Annual Report

Transcription

Annual Report

T+44 (0)1279 442 791
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Yule Catto & Co plc Annual Report 2009
Yule Catto & Co plc
Temple Fields
Harlow
Essex CM20 2BH
UK
Yule Catto & Co plc
Annual Report
For the year ended 31 December 2009
www.yulecatto.com
Being part of
all our lives
Introduction
01
02
03
04
Business review
06Chief Executive’s report
06 Polymer Chemicals
10 Pharma Chemicals
11 Impact Chemicals
12 Financial review
14 Corporate Social Responsibility report
Governance
21
22
24
28
31
32
Group financial
statements
33
34
35
35
36
37
38
Company financial
statements
Financial highlights
Group overview
Yule Catto around the world
Chairman’s statement
68 Independent auditors’ report
69 Company balance sheet
70 Notes to the Company financial statements
Directors and advisers
Report of the directors
Corporate governance
Directors’ remuneration report
Directors’ interests
Statement of directors’ responsibilities
Independent auditors’ report
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated statement of changes in equity
Consolidated balance sheet
Consolidated cash flow statement
Notes to the consolidated financial statements
2009 was an extremely
good year for Yule Catto,
with operating profit in
all three Divisions ahead
of the prior year, despite
the environment with
a strong increase in
Group pre-tax profit and
a substantial reduction
in net debt, considerably
ahead of schedule.
Other information
77 Principal subsidiaries and joint ventures
78 Five year financial summary
79 Notice of meeting
Designed and produced by The College www.thecollege.uk.com
> Operating profit* ahead in
all divisions
> Earnings per share* up 19%
at 21.3p (2008 17.9p)
> Substantial reduction in net debt*
to £88 million (2008 £135 million)
£543m
21.3p
£41.5m
+27%
Earnings per share*
Business review
> Polymers operating profit
ahead by 27%
Total sales
Introduction
> Profit before taxation* up 27%
to £41.5 million (2008 £32.7 million)
Profit before taxation*
Governance
Increase in profit before taxation*
Underlying performance (a)
2009
2008
£’000
£’000
543,398
66,082
51,406
41,537
21.3p
–
88,038
64,499
39,001
602,153
58,630
43,192
32,690
17.9p
4.0p
135,482
44,299
7,781
543,398
66,082
21,406
7,136
4.1p
–
97,646
64,499
39,001
2008
£’000
602,153
58,630
40,786
38,899
22.2p
4.0p
161,448
44,299
7,781
Other information
The above table represents the results of Yule Catto & Co plc, its subsidiaries and its share of joint ventures.
(a)Underlying performance excludes special items as shown on the consolidated income statement.
(b)As defined in the accounting policies at note 2.
(c)As defined in the accounting policies at note 2 and reconciled at note 36.
(d)See note 11.
(e)As shown on the consolidated balance sheet on page 36.
(f) As shown within the consolidated cash flow statement on page 37.
Yule Catto & Co plc
Annual report and accounts 2009
Company financial
statements
Total sales (b)
EBITDA (c)
Operating profit
Profit before taxation
Earnings per share
Dividends per share (d)
Net borrowings (e)
Cash generated from operations
Free cash flow before dividends (f)
IFRS
IFRS
2009
£’000
Group financial
statements
*Underlying performance
01
Group overview
Divisions
Introduction
Business review
Polymer Chemicals
Pharma Chemicals
Impact Chemicals
Key products
– Emulsions
– Synthetic latices
– Adhesives
– Natural rubber latex
– Liquid polybutadiene
– Polyvinyl alcohol
– Polyvinyl acetate
– Alkyd and polyester resins
Key products
– Generic and ethical
pharmaceutical actives
– Development and manufacture
of clinical phase compounds
Key products
– Inorganic specialities
Markets
– Generic and ethical drug
manufacture
– Generic drugs
Markets
– Catalyst pre-cursors
– Flame retardants
– Iodates
Markets
– Surface coatings
– Construction
– Dipping – eg gloves
– Carpets and non-woven
Our strategy – three year review
Governance
What we said
What we did
Polymer Chemicals
> Enhance ‘Key Product’ portfolio.
> Expand geographically around existing ‘hubs’.
> Maximise inter-regional synergies.
> 50% of Nitrile sales from product development in
the last two years.
> Acquisition of Chemtech, Vietnam.
> 60% capacity expansion for Nitrile latex.
Group financial
statements
> New latex pilot plant in Malaysia.
> Enhanced Lithene product range.
> New compound plant under construction in Egypt.
> Solid new product pipeline.
Pharma Chemicals
Company financial
statements
> Expand the pipeline of Generic APIs.
> 6 DMFs registered per annum 2006-2009.
> Broaden the range of products to be manufactured
in each location.
> Sales of recently launched products have grown 200+%
over the last 2 years.
> Optimise fixed cost base.
> Closure of Italian plant and transfer of product supply
to Mexico and Spain.
> Capacity expansion in low cost Mexican plant.
Impact Chemicals
> Maximise short-term profitability.
> Divest at attractive prices.
> Aggressive turn-round executed and all businesses made
profitable from H2 2006 loss making position.
Other information
> 4 out of 5 businesses sold for gross proceeds of £63 million.
> Remaining business delivering profits since 2008
and improving.
Balance Sheet
> Substantial debt reduction.
> Improved financial ratios.
02
Yule Catto & Co plc
> Net debt reduced from £166 million to £88 million between
2006 and 2009.
> Working capital to sales ratio reduced by over 3%.
Introduction
Principal subsidiaries and joint ventures as listed on page 77.
Polymer Chemicals
Pharma Chemicals
Impact Chemicals
Governance
9
11
8 10
12
14
Business review
Locations
1 Cuernavaca – Uquifa Mexico S.A.C.V.
2 Durban – Revertex Chemicals (Pty) Ltd
3 Dammam – Synthomer Middle East Company
4 Kluang – Revertex (Malaysia) & Synthomer Sdn Bhd
5 Klang – Revertex Finewaters Sdn Bhd
6 Guangzhou – Yule Catto Asia Ltd
7 Ho Chi Minh City – Synthomer Vietnam Co. Ltd
8 Accrington – William Blythe Ltd
9 Batley – Synthomer Ltd
10 Ossett – Synthomer Ltd
11 Stallingborough – Synthomer Ltd
12 Harlow – Synthomer Ltd
13 Langelsheim – Synthomer GmbH
14 Hasselt – Synthomer BV
15 Oss – Synthomer BV
16 Mouscron – Synthomer SA
17 Lliçà de Vall – Uquifa SA
18 Barcelona – Uquifa SA
19 Sant Celoni – Uquifa SA
13
15
16
Group financial
statements
18
19
3
6
4
5
Company financial
statements
1
17
7
Other information
2
Yule Catto & Co plc
03
Introduction
Business review
Governance
2009 was an extremely good year for
Yule Catto, with operating profit in
all three Divisions ahead of the prior
year, despite the environment with
a strong increase in Group pre-tax
profit and a substantial reduction
in net debt, considerably ahead
of schedule.
Underlying Group profit before tax
increased by 27% to £41.5 million, and
earnings rose by 19% to 21.3 pence
per share.
Group financial
statements
Company financial
statements
We entered 2009 with concerns about
how the year would develop given the
substantial global economic contraction
in late 2008 and the ongoing financial
crisis. However, we took decisive action
on costs which helped underpin a
resilient underlying performance across
the Group. We also benefited from the
recent work done both to restructure the
balance sheet and to improve the profile
of the Group’s business portfolio. The
geographic balance of the Group has
changed markedly in recent years with
44% of Group revenues now generated
in Asia and other high growth developing
economies, and this is standing us in
very good stead.
Other information
Our core business of Polymers
accounted for 84% of Group revenue
in 2009 and 88% of divisional operating
profits. Volumes were inevitably down
on 2008 as a result of the global
economic slowdown. However, margin
management and tight cost control,
together with the benefit of the weaker
pound, resulted in a strong performance
throughout the year.
04
Yule Catto & Co plc
Our strategy in Polymers remains
focused on geographical expansion
around existing business hubs, further
increasing our presence in emerging
markets, particularly in Asia, and in
developing market sectors where our
technology, new product development
and manufacturing capabilities give us
real competitive advantage. With the
global contraction in the chemicals
sector in 2009, our focus was on cost
control, process efficiency and product
development. However, as we move
forward we expect to invest in further
manufacturing capacity in Asia during
2010 in order to meet the rising demand.
Our Pharma business now represents
just 12% of Group revenue, and 9%
of divisional operating profit. It was
not immune from the global economic
problems in 2009 and volumes were
adversely affected. However, it continued
to grow its range of products with the
registration of six further Drug Master
Files in the year. During the year we
concluded the exit of our Italian site as
planned and the movement of product
manufacture to other sites in Mexico and
Spain, which should create further benefit
to the business during 2010.
The strategy of restructuring and
divesting our Impact portfolio was largely
completed during 2008 with the sale
of four of our five Impact businesses.
During 2009 profitability in the remaining
business, William Blythe, improved and
we expect it will continue to show further
improvement over the course of 2010.
As we entered 2009, the Board made
the decision to suspend the dividend
whilst the Group completed its balance
sheet restructuring, and set a target
to reduce net debt below £100 million
within 24 months. I am delighted that
we have already comfortably exceeded
this target, some 12 months ahead
of schedule, with net debt now at
£88 million. As a result, we are in a
position to recommence interim and
final dividend payments in 2010. Whilst
the dividend suspension was made
reluctantly it has proved to be the right
decision and we are now a much
stronger Group financially.
Whilst the Board will not conclude on the
final level of the dividend payout in 2010
until the year is complete, it has already
determined that the total dividend for the
year will be not less than 5 pence per
ordinary share.
as derived from note 4 to financial
statements on page 45
Divisional operating profit %
Peter Wood
10 March 2010
During the year we slimmed down
the Board, which now comprises
two executive and six non-executive
members. Richard Hunting and Dato’
Seri Lee Oi Hian stepped down as
non-executive Directors at the last AGM
and I would like to thank them for their
support and contribution during their
long service to the Group.
Group financial
statements
Polymer Chemicals – 87.7%
Pharma Chemicals – 9.1%
Impact Chemicals – 3.2%
I would like to thank all of our employees
for their support during what has
been a challenging year. Without their
contribution, support and understanding
of some of the difficult decisions that
were taken during the year, the company
could not have delivered such substantial
improvements in performance.
Governance
as derived from note 4 to financial
statements on page 43
The Group is absolutely committed
to the continuous improvement of its
performance in respect of Safety, Health
and the Environment. The Group again
showed further annual improvement
across a range of performance measures
in this area, and has substantially
bettered the ten year targets it published
and has reported against since 2000.
Looking forward, we expect western
economies to grow slowly for several
years with global growth generally driven
from emerging markets. Our business
model is well adapted to this scenario,
with approaching half of our Group
revenues generated in Asia and other
high growth developing economies,
and with our European business now
better focused and more efficient. We
have robust positions within our chosen
market sectors, a healthy new product
pipeline, and a significantly strengthened
balance sheet. Against this background
2010 has made a solid start and we are
confident about the prospects for the
Group in the years ahead.
Business review
UK – 13.2%
Other Europe – 36.5%
Asia – 29.5%
Rest of the World – 20.8%
As a further measure to improve the
financial strength of the Group, we took
the decision to close the UK defined
benefit pension scheme to further
accrual. Most active members left the
scheme at the end of 2009, and the
scheme will be fully closed by September
2010, after which time no new liabilities
will accrue to the scheme.
Introduction
Total sales by destination %
Company financial
statements
Other information
Yule Catto & Co plc
05
Chief Executive’s report
Introduction
Business review
The Group delivered a 27% improvement
in underlying profit before tax, and
achieved a substantial reduction in
its debt over the course of the year.
This must be seen as an exceptional
achievement given the global
recession and financial crisis.
Governance
Group financial
statements
Overview
Polymers (84% of sales) saw volumes
decline by 8.6% whilst increasing its
operating profit by 27% to £53.7 million.
Much of our effort in 2009 was focused
on cost control, efficiency and product
development. This should stand us
in good stead for the years ahead as
global volumes start to recover. Volumes
reduced over the course of the year after
a slow start, and whilst full year volumes
were down, fourth quarter volumes were
ahead of prior year. Volumes in nitrile
latex in particular recovered strongly and
we anticipate a further expansion of our
Malaysian capacity during the course of
2010 to meet the rising demand.
Company financial
statements
Pharmaceuticals (12% of sales) saw a
modest increase in profits, with volumes
affected by the global economic
environment. We completed the closure
of the Italian plant and the associated
product transfers to other sites around
the middle of 2009. A further six Drug
Master Files (DMF’s) were filed in the
year as we continued to develop our
generic pipeline.
Other information
06
Yule Catto & Co plc
The API manufacturing industry remains
challenging with competition from
cheaper manufacturing economies
in Asia continuing to develop. In light
of these strategic shifts, and recent
experience, the Board has written down
the carrying value of the goodwill in the
Pharma business in the Group’s balance
sheet by £30 million. The value of the
assets of the business including goodwill
after this writedown at the year end was
£80 million.
We completed most of the restructuring
of the Impact Division with the sale of four
of the five operating units over the course
of 2008. During 2009 the remaining
business, William Blythe, further
improved, delivering operating profits of
some £2 million – a good result given the
business was loss-making in 2007. We
expect the business to improve further
during 2010. Whilst we have stated our
intention to sell the business at some
time, we fully intend to extract maximum
value from it for our shareholders.
Polymer Chemicals
Total sales (£’m)
2008
2009
507.1
454.5
Divisional operating profit* (£’m)
2008
2009
42.4
53.7
* Underlying performance
The Polymer Division, Yule Catto’s core
business, develops and manufactures
products used in a wide range of
industries and applications including
coatings, adhesives and construction,
where they deliver a number of
performance benefits from enhanced
waterproofing to scratch resistance.
It is also a major supplier to the medical
industry where its natural rubber and
synthetic nitrile latex polymers are
used in the manufacture of condoms,
catheters and surgical and examination
gloves where it holds a world leading
position. It manufactures from 13 sites
within four geographical regions –
Europe, South East Asia, Middle East
and South Africa.
Geographic expansion
in Polymer Chemicals
The Group has operated successfully out of
Kluang, Malaysia for many years through its joint
venture company Revertex (Malaysia) Sdn Bhd,
manufacturing Dispersions, Alkyds, Rubber and
other chemicals. In 2001 the Group invested in
Nitrile Latex Polymer manufacturing capacity
on the Kluang site through a 100% subsidiary,
Synthomer Sdn Bhd. The first of its kind in South
East Asia, this facility had an initial nameplate
capacity of 44ktes.
The Group is committed to expanding in growth
markets, leveraging where possible existing
manufacturing hubs. As such, it has continued
to invest heavily in its Nitrile facility in Kluang.
In 2007 another 36ktes was added, followed by a
further expansion of 36ktes in 2008. The Group
anticipates further investment in 2010 in both
Nitrile Latex and Dispersion capacity in Malaysia.
New specialist laboratory and Pilot Plant facilities
have also recently been added.
Yule Catto is the world’s largest supplier of nitrile
latex to the high growth synthetic nitrile gloves
market, with a global share of around 25%.
For more information visit:
www.yulecatto.com
Yule Catto & Co plc
07
Chief Executive’s report continued
Introduction
The core products of Polymer Division are
water-based emulsion polymers, based
on vinyl acetate and acrylic dispersions,
styrene and nitrile butadiene rubber, as
well as polyvinyl alcohol/acetate, and a
number of smaller specialist products.
Business review
Governance
2009 was a year where all business
units faced unprecedented economic
challenges in their markets. Volume
declines in the first quarter were in
the region of 15% compared to prior
year, however, this recovered to some
8.6% down for the full year. In such
uncertain times, cost elimination and
containment became a key focus
resulting in the implementation of a
number of restructuring projects across
the Division. We reduced full time
positions in all our operations around
the world as well as utilising government
schemes in continental Europe that allow
for temporary layoffs. In addition, many
recruitment decisions were deferred and
as a consequence overall headcount
declined by 6% in comparison to 2008.
Group financial
statements
Company financial
statements
Polymer Division’s expansion strategy
slowed in 2009 as the business
focused on its cost reduction plans,
however, the search for geographic
and technological growth opportunities
continued throughout the year. As part
of the continued development of our
leadership position in Floor Coverings
a joint venture, Synthomer Egypt, was
established between Synthomer BV and
the Arab Company for Artificial Polymers
and Varnishes (ACAPV) to produce
latex compounds for the carpet and
rug industries in Egypt and the Middle
East. The new plant is anticipated to be
operational by the end of 2010 and will
consolidate our leadership position in
this market.
Other information
08
Yule Catto & Co plc
Synthetic Latex
Polymer Division’s Synthetic Latex
dispersions business consists of two
product families, Styrene Butadiene
Rubber (SBR) manufactured in Germany
and the UK and Nitrile Butadiene
Rubber (NBR) manufactured in the
UK and Malaysia.
SBR latex is sold to the speciality
segments of the construction, textile
and floor coverings markets. In
construction, sales held up as major
customer projects which were started
continued to completion, however,
sales in floor coverings continued to be
under significant pressure as the UK and
continental European Carpet Market felt
the full force of the recession. Sales into
the former segments experienced single
digit percentage volume declines, while
floor covering volumes dropped by a little
over 10%.
In the early part of the year, the NBR latex
market continued to experience customer
supply chain destocking which began in
the final quarter of 2008. The first quarter
therefore saw a substantial volume
decline, which was recovered over the
course of the year. The resurgence of
the H1N1 virus and concerns over a
global pandemic, coupled to very low
stock levels in the customer supply
chain, raised demand significantly in the
second half, and this continued through
the year-end. In addition, rising monomer
prices required several price increases
during the latter part of the year in order
to protect margins. During the year the
new pilot plant was commissioned at
the Kluang site, and this gave further
positive momentum to New Product
Development programmes. Sales of new
NBR products launched in the last two
years now account for approximately
half of all NBR sales. Looking forward
continued strong growth in this market
is expected and further capacity
expansions of Nitrile latex in Kluang are
currently being planned to meet the rising
customer demand in the high growth
synthetic glove market.
Dispersions
The global Coatings and Adhesives
markets, the major segments served by
our Dispersions business, experienced
sluggish demand during the year. The
European, South African and Middle
East regions recorded significant volume
declines. However, the Asian operations
fared better with South East Asia flat
while Vietnam grew by a resounding
25%, resulting from solid sales progress
in the coating sector. Against the
background of falling volumes, our
raw material position was favourable
and helped margins recover in most
markets and compensated for the
volume declines, except in the Middle
East where very aggressive competition
placed margins under severe pressure.
In Research and Development the drive
to improve our low VOC offering to the
coatings market continued with the
launch of a number of new products
which were well received in the market.
Specialities
Polyvinyl Alcohol
The PVC market was a challenging
environment globally with many
customers forced to reduce or idle their
capacity during the first half of the year.
The severe downturn created extremely
poor trading conditions for the Alcotex
business, which resulted in a difficult
but necessary decision to carry out a
restructuring at the Harlow site. In the
market, Synthomer continued to maintain
its leadership position in the supply of
low hydrolysis polyvinyl alcohol to the
PVC industry and volumes did improve
in the second half of the year. In addition
investments made in plant maintenance
and process control started to deliver
benefits. Overall, volumes for the primary
and secondary Alcotex stabilisers were
modestly down on 2008, however,
good control of margins, as well as the
benefits of strong cost control assisted
the business to deliver a significant
improvement in full year performance.
Synthomer’s Pioneering
Technology – self crosslinking latex
Synthomer has invested heavily in Research and
Development for its range of nitrile latices for
the dipped glove market. Significant investment
has been made in its development group which
is located at Kluang site so as to be close to the
market and the NBR manufacturing facility.
This includes additional scientists; new research
laboratories equipped with modern equipment;
an applications laboratory designed for technical
customer support and applications development;
and a new pilot plant facility tied in to the
main plant.
This investment has already paid off and today
around 50% of sales are from products introduced
within the last two years. One example of such
successful innovation is the development of
Synthomer’s self crosslinking technology
to answer a specific market need.
Most healthcare professionals are familiar with
Type I latex glove allergy, related to proteins in
natural rubber. However Type IV allergy, related
to residual accelerators, is less known but can
also give a dermatitis reaction. Synthomer has
pioneered self crosslinking technology for glove
dipping applications. This allows development
of gloves which are sulphur and accelerator free.
They are easier to handle during manufacturing
and have much reduced risk of allergy.
Chemax 7th sense from Kossan has been
successfully launched using one of Synthomer’s
self crosslinking latices, being the first accelerator
free glove approved by the FDA with a low
dermatitis claim.
Synthomer’s commitment to innovation and strong
understanding of current and future customer
needs has given rise to this pioneering product for
the glove market.
www.yulecatto.com
Yule Catto & Co plc
09
Chief Executive’s report continued
Introduction
Business review
Liquid Polybutadiene
During 2009 our intensified technical
approach to developing the Lithene
business continued to gain momentum.
However, the collapse of sales to the
automotive industry led to a decision
to idle the plant for much of the first
half. However, a more positive trading
environment in the second half saw
sales pick up strongly and, while full
year volume was substantially lower, the
continuation of cost control and margin
management work started in late 2008
resulted in full year operating profit
ahead of prior year.
Governance
Alkyds and Polyester
The Malaysian-based Resin business
experienced two very different results
in 2009. The Alkyd business had a
difficult time throughout the year resulting
from significantly weaker demand in
South East Asia and strong customer
destocking in the run up to year-end. In
contrast, Polyester enjoyed a strong year,
with sales mainly driven by the launch
of government infrastructure projects
in many South East Asian countries.
Pharma Chemicals
2008
2009
63.9
65.3
2008
2009
5.3
5.6
Pharma Chemicals produces a range
of over 75 Active Pharmaceutical
Ingredients (APIs) for the generic and
ethical pharmaceutical industries from
its manufacturing plants in Spain and
Mexico. These products are sold to
formulators who produce and distribute
the drug in its final physical form. APIs
produced range from anti-bacterial, antiulcer and anti-parasitic to heart drugs.
Group financial
statements
The Pharma Chemicals business
continued to be challenged by the
market conditions and the regulatory
environment for pharmaceuticals, and
a number of its customers did not gain
Ministry of Health final approvals for
new products. Consequently although
margins held up volumes were behind
for the year. A programme of cost
reduction helped compensate for the
reduced volumes.
Company financial
statements
The volume reductions were felt the most
acutely in the Spanish plants, but a well
implemented cost improvement plan
was successful in offsetting the lower
volumes. A number of customers did
not get approvals for their registrations
and the newly implemented German
Insurers – generic tender process
changed significantly the order patterns
of some major customers. Our ability to
continue to strategically source from Asia
helped our margins and the successful
outsourcing of key intermediates bodes
well for 2010.
Other information
10
Yule Catto & Co plc
Generics remains the major part of the
business sourced from Spain, within
which the anti-ulcer franchises were
important both in the US and Europe.
In the middle of the year, destocking
and the uncertainty around tenders for
anti-ulcer drugs in Europe softened our
order book, but this reversed later in the
year with our US franchises continuing
to perform well. The launch of a new
Omeprazole formulation in the US did
not gain approval in 2009 as expected
so, although the approval has now been
gained, the launch will not happen until
the second quarter of 2010.
The rest of our generic portfolio
manufactured in Spain showed a
mixed year and although we saw our
Pantoperazole and Quetiepine franchises
building in volume, late approvals in
Europe and price erosion occurred
during the later part of the year. We still
await approvals for a new formulation
of Ketorolac which is expected by the
middle of 2010. The dossier business
helped us, especially in the European
market, and we are now looking to
widen the formulation registration
dossiers we have.
After a disappointing 2008, sales from
our Mexican plant bounced back strongly
with ethical customer orders increasing
significantly throughout the year. The new
Albendazole plant came on stream in
the first half of the year and boosted
significantly our capacity, which was used
to satisfy a range of ethical and generic
customers around the world. New drying
capacity will come on stream in the first
quarter to meet our capacity requirements
in 2010. Volumes remained strong during
the year with both generic and ethical
products improving the performance.
2009
31.1
23.6
2008
2009
1.6
2.0
Impact Chemicals originally comprised
five businesses, four of which were sold
during 2008. The remaining business,
William Blythe, is a worldwide supplier
of inorganic specialities based on copper,
iodine and tin from its UK manufacturing
facility. Products are used in a range
of applications such as semiconductor
manufacture, pharmaceutical actives,
non-toxic flame retardants, safety glass
coatings and catalysts.
During the period, William Blythe traded
ahead of 2008 albeit on generally
weaker volumes.
Group financial
statements
Development and selection of new APIs
is still key to our strategy and we filed
six Drug Master Files in the year in a
number of countries. Esomeprazole
(Nexium®, API) remains very interesting
to a number of our key customers and
establishes us for when patent expiries
begin in Europe and the US. A number
of our newly filed products have received
keen interest from our customer base
and we see this continuing in 2010.
2008
Governance
The transfer of products from Italy to
Spain and Mexico is complete, although
customer regulatory approvals are taking
time from a number of customers and
health authorities. We will see improved
volumes as these approvals come
on stream.
Business review
Our commitment to continuous
improvement of processes and our
cost base helped underpin our results
for the year, with good progress made
in leveraging our Asian suppliers
throughout the period.
Impact Chemicals
Introduction
Custom synthesis remained flat in
the year as a consequence of reduced
funding especially in the biotech
sector where we saw Research
and Development programmes
cut dramatically.
Company financial
statements
Other information
Yule Catto & Co plc
11
Financial review
Introduction
Business review
Governance
Group financial
statements
Company financial
statements
Income statement – underlying
Income statement – special items
performance
To provide a clearer indication of the
Total sales decreased by 10% driven in
Group’s underlying performance, a
the main by the volume declines seen
number of special items are shown in
across the Polymer business. Translation
a separate column of the consolidated
increased turnover by 8%, offset by
income statement. Special items include:
lower pricing and mix. Turnover remains
predominantly within Europe with some • Profit on the sale of Oxford Chemicals
50% of sales (2008 50%), which has
Limited of £3.9 million. The sale was
sales outside Europe heavily skewed
announced in 2008, but completed in
towards Asia and other developing
January 2009.
economies, which accounted for 44%
• We utilise various cross currency
of turnover.
and interest rate swaps for hedging
purposes, which involve maturities of
With the international nature of the
up to seven years. IFRS requires that
business, movements in foreign currency
where the strict requirements of IAS
exchange rates can affect the value
39 are not met, changes in the market
of transactions made by the Group
value should be recognised annually in
where pricing of our products is in nonthe income statement. However, such
domestic currency, and in the translation
financial instruments are maintained by
of results from overseas subsidiaries.
the Group for the length of the contract
With regard to the former of these two
and over their lifetime have a fair
effects, the Group generally hedges
value of nil. Hence the notional annual
transactions once entered into and in
adjustment of £(4.4 million) (2008 gain
addition, where exchange rates continue
£8.6 million) is segregated from the
to be adverse, we look to increase sale
underlying performance.
prices or price in domestic currency
• Impairment of goodwill in the Pharma
to mitigate the impact where this is
business of £30 million.
commercially possible. The weakness
• Release of tax provisions relating to
of sterling against the euro and the
prior year issues that were closed during
Malaysian ringgit delivered some
the course of 2009 of £9.3 million.
£4 million improvement to operating
profit from translation.
The impairment of goodwill in the Pharma
business is a result of lower projected
The underlying tax rate of 20% reflects
earnings growth for the business based on
the benefits of pioneer status on our
recent experience. Post the impairment, the
investment in Malaysia and the settlement book value of the assets of the business,
of some prior year tax positions. The
including goodwill, was £80 million.
comparable rate for 2008 of 15% was
abnormally low, reflecting adjustments
relating to prior year tax provisions.
Profit attributable to minority interests
was £2.2 million (2008 £1.7 million).
Other information
The resultant underlying earnings
per share of 21.3 pence is a yearon-year increase of 19%. The Group
announced in December 2008 that
given the prevailing financial crisis, and
to strengthen the Group’s balance sheet,
the Group would suspend its dividend
until it had reduced net debt below
£100 million. Year end net debt fell to
£88 million, and the Group will therefore
be declaring a dividend for 2010.
12
Yule Catto & Co plc
Pensions
In the main UK defined benefit pension
scheme the majority of investments
are in equities. Equity markets having
declined substantially in 2008, recovered
somewhat over the course of 2009, and
overall the fund delivered a return of
24%. The yield on high-quality corporate
bonds decreased significantly during
the year, which has increased liabilities.
Over and above the Company’s agreed
£5.8 million per annum deficit remediation
funding of the UK scheme, the Company
contributed, on a voluntary basis, a
further £4 million in November 2009.
The overall effect of these changes was
that there was little movement in the
overall deficit of the scheme, which stood
at £70 million at the end of 2009.
The UK scheme was closed to future
accrual during 2009. At the end of the
year fewer than twenty active members
remained, and there will be no active
members as at the end of September
2010, after which date no further liabilities
will accrue to the scheme.
IFRS
On an unadjusted IFRS basis, Group
revenue decreased by £56.5 million to
£527.9 million. Profit before taxation at
£7.1 million was £31.8 million lower than
the previous period, reflecting the change
between the years in the mark to market
of the Group’s currency swaps, the
profit on disposal of businesses and
goodwill impairment.
Year end net debt
£’m
185
165
145
Borrowings
Underlying net debt reduced significantly
during the year.
In 2008 we reported a year of increased
capital expenditure, having invested
in further expansion of the Malaysian
nitrile facility over 2007 and 2008 and
in the relocation of some manufacturing
from our Italian Pharma site. Capital
expenditure slowed substantially in 2009
with the global recession with capex of
only £8.7 million (2008 £17.7 million).
Investment in the cash costs of
running the Italian Pharma site came
to some £3.5 million, whilst net
proceeds from divestments totalled
£8.8 million, predominantly the sale
of Oxford Chemicals.
Working capital inflow for the year
was £15.2 million. Control of working
capital is a core focus of the business
management.
The combination of stronger EBITDA,
lower capex, divestment proceeds and
the substantial working capital inflow
resulted in underlying net debt reducing
to £88 million from £135 million at the
end of 2008.
Refinancing and liquidity
The Group has a further £33 million
of US private placement debt to repay
in September 2010. Thereafter, the
next large repayment of term debt is
£24 million of US private placement debt
due in 2012. At the year end the Group
had £30 million of cash available to it
under an undrawn three year revolving
loan maturing December 2011 and
£42 million of cash, which in aggregate
is some £39 million more than the
September 2010 £33 million repayment.
Net Debt to EBITDA, the Group’s key
leverage metric, fell to under 1.3 at the
end of the year from 2.3 at the end
of 2008.
125
105
85
2006 2007 2008 2009
Net debt substantially
reduced in just two years
At the end of 2007, net debt stood at £171 million, and
net debt to EBITDA, the key financial metric for borrowing,
stood at 2.8 times.
One objective of the portfolio rationalisation with the
sale of four of the Impact businesses was to reduce the
gearing of the Company. Over the three years to end 2009,
the Company has generated £60 million (net) from
divestments. The Company continued to invest in its
asset base over this time period with capital expenditure
exceeding depreciation in 2007 and 2008.
Working capital management is, and remains, a core focus
of Group management. Over the three year period to end
2009, the Group lowered its working capital to sales ratio
by over 3%, generating in excess of £15 million of cash for
debt reduction.
During the refinancing of the Group’s revolving credit lines
in late 2008, at the height of the financial crisis, the Board
reluctantly took the tough decision to suspend the dividend
to allow a final push to reduce debt below £100 million and
move the Group’s net debt to EBITDA ratio to a sensible
level, at which the Board anticipated any future refinancing
of the Group, as required from time to time, would be
straightforward to execute.
The Board set a two year period to achieve this,
and in practice, the target was reached in one year.
Net debt at the end of 2009 was £88 million, and with the
improvement in underlying earnings over the three year
period, net debt to EBITDA now stands at only 1.3.
www.yulecatto.com
Yule Catto & Co plc
13
Corporate Social Responsibility report
Introduction
Introduction
2009 saw another significant improvement in Yule Catto’s
Safety Health and Environment (SHE) performance, even
against the sharply improved performance of recent years. This
improvement was sustained across all the Operating Divisions
and across the geographical spread of Group companies.
It was achieved despite the difficult trading conditions in 2009
and covered both safety and environmental impact.
Business review
Governance
The Group’s accident performance improved again compared
to 2008’s record performance, with the Group recording
3 fewer over 3-day (O3D) lost time accidents (down from
13 to 10). The number of all Lost Time Accidents (LTAs) also
reduced and our accident rate was over 30% below the latest
average figure reported by Cefic (the European Chemical
Industry’s representative body). The Group recorded very
significant improvements in energy and water usage per tonne
of production, down by 16% and 15% respectively, and there
were further reductions in the tonnage of both hazardous and
non-hazardous waste produced. The great majority of our other
environmental indicators also showed further improvement, due
to innovative solutions by Group companies and as the result
of investment in environmental protection.
Group financial
statements
Our policy commitments
Responsible Care® was an initiative of the Canadian chemical
industry in the 1980s and has now been adopted by the
chemical industry around the world. Responsible Care®
aims to improve and enhance the chemical industry’s SHE
performance, year on year. Yule Catto has been committed
to Responsible Care® since the 1990s and this commitment
remains at the core of our efforts towards excellence in
Corporate Social Responsibility. All Yule Catto sites are
required to adhere to these principles and actively support
the Group’s efforts to achieve continuous improvement in
our SHE performance.
Company financial
statements
In 2005 the Yule Catto Group was amongst the first group of
UK Chemical Manufacturers to sign up to and support the UK
Chemical Industries Association’s Sustainable Development
(SD) guiding principles. The SD principles were adopted by the
Yule Catto Board and are followed by the Group’s sites around
the world. They have been used to set improvement targets,
especially for our environmental performance, and to help the
Group to define its route to a safe and sustainable business.
The SD principles include a strong commitment to open
reporting of our environmental performance and full respect
for the people and communities amongst whom we work.
Other information
Highlights and achievements during 2009
Yule Catto uses five ‘headline’ SHE Key Performance Indicators
(KPIs) to monitor its performance month by month. On all five,
the Group’s performance improved markedly during 2009.
Energy use per tonne of production fell by 16%; water use fell
by 15%; total waste production fell by 18.5%; and the number
of O3D accidents fell from 13 to 10, giving a frequency
14
Yule Catto & Co plc
rate of 0.235 per 100,000 hours worked. These four KPIs are
lagging indicators of performance. The Group also uses a
leading indicator: the reporting of ‘near misses’ – defined as
conditions which could potentially cause an injury, loss or
environmental problem – by Group employees. Near miss
reporting gives sites the chance to remove dangerous or
potentially dangerous conditions before they can cause
damage or personal injury. As a pro-active measure all sites
were set a target of identifying, reporting and dealing with
2 near misses per employee during the year. Group employees
showed that they recognise the importance of this initiative by
reporting and dealing with 3.9 near misses per person, almost
double the target.
The number of O3D accidents was down by over 20% but
the frequency rate was only slightly better, due to the reduced
number of hours worked. The rate was as good as the average
for the UK Chemical Industry but did not quite meet our
target for the year of 0.20. The Group performance on all LTAs
also improved by over 6%: the frequency rate was 0.40 per
100,000 hours and remains some 30% below the average
for the European chemical industry (as reported by Cefic).
The SHE headline KPIs are in addition to the Group’s continuing
commitment to our 10-year SD targets, which cover a wider
range of environmental measures. As the Group has a history
of significantly beating the SD targets, the headline KPIs are
measured against tougher internal targets: an annual 4%
reduction in both energy and water usage per production
tonne; and a 5% reduction in waste disposed of off-site.
The Group passed these more stringent environmental
targets by a significant margin in 2009.
Nearly all of the Group’s other environmental targets were met,
and indeed passed, in 2009 to give a performance better than
target: for example the release of acid gases to atmosphere
was reduced by a further 73%. However, Volatile Organic
Compounds (VOC) releases increased significantly compared
to previously reported figures and this is discussed
further on page 17.
Given the recession and the accompanying reduction
in production volume for many of our sites, the Group’s
achievement is particularly notable. 2009 continued the
Group’s record of improvement over the last 8 years; a record
of continuous improvement which means that most of the
easy changes have already been implemented. Sites now have
to actively manage energy, water, waste and other materials
to continue to make further performance improvements. It is
notable that the Group’s use of water per tonne of product has
been reduced by 50% since 2000 and energy use is down
by 38%. The innovative approach to the disposal of waste is
shown by Polymer Division’s increasing disposal of polymer
waste by composting, producing a saleable soil enhancer rather
than a waste problem.
1.0
0.8
0.6
0.4
0.2
0.0
00
01
02
03
04
05
06
07
08
09
Process safety and reportable safety incidents
The number of significant, reportable safety incidents remains
at a very low level as indicated by the chart overleaf. None of
the incidents during the year caused lasting harm to people
or the environment.
Major safety improvement projects were implemented during
the year in Vietnam and South Africa. These projects upgraded
and significantly improved the reactor venting systems on both
plants and will enable both sites to operate with an enhanced
level of safety in the future.
Yule Catto & Co plc
15
Other information
Yule Catto participated in the production of a new Process
Safety course by the UK Institution of Chemical Engineers
(IChemE). IChemE ran the course several times during the year
and Yule Catto sent a number of delegates to attend. Further
staff training will be carried out in 2010.
Company financial
statements
There was one significant incident at our polymer plant in
Germany where there was an uncontrolled polymerisation in
a storage vessel. The incident involved a release of Butadiene
from the vessel concerned and required off-site emergency
services to attend. There was very little environmental or plant
damage but 3 people were sent to hospital for observation.
All were released quickly. Following the incident the European
management team carried out an urgent safety review of the
systems involved and identified a number of opportunities for
improved operation in future. These were rapidly implemented
and the plant returned to operation within 14 days with the full
support of the German Regulatory Authorities.
Group financial
statements
Health, safety and accident performance
The number of more serious accidents, those which cause an
employee or contractor to lose more than 3 working days (O3D
accidents), reduced again in 2009, falling to 10 compared to 13
in 2008. Notably no contractors suffered an O3D accident on
any of our sites in 2009. As the number of worked hours also
fell during the year, this improved performance only resulted in
a small reduction in the frequency rate to 0.235 per 100,000
1.2
Governance
• SHE performance is discussed in all management meetings,
as the first agenda item;
• Yule Catto conducts regular, in-depth SHE audits of all
sites to assess performance and identify opportunities for
improvement. The results of the audits are discussed both
with the site involved and with wider management,
for example at the Group Executive Committee;
• The Group AIMS is used to collect and analyse data on all
accidents, incidents and near misses on our site. The system
ensures that all of these are appropriately investigated, with
the most serious or potentially serious incidents being fully
investigated to root causes. The system is then used to
ensure that the identified actions to prevent recurrence are
put in place;
• Key measures of SHE performance are collected monthly or
quarterly as appropriate and reported to the Group Executive
and to the Board. This process is mirrored at company and
site level to give management and staff a clear picture of
current performance; and
• Senior managers have SHE targets as part of their annual
objectives. Other employees have similar objectives set,
either on an individual or a site basis.
Reportable lost time accident frequency rates
O3D LTA frequency rate (per 100,000 hours)
SHE performance is a primary duty for management at all levels
in the Group and we have a number of management processes
which assist this:
Business review
The Group has an Accident and Incident Management System
(AIMS) to assist in the management of all actual events and
all near misses throughout the Group. The system received
a significant upgrade during 2009 to improve the risk
assessment of events and to include better information capture
for process safety incidents, an area of increasing importance
for the Group.
hours worked (100,000 hours is, very broadly, a working
lifetime). These O3D accidents are those which are generally
reportable to the regulatory authorities in the European Union
and are a widely used comparison between different industries.
The UK chemical industry is amongst the safest manufacturing
industries in the world and the UK Chemical Industry Association
(CIA) reports on its members’ performance. Our performance
in 2009 puts Yule Catto at or just ahead of the average for CIA
companies. Our current rate of O3D injuries is less than one
quarter of what it was at the beginning of the decade.
Introduction
Managing safety and environmental performance
Yule Catto believes that staff at all levels have to manage health
and safety effectively if we are to achieve our aim of protecting
the safety of all our personnel and have to operate our sites
in a way that protects the environment at all times. This is
achieved by managing our SHE performance in the same
way that all other business objectives are managed.
Corporate Social Responsibility report continued
Introduction
Reportable safety incidents
66
26
Business review
00
01
26
02
4
2
4
4
4
4
03
04
05
06
07
08
6
09
Governance
Occupational health and hygiene
The Group has a comprehensive set of medical arrangements
for our staff around the world. All staff who work with chemicals
are provided with regular medical examinations. Whilst always
respecting medical confidentiality, the doctors who provide
the service in each country inform the local company if there
are cases of reportable disease which could be caused by a
work activity. They are also asked to inform the company if
their overview of the health of our staff causes them concern.
It is good to be able to report that there were no cases of a
reportable disease recorded in 2009 or issues of concern
highlighted by local doctors.
Group financial
statements
To support our work in occupational health, Yule Catto
companies manage occupational hygiene, principally by
limiting exposure to the chemicals we process. This is done
by the provision of appropriate equipment and work conditions
which minimise exposure, and by the provision of Personal
Protective Equipment (PPE) as a backup measure. In order
to ensure that these measures are adequate the Group has
introduced a risk assessment programme which is based on
the standards of the UK Control of Substances Hazardous to
Health regulations. This programme is being rolled out to all our
companies around the world and is backed by the programme
of Group SHE audits which give advice on adequate standards.
Company financial
statements
Other information
Audit programme
We have continued the Yule Catto Group SHE audits during
2009 and the results have been reported to the Group
Executive on a regular basis. The audits are based on the
principles of Responsible Care® management and give both
individual companies and Yule Catto a view of each site’s
current performance and set out areas for improvement.
The Executive monitors both the findings of the audits and
the progression of improvement actions which arise from
the audits.
Asset protection and insurance inspections
We can report that the Group’s losses from fire or process
safety related incidents in 2009 continued at the very low
level we have experienced in recent years. The Group’s SHE
management systems and our internal SHE audit processes
continue to contribute to this performance. The biennial
insurance surveys carried out by our global property and
business risk insurers serve as a ‘sense check’ on our own
internal audits and also produce loss control recommendations
of their own. These recommendations are assessed by Yule
Catto for their practicality and cost-effectiveness, and progress
is monitored both internally and by our insurers. This transparent
partnership has helped the Group to reduce the cost of our
global risk insurance by one third over the past five years.
Regulatory affairs: REACH and GHS
The Registration, Evaluation, Authorisation and Restriction
of Chemicals (REACH) regulations came into full force on
1 December 2008. The regulations required a significant
amount of work by Group companies in 2008, including the
pre-registration of some 1,250 chemicals with the European
Chemicals Agency (ECHA). The first deadline for registration
is 1 December 2010 and the workload in 2009 was focused
on two areas: preparation for registration of the appropriate
materials in 2010; and exchanging information with our
customers and suppliers. Preparation for registration involves
understanding which materials require registration and
collecting the relevant information, not only from our suppliers
and customers but also from any other companies who
produce or market the same materials in the EU – with due
regard to competition rules. Information collection naturally
intersects with information sharing and these requirements
mean that we must understand how our products are used
and for what purposes, and then set up systems to collect and
share appropriate safety information with those who need it.
The work in 2009 has shown that Polymer Division will need
to register a number of monomers contained in polymers
imported into the EU by Group companies. These registrations
are to be made in 2010. William Blythe will also have a number
of substances to register. The Pharma Division will only need
to register some transported intermediates which require a
much reduced data set.
These obligations are further complicated by the introduction
of the new Globally Harmonised System (GHS) for Safety Data
Sheets and hazardous product labelling. This new system has
been negotiated by the United Nations and is being introduced
in Europe at the end of 2010. Other jurisdictions around the
world are currently planning the introduction of GHS, early in
the next decade. REACH and GHS mean that the majority
of our Safety Data Sheets and the accompanying labels for
our products will need to be revised over the next few years.
The Group Executive Committee continues to monitor
the implementation of REACH and is kept abreast of the
forthcoming impact of GHS.
16
Yule Catto & Co plc
Tonnes carbon dioxide equivalent release per production tonne
0.45
0.40
0.35
0.30
0.25
0.20
0.15
0.10
Actual
10-year target
0.05
0.00
00
01
02
03
04
05
06
07
08
09
10
Although energy prices fell at the start of 2009, the long term
trend is for energy prices to continue to rise; this makes the
value of the energy saving achieved very significant for the
Group. The change in the energy consumption per tonne in
2009 was equivalent to a saving of approximately £1.6 million.
Atmospheric acidification burden
6
5
3
5.0
4.0
3.0
2.0
1.0
0.0
Actual
10-year target
00
01
02
03
04
05
06
07
08
09
10
2
1
0
Actual
10-year target
00
01
02
03
04
05
06
07
08
09
10
Yule Catto & Co plc
17
Other information
GigaJoules used per production tonne
4
6.0
Company financial
statements
Energy consumption
Kgs sulphur dioxide equivalent released per production tonne
Atmospheric acidification
Despite having already fallen by 97% since 2000, the Group
achieved a further 73% reduction in its release of acidic gases
to the atmosphere in 2009. This means that the releases are
now less than 1% of what they were 9 years ago. By far the
greatest sources of acid gases were the two Holliday Pigment
plants, now no longer part of the Yule Catto Group. However,
it is worth noting that the vast majority of the reduction arose
from the very significant investment Yule Catto made in
abatement equipment. The Group is currently producing
only 1.6% of our target for 2010.
Group financial
statements
Energy
For the fourth year in a row the Group achieved a very significant
reduction in its specific energy consumption (that is energy
consumption per tonne of production). Energy use fell by a
further 16.9% in 2009 which means that the Group’s energy
consumption is almost exactly one half of what it was in 2001.
It has fallen by over 38% since the SD goals were signed in 2005
and is 34% below the target for 2010. The Group has set itself
an internal target of achieving a further 4% reduction in energy
consumption in 2010, which is roughly twice the rate of reduction
which is expected by the Chemical Industry’s SD goals.
Governance
2009 saw further significant improvements against all the
SD measures we have reported in previous years with one
exception. Improved measurements and better calculation
methods have shown that the Group has significantly
underestimated its releases of VOCs in recent years. There is no
evidence of which Yule Catto is aware that these releases cause
or have caused any immediate environmental harm, though
we fully accept that they contribute to the overall environmental
cost of our operations. Having become aware of this problem,
which affects more than one site, the Group is actively seeking
ways to reduce or abate these releases in the coming years.
Global warming burden
Business review
Managing our environmental responsibilities
The Chemical Industry is committed to the concepts of SD.
The UK CIA asked its member companies to formally commit
to SD by signing a programme of SD goals in 2005. Yule Catto
joined this programme at inception and has been committed to
achieving them ever since. This commitment has been shown
by a continuous record of improvement against the targets and
a significant reduction of almost all our environmental impacts
year on year.
Global warming
Despite the very significant improvement in energy
performance, Yule Catto’s impact on global warming was
unchanged in 2009. The gains in energy efficiency were
effectively negated by the recalculated VOC emissions.
None the less the Group is already performing over 20% better
than its 2010 target. We expect this indicator to improve again
when measures to reduce or abate VOC releases can be
brought online.
Introduction
Sustainable Development Performance
Report 2009
Business review
Water usage fell sharply in 2009, by 15.2% compared to 2008,
and has fallen markedly over the last decade so that it is just
less than 50% of the consumption in the baseline year of 2000.
It has fallen by over 28% since 2005 when the SD targets were
set and is now only 62% of the 2010 target.
Water consumption
Governance
10.0
9.0
As noted in previous years we have adopted various strategies
to reduce the quantity of waste produced, from ensuring
that as much material as possible is reused or recycled, to
sending non-hazardous organic waste to be disposed of via
composting. These efforts have continued to bear fruit and the
quantity of non-hazardous waste reduced by a further 7.5% in
2009. It is now only 36% of the quantity produced in 2005, the
peak year.
Non-hazardous waste disposed to land
0.025
0.020
Tonnes per production tonne
Introduction
Water use
The security of the water supply and its quality is of great
importance to every site in the Group, not least because water
is an essential reactant in many of our processes and because
the vast majority of our polymers are sold as dispersions in
water. We are fortunate to have reliable sources of water for
our sites and in a number of cases they come from our own
renewable sources. Where we have this type of supply we
monitor the source carefully so that we can be certain
that it is not being depleted. Using water carefully and wisely
is an important goal in ensuring that Group companies are
fully sustainable.
0.015
0.010
0.005
0.000
00
01
02
03
04
05
06
07
08
09
10
8.0
7.0
6.0
Group financial
statements
m 3 per production tonne
5.0
4.0
3.0
2.0
Actual
10-year target
1.0
0.0
00
01
02
03
04
05
06
07
08
09
10
Company financial
statements
Waste disposal
For Yule Catto the safe disposal of hazardous waste is an
important responsibility which we fulfil by minimising the
quantity of waste we produce and by working with reputable,
regulated waste disposal companies. Our waste reduction
programme has been very successful over the period since
2000 and current waste quantities are less than one sixth of
what they were in 2000. Compared to the target for 2010 Yule
Catto companies are producing only 16% of the target amount.
Hazardous waste disposed to land
The other reportable environmental incidents during 2009 were
also nearly all to do with effluent discharge. Tighter limits and
stricter controls are making this an active area of improvement
for most of our sites and we expect to make significant
investment in upgrades to our on-site treatment plants over
the next few years.
Although limits were breached on 8 occasions in 2009 the
tightness of the limits we operate to means that there have
been no reports of environmental damage arising from
these incidents. None the less each incident has been fully
investigated and remedial actions needed to prevent
recurrence have been implemented.
0.012
Reportable environmental incidents
0.010
Other information
Tonnes waste per production tonne
Environmental incidents
Having risen sharply in 2008, the number of environmental
incidents dropped back to previous levels in 2009. This
significant improvement was due to further changes in the
control of effluent discharge at William Blythe in Accrington, UK.
Tighter limits had pushed them out of consent on a number of
occasions in 2008 but improved control ensured that there was
only one reportable incident during 2009.
49
44
0.008
0.006
22
0.004
0.002
0.000
4
00
01
02
03
04
05
06
07
08
09
Yule Catto & Co plc
7
8
8
06
07
8
4
10
00
18
19
Actual
10-year target
01
02
03
04
05
08
09
2009
2008
2007 1,967,478
641,691
24,885
61,046
147,456
1,086,779
2.765
2,633,940
934,577
82,920
35,254
165,912
1,409,021
3.327
% change
2008-2009
3,063,455
-35.78%
1,159,183
82,120
46,202
179,939
1,596,011
3.640
-24.04%
-25.30%
-16.89%
Sulphur Dioxide (SO2 )
Tonnes
28
114
261
-89.31%
-75.52%
Kilos SO2 /tonne production
0.039
0.144
0.31
-35.05%
Volatile Organic Compounds (VOC) 3
Tonnes
2155
2081
2065
4.34%
Kilos VOC/tonne production
3.028
2.628
2.451
3.54%
3,366,442
938,084
1,609,773
308,738
2,565
507,282
4.731
4,417,697
1,358,705
2,285,307
443,308
15,282
315,094
5.580
4,733,336
-28.88%
1,480,577
2,439,170
420,921
5,169
387,499
5.620
-15.82%
-23.80%
-15.21%
1. Data relates to site usage of all fuels, excluding transport.
2. Emissions to air have been calculated from the usage of all fuels, excluding transport fuel; and therefore include both direct emissions
and indirect emissions related to bought-in electricity.
3. Improved measurement methods used in 2009.
Figures for earlier years have been revised using 2009 measurements and calculation methods.
Company financial
statements
Water usage
Cubic metres (m3 )
Public potable supply
Raw water from river
Raw water from borehole
Raw water from canal
Raw water from other
M3/tonne production
Group financial
statements
Nitrous Oxides (NOx)
Tonnes
20.033
30.844
38.460
-47.91%
Kilos NOx/tonne production
0.028
0.039
0.046
Governance
Emissions to Air2
Carbon Dioxide (CO2 )
’000 tonnes
98,289
131,787
153,308
-35.89%
-25.42%
Tonnes CO2 /tonne production
0.138
0.166
0.182
Business review
Energy consumption1
GJ
Gas
Light oil
Heavy oil
Steam
Electricity (primary basis)
GJ/tonne production
% change 2007-2009
Introduction
Environmental KPIs
The UK Department for Environment, Food and Rural Affairs (DEFRA) published guidelines for reporting environmental key
performance indicators in 2006. The key measures suggested were energy use, emissions to air, waste disposal and water
consumption, on an absolute and a per tonne basis. Yule Catto has reported on these indicators for a number of years, and to aid
transparency in environmental performance reporting Yule Catto adopted DEFRA’s preferred format in 2007. This format is used in
the table below which gives the data for the period 2007-2009:
Other information
Yule Catto & Co plc
19
Introduction
2009
2008
2007 % change 2007-2009
% change
2008-2009
Waste management
Hazardous waste
’000 tonnes
12.131
18.848
23.469
-48.31%
-35.64%
Business review
Governance
Hazardous waste sent off-site
Recycled – energy recovery
Recycled – separated, reprocessed
Incinerated – no energy recovery
Disposed by landfill
Other
1.981
3.865
3.462
0.817
0.065
4.855
5.164
4.232
1.158
0.119
5.675
6.749
2.106
2.075
0.151
Hazardous waste disposed on-site
Incinerated on-site with energy recovery
Incinerated on-site with no energy recovery
Disposed to on-site landfill
Hazardous waste tonnes/tonne production
0.000
1.941
0.000
0.017
1.335
1.986
0.000
0.024
4.181
2.532
0.000
0.027
-36.86%
12.809
15.206
3.077
1.418
0.078
6.041
1.580
3.413
2.326
0.022
6.976
1.437
Non-hazardous waste
’000 tonnes
Non-hazardous waste sent off-site
Recycled – separated, reprocessed
Other – municipality
16.466
-22.21%
-28.96%
-15.76%
3.669
1.930
0.022
9.051
0.770
Group financial
statements
Non-hazardous waste disposed on-site
0.000
0.000
0.000
0.000
0.000
0.000
0.616
1.031
1.024
Non-hazardous waste tonnes/tonne production
0.018
0.019
0.200
-91.00%
-5.26%
Total waste tonnes/tonne production
0.035
0.043
0.227
-84.56%
-18.49%
711,560
791,711
842,578
-15.55%
-10.12%
Production
Tonnes
Company financial
statements
Other information
20
Yule Catto & Co plc
D C Blackwood – Finance Director
Joined the Group and was appointed to the Board in October
2007. Prior to appointment he was Group Treasurer of Imperial
Chemical Industries PLC. Age 50.
Dr A A Dobbie1,2,3
Joined the Board in August 2007. He is a founding Director of
Cogency Chemical Consultants Limited, a Director of NiTech
Solutions Limited and Chairman of Chemical Sciences
Scotland and Warwick International Group Limited. Age 58.
Financial advisers
RBS Hoare Govett
Joint stockbrokers
RBS Hoare Govett and Collins Stewart
Registrars
Computershare Investor Services PLC
Lochside House
7 Lochside Avenue
Edinburgh Park
Edinburgh
EH12 9DJ
Auditors
Deloitte LLP
Solicitors
Linklaters LLP
Hammonds LLP
Pinsent Masons LLP
Group financial
statements
Dato’ Lee Hau Hian 4
Joined the Board in 1993 and stood down in 2000 to become
an Alternate Director. He rejoined the Board in 2002. He is
a Director of Kuala Lumpur Kepong Bhd and Batu Kawan Bhd.
Age 56.
Bankers
Banco de Sabadell SA
Barclays Bank PLC
Dresdner Bank AG
HSBC Bank plc
Maybank – Malayan Banking Berhad
Governance
The Hon. A G Catto 4
Joined the Board in 1981. He is Managing Director of
CairnSea Investments Ltd, a private investment company,
and a non-executive director of several early stage companies
that have been backed by CairnSea. Until 1995 he was
a Managing Director of Lazard Brothers and prior to this
he was with J P Morgan and Morgan Grenfell & Co. Age 57.
Secretary
Richard Atkinson
Business review
Non-executive directors
P S Wood 2,4 – Chairman
Joined the Board in 2001 and was appointed Chairman on
1 February 2009. He was Chief Executive of The BSS Group plc
until retirement at the end of 2005 and is a non-executive
director of RPC Group plc. He is a member of the Institute
of Chartered Accountants of England and Wales. Age 62.
Registered office
Yule Catto & Co plc
Temple Fields
Harlow
Essex
CM20 2BH
Registered No. 98381
Introduction
Executive directors
A M Whitfield 2 – Chief Executive
Joined the Group and was appointed to the Board in March
2006. He assumed the role of Chief Executive in August 2006.
Prior to appointment he was Chief Executive of the plastics
division of D S Smith Plc. Age 48.
J K Maiden 1,2,3
Joined the Board in August 2007. He is Group Finance Director
of National Express Group PLC and a Fellow of the Chartered
Institute of Management Accountants. Age 48.
Company financial
statements
G R Menzies1,2,3 – Senior Independent Director
Joined the Board with effect from 1 March 2009. He was
Chief Executive of Senior plc until retirement in April 2008
and is a non-executive director of Arran Isle Limited. Age 62.
1. Member of Audit Committee.
2. Member of Nomination Committee.
3. Member of Remuneration Committee.
4. Standing for re-election at 2010 AGM.
Other information
Yule Catto & Co plc
21
for the year ended 31 December 2009
The directors submit their annual report and the audited
financial statements for the year ended 31 December 2009.
Results and dividends
Profit attributable to shareholders for the year was £9,686,000.
Introduction
On 29 December 2008 the Company announced the
suspension of the payment of dividends and accordingly
no dividend was paid in 2009 and no final dividend is
recommended by the directors for 2009.
Business review
Principal activities and business review
The principal activities of the Company and a business review,
including key performance indicators and key risks and
uncertainties, are set out on pages 6 to 20 and form part
of the report of the directors.
Disposals
On 30 January 2009 the business and assets of Oxford
Chemicals Limited were sold to Frutarom (UK) Limited.
Further details of this disposal are contained in note 28.
Governance
Financial instruments
Details of the Group’s use of financial instruments and its
financial risk management objectives and policies, and of
its exposure to price, credit, liquidity and cash flow risk in
relation to such instruments, is contained in note 21 to the
financial statements.
Group financial
statements
Directors
The present membership of the Board is shown on page 21
all of whom served throughout the year apart from
Mr G R Menzies who was appointed on 1 March 2009.
Mr A E Richmond-Watson served as Chairman of the Board
until his retirement on 1 February 2009. Dato’ Seri Lee Oi Hian
and Mr R H Hunting retired at the close of the 2009 AGM
having decided not to seek re-election.
The Hon. A G Catto, Dato’ Lee Hau Hian and Mr P S Wood
retire and will be seeking re-election at the forthcoming
Annual General Meeting.
None of the directors seeking re-election has a service contract.
Details of directors’ emoluments and the interests of each
director in the share capital of the Company are shown in the
Remuneration report on pages 28 to 30.
Company financial
statements
Other information
Director indemnity provisions
Under the Company’s Articles of Association, the directors
of the Company have the benefit of a qualifying third-party
indemnity provision which provides that they shall be
indemnified by the Company against certain liabilities as
permitted by Sections 232 and 234 of the Companies Act 2006
and against costs incurred by them in relation to any liability
for which they are indemnified. The Company has purchased
and maintains insurance against directors’ and officers’ liabilities
in relation to the Company.
22
Yule Catto & Co plc
Share capital and control
Details of the Company’s share capital are contained in note 25
to the financial statements. During 2009 no shares were issued
or re-purchased.
The rights and obligations attaching to the Company’s ordinary
shares, being the only class of issued share capital, as well as
the powers of the Company’s directors, are set out in the
Company’s Articles of Association, copies of which can be
obtained from Companies House or by writing to the Company
Secretary. There are no restrictions on the voting rights
attaching to the Company’s ordinary shares or on the transfer
of securities in the Company. No person holds securities in the
Company carrying special rights with regard to the control of
the Company. The Company is not aware of any agreements
between holders of securities that may result in restrictions
on the transfer of securities or on voting rights. Unless expressly
specified to the contrary in the Articles of Association of the
Company, the Company’s Articles of Association may be
amended by special resolution of the Company’s shareholders.
Other than in relation to its borrowings which, unless certain
conditions are satisfied, become repayable on a takeover, the
Company is not party to any significant agreements that would
take effect, alter or terminate upon a change of control following
a takeover bid.
The Company does not have agreements with any director
or employee that would provide compensation for loss of office
or employment resulting from a takeover.
All of the Company’s share schemes contain provisions relating
to a change of control. Outstanding options and awards would
normally vest and become exercisable on a change of control,
subject to the satisfaction of any performance conditions at
that time.
Contractual arrangements
The Group has contractual and other arrangements with
numerous third parties in support of its business operations.
The disclosure in this report of information about any such
third parties is not considered to be necessary for an
understanding of the development, performance or position
of the Group’s business.
Major shareholdings
Other than the shareholdings disclosed as directors’ interests in
the Remuneration report as at 19 February 2010, the Company
had been notified under Section 5 of the Disclosure and
Transparency Rules of the UK Listing Authority of the following
significant holdings of voting rights in its ordinary shares:
Percentage
Ordinary of ordinary
shares shares in
(number)
issue
Nature of holding
Kuala Lumpur
Kepong Berhad 27,414,414
18.82
Direct interest
Tameside MBC 5,855,353
4.02
Direct interest
UBS Global 13,372,875
9.18
Part direct interest
Management Part indirect interest
– Traditional
• the required repayment of £33 million on the US loan notes
in September 2010; and
• the availability of an additional £30 million of undrawn facilities
negotiated in the UK described above.
Employee involvement
The Group is organised on a decentralised basis so as
to promote greater employee involvement and better
communications with employees. Each Group company is
encouraged to make its employees aware of the financial and
economic factors affecting the performance of the Company.
Performance related bonus schemes are in operation in
a number of Group companies.
• the current economic conditions and potential impact of the
level of demand for the Group’s products;
• recent volatility in the currency markets and the ability of the
Company to hedge exposures;
• volatility in prices of the Group’s raw materials; and
• the Group’s exposures to credit and liquidity risk (see note 21).
A long-term share incentive plan for directors and senior
executives was introduced in 2002 with the approval of
shareholders.
Charitable donations
Charitable donations in the year amounted to £56,208 (2008
£51,500). There were no political donations during the year.
Cautionary statement
The purpose of this report is to provide information to the
members of the Company. It contains certain forward-looking
statements with respect to the operations, performance and
financial condition of the Group. By their nature, these
statements involve uncertainty since future events and
circumstances can cause results and developments to differ
materially from those anticipated. The forward-looking
statements reflect knowledge and information available at the
date of preparation of this report and the Company undertakes
no obligation to update these forward-looking statements.
Nothing in this report should be construed as a profit forecast.
Auditors
A resolution to reappoint Deloitte LLP as the Company’s
auditors will be proposed at the Annual General Meeting.
Annual General Meeting
The Annual General Meeting will be held at 11.00am on
Thursday 6 May 2010 at Manor of Groves Hotel, High Wych,
Sawbridgeworth, Hertfordshire CM21 0JU.
By order of the Board
R Atkinson
Secretary
10 March 2010
Other information
Statement as to disclosure of information to auditors
Each director of the Company confirms that, so far as he is
aware, there is no relevant audit information of which the
Company’s auditors are unaware and that he has taken all the
steps that he ought to have taken as a director in order to make
himself aware of any relevant audit information and to establish
that the Company’s auditors are aware of that information. For
these purposes, relevant audit information means information
needed by the Company’s auditors in connection with
preparing their reports on pages 33 and 68.
Accordingly, they continue to adopt the going concern basis
in preparing the annual report and accounts.
Company financial
statements
Creditor payment policy
The Group’s policy is to make payments to creditors and other
suppliers in accordance with terms of payment agreed at the
time the contract of supply is made, subject to all the terms and
conditions of the order being satisfied by the supplier. Trade
creditor days of the Company for the year ended 31 December
2009 were 25 days (2008 27 days) based on the ratio of trade
creditors at the year end to the amounts invoiced during the
year by trade creditors.
After making enquiries and taking account of reasonably
possible changes in trading performance, the directors have
concluded that the Company and the Group have adequate
resources to continue in operational existence for the
foreseeable future.
Group financial
statements
UK pension funds
The trustees have reviewed the independent investment
management of the assets of the Company pension schemes
in the UK and assured themselves of the security and controls
in place. In particular, it is the trustees’ policy not to invest in
Yule Catto shares nor lend money to the Company.
The directors have appropriately considered the Group’s risks
and uncertainties (as fully described in the business review
on pages 6 to 20) including:
Governance
Authority to purchase own shares
The Company has a general authority, which expires at the
conclusion of the 2010 Annual General Meeting, to make
market purchases of not more than 14,566,318 of the
Company’s ordinary shares in accordance with the terms of the
special resolution passed at the 2009 Annual General Meeting.
A resolution will be tabled at the 2010 Annual General Meeting
to renew this authority.
Going concern
The directors have acknowledged the latest guidance on going
concern and in reaching their conclusions have taken into
account factors including:
Business review
The corporate governance report is set out on pages 24 to 27
and forms part of the report of the directors.
Introduction
Employment policies
The Group gives every consideration to applications for
employment from disabled persons. Employees who become
disabled are given every opportunity to continue employment
under normal terms and conditions with appropriate training,
career development and promotion wherever possible. The
Group seeks to achieve equal opportunities in employment
through recruitment and training policies.
This confirmation is given and should be interpreted in
accordance with Section 418 of the Companies Act 2006.
Yule Catto & Co plc
23
This compliance statement is produced in relation to the
Combined Code on Corporate Governance (‘the Code’) which
was published in June 2008 by the Financial Reporting Council.
Introduction
Statement of compliance
The Company considers that it has complied throughout the
financial year ended 31 December 2009 with the provisions
set out in Section 1 of the Code.
Application of the Code
The main principles of Section 1 of the Code were applied
as follows:
Business review
Governance
The Board
Operation of the Board
The activities of the Company are controlled by the Board
which, following a review of its size and composition during
2008, comprised two executive directors and six non-executive
directors, with effect from the close of the 2009 Annual General
Meeting, as a result of the decision of Dato’ Seri Lee Oi Hian
and Mr R H Hunting not to stand for re-election. The roles
of Chairman and Chief Executive are clearly divided between
Mr P S Wood who heads the Board in his capacity as
non-executive Chairman and Mr A M Whitfield who has
responsibility for the running of the Company’s business
as Chief Executive. The non-executive directors all have wide
business and boardroom experience gained in a broad range
of business sectors.
Group financial
statements
The Board has reserved to itself a schedule of matters which
includes setting long-term objectives for the Group and the
strategies to be employed in achieving them, setting policies
in the areas of safety, health and the environment, recruitment
and employment, risk management and treasury and, subject
to materiality thresholds, decisions on the raising of capital,
financial commitments, capital expenditure, acquisitions
and disposals and the prosecution, defence and settlement
of litigation.
Company financial
statements
During 2009 the Board met quarterly to review current and
projected performance and to determine strategic issues.
From 1 January 2010 the Board will meet six times a year in
order to afford more time for strategic review and discussion.
The directors receive in advance full information on all matters
to be discussed at Board meetings as well as a detailed
quarterly review of performance prepared by the Chief
Executive. The Board has established Audit, Nomination
and Remuneration committees which are discussed below.
In addition arrangements are made each year for the Board
to visit up to two of the Group’s operational sites and meet
local management. Ad hoc site visits are facilitated for individual
non-executive directors on request.
Other information
The Board has delegated to the Chief Executive responsibility
for the development and preparation of the business plan for
the Group and the annual Group budget for recommendation to
the Board. As the senior executive director, the Chief Executive
is responsible for all aspects of day-to-day operational control
24
Yule Catto & Co plc
of the Group and execution of the Group strategy. The Chief
Executive has established and chairs an Executive Committee
(whose other members are the divisional Chief Executives, the
Finance Director, the Deputy Finance Director, the Company
Secretary and the Director of Group Human Resources) to
assist him in the performance of his duties and which meets
once a month. The Chairman receives the minutes of the
Executive Committee and all directors receive a monthly trading
summary and commentary from the Finance Director and an
update report from the Chief Executive.
Board membership and balance
The Chairman, Chief Executive and senior independent director
are identified on page 21. The Chairmen and members of
the Audit, Nomination and Remuneration Committees are
identified below.
The Board held nine meetings in 2009, being four scheduled
quarterly meetings, one meeting solely related to strategy,
two meetings in conjunction with a site visit and two held by
telephone to briefly consider single topics. In addition the
Chairman held one separate meeting with the non-executive
directors without the executive directors being present to
appraise the performance of the executive management.
The non-executive directors also met once without the
Chairman to appraise his performance.
The table below shows the number of meetings of the Board,
Audit, Remuneration and Nomination Committees held during
the year and the number of meetings attended by each director.
Where a director is unable to attend a Board or Committee
meeting his views on agenda items are canvassed in advance
of the meeting and incorporated into the discussions.
Number of
meetings held Board Audit RemunerationNomination
9
4
3
1
9/9
9/9
9/9
2/2
8/9
1/2
6/9
8/9
9/9
9/9
N/A
N/A
3/3
2/2
N/A
N/A
3/4
3/3
N/A
N/A
N/A
N/A
3/3
N/A
N/A
N/A
2/3
2/2
N/A
N/A
N/A
N/A
1/1
N/A
N/A
N/A
0/1
1/1
1/1
1/1
Number of
meetings attended
D C Blackwood
A G Catto
A A Dobbie
R H Hunting1
Lee Hau Hian
Lee Oi Hian1
J K Maiden
G R Menzies2
A M Whitfield
P S Wood
1. Retired on 14 May 2009.
2. Appointed on 1 March 2009.
The Board considers the following non-executive directors
to be independent in accordance with the provisions of the
Code: Dr A A Dobbie, Mr J K Maiden and Mr G R Menzies.
Mr P S Wood was considered to be independent up until his
appointment as Chairman on 1 February 2009.
The Company makes use of its website www.yulecatto.com
to communicate with its shareholders where it publishes interim
and full year results, Company announcements, share price
and corporate governance and other investor information.
• an assessment of the performance of individual non-executive
directors is carried out by the Chairman through a rolling
programme of one-to-one discussions using performance
evaluation questions as the centrepiece for those discussions.
Every non-executive director is assessed in this way once
a year;
• the performance of the executive directors was reviewed
in August 2009 at a meeting of the non-executive directors
chaired by the Chairman;
• a meeting of the non-executive directors (in the absence
of the Chairman) chaired by the senior independent director
was held in November 2009 to evaluate the performance of
the Chairman, taking into account the views of the executive
directors; and
• the Board and its Committees carry out an annual selfassessment of performance led by the Chairman and the
Chairman of each committee respectively. The results of
assessment questionnaires completed by those Chairmen
were reviewed by the relevant committees and the Board
and were shared with and discussed by the Board as a whole
at its meeting in November 2009.
Board committees
The Board has formally established Audit, Nomination and
Remuneration Committees each with their own terms of
reference which set out their respective roles and the authority
delegated to them by the Board. Copies of the terms of
reference are available upon request from the Company
Secretary and can also be downloaded from the
Company’s website.
Shareholder communications
Dialogue with institutional investors is conducted on a regular
basis by the Chief Executive and the Finance Director and
meetings take place following the announcement of interim and
full year results and at other times according to circumstances.
Company financial
statements
Other information
The Board has adopted a set of shareholder communication
principles in order to ensure that Board members develop an
understanding of the views of the Group’s major shareholders.
These principles require the Chairman to be present with
the Chief Executive and the Finance Director at sufficient
shareholder presentations and meetings that he fully
understands the issues and concerns of major shareholders.
The Chairman reports on shareholder relations at each Board
meeting. Communications with shareholders relating to
corporate governance matters are conducted by the Chairman
with the assistance of the Chairmen of the Audit, Nomination
and Remuneration Committees. Written reports on all meetings
between non-executive directors and institutional shareholders
and their representative bodies are presented to the Board
at the first opportunity following such meetings as is all
correspondence with them.
Group financial
statements
Non-executive directors are appointed for three-year terms.
Those non-executive directors who have served longer than
nine years on the Board are subject to annual re-election
by shareholders with other directors subject to re-election
at least every three years.
Audit Committee
During 2009 the Audit Committee comprised Mr J K Maiden
(Chairman), Mr R H Hunting and Mr P S Wood until 5 March
2009 when Mr Wood left the Committee and Dr A A Dobbie
and Mr G R Menzies joined on that date. On 14 May 2009
Mr R H Hunting retired from the Committee and the Board.
Mr Wood was and Mr Maiden is considered by the Board to
have ‘recent and relevant financial experience’ for the purposes
of Provision C.3.1 of the Code. The Committee has established
a detailed remit regarding the application of financial reporting
and internal control principles. The Finance Director and senior
members of his department attend meetings of the Committee
as part of the review of the Group’s interim and final statements
prior to their submission to the Board. The Committee meets
periodically with the Company’s auditors to discuss the
adequacy of the Group’s financial management, internal
controls and information systems. The Committee’s remit
includes the review of the cost-effectiveness, independence
and objectivity of the auditors (including the extent of non-audit
services and fees payable to the auditors) which is carried out
and discussed with the auditors on a periodic basis. With
regard to seeking to ensure the independence and objectivity
of the auditors, the Audit Committee’s policy is to avoid the
auditors providing services in areas which may create or be
perceived to create a conflict of interest. Accordingly, other than
in circumstances where time constraints render it impractical
or assignments are of a minor nature, the auditors are not
invited to tender or propose for services of the following nature:
corporate finance, legal, information technology and systems,
recruitment or remuneration, accounting, internal audit or
control, acquisition due diligence, valuations or appraisals,
actuarial or general business consulting. In addition the auditors
have been requested not to provide services to executive
directors or senior executives. Non-executive directors are
required to disclose any relationship they have with the auditors.
Governance
Performance evaluation
Performance evaluations of the Board, its committees and its
directors were carried out in the last year by the following
internal processes:
Business review
The Board seeks to encourage participation of all shareholders,
and in particular private investors, at the Company’s Annual
General Meeting and endeavours to ensure all Board members
are in attendance. In particular, the Chairmen of the
Remuneration, Audit and Nomination Committees are
available to answer questions.
Introduction
Induction and training
Induction arrangements are in place in order to ensure new
directors receive a full formal and tailored induction on
appointment. The skills and knowledge of Board members
are updated by briefings provided by the Company’s internal
resources and materials and seminars offered by external advisers.
Yule Catto & Co plc
25
Corporate governance continued
Introduction
The Group does not have an internal audit function.
The Committee has reviewed this during the year and has
concluded that there are in place appropriate procedures
for assuring the integrity and effectiveness of the Group’s
governance, risk management and control processes.
The Board has accepted this recommendation.
The current auditors were first appointed in 2002 and their
appointment was reviewed by the Committee in 2009. Details
of audit and non-audit fees paid to them in 2009 are set
out in note 6 on page 46. Non-audit fees principally relate
to taxation advice. The Board accepts the Committee’s
recommendation that the current auditors be proposed for
reappointment at the forthcoming Annual General Meeting.
Business review
The Committee met formally four times during 2009 and the
Chairman of the Committee had regular dialogue with the
auditors during the course of the year. As well as complying
with the terms of its remit during the year the Committee
reviewed its remit.
Governance
Nomination Committee
During 2009 the Nomination Committee comprised
Mr R H Hunting (Chairman), Dr A A Dobbie and Mr P S Wood
with Mr J K Maiden, Mr G R Menzies and Mr A M Whitfield
joining on 5 March 2009. On 14 May 2009 Mr R H Hunting
retired from the Committee and the Board and was replaced
as Chairman of the Committee by Mr P S Wood. The Committee
is responsible for: the regular review of the structure, size and
composition of the Board and the making of recommendations
with regard to any changes; leading the process for Board
appointments and nominating candidates for non-executive
positions; and considering succession planning.
Group financial
statements
The Committee led the process for appointing a new
Chairman of the Board and nominating Mr G R Menzies for
appointment as a non-executive director, which involved a
thorough review of a range of candidates put forward by a
recruitment consultancy, which conducted an extensive
search process. The Nomination Committee held one
meeting during 2009.
Remuneration Committee
All matters relating to the Remuneration Committee and
remuneration are covered in the Remuneration Report,
set out on pages 28 to 30.
Company financial
statements
Other information
Accountability
An explanation of the directors’ responsibility for preparing the
financial statements, their report that the business is a going
concern, a responsibility statement and their statement as
to disclosure of information to the auditors are set out on
pages 32 and 23 respectively. Statements by the auditors about
their reporting responsibilities are set out on pages 32 and 68
respectively. A report on the approach to internal control is
set out below. The directors endeavour to make the annual
report and financial statements as informative and
understandable as possible.
26
Yule Catto & Co plc
Internal control
The Board of Directors has ultimate responsibility for the
Group’s system of internal control and sets appropriate
policies to ensure that the Code requirements on internal
control are met.
The system of internal control deployed within the Group
is designed to reduce the risks of failure to meet business
objectives, but these risks cannot be eliminated. The internal
control system adopted can therefore only provide reasonable,
not absolute, assurance about meeting such business
objectives or against material mis-statement or loss.
A process for identifying, evaluating and managing significant
business risks faced by the Group has been in place since
2000. This has since been built upon so as to embed further
the process into the businesses and to enhance the usefulness
of the relevant processes and information, and has been
operated throughout 2009 and up to the date of approval
of the annual report and accounts, and accords with the
Turnbull Guidance.
The system is applied at all material subsidiaries, and a
‘bottom up’ risk profile is created by evaluating the information
at business, divisional and Group level. Individual directors
within Yule Catto’s businesses identify and assess key risks
associated within their area of responsibility based on formal
management information and interaction with colleagues,
customers, suppliers and other parties.
The individual submissions are consolidated, reviewed and
agreed at a board meeting of the subsidiary. A business risk
report is prepared that is closely linked to business strategy
and takes account of key internal and external factors. Risks
are prioritised using a common risk matrix, which forms the
basis of a single corporate risk report that is reviewed and
discussed by the Yule Catto Audit Committee.
The individual business risk reports are formally reviewed at
a board meeting of the subsidiary every six months, out of
which a revised report is submitted which identifies changes
in the risk environment.
The process was last reviewed by the Yule Catto Board
of Directors in March 2009.
The nature of the risks identified as a result of this process
during the year primarily relate to matters of an operational and
financial nature and the most significant of those which faced
the Group in 2009 are reviewed in the reports of the Chairman,
Chief Executive and Group Finance Director.
Risks associated with safety, health and the environment are,
by the nature of the Group’s business, always of the utmost
concern and the Corporate Social Responsibility report on
pages 14 to 20 reviews the Group’s performance in this
connection in 2009.
In addition, the Board:
The Board is also aware of the reputational risk associated
with social and ethical issues and has a Group-wide code of
business conduct on corruption and anti-competitive activities,
which is available on the Company’s website and upon request
from the Company Secretary. The purpose of this code is to
ensure that the Group’s employees have a clear understanding
of the principles that are important in these areas when
conducting the Group’s business. The application of the code
is explained to senior management at regular intervals and
they are charged with its communication throughout their
businesses supported by internal and external training.
A compliance procedure was initiated in 2007 involving annual
certification by the senior management of each operating
company and since 2009 a procedure for maintaining a register
of, and where appropriate gaining prior approval for, gifts,
entertainment and corporate hospitality has been instituted.
A report is made to the Audit Committee annually on the code
and the Company’s whistleblowing procedure.
Governance
The Board’s approach to governance, training of directors
and identification and assessment of risk is set out above.
Group financial
statements
Environmental, social and governance matters
In January 2007 the Association of British Insurers (ABI)
published a revised version of its guidelines on responsible
investment disclosure. These guidelines require statements
on the extent to which environmental, social and governance
matters are taken into account by the Board and identified,
assessed, managed and monitored, particularly in relation
to the risks and opportunities they present to the value
of the Company.
Governance
• receives copies of the minutes from all Audit Committee
meetings;
• considers the role of the Group insurance programme;
• receives regular written and oral reports from management
on all aspects of production, operations, financial and risk
management matters; and
• in compliance with Provision C.2.1 of the Combined Code
the Board regularly reviews and approves the effectiveness
of the Group’s system of internal controls.
The Board is conscious of its responsibility to the communities
in which the Group’s businesses operate and is supportive
of local initiatives by management.
Business review
• a review of the external audit work plan;
• consideration of reports from management and external
parties, including the auditors, on the system of internal
financial control and any material control weaknesses;
• a quarterly review of safety, health and environmental
performance;
• discussion with management of the actions taken on any
possible problem areas for the business identified by Board
members or in the audit report; and
• consideration of a consolidated risk management report
setting out the main conclusions from the internal
control process.
Social and ethical matters
The Board takes account of social and ethical matters as part
of its review of internal control which, by virtue of its approach
to risk identification, covers areas which encompass social and
ethical matters.
Introduction
The processes which are used by the Board either directly
or, where appropriate, through the Audit Committee to review
the effectiveness of the internal control and risk management
systems (including in relation to the financial reporting process
and the process for preparing consolidated accounts) include
the following:
Company financial
statements
Environmental matters
The maintenance of high standards of environmental
(together with health and safety) protection is central to the
Company’s business. A separate statement on safety, health
and environmental (SHE) matters has been a feature of the
annual report for a number of years. The Corporate Social
Responsibility report statement on pages 14 to 20 incorporates
the ABI guidelines and includes a report on the initiatives the
Company has adopted regarding sustainable development.
Other information
Yule Catto & Co plc
27
Introduction
The following report complies with the relevant provisions of the
Large and Medium-sized Companies and Groups (Accounts
and Reports) Regulations 2008 and satisfies the requirements
of the Listing Rules of the Financial Services Authority and
the Combined Code on Corporate Governance which was
published in June 2008 by the Financial Reporting Council.
Remuneration Committee
During 2009 the Remuneration Committee comprised
Mr P S Wood (Chairman), Dr A A Dobbie and Mr J K Maiden
until 5 March 2009 when Mr Wood left the Committee,
Dr Dobbie replaced him as Chairman and Mr G R Menzies
joined the Committee.
Business review
Governance
The Committee is responsible for determining the Company’s
policy on executive remuneration and the specific remuneration
for the Chairman and each of the executive directors, including
pension rights. The Committee is also responsible for reviewing
the remuneration of senior executives throughout the Group.
The Committee was assisted in its deliberations on executive
directors’ remuneration by the Chief Executive and took advice
from and used the services of Hewitt New Bridge Street (HNBS
– a trading name of Hewitt Associates) and Grant Thornton
UK LLP (Grant Thornton). Hewitt Associates does not have any
other connection with the Company. Grant Thornton provides
corporate tax advice to the Company. The Board as a whole
determines the remuneration of the non-executive directors,
including members of the Remuneration Committee. The
Remuneration Committee met three times during 2009.
Group financial
statements
Remuneration policy
Non-executive directors’ remuneration
It is the Board’s policy to review fees paid to non-executive
directors periodically. A review of non-executive director
remuneration was last carried out in December 2006 with
the assistance of advice provided by Monks, part of
PricewaterhouseCoopers LLP. With effect from 1 January 2007
non-executive director fees are as follows: £30,000 pa for those
who do not sit on a committee; £33,000 pa for those who do
sit on a committee; £36,000 pa for those who are Committee
chairmen. The fees payable to the Chairman of the Board
are £110,000 pa.
Company financial
statements
Non-executive directors are not eligible to receive awards under
any of the Company’s share schemes or other employee benefit
schemes nor does the Company make any contribution to their
pension arrangements.
Executive directors’ remuneration
The Company’s policy for 2009 was and continues to be to
structure executive pay in such a way that key executives may
be recruited, motivated and retained through being offered
remuneration packages that are competitive. For this purpose,
the Committee uses industry and sector data and surveys.
Other information
28
Yule Catto & Co plc
Whilst not adopting set formulae the Committee is also
sensitive to the pay and employment conditions elsewhere
in the Group when considering annual salary increases and
total remuneration. The Committee also has the discretion to
consider the Company’s performance on environmental, social
and governance matters when setting the remuneration of the
executive directors.
The major element of the remuneration package of senior
executives is a competitive basic salary which is reviewed with
effect from 1 January each year. For executive directors this
review is conducted with the assistance of independent surveys
of salaries at UK listed companies with a similar profile to the
Company in terms of turnover and market capitalisation. The
Committee then uses this information to recommend basic
salaries for the executive directors in line with the Board’s
policy of awarding for good performance a basic salary of
approximately the market median for companies of a similar
size and complexity. In addition, the Remuneration Committee
has overseen the introduction of incentives, which are designed
to reward the achievement of predetermined targets by the
individuals concerned. These incentives, which were designed
in accordance with the provisions of Schedule A to the
Code, currently comprise an annual cash incentive plan and
membership of an approved longer term incentive plan
(the ‘Performance Plan’). The Committee does not consider
that the incentive structure for senior executives gives rise to
environmental, social or governance risks by inadvertently
motivating irresponsible behaviour.
• Annual incentive arrangements
For 2009 the previous annual cash bonus arrangement for
the executive directors and senior head office employees
calculated by reference to the annual growth in the
Company’s basic earnings per share for underlying
performance was replaced as contemplated in last year’s
Remuneration Report. Following further consideration of
appropriate targets and structures the Committee decided
on the introduction of an incentive plan (the growth securities
ownership plan (GSOP)) related to growth in profit before tax
and reduction in Group debt. As a result of the growth in profit
before tax for 2009 exceeding RPI plus 10% and Group debt
falling below £105 million maximum payments will be made
to the executive directors under the GSOP. For 2010 the
Remuneration Committee considered it appropriate to issue
awards under the GSOP linked to set levels of profit before
tax, the details of which are considered to be commercially
sensitive. The maximum net amount payable to executive
directors in 2009 under the GSOP was and remains in 2010
at 60% and 80% of basic pay for the Finance Director and
the Chief Executive respectively.
For divisional chief executives and managing directors of
subsidiary companies the 2009 annual cash bonus payments
were based on appropriate combinations of profit, cash flow,
working capital and safety and environmental targets. In 2009
the bonuses were subject to limits of 60% and 50% of basic
pay respectively.
All non-executive directors are appointed in writing. The first
year of each director’s appointment is shown in the directors’
biographies on page 21. The periods of appointment and
the requirements for re-election of non-executive directors
are provided within the Performance Evaluation section of
the Corporate Governance report on page 25.
• Non-executive directorships held by the executive directors
Mr Whitfield is a non-executive director of the Chemical
Industries Association Limited for which he does not receive
any remuneration. Mr Blackwood is a non-executive member
of the Cabinet Office Audit and Risk Committee and is
a member of the Board for Actuarial Standards for which
he receives and retains £4,000 and £10,000 pa respectively.
• Total shareholder return over five years
The following graph compares the share price performance
of the Company (by reference to total shareholder return)
with that of the FTSE 250 which is considered to be the most
appropriate index against which to make a comparison.
Yule Catto total shareholder return versus FTSE 250 total return
(cumulative) for years ended 31 December
Company financial
statements
250
200
150
100
50
0
Yule Catto
FTSE 250
04
05
06
07
08
09
AGM approval
The directors’ Remuneration Report has been submitted to the
2010 Annual General Meeting for approval.
Yule Catto & Co plc
29
Other information
• Pension arrangements
Mr A M Whitfield and Mr D C Blackwood are not members
of the Company pension scheme and receive payments
from the Company to enable them to make their own
arrangements. There are no unfunded pension promises
or similar arrangements for directors.
Group financial
statements
Executive directors are entitled to participate in grants of
options made under the Company’s Savings-Related Share
Option Scheme as and when these are made.
The Remuneration Committee’s policy on contracts and
notice periods for executive directors is to seek to comply
with best practices in corporate governance.
Governance
None of the shares comprised in the awards granted
in 2007 have vested due to the failure to meet the
performance conditions.
• Service contracts
No director other than Mr A M Whitfield and
Mr D C Blackwood has a service contract. Mr Whitfield’s
contract is dated 22 November 2005, has no unexpired
term, provides for a notice period of one year and makes no
provision for pre-determined compensation on termination.
Mr Blackwood’s contract is dated 12 September 2007, has
no unexpired term, provides for a notice period of one year
and makes no provision for pre-determined compensation
on termination.
Business review
During 2009 2,810,312 shares were awarded under the
Performance Plan. The comparatively high number of shares
awarded resulted from the applicable share price at the time
the awards were made of 41.25 pence. The Remuneration
Committee did not consider it appropriate to scale back the
number of shares comprised in the awards given that no
corresponding adjustment had been made at times when
the share price was at historically high levels.
• Remuneration details
The amount and components of the directors’ remuneration
are set out below. At the 2010 salary review basic salary
increases for the executive directors were under 3%.
No elements of remuneration other than basic salary
are pensionable.
Introduction
• Share plan
The Performance Plan was introduced in 2002 following
shareholder approval at that year’s Annual General Meeting
and covers the executive directors, divisional chief executives
and senior managers and head office employees. An award
consists of a right to acquire shares which can be exercised
for a nominal price, subject to the Company satisfying
performance conditions. The value of shares awarded under
the Performance Plan in any financial year to any individual
currently may not exceed 100% of their annual basic salary.
Following review by the Remuneration Committee and
shareholder approval awards made since 2006 have been
subject to performance conditions related to relative and
absolute growth in total shareholder return in order to better
align the interests of the participants in the Performance Plan
with shareholders. Details of performance conditions are set
out at page 31. Currently an award which vests in accordance
with the performance conditions will only be exercisable and
allocated shares may only be transferred as to one-half after
the third anniversary of the date the award is made and as to
the remaining half after the fourth anniversary of the date the
award is made. The Remuneration Committee is proposing
that future awards which vest be exercisable and allocated
shares be transferred in full after the third anniversary of the
date the award is made. Accordingly a resolution to effect
this change is contained in the 2010 notice of Annual General
Meeting. In order to further align the interests of the executive
directors and shareholders there are share ownership
requirements in connection with the Performance Plan
requiring the retention of a percentage of the shares acquired
by executive directors until such time as ordinary shares in
the Company have been built up to a level equivalent in
value to their annual basic salary.
Directors’ remuneration report continued
Audited information
Directors’ remuneration
Emoluments
2008
£’000
2009
£’000
Introduction
The total amounts for directors’ remuneration and other benefits were:
Emoluments
1,366 1,405
The emoluments of the individual executive directors holding office during the year were:
Annual
Base
incentive
salary arrangement Benefits
Total
Total
2009
2009
2009
2009
2008
£
£
£
£
£
Business review
A M Whitfield – Highest paid director
370,000 296,000 27,071 693,071 665,104
D C Blackwood
239,500 143,700 16,660 399,860 384,779
The annual incentive arrangement is discussed in more detail on page 28 of the Remuneration report. Pension arrangements
A M Whitfield and D C Blackwood are not members of the Company’s defined benefit pension scheme, the Yule Catto Group
Retirement Benefits Scheme. To fund their pension arrangements, they received the following payments:
2009
2008
£
£
A M Whitfield
D C Blackwood
Governance
Directors’ fees
The fees of the individual non-executive directors holding office during the year were:
Group financial
statements
A E Richmond-Watson – Chairman until 01/02/09
P S Wood – Chairman from 01/02/09
The Hon. A G Catto
Dr A A Dobbie
R H Hunting
Dato’ Lee Hau Hian
Dato’ Seri Lee Oi Hian
J K Maiden
G R Menzies
C J Williams
92,500 47,900 2009
£
9,167 103,833 30,000 35,500 13,938 30,000 11,615 36,000 30,000 –
300,053 88,750
46,000
2008
£
110,000
36,000
30,000
33,000
36,000
30,000
30,000
33,726
–
16,500
355,226
The non-executive directors receive no other remuneration in addition to their fee.
Company financial
statements
Other information
30
Yule Catto & Co plc
Shareholdings
Given below are details of the interests of the directors in the share capital of the Company at 31 December 2009 and
31 December 2008:
Options
2009
17,500
17,500
725,260
1,315,604 1,215,604
–
5,197,093* 5,197,093*
–
49,223
10,000
–
10,613
10,613
–
nil
nil
–
10,000
nil
–
6,000
6,000 1,255,047
22,249
2,500
–
2008
144,654
–
–
–
–
–
–
482,430
–
Introduction
D C Blackwood
The Hon. A G Catto
Dr A A Dobbie
Dato’ Lee Hau Hian
J K Maiden
G R Menzies
A M Whitfield
P S Wood
Ordinary shares
2009
2008
* Non-beneficial interest.
Executive options
Number of options
At
during the year
At
Exercise
01/01/09
Granted
Lapsed
Exercised
31/12/09
price
124,352
134,808 (i)
223,270 (ii)
– (iii)
482,430
–
–
–
896,969
896,969
124,352
–
–
–
124,352
–
–
–
–
–
–
134,808
223,270
896,969
1,255,047
–
–
–
–
204,908 2010-2017
–
339,370 2011-2018
– 1,363,392 2012-2019
–
Number of options
At
during the year
At
Exercise
01/01/09
Granted
Lapsed
Exercised
31/12/09
price D C Blackwood
144,654(ii)
– (iii) 580,606
144,654
580,606
–
–
–
–
–
–
144,654
580,606
725,260
Exercise
period
Notional
value
£
Exercise
period
Governance
A M Whitfield
Notional
value
£
Business review
Between 31 December 2009 and 19 February 2010 there were no other changes in the directors’ holdings.
–
219,874 2011-2018
–
882,521 2012-2019
–
(iii) For the awards made in 2009 to Mr A M Whitfield and Mr D C Blackwood the same performance conditions apply as for the
awards referred to in (i) and (ii) above over a three year period ending on 31 December 2011.
Company financial
statements
(ii)For the awards made in 2008 to Mr A M Whitfield and Mr D C Blackwood the same performance conditions apply as for the
award made to Mr A M Whitfield in 2007 over a three-year period ending on 31 December 2010.
Group financial
statements
(i)For the award made in 2007 to Mr A M Whitfield, it would have vested in respect of 50% of the shares only if the Company’s
total shareholder return (TSR) over a three-year period, ended on 31 December 2009, had increased by the rise in RPI plus
15.76% or more compared with the Company’s TSR at the start of the three-year performance period. If growth in the
Company’s TSR had been equal to the rise in RPI plus 9.27% over the three-year performance period 25% of the shares
subject to the award would have vested. Performance between these points would have resulted in between 25% to 50%
of the shares vesting on a straight-line basis with lesser performance resulting in no part of the 50% of the shares vesting.
Vesting of the other 50% of the shares subject to the award was based on the growth in the Company’s TSR compared with
the growth of the FTSE 250 total return index over the same three-year period. If the Company’s TSR had exceeded the
FTSE 250 total return index by 7.69% or more over the three year period 50% of the shares subject to an award would have
vested. If growth in the Company’s TSR had been equal to the FTSE 250 over the three-year performance period 5% of the
shares subject to the award would have vested. Performance between these points would have resulted in between 5% to 50%
of the shares vesting on a straight-line basis, with lesser performance resulting in no part of the 50% of the shares vesting.
The notional value of unexercised share options is based on the mid-market price of a share on 31 December 2009 of 152 pence.
During the year the market price ranged between 37 pence and 184.75 pence.
Other information
R Atkinson
Secretary
10 March 2010
Yule Catto & Co plc
31
Financial statements, including adoption of going
concern basis
The directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable
law and regulations.
Introduction
Business review
Company law requires the directors to prepare financial
statements for each financial year. Under that law the directors
are required to prepare the Group financial statements in
accordance with International Financial Reporting Standards
(IFRSs) as adopted by the European Union and Article 4
of the IAS Regulation and have elected to prepare the parent
company financial statements in accordance with United
Kingdom Generally Accepted Accounting Practice (United
Kingdom Accounting Standards and applicable law). Under
company law the directors must not approve the accounts
unless they are satisfied that they give a true and fair view
of the state of affairs of the Company and of the profit or loss
of the company for that period.
In preparing the parent company financial statements, the
directors are required to:
Governance
• select suitable accounting policies and then apply
them consistently;
• make judgments and accounting estimates that are
reasonable and prudent;
• state whether applicable UK Accounting Standards have
been followed, subject to any material departures disclosed
and explained in the financial statements; and
• prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
Group financial
statements
In preparing the Group financial statements, International
Accounting Standard 1 requires that directors:
Company financial
statements
• properly select and apply accounting policies;
• present information, including accounting policies, in
a manner that provides relevant, reliable, comparable and
understandable information;
• provide additional disclosures when compliance with the
specific requirements in IFRSs are insufficient to enable users
to understand the impact of particular transactions, other
events and conditions on the entity’s financial position and
financial performance; and
• make an assessment of the Company’s ability to continue
as a going concern.
Other information
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy at any time
the financial position of the Company and enable them to
ensure that the financial statements comply with the Companies
Act 2006. They are also responsible for safeguarding the assets
of the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
32
Yule Catto & Co plc
Other matters
The directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company’s website. Legislation in the United Kingdom
governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
Responsibility statement
We confirm that to the best of our knowledge:
• the financial statements, prepared in accordance with the
relevant financial reporting framework, give a true and fair
view of the assets, liabilities, financial position and profit or
loss of the Company and the undertakings included in the
consolidation taken as a whole; and
• the management 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 that
they face.
A M Whitfield
Chief Executive
10 March 2010
D C Blackwood
Group Finance Director
to the members of Yule Catto & Co plc
Opinion on other matter prescribed by the
Companies Act 2006
In our opinion:
This report is made solely to the Company’s members,
as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so
that we might state to the Company’s members those matters
we are required to state to them in an auditors’ report and for
no other purpose. To the fullest extent permitted by law, we
do not accept or assume responsibility to anyone other than
the company and the Company’s members as a body, for our
audit work, for this report, or for the opinions we have formed.
Matters on which we are required to report by exception
We have nothing to report in respect of the following:
• certain disclosures of directors’ remuneration specified
by law are not made; or
• we have not received all the information and explanations
we require for our audit.
Under the Listing Rules we are required to review:
• the directors’ statement contained within the Directors’ Report
in relation to going concern; and
• the part of the Corporate Governance Statement relating to
the Company’s compliance with the nine provisions of the
June 2008 Combined Code specified for our review.
Other matter
We have reported separately on the parent company financial
statements of Yule Catto & Co plc for the year ended
31 December 2009.
Group financial
statements
Stuart Henderson (Senior Statutory Auditor)
for and on behalf of Deloitte LLP
Chartered Accountants and Statutory Auditors
Cambridge, United Kingdom
10 March 2010
Governance
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts
and disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free
from material misstatement, whether caused by fraud or error.
This includes an assessment of: whether the accounting
policies are appropriate to the Group’s circumstances and
have been consistently applied and adequately disclosed;
the reasonableness of significant accounting estimates
made by the directors; and the overall presentation of the
Under the Companies Act 2006 we are required to report
to you if, in our opinion:
Business review
Respective responsibilities of directors and auditors
As explained more fully in the Directors’ Responsibilities
Statement, the directors are responsible for the preparation
of the Group financial statements and for being satisfied that
they give a true and fair view. Our responsibility is to audit the
Group financial statements in accordance with applicable law
and International Standards on Auditing (UK and Ireland).
Those standards require us to comply with the Auditing
Practices Board’s (APB’s) Ethical Standards for Auditors.
• the part of the Directors’ Remuneration Report to be audited
has been properly prepared in accordance with the
Companies Act 2006; and
• the information given in the Directors’ Report for the financial
year for which the financial statements are prepared is
consistent with the Group financial statements.
Introduction
We have audited the Group financial statements of
Yule Catto & Co plc for the year ended 31 December 2009
which comprise the Consolidated Income Statement, the
Consolidated Statement of Comprehensive Income, the
Consolidated Statement of Changes in Equity, the Consolidated
Balance Sheet and the Consolidated Cash Flow Statement and
the related notes 1 to 36. The financial reporting framework that
has been applied in their preparation is applicable law and
International Financial Reporting Standards (IFRSs) as adopted
by the European Union.
Opinion on financial statements
In our opinion the Group financial statements:
Company financial
statements
• give a true and fair view of the state of the Group’s affairs as
at 31 December 2009 and of its profit for the year then ended;
• have been properly prepared in accordance with IFRSs as
adopted by the European Union; and
• have been prepared in accordance with the requirements of
the Companies Act 2006 and Article 4 of the IAS Regulation.
Other information
Separate opinion in relation to IFRSs as issued by the IASB
As explained in note 2 to the Group financial statements, the
Group in addition to complying with its legal obligation to apply
IFRSs as adopted by the European Union has also applied
IFRSs as issued by the International Accounting Standards
Board (IASB).
In our opinion the Group financial statements comply with
IFRSs as issued by the IASB.
Yule Catto & Co plc
33
Underlying
performance
Note
£’000
2009
Special Underlying
items
IFRS performance
£’000
£’000
£’000
2008
Special
items
£’000
IFRS
£’000
Introduction
Business review
Governance
Group financial
statements
Continuing operations
Group revenue
4,5
527,948 –
527,948 584,373 –
584,373
Share of joint ventures’ revenue
4,5
15,450 –
15,450 17,780 –
17,780
Total sales
543,398 – 543,398 602,153 –
602,153
Group revenue
527,948 –
527,948 584,373 –
584,373
Company and subsidiaries
before special items
50,164 –
50,164 41,577 –
41,577
Impairment of goodwill
3
–
(30,000)
(30,000)
–
–
–
Operations sold or closed during the year
4
–
–
–
–
(2,406)
(2,406)
50,164 (30,000)
20,164 41,577 (2,406)
39,171
Share of joint ventures
4, 5
1,242 –
1,242 1,615 –
1,615
Operating profit/(loss)
5
51,406 (30,000)
21,406 43,192 (2,406)
40,786
Interest payable
8
(10,308)
–
(10,308)
(15,983)
–
(15,983)
Interest receivable
8
439 –
439 5,481 –
5,481
(9,869)
–
(9,869)
(10,502)
–
(10,502)
Fair value adjustment
3, 8
–
(4,401)
(4,401)
–
8,615 8,615
Finance costs
(9,869)
(4,401)
(14,270)
(10,502)
8,615
(1,887)
Profit/(loss) before taxation
41,537 (34,401)
7,136 32,690 6,209 38,899
Taxation 9
(8,261)
9,345 1,084 (4,904)
–
(4,904)
Profit/(loss) for the year from
continuing operations
33,276 (25,056)
8,220 27,786 6,209 33,995
Discontinued operations
Profit for the year from
discontinued operations
3
–
3,668 3,668 –
22,568 22,568
Profit/(loss) for the year
33,276 (21,388)
11,888 27,786 28,777 56,563
Profit attributable to minority interests
26 2,202 –
2,202 1,718 –
1,718
Profit/(loss) attributable to equity
holders of the parent
26 31,074 (21,388)
9,686 26,068 28,777 54,845
33,276 (21,388)
11,888 27,786 28,777 56,563
Earnings per share
From continuing operations
– Basic
12 21.3p (17.2)p
4.1p
17.9p 4.3p 22.2p
– Diluted
12 20.8p (16.8)p
4.0p 17.8p 4.2p 22.0p
Company financial
statements
From continuing and discontinued operations
– Basic
12 21.3p (14.7)p
6.6p 17.9p 19.8p 37.7p
– Diluted
12 20.8p (14.3)p
6.5p 17.8p 19.6p 37.4p
Special items
The special items are shown in more detail in note 3.
Other information
34
Yule Catto & Co plc
Minority interests
£’000
2009
Equity
holders of
Minority
the parent
Total
interests
£’000
£’000
£’000
2008
Equity
holders of
the parent
£’000
Total
£’000
33,034
–
949
–
–
–
6,252
–
678
–
–
–
–
(7,186)
(678)
–
–
–
–
33,034
–
–
–
–
949
–
–
47
(47)
–
(7,186)
–
–
–
(934)
(678)
–
–
–
–
Share
Share
capital premium
£’000
£’000
Cash flow
hedging
reserve
£’000
2,056 66,692
9,686 11,888
(825) (12,313) (21,002)
1,377
(3,631)
–
–
6,903
(2,627) (9,114)
– (3,631)
–
47
590
543
19 54,537
Minority Retained
interest earnings
Total
£’000
£’000
£’000
33,034
–
949
–
–
–
(9,087)
–
–
–
5,725
1,718
416 45,603
54,845 56,563
–
–
–
15,339
678
2,055 (39,159) (21,087)
–
–
–
33,034
–
–
–
949
–
–
–
–
15,339
–
–
6,252
678
–
–
678
3,773 15,686 35,476
(341) (14,129) (14,470)
–
83
83
9,157
2,056 66,692
Company financial
statements
At 1 January 2008
14,566
Profit for the year
–
Other comprehensive income
for the period
–
Total comprehensive income
for the period
–
Dividends paid
–
Share-based payments
–
At 31 December 2008
14,566
Capital Hedging and
redemption
Own translation
reserve
shares
reserve
£’000
£’000
£’000
9,157
2,202
Group financial
statements
At 1 January 2009
14,566
Profit for the year
–
Other comprehensive income
for the period
–
Total comprehensive income
for the period
–
Dividends paid
–
Shares purchased by ESOP trust
–
–
At 31 December 2009
14,566
Capital Hedging and Cash flow
redemption
Own translation
hedging Minority Retained
reserve
shares
reserve
reserve interest earnings
Total
£’000
£’000
£’000
£’000
£’000
£’000
£’000
Governance
Share
Share
capital premium
£’000
£’000
Business review
Introduction
Profit for the year
2,202 9,686 11,888 1,718 54,845 56,563
Actuarial gains and losses
–
(12,619)
(12,619)
–
(39,111)
(39,111)
Losses on a hedge of a net investment taken to equity
–
(253)
(253)
–
(24,617)
(24,617)
(Losses)/gains on cash flow hedges
arising during the period
–
(678)
(678)
–
678 678
Exchange differences on translation
of foreign operations
(825)
(6,933)
(7,758)
2,055 39,956 42,011
Tax relating to components of
other comprehensive income
–
306 306 –
(48)
(48)
Other comprehensive income for the period
(825)
(20,177)
(21,002)
2,055 (23,142)
(21,087)
Total comprehensive income for the period
1,377 (10,491)
(9,114)
3,773 31,703 35,476
Other information
Yule Catto & Co plc
35
31 December 2009
Note
2009
£’000
2008
£’000
Introduction
Business review
Non-current assets
Goodwill
14 Other intangible assets
15 Property, plant and equipment
16 Deferred tax assets
10 Investment in joint ventures
17 124,027
604
103,815
1,139
3,798
233,383
154,027
869
118,106
457
4,948
278,407
Current assets
Inventories
18 Trade and other receivables
19 Cash and cash equivalents
20 Derivatives at fair value
21 56,145
99,006
42,384
11,763
209,298
63,507
126,136
26,576
33,887
250,106
Assets held for sale
Total current assets
–
209,298
7,377
257,483
22 Governance
Current liabilities
Borrowings
20 (38,924)
(57,972)
Trade and other payables
23 (125,609)
(152,621)
Current tax liability
9
(34,556)
(44,528)
(199,089)
(255,121)
Group financial
statements
Liabilities directly associated with assets classified as held for sale
22 Total current liabilities
–
(199,089)
(1,400)
(256,521)
Non-current liabilities
Borrowings
20 Trade and other payables
23 Deferred tax liability
10 Post retirement benefit obligations
24 Net assets
(101,106)
(216)
(9,044)
(78,689)
(189,055)
54,537
(130,052)
(167)
(6,899)
(75,559)
(212,677)
66,692
Company financial
statements
Equity Called up share capital
25 14,566
14,566
Share premium
26 33,034
33,034
Capital redemption reserve
26 949
949
Hedging and translation reserve
26 (934)
6,252
Cash flow hedging reserve
26 –
678
Retained earnings
26 19
2,056
Equity attributable to equity holders of the parent 47,634
57,535
Minority interests
26 6,903
9,157
Total equity
54,537
66,692
Other information
Analysis of net borrowings
Cash and cash equivalents
20 42,384 26,576 Current borrowings
20 (38,924)
(57,972)
Non-current borrowings
20 (101,106) (130,052)
Net borrowings
(97,646) (161,448)
Deduct: special items
20 9,608
25,966
Net borrowings (underlying performance)
(88,038) (135,482)
The financial statements were approved by the Board of Directors and authorised for issue on 10 March 2010. They are signed
on its behalf by:
A M Whitfield
D C Blackwood
Directors
36
Yule Catto & Co plc
Note
£’000
2009
£’000
2008
£’000
44,299
(11,354)
(10,214)
22,731
816
(15,425)
50,208
35,599
Increase in cash and bank overdrafts during the year
33,982 10,514
Comprised of:
30 Bank overdrafts
30 20,157 13,825 33,982 (64,475)
74,989
10,514
Reconciliation of net cash flow from operating activities
to movement in net borrowings
Net cash inflow from operating activities
Add back: dividends received from joint ventures
17 Less: net capital expenditure and financial investment
Less: dividends paid to minority interests
26 Free cash flow before dividends
Net cash impact of acquisitions and disposals
28, 29
Purchase of own shares
26 Equity dividends paid
11 Exchange movements
Movement in net borrowings (underlying performance)
47,167 1,899 (6,434)
(3,631)
39,001 8,760 (47)
– (270)
47,444 22,731
816
(15,425)
(341)
7,781
50,208
–
(14,129)
(8,511)
35,349
Company financial
statements
(14,129)
(341)
–
(33,512)
166
(47,816)
Group financial
statements
–
(3,631)
(47)
(33,472)
19,740 (17,410)
Governance
Financing
Equity dividends paid
11 Dividends paid to minority interests
26 Purchase of own shares
26 Repayment of borrowings
30 Proceeds of non-current borrowings
30 Net cash outflow from financing activities
Business review
Investing
Dividends received from joint ventures
17 1,899 Purchase of property, plant and equipment
(8,687)
(17,707)
Sale of property, plant and equipment
2,253 2,282
Net capital expenditure and financial investment
(6,434)
Purchase of businesses
29 – (468)
Sale of businesses
28 8,760 50,676
Net cash impact of acquisitions and disposals
8,760
Net cash inflow from investing activities
4,225
£’000
Introduction
Operating
27 64,499 Interest received
439 5,481
Interest paid
(10,959)
(16,835)
Net interest paid
(10,520)
UK corporation tax (paid)/received
(139)
207
Overseas corporate tax paid
(6,673)
(10,421)
Total tax paid
(6,812)
Net cash inflow from operating activities
47,167 Other information
Yule Catto & Co plc
37
31 December 2009
1 General information
Yule Catto & Co plc is a company incorporated in the United
Kingdom under the Companies Act. The address of the
registered office is given on page 21.
Introduction
These financial statements are presented in pounds sterling
because that is the currency of the primary economic
environment in which the Group operates. Foreign operations
are included in accordance with the policies set out in note 2.
Business review
In the current year, the following new and revised Standards
have been adopted. IAS 1 Presentation of Financial Statements
has introduced a number of changes in the format and content
of the financial statements. IFRS 8 Operating Segments is a
disclosure standard that has not led to any redesignation of the
Group’s reportable segments. Amendments to IFRS 7 Financial
Instruments has expanded the disclosure required in respect of
fair value measurements and liquidity risk. IAS 23 Borrowing
Costs has had no impact on these financial statements.
At the date of authorisation of these financial statements, the
following Standards and Interpretations which have not been
applied in these financial statements were in issue but not
yet effective:
Governance
Group financial
statements
Company financial
statements
• Amendment to IFRS 1 (Jan. 2010) – Limited Exemption from
Comparative IFRS 7 Disclosures for First-time Adopters
• IFRS 9 – Financial Instruments
• IAS 24 (revised Nov. 2009) – Related Party Disclosures
• Amendment to IAS 32 (Oct. 2009) – Classification
of Rights Issues
• Amendments to IFRS 1 (Jul. 2009) – Additional Exemptions
for First-time Adopters
• Amendments to IFRS 2 (Jun. 2009) – Group Cash-settled
Share-based Payment Transactions
• Improvements to IFRSs 2009 (Apr. 2009) – Improvements
to IFRSs 2009
• Amendments to IFRIC 9 and IAS 39 (Mar. 2009) –
Embedded Derivatives
• IFRS 1 (revised Nov. 2008) – First-time Adoption of
International Financial Reporting Standards
• IFRS 3 (revised Jan. 2008) – Business Combinations
• Amendments to IAS 27 (Jan. 2008) – Consolidated and
Separate Financial Statements
• Amendments to IFRIC 14 (Nov. 2009) – Prepayments
of a Minimum Funding Requirement
• IFRIC 19 – Extinguishing Financial Liabilities with Equity
Instruments
• IFRIC 18 – Transfers of Assets from Customers
• IFRIC 17 – Distributions of Non-cash Assets to Owners
Other information
38
Yule Catto & Co plc
2 Significant accounting policies
Basis of accounting
The financial statements have been prepared in accordance
with International Financial Reporting Standards (IFRSs). The
financial statements have also been prepared in accordance
with IFRSs adopted by the European Union and therefore the
Group financial statements comply with Article 4 of the EU IAS
Regulation. The financial statements have been prepared
on the historical cost basis, except for the revaluation of certain
properties and financial instruments. As discussed in the Report
of the Directors on page 23, the financial statements have been
prepared on a going concern basis. The principal accounting
policies adopted are set out below.
Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the
Company (its subsidiaries) made up to 31 December each
year. Control is achieved where the Company has the power
to govern the financial and operating policies of an investee
entity so as to obtain benefits from its activities.
The results of subsidiaries acquired or disposed of during the
year are included in the consolidated income statement from
the effective date of acquisition or up to the effective date of
disposal, as appropriate. Where necessary, adjustments are
made to the financial statements of subsidiaries to bring the
accounting policies used into line with those used by the Group.
The results of joint ventures are accounted for using
equity accounting.
Minority interests in the net assets of consolidated subsidiaries
are identified separately from the Group’s equity therein.
Minority interests consist of the amount of those interests
at the date of the original business combination (see below)
and the minority’s share of changes in equity since the date
of combination. Subsequently, any losses applicable to the
minority interest in excess of the minority interest are allocated
against the interests of the parent except to the extent that the
minority has a binding obligation and is able to make an
additional investment to cover the losses.
All intra-group transactions, balances, income and expenses
are eliminated on consolidation.
Goodwill arising on acquisitions before the date of transition
to IFRSs has been retained at the previous UK GAAP amounts
subject to being tested for impairment at that date. Goodwill
written off to reserves under UK GAAP prior to 1998 has not
been reinstated and is not included in determining any
subsequent profit or loss on disposal.
Software – between 3 and 5 years
An internally-generated intangible asset arising from the group’s
product development is recognised only if all of the following
conditions in IAS 38 are met:
No research or development costs met the criteria for required
capitalisation under IAS 38 during the year.
Operating leases
Operating lease payments are expensed on a straight-line basis
to the income statement over the term of the relevant lease. Any
benefits received as an incentive to enter into an operating lease
are also spread on a straight-line basis over the lease term.
Inventories
Inventories are stated at the lower of cost and net realisable
value. Cost comprises direct materials and, where applicable,
direct labour costs and those overheads that have been
incurred in bringing the inventories to their present location
and condition. Cost is calculated using the weighted average
method. Net realisable value represents the estimated selling
price less all estimated costs of completion and costs to be
incurred in marketing, selling and distribution. Provision is made
for obsolete, slow-moving or defective items where appropriate.
Other information
Where no internally-generated intangible asset can be
recognised, development expenditure is recognised as
an expense in the period in which it is incurred. If the recoverable amount of an asset (or cash-generating unit)
is estimated to be less than its carrying amount, the carrying
amount of the asset (or cash-generating unit) is reduced to its
recoverable amount. An impairment loss is recognised as an
expense immediately, unless the relevant asset is carried at
a revalued amount, in which case the impairment loss is treated
as a revaluation decrease.
Company financial
statements
• an asset is created that can be separately identified (such
as software and new processes);
• it is probable that the asset created will generate future
economic benefits; and
• the development cost of the asset can be measured reliably.
Recoverable amount is the higher of fair value less costs to sell
and value in use. In assessing value in use, the estimated future
cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the
time value of money and the risks specific to the asset for which
the estimates of future cash flows have not been adjusted.
Group financial
statements
Other intangible assets
Software development and environmental licensing costs
resulting in development of a long-term intangible asset are
measured initially at cost and are amortised on a straight-line
basis over their estimated useful lives as follows:
Impairment of tangible and intangible assets excluding goodwill
At each balance sheet date, the Group reviews the carrying
amounts of its tangible and intangible assets to determine
whether there is any indication that those assets have suffered
an impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the
extent of the impairment loss (if any). Where the asset does
not generate cash flows that are independent from other
assets, the Group estimates the recoverable amount of the
cash-generating unit to which the asset belongs.
Governance
On disposal of a subsidiary, associate or jointly controlled
entity, the attributable amount of goodwill is included in the
determination of the profit or loss on disposal.
Freehold buildings – 50 years
Leasehold land and buildings – the lesser of 50 years and
the period of the lease
Plant and equipment – between 3 and 10 years
Business review
For the purpose of impairment testing, goodwill is allocated to
each of the Group’s cash generating units expected to benefit
from the synergies of the combination. Cash-generating units
to which goodwill has been allocated are tested for impairment
annually, or more frequently when there is an indication that the
unit may be impaired. If the recoverable amount of the cashgenerating unit is less than the carrying amount of the unit, the
impairment loss is allocated first to reduce the carrying amount
of any goodwill allocated to the unit and then to the other assets
of the unit pro-rata on the basis of the carrying amount of each
asset in the unit. An impairment loss recognised for goodwill is
not reversed in a subsequent period.
Property, plant and equipment
Property, plant and equipment is stated at cost, net of
depreciation and any provision for impairment. Except for
freehold land and land grants in Malaysia, which are not
depreciated, the cost or valuation of property, plant and
equipment is depreciated on a straight-line basis over its
expected useful life as follows:
Introduction
2 Significant accounting policies continued
Goodwill
Goodwill arising on consolidation represents the excess of the
cost of acquisition over the Group’s interest in the fair value of
the identifiable assets and liabilities of a subsidiary, associate
or jointly controlled entity at the date of acquisition. Goodwill
is recognised as an asset and reviewed for impairment at least
annually. Any impairment is recognised immediately in profit
or loss and is not subsequently reversed.
Yule Catto & Co plc
39
Notes to the consolidated financial statements continued
31 December 2009
Financial assets and financial liabilities are recognised on the
Group’s balance sheet when the Group becomes a party to
the contractual provisions of the instrument.
Introduction
Loans and receivables
Trade receivables
Trade receivables are measured at initial recognition at fair value
and are subsequently measured at amortised cost using the
effective interest rate method. Appropriate allowances for
estimated irrecoverable amounts are recognised in profit or
loss where there is objective evidence that the asset is impaired.
Business review
Amortised costs
Bank borrowings
Interest-bearing bank loans and overdrafts are recorded at the
proceeds received, net of direct issue costs. Finance charges,
including premiums payable on settlement or redemption and
direct issue costs, are accounted for on an accruals basis to
the profit and loss account using the effective interest method
and are added to the carrying amount of the instrument to the
extent that they are not settled in the period in which they arise.
Foreign currencies
In preparing the financial statements of the individual
companies, transactions in currencies other than the entity’s
functional currency are recorded at the rates of exchange
prevailing on the dates of the transactions. At each balance
sheet date, monetary assets and liabilities that are denominated
in foreign currencies are retranslated at the rates prevailing on
the balance sheet date. Non-monetary assets and liabilities
carried at fair value that are denominated in foreign currencies
are translated at the rates prevailing at the date when the
fair value was determined. Non-monetary items that are
measured in terms of historical cost in a foreign currency
are not retranslated.
In order to hedge its exposure to certain foreign exchange risks,
the Group enters into forward contracts and options (see below
for details of the Group’s accounting policies in respect of such
derivative financial instruments).
Governance
Group financial
statements
Trade payables
Trade payables are measured at initial recognition at fair value
and are subsequently measured at amortised cost using the
effective interest rate method.
On consolidation, the assets and liabilities of the Group’s
overseas operations are translated at exchange rates prevailing
on the balance sheet date. Income and expense items are
translated at the average exchange rates for the period unless
exchange rates fluctuate significantly. Exchange differences
arising, if any, are classified as equity and transferred to the
Group’s translation reserve. Such translation differences are
recognised as income or as expenses in the period in which
the operation is disposed of.
Fair value through the income statement
Derivative financial instruments
The Group uses derivative financial instruments to reduce
exposure to foreign exchange risk and interest rate movements.
The Group does not hold or issue derivative financial
instruments for speculative purposes.
Goodwill and fair value adjustments arising on the acquisition
of a foreign entity are treated as assets and liabilities of the
foreign entity and translated at the closing rate. The Group
has elected to treat goodwill and fair value adjustments arising
on acquisitions before the date of transition to IFRSs as
sterling-denominated assets and liabilities.
The use of financial derivatives is governed by the Group’s
policies approved by the Board of directors, which provide
written principles on the use of financial derivatives, as set
out in note 21.
The Group enters into a variety of derivative financial
instruments to manage its exposure to interest rate and foreign
exchange rate risk, including foreign exchange forward
contracts, interest rate swaps and foreign currency options.
Company financial
statements
Impairment of financial assets
At each balance sheet date, the Group reviews the carrying
amounts of its financial assets to determine whether there is
any indication that those assets have suffered an impairment
loss. If any such indication exists, the recoverable amount of
the asset is estimated in order to determine the extent of the
impairment loss (if any).
Finance costs
Finance costs of debt are recognised in the income statement
over the term of such instruments at a constant rate on the
carrying amount. Finance costs that are directly attributable
to the construction of tangible fixed assets are capitalised as
part of the cost of those assets in accordance with IAS 23.
Other information
40
Yule Catto & Co plc
Derivatives are initially recognised at fair value at the date
a derivative contract is entered into and are subsequently
remeasured to their fair value at each balance sheet date.
A derivative with a positive fair value is recognised as a
financial asset whereas a derivative with a negative fair value
is recognised as a financial liability. The resulting gain or loss
is recognised in profit or loss immediately unless the derivative
is designated and effective as a hedging instrument, in which
event the timing of the recognition in profit or loss depends
on the nature of the hedge relationship. The Group designates
certain derivatives as either hedges of highly probable
forecast transactions or hedges of foreign currency risk
of firm commitments (cash flow hedges), or hedges of net
investments in foreign operations.
Cash flow hedge
The effective portion of changes in the fair value of derivatives
that are designated and qualify as cash flow hedges are
deferred in equity. The gain or loss relating to the ineffective
portion is recognised immediately in profit or loss, and
is included in the ‘other gains and losses’ line of the
income statement.
The carrying amount of deferred tax assets is reviewed at each
balance sheet date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow
all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected
to apply in the period when the liability is settled or the asset
is realised. Deferred tax is charged or credited in the income
statement, except when it relates to items charged or credited
directly to equity, in which case the deferred tax is also dealt
with in equity.
Retirement benefit costs
The costs of defined benefit contributions to the Group’s
pension schemes and of augmenting existing pensions are
charged to the income statement on a systematic basis over
the expected period of benefits from employees’ service.
Payments to defined contribution retirement benefit schemes
are charged as an expense as they fall due.
Actuarial gains on the defined benefit schemes are recognised
in full in each period in which they occur. They are recognised
outside of profit or loss and are presented in the statement
of comprehensive income.
For the German schemes, the assets are included within the
assets of the respective companies, as permitted under local
laws. The assets of the other overseas schemes are held
separately from those of the Group.
Yule Catto & Co plc
41
Other information
The UK defined benefit scheme is funded, with the assets of the
scheme held separately from those of the Group, in separate
trustee-administered funds. Company financial
statements
Hedges of net investments in foreign operations
Hedges of net investments in foreign operations are accounted
for similarly to cash flow hedges. Any gain or loss on the
hedging instrument relating to the effective portion of the
hedge is recognised in equity in the foreign currency translation
reserve. The gain or loss relating to the ineffective portion
is recognised immediately in profit or loss, and is included
in the ‘other gains and losses’ line of the income statement.
Deferred tax liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries and
associates, and interests in joint ventures, except where the
Group is able to control the reversal of the temporary difference
and it is probable that the temporary difference will not reverse
in the foreseeable future.
Group financial
statements
Hedge accounting is discontinued when the Group revokes
the hedging relationship, the hedging instrument expires or is
sold, terminated, or exercised, or no longer qualifies for hedge
accounting. Any cumulative gain or loss deferred in equity at
that time remains in equity and is recognised when the forecast
transaction is ultimately recognised in profit or loss. When
a forecast transaction is no longer expected to occur, the
cumulative gain or loss that was deferred in equity is
recognised immediately in profit or loss.
Deferred tax is the tax expected to be payable or recoverable
on differences between the carrying amounts of assets and
liabilities in the financial statements and the corresponding
tax bases used in the computation of taxable profit, and is
accounted for using the balance sheet liability method. Deferred
tax liabilities are generally recognised for all taxable temporary
differences and deferred tax assets are recognised to the extent
that it is probable that taxable profits will be available against
which deductible temporary differences can be utilised. Governance
Amounts deferred in equity are recycled in profit or loss in the
periods when the hedged item is recognised in profit or loss,
in the same line of the income statement as the recognised
hedged item. However, when the forecast transaction that is
hedged results in the recognition of a non-financial asset or
a non-financial liability, the gains and losses previously deferred
in equity are transferred from equity and included in the initial
measurement of the cost of the non-financial asset or nonfinancial liability.
The tax currently payable is based on taxable profit for the year.
Taxable profit differs from net profit as reported in the income
statement because it excludes items of income or expense that
are taxable or deductible in other years and it further excludes
items that are never taxable or deductible. The Group’s liability
for current tax is calculated using tax rates that have been
enacted or substantively enacted by the balance sheet date.
Business review
At the inception of the hedge relationship, the entity documents
the relationship between the hedging instrument and the
hedged item, along with its risk management objectives
and its strategy for undertaking various hedge transactions.
Furthermore, at the inception of the hedge and on an ongoing
basis, the Group documents whether the hedging instrument
that is used in a hedging relationship is highly effective in
offsetting changes in cash flows of the hedged item.
Taxation
The tax expense represents the sum of the tax currently
payable and deferred tax.
Introduction
Hedge accounting
The Group designates certain hedging instruments, which
include derivatives, embedded derivatives and non-derivatives
in respect of foreign currency risk, as either cash flow hedges,
or hedges of net investments in foreign operations. Hedges
of foreign exchange risk on firm commitments are accounted
for as cash flow hedges.
31 December 2009
Provisions
Provisions for warranty costs are recognised at the date of
sale of the relevant products, at the directors’ best estimate
of the expenditure required to settle the Group’s liability.
Introduction
Provisions for restructuring costs are recognised when the
Group has a detailed formal plan for the restructuring that
has been communicated to affected parties.
Revenue recognition
Revenue is measured at the fair value of the consideration
received or receivable and represents amounts receivable for
goods and services provided in the normal course of business,
net of discounts, VAT and other sales-related taxes.
Special items
The following are disclosed separately in note 3 as special
items in order to provide a clearer indication of the Group’s
underlying performance:
• Non-recurring items;
• Mark to market adjustments in respect of cross currency
and interest rate derivatives used for hedging purposes
where IAS 39 hedge accounting is not applied;
• Revaluation of US dollar loan notes from the rate of the
related cross currency swaps to the year end rate.
Sales of goods are recognised when goods are delivered and
title has passed, where delivery is defined in accordance with
Incoterms 2000.
The Group has applied the requirements of IFRS 2 Share-based
Payments. In accordance with the transitional provisions,
IFRS 2 has been applied to all grants of equity instruments after
7 November 2002 that were unvested as of 1 January 2006.
Critical accounting judgements and key sources
of estimation uncertainty
In the process of applying the Group’s accounting policies,
which are described above, management has made the
following judgements and estimates that have the most
significant effect on the amounts to be recognised in the
Governance
The Group issues equity-settled share-based payments to
certain employees. Equity-settled share-based payments
are measured at fair value at the date of grant. The fair value
determined at the grant date of the equity-settled share-based
payments is expensed on a straight-line basis over the vesting
period, based on the Group’s estimate of shares that will
eventually vest.
Determining whether goodwill is impaired requires an estimation
of the value in use of the cash-generating units to which
goodwill has been allocated. The value in use calculation
requires the entity to estimate the future cash flows expected
to arise from the cash-generating unit and a suitable discount
rate in order to calculate present value.
Definitions
Total sales
Total sales represent the total of revenue from Yule Catto &
Co plc, its subsidiaries, and its share of the revenue of
joint ventures.
Post retirement benefit obligations
Included in the actuaries’ calculation of the post retirement
benefit obligations are a number of assumptions. These are
shown in detail in note 24.
Group financial
statements
Business review
Net borrowings
Net borrowings represents cash and cash equivalents together
with short and long term borrowings, as adjusted for the effect
of related derivative instruments irrespective of whether they
qualify for hedge accounting.
Operating profit
Operating profit represents profit before financing costs
and taxation. Company financial
statements
EBITDA
EBITDA is calculated as operating profit before depreciation,
amortisation and non-recurring items.
Non-recurring items
Non-recurring items includes those items that are not directly
or indirectly associated with the Group’s post-tax trading
performance, which need to be separately disclosed in order
to enable improved understanding of the accounts by users.
Non-recurring items are defined as:
Other information
• Profit or loss impact arising from the sale or closure
of an operation;
• Impairment of non-current assets; and
• Other non-operating or one-off items.
42
Yule Catto & Co plc
Current tax liability
When calculating the current tax liability an appropriate estimate
has been made regarding the outstanding items in respect
of previous years with various tax authorities for which the
outcome of discussions is uncertain.
Closure of manufacturing sites
Included in costs to close the manufacturing sites are estimates
for redundancy, decontamination and dismantling costs. These
estimates are based on experience gained in previous closures.
3 Special items
The special items are made up as follows:
–
(2,406)
(30,000)
(4,401)
(34,401)
9,345
(25,056)
(2,406)
8,615
6,209
–
6,209
772
52,900
22
3,652
3,674
4,113
20,067
24,180
(6)
–
3,668 (884)
(728)
22,568
4 Segmental analysis
The Group has adopted IFRS 8 Operating Segments with effect from 1 January 2009. IFRS 8 requires operating segments to be
identified on the basis of internal reports about components of the Group that are regularly reviewed by the Executive Committee
to allocate resources to the segments and assess their performance. Following the adoption of IFRS 8, the identification of the
Group’s reportable segments has not changed. The Group has three operating divisions being Polymer Chemicals, Pharma
Chemicals and Impact Chemicals.
IFRS
£’000
Company financial
statements
Analysis by activity
Continuing activity
Polymer Chemicals
439,098
– 439,098
52,510
–
52,510
Share of Polymer joint ventures
15,450
–
15,450
1,242
–
1,242
454,548
– 454,548
53,752
–
53,752
Pharma Chemicals
65,296
–
65,296
5,571
(30,000)
(24,429)
Impact Chemicals
23,554
–
23,554
1,967
–
1,967
Total sales
543,398
– 543,398
Divisional operating profit
61,290
(30,000)
31,290
Unallocated corporate expenses
(9,884)
–
(9,884)
Operating profit
51,406
(30,000)
21,406
Group financial
statements
Total sales
Operating profit
Underlying Special Underlying
Special
performance
items
IFRS performance
items
2009
£’000
£’000
£’000
£’000
£’000
Governance
(30,000)
–
Business review
Finance costs
Fair value adjustment (see note 8)
(Loss)/profit before taxation from continuing operations
Taxation
(Loss)/profit for the year from continuing operations
Total sales
Revenue of operations sold or closed during the year
Operating profit of discontinued operations
Operating profit of operations sold or closed during the year
Profit arising from the sale or closure of operations (see note 7)
Taxation
Taxation on operating profit of operations sold or closed during the year Taxation on profit arising from the sale or closure of operations
Profit for the year from discontinued operations
2008
£’000
Introduction
Operating loss
Impairment of goodwill (see note 14)
Loss arising from the sale or closure of operations (see note 7)
2009
£’000
Other information
Yule Catto & Co plc
43
31 December 2009
4 Segmental analysis continued
Total sales
Operating profit
Underlying Special Underlying
Special
performance
items
IFRS performance
items
2008
£’000
£’000
£’000
£’000
£’000
Introduction
Business review
Continuing activity
Polymer Chemicals
489,350
–
489,350
17,780
–
17,780
507,130
–
507,130
Pharma Chemicals
63,891
–
63,891
Impact Chemicals
31,132
–
31,132
Total sales
602,153
–
602,153
Divisional operating profit
Unallocated corporate expenses
Operating profit
IFRS
£’000
40,829
1,615
42,444
5,265
1,634
–
–
–
(1,756)
(650)
40,829
1,615
42,444
3,509
984
49,343
(6,151)
43,192
(2,406)
–
(2,406)
46,937
(6,151)
40,786
Special items
Unallocated
Pharma
Impact
expenses
Chemicals Chemicals
corporate
Total
2009
£’000
£’000
£’000
£’000
(30,000)
–
–
Governance
Unallocated
Pharma
Impact
corporate
Chemicals
Chemicals
expenses
2008
£’000
£’000
£’000
Loss arising from the sale or closure of operations
(1,756)
(650)
–
(30,000)
Total
£’000
(2,406)
Depreciation
Total Total
Capital
and
assets
liabilities expenditure amortisation
2009
£’000
£’000
£’000
£’000
Group financial
statements
Company financial
statements
Continuing activity
Polymer Chemicals
181,537
Pharma Chemicals
64,151
Impact Chemicals
8,340
254,028
Holding companies
18,594
272,622
7,013
Goodwill (see note 14)
124,027
Net borrowings
403,662
Net assets
Other information
44
Yule Catto & Co plc
(154,221)
(20,893)
(16,766)
(191,880)
(56,231)
(248,111)
(3,368)
(97,646)
(349,125)
54,537
(3,772)
(3,219)
(292)
(7,283)
(33)
(7,316)
(9,720)
(4,545)
(76)
(14,341)
(411)
(14,752)
4 Segmental analysis continued
Depreciation
Total Total
Capital
and
assets
liabilities expenditure amortisation
2008
£’000
£’000
£’000
£’000
Total sales
2009
2008
£’000
£’000
(161,448)
(448,984)
66,692
Segment net assets
2009
2008
£’000
£’000
(164,506) 130,578
50,226
11,858
28,156
124,027
(97,646)
54,537
(9,372)
(9,658)
(3,213)
(22,243)
4,679
(17,564)
(102,209) 104,044
62,775
9,503
74,113
154,027
(161,448)
66,692
Capital expenditure
2009
2008
£’000
£’000
2,646
5,562
10,750
2,154
21,112
2009
£’000
2008
£’000
Analysis of total sales by destination
United Kingdom
Other Europe
Asia
Africa and Middle East
Rest of World
71,753
198,053
160,123
63,654
49,815
543,398
84,132
217,680
181,451
68,898
49,992
602,153
2009
Polymer Pharma
Chemicals Chemicals
£’000
£’000
Impact
Chemicals
£’000
–
–
–
–
–
–
231
231
–
–
–
–
2008
Polymer Chemicals
£’000
Pharma
Chemicals
£’000
Impact
Chemicals
£’000
Polymer Chemicals
Pharma Chemicals
Impact Chemicals
Total
–
–
–
–
–
–
2,192
2,192 –
551
–
551 Yule Catto & Co plc
–
–
231
231
Total
£’000
–
551
2,192
2,743
45
Other information
Polymer Chemicals
Pharma Chemicals
Impact Chemicals
Total
Total
£’000
Company financial
statements
Inter-segmental sales
In addition to the amounts included above, inter segmental sales of £231,000 (2008 £2,743,000) were made as set out below.
These sales were eliminated on consolidation.
Group financial
statements
1,323
2,827
1,373
1,793
7,316
Governance
Analysis by region of operation
United Kingdom
165,454
182,043
Other Europe
183,424
209,007
Asia
154,830
178,327
Rest of World
39,690
32,776
543,398
602,153
Goodwill
Net borrowings
Net assets
(14,815)
(4,823)
(1,327)
(20,965)
(147)
(21,112)
Business review
Geographical information
(152,764)
(31,004)
(21,558)
(205,326)
(75,848)
(281,174) (6,362)
Introduction
Continuing activity
Polymer Chemicals
215,098
Pharma Chemicals
75,324
Impact Chemicals
20,387
310,809
Holding companies
39,604
350,413
11,236
Goodwill (see note 14)
154,027
Net borrowings
Net assets
515,676
31 December 2009
5 Operating profit
2009
£’000
Introduction
Business review
JointCompany and
ventures
Total subsidiaries
2009
2009
2008
£’000
£’000
£’000
Joint
ventures
2008
£’000
Total
2008
£’000
584,373
(471,626)
112,747
(45,075)
(26,095)
(2,406)
39,171
17,780
(14,438)
3,342
(1,013)
(714)
–
1,615
602,153
(486,064)
116,089
(46,088)
(26,809)
(2,406)
40,786
2009
£’000
2008
£’000
Operating profit is stated after charging the following:
Depreciation
Amortisation
Hire of plant and equipment
Other lease rentals
Research and development expenditure
Loss arising from the sale or closure of operations
14,345
331
2,001
3,047
9,584
–
30,000
15,336
102
1,570
2,790
10,172
2,406
–
2009
£’000
2008
£’000
7
7
409
416
36
25
61
478
485
55
34
89
Total sales
Cost of sales
Gross profit
Distribution costs
Administrative expenses
Special items
Operating profit
527,948
(403,052)
124,896
(42,027)
(32,705)
(30,000)
20,164
15,450
(12,317)
3,133
(942)
(949)
–
1,242
543,398
(415,369)
128,029
(42,969)
(33,654)
(30,000)
21,406
6 Auditors’ remuneration
Governance
Fees payable to the Company’s auditors for:
– audit of the Company’s annual accounts
Fees payable to the Company’s auditors and their associates for:
– audit of the Company’s subsidiaries pursuant to legislation
Total audit fees
Tax services
Other services
Total non-audit fees
Group financial
statements
The other services provided by the Group auditors relate to assistance given in grant applications and sundry projects.
7 Profit/(loss) arising from the sale or closure of an operation
Company financial
statements
Other information
Closure of Uquifa’s Italian manufacturing site
Restructuring of William Blythe Limited
Sale of Oxford Chemicals Ltd
Write back of excess provision of Holliday Encres SA
Costs associated with prior year disposals
Closure of Holliday Pigments UK manufacturing site
Closure of James Robinson’s German manufacturing site
Sale of James Robinson Limited and James Robinson GmbH
Sale of James Robinson India Pvt Ltd
Sale of Holliday Pigments SA and Holliday France SA Sale of Holliday Chemical Espana SA
Sale of PFW Aroma Chemicals BV
Sale of Hull site
Sale of Dieburg site
2009
£’000
2008
£’000
–
–
–
(1,756)
(650)
(2,406)
3,944 371 (663)
–
–
–
–
–
–
–
–
–
3,652 3,652 –
–
–
450
4,523
5,637
(362)
8,265
409
(774)
1,351
568
20,067
17,661
In each case, assets retained that cannot be sold are written off. To the extent that workers are not redeployed, termination terms
are agreed.
46
Yule Catto & Co plc
8 Finance costs
2009
£’000
2008
£’000
Interest payable on bank loans and overdrafts
Interest payable on other loans
Less: interest receivable
Net interest payable
Fair value adjustment
Total finance costs
6,789
3,519
10,308
(439)
9,869
4,401
14,270
11,219
4,764
15,983
(5,481)
10,502
(8,615)
1,887
Introduction
The fair value adjustment is the mark to market adjustment in respect of cross currency and interest rate derivatives used for
hedging purposes where IAS 39 hedge accounting is not applied.
9 Current taxation
2009
£’000
2008
£’000
(11)
8,657
8,646
(103)
4,278
4,175
(385)
8,261
(9,345)
(1,084)
729
4,904
–
4,904
Tax on special items – UK
Tax on special items – overseas
Tax charge for the year on discontinued operations
6
–
6
–
1,612
1,612
2009
£’000
2008
£’000
Tax expense
Total tax expense
(1,084)
6
(1,078)
4,904
1,612
6,516
2009
£’000
2008
£’000
Yule Catto & Co plc
47
Other information
Profit before taxation – continuing operations
7,136
38,899
Profit before taxation – discontinued operations
3,674
24,180
Profit before taxation
10,810
63,079
Tax on profit before taxation at standard UK corporation tax rate of 28% (2008 28.5%)
3,027
17,978
Effects of:
Expenses not deductible for tax purposes
727
1,409
Tax incentives and items not subject to tax
(5,718)
(12,061)
Losses not recognised less utilisation of losses not previously recognised
988
(639)
Lower tax rates on overseas earnings
(7)
(171)
Other deferred tax asset not recognised less amounts now recognised
458
–
Adjustments to tax charge in respect of prior periods
(501)
–
Effect of change of rate on deferred tax
(52)
–
Tax charge for year
(1,078)
6,516
Company financial
statements
Reconciliation of tax expense to profit before taxation
The differences between the total tax expense shown above and the amount calculated by applying the standard rate of UK
corporation tax to the profit before tax is as follows.
Group financial
statements
UK corporation tax is calculated at 28% (2008 28.5%) of the estimated assessable profit for the year. Taxation for other jurisdictions
is calculated at the rates prevailing in the respective jurisdictions.
Governance
Current tax
UK corporation tax
Overseas taxation
Deferred tax
Origination and reversal of temporary differences
Special items (see note 3)
Total tax on profit before taxation
Business review
31 December 2009
9 Current taxation continued
Tax charges to equity
Introduction
2009
£’000
Deferred tax (credit)/charge on items recognised directly in equity
(306)
(306)
Current tax liabilities
Current tax liabilities
2009
£’000
(34,556)
2008
£’000
48
48
2008
£’000
(44,528)
Business review
10 Deferred taxation
Deferred tax assets have been recognised in respect of all tax losses and other temporary differences giving rise to deferred tax
assets to the extent that it is probable that these assets will be recovered. No deferred tax is recognised on the unremitted earnings
of overseas subsidiaries and joint ventures. As the earnings are continually reinvested by the Group, no tax is expected to be payable
on them in the foreseeable future.
The movements in deferred tax assets and liabilities (prior to offset) are shown below.
Deferred tax liabilities
Accelerated
tax depreciation
2009
£’000
Governance
At 1 January
Charge to income statement
Transfer from current tax liability
Exchange adjustment
At 31 December
Deferred tax assets
2009
Group financial
statements
At 1 January
Charged to income statement
Charged through retained earnings
At 31 December
(4,702)
1,416
(2,554)
272
(5,568)
Pensions
£’000
457 (672)
306
91 Other
£’000
Total
£’000
(2,197)
(1,407)
–
128
(3,476)
(6,899)
9
(2,554)
400
(9,044)
Other
£’000
Total
£’000
–
1,048 –
1,048 457
376
306
1,139
All of the deferred tax assets were available for offset against deferred tax liabilities and hence the net deferred tax provision
at 31 December 2009 is as follows:
Net deferred tax liability
Company financial
statements
Total
£’000
At 31 December 2009
At 31 December 2008
(7,905)
(6,442)
Deferred tax asset not recognised
Deferred tax has not been recognised where it has been assumed that the deferred tax asset is not recoverable. The amounts of
deferred tax not recognised at the balance sheet dates are as follows:
Other information
2009
£’000
UK pension liability
Tax losses
Accelerated capital allowances
Other timing differences
19,589 8,136 18,747 628 47,100
48
Yule Catto & Co plc
2008
£’000
16,920
957
10,139
2,434
30,450
10 Deferred taxation continued
Deferred tax on unremitted overseas earnings
The estimated deferred tax relating to the retained profits held within subsidiary Group companies and not yet remitted, excluding
any mitigation through use of loss relief, double taxation credits and other reliefs is as follows:
79,832 87,548
At the balance sheet date, the aggregate amount of temporary differences associated with undistributed earnings of subsidiaries,
associates and joint ventures was £79.4 million (2008 £88.2 million). Calculation of the potential deferred tax liability has not been
undertaken as the Group is in a position to control the timing of the reversal of the temporary differences and it is probable that
the differences will not reverse in the foreseeable future. If the temporary differences were to reverse in the future, it is probable
that the majority of the potential tax liability would be covered by tax credits in respect of tax paid locally.
11 Dividends
Ordinary
– prior year final of nil pence per share (2007 5.7 pence)
– interim of nil pence per share (2008 4.0 pence)
12 Earnings per share
2008
£’000
2009
£’000
–
–
–
8,303
5,826
14,129
2008
Special
items
£’000
From Continuing operations
Earnings (Profit attributable to
equity holders of the parent)
Earnings per share
Diluted earnings per share
31,074 21.3p 20.8p (25,056)
(17.2)p
(16.8)p
6,018 4.1p 4.0p 26,068 17.9p 17.8p 6,209 4.3p 4.2p 32,277
22.2p
22.0p
From Continuing and discontinued operations
Earnings (Profit attributable to
equity holders of the parent)
Earnings per share
Diluted earnings per share
31,074 21.3p 20.8p (21,388)
(14.7)p
(14.3)p
9,686 6.6p 6.5p 26,068 17.9p 17.8p 28,777 19.8p 19.6p 54,845
37.7p
37.4p
IFRS
£’000
Earnings per share are calculated using the weighted average number of shares in issue during the year of 145,660,000
(2008 145,645,000).
Group financial
statements
2009
Special Underlying
items
IFRS performance
£’000
£’000
£’000
Governance
Underlying performance
£’000
Business review
Introduction
Deferred tax liability not recognised
2008
£’000
2009
£’000
Diluted earnings per share are calculated using the weighted average number of shares in issue in the year as adjusted for dilutive
share options of 149,382,000 (2008 146,653,000).
2009
Number
2008
Number
1,435 421 155 34 2,045 48 2,093 1,497
458
438
41
2,434
51
2,485
2009
£’000
2008
£’000
The aggregate remuneration of all Group employees comprised:
Wages and salaries
Social security costs
51,600 7,866 4,208 63,674 57,990
9,948
5,225
73,163
Yule Catto & Co plc
49
Other information
The average monthly number of employees during the year by activity was:
Polymer Chemicals
Pharma Chemicals
Impact Chemicals
Holding companies
Share of joint ventures
Company financial
statements
13 Employees
31 December 2009
14 Goodwill
Introduction
Business review
Cost
At 1 January
Recognised on acquisition of a subsidiary
Derecognised on disposal of a subsidiary
At 31 December
Accumulated impairment losses
At 1 January
Impairment losses for the year
Derecognised on disposal of a subsidiary
At 31 December
Net book value
At 31 December
2009
£’000
2008
£’000
263,939
–
–
263,939
309,371
412
(45,844)
263,939
109,912
30,000
–
139,912
136,928
–
(27,016)
109,912
124,027
154,027
The Group tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be impaired.
Cash Generating Units (‘CGU’) comprise primarily acquired entities monitored at business unit level. The exception is where
management monitor a CGU across similar businesses as a whole or components of businesses largely independent of
other parts of those businesses.
The allocation of the carrying value of goodwill is represented below.
Governance
31 December 31 December
31 December 2009
2007
2008 Impairment Net book
Net book during the Net book
value
value
year
value
£’000
£’000
£’000
£’000
Group financial
statements
Company financial
statements
Polymer Chemicals
Synthomer Ltd and Harlow Chemical Company Ltd
Synthomer GmbH
Synthomer Hasselt BV
Synthomer Vietnam Co Ltd
Pharma Chemicals
Uquifa Spain SA and Uquifa Mexico SACV
Impact Chemicals
Holliday Chemical Espana SA
Holliday France SA
Holliday Pigments Ltd and SA
James Robinson GmbH
Other
Total
70,521
13,120
3,089
–
86,730
70,521
13,120
3,089
412
87,142
–
–
–
–
–
70,521
13,120
3,089
412
87,142
66,885
66,885
66,885
66,885
(30,000)
(30,000)
36,885
36,885
97
136
14,977
3,382
236
18,828
172,443
–
–
–
–
–
–
154,027
–
–
–
–
–
–
(30,000)
–
–
–
–
–
–
124,027
In compiling the above table, the recoverable amounts for the CGUs are determined from value in use calculations, based upon
discounted cash flows. The key assumptions for the discounted cash flow calculations are those regarding the discount rate, profit
and growth rate. Management estimates pre-tax discount rates that reflect current market assessments of the time value of money
and the risks specific to each CGU. A discount rate of 9.0% has been used. The profit used in the cash flows for the first year is
derived from management forecasts, for years 2 to 10 a growth rate is applied. The profit for year 10 is then assumed to apply
without further growth into perpetuity. Growth rates of between 4.0% and 5.0% have been used, representing management’s best
estimate of each CGU’s circumstances, and these do not exceed average long-term growth rates for the markets concerned.
Other information
The Pharma Chemicals CGU’s have been combined reflecting the amalgamation of the management of Uquifa Spain SA and Uquifa
Mexcis SACV. A £30 million impairment has been recognised in this CGU to reduce the carrying value to management best estimate
of the recoverable amount using the methodology above.
With the exception of Pharma Chemicals the Group has conducted a sensitivity analysis on the impairment of each CGUs
carrying value. A cut in the growth rate to zero percent would not result in the carrying value of goodwill being reduced below
its recoverable amount.
50
Yule Catto & Co plc
15 Other intangible assets
Expenditure on research activities is recognised as an expense in the period in which it is incurred.
No development expenditure met the requirements to be recognised as an internally generated intangible asset, therefore all
development costs in the period were expensed.
6,163 (626)
72 (58)
5,551 215 –
–
–
215 6,378
(626)
72
(58)
5,766
5,294
(620)
331
(58)
4,947
215
–
–
–
215
5,509
(620)
331
(58)
5,162
604 –
604
Environmental
licences
£’000
Total
£’000
215 –
–
–
215 6,319
1,024
579
(1,544)
6,378
5,513
983
102
(1,304)
5,294
215
–
–
–
215
5,728
983
102
(1,304)
5,509
869 –
869
Group financial
statements
6,104 1,024 579 (1,544)
6,163 Governance
Software
£’000
Cost
At 1 January 2008
Exchange adjustments
Additions
Disposals
At 31 December 2008
Accumulated amortisation and impairment
At 1 January 2008
Amortisation charge for the year
Disposals
At 31 December 2008
Net book value
At 31 December 2008
Total
£’000
Business review
Cost At 1 January 2009
Additions
Disposals
At 31 December 2009
Accumulated amortisation and impairment
At 1 January 2009
Amortisation charge for the year
Disposals
At 31 December 2009
Net book value
At 31 December 2009
Environmental
licences
£’000
Introduction
Software
£’000
16 Property, plant and equipment
Plant and
equipment
£’000
Total
£’000
Yule Catto & Co plc
51
Other information
Cost
At 1 January 2009
61,977 4,575 3,899 332,041 402,492
(3,139)
(2)
(519)
(13,914)
(17,574)
Additions
1,252 –
1,051 4,941 7,244
Disposals
(788)
–
–
(2,602)
(3,390)
At 31 December 2009
59,302 4,573 4,431 320,466 388,772
Accumulated depreciation and impairment
At 1 January 2009
23,724 2,217 426 258,019 284,386
(785)
–
(62)
(9,916)
(10,763)
Depreciation charge for the year 1,031 129 149 13,112 14,421
Disposals
(314)
–
–
(2,773)
(3,087)
At 31 December 2009
23,656 2,346 513 258,442 284,957
Net book value
At 31 December 2009
35,646 2,227 3,918 62,024 103,815
Company financial
statements
Land and buildings
Leaseholds
Freeholds
Long
Short
£’000
£’000
£’000
31 December 2009
16 Property, plant and equipment continued
Land and buildings
Leaseholds
Freeholds
Long
Short
£’000
£’000
£’000
Introduction
Business review
Cost
At 1 January 2008
Additions
Assets written off on closure of business
Disposals
Reclassified as held for sale
At 31 December 2008
Accumulated depreciation and impairment
At 1 January 2008
Depreciation charge for the year
Assets written off on closure of business
Disposals
On assets reclassified as held for sale
At 31 December 2008
Net book value
At 31 December 2008
Plant and
equipment
£’000
Total
£’000
53,305 17,260 331 1,939 (6,609)
(4,249)
61,977 4,598 18 102 –
(143)
–
4,575 1,534 1,370 995 –
–
–
3,899 313,257 52,797 19,105 396 (45,356)
(8,158)
332,041 372,694
71,445
20,533
2,335
(52,108)
(12,407)
402,492
22,665 3,081 1,198 –
(2,306)
(914)
23,724 2,100 2
125 –
(10)
–
2,217 104 140 182 –
–
–
426 239,357 43,395 15,957 166 (33,665)
(7,191)
258,019 264,226
46,618
17,462
166
(35,981)
(8,105)
284,386
38,253 2,358 3,473 74,022 118,106
Freehold land amounting to £9,357,000 (2008 £9,357,000) has not been depreciated.
Governance
Of the depreciation charge for the year £76,000 (2008 £2,126,000) relates to discontinued operations.
17 Investment in joint ventures
Group financial
statements
At 1 January
Share of non-current assets
Share of current assets
Share of current liabilities
Share of income
Share of expenses
Tax
Dividends paid during the year
Retained (loss)/profit
2008
£’000
2008
£’000
1,091
10,219
(6,362)
4,948
15,450
17,780
(14,096)
(16,113)
1,354
1,667
(112)
(52)
(1,899)
(816)
(493)
972
(1,150)
1,771
975
6,439
(4,237)
3,177
2009
£’000
Company financial
statements
At 31 December
Share of non-current assets
Share of current assets
Share of current liabilities
A list of principal subsidiary undertakings and joint ventures is given on page 77.
Other information
52
Yule Catto & Co plc
2009
£’000 1,028
6,135
(3,365)
3,798
1,091
10,219
(6,362)
4,948
18 Inventories
2009
£’000
Raw materials and consumables
Work in progress
Finished goods
22,750 1,398 31,997 56,145 2008
£’000
27,584
1,677
34,246
63,507
The value of stock written off during the year was £853,000 (2008 £1,780,000).
There is no material difference between the balance sheet value of inventories and their replacement cost.
19 Trade and other receivables
2009
£’000
Trade receivables
Amounts owed by joint ventures
Other receivables
Prepayments and accrued income
86,468 395 7,793 4,350 99,006 2008
£’000
108,140
390
11,522
6,084
126,136
The directors consider that the carrying amount of trade and other receivables approximates to their fair value.
Before accepting a new customer, the Group uses appropriate procedures to assess the potential customer’s credit quality
in order to set a credit limit.
Ageing of trade receivables
2009
£’000
Not yet due
0-60 days overdue
61-120 days overdue
Over 120 days due
Less: provision for impairment
74,844 11,854 986 2,140 89,824 (3,356)
86,468 2008
£’000
88,290
18,793
2,356
1,423
110,862
(2,722)
108,140
Group financial
statements
Governance
Credit risk
Amounts presented in the balance sheet are net of allowances for doubtful receivables, estimated by the Group’s management
based on prior experience and their assessment of the current economic environment. The Group has no significant concentration
of credit risk, with exposure spread over a large number of customers.
Business review
Introduction
Provision for impairment of receivables
2009
2008
£’000
£’000
2,722 11 733 (110)
–
3,356 1,775
320
906
(263)
(16)
2,722
Company financial
statements
At 1 January
Charge for the year
Amounts written off as uncollectible
Amounts recovered previously written off
At 31 December
The provision is predominantly against trade receivables more than 61 days overdue.
Other information
Yule Catto & Co plc
53
31 December 2009
20 Cash and borrowings
Cash pooling
The Group runs notional pooling facilities in a number of countries, principally the UK. The structure facilitates interest and balance
compensation of cash and bank overdrafts. This notional pooling does not meet the strict set-off rules under IFRS, and as a result
the cash and bank overdraft balances must be reported ‘gross’ on the balance sheet.
Introduction
The table below shows the impact of netting the cash and overdraft balances in each of the pooled facilities. It is the opinion of the
directors that this treatment reflects the commercial reality of the Group’s position with its banks.
2009
2008
Bank loans Bank loans
and and
Cash overdrafts
Cash
overdrafts
£’000
£’000
£’000
£’000
Business review
As disclosed under IFRS
Notional pooling adjustment
Underlying position
42,384 –
42,384 (3,608)
–
(3,608)
26,576 (6,986)
19,590 (20,844)
6,986
(13,858)
2009
2008
£’000
£’000
Governance
Group financial
statements
Company financial
statements
Current borrowings
Bank loans
Bank loans and overdrafts
Malaysian ringgits 100 million six-year amortising term loan
3,608 2,372 20,844
–
Other loans
$136,000,000 7.66% Guaranteed Senior Unsecured Notes due 8 September 2010
£15,000,000 6.99% Guaranteed Senior Unsecured Notes due 8 September 2010
Less: capitalised costs
27,949 5,000 38,929 (5)
38,924 32,168
5,000
58,012
(40)
57,972
Bank loans
Unsecured £30m revolving credit facility expiring 2011
Malaysian ringgits 100 million six-year amortising term loan
Other bank loans
–
15,936 1,283 –
–
–
Other loans
–
–
26,996 43,948 13,812 101,975 (869)
101,106 32,168
5,000 29,698
48,346
15,195
130,407
(355)
130,052 Bank loans are denominated in a number of currencies and bear interest based on LIBOR or foreign equivalents or government
bond rates appropriate to the country in which the borrowing is incurred.
At 31 December 2009, the Group had available £30 million (2008 £30 million) of undrawn committed borrowing facilities in respect
of which all conditions precedent had been met.
Other information
54
Yule Catto & Co plc
20 Cash and borrowings continued
The directors calculate the carrying value of the Group’s borrowings as follows:
Analysis of borrowings at carrying value by currency
Sterling
£’000
US dollar
£’000
Euro
£’000
Other
£’000
Total
£’000
20,844
167,575
(395)
188,024
(26,576)
161,448
(25,966)
135,482
Cash and cash equivalents comprise cash at bank and other short term highly liquid investments with a maturity of three months
or less.
The special item represents the revaluation of US dollar loan notes from the rate of the related cross currency swaps to the year
end rate, together with the transitional adjustment required to reflect movements in fair value caused by variations in interest rates,
and subsequent amortisation thereof, to the extent that these constituted effective hedges prior to the adoption of IFRS.
The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while maximising the
return to stakeholders through the optimisation of the debt and equity balance. The capital structure of the Group consists of debt,
which includes the cash and borrowings disclosed in note 20, and equity attributable to equity holders of the parent, comprising
issued capital, reserves and retained earnings, as disclosed in note 26.
It is, and has been throughout the period under review, the Group’s policy that no trading in financial instruments shall be undertaken.
Company financial
statements
The Group’s principal financial instruments comprise borrowings, some cash and liquid resources and various items, such as
trade debtors and trade creditors, that arise directly from its operations. The Group also uses interest rate swaps, currency swaps
and forward foreign currency contracts to manage the interest rate and currency risks arising from the Group’s operations and
its sources of finance.
Group financial
statements
21 Financial instruments
The Group’s treasury function operates procedures designed to reduce or eliminate financial risk and ensure that funds are available
for current and future needs. The policies are approved by the Board and the use of financial instruments is strictly controlled.
Governance
31 December 2008
7,908
4,632
8,255
49
Loan notes
10,000
157,575
–
–
Capitalised costs
(395)
–
–
–
17,513
162,207
8,255
49
Net borrowings
Deduct: special item
Business review
3,608
19,591
117,705
(874)
140,030
(42,384)
97,646
(9,608)
88,038
Introduction
31 December 2009
–
14
3,410
184
Bank loans
–
–
1,283
18,308
Loan notes
5,000
112,705
–
–
Capitalised costs
(874)
–
–
–
4,126
112,719
4,693
18,492
Net borrowings
Other information
Yule Catto & Co plc
55
31 December 2009
21 Financial instruments continued
Set out below is a comparison by category of book values and fair values of the Group’s financial assets and liabilities:
Introduction
Carrying values at 31 December
2009
2008
£’000
£’000
Fair values
at 31 December
2009
2008
£’000
£’000
Business review
Fair value of financial assets
Trade and other receivables excluding prepayments
94,656
120,052 94,656 120,052
42,384
26,576
42,384
26,576
Derivatives at fair value
11,763
33,887
11,763
33,887
148,803
180,515
148,803
180,515
Fair value of financial liabilities
Loan notes
116,831
167,180 96,371
124,225
23,199
20,844 23,199 20,844 Trade and other payables
125,825
152,788 125,825 152,788 265,855
340,812
245,395
297,857
Fair values have been obtained from the relevant institutions where appropriate. Where market values are not available, fair values
of financial assets and financial liabilities have been calculated by discounting expected future cash flow at prevailing interest rates
and by applying year end exchange rates. The carrying amount of short-term borrowings approximates to book value.
The fair value of the Group’s financial instruments are measured using inputs other than quoted prices that are directly
or indirectly observable.
Governance
The main risks arising from the Group’s financial instruments are market risk and liquidity risk. The Board reviews and agrees
policies for managing each of these risks and they are summarised below, together with related disclosure required by IFRS.
Market risk
The Group’s main exposure to market risk is in the form of interest rate risk and foreign currency risk. The policies adopted to
address these risks are as follows:
Group financial
statements
Interest rate risk
The Group finances its operations through a mixture of retained profits, loan notes and bank borrowings. The Group borrows at
both fixed and floating rates of interest and uses interest rate swaps to generate the desired interest profile in order to manage the
Group’s exposure to interest rate fluctuations.
Foreign currency risk
The Group uses currency borrowings, forward contracts and currency swaps to hedge overseas net assets, which are
predominantly denominated in euros. Profit translation exposures are not hedged.
Company financial
statements
The Group hedges currency transaction exposures at the point of confirmed order, using forward foreign exchange contracts.
The Group’s policy is, where practicable, to hedge all exposures on monetary assets and liabilities. Consequently, there are no
material currency exposures to disclose (2008 none).
Impact on income statement
Changes in the fair value of derivative contracts amounting to £4,400,652 have been charged to the income statement in the year
(2008 credit of £8,614,461). These changes are shown separately as a special item in the consolidated income statement.
Other information
56
Yule Catto & Co plc
Hedge accounting
The Group has a number of cross currency and interest rate swaps that are used to reduce the exposure to interest rate and
currency risk.
Introduction
These swaps are fully effective at eliminating the risks they address.
The Group has reviewed the requirements necessary to permit the application of hedge accounting under IAS 39. It has
concluded that the costs involved in meeting these requirements cannot be justified and therefore IAS 39 hedge accounting
will not be applied.
Business review
Changes in the fair value of derivative financial instruments to which hedge accounting is not applied are recognised in the
income statement as they arise.
Given the recent volatility in currency rates the Group has taken out forward foreign exchange contracts to fix the euro value
of a percentage of the anticipated US dollar sales. These contracts have been accounted for as cash flow hedges as permitted
by IAS 39. Interest rate risk profile
Financial liabilities
After taking into account the various interest rate and currency swaps entered into by the Group, the currency and interest rate
exposure of the Group as at 31 December 2009 was:
Sterling
2,223 Euro
4,693 US dollar
14 Other
18,492 25,422 Cash and cash equivalents
105,000 –
–
–
105,000 Fixed rate
borrowings
2008
£’000
107,223 24,122 125,000 4,693 8,255 –
14 4,632
–
18,492 49 –
130,422 37,058 125,000 (42,384)
88,038 Total
borrowings
2008
£’000
149,122
8,255 4,632
49
162,058
(26,576)
135,482
Group financial
statements
The effective interest rate for the year was 6.9% (2008 6.9%).
Sensitivity analysis
The following table illustrates the effect on the income statement and items that are recognised directly in equity that would result
from reasonably possible movements in UK and US interest rates and in euro and US dollar to sterling exchange rates, before the
effect of tax.
2009
2008
Income statement
Equity
Income statement
Underlying IFRS
IFRS Underlying IFRS
-/+ £m
-/+ £m
-/+ £m
-/+ £m
-/+ £m
Equity
IFRS
-/+ £m
0.1 0.1 –
2.4 0.1 3.8 –
–
–
0.2 0.1 –
3.8 0.1 5.9 –
–
–
0.5 –
0.5 1.1 3.2 –
1.1 0.5 1.1 4.5 2.8
–
The foreign currency sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their
translation at the period end for a 10% change in foreign currency rates. The sensitivity analysis includes external loans as well as
loans to foreign operations within the Group where the denomination of the loan is in a currency other than the functional currency
of the lender or borrower.
Yule Catto & Co plc
57
Other information
The interest rate sensitivity analysis has been determined based on the exposure to interest rates for both derivatives and nonderivative instruments at the balance sheet date. For floating rate liabilities, the analysis is prepared assuming the amount of liability
outstanding at the balance sheet date was outstanding for the whole year.
Company financial
statements
Interest rate sensitivity analysis
UK interest rate +/- 1.0%
Euro interest rate +/- 1.0%
US interest rate +/- 1.0%
Foreign currency sensitivity analysis
Euro exchange rate -/+ 10%
US dollar exchange rate -/+ 10%
Governance
Floating rate Fixed rate
Total Floating rate
borrowings borrowings borrowings borrowings
2009
2009
2009
2008
£’000
£’000
£’000
£’000
31 December 2009
Liquidity risk
The objective of the Group is to meet financial commitments as and when they fall due. The Board closely monitors liquidity
through monthly management accounts.
Introduction
At the year end, Yule Catto & Co plc had the following principal facilities:
A committed syndicated bank revolving credit facility of £30 million which expires in December 2011.
Unsecured loan notes totalling approximately £108 million raised from the US private placement market in 1999 and 2004.
With maturity between 2010 and 2016, these loan notes provide the Group’s long-term requirements. Please see note 20
for further details.
A RM 100 million (£18 million) six year amortising loan through its Malaysian subsidiary Synthomer Sdn Bhd.
Business review
The following table details the remaining contractual maturity for non-derivative financial liabilities:
2009
2008
Amount due
Amount due
between between between between
within 1 and 2
2 and 5
after 5
within
1 and 2
2 and 5
one year
years
years
years
Total one year
years years
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
Governance
Non-interest bearing
Trade and
other payables
125,609 Variable interest
rate instruments
Bank loans
and overdrafts
5,980 Fixed interest
rate instruments
Loan notes
33,506 165,095 216 –
3,853 13,366 –
4,069 61,615 74,981 – 125,825 152,621 after 5
years
£’000
Total
£’000
167 –
– 152,788
20,844 –
–
–
12,102 107,223 33,472 12,102 256,247 206,937 33,472 33,639 23,672 23,672 –
23,199 20,844
50,598 141,214 50,598 314,846 The following table details the remaining contractual maturity for non-derivative financial assets:
Group financial
statements
2009
2008
Amount due
Amount due
within 1 and 2
2 and 5
after 5
within
1 and 2
2 and 5
one year
years
years
years
Total one year
years years
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
Company financial
statements
Non-interest bearing
Trade and other
receivables excluding
prepayments
94,656 Variable interest
rate instruments
Cash and
cash equivalents
42,384 137,040 Other information
58
Yule Catto & Co plc
after 5
years
£’000
Total
£’000
–
–
–
94,656 120,052 –
–
– 120,052
–
–
–
–
– 42,384 26,576 – 137,040 146,628 –
–
–
–
– 26,576
– 146,628
The following table details the remaining contractual maturity for its derivative financial instruments:
Interest rate swaps
3,984 Cross currency swaps (3,845)
Foreign exchange
forward contracts
26 165 after 5
years
£’000
Total
£’000
–
(2,370)
–
(4,732)
–
3,984 (333) (11,280)
1,101 (2,964)
1,506 (4,251)
–
(4,275)
–
(1,478)
2,607
(12,968)
–
(2,370)
–
(4,732)
–
(333)
26 (7,270)
232 (1,631)
–
(2,745)
–
(4,275)
–
(1,478)
232
(10,129)
22 Assets held for sale
Assets held for sale in the comparative year related to Oxford Chemicals Limited and land belonging to James Robinson GmbH.
23 Trade and other payables
2008
£’000
2009
£’000
78,961 24,487 22,161 125,609
100,790
27,710
24,121
152,621
216 125,825
167
152,788
Governance
Amount due within one year
Trade creditors
Other creditors
Accruals and deferred income
Amount due in greater than one year
Other creditors
Business review
In accordance wth IFRS 7, the above table shows undiscounted cash flows. In contrast IAS 39 requires these items to be carried
in, the balance sheet at fair value, which is based on discounted cash flows.
Introduction
2009
2008
Amount due
Amount due
within 1 and 2
2 and 5
after 5
within
1 and 2
2 and 5
one year
years
years
years
Total one year
years years
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
Accruals and deferred income includes £1,413,000 (2008 £6,097,000) in respect of restructuring costs.
Group financial
statements
Average trade creditor days in 2009 was 68 (2008 66). This figure represents trade creditor days for all trading operations
within the Group, calculated as a weighted average based on cost of sales.
The directors consider that the carrying amount of trade payables approximates to their fair value.
24 Post retirement benefit obligations
Charge to income statement in respect of the Group’s pension schemes
Defined benefit
– special item
3,654
–
–
–
–
–
3,654
762 4,416
1,365
1,198
762 4,416
1,365
1,198
2,563
1,757
– (10,797)
2,563
(9,040)
1,715
3,472
– (10,797)
1,715
(7,325)
2,499
1,475
3,974
4,347
936
Total
4,226
1,057
5,283
–
–
–
–
–
–
2,499
1,475
3,974
4,347
936
5,283
The fair value of the assets in the schemes, and the present value of the liabilities in the schemes at each balance sheet date were:
Post retirement
benefit obligations
(69,960)
(8,729) (78,689) (67,428)
(8,131) (75,559) (33,641)
(7,595) (41,236) (69,288)
(8,596) (77,884) (57,600) (12,037) (69,637)
Yule Catto & Co plc
59
Other information
2009
2008
2007
2006
2005
£’000
£’000
£’000 £’000
£’000
UKOverseas
Total
UK Overseas
Total UK Overseas
Total
UK Overseas
Total
UK Overseas
Total
Present value of funded
defined benefit obligations (241,475) (13,971)(255,446) (205,721) (13,449) (219,170)(228,966) (15,530) (244,496) (260,425) (16,591)(277,016) (225,000) (16,233) (241,233)
Fair value of scheme assets 171,515
5,242 176,757 138,293
5,318 143,611 195,325
7,935 203,260 191,137
7,995 199,132 167,400
4,196 171,596
Company financial
statements
2009
2008
2007
2006
2005
£’000
£’000
£’000 £’000
£’000
UKOverseas
Total
UK Overseas
Total UK Overseas
Total
UK Overseas
Total
UK Overseas
Defined benefit
3,168
699 3,867
977
427
1,404
1,598
763
2,361
2,200
763
2,963
4,000
226
Defined contribution
486 63 549
388
771
1,159
159
952
1,111
299
712
1,011
347
710
31 December 2009
Introduction
24 Post retirement benefit obligations continued
UK pension schemes
The Group participates in a funded scheme with both a defined benefit and defined contribution section (the Yule Catto Group
Retirement Benefit Scheme). The scheme’s defined benefit section was closed to new members with effect from 31 December
1998 and with effect from 1 January 1999 a defined contribution section was introduced and is open to all eligible Group employees.
During 2009 the Group announced that it intended to close the defined benefit scheme to future accrual. This process commenced
in 2009 and will be completed by September 2010.
The assets of the scheme are held separately from those of the companies concerned.
Contributions to the scheme are charged to the profit and loss account to spread the cost of pensions over employees’ working
lives within the Group.
Business review
Defined benefit scheme
A full actuarial valuation was carried out as at 6 April 2006 and updated to 31 December 2009 by a qualified actuary. The major
assumptions used by the actuary were:
Rate of increase in salaries
Rate of increase in pensions in payment
Discount rate
Rates of return on plan assets
Inflation assumption
2009
2008
2007
2006
2005
3.00%
3.00%
5.70%
8.22%
3.00%
2.60%
2.50%
6.50%
7.31%
2.60%
3.10%
2.50%
5.90%
7.33%
3.10%
3.30%
2.50%
5.20%
6.95%
2.80%
3.50%
2.50%
4.90%
7.21%
2.50%
Amount charged to operating profit
Governance
2009
£’000
Current service cost
Expected return on plan assets
Interest cost relating to pension scheme liabilities
Actuarial loss recognised in the statement of comprehensive income
1,493 (11,393)
13,068 3,168 Actual return less expected return on pension scheme assets
Experience gains and losses arising on the scheme liabilities
21,209 (32,753)
(11,544)
2009
£’000
2008
£’000
1,795
(14,047)
13,229
977
2008
£’000
Group financial
statements
(64,742)
25,273
(39,469)
History of experience gains and losses
2009
2008
Company financial
statements
Difference between the expected and
actual return on scheme assets:
Amount (£’000)
21,209 (64,742)
Percentage of scheme assets
12.37%
(46.82)%
Experience gains and losses arising
on the scheme liabilities
Amount (£’000)
(32,753)
25,273 Percentage of the present value of scheme liabilities
(13.56)%
12.29%
Total actuarial (losses)/gains recognised the
statement of recognised income and expense
Amount (£’000)
(11,544)
(39,469)
Percentage of the present value of scheme liabilities
(4.78)%
(19.19)%
Other information
The actual return on plan assets was £32,602,000 (2008 £50,695,000).
60
Yule Catto & Co plc
2007
2006
2005
(5,891)
(3.02)%
13,800 7.22%
17,200
10.27%
25,872 11.30%
(30,988)
(11.90)%
(12,100)
(5.38)%
19,981 8.73%
(17,188)
(6.61)%
5,100
2.27%
Movements in the present value of defined benefit obligations were as follows:
2009
2008
£’000
£’000
(205,721)
(1,493)
(13,068)
(438)
(32,753)
11,998 (241,475)
(228,966)
(1,795)
(13,229)
(739)
25,273
13,735
(205,721)
Introduction
At 1 January
Interest cost
Contributions from scheme members
Benefits paid
At 31 December
Movements in the fair value of the scheme assets were as follows:
2009
2008
£’000
£’000
138,293 11,393 21,209 10,951 438 (10,769)
171,515 195,325
14,047
(64,742)
6,659
739
(13,735)
138,293
2009
%
2009
£’000
2008
%
2008
£’000
2007
%
2007
£’000
2006
%
2006
£’000
2005
%
2005
£’000
Overseas pension schemes
The Group operates a number of smaller overseas pension and post-retirement schemes. The assets of these schemes are held
separately from those of the Group with the exception of the German schemes, where in line with common practice, the assets
are held within the respective company.
Group financial
statements
Equities
8.00 113,373 9.00
90,241 8.00 148,447 7.90 154,821 7.50 134,900
Bonds
5.70 54,243 6.70
47,614 5.17 44,925 4.92
36,316 4.63
31,800
Cash
2.00
3,899 4.25
438 4.25
1,953 4.25
–
4.00
700
Total fair value of assets 171,515 138,293 195,325 191,137 167,400
Present value
of scheme liabilities
(241,475) (205,721) (228,966) (260,425) (225,000)
Post retirement
benefit obligations (69,960) (67,428) (33,641) (69,288) (57,600)
Governance
Contributions from the sponsoring companies are expected to be £6,566,000 in 2009 (2008 £6,659,000).
The fair value of the assets in the scheme, the present value of the liabilities in the scheme and the expected rate of return at each
balance sheet date were:
Business review
At 1 January
Expected return on scheme assets
Actual return less expected return on pension scheme assets
Contributions from sponsoring companies
Contributions from scheme members
Benefits paid
At 31 December
Company financial
statements
Other information
Yule Catto & Co plc
61
31 December 2009
Defined benefit schemes
The aggregated pension disclosure below for the overseas defined benefit schemes has been compiled from a number of actuarial
valuations at 31 December 2009. The major assumptions do not differ significantly from those disclosed above in relation to the UK
pension schemes.
Introduction
Amount charged to operating profit
Gain on settlements and curtailments
Expected return on plan assets
Interest cost relating to pension scheme liabilities
Business review
Actuarial (loss)/gain recognised in the statement of comprehensive income
2009
£’000
224 –
(239)
714 699 2009
£’000
2
(1,077)
(1,075)
2008
£’000
369
(325)
(310)
693
427
2008
£’000
(377)
735
358
The actual return on plan assets was £241,000 (2008 £67,000 loss).
Analysis of the movements in the net balance sheet liability before deferred tax
Governance
2009
£’000
2008
£’000
Net liability at 1 January
Total expense as detailed above
Contributions made
Actuarial gain
Sale of PFW Aroma Chemicals BV
Exchange movements
Net liability at 31 December
(8,131)
(699)
572 (1,075)
–
604 (8,729)
(7,595)
(427)
938
358
846
(2,251)
(8,131)
Group financial
statements
25 Share capital
Authorised
219,111,230 (2008 219,111,230) ordinary shares of 10 pence each
Issued and fully paid
2009
2008
£’000
£’000
21,911 21,911
14,566 14,566
Ordinary shares carry no right to fixed income.
Company financial
statements
Share options
As at 31 December 2009 the following options were outstanding:
Executive share options
Exercisable between 2010-2012
Number Option price
1,413 254,801 655,809 2,810,312 (a)
(a)
(a)
(a)
Other information
SAYE options
Number Option price
Exercisable in 2010
13,872 261.0p
(a) Options granted under the Performance Share Plan, Longer-Term Deferred Bonus Plan and the Deferred Bonus Plan 2006 with a total exercise price of £45.
62
Yule Catto & Co plc
26 Changes in equity
CapitalHedging and
Share
Share redemption
Own translation
capital
premium
reserve
shares
reserve
£’000
£’000
£’000
£’000
£’000
Retained
earnings
£’000
Total
£’000
–
–
–
6,252
–
–
678
–
–
9,157
2,202
–
2,056
9,686
(12,619)
66,692
11,888
(12,619)
–
–
–
–
–
–
306
306
–
–
–
–
(678)
–
–
(678)
–
–
–
–
–
–
(6,933)
(253)
–
–
(825)
–
–
–
(7,758)
(253)
–
–
–
–
33,034
–
–
–
–
949
–
–
47
(47)
–
(7,186)
–
–
–
(934)
(678)
–
–
–
–
1,377
(3,631)
–
–
6,903
(2,627)
–
–
590
19
(9,114)
(3,631)
47
543
54,537
Cash flow
hedging
reserve
£’000
Minority
interest
£’000
Retained
earnings
£’000
Total
£’000
33,034
–
–
949
–
–
–
–
–
(9,087)
–
–
–
–
–
5,725
1,718
–
416
54,845
(39,111)
45,603
56,563
(39,111)
–
–
–
–
–
–
–
(48)
(48)
–
–
–
–
–
678
–
–
678
–
–
–
–
–
–
–
–
39,956
(24,617)
–
–
2,055
–
–
–
42,011
(24,617)
–
–
–
14,566
–
–
–
33,034
–
–
–
949
–
–
–
–
15,339
–
–
6,252
678
–
–
678
3,773
(341)
–
9,157
15,686
(14,129)
83
2,056
35,476
(14,470)
83
66,692
Group financial
statements
14,566
–
–
Governance
949
–
–
Business review
33,034
–
–
CapitalHedging and
Share
Share redemption
Own translation
capital
premium
reserve
shares
reserve
£’000
£’000
£’000
£’000
£’000
At 1 January 2008
Profit for the year
Tax on items recognised
directly in equity
Exchange differences
on cash flow hedging
deferred to equity
on translation of
overseas operations
Net investment hedging
Total recognised
income for the period
Dividends paid
At 31 December 2008
Minority
interest
£’000
Introduction
At 1 January 2009
14,566
Profit for the year
–
–
Tax on items recognised
directly in equity
–
on cash flow hedging
deferred to equity
–
on translation of
overseas operations
–
Net investment hedging
–
Total recognised (expenditure)/
income for the period
–
Dividends paid
–
Shares purchased by ESOP trust –
–
At 31 December 2009
14,566
Cash flow
hedging
reserve
£’000
Company financial
statements
Other information
Yule Catto & Co plc
63
31 December 2009
27 Reconciliation of operating profit to cash generated from operations
Introduction
Business review
Operating profit – continuing operations
Operating profit for the year from discontinued operations
Less: share of profits of joint ventures
Depreciation and amortisation
Profit arising from the sale or closure of operations
(Profit)/loss on sale of fixed assets
Cash impact of termination of businesses
Pension funding in excess of IAS 19 charge
Decrease in inventories
Decrease in trade and other receivables
Decrease in trade and other payables
Unrealised exchange gains
2009
£’000
21,406
3,674
(1,242)
23,838
14,771
30,000
(3,652)
(76)
(1,306)
(3,591)
(10,678)
4,690
20,779
(10,276)
–
64,499
2008
£’000
40,786
24,180
(1,615)
63,351
16,890
–
(17,661)
79
470
(10,283)
(6,301)
1,070
3,399
(5,931)
(784)
44,299
28 Disposal of subsidiaries
The Group disposed of the following interest in Group companies in 2009:
Company name
Governance
Group financial
statements
Division
Sale type
Oxford Chemicals Limited
30 January 2009 Third party trade Impact Chemicals
The net assets of the company at the date of disposal were as follows:
Date of sale
Purchaser
Assets
Property, plant and equipment
Inventories
Trade receivables
Trade payables
Profit on disposal
Total consideration
Satisfied by:
Cash (net of disposal costs)
2,183
1,662
1,347
(1,206)
3,986
3,944
7,930
Oxford Chemicals
Limited
£’000
Company financial
statements
Net cash inflow arising on disposal:
Cash consideration
Less costs of disposal
The impact of this disposal on the Group’s results in the current period and prior periods is disclosed in note 3.
In addition to the £7,930,000 proceeds from the disposal of Oxford Chemicals the Group has also received the deferred
consideration on the disposal of James Robinson GmbH of £830,000 during the year.
29 Acquisition of subsidiary
On 16 January 2008, the Group acquired 60 per cent of the issued share capital of Synthomer Vietnam Co. Ltd
(formerly Chemtech Industry Co. Ltd).
Other information
64
Yule Catto & Co plc
7,930
8,250
(320)
7,930
30 Analysis of changes in net borrowings
1 January Reclassification
Cash
Exchange and 31 December
2009 of borrowings inflows/(outflows) other movements
2009
£’000
£’000
£’000
£’000
£’000
Current borrowing – Bank overdrafts
Current borrowings Non-current borrowings
Net borrowings
26,576 –
20,157 (4,349)
(20,844)
–
13,825 3,411 5,732 –
33,982 (938)
(37,128)
(35,878)
33,472 4,218 (130,052)
35,878
(19,740)
12,808
(161,448)
–
47,714 16,088 25,966 (135,482)
42,384
(3,608)
38,776
(35,316)
(101,106)
(97,646)
9,608
(88,038)
31 Related party transactions
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and
are not included in this note. Transactions between the Company and its subsidiaries are disclosed in the Company’s financial
statements where appropriate.
Key management compensation
2009
£’000
2008
£’000
Short-term employee benefits
2,938 250 1,069 4,257 2,975
239
1,115
4,329
Governance
Business review
The special item represents the revaluation of US dollar loan notes from the rate of the related cross currency swaps to the year
end rate, together with the transitional adjustment required to reflect movements in fair value caused by variations in interest rates,
and subsequent amortisation thereof, to the extent that these constituted effective hedges under UK GAAP.
Introduction
The key management figures given above include the directors and all participants of the Performance Share Plan.
32 Commitments
2009
£’000
Capital expenditure authorised but not provided for in the accounts
Contracted
1,064 2009
£’000
Commitments under operating leases are as follows
Payments under operating leases which fall due:
Within 1 year
Between 2 and 5 years
After 5 years
3,258 8,917 41,097 53,272 607
2008
£’000
3,600
11,280
41,236
56,116
33 Contingent assets, contingent liabilities and guarantees
Guarantees of the parent company in respect of bank and other facilities of subsidiaries and joint ventures totalled £18,309,000
(2008 £7,071,000).
Other guarantees and contingent liabilities of the Group amount to £1,376,000 (2008 £1,523,000).
Yule Catto & Co plc
65
Other information
The Company and its subsidiaries have, in the normal course of business, entered into guarantees and counter-indemnities
in respect of performance bonds, relating to the Group’s own contracts.
Company financial
statements
2008
£’000
Group financial
statements
31 December 2009
34 Share-based payments
Save As You Earn share option plan
This plan, which is available to almost all UK employees, provides for a grant price equal to the average quoted market price of
the Group shares on the date of grant. The vesting period is five to seven years, followed by an exercise period of six months after
which the options expire. Furthermore, options are forfeited if the employee leaves the Group before the options vest.
Introduction
Business review
No grants have been made under the plan since 7 November 2002, and the Group has elected not to apply IFRS 2 to awards
made before that date. For options expected to be settled with shares purchased by the Yule Catto Employee Benefit Trust in
the open market, the charge to profit reflects the anticipated cash cost of these shares spread over the vesting period. For options
expected to be settled by the issue of new shares, no charge to profit is made.
For options outstanding as at 31 December 2009, the exercise price is £2.61, and the weighted average remaining contractual life
was 0.4 years (2008 1.4 years).
Outstanding at 1 January
Exercised during the period
Lapsed during the period
Outstanding at 31 December
Exercisable at 31 December
Weighted
av. exercise
Options
price (£)
Options
2009
2009
2008
13,872 2.610 – –
2.610 13,872 2.610 13,872 Weighted
av. exercise
price (£)
2008
293,974 2.610
–
(280,102)
2.610
13,872 2.610
– Governance
Executive share option schemes
Details of the share option schemes available to senior management are included in the Remuneration report on pages 28 to 30.
For grants made after 7 November 2002, the charge to profit is calculated on the assumption that, given that the exercise price
is effectively nil, the share price at grant provides a reasonable estimate of the option value at grant.
For grants made before 7 November 2002, the charge to profit is based on the anticipated cash cost of acquiring shares to meet
the options exercised.
Group financial
statements
Weighted
av. exercise
Options
price (£)
Options
2009
2009
2008
Outstanding at 1 January
1,226,535 Granted during the period
2,810,312 Exercised during the period
(76,969)
Lapsed during the period
(237,543)
Outstanding at 31 December 3,722,335 Exercisable at 31 December
1,413 Weighted
av. exercise
price (£)
2008
–
715,781 –
777,865 –
(17,471)
– (249,640)
– 1,226,535 64,557
For options outstanding as at 31 December 2009, the exercise price was £nil and the weighted average remaining contractual life
was 5.7 years (2008 5.3 years).
Company financial
statements
Yule Catto Employee Benefit Trust
The Company established a trust, the Yule Catto Employee Benefit Trust, on 17 July 1996 to distribute shares to employees
enabling the obligations under the Yule Catto Longer-Term Performance Share Plan and the Yule Catto Longer-Term Deferred
Bonus Plan to be met. The Trust is managed by the RBC Trustees (Guernsey) Limited, an independent company located in
Guernsey. At 31 December 2009, the Trust held 3,418 (2008 17,767) ordinary shares in the company with a market value
of £5,000 (2008 £10,000). The dividends on these shares have been waived. All of the shares are under option. Costs are
amortised over the life of the plans.
Other information
35 Share price information
The middle market value of the listed ordinary shares at 31 December 2009 was 152.0 pence. During the year, the market price
ranged between 37.0 pence and 184.75 pence. The market value of the listed ordinary shares at 31 March 1982 was 19.5 pence.
The latest ordinary share price is available on the Financial Times Cityline service, telephone 09058 171690.
66
Yule Catto & Co plc
–
–
–
–
–
36 Reconciliation of EBITDA
2009
£’000
2008
£’000
43,192
–
–
102
15,336
58,630
21,406
–
30,000
331
14,345
66,082
40,786
2,406
–
102
15,336
58,630
51,406
–
–
331
14,345
66,082
IFRS
Introduction
Operating profit
Add: operating profit or loss of businesses sold or closed during the year
Add: Impairment of goodwill
Add back: amortisation
Add back: depreciation
EBITDA
Underlying performance
2009
2008
£’000
£’000
Business review
Governance
Group financial
statements
Company financial
statements
Other information
Yule Catto & Co plc
67
to the members of Yule Catto & Co plc
Introduction
We have audited the parent company financial statements of
Yule Catto & Co plc for the year ended 31 December 2009
which comprise the Company Balance Sheet and the related
notes 1 to 16. The financial reporting framework that has been
applied in their preparation is applicable law and United
Kingdom Accounting Standards (United Kingdom Generally
Accepted Accounting Practice).
Business review
This report is made solely to the company’s members,
as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so
that we might state to the company’s members those matters
we are required to state to them in an auditors’ report and for
no other purpose. To the fullest extent permitted by law, we do
not accept or assume responsibility to anyone other than the
company and the company’s members as a body, for our audit
work, for this report, or for the opinions we have formed.
Governance
Respective responsibilities of directors and auditors
As explained more fully in the Directors’ Responsibilities
Statement, the directors are responsible for the preparation of
the parent company financial statements and for being satisfied
that they give a true and fair view. Our responsibility is to audit
the parent company financial statements in accordance with
applicable law and International Standards on Auditing (UK and
Ireland). Those standards require us to comply with the Auditing
Practices Board’s (APB’s) Ethical Standards for Auditors.
Group financial
statements
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts
and disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free
from material misstatement, whether caused by fraud or error.
This includes an assessment of: whether the accounting
policies are appropriate to the parent company’s circumstances
and have been consistently applied and adequately disclosed;
the reasonableness of significant accounting estimates
made by the directors; and the overall presentation of the
Opinion on financial statements
In our opinion the parent company financial statements:
Company financial
statements
• give a true and fair view of the state of the parent company’s
affairs as at 31 December 2009;
• have been properly prepared in accordance with United
Kingdom Generally Accepted Accounting Practice; and
• have been prepared in accordance with the requirements
of the Companies Act 2006.
Other information
68
Yule Catto & Co plc
Opinion on other matters prescribed by the
Companies Act 2006
In our opinion the information given in the Directors’ Report
for the financial year for which the financial statements
are prepared is consistent with the parent company
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters
where the Companies Act 2006 requires us to report to you if,
in our opinion:
• adequate accounting records have not been kept by the
parent company, or returns adequate for our audit have not
been received from branches not visited by us; or
• the parent company financial statements are not in agreement
with the accounting records and returns; or
• we have not received all the information and explanations
we require for our audit.
Other matter
We have reported separately on the Group financial statements
of Yule Catto & Co plc for the year ended 31 December 2009.
Stuart Henderson (Senior Statutory Auditor)
for and on behalf of Deloitte LLP
Chartered Accountants and Statutory Auditors
Cambridge, United Kingdom
10 March 2010
Company balance sheet
31 December 2009
Note
2008
£’000
2009
£’000
2,533 334,130 336,663 2,597
334,125
336,722
Current assets
Debtors
8
Cash at bank and in hand
Derivatives at fair value
978 1,603 11,737 14,318 1,303
2,641
33,655
37,599
Net current liabilities
Total assets less current liabilities
(131,382)
205,281 (75,811)
260,911
(83,887)
121,394 (130,052)
130,859
Capital and reserves
Called up share capital
Share premium
Revaluation reserve
Capital redemption reserve
Profit and loss account
Capital employed
11 12 12 12 12 14,566 33,034 824 949 72,021 121,394 14,566
33,034
826
949
81,484
130,859
Analysis of net borrowings
Cash at bank and in hand
Borrowings due in less than one year
Borrowings due after more than one year
Net borrowings
9
1,603 (32,944)
(83,887)
(115,228)
9,608 (105,620)
2,641
(46,940)
(130,052)
(174,351)
25,966
(148,385)
Group financial
statements
9
Governance
Creditors – due after more than one year
Borrowings
Net assets
Business review
Creditors – due within one year
Borrowings
9
(32,944)
(46,940)
Other creditors
10 (112,756)
(66,470)
(145,700)
(113,410)
Introduction
Fixed assets
Tangible fixed assets
6
Investments
7
The financial statements of Yule Catto & Co plc (registered number 98381) were approved on 10 March 2010.
Company financial
statements
A M Whitfield
D C Blackwood
Directors
Other information
Yule Catto & Co plc
69
Notes to the Company financial statements
31 December 2009
1 Accounting policies
The principal accounting policies are summarised below.
They have all been applied consistently throughout the year
and the preceding year.
Introduction
Basis of accounting
The financial statements have been prepared under the
historical cost convention as modified by the revaluation
of certain fixed assets, and comply with applicable UK
accounting standards.
Business review
Foreign currencies
Transactions in foreign currencies are recorded at the rate
of exchange at the date of the transaction or, if hedged,
at the forward contract rate. Monetary assets and liabilities
denominated in foreign currencies at the balance sheet date
are reported at the rates of exchange prevailing at that date
or, if appropriate, at the forward contract rate.
Tangible fixed assets
Tangible fixed assets are stated at cost or valuation, net of
depreciation and any provision for impairment. Except for
freehold land, which is not depreciated, the cost or valuation
of tangible fixed assets is depreciated on a straight-line basis
over their expected useful lives as follows:
Governance
Freehold buildings – 50 years
Leasehold land and buildings – the lesser of 50 years and
the period of the lease
Plant and equipment – between 3 and 10 years
Group financial
statements
Revaluation of properties
The Company has taken advantage of the transitional provisions
of FRS 15 ‘Tangible Fixed Assets’ and retained the book
amounts of certain freehold properties which were revalued
prior to implementation of that standard.
Where depreciation charges are increased following a
revaluation, an amount equal to the increase is transferred
annually from the revaluation reserve to the profit and loss
account as a movement on reserves. On the disposal or
recognition of a provision for impairment of a revalued fixed
asset, any related balance remaining in the revaluation reserve
is also transferred to the profit and loss account as a movement
on reserves.
Company financial
statements
Investments
Fixed asset investments are shown at cost less provision
for impairment.
Debt
Debt is initially stated at the amount of the net proceeds
after deduction of issue costs.
Other information
Dividends
Dividends are accrued where declared and unpaid at the
balance sheet date.
Taxation
Current tax, including UK corporation tax and foreign tax, is
provided at amounts expected to be paid (or recovered) using
the tax rates and laws that have been enacted or substantively
enacted by the balance sheet date.
70
Yule Catto & Co plc
Deferred taxation
Deferred tax is recognised in respect of all timing differences
that have originated but not reversed at the balance sheet date
where transactions or events that result in an obligation to pay
more tax in the future or a right to pay less tax in the future have
occurred at the balance sheet date. Timing differences are
differences between the Group’s taxable profits and its results
as stated in the financial statements that arise from the inclusion
of gains and losses in tax assessments in periods different from
those in which they are recognised in the financial statements.
A net deferred tax asset is regarded as recoverable and
therefore recognised only when, on the basis of all available
evidence, it can be regarded as more likely than not that there
will be suitable taxable profits from which the future reversal
of the underlying timing differences can be deducted.
Deferred tax is measured at the average tax rates that are
expected to apply in the periods in which the timing differences
are expected to reverse, based on tax rates and laws that
have been enacted or substantively enacted by the balance
sheet date.
Deferred tax is measured on a non-discounted basis.
Financial assets and financial liabilities are recognised on the
Group’s balance sheet when the Group becomes a party
to the contractual provisions of the instrument.
Trade receivables
Trade receivables do not carry any interest and are stated
at their nominal value as reduced by appropriate allowances
for estimated irrecoverable amounts.
Bank borrowings
Interest-bearing bank loans and overdrafts are recorded at the
proceeds received, net of direct issue costs. Finance charges,
including premiums payable on settlement or redemption and
direct issue costs, are accounted for on an accrual basis to the
profit and loss account using the effective interest method and
are added to the carrying amount of the instrument to the
extent that they are not settled in the period in which they arise.
Trade payables
Trade payables are not interest-bearing and are stated at their
nominal value.
Equity instruments
Equity instruments issued by the Company are recorded at the
proceeds received, net of direct issue costs.
The Company uses derivative financial instruments to reduce
exposure to foreign exchange risk and interest rate movements.
The Company does not hold or issue derivative financial
instruments for speculative purposes.
The use of financial derivatives is governed by the Group’s
policies approved by the Board of directors, which provide
written principles on the use of financial derivatives.
1 Accounting policies continued
Net borrowings
Net borrowings represents cash and cash equivalents together with short-and long-term borrowings, as adjusted for the effect
of related derivative instruments irrespective of whether they qualify for hedge accounting.
Introduction
Pension funding
The costs of contributions to the Group’s pension schemes and of augmenting existing pensions are charged to the profit and
loss account on a systematic basis over the expected period of benefits from employees’ service.
The UK defined benefit scheme is funded, with the assets of the scheme held separately from those of the Group, in separate
trustee-administered funds. 2 Auditors’ remuneration
The audit fee of Yule Catto & Co plc amounted to £7,000 (2008 £6,500).
The average monthly number of employees during the year was:
4 Loss attributable to equity shareholders
UK GAAP basis*
Attributable to Yule Catto & Co plc
2008
Number
29 30
2009
£’000
2008
£’000
2,260 273 153 2,686 2,440
289
294
3,023
2009
£’000
2008
£’000
(10,053)
Governance
The aggregate remuneration of all Company employees comprised:
Wages and salaries
Social security costs
Post retirement benefits
2009
Number
Business review
3 Employees
(19,261)
As permitted by Section 408 of the Companies Act 2006 no profit and loss account is presented for Yule Catto & Co plc.
5 Dividends
Ordinary – prior year final of nil pence per share (2007 5.7 pence)
– interim of nil pence per share (2008 4.0 pence)
2008
£’000
2009
£’000
–
–
–
8,303
5,826
14,129
Group financial
statements
* The above has been calculated on a UK GAAP basis as this is consistent with the continued presentation of Yule Catto & Co plc’s accounts under UK GAAP.
Company financial
statements
Other information
Yule Catto & Co plc
71
Notes to the Company financial statements continued
31 December 2009
6 Tangible fixed assets
Land and buildings
Long
Freeholds
leaseholds
£’000
£’000
Plant and
equipment
Total
£’000
£’000
Introduction
Business review
Governance
Cost or valuation
At 1 January 2009
Additions
Disposals
At 31 December 2009
2,777 –
–
2,777 89 –
–
89 1,482 33 (73)
1,442 4,348
33
(73)
4,308
At cost
At professional valuation in 1985
12 2,765 2,777 –
89 89 1,442 –
1,442 1,454
2,854
4,308
Depreciation
At 1 January 2009
Charge for the year
Eliminated on disposals
At 31 December 2009
470 21 –
491 45 2
–
47 1,236 64 (63)
1,237 1,751
87
(63)
1,775
Net book value
At 31 December 2009
2,286 42 205 2,533
Net book value
At 31 December 2008
2,307 44 246 2,597
Properties included at valuation would have been stated on a historical cost basis at cost of £1,877,000 (2008 £1,877,000) and
depreciation of £420,000 (2008 £403,000).
Freehold land amounting to £1,781,000 (2008 £1,781,000) has not been depreciated.
7 Investments
Group financial
statements
Subsidiaries
£’000
Joint
Other
ventures investments
£’000
£’000
Total
£’000
Company financial
statements
Cost
At 1 January 2009
Additions
At 31 December 2009
334,942 –
334,942 500 –
500 46 13 59 335,488
13
335,501
Provisions
At 1 January 2009
Amortisation
At 31 December 2009
1,118 –
1,118 220 –
220 25 8
33 1,363
8
1,371
333,824 280 26 334,130
Net book value
At 31 December 2008
333,824 280 21 334,125
Net book value
At 31 December 2009
Other information
Details of the principal Group companies are given on page 77.
8 Debtors
Other debtors
Prepayments and accrued income
72
Yule Catto & Co plc
2009
£’000
900 78 978 2008
£’000
1,190
113
1,303
9 Borrowings
2008
£’000
2009
£’000
Other loans
27,949 5,000 32,949 (5)
32,944 32,168
5,000
46,980
(40)
46,940
Bank loans
Unsecured £30 million revolving credit facility expiring 2011
–
–
Other loans
–
–
26,996 43,948 13,812 84,756 (869)
83,887 32,168
5,000
29,698
48,346
15,195
130,407
(355)
130,052
Bank loans are denominated in a number of currencies and bear interest based on LIBOR or foreign equivalents.
Governance
9,812
Business review
–
Introduction
Current borrowings
Bank loans
At 31 December 2009, the Company had available £30 million (2008 £30 million) of undrawn committed borrowing facilities
in respect of which all conditions precedent had been met.
The directors calculate the carrying value of the Company’s borrowings as follows:
Sterling
£’000
US dollar
£’000
Euro
£’000
117,705
(874)
116,831
(1,603)
115,228
(9,608)
105,620
Cash and cash equivalents comprise cash at bank and other short-term highly liquid investments with a maturity
of three months or less.
* The special item represents the revaluation of US dollar loan notes from the rate of the related cross currency swaps to the year end rate, together with the transitional
adjustment required to reflect movements in fair value caused by variations in interest rates, and subsequent amortisation thereof, to the extent that these constituted
effective hedges under pre FRS 26 UK GAAP.
Yule Catto & Co plc
73
Other information
9,812
167,575
(395)
176,992
(2,641)
174,351
(25,966)
148,385
Company financial
statements
31 December 2009
Loan notes
5,000 112,705 –
Capitalised costs
(874)
–
–
4,126 112,705 –
Net borrowings
Deduct: special item*
31 December 2008
6,242 3,221 349 Loan notes
10,000 157,575 –
Capitalised costs
(395)
–
–
15,847 160,796 349 Cash and cash equivalents
Net borrowings
Deduct: special item*
Total
£’000
Group financial
statements
Analysis of borrowings at carrying value by currency
31 December 2009
10 Other creditors
2009
£’000
2008
£’000
Introduction
Amount due within one year
Trade creditors
1,088 579
Other taxation and social security
114 127
Other creditors
2,341 2,164
Amounts owed to subsidiaries
104,111 54,788
Accruals and deferred income
5,102 8,812
112,756 66,470
11 Share capital
Business review
2009
£’000
2008
£’000
Authorised
21,911 21,911
Issued and fully paid
14,566 14,566
Share options
As at 31 December 2009 the following options were outstanding:
Executive share options
Governance
Number Option price
1,413 254,801 655,809 2,810,312 (a)
(a)
(a)
(a)
SAYE options
Number Option price
Exercisable in 2010
13,872 261.0p
(a) Options granted under the Performance Share Plan and the Longer-Term Deferred Bonus Plan and the Deferred Bonus Plan 2006 with a total exercise price of £45.
12 Share premium and reserves
Group financial
statements
Share Revaluation
premium
reserve
£’000
£’000
Company financial
statements
At 1 January 2009
Loss for the year
Dividends
Retained loss for the year Share-based payments
Revaluation depreciation
At 31 December 2009
33,034 –
–
–
–
–
33,034 826 –
–
–
–
(2)
824 Capital
redemption
Profit and
reserve loss account
£’000
£’000
949 –
–
–
–
–
949 81,484 (10,053)
–
(10,053)
590 –
72,021 Total
£’000
116,293
(10,053)
–
(10,053)
590
(2)
106,828
13 Related party transactions
There were no related party transactions during the year (2008 none).
14 Guarantees and other financial commitments
The Company has given guarantees amounting to £18,309,000 (2008 £7,071,000) in respect of bank and other facilities
of subsidiaries and joint ventures.
Other information
74
Yule Catto & Co plc
Introduction
15 Pension commitments
The Group participates in a funded scheme with both a defined benefit and defined contribution section (the Yule Catto Group
Retirement Benefit Scheme). The scheme’s defined benefit section was closed to new members with effect from 31 December
1998 and with effect from 1 January 1999 a defined contribution section was introduced and is open to all eligible Group
employees. During 2009 the Group announced that it intended to close the defined benefit scheme to future accrual. This
process commenced in 2009 and will be completed by September 2010.
The assets of the scheme are held separately from those of the companies concerned.
The pension charge for the year for the Company amounted to £6,972,000 (2008 £3,838,000).
In accordance with FRS 17, the Company will account for its contributions to the defined benefit scheme as if it were a defined
contribution scheme because it is not possible to identify the Company’s share of the assets and liabilities in the scheme on a
consistent and reasonable basis. The latest actuarial valuation of the scheme prepared for the purposes of making transitional
disclosure in accordance with FRS 17 shows a net pension liability of £69,660,000 at 31 December 2009.
A full actuarial valuation was carried out as at 6 April 2006 and updated to 31 December 2009 by a qualified actuary. The major
assumptions used by the actuary were:
2009
2008
2007
2006
2005
Rate of increase in salaries
Rate of increase in pensions in payment
Discount rate
Inflation assumption
3.00%
3.00%
5.70%
3.00%
2.60%
2.50%
6.50%
2.60%
3.10%
2.50%
5.90%
3.10%
3.30%
2.50%
5.20%
2.80%
3.50%
2.50%
4.90%
2.50%
The fair value of the assets in the scheme, the present value of the liabilities in the scheme and the expected rate of return at each
balance sheet date were:
2009
£’000
2008
£’000
2008
%
2007
£’000
2007
%
2006
£’000
2006
%
2005
£’000
2005
%
113,673 9.00 90,541 8.00 148,747 7.90 155,121 7.50 135,200
54,243 6.70 47,614 5.17 44,925 4.92 36,316 4.63 31,800
3,899 4.25 438 4.25 1,953 4.25 –
4.00 700
171,815 138,593 195,625 191,437 167,700
(241,475) (205,721) (228,966) (260,425) (225,000)
(69,660) (67,128) (33,341) (68,988) (57,300)
– – – – –
(69,660) (67,128) (33,341) (68,988) (57,300)
Group financial
statements
Equities
8.00 Bonds
5.70 Cash
2.00 Total fair value of assets
Present value of
scheme liabilities
Deficit in the scheme
Related deferred tax asset
Net pension liability
2009
%
Governance
Business review
FRS 17 disclosure
Due to the application of IAS 19 to the Group financial statements, resulting in changes to the required disclosures at Group level,
the disclosure requirements of FRS 17 for the Group have been included below.
Contributions from the sponsoring companies are expected to be £11,000,000 in 2010.
2009
£’000
2008
£’000
1,493 1,493 1,795
1,795
2009
£’000
2008
£’000
Analysis of the amount that would have been charged to net finance income under FRS 17
(11,393)
13,068 1,675 (14,047)
13,229
(818)
Yule Catto & Co plc
75
Other information
Expected return on pension scheme assets
Interest on pension scheme liabilities
Company financial
statements
Analysis of the amount that would have been charged to operating profit under FRS 17
31 December 2009
15 Pension commitments continued
Analysis of the actuarial (loss)/gain that would have been recognised in the statement of total recognised gains and losses
Introduction
History of experience gains and losses
2009
2008
Business review
Difference between the expected and
actual return on scheme assets:
Amount (£’000)
21,209 (64,742)
Percentage of scheme assets
12.34%
(46.71)%
Experience (losses)/gains on scheme liabilities:
Amount (£’000)
(32,753)
25,273 Percentage of the present value of scheme liabilities
(13.56)%
12.29%
Total actuarial (losses)/gains recognised in the
statement of total recognised gains and losses:
Amount (£’000)
(11,544)
(39,469)
Percentage of the present value of scheme liabilities
(4.78)%
(19.19)%
2009
£’000
21,209 (32,753)
(11,544)
Governance
Group financial
statements
Company financial
statements
Other information
Yule Catto & Co plc
(64,742)
25,273
(39,469)
2007
2006
2005
(5,891)
(3.01)%
13,800 7.21%
17,200
10.26%
25,872 11.30%
(30,988)
(11.90)%
(12,100)
(5.38)%
19,981 8.73%
(17,188)
(6.61)%
5,100
2.27%
16 Share-based payments
For details of share-based payments please refer to note 34 to the consolidated financial statements on page 66.
76
2008
£’000
Principal subsidiaries and joint ventures
Effective
Country of Group interest
incorporation
in equity
Operating companies
and operation
%
50 #
49 #
100
63
Introduction
70
100
100
100*
100
100
Business review
60
100
100
100
100
100
100
100*
100
100
Group financial
statements
100
Governance
Arkem (Pty) Ltd
South Africa
Distributor of speciality chemicals and allied products
Synthomer Middle East Company
Saudi Arabia
Synthetic resin emulsions
Revertex Chemicals (Pty) Ltd
South Africa
Synthetic resin and emulsions and allied products
Revertex Finewaters Sdn Bhd
Malaysia
Adhesives
Revertex (Malaysia) Sdn Bhd
Malaysia
Synthetic resin and emulsions, natural rubber latices, plasticers and allied products
Synthomer BV
Netherlands
Compounds of synthetic rubber latices
Synthomer GmbH
Germany
Synthetic rubber latices and related compounds
Synthomer Ltd
England
Synthetic rubber latices and emulsions
Synthomer SA
Belgium
Compounds, dispersions and adhesives
Synthomer Sdn Bhd
Malaysia
Synthetic rubber latices and related compounds
Synthomer Vietnam Co. Ltd
Vietnam
Synthetic adhesives
Union Quimico Farmaceutica SA (UQUIFA) Spain
Pharmaceutical actives and intermediates
Uquifa Mexico S.A.C.V.
Mexico
Pharmaceutical actives and intermediates
William Blythe Ltd
England
Inorganic chemicals
100
Holding companies
Holliday Chemical Holdings
Yule Catto International SA
Yule Catto BV
Yule Catto Financing Ltd
Yule Catto Holdings GmbH
Yule Catto International Ltd
Yule Catto Spain SL
Yule Catto Nederland BV
England
France
Netherlands
Ireland
Germany
England
Spain
Netherlands
# Joint ventures
* Shares held by Yule Catto & Co plc
Company financial
statements
Other information
Yule Catto & Co plc
77
Five year financial summary
Underlying performance (a)
Introduction
Total sales
EBITDA
(b)
Operating profit
(c)
Finance costs Profit before taxation
Earnings per share
Dividends per share
Dividend cover
Net borrowings
(e)
Free cash flow before dividends
(d)
Capital expenditure
Business review
IFRS – continuing operations Governance
Total sales
EBITDA
(b)
Operating profit
(c)
Finance costs Profit before taxation
Earnings per share
Dividends per share
Dividend cover
Net borrowings
(e)
Free cash flow before dividends
(d)
Capital expenditure
(a) As presented in the consolidated income statement on page 34.
(b) As defined in the accounting policies at note 2 and derived in note 36.
(c) As defined in note 2 to the financial statements on pages 38 to 42.
(d) As shown with the consolidated cash flow statement on page 37.
(e) As defined in note 2 to the financial statements and derived in note 30.
Group financial
statements
Company financial
statements
Other information
78
Yule Catto & Co plc
2009
£’000
543,398 66,082 51,406 (9,869)
41,537 21.3p –
–
(88,038)
39,001 8,687 2009
£’000
543,398 66,082 21,406 (14,270)
7,136 4.1p –
–
(97,646)
39,001 8,687 2008
£’000
602,153 58,630 43,192 (10,502)
32,690 17.9p 4.0p 4.5 (135,482)
7,781 17,707 2008
£’000
602,153 58,630
40,786 (1,887)
38,899 22.2p 4.0p 5.5 (161,448)
7,781 17,707 2007
£’000
511,313 56,242 42,696 (11,497)
31,199 16.0p 9.6p 1.7 (170,831)
14,012 16,994 2007
£’000
511,313 56,242 41,032 (7,050)
33,982 17.9p 9.6p 1.9 (150,341)
14,012 16,994 2006
£’000
485,137 54,519 41,634 (11,443)
30,191 14.0p 9.3p 1.5 (166,271)
8,479 18,468 2006
£’000
485,137 54,519 22,533 (7,825)
14,708 2.6p 9.3p 0.3 (150,656)
8,479 18,468 2005
£’000
448,841
49,724
36,230
(11,741)
24,489
9.8p
9.0p
1.1
(165,591)
19,786
14,331 2005
£’000
448,841
49,724
36,239
(14,162)
22,077
8.2p
9.0p
0.9
(171,266)
19,786
14,331
Notice of meeting
Notice is hereby given that the Annual General Meeting of the
Company will be held at the Manor of Groves Hotel, High Wych,
Sawbridgeworth, Hertfordshire, CM21 0JU on Thursday 6 May
2010 at 11.00am for the following purposes:
Ordinary business
1.To receive and adopt the report of the Directors and audited
financial statements for the year ended 31 December 2009.
2. To approve the report of the Board on Directors’
remuneration for the year ended 31 December 2009.
b) the minimum price which may be paid for each share
is 10p (exclusive of expenses);
c) the maximum price which may be paid for a share is
an amount equal to 105% of the average of the closing
middle market quotations of the Company’s ordinary
shares as derived from the London Stock Exchange
Daily Official List for the five business days immediately
preceding the day on which such share is contracted
to be purchased (exclusive of expenses); and
d) this authority shall expire at the conclusion of the next
Annual General Meeting of the Company or, if earlier,
15 months after the passing of this Resolution (except
in relation to the purchase of shares the contract for
which was concluded before the expiry of such authority
and which might be executed wholly or partly after
such expiry) unless such authority is renewed prior
to such time.
3. To re-elect as a director the Hon. A G Catto.
4. To re-elect as a director Dato’ Lee Hau Hian.
5. To re-elect as a director Mr P S Wood.
6.To reappoint Deloitte LLP as auditors of the Company to
hold office until the conclusion of the next Annual General
Meeting at which accounts are laid before the Company.
7. To authorise the Directors to determine the remuneration
of the auditors.
12.That a general meeting other than an Annual General
Meeting may be called on not less than 14 clear
days’ notice.
(a) the Articles of Association of the Company be amended
by deleting all the provisions of the Company’s
Memorandum of Association which, by virtue of Section
28 of the Companies Act 2006, are to be treated as
provisions of the Company’s Articles of Association; and
13.That the amendments to the Yule Catto Performance
Share Plan, main features of which are summarised
in the Chairman’s letter to shareholders dated 8 April 2010,
be and are hereby approved.
(b) the Articles of Association produced to the meeting and
initialled by the Chairman of the meeting for the purpose
of identification (the ‘New Articles’) be adopted as the
Articles of Association of the Company in substitution
for, and to the exclusion of, the existing Articles
of Association.
R Atkinson
Secretary
10 March 2010
Registered office:
Temple Fields
Central Road
Harlow
Essex
CM20 2BH
Company financial
statements
9. To resolve that the authority conferred on the Directors by
Article 5.2 of the Company’s New Articles be renewed upon
the New Articles becoming effective for the period ending
at the end of the Annual General Meeting in 2011 or on
30 June 2011, whichever is the earlier, and for such period
the Section 551 Amount shall be £4,855,439. Such authority
shall be in substitution for all previous authorities pursuant
to Section 551 of the Companies Act 2006.
Group financial
statements
Special business
8. To resolve that with effect from the end of this Annual
General Meeting:
Governance
a) the maximum number of shares which may be purchased
is 14,566,318;
Business review
Introduction
Resolutions 8, 10, 11 and 12 will be proposed as special
resolutions. All other resolutions will be proposed as
ordinary resolutions.
11.That the Company be unconditionally and generally
authorised for the purpose of Section 701 of the Companies
Act 2006 (‘the Act’) to make market purchases (as defined
in Section 693(4) of the Act) of ordinary shares of 10p each
in the capital of the Company provided that:
Registered in England and Wales number 98381
Other information
10.To resolve that subject to the passing of Resolution 9 above,
the power conferred on the Directors by Article 5.3 of the
Company’s New Articles be renewed for the period referred
to in such Resolution and for such period the Section 561
Amount shall be £728,315. Such authority shall be in
substitution for all previous powers pursuant to Section 561
of the Companies Act 2006.
Yule Catto & Co plc
79
Notice of meeting continued
Notes
Introduction
1.Members are entitled to appoint a proxy to exercise all or any
of their rights to attend and to speak and vote on their behalf at
the meeting. A shareholder may appoint more than one proxy in
relation to the Annual General Meeting provided that each proxy
is appointed to exercise the rights attached to a different share or
shares held by that shareholder. A proxy need not be a shareholder
of the Company. A proxy form which may be used to make such
appointment and give proxy instructions accompanies this notice.
2.To be valid any proxy form or other instrument appointing a proxy
must be received by post or (during normal business hours only)
by hand at Computershare Investor Services PLC, The Pavilions,
Bridgwater Road, Bristol, BS99 6ZY or at the electronic address
provided in the proxy form, in each case no later than 48 hours
before the time appointed for holding the meeting or any
adjourned meeting.
Business review
3. The return of a completed proxy form, other such instrument or any
CREST Proxy Instruction (as described in paragraph 9 below) will
not prevent a shareholder attending the Annual General Meeting
and voting in person if he/she wishes to do so.
Governance
4. Any person to whom this notice is sent who is a person nominated
under Section 146 of the Companies Act 2006 to enjoy information
rights (a ‘Nominated Person’) may, under an agreement between
him/her and the shareholder by whom he/she was nominated,
have a right to be appointed (or to have someone else appointed)
as a proxy for the Annual General Meeting. If a Nominated Person
has no such proxy appointment right or does not wish to exercise
it, he/she may, under any such agreement, have a right to give
instructions to the shareholder as to the exercise of voting rights.
5. The statement of the rights of shareholders in relation to the
appointment of proxies in paragraphs 1 and 2 above does not
apply to Nominated Persons. The rights described in these
paragraphs can only be exercised by shareholders of the Company.
Group financial
statements
6.To be entitled to attend and vote at the Annual General Meeting
(and for the purpose of the determination by the Company of the
votes they may cast), Shareholders must be registered in the
Register of Members of the Company at close of business on
Tuesday 4 May 2010 (or, in the event of any adjournment, on the
date which is two days before the time of the adjourned meeting).
Changes to the Register of Members after the relevant deadline
shall be disregarded in determining the rights of any person to
attend and vote at the meeting.
7. The Company’s capital consists of 145,663,187 ordinary shares
with voting rights.
Company financial
statements
8. CREST members who wish to appoint a proxy or proxies through
the CREST electronic proxy appointment service may do so by
using the procedures described in the CREST Manual. CREST
Personal Members or other CREST sponsored members, and
those CREST members who have appointed a service provider(s),
should refer to their CREST sponsor or voting service provider(s),
who will be able to take the appropriate action on their behalf.
Other information
9. In order for a proxy appointment or instruction made using the
CREST service to be valid, the appropriate CREST message
(a ‘CREST Proxy Instruction’) must be properly authenticated in
accordance with Euroclear UK & Ireland Limited’s specifications,
and must contain the information required for such instruction, as
described in the CREST Manual (available via www.euroclear.com/
CREST). The message, regardless of whether it constitutes the
appointment of a proxy or is an amendment to the instruction
given to a previously appointed proxy must, in order to be valid,
80
Yule Catto & Co plc
be transmitted so as to be received by the issuer’s agent (ID
3RA50) by the latest time(s) for the receipt of proxy appointments
specified in Note 2. For this purpose, the time of receipt will be
taken to be the time (as determined by the time stamp applied to
the message by the CREST Application Host) from which the
issuer’s agent is able to retrieve the message by enquiry to CREST
in the manner prescribed by CREST. After this time any change of
instructions to proxies appointed through CREST should be
communicated to the appointee through other means.
10.CREST members and, where applicable, their CREST sponsors
or voting service providers should note that Euroclear UK & Ireland
Limited does not make available special procedures in CREST for
any particular message. Normal system timings and limitations will,
therefore, apply in relation to the input of CREST Proxy Instructions.
It is the responsibility of the CREST member concerned to take
(or, if the CREST member is a CREST personal member,
or sponsored member, or has appointed a voting service provider,
to procure that his CREST sponsor or voting service provider(s)
take(s)) such action as shall be necessary to ensure that a
message is transmitted by means of the CREST system by any
particular time. In this connection, CREST members and, where
applicable, their CREST sponsors or voting system providers are
referred, in particular, to those sections of the CREST Manual
concerning practical limitations of the CREST system and timings.
11.The Company may treat as invalid a CREST Proxy Instruction in the
circumstances set out in Regulation 35(5)(a) of the Uncertificated
Securities Regulations 2001.
12.Any corporation which is a member can appoint one or more
corporate representatives who may exercise on its behalf all of its
powers as a member provided that they do not do so in relation to
the same shares.
13.Under Section 527 of the Companies Act 2006 members meeting
the threshold requirements set out in that Section have the right to
require the company to publish on a website a statement setting
out any matter relating to: (i) the audit of the Company’s accounts
(including the auditor’s report and the conduct of the audit) that
are to be laid before the Annual General Meeting; or
(ii) any circumstance connected with an auditor of the Company
ceasing to hold office since the previous meeting at which annual
accounts and reports were laid in accordance with Section 437 of
the Companies Act 2006. The Company may not require the
shareholders requesting any such website publication to pay its
expenses in complying with Sections 527 or 528 of the Companies
Act 2006. Where the Company is required to place a statement on
a website under Section 527 of the Companies Act 2006, it must
forward the statement to the Company’s auditor not later than the
time when it makes the statement available on the website. The
business which may be dealt with at the Annual General Meeting
includes any statement that the Company has been required under
Section 527 of the Companies Act 2006 to publish on a website.
14.Any member attending the meeting has the right to ask questions.
The Company must cause to be answered any such question
relating to the business being dealt with at the meeting but no such
answer need be given if (a) to do so would interfere unduly with the
preparation for the meeting or involve the disclosure of confidential
information, (b) the answer has already been given on a website
in the form of an answer to a question, or (c) it is undesirable in
the interests of the company or the good order of the meeting that
the question be answered.
15.A copy of this notice, and other information required by
Section 311A of the Companies Act 2006, can be found at
www.yulecatto.com.
Introduction
01
02
03
04
Business review
06Chief Executive’s report
06 Polymer Chemicals
10 Pharma Chemicals
11 Impact Chemicals
12 Financial review
14 Corporate Social Responsibility report
Governance
21
22
24
28
31
32
Group financial
statements
33
34
35
35
36
37
38
Company financial
statements
Group overview
68 Independent auditors’ report
69 Company balance sheet
70 Notes to the Company financial statements
2009 was an extremely
good year for Yule Catto,
with operating profit in
all three Divisions ahead
of the prior year, despite
the environment with
a strong increase in
Group pre-tax profit and
a substantial reduction
in net debt, considerably
ahead of schedule.
Other information
77 Principal subsidiaries and joint ventures
78 Five year financial summary
79 Notice of meeting
Designed and produced by The College www.thecollege.uk.com
T+44 (0)1279 442 791
F+44 (0)1279 641 360
Yule Catto & Co plc Annual Report 2009
Yule Catto & Co plc
Temple Fields
Harlow
Essex CM20 2BH
UK
Yule Catto & Co plc
Annual Report
For the year ended 31 December 2009
www.yulecatto.com
Being part of
all our lives

Annual Report

Transcription

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