23
Mott MacDonald Group Limited
Notes to the financial statements
at 31 December 2010
4. Directors’ remuneration
2010 2009
£000 £000
Emoluments (excluding pension contributions) 3,849 4,013
The emoluments (excluding pension contributions) of the highest paid director were £801,795
(2009 – £836,725).
During the year £141,660 (2009 – £211,493) of contributions were paid to either the defined contribution
section of the Mott MacDonald Pension Scheme (‘the Scheme’) or the Stakeholder Scheme in respect of
5 directors (2009 – 5), of which £Nil related to the highest paid director. These directors also have benefits
under the closed defined benefit section of the Scheme. The highest paid director started drawing his pension
on 12 October 2010 and the accrued pension at that time was £59,908 (31 December 2009 – £34,546).
The Scheme provides an option to commute part of this pension for a lump sum. The lump sum is calculated
in accordance with HM Revenue & Customs rules using a Scheme specific formula, which amounted to
£295,841 at 12 October 2010 for the highest paid director.
5. Staff costs
2010 2009
£000 £000
Salaries 476,232 457,112
Social security costs 34,458 34,244
Other pension costs 49,461 52,512
560,151 543,868
The average number of persons employed by the Group
(including directors) during the year was made up as follows:
No. No.
Management 634 551
Technical staff 10,694 10,834
Administrative staff 1,685 1,675
13,013 13,060
The actual number of permanent staff at 31 December was: 12,766 12,872
24
Mott MacDonald Group Limited
Notes to the financial statements
at 31 December 2010
6. Net interest receivable
2010 2009
£000 £000
Interest receivable 632 747
Interest payable:
Bank loans and overdrafts (411) (434)
Finance charges payable under finance leases (10) (9)
Other (133) (257)
(554) (700)
Net interest receivable 78 47
7. Tax
(a) Tax on profit on ordinary activities
2010 2009
£000 £000
The taxation charge is made up as follows:
Current tax:
UK corporation tax 6,005 3,706
Non-UK tax 12,495 11,517
18,500 15,223
Double taxation relief (135) (1,830)
18,365 13,393
Adjustments in respect of previous years:
UK corporation tax (940) 4,585
Non-UK tax 353 (43)
Total current tax (note 7(b)) 17,778 17,935
Deferred tax:
Origination and reversal of timing differences (840) (3,531)
Adjustments in respect of previous years (865) 250
Effect of decreased tax rate on opening asset 77 –
Total deferred tax (note 7(c)) (1,628) (3,281)
Tax on profit on ordinary activities 16,150 14,654
25
Mott MacDonald Group Limited
Notes to the financial statements
at 31 December 2010
7. Tax (continued)
(b) Factors affecting current tax charge for year
The tax assessed for the year is higher than the standard rate of corporation tax
in the UK of 28% (2009 – 28%). The differences are explained below:
2010 2009
£000 £000
Profit on ordinary activities before taxation 49,331 45,034
Profit on ordinary activities multiplied by standard rate of corporation tax
in the UK of 28% (2009 – 28%) 13,813 12,609
Effects of:
Timing differences including provisions, depreciation and capital allowances 1,275 3,569
Tax losses 1,028 540
Higher taxes on non-UK earnings reduced by onshore pooling relief 1,709 731
Adjustments in respect of previous years (587) 4,542
Contribution to the Mott MacDonald Employee Trust 921 1,004
Other permanent differences 2,654 (1,028)
Pension contributions (3,035) (4,032)
Total current tax (note 7(a)) 17,778 17,935
Adjustments in respect of previous years include the effects of changes in tax legislation or interpretations
and revisions of estimates used in establishing prior year tax provisions.
Other permanent differences include consolidation adjustments, including goodwill amortisation as well as
permanent tax reliefs and non-deductible items.
The items listed above which explain why the tax charge for the current year is higher than the standard
corporation tax in the UK are likely to impact on tax charges of future years as well, although their exact
quantum will vary with time and circumstances.
26
Mott MacDonald Group Limited
Notes to the financial statements
at 31 December 2010
7. Tax (continued)
(c) Deferred tax
Group
2010 2009
£000 £000
The deferred tax included in the balance sheet is as follows:
Included in debtors (note 12) 8,699 7,300
Included in provisions for liabilities (note 17) (927) (613)
Included in arriving at pension liability (note 22(c)) 15,775 31,066
23,547 37,753
The elements of deferred taxation are as follows:
Excess of book depreciation over tax allowances on fixed assets 2,496 2,374
Other timing differences 5,276 4,313
Pension costs 15,775 31,066
23,547 37,753
The movement in the year was:
At 1 January 37,753 33,289
Deferred tax credit in Group profit and loss account (note 7(a)) 1,628 3,281
Impact of acquisitions (59) –
Deferred tax (charge)/credit in ‘statement of total recognised gains and losses’
– on actuarial (gain)/loss in pension scheme (11,785) 3,922
– on additional pension contributions made during the year (note 19(a)) (2,959) (2,800)
– due to effect of rate change on opening balance of pension scheme (note 19(a)) (842) –
Exchange and other adjustments (189) 61
At 31 December 23,547 37,753
8. Dividends
2010 2009
£000 £000
The following dividends were paid during the year:
Ordinary:
Interim dividend paid (2010 – £1 per share; 2009 – £1 per share) 8,735 7,997
The trustees of the Mott MacDonald Employee Trust and certain other shareholders waived the dividend on
their 8,967,227 ordinary shares (held at the relevant date for dividend purposes) amounting to £8,967,227.
27
Mott MacDonald Group Limited
Notes to the financial statements
at 31 December 2010
9. Group intangible fixed assets
Goodwill 2010
£000
Cost:
At 1 January 54,618
Additions (note 11(d)) 12,514
At 31 December 67,132
Amortisation:
At 1 January 30,404
Provided during the year 6,702
At 31 December 37,106
Net book value:
At 31 December 30,026
At 1 January 24,214
10. Group tangible fixed assets
2010 Freehold Fixtures,
land & Motor fittings &
buildings vehicles equipment Total
£000 £000 £000 £000
Cost:
At 1 January 133 3,353 66,239 69,725
Exchange adjustments 10 74 1,300 1,384
Additions – 670 8,590 9,260
Additions on acquisition (note 11(d)) – 38 156 194
Disposals – (449) (5,820) (6,269)
At 31 December 143 3,686 70,465 74,294
Depreciation:
At 1 January 43 2,436 49,293 51,772
Exchange adjustments 3 41 773 817
Provided during the year 5 670 8,799 9,474
Disposals – (361) (5,569) (5,930)
At 31 December 51 2,786 53,296 56,133
Net book value:
At 31 December 92 900 17,169 18,161
At 1 January 90 917 16,946 17,953
Included in the above figures for motor vehicles are vehicles held under finance leases with a carrying value
of £146,000 (2009 – £196,000).
28
Mott MacDonald Group Limited
Notes to the financial statements
at 31 December 2010
11. Investments
(a) Group
2010 Other fixed
asset
investments
£000
Cost or valuation:
At 1 January 127
Reclassifications (10)
Additions at cost 41
Additions on acquisition (note 11(d)) 7
At 31 December 165
Amounts provided:
At 1 January and at 31 December 30
Net book value:
At 31 December 135
At 1 January 97
Other fixed asset investments
The principal activity of the businesses comprising other fixed asset investments is that of consulting engineers.
The total historical cost of other fixed asset investments is £165,000 (2009 – £127,000).
Current asset investments
2010 2009
£000 £000
Valuation:
At 1 January 15,573 15,242
Additions at cost 11,165 10,711
Disposals at cost (6,726) (10,930)
Revaluation 531 550
At 31 December 20,543 15,573
Investments:
Listed on the London Stock Exchange 18,545 13,653
Other listed investments 1,998 1,920
20,543 15,573
The historical cost of current asset investments is £19,577,000 (2009 – £15,138,000). Current asset
investments are held by MHACE Insurance Company Limited, the Group’s captive insurance company.
29
Mott MacDonald Group Limited
Notes to the financial statements
at 31 December 2010
11. Investments (continued)
(b) Company
2010 Other fixed
Subsidiary asset
undertakings investments Total
£000 £000 £000
Cost or valuation:
At 1 January 350,271 30 350,301
Additions at cost 73 – 73
At 31 December 350,344 30 350,374
Amounts provided:
At 1 January and at 31 December 503 30 533
Net book value:
At 31 December 349,841 – 349,841
At 1 January 349,768 – 349,768
The total historical cost of interests in subsidiary undertakings is £347,118,000 (2009 – £347,045,000).
Subsidiary undertakings held at cost or written down value amount to £336,391,000 (2009 – £336,318,000).
Subsidiary undertakings held at valuation amount to £13,450,000 (2009 – £13,450,000).
The total historical cost of other fixed asset investments is £30,000 (2009 – £30,000).
30
Mott MacDonald Group Limited
Notes to the financial statements
at 31 December 2010
11. Investments (continued)
(c) Principal subsidiaries
The company’s principal subsidiary undertakings at 31 December 2010 are shown below. All of these
undertakings have coterminous year ends with the exception of Mott MacDonald Private Limited which has
a year end of 31 March due to local regulations. The main activities of these are almost entirely those of
engineering, management and development consultancies, except for MHACE Insurance Company Limited
which is an insurance company and Mott MacDonald International Limited which is an investment company.
Country of
Subsidiary undertaking Controlling interest incorporation/registration
2010 2009
% %
Hatch Mott MacDonald Group, Inc. 51.6 52.6 United States of America
MHACE Insurance Company Limited 100 100 Guernsey
Mott MacDonald & Co LLC 65 65 Oman
Mott MacDonald (Beijing) Limited 100 100 China
Mott MacDonald, Inc. 100 100 United States of America
Mott MacDonald Australia Pty Limited 100 100 Australia
Mott MacDonald B.V. 100 100 The Netherlands
Mott MacDonald Hong Kong Limited 100 100 China (Hong Kong)
Mott MacDonald Hughes Trueman Pty Limited 100 – Australia
Mott MacDonald International Limited1 100 100 England and Wales
Mott MacDonald Ireland Limited 100 100 Irish Republic
Mott MacDonald Limited1 100 100 England and Wales
Mott MacDonald Polska spolka z o.o. 100 100 Poland
Mott MacDonald Praha, spol. s.r.o. 100 100 Czech Republic
Mott MacDonald Private Limited 100 100 India
Mott MacDonald R Limited 100 100 Russia
Mott MacDonald Singapore Pte Limited 100 100 Singapore
Mott MacDonald South Africa (Proprietary) Limited 100 100 South Africa
1
investment not held through subsidiary undertakings
A full list of subsidiary undertakings is filed with the annual return at Companies House.
31
Mott MacDonald Group Limited
Notes to the financial statements
at 31 December 2010
11. Investments (continued)
(d) Acquisitions
To further its operations, the Group acquired businesses and 100% holdings in a number of entities as follows:
Subsidiary undertakings/businesses Country of operation 2010
Merz and McLellan (Proprietary) Limited South Africa 28 February
Merz and McLellan Botswana (Proprietary) Limited Botswana 28 February
Phambili Merz (Proprietary) Limited South Africa 28 February
Courtyard Group UK Limited United Kingdom 3 June
Health and Development Africa (Proprietary) Limited South Africa 5 July
Hughes Trueman Pty Limited Australia 6 August
Teacher Training Australia (TTA) Pty Limited Australia 30 September
Mortimer Project Management Pty Limited Australia 22 December
Gibson Engineers, PC United States of America 31 December
Richard P. Arber Associates, Inc. United States of America 31 December
These are not material in the context of the Group’s results or net assets except Hughes Trueman Pty Limited.
Analysis of all acquisitions: Book and fair value
Hughes Trueman Other Total
£000 £000 £000
Net assets at date of acquisition:
Tangible fixed assets (note 10) 129 65 194
Other fixed asset investments (note 11(a)) 7 – 7
Debtors 2,630 3,088 5,718
Cash at bank and in hand 738 1,089 1,827
Bank overdrafts – (155) (155)
Creditors due within one year (1,871) (2,439) (4,310)
Provisions (1,631) (27) (1,658)
Net assets 2 1,621 1,623
Goodwill arising on acquisition (note 9) 8,702 3,812 12,514
Consideration and costs of acquisitions 8,704 5,433 14,137
Discharged by:
Payments to acquire subsidiary undertakings 3,509 3,858 7,367
Payments to acquire businesses – 170 170
Cash consideration 3,509 4,028 7,537
Deferred consideration 3,468 525 3,993
Fair value of shares issued 1,462 515 1,977
Fair value of shares issued in subsidiary undertaking – 95 95
8,439 5,163 13,602
Costs associated with the acquisitions 265 270 535
8,704 5,433 14,137
The deferred consideration is expected to be paid in cash within three years.
32
Mott MacDonald Group Limited
Notes to the financial statements
at 31 December 2010
11. Investments (continued)
(d) Acquisitions (continued)
Analysis of net outflow of cash in respect of the acquisitions:
Book and fair value
Hughes Trueman Other Total
£000 £000 £000
Cash consideration 3,509 4,028 7,537
Costs associated with the acquisitions 265 270 535
3,774 4,298 8,072
Cash at bank and in hand acquired (738) (1,089) (1,827)
Bank loans and overdrafts acquired – 155 155
3,036 3,364 6,400
Hughes Trueman Pty Limited earned a profit after tax of £99,000 in the year ended 31 December 2010
(2009 – £1,825,000), of which £723,000 arose in the period from 1 January 2010 to 5 August 2010.
There were no recognised gains or losses in the period from 1 January 2010 to 5 August 2010.
Gross revenue and operating profit relating to the acquisitions have been disclosed in the profit and loss
account. Cost of sales and administration expenses amount to £6,082,000 and £3,345,000 respectively.
12. Debtors
Group Company
2010 2009 2010 2009
£000 £000 £000 £000
Trade debtors 198,872 180,850 – –
Amounts recoverable on contracts 86,060 74,836 – –
Amounts owed by subsidiary undertakings – – 56,354 40,998
Amounts owed by other fixed asset investments 205 850 – –
Deferred taxation (note 7(c)) 8,699 7,300 – –
Taxation recoverable 3,676 3,930 – –
Other debtors 8,989 8,892 4 7
Prepayments and accrued income 18,749 18,743 – –
325,250 295,401 56,358 41,005
Amounts owed by subsidiary undertakings and deferred taxation recoverable are due after more than one year.
33
Mott MacDonald Group Limited
Notes to the financial statements
at 31 December 2010
13. Creditors: amounts falling due within one year
Group Company
2010 2009 2010 2009
£000 £000 £000 £000
Current instalments due on unsecured bank
and other loans (note 15) 325 576 – 274
Bank overdrafts 82 80 – –
Payments on account 105,817 102,222 – –
Trade creditors 22,264 26,189 – –
Current UK corporation tax 2,108 2,861 – 691
Non-UK taxation 4,957 4,840 – –
Other taxes 8,768 7,110 – –
Social security 8,573 8,364 – –
Shares classed as financial liabilities (note 18) 28 25 28 25
Obligations under finance leases 72 105 – –
Other creditors 11,906 10,638 127 508
Accruals 76,219 74,537 – –
241,119 237,547 155 1,498
14. Creditors: amounts falling due after more than one year
Group Company
2010 2009 2010 2009
£000 £000 £000 £000
Unsecured bank loans (note 15) 9,580 9,503 – –
Unsecured other loans (note 15) – 107 – –
Obligations under finance leases 59 119 – –
Other creditors 2,473 625 – 125
Amounts owed to subsidiary undertakings – – 250,000 250,000
12,112 10,354 250,000 250,125
34
Mott MacDonald Group Limited
Notes to the financial statements
at 31 December 2010
15. Loans
Group Company
2010 2009 2010 2009
£000 £000 £000 £000
Bank loans:
Amounts falling due:
Within one year (note 13) 219 302 – –
Between one and two years (note 14) – 215 – –
Between two and five years (note 14) 9,580 9,288 – –
9,799 9,805 – –
Other loans:
Amounts falling due:
Within one year (note 13) 106 274 – 274
Between one and two years (note 14) – 107 – –
Total loans 9,905 10,186 – 274
16. Obligations under leases
Group
Annual commitments under non-cancellable operating leases are:
Land and buildings Other
2010 2009 2010 2009
£000 £000 £000 £000
Operating leases which expire:
Within one year 3,318 3,196 11 7
In two to five years 12,809 14,197 514 464
Over five years 6,964 3,989 – –
23,091 21,382 525 471
35
Mott MacDonald Group Limited
Notes to the financial statements
at 31 December 2010
17. Provisions for liabilities
Group
2010 Provision
for Deferred
losses on taxation Other
contracts Note 7(c) provisions Total
£000 £000 £000 £000
At 1 January 1,727 613 11,438 13,778
Exchange adjustments 25 55 (15) 65
Arising during the year 1,735 259 1,381 3,375
Utilised (1,311) – (1,242) (2,553)
At 31 December 2,176 927 11,562 14,665
Other provisions are mainly in respect of outstanding claims within MHACE Insurance Company Limited,
the Group’s captive insurance company. Due to their nature, it is not possible to predict the precise timing
of their utilisation.
18. Share capital
Authorised
2010 2009
£000 £000
Ordinary shares of £1 each 20,000 20,000
11% non-cumulative preference shares of £1 each 150 150
Convertible deferred shares of 1p each 40 40
Unclassified shares of 99p each 3,960 3,960
24,150 24,150
36
Mott MacDonald Group Limited
Notes to the financial statements
at 31 December 2010
18. Share capital (continued)
Allotted, called up and fully paid
2010 2009 2010 2009
No. No. £000 £000
Ordinary shares of £1 each 17,732,124 16,562,484 17,732 16,562
Convertible deferred shares of 1p each 2,805,510 2,533,160 28 25
17,760 16,587
Equity shares:
Ordinary shares of £1 each 17,732,124 16,562,484 17,732 16,562
Shares classed as financial liabilities (note 13):
Convertible deferred shares of 1p each 2,805,510 2,533,160 28 25
The convertible deferred shares are offered for cash at par to former employees of the company or any of its
subsidiaries who held ordinary shares of the company for more than five years but who had ceased to be such
holders by virtue of a ‘Qualifying Sale’ as more particularly described in the Articles of Association. On the
occurrence of a ‘Specified Event’ as described in the Articles of Association, the convertible deferred shares
(together with a corresponding number of unclassified shares) will be converted into ordinary shares of the
company. The convertible deferred shares carry no voting rights and no entitlement to dividends or any surplus
on winding up. As required by Financial Reporting Standard 25 (‘FRS 25’) ‘Financial Instruments: Presentation’,
these shares are disclosed as current liabilities rather than as share capital (see note 13).
During the year the company issued 1,169,640 ordinary shares of £1 each fully paid for £9,825,000 of which
934,290 were issued fully paid for cash of £7,848,000 and 235,350 were issued fully paid as part consideration
for certain acquisitions amounting to £1,977,000.
37
Mott MacDonald Group Limited
Notes to the financial statements
at 31 December 2010
19. Reserves
(a) Group
2010 Share Capital
premium Revaluation redemption Other
account reserve reserve reserves
£000 £000 £000 £000
At 1 January 54,817 550 150 548
Arising on issue of shares 8,655 – – –
Increase in valuation of current asset investments – 382 – –
At 31 December 63,472 932 150 548
Profit and loss account Excluding Including
pension Pension pension
deficit deficit deficit
£000 £000 £000
At 1 January 79,153 (78,990) 163
Exchange adjustments on translation of net assets 701 – 701
Profit attributable to members of the parent company 22,517 – 22,517
Dividends (note 8) (8,735) – (8,735)
Transfer in respect of additional pension
contribution (net of deferred tax) (7,937) 7,937 –
Deferred tax on additional pension contributions (note 7(c)) (2,959) – (2,959)
Deferred tax rate change on opening pension scheme
deficit (note 7(c)) – (842) (842)
Other finance cost (net of deferred tax) 1,102 (1,102) –
Actuarial gain on pension scheme – 43,551 43,551
Deferred tax on actuarial gain – (11,785) (11,785)
At 31 December 83,842 (41,231) 42,611
The share premium account relates to equity shares.
The pension deficit of £41,231,000 above differs from the pension liability in the balance sheet of £31,363,000
by £9,868,000. This difference relates to the escrow account of the pension scheme of £10,400,000 less the
pre-acquisition element of the pension deficit in Multi Design Holdings Limited of £532,000.
The net cumulative goodwill written off directly against reserves prior to goodwill being capitalised on
the balance sheet amounts to £1,995,000 (2009 – £1,995,000); and that credited to reserves amounts
to £2,444,000 (2009 – £2,444,000).
38
Mott MacDonald Group Limited
Notes to the financial statements
at 31 December 2010
19. Reserves (continued)
(b) Company
2010 Share Capital Profit
premium Revaluation redemption and loss
account reserve reserve account
£000 £000 £000 £000
At 1 January 54,817 2,831 150 64,798
Arising on issue of shares 8,655 – – –
Profit on ordinary activities after taxation – – – 15,804
Dividends (note 8) – – – (8,735)
At 31 December 63,472 2,831 150 71,867
20. Capital commitments
There were no capital commitments contracted and not provided for in the financial statements.
21. Contingent liabilities
Group Company
2010 2009 2010 2009
£000 £000 £000 £000
Guarantee of bank loans and overdrafts in respect of
other Group companies – – 9,881 9,562
In addition, in the normal course of business, down payment, performance and tender bonds have been given
by certain subsidiary undertakings. In the opinion of the directors, these are not expected to give rise to any
significant liability.
39
Mott MacDonald Group Limited
Notes to the financial statements
at 31 December 2010
22. Pensions and other retirement benefits
(a) Mott MacDonald Pension Schemes
The Group has two pension schemes in the UK. The Mott MacDonald Pension Scheme (ʻthe Schemeʼ) is trust
based and has defined benefit and defined contribution sections. On 1 May 2000, the defined benefit section
was closed to new entrants. From 1 January 2001, all members were transferred to the defined contribution
section. This section is contracted into the State Second Pension, formerly known as the State Earnings
Related Pension Scheme (ʻSERPSʼ) and was closed to new members on 31 December 2004.
From 1 January 2005, new employees are entitled to join the Mott MacDonald Stakeholder Pension Scheme
(ʻStakeholder Schemeʼ), a contract based scheme.
The Group contributes to the individual employee accounts in both the defined contribution section of the
Mott MacDonald Pension Scheme and the Stakeholder Scheme, at the rates specified in the rules of
these schemes.
The total pension costs for the Scheme for the year were £13.2m (2009 – £14.4m) for the defined contribution
section and £12.0m (2009 – £11.8m) for the defined benefit section. The defined benefit cost includes both
administrative expenses and life assurance costs relating to the Scheme and an instalment of £10.2m to
reduce the deficit. Membersʼ pensions were increased during the year according to the rules of the Scheme.
Total pension costs for the Stakeholder Scheme were £10.2m (2009 – £10.3m).
The Scheme is funded by means of assets which are held in trustee-administered funds, separated from the
Groupʼs own resources. The contributions to the defined benefit section of the Scheme are determined with the
advice of an independent qualified actuary on the basis of triennial valuations using the ʻAttained Ageʼ method
and a funding agreement between the trustees and the Group.
The following key assumptions were used to assess the funding level at the last
actuarial valuation:
Date of valuation 1 January 2009
Future investment return per annum – pre-retirement 5.8%
– post-retirement 4.8%
Pensionable salary increases per annum 3.7%
Market value of assets at the valuation date £328m
Level of funding based on market value of assets 63%
The level of funding is the value of the assets expressed as a percentage of Scheme liabilities, after allowing
for revaluation of benefits to normal pension date.
The valuation position of the Scheme was updated to 31 December 2010 by a qualified independent actuary
for the purpose of Financial Reporting Standard 17 ʻRetirement Benefitsʼ (ʻFRS 17ʼ).
40
Mott MacDonald Group Limited
Notes to the financial statements
at 31 December 2010
22. Pensions and other retirement benefits (continued)
(a) Mott MacDonald Pension Schemes (continued)
It should be noted that the calculations and methods under FRS 17 are different from those used by the
actuary to determine the funding level of the Scheme. The Group and the trustees regularly review the funding
level of the Scheme with the advice of the actuary. Contributions amounting to £10.2m per annum are currently
being paid into the defined benefit section of the Scheme to eliminate the deficit. This will be reviewed following
the next formal valuation of the Scheme at 1 January 2012.
Following the UK Governmentʼs announcement in summer 2010, the inflation index to be used to derive
statutory pension increases has been changed from the Retail Prices Index (RPI) to the Consumer Prices
Index (CPI). Due to a number of differences between indices, including both constituents and construction,
CPI is expected to be less than RPI over the long term which means that the scheme liabilities have reduced.
Following discussions with our advisors, we have recognised the reduction as an assumption change – that is,
a change to the estimate of future inflation which will be used to increase deferred benefits, and upon which
the inflationary increases to pensions in payment will be derived.
In agreeing the latest recovery plan with the trustees of the UK defined benefit pension scheme, a company
security has been provided as follows:
G a minimum security of £19m will be in place throughout the period of the recovery plan and takes the form
of bank guarantees which are renewable on an annual basis;
G the maximum security that can be in place during the period of the recovery plan is £35m and an escrow
mechanism of up to £16m overlays the bank guarantees of £19m to achieve this. The level of security
required is agreed annually with the pension scheme trustees. The escrow account had a balance of £10.4m
at 31 December 2010.
The security can be called by the trustees in the event of the company defaulting on its contributions to
the Scheme or in the event of the company being sold or being placed in administration. In the view of the
directors, such possible events are remote.
(b) Other pension schemes
In the USA, there is the Hatch Mott MacDonald Defined Benefit Pension Plan. This is a defined benefit scheme
which is closed to new members and future accrual of benefits. An interim report was prepared by a qualified
actuary at 31 December 2010 for disclosure purposes which showed that the total market value of the assets
of the scheme was US$12.8m (2009 – US$12.1m) and the liabilities were US$16.4m (2009 – US$15.7m)
resulting in a deficit of US$3.6m at 31 December 2010 (2009 – US$3.6m).
In the Irish Republic, there is a further defined benefit scheme which is also closed to new members and future
accrual of benefits. An interim report was prepared by a qualified actuary at 31 December 2010 for disclosure
purposes which showed that the total market value of the assets of the scheme was €3.7m (2009 – €3.4m)
and the liabilities were €5.4m (2009 – €4.6m) resulting in a deficit of €1.7m at 31 December 2010
(2009 – €1.2m).
These pension schemes are not material in the context of the Group financial statements.
41
Mott MacDonald Group Limited
Notes to the financial statements
at 31 December 2010
22. Pensions and other retirement benefits (continued)
(c) Group pension schemes
The assets and liabilities of the Mott MacDonald Pension Scheme (‘the UK Scheme’)
as at 31 December are analysed below:
2010 2009
£m £m
Change in benefit obligation
Benefit obligation at 1 January (504.3) (425.0)
Interest cost (28.1) (28.0)
Business combinations – (6.1)
Actuarial gains/(losses) 21.5 (66.6)
Benefits paid 21.5 21.4
Benefit obligation at 31 December (489.4) (504.3)
Analysis of defined benefit obligation
Plans that are wholly or partly funded (489.4) (504.3)
Change in plan assets
Fair value of plan assets at 1 January 397.0 327.5
Expected return on plan assets 26.6 23.0
Actuarial gains 23.3 52.2
Employer contributions 10.2 10.0
Business combinations – 5.7
Benefits paid (21.5) (21.4)
Fair value of plan assets at 31 December 435.6 397.0
Funded status of the UK Scheme (53.8) (107.3)
Net amount recognised in respect of the UK Scheme (53.8) (107.3)
Deficit in the UK Scheme (53.8) (107.3)
Deficit in other Group schemes (3.8) (3.3)
Total deficit in Group schemes (57.6) (110.6)
Related deferred tax asset (note 7(c)) 15.8 31.1
FRS 17 Pension liability (41.8) (79.5)
Less: Escrow account/payment on account 10.4 7.3
Net pension liability (31.4) (72.2)
42
Mott MacDonald Group Limited
Notes to the financial statements
at 31 December 2010
22. Pensions and other retirement benefits (continued)
(c) Group pension schemes (continued)
Components of pension (cost)/income
Year to 31 December 2010 2009
£m £m
Interest cost (28.1) (28.0)
Expected return on plan assets 26.6 23.0
Total pension cost recognised within other finance cost in the
profit and loss account – for the UK Scheme (1.5) (5.0)
– for other Group schemes (0.1) –
(1.6) (5.0)
Actuarial gains/(losses) immediately recognised for the UK Scheme 44.8 (14.4)
Business combinations – (0.5)
Total pension income/(cost) recognised in the statement of total recognised
gains and losses (‘STRGL’) – for the UK Scheme 44.8 (14.9)
– for other Group schemes (1.2) 1.0
43.6 (13.9)
Cumulative amount of actuarial gains immediately recognised for the UK Scheme 160.4 115.6
Plan assets
The weighted average asset allocation at the year end for the UK Scheme was as follows:
2010 2009
% %
Asset category
Equities 51 65
Non-government fixed interest bonds 19 22
Diversified growth funds 25 5
Other 5 7
Cash – 1
100 100
To develop the expected long-term rate of return on assets assumption, the company considered the current
level of expected returns on risk free investments (primarily government bonds), the historical level of the risk
premium associated with the other asset classes in which the portfolio was invested and the expectations for
future returns of each asset class. The expected return for each asset class was then weighted based on the
target asset allocation to develop the expected long-term rate of return on assets assumption for the portfolio.
This resulted in the selection of the 6.8% assumption.
43
Mott MacDonald Group Limited
Notes to the financial statements
at 31 December 2010
22. Pensions and other retirement benefits (continued)
(c) Group pension schemes (continued)
Year to 31 December 2010 2009
£m £m
Actual return on plan assets – for the UK Scheme 49.9 75.2
The key financial assumptions used to determine the pension
liability at 31 December for the UK Scheme are: 2010 2009
% %
Discount rate 5.5 5.7
RPI inflation 3.5 3.5
CPI inflation 2.6 N/A
Pension increases (inflationary increases with a maximum of 5% p.a.) 2.6 3.5
Pension increases (inflationary increases with a maximum of 3% p.a.) 2.1 3.0
Salary increases 4.5 4.5
Weighted average life expectancy for mortality tables used to determine
benefit obligations at 31 December 2010 – for the UK Scheme
Male Female
Years Years
Member age 60 (current life expectancy) 28.0 28.7
Member age 40 (life expectancy at age 60) 30.4 31.2
Five year history for the UK Scheme
Financial years to 31 December 2010 2009 2008 2007 2006
£m £m £m £m £m
Benefit obligation at end of year (489) (504) (425) (492) (514)
Fair value of plan assets at end of year 435 397 328 457 436
Deficit (54) (107) (97) (35) (78)
Financial years to 31 December 2010 2009 2008 2007 2006
Difference between actual return and expected
return on scheme assets:
amount (£m) 23 58 (156) 5 27
percentage of scheme assets 5% 15% (48%) 1% 6%
Experience gains and losses on scheme liabilities:
amount (£m) 8 8 3 (16) (9)
percentage of scheme liabilities 2% 2% 1% (3%) (2%)
44
Mott MacDonald Group Limited
Notes to the financial statements
at 31 December 2010
23. Related party transactions
Mott MacDonald Employee Trust (‘the Employee Trust’) is a trust which at 31 December 2010 owned
9,006,927 (2009 – 8,595,707) ordinary shares of the company.
Loans were made and settled between Mott MacDonald Limited and the Employee Trust during the year.
During the year, Mott MacDonald Limited made a contribution to the Employee Trust of £3,291,000.
The company has taken advantage of the provisions in Financial Reporting Standard 8 ‘Related Party
Disclosures’ not to disclose transactions with wholly owned subsidiaries.
24. Financial instruments
A statement of the Group’s objectives, policies and strategies with regard to financial instruments is contained
in the Directors’ Report.
(a) Interest rate and currency profile of financial assets and liabilities
The currency and interest rate exposures of the Group’s financial assets and liabilities are:
2010 Sterling US dollar Euro Other Total
£m £m £m £m £m
Cash and short term investments:
Floating rate 9.4 6.1 12.4 35.0 62.9
Borrowings:
Floating rate: overdrafts – – – (0.1) (0.1)
loans – – – (0.3) (0.3)
Fixed rate: loans (0.1) (9.5) – – (9.6)
obligations under finance leases (0.1) – – – (0.1)
(0.2) (9.5) – (0.4) (10.1)
Net funds/(debt) at 31 December (note 26) 9.2 (3.4) 12.4 34.6 52.8
2009
£m £m £m £m £m
Cash and short term investments:
Floating rate 34.4 11.7 9.5 23.5 79.1
Borrowings:
Floating rate: overdrafts – – – (0.1) (0.1)
loans (0.4) – – (0.2) (0.6)
Fixed rate: loans (0.3) (9.3) – – (9.6)
obligations under finance leases (0.1) – – (0.1) (0.2)
(0.8) (9.3) – (0.4) (10.5)
Net funds at 31 December (note 26) 33.6 2.4 9.5 23.1 68.6
All short term investments are money market deposits with maturities of less than one month
(2009 – three months).
45
Mott MacDonald Group Limited
Notes to the financial statements
at 31 December 2010
24. Financial instruments (continued)
(b) Fair values of financial assets and financial liabilities
Book value Fair value Book value Fair value
2010 2010 2009 2009
£m £m £m £m
Cash and investments:
Cash at bank and in hand 62.9 62.9 79.1 79.1
Borrowings due:
In one year or less or on demand (0.5) (0.5) (0.8) (0.8)
In one to two years – – (0.4) (0.4)
In two to five years (9.6) (9.6) (9.3) (9.3)
(10.1) (10.1) (10.5) (10.5)
Derivatives held to:
Hedge future transactions
expected to occur in less than one year – – – (0.3)
Fair values are derived from market values.
(c) Unrecognised net gains and losses on hedging instruments are as follows:
Gains Losses Net total
£m £m £m
On hedges as at 31 December 2010 – – –
Of which:
expected to be recognised within one year – – –
On hedges as at 31 December 2009 – (0.3) (0.3)
Of which:
expected to be recognised within one year – (0.3) (0.3)
(d) Borrowing facilities
The Group had adequate funding facilities in place at 31 December 2010 to finance the business going
forward. The available funding is in the form of undrawn committed and undrawn uncommitted facilities.
46
Mott MacDonald Group Limited
Notes to the financial statements
at 31 December 2010
24. Financial instruments (continued)
(e) Interest rate swaps
In order to mitigate interest rate risk, the Group entered into a three year interest rate swap agreement to
September 2011 on US$15m borrowings from a floating rate to a fixed rate of 3.4% plus margin. The fair
value of this swap is a liability of £0.3m which is not reflected on the balance sheet.
25. Analysis of cash flow statement
2010 2009
£000 £000
(a) Reconciliation of operating profit to operating cash flows
Continuing operations:
Operating profit 49,990 48,103
Depreciation 9,474 9,037
Amortisation of goodwill 6,702 6,154
Pension contributions (10,627) (7,334)
Pension payment on account 7,334 –
Pension escrow (10,400) –
Contribution to Mott MacDonald Employee Trust 3,291 3,584
Loss on disposal of tangible fixed assets 256 25
(Profit)/loss on disposal of current asset investments (172) 76
Exchange differences 351 (3,050)
(Increase)/decrease in debtors (23,191) 6,742
Decrease in creditors (4,843) (16,903)
(Decrease)/increase in provision for liabilities (1,085) 2,347
Net cash inflow from operating activities 27,080 48,781
(b) Returns on investments and servicing of finance
Interest received 632 747
Interest paid (544) (691)
Interest element of finance lease rentals (10) (9)
Income from current asset investments 720 468
Dividends from former associates – 1,634
Dividends received from other fixed asset investments 125 4
Dividends paid to minority interests (5,693) (4,052)
Net cash outflow from returns on investments and servicing of finance (4,770) (1,899)
47
Mott MacDonald Group Limited
Notes to the financial statements
at 31 December 2010
25. Analysis of cash flow statement (continued)
2010 2009
£000 £000
(c) Capital expenditure and financial investment
Payments to acquire tangible fixed assets (9,260) (7,071)
Receipts from sales of tangible fixed assets 83 62
Payments to acquire current asset investments (11,165) (10,711)
Receipts from sales of current asset investments 6,898 10,854
Payments to acquire other fixed asset investments (41) (11)
Receipts from sales of other fixed asset investments – 1,636
Net cash outflow from capital expenditure and financial investment (13,485) (5,241)
(d) Acquisitions and disposals
Shares in subsidiary company sold to minority interests 532 595
Payments to acquire subsidiary undertakings (7,367) (1,442)
Payments to acquire businesses (170) –
Acquisition costs paid (535) (92)
Net cash acquired 1,672 475
Net cash outflow from acquisitions and disposals (5,868) (464)
(e) Financing
Issue of equity share capital 7,848 7,371
New loans 106 –
Issue/(redemption) of shares classed as financial liabilities 3 (1)
Repayments of amounts borrowed (704) –
Repayments of capital element of finance lease rentals (141) (1)
Decrease in debt and lease financing (736) (2)
Net cash inflow from financing 7,112 7,369
48
Mott MacDonald Group Limited
Group five year summary
26. Analysis of net funds
Group Acquired
with
subsidiaries
1 January Exchange (excluding 31 December
2010 Cash flow movement cash) 2010
£000 £000 £000 £000 £000
Cash at bank and in hand 79,093 (17,345) 1,187 62,935
Bank overdrafts (80) 4 (6) (82)
79,013 (17,341) 1,181 62,853
Debt due after one year (9,610) 322 (292) – (9,580)
Debt due within one year (576) 276 (25) – (325)
(10,186) 598 (317) – (9,905)
Finance leases (224) 141 (7) (41) (131)
Shares classed as
financial liabilities (25) (3) – – (28)
Total net funds 68,578 (16,605) 857 (41) 52,789
Analysis of cash at bank
and in hand 2010 2009
£000 £000
Cash at bank 48,735 40,893
Money market deposits 14,200 38,200
Total 62,935 79,093
Cash at bank earns interest at floating rates based on daily bank deposit rates. Money market deposits at
the year end are made for varying periods up to one month (2009 – three months) with an average maturity of
9 days (2009 – 22 days) and earn interest at an average effective rate of 0.80% (2009 – 0.75%). The carrying
value of money market deposits approximates their fair value.
49
Mott MacDonald Group Limited
Group five year summary
Years ended 31 December 2010 2009 2008 2007 2006
£000 £000 £000 £000 £000
Gross revenue 1,035,069 1,016,267 913,413 747,910 615,484
Profit on ordinary activities
before taxation 49,331 45,034 41,910 24,932 22,647
Tax on profit on ordinary activities (16,150) (14,654) (10,424) (8,045) (5,220)
Minority interest (10,664) (8,942) (4,184) (2,537) (2,561)
Dividends (8,735) (7,997) (3,763) (2,545) (1,983)
Retained profit 13,782 13,441 23,539 11,805 12,883
Employment of Group capital
Fixed assets 48,322 42,264 48,516 43,229 35,354
Net current assets (less provisions) 152,944 138,742 112,160 78,724 75,117
Excluding net pension liability 201,266 181,006 160,676 121,953 110,471
Net pension liability (31,363) (72,188) (63,174) (9,599) (46,200)
Including net pension liability 169,903 108,818 97,502 112,354 64,271
Group capital employed
Creditors falling due after more than
one year 12,112 10,354 10,532 86 208
Capital and reserves excluding net
pension liability 156,808 144,978 127,280 106,362 98,721
Minority interest 32,346 25,674 22,864 15,505 11,542
Excluding net pension liability 201,266 181,006 160,676 121,953 110,471
Net pension liability (31,363) (72,188) (63,174) (9,599) (46,200)
Including net pension liability 169,903 108,818 97,502 112,354 64,271
Net funds
Cash at bank and in hand 62,935 79,093 54,564 63,154 54,266
Bank overdrafts (82) (80) (204) (274) (276)
Current instalments due on loans (325) (576) (486) (8,294) (8,774)
Loans falling due after more than one year (9,580) (9,610) (10,433) (78) –
Obligations under finance leases (131) (224) (121) (15) (33)
Shares classed as financial liabilities (28) (25) (26) (30) (28)
52,789 68,578 43,294 54,463 45,155
50
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