Morgan Crucible Company plc (ticker: MGCR.L, exchange: London Stock Exchange (.L))
News Release -
22-Feb-2006
Morgan Crucible Co - Final ResultsMorgan Crucible Co PLC
22 February 2006
PRELIMINARY RESULTS FOR THE PERIOD ENDED 4 JANUARY 2006
2005 2004
Revenue £m 745.7 795.9
Underlying operating profit* £m 66.0 55.8
Underlying PBT** £m 52.9 39.7
Underlying EPS *** pence 13.1 10.0
Net cash/(debt) £m 50.5 (147.9)
Operating profit/(loss) £m 33.6 (6.7)
Profit before tax £m 20.4 (31.0)
Basic EPS pence 18.1 (22.2)
* Defined as operating profit of £33.6 million (2004: loss £6.7 million) before
financing costs of £13.1 million (2004: £16.1 million) and before restructuring
costs of £29.7 million (2004: £47.5 million), costs associated with the
settlement of prior period litigation of £2.3 million (2004: £11.2 million) and
losses on property disposals of £0.4 million (2004: £3.8 million). This measure
of earnings is shown because the Directors consider that it gives a better
indication of underlying performance.
** Defined as operating profit of £33.6 million (2004:loss of £6.7 million)
before restructuring costs of £29.7 million (2004: £47.5 million), costs
associated with the settlement of prior period litigation of £2.3 million (2004:
£11.2 million) and losses on property disposals of £0.4 million (2004: £3.8
million) and after net financing costs of £13.1 million (2004: £16.1 million).
*** Defined as basic earnings/(loss) per share of 18.1p (2004: loss 22.2p)
adjusted to exclude the after tax impact of restructuring costs, costs of
settlement of prior period litigation and losses on property disposals of 5.0p
(2004: 32.2p).
• Top line growth:
• Turnover from continuing operations up 4.8% to £609.8 million (2004:
£581.6 million) including a favourable currency translation impact of
£8.5 million
• Profitability increasing:
• Underlying operating profit from continuing operations up 32.9% to
£55.4 million (2004: £41.7 million) including a favourable currency
translation impact of £1.3 million
• Underlying operating margins for continuing businesses improved from 7.2% to
9.1%
• Underlying EPS improved by 31.0% to 13.1p (2004: 10.0p)
• Financial position transformed:
• Net cash of £50.5 million (2004: net debt of £147.9 million)
• Significant decrease of c£60 million in pension deficit
• Dividend payment resumed at 2.5p per share
Commenting on the results, Chief Executive Officer, Warren Knowlton said:
'Morgan is progressing well into the next phase of its development. Our
three-year profit improvement programme is entering its last phase in 2006 and
is delivering results ahead of schedule. I am pleased to report that in 2005
volume growth and pricing improvements are of similar importance to cost
reductions as drivers for our increasing profitability. The elimination of bank
debt and the significant reduction in the Group pension deficit following the
successful sale of the Magnetics division have transformed the financial
strength of the Company. As a result, we are well placed to focus on profitable
growth both organically and through bolt-on acquisitions. We are aiming for
mid-teen operating profit margins as the Group's medium-term goal. The
confidence of the Board is reflected in the resumption of dividend payments.'
Strategy
Morgan Crucible's strong financial momentum has continued throughout 2005. The
Group has successfully driven its core business to nearly 10% underlying
operating margins by the second half of 2005. This puts us approximately one
year ahead of our profit improvement plan announced in early 2004 to achieve
double-digit margins on a run rate basis by the end of 2006.
Our cost base has improved each year 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 2002 to
35.7% in 2005.
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 firmly
into positive territory.
Non-core businesses have been disposed of successfully over the past three
years. Most notably in 2005 the Magnetics division was sold for the very
attractive price of £300 million comprising £225 million cash and £75 million of
pension and other employee benefits assumed by the purchaser. This has
transformed the balance sheet of Morgan Crucible and reduced the pension deficit
substantially. At the end of 2005, we had a positive net cash position of £50
million compared to the net debt of £350 million in 2002.
The significantly improved financial strength of the Group leaves us well placed
to invest in the profitable growth of our businesses both organically and
through bolt-on acquisitions in our core markets. As a result, we are now well
positioned to aim for mid-teen margins.
Financial Review
Note: The financial statements have been prepared under 'International Financial
Reporting Standards'(IFRS). All the figures quoted below are on an IFRS basis.
Under transitional requirements for the move from UK GAAP to IFRS a
comprehensive review of the changes which have been made are shown on the Morgan
website and will be shown in the 2005 statutory accounts when they are
published. These include the Group's new accounting policies under IFRS and the
transitional disclosures for the 2004 comparative data showing reconciliations
between UK GAAP and IFRS both for the balance sheet and the income statement.
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 32.9%
to £55.4 million (2004: £41.7 million). Underlying operating profit margins from
continuing businesses for the year were 9.1%. This compares to 7.2% in the
equivalent period in 2004. All three of our major business units contributed to
this increase in margin.
The Group has continued to implement its 'Profit Improvement Programme' in the
year with restructuring charges being £29.7 million (2004: £47.5 million). We
have also incurred costs associated with settlement of prior period litigation
in 2005 of £2.3 million (2004: £11.2 million).
The Group disposed of the Magnetics division in September 2005 for an enterprise
value of c£300 million, comprising £225 million of cash and £75 million of
pension and other employee liabilities assumed by the purchaser. This disposal
has transformed the balance sheet of Morgan eliminating net debt and creating a
year-end net cash position of £50.5 million. The profit on disposal net of tax
was £42.6 million.
The net finance charge was £13.1 million (2004: £16.1 million). Net bank
interest and similar charges were £10.0 million (2004: £12.3 million), an
improvement of £2.3 million from 2004 as our cash position improved in the year
and the Magnetics disposal monies were received in December 2005. Part of the
finance charge under IFRS is the net IAS 19 (Employee Benefits) interest charge
on pension scheme net liabilities which was £3.5 million (2004: £3.8 million).
The gain on remeasurement of interest rate swaps to fair value was £0.4 million
(2004: £nil).
The tax charge for the year, including £21.4 million on the disposal of the
Magnetics division was £30.2 million (2004: £2.5 million). The effective tax
rate before restructuring costs, costs associated with settlement of prior
period litigation and losses on property disposals was 25% (2004: 25%).
Underlying earnings per share was 13.1 pence (2004: 10.0 pence).
The net cash inflow from operating activities was £48.5 million (2004: £50.2
million) which included an adverse cash impact from restructuring costs and
costs associated with anti-trust litigation of £30.8 million (2004: £26.0
million). Working capital increased by £6.2 million (2004: decrease £7.0
million).
Year Year
2005 2004
£m £m
Net cash from operating activities 48.5 50.2
Interest received 2.3 1.5
Net capital expenditure (38.1) (28.1)
_____ _____
Free cash flow 12.7 23.6
Cash flows from other investing 190.8 23.3
activities
Cash flows from financing (1.8) 50.5
activities
Exchange movement (3.3) 4.7
Opening net debt (147.9) (250.0)
_____ _____
Closing net debt 50.5 (147.9)
_____ _____
Final Dividend
Morgan has demonstrated sustained net free cash flow over the past two years
coupled with strong improvement in underlying business profitability and, as
such, the Board is recommending a final dividend of 2.5 pence per Ordinary share
for the year. Morgan's intention is to have a progressive dividend policy going
forward. The dividend will be paid on 6th July 2006 to Ordinary shareholders on
the register of members at the close of business on 2nd June 2006. A Dividend
Re-Investment Plan will be made available for Ordinary shareholders who would
like to take their dividends by way of shares and details will be posted to
shareholders in due course.
Operating Review
Carbon
Morgan Carbon supplies products that exploit both the electrical and mechanical
properties of carbon - combining our materials technology, with in-depth
application knowledge, to produce added value components for the markets we
serve. Turnover of the business was up 1.9% compared to last year at £199.9
million (2004: £196.1 million). Underlying operating profit for the continuing
business showed a strong improvement at £27.4 million (2004: £20.9 million).
Turnover growth was subdued by a temporary decline in Armour sales midway
through the year as the US military changed its specifications. The new
specifications were met during the second half of 2005 and sales volumes are
returning to their previous levels.
General market conditions in the Americas remain robust. Performance was strong
in the traditional brush and seals and bearings markets and also in the
semiconductor market. The industrial market in Europe showed limited growth,
although further improvement was generated in niche added value applications
such as 'Press to Size' mechanical components used in domestic applications and
electrical rotary businesses. There was good organic growth across most of the
businesses in Asia, particularly in China, and the division benefited from the
capital and resource investments that continue to be made in the region. The
programme of site rationalisation, overhead reduction and the move to low cost
manufacturing countries is continuing successfully.
Technical Ceramics
The Technical Ceramics business trading performance reflects substantial
progress during the year. Turnover grew 6.7% to £144.8 million (2004: £135.7
million) and underlying operating profit increased by 64.9% to £12.2 million
(2004: £7.4 million). Free cash flow was also strong, with the focus on balance
sheet efficiency continuing to release cash within the business. During 2005,
cost reductions made through our continuing improvement programme more than
offset energy and raw material price increases. We will continue to focus on
these initiatives in 2006.
Technical Ceramics made improvements across all its regions. US markets were
strong throughout the year whilst Europe was stable. In Asia our increased
capacity allowed us to increase sales by over 40% from 2004, albeit from a small
base. In terms of products, sales growth is being driven by piezo ceramic,
medical and aerospace applications which are higher-margin markets.
Opportunities to further develop our interests in these areas are being pursued.
Insulating Ceramics
The Insulating Ceramics businesses' trading performance reflects steady progress
during the year. Turnover grew 6.1% to £265.1 million (2004: £249.8 million) and
underlying operating profit increased by 14.4% to £21.5 million (2004:
£18.8million).
The Thermal Ceramics division finished 2005 with a buoyant order book and sales
in the second half ahead of the comparative period last year. There was strong
growth in NAFTA, Asia and Latin America facilitated by expansion and
modernisation of facilities in China, India, Australia, Brazil and Korea.
Personnel reduction plans in Europe and NAFTA have continued to sustain
profitability in spite of the impact of the cost rises in raw materials and,
more significantly, in energy which have put pressure on margins. Price
increases large enough to offset the rises in input costs have proved difficult
to implement. The launch of a new high temperature bio-soluble fibre
(Superwool(TM) 607HT) during the second half of 2005 is enabling the Thermal
Ceramics business to increase its market share, while new joint ventures in
China and Russia signed in December further improve our geographic presence.
Demand in Europe for the Crucibles business continued to fall sharply and energy
and raw material prices escalated rapidly, reducing margins. However trading
stabilised in the latter part of 2005. Sales into the Americas grew modestly,
despite the well publicised difficulties facing US automobile producers, driven
in part by improved sales of furnace equipment aimed at reducing fuel and energy
costs. Sales into Asia continued to record double-digit growth, with little sign
of any imminent interruption to this trend. The benefits of some fixed cost
reduction showed through in the second half and contributed to an improving
level of profitability.
Outlook
The financial transformation of Morgan, which accelerated in 2005, provides a
strong platform for growth. All three major divisions continue to make good
progress in margin improvement with the Group's double digit operating margin
target now very close to being realised a year ahead of schedule. Going forward,
Morgan will be looking to leverage its much strengthened position to aim for
mid-teen margins in the medium term with profitable growth coming both
organically and through bolt-on acquisitions. The decision to reinstate dividend
payments reflects Morgan's improved financial position and the confidence of the
Board.
Lars Kylberg Chairman
Warren Knowlton Chief Executive Officer
CONSOLIDATED INCOME STATEMENT
for the year ended 4 January 2006
Continuing Discontinued Total Continuing Discontinued Total
operations operations operations operations
2005 2005 2005 2004 2004 2004
Note £m £m £m £m £m £m
Revenue 1 609.8 135.9 745.7 581.6 214.3 795.9
Operating costs before
restructuring costs, cost
associated with settlement of
prior period anti-trust
litigation and property disposals (554.4) (125.3) (679.7) (539.9) (200.2) (740.1)
________ ________ _______ ________ _________ _______
Profit from operations before
restructuring costs, costs
associated with settlement of prior
period anti-trust litigation and
property disposals 1 55.4 10.6 66.0 41.7 14.1 55.8
Restructuring costs and costs
associated with settlement of prior
period anti-trust litigation 4 (29.9) (2.1) (32.0) (44.9) (13.8) (58.7)
Loss on disposal of property (0.4) - (0.4) (4.6) 0.8 (3.8)
________ ________ _______ ________ _________ _______
Operating profit/(loss) 25.1 8.5 33.6 (7.8) 1.1 (6.7)
Finance income 22.7 - 22.7 20.9 - 20.9
Finance expenses (33.4) (2.4) (35.8) (33.6) (3.4) (37.0)
________ ________ _______ ________ _________ _______
Net financing costs 2 (10.7) (2.4) (13.1) (12.7) (3.4) (16.1)
Loss on partial disposal of businesses (0.1) - (0.1) (8.2) - (8.2)
________ ________ _______ ________ _________ _______
Profit/(loss) before taxation 14.3 6.1 20.4 (28.7) (2.3) (31.0)
Income tax expense 3 (4.8) (4.0) (8.8) (2.5) - (2.5)
________ ________ _______ ________ _________ _______
Profit/(loss) after taxation but
before gain on sale of discontinued
operations 9.5 2.1 11.6 (31.2) (2.3) (33.5)
Gain/(loss) on sale of discontinued
operations, net of tax - 42.6 42.6 - (26.7) (26.7)
________ ________ _______ ________ _________ _______
Profit/(loss) for the period 9.5 44.7 54.2 (31.2) (29.0) (60.2)
======== ======== ======= ======== ========= =======
Profit/(loss) for period attributable to:
Equity holders of the parent 7.2 44.7 51.9 (33.0) (29.0) (62.0)
Minority interest 2.3 - 2.3 1.8 - 1.8
________ ________ _______ ________ _________ _______
9.5 44.7 54.2 (31.2) (29.0) (60.2)
======== ======== ======= ======== ========= =======
Earnings/(loss) per share 5
Basic 2.5p 15.6p 18.1p (11.8p) (10.4p) (22.2p)
Diluted 2.4p 14.8p 17.2p (11.8p) (10.4p) (22.2p)
Dividends
Proposed final dividend - pence 2.5p -
- £m 7.3 -
CONSOLIDATED BALANCE SHEET
as at 4 January 2006
2005 2004
£m £m
_______ ______
Assets
Property, plant and equipment 235.3 319.8
Intangible assets 46.6 107.1
Other investments 6.1 5.6
Other receivables 0.3 3.5
Deferred tax assets 27.4 31.2
_______ ______
Total non-current assets 315.7 467.2
_______ ______
Inventories 77.8 121.3
Trade and other receivables 140.9 165.3
Cash and cash equivalents 160.0 56.3
_______ ______
Total current assets 378.7 342.9
_______ ______
Total assets 694.4 810.1
_______ ______
Liabilities
Interest-bearing loans and borrowings 57.3 137.9
Employee benefits 124.2 183.0
Grants for capital expenditure 0.3 0.4
Provisions 4.3 5.0
Deferred tax liabilities 28.1 42.1
_______ ______
Total non-current liabilities 214.2 368.4
_______ ______
Bank overdraft 27.2 0.8
Interest-bearing loans and borrowings 25.0 65.5
Trade and other payables 203.9 184.0
Provisions 28.4 38.3
_______ ______
Total current liabilities 284.5 288.6
_______ ______
Total liabilities 498.7 657.0
_______ ______
Total net assets 195.7 153.1
======= ======
Equity
Issued capital 75.5 74.8
Share premium 85.0 84.0
Reserves 41.4 35.0
Retained earnings (19.6) (51.4)
_______ ______
Total equity attributable to equity holders
of the parent company 182.3 142.4
_______ ______
Minority interest 13.4 10.7
_______ ______
Total equity 195.7 153.1
======= ======
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 4 January 2006
2005 2004
Note £m £m
_______ ______
Operating activities
Profit/(loss) for the period 54.2 (60.2)
Adjustments for:
Depreciation 30.0 34.4
Amortisation 1.3 1.4
Interest expense 13.1 16.1
Loss on sale of property, plant and
equipment 0.6 4.3
Income tax expense 8.8 2.5
Equity settled share based payment
expenses 2.5 1.7
_______ ______
Operating profit before changes in working
capital and provisions 110.5 0.2
(Increase)/decrease in trade and other
receivables (5.8) (11.5)
(Increase)/decrease in inventories (9.0) (3.1)
Increase/(decrease) in trade and other
payables 8.6 21.6
Non cash operating costs relating to
restructuring 8.5 12.4
Increase/(decrease) in provisions and
employee benefits (1.9) 12.8
_______ ______
Cash generated from operations 110.9 32.4
Interest paid (13.7) (14.8)
Taxation (6.2) (2.3)
Loss on partial disposal of businesses 0.1 8.2
Gain on sale of discontinued operations (42.6) 26.7
_______ ______
Net cash from operating activities 48.5 50.2
Investing activities
Purchase of property, plant and equipment (43.6) (38.3)
Proceeds from sale of property, plant and
equipment 5.5 10.2
Purchase of investments (2.8) (1.0)
Proceeds from sale of investments 0.7 0.4
Interest received 2.3 1.5
Acquisitions of subsidiaries, net of cash
acquired (3.0) -
Disposal of subsidiaries, net of cash
disposed of 195.9 23.9
_______ ______
Net cash from investing activities 155.0 (3.3)
Financing activities
Proceeds from the issue of share capital 1.7 54.1
Purchase of shares for LTIP (3.5) (3.3)
Repayment of borrowings (125.2) (97.6)
Payment of finance lease liabilities (1.2) (1.0)
_______ ______
Net cash from financing activities (128.2) (47.8)
Net increase/(decrease) in cash and cash
equivalents 75.3 (0.9)
Cash and cash equivalents at start of
period 56.3 57.9
Effect of exchange rate fluctuations on cash
held 2.0 (0.7)
_______ ______
Cash and cash equivalents at period end 6 133.6 56.3
======= ======
CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
for the year ended 4 January 2006
2005 2004
£m £m
_______ ______
Foreign exchange translation differences 5.0 (2.5)
Actuarial losses on defined benefit plans (16.2) (39.0)
Net gain/(loss) on hedge of net investment in foreign
subsidiary (1.5) -
Cash flow hedges:
Effective portion of changes in fair value 0.2 -
Change in fair value of equity securities
available-for-sale 0.3 0.2
_______ ______
Income and expense recognised directly in equity (12.2) (41.3)
Profit/(loss) for the period 54.2 (60.2)
_______ ______
Total recognised income and expense for the period 42.0 (101.5)
======= ======
Attributable to:
Equity holders of the parent 39.7 (103.3)
Minority interest 2.3 1.8
_______ ______
Total recognised income and expenses for the period 42.0 (101.5)
======= ======
Total recognised income and expenses for the period 42.0 (101.5)
Effect of adoption of IAS 32 and 39, net of tax, on 5
January 2005 (with 2004 not restated) * (0.5) -
_______ ______
41.5 (101.5)
======= ======
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 4 January 2006
2005 2004
£m £m
_______ ______
Equity attributable to equity holders of the parent at 5
January 142.4 193.3
Effect of adoption of IAS 32 and 39, net of tax, on 5
January 2005 (with 2004 not restated) * (0.5) -
Recognised income and expense for the year 39.7 (103.3)
New ordinary share capital issued (net of expenses) 1.7 54.1
Relating to own shares (3.5) (3.4)
Relating to share-based payment 2.5 1.7
_______ ______
Equity attributable to equity holders of the parent at 4
January 182.3 142.4
======= ======
2005 2004
£m £m
_______ ______
*Effect of change in accounting policy
Effect of adoption of IAS 32 and 39, net of tax, on 5
January 2005 (with 2004 not restated) on:
Cash flow hedge reserve (0.1) -
Retained earnings (0.4) -
_______ ______
(0.5) -
======= ======
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Basis of preparation
The attached financial statements are the Group's first financial statements
following the adoption of International Financial Reporting Standards (IFRS).
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/
606/2002).
As allowed by IFRS 1 'First-time adoption of IFRS', the Group adopted IAS 32
'Financial instruments: disclosure and presentation' and IAS 39 'Financial
instruments: recognition and measurement', prospectively from 5 January 2005.
Consequently, until 4 January 2005, the Group continued to hedge account for
forecast foreign exchange transactions and commodity exposures in accordance
with UK GAAP, and hence the comparative financial statements exclude the impact
of these standards.
On 8 July 2005, the Group published a comprehensive analysis of the impact of
adopting IFRS from 5 January 2004 - available from the Company's web site at
www.morgancrucible.com. This included income statement and balance sheet
reconciliations, as well as details of the accounting policies applied in
restating its financial statements for the year ended 4 January 2005 and as at 5
January 2004. Some small adjustments have been made to these statements to
reflect reclassifications more accurately.
The financial information set out above does not constitute the Company's
statutory accounts for the years ended 4 January 2005 or 2006. Statutory
accounts for 2005, which were prepared under UK GAAP, have been delivered to the
registrar of companies, and those for 2005, prepared under accounting standards
adopted by the EU, will be delivered in due course. The auditors have reported
on those accounts; their reports were (i) unqualified, (ii) did not include
references to any matters to which the auditors drew attention by way of
emphasis without qualifying their reports and (iii) did not contain statements
under sections 237(2) or (3) of the Companies Act 1985.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Segment reporting
Business segments
Carbon Technical Thermal Crucibles Discontinued Consolidated
Ceramics Ceramics
2005 2004 2005 2004 2005 2004 2005 2004 2005 2004 2005 2004
£m £m £m £m £m £m £m £m £m £m £m £m
______ ______ _______ ______ ______ ______ ______ ______ ______ ______ ______ ______
Revenue from external
customers 199.9 196.1 144.8 135.7 236.7 220.3 28.4 29.5 135.9 214.3 745.7 795.9
______ ______ _______ ______ ______ ______ ______ ______ ______ ______ ______ ______
Segment profit 15.3 0.2 8.6 1.1 9.2 8.0 1.3 3.2 8.5 1.1 42.9 13.6
______ ______ _______ ______ ______ ______ ______ ______ ______ ______ ______ ______
Unallocated costs (9.3) (20.3)
______ ______
Operating profit/(loss) 33.6 (6.7)
Net financing costs (13.1) (16.1)
Loss on partial disposal
of businesses (0.1) (8.2)
Income tax expense (8.8) (2.5)
Gain/(loss) on sale of
discontinued operations,
net of tax 42.6 (26.7)
______ ______
Profit/(loss) for the
period 54.2 (60.2)
====== ======
Segment underlying
operating profit * 27.4 20.9 12.2 7.4 19.7 15.9 1.8 2.9 10.6 14.1 71.7 61.2
______ ______ _______ ______ ______ ______ ______ ______ ______ ______ ______ ______
Unallocated costs (5.7) (5.4)
______ ______
Underlying operating profit 66.0 55.8
====== ======
Revenue from external customers in discontinued comprises the Magnetics division
£135.9 million (2004: £181.2 million), the Auto and Consumer business £nil
(2004: £31.7 million) and three Technical Ceramics operations £nil (2004: £1.4
million). Segment profit in discontinued comprises the Magnetics division £8.5
million (2004: £7.4 million), the Auto and Consumer business £nil (2004: £6.5
million loss) and three Technical Ceramics operations £nil (2004: £0.2 million).
Segment underlying operating profit in discontinued comprises the Magnetics
division £10.6 million (2004: £14.2 million), the Auto and Consumer business
£nil (2004: £0.3 million loss) and three Technical Ceramics operations £nil
(2004: £0.2 million).
* This measure of profit (before all restructuring costs, cost associated with
settlement of anti-trust litigation and property disposals) is shown because the
Directors consider that it gives a better indication of underlying performance.
Geographical segments
Europe Americas Far East & Middle East & Discontinued Unallocated Consolidated
Australia Africa
2005 2004 2005 2004 2005 2004 2005 2004 2005 2004 2005 2004 2005 2004
£m £m £m £m £m £m £m £m £m £m £m £m £m £m
----- ----- ----- ----- ----- ----- ----- ----- ------ ------ ----- ----- ------ ------
Revenue
from
external
customers 237.6 241.0 268.2 244.6 90.5 82.6 13.5 13.4 135.9 214.3 - - 745.7 795.9
----- ----- ----- ----- ----- ----- ----- ----- ------ ------ ----- ----- ------ ------
2. Net finance income and expense
2005 2004
£m £m
_____ ______
Interest expense (11.3) (13.8)
Interest on IAS 19 obligations (24.5) (23.2)
_____ ______
Financial expenses (35.8) (37.0)
===== ======
Interest income 1.3 1.5
Expected return on IAS 19 scheme assets 21.0 19.4
Gain on remeasurement of interest rate swaps to fair
value 0.4 -
_____ ______
Financial income 22.7 20.9
===== ======
3. Taxation - Income tax expense
Recognised in the income statement
2005 2004
£m £m
______ ______
Current tax expense
Current year 36.0 6.0
Adjustments for prior years 0.3 0.2
______ ______
36.3 6.2
______ ______
Deferred tax expense
Origination and reversal of temporary differences
Benefit of losses recognised 4.0 (3.7)
(10.1) -
______ ______
(6.1) (3.7)
______ ______
Total income tax expense in income statement 30.2 2.5
====== ======
Reconciliation of effective tax rate 2005 2005 2004 2004
£m % £m %
______ _______ ______ ______
Profit/(loss) before tax 84.4 (57.7)
Income tax using the domestic corporation tax rate 25.3 30.0 (17.3) 30.0
Non-deductible expenses 14.7 17.4 17.0 (29.5)
Effect of tax losses utilised (10.1) (12.0) 1.9 (3.3)
Under/(over) provided in prior years 0.5 0.6 0.2 (0.3)
Other (0.2) (0.2) 0.7 (1.2)
______ _______ ______ ______
30.2 35.8 2.5 (4.3)
====== ======= ====== ======
Reconciliation of profit/(loss) before tax 2005 2004
£m £m
______ ______
Shown on income statement 20.4 (31.0)
Add: gain on sale of discontinued operations, gross of tax 64.0 (26.7)
______ ______
Profit/(loss) before tax shown above in tax rate reconciliation 84.4 (57.7)
====== ======
4. Restructuring costs and costs associated with settlement of anti-trust
litigation
Costs of restructuring were £29.7 million (2004: £47.5 million) and legal costs
associated with settlement of anti-trust litigation were £2.3 million (2004:
£11.2 million).
5. Earnings per share
Basic earnings per share
The calculation of basic earnings per share at 4 January 2006 was based on the
profit/(loss) attributable to Equity holders of the Morgan Crucible Company plc
of £51.9 million (4 January 2005: £62.0 million loss) and a weighted average
number of ordinary shares outstanding during the period ended 4 January 2006 of
286,553,767 (4 January 2005: 279,423,850) calculated as follows:
2005 2004
£m £m
___________ ___________
Profit/(loss) attributable to Equity holders of the Morgan Crucible Company plc 51.9 (62.0)
=========== ===========
Weighted average number of ordinary shares
Issued ordinary shares at 5 January 290,200,179 232,050,876
Effect of shares issued in period and Treasury shares held by the Company (3,646,412) 47,372,974
___________ ___________
Weighted average number of ordinary shares at period end 286,553,767 279,423,850
=========== ===========
Diluted earnings per share
The calculation of diluted earnings per share at 4 January 2006 was
based on net profit/(loss) attributable to Equity holders of the Morgan
Crucible Company plc of £51.9 million (4 January 2005: £62.0 million
loss) and a weighted average number of ordinary shares outstanding
during the period ended 4 January 2006 of 301,088,360 (4 January 2005:
286,076,731), calculated as follows:
2005 2004
£m £m
___________ ___________
Profit/(loss) attributable to Equity holders of the Morgan Crucible Company plc 51.9 (62.0)
=========== ===========
Weighted average number or ordinary shares
Weighted average number of ordinary shares 286,553,767 281,370,979
Effect of share options/incentive schemes 14,534,593 4,705,752
___________ ___________
Diluted weighted average number of ordinary shares 301,088,360 286,076,731
=========== ===========
Underlying earnings per share
The calculations of underlying earnings per share at 4 January 2006 was based on
profit from operations before restructuring costs, costs associated with
settlement of anti-trust litigation and property disposals less, net finance
costs, income tax expense (excluding tax credit arising from restructuring,
anti-trust litigation and property disposals of £4.3 million,
(4 January 2005: £7.5 million)) and minority interest of £37.5 million
(4 January 2005: £27.9 million) and a weighted average number of ordinary shares
outstanding during the period ended 4 January 2006 of 286,553,767
(4 January 2005: 279,423,850) calculated as follows:
2005 2004
£m £m
___________ ___________
Profit from operations before restructuring costs and costs associated with
settlement of anti-trust litigation, less net finance charge costs, income tax
expense and minority interest 37.5 27.9
=========== ===========
Weighted average number of ordinary shares
Issued ordinary shares at 5 January 290,200,179 232,050,876
Effect of shares issued in period and Treasury shares held by the Company (3,646,412) 47,372,974
___________ ___________
Weighted average number of ordinary shares at period end 286,553,767 279,423,850
=========== ===========
Underlying earnings per share (pence) 13.1p 10.0p
Underlying diluted earnings per share
The calculations of underlying diluted earnings per share at 4 January 2006 was
based on profit from operations before restructuring costs, costs associated
with settlement of anti-trust litigation and property disposals less, net
finance costs, income tax expense (excluding tax credit arising from
restructuring, anti-trust litigation and property disposals £4.3 million, (4
January 2005: £7.5 million)) and minority interest of £37.5 million (4 January
2005: £27.9 million) and a weighted average number of ordinary shares
outstanding during the period ended 4 January 2006 of 301,088,360 (4 January
2005: 286,076,731) calculated as follows:
2005 2004
£m £m
___________ ___________
Profit from operations before restructuring costs and costs associated with
settlement of anti-trust litigation, less net finance charge costs, income tax
expense and minority interest 37.5 27.9
=========== ===========
Weighted average number of ordinary shares
Weighted average number of ordinary shares 286,553,767 281,370,979
Effect of shares options/incentive schemes 14,534,593 4,705,752
___________ ___________
Diluted weighted average number of ordinary shares 301,088,360 286,076,731
=========== ===========
Underlying diluted earnings per share (pence) 12.5p 9.8p
6. Cash and cash equivalents/bank overdrafts
2005 2004
£m £m
______ ______
Cash and cash equivalents per balance sheet 160.0 56.3
Bank overdrafts subject to cash pooling arrangements (26.4) -
______ ______
Cash and cash equivalents per cash flow statement 133.6 56.3
====== ======
Bank overdrafts subject to cash pooling arrangements (26.4) -
Other bank overdrafts (0.8) (0.8)
______ ______
Total bank overdrafts (27.2) (0.8)
====== ======
'Cash and cash equivalents' in the 2004 balance sheet were shown net of
bank overdrafts subject to cash pooling arrangements of £17.4
million.
This information is provided by RNS
The company news service from the London Stock Exchange
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Morgan Crucible Company plc
