Notes to the accounts
7 Discontinued operations
On 5 May 2007, the Company sold its Aerospace operations to General Electric Company. The Aerospace operations sold comprised the Aerospace business segment as reported in previous annual reports and accounts plus the microwave company previously reported in Specialty – Other. The revenue and profit before taxation of the microwave company were £32.2m (2006: £42.9m) and £7.6m (2006: £10.2m), respectively. As the Aerospace operations represented a separate business segment, the disposal group has been treated as a discontinued operation in this annual report and accounts. The post-tax result of the Aerospace operations has been disclosed as a discontinued operation in the consolidated income statement. In the cash-flow statement, the operating cash-flows of the Aerospace Group have been aggregated with those of the continuing operations, but are shown separately in the note below.
Profit on disposal of operation
|
|
|
£m |
|
Total consideration |
|
2,585.4 |
|
Foreign exchange recycled to the income statement on disposal |
|
(48.4) |
|
Provisions and disposal costs |
|
(76.0) |
|
Pension curtailment gains |
|
63.3 |
|
Provision for settlement loss |
|
(24.3) |
|
|
|
2,500.0 |
|
Net assets disposed |
|
(1,030.4) |
|
Pre-tax profit on disposal |
|
1,469.6 |
|
|
|
|
|
|
|
£m |
|
Cash received from disposal of Aerospace operations |
|
2,585.4 |
|
Disposal costs |
|
(31.9) |
|
Cash and cash equivalents of subsidiaries disposed |
|
(62.5) |
|
Borrowings of subsidiaries disposed |
|
4.0 |
|
Net cash inflow on disposal |
|
2,495.0 |
Assets and liabilities of discontinued operations at the date of disposal
|
|
|
|
£m |
|
Assets |
|
|
|
|
Intangible assets |
|
|
553.0 |
|
Property, plant and equipment |
|
|
256.1 |
|
Retirement benefit assets |
|
|
6.8 |
|
Inventories |
|
|
297.0 |
|
Trade and other receivables |
|
|
1,357.1 |
|
Inter-company receivables |
|
|
1,024.5 |
|
Cash and cash equivalents |
|
|
62.5 |
|
Financial derivatives |
|
|
12.1 |
|
Total assets |
|
|
3,569.1 |
|
Liabilities |
|
|
|
|
Financial liabilities |
|
|
|
|
– borrowings |
|
|
(4.0) |
|
– financial derivatives |
|
|
(2.5) |
|
Provisions for liabilities and charges |
|
|
(20.6) |
|
Retirement benefit obligations |
|
|
(0.5) |
|
Deferred tax liabilities |
|
|
(17.4) |
|
Trade and other payables |
|
|
(2,493.7) |
|
Total liabilities |
|
|
(2,538.7) |
|
Net assets |
|
|
1,030.4 |
Financial information for the Aerospace operations after Group eliminations is presented below.
Results from discontinued operations
|
|
Period ended |
Period ended |
|
Revenue |
955.6 |
1,342.6 |
|
Cost of sales |
(667.9) |
(946.0) |
|
Gross profit |
287.7 |
396.6 |
|
Sales and distribution costs |
(29.9) |
(37.8) |
|
Administrative expenses |
(116.6) |
(188.7) |
|
Loss on disposal of business |
|
(1.7) |
|
Operating profit |
141.2 |
168.4 |
|
Interest payable |
(1.2) |
(1.1) |
|
Other financing gains |
0.7 |
|
|
Other finance income – retirement benefits |
3.1 |
2.4 |
|
Profit before taxation |
143.8 |
169.7 |
|
Taxation relating to performance of discontinued operations (note 6) |
(36.9) |
(42.8) |
|
Profit on disposal |
1,469.6 |
|
|
Attributable tax charge (note 6) |
(51.3) |
|
|
Profit for the period |
1,525.2 |
126.9 |
|
|
|
|
|
Earnings per share from discontinued operations – pence |
|
|
|
Basic |
277.8p |
22.5p |
|
Diluted |
273.9p |
22.5p |
The profit before taxation for the period ended 31 July 2007 represents the results of the operations for the period to the date of disposal.
Analysis by geographical location
The Group's revenue from discontinued operations by destination is shown below:
|
|
Period ended |
Period ended |
|
Revenue |
|
|
|
United Kingdom |
125.7 |
186.3 |
|
North America |
688.6 |
963.0 |
|
Europe |
95.0 |
112.5 |
|
Other overseas |
46.3 |
80.8 |
|
|
955.6 |
1,342.6 |
The Group operating profit from discontinued operations was after charging:
|
|
Period ended |
Period ended |
|
Cost of inventories recognised as an expense |
594.6 |
778.7 |
|
Employee costs (note 11) |
342.5 |
467.3 |
|
Depreciation of property, plant and equipment |
8.4 |
31.2 |
|
Amortisation of intangible assets |
3.8 |
19.4 |
|
Impairment losses recognised in the period on receivables |
0.1 |
0.3 |
|
Research and development costs |
29.4 |
53.4 |
|
Operating leases |
|
|
|
– land and buildings |
4.1 |
7.5 |
|
– other |
1.0 |
1.4 |
|
Fair value movements on derivatives |
|
|
|
– embedded |
(0.1) |
3.5 |
|
– held for trading |
0.7 |
(0.1) |
Cash-flows from discontinued operations
|
|
|
Period ended |
Period ended |
|
Profit before taxation (including profit on disposal of Aerospace operations) |
|
1,613.4 |
169.7 |
|
Net interest payable |
|
1.2 |
1.1 |
|
Financing (gains)/losses |
|
|
|
|
– charged to financing |
|
(0.7) |
|
|
Other finance income – retirement benefits |
|
(3.1) |
(2.4) |
|
Profit on disposal of discontinued operation |
|
(1,469.6) |
|
|
|
|
141.2 |
168.4 |
|
Amortisation of intangible assets |
|
3.8 |
19.4 |
|
Profit on disposal of property, plant and equipment |
|
0.2 |
|
|
Profit on disposal of business |
|
|
1.7 |
|
Depreciation of property, plant and equipment |
|
8.4 |
31.2 |
|
Share-based payment expense |
|
3.5 |
5.3 |
|
Retirement benefits |
|
(22.6) |
1.6 |
|
Increase in inventories |
|
(51.0) |
(31.6) |
|
(Increase)/decrease in trade and other receivables |
|
(17.3) |
16.5 |
|
(Decrease)/increase in trade and other payables |
|
(16.4) |
60.5 |
|
(Decrease)/increase in provisions |
|
(1.1) |
0.5 |
|
Cash generated from operations |
|
48.7 |
273.5 |
|
Interest |
|
(1.2) |
(1.1) |
|
Tax paid |
|
(6.9) |
(22.3) |
|
Net cash inflow from operating activities |
|
40.6 |
250.1 |
|
|
|||
|
|
|
Period ended |
Period ended |
|
Operating activities |
|
40.6 |
250.1 |
|
Investing activities |
|
2,373.1 |
(148.1) |
|
Financing activities |
|
14.2 |
3.0 |
|
|
|
2,427.9 |
105.0 |