4        Profit on disposal of investment in associate

On 25 April 2017, the Group disposed of its 49% investments in Greenwhitestar Holdings Company 1 Limited and Greenwhitestar Finance Limited for consideration comprising cash of £112.0m and a 12.5% shareholding in Eddie Stobart Logistics plc. This disposal generated £123.9m profit on disposal.

Eddie Stobart Logistics plc was admitted to AIM on 25 April 2017 and the 12.5% investment was valued at £71.5m on admission, which was equivalent to 160p per share. As at 31 August 2017, the investment remains valued at £71.5m.

5        Non-underlying items

Non-underlying items included in the Consolidated Income Statement comprise the items set out and described below.

New business and new contract set up costs comprise costs of investing in major new business areas or major new contracts to commence or accelerate development of our business presence. The costs in the current year were (i) pre-contract costs and excess costs incurred due to delays in customer plants becoming operational in the Energy division and (ii) marketing and support costs in relation to introducing 11 additional routes at London Southend Airport, operated by our regional airline.

Transaction costs comprise costs of making investments that are not permitted to be debited to the cost of investment or as issue costs. These costs include costs of any aborted transactions.

Restructuring costs comprise costs of integration plans and other business reorganisation and restructuring undertaken by management. Costs include cost rationalisation, site closure costs, certain short-term duplicated costs and other costs related to the reorganisation and integration of businesses. These are principally expected to be one-off in nature.

The charge for litigation and claims includes payments in respect of historic matters. Contingent assets relating to any outstanding claims are not recognised unless recovery is considered virtually certain, in accordance with accounting standards.

The bad debt write-off relates to a significant receivable, written off due to the customer entering administration.

Amortisation of acquired intangibles comprises the amortisation of intangible assets including those identified as fair value adjustments in acquisition accounting. The charge in the year principally relates to the amortisation of the brand assets.

Impairment of goodwill/credit for business purchase relates to the acquisitions of Everdeal Holdings Limited and Propius Holdings Limited in February 2017.  Prior to acquisition, these investments were previously accounted for as an associates and joint venture respectively.

6              Taxation

Taxation on profit on ordinary activities

Reductions in the UK corporation tax rate from 20% to 19% (effective from 1 April 2017) and 18% (effective from 1 April 2020) were substantively enacted on 26 October 2015. As part of the March 2016 Budget, a further reduction to 17% (effective from 1 April 2020) was announced and substantively enacted in September 2016. The deferred tax liability as at 31 August 2017 has been provided at 17%.

7        Dividends

A final dividend of 4.5p per share (2016: 4.0p) totalling £15,945,000 (2016: £13,770,000) was declared on 11 May 2017 and was paid on 7 July 2017.

An interim dividend of 4.5p per share (2016: 3.0p) totalling £15,841,953 (2016: £10,327,412) was declared on 5 September 2017 and was paid on 6 October 2017 to shareholders on the register as at 15 September 2017.

The annualised dividend now stands at 18.0p per share.

8        Earnings per share

The following table reflects the income and share data used in the basic and diluted earnings per share calculations:

The numerator used for the basic and diluted underlying earnings per share is the underlying profit for the period of £122,170,000 (Aug 2016: £13,765,000 / Feb 2017: £27,606,000), disclosed in the Condensed Consolidated Income Statement.

9        Property, plant and equipment

Additions and disposals

During the six months ended 31 August 2017, the Group acquired or developed property, plant and equipment assets with a cost of £51,834,000 (2016: £8,674,000). This included the acquisition of three Embraer E195 aircraft for £33.1m. These aircraft are leased outside of the Group until late 2018.

Property, plant and equipment assets with a book value of £98,688,000 (2016: £532,000) were disposed of by the Group during the six months ended 31 August 2017, resulting in a profit of £192,000 (2016: £132,000). This included the sale and leaseback of eight ATR 72-600 in April 2017.  The Group received net proceeds of $62.7m (£50.2m) after repayment of existing financing in respect of the aircraft of $85.3m (£68.2m), including refundable deposits withheld of $3.8m (£3.0m) and $1.0m (£0.8m) in rental payments. The leases are for a ten-year term with an option to terminate after six years. Aggregate payments under the leases will amount to $15.4m (£12.3m) per annum. The Group will continue to operate all eight aircraft within its airline, primarily providing flights under the Aer Lingus franchise agreement.

Capital commitments

At 31 August 2017, the Group had capital commitments of £315,000 (2016: £2,703,000), principally relating to new and upgraded IT systems in Rail, HR and London Southend Airport.

10      Analysis of net (cash)/debt

The obligations under finance leases and hire purchase contracts are taken out with various lenders at fixed or variable interest rates prevailing at the inception of the contracts.

The £65,000,000 variable rate committed revolving credit facility, with a facility end date of January 2020, was drawn at £Nil (Feb 2017:  £42,200,000) at the period end.

The Group was compliant with all financial covenants throughout both the current and prior periods.

11      Fair values

Financial assets and liabilities

The book value and fair values of financial assets and financial liabilities are as follows: