RNS Number : 7008T

Morgan Advanced Materials PLC

22 July 2015



HALF-YEAR RESULTS FOR THE PERIOD ENDED 30 JUNE 2015

Results summary

£ million unless otherwise stated	H1   2015	H1 2014	Reported Change %	Constant Currency Change %
Business Performance Revenue	469.2	448.4	+4.6%	+3.1%
Group EBITA*	61.1	56.4	+8.3%	+5.3%
Group EBITA margin*	13.0%	12.6%
Group underlying operating profit*	61.1	54.3	+12.5%	+9.7%
Underlying PBT*	52.8	43.8	+20.5%	+18.7%
Underlying EPS* (pence) Return on Operating Capital Employed*	12.6p 29.7%	10.6p 28.1%	+18.9%
Interim dividend (pence)	4.0p	3.9p	+2.6%
Cash flow from operations*	58.1	42.5	+36.7%
Statutory Reporting
Operating profit	57.5	50.0	+15.0%
Profit before tax	49.2	37.5	+31.2%
Basic EPS (pence)	11.4p	8.4p	+35.7%

*     Definitions of the financial measures can be found in the glossary

Financial Highlights

·   Group revenue at £469.2 million (H1 2014: £448.4 million) was up 4.6% on a reported basis; on a constant currency basis, revenue was up 3.1% compared to the first half of 2014 with all operating regions achieving revenue growth.

·   Overall order intake in the first half was solid with a book-to-bill ratio of 1.03x with all three operating regions above 1.00x. The order book at the end of June was 5.7% higher than at the end of June 2014.

·   Group EBITA margin for the first half of the year was 13.0% (H1 2014: 12.6%). There were no one-off or restructuring charges in the first half and hence the Group underlying margin was 13.0% compared to 12.1% last year, up 90 basis points.

·   Underlying EPS was up 18.9% to 12.6 pence (H1 2014: 10.6 pence).

·   Significant investment continued to be made in the Group's future with R&D spend increasing to 2.7% of sales (H1 2014: 2.4%) and capital expenditure focussed on key profitable growth markets.

·   Net debt at the half-year was £217.1 million (Full-year 2014: £207.0 million). Net debt to EBITDA ratio at the half-year was 1.4x (Full-year 2014: 1.4x).

·   Interim dividend increased by 2.6% to 4.0 pence per share (2014: Interim 3.9 pence per share).

Regional Highlights

·   In North America reported revenue was up 11.6% compared to the first half of 2014 at £191.6 million (H1 2014: £171.7 million). At constant currency, the increase was 2.6% compared to H1 2014. The Thermal Ceramics and Electrical Carbon businesses continued to grow, offset by flat trading in Technical Ceramics and a small decline in the Seals and Bearings business.  The performance of the ceramic cores Certech business continues to improve from the operating issues experienced in 2014.  EBITA margins improved to 15.6% (H1 2014: 15.3%).

·   In Europe reported revenue was marginally down against the first half of 2014 at £157.2 million (H1 2014: £159.4 million).  On an organic and constant currency basis, revenue was up 4.7% compared to the first half of 2014 with particularly good growth in the Thermal Ceramics business, offset by some softness in Technical Ceramics.  EBITA margins improved to 12.3%(H1 2104: 11.2%), with Thermal Ceramics again being the main contributor to this improvement.

·   In Asia/Rest of World reported revenue increased 2.6% to £120.4 million (H1 2014: £117.3 million). On an organic and constant currency basis, the revenue increase was 0.6%.  This growth was achieved despite the slow-down in the Chinese industrial market that resulted in a 9.3% reduction in revenue at constant currency compared to the first half of 2014.  All other major regions of the Asian business grew in the first six months of the year compared to the first half of 2014, particularly South Korea and South East Asia. EBITA margins were 12.0% (H1 2014: 12.7%) with China and South America the main areas of softness in performance.

Commenting on the results for Morgan Advanced Materials, Interim Chief Executive Officer, Kevin Dangerfield said:

"The Group has performed well through the period with improvement across all our business performance measures. Our focus in the last six months has been on driving positive mix shift, delivering cost and operational efficiencies and making continued investments in technology and differentiation.

All three operating regions continued to achieve revenue growth despite the softness in some geographies and end-markets and the profit margin changes in the regions mirrored this mixed trading landscape.

The Group's solid financial and operational platform and the investment in the business gives the Board confidence in the prospects for the Group as we enter the second half of 2015."

For further enquiries:

Kevin Dangerfield	Morgan Advanced Materials	01753 837000
Mike Smith	Brunswick	0207 404 5959

There will be an analyst and investor presentation at 09.30 (UK time) today at Goldman Sachs, The Auditorium, 120 Fleet Street, London, EC4A 2BB. A live video webcast and slide presentation of this event will be available on www.morganadvancedmaterials.com. We recommend you register at 09.00 (UK time).

Operating Review

	Revenue			EBITA			EBITA Margin
	H1		H1	H1		H1	H1		H1
	2015		2014	2015		2014	2015		2014
	£m		£m	£m		£m	%		%
North America	191.6		171.7	29.8		26.2	15.6%		15.3%
Europe	157.2		159.4	19.3		17.8	12.3%		11.2%
Asia/Rest of World	120.4		117.3	14.5		14.9	12.0%		12.7%
	469.2		448.4	63.6		58.9	13.6%		13.1%
Unallocated costs				(2.5)		(2.5)
Group EBITA				61.1		56.4	13.0%		12.6%
Restructuring costs and other one-off items				-		(2.1)
Underlying operating profit				61.1		54.3	13.0%		12.1%

North America

Revenue for the first half of the year was £191.6 million (H1 2014: £171.7 million) representing an increase of 11.6% at reported rates. At constant currency there was an increase of 2.6%.

EBITA for the first half of the year was £29.8 million (H1 2014: £26.2 million), with EBITA margin improving to 15.6% in the first half of 2015 compared with 15.3% in H1 2014.

Thermal Ceramics achieved particularly good revenue growth in the first half of 9.1% compared to the first half of 2014. Electrical Carbon revenue grew at 3.3% while Technical Ceramics was flat and Seals and Bearings had marginal revenue decline. Thermal Ceramics continues to perform well across its business in general industrial applications, fire resistant and automotive applications. Electrical Carbon showed steady revenue growth, particularly from strength in rail business in the period. The Technical Ceramics business continues to experience mixed trading conditions in the region in relation to both customers and end-markets. A number of individual customer decisions both positive and negative in the period and end-market exposure to areas such as oil and gas have resulted in an overall flat trading period. The Certech (ceramic cores for turbine blade manufacture) business has continued to improve following the operational issues experienced in 2014. Seals and Bearings EBITA performance improved in the first half despite some softness in the oil and gas market.

The book to bill ratio in North America has remained positive year to date.

Europe

Revenue for the first half of the year was £157.2 million (H1 2014: £159.4 million) representing a decline of 1.4% at reported rates. On an organic and constant currency basis, revenue was up 4.7% compared to the first half of 2014.

EBITA for the first half of the year was £19.3 million (H1 2014: £17.8 million).  EBITA margins improved to 12.3%, compared with 11.2% in H1 2014, with Thermal Ceramics the main contributor to this improvement. 

The Thermal Ceramics business achieved good organic revenue growth of 9.5% at constant currency compared to the first half of 2014, with orders for export outside Europe particularly strong. Revenue growth in Seals and Bearings continued and the Electrical Carbon business had a marginal decline in the period compared to the first half of 2014. Technical Ceramics had the main decline in revenue in the period of 4.5% at constant currency, being impacted by the loss of some individual applications in our customer base and reflecting the mixed end-market conditions particularly in piezo ceramics serving the aerospace, automotive, marine and medical markets. Porextherm, the microporous business acquired in July 2014, is progressing well with new business and opportunities being realised in North America and Asia. The Composites and Defence Systems (C&DS) business is broadly achieving the revenue and performance anticipated in the first half with an expectation of improvement in the second half, indicating the business will achieve close to £40 million of annualised revenue.

The book to bill ratio in Europe has remained positive year to date.

Asia & Rest of the World

Revenue for the first half of the year was £120.4 million (H1 2014: £117.3 million) representing an increase of 2.6% at reported rates. On an organic and constant currency basis, revenue increased in the first half of the year by 0.6% compared to H1 2014.

EBITA for the first half of the year was £14.5 million (H1 2014: £14.9 million). EBITA margin was 12.0%, compared to 12.7% in the first half of 2014.

Trading conditions in Asia/ROW were mixed. China revenue fell by 9.3% compared to the first half of 2014, but all the other main geographies, including India, South Korea and the Middle East achieved revenue growth. The Chinese domestic market has been weak in the traditional industrial sectors through the period (iron and steel, chemicals etc) with larger project orders in Thermal Ceramics being particularly impacted. Our Technical Ceramics business in Asia has continued to grow and revenue now exceeds £10 million, with further expansion/projects in this business planned through 2015 and 2016. The Molten Metal Systems business, with close to 50% of its revenue from the region, continued to see soft demand in China partially offset by an improving Indian economy. The lower revenue in China and continuing poor economic conditions in South America (the combined effect of inflation, pricing and product mix) have been the main contributors to the decline in EBITA margin in the first half.

The book to bill ratio for the region has been marginally positive year to date, despite the softness in China experienced in the first half of the year.

Financial Review

Reference is made to 'Underlying operating profit' and 'Underlying EPS' below, both of which are defined in the glossary at the end of this statement.  These measures of earnings are shown because the Directors consider that they give the best indication of underlying performance.

Business Performance Review

Group revenue in the first half of 2015 was £469.2 million, an increase of 4.6% compared to the first half of 2014. On a constant currency basis revenue increased by 3.1% and on an organic and constant currency basis revenue increased by 2.7% compared to the first half of 2014.

Group EBITA before restructuring charges and other one-off items was £61.1 million (H1 2014: £56.4 million) representing a margin of 13.0% (H1 2014: 12.6%).

Group underlying operating profit (EBITA after restructuring costs and other one-off items) for the first half of 2015 was £61.1 million (H1 2014: £54.3 million).  Underlying operating profit margin was 13.0%, compared to 12.1% for the first half of 2014.

There were no restructuring costs and other one-off items in H1 2015 (H1 2014: £2.1 million). 

The Group amortisation charge for the half-year was £3.6 million (H1 2014: £4.3 million).

The net finance charge was £8.5 million (H1 2014: £10.5 million), comprising the net bank interest and similar charges of £6.1 million (H1 2014: £7.5 million), income derived from financial instruments of £1.0 million (H1 2014: nil) and the finance charge under IAS 19 (revised), being the interest charge on pension scheme net liabilities, of £3.4 million (H1 2014: £3.0 million).

The tax charge for the period was £14.5 million (H1 2014: £11.5 million). The effective tax rate for the half-year is 29.5% (H1 2014: 29.1%).

Underlying EPS is 12.6 pence (H1 2014: 10.6 pence).

The Return on Operating Capital Employed at 30 June 2015, defined as Group underlying profit for the last 12 months divided by the sum of working capital and the net book value of tangible assets, was 29.7%, compared with 28.1% at 30 June 2014.

Employee Benefits

The Group pension deficit has decreased by £18.8 million since last year end to £193.0 million on an IAS 19 basis.  Reductions in deficit were experienced in the US, UK and European defined benefit pension schemes, mainly due to higher discount rates. The US deficit decreased by £8.6 million to £50.2 million (December 2014: £58.8 million), the UK deficit decreased by £5.8 million to £113.0 million (December 2014: £118.8 million) and the European deficit decreased by £4.6 million to £27.0 million (December 2014: £31.6 million).

Cash Flow

						H1 2015	H1 2014
						£m	£m
Cashflow from operations						58.1	42.5
Net capital expenditure						(31.8)	(13.6)
Net interest paid						(4.9)	(7.7)
Tax paid						(17.4)	(10.7)
Restructuring costs and other one-off items						(2.6)	(3.7)
Free cash flow before acquisitions and dividends						1.4	6.8
Dividends paid						(20.0)	(19.1)
Cash flows from other investing and financing						3.6	(1.7)
Exchange movement						4.9	6.2
Movement in net debt in period						(10.1)	(7.8)
Opening net debt						(207.0)	(186.5)
Closing net debt						(217.1)	(194.3)

Cash flow from operations was £58.1 million (H1 2014: £42.5 million).

Net capital expenditure of £31.8 million was significantly higher than the £13.6 million in H1 2014. The Group has continued its investment in additional capability and capacity, particularly in the Asia/Rest of World region and in the insulating ceramic fibre business stream, to support future growth.  In addition to this the H1 2015 capital expenditure included approximately £12 million for the acquisition of the Swansea, UK facility.  The site was previously occupied on a long-term lease, running to 2034, and to most effectively allow the significant re-organisation of the Group's operations on that site a decision was made to acquire the site and this was completed in March 2015. The intent is to consolidate the remaining operations on a more efficient footprint and to then realise value from the remaining space.  Provision was made in the 2014 full year financial statements to reflect the purchase price, the expected re-organisation costs and the expected realisable value.  

Free cash flow before acquisitions and dividends was £1.4 million (H1 2014: £6.8 million).

Net debt at the half-year end was £217.1 million (2014 year end: £207.0 million) representing a net debt to EBITDA ratio of 1.4x (2014 year end: 1.4x).

Foreign exchange - translation effect - illustration

For illustrative purposes, the table below provides details of the impact on H1 2015 revenue and EBITA if the actual reported results, calculated using H1 2015 average exchange rates, were restated at H1 2015 closing exchange rates.

	H1 2015 Reported (average rates) £m	FX impact of using H1 2015 closing rates £m	H1 2015 at H1 2015 closing rates                £m
Revenue	469.2	(14.0)	455.2
EBITA before restructuring	61.1	(2.5)	58.6
EBITA margin %	13.0%		12.9%

The principal exchange rates used in the translation of the results of overseas subsidiaries were as follows:

	H1 2015		FY 2014		H1 2014
GBP to:	Closing rate	Average Rate	Closing rate	Average Rate	Closing rate	Average rate
US dollar	1.57	1.52	1.56	1.65	1.71	1.67
Euro	1.41	1.37	1.29	1.24	1.25	1.22
Chinese yuan	9.74	9.47	9.67	10.15	10.61	10.30

Interim Dividend

The Board has declared an interim dividend of 4.0 pence per ordinary share. This is an increase of 2.6% compared to the interim dividend declared in 2014. The dividend will be paid on 27 November 2015 to Ordinary shareholders on the register of members at the close of business on 6 November 2015.

Principal Risks and Uncertainties

The Group has in place processes for identifying, evaluating and managing the key risks which could have an impact upon the Group's performance.

The current risks, which the Board considers could have the most serious effect on achieving the Group's strategy, and the approach to managing them, are set out in the 2014 Annual Report, which is available at the Group's website at www.morganadvancedmaterials.com  The Group has reviewed these risks and concluded that they adequately represent the current principal risks and uncertainties of the Group and will continue to remain relevant for the second half of the financial year.

The principal risks comprise: technology obsolescence; recruiting, maintaining and motivating high-quality staff; treasury risks; quality of contracts; IT risks and cyber risks; product quality, safety and liability; single point exposures; environment, health and safety risks; changes to or non-compliance with laws and regulation; a changing political, economic and social environment; and pension funding.

Going Concern

As reported on page 45 of the 2014 financial statements, the Group meets its day-to-day working capital requirements through local banking arrangements and the committed £200 million unsecured five-year multi-currency revolving credit facility.  The headroom on this at the half-year was £106.5 million.

The Group's forecasts and projections, taking account of reasonably possible changes in trading performance, show that the Group is able to operate within the level of its committed facilities. The Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the condensed consolidated financial statements for the six months ended 30 June 2015.

Directors' Responsibility Statement

The Directors confirm that to the best of their knowledge:

·     the condensed consolidated set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the European Union;

·     the interim management report includes a fair review of the information required by:

(a) DTR 4.2.7 of the Disclosure and Transparency Rules of the Financial Conduct Authority, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

(b) DTR 4.2.8 of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

Information on 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

Andrew Shilston

Chairman

Kevin Dangerfield

Interim Chief Executive Officer

                                                    Glossary of terms

Cash flow from operations	Group EBITA of £61.1 million (H1 2014: £56.4 million), plus depreciation of £13.8 million (H1 2014: £13.9 million) plus loss on sale of plant and machinery of nil (H1 2014: £0.1 million), less the increase in working capital of £10.1 million (H1 2014: £21.4 million) less the decrease in provisions (excluding restructuring) and employee benefits of £6.7 million (H1 2014: £6.5 million)
Group earnings before interest, tax, depreciation and amortisation ("EBITDA")	Operating profit before specific adjusting items, restructuring costs and other one-off items, depreciation and amortisation of intangible assets
Group earnings before interest, tax and amortisation ("EBITA")	Operating profit before specific adjusting items, restructuring costs and other one-off items and amortisation of intangible assets
Group underlying operating profit	Operating profit of £57.5 million (H1 2014: £50.0 million) before amortisation of intangibles of £3.6 million (H1 2014: £4.3 million)
Net debt	Interest-bearing loans and borrowings, bank overdrafts less cash and cash equivalents
Restructuring costs and other one-off items	Include the costs of restructuring activity, gain on disposal of property and acquisition-related costs
Return on operating capital employed ("ROCE")	Group underlying operating profit for the last 12 months divided by the sum of working capital (which excludes pension liability and provisions) and the net book value of tangible assets. Goodwill and other intangible assets are excluded
Unallocated costs	Includes plc costs (e.g. Report & Accounts, AGM, Non-Executive Directors) and Group management costs (e.g. Corporate head office rent, utilities, staff etc.)
Underlying earnings per share ("EPS")	Basic earnings per share of 11.4 pence (H1 2014: 8.4 pence) adjusted to exclude specific adjusting items of 0 pence (H1 2014: 0.7 pence) and amortisation of 1.2 pence (H1 2014: 1.5 pence)
Underlying profit before tax ("PBT")	Operating profit of £57.5 million (H1 2014: £50.0 million) before amortisation of intangibles of £3.6 million (H1 2014: £4.3 million), plus share of profit from associate £0.2 million (H1 2014: nil) less net financing costs of £8.5 million (H1 2014: £10.5 million)
Working capital (as used in the ROCE calculation)	Working capital as used in the calculation of ROCE is the sum of inventories, £130.9 million (H1 2014: £124.1 million), trade and other receivables, £186.5 million (H1 2014: £188.4 million), net derivative financial assets, £3.1 million (H1 2014: £1.8 million), trade and other payables, £(179.9) million (H1 2014: £(168.5) million) less tax accruals £(20.7) million (H1 2014: £(22.9) million), plus the net of deferred consideration, third party dividends payable and other sundry items, £(0.6) million  (H1 2014: £(1.6) million)

CONDENSED CONSOLIDATED INCOME STATEMENT for the six months ended 30 June 2015		Six months		Six months	Six months	Six months		Year	Year	Year
		Total		Results before specific adjusting items	Specific adjusting items*	Total		Results before specific adjusting items	Specific adjusting items*	Total
		2015		2014	2014	2014		2014	2014	2014
	Note	£m		£m	£m	£m		£m	£m	£m
Revenue	3	469.2		448.4	-	448.4		921.7	-	921.7
Operating costs before restructuring costs, other one-off items and amortisation of intangible assets		(408.1)		(392.0)	-	(392.0)		(803.7)	-	(803.7)
Profit from operations before restructuring costs,
other one-off items and amortisation of intangible assets		61.1		56.4	-	56.4		118.0	-	118.0
Restructuring costs and other one-off items:	4
Restructuring costs		-		(1.7)	-	(1.7)		(5.9)	(16.3)	(22.2)
Business exit costs		-		-	-	-		-	(1.9)	(1.9)
Transaction-related costs		-		(0.4)	-	(0.4)		-	(1.2)	(1.2)
Settlement of prior period anti-trust litigation		-		-	-	-		-	(3.6)	(3.6)
Gain on disposal of properties		-		-	-	-		0.3	-	0.3
Profit from operations before amortisation of intangible assets	3	61.1		54.3	-	54.3		112.4	(23.0)	89.4
Amortisation and impairment of intangible assets		(3.6)		(4.3)	-	(4.3)		(8.2)	-	(8.2)
Impairment of intangible assets		-		-	-	-		-	(26.9)	(26.9)
Operating profit	3	57.5		50.0	-	50.0		104.2	(49.9)	54.3
Finance income		1.9		0.8	-	0.8		2.1	-	2.1
Finance expense		(10.4)		(11.3)	-	(11.3)		(22.9)	-	(22.9)
Net financing costs	5	(8.5)		(10.5)	-	(10.5)		(20.8)	-	(20.8)
Net loss on disposal of businesses	4	-		-	(2.0)	(2.0)		-	(2.0)	(2.0)
Share of profit of associate (net of income tax)		0.2		-	-	-		-	-	-
Profit before taxation		49.2		39.5	(2.0)	37.5		83.4	(51.9)	31.5
Income tax expense	6	(14.5)		(11.5)	-	(11.5)		(24.7)	5.5	(19.2)
Profit for the period		34.7		28.0	(2.0)	26.0		58.7	(46.4)	12.3
CONDENSED CONSOLIDATED INCOME STATEMENT for the six months ended 30 June 2015 continued		Six months		Six months	Six months	Six months		Year	Year	Year
		Total		Results before specific adjusting items	Specific adjusting items*	Total		Results before specific adjusting items	Specific adjusting items*	Total
		2015		2014	2014	2014		2014	2014	2014
	Note	£m		£m	£m	£m		£m	£m	£m
Profit for the period attributable to:
Owners of the parent		32.4		25.9	(2.0)	23.9		54.8	(47.0)	7.8
Non-controlling interests		2.3		2.1	-	2.1		3.9	0.6	4.5
Profit for the period		34.7		28.0	(2.0)	26.0		58.7	(46.4)	12.3
								Six months	Six months	Year
								Total	Total	Total
								2015	2014	2014
								£m	£m	£m
Earnings per share from continuing operations	7
Basic								11.4p	8.4p	2.7p
Diluted								11.3p	8.4p	2.7p
Dividends
Proposed interim dividend - pence								4.00p	3.90p
- £m								11.4	11.1
Approved final dividend    - pence										7.00p
- £m										20.0
The proposed interim and approved final dividends are based upon the number of shares outstanding at the balance sheet date.
* Details of 'Specific adjusting items' are given in note 4 to the financial statements. There were no specific adjusting items in the six months ended 30 June 2015.

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 30 June 2015
					Total
			Fair		parent	Non-	Total
	Translation	Hedging	value	Retained	comprehensive	controlling	comprehensive
	reserve	reserve	reserve	earnings	income	interests	income
	£m	£m	£m	£m	£m	£m	£m
Six months ended 30 June 2014
Profit for the period	-	-	-	23.9	23.9	2.1	26.0
Items that will not be reclassified subsequently to profit or loss:
Remeasurement loss on defined benefit plans	-	-	-	(14.9)	(14.9)	-	(14.9)
Tax effect of components of other comprehensive income not reclassified	-	-	-	1.6	1.6	-	1.6
	-	-	-	(13.3)	(13.3)	-	(13.3)
Items that may be reclassified subsequently to profit or loss:
Foreign exchange translation differences	(7.7)	-	-	-	(7.7)	(1.3)	(9.0)
Net gain on hedge of net investment in foreign subsidiaries	2.2	-	-	-	2.2	-	2.2
Cash flow hedges:
Effective portion of changes in fair value	-	0.7	-	-	0.7	-	0.7
	(5.5)	0.7	-	-	(4.8)	(1.3)	(6.1)
Total comprehensive income, net of tax	(5.5)	0.7	-	10.6	5.8	0.8	6.6
Year ended 31 December 2014
Profit for the period	-	-	-	7.8	7.8	4.5	12.3
Items that will not be reclassified subsequently to profit or loss:
Remeasurement loss on defined benefit plans	-	-	-	(75.2)	(75.2)	-	(75.2)
Tax effect of components of other comprehensive income not reclassified	-	-	-	10.0	10.0	-	10.0
	-	-	-	(65.2)	(65.2)	-	(65.2)
Items that may be reclassified subsequently to profit or loss:
Foreign exchange translation differences	(6.6)	-	-	-	(6.6)	(0.4)	(7.0)
Net gain on hedge of net investment in foreign subsidiaries	7.9	-	-	-	7.9	-	7.9
Cash flow hedges:
Transferred to profit or loss	-	(0.1)	-	-	(0.1)	-	(0.1)
	1.3	(0.1)	-	-	1.2	(0.4)	0.8
Total comprehensive income, net of tax	1.3	(0.1)	-	(57.4)	(56.2)	4.1	(52.1)
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 30 June 2015 continued
					Total
			Fair		parent	Non-	Total
	Translation	Hedging	value	Retained	comprehensive	controlling	comprehensive
	reserve	reserve	reserve	earnings	income	interests	income
	£m	£m	£m	£m	£m	£m	£m
Six months ended 30 June 2015
Profit for the period	-	-	-	32.4	32.4	2.3	34.7
Items that will not be reclassified subsequently to profit or loss:
Remeasurement gain on defined benefit plans	-	-	-	12.7	12.7	-	12.7
Tax effect of components of other comprehensive income not reclassified	-	-	-	(3.1)	(3.1)	-	(3.1)
	-	-	-	9.6	9.6	-	9.6
Items that may be reclassified subsequently to profit or loss:
Foreign exchange translation differences	(11.1)	-	-	-	(11.1)	(0.5)	(11.6)
Net gain on hedge of net investment in foreign subsidiaries	5.1	-	-	-	5.1	-	5.1
Cash flow hedges:
Effective portion of changes in fair value	-	1.4	-	-	1.4	-	1.4
	(6.0)	1.4	-	-	(4.6)	(0.5)	(5.1)
Total comprehensive income, net of tax	(6.0)	1.4	-	42.0	37.4	1.8	39.2

CONDENSED CONSOLIDATED BALANCE SHEET
as at 30 June 2015
		30 June	30 June	31 December
		2015	2014	2014
	Note	£m	£m	£m
Assets
Property, plant and equipment		240.4	229.3	241.0
Intangible assets		230.1	244.5	235.3
Investments		6.0	6.5	6.2
Other receivables		10.9	3.6	4.0
Deferred tax assets		38.6	31.8	39.5
Total non-current assets		526.0	515.7	526.0
Inventories		130.9	124.1	126.6
Derivative financial assets	9	4.0	2.3	6.0
Trade and other receivables		186.5	188.4	193.9
Cash and cash equivalents	8	52.4	65.7	63.0
Assets classified as held for sale		-	-	4.5
Total current assets		373.8	380.5	394.0
Total assets		899.8	896.2	920.0
Liabilities
Interest-bearing loans and borrowings		269.5	167.3	232.9
Employee benefits		193.0	154.4	211.8
Provisions		2.3	3.5	2.6
Non-trade payables		0.7	0.8	0.8
Deferred tax liabilities		34.4	34.7	33.4
Total non-current liabilities		499.9	360.7	481.5
Interest-bearing loans and borrowings and bank overdrafts		-	92.7	37.1
Trade and other payables		179.9	168.5	185.7
Current tax payable		3.8	2.4	5.7
Provisions		8.6	9.4	20.2
Derivative financial liabilities	9	0.9	0.5	0.8
Liabilities classified as held for sale		-	-	1.3
Total current liabilities		193.2	273.5	250.8
Total liabilities		693.1	634.2	732.3
Total net assets		206.7	262.0	187.7
Equity
Share capital		71.8	71.8	71.8
Share premium		111.7	111.7	111.7
Reserves		34.5	33.1	39.1
Retained earnings		(49.0)	8.1	(71.4)
Total equity attributable to equity holders of parent Company		169.0	224.7	151.2
Non-controlling interests		37.7	37.3	36.5
Total equity		206.7	262.0	187.7

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 June 2015
						Fair		Capital			Total	Non-
		Share	Share	Translation	Hedging	value	Special	redemption	Other	Retained	parent	controlling	Total
		capital	premium	reserve	reserve	reserve	reserve	reserve	reserves	earnings	equity	interests	equity
		£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
Balance at 1 January 2014		71.8	111.7	(14.8)	0.6	(1.0)	6.0	35.7	11.4	16.7	238.1	36.0	274.1
Profit for the period		-	-	-	-	-	-	-	-	23.9	23.9	2.1	26.0
Other comprehensive income		-	-	(5.5)	0.7	-	-	-	-	(13.3)	(18.1)	(1.3)	(19.4)
Transactions with owners:
Dividends		-	-	-	-	-	-	-	-	(19.1)	(19.1)	(0.7)	(19.8)
Equity-settled share-based payment transactions		-	-	-	-	-	-	-	-	1.1	1.1	-	1.1
Own shares acquired for share incentive schemes		-	-	-	-	-	-	-	-	(1.2)	(1.2)	-	(1.2)
Adjustment arising from change in non-controlling interest		-	-	-	-	-	-	-	-	-	-	1.2	1.2
Balance at 30 June 2014		71.8	111.7	(20.3)	1.3	(1.0)	6.0	35.7	11.4	8.1	224.7	37.3	262.0
Balance at 1 January 2014		71.8	111.7	(14.8)	0.6	(1.0)	6.0	35.7	11.4	16.7	238.1	36.0	274.1
Profit for the period		-	-	-	-	-	-	-	-	7.8	7.8	4.5	12.3
Other comprehensive income		-	-	1.3	(0.1)	-	-	-	-	(65.2)	(64.0)	(0.4)	(64.4)
Transactions with owners:
Dividends		-	-	-	-	-	-	-	-	(30.2)	(30.2)	(4.8)	(35.0)
Equity-settled share-based payment transactions		-	-	-	-	-	-	-	-	1.8	1.8	-	1.8
Own shares acquired for share incentive schemes		-	-	-	-	-	-	-	-	(2.3)	(2.3)	-	(2.3)
Adjustment arising from change in non-controlling interest		-	-	-	-	-	-	-	-	-	-	1.2	1.2
Balance at 31 December 2014		71.8	111.7	(13.5)	0.5	(1.0)	6.0	35.7	11.4	(71.4)	151.2	36.5	187.7
Balance at 1 January 2015		71.8	111.7	(13.5)	0.5	(1.0)	6.0	35.7	11.4	(71.4)	151.2	36.5	187.7
Profit for the period		-	-	-	-	-	-	-	-	32.4	32.4	2.3	34.7
Other comprehensive income		-	-	(6.0)	1.4	-	-	-	-	9.6	5.0	(0.5)	4.5
Transactions with owners:
Dividends		-	-	-	-	-	-	-	-	(20.0)	(20.0)	(1.1)	(21.1)
Equity-settled share-based payment transactions		-	-	-	-	-	-	-	-	1.3	1.3	-	1.3
Own shares acquired for share incentive schemes		-	-	-	-	-	-	-	-	(0.9)	(0.9)	-	(0.9)
Adjustment arising from change in non-controlling interest		-	-	-	-	-	-	-	-	-	-	0.5	0.5
Balance at 30 June 2015		71.8	111.7	(19.5)	1.9	(1.0)	6.0	35.7	11.4	(49.0)	169.0	37.7	206.7

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
for the six months ended 30 June 2014
			Six months	Six months	Year
			2015	2014	2014
		Note	£m	£m	£m
Operating activities
Profit for the period			34.7	26.0	12.3
Adjustments for:
	Depreciation		13.8	13.9	27.8
	Amortisation	3	3.6	4.3	8.2
	Net financing costs	5	8.5	10.5	20.8
	Loss on disposal of business	4	-	2.0	2.0
	Share of profit from associate		(0.2)	-	-
	Income tax expense	6	14.5	11.5	19.2
	Profit on sale of property, plant and equipment		(0.2)	-	-
	Non-cash operating costs relating to restructuring	4	-	0.6	2.0
	Non-cash specific adjusting items included in operating profit	4	-	-	38.0
	Equity-settled share-based payment expenses		1.0	1.0	1.7
Cash generated from operations before changes in working capital and provisions			75.7	69.8	132.0
(Increase) in trade and other receivables			(1.3)	(5.5)	(2.8)
(Increase) in inventories			(9.4)	(10.8)	(9.5)
Increase/(decrease) in trade and other payables			0.5	(4.7)	3.1
(Decrease) in provisions and employee benefits			(10.1)	(10.1)	(15.0)
Cash generated from operations			55.4	38.7	107.8
Acquisition-related costs			-	(0.3)	(0.3)
Interest paid			(6.8)	(8.4)	(17.2)
Income tax paid			(17.4)	(10.7)	(20.0)
Net cash from operating activities			31.2	19.3	70.3
Investing activities
Purchase of property, plant and equipment			(32.2)	(13.6)	(33.8)
Proceeds from sale of property, plant and equipment			0.4	-	1.3
Sale of investments			-	1.3	0.9
Interest received			1.9	0.7	1.9
Disposal of subsidiaries, net of cash disposed			-	(0.6)	(0.6)
Acquisition of subsidiaries, net of cash acquired			-	-	(20.7)
Loan made to associate			-	(1.0)	(1.5)
Loan made to purchaser of business			(1.2)	-	-
Investment made by non-controlling interests			0.5	-	-
Deferred consideration received on disposal of subsidiary			-	0.4	0.7
Forward contracts used in net investment hedging			5.2	(0.3)	0.9
Net cash from investing activities			(25.4)	(13.1)	(50.9)
Financing activities
Purchase of own shares for share incentive schemes			(0.9)	(1.2)	(2.3)
Increase/(decrease) in borrowings		8	6.6	6.1	(1.2)
Payment of finance lease liabilities		8	(0.1)	(0.1)	(0.1)
Finance leases acquired			-	-	1.2
Dividends paid			(20.0)	(19.1)	(30.2)
Net cash from financing activities			(14.4)	(14.3)	(32.6)
Net (decrease) in cash and cash equivalents			(8.6)	(8.1)	(13.2)
Cash and cash equivalents at start of period			63.0	76.0	76.0
Effect of exchange rate fluctuations on cash held			(2.0)	(2.2)	0.2
Cash and cash equivalents at period end		8	52.4	65.7	63.0
A reconciliation of cash and cash equivalents to net borrowings is shown in note 8.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.

Basis of preparation

Morgan Advanced Materials plc (the 'Company') is a company domiciled in the United Kingdom. The condensed consolidated financial statements of the Company as at and for the six months ended 30 June 2015 comprise the Company and its subsidiaries (together referred to as the 'Group') and the Group's interests in associates.

These half-year condensed consolidated financial statements have been drawn up to 30 June 2015.

The condensed consolidated financial statements for the six months ended 30 June 2015 have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU. 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 as at and for the year ended 31 December 2014. The condensed consolidated financial statements do not include all the information required for full annual financial statements prepared in accordance with International Financial Reporting Standards.

These condensed consolidated half-year financial statements do not comprise statutory accounts within the meaning of Section 435 of the Companies Act 2006, and should be read in conjunction with the Annual Report 2014.

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.

In preparing the condensed consolidated financial statements, significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended 31 December 2014.

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 Company's published consolidated financial statements for the year ended 31 December 2014 except for the impact of adopting the accounting standards below.

During the period, the Group adopted a number of minor amendments to standards which became effective, none of which had a material impact on the Group's net cash flow, financial position, total comprehensive income or earnings per share.

The comparative figures for the financial year ended 31 December 2014 are not the Company's statutory consolidated accounts for that financial year. Those accounts have been reported on by the Company's auditor and delivered to the registrar of companies. The report of the auditor was (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying his report, and (iii) did not contain a statement under section 498(2) or (3) of the Companies Act 2006. The consolidated financial statements of the Group as at and for the year ended 31 December 2014 are available on request from the Company's registered office at Quadrant, 55-57 High Street, Windsor, Berkshire SL4 1LP or at www.morganadvancedmaterials.com.

The condensed consolidated financial statements for the six months ended 30 June 2015 and the comparative period have neither been audited nor reviewed.

The condensed consolidated financial statements for the six months ended 30 June 2015 were approved by the Board on 22 July 2015.

2. Acquisitions & disposals
Disposal: 2015
On 30 January 2015, the Group disposed of its Thermal Ceramics business in Wissembourg, France. The assets and liabilities disposed of were classified as held for sale as at 31 December 2014, as described in note 6 in the Annual Report 2014:
	£m
Property, plant and equipment	2.5
Intangible assets	0.1
Inventories	1.9
Total assets classified as held for sale	4.5
Trade and other payables	0.6
Employee benefits	0.7
Total liabilities classified as held for sale	1.3
Net assets of disposal group	3.2
Deferred consideration	3.2
The Group incurred a £1.9 million loss on disposal of this business and booked this as an impairment charge in 2014.
The Group also made a loan of £1.2 million to the purchasers of the Wissembourg business. This is shown in 'loan made to purchaser of business' in the condensed consolidated statement of cash flows.                    The Group did not make any other acquisitions or disposals during the half-year ended 30 June 2015.
Acquisitions and disposals: 2014
Full details of acquisitions and disposals in 2014 were given in the last annual consolidated financial statements as at and for the year ended 31 December 2014. There have been no subsequent changes to these transactions.

3.	Segment information
The information presented below represents the operating segments of the Group.
		North America			Europe			Asia/Rest of World			Consolidated
		Six months	Six months		Six months	Six months		Six months	Six months		Six months	Six months
		2015	2014		2015	2014		2015	2014		2015	2014
		£m	£m		£m	£m		£m	£m		£m	£m
Revenue from external customers		191.6	171.7		157.2	159.4		120.4	117.3		469.2	448.4
Regional EBITA 1		29.8	26.2		19.3	17.8		14.5	14.9		63.6	58.9
Unallocated costs											(2.5)	(2.5)
Group EBITA 2											61.1	56.4
Restructuring costs and other one-off items		-	(0.5)		-	(0.9)		-	(0.7)		-	(2.1)
Underlying operating profit 3											61.1	54.3
Amortisation of intangible assets		(1.7)	(1.8)		(1.3)	(1.9)		(0.6)	(0.6)		(3.6)	(4.3)
Operating profit											57.5	50.0
Finance income											1.9	0.8
Finance expense											(10.4)	(11.3)
Net loss on disposal of businesses											-	(2.0)
Share of profit of associate (net of income tax)											0.2	-
Profit before taxation											49.2	37.5
Segment assets		300.6	276.8		271.5	300.9		225.8	215.2		797.9	792.9
Unallocated assets											101.9	103.3
Total assets											899.8	896.2
Segment liabilities		103.5	85.7		201.6	169.5		47.4	44.8		352.5	300.0
Unallocated liabilities											340.6	334.2
Total liabilities											693.1	634.2
								North			Asia/Rest
								America	Europe		of World	Consolidated
								Year	Year		Year	Year
								2014	2014		2014	2014
								£m	£m		£m	£m
Revenue from external customers								353.1	325.7		242.9	921.7
Regional EBITA 1								52.5	39.8		31.2	123.5
Unallocated costs												(5.5)
Group EBITA 2												118.0
Restructuring costs and other one-off items								(0.8)	(1.2)		(3.6)	(5.6)
Underlying operating profit 3												112.4
Amortisation of intangible assets								(3.4)	(3.8)		(1.0)	(8.2)
Operating profit before specific adjusting items												104.2
Specific adjusting items included in operating profit 4												(49.9)
Operating profit												54.3
Finance income												2.1
Finance expense												(22.9)
Net loss on disposal of businesses												(2.0)
Profit before taxation												31.5
Segment assets								300.1	283.1		225.3	808.5
Unallocated assets												111.5
Total assets												920.0
Segment liabilities								108.9	217.1		53.2	379.2
Unallocated liabilities												353.1
Total liabilities												732.3
1. Segment profit is defined as Regional EBITA, which is segment operating profit before restructuring costs & other one-off items and amortisation of intangible assets.
2. Group EBITA is defined as operating profit before restructuring costs & other one-off items and amortisation of intangible assets.
3. Underlying operating profit is defined as operating profit before amortisation of intangible assets.
4. Details of 'specific adjusting items' are given in note 4 to the financial statements
The above measures of profit are shown because the Directors use them to measure the underlying performance of the business, as referred to throughout the half-year report.

4.	Specific adjusting items
	In the condensed consolidated income statement the Group presents specific adjusting items separately. In the judgment of the Directors, due to 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 a proper understanding of the financial information and the best indication of underlying performance of the Group. No specific adjusting items were incurred in the six months ended 30 June 2015. Full details of the specific adjusting items incurred in 2014 were given in the last annual consolidated financial statements as at and for the year ended 31 December 2014. Since 31 December 2014 the Group has completed the disposal of the Thermal Ceramics business in Wissembourg, France. Details are given in note 2 of these condensed financial statements. There have been no other subsequent changes to the specific adjusting items incurred in 2014.

5.	Net finance income and expense
					Six months	Six months	Year
					2015	2014	2014
	Amounts derived from financial instruments Interest income on bank deposits measured at amortised cost Finance income				£m	£m	£m
					1.0	-	0.7
					0.9	0.8	1.4
					1.9	0.8	2.1
					Interest expense on financial liabilities measured at amortised cost				(7.0)	(8.3)	(17.2)
	Net interest on IAS 19 obligations				(3.4)	(3.0)	(5.7)
	Finance expense				(10.4)	(11.3)	(22.9)
	Net financing costs recognised in profit or loss				(8.5)	(10.5)	(20.8)
6.	Taxation - income tax expense
					Six months	Six months	Year
					2015	2014	2014
					£m	£m	£m
	Tax on profit				14.5	11.5	19.2
	The Group's consolidated effective tax rate in respect of continuing operations for the six months ended 30 June 2015 is based on the Directors' best estimate of the effective tax rate for the year.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
7.	Earnings per share
Earnings per share from continuing operations
The calculation of basic/diluted earnings per share from continuing operations at 30 June 2015 was based on the following:
		Six months  2015			Six months  2014			Year  2014
		Basic	Diluted		Basic	Diluted		Basic	Diluted
		£m	£m		£m	£m		£m	£m
Profit attributable to equity holders of the Company from continuing operations		32.4	32.4		23.9	23.9		7.8	7.8
Weighted average number of Ordinary shares
Issued Ordinary shares at the beginning of the period (millions)		285.4	285.4		285.4	285.4		285.4	285.4
Effect of shares issued in period and shares held by The Morgan General Employee Benefit Trust (millions)		(0.3)	(0.3)		(0.2)	(0.2)		(0.3)	(0.3)
Dilutive effect of share options/incentive schemes (millions)		n/a	0.5		n/a	0.7		n/a	0.5
Basic/diluted weighted average number of Ordinary shares during the period (millions)		285.1	285.6		285.2	285.9		285.1	285.6
Earnings per share from continuing operations (pence)		11.4p	11.3p		8.4p	8.4p		2.7p	2.7p
Underlying earnings per share
The calculation of basic/diluted underlying earnings per share at 30 June 2015 was based on the following:
		Six months  2015			Six months  2014			Year  2014
		Basic	Diluted		Basic	Diluted		Basic	Diluted
		£m	£m		£m	£m		£m	£m
Underlying operating profit and share of profit of associate before specific adjusting items and amortisation, less net financing costs, income tax expense and non-controlling interests		36.0	36.0		30.2	30.2		63.0	63.0
Basic/diluted weighted average number of Ordinary shares during the period - calculated as above (millions)		285.1	285.6		285.2	285.9		285.1	285.6
Earnings per share before specific adjusting items and amortisation of intangible assets (pence)		12.6p	12.6p		10.6p	10.6p		22.1p	22.1p

8.   Cash and cash equivalents
		30 June	30 June	31 December
		2015	2014	2014
		£m	£m	£m
Bank balances		43.8	52.9	49.1
Cash deposits		8.6	12.8	13.9
Cash and cash equivalents		52.4	65.7	63.0
Reconciliation of cash and cash equivalents to net debt*
		Six months	Six months	Year
		2015	2014	2014
		£m	£m	£m
Opening borrowings		(270.0)	(262.5)	(262.5)
(Increase)/decrease in borrowings		(6.6)	(6.1)	1.2
Payment of finance lease liabilities		0.1	0.1	0.1
Finance leases acquired as part of acquisition of subsidiary		-	-	(1.2)
Effect of movements in foreign exchange on borrowings		7.0	8.5	(7.6)
Closing borrowings		(269.5)	(260.0)	(270.0)
Cash and cash equivalents		52.4	65.7	63.0
Closing net debt		(217.1)	(194.3)	(207.0)
* Net debt is defined as interest-bearing loans and borrowings, bank overdrafts less cash and cash equivalents.

9.   Financial Risk Management
Fair Values
The fair values of financial assets and liabilities, together with the carrying amounts shown in the balance sheet, are as follows:
		Carrying amount	Fair value	Carrying amount	Fair value	Carrying amount	Fair value
		30 June	30 June	30 June	30 June	31 December	31 December
		2015	2015	2014	2014	2014	2014
		£m	£m	£m	£m	£m	£m
Financial assets and liabilities at amortised cost
5.70% US Dollar Senior Notes 2014		-	-	(58.6)	(59.5)	-	-
3.65% Euro Senior Notes 2015		-	-	(32.3)	(32.9)	(31.3)	(31.6)
4.32% Euro Senior Notes 2017		(14.3)	(15.1)	(16.2)	(17.3)	(15.7)	(16.6)
6.12% US Dollar Senior Notes 2017		(111.5)	(119.6)	(102.3)	(112.1)	(112.3)	(121.6)
6.26% US Dollar Senior Notes 2019		(47.7)	(52.8)	(43.8)	(48.9)	(48.1)	(53.5)
Bank and other loans		(94.9)	(94.9)	(6.7)	(6.7)	(61.3)	(61.3)
Obligations under finance leases		(1.1)	(1.1)	(0.1)	(0.1)	(1.3)	(1.3)
Trade and other payables		(91.3)	(91.3)	(84.8)	(84.8)	(93.0)	(93.0)
Loans and receivables		167.3	167.3	165.9	165.9	170.5	170.5
Cash and cash equivalents		52.4	52.4	65.7	65.7	63.0	63.0
		(141.1)	(155.1)	(113.2)	(130.7)	(129.5)	(145.4)
Available-for-sale financial instruments
Available-for-sale financial assets		1.2	1.2	1.9	1.9	1.6	1.6
Derivatives and other items at fair value
Forward exchange contracts used for hedging		2.5	2.5	1.5	1.5	1.4	1.4
Cross currency swaps used for hedging		0.6	0.6	0.3	0.3	3.8	3.8
		(136.8)	(150.8)	(109.5)	(127.0)	(122.7)	(138.6)
The following summarises the major methods and assumptions used in estimating the fair values of financial instruments reflected  in the preceding table. 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.
Interest-bearing loans and 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 loans and borrowings are 1.7-3.7% (30 June 2014: 2.0-3.9%; 31 December 2014: 1.8-3.8%).
Finance lease liabilities
The fair value is estimated as the present value of future cash flows, discounted at market interest rates for homogeneous lease  agreements. The estimated fair values reflect changes in interest rates.
Trade and other receivables/payables
For receivables/payables with a remaining life of less than one year, the notional amount is deemed to reflect the fair value. All other receivables/payables are discounted to determine the fair value.
Cash and cash equivalents, trade and other payables and loans and receivables
The Group has disclosed the fair value of cash and cash equivalents, current loans and receivables and current payables at their carrying amount, given their notional amount is deemed to be their fair value.
								Fair value hierarchy
The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (ie as prices) or indirectly (ie derived from prices)
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
	30 June 2015				30 June 2014
	Level 1	Level 2	Total		Level 1	Level 2	Total
	£m	£m	£m		£m	£m	£m
Available-for-sale financial assets	1.2	-	1.2		1.9	-	1.9
Derivative financial assets	-	4.0	4.0		-	2.3	2.3
	1.2	4.0	5.2		1.9	2.3	4.2
Derivative financial liabilities	-	(0.9)	(0.9)		-	(0.5)	(0.5)
					31 December 2014
					Level 1	Level 2	Total
					£m	£m	£m
Available-for-sale financial assets					1.6	-	1.6
Derivative financial assets					-	6.0	6.0
					1.6	6.0	7.6
Derivative financial liabilities					-	(0.8)	(0.8)
	30 June 2015				30 June 2014
	Level 1	Level 2	Total		Level 1	Level 2	Total
	£m	£m	£m		£m	£m	£m
5.70% US Dollar Senior Notes 2014	-	-	-		-	(59.5)	(59.5)
3.65% Euro Senior Notes 2015	-	-	-		-	(32.9)	(32.9)
4.32% Euro Senior Notes 2017	-	(15.1)	(15.1)		-	(17.3)	(17.3)
6.12% US Dollar Senior Notes 2017	-	(119.6)	(119.6)		-	(112.1)	(112.1)
6.26% US Dollar Senior Notes 2019	-	(52.8)	(52.8)		-	(48.9)	(48.9)
Obligations under finance leases	-	(1.1)	(1.1)		-	(0.1)	(0.1)
	-	(188.6)	(188.6)		-	(270.8)	(270.8)
					31 December 2014
					Level 1	Level 2	Total
					£m	£m	£m
5.70% US Dollar Senior Notes 2014					-	-	-
3.65% Euro Senior Notes 2015					-	(31.6)	(31.6)
4.32% Euro Senior Notes 2017					-	(16.6)	(16.6)
6.12% US Dollar Senior Notes 2017					-	(121.6)	(121.6)
6.26% US Dollar Senior Notes 2019					-	(53.5)	(53.5)
Obligations under finance leases					-	(1.3)	(1.3)
					-	(224.6)	(224.6)
There have been no transfers between level 1 and level 2 between 1 January 2014 and 30 June 2015 and there were no level 3 financial instruments between 1 January 2014 and 30 June 2015.

10.	Related parties
The Company has related party relationships with its subsidiaries and its associates 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 2014 Annual Report.
											Six months	Six months	Year
				2015	2014	2014
Transactions with associate				£m	£m	£m
Sales to associates				0.1	1.2	1.3
Purchases from associate				0.9	0.6	1.5
Loan made to associate				1.9	1.0	1.5
Trade receivables due from associate				2.3	9.9	2.1
Trade payables due to associate				0.6	-	0.5
The Group also has trade receivables owed by associates of £1.3 million which have been fully provided for (30 June 2014: £1.3 million; 31 December 2014: £1.3 million).
Except as disclosed in the table above:
- 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; and
- There have been no changes in the nature of related party transactions as described in note 26 of the Group's 2014 Annual Report that could have a material effect on the financial position or performance of the Group during the period.

This information is provided by RNS

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