REG - Melrose Ind Plc - Unaudited Interim Results <Origin Href="QuoteRef">MRON.L</Origin> - Part 2
29/10/2014 15:49
- Part 2: For the preceding part double click ID:nRSb1811Qa
Investing activities
Disposal of businesses - 0.7 950.4
Disposal costs (1.0) (9.7) (25.0)
Net cash disposed - - (37.2)
Purchase of property, plant and equipment (27.2) (22.5) (47.0)
Proceeds from disposal of property, plant and equipment 1.6 1.8 6.2
Purchase of computer software and development costs (3.2) (2.1) (3.8)
Dividends received from joint ventures 3.3 2.3 2.7
Interest received 7.7 11.4 21.7
Acquisition of subsidiaries and non-controlling interests - (11.0) (12.8)
Dividends paid to non-controlling interests (0.1) - (6.3)
Net cash (used in)/from investing activities from continuing operations (18.9) (29.1) 848.9
Net cash used in investing activities from discontinued operations 13 - (6.9) (11.6)
Net cash (used in)/from investing activities (18.9) (36.0) 837.3
Financing activities
Return of capital 14 (595.3) - -
Movement in borrowings 532.9 (26.0) (834.0)
Dividends paid 8 (53.6) (63.3) (98.1)
Net cash used in financing activities from continuing operations (116.0) (89.3) (932.1)
Net cash used in financing activities from discontinued operations 13 - - -
Net cash used in financing activities (116.0) (89.3) (932.1)
Net (decrease)/increase in cash and cash equivalents (84.5) (46.1) 41.2
Cash and cash equivalents at the beginning of the period 200.4 156.5 156.5
Effect of foreign exchange rate changes (0.6) 3.3 2.7
Cash and cash equivalents at the end of the period 115.3 113.7 200.4
Cash classified as held for sale - (9.2) -
Cash and cash equivalents in the continuing Group at the end of the period 115.3 104.5 200.4
(1) Restated to include the cash flows of Crosby, Acco and Harris within discontinued operations (note 9).
As at 30 June 2014, the Group's net debt was £750.6 million (31 December 2013: £140.8 million). A reconciliation of the
movement in net debt is shown in note 13.
Melrose Industries PLC
Condensed Consolidated Balance Sheet
Notes 30 June 30 June 31 December 2013£m
2014Unaudited£m 2013Unaudited£m
Non-current assets
Goodwill and other intangible assets 2,499.9 3,092.2 2,612.0
Property, plant and equipment 243.1 293.3 241.2
Interests in joint ventures 12.0 13.2 12.6
Deferred tax assets 98.5 149.2 70.3
Derivative financial assets 12 2.8 2.9 8.1
Trade and other receivables 0.3 0.5 0.3
2,856.6 3,551.3 2,944.5
Current assets
Inventories 236.2 336.0 234.5
Trade and other receivables 286.0 351.9 292.8
Derivative financial assets 12 3.4 3.0 5.1
Cash and cash equivalents 115.3 104.5 200.4
Assets held for sale - 206.8 -
640.9 1,002.2 732.8
Total assets 3 3,497.5 4,553.5 3,677.3
Current liabilities
Trade and other payables 369.2 480.5 399.2
Interest-bearing loans and borrowings - 6.2 -
Derivative financial liabilities 12 5.1 4.2 7.2
Current tax liabilities 46.8 48.6 43.6
Provisions 10 63.8 80.6 74.4
Liabilities directly associated with assets classified as held for sale - 67.5 -
484.9 687.6 524.4
Net current assets 156.0 314.6 208.4
Non-current liabilities
Trade and other payables 1.3 3.5 1.5
Interest-bearing loans and borrowings 865.9 1,167.9 341.2
Derivative financial liabilities 12 0.4 - -
Deferred tax liabilities 310.1 411.8 299.6
Retirement benefit obligations 11 236.9 201.6 219.3
Provisions 10 103.7 186.0 103.4
1,518.3 1,970.8 965.0
Total liabilities 3 2,003.2 2,658.4 1,489.4
Net assets 1,494.3 1,895.1 2,187.9
Equity
Issued share capital 1.3 1.3 1.3
Merger reserve 595.3 1,190.6 1,190.6
Capital redemption reserve 14 595.3 - -
Other reserves (757.1) (757.1) (757.1)
Hedging reserve 1.3 1.7 5.8
Translation reserve (94.2) 96.9 (29.9)
Retained earnings 1,150.4 1,358.5 1,775.3
Equity attributable to owners of the parent 1,492.3 1,891.9 2,186.0
Non-controlling interests 2.0 3.2 1.9
Total equity 1,494.3 1,895.1 2,187.9
Melrose Industries PLC
Condensed Consolidated Statement of Changes in Equity
Issued share capital£m Merger reserve£m Capital redemption reserve£m Other reserves£m Hedging reserve£m Translation reserve£m Retained earnings£m Equity attributable to owners of the parent£m Non-controllinginterests£m Total equity£m
At 1 January 2013 (audited) 1.3 1,190.6 - (757.1) (7.7) 8.0 1,299.5 1,734.6 7.1 1,741.7
Profit for the period - - - - - - 75.8 75.8 1.4 77.2
Other comprehensive income - - - - 9.4 88.9 55.4 153.7 0.1 153.8
Total comprehensive income - - - - 9.4 88.9 131.2 229.5 1.5 231.0
Purchase of non-controlling interests - - - - - - (10.9) (10.9) (0.1) (11.0)
Dividends paid - - - - - - (63.3) (63.3) (5.3) (68.6)
Credit to equity for equity-settled share-based payments - - - - - - 2.0 2.0 - 2.0
At 30 June 2013 (unaudited) 1.3 1,190.6 - (757.1) 1.7 96.9 1,358.5 1,891.9 3.2 1,895.1
Profit for the period - - - - - - 486.9 486.9 0.5 487.4
Other comprehensive income/(expense) - - - - 4.1 (126.8) (35.9) (158.6) (0.4) (159.0)
Total comprehensive income/(expense) - - - - 4.1 (126.8) 451.0 328.3 0.1 328.4
Purchase of non-controlling interests - - - - - - (1.4) (1.4) (0.4) (1.8)
Dividends paid - - - - - - (34.8) (34.8) (1.0) (35.8)
Credit to equity for equity-settled share-based payments - - - - - - 2.0 2.0 - 2.0
At 31 December 2013 (audited) 1.3 1,190.6 - (757.1) 5.8 (29.9) 1,775.3 2,186.0 1.9 2,187.9
Profit for the period - - - - - - 50.0 50.0 0.3 50.3
Other comprehensive expense - - - - (4.5) (64.3) (28.0) (96.8) (0.1) (96.9)
Total comprehensive (expense)/income - - - - (4.5) (64.3) 22.0 (46.8) 0.2 (46.6)
Return of capital - (595.3) 595.3 - - - (595.3) (595.3) - (595.3)
Dividends paid - - - - - - (53.6) (53.6) (0.1) (53.7)
Credit to equity for equity-settled share-based payments - - - - - - 2.0 2.0 - 2.0
At 30 June 2014 (unaudited) 1.3 595.3 595.3 (757.1) 1.3 (94.2) 1,150.4 1,492.3 2.0 1,494.3
Notes to the condensed financial statements
1. Corporate information
The interim financial information for the six months ended 30 June 2014 has been reviewed by the auditor, but not audited.
The information for the year ended 31 December 2013 shown in this report does not constitute statutory accounts for that
year as defined in section 434 of the Companies Act 2006. A copy of the statutory accounts for that year has been delivered
to the Registrar of Companies. The auditor has reported on those accounts. Their report was unqualified, did not draw
attention to any matters by way of emphasis and did not contain a statement under section 498 (2) or (3) of the Companies
Act 2006.
The comparative information for the period ended 30 June 2013 in these interim financial statements has been restated to
include the results and cash flows of Crosby and Acco, previously disclosed within the Lifting segment, and Harris,
previously disclosed within the Other Industrial segment, within discontinued operations, and exclude them from continuing
operations.
2. Summary of significant accounting policies
The interim financial information for the six months ended 30 June 2014, which has been approved by a committee of the
Board of Directors on 28 August 2014, has been prepared on the basis of the accounting policies set out in the Group's 2013
Annual Report and financial statements on pages 98 to 106. The Group's 2013 Annual Report and financial statements can be
found on the Group's website www.melroseplc.net. These interim financial statements should therefore be read in
conjunction with the 2013 information. The accounting policies used in the preparation of the interim financial
information have been consistently applied to all periods presented. The annual financial statements are prepared in
accordance with IFRS as adopted by the European Union. These interim financial statements have been prepared in accordance
with IAS 34: "Interim Financial Reporting" as adopted by the European Union.
Adoption of new accounting standards
The Group has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective.
The Group has adopted relevant standards and amendments with no material impact on its results, assets and liabilities.
Going concern
The Group's business activities in the period, together with the factors likely to affect its future development,
performance and position are set out in the Chief Executive's review.
The Group's principal risks and uncertainties are unchanged from 2013, as discussed in the Finance Director's review. These
are set out in more detail on pages 36 to 39 in the Group's Annual Report for the year ended 31 December 2013.
After making appropriate enquiries, the Directors have a reasonable expectation that the Group has adequate resources to
continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis
in preparing these interim financial statements.
3. Segment information
Segment information is presented in accordance with IFRS 8: "Operating segments" which requires operating segments to be
identified on the basis of internal reports about components of the Group that are regularly reported to the Group's Board
in order to allocate resources to the segments and assess their performance. The Group's reportable operating segments
under IFRS 8 are categorised as follows:
FKI segments
· Energy
· Lifting
Elster segments
· Gas
· Electricity
· Water
· Elster central
The Energy segment consists of the Brush business, a specialist supplier of energy industrial products to the global
market. The Lifting segment consists of the Bridon business, serving oil & gas production, mining, petrochemical,
alternative energy and general construction markets. Elster comprises the Gas, Electricity and Water segments along with
their associated central costs. These businesses serve residential and industrial metering and utilisation markets whilst
providing related communications, networking and software solutions.
There are two central cost centres which are also separately reported to the Board:
· Central - corporate
· Central - LTIPs(1)
(1) Long Term Incentive Plans
The Central corporate cost centre contains the Melrose Group head office costs. The Central LTIPs cost centre contains the
costs associated with the five year 2012 Melrose Incentive Plan (granted on 11 April 2012) and the divisional management
LTIPs that are in operation across the Group.
The discontinued operations incorporate the Truth, Marelli, Crosby, Acco and Harris businesses. Truth and Marelli were
classified as held for sale at 30 June 2013. Following the disposal of Harris, the Other Industrial segment has ceased to
exist.
Transfer prices between business units are set on an arms length basis in a manner similar to transactions with third
parties.
The Group's geographical segments are determined by the location of the Group's non-current assets and, for revenue, the
location of external customers. Inter-segment sales are not material and have not been included in the segment
information.
The following tables present revenue, profit and certain asset and liability information regarding the Group's operating
segments for the six month period ended 30 June 2014 and comparative periods. Note 5 gives details of exceptional costs and
income.
Segment revenues and results
Segment revenue from external customers
Note 6 months ended 30 June 2014£m Restated(1) 6 months ended Year ended 31 December 2013£m
30 June 2013£m
Continuing operations
Energy 164.5 170.3 350.1
Lifting 122.8 135.8 266.4
FKI total 287.3 306.1 616.5
Gas 325.5 348.1 688.9
Electricity 87.1 117.9 247.5
Water 81.0 103.2 179.9
Elster total 493.6 569.2 1,116.3
Total continuing operations 780.9 875.3 1,732.8
Discontinued operations 9 - 261.0 392.8
Total revenue 780.9 1,136.3 2,125.6
(1) Restated to include the revenues of Crosby, Acco and Harris within discontinued operations (note 9).
Segment result
Notes 6 months ended 30 June 2014£m Restated(1) 6 months ended Year ended 31 December 2013£m
30 June 2013£m
Continuing operations
Energy 34.2 35.8 73.1
Lifting 13.5 18.8 34.1
FKI headline(2) operating profit 47.7 54.6 107.2
Gas 76.9 76.1 152.4
Electricity 4.0 6.2 21.5
Water 13.3 10.5 23.0
Elster central (1.1) (1.6) (2.7)
Elster headline(2) operating profit 93.1 91.2 194.2
Central - corporate (6.8) (5.9) (13.5)
Central - LTIPs(3) (5.5) (7.0) (13.0)
Headline(2) operating profit 128.5 132.9 274.9
Intangible asset amortisation (30.9) (32.7) (64.6)
Exceptional operating costs 5 (14.8) (10.6) (19.3)
Exceptional operating income 5 5.4 - 28.9
Operating profit 88.2 89.6 219.9
Finance costs (26.3) (36.9) (70.5)
Finance income 7.7 11.4 21.7
Profit before tax 69.6 64.1 171.1
Tax 6 (19.3) (17.0) (49.2)
Profit for the period from discontinued operations 9 - 30.1 442.7
Profit for the period 50.3 77.2 564.6
(1) Restated to include the results of Crosby, Acco and Harris within discontinued operations (note 9).
(2) Before exceptional costs, exceptional income and intangible asset amortisation.
(3) Long Term Incentive Plans.
Total assets Total liabilities
30 June Restated(1) 30 June 31 December 2013£m 30 June Restated(1) 30 June 31 December 2013£m
2014£m 2013£m 2014£m 2013£m
Continuing operations
Energy 501.5 503.2 497.7 146.7 148.3 146.5
Lifting 332.4 359.9 340.4 83.5 111.4 88.3
FKI total 833.9 863.1 838.1 230.2 259.7 234.8
Gas 1,980.7 2,227.2 2,038.7 490.6 577.9 470.3
Electricity 321.5 354.1 343.0 99.0 120.3 117.7
Water 198.9 238.9 201.6 87.6 153.7 92.6
Elster central 5.3 12.2 6.3 49.8 76.4 60.5
Elster total 2,506.4 2,832.4 2,589.6 727.0 928.3 741.1
Central - corporate 157.2 141.8 249.6 1,020.4 1,274.9 491.9
Central - LTIPs(2) - - - 25.6 21.9 21.6
Total continuing operations 3,497.5 3,837.3 3,677.3 2,003.2 2,484.8 1,489.4
Discontinued operations - 716.2 - - 173.6 -
Total 3,497.5 4,553.5 3,677.3 2,003.2 2,658.4 1,489.4
(1) Restated to include the total assets and total liabilities of Crosby, Acco and Harris within discontinued operations (note 9).
(2) Long Term Incentive Plans.
Capital expenditure(1) Depreciation(1)
6 months ended Restated(2) 6 months ended Year ended 31 December 2013£m 6 months ended Restated(2) 6 months ended Year ended 31 December 2013£m
30 June 30 June 30 June 30 June
2014£m 2013£m 2014£m 2013£m
Continuing operations
Energy 14.1 8.0 16.8 3.1 3.1 5.9
Lifting 2.3 4.3 8.6 3.8 3.8 7.5
FKI total 16.4 12.3 25.4 6.9 6.9 13.4
Gas 6.8 6.5 14.1 7.3 7.6 15.4
Electricity 4.9 3.1 6.9 3.0 3.4 6.7
Water 1.7 1.8 3.7 2.1 2.4 4.5
Elster central - - 0.3 - - -
Elster total 13.4 11.4 25.0 12.4 13.4 26.6
Central - corporate 0.2 0.2 0.6 0.4 0.3 0.7
Total continuing operations 30.0 23.9 51.0 19.7 20.6 40.7
Discontinued operations - 7.8 10.3 - 5.5 7.7
Total 30.0 31.7 61.3 19.7 26.1 48.4
(1) Including computer software and development costs.
(2) Restated to include the capital expenditure(1) and depreciation(1) of Crosby, Acco and Harris within discontinued operations (note 9).
Geographical information
The Group operates in various geographical areas around the world. The Group's country of domicile is the UK and the
Group's revenues and non-current assets in Europe and North America are also considered to be material.
The Group's revenue from external customers and information about its segment assets (non-current assets excluding
interests in joint ventures, deferred tax assets, derivative financial assets and non-current trade and other receivables)
by geographical location are detailed below:
Revenue(1) from external customers Non-current assets
6 months ended Restated(2) 6 months ended Year ended 31 December 2013£m 30 June Restated(2) 31 December 2013£m
30 June 30 June 2014£m 30 June
2014£m 2013£m 2013£m
UK 98.7 91.0 213.5 411.8 398.0 417.2
Europe 286.4 290.4 574.4 1,481.3 1,696.1 1,557.1
North America 221.3 294.0 540.5 728.6 839.4 761.9
Other 174.5 199.9 404.4 121.3 82.6 117.0
Total continuing operations 780.9 875.3 1,732.8 2,743.0 3,016.1 2,853.2
Discontinued operations - 261.0 392.8 - 369.4 -
Total 780.9 1,136.3 2,125.6 2,743.0 3,385.5 2,853.2
(1) Revenue is presented by destination.
(2) Restated to include the revenue from external customers and non-current assets of Crosby, Acco and Harris within discontinued operations (note 9).
4. Operating expenses
Net operating expenses comprise: 6 months ended 30 June 2014£m Restated(1)6 months ended 30 June 2013£m Year ended
31 December 2013£m
Continuing operations
Selling and distribution costs 69.4 77.2 148.3
Administration expenses 117.3 128.7 251.5
Share of headline(2) results of joint ventures (3.2) (2.3) (2.8)
Other operating costs - exceptional (note 5) 14.8 10.6 19.3
Other operating income - exceptional (note 5) (5.4) - (28.9)
Total net operating expenses from continuing operations 192.9 214.2 387.4
Total net operating expenses from discontinued operations - 36.3 54.0
Total net operating expenses 192.9 250.5 441.4
(1) Restated to include the results of Crosby, Acco and Harris within discontinued operations (note 9).
(2) Before exceptional costs, exceptional income and intangible asset amortisation.
5. Exceptional costs and income
Exceptional costs 6 months ended 30 June 2014£m Restated(1) 6 months ended 30 June 2013£m Year ended
31 December 2013£m
Continuing operations
Restructuring costs 14.8 9.0 18.8
Acquisition and disposal costs - 1.6 0.5
Total exceptional costs 14.8 10.6 19.3
(1) Restated to include the results of Crosby, Acco and Harris within discontinued operations (note 9).
During the six months to 30 June 2014 restructuring costs were incurred primarily within the Gas business resulting in a
charge for the period of £14.8 million. Restructuring costs, primarily relating to other Elster businesses, of £18.8
million were incurred in 2013, of which £9.0 million had been incurred in the first half of the year.
In 2013, committed acquisition and disposal costs were shown as exceptional costs. No such costs have been incurred in
2014.
Exceptional income 6 months ended 30 June 2014£m 6 months ended 30 June 2013£m Year ended
31 December 2013£m
Continuing operations
Release of surplus
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