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Half-year results for the
period ended 30 June 2024
£
million
unless otherwise stated
|
1H
2024
|
1H
2023
|
As
reported
change
|
Organic
constant- currency1 change
|
Adjusted results
Revenue
|
572.6
|
553.9
|
3.4%
|
8.2%
|
Group adjusted operating
profit1
|
71.3
|
50.0
|
42.6%
|
59.5%
|
Group adjusted operating profit
margin1
|
12.5%
|
9.0%
|
350bps
|
|
Return on invested
capital1
|
19.7%
|
18.7%
|
100bps
|
|
Adjusted EPS1
|
14.7p
|
9.9p
|
48.5%
|
|
Free cash flow before
acquisitions, disposals and dividends1
|
(7.9)
|
(37.1)
|
78.7%
|
|
Net debt (incl. lease
liabilities)1
|
270.5
|
257.7
|
5.0%
|
|
|
|
|
|
|
Statutory results
|
|
|
|
|
Revenue
|
572.6
|
553.9
|
|
|
Operating profit
|
66.8
|
34.5
|
32.3
|
|
Profit before taxation
|
57.5
|
28.4
|
29.1
|
|
Continuing EPS
|
13.2p
|
5.2p
|
8.0p
|
|
Cash generated from continuing
operations
|
66.1
|
12.9
|
53.2
|
|
Interim dividend per
share
|
5.4p
|
5.3p
|
0.1p
|
|
1. Definitions of these
non-GAAP measures can be found in the glossary of terms on page 43,
reconciliations of the statutory results to the adjusted measures
can be found on pages 16 to 20. Throughout this report these
non-GAAP measures are clearly identified by an asterisk (*) where
they appear in text and by a footnote where they appear in
tables.
Group highlights
·
|
Organic constant-currency* revenue
growth of 8.2%, with 14.9% from our faster growing
markets
|
·
|
Group adjusted operating profit
margin* of 12.5%, in line with our financial framework. Pricing
measures continue to more than offset inflation
|
·
|
Adjusted EPS* at 14.7p has grown
+48.5% versus 1H 2023
|
·
|
Capital investment programme
progressing well
|
·
|
Return on invested capital* 19.7%
for 1H, at the higher end of our financial framework
range
|
·
|
Strong balance sheet with net
debt*/EBITDA (excl. leasing)* of 1.3 times
|
·
|
Interim dividend increased 0.1p to
5.4p per share
|
·
|
Absolute scope 1 and 2 emissions
CO2e reduced by 11.6% compared with 1H 2023
|
·
|
2H revenue in line with 1H; margin
to remain at around 12.5%
|
Commenting on the results, Chief
Executive Officer, Pete Raby said:
"We are continuing to implement
our strategy successfully. Whilst our constant currency
revenue growth benefitted from the weaker, cyber impacted, prior
year comparator, we have seen underlying revenue growth in both our
Core and Faster Growing markets. Our investment in
Semiconductor capacity, where we continue to see strong demand and
have attractive growth opportunities, along with our simplification
programme, are both on-track. Our balance sheet remains
strong. I want to thank all our employees for their
commitment and support."
Outlook
We are cautious on demand in a
number of our end-markets and now expect revenue in our second half
to be in line with that in our first half. Nevertheless, we
are well-positioned with our market leading differentiated
positions and expect constant-currency* full-year revenue growth to
continue to be towards the top end of our financial framework at
4-7%. We have made good progress with our simplification
programme and expect our full-year margin outlook to remain at
around 12.5%.
Business Simplification
As announced with our 2023
financial results we are now managing the Company through three
distinct segments, as detailed below, in order to streamline our
management structures and optimise plant operations:
Thermal Products: comprising
the Thermal Ceramics and MMS segments, focused on growth
opportunities in which heat resistance, fire protection and
insulation are principal product attributes.
Performance Carbon: comprising the
Electrical Carbon and part of the Seals and Bearings segments, with
a clear strategy to pursue opportunities for carbon-based
components in Semiconductor, Rail, Aerospace, Power Generation and
other markets.
Technical Ceramics: comprising the
Technical Ceramics and part of the former Seals and Bearings
segments, focused on development of our advanced ceramic
applications in Semiconductor, Healthcare, Aerospace and Industrial
equipment.
This change forms part of a
broader restructuring plan that is expected to deliver £10 million
of annualised savings by 2025, with an expected implementation cost
of around £20 million, of which £18 million are cash costs expected
to be incurred during the programme.
|
FY
2023
£m
|
FY
2024
£m
|
FY
2025
£m
|
Total
£m
|
Adjusted operating
profit* benefits (incremental)
|
1
|
7
|
10
|
-
|
Costs charged to
specific adjusting items
|
(7)
|
(11)
|
(2)
|
(20)
|
Our purpose
Our purpose is to use advanced materials to
make the world more sustainable and to improve the quality of
life. This purpose guides our actions: it underpins
our work to reduce our environmental impact, informs how we treat
our people, and ensures we fulfil our responsibility for good
corporate governance.
We deliver on our purpose through
the products that we make and the way that we make them.
·
|
We improve the quality of life by
supporting medical diagnostics with our power tubes in medical
scanners. Our feedthroughs are at the core of cochlear implants and
our seals are used in blood pumps. These products transform
people's lives.
|
·
|
Our products help keep people
safe. We are proud to design fire protection in everything
from cars to tunnels, and ships to oil platforms.
|
·
|
We design and manufacture our
products to help customers save energy.
|
·
|
Our carbon brushes are integral to
wind turbines and power generators and enable electrified rail
transport.
|
·
|
Our ceramic rollers are used to
make thin-film solar panels, our insulation is used in solar towers
and steam turbines, and our ceramic cores are used to make more
efficient industrial gas turbines. These are all products which
promote a more sustainable and environmentally secure future for
our planet.
|
Our strategy
Our strategy builds on our
strengths and focuses the Group on scalable businesses in
attractive markets, and on the development of our three core
capabilities in customer focus, application
engineering and materials science. To continue the
development of our core capabilities, and improve the execution of
our strategy, we have three execution priorities:
Big positive difference - making
sure we govern our business the right way, looking after the
environment, looking after our people and operating to high ethical
standards. This priority supports our focus on living and breathing our commitments on inclusion, treating
people fairly, reducing waste, managing our water consumption, and
reducing emissions.
Delight the customer
- following on from our foundational work on
sales effectiveness, we are working to shape our product and
service offerings further based on customer needs, with the overall
objective of making our business more customer-centric.
Innovate to grow -
many of our customers have an increasing need to
reduce their energy consumption and CO2e emissions,
these customers need our help. This priority supports our focus on
working with the customer to innovate in traditional heavy
industries whilst also contributing to greener technologies for the
future.
We want to accelerate our growth, by winning in our
core markets and increasing our exposure to four faster growing
market segments: clean energy & clean transportation,
semiconductors and healthcare.
We have been focusing our product development and
business development efforts in these four market segments over the
last several years to develop new and differentiated products that
solve complex problems for our customers.
·
|
Clean energy and clean
transportation - solutions for energy storage, brushes and slip
rings for onshore wind applications and ceramic and carbon products
used in solar panel manufacture. Our rail collector business for
metro and main rail applications, water and vacuum pump components
for electric vehicle applications, fire protection solutions for
electric vehicles.
|
·
|
Semiconductors - we supply carbon
and ceramic consumables for key semiconductor process steps
including crystal growth, deposition, lithography and
etch.
|
·
|
Healthcare - enabling medical
imaging and supply of low temperature insulation for medicine and
vaccine transport and storage.
|
Organic constant-currency* revenue growth in these
segments for the six months to 30 June 2024 was 14.9%. These
segments represented 22.4% of our revenue overall.
Our financial framework
As previously announced, our financial
framework is:
·
|
Organic constant currency* revenue
growth of 4%-7% through the cycle
|
·
|
Adjusted operating profit margin*
of 12.5%15%
|
·
|
Return on invested capital* of
17%-20%
|
·
|
Leverage (net debt*/EBITDA excl.
leasing*) of 1.01.5 times without M&A, 1.0-2.0 times with
M&A
|
Our environment, social and
governance (ESG) priorities
In March 2021, we set stretching targets to improve
our environmental, social and governance performance and become a
more sustainable business. We take these commitments seriously and
have plans in place to deliver against them in the coming years,
making a step change in our performance.
Protect the environment
·
|
Our goal is to be a scope 1 and 2
CO2e net zero business by 2050. Our 2030 target is to
reduce our scope 1 and scope 2 CO2e emissions by 50%
(from a 2015 baseline). For the full year 2023 we reduced our scope
1 and scope 2 emissions by 54% versus the 2015 baseline.
In the first half we have reduced our CO2e
emissions by 11.6% compared with 1H 2023 through a
combination of switching to renewable or carbon free electricity
and a range of energy reduction projects across the
Group.
|
·
|
Our goal is to use water
sustainably across our business. Our 2030 target is to reduce our
overall water usage by 30% and reduce our water usage in high and
extremely high stress areas by 30% (from a 2015 baseline).
In the first half, overall water usage decreased
by 8.1% whilst high stress water usage decreased by 4.4% compared
with 1H 2023.
|
Provide a safe, fair and inclusive
workplace
·
|
Our goal is to create an environment and culture
with zero harm to our employees. Our 2030 target is a lost-time
accident rate below 0.1 (lost-time accidents per 100,000 hours
worked). Our lost time accident rate in the first half was
0.13, compared with 0.28 for 1H 2023. Safety is our
top priority and continues to receive a high level of focus
throughout the organisation.
|
·
|
Our goal is that our employee demographics
reflect the communities that we operate in. Our 2030 target is for
40% female representation across the leadership population of our
organisation. At 30 June 2024, we have 34% females in our
leadership population, compared with 30% at the end of
2023.
|
·
|
Our goal is to be a welcoming and inclusive
organisation where our employees can grow and thrive. Our
2030 target is to attain a top quartile employee engagement score.
We survey our employees annually and we will provide an updated
engagement score with our preliminary results in 2025.
|
Our Group Environment, Health and
Sustainability Director and Group HR Director coordinate our
improvement projects. In addition, the Board reviews progress
quarterly and takes an active role in holding the executive team to
account on improving ESG performance.
Enquiries
|
|
|
Pete Raby
|
Morgan Advanced Materials
|
01753 837 000
|
Richard Armitage
|
Morgan Advanced Materials
|
|
Nina Coad
|
Brunswick
|
0207 404 5959
|
Results presentation
today
There will be an analyst and investor
presentation at 10:00 (UK time) today via
web-conference.
A live audio webcast and slide presentation of
this event will be available on www.morganadvancedmaterials.com
We recommend that you register by 09:45 (UK
time).
Basis of preparation
Non-GAAP measures
Throughout this report adjusted measures are
used to describe the Group's financial performance. These are not
recognised under IFRS or other generally accepted accounting
principles (GAAP). The Executive Committee and the Board manage and
assess the performance of the business on these measures and they
are presented as the Directors consider they provide useful
information to shareholders, including additional insight into
ongoing trading and year-on-year comparisons. These non-GAAP
measures should be viewed as complementary to, not replacements
for, the comparable GAAP measures.
Throughout this report these non-GAAP measures
are clearly identified by an asterisk (*) where they appear in
text, and by a footnote when they appear in tables. Definitions of
these non-GAAP measures can be found in the glossary of terms on
page 43, reconciliations of the statutory results to the adjusted
measures can be found on pages 16 to 20.
All periods presented in these condensed
consolidated financial statements are for continuing operations,
with separate disclosure of discontinued operations where
appropriate.
Operating review
|
Revenue
|
Adjusted
operating
profit1
|
Margin
%1
|
|
1H 2024
|
|
1H
2023
|
1H 2024
|
|
1H
2023
|
1H 2024
|
|
1H
2023
|
|
£m
|
|
£m
|
£m
|
|
£m
|
%
|
|
%
|
|
Thermal Products
|
221.5
|
|
231.4
|
24.2
|
|
15.8
|
10.9%
|
|
6.8%
|
|
Performance Carbon
|
178.9
|
|
157.4
|
31.3
|
|
19.6
|
17.5%
|
|
12.5%
|
|
Technical Ceramics
|
172.2
|
|
165.1
|
18.8
|
|
17.6
|
10.9%
|
|
10.7%
|
|
Segment total2
|
572.6
|
|
553.9
|
74.3
|
|
53.0
|
13.0%
|
|
9.6%
|
|
Corporate costs
|
|
|
(3.0)
|
|
(3.0)
|
|
|
|
|
Group adjusted operating
profit1
|
|
|
71.3
|
|
50.0
|
12.5%
|
|
9.0%
|
|
Amortisation of intangible
assets
|
(1.1)
|
|
(2.1)
|
|
|
|
|
Operating profit before specific adjusting
items
|
70.2
|
|
47.9
|
12.3%
|
|
8.6%
|
|
Specific adjusting items included
in operating profit2
|
(3.4)
|
|
(13.4)
|
|
|
|
|
Operating profit
|
|
|
66.8
|
|
34.5
|
11.7%
|
|
6.2%
|
|
Net financing costs
|
|
|
(9.3)
|
|
(6.1)
|
|
|
|
|
Profit before taxation
|
|
|
57.5
|
|
28.4
|
|
|
|
|
1. Definitions of these non-GAAP
measures can be found in the glossary of terms on page 43,
reconciliations of the statutory results to the adjusted measures
can be found on pages 16 to 20.
2. Details of specific adjusting
items can be found in note 3 to the condensed consolidated
financial statements.
Thermal Products
Revenue for the Thermal Products segment
for the six months ended 30 June 2024 was £221.5 million,
representing a decline of 4.3% compared with £231.4 million in 1H
2023 driven predominantly by foreign exchange. On an organic
constant-currency* basis, year-on-year revenue increased by 2.4%,
with growth in aerospace and the petrochemical market
segments.
Operating profit for the six months ended 30
June 2024 was £22.7 million (1H 2023: 13.1 million) with an
operating profit margin of 10.2% (1H 2023: 5.7%). Adjusted
operating profit* was £24.2 million (1H 2023 £15.8 million) with an
adjusted operating profit margin* of 10.9% (1H 2023: 6.8%), with
margin growth due to recovered efficiencies lost during the cyber
incident in 1H 2023, pricing measures continue to recover
inflation. Details of the specific adjusting items charge of
£1.0 million (1H 2023: £1.8 million) are included in note 3.
Performance Carbon
Revenue for the Performance Carbon segment for
the six months ended 30 June 2024 was £178.9 million, representing
an increase of 13.7% on a reported basis compared with £157.4
million in 1H 2023. On an organic constant-currency* basis,
year-on-year revenue increased by 18.1%, with continued strong
growth in our faster growing markets with particular strength in
semiconductors. Core markets are also showing year over year growth
led by the industrial market segment.
Operating profit for the six
months ended 30 June 2024 was £30.3 million (1H 2023: £18.9
million) with an operating profit margin
of 16.9% (1H 2023: 12.0%). Adjusted operating
profit* was £31.3 million (1H 2023: £19.6 million)
with an adjusted operating profit margin*
of 17.5% (1H 2023: 12.5%), with margin growth due to
recovered efficiencies lost during the cyber incident in 1H 2023,
pricing measures continue to recover inflation.
Details of the specific adjusting items charge of £0.8 million (1H
2023: £0.2 million) are included in note 3.
Technical Ceramics
Revenue for the Technical Ceramics segment for the six months ended
30 June 2024 was £172.2 million, an increase of 4.3% compared with
£165.1 million in 1H 2023. On an organic constant-currency* basis,
year-on-year revenue increased by 6.7%, with growth led by
aerospace and healthcare offsetting a weaker industrial
market.
Operating profit for the six months ended 30
June 2024 was £18.0 million (1H 2023: £18.0 million) with an
operating profit margin of 10.5% (1H 2023: 10.9%).
Adjusted operating profit* was £18.8 million (1H 2023: £17.6
million) with an adjusted operating profit margin* of 10.9% (1H
2023: 10.7%), with margin growth due to returned efficiencies after
the cyber incident impacting 1H 2023, pricing measures continue to
recover inflation. Details of the specific adjusting items
charge of £0.4 million (1H 2023: credit of £1.1 million) are
included in note 3.
Group financial review
Group revenue for the six months ended 30 June
2024 was £572.6 million (1H 2023: £553.9 million), an increase of
3.4% on a reported basis compared with 1H 2023. On an organic
constant-currency* basis revenue increased by 8.2%.
Group adjusted operating profit* for the six
months ended 30 June 2024 was £71.3 million (1H 2023:
£50.0 million). Adjusted operating profit margin* was 12.5%,
compared with 9.0% for 1H 2023.
Specific adjusting items before tax for the
six months ended 30 June 2024 totalled £3.4 million. See Note
3 of the condensed consolidated financial statements
on page 32, for additional information.
Operating profit for the six months ended 30
June 2024 was £66.8 million (1H 2023: £34.5 million) and profit
before taxation was £57.5 million (1H 2023: £28.4
million).
The Group amortisation charge for the six
months ended 30 June 2024 was £1.1 million (1H 2023: £2.1
million).
The net finance charge for the six months
ended 30 June 2024 was £9.3 million (1H 2023: £6.1 million)
comprising net bank interest and similar charges of £7.4 million
(1H 2022: £5.0 million), net interest on IAS 19 pension obligations
of £0.2 million (1H 2023: £nil), loss on sale of bonds of 0.4
million (1H 2023: £nil) and interest expense on lease liabilities
of £1.3 million (1H 2023: £1.1 million).
Looking forward to the full year, we
anticipate that the net finance charge will be around £17-19
million, comprising net bank interest and similar charges of £15-16
million; net interest on IAS 19 pension obligations
of £0.5 million; and interest expense on lease
liabilities of £2 million.
The Group tax charge for the six months ended
30 June 2024, excluding specific adjusting items, was £15.8 million
(1H 2023: £11.3 million), tax on specific adjusting
items was a credit of £0.4 million (1H 2023: £2.2
million). The effective tax rate, excluding specific
adjusting items, was 26.0% (1H 2023: 27.0%). Note 5 to the
condensed consolidated financial statements provides additional
information on the Group's tax charge. Looking forward to the
full year, we anticipate an effective tax rate around
25-27%.
Adjusted earnings per share* for the six
months ended 30 June 2024 was 14.7 pence (1H 2023: 9.9 pence) and
basic profit per share from continuing operations was 13.2 pence
(1H 2023: 5.2 pence). Details of these calculations can be found in
note 7 to the condensed consolidated financial
statements.
The Group's balance sheet and
liquidity remains robust. Net debt* for
the six months ended 30 June 2024 was £270.5 million, with net
debt* excluding lease liabilities of £222.3 million. The Group has
cash and cash equivalents of £116.6 million and undrawn headroom on its
revolving credit
facility of £159.1 million.
Our key financial covenants are
measured on a pre-IFRS 16 Leases
basis. As at 30 June 2024, net debt* to EBITDA*,
excluding the impact of IFRS 16 Leases, was 1.3 times
compared with a covenant not to exceed 3.0 times, and our interest
cover excluding the impact of IFRS 16 Leases was 12.1 times,
compared with a covenant to exceed 4.0 times.
Acquisitions, divestments and
business exits
There were no acquisitions,
divestments or business exits in the six months to 30 June 2024 or
the six months to 30 June 2023.
Specific adjusting
items
In the consolidated income statement, the
Group presents specific adjusting items separately. In the
judgement of the Directors, as a result of the nature and value of
these items they should be disclosed separately from the underlying
results of the Group to allow the reader to obtain an alternative
understanding of the financial information and an indication of the
underlying performance of the Group.
Details of the specific adjusting items
arising during the comparative period are given in note 3 to the
condensed consolidated financial statements.
|
1H
2024
£m
|
1H
2023
£m
|
Specific adjusting
items
|
|
|
Cyber incident recovery costs and
charges
|
(1.1)
|
(12.0)
|
Business closure and exit
costs
|
-
|
(1.8)
|
Restructuring
(charge)/credit
|
(2.3)
|
0.4
|
Total specific adjusting items before income
tax
|
(3.4)
|
(13.4)
|
Income tax credit from specific
adjusting items
|
0.4
|
2.2
|
Total specific adjusting items after income
tax
|
(3.4)
|
(11.2)
|
2024
Cyber incident recovery costs and
charges
As disclosed in the 2023 Annual
Report, the Group experienced a cyber security incident in January
2023. £1.1 million of specialist support costs were incurred in
early 2024, which did not meet the recognition criteria as at 31
December 2023.
Restructuring charge
As disclosed in our 2023 Annual
Report, the Group has taken the opportunity to reduce our global
footprint and rationalise costs in order to focus resources on our
faster growing markets and optimise factory operations. This
restructuring programme commenced in the second half of 2023 and
further costs are anticipated in 2024. A charge of £2.3 million has
been recognised in relation to this and comprises costs associated
with staff redundancies and site closure costs.
2023
Cyber incident recovery costs and
charges
As disclosed in the 2023 Annual
Report, the Group experienced a cyber security incident in January
2023. Costs and charges of £11.2 million were incurred during the
six months to June 2023 relating to system recovery and specialist
support costs and £0.8 million of leased and owned IT assets which
were impacted by the incident were impaired.
Business closure and exit
costs
In July 2023, the Board of our
joint venture in Dalian, China made the decision to liquidate the
entity as the joint venture agreement expired in August 2023. A
£1.8 million charge associated with the liquidation costs was
recognised, mainly in relation to severance costs, costs of
dismantling equipment and advisor fees.
Restructuring credit
The Group recognised a £0.4 million
credit relating mainly to the partial release of a provision
following final settlement of the US multi-employer pension plan
for our Technical Ceramics, Ceramics Cores site which was closed in
2021.
Foreign currency impact
The principal exchange rates used in the
translation of the results of overseas subsidiaries were as
follows:
|
1H 2024
|
1H
2023
|
GBP to:
|
Closing
rate
|
Average
rate
|
Closing
rate
|
Average
rate
|
US dollar
|
1.26
|
1.27
|
1.27
|
1.23
|
Euro
|
1.18
|
1.17
|
1.16
|
1.14
|
For illustrative purposes, the table
below provides details of the impact on 1H 2024 revenue and
adjusted operating profit* if the actual reported results,
calculated using 1H 2024 average exchange rates were restated for
GBP weakening by 10 cents against US dollar in isolation and 10
cents against the Euro in isolation:
Increase in 2024 revenue/adjusted operating
profit1
if:
|
Revenue
£m
|
Adjusted operating
profit1
£m
|
GBP weakens by 10c against the US
dollar in isolation
|
22.2
|
2.8
|
GBP weakens by 10c against the
Euro in isolation
|
10.4
|
1.8
|
1. Definitions of these non-GAAP
measures can be found in the glossary of terms on page 43,
reconciliations of the statutory results to the adjusted measures
can be found on pages 16 to 20.
Cash flow
|
1H
2024
£m
|
1H
2023
£m
|
Cash generated from continuing
operations
|
66.1
|
12.9
|
Net capital expenditure
|
(44.6)
|
(24.0)
|
Net interest on cash and
borrowings
|
(7.3)
|
(4.5)
|
Tax paid
|
(16.0)
|
(15.8)
|
Lease payments and
interest
|
(6.1)
|
(5.7)
|
Free cash flow before acquisitions, disposals and
dividends1
|
(7.9)
|
(37.1)
|
Dividends paid to external plc
shareholders
|
(19.1)
|
(19.1)
|
Net cash flows from other
investing and financing activities
|
(8.7)
|
(2.4)
|
Exchange movement and other
non-cash movements
|
(1.4)
|
(1.4)
|
Opening net debt1
excluding lease liabilities
|
(185.2)
|
(148.5)
|
Closing net debt1
excluding lease liabilities
|
(222.3)
|
(208.5)
|
Closing lease
liabilities
|
(48.2)
|
(49.2)
|
Closing net debt1
|
(270.5)
|
(257.7)
|
1. Definitions of these non-GAAP measures can be found in the
glossary of terms on page 43, reconciliations of the statutory
results to the adjusted measures can be found on pages 16 to
20.
Cash generated from continuing
operations for the six months ended 30 June 2024 was £66.1 million
(1H 2023: £12.9 million). Working capital increased by £22.0
million as a result of an increase in receivables of £15.0 million
and other working capital of £7.0 million. The increase in working
capital is largely driven by the growth in sales.
Free cash flow before acquisitions, disposals and
dividends* was £(7.9) million (1H 2023: £(37.1) million).
Net debt* for the six months ended 30 June 2024 was
£270.5 million (1H 2023: £257.7 million), representing a net debt*
to EBITDA* ratio of 1.5 times (1H 2023: 1.5 times).
Net debt* for the six months ended 30 June 2024
excluding lease liabilities was £222.3 million (1H 2023: £208.5
million), representing a net debt* to EBITDA* ratio excluding the
impact of IFRS 16 Leases
of 1.3 times (1H 2023: 1.3 times).
Further information on the Group's net debt* is
provided in note 10 to the condensed consolidated financial
statements.
Defined benefit pension
plans
The Group pension deficit for the
six months ended 30 June 2024 has decreased by £7.2 million since
31 December 2023 to £18.0 million on an IAS 19 (revised) basis,
with UK discount rates increasing as a result of an increase in
corporate bond yields, whilst the US, Eurozone and the Rest of
World discount rates have remained stable:
·
|
The UK schemes surplus increased
by £3.6 million to £16.1 million (FY 2023: surplus £12.5 million;
1H 2023: deficit £19.0 million), (discount rate 1H 2024: 5.12%; FY
2023: 4.52%; 1H 2023: 5.26%).
|
·
|
The US schemes deficit decreased
by £1.7 million to £3.8 million (FY 2023: £5.5 million; 1H 2023:
£6.9 million), (discount rate 1H 2024: 5.28%; FY 2023: 4.80%; 1H
2023: 4.93%).
|
·
|
The European schemes deficit
decreased by £2.2 million to £26.0 million (FY 2023: £28.2 million;
1H 2023: £27.3 million), (discount rate 1H 2024: 3.80%; FY 2023:
3.40%; 1H 2023: 3.70%).
|
·
|
The Rest of World schemes deficit
increased by £0.3 million to £4.3 million (FY 2023: £4.0 million;
1H 2023: £4.0 million), (discount rate 1H 2024: 5.52%; FY 2023:
5.52%; 1H 2023: 5.30%).
|
Note 12 to the condensed consolidated
financial statements provides additional information on the Group's
pension plans.
The most recent full actuarial
valuations of the UK Schemes were undertaken as at 31 March 2022
and resulted in combined assessed deficits of £49.7 million on the
'Technical Provisions' basis. The Company subsequently agreed with
the Trustees to make a lump sum contribution to the Schemes of
£67.0 million on 29 December 2022 in lieu of the remaining
contributions that would otherwise have been due under the existing
recovery plans from the 31 March 2019 valuations. The sum paid also
represented the value of the deficit on the more prudent 'Long Term
Objective' basis. As a result, no further contributions to the UK
Schemes are expected to be required pending the results of the next
full valuations as at 31 March 2025.
Interim dividend
The Board has resolved to pay an
interim dividend of 5.4 pence (2023: 5.3 pence)
per Ordinary share. The interim dividend will be
paid on 15 November 2024 to Ordinary shareholders on the register
of members at the close of trading on 25 October 2024. The
ex-dividend date will be 24 October 2024.
Principal risks and
uncertainties
The Group has an established risk
management methodology, which seeks to identify, prioritise and
mitigate risks, underpinned by a 'three lines of defence' model
comprising an internal control framework, internal monitoring and
independent assurance processes. The Board considers that risk
management and internal control are fundamental to achieving the
Group aim of creating long-term sustainable shareholder
value.
The current principal risks,
representing those risks that the Board feels could have the most
significant impact on achieving the Group's strategy of building a
sustainable business for the long-term and delivering strong
returns to the Group's shareholders, are set out in the 2023 Annual
Report and Accounts, which are available on the Group's
website at www.morganadvancedmaterials.com
The following are the Group's
principal risks and uncertainties:
·
|
Technical leadership
The Group's strategic success depends on maintaining and developing
its technical leadership in materials science over its competitors.
Unforeseen or unmitigated technology obsolescence, the emergence of
competing technologies, the loss of control of proprietary
technology or the loss of intellectual property/ know-how or
inability to recruit, retain and develop the right people would
negatively impact the Group's ability to achieve its strategic
goals.
|
·
|
Operational execution/organisational
change
As part of the Group's strategy to improve the efficiency of its
operations and organisation, various changes have been made to
operational processes at individual sites and to the Group's
structure. Further improvements and changes are planned for future
years. Failure to manage these changes adequately could result in
interruption to operations or customer service, or a failure to
maximise the Group's opportunities.
|
·
|
Portfolio management
Failure to manage the Group's portfolio of businesses proactively
and in line with this technology profile could lead to the value of
the Group's businesses being eroded over time or to a failure to
exploit opportunities to acquire businesses with the capability to
add further value to the Group.
|
·
|
Macro-economic and political
environment
The Group operates in a range of markets and geographies around the
world and could be affected by political, economic, social or
regulatory developments or instability, for example an economic
slowdown or issues stemming from oil and natural resource price
shocks.
|
·
|
Environment, health and safety
The Group operates a number of manufacturing facilities around the
world. A failure in the Group's EHS procedures could lead to
environmental damage or to injury or death of employees or third
parties, with a consequential impact on operations and increased
risk of regulatory or legal action being taken against the
Group.
|
·
|
Pandemic
The overall risk severity has been
increased based on assessing a potentially higher impact of a
future pandemic. Communicable disease impacts ways of working, the
supply chain and the ability of employees to travel to work in
affected areas. The Company's priority is to take all actions and
precautions necessary to ensure the safety and wellbeing of our
employees.
|
·
|
Climate Change
Global climate change poses
short-term and longer-term challenges for our business. The
expected changes are far-reaching and difficult to
reverse.
|
·
|
Product quality, safety and
liability
Products used in applications for which they were not intended or
inadequate quality control/ over commitment on customer
specifications could result in products not meeting customer
requirements, which could in turn lead to significant liabilities
and reputational damage.
|
·
|
Compliance
A failure to comply with any applicable export, data and other
laws/regulations could result in civil or criminal liabilities
and/or individual or corporate fines and could also result in
debarment from government-related contracts or rejection by
financial market counterparties and reputational damage.
|
·
|
IT & cyber security
Key business system failure might impact the ability of the
business to deliver on its strategic goals. Following the cyber
incident experienced in January 2023, the Group's IT modernisation
security programme has been accelerated.
|
·
|
Supply chain and business
continuity
The Group has a number of potential single-point exposure
risks. These include:
Single-point supplier: a
significant interruption of internal or external key supply could
impact business continuity.
Single-point site: a key site exposed to a strike, a natural
catastrophe or a serious incident, such as fire, could impact
business continuity.
|
·
|
Treasury
The Group's global reach means that it is exposed to uncertainties
in the financial markets, the fiscal jurisdictions where it
operates, and the banking sector. These heighten the Group's
funding, foreign exchange, tax, interest rate, credit and liquidity
risks as well as the risk that a bank failure could impact the
Group's cash.
|
·
|
Pension funding
The Group sponsors several defined benefit pension arrangements,
whose liabilities are subject to fluctuating interest rates,
investment values and inflation. This coupled with the increased
longevity of members and a tougher regulatory funding regime can
result in increased funding burdens on the Group in the
future.
|
·
|
Tax
The Group operates in many jurisdictions around the world and could
be affected by changes in tax laws and regulations within the
complex international tax environment.
|
·
|
Contract management
As a global advanced materials business supplying components into
critical applications, the Group may be exposed to liabilities
arising from the use of its products.
|
·
|
Compliance
A failure to comply with any applicable laws/regulations could
result in civil or criminal liabilities and/or individual or
corporate fines and could also result in debarment from
government-related contracts or rejection by financial market
counterparties and reputational damage.
|
Going concern
The Group's business activities,
together with the factors likely to affect its future development,
performance and position are set out in the 2023 Annual Report and
Accounts on pages 2 to 75. The financial position of the Group, its
cash flows, liquidity position and borrowing facilities, are
described earlier in the Financial Review on pages 64 to 69. In
addition, note 11 to the condensed consolidated financial
statements for the six months ended 30th June 2024 provides details
of the Group's policies and processes for managing financial risk,
details of its financial instruments and hedging activities and
details of its exposures to credit risk and liquidity
risk.
The Group meets its day-to-day
working capital requirements through local banking arrangements
underpinned by the Group's £230 million unsecured multi-currency
revolving credit facility, which matures in November 2028. As at
30th June 2024 the Group had both significant available liquidity
and headroom on its covenants. Total committed borrowing facilities
were £494.8. The amount drawn under these facilities was £335.7m,
which together with net cash and cash equivalents of £115.0m, gave
total headroom of £274.1m. The multi-currency revolving credit
facility was £70.9m drawn. The Group has no scheduled debt
maturities until January 2026.
The principal borrowing facilities
are subject to covenants that are measured semi-annually in June
and December, being net debt to EBITDA of a maximum of 3x and
interest cover of a minimum of 4x, based on measures defined in the
facilities agreements which are adjusted from the equivalent IFRS
amounts.
The Group has carefully modelled
its cash flow outlook, taking account of reasonably possible
changes in trading performance, exchange rates and plausible
downside scenarios. This review indicated that there was sufficient
headroom and liquidity for the business to continue for the
18-month period based on the facilities available as discussed in
note 11 to the financial statements. The Group was also expected to
be in compliance with the required covenants discussed
above.
The Board has also reviewed the
Group's reverse stress testing performed to demonstrate how much
headroom is available on covenant levels in respect of changes in
net debt, EBITDA, and underlying revenue. Based on this assessment,
a combined reduction in EBITDA of 45% and an increase in net debt
of 45% would still allow the Group to operate within its financial
covenants. The Directors do not consider either of these scenarios
to be plausible given the diversity of the Group's end-markets and
its broad manufacturing base.
The Board and Executive Committee
have regular reporting and review processes in place in order to
closely monitor the ongoing operational and financial performance
of the Group. As part of the ongoing risk management process,
principal and emerging risks are identified and reviewed on a
regular basis. In addition, the Directors have assessed the risk of
climate change and do not consider that it will impact the Group's
ability to operate as a going concern for the period under
consideration.
The Board fully recognises the
challenges that lie ahead but, after making enquiries, and in the
absence of any material uncertainties, the Directors have a
reasonable expectation that the Company and the Group have adequate
resources to continue in operational existence for a period of 18
months from the date of signing this Half-yearly report.
Accordingly, they continue to adopt the going concern basis in
preparing the condensed consolidated financial statements for the
six months ended 30 June 2024.
Directors' Responsibility
Statement
The Directors confirm that to the
best of their knowledge:
·
|
The condensed consolidated
financial statements have been prepared in accordance with
UK-adopted IAS 34 Interim
Financial Reporting;
|
·
|
The interim management report for
the six-month period ended 30 June 2024 includes a fair review of
the information required by DTR 4.2.7R (indication of important
events and their impact during the first six months of the
financial year and a description of the principal risks and
uncertainties for the remaining six months of the year);
and
|
·
|
The interim management report for
the six-month period ended 30 June 2024 includes a fair review of
the information required by DTR 4.2.8R (disclosure of related
parties' transactions and changes therein).
|
Information about the current
Directors of Morgan Advanced Materials plc responsible for
providing this Statement is maintained on the Company's website
at www.morganadvancedmaterials.com
By order of the Board
Pete Raby
Chief Executive Officer
Richard Armitage
Chief Financial Officer  
5
August 2024
Definitions and reconciliations of
non-GAAP to GAAP measures
Reference is made to the following
non-GAAP measures throughout this document. These measures are
shown because the Directors consider they provide useful
information to shareholders, including additional insight into
ongoing trading and year-on-year comparisons. These non-GAAP
measures should be viewed as complementary to, not replacements
for, the comparable GAAP measures. As defined in the basis of
preparation on page 6, these measures are calculated on a
continuing basis.
Adjusted operating
profit
Adjusted operating profit is
stated before specific adjusting items and amortisation of
intangible assets. Specific adjusting items are excluded on the
basis that they distort trading performance. Amortisation is
excluded consistent with previous years.
1H 2024
|
Thermal
Products
£m
|
Performance Carbon
£m
|
Technical Ceramics
£m
|
Segment
total
£m
|
Corporate costs1
£m
|
Group
£m
|
Operating profit
|
22.7
|
30.3
|
18.0
|
71.0
|
(4.2)
|
66.8
|
Add back: specific adjusting items
included in operating profit
|
1.0
|
0.8
|
0.4
|
2.2
|
1.2
|
3.4
|
Add back: amortisation of
intangible assets
|
0.5
|
0.2
|
0.4
|
1.1
|
|
1.1
|
Group and segmental adjusted operating
profit/(loss)
|
24.2
|
31.3
|
18.8
|
74.3
|
(3.0)
|
71.3
|
1. Corporate costs consist of
central head office costs.
1H 2023
|
Thermal
Products
£m
|
Performance Carbon
£m
|
Technical Ceramics
£m
|
Segment
total
£m
|
Corporate costs1
£m
|
Group
£m
|
Operating profit
|
13.1
|
18.9
|
18.0
|
50.0
|
(15.5)
|
34.5
|
Add back: specific adjusting items
included in operating profit
|
1.8
|
0.2
|
(1.1)
|
0.9
|
12.5
|
13.4
|
Add back: amortisation of
intangible assets
|
0.9
|
0.5
|
0.7
|
2.1
|
|
2.1
|
Group and segmental adjusted operating
profit/(loss)
|
15.8
|
19.6
|
17.6
|
53.0
|
(3.0)
|
50.0
|
1. Corporate costs consist of
central head office costs.
Organic growth
Organic growth is the growth of
the business excluding the impacts of acquisitions, divestments and
foreign currency impacts. This measure is used as
it allows revenue and adjusted operating profit to be compared on a
like-for-like basis.
Commentary on the underlying
business performance is included as part of the operating review on
pages 6 to 11.
Year-on-year movements in segment
revenue
|
Thermal
Products
|
Performance Carbon
|
Technical Ceramics
|
Segment
total1
|
|
£m
|
£m
|
£m
|
£m
|
|
|
|
|
|
1H 2023
|
231.4
|
157.4
|
165.1
|
553.9
|
|
|
|
|
|
Impact of foreign currency
movements
|
(14.2)
|
(5.9)
|
(3.7)
|
(23.8)
|
Impacts of acquisitions, disposals
and business exits
|
(0.9)
|
|
|
(0.9)
|
Organic constant-currency
change
|
5.2
|
27.4
|
10.8
|
43.4
|
Organic constant-currency change %
|
2.4%
|
18.1%
|
6.7%
|
8.2%
|
|
|
|
|
|
1H 2024
|
221.5
|
178.9
|
172.2
|
572.6
|
Year-on-year movements in segment
and Group adjusted operating profit
|
Thermal
Products
|
Performance Carbon
|
Technical Ceramics
|
Segment
total
|
Corporate costs1
|
Group
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
|
|
|
|
|
|
1H 2023
|
15.8
|
19.6
|
17.6
|
53.0
|
(3.0)
|
50.0
|
|
|
|
|
|
|
|
Impact of foreign currency
movements
|
(3.5)
|
(0.9)
|
(1.0)
|
(5.4)
|
|
(5.4)
|
Impact of acquisitions, disposals
and business exits
|
0.1
|
|
|
(0.1)
|
|
(0.1)
|
Organic constant-currency
change
|
11.8
|
12.6
|
2.2
|
26.6
|
|
26.6
|
Organic constant-currency change %
|
95.2%
|
67.4%
|
13.3%
|
55.8%
|
|
59.5%
|
|
|
|
|
|
|
|
1H 2024
|
24.2
|
31.3
|
18.8
|
74.3
|
(3.0)
|
71.3
|
1. Corporate costs consist of the
cost of the central head office.
Group EBITDA
Group EBITDA is defined as
operating profit before specific adjusting items, depreciation and
amortisation of intangible assets. The Group uses this measure as
it is a key metric in covenants over debt facilities, these
covenants use EBITDA on a pre-IFRS 16 basis i.e. excluding capital
and interest payments on leases which have been capitalised
following the adoption of IFRS 16. This is used as a proxy for the
charge that would have been attributable to operating leases under
the now defunct IAS 17. A reconciliation of operating profit
to Group EBITDA is as follows:
|
1H 2024
£m
|
1H
2023
£m
|
Operating profit
|
66.8
|
34.5
|
Add back: specific adjusting items
included in operating profit
|
3.4
|
13.4
|
Add back: depreciation - property,
plant and equipment
|
17.0
|
15.7
|
Add back: depreciation -
right-of-use assets
|
4.3
|
3.8
|
Add back: amortisation of
intangible assets
|
1.1
|
2.1
|
Group EBITDA
|
92.6
|
69.5
|
Group EBITDA excluding IFRS 16 Leases impact
|
86.5
|
63.8
|
Free cash flow before
acquisitions, disposals and dividends
Free cash flow before
acquisitions, disposals and dividends is defined as cash generated
from continuing operations less net capital expenditure, net
interest (interest paid on borrowings, overdrafts and lease
liabilities, net of interest received), tax paid and lease
payments.
The Group discloses this measure
of free cash flow as this provides readers of the condensed
consolidated financial statements with a measure of the cash flows
from the business before corporate level cash flows (acquisitions,
disposals and dividends).
A reconciliation of cash generated
from continuing operations to free cash
flow before acquisitions, disposals and dividends is as
follows:
|
1H 2024
£m
|
1H
2023
£m
|
Cash generated from continuing operations
|
66.1
|
12.9
|
Net capital expenditure
|
(44.6)
|
(24.0)
|
Net interest on cash and
borrowings
|
(7.3)
|
(4.5)
|
Tax paid
|
(16.0)
|
(15.8)
|
Lease payments and
interest
|
(6.1)
|
(5.7)
|
Free cash flow before acquisitions, disposals and
dividends
|
(7.9)
|
(37.1)
|
Net cash and cash
equivalents
Net cash and cash equivalents is
defined as cash and cash equivalents less bank overdrafts. The
Group also discloses this measure as it provides an indication of
the net short-term liquidity available to the Group.
|
1H 2024
£m
|
1H
2023
£m
|
Cash and cash
equivalents
|
116.6
|
137.5
|
Bank overdrafts
|
(1.6)
|
(7.2)
|
Net cash and cash equivalents
|
115.0
|
130.3
|
Net debt
Net debt is defined as borrowings,
bank overdrafts and lease liabilities, less cash and cash
equivalents. The Group discloses net debt because it helps readers
of the consolidated financial statements assess its ability to meet
financial obligations, manage debt and its capacity to invest in
growth opportunities. The Group also discloses this metric
excluding lease liabilities as this is the measure used in the
covenants over the Group's debt facilities.
|
1H 2024
£m
|
1H
2023
£m
|
Cash and cash
equivalents
|
116.6
|
137.5
|
Non-current borrowings
|
(337.3)
|
(305.9)
|
Non-current lease
liabilities
|
(39.3)
|
(38.0)
|
Current borrowings and bank
overdrafts
|
(1.6)
|
(40.1)
|
Current lease
liabilities
|
(8.9)
|
(11.2)
|
Closing net debt
|
(270.5)
|
(257.7)
|
Closing net debt excluding IFRS 16 Leases liabilities
|
(222.3)
|
(208.5)
|
Return on invested
capital
The Group discloses return on
invested capital (ROIC) to assess its efficiency in generating
profits from the capital it has invested in its operations. ROIC is
defined as 12-month adjusted operating profit (operating profit
excluding specific adjusting items and amortisation of intangible
assets) divided by the average adjusted net assets (excludes
long-term employee benefits, deferred tax assets and liabilities,
current tax payable, provisions, cash and cash equivalents,
borrowings, bank overdrafts and lease liabilities). Third party
working capital includes inventories, trade and other receivables,
and trade and other payables.
|
1H 2024
£m
|
1H
2023
£m
|
Operating profit before specific
adjusting items
|
139.3
|
124.0
|
Add back: amortisation of
intangible assets
|
2.3
|
4.5
|
Group adjusted operating profit
|
141.6
|
128.5
|
|
|
|
Average adjusted net
assets:
|
|
|
Third-party working
capital
|
210.1
|
197.5
|
Property, Plant and
equipment
|
293.6
|
271.7
|
Goodwill
|
177.2
|
179.3
|
Right-of-use assets
|
32.4
|
32.5
|
Intangible assets
|
4.2
|
6.8
|
Average adjusted net assets
|
717.5
|
687.8
|
|
|
|
ROIC
|
19.7%
|
18.7%
|
ROIC excluding IFRS 16 Leases impact
|
20.7%
|
19.6%
|
Adjusted earnings per
share
Adjusted earnings per share is
defined as operating profit adjusted to exclude specific adjusting
items and amortisation of intangible assets, less net financing
costs, income tax expense and non-controlling interests, divided by
the weighted average number of Ordinary shares during the period.
This measure of earnings is shown because the Directors consider
that it provides a helpful indication of the Group's financial
performance excluding material non-recurring expenses or gains and
non-financial asset impairments and impairment reversals, and
therefore facilitates the evaluation of the Group's performance
over time.
A reconciliation from IFRS profit to the
profit used to calculate adjusted earnings per share is included in
note 7 to the condensed consolidated financial
statements.
Constant-currency revenue and
adjusted operating profit
Constant-currency revenue and
adjusted operating profit are derived by translating the prior year
results at current year average exchange rates. These measures are
used as they allow revenue to be compared excluding the impact of
foreign exchange rates. Page 9 provides further information on the
principal foreign currency exchange rates used in the translation
of the Group's results to constant-currency at average exchange
rates.
Condensed consolidated income
statement
|
|
Six months
ended
30 June
2024
|
|
Six
months ended
30 June
2023
|
|
Year
ended
31
December 2023
|
|
|
Results
before
specific
adjusting
items
|
Specific
adjusting
items 1
|
Total
|
|
Results
before
specific
adjusting items
|
Specific
adjusting
items 1
|
Total
|
|
Results
before
specific
adjusting items
|
Specific
adjusting
items 1
|
Total
|
|
Note
|
£m
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
Revenue
|
2
|
572.6
|
-
|
572.6
|
|
553.9
|
-
|
553.9
|
|
1,114.7
|
-
|
1,114.7
|
Operating costs before
amortisation of intangible assets, impairments and reversal of
impairments of non-financial assets
|
|
(501.3)
|
(3.4)
|
(504.7)
|
|
(503.9)
|
(13.4)
|
(517.3)
|
|
(994.4)
|
(25.9)
|
(1,020.3)
|
Profit from operations before amortisation of intangible
assets, impairments and reversals
of impairments of non-financial assets
|
2
|
71.3
|
(3.4)
|
67.9
|
|
50.0
|
(13.4)
|
36.6
|
|
120.3
|
(25.9)
|
94.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortisation of intangible
assets
|
|
(1.1)
|
-
|
(1.1)
|
|
(2.1)
|
-
|
(2.1)
|
|
(3.3)
|
-
|
(3.3)
|
Impairment of non-financial
assets
|
3
|
-
|
-
|
-
|
|
-
|
-
|
-
|
|
-
|
(7.3)
|
(7.3)
|
Reversal of impairment of
non-financial assets
|
3
|
-
|
-
|
-
|
|
-
|
-
|
-
|
|
-
|
8.1
|
8.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit
|
2
|
70.2
|
(3.4)
|
66.8
|
|
47.9
|
(13.4)
|
34.5
|
|
117.0
|
(25.1)
|
91.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance income
|
|
1.3
|
-
|
1.3
|
|
2.2
|
-
|
2.2
|
|
3.9
|
-
|
3.9
|
Finance expense
|
|
(10.6)
|
-
|
(10.6)
|
|
(8.3)
|
-
|
(8.3)
|
|
(18.0)
|
-
|
(18.0)
|
Net financing costs
|
4
|
(9.3)
|
-
|
(9.3)
|
|
(6.1)
|
-
|
(6.1)
|
|
(14.1)
|
-
|
(14.1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before taxation
|
|
60.9
|
(3.4)
|
57.5
|
|
41.8
|
(13.4)
|
28.4
|
|
102.9
|
(25.1)
|
77.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
5
|
(15.8)
|
0.4
|
(15.4)
|
|
(11.3)
|
2.2
|
(9.1)
|
|
(26.0)
|
3.8
|
(22.2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit from continuing operations
|
|
45.1
|
(3.0)
|
42.1
|
|
30.5
|
(11.2)
|
19.3
|
|
76.9
|
(21.3)
|
55.6
|
Profit from discontinued
operations
|
6
|
-
|
-
|
-
|
|
-
|
-
|
-
|
|
-
|
0.7
|
0.7
|
Profit for the period
|
|
45.1
|
(3.0)
|
42.1
|
|
30.5
|
(11.2)
|
19.3
|
|
76.9
|
(20.6)
|
56.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the period attributable
to:
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders of the
Company
|
|
40.4
|
(3.0)
|
37.4
|
|
26.0
|
(11.2)
|
14.8
|
|
67.9
|
(20.6)
|
47.3
|
Non-controlling
interests
|
|
4.7
|
-
|
4.7
|
|
4.5
|
-
|
4.5
|
|
9.0
|
-
|
9.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the period
|
|
45.1
|
(3.0)
|
42.1
|
|
30.5
|
(11.2)
|
19.3
|
|
76.9
|
(20.6)
|
56.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
|
7
|
|
|
|
|
|
|
|
|
|
|
|
Continuing and discontinued operations
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share
|
|
|
|
13.2p
|
|
|
|
5.2p
|
|
|
|
16.6p
|
Diluted earnings per
share
|
|
|
|
13.0p
|
|
|
|
5.2p
|
|
|
|
16.5p
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share
|
|
|
|
13.2p
|
|
|
|
5.2p
|
|
|
|
16.4p
|
Diluted earnings per
share
|
|
|
|
13.0p
|
|
|
|
5.2p
|
|
|
|
16.3p
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends2
|
|
|
|
|
|
|
|
|
|
|
|
|
Proposed interim dividend -
pence
|
|
|
|
5.40p
|
|
|
|
5.30p
|
|
|
|
5.30p
|
- £m
|
|
|
|
15.4
|
|
|
|
15.1
|
|
|
|
15.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Final dividend -
pence
|
|
|
|
|
|
|
|
|
|
|
|
6.70p
|
- £m
|
|
|
|
|
|
|
|
|
|
|
|
19.1
|
1. Details of specific adjusting
items are given in note 3 to the condensed consolidated financial
statements.
2. The
proposed interim and approved final dividends are based upon the
number of shares outstanding at the balance sheet date.
Condensed consolidated statement
of comprehensive income
|
At 30 June
2024
|
At 30
June 2023
|
At 31
December 2023
|
|
£m
|
£m
|
£m
|
|
|
|
|
Profit for the period
|
42.1
|
19.3
|
56.3
|
|
|
|
|
Other comprehensive income/(expense):
|
|
|
|
Items that will not be reclassified subsequently to profit or
loss:
|
|
|
|
Remeasurement gain/(loss) on
defined benefit plans
|
6.2
|
(5.0)
|
(11.5)
|
Tax effect of components of other
comprehensive income not reclassified
|
(0.8)
|
(0.4)
|
(0.5)
|
|
5.4
|
(5.4)
|
(12.0)
|
Items that may be reclassified subsequently to profit or
loss:
|
|
|
|
Foreign exchange translation
differences
|
(6.7)
|
(27.5)
|
(32.8)
|
Net investment hedges:
|
|
|
|
Change
in fair value
|
1.1
|
(0.3)
|
(0.3)
|
|
Cash flow hedges:
|
|
|
|
Change in
fair value
|
(0.8)
|
0.5
|
1.1
|
Transferred to profit or loss
|
(0.5)
|
(0.1)
|
0.2
|
|
(6.9)
|
(27.4)
|
(31.8)
|
Total other comprehensive income
|
(1.5)
|
(32.8)
|
(43.8)
|
Total comprehensive income
|
40.6
|
(13.5)
|
12.5
|
|
|
|
|
Attributable to:
|
|
|
|
Shareholders of the
Company
|
36.8
|
(14.3)
|
6.7
|
Non-controlling
interests
|
3.8
|
0.8
|
5.8
|
|
40.6
|
(13.5)
|
12.5
|
|
|
|
|
Total comprehensive income attributable to shareholders of
the Company arising from:
|
|
|
|
Continuing operations
|
36.8
|
(14.3)
|
6.0
|
Discontinued operations
|
-
|
-
|
0.7
|
|
36.8
|
(14.3)
|
6.7
|
Condensed consolidated balance
sheet
|
|
At 30 June
2024
|
At 30
June 2023
|
At 31
December 2023
|
|
Note
|
£m
|
£m
|
£m
|
Assets
|
|
|
|
|
Property, plant and
equipment
|
8
|
311.6
|
275.6
|
293.8
|
Right-of-use assets
|
|
33.0
|
31.7
|
31.6
|
Intangible assets:
goodwill
|
9
|
177.2
|
177.3
|
177.5
|
Intangible assets:
other
|
9
|
3.8
|
4.6
|
4.7
|
Investments
|
|
1.0
|
-
|
2.2
|
Other receivables
|
|
2.0
|
3.0
|
3.4
|
Deferred tax assets
|
|
17.2
|
14.5
|
17.6
|
Total non-current assets
|
|
545.8
|
506.7
|
530.8
|
Inventories
|
|
182.2
|
181.4
|
175.1
|
Derivative financial
assets
|
11
|
0.3
|
0.8
|
1.5
|
Trade and other
receivables
|
|
208.2
|
227.7
|
191.6
|
Current tax receivable
|
|
1.3
|
0.5
|
1.2
|
Cash and cash
equivalents
|
10
|
116.6
|
137.5
|
124.5
|
Total current assets
|
|
508.6
|
547.9
|
493.9
|
Total assets
|
|
1,054.4
|
1,054.6
|
1,024.7
|
Liabilities
|
|
|
|
|
Borrowings
|
10
|
337.3
|
305.9
|
309.1
|
Lease liabilities
|
|
39.3
|
38.0
|
36.6
|
Employee benefits:
pensions
|
12
|
18.0
|
19.2
|
25.2
|
Provisions
|
13
|
10.5
|
9.5
|
11.5
|
Non-trade payables
|
|
2.4
|
1.8
|
2.4
|
Deferred tax
liabilities
|
|
2.4
|
2.8
|
1.8
|
Total non-current liabilities
|
|
409.9
|
377.2
|
386.6
|
Borrowings and bank
overdrafts
|
10
|
1.6
|
40.1
|
0.6
|
Lease liabilities
|
|
8.9
|
11.2
|
10.5
|
Trade and other
payables
|
|
187.2
|
192.2
|
192.0
|
Current tax payable
|
|
24.7
|
22.2
|
25.6
|
Provisions
|
13
|
9.0
|
13.7
|
10.3
|
Derivative financial
liabilities
|
11
|
0.8
|
0.6
|
0.5
|
Total current liabilities
|
|
232.2
|
280.0
|
239.5
|
Total liabilities
|
|
642.1
|
657.2
|
626.1
|
Total net assets
|
|
412.3
|
397.4
|
398.6
|
Equity
|
|
|
|
|
Share capital
|
|
71.3
|
71.3
|
71.3
|
Share premium
|
|
111.7
|
111.7
|
111.7
|
Reserves
|
|
0.5
|
11.4
|
6.5
|
Retained earnings
|
|
191.2
|
163.2
|
170.8
|
Total equity attributable to shareholders of the
Company
|
|
374.7
|
357.6
|
360.3
|
Non-controlling interests
|
|
37.6
|
39.8
|
38.3
|
Total equity
|
|
412.3
|
397.4
|
398.6
|
Condensed consolidated statement
of changes in equity
|
Share
capital
|
Share
premium
|
Translation
reserve
|
Hedging
reserve
|
Fair value
reserve
|
Capital redemption
reserve
|
Other
reserves
|
Retained
earnings
|
Total parent
equity
|
Non-controlling
interests
|
Total
equity
|
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
At 1 January 2023
|
71.3
|
111.7
|
-
|
(0.2)
|
(1.0)
|
35.7
|
0.6
|
170.9
|
389.0
|
40.6
|
429.6
|
|
Profit for the period
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
14.8
|
14.8
|
4.5
|
19.3
|
|
Other comprehensive income/(expense):
|
|
|
|
|
|
|
|
|
|
|
|
Remeasurement loss on defined
benefit plans and related taxes
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(5.4)
|
(5.4)
|
-
|
(5.4)
|
|
Foreign exchange
differences
|
-
|
-
|
(23.8)
|
-
|
-
|
-
|
-
|
-
|
(23.8)
|
(3.7)
|
(27.5)
|
|
Cash flow hedging fair value
changes and transfers
|
-
|
-
|
-
|
0.4
|
-
|
-
|
-
|
-
|
0.4
|
-
|
0.4
|
|
Net investment hedging fair value
changes and transfers
|
-
|
-
|
-
|
(0.3)
|
-
|
-
|
-
|
-
|
(0.3)
|
-
|
(0.3)
|
|
Total comprehensive income/(expense)
|
-
|
-
|
(23.8)
|
0.1
|
-
|
-
|
-
|
9.4
|
(14.3)
|
0.8
|
(13.5)
|
|
Transactions with owners:
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(19.1)
|
(19.1)
|
(1.6)
|
(20.7)
|
|
Equity-settled share-based
payments
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
2.6
|
2.6
|
-
|
2.6
|
|
Own shares acquired for share
incentive schemes (net)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(0.6)
|
(0.6)
|
-
|
(0.6)
|
|
At 30 June 2023
|
71.3
|
111.7
|
(23.8)
|
(0.1)
|
(1.0)
|
35.7
|
0.6
|
163.2
|
357.6
|
39.8
|
397.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 January 2023
|
71.3
|
111.7
|
-
|
(0.2)
|
(1.0)
|
35.7
|
0.6
|
170.9
|
389.0
|
40.6
|
429.6
|
|
Profit for the year
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
47.3
|
47.3
|
9.0
|
56.3
|
|
Other comprehensive income/(expense):
|
|
|
|
|
|
|
|
|
|
|
|
Remeasurement loss on defined
benefit plans and related taxes
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(12.0)
|
(12.0)
|
-
|
(12.0)
|
|
Foreign exchange differences and
related taxes
|
-
|
-
|
(29.6)
|
-
|
-
|
-
|
-
|
-
|
(29.6)
|
(3.2)
|
(32.8)
|
|
Cash flow hedging fair value
changes and transfers
|
-
|
-
|
-
|
1.3
|
-
|
-
|
-
|
-
|
1.3
|
-
|
1.3
|
|
Net investment hedging
fair
value changes and
transfers
|
-
|
-
|
(0.3)
|
-
|
-
|
-
|
-
|
-
|
(0.3)
|
-
|
(0.3)
|
|
Total comprehensive income/(expense)
|
-
|
-
|
(29.9)
|
1.3
|
-
|
-
|
-
|
35.3
|
6.7
|
5.8
|
12.5
|
|
Transactions with owners:
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(34.2)
|
(34.2)
|
(8.1)
|
(42.3)
|
|
Equity settled share-based
payments
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
2.9
|
2.9
|
-
|
2.9
|
|
Own shares acquired for share
incentive schemes (net)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(4.1)
|
(4.1)
|
-
|
(4.1)
|
|
At 31 December 2023
|
71.3
|
111.7
|
(29.9)
|
1.1
|
(1.0)
|
35.7
|
0.6
|
170.8
|
360.3
|
38.3
|
398.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 January 2024
|
71.3
|
111.7
|
(29.9)
|
1.1
|
(1.0)
|
35.7
|
0.6
|
170.8
|
360.3
|
38.3
|
398.6
|
|
Profit for the period
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
37.4
|
37.4
|
4.7
|
42.1
|
|
Other comprehensive income/(expense):
|
|
|
|
|
|
|
|
|
|
|
|
Remeasurement gain on defined
benefit plans and related taxes
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
5.4
|
5.4
|
-
|
5.4
|
|
Foreign exchange
differences
|
-
|
-
|
(5.8)
|
-
|
-
|
-
|
-
|
-
|
(5.8)
|
(0.9)
|
(6.7)
|
|
Cash flow hedging fair value
changes and transfers
|
-
|
-
|
-
|
(1.3)
|
-
|
-
|
-
|
-
|
(1.3)
|
-
|
(1.3)
|
|
Net investment hedging
fair
value changes and
transfers
|
-
|
-
|
1.1
|
-
|
-
|
-
|
-
|
-
|
1.1
|
-
|
1.1
|
|
Total comprehensive income/(expense)
|
-
|
-
|
(4.7)
|
(1.3)
|
-
|
-
|
-
|
42.8
|
36.8
|
3.8
|
40.6
|
|
Transactions with owners:
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(19.1)
|
(19.1)
|
(2.3)
|
(21.4)
|
|
Purchase of non-controlling
interest
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(2.7)
|
(2.7)
|
(2.2)
|
(4.9)
|
|
Equity-settled share-based
payments
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
2.7
|
2.7
|
-
|
2.7
|
|
Own shares acquired for share
incentive schemes (net)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(3.3)
|
(3.3)
|
-
|
(3.3)
|
|
At 30 June 2024
|
71.3
|
111.7
|
(34.6)
|
(0.2)
|
(1.0)
|
35.7
|
0.6
|
191.2
|
374.7
|
37.6
|
412.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Condensed consolidated statement
of cash flows
|
|
Six months
ended
30 June
2024
|
Six
months ended
30 June
20231
|
Year
ended
31
December 20231
|
|
Note
|
£m
|
£m
|
£m
|
Operating activities
|
|
|
|
|
Profit for the period from
continuing operations
|
|
42.1
|
19.3
|
55.6
|
Profit for the period from
discontinued operations
|
6
|
-
|
-
|
0.7
|
|
|
|
|
|
Adjustments for:
|
|
|
|
|
Depreciation - property, plant and equipment
|
2,8
|
17.0
|
15.7
|
31.9
|
Depreciation - right-of-use assets
|
2
|
4.3
|
3.8
|
7.6
|
Amortisation
|
2,9
|
1.1
|
2.1
|
3.3
|
Net
financing costs
|
4
|
9.3
|
6.1
|
14.1
|
Non-cash
specific adjusting items included in operating profit
|
3
|
(0.2)
|
0.8
|
(2.5)
|
Fair
value gain on equity instruments held at FVTPL
|
|
(1.0)
|
-
|
(0.9)
|
Profit on
sale of property, plant and equipment
|
|
(0.1)
|
-
|
(1.6)
|
Income
tax expense
|
5
|
15.4
|
9.1
|
22.2
|
Equity-settled share-based payment expenses
|
|
2.7
|
2.6
|
2.9
|
Cash generated from operations before changes in working
capital and provisions
|
|
90.6
|
59.5
|
133.3
|
|
|
|
|
|
Increase in trade and other
receivables
|
|
(15.0)
|
(34.3)
|
(4.0)
|
Increase in inventories
|
|
(9.1)
|
(17.2)
|
(12.3)
|
Increase in trade and other
payables
|
|
2.1
|
6.3
|
13.3
|
Decrease in provisions
|
|
(2.0)
|
(1.6)
|
(3.4)
|
Payments to defined benefit
pension plans (net of IAS 19 pension charges)
|
|
(0.5)
|
0.2
|
(0.2)
|
Cash generated from operations
|
|
66.1
|
12.9
|
126.7
|
|
|
|
|
|
Interest paid - borrowings and
overdrafts
|
|
(8.6)
|
(6.7)
|
(15.5)
|
Interest paid - lease
liabilities
|
|
(1.3)
|
(1.1)
|
(2.4)
|
Income tax paid
|
|
(16.0)
|
(15.8)
|
(30.3)
|
Net cash from operating activities
|
|
40.2
|
(10.7)
|
78.5
|
|
|
|
|
|
Investing activities
|
|
|
|
|
Purchase of property, plant and
equipment and software
|
|
(45.9)
|
(24.0)
|
(60.4)
|
Purchase of investments
|
|
-
|
(0.2)
|
(5.6)
|
Proceeds from sale of property,
plant and equipment
|
|
0.7
|
-
|
1.8
|
Grants received for purchase of
equipment
|
|
0.6
|
-
|
0.1
|
Interest received
|
|
1.3
|
2.2
|
3.9
|
Disposal of investments
|
|
1.8
|
-
|
-
|
Net cash from investing activities
|
|
(41.5)
|
(22.0)
|
(60.2)
|
|
|
|
|
|
Financing activities
|
|
|
|
|
Purchase of own shares for share
incentive schemes
|
|
(3.7)
|
(0.7)
|
(4.7)
|
Net proceeds from exercise of
share options
|
|
0.4
|
0.1
|
0.6
|
Increase in borrowings
|
|
44.2
|
194.8
|
247.2
|
Reduction and repayment of
borrowings
|
|
(14.7)
|
(112.2)
|
(193.0)
|
Payment of lease
liabilities
|
|
(4.8)
|
(4.6)
|
(8.9)
|
Dividends paid to shareholders of
the Company
|
|
(19.1)
|
(19.1)
|
(34.2)
|
Dividends paid to non-controlling
interests
|
|
(2.3)
|
(1.6)
|
(8.1)
|
Purchase of non-controlling
interest
|
|
(4.9)
|
-
|
-
|
Net cash from financing activities
|
|
(4.9)
|
56.7
|
(1.1)
|
|
|
|
|
|
Net (decrease)/increase in net
cash and cash equivalents
|
|
(6.2)
|
24.0
|
17.2
|
Net cash and cash equivalents at
start of period
|
|
123.9
|
116.2
|
116.2
|
Effect of exchange rate
fluctuations on cash held
|
|
(2.7)
|
(9.9)
|
(9.5)
|
Net cash and cash equivalents at period end
|
10
|
115.0
|
130.3
|
123.9
|
1. The condensed consolidated
statement of cash flows for the six months ended 30 June 2023 and
the year ended 31 December 2023 have been re-presented to net bank
overdrafts against cash and cash equivalents.
Notes to the condensed
consolidated financial statements
Note 1. Basis of preparation,
accounting policies and judgment and estimates
Morgan Advanced Materials plc (the
'Company') is a company incorporated in the UK under the Companies
Act 2006.
The unaudited condensed
consolidated financial statements of the Company for the six months
ended 30 June 2024 comprise the Company and the Group's
subsidiaries (together 'the Group').
The condensed consolidated
financial statements for the six months ended 30 June 2024 have
been prepared in accordance with International Accounting Standard
34 Interim Financial
Reporting and International Financial Reporting Standards
('IFRSs') as adopted by the UK. There has been no change to the
recognition, measurement or disclosure from preparation in previous
periods under IFRSs as adopted by the European Union. Selected
explanatory notes are included to explain events and transactions
that are significant to an understanding of the changes in
financial position and performance of the Group since the last
annual consolidated financial statements for the year ended 31
December 2023.
The condensed consolidated
financial statements and the comparative information for the six
months ended 30 June 2024 have neither been audited nor reviewed,
do not comprise statutory accounts for the purpose of section 434
of Companies Act 2006 and should be read in conjunction with the
Annual Report and Accounts for the year ended 31 December 2023.
Those accounts have been reported on by the Group's auditor and
delivered to the Registrar of Companies. The report of the auditor
was unqualified, did not include a reference to any matters to
which the auditor drew attention by way of emphasis without
qualifying his report, and did not contain a statement under
section 498(2) or (3) of the Companies Act 2006. The condensed
consolidated financial statements have been prepared on a going
concern basis, see page 28 for further details.
The consolidated financial
statements of the Group for the year ended 31 December 2023 are
available on request from the Company's registered office at York
House, Sheet Street, Windsor, SL4 1DD or at morganadvancedmaterials.com.
The condensed consolidated
financial statements for the six months ended 30 June 2024 were
approved by the Board on 5 August 2024.
Accounting policies
As required by the Disclosure and
Transparency Rules of the Financial Conduct Authority, these
condensed consolidated financial statements have been prepared by
applying the accounting policies that were applied in the
preparation of the Group's published consolidated financial
statements for the year ended 31 December 2023, except for newly
effective standards listed below.
Use of judgements and
estimates
Preparing the condensed
consolidated financial statements requires management to make
judgements, estimates and assumptions that affect the application
of accounting policies and the reported amounts of assets and
liabilities, income and expense. Actual results may differ from
these estimates. The Group's critical accounting judgments and key
sources of estimation uncertainty remain unchanged from those set
out in the Group's consolidated financial statements for the year
ended 31 December 2023.
Adoption of new and revised
accounting standards
There are no new standards that
became effective during the period.
During the period the following
amendments to standards became effective. The amendments did not
have a material impact on the Group:
·
|
Classification of Liabilities as
Current or Non-Current (Amendments to IAS 1);
|
·
|
Lease Liability in a Sale and
Leaseback (Amendments to IFRS 16);
|
·
|
Non-current Liabilities with
Covenants (Amendments to IAS 1);
|
·
|
Supplier Finance Arrangements
(Amendments to IAS 7 and IFRS 7).
|
Accounting developments and
changes
There are no new standards or
interpretations that are in issue but not yet effective.
Non-GAAP measures
Where non-GAAP measures have been
referenced, these have been identified by an asterisk (*) where
they appear in text and by a footnote where they appear in a table.
Definitions of these non-GAAP measures, and their
reconciliation to the relevant GAAP measure, are provided on
pages 16 to 20.
Going concern
The Group's business activities,
together with the factors likely to affect its future development,
performance and position are set out in the 2023 Annual Report and
Accounts on pages 2 to 75. The financial position of the Group, its
cash flows, liquidity position and borrowing facilities, are
described earlier in the Financial Review on pages 64 to 69. In
addition, note 11 to the condensed consolidated financial
statements for the six months ended 30 June 2024 provides details
of the Group's policies and processes for managing financial risk,
details of its financial instruments and hedging activities and
details of its exposures to credit risk and liquidity
risk.
The Group meets its day-to-day
working capital requirements through local banking arrangements
underpinned by the Group's £230.0 million unsecured multi-currency
revolving credit facility, which matures in November 2028. As at 30
June 2024 the Group had both significant available liquidity and
headroom on its covenants. Total committed borrowing facilities
were £494.8 million. The amount drawn under these facilities was
£335.7 million, which together with net cash and cash equivalents
of £115.0 million, gave total headroom of £274.1 million. The
multi-currency revolving credit facility was £70.9 million drawn.
The Group has no scheduled debt maturities until January
2026.
The principal borrowing facilities
are subject to covenants that are measured semi-annually in June
and December, being net debt to EBITDA of a maximum of 3 times and
interest cover of a minimum of 4 times, based on measures defined
in the facilities agreements which are adjusted from the equivalent
IFRS amounts.
The Group has carefully modelled
its cash flow outlook, taking account of reasonably possible
changes in trading performance, exchange rates and plausible
downside scenarios. This review indicated that there was sufficient
headroom and liquidity for the business to continue for the
18-month period based on the facilities available as discussed in
note 11 to the financial statements. The Group was also expected to
be in compliance with the required covenants discussed
above.
The Board has also reviewed the
Group's reverse stress testing performed to demonstrate how much
headroom is available on covenant levels in respect of changes in
net debt, EBITDA, and underlying revenue. Based on this assessment,
a combined reduction in EBITDA of 45% and an increase in net debt
of 45% would still allow the Group to operate within its financial
covenants. The Directors do not consider either of these scenarios
to be plausible given the diversity of the Group's end markets and
its broad manufacturing base.
The Board and Executive Committee
have regular reporting and review processes in place in order to
closely monitor the ongoing operational and financial performance
of the Group. As part of the ongoing risk
management process, principal and emerging risks are identified and
reviewed on a regular basis. In addition,
the Directors have assessed the risk of climate change and do not
consider that it will impact the Group's ability to operate as a
going concern for the period under consideration.
The Board fully recognises the
challenges that lie ahead but, after making enquiries, and in the
absence of any material uncertainties, the Directors have a
reasonable expectation that the Company and the Group have adequate
resources to continue in operational existence for a period of 18
months from the date of signing this Half-yearly report.
Accordingly, they continue to adopt the going concern basis in
preparing the condensed consolidated financial statements for the
six months ended 30 June 2024.
Note 2. Segment
reporting
As announced with the 2023
financial results, the Group is now managed through three distinct
segments, as detailed below. These have been identified on the
basis of internal management reporting information that is
regularly reviewed by the Group's Board of Directors (the Chief
Operating Decision Maker) in order to allocate resources and assess
performance.
Segment results, assets and
liabilities include items directly attributable to a segment as
well as those that can be allocated on a reasonable basis.
Unallocated items comprise mainly investments and related income,
borrowings and related expenses, corporate assets and head office
expenses, and income tax assets and liabilities.
The information presented below
represents the operating segments of the Group.
Six months ended 30 June 2024
|
|
|
Thermal
Products
|
Performance Carbon
|
Technical Ceramics
|
Segment
totals
|
Corporate costs
|
Group
|
Continuing operations
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
|
|
|
|
|
|
Revenue from external customers
|
221.5
|
178.9
|
172.2
|
572.6
|
-
|
572.6
|
|
|
|
|
|
|
|
Segment adjusted operating
profit1
|
24.2
|
31.3
|
18.8
|
74.3
|
-
|
74.3
|
Corporate costs
|
|
|
|
|
(3.0)
|
(3.0)
|
Group adjusted operating profit1
|
|
|
|
|
|
71.3
|
Amortisation of intangible
assets
|
(0.5)
|
(0.2)
|
(0.4)
|
(1.1)
|
-
|
(1.1)
|
Operating profit before specific adjusting
items
|
23.7
|
31.1
|
18.4
|
73.2
|
(3.0)
|
70.2
|
Specific adjusting items included
in operating profit2
|
(1.0)
|
(0.8)
|
(0.4)
|
(2.2)
|
(1.2)
|
(3.4)
|
Operating profit
|
22.7
|
30.3
|
18.0
|
71.0
|
(4.2)
|
66.8
|
Finance income
|
|
|
|
|
|
1.3
|
Finance expense
|
|
|
|
|
|
(10.6)
|
Profit before taxation
|
|
|
|
|
|
57.5
|
|
|
|
|
|
|
|
Segment assets
|
377.0
|
307.9
|
230.4
|
915.3
|
139.1
|
1,054.4
|
|
|
|
|
|
|
|
Segment liabilities
|
100.8
|
51.9
|
82.5
|
235.2
|
406.9
|
642.1
|
|
|
|
|
|
|
|
Segment capital
expenditure
|
8.0
|
25.8
|
11.5
|
45.3
|
0.6
|
45.9
|
|
|
|
|
|
|
|
Segment depreciation - property,
plant and equipment
|
7.3
|
5.6
|
4.1
|
17.0
|
-
|
17.0
|
|
|
|
|
|
|
|
Segment depreciation -
right-of-use assets
|
1.9
|
0.8
|
1.6
|
4.3
|
-
|
4.3
|
|
|
|
|
|
|
|
Segment impairment of
non-financial assets
|
-
|
-
|
-
|
-
|
-
|
-
|
1. Definitions of these non-GAAP
measures can be found in the glossary of terms on page 43,
reconciliations of the statutory results to the adjusted measures
can be found on pages 16 to 20.
2. Details of specific adjusting
items are given in note 3 to the condensed consolidated financial
statements.
Six months ended 30 June 20233
|
|
|
Thermal
Products
|
Performance Carbon
|
Technical Ceramics
|
Segment
totals
|
Corporate costs
|
Group
|
Continuing operations
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
|
|
|
|
|
|
Revenue from external customers
|
231.4
|
157.4
|
165.1
|
553.9
|
-
|
553.9
|
|
|
|
|
|
|
|
Segment adjusted operating
profit1
|
15.8
|
19.6
|
17.6
|
53.0
|
-
|
53.0
|
Corporate costs
|
|
|
|
|
(3.0)
|
(3.0)
|
Group adjusted operating profit1
|
|
|
|
|
|
50.0
|
Amortisation of intangible
assets
|
(0.9)
|
(0.5)
|
(0.7)
|
(2.1)
|
-
|
(2.1)
|
Operating profit before specific adjusting
items
|
14.9
|
19.1
|
16.9
|
50.9
|
(3.0)
|
47.9
|
Specific adjusting items included
in operating profit2
|
(1.8)
|
(0.2)
|
1.1
|
(0.9)
|
(12.5)
|
(13.4)
|
Operating profit
|
13.1
|
18.9
|
18.0
|
50.0
|
(15.5)
|
34.5
|
Finance income
|
|
|
|
|
|
2.2
|
Finance expense
|
|
|
|
|
|
(8.3)
|
Profit before taxation
|
|
|
|
|
|
28.4
|
|
|
|
|
|
|
|
Segment assets
|
398.3
|
271.4
|
224.8
|
894.5
|
160.1
|
1,054.6
|
|
|
|
|
|
|
|
Segment liabilities
|
100.0
|
49.8
|
83.6
|
233.4
|
423.8
|
657.2
|
|
|
|
|
|
|
|
Segment capital
expenditure
|
7.4
|
10.0
|
6.6
|
24.0
|
-
|
24.0
|
|
|
|
|
|
|
|
Segment depreciation - property,
plant and equipment
|
6.8
|
5.7
|
3.2
|
15.7
|
-
|
15.7
|
|
|
|
|
|
|
|
Segment depreciation -
right-of-use assets
|
1.7
|
0.7
|
1.4
|
3.8
|
-
|
3.8
|
|
|
|
|
|
|
|
Segment impairment of
non-financial assets
|
-
|
-
|
-
|
-
|
0.8
|
0.8
|
1. Definitions of these non-GAAP
measures can be found in the glossary of terms on page 43,
reconciliations of the statutory results to the adjusted measures
can be found on pages 16 to 20.
2. Details of specific adjusting
items are given in note 3 to the condensed consolidated financial
statements.
3. The figures above have been
restated to show the segmental results for the three operating
segments.
Year ended 31 December 20233
|
|
|
Thermal
Products
|
Performance Carbon
|
Technical Ceramics
|
Segment
totals
|
Corporate costs
|
Group
|
Continuing operations
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
|
|
|
|
|
|
Revenue from external customers
|
454.5
|
327.1
|
333.1
|
1,114.7
|
-
|
1,114.7
|
|
|
|
|
|
|
|
Segment adjusted operating
profit1
|
40.2
|
49.0
|
37.0
|
126.2
|
-
|
126.2
|
Corporate costs
|
|
|
|
|
(5.9)
|
(5.9)
|
Group adjusted operating profit1
|
|
|
|
|
|
120.3
|
Amortisation of intangible
assets
|
(1.4)
|
(0.8)
|
(1.1)
|
(3.3)
|
-
|
(3.3)
|
Operating profit before specific adjusting
items
|
38.8
|
48.2
|
35.9
|
122.9
|
(5.9)
|
117.0
|
Specific adjusting items included
in operating profit2
|
(9.3)
|
(9.3)
|
7.6
|
(11.0)
|
(14.1)
|
(25.1)
|
Operating profit
|
29.5
|
38.9
|
43.5
|
111.9
|
(20.0)
|
91.9
|
Finance income
|
|
|
|
|
|
3.9
|
Finance expense
|
|
|
|
|
|
(18.0)
|
Profit before taxation
|
|
|
|
|
|
77.8
|
|
|
|
|
|
|
|
Segment assets
|
376.2
|
278.2
|
217.6
|
872.0
|
152.7
|
1,024.7
|
|
|
|
|
|
|
|
Segment liabilities
|
101.0
|
55.0
|
80.4
|
236.4
|
389.7
|
626.1
|
|
|
|
|
|
|
|
Segment capital
expenditure
|
17.2
|
27.2
|
15.9
|
60.3
|
-
|
60.3
|
|
|
|
|
|
|
|
Segment depreciation - property,
plant and equipment
|
13.9
|
11.2
|
6.8
|
31.9
|
-
|
31.9
|
|
|
|
|
|
|
|
Segment depreciation -
right-of-use assets
|
3.5
|
1.3
|
2.8
|
7.6
|
-
|
7.6
|
|
|
|
|
|
|
|
Segment impairment of
non-financial assets
|
-
|
7.0
|
0.3
|
7.3
|
-
|
7.3
|
|
|
|
|
|
|
|
Segment reversal of impairment of
non-financial assets
|
2.4
|
-
|
5.7
|
8.1
|
-
|
8.1
|
|
|
|
|
|
|
| |
1. Definitions of these non-GAAP
measures can be found in the glossary of terms on page 43,
reconciliations of the statutory results to the adjusted measures
can be found on pages 16 to 20.
2. Details of specific adjusting
items are given in note 3 to the condensed consolidated financial
statements.
3. The figures above have been
restated to show the segmental results for the three operating
segments.
Revenue from external customers by
geography
Continuing operations
|
Six months
ended
30 June
2024
£m
|
Six
months ended
30 June
2023
£m
|
Year
ended
31
December 2023
£m
|
US
|
233.6
|
203.7
|
427.4
|
China
|
53.1
|
56.7
|
114.8
|
Germany
|
43.4
|
45.3
|
88.7
|
UK (the Group's country of
domicile)
|
21.6
|
22.6
|
43.6
|
Other Asia, Australasia, Middle
East and Africa
|
98.4
|
97.3
|
197.1
|
Other Europe
|
87.6
|
92.3
|
173.2
|
Other North America
|
19.4
|
21.4
|
44.9
|
South America
|
15.5
|
14.6
|
25.0
|
|
572.6
|
553.9
|
1,114.7
|
Revenue from external customers is
based on geographic location of the end-customer. No customer
represents more than 5% of revenue.
Revenue from external customers by
end-market
Continuing operations
|
Six months
ended
30 June
2024
£m
|
Six
months ended
30 June
2023
£m
|
Year
ended
31
December 2023
£m
|
Semiconductors
|
56.8
|
51.6
|
108.6
|
Healthcare
|
41.8
|
39.1
|
78.7
|
Clean energy and clean
transportation
|
29.6
|
24.4
|
50.0
|
Faster growing markets
|
128.2
|
115.1
|
237.3
|
Industrial
|
156.6
|
170.3
|
315.9
|
Conventional
transportation
|
106.3
|
91.8
|
200.2
|
Metals
|
73.1
|
72.0
|
150.2
|
Petrochemical and
chemical
|
51.8
|
57.2
|
110.8
|
Security and defence
|
37.0
|
32.4
|
68.5
|
Conventional
energy
|
19.6
|
15.1
|
31.8
|
Core markets
|
444.4
|
438.8
|
877.4
|
|
572.6
|
553.9
|
1,114.7
|
Intercompany sales to other
segments
Continuing operations
|
Six months
ended
30 June
2024
£m
|
Six
months ended
30 June
20231
£m
|
Year
ended
31
December 20231
£m
|
Thermal Products
|
0.9
|
0.3
|
1.0
|
Performance Carbon
|
0.3
|
0.3
|
0.6
|
Technical Ceramics
|
0.4
|
0.1
|
0.7
|
|
1.6
|
0.7
|
2.3
|
1. The figures
above have been restated to show the segmental results for the
three operating segments.
Note 3. Specific adjusting
items
Continuing operations
|
Six months
ended
30 June
2024
£m
|
Six
months ended
30 June
2023
£m
|
Year
ended
31
December 2023
£m
|
Specific adjusting items:
|
|
|
|
Cyber incident recovery costs and
charges
|
(1.1)
|
(12.0)
|
(14.7)
|
Charges in relation to the impact
of Argentina's currency devaluation
|
-
|
-
|
(5.8)
|
Net business closure and exit
costs
|
-
|
(1.8)
|
(1.9)
|
Net restructuring
(charge)/credit
|
(2.3)
|
0.4
|
(3.5)
|
Impairment of non-financial
assets
|
-
|
-
|
(7.3)
|
Reversal of impairment of
non-financial assets
|
-
|
-
|
8.1
|
Total specific adjusting items before income
tax
|
(3.4)
|
(13.4)
|
(25.1)
|
Income tax credit from specific
adjusting items
|
0.4
|
2.2
|
3.8
|
Total specific adjusting items after income
tax
|
(3.0)
|
(11.2)
|
(21.3)
|
There were no specific adjusting
items in relation to discontinued operations in the six months to
30 June 2024 and to 30 June 2023.
2024
Cyber incident recovery costs and
charges
As disclosed in the 2023 Annual
Report, the Group experienced a cyber security incident in January
2023. £1.1 million of specialist support costs were incurred in
early 2024, which did not meet the recognition criteria as at 31
December 2023.
Restructuring charge
As disclosed in our 2023 Annual
Report, the Group has taken the opportunity to reduce our global
footprint and rationalise costs in order to focus resources on our
faster growing markets and optimise factory operations. This
restructuring programme commenced in the second half of 2023 and
further costs are anticipated in 2024. A charge of £2.3 million has
been recognised in relation to this and comprises costs associated
with staff redundancies and site closure costs.
2023
Cyber incident recovery costs and
charges
As disclosed in the 2023 Annual
Report, the Group experienced a cyber security incident in January
2023. Costs and charges of £11.2 million were incurred during the
six months to June 2023 relating to system recovery and specialist
support costs and £0.8 million of leased and owned IT assets which
were impacted by the incident were impaired.
Business closure and exit
costs
In July 2023, the Board of our joint
venture in Dalian, China made the decision to liquidate the entity
as the joint venture agreement expired in August 2023. A £1.8
million charge associated with the liquidation costs was
recognised, mainly in relation to severance costs, costs of
dismantling equipment and advisor fees.
Restructuring credit
The Group recognised a £0.4 million
credit relating to the partial release of a provision following
final settlement of the US multi-employer pension plan for our
Technical Ceramics, Ceramics Cores site which was closed in
2021.
Note 4. Finance income and
expense
Continuing operations
|
Six months
ended
30 June
2024
£m
|
Six
months ended
30 June
2023
£m
|
Year
ended
31
December 2023
£m
|
Interest on bank balances and cash
deposits
|
1.3
|
2.2
|
3.9
|
Finance income
|
1.3
|
2.2
|
3.9
|
|
|
|
|
Interest expense on borrowings and
overdrafts
|
(8.7)
|
(7.2)
|
(15.6)
|
Interest expense on lease
liabilities
|
(1.3)
|
(1.1)
|
(2.4)
|
Net interest on IAS 19 defined
benefit pension obligations
|
(0.2)
|
-
|
-
|
Net loss on sale of
bonds
|
(0.4)
|
-
|
-
|
Finance expense
|
(10.6)
|
(8.3)
|
(18.0)
|
Net financing costs recognised in profit or
loss
|
(9.3)
|
(6.1)
|
(14.1)
|
No finance income or expense related
to discontinued operations in either the current or preceding
periods.
Note 5. Taxation
Continuing operations
|
Six months
ended
30 June
2024
£m
|
Six
months ended
30 June
2023
£m
|
Year
ended
31
December 2023
£m
|
Income tax charge on profit
before specific adjusting items
|
(15.8)
|
(11.3)
|
(26.0)
|
Income tax credit from specific
adjusting items
|
0.4
|
2.2
|
3.8
|
Total income tax expense recognised in profit or
loss
|
(15.4)
|
(9.1)
|
(22.2)
|
The Group's consolidated effective
tax rate, excluding specific adjusting items, was 26.0% for the six
months ended 30 June 2024 (30 June 2023: 27.0%; 31 December 2023:
25.3%) and is based on the Directors' best estimate of the
effective tax rate for the year.
The Group operates in many
jurisdictions around the world and is subject to factors that may
impact future tax charges including the implementation of the
OECD's BEPS actions, tax rate and legislation changes, expiry of
the statute of limitations and resolution of tax audits and
disputes.
On 11 July 2023, Finance (No.2)
Act 2023 was enacted in the UK, introducing a global minimum
effective tax rate of 15%. The legislation implements a domestic
top-up tax and a multinational top-up-tax which will be effective
for the Group's financial year beginning 1 January 2024. The Group
is in scope of the substantively enacted legislation and has
performed an assessment of the Group's potential exposure to Pillar
Two income taxes. The assessment of the potential exposure to
Pillar Two income taxes is based on the submitted
country-by-country reporting data of the constituent entities in
the Group. Based on the assessment, the Pillar Two effective tax
rates in the majority of the jurisdictions in which the Group
operates are above 15%. However, the Group has an entity in United
Arab Emirates where the transitional safe harbour relief does not
apply as the Pillar Two effective tax rate is below 15%. The Group
does not expect a material exposure to Pillar Two income taxes in
this jurisdiction.
Note 6. Discontinued
operations
The results from discontinued
operations, which represent the Composites and Defence Systems business disposed in
2018, are set out below:
|
Six months
ended
30 June
2024
|
|
Six
months ended
30 June
2023
|
|
Year
ended
31
December 2023
|
|
Results
before
specific
adjusting
items
|
Specific
adjusting
items
|
Total
|
|
Results
before
specific
adjusting items
|
Specific
adjusting
items
|
Total
|
|
Results
before
specific
adjusting items
|
Specific
adjusting
items
|
Total
|
|
£m
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
Revenue
|
-
|
-
|
-
|
|
-
|
-
|
-
|
|
-
|
0.7
|
0.7
|
Operating income
|
-
|
-
|
-
|
|
-
|
-
|
-
|
|
-
|
-
|
-
|
Profit before taxation
|
-
|
-
|
-
|
|
-
|
-
|
-
|
|
-
|
0.7
|
0.7
|
Income tax expense
|
-
|
-
|
-
|
|
-
|
-
|
-
|
|
-
|
-
|
-
|
Profit from discontinued operations
|
-
|
-
|
-
|
|
-
|
-
|
-
|
|
-
|
0.7
|
0.7
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic profit per share from
discontinued operations
|
|
|
-
|
|
|
|
-
|
|
|
|
0.2p
|
Diluted profit per share from
discontinued operations
|
|
|
-
|
|
|
|
-
|
|
|
|
0.2p
|
For the period to 30 June 2024 and
the comparative period in the previous year, there were no
transactions from discontinued operations.
In December 2023, a gain of £0.7
million was recognised from a long-term contract.
There was no income tax expense in
relation to the discontinued operations in either the current or
preceding periods.
There were no cash flows from
discontinued operations for the six months ended 30 June 2024 or 30
June 2023. There were net cash inflows from operating activities of
£0.4 million during the year ended 31 December 2023.
Note 7. Earnings per
share
|
Six months
ended
30 June
2024
|
|
Six
months ended
30 June
2023
|
|
Year
ended
31
December 2023
|
|
Earnings
|
Basic
earnings
per share
|
Diluted
earnings
per share
|
|
Earnings
|
Basic
earnings
per
share
|
Diluted
earnings
per
share
|
|
Earnings
|
Basic
earnings
per
share
|
Diluted
earnings
per
share
|
|
£m
|
pence
|
pence
|
|
£m
|
pence
|
pence
|
|
£m
|
pence
|
pence
|
Profit for the period attributable
to shareholders of the Company
|
37.4
|
13.2p
|
13.0p
|
|
14.8
|
5.2p
|
5.2p
|
|
47.3
|
16.6p
|
16.5p
|
Profit from discontinued
operations
|
-
|
-
|
-
|
|
-
|
-
|
-
|
|
(0.7)
|
(0.2)p
|
(0.2)p
|
Profit from continuing operations
|
37.4
|
13.2p
|
13.0p
|
|
14.8
|
5.2p
|
5.2p
|
|
46.6
|
16.4p
|
16.3p
|
Specific adjusting
items
|
3.4
|
1.2p
|
1.2p
|
|
13.4
|
4.7p
|
4.7p
|
|
25.1
|
8.8p
|
8.7p
|
Amortisation of intangible
assets
|
1.1
|
0.4p
|
0.4p
|
|
2.1
|
0.8p
|
0.7p
|
|
3.3
|
1.2p
|
1.1p
|
Tax effect of the above
|
(0.4)
|
(0.1)p
|
(0.1)p
|
|
(2.2)
|
(0.8)p
|
(0.8)p
|
|
(3.8)
|
(1.3)p
|
(1.3)p
|
Non-controlling interests' share
of the above adjustments
|
-
|
-
|
-
|
|
-
|
-
|
-
|
|
-
|
-
|
-
|
Adjusted profit for the period
from continuing operations as used in adjusted earnings per share1
|
41.5
|
14.7p
|
14.5p
|
|
28.1
|
9.9p
|
9.8p
|
|
71.2
|
25.0p
|
24.8p
|
1. Definitions of these non-GAAP
measures can be found in the glossary of terms on page 43,
reconciliations of the statutory results to the adjusted measures
can be found on pages 16 to 20.
|
Six months
ended
30 June
2024
millions
|
Six
months ended
30 June
2023
millions
|
Year
ended
31
December 2023
millions
|
Number of shares
|
|
|
|
Weighted average number of
Ordinary shares for the purposes of basic earnings per
share1
|
284.4
|
284.5
|
284.8
|
Effect of dilutive potential
Ordinary shares:
|
|
|
|
Share options
|
3.8
|
1.8
|
2.5
|
Weighted average number of Ordinary shares for the purposes
of diluted earnings per share
|
288.2
|
286.3
|
287.3
|
1. The calculation of the weighted
average number of shares excludes the shares held by The Morgan
General Employee Benefit Trust, on which dividends are
waived.
Note 8. Property, plant and
equipment
|
Land and
buildings
£m
|
Plant,
equipment
and
fixtures
£m
|
Total
£m
|
Cost
|
|
|
|
At 1 January 2024
|
216.1
|
777.4
|
993.5
|
Additions
|
10.4
|
27.0
|
37.4
|
Disposals
|
(0.6)
|
(15.6)
|
(16.2)
|
Transfer between
categories
|
0.2
|
(0.2)
|
-
|
Effect of movement in foreign
exchange
|
(1.5)
|
(2.8)
|
(4.3)
|
At 30 June 2024
|
224.6
|
785.8
|
1,010.4
|
|
|
|
|
Depreciation and impairment
losses
|
|
|
|
At 1 January 2024
|
119.0
|
580.7
|
699.7
|
Depreciation charge for the
period
|
2.7
|
14.3
|
17.0
|
Disposals
|
(0.6)
|
(15.1)
|
(15.7)
|
Transfer between
categories
|
(0.2)
|
0.2
|
-
|
Effect of movement in foreign
exchange
|
(0.6)
|
(1.6)
|
(2.2)
|
At 30 June 2024
|
120.3
|
578.5
|
698.8
|
|
|
|
|
Carrying amounts
|
|
|
|
At 1 January 2024
|
97.1
|
196.7
|
293.8
|
At 30 June 2024
|
104.3
|
207.3
|
311.6
|
As at 30 June 2024, commitments for
property, plant and equipment and computer software expenditure for
which no provision has been made in these accounts amount to £21.2
million (30 June 2023: £3.9 million).
Note 9. Intangible
assets
|
Acquisition
intangibles
|
|
|
|
|
Goodwill
£m
|
Customer
relationships
£m
|
Other
£m
|
Capitalised
development
costs
£m
|
Computer
software
£m
|
Total
£m
|
Cost
|
|
|
|
|
|
|
At 1 January 2024
|
177.5
|
60.9
|
4.2
|
0.8
|
36.2
|
279.6
|
Additions
|
-
|
-
|
-
|
-
|
0.1
|
0.1
|
Disposals
|
-
|
-
|
-
|
-
|
(0.8)
|
(0.8)
|
Effect of movement in foreign
exchange
|
(0.3)
|
0.4
|
(0.1)
|
-
|
0.1
|
0.1
|
At 30 June 2024
|
177.2
|
61.3
|
4.1
|
0.8
|
35.6
|
279.0
|
|
|
|
|
|
|
|
Amortisation and impairment losses
|
|
|
|
|
|
|
At 1 January 2024
|
-
|
59.8
|
3.2
|
0.8
|
33.6
|
97.4
|
Amortisation charge for the
period
|
-
|
0.1
|
0.1
|
-
|
0.9
|
1.1
|
Disposals
|
-
|
-
|
-
|
-
|
(0.8)
|
(0.8)
|
Effects of movement in foreign
exchange
|
-
|
0.4
|
(0.1)
|
-
|
-
|
0.3
|
At 30 June 2024
|
-
|
60.3
|
3.2
|
0.8
|
33.7
|
98.0
|
|
|
|
|
|
|
|
Carrying amounts
|
|
|
|
|
|
|
At 1 January 2024
|
177.5
|
1.1
|
1.0
|
-
|
2.6
|
182.2
|
At 30 June 2024
|
177.2
|
1.0
|
0.9
|
-
|
1.9
|
181.0
|
Note 10. Cash and cash equivalents
reconciled to net debt*
|
At 30 June
2024
£m
|
At 30
June 2023
£m
|
At 31
December 2023
£m
|
|
|
|
|
Bank balances
|
105.2
|
123.9
|
112.5
|
Cash deposits
|
11.4
|
13.6
|
12.0
|
Cash and cash equivalents
|
116.6
|
137.5
|
124.5
|
Bank overdrafts
|
(1.6)
|
(7.2)
|
(0.6)
|
Net cash and cash equivalents
|
115.0
|
130.3
|
123.9
|
Reconciliation of net cash and cash equivalents to net
debt*
|
Six months
ended
30 June
2024
£m
|
Six
months ended
30 June
20232
£m
|
Year
ended
31
December 20232
£m
|
Opening borrowings and lease liabilities excluding bank
overdrafts
|
(356.2)
|
(316.6)
|
(316.6)
|
Increase in borrowings
|
(44.2)
|
(194.8)
|
(247.2)
|
Reduction and repayment of
borrowings
|
14.7
|
112.2
|
193.0
|
Payment of lease
liabilities
|
4.8
|
4.6
|
8.9
|
Total changes from cash flows
|
(24.7)
|
(78.0)
|
(45.3)
|
New leases and lease
remeasurement
|
(6.1)
|
(4.0)
|
(6.4)
|
Effect of movements in foreign
exchange on borrowings
|
1.5
|
10.6
|
12.1
|
Closing borrowings and lease liabilities excluding bank
overdrafts
|
(385.5)
|
(388.0)
|
(356.2)
|
Net cash and cash
equivalents
|
115.0
|
130.3
|
123.9
|
Closing net debt1
|
(270.5)
|
(257.7)
|
(232.3)
|
1. Definitions of these non-GAAP
measures can be found in the glossary of terms on page 43,
reconciliations of the statutory results to the adjusted measures
can be found on pages 16 to 20.
2. Re-presented to net bank
overdrafts against cash and cash equivalents.
The table below details changes in the Group's
liabilities arising from financing activities, including both cash
and non-cash changes.
|
Borrowings excluding bank
overdrafts
£m
|
Lease
liabilities
£m
|
Total financing
liabilities
£m
|
Net cash and cash
equivalents
£m
|
Movement in
net debt1
£m
|
At 1 January 2024
|
(309.1)
|
(47.1)
|
(356.2)
|
123.9
|
(232.3)
|
Cash inflow
|
-
|
-
|
-
|
7.4
|
7.4
|
Borrowings and lease liability
cash flow
|
(29.5)
|
4.8
|
(24.7)
|
-
|
(24.7)
|
Interest paid
|
-
|
-
|
-
|
(9.9)
|
(9.9)
|
Net cash
inflow/(outflow)
|
(29.5)
|
4.8
|
(24.7)
|
(2.5)
|
(27.2)
|
Share purchases
|
-
|
-
|
-
|
(3.7)
|
(3.7)
|
New leases and lease
remeasurement
|
-
|
(6.1)
|
(6.1)
|
-
|
(6.1)
|
Exchange and other
movements
|
1.3
|
0.2
|
1.5
|
(2.7)
|
(1.2)
|
At 30 June 2024
|
(337.3)
|
(48.2)
|
(385.5)
|
115.0
|
(270.5)
|
1. Definitions of these non-GAAP measures can be found in the
glossary of terms on page 43, reconciliations of the statutory
results to the adjusted measures can be found on pages 16 to
20.
Note 11. Financial risk
management
Fair values
|
At 30
June 2024
|
At 30
June 2023
|
At 31
December 2023
|
Carrying
amount
£m
|
Fair
value
|
Carrying
amount
£m
|
Fair
value
|
Carrying
amount
£m
|
Fair
value
|
Level
1
£m
|
Level
2
£m
|
Total
£m
|
Level
1
£m
|
Level
2
£m
|
Total
£m
|
Level
1
£m
|
Level
2
£m
|
Total
£m
|
Financial assets and liabilities
held at
amortised cost
|
1.18% Euro Senior Notes
2023
|
-
|
-
|
-
|
-
|
(21.5)
|
-
|
(21.2)
|
(21.2)
|
-
|
-
|
-
|
-
|
3.17% US Dollar Senior Notes
2023
|
-
|
-
|
-
|
-
|
(11.9)
|
-
|
(11.7)
|
(11.7)
|
-
|
-
|
-
|
-
|
1.55% Euro Senior Notes
2026
|
(21.2)
|
-
|
(19.8)
|
(19.8)
|
(21.5)
|
-
|
(19.5)
|
(19.5)
|
(21.7)
|
-
|
(20.3)
|
(20.3)
|
3.37% US Dollar Senior Notes
2026
|
(77.1)
|
-
|
(71.8)
|
(71.8)
|
(76.8)
|
-
|
(69.8)
|
(69.8)
|
(76.6)
|
-
|
(71.6)
|
(71.6)
|
4.87% US Dollar Senior Notes
2026
|
(20.2)
|
-
|
(19.6)
|
(19.6)
|
(20.1)
|
-
|
(19.2)
|
(19.2)
|
(20.0)
|
-
|
(19.4)
|
(19.4)
|
1.74% Euro Senior Notes
2028
|
(8.5)
|
-
|
(7.7)
|
(7.7)
|
(8.6)
|
-
|
(7.6)
|
(7.6)
|
(8.7)
|
-
|
(8.0)
|
(8.0)
|
2.89% Euro Senior Notes
2030
|
(21.2)
|
-
|
(18.8)
|
(18.8)
|
(21.5)
|
-
|
(18.7)
|
(18.7)
|
(21.7)
|
-
|
(19.6)
|
(19.6)
|
5.47% US Dollar Senior Notes
2031
|
(7.9)
|
-
|
(7.5)
|
(7.5)
|
(7.9)
|
-
|
(7.6)
|
(7.6)
|
(7.9)
|
-
|
(7.7)
|
(7.7)
|
5.53% US Dollar Senior Notes
2033
|
(7.9)
|
-
|
(7.4)
|
(7.4)
|
(7.9)
|
-
|
(7.6)
|
(7.6)
|
(7.9)
|
-
|
(7.6)
|
(7.6)
|
5.61% US Dollar Senior Notes
2035
|
(23.8)
|
-
|
(22.0)
|
(22.0)
|
(23.7)
|
-
|
(22.7)
|
(22.7)
|
(23.7)
|
-
|
(22.8)
|
(22.8)
|
5.50% Cumulative First Preference
shares
|
(0.1)
|
-
|
(0.1)
|
(0.1)
|
(0.1)
|
-
|
(0.1)
|
(0.1)
|
(0.1)
|
-
|
(0.1)
|
(0.1)
|
5.00% Cumulative Second Preference
shares
|
(0.3)
|
-
|
(0.3)
|
(0.3)
|
(0.3)
|
-
|
(0.3)
|
(0.3)
|
(0.3)
|
-
|
(0.3)
|
(0.3)
|
|
(188.2)
|
-
|
(175.0)
|
(175.0)
|
(221.8)
|
-
|
(206.0)
|
(206.0)
|
(188.6)
|
-
|
(177.4)
|
(177.4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial assets held at
FVTPL
|
1.0
|
1.0
|
-
|
1.0
|
-
|
-
|
-
|
-
|
2.2
|
2.2
|
-
|
2.2
|
Derivative financial assets held
at fair value
|
0.3
|
-
|
0.3
|
0.3
|
0.8
|
-
|
0.8
|
0.8
|
1.5
|
-
|
1.5
|
1.5
|
|
1.3
|
1.0
|
0.3
|
1.3
|
0.8
|
-
|
0.8
|
0.8
|
3.7
|
2.2
|
1.5
|
3.7
|
Derivative financial liabilities
held at fair value
|
(0.8)
|
-
|
(0.8)
|
(0.8)
|
(0.6)
|
-
|
(0.6)
|
(0.6)
|
(0.5)
|
-
|
(0.5)
|
(0.5)
|
The table above analyses financial
instruments carried at fair value, by valuation method, together
with the carrying amounts shown in the balance sheet. The fair
value of cash and cash equivalents, current trade and other
receivables/payables and floating-rate bank and other borrowings
are excluded from the preceding table as their carrying amount
approximates to their fair value.
Fair value hierarchy
The different levels have been
defined as follows:
Level 1: quoted prices (unadjusted)
in active markets for identical assets or liabilities.
Level 2: not traded in an active
market but the fair values are based on quoted market prices or
alternative pricing sources with reasonable levels of price
transparency. Fair value is calculated using discounted cash flow
methodology, future cash flows are estimated based on forward
exchange rates.
Level 3: inputs for the asset or
liability that are not based on observable market data
(unobservable inputs).
There were no transfers between
Level 1 and Level 2 during the six months to 30 June 2024 or 2023
and there were no Level 3 financial instruments in either the six
months to 30 June 2024 or 2023.
The major methods and assumption
used in estimating the fair values of financial instruments
reflected in the preceding table are as follows:
Fixed-rate borrowings
Fair value is calculated based on
discounted expected future principal and interest cash flows. The
interest rates used to determine the fair value of borrowings are
4.2-6.8% (30 June 2023: 4.3-7.1%; 31 December 2023:
3.7-6.3%).
Equity securities
Fair value is based on quoted market
prices at the balance sheet date.
Derivatives
Forward exchange contracts are
marked to market either using listed market prices or by
discounting the contractual forward price and deducting the current
spot rate.
Credit risk
Credit risk is the risk of financial
loss to the Group if a customer or counterparty to a financial
instrument fails to meet its contractual obligations. The Group is
exposed to credit risk on financial instruments such as liquid
assets, derivative assets and trade receivables.
The current economic climate gives
rise to an increased credit risk, primarily with
respect to trade receivables.
The Group establishes an allowance
for impairment that represents its estimate of expected credit
losses in respect of trade receivables.
The loss allowance for trade
receivables by ageing category is as follows:
|
At 30 June
2024
|
At 30
June 2023
|
At 31
December 2023
|
|
Expected credit loss rate
|
Gross trade receivables
|
Expected credit losses
|
Net
trade receivables
|
Expected credit loss rate
|
Gross trade receivables
|
Expected credit losses
|
Net trade receivables
|
Expected credit loss
rate
|
Gross trade receivables
|
Expected credit losses
|
Net trade receivables
|
|
%
|
£m
|
£m
|
£m
|
%
|
£m
|
£m
|
£m
|
%
|
£m
|
£m
|
£m
|
Not past due
|
0.1%
|
150.2
|
(0.1)
|
150.1
|
0.1%
|
152.1
|
(0.1)
|
152.0
|
0.2%
|
133.3
|
(0.2)
|
133.1
|
Past due 0-30 days
|
1.1%
|
19.0
|
(0.2)
|
18.8
|
0.4%
|
25.7
|
(0.1)
|
25.6
|
1.0%
|
19.9
|
(0.2)
|
19.7
|
Past due 31-60 days
|
0.0%
|
4.2
|
-
|
4.2
|
0.0%
|
7.2
|
-
|
7.2
|
0.0%
|
3.7
|
-
|
3.7
|
Past due 61-90 days
|
5.3%
|
1.9
|
(0.1)
|
1.8
|
2.2%
|
4.5
|
(0.1)
|
4.4
|
6.3%
|
1.6
|
(0.1)
|
1.5
|
Past due more than 90
days
|
87.6%
|
8.9
|
(7.8)
|
1.1
|
77.4%
|
11.5
|
(8.9)
|
2.6
|
81.0%
|
10.5
|
(8.5)
|
2.0
|
|
|
184.2
|
(8.2)
|
176.0
|
|
201.0
|
(9.2)
|
191.8
|
|
169.0
|
(9.0)
|
160.0
|
Full details of the Group's policies
and processes for managing financial risk are described in note 21 of the Group's 2023 Annual Report and
Accounts.
Offsetting financial assets and
liabilities
The following table shows the
amounts recognised for forward exchange contracts, which are
subject to offsetting arrangements on a gross basis, and the
amounts offset in the balance sheet.
The Group also has cash pooling
agreements which cannot be offset under IFRS, but which could be
settled net under the terms of master netting agreements, are also
presented in the table to show the total net exposure of the
Group.
|
Gross
amounts of recognised financial assets/
(liabilities)1
|
Amounts
offset
|
Net amounts presented on the
balance sheet
|
Financial instruments not offset in the balance
sheet
|
Net amount
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
At 30 June 2024
|
|
|
|
|
|
Derivative financial
assets
|
0.3
|
-
|
0.3
|
-
|
0.3
|
Derivative financial
liabilities
|
(0.8)
|
-
|
(0.8)
|
-
|
(0.8)
|
Cash and cash
equivalents
|
116.6
|
-
|
116.6
|
(1.6)
|
115.0
|
Current bank and other
borrowings
|
(1.6)
|
-
|
(1.6)
|
1.6
|
-
|
|
|
|
|
|
|
At 30 June 2023
|
|
|
|
|
|
Derivative financial
assets
|
0.8
|
-
|
0.8
|
-
|
0.8
|
Derivative financial
liabilities
|
(0.6)
|
-
|
(0.6)
|
-
|
(0.6)
|
Cash and cash
equivalents
|
137.5
|
-
|
137.5
|
(6.8)
|
130.7
|
Current bank and other
borrowings
|
(6.8)
|
-
|
(6.8)
|
6.8
|
-
|
|
|
|
|
|
|
At 31 December 2023
|
|
|
|
|
|
Derivative financial
assets
|
1.5
|
-
|
1.5
|
-
|
1.5
|
Derivative financial
liabilities
|
(0.5)
|
-
|
(0.5)
|
-
|
(0.5)
|
Cash and cash
equivalents
|
124.5
|
-
|
124.5
|
(0.6)
|
123.9
|
Current bank and other
borrowings
|
(0.6)
|
-
|
(0.6)
|
0.6
|
-
|
1. Gross
amounts of recognised financial assets and liabilities in June 2023
have been re-presented to show the mark-to-market position of the
individual derivatives.
Note 12. Pensions and other
post-retirement employee benefits
Defined benefit
obligations
Six months ended 30 June
2024
|
|
UK
£m
|
US
£m
|
Europe
£m
|
Rest of
World
£m
|
Total
£m
|
Summary of net obligations
|
|
|
|
|
|
Present value of unfunded defined
benefit obligations
|
-
|
(4.8)
|
(25.8)
|
(4.5)
|
(35.1)
|
Present value of funded defined
benefit obligations
|
(338.3)
|
(101.8)
|
(0.5)
|
(7.9)
|
(448.5)
|
Fair value of plan
assets
|
354.4
|
102.8
|
0.3
|
8.1
|
465.6
|
|
16.1
|
(3.8)
|
(26.0)
|
(4.3)
|
(18.0)
|
|
|
|
|
|
|
Movements in present value of defined benefit
obligation
|
|
|
|
|
|
At 1 January 2024
|
(362.8)
|
(112.2)
|
(28.4)
|
(12.7)
|
(516.1)
|
Current service cost
|
-
|
-
|
(0.4)
|
(0.8)
|
(1.2)
|
Interest cost
|
(8.0)
|
(2.6)
|
(0.4)
|
(0.1)
|
(11.1)
|
Actuarial gain/(loss):
|
|
|
|
|
|
Experience
(loss)/gain on plan obligations
|
(0.1)
|
-
|
-
|
0.3
|
0.2
|
Changes in
financial assumptions - gain
|
21.8
|
4.5
|
1.3
|
-
|
27.6
|
Benefits paid
|
10.8
|
4.5
|
0.9
|
0.5
|
16.7
|
Exchange adjustments
|
-
|
(0.8)
|
0.7
|
0.4
|
0.3
|
At 30 June 2024
|
(338.3)
|
(106.6)
|
(26.3)
|
(12.4)
|
(483.6)
|
|
|
|
|
|
|
Movements in fair value of plan assets
|
|
|
|
|
|
At 1 January 2024
|
375.3
|
106.7
|
0.2
|
8.7
|
490.9
|
Interest on plan assets
|
8.2
|
2.5
|
-
|
0.2
|
10.9
|
Remeasurement loss
|
(18.3)
|
(2.8)
|
-
|
(0.5)
|
(21.6)
|
Contributions by
employer
|
-
|
0.3
|
0.9
|
0.6
|
1.8
|
Benefits paid
|
(10.8)
|
(4.5)
|
(0.9)
|
(0.5)
|
(16.7)
|
Exchange adjustments
|
-
|
0.6
|
0.1
|
(0.4)
|
0.3
|
At 30 June 2024
|
354.4
|
102.8
|
0.3
|
8.1
|
465.6
|
Actual return on assets
|
(10.1)
|
(0.3)
|
-
|
(0.3)
|
(10.7)
|
|
|
|
|
|
|
Fair value of plan assets by category
|
|
|
|
|
|
Equities
|
-
|
5.1
|
-
|
-
|
5.1
|
Growth assets
|
46.2
|
-
|
-
|
-
|
46.2
|
Bonds
|
27.8
|
95.1
|
-
|
-
|
122.9
|
Liability-driven investments
(LDI)
|
184.1
|
-
|
-
|
-
|
184.1
|
Matching insurance
policies
|
95.2
|
1.4
|
0.3
|
6.0
|
102.9
|
Other
|
1.1
|
1.2
|
-
|
2.1
|
4.4
|
|
354.4
|
102.8
|
0.3
|
8.1
|
465.6
|
|
|
|
|
|
|
Principal actuarial assumptions at 30 June 2024
were:
|
%
|
%
|
%
|
%
|
|
Discount rate
|
5.12
|
5.28
|
3.80
|
5.52
|
|
Inflation (UK: RPI/CPI)
|
3.18/2.45
|
n/a
|
2.10
|
n/a
|
|
Six
months ended 30 June 2023
|
|
UK
£m
|
US
£m
|
Europe
£m
|
Rest of
World
£m
|
Total
£m
|
Summary of net obligations
|
|
|
|
|
|
Present value of unfunded defined
benefit obligations
|
-
|
(5.4)
|
(26.6)
|
(3.8)
|
(35.8)
|
Present value of funded defined
benefit obligations
|
(341.1)
|
(109.0)
|
(0.9)
|
(7.8)
|
(458.8)
|
Fair value of plan
assets
|
360.1
|
107.5
|
0.2
|
7.6
|
475.4
|
|
19.0
|
(6.9)
|
(27.3)
|
(4.0)
|
(19.2)
|
|
|
|
|
|
|
Principal actuarial assumptions at 30 June 2023
were:
|
%
|
%
|
%
|
%
|
|
Discount rate
|
5.26
|
4.93
|
3.70
|
5.30
|
|
Inflation (UK: RPI/CPI)
|
3.28/2.52
|
n/a
|
2.20
|
n/a
|
|
Year
ended 31 December 2023
|
|
UK
£m
|
US
£m
|
Europe
£m
|
Rest of
World
£m
|
Total
£m
|
Summary of net obligations
|
|
|
|
|
|
Present value of unfunded defined
benefit obligations
|
-
|
(5.2)
|
(27.1)
|
(4.6)
|
(36.9)
|
Present value of funded defined
benefit obligations
|
(362.8)
|
(107.0)
|
(1.3)
|
(8.1)
|
(479.2)
|
Fair value of plan
assets
|
375.3
|
106.7
|
0.2
|
8.7
|
490.9
|
|
12.5
|
(5.5)
|
(28.2)
|
(4.0)
|
(25.2)
|
|
|
|
|
|
|
Principal actuarial assumptions at 31 December 2023
were:
|
%
|
%
|
%
|
%
|
|
Discount rate
|
4.52
|
4.80
|
3.40
|
5.52
|
|
Inflation (UK: RPI/CPI)
|
3.05/2.31
|
n/a
|
2.10
|
n/a
|
|
Note 13. Provisions and contingent
liabilities
|
Closure
and
restructuring
provisions
£m
|
Legal
and other
provisions
£m
|
Environmental
provisions
£m
|
Total
£m
|
At 1 January 2024
|
7.9
|
5.6
|
8.3
|
21.8
|
Provisions made during the
period
|
1.5
|
0.2
|
-
|
1.7
|
Provisions used during the
period
|
(1.6)
|
(0.4)
|
(1.1)
|
(3.1)
|
Provisions reversed during the
period
|
(0.4)
|
(0.2)
|
-
|
(0.6)
|
Effect of movements in foreign
exchange
|
(0.1)
|
(0.2)
|
-
|
(0.3)
|
At 30 June 2024
|
7.3
|
5.0
|
7.2
|
19.5
|
|
|
|
|
|
Current
|
5.3
|
2.0
|
1.7
|
9.0
|
Non-current
|
2.0
|
3.0
|
5.5
|
10.5
|
At 30 June 2024
|
7.3
|
5.0
|
7.2
|
19.5
|
Closure and restructuring provisions
Closure and restructuring provisions
are based on the Group's restructuring programmes and represent
committed expenditure at the balance sheet date. The amounts
provided are based on the costs of terminating relevant contracts,
under the contract terms, and management's best estimate of other
associated restructuring costs including professional
fees.
We retain provisions for remaining
lease exit costs and a multi-employer pension plan from two US
sites which were closed during 2021. The cash outflows relating to
the pension obligations may continue for up to seventeen years,
subject to any settlement being reached in advance of that date.
Cash outflows in relation to the lease may continue for the next
three years.
Legal and other provisions
Legal and other provisions mainly
comprise amounts provided against open legal and contractual
disputes arising in the normal course of business and long-service
costs. Provisions are made for the expected costs associated with
such matters, based on past experience of similar items and other
known factors, taking into account professional advice received,
and represent management's best estimate of the most likely
outcome. The timing of utilisation of these provisions is
frequently uncertain, reflecting the complexity of issues and the
outcome of various court proceedings and associated
negotiations.
Environmental provisions
Environmental provisions are made
for quantifiable environmental liabilities arising from known
environmental issues. The amounts provided are based on the best
estimate of the costs required to remedy these issues. At one site,
a remediation feasibility study has been conducted in relation to
a known environmental issue and in conjunction with the local
Environmental Regulator. A remediation plan has been prepared. The
provision recorded reflects the estimated costs of remediation and
awaits final regulatory approval. The provision is expected to be
utilised in the next five years.
Environmental contingent liabilities
The Group is subject to local
health, safety and environmental laws and regulations concerning
its manufacturing operations around the world. These laws and
regulations may require the Group to take future action to
remediate the impact of historical manufacturing processes on the
environment or lead to other economic outflows. Such contingencies
may exist for various sites which the Group currently operates or
has operated in the past. There is a contingent liability arising
from additional, as yet unknown, environmental issues at the site
referred to above, pending the completion of the feasibility
study.
Tax contingent liabilities
The Group is subject to periodic tax
audits by various fiscal authorities covering corporate, employee
and sales taxes in the various jurisdictions in which it operates.
We have provided for estimates of the Group's likely exposures
where these can be reliably estimated.
Note 14. Related parties
Identification of related
parties
The Company has related party
relationships with its subsidiaries and with its Directors and
executive officers.
Transactions with key management
personnel
Details of transactions with key
management personnel are described in note 26 of the Group's 2023
Annual Report and Accounts.
Transactions with related
parties
There were no related party
transactions during the period that have materially affected the
financial position or the performance of the Group during the
period. There have been no changes in the nature of related party
transactions as described in note 26 to the Group's 2023 Annual
Report and Accounts which could have a material effect on the
financial position or performance of the Group during the
period.
Note 15. Subsequent
events
There were no reportable events
subsequent to the balance sheet date.
Glossary
Constant-currency1
|
Constant-currency revenue and Group
adjusted operating profit are derived by translating the prior year
results at current year average exchange rates.
|
Corporate costs
|
Corporate costs consist of the costs
of the central head office.
|
Free cash flow before acquisitions,
disposals and dividends1
|
Cash generated from continuing
operations less net capital expenditure, net interest paid, tax
paid and lease payments.
|
Group earnings before interest, tax,
depreciation
and amortisation (EBITDA)1
|
EBITDA is defined as operating
profit before specific adjusting items, amortisation of intangible
assets and depreciation.
|
Group adjusted operating
profit1
|
Operating profit adjusted to exclude
specific adjusting items and amortisation of intangible
assets.
|
Group adjusted operating profit
margin1
|
The ratio of Group adjusted
operating profit to revenue.
|
Group organic1
|
The Group results excluding
acquisition, disposal and business exit impacts at
constant-currency.
|
Adjusted earnings per share
(EPS)1
|
Adjusted earnings per share is
defined as operating profit adjusted to exclude specific adjusting
items and amortisation of intangible assets, plus share of profit
of associate less net financing costs, income tax and
non-controlling interests, divided by the weighted average number
of Ordinary shares during the period.
|
Net debt1
|
Borrowings, bank overdrafts and
lease liabilities less cash and cash equivalents.
|
Net cash and cash
equivalents1
|
Net cash and cash equivalents is
defined as cash and cash equivalents less bank
overdrafts.
|
Return on invested capital
(ROIC)1
|
Group 12-month adjusted operating
profit (operating profit excluding specific adjusting items and
amortisation of intangible assets) divided by the average adjusted
net assets (excludes long-term employee benefits, deferred tax
assets and liabilities, current tax payable, provisions, cash and
cash equivalents, borrowings, bank overdrafts and lease
liabilities).
|
Specific adjusting items
|
See note 3 to the condensed
consolidated financial statements for further details.
|
Underlying
|
Reference to underlying reflects
the trading results of the Group without the impact of specific
adjusting items and amortisation of intangible assets that would
otherwise impact the users' understanding of the Group's
performance. The Directors believe that adjusted results provide
additional useful information on the core operational performance
of the Group and review the results of the Group on an adjusted
basis internally.
|
|
1. See definitions and
reconciliations of non-GAAP measures to GAAP measures on pages 16
to 20.