REG - Vesuvius plc - Half Yearly Report <Origin Href="QuoteRef">VSVS.L</Origin> - Part 3

VesuviusAnnouncement

31/07/2015 07:01

- Part 3: For the preceding part double click  ID:nRSe6489Ub 

before tax - within net finance costs  0.5        0.9        1.8        
 Total net charge - continuing operations                     4.4        3.9        4.1        
 
 
Cash contributions into the Group's defined benefit pension plans amounted to £2.1m (2014: half year £2.8m; full year
£6.1m), which included additional funding contributions of £1.0m (2014: half year £1.0m; full year £3.2m). 
 
13.     Other reserves 
 
Within other reserves as at half year 2015 is £1,499.0m (full year 2014: £1,499.0m) arising from the demerger of Cookson
Group plc, being the excess of the Vesuvius plc share capital of £1,777.9m over the total share capital and share premium
of Cookson Group plc as at 14 December 2012 of £278.9m. Also included are translation reserves of £14.2m (full year 2014:
(£32.8m)) and investment revaluation reserves of £0.5m (full year 2014: £0.5m). 
 
14.     Related parties 
 
All transactions with related parties are conducted on an arm's length basis and in accordance with normal business terms.
Transactions between related parties that are Group subsidiaries are eliminated on consolidation. 
 
15.     Contingent liabilities 
 
Guarantees given by the Group under property leases of operations disposed of amounted to £2.0m (full year 2014: £2.3m). 
 
Vesuvius has extensive international operations and is subject to various legal and regulatory regimes, including those
covering taxation and environmental matters. Several of Vesuvius' subsidiaries are parties to legal proceedings, certain of
which are insured claims arising in the ordinary course of the operations of the company involved, and the Directors are
aware of a number of issues which are, or may be, the subject of dispute with tax authorities. Reserves are made for the
expected amounts payable in respect of known or probable costs resulting both from legal or other regulatory requirements,
or from third-party claims. As the settlement of many of the obligations for which reserve is made is subject to legal or
other regulatory process, the timing and amount of the associated outflows is subject to some uncertainty. 
 
Certain of Vesuvius' subsidiaries are subject to lawsuits, predominantly in the US, relating to a small number of products
containing asbestos manufactured prior to the acquisition of those subsidiaries by Vesuvius. These suits usually also name
many other product manufacturers. To date, Vesuvius is not aware of there being any liability verdicts against any of these
subsidiaries. A number of lawsuits have been withdrawn, dismissed or settled and the amount paid, including costs, in
relation to this litigation has not had a material adverse effect on Vesuvius' financial position or results of
operations. 
 
16.     Non-GAAP financial measures 
 
The Company uses a number of non-Generally Accepted Accounting Practice ("non-GAAP") financial measures in addition to
those reported in accordance with IFRS. The Directors believe that these non-GAAP measures, listed below, are important
when assessing the underlying financial and operating performance of the Group and its divisions. 
 
16.1   Headline 
 
Headline performance is from continuing operations and before items reported separately on the face of the income
statement. 
 
16.2   Underlying 
 
Underlying performance is adjusted to exclude the effects of changes in exchange rates, business acquisitions and
disposals. 
 
16.3   Return on sales 
 
Return on sales is calculated as trading profit divided by revenue. 
 
16.4   Trading profit 
 
Trading profit is defined as profit from operations before separately reported items. The Directors believe that trading
profit is an important measure of the underlying trading performance of the Group. 
 
16.5   Headline profit before tax 
 
Headline profit before tax is calculated as the net total of trading profit, plus the Group's share of post-tax profit of
joint ventures and total net finance costs associated with headline performance. 
 
16.6   Effective tax rate 
 
The Group's effective tax rate is calculated as the income tax costs associated with headline performance, divided by
headline profit before tax and before the Group's share of post-tax profit of joint ventures. 
 
16.7   Headline basic earnings per share 
 
Headline basic earnings per share is calculated as headline profit before tax and after income tax costs associated with
headline performance and profit attributable to non-controlling interests, divided by the weighted average number of
ordinary shares in issue during the period. 
 
16.8   Operating cash flow 
 
Operating cash flow is cash generated from continuing operations before restructuring, demerger payments and additional
pension funding contributions but after deducting capital expenditure net of assets disposals. 
 
16.9   Free cash flow 
 
Free cash flow is defined as net cash flow from operating activities after tax, net outlays for the purchase and sale of
property, plant and equipment, dividends from joint ventures and dividends paid to non-controlling shareholders, but before
additional funding contributions to Group pension plans.  "Recurring free cash flow" is free cash flow before restructuring
payments. 
 
16.10 Average trade working capital to sales ratio 
 
The average trade working capital to sales ratio is calculated as the percentage of average trade working capital balances
to the annualised revenue for the period. Average trade working capital (comprising inventories, trade receivables, and
trade payables) is calculated as the average of the 12 previous month end balances, and annualised revenue is the revenue
for the previous 12 months. 
 
16.11 Earnings before interest tax depreciation and amortisation ("EBITDA") 
 
EBITDA is calculated as the total of trading profit before depreciation charges. 
 
16.12 Net interest 
 
Net interest is calculated as interest payable on borrowings less interest receivable, excluding any item therein
considered by the Directors to be exceptional and therefore separately reported. 
 
16.13 Interest cover 
 
Interest cover is the ratio of EBITDA to net interest. 
 
16.14 Net debt 
 
Net debt comprises the net total of current and non-current interest-bearing borrowings and cash and short-term deposits. 
 
16.15 Net debt to EBITDA 
 
Net debt to EBITDA is the ratio of net debt at the period-end to EBITDA for the preceding 12 month period. 
 
16.16 Return on net assets ("RONA") 
 
RONA is calculated as trading profit plus share of post-tax profit of joint ventures, divided by average net operating
assets (being the average over the previous 12 months of property, plant and equipment, trade working capital and other
operating receivables and payables). 
 
16.17 Constant rates 
 
Figures presented at constant rates represent December and June 2014 results retranslated at June 2015 exchange rates. 
 
17.     Exchange rates 
 
The Group reports its results in pounds sterling. A substantial portion of the Group's revenue and profit are denominated
in currencies other than pounds sterling. It is the Group's policy to translate the income statements and cash flow
statements of its overseas operations into pounds sterling using average exchange rates for the period reported (except
when the use of average rates does not approximate the exchange rate at the date of the transaction, in which case the
transaction rate is used) and to translate balance sheets using period end rates. The principal exchange rates used were as
follows: 
 
                     Income and expenseAverage rates  Assets and liabilitiesPeriod end rates  
                     Half year 2015                   Half year 2014                          Full year 2014  Half year to Half year change  Half year to full year change  Half year 2015  Half year 2014  Full year 2014  Half year to Half year change  Half year to full year change  
 US Dollar           1.523                            1.668                                   1.649           8.7%                           7.6%                           1.571           1.710           1.557           8.1%                           (0.9%)                         
 Euro                1.365                            1.217                                   1.241           (12.2%)                        (10.0%)                        1.410           1.249           1.287           (12.9%)                        (9.6%)                         
 Chinese Renminbi    9.470                            10.288                                  10.157          8.0%                           6.8%                           9.737           10.611          9.662           8.2%                           (0.8%)                         
 Japanese Yen        183.035                          170.942                                 174.087         (7.1%)                         (5.1%)                         192.371         173.264         186.377         (11.0%)                        (3.2%)                         
 Brazilian Real      4.515                            3.831                                   3.869           (17.9%)                        (16.7%)                        4.872           3.786           4.137           (28.7%)                        (17.7%)                        
 Indian Rupee        95.608                           101.375                                 100.495         5.7%                           4.9%                           99.874          102.701         98.157          (2.8%)                         (1.7%)                         
 South African Rand  18.128                           17.780                                  17.834          (2.0%)                         (1.6%)                         19.105          18.188          18.012          (5.0%)                         (6.1%)                         
 
 
Non-GAAP supplementary information 
 
5 year history at constant currency 
 
                          HY 2011  HY 2012  HY 2013  HY 2014  HY 2015    
 Revenue (£m)             748.0    740.6    696.8    721.0    702.6      
 Steel                    481.9    488.7    470.5    490.3    476.3      
 Foundry                  266.1    251.9    226.3    230.7    226.3      
 Trading Profit (£m)      78.6     69.5     62.2     71.0     70.4       
 Steel                    45.9     46.4     39.4     48.6     44.5       
 Foundry                  32.7     23.1     22.8     22.4     25.9       
 Return on Sales          10.5%    9.4%     8.9%     9.9%     10.0%      
 Steel                    9.5%     9.5%     8.4%     9.9%     9.3%       
 Foundry                  12.3%    9.2%     10.1%    9.7%     11.5%      
 
 
This information is provided by RNS
The company news service from the London Stock Exchange