Yule Catto & Co plc Full Year results presentation March 2011 - - PowerPoint PPT Presentation

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yule catto co plc full year results presentation march
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Yule Catto & Co plc Full Year results presentation March 2011 - - PowerPoint PPT Presentation

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Yule Catto & Co plc Full Year results presentation March 2011 Introduction Adrian Whitfield, Chief Executive 2 Being part of all our lives Structure Key Themes Highlights Financials Operational Review Group

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Yule Catto & Co plc Full Year results presentation March 2011

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Introduction Adrian Whitfield, Chief Executive

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Structure

  • Key Themes
  • Highlights
  • Financials
  • Operational Review

– Group – Polymers – Pharma – Impact

  • Summary
  • Acquisition of PolymerLatex / “New” Yule Catto
  • Outlook
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Key Themes

  • Continued strong progression in Group profitability
  • Following the transformational acquisition of

PolymerLatex business now clearly focused around core Polymers business

  • Significant and increasing exposure to high growth

emerging markets

  • Geographic balance and market leadership positions

create good growth dynamics

  • The acquisition of PolymerLatex brings additional
  • pportunities to enhance the future profitability of the

Group

  • Strong balance sheet
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2010 Highlights

  • A very good year

– Underlying PBT £47m up 19% – Underlying EPS up 22% – Builds on 27% increase in PBT delivered in 2009

  • Strong increase in Polymers profitability year-on-year
  • Continued good progress in passing on increased raw material prices
  • Satisfactory performances from Pharma and Impact
  • Significant reduction in net debt

– £63.4m at period end – net debt / EBITDA ratio 0.9x

  • Recommended final dividend of 1.3p per share in line with communication at

the time of the PolymerLatex acquisition

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Full Year Results David Blackwood, Finance Director

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P&L - Underlying

2010 (£’m) 2009 (£’m) Variance Underlying Underlying Total Sales 645.8. 532.2. +21.3% Operating Profit/(Loss) 54.9. 49.4. +11.1% Finance Cost (7.9) (9.9) Profit/(Loss) Before Tax 47.0. 39.5. +19.2%. . Tax (9.1) (8.0) Circa 20% rate Minorities (1.3) (1.5) Attributable to equity holders

  • f parent

36.6. 30.0. EPS * 16.2p. 13.3p. +21.8%.

*adjusted for the rights issue

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Consolidated Income Statement

2010 2009 £’m £’m Und’lying Special items IFRS Und’lying Special items IFRS Total Sales 645.8 5.7 651.5 532.2 11.2 543.4 Operating Profit 54.9 8.1 63.0 49.4 (28.0) 21.4 Finance Cost (7.9) 2.7 (5.2) (9.9) (4.4) (14.3) Profit/(Loss) before tax 47.0 10.8 57.8 39.5 (32.4) 7.1 Discontinued Operations

  • 3.7

3.7 Tax (9.1) 6.6 (2.5) (8.0) 9.1 1.1 Minorities (1.3) (4.2) (5.5) (1.5) (0.7) (2.2) Attributable to equity holders

  • f parent

36.6 13.2 49.8 30.0 (20.3) 9.7 EPS* 16.2p 5.8p 22.0p 13.3p (9.1)p 4.2p

*adjusted for the rights issue

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Special / Exceptional Items

  • Gain of £12.7m on disposal of interest in Revertex

Finewaters (of which £4.2m attributable to minorities), plus associated trading, Italian decommissioning costs and acquisition costs of £4.2m (PolymerLatex)

  • Finance £2.6m positive

– Mark to market on US$ cross currency swaps – Does not qualify for “technical” hedge accounting

  • Tax £6.6 million gain – release of prior year provisions
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  • Group operating profit up £5.5m
  • Polymer operating profit up £5.0m
  • Volume improvement
  • Margin management
  • Pharma, down £1.1m, slow start but

strong order book at year end

  • William Blythe (Impact) up £1.5m,

volumes strongly ahead

  • Underlying group sales up 21%
  • Polymer sales up 25%

– Volume +4% – Currency translation +2%

Segmental Analysis

£’m £’m

Total Sales

30.9 62.9 552.0 23.6 65.3 443.3

100 200 300 400 500 600 Polymer Pharma Impact Operating Profit

56.7

  • 9.8 -9.9

3.5 4.5 51.7 5.6 2.0

  • 10.0

0.0 10.0 20.0 30.0 40.0 50.0 60.0 Polymer Pharma Impact Central costs

2010 2009

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Cash Flow Statement

2010 2009 £’m £’m Operating profit (before JV)

52.8 50.2

Movement in working capital

(11.6) 13.9

Depreciation

14.6 14.8

Capital expenditure (net)

(10.5) (8.6)

Interest

(9.2) (10.5)

Tax paid

(8.7) (6.8)

Pension funding in excess of IAS19 charge

(12.2) (10.7)

Other (MI / JV Dividend)

(3.8) (1.9)

Sub total

11.4 40.4

Cash impact of closure of business

(1.5) (3.6)

Disposal proceeds/acquisitions (net)

16.1 10.9

Acquisition costs

(0.4)

  • Dividends paid

(2.9)

  • Exchange

1.9 (0.3)

Movement in borrowings

24.6 47.4

Closing debt

63.4 88.0

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Asset Disposals

  • Revertex Finewaters
  • Non-core downstream adhesives business
  • Consideration attributable to Yule Catto of £11m (8x EBITDA for

2009)

  • Long term contract to continue supplying raw material to

Finewaters from existing Malaysian Polymers facility

  • Land disposals
  • Italian land – sale agreed in August for €4.6m – due Q2
  • Accrington – old Impact site – held for sale when property

market improves

  • Malaysia - previously announced 50 acre plot sale – proceeds

attributable to Yule Catto of £1.4m received in H2

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Operational Review Adrian Whitfield, Chief Executive

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Yule Catto – Operating Profit Split

Operating Profit Split 2010

Impact 5% Pharma 7% Polymer 88%

£54.9 million

Operating Profit Split 2009

Impact 3% Pharma 10% Polymer 87%

£49.4 million

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Developing World Sales (2010)

Middle East 7% China 8% Others 19% South East Asia 56% Southern Africa 10%

Average GDP growth for 05-09

1 5 5 4 8

Europe/USA Middle East South East Asia Southern Africa China

%

46% of Group Sales

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Polymer Chemicals

(88% of Group Profitability)

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Polymers – Sales by Territory

West Europe 41% Asia 37% East Europe 4% South Africa and Middle East 11% Americas 7%

2010

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Operational Review - Polymers

  • Operating profit increased 10% to £56.7m
  • 4% volume increase

– Strong demand in Asia – Demand mixed in other areas of the world – We require additional Latex and Dispersion capacity in Asia – Nitrile expansion will commission in Q2

  • Material costs have risen sharply through

2010

– Good success in passing these increases through – Continued strong momentum as we enter 2011

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Operational Review - Polymers

  • Future profit drivers

– Capacity increases particularly in Asia and the developing world in general. – Continued focus on Margin Management and being paid for the value we add. – Geographical spread particularly in Asia and the developing world. – Delivery of anticipated £20m of synergies from PolymerLatex acquisition.

  • Focus on growing the business

– Yule Catto has excellent market positions – Established track record in growing volumes – Active NPD (New Product Development) pipeline to drive both volumes and margins

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Pharma Chemicals

(7% of Group Profitability)

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Pharma – 2010

Sales by Market

Ethical 23% Generic 77%

Sales by Territory

Europe 43% USA 26% Rest of World 31%

(“Generic” - producers of off-patent drugs)

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Operational Review – Pharma Chemicals

  • Profitability decreased to £4.5m

– Sales decreased 4%; weak start to the year – Manufacturing costs controlled

  • Sales improved as the year progressed

– Strong order book – Environment remains competitive

  • API industry continues to rationalise to meet the

challenges of Asian competition and reduced new drug development

– Sale/closure of European API producers – Teva’s acquisition of RatioPharm

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Impact Chemicals

(5% of Group Profitability)

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Impact – Operational Review

  • William Blythe the only remaining business
  • Underlying profit progressed 75% (£2.0m  £3.5m)

– Demand strengthened throughout 2010 – Several projects in the pipeline to further increase profitability

  • Raw Material prices rising strongly
  • 2011 looks solid
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Summary

  • Another very good year of profitable growth following on

from an excellent 2009

  • Company focused on growth driven by Polymers
  • Strong financial position
  • Final dividend will be 1.3p per share in line with guidance

following the acquisition of PolymerLatex

  • Acquisition of PolymerLatex transformational to the

Group

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PolymerLatex / “New” Yule Catto

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A compelling, transformational opportunity

  • A leading global player in latex products operating in Europe and Asia
  • Markets and products well understood by Yule Catto
  • Strong EBITDA margins
  • Well invested facilities in Europe and Asia
  • Estimated annual cost synergies of at least £20m fully realised in 2012(1)
  • Earnings accretive in 2011 and significantly accretive thereafter(1)
  • Improved cash flow to invest in organic growth
  • Accelerates Asian expansion plans
  • Diversified portfolio – foam, paper, coatings and non-wovens
  • Enhances market position in protective gloves
  • Provides additional modern, purpose-built NBR capacity in Malaysia
  • Well located facilities with access to cost-effective raw materials

PolymerLatex – a leading emulsion polymers producer An excellent strategic fit Attractive returns and growth

  • pportunities

(1) Management expectation based upon an assumed acquisition completion date of 1 January 2011 and before any exceptional restructuring costs. This statement should not be construed as a profit forecast

  • r be interpreted to mean that the future earnings per share, profits, margins or cash flows of the Group, taking into account the effect of the Rights Issue, will necessarily be greater than the historic

published earnings per share, profits, margins or cash flows of the Group.

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Sant Celoni

Uquifa SA

Lliçà de Vall

Uquifa SA

Filago Marl (2 plants) Dormagen (Tolling)

Combined manufacturing footprint

Polymer Chemicals Pharma Chemicals Impact Chemicals Polymer Chemicals Yule Catto PolymerLatex

Dammam

Synthomer Middle East Company (JV)

Durban

Revertex Chemicals (Pty) Ltd

Cuernavaca

Uquifa Mexico S.A.C.V.

Batley

Synthomer Ltd

Ossett

Synthomer Ltd

Accrington

William Blythe Ltd

Harlow

Synthomer Ltd

Stallingborough

Synthomer Ltd

Langelsheim

Synthomer GmbH

Oss

Synthomer BV

Hasselt

Synthomer BV

Mouscron

Synthomer SA

Oulu, Finland

(JV)

Worms Johor Bahru

Malaysia

Ho Chi Minh City

Synthomer Vietnam Co. Ltd

Kluang

Revertex (Malaysia) & Synthomer Sdn Bhd

Lliçà de Vall

Uquifa SA

Sant Celoni

Uquifa SA

Filago Dormagen (Tolling) Marl (2 plants) Dubai UAE (Tolling)

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Complementary products and geography 2010*

Market Breakdown Regional Breakdown PolymerLatex Yule Catto PolymerLatex Yule Catto

Carpets: 16.1% Functional Polymers: 13.6% C&P: 12.3% Gloves: 16.1% Carpets: 14.6% Functional Polymers: 16.7% C&P: 28.9% Gloves: 17.6% Other: 22.2% Foam: 13.4% Paper: 28.5% RoW: 13.6% Europe: 70.1% Asia: 16.3% RoW: 18% Europe: 45% Asia: 37%

*Unaudited

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PolymerLatex – current status

  • German competition approval received February 14th

without restriction

  • Spanish competition approval received March 1st without

restriction

  • Completion will be 31st March 2011
  • Good progress made on integration planning in the

intervening period

  • Trading continued in line with that anticipated
  • Pleased with progress to date
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Current Trading & Outlook

  • Global growth patterns remain mixed:

– Europe and North America stable – Robust growth in Asia

  • January in line with expectations
  • Raw material prices increasing strongly driven by Middle

East unrest and supply demand imbalance in a number

  • f monomers. We will as always work diligently to pass

these on in full.

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Appendices

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Raw Material Prices 2000-2010

200 400 600 800 1000 1200 1400 1600 1800 2000

Q1 00 Q3 00 Q1 01 Q3 01 Q1 02 Q3 02 Q1 03 Q3 03 Q1 04 Q3 04 Q1 05 Q3 05 Q1 06 Q3 06 Q1 07 Q3 07 Q1 08 Q3 08 Q1 09 Q3 2009 Q1 10 Q3 10

Euro/Tonne

Vinyl Acetate Butadiene Acrylonitrile Styrene BA

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Polymers – 2010 Sales by Product

Compounds 14% Dispersions 30% Latex 39% Specialities* 17%

Nitrile 48% SBR 52%

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Sales by Territory 2006

UK 16% Europe 41% Asia 23% Middle East 2% Rest of World 11% USA 7%

£557.4 million*

Sales by Territory 2009

UK 13% Europe 36% Asia 30% Middle East 3% Rest of World 11% USA 7%

£532.2 million (underlying)

Yule Catto – Sales Development 2006-2010

* Include companies disposed of since 2006

Sales by Territory 2010

UK 12% Europe 34% Asia 33% Middle East 3% Rest of World 11% USA 7%

£645.8 million (underlying)