Synthomer Regulatory News (SYNT)

12 May 2011

Yule Catto & Co plc (the "Group") 

Interim Management Statement

At this afternoon'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 2011 to date.

The Group's earnings for the first quarter were well ahead of the same period last year excluding any impact of the PolymerLatex acquisition, and the Board's expectations for financial performance for 2011 remain unchanged.

Overall demand in Yule Catto's Polymer business was solid. Asian demand was strong through the quarter, whilst Europe firmed after a slow start in the UK. Ongoing very substantial monomer price increases have had to be passed on to customers, resulting in the usual temporary margin compression as the increases are recovered and target unit margins per tonne restored. Consequently, although volumes increased in Polymers and turnover was strongly ahead, operating profit was flat year on year in the first quarter. Whilst Europe lagged the prior year, Asia was ahead, despite, as expected, profits being temporarily constrained by capacity during the quarter. This position will be resolved in the course of the second quarter with the new 15,000 tonne nitrile expansion coming on line and some spare capacity in the acquired PolymerLatex nitrile assets. In April, the existing Yule Catto polymer business performed ahead of prior year.

The acquisition of PolymerLatex completed at the end of March as anticipated. Integration planning progressed through the first quarter and is now being implemented. Post acquisition, the synergy potential has been confirmed, and management remain highly confident that at least £20m of synergies will be delivered as disclosed at the time of the acquisition announcement and to the same timetable. Regular updates on progress in delivering these synergies will be provided to investors, with the first update to be delivered with the group's half year results in August. As at the date of this statement, actions taken to date have already delivered synergies with an annual run rate value of approximately £2m.

PolymerLatex itself traded comfortably ahead of last year in the first quarter, and this has continued through April. The business benefited from good demand in central Europe for latex and volume growth in its Malaysian nitrile facility. Plans are already being developed for very substantial increases in capacity in Asia for nitrile and SBR latex to be brought on line before the end of 2012.

In the Group's other businesses in the first quarter, the Pharma division performed well ahead of what was a very weak result in the same period last year, whilst William Blythe continued to grow profits strongly.

Net debt at the end of the quarter stood at £235m reflecting the impact of the acquisition of PolymerLatex, in line with the Group's forecasts at the time of the acquisition announcement.

- Ends -

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