REG - Vesuvius plc - Half Yearly Report <Origin Href="QuoteRef">VSVS.L</Origin> - Part 2
29/10/2014 09:15
- Part 2: For the preceding part double click ID:nRSA9638Na
Items that may be reclassified subsequently to income statement:
Exchange differences on the net assets of foreign operations - (83.6) - (83.6) (3.0) (86.6)
Exchange translation differences arising on net investment hedges - 11.5 - 11.5 - 11.5
Change in fair value of cash flow hedges - 0.2 - 0.2 - 0.2
Change in fair value of available-for-sale investments - 0.1 - 0.1 - 0.1
Items that will may be reclassified subsequently to income statement - (71.8) - (71.8) (3.0) (74.8)
Other comprehensive (loss)/income, net of income tax - (71.8) 0.9 (70.9) (3.0) (73.9)
Total comprehensive (loss)/income - (71.8) 84.5 12.7 (1.1) 11.6
Purchase of own shares - - (8.7) (8.7) - (8.7)
Recognition of share-based payments - - 1.1 1.1 - 1.1
Dividends paid (note 9) - - (13.0) (13.0) (0.3) (13.3)
Redemption of redeemable preference shares - 0.1 (0.1) - - -
Total transactions with owners - 0.1 (20.7) (20.6) (0.3) (20.9)
As at 1 January 2014 27.8 (1,455.8) 2,284.6 856.6 27.3 883.9
Issued Non-
share Other Retained Owners of controlling Total
capital reserves earnings the parent interests equity
£m £m £m £m £m £m
As at 1 January 2014 27.8 (1,455.8) 2,284.6 856.6 27.3 883.9
Profit - - 38.3 38.3 2.1 40.4
Other comprehensive (loss)/income, net of income tax:
Items that will not be reclassified subsequently to income statement:
Remeasurement of defined benefit liabilities/assets - - (21.8) (21.8) - (21.8)
Income tax relating to items not reclassified - - 3.1 3.1 - 3.1
Items that will not be reclassified subsequently to income statement - - (18.7) (18.7) - (18.7)
Items that may be reclassified subsequently to income statement:
Exchange differences on the net assets of foreign operations - (32.0) - - (32.0) (0.4) (32.4)
Exchange translation differences arising on net investment hedges - 7.0 - - 7.0 - 7.0
Change in fair value of cash flow hedges - (0.3) - - (0.3) - (0.3)
Items that may be reclassified subsequently to income statement - (25.3) - (25.3) (0.4) (25.7)
Other comprehensive (loss), net of income tax (25.3) (18.7) - (44.0) (0.4) (44.4)
Total comprehensive (loss)/income - (25.3) 19.6 - (5.7) 1.7 (4.0)
Purchase of own shares - - (0.4) (0.4) - (0.4)
Recognition of share-based payments - - 1.4 - 1.4 - 1.4
Dividends paid (note 9) - - (27.7) - (27.7) (1.2) (28.9)
Total transactions with owners - - (26.7) - (26.7) (1.2) (27.9)
As at 30 June 2014, unaudited 27.8 (1,481.1) 2,277.5 - 824.2 27.8 852.0
Notes to the condensed 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.
Except as noted in note 1.6 below, 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 2013, 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 2013. 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 2013 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 govern the financial and
operating policies of an entity so as to obtain benefits 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 2014 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.
1.4 Functional and presentation currency
The condensed 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 exceptional items as "separately reported items"
International Accounting Standard 1 ("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 policy of
disclosing separately on the face of its condensed 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 deferred tax
assets, together with items always reported separately, such as amortisation charges relating to 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 separately reported.
1.6 New and revised IFRS
During the period, the Group adopted a number of other new standards and amendments which became effective, none of which
had a material impact on the Group's net cash flow, financial position, total comprehensive income or earnings per share.
2. Segment information
Operating segments for continuing operations:
For reporting purposes, the Group is organised into two main business segments: Steel and Foundry and the senior executive
management of these business segments reports to the Chief Executive of the Group. 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
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. The costs
incurred by Vesuvius within its central headquarters have been allocated in full across the Group's two segments for the
period ended 30 June 2014. In the comparative periods these costs were allocated in part to the Group's discontinued
operations.
Discontinued operations:
Discontinued operations in 2013 comprise only the European Precious Metals Processing business.
The operating segment results from continuing operations are presented below.
Unaudited half year 2014
Continuing
Steel Foundry Operations
£m £m £m
Segment revenue 489.5 240.3 729.8
Segment EBITDA (note 17.11) 59.7 30.6 90.3
Segment depreciation (12.5) (6.6) (19.1)
Segment trading profit 47.2 24.0 71.2
Amortisation of intangible assets (8.5)
Profit on disposal of non-current assets 0.6
Operating profit 63.3
Net finance costs (9.2)
Share of post-tax profit of joint ventures 0.8
Profit before tax 54.9
Return on sales margin (%) (note 17.3) 9.7 10.0 9.8
Capital expenditure additions (£m) 8.6 5.7 14.3
Unaudited half year 2013
Continuing
Steel Foundry Operations
£m £m £m
Segment revenue 513.5 259.2 772.7
Segment EBITDA (note 17.11) 55.2 35.1 90.3
Segment depreciation (12.3) (7.2) (19.5)
Segment trading profit 42.9 27.9 70.8
Amortisation of intangible assets (8.8)
Restructuring charges (3.0)
Operating profit 59.0
Net finance costs (8.5)
Share of post-tax profit of joint ventures 1.4
Loss on disposal of continuing operations (0.2)
Profit before tax 51.7
Return on sales margin (%) (note 17.3) 8.3 10.8 9.2
Capital expenditure additions (£m) 13.3 5.6 18.9
Full year 2013
Continuing
Steel Foundry Operations
£m £m £m
Segment revenue 1,017.5 493.0 1,510.5
Segment EBITDA (note 17.11) 114.1 65.2 179.3
Segment depreciation (25.4) (13.9) (39.3)
Segment trading profit 88.7 51.3 140.0
Amortisation of intangible assets (17.4)
Restructuring charges (3.9)
Operating profit 118.7
Net finance costs (17.3)
Share of post-tax profit of joint ventures 2.5
Profit on disposal of continuing operations 0.2
Profit before tax 104.1
Return on sales margin (%) (note 17.3) 8.7 10.4 9.3
Capital expenditure additions (£m) 28.6 18.9 47.5
3. Amortisation of intangible assets
Intangible assets other than goodwill arose on the acquisition of Foseco in 2008 and are being amortised on a straight-line
basis over their useful lives. The assets acquired and their remaining useful lives are shown below.
Unaudited
Net book
value as at
Remaining 30 June
useful life 2014
years £m
Customer relationships 13.8 72.6
Trade name 13.8 49.8
Intellectual property rights 3.8 30.1
152.5
4. Restructuring charges from continuing operations
In the first half of 2014 there were no separately reported restructuring charges (2013: half year £3.0m; full year £3.9m).
In 2013 these charges related to redundancy programmes, downsizing or closure of facilities, streamlining of manufacturing
processes and the rationalisation of product lines in 2013. No net tax credit was attributable to the half year £nil charge
(2013: half year £nil; full year £2.6m).
Cash costs of £3.9m (2013: half year £7.3m; full year £10.3m) were incurred in the period in respect of the restructuring
initiatives commenced in prior years, leaving provisions made but unspent of £9.6m as at 30 June 2014 (2013: 30 June
£14.2m; 31 December £12.9m), of which £4.7m (2013: 30 June £5.2m; 31 December £4.9m) relates to future lease costs in
respect of leases expiring between one and ten years.
5. Net finance costs
Total net finance costs for the half year 2014 of £9.2m is analysed in the table below.
Unaudited Unaudited
Half year Half year Full year
2014 2013 2013
£m £m £m
Continuing operations
Interest cost of borrowings 7.9 7.1 13.2
Pension interest cost, net 0.9 0.9 1.8
Other finance costs 1.6 1.3 4.1
Total finance costs 10.4 9.3 19.1
Finance income (1.2) (0.8) (1.8)
Total net finance costs 9.2 8.5 17.3
6. (Loss)/profit on disposal of continuing operations
The net loss on disposal of continuing operations in the first half of 2013 of £0.2m relates to the disposal of a non-core
business held for sale as at 31 December 2012. The net profit on disposal of continuing operations in respect of the year
ended 31 December 2013 comprised £0.4m profit on sale of a construction and installation business in Canada, together with
the loss relating the non-core business held for sale as at 31 December 2012.
7. Income tax costs
The Group's effective tax rate, based on the income tax costs associated with headline performance of £16.4m, was 26.5% in
the first half of 2014.
The Group's total income tax costs associated with headline performance include a credit of £1.9m (2013: half year £2.2m
credit; full year £38.8m credit) relating to separately reported items comprising: a credit of £nil (2013: half year £nil;
full year £2.6m) in relation to restructuring charges; a credit of £1.9m (2013: half year £2.2m; full year £7.0m) relating
to the amortisation of intangible assets; and a credit of £nil (2013: half year £nil; full year £29.9m) in respect of the
potential recognition of US temporary differences. Tax credited in the Group statement of comprehensive income in the year
amounted to £3.1m (2013: half year £2.1m charge; full year £1.6m charge), all of which related to net actuarial gains and
losses on employee benefits plans.
On 2 July 2013, the UK Government passed the 2013 Finance Bill, which reduced the main rate of corporation tax to 21% from
1 April 2014, with a further reduction to 20% from 1 April 2015. Accordingly, the Group's closing UK deferred tax liability
has been provided using a tax rate of 20%.
8. Earnings per share ("EPS")
8.1 Per share amounts
Unaudited Unaudited
Continuing Discontinued Half year Continuing Discontinued Half year
operations operations 2014 operations operations 2013
pence pence pence pence pence pence
Earnings per share - basic 14.2 - 14.2 12.4 6.2 18.6
- diluted 14.1 - 14.1 12.3 6.2 18.5
- headline 16.4 15.9
- diluted headline 16.4 15.9
Continuing Discontinued Full year
operations operations 2013
pence pence pence
Earnings per share - basic 38.4 10.8 49.2
- diluted 38.3 10.8 49.1
- headline 31.9
- diluted headline 31.8
8.2 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 condensed Group income statement, of £38.3m (2013: half year £34.3m; full year £105.4m), being the profit
for the period of £40.4m (2013: half year £37.4m; full year £110.4m) less non-controlling interests of £2.1m (2013: half
year £3.1m; full year £5.0m). Basic and diluted EPS from total operations are based on the profit attributable to owners of
the parent of £38.3m (2013: half year £51.7m; full year £135.3m). Headline and diluted headline EPS are based upon headline
profit from continuing operations attributable to owners of the parent of £44.3m (2013: half year £44.1m; full year
£87.7m). The table below reconciles these different profit measures:
. Unaudited Unaudited
Half year Half year Full year
2014 2013 2013
£m £m £m
Continuing operations
Profit attributable to owners of the parent 38.3 34.3 105.4
Adjustments for separately reported items:
Amortisation of intangible assets 8.5 8.8 17.4
Restructuring costs - 3.0 3.9
Profit on disposal of non-current assets (0.6) - -
Loss/(profit) on disposal of continuing operations - 0.2 (0.2)
Tax relating to separately reported items (1.9) (2.2) (38.8)
Headline profit attributable to owners of the parent - continuing operations 44.3 44.1 87.7
8.3 Weighted average number of shares
Unaudited Unaudited
Half year Half year Full year
2014 2013 2013
m m m
For calculating basic and headline EPS 270.2 277.6 274.8
Adjustment for dilutive potential ordinary shares 0.6 0.6 0.9
For calculating diluted and diluted headline EPS 270.8 278.2 275.7
For the purposes of calculating diluted basic 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 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.
9. Dividends
Unaudited Unaudited
Half year Half year Full year
2014 2013 2013
£m £m £m
Amounts recognised as dividends and paid to equity holders during the period
Final dividend for the year ended 31 December 2012 of 9.5p per ordinary share - 26.4 26.4
Interim dividend for the year ended 31 December 2013 of 4.75p per ordinary share - - 13.0
Final dividend for the year ended 31 December 2013 of 10.25p per ordinary share 27.7 - -
27.7 26.4 39.4
The Directors have declared an interim dividend of 5.0p per ordinary share in respect of the year ending 31 December 2014.
The dividend will be paid on 26 September 2014 to ordinary shareholders on the register at the close of business on 15
August 2014. Based upon the number of ordinary shares in issue at 30 June 2014, the total cost of the dividend would be
£13.5m.
10. Net debt
Unaudited
Balance at Foreign Balance at
1 January exchange Non cash 30 June
2014 adjustments Movements Cash flow 2014
£m £m £m £m £m
Cash and cash equivalents
Cash at bank and in hand 68.4 (2.0) - 6.4 72.8
Bank overdrafts (15.6) 0.2 - 7.1 (8.3)
13.5
Borrowings, excluding bank overdrafts
Current (1.5) - - (3.3) (4.8)
Non-current (310.7) 9.0 - (21.0) (322.7)
Capitalised borrowing costs 3.0 - (1.7) - 1.3
(24.3)
Net debt (256.4) 7.2 (1.7) (10.8) (261.7)
11. Cash generated from operations
Unaudited Unaudited
Continuing Discontinued Half year Continuing Discontinued Half year
operations operations 2014 Operations Operations 2013
£m £m £m £m £m £m
Operating profit/(loss) 63.3 - 63.3 59.0 (2.2) 56.8
Adjustments for:
Amortisation of intangible assetsRestructuring charges 8.5 - 8.5 8.8 - 8.8
Restructuring charges - - - 3.0 0.1 3.1
Profit on disposal of non-current assets (0.6) - (0.6) - - -
Depreciation 19.1 - 19.1 19.5 - 19.5
EBITDA 90.3 - 90.3 90.3 (2.1) 88.2
Increase in inventories (17.0) - (17.0) (12.6) - (12.6)
Increase in trade receivables (17.6) - (17.6) (18.3) - (18.3)
Increase in trade payables 9.6 - 9.6 11.0 - 11.0
(Increase)/decrease in other working capital balances (7.4) (0.4) (7.8) 22.4 - 22.4
Net (increase)/decrease in trade and other working capital (32.4) (0.4) (32.8) 2.5 - 2.5
Net operating inflow/(outflow) relating to assets and liabilities classified as held for sale - - - 0.1 (7.7) (7.6)
Outflow related to restructuring charges (3.9) - (3.9) (7.3) - (7.3)
Outflow related to demerger costs - - - (3.1) - (3.1)
Additional pension funding contributions (1.0) - (1.0) (6.4) - (6.4)
Cash generated from operations 53.0 (0.4) 52.6 76.1 (9.8) 66.3
Continuing Discontinued Full year
Operations operations 2013
£m £m £m
Operating profit 118.7 10.6 129.3
Adjustments for:
Amortisation of intangible assetsRestructuring charges 17.4 - 17.4
Restructuring charges 3.9 0.1 4.0
Depreciation 39.3 - 39.3
EBITDA 179.3 10.7 190.0
Decrease in inventories 4.8 - 4.8
Increase in trade receivables (3.5) - (3.5)
Decrease in trade payables (4.5) - (4.5)
Decrease/(increase) in other working capital balances 19.0 (3.5) 15.5
Net decrease/(increase) in trade and other working capital 15.8 (3.5) 12.3
Net operating outflow relating to assets and liabilities classified as held for sale - (17.1) (17.1)
Outflow related to restructuring charges (10.3) - (10.3)
Outflow related to demerger costs (3.2) - (3.2)
Additional pension funding contributions (11.0) - (11.0)
Cash generated from operations 170.6 (9.9) 160.7
12. Employee benefits
The net employee benefits balance as at 30 June 2014 of £66.5m (2013: half year £57.7m; full year £47.9m) in respect of the
Group's defined benefit pension and other post-retirement benefit obligations, comprised net surpluses of £17.9m (2013:
half year £32.3m; full year £28.7m) and net liabilities of £84.4m (2013: half year £90.0m; full year £76.6m), and results
from an interim actuarial valuation of the Group's defined benefit pension and other post-retirement obligations as at that
date.
Unaudited Unaudited
30 June 31 December 30 June
2014 2013 2013
£m £m £m
Employee benefits - net surpluses
UK defined benefit pension plan 17.9 28.7 32.3
Employee benefits - net liabilities
US defined benefit pension plans 27.8 23.3 32.2
Germany defined benefit pension plans 35.1 32.6 33.0
ROW defined benefit pension plans 13.4 12.6 15.2
Other post-retirement benefit obligations 8.1 8.1 9.6
84.4 76.6 90.0
Employee benefits - total net liabilities 66.5 47.9 57.7
The total net charges in respect of the Group's defined benefit pension and other post-retirement benefit obligations are
shown in the table below:
Unaudited Unaudited
Half year Half year Full year
2014 2013 2013
£m £m £m
In arriving at trading profit - within manufacturing costs 1.1 0.7 1.9
- within administration, selling and distribution costs 1.9 2.2 4.1
In arriving at profit before tax - within net finance costs 0.9 0.9 1.8
Total net charge - continuing operations 3.9 3.8 7.8
Cash contributions into the Group's defined benefit pension plans amounted to £2.8m (2013: half year £8.4m; full year
£15.3m), which included additional funding contributions of £1.0m (2013: half year £6.4m; full year £11.0m).
13. Shareholders' equity
Following the completion of the sale of the European Precious Metals division on 31 May 2013, the Group commenced an
on-market share repurchase programme to return up to £30m to shareholders, and this exercise was completed by 31 December
2013.
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 £2.4m (2013: £2.7m).
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.
Certain subsidiary companies of Vesuvius plc and Alent plc are defendants in two actions, brought by MacDermid
(incorporated in the United States), which are pending in the Connecticut Superior Court and arising out of corporate
activity involving the parties in the autumn of 2006. The first action was commenced in 2009 and the second action was
commenced in August 2012. MacDermid claims damages of approximately $62m, plus punitive or exemplary damages, costs and
interest which are currently unquantifiable. Both Vesuvius and Alent believe these claims have no merit and are vigorously
defending these actions. Vesuvius and Alent filed a motion for summary judgement in May 2014 in the first action. If any
claims remain following decision on that motion, a trial in the first action is presently scheduled for January 2015. Each
of Vesuvius and Alent anticipate filing a motion to consolidate the two actions and, if granted, a consolidated trial of
the two actions is currently anticipated in late summer 2015. Any liability relating to the MacDermid claim arising
following the demerger of Cookson Group will be split equally between Alent plc and Vesuvius plc.
16. Discontinued operations
Discontinued operations in 2013 comprise only the post-tax results of the European Precious Metals Processing business for
the period up to 31 May 2013 when it was sold, together with the profit arising on its disposal.
The profit arising in the first half of 2013 in respect of the disposal of discontinued operations of £19.6m represents the
profit on the sale of the Group's European Precious Metals Processing businesses to Heimerle + Meule, which was completed
on 31 May 2013. The consideration received of E56.8m was subject to adjustment dependent upon the delivery of a specified
level of assets per the closing balance sheet, which resulted in a full year profit on disposal of £19.3m. Included in the
profit on disposal is a credit of £6.2m for recycled foreign exchange differences which had previously been taken directly
to reserves in the Group accounts relating to the businesses sold.
16.1 Results of discontinued operations
Unaudited Unaudited
Half year Half year Full year
2014 2013 2013
£m £m £m
Revenue - 65.0 65.0
Expenses - (67.2) (54.4)
(Loss)/profit before tax - (2.2) 10.6
Income tax costs - - -
Profit on disposal of discontinued operations - 19.6 19.3
Profit for the period attributable to owners of the parent - 17.4 29.9
Earnings per share - pence
Basic - 6.2 10.8
Diluted - 6.2 10.8
The profit before tax of £10.6m for the full year 2013 includes the release of £10.2m of a provision relating to a VAT case
which was resolved in Vesuvius' favour.
17. 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.
17.1 Headline
Headline performance is from continuing operations and before items reported separately on the face of the income
statement.
17.2 Underlying
Underlying performance is adjusted to exclude the effects of changes in exchange rates, business acquisitions and
disposals.
17.3 Return on sales
Return on sales is calculated as trading profit divided by revenue.
17.4 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.
17.5 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.
17.6 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.
17.7 Headline earnings per share
Headline 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.
17.8 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.
17.9 Free cash flow
Free cash flow is defined as net cash flow from operating activities after 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.
17.10 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.
17.11 Earnings before interest tax depreciation and amortisation ("EBITDA")
EBITDA is calculated as the total of trading profit before depreciation charges.
17.12 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.
17.13 Interest cover
Interest cover is the ratio of EBITDA to net interest.
17.14 Net debt
Net debt comprises the net total of current and non-current interest-bearing borrowings and cash and short-term deposits.
17.15 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.
17.16 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).
17.17 Constant rates
Figures presented at constant rates represent December and June 2013 results retranslated at June 2014 exchange rates.
18. 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 2014 Half year 2013 Full year 2013 Half year to Half year change Half year to full year change Half year 2014 Half year 2013 Full year 2013 Half year to Half year change Half year to full year change
US Dollar 1.6683 1.5443 1.5638 8.0% 6.7% 1.7104 1.5210 1.6556 12.5% 3.3%
Euro 1.2169 1.1760 1.1776 3.5% 3.3% 1.2493 1.1693 1.2045 6.8% 3.7%
Chinese Renminbi 10.2879 9.5587 9.6139 7.6% 7.0% 10.6106 9.3350 10.0225 13.7% 5.9%
Japanese Yen 170.9417 147.3083 152.5203 16.0% 12.1% 173.2635 150.7615 174.3347 14.9% (0.6%)
Brazilian Real 3.8305 3.1331 3.3747 22.3% 13.5% 3.7863 3.3941 3.9102 11.6% (3.2%)
Indian Rupee 101.3751 84.7442 91.5828 19.6% 10.7% 102.7010 90.5345 102.3161 13.4% 0.4%
South African Rand 17.7995 14.1531 15.0314 25.8% 18.4% 18.1884 14.9514 17.2961 21.7% 5.2%
Non-GAAP supplementary information
5 year history at constant currency
2009 2010 2011 2012 2013 2014 H1
Revenue (£m) 1,057.3 1,347.2 1,507.4 1,441.0 1,411.2 729.8
Steel 708.1 888.3 970.2 953.3 953.2 489.5
Foundry 349.2 458.8 537.3 487.7 458.0 240.3
Trading Profit(£m) 54.4 148.4 157.5 116.6 128.8 71.2
Steel 44.3 90.0 93.0 76.2 82.9 47.2
Foundry 10.1 58.4 64.5 40.4 45.9 24.0
Return on Sales 5.1% 11.0% 10.5% 8.1% 9.1% 9.8%
Steel 6.2% 10.1% 9.6% 8.0% 8.7% 9.7%
Foundry 2.9% 12.7% 12.0% 8.3% 10.0% 10.0%
This information is provided by RNS
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