Interim Results
Yule Catto & Co PLC
12 September 2002
YULE CATTO & COMPANY PLC
Interim Results for the six months ended 30 June 2002
Yule Catto is an international producer of speciality chemicals, which are
supplied to global customers, ranging from manufacturers of medical gloves,
paint and adhesives to the pharmaceuticals and cosmetics industries
HIGHLIGHTS
* Growth in turnover for continuing activities of 7.6% to £254.5 million
* Profit before tax up 47% at £26.5 million (2001: £18.0 million)
* Earnings per share rise 42% to 12.1 pence (2001: 8.5 pence as restated)
* Good cash generation despite high levels of business activity
* Interim dividend increased to 5.1 pence (2001: 4.9 pence)
* Product from Malaysian nitrile latex plant with customers for approval
Anthony Richmond-Watson, Chairman, comments:
'Demand continues to hold up and that, plus a concerted effort to increase
selling prices, should substantially reduce the impact of recent raw material
cost increases. Over the long term, the realignment of our Polymer business,
coupled with the expansion opportunity created by our investment in new
capacity, will deliver significant benefit. The strong pipeline developing
within our pharmaceutical active ingredient range also offers much potential.'
12 September 2002
ENQUIRIES:
YULE CATTO Tel: 01279 442791
Alex Walker, Chief Executive
Sean Cummins, Finance Director
COLLEGE HILL Tel: 020 7457 2020
Gareth David email: gareth.david@collegehill.com
Lisa Pearson email: lisa.pearson@collegehill.com
RESULTS SUMMARY
Six months to 30 June 2002 2001
Unaudited Unaudited
£'000 £'000
Total turnover 254,512 239,348
Earnings before interest, taxation, depreciation
and amortisation 43,542 32,944
Operating profit before amortisation 33,449 23,893
Profit before taxation and amortisation 26,455 18,040 *
Net borrowings 220,055 165,132
Free cash flow before dividends 2,889 1,208
Adjusted earnings per ordinary share 12.1p 8.5p +
Earnings per ordinary share - FRS3 6.8p (5.3)p +
Interim dividend per share 5.1p 4.9p
* Excludes sale and termination of businesses
+ Restated per note 3
CHAIRMAN'S STATEMENT
Overview
Against the current backcloth of uncertain macro-economic conditions, we are
pleased to report a healthy increase in earnings, dividend and cash flow. The
recently created global water-based polymer group, under the Synthomer banner,
has made a strong debut and good growth continues for Omeprazole as it
progressively becomes generic in more territories. Consequently, profit before
taxation and amortisation of goodwill of £26.5 million has been achieved, an
advance of 47% over the corresponding period. Turnover for continuing activities
increased by 7.6% to £254.5 million. The benefits of our recent strategic
acquisition and investment programme continue to flow through giving your Board
the confidence to increase the interim dividend to 5.1p (2001: 4.9p) per
ordinary share.
Review of Operations
Polymer Chemicals
With the first time inclusion of full ownership of Harlow Chemical Company
Limited, operating profit was nearly double the level achieved in the first half
of 2001, with excellent progression in all geographic regions in which we
operate. Lower raw material costs have been a feature, but good volume
development across the majority of our business sectors, coupled with an
enhanced mix as we drive towards more technically demanding applications, have
combined to return margins to previously achieved levels.
At the beginning of the year Yule Catto announced a major restructuring of its
polymer chemicals business. The new entity, Synthomer, can claim to be a world
leader in both technology and the breadth of product range offered for
speciality applications. There has been a rapid integration of a number of
operating sites under one management structure and the new organisation has been
well received in the marketplace. Further rewards will accrue as we expand our
European capacity, including de-bottlenecking critical processes in the UK and
the construction of a new plant in Belgium.
The new state of the art nitrile latex facility in Malaysia has been
successfully commissioned and customer trials with product from this plant are
well advanced. Following approval, the logistical advantage afforded by our
location should ensure a rapid take up of available capacity, generating a
positive contribution in the near term.
Pharma & Fine Chemicals
In the limited number of territories where the patent has expired, generic
Omeprazole has gained significant market share from branded product. As a
result, sales of our active ingredient have enjoyed substantial growth in
Germany and Spain, whilst sales continue to increase in traditional markets. In
the UK, the patent has recently expired offering further market opportunities.
Our customers in the USA, where minimal quantities have been ordered to date,
await the imminent outcome of protracted litigation over the Omeprazole patent.
Considerable volumes are anticipated once clarification on patent expiry is
achieved.
Other generics have also delivered growth and further focus placed on reducing
the cost of manufacture has been reflected in a positive movement in margin. We
are on course with our stated strategy to develop three to six new generic
products each year.
The new pilot plant in Spain is operational and fully loaded with development
projects for many months ahead. This bodes well for the medium-term expansion of
our ethical range, which in the past has been impacted by regulatory delays and
product withdrawal.
Growth in our flavour and fragrance businesses has been held back following
consolidation within the industry, causing customers to focus initially on
integration programmes. We continue to introduce novel products, which are
targeted at major global companies, and we are well placed to recover quickly
our growth momentum.
Performance Chemicals
A combination of factors contributed towards a dip in profits during the second
half of 2001, many of which have reversed, leading to a progressively improving
result during the first six months.
The price of caustic soda has reduced which, together with the introduction of a
new copper digestion plant, has delivered a robust performance within our
inorganic salts business. Our systematic investment in new kilns for ultramarine
pigment manufacture has continued, achieving greater product consistency, higher
quality and much needed additional capacity. We are very encouraged by the
reception of ultramarine in potential new application areas, some of which are
seeking the environmental benefits offered by this blue pigment.
Growth in our organics business has been slower to recover but we are pleased to
confirm that our facility in India is now manufacturing photographic products to
the highest global standards. This has contributed to the attainment of a number
of customer approvals and a rapidly growing order book. Sales of hair dyes have
been impacted by the timing of customer requirements, with a greater bias
towards the second half.
Borrowings
Net borrowings have reduced marginally from their 2001 year end position to
£220.1 million: this was achieved despite the normal seasonal rise in working
capital being affected by a particularly active second quarter. The higher level
of operating profit, coupled with a reduced level of expenditure on fixed
assets, have contributed to our improved free cash flow of £2.9 million. An
anticipated lower level of capital expenditure, in conjunction with a reversal
of the growth in working capital, should provide the customary strong free cash
flow performance in the second half.
Dividend
The interim dividend of 5.1 pence per ordinary share will be paid on 21 November
2002 to members on the register at close of business on 1 November 2002.
Outlook
The global economy displays little sign of the emergence of a sustained
recovery. Within our industry the cost of monomers, our major raw materials,
have risen in recent months causing margins to fall from the levels achieved in
the first half. Demand continues to hold up and that, plus a concerted effort to
increase selling prices, should substantially reduce the impact of the cost
increases.
Over the long term, the realignment of our Polymer business, coupled with the
expansion opportunity created by our investment in new capacity, will deliver
significant benefit. The strong pipeline developing within our pharmaceutical
active ingredient range offers much potential, whilst the niche nature and
spread of our Performance sector provides a solid platform. With our traditional
focus on profit and cash generation, overall we remain cautiously optimistic
regarding the near and medium term outlook.
A E RICHMOND-WATSON
Chairman
12 September 2002
Consolidated Profit & Loss Account
6 months ended 6 months ended 12 months ended
30 June 30 June 31 December
2002 2001 2001
(Restated) (Restated)
Unaudited Unaudited Unaudited
£000 £000 £000
Turnover of company and subsidiaries 249,935 216,457 443,930
Share of turnover of joint ventures 4,577 22,891 30,891
Total turnover 254,512 239,348 474,821
Operating profit
Existing operations 32,743 21,119 48,989
Amortisation of goodwill (7,621) (6,466) (13,893)
Operating profit of company and 25,122 14,653 35,096
subsidiaries
Share of operating profit of joint ventures 706 2,774 3,881
Total operating profit 25,828 17,427 38,977
Sale and termination of businesses - (13,498) (13,498)
Interest payable (net) (6,994) (5,853) (12,590)
Profit/(loss) on ordinary activities before 18,834 (1,924) 12,889
taxation
Taxation on profit on ordinary activities (7,963) (5,274) (12,003)
Profit/(loss) on ordinary activities after taxation 10,871 (7,198) 886
Minority interests (999) (464) (1,316)
Profit/(loss) attributable to shareholders 9,872 (7,662) (430)
Ordinary dividends (7,411) (7,095) (17,245)
Retained profit/(loss) for the financial period 2,461 (14,757) (17,675)
Operating profit before amortisation 33,449 23,893 52,870
Profit before taxation (excluding amortisation
and sale and termination of businesses) 26,455 18,040 40,280
Earnings per share - Adjusted 12.1p 8.5p 18.6p
- FRS3 6.8p (5.3)p (0.3)p
Dividends per ordinary share 5.1p 4.9p 12.0p
Consolidated Balance Sheet
30 June 30 June 31 December
2002 2001 2001
(Restated) (Restated)
Unaudited Unaudited Unaudited
£000 £000 £000
Goodwill 250,347 219,214 257,968
Fixed Assets 178,558 151,398 175,908
Working capital 23,385 30,473 9,544
Provisions (24,737) (25,973) (24,806)
Dividends (17,629) (17,086) (10,218)
Net borrowings (220,055) (165,132) (223,165)
Net assets 189,869 192,894 185,231
Shareholders' funds 184,924 188,570 181,031
Minority interests 4,945 4,324 4,200
Capital employed 189,869 192,894 185,231
Consolidated Cash Flow Statement
6 months ended 6 months ended 12 months ended
30 June 30 June 31 December
2002 2001 2001
Unaudited Unaudited Audited
£000 £000 £000
Net cash inflow from operating activities 25,108 23,753 79,615
Interest paid (6,497) (5,667) (12,244)
Dividends received less paid to minorities 488 623 2,646
Taxation paid (7,436) (7,120) (7,186)
Net capital expenditure (8,774) (10,381) (31,168)
Free cash flow before dividends 2,889 1,208 31,663
Acquisition and disposal of businesses - (1,264) (70,292)
Equity dividends paid - - (17,018)
Issue of ordinary shares - - -
Exchange movements 221 (291) (2,733)
Movement in net borrowings 3,110 (347) (58,380)
Notes to the financial statements
1. Analysis of total turnover
6 months ended 6 months ended
30 June 2002 30 June 2001
Unaudited Unaudited
£'000 £'000
Polymer Chemicals 132,359 112,011
Pharma & Fine Chemicals 48,641 44,769
Performance Chemicals 73,512 79,651
Building Products - 2,917
254,512 239,348
2. Analysis of profit
6 months ended 6 months ended
30 June 2002 30 June 2001
Unaudited Unaudited
£000 £000
Polymer Chemicals 21,138 11,308
Pharma & Fine Chemicals 7,786 4,943
Performance Chemicals 6,727 10,095
Building Products - (243)
Holding companies (2,194) (2,048)
Interest payable by joint ventures (8) (162)
33,449 23,893
3. These accounts have been prepared on the basis of the accounting policies set
out in the group's audited accounts for the year ended 31 December 2001, except
for the deferred tax.
In accordance with FRS19, which is effective for accounting periods ending on or
after 23 January 2002, deferred tax is accounted for on a full provision basis,
recognising in total the potential future tax effects of past transactions. No
discounting has been applied. A prior period adjustment of £12.8 million is the
cumulative prior period effect of this change of deferred tax accounting policy
and has been charged against reserves.
Comparatives have been restated accordingly for this change in accounting
policy.
4. The financial information for the year ended 31 December 2001 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.
5. This statement will be sent to all shareholders on 12 September and can be
obtained by the public from the company's registered office at Temple Fields,
Harlow, Essex, CM20 2BH.
6. An interim dividend of 5.1p (4.9p) per share, totalling £7.4 million (£7.1
million) has been declared by the directors.
7. 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 -
144.8 million (144.8 million).
8. Adjusted earnings per share excludes the sale and termination of businesses
and the amortisation of goodwill.
This information is provided by RNS
The company news service from the London Stock Exchange
Friday, 10th January 2025
COMPANIES COVERED:
Latest directors dealings
- 2 days ago FRP Advisory Group
- 2 days ago Marks Electrical Group
- 2 days ago CLS Holdings
- 2 days ago QinetiQ Group
- 2 days ago Spectris