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Exceptionals
Net exceptional charges before tax were £0.1 million (2001: £1.7
million) comprising:
- £0.7 million insurance recovery in Chromium
- £0.8 million profit in respect of property disposals
- £1.6 million of retrenchment costs in relation to the introduction
of two shared service centres in conjunction with rolling out a new
ERP system in 2003 and 2004.
Interest
The Group total interest charge was £3.1 million (2002: £1.2
million). Interest on net borrowings amounted to £1.0 million (2002:
£1.0 million). Other interest comprised the FRS17 charge in respect
of pension schemes of £2.0 million (2002: £0.2 million), £0.5
million to unwind the discount in respect of environmental provisions
and £0.4 million received in respect of tax refunds. Interest cover,
(the ratio of net interest to profit before interest, goodwill amortisation
and exceptionals) was 4.7 times (2002: 12.1 times). If based solely on
interest in respect of net borrowings, interest cover was 14.5 times (2002:
14.5 times).
Taxation
The tax charge for the period was £2.9 million (25 per cent) on
profit before goodwill amortisation and exceptionals (2002: £2.6
million (20 per cent)). The total tax charge also includes a tax credit
in relation to goodwill amortisation of £2.3 million (2002: £2.5
million) and after a charge on exceptionals of £0.2 million (2002:
nil), the net charge was £0.8 million (2002: £0.1 million).
Tax payments were £0.8 million (2002: £1.8 million) and due
to the surplus ACT in the UK and accumulated tax losses in the US, it
is expected that the cash tax paid will be below 10 per cent of profit
before tax for a number of years.
Cash flow and balance sheet
The cash flow for the six months to 30 June is summarised below:
| |
2003
£million |
2002
£million |
 |
| Ebitda |
22.2 |
24.1 |
| Working capital |
(25.0) |
(11.3) |
| Provisions paid |
(4.7) |
(1.7) |
| Other |
(0.7) |
2.2 |
|
| Operating activities |
(8.2) |
13.3 |
| Capital expenditure |
(8.7) |
(5.0) |
| Property disposals |
1.0 |
– |
| B Shares |
(4.8) |
(4.7) |
| Other |
(0.1) |
(0.7) |
|
| Change in net debt |
(20.8) |
2.9 |
The working capital outflow in the first half of 2003 reflected normal
seasonal effects, unusually high creditor levels at the year end and the
additional working capital requirement following the acquisition of the
chrome chemicals business from OxyChem in December 2002. Inventories increased
by £1.7 million over the half year. Debtors increased by £13.9
million, whilst creditors decreased by £9.4 million.
Cash expenditure on fixed assets totalled £8.7 million (2002:
£5.0 million) net of grants received of £nil (2002: £0.7
million), and compares with depreciation of £7.7 million (2002:
£9.6 million). Major projects included £0.7 million in respect
of a new Pigments plant in Taicang, China and £3.8 million in respect
of the ERP system. Capital expenditure for the full year, excluding these
projects, is expected to be below depreciation.
The net pension liability, reflected in the balance sheet under FRS17,
was £63.8 million at the end of June compared to £63.6 million
at the end of December 2002. The charge against operating profit for pensions
and post-retirement medical benefits in the first half of 2003 was £2.9
million (2002: £2.9 million).
Net borrowings at the end of June were £58.2 million compared
to £37.1 million at June 2002 and £37.4 million at the end
of December 2002. Shareholders' funds at the half year were £268.3
million compared to £338.3 million at June 2002 and £275.3
million at the end of December 2002. Net gearing (the ratio of net borrowings
to shareholders' funds plus net borrowings) was 17.8 per cent compared
to 9.9 per cent at June 2002 and 12.0 per cent at the end of December
2002.
Brian Taylorson
Finance Director
29 July 2003
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