REG - Melrose Ind Plc - Half Yearly Report <Origin Href="QuoteRef">MRON.L</Origin> - Part 3
28/07/2015 07:02
- Part 3: For the preceding part double click ID:nRSb2372Ub
69.8 38.8 186.4
Attributable to:
Owners of the parent 69.3 38.5 185.6
Non-controlling interests 0.5 0.3 0.8
69.8 38.8 186.4
(1) Restated to include the results of Bridon and the Elster disposal group (note 1) within discontinued operations.
(2) Restated to include the results of the Elster disposal group (note 1) within discontinued operations.
(3) Before exceptional costs, exceptional income and intangible asset amortisation.
(4) Includes exceptional tax and tax on exceptional items and intangible asset amortisation.
Revenue from discontinued operations comprises £370.6 million in relation to Gas (period ended 30 June 2014: £325.5
million, year ended 31 December 2014: £687.0 million), £98.9 million in relation to Electricity (period ended 30 June 2014:
£87.1 million, year ended 31 December 2014: £215.7 million), £71.8 million in relation to Water (period ended 30 June 2014:
£81.0 million, year ended 31 December 2014: £147.5 million) and £nil in relation to Bridon (period ended 30 June 2014:
£122.8 million, year ended 31 December 2014: £208.0 million).
Headline operating profit from discontinued operations comprises £93.3 million profit in relation to Gas (period ended 30
June 2014: £76.9 million, year ended 31 December 2014: £161.4 million), £4.7 million profit in relation to Electricity
(period ended 30 June 2014: £4.0 million, year ended 31 December 2014: £22.8 million), £11.9 million profit in relation to
Water (period ended 30 June 2014: £13.3 million, year ended 31 December 2014: £23.4 million), £0.9 million loss in relation
to Elster central (period ended 30 June 2014: £1.1 million, year ended 31 December 2014: £2.1 million), £nil profit in
relation to Bridon (period ended 30 June 2014: £13.5 million, year ended 31 December 2014: £22.6 million) and a £3.2
million loss in relation to discontinued corporate costs (period ended 30 June 2014: £4.1 million, year ended 31 December
2014: £7.6 million).
The net credit on exceptional items of £11.8 million includes the release of £29.2 million of items previously booked as
fair value adjustments following the successful resolution of certain warranty and legal issues inherited with the
acquisition of Elster, comprising £24.6 million of provisions and £4.6 million of trade and other payables. These are
offset by an accelerated charge on long term incentive plans of £5.4 million and £12.0 million of restructuring costs
primarily in relation to the Gas segment which includes the integration of Eclipse.
The charge in relation to exceptional items for the year ended 31 December 2014 of £28.3 million is comprised of £26.0
million in relation to restructuring costs, weighted towards the Gas segment and £2.3 million of acquisition costs in
relation to the acquisition of Eclipse. Of these costs, £14.6 million of restructuring costs had been incurred by 30 June
2014.
Assets held for sale
The major classes of assets and liabilities of the Elster disposal group, which are classified as held for sale at 30 June
2015, are as follows:
30 June 2015£m
Goodwill and other intangible assets 1,989.2
Property, plant and equipment 90.7
Interests in joint ventures 10.7
Deferred tax assets 61.9
Derivative financial assets 1.0
Inventories 128.7
Trade and other receivables 173.4
Total assets classified as held for sale 2,455.6
Trade and other payables (222.3)
Derivative financial liabilities (3.3)
Current tax (62.2)
Deferred tax liabilities (229.3)
Retirement benefit obligations (133.8)
Provisions (86.4)
Total liabilities associated with assets classified as held for sale (737.3)
Net assets classified as held for sale 1,718.3
9. Provisions
Surplus leaseholdproperty costs£m Environmental and legal costs£m Incentive plan related£m Warranty related costs£m Other£m Total£m
At 1 January 2015 restated(1) 11.0 51.0 26.6 50.8 33.4 172.8
Utilised (1.7) (1.7) (10.0) (10.9) (16.7) (41.0)
Net charge to headline(2) operating profit - (1.0) 2.5 (1.2) 0.2 0.5
Net release to exceptional items (3.0) (15.0) 5.4 (4.7) 13.0 (4.3)
Unwind of discount 0.1 - 0.5 - - 0.6
Exchange differences - (0.8) - (2.0) (1.7) (4.5)
Transfer to held for sale (0.5) (12.8) (24.0) (29.1) (20.0) (86.4)
At 30 June 2015 5.9 19.7 1.0 2.9 8.2 37.7
Current 2.3 3.8 - 1.6 7.7 15.4
Non-current 3.6 15.9 1.0 1.3 0.5 22.3
5.9 19.7 1.0 2.9 8.2 37.7
(1) Restated to reflect the completion of the acquisition accounting of Eclipse (note 1).
(2) Before exceptional costs, exceptional income and intangible asset amortisation.
The provision for surplus leasehold property costs represents the estimated net payments payable over the term of these
leases together with any dilapidation costs. This is expected to result in cash expenditure over the next one to four
years.
Environmental and legal costs provisions relate to the estimated remediation costs of pollution, soil and groundwater
contamination at certain sites and estimated future costs and settlements in relation to legal claims. Due to their nature,
it is not possible to predict precisely when these provisions will be utilised.
Incentive plan related provisions are in respect of long-term incentive plans for divisional senior management, expected to
result in cash expenditure in the next five years.
The provision for warranty related costs represents the best estimate of the expenditure required to settle the Group's
obligations. Warranty terms are, on average, between one and five years.
Other provisions relate primarily to costs that will be incurred in respect of restructuring programmes, usually resulting
in cash spend within one year.
Where appropriate, provisions have been discounted using a discount rate of 3% (31 December 2014: 3%).
10. Retirement benefit obligations
In accordance with IFRS 5: "Non-current assets held for sale and discontinued operations", £133.8 million of net
liabilities on defined benefit pension plans within Elster, the FKI UK Pension Plan and the McKechnie UK Pension Plan are
shown within liabilities directly associated with assets classified as held for sale at 30 June 2015 following the
agreement to sell the Elster disposal group.
The remaining defined benefit obligations as at 30 June 2015 in the UK relate to the Brush Group (2013) Pension Plan and in
the US relate to the FKI US Pension Plans. The amount recognised in the Balance Sheet in respect of these plans is as
follows:
30 June 2015 31 December 2014
UKPlans USPlans Total UKPlans US Plans Total
£m £m £m £m £m £m
Present value of defined benefit obligations (217.4) (183.1) (400.5) (225.8) (195.2) (421.0)
Fair value of plan assets 198.7 167.7 366.4 197.4 176.5 373.9
Net liabilities (18.7) (15.4) (34.1) (28.4) (18.7) (47.1)
The valuations of these plans have been updated at 30 June 2015 by independent actuaries to reflect updated assumptions
regarding discount rates, inflation rates and asset values. These assumptions were as follows:
30 June 2015 31 December 2014
UKPlans US Plans UKPlans USPlans
% p.a. % p.a. % p.a. % p.a.
Rate of increase in salaries N/A N/A N/A N/A
Rate of increase in pensions in payment 3.10 N/A 3.00 N/A
Discount rate 3.80 4.30 3.50 3.90
RPI inflation assumptions 3.20 N/A 3.10 N/A
In addition, the defined benefit plan assets and liabilities have been updated to reflect the contributions made to the
defined benefit plans during the period and the benefits earned during the period to 30 June 2015.
11. Financial instruments
The table below sets out the Group's accounting classification of each category of financial assets and liabilities and
their fair values as at 30 June 2015, 31 December 2014 and 30 June 2014:
Current£m Non-current£m Total£m
30 June 2015
Financial assets
Cash and cash equivalents 45.6 - 45.6
Net trade receivables 53.5 - 53.5
Derivative financial assets:
Foreign currency forward contracts 2.3 - 2.3
Interest rate swaps 5.3 - 5.3
Net assets held for sale 1,718.3 - 1,718.3
Financial liabilities
Interest-bearing loans and borrowings (1.2) (786.7) (787.9)
Derivative financial liabilities:
Foreign currency forward contracts (4.5) - (4.5)
Interest rate swaps (3.0) (2.2) (5.2)
Other financial liabilities (91.7) - (91.7)
31 December 2014
Financial assets
Cash and cash equivalents 70.5 - 70.5
Net trade receivables 220.2 3.3 223.5
Derivative financial assets:
Foreign currency forward contracts 3.9 - 3.9
Interest rate swaps - 1.2 1.2
Financial liabilities
Interest-bearing loans and borrowings (0.9) (570.9) (571.8)
Derivative financial liabilities:
Foreign currency forward contracts (8.0) (0.2) (8.2)
Interest rate swaps (2.1) - (2.1)
Other financial liabilities (308.9) (0.4) (309.3)
30 June 2014
Financial assets
Cash and cash equivalents 115.3 - 115.3
Net trade receivables 237.1 0.3 237.4
Derivative financial assets:
Foreign currency forward contracts 2.8 0.1 2.9
Interest rate swaps 0.6 2.7 3.3
Financial liabilities
Interest-bearing loans and borrowings - (865.9) (865.9)
Derivative financial liabilities:
Foreign currency forward contracts (5.1) (0.4) (5.5)
Other financial liabilities (353.9) (1.3) (355.2)
The fair value of the derivative financial instruments are derived from inputs other than quoted prices that are observable
for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices) and they are
therefore categorised within level 2 of the fair value hierarchy set out in IFRS 13: "Fair value measurement". The Group's
policy is to recognise transfers into and out of the different fair value hierarchy levels at the date of the event or
change in circumstances that caused the transfer to occur. There have been no transfers between levels in the period.
12. Notes to the Cash Flow Statement
6 months Restated(1)6 months Restated(2)year ended 31 December
ended30 June ended30 June 2014£m
2015£m 2014£m
Reconciliation of headline(3)operating profit to cash generated by continuing operations
Headline(3) operating profit from continuing operations 6.1 26.0 48.1
Adjustments for:
Depreciation of property, plant and equipment 3.7 3.3 6.6
Amortisation of computer software and development costs 0.2 0.2 0.6
Restructuring costs paid and movements in other provisions (7.9) (0.6) (5.1)
Operating cash flows before movements in working capital 2.1 28.9 50.2
(Increase)/decrease in inventories (14.0) (4.0) 4.6
Decrease/(increase) in receivables 6.8 (3.0) (7.0)
Decrease in payables (4.6) (7.2) (13.0)
Cash (used in)/generated by operations (9.7) 14.7 34.8
Tax paid (1.7) (1.5) (3.4)
Interest paid (6.4) (15.6) (36.7)
Defined benefit pension contributions paid (2.7) (2.5) (5.0)
Incentive scheme payments (10.0) - -
Net cash used in operating activities from continuing operations (30.5) (4.9) (10.3)
(1) Restated to include the cash flows of Bridon and the Elster disposal group (note 1) within discontinued operations
(note 8).
(2) Restated to include the cash flows of the Elster disposal group (note 1) within discontinued operations (note 8).
(3) Before exceptional costs, exceptional income and intangible asset amortisation.
Cash flow from discontinued operations 6 months Restated(1)6 months Restated(2)year ended 31 December
ended30 June ended30 June 2014£m
2015£m 2014£m
Cash generated from discontinued operations 85.3 90.4 201.4
Tax paid (10.0) (19.9) (35.9)
Defined benefit pension contributions paid (15.2) (13.9) (34.2)
Interest paid (1.2) (1.3) (2.2)
Acquisition costs (0.1) - (2.3)
Net cash from operating activities from discontinued operations 58.8 55.3 126.8
Purchase of property, plant and equipment (13.0) (12.8) (28.4)
Purchase of computer software and developments costs (6.0) (2.8) (7.6)
Cash acquired on acquisition of subsidiaries - - 1.5
Acquisition of subsidiaries and non-controlling interests (1.5) - (97.6)
Dividends received from joint ventures 1.7 2.1 2.1
Dividends paid to minority interests (0.1) (0.1) (0.4)
Proceeds from disposal of property, plant and equipment 1.6 1.4 3.9
Interest received 0.2 0.2 0.5
Net cash used in investing activities from discontinued operations (17.1) (12.0) (126.0)
Net cash used in financing activities from discontinued operations - - -
(1) Restated to include the cash flows of Bridon and the Elster disposal group (note 1) within discontinued operations
(note 8).
(2) Restated to include the cash flows of the Elster disposal group (note 1) within discontinued operations (note 8).
Net debt reconciliation
At 31 December 2014 Cash flow(1) Other non-cash movements Effect of foreign exchange At 30 June 2015
£m £m £m £m £m
Cash 70.5 (18.2) - (6.7) 45.6
Debt due within one year (0.9) - (0.3) - (1.2)
Debt due after one year (570.9) (233.5) (1.5) 19.2 (786.7)
Net debt (501.3) (251.7) (1.8) 12.5 (742.3)
(1) Includes a £200.4 million return of capital to shareholders and £52.7 million of dividends paid.
13. Return of capital
On 20 February 2015 a £200.4 million return of capital was approved by shareholders. At this date 1,071.8 million 18.7
pence 'B' and 'C' shares were created utilising £200.4 million of the merger reserve. These shares were subsequently
redeemed in the period resulting in a £200.4 million transfer to the capital redemption reserve.
Alongside the return of capital the number of Ordinary Shares was consolidated in a ratio of 13 to 14, which reduced the
number of Ordinary Shares in issue from 1,071.8 million to 995.2 million.
This information is provided by RNS
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