Interim Results

Croda International PLC 1 August 2000 Croda International Plc announces its interim results for the six months to 30 June 2000: Highlights 2000 1999 Turnover from continuing operations £186.2m £185.0m Trading profit from continuing operations £ 23.6m £ 23.5m Pre-tax profit £ 19.2m £ 19.1m Earnings per share (pre-exceptionals) 9.7p 9.7p Dividends per share 3.75p 3.65p * Oleochemicals' profits up 7% on sales up 3% * Oleochemicals' margins 16.8% (1999 16.2%) * Strong growth in Oleochemicals, particularly in the Americas and Asia * Singapore plant commissioned * Restructuring on schedule * ERP system roll-out started Commenting on the results, Chairman, Keith Hopkins, said: 'Much has been achieved in the first half of the year. We have continued apace with our restructuring programme and our core Oleochemicals business again shows strong growth. We continue to focus on achieving the efficiencies necessary to mitigate the poor trading conditions facing us in UK manufacturing.' For further information, please contact: Mike Humphrey, Chief Executive Tel:0207 269 7260 Barbara Richmond, Group Finance Director Tel: 0207 269 7260 Tom Baldock, Financial Dynamics Tel: 0207 269 7144 Or visit our web site at: www.croda.co.uk where the presentation given to analysts will be available midday today Chairman's Statement Profit before tax for the first six months of this year was £19.2m, just ahead of the £19.1m achieved in the same period last year. Sales turnover from continuing operations at £186m was at a similar level to last year. While sales in the UK declined, sales in Europe were robust and exports from the UK rose 2% to £69m, despite the weak Euro. With a higher tax charge than the previous year, earnings per share were 9.7p (1999 9.7p). The Board has declared a 2.7% increase in the interim dividend to 3.75p (1999 3.65p) and this will be paid to shareholders on 8 January 2001. Trading Overall we saw a good performance in Oleochemicals with operating profits rising 6.7% on sales up 3% to £132m. Margins widened to 16.8% from the 16.2% achieved in the same period last year. Prices of our vegetable oil raw materials remained subdued in stark contrast to increases in the prices of solvents and other petrochemical products. New product launches continue to be the key in maintaining margins in this business. Demand from personal care customers continues to be strong and good progress continued in the development and sales of skincare ingredients. Sales in the Far East rose by 13% with sales of high purity specialities from our Japanese factory being particularly buoyant. Our new plant in Singapore had some initial commissioning and supply problems and as a consequence profitable operation was not achieved until June. Future prospects in South East Asia remain excellent. Once again we saw good growth in sales and profits in North America, and a strong performance from South America. In Industrial Chemicals profits fell to £3.4m (1999 £4.6m) on sales 4.4% lower at £54m. Trading conditions in the UK market were particularly difficult with a number of our businesses encountering severe price competition. Last year we embarked on a restructuring programme in our European operations aimed at reducing our cost base. Phase one of this action plan has now been completed and benefits will be seen over the next few years. E-Commerce In our speciality chemical businesses e-commerce will be less revolutionary than in commodity chemicals or in chemical distribution, though it could become a major way of transacting business. In Oleochemicals, problem solving alongside customers' R & D departments will remain the key management task. New electronic technology will enable us to reduce costs and provide an easily accessible technical information database for existing and potential customers. We continue to develop our website, www.croda.co.uk. Our Intranet came on stream in the second quarter and will be the platform for business to business transactions. We are currently installing a new ERP software package in our UK operations that will be rolled-out throughout the world in due course. Despite careful preparation, the implementation of such systems does invariably cause some initial disruption. Finance and Corporate Development We continue to invest in and focus our business on Oleochemicals where we believe there are good prospects for future development. In the first half of this year we spent £14.5m (1999 £13.9m) on capital expenditure mainly on a number of projects across Oleochemicals. Our employee trusts set up to purchase Croda shares to cover share option liabilities now hold 5m shares which cover 77% of the potential liability. The trusts have purchased 700,000 shares so far this year at a cost of £1.8m. Group net debt rose to £130.9m (1999 £120.5m) with gearing at 80%. Interest cover is over five times. Goodwill of £0.2m (1999 £0.2m) was written off through the profit and loss account. The Board We are pleased to welcome David Dunn who joined our Board as a non-executive director in May. David is Chairman of Scapa Plc, the speciality technical tapes manufacturer, and a non-executive director of Bemrose Corporation Plc and FirstGroup Plc. Outlook While we continue to see good sales demand in Europe, the Americas and Far East, demand in recent months in the UK has been lower than expected. While we expect a positive contribution in the second half from our new plant in Singapore and the continued benefit of new product launches, the current poor trading conditions in the UK lead us to be cautious in making forecasts for further progress in the remainder of this year. Croda International Plc Results for the six months ended 30 June 2000 Group Profit and loss account 2000 1999 1999 Unaudited £m First First Year Half Half Turnover Continuing operations 186.2 185.0 368.9 Discontinued operations - 1.9 2.9 _____ _____ _____ 186.2 186.9 371.8 _____ _____ _____ Operating profit Continuing operations before exceptional items 23.6 23.5 48.7 Restructuring costs - - (8.3) _____ _____ _____ 23.6 23.5 40.4 Discontinued operations - (0.7) (0.7) _____ _____ _____ Total operating profit 23.6 22.8 39.7 Loss on disposal of discontinued operations - (5.5) (7.4) Net interest payable (4.4) (3.7) (7.5) _____ _____ _____ Profit before taxation 19.2 13.6 24.8 UK taxation (1.2) (2.0) (3.5) Overseas taxation (5.2) (4.0) (9.4) Tax on exceptional items - 0.4 1.4 _____ _____ _____ Profit after taxation 12.8 8.0 13.3 Minority interests and preference dividends (0.1) (0.2) (0.4) _____ _____ _____ Profit attributable to ordinary shareholders 12.7 7.8 12.9 Ordinary dividends (4.9) (4.9) (14.1) _____ _____ _____ Reserves transfer 7.8 2.9 (1.2) _____ _____ _____ Earnings per share of 10p pence pence pence per per per share share share Basic 9.7 5.9 9.7 Basic before exceptional items 9.7 9.7 20.4 Fully diluted 9.7 5.9 9.7 Fully diluted before exceptional items 9.7 9.7 20.4 Ordinary dividends Interim 3.75 3.65 3.65 Final 7.05 Segmental analysis of continuing operations Unaudited £m 2000 1999 1999 First half First half Year Turnover Oleochemicals 132.2 128.5 255.6 Industrial Chemicals 54.0 56.5 113.3 _____ _____ _____ 186.2 185.0 368.9 _____ _____ _____ Trading profit Oleochemicals 22.2 20.8 43.5 Industrial Chemicals 3.4 4.6 8.9 _____ _____ _____ 25.6 25.4 52.4 Central costs (2.0) (1.9) (3.7) _____ _____ _____ Operating profit 23.6 23.5 48.7 _____ _____ _____ Turnover by geographical destination United Kingdom 41.5 46.4 90.4 Rest of Europe 53.1 52.3 100.6 Americas 57.6 54.8 110.8 Asia 19.6 17.4 36.2 Rest of World 14.4 14.1 30.9 _____ _____ _____ 186.2 185.0 368.9 _____ _____ _____ Summarised cash flow Unaudited £m 2000 1999 1999 First half First half Year Operating profit 23.6 22.8 39.7 Depreciation and amortisation 7.4 9.6 19.6 Working capital (9.1) (6.3) (5.6) Other (2.1) (1.6) 5.1 _____ _____ _____ Operating cash flow 19.8 24.5 58.8 Interest (4.3) (3.6) (7.2) Dividends (4.9) (9.2) (9.3) Taxation (6.8) (5.1) (12.2) Fixed assets purchased (14.5) (13.9) (30.5) Purchase of own shares (1.8) (4.6) (7.9) Disposals - - 0.4 Other 1.2 (0.5) (1.1) _____ _____ _____ Movement in net debt from cash flows (11.3) (12.4) (9.0) New finance lease contracts - - (0.2) Exchange differences (2.7) (0.7) (0.3) _____ _____ _____ Movement in net debt (14.0) (13.1) (9.5) _____ _____ _____ Summarised balance sheet Unaudited £m At 30 June At 30 June At 31 Dec 2000 1999 1999 Fixed assets 204.6 192.2 196.4 Stock 70.8 60.9 64.1 Debtors 116.6 114.1 110.4 Creditors and provisions (97.1) (88.8) (99.2) _____ _____ _____ 294.9 278.4 271.7 _____ _____ _____ Shareholders' funds 162.3 156.6 153.4 Minority interests 1.7 1.3 1.4 _____ _____ _____ 164.0 157.9 154.8 Net debt 130.9 120.5 116.9 _____ _____ _____ 294.9 278.4 271.7 _____ _____ _____ Movement in shareholders' funds 2000 1999 1999 First half First half Year Profit attributable to ordinary shareholders 12.7 7.8 12.9 Ordinary dividends (4.9) (4.9) (14.1) Goodwill written back - 0.4 0.4 Currency translation differences 1.1 (1.5) (0.6) _____ _____ _____ Net addition to shareholders' funds 8.9 1.8 (1.4) Opening shareholders' funds 153.4 154.8 154.8 _____ _____ _____ Closing shareholders' funds 162.3 156.6 153.4 _____ _____ _____ Note There were no recognised gains or losses other than those detailed above. Notes to interim statement: 1. The interim dividend of 3.75p will be paid on 8 January 2001 to shareholders registered on 8 December 2000. 2. The interim financial information has been prepared on the basis of the accounting policies set out in the Group's 1999 statutory accounts. 3. The financial information for the year ended 31 December 1999 is abridged. Full accounts for that year, on which the Auditors of the Company made an unqualified report, have been delivered to the Registrar of Companies. 4. This statement has been sent to all shareholders and can be obtained by the public from the Company's registered office, Cowick Hall, Snaith, Goole, East Yorkshire DN14 9AA.

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