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Yorkshire Group PLC (YOR)

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Wednesday 12 April, 2000

Yorkshire Group PLC

Final Results - Year Ended 31 December 1999

Yorkshire Group PLC
12 April 2000


YORKSHIRE GROUP PLC
1999 PRELIMINARY ANNOUNCEMENT

HIGHLIGHTS

*     1999 results hit by depressed markets and sterling strength
*     Stock reduction programme delivers £6 m cash
*     Successful integration of Viochrom
*     Acquisition of CK Witco dyes business transforms future prospects
*     £25 m exceptional charge for full cost of restructuring and integration
*     First quarter of 2000 best for some years
*     Final dividend of 3.05 p per share.


CHAIRMAN'S STATEMENT

Summary

The 1999 results show the effects of one of the most difficult and turbulent
years in Yorkshire's history.

In the face of market conditions which continued to deteriorate throughout 
the first half of 1999, aggravated for Yorkshire by sterling's relentless
appreciation against the euro, the trading outcome was a creditable, if
disappointing performance.

The group began the year by successfully integrating Viochrom, its newly
acquired Greek subsidiary and ended it with the acquisition of the
substantially larger worldwide textile and European industrial dyestuff
operations of CK Witco.

The result is that in spite of severe market conditions the group has
transformed itself from a regional manufacturer of dyes for polyester 
into one of the few remaining global players in its industry.  In the 
process it has also made substantial progress in rebalancing its product
sector portfolio away from commodities and into speciality dyes and 
chemicals.

There is growing evidence that Yorkshire is now beginning to profit 
from its new global reach, broader product range and improving market
conditions.

Results

Group sales of £60.4m, including a full year's sales for Viochrom and 
2 weeks' sales for the CK Witco business, were 4.8% up on those of the
previous year.
 
Group operating profits of £0.1m from continuing operations, excluding
the CK Witco business, compared with £1.8m in 1998, reflected the increasing
severity of market conditions, especially during the first half, and the
impact of continuing sterling appreciation against the euro.  They were also
reduced by production under-recoveries resulting from the successful stock
reduction programme. 

The trading losses of £0.3m for the newly acquired business during the 
last 2 weeks of the year were a predictable reflection of widespread holiday
shutdowns over this period.

Profit before tax and exceptionals of £0.8m, compared with £4.5m in 1998, 
were a result of the lower trading profits and reduced interest income.

Exceptional costs of £25m have been provided for restructuring and costs
associated with the integration of the acquired businesses. They represent 
the expected total cost of restructuring and in cash terms have an anticipated
payback of less than three years.

The results do not reflect the expected receipt of £6.1m from the 
Berkeley Group plc in connection with the major development project on
land adjacent to the group's Hunslet Road site.  The agreement signed on 
19th March 1999 has been extended to accommodate the further time needed
for the grant of local authority planning approvals.

In spite of relatively high dividend and tax payments, the group's net
cash balances remained steady at around £27m for most of the year, 
thanks to an aggressive stock reduction programme.  Following the 
acquisition in mid-December, net borrowings at the year end were £19.6m 
and gearing 30%.

Losses per share before exceptional items were 1.1p compared with 
earnings per share before exceptional items of 7.5p in 1998.
 
Strategy

Following the disposal of all its non-core businesses in 1997, the 
group has patiently and systematically pursued its key strategic 
objectives: broadening the product offering; scaling back manufacturing
operations in general and refocusing on speciality manufacture; and
achievement of critical mass in both financial and marketing terms.  
During 1999 major strides were made towards the realisation of these 
goals.

The acquisition of Viochrom at the end of 1998 enabled Yorkshire to 
gain a substantial foothold in the speciality automotive dyes market 
and provided a qualitative improvement in its technical resources.

The more substantial acquisition of the CK Witco businesses for $86.5m,
approved by shareholders on 15th December 1999, was probably the most far
reaching change in the group's 100 year history, more than doubling its 
size and fulfilling most of its key objectives at a stroke.  The new group
now enjoys leading positions in a number of speciality markets and 
combines a breadth of product range and market presence which can be 
leveraged to generate profitable growth.  At the same time the structure 
of the deal has left the group with a sound balance sheet and we believe a
lower dependence on own-manufactured product than any of the other major
European dyestuff suppliers.

As regards its original business, Yorkshire recognised some time ago
that commodity disperse dyes was the sector  most exposed to the twin
pressures of world overcapacity and major competitors' drive for market
share seemingly regardless of profitability.  In consequence, the 
policy of outsourcing commodity dyes and presscakes continued to be 
pursued energetically throughout the year with the aim of reducing the
proportion of own-manufactured product to less than 50% of sales.

Directors and employees

There were two changes during the year at board level: the appointment 
of Stevan Fowler as group finance director in May and of Sid Taylor as
non-executive director in October.  It is intended to appoint Sid Taylor
deputy chairman in the near future in preparation for an orderly 
transition as soon as it is clear that the task of repositioning the
group is largely accomplished.

Having gained 135 new employees with the acquisition of Viochrom, the 
group began the year with numbers employed of almost 700 and following 
the acquisition of the CK Witco businesses in December, ended it  with 
over 1,200.

In a watershed year for the company we have relied even more heavily on 
the abilities, loyalty, commitment and gritty determination of Yorkshire 
group employees. As before they rose to the challenge and the Board is
grateful for their support.

We extend the warmest of welcomes to the new members of the Yorkshire 
family who joined the group from CK Witco at the end of the year.  We are
delighted at the quality and strength in depth of the organisation we have
acquired and are confident that, reinvigorated by working once again 
within a company dedicated to the dyes business, our new colleagues will 
make an enormous contribution to the future of the group.

Dividend

As I said in my letter to shareholders of 29 November 1999: 'Following
completion of the acquisition, the directors intend to pursue a dividend
policy that reflects the growth in earnings and cash flow generated from 
the operations of the enlarged group.  An appropriate level of dividend cover
will be maintained having regard to the need to retain sufficient funds to
finance the integration of the dyes business and future development of the
enlarged group.  As a result, in the short term, dividends will be held at
modest levels until such time as the potential of the enlarged group is
realised'.

In line with this policy, we intend to pay a final dividend of 3.05p per
share, equal to the interim dividend and giving a total for the year of
 6.1p.  This compares with a total dividend of 9.6p in 1998, the latter 
reflecting a level of dividends in excess of that warranted by the group's
trading performance and recognising the significant cash resources at that
time. The dividend will be payable on 2nd June 2000 to shareholders on the
register at the close of business on 19th May 2000.

Current trading and prospects

At the end of the first quarter of 2000, it is already apparent that the
combined Yorkshire and CK Witco dyes and textile chemical interests are an
excellent fit.  Whilst much work is involved in maximising the synergies 
from the deal, the task has been made significantly easier by shared 
attitudes and culture.  The integration work is proceeding apace and we
 remain confident that the cost-saving and other benefits of the merger
will continue to flow through over the next two years.

It is also encouraging that the early stages of integration are taking 
place in a market showing distinct signs of improvement over 1999. 
 Although the apparel customer base in western markets is still under 
enormous pressure, the new group has a significantly reduced dependence on
this sector.  Similarly, while sterling strength remains a problem,
particularly for the UK-based business, substantial growth in the group's
overseas operations has reduced its overall vulnerability to the vagaries 
of currency fluctuation. 

In summary, though market conditions remain tough and competitive pressures
severe, the group has made  its best start for several years.  We are
confident that we have found the right formula, the process of integration
is on track and our determination to extract the substantial benefits
available from the recent acquisition as quickly as possible is made keener
by the knowledge that our industry awaits further restructuring and that
Yorkshire is now well positioned to take advantage of any opportunities 
which arise.

S M Wallis
Chairman                                                     12th April 2000
..............................................


GROUP PROFIT AND LOSS ACCOUNT for the year ended 31st December 1999

                                               1999           1998
                                      Note    £'000          £'000
Turnover                                2
  Current year acquisition                     1,515              -
  Other continuing operations                 58,850         56,889

  Total continuing operations                 60,365         56,889
  Discountinued operations                         -            728

Total turnover                                60,365         57,617
Cost of sales                                (44,337)       (39,437)

Gross profit                                  16,028         18,180
Other operating expenses                     (16,194)       (16,301)

Operating (loss)/profit                 3       (166)         1,879
  Current year acquisition                      (250)             -
  Other continuing operations                     84          1,780

  Total continuing operations                   (166)         1,780
  Discontinued operations                          -             99

Exceptional items 
  Profit on sale of businesses                     -          1,387
  Fundamental re-organisation costs      4   (24,959)        (4,350)

Loss on ordinary activities before interest  (25,125)        (1,084)
Net interest                                     916          2,672

(Loss)/profit on ordinary activities 
  before taxation                            (24,209)         1,588
  Tax on profit on ordinary activities   5       541           (780)

(Loss)/profit on ordinary activities
  after taxation                             (23,668)           808
  Minority interest - equity                     (14)            (2)

(Loss)/profit for the financial year         (23,682)           806
Dividends - on equity shares                  (2,796)        (4,399)

Transfer from reserves for the financial
  year                                       (26,478)        (3,593)


(Loss)/earnings per ordinary share
  before exceptional items                      (1.1)p          7.5p
  exceptional items less attributable tax      (50.0)p         (5.7)p

(Loss)/earnings per ordinary share        6    (51.1)p          1.8p


BALANCE SHEET at 31st December 1999

                                               1999           1998
                                              £'000          £'000
Fixed assets:
 Intangible assets                            1,428             15
 Tangible assets                             46,400         35,923
 Investments                                     23             23

                                             47,851         35,961

Current assets:
 Stocks                                      45,832         23,426
 Debtors                                     37,862         19,150
 Cash at bank and in hand                     6,656         33,974

                                             90,350         76,550

Current liabilities:
 Creditors - amounts falling due within
  one year                                  (35,156)       (17,709)

Net current assets                           55,194         58,841

Total assets less current liabilities       103,045         94,802

Creditors - amounts falling due after
  more than one year                        (20,000)       (3,041)
Provisions for liabilities and charges      (17,581)       (2,596)

Net assets                                   65,464         89,165

Capital and reserves:
  Called up share capital                    13,076         11,456
  Share premium account                      26,760         23,121
  Revaluation reserve                           550            550
  Capital redemption reserve                    300            300
  Profit and loss account                    24,545         53,553

Equity shareholders' funds                   65,231         88,980

  Equity minority interest                      233            185

Total capital employed                       65,464         89,165


CONSOLIDATED CASH FLOW STATEMENT for the year ended 31st December 1999

                                            1999             1998
                              Note    £'000    £'000    £'000    £'000
Net cash inflow/(outflow)
  from operating activities    7(a)            7,320            (2,059)
Returns on investments and 
  servicing of finance         7(b)            1,265             2,725
Taxation
  Paid                                (1,819)          (4,922)
  Received                               224                -
                                              (1,595)           (4,922)
Capital expenditure and
  financial investment         7(c)           (1,868)           (2,500)
Acquisitions and disposals: 
  Sale of tin plating business 7(d)        -            1,451
  Purchase of subsidiary 
    undertakings               7(e)  (49,218)         (12,968)
  Cash acquired with 
    subsidiary undertakings            2,227            1,827

                                             (46,991)           (9,690)
Equity dividends paid                         (4,400)           (4,398)

Net cash outflow before management of
 liquid resources and financing              (46,269)          (20,844)

Management of liquid resources:
  Cash recalled from short term deposit       30,238            11,227

Financing:
  New bank loans                      25,000                 -
  Repayment of loans                  (4,603)           (2,761)
  Issue of ordinary shares                 -                 4
                                              20,397            (2,757)

Increase/(decrease) in cash in the year        4,366           (12,374)

Reconciliation of net cash flow to
  movement in net debt:
 Increase/(decrease) in cash in 
  the period                           4,366           (12,374)
 Cash (inflow)/outflow from
  (increase)/decrease in debt        (20,397)            2,761
 Cash inflow from decrease in
  liquid resources                   (30,238)          (11,227)

Change in net debt resulting from
  cash flows                                 (46,269)          (20,840)
Translation differences                         (523)             (686)

Movement in net debt in the year             (46,792)          (21,526)
Net cash at 1st January                       27,195            48,721

Net (debt)/cash at 31st December             (19,597)           27,195     



NOTES TO THE FINANCIAL STATEMENTS

1.  Preparation of financial statements

    The financial statements for the year ended 31st December 1999 have
    been prepared on the basis of the accounting policies as set out in
    the group's annual report for 1998.  The abridged financial information
    presented above is based on the full accounts of the group for 1999
    and 1998, on which the auditors have given an unqualified report.  The
    full accounts for 1999 have not yet been filed with the registrar of
    companies.

2.  Turnover

    Turnover represents sales by group companies after eliminating intra-
    group transactions.

    Geographical destination analysis of group turnover:     
                                                                      Dis-
    1999                        Total    Continuing  Acquisitions   continued
                                £'000       £'000        £'000       £'000
    Continental Europe         27,803      27,400          403           -
    Asia                        7,100       6,985          115           -
    Australasia                 2,035       2,035            -           -
    North and South America    17,373      16,416          957           -
    Africa                      1,159       1,159            -           -

                               55,470      53,995        1,475           -
    UK                          4,895       4,855           40           -

    Total turnover             60,365      58,850        1,515           -

    1998                       

     Continental Europe        25,629      24,950            -         679
     Asia                       6,764       6,764            -           -
     Australasia                2,416       2,416            -           -
     North and South America   16,450      16,401            -          49
     Africa                       750         750            -           -

                               52,009      51,281            -         728
     UK                         5,608       5,608            -           -

   Total turnover              57,617      56,889            -         728


   Divisional analysis of                                 1999        1998
    group turnover:                                       £'000       £'000

    Europe                                              44,935      43,859
    Australia                                            2,418       2,665
    Americas                                            14,636      14,384
    Indonesia                                            1,099         530
                           
                                                        63,088      61,438
   Inter-divisional elimination                         (2,723)     (3,821)

   Total turnover                                       60,365      57,617


3. Divisional analysis of group operating profit
                                                          1999        1998
                                                         £'000       £'000
   Europe                                               (1,381)      1,290
   Australia                                                86         (78)
   Americas                                                707         962
   Indonesia                                                86          19
   Group expenses                                          336        (314)

   Group operating profit                                 (166)      1,879

    
   1999                                                               Dis-
                                Total    Continuing  Acquisitions  continued
                                £'000       £'000        £'000       £'000
   Turnover                    60,365      58,850        1,515           -
   Cost of sales              (44,337)    (43,196)      (1,141)          -

   Gross margin                16,028      15,654          374           -
   Other operating expenses   (16,194)    (15,570)        (624)          -

   Operating (loss)/profit       (166)         84         (250)          -


   1998

   Turnover                    57,617      56,889            -         728
   Cost of sales              (39,437)    (39,134)           -        (303)

   Gross margin                18,180      17,755            -         425
   Other operating expenses   (16,301)    (15,975)           -        (326)

   Operating profit             1,879       1,780            -          99
 

4. Exceptional items 

   The group has put in place a fundamental re-organisation programme for its
   continuing operations. As a consequence of this restructuring exercise, 
   the group's fixed assets have been written down by £8.2m and provisions
   totalling £16.1m have been established for the costs of restructuring. 
   The balance of the £25m charge to the 1999 profit and loss account relates
   to costs incurred prior to the year end in relation to the restructuring
   exercise.


5. Tax on profit on ordinary activities                   1999        1998
                                                         £'000       £'000
   UK corporation tax at 30% (1998 - 31%)                    -         132
   UK deferred tax at 30% (1998 - 31%)                       -           -

   Total UK tax                                              -         132
   Overseas tax                                            541         648

                                                           541         780

   The tax charge for 1999 includes a credit of
   £1,802,000 in respect of exceptional items
   (1998 : £358,000)

6. Earnings per ordinary share

   These have been calculated on (losses)/earnings before exceptional items
   of £(525,000) (1998 - £3,411,000) and (losses)/earnings after exceptional
   items of £(23,682,000) (1998 - £806,000).

   The weighted average number of shares used was 46,320,793 (1998 -
   45,821,274).

   Diluted earnings per share have been calculated for 1999 and 1998 under
   FRS14 and no dilution arises in either year.

7. Analysis of cash flows for headings netted in the cash flow statement.

   7(a)  Net cash flow from operating activities          1999        1998
                                                         £'000       £'000
         Operating (loss)/profit before exceptional 
           items                                          (166)      1,879
         Cash outflow in respect of exceptional items   (1,773)     (5,222)
         Depreciation of tangible fixed assets           2,630       2,836
         Amortisation of intangible asset                    1           1
         Profit on sale of fixed assets                    (59)       (103)
         Decrease/(increase) in stock                    6,083      (2,645)
         (Increase)/decrease in debtors                   (637)      6,983
         Decrease/(increase) in creditors                1,241      (5,788)

         Net cash inflow/(outflow) from operating
          activities                                     7,320      (2,059)
               
                                                         
   7(b)  Returns on investments and servicing of         
         finance 

         Interest received                               1,728       3,905
         Interest paid                                    (463)     (1,180)

                                                         1,265       2,725

   7(c)  Capital expenditure and financial
         investment                                      

         Purchase of tangible fixed assets              (1,984)     (2,688)
         Sale of tangible fixed assets                     116         188

                                                        (1,868)     (2,500)

   7(d)  Disposal of businesses
     
         Stock                                               -          64
         Profit on disposals                                 -       1,387

         Total cash received net of disposal expenses        -       1,451

   7(e)  Purchase of subsidiary undertaking

         On 17th December 1999 the group acquired the worldwide textile
         dyes business and the European industrial dyes business of CK
         Witco Corporation.  The assets and liabilities of the acquired
         entities were:
                               Initial      Fair     Accounting   Provisional
                                book       value        policy        fair
                                value    adjustments  alignment      value
                                £'000       £'000        £'000       £'000
         Intangible fixed 
          assets                2,443           -       (2,443)          -
         Tangible fixed 
          assets               26,212      (5,766)           -      20,446
         Stock                 28,897           -            -      28,897
         Debtors               19,645           -            -      19,645
         Creditors            (16,810)          -            -     (16,810)
         Cash                   2,227           -            -       2,227

         Net assets acquired   62,614      (5,766)      (2,443)     54,405

         Goodwill                                                    1,414
         Consideration (including expenses)                         55,819

         The consideration is analysed as follows:

         Shares issued                                               5,259
         Cash paid before year end                                  49,218
         Accrued expenses                                            1,342

         Total                                                      55,819


For further information contact:

S M Wallis,Chairman          - 0171 553 1483
M Greenhalgh,Chief Executive - 0113 244 3111