- Part 2: For the preceeding part double click ID
per share of 88.5p per share
in 2008. The Board believes this basis of calculating EPS is an important measure of the underlying earnings per share
of
the Group. Basic loss per share, based on the net loss from continuing operations, was 17.8p (2008: earnings per share
of
32.7p).
Dividend
As a result of the very significant deterioration in end-market conditions since the fourth quarter of 2008, the Board
decided not to recommend a final dividend for 2008 to shareholders nor declare an interim dividend for 2009. Given the
weak trading conditions experienced during 2009 and the difficulties in predicting the strength and timing of the
recovery
in our end-markets, the Board has decided not to recommend a final dividend to shareholders for 2009.
A decision to resume dividend payments will be made once a clear recovery can be seen in the Group's end-markets and
trading performance, and in the context of the Group's cash requirements at that time.
Group cash flow
Net cash inflow from operating activities
In 2009, the Group generated £183.7m of net cash inflow from operating activities, £63.3m higher than in 2008. This net
increase principally arose from:
2009 2008 Change
£m £m £m
EBITDA 165.3 263.5 (98.2)
Trade and other working capital 152.5 (8.9) 161.4
Outflows related to assets held for sale (0.8) - (0.8)
Restructuring and integration costs paid (49.3) (23.0) (26.3)
Additional pension contributions (8.3) (25.0) 16.7
Net interest paid (35.2) (34.2) (1.0)
Taxation paid (40.5) (52.0) 11.5
Net cash inflow from operating activities 183.7 120.4 63.3
Net cash inflow from operating activities
183.7
120.4
63.3
Of the £152.5m cash inflow in respect of trade and other working capital, £133.2m related to the reduced level of
inventory
and trade receivables. This decrease resulted principally from the success of a number of Group-wide initiatives to
reduce
working capital, combined with a reduction in raw material inventories in the Ceramics division which had been built up
in
the second half of 2008.
The significant reduction in working capital during the year resulted in the ratio of average trade working capital to
sales calculated over the second half of 2009 improving by 4.5 percentage points to 21.4% compared to the second half of
2008.
Cash outflow for restructuring and integration was £49.3m. A cash outflow for restructuring and integration of around
£20m
is expected in 2010.
Net cash outflow from investing activities
Capital expenditure: payments to acquire property, plant and equipment in 2009 were £35.0m, £37.8m lower than 2008 and
representing 65% of depreciation (2008: 154%). Of this £35.0m, just under £10m was for customer installations which
secure
long-term supply contracts for consumables. A cash outflow for capital expenditure of around £55m is expected in 2010
reflecting a number of capacity expansion projects in the emerging markets of China, India and Brazil, and customer
installations in the Ceramics and Electronics divisions.
Acquisition of subsidiaries and joint ventures: net cash outflow from acquisitions of subsidiaries and joint ventures in
2009 was £5.9m, principally relating to the Ceramics division's investment in the Linings joint venture in China with
Angang.
Disposals of subsidiaries and joint ventures: net cash inflow from disposals of subsidiaries and joint ventures in 2009
was
£6.2m, principally relating to the disposals in February 2009 of the Ceramics division's high temperature insulation
board
business ("Pyrobor") and the Precious Metals division's emblematic jewellery business ("Masters of Design").
Other investing outflows: net cash outflow from other investing activity in 2009 was £8.9m (2008: £2.1m), principally
relating to the partial cash settlement of the close-out of interest rate swaps and trailing costs in respect of prior
years' disposals.
Free cash flow
Free cash flow is defined as net cash flow from operating activities and after net outlays for the acquisition and
disposal
of property, plant and equipment, dividends received from joint ventures and paid to non-controlling shareholders, but
before additional funding contributions to Group pension plans.
Free cash inflow for 2009 was £157.3m, £84.2m higher than 2008, primarily due to the £63.3m increase in net cash flow
from
operating activities for the reasons described above, combined with the £37.8m decrease in the payments to acquire
property, plant and equipment.
The Group traditionally experiences weaker free cash inflows in the first half of the year compared with the second
half,
due to the seasonality of trade working capital cash flows. However, in 2009 continued management focus on cash
generation
has resulted in strong free cash flow in both the first and second halves of 2009 (first half £84.4m; second half
£72.9m).
For 2010, it is expected that there will be some level of cash outflow in respect of trade working capital as it
increases
in line with the growth in revenue, and that there will be a return to more normal trade working capital seasonality.
Net cash flow before financing
Net cash inflow before financing for 2009 was £142.5m, compared with a net cash outflow of £418.2m in 2008 which arose
principally from the acquisition of Foseco.
Cash flow from financing activities: net cash inflow from financing activities (before movement in borrowings) was
£198.3m
(2008: outflow of £24.3m), principally comprising the following:
· Cash outflow of £38.0m relating to the settlement during the period of forward foreign exchange contracts, in
particular those relating to the Chinese renminbi and US dollars. These forward foreign exchange contracts had been
taken
out broadly to align the currency profile of the Group's borrowings with the net assets of the Group and formed part of
the
hedge on investments of the Group's foreign operations; and
· Proceeds of £241m (net of expenses of £14m) relating to the rights issue which was completed in March 2009. The
rights issue resulted in the issue of 255.1m new shares at an issue price of 100p (as restated for the subsequent share
consolidation in May 2009) with the shares being issued on the basis of 12 new shares for every 1 existing share.
Net cash inflow and movement in net debt: net cash inflow for 2009 (before movement in borrowings) was £340.8m, £783.3m
higher than 2008.
With a £22.0m positive foreign exchange adjustment and a £2.5m increase in borrowings arising from other non-cash
movements, this resulted in a decrease in net debt from £731.7m at 31 December 2008 to £371.4m at 31 December 2009.
Group borrowings
The net debt of £371.4m as at 31 December 2009 was primarily drawn on available committed facilities of around £880m.
The
Group's net debt comprised the following:
31 December 31 December
2009 2008
£m £m
US Private Placement loan notes 201.3 250.4
Committed bank facility 324.9 565.5
Lease financing 3.6 4.8
Other 1.8 26.8
Gross borrowings 531.6 847.5
Cash and short-term deposits (160.2) (115.8)
Net Debt 371.4 731.7
847.5
Cash and short-term deposits
(160.2)
(115.8)
Net Debt
371.4
731.7
The US Private Placement loan notes, currently US$325m, are repayable in two instalments; US$135m in May 2010 and
US$190m
in May 2012.
On 10 October 2007, the Group entered into a new multi-currency, committed bank facility for approximately £750m, raised
for the purpose of the acquisition of Foseco. On completion of the acquisition in April 2008, this facility was used,
in
combination with the net proceeds of £151m from the share placing on 11 October 2007, to finance the acquisition of
Foseco.
This included the refinancing of the existing committed bank facilities of Cookson and Foseco. This facility was
originally repayable in three instalments; £75.0m and E37.5m in October 2010, £75.0m and E37.5m in October 2011 and
£500.0m
and E75.0m in October 2012.
On 6 March 2009, the Group reached agreement with its banks whereby the Group prepaid in March 2009 the £75.0m and
E37.5m
repayments originally due in October 2010. In exchange for this the banks rescheduled the tightening of the net debt to
EBITDA covenant. As a result, the covenant test was 3.5 times (previously 3.0 times) at 31 December 2009, reverting to
3.0
times as at 30 June 2010 and thereafter.
As at December 2009, the Group's EBITDA to interest on borrowings ratio was 6.4 times (as compared with not less than
4.0
times for bank covenant purposes) and the net debt to EBITDA ratio was 2.3 times (as compared with not more than 3.5
times
for bank covenant purposes). Given the Board's expectations for trading and cash flows over the next twelve months, the
Board are confident that the Group will be able to operate within the current committed debt facilities and continue to
be
in full compliance with the financial covenants contained within these debt facilities.
As at 31 December 2009, the Group had undrawn committed debt facilities totalling £350m.
The average interest rate on net debt for 2010 - excluding pension interest - is expected to be around 6%. This rate
reflects both the relatively expensive US private placement loan notes - which have an interest rate of just over 8% -
and
the low levels of interest income earned on cash balances. In January 2010, the Group entered into a number of interest
rate swaps. Following these transactions, around two-thirds of the Group's current gross borrowings are now at fixed
interest rates for an average period of just over two years.
Currency
Whilst sterling has strengthened against the majority of currencies from the beginning of the year to 31 December 2009
(by
8% against the euro and 11% against each of the US dollar and Chinese renminbi), the relative strength of sterling
during
the first ten months of 2008 has meant that the average exchange rates used to translate the Group's overseas results
into
sterling for 2009 and 2008 have benefitted the Group's reported results. Between these years, the average exchange
rates
for sterling weakened against the euro by 11%, the US dollar by 16%, and the Chinese renminbi by 17%.
In 2009, the net translation impact of currency changes compared to 2008 was to increase 2008 revenue by £284m and 2008
trading profit by £28m.
Currently all of the currency-denominated borrowings under the US Private Placement loan notes are swapped into sterling
and all drawings under the syndicated bank facility are in sterling such that changes in exchange rates do not currently
have a material impact on the level of gross borrowings. This policy will be kept under review.
Pension fund and other post-retirement obligations
The Group operates defined contribution and defined benefit pension plans, principally in the UK and US. In addition,
the
Group has various other post-retirement defined benefit ("PRB") arrangements, being principally healthcare arrangements
in
the US. The Group's UK defined benefit pension plan ("the UK Plan"), now merged with that of Foseco, is closed to new
members and its two principal defined benefit pension plans in the US are closed to new members and to further accruals
for
existing members. Employees are being consulted regarding the proposed closure of the UK defined benefit and defined
contribution plans to future benefit accrual with effect from 31 July 2010. It is proposed that a new Group Personal
Pension Plan be implemented in their place to provide defined contribution benefits for all eligible UK employees.
As at 31 December 2009, a net liability of £137.7m was recognised in respect of employee benefits. The increase of
£42.4m
from the net deficit as at 31 December 2008 of £95.3m primarily arose in respect of the UK arrangements, where the
liabilities increased by £82.5m as a result of changes in the IAS 19 discount rate and inflation assumptions, taking the
UK
pension and other PRB plans from an overall surplus at the end of 2008 into a deficit of £24.3m. In contrast, the
deficit
in the Group's US arrangements reduced by £49.1m, the main contributing factors being asset and exchange rate gains,
together with a gain resulting from the termination of certain US retiree medical benefit arrangements. The net deficit
in
the Group's plans outside of the UK and the US was broadly the same as at the end of 2008.
The total Group net liability comprises deficits of £22.3m relating to the UK Plan, £54.1m to the Group's defined
benefit
pension plans in the US, £46.0m to pension arrangements in other countries, and £15.3m to unfunded post-retirement
defined
benefit arrangements, being mainly healthcare benefit arrangements in the US.
During 2008 it was agreed, in consultation with the Trustee of the UK Plan, to reduce the level of 'top-up' payments
(made
in addition to normal cash contributions) to £14.0m per annum with effect from 1 September 2008. In March 2009, the
Group
again consulted with the Trustee and both agreed to a change to the schedule of 'top-up' payments, such that no further
additional payments will be made from the end of January 2009 until August 2010, or until such earlier time as the Group
announces that it is to recommence payment of dividends to shareholders. A new triennial funding valuation for the UK
Plan
as at the end of 2009 is underway, based upon which the Company and Trustee expect to agree a new schedule of
contributions
to commence in August 2010.
The discount rate used to determine the liabilities of the UK Plan for IAS 19 accounting purposes is required to be a
corporate bond yield. The UK Plan has, since 2006, operated a hedging strategy, using a combination of swaps and money
market instruments, to mitigate the impact of interest rate and inflation rate movements on the value of its projected
liabilities for meeting future pension payments (the UK Plan's "economic liabilities"), the value of which is related
more
to interest rate and inflation rate swap yields than to corporate bond yields. When the relationship between the
relevant
swap yields and corporate bond yields is stable, the UK Plan's hedging strategy should deliver a broadly stable 'funding
ratio' (the ratio of plan assets to plan liabilities) not just in relation to the UK Plan's economic liabilities, but
also
under an IAS 19 basis of valuation. However, the current spread of corporate bond yields over swap yields results in
the
IAS 19 value of the UK Plan's liabilities being lower than the value of the actual underlying economic liabilities. As
at
31 December 2009, the estimated funding position (incorporating the UK Plan's economic liabilities) showed a funding
ratio
of 85%, but the IAS 19 valuation reflected a funding ratio of 95%. This represents a valuation difference of around
£50m,
of which some £30m is due to the use of the stronger Long Cohort mortality assumption for funding purposes and the rest
is
largely due to the difference in the discount rates used in each valuation methodology. The Group continues to fund the
UK
Plan with reference to its economic funding position.
In 2006, in order to reduce significantly the future volatility of the Group's UK Plan the plan Trustee implemented risk
mitigation elements within its investment strategy which included, inter alia, entering into an equity hedge. The
equity
hedge has provided a significant level of protection to the UK Plan's assets arising from the fall in global equity
markets
in the last two years. In January 2010, to ensure that the equity hedge continued to provide risk protection to the UK
Plan's assets going forward (including those additional assets arising from the merger of the Foseco pension plan), the
equity hedge was restructured to reflect better the current level of equity markets.
The total charge to the income statement in 2009 for all pension plans (including defined contribution plans) was
£23.7m,
an increase of £2.3m over 2008. Of this charge, £18.9m (2008: £17.7m) has been deducted in arriving at trading profit
and
£4.8m (2008: £3.7m) has been included within finance charges. In addition, an exceptional net credit of £9.7m was
reported
(2008: £6.0m) relating mainly to the termination of certain US retiree medical benefit arrangements and a charge of
£0.8m
(2008: £0.2m) was included in restructuring and integration costs related to pension charges associated with redundancy
programmes. Total pension cash contributions amounted to £36.2m in 2009 (2008: £49.0m), which included additional
funding
contributions into the UK Plan of £1.2m and a non-recurring funding contribution into the US plans of £7.1m.
For further information please contact:
Shareholder/analyst enquiries:
Nick Salmon, Chief Executive Cookson Group plc
Mike Butterworth, Group Finance Director Tel: + 44 (0)20 7822 0000
Media enquiries:
John Olsen Hogarth Partnership
Anthony Arthur Tel: +44 (0)20 7357 9477 + 44 (0)7770 272082
Hogarth Partnership
Anthony Arthur
Tel: +44 (0)20 7357 9477
+ 44 (0)7770 272082
Copies of Cookson's 2009 Annual Report are due to be posted to shareholders of the Company who have elected to receive a
hard copy on 9 April 2010 and are also expected to be available on the Company's website and at the Registered Office of
the Company from this date.
Cookson management will make a presentation to analysts on 2 March 2010 at 9.30am (UK time). This will be broadcast
live
on Cookson's website. An archived version of the presentation will be available on the website later that day.
Forward looking statements
This announcement contains certain forward looking statements which may include reference to one or more of the
following:
the Group's financial condition, results of operations, cash flows, dividends, financing plans, business strategies,
operating efficiencies or synergies, budgets, capital and other expenditures, competitive positions, growth
opportunities
for existing products, plans and objectives of management and other matters.
Statements in this announcement that are not historical facts are hereby identified as "forward looking statements".
Such
forward looking statements, including, without limitation, those relating to the future business prospects, revenue,
working capital, liquidity, capital needs, interest costs and income, in each case relating to Cookson, wherever they
occur
in this announcement, are necessarily based on assumptions reflecting the views of Cookson and involve a number of known
and unknown risks, uncertainties and other factors that could cause actual results, performance or achievements to
differ
materially from those expressed or implied by the forward looking statements. Such forward looking statements should,
therefore, be considered in light of various important factors. Important factors that could cause actual results to
differ
materially from estimates or projections contained in the forward looking statements include without limitation:
economic
and business cycles; the terms and conditions of Cookson's financing arrangements; foreign currency rate fluctuations;
competition in Cookson's principal markets; acquisitions or disposals of businesses or assets; and trends in Cookson's
principal industries.
The foregoing list of important factors is not exhaustive. When relying on forward looking statements, careful
consideration should be given to the foregoing factors and other uncertainties and events, as well as factors described
in
documents the Company files with the UK regulator from time to time including its annual reports and accounts.
Such forward looking statements speak only as of the date on which they are made. Except as required by the Rules of the
UK
Listing Authority and the London Stock Exchange and applicable law, Cookson undertakes no obligation to update publicly
or
revise any forward looking statements, whether as a result of new information, future events or otherwise. In light of
these risks, uncertainties and assumptions, the forward looking events discussed in this announcement might not occur.
Cookson Group plc, 165 Fleet Street, London EC4A 2AE
Registered in England and Wales No. 251977
www.cooksongroup.co.uk
Group Income Statement
For the year ended 31 December 2009
2009 2008
Notes £m £m
Revenue 2 1,960.6 2,202.5
Manufacturing costs - raw materials (972.7) (1,107.2)
- other (470.1) (508.1)
Administration, selling and distribution costs (406.1) (370.9)
Tradingprofit 1.5, 2 111.7 216.3
Restructuring and integration costs 3 (75.6) (39.6)
Inventory fair value adjustment 4 - (2.6)
(Loss)/profit relating to non-current assets 5 (2.8) 3.4
Amortisation and impairment of intangible assets 13 (17.6) (52.5)
Exceptional gains relating to employee benefits plans 6 9.7 6.0
Profit from operations 25.4 131.0
Finance costs - ordinary activities 7 (75.6) (85.3)
- exceptional items 7 (14.0) (2.2)
Finance income 7 38.6 44.5
Share of post-tax profit of joint ventures 1.0 0.7
Net profit on disposal of continuing operations 8 3.7 0.9
(Loss)/profit before tax (20.9) 89.6
Income tax costs - ordinary activities 9 (26.3) (48.3)
- exceptional items 9 5.9 8.1
Discontinued operations 10 (3.4) -
(Loss)/profit for the year (44.7) 49.4
(Loss)/profit for the year attributable to:
Owners of the parent (48.5) 46.1
Non-controlling interests 3.8 3.3
(Loss)/profit for the year (44.7) 49.4
Headline earnings
Trading profit 111.7 216.3
Net finance costs - ordinary activities (37.0) (40.8)
Share of post-tax profit of joint ventures 1.0 0.7
Headline profit before tax 1.5 75.7 176.2
Income tax costs - ordinary activities (26.3) (48.3)
Profit attributable to non-controlling interests (3.8) (3.3)
Headline profit attributable to owners of the parent 45.6 124.6
Earnings per share from continuing operations, as restated 11
Basic (loss)/earnings per share (pence) (17.8) 32.7
Diluted (loss)/earnings per share (pence) (17.8) 32.7
Headline basic earnings per share (pence) 18.0 88.5
Headline diluted earnings per share (pence) 18.0 88.4
0.7
Headline profit before tax
1.5
75.7
176.2
Income tax costs - ordinary activities
(26.3)
(48.3)
Profit attributable to non-controlling interests
(3.8)
(3.3)
Headline profit attributable to owners of the parent
45.6
124.6
Earnings per share from continuing operations, as restated
11
Basic (loss)/earnings per share (pence)
(17.8)
32.7
Diluted (loss)/earnings per share (pence)
(17.8)
32.7
Headline basic earnings per share (pence)
18.0
88.5
Headline diluted earnings per share (pence)
18.0
88.4
Group Statement of Comprehensive Income
For the year ended 31 December 2009
2009 2008
Notes £m £m
(Loss)/profit for the year (44.7) 49.4
Other comprehensive (loss)/income for the year:
Exchange differences on translation of the net assets of foreign operations (94.5) 377.8
Exchange translation differences arising on net investment hedges 16.8 (166.8)
Change in fair value of cash flow hedges (1.0) (11.7)
Change in fair value of cash flow hedges transferred to profit for the year 12.8 -
Actuarial gains on employee benefits plans 24.4 78.0
Actuarial losses on employee benefits plans (101.7) (44.3)
Change in fair value of available-for-sale investments 0.5 2.5
Change in fair value of available-for-sale investments transferred to profit for the year - (6.5)
Income tax relating to components of other comprehensive income 9 21.8 (20.5)
Other comprehensive (loss)/income for the year, net of tax (120.9) 208.5
Total comprehensive (loss)/income for the year (165.6) 257.9
Total comprehensive (loss)/income for the year attributable to:
Owners of the parent (168.2) 252.2
Non-controlling interests 2.6 5.7
Total comprehensive (loss)/income for the year (165.6) 257.9
Total comprehensive (loss)/income for the year attributable to:
Owners of the parent
(168.2)
252.2
Non-controlling interests
2.6
5.7
Total comprehensive (loss)/income for the year
(165.6)
257.9
Group Statement of Cash Flows
For the year ended 31 December 2009
2009 2008
Notes £m £m
Cash flows from operating activities
Profit from operations 25.4 131.0
Restructuring and integration costs 75.6 39.6
Inventory fair value adjustment - 2.6
Loss/(profit) relating to non-current assets 2.8 (3.4)
Amortisation and impairment of intangible assets 17.6 52.5
Exceptional gains relating to employee benefits plans (9.7) (6.0)
Depreciation 53.6 47.2
EBITDA 1.5 165.3 263.5
Net decrease/(increase) in trade and other working capital 152.5 (8.9)
Net operating outflow related to assets and liabilities classified as held for sale (0.8) -
Outflow related to restructuring and integration costs 3 (49.3) (23.0)
Additional funding contributions into Group pension plans (8.3) (25.0)
Cash generated from operations 259.4 206.6
Interest paid (43.8) (41.4)
Interest received 8.6 7.2
Income taxes paid (40.5) (52.0)
Net cash inflow from operating activities 183.7 120.4
Cash flows from investing activities
Purchase of property, plant and equipment (35.0) (72.8)
Proceeds from the sale of property, plant and equipment 1.2 2.2
Proceeds from the sale of investments 0.1 14.7
Acquisition of subsidiaries and joint ventures, net of cash acquired (5.9) (502.2)
Disposal of subsidiaries and joint ventures, net of cash disposed of 6.2 21.2
Dividends received from joint ventures 1.1 0.4
Other investing outflows, including additional costs for prior years' disposals (8.9) (2.1)
Net cash outflow from investing activities (41.2) (538.6)
Net cash inflow/(outflow) before financing activities 142.5 (418.2)
Cash flows from financing activities
Repayment of borrowings 15 (284.1) -
Increase in borrowings - 365.6
Settlement of forward foreign exchange contracts (38.0) 18.3
Proceeds from the issue of share capital 240.7 0.1
Purchase of treasury shares - (3.9)
Proceeds from the sale of treasury shares - 0.3
Borrowing facility arrangement costs (2.4) (6.0)
Dividends paid to equity shareholders 12 - (31.0)
Dividends paid to non-controlling shareholders (2.0) (2.1)
Net cash (outflow)/inflow from financing activities (85.8) 341.3
Net increase/(decrease) in cash and cash equivalents 15 56.7 (76.9)
Cash and cash equivalents at 1 January 105.6 153.2
Effect of exchange rate fluctuations on cash and cash equivalents (4.6) 29.3
Cash and cash equivalents at 31 December 157.7 105.6
Proceeds from the issue of share capital
240.7
0.1
Purchase of treasury shares
-
(3.9)
Proceeds from the sale of treasury shares
-
0.3
Borrowing facility arrangement costs
(2.4)
(6.0)
Dividends paid to equity shareholders
12
-
(31.0)
Dividends paid to non-controlling shareholders
(2.0)
(2.1)
Net cash (outflow)/inflow from financing activities
(85.8)
341.3
Net increase/(decrease) in cash and cash equivalents
15
56.7
(76.9)
Cash and cash equivalents at 1 January
105.6
153.2
Effect of exchange rate fluctuations on cash and cash equivalents
(4.6)
29.3
Cash and cash equivalents at 31 December
157.7
105.6
Free cash flow 1.5
Net cash inflow from operating activities 183.7 120.4
Additional funding contributions into Group pension plans 8.3 25.0
Purchase of property, plant and equipment (35.0) (72.8)
Proceeds from the sale of property, plant and equipment 1.2 2.2
Dividends received from joint ventures 1.1 0.4
Dividends paid to non-controlling shareholders (2.0) (2.1)
Free cash flow 157.3 73.1
Dividends paid to non-controlling shareholders
(2.0)
(2.1)
Free cash flow
157.3
73.1
Group Balance Sheet
As at 31 December 2009
2009 2008
Notes £m £m
Assets
Property, plant and equipment 391.9 446.6
Intangible assets 13 1,115.6 1,187.6
Employee benefits - net surpluses 16 - 70.6
Interests in joint ventures 23.5 22.2
Investments 9.8 10.2
Deferred tax assets 12.0 14.8
Other receivables 11.0 12.1
Total non-current assets 1,563.8 1,764.1
Cash and short-term deposits 160.2 115.8
Inventories 222.0 331.6
Trade and other receivables 405.1 479.0
Income tax recoverable 5.5 1.0
Derivative financial instruments 0.2 6.7
Assets classified as held for sale 3.2 0.3
Total current assets 796.2 934.4
Total assets 2,360.0 2,698.5
Equity
Issued share capital 276.4 21.3
Share premium account - 8.1
Other reserves 127.9 192.1
Retained earnings 643.9 753.1
Total parent company shareholders' equity 1,048.2 974.6
Non-controlling interests 18.2 17.6
Total equity 1,066.4 992.2
Liabilities
Interest-bearing loans and borrowings 441.6 786.4
Employee benefits - net liabilities 16 137.7 165.9
Other payables 27.2 23.7
Provisions 56.6 37.7
Derivative financial instruments 7.7 24.3
Deferred tax liabilities 99.3 134.5
Total non-current liabilities 770.1 1,172.5
Interest-bearing loans and borrowings 90.0 61.1
Trade and other payables 337.5 344.6
Income tax payable 45.8 59.3
Provisions 36.9 29.5
Derivative financial instruments 11.9 39.3
Liabilities directly associated with assets classified as held for sale 1.4 -
Total current liabilities 523.5 533.8
Total liabilities 1,293.6 1,706.3
Total equity and liabilities 2,360.0 2,698.5
Net debt 1.5
Interest-bearing loans and borrowings - non-current 441.6 786.4
- current 90.0 61.1
Cash and short-term deposits (160.2) (115.8)
Net debt 15 371.4 731.7
11.9
39.3
Liabilities directly associated with assets classified as held for sale
1.4
-
Total current liabilities
523.5
533.8
Total liabilities
1,293.6
1,706.3
Total equity and liabilities
2,360.0
2,698.5
Net debt
1.5
Interest-bearing loans and borrowings - non-current
441.6
786.4
- current
90.0
61.1
Cash and short-term deposits
(160.2)
(115.8)
Net debt
15
371.4
731.7
Group Statement of Changes in Equity
As at 31 December 2009
Exchange
trans-
Available- Owners
Issued Share lation
Cash for-sale of the Non-
share premium differ-
flow invest- Retained parent controlling Total
capital account ences
hedges ments earnings total interests equity
£m £m £m
£m £m £m £m £m £m
As at 1 January 2008 21.3 8.0 (5.9)
(0.3) 6.0 724.9 754.0 11.9 765.9
Profit for the year - - -
- - 46.1 46.1 3.3 49.4
Other comprehensive income/(loss) for the year:
Exchange differences on translation of the net assets of foreign operations - - 375.4
- - - 375.4 2.4 377.8
Exchange translation differences arising on net investment hedges - - (166.8)
- - - (166.8) - (166.8)
Change in fair value of cash flow hedges - - -
(11.7) - - (11.7) - (11.7)
Actuarial gains on employee benefits plans - - -
- - 78.0 78.0 - 78.0
Actuarial losses on employee benefits plans - - -
- - (44.3) (44.3) - (44.3)
Change in fair value of available-for-sale investments - - -
- 2.5 - 2.5 - 2.5
Change in fair value of available-for-sale investments transferred to profit for the year - - -
- (6.5) - (6.5) - (6.5)
Income tax relating to components of other comprehensive income (note 9) - - (0.6)
- - (19.9) (20.5) - (20.5)
Other comprehensive income/(loss) for the year, net of tax - - 208.0
(11.7) (4.0) 13.8 206.1 2.4 208.5
Total comprehensive income/(loss) for the year - - 208.0
(11.7) (4.0) 59.9 252.2 5.7 257.9
Transactions with owners:
Shares issued in the year - 0.1 -
- - - 0.1 - 0.1
Recognition of share-based payments - - -
- - 2.9 2.9 - 2.9
Treasury shares - additions - - -
- - (3.9) (3.9) - (3.9)
- disposals - - -
- - 0.3 0.3 - 0.3
Dividends paid - - -
- - (31.0) (31.0) (2.1) (33.1)
Business acquisitions - - -
- - - - 2.1 2.1
Total transactions with owners for the year - 0.1 -
- - (31.7) (31.6) - (31.6)
As at 1 January 2009 21.3 8.1 202.1
(12.0) 2.0 753.1 974.6 17.6 992.2
(Loss)/profit for the year - - -
- - (48.5) (48.5) 3.8 (44.7)
Other comprehensive (loss)/income for the year:
Exchange differences on translation of the net assets of foreign operations - - (93.3)
- - - (93.3) (1.2) (94.5)
Exchange translation differences arising on net investment hedges - - 16.8
- - - 16.8 - 16.8
Change in fair value of cash flow hedges - - -
(1.0) - - (1.0) - (1.0)
Change in fair value of cash flow hedges transferred to profit for the year - - -
12.8 - - 12.8 - 12.8
Actuarial gains on employee benefits plans - - -
- - 24.4 24.4 - 24.4
Actuarial losses on employee benefits plans - - -
- - (101.7) (101.7) - (101.7)
Change in fair value of available-for-sale investments - - -
- 0.5 - 0.5 - 0.5
Income tax relating to components of other comprehensive income (note 9) - - -
- - 21.8 21.8 - 21.8
Other comprehensive (loss)/income for the year, net of tax - - (76.5)
11.8 0.5 (55.5) (119.7) (1.2) (120.9)
Total comprehensive (loss)/income for the year - - (76.5)
11.8 0.5 (104.0) (168.2) 2.6 (165.6)
Transactions with owners:
Shares issued in the year 255.1 (8.1) -
- - (6.3) 240.7 - 240.7
Recognition of share-based payments - - -
- - 1.1 1.1 - 1.1
Dividends paid - - -
- - - - (2.0) (2.0)
Total transactions with owners for the year 255.1 (8.1) -
- - (5.2) 241.8 (2.0) 239.8
As at 31 December 2009 276.4 - 125.6
(0.2) 2.5 643.9 1,048.2 18.2 1,066.4
-
-
12.8
-
12.8
Actuarial gains on employee benefits plans
-
-
-
-
-
24.4
24.4
-
24.4
Actuarial losses on employee benefits plans
-
-
-
-
-
(101.7)
(101.7)
-
(101.7)
Change in fair value of available-for-sale investments
-
-
-
-
0.5
-
0.5
-
0.5
Income tax relating to components of other comprehensive income (note 9)
-
-
-
-
-
21.8
21.8
-
21.8
Other comprehensive (loss)/income for the year, net of tax
-
-
(76.5)
11.8
0.5
(55.5)
(119.7)
(1.2)
(120.9)
Total comprehensive (loss)/income for the year
-
-
(76.5)
11.8
0.5
(104.0)
(168.2)
2.6
(165.6)
Transactions with owners:
Shares issued in the year
255.1
(8.1)
-
-
-
(6.3)
240.7
-
240.7
Recognition of share-based payments
-
-
-
-
-
1.1
1.1
-
1.1
Dividends paid
-
-
-
-
-
-
-
(2.0)
(2.0)
Total transactions with owners for the year
255.1
(8.1)
-
-
-
(5.2)
241.8
(2.0)
239.8
As at 31 December 2009
276.4
-
125.6
(0.2)
2.5
643.9
1,048.2
18.2
1,066.4
Notes to the financial statements
1. BASIS OF PREPARATION
1.1 GENERAL INFORMATION
The audited consolidated financial statements of Cookson Group plc (the "Company") in respect of the year ended 31
December
2009 have been prepared in accordance with International Financial Reporting Standards as adopted by the EU ("IFRS") and
were approved by the Board of Directors on 2 March 2010. The financial information set out in this annual results
announcement does not constitute the Company's statutory accounts for the year ended 31 December 2009, but is derived
from
those accounts. An unqualified audit report was issued on the statutory accounts for 2009, which will be delivered to
the
Registrar of Companies following the Company's Annual General Meeting.
The comparative figures for the financial year ended 31 December 2008 are not the Company's statutory accounts for that
financial year. Those accounts, which were prepared under IFRS, have been reported on by the Company's auditor and
delivered to the Registrar of Companies. The report of the auditor was unqualified and did not contain a statement under
section 498(2) or (3) of the Companies Act 2006. These sections address whether proper accounting records have been
kept,
whether the Company's accounts are in agreement with these records and whether the auditor has obtained all the
information
and explanations necessary for the purposes of its audit.
1.2 CHANGES IN ACCOUNTING POLICY
The following revised and amended standards and interpretations have been adopted by the Group in its 2009 Annual
Report.
Their adoption has had no material impact on the Group's net cash flows, financial position, total comprehensive income
or
earnings per share.
· Revised IAS 1, Presentation of Financial Statements, effective for accounting periods beginning on or after 1
January 2009, has resulted in the Statement of Recognised Income and Expense being renamed the Statement of
Comprehensive
Income and the introduction of the Statement of Changes in Equity as a primary statement. IAS 1 also requires an
additional
Balance Sheet to be presented as at the beginning of the earliest comparative period whenever an accounting policy is
applied retrospectively, or a retrospective restatement of items is made in the financial statements, or items are
reclassified in the financial statements. The only restatements made in the Group's financial statements for the year
ended
31 December 2009, are to those notes that contain per share amounts, following the 10 for 1 share consolidation that
took
effect on 14 May 2009. The Directors do not consider these restatements to be material and accordingly an additional
Balance Sheet has not been presented.
· Revised IAS 23, Borrowing Costs, effective for accounting periods beginning on or after 1 January 2009, has
removed
the option of immediately recognising as an expense borrowing costs that relate to assets that take a substantial period
of
time to get ready for use or sale. The revised standard requires such borrowing costs to be capitalised as part of the
cost
of the asset. The Group's previous policy in relation to borrowing costs was to recognise them in the income statement
using the effective interest rate method.
· Amendments to IAS 39, Financial Instruments: Recognition and Measurement: Eligible Hedged Items and IFRS 7,
Improving Disclosures about Financial Instruments, effective from 1 July 2008, in limited circumstances this amendment
allows the reclassification of certain financial assets previously classified as "held-for-trading" or
"available-for-sale"
to another category.
· Amendments to IAS 32 and IAS 1, Puttable Financial Instruments and Obligations Arising on Liquidation, effective
for
accounting periods beginning on or after 1 January 2009, relate to puttable financial instruments and obligations
arising
on liquidation.
· Amendments to IFRS 1 and IAS 27, Cost of an Investment in a Subsidiary, Jointly-Controlled Entity or Associate,
effective for accounting periods beginning on or after 1 January 2009, relate to the measurement of the initial cost of
investment in a subsidiary.
· Amendments to IFRS 2, Share based payment - Vesting Conditions and Cancellations, effective for accounting
periods
beginning on or after 1 January 2009, clarifies that vesting conditions are service conditions and performance
conditions
only; other features of a share-based payment are not vesting conditions. It also specifies that all cancellations,
whether
by the entity or by other parties, should receive the same accounting treatment.
· Amendment to IFRS 7, Improving Disclosures about Financial Instruments, effective for accounting periods
beginning
on or after 1 January 2009, increases the disclosure requirements for fair value measurement and reinforces existing
principles for disclosure of liquidity risk.
· IFRIC 9, Reassessment of Embedded Derivatives, and IAS 39, Financial Instruments: Recognition and Measurement,
effective for accounting periods ending on or after 1 July 2008, clarifies the accounting for embedded derivatives when
a
financial asset is reclassified out of the "fair value through profit or loss" classification.
· IFRIC 13, Customer Loyalty Programmes, effective for accounting periods beginning on or after 1 July 2008,
addresses
the accounting for loyalty award credits to customers who buy other goods or services.
1.3 BASIS FOR PREPARATION OF FINANCIAL STATEMENTS ON A GOING CONCERN BASIS
Information on the business environment in which the Group operates, including the factors that are likely to impact the
future prospects of the Group, are included in the Overview and Operating Review contained in this annual results
announcement. The financial position of the Group, its cash flows, liquidity position and debt facilities are described
in
the Financial Review.
The Group has two committed debt facilities, approximately £680m of syndicated bank facilities and approximately £200m
of
US Private Placement loan notes. Of the latter, approximately £84m matures in May 2010. Of the remaining total
facilities,
of approximately £796m, the principal maturities are due in 2011 and 2012. The Group's debt facilities contain a number
of
financial covenants with which the Group is required to comply and with which it was fully in compliance as at 31
December
2009. In March 2009, the Group completed a rights issue which raised proceeds (net of expenses) of £241m which were used
to
repay gross borrowings, significantly strengthening the Company's and the Group's financial position.
The Directors have prepared cash flow forecasts for the Group for a period in excess of twelve months from the date of
approval of these consolidated financial statements. These forecasts reflect an assessment of current end-market
conditions, their impact on the Group's future trading performance and the actions taken by management in response to
the
difficult market conditions. The
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