Interim Results
Morgan Crucible Co PLC
03 August 2006
INTERIM RESULTS FOR THE HALF YEAR ENDED 4 JULY 2006
• Double digit growth and margins:
Turnover from continuing operations up 11.7% to £336.3 million
(2005: £301.0 million) including a favourable currency translation
impact of £8.8 million
Underlying operating profit from continuing operations up 39.5%
to £35.7 million (2005: £25.6 million) including a favourable currency
translation impact of £1.1 million
Group underlying operating profit margins for continuing businesses
improved from 8.5% to 10.6%
Underlying EPS improved by 34.9% to 8.5p (2005:6.3p)
• Strong financial position :
Net debt of £22.9 million (2005: net debt of £165.0 million)
Group pension deficit substantially reduced to £44.4 million
UK pension schemes now in surplus on an IAS 19 basis
Interim dividend recommended at 1.5p per share
2006 2005
------------------------------------------------------------------------
Revenue £m 336.3 391.7
------------------------------------------------------------------------
Underlying operating profit* £m 35.7 33.2
------------------------------------------------------------------------
Underlying PBT** £m 34.2 26.1
------------------------------------------------------------------------
Underlying EPS *** pence 8.5 6.3
------------------------------------------------------------------------
Net debt £m 22.9 165.0
------------------------------------------------------------------------
Operating profit £m 31.6 22.2
------------------------------------------------------------------------
Profit before tax £m 30.1 15.1
------------------------------------------------------------------------
Basic EPS pence 7.5 2.8
------------------------------------------------------------------------
Commenting on the results, Chief Executive Officer, Warren Knowlton
said:
'I am delighted that we have delivered our promises ahead of schedule.
Morgan is in a substantially better position than it was three years
ago. Our profit improvement plan is nearly complete, having delivered
both the strategic repositioning of the Group and financial benefits. At
the same time we have also successfully demonstrated our capacity to
achieve good top line growth. Morgan has delivered significant
shareholder value and has the capacity to create more. The Group is in a
strong financial position and this, coupled with our profitable growth,
allows us to look to the future with confidence.'
* Defined as operating profit of £31.6 million (2005: £22.2 million)
before financing costs of £1.5 million (2005: £6.7 million) and before
restructuring costs of £14.4 million (2005: £9.8 million), costs
associated with the settlement of prior period litigation of £0.8
million (2005: £1.2 million), gain on curtailment of United Kingdom
employee benefit schemes of £11.0 million (2005: £nil) and gains on
property disposals of £0.1 million (2005: £ nil). This measure of
earnings is shown because the Directors consider that it gives a better
indication of underlying performance.
** Defined as operating profit of £31.6 million (2005: £22.2 million)
before restructuring costs of £14.4 million (2005: £9.8 million), costs
associated with the settlement of prior period litigation of £0.8
million (2005: £1.2 million), gain on curtailment of United Kingdom
employee benefit schemes of £11.0 million (2005: £nil) and gains on
property disposals of £0.1 million (2005: £nil) and after net financing
costs of £1.5 million (2005: £6.7 million) and losses on partial
disposal of businesses of £nil (2005: £0.4 million).
*** Defined as basic earnings per share of 7.5p (2005: 2.8p) adjusted to
exclude the after tax impact of restructuring costs, costs of settlement
of prior period litigation, gain on curtailment of United Kingdom
employee benefit schemes and gains on property disposals of 1.0p (2005:
3.5p).
Strategy
Morgan Crucible's strong performance has continued into 2006. The Group
has successfully driven its core business to 10.6% underlying operating
margins, putting us ahead of our announced target of achieving
double-digit margins on a run rate basis by the end of 2006.
Our cost base has consistently improved since 2002. We are progressively
shifting our manufacturing footprint to lower cost countries and,
combined with ongoing reductions in overhead costs, this has driven down
our total employment costs (from continuing businesses) as a percentage
of sales from 39.3% in 2003 to 33.8% for the first half of 2006.
We have targeted attractive, higher growth markets and coupled with our
concentration on increasing the value-added component within our product
range, have reversed year on year price erosion. Our pricing position is
now strongly positive at 1.7% and as a continuing Group we have averaged
over 5% top line growth over the past three years on a constant currency
basis. We have actively pursued a positive shift in product mix by
exiting price competitive cyclical markets and targeting higher growth,
less commoditised markets such as medical and defence.
The significantly improved financial strength of the Group leaves us
well placed to invest in profitable growth both organically and through
bolt-on acquisitions in our core markets. We have made six acquisitions/
joint ventures in 2006 so far which have given us both enhanced market
access and lower cost country penetration. This financial strength,
combined with our organic growth and bolt-on acquisitions, creates a
secure base for the Group to target mid-teen margins.
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 consider that they
give a better indication of underlying performance.
Group underlying operating profit for continuing businesses increased by
39.5% to £35.7 million (2005: £25.6 million). Underlying operating
profit margins from continuing businesses for the six months were 10.6%.
This compares to 8.5% 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 being £14.4 million (2005:
£9.8 million). We have also incurred costs associated with settlement of
prior period anti-trust litigation in 2006 of £0.8 million (2005: £1.2
million).
The net finance charge was £1.5 million (2005: £6.7 million). Net bank
interest and similar charges were £1.6 million (2005: £4.9 million), an
improvement of £3.3 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 £0.1 million (2005: charge of £1.8
million).
The tax charge for the period was £6.7 million (2005: £5.5 million). The
tax charge on underlying operating profit net of finance costs was £8.6
million. There was a tax credit of £1.9 million on restructuring costs
and costs associated with prior period anti-trust litigation. The
effective tax rate before restructuring costs, costs associated with
settlement of prior period anti-trust litigation, gain on curtailment of
United Kingdom employee benefit schemes and gains on property disposals
was 25% (2005: 28%). Over the medium term we would expect the effective
tax rate to trend towards 30% as losses are utilised.
Underlying earnings per share were 8.5 pence (2005: 6.3 pence).
The Group pension deficit has improved by £79.8 million since last year
end to £44.4 million on an IAS 19 basis. The main movements are in the
UK pension schemes which show a surplus of £5.7 million at the half year
on an IAS 19 basis, an improvement of £71.9 million in the period. The
two main one-off changes for the UK are a £40 million cash injection and
an £11 million curtailment to the deficit due to the changes implemented
in the schemes. Improvement in bond yields contributed to a higher
discount rate and hence a lower liability position.
The net cash outflow from operating activities was £51.4 million (2005:
inflow £2.7 million) which included an adverse cash impact from
restructuring costs and costs associated with anti-trust litigation of
£14.3 million (2005: £14.9 million). Working capital increased by £35.0
million (2005: increase £22.1 million) in the first half of the year.
Seasonality in inventory levels, due to stock building for shut down
periods in July and August is a large part of this increase. Combined
with higher raw material and energy prices included in inventory and
strong sales in June increasing debtors, working capital was £12.9
million adverse compared to the same time last year. Working capital
levels are expected to improve significantly in the second half of the
year as this half year position unwinds.
HY HY
-------------------------------------------------------------------------
2006 2005
-------------------------------------------------------------------------
£m £m
-------------------------------------------------------------------------
Net cash from operating activities before UK pension
payment (11.4) 2.7
-------------------------------------------------------------------------
UK pension scheme payment (40.0) -
-------------------------------------------------------------------------
Interest received 2.3 0.9
-------------------------------------------------------------------------
Net capital expenditure (14.1) (12.3)
-------------------------------------------------------------------------
Free cash flow (63.2) (8.7)
-------------------------------------------------------------------------
Cash flows from other investing activities (5.8) (4.2)
-------------------------------------------------------------------------
Cash flows from financing activities (6.4) (3.4)
-------------------------------------------------------------------------
Exchange movement 2.0 (0.8)
-------------------------------------------------------------------------
Opening net cash/(debt) 50.5 (147.9)
-------------------------------------------------------------------------
Closing net (debt) (22.9) (165.0)
Interim Dividend
Further to the return to the dividend list as announced at the
presentation of our Final 2005 results, the Board has declared an
interim dividend of 1.5 pence per Ordinary share. The dividend will be
paid on 8 January 2007 to Ordinary shareholders on the register of
members at the close of business on 1 December 2006.
Operating Review
Carbon
Sales in the first half were up by 5.6% compared to the same period last
year at £106.5 million (2005: £100.9 million) and on a constant currency
basis up 3.2%. Underlying operating profit for the period was up 30.6%
to £16.2 million (2005: £12.4 million). This profit improvement is due
to a combination of sales growth in niche applications such as rotary
systems and armour and the impact on both gross margin and overheads
from the restructuring projects in USA and Western Europe.
Performance has been robust across most regions and markets. In the
Americas, sales have been strong in the traditional brush and seals and
bearings markets. Additional capacity has been installed to meet the
demands for armour from the US and European military. Good progress has
also been made in the increased utilisation of the Mexican business to
provide a low cost manufacturing site. Whilst trading conditions remain
more difficult in Europe, there have been some signs of recovery and
sales in a number of markets have shown improvement on 2005. Major
re-organisation projects have been completed and the first half has seen
some of the benefits of these. The Asian business, particularly in China
, continues to enjoy strong organic growth and our continued investment
in terms of financial, technical and human resource has allowed us to
take advantage of the opportunities in this area.
We have recently completed the acquisition of an armour technology
business, Aceram, based in Canada for a maximum purchase price of c.£6.0
million of which £1.8 million will be paid upfront and the remainder
deferred and linked to business performance. This acquisition will
broaden the portfolio of products and materials available to Morgan in
the armour market.
Technical Ceramics
Sales in the first half showed strong organic growth, increasing 18.1%
to £84.0 million (2005: £71.1 million) and on a constant currency basis
up 16.0%. This sales growth is flattered by the inclusion of metal price
increases that are a component of our sales and this accounts for 2.8%
of this increase. The organic growth was achieved across all geographic
regions, with the highest growth rates in percentage terms being seen in
Asia as the business continues to expand its activities in this area.
Underlying operating profit grew 45.9% to £8.9 million (2005: £6.1
million), increasing operating margins to 10.6% (2005: 8.6%). Costs were
controlled while the top line was grown and new product introductions
helped to support gross margins in the face of pressure from raw
materials and energy price increases.
We maintain our focus on niche opportunities within selected target
markets, and overall have experienced strong market conditions in Europe
and in the US throughout the period. Telecoms in the US continue to
improve, and demand for our products in Aerospace applications has also
been good. Our factory in Yixing, China continues to expand toward full
utilization of the recent new capacity installed and is serving local
customers as well as export markets.
Insulating Ceramics
Insulating Ceramics sales in the first half were up by 12.9% (including
revenue in 2006 of £4.1 million from acquisitions) at £145.8 million
(2005: £129.0 million) and on a constant currency basis up 10.5%.
Underlying operating profit increased 32.3% to £13.1 million (2005: £9.9
million) despite the continued rise of input price pressures from raw
materials and energy suppliers.
Within the Thermal Ceramics business price increases were implemented in
January and July 2006 in order to offset these cost increases. In
addition we have implemented further restructuring plans within the
division continuing to streamline our infrastructure and ensure that our
main European and American facilities become the lowest cost producers
in their respective markets. The overall cost reduction programme to
counter higher input costs and to fully leverage the Vesuvius ceramic
fibre acquisition has resulted in further restructuring costs of c.£8
million for an expected annualised benefit of c.£8 million.
The Thermal Ceramics business has continued to expand its geographic
presence with the formation of a 75% joint venture ('JV') with Beijing
Yingtelai Textile Corporation in Beijing, China, a 51% JV with Shandong
Luyang in China to manufacture high temperature sol gel fibres, a 51% JV
in Yekaterinburg, Russia with Sukhoy Log to produce ceramic fibres and
the acquisition of the ceramic fibre division of Vesuvius with plants in
Erwin, USA and Skawina, Poland. Investment in our fibre facility in
France has allowed closure of our Italian site and closure of our UK
fibre line in the second half of the year.
The launch of a new high temperature bio-soluble fibre (SuperwoolTM
607HT) has enabled Thermal Ceramics to be at the forefront of developing
new products adapted to the changing needs and environmental demands of
the European and global markets.
The first half of the year saw improved trading conditions for the
Crucibles business, with sales growth evident in all regions. Escalating
fuel prices stimulated an increasing interest in energy efficient metal
melting systems, particularly in the Americas. Operating margins
continued to improve, assisted by the fixed cost reduction programmes
implemented in the second half of last year. Consolidation of our Indian
operations was achieved by the purchase of the remaining equity owned by
our joint venture partner and by the subsequent acquisition of the
Diamond Crucible Company in Gujarat. Additional technical and sales
resources have been deployed in Asia, in order to accelerate the
capacity expansion that is required to support the anticipated market
growth in the region.
Outlook
All three divisions continue to make progress in both margin improvement
and top line growth. Our strong market positions and current trading
give the Board confidence that the Group will make further progress in
the second half of the year.
Lars Kylberg Chairman
Warren Knowlton Chief Executive Officer
CONSOLIDATED INCOME STATEMENT
for the six months ended 4 July 2006
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
Six Six Six Six Six Six
months months months months months months Year Year Year
Contd D'contd Total Cont D'contd Total Cont D'cont Total
opera- opera- opera- opera- opera- opera-
tions tions tions tions tions tions
2006 2006 2006 2005 2005 2005 2005 2005 2005
Note £m £m £m £m £m £m £m £m £m
-------------------------------------------------------------------------------------------------
Revenue 1 336.3 - 336.3 301.0 90.7 391.7 609.8 135.9 745.7
-------------------------------------------------------------------------------------------------
Operating
costs before
special items (300.6) - (300.6) (275.4) (83.1) (358.5) (554.4) (125.3) (679.7)
-------------------------------------------------------------------------------------------------
Profit from
operations
before special 1 35.7 - 35.7 25.6 7.6 33.2 55.4 10.6 66.0
items
Restructuring
costs & costs
assoc with
settlement
of prior
period anti-
trust litigation 4 (15.2) - (15.2) (9.9) (1.1) (11.0) (29.9) (2.1) (32.0)
Gain
curtailment
of UK employee
benefit schemes 11.0 - 11.0 - - - - - -
Gain/ (loss)
on disposal
of property 0.1 - 0.1 - - - (0.4) - (0.4)
-------------------------------------------------------------------------------------------------
Operating
profit 1 31.6 - 31.6 15.7 6.5 22.2 25.1 8.5 33.6
Finance income 12.8 - 12.8 11.9 - 11.9 22.7 - 22.7
Finance expenses (14.3) - (14.3) (17.2) (1.4) (18.6) (33.4) (2.4) (35.8)
-------------------------------------------------------------------------------------------------
Net financing
costs 2 (1.5) - (1.5) (5.3) 1.4) (6.7) (10.7) (2.4) (13.1)
Loss on
partial
disposal of
businesses - - - (0.4) - (0.4) (0.1) - (0.1)
-------------------------------------------------------------------------------------------------
Profit before
taxation 30.1 - 30.1 10.0 5.1 15.1 14.3 6.1 20.4
Income tax
expense 3 (6.7) - (6.7) (4.5) (1.0) (5.5) (4.8) (4.0) (8.8)
-------------------------------------------------------------------------------------------------
Profit after
taxation but
before loss/
(gain) on sale
of discontinued
operations 23.4 - 23.4 5.5 4.1 9.6 9.5 2.1 11.6
Loss/(gain)
on sale of
discontinued
operations, - (0.6) (0.6) - (0.6) (0.6) - 42.6 42.6
net of tax
-------------------------------------------------------------------------------------------------
Profit/(loss)
for the 23.4 (0.6) 22.8 5.5 3.5 9.0 9.5 44.7 54.2
period
=================================================================================================
Profit/(loss)
for the period
attributable to:
Equity
holders
of the parent 22.2 (0.6) 21.6 4.7 3.5 8.2 7.2 44.7 51.9
Minority interest 1.2 - 1.2 0.8 - 0.8 2.3 - 2.3
-------------------------------------------------------------------------------------------------
23.4 (0.6) 22.8 5.5 3.5 9.0 9.5 44.7 54.2
=================================================================================================
Earnings/(loss) 5
per share
Basic 7.7p (0.2p) 7.5p 1.6p 1.2p 2.8p 2.5p 15.6p 18.1p
Diluted 7.4p (0.2p) 7.2p 1.5p 1.2p 2.7p 2.4p 14.8p 17.2p
Dividends
Proposed interim
/final
dividend - pence 1.5p - 2.5p
- £m 4.4 - 7.3
CONSOLIDATED BALANCE SHEET
As at 4 July 2006
Unaudited Unaudited
Six months Six months Year
2006 2005 2005
£m £m £m
-----------------------------------------
Assets
Property, plant and equipment 228.7 321.9 235.3
Intangible assets 58.2 107.0 46.6
Other investments 5.8 6.0 6.1
Other receivables 0.4 3.5 0.3
Deferred tax assets 27.4 31.2 27.4
-----------------------------------------
Total non-current assets 320.5 469.6 315.7
-----------------------------------------
Inventories 86.0 133.1 77.8
Trade and other receivables 141.7 176.7 140.9
Cash and cash equivalents 85.1 69.6 160.0
-----------------------------------------
Total current assets 312.8 379.4 378.7
-----------------------------------------
Total assets 633.3 849.0 694.4
-----------------------------------------
Liabilities
Interest-bearing loans and borrowings 76.8 181.1 57.3
Employee benefits 44.4 185.0 124.2
Grants for capital expenditure 0.3 0.6 0.3
Provisions 3.7 5.2 4.3
Deferred tax liabilities 28.7 42.1 28.1
-----------------------------------------
Total non-current liabilities 153.9 414.0 214.2
-----------------------------------------
Bank overdraft 15.7 14.1 27.2
Interest-bearing loans and borrowings 15.5 39.4 25.0
Trade and other payables 202.2 192.3 203.9
Provisions 27.2 34.1 28.4
-----------------------------------------
Total current liabilities 260.6 279.9 284.5
-----------------------------------------
Total liabilities 414.5 693.9 498.7
-----------------------------------------
-----------------------------------------
Total net assets 218.8 155.1 195.7
=========================================
Equity
Issued capital 75.6 74.8 75.5
Share premium 85.2 84.1 85.0
Reserves 33.3 36.5 41.4
Retained earnings 10.6 (52.3) (19.6)
-----------------------------------------
Total equity attributable to
equity holders of the parent company 204.7 143.1 182.3
-----------------------------------------
Minority interest 14.1 12.0 13.4
-----------------------------------------
Total equity 218.8 155.1 195.7
=========================================
CONSOLIDATED STATEMENT OF CASH FLOWS
for the six months ended 4 July 2006
Unaudited Unaudited
Six months Six months Year
2006 2005 2005
Note £m £m £m
-----------------------------------------
Operating activities
Net profit from ordinary activities 22.8 9.0 54.2
Adjustments for:
Depreciation 12.7 16.3 30.0
Amortisation 0.4 0.7 1.3
Interest expense 1.5 6.7 13.1
(Profit)/loss on sale
of property, plant & equipment (0.2) 0.1 0.6
Income tax expense 6.7 5.5 8.8
Equity settled share
based payment expenses 1.6 1.5 2.5
-----------------------------------------
Operating profit before changes in
working capital and provisions 45.5 39.8 110.5
(Increase)/decrease in trade
and other receivables (11.7) (13.1) (5.8)
(Increase)/decrease in inventories (9.9) (11.3) (9.0)
Increase/(decrease) in trade
and other payables (13.4) 2.3 8.6
Non cash operating costs relating to
restructuring 1.6 1.6 8.5
Increase/(decrease) in provisions and
employee benefits (17.0) (6.8) (1.9)
Payment to UK pension schemes (40.0) - -
-----------------------------------------
Cash generated from the operations (44.9) 12.5 110.9
Interest paid (3.7) (6.7) (13.7)
Taxation (3.4) (4.1) (6.2)
Loss on partial - 0.4 0.1
disposal of businesses
Loss/(gain) on sale of
discontinued operations 0.6 0.6 (42.6)
-----------------------------------------
Net cash flows from operating
activities (51.4) 2.7 48.5
Investing activities
Purchase of property, plant
and equipment (14.8) (17.3) (43.6)
Proceeds from sale of
property, plant and equipment 0.7 5.0 5.5
Purchase of investments (0.3) (0.6) (2.8)
Proceeds from sale of investments 0.3 - 0.7
Interest received 2.3 0.9 2.3
Acquisitions of subsidiaries, net of
cash acquired (15.5) (2.6) (3.0)
Disposal of subsidiaries, net of
cash disposed 9.7 (1.0) 195.9
-----------------------------------------
Net cash flows from investing
activities (17.6) (15.6) 155.0
Financing activities
Proceeds from the issue of share
capital 0.2 0.1 1.7
Purchase of shares for LTIP (6.2) (3.5) (3.5)
Increase/(repayment)of borrowings 14.2 14.7 (125.2)
Payment of finance lease liabilities (0.3) - (1.2)
Dividends paid (0.4) - -
-----------------------------------------
Net cash flows from financing
activities 7.5 11.3 (128.2)
Net increase/(decrease)
in cash and cash equivalents (61.5) (1.6) 75.3
Cash and cash equivalents at start
of period 133.6 56.3 56.3
Effect of exchange ate fluctuations
on cash held (1.7) 1.1 2.0
-----------------------------------------
Cash and cash 6 70.4 55.8 133.6
equivalents at period end =========================================
CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
for the six months ended 4 July 2006
Unaudited Unaudited
Six months Six months Year
2006 2005 2005
£m £m £m
-----------------------------------------
Foreign exchange translation
differences (10.1) (0.4) 5.0
Actuarial gain/(loss) on
defined benefit plans 23.8 (4.1) (16.2)
Deferred tax associated with
employee benefit schemes (1.7) - -
Net gain/(loss) on hedge of
net investment in foreign subsidiary - 0.6 (1.5)
Cash flow hedges:
Effective portion of changes
in fair value 0.4 (1.2) 0.2
Change in fair value of
equity securities available-for-sale - - 0.3
-----------------------------------------
Income and expense recognised
directly in equity 12.4 (5.1) (12.2)
Profit for the period 22.8 9.0 54.2
-----------------------------------------
Total recognised income and
expense for the period 35.2 3.9 42.0
=========================================
Attributable to:
Equity holders of the parent 34.0 3.1 39.7
Minority interest 1.2 0.8 2.3
-----------------------------------------
Total recognised income and
expenses for the period 35.2 3.9 42.0
=========================================
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Basis of preparation
The Morgan Crucible Company plc (the 'Company') is a company domiciled
in the United Kingdom. The consolidated financial statements of the
Company for the period ended 4 July 2006 comprise the Company and its
subsidiaries (together referred to as the 'Group') and the Group's
interest in associates and jointly controlled entities.
These financial statements have been prepared on the basis of the
recognition and measurement requirements of IFRS applied in the
financial statements at 4 January 2006 and those standards that have
been endorsed and will be applied at 4 January 2007.
The results for each half year are unaudited. The comparative figures
for the year to 4 January 2006 have been abridged from the Group's
financial statements for that year, which have been delivered to the
registrar of Companies. The auditors have reported on these financial
statements; their report was unqualified and did not contain statements
under section 237 (2) or (3) of the Companies Act 1985
The interim financial statements for the six months ended 4 July 2006
were approved by the Board on 3 August 2006.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Segment reporting
Business segments
Carbon Technical Ceramics Thermal Ceramics Crucibles Discontinued Consolidated
6 mths 6 mths 6 mths 6 mths 6 mths 6 mths 6 mths 6 mths 6 mths 6 mths 6 mths 6 mths
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 106.5 100.9 84.0 71.1 130.5 114.8 15.3 14.2 - 90.7 336.3 391.7
---------------------------------------------------------------------------------------------------------------
Segment
profit 14.1 8.6 12.4 4.7 4.6 6.6 2.5 0.8 - 6.5 33.6 27.2
----------------------------------------------------------------------------------------------
Unallocated
costs (2.0) (5.0)
-----------------
Operating Profit 31.6 22.2
=================
Segment underlying
operating
profit *
16.2 12.4 8.9 6.1 11.4 9.0 1.7 0.9 - 7.6 38.2 36.0
----------------------------------------------------------------------------------------------
Unallocated
costs (2.5) (2.8)
-----------------
Underlying operating
profit 35.7 33.2
=================
Technical Thermal
Carbon Ceramics Ceramics Crucibles Discontinued Consolidated
Year Year Year Year Year Year
2005 2005 2005 2005 2005 2005
£m £m £m £m £m £m
-----------------------------------------------------------------------------
Revenue from external customers 199.9 144.8 236.7 28.4 135.9 745.7
-----------------------------------------------------------------------------
Segment profit 15.3 8.6 9.2 1.3 8.5 42.9
------------------------------------------------------------
Unallocated costs (9.3)
-----------------
Operating profit 33.6
=================
Segment underlying operating
profit* 27.4 12.2 19.7 1.8 10.6 71.7
------------------------------------------------------------
Unallocated costs (5.7)
-----------------
Underlying operating profit 66.0
=================
* This measure of profit (before special items) is shown because the Directors consider that it gives a better
indication of underlying performance.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2. Finance income and expenses
Six months Six months Year
2006 2005 2005
£m £m £m
-----------------------------------
Interest income 1.3 0.9 1.3
Expected return on IAS 19 scheme assets 11.5 10.6 21.0
Fair value gain on interest rate swaps - 0.4 0.4
-----------------------------------
Finance income 12.8 11.9 22.7
===================================
Interest expense (2.9) (6.2) (11.3)
Interest on IAS 19 obligations (11.4) (12.4) (24.5)
-----------------------------------
Finance expenses (14.3) (18.6) (35.8)
===================================
3. Taxation
Six months Six months Year
2006 2005 2005
£m £m £m
-----------------------------------
Tax on profit before special items
and sale of discontinued operations 8.6 7.4 13.1
Tax on special items (1.9) (1.9) (4.3)
-----------------------------------
Income tax expense 6.7 5.5 8.8
Tax on sale of discontinued operations - - 21.4
-----------------------------------
Total taxation 6.7 5.5 30.2
===================================
The interim taxation charge is calculated by applying the Directors'
best estimate of the annual tax rate to the profit for the period.
4. Restructuring costs and costs associated with settlement of
anti-trust litigation
Costs of restructuring were £14.4 million (2005: £9.8 million) and legal
costs associated with settlement of prior period anti-trust litigation
were £0.8 million (2005: £1.2 million).
5. Earnings per share
Basic earnings per share
--------------------------
The calculations of basic earnings per share at 4 July 2006 was based on
the net profit/(loss) attributable to Equity holders of The Morgan
Crucible Company plc of £21.6 million (2005: £8.2 million) and a
weighted average number of Ordinary shares outstanding during the period
ended 4 July 2006 of 288,175,695 (2005: 290,279,006) calculated as
follows:
Six months Six months Year
2006 2005 2005
£m £m £m
--------------------------------------------------
Net profit/(loss) attributable to Equity
holders of The Morgan Crucible Company plc 21.6 8.2 51.9
--------------------------------------------------
Weighted average number of Ordinary shares
Issued Ordinary shares at 5 January 293,188,372 290,200,179 290,200,179
Effect of shares issued in period and
Treasury shares held by the Company (5,012,677) 78,827 (3,646,412)
--------------------------------------------------
Weighted average number of Ordinary
shares at period end 288,175,695 290,279,006 286,553,767
==================================================
Diluted earnings per share
----------------------------
The calculation of diluted earnings per share at 4 July 2006 was based
on net profit/(loss) attributable to Equity holders of The Morgan
Crucible Company plc of £21.6 million (2005: £8.2 million) and a
weighted average number of Ordinary shares outstanding during the period
ended 4 July 2006 of 300,271,233 (2005: 301,688,291), calculated as
follows:
Six months Six months Year
2006 2005 2005
£m £m £m
--------------------------------------------------
Net profit/(loss) attributable to Equity
holders of The Morgan Crucible Company plc 21.6 8.2 51.9
==================================================
Weighted average number of Ordinary shares
Weighted average number of Ordinary shares 288,175,695 290,279,006 286,553,767
Effect of share options/incentive schemes 12,095,538 11,409,285 14,534,593
--------------------------------------------------
Diluted weighted average number of
Ordinary shares 300,271,233 301,688,291 301,088,360
==================================================
5. Earnings per share (continued)
Underlying earnings per share
-------------------------------
The calculations of underlying earnings per share at 4 July 2006 was
based on profit from operations before special items less net finance
costs, income tax expense (excluding tax credit arising from special
items) and minority interest of £24.4 million (2005: £18.3 million) and
a weighted average number of Ordinary shares outstanding during the
period ended 4 July 2006 of 288,175,695 (2005: 290,279,006) calculated
as follows:
Six months Six months Year
2006 2005 2005
£m £m £m
--------------------------------------------------
Profit from operations before special items
less net finance charge costs, income tax
expense and minority interest 24.4 18.3 37.5
==================================================
Weighted average number of Ordinary shares
Issued Ordinary shares at 5 January 293,188,372 290,200,179 290,200,179
Effect of shares issued in period and
Treasury shares held by the Company (5,012,677) 78,827 (3,646,412)
--------------------------------------------------
Weighted average number of Ordinary shares
at period end 288,175,695 290,279,006 286,553,767
==================================================
Underlying earnings per share (pence) 8.5p 6.3p 13.1p
Underlying diluted earnings per share
---------------------------------------
The calculations of underlying diluted earnings per share at 4 July 2006
was based on profit from operations before special items less net finance
costs, income tax expense (excluding tax credit arising from special
items) and minority interest of £24.4 million (2005: £18.3 million) and a
weighted average number of Ordinary shares outstanding during the period
ended 4 July 2006 of 300,271,233 (2005: 301,688,291) calculated as
follows:
Six months Six months Year
2006 2005 2005
£m £m £m
--------------------------------------------------
Profit from operations before special items
less net finance charge costs, income tax
expense and minority interest 24.4 18.3 37.5
--------------------------------------------------
Weighted average number of Ordinary shares
Weighted average number of Ordinary shares 288,175,695 290,279,006 286,553,767
Effect of shares options/incentive schemes 12,095,538 11,409,285 14,534,593
--------------------------------------------------
Diluted weighted average number of
Ordinary shares 300,271,233 301,688,291 301,088,360
==================================================
Underlying diluted earnings per share (pence) 8.1p 6.1p 12.5p
6. Cash and cash equivalents/bank overdrafts
Six months Six months Year
2006 2005 2005
£m £m £m
--------------------------------------------------
Bank balances 61.3 41.9 69.0
Cash deposits 23.8 27.7 91.0
--------------------------------------------------
Cash and cash equivalents per balance sheet 85.1 69.6 160.0
Bank overdrafts subject to cash
pooling arrangements (14.7) (13.8) (26.4)
Cash and cash equivalents per cash
flow statement 70.4 55.8 133.6
==================================================
Bank overdrafts subject to cash
pooling arrangements (14.7) (13.8) (26.4)
Other bank overdrafts (1.0) (0.3) (0.8)
--------------------------------------------------
Total bank overdrafts (15.7) (14.1) (27.2)
==================================================
Reconciliation of cash and cash equivalents to net borrowings
Six months Six months Year
2006 2005 2005
£m £m £m
--------------------------------------------------
Opening (borrowings) (83.1) (204.2) (204.2)
(Increase)/repayment of borrowings (14.2) (14.7) 125.2
Payment of finance lease liabilities 0.3 - 1.2
Effect of movements in foreign exchange
on borrowings 3.7 (1.9) (5.3)
--------------------------------------------------
Closing (borrowings) (93.3) (220.8) (83.1)
Cash and cash equivalents per cash
flow statement 70.4 55.8 133.6
--------------------------------------------------
Closing net cash and equivalents/(borrowings) (22.9) (165.0) 50.5
==================================================
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, Quadrant, 55 - 57
High Street, Windsor, Berkshire, SL4 1EP. (Registered in England
No.286773)
This information is provided by RNS
The company news service from the London Stock Exchange
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