Hyder Consulting PLC Annual Report 2012

Cash generated from operations before pension deficit
contributions of £3.9m (2011: £3.0m) was £19.5m (2011:
£22.2m). The proportion of EBITDA converted into operating
cash flow in the year was 76% (2011: 87%).
The working capital outflow amounted to £5.9m during the
year (2011: £2.6m), principally due to settlement of prior
year payables, accruals and liabilities acquired. Underlying
trade debtor and work in progress balances reduced by
£4.0m, before inclusion of acquired balances of £1.8m,
largely in the UK and Europe offset by an increase in the
Middle East due to slow contract settlements. We have
received £7.9m from a client in Qatar subsequent to the year
end, and made good progress in resolving delayed contract
settlements in the region.
Tax payments in the year, principally in Australia, amounted
to £4.5m (2011: £4.5m). Cash consideration paid for
acquisitions was £3.1m (2011: £1.1m) with cash balances
acquired of £0.6m (2011: £0.7m).
Post employment benefits
The group operates both defined benefit and defined
contribution schemes as detailed in note 26.
The principal defined benefit scheme is the AGPS, for which
the sponsoring employer is Hyder Consulting (UK) Limited.
There are no group guarantees in place in relation to the
AGPS. Following a consultation period with members the
scheme’s trustees consented to close the scheme to future
accrual with effect from 30 April 2011.
The gross deficit in the scheme at 31 March 2012 reduced
to £16.3m (2011: £17.3m); the deficit net of deferred
tax reduced to £13.1m (2011: £13.5m). The reduction in
the deficit reflects better than expected asset returns
and deficit contributions of £3.9m in the year, offset by
actuarial losses due to reduced discount rates. A triennial
valuation of the scheme as at 1 April 2011 has recently been
concluded. Fixed contributions for the current year will
amount to £1.8m; in the next two years fixed contributions
increase by £0.1m per annum; increased by RPI plus 1%
thereafter. Contingent contributions may become payable
annually up to a cap of £0.7m, dependent on the cash
performance of the UK business.
The Bearing Active
Preload system for
use on Alphasat,
and Europe’s
EDRS satellite
communications
constellation, ESR
Technology, UK
The main assumptions in valuing the deficit are disclosed in
note 26. The sensitivities of the AGPS scheme liabilities to
changes in these assumptions are shown below:
Assumption Change in assumption Indicative effect
on scheme
liabilities
Discount rate Increase / decrease Decrease /
by 0.5% increase by 9%
Rate of inflation Increase / decrease Decrease /
by 0.5% increase by 6%
Longevity Increase by 1 year Increase by 2-3%
The group also operates certain overseas post employment
benefit schemes, which principally relate to benefits payable
to staff when they leave in the Middle East which have been
actuarially valued for the first time this year. Net liabilities
in relation to overseas and annuitants schemes increased
to £7.9m (2011: £6.7m) as a result of ongoing service costs,
a reduction in discount rates and the acquisition of SAK
during the year.
The net finance income for pension schemes amounted to
£0.9m in the year (2011: £0.5m). In 2013 this is anticipated
to reduce to £0.7m. The application of the changes to IAS
19, ‘Employee Benefits’, from 2014 will affect the pension
financing charge; if the change were applied in 2013 this
would result in a pro-forma pension financing charge of
approximately £1.0m.
Principal risks and uncertainties
The group is broadly based, both internationally and across
market sectors, which provides considerable resilience to
and mitigates against economic and political risks. The
group’s risks are regularly monitored by the board. Risk
management and internal control systems provide a means
of identifying, evaluating and managing the significant
risks facing the group. These systems can only mitigate risk
rather than eliminate it completely.
The group’s principal risks have been identified as follows:
Hyder Consulting PLC Annual Report 2012 27