Preliminary Results
Elementis PLC
28 February 2001
Elementis plc
Preliminary Results
ELEMENTIS plc
PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2000
Business re-engineering delivers enhanced performance
* Sales up 7 per cent to £573.8 million (1999: £535.1 million)
* Operating profit up 12 per cent to £63.5 million* (1999: £56.8 million*)
* Profit before tax up 14 per cent to £58.4 million* (1999: £51.4 million*)
* Earnings per share up 25 per cent to 11.6 pence* (1999: 9.3 pence*)
*before goodwill amortisation and exceptionals
Lyndon Cole, Group Chief Executive of Elementis plc, said:
'Elementis has achieved an impressive year on year financial performance.
This clearly demonstrates that the Group-wide focus on business re-
engineering, launched in 1999, is delivering results.
'Since the year end, sales growth continues to be encouraging, despite
concerns over the strength of the US economy.
'High energy prices have significantly impacted short-term profitability,
particularly in Elementis Chromium. There is still considerable uncertainty
over the future timing and direction of US gas prices. If prices for the
remainder of 2001 reflect forward market rates obtainable at the beginning of
February, the Board estimates that the Group's energy costs would increase by
around £10 million compared to 2000. This should be partially mitigated by
selective price increases and substantial benefits from ongoing business
improvement projects.
'Following the announcement made in December 2000 confirming a speculative
approach, Elementis has embarked on an in-depth targeted marketing exercise
to determine whether it can obtain an offer for the Company which it believes
to be in the best interests of shareholders. The Board will provide
shareholders with further information in due course.'
Enquiries
Elementis 020 7398 1400
Lyndon Cole Group Chief Executive
George Fairweather Group Finance Director
Anna Passey Head of Corporate Communications
Brunswick 020 7404 5959
Andrew Fenwick
Rupert Young
Overview and financial results
The 2000 results clearly demonstrate that the Group-wide focus on business re-
engineering, launched in 1999, is delivering enhanced financial performance.
Sales growth is being driven through customer focus and innovation. The
Group's lower cost base and improved health and safety performance are direct
results of the operational excellence programme.
Overall market conditions improved during the period with a number of Asian
economies continuing their recovery, but competition remains aggressive.
In the Group's Interim Report 2000, concerns were expressed relating to
rising energy costs and also the weakness of the euro. Since then, the
adverse energy price trend has continued; US gas prices quadrupled over the
course of the year. Average exchange rates for the US dollar and sterling,
our key manufacturing currencies, strengthened against the euro by 15 per
cent and 8 per cent respectively over the course of the year.
Operating profit before goodwill amortisation and exceptionals was £63.5
million, up 12 per cent on 1999. Operating profit on the same basis for the
second half of 2000 was £31.3 million, up 7 per cent on the second half of
1999. Energy cost increases adversely impacted operating profit by around
£4.5 million compared to 1999. Currency transaction and translation
adversely impacted operating profit by around £0.5 million.
Profit before goodwill amortisation, exceptionals and tax was £58.4 million,
up 14 per cent on 1999. Basic earnings per share before goodwill
amortisation and exceptionals increased by 25 per cent to 11.6 pence.
Net exceptional charges before tax were £3.0 million (1999: £8.7 million).
Net cash inflow from operating activities was £58.4 million (1999: £74.1
million). Net borrowings at the year end were £41.7 million (1999: £45.5
million).
Dividends and issue of redeemable B shares
The Board did not declare an interim dividend and, similarly, is not
proposing a final dividend. Instead, it will continue with the programme,
started in 2000, of issuing and redeeming redeemable B shares. The total
nominal value of redeemable B shares issued to shareholders during 2000 was
5.2 pence per ordinary share. The Board intends to issue further redeemable
B shares to ordinary shareholders on the register on 26 April 2001, such that
they receive redeemable B shares with a total nominal value of 3.3 pence for
each ordinary share held. This represents a 6 per cent increase on the
comparable issue last year. This will be coupled with an offer to redeem
these new shares for cash at their nominal value on 2 May 2001. A further
offer will also be made to existing holders of redeemable B shares to redeem
these shares for cash at their nominal value on 2 May 2001.
By not paying dividends on ordinary shares during 2000, Elementis will
recover £4.6 million of advance corporation tax previously paid. Elementis
estimates that it will be able to recover a further £3.6 million of advance
corporation tax by not paying a final dividend for 2000.
Further details of the issue and redemption of redeemable B shares will be
set out in a letter to ordinary shareholders accompanying the Annual Report.
Current trading and outlook
Since the year end, sales growth continues to be encouraging, despite
concerns over the strength of the US economy.
High energy prices have significantly impacted short-term profitability,
particularly in Elementis Chromium. There is still considerable uncertainty
over the future timing and direction of US gas prices. If prices for the
remainder of 2001 reflect forward market rates obtainable at the beginning of
February, the Board estimates that the Group's energy costs would increase by
around £10.0 million compared to 2000. This should be partially mitigated by
selective price increases and substantial benefits from ongoing business
improvement projects.
Corporate update
In December 2000, in response to press speculation, the Board confirmed that
it had received a speculative approach from a financial buyer concerning
potential interest in making an offer for the Company and that the Board was
considering the most appropriate means of maximising value for shareholders.
Since that announcement, the Board, together with its recently appointed
advisors, Deutsche Bank, have embarked on an in-depth targeted marketing
exercise to determine whether it can obtain an offer for the Company which it
believes to be in the best interests of shareholders.
The Board will provide shareholders with further information in due course.
Review of operations
For the year ended 31 December 2000
2000 2000 1999 1999
Sales Operating Sales Operating
profit* profit*
£million £million £million £million
Chromium 131.7 23.7 118.2 20.3
Pigments & Specialties 234.9 31.1 222.9 28.5
Chemical Distribution 160.0 6.0 144.5 5.5
Specialty Rubber 54.1 2.6 54.9 2.4
Associates - 0.1 - 0.1
Inter-group (6.9) - (5.4) -
_________ _________ _________ _________
573.8 63.5 35.1 56.8
========= ========= ========= =========
*before goodwill amortisation and exceptionals
Chromium
Operating profit before exceptionals was £23.7 million, a year on year
increase of 17 per cent, on sales up 11 per cent to £131.7 million.
Operating profit before exceptionals in the second half of 2000 was £11.7
million, up 8 per cent on the second half of 1999.
The business estimates that the global chromium chemicals market has grown
modestly in volume terms compared to last year with principal growth coming
from chromic acid demand for US timber treatment and metal finishing. The
chromic oxide market recovered slowly as the year progressed with demand for
metal alloys for land based turbines increasing. Demand for metal alloys for
aerospace applications remained low, as predicted. During the year, there
have been signs that the Asian leather tanning market for chrome sulphate is
starting to recover, although competition strengthened in the second half.
Elementis Chromium sales volume increased to record levels; volume was up 17
per cent year on year, with second half volume up 15 per cent on the
comparable period in 1999. Growth was achieved in all product categories,
reflecting the product focused sales and marketing strategy introduced in the
second half of 1999, which is also delivering good market share growth.
Chromic oxide and chromic acid volume growth were particularly strong, the
latter reflecting increasing demand for the superior handling properties of
our CA21 chromic acid product. Over 40 per cent of CA21 sales were to new
chromic acid customers acquired since its launch two years ago.
Average pricing of chromium products was lower than in 1999 as a result of a
more competitive pricing policy to grow market share, aggressive competition
and the impact of currency. Compared to 1999, the base currencies of major
competitors in the Former Soviet Union and South Africa were significantly
weaker against the US dollar.
The new kiln at Corpus Christi, Texas was successfully brought on stream; the
rotary hearth it replaced was shut down in July. Plans are being developed
to increase capacity by de-bottlenecking downstream processes. Annualised
cost savings from the new kiln, as previously announced, are £2.0 million,
which brings the total annualised cost savings achieved within Elementis
Chromium over the twelve month period to June 2000 to £6.0 million.
The expanded pure salt plant at Eaglescliffe, UK was commissioned in the
second quarter, further enhancing environmental performance. Sodium sulphate
sales volumes increased year on year but trading conditions became more
difficult in the second half.
In the Group's Interim Report 2000, concerns were expressed relating to
rising energy costs. Since then, the adverse energy price trend has
continued; US spot gas prices quadrupled during the course of the year. This
rise was partly mitigated through operation of the new energy efficient kiln
and some short-term forward gas purchasing. Excluding volume increases,
energy costs rose year on year by around £3.5 million, of which around £3.0
million was in the second half.
The ratio of trade working capital to sales reduced from 19 per cent at the
end of 1999 to 14 per cent at the end of 2000, with inventory down by £0.8
million.
Since the year end, headcount has reduced by 10 per cent following a business
process re-engineering exercise at Corpus Christi; the one-off cost of this
is around £2.3 million which will be largely recouped over the balance of the
year.
Pigments & Specialties
Operating profit before goodwill amortisation and exceptionals was £31.1
million, a year on year increase of 9 per cent, on sales up 5 per cent to
£234.9 million. Operating profit before goodwill amortisation and
exceptionals in the second half of 2000 was £15.5 million, up 8 per cent on
the second half of 1999.
At Elementis Pigments, sales and operating profit before exceptionals both
increased. This reflects strong growth of iron oxide sales into the
construction market, including granular products, and the benefits of the
major restructuring and upgrading programme, partially offset by lower
profits on zinc products for the depressed UK market.
Success in marketing higher value added iron oxide pigments continues, with
double digit sales growth into the toners and catalysts markets. New product
launches during the year include the specialty zinc derivative Decelox for
use in plastics.
During the first half of the year, the restructuring programme in the UK was
completed with the consolidation of the Northampton distribution and
administration centre into Birtley, the closure of the anhydrous aluminium
chloride production facility at Birtley and the consolidation of the small
pigments manufacturing facility in Toronto, Canada into the recently upgraded
facility at Easton, US.
At Elementis Specialties, sales and operating profit before goodwill
amortisation and exceptionals were similarly both up on 1999, despite the
impact of currency. Strong sales growth was achieved in the oil exploration
drilling, inks and personal care markets; oil exploration drilling benefited
from a continuing market recovery.
In the year, water-based additives for coatings grew by around 9 per cent
against 1999 and Rheolate sales increased by 10 per cent. Rheological
additives sales growth slowed in the second half of the year. Sales grew in
most geographical regions, with sales to Japan more than 50 per cent higher
than that achieved in 1999, reflecting the direct and technical sales
presence established in May 1999. Performance in Europe was hindered by the
relative weakness of the euro.
Key new products launched during 2000:
* Rheolate 450: a thickener for vinyl acrylic based interior house paints
that imparts high film build and good sag and levelling properties
* EA-2734: a pumpable organoclay compound for printing ink developed in
response to increasing industry automation
* EA-2947: a heat-resistant organoclay compound for oil drilling fluids
used in deep water drilling
The number of customers evaluating zinc oxide products for personal care
applications increased significantly over the year. Elementis Specialties
has also developed powder derivatives of zinc oxide for use in personal care
applications and other products for UV protection in clear wood coatings. A
plastic nanocomposite additive, which utilises proprietary clay modification
technology, is currently on trial with customers.
In June, the £2.0 million Rheolate production facility for water-based
coatings in Livingston, Scotland was completed and commissioned; this enables
Elementis Specialties to meet growing worldwide demand for these technically
innovative products. Capacity was also increased at Livingston to replace
the small high cost production unit in Germany which closed in late 1999.
Costs in Pigments & Specialties reduced by £1.5 million on an annualised
basis over the first half of the year, in line with previously announced
targets; exceptional restructuring costs were £1.4 million as previously
announced.
The ratio of trade working capital to sales increased from 19 per cent at the
end of 1999 to 21 per cent at the end of 2000, primarily as a result of
higher inventory levels; action is being taken to reverse this trend.
Chemical Distribution
Operating profit was £6.0 million, a year on year increase of 9 per cent, on
sales up 11 per cent to £160.0 million. Operating profit in the second half
of 2000 was £3.0 million, up 7 per cent on the second half of 1999.
Margins were lower than in 1999, chlorine margins having declined towards the
end of that year. Caustic soda and sodium hypochlorite margins declined in
the latter part of 2000, input costs being impacted by higher gas prices and
low demand for chlorine. Operating costs remained tightly controlled
throughout the year.
Volume grew by 5 per cent, driven by strong growth in caustic soda and sodium
hypochlorite being partially offset by lower levels of rock salt. Excluding
rock salt, volume grew by 6 per cent.
An internet based ordering system was introduced for customers during the
year and the vendor managed inventory programme extended to additional
customers.
Specialty Rubber
Operating profit before exceptionals was £2.6 million, a year on year
increase of 8 per cent, on sales 1 per cent lower at £54.1 million.
Operating profit before exceptionals in the second half of the year was £1.0
million, compared to £1.2 million in the second half of 1999.
Performance in the minerals processing and industrial rubber business units
was largely offset by lower sales and profits on major process technology
equipment contracts.
The programme announced a year ago to refocus and simplify the Linatex
business on its core specialty rubber capability and profitable sales
opportunities was completed ahead of schedule, with the closure of the final
site in Montreal in February 2001. During the year, the number of operating
sites reduced from 25 to 13, headcount by 128 and annualised costs by over
£3.0 million. Additional headcount reductions in excess of 50 are planned
for the first quarter of 2001. Exceptional restructuring costs of £2.3
million were charged in 2000 to complete the programme, in line with previous
estimates.
In addition, Linatex has decided not to pursue major new process technology
equipment contracts following the disappointing financial performance in the
second half of the year; this unprofitable part of the business will be
phased out over the coming months.
The new £1.5 million rubber conversion and mixing plant in Malaysia was
commissioned during the year; this provides lower cost and more consistent
quality feedstock for the Linatex sheet manufacturing and moulding process.
A £4.0 million continuous rubber sheet press is to be installed by the end of
2001, to reduce operating costs further and enable Linatex sheet to be
produced within tighter thickness tolerances for new applications and with
enhanced bonding capabilities.
A tragic accident occurred in late December when an aircraft crashed into the
Linatex facility at Yateley, Hampshire, UK, killing all five on board. Part
of the building suffered structural damage and some machinery was destroyed
causing short-term customer service issues.
Health, safety and the environment
The focus on health, safety and the environment continues throughout the
Group. Compared to 1999, lost time accident frequency reduced by 2 per cent
although disappointingly, non-compliance with environmental consents rose by
two.
Exceptionals
Net exceptional charges before tax were £3.0 million, compared to £8.7
million in 1999. For 2000, exceptionals comprised:
* £3.7 million of previously announced restructuring costs at Elementis
Pigments and Linatex
* £0.7 million insurance recovery for the settlement of US litigation in
1999
Interest
Net interest payable was £5.1 million, compared to £5.4 million in 1999.
Interest cover (the number of times that the net interest charge is covered
by operating profit before goodwill amortisation and exceptionals) was 12.5
times (1999: 10.5 times).
Taxation
The effective rate of tax on profit before goodwill amortisation and
exceptionals was 14.0 per cent, compared with 22.0 per cent in 1999. This
rate is substantially lower than the standard UK corporate tax rate for a
number of reasons, including tax relief on purchased US goodwill and the
utilisation of surplus advance corporation tax, partially offset by higher
overseas tax rates. Tax on exceptional items was a credit of £0.4 million
(1999: £0.8 million).
Earnings per share
Basic earnings per share before goodwill amortisation and exceptionals
increased by 25 per cent year on year to 11.6 pence. Basic earnings per
share, after goodwill and exceptionals, was 7.9 pence (1999: 4.6 pence). The
weighted average number of shares in issue during the year was 431.5 million
(1999: 431.5 million); the number of shares in issue at the year end was
431.5 million (1999: 431.5 million).
Cash flow and balance sheet
Net cash inflow from operating activities was £58.4 million, compared to
£74.1 million in 1999.
Working capital outflow was £12.4 million, compared to a £19.4 million inflow
in 1999. Debtors increased by £8.4 million, of which £1.9 million was
attributed to increased sales. Trade debtor days increased by two during the
year, primarily as a result of increased sales in markets with longer payment
terms. The majority of debtor cash outflow is therefore related to a number
of other factors, including a delay in receiving a VAT refund in continental
Europe and a deposit on the Linatex continuous rubber sheet press. Stock
levels continue to be tightly controlled overall.
Cash expenditure on fixed assets totalled £22.1 million (1999: £43.9
million), most of which related to Elementis Chromium, the principal project
being the new kiln; this compares with depreciation of £17.5 million (1999:
£15.3 million). Looking forward to 2001, capital expenditure is likely to be
modestly ahead of depreciation.
Net cash inflow before the use of liquid resources and financing was £32.4
million compared to an inflow of £9.6 million in 1999. Free cash inflow was
£33.4 million, compared to £10.3 million in 1999. Net borrowings at the year
end were £41.7 million (1999: £45.5 million). Shareholder funds at the year
end were £411.2 million, compared to £380.4 million at the end of 1999.
Consolidated profit & loss account for the year ended 31 December 2000
Before
goodwill
amortisation
& Goodwill
exceptionals amortisation Exceptionals 2000 1999
Note £million £million £million £million £million
Turnover -
continuing
operations 3 573.8 - - 573.8 535.1
________ ________ ________ ________ ________
Group
operating
profit
_____________________________________________________________________________
Before
goodwill
amortisation
and
exceptionals 63.4 - - 63.4 56.7
Goodwill - (13.3) - (13.3) (12.5)
amortisation
Exceptionals - - (3.0) (3.0) (15.3)
_____________________________________________________________________________
3/4 63.4 (13.3) (3.0) 47.1 28.9
Associates 0.1 - - 0.1 0.1
________ ________ ________ ________ ________
Operating
profit -
continuing
operations 63.5 (13.3) (3.0) 47.2 29.0
Profit on
disposal of
properties - - - - 6.6
________ ________ ________ ________ ________
Profit on
ordinary
activities
before
interest 63.5 (13.3) (3.0) 47.2 35.6
Net interest
payable (5.1) - - (5.1) (5.4)
________ ________ ________ ________ ________
Profit on
ordinary
activities
before tax
_____________________________________________________________________________
Before
goodwill
amortisation
and
exceptionals 58.4 - - 58.4 51.4
Goodwill
amortisation - (13.3) - (13.3) (12.5)
Exceptionals - - (3.0) (3.0) (8.7)
_____________________________________________________________________________
58.4 (13.3) (3.0) 42.1 30.2
Tax on profit
on ordinary
activities 5 (8.2) - 0.4 (7.8) (10.5_
________ ________ ________ ________ ________
Profit on
ordinary
activities
after tax 50.2 (13.3) (2.6) 34.3 19.7
Minority
interests -
equity (0.1) - - (0.1) 0.3
________ ________ ________ ________ ________
Profit for the
financial year 50.1 (13.3) (2.6) 34.2 20.0
Dividends -
equity - - - - (8.6)
Dividends -
non-equity (0.1) - - (0.1) -
________ ________ ________ ________ ________
Amount
transferred to
reserves 50.0 (13.3) (2.6) 34.1 11.4
======== ======== ======== ======== ========
Earnings per
ordinary share 6
Basic and
diluted 7.9p 4.6p
Basic before
goodwill
amortisation
and
exceptionals 11.6p 9.3p
Diluted before
goodwill
amortisation and
exceptionals 11.5p 9.3p
Balance sheet at 31 December 2000
2000 1999
£million £million
Fixed assets
Goodwill 228.8 225.5
Tangible assets 192.1 182.7
Investments 2.0 1.8
__________ __________
422.9 410.0
__________ __________
Current assets
Stocks 76.7 71.6
Debtors 109.2 104.9
Cash at bank and in hand 51.2 79.9
__________ __________
237.1 256.4
__________ __________
Creditors: amounts falling due within one
year
Borrowings 7.3 11.2
Creditors 106.2 109.4
__________ __________
113.5 120.6
__________ __________
Net current assets 123.6 135.8
__________ __________
Total assets less current liabilities 546.5 545.8
__________ __________
Creditors: amounts falling due after more
than one year
Borrowings 85.6 114.2
Government grants 0.6 0.8
__________ __________
86.2 115.0
Provisions for liabilities and charges 46.6 48.1
__________ __________
132.8 163.1
__________ __________
413.7 382.7
========== ==========
Capital and reserves
Called up share capital 23.6 21.6
Share premium 1.1 1.1
Capital redemption reserve 20.4 -
Profit and loss account 366.1 357.7
__________ __________
Shareholders' funds 411.2 380.4
Minority interests 2.5 2.3
__________ __________
413.7 382.7
========== ==========
Shareholders' funds
Equity 409.2 380.4
Non-equity 2.0 -
__________ __________
411.2 380.4
========== ==========
Net borrowings (41.7) (45.5)
========== ==========
Cash flow statement for the year ended 31 December 2000
2000 2000 1999 1999
Note £million £million £million £million
Net cash inflow from 58.4 74.1
operating activities
Returns on investments
and servicing of finance
Interest received 9.3 8.8
Interest paid (14.4) (14.4)
_______ _______
(5.1) (5.6)
Taxation (4.5) (4.7)
Capital expenditure and
financial investment
Purchase of fixed assets (22.1) (43.9)
Disposal of fixed assets 6.7 12.0
_______ _______
(15.4) (31.9)
Acquisitions and
disposals
Acquisition of - (0.2)
businesses in prior
years
Disposal of businesses (1.0) (0.5)
in prior years
_______ _______
(1.0) (0.7)
Equity dividends paid - (21.6)
_______ _______
Cash inflow before use 32.4 9.6
of liquid resources and
financing
Financing and management 7 (35.7) (1.7)
of liquid resources
_______ _______
(Decrease)/Increase in (3.3) 7.9
cash
======= =======
Reconciliation of operating profit to net cash inflow from operating
activities for the year ended 31 December 2000
2000 1999
£million £million
Operating profit 47.2 29.0
Goodwill amortisation 13.3 12.5
Depreciation (less grants credited) 17.3 15.3
Share of profits of associated undertakings (0.1) (0.1)
Loss on disposal of fixed assets - 0.2
Exceptionals in operating profit 3.0 15.3
Cash outflow on exceptionals (3.9) (12.2)
(Increase)/decrease in stocks (1.8) 15.0
Increase in debtors (8.4) (6.2)
(Decrease)/increase in creditors (2.2) 10.6
Decrease in provisions (6.0) (5.3)
________ ________
58.4 74.1
======== ========
Statement of total recognised gains and losses
for the year ended 31 December 2000
2000 1999
£million £million
Profit for the financial year 34.2 20.0
Currency translation differences 19.4 2.2
Taxation on currency translation differences on
foreign currency borrowings (2.0) (1.0)
________ ________
Total recognised gains for the year 51.6 21.2
======== ========
Reconciliation of movements in shareholders' funds
for the year ended 31 December 2000
2000 1999
£million £million
Profit for the financial year 34.2 20.0
Dividends - ordinary shares - (8.6)
Dividends - redeemable B shares (0.1) -
________ ________
Amounts transferred to reserves 34.1 11.4
Redemption of redeemable B shares (including issue
costs) (20.7) -
Currency translation differences 19.4 2.2
Taxation on currency translation differences on (2.0) (1.0)
foreign currency borrowings
________ ________
Net increase in shareholders' funds 30.8 12.6
At beginning of the financial year 380.4 367.8
________ ________
At end of the financial year 411.2 380.4
======== ========
Notes to the financial statements
1 Preparation of preliminary announcement
The financial information in this statement does not constitute statutory
accounts
within the meaning of Section 240 of the Companies Act 1985. The financial
information for the year ended 31 December 1999 has been extracted from the
financial statements for that year which have been delivered to the Registrar
of Companies. The report of the auditors on those financial statements was
unqualified and did not contain a statement under Section 237 of the
Companies Act 1985.
2 Exchange rates
The principal currency in which the Group conducts its business is the US
dollar.
In 2000, the average sterling exchange rate was $1.52 compared with $1.62 in
1999. The sterling exchange rate at 31 December 2000 was $1.49 compared with
$1.61 at 31 December 1999.
3 Segmental information
Group turnover Group operating Net assets
profit
2000 1999 2000 1999 2000 1999
£million £million £million £million £million £million
Analysis by
activity
Chromium
Before
exceptionals 131.7 118.2 23.7 20.3 122.1 118.0
Inter-group
turnover (6.9) (5.4) - - - -
Exceptionals - - 0.7 (8.8) - -
_______ _______ _______ _______ _______ _______
124.8 112.8 24.4 11.5 122.1 118.0
_______ _______ _______ _______ _______ _______
Pigments &
Specialties
Before
goodwill
amortisation
and
exceptionals 234.9 222.9 31.1 28.5 349.9 332.3
Goodwill
amortisation - - (13.3) (12.5) - -
Exceptionals - - (1.4) (5.3) - -
_______ _______ _______ _______ _______ _______
234.9 222.9 16.4 10.7 349.9 332.3
_______ _______ _______ _______ _______ _______
Chemical
Distribution 160.0 144.5 6.0 5.5 7.6 5.0
_______ _______ _______ _______ _______ _______
Specialty
Rubber
Before
exceptionals 54.1 54.9 2.6 2.4 23.7 21.9
Exceptionals - - (2.3) (1.2) - -
_______ _______ _______ _______ _______ _______
54.1 54.9 0.3 1.2 23.7 21.9
_______ _______ _______ _______ _______ _______
Total
Before
goodwill
amortisation
and
exceptionals 573.8 535.1 63.4 56.7 503.3 477.2
Goodwill
amortisation - - (13.3) (12.5) - -
Exceptionals - - (3.0) (15.3) - -
_______ _______ _______ _______ _______ _______
573.8 535.1 47.1 28.9 503.3 477.2
_______ _______ _______ _______ _______ _______
Unallocated
liabilities - - - - (89.6) (94.5)
_______ _______ _______ _______ _______ _______
573.8 535.1 47.1 28.9 413.7 382.7
======= ======= ======= ======= ======= =======
Group turnover and operating profit are derived from continuing operations.
Group turnover Group operating Net assets
profit
2000 1999 2000 1999 2000 1999
£million £million £million £million £million £million
Analysis by
area of
operations
North America 389.0 357.6 33.4 24.2 359.0 336.4
Europe 163.4 157.3 12.2 4.8 128.9 127.2
Rest of the
World 21.4 20.2 1.5 (0.1) 15.4 13.6
________ ________ ________ ________ ________ ________
573.8 535.1 47.1 28.9 503.3 477.2
Unallocated - - - - (89.6) (94.5)
liabilities
________ ________ ________ ________ ________ ________
573.8 535.1 47.1 28.9 413.7 382.7
======== ======== ======== ======== ======== ========
Unallocated liabilities comprise:
2000 1999
£million £million
Net borrowings (41.7) (45.5)
Taxation and dividends (20.7) (15.2)
Post retirement benefits and government grants (14.8) (15.9)
Other (12.4) (17.9)
________ ________
(89.6) (94.5)
======== ========
2000 1999
£million £million
Group turnover analysed by geographical markets
North America 368.3 336.8
Europe 143.0 141.4
Rest of the World 62.5 56.9
________ ________
573.8 535.1
======== ========
4 Exceptionals
Group operating profit includes the following charges/(income):
Settlement of Restructuring Impairment of Total
US litigation costs assets
2000 1999 2000 1999 2000 1999 2000 1999
£mil- £mil- £mil- £mil- £mil- £mil- £mil- £mil-
lion lion lion lion lion lion lion lion
Chromium (0.7) 6.4 - 2.4 - - (0.7) 8.8
Pigments &
Specialties - 0.2 1.4 2.4 - 2.7 1.4 5.3
Specialty
Rubber - - 2.3 1.2 - - 2.3 1.2
_______ _______ _______ _______ _______ _______ _______ _______
(0.7) 6.6 3.7 6.0 - 2.7 3.0 15.3
======= ======= ======= ======= ======= ======= ======= =======
Tax on these charges was a credit of £0.4 million (1999: £0.8 million).
5 Tax on profit on ordinary activities
The charge for United Kingdom tax has been based on a corporation tax rate of
30
per cent (1999: 30.25 per cent). If deferred tax had been fully provided in
2000 under the liability method, the tax charge for the year would have
increased by £0.2 million (1999: £4.1 million).
2000 1999
£million £million
Reconciliation of the tax charge:
Notional tax charge before goodwill amortisation and
exceptionals at UK corporation tax rate (2000: 30 per
cent, 1999: 30.25 per cent) 17.5 15.5
Recoverable ACT (4.6) (1.0)
Differences in overseas effective tax rates 2.2 3.9
Benefit of US goodwill (6.0) (5.7)
Overseas tax losses (relieved)/unrelieved (0.3) 0.4
Other current tax items 0.6 0.2
Deferred tax not provided on excess capital
allowances and other timing differences (1.2) (2.0)
________ ________
8.2 11.3
Tax credit on exceptionals (0.4) (0.8)
________ ________
7.8 10.5
======== ========
6 Earnings per ordinary share
2000 1999
Profit Weighted Profit Weighted
for the average for the average
financial number Earnings financial number of Earnings
year* of shares per share year* shares per share
£million million pence £million million pence
Basic
earnings per
share 34.1 431.5 7.9 20.0 431.5 4.6
Share options - 2.6 - - 1.8 -
______ ______ ______ ______ ______ ______
Diluted
earnings per
share 34.1 434.1 7.9 20.0 433.3 4.6
______ ______ ______ ______ ______ ______
Basic
earnings per
share 34.1 431.5 7.9 20.0 41.5 4.6
Goodwill
amortisation 13.3 - 3.1 12.5 - 2.9
Exceptionals
net of
taxation 2.6 - 0.6 7.7 - 1.8
______ ______ ______ ______ ______ ______
Basic
earnings per
share before
goodwill
amortisation
and
exceptionals 50.0 431.5 11.6 40.2 431.5 9.3
Share options - 2.6 (0.1) - 1.8 -
______ ______ ______ ______ ______ ______
Diluted
earnings per
share before
goodwill
amortisation
and
exceptionals 50.0 434.1 11.5 40.2 433.3 9.3
====== ====== ====== ====== ====== ======
*after non-equity dividends
Earnings per share before goodwill amortisation and exceptionals provides a
measure of the underlying financial performance of the Group on a comparable
basis with many other groups.
7 Financing and management of liquid resources
2000 1999
£million £million
Financing
Redemption of B shares (including issue costs) (20.7) -
Loan notes redeemed (3.1) (1.3)
Decrease in borrowings repayable within one year - (6.3)
Decrease in borrowings repayable after one year (37.3) (140.1)
________ ________
(61.1) (147.7)
________ ________
Management of liquid resources
New cash deposits (0.1) (5.4)
Repayment of cash deposits 25.5 151.4
________ ________
25.4 146.0
________ ________
Total financing and management of liquid resources (35.7) (1.7)
======== ========
Redeemable B shares of nominal value £22.4 million were issued for nil
consideration during the year (1999: nil).
8 Reconciliation of net cash flow to movement in net borrowings
2000 1999
£million £million
Change in net borrowings resulting from cash flows:
(Decrease)/increase in cash in the period (3.3) 7.9
Decrease in borrowings 40.4 147.7
Decrease in liquid resources (25.4) (146.0)
________ ________
11.7 9.6
Currency translation differences (7.9) (7.1)
________ ________
Decrease in net borrowings 3.8 2.5
Net borrowings at beginning of the financial year (45.5) (48.0)
________ ________
Net borrowings at end of the financial year (41.7) (45.5)
======== ========
9 Contingent liabilities
The Group was notified of a potential warranty claim in 1998, under the
contract for the sale of Pauls Malt Limited, relating to export refunds from
the Intervention Board for Agricultural Produce. Should such a claim
materialise, this will be vigorously defended and, in any event, in the
opinion of the directors, this will not have a significant effect on the
financial position of the Group.
10 Annual General Meeting
The Annual General Meeting of Elementis plc will be held on 26 April 2001 at
11.00am at The Lincoln Centre, 18 Lincoln's Inn Fields, London, WC2A 3ED.
The Notice of Meeting is given in a separate document accompanying the Annual
Report. Details of the ordinary and special business of the Annual General
Meeting are also contained in this document.
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