29th Dec 2008 07:00
29 December 2008
Yule Catto & Co plc
Update
Yule Catto & Co plc ("the Group") is pleased to announce that it has signed a new three year £30 million revolving loan facility with its principal banks, HSBC and Barclays. This loan replaces its existing revolving bank loan facility maturing in November 2009.
During the course of this re-financing, the Board has been carefully considering the capital structure of the Group. Whilst much progress has been made on the deleveraging of the balance sheet, with £55 million of gross proceeds received from the sale of three of our five Impact Chemicals businesses, the balance sheet remains a core focus of the Board and it aims to reduce outstanding net debt to below £100 million over the next twelve to twenty four months. The Board believes this is consistent with the Group's objectives, including its financial commitments to the Group's UK pension fund.
Accordingly, and in light of the current financial environment and economic uncertainty, the Board has additionally decided to suspend the payment of dividends until such time as net debt is nearer to its overall target and at which time the business environment and financial market conditions may well have improved. The Board anticipates reverting to the payment of a dividend within two years.
At the time the Group recommences the payment of a dividend, the Board anticipates rebasing it to a level determined by comparison with its peer group and which will allow an appropriate free cash flow to suit the Group's circumstances.
The Board is also pleased to confirm that for 2008 the Group still expects to deliver underlying earnings before tax modestly ahead of last year, despite the current difficult economic conditions particularly in the UK and Continental Europe.
The Board believes it is too early at this time, given the prevailing economic uncertainty, to offer any firm guidance on the outturn for 2009. The Group's Impact Chemicals and Pharma Chemicals businesses should benefit next year from recent restructuring. Within our Polymer Chemicals business we anticipate the performance of our Asian and Middle East businesses to be more robust than that of our European businesses, due to local market conditions and a more resilient demand profile from our targeted markets. In addition, the current relative weakness of Sterling against the Dollar, Euro and Malaysian Ringgit, should it continue, will assist the reported Sterling earnings for a number of our businesses.
The Group continues to look at ways to improve efficiency and minimise costs. We currently have a number of initiatives in hand to do this, both within Europe and the rest of the world.
These are exceptional times, with a high degree of market uncertainty and a very difficult environment for funding. Having completed £55 million of divestments and put in place a new revolving loan, the Board believes that, together with internal actions to conserve cash and the suspension of the dividend, Yule Catto is now well placed to weather these conditions.
- Ends -
For further information, please contact:
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Yule Catto & Co plc
Adrian Whitfield, Chief Executive
David Blackwood, Group Finance Director
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01279 442791
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Hogarth Partnership
John Olsen
Andrew Jaques
Ian Payne
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020 7357 9477
07770 272082
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