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Croda International (CRDA)

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Wednesday 27 July, 2005

Croda International

Interim Results

Croda International PLC
27 July 2005

Wednesday, 27 July 2005


                           Croda International Plc

                         Interim Results Announcement
                          Six months to 30 June 2005

Highlights

                                              2005            2004
                                        
Sales for continuing operations            £158.9m         £146.5m        +8.5%

Pre-tax profit for continuing operations    £25.8m          £22.4m         +15%

Earnings per share                           13.0p           11.6p         +12%

Dividend per share                           4.35p           4.10p        +  6%


•   Pre-tax profits up 15%

•   Consumer Care sales up 11.7%

•   Consumer Care volumes up 11%

•   Consumer Care margins maintained at 21%

•   Dividend increased 6% to 4.35p per share

•   Continued Treasury share buy back programme


Commenting on the results, Chairman, Antony Beevor, said:

'Demand from our customers has continued to be good.  In particular, in the
Consumer Care segment sales rose by 11.7% on volumes which were 11% up on the
previous year.  The principal driver of growth was skin care, which is one of
the fastest growing parts of the personal care market worldwide.

Overall, ongoing demand remains good across the business.  We anticipate further
product launches in the second half giving us confidence in the continued growth
of the business in our chosen markets.  We expect 2005 to be another year of
progress for the Group.'


For further information, please contact:

Mike Humphrey, Chief Executive                              Tel:   01405 860551

Barbara Richmond, Group Finance Director                    Tel:   01405 860551

Charles Watenphul or Andrew Dowler, Financial Dynamics      Tel:   0207 831 3113


Or visit our web site at:  www.croda.com where the presentation to analysts will
be available by 10.30 a.m. today.




                              Croda International Plc

                              Chairman's Statement

These are the first set of results we have prepared under International
Financial Reporting Standards (IFRS).  Profit before tax for the first six
months was £25.8m, 15% ahead of the same period last year.  Sales from
continuing operations increased by 8.5%.  For the first time in a number of
years currency had no significant effect on sales values or profits in the first
half.

The tax rate of 34.9% was in line with expectations, resulting in earnings per
share of 13p (2004 11.6p).  As a result of this strong performance, the Board
has declared an interim dividend 6% higher than last year.  This dividend of
4.35p (2004 4.1p) will be payable to shareholders on 6 October 2005, in line
with best practice and three months earlier than the Company has previously paid
the interim dividend.

Trading

At the AGM in April, I reported the year had started strongly.  Demand has
continued to be good in the second quarter.  In particular, in the Consumer Care
segment (comprising the  Personal, Health and Home Care businesses) sales rose
by 11.7% on volumes which were 11% up on the previous year.  Whilst all of this
segment performed well, the principal driver of growth was skin care, which is
one of the fastest growing parts of the Personal Care market worldwide.  The
operating margin in Consumer Care was maintained at 21%.

Sales of Industrial Specialities were up 2.7% on volumes which were 2.5% lower.
The good performance in higher added value plastics additives was partly offset
by lower volumes of commodity industrial products.

Geographically, we achieved very good growth in the Americas, with North
American sales up 16% and those in South America up almost 35%.  Europe also
performed well with an increase in mainland Europe of 8%.  Sales in Asia grew at
a lower rate overall with good growth in some areas such as China and little
growth in countries such as Indonesia.

Finance

Again we achieved a good cash performance with operating cash inflow of 14.5p
per share (2004 12.7p).  We continued to buy back shares into Treasury in the
first half and have now purchased in total 6.5 million shares at a cost of
£23.5m since the buy back programme began in December of last year.  We also
returned to the market 1.4 million shares as a result of the exercise of
employee share options in the first half.

Net debt at the end of June was £20.8m producing gearing of 26.4% (2004 24.7%).

Further information on the impact of IFRS on the accounting policies and 2004
results can be found by visiting our website www.croda.com and going to the '
Latest Announcements' in the Investor centre.

Outlook

Overall, ongoing demand remains good across the business.  Also we anticipate
further product launches in the second half, giving us confidence in the
continued growth of the business in our chosen markets.  We expect 2005 to be
another year of progress for the Group.

As already announced I will be retiring at the end of September, handing over to
Martin Flower. I have been privileged to be Chairman of Croda for the last three
and a half years and I wish Martin all possible success in the future.


Croda International Plc
Results for the six months ended 30 June 2005

Condensed Group income statement

Unaudited £m                                             Note             2005            2004            2004
                                                                         First           First            Full
                                                                          Half            Half            Year
Continuing operations
Turnover                                                 2               158.9           146.5           291.1

Cost of sales                                                          (110.4)         (104.4)         (206.5)
                                                                        ______          ______          ______
Gross profit                                                              48.5            42.1            84.6

Operating expenses                                                      (22.7)          (19.8)          (39.3)

Share of associate's post-tax profits
   Profit before tax                                                       1.1             1.7             2.6
   Tax                                                                   (0.3)           (0.5)           (0.8)
                                                                           0.8             1.2             1.8
                                                                        ______          ______          ______
Operating profit                                         2                26.6            23.5            47.1

Finance costs                                            3               (0.8)           (1.1)           (1.9)
                                                                        ______          ______          ______
Profit before tax                                                         25.8            22.4            45.2

Tax                                                                      (9.0)           (7.5)          (15.2)
                                                                        ______          ______          ______
Profit after tax from continuing operations                               16.8            14.9            30.0

Discontinued operations                                  5                   -             0.5             0.7

Minority interest and preference dividends                                   -           (0.2)           (0.2)
                                                                        ______          ______          ______
Profit attributable to ordinary shareholders                              16.8            15.2            30.5
                                                                         _____           _____           _____


                                                                pence per        pence per      pence per
                                                                    share            share          share
Earnings per share of 10p
Basic
Total                                                                13.0             11.6           23.3
Continuing operations                                                13.0             11.3           22.8

Diluted
Total                                                                13.0             11.6           23.1
Continuing operations                                                13.0             11.3           22.7

Ordinary dividends
Interim                                                              4.35             4.10           4.10
Final                                                                                                8.40


Condensed Group balance sheet

Unaudited £m                                       Note                  At                 At                 At
                                                                    30 June            30 June        31 December
                                                                       2005               2004               2004
Assets
Non-current assets
Property, plant and equipment                                         126.2              130.1              127.4
Intangible assets                                                       6.5                6.5                6.5
Investments                                                            11.1               11.2               10.9
Deferred tax assets                                                    33.8               32.4               34.1
                                                                     ______             ______             ______
                                                                      177.6              180.2              178.9
                                                                     ______             ______             ______

Current Assets
Inventories                                                            55.9               52.1               52.0
Trade and other receivables                                            64.3               59.0               54.9
Cash, cash equivalents and
   other financial assets                          6                   36.5               28.2               32.4
                                                                     ______             ______             ______
                                                                      156.7              139.3              139.3
                                                                     ______             ______             ______

Liabilities
Current liabilities
Trade and other payables                                             (66.6)             (51.3)             (42.1)
Borrowings and other financial
   liabilities                                     6                 (36.0)             (18.0)             (15.6)
Current tax liabilities                                               (4.4)              (6.1)              (4.8)
                                                                     ______             ______             ______
                                                                    (107.0)             (75.4)             (62.5)
                                                                     ______             ______             ______
Net current assets                                                     49.7               63.9               76.8
                                                                     ______             ______             ______
Non-current liabilities
Borrowings and other financial                     6
   liabilities                                                       (21.3)             (31.1)             (32.0)
Other payables                                                        (0.7)              (0.7)              (0.9)
Retirement benefit obligations                                      (102.5)             (99.9)            (104.1)
Provisions                                                            (8.6)             (14.0)             (13.6)
Deferred tax liabilities                                             (15.4)             (13.9)             (15.5)
                                                                     ______             ______             ______
                                                                    (148.5)            (159.6)            (166.1)
                                                                     ______             ______             ______
Net assets                                                             78.8               84.5               89.6
                                                                     ______             ______             ______

Equity shareholders' funds                                             77.9               83.3               88.8
Minority interests                                                      0.9                1.2                0.8
                                                                     ______             ______             ______

Total equity                                                           78.8               84.5               89.6
                                                                     ______             ______             ______


Condensed statement of recognised income and expense

Unaudited £m                                                  2005                 2004            2004
                                                             First                First            Full
                                                              Half                 Half            Year

Profit attributable to ordinary shareholders                  16.8                 15.2            30.5
Exchange differences                                           1.6                (1.6)           (0.7)
Actuarial movement on retirement benefit
   obligations (net of deferred tax)                             -                    -           (5.2)
                                                            ______               ______          ______
Total recognised income and expense                           18.4                 13.6            24.6
                                                            ______               ______          ______


Condensed statement of changes in equity

Unaudited £m                                                  2005                 2004            2004
                                                             First                First            Full
                                                              Half                 Half            Year

Opening shareholders' equity                                  88.8                 84.1            84.1
Total recognised income                                       18.4                 13.6            24.6
Ordinary dividends on equity shares                         (16.2)               (15.5)          (15.5)
Transactions in own shares                                  (13.3)                  1.0           (4.7)
Share based payments                                           0.2                  0.1             0.3
                                                            ______               ______          ______
Closing shareholders' equity                                  77.9                 83.3            88.8
                                                            ______               ______          ______


Condensed Group cash flow statement

Unaudited £m                                            Note                 2005           2004             2004
                                                                            First          First             Full
                                                                             Half           Half             Year
Cash flows from operating activities
Profit before tax
  Continuing operations                                                      25.8           22.4             45.2
  Discontinued operations                                                       -          (0.2)            (0.2)
Adjustments for:
  Depreciation and loss on disposal of fixed assets                           7.1            7.2             14.5
  Changes in working capital                                                (3.6)          (3.0)            (0.7)
  Net financing cost                                                          0.8            1.1              1.9
  Pension fund contributions in excess of service
    costs                                                                   (1.4)          (2.2)            (3.8)
  Share based payments                                                        0.4            0.3              0.4
  Share of profit of associated undertaking                                 (0.8)          (1.2)            (1.8)
Dividend received from associated undertaking                                 0.5            0.8              1.9
                                                                           ______         ______           ______
Cash generated from operations                                               28.8           25.2             57.4
Interest paid                                                               (1.5)          (1.8)            (3.4)
Tax paid                                                                    (9.1)          (7.3)           (12.5)
                                                                           ______         ______           ______
Net cash generated from operating activities                                 18.2           16.1             41.5
                                                                           ______         ______           ______
Cash flows from investing activities
Purchases of property, plant and equipment                                  (4.1)          (8.9)           (14.9)
Proceeds from sale of property, plant and equipment                           0.2            2.2              1.3
Proceeds from sale of businesses (net of costs)                                 -            3.2              4.6
Cash paid against provisions                                                (5.0)              -                -
Interest received                                                             0.5            0.6              1.1
                                                                           ______         ______           ______
Net cash used in investing activities                                       (8.4)          (2.9)            (7.9)
                                                                           ______         ______           ______
Cash flows from financing activities
Additional borrowings                                                         4.8              -                -
Repayment of borrowings                                                         -          (5.2)            (3.3)
Net purchases of own shares                                                 (8.9)            1.0            (4.7)
Dividends paid                                          4                   (5.4)          (5.4)           (16.0)
Other                                                                           -          (0.1)                -
                                                                           ______         ______           ______
Net cash used in financing activities                                       (9.5)          (9.7)           (24.0)
                                                                           ______         ______           ______

Net increase in cash and cash equivalents                                     0.3            3.5              9.6
Cash and cash equivalents brought forward                                    17.5            8.5              8.5
Exchange differences                                                          1.1          (0.6)            (0.6)
                                                                           ______         ______           ______
Cash and cash equivalents carried forward                                    18.9           11.4             17.5
                                                                           ______         ______           ______

Cash and cash equivalents carried forward
  comprise
Cash at bank and in hand                                                     36.2           28.2             32.4
Bank overdrafts                                                            (17.3)         (16.8)           (14.9)
                                                                           ______         ______           ______
                                                                             18.9           11.4             17.5
                                                                           ______         ______           ______
Reconciliation to net debt
Net increase in cash and cash equivalents                                     0.3            3.5              9.6
Increase in debt and lease financing                                        (4.8)            5.2              3.3
                                                                           ______         ______           ______
Change in net debt from cash flows                                          (4.5)            8.7             12.9
New finance lease contracts                                                     -              -            (0.1)
Exchange differences                                                        (1.1)          (0.1)              1.5
                                                                           ______         ______           ______
                                                                            (5.6)            8.6             14.3
Net debt brought forward                                                   (15.2)         (29.5)           (29.5)
                                                                           ______         ______           ______
Net debt carried forward                                                   (20.8)         (20.9)           (15.2)
                                                                           ______         ______           ______

Notes to the interim report

1.     Basis of preparation

The financial information in this interim report has been prepared on the basis
of all IFRS's that had been published by 31 December 2004 and apply to
accounting periods beginning on or after 1 January 2005.  The Group has also, as
permitted, early adopted the amendment to IAS 19 'Employee Benefits - Actuarial
Gains and Losses' that was published by the International Accounting Standards
Board ('IASB') in December 2004.  The standards used are those endorsed by the
EU together with those standards and interpretations that had been issued by the
IASB but had not been endorsed by the EU at the time of preparing these
statements (July 2005).  The directors expect that the amendments to IAS 19 '
Employee Benefits - Actuarial Gains and Losses' issued by the IASB will be fully
adopted by the EU and will therefore be available for use in the IFRS financial
statements for the year ended 31 December 2005.

During 2005 further standards and interpretations may be issued that will be
applicable for financial years beginning on or after 1 January 2005 or that are
applicable to later accounting periods but may be adopted early.  The Group's
first IFRS financial statements may, therefore, be prepared in accordance with
some different accounting policies from the financial information presented
here.   Additionally, IFRS is currently being applied in the United Kingdom, and
in a large number of other countries simultaneously, for the first time.
Furthermore, due to a number of new and revised standards included within the
body of standards that comprise IFRS, there is not yet a significant body of
established practice on which to draw in forming opinions regarding
interpretation and application. Accordingly, practice is continuing to evolve.
At this preliminary stage, therefore, the full financial effect of reporting
under IFRS as it will be applied and reported on in the Group's first IFRS
financial statements cannot be determined with certainty and may be subject to
change.

In June 2005, the Group published via the Stock Exchange and on its website
(croda.com) a 'Statement on the Transition to International Accounting Standards
and International Financial Reporting Standards' ('the transition statement').
This statement described the likely impact of the transition from UK GAAP to
IFRS on the Group's equity, net income and cash flows, as well as providing each
of the reconciliations required by IFRS 1. The interim report should be read in
conjunction with the transition statement.

The accounting policies followed in the preparation of this interim report were
set out in full in the transition statement and have been consistently applied
to all the years presented except for those relating to the classification and
measurement of financial instruments. The Group has made use of the exemption
available under IFRS 1 to only apply IAS 32 and IAS 39 from 1 January 2005.

The comparative figures for the financial year ended 31 December 2004 are not
the Group's statutory accounts for the financial year.  Those accounts, which
were prepared under UK GAAP in accordance with the Companies Act 1985, have been
reported on by the Company's auditors and delivered to the registrar of
companies.  The report of the auditors was unqualified and did not contain
statements under section 237(2) or (3) of the Companies Act 1985.

2.         Segmental information

Primary reporting format - business segments

At 30 June 2005 the Group is organised on a worldwide basis into two main
business segments, relating to the manufacture and sale of the Group's products
which are destined for either the Consumer Care market or the market for
Industrial Specialities.

                                                                    2005             2004              2004
                                                                   First            First              Full
                                                                    Half             Half              Year
                                                                      £m               £m                £m
Turnover - continuing operations
Consumer Care                                                      104.9             93.9             187.3
Industrial Specialities                                             54.0             52.6             103.8
                                                                  ______           ______            ______
                                                                   158.9            146.5             291.1
                                                                  ______           ______            ______

Operating profit - continuing operations
Consumer Care                                                       22.0             20.3              40.7
Industrial Specialities                                              4.6              3.2               6.4
                                                                  ______           ______            ______
                                                                    26.6             23.5              47.1
                                                                  ______           ______            ______


There are no sales between business segments and all operating costs of the
Group are allocated between the segments.

Secondary reporting format - geographical segments

The sales analysis in the table below is based on the location of the customer.

                                                                    2005             2004              2004
                                                                   First            First              Full
                                                                    Half             Half              Year
                                                                      £m               £m                £m
Turnover by destination - continuing operations
operations
Europe                                                              72.8             69.6             132.7
Americas                                                            55.9             47.2              97.4
Asia                                                                20.3             20.0              41.0
Rest of World                                                        9.9              9.7              20.0
                                                                  ______           ______            ______
                                                                   158.9            146.5             291.1
                                                                  ______           ______            ______
3.     Finance costs


                                                                   2005             2004              2004
                                                                  First            First              Full
                                                                   Half             Half              Year
                                                                     £m               £m                £m

Net bank interest payable                                           1.0              1.2               2.1
Expected return on pension scheme assets
  less interest on scheme liabilities                             (0.2)            (0.1)             (0.2)
                                                                 ______           ______            ______
                                                                    0.8              1.1               1.9
                                                                 ______           ______            ______

4.     Dividends paid


                                               Pence          2005            2004              2004
                                                 per         First           First              Full
                                               share          Half            Half              Year
                                                                £m              £m                £m

Ordinary
2003 Interim - paid January 2004                4.02             -             5.3               5.3
2003 Final - approved April 2004,
  paid July 2004                                7.83             -               -              10.2
2004 Interim - paid January 2005                4.10           5.4               -                 -
                                                             _____           _____             _____
                                                               5.4             5.3              15.5
Preference (paid June and
  December)                                                      -               -               0.1
Dividends paid to minority
  shareholders                                                   -             0.1               0.4
                                                             _____           _____             _____
                                                               5.4             5.4              16.0
                                                             _____           _____             _____


A final dividend in respect of 2004 of 8.4p per share, amounting to a total
dividend of £10.8m, was approved at the Company's AGM on 21 April 2005 and was
paid on 7 July 2005.

An interim dividend in respect of 2005 of 4.35p per share, amounting to a total
dividend of £5.5m, was declared by the directors at their meeting on 26 July
2005.  The interim report does not reflect the 2005 interim dividend payable.
The dividend will be paid on 6 October 2005 to shareholders registered on 9
September 2005.

5.     Discontinued operations

During 2004 the Group sold its Fire Fighting Chemicals and rock anchor
manufacturing businesses. The results of these businesses up to the point of
disposal are included within discontinued operations on the face of the income
statement along with any profit or loss arising on the business disposal itself
and the profits or losses arising from the subsequent disposals of properties
previously occupied by disposed businesses. The impact on the income statement
is summarised below.

                                                                   2005             2004              2004
                                                                  First            First              Full
                                                                   Half             Half              Year
                                                                     £m               £m                £m

Profit before tax of discontinued operations
  to point of disposal                                                -            (0.2)             (0.2)
Profit on disposal and closure of
  discontinued operations                                             -              0.3             (0.5)
Profit on disposal of fixed assets in
  discontinued operations                                             -              0.6               0.6
Tax                                                                   -            (0.2)               0.8
                                                                 ______           ______            ______
                                                                      -              0.5               0.7
                                                                 ______           ______            ______


6.     Financial assets and liabilities

The Group manages its interest rate profile by use of an interest rate swap to
convert a proportion of its fixed rate debt to a floating rate.  Under IFRS, the
fair value of such derivative instruments must be recognised in the financial
statements with a corresponding fair value adjustment to the underlying loan
instrument.  Accordingly, a financial asset of £0.3m has been recognised within
current assets, being the fair value of the interest rate swap, and current and
non-current financial liabilities include £0.1m and £0.2m respectively in
recognition of the corresponding adjustment to the fair value of the Group's
fixed rate debt at 30 June 2005.

7.     Treasury shares

During the period covered by this interim report the Company purchased 4,537,305
shares on the open market to be held as treasury shares for a consideration of
£17.2m.  Included within this consideration is an amount of £4.4m accrued in
respect of purchases contracted before the period end with a settlement date
shortly after the period end.  The Company now holds 6,522,589 shares in total
as treasury shares. These shares have been deducted from shareholders' equity
and will be held until such time as the Board decides to cancel, reissue or use
them to satisfy share options.

8.     Accounting estimates and judgements

The Group's critical accounting policies under IFRS, as discussed in the
transition statement, have been set by management with the approval of the Audit
Committee. The application of these policies requires estimates and assumptions
to be made concerning the future and judgements to be made on the applicability
of policies to particular situations. Estimates and judgements are continually
evaluated and are based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the
circumstances.

Under IFRS an estimate or judgement may be considered critical if it involves
matters that are highly uncertain, or where different estimation methods could
reasonably have been used, or if changes in the estimate that would have a
material impact on the Group's results are likely to occur from period to
period. The only such critical judgement required when preparing the Group's
accounts is discussed below.

Environmental provisions

At 30 June 2005, the Group has an environmental provision of £8.6m in respect of
soil and potential ground water contamination on a number of sites. These
provisions were established in line with UK GAAP and have been reviewed to
ensure compliance with IFRS. Based on information currently available, this
level of provision is considered appropriate by the directors.




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