Half Yearly Report

RNS Number : 8616X
Yule Catto & Co PLC
24 August 2009
 





Yule Catto & Co plc 


Interim Results for the six months ended 30 June 2009

Profits ahead across all three businesses and further substantial reduction in net debt


Yule Catto & Co plc ('Yule Catto' or the 'Group'), the international producer of speciality chemicals, is pleased to announce its interim results for the six months ended 30 June 2009.

HIGHLIGHTS


  • Total sales decreased by 9.9% to £269.7m (2008: £299.3m)


  • Underlying profit before taxation* increased by 14% to £19.9m (2008: £17.4m)


  • Earnings per share* of 10.3p (20088.1p)


  • Net borrowings* £113.9m, down £21.5m from 2008 year end 


  • Polymer Chemicals operating profit up 13%


  • Pharma Chemicals operating profit up 7%


  • The remaining Impact Chemicals business, William Blythe, also ahead of 2008



* Before special items, as defined in note 16, Glossary of terms


Adrian Whitfield, Chief Executive, commented:


'The Company had a very good first half despite the difficult economic conditions.  All three of our businesses delivered operating profits ahead of last year, and we now expect the results for the full year to be slightly ahead of the Boards previous expectations.'


24 August 2009

ENQUIRIES:

 

Yule Catto & Co plc

Tel: 01279 442791

Adrian Whitfield, Chief Executive 


David Blackwood, Group Finance Director 

 



Hogarth Partnership Limited

Andrew Jaques

Ian Payne


Tel: 020 7357 9477

  


RESULTS SUMMARY

Six months to 30 June 




Underlying performance(a)


IFRS


2009

2008


2009

2008


Unaudited

Unaudited


Unaudited

Unaudited


£'000

£'000


£'000

£'000













Total sales

269,656

299,311


269,656

299,311







EBITDA (b)

32,171

31,705


32,171

31,705

Operating profit

25,071

23,618


25,670

21,341

Profit before taxation

19,903

17,424


16,116

20,376







Net borrowings 

(113,939)

(168,816)


(119,534)

(147,340)

Free cash flow (c)

12,121

(2,940)


12,121

(2,940)







Earnings per share

10.3p

8.1p


7.7p

10.1p

Dividend per share

0.0p

4.0p


0.0p

4.0p


(a) Underlying performance excludes special items as shown in note 3.


(b) Operating profit before depreciation, amortisation and non-recurring items.


(c) As shown in the reconciliation of net cash flow.



 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 2009 are neither audited nor reviewed.



  CHAIRMAN'S STATEMENT & BUSINESS REVIEW


Overview

The Group had a very successful first half in 2009 with all three operating divisions delivering improved results over 2008 and underlying group profit before tax up 14%.


The improvement in Polymer Chemicals' operating profit was achieved despite volume declines of some 15%. The business benefited from a strong focus on cost reduction, as well as from weaker sterling and lower raw material costs. Whilst Pharma Chemicals performed a little below our expectations it was still ahead of last year, on generally weaker volumes, and the restructured William Blythe business was also ahead at the half year.


We made further progress on debt reduction and should see further reduction by the year end. We remain confident of achieving our previously indicated target of net debt below £100m before the end of 2010.



Polymer Chemicals


H1 2009

H1 2008

FY 2008

Sales (£'m)

222.4

251.0

507.1

Operating Profit (£'m)

25.4

22.5

42.4


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 latex is mainly sold into the fast growing nitrile glove market. Speciality Polymers includes rubber, polymers to regulate PVC manufacture and sealants for the motor industry.  


The Division achieved a good result in the first half despite the challenging economic environment. Volumes declined by some 15%, and turnover by 11%, but operating profit was ahead by 13%. This was mainly due to the benefit of currency translationand lower monomer costs, but it was also a result of the effective cost control initiatives we have implemented during the period, which will deliver annualised savings of over £2.5m.


Within Latex, volume declines were most marked in the commodity carpet business.  The Nitrile Latex business, which remains an important and high growth market for us, saw lower than average declines of just over 10% for the half year. A rapid decline in the price of the key raw material for Nitrile in the first quarter caused a substantial short-term de-stockingbut volumes were somewhat stronger in the second quarter at only 8% down.  


Dispersions, with a substantial exposure to decorative coatings, held up relatively well with volumes only 10% down.


Within Speciality Polymers, our auxiliary polymers products saw volume declines in line with the rest of the business, whilst our speciality lithene business, with its substantial sales into auto, saw volume declines of over 40%, albeit improving towards the end of the first half.


Looking forward, whilst monomer prices are likely to rise, the volume position appears to have settled at some 10-15% below prior year. 


  Pharma Chemicals


H1 2009

H1 2008

FY 2008

Sales (£'m)

35.7

32.6

63.9

Operating Profit (£'m)

3.7

3.4

5.3


Pharma Chemicals, 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. 


The division delivered an operating profit of £3.7m, 7% ahead of prior year. Volumes were generally lower across the Spanish business, whilst the Mexican business benefited from large, continuing orders for two major APIs.  


The transfer of products from Italy and Germany was successfully completed during the period, and the Italian plant has now ceased production and is being closed down. The continuing business saw some benefits from products transferred to its Spanish and Mexican assets, and these benefits should increase going forward.



Impact Chemicals


H1 2009

H1 2008

FY 2008

Sales (£'m)

11.5

15.7

31.1

Operating Profit (£'m)

0.9

0.5

1.6


Four of the original five Impact Chemicals businesses were sold in 2008, with the proceeds from the last announced sale of £8.25m, for Oxford Chemicals received in January 2009.


The remaining 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.


During the period, William Blythe traded ahead of 2009 albeit on generally weaker volumes.



Borrowingspensions and currency

Net debt decreased from £135m at the year end to £114m at June 2009. Proceeds from the Oxford sale (£8.25m) and lower capex contributed to the reduction. Net debt to EBITDA (last 12 months basisreduced from 2.3 at the year end to 1.9 at the end of June.  


The net deficit on post retirement benefit obligations increased by £10m to £86m, reflecting the lowering of the discount rate from 6.5% to 6.2%.


Reported operating profit benefited by £2.9m from currency translation, with the weakness of sterling in 2009 compared to 2008.



Special items and central costs

Special items in operating profit comprises the losses on the Italian Pharma plant closed at the end of June. Our debt includes £141m 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, and the mark to market on the swaps, that does not qualify for hedge accounting is shown in special items finance costs. Discontinued items shown in special items is the profit on sale of assets associated with the Impact Chemicals business. Central costs increased during the first half. In the main this is due to accounting requirements of IAS 19 for pensions. This increased central costs by £1.4m at the half year.



Taxation and EPS

The 2009 estimated underlying tax rate is 20%. In 2008, the estimated rate used at the half year was 27%, though the eventual full year rate for 2008 was 14%. These differential half year tax rates produce an increase in reported EPS at the half year of 27%, compared to the increase in PBT of 14%.



Dividend

In line with previous announcements, no interim dividend will be declared for 2009.



Outlook

We have performed well in the first half and continued to successfully deliver against our strategic goals despite the very difficult economic conditions.  


Looking to the full year, we expect our Pharma business and William Blythe to continue performing a little ahead of last year.  The outlook for Polymers is less certain, with volumes running at some 10 to 15% down on prior year and raw material costs rising.  The favourable currency position of the first half has started to unwind as sterling strengthened through the period.  However, we remain confident and clearly focused both on continuing to improve the quality and performance of our business, and on further strengthening our balance sheet.  


Considering this backgroundthe Board now anticipates the results for the full year to be slightly ahead of its previous expectations.




PETER WOOD

Chairman

24 August 2009                                                      

Consolidated income statement for the SIX MONTHS ENDED 30 JUNE 2009




Six months ended 30 June 2009



Six months ended 30 June 2008



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


261,812

-

261,812


289,620

-

289,620

Share of joint ventures' revenue


7,844

-

7,844


9,691

-

9,691

Total sales


269,656

-

269,656


299,311

-

299,311



















Group revenue


261,812

-

261,812


289,620

-

289,620










Company and subsidiaries before special items


24,870

-

24,870


22,719

-

22,719

Operations sold or closed during the year


-

599

599


-

(2,277)

(2,277)



















Company and subsidiaries


24,870

599

25,469


22,719

(2,277)

20,442

Share of joint ventures


201

-

201


899

-

899

Operating profit/(loss)


25,071

599

25,670


23,618

(2,277)

21,341











Interest payable


(5,424)

-

(5,424)


(8,853)

-

(8,853)

Interest receivable


256

-

256


2,659

-

2,659



(5,168)

-

(5,168)


(6,194)

-

(6,194)

Fair value adjustment


-

(4,386)

(4,386)


-

5,229

5,229

Finance costs


(5,168)

(4,386)

(9,554)


(6,194)

5,229

(965)










Profit before taxation


19,903

(3,787)

16,116


17,424

2,952

20,376

Taxation


(3,939)

-

(3,939)


(4,685)

-

(4,685)

Profit for the year from continuing operations


15,964

(3,787)

12,177


12,739

2,952

15,691










Discontinued operations









Profit/(loss) for the year from discontinued operations


-

3,233

3,233


-

8,311

8,311

Profit/(loss) for the year


15,964

(554)

15,410


12,739

11,263

24,002










Profit attributable to minority interests


916

-

916


880

-

880

Profit/(loss) attributable to equity holders of the parent


15,048

(554)

14,494


11,859

11,263

23,122



15,964

(554)

15,410


12,739

11,263

24,002










Earnings per share









From continuing operations









Basic


10.3p

(2.6)p

7.7p


8.1p

2.0p

10.1p

Diluted


10.1p

(2.5)p

7.6p


8.0p

2.0p

10.0p










From continuing and discontinued operations








Basic

10.3p

(0.4)p

9.9p


8.1p

7.8p

15.9p

Diluted

10.1p

(0.4)p

9.7p


8.0p

7.8p

15.8p

Special items

The special items are shown in more detail in note 3.

  

Consolidated income statement for the SIX MONTHS ENDED 30 JUNE 2009 continued




Year ended 31 December 2008




Underlying performance

Special items

IFRS



£'000

£'000

£'000



Audited

Audited

Audited

Continuing operations





Group revenue


584,373

-

584,373

Share of joint ventures' revenue


17,780

-

17,780

Total sales


602,153

-

602,153











Group revenue


584,373

-

584,373






Company and subsidiaries before special items


41,577

-

41,577

Operations sold or closed during the year


-

(2,406)

(2,406)











Company and subsidiaries


41,577

(2,406)

39,171

Share of joint ventures


1,615

-

1,615

Operating profit/(loss)


43,192

(2,406)

40,786







Interest payable


(15,983)

-

(15,983)

Interest receivable


5,481

-

5,481



(10,502)

-

(10,502)

Fair value adjustment


-

8,615

8,615

Finance costs


(10,502)

8,615

(1,887)






Profit before taxation


32,690

6,209

38,899

Taxation


(4,904)

-

(4,904)

Profit for the year from continuing operations


27,786

6,209

33,995






Discontinued operations





Profit/(loss) for the year from discontinued operations


-

22,568

22,568

Profit/(loss) for the year


27,786

28,777

56,563






Profit attributable to minority interests


1,718

-

1,718

Profit/(loss) attributable to equity holders of the parent


26,068

28,777

54,845



27,786

28,777

56,563






Earnings per share





From continuing operations





Basic


17.9p

4.3p

22.2p

Diluted


17.8p

4.2p

22.0p






From continuing and discontinued operations




Basic

17.9p

19.8p

37.7p

Diluted

17.8p

19.6p

37.4p

Special items

The special items are shown in more detail in note 3.

  Consolidated balance sheet as at 30 June 2009



30 June 2009


30 June 2008


31 December 2008


Unaudited


Unaudited


Audited


£'000


£'000


£'000

Non-current assets






Goodwill

154,027


169,238


154,027

Other intangible assets

715


533


869

Property, plant and equipment

101,660


104,220


118,106

Deferred tax assets

457


762


457

Investment in joint ventures

4,541


3,711


4,948


261,400


278,464


278,407

Current assets






Inventories

49,399


59,502


63,507

Trade and other receivables

103,751


125,845


126,136

Cash and cash equivalents

40,270


118,942


26,576

Derivatives at fair value

9,176


388


33,887


202,596


304,677


250,106







Assets held for sale

-


18,917


7,377

Total current assets

202,596


323,594


257,483







Current liabilities






Borrowings

(36,078)


(141,814)


(57,972)

Trade and other payables

(111,065)


(147,217)


(152,621)

Current tax liability

(47,104)


(48,902)


(44,528)

Dividends

-


(8,303)


-  

Derivatives at fair value

-


(18,812)


-


(194,247)


(365,048)


(255,121)

Liabilities directly associated with assets classified as held for sale

-


(8,506)


(1,400)

Total current liabilities

(194,247)


(373,554)


(256,521)







Non-current liabilities






Borrowings

(123,726)


(124,468)


(130,052)

Trade and other payables

(213)


(269)


(167)

Deferred tax liability

(6,032)


(5,390)


(6,899)

Post retirement benefit obligations

(86,116)


(63,126)


(75,559)


(216,087)


(193,253)


(212,677)







Net assets

53,662


35,251


66,692







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

(6,043)


(10,838)


6,252

Cash flow hedging reserve

1,052


-


678

Retained earnings

2,853


(9,027)


2,056

Equity attributable to equity holders of the parent

46,411


28,684


57,535

Minority interests

7,251


6,567


9,157

Total equity

53,662


35,251


66,692







Analysis of net borrowing






Cash and cash equivalents

40,270


118,942


26,576

Current borrowings

(36,078)


(141,814)


(57,972)

Non-current borrowings

(123,726)


(124,468)


(130,052)

Net borrowings

(119,534)


(147,340)


(161,448)

Deduct/(add back): special items

5,595


(21,476)


25,966

Net borrowings (underlying performance)

(113,939)


(168,816)


(135,482)

The financial statements were approved by the Board of Directors and authorised for issue on 24 August 2009.  

  

Consolidated cash flow for the SIX MONTHS ENDED 30 JUNE 2009



Six months ended 30 June 2009


Six months ended 30 June 2008


Year ended 31 December 2008


Unaudited

Unaudited


Unaudited

Unaudited


Audited

Audited


£'000

£'000


£'000

£'000


£'000

£'000

Operating









Cash generated from operations


23,173



16,304



44,299

Interest received

256



2,659



5,481


Interest paid

(5,726)



(8,912)



(16,835)


Net interest paid


(5,470)



(6,253)



(11,354)

UK corporation tax (paid) / received

(255)



128



207


Overseas corporate tax paid

(2,189)



(6,296)



(10,421)


Total tax paid


(2,444)



(6,168)



(10,214)

Net cash inflow from operating activities


15,259



3,883



22,731










Investing









Dividends received from joint ventures


111



767



816

Purchase of property, plant and equipment

(4,818)



(9,288)



(17,707)


Sale of property, plant and equipment

2,124



1,698



2,282


Net capital expenditure and financial investment


(2,694)



(7,590)



(15,425)

Purchase of businesses

-



(468)



(468)


Sale of businesses

8,760



10,755



50,676


Net cash impact of acquisitions and disposals


8,760



10,287



50,208

Net cash inflow/(outflow) from investing activities


6,177



3,464



35,599










Financing









Equity dividends paid


-



-



(14,129)

Dividends paid to minority interests


(555)



-



(341)

Repayment of borrowings


-



-



(33,512)

Proceeds of non-current borrowings


(701)



-



166

Net cash (outflow)/ inflow from financing activities


(1,256)



-



(47,816)










Increase in cash and bank overdrafts during the year


20,180



7,347



10,514























































  RECONCILIATION OF NET CASH FLOW FROM OPERATING ACTIVITIES TO MOVEMENT IN NET BORROWING FOR THE SIX MONTHS ENDED 30 JUNE 2009




Six months ended 30 June 2009


Six months ended 30 June 2008


Year ended 31 December 2008



Unaudited 


Unaudited 


Audited 



£'000


£'000


£'000








Net cash inflow from operating activities 


15,259


3,883


22,731

Dividends received from joint ventures


111


767


816

Net capital expenditure and financial investment


(2,694)


(7,590)


(15,425)

Dividends paid to minority interests


(555)


-


(341)

Free cash flow 


12,121


(2,940)


7,781








Net cash impact of acquisitions and disposals


8,760


10,287


50,208

Equity dividends paid


-


-


(14,129)

Exchange movements


662


(5,332)


(8,511)








Movement in net borrowings (underlying performance)


21,543


2,015


35,349



Consolidated STATEMENT OF RECOGNISED INCOME AND EXPENSE 

for the SIX MONTHS ENDED 30 June 2009




Six months ended 30 June 2009


Six months ended 30 June 2008 



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










Actuarial gains and losses


-

(13,697)

(13,697)


-

(24,248)

(24,248)

Tax on items recognised directly in equity


-

-

-


-

-

-

Exchange differences


(2,267)

(11,921)

(14,188)


(38)

(1,765)

(1,803)

Profit for the year


916

14,494

15,410


880

23,122

24,002

Total recognised (expenditure)/ income for the period


(1,351)

(11,124)

(12,475)


842

(2,891)

(2,049)





Year ended 31 December 2008



Minority interests

Equity holders of the parent

Total



Audited

Audited

Audited



£'000

£'000

£'000






Actuarial gains and losses


-

(39,111)

(39,111)

Tax on items recognised directly in equity


-

(48)

(48)

Exchange differences


2,055

16,017

18,072

Profit for the year


1,718

54,845

56,563

Total recognised (expenditure)income for the period


3,773

31,703

35,476

  1.  General information

The information for the year ended 31 December 2008 does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. 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 237(2) or (3) of the Companies Act 1985.  The interim results to 30 June 2009 and 2008 are neither audited nor reviewed.

2.  Accounting policies

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.

3.  Special items

The special items disclosed are made up as follows:



Six months ended 

30 June 2009


Six months ended

30 June 2008


Year ended

31 December 2008


£'000


£'000


£'000


Unaudited


Unaudited


Audited







Continuing operations 






Operating Loss






Profit / (loss) arising from the sale or closure of operations 

599


(2,277)


(2,406)







Finance costs






Fair value adjustment

(4,386)


5,229


8,615







Profit for the year from continuing operations

(3,787)


2,952


6,209







Discontinued operations






Total sales






Revenue of operations sold or closed during the period

772


36,114


52,900







Operating profit/(loss) of discontinued operations 






Operating profit of operations sold or closed during the period

22


3,281


4,113

Profit/(loss) for the year from discontinued operations 

4,315


6,325


20,067


4,337


9,606


24,180







Taxation






Taxation on operating profit/(loss) of operations sold or closed during the year

-


(809)


(884)

Taxation on profit/(loss) arising from the sale or closure of operations

(1,104)


(486)


(728)

Profit/(loss) for the year from discontinued operations

3,233


8,311


22,568


  

4 Segmental analysis



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

214,568

-

214,568


25,193

-

25,193

Share of Polymer joint ventures

7,844

-

7,844


201

-

201


222,412

-

222,412


25,394

-

25,394









Pharma Chemicals

35,705

-

35,705


3,677

599

4,276

Impact Chemicals

11,539

-

11,539


895

-

895

Total sales

269,656

-

269,656





Divisional Operating profit





29,966

599

30,565

Unallocated corporate expenses





(4,895)

-

(4,895)

Operating profit





25,071

599

25,670



Total sales


Operating profit 


Underlying performance

Special items

IFRS


Underlying performance

Special items

IFRS


£'000

£'000

£'000


£'000

£'000

£'000

30 June 2008








Analysis by activity








Continuing activity








Polymer Chemicals

241,307

-

241,307


21,569

-

21,569

Share of Polymer joint ventures

9,691

-

9,691


899

-

899


250,998

-

250,998


22,468

-

22,468









Pharma Chemicals

32,647

-

32,647


3,422

(1,627)

1,795

Impact Chemicals

15,666

-

15,666


548

(650)

(102)

Total sales

299,311

-

299,311





Divisional Operating profit





26,438

(2,277)

24,161

Unallocated corporate expenses





(2,820)

-

(2,820)

Operating profit





23,618

(2,277)

21,341



Total sales


Operating profit


Underlying performance

Special items

IFRS


Underlying performance

Special items

IFRS


£'000

£'000

£'000


£'000

£'000

£'000

31 December 2008








Analysis by activity








Continuing activity








Polymer Chemicals

489,350

-

489,350


40,829

-

40,829

Share of Polymer joint ventures

17,780

-

17,780


1,615

-

1,615


507,130

-

507,130


42,444

-

42,444









Pharma Chemicals

63,891

-

63,891


5,265

(1,756)

3,509

Impact Chemicals

31,132

-

31,132


1,634

(650)

984

Total sales

602,153

-

602,153





Divisional Operating profit





49,343

(2,406)

46,937

Unallocated corporate expenses





(6,151)

-

(6,151)

Operating profit





43,192

(2,406)

40,786


  

5 Profit or loss arising from the sale or closure of operations




Six months ended   

30 June 2009


Six months ended

 30 June 2008


Year ended

31 December 2008



Unaudited 


Unaudited 


Audited 



£'000


£'000


£'000

Profit/(loss) arising from the sale or closure of operations 







Continuing Operations







Closure of Uquifa's Italian manufacturing site


599


(1,627)


(1,756)

Restructuring of William Blythe Ltd


-


(650)


(650)



599


(2,277)


(2,406)








Discontinued Operations







Closure of Holliday Pigments UK manufacturing site


-


-


450

Closure of James Robinson's German manufacturing site


-


(301)


4,523

Sale of James Robinson Limited and James Robinson GmbH


-


5,637


5,637

Sale of James Robinson India Pvt Ltd


-


(362)


(362)

Sale of Holliday Pigments SA and Holliday France SA


-


-


8,265

Sale of Holliday Chemical Espana SA


-


-


409

Sale of PFW Aroma Chemicals BV


-


-


(774)

Sale of Hull site


-


1,351


1,351

Sale of Dieburg site


-


-


568

Sale of Oxford Chemicals Ltd


3,944


-


-

Write back of excess provision of Holliday Encres SA


371


-


-



4,315


6,325


20,067



4,914


4,048


17,661



Six months ended 

30 June 2009


Six months ended 30 June 2008


Year ended    31 December 2008


Unaudited


Unaudited


Audited


£'000


£'000


£'000













Operating profit - continuing operations

25,670


21,341


40,786

Operating profit for the year from discontinued operations

4,337


9,606


24,180

Less: share of profit of joint ventures'

(201)


(899)


(1,615)


29,806


30,048


63,351







Depreciation and amortisation

7,100


8,087


16,890

Profit arising from the sale or closure of operations

(4,914)


(4,048)


(17,661)

Loss / (profit) on sale of fixed assets

96


(81)


79

Share based payments

-


-


470

Cash impact of termination of businesses

(657)


(4,197)


(10,283)

Pension funding in excess of IAS 19 charge

(3,140)


(2,386)


(6,301)

Decrease in inventories

9,295


2,143


1,070

Decrease / (increase) in trade and other receivables

11,783


(13,752)


3,399

(Decrease) / increase in trade and other payables

(26,196)


490


(5,931)

Unrealised exchange (gains) / losses

-


-


(784)







Cash generated from operations

23,173


16,304


44,299

6.   Reconciliation of profit from operations to cash generated from operations

  

7.  Tax

Tax on the underlying profit before taxation for the six month period is charged at 20% (six months ended 30 June 2008: 27%; year ended 31 December 200815%), 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 24% (six months ended 30 June 200823%; year ended 31 December 200817%), on the IFRS profit before taxation for continuing operations.


8.  Dividends



Six months ended 30 June 2009


Six months ended 30 June 2008


Year ended 31 December 2008


Unaudited


Unaudited


Audited


£'000


£'000


£'000

Ordinary






- prior year final of nil pence per share (2007: 5.7 pence)

-


8,303


8,303

- interim (20084.0 pence)





5,826






14,129

Proposed interim dividend of nil pence per share 

(20084.0 pence)

-


5,826









Proposed final dividend (2008nil pence)





-


9.  Earnings per share



Six months ended 30 June 2009


Six months ended 30 June 2008 



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) 


15,048

(3,787)

11,261


11,859

2,952

14,811

Earnings per share


10.3p

(2.6)p

7.7p


8.1p

2.0p

10.1p

Diluted earnings per share


10.1p

(2.5)p

7.6p


8.0p

2.0p

10.0p










From continuing and discontinuing operations









Earnings (Profit attributable to equity holders of the parent) 


15,048

(554)

14,494


11,859

11,263

23,122

Earnings per share


10.3p

(0.4)p

9.9p


8.1p

7.8p

15.9p

Diluted earnings per share


10.1p

(0.4)p

9.7p


8.0p

7.8p

15.8p













Year ended 31 December 2008



Underlying performance

Special items

IFRS



£'000

£'000

£'000

From continuing operations





Earnings (Profit attributable to equity holders of the parent) 


26,068

6,209

32,277

Earnings per share


17.9p

4.3p

22.2p

Diluted earnings per share


17.8p

4.2p

22.0p






From continuing and discontinued operations





Earnings (Profit attributable to equity holders of the parent) 


26,068

28,777

54,845

Earnings per share


17.9p

19.8p

37.7p

Diluted earnings per share


17.8p

19.6p

37.4p










Diluted earnings per share are calculated using the weighted average number of shares in issue in the year as adjusted for dilutive share options of 146,449,000 (six months ended 30 June 2008: 146,912,000, year ended 31 December 2008: 146,653,000).


10.  Defined benefit schemes

The defined benefit plan assets have been updated to reflect their market value as at the 30 June 2009. 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 Recognised Income and Expense in accordance with the Group's accounting policy.


11.  Disposal of subsidiary

The Group disposed of the following interests in Group companies during the six months ended 30 June 2009:

Company name:

Date of sale:

Purchaser:

Division:

Sale type:

Oxford Chemicals Limited

30 January 2009

Third party trade

Impact Chemicals

Assets


The net assets of the companies at the date of disposal were as follows:





Oxford Chemicals Limited 




£'000





Property, plant and equipment 



2,183

Inventories



1,662

Trade receivables



1,347

Trade payables



(1,206)




3,986

Profit on disposal



3,944

Total consideration



7,930





Satisfied by:




Cash (net of disposal costs)



7,930




7,930

Net cash inflow arising on disposal:




Cash consideration



8,250

Less costs of disposal



(320)




7,930

The impact of these disposals on the Group's results in the current period and prior periods is disclosed in note 3.

In addition to the £7,930,000 proceeds from the disposal of Oxford Chemicals the Group has also received the deferred consideration on the disposal of James Robinson GmbH of £830,000 during the period.

  

12.  Changes in equity (unaudited)



Share capital

Share premium

Capital redemption reserve

Hedging and translation reserve

Cash flow hedging reserve

Minority interest

Retained earning

Total


£'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 year

-

-

-

-

-

916

14,494

15,410

Actuarial gains and losses 

-

-

-

-

-

-

(13,697)

(13,697)

Exchange differences on cash flow hedging deferred to equity 

-

-

-

-

374

-

-

374

Exchange differences on translations of overseas operations

-

-

-

(10,569)

-

(2,267)

-

(12,836)

Net investment hedging

-

-

-

(1,726)

-

-

-

(1,726)

Total recognised (expenditure)/income for the period

-

-

-

(12,295)

374

(1,351)

797

(12,475)

Dividends paid

-

-

-

-

-

(555)

-

(555)

At 30 June 2009

14,566

33,034

949

(6,043)

1,052

7,251

2,853

53,662


13 Related party transactions

Transactions between the company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not included in this note.

14 Risks and uncertainties

The Group's principle risks are unchanged from those disclosed in its year end accounts.

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.

15 Further information

The financial information for the year ended 31 December 2008 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 237 of the Companies Act 1985.

The financial statements were approved by the Board of Directors on 24 August 2009.

This statement can be obtained by the public from the Company's registered office at Temple Fields, Harlow, EssexCM20 2BH, or on the company website www.yulecatto.com.  

Earnings per ordinary share are based on the attributable profit for the period and the weighted average number of shares in issue during the period to 30 June 2009 of 145.7 million (2008: 145.7 million).

The financial information for the year ended 31 December 2008 has been extracted from the statutory accounts, which have

 16 Glossary of terms

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 non-recurring items.

Operating profit

Operating profit represents profit 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 period 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 borrowings

Net borrowings 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 knowledge:

  • 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

                    

24 August 2009




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