Final Results - Year Ended 31 December 1999

Ascot PLC 20 March 2000 Contact Howard Dyer, Executive Chairman Martin Rogers, Finance Director Ascot Plc 020 7815 0805 David Bick Holborn Public Relations 020 7929 5599 david_bick@holbornpr.co.uk ASCOT PLC Preliminary Results for the year ended 31 December 1999 Highlights * Record profits - operating profit (before goodwill amortisation), of £41.4m up 37% * Diluted earnings per share, before exceptional items and goodwill amortisation, up 16% * Dividend increased by 14% * Focus on chemicals * Remaining 70% of ChiroTech purchased for £54m * Record year for Haltermann, purchased in December 1998 * Purchase of Specified Fuels & Chemicals since year end * Divestment of surplus assets Commenting, Ascot's Executive Chairman, Howard Dyer, said:- '1999 saw a record financial performance. During the year Ascot was reshaped into a Chemicals Group. Ascot has two world leading businesses with strong roots in outsourcing. We have created excellent businesses in growing markets and our objective is to build upon these businesses. The divestment of our surplus assets provides additional cash for future investment.' CHAIRMAN'S STATEMENT 1999 SAW A RECORD FINANCIAL PERFORMANCE We achieved a record operating profit of £41.4m, up 37% from £30.2m, before goodwill amortisation of £4.7m (1998 : £0.5m). Adjusted, diluted earnings per share rose 16% from 30.0p to 34.9p. Sales rose by 68% from £185.6m to £311.9m. Pre-tax profit of £29.9m was 11% higher than last year, after goodwill amortisation of £4.7m, a net exceptional gain of £0.4m and interest costs of £7.2m. Our growth was achieved without recourse to shareholders. Net debt increased from £141.9m to £190.1m which we believe to be comfortable in terms of interest cover of 5.8 times and surplus assets earmarked for sale. The Board proposes a final dividend of 8.5p, making a total for the year of 12.5p, an increase of 14%. The proposed full year dividend is covered 2.8 times by earnings before exceptional items. If approved, the dividend will be paid on 3 July 2000 to shareholders on the register at the close of business on 16 June 2000. DURING THE YEAR ASCOT WAS RESHAPED The £54m cash purchase in October of the remaining 70% of ChiroTech reinforced Ascot's recent move into fine and speciality chemicals. We are now a Chemicals Group deriving two thirds of our profits from this sector. The Haltermann Group, which was acquired in December 1998, was successfully integrated with Chemoxy and Pentagon. Adding ChiroTech was doubly synergistic - the common ownership of ChiroTech and Mitchell Cotts strengthens Mitchell Cotts' manufacturing pipeline and provides ChiroTech with a manufacturing capability that its pharmaceutical customers will value. Ascot now has two world leading businesses with strong roots in outsourcing - a market forecast to grow at around 15% per annum in fine chemicals and at around 4% per annum in speciality chemicals. We intend to divest our specialist engineering businesses and continue our programme of selling our remaining surplus property assets. The divestment of our surplus assets provides additional cash for future investment. We have created excellent businesses in growing markets and our objective is to build upon these businesses. KEY EVENTS In its first year within the Group, Haltermann far exceeded previous levels of profit. We invested in additional technology and capacity at Houston, and established a new trading and distribution company in Norway to complement Haltermann's Danish and Swedish operations. In our fine chemicals business, we invested in additional facilities for both small scale and large scale production. To complement our research manufacture at ChiroTech (volumes of less than 1 - 10kg), we are building at Mitchell Cotts a £3.8m small scale manufacturing unit (10 - 100kg) and an £8.5m plant (100kg - 100 tonnes per annum) to world standards of manufacturing practice. After accreditation and FDA approval, the plants will come on stream in the third and fourth quarters of 2000. On 10 March 2000, we acquired Specified Fuels & Chemicals, debt free, for a total cash consideration of US$23.5m, paid on completion, slightly below the net asset value of US$24.4m. Based in Houston one mile from Haltermann's Houston plant, Specified provides us with a significant increase in chemical custom processing capacity in the growing US market where we require facilities for new contracts that we are winning. OTHER BUSINESSES Our smaller specialist engineering companies did well to sustain their profits in market conditions which declined. We expect no further deterioration in conditions. The property disposal programme continued successfully in terms of both pace and proceeds realised. The refrigeration businesses were adversely affected by a reduction in customers' capital spend, slowing supermarket construction, and the poor summer. MANAGEMENT As I mentioned in my interim statement, Martin Rogers joined the Board as Group Finance Director during the year. As announced in January 2000, John Grant has expressed an interest in pursuing a management buyout of the four smaller engineering businesses and will be leaving the Group with effect from the middle of the year. In the meantime, he has relinquished his day to day responsibilities. On behalf of the Board, I should like to thank John for his contribution over the past two and a half years. I am delighted that we have also recently added to the non-executive Board by appointing Dr Jeff Edington and Dr Karl-Gerhard Seifert. Jeff Edington is an executive director of Corus Group plc and Dr Seifert is Head of Morgan Grenfell Private Equity Germany and was previously Chief Executive Officer of Clariant International. Both will bring a broad range of experience to the Group. Our management teams served us well in this critical refocusing period. In managing the Group, we identify four discrete functions - a corporate team buying and selling assets, a special assignments team managing new acquisitions during the integration process, operational management running existing businesses, and central finance and administration. This management structure supports our growth strategy as we look for acquisitions with synergistic benefits to enhance Ascot's value. LOOKING AHEAD We take a prudent view of what are positive prospects for the Group. The outlook for Ascot Fine Chemicals will improve during the course of 2000 as shipments of (-)-lactam for the GlaxoWellcome AIDS drug resume and our new plants come on stream, but we reserve our real optimism, based on a growing product pipeline, for 2001. Ascot Speciality Chemicals started the current year with high levels of sales and good order books, and the outlook remains favourable. REVIEW OF OPERATIONS - SPECIALITY CHEMICALS BUSINESS OVERVIEW Ascot Speciality Chemicals is a world leader for distillation in the chemical custom processing market. In 1999, we put together the strengths of Haltermann, already a lead player by virtue of its plants in the USA (Houston), Belgium (Antwerp) and Germany (Speyer), with those of our existing UK businesses - Chemoxy (Teesside) and Pentagon (Workington). We now operate the world's largest custom processing business by volume, with an estimated 50% share of the European market and an estimated 30% share of the US market for contract distillation. Having successfully integrated Haltermann, we brought the three companies together to create Haltermann Custom Processing, uniting the individual marketing teams under global leadership. At the same time, we separated out the companies' own products business to give it a distinct identity and market focus. Haltermann Products will have its own management team, responsible for developing our leading position in printing ink distillates and reference fuels, and building our strength in propellants and ultra pure solvents which are used by pharmaceutical companies as well as by companies operating in a variety of other industries. New products will be developed on a pan- European basis and we shall take advantage of opportunities to switch products between sites in order to reduce costs and optimise logistics. BUSINESS PERFORMANCE We achieved a notable profit increase in custom processing, with particularly strong performances from the USA and Belgium. We were helped by a buoyant US economy and the hardening of the oil price, which increased the level of chemical and oil activity, and gave a stimulus to the processing of sidestreams. Our products business had a record year, with an increase of over 50% in profits. We achieved slight growth in the UK, in line with the market, while our continental European business delivered an outstanding performance. OPERATING EFFICIENCY As part of the review process, nearly a dozen task teams were set up in order to review best practice across our locations in all fields, from processing technology to finance. De-bottlenecking opportunities were identified at all sites to improve throughput rates and allow more intensive use of assets. Capacity utilisation rose at four of our five locations. In particular, a major process improvement at Antwerp increased capacity by 15%. We completed the first stage of investment at Houston to raise capacity by 15% by the end of 2000 and sanctioned a new reactor system which will enable Antwerp to switch one operation to continuous processing by the end of 2000, trebling throughput of the unit. EXPANDING OUR TECHNOLOGY The successful completion of one of Teesside's contracts gave us experience in an additional important technology. We broadened the base of our business at Houston by expanding our reaction technology in response to an increasing flow of inquiries. The commissioning of a new Grignard reaction plant at Workington opened up new areas of the market to us. BUILDING OUR POSITION WITH CUSTOMERS Reputation is a key driver in our business, particularly in terms of health and safety. As part of our programme of continual improvement to achieve world class performance at all sites, equal to that of the majors, we initiated DuPont health and safety projects at Antwerp and Speyer. Relationships with customers indicate the health of our business. In 1999, 40% of our custom processing related to long-term contracts, 36% to 'evergreen' customers constantly using our services, and 24% to spot business. The value of new custom processing contracts signed last year represented a significant increase over the contracts completed during the period. In addition, we won preferred supplier status with a further three clients and recorded an increase in the value of business which uses our combined reaction and distillation skills. LOOKING AHEAD Each of our custom processing sites is enjoying the benefit of strong order books for the first quarter of 2000. As use of sub-contracting increases, the technical competence of our people allied with excellent infrastructure in key strategic locations enables us to establish partnerships with blue chip customers. The outlook for products is equally positive. Continuing product innovation together with leadership in niche and speciality markets enables us to promote higher added value products through our global sales network. REVIEW OF OPERATIONS - ASCOT FINE CHEMICALS BUSINESS OVERVIEW Ascot Fine Chemicals is a world leader in chirality, bringing technology to the life science industries. In particular, chiral technology has a strong future in health care. Over 80% of drugs entering development are chiral - introducing only one stereoisomer form into the product, not a mixture of two or more forms of the molecule. Chiral drugs are beneficial to the patient because they focus upon the 50% of product that is of use. Chiral drugs bring the benefits of greater efficacy, lower dosage, reduced side effects, cheaper trials and faster approval. The complexity of their manufacture also extends protection once patents run out. Ascot works with pharmaceutical majors in the earlier stages of research and development, so it is well placed to capture manufacturing contracts when the resulting new drugs are launched. Ascot works across all stages of the product pipeline - offering customers novel building blocks for discovery, research solutions and economic syntheses for drug development, and bulk manufacture. As discovery costs increase, companies use contract manufacture not only to avoid capital spend but also to gain speed - every day when the patent is running but the drug is not yet on the market cuts the exploitation opportunity. BUSINESS PERFORMANCE Having made its first commercial breakthrough with a bicyclic lactam intermediate for an HIV drug, ChiroTech is now moving to the next stage of its development, that of building its product portfolio. Two active pharmaceutical ingredients are now in production, and the next successes that will smooth its revenue flow are expected for 2001. In 1999, dependency on the bicyclic lactam business was reduced as sales of other products grew by over 50%. Meanwhile Mitchell Cotts manufactured the initial volumes for three new intermediates, partly offsetting a decline in the pyrethroid business resulting from tariff barriers on imported insecticides in China and strong price competition from India. TECHNOLOGY Ascot's customers depend upon technology to create and develop their drugs. Four years ago ChiroTech gained the worldwide exclusive rights in certain market sectors to the commercial use of the DuPHOS ligands and catalysts from DuPont. The driving force behind the business is to capitalise on those rights. At the outset only research quantities of the catalyst had ever been made. ChiroTech then developed DuPHOS into a manufacturing technology. Similarly, ChiroTech began to sell products made using the Trost Palladium catalysts licensed from Stanford in 1997. Following the DuPHOS and Trost Palladium model, ChiroTech last year in-licensed the Trost molybdenum catalysts from Stanford and the Hoveyda/Schrock metathesis catalysts from MIT both on a worldwide exclusive basis. It also discovered and developed in-house the FerroTANE hydrogenation catalyst to complement the DuPHOS systems. To seed future licenses, new academic link-ups were initiated with discovery professors in MIT, Boston College and the Nagoya Institute. BUILDING THE PIPELINE ChiroTech completed 16 collaborative R&D projects last year, building the product pipeline. Most remain confidential. The developments we can report include: * three further customers for the bicyclic lactam and related intermediates; * an active pharmaceutical ingredient supplied for Alcon's potential glaucoma drug, now in advanced trials; * and a synthetic process developed for the AIDS drug, Calanolide A, now completing phase 1 trials. ChiroTech has always been driven by the calibre of its science. Now it has equal impetus in commercialising that work. Last year, we opened a sales office in the key US market, and, with the chemists' catalogue company, Lancaster Synthesis, agreed worldwide distribution of research quantities of our chiral compounds which will bring future business. LOOKING AHEAD The product pipeline is the key to Ascot Fine Chemicals' future, and its development is accelerating. Our ability to manufacture in bulk to cGMP standard also increased, and we put the business on a broader base. Last year there was a 40% increase in patents applied for or granted. We grew both the number and average spend of our customers. We added 180 new compounds to our product range, and increased the number and value of our early collaborations which will start to bear fruit in 2001 and thereafter. REVIEW OF OPERATIONS - OTHER BUSINESSES ENGINEERING The engineering businesses, apart from those involved in refrigeration, performed well, increasing profits year on year. Generally, we are seeing increasing evidence of activity in the general engineering sector and as a consequence we feel more optimistic about prospects for the coming year. At WDS we relocated the factory to a new site and have seen general improvements in all areas of the business. The increase in profits of the general engineering businesses was more than offset by a significant reduction in the profitability of the refrigeration businesses. Recent developments in the food retailing sector affected sales and margins and the lack of a consistently hot summer saw air conditioning sales below expectation. However, we have maintained our market leadership and market share position. Actions to mitigate these market conditions include the introduction of new products, cost reductions and improvement in customer services. PROPERTIES The continuing property disposal programme saw 9 properties and 29 public houses sold in the year. ASCOT PLC Consolidated Profit and Loss Account for the year ended 31 December 1999 Year Year ended ended 31 December 31 December 1999 1998 Notes £m £m Turnover Continuing operations (including £1.2m from acquisitions) 1 311.9 185.6 _____ _____ Operating profit Continuing operations (including £0.0m from acquisitions) 37.7 27.9 Amortisation of goodwill on acquisition of subsidiaries (3.5) - _____ _____ Operating profit 1 34.2 27.9 Share of operating profit of associates 3.7 2.3 Amortisation of goodwill on investment in associates (1.2) (0.5) _____ _____ 2.5 1.8 _____ _____ Total operating profit including share of associates 36.7 29.7 Exceptional items Continuing operations - profit/(loss) on disposal of fixed assets 2 0.4 (0.4) - net amounts written back on investments - 1.0 _____ _____ Profit on ordinary activities before interest 37.1 30.3 Net interest payable and similar charges (7.2) (3.3) _____ _____ Profit on ordinary activities before taxation 29.9 27.0 Taxation 3 (7.5) (5.6) _____ _____ Profit on ordinary activities after taxation 22.4 21.4 Dividends 4 (9.5) (7.9) _____ _____ Retained profit for the year 12.9 13.5 ===== ===== Earnings per share 5 - basic 29.7p 30.9p - diluted 29.3p 30.1p Adjusted earnings per share - basic 35.5p 30.8p - diluted 34.9p 30.0p Dividend per share 12.5p 11.0p ASCOT PLC Consolidated Balance Sheet as at 31 December 1999 31 December 31 December 1999 1998 Notes £m £m £m £m Fixed Assets Intangible assets 129.5 67.0 Investment properties 30.8 31.8 Other tangible assets 142.8 110.3 Investments 1.0 36.1 _____ _____ 304.1 245.2 Current assets Stocks 42.6 47.3 Assets for resale 0.5 1.8 Debtors 59.4 57.1 Investments - - Cash at bank and in hand 18.9 16.2 _____ _____ 121.4 122.4 Creditors: Amounts falling due within one year Bank overdrafts and other loans (12.9) (30.1) Other creditors (90.8) (90.8) _____ _____ (103.7) (120.9) _____ _____ Net current assets 17.7 1.5 _____ _____ Total assets less current liabilities 321.8 246.7 Creditors: Amounts falling due after more than one year Bank and other loans (196.1) (128.0) Other (0.1) (6.5) Provisions for liabilities and charges Deferred taxation (16.8) (11.7) Other provisions (38.6) (40.1) _____ _____ Net assets 70.2 60.4 _____ _____ Capital and reserves Ordinary share capital 9.9 9.8 Share premium account 7 41.8 42.3 Warrant reserve 7 - 0.6 Capital redemption reserve 7 55.4 55.4 Revaluation reserve 7 5.1 5.1 Profit and loss account 7 (42.0) (52.8) _____ _____ Shareholders' funds 70.2 60.4 _____ _____ Approved by the Board on 17 March 2000 signed on its behalf H P Dyer M J Rogers Directors ASCOT PLC Statement of total recognised gains and losses for the year ended 31 December 1999 Year ended Year ended 31 December 31 December 1999 1998 £m £m Profit on ordinary activities after taxation 22.4 21.4 Exchange movements on overseas net assets (1.0) 0.3 Cancellation of warrants (1.1) - ____ ____ 20.3 21.7 ____ ____ The reported profit for the year is not materially different from the profit on an unmodified historical cost basis. Reconciliation of movements in shareholders' funds for the year ended 31 December 1999 Year ended Year ended 31 December 31 December 1999 1999 £m £m Opening shareholders' funds 60.4 66.4 Profit on ordinary activities after taxation 22.4 21.4 Dividends (9.5) (7.9) Exchange movements on overseas net assets (1.0) 0.3 Shares issued 0.5 31.7 Costs associated with issue of shares (0.9) (0.8) Repayment of B shares - (50.7) Cancellation of warrants (1.7) - ____ ____ Closing shareholders' funds 70.2 60.4 ____ ____ ASCOT PLC Consolidated cash flow statement for the year ended 31 December 1999 Year ended Year ended 31 December 1999 31 December 1998 £m £m £m £m Net cash inflow from operating activities 48.0 20.6 Dividends from associates 1.5 - Returns on investments and servicing of finance Interest received 2.8 0.5 Interest paid (9.2) (3.6) ____ ____ Net cash outflow from returns on investments and servicing of finance (6.4) (3.1) Taxation Tax paid (12.5) (2.5) Capital expenditure and financial investment Additions to tangible assets (27.4) (14.1) Disposals of tangible assets 4.6 6.1 (Purchase)/disposal of current investments (0.1) 1.0 Purchase of own shares for ESOP trust (1.4) - ____ ____ Net cash outflow from capital expenditure and financial investment (24.3) (7.0) Acquisitions and disposals Acquisition of businesses (including costs paid and net of cash acquired of £3.1m (1998: £2.8m)) (57.4) (57.5) Acquisition of associate - (30.9) ____ ____ Net cash outflow from acquisitions and disposals (57.4) (88.4) Equity dividends paid (8.7) (7.1) ____ ____ (59.8) (87.5) Management of liquid resources (8.2) 3.6 Financing Decrease in loans to associates 6.5 4.9 Issue of ordinary shares 0.5 1.4 Costs associated with issue of ordinary shares (0.9) (0.8) Redemption of B shares - (50.7) Cancellation of warrants (1.7) - Additional bank loans 99.6 133.7 Repayment of loan notes, bonds and bank loans (38.1) (0.5) ____ ____ Net cash inflow from financing 65.9 88.0 ____ ____ (Decrease)/increase in cash (2.1) 4.1 ____ ____ ASCOT PLC Reconciliation of operating profit to net cash inflow from operating activities for the year ended 31 December 1999 Year ended Year ended 31 December 31 December 1999 1998 £m £m Operating profit 34.2 27.9 Depreciation and amortisation 14.5 6.1 Other non cash movements (0.5) (0.6) (Increase)/decrease in stocks and trading properties 4.4 (1.2) (Increase)/decrease in debtors (4.2) 2.1 Increase/(decrease) in creditors 1.1 (13.0) Decrease in provisions (1.5) (0.7) ____ ____ Net cash inflow from operating activities 48.0 20.6 ____ ____ The impact of acquisitions and disposals was immaterial in 1999 and 1998. Reconciliation of net cash flow to movement in net debt for the year ended 31 December 1999 Year ended Year ended 31 December 31 December 1999 1998 £m £m Increase/(decrease) in cash (2.1) 4.1 Increase/(decrease) in liquid resources 8.2 (3.6) Repayment of loan notes, bonds and bank loans 38.1 0.5 Bank loan drawn down (99.6) (133.7) _____ _____ Change in net debt resulting from cash flows (55.4) (132.7) Loans acquired with Haltermann - (9.6) Exchange rate movements 7.2 - _____ _____ Movement in net debt in the period (48.2) (142.3) Opening net (debt)/cash (141.9) 0.4 _____ _____ Closing net debt (190.1) (141.9) _____ _____ ASCOT PLC Notes to the preliminary announcement for the year ended 31 December 1999 1. Business segment analysis Year ended Year ended 31 December 1999 31 December 1998 Operating Operating Turnover profit Turnover profit £m £m £m £m Chemicals 191.6 29.5 58.6 14.6 Amortisation of goodwill on: - acquisition of subsidiaries - (3.5) - - - investment in associate - (1.2) - (0.5) _____ _____ _____ _____ 191.6 24.8 58.6 14.1 Engineering 113.8 12.4 120.4 16.1 Properties 6.5 4.0 6.6 3.7 Central costs - (4.5) - (4.2) _____ _____ _____ _____ Turnover/total operating profit 311.9 36.7 185.6 29.7 Share of associates operating profit included in: - Chemicals - (2.1) - (2.1) - goodwill amortised on associate - 1.2 - 0.5 - Properties - (1.6) - (0.2) _____ _____ _____ _____ Turnover/Operating profit 311.9 34.2 185.6 27.9 ===== ===== ===== ===== Segmental information on net assets is set out below: 31 31 December December Operational analysis 1999 1998 £m £m Chemicals 245.2 178.2 Engineering 36.8 39.5 Properties and Central 13.0 17.1 _____ _____ Net operating assets 295.0 234.8 Taxation (34.7) (32.5) Bank overdrafts (12.9) (30.1) Borrowings (196.1) (128.0) Cash at bank and in hand 18.9 16.2 _____ _____ Net assets 70.2 60.4 _____ _____ ASCOT PLC Notes to the preliminary announcement for the year ended 31 December 1999 1. Business segment analysis (continued) Geographical analysis Year ended Year ended 31 December 1999 31 December 1998 Operating Operating Turnover profit Turnover profit £m £m £m £m By destination United Kingdom 118.6 10.0 123.1 21.3 France 17.0 1.0 10.6 0.4 Germany 44.7 3.4 16.7 2.6 North America 38.6 10.4 11.5 2.0 Scandinavia 20.0 1.0 - - South Africa - - 0.5 - Other 73.0 8.4 23.2 1.6 _____ _____ _____ _____ 311.9 34.2 185.6 27.9 _____ _____ _____ _____ By origin United Kingdom 165.6 17.0 171.4 27.3 France 11.6 0.2 8.9 0.4 Germany 55.0 4.2 3.0 0.2 North America 26.1 7.9 1.8 - Belgium 21.5 4.1 - - Scandinavia 21.6 0.7 - - Other 10.5 0.1 0.5 - _____ _____ _____ _____ 311.9 34.2 185.6 27.9 _____ _____ _____ _____ 31 31 December December Net operating assets 1999 1998 £m £m United Kingdom 190.1 116.5 France 4.5 4.6 Germany 26.9 (5.4) North America 35.0 72.6 Belgium 28.9 29.0 Scandinavia 8.7 13.8 Other 0.9 3.7 _____ _____ 295.0 234.8 _____ _____ ASCOT PLC Notes to the preliminary announcement for the year ended 31 December 1999 2. Exceptional items The exceptional items reflected on the face of the profit and loss account comprise of the following: 1999 1998 £m £m Profit on sale of investment properties and land 0.4 0.2 Provision for loss on disposal of fixed assets - (0.8) Sale of investment in Emess Plc - 0.2 ____ ____ 0.4 (0.4) Writeback of provisions against investments 0.9 1.0 Provision against investments (0.9) - ____ ____ 0.4 0.6 ==== ==== The effect of the taxation charge for the year on the exceptional items recognised below operating profit is disclosed in note 3. 3. Taxation The charge for taxation comprises: 1999 1998 £m £m UK corporation tax at 30.25% (1998: 31%) 3.3 7.0 Use of advance corporation tax (0.7) (1.3) UK deferred tax (0.4) 1.8 Tax on associated company income 0.7 0.7 Prior year adjustments (3.3) (2.8) ____ ____ UK taxation (0.4) 5.4 ==== ==== Overseas taxation on current profits 6.5 0.1 Overseas over provision for prior years - 0.1 Deferred tax 1.4 - ____ ____ Overseas taxation 7.9 0.2 ==== ==== Total tax charge 7.5 5.6 ==== ==== The UK tax charge for the year has been reduced by the use of Advance Corporation Tax and losses brought forward which were not previously valued in the accounts and by the release of provisions following the resolution of outstanding issues for earlier years. No tax charge arose on the profit on exceptional items due to the use of losses brought forward. ASCOT PLC Notes to the preliminary announcement for the year ended 31 December 1999 4. Dividends 1999 1998 pence pence per share £m per share £m Proposed final dividend 8.5 6.5 7.5 5.7 Interim dividend 4.0 3.0 3.5 2.2 ____ ____ ____ ____ Equity dividends 12.5 9.5 11.0 7.9 ____ ____ ____ ____ In 1998 a non equity dividend of £46,000 was paid. 5. Earnings per share The calculation of basic earnings per ordinary share is derived from the profit of £22.4m (1998: £21.4m) and the weighted average number of ordinary shares in issue during the year of 75.3m (1998: 69.2m). To give a meaningful comparison adjusted earnings per ordinary share figures have been calculated which exclude goodwill amortisation, profits and losses on disposal of fixed assets, and net movements on investments. 31 December 1999 31 December 1998 pence pence per share per share Earnings £22.4m £21.4m Weighted average number of ordinary shares 75.3m 69.2m Basic earnings per share 29.7 30.9 Earnings £22.4m £21.4m Weighted average number of ordinary shares - diluted 76.5m 71.0m Diluted earnings per share 29.3 30.1 £m £m Earnings 22.4 29.7 21.4 30.9 Exclusion of (profits)/losses on disposal of fixed assets (0.4) (0.5) 0.4 0.6 Exclusion of net movements on investments - - (1.0) (1.4) Exclusion of goodwill amortisation 4.7 6.3 0.5 0.7 ____ ____ ____ ____ Adjusted earnings 26.7 21.3 Adjusted basic earnings per share 35.5 30.8 ____ ____ ____ ____ Adjusted earnings 26.7 21.3 Adjusted diluted earnings per share 34.9 30.0 ____ ____ ____ ____ The number of shares used in the calculation of basic earnings per share and diluted earnings per share has been calculated in accordance with Financial Reporting Standard No.14. The diluted earnings per share calculations are based on the average number of ordinary shares used in the basic earnings per share calculation, with an adjustment to reflect the bonus element of the average number of warrants and options outstanding during the year. The bonus element of warrants and options arises when the exercise price is lower than the average market price during the year. ASCOT PLC Notes to the preliminary announcement for the year ended 31 December 1999 6. Acquisitions Acquisition of Chirotech Technology Limited On 19 October 1999 the Group acquired the remaining 70% shareholding in its associate company, Chirotech Technology Limited ('ChiroTech'), for a cash consideration of £54.0m plus a dividend waived of £1.5m plus costs. Goodwill arising on the acquisition has been capitalised and classified as an asset on the balance sheet. The fair value adjustments are provisional due to the timing of the acquisition. Net assets at date of acquisition were: Provisional fair value Book Value Adjustments to Group £m £m £m Fixed assets 1.8 - 1.8 Investments 0.6 (0.6) - Stocks 2.1 - 2.1 Debtors 0.6 - 0.6 Cash less overdrafts 3.1 - 3.1 Creditors due within 1 year (6.4) (0.9) (7.3) _________________________________________ Net assets 1.8 (1.5) 0.3 ========================================= £m Share of net assets acquired 0.2 Hindsight fair value adjustment relating to the original 30% acquired 0.2 Goodwill arising on acquisition 57.1 ____ 57.5 ==== £m Discharged by: Cash 54.0 Costs associated with the acquisition 2.0 Dividends waived 1.5 ____ 57.5 ==== Total goodwill on the acquisition of ChiroTech amounted to £88.0m, with £30.7m incurred on acquiring the initial 30% holding. The adjustments in respect of fair value are as follows: (a) The adjustment to investments provides against the carrying value of an associate company of ChiroTech which is not considered to be recoverable (b) Creditors due within one year adjusts for liabilities and deferred income not included in the statutory accounts of ChiroTech ASCOT PLC Notes to the preliminary announcement for the year ended 31 December 1999 6. Acquisitions (continued) ChiroTech's summarised profit and loss account for the period 1 March to the effective date of acquisition and the preceding period are as follows: Period to 12 months to 19 October 1999 February 1999 £m £m Turnover 16.7 30.1 ====== ====== Operating profit 6.0 12.6 Exceptional profit on sale of business - 117.4 ______ ______ Profit before taxation 6.0 130.0 Taxation (2.0) (3.7) ______ ______ Profit after taxation 4.0 126.3 ====== ====== The exceptional profit in the year ended February 1999 occurred as part of a Group reconstruction undertaken by ChiroScience (the Group from which ChiroTech was purchased). Prior to becoming a subsidiary, ChiroTech was accounted for as an associated undertaking. In accordance with Financial Reporting Standard No.2 and in order to give a true and fair view, purchased goodwill has been calculated as the sum of the goodwill arising on each purchase of the identifiable assets and liabilities of the interest purchased. This is a departure from the statutory method, under which goodwill would have been calculated as the difference between cost and fair value on the date that ChiroTech became a subsidiary. The statutory method would not give a materially different result. 7. Reserves Capital Share Revaluation Warrant Redemption Profit Premium Reserve Reserve Reserve and loss £m £m £m £m £m Group At 31 December 1998 42.3 5.1 0.6 55.4 (52.8) Retained profit - - - - 12.9 Shares issued and exercise of options 0.4 - - - - Costs associated with the issue of shares (0.9) - - - - Exchange movement - - - - (1.0) Cancellation of warrants - - (0.6) - (1.1) ________________________________________________ At 31 December 1999 41.8 5.1 - 55.4 (42.0) ================================================ The consolidated profit and loss account at 31 December 1999 includes the Group's share of associated companies' post acquisition reserves amounting to £0.2m (1998: £1.6m), of which £Nil (1998: £Nil) has been recognised in the Company's profit and loss account. The reserves within the Group include merger relief of £141.1m (1998: £141.1m), against which an equal amount of goodwill has been offset. Cumulative goodwill eliminated against reserves amounted to £210.4m (1998: £210.4m). ASCOT PLC Notes to the preliminary announcement for the year ended 31 December 1999 8. Financial information The financial information in this announcement is an abridged version of the Group's full accounts upon which the auditors have given an unqualified opinion. The full audited accounts will be filed with the Registrar of Companies in due course. Audited accounts for the previous year have been delivered to the Registrar and the auditors report thereon was unqualified. 9. Post Balance Sheet event The Group acquired the business of Specified Fuels & Chemicals LLC for a cash consideration of £14.8m on 10 March 2000. Funding for the consideration will be met through existing cash resources and a new US$15m facility provided by Dresdner Bank AG in London. 10. Annual Report and Accounts The annual report and accounts and Notice of Annual General Meeting will be posted to shareholders shortly and copies will be available from the Company Secretary, Ascot Plc, 18 Hanover Square, London W1R 9DA. 11. Annual General Meeting The Annual General Meeting will be held on Thursday 1 June 2000, at 11.00am at the Gaumont Suite, Dresdner Kleinwort Benson, 20 Fenchurch Street, London EC3P 3DB.

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