Final Results
Yule Catto & Co PLC
03 March 2005
Yule Catto & Company plc
Preliminary Results for the year ended 31 December 2004
Solid performance in the testing operating environment of 2004 - PBT in line
with market expectation.
HIGHLIGHTS
• Profit before taxation* at £31.0 million
• Dividend per share 13.4 pence, a rise of 3.1%
• Free cash flow before dividends at £13.3 million, held back by the impact
of rising monomer costs
• Profit on ordinary activities before taxation of £15.5 million
• Strong volume growth in Polymer division
• Eight drug master files registered in USA
* excluding amortisation of goodwill
Anthony Richmond-Watson, Chairman, comments:
'Overall we delivered a solid performance in the testing operating environment
of 2004 and remain well positioned to deliver volume growth. The investments of
recent years in positioning manufacturing assets strategically and in
strengthening our development facilities are in place. However, predicting the
time scale within which these initiatives translate to results will depend on
global factors affecting our suppliers and customers alike. '
3 March 2005
ENQUIRIES:
YULE CATTO Tel: 01279 442791
Alex Walker, Chief Executive
Sean Cummins, Finance Director
COLLEGE HILL Tel: 020 7457 2020
Gareth David email: gareth.david@collegehill.com
RESULTS SUMMARY
2004 2003
Note Audited Audited
£'000 £'000
Total turnover* 549,444 550,114
Earnings before taxation, interest, depreciation, 5 66,871 96,474
amortisation*
Operating profit before amortisation* 5 43,961 73,432
Total operating profit 28,492 57,985
Profit before taxation + 5 31,011 59,914
Profit on ordinary activities before taxation 15,542 49,185
Profit attributable to shareholders 4,626 27,798
Net borrowings 187,641 177,276
Net cash inflow from operating activities 49,181 111,140
Free cash flow before dividends 5 13,344 62,979
Adjusted earnings per ordinary share 13.9p 27.6p
Basic earnings per ordinary share 3.2p 19.2p
Dividends on ordinary shares:
Interim paid November 5.5p 5.3p
Final proposed/paid 7.9p 7.7p
Total dividend 13.4p 13.0p
Note:
* Includes attributable share of joint ventures: turnover £12,877,000 (2003
£10,487,000)
+ Before amortisation, sale and termination of business and profit on disposal
of fixed assets
CHAIRMAN'S STATEMENT
After the exciting returns from the sale of omeprazole to USA in 2003, we
entered 2004 with the expectation that profit would be lower than the previous
year. As things turned out, macro-economic conditions conspired to cause the
price of oil to increase, leading to upward pressure on the input cost of
monomers and a squeeze on margins. The weakening of the US dollar also reduced
the profitability of sales denominated in that and related currencies. The
resultant impact on profit masked good progress that was made towards the
long-term development of the group, with strong volume growth in polymers and
further evolution in the pipeline for pharmaceutical active ingredients.
Total turnover of £549.4 million was in line with last year, however, at
constant exchange rates, underlying growth was 5%. Profit before taxation has
been struck at £31.0 million, which must be viewed as a solid achievement given
the number of negative factors in play throughout the year.
The sharp escalation in the cost of monomers has been the most difficult issue
faced by our operations. In total raw material costs for the Polymer division
rose by £25 million in the year, requiring selling price increases to be
revisited on a regular basis. The fact that an operating profit within £3
million of the prior year was delivered in such trying market conditions is a
testament to the quality of our products and the skills of our management teams.
Movements in foreign currency exchange rates again had a detrimental bearing on
results. Sterling appreciated against almost all of the currencies in which we
have manufacturing operations, resulting in an adverse impact of nearly £2
million upon the translation of overseas results. The primary exposure on
transactions is to the US Dollar, which weakened by a further 14%, creating an
unfavourable effect of nearly £8 million.
The commitment to increase pension contributions by £6 million per annum has
been reflected in the results for a full year for the first time in 2004.
Higher payments from both the group and employees, a review of certain benefits
and an improvement in stock market performance, saw the deficit on the pension
fund reduce during the year.
Adjusted earnings per share of 13.9 pence were achieved. Long term prospects
for the group remain sound, particularly should raw material price fluctuations
abate. Your Directors therefore propose a final dividend of 7.9 pence per share
taking the total for the year to 13.4 pence, an increase of 3.1% over the
previous year. Subject to shareholder approval at the Annual General Meeting,
the dividend will be paid on 4 July to members on the register at close of
business on 3 June.
After a high level of capital expenditure in recent years, capital investment
was lower in 2004 at £16.7 million, being 0.7 times depreciation. As
anticipated, the high level of working capital reported at the half year has
reduced. However, for the year as a whole there was upward pressure due to
higher monomer costs, which increase the unit carrying value, together with a
priority on securing raw materials during a period of restricted availability.
The resultant free cash flow was £13.3 million and net debt at the year end was
£187.6 million.
In September we issued £75 million of Guaranteed Senior Unsecured Loan Notes to
institutional investors in USA, which are repayable between 2012 and 2016.
November saw the refinancing of a £60 million revolving credit facility with
five European banks, expiring in November 2009. The two initiatives, together
with £100 million of long term loans previously placed, provide long term
security for our borrowing requirements.
In responding to a far from easy operating environment, the commitment and hard
work of our employees around the world is our most valuable asset. We have
experienced many new challenges during the year, which were addressed by
customary resource and energy. On behalf of the Board of Directors, I should
like to recognise the invaluable contribution of our employees and thank them
for their efforts on behalf of Yule Catto.
Safety, health and environmental issues are of the highest importance within
Yule Catto. In recent years we have seen a pleasing trend of improving
statistics in this area, and to take matters a stage further we are fully
committed to support the UK Chemical Industry Association through adoption of
its recently published principles of sustainable development. This will broaden
the categories targeted for improvement by introducing additional measures to
reduce energy and waste. We will publish our objectives for the next five years
in 2005.
Much effort has been directed at the detailed programme necessary to effect a
smooth transition to International Financial Reporting Standards (IFRS), which
became effective from 1 January 2005. The restated results for 2004, under
IFRS, will be audited prior to their release on 8 September with the 2005
interim results. Following the introduction of IFRS, we anticipate greater
volatility on reported earnings, in particular relating to the accounting for
goodwill, financial instruments and foreign exchange.
Outlook
Volume continues to be strong within the Polymer business and the global
infrastructure is in place to support further growth. Additional selling price
increases are being implemented, which should alleviate some of the margin
pressure experienced in 2004. We are well placed to sustain growth, and exploit
opportunities to return to historic levels of operating margin, but in the
short-term, results may be constrained by the impact of a tightness within the
raw material supply chain.
The strategy to increase the number of generic active pharmaceutical ingredients
registered continues apace, with another 8 DMFs targeted for filing in USA in
the current year. This will further improve the platform for the long-term
development of the Pharma business. Delays in the approval of new chemical
entities, together with adverse publicity surrounding certain products already
in the market, is causing pharmaceutical companies to review their outsourcing
requirement, thereby potentially creating uncertainty for us in the area of
contract manufacturing.
Overall we delivered a solid performance in the testing operating environment of
2004 and remain well positioned to deliver volume growth. The investments of
recent years in positioning manufacturing assets strategically and in
strengthening our development facilities are in place. However, predicting the
time scale within which these initiatives translate to results will depend on
global factors affecting our suppliers and customers alike.
ANTHONY RICHMOND-WATSON,
Chairman
3 March 2005
REVIEW OF OPERATIONS
POLYMER CHEMICALS
£'000
Sales (including joint ventures) 2004 316,108
2003 295,354
Divisional Operating Profit 2004 26,907
2003 29,608
Against a backcloth of substantial supply-side difficulties, our polymer
chemicals businesses did well to maintain progress towards our long-term
strategic aims. Along with the pressure of rising oil-derived raw material
prices throughout the year, there were unprecedented shortages of key monomers
used in our products. This not only exacerbated price levels further, but also
restricted the achievement of a number of identified growth opportunities. It
is, therefore, pleasing to report record sales volumes, capacity utilisation
improvements and the creation of new opportunities through product innovation.
The magnitude of the challenges facing our business in 2004 was most apparent in
Europe as we endured serious raw material shortages. Fifteen force majeures
were called by our suppliers as feedstock output was interrupted by oil cracker
outages and plant production problems. As a consequence, an already tight
supply v. demand balance came under strain and suppliers were forced either to
allocate or temporarily halt supply. This had the effect of compounding the
impact on raw material costs that were already moving upwards with the rise in
crude oil prices. It was difficult to reflect the speed of change in input
prices quickly in our selling prices with the result that margins declined
across the year.
Recognition of these unusual circumstances, and their implications has now been
accepted by our customer base and selling prices are being increased, which will
provide margin recovery as raw materials stabilise. The supply chain is likely
to remain fairly tight but good work in changing polymer formulations and
seeking out new suppliers means that supplies in the year ahead should be more
secure. This will permit a resumption of the drive to achieve higher volumes
for our newly established European facilities.
Outside Europe, our businesses did not suffer to the same extent, primarily as
supply lines are different. However, they did not escape the global impact of
rising oil prices flowing through to higher raw material costs. Market
acceptance was quicker and margins were maintained by virtue of successful price
increase programmes. We were also able to benefit from the strategic capacity
enhancements made in late 2003 in the Middle East and South Africa which,
combined with the introduction of new polymers, provided the platform for
improved results. Also playing its part was our Malaysian nitrile latex
facility which attained new highs in terms of output. Further capacity
expansion is now taking place in Saudi Arabia and we are progressing the design
and planning stages for increased polymerisation facilities in Malaysia and
Belgium.
The price of crude oil continues to be volatile and raw material input prices
remain difficult to predict due to the tightness of supply. The most likely
outlook is for more modest rises in coming months.
Synthetic Latex
Overall, volume of synthetic latex grew by 11% in the year. The achievement was
greatly assisted by the Synthomer plant in Malaysia reaching full capacity and
customers appreciating the benefits of indigenous production. Demand for
dipping latex remains strong, with sales growing in excess of 15%. Support from
our UK facilities has been initiated, as has the design study for a 35% increase
in the capacity of the facility in Kluang. This will have the additional
benefit of enabling our Malaysian plant to manufacture other products from our
comprehensive range of SBR latices for sale throughout the region.
In Europe, our leadership in the carpet compound market was enhanced by the
development of new customers. Unfortunately, in general, the carpet industry
faced difficult conditions, particularly in UK, where some traditional and
well-known names have been forced to cease trading.
Freeing up capacity in Europe for construction and textile latices, generated by
the transfer of dipping latex manufacture to Kluang, has enabled us to widen the
customer profile in other latex activities. European latex volumes for
speciality applications rose by 15% and only shortages of some specific raw
materials restricted further growth. On the negative side, styrene monomer, one
of the main raw materials, was the subject of a change from quarterly to monthly
pricing by suppliers as a consequence of sharply rising benzene prices.
Efforts to reflect this speed of movement in selling prices were only partially
successful.
Emulsions
Emulsion sales volume grew at over 8% across the group, which is a considerable
achievement given the difficulty in meeting demand caused by many interruptions
in the raw material supply chain. Positive as it was, the volume growth did not
reach the high levels we had hoped for during the first full year of trading
from our first emulsion facility in mainland Europe. Promotional activities
were fully reactivated in the fourth quarter, with promising results as efforts
to improve raw material supplies began to bear fruit. Significant business
opportunities exist and planning for additional capacity in Mouscron, Belgium is
in progress.
In the Middle East, record sales volumes and profits were achieved by our joint
venture, DCI-Harco. Yet another new reactor is in the course of installation to
meet continued strong demand from customers in Saudi Arabia and adjacent
countries.
The strength of the Rand affected exports by our South African subsidiary, but
demand from the local economy more than compensated. The performance was aided
by the introduction of new polymers for construction, adhesives and surface
coatings to enhance the product portfolio.
Our Far East group also had a successful year in emulsions. Closer
co-ordination between regions, involving technical exchange, allowed Revertex
Malaysia to configure its production facilities to manufacture an increased
range of speciality emulsions. Local economies remain reasonably robust and
management deployed close technical contact with customers to aid the reaction
to raw material price rises through new product introductions.
Polyvinyl Alcohol and Acetate
A debottlenecking programme enabled improved capacity utilisation and with the
PVC industry, the main outlet for Synthomer's Alcotex range, showing growth, the
sales of Polyvinyl Alcohol were at record levels. Particularly encouraging was
the development of new business in Asian markets, where the benefits of the
unique technical properties of our Alcotex primary stabilisers found favour in
both rigid and flexible PVC resins. A large proportion of sales are exported
from Europe to US Dollar denominated territories and currency weakness created
pressures upon margins. Recovery through selling price increases is being
achieved, but with the inevitable lag in implementation.
Polyvinyl Acetate sales held up well despite disappointing sales to the
automotive sound damping market. The introduction of new products opened up a
new field for Synthomer, namely low profile polyester additives and we expect to
build on sales in the USA.
Other Speciality Products
In April, Revertex Malaysia joined forces with Kurian Abraham Private Ltd to
form a joint venture, Revertex KA Latex (India) Private Ltd, to manufacture our
speciality natural rubber latices in India. India is fast becoming a major
producer of natural rubber and is already No.3 in the world. We envisage the
combination of an indigenous raw material source and our well-established
technology will provide a sound extension to our natural rubber activities. The
existing natural rubber business in Malaysia and Thailand showed good growth
with sales for condom manufacture increasing in China and the USA.
Revertex Finewaters' position in the manufacture and sale of adhesives in
Malaysia has been enhanced with a number of new products added to the already
wide product range. Furthermore, export sales improved, particularly to
Vietnam, Hong Kong, Thailand and Pakistan. However, the company was not immune
from rising input costs and profitability fell back from the high levels of
previous years.
Sales of alkyd resins in Asia reached record levels. Not only did we see
organic and new customer growth from our own promotional activities, but
benefits also accrued from an unexpected surge in demand as other suppliers
experienced production problems.
New technical initiatives in the Lithene polybutadiene business resulted in a
23% growth year on year. The growth is expected to continue and a capacity
enhancement project is programmed for 2005.
PHARMA AND FINE CHEMICALS
£'000
Sales 2004 96,868
2003 111,994
Divisional Operating Profit 2004 16,244
2003 36,170
Sales by our Pharma & Fine chemicals businesses fell by 13.5%, which was
unsurprising given the significant changes that took place in late 2003 in the
omeprazole market in the USA. Margins were fairly consistent throughout the
year, delivering a healthy level of operating profit.
The inevitable effect on selling prices of omeprazole becoming fully generic in
the USA was a key feature of 2004. Development of other territories, however,
enabled volume to be very close to the exceptional shipments of 2002.
Zegerid(TM), a new patented immediate release version of this important proton
pump inhibitor, was launched in October. An exclusive long-term supply contract
is in place with our customer, Santarus. Close to the end of the year a larger
dose variant received FDA approval, which should further enhance sales
opportunities.
The fine chemical market for pharmaceuticals is passing through an interesting
period as major drug manufacturers face an increasingly tough regulatory
landscape. The cornerstone of our strategy continues to be the development of
an extensive generic portfolio. Last year, this advanced through the filing of
eight drug master files in a range of therapeutic categories in the important US
market. Plans are in hand to continue this accelerated programme of filings in
2005. Investment to support our strategy will come on stream in the coming
months, with a new technology centre in Spain and the completion of a new pilot
plant in Italy.
Major contracts in the ethical market have been secured, but uncertainties
within our customer base are lengthening approval times and delaying project
start dates. A number of clinical phase projects were successfully manufactured
and a potential anti-parkinson product in phase 2b is scheduled to move to
industrial quantities in the coming year.
Challenges remain as ever, including the effect of a weakening US currency on
margins of products sold from our European manufacturing base. Looking forward,
however, we retain confidence in our development skills and the benefits of
concentration on cost efficient plants and processes. The outlook for product
approvals and regulatory permissions in the ethical sector may, in the near
term, have an impact on the overall rate of progress achievable, but our generic
development programme is gathering pace. Recently announced changes to EU rules
to bring them closer to those of the US regarding process development ahead of
patent expiry, should further assist in the pursuit of this strategy.
Trading for our flavour and fragrance activities was stable. Initiatives
directed towards improving the operating cost base proved fruitful.
Pharma
The Uquifa operations in Spain continued to enjoy the benefit of good volumes of
omeprazole. This was particularly true of sales of pelletised material, which
grew by over 50%. New equipment is at present being installed at the Sant
Celoni facility to meet the increased customer demand for this added value
variant.
Margin erosion for ranitidine was significantly diminished, assisted by recent
work on process efficiency and, pleasingly, substantial volume growth was
achieved in a competitive market. Positions within the antiviral, antibacterial
and antidepressive sectors began to emerge with products whose patent expiry was
some years ago. A product to the veterinary market also made good progress
which, all in all, added up to a strong year for volume.
New business gained in the ethical sector stretched our development and
engineering teams which successfully installed new facilities against a tight
deadline. As well as long term contracts, this equipment brings new
technologies to offer to our customer base. The pilot plant remains busy with
good loadings in the months ahead.
Following the decontamination of the cephalosporins plant in Italy, a number of
new products were introduced and contracts received. However, the regulatory
and technical approval process has taken much longer than anticipated. In
response, products are in the process of being moved from Spain and Mexico,
where plant occupancy is at a high level, and a close control of operating costs
and efficiencies is being maintained. Validation batches of new products using
different technologies, only sited in our Italian plant, are scheduled in the
early part of 2005.
Sales from our Mexican facility were strong, led by significant volumes of
ethical intermediates to large pharmaceutical companies. As anticipated,
volumes of the antibacterial ciprofloxacine started well with patent expiry
mid-year in USA. Contribution was ahead of expectations, but far from that seen
for other products turning generic owing to the number of competitors at launch.
Sales of an antipsychotic, zolpidem, are progressing well and we are well
placed with major generic houses in the USA where it is scheduled to come off
patent in 2006.
Flavour and Fragrances
The pace of consolidation within the world's flavour and fragrance market abated
during the course of the year. Unit sales prices continued to come under
pressure from Far Eastern competition, but the higher quality of our products is
showing signs of combating this threat.
Oxford Chemicals delivered a robust performance, with good profitability
re-established, assisted by the cost-control measures implemented the previous
year. The company's high level of expertise in sulphur chemistry is being
deployed in support of Uquifa through the manufacture of pharmaceutical
intermediates. New technologies for product manufacture are also being explored
through collaboration with universities and a priority is being given to
identifying sources of starting material for natural flavours.
The PFW fragrance business had a good year with new business secured in emerging
markets. Good inter-group collaboration is seeing the larger scale facilities
of PFW being used in support of Oxford Chemicals to reduce the manufactured cost
of some key volume products.
PERFORMANCE CHEMICALS
£'000
Sales 2004 136,468
2003 142,766
Divisional Operating Profit 2004 5,418
2003 11,737
A mixture of adverse factors affected our performance chemicals businesses
throughout the whole of 2004. This cumulatively resulted in a halving of
operating profit from that achieved the previous year, which was disappointing.
In particular, the sharp fall in the US Dollar against Sterling and Euro hit
margins in the second half. Aggressive competition from overseas for sulphur
derivatives and uncertainty in the timber treatment market were also a feature.
Production output for ultramarine has steadily been re-established with the
successful commissioning of a new flue gas desulphurisation unit (FGD) in
France, replacing the one that had been destroyed by fire. Better fortunes were
experienced with specialised intermediates directed at the personal care,
photographic and houseware markets.
Turnover for continuing businesses was sustained at close to 2003 levels,
despite these testing market conditions, demonstrating a successful defence of
market share. In addition, the assault on operating costs continued, with
substantial restructuring charges once more incurred. Progress was achieved in
the construction of new cost effective facilities in pursuit of restructuring to
deliver further efficiencies.
Inorganic Chemicals
Uncertainty over the direction of our customer base in responding to the move
away from copper chrome arsenate timber treatment to more environmentally -
acceptable systems impacted unfavourably. Ways of addressing this issue are
under development, using new approaches to providing copper-based products for
supply throughout Europe. High purity copper chromite for catalyst manufacture
has been added to the range, with good customer acceptance.
Sales of tin products for use in non-toxic flame retardants, insulating glass
systems and pharmaceutical manufacture showed good growth. The impact of a
rising tin price was well managed. Iodine sales also delivered good results as
the more recently introduced products gained market penetration.
Sulphur dioxide derivatives saw considerable market instability, due to
pressures from competitive activity. Market share in the UK and Ireland has
been successfully defended by focusing on good logistics and high level customer
service. A new transport fleet is being introduced through outsourcing to a
highly experienced logistics company. Changes were also instituted to the
distribution network which will positively impact upon margins attainable.
To reflect the changed trading conditions, employee numbers have been reduced,
with the result that William Blythe reported a loss for the year as a whole.
The reorganisation of operations, coupled with product introductions and
marketing initiatives, place the business in a better position going forward.
Organic Chemicals and Pigments
James Robinson delivered a pleasing performance across all of its activities.
This result came from a combination of the benefits accruing from the
restructuring of recent years and good demand in the market for our speciality
products. Opportunities arose for higher volumes of our market-leading hair dye
products from the merger of major customers. Sales have been strong and changes
to the distribution network in key territories will benefit market penetration.
Colour developer sales experienced good growth and our Indian joint venture
moved into decent profitability. Investment is in progress in India to extend
the range of intermediates manufactured. The photochromics business saw sales
rise by 24% as new products were introduced and our proprietary neutral
molecules gained wider acceptance. The alignment of the manufacturing
facilities with market needs is progressing, underpinning results going forward.
The successful commissioning of the state-of-the-art FGD unit at our ultramarine
facility in France provided the opportunity to rebuild sales volume to the level
seen in 2002. The unit is performing well and the investment has received
accolades from the French environmental authorities. Over half of all
ultramarine sales are made in US Dollars and the weakening of that currency has
a marked effect on operating margins. To combat this, selective price increases
have been introduced, as has a review of the cost base. Projects to refine the
manufacturing process have also recently been implemented. These are
delivering improvements in quality and yield.
The world demand for ultramarine pigment continues to grow, with China and the
Far East being particularly strong. In addition, the new application
development programme of recent years is starting to see the number and quality
of approvals increasing. The re-establishment of production levels will now
enable growth in volume from our global customer base to be fully supported.
Other Activities
Demand from the industrial and retail sectors for our consumer chemicals
products was relatively flat holding back efforts to grow sales. Results
improved, but less than was anticipated from reductions implemented in the
operating cost base.
Holliday Dispersions saw a difficult year, particularly in France, where
customers still suffered the impact of depressed market conditions. In the UK,
sales levels were successfully sustained, but margins came under pressure as raw
material cost increases took effect in the second half.
The car preparation services offered by Autoclenz experienced buoyant trading
and the business delivered new records for performance. This was assisted by
greater levels of efficiency and pleasing growth in new development areas.
Brencliffe was impacted by some changes in its retail customer base in the early
months of 2004. As the year unfolded, a high level of product innovation
enabled this small company to return to forward momentum.
YULE CATTO & COMPANY PLC
Preliminary Results for the year ended 31 December 2004
CONSOLIDATED PROFIT & LOSS ACCOUNT
2004 2003
Audited Audited
Note £'000 £'000
Existing operations 536,567 534,573
Discontinued operations - 5,054
Turnover of company and subsidiaries 536,567 539,627
Share of turnover of joint ventures 12,877 10,487
Total turnover 3 549,444 550,114
Operating profit before joint ventures and amortisation
of goodwill
Existing operations 42,005 71,950
Discontinued operations - (233)
42,005 71,717
Amortisation of goodwill
Existing operations (15,469) (15,447)
Operating profit of company and subsidiaries 26,536 56,270
Existing operations 26,536 56,503
Discontinued - (233)
Operating profit of company and subsidiaries 26,536 56,270
Share of operating profit of joint ventures 1,956 1,715
Total operating profit 28,492 57,985
Sale and termination of businesses - 2,067
Profit on disposal of fixed assets - 2,651
Interest payable (net) (12,950) (13,518)
Profit on ordinary activities before taxation 15,542 49,185
Taxation on profit of ordinary activities (9,613) (19,848)
Profit on ordinary activities after taxation 5,929 29,337
Minority interests (1,303) (1,539)
Profit attributable to shareholders 4,626 27,798
Ordinary dividends (19,376) (18,777)
Retained (loss)/profit for the financial year (14,750) 9,021
Operating profit before amortisation 5 43,961 73,432
Profit before taxation * 5 31,011 59,914
Profit after taxation and minorities* 5 20,095 39,802
Earnings per share - Adjusted 6 13.9p 27.6p
- Basic 3.2p 19.2p
- Diluted 3.2p 19.0p
Note:
* Before amortisation, sale and termination of business and profit on disposal
of fixed assets
YULE CATTO & COMPANY PLC
Preliminary Results for the year ended 31 December 2004
SUMMARISED CONSOLIDATED BALANCE SHEET
2004 2003
Audited Audited
£'000 £'000
Fixed assets
Goodwill 216,352 231,821
Tangible fixed assets 166,440 175,067
Investments in joint ventures 3,053 3,252
Investments 25 38
385,870 410,178
Current assets
Stock 71,235 66,947
Debtors 109,492 100,182
Cash at bank and in hand 17,834 9,856
198,561 176,985
Creditors - due within one year
Borrowings (26,210) (34,271)
Dividends (11,440) (11,150)
Other creditors (166,358) (170,966)
Net current liabilities (5,447) (39,402)
Creditors - due after more than one year
Borrowings (179,265) (152,861)
Other creditors (222) (594)
Provisions for liabilities and charges (26,983) (26,757)
Net assets 173,953 190,564
Shareholders' funds - all equity 169,547 187,120
Minority interests 4,406 3,444
Capital employed 173,953 190,564
Net borrowings
Cash at bank and in hand 17,834 9,856
Borrowings - due within one year (26,210) (34,271)
Borrowings - due after one year (179,265) (152,861)
(187,641) (177,276)
YULE CATTO & COMPANY PLC
Preliminary Results for the year ended 31 December 2004
SUMMARISED CONSOLIDATED CASH FLOW STATEMENT
2004 2003
Audited Audited
Note £'000 £'000
Net cash flow inflow from operating activities 4 49,181 111,140
Dividends received from joint ventures 1,854 1,244
Returns on investment and servicing of finance (12,453) (15,573)
Taxation paid (8,504) (14,749)
Capital expenditure and financial investment (16,734) (19,083)
Free cash flow before dividends, financing, 13,344 62,979
acquisitions and disposal of business
Acquisition and disposal of business (1,358) (6,348)
Equity dividends paid (19,086) (18,342)
Cash (outflow)/inflow before financing (7,100) 38,289
Financing 14,301 (30,567)
Increase in cash balances 7,201 7,722
Movement in net borrowings
Cash (outflow)/inflow before financing (7,100) 38,289
Purchase of own shares (185) (211)
Exchange movements (3,080) (4,163)
(10,365) 33,915
Notes:
1. Copies of the 2004 Annual Report will be posted to the shareholders on 21
April 2005.
2. The financial information set out above does not comprise the company's
statutory accounts. It has been derived from the group's audited accounts
for the year ended 31 December 2004, which will be delivered to the
Registrar of Companies following the Annual General Meeting. The accounting
policies used to prepare these accounts are the same as those used in the
preparation of group's audited account for the year ended 31 December 2003,
which has been delivered to the Registrar of Companies. The auditors'
report was unqualified and did not contain any statement under section 237
(2) or (3) of the Companies Act 1985.
The Financial statements were approved by the Board of Directors on 3 March
2005.
YULE CATTO & COMPANY PLC
Preliminary Results for the year ended 31 December 2004
NOTES (cont'd)
3. Analysis of total turnover by activity 2004 2003
£'000 £'000
Polymer Chemicals (including joint ventures) 316,108 295,354
Pharma & Fine Chemicals 96,868 111,994
Performance Chemicals - Continuing 136,468 137,712
Performance Chemicals - Discontinued - 5,054
549,444 550,114
Analysis of operating profit by activity
Polymer Chemicals 26,907 29,608
Pharma & Fine Chemicals 16,244 36,170
Performance Chemicals - Continuing 5,418 11,504
Performance Chemicals - Discontinued - 233
Holding companies (4,608) (4,083)
Operating profit before amortisation 43,961 73,432
Analysis of total turnover by destination
United Kingdom 128,634 132,502
Other Europe 218,470 208,782
Asia 98,870 97,711
Africa and Middle East 45,863 38,245
Rest of World 57,607 72,874
549,444 550,114
2004 2003
4. Reconciliation of operating profit to net cash inflow from £'000 £'000
operating activities
Operating profit 28,492 57,985
Share of profits of joint ventures (1,956) (1,715)
26,536 56,270
Depreciation charge 22,910 23,042
Cash impact of termination of businesses (280) (590)
Amortisation of goodwill 15,469 15,447
Amortisation of investments 13 13
Amortisation of own shares held by ESOP 185 211
Increase in stocks (4,645) (5,200)
(Increase)/decrease in debtors (10,096) 15,177
(Decrease)/increase in creditors and provisions (911) 6,770
Net cash inflow from operating activities 49,181 111,140
YULE CATTO & COMPANY PLC
Preliminary Results for the year ended 31 December 2004
NOTES (cont'd)
5. Reconciliation of numbers shown in Highlights and Results Summary
2004 2003
£'000 £'000
Total operating profit 28,492 57,985
Add: depreciation 22,910 23,042
Add: amortisation of goodwill 15,469 15,447
Earnings before taxation, interest, depreciation and amortisation 66,871 96,474
Total operating profit 28,492 57,985
Add: amortisation of goodwill 15,469 15,447
Operating profit before amortisation 43,961 73,432
Profit on ordinary activities before taxation 15,542 49,185
Add: sale and termination of businesses - (2,067)
Add: (profit)/loss on disposal of fixed assets - (2,651)
Add: amortisation of goodwill 15,469 15,447
Profit before taxation + 31,011 59,914
Profit attributable to shareholders 4,626 27,798
Add: sale and termination of businesses - (2,067)
Add: profit on disposal of fixed assets - (2,651)
Add: tax on exceptional items - 1,275
Add: amortisation of goodwill 15,469 15,447
Profit after taxation and minorities + 20,095 39,802
Net cash inflow from operating activities 49,181 111,140
Dividends received from joint ventures 1,854 1,244
Net cash outflow from returns on
Investments and servicing of finance (12,453) (15,573)
Total tax paid (8,504) (14,749)
Capital expenditure and financial investment (16,734) (19,083)
Free cash flow before dividends 13,344 62,979
+ before amortisation, sale and termination of business and profit on disposal
of fixed assets
YULE CATTO & COMPANY PLC
Preliminary Results for the year ended 31 December 2004
NOTES (cont'd)
6. Adjusted earnings per share
Earnings Earnings per share
2004 2003 2004 2003
£'000 £'000 p p
Earnings - Basic 4,626 27,798 3.2 19.2
Amortisation of goodwill 15,469 15,447 10.7 10.7
Sale and termination of businesses - (2,067) - (1.4)
Profit on disposal of fixed assets - (2,651) - (1.8)
Tax on sale and termination of businesses and profit
on disposal of fixed assets
- 1,275 - 0.9
Earnings - Adjusted 20,095 39,802 13.9 27.6
The adjusted earnings per share has been calculated to allow shareholders to
gain a clearer understanding of the trading performance of the Group.
This information is provided by RNS
The company news service from the London Stock Exchange
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