Interim Results
Morgan Crucible Co PLC
04 August 2004
4 August 2004
INTERIM ANNOUNCEMENT 2004
2004 2003
---- ----
Group Turnover £m 406.2 442.6
Operating Profit * £m 24.9 21.4
Underlying PBT ** £m 18.0 13.8
Net Debt £m 159.3 236.5
Underlying EPS *** pence 4.7p 3.4p
• Total turnover £406.2 million (2003: £442.6 million) and
turnover from continuing operations £371.4 million (2003: £379.2 million).
Adverse currency translation impact of £21.5m from continuing operations.
• Underlying operating profit £24.9 million (2003: £21.4 million)
and underlying operating profit from continuing operations up 33% to £25.2
million. (2003: £19.0 million). Adverse currency translation impact of £2.7
million on underlying operating profit from continuing operations.
• Underlying EPS of 4.7 pence (2003: 3.4 pence).
• Underlying operating margins for continuing businesses improved
to 6.8%.
• Operating exceptional costs of £17.5 million in the period
(2003: £15.3 million) arising from profit improvement initiatives and £2.7
million (2003: £3.0 million) from competition matters and associated legal
costs.
• Net debt reduced to £159.3 million (2003: £236.5 million).
• Profit improvement plan announced in February 2004 progressing
to plan.
• Raised £54.2 million from rights issue in February 2004.
• Auto and Consumer global business disposal for $77.5 million
completed in June 2004, of which $17.5 million is deferred and payable on
performance criteria for 2004 and 2005.
Commenting on the results, Chief Executive Officer, Warren Knowlton said:
'There are indications that there is an improving position in our North American
and in our smaller but growing Asian markets; however, improvement is not yet
apparent in some European markets. We are not relying on a market upturn to
improve trading performance. Our emphasis will remain upon our continuing
strategy of improving profitability through cost reductions and increasing
efficiency whilst maintaining strong cash management and reducing debt. It is
our intention to grow the business from a stronger and more focused sales base.'
Enquiries
Warren Knowlton, Group Chief Executive 01753 837 302
Nigel Young, Finance Director 01753 837 306
Robin Walker, Finsbury 020 7251 3801
* Defined as statutory operating profit of £4.1 million (2003: £2.2 million)
before goodwill amortisation of £3.3 million (2003: £3.9 million) and
operating exceptional charges of £17.5 million (2003: £15.3 million). This
measure of earnings is shown because the Directors consider that it gives a
better indication of underlying performance.
** Defined as statutory loss before tax of £45.1 million (2003: loss £21.0
million) before goodwill amortisation of £3.3 million (2003: £3.9 million)
and corporate and operating exceptional charges of £59.8 million (2003: £30.9
million).
** Basic underlying loss per share of 16.7p (2003: loss 9.9p) adjusted to
* exclude the after tax impact of corporate and operating exceptional items of
21.4p (2003: 13.3p).
INTERIM STATEMENT 2004
Overview
Both at the time of our Preliminary Results in February and again at the Annual
General Meeting in April we advised that markets overall had stabilised and that
trading was in line with the Board's expectations. The first half has been
encouraging with some early indications that certain markets are recovering
although at this point the picture in Europe remains mixed. We are not however,
relying on a market upturn to improve trading performance.
Turnover for the first half was £406.2 million (2003: £442.6 million) although
on a continuing operations basis sales for the first half were down on last year
by 2% at £371.4 million (2003: £379.2 million). The adverse impact from
translating turnover at last year's exchange rates was 6.1% or £24.9 million,
while for continuing operations it was £21.5 million.
Strategy
The Group's new management set out its key strategic objectives in 2003 and
reiterated these in February when the Group raised £54.2 million by means of a
rights issue. The key objectives are to reduce the complexity of the Group's
businesses and operations, aggressively redirect resources to areas of
advantage, turn around under-performing businesses and accelerate and extend the
current restructuring programme. The strategy has also included the sale of
businesses that fail to meet the Group's performance criteria. The completion
and timing of these disposals could not be predicted with certainty.
The rights issue ensured that the programme of targeted cost saving and profit
improvement opportunities of up to £50 million per annum by the end of 2006
could be accelerated without being reliant upon the uncertain outcome of
business disposals. The estimated future cash costs of securing the targeted
improvements was estimated at £70 million of which £10 million is expected to be
absorbed within the company's ongoing capital expenditure of approximately £35
million to £40 million per annum. The rights issue also strengthened the capital
base of the Group and provided greater financial flexibility.
The profit improvement and targeted cost saving programmes that are focused
primarily on the Group's three largest businesses Magnetics, Carbon and
Insulating Ceramics are on track. The largest two cost saving categories are
connected with site rationalisation, other production efficiencies and headcount
and general overhead reductions. Key project costs in the first half include
sales operations restructuring in Magnetics, site closures and rationalisation
of production in Carbon and Technical Ceramics and overhead reductions in
Insulating Ceramics.
The Group successfully completed several business disposals in the first half,
the most significant being the sale of the Auto and Consumer business in June
for US$77.5 million of which the receipt of US$17.5 million will depend upon the
trading performance of that business for financial years 2004 and 2005. Other
disposals included the sale of the final two soft coatings operations in the USA
and the UK for considerations of US$6.2 million and £3.4 million respectively.
Proceeds from these corporate disposals, a net of £54.2 million from the rights
issue as well as £8.4 million from property disposals contributed to a net debt
reduction to £159.3 million (2003: £236.5 million) at the end of the first half
and a gearing percentage of 59.3% (2003: 69.9%).
Financial Review
Group underlying operating profit for continuing businesses before goodwill and
operating exceptional costs increased by 33% to £25.2 million (2003: £19.0
million). The Group's operating margins for the first six months on this basis
were 6.8% (2003: 5.0%) and all continuing segments contributed to this increase.
Operating exceptional costs in the first half were £17.5 million (2003: £15.3
million). These included the costs of the Group's restructuring programmes and
£2.7 million (2003: £3.0 million) in respect of competition matters and
associated legal costs. The goodwill amortisation reduced to £3.3 million (2003:
£3.9 million) as a result of the effect of corporate disposals in the period.
Corporate exceptional charges in the first six months totalled £42.3 million
(2003: £15.6 million). The loss on sale of businesses of £37.8 million (2003:
£11.7 million) arose principally from the £33.3 million loss from the recent
disposal of the Auto and Consumer business as well as the US and UK soft
coatings operations and various smaller disposals. Corporate charges also
include the disposal of various properties.
The net finance charge reduced in the first half to £6.9 million (2003: £7.6
million) reflecting the significant reduction in borrowings following the
receipt of funds from the rights issue in February and the disposals later in
the period.
The tax charge for the period was £2.9 million (2003: £4.1 million). The
effective rate before all exceptional items and goodwill amortisation was 25%
(2003: 30%). The effective tax rate for the full year 2003 before all
exceptional items, goodwill amortisation and provision releases was 23%.
Underlying earnings per share for the period before goodwill amortisation was
4.7 pence (2003: 3.4 pence).
The net cash inflow from operating activities was £18.6 million (2003: £8.4
million) and included a £15.0 million adverse cash impact from all operating
exceptional costs (2003: £16.2 million). There was also a working capital
outflow of £9.9 million (2003: £21.5 million) some of which arose from higher
trading activity levels and increased costs for raw material supplies.
Programmes are in place to significantly reduce this outflow by the year-end
although increased raw material costs are likely to remain an adverse factor.
Free cash inflow in the period of £7.7 million (2003: outflow £12.6 million)
included capital expenditure of £11.9 million (2003: £14.7 million). Receipts
from property disposals were £8.4 million (2003: £1.6 million). Net receipts
from corporate disposals of £26.3 million (2003: £26.9 million) were mainly from
the disposals of the Auto and Consumer business and the remaining soft coatings
operations. The ratio of capital expenditure to depreciation was 0.64, the same
level as the first half of 2003.
A project to implement 'International Accounting Standards' has been under way
since October 2003. This programme is on track for full implementation in 2005.
Interim Dividend
The Board intends to consider resuming the payment of dividends once the Company
is achieving a level of sustained profitability and cash generation. At this
time no dividend has been proposed given the continuing need to invest in the
profit improvement plan and to reduce net debt.
Operating Review
In the operating review all references to operating profit are stated before
goodwill amortisation and operating exceptional costs.
Carbon
This business supplies carbon components and systems that exploit the
electrical properties of carbon, as well as products that utilise the mechanical
properties of carbon. The division traded well during the period. However, the
translation impact from a weaker dollar had a significant adverse impact upon
both reported turnover and operating profit. Turnover was at a similar level to
the same period last year at £94.6 million (2003: £95.6 million) although the
year on year turnover expressed in constant currency increased by approximately
7%. The operating profit remained steady at £9.1 million (2003: £9.2 million)
despite the adverse translation impact of exchange rates of approximately £1.1
million. This reflected the benefits from the ongoing restructuring programme to
reduce costs through site rationalisation, the elimination of duplication and
the streamlining of processes and services between complimentary activities. The
performance also benefited from an upturn in the semiconductor industry and the
strong demand for silicon carbide body armour for personal protection and armour
for various aircraft and vehicle applications.
The Auto and Consumer global business that was formerly included in the Carbon
segment was sold in June to Energy Conversion Systems.
Magnetics
Trading in the Magnetics business was significantly better than for the
comparable period last year. Turnover remained level at £87.0 million (2003:
£87.9 million) while operating profit increased to £4.7 million (2003: £0.9
million). The benefits from the restructuring actions completed to date were
apparent. By early this year the business had completed its withdrawal from the
highly competitive, low margin market for permanent magnets used in disc drives
and closed one production plant in Malaysia and one in the USA at Elizabethtown,
Kentucky. It also enjoyed the benefits from its expansion in the lower
production cost environment in Slovakia. Further opportunities to reduce
headcount particularly in higher cost locations are being pursued. In addition
to the ongoing restructuring initiatives and market opportunities the first six
months saw some improvement in trading conditions. There has been an increasing
demand for particular products and systems notably the supply of systems for the
security tag market, earth leakage breakers and watt hour meters. In addition,
Magnetics is taking advantage of the growing demand in certain regional markets,
particularly in the Far East, as well as investing in the development of lower
cost sources of product supply. As a result, since the end of the first half,
Magnetics has announced the establishment of a joint venture with San Huan a
leading Chinese producer of permanent magnets.
Technical Ceramics
The first half trading performance of the Technical Ceramics business that
includes products that use either the mechanical properties of ceramics or the
electrical energy properties of ceramics, benefited from improved trading
conditions. Turnover for the continuing operations, despite the adverse impact
from translation, improved by 7.8% to £70.1 million (2003: £65.0 million) and
operating profit improved to £4.2 million (2003: £1.1 million). This arose in
particular from improved conditions in the semiconductor and aerospace markets
and a continuing healthy demand from the medical sector. There was also an
improvement from the restructuring actions to drive down costs and actions to
turn around the trading performance of individual operations, notably that of
the major technical ceramics plant in California. There was also an increase in
the supply of product for new electro ceramic applications with computer disc
drive manufacturers. These components that use high quality piezo materials
allow an enhanced level of data to be stored on a computer disc.
Insulating Ceramics
The Insulating Ceramics business includes both heat management products for
high temperature applications as well as crucibles and related products for the
non-ferrous and precious foundry market. The business traded satisfactorily
during the period. Sales in the first six months were slightly down at £119.7
million (2003: £130.7 million). Market demand in the Americas was similar to the
previous year, Europe showed some weakness partially due to the impact of a
strong euro, and in the smaller Asian market demand was significantly ahead, led
by the demand for petrochemical, iron and steel and ceramic applications. During
the period, market demand for the Superwool family of low bio-persistent fibres
continued to grow worldwide. Operating profits were £7.2 million (2003: £7.8
million) and showed some advance as a result of the continuing restructuring
actions to rationalise plants, reduce overheads and increase efficiency. Adverse
impact from translation at last years foreign exchange rates was £0.9 million.
The operating profit performance did suffer from price increases in alumina
material and energy costs. In the period the Crucible business completed a joint
venture under which its products will be supplied to the Japanese market.
Outlook
There are indications that markets have stabilised since last year and are
showing some improvements in North America. However, this improvement has yet to
manifest itself in all of the group's markets in Europe, which remain a
fundamental geographic segment. Although smaller than our markets in Europe and
North America, our markets in Asia are growing and will provide good
opportunities. Cost reductions and actions to enhance our efficiency are
continuing.
Although recovery may not be apparent in all our markets, we are not relying on
market upturn to improve trading performance. Our emphasis will remain upon our
now proven strategy of improving profitability through cost reductions and
increasing efficiency, whilst maintaining strong cash management and reducing
debt.
Lars Kylberg Chairman
Warren Knowlton Group Chief Executive
CONSOLIDATED PROFIT AND LOSS STATEMENT
for the six months ended 4 July 2004
Restated* Restated*
Unaudited Unaudited
Six months Six months Year
2004 2003 2003
-------------------------------------
Note £m £m £m
-------------------------------------
Turnover
Continuing operations 371.4 379.2 744.3
Discontinued operations 34.8 63.4 105.3
-------------------------------------
Group turnover 2 406.2 442.6 849.6
--------------------------------------------------------------------------------
|Operating profit before goodwill |
|amortisation and operating |
|exceptionals |
|Continuing operations 25.2 19.0 38.3|
|Discontinued operations (0.3) 2.4 4.3|
--------------------------------------------------------------------------------
24.9 21.4 42.6
Operating exceptionals (17.5) (15.3) (67.3)
--------------------------------------------------------------------------------
|Operating profit/(loss) before 7.4 6.1 (24.7)|
|goodwill amortisation |
|Goodwill amortisation (3.3) (3.9) (7.5)|
--------------------------------------------------------------------------------
Operating profit/(loss)
Continuing operations 6.8 2.3 (29.3)
Discontinued operations (2.7) (0.1) (2.9)
-------------------------------------
Group operating profit/(loss) 2 4.1 2.2 (32.2)
-------------------------------------
Corporate exceptional items 3
Continuing operations
-Disposal of fixed assets (4.0) (0.2) (2.3)
-Loss on sale of operations (0.5) (3.7) (6.5)
Discontinued operations
-Loss on sale of businesses (37.8) (11.7) (21.3)
-------------------------------------
(42.3) (15.6) (30.1)
-------------------------------------
(Loss) on ordinary activities (38.2) (13.4) (62.3)
before interest and taxation -------------------------------------
Net finance charges and similar (6.9) (7.6) (15.7)
items -------------------------------------
(Loss) on ordinary activities (45.1) (21.0) (78.0)
before taxation
Taxation 4 (2.9) (4.1) 2.4
-------------------------------------
(Loss) on ordinary activities (48.0) (25.1) (75.6)
after taxation
Equity minority interest (0.8) (0.7) (1.4)
-------------------------------------
Net (loss) attributable to The (48.8) (25.8) (77.0)
Morgan Crucible Company plc
Preference dividends on - (1.1) (1.2)
non-equity shares -------------------------------------
Retained (loss) for the period (48.8) (26.9) (78.2)
================================================================================
Earnings/(loss) per share 5
Underlying earnings per share
- before goodwill amortisation 4.7p 3.4p 9.6p
- after goodwill amortisation 3.4p 1.7p 6.4p
Underlying diluted earnings per 3.4p 1.7p 6.3p
share
After all post tax exceptionalitems:
Basic (loss) per share
- before goodwill amortisation (16.7p) (9.9p) (30.5p)
- after goodwill amortisation (17.9p) (11.6p) (33.7p)
Diluted (loss) per share (17.9p) (11.6p) (33.7p)
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
for the six months ended 4 July 2004 Six months Six months Year
2004 2003 2003
-------------------------------------
£m £m £m
-------------------------------------
Net (loss) attributable to shareholders (48.8) (25.8) (77.0)
Foreign currency translation (8.1) 8.2 4.5
Deficit on write-off of revalued assets - - (0.3)
Return on investments - - 0.3
-------------------------------------
Total recognised losses relating to the (56.9) (17.6) (72.5)
period
================================================================================
* Restated in respect of discontinued operations
CONSOLIDATED BALANCE SHEET
as at 4 July 2004
Unaudited Unaudited
Six months Six months Year
2004 2003 2003
-------------------------------------
Note £m £m £m
-------------------------------------
Fixed assets
Intangible assets - goodwill 95.3 118.3 112.2
Tangible assets 323.5 415.9 386.3
Investment in associated 0.7 1.5 -
undertakings and joint ventures
Other investments 5.5 5.8 6.3
-------------------------------------
425.0 541.5 504.8
-------------------------------------
Current assets
Stocks 130.3 150.4 131.5
-------------------------------------------------------------------------------
|Debtors - due within one year 165.7 204.9 178.2|
| - due after one year 31.9 25.9 28.5|
-------------------------------------------------------------------------------
Total debtors 197.6 230.8 206.7
Cash at bank and in hand 51.3 73.0 57.9
-------------------------------------
379.2 454.2 396.1
Current liabilities 6 235.1 292.3 253.1
-------------------------------------
Net current assets 144.1 161.9 143.0
-------------------------------------
Total assets less current 569.1 703.4 647.8
liabilities -------------------------------------
Creditors - amounts falling due
after more than one year -------------------------------------
Borrowings 149.3 216.2 230.6
Grants for capital expenditure 0.7 1.0 0.6
-------------------------------------
150.0 217.2 231.2
Provisions for liabilities and charges 150.3 148.1 156.1
-------------------------------------
300.3 365.3 387.3
-------------------------------------
NET ASSETS 268.8 338.1 260.5
================================================================================
Capital and reserves
Called up share capital (including 74.8 88.3 60.3
non-equity interests)
Share premium account 84.1 44.4 44.4
Revaluation reserve 3.1 7.4 3.7
Other reserves 1.4 1.4 1.4
Special reserve 18.5 - 6.0
Capital redemption reserve 28.0 - 28.0
Profit and loss account 50.1 186.3 106.4
-------------------------------------
260.0 327.8 250.2
Minority interest
Equity 8.7 10.2 10.2
Non-equity 0.1 0.1 0.1
-------------------------------------
8.8 10.3 10.3
-------------------------------------
CAPITAL EMPLOYED 268.8 338.1 260.5
================================================================================
MOVEMENT IN SHAREHOLDERS' FUNDS
for the six months ended 4 July 2004
Six months Six months Year
2004 2003 2003
-------------------------------------
£m £m £m
-------------------------------------
Net (loss) attributable to shareholders (48.8) (25.8) (77.0)
(Deficit) on write-off of revalued - - (0.3)
assets
Return on investments - - 0.3
Dividends - (1.1) (1.2)
-------------------------------------
(48.8) (26.9) (78.2)
Goodwill written back to profit and loss 12.5 6.4 11.8
account on disposals
Redemption of Preference shares - - (28.0)
Issue of Ordinary shares 54.2 - -
Foreign currency translation (8.1) 8.2 4.5
-------------------------------------
Net increase/(decrease) to shareholders' 9.8 (12.3) (89.9)
funds
Opening shareholders' funds 250.2 340.1 340.1
-------------------------------------
Closing shareholders' funds 260.0 327.8 250.2
================================================================================
CONSOLIDATED CASH FLOW STATEMENT
for the six months ended 4 July 2004
Six months Six months Year
Unaudited Unaudited
2004 2003 2003
---------------------------------------------------
Note £m £m £m £m £m £m
---------------------------------------------------
Net cash inflow (a) 18.6 8.4 45.3
from operating
activities
Returns on
investments and
servicing of
finance
Interest 0.7 1.1 2.3
received
Interest paid (9.3) (6.8) (15.8)
Preference - (1.1) (2.3)
dividends paid ---------------------------------------------------
(8.6) (6.8) (15.8)
Taxation 1.2 (1.1) (6.0)
Capital
expenditure and
financial
investments
Purchase of (11.9) (14.7) (34.3)
tangible fixed
assets
Proceeds on sale 8.4 1.6 2.0
of tangible fixed
assets
Purchase of (0.3) (0.6) (0.6)
investments
Disposal of 0.2 0.3 0.9
investments ---------------------------------------------------
(3.6) (13.4) (32.0)
Acquisitions and
disposals
Deferred (0.1) (0.3) (0.4)
consideration for
prior year
acquisitions
Disposal of 26.3 26.9 32.8
businesses ---------------------------------------------------
26.2 26.6 32.4
Cash inflow before
use of liquid
resources and 33.8 13.7 23.9
financing
Management of 1.6 5.5 10.3
liquid resources
Financing
Increase in 54.2 - -
Ordinary share
capital
Redemption of - - (28.0)
Preference
shares
Increase in bank 6.0 244.1 274.2
loans
Repayment of bank (99.5) (243.1) (270.5)
loans ---------------------------------------------------
(39.3) 1.0 (24.3)
Net (decrease)/ (3.9) 20.2 9.9
increase in cash
================================================================================
Reconciliation of
net cash flow to
movement in net
borrowings
Net (decrease)/ (3.9) 20.2 9.9
increase in cash
Cash flow from 93.5 (1.0) (3.7)
decrease/
(increase) in
loans
Cash flow from (1.6) (5.5) (10.3)
(decrease) in ---------------------------------------------------
deposits
Change in net
borrowings
resulting from
cash flows 88.0 13.7 (4.1)
Exchange 2.0 1.4 6.4
movement ---------------------------------------------------
Movement in net 90.0 15.1 2.3
borrowings during
the period
Opening net (249.3) (251.6) (251.6)
borrowings ---------------------------------------------------
Closing net (159.3) (236.5) (249.3)
borrowings
================================================================================
CONSOLIDATED FREE CASH FLOW
for the six months ended 4 July 2004
Six months Six months
Unaudited Unaudited Year
2004 2003 2003
------------------------------------
Note £m £m £m
------------------------------------
Net cash inflow from operating (a) 18.6 8.4 45.3
activities
Net interest paid (8.6) (5.7) (13.5)
Taxation 1.2 (1.1) (6.0)
Net dividends paid - (1.1) (2.3)
------------------------------------
Post dividend cash flow 11.2 0.5 23.5
Net capital expenditure (3.5) (13.1) (32.3)
------------------------------------
Free cash flow 7.7 (12.6) (8.8)
================================================================================
(a) Reconciliation of operating profit/(loss) to net cash inflow from
operating activities
Six
months Six
Contin- Discon- 2004 months Year
uing tinued Total 2003 2003
-------------------------------------------------
£m £m £m £m £m
-------------------------------------------------
Operating profit/(loss) 6.8 (2.7) 4.1 2.2 (32.2)
Depreciation 16.9 1.8 18.7 22.9 43.4
Amortisation of 3.1 0.2 3.3 3.9 7.5
goodwill
Loss on sale of plant 0.5 - 0.5 - 0.6
and machinery
Exceptional non-cash 0.2 - 0.2 0.6 15.2
operating costs
(Increase)/decrease in (12.9) (0.9) (13.8) (7.8) 3.3
stocks
(Increase)/decrease in (6.7) (2.0) (8.7) (13.3) 13.3
debtors
Increase/(decrease) in 9.6 3.0 12.6 (0.4) (15.4)
creditors
Increase/(decrease) in 1.6 0.1 1.7 0.3 9.6
provisions
-------------------------------------------------
Net cash inflow from 19.1 (0.5) 18.6 8.4 45.3
operating activities
================================================================================
NOTES
1. Basis of preparation
The interim financial information, which has been approved by the Board of
Directors, has been prepared on a consistent basis with the accounting
policies set out in the Group's 2003 annual report and accounts.
Operating exceptionals are separately disclosed as they are considered
material to the statement.
The results and balance sheet for the year 2003 (as restated) are an
abridged version of the full accounts which received an unqualified report
by the auditors and have been filed with the Registrar of Companies.
2. Segmental Information
Product group Turnover Operating
profit/(loss)
Six Six Six Six
months months Year months months Year
2004 2003 2003 2004 2003 2003
---------------------------------------------------------
£m £m £m £m £m £m
---------------------------------------------------------
Carbon 94.6 95.6 187.7 9.1 9.2 18.3
Magnetics 87.0 87.9 172.1 4.7 0.9 3.0
Technical 70.1 65.0 126.2 4.2 1.1 0.3
Ceramics
Insulating 119.7 130.7 258.3 7.2 7.8 16.7
Ceramics
---------------------------------------------------------
Continuing 371.4 379.2 744.3 25.2 19.0 38.3
operations
Discontinued 34.8 63.4 105.3 (0.3) 2.4 4.3
operations
---------------------------------------------------------
406.2 442.6 849.6 24.9 21.4 42.6
=============================================================================
Operating (17.5) (15.3) (67.3)
exceptionals
Goodwill (3.3) (3.9) (7.5)
amortisation
-----------------------------------------------------------------------------
Group operating 4.1 2.2 (32.2)
profit/(loss)
=============================================================================
The discontinued operations in 2004 are the Auto and Consumer business, two
Coatings operations and Matroc Paris, and in 2003 also includes the
Superconductors business, six Coatings operations and the Graflon business.
The operating exceptionals of £17.5 million comprise, Carbon £3.3 million,
Magnetics £3.8 million, Technical Ceramics £5.1 million, Insulating
Ceramics £3.1 million and discontinued £2.2 million.
Geographical area
The analysis shown below is based on the location of the contributing companies:
Turnover Operating
profit/(loss)
Six Six Six Six
months months Year months months Year
2004 2003 2003 2004 2003 2003
-------------------------------------------------------------
£m £m £m £m £m £m
--------------------------------------------------------------------------------
United Kingdom
Sales in the UK 17.2 17.3 33.5
Sales overseas 21.5 21.4 40.9
--------------------------------------------------------------------------------
Total United 38.7 38.7 74.4 (0.3) 1.4 1.2
Kingdom
Rest of Europe 167.9 164.3 321.5 11.2 10.2 19.2
The Americas 120.7 133.0 257.8 9.8 3.5 7.8
Far East and 37.9 36.7 77.4 3.4 2.9 7.7
Australasia
Middle East and 6.2 6.5 13.2 1.1 1.0 2.4
Africa
--------------------------------------------------------------------------------
371.4 379.2 744.3 25.2 19.0 38.3
Discontinued 34.8 63.4 105.3 (0.3) 2.4 4.3
operations
--------------------------------------------------------------------------------
406.2 442.6 849.6 24.9 21.4 42.6
===============================================================================
Operating (17.5) (15.3) (67.3)
exceptionals
Goodwill (3.3) (3.9) (7.5)
amortisation
--------------------------------------------------------------------------------
Group operating 4.1 2.2 (32.2)
profit/(loss)
===============================================================================
The analysis shown below is based on the location of the customer:
Turnover
Six months Six months Year
2004 2003 2003
------------------------------------
£m £m £m
------------------------------------
United Kingdom 23.0 23.1 49.0
Rest of Europe 157.5 162.2 309.3
The Americas 130.4 130.2 253.9
Far East and Australasia 51.0 53.6 112.4
Middle East and Africa 9.5 10.1 19.7
------------------------------------
371.4 379.2 744.3
Discontinued operations 34.8 63.4 105.3
------------------------------------
406.2 442.6 849.6
================================================================================
3. Corporate exceptional items
In 2004, the exceptional loss related mainly to the disposal of the Auto and
Consumer business and the sale of two Coatings operations.
4. Taxation
Six months Six months Year
2004 2003 2003
----------------------------------
£m £m £m
----------------------------------
United Kingdom taxes (1.0) (1.7) (4.9)
Overseas taxes 3.9 5.8 2.5
----------------------------------
Total taxation 2.9 4.1 (2.4)
================================================================================
The total taxation charge for the six months to 4 July 2004 of £2.9 million
(2003 : £4.1 million) includes a tax credit on exceptional items of £1.6 million
(2003 : £ Nil).
The interim taxation charge is calculated by applying the Directors' best
estimate of the annual tax rate to the taxable profit for the period.
5. Earnings/(loss) per Ordinary share
a. Six months Six months Year
Basic and underlying earnings/ 2004 2003 2003
(loss) per share
------------------------------------------
£m £m £m
------------------------------------------
(Loss) after tax and minority (48.8) (25.8) (77.0)
interest
Preference dividend - (1.1) (1.2)
-----------------------------------------
Basic (loss) after goodwill (48.8) (26.9) (78.2)
amortisation
Goodwill amortisation 3.3 3.9 7.5
-----------------------------------------
Basic (loss) before goodwill (45.5) (23.0) (70.7)
amortisation
-----------------------------------------
Adjusted by all post tax 58.2 30.9 93.0
exceptional items
-----------------------------------------
Underlying earnings
- before goodwill amortisation 12.7 7.9 22.3
- after goodwill amortisation 9.4 4.0 14.8
Weighted average number of 272,919,621 231,993,647 232,018,129
Ordinary shares
Underlying earnings per share
- before goodwill amortisation 4.7p 3.4p 9.6p
- after goodwill amortisation 3.4p 1.7p 6.4p
Basic (loss) per share
- before goodwill amortisation (16.7p) (9.9p) (30.5p)
- after goodwill amortisation (17.9p) (11.6p) (33.7p)
The Directors have disclosed an underlying earnings per share as, in their
opinion, this better reflects the real performance of the Group and assists
comparison with the results of previous periods.
b.
Diluted earnings Six months Six months Year
2004 2003 2003
-----------------------------------------
£m £m £m
-----------------------------------------
Basic and diluted (loss) (48.8) (26.9) (78.2)
Adjusted by all post tax 58.2 30.9 93.0
exceptional items
-----------------------------------------
Underlying diluted earnings 9.4 4.0 14.8
=========================================================================
Weighted average number of 272,919,621 231,993,647 232,018,129
Ordinary shares
Dilutive effect of share 4,287,463 3,008 1,677,339
option/incentive schemes
-----------------------------------------
Weighted average number of 277,207,084 231,996,655 233,695,468
diluted shares
=========================================================================
Diluted (loss) per share (17.9p) (11.6p) (33.7p)
Diluted underlying earnings 3.4p 1.7p 6.3p
per share
6. Current liabilities
Current liabilities include bank loans and overdrafts of £61.3 million (4
July 2003: £93.3 million; 4 January 2004: £76.6 million).
This Interim Statement will be dispatched to all registered holders of Ordinary
shares. Copies of this statement may be obtained from the Secretary at the
Registered Office of the Company, Morgan House, Madeira Walk, Windsor,
Berkshire, SL4 1EP.
This information is provided by RNS
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