Synthomer Regulatory News (SYNT)

 17 May 2012

Yule Catto & Co plc (the "Group") 

AGM & Interim Management Statement

At this morning's AGM of Yule Catto & Co plc, the international producer of speciality chemicals, Chairman Peter Wood will make the following statement which also comprises the Group's interim management statement for the period 1 January 2012 to date.

Profitability for the period was substantially ahead of prior year* and in line with the Board's expectations, in what has been a very challenging environment. The economic issues, particularly in Europe, have produced an environment of high raw material volatility and a general lack of business confidence.

In our Europe and North America segment, volumes in Q1 were 11% below what was a strong start to 2011, but 14% ahead of Q4 2011. Weakness was most evident in sales to the construction sector. Margin management has more than compensated for the lower volume levels, and together with the benefit of the planned synergies, the segment operating profit was substantially ahead of prior year.

In our Asia and ROW segment, the Construction and Coatings business unit showed good year on year improvement. However, in Health and Protection, demand remained subdued. Asia and ROW volumes were down 1% on Q1 2011 and 11 % ahead of Q4 2011. Margins in Health and Protection in the first half of 2011 were reasonably strong and have not been maintained at these high levels. Consequently results overall for the segment were below prior year.

Synergies hit an annualised run rate of £20 million as at the end of Marchand remain on track for £25M at the end of Q1 next year. This represents a £15M full year synergy benefit to 2012 operating profits compared to prior year.

The Group's latex expansion in Malaysia remains on track for production in the fourth quarter. This expansion will allow us to keep pace with long term demand in the high growth nitrile latex market and allow additional growth through the sale of locally manufactured SBR.

Net debt at the end of April was £171M, slightly up on the year end position of £164M

The Board also notes the current weakness of the euro which has hit 1.25 against sterling in recent days, having averaged 1.20 over the first four months of 2012, and 1.15 through 2011. The Group made a little over half of its operating profit in the euro zone in 2011. The translation effect of a one cent movement in the euro equates to approximately £0.5M of operating profit.

The environment remains both challenging and volatile. Against this background, the Board is pleased with the Group's financial performance year to date, and its expectations for the performance of the Group over the remainder of the year remain unchanged.

Note: * The Group reported an underlying proforma PBT of £96.0M for full year 2011, which included an adjustment to reflect the first quarter's pre acquisition operating profit of PolymerLatex of £13.3M and an estimated interest cost of £2.1M. Comments on PBT, operating profit performance and volumes for the period under review compared to 2011 are based on this proforma basis.

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