22nd Feb 2005 07:00
Morgan Crucible Co PLC22 February 2005 22 February 2005 PRELIMINARY RESULTS FOR THE YEAR TO 4 JANUARY 2005 2004 2003---------------------------------------------------Group Turnover £m 795.9 849.6---------------------------------------------------Operating Profit* £m 53.7 42.6---------------------------------------------------Underlying PBT** £m 41.5 26.9---------------------------------------------------Net Debt £m 147.5 249.3---------------------------------------------------Underlying EPS*** pence 10.4p 9.1p---------------------------------------------------* Defined as statutory operating loss of £11.4 million (2003:loss £32.2 million) before goodwill amortisation of £6.4 million (2003: £7.5 million) and operating exceptional charges of £58.7 million (2003: £67.3 million). This measure of earnings is shown because the Directors consider that it gives a better indication of underlying performance.** Defined as statutory loss before tax of £78.4 million (2003: loss £78.0 million) before goodwill amortisation of £6.4 million (2003: £7.5 million) and corporate and operating exceptional charges of £113.5 million (2003: £97.4 million).*** Basic underlying loss per share of 27.3p (2003: loss 28.9p) adjusted to exclude the after tax impact of corporate and operating exceptional items of 37.7p (2003: 38.0p). Note: Average exchange rates used were US$1.8315 (2003: US$1.6349) and Euro 1.4734 (2003: Euro 1.4456) • Total turnover £795.9 million (2003: £849.6 million). Turnover from continuing operations up 1.9% to £762.8 million (2003: £748.7 million) despite adverse currency translation impact of £50.4 million. • Underlying operating profit up 26.1% to £53.7 million (2003: £42.6 million). Underlying operating profit from continuing operations up 37.2% to £53.9 million (2003: £39.3 million) despite adverse currency translation impact of £5.0 million. • Underlying operating margins for continuing business improved from 5.2% to 7.1% • Underlying EPS improved by 14.3% to 10.4p (2003: 9.1p) • Positive free cash flow for the year of £23.0 million compared to an outflow of £8.8 million in 2003. • Net debt reduced by over £100 million to £147.5 million (2003: £249.3 million) • Operating exceptional costs of £58.7 million (2003: £67.3 million) arising from profit improvement initiatives of £47.5m and £11.2 million from corporate costs. • Profit improvement plan announced in February 2004 on track. Commenting on the results, Chief Executive Officer, Warren Knowlton said: "We are delivering on the commitments that we made to our shareholders a yearago; namely, to achieve target cost savings and profit improvement opportunitiesof up to £50 million by the end of 2006. We are making good progress inrationalising the Group and in creating a strong core from which to growprofitably. These results indicate that we have the capability to grow the topline as well as to deliver on our cost rationalisation plans". EnquiriesWarren Knowlton, Group Chief Executive 01753 837 306Mark Robertshaw, Chief Financial Officer 01753 837 302Charlotte Hepburne-Scott, Robin Walker, Finsbury 020 7251 3801 Market Overview The recovery of our key businesses is continuing, particularly those of theMagnetics and Technical Ceramics Divisions. From a geographic perspective,demand in both the Americas and Asia has been strong whereas the Europeanmarkets generally remain flat. The macro-economic variables that Morganexperienced in 2004 are likely to continue to be factors in 2005 trading, namelycurrency effects and increased raw materials prices and energy costs. Turnover for the year was £795.9 million (2003: £849.6 million). On a continuingbasis, sales were up 1.9% at £762.8 million (2003: £748.7 million) despite theadverse impact of currency translation. On a constant currency and continuingbusiness basis, turnover was up 7.1%. Profit Improvement Plan The profit improvement plan, as announced in February 2004, remains on track.The programme benefits are focussed primarily on the Group's three largerdivisions (Magnetics, Insulating Ceramics and Carbon). Key projects in 2004included site rationalisation in both the Carbon and Insulating Ceramicsbusinesses, expansion of our presence in lower-cost regions for all divisions,and additional Joint Venture activity. We had a cash spend of £32 million on theprofit improvement plan in 2004 and are forecasting to spend c. £20 million ofcash in 2005. Disposals The Group disposed of a number of non-core activities during the year, the mostsignificant being the sale of the Auto and Consumer business in June. Otherdisposals included the sale of the final two soft coatings businesses in the USAand the UK for considerations of US$6.2 million and £3.4 million respectively,and the Fulmer carbon operation for £1.1 million. Net Debt Net debt at the end of the year was £147.5 million compared with £249.3 millionin 2003, representing a reduction of £101.8 million. The net debt improvementyear on year can be attributed to a positive free cash flow of £23.0 million,corporate disposals of net £24.3 million, and a net of £54.1 million from therights issue in February 2004. Balance sheet gearing decreased from 96.0% to61.4% at the end of 2004. Financial Review Group underlying operating profit for continuing businesses before goodwill andoperating exceptional costs increased by 37.2% to £53.9 million (2003: £39.3million). The Group's operating margins for the year were 7.1% on a continuingbasis (2003: 5.2%). Operating exceptional costs for the year were £58.7 million (2003: £67.3million). These included the costs of the Group's restructuring programmes of£47.5 million (2003: £60.8 million) and £11.2 million (2003: £6.5 million) inrespect of the settlement of the US class actions and associated legal costs. The goodwill amortisation was £6.4 million (2003: £7.5 million). Corporate exceptional charges for the year totalled £54.8 million (2003: £30.1million) of which the largest component was the £42.8 million loss on the saleof businesses (2003: £21.3 million). This arose principally from £40.3 millionrelating to the disposal of the Auto and Consumer business. The remainder of thecorporate exceptional charges for the year comprises an £8.2 million loss onpartial disposal of businesses, including £5.9m for the Fulmer operation, and a£3.8m charge from the sale of various properties (2003: £2.3 million) The net finance charge reduced in the year to £12.2 million (2003: £15.7million) reflecting the positive free cash flow and the significant reduction inGroup borrowings. We continue to progress towards our aim of achieving a netdebt to EBITDA ratio of 1:1. The tax charge for the period was £2.9 million (2003: a net credit of £2.4million). The effective rate before all exceptional items and goodwillamortisation was 25% (2003: 23%). Underlying earnings per share for the period before goodwill amortisation was10.4 pence (2003: 9.1 pence), restated for the effects of the rights issue. The net cash inflow from operating activities was £66.7 million (2003: £45.3million). Free cash inflow in the year of £23.0 million (2003: outflow £8.8million) after capital expenditure of £38.3 million (2003: £34.3 million).Receipts from property disposals were £10.2 million (2003: £2.0 million). Netreceipts from corporate disposals of £24.3 million (2003: £32.8 million) weremainly from the sale of the Auto and Consumer business and the remaining softcoatings operations. Dividend Policy The Board intends to resume the payment of dividends once the Company isachieving a level of sustained profitability and cash generation. At this timeno dividend has been proposed given the continuing need to invest in the profitimprovement plan and to reduce net debt. Operating Review In the operating review all references to operating profit are stated beforegoodwill amortisation and operating exceptional costs (EBITA). Carbon This business supplies products that exploit both the electrical and mechanicalproperties of carbon. Turnover was up c.2% compared to last year at £196.1million (2003: £192.1 million); however, year on year turnover expressed inconstant currency increased by over 8 %. Operating profit for the year was £19.6million (2003: £19.2 million) despite adverse currency translation impact of£2.2m. The North American business delivered strong performance, driven particularly bythe high demand for personal body armour and core mechanical and electricalproducts. In Asia the business saw both underlying market growth and an increasein market share. The major markets in continental Europe remained difficult in2004, but some growth in market share was achieved. The Auto and Consumer global business that was formerly included in the Carbonsegment was sold in June to Energy Conversion Systems. Magnetics The performance of the Magnetics business improved significantly from the prioryear, both in terms of turnover and operating profit. Operating profit increasedto £9.8m (2003: £3.0 million), partially due to the development of new marketsegments and increase in market share, and partially due to the benefits of therestructuring actions undertaken. Notable market segments that have experiencedstrong growth are electronic article surveillance and automotive applicationssuch as keyless-go systems. Such top-line growth, combined with the shift ofcertain areas of production to high growth, lower-cost countries such asSlovakia, Malaysia and China, has contributed to the division producing £181.2million in turnover (2003: £172.1 million). On a constant currency basis, theturnover for the division was up by 8.4% compared to 2003. In August 2004, a joint venture with San Huan, a leading Chinese producer ofpermanent magnets, was announced. Technical Ceramics The Technical Ceramics business enjoyed significant growth in both turnover andoperating profit against 2003. Turnover was £135.7 million (2003: £126.2million) and operating profit increased to £6.6 million (2003: £0.4 million),driven by improvement in its major markets such as medical and aerospace, andgood demand from the communications market for power tubes. On a constantcurrency basis, turnover for the division was up by 13.6% compared to 2003.Restructuring initiatives resulted in a reduction of overheads, significantlycontributing to the operating profit result. Insulating Ceramics The Insulating Ceramics business includes both heat management products for hightemperature applications as well as crucibles and related products for thenon-ferrous and precious foundry market. The business traded satisfactorilyduring the period and turnover was £249.8 million (2003: £258.3 million). Yearon year growth in turnover expressed on a constant currency basis was 1.9%.Market demand in the Americas has improved compared to 2003; however theEuropean markets struggled from a weak industrial economy with the addedpressure of a strong Euro/dollar exchange rate. The Asian markets, in particularChina, showed strong growth, partly through market share accretion and partlythrough economic growth in the region. Operating profits were £17.9 million(2003: £16.7 million) reflecting an increased market share in products such asSuperwool, and also the impact of the continuing restructuring actions which, incombination, more than offset the downward pressures of raw material prices andenergy costs. Since the year end, a joint venture with Hubei Kailong, a leading manufacturerof ceramic fibre, has been announced. Outlook We anticipate the market conditions experienced in 2004 are likely to continuein 2005, namely that growth remains healthy in the Americas and Asia, whilstEuropean markets remain flat. As we have said before, we are not relying on market conditions to improvetrading performance. We will continue to take action to improve our cost baseand manufacturing productivity. We remain fully committed to our strategy ofdelivering on our profit improvement plan and achieving sustainable earningsgrowth. After another year of progress, Morgan Crucible is in a strongerfinancial position and better placed in its key markets for the pursuit ofprofitable longer-term growth. Warren D. KnowltonGroup Chief Executive Officer CONSOLIDATED PROFIT AND LOSS STATEMENT FOR THE YEAR ENDED 4 JANUARY 2005 ------------------------------------------------------------------------------ 2004 2003 Restated* Note Total Total £m £mTurnoverContinuing operations 762.8 748.7Discontinued operations 33.1 100.9 -------------------Group turnover 1 795.9 849.6Other operating income 1.8 3.3 ------------------- 797.7 852.9--------------------------------------------------------------------------------|Operating profit before goodwill amortisation and ||operating exceptionals ||Continuing operations 53.9 39.3 ||Discontinued operations (0.2) 3.3 || ------------------- || 53.7 42.6 || ||Operating exceptionals 2 (58.7) (67.3)|| --------------------||Operating (loss) before goodwill amortisation (5.0) (24.7)||Goodwill amortisation (6.4) (7.5)|-------------------------------------------------------------------------------- Operating (loss)Continuing operations (4.8) (28.3)Discontinued operations (6.6) (3.9) -------------------Group operating (loss) 1 (11.4) (32.2) Corporate exceptional itemsDiscontinued operations-Loss on sale of businesses (42.8) (21.3)Continuing operations-Disposal of fixed assets (3.8) (2.3)-Loss on partial disposal of businesses (8.2) (6.5) ------------------- 3 (54.8) (30.1) -------------------(Loss) on ordinary activities before interest and (66.2) (62.3)taxation Net finance charges and similar items (12.2) (15.7) -------------------(Loss) on ordinary activities before taxation (78.4) (78.0)Taxation (charge)/credit (including exceptional 4tax credit of £7.5 million(2003: £4.4 million credit)) (2.9) 2.4 ------------------- (Loss) on ordinary activities after taxation (81.3) (75.6)Equity minority interest (1.8) (1.4) ------------------- Net (loss) attributable to The Morgan Crucible (83.1) (77.0)Company plcPreference dividends on non-equity shares 5 - (1.2) ------------------- Retained (loss) for the year (83.1) (78.2) =================== (Loss)/earnings per share (Note 6) 2004 2003 Restated** Before goodwill After goodwill Before goodwill After goodwill amortisation amortisation amortisation amortisation - underlying 10.4p 8.1p 9.1p 6.0p- basic (27.3p) (29.5p) (28.9p) (31.9p)- diluted (29.5p) (31.9p)- underlying diluted 8.0p 6.0p * Restated comparatives for the results of operations discontinued in the year.** Restated comparatives for the impact of the Rights issue during the year. CONSOLIDATED AND COMPANY BALANCE SHEETS AS AT 4 JANUARY 2005 The Group The Company 2004 2003 2004 2003 Restated* Restated* £m £m £m £mFixed assetsIntangible assets - goodwill 93.8 112.2 - -Tangible assets 326.3 386.3 0.8 1.7Investment in subsidiary - - 793.5 811.8undertakingsOther investments 5.6 5.6 0.3 0.9 ----------------------------------------- 425.7 504.1 794.6 814.4Current assetsStocks 121.3 131.5 - --------------------------------------------------------------------------------|Debtors - due within one year 165.6 178.2 62.1 44.6|| - due after one year 23.8 28.5 5.5 7.5|-------------------------------------------------------------------------------Total debtors 189.4 206.7 67.6 52.1Cash at bank and in hand 56.3 57.9 18.1 17.2 ----------------------------------------- 367.0 396.1 85.7 69.3Creditors - amounts falling due 250.5 253.1 59.2 39.7within one year -----------------------------------------Net current assets 116.5 143.0 26.5 29.6 -----------------------------------------Total assets less current 542.2 647.1 821.1 844.0liabilities Creditors - amounts falling dueafter more than one year Amounts payable to subsidiary - - 256.7 231.9undertakingsBorrowings 137.5 230.6 78.9 166.0Grants for capital expenditure 0.4 0.6 - - ----------------------------------------- 137.9 231.2 335.6 397.9Provisions for liabilities and 163.9 156.1 14.9 8.3charges ----------------------------------------- 301.8 387.3 350.5 406.2 -----------------------------------------NET ASSETS 240.4 259.8 470.6 437.8 ========================================= Capital and reservesEquity shareholders' funds Called up share capital 72.5 58.0 72.5 58.0 Share premium account 84.0 44.4 84.0 44.4 Revaluation reserve 1.4 3.7 - - Merger reserve - - 91.6 91.6 Other reserves 1.4 1.4 - - Special reserve 22.1 6.0 - 41.7 Capital redemption reserve 28.0 28.0 28.0 28.0 Profit and loss account 18.0 105.7 192.2 171.8 ----------------------------------------- 227.4 247.2 468.3 435.5Non-equity shareholders' fundsCalled up share capital 2.3 2.3 2.3 2.3 ----------------------------------------- 229.7 249.5 470.6 437.8 -----------------------------------------Minority interestEquity 10.6 10.2 - -Non-equity 0.1 0.1 - - ----------------------------------------- 10.7 10.3 - - ----------------------------------------- CAPITAL EMPLOYED 240.4 259.8 470.6 437.8 ========================================= * The Group has complied with UITF Abstract 38 Accounting for ESOP trusts. This has resulted in the reclassification of shares held in employee trusts from investments to shareholders' funds and has been accounted for as a prior year adjustment. CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 4 JANUARY 2005 2004 2003 Note £m £m £m £mNet cash inflow from operating (a) 66.7 45.3activities Returns on investments and servicing of finance Interest received 1.5 2.3Interest paid (14.8) (15.8)Preference dividends paid - (2.3) -------- --------Net cash (outflow) from returnson investmentsand servicing of finance (13.3) (15.8) Taxation (2.3) (6.0) Capital expenditure andfinancial investmentsPurchase of tangible fixed assets (38.3) (34.3)Other proceeds on sale of 10.2 2.0tangible fixed assetsPurchase of investments (1.0) (0.6)Disposal of investments 0.4 0.9 -------- --------Net cash (outflow) from capitalexpenditure andfinancial investments (28.7) (32.0)Acquisitions and disposalsDeferred consideration for prior (0.4) (0.4)year acquisitionsDisposal of businesses 24.3 32.8 -------- --------Net cash inflow from 23.9 32.4acquisitions and disposals -------- -------- Cash inflow before use of liquidresources and financing 46.3 23.9 Management of liquid resources 0.5 10.3 FinancingIncrease in Ordinary share capital 54.1 -Redemption of Preference shares - (28.0)Purchase of shares for LTIP (3.3) -Increase in bank loans 7.7 274.2Repayment of bank loans (105.9) (270.5) -------- -------- (47.4) (24.3) -------- --------Net (decrease)/increase in cash (0.6) 9.9in the year------------------------------------------------------------------------------ RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET BORROWINGS Net (decrease)/increase in cash (0.6) 9.9in the yearCash flow from decrease/ 98.2 (3.7)(increase) in loansCash flow from (decrease) in deposits (0.5) (10.3) -------- --------Change in net borrowings 97.1 (4.1)resulting from cash flowsExchange movement 4.7 6.4 -------- -------- Movement in net borrowings 101.8 2.3during the periodOpening net borrowings (249.3) (251.6) -------- -------- Closing net borrowings (147.5) (249.3) ========= ======== CONSOLIDATED FREE CASH FLOW FOR THE YEAR ENDED 4 JANUARY 2005 2004 2003 Note £m £mNet cash inflow from operating activities (a) 66.7 45.3Net interest paid (13.3) (13.5)Taxation (2.3) (6.0) -------- --------Cash earnings 51.1 25.8Dividends paid - (2.3) -------- --------Post dividend cash flow 51.1 23.5Capital expenditure (38.3) (34.3)Proceeds on sale of tangible fixed assets 10.2 2.0 -------- --------Free cash flow 23.0 (8.8) ======== ========------------------------------------------------------------------------------ (a) Reconciliation of operating loss) to net cash inflow from operating activities 2004 2003 Contin- Discon- Contin- Discon- uing tinued Total uing tinued Total £m £m £m £m £m £m Operating (loss) (4.8) (6.6) (11.4) (28.3) (3.9) (32.2) Depreciation 33.9 1.6 35.5 38.2 5.2 43.4 Amortisation 6.2 0.2 6.4 6.5 1.0 7.5 of goodwill Loss on sale 0.4 0.1 0.5 0.2 0.4 0.6 of plant and machinery Exceptional 12.4 - 12.4 15.2 - 15.2 non-cash operating costs (Increase)/ (2.2) (0.9) (3.1) 5.3 (2.0) 3.3 decrease in stocks (Increase)/ (8.8) (2.0) (10.8) 13.0 0.3 13.3 decrease in debtors Increase/ 18.7 2.9 21.6 (14.8) (0.6) (15.4) (decrease) in creditors Increase/ 11.2 4.4 15.6 9.8 (0.2) 9.6 (decrease) in provisions -------------------------------------------------------- Net cash 67.0 (0.3) 66.7 45.1 0.2 45.3 inflow from operating activities ========================================================= CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES FOR THE YEAR ENDED4 JANUARY 2005 2004 2003 £m £mNet (loss) attributable to shareholders (83.1) (77.0)(Deficit) on write-off of revalued assets - (0.3)Return on investments 0.2 0.3Foreign currency translation (3.7) 4.5 ------- -------Total recognised (losses) relating to the year (86.6) (72.5) ======= ======= CONSOLIDATED RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS FOR THE YEAR ENDED 4 JANUARY 2005 2004 2003 Restated £m £mNet (loss) attributable to shareholders (83.1) (77.0)(Deficit) on write-off of revalued assets - (0.3)Return on investments 0.2 0.3Goodwill written back to profit and loss accounton disposals 16.1 11.8Dividends - (1.2) ------- ------- (66.8) (66.4)Issue of Ordinary shares 54.1 -Redemption of Preference shares - (28.0)Purchase of shares for LTIP (3.4) (0.7)Foreign currency translation (3.7) 4.5 ------- ------- Net decrease to shareholders' funds (19.8) (90.6)before UITF Abstract 38 adjustment) 249.5 340.1 ------- -------Closing shareholders' funds 229.7 249.5 ======= ======= NOTES TO THE ACCOUNTS 1. SEGMENTAL INFORMATION Net operating assets Turnover Operating profit/(loss) 2004 2003 2004 2003 2004 2003 Restated* Restated** Restated** £m £m £m £m £m £m Product group Carbon 104.4 142.8 196.1 192.1 19.6 19.2 Technical Ceramics 89.3 105.9 135.7 126.2 6.6 0.4 Insulating Ceramics 126.1 138.1 249.8 258.3 17.9 16.7 Magnetics 124.6 134.3 181.2 172.1 9.8 3.0 ---------------------------------------------------------------- Continuing 444.4 521.1 762.8 748.7 53.9 39.3 operations Discontinued - 45.6 33.1 100.9 (0.2) 3.3 operations Central assets 6.9 5.3 ---------------------------------------------------------------- 451.3 572.0 795.9 849.6 53.7 42.6 Operating (58.7) (67.3) exceptionals Goodwill (6.4) (7.5) amortisation ------- ------- Group operating (11.4) (32.2) (loss) ======= ======== The central assets include land and buildings, prepayments and other creditors of the non operating and holding companies. The discontinued operations in 2004 include the Auto and Consumer business and sale of the two remaining Coatings operations. The operating exceptionals of £58.7 million comprise, Carbon £16.5 million (2003: £22.0 million), Technical Ceramics £5.7 million (2003: £10.3 million), Insulating Ceramics £7.8 million (2003: £10.3 million), Magnetics £7.6 million (2003: £19.8 million), Holding Companies £14.9 million (2003: £4.9 million), and discontinued £6.2 million (2003: £nil). Goodwill amortisation comprises, Carbon £1.1 million (2003: £1.5 million), Technical Ceramics £1.2 million (2003: £1.5 million), Insulating Ceramics £0.5 million (2003: £0.5 million) and Magnetics £3.6 million (2003: £4.0 million). Geographical area The analysis shown below is based on the location of the contributing companies: Net operating assets Turnover Operating profit/(loss) 2004 2003 2004 2003 2004 2003 Restated* Restated** Restated** £m £m £m £m £m £m United Kingdom Sales in the UK 33.9 33.5 Sales overseas 41.9 40.9 -------------------- Total United 66.7 87.0 75.8 74.4 0.8 1.2 Kingdom Rest of Europe 184.0 217.1 345.7 321.5 22.5 19.2 The Americas 138.2 160.7 244.9 257.7 19.8 7.9 Far East and 51.6 52.0 83.0 81.9 8.3 8.6 Australasia Middle East and 3.9 4.3 13.4 13.2 2.5 2.4 Africa ---------------------------------------------------------------- 444.4 521.1 762.8 748.7 53.9 39.3 Discontinued - 45.6 33.1 100.9 (0.2) 3.3 operations Central assets 6.9 5.3 ---------------------------------------------------------------- 451.3 572.0 795.9 849.6 53.7 42.6 Operating (58.7) (67.3) exceptionals Goodwill (6.4) (7.5) amortisation ------- -------- Group operating (loss) (11.4) (32.2) ======= ======== * Restated comparatives for UITF Abstract 38 Accounting for ESOP trusts, £0.7 million. ** Restated comparatives for the results of operations discontinued in the year. Turnover 2004 2003 Restated £m £m The analysis shown below is based on the location of the customer: United Kingdom 45.7 49.0 Rest of Europe 316.7 309.3 The Americas 267.6 254.2 Far East and Australasia 113.4 116.5 Middle East and Africa 19.4 19.7 ------------------ 762.8 748.7 Discontinued operations 33.1 100.9 ------------------ 795.9 849.6 ================== 2. OPERATING EXCEPTIONALS The Group has incurred and provided for the costs of restructuring, £47.5 million (2003: £60.8 million), and in respect of the settlement of the US class actions and associated legal costs, £11.2 million (2003: £6.5 million). 3. CORPORATE EXCEPTIONAL ITEMS The corporate exceptional items relating to the sale of businesses, £42.8 million (2003: £21.3 million), include disposals of the Auto and Consumer business and the sale of the two remaining Coatings operations. The loss on partial disposal of businesses, £8.2 million (2003: £6.5 million), includes the disposal of a small, discrete manufacturing facility in the U.S. The goodwill written off as part of the business disposals is £25.8 million (2003: £24.2 million). Disposal of fixed assets, £3.8 million (2003: £2.3 million), relates to various property disposals. 4. TAXATION CHARGE/(CREDIT) 2004 2003 £m £m United Kingdom corporation tax: Corporation tax on (loss) for the period at 30% - (0.4) (2003: 30%) Adjustment in respect of prior years 0.2 (4.5) --------------- 0.2 (4.9) Overseas current tax 6.0 3.1 --------------- Total current tax 6.2 (1.8) =============== Deferred tax: United Kingdom (2.9) - Overseas (0.4) (0.6) --------------- Total deferred tax (3.3) (0.6) =============== --------------- Total taxation 2.9 (2.4) =============== Overseas tax includes a credit of £3.1 million (2003: £2.2 million credit) arising on total exceptional losses of £80.2 million (2003: losses of £66.6 million). United Kingdom tax includes a tax credit of £4.4 million (2003: £2.2 million credit) arising on total exceptional losses of £33.3 million (2003: £30.8 million). Factors affecting the tax charge/(credit) for the period: The tax assessed for the period is higher than the standard rate of corporation tax in the UK. The differences are explained below. 2004 2003 £m £m (Loss) on ordinary activities before taxation (78.4) (78.0) Taxation on (loss) on ordinary activities at standard rate of UK corporation tax of 30% (2003 : 30%) (23.5) (23.4) Difference comprises: Asset write offs and other non deductible items 23.2 11.3 Goodwill amortisation not deductible for tax purposes 1.9 2.3 Overseas losses not utilised 2.8 10.8 Effect of movement of timing differences 3.3 0.6 Other, including adjustments in respect of prior years (1.5) (3.4) ----------------- Current tax charge/(credit) for the period 6.2 (1.8) ================= 5. DIVIDENDS 2004 2003 £m £m Preference dividends on non-equity shares - 1.2 ================= 6. (LOSS)/EARNINGS PER ORDINARY SHARE a. Basic and underlying (loss)/earnings per share 2004 2003 Restated* Before goodwill After goodwill Before goodwill After goodwill amortisation amortisation amortisation amortisation £m £m £m £m(Loss) after tax (76.7) (83.1) (69.5) (77.0)and minorityinterestPreference - - (1.2) (1.2)dividend ----------------------------------------------------------------Basic (loss) (76.7) (83.1) (70.7) (78.2)Adjusted by all post 106.0 106.0 93.0 93.0tax exceptional items ----------------------------------------------------------------Underlying earnings 29.3 22.9 22.3 14.8 ===============================================================Weighted average 281,370,979 244,941,539number ofOrdinary sharesBasic (loss) per (27.3p) (29.5p) (28.9p) (31.9p)shareUnderlying earnings 10.4p 8.1p 9.1p 6.0pper share The Directors have disclosed an underlying earnings per share as, in theiropinion, this gives a better indication of the underlying performance of the Group and assists comparison with the results of earlier years. * Restated comparatives for the impact of the Rights issue during the year. b. Diluted earnings 2004 2003 Restated £m £mBasic and diluted (loss) (83.1) (78.2)Adjusted by all post tax exceptional 106.0 93.0items --------------------------Underlying diluted earnings 22.9 14.8 ========================== Weighted average number of Ordinary 281,370,979 244,941,539sharesDilutive effect of share option schemes 6,652,880 1,770,766 288,023,859 246,712,305 ==========================Diluted (loss) per share (29.5p) (31.9p)Diluted underlying earnings per share 8.0p 6.0p 7. PENSION COSTS The Group accounts for pension costs in accordance with SSAP 24: Accounting for Pension Costs or local best practice. Where local best practice is followed the resulting charge is not materially different from the charge which would arise under SSAP 24. The transitional disclosures required by FRS 17: Post Retirement Benefits will be made in the financial statements. These show that had FRS 17 been fully adopted in the year, the liability provided for on the balance sheet as at 4 January 2005 would increase by £81.4 million (2003 : £43.2 million). The financial information contained in this Preliminary Statement does notamount to statutory accounts for the Company's financial years ended 4 January2005 and 4 January 2004. It has been approved by the Board of Directors on 22February 2005 and has been prepared on a consistent basis with the accountingpolicies set out in the Group's 2003 annual report and accounts. The financialinformation for 2003 is derived from the statutory accounts for the year ended 4January 2004 which have been filed with the Registrar of Companies. The auditorshave reported on the 2003 accounts; their report was unqualified and did notcontain a statement under Section 237 (2) or (3) of the Companies Act 1985. Thestatutory accounts for 2004 will be finalised on the basis of the financialinformation presented by the directors in this preliminary statement and will bedelivered to the Registrar of Companies following the Annual General Meeting ofthe Company in April 2005. This preliminary statement will be dispatched to all registered holders ofOrdinary shares and First and Second Preference shares. Copies of this statementmay be obtained from the Secretary at the Registered Office of the Company,Quadrant, 55-57 High Street, Windsor, Berkshire, SL4 1LP. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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