Final Results
Ascot PLC
29 March 2001
Date 29 March 2001
Contact Howard Dyer, Executive Chairman
Martin Rogers, Finance Director
Ascot Plc 020 7815 0805
David Bick
Holborn Public Relations 020 7929 5599
david.bick@holbornpr.co.uk
ASCOT PLC
Preliminary Results for the year ended 31 December 2000
Highlights
* Operating profit (before goodwill amortisation) of £46.5m up 12.3%
* Adjusted diluted earnings per share of 38.0p up 8.9%
* Specified Fuels acquired for £15.3m in March 2000
* Smaller engineering businesses sold for £45.6m during the second half of
the year
* NRS sold on 27 March 2001 for a total cash consideration of £22m
* Announcement today of recommended cash offer for Ascot Plc by J P Morgan on
behalf of Dow UK plc, a wholly owned subsidiary of The Dow Chemical Company.
CHAIRMAN'S STATEMENT
The year ended 31 December 2000 saw further progress in sales and operating
profits despite a £3m year on year increase in energy costs caused by rising
oil prices. Sales were up 7.9% to £336.5m and operating profit, before
goodwill amortisation, was up from £41.4m to £46.5m, an increase of 12.3%.
Our interest charge at £13.4m was considerably higher than the previous year
as a result of the acquisitions made over the last 18 months.
Adjusted, diluted earnings per share rose 8.9% to 38.0p on an effective tax
rate of 12% (1999 22%). The tax charge was lower than expected due to the
utilisation of losses brought forward and the resolution of significant prior
year issues in the second half of 2000.
Net debt of £194.1m (1999 £190.1m) benefited from net cash proceeds of £39.9m
arising from the sale of our smaller engineering businesses for £45.6m during
the second half of the year. The profit on the sale of these operations is
£26.5m before goodwill written off of £51m.
SPECIALITY CHEMICALS
A strong performance from Haltermann exceeded 1999's excellent results even
after the effect of high oil prices referred to above. All locations
experienced high levels of capacity utilisation. The results benefited from
the reorganisation of the UK speciality chemical companies undertaken late in
1999 with the aim of reducing the proportion of spot business in our turnover
mix in favour of longer-term contracts. In March we acquired Specified Fuels
and Chemicals ('Specified') for £15.3m in cash. Specified increases the
capacity of our US custom processing business, has a site appropriate for
further expansion and provides a North American base for our Own Products
business.
Ascot's strategy is to expand the business in terms of scope as well as
scale. During the year substantial amounts were invested in new distillation
columns at our facilities in Antwerp and Houston which extended our service
offering to our customers. We expect these investments to start contributing
to earnings in the current year, with the full impact being felt in 2002.
Planning on the next phase in this investment programme was undertaken during
the year, including an evaluation of the opportunity to extend our operation
to Asia.
FINE CHEMICALS
2000 was a disappointing year in terms of earnings due to the inherent peaks
and troughs of demand in this sector. Shipments of our key active
pharmaceutical intermediate were considerably lower than expectations.
Volumes are expected to recover towards the end of 2001.
The product pipeline at ChiroTech grew significantly in both scale and
maturity during the year. The broadening portfolio of chemical compounds on
which we are working should in time reduce the earnings volatility which has
been experienced by this business. During the year we were able to announce
the exclusive manufacturing contract with Alcon for the glaucoma drug
TravatanTM.
ChiroTech's integration into Ascot has brought a stronger commercial edge to
its leading technical capability. Our strategy is to invest in projects with
significant long-term opportunity. Our initiative to provide early clinical
stage compound samples to pharmaceutical companies to secure manufacturing
rights to the drugs of the future is an example of this strategy.
The flexible small scale manufacturing unit recently commissioned will
improve our ability to cope with the large number of medium-sized order
volumes generated by our expanding pipeline. Our new FDA inspected cGMP plant
began production and we expect to be the market leader in pyretheroid based
active ingredients for the head-lice shampoo market in the next twelve
months.
OTHER BUSINESSES
During the year and subsequently, your Board has been progressing its policy
of focusing on its core chemical activities.
Pursuant to this in October we completed the sale of the four small
engineering businesses, WDS, Peter Stubs, Floform and MCT for £45.6m to
Ascot's former chief executive, John Grant. The proceeds were used to reduce
our debt levels.
On 27 March 2001 we completed the sale of NRS to Wolseley Plc for a total
cash consideration of £22 million. For the year ended 31 December 2000, NRS
reported a profit before interest and tax of £3.2m. The net assets excluding
cash and debt to be disposed of amounted to £15.3m.
The sale process for ICG is currently under way, with its divestment expected
to be completed by the end of 2001.
During the year ended 31 December 2000, the property subsidiaries made a
profit of £4.9m (1999 £2.4m) on turnover of £6.2m (1999 £6.5m). Details
concerning the proposed disposal of these properties which is conditional on
the Offer for Ascot becoming unconditional, have been announced
contemporaneously with this statement.
OUTLOOK
Our European speciality chemicals businesses have strong order books but will
remain capacity constrained until the middle of the current year. Our US
businesses have experienced some weakening in demand in parallel with the
slowdown in US economic activity. It is too early to gauge the impact that US
economic factors will have on the full year. In fine chemicals, although
deliveries of ChiroTech's key pharmaceutical intermediate are likely to
remain at a low level until late in the current year, we expect to grow the
quality of our intermediate business and to broaden our technology base.
Howard Dyer
Executive Chairman
29 March 2001
ASCOT PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2000
Continuing Operations
To be Discontinued
Ongoing discontinued Operations Total
2000 2000 2000 2000 1999
Notes £m £m £m £m £m
Turnover 1 221.1 32.1 83.3 336.5 311.9
Operating 1 29.9 7.0 9.6 46.5 37.7
profit before
amortisation
of goodwill
Amortisation (7.2) - - (7.2) (3.5)
of goodwill
Group 1 22.7 7.0 9.6 39.3 34.2
Operating
profit
Associated Undertakings
Share of - - - - 3.7
operating
profit of
associates
Amortisation - - - - (1.2)
of goodwill
on investment
in associates
Total
operating 22.7 7.0 9.6 39.3 36.7
profit
including
share of
associates
Profit on
disposal of 27.3 0.4
businesses,
fixed assets
and investments
Goodwill on (51.0) -
business
disposals
previously
written off
Exceptional 2 (23.7) 0.4
items
Profit on 15.6 37.1
ordinary
activities
before
interest
Net interest (13.4) (7.2)
payable and
similar
charges
Profit on 2.2 29.9
ordinary
activities
before
taxation
Taxation 3 (4.1) (7.5)
(Loss)/profit (1.9) 22.4
on ordinary
activities
after
taxation
Dividends 4 (3.3) (9.5)
(Loss)/retained (5.2) 12.9
profit for
the period
(Loss)/earnings
per share
- basic 5 (2.5p) 29.7p
- diluted 5 (2.5p) 29.3p
Adjusted
earnings per
share
- basic 5 38.6p 35.5p
- diluted 5 38.0p 34.9p
Dividend per 4 4.3p 12.5p
share
ASCOT PLC
CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2000
2000 1999
Notes £m £m £m £m
Fixed assets
Intangible assets 131.6 129.5
Investment properties 36.0 30.8
Other tangible assets 158.0 142.8
Investments 2.6 1.0
328.2 304.1
Current assets
Stocks 46.8 42.6
Assets for resale 10.1 0.5
Debtors 61.6 59.4
Cash at bank and in hand 10.9 18.9
129.4 121.4
Creditors: amounts falling
due within one year
Bank overdrafts and other (80.4) (12.9)
loans
Other creditors (83.7) (90.8)
(164.1) (103.7)
Net current (34.7) 17.7
(liabilities)/assets
Total assets less current 293.5 321.8
liabilities
Creditors: amounts falling
due after more than one year
Bank and other loans (124.6) (196.1)
Other creditors (0.3) (0.1)
Provisions for liabilities
and charges
Deferred taxation (20.2) (16.8)
Other provisions 6 (27.9) (38.6)
Net assets 120.5 70.2
Capital and reserves
Ordinary share capital 9.9 9.9
Share premium account 7 42.4 41.8
Capital redemption reserve 7 55.4 55.4
Revaluation reserve 7 8.7 5.1
Profit and loss account 7 4.1 (42.0)
Shareholders' funds 120.5 70.2
Approved by the Board on 29 March and signed on its behalf.
H P Dyer
M J Rogers
Directors
ASCOT PLC
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
FOR THE YEAR ENDED 31 DECEMBER 2000
Year ended Year ended
31 December 31 December
2000 1999
£m £m
Profit on ordinary activities after taxation, before
goodwill previously written off to reserves 49.1 22.4
Goodwill previously written off to reserves (51.0) -
(Loss)/profit on ordinary activities after taxation (1.9) 22.4
Exchange movements 0.6 (1.0)
Surplus on revaluation of investment properties 3.3 -
Cancellation of warrants - (1.1)
2.0 20.3
The reported profit for the year is not materially different from the profit
on an unmodified historical cost basis.
RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS
FOR THE YEAR ENDED 31 DECEMBER 2000
Year ended Year ended
31 December 31 December
2000 1999
£m £m
Opening shareholders' funds 70.2 60.4
(Loss)/profit on ordinary activities after taxation (1.9) 22.4
Dividends (3.3) (9.5)
Exchange movements on overseas net assets 0.6 (1.0)
Shares issued 0.6 0.5
Goodwill written back on sale of engineering 51.0 -
businesses
Revaluation of investment properties 3.3 -
Costs associated with issue of shares - (0.9)
Cancellation of warrants - (1.7)
Closing shareholders' funds 120.5 70.2
ASCOT PLC
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2000
2000 1999
£m £m £m £m
Net cash inflow from operating 31.6 48.0
activities
Dividends from associates - 1.5
Returns on investment and servicing
of finance
Interest received 3.7 2.8
Interest paid (16.4) (9.2)
Net cash outflow from returns on
investments and (12.7) (6.4)
servicing of finance
Taxation
Tax paid (4.6) (12.5)
Capital expenditure and financial
investment
Additions to tangible assets & (28.3) (27.4)
investment properties
Disposals of tangible assets 0.8 4.6
Purchase of current investment - (0.1)
Purchase of own shares for ESOP (1.8) (1.4)
Trust
Net cash outflow from capital
expenditure and financial (29.3) (24.3)
Investment
Acquisitions and disposals
Acquisitions of business (inclusive
of costs paid and (15.3) (57.4)
including debt acquired of £Nil
(1999: £3.1m))
Disposal of businesses (net of
costs paid and cash 39.9 -
transferred £2.9m)
Net cash inflow/(outflow) from
acquisitions 24.6 (57.4)
and disposals
Equity dividends paid (9.8) (8.7)
Management of liquid resources 5.7 (8.2)
Financing
Decrease in loans to associates - 6.5
Issue of ordinary shares less costs 0.6 (0.4)
Cancellation of warrants - (1.7)
Additional bank loans 28.9 99.6
Repayment of loan notes, bonds and (37.8) (38.1)
bank loans
Net cash (outflow)/inflow from (8.3) 65.9
financing
Decrease in cash (2.8) (2.1)
ASCOT PLC
RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING
ACTIVITIES
Year ended Year ended
31 December 31 December
2000 1999
£m £m
Operating profit 39.3 34.2
Depreciation and amortisation 18.7 14.5
Other non cash movements (0.5) (0.5)
(Increase)/decrease in stocks (6.6) 3.1
Increase in debtors (6.1) (4.2)
(Decrease)/increase in creditors (1.1) 1.1
(Increase)/decrease in property assets for resale (1.4) 1.3
Provision utilised in reduction of carrying value of (4.3) -
trading property
Cash spend against provisions (3.8) 0.5
Other decrease in provisions (2.6) (2.0)
Net cash inflow from operating activities 31.6 48.0
The impact of acquisitions and disposals was immaterial in 2000 and 1999.
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
Year ended Year ended
31 December 31 December
2000 1999
£m £m
Decrease in cash in the period (2.8) (2.1)
(Decrease)/increase in liquid resources (5.7) 8.2
Repayment of loan notes, bonds and bank loans 37.8 38.1
Bank loan drawn down (28.9) (99.6)
Change in net debt resulting from cash flows 0.4 (55.4)
Exchange rate movements (4.4) 7.2
Movement in net debt in the period (4.0) (48.2)
Opening net debt (190.1) (141.9)
Closing net debt (194.1) (190.1)
ASCOT PLC
NOTES TO THE PRELIMINARY ANNOUNCEMENT
FOR THE YEAR ENDED 31 DECEMBER 2000
1 SEGMENTAL ANALYSIS
Turnover Operating Profit Net operating
assets (i)
Before
Before good-
good- will &
2000 1999 will & except After After
£m £m except- ional good- good-
ional items will will
items 1999 2000 1999 2000 1999
2000 £m £m £m £m £m
£m
Business segment
Continuing
operations
Chemicals 221.1 191.6 34.9 27.4 27.7 23.9 292.0 245.2
Central - - (5.0) (4.5) (5.0) (4.5) 3.6 (8.0)
Discontinuing 25.9 79.8 2.1 5.6 2.1 5.6 9.9 22.4
- Engineering
- Properties 6.2 6.5 4.9 2.4 4.9 2.4 27.0 21.0
253.2 277.9 36.9 30.9 29.7 27.4 332.5 280.6
Discontinued 83.3 34.0 9.6 6.8 9.6 6.8 16.2 14.4
operations
336.5 311.9 46.5 37.7 39.3 34.2 348.7 295.0
Associated - - - 3.7 - 2.5 - -
undertakings
336.5 311.9 46.5 41.4 39.3 36.7 348.7 295.0
Geographical origin
Continuing operations
UK 88.7 131.6 11.8 13.2 6.8 10.2 204.6 165.2
Continental 120.3 109.7 13.8 9.2 12.5 9.2 71.4 70.3
Europe
America & Rest 44.2 36.6 11.3 8.5 10.4 8.0 56.5 34.2
of World
253.2 277.9 36.9 30.9 29.7 27.4 332.5 269.7
Discontinued operations
UK 83.3 34.0 9.6 6.8 9.6 6.8 16.2 25.3
336.5 311.9 46.5 37.7 39.3 34.2 348.7 295.0
Associated - - - 3.7 - 2.5 - -
undertakings
336.5 311.9 46.5 41.4 39.3 36.7 348.7 295.0
Geographical markets supplied
UK 123.9 118.6
Continental 140.0 134.3
Europe
America & Rest 72.6 59.0
of World
336.5 311.9
(i) Net operating assets are arrived at by excluding taxation and net
debt balances from net assets.
The geographical regions disclosed above have been changed from the prior
year as it is believed to more appropriately reflect the classification of
our businesses.
ASCOT PLC
NOTES TO THE PRELIMINARY ANNOUNCEMENT (Continued)
2 EXCEPTIONAL ITEMS
2000 1999
The exceptional items reflected on the face of the £m £m
profit & loss account comprise:
Profit on sale of operations 26.5 -
Goodwill on businesses sold previously written off to (51.0) -
reserves
(24.5) -
Release of surplus accruals on past disposals 0.3 -
(Loss)/profit on sale of investment properties and land (0.3) 0.4
Provisions against investments no longer required 0.8 0.9
Provision against investments - (0.9)
(23.7) 0.4
The exceptional losses above had no impact on the taxation charge for the
year due to the use of tax losses brought forward.
Note 6 details two releases from provisions which have been necessitated by
the purchase of the Penkridge property and the development work and capital
expenditure incurred on the onerous manufacturing contract. The £1.2m
relating to Penkridge is included within operating profit for Properties set
out in Note 1.
The £1.4m relating to the manufacturing contract is included within operating
profit for Chemicals, as set out in Note 1.
3 TAXATION
2000 1999
The charge for taxation comprises: £m £m
UK taxation at 30% (1999: 30.25%) 1.1 3.3
Use of advance corporation tax - (0.7)
UK deferred tax 1.0 (0.4)
Tax on associated company income - 0.7
Prior year adjustments (1.7) (3.3)
0.4 (0.4)
Overseas taxation on current profits 3.5 6.5
Deferred tax 2.0 1.4
Prior year adjustment (1.8) -
Overseas taxation 3.7 7.9
Total tax charge 4.1 7.5
The UK tax charge for the year has been reduced by the use of losses brought
forward which were not previously valued in the accounts and by the release
of provisions following the resolution of outstanding issues for earlier
years.
ASCOT PLC
NOTES TO THE PRELIMINARY ANNOUNCEMENT (Continued)
4 DIVIDENDS
2000 1999
Pence per Pence per
share £m share £m
Proposed final dividend - - 8.5 6.5
Interim dividend 4.3 3.3 4.0 3.0
4.3 3.3 12.5 9.5
5 EARNINGS PER SHARE
2000 1999
Pence per Pence per
share share
Earnings £(1.9)m £22.4m
Weighted average number 75.1m 75.3m
of ordinary shares
Basic earnings per share (2.5) 29.7
Earnings £(1.9)m £22.4m
Weighted average number 76.3m 76.5m
of ordinary shares -
diluted
Diluted earnings per (2.5) 29.3
share
£m £m
Earnings (1.9) (2.5) 22.4 29.7
Exclusion of exceptional
items
- profit on (27.3) (36.4) (0.4) (0.5)
disposal of businesses,
fixed assets &
investments
- goodwill written 51.0 67.9 - -
back on business
disposals
Goodwill amortisation 7.2 9.6 4.7 6.3
Adjusted earnings 29.0 26.7
Adjusted basic earnings 38.6 35.5
per share
Adjusted diluted 38.0 34.9
earnings per share
ASCOT PLC
NOTES TO THE PRELIMINARY ANNOUNCEMENT (Continued)
6 PROVISIONS
Environmental Pension Onerous contracts Other Total
Properties Manufacturing
(i) (ii) (iii) (iv)
Group £m £m £m £m £m £m
At 1 January 2000 11.5 16.5 7.0 2.4 1.2 38.6
Exchange rate movements 0.1 0.1 - - - 0.2
Charged during the year - 0.6 - - - 0.6
Eliminated on disposal - - (0.5) - - (0.5)
of assets
Provision utilised in
reduction of - - (4.3) - - (4.3)
carrying value of asset
Cash spend against (1.0) (0.8) (0.2) (0.7) (1.1) (3.8)
provisions
Release crystallised
by:
- purchase of - - (1.2) - - (1.2)
leased property
- process - - - (1.4) - (1.4)
development
- other (0.2) - - - (0.1) (0.3)
At 31 December 2000 10.4 16.4 0.8 0.3 - 27.9
(i) Environmental provisions relate to costs expected to be incurred to
comply with the Group's environmental policy. This expenditure is expected to
crystallise at varying times over the next 9-10 years.
(ii) The pension provisions relate to the unfunded liabilities of the Group's
German subsidiaries. These provisions are long term and the timing of their
utilisation is unknown.
(iii) The property onerous contract provision substantially relates to the
anticipated shortfall in the reletting of property leased to the Group. The
Group has secured the freehold of the property enabling it to properly manage
its exit, with the result that previously anticipated losses of £1.2m will
not now be incurred. The Group has already received an acceptable offer for
the sale of this property.
(iv) The onerous manufacturing contract relates to the production of chemical
products to be sold at below cost. Substantial process re-engineering work
has been carried out during the year to mitigate these anticipated losses and
new capital expenditure was committed, which together, is expected to result
in the contract operating profitably or at least a break even from the middle
of 2001. £1.4m of the anticipated losses are not expected to be incurred and
consequently this part of the provision has been released. A provision of
£0.3m has been retained to cover anticipated losses in the first half of
2001.
ASCOT PLC
NOTES TO THE PRELIMINARY ANNOUNCEMENT
FOR THE YEAR ENDED 31 DECEMBER 2000
7 RESERVES
Capital
Share redemption Reval- Profit Total
uation and
premium reserve reserve loss reserves
Group £m £m £m £m £m
As at 1 January 2000 41.8 55.4 5.1 (42.0) 60.3
Loss for the year - - - (5.2) (5.2)
Shares issued and exercise of 0.6 - - - 0.6
options
Exchange movement - - - 0.6 0.6
Goodwill on disposals previously - - - 51.0 51.0
written off
Revaluation in the year - - 3.3 - 3.3
Revaluation deficit realised on - - 0.3 (0.3) -
sale of investment property
At 31 December 2000 42.4 55.4 8.7 4.1 110.6
The consolidated profit and loss account at 31 December 2000 includes the
Group's share of associated companies post acquisition reserves amounting to
£0.2m (1999: £0.2m), of which £Nil (1999: £Nil) has been recognised in the
Company's profit and loss account.
The reserves within the Group include merger relief of £141.1m (1999:
£141.1m), against which an equal amount of goodwill has been offset.
Cumulative goodwill eliminated against reserves amounted to £159.4m (1999:
£210.4m).
8 FINANCIAL INFORMATION
The financial information has been prepared on the same basis and applying
the same material accounting policies as reported in the 1999 annual report
and financial statements.
The financial information in this announcement is an abridged version of the
Group's full accounts upon which the auditors have given an unqualified
opinion. The full audited accounts will be filed with the Registrar of
Companies in due course. Audited accounts for the previous year have been
delivered to the Registrar and the auditors report thereon was unqualified.
9 POST BALANCE SHEET EVENTS
On 27 March 2001 the Board completed the sale of NRS, the Group's
refrigeration distribution business to Wolseley Plc, debt free for a cash
consideration of £22.0m.
On 29 March 2001, the Board announced that it had reached agreement on the
terms of a recommended Offer from J P Morgan to acquire the whole of the
Company's share capital on behalf of Dow UK plc, a wholly owned subsidiary of
The Dow Chemical Company. The Board also announced that it has agreed terms
for the disposal of certain property assets of the Group to a management
consortium for the sum of £37.8m, such disposal being a condition of the
offer. These transactions are conditional, inter alia, on shareholder
approval.
- ENDS -
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