RNS Number:6504J
Chemetall PLC
11 March 2005
Chemetall PLC
Preliminary Results for the year ended 31 December 2004
Chairman's report
Despite the continued challenging trading conditions in the UK manufacturing
sector, Chemetall PLC was able to grow its third party sales by 5% during 2004.
Particularly pleasing was the growth in new automotive component and aerospace
business which more than offset a further decline in general manufacturing
industry sales. The Middle East markets achieved their ambitious sales plan and
new business in the rail sector gives cause for optimism.
Results and dividends
During the year the Group generated a profit on ordinary activities before
taxation of #1.9 million (fifteen months ended 31 December 2003: #3.2 million)
with a turnover of #13.9 million (fifteen months ended 31 December 2003: #16.8
million). The result for the fifteen month period to 31 December 2003 included
exchange gains of #1.2 million on loans held with other Chemetall GmbH group
companies denominated in foreign currencies which were converted into sterling
prior to the current period.
On 30 November 2004 we acquired the aircraft sealant surface treatment business
of Chemetall Speciality Chemicals Ltd for #0.8 million. The fair value of net
assets acquired was #0.5 million.
The Group's loan assets, including any exchange movements and interest accrued
thereon, totalled #82.3 million at 31 December 2004 (31 December 2003: #80.9
million).
Preference dividends continue to be paid on the normal due dates.
Ultimate parent undertaking
On 1 August 2004 our ultimate holding company, mg technologies ag ('mg') sold
its chemical business, which includes Chemetall PLC, to the Rockwood Specialties
Group Inc., a US-based speciality chemicals company.
The change in ownership enabled the Chemetall Surface Treatment Division as a
whole to review its core business strategy and to set in place firm growth plans
for the future. Funds are available for future strategic acquisition and
technology additions, which should in turn ensure that the business as a whole
continues to deliver a strong performance going forward.
Pension Scheme
Due to the sale of the Chemetall business it was legally necessary to change the
pension arrangements of certain employees. During the period these employees
transferred from the mg technologies UK pension scheme to the Chemetall UK
scheme. This has resulted in the Company incurring a charge of #0.8 million to
maintain these employees' pension entitlements.
Board
There have been a few changes in the board during the year. Thomas Klatt
resigned as non-executive Director in April and Ernst-Joachim Molter resigned as
Chief Executive Director in September following the sale of the Chemetall group
to Rockwood in August. I would like to thank them both for their efforts.
In August Matthias Wilhelm Stoermer of Chemetall Frankfurt was appointed to the
board.
Employees
On behalf of the board I would like to thank our employees for their continuing
commitment to our business. Chemetall PLC continues to invest in both internal
and external training and development of all employees. The company has
maintained its Investors in People registration.
Outlook
We are confident that the third party sales growth trend will continue through
to 2005 with significant new business opportunities, particularly in the
automotive and aluminium sectors. Price increases will be necessary to maintain
profit margins that have come under pressure as the company suffers the impact
of significant key raw material price increases.
Alec Daly CBE
Chairman
Operating and financial review
Divisional analysis
The Aerospace Division ended the year at 8.2% over plan. Demand for aircraft
sealant and corrosion protective compounds at Airbus was particularly strong. We
maintained our position as the first tier supplier to Rolls Royce Aerospace
Engines. Overall demand in the airframe overhaul, repair and maintenance sector
was very strong.
The Automotive Division finished the year on plan with sales slightly ahead of
the prior year and expect that new business recently won will result in a growth
in sales during 2005. However, raw material price increases may adversely affect
revenues from this sector where price improvements are difficult to implement.
In our Advanced Technologies Division, the automotive components business unit
finished the year strongly at 8.4% above plan thanks mainly to some significant
new business gains. In contrast, general industries business unit sales suffered
following the closure of six key customers. New business is expected for the
Group's new chrome free aluminium technologies especially in the architectural
aluminium sector where industry standards have now been met. Significant
progress was made in the steel industry throughout the year. Chemetall PLC has
been successful in winning a significant new contract for the supply of cleaning
technology.
The Performance Products Division (PPD) continued to enjoy slow but steady
growth. Sales of maintenance chemicals to airport authorities, traffic film
remover to the road transport sector and front-end cleaners to the rail sector
provide cause for optimism during 2005.
Chemetall PLC was accredited to the new automotive industry standard TS169/40
during 2004. This accreditation was difficult to attain and helps to win us a
competitive edge over many of our competitors.
Acquisition
On 30 November 2004 the aircraft sealant surface treatment business of Chemetall
Speciality Chemicals Ltd was acquired. Details of this transaction are given in
note 6. During the period the business contributed turnover of #0.1 million and
broke even at operating profit level.
Profit performance and analysis
Turnover for the year to 31 December 2004 was #13.9 million (fifteen month
period to 31 December 2003: #16.8 million) with profit on ordinary activities
before taxation being #1.9 million (fifteen month period to 31 December 2003:
#3.2 million). The prior period result includes the effect of a #1.2 million
favourable exchange movement on a loan held by Chemetall PLC with Chemetall GmbH
which was converted to Sterling during that period.
At 31 December 2004 the Group held loans, including interest accrued thereon,
totalling #82.3 million (31 December 2003: #80.9 million). Interest earned on
these loans during 2004 totalled #2.9 million (fifteen months ended 31 December
2003: #3.3 million).
The Group incurred a charge of #0.8 million to transfer the pensions
arrangements of certain employees from the Metallgesellschaft Group Pension
Scheme to the Chemetall UK Scheme following the change in ownership of the group
in the year.
Cash flow and financing
The net cash inflow from operating activities before exceptional cash items was
#1.5 million (fifteen months ended 31 December 2003: #0.8 million). Exceptional
cash items of #0.8 million relate to the transfer of certain employees pension
arrangements following the change in the Group's ultimate holding company.
Payments of interest totalling #1.3 million on loans were received from
Chemetall GmbH during the year.
The funds received on payment of loan interest have been used to eliminate bank
overdrafts; any surpluses are remitted to our holding company Chemetall GmbH. At
the year-end, the Group had net cash balances of #0.3 million (fifteen months
ended 31 December 2003: #0.2 million).
During the year the Group joined a cash-pooling arrangement with other Rockwood
companies in the UK.
Taxation
The Group's tax charge on profit is #0.4 million, representing an effective rate
of 22.3%. The effective rate is lower than the UK corporation tax rate of 30%
mainly due to adjustments and deductions relating to prior years. #2.2 million
of tax credits associated with prior year's tax losses continue to not be
recognised.
Treasury Policies
The Group's treasury policies, which are approved by the board, seek to
eliminate risk from currency movements affecting sales and purchases denominated
in foreign currencies. We use instruments such as forward currency sale or
purchase contracts where practical and cost effective.
Where appropriate, the Group's financial systems are able to transact business
denominated in foreign currencies.
Accounting changes
The Company will be required to adopt International Financial Reporting
Standards ('IFRS') with effect from 1 January 2005. An initial assessment of the
impact on the Group's financial statements and processes has been made.
Accordingly the Group's interim results to 30 June 2005 will be prepared in
accordance with IFRS.
Consolidated Profit and Loss Account
for the year ended 31 December 2004
Note Year ended 31 15 months ended
December 31 December
2004 2003
#000 #000
Group turnover 2 13,885 16,820
Cost of sales (7,710) (8,492)
Gross profit 6,175 8,328
Selling and distribution
costs (5,397) (6,325)
Administrative expenses (1,905) (3,530)
Other operating income 108 125
--------------------- -------- -------- --------
Operating loss
before exceptional
operating items (219) (552)
Exceptional
operating items
- litigation costs - (850)
- pension costs (800) -
--------------------- -------- -------- --------
Operating loss (1,019) (1,402)
Profit on sale of
properties held for
resale - 6
Loss on ordinary
activities before
interest (1,019) (1,396)
Net interest
receivable and
similar income 4 2,948 4,568
Profit on ordinary
activities
before taxation 3 1,929 3,172
Taxation on profit
on ordinary
activities (430) (628)
Profit for the
financial period 1,499 2,544
Dividends on equity
and non-equity
shares 5 (1,080) (1,350)
Retained profit for
the period 419 1,194
The results for the current and preceding financial period are derived from
continuing operations.
Consolidated Balance Sheet
at 31 December 2004
Note 31 December 31 December
2004 2003
#000 #000 #000 #000
Fixed assets
Intangible assets 2,890 2,906
Tangible assets 1,297 1,443
4,187 4,349
Current assets
Stocks 1,124 1,082
Debtors 86,397 85,500
Cash at bank and in hand 300 203
87,821 86,785
Creditors: amounts falling (4,284) (3,838)
due
within one year
Net current assets 83,537 82,947
Total assets less current
liabilities 87,724 87,296
Provisions for liabilities
and (629) (667)
charges
Net assets 87,095 86,629
Capital and reserves
Called up share capital 18,889 18,889
Share premium account 29,757 29,757
Profit and loss account 38,449 37,983
Shareholders' funds 7 87,095 86,629
Equity 75,095 74,629
Non-equity 12,000 12,000
87,095 86,629
Consolidated Cash Flow Statement
for the year ended 31 December 2004
Note Year ended 31 December 2004 15 months ended 31 December
2003
#000 #000 #000 #000
Net cash
inflow/
(outflow)
from
operating 8 671 (22)
activities
Returns on
investments
and
servicing of
finance
Interest
received 1,282 2,056
Interest (2) (73)
paid
Dividends (1,080) (1,080)
paid
Net cash
inflow from
returns on
investments
and
servicing 200 903
of finance
Taxation (610) (434)
Capital
expenditure
and
financial
investment
Purchase of
tangible
fixed (164) (118)
assets
Purchase of
intangible
fixed assets - (6)
Sale of
properties
for - 46
resale
Net cash
outflow from
capital
expenditure (164) (78)
Increase in
cash in the
period 10 97 369
Consolidated Statement of Total Recognised Gains and Losses
for the year ended 31 December 2004
Year ended 31 15 months ended
December 31 December
2004 2003
#000 #000
Profit for the
financial period 1,499 2,544
Exchange
difference on the
retranslation of
net investments
and related
borrowings 47 4,623
Total gains
recognised since
last annual report 1,546 7,167
Notes to the Preliminary Statement
1.Accounting policies
Basis of preparation
The unaudited preliminary results for the year ended 31 December 2004
have been prepared in accordance with UK generally accepted accounting
principles. The accounting policies applied are those set out in the
Group's Annual Report and Accounts for the fifteen months ended 31
December 2003. The Group has followed the transitional arrangements of
FRS 17 "Retirement Benefits" in these financial statements.
Basis of consolidation
The consolidated financial statements include the financial statements
of the Company and its subsidiary undertakings made up to 31 December
2004. The acquisition method of accounting has been adopted. Under this
method the results of subsidiary undertakings acquired or sold during
the year are included in the consolidated profit and loss account from
or to their respective dates of acquisition or disposal. Where
appropriate, the financial statements of overseas subsidiary
undertakings are adjusted to conform to the Group's accounting policies.
2. Turnover
All activities are derived from the development, manufacture and
marketing of specialised industrial chemicals.
3. Profit on ordinary activities before taxation
Profit on ordinary activities before taxation is stated after charging
#800,000 to transfer the pension arrangements of certain employees from
the Metallgesellschaft Group Pension Scheme to the Chemetall UK Scheme
following the change in ownership of the group in the year.
4. Net interest receivable and similar income
Year ended 15 months ended
31 December 2004 31 December 2003
#000 #000
Interest receivable
and similar
income
Loans to group
undertakings 2,949 3,335
On cash
balances 1 74
Exchange gain
on loans to
group
undertakings - 1,232
2,950 4,641
Interest payable
and similar
charges
Bank overdrafts (2) (73)
Net interest
receivable 2,948 4,568
5. Dividends and other appropriations
Year ended 15 months ended
31 December 2004 31 December 2003
#000 #000
9% redeemable
preference shares
Dividend paid 540 810
Dividend proposed 540 540
1,080 1,350
6. Acquisitions in the year
On 30 November 2004 Chemetall PLC acquired the aircraft sealant surface
treatment business of Chemetall Speciality Chemicals Ltd. The following
table analyses the preliminary fair value of the net assets acquired:
#000
Stocks 16
Debtors 519
535
Consideration - on account with Chemetall Speciality
Chemicals Limited 785
Goodwill 250
The goodwill arising from the above acquisition is amortised over 25
months.
The turnover and results of the acquired business have not been shown on
the face of the profit and loss account as they are not considered
material. The turnover and operating profit of the acquired entity
included in the profit and loss account are:
#000
Turnover 104
Operating profit 5
7. Reconciliation of movements in shareholders funds
31 December 31 December
2004 2003
#000 #000
At 1 January 2004 86,629 80,812
Profit for the year 419 1,194
Other recognised gains and losses in 47 4,623
the year (net)
At 31 December 2004 87,095 86,629
8. Reconciliation of operating profit to operating cash flows
15 months ended
31 December 2004 31 December 2003
#000 #000
Operating loss before exceptional operating
items (219) (552)
Exceptional operating items (800) (850)
Operating loss (1,019) (1,402)
Depreciation, amortisation and impairment
charges 576 672
(Increase)/decrease in stocks (42) 95
Decrease in debtors 800 1,243
Increase/(decrease) in creditors and other
provisions 356 (630)
Net cash inflow/(outflow) from
operating activities 671 (22)
9. Analysis of net funds
At the Cash flow Exchange Other At the end of
beginning of movement the year
the year
#000 #000 #000 #000 #000
Cash at bank 203 97 - - 300
Loans to group
undertakings 80,866 (1,503) 50 2,948 82,361
Net funds 81,069 (1,406) 50 2,948 82,661
10. Reconciliation of net cash flow to movement in net funds
15 months ended
31 December 31 December
2004 2003
#000 #000
Increase in cash in the period 97 369
Cash flow from movement in funds
in the period (1,503) (1,982)
Change in net funds resulting
from cash flows (1,406) (1,613)
Non-cash movements on loans (see 2,948 4,040
below)
Translation differences 50 4,083
Movement in net funds in the 1,592 6,510
period
Net funds at beginning of the 81,069 74,559
period
Net funds at the end of the 82,661 81,069
period
Non-cash movements on loans consist of accrued and current interest
being rolled up into the principal amounts on existing loan to group
undertakings.
11. Declaration
The results for the year ended 31 December 2004 are unaudited. The
results for the fifteen months ended 31 December 2003 are an extract
from the full accounts for that period and have been delivered to the
Registrar of Companies; the report of the auditors on those accounts was
unqualified. The accounts for the year ended 31 December 2004 will be
posted to all shareholders shortly. The report of the auditors on those
accounts is expected to be unqualified. The financial information in
this statement does not constitute full statutory accounts within the
meaning of section 240 of the Companies Act 1985.
Ends
For further information, please contact:
Rob Rydings, Chemetall PLC Tel: 01908 361817
This information is provided by RNS
The company news service from the London Stock Exchange
END
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