THE MORGAN CRUCIBLE COMPANY PLC

PRELIMINARY ANNOUNCEMENT 2002

 

 

 

CONSOLIDATED AND COMPANY BALANCE SHEET AS AT 4 JANUARY 2003

 

 

 

The Group 

The Company 

 

 

 

Restated* 

 

Restated* 

 

 

2002

2001 

2002 

2001 

 

 

m

m 

m 

m 

Fixed assets

 

 

 

 

 

Intangible assets - goodwill

 

130.5 

138.4 

Tangible assets

 

433.6 

490.3 

1.7 

1.9 

Investment in subsidiary undertakings

 

908.5 

888.4 

Investment in associated undertakings

 

1.2 

1.2 

Other investments

 

6.0 

21.9 

1.2 

16.0 

 

 

571.3 

651.8 

911.4 

906.3 

Current assets

 

 

 

 

 

Stocks

 

156.6 

185.0 

Debtors - due within one year

 

188.2 

199.4 

29.1 

23.5 

- due after one year

 

22.9 

23.8 

8.2 

8.3 

Total debtors

 

211.1 

223.2 

37.3 

31.8 

Cash at bank and in hand

 

60.5 

72.7 

17.1 

12.4 

 

 

428.2 

480.9 

54.4 

44.2 

Creditors - amounts falling due within one year

 

331.5 

321.6 

115.1 

91.7 

 

 

 

 

 

 

Net current assets/(liabilities)

 

96.7 

159.3 

(60.7)

(47.5)

 

 

 

 

 

 

Total assets less current liabilities

 

668.0 

811.1 

850.7 

858.8 

 

 

 

 

 

 

Creditors - amounts falling due after more than one year

 

 

 

 

 

Amounts payable to subsidiary undertakings

 

218.6 

203.0 

Borrowings

 

177.1 

255.2 

142.5 

172.4 

Exchangeable redeemable preference shares

 

1.5 

4.5 

Grants for capital expenditure

 

0.8 

1.5 

0.6 

 

 

179.4 

261.2 

361.1 

376.0 

Provisions for liabilities and charges

 

138.2 

128.4 

8.8 

8.3 

 

 

317.6 

389.6 

369.9 

384.3 

 

 

 

 

 

 

NET ASSETS

 

350.4 

421.5 

480.8 

474.5 

 

 

 

 

 

 

Capital and reserves

 

 

 

 

 

Equity shareholders' funds

 

 

 

 

 

Called up share capital

 

58.0 

58.0 

58.0 

58.0 

Share premium account

 

44.4 

44.4 

44.4 

44.4 

Revaluation reserve

 

7.4 

10.4 

Merger reserve

 

91.6 

91.6 

Other reserves

 

1.4 

1.4 

Special reserve

 

41.7 

41.7 

Profit and loss account

 

198.6 

265.8 

214.8 

208.5 

 

 

309.8 

380.0 

450.5 

444.2 

Non-equity shareholders' funds

 

 

 

 

 

Called up share capital

 

30.3 

30.3 

30.3 

30.3 

 

 

340.1 

410.3 

480.8 

474.5 

Minority interest

 

 

 

 

 

Equity

 

10.2 

11.1 

Non-equity

 

0.1 

0.1 

 

 

10.3 

11.2 

 

 

 

 

 

 

CAPITAL EMPLOYED

 

350.4 

421.5 

480.8 

474.5 

* Restated comparatives for adoption of FRS 19.

 


 

CONSOLIDATED CASHFLOW STATEMENT FOR THE YEAR ENDED 4 JANUARY 2003

 

 

 

2002 

 

2001 

 

 

m 

m 

m 

Net cash inflow from operating activities

 

 

75.2 

 

109.4 

 

 

 

 

 

 

Returns on investments and servicing of finance

 

 

 

 

 

Interest received

 

2.7 

 

3.2 

 

Interest paid

 

(16.1)

 

(22.9)

 

Preference dividends paid

 

(2.1)

 

(2.1)

 

Net cash (outflow) from returns on investments

 

 

 

 

 

and servicing of finance

 

 

(15.5)

 

(21.8)

 

 

 

 

 

 

Taxation

 

 

(10.8)

 

(14.1)

 

 

 

 

 

 

Capital expenditure and financial investments

 

 

 

 

 

Purchase of tangible fixed assets

 

(35.0)

 

(57.6)

 

Other proceeds on sale of tangible fixed assets

 

8.4 

 

13.6 

 

Purchase of investments

 

(5.8)

 

(5.7)

 

Disposal of investments

 

20.8 

 

0.4 

 

Net cash (outflow) from capital expenditure and

 

 

 

 

 

financial investments

 

 

(11.6)

 

(49.3)

Acquisitions and disposals

 

 

 

 

 

Acquisition of subsidiary undertakings

 

(0.1)

 

(41.5)

 

Net cash acquired

 

 

(0.6)

 

Deferred consideration for prior year acquisitions

 

(3.4)

 

(3.8)

 

Disposal of businesses

 

(0.7)

 

(3.8)

 

Net cash (outflow) from acquisitions and disposals

 

 

(4.2)

 

(49.7)

 

 

 

 

 

 

Equity dividends paid

 

 

(17.2)

 

(36.9)

 

 

 

 

 

 

Cash inflow/(outflow) before use of liquid resources and financing

 

 

15.9 

 

(62.4)

 

 

 

 

 

 

Management of liquid resources

 

 

3.4 

 

24.1 

 

 

 

 

 

 

Financing

 

 

 

 

 

Increase in share capital

 

 

0.1 

 

Increase in bank loans

 

26.5 

 

89.6 

 

Repayment of bank loans

 

(49.6)

 

(42.4)

 

Repurchase of exchangeable redeemable preference shares

 

(3.9)

 

(4.1)

 

 

 

 

(27.0)

 

43.2 

 

 

 

 

 

 

Net (decrease)/increase in cash in the year

 

 

(7.7)

 

4.9 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of net cashflow to

 

 

 

 

 

movement in net borrowings

 

 

 

 

 

Net (decrease)/increase in cash in the year

 

 

(7.7)

 

4.9 

Cashflow from decrease/(increase) in loans

 

 

23.1 

 

(47.2)

Cashflow from (decrease) in deposits

 

 

(3.4)

 

(24.1)

Cashflow from repurchase of exchangeable redeemable

 

 

 

 

 

preference shares

 

 

3.9 

 

4.1 

Change in net borrowings resulting from cashflows

 

 

15.9 

 

(62.3)

Issue of exchangeable redeemable preference shares

 

 

(0.9)

 

(1.1)

Bank loans acquired with acquisitions

 

 

(0.5)

 

(0.7)

Bank loans reduced with disposals

 

 

0.2 

 

8.6 

Exchange movement

 

 

9.8 

 

(0.6)

 

 

 

 

 

 

Movement in net borrowings during the period

 

 

24.5 

 

(56.1)

Opening net borrowings

 

 

(276.1)

 

(220.0)

 

 

 

 

 

 

Closing net borrowings

 

 

(251.6)

 

(276.1)

 

CONSOLIDATED FREE CASHFLOW

 

 

2002 

2001 

 

Note

m 

m 

Net cash inflow from operating activities

(a)

75.2 

109.4 

Net interest paid

 

(13.4)

(19.7)

Taxation

 

(10.8)

(14.1)

Cash earnings

 

51.0 

75.6 

Dividends paid

 

(19.3)

(39.0)

Post dividend cashflow

 

31.7 

36.6 

Capital expenditure

 

(35.0)

(57.6)

Proceeds on sale of tangible fixed assets

 

8.4 

13.6 

Free cashflow

 

5.1 

(7.4)

 

 

 

 

 

(a)

Reconciliation of operating (loss)/profit to net cash inflow from operating activities

2002

2001

Contin-

Discon-

 

Contin-

Discon-

 

 

 

uing 

tinued 

Total 

uing 

tinued 

Total 

 

 

m 

m 

m 

m 

m 

m 

 

Operating (loss)/profit

(30.6)

(0.3)

(30.9)

55.8 

0.8 

56.6 

 

Depreciation

46.6 

0.1 

46.7 

45.9 

2.1 

48.0 

 

Amortisation of goodwill

7.7 

7.7 

7.7 

7.7 

 

Loss on sale of plant and machinery

0.4 

0.4 

0.3 

0.3 

 

Exceptional operating costs

17.2 

17.2 

 

(Increase)/decrease in stocks

18.6 

(1.0)

17.6 

6.5 

0.2 

6.7 

 

(Increase)/decrease in debtors

3.5 

0.5 

4.0 

20.8 

1.7 

22.5 

 

Increase/(decrease) in creditors

(2.8)

(0.1)

(2.9)

(31.9)

(1.6)

(33.5)

 

Increase/(decrease) in provisions

15.4 

15.4 

0.6 

0.5 

1.1 

 

Net cash inflow from operating activities

76.0 

(0.8)

75.2 

105.7 

3.7 

109.4 

 

CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES

 

 

2002 

2001 

 

 

m 

m 

 

Net (loss)/profit attributable to shareholders

(59.4)

5.9 

 

Deficit on revaluation of investments

(0.3)

 

Foreign currency translation

(13.2)

(1.4)

 

Total recognised gains and (losses) relating to the year

(72.9)

4.5 

 

FRS 19 Prior year adjustment

(21.8)

 

 

Total recognised gains and (losses) since last annual report

(94.7)

 

 

CONSOLIDATED reconciliation of Movement in shareholders' funds

 

 

2002 

2001 

 

 

 

Restated 

 

 

m 

m 

 

Net profit attributable to shareholders

(59.4)

5.9 

 

Repayment of capital investment

(0.2)

 

Deficit on revaluation of investments

(0.3)

 

Goodwill written back to profit and loss

4.8 

 

Dividends

(2.1)

(19.3)

 

 

(57.0)

(13.6)

 

New share capital

0.1 

 

FRS 19 prior year adjustment

(21.8)

 

Foreign currency translation

(13.2)

(1.4)

 

 

 

 

 

Net decrease to shareholders' funds

(70.2)

(36.7)

 

Opening shareholders' funds (originally 432.1 million

 

 

 

before FRS 19 adjustment)

410.3 

447.0 

 

Closing shareholders' funds

340.1 

410.3 

 

NOTES TO THE ACCOUNTS

1.

SEGMENTAL INFORMATION

 

 

 

 

 

 

 

 

Net Operating Assets

Turnover

Operating profit

 

 

2002 

2001 

2002 

2001 

2002 

2001 

 

 

 

Restated 

 

 

 

Restated 

 

 

 

Product Group

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Electrical Carbon

141.8 

175.4 

199.9 

210.0 

14.6 

17.0 

 

Magnetics

168.6 

181.6 

186.2 

215.1 

(2.9)

5.8 

 

Engineered Carbon

94.8 

112.8 

111.3 

127.3 

3.8 

8.4 

 

Technical Ceramics

108.2 

104.9 

125.2 

149.9 

5.0 

13.5 

 

Insulating Ceramics

152.1 

190.9 

256.8 

287.7 

13.9 

18.8 

 

Continuing operations

665.5 

765.6 

879.4 

990.0 

34.4 

63.5 

 

Discontinued operations

 

 

0.9 

34.5 

(0.3)

0.8 

 

Central assets

8.8 

11.7 

 

 

 

 

 

 

674.3 

777.3 

880.3 

1,024.5 

34.1 

64.3 

 

Operating exceptionals

 

 

 

 

(57.3)

 

Goodwill amortisation

 

 

 

 

(7.7)

(7.7)

 

Group operating profit

 

 

 

 

(30.9)

56.6 

 

 

 

 

 

 

 

 

 

The central assets include land and buildings, prepayments and other creditors of the non operating and holding companies. The discontinued operation in 2002 is Barcelona.

 

The operating exceptionals of 57.3 million comprise, Electrical Carbon 6.9 million, Magnetics 7.8 million, Engineered Carbon 7.2 million, Technical Ceramics 5.2 million, Insulating Ceramics 17.9 million, and 12.3 million referred to in note 2.

 

Goodwill comprises, Electrical Carbon 1.0 million, Magnetics 4.1 million, Engineered Carbon 0.5 million, Technical Ceramics 0.9 million and Insulating Ceramics 1.2 million.

 

 

 

 

 

 

 

 

 

Geographical Area

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The analysis shown below is based on the location of the contributing companies:

 

 

 

Net Operating Assets

 

Turnover

Operating profit

 

 

2002 

2001 

2002 

2001 

2002 

2001 

 

 

 

Restated 

 

 

 

Restated 

 

 

m 

m 

m 

m 

m 

m 

 

United Kingdom

 

 

 

 

 

 

 

Sales in the UK

 

 

41.2 

48.5 

 

 

 

Sales overseas

 

 

42.6 

47.8 

 

 

 

Total United Kingdom

98.1 

102.2 

83.8 

96.3 

2.2 

4.4 

 

Rest of Europe

241.8 

258.4 

320.2 

342.8 

11.9 

26.3 

 

The Americas

265.8 

340.0 

380.5 

460.9 

12.2 

24.9 

 

Far East and Australasia

55.4 

61.6 

83.5 

79.3 

6.4 

6.0 

 

Middle East and Africa

4.4 

3.4 

11.4 

10.7 

1.7 

1.9 

 

 

665.5 

765.6 

879.4 

990.0 

34.4 

63.5 

 

Discontinued operations

 

 

0.9 

34.5 

(0.3)

0.8 

 

Central assets

8.8 

11.7 

 

 

 

 

 

 

674.3 

777.3 

880.3 

1,024.5 

34.1 

64.3 

 

Operating exceptionals

 

 

 

 

(57.3)

 

Goodwill amortisation

 

 

 

 

(7.7)

(7.7)

 

Group operating profit

 

 

 

 

(30.9)

56.6 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

1.

SEGMENTAL INFORMATION (continued)

 

 

 

 

 

Turnover 

 

 

 

 

 

 

2002 

2001 

 

 

 

 

 

 

 

Restated 

 

 

 

 

 

 

 

The analysis shown below is based on the location of the customer:

 

 

 

 

 

 

 

 

 

 

 

 

United Kingdom

 

 

 

 

65.3 

73.7 

 

Rest of Europe

 

 

 

 

301.0 

341.4 

 

The Americas

 

 

 

 

372.5 

433.7 

 

Far East and Australasia

 

 

 

 

122.8 

123.0 

 

Middle East and Africa

 

 

 

 

17.8 

18.2 

 

 

 

 

 

 

879.4 

990.0 

 

Discontinued operations

 

 

 

 

0.9 

34.5 

 

 

 

 

 

 

880.3 

1,024.5 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2.

Operating Exceptionals

 

 

 

 

 

 

 

The Group has incurred and provided for the costs of restructuring, 45.0 million, and the costs and fines associated with the final Department of Justice enquiry in the USA, 12.3 million.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3.

CORPORATE exceptional items

 

 

 

 

 

 

 

 

 

 

 

The corporate exceptional items relating to the sale of businesses, 11.6 million, include two main disposals of the Barcelona, and Thermal Ceramics (New Zealand) businesses and the disposal of the Kesteren operation. The goodwill written-off as part of the business disposals is 3.5 million. The 3.4 million relates to various property disposals.

 

 

4.

Taxation CHARGE/(CREDIT)

 

 

 

 

 

 

 

 

2002

2001

 

 

 

 

m

m

 

United Kingdom corporation tax:

 

 

 

 

 

Corporation tax on (loss)/profit

 

 

 

 

 

for the period at 30% (2001 : 30%)

 

 

6.1 

10.7 

 

Adjustment to prior years

 

 

(1.9)

(0.8)

 

 

 

 

4.2 

9.9 

 

Overseas current tax

 

 

2.7 

9.0 

 

Total current tax

 

 

6.9 

18.9 

 

 

 

 

 

 

 

Deferred tax

 

 

 

 

 

United Kingdom

 

 

0.3 

0.3 

 

Overseas

 

 

(7.7)

(6.7)

 

Total deferred tax

 

 

(7.4)

(6.4)

 

 

 

 

 

 

 

Total taxation

 

 

(0.5)

12.5 

 

 


 

4.

Taxation CHARGE/(CREDIT) (Continued)

 

 

Overseas tax includes a credit of 5.7 million (2001: 0.1 million debit) arising on total exceptional losses of 58.5 million (2001: losses of 15.0 million).

United Kingdom tax includes a tax credit of 1.2 million (2001: 0.1 million credit) arising on total exceptional losses of 13.8 million (2001: 2.6 million).

 

Factors affecting the tax charge 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.

 

 

 

 

2002

2001

 

 

 

 

m

m

 

(Loss)/profit on ordinary activities before taxation

 

 

(58.7)

19.8 

 

 

 

 

 

 

 

Taxation on (loss)/profit on ordinary activities at standard

 

 

 

 

 

rate of UK corporation tax of 30% (2001: 30%)

 

 

(17.6)

5.9 

 

 

 

 

 

 

 

Difference comprises:

 

 

 

 

 

Exceptional items not deductible for tax purposes

 

 

9.7 

5.3 

 

Goodwill amortisation not deductible for tax purposes

 

 

2.3 

2.3 

 

Overseas losses not utilised

 

 

4.0 

1.7 

 

Overseas rate differences

 

 

1.9 

1.5 

 

Effect of reversal of timing differences

 

 

7.4 

0.6 

 

Other

 

 

(0.8)

1.6 

 

Current tax charge for the period

 

 

6.9 

18.9 

 

 

 

 

 

 

 

 

 

 

 

 

5

Dividends

 

 

2002

2001

 

 

 

 

m

m

 

Interim: 0.0p per Ordinary share (2001: 7.4p)

 

 

17.2 

 

Proposed final: 0.0p per Ordinary share (2001: 0.0p)

 

 

 

Total: 0.0p per Ordinary share (2001: 7.4p)

 

 

17.2 

 

Preference dividends on non-equity shares

 

 

2.1 

2.1 

 

 

 

 

2.1 

19.3 

 

6

(loss)/Earnings per Ordinary share

 

 

 

 

a.

Basic and underlying (loss)/earnings per share

 

2002

 

2001

 

 

Before goodwill amortisation

After goodwill amortisation

Before goodwill amortisation

After goodwill amortisation

 

 

m

m

m

m

 

(Loss)/profit after tax and minority interest

(51.7)

(59.4)

13.6 

5.9 

 

Preference dividend

(2.1)

(2.1)

(2.1)

(2.1)

 

Basic (loss)/earnings

(53.8)

(61.5)

11.5 

3.8 

 

Adjusted by all post tax exceptional items

65.4 

65.4 

17.6 

17.6 

 

Underlying earnings

11.6 

3.9 

29.1 

21.4 

 

 

 

 

 

 

 

Weighted average number of Ordinary shares

 

231,990,704

 

231,958,292

 

 

 

 

 

 

 

Basic (loss)/earnings per share

(23.2p)

(26.5p)

5.0p 

1.6p 

 

Underlying earnings per share

5.0p 

1.7p

12.5p 

9.2p 

 

 

 

 

 

 

 

The Directors have disclosed an underlying (loss)/earnings per share as, in their opinion, this gives a better indication of the underlying performance of the Group and assists comparison with the results of earlier years.

 

 


 

6

(loss)/Earnings per Ordinary share (Continued)

 

 

b.

Diluted earnings

 

 

2002

2001

 

 

 

 

m

m

 

Basic (loss)/earnings

 

 

(61.5)

3.8 

 

Preference dividend to be eliminated on

 

 

 

 

 

conversion of preference shares

 

 

 

Diluted (loss)/earnings

 

 

(61.5)

3.8 

 

Adjusted by all post tax exceptional items

 

 

65.4 

17.6 

 

Underlying diluted earnings

 

 

3.9 

21.4 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of Ordinary shares

 

 

231,990,704 

231,958,292 

 

Dilutive effect of share option schemes

 

 

2,718,929 

292,752 

 

 

 

 

234,709,633 

232,251,044 

 

Diluted (loss)/earnings per share

 

 

(26.2p)

1.6p 

 

Diluted underlying earnings per share

 

 

1.7p 

9.2p