28th Jul 2005 07:01
Elementis PLC28 July 2005 PRESS INFORMATION 28 July 2005 Elementis plc INTERIM RESULTS FOR THE HALF YEAR ENDED 30 JUNE 2005 • Sales £223.6 million (2004: £176.8 million); $421.5 million (2004: $321.6 million) • Operating profit before exceptional items £8.1 million (2004: £5.6 million) • Profit before tax and exceptional items £4.5 million (2004: £3.0 million) • Earnings per share before exceptional items 1.0 pence (2004: 0.7 pence) • Net exceptional items £7.6 million (2004: £1.0 million) • Operating profit £0.5 million (2004: £4.6 million), loss before tax £3.1 million (2004: profit of £2.0 million), loss per share 0.5 pence (2004: earnings of 0.6 pence) • 26 per cent sales growth from Servo acquisition and price increases • 45 per cent higher operating profit before exceptional items • Chromium prices up 17 per cent on first half 2004 - further increases announced • Coatings volume down on soft consumer demand and slowing of Chinese growth • New TaiCang Pigments plant on stream, East St Louis operations scaling down • Servo rationalisation and head office reorganisation - benefits in second half Geoff Gaywood, Chief Executive of Elementis plc, said: "All four Elementis businesses delivered good sales growth in the first half of2005 compared to last year, despite softer demand for pigments and additives inthe coatings sector. The Servo acquisition added £40.5 million in sales and£2.0 million in operating profit, while better Chromium pricing, net of strongongoing variable cost inflation, generated a £2.4 million operating profitimprovement. Higher volumes in Specialty Rubber delivered a £0.5 millionoperating profit uplift. "Elementis will begin to benefit in the second half from cost reductions relatedto the scaling down of the East St Louis pigments plant, the Servorationalisation and a Head Office reorganisation, all of which have beenpreviously announced. "However, external inflationary cost pressures of the kind that significantlyimpacted 2004 performance, particularly energy and raw materials, remain aconcern, and a recovery of demand in the coatings sector is unlikely in theshort term." - Ends - An interview with Geoff Gaywood in video/audio format can be viewed on www.elementis.com and www.cantos.com from 0700 hours GMT. EnquiriesElementis plc Tel: +44 (0)1784 227 000Geoff Gaywood Chief ExecutiveBrian Taylorson Finance Director Financial Dynamics Tel +44 (0) 20 7831 3113Deborah ScottGreg Quine Chairman's Statement Overview Sales for the first half of 2005 rose by £46.8 million compared to the sameperiod of last year to £223.6 million, due to the acquisition of Sasol Servo on30 June 2004 and improved pricing, particularly in chromium chemicals. Softglobal demand in the coatings sector and unfavourable currency movementsnegatively impacted sales by £8.0 million. Operating profit for the period, before exceptional items, was £8.1 million, animprovement of £2.5 million, as a result of the Servo acquisition and pricesmoving ahead of raw material and energy cost inflation. There was a net chargeof £7.6 million for exceptional items, which comprised £4.6 million from thesale of the Hardman adhesives business completed in June, offset by charges of£7.1 million for the rationalisation of the East St Louis pigments plant, £4.0million for the rationalisation of the Servo operations, and a £1.1 million headoffice restructuring charge. The newly constructed pigments production facility in TaiCang, China, is nowproducing a full range of products, and operations at the East St Louis plantwill be scaled down during the second half of the year as production istransferred to other manufacturing sites including TaiCang. The Company expectsthat these moves will result in an improvement in margins for its pigmentsbusiness in 2006 when they will have been implemented fully. Dividends and issue of redeemable B shares The Board has not declared an interim ordinary dividend. Instead it willcontinue with its programme of issuing and redeeming redeemable B shares. TheBoard intends to issue further redeemable B shares to ordinary shareholders onthe register on 27 October 2005, such that they receive redeemable B shares witha total nominal share value of 1.1 pence for each ordinary share held. Theissue will be coupled with an offer to redeem the new shares for cash at theirnominal value on 2 November 2005. A further offer will also be made to existingholders of redeemable B shares to redeem these shares for cash at their nominalvalue on the same date. A circular providing full details of the issue andredemption of redeemable B shares will be posted to all ordinary shareholders on22 September 2005. Current trading and outlook The Board of Elementis, which was reconstituted in June 2005, is reviewing theCompany's strategy and the operations of each of its business units. TheCompany will provide an update of the plans resulting from this process duringthe second half. Excluding any changes that may result from the Board's review,the Company's current trading performance is in line with its expectations forcontinued improvement in the second half of the year. Edward BramsonChairman28 July 2005 Chief Executive's Strategic and Operating Review Strategic progress report All four Elementis businesses delivered good sales growth in the first half of2005 compared to the same period last year, with most of the 26 per centimprovement coming from the Servo acquisition and recovery in the chromiumchemicals business. A 45 per cent improvement in operating profit before exceptional items waslargely driven by continued progress in the restoration of chromium chemicalspricing. Inflationary cost pressure has continued, but the effects have beenoffset by improved pricing in all businesses. The demand for pigments andspecialty additives in decorative paints was estimated to be 5 - 6 per centbelow prior year due to weaker consumer demand in the US and Europe, and theeffects of Chinese government action to halt speculation in the constructionsector. There was good growth in sales of Servo products and to other targetedSpecialties markets. Specialty Rubber has continued to show good top linegrowth, and further improvement in operating profit. Specialties Sales net of the Servo acquisition declined by 6 per cent due to soft demand inthe coatings sector. The Servo acquisition, which is now fully integrated,added £33.0 million of sales and £1.3 million of operating profit, and relatedcost rationalisation measures previously announced will begin to take effect inthe second half of 2005. Overall operating profit before exceptional itemsdeclined by 10 per cent due to the coatings volume shortfall and an increasedoverhead cost allocation. Growth was good in the oilfield and personal caremarkets, and progress in the introduction of new technologies and productplatforms continues in line with expectations. PigmentsThe soft coatings market caused Elementis Pigments sales in this sector todecline by 5 per cent compared to the prior year. However, improved pricing andthe benefits of the additional sales of driers from the Servo acquisition offsetthe downside, so that overall sales rose by 17 per cent, and operating profitfor the period improved. Sales to the construction industry have been flat,while production of a new range of pigments for the plastics sector hascommenced. Start-up of the new world scale plant at TaiCang, China, hasproceeded as expected, and a full range of pigments is now being manufacturedthere in accordance with specifications. Production at the Elementis PigmentsEast St Louis plant will be scaled down in the second half of the year, asproduction increases at other facilities, including TaiCang. Chromium Chromium chemicals pricing in US Dollars rose by 19 per cent compared to thesame period in 2004, and US Dollar sales grew by 21 per cent, which translatesto a 17 per cent increase in Sterling. Global production capacityrationalisation in the Far East progressed further, while demand remained goodin all market sectors. Prices were increased in January, April and July, andwill be selectively increased again on 1 October. Cost inflation from freight,energy and raw materials has continued, but the tightening supply/demandsituation is supporting progressive operating profit recovery. Specialty Rubber Sales of Linatex brand rubber products to the mining and construction materialsindustries have continued to grow strongly in the first half of the year in allmarket sectors, and operating profit has risen accordingly. A new joint venturestarted up in Chile, further adding to growth momentum. This business iscurrently under strategic review. Safety and environmental Corporate safety performance, as measured by recordable incidents and lost timeaccidents, has continued on a favourable trend, and is now at the level of thetop quartile of the world's chemical companies. Board changes I am delighted to welcome Edward Bramson as the new Chairman of Elementis plc,and his fellow non-executive directors Matthew Peacock, Ken Minton and IanBrindle. The new Board is highly experienced and has a fine track record ofdelivering shareholder value, which creates a favourable environment for theenhancement of performance at Elementis. Geoff GaywoodChief Executive28 July 2005 Financial review of operationsfor the six months ended 30 June 2005 2005 2005 2005 Revenue Operating Operating profit profit/(loss) before after exceptional exceptional items items £million £million £million ______ ______ ______ Specialties 92.9 6.4 6.6Pigments 46.6 0.3 (7.0)Chromium 62.0 1.1 0.7Specialty Rubber 24.0 0.3 0.2Inter-group (1.9) - - ______ ______ ______ 223.6 8.1 0.5 ______ ______ ______ (Continued from table above) 2004 2004 2004 Revenue Operating Operating profit/(loss) profit/(loss) before after exceptional exceptional items items £million £million £million ______ ______ ______ Specialties 64.0 7.1 7.1Pigments 40.0 - -Chromium 53.1 (1.3) (2.3)Specialty Rubber 22.7 (0.2) (0.2)Inter-group (3.0) - - ______ ______ ______ 176.8 5.6 4.6 ______ ______ ______ IFRS The consolidated interim financial statements have been prepared in accordancewith International Financial Reporting Standards (IFRS) in issue and expected tobe endorsed by the European Union by 31 December 2005. Comparative results for2004 have been restated accordingly. As allowed by IFRS, significant transactions primarily in relation torestructuring and business disposals have been separately identified in thefinancial statements to enable users to understand these items and the businessresults excluding these significant items. These significant transactions havecollectively been described as exceptional items. Financial results Revenue in the first half of 2005 was £46.8 million higher than the same periodin 2004 at £223.6 million. The acquisition of the Servo business in June 2004added £40.5 million to revenue, while currency movements reduced sales by 2 percent. On a constant currency basis and excluding acquisitions and disposals,revenue increased by 6 per cent, with Chromium up 19 per cent, Specialty Rubberup 5 per cent, Specialties lower by 2 per cent and Pigments essentially flat. Sales volumes were 2 per cent lower with increases in Chromium and SpecialtyRubber offset by declines in Specialties and Pigments. In terms of geography,volumes in North America were higher than the previous year, with strong salesin Chromium to the industrial CCA and refractory markets more than offsettingsoft demand in coatings. Volumes in Asia Pacific were generally lower due to aslowdown in the Chinese construction sector and a softer coatings market,although volumes sold to Japan by Chromium increased due to plant closuresthere. European volumes were more or less flat. Operating profit before exceptional items was £2.5 million higher than last yearat £8.1 million. The Servo acquisition contributed £2.0 million and priceincreases, particularly in Chromium, contributed close to £14.0 million. Energycosts increased by £3.3 million while other costs, particularly raw materialsand freight, increased by around £9.0 million with much of the inflation incosts having taken place during the second half of 2004. Profit before tax and exceptional items was £4.5 million compared to £3.0million in the first half of 2004. Basic earnings per share before exceptionalitems increased to 1.0p (2004: 0.7p) due to the increase in operating profits,partly offset by higher finance costs and taxation. Exceptional items were a net charge before tax of £7.6 million giving an overallloss before tax of £3.1 million (2004: profit of £2.0 million). Earnings pershare after exceptional items was a loss of 0.5p (2004: earnings of 0.6p). Specialties Revenue at Specialties was £28.9 million higher than the previous year at £92.9million. The Servo acquisition added £33.0 million to revenue while currencymovements reduced it by £2.2 million. Excluding the effects of currency andacquisitions, revenue was 2 per cent lower than the previous year. Pricesimproved by 4 per cent versus the first half of 2004, but volumes were around 6per cent lower due to softer demand in the coatings sector in both Europe andNorth America. Operating profit before exceptional items was £0.7 million lower than the firsthalf of 2004 at £6.4 million. Lower sales volumes were compensated by higherprices and the Servo acquisition added £1.3 million to operating profit. Inaddition, the revaluation of Hectorite ore at its mine in California contributed£0.8 million to its result in the first half of 2005. Fixed costs were higherthan the previous year and this will be addressed in the second half of 2005 bythe announced rationalisation at Servo and the reduction in centraladministration costs. 2004 2005 Revenue Revenue Six months Effect of Six months ended exchange Acquisitions/ Increase/ ended 30 June rates disposals (decrease) 30 June £million £million £million £million £million ______ ______ ______ ______ ______ Specialties 64.0 (2.2) 32.3 (1.2) 92.9Pigments 40.0 (0.6) 7.5 (0.3) 46.6Chromium 53.1 (1.3) - 10.2 62.0Specialty Rubber 22.7 0.1 - 1.2 24.0Inter-company (3.0) 0.1 - 1.0 (1.9) ______ ______ ______ ______ ______ 176.8 (3.9) 39.8 10.9 223.6 ______ ______ ______ ______ ______ Pigments Revenue at Pigments for the first half of 2005 was £6.6 million higher than theprevious year at £46.6 million. Excluding the Servo acquisition, which added£7.5 million of sales and the effects of currency, revenue was essentially flat.Prices improved by around 6 per cent but were offset by lower volumes due tosofter demand in the coatings sector in both Europe and North America. Operating profit before exceptional items was £0.3 million higher than the firsthalf of 2004 at £0.3 million. Higher selling prices more than offset theeffects of lower volumes, but energy and raw material cost inflation, which wasparticularly evident in the second half of 2004, had a dampening effect. TheServo acquisition contributed around £0.7 million to operating profit. Chromium Revenue at Chromium increased by £8.9 million versus the first half of 2004 to£62.0 million, largely driven by strong selling price momentum that increasedsales by 17 per cent. Volumes were up 2 per cent with increases in most highermargin products, offset by reduced volumes in lower margin dichromate and chromesulphate. Overall, revenues on a constant currency basis were 19 per cent higherthan the first half of 2004. Operating profit before exceptional items improved by £2.4 million versus thefirst half of 2004 to £1.1 million. Improvements in pricing and volumes wereoffset by an increase of £2.4 million in energy costs and other cost increasesof £4.4 million, mostly in raw materials, freight and maintenance. Specialty Rubber Revenue at Specialty Rubber increased by £1.3 million versus the first half of2004 to £24.0 million. The improvement came in equal amounts from increasedvolumes and higher prices. Volume increases were particularly prominent inEurope and also in Chile, where a new joint venture was recently formed to servethat market. Operating profit before exceptional items was £0.3 million versus a loss of £0.2million in the first half of 2004. Improved sales more than offset costinflation. Exceptional items IFRS requires separate disclosure of material items of income and expense.These items are considered to be most appropriately described as exceptional. 2005 £millionRationalisation of East St Louis pigments plant (7.1)Rationalisation of Servo business (4.0)Central restructuring costs (1.1)Sale of Hardman business 4.6Total (7.6) ______ The Group announced on 30 June 2005 that the majority of its Pigments plant atEast St Louis would cease operation and that production would be transferred toother sites, including the newly constructed facility at TaiCang. The charge of£7.1 million comprises an asset impairment of £4.8 million and redundancy anddecommissioning costs of £2.3 million. The charge of £4.0 million in respect of the Servo business comprisesredundancies and the cost of transferring the Group's Oosterhout plant to theServo plant at Delden, Netherlands. In addition, as part of management's continued focus on cost control and due tothe significant progress that the Group has made in resolving legacy legalissues, a central restructuring has been implemented at a cost of £1.1 million. The sale of the Group's Hardman epoxy and urethane products business wascompleted on 13 June 2005 for a cash consideration of £7.8 million, whichresulted in a gain on disposal of £4.6 million. Interest £million 2005 2004 ______ ______On net borrowings 2.8 1.7Pension finance charge 0.5 0.4Discount on provisions 0.3 0.5Total 3.6 2.6 ______ ______ Interest payable on net borrowings was £1.1 million higher than the previousyear due to increased borrowings following the acquisition of Servo in June2004. Interest cover (the ratio of operating profit before exceptional items tointerest on net borrowings) was 3.1 times (2004: 7.1 times) Taxation Tax (charge)/credit £million Effective rate ______ ______Before exceptional items (0.1) 2.6%Exceptional items 1.3 17.1%Total 1.2 - ______ ______ The Group's tax rate on profit before exceptional items was 2.6 per cent and islower than the standard UK corporation tax rate primarily due to the utilisationof brought forward losses and the resolution of open issues from prior periods. Earnings per share Earnings per share before exceptional items was 1.0 pence (2004: 0.7 pence) dueto the £2.5 million increase in operating profit, which was partially offset byincreased finance costs and taxation. Earnings per share after exceptionalitems was a loss of 0.5 pence (2004: earnings of 0.6 pence). Cash flow Net borrowings increased by £10.9 million in the period to 30 June 2005 to£101.1 million. This included £2.5 million in relation to B shares which, dueto their preferential rights, have been transferred to net borrowings inaccordance with IAS 39. Working capital increased by £9.0 million (2004: £18.8 million) reflectingseasonal trading. The increase is less than the same period last year due toimprovements in working capital following the implementation of the Group's ERPsystem in three of the businesses and the creation of Shared Service Centres inNorth America and Europe. Currency fluctuations also caused borrowings toincrease by £4.7 million. The cash flow is summarised below: 2005 2004 £million £million _______ _______Earnings before interest, exceptionals,depreciation and amortisation 16.9 12.6Change in working capital (9.0) (18.8)Other (5.8) (4.5)Capital expenditure (9.0) (9.7) _______ _______ (6.9) (20.4)Redemption of B shares (4.6) (4.6)Acquisitions and disposals 7.8 (34.8)Reclassification of B shares (2.5) -Currency translation on net borrowings (4.7) 0.5 _______ _______ (10.9) (59.3)Net borrowings at start of period (90.2) (46.9)Net borrowings at end of period (101.1) (106.2) _______ _______ Capital expenditure Capital expenditure on fixed assets was £8.7 million (2004: £9.7 million). Thisincluded £1.3 million on the construction of the Pigments plant in TaiCang,China. Excluding this project capital expenditure was 84 per cent ofdepreciation (2004: 84 per cent). Balance sheet 2005 2004 £million £million ______ ______Tangible fixed assets 174.2 171.8Other net assets 151.5 183.5 ______ ______ 325.7 355.3 ______ ______Equity attributable to parent 224.6 249.1Net borrowings 101.1 106.2 ______ ______ 325.7 355.3 ______ ______Gearing1 31% 30% ______ ______ 1 the ratio of net borrowings to equity attributable to parent plus netborrowings Equity attributable to the parent was lower than at 30 June 2004 due to changesin deferred tax and actuarial losses associated with pension and other postretirement schemes of £13.6 million and the redemption of B shares totalling£9.2 million. The main sterling currency exchange rates in the period were: 2005 2005 2004 2004 30 June Average 30 June Average ______ ______ ______ ______US dollar 1.79 1.87 1.81 1.82Euro 1.48 1.45 1.49 1.48 ______ ______ ______ ______ There was no significant impact on the Group's balance sheet as a result ofchanges in the period end exchange rates. In terms of average exchange ratesfor the first six months of 2005 and the equivalent period last year, the Eurowas 2 per cent stronger against the Pound Sterling in the current period, whilethe US Dollar was 3 per cent weaker. Average exchange rate movements in thefirst six months of 2005 caused revenue to be £3.9 million lower than last yearand operating profit to be £1.1 million higher than last year. Working capital Inventories were £7.6 million higher than at the same time last year. This wasprimarily due to a strategic inventory build in the Pigments business inanticipation of the closure and transfer of production from the East St Louisplant. Debtor days at the end of the period were 56 compared to 61 days at 30June 2004 and creditor days had increased by 8 days to 69 (2004: 61). Pensions and other post retirement benefits The pension liability was £81.8 million at 30 June 2005 compared to £81.4million at 31 December 2004. The pension schemes were not revalued at 30 June2005 and the net liability calculated by the Group's actuaries at 31 December2004 has been updated for contributions paid and amounts expensed in the sixmonths ended 30 June 2005. In the first half £3.4 million (2004: £3.0 million) was charged to the profitand loss account including £0.5 million (2004: £0.4 million) of finance chargesand £5.1 million (2004: £3.9 million) was paid in contributions. Brian TaylorsonFinance Director28 July 2005 Consolidated interim income statementfor the six months ended 30 June 2005 Six months ended 30 June 2005 Before After exceptional Exceptional exceptional Note items items* items £million £million £million ______ ______ ______Revenue 3 223.6 - 223.6Cost of sales (154.8) - (154.8) ______ ______ ______Gross profit 68.8 - 68.8Other operating income - 4.6 4.6Distribution costs (35.2) - (35.2)Administrative expenses (25.4) (12.2) (37.6)Share of loss of associates (0.1) - (0.1) ______ ______ ______Operating profit 3 8.1 (7.6) 0.5Net finance costs 4 (3.6) - (3.6) ______ ______ ______Profit/(loss) before income tax 4.5 (7.6) (3.1)Tax 6 (0.1) 1.3 1.2 ______ ______ ______Profit for the period 4.4 (6.3) (1.9) ______ ______ ______Attributable to:Equity holders of the parent 4.2 (6.3) (2.1)Minority interests 0.2 - 0.2 ______ ______ ______ 4.4 (6.3) (1.9) ______ ______ ______Earnings per shareBasic and diluted 7 1.0 (0.5) ______ ______ (Continued from table above) Six months ended 30 June 2004 Before After exceptional Exceptional exceptional Note items items* items £million £million £million ______ ______ ______Revenue 3 176.8 - 176.8Cost of sales (117.8) - (117.8) ______ ______ ______Gross profit 59.0 - 59.0Other operating income - - -Distribution costs (30.5) - (30.5)Administrative expenses (22.9) (1.0) (23.9)Share of loss of associates - - - ______ ______ ______Operating profit 3 5.6 (1.0) 4.6Net finance costs 4 (2.6) - (2.6) ______ ______ ______Profit/(loss) before income tax 3.0 (1.0) 2.0Tax 6 0.2 0.2 0.4Profit for the period 3.2 (0.8) 2.4 ______ ______ ______Attributable to: 2.4 Equity holders of the parent 3.2 (0.8)Minority interests - - - 3.2 (0.8) 2.4Earnings per share Basic and diluted 7 0.7 0.6 * IFRS requires separate disclosure of items of income and expense which arematerial by virtue of their nature and amount. These items are considered to bemost appropriately disclosed as exceptional (see note 5). Consolidated interim income statement (continued) Year ended 31 December 2004 Before After Exceptional Exceptional exceptional Note items items items £million £million £million ______ ______ ______Revenue 3 389.2 - 389.2Cost of sales (264.1) - (264.1) ______ ______ ______Gross profit 125.1 - 125.1Other operating income - 2.6 2.6Distribution costs (66.5) - (66.5)Administrative expenses (47.1) (5.2) (52.3) ______ ______ ______Operating profit 3 11.5 (2.6) 8.9Net finance costs 4 (5.6) - (5.6) ______ ______ ______Profit before income tax 5.9 (2.6) 3.3Tax 6 (0.1) 0.2 0.1 ______ ______ ______Profit for the period 5.8 (2.4) 3.4 ______ ______ ______Attributable to:Equity holders of the parent 5.8 (2.4) 3.4Minority interests - - - ______ ______ ______ 5.8 (2.4) 3.4 ______ ______ ______Earnings per shareBasic and diluted 7 1.3 0.8 ______ ______ Consolidated interim statement of recognised income and expensefor the six months ended 30 June 2005 2005 2004 2004 Six months Six months ended ended Year ended 30 June 30 June 31 December £million £million £million ______ ______ ______Exchange differences on translation of foreignoperations 11.6 (1.1) (11.8) Actuarial loss on pension and other post retirementschemes - - (4.7) Deferred tax associated with pension and other postretirement schemes - - (8.9) ______ ______ ______Net income/(expense) recognised in equity 11.6 (1.1) (25.4)(Loss)/profit for the period (2.1) 2.4 3.4 ______ ______ ______Total recognised income and expense for the period 9.5 1.3 (22.0) ______ ______ ______Attributable to:Equity holders of the parent 9.3 1.3 (22.0)Minority interests 0.2 - - ______ ______ ______ 9.5 1.3 (22.0) ______ ______ ______ Consolidated interim statement of changes in equityfor the six months ended 30 June 2005 2005 2004 2004 Six months Six months ended ended Year ended 30 June 30 June 31 December £million £million £million ______ ______ ______Total recognised income and expense for the period 9.5 1.3 (22.0)Transfer of B shares from equity to non-currentliabilities (2.5) - -Issue of shares 0.6 - -Recognition of share-based payments 0.3 0.1 0.2Redemption of redeemable B shares (4.6) (4.6) (9.2) ______ ______ ______Net increase/(decrease) in equity attributable tothe parent 3.3 (3.2) (31.0)At beginning of financial period 221.3 252.3 252.3 ______ ______ ______At end of financial period 224.6 249.1 221.3 ______ ______ ______ Consolidated interim balance sheetat 30 June 2005 2005 2004 2004 30 June 30 June 31 December £million £million £million ______ ______ ______Non-current assetsGoodwill 164.1 163.2 155.1Intangible assets 0.5 0.6 0.6Property, plant and equipment 174.2 171.8 173.0Interests in associates and other investments 2.2 3.8 1.9Deferred tax assets 17.6 26.0 16.9 ______ ______ ______Total non-current assets 358.6 365.4 347.5 ______ ______ ______ Current assetsInventories 73.9 66.3 68.3Trade and other receivables 95.6 91.9 84.0Cash and cash equivalents 12.6 32.4 11.5Assets classified as held for sale - 6.7 3.7 ______ ______ ______Total current assets 182.1 197.3 167.5 ______ ______ ______Total assets 540.7 562.7 515.0 ______ ______ ______ Current liabilitiesBank overdrafts and loans (6.2) (8.7) (4.4)Trade and other payables (84.5) (65.4) (79.8)Provisions (7.6) (1.3) (0.8)Liabilities classified as held for sale - (1.3) (1.3) ______ ______ ______Total current liabilities (98.3) (76.7) (86.3) ______ ______ ______ Non-current liabilitiesBank loans (107.5) (129.9) (97.3)Retirement benefit obligations (81.8) (79.7) (81.4)Deferred tax liabilities (1.8) (0.9) (2.9)Provisions (21.9) (22.1) (21.6)Government grants (2.3) (2.4) (2.4) ______ ______ ______Total non-current liabilities (215.3) (235.0) (205.6) ______ ______ ______Total liabilities (313.6) (311.7) (291.9) ______ ______ ______Net assets 227.1 251.0 223.1 ______ ______ ______ EquityShare capital 22.1 23.6 23.8Share premium 1.2 1.2 1.2Other reserves 75.9 65.8 59.7Retained earnings 125.4 158.5 136.6 ______ ______ ______Equity attributable to equity holders ofthe parent 224.6 249.1 221.3Minority equity interests 2.5 1.9 1.8 ______ ______ ______Total equity and reserves 227.1 251.0 223.1 ______ ______ ______ Consolidated interim cash flow statementfor the six months ended 30 June 2005 2005 2004 2004 Six months Six months Year ended ended ended 30 June 30 June 31 December Note £million £million £million ______ ______ ______ Cash flow from operating activities 8 1.3 (11.0) 13.5 ______ ______ ______Investing activitiesInterest received 0.3 0.3 1.4Disposal of property, plant and equipment - - 5.8Purchase of property, plant and equipment (9.0) (9.7) (22.0)Acquisition of business - (34.8) (36.3)Disposal of businesses 7.8 - - ______ ______ ______Net cash used in investing activities (0.9) (44.2) (51.1) Financing activitiesIssue of shares 0.6 - -Redemption of B shares (4.6) (4.6) (9.2)(Decrease) in borrowings due within one year (3.0) (0.6) (0.8)Increase in borrowings repayable after one year 2.7 65.6 35.8Repayments of obligations under finance leases (0.2) - (0.2) ______ ______ ______Net cash (used in)/from financing activities (4.5) 60.4 25.6 ______ ______ ______Net (decrease)/increase in cash and cash (4.1) 5.2 (12.0)equivalentsCash and cash equivalents at beginning of period 10.3 22.6 22.6Foreign exchange 0.2 (0.8) (0.3) ______ ______ ______Cash and cash equivalents at end of period 6.4 27.0 10.3 ______ ______ ______ Notes to the interim financial statementsfor the six months ended 30 June 2005 1 General Information The comparative figures for the year ended 31 December 2004 are not theCompany's statutory accounts for that financial year. Those accounts, whichwere prepared under UK Generally Accepted Accounting Practices, have beenreported on by the Company's auditor and delivered to the Registrar ofCompanies. The auditor's report was unqualified and did not contain statementsunder section 237 (2) or (3) of the Companies Act 1985. 2 Accounting policies Statement of compliance The consolidated interim financial statements of theCompany comprise the Company and its subsidiaries (the "Group") and the Group'sinterest in associates. European Union (EU) law requires that the next annualconsolidated financial statements of the Company, for the year ending 31December 2005, be prepared in accordance with International Financial ReportingStandards (IFRS) adopted for use in the EU ("adopted IFRS"). This interimfinancial information has been prepared on the basis of the recognition andmeasurement requirements of IFRS in issue that either are endorsed by the EU andeffective at 30 June 2005 or are expected to be endorsed and effective at 31December 2005, the Group's first annual reporting date at which it is requiredto use adopted IFRSs. Based on these adopted and unadopted IFRSs, the directorshave made assumptions about the accounting policies expected to be applied,which are as set out below, when the first annual IFRS financial statements areprepared for the year ending 31 December 2005. In particular, the directors have assumed that the following IFRS issued by theInternational Accounting Standards Board will be adopted by the EU insufficient time that it will be available for use in the annual IFRS financialstatements for the year ending 31 December 2005: Amendment to International Accounting Standard IAS 19 Employee Benefits:Acturial Gains and Losses, Group Plans and Disclosures In addition, the adopted IFRSs that will be effective in the annual financialstatements for the year ending 31 December 2005 are still subject to change andto additional interpretations and therefore cannot be determined with certainty.Accordingly, the accounting policies for that annual period will be determinedfinally only when the annual financial statements are prepared for the yearending 31 December 2005. An explanation of how the transition to IFRS has affected the reported financialposition, financial performance and cash flows of the Group was published by theCompany on 31 March 2005 and is available on its website at www.elementis.com. 3 Segment reporting Segment information is presented in the consolidated interim financialstatements in respect of the business segments that reflect the Group'smanagement and internal reporting structure. Six months ended 30 June 2005 External Eliminations Total £million £million £million ______ ______ ______RevenueSpecialties 92.9 - 92.9Pigments 46.6 - 46.6Chromium 62.0 (1.9) 60.1Speciality Rubber 24.0 - 24.0Inter-segment sales (1.9) 1.9 - ______ ______ ______ 223.6 - 223.6 ______ ______ ______ (Continued from table above) Six months ended 30 June 2004 External Eliminations Total £million £million £million ______ ______ ______RevenueSpecialties 64.0 - 64.0Pigments 40.0 - 40.0Chromium 53.1 (3.0) 50.1Speciality Rubber 22.7 - 22.7Inter-segment sales (3.0) 3.0 - ______ ______ ______ 176.8 - 176.8Related Shares:
Elementis