REG - Vesuvius plc - Half-year Report <Origin Href="QuoteRef">VSVS.L</Origin> - Part 2
27/07/2017 07:07
- Part 2: For the preceding part double click ID:nRSa2208Ma
Christer Gardell, Non-executive Director
Hock Goh, Non-executive Director
Holly Koeppel, Non-executive Director
Independent review report to Vesuvius plc
Report on the condensed half year financial statements
Our conclusion
We have reviewed Vesuvius plc's condensed half year financial statements (the "interim financial statements") in the Half
Year Results of Vesuvius plc for the 6 month period ended 30 June 2017. Based on our review, nothing has come to our
attention that causes us to believe that the interim financial statements are not prepared, in all material respects, in
accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and
the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.
What we have reviewed
The interim financial statements comprise:
• the Condensed Group Balance Sheet as at 30 June 2017;
• the Condensed Group Income Statement and Condensed Group Statement of Comprehensive Income/(Loss) for the period then
ended;
• the Condensed Group Statement of Cash Flows for the period then ended;
• the Condensed Group Statement of Changes in Equity for the period then ended; and
• the explanatory notes to the interim financial statements.
The interim financial statements included in the Half Year Results have been prepared in accordance with International
Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.
As disclosed in note 1 to the interim financial statements, the financial reporting framework that has been applied in the
preparation of the full annual financial statements of the Group is applicable law and International Financial Reporting
Standards (IFRSs) as adopted by the European Union.
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the directors
The Half Year Results, including the interim financial statements, is the responsibility of, and has been approved by, the
directors. The directors are responsible for preparing the Half Year Results in accordance with the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.
Our responsibility is to express a conclusion on the interim financial statements in the Half Year Results based on our
review. This report, including the conclusion, has been prepared for and only for the company for the purpose of complying
with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority and for
no other purpose. We do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any
other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent
in writing.
What a review of interim financial statements involves
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board
for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and other review procedures.
A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK)
and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might
be identified in an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the Half Year Results and considered whether it contains any apparent
misstatements or material inconsistencies with the information in the interim financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants
London
26 July 2017
Notes:
a) The maintenance and integrity of the Vesuvius plc website is the responsibility of the directors; the work carried
out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility
for any changes that may have occurred to the interim financial statements since they were initially presented on the
website.
b) Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.
Condensed Group Income Statement For the six months ended 30 June 2017
Half year 2017 Half year 2016 Full year 2016
Headline performance(1) Separately reported items Unaudited Half year 2017 Headline performance Separately reported items Unaudited Half year 2016 Headline performance Separately reported items Full year 2016
Notes £m £m £m £m £m £m £m £m £m
Continuing operations
Revenue 2 831.5 - 831.5 668.3 - 668.3 1,401.4 - 1,401.4
Manufacturing costs (596.9) - (596.9) (485.2) - (485.2) (1,018.6) - (1,018.6)
Administration, selling and distribution costs (148.3) - (148.3) (124.0) - (124.0) (249.5) - (249.5)
Tradingprofit 2, 16 86.3 - 86.3 59.1 - 59.1 133.3 - 133.3
Amortisation of acquired intangible assets - (9.7) (9.7) - (8.3) (8.3) - (17.1) (17.1)
Restructuring charges 3 - (8.9) (8.9) - (5.3) (5.3) - (28.5) (28.5)
Gain on employee benefit plan 10 - - - - 1.0 1.0 - 5.2 5.2
Operating profit/(loss) 2 86.3 (18.6) 67.7 59.1 (12.6) 46.5 133.3 (40.4) 92.9
Finance expense (8.9) - (8.9) (9.9) - (9.9) (17.4) - (17.4)
Finance income 1.6 - 1.6 2.0 - 2.0 2.9 - 2.9
Net finance costs 4 (7.3) - (7.3) (7.9) - (7.9) (14.5) - (14.5)
Share of post-tax income (loss) of joint ventures 0.4 - 0.4 (0.4) - (0.4) 1.0 - 1.0
Profit/(loss) before tax 2 79.4 (18.6) 60.8 50.8 (12.6) 38.2 119.8 (40.4) 79.4
Income tax (charge)/credits 5 (22.1) 6.0 (16.1) (13.1) 2.7 (10.4) (31.4) 5.0 (26.4)
Profit/(loss) from:
Continuing operations 57.3 (12.6) 44.7 37.7 (9.9) 27.8 88.4 (35.4) 53.0
Discontinued operations - 1.7 1.7 - - - - 10.2 10.2
Profit/(loss) 57.3 (10.9) 46.4 37.7 (9.9) 27.8 88.4 (25.2) 63.2
Profit attributable to:
Owners of the parent 53.3 (10.9) 42.4 34.4 (9.9) 24.5 82.1 (25.2) 56.9
Non-controlling interests 4.0 - 4.0 3.3 - 3.3 6.3 - 6.3
Profit/(loss) 57.3 (10.9) 46.4 37.7 (9.9) 27.8 88.4 (25.2) 63.2
Earnings per share - pence 6
Continuing operations - basic 15.1 9.1 17.3
- diluted 15.0 9.1 17.3
Total operations - basic 15.7 9.1 21.1
- diluted 15.6 9.1 21.0
(1) Headline performance is defined in Note 16.1
Condensed Group Statement of Comprehensive Income/(Loss)For the six months ended 30 June 2017
Unaudited Unaudited
Half year Half year Full year
2017 2016 2016
Notes £m £m £m
Profit 46.4 27.8 63.2
Items that will not be reclassified subsequently to income statement:
Remeasurement of defined benefit assets/liabilities 5.4 (9.9) 9.5
Income tax relating to items not reclassified 5 (0.7) 1.4 (0.7)
Items that may be reclassified subsequently to income statement:
Exchange differences on translation of the net assets of foreign operations (23.6) 146.7 207.7
Exchange translation differences arising on net investment hedges 6.4 (27.1) (41.6)
Other comprehensive (loss)/income, net of income tax (12.5) 111.1 174.9
Total comprehensive income 33.9 138.9 238.1
Total comprehensive income attributable to:
Owners of the parent 30.1 132.4 226.2
Non-controlling interests 3.8 6.5 11.9
Total comprehensive income 33.9 138.9 238.1
Total comprehensive income attributable to owners of the parent arises from:
Continuing operations 26.1 132.4 216.0
Discontinued operations 4.0 - 10.2
Total comprehensive income attributable to owners of the parent 30.1 132.4 226.2
Condensed Group Statement of Cash FlowsFor the six months ended 30 June 2017
Unaudited Unaudited
Half year Half year Full year
2017 2016 2016
Notes £m £m £m
Cash flows from operating activities
Cash generated from operations 9 62.3 63.0 130.2
Net interest paid (6.8) (5.8) (12.1)
Income taxes paid (19.3) (16.3) (34.2)
Net cash inflow from operating activities 36.2 40.9 83.9
Cash flows from investing activities
Capital expenditure (13.2) (9.1) (31.3)
Proceeds from the sale of property, plant and equipment 1.6 0.7 1.6
Acquisition of subsidiaries and joint ventures, net of cash acquired (0.1) - (7.7)
Disposal of subsidiaries and joint ventures, net of cash disposed of 0.9 - -
Dividends received from joint ventures 1.7 0.9 2.0
Net cash (outflow) from investing activities (9.1) (7.5) (35.4)
Net cash inflow before financing activities 27.1 33.4 48.5
Cash flows from financing activities
Proceeds from borrowings 36.4 4.9 0.8
Settlement of forward foreign exchange contracts (6.3) 10.4 20.6
Dividends paid to equity shareholders 7 (30.8) (30.0) (43.9)
Dividends paid to non-controlling shareholders (1.0) (0.9) (2.5)
Net cash (outflow) from financing activities (1.7) (15.6) (25.0)
Net increase in cash and cash equivalents 8 25.4 17.8 23.5
Cash and cash equivalents at beginning of period 101.0 67.0 67.0
Effect of exchange rate fluctuations on cash and cash equivalents (1.7) 6.7 10.5
Cash and cash equivalents at end of period 124.7 91.5 101.0
Free cash flow from continuing operations (Note 16.10)
Net cash inflow from operating activities 36.2 40.9 83.9
Additional funding contributions into Group pension plans 1.1 1.0 7.7
Capital expenditure (13.2) (9.1) (31.3)
Proceeds from the sale of property, plant and equipment 1.6 0.7 1.6
Dividends received from joint ventures 1.7 0.9 2.0
Dividends paid to non-controlling shareholders (1.0) (0.9) (2.5)
Free cash flow from continuing operations 16 26.4 33.5 61.4
Discontinued operations - (0.2) -
Free cash flow 16 26.4 33.3 61.4
Condensed Group Balance SheetAs at 30 June 2017
Unaudited Unaudited
Half year Half year Full year
2017 2016 2016
Notes £m £m £m
Assets
Property, plant and equipment 311.3 309.8 323.6
Intangible assets 761.5 755.4 781.9
Employee benefits - net surpluses 10 81.9 65.5 78.8
Interests in joint ventures 16.1 17.0 18.0
Investments 2.5 2.8 2.6
Income tax recoverable 1.0 1.3 1.0
Deferred tax assets 89.3 76.3 92.1
Other receivables 22.6 20.3 23.4
Total non-current assets 1,286.2 1,248.4 1,321.4
Cash and short-term deposits 8 152.2 134.0 144.4
Inventories 225.7 190.0 207.7
Trade and other receivables 427.4 375.0 393.2
Income tax recoverable 2.4 1.8 3.9
Derivative financial instruments - 0.7 -
Total current assets 807.7 701.5 749.2
Total assets 2,093.9 1,949.9 2,070.6
Equity
Issued share capital 27.8 27.8 27.8
Retained earnings 2,388.0 2,333.4 2,370.0
Other reserves (1,358.4) (1,385.5) (1,341.4)
Equity attributable to the owners of the parent 1,057.4 975.7 1,056.4
Non-controlling interests 44.9 38.4 42.1
Total equity 1,102.3 1,014.1 1,098.5
Liabilities
Interest-bearing borrowings 8 360.0 396.6 330.8
Employee benefits - net liabilities 10 105.2 119.7 108.2
Other payables 18.0 19.6 16.5
Provisions 14 30.6 30.3 32.9
Deferred tax liabilities 44.8 45.4 48.6
Total non-current liabilities 558.6 611.6 537.0
Interest-bearing borrowings 8 114.0 47.7 133.9
Trade and other payables 260.1 217.5 232.7
Income tax payable 42.2 43.9 41.9
Provisions 14 15.9 15.1 25.7
Derivative financial instruments 15 0.8 - 0.9
Total current liabilities 433.0 324.2 435.1
Total liabilities 991.6 935.8 972.1
Total equity and liabilities 2,093.9 1,949.9 2,070.6
Condensed Group Statement of Changes in EquityFor the six months ended 30 June 2017
Issued share capital Other reserves Retained earnings Owners of the parent Non-controlling interests Total equity
£m £m £m £m £m £m
As at 1 January 2016 27.8 (1,501.9) 2,346.5 872.4 32.7 905.1
Profit - - 24.5 24.5 3.3 27.8
Remeasurement of defined benefit liabilities/assets - - (9.9) (9.9) - (9.9)
Income tax relating to items not reclassified - - 1.4 1.4 - 1.4
Exchange differences on the net assets of foreign operations - 143.5 - 143.5 3.2 146.7
Exchange translation differences arising on net investment hedges - (27.1) - (27.1) - (27.1)
Other comprehensive income/(loss), net of income tax - 116.4 (8.5) 107.9 3.2 111.1
Total comprehensive income - 116.4 16.0 132.4 6.5 138.9
Recognition of share-based payments - - 0.9 0.9 - 0.9
Dividends paid (note 7) - - (30.0) (30.0) (0.8) (30.8)
Total transactions with owners - - (29.1) (29.1) (0.8) (29.9)
As at 30 June 2016, unaudited 27.8 (1,385.5) 2,333.4 975.7 38.4 1,014.1
Profit - - 32.4 32.4 3.0 35.4
Remeasurement of defined benefit liabilities/assets - - 19.4 19.4 - 19.4
Income tax relating to items not reclassified - - (2.1) (2.1) - (2.1)
Exchange differences on the net assets of foreign operations - 58.6 - 58.6 2.4 61.0
Exchange translation differences arising on net investment hedges - (14.5) - (14.5) - (14.5)
Other comprehensive income, net of income tax - 44.1 17.3 61.4 2.4 63.8
Total comprehensive income - 44.1 49.7 93.8 5.4 99.2
Recognition of share-based payments - - 0.8 0.8 - 0.8
Dividends paid (note 7) - - (13.9) (13.9) (1.7) (15.6)
Total transactions with owners - - (13.1) (13.1) (1.7) (14.8)
As at 1 January 2017 27.8 (1,341.4) 2,370.0 1,056.4 42.1 1,098.5
Profit - - 42.4 42.4 4.0 46.4
Remeasurement of defined benefit liabilities/assets - - 5.4 5.4 - 5.4
Income tax relating to items not reclassified - - (0.7) (0.7) - (0.7)
Exchange differences on the net assets of foreign operations - (23.4) - (23.4) (0.2) (23.6)
Exchange translation differences arising on net investment hedges - 6.4 - 6.4 - 6.4
Other comprehensive income/(loss), net of income tax - (17.0) 4.7 (12.3) (0.2) (12.5)
Total comprehensive income - (17.0) 47.1 30.1 3.8 33.9
Recognition of share-based payments - - 1.7 1.7 - 1.7
Dividends paid (note 7) - - (30.8) (30.8) (1.0) (31.8)
Total transactions with owners - - (29.1) (29.1) (1.0) (30.1)
As at 30 June 2017 27.8 (1,358.4) 2,388.0 1,057.4 44.9 1,102.3
Notes to the Financial Statements
1 Basis of preparation
1.1 Basis of accounting
These condensed financial statements of Vesuvius plc ("Vesuvius" or the "Company") and its subsidiary and joint venture
companies (the "Group") have been prepared in accordance with International Accounting Standard ("IAS") 34 Interim
Financial Reporting, as adopted by the EU and in accordance with the Disclosure and Transparency Rules of the UK's
Financial Conduct Authority.
These condensed financial statements have been prepared using the same accounting policies as used in the preparation of
the Group's annual financial statements for the year ended 31 December 2016, which were prepared in accordance with
International Financial Reporting Standards as adopted by the EU ("IFRS"). They do not include all of the information
required for full annual financial statements, and should be read in conjunction with the consolidated financial statements
of the Group for the year ended 31 December 2016. The financial information presented in this document is unaudited, but
has been reviewed by the Company's auditor.
The comparative figures for the financial year ended 31 December 2016 are not the Company's statutory accounts for that
financial year. Those accounts have been reported on by the Company's auditor and delivered to the Registrar of Companies.
The report of the auditor was unqualified, did not include reference to any matters to which the auditor drew attention by
way of emphasis without qualifying its report and did not contain a statement under section 498(2) or (3) of the Companies
Act 2006. These sections address whether proper accounting records have been kept, whether the Company's accounts are in
agreement with those records and whether the auditor has obtained all the information and explanations necessary for the
purposes of its audit.
1.2 Basis of consolidation
The consolidated financial statements of the Group incorporate the financial statements of the Company and entities
controlled by the Company (its "subsidiaries"). Control exists when the Company has the power to direct the relevant
activities of an entity that significantly affect the entity's return so as to have rights to the variable return from its
activities. In assessing whether control exists, potential voting rights that are currently exercisable are taken into
account. The results of subsidiaries acquired or disposed of during the year are included in the Group income statement
from the effective date of acquisition or up to the effective date of disposal, as appropriate.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into
line with those detailed herein to ensure that the Group financial statements are prepared on a consistent basis. All
intra-Group transactions, balances, income and expenses are eliminated on consolidation.
Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the Group's
interest therein. Non-controlling interests consist of the amount of those interests at the date of the original business
combination together with the non-controlling interests' share of profit or loss and each component of other comprehensive
income since the date of the combination. Total comprehensive income is attributed to the non-controlling interests even if
this results in the non-controlling interests having a deficit balance.
1.3 Going concern
The Directors have prepared cash flow forecasts for the Group for a period in excess of 12 months from the date of approval
of the 2017 interim financial statements. These forecasts reflect an assessment of current and future end-market conditions
and their impact on the Group's future trading performance. The forecasts show that the Group will be able to operate
within the current committed debt facilities and show continued compliance with the Company's financial covenants. On the
basis of the exercise described above and the Group's available committed debt facilities, the Directors consider that the
Group and Company have adequate resources to continue in operational existence for the foreseeable future. Accordingly,
they continue to adopt a going concern basis in preparing the financial statements of the Group and the Company.
1.4 Functional and presentation currency
The financial statements are presented in millions of pounds Sterling, which is the functional currency of the Company, and
rounded to one decimal place.
1.5 Disclosure of "separately reported items"
IAS 1 Presentation of Financial Statements provides no definitive guidance as to the format of the income statement, but
states key lines which should be disclosed. It also encourages the disclosure of additional line items and the reordering
of items presented on the face of the income statement when appropriate for a proper understanding of the entity's
financial performance. In accordance with IAS 1, the Company has adopted a columnar presentation for its Group income
statement, to separately identify headline performance results (as defined in Note 16), as the Directors consider that this
gives a better view of the underlying results of the ongoing business. As part of this presentation format, the Company has
adopted a policy of disclosing separately on the face of its Group income statement, within the column entitled 'Separately
reported items', the effect of any components of financial performance for which the Directors consider separate disclosure
would assist both in a better understanding of the financial performance achieved and in making projections of future
results. In its adoption of this policy, the Company applies an even-handed approach to both gains and losses and aims to
be both consistent and clear in its accounting and disclosure of such items.
Both materiality and the nature and function of the components of income and expense are considered in deciding upon such
presentation. Such items may include, inter alia, the financial effect of exceptional items which occur infrequently, such
as major restructuring activity, initial recognition and subsequent increase, decrease and amortisation of US deferred tax
assets, together with items always reported separately, such as amortisation charges relating to acquired intangible
assets, profits or losses arising on the disposal of continuing or discontinued operations and the taxation impact of the
aforementioned exceptional items and items reported separately.
1.6 New and revised IFRS
IFRS 9 Financial Instruments (effective from 1 January 2018, for the year ending 2018), replaces the existing guidance in
IAS 39 Financial Instruments Recognition and Measurement. IFRS 9 includes revised guidance on the classification and
measurement of financial instruments, including a new expected credit loss model for calculating impairment on financial
assets, and new general hedge accounting requirements. It also carries forward the guidance on recognition and
de-recognition of financial instruments from IAS 39. Based on an assessment of the adoption of IFRS 9, the Group does not
believe there will be a significant impact on its Consolidated Financial Statements.
IFRS 15 Revenue from Contracts with Customers (effective from 1 January 2018, for the year ending 2018) establishes a
comprehensive framework for determining whether, how much and when revenue is recognised. It replaces existing revenue
recognition guidance, including IAS 18 Revenue, IAS 11 Construction Contracts and IFRIC 13 Customer Loyalty Programmes.
Based on an initial assessment of the adoption of IFRS 15, the Group does not believe there will be a significant impact on
its Consolidated Financial Statements.
IFRS 16 Leases (effective from 1 January 2019, for the year ending 2019), replaces the existing guidance in IAS 17 Leases.
IFRS 16 provides a single lessee accounting model, requiring lessees to recognise assets and liabilities for all leases
unless the lease term is 12 months or less or the underlying asset has a low value. The Group is currently assessing the
potential impact on its Consolidated Financial Statements resulting from the application of IFRS 16.
IFRIC 23 Uncertainty over income tax treatments (effective from 1 January 2019, for the year ending 2019, not yet
endorsed), clarifies how to recognise and measure deferred and current income tax assets and liabilities where there is
uncertainty over tax treatment under IAS 12. The Group is currently assessing the potential impact on its Consolidated
Financial Statements resulting from the application of IFRIC 23.
Other new or amended standards are not expected to have a significant impact on the Group's financial statements.
2 Segment information
Operating segments for continuing operations
For reporting purposes, the Group is organised into two business segments: Steel and Foundry. It is the Vesuvius Board
which makes the key operating decisions in respect of these segments. The information used by the Vesuvius Board to review
performance and determine resource allocation between the business segments is presented with the Group's activities
segmented between the two business segments, Steel and Foundry. Taking into account the basis on which the Group's
activities are reported to the Vesuvius Board, the Directors believe that these two business segments are the appropriate
way to analyse the Group's results.
Segment revenue represents revenue from external customers (inter-segment revenue is not material). Trading profit includes
items directly attributable to a segment as well as those items that can be allocated on a reasonable basis.
2.1 Income statement
Unaudited Half year 2017
Steel Foundry Continuing operations
£m £m £m
Segment revenue 562.7 268.8 831.5
Segment EBITDA 66.3 42.2 108.5
Segment depreciation (14.6) (7.6) (22.2)
Segment trading profit 51.7 34.6 86.3
Return on sales margin 9.2% 12.9% 10.4%
Amortisation of acquired intangibles (9.7)
Restructuring charges (8.9)
Gain on employee benefit plan -
Operating profit 67.7
Net finance costs (7.3)
Share of post-tax profit of joint ventures 0.4
Profit before tax 60.8
Capital expenditure additions 12.1 2.5 14.6
2.1 Income statement (continued)
Unaudited Half year 2016
Steel Foundry Continuing operations
£m £m £m
Segment revenue 443.1 225.2 668.3
Segment EBITDA 46.3 32.8 79.1
Segment depreciation (13.1) (6.9) (20.0)
Segment trading profit 33.2 25.9 59.1
Return on sales margin 7.5% 11.5% 8.8%
Amortisation of acquired intangibles (8.3)
Restructuring charges (5.3)
Gain on employee benefit plan 1.0
Operating profit 46.5
Net finance costs (7.9)
Share of post-tax profit of joint ventures (0.4)
Profit before tax 38.2
Capital expenditure additions 6.7 2.7 9.4
Full year 2016
Steel Foundry Continuing operations
£m £m £m
Segment revenue 942.0 459.4 1,401.4
Segment EBITDA 107.0 68.6 175.6
Segment depreciation (27.8) (14.5) (42.3)
Segment trading profit 79.2 54.1 133.3
Return on sales margin 8.4% 11.8% 9.5%
Amortisation of acquired intangibles (17.1)
Restructuring charges (28.5)
Gain on employee benefit plan 5.2
Operating profit 92.9
Net finance costs (14.5)
Share of post-tax profit of joint ventures 1.0
Profit before tax 79.4
Capital expenditure additions 23.7 11.5 35.2
3 Restructuring charges from continuing operations
The Group-wide restructuring programme initiated in 2015 was continued, resulting in charges of £8.9m (2016: half year
£5.3m; full year £28.5m) reflecting redundancy costs of £3.0m (2016: half year £4.9m; full year £21.4m), plant closure
costs of £0.3m (2016: half year £nil; full year £4.2m), the full programme's consultancy and professional fees of £4.8m
(2016: half year £0.4m; full year £2.0m) and an inventory write-off of £0.8m (2016: half year £nil; full year £0.9m).
The net tax credit attributable to the total restructuring charges was £0.9m (2016: half year £0.8m; full year £3.8m).
Cash costs of £15.6m (2016: half year £10.2m; full year £16.8m) (Note 9) were incurred in the period in respect of the
restructuring programme leaving provisions made but unspent of £11.0m as at 30 June 2017 (2016: half year £5.3m; full year
£18.5m), of which £2.7m relates to future costs in respect of leases expiring between one and six years (2016: half year
£2.9m; full year £2.7m).
4 Finance costs
Total net finance costs for the period of £7.3m is analysed in the table below.
Unaudited Unaudited
Half year Half year Full year
2017 2016 2016
£m £m £m
Interest payable on borrowings
Loans, overdrafts and factoring arrangements 8.1 7.0 15.1
Obligations under finance leases 0.2 0.1 0.2
Amortisation of capitalised borrowing costs 0.3 0.3 0.5
Total interest payable on borrowings 8.6 7.4 15.8
Interest on net retirement benefits obligations 0.3 0.6 1.3
Adjustments to discounts on provisions and other liabilities 0.1 1.9 (0.2)
Adjustments to discounts on receivables (0.1) (0.5) 0.3
Finance income (1.6) (1.5) (2.7)
Total net finance costs 7.3 7.9 14.5
5 Income tax costs
The Group's effective tax rate, based on the income tax costs associated with headline performance of £22.1m (2016: half
year £13.1m; full year £31.4m), was 28% in the first half of 2017 (2016: half year 25.5%; full year 26.4%).
The Group's total income tax costs include a credit of £6.0m (2016: half year £2.7m; full year £5.0m) relating to
separately reported items comprising: a credit of £0.9m (2016: half year £0.8m credit; full year £3.8m credit) in relation
to restructuring charges; a credit of £5.1m (2016: half year £1.9m credit; full year £3.7m credit) relating to the
amortisation of intangible assets; a charge of £nil (2016: half year £nil; full year £2.1m charge) in respect of the
recognition of US temporary differences and a net charge of £nil (2016: half year £nil; full year £0.4m charge) relating to
the gain on employee benefit plan. The net tax charge in the Group statement of comprehensive income in the year amounted
to £0.7m (2016: half year £1.4m; full year £0.7m) related to tax on net actuarial gains and losses on employee benefits
plans.
6 Earnings per share ("EPS")
6.1 Earnings for EPS
Basic and diluted EPS from continuing operations are based upon the profit attributable to owners of the parent, as
reported in the Group income statement, of £40.7m (2016: half year £24.5m; full year £46.7m), being the profit for the
period of £44.7m (2016: half year £27.8m; full year £53.0m) less non-controlling interests of £4.0m (2016: half year £3.3m;
full year £6.3m); basic and diluted EPS from total operations are based on the profit attributable to owners of the parent
of £42.4m (2016: half year £24.5m; full year £56.9m); headline and diluted headline EPS are based upon headline profit from
continuing operations attributable to owners of the parent of £53.3m (2016: half year £34.4m; full year £82.1m). The table
below reconciles these different profit measures.
Unaudited Unaudited
Half year Half year Full year
2017 2016 2016
Notes £m £m £m
Profit attributable to owners of the parent 40.7 24.5 46.7
Adjustments for separately reported items:
Amortisation of intangible assets 9.7 8.3 17.1
Restructuring charges 8.9 5.3 28.5
Gain on employee benefit plan - (1.0) (5.2)
Income tax credit (6.0) (2.7) (5.0)
Headline profit attributable to owners of the parent 15 53.3 34.4 82.1
6.2 Weighted average number of shares
Unaudited Unaudited
Half year Half year Full year
2017 2016 2016
£m £m £m
For calculating basic and headline EPS 270.2 269.7 269.9
Adjustment for dilutive potential ordinary shares 2.0 0.5 0.8
For calculating diluted and diluted headline EPS 272.2 270.2 270.7
For the purposes of calculating diluted and diluted headline EPS, the weighted average number of ordinary shares is
adjusted to include the weighted average number of ordinary shares that would be issued on the conversion of all dilutive
potential ordinary shares expected to vest, relating to the Company's share-based payment plans. Potential ordinary shares
are only treated as dilutive when their conversion to ordinary shares would decrease earnings per share, or increase loss
per share, from continuing operations.
6.3 Per share amounts
Unaudited Unaudited
Continuing Discontinued Half year Continuing Discontinued Half year
operations operations 2017 operations operations 2016
pence pence pence pence pence pence
Earnings per share - basic 15.1 0.6 15.7 9.1 - 9.1
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