Synthomer Regulatory News (SYNT)

3 Mar 2005 07:00

Yule Catto & Co PLC03 March 2005 Yule Catto & Company plc Preliminary Results for the year ended 31 December 2004 Solid performance in the testing operating environment of 2004 - PBT in linewith market expectation. HIGHLIGHTS • Profit before taxation* at £31.0 million • Dividend per share 13.4 pence, a rise of 3.1% • Free cash flow before dividends at £13.3 million, held back by the impact of rising monomer costs • Profit on ordinary activities before taxation of £15.5 million • Strong volume growth in Polymer division • Eight drug master files registered in USA * excluding amortisation of goodwill Anthony Richmond-Watson, Chairman, comments: "Overall we delivered a solid performance in the testing operating environmentof 2004 and remain well positioned to deliver volume growth. The investments ofrecent years in positioning manufacturing assets strategically and instrengthening our development facilities are in place. However, predicting thetime scale within which these initiatives translate to results will depend onglobal factors affecting our suppliers and customers alike. " 3 March 2005 ENQUIRIES: YULE CATTO Tel: 01279 442791Alex Walker, Chief ExecutiveSean Cummins, Finance Director COLLEGE HILL Tel: 020 7457 2020Gareth David email: gareth.david@collegehill.com RESULTS SUMMARY 2004 2003 Note Audited Audited £'000 £'000 Total turnover* 549,444 550,114 Earnings before taxation, interest, depreciation, 5 66,871 96,474 amortisation* Operating profit before amortisation* 5 43,961 73,432 Total operating profit 28,492 57,985 Profit before taxation + 5 31,011 59,914Profit on ordinary activities before taxation 15,542 49,185Profit attributable to shareholders 4,626 27,798 Net borrowings 187,641 177,276Net cash inflow from operating activities 49,181 111,140Free cash flow before dividends 5 13,344 62,979 Adjusted earnings per ordinary share 13.9p 27.6pBasic earnings per ordinary share 3.2p 19.2p Dividends on ordinary shares:Interim paid November 5.5p 5.3pFinal proposed/paid 7.9p 7.7pTotal dividend 13.4p 13.0p Note: * Includes attributable share of joint ventures: turnover £12,877,000 (2003 £10,487,000) + Before amortisation, sale and termination of business and profit on disposal of fixed assets CHAIRMAN'S STATEMENT After the exciting returns from the sale of omeprazole to USA in 2003, weentered 2004 with the expectation that profit would be lower than the previousyear. As things turned out, macro-economic conditions conspired to cause theprice of oil to increase, leading to upward pressure on the input cost ofmonomers and a squeeze on margins. The weakening of the US dollar also reducedthe profitability of sales denominated in that and related currencies. Theresultant impact on profit masked good progress that was made towards thelong-term development of the group, with strong volume growth in polymers andfurther evolution in the pipeline for pharmaceutical active ingredients. Total turnover of £549.4 million was in line with last year, however, atconstant exchange rates, underlying growth was 5%. Profit before taxation hasbeen struck at £31.0 million, which must be viewed as a solid achievement giventhe number of negative factors in play throughout the year. The sharp escalation in the cost of monomers has been the most difficult issuefaced by our operations. In total raw material costs for the Polymer divisionrose by £25 million in the year, requiring selling price increases to berevisited on a regular basis. The fact that an operating profit within £3million of the prior year was delivered in such trying market conditions is atestament to the quality of our products and the skills of our management teams. Movements in foreign currency exchange rates again had a detrimental bearing onresults. Sterling appreciated against almost all of the currencies in which wehave manufacturing operations, resulting in an adverse impact of nearly £2million upon the translation of overseas results. The primary exposure ontransactions is to the US Dollar, which weakened by a further 14%, creating anunfavourable effect of nearly £8 million. The commitment to increase pension contributions by £6 million per annum hasbeen reflected in the results for a full year for the first time in 2004.Higher payments from both the group and employees, a review of certain benefitsand an improvement in stock market performance, saw the deficit on the pensionfund reduce during the year. Adjusted earnings per share of 13.9 pence were achieved. Long term prospectsfor the group remain sound, particularly should raw material price fluctuationsabate. Your Directors therefore propose a final dividend of 7.9 pence per sharetaking the total for the year to 13.4 pence, an increase of 3.1% over theprevious year. Subject to shareholder approval at the Annual General Meeting,the dividend will be paid on 4 July to members on the register at close ofbusiness on 3 June. After a high level of capital expenditure in recent years, capital investmentwas lower in 2004 at £16.7 million, being 0.7 times depreciation. Asanticipated, the high level of working capital reported at the half year hasreduced. However, for the year as a whole there was upward pressure due tohigher monomer costs, which increase the unit carrying value, together with apriority on securing raw materials during a period of restricted availability.The resultant free cash flow was £13.3 million and net debt at the year end was£187.6 million. In September we issued £75 million of Guaranteed Senior Unsecured Loan Notes toinstitutional investors in USA, which are repayable between 2012 and 2016.November saw the refinancing of a £60 million revolving credit facility withfive European banks, expiring in November 2009. The two initiatives, togetherwith £100 million of long term loans previously placed, provide long termsecurity for our borrowing requirements. In responding to a far from easy operating environment, the commitment and hardwork of our employees around the world is our most valuable asset. We haveexperienced many new challenges during the year, which were addressed bycustomary resource and energy. On behalf of the Board of Directors, I shouldlike to recognise the invaluable contribution of our employees and thank themfor their efforts on behalf of Yule Catto. Safety, health and environmental issues are of the highest importance withinYule Catto. In recent years we have seen a pleasing trend of improvingstatistics in this area, and to take matters a stage further we are fullycommitted to support the UK Chemical Industry Association through adoption ofits recently published principles of sustainable development. This will broadenthe categories targeted for improvement by introducing additional measures toreduce energy and waste. We will publish our objectives for the next five yearsin 2005. Much effort has been directed at the detailed programme necessary to effect asmooth transition to International Financial Reporting Standards (IFRS), whichbecame effective from 1 January 2005. The restated results for 2004, underIFRS, will be audited prior to their release on 8 September with the 2005interim results. Following the introduction of IFRS, we anticipate greatervolatility on reported earnings, in particular relating to the accounting forgoodwill, financial instruments and foreign exchange. Outlook Volume continues to be strong within the Polymer business and the globalinfrastructure is in place to support further growth. Additional selling priceincreases are being implemented, which should alleviate some of the marginpressure experienced in 2004. We are well placed to sustain growth, and exploitopportunities to return to historic levels of operating margin, but in theshort-term, results may be constrained by the impact of a tightness within theraw material supply chain. The strategy to increase the number of generic active pharmaceutical ingredientsregistered continues apace, with another 8 DMFs targeted for filing in USA inthe current year. This will further improve the platform for the long-termdevelopment of the Pharma business. Delays in the approval of new chemicalentities, together with adverse publicity surrounding certain products alreadyin the market, is causing pharmaceutical companies to review their outsourcingrequirement, thereby potentially creating uncertainty for us in the area ofcontract manufacturing. Overall we delivered a solid performance in the testing operating environment of2004 and remain well positioned to deliver volume growth. The investments ofrecent years in positioning manufacturing assets strategically and instrengthening our development facilities are in place. However, predicting thetime scale within which these initiatives translate to results will depend onglobal factors affecting our suppliers and customers alike. ANTHONY RICHMOND-WATSON,Chairman 3 March 2005 REVIEW OF OPERATIONS POLYMER CHEMICALS £'000 Sales (including joint ventures) 2004 316,108 2003 295,354 Divisional Operating Profit 2004 26,907 2003 29,608 Against a backcloth of substantial supply-side difficulties, our polymerchemicals businesses did well to maintain progress towards our long-termstrategic aims. Along with the pressure of rising oil-derived raw materialprices throughout the year, there were unprecedented shortages of key monomersused in our products. This not only exacerbated price levels further, but alsorestricted the achievement of a number of identified growth opportunities. Itis, therefore, pleasing to report record sales volumes, capacity utilisationimprovements and the creation of new opportunities through product innovation. The magnitude of the challenges facing our business in 2004 was most apparent inEurope as we endured serious raw material shortages. Fifteen force majeureswere called by our suppliers as feedstock output was interrupted by oil crackeroutages and plant production problems. As a consequence, an already tightsupply v. demand balance came under strain and suppliers were forced either toallocate or temporarily halt supply. This had the effect of compounding theimpact on raw material costs that were already moving upwards with the rise incrude oil prices. It was difficult to reflect the speed of change in inputprices quickly in our selling prices with the result that margins declinedacross the year. Recognition of these unusual circumstances, and their implications has now beenaccepted by our customer base and selling prices are being increased, which willprovide margin recovery as raw materials stabilise. The supply chain is likelyto remain fairly tight but good work in changing polymer formulations andseeking out new suppliers means that supplies in the year ahead should be moresecure. This will permit a resumption of the drive to achieve higher volumesfor our newly established European facilities. Outside Europe, our businesses did not suffer to the same extent, primarily assupply lines are different. However, they did not escape the global impact ofrising oil prices flowing through to higher raw material costs. Marketacceptance was quicker and margins were maintained by virtue of successful priceincrease programmes. We were also able to benefit from the strategic capacityenhancements made in late 2003 in the Middle East and South Africa which,combined with the introduction of new polymers, provided the platform forimproved results. Also playing its part was our Malaysian nitrile latexfacility which attained new highs in terms of output. Further capacityexpansion is now taking place in Saudi Arabia and we are progressing the designand planning stages for increased polymerisation facilities in Malaysia andBelgium. The price of crude oil continues to be volatile and raw material input pricesremain difficult to predict due to the tightness of supply. The most likelyoutlook is for more modest rises in coming months. Synthetic Latex Overall, volume of synthetic latex grew by 11% in the year. The achievement wasgreatly assisted by the Synthomer plant in Malaysia reaching full capacity andcustomers appreciating the benefits of indigenous production. Demand fordipping latex remains strong, with sales growing in excess of 15%. Support fromour UK facilities has been initiated, as has the design study for a 35% increasein the capacity of the facility in Kluang. This will have the additionalbenefit of enabling our Malaysian plant to manufacture other products from ourcomprehensive range of SBR latices for sale throughout the region. In Europe, our leadership in the carpet compound market was enhanced by thedevelopment of new customers. Unfortunately, in general, the carpet industryfaced difficult conditions, particularly in UK, where some traditional andwell-known names have been forced to cease trading. Freeing up capacity in Europe for construction and textile latices, generated bythe transfer of dipping latex manufacture to Kluang, has enabled us to widen thecustomer profile in other latex activities. European latex volumes forspeciality applications rose by 15% and only shortages of some specific rawmaterials restricted further growth. On the negative side, styrene monomer, oneof the main raw materials, was the subject of a change from quarterly to monthlypricing by suppliers as a consequence of sharply rising benzene prices.Efforts to reflect this speed of movement in selling prices were only partiallysuccessful. Emulsions Emulsion sales volume grew at over 8% across the group, which is a considerableachievement given the difficulty in meeting demand caused by many interruptionsin the raw material supply chain. Positive as it was, the volume growth did notreach the high levels we had hoped for during the first full year of tradingfrom our first emulsion facility in mainland Europe. Promotional activitieswere fully reactivated in the fourth quarter, with promising results as effortsto improve raw material supplies began to bear fruit. Significant businessopportunities exist and planning for additional capacity in Mouscron, Belgium isin progress. In the Middle East, record sales volumes and profits were achieved by our jointventure, DCI-Harco. Yet another new reactor is in the course of installation tomeet continued strong demand from customers in Saudi Arabia and adjacentcountries. The strength of the Rand affected exports by our South African subsidiary, butdemand from the local economy more than compensated. The performance was aidedby the introduction of new polymers for construction, adhesives and surfacecoatings to enhance the product portfolio. Our Far East group also had a successful year in emulsions. Closerco-ordination between regions, involving technical exchange, allowed RevertexMalaysia to configure its production facilities to manufacture an increasedrange of speciality emulsions. Local economies remain reasonably robust andmanagement deployed close technical contact with customers to aid the reactionto raw material price rises through new product introductions. Polyvinyl Alcohol and Acetate A debottlenecking programme enabled improved capacity utilisation and with thePVC industry, the main outlet for Synthomer's Alcotex range, showing growth, thesales of Polyvinyl Alcohol were at record levels. Particularly encouraging wasthe development of new business in Asian markets, where the benefits of theunique technical properties of our Alcotex primary stabilisers found favour inboth rigid and flexible PVC resins. A large proportion of sales are exportedfrom Europe to US Dollar denominated territories and currency weakness createdpressures upon margins. Recovery through selling price increases is beingachieved, but with the inevitable lag in implementation. Polyvinyl Acetate sales held up well despite disappointing sales to theautomotive sound damping market. The introduction of new products opened up anew field for Synthomer, namely low profile polyester additives and we expect tobuild on sales in the USA. Other Speciality Products In April, Revertex Malaysia joined forces with Kurian Abraham Private Ltd toform a joint venture, Revertex KA Latex (India) Private Ltd, to manufacture ourspeciality natural rubber latices in India. India is fast becoming a majorproducer of natural rubber and is already No.3 in the world. We envisage thecombination of an indigenous raw material source and our well-establishedtechnology will provide a sound extension to our natural rubber activities. Theexisting natural rubber business in Malaysia and Thailand showed good growthwith sales for condom manufacture increasing in China and the USA. Revertex Finewaters' position in the manufacture and sale of adhesives inMalaysia has been enhanced with a number of new products added to the alreadywide product range. Furthermore, export sales improved, particularly toVietnam, Hong Kong, Thailand and Pakistan. However, the company was not immunefrom rising input costs and profitability fell back from the high levels ofprevious years. Sales of alkyd resins in Asia reached record levels. Not only did we seeorganic and new customer growth from our own promotional activities, butbenefits also accrued from an unexpected surge in demand as other suppliersexperienced production problems. New technical initiatives in the Lithene polybutadiene business resulted in a23% growth year on year. The growth is expected to continue and a capacityenhancement project is programmed for 2005. PHARMA AND FINE CHEMICALS £'000Sales 2004 96,868 2003 111,994 Divisional Operating Profit 2004 16,244 2003 36,170 Sales by our Pharma & Fine chemicals businesses fell by 13.5%, which wasunsurprising given the significant changes that took place in late 2003 in theomeprazole market in the USA. Margins were fairly consistent throughout theyear, delivering a healthy level of operating profit. The inevitable effect on selling prices of omeprazole becoming fully generic inthe USA was a key feature of 2004. Development of other territories, however,enabled volume to be very close to the exceptional shipments of 2002. Zegerid(TM), a new patented immediate release version of this important proton pump inhibitor, was launched in October. An exclusive long-term supply contract is in place with our customer, Santarus. Close to the end of the year a largerdose variant received FDA approval, which should further enhance salesopportunities. The fine chemical market for pharmaceuticals is passing through an interestingperiod as major drug manufacturers face an increasingly tough regulatorylandscape. The cornerstone of our strategy continues to be the development ofan extensive generic portfolio. Last year, this advanced through the filing ofeight drug master files in a range of therapeutic categories in the important USmarket. Plans are in hand to continue this accelerated programme of filings in2005. Investment to support our strategy will come on stream in the comingmonths, with a new technology centre in Spain and the completion of a new pilotplant in Italy. Major contracts in the ethical market have been secured, but uncertaintieswithin our customer base are lengthening approval times and delaying projectstart dates. A number of clinical phase projects were successfully manufacturedand a potential anti-parkinson product in phase 2b is scheduled to move toindustrial quantities in the coming year. Challenges remain as ever, including the effect of a weakening US currency onmargins of products sold from our European manufacturing base. Looking forward,however, we retain confidence in our development skills and the benefits ofconcentration on cost efficient plants and processes. The outlook for productapprovals and regulatory permissions in the ethical sector may, in the nearterm, have an impact on the overall rate of progress achievable, but our genericdevelopment programme is gathering pace. Recently announced changes to EU rulesto bring them closer to those of the US regarding process development ahead ofpatent expiry, should further assist in the pursuit of this strategy. Trading for our flavour and fragrance activities was stable. Initiativesdirected towards improving the operating cost base proved fruitful. Pharma The Uquifa operations in Spain continued to enjoy the benefit of good volumes ofomeprazole. This was particularly true of sales of pelletised material, whichgrew by over 50%. New equipment is at present being installed at the SantCeloni facility to meet the increased customer demand for this added valuevariant. Margin erosion for ranitidine was significantly diminished, assisted by recentwork on process efficiency and, pleasingly, substantial volume growth wasachieved in a competitive market. Positions within the antiviral, antibacterialand antidepressive sectors began to emerge with products whose patent expiry wassome years ago. A product to the veterinary market also made good progresswhich, all in all, added up to a strong year for volume. New business gained in the ethical sector stretched our development andengineering teams which successfully installed new facilities against a tightdeadline. As well as long term contracts, this equipment brings newtechnologies to offer to our customer base. The pilot plant remains busy withgood loadings in the months ahead. Following the decontamination of the cephalosporins plant in Italy, a number ofnew products were introduced and contracts received. However, the regulatoryand technical approval process has taken much longer than anticipated. Inresponse, products are in the process of being moved from Spain and Mexico,where plant occupancy is at a high level, and a close control of operating costsand efficiencies is being maintained. Validation batches of new products usingdifferent technologies, only sited in our Italian plant, are scheduled in theearly part of 2005. Sales from our Mexican facility were strong, led by significant volumes ofethical intermediates to large pharmaceutical companies. As anticipated,volumes of the antibacterial ciprofloxacine started well with patent expirymid-year in USA. Contribution was ahead of expectations, but far from that seenfor other products turning generic owing to the number of competitors at launch. Sales of an antipsychotic, zolpidem, are progressing well and we are wellplaced with major generic houses in the USA where it is scheduled to come offpatent in 2006. Flavour and Fragrances The pace of consolidation within the world's flavour and fragrance market abatedduring the course of the year. Unit sales prices continued to come underpressure from Far Eastern competition, but the higher quality of our products isshowing signs of combating this threat. Oxford Chemicals delivered a robust performance, with good profitabilityre-established, assisted by the cost-control measures implemented the previousyear. The company's high level of expertise in sulphur chemistry is beingdeployed in support of Uquifa through the manufacture of pharmaceuticalintermediates. New technologies for product manufacture are also being exploredthrough collaboration with universities and a priority is being given toidentifying sources of starting material for natural flavours. The PFW fragrance business had a good year with new business secured in emergingmarkets. Good inter-group collaboration is seeing the larger scale facilitiesof PFW being used in support of Oxford Chemicals to reduce the manufactured costof some key volume products. PERFORMANCE CHEMICALS £'000Sales 2004 136,468 2003 142,766 Divisional Operating Profit 2004 5,418 2003 11,737 A mixture of adverse factors affected our performance chemicals businessesthroughout the whole of 2004. This cumulatively resulted in a halving ofoperating profit from that achieved the previous year, which was disappointing.In particular, the sharp fall in the US Dollar against Sterling and Euro hitmargins in the second half. Aggressive competition from overseas for sulphurderivatives and uncertainty in the timber treatment market were also a feature.Production output for ultramarine has steadily been re-established with thesuccessful commissioning of a new flue gas desulphurisation unit (FGD) inFrance, replacing the one that had been destroyed by fire. Better fortunes wereexperienced with specialised intermediates directed at the personal care,photographic and houseware markets. Turnover for continuing businesses was sustained at close to 2003 levels,despite these testing market conditions, demonstrating a successful defence ofmarket share. In addition, the assault on operating costs continued, withsubstantial restructuring charges once more incurred. Progress was achieved inthe construction of new cost effective facilities in pursuit of restructuring todeliver further efficiencies. Inorganic Chemicals Uncertainty over the direction of our customer base in responding to the moveaway from copper chrome arsenate timber treatment to more environmentally -acceptable systems impacted unfavourably. Ways of addressing this issue areunder development, using new approaches to providing copper-based products forsupply throughout Europe. High purity copper chromite for catalyst manufacturehas been added to the range, with good customer acceptance. Sales of tin products for use in non-toxic flame retardants, insulating glasssystems and pharmaceutical manufacture showed good growth. The impact of arising tin price was well managed. Iodine sales also delivered good results asthe more recently introduced products gained market penetration. Sulphur dioxide derivatives saw considerable market instability, due topressures from competitive activity. Market share in the UK and Ireland hasbeen successfully defended by focusing on good logistics and high level customerservice. A new transport fleet is being introduced through outsourcing to ahighly experienced logistics company. Changes were also instituted to thedistribution network which will positively impact upon margins attainable. To reflect the changed trading conditions, employee numbers have been reduced,with the result that William Blythe reported a loss for the year as a whole.The reorganisation of operations, coupled with product introductions andmarketing initiatives, place the business in a better position going forward. Organic Chemicals and Pigments James Robinson delivered a pleasing performance across all of its activities.This result came from a combination of the benefits accruing from therestructuring of recent years and good demand in the market for our specialityproducts. Opportunities arose for higher volumes of our market-leading hair dyeproducts from the merger of major customers. Sales have been strong and changesto the distribution network in key territories will benefit market penetration.Colour developer sales experienced good growth and our Indian joint venturemoved into decent profitability. Investment is in progress in India to extendthe range of intermediates manufactured. The photochromics business saw salesrise by 24% as new products were introduced and our proprietary neutralmolecules gained wider acceptance. The alignment of the manufacturingfacilities with market needs is progressing, underpinning results going forward. The successful commissioning of the state-of-the-art FGD unit at our ultramarinefacility in France provided the opportunity to rebuild sales volume to the levelseen in 2002. The unit is performing well and the investment has receivedaccolades from the French environmental authorities. Over half of allultramarine sales are made in US Dollars and the weakening of that currency hasa marked effect on operating margins. To combat this, selective price increaseshave been introduced, as has a review of the cost base. Projects to refine themanufacturing process have also recently been implemented. These aredelivering improvements in quality and yield. The world demand for ultramarine pigment continues to grow, with China and theFar East being particularly strong. In addition, the new applicationdevelopment programme of recent years is starting to see the number and qualityof approvals increasing. The re-establishment of production levels will nowenable growth in volume from our global customer base to be fully supported. Other Activities Demand from the industrial and retail sectors for our consumer chemicalsproducts was relatively flat holding back efforts to grow sales. Resultsimproved, but less than was anticipated from reductions implemented in theoperating cost base. Holliday Dispersions saw a difficult year, particularly in France, wherecustomers still suffered the impact of depressed market conditions. In the UK,sales levels were successfully sustained, but margins came under pressure as rawmaterial cost increases took effect in the second half. The car preparation services offered by Autoclenz experienced buoyant tradingand the business delivered new records for performance. This was assisted bygreater levels of efficiency and pleasing growth in new development areas. Brencliffe was impacted by some changes in its retail customer base in the earlymonths of 2004. As the year unfolded, a high level of product innovationenabled this small company to return to forward momentum. YULE CATTO & COMPANY PLC Preliminary Results for the year ended 31 December 2004 CONSOLIDATED PROFIT & LOSS ACCOUNT 2004 2003 Audited Audited Note £'000 £'000 Existing operations 536,567 534,573Discontinued operations - 5,054Turnover of company and subsidiaries 536,567 539,627Share of turnover of joint ventures 12,877 10,487Total turnover 3 549,444 550,114 Operating profit before joint ventures and amortisationof goodwill Existing operations 42,005 71,950Discontinued operations - (233) 42,005 71,717Amortisation of goodwill Existing operations (15,469) (15,447) Operating profit of company and subsidiaries 26,536 56,270Existing operations 26,536 56,503Discontinued - (233)Operating profit of company and subsidiaries 26,536 56,270 Share of operating profit of joint ventures 1,956 1,715 Total operating profit 28,492 57,985 Sale and termination of businesses - 2,067Profit on disposal of fixed assets - 2,651Interest payable (net) (12,950) (13,518) Profit on ordinary activities before taxation 15,542 49,185Taxation on profit of ordinary activities (9,613) (19,848) Profit on ordinary activities after taxation 5,929 29,337Minority interests (1,303) (1,539)Profit attributable to shareholders 4,626 27,798 Ordinary dividends (19,376) (18,777)Retained (loss)/profit for the financial year (14,750) 9,021 Operating profit before amortisation 5 43,961 73,432 Profit before taxation * 5 31,011 59,914Profit after taxation and minorities* 5 20,095 39,802 Earnings per share - Adjusted 6 13.9p 27.6p - Basic 3.2p 19.2p - Diluted 3.2p 19.0p Note: * Before amortisation, sale and termination of business and profit on disposal of fixed assets YULE CATTO & COMPANY PLC Preliminary Results for the year ended 31 December 2004 SUMMARISED CONSOLIDATED BALANCE SHEET 2004 2003 Audited Audited £'000 £'000 Fixed assetsGoodwill 216,352 231,821Tangible fixed assets 166,440 175,067Investments in joint ventures 3,053 3,252Investments 25 38 385,870 410,178Current assetsStock 71,235 66,947Debtors 109,492 100,182Cash at bank and in hand 17,834 9,856 198,561 176,985Creditors - due within one yearBorrowings (26,210) (34,271)Dividends (11,440) (11,150)Other creditors (166,358) (170,966) Net current liabilities (5,447) (39,402) Creditors - due after more than one yearBorrowings (179,265) (152,861)Other creditors (222) (594)Provisions for liabilities and charges (26,983) (26,757) Net assets 173,953 190,564 Shareholders' funds - all equity 169,547 187,120Minority interests 4,406 3,444Capital employed 173,953 190,564 Net borrowingsCash at bank and in hand 17,834 9,856Borrowings - due within one year (26,210) (34,271)Borrowings - due after one year (179,265) (152,861) (187,641) (177,276) YULE CATTO & COMPANY PLC Preliminary Results for the year ended 31 December 2004 SUMMARISED CONSOLIDATED CASH FLOW STATEMENT 2004 2003 Audited Audited Note £'000 £'000 Net cash flow inflow from operating activities 4 49,181 111,140Dividends received from joint ventures 1,854 1,244Returns on investment and servicing of finance (12,453) (15,573)Taxation paid (8,504) (14,749)Capital expenditure and financial investment (16,734) (19,083) Free cash flow before dividends, financing, 13,344 62,979acquisitions and disposal of business Acquisition and disposal of business (1,358) (6,348)Equity dividends paid (19,086) (18,342)Cash (outflow)/inflow before financing (7,100) 38,289Financing 14,301 (30,567) Increase in cash balances 7,201 7,722 Movement in net borrowingsCash (outflow)/inflow before financing (7,100) 38,289Purchase of own shares (185) (211)Exchange movements (3,080) (4,163) (10,365) 33,915 Notes: 1. Copies of the 2004 Annual Report will be posted to the shareholders on 21 April 2005. 2. The financial information set out above does not comprise the company's statutory accounts. It has been derived from the group's audited accounts for the year ended 31 December 2004, which will be delivered to the Registrar of Companies following the Annual General Meeting. The accounting policies used to prepare these accounts are the same as those used in the preparation of group's audited account for the year ended 31 December 2003, which has been delivered to the Registrar of Companies. The auditors' report was unqualified and did not contain any statement under section 237 (2) or (3) of the Companies Act 1985. The Financial statements were approved by the Board of Directors on 3 March2005. YULE CATTO & COMPANY PLC Preliminary Results for the year ended 31 December 2004 NOTES (cont'd) 3. Analysis of total turnover by activity 2004 2003 £'000 £'000 Polymer Chemicals (including joint ventures) 316,108 295,354Pharma & Fine Chemicals 96,868 111,994Performance Chemicals - Continuing 136,468 137,712Performance Chemicals - Discontinued - 5,054 549,444 550,114 Analysis of operating profit by activity Polymer Chemicals 26,907 29,608Pharma & Fine Chemicals 16,244 36,170Performance Chemicals - Continuing 5,418 11,504Performance Chemicals - Discontinued - 233Holding companies (4,608) (4,083)Operating profit before amortisation 43,961 73,432 Analysis of total turnover by destination United Kingdom 128,634 132,502Other Europe 218,470 208,782Asia 98,870 97,711Africa and Middle East 45,863 38,245Rest of World 57,607 72,874 549,444 550,114 2004 2003 4. Reconciliation of operating profit to net cash inflow from £'000 £'000 operating activities Operating profit 28,492 57,985Share of profits of joint ventures (1,956) (1,715) 26,536 56,270Depreciation charge 22,910 23,042Cash impact of termination of businesses (280) (590)Amortisation of goodwill 15,469 15,447Amortisation of investments 13 13Amortisation of own shares held by ESOP 185 211Increase in stocks (4,645) (5,200)(Increase)/decrease in debtors (10,096) 15,177(Decrease)/increase in creditors and provisions (911) 6,770 Net cash inflow from operating activities 49,181 111,140 YULE CATTO & COMPANY PLC Preliminary Results for the year ended 31 December 2004 NOTES (cont'd) 5. Reconciliation of numbers shown in Highlights and Results Summary 2004 2003 £'000 £'000 Total operating profit 28,492 57,985Add: depreciation 22,910 23,042Add: amortisation of goodwill 15,469 15,447Earnings before taxation, interest, depreciation and amortisation 66,871 96,474 Total operating profit 28,492 57,985Add: amortisation of goodwill 15,469 15,447Operating profit before amortisation 43,961 73,432 Profit on ordinary activities before taxation 15,542 49,185Add: sale and termination of businesses - (2,067)Add: (profit)/loss on disposal of fixed assets - (2,651)Add: amortisation of goodwill 15,469 15,447Profit before taxation + 31,011 59,914 Profit attributable to shareholders 4,626 27,798Add: sale and termination of businesses - (2,067)Add: profit on disposal of fixed assets - (2,651)Add: tax on exceptional items - 1,275Add: amortisation of goodwill 15,469 15,447Profit after taxation and minorities + 20,095 39,802 Net cash inflow from operating activities 49,181 111,140Dividends received from joint ventures 1,854 1,244Net cash outflow from returns on Investments and servicing of finance (12,453) (15,573)Total tax paid (8,504) (14,749)Capital expenditure and financial investment (16,734) (19,083)Free cash flow before dividends 13,344 62,979 + before amortisation, sale and termination of business and profit on disposalof fixed assets YULE CATTO & COMPANY PLC Preliminary Results for the year ended 31 December 2004 NOTES (cont'd) 6. Adjusted earnings per share Earnings Earnings per share 2004 2003 2004 2003 £'000 £'000 p p Earnings - Basic 4,626 27,798 3.2 19.2Amortisation of goodwill 15,469 15,447 10.7 10.7Sale and termination of businesses - (2,067) - (1.4)Profit on disposal of fixed assets - (2,651) - (1.8)Tax on sale and termination of businesses and profiton disposal of fixed assets - 1,275 - 0.9Earnings - Adjusted 20,095 39,802 13.9 27.6 The adjusted earnings per share has been calculated to allow shareholders togain a clearer understanding of the trading performance of the Group. This information is provided by RNS The company news service from the London Stock Exchange