Financial Express (Holdings) Limited (“we”, “our”, “us” and derivatives) are committed to protecting and respecting your privacy. This Privacy Policy, together with our Terms of Use, sets out the basis on which any personal data that we collect from you, or that you provide to us, will be processed by us relating to your use of any of the below websites (“sites”).

  • FEAnalytics.com
  • FEInvest.net
  • FETransmission.com
  • Investegate.co.uk
  • Trustnet.hk
  • Trustnetoffshore.com
  • Trustnetmiddleeast.com

For the purposes of the Data Protection Act 1998, the data controller is Trustnet Limited of 2nd Floor, Golden House, 30 Great Pulteney Street, London, W1F 9NN. Our nominated representative for the purpose of this Act is Kirsty Witter.

WHAT INFORMATION DO WE COLLECT ABOUT YOU?

We collect information about you when you register with us or use any of our websites / services. Part of the registration process may include entering personal details & details of your investments.

We may collect information about your computer, including where available your operating system, browser version, domain name and IP address and details of the website that you came from, in order to improve this site.

You confirm that all information you supply is accurate.

COOKIES

In order to provide personalised services to and analyse site traffic, we may use a cookie file which is stored on your browser or the hard drive of your computer. Some of the cookies we use are essential for the sites to operate and may be used to deliver you different content, depending on the type of investor you are.

You can block cookies by activating the setting on your browser which allows you to refuse the setting of all or some cookies. However, if you use your browser settings to block all cookies (including essential cookies) you may not be able to access all or part of our sites. Unless you have adjusted your browser setting so that it will refuse cookies, our system will issue cookies as soon as you visit our sites.

HOW WE USE INFORMATION

We store and use information you provide as follows:

  • to present content effectively;
  • to provide you with information, products or services that you request from us or which may interest you, tailored to your specific interests, where you have consented to be contacted for such purposes;
  • to carry out our obligations arising from any contracts between you and us;
  • to enable you to participate in interactive features of our service, when you choose to do so;
  • to notify you about changes to our service;
  • to improve our content by tracking group information that describes the habits, usage, patterns and demographics of our customers.

We may also send you emails to provide information and keep you up to date with developments on our sites. It is our policy to have instructions on how to unsubscribe so that you will not receive any future e-mails. You can change your e-mail address at any time.

In order to provide support on the usage of our tools, our support team need access to all information provided in relation to the tool.

We will not disclose your name, email address or postal address or any data that could identify you to any third party without first receiving your permission.

However, you agree that we may disclose to any regulatory authority to which we are subject and to any investment exchange on which we may deal or to its related clearing house (or to investigators, inspectors or agents appointed by them), or to any person empowered to require such information by or under any legal enactment, any information they may request or require relating to you, or if relevant, any of your clients.

You agree that we may pass on information obtained under Money Laundering legislation as we consider necessary to comply with reporting requirements under such legislation.

ACCESS TO YOUR INFORMATION AND CORRECTION

We want to ensure that the personal information we hold about you is accurate and up to date. You may ask us to correct or remove information that is inaccurate.

You have the right under data protection legislation to access information held about you. If you wish to receive a copy of any personal information we hold, please write to us at 3rd Floor, Hollywood House, Church Street East, Woking, GU21 6HJ. Any access request may be subject to a fee of £10 to meet our costs in providing you with details of the information we hold about you.

WHERE WE STORE YOUR PERSONAL DATA

The data that we collect from you may be transferred to, and stored at, a destination outside the European Economic Area (“EEA”). It may be processed by staff operating outside the EEA who work for us or for one of our suppliers. Such staff may be engaged in, amongst other things, the provision of support services. By submitting your personal data, you agree to this transfer, storing and processing. We will take all steps reasonably necessary, including the use of encryption, to ensure that your data is treated securely and in accordance with this privacy policy.

Unfortunately, the transmission of information via the internet is not completely secure. Although we will do our best to protect your personal data, we cannot guarantee the security of your data transmitted to our sites; any transmission is at your own risk. You will not hold us responsible for any breach of security unless we have been negligent or in wilful default.

CHANGES TO OUR PRIVACY POLICY

Any changes we make to our privacy policy in the future will be posted on this page and, where appropriate, notified to you by e-mail.

OTHER WEBSITES

Our sites contain links to other websites. If you follow a link to any of these websites, please note that these websites have their own privacy policies and that we do not accept any responsibility or liability for these policies. Please check these policies before you submit any personal data to these websites.

CONTACT

If you want more information or have any questions or comments relating to our privacy policy please email publishing@financialexpress.net in the first instance.

 Information  X 
Enter a valid email address

Croda International (CRDA)

  Print      Mail a friend

Tuesday 22 February, 2011

Croda International

Final Results

RNS Number : 6071B
Croda International PLC
22 February 2011
 



Tuesday 22 February 2011

 

Croda International Plc

 

Preliminary results for the year to 31 December 2010 (unaudited)

 

STRONG ORGANIC GROWTH IN ALL AREAS PRODUCES RECORD RESULTS

 

FURTHER PROGRESS EXPECTED IN 2011

 

Highlights - Year to December

2010

2009

Change

 

Sales - continuing operations

£1,001.9m

£827.5m

+21.1%

Profit before tax and exceptional items




for continuing operations

£192.3m

£108.0m

+78.1%





Profit before tax

£192.3m

£90.8m

+111.8%





Earnings per share -  continuing operations before exceptional items

95.4p

53.8p

+77.3%

Earnings per share - basic

96.1p

17.6p

+446.0%

Dividend per share

35.0p

21.5p

+62.8%

 

 

· Consumer Care growth driven by continued robust demand for high performance products

-      Operating profit* up 31.8% to £136.5m on sales increase of 14.0% to £516.4m

-      All business areas saw at least double digit sales growth with Personal Care and Crop Care particularly strong

 

·   Industrial Specialities benefitted from the increased focus on higher value ingredients

-      Operating profit* more than trebled to £62.1m on sales up 29.7% to £485.5m

 

·   Return on sales up to 19.8% (2009: 14.7%)

 

·   Net debt reduced by £68.2m to £220.3m

·   Active management of pension scheme reduced post tax deficit from £150.0m to £104.9m

·   Share buyback programme announced

 

 

Highlights - Fourth Quarter

2010

2009

Change


£m

£m






Consumer Care sales

123.8

109.6

+13.0%

Industrial Specialities sales

113.6

100.3

+13.3%

Total sales

237.4

209.9

+13.1%

 

Consumer Care operating profit

32.9

26.2

+25.6%

Industrial Specialities operating profit

16.5

8.8

+87.5%

Operating profit

49.4

35.0

+41.1%

Interest

(0.5)

(3.3)


Continuing pre-tax profit

48.9

31.7

+ 54.3%

 

·    

 

Commenting on these results, Chairman, Martin Flower said: 

"Croda has produced another year of strong sequential growth to end 2010 with record results and a continuing turnover of £1 billion for the first time in our history. This performance demonstrates the solid foundations on which this business is built and our focus on innovation and growth markets has provided a robust platform both in times of global recession and global prosperity.

In Industrial Specialities we have replicated our strategy in Consumer Care to focus on lower volume, high quality ingredients. As a result, Industrial Specialities beat its 10% return on sales target and has made significant progress towards the new 15% goal. Achieving a return at this level has always been a key criterion for Croda in evaluating businesses both internally and externally.

Growth across all parts of the business and all major geographies translated into significant cash generation which enabled us to increase the dividend by 62.8% to 35.0p. In addition, we have decided to initiate a share buyback programme in 2011 whilst continuing to monitor suitable acquisition opportunities. 

2011 has started well and we are confident of making further progress in the current year."

 

* For continuing operations before exceptional items

 

For further information, please contact:

Mike Humphrey, Group Chief Executive

Tel 01405 860551

Sean Christie, Group Finance Director




Financial Dynamics

Tel 020 7269 7275

Charlie Armitstead / Hazel Stevenson


 

The company will broadcast the meeting with analysts in a live webcast commencing at 9:30 AM on 22 February 2011 on the company's website at www.croda.com.

 

 

Chairman's Statement

 

Throughout this statement and the operating and financial reviews, in order to show underlying business performance, sales and profits are stated for continuing operations.  In 2010, there were no exceptional costs for continuing operations. In 2009, operating profit and pre-tax profit are stated for continuing operations before exceptional costs of £17.2m. Further details of discontinued operations and exceptional items are included in note 7 to the financial information.

 

Introduction

Croda has delivered an unbroken run of continuing sales and profit growth for over ten years. This is a testament to the focus on a clear strategy which is communicated and executed throughout the business.  This year has seen record results, with strong demand, tight cost control and the benefits of past restructuring producing the uplift.

 

Quarter Four Trading

We achieved an excellent result in the fourth quarter despite strong 2009 comparatives.

The fourth quarter usually has the lowest sales of the year and whilst this was the case in 2010, the results represented a very strong close to the year. Sales in the quarter were up 13.1% to £237.4m (2009: £209.9m) with both Consumer Care and Industrial Specialities seeing similar turnover growth.

Pre-tax profit was up 54.3% to £48.9m (2009: £31.7m), with a significant increase in operating profit boosted by lower borrowing costs.

Our continued tight control of costs and the benefits of the closure of our operations at Wilton meant that both sectors saw improved returns, with Consumer Care's operating profit up 25.6% to £32.9m (2009: £26.2m) and Industrial Specialities up 87.5% to £16.5m (2009: £8.8m). Both results were impressive, with Industrial Specialities return on sales rising to 14.5% with particularly strong sales of speciality products versus 2009 contributing to the mix improvement.

 

Full Year Results

Record turnover and profits were achieved in 2010.

Turnover was over £1 billion for the first time at £1,001.9m, up 21.1% on 2009's £827.5m. Pre-tax profits increased 78.1% to £192.3m (2009: £108.0m). Continuing earnings per share were up 77.3% at 95.4p (2009: 53.8p).

Demand was strong in all business areas within both sectors and across all major geographies. Latin America, Asia and Africa accounted for 32.4% of Group turnover and that does not include ingredients we sell in Europe and America where our customers export finished products to consumers in those markets.

Consumer Care turnover was up 14.0% to £516.4m (2009: £453.1m).  All business areas recorded at least double digit growth, with Personal Care and Crop Care leading the way. Operating profit increased 31.8% to £136.5m (2009: £103.6m).

Industrial Specialities turnover was up 29.7% to £485.5m (2009: £374.4m). Our strategy to focus on lower volume, high specification, high quality ingredients to our five markets was central to our progress. This further benefitted the operating profit where profits rose 246.9% to £62.1m (2009: £17.9m). The first half of 2009 had been adversely affected by customer destocking as a result of the recession but nevertheless this was a very pleasing result. Return on sales increased to 12.8% (2009: 4.8%), beating our previous 10% target and making good progress towards the new, more challenging 15% goal.

Cash flow was again very impressive with a £68.2m reduction in net debt. EBITDA drove the result, which was achieved despite a working capital increase, as activity levels rose dramatically.

 

Disposals and Acquisitions

 

We continue to streamline the business and focus on high value speciality products.

 

On 10 May 2010 we announced that we had agreed to sell the Emmerich site and associated business in Germany to KLK Emmerich GmbH, a subsidiary of the KLK Group, for €55.0m. As part of the transaction, the purchaser assumed the IAS 19 retirement benefit obligations relating to the business of €38.4 million so that cash payable at completion was €16.6m.There was an exceptional profit before tax on the sale of £0.9m.

In November 2010 we bought out our joint venture partners' 40% share in our Indonesian company for $1.6m. Since the year end we have sold our 60% shareholding in the Korean joint venture to the minority shareholders for £2.2m. Korea remains an important market for Croda and our sales, distribution and technical operations in the country are unaffected by the disposal.

All these businesses were acquired with Uniqema in 2006.

 

Retirement Benefits

Our gross IAS 19 pension deficit reduced from £203.5m to £147.8m. The sale of Emmerich in May 2010 was the biggest element of the reduction as it removed almost all of our pension liabilities in Germany. The deficit was then further reduced in 2010 by additional Company contributions and increased asset values from stronger global equity markets outweighing increased liabilities as a consequence of slightly lower corporate bond rates.

 

Dividend

Given the strong performance across all our businesses, the Board will propose an increase in the final dividend of 68.3% to 25.25p (2009: 15.00p). This will give a total dividend for the year of 35.0p, up 62.8% on 2009's 21.5p.

 

Share Buyback

With Croda's performance and prospects being so strong it makes sense to maximise our investment in the business through capital expenditure and acquisitions where appropriate. We expect to increase capital expenditure in 2011 to a higher level than that seen in recent years in order to increase capacity but there is a limit to what can be spent in any one year without disrupting operations.

Despite this increase, we expect to generate a significant amount of cash in 2011 and with our net debt to EBITDA ratio already below one times, we believe that returning excess cash to shareholders by resuming our share buyback programme is a logical move. We see the programme as tactical and continue to monitor suitable acquisition opportunities. In the absence of such acquisitions, we would expect to buy shares worth around £50m in the market over the next year.

 

Outlook

The strong trading performance during the fourth quarter has continued into 2011. We are continuing to see significant raw material inflation and have increased our prices as we entered the year to protect our profitability. Across both Consumer Care and Industrial Specialities, our global markets continue to grow and we are confident of making further progress in the current year.

 

Operating Review

 

Sales were very strong in 2010 in both reporting sectors. Industrial Specialities had the highest growth, particularly in the first half, with weak comparatives in 2009 due to the recession.

 

Performance and Prospects

 

Consumer Care

 

There are three main business areas within the Consumer Care segment: Personal Care, Health Care and Crop Care.  In 2010, sales increased by 14.0% to £516.4m (2009:  £453.1m) and operating profits increased 31.8% to £136.5m (2009:  £103.6m) with the underlying margin from the extra sales boosted by the benefits of last year's restructuring and tight cost control. Return on sales increased to 26.4% (2009: 22.9%).

 

Personal Care is the largest of the business areas and sales grew faster than the Consumer Care average, with the strongest growth in prestige and high end salon products to our largest customers. Sales were particularly strong in North America and Europe. Our innovation and new product pipeline remain very strong and this is fuelling demand.

 

Health Care saw double digit growth despite capacity constraints in the first half of the year. New high purity Omega 3 capacity will be operational in the first half of 2011.

 

After a quiet first quarter, Crop Care achieved very strong sales with North American and European markets again seeing the highest growth.

 

Industrial Specialities

 

There are five main business areas in our Industrial Specialities segment: Polymer Additives, Lubricant Additives, Home Care, Coatings & Polymers and Geo Technologies.  2010 sales were up 29.7% to £485.5m (2009:  £374.4m) and continuing operating profit increased by 246.9% to £62.1m (2009: £17.9m) for the same reasons as those behind the Consumer Care profit uplift, plus the fact that comparatives in the first half of 2009 were very weak as a result of the global recession. Return on sales increased to 12.8% (2009: 4.8%), beating our previous target of 10% and the 2010 result showed good progress towards our new 15% target.

 

In Polymer Additives, good sales growth was achieved throughout the year despite some capacity issues, with sales doubling in China versus 2009.

 

Lubricant Additives were also capacity constrained in the early part of the year, following the Wilton closure, with strong demand for "green" high performance products.

 

In Home Care, sales were again strong. The quality of the portfolio that remains after the sale of Emmerich is high and we have been particularly successful in selling new biodegradable products in North America.

 

Coatings & Polymers saw strong growth with sales to the electronics industry in Asia performing well.

 

Geo Technologies saw a windfall in North America as a result of the Gulf of Mexico cleanup but this was again countered by capacity issues early in the year following the closure of Wilton.

 

Summary

 

Croda is a truly global company with only 5% of its sales in the UK.  Our customer focused business model has been the basis of our success for many years.  We will continue to increase this focus to create our future success.

In a number of areas we were short of capacity in 2010 following the Wilton closure and have addressed this issue during 2010 and will install further capacity in the current year.

Our new product pipeline is strong and global demand in our chosen markets remains robust.

2011 has started well and we expect to report further progress in the current year.

 

Financial Review

 

Pre-tax Profit

Pre-tax profit increased 78.1% to £192.3m (2009: £108.0m) with financing costs falling due to lower borrowings, lower interest rates and a higher pension funding credit.

 

Exceptional Items

There was a pre-tax exceptional credit on the sale of Emmerich of £0.9m in 2010. We sold the Bromborough site post closure and realised an exceptional pre-tax credit amounting to £3.0m, including unused provision releases.

 

Earnings per Share

Continuing earnings per share before exceptional items increased 77.3% to 95.4p (2009: 53.8p) driven by the pre-tax profit growth.

 

Dividend

We propose to increase the final dividend by 68.3% to 25.25p (2009: 15.00p). This will give a total dividend for the year of 35.0p, up 62.8% on 2009's 21.5p. Dividend cover increases to 2.7x (2009: 2.5x).

 

Debt and Liquidity

We negotiated a ten year $100m fixed rate private placement in January 2010, then in November replaced our committed bank arrangements with new facilities totalling £410m that run to May 2015.

As a result of the strong cash flow, net debt stood at £220.3m (2009: £288.5m). As a result we have £253m of headroom on our committed facilities. Our main banking ratio, net debt to EBITDA, fell to below one times for the first time since the acquisition of Uniqema.

 

Retirement Benefits

The gross IAS 19 deficit reduced from £203.5m to £147.8m and, post tax, the deficit at the end of 2010 was £45.1m lower than last year at £104.9m. The sale of Emmerich was the biggest element of the reduction as it removed almost all of our pension liabilities in Germany. In 2010, the Company paid £16.7m (2009: £16.6m) to reduce the deficit as agreed with our trustees around the world. In addition to these moves, global equity markets were stronger, increasing the funds' assets.

 

We have made some changes to our pension schemes in the UK during 2010 with new employees accruing pension benefits at 1/80th of salary per annum. Existing employees were able to retain their 1/60th accrual rate but their contribution increased to 8% of salary.

 

Financial KPIs

 

Performance against our five main KPIs (before exceptional items) is shown in the following table:

 


Target

2010

2009




As reported





Return on Sales

>15%

19.8%

13.1%

EPS Growth

+5-10%

+77.3%

+10.4%

Post tax ROIC

>WACC*

19.3%

10.5%

Debt/EBITDA

<3x

1.0x

1.8x

EBITDA Interest cover

>4x

36.7x

11.3x

 

All KPIs were ahead of target in 2010. Consumer Care significantly exceeded the return on sales target with a return of 26.4% and Industrial Specialities return on sales in 2010 was 12.8%. We have made great progress over the last few years in increasing the profitability of Industrial Specialities and are confident that our new goal of 15% is achievable.

 

* WACC:  Weighted average cost of capital, 2010 average estimated 7.5% (2009: 6.8%)

 

 

Croda International Plc

Preliminary announcement of trading results for the year ended 31 December 2010

Group income statement

 


Note

2010

£m

Before

Exceptional

items

2010

£m

 

Exceptional

items

2010

£m

 

 

Total

2009

£m

Before

Exceptional

items

2009

£m

 

Exceptional

items

2009

£m

 

 

Total

Continuing operations








Revenue

2

1,001.9

-

1,001.9

827.5

-

827.5









Cost of sales


(684.4)

-

(684.4)

(594.3)

(17.2)

(611.5)



______

______

______

______

______

______

Gross profit


317.5

-

317.5

233.2

(17.2)

216.0









Operating expenses


(118.9)

-

(118.9)

(111.7)

-

(111.7)



______

______

______

______

______

______

Operating profit

2

198.6

-

198.6

121.5

(17.2)

104.3









Financial expenses

3

(10.7)

-

(10.7)

(15.7)

-

(15.7)









Financial income

3

4.4

-

4.4

2.2

-

2.2



______

______

______

______

______

______

Profit before tax


192.3

-

192.3

108.0

(17.2)

90.8









Tax

4

(62.5)

-

(62.5)

(35.3)

2.1

(33.2)



______

______

______

______

______

______

Profit after tax from continuing operations


 

129.8

 

-

 

129.8

 

72.7

 

(15.1)

 

57.6









(Loss)/profit after tax from discontinued operations

7

(0.9)

2.1

1.2

(4.6)

(29.0)

(33.6)



______

______

______

______

______

______









Profit for the year


128.9

2.1

131.0

68.1

(44.1)

24.0



______

______

______

______

______

______









Attributable to:
















Non-controlling interests




0.2



0.2









Equity shareholders




130.8



23.8





______



______





131.0



24.0





______



______






pence per

share


pence per

share

Earnings per share (note 5)




Basic




Total

96.1


17.6

Total before exceptional items

94.6


50.2

Continuing operations

95.4


42.6

Continuing operations before exceptional items

95.4


53.8





Diluted




Total

94.1


17.3

Continuing operations

93.4


41.9





Ordinary dividends (note 6)




Interim

9.75


6.50

Final

25.25


15.00

 

 

Group statement of comprehensive income and expense

for the year ended 31 December 2010

 


2010

£m


2009

£m





Profit for the year

131.0


24.0





Other comprehensive income:








Currency translation differences

9.1


(7.1)





Movement in fair value of cash flow hedges

0.3


2.1





Actuarial movement on retirement benefit 

   liabilities

 

3.7


 

(141.8)





Deferred tax on actuarial movement on

  retirement benefit liabilities

 

(1.2)


 

38.5


______


______

Total comprehensive income/(expense)

  for the year

 

142.9


 

(84.3)


______


______





Attributable to:








Non-controlling interests

0.3


-





Equity shareholders

142.6


(84.3)


______


______


142.9


(84.3)


______


______

 

 

Group balance sheet at 31 December 2010

 


Note

2010

£m


2009

£m






Assets





Non-current assets





Intangible assets


203.5


202.0

Property, plant and equipment


319.4


341.8

Investments


14.0


12.5

Deferred tax assets


68.1


73.9



______


_____



605.0


630.2



______


_____






Current assets





Inventories


164.6


148.9

Trade and other receivables


146.2


159.0

Cash and cash equivalents


64.8


45.0

Assets classified as held for sale


0.6


-



______


______



376.2


352.9



______


______






Liabilities





Current liabilities





Trade and other payables


(178.5)


(179.0)

Borrowings and other financial liabilities


(3.3)


(48.8)

Provisions


(17.9)


(30.6)

Current tax liabilities


(16.6)


(14.7)



______


______



(216.3)


(273.1)



______


______

Net current assets


159.9


79.8



______


______

Non-current liabilities





Borrowings and other financial liabilities


(281.8)


(285.0)

Other payables


(4.8)


(3.6)

Retirement benefit liabilities

9

(147.8)


(203.5)

Provisions


(13.3)


(24.5)

Deferred tax liabilities


(43.0)


(35.2)



______


______



(490.7)


(551.8)



______


______






Net assets


274.2


158.2



______


______






Equity shareholders' funds


273.1


156.5

Non-controlling interests in equity


1.1


1.7



______


______






Total equity


274.2


158.2



______


______

 

 

Group statement of changes in equity

for the year ending 31 December 2010

 


 

Share

Capital

£m

Share

Premium

Account

£m

 

Other

Reserves

£m

 

Retained

Earnings

£m

Non-

Controlling

Interests

£m

 

 

Total

£m

At 1 January 2009

15.1

93.3

34.0

120.9

2.0

265.3








Profit for the year attributable to

  equity shareholders

 

-

 

-

 

-

 

23.8

 

-

 

23.8

Other comprehensive expense

-

-

(6.9)

(101.2)

-

(108.1)

Transactions with owners:







  Dividends on equity shares

-

-

-

(27.1)

-

(27.1)

  Share based payments

-

-

-

3.0

-

3.0

  Consideration received for sale

    of own shares held in trust

 

-

 

-

 

-

 

1.6

 

-

 

1.6


_____

_____

_____

_____

_____

_____

Total transactions with owners

-

-

-

(22.5)

-

(22.5)


_____

_____

_____

_____

_____

_____

Transactions with non-controlling

  interests:







  Share of profit after tax

-

-

-

-

0.2

0.2

  Currency translation differences

-

-

-

-

(0.2)

(0.2)

  Dividends paid to non-controlling

    interests

 

-

 

-

 

-

 

-

 

(0.3)

 

(0.3)


_____

_____

_____

_____

_____

_____

Total transactions with

  non-controlling interests

 

-

 

-

 

-

 

-

 

(0.3)

 

(0.3)


_____

_____

_____

_____

_____

_____

Total equity at







  31 December 2009

15.1

93.3

27.1

21.0

1.7

158.2


_____

_____

_____

_____

_____

_____















At 1 January 2010

15.1

93.3

27.1

21.0

1.7

158.2








Profit for the year attributable to

  equity shareholders

 

-

 

-

 

-

 

130.8

 

-

 

130.8








Other comprehensive income

-

-

9.0

2.8

-

11.8








Transactions with owners:







  Dividends on equity shares

-

-

-

(33.8)

-

(33.8)

  Share based payments

-

-

-

6.0

-

6.0

  Consideration received for sale

    of own shares held in trust

 

-

 

-

 

-

 

2.1

 

-

 

2.1


_____

_____

_____

_____

_____

_____

Total transactions with owners

-

-

-

(25.7)

-

(25.7)


_____

_____

_____

_____

_____

_____








Transactions with non-controlling

  interests:

 

 






  Share of profit after tax

-

-

-

-

0.2

0.2

  Currency translation differences

-

-

-

-

0.1

0.1

  Dividends paid to non-controlling

    interests

 

-

 

-

 

-

 

-

 

(0.2)

 

(0.2)

  Purchase of shares from

    non-controlling interests

 

-

 

-

 

-

 

(0.3)

 

(0.7)

 

(1.0)


_____

_____

_____

_____

_____

_____

Total transactions with

  non-controlling interests

 

-

 

-

 

-

 

(0.3)

 

(0.6)

 

(0.9)


_____

_____

_____

_____

_____

_____

Total equity at







  31 December 2010

15.1

93.3

36.1

128.6

1.1

274.2


_____

_____

_____

_____

_____

_____

 

Other reserves comprise the Capital Redemption Reserve of £0.9m (2009:  £0.9m) and the Translation Reserve of £35.2m (2009:  £26.2m).

 

 

Group statement of cash flows

for the year ended 31 December 2010

 


Note

2010

£m


2009

£m

Cash flows from operating activities





Continuing operations





Operating profit


198.6


104.3

Adjustments for:





  Depreciation, amortisation and loss/profit on disposal of





     fixed assets


34.1


32.4

  Exceptional items


-


17.2

  Other provisions


1.5


0.7

  Cash paid against operating provisions


(15.2)


(10.4)

  Changes in working capital


(16.1)


58.7

  Pension fund contributions in excess of service





    costs


(16.7)


(16.6)

  Share based payments


8.2


4.3



______


______

Cash generated by continuing operations


194.4


190.6

Discontinued operations


(6.0)


6.3

Interest paid


(10.7)


(20.5)

Tax paid


(45.9)


(21.5)



______


______

Net cash generated by operating activities


131.8


154.9



______


______

Cash flows from investing activities





Acquisition of non-controlling interest


(1.0)


-

Purchase of property, plant and equipment


(40.8)


(39.8)

Purchase of computer software


(0.5)


-

Proceeds from sale of property, plant and equipment


0.5


0.7

Proceeds from sale of businesses (net of costs)


14.1


2.7

Cash paid against non-operating provisions


(8.5)


(5.1)

Interest received


0.8


0.6



______


______

Net cash absorbed by investing activities


(35.4)


(40.9)



______


______

Cash flows from financing activities





New borrowings


284.0


-

Repayment of borrowings


(324.7)


(66.9)

Capital element of finance lease repayments


(0.5)


(0.4)

Net transactions in own shares


2.1


1.6

Dividends paid

6

(34.0)


(27.4)



______


______

Net cash absorbed by financing activities


(73.1)


(93.1)



______


______






Net movement in cash and cash equivalents


23.3


20.9

Cash and cash equivalents brought forward


37.2


17.3

Exchange differences


2.0


(1.0)



______


______

Cash and cash equivalents carried forward


62.5


37.2



______


______

Cash and cash equivalents carried forward comprise





Cash at bank and in hand


64.8


45.0

Bank overdrafts


(2.3)


(7.8)



______


______



62.5


37.2



______


______






Reconciliation to net debt





Net movement in cash and cash equivalents


23.3


20.9

Movement in debt and lease financing


41.2


67.3



______


______

Change in net debt from cash flows


64.5


88.2

New finance lease contracts


(0.4)


(0.3)

Exchange differences


4.1


21.7



______


______



68.2


109.6

Net debt brought forward


(288.5)


(398.1)



______


______

Net debt carried forward


(220.3)


(288.5)



______


______






 

Notes to the preliminary announcement

 

1.     Basis of preparation

 

        In preparing this financial information, management has used the principal accounting policies that will be detailed in the Group's annual report and which are unchanged from the prior year.  The results shown for 2010 are unaudited.  The financial information contained in this announcement does not constitute statutory accounts within the meaning of Section 435 of the Companies Act 2006.  Statutory accounts of the Company in respect of the financial year ended 31 December 2009, upon which the Company's auditors have given a report which was unqualified and did not contain a statement under Section 237(2) of the Companies Act 2006, have been delivered to the Registrar of Companies.

 

        The following new standards, amendments to existing standards or interpretations are mandatory for the first time for financial years beginning on or after 1 January 2010, and have been adopted by the Group effective from 1 January 2010;

 

         -        IFRS 3 (revised) - 'Business combinations', and consequential amendments to IAS 27, 'Consolidated and separate financial statements', IAS 28, 'Investments in associates', and IAS 31, 'Interests in joint ventures', are effective prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after 1 July 2009. The revised standard continues to apply the acquisition method to business combinations but with some significant changes compared with IFRS 3.  The standard has been applied in respect of transactions with non-controlling interests in the year.

        

         The following new standards, amendments to standards and interpretations are mandatory for the first time for the financial year beginning 1 January 2010 but do not have a significant impact on the Group:  IFRIC 17 'Distributions of non-cash assets to owners', IFRIC 18 'Transfers of assets from customers', IFRIC 9 'Reassessment of embedded derivatives and IAS 39, Financial instruments: Recognition and measurement', IFRIC 16 'Hedges of a net investment in a foreign operation', IAS 1 (amendment) 'Presentation of financial statements', IAS 36 (amendment) 'Impairment of assets', IFRS 2 (amendments) 'Group cash-settled share based payment transactions' and IFRS 5 (amendment) 'Non-current assets held for sale and discontinued operations'.

 

         The following new standards, new interpretations, and amendments to standards and interpretations have been issued but are not effective for the financial year beginning 1 January 2010 and have not been early adopted - IFRS 9, IAS 24, IAS 32, IFRIC 14 and IFRIC 19.

        

 

2.     Segmental information

 

        At 31 December 2010 the Group continued to be 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.  These are the segments for which management information is presented to the Group's Finance and Executive Committees, which are deemed to be the Group's Chief Operating Decision Makers.  There is no material trade between segments.  Segment results include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. 

 

        Income statement


2010

£m


2009

£m

Revenue - continuing operations




Consumer Care

516.4


453.1

Industrial Specialities

485.5


374.4


______


______


1,001.9


827.5


______


______

Operating profit - continuing operations before exceptional items




Consumer Care

136.5


103.6

Industrial Specialities

62.1


17.9


______


______


198.6


121.5


______


______

 

        Total assets

 


2010

£m


2009

£m

Consumer Care

517.0


481.7

Industrial Specialities 

316.7


370.0


_____


______

Total segment assets

833.7


851.7





Assets classified as held for sale

0.6


-

Tax assets

68.1


73.9

Cash, other financial assets and other




  investments

78.8


57.5


_____


______

Total assets

981.2


983.1


_____


______

 

 

3.     Net financial expenses

 


2010

£m


2009

£m

Financial expenses




Bank interest payable

(10.7)


(15.7)


_____


_____





Financial income




Bank and other interest receivable

2.1


1.5

Expected return on pension scheme assets




  less interest on scheme liabilities

2.3


0.7


_____


_____


4.4


2.2


_____


_____





Net financial expenses

(6.3)


(13.5)


_____


_____

 



 

4.     Tax on continuing operations

 


2010

£m


2009

£m

Analysis of tax charge for the year




United Kingdom current tax

0.4


0.3

Overseas current tax

47.2


27.2

Deferred tax

14.9


5.7


_____


_____


62.5


33.2


_____


_____

 

 

5.     Earnings per share

 


2010

p


2009

p

Earnings per share - continuing operations before exceptional items

95.4


53.8

Impact of discontinued operations' trading

(0.8)


(3.6)


_____


_____

Earnings per share before exceptional items

94.6


50.2

Impact of exceptional items

1.5


(32.6)


_____


_____

Earnings per share - basic

96.1


17.6


_____


_____

 

 

6.     Dividends paid

 


Pence

per

share

 

2010

£m


 

2009

£m

Ordinary





2008 Final - paid June 2009

13.55

-


18.2

2009 Interim - paid October 2009

6.50

-


8.8

2009 Final - paid June 2010

15.00

20.4


-

2010 Interim - paid October 2010

9.75

13.3


-



_____


_____



33.7


27.0






Preference (paid June and





  December)


0.1


0.1

Dividends paid to non-controlling





  interests


0.2


0.3



_____


_____



34.0


27.4



_____


_____

 

The directors are proposing a final dividend of 25.25p per share (£34.4m) in respect of the financial year ended 31 December 2010.  It will be paid on 3 June 2011 to shareholders registered on 3 May 2011.  The total proposed dividend for the year ended 31 December 2010 is 35.0p per share (£47.7m). 

 

 

7.     Discontinued operations and exceptional items

 

        In May 2010, the Group sold its Emmerich site and associated business in Germany to KLK Emmerich GmbH, a subsidiary of the KLK Group (Kuala Lumpur Kepong Berhad), for €55.0m. The Emmerich site produced fatty acids and glycerine, most of which were sold into the Industrial Specialities market. The profit before tax on the sale of the site of £0.9m has been disclosed as exceptional. As part of the transaction, KLK assumed the IAS19 retirement benefit obligations relating to the business of €38.4m such that cash receivable by the Group was €16.6m. The sale represents a further exit from the oleochemicals sector and largely completes the Group's restructuring programme established following the 2006 acquisition of Uniqema.

 

        During 2009, in line with the same strategy to reduce exposure to basic commodity sectors, the Group announced the closure of its operations at Bromborough in Merseyside, United Kingdom.   There was an exceptional pre-tax credit of £3.0m in 2010 in relation to this discontinued business.

       

        Since the balance sheet date, in January 2011, the Group has completed the sale of its 60% holding in its Korean joint venture, Croda Woobang, to the Korean joint venture partners. The trading result of Croda Woobang has been classified as discontinued and the company's assets have been classified as 'held for sale' in the Group balance sheet.

 

        The impact of the operations discontinued in 2010 and 2009 is as follows:

 


2010

£m

2009

£m

Pre-tax operating loss from discontinued operations

(1.4)

(6.7)

Tax

0.5

2.1


______

______

Post-tax operating loss from discontinued operations

(0.9)

(4.6)


______

______

 

Profit/(loss) before tax on disposal

 

3.9

 

(32.8)

Tax

(1.8)

3.8


______

______

Net exceptional profit/(loss) on disposal

2.1

(29.0)


______

______

Total profit/(loss) after tax from discontinued operations

1.2

(33.6)


______

______

 

        The prior year continuing operations' exceptional item related to the closure of the Group's operations at Wilton on Teesside, United Kingdom. The closure was completed in 2010 with no further exceptional cost.

 

8.     Financial assets and liabilities

 

        During 2006 the Group took out interest rate swaps with a notional value of £100m to fix a proportion of the floating rate acquisition funding and these were designated as cash flow hedges. The swaps expired on 31 January 2010. There is no intention at the current time to enter into any further interest rate swaps following the issue of a ten year fixed rate $100m loan note in January 2010.

 

 

9.     Accounting estimates and judgements

 

        The Group's critical accounting policies under IFRS have been established 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.  Critical judgement has been required when preparing the Group's accounts as follows:

 

 

        Provisions

 

        At 31 December 2010, the Group has an environmental provision of £12.1m in respect of soil and potential ground water contamination on a number of sites.  Restructuring provisions, totalling £14.1m as at 31 December 2010, relate to the remaining costs associated with the ongoing plans to finalise the integration of the Uniqema business acquired in 2006 with the existing Croda businesses and the remaining costs associated with the closure of our Wilton site. 

 

        Based on environmental information currently available and the detailed plans established for the restructuring of the Group, the level of provisions is considered appropriate by the directors.

 

        Goodwill and fair value of assets acquired

 

        The Group tests annually whether goodwill has suffered any impairment and the carrying value of goodwill in the Group balance sheet has been supported by detailed value-in-use calculations relating to the recoverable amounts of the underlying cash generating units. These calculations require the use of estimates, however as recoverable amounts significantly exceed carrying values including goodwill, there is no impairment within a wide range of assumptions.

 

Retirement benefit liabilities

 

The Group's principal retirement benefit schemes are of the defined benefit type. Year end recognition of the liabilities under these schemes and the valuation of assets held to fund these liabilities require a number of significant assumptions to be made, relating to levels of scheme membership, mortality rates, key financial market indicators such as inflation and expectations on future salary growth and asset returns. These assumptions are made by management taking account of advice received from the schemes' actuaries.  As a result of the sale of Emmerich and stronger global equity markets, the IAS 19 gross pension deficit during the year ended

31 December 2010 has reduced from £203.5m to £147.8m.

 

 

10.  Principal risks and uncertainties

 

Each division considers strategic, operational and financial risks and identifies actions to mitigate those risks.  These risk profiles are updated at least annually.  The principal risks and uncertainties for the Group are the same risks and uncertainties that will be referred to and discussed in the Group's annual report and which are unchanged from the prior year.  These risks remain as:  a major site event, loss of key personnel, interruption of raw material supply, major environmental incident, product liability, regulatory compliance, IT failure, management of pension fund assets and working capital management.

 

 

Responsibility Statement of the directors on the annual report

 

The Responsibility Statement below has been prepared in connection with the Company's full annual report for the year ended 31 December 2010. Certain parts thereof are not included within this announcement.

 

We confirm to the best of our knowledge:

 

·     the financial statements, prepared in accordance with IFRS as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit of the Company and the undertakings included in the consolidation taken as a whole; and

·     the management report, which is incorporated into the directors' report, includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties they face.

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
FR DKDDDCBKDPBB