Interim Results

Ascot PLC 12 September 2000 Date 12 September 2000 Contact Howard Dyer, Executive Chairman Martin Rogers, Finance Director Ascot Plc 020 7815 0805 David Bick / Mike Crofts Holborn Public Relations 020 7929 5599 david.bick@holbornpr.co.uk mike.crofts@holbornpr.co.uk ASCOT PLC Interim Results for the six months ended 30 June 2000 Highlights * Operating profit at a high of £21.4m * Speciality chemicals performed strongly, with plants near capacity throughout the period * Fine chemicals continued to build both the quality and quantity of its product pipeline * The group invested significantly to increase capacity in both businesses * Acquired Specified Fuels & Chemicals in Houston, and effectively integrated it into the Group * Leadership team was strengthened by the appointment of a managing director for each of the two chemical divisions * Progress in the disposal programme brought the reshaping of the Group into the final phase Commenting, Howard Dyer, Executive Chairman said 'Order books in Speciality Chemicals remain strong and are strengthening in Fine Chemicals. We look forward to a satisfactory outcome for the full year.' CHAIRMAN'S STATEMENT We made a good start to the year. A record performance by the Speciality Chemicals division was particularly rewarding following its excellent performance last year. In Fine Chemicals, the continued lack of shipments of a major product, as noted in the 1999 Annual Report, reduced earnings on last year. However, the quality and quantity of the Fine Chemicals product pipeline continue to develop significantly. RESULTS Operating profit (before goodwill amortisation and including profit from associates) for the six months to 30 June 2000 was £21.4m compared with £20.7m for the first half of 1999. Sales rose by 6% to £169.1m, including an increase in the core chemicals business of 7% to £107.2m. Diluted earnings per share, pre goodwill amortisation, of 16.0p compared with 17.9p in 1999. The reduction reflects the increase in interest charges incurred as a result of funding the acquisitions of ChiroTech and Specified Fuels & Chemicals. The Board is declaring an interim dividend of 4.3p, an increase of 8% over last year. Net debt increased by £39.7m to £229.8m during the period. The cash outflow principally relates to the acquisition of Specified Fuels & Chemicals (£15.3m), an increase of £17.1m in working capital caused principally by higher levels of activity combined with higher raw material prices, and capital expenditure of £11.7m which ran at almost twice the depreciation charge of £6.1m. Contributing to the higher debt were significant refundable tax payments in Germany and adverse exchange rate movements. The planned disposal of surplus assets in the second half of the year will generate a substantial cash inflow. ASCOT SPECIALITY CHEMICALS The custom processing business improved on its record performance last year. All plants operated efficiently and near capacity. We continued to increase our processing capability, with investment at all four major sites in Germany, Belgium, USA and the UK. Outsourcing is a developing trend which enables the chemical majors to optimise the use of their own resources. We see the dynamics of this trend working in our favour for some time and thus are planning further expansion to allow us to meet the market opportunity. Our own products business also did well, as established products maintained high market shares. We continued the reorganisation of the business, improved the productivity of the German manufacturing unit, and increased the capacity of the distribution business in Scandinavia. ASCOT FINE CHEMICALS As noted above, the continued lack of shipments of a major product reduced earnings on last year. Shipments of key intermediates are expected to be on schedule for the remainder of 2000 and we remain confident of the ongoing supply situation. Added value is continuing to be created by the development of ChiroTech's product pipeline and the success of some key initiatives. The collaborative work with pharma majors together with the recent decision to supply small samples to actual and potential customers has led to valuable orders being placed. The developed pipeline has also benefited from a second order for an active pharmaceutical ingredient for a major drug approaching launch. The Fine Chemicals division increased capacity with the commissioning of Mitchell Cotts' small scale manufacturing unit and cGMP plant. Both plants have been FDA inspected and are expected to produce product for customers in small quantities before the end of the year, reaching full operating capacity in the second quarter of 2001. The small scale manufacturing unit represents a major step in enabling the Group to realise the full potential of ChiroTech's future products. The cGMP plant is dedicated to the manufacture of a specific product under long term contracts. OTHER BUSINESSES All but one of the small engineering businesses improved their performance. Negotiations for the disposal of these businesses are in progress with a sale expected before the end of the year. We saw the bottoming of a weak market for refrigeration which once again impacted the profits of our distribution and manufacturing businesses. Both will be put up for sale before the end of the year. MANAGEMENT We have appointed Stephen Woodbridge as Managing Director of Ascot Speciality Chemicals. Stephen was previously Director of Special Operations and has managed the division since the acquisition of Haltermann in December 1998. We have recruited Dr Mike Evans as Managing Director of Ascot Fine Chemicals. Mike was previously at Nycomed Amersham where he was Vice President of Drug Discovery, Amersham Pharmacia Biotech. OUTLOOK The disposal of our four engineering businesses is progressing and completion is expected by the year end. In Speciality Chemicals, order books remain strong and we expect to operate close to full capacity for the balance of the year. In Fine Chemicals, our order book is strengthening as sales of a key intermediate resume and the two new cGMP plants begin to come on stream. Overall, we look forward to a satisfactory outcome for the full year. Howard Dyer Executive Chairman ASCOT PLC Consolidated profit and loss account (Unaudited) Year Notes Period Period ended ended ended 31 30 June 30 June December 2000 1999 1999 £m £m £m ------- ------- -------- Turnover 2 169.1 159.4 311.9 ------- ------- -------- Operating profit before goodwill amortisation 21.4 16.8 37.7 Amortisation of goodwill arising on acquisition of subsidiaries (3.5) (1.7) (3.5) ------- ------- -------- Operating profit 17.9 15.1 34.2 ------- ------- -------- Share of operating profit of associates - 3.9 3.7 Amortisation of goodwill on investment in associates - (0.8) (1.2) ------- ------- -------- - 3.1 2.5 ------- ------- -------- Total operating profit including associates 17.9 18.2 36.7 Profit on disposal of fixed assets and investments - - 0.4 Amounts written back on investments - 0.7 - ------- ------- -------- Profit on ordinary activities before interest 17.9 18.9 37.1 Net interest payable and similar charges (5.8) (3.2) (7.2) ------- ------- -------- Profit on ordinary activities before taxation 12.1 15.7 29.9 Taxation 3 (3.4) (3.8) (7.5) ------- ------- -------- Profit on ordinary activities after taxation 8.7 11.9 22.4 Dividends (3.3) (3.0) (9.5) ------- ------- -------- Retained profit for the period 5.4 8.9 12.9 ======= ======= ======== Earnings per share 4 - basic 11.6p 15.7p 29.7p - diluted 11.4p 15.5p 29.3p Adjusted earnings per share - basic 16.3p 18.1p 35.5p - diluted 16.0p 17.9p 34.9p Dividend per share 5 4.3p 4.0p 12.5p All of the above are from Continuing Operations ASCOT PLC Consolidated balance sheet (Unaudited) 31 Note 30 June 30 June December 2000 1999 1999 £m £m £m ------- ------- -------- Fixed assets Intangible assets 132.6 65.3 129.5 Tangible assets 154.9 138.9 142.8 Investments 33.2 31.3 31.8 ------- ------- -------- 320.7 235.5 304.1 Current assets Stocks 47.9 42.0 42.6 Assets for resale 0.3 0.8 0.5 Debtors 72.7 48.2 59.4 Cash at bank and in hand 6.7 21.5 18.9 ------- ------- -------- 127.6 112.5 121.4 Creditors: amounts falling due within one year Bank overdrafts and other loans (105.5) (2.1) (12.9) Other creditors (78.1) (75.3) (90.8) ------- ------- -------- Net current (liabilities) / assets (56.0) 35.1 17.7 ------- ------- -------- Total assets less current liabilities 264.7 270.6 321.8 Creditors: amounts falling due after more than one year Bank and other loans (131.0) (144.6) (196.1) Other (3.1) (3.5) (0.1) Deferred taxation (17.3) (11.7) (16.8) Other provisions (37.0) (41.6) (38.6) ------- ------- -------- Net assets 76.3 69.2 70.2 ======= ======= ======== Capital and reserves 7 Ordinary share capital 9.9 9.8 9.9 Share premium account 42.3 41.4 41.8 Capital redemption reserve 55.4 55.4 55.4 Revaluation reserve 5.1 5.1 5.1 Profit and loss account (36.4) (42.5) (42.0) ------- ------- -------- Shareholders' funds 76.3 69.2 70.2 ======= ======= ======== ASCOT PLC Consolidated cash flow statement (Unaudited) Year Period Period ended ended ended 31 30 June 30 June December 2000 1999 1999 £m £m £m ------- ------- -------- Operating Activities Operating profit 17.9 15.1 34.2 Depreciation and amortisation 9.6 9.4 14.5 (Increase) / decrease in working capital (17.1) (4.3) 1.3 (Decrease) / increase in provisions (1.6) 1.7 (1.5) Other non cash items (0.5) (0.8) (0.5) ------- ------- -------- Net cash inflow from operating activities 8.3 21.1 48.0 Dividends from associates - 1.5 1.5 Returns on investment and servicing of finance Net interest paid (5.5) (4.1) (6.4) ------- ------- -------- Net cash outflow from returns on investments and servicing of finance (5.5) (4.1) (6.4) Taxation Tax paid (10.5) (1.9) (12.5) Capital expenditure and financial investment Additions to tangible assets (11.7) (8.5) (27.4) Disposals of tangible assets 0.2 4.0 4.6 Purchase of current investments - - (0.1) Purchase of own shares for ESOP Trust (1.8) - (1.4) ------- ------- -------- Net cash outflow from capital expenditure and financial investment (13.3) (4.5) (24.3) Acquisitions and disposals Acquisition of business (inclusive of costs and net debt) (15.3) (4.1) (57.4) ------- ------- -------- Net cash outflow from acquisitions and disposals (15.3) (4.1) (57.4) Equity dividends paid - - (8.7) Management of liquid resources 17.7 (12.3) (8.2) Financing Decrease in loans to associates - 6.3 6.5 Issue of ordinary shares less costs 0.5 (0.9) (0.4) Additional bank loans 9.4 35.0 99.6 Repayment of loan notes, bonds and bank loans (0.7) (38.4) (38.1) Cancellation of warrants - (1.7) (1.7) ------- ------- -------- Net cash inflow from financing 9.2 0.3 65.9 ------- ------- -------- Decrease in cash (9.4) (4.0) (2.1) ======= ======= ======== ASCOT PLC Reconciliation of net cash flow to movement in net debt Year Period Period ended ended ended 31 30 June 30 June December 2000 1999 1999 £m £m £m -------- ------- -------- Decrease in cash in the period (9.4) (4.0) (2.1) (Decrease) / increase in liquid resources (17.7) 12.3 8.2 Repayment of loan notes, bonds and bank loans 0.7 38.4 38.1 Bank loan drawn down (9.4) (35.0) (99.6) -------- ------- -------- Change in net debt resulting from cash flows (35.8) 11.7 (55.4) Exchange rate movements (3.9) 5.0 7.2 -------- ------- -------- Movement in net debt in the period (39.7) 16.7 (48.2) Opening net debt (190.1) (141.9) (141.9) -------- ------- -------- Closing net debt (229.8) (125.2) (190.1) ======== ======= ======== Statement of total recognised gains and losses Year Period Period ended ended ended 31 30 June 30 June December 2000 1999 1999 £m £m £m -------- ------- -------- Profit on ordinary activities after taxation 8.7 11.9 22.4 Exchange movements on overseas net assets 0.2 2.5 (1.0) Cancellation of warrants - (1.1) (1.1) -------- ------- -------- 8.9 13.3 20.3 ======== ======= ======== ASCOT PLC Notes to the accounts 1. Basis of preparation The financial information contained in this interim statement is unaudited and does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. The financial information for the full preceding period represents an abridged extract based on the statutory accounts for the financial period ended 31 December 1999. The financial information has been prepared on the same basis and applying the same accounting policies as in prior years. Those accounts for the financial period ended 31 December 1999, upon which the auditors issued an unqualified opinion, have been delivered to the Registrar of Companies. 2. Business segment analysis Period ended Period ended Year ended 30 June 2000 30 June 1999 31 December 1999 Turn- Operat- Turn- Operat- Turn- Operat- over ing over ing over ing profit profit profit £m £m £m £m £m £m ------------- ------------- ------------- Chemicals 107.2 15.4 100.7 15.2 191.6 29.5 Engineering 58.7 5.9 55.4 6.0 113.8 12.4 Properties 3.2 2.3 3.3 1.8 6.5 4.0 Central costs - (2.2) - (2.3) - (4.5) ------------- ------------- ------------- 169.1 21.4 159.4 20.7 311.9 41.4 Amortisation of goodwill arising on: - acquisition of subsidiaries - (3.5) - (1.7) - (3.5) - investment in associate - - - (0.8) - (1.2) ------------- ------------- ------------- Turnover / Total operating profit 169.1 17.9 159.4 18.2 311.9 36.7 Share of associates operating profit included in: - Chemicals - - - (1.5) - (2.1) - Goodwill amortised on associate - - - - - 1.2 - Properties - - - (1.6) - (1.6) ------------- ------------- ------------- Turnover / Operating profit 169.1 17.9 159.4 15.1 311.9 34.2 ============= ============= ============= Notes to the accounts (continued) 3. Taxation Year The charge for taxation comprises Period Period ended ended ended 31 30 June 30 June December 2000 1999 1999 £m £m £m --------------------------- UK taxation at 30% (1999:30.25%) 1.2 1.9 3.3 Use of advance corporation tax - - (0.7) UK deferred tax - - (0.4) Tax on associated Company income - 0.7 0.7 Prior year adjustments (2.1) - (3.3) --------------------------- UK taxation (0.9) 2.6 (0.4) --------------------------- Overseas taxation on current profits 4.3 1.2 6.5 Deferred tax - - 1.4 --------------------------- Overseas taxation 4.3 1.2 7.9 --------------------------- Total tax charge 3.4 3.8 7.5 =========================== The tax charge is an estimate based upon the anticipated charge for the full year. 4. Earnings per share Year Period Period ended ended ended 31 30 June 30 June December 2000 1999 1999 --------------------------- Earnings £8.7m £11.9m £22.4m Weighted average number of ordinary shares 75.0m 75.7m 75.3m --------------------------- Basic earnings per share 11.6p 15.7p 29.7p --------------------------- Earnings £8.7m £11.9m £22.4m Weighted average number of ordinary shares - diluted 76.4m 76.6m 76.5m --------------------------- Diluted earnings per share 11.4p 15.5p 29.3p --------------------------- Basic earnings per share 11.6p 15.7p 29.7p Exclusion of profits on disposal of fixed assets and investments - - (0.5p) Exclusion of amounts written back on investments - (0.9p) - Exclusion of goodwill amortisation 4.7p 3.3p 6.3p --------------------------- Adjusted earnings per share - basic 16.3p 18.1p 35.5p =========================== - diluted 16.0p 17.9p 34.9p =========================== The number of shares used in the calculation of basic earnings per share and diluted earnings per share has been calculated in accordance with Financial Reporting Standard 14. The diluted earnings per share calculations are based on the average number of ordinary shares used in the basic earnings per share calculation, with an adjustment to reflect the bonus element of the average number of options outstanding during the year. The bonus element of options arises when the exercise price is lower than the average market price during the year. ASCOT PLC Notes to the accounts (continued) 5. Dividends Period ended Year ended 30 June 2000 31 December 1999 Pence Pence per share £m per share £m --------- --- --------- --- Dividends on ordinary shares Interim 4.3p 3.3 4.0p 3.0 Final 8.5p 6.5 -------------- 12.5p 9.5 ============== 6. Reconciliation of movement in shareholders' funds Period ended 30 June 2000 £m --- Opening shareholders' funds 70.2 Profit for the period 8.7 Dividends (3.3) Exchange movements on overseas net assets 0.2 Shares issued at a premium 0.5 ----------- Closing shareholders' funds 76.3 =========== 7. Reserves Capital Profit redempt- Revalua- and Share ion tion loss premium reserve reserve account £m £m £m £m ------------------------------------ At 31 December 1999 41.8 55.4 5.1 (42.0) Retained profit - - - 5.4 Shares issued at a premium 0.5 - - - Exchange movement - - - 0.2 ------------------------------------ At 30 June 2000 42.3 55.4 5.1 (36.4) ------------------------------------ Independent review report to Ascot Plc Introduction We have been instructed by the Company to review the financial information set out on pages 4 to 10 and we have read the other information contained in the interim report for any apparent misstatements or material inconsistencies with the financial information. Directors' responsibilities The interim report, including the financial information contained therein, is the responsibility of, and has been approved, by the Directors. The Listing Rules of the Financial Services Authority require that the accounting policies and presentation applied to the interim figures should be consistent with those applied in preparing the preceding annual accounts except where any changes, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board. A review consists principally of making enquiries of group management and applying analytical procedures to the financial information and underlying financial data, and based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with Auditing Standards and therefore provides a lower level of assurance than an audit. Accordingly we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 30 June 2000. PricewaterhouseCoopers Chartered Accountants Nottingham 12 September 2000

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