Final Results
Morgan Crucible Co PLC
19 February 2008
PRELIMINARY RESULTS FOR THE YEAR ENDED 4 JANUARY 2008
• Strong year-on-year financial performance:
Revenue increased by 6.3% on a constant currency basis
Group operating profit margins before one off items(1) rose to 12.5% from
10.9% driven by improved pricing, operational efficiencies and continued
growth in higher margin business
Group operating profit margins after one off items(1) improved to 11.2%
from 8.1%
Profit before tax increased 47.8% to £71.7 million on a constant currency
basis
EPS(2) before one off items improved by 24.6% to 22.3 pence (2006:
17.9 pence)
• All three divisions contributing to a 24.8% increase in operating profit
before one off items at constant currency:
Carbon achieved operating profit margins before one-off items of 16.0%
(2006: 15.8%), with continued growth in our higher margin businesses, such
as armour, combined with strong performances from the Americas and Asia
Technical Ceramics achieved excellent operating profit margin growth before
one-off items to 13.0% (2006: 10.5%) with a particularly strong performance
in Europe
Insulating Ceramics achieved operating profit margins before one-off items
of 11.3% (2006: 9.2%) with very good growth in both the top line and bottom
line due to large project-based business
• Robust financial position:
Net debt(4) at year end remains low at £119.7 million. Following the
acquisition of the two businesses from Carpenter Technology Corporation,
the net debt will be c. £200 million, representing 1.8 times proforma
EBITDA (including the last full year Carpenter EBITDA), comfortably below
our gearing target of 2 to 2.5 times EBITDA
Total dividend increased by 50% to 6.75 pence per share (2006: 4.5 pence),
reflecting the Board's confidence in the future prospects of the Group
Commenting on the results, Chief Executive Officer, Mark Robertshaw said:
'Morgan Crucible has delivered a strong financial performance in 2007, with
results that reflect the quality in our business. Top line revenue growth has
been good and we have made further progress towards our goal of mid-teen
operating profit margins. Our strategy remains to focus on higher margin, higher
growth, less economically cyclical markets.
Morgan Crucible ended 2007 in a strong financial position. We have reduced our
exposure to cyclical end markets both through positive mix shift in our organic
business and through our acquisitions, targeting long term secular growth
markets. Our order books are well up on last year and we look to the future with
confidence.'
--------------------------------------------------------------------------------
£m unless otherwise stated 2007 2006 Change
--------------------------------------------------------------------------------
Revenue 693.2 677.8 +2.3%
--------------------------------------------------------------------------------
Operating profit before one-off items(3) 86.5 73.7 +17.4%
--------------------------------------------------------------------------------
Operating profit before one-off items(3) 12.5% 10.9%
margin
--------------------------------------------------------------------------------
EBITDA after one-off items (1) 102.6 81.1 +26.5%
--------------------------------------------------------------------------------
EBITA after one-off items (1) 78.9 56.4 +39.9%
--------------------------------------------------------------------------------
Operating profit after one-off items (1) 77.3 55.2 +40.0%
--------------------------------------------------------------------------------
Operating profit margin after one-off items 11.2% 8.1%
--------------------------------------------------------------------------------
Profit before tax 71.7 50.3 +42.5%
--------------------------------------------------------------------------------
EPS (pence) before one off items(2) 22.3 17.9 +24.6%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Basic EPS (pence) 19.1 12.9 +48.1%
--------------------------------------------------------------------------------
Notes
-----
(1) One-off items are defined as costs of restructuring £9.8 million (2006:
£23.9 million) and recovered legal costs associated with settlement of
anti-trust litigation £0.8 million (2006: charge of £3.8 million), gain on
curtailment of UK employee benefit schemes £nil (2006: £11.0 million),
terminated bid approach costs £nil (2006: £2.1 million) and gain/(loss) on
disposal of property £0.2 million loss (2006: gain of £0.3 million).
(2) EPS before one-off items defined as basic earnings per share of 19.1
pence (2006: 12.9 pence) adjusted to exclude the after tax impact of one-off
items of 3.2 pence (2006: 5.0 pence).
(3) Operating profit before one-off items defined as operating profit of £77.3
million (2006: £55.2 million) before one-off items of £9.2 million (2006:
£18.5 million).
(4) Net debt defined as interest bearing loans and borrowings, bank overdrafts
less cash and other cash equivalents.
Reference is made to operating profit and EPS before one-off items below, both
of which are defined at the front of this statement. These measures of earnings
are shown because the Directors have used them historically to measure the
underlying performance of the business during the restructuring of the Group
from 2003 through to 2006. For 2007 and going forward the Group will continue to
publish this measure but will focus on operating profit after one-off items (as
defined at the front of this statement) as the Directors believe that this
measure more accurately reflects the ongoing performance of the Group.
Strategy
The Group has delivered a 24.8% increase in operating profit before one-off
items in 2007 on a constant currency basis. The operating profit margin before
one-off items reached 12.5% in 2007 compared to 10.9% in 2006. Going forward the
Group will be using operating profit margin after one-off items as its main
profit measure. In 2007 operating profit after one-off items was 11.2%, which is
a substantial increase over the 2006 margin of 8.1%. Our goal, based on
operating profit margin after one-off items, remains to target mid-teen margins
in good times and maintain double digit margins in bad times.
We continue to focus on higher growth, higher margin markets and continue to
reduce our exposure to economically cyclical and commoditised business. Since
2003, we have increased our sales to key target markets such as the aerospace,
defence and petrochemical sectors whilst reducing our exposure to the
automotive, consumer goods and telecommunications sectors. We aim to provide
high value-added solutions for our customers and to be number one or two in our
chosen market segments.
Simultaneously, we focus on reducing and managing our cost base. Our
manufacturing footprint is continually being reviewed for opportunities to
simplify and rationalise the number of, and increase the efficiency of, our
sites. In our continuing businesses, total overheads as a percentage of sales
have reduced, on a constant currency basis, from 32.9% in 2003 to 25.1% in 2007.
Over the same period total employment costs (from continuing businesses) as a
percentage of sales have fallen from 39.3% in 2003 to 31.1% in 2007.
The Group is in excellent financial health. Our balance sheet strength has
enabled us to pursue suitable bolt-on acquisitions that are aligned with our
strategic priorities to accelerate profitable growth. We announced two major
acquisitions in 2007, NP Aerospace and two businesses from Carpenter Technology
Corporation. Going forward, we continue to look for targets that will enhance
shareholder value.
In summary, we are delivering on our stated strategy. The combination of
continuing healthy top line growth and profit margin progression allied to a
strong balance sheet sees the Group in robust health.
Financial Review
The Group has delivered good top line growth in 2007 of 6.3% (on a constant
currency basis) to £693.2 million (2006: £677.8 million).
Group operating profit before one-off items increased by 24.8% on a constant
currency basis to £86.5 million (2006: £73.7 million) and operating profit
margin before one-off items reached 12.5%, in comparison to 10.9% in 2006. All
three of our Divisions contributed to this increase in margin. Operating profit
after one-off items was £77.3 million, an increase of 49.2% over the previous
year on a constant currency basis.
We have continued to rationalise our manufacturing footprint and to drive down
the fixed cost base. The total gross charge for restructuring activities in 2007
was £9.8 million with expected benefits in the region of c. £5 million.
The net finance charge was £5.5 million (2006: £3.4 million). Net bank interest
and similar charges were £7.2 million (2006: £4.6 million). Part of the finance
charge under IFRS is the net IAS 19 (Employee Benefits) interest receipt on
pension scheme net liabilities which was £1.7 million (2006: £1.2 million).
The tax charge for the period was £15.2 million (2006: £10.6 million). The tax
charge on operating profit before one-off items, net of finance costs, was £15.8
million. There was a tax credit of £0.6 million on one-off items. The effective
tax rate before one-off items was 21% (2006: 23.0%) which was marginally higher
than the half year estimate. Over the medium term and as highlighted previously
we would expect the effective tax rate to trend towards 30% as tax losses are
utilised.
Earnings per share (EPS) before one-off items were 22.3 pence (2006: 17.9
pence). EPS after one-off items was 19.1 pence (2006: 12.9 pence).
The Group pension deficit has increased by £5.0 million since last year end to
£47.7 million on an IAS 19 basis.
The net cash inflow from operating activities was £53.1 million (2006: £21.9
million outflow) which included an adverse cash impact from restructuring costs
and costs associated with anti-trust litigation of £11.4 million (2006: £34.3
million). In absolute terms, working capital grew by £18.4 million (2006: £22.9
million), reflecting the increasing level of sales in our divisions. Cash flows
from other investing activities included consideration paid in respect of
acquisitions of £45.4 million (2006: £20.7 million) and receipts from prior year
disposals which were £nil (2006: £11.6 million). Cash flows from financing
activities include payment of £0.8 million (2006: £18.9 million) for the
purchase of shares in respect of the long term incentive and employee share
option schemes and £46.9 million (2006: £0.5 million) for the buy back of own
shares.
--------------------------------------------------------------------------------
Cash flow FY FY
--------------------------------------------------------------------------------
2007 2006
--------------------------------------------------------------------------------
£m £m
--------------------------------------------------------------------------------
Net cash from operating activities 53.1 18.1
--------------------------------------------------------------------------------
UK pension scheme payment - (40.0)
--------------------------------------------------------------------------------
Interest received 3.7 3.5
--------------------------------------------------------------------------------
Net capital expenditure (33.1) (32.9)
--------------------------------------------------------------------------------
Dividends paid (18.8) (7.4)
------ -----
--------------------------------------------------------------------------------
Free cash flow 4.9 (58.7)
--------------------------------------------------------------------------------
Cash flows from other investing activities (45.7) (10.9)
--------------------------------------------------------------------------------
Cash flows from financing activities (47.7) (19.2)
--------------------------------------------------------------------------------
Exchange movement 2.9 4.2
--------------------------------------------------------------------------------
Opening net cash/(debt) (34.1) 50.5
------ ----
--------------------------------------------------------------------------------
Closing net (debt) (119.7) (34.1)
--------------------------------------------------------------------------------
Dividend
Given the good financial performance of the Group in 2007, our strong balance
sheet and our underlying confidence in future prospects, the Board has proposed
a final dividend of 4.5 pence per Ordinary share, an increase of 50% on the
final dividend declared for 2006. The dividend will be paid on 30th June 2008 to
Ordinary shareholders on the register of members at the close of business on
30th May 2008.
Operating Review
Carbon
Revenues for the full year were up by 1.4% on a reported basis compared to the
same period last year at £216.6 million (2006: £213.6 million). On a constant
currency basis the year on year revenue growth was 6.3%. Operating
profit before one-off items for the year increased from £33.8 million to £34.6
million with operating profit margins before one-off items increasing from 15.8%
in 2006 to 16.0% in 2007.
The Americas and the Asian regions performed well in 2007. As part of the
Americas success there has been healthy growth in our armour business, including
a good finish to the year in terms of both sales and orders. We expect our
armour business to continue to perform well in 2008. Investment was made in
Europe during the course of the year to improve our ability to serve the global
market for both personal and vehicle protection. Our Asian businesses delivered
another year of double digit revenue growth and we have continued to invest
strongly in these businesses to ensure that growth can be maintained. This
investment includes adding to our operational and technical resource, expanding
the product range and broadening our regional coverage.
The NP Aerospace business has performed well since our investment in July 2007.
Both the order book and opportunity pipeline are extremely strong, particularly
in the vehicle armour market.
Technical Ceramics
Revenues in 2007 decreased by 6.1% to £152.6 million (2006: £162.5 million) and
at constant currency this decline would have been 2.3%. As previously announced,
this revenue decline was due to a large US customer reaching the end of its
product lifecycle.
During the year, Technical Ceramics maintained its focus on positive product mix
shift towards higher margin, higher value added end markets. In parallel, our
continuous improvement programme in operations, our cost reduction initiatives
in fixed overhead, and our emphasis on positive pricing all contributed to a
further improvement in operating margins. Operating profit before one-off items
increased by 17.1% to £19.9 million (2006: £17.0 million) and operating profit
before one-off items margins improved to 13.0% (2006: 10.5%).
The order book for our US business continues to look healthy. Our business in
Asia, although smaller, is robust, with continued growth in demand for ceramic
rollers made at our recently expanded Yixing facility. Our European business
performed particularly well in the second half of 2007 and markets there remain
strong. In Europe and North America a highlight of 2007 has been the strength of
our medical and aerospace customers. Developing our exposure to these sectors
remains a major theme for the Division.
In December 2007, we announced the acquisition of the Technical Ceramics
businesses of Carpenter Technology Corporation. The transaction is awaiting
regulatory approvals and is expected to close by the end of the first quarter of
2008. These businesses are an excellent strategic fit and the enlarged Technical
Ceramics Division has exciting prospects for revenue growth and operating margin
enhancement. We continue to target additional bolt-on acquisition opportunities
with attractive technology and market positions that will help to accelerate
profitable growth momentum.
Overall, our order books remain robust having increased by over £7 million in
the year to stand at £49 million by the year end. Our new business pipeline also
has several strong prospects for 2008. As a result, the Division is well placed
to renew revenue growth and continue to improve operating margins in 2008.
Insulating Ceramics
Within the Insulating Ceramics Division there are two business units: Thermal
Ceramics and Molten Metal Systems.
The Thermal Ceramics business' revenue increased by 7.6% to £291.9 million in
2007 (2006: £271.2 million) and on a constant currency basis year on year growth
was 11.0%, driven primarily by large project based orders.
Energy and raw material prices increased sharply in the last quarter of the
year, particularly for bauxite (for alumina production), which have impacted
contract prices for 2008. The business will continue to address these cost
pressures through price increases and through improvements in manufacturing
efficiency, with a particular focus on reducing energy usage.
The division starts the year with a healthy order book. Growth is coming
particularly from project based sales in Asia and from the Middle East for
aluminium, petrochemical and iron and steel markets associated with emerging
market infrastructure build. These project orders are expected to remain strong
through 2008.
New products launched during the last three years now account for 20% of
European fibre sales; these include Superwool 607HT (high temperature
bio-soluble fibre), Superwool Plus (enhanced insulation bio-soluble fibre) and
engineered fibre for diesel particulate filters, taking advantage of the
environmental requirements of the automotive market. Our global Superwool sales
are growing steadily with eight plants now in regular Superwool production.
Trading conditions within the Molten Metal Systems business remained firm
throughout 2007 with revenue at £32.1 million, an increase of 6.7% at constant
currency over the previous year, with all regions reporting growth. Operating
margins also improved with price increases and cost efficiencies offsetting
increases in energy costs, raw material prices and adverse currency movements.
We remain on schedule to cease manufacturing at our UK plant during the first
half of 2008.Our German plant has been upgraded with additional capacity now in
place. The building extension at our Indian plant in Aurangabad is complete and
the increased manufacturing capacity will come on stream progressively during 2008.
In China, construction commenced of our new crucible manufacturing plant in
Suzhou, near Shanghai. These projects will be fully operational in the second
half of 2008 and will see our global production capacity more closely aligned
with anticipated levels of future regional demand.
Outlook
All our Divisions continued to make good profit margin progression in 2007. Our
leading market positions, diversified end-market mix, strong order book and
healthy balance sheet enable the Board to look to the future with confidence.
Tim Stevenson, Chairman
Mark Robertshaw, Chief Executive Officer
CONSOLIDATED INCOME STATEMENT
for the year ended 4 January 2008
Total* Continuing Discontinued Total
operations operations
2007 2006 2006 2006
Note £m £m £m £m
---------- ------------------------------------
Revenue 1 693.2 677.8 - 677.8
Operating costs before one-off items and amortisation of
intangibles (605.1) (602.9) - (602.9)
---------- ------------------------------------
Profit from operations before one-off items and amortisation of
intangible assets 88.1 74.9 - 74.9
Amortisation of intangible assets (1.6) (1.2) - (1.2)
---------- ------------------------------------
Profit from operations before one-off items 86.5 73.7 - 73.7
One-off items:
Restructuring costs and costs associated with settlement of prior
period anti-trust litigation 4 (9.0) (27.7) - (27.7)
Gain on curtailment of United Kingdom employee benefit schemes - 11.0 - 11.0
Costs of terminated bid approach - (2.1) - (2.1)
Profit/(loss)on disposal of property (0.2) 0.3 - 0.3
---------- ------------------------------------
Operating profit 77.3 55.2 - 55.2
Finance income 28.8 26.8 - 26.8
Finance expenses (34.3) (30.2) - (30.2)
---------- ------------------------------------
Net financing costs 2 (5.5) (3.4) - (3.4)
Loss on disposal of business (0.3) - (1.5) (1.5)
Share of profit of associate (net of income tax) 0.2 - - -
---------- ------------------------------------
Profit/(loss) before taxation 71.7 51.8 (1.5) 50.3
Income tax expense (all relates to overseas tax payable) 3 (15.2) (10.6) - (10.6)
---------- ------------------------------------
Profit/(loss) after taxation and for the period 56.5 41.2 (1.5) 39.7
========== ====================================
Profit/(loss) for period attributable to:
Equity holders of the parent 52.6 38.4 (1.5) 36.9
Minority interest 3.9 2.8 - 2.8
---------- ------------------------------------
56.5 41.2 (1.5) 39.7
========== ====================================
Earnings/(loss) per share 5
Basic 19.1p 13.4p (0.5)p 12.9p
Diluted 18.5p 12.8p (0.5)p 12.3p
Dividends
Interim dividend - pence 2.25p 1.5p
- £m 6.3 4.4
Proposed final dividend - pence 4.5p 3.0p
- £m 12.4 8.8
The proposed final dividend is based upon the number of shares outstanding at the balance sheet date.
* All current year operations are continuing.
CONSOLIDATED BALANCE SHEET
as at 4 January 2008
2007 2006
£m £m
------------------------------
Assets
Property, plant and equipment 246.6 230.2
Intangible assets 69.8 66.4
Other investments 7.5 7.2
Investment in associate 5.2 -
Other receivables 36.8 1.2
Deferred tax assets 25.8 28.8
------------------------------
Total non-current assets 391.7 333.8
------------------------------
Inventories 97.7 84.9
Trade and other receivables 139.8 136.0
Cash and cash equivalents 108.0 97.4
------------------------------
Total current assets 345.5 318.3
------------------------------
Total assets 737.2 652.1
------------------------------
Liabilities
Interest-bearing loans and borrowings 193.1 93.2
Employee benefits 47.7 42.7
Grants for capital expenditure 0.2 0.1
Provisions 5.7 6.7
Non-trade payables 3.7 3.6
Derivative financial liabilities 0.2 -
Deferred tax liabilities 19.2 28.4
------------------------------
Total non-current liabilities 269.8 174.7
------------------------------
Bank overdraft 20.8 24.5
Interest-bearing loans and borrowings 13.8 13.8
Trade and other payables 208.5 210.3
Current tax payable 15.2 9.9
Provisions 11.8 15.8
Derivative financial liabilities 1.0 -
------------------------------
Total current liabilities 271.1 274.3
------------------------------
Total liabilities 540.9 449.0
------------------------------
------------------------------
Total net assets 196.3 203.1
==============================
Equity
Issued capital 69.5 73.7
Share premium 85.3 85.2
Reserves 32.5 21.3
Retained earnings (11.1) 6.5
------------------------------
Total equity attributable to equity holders of
parent company 176.2 186.7
------------------------------
------------------------------
Minority interest 20.1 16.4
------------------------------
Total equity 196.3 203.1
==============================
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 4 January 2008
2007 2006
Note £m £m
---------------------------
Operating activities
Profit for the period 56.5 39.7
Adjustments for:
Depreciation 23.7 24.7
Amortisation 1.6 1.2
Net financing costs 5.5 3.4
Loss on disposal of business 0.3 1.5
Share of profit of associate (0.2) -
Profit on sale of property, plant and equipment (0.1) (0.4)
Income tax expense 15.2 10.6
Equity settled share based payment expenses 2.7 3.2
---------------------------
Operating profit before changes in working capital and provisions 105.2 83.9
(Increase)/decrease in trade and other receivables 5.7 (18.7)
(Increase)/decrease in inventories (8.5) (11.3)
Increase/(decrease) in trade and other payables (15.7) 7.1
Non cash operating costs relating to restructuring 0.2 4.2
Increase/(decrease) in provisions and employee benefits (8.8) (72.6)
---------------------------
Cash (absorbed)/generated from operations 78.1 (7.4)
Interest paid (12.5) (8.2)
Taxation (12.5) (6.3)
---------------------------
Net cash from operating activities 53.1 (21.9)
Investing activities
Purchase of property, plant and equipment (34.9) (34.0)
Proceeds from sale of property, plant and equipment 1.8 1.1
Purchase of investments (0.3) (1.8)
Interest received 3.7 3.5
Acquisition of subsidiaries and associate, net of cash acquired (9.4) (20.7)
Issue of debt to associate (36.0) -
Disposal of subsidiaries, net of cash disposed of - 11.6
---------------------------
Net cash from investing activities (75.1) (40.3)
Financing activities
Proceeds from the issue of share capital - 0.2
Purchase of own shares (47.7) (19.4)
Repayment of borrowings 102.5 32.3
Payment of finance lease liabilities (0.3) (0.4)
Dividends paid (18.8) (7.4)
---------------------------
Net cash from financing activities 35.7 5.3
Net increase/(decrease) in cash and cash equivalents 13.7 (56.9)
Cash and cash equivalents at start of period 73.5 133.6
Effect of exchange rate fluctuations on cash held 2.9 (3.2)
---------------------------
Cash and cash equivalents at period end 6 90.1 73.5
===========================
CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
for the year ended 4 January 2008
2007 2006
£m £m
-----------------------------
Foreign exchange translation differences 7.9 (17.8)
Actuarial gain/(losses) on defined benefit plans (9.9) 15.2
Deferred tax associated with employee benefit schemes 0.5 (1.2)
Cash flow hedges:
Effective portion of changes in fair value (1.2) (0.1)
Change in fair value of equity securities
available-for-sale 0.3 0.3
-----------------------------
Income and expense recognised directly in equity (2.4) (3.6)
Profit/(loss) for the period 56.5 39.7
-----------------------------
Total recognised income and expense for the period 54.1 36.1
==============================
Attributable to:
Equity holders of the parent 50.2 33.3
Minority interest 3.9 2.8
-----------------------------
Total recognised income and expenses for the period 54.1 36.1
=============================
Basis of Preparation
These financial statements have been prepared in accordance with International
Financial Reporting Standards adopted for use in the EU in accordance with EU
law (IAS regulation EC/1606/2002).
The financial information set out above does not constitute the company's
statutory accounts for the years ended 4 January 2008 or 2007. Statutory
accounts for 2006 have been delivered to the registrar of companies, and those
for 2007 will be delivered in due course. The auditors have reported on those
accounts; their report was (i) unqualified, (ii) did not include a reference to
any matters to which the auditors drew attention by way of emphasis without
qualifying their report and (iii) did not contain a statement under section
237(2) or (3) of the Companies Act 1985.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Segment reporting
Carbon Technical Thermal Molten Metal Consolidated
Ceramics Ceramics Systems
2007 2006 2007 2006 2007 2006 2007 2006 2007 2006
£m £m £m £m £m £m £m £m £m £m
--------------------------------------------------------------------------------------
Revenue from external customers 216.6 213.6 152.6 162.5 291.9 271.2 32.1 30.5 693.2 677.8
--------------------------------------------------------------------------------------
Segment profit 31.7 28.5 14.7 19.3 33.2 12.9 2.1 4.1 81.7 64.8
---------------------------------------------------------------------
Unallocated costs (4.4) (9.6)
---------------
Operating profit 77.3 55.2
Net financing costs (5.5) (3.4)
Loss on disposal of business (0.3) (1.5)
Share of profit of associate
(net of income tax) 0.2 - - - - - - - 0.2 -
Income tax expense (15.2) (10.6)
---------------
Profit for the period 56.5 39.7
===============
Segment operating profit before
one-off items* 34.6 33.8 19.9 17.0 32.7 24.7 3.9 3.2 91.1 78.7
--------------------------------------------------------------------
Unallocated costs (4.6) (5.0)
---------------
Operating profit before one-off items* 86.5 73.7
===============
* Operating profit before one-off items. This measure of profit is shown because the Directors use
it to measure the underlying performance of the business.
Europe Americas Far East & Middle East & Consolidated
Australia Africa
2007 2006 2007 2006 2007 2006 2007 2006 2007 2006
£m £m £m £m £m £m £m £m £m £m
--------------------------------------------------------------------------------
Revenue from external customers 280.7 261.9 291.7 302.4 108.6 100.0 12.2 13.5 693.2 677.8
-------------------------------------------------------------------------------
2. Net finance income and expense
2007 2006
£m £m
------------------
Recognised in profit or loss
Interest income on bank deposits 3.9 3.5
Expected return on IAS 19 scheme assets 24.9 23.3
------------------
Finance income 28.8 26.8
------------------
Interest expense on financial liabilities measured at amortised cost (11.1) (8.1)
Interest on IAS 19 obligations (23.2) (22.1)
------------------
Finance expense (34.3) (30.2)
------------------
Net financing costs (5.5) (3.4)
==================
The above finance income and expense include the
following in respect of assets/(liabilities) not at fair
value through profit or loss:
Total interest income on financial assets 3.9 3.5
------------------
Total interest expense on financial liabilities (11.1) (8.1)
------------------
Recognised directly in equity
Net change in fair value of available for sale financial assets 0.3 0.3
Effective portion of changes in fair value of cash flow hedge (1.2) (0.1)
Effective portion of change in fair value of net investment hedge (6.9) -
Foreign currency translation differences for foreign operations 14.8 (17.8)
------------------
7.0 (17.6)
------------------
Recognised in:
Fair value reserve 0.3 0.3
Translation reserve 7.9 (17.8)
Hedging reserve (1.2) (0.1)
------------------
7.0 (17.6)
------------------
3. Taxation - Income tax expense
Recognised in the income statement
2007 2006
£m £m
-----------------
Current tax expense
Current year 19.0 12.5
Adjustments for prior years 1.6 0.6
-----------------
20.6 13.1
-----------------
Deferred tax expense
Origination and reversal of temporary differences (12.1) 2.9
Benefit of losses recognised 6.7 (5.4)
-----------------
(5.4) (2.5)
-----------------
Total income tax expense in income statement 15.2 10.6
=================
Reconciliation of effective tax rate 2007 2007 2006 2006
£m % £m %
Profit before tax 71.7 50.3
Income tax using the domestic corporation taxt rate 21.4 30.0 15.1 30.0
Non-deductible expenses 1.1 1.5 2.3 4.6
Effect of tax losses utilised (12.0) (16.7) (7.3) (14.5)
Under provided in prior years 1.6 2.2 0.6 1.2
Other (including the impact of overseas tax rates) 3.1 4.3 (0.1) (0.2)
-------- --------
15.2 21.2 10.6 21.1
======== ========
Income tax recognised directly in equity
Actuarial gains and losses 0.5 (1.2)
-------- --------
Total income tax recognised directly in equity 0.5 (1.2)
======== ========
4. Restructuring costs and costs associated with settlement of anti-trust litigation
Costs of restructuring were £9.8 million (2006: £23.9 million) and legal costs
recoverable associated with settlement of anti- trust litigation were £0.8 million
(2006: a cost of £3.8 million).
5. Earnings per share
Basic earnings per share
--------------------------
The calculation of basic earnings per share at 4 January 2008 was based on
the profit attributable to equity holders of The Morgan Crucible Company plc
of £52.6 million (4 January 2007: £36.9 million) and a weighted average
number of ordinary shares outstanding during the period ended 4 January 2008
of 275,659,262 (4 January 2007: 287,110,574) calculated as follows:
2007 2006
£m £m
---------------------------
Profit attributable to Equity holders of The Morgan Crucible Company plc 52.6 36.9
===========================
Weighted average number of Ordinary shares
Issued Ordinary shares at 5 January 293,225,142 293,188,372
Effect of shares issued in period and Treasury shares held by the Company (17,565,880) (6,077,798)
---------------------------
Weighted average number of Ordinary shares at period end 275,659,262 287,110,574
===========================
Basic earnings per share (pence) 19.1p 12.9p
Diluted earnings per share
----------------------------
The calculation of diluted earnings per share at 4 January 2008 was based on
the profit attributable to equity holders of The Morgan Crucible Company plc
of £52.6 million (4 January 2007: £36.9 million) and a weighted average
number of ordinary shares outstanding during the period ended 4 January 2008
of 283,598,328 (4 January 2007: 298,938,120), calculated as follows:
2007 2006
£m £m
--------------------------
Profit attributable to Equity holders of The Morgan Crucible Company plc 52.6 36.9
==========================
Weighted average number of Ordinary shares
Weighted average number of Ordinary shares 275,659,262 287,110,574
Effect of share options/incentive schemes 7,939,066 11,827,546
--------------------------
Diluted weighted average number of Ordinary shares 283,598,328 298,938,120
==========================
Diluted earnings per share (pence) 18.5p 12.3p
Earnings per share before one-off items
-----------------------------------------
The calculation of earnings per share before one-off items at 4 January 2008
was based on profit from operations and share of profit of associate, before
one-off items less net finance costs, income tax expense (excluding tax
credit arising from one-off items of £0.6 million, (4 January 2007: £5.6
million)) and minority interest of £61.5 million (4 January 2007: £51.3
million) and a weighted average number of ordinary shares outstanding during
the period ended 4 January 2008 of 275,659,262 (4 January 2007: 287,110,574)
calculated as follows:
2007 2006
£m £m
--------------------------
Profit from operations and share of profit of assoicate, before one-off
items less net finance costs, income tax expense and minority interest 61.5 51.3
==========================
Weighted average number of Ordinary shares
Issued Ordinary shares at 5 January 293,225,142 293,188,372
Effect of shares issued in period and Treasury shares held by the Company (17,565,880) (6,077,798)
--------------------------
Weighted average number of Ordinary shares at
period end 275,659,262 287,110,574
==========================
Earnings per share before one-off items (pence) 22.3p 17.9p
Diluted earnings per share before one-off items
-------------------------------------------------
The calculation of diluted earnings per share before one-off items at 4
January 2008 was based on profit from operations and share of profit of
associate, before one-off items less net finance costs, income tax expense
(excluding tax credit arising from one-off items £0.6 million (4 January
2007: £5.6 million)) and minority interest of £61.5 million (4 January 2007:
£51.3 million) and a weighted average number of ordinary shares outstanding
during the period ended 4 January 2008 of 283,598,328 (4 January 2007:
298,938,120) calculated as follows:
2007 2006
£m £m
--------------------------
Profit from operations and share of profit of assoicate, before one-off
items less net finance costs, income tax expense and minority interest 61.5 51.3
==========================
Weighted average number of Ordinary shares
Weighted average number of Ordinary shares 275,659,262 287,110,574
Effect of share options/incentive schemes 7,939,066 11,827,546
--------------------------
Diluted weighted average number of Ordinary shares 283,598,328 298,938,120
==========================
Diluted earnings per share before one-off items (pence) 21.7p 17.2p
6. Cash and cash equivalents/bank overdrafts
2007 2006
£m £m
------------------
Bank balances 81.0 70.2
Cash deposits 27.0 27.2
------------------
Cash and cash equivalents per balance sheet 108.0 97.4
Bank overdrafts subject to cash pooling arrangements (17.9) (23.9)
------------------
Cash and cash equivalents per cash flow statement 90.1 73.5
==================
Bank overdrafts subject to cash pooling arrangements (17.9) (23.9)
Other bank overdrafts (2.9) (0.6)
------------------
Total bank overdrafts (20.8) (24.5)
==================
This information is provided by RNS
The company news service from the London Stock Exchange
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