RNS Number:5159P
Yule Catto & Co PLC
09 September 2003
YULE CATTO & COMPANY PLC
Interim Results for the six months ended 30 June 2003
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
* Profit before tax up 37% at #36.2 million* (2002: #26.5 million)
* Earnings per share rise 36% to 16.5 pence* (2002: 12.1 pence)
* Record levels of free cash flow - #33.5 million
* Interim dividend increases to 5.3 pence per share, a growth of 4%
* Good contribution from sales of generic omeprazole to USA
* Volume growth in water based polymers, supported by new capacity
Anthony Richmond-Watson, Chairman, comments:
"We are delighted to report on a half year that saw a substantial rise in
earnings, supported by record levels of free cash flow and a further increase in
the dividend. Taking account of the results already achieved this year, we
continue to expect to deliver a new record level of profit for the full year."
9 September 2003
* Before amortisation of goodwill, sale and termination of businesses and profit
on sale of fixed assets.
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
-------------------------------------
Crawford Burden email:crawford.burden@collegehill.com
-----------------------------------------
YULE CATTO & COMPANY PLC
Interim Results for the six months ended 30 June 2003
RESULTS SUMMARY
Six months to 30 June 2003 2002
Unaudited Unaudited
#'000 #'000
Total turnover 284,549 254,512
Earnings before interest, taxation,
depreciation
and amortisation 54,754 * 43,542
Operating profit before amortisation 43,173 * 33,449
Profit before taxation and amortisation 36,233 * 26,455
Net borrowings 181,029 220,055
Free cash flow before dividends 33,486 2,889
Adjusted earnings per ordinary share 16.5p 12.1p
Earnings per ordinary share - FRS3 16.3p 6.8p
Interim dividend per share 5.3p 5.1p
* Excludes sale and termination of businesses and profit on
sale of fixed assets
YULE CATTO & COMPANY PLC
Interim Results for the six months ended 30 June 2003
CHAIRMAN'S STATEMENT
Overview
We are delighted to report on a half year that saw a substantial rise in
earnings, supported by record levels of free cash flow and a further increase in
the dividend. In the water-based polymer division, good volume growth has been
achieved, the benefits of which have been masked by high raw material costs. The
long-term focus on being a low-cost manufacturer of generic active
pharmaceutical ingredients has delivered outstanding rewards, whilst the
anticipated improvement in Performance Chemicals has begun to materialise.
The resultant profit before taxation, amortisation of goodwill and exceptional
items of #36.2 million is a creditable 37% increase over the first half of 2002.
Your Board has increased the interim dividend to 5.3 pence (2002: 5.1 pence) per
ordinary share, a growth of 4%.
Review of Operations
Polymer Chemicals
Divisional profit of 10% on sales is a noteworthy performance in a marketplace
exhibiting lower demand due to weakness in the major global economies, combined
with margin pressure arising from higher raw material costs. This has been
achieved by maintaining our strategy of focussing on more technically demanding
applications, whilst benefiting from previous strategic investments.
The recently created Synthomer business has made excellent progress in extending
our product portfolio to an ever larger customer base. The expansion of
dispersion capacity in Europe is progressing in line with expectation and will
provide the platform for future growth. In Malaysia, the levels of production in
the new nitrile facility have progressively increased as more customers take up
the benefits of local production: capacity utilisation is currently 65%. The
acquisition of Ditar in early 2003 has established a market leading position for
the supply of compound to the carpet industry and in addition, through the
supply of latex from Synthomer's facilities, operating efficiencies have been
improved and overall returns enhanced.
The rising cost of raw materials experienced towards the end of last year
persisted relentlessly throughout the current period, primarily due to the
uncertainty surrounding Iraq. Following the cessation of major hostilities the
price of oil weakened, alleviating the upward pressure on the cost of monomers.
In the third quarter of the year there has been some softening in raw material
pricing.
Pharma & Fine Chemicals
The success of generic omeprazole sales to the United States was a key feature
in the positive development of profits in the division, but growth was also
experienced in other generics and the portfolio of ethical contracts continues
to expand.
YULE CATTO & COMPANY PLC
Interim Results for the six months ended 30 June 2003
CHAIRMAN'S STATEMENT (cont'd)
Sales of ranitidine maintained their advance and with the prospect of further
contracts additional manufacturing capacity has been approved. We have enjoyed
growth in the veterinary sector, achieved sales into anti-diabetes and
anti-arthritis applications, whilst the new pilot plant is fully loaded with
early phase development contracts. Following the withdrawal from cephalosporins,
a major facility in Italy has been successfully decontaminated and is already
being put to good use manufacturing products for newly secured contracts.
Omeprazole sales have performed extremely well, with the USA territory being
particularly buoyant as the generic product established a high share of the
Prilosec(R) market. In an unprecedented move ahead of the completion of an ongoing
court process, new entrants have recently announced their intention to begin
sales of generic omeprazole to the USA market. This inevitably will create a
substantially more competitive commercial environment for our active ingredient
and affect margins. However, with lower pricing, generic omeprazole may more
rapidly penetrate the large and expanding wider proton pump inhibitor market,
providing the opportunity for increased volume sales. We have ample capacity
installed to support growth and are developing processes to optimise operating
efficiencies further.
Our fragrance business continues to recover from the disruption to its supply of
raw materials three years ago, with both volume and margins advancing. In
flavours, difficult market conditions have been widely reported and this has
been reflected in our performance.
Performance Chemicals
Good progress has been made in recovering from several difficulties experienced
in the second half of 2002. Profits have advanced 6% over the corresponding
period of last year and might have been better but for production restrictions
arising from a fire at our ultramarine factory in France last September.
The metal salts business benefited from strong demand for tin applications in
glass as did SO2 derivatives, particularly in carbonated drinks. The transition
from CCA to alternative timber treatment technologies is gathering pace and we
should benefit as a major supplier of the new generation products.
Approvals for the use of ultramarine pigment in automotive paints are
progressing; this sector offers excellent opportunities in the future.
Unfortunately, short-term results have been affected by limitations on output
caused by the fire in France. However, rectification work is well advanced and a
resumption of normal production is anticipated early next year.
YULE CATTO & COMPANY PLC
Interim Results for the six months ended 30 June 2003
CHAIRMAN'S STATEMENT (cont'd)
Improved contribution came from further penetration of the hair dye market,
combined with a good mix. Our speciality dyes for the petroleum industry have
recently become the standard across Europe for fuel identification, thereby
doubling sales, and growth was recorded for photographic developers as major
customer approvals were secured.
Exceptional Items
In 2000 we announced the withdrawal from the textile dye market. Following the
sale of the surplus land in June this year, the liabilities have been
successfully closed out more quickly and favourably than originally expected.
The cash proceeds were #2.4 million, generating an exceptional credit to the
profit and loss account of #7.4 million.
Borrowings
Net borrowings have reduced significantly from the position at 31 December 2002
to #181.0 million. The higher level of operating profit, combined with a reduced
level of capital expenditure, was boosted by the proceeds from the sale of fixed
assets. In addition, the normal seasonal increase in working capital was not as
significant as in previous years. All of this has resulted in an exceptionally
strong free cash flow of #33.5 million.
Dividend
The interim dividend of 5.3 pence per ordinary share will be paid on 20 November
2003 to members on the register at close of business on 24 October 2003.
Outlook
Whilst there is a good order book across the range of pharmaceutical active
ingredients, the extent of the impact on our results of new entrants into the US
generic omeprazole market is uncertain. Demand in our Polymer business continues
to be strong and margins should be restored if the softening trend in raw
material pricing is maintained. Additionally, a solid contribution from
Performance Chemicals is expected. Taking account of the results already
achieved this year, we continue to expect to deliver a new record level of
profits for the full year.
ANTHONY RICHMOND-WATSON
Chairman
9 September 2003
YULE CATTO & COMPANY PLC
Interim Results for the six months ended 30 June 2003
CONSOLIDATED PROFIT & LOSS ACCOUNT
6 months ended 6 months ended 12 months ended
30 June 30 June 31 December
2003 2002 2002
Unaudited Unaudited Audited
#000 #000 #000
Turnover of company and 279,833 249,935 501,562
subsidiaries
Share of turnover of joint 4,716 4,577 9,216
ventures ----------- ----------- ----------
Total turnover 284,549 254,512 510,778
----------- ----------- ----------
Operating profit
Existing operations 42,305 32,743 65,252
Amortisation of goodwill (7,701) (7,621) (15,244)
----------- ----------- ----------
Operating profit of company 34,604 25,122 50,008
and subsidiaries
Share of operating profit of 868 706 1,437
joint ventures ----------- ----------- ----------
Total operating profit 35,472 25,828 51,445
Sale and termination of 4,775 - -
businesses
Profit/(loss) on disposal of 2,651 - (1,825)
fixed assets
Interest payable (net) (6,940) (6,994) (14,127)
----------- ----------- ----------
Profit/(loss) on ordinary 35,958 18,834 35,493
activities before
taxation
Taxation on profit on ordinary (11,812) (7,963) (16,293)
activities ----------- ----------- ----------
Profit/(loss) on ordinary 24,146 10,871 19,200
activities after taxation
Minority interests (596) (999) (1,852)
----------- ----------- ----------
Profit/(loss) attributable to 23,550 9,872 17,348
shareholders
Ordinary dividends (7,675) (7,411) (18,095)
----------- ----------- ----------
Retained profit/(loss) for the 15,875 2,461 (747)
financial period ----------- ----------- ----------
Operating profit before 43,173 33,449 66,689
amortisation
Profit before taxation
(excluding amortisation,
sale and termination of 36,233 26,455 52,562
businesses and profit/(loss)
on sale of fixed assets)
Earnings per share - 16.5p 12.1p 23.9p
Adjusted
- FRS3 16.3p 6.8p 12.0p
Dividends per ordinary share 5.3p 5.1p 12.5p
YULE CATTO & COMPANY PLC
Interim Results for the six months ended 30 June 2003
CONSOLIDATED BALANCE SHEET
30 June 30 June 31 December
2003 2002 2002
Unaudited Unaudited Audited
#000 #000 #000
Fixed Assets
Goodwill 239,145 250,347 242,724
Tangible fixed assets 174,767 175,083 173,291
Investment in joint ventures 3,116 3,418 3,014
Investments 45 57 51
------------- ---------- ---------
417,073 428,905 419,080
Current assets
Stocks 66,422 62,803 60,740
Debtors 105,894 106,977 111,403
Bank and cash balances 11,149 3,989 6,553
------------- ---------- ---------
183,465 173,769 178,696
Creditors - due within one year
Borrowings (31,894) (63,811) (57,527)
Dividends (18,390) (17,629) (10,715)
Other Creditors (157,155) (146,098) (158,959)
------------- ---------- ---------
Net current liabilities (23,974) (53,769) (48,505)
------------- ---------- ---------
Total assets less current 393,099 375,136 370,575
liabilities
Creditors - due after one year
Borrowings (160,284) (160,233) (160,217)
Other creditors (66) (297) (71)
Provisions for liabilities and (25,564) (24,737) (25,059)
charges ------------- ---------- ---------
Net assets 207,185 189,869 185,228
------------- ---------- ---------
Capital and reserves
Called up share capital 14,480 14,480 14,480
Reserves 187,212 170,444 165,834
------------- ---------- ---------
Shareholders' funds 201,692 184,924 180,314
Minority interests 5,493 4,945 4,914
------------- ---------- ---------
Capital employed 207,185 189,869 185,228
------------- ---------- ---------
YULE CATTO & COMPANY PLC
Interim Results for the six months ended 30 June 2003
CONSOLIDATED CASH FLOW STATEMENT
6 months ended 6 months ended 12 months ended
30 June 30 June 31 December
2003 2002 2002
Unaudited Unaudited Audited
#000 #000 #000 #000 #000 #000
Net cash 55,670 25,108 72,802
inflow from
operating
activities
Dividends 792 553 1,410
received from
joint
ventures
Returns on
investments
and servicing
of finance
Net interest (8,200) (6,497) (13,649)
paid
Dividends paid (49) (65) (923)
to minority ------- ------- -------
interests
Net cash (8,249) (6,562) (14,572)
outflow from
returns on
investments
and servicing
of finance
Taxation (7,351) (7,436) (10,897)
Capital
expenditure
and financial
investment
Purchase of (10,133) (10,446) (20,862)
tangible fixed
assets
Sale of 2,757 1,672 1,910
tangible fixed
assets
Investments - - 12
net of ------- ------- -------
disposals
(7,376) (8,774) (18,940)
---------- -- ---------- --- -----------
Free cash flow 33,486 2,889 29,803
before
dividends
Acquisitions
and
disposals
Purchase of (4,105) - -
businesses
Equity - - (17,598)
dividends ---------- -- ---------- --- -----------
paid
Cash inflow 29,381 2,889 12,205
before
management of
liquid
resources and
financing
Financing
Exchange 781 221 (231)
movements ---------- -- ---------- --- -----------
Movement in 30,162 3,110 11,974
net ---------- -- ---------- --- -----------
borrowings
YULE CATTO & COMPANY PLC
Interim Results for the six months ended 30 June 2003
NOTES TO THE FINANCIAL STATEMENTS
1. Analysis of total turnover
6 months ended 6 months ended
30 June 2003 30 June 2002
Unaudited Unaudited
#'000 #'000
Analysis by activity
Polymer Chemicals 148,125 132,359
Pharma & Fine Chemicals 61,020 48,641
Performance Chemicals 75,404 73,512
-------- ---------
284,549 254,512
-------- ---------
2. Analysis of profit
6 months ended 6 months ended
30 June 2003 30 June 2002
Unaudited Unaudited
#'000 #'000
Analysis by activity
Polymer Chemicals 14,455 21,138
Pharma & Fine Chemicals 23,664 7,786
Performance Chemicals 7,103 6,727
Holding Companies (2,049) (2,202)
-------- ---------
43,173 33,449
-------- ---------
YULE CATTO & COMPANY PLC
Interim Results for the six months ended 30 June 2003
NOTES TO THE FINANCIAL STATEMENTS (cont'd)
3. Reconciliation of operating profit to net cash inflow from operating
activities
30 June 30 June 31 December
2003 2002 2002
Unaudited Unaudited Audited
#000 #000 #000
Operating profit 35,472 25,828 51,445
Share of profits of joint ventures (868) (706) (1,437)
--------- -------- ----------
34,604 25,122 50,008
Depreciation charge 11,581 10,093 20,671
Cash impact of termination of (155) (366) (510)
business
Amortisation of goodwill 7,701 7,621 15,244
ESOP trust - - (523)
Profit on sale of tangible fixed - 22 -
assets
Increase in stocks (4,150) (2,236) (279)
Decrease/(increase) in debtors 9,855 (7,750) (11,093)
Decrease in creditors and provisions (3,766) (7,398) (716)
--------- -------- ----------
Net cash inflow from operating 55,670 25,108 72,802
activities --------- -------- ----------
4. The financial information for the year ended 31 December 2002 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 9 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 5.3p (5.1p) per share, totalling #7.7 million (#7.4
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 -
144.3 million (144.8 million).
8. Adjusted earnings per share excludes the sale and termination of
businesses, profit on sale of fixed assets and the amortisation of goodwill.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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