Interim Results
Elementis PLC
2 August 2000
ELEMENTIS plc
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2000
Elementis demonstrates enhanced performance
* Sales up 8 per cent to £288.0 million (1999: £266.9 million)
* Operating profit up 17 per cent to £32.2 million* (1999: £27.5
million*)
* Profit before tax up 20 per cent to £29.5 million* (1999: £24.5
million*)
* Earnings per share up 24 per cent to 5.6 pence* (1999: 4.5 pence*)
*before goodwill amortisation and exceptionals
Lyndon Cole, Group Chief Executive of Elementis plc, said:
'The half year results clearly demonstrate that the Group-wide focus on
business re-engineering is delivering results. Sales growth is being driven
through customer focus and innovation. The Group's lower cost base and
improved health and safety performance are direct results of the operational
excellence programme.
'Customer focus, innovation, people and operational excellence remain the
Group's key drivers of shareholder value; which, as previously stated,
should be reflected in enhanced performance as the year progresses.'
Enquiries
Elementis
Lyndon Cole Group Chief Executive 020 7398 1400
George Fairweather Group Finance Director
Anna Passey Head of Corporate Communications
Brunswick
Andrew Fenwick 020 7404 5959
Rupert Young
Overview and financial results
The half year results clearly demonstrate that the Group-wide focus on
business re-engineering, launched in 1999, is delivering enhanced financial
performance. Sales growth is being driven through customer focus and
innovation. The Group's lower cost base and improved health and safety
performance are direct results of the operational excellence programme.
Overall market conditions improved during the period with a number of Asian
economies continuing their recovery, but competition remains aggressive.
Average exchange rates for the US dollar and sterling, our key manufacturing
currencies, strengthened against the euro by 11 per cent and 8 per cent
respectively over the first six months of the year.
Operating profit before goodwill amortisation and exceptionals was £32.2
million, up 17 per cent on the first half of 1999 and up 10 per cent on the
second half of 1999. Currency transaction and translation effects adversely
impacted operating profit by around £1.7 million compared to the first half
of 1999.
Profit before goodwill amortisation, exceptionals and tax was £29.5 million,
up 20 per cent on the first half of 1999 and up 10 per cent on the second
half of 1999. Basic earnings per share before goodwill amortisation and
exceptionals increased by 24 per cent to 5.6 pence.
Net exceptional charges before tax were £2.8 million (1999: £6.8 million).
Net cash inflow from operating activities was £18.1 million (1999: £32.7
million). Net borrowings at the end of June were £57.7 million (1999: £60.4
million).
Dividends and issue of redeemable B shares
The Board has not declared an interim ordinary dividend (1999: 2.0 pence).
Instead, it will issue redeemable B shares to ordinary shareholders on the
register on 27 October 2000, such that they receive redeemable B shares with
a total nominal value of 2.1 pence for each ordinary share held. This will
be coupled with an offer to redeem these new shares for cash at their
nominal value on 2 November 2000. A further offer will also be made to
existing holders of redeemable B shares to redeem these shares for cash at
their nominal value on the same date.
By not paying an interim dividend on ordinary shares, Elementis estimates
that it will be able to recover £2.3 million of advance corporation tax
previously paid. A circular providing full details of the issue and
redemption of redeemable B shares will be posted to all ordinary
shareholders on 2 October 2000.
Strategy
The Board of Elementis remains committed to creating value for shareholders
through organic growth and selective acquisitions. We continue to evaluate
acquisition opportunities against the Group's strict criteria of price and
fit with existing businesses.
Business teams have been established to accelerate the adoption of
e-business opportunities. Their primary focus is on the use of internet
technology to enhance customer relationships across the globe.
Health, safety and the environment
Focus on health, safety and the environment continues throughout the Group.
Compared to the first half of 1999, lost time accident frequency reduced by
6 per cent although, disappointingly, non-compliance with environmental
consents rose by two to 11; this is now receiving additional management
attention.
The Board
In July, the Board was strengthened by the appointment of Philip Brown,
Company Secretary, as an executive director and Rick McNeel as a non-
executive director. Philip joined the Group in 1992 and played a major role
in the corporate restructuring to create Elementis plc. Rick, a US citizen
based in the UK, is Group Vice President of Performance Products within the
chemical business of BP Amoco p.l.c.
Mike Parker stepped down as an executive director in the same month; his
departure follows the recent decision to strengthen business development
functions within individual operating businesses.
Current trading and outlook
Market conditions continue in line with those in the first half. The
current weakness of the euro and recent increases in energy costs are a
concern. Customer focus, innovation, people and operational excellence
remain the Group's key drivers of shareholder value which should deliver
further enhanced performance as the year progresses.
Review of operations
for the six months to 30 June 2000
2000 1999
Sales Operating Sales Operating
profit* profit*
£million £million £million £million
Chromium 65.8 12.0 58.9 9.5
Pigments & Specialties 118.7 15.6 111.8 14.1
Chemical Distribution 78.7 3.0 73.1 2.7
Specialty Rubber 28.2 1.6 25.7 1.2
Inter-group (3.4) - (2.6) -
_________ _________ _________ _________
288.0 32.2 266.9 27.5
========= ========= ========= =========
*before goodwill amortisation and exceptionals
Chromium
Operating profit before exceptionals was £12.0 million, an increase of 26
per cent on the first half of 1999, on sales up 12 per cent to £65.8
million.
The business estimates that the global chromium chemicals market has grown
modestly in volume terms compared to the first half of last year with
principal growth coming from chromic acid demand for US timber treatment and
metal finishing. The chrome oxide market is estimated to have grown to a
lesser extent with demand for metal alloys for aerospace applications
remaining low, as predicted. Towards the end of the period, there were
signs that the Asian leather tanning market for chrome sulphate is starting
to recover.
Elementis Chromium sales volume increased by 20 per cent on the first half
of 1999 with good growth in all product categories. This reflects the
product focused sales and marketing strategy introduced in the second half
of 1999 which is delivering significant market share growth. Chrome oxide
and chromic acid volume growth were particularly strong, the latter
reflected increasing demand for the superior handling properties of our
CA21 chromic acid product. Over 40 per cent of CA21 sales were to new
chromic acid customers acquired since its launch 18 months ago.
Average pricing of chromium products was lower than in the first half of
1999 as a result of a more competitive pricing policy to grow market share,
aggressive competition and the impact of currency. Compared to the first
half of 1999, the base currencies of major competitors in the Former Soviet
Union and South Africa were significantly weaker against sterling and the US
dollar. In the six month period, US gas prices doubled.
The new kiln at Corpus Christi, Texas was successfully brought on stream;
the rotary hearth it replaced was shut down in July. Plans are being
developed to increase capacity by de-bottlenecking downstream processes.
Annualised cost savings from the new kiln, as previously announced, are £2
million, which brings the total annualised cost savings achieved within
Elementis Chromium over the last year to £6 million.
The expanded pure salt plant at Eaglescliffe, UK was also commissioned in
the second quarter. In July, this site completed one million man hours
without a lost time accident.
Pigments & Specialties
Operating profit before goodwill amortisation and exceptionals was £15.6
million, an increase of 11 per cent on the first half of 1999, on sales up 6
per cent to £118.7 million. Currency transaction and translation adversely
impacted operating profit by around £1 million compared to the first half of
1999.
At Elementis Pigments, sales and operating profit before exceptionals both
increased. This reflects strong growth of iron oxide sales into the
construction market and the benefits of the major restructuring and
upgrading programme, partially offset by lower profits on zinc products for
the depressed UK market.
Success in marketing higher value added iron oxide pigments continues, with
double digit sales growth into the toners and catalysts markets. New
product launches during the period included Decelox for plastics and zinCare
for personal care, both specialty zinc derivatives of our Nanox product.
During the period, the restructuring programme in the UK was completed with
the consolidation of the Northampton distribution and administration centre
into Birtley and the closure of the anhydrous aluminium chloride production
facility at Birtley. Consolidation of the small pigments manufacturing
facility in Toronto, Canada into the recently upgraded facility at Easton,
US will be completed later this year.
At Elementis Specialties, sales and operating profit before goodwill
amortisation and exceptionals were similarly both up on the first half of
1999, despite the impact of currency. Strong sales growth was achieved in
the oil exploration drilling, inks and personal care markets; oil
exploration drilling benefitted from a continuing market recovery.
Rheological additives sales growth was strong, particularly water-based
additives for coatings which grew by around 7 per cent against the first
half of 1999; Rheolate sales increased by 11 per cent. Sales grew in most
geographical regions, with sales to Japan more than double that achieved in
the first half of 1999, reflecting the direct and technical sales presence
established in May last year. Performance in Europe was hindered by the
relative weakness of the euro against sterling and the US dollar.
The number of customers evaluating Nanox for personal care products
increased significantly over the half year. Elementis Specialties has
recently developed powder and gel derivatives of Nanox for UV protection in
clear wood coatings. A plastic nanocomposite formulation, which utilises
proprietary clay modification technology, is currently on trial with
customers.
In June, the £2 million Rheolate production facility for water-based
coatings in Livingston, Scotland was completed and commissioned; this
enables Elementis Specialties to meet growing worldwide demand for these
technically innovative products. Capacity was also increased at Livingston
to replace the small high cost production unit in Germany which closed late
last year.
Costs in Pigments & Specialties reduced by £1.5 million on an annualised
basis over the half year, in line with previously announced targets;
exceptional restructuring costs were £1.4 million as previously announced.
Chemical Distribution
Operating profit was £3.0 million, an increase of 11 per cent on the first
half of 1999, on sales up 8 per cent to £78.7 million. Volume grew by 3 per
cent with strong growth in caustic soda and sodium hypochlorite being
partially offset by low levels of rock salt due to a mild winter in the
northeast of America. Excluding rock salt, volume grew by 10 per cent.
An internet based ordering system was introduced for customers during the
period as an extension of our vendor managed inventory programme.
Specialty Rubber
Operating profit before exceptionals was £1.6 million, an increase of 33 per
cent on the first half of 1999, on sales up 10 per cent to £28.2 million.
Sales increased in all business units, with the largest, minerals
processing, benefitting from improved copper and gold markets following the
poor trading conditions experienced in the second half of 1999.
The programme to refocus and simplify the Linatex business on its core
specialty rubber capability and profitable sales opportunities is well
underway. In the first half, the number of operating sites reduced from 25
to 17, headcount by 75 and annualised costs by £1.2 million. Over the next
nine months, the number of sites will reduce by a further five and
annualised costs by a further £1.8 million, three months ahead of the
previously announced schedule. Headcount will reduce by a further 75 over
the same period, an increase of 25 on the previous target. Exceptional
restructuring costs of £1.4 million were charged in the first half with a
further £0.9 million estimated for the balance of the programme, in line with
the previous forecast.
The new £1.5 million rubber conversion and mixing plant in Malaysia is now
commissioned, providing lower cost and more consistent quality feedstock for
the Linatex sheet manufacturing and moulding process.
A £4 million continuous rubber sheet press is to be installed by the end of
2001, to further reduce operating costs and enable Linatex sheet to be
produced within tighter thickness tolerances for new applications and with
enhanced bonding capabilities.
Exceptionals
Exceptional charges before tax were £2.8 million, all relating to previously
announced restructuring in Elementis Pigments and Linatex; this compared to
£6.8 million of net exceptional charges in the first half of 1999.
Cash flow and balance sheet
Net cash inflow from operating activities was £18.1 million, compared to
£32.7 million in the first half of 1999. Working capital outflow was £18.5
million, compared to £1.1 million in the first half of 1999. Debtors
increased by £14.8 million over the course of the first six months, £9.9
million of which was attributed to increased sales including the normal
seasonal effect. Trade debtor days increased by five days in the period,
primarily as a result of sales increases in markets with longer payment
terms. Stock levels continue to be tightly controlled.
Cash expenditure on fixed assets totalled £14.9 million, most of which
relates to Elementis Chromium, the principal project being the new kiln.
Net borrowings at the end of June were £57.7 million compared to £45.5
million at the end of December 1999. Shareholders' funds at the half year
were £398.4 million compared to £380.4 million at the end of December 1999.
Consolidated profit & loss account
for the six months to 30 June 2000
Before
good-
will
amort- 2000 1999 1999
isation Six Six
& excep- Goodwill months months Year
tionals amort- Excep- to 30 to 30 to 31
isation tionals June June Dec
£ £ £ £ £ £
Note million million million million million million
Turnover
Continuing
operations 3 288.0 - - 288.0 266.9 535.1
======= ======= ======= ======= ======= =======
Group operating
profit
Continuing
operations
___________________________________________________________________________
Before goodwill
amortisation and
exceptionals 32.2 - - 32.2 27.5 56.7
Goodwill
amortisation - (6.4) - (6.4) (6.3) (12.5)
Exceptionals - - (2.8) (2.8) (8.2) (15.3)
___________________________________________________________________________
3 32.2 (6.4) (2.8) 23.0 13.0 28.9
Associates -
continuing
operations - - - - - 0.1
_______ _______ _______ _______ _______ _______
Operating profit 32.2 (6.4) (2.8) 23.0 13.0 29.0
Profit on disposal
of properties - - - - 1.4 6.6
_______ _______ _______ _______ _______ _______
Profit on ordinary
activities before
interest 32.2 (6.4) (2.8) 23.0 14.4 35.6
Net interest
payable (2.7) - - (2.7) (3.0) (5.4)
_______ _______ _______ _______ _______ _______
Profit on ordinary
activities before
tax
___________________________________________________________________________
Before goodwill
amortisation and
exceptionals 29.5 - - 29.5 24.5 51.4
Goodwill
amortisation - (6.4) - (6.4) (6.3) (12.5)
Exceptionals - - (2.8) (2.8) (6.8) (8.7)
___________________________________________________________________________
29.5 (6.4) (2.8) 20.3 11.4 30.2
Tax on profit on
ordinary activities 4 (5.3) - 0.2 (5.1) (5.1) (10.5)
_______ _______ _______ _______ _______ _______
Profit on ordinary
activities after
tax 24.2 (6.4) (2.6) 15.2 6.3 19.7
Minority interests
- equity (0.1) - - (0.1) 0.1 0.3
_______ _______ _______ _______ _______ _______
Profit for the
financial period 24.1 (6.4) (2.6) 15.1 6.4 20.0
Dividends 5 - - - - (8.6) (8.6)
_______ _______ _______ _______ _______ _______
Amount transferred
to/(from) reserves 24.1 (6.4) (2.6) 15.1 (2.2) 11.4
======= ======= ======= ======= ======= =======
Earnings per 6
ordinary share
Basic and diluted 3.5p 1.5p 4.6p
Basic and diluted
before goodwill
amortisation and
exceptionals 5.6p 4.5p 9.3p
Consolidated balance sheet
at 30 June 2000
2000 1999 1999
30 June 30 June 31 Dec
£million £million £million
Fixed assets
Goodwill 232.5 236.0 225.5
Tangible assets 192.6 172.0 182.7
Investment in associated undertakings 1.9 1.8 1.8
________ ________ ________
427.0 409.8 410.0
________ ________ ________
Current assets
Stocks 75.5 76.6 71.6
Debtors 117.3 122.6 104.9
Cash at bank and in hand 72.6 212.5 79.9
________ ________ ________
265.4 411.7 256.4
________ ________ ________
Creditors: amounts falling due within one
year
Borrowings 9.3 14.3 11.2
Proposed dividend - 8.7 -
Creditors 111.5 114.1 109.4
_______ _______ _______
120.8 137.1 120.6
________ ________ ________
Net current assets 144.6 274.6 135.8
________ ________ ________
Total assets less current liabilities 571.6 684.4 545.8
________ ________ ________
Creditors: amounts falling due after more
than one year
Borrowings 121.0 258.6 114.2
Government grants 0.7 0.8 0.8
________ ________ ________
121.7 259.4 115.0
Provisions for liabilities and charges 49.0 52.9 48.1
________ ________ ________
170.7 312.3 163.1
________ ________ ________
400.9 372.1 382.7
======== ======== ========
Capital and reserves
Called up share capital 23.3 21.6 21.6
Share premium 1.1 1.1 1.1
Capital redemption reserve 11.6 - -
Profit and loss account 362.4 347.0 357.7
________ ________ ________
Shareholders'funds - equity 398.4 369.7 380.4
Minority interests - equity 2.5 2.4 2.3
________ ________ ________
400.9 372.1 382.7
======== ======== ========
Net borrowings (57.7) (60.4) (45.5)
Cash flow statement
for the six months to 30 June 2000
2000 1999 1999
Six months Six months Year
to 30 June to 30 June to 31 Dec
Note £million £million £million
Net cash inflow from
operating activities 18.1 32.7 74.1
Returns on investments and
servicing of finance
Interest received 4.4 5.3 8.8
Interest paid (6.1) (7.1) (14.4)
Taxation (2.0) 0.8 (4.7)
Capital expenditure and
financial investment
Purchase of fixed assets (14.9) (21.9) (43.9)
Disposal of fixed assets 6.1 2.3 12.0
Acquisitions and disposals
Acquisition of businesses - (0.2) (0.2)
Disposal of businesses in
prior years (0.4) (0.2) (0.5)
Equity dividends paid - (12.9) (21.6)
___________ ___________ ___________
Cash inflow/(outflow) before
use of liquid resources and
financing 5.2 (1.2) 9.6
Financing and management of
liquid resources 7 (6.4) 1.3 (1.7)
___________ ___________ ___________
(Decrease)/increase in cash
8 (1.2) 0.1 7.9
=========== =========== ===========
Reconciliation of operating profit to net cash inflow from operating
activities for the six months to 30 June 2000
2000 1999 1999
Six months Six months to Year to
to 30 June 30 June 31 Dec
£million £million £million
Operating profit 23.0 13.0 29.0
Goodwill amortisation 6.4 6.3 12.5
Depreciation (less grants
credited) 8.5 8.2 15.3
Share of profits of
associated undertakings - - (0.1)
(Profit)/loss on disposal of
fixed assets (0.2) - 0.2
Exceptionals in operating
profit 2.8 8.2 15.3
Cash outflow on exceptionals
(2.2) (0.7) (12.2)
(Increase)/decrease in
stocks (1.0) 11.1 15.0
Increase in debtors (14.8) (11.2) (6.2)
(Decrease)/increase in
creditors (2.7) (1.0) 10.6
Decrease in provisions (1.7) (1.2) (5.3)
__________ __________ __________
Net cash inflow from
operating activities 18.1 32.7 74.1
========== ========== ==========
Statement of total recognised gains and losses
for the six months to 30 June 2000
2000 1999 1999
Six months Six months Year to
to 30 June to 30 June 31 Dec
£million £million £million
Profit for the financial period 15.1 6.4 20.0
Currency translation differences 16.5 4.8 2.2
Taxation on currency translation
differences on foreign currency
borrowings (1.7) (0.7) (1.0)
__________ __________ __________
Total recognised gains for the
financial period 29.9 10.5 21.2
========== ========== ==========
Reconciliation of movements in shareholders' funds
for the six months to 30 June 2000
2000 1999 1999
Six months Six months Year to
to 30 June to 30 June 31 Dec
£million £million £million
Profit for the financial period 15.1 6.4 20.0
Dividends - ordinary - (8.6) (8.6)
__________ __________ __________
Amounts transferred to/(from)
reserves 15.1 (2.2) 11.4
Currency translation differences 16.5 4.8 2.2
Taxation on currency translation
differences on foreign currency
borrowings (1.7) (0.7) (1.0)
Redemption of B shares (11.9) - -
__________ __________ __________
Net increase in shareholders'
funds 18.0 1.9 12.6
At beginning of the financial
period 380.4 367.8 367.8
__________ __________ __________
At end of the financial period 398.4 369.7 380.4
========== ========== ==========
Notes
1. Accounting policies
Basis of preparation. The financial information for the first six months of
2000 and 1999, which is unaudited but has been reviewed by the Company's
auditors, does not constitute statutory accounts within the meaning of
section 240 of the Companies Act 1985 and it is presented on the basis of
accounting policies set out in the financial statements of Elementis plc for
the year ended 31 December 1999.
2. Exchange rates
The principal currency in which the Group conducts its business is the US
dollar. For the six months to 30 June 2000, the average exchange rate was
$1.57 (1999: $1.61, year to 31 December 1999: $1.62). The US dollar rate at
30 June 2000 was $1.51 (1999: $1.58, 31 December 1999: $1.61).
3. Segmental information
Group turnover Group operating profit
2000 1999 1999 2000 1999 1999
Six six Six Six
months months months months Year
to 30 to 30 Year to to 30 to 30 to
June June 31 Dec June June 31 Dec
£mill- mill- £mill- £mill- ill- £mill-
ion ion ion ion ion ion
Analysis by
activity
Chromium
Before
exceptionals 65.8 58.9 118.2 12.0 9.5 20.3
Inter-group
turnover (3.4) (2.6) (5.4) - - -
Exceptionals - - - - (7.4) (8.8)
______ ______ ______ ______ ______ ______
62.4 56.3 112.8 12.0 2.1 11.5
______ ______ ______ ______ ______ ______
Pigments &
Specialties
Before goodwill
amortisation
and
exceptionals 118.7 111.8 222.9 15.6 14.1 28.5
Goodwill
amortisation - - - (6.4) (6.3) (12.5)
Exceptionals - - - (1.4) (0.3) (5.3)
______ ______ ______ ______ ______ ______
118.7 111.8 222.9 7.8 7.5 10.7
______ ______ ______ ______ ______ ______
Chemical
Distribution 78.7 73.1 144.5 3.0 2.7 5.5
______ ______ ______ ______ ______ ______
Specialty
Rubber
Before
exceptionals 28.2 25.7 54.9 1.6 1.2 2.4
Exceptionals - - - (1.4) (0.5) (1.2)
______ ______ ______ ______ ______ ______
28.2 25.7 54.9 0.2 0.7 1.2
______ ______ ______ ______ ______ ______
Total before
goodwill
amortisation
and
exceptionals 288.0 266.9 535.1 32.2 27.5 56.7
Goodwill
amortisation - - - (6.4) (6.3) (12.5)
Exceptionals - - - (2.8) (8.2) (15.3)
______ ______ ______ ______ ______ ______
288.0 266.9 535.1 23.0 13.0 28.9
====== ====== ====== ====== ====== ======
Group turnover Group operating profit
2000 1999 1999 2000 1999 1999
Six Six Six Six
months months months months
to 30 to 30 Year to to 30 to 30 Year to
June June 31 Dec June June 31 Dec
£mill- £mill- £mill- £mill- £mill- £mill-
ion ion ion ion ion ion
Analysis by
area of
operations
North America 194.5 180.6 357.6 17.6 9.9 24.2
Europe 83.1 77.5 157.3 4.6 2.7 4.8
Rest of the
World 10.4 8.8 20.2 0.8 0.4 (0.1)
______ ______ ______ ______ ______ ______
288.0 266.9 535.1 23.0 13.0 28.9
====== ====== ====== ====== ====== ======
4. Taxation
The tax charge of £5.3 million (1999: £5.4 million) is based on an estimated
effective tax rate on profit before goodwill amortisation and exceptionals
for the year to 31 December 2000 of 18 per cent (1999: 22 per cent). The
rate is lower than the standard UK corporation tax rate for a number of
reasons including tax relief on purchased US goodwill, utilisation of
surplus ACT and deferred tax timing differences.
Tax on exceptional charges was a credit of £0.2 million (1999: £0.3
million).
5. Dividends
No interim ordinary dividend will be paid (1999: 2.0 pence per share).
6. Earnings per ordinary share
2000 1999 1999
Six months Six months Year
to 30 June to 30 June to 31 Dec
pence pence pence
per share per share per share
Basic earnings per ordinary
share 3.5 1.5 4.6
Goodwill amortisation 1.5 1.5 2.9
Exceptionals net of taxation
0.6 1.5 1.8
_________ _________ _________
Basic earnings per ordinary
share before goodwill
amortisation and
exceptionals 5.6 4.5 9.3
========= ========= =========
Basic earnings per ordinary share are based on profit for the period of
£15.1 million (1999: £6.4 million, year to 31 December 1999: £20.0 million)
and on the weighted average number of ordinary shares in issue during the
period of 431.5 million (1999: 431.5 million, year to 31 December 1999:
431.5 million). Basic earnings per ordinary share before goodwill
amortisation and exceptionals are based on earnings of £24.1 million (1999:
£19.2 million, year to 31 December 1999: £40.2 million).
Diluted earnings per ordinary share are based on an adjusted weighted
average number of shares of 433.5 million (1999: 431.5 million, year to 31
December 1999: 433.3 million).
7. Financing and management of liquid resources
2000 1999 1999
Six months Six months to Year
to 30 June 30 June to 31 Dec
£million £million £million
Redemption of B shares
(including expenses) (11.9) - -
Increase/(decrease) in net
borrowings 5.5 1.3 (1.7)
___________ ___________ ____________
(6.4) 1.3 (1.7)
=========== =========== ============
Redeemable B shares, of nominal value £13.3 million, were issued for nil
consideration during the period.
8. Reconciliation of net cash flow to movement in net borrowings
2000 1999 1999
Six months Six months Year
to 30 June to 30 June to 31 Dec
£million £million £million
Change in net borrowings
resulting from cash flows:
(Decrease)/increase in cash
in the period (1.2) 0.1 7.9
Decrease in borrowings 0.7 6.2 147.7
Decrease in liquid resources
(6.2) (7.5) (146.0)
__________ ___________ __________
(6.7) (1.2) 9.6
Currency translation
differences (5.5) (11.2) (7.1)
___________ ___________ __________
(Increase)/decrease in net
borrowings (12.2) (12.4) 2.5
Net borrowings at beginning
of the financial period
(45.5) (48.0) (48.0)
___________ ___________ __________
Net borrowings at end of the
financial period (57.7) (60.4) (45.5)
=========== =========== ==========
9. Contingent liabilities
In 1999 the Group was notified of a potential warranty claim, under the
contract for the sale of Pauls Malt, relating to export refunds from the
Intervention Board for Agricultural Produce. Should such a claim
materialise, this will be vigorously defended and, in any event, in the
opinion of the directors, this will not have a significant effect on the
financial position of the Group.
Auditors' independent review report to Elementis plc
Introduction
We have been instructed by the Company to review the attached financial
information and we have read the other information contained in the interim
report for any apparent misstatements or material inconsistencies with the
financial information.
Directors' responsibilities
The interim report, including the financial information contained therein,
is the responsibility of, and has been approved by the directors. The
Listing Rules of the Financial Services Authority require that the
accounting policies and presentation applied to the interim figures should
be consistent with those applied in preparing the preceding annual financial
statements except where any changes, and the reasons for them, are
disclosed.
Review work performed
We conducted our review in accordance with the guidance contained in
Bulletin 1999/4 issued by the Auditing Practices Board. A review consists
principally of making enquiries of Group management and applying analytical
procedures to the financial information and underlying financial data, and
based thereon, assessing whether the accounting policies and presentation
have been consistently applied unless otherwise disclosed. A review
excludes audit procedures such as tests of controls and verification of
assets, liabilities and transactions. It is substantially less in scope
than an audit performed in accordance with Auditing Standards and,
therefore, provides a lower level of assurance than an audit. Accordingly,
we do not express an audit opinion on the financial information.
Review conclusion
On the basis of our review, we are not aware of any material modifications
that should be made to the financial information as presented for the six
months ended 30 June 2000.
PricewaterhouseCoopers
Chartered Accountants
London
Tuesday, 14th May 2024
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