19th Feb 2008 07:01
Morgan Crucible Co PLC19 February 2008 PRELIMINARY RESULTS FOR THE YEAR ENDED 4 JANUARY 2008 • Strong year-on-year financial performance: Revenue increased by 6.3% on a constant currency basis Group operating profit margins before one off items(1) rose to 12.5% from 10.9% driven by improved pricing, operational efficiencies and continued growth in higher margin business Group operating profit margins after one off items(1) improved to 11.2% from 8.1% Profit before tax increased 47.8% to £71.7 million on a constant currency basis EPS(2) before one off items improved by 24.6% to 22.3 pence (2006: 17.9 pence) • All three divisions contributing to a 24.8% increase in operating profit before one off items at constant currency: Carbon achieved operating profit margins before one-off items of 16.0% (2006: 15.8%), with continued growth in our higher margin businesses, such as armour, combined with strong performances from the Americas and Asia Technical Ceramics achieved excellent operating profit margin growth before one-off items to 13.0% (2006: 10.5%) with a particularly strong performance in Europe Insulating Ceramics achieved operating profit margins before one-off items of 11.3% (2006: 9.2%) with very good growth in both the top line and bottom line due to large project-based business • Robust financial position: Net debt(4) at year end remains low at £119.7 million. Following the acquisition of the two businesses from Carpenter Technology Corporation, the net debt will be c. £200 million, representing 1.8 times proforma EBITDA (including the last full year Carpenter EBITDA), comfortably below our gearing target of 2 to 2.5 times EBITDA Total dividend increased by 50% to 6.75 pence per share (2006: 4.5 pence), reflecting the Board's confidence in the future prospects of the Group Commenting on the results, Chief Executive Officer, Mark Robertshaw said: "Morgan Crucible has delivered a strong financial performance in 2007, withresults that reflect the quality in our business. Top line revenue growth hasbeen good and we have made further progress towards our goal of mid-teenoperating profit margins. Our strategy remains to focus on higher margin, highergrowth, less economically cyclical markets. Morgan Crucible ended 2007 in a strong financial position. We have reduced ourexposure to cyclical end markets both through positive mix shift in our organicbusiness and through our acquisitions, targeting long term secular growthmarkets. Our order books are well up on last year and we look to the future withconfidence." --------------------------------------------------------------------------------£m unless otherwise stated 2007 2006 Change--------------------------------------------------------------------------------Revenue 693.2 677.8 +2.3%--------------------------------------------------------------------------------Operating profit before one-off items(3) 86.5 73.7 +17.4%--------------------------------------------------------------------------------Operating profit before one-off items(3) 12.5% 10.9%margin --------------------------------------------------------------------------------EBITDA after one-off items (1) 102.6 81.1 +26.5%--------------------------------------------------------------------------------EBITA after one-off items (1) 78.9 56.4 +39.9%--------------------------------------------------------------------------------Operating profit after one-off items (1) 77.3 55.2 +40.0%--------------------------------------------------------------------------------Operating profit margin after one-off items 11.2% 8.1%--------------------------------------------------------------------------------Profit before tax 71.7 50.3 +42.5%--------------------------------------------------------------------------------EPS (pence) before one off items(2) 22.3 17.9 +24.6%----------------------------------------------------------------------------------------------------------------------------------------------------------------Basic EPS (pence) 19.1 12.9 +48.1%-------------------------------------------------------------------------------- Notes-----(1) One-off items are defined as costs of restructuring £9.8 million (2006: £23.9 million) and recovered legal costs associated with settlement of anti-trust litigation £0.8 million (2006: charge of £3.8 million), gain on curtailment of UK employee benefit schemes £nil (2006: £11.0 million), terminated bid approach costs £nil (2006: £2.1 million) and gain/(loss) on disposal of property £0.2 million loss (2006: gain of £0.3 million). (2) EPS before one-off items defined as basic earnings per share of 19.1 pence (2006: 12.9 pence) adjusted to exclude the after tax impact of one-off items of 3.2 pence (2006: 5.0 pence). (3) Operating profit before one-off items defined as operating profit of £77.3 million (2006: £55.2 million) before one-off items of £9.2 million (2006: £18.5 million). (4) Net debt defined as interest bearing loans and borrowings, bank overdrafts less cash and other cash equivalents. Reference is made to operating profit and EPS before one-off items below, bothof which are defined at the front of this statement. These measures of earningsare shown because the Directors have used them historically to measure theunderlying performance of the business during the restructuring of the Groupfrom 2003 through to 2006. For 2007 and going forward the Group will continue topublish this measure but will focus on operating profit after one-off items (asdefined at the front of this statement) as the Directors believe that thismeasure more accurately reflects the ongoing performance of the Group. Strategy The Group has delivered a 24.8% increase in operating profit before one-offitems in 2007 on a constant currency basis. The operating profit margin beforeone-off items reached 12.5% in 2007 compared to 10.9% in 2006. Going forward theGroup will be using operating profit margin after one-off items as its mainprofit measure. In 2007 operating profit after one-off items was 11.2%, which isa substantial increase over the 2006 margin of 8.1%. Our goal, based onoperating profit margin after one-off items, remains to target mid-teen marginsin good times and maintain double digit margins in bad times. We continue to focus on higher growth, higher margin markets and continue toreduce our exposure to economically cyclical and commoditised business. Since2003, we have increased our sales to key target markets such as the aerospace,defence and petrochemical sectors whilst reducing our exposure to theautomotive, consumer goods and telecommunications sectors. We aim to providehigh value-added solutions for our customers and to be number one or two in ourchosen market segments. Simultaneously, we focus on reducing and managing our cost base. Ourmanufacturing footprint is continually being reviewed for opportunities tosimplify and rationalise the number of, and increase the efficiency of, oursites. In our continuing businesses, total overheads as a percentage of saleshave reduced, on a constant currency basis, from 32.9% in 2003 to 25.1% in 2007.Over the same period total employment costs (from continuing businesses) as apercentage of sales have fallen from 39.3% in 2003 to 31.1% in 2007. The Group is in excellent financial health. Our balance sheet strength hasenabled us to pursue suitable bolt-on acquisitions that are aligned with ourstrategic priorities to accelerate profitable growth. We announced two majoracquisitions in 2007, NP Aerospace and two businesses from Carpenter TechnologyCorporation. Going forward, we continue to look for targets that will enhance shareholder value. In summary, we are delivering on our stated strategy. The combination ofcontinuing healthy top line growth and profit margin progression allied to astrong balance sheet sees the Group in robust health. Financial Review The Group has delivered good top line growth in 2007 of 6.3% (on a constantcurrency basis) to £693.2 million (2006: £677.8 million). Group operating profit before one-off items increased by 24.8% on a constantcurrency basis to £86.5 million (2006: £73.7 million) and operating profitmargin before one-off items reached 12.5%, in comparison to 10.9% in 2006. Allthree of our Divisions contributed to this increase in margin. Operating profitafter one-off items was £77.3 million, an increase of 49.2% over the previousyear on a constant currency basis. We have continued to rationalise our manufacturing footprint and to drive downthe fixed cost base. The total gross charge for restructuring activities in 2007was £9.8 million with expected benefits in the region of c. £5 million. The net finance charge was £5.5 million (2006: £3.4 million). Net bank interestand similar charges were £7.2 million (2006: £4.6 million). Part of the financecharge under IFRS is the net IAS 19 (Employee Benefits) interest receipt onpension scheme net liabilities which was £1.7 million (2006: £1.2 million). The tax charge for the period was £15.2 million (2006: £10.6 million). The taxcharge on operating profit before one-off items, net of finance costs, was £15.8million. There was a tax credit of £0.6 million on one-off items. The effectivetax rate before one-off items was 21% (2006: 23.0%) which was marginally higherthan the half year estimate. Over the medium term and as highlighted previouslywe would expect the effective tax rate to trend towards 30% as tax losses areutilised. Earnings per share (EPS) before one-off items were 22.3 pence (2006: 17.9pence). EPS after one-off items was 19.1 pence (2006: 12.9 pence). The Group pension deficit has increased by £5.0 million since last year end to£47.7 million on an IAS 19 basis. The net cash inflow from operating activities was £53.1 million (2006: £21.9million outflow) which included an adverse cash impact from restructuring costsand costs associated with anti-trust litigation of £11.4 million (2006: £34.3million). In absolute terms, working capital grew by £18.4 million (2006: £22.9million), reflecting the increasing level of sales in our divisions. Cash flowsfrom other investing activities included consideration paid in respect ofacquisitions of £45.4 million (2006: £20.7 million) and receipts from prior year disposals which were £nil (2006: £11.6 million). Cash flows from financing activities include payment of £0.8 million (2006: £18.9 million) for the purchase of shares in respect of the long term incentive and employee share option schemes and £46.9 million (2006: £0.5 million) for the buy back of own shares. --------------------------------------------------------------------------------Cash flow FY FY-------------------------------------------------------------------------------- 2007 2006-------------------------------------------------------------------------------- £m £m--------------------------------------------------------------------------------Net cash from operating activities 53.1 18.1--------------------------------------------------------------------------------UK pension scheme payment - (40.0)--------------------------------------------------------------------------------Interest received 3.7 3.5--------------------------------------------------------------------------------Net capital expenditure (33.1) (32.9)--------------------------------------------------------------------------------Dividends paid (18.8) (7.4) ------ -------------------------------------------------------------------------------------Free cash flow 4.9 (58.7)--------------------------------------------------------------------------------Cash flows from other investing activities (45.7) (10.9)--------------------------------------------------------------------------------Cash flows from financing activities (47.7) (19.2)--------------------------------------------------------------------------------Exchange movement 2.9 4.2--------------------------------------------------------------------------------Opening net cash/(debt) (34.1) 50.5 ------ ------------------------------------------------------------------------------------Closing net (debt) (119.7) (34.1)-------------------------------------------------------------------------------- Dividend Given the good financial performance of the Group in 2007, our strong balancesheet and our underlying confidence in future prospects, the Board has proposeda final dividend of 4.5 pence per Ordinary share, an increase of 50% on thefinal dividend declared for 2006. The dividend will be paid on 30th June 2008 toOrdinary shareholders on the register of members at the close of business on30th May 2008. Operating Review Carbon Revenues for the full year were up by 1.4% on a reported basis compared to thesame period last year at £216.6 million (2006: £213.6 million). On a constantcurrency basis the year on year revenue growth was 6.3%. Operatingprofit before one-off items for the year increased from £33.8 million to £34.6million with operating profit margins before one-off items increasing from 15.8%in 2006 to 16.0% in 2007. The Americas and the Asian regions performed well in 2007. As part of theAmericas success there has been healthy growth in our armour business, includinga good finish to the year in terms of both sales and orders. We expect ourarmour business to continue to perform well in 2008. Investment was made inEurope during the course of the year to improve our ability to serve the globalmarket for both personal and vehicle protection. Our Asian businesses deliveredanother year of double digit revenue growth and we have continued to investstrongly in these businesses to ensure that growth can be maintained. Thisinvestment includes adding to our operational and technical resource, expandingthe product range and broadening our regional coverage. The NP Aerospace business has performed well since our investment in July 2007.Both the order book and opportunity pipeline are extremely strong, particularlyin the vehicle armour market. Technical Ceramics Revenues in 2007 decreased by 6.1% to £152.6 million (2006: £162.5 million) andat constant currency this decline would have been 2.3%. As previously announced,this revenue decline was due to a large US customer reaching the end of itsproduct lifecycle. During the year, Technical Ceramics maintained its focus on positive product mixshift towards higher margin, higher value added end markets. In parallel, ourcontinuous improvement programme in operations, our cost reduction initiativesin fixed overhead, and our emphasis on positive pricing all contributed to afurther improvement in operating margins. Operating profit before one-off itemsincreased by 17.1% to £19.9 million (2006: £17.0 million) and operating profitbefore one-off items margins improved to 13.0% (2006: 10.5%). The order book for our US business continues to look healthy. Our business inAsia, although smaller, is robust, with continued growth in demand for ceramicrollers made at our recently expanded Yixing facility. Our European businessperformed particularly well in the second half of 2007 and markets there remainstrong. In Europe and North America a highlight of 2007 has been the strength ofour medical and aerospace customers. Developing our exposure to these sectorsremains a major theme for the Division. In December 2007, we announced the acquisition of the Technical Ceramicsbusinesses of Carpenter Technology Corporation. The transaction is awaitingregulatory approvals and is expected to close by the end of the first quarter of2008. These businesses are an excellent strategic fit and the enlarged TechnicalCeramics Division has exciting prospects for revenue growth and operating marginenhancement. We continue to target additional bolt-on acquisition opportunitieswith attractive technology and market positions that will help to accelerateprofitable growth momentum. Overall, our order books remain robust having increased by over £7 million inthe year to stand at £49 million by the year end. Our new business pipeline alsohas several strong prospects for 2008. As a result, the Division is well placedto renew revenue growth and continue to improve operating margins in 2008. Insulating Ceramics Within the Insulating Ceramics Division there are two business units: ThermalCeramics and Molten Metal Systems. The Thermal Ceramics business' revenue increased by 7.6% to £291.9 million in2007 (2006: £271.2 million) and on a constant currency basis year on year growthwas 11.0%, driven primarily by large project based orders. Energy and raw material prices increased sharply in the last quarter of theyear, particularly for bauxite (for alumina production), which have impactedcontract prices for 2008. The business will continue to address these costpressures through price increases and through improvements in manufacturingefficiency, with a particular focus on reducing energy usage. The division starts the year with a healthy order book. Growth is comingparticularly from project based sales in Asia and from the Middle East foraluminium, petrochemical and iron and steel markets associated with emergingmarket infrastructure build. These project orders are expected to remain strongthrough 2008. New products launched during the last three years now account for 20% ofEuropean fibre sales; these include Superwool 607HT (high temperaturebio-soluble fibre), Superwool Plus (enhanced insulation bio-soluble fibre) andengineered fibre for diesel particulate filters, taking advantage of theenvironmental requirements of the automotive market. Our global Superwool salesare growing steadily with eight plants now in regular Superwool production. Trading conditions within the Molten Metal Systems business remained firmthroughout 2007 with revenue at £32.1 million, an increase of 6.7% at constant currency over the previous year, with all regions reporting growth. Operating margins also improved with price increases and cost efficiencies offsetting increases in energy costs, raw material prices and adverse currency movements. We remain on schedule to cease manufacturing at our UK plant during the first half of 2008.Our German plant has been upgraded with additional capacity now in place. The building extension at our Indian plant in Aurangabad is complete and the increased manufacturing capacity will come on stream progressively during 2008.In China, construction commenced of our new crucible manufacturing plant inSuzhou, near Shanghai. These projects will be fully operational in the secondhalf of 2008 and will see our global production capacity more closely alignedwith anticipated levels of future regional demand. Outlook All our Divisions continued to make good profit margin progression in 2007. Ourleading market positions, diversified end-market mix, strong order book andhealthy balance sheet enable the Board to look to the future with confidence. Tim Stevenson, Chairman Mark Robertshaw, Chief Executive Officer CONSOLIDATED INCOME STATEMENTfor the year ended 4 January 2008 Total* Continuing Discontinued Total operations operations 2007 2006 2006 2006 Note £m £m £m £m ---------- ------------------------------------Revenue 1 693.2 677.8 - 677.8 Operating costs before one-off items and amortisation of intangibles (605.1) (602.9) - (602.9) ---------- ------------------------------------Profit from operations before one-off items and amortisation of intangible assets 88.1 74.9 - 74.9 Amortisation of intangible assets (1.6) (1.2) - (1.2) ---------- ------------------------------------Profit from operations before one-off items 86.5 73.7 - 73.7 One-off items: Restructuring costs and costs associated with settlement of prior period anti-trust litigation 4 (9.0) (27.7) - (27.7) Gain on curtailment of United Kingdom employee benefit schemes - 11.0 - 11.0 Costs of terminated bid approach - (2.1) - (2.1) Profit/(loss)on disposal of property (0.2) 0.3 - 0.3 ---------- ------------------------------------Operating profit 77.3 55.2 - 55.2 Finance income 28.8 26.8 - 26.8Finance expenses (34.3) (30.2) - (30.2) ---------- ------------------------------------Net financing costs 2 (5.5) (3.4) - (3.4) Loss on disposal of business (0.3) - (1.5) (1.5) Share of profit of associate (net of income tax) 0.2 - - - ---------- ------------------------------------Profit/(loss) before taxation 71.7 51.8 (1.5) 50.3 Income tax expense (all relates to overseas tax payable) 3 (15.2) (10.6) - (10.6) ---------- ------------------------------------Profit/(loss) after taxation and for the period 56.5 41.2 (1.5) 39.7 ========== ====================================Profit/(loss) for period attributable to: Equity holders of the parent 52.6 38.4 (1.5) 36.9 Minority interest 3.9 2.8 - 2.8 ---------- ------------------------------------ 56.5 41.2 (1.5) 39.7 ========== ==================================== Earnings/(loss) per share 5Basic 19.1p 13.4p (0.5)p 12.9pDiluted 18.5p 12.8p (0.5)p 12.3p DividendsInterim dividend - pence 2.25p 1.5p - £m 6.3 4.4Proposed final dividend - pence 4.5p 3.0p - £m 12.4 8.8 The proposed final dividend is based upon the number of shares outstanding at the balance sheet date.* All current year operations are continuing. CONSOLIDATED BALANCE SHEETas at 4 January 2008 2007 2006 £m £m ------------------------------AssetsProperty, plant and equipment 246.6 230.2Intangible assets 69.8 66.4Other investments 7.5 7.2Investment in associate 5.2 -Other receivables 36.8 1.2Deferred tax assets 25.8 28.8 ------------------------------Total non-current assets 391.7 333.8 ------------------------------ Inventories 97.7 84.9Trade and other receivables 139.8 136.0Cash and cash equivalents 108.0 97.4 ------------------------------Total current assets 345.5 318.3 ------------------------------Total assets 737.2 652.1 ------------------------------ LiabilitiesInterest-bearing loans and borrowings 193.1 93.2Employee benefits 47.7 42.7Grants for capital expenditure 0.2 0.1Provisions 5.7 6.7Non-trade payables 3.7 3.6Derivative financial liabilities 0.2 -Deferred tax liabilities 19.2 28.4 ------------------------------Total non-current liabilities 269.8 174.7 ------------------------------ Bank overdraft 20.8 24.5Interest-bearing loans and borrowings 13.8 13.8Trade and other payables 208.5 210.3Current tax payable 15.2 9.9Provisions 11.8 15.8Derivative financial liabilities 1.0 - ------------------------------Total current liabilities 271.1 274.3 ------------------------------Total liabilities 540.9 449.0 ------------------------------ ------------------------------Total net assets 196.3 203.1 ============================== EquityIssued capital 69.5 73.7Share premium 85.3 85.2Reserves 32.5 21.3Retained earnings (11.1) 6.5 ------------------------------Total equity attributable to equity holders ofparent company 176.2 186.7 ------------------------------ ------------------------------Minority interest 20.1 16.4 ------------------------------Total equity 196.3 203.1 ============================== CONSOLIDATED STATEMENT OF CASH FLOWSfor the year ended 4 January 2008 2007 2006 Note £m £m --------------------------- Operating activitiesProfit for the period 56.5 39.7Adjustments for: Depreciation 23.7 24.7 Amortisation 1.6 1.2 Net financing costs 5.5 3.4 Loss on disposal of business 0.3 1.5 Share of profit of associate (0.2) - Profit on sale of property, plant and equipment (0.1) (0.4) Income tax expense 15.2 10.6 Equity settled share based payment expenses 2.7 3.2 ---------------------------Operating profit before changes in working capital and provisions 105.2 83.9 (Increase)/decrease in trade and other receivables 5.7 (18.7)(Increase)/decrease in inventories (8.5) (11.3)Increase/(decrease) in trade and other payables (15.7) 7.1Non cash operating costs relating to restructuring 0.2 4.2Increase/(decrease) in provisions and employee benefits (8.8) (72.6) ---------------------------Cash (absorbed)/generated from operations 78.1 (7.4) Interest paid (12.5) (8.2)Taxation (12.5) (6.3) ---------------------------Net cash from operating activities 53.1 (21.9) Investing activitiesPurchase of property, plant and equipment (34.9) (34.0)Proceeds from sale of property, plant and equipment 1.8 1.1Purchase of investments (0.3) (1.8)Interest received 3.7 3.5Acquisition of subsidiaries and associate, net of cash acquired (9.4) (20.7)Issue of debt to associate (36.0) -Disposal of subsidiaries, net of cash disposed of - 11.6 ---------------------------Net cash from investing activities (75.1) (40.3) Financing activitiesProceeds from the issue of share capital - 0.2Purchase of own shares (47.7) (19.4)Repayment of borrowings 102.5 32.3Payment of finance lease liabilities (0.3) (0.4)Dividends paid (18.8) (7.4) ---------------------------Net cash from financing activities 35.7 5.3 Net increase/(decrease) in cash and cash equivalents 13.7 (56.9) Cash and cash equivalents at start of period 73.5 133.6Effect of exchange rate fluctuations on cash held 2.9 (3.2) ---------------------------Cash and cash equivalents at period end 6 90.1 73.5 =========================== CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSEfor the year ended 4 January 2008 2007 2006 £m £m ----------------------------- Foreign exchange translation differences 7.9 (17.8)Actuarial gain/(losses) on defined benefit plans (9.9) 15.2Deferred tax associated with employee benefit schemes 0.5 (1.2)Cash flow hedges: Effective portion of changes in fair value (1.2) (0.1)Change in fair value of equity securitiesavailable-for-sale 0.3 0.3 -----------------------------Income and expense recognised directly in equity (2.4) (3.6)Profit/(loss) for the period 56.5 39.7 -----------------------------Total recognised income and expense for the period 54.1 36.1 ==============================Attributable to: Equity holders of the parent 50.2 33.3 Minority interest 3.9 2.8 -----------------------------Total recognised income and expenses for the period 54.1 36.1 ============================= Basis of Preparation These financial statements have been prepared in accordance with International Financial Reporting Standards adopted for use in the EU in accordance with EU law (IAS regulation EC/1606/2002). The financial information set out above does not constitute the company's statutory accounts for the years ended 4 January 2008 or 2007. Statutory accounts for 2006 have been delivered to the registrar of companies, and those for 2007 will be delivered in due course. The auditors have reported on those accounts; their report was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 237(2) or (3) of the Companies Act 1985. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1. Segment reporting Carbon Technical Thermal Molten Metal Consolidated Ceramics Ceramics Systems 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 £m £m £m £m £m £m £m £m £m £m -------------------------------------------------------------------------------------- Revenue from external customers 216.6 213.6 152.6 162.5 291.9 271.2 32.1 30.5 693.2 677.8 --------------------------------------------------------------------------------------Segment profit 31.7 28.5 14.7 19.3 33.2 12.9 2.1 4.1 81.7 64.8 ---------------------------------------------------------------------Unallocated costs (4.4) (9.6) ---------------Operating profit 77.3 55.2Net financing costs (5.5) (3.4)Loss on disposal of business (0.3) (1.5)Share of profit of associate (net of income tax) 0.2 - - - - - - - 0.2 -Income tax expense (15.2) (10.6) ---------------Profit for the period 56.5 39.7 =============== Segment operating profit before one-off items* 34.6 33.8 19.9 17.0 32.7 24.7 3.9 3.2 91.1 78.7 --------------------------------------------------------------------Unallocated costs (4.6) (5.0) ---------------Operating profit before one-off items* 86.5 73.7 ===============* Operating profit before one-off items. This measure of profit is shown because the Directors use it to measure the underlying performance of the business. Europe Americas Far East & Middle East & Consolidated Australia Africa 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 £m £m £m £m £m £m £m £m £m £m -------------------------------------------------------------------------------- Revenue from external customers 280.7 261.9 291.7 302.4 108.6 100.0 12.2 13.5 693.2 677.8 ------------------------------------------------------------------------------- 2. Net finance income and expense 2007 2006 £m £m ------------------ Recognised in profit or loss Interest income on bank deposits 3.9 3.5 Expected return on IAS 19 scheme assets 24.9 23.3 ------------------ Finance income 28.8 26.8 ------------------ Interest expense on financial liabilities measured at amortised cost (11.1) (8.1) Interest on IAS 19 obligations (23.2) (22.1) ------------------ Finance expense (34.3) (30.2) ------------------ Net financing costs (5.5) (3.4) ================== The above finance income and expense include the following in respect of assets/(liabilities) not at fair value through profit or loss: Total interest income on financial assets 3.9 3.5 ------------------ Total interest expense on financial liabilities (11.1) (8.1) ------------------ Recognised directly in equity Net change in fair value of available for sale financial assets 0.3 0.3 Effective portion of changes in fair value of cash flow hedge (1.2) (0.1) Effective portion of change in fair value of net investment hedge (6.9) - Foreign currency translation differences for foreign operations 14.8 (17.8) ------------------ 7.0 (17.6) ------------------ Recognised in: Fair value reserve 0.3 0.3 Translation reserve 7.9 (17.8) Hedging reserve (1.2) (0.1) ------------------ 7.0 (17.6) ------------------ 3. Taxation - Income tax expense Recognised in the income statement 2007 2006 £m £m ----------------- Current tax expense Current year 19.0 12.5 Adjustments for prior years 1.6 0.6 ----------------- 20.6 13.1 ----------------- Deferred tax expense Origination and reversal of temporary differences (12.1) 2.9 Benefit of losses recognised 6.7 (5.4) ----------------- (5.4) (2.5) ----------------- Total income tax expense in income statement 15.2 10.6 ================= Reconciliation of effective tax rate 2007 2007 2006 2006 £m % £m % Profit before tax 71.7 50.3 Income tax using the domestic corporation taxt rate 21.4 30.0 15.1 30.0 Non-deductible expenses 1.1 1.5 2.3 4.6 Effect of tax losses utilised (12.0) (16.7) (7.3) (14.5) Under provided in prior years 1.6 2.2 0.6 1.2 Other (including the impact of overseas tax rates) 3.1 4.3 (0.1) (0.2) -------- -------- 15.2 21.2 10.6 21.1 ======== ======== Income tax recognised directly in equity Actuarial gains and losses 0.5 (1.2) -------- -------- Total income tax recognised directly in equity 0.5 (1.2) ======== ======== 4. Restructuring costs and costs associated with settlement of anti-trust litigation Costs of restructuring were £9.8 million (2006: £23.9 million) and legal costs recoverable associated with settlement of anti- trust litigation were £0.8 million (2006: a cost of £3.8 million). 5. Earnings per share Basic earnings per share--------------------------The calculation of basic earnings per share at 4 January 2008 was based onthe profit attributable to equity holders of The Morgan Crucible Company plcof £52.6 million (4 January 2007: £36.9 million) and a weighted averagenumber of ordinary shares outstanding during the period ended 4 January 2008of 275,659,262 (4 January 2007: 287,110,574) calculated as follows: 2007 2006 £m £m ---------------------------Profit attributable to Equity holders of The Morgan Crucible Company plc 52.6 36.9 =========================== Weighted average number of Ordinary sharesIssued Ordinary shares at 5 January 293,225,142 293,188,372Effect of shares issued in period and Treasury shares held by the Company (17,565,880) (6,077,798) ---------------------------Weighted average number of Ordinary shares at period end 275,659,262 287,110,574 ===========================Basic earnings per share (pence) 19.1p 12.9p Diluted earnings per share----------------------------The calculation of diluted earnings per share at 4 January 2008 was based onthe profit attributable to equity holders of The Morgan Crucible Company plcof £52.6 million (4 January 2007: £36.9 million) and a weighted averagenumber of ordinary shares outstanding during the period ended 4 January 2008of 283,598,328 (4 January 2007: 298,938,120), calculated as follows: 2007 2006 £m £m --------------------------Profit attributable to Equity holders of The Morgan Crucible Company plc 52.6 36.9 ========================== Weighted average number of Ordinary sharesWeighted average number of Ordinary shares 275,659,262 287,110,574Effect of share options/incentive schemes 7,939,066 11,827,546 --------------------------Diluted weighted average number of Ordinary shares 283,598,328 298,938,120 ==========================Diluted earnings per share (pence) 18.5p 12.3p Earnings per share before one-off items-----------------------------------------The calculation of earnings per share before one-off items at 4 January 2008was based on profit from operations and share of profit of associate, beforeone-off items less net finance costs, income tax expense (excluding taxcredit arising from one-off items of £0.6 million, (4 January 2007: £5.6million)) and minority interest of £61.5 million (4 January 2007: £51.3million) and a weighted average number of ordinary shares outstanding duringthe period ended 4 January 2008 of 275,659,262 (4 January 2007: 287,110,574)calculated as follows: 2007 2006 £m £m --------------------------Profit from operations and share of profit of assoicate, before one-off items less net finance costs, income tax expense and minority interest 61.5 51.3 ========================== Weighted average number of Ordinary sharesIssued Ordinary shares at 5 January 293,225,142 293,188,372Effect of shares issued in period and Treasury shares held by the Company (17,565,880) (6,077,798) --------------------------Weighted average number of Ordinary shares atperiod end 275,659,262 287,110,574 ==========================Earnings per share before one-off items (pence) 22.3p 17.9p Diluted earnings per share before one-off items-------------------------------------------------The calculation of diluted earnings per share before one-off items at 4January 2008 was based on profit from operations and share of profit ofassociate, before one-off items less net finance costs, income tax expense(excluding tax credit arising from one-off items £0.6 million (4 January2007: £5.6 million)) and minority interest of £61.5 million (4 January 2007:£51.3 million) and a weighted average number of ordinary shares outstandingduring the period ended 4 January 2008 of 283,598,328 (4 January 2007:298,938,120) calculated as follows: 2007 2006 £m £m --------------------------Profit from operations and share of profit of assoicate, before one-off items less net finance costs, income tax expense and minority interest 61.5 51.3 ========================== Weighted average number of Ordinary sharesWeighted average number of Ordinary shares 275,659,262 287,110,574Effect of share options/incentive schemes 7,939,066 11,827,546 --------------------------Diluted weighted average number of Ordinary shares 283,598,328 298,938,120 ==========================Diluted earnings per share before one-off items (pence) 21.7p 17.2p 6. Cash and cash equivalents/bank overdrafts 2007 2006 £m £m ------------------ Bank balances 81.0 70.2 Cash deposits 27.0 27.2 ------------------ Cash and cash equivalents per balance sheet 108.0 97.4 Bank overdrafts subject to cash pooling arrangements (17.9) (23.9) ------------------ Cash and cash equivalents per cash flow statement 90.1 73.5 ================== Bank overdrafts subject to cash pooling arrangements (17.9) (23.9) Other bank overdrafts (2.9) (0.6) ------------------ Total bank overdrafts (20.8) (24.5) ================== This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Morgan Advanced Materials