Final Results
Morgan Crucible Co PLC
20 February 2007
PRELIMINARY RESULTS FOR THE YEAR ENDED 4 JANUARY 2007
• Strong revenue growth and double-digit margins:
Revenue from continuing operations increased by over
11%, which included organic growth of over 9% at constant currency
Group underlying operating margins from continuing
businesses improved from 9.1% to 10.9%, driven by favourable mix shift,
improved pricing, growth in emerging markets and reduced costs
Underlying operating profit** from continuing operations
up from £55.4 million to £73.7 million
Underlying EBITDA* from continuing operations up 24.3%
to £99.6 million (2005: £80.1 million)
Underlying EPSdegrees improved by 36.6% to 17.9 pence (2005: 13.1 pence)
• Margin improvement and growth in excess of GDP across all three
divisions:
Carbon achieved underlying operating profit margins of 15.8% (2005:
13.7%) and revenue growth at constant currency of 8.7%, with a
particularly strong performance in Armour
Technical Ceramics achieved underlying operating profit margins of 10.5%
(2005:8.4%) and revenue growth at constant currency of 13.0%, with
strong growth in the medical, aerospace and electronics segments
Insulating Ceramics achieved underlying operating profit margins of 9.2%
(2005:8.1%) and revenue growth at constant currency of 14.3% with a
strong contribution from acquisitions and growth in Asia and cost
reductions partially offsetting higher energy and raw material costs
• Strong financial position:
Net debt of ^^£34.1 million (2005: net cash of £50.5 million) after cash
payments into the UK pension fund, acquisitions, restructuring and share
purchases for LTIP/ESOS
Group pension deficit substantially reduced by £81.5 million to £42.7
million
Final dividend proposed at 3.0 pence per share
£m unless otherwise stated 2006 2005 Change
--------------------------------------------------------------------------------
Revenue 677.8 745.7 -9.1%%
--------------------------------------------------------------------------------
Underlying EBITDA* 99.6 97.3 +2.4%
--------------------------------------------------------------------------------
Underlying operating profit** 73.7 66.0 +11.7%
--------------------------------------------------------------------------------
Underlying PBT*** 70.3 52.9 +32.9%
--------------------------------------------------------------------------------
Underlying EPS^ degrees (pence) 17.9 13.1 +36.6%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Basic EPS (pence) 12.9 18.1 -28.7%
--------------------------------------------------------------------------------
Operating profit 55.2 33.6 +64.3%
--------------------------------------------------------------------------------
Profit before tax 50.3 20.4 +146.6%
--------------------------------------------------------------------------------
Commenting on the results, Chief Executive Officer, Mark Robertshaw said:
'Morgan has delivered another year of improved financial performance, with
strong momentum both in top line growth and in continued profit margin
enhancement. The top line progress has been driven by our strategy of focusing
on higher growth, higher margin end markets whilst reducing our exposure to
slower growing, more commoditised market segments. In parallel we have
maintained our rigorous ongoing focus on cost management and operational
efficiency. The Morgan Group is in robust financial health and is in a strong
position to continue targeting further profitable growth and the creation of
superior shareholder value. Our strong market positions and healthy balance
sheet enable the Board to look to the future with confidence.'
Special items are defined as costs of restructuring £23.9 million (2005: £29.7
million), legal costs associated with settlement of anti-trust litigation £3.8
million (2005: £2.3 million), gain on curtailment of UK employee benefit schemes
£(11.0) million (2005: £nil), costs of terminated bid approach £2.1 million
(2005: £nil) and (profit)/loss on disposal of property £(0.3) million (2005:
£0.4 million).
* Defined as operating profit of £55.2 million (2005: £33.6 million) before
special items of £18.5 million (2005: £32.4 million) and before depreciation and
amortisation of £25.9 million (2005: £31.3 million).
** Defined as operating profit of £55.2 million (2005: £33.6 million) before
special items of £18.5 million (2005: £32.4 million). This measure of earnings
is shown because the Directors use it to measure the underlying performance of
the business.
*** Defined as operating profit of £55.2 million (2005: £33.6 million) before
special items of £18.5 million (2005: £32.4 million) and after financing costs
of £3.4 million (2005: £13.1 million).
^ Degrees Defined as basic earnings per share of 12.9 pence (2005: 18.1 pence)
adjusted to exclude the after tax impact of special items of 5.0 pence (2005:
9.5 pence) and gain on disposal of discontinued operations 2006 nil pence (2005:
(14.5 pence))
^^ Defined as interest bearing loans and borrowings, bank overdrafts less cash
and other cash equivalents.
Strategy
The Group has delivered a 33% increase in underlying operating profit from 2005
on a continuing business basis at underlying operating profit margins for the
year approaching 11%. Our goal remains to reach mid-teen margins in good times
and double digit margins in bad times.
We are concentrating on higher growth, higher margin markets and are continually
looking to reduce our exposure to commoditised markets. We aim to provide high
value-added solutions for our customers and we aim to be number one or two in
our chosen market sectors
At the same time, we continue to focus on reducing and managing our cost base.
Our manufacturing footprint is continuously being reviewed for opportunities to
simplify and rationalise the number and efficiency of our sites to provide
optimum results. Our total overheads as a percentage of sales have reduced from
29.1% in 2003 to 23.2% in 2006 driven by both the simplification of our
manufacturing footprint and by the reduction in the number of our divisions.
Over the same period our total employment costs (from continuing businesses) as
a percentage of sales have fallen from 39.6% in 2003 to 31.7% for the second
half of 2006.
The Group is in very good financial health, with minimal debt and substantially
reduced Group pension deficits. This balance sheet strength leaves us well
placed to look for suitable bolt-on acquisitions that are aligned with our
strategic priorities to accelerate profitable growth. It should be noted that we
view our M&A activity as a means to accelerate the delivery of our strategy
rather than being a stand-alone strategy in itself. We made six acquisitions in
2006 and we continue to look for further targets that are aligned with our
strategic priorities.
In summary the combination of continuing strong top line and profit margin
progression allied to a healthy balance sheet sees the Group in robust health as
we enter 2007.
Financial Review
Reference is made to underlying operating profit and underlying EPS below, both
of which are defined at the front of this statement. These measures of earnings
are shown because the Directors use them to measure the underlying performance
of the business.
Revenue from continuing businesses increased by over 11% from the previous year
at £677.8 million (2005: £609.8 million). This was driven by organic growth at
constant currency of over 9% and the benefit from the six bolt-on acquisitions
completed in 2006.
Group underlying operating profit for continuing businesses increased by 33.0%
to £73.7 million (2005: £55.4 million). Underlying operating profit margins from
continuing businesses for the second six months of 2006 were 11.1%, in
comparison to 9.7% in the equivalent period in 2005. All three of our major
business units contributed to this increase in margin.
The Group has continued to implement its 'Profit Improvement Programme' in this
period with restructuring charges of £23.9 million (2005: £29.7 million). While
this programme has drawn to a close, we would expect a modest level of
operational restructuring going forwards. We have also incurred costs associated
with settlement of prior period anti-trust litigation in 2006 of £3.8 million
(2005: £2.3 million).
The net finance charge was £3.4 million (2005: £13.1 million). Net bank interest
and similar charges were £4.6 million (2005: £10.0 million), an improvement of
£5.4 million from 2005. Part of the finance charge under IFRS is the net IAS 19
(Employee Benefits) interest receipt on pension scheme net liabilities which was
£1.2 million (2005: charge of £3.5 million).
The tax charge for the period was £10.6 million (2005: £30.2 million including
£25.4 million relating to discontinued operations). The tax charge on underlying
operating profit net of finance costs was £16.2 million. There was a tax credit
of £5.6 million on special items. The effective tax rate before special items
was 23.0% (2005: 25.0%) which is a lower rate than the half year estimate of 25%
due to deferred tax asset recognition in the second half of the year. Over the
medium term we would expect the effective tax rate to trend towards 30% as
losses are utilised.
Underlying earnings per share were 17.9 pence (2005: 13.1 pence).
The Group pension deficit has improved by £81.5 million since last year end to
£42.7 million on an IAS 19 basis. The main movements are in the UK pension
schemes which show a surplus of £3.1 million on an IAS 19 basis, an improvement
of £69.3 million in the period. The two main one-off changes for the UK are a
£40.0 million cash injection and an £11.0 million curtailment to the deficit due
to the changes implemented in the schemes.
The net cash from operating activities, before a one off UK pension payment of
£40 million, was £18.1 million (2005: £48.5 million) which included an adverse
cash impact from restructuring costs and costs associated with anti-trust
litigation of £34.3 million (2005: £30.8 million). Working capital levels
continue to improve as a percentage of sales. In absolute terms, working capital
grew by £22.9 million (2005: £6.2 million), reflecting the increasing level of
sales in our continuing businesses. Cash flows from other investing activities
included consideration paid in respect of acquisitions of £20.7 million (2005:
£3.0 million) and receipts from prior year disposals of £11.6 million (2005:
£195.9 million). Cash flows from financing activities include payment of £18.9
million (2005: £3.5 million) for the purchase of shares in respect of the long
term incentive and employee share option schemes and £0.5 million (2005: £nil)
for the buy back of own shares.
FY FY
2006 2005
£m £m
Net cash from operating activities before UK pension payment 18.1 48.5
UK pension scheme payment (40.0) -
Interest received 3.5 2.3
Net capital expenditure (32.9) (38.1)
Dividends paid (7.4) -
----------------
Free cash flow (58.7) 12.7
Cash flows from other investing activities (10.9) 190.8
Cash flows from financing activities (19.2) (1.8)
Exchange movement 4.2 (3.3)
Opening net cash/(debt) 50.5 (147.9)
----------------
Closing net (debt) (34.1) 50.5
Final Dividend
The Board has proposed a final dividend of 3.0 pence per Ordinary share. The
dividend will be paid on 6th July 2007 to Ordinary shareholders on the register
of members at the close of business on 1st June 2007.
Operating Review
Carbon
Revenues for the full year increased by 6.9% to £213.6 million (2005: £199.9
million) and on a constant currency basis were up 8.7%. Underlying operating
profit for the period was up 23.4% to £33.8 million (2005: £27.4 million). This
strong increase in profit reflects the revenue growth in both our traditional
and emerging businesses, the benefits of recent restructuring projects in USA
and Western Europe and the increased use of low cost manufacturing operations in
Mexico, China and India.
All regions and most markets have delivered revenue growth compared to 2005. In
the Americas, revenue has been strong in the traditional brush and seals and
bearings markets. We have seen strong demand from the US military for personal
and vehicle protection and additional capacity continues to be installed to meet
this demand. Armour demand is also increasing in Europe and the rest of the
world, and additional capability and production capacity is being installed in
the UK to ensure we are best placed to take advantage of these opportunities.
The Aceram business acquired in July 2006 has increased the armour materials
portfolio and has been successfully integrated into the existing business.
In Europe, we have seen growth in our traditional markets, supported by good
growth in our German-based rotary business, which has benefited from robust
demand in the defence sector. All the major re-organisation projects have been
effectively completed and we will see the full year benefit of these in 2007.
There has also been significant progress in our Asian businesses. This was
notably strong in China which has delivered more than double digit growth in
both sales and profits. Significant financial, technical and human resource
investment has been made in the region and this will allow us to continue to
take advantage of the organic growth to provide a high quality/low cost
manufacturing resource for the rest of the world and to provide local support
for customers as they move east.
Technical Ceramics
The Technical Ceramics division enjoyed another strong year in 2006, combining
top line growth with further operating margin improvement. Revenues for the full
year increased by 12.2% to £162.5 million (2005: £144.8 million) and on a
constant currency basis were up 13.0%, of which c.2% was due to the higher than
average levels of precious metal prices in 2006 compared to 2005. Underlying
operating profit increased by 39.3% to £17.0 million (2005: £12.2 million), with
only a negligible positive impact from the higher metals prices. Good balance
sheet discipline continued during the year, ensuring that the profit performance
was also reflected in strong free cash flow.
The business remains focused on continued profit margin progression, with
improvements seen in all regions during 2006, supported by investment in new
product introductions. Although raw material and energy costs have increased
through the year, these have been countered by a combination of price increases
and operational efficiencies. Globally the industrial equipment, medical,
aerospace and electronics segments continue to show good growth. The US markets
have remained robust and our European business is also seeing a strong
performance, particularly in laser and power tube products for communications
and security equipment. In Asia the additional capacity recently installed to
meet demand for the thermal processing market is now fully utilised and
performing well.
Insulating Ceramics
Revenues for the full year increased by 13.8% to £301.7 million (2005: £265.1
million) and on a constant currency basis were up 14.3%, including revenue of
£12.4 million from acquisitions. Underlying operating profit increased 29.8% to
£27.9 million (2005: £21.5 million) as a combination of top line growth and cost
reduction programmes. Within the Insulating Ceramics division there are two
trading divisions: Thermal Ceramics and Molten Metal Systems (formerly known as
Crucibles).
Within Thermal Ceramics, improved sales growth has been driven by continued
positive market conditions in the USA, Middle East and Asia, as well as a number
of major orders for aluminium and petrochemical projects sourced from our
European production sites. As previously noted the division has seen large input
cost rises over the past couple of years, particularly for energy and raw
materials. However, we have taken a number of steps to counteract these margin
pressures both in terms of operational improvements and price increases.
Additional overhead and cost rationalisation programmes were implemented earlier
in 2006, including the closure of fibre production in the UK. The new Joint
Ventures in China and Russia started well, while the Vesuvius insulating fibre
acquisition in the US has been fully integrated into our organisation and
operations.
Trading conditions for the Molten Metals Systems business improved during 2006,
with higher demand in all geographical areas. Revenue increased in all regions,
in particular Asia and the Americas, which delivered double digit growth.
Operating margins improved, benefiting from continued cost control, augmenting
the overhead reduction programmes implemented during 2005. Upgrading of the
Indian manufacturing operations will continue in 2007 to facilitate an
increasing share of the growing domestic market and increase exports in the
region. The business has also announced its intention to establish a
manufacturing operation in China, to be operational in the first half of 2008,
in order to consolidate its market position in the Far East. Further recruitment
is underway in China to increase development strength for that market. The
outlook for 2007 is positive, with continued growth in sales alongside a
significant repositioning of the manufacturing footprint.
Outlook
The group continued to make strong progress in both top line growth and profit
margin enhancement in 2006. With all divisions showing positive momentum, our
objective remains to deliver continued top line growth and margin progression.
Despite the impact of a weak US Dollar in our sterling results, we look forward to
2007 with confidence.
Tim Stevenson Chairman
Mark Robertshaw Chief Executive Office
Consolidated Income Statement
For the year ended 4 January 2007
Continuing Discontinued Total Continuing Discontinued Total
operations operations operations operations
2006 2006 2006 2005 2005 2005
Note £m £m £m £m £m £m
----------------------------------------------------------------------------------------------------------------------
Revenue 1 677.8 - 677.8 609.8 135.9 745.7
Operating costs before Special
items (604.1) - (604.1) (554.4) (125.3) (679.7)
----------------------------------------------------------------------------------------------------------------------
Profit from operations before
special items 73.7 - 73.7 55.4 10.6 66.0
Special items:
Restructuring costs and costs
associated with settlement of
prior
period anti-trust litigation 4 (27.7) - (27.7) (29.9) (2.1) (32.0)
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 0.3 - 0.3 (0.4) - (0.4)
----------------------------------------------------------------------------------------------------------------------
Operating profit 55.2 - 55.2 25.1 8.5 33.6
Finance income 26.8 - 26.8 22.7 - 22.7
Finance expenses (30.2) - (30.2) (33.4) (2.4) (35.8)
----------------------------------------------------------------------------------------------------------------------
Net financing costs 2 (3.4) - (3.4) (10.7) (2.4) (13.1)
Loss on partial disposal of
business - (1.5) (1.5) (0.1) - (0.1)
----------------------------------------------------------------------------------------------------------------------
Profit/(loss) before taxation 51.8 (1.5) 50.3 14.3 6.1 20.4
Income tax expense (all relates
to overseas tax payable) 3 (10.6) - (10.6) (4.8) (4.0) (8.8)
----------------------------------------------------------------------------------------------------------------------
Profit/(loss)after taxation but
before gain on sale of
discontinued operations 41.2 (1.5) 39.7 9.5 2.1 11.6
Gain on sale of discontinued
operations, net of tax - - - - 42.6 42.6
----------------------------------------------------------------------------------------------------------------------
Profit/(loss)for the period 41.2 (1.5) 39.7 9.5 44.7 54.2
======================================================================================================================
Profit/(loss)for period
attributable to:
Equity holders of the parent 38.4 (1.5) 36.9 7.2 44.7 51.9
Minority interest 2.8 - 2.8 2.3 - 2.3
----------------------------------------------------------------------------------------------------------------------
41.2 (1.5) 39.7 9.5 44.7 54.2
======================================================================================================================
Earnings/(loss) per share 5
Basic 13.4p (0.5p) 12.9p 2.5p 15.6p 18.1p
Diluted 12.8p (0.5p) 12.3p 2.4p 14.8p 17.2p
Dividends
Interim dividend - pence 1.5p -
Proposed final dividend - pence 3.0p 2.5p
- £m 8.8 7.3
The proposed final dividend is
based upon the number of shares
outstanding at the balance sheet
date
CONSOLIDATED BALANCE STATEMENT
as at 4 January 2007
2006 2005
Note £m £m
-------------------------------
Assets
Property, plant and equipment 230.2 235.3
Intangible assets 66.4 46.6
Other investments 7.2 6.1
Other receivables 1.2 0.3
Deferred tax assets 28.8 27.4
-------------------------------
Total non-current assets 333.8 315.7
-------------------------------
Inventories 84.9 77.8
Trade and other receivables 136.0 140.9
Cash and cash equivalents 97.4 160.0
-------------------------------
Total current assets 318.3 378.7
-------------------------------
Total assets 652.1 694.4
-------------------------------
Liabilities
Interest-bearing loans and borrowings 93.2 57.3
Employee benefits 42.7 124.2
Grants for capital expenditure 0.1 0.3
Provisions 6.7 4.3
Non-trade payables 3.6 -
Deferred tax liabilities 28.4 28.1
-------------------------------
Total non-current liabilities 174.7 214.2
-------------------------------
Bank overdraft 24.5 27.2
Interest-bearing loans and borrowings 13.8 25.0
Trade and other payables 210.3 195.8
Current tax payable 9.9 8.1
Provisions 15.8 28.4
-------------------------------
Total current liabilities 274.3 284.5
-------------------------------
Total Liabilities 449.0 498.7
-------------------------------
-------------------------------
Total net assets 203.1 195.7
===============================
Equity
Issued capital 73.7 75.5
Share premium 85.2 85.0
Reserves 28.9 41.4
Retained earnings (1.1) (19.6)
-------------------------------
Total equity attributable to equity holders of
parent 186.7 182.3
company -------------------------------
Minority interest 16.4 13.4
-------------------------------
Total equity 203.1 195.7
===============================
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year end 4th January 2007
2006 2005
Note £m £m
-------------------------
Operating activities
Profit for the period 39.7 54.2
Adjustments for:
Depreciation 24.7 30.0
Amortisation 1.2 1.3
Interest expense 3.4 13.1
(Profit)/Loss on sale of property, plant and equipment (0.4) 0.6
Income tax expense 10.6 8.8
Equity settled share based payment expenses 3.2 2.5
--------------------------
Operating profit before changes in
working capital and provisions 82.4 110.5
(Increase)/decrease in trade and other receivables (18.7) (5.8)
(Increase)/decrease in inventories (11.3) (9.0)
Increase/(decrease) in trade and other payables 7.1 8.6
Non cash operating costs relating to restructuring 4.2 8.5
Increase/(decrease) in provisions and employee benefits (72.6) (1.9)
---------------------------
Cash (absorbed)/generated from operations (8.9) 110.9
Interest paid (8.2) (13.7)
Taxation (6.3) (6.2)
Loss on partial disposal of business 1.5 0.1
Loss/(Gain) on sale of discontinued operations - (42.6)
---------------------------
Net cash from operating activities (21.9) 48.5
Investing activities
Purchase of property, plant and equipment (34.0) (43.6)
Proceeds from sale of property, plant and equipment 1.1 5.5
Purchase of investments (1.8) (2.8)
Proceeds from sale of investments - 0.7
Interest received 3.5 2.3
Acquisitions of subsidiaries, net of cash acquired (20.7) (3.0)
Disposal of subsidiaries, net of cash disposed of 11.6 195.9
---------------------------
Net cash from investing activities (40.3) 155.0
Financing activities
Proceeds from the issue of share capital 0.2 1.7
Purchase of own shares (19.4) (3.5)
Repayment of borrowings 32.3 (125.2)
Payment of finance lease liabilities (0.4) (1.2)
Dividends paid (7.4) -
---------------------------
Net cash from financing activities 5.3 (128.2)
Net
increase/(decrease) in cash and cash equivalents (56.9) 75.3
Cash and cash equivalents at start of period 133.6 56.3
Effect of exchange rate fluctuations on cash held (3.2) 2.0
----------------------------
Cash and Cash equivalents at period end 6 73.5 133.6
============================
CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
for the year eneded 4 January 2007
2006 2005
£m £m
-----------------------
Foreign exchange translation differences (17.8) 5.0
Actuarial gain/(losses) on defined benefit plans 15.2 (16.2)
Deferred tax associated with employee benefit schemes (1.2) -
Net gain/(loss) on hedge of net investment in foreign
subsidiary - (1.5)
Cash flow hedges:
Effective portion of changes in fair value (0.1) 0.2
Change in fair value of equity securities
available-for-sale 0.3 0.3
-----------------------
Income and expense recognised directly in equity (3.6) (12.2)
Profit/(loss)for the period 39.7 54.2
-----------------------
Total recognised income and expense for the period 36.1 42.0
=======================
Attributable to:
Equity holders of the parent 33.3 39.7
Minority interest 2.8 2.3
-----------------------
Total recognised income and expenses for the period 36.1 42.0
=======================
Basis of Preparation
These financial statements have been prepared in accordance with IFRS adopted
for use in the EU ('Adopted IFRS') in accordance with EU law (IAS regulation EC/
606/202).
The financial information set out above does not constitute the company's
statutory accounts for the years ended 4 January 2007 or 2006. Statutory
accounts for 2005 have been delivered to the registrar of companies, and those
for 2006 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. Revenue Analysis
Carbon Technical Thermal Molten Metal
Ceramics Ceramics Systems
(formerly Discontinued Consolidated
Crucibles)
2006 2005 2006 2005 2006 2005 2006 2005 2006 2005 2006 2005
£m £m £m £m £m £m £m £m £m £m £m £m
-----------------------------------------------------------------------------------------------------------------------
Revenue from
external customers 213.6 199.9 162.5 144.8 271.2 236.7 30.5 28.4 - 135.9 677.8 745.7
-----------------------------------------------------------------------------------------------------------------------
Segment profit 28.5 15.3 19.3 8.6 12.9 9.2 4.1 1.3 - 8.5 64.8 42.9
-----------------------------------------------------------------------------------------------------------------------
Unallocated costs
(9.6) (9.3)
----------------
Operating profit/(loss) 55.2 33.6
Net financing costs (3.4) (13.1)
Loss of partial
disposal of business (1.5) (0.1)
Income tax expense (10.6) (8.8)
Gain/(loss) on sale of
discontinued operations,
net of tax - 42.6
----------------
Profit/(loss)for the period 39.7 54.2
================
Segment underlying
operating profit 33.8 27.4 17.0 12.2 24.7 19.7 3.2 1.8 - 10.6 78.7 71.7
------------------------------------------------------------------------------------------------------------------------
Unallocated costs
(5.0) (5.7)
----------------
Underlying operating
profit 73.7 66.0
================
Revenue from external customers in discontinued comprises the Magnetics division
£nil (2005: £135.9 million). Segment profit in discontinued comprises the
Magnetics division £nil (2005: £8.5 million). Segment underlying operating
profit in discontinued comprises the Magnetics division £nil (2005:£10.6
million).
Far East & Middle East
Europe Americas Australia & Africa Discontinued Consolidated
2006 2005 2006 2005 2006 2005 2006 2005 2006 2005 2006 2005
£m £m £m £m £m £m £m £m £m £m £m £m
------------------------------------------------------------------------------------------------------------------------
Revenue from
external
customers 261.9 237.6 302.4 268.2 100.0 90.5 13.5 13.5 - 135.9 677.8 745.7
------------------------------------------------------------------------------------------------------------------------
2. Net Finance income and expense
2006 2005
£m £m
---------------------------
Interest income 3.5 1.3
Expected return on IAS 19 scheme assets 23.3 21.0
Fair value gain on interest rate swaps - 0.4
---------------------------
Finance income 26.8 22.7
===========================
Interest expense (8.1) (11.3)
Interest on IAS 19 obligations (22.1) (24.5)
---------------------------
Finance expenses (30.2) (35.8)
===========================
3. Taxation - Income tax expense
Recognised in the income statement
2006 2005
£m £m
---------------------------
Current tax expense
Current year 12.5 36.0
Adjustments for prior years 0.6 0.3
---------------------------
13.1 36.3
---------------------------
Deferred tax expense
Origination and reversal of temporary
differences 2.9 4.0
Benefit of losses recognised (5.4) (10.1)
---------------------------
(2.5) (6.1)
---------------------------
Total income tax expense in income statement 10.6 30.2
===========================
Included in the total income tax expense is £nil million tax charge/(credit)
related to the sale of discontinued operations (2005: £25.4 million charge).
Reconciliation of effective tax rate 2006 2006 2005 2005
£m % £m %
Profit before tax 50.3 84.4
Income tax using the domestic
corporation tax rate 15.1 30.0 25.3 30.0
Non-deductible expenses 2.3 4.6 14.7 17.4
Effect of tax losses utilised (7.3) (14.5) (10.1) (12.0)
Under provided in prior years 0.6 1.2 0.5 0.6
Other (0.1) (0.2) (0.2) (0.2)
--------------------------------
10.6 21.1 30.2 35.8
================================
Reconciliation of profit before tax 2006 2005
£m £m
------------------
Shown on income statement 50.3 20.4
Add: gain on sale of discontinued
operations, gross of tax - 64.0
------------------
Profit/(loss) before tax shown above in tax
rate reconciliation 50.3 84.4
==================
4. Restructuring costs and costs associated with settlement of anti-trust
litigation
Costs of restructuring were £23.9 million (2005: £29.7 million) and legal
costs associated with settlement of anti-trust litigation were £3.8 million
(2005: £2.3 million).
5. Earnings per share
Basic earnings per share
--------------------------
The calculation of basic earnings per share at 4 January 2007 was based on the
profit attributable to Equity holders of The Morgan Crucible Company plc of
£36.9 million (4 January 2006: £51.9 million) and a weighted average number of
Ordinary shares outstanding during the period ended 4 January 2007 of
287,110,574 (4 January 2006: 286,553,767) calculated as follows:
2006 2005
£m £m
------------------------------
Profit attributable to Equity holders of The
Morgan Crucible Company plc 36.9 51.9
==============================
Weighted average number of Ordinary shares
Issued Ordinary shares at 5 January 293,188,372 290,200,179
Effect of shares issued in period and Treasury
shares held by the Company (6,077,798) (3,646,412)
------------------------------
Weighted average number of Ordinary shares at
period end 287,110,574 286,553,767
==============================
Basic earnings per share (pence) 12.9p 18.1p
Diluted earnings per share
----------------------------
The calculation of diluted earnings per share at 4 January 2007 was based on the
profit attributable to Equity holders of The Morgan Crucible Company plc of
£36.9 million (4 January 2006: £51.9 million) and a weighted average number of
Ordinary shares outstanding during the period ended 4 January 2007 of
298,938,120 (4 January 2006: 301,088,360), calculated as follows:
2006 2005
£m £m
------------------------------
Profit attributable to Equity holders of The
Morgan Crucible Company plc 36.9 51.9
==============================
Weighted average number of Ordinary shares
Weighted average number of Ordinary shares 287,110,574 286,553,767
Effect of share options/incentive schemes 11,827,546 14,534,593
------------------------------
Diluted weighted average number of Ordinary
shares 298,938,120 301,088,360
==============================
Diluted earnings per share (pence) 12.3p 17.2p
Underlying earnings per share
-------------------------------
The calculation of underlying earnings per share at 4 January 2007 was based on
profit from operations before special items less net finance costs, income tax
expense (excluding tax credit arising from special items of £5.6 million, (4
January 2006: £4.3 million)) and minority interest of £ 51.3 million (4 January
2006: £37.5 million) and a weighted average number of Ordinary shares
outstanding during the period ended 4 January 2007 of 287,110,574 (4 January
2006: 286,553,767) calculated as follows:
2006 2005
£m £m
------------------------------
Profit from operations before special items
less net finance charge costs, income tax
expense and minority interest 51.3 37.5
==============================
Weighted average number of Ordinary shares
Issued Ordinary shares at 5 January 293,188,372 290,200,179
Effect of shares issued in period and Treasury
shares held by the Company (6,077,798) (3,646,412)
------------------------------
Weighted average number of Ordinary shares at
period end 287,110,574 286,553,767
==============================
Underlying earnings per share (pence) 17.9p 13.1p
Underlying diluted earnings per share
---------------------------------------
The calculation of underlying diluted earnings per share at 4 January 2007 was
based on profit from operations before special items less net finance costs,
income tax expense (excluding tax credit arising from special items £ 5.6
million (4 January 2006: £4.3 million)) and minority interest of £ 51.3 million
(4 January 2006: £37.5 million) and a weighted average number of Ordinary shares
outstanding during the period ended 4 January 2007 of 298,938,120 (4 January
2006: 301,088,360) calculated as follows:
2006 2005
£m £m
------------------------------
Profit from operations before special items
less net finance charge costs, income tax
expense and minority interest 51.3 37.5
==============================
Weighted average number of Ordinary shares
Weighted average number of Ordinary shares 287,110,574 286,553,767
Effect of share options/incentive schemes 11,827,546 14,534,593
------------------------------
Diluted weighted average number of Ordinary
shares 298,938,120 301,088,360
==============================
Underlying diluted earnings per share (pence) 17.2p 12.5p
6. Cash and cash equivalents/bank overdrafts
2006 2005
£m £m
----------------------
Bank balances 70.2 69.0
Cash deposits 27.2 91.0
----------------------
Cash and cash equivalents per balance sheet 97.4 160.0
Bank overdrafts subject to cash pooling (23.9) (26.4)
arrangements ----------------------
Cash and cash equivalents per cash flow statement 73.5 133.6
======================
Bank overdrafts subject to cash pooling (23.9) (26.4)
arrangements
Other bank overdrafts (0.6) (0.8)
----------------------
Total bank overdrafts (24.5) (27.2)
======================
Enquiries:
Mark Robertshaw Chief Executive Officer 01753 837 306
Kevin Dangerfield Chief Financial Officer 01753 837 302
Mike Smith/Robin Walker Finsbury Group 020 7251 3801
This information is provided by RNS
The company news service from the London Stock Exchange
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