· Underlying total sales* increased by 24% to £326.6m (2009: £264.3m)
· Underlying profit before taxation* increased by 26% to £24.0m (2009: £19.0m) building on the similar increase delivered in 2009
· Earnings per share* of 12.6p (2009: 10.0p), up 26%
· Net debt* £76.5m, down £11.5m from 2009 year end
· Polymer Chemicals operating profit up 19%
· Interim dividend resumed at 2p per share
· 45% of Group revenue now generated in Asia and other high growth developing countries
· Additional Polymers capacity in Asia now under construction
* Before special items, analysed in note 3 and as defined in note 15
Adrian Whitfield, Chief Executive, commented:
"The Group had an excellent first half, with strong growth in earnings driven by profits in our core Polymers Division, building further on the substantial improvements we delivered in 2009.
The Group exited the first half with firm demand across nearly all areas in the Polymer business and a strong order book in Pharma and Impact. The Board anticipates performance in the second half should continue at a broadly similar level to the first half, albeit with the usual seasonal trend.
We remain cautious regarding the wider economic outlook as global growth patterns remain mixed, with robust growth in Asia offset by weaker growth in Europe and North America. However, Yule Catto's robust financial position, strong portfolio of market leading products, and high percentage of sales into Asia and other developing economies, underpin the Board's confidence in the Group's prospects for the medium term."
26 August 2010
ENQUIRIES:
Yule Catto & Co plc |
Tel: 01279 442791 |
Adrian Whitfield, Chief Executive |
|
David Blackwood, Group Finance Director |
|
|
|
Hogarth |
Tel: 020 7357 9477 |
Andrew Jaques |
|
John Olsen |
|
Ian Payne |
|
RESULTS SUMMARY
Six months to 30 June
|
Underlying performance(a) |
|
IFRS |
||
|
2010 |
2009 |
|
2010 |
2009 |
|
Unaudited |
Unaudited |
|
Unaudited |
Unaudited |
|
£'000 |
£'000 |
|
£'000 |
£'000 |
|
|
|
|
|
|
|
|
|
|
|
|
Total sales |
326,647 |
264,299 |
|
332,336 |
269,656 |
|
|
|
|
|
|
EBITDA (b) |
36,061 |
31,277 |
|
N/A |
N/A |
Operating profit |
28,699 |
24,177 |
|
41,438 |
25,670 |
Profit before taxation |
24,049 |
19,009 |
|
40,914 |
16,116 |
|
|
|
|
|
|
Net debt (c) |
76,545 |
113,939 |
|
N/A |
N/A |
|
|
|
|
|
|
Earnings per share - continuing operations |
12.6p |
10.0p |
|
21.1p |
7.7p |
(a) Underlying performance excludes special items as shown in note 3.
(b) Operating profit before depreciation, amortisation and special items.
(c) As reconciled on the consolidated balance sheet.
Cautionary statement
This Interim Management Report (IMR) has been prepared solely to provide additional information to shareholders to assess the Group's strategies and the potential for those strategies to succeed. The IMR should not be relied on by any other party or for any other purpose.
The IMR contains certain forward-looking statements. These statements are made by the directors in good faith based on the information available to them up to the time of their approval of this report and such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward-looking information.
This IMR and the consolidated financial statements for the six months ending 30 June 2010 have been reviewed but not audited. The consolidated financial statements for the six months ending 30 June 2009 were neither audited nor reviewed.
All reference to sales and operating profit in the Chairman's statement and business review, which follows, reflect underlying performance including share of joint ventures, as per note 4, unless otherwise stated.
CHAIRMAN'S STATEMENT & BUSINESS REVIEW
Overview
The Group had an excellent first half, with underlying profit before tax and EPS up 26%. The improvement was driven by the Polymers business, now representing 86% of divisional operating profit, where operating profit increased by 19%. Pharma chemicals profit was lower, but trading improved through the half following a weak start, whilst our remaining Impact business continued to improve performance as expected.
This performance builds further on the substantial improvements we made in 2009, where we grew underlying Group PBT by some 27%.
The successful completion of the sale of our downstream adhesives business led to a further significant reduction in net debt, from £88.0 million at the end of 2009 to £76.5 million.
The Board has declared that the interim dividend will be resumed at 2.0 pence per share, in line with its commitment that the full year dividend will be no less than 5.0 pence.
Polymer Chemicals
|
H1 2010 |
H1 2009 |
FY 2009 |
Sales (£'m) |
278.8 |
217.1 |
443.3 |
Operating Profit (£'m) |
29.2 |
24.5 |
51.8 |
Polymers has manufacturing assets around the world and comprises Dispersion, Latex and various Speciality Polymers. Dispersion Polymers are principally used in surface coatings such as paint and varnish, adhesives such as wood glues and construction applications such as sealants and fillers. SBR latex is used in the manufacture of carpet floor coverings and construction materials such as speciality cement whilst NBR (nitrile) latex is mainly sold into the fast growing nitrile glove market. Speciality Polymers includes polymers to regulate PVC manufacture and sealants for the motor industry.
The division delivered good growth in the first half with revenues ahead by 28% and operating profit ahead by 19%.
Demand has been generally firm, with volumes up by over 9% and increases across all business areas other than the lower margin European compound business for the carpet sector, which remains depressed.
Volume increases were particularly strong in the high growth nitrile latex market. The Group has started construction of additional capacity for nitrile latex in its Malaysian plant, which is due on line in early 2011. Work is also in hand to increase dispersion capacity in Asia to meet growing regional demand.
Raw material input costs rose sharply over the first half of the year and the Division has worked hard to successfully recover these in the market. This will remain a core focus for the Group as prices continue to rise, albeit at a slower pace.
Pharma Chemicals
|
H1 2010 |
H1 2009 |
FY 2009 |
Sales (£'m) |
33.8 |
35.7 |
65.3 |
Operating Profit (£'m) |
3.0 |
3.7 |
5.6 |
Pharma Chemicals (Uquifa), from its manufacturing plants in Spain and Mexico, produces a range of Active Pharmaceutical Ingredients (APIs) for the generic and ethical pharmaceutical industries. These products are sold to formulators who produce and distribute the drug in its final physical form. APIs range from anti-bacterial, anti-ulcer, anti-parasitic to heart drugs. The company currently produces over 75 products.
Operating profit in the first half was lower than in the prior year, as the business experienced a weak start to the year. However, demand and profit strengthened through the half, and the business exited the period with a very strong order book.
We have formed a marketing Joint Venture with Synthetics International, a Swiss headquartered manufacturer focused predominantly on the production of ethical intermediates and API's with manufacturing in China. We believe this marketing Joint Venture will provide Uquifa with access to high quality low cost manufacturing and development whilst simultaneously allowing Synthetics customers to utilise Uquifa's extensive manufacturing and development capabilities in Spain and Mexico.
|
H1 2010 |
H1 2009 |
FY 2009 |
Sales (£'m) |
14.1 |
11.5 |
23.6 |
Operating Profit (£'m) |
1.6 |
0.9 |
2.0 |
The Group's remaining Impact Chemicals business, William Blythe, is a worldwide supplier of inorganic specialities based on copper, iodine and tin from its UK manufacturing facility. Products are used in a range of applications such as semiconductor manufacture, pharmaceutical actives, non-toxic flame retardant, safety glass coatings and catalysts.
William Blythe traded well through the first half with operating profit up by 76%, and has a strong order book as we move into the second half.
Net debt decreased from £88.0 million at the year end to £76.5 million at June 2010. The Group sold its downstream adhesives business, Revertex Finewaters in the first half. After passing the minority interest share of the consideration by dividend, the Group's effective share, net of minority interests, equated to £10.9 million, which has contributed to the reduction in net debt.
The net deficit on post retirement benefit obligations in the Group's UK scheme increased by £13.5 million to £83.5 million, reflecting an increased liability from a lower discount rate. Asset values in the scheme were broadly unchanged from the year end.
Special items and asset sales
The Group's debt includes £108 million of US private placements. These borrowings were raised in US dollars and then "swapped" into sterling using long dated cross currency swaps. Whilst the debt therefore is, economically, sterling debt, the swaps do not meet the technical requirements for hedge accounting. Consequently the Group shows the economic interest on the swapped Sterling debt in the underlying column and volatility on the mark to market on the derivatives under special items. In H1 2010 this adjustment resulted in a gain of £4.1 million (2009 loss £4.4 million), shown in special items.
The special items' operating profit of £12.7 million reflects the trading profit and gain on disposal of Revertex Finewaters Sdn Bhd, the Group's downstream adhesive business together with some minor costs of decommissioning the Italian Pharma plant, which was closed as part of the Group's 2007 restructuring programme. The Group's economic interest in Finewaters was 63%, and the gain on this disposal attributable to minority interests is also shown in the special items column.
The Group signed a conditional agreement to sell the Italian Pharma site for redevelopment for €4.6 million in August, the proceeds of which are expected to be received early in 2011. The Group has one further plot of land from its 2007 restructuring programme in Accrington, UK which it intends to dispose of when market conditions allow. Additionally the sale of a 50 acre plot for development from the 1,400 acre Malaysian palm oil plantation is expected to be completed before the year end, with proceeds to the Group of £1.4 million.
Taxation and EPS
The 2010 estimated underlying tax rate is 20%, similar to 2009.
Dividend
The interim dividend of 2.0 pence per ordinary share (2009 nil pence) will be paid on 11 November 2010 to members on the register at close of business on 15 October 2010.
Outlook
The Group exited the first half with firm demand across nearly all areas in the Polymer business and a strong order book in Pharma and Impact. The Board anticipates performance in the second half should continue at a broadly similar level to the first half, albeit with the usual seasonal trend.
We remain cautious regarding the wider economic outlook as global growth patterns remain mixed, with robust growth in Asia offset by weaker growth in Europe and North America. However, Yule Catto's robust financial position, strong portfolio of market leading products, and high percentage of sales into Asia and other developing economies, underpin the Board's confidence in the Group's prospects for the medium term.
PETER WOOD
Chairman
26 August 2010
|
|
Six months ended 30 June 2010 |
|
Six months ended 30 June 2009 |
|||||
|
|
Underlying performance |
Special items |
IFRS |
|
Underlying performance |
Special items |
IFRS |
|
|
|
£'000 |
£'000 |
£'000 |
|
£'000 |
£'000 |
£'000 |
|
|
|
Unaudited |
Unaudited |
Unaudited |
|
Unaudited |
Unaudited |
Unaudited |
|
Continuing operations |
|
|
|
|
|
|
|
|
|
Group revenue |
|
316,982 |
5,689 |
322,671 |
|
256,455 |
5,357 |
261,812 |
|
Share of joint ventures' revenue |
|
9,665 |
- |
9,665 |
|
7,844 |
- |
7,844 |
|
Total sales |
|
326,647 |
5,689 |
332,336 |
|
264,299 |
5,357 |
269,656 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group revenue |
|
316,982 |
5,689 |
322,671 |
|
256,455 |
5,357 |
261,812 |
|
|
|
|
|
|
|
|
|
|
|
Company and subsidiaries before special items |
|
27,284 |
- |
27,284 |
|
23,976 |
- |
23,976 |
|
Operations sold or closed during the period |
|
- |
12,739 |
12,739 |
|
- |
1,493 |
1,493 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company and subsidiaries |
|
27,284 |
12,739 |
40,023 |
|
23,976 |
1,493 |
25,469 |
|
Share of joint ventures |
|
1,415 |
- |
1,415 |
|
201 |
- |
201 |
|
Operating profit |
|
28,699 |
12,739 |
41,438 |
|
24,177 |
1,493 |
25,670 |
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
Interest payable |
|
(4,860) |
- |
(4,860) |
|
(5,424) |
- |
(5,424) |
|
Interest receivable |
|
210 |
- |
210 |
|
256 |
- |
256 |
|
|
|
(4,650) |
- |
(4,650) |
|
(5,168) |
- |
(5,168) |
|
Fair value adjustment |
|
- |
4,126 |
4,126 |
|
- |
(4,386) |
(4,386) |
|
Finance costs |
|
(4,650) |
4,126 |
(524) |
|
(5,168) |
(4,386) |
(9,554) |
|
|
|
|
|
|
|
|
|
|
|
Profit/(loss) before taxation |
|
24,049 |
16,865 |
40,914 |
|
19,009 |
(2,893) |
16,116 |
|
Taxation |
|
(4,809) |
(225) |
(5,034) |
|
(3,715) |
(224) |
(3,939) |
|
Profit/(loss) for the year from continuing operations |
|
19,240 |
16,640 |
35,880 |
|
15,294 |
(3,117) |
12,177 |
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations |
|
|
|
|
|
|
|
|
|
Loss/profit for the year from discontinued operations |
|
- |
- |
- |
|
- |
3,233 |
3,233 |
|
Profit for the year |
|
19,240 |
16,640 |
35,880 |
|
15,294 |
116 |
15,410 |
|
|
|
|
|
|
|
|
|
|
|
Profit attributable to minority interests |
|
866 |
4,236 |
5,102 |
|
668 |
248 |
916 |
|
Profit/(loss) attributable to equity holders of the parent |
|
18,374 |
12,404 |
30,778 |
|
14,626 |
(132) |
14,494 |
|
|
|
19,240 |
16,640 |
35,880 |
|
15,294 |
116 |
15,410 |
|
|
|
|
|
|
|
|
|
|
|
Earnings per share |
|
|
|
|
|
|
|
|
|
From continuing operations |
|
|
|
|
|
|
|
|
|
Basic |
|
12.6p |
8.5p |
21.1p |
|
10.0p |
(2.3)p |
7.7p |
|
Diluted |
|
12.3p |
8.3p |
20.6p |
|
9.8p |
(2.2)p |
7.6p |
|
|
|
|
|
|
|
|
|
|
|
From continuing and discontinued operations |
|
|
|
|
|
|
|
||
Basic |
12.6p |
8.5p |
21.1p |
|
10.0p |
(0.1)p |
9.9p |
||
Diluted |
12.3p |
8.3p |
20.6p |
|
9.8p |
(0.1)p |
9.7p |
||
Special items
The special items are shown in more detail in note 3.
|
|
Year ended 31 December 2009 |
|
|||
|
|
Underlying performance |
Special items |
IFRS |
|
|
|
|
£'000 |
£'000 |
£'000 |
|
|
|
|
audited |
audited |
audited |
|
|
Continuing operations |
|
|
|
|
|
|
Group revenue |
|
516,712 |
11,236 |
527,948 |
|
|
Share of joint ventures' revenue |
|
15,450 |
- |
15,450 |
|
|
Total sales |
|
532,162 |
11,236 |
543,398 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group revenue |
|
516,712 |
11,236 |
527,948 |
|
|
|
|
|
|
|
|
|
Company and subsidiaries before special items |
|
48,174 |
- |
48,174 |
|
|
Operations sold or closed during the period |
|
- |
1,990 |
1,990 |
|
|
Impairment of goodwill |
|
- |
(30,000) |
(30,000) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company and subsidiaries |
|
48,174 |
(28,010) |
20,164 |
|
|
Share of joint ventures |
|
1,242 |
- |
1,242 |
|
|
Operating profit/(loss) |
|
49,416 |
(28,010) |
21,406 |
|
|
|
||||||
|
|
|
|
|
|
|
Interest payable |
|
(10,308) |
- |
(10,308) |
|
|
Interest receivable |
|
439 |
- |
439 |
|
|
|
|
(9,869) |
- |
(9,869) |
|
|
Fair value adjustment |
|
- |
(4,401) |
(4,401) |
|
|
Finance costs |
|
(9,869) |
(4,401) |
(14,270) |
|
|
|
|
|
|
|
|
|
Profit/(loss) before taxation |
|
39,547 |
(32,411) |
7,136 |
|
|
Taxation |
|
(7,981) |
9,065 |
1,084 |
|
|
Profit/(loss) for the year from continuing operations |
|
31,566 |
(23,346) |
8,220 |
|
|
|
|
|
|
|
|
|
Discontinued operations |
|
|
|
|
|
|
Profit for the year from discontinued operations |
|
- |
3,668 |
3,668 |
|
|
Profit/(loss) for the year |
|
31,566 |
(19,678) |
11,888 |
|
|
|
|
|
|
|
|
|
Profit attributable to minority interests |
|
1,572 |
630 |
2,202 |
|
|
Profit/(loss) attributable to equity holders of the parent |
|
29,994 |
(20,308) |
9,686 |
|
|
|
|
31,566 |
(19,678) |
11,888 |
|
|
|
|
|
|
|
|
|
Earnings per share |
|
|
|
|
|
|
From continuing operations |
|
|
|
|
|
|
Basic |
|
20.6p |
(16.5)p |
4.1p |
|
|
Diluted |
|
20.1p |
(16.1)p |
4.0p |
|
|
|
|
|
|
|
|
|
From continuing and discontinued operations |
|
|
|
|
||
Basic |
20.6p |
(14.0)p |
6.6p |
|
||
Diluted |
20.1p |
(13.6)p |
6.5p |
|
||
Special items
The special items are shown in more detail in note 3.
|
|
Six months ended 30 June 2010 |
|
Six months ended 30 June 2009 |
||||
|
|
Minority interests |
Equity holders of the parent |
Total |
|
Minority interests |
Equity holders of the parent |
Total |
|
|
Unaudited |
Unaudited |
Unaudited |
|
Unaudited |
Unaudited |
Unaudited |
|
|
£'000 |
£'000 |
£'000 |
|
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
|
|
Profit for the year |
|
5,102 |
30,778 |
35,880 |
|
916 |
14,494 |
15,410 |
Actuarial gains and losses |
|
- |
(18,402) |
(18,402) |
|
- |
(13,697) |
(13,697) |
Gains/(losses) on a hedge of a net investment taken to equity |
|
- |
3,597 |
3,597 |
|
- |
1,726 |
1,726 |
Gains on cash flow hedges arising during the period |
|
- |
- |
- |
|
- |
374 |
374 |
Exchange differences on translation of foreign operations |
|
131 |
(1,960) |
(1,829) |
|
(2,267) |
(14,021) |
(16,288) |
Other comprehensive income for the period |
|
131 |
(16,765) |
(16,634) |
|
(2,267) |
(25,618) |
(27,885) |
Total comprehensive income for the period |
|
5,233 |
14,013 |
19,246 |
|
(1,351) |
(11,124) |
(12,475) |
|
|
Year ended 31 December 2009 |
|
||
|
|
Minority interests |
Equity holders of the parent |
Total |
|
|
|
Audited |
Audited |
Audited |
|
|
|
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
Profit for the year |
|
2,202 |
9,686 |
11,888 |
|
Actuarial gains and losses |
|
- |
(12,619) |
(12,619) |
|
Losses on a hedge of a net investment taken to equity |
|
- |
(253) |
(253) |
|
Gains/(losses) on cash flow hedges arising during the period |
|
- |
(678) |
(678) |
|
Exchange differences on translation of foreign operations |
|
(825) |
(6,933) |
(7,758) |
|
Tax relating to components of other comprehensive income |
|
- |
306 |
306 |
|
Other comprehensive income for the period |
|
(825) |
(20,177) |
(21,002) |
|
Total comprehensive income for the period |
|
1,377 |
(10,491) |
(9,114) |
|
|
Share capital |
Share premium |
Capital redemption reserve |
Own Shares |
Hedging and translation reserve |
Cash flow hedging reserve |
Minority interest |
Retained earnings |
Total |
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
|
|
|
At 1 January 2010 |
14,566 |
33,034 |
949 |
- |
(934) |
- |
6,903 |
19 |
54,537 |
Profit for the period |
- |
- |
- |
- |
- |
- |
5,102 |
30,778 |
35,880 |
Other comprehensive income for the period |
- |
- |
- |
- |
1,637 |
- |
131 |
(18,402) |
(16,634) |
Total comprehensive income for the period |
- |
- |
- |
- |
1,637 |
- |
5,233 |
12,376 |
19,246 |
Dividends paid |
- |
- |
- |
- |
- |
- |
(5,786) |
- |
(5,786) |
Issue of share capital |
- |
- |
- |
- |
- |
- |
135 |
- |
135 |
At 30 June 2010 (Unaudited) |
14,566 |
33,034 |
949 |
- |
703 |
- |
6,485 |
12,395 |
68,132 |
|
Share capital |
Share premium |
Capital redemption reserve |
Own Shares |
Hedging and translation reserve |
Cash flow hedging reserve |
Minority interest |
Retained earnings |
Total |
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
|
|
|
At 1 January 2009 |
14,566 |
33,034 |
949 |
- |
6,252 |
678 |
9,157 |
2,056 |
66,692 |
Profit for the period |
- |
- |
- |
- |
- |
- |
916 |
14,494 |
15,410 |
Other comprehensive income for the period |
- |
- |
- |
- |
(12,295) |
374 |
(2,267) |
(13,697) |
(27,885) |
Total comprehensive income for the period |
- |
- |
- |
- |
(12,295) |
374 |
(1,351) |
797 |
(12,475) |
Dividends paid |
- |
- |
- |
- |
- |
- |
(555) |
- |
(555) |
At 30 June 2009 (Unaudited) |
14,566 |
33,034 |
949 |
- |
(6,043) |
1,052 |
7,251 |
2,853 |
53,662 |
|
Share capital |
Share premium |
Capital redemption reserve |
Own Shares |
Hedging and translation reserve |
Cash flow hedging reserve |
Minority interest |
Retained earnings |
Total |
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
|
|
|
At 1 January 2009 |
14,566 |
33,034 |
949 |
- |
6,252 |
678 |
9,157 |
2,056 |
66,692 |
Profit for the period |
- |
- |
- |
- |
- |
- |
2,202 |
9,686 |
11,888 |
Other comprehensive income for the period |
- |
- |
- |
- |
(7,186) |
(678) |
(825) |
(12,313) |
(21,002) |
Total comprehensive income for the period |
- |
- |
- |
- |
(7,186) |
(678) |
1,377 |
(2,627) |
(9,114) |
Dividends paid |
- |
- |
- |
- |
- |
- |
(3,631) |
- |
(3,631) |
Shares purchased by ESOP trust |
- |
- |
- |
47 |
- |
- |
- |
- |
47 |
Share-based payments |
- |
- |
- |
(47) |
- |
- |
- |
590 |
543 |
At 31 December 2009 (Audited) |
14,566 |
33,034 |
949 |
- |
(934) |
- |
6,903 |
19 |
54,537 |
|
30 June 2010 |
|
30 June 2009 |
|
31 December 2009 |
|
Unaudited |
|
Unaudited |
|
Audited |
|
£'000 |
|
£'000 |
|
£'000 |
Non-current assets |
|
|
|
|
|
Goodwill |
124,027 |
|
154,027 |
|
124,027 |
Other intangible assets |
482 |
|
715 |
|
604 |
Property, plant and equipment |
99,623 |
|
101,660 |
|
103,815 |
Deferred tax assets |
1,069 |
|
457 |
|
1,139 |
Investment in joint ventures |
4,398 |
|
4,541 |
|
3,798 |
|
229,599 |
|
261,400 |
|
233,383 |
Current assets |
|
|
|
|
|
Inventories |
57,576 |
|
49,399 |
|
56,145 |
Trade and other receivables |
124,448 |
|
103,751 |
|
99,006 |
Cash and cash equivalents |
52,162 |
|
40,270 |
|
42,384 |
Derivatives at fair value |
23,026 |
|
9,176 |
|
11,763 |
Total current assets |
257,212 |
|
202,596 |
|
209,298 |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Borrowings |
(39,141) |
|
(36,078) |
|
(38,924) |
Trade and other payables |
(140,776) |
|
(111,065) |
|
(125,609) |
Current tax liability |
(32,942) |
|
(47,104) |
|
(34,556) |
Total current liabilities |
(212,859) |
|
(194,247) |
|
(199,089) |
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
Borrowings |
(106,125) |
|
(123,726) |
|
(101,106) |
Trade and other payables |
(319) |
|
(213) |
|
(216) |
Deferred tax liability |
(8,414) |
|
(6,032) |
|
(9,044) |
Post retirement benefit obligations |
(90,962) |
|
(86,116) |
|
(78,689) |
|
(205,820) |
|
(216,087) |
|
(189,055) |
|
|
|
|
|
|
Net assets |
68,132 |
|
53,662 |
|
54,537 |
|
|
|
|
|
|
Equity |
|
|
|
|
|
Called up share capital |
14,566 |
|
14,566 |
|
14,566 |
Share premium |
33,034 |
|
33,034 |
|
33,034 |
Capital redemption reserve |
949 |
|
949 |
|
949 |
Hedging and translation reserve |
703 |
|
(6,043) |
|
(934) |
Cash flow hedging reserve |
- |
|
1,052 |
|
- |
Retained earnings |
12,395 |
|
2,853 |
|
19 |
Equity attributable to equity holders of the parent |
61,647 |
|
46,411 |
|
47,634 |
Minority interests |
6,485 |
|
7,251 |
|
6,903 |
Total equity |
68,132 |
|
53,662 |
|
54,537 |
|
|
|
|
|
|
Analysis of net borrowing |
|
|
|
|
|
Cash and cash equivalents |
52,162 |
|
40,270 |
|
42,384 |
Current borrowings |
(39,141) |
|
(36,078) |
|
(38,924) |
Non-current borrowings |
(106,125) |
|
(123,726) |
|
(101,106) |
Net borrowings |
(93,104) |
|
(119,534) |
|
(97,646) |
Deduct: special items |
16,559 |
|
5,595 |
|
9,608 |
Net debt |
(76,545) |
|
(113,939) |
|
(88,038) |
The Group's US private placement US dollar term debt was economically hedged from dollars into sterling using long dated cross currency swaps at the date it was borrowed. The US dollar term debt is shown at the 30 June 2010 spot rate in net borrowing and the special item reconciling net borrowings to net debt is the mark to market of the currency element of these swaps which hedges this US dollar term debt
The financial statements were approved by the Board of Directors and authorised for issue on 26 August 2010.
|
Six months ended 30 June 2010 |
|
Six months ended 30 June 2009 |
|
Year ended 31 December 2009 |
||||
|
Unaudited |
Unaudited |
|
Unaudited |
Unaudited |
|
Audited |
Audited |
|
|
£'000 |
£'000 |
|
£'000 |
£'000 |
|
£'000 |
£'000 |
|
Operating |
|
|
|
|
|
|
|
|
|
Cash generated from operations |
|
15,596 |
|
|
23,173 |
|
|
64,499 |
|
Interest received |
210 |
|
|
256 |
|
|
439 |
|
|
Interest paid |
(4,758) |
|
|
(5,726) |
|
|
(10,959) |
|
|
Net interest paid |
|
(4,548) |
|
|
(5,470) |
|
|
(10,520) |
|
UK corporation tax paid |
(19) |
|
|
(255) |
|
|
(139) |
|
|
Overseas corporate tax paid |
(5,620) |
|
|
(2,189) |
|
|
(6,673) |
|
|
Total tax paid |
|
(5,639) |
|
|
(2,444) |
|
|
(6,812) |
|
Net cash inflow from operating activities |
|
5,409 |
|
|
15,259 |
|
|
47,167 |
|
|
|
|
|
|
|
|
|
|
|
Investing |
|
|
|
|
|
|
|
|
|
Dividends received from joint ventures |
|
130 |
|
|
111 |
|
|
1,899 |
|
Purchase of property, plant and equipment |
(4,568) |
|
|
(4,818) |
|
|
(8,687) |
|
|
Sale of property, plant and equipment |
- |
|
|
2,124 |
|
|
2,253 |
|
|
Net capital expenditure and financial investment |
|
(4,568) |
|
|
(2,694) |
|
|
(6,434) |
|
Sale of businesses |
16,236 |
|
|
8,760 |
|
|
8,760 |
|
|
Net cash impact of acquisitions and disposals |
|
16,236 |
|
|
8,760 |
|
|
8,760 |
|
Net cash inflow from investing activities |
|
11,798 |
|
|
6,177 |
|
|
4,225 |
|
|
|
|
|
|
|
|
|
|
|
Financing |
|
|
|
|
|
|
|
|
|
Dividends paid to minority interests |
|
(5,786) |
|
|
(555) |
|
|
(3,631) |
|
Investment by minority shareholder |
|
135 |
|
|
- |
|
|
- |
|
Purchase of own shares |
|
- |
|
|
- |
|
|
(47) |
|
Repayment of borrowings |
|
- |
|
|
- |
|
|
(33,472) |
|
Proceeds of non-current borrowings |
|
1,902 |
|
|
(701) |
|
|
19,740 |
|
Net cash outflow from financing activities |
|
(3,749) |
|
|
(1,256) |
|
|
(17,410) |
|
|
|
|
|
|
|
|
|
|
|
Increase in cash and bank overdrafts during the year |
|
13,458 |
|
|
20,180 |
|
|
33,982 |
|
|
|
|
|
|
|
|
|
|
|
Comprised of: |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
10,655 |
|
|
7,375 |
|
|
20,157 |
|
Bank overdrafts |
|
2,803 |
|
|
12,805 |
|
|
13,825 |
|
|
|
13,458 |
|
|
20,180 |
|
|
33,982 |
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended 30 June 2010 |
|
Six months ended 30 June 2009 |
|
Year ended 31 December 2009 |
|
Unaudited |
|
Unaudited |
|
Audited |
|
£'000 |
|
£'000 |
|
£'000 |
|
|
|
|
|
|
Net cash inflow from operating activities |
5,409 |
|
15,259 |
|
47,167 |
Dividends received from joint ventures |
130 |
|
111 |
|
1,899 |
Net capital expenditure and financial investment |
(4,568) |
|
(2,694) |
|
(6,434) |
Dividends paid to minority interests |
(5,786) |
|
(555) |
|
(3,631) |
Free cash flow |
(4,815) |
|
12,121 |
|
39,001 |
|
|
|
|
|
|
Net cash impact of acquisitions and disposals |
16,236 |
|
8,760 |
|
8,760 |
Investment by minority shareholder |
135 |
|
- |
|
- |
Purchase of own shares |
- |
|
- |
|
(47) |
Exchange movements |
(63) |
|
662 |
|
(270) |
Movement in net debt |
11,493 |
|
21,543 |
|
47,444 |
NOTES TO THE FINANCIAL STATEMENTS
The information for the year ended 31 December 2009 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditors' report on those accounts was not qualified and did not contain statements under section 498(2) or (3) of the Companies Act 2006.
The annual financial statements of Yule Catto & Co plc are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in the half-yearly financial report has been prepared in accordance with International Accounting Standards 34 'Interim Financial Reporting', as adopted by the European Union. The same accounting policies and methods of computations are followed in the interim financial statements as in the most recent annual financial statements.
Having regard to the financial position and future prospects of the Group, the directors have concluded that the Group is a going concern and have prepared these financial statements on that basis.
The special items disclosed are made up as follows:
|
Six months ended 30 June 2010 |
|
Six months ended 30 June 2009 |
|
Year ended 31 December 2009 |
|
£'000 |
|
£'000 |
|
£'000 |
|
Unaudited |
|
Unaudited |
|
Audited |
Continuing operations |
|
|
|
|
|
Total sales |
|
|
|
|
|
Revenue of operations sold or closed during the period |
5,689 |
|
5,357 |
|
11,236 |
|
|
|
|
|
|
Operating profit/(loss) |
|
|
|
|
|
Operating profit of operations sold or closed during the period |
468 |
|
1,493 |
|
1,990 |
Profit arising from the sale or closure of operations |
12,271 |
|
- |
|
- |
Operations sold or closed during the period |
12,739 |
|
1,493 |
|
1,990 |
Impairment of goodwill |
- |
|
- |
|
(30,000) |
|
|
|
|
|
|
Finance costs |
|
|
|
|
|
Fair value adjustment |
4,126 |
|
(4,386) |
|
(4,401) |
Profit/(loss) before taxation from continuing operations |
16,865 |
|
(2,893) |
|
(32,411) |
Taxation |
(225) |
|
(224) |
|
9,065 |
Profit/(loss) for the year from continuing operations |
16,640 |
|
(3,117) |
|
(23,346) |
|
|
|
|
|
|
Discontinued operations |
|
|
|
|
|
Total sales |
|
|
|
|
|
Revenue of operations sold or closed during the period |
- |
|
772 |
|
772 |
|
|
|
|
|
|
Operating profit of discontinued operations |
|
|
|
|
|
Operating profit of operations sold or closed during the period |
- |
|
22 |
|
22 |
Profit arising from the sale or closure of operations |
- |
|
4,315 |
|
3,652 |
|
- |
|
4,337 |
|
3,674 |
|
|
|
|
|
|
Taxation |
|
|
|
|
|
Taxation on operating profit of operations sold or closed during the year |
- |
|
- |
|
(6) |
Taxation on profit arising from the sale or closure of operations |
- |
|
(1,104) |
|
- |
Profit/(loss) for the year from discontinued operations |
- |
|
3,233 |
|
3,668 |
|
Total sales |
|
Operating profit |
||||
|
Underlying performance |
Special items |
IFRS |
|
Underlying performance |
Special items |
IFRS |
|
£'000 |
£'000 |
£'000 |
|
£'000 |
£'000 |
£'000 |
30 June 2010 |
|
|
|
|
|
|
|
Analysis by activity |
|
|
|
|
|
|
|
Continuing activity |
|
|
|
|
|
|
|
Polymer Chemicals |
269,090 |
5,689 |
274,779 |
|
27,743 |
13,161 |
40,904 |
Share of Polymer joint ventures |
9,665 |
- |
9,665 |
|
1,415 |
- |
1,415 |
|
278,755 |
5,689 |
284,444 |
|
29,158 |
13,161 |
42,319 |
|
|
|
|
|
|
|
|
Pharma Chemicals |
33,802 |
- |
33,802 |
|
2,969 |
(422) |
2,547 |
Impact Chemicals |
14,090 |
- |
14,090 |
|
1,574 |
- |
1,574 |
Total sales |
326,647 |
5,689 |
332,336 |
|
|
|
|
Divisional operating profit |
|
|
|
|
33,701 |
12,739 |
46,440 |
Unallocated corporate expenses |
|
|
|
|
(5,002) |
- |
(5,002) |
Operating profit |
|
|
|
|
28,699 |
12,739 |
41,438 |
|
Total sales |
|
Operating profit |
||||
|
Underlying performance |
Special items |
IFRS |
|
Underlying performance |
Special items |
IFRS |
|
£'000 |
£'000 |
£'000 |
|
£'000 |
£'000 |
£'000 |
30 June 2009 |
|
|
|
|
|
|
|
Analysis by activity |
|
|
|
|
|
|
|
Continuing activity |
|
|
|
|
|
|
|
Polymer Chemicals |
209,211 |
5,357 |
214,568 |
|
24,299 |
894 |
25,193 |
Share of Polymer joint ventures |
7,844 |
- |
7,844 |
|
201 |
- |
201 |
|
217,055 |
5,357 |
222,412 |
|
24,500 |
894 |
25,394 |
|
|
|
|
|
|
|
|
Pharma Chemicals |
35,705 |
- |
35,705 |
|
3,677 |
599 |
4,276 |
Impact Chemicals |
11,539 |
- |
11,539 |
|
895 |
- |
895 |
Total sales |
264,299 |
5,357 |
269,656 |
|
|
|
|
Divisional operating profit |
|
|
|
|
29,072 |
1,493 |
30,565 |
Unallocated corporate expenses |
|
|
|
|
(4,895) |
- |
(4,895) |
Operating profit |
|
|
|
|
24,177 |
1,493 |
25,670 |
|
Total sales |
|
Operating profit |
||||
|
Underlying performance |
Special items |
IFRS |
|
Underlying performance |
Special items |
IFRS |
|
£'000 |
£'000 |
£'000 |
|
£'000 |
£'000 |
£'000 |
31 December 2009 |
|
|
|
|
|
|
|
Analysis by activity |
|
|
|
|
|
|
|
Continuing activity |
|
|
|
|
|
|
|
Polymer Chemicals |
427,862 |
11,236 |
439,098 |
|
50,520 |
1,990 |
52,510 |
Share of Polymer joint ventures |
15,450 |
- |
15,450 |
|
1,242 |
- |
1,242 |
|
443,312 |
11,236 |
454,548 |
|
51,762 |
1,990 |
53,752 |
|
|
|
|
|
|
|
|
Pharma Chemicals |
65,296 |
- |
65,296 |
|
5,571 |
(30,000) |
(24,429) |
Impact Chemicals |
23,554 |
- |
23,554 |
|
1,967 |
- |
1,967 |
Total sales |
532,162 |
11,236 |
543,398 |
|
|
|
|
Divisional operating profit |
|
|
|
|
59,300 |
(28,010) |
31,290 |
Unallocated corporate expenses |
|
|
|
|
(9,884) |
- |
(9,884) |
Operating profit |
|
|
|
|
49,416 |
(28,010) |
21,406 |
|
|
Six months ended 30 June 2010 |
|
Six months ended 30 June 2009 |
|
Year ended 31 December 2009 |
|
|
Unaudited |
|
Unaudited |
|
Audited |
|
|
£'000 |
|
£'000 |
|
£'000 |
Profit/(loss) arising from the sale or closure of operations |
|
|
|
|
|
|
Continuing Operations |
|
|
|
|
|
|
Sale of Revertex Finewaters Sdn Bhd |
|
12,271 |
|
- |
|
- |
|
|
12,271 |
|
- |
|
- |
|
|
|
|
|
|
|
Discontinued Operations |
|
|
|
|
|
|
Costs associated with prior year disposals |
|
- |
|
- |
|
(663) |
Sale of Oxford Chemicals |
|
- |
|
3,944 |
|
3,944 |
Write back of excess provision of Holliday Encres SA |
|
- |
|
371 |
|
371 |
|
|
- |
|
4,315 |
|
3,652 |
|
|
12,271 |
|
4,315 |
|
3,652 |
|
Six months ended 30 June 2010 |
|
Six months ended 30 June 2009 |
|
Year ended 31 December 2009 |
|
Unaudited |
|
Unaudited |
|
Audited |
|
£'000 |
|
£'000 |
|
£'000 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit - continuing operations |
41,438 |
|
25,670 |
|
21,406 |
Operating profit for the year from discontinued operations |
- |
|
4,337 |
|
3,674 |
Less: share of profit of joint ventures |
(1,415) |
|
(201) |
|
(1,242) |
|
40,023 |
|
29,806 |
|
23,838 |
|
|
|
|
|
|
Depreciation and amortisation |
7,362 |
|
7,100 |
|
14,771 |
Impairment of goodwill |
- |
|
- |
|
30,000 |
Profit arising from the sale or closure of operations |
(11,849) |
|
(4,914) |
|
(3,652) |
Loss / (profit) on sale of fixed assets |
9 |
|
96 |
|
(76) |
Share based payments |
- |
|
- |
|
(1,306) |
Cash impact of termination of businesses |
(1,057) |
|
(657) |
|
(3,591) |
Pension funding in excess of IAS 19 charge |
(5,676) |
|
(3,140) |
|
(10,678) |
(Increase) / decrease in inventories |
(2,451) |
|
9,295 |
|
4,690 |
(Increase) / decrease in trade and other receivables |
(28,595) |
|
11,783 |
|
20,779 |
Increase / (decrease) in trade and other payables |
17,830 |
|
(26,196) |
|
(10,276) |
|
|
|
|
|
|
Cash generated from operations |
15,596 |
|
23,173 |
|
64,499 |
|
|
|
|
|
|
7. Tax
Tax on the underlying profit before taxation for the six month period is charged at 20% (six months ended 30 June 2009: 20%; year ended 31 December 2009: 20%), representing the best estimate of the average annual effective income tax rate expected for the full year. Inclusion of the best estimate for the tax charge on the special items profit before taxation results in a tax rate of 12% (six months ended 30 June 2009: 24%; year ended 31 December 2009: 15% credit), on the IFRS profit before taxation for continuing operations.
The interim dividend of 2p per share was approved by the Board on 26 August 2010.
|
|
Six months ended 30 June 2010 |
|
Six months ended 30 June 2009 |
||||
|
|
Underlying performance |
Special items |
IFRS |
|
Underlying performance |
Special items |
IFRS |
|
|
£'000 |
£'000 |
£'000 |
|
£'000 |
£'000 |
£'000 |
From continuing operations |
|
|
|
|
|
|
|
|
Earnings (Profit attributable to equity holders of the parent) |
|
18,374 |
12,404 |
30,778 |
|
14,626 |
(3,365) |
11,261 |
Earnings per share |
|
12.6p |
8.5p |
21.1p |
|
10.0p |
(2.3)p |
7.7p |
Diluted earnings per share |
|
12.3p |
8.3p |
20.6p |
|
9.8p |
(2.2)p |
7.6p |
|
|
|
|
|
|
|
|
|
From continuing and discontinuing operations |
|
|
|
|
|
|
|
|
Earnings (Profit attributable to equity holders of the parent) |
|
18,374 |
12,404 |
30,778 |
|
14,626 |
(132) |
14,494 |
Earnings per share |
|
12.6p |
8.5p |
21.1p |
|
10.0p |
(0.1)p |
9.9p |
Diluted earnings per share |
|
12.3p |
8.3p |
20.6p |
|
9.8p |
(0.1)p |
9.7p |
|
|
|
|
|
|
|
|
|
|
|
Year ended 31 December 2009 |
||
|
|
Underlying performance |
Special items |
IFRS |
|
|
£'000 |
£'000 |
£'000 |
From continuing operations |
|
|
|
|
Earnings (Profit attributable to equity holders of the parent) |
|
29,994 |
(23,976) |
6,018 |
Earnings per share |
|
20.6p |
(16.5)p |
4.1p |
Diluted earnings per share |
|
20.1p |
(16.1)p |
4.0p |
|
|
|
|
|
From continuing and discontinued operations |
|
|
|
|
Earnings (Profit attributable to equity holders of the parent) |
|
29,994 |
(20,308) |
9,686 |
Earnings per share |
|
20.6p |
(14.0)p |
6.6p |
Diluted earnings per share |
|
20.1p |
(13.6)p |
6.5p |
Diluted per share are calculated using the weighted average number of shares in issue in the period as adjusted for dilutive share options of 149.4 million (six months ended 30 June 2009: 149.4 million, year ended 31 December 2009: 149.4 million).
The defined benefit plan assets have been updated to reflect their market value as at the 30 June 2010. Differences between the expected return on assets and the actual return on assets have been recognised as an actuarial gain or loss in the Statement of Comprehensive Income in accordance with the Group's accounting policy.
The Group disposed of the following interest during the six months ended 30 June 2010:
Company name: |
Date of sale: |
Purchaser: |
Division: |
Sale type: |
Revertex Finewaters Sdn Bhd |
2 June 2010 |
Third party trade |
Polymer Chemicals |
Share |
The net assets of the company at the date of disposal were as follows:
|
|
|
Revertex Finewaters Sdn Bhd |
|
|
|
£'000 |
|
|
|
|
Property, plant and equipment |
|
|
1,713 |
Inventories |
|
|
1,316 |
Trade receivables |
|
|
3,440 |
Net borrowing |
|
|
386 |
Deferred tax liability |
|
|
(140) |
Current tax liability |
|
|
(92) |
Trade payables |
|
|
(2,774) |
|
|
|
3,849 |
Less minority interest |
|
|
(384) |
|
|
|
3,465 |
|
|
|
|
Profit on disposal |
|
|
12,271 |
Total consideration |
|
|
15,736 |
|
|
|
|
Satisfied by: |
|
|
|
Cash (net of disposal costs) |
|
|
16,236 |
Accrued costs of disposal |
|
|
(500) |
|
|
|
15,736 |
The impact of this disposal on the Group's results in the current period and prior periods is disclosed in note 3.
The risks include those arising from reduced demand for the Group's products, market competition, legal, export, environmental or other regulatory matters, plant failure, contracts, retirement benefit plan funding and supply chain management together with credit risk, interest rate and exchange rate risk.
The financial information for the year ended 31 December 2009 has been extracted from the statutory accounts, which have been filed with the Registrar of Companies. The auditors' report on those accounts was unqualified and did not contain any statement under section 498(2) or (3) of the Companies Act 2006.
The financial statements were approved by the Board of Directors on 26 August 2010.
This statement can be obtained by the public from the Company's registered office at Temple Fields, Harlow, Essex, CM20 2BH, or on the company website www.yulecatto.com.
Total sales |
Total sales represent the total of revenue from Yule Catto & Co plc, its subsidiaries, and its share of the revenue of joint ventures.
|
EBITDA |
EBITDA is calculated as operating profit before depreciation, amortisation and special items.
|
Operating profit |
Operating profit represents profit from continuing activities before finance costs and taxation.
|
Non-recurring items |
Non-recurring items are defined as: · Profit or loss impact arising from the sale or closure of an operation; · Impairment of non-current assets; and · Other non-operating or one-off items.
|
Special items |
The following are disclosed separately as special items in order to provide a clearer indication of the Group's underlying performance: · Non-recurring items; · Mark to market adjustments in respect of cross currency and interest rate derivatives used for hedging purposes where IAS 39 hedge accounting is not applied; · Revaluation of US dollar loan notes from the rate of the related cross currency swaps to the year end rate; and · The transitional adjustment required to reflect movements in fair value caused by variations in interest rates, and subsequent amortisation thereof, to the extent that these constituted effective hedges under UK GAAP.
|
Underlying performance |
Underlying performance represents the statutory performance of the Group under IFRS, excluding special items.
|
Free cash flow |
Free cash flow represents cash flow before cash impact of acquisitions and disposals, purchase and issue of own shares, equity dividends paid and exchange movements.
|
Net debt |
Net debt represents cash and cash equivalents together with short and long term borrowings, as adjusted for the effect of related derivative instruments irrespective of whether they qualify for hedge accounting. |
Responsibility statement
We confirm that to the best of our knowlege:
- The condensed set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting';
- The interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and
- The interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties' transactions and changes therein).
By order of the Board
A M Whitfield D C Blackwood
Chief Executive Group Finance Director
26 August 2010
INDEPENDENT REVIEW REPORT TO YULE CATTO & CO PLC
We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2010 which comprises the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of changes in equity, the consolidated balance sheet and the consolidated cash flow statement and related notes 1 to 15. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the Company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the Company those matters we are required to state to them in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our review work, for this report, or for the conclusions we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.
As disclosed in note 2, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting," as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.
Scope of Review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2010 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.
Deloitte LLP
Chartered Accountants and Statutory Auditors
Cambridge, United Kingdom
26 August 2010