<PAGE>
EXHIBIT 99.1
<TABLE>
<CAPTION>
Page
----
<S> <C>
Historical Financial Statements:
Annual
Report of Independent Accountants 7
Consolidated Statements of Income for the Years ended
December 31, 1998 and 1999 8
Consolidated Statements of Changes in Financial Position (Cash Flows)
for the Years Ended December 31, 1998 and 1999 9
Consolidated Balance Sheets as of December 31, 1998 and 1999 10
Notes to Consolidated Financial Statements 11
Interim (Unaudited)
Consolidated Statements of Income for the Six Months ended
June 30, 1999 and 2000 42
Consolidated Statements of Changes in Financial Position (Cash Flows)
and Reconciliation of Net Debt for the Six Months Ended
June 30, 1999 and 2000 43
Consolidated Balance Sheets as of June 30, 1999 and 2000 45
Notes to Interim Financial Statements 46
</TABLE>
6
<PAGE>
To the Board of Directors and Shareholders of Hickson International plc
In our opinion, the accompanying consolidated balance sheets and the related
consolidated profit and loss accounts and cash flow statements present fairly in
all material respects, the financial position of Hickson International plc and
its subsidiaries at December 31, 1998 and 1999 and the results of their
operations and their cash flows for each of the two years in the period ended
December 31, 1999 in conformity with accounting principles generally accepted in
the United Kingdom. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with auditing standards generally accepted in
the United States which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
Accounting principles generally accepted in the United Kingdom vary in certain
significant respects from accounting principles generally accepted in the United
States. The application of the latter would have affected the determination of
consolidated net income expressed in sterling for each of the two years in the
period ended December 31, 1999 and the determination of consolidated
shareholders' equity and consolidated financial position also expressed in
sterling at December 31, 1999 and 1998 to the extent summarised in Note 27 to
the consolidated financial statements.
PricewaterhouseCoopers
Leeds, England
21 March 2000, except for the information presented in Note 27
for which the date is 31 October 2000
7
<PAGE>
ANNUAL FINANCIAL STATEMENTS
<PAGE>
HICKSON INTERNATIONAL PLC
CONSOLIDATED PROFIT & LOSS ACCOUNT
Years ended 31 December:
<TABLE>
<CAPTION>
Before Exceptional Before Exceptional
----------- ----------- ----------- -----------
Note Exceptional Items 1999 Exceptional Items 1998 Total 1998
---- ----------- ----------- ----------- ----------- -----------
Items 1999 (Note 4) Total 1999 Items 1998 (Note 4)
----------- ----------- ---------- ----------- -----------
(Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m
<S> <C> <C> <C> <C> <C> <C> <C>
Turnover.................. 1 219.0 -- 219.0 227.2 -- 227.2
Deduct share of
associated
undertakings............. 10.8 -- 10.8 9.8 -- 9.8
------ ----------- ------ ------ ----------- ------
Group turnover............ 208.2 -- 208.2 217.4 -- 217.4
Costs and overheads....... 3 (200.8) (21.7) (222.5) (203.1) (6.0) (209.1)
------ ----------- ------ ------ ----------- ------
Operating Profit.......... 1 7.4 (21.7) (14.3) 14.3 (6.0) 8.3
Share of operating
profit in associated
undertakings............. 1.1 -- 1.1 1.0 -- 1.0
Loss on termination
and disposal of
operations............... -- -- -- -- (7.0) (7.0)
------ ----------- ------ ------ ----------- ------
Profit/(Loss) before
interest and
taxation................. 8.5 (21.7) (13.2) 15.3 (13.0) 2.3
------ ----------- ------ -----------
Interest.................. 6 (2.4) (2.5)
------ ------
Loss Before
Taxation................. (15.6) (0.2)
Taxation.................. 7 (2.6) 0.7
------ ------
(Loss)/Profit for the
Financial Year........... (18.2) 0.5
Dividends................. 8 (2.8) (2.8)
------ ------
Retained Loss for the
Financial Year........... (21.0) (2.3)
====== ======
Earnings per Share 9
Before Exceptional
Items....................
Basic..................... 2.01p 6.61 p
Diluted................... 2.01p 6.61 p
(Loss)/Earnings per
Share
After Exceptional
Items....................
Basic..................... (10.47)p 0.29 p
Diluted................... (10.47)p 0.29 p
</TABLE>
The results for the years ended 31 December 1998 and 1999 all relate to
continuing operations, except for turnover of (Pounds)1.4m and costs and
overheads of (Pounds)1.4m which related to discontinued operations in 1998.
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
For the year ended 31 December 1999
<TABLE>
<CAPTION>
1999 1998
-------------- -------------
(Pounds)m (Pounds)m
-------------- -------------
<S> <C> <C>
(Loss)/Profit for the financial year (18.2) 0.5
Adjustment in respect of the translation of foreign currency net
investments to sterling (0.8) 0.5
----- ----
Total Recognised Gains and Losses relating to the Year 19.0 1.0
===== ====
</TABLE>
8
<PAGE>
HICKSON INTERNATIONAL PLC
CASH FLOW STATEMENT
<TABLE>
<CAPTION>
Year ended 31 December:
-------------------------
Note 1999 1998
----
(Pounds)m (Pounds)m
<S> <C> <C>
NET CASH INFLOW FROM OPERATING ACTIVITIES
BEFORE EXCEPTIONAL ITEMS..................................... 28.6 27.6
Exceptional items............................................ (3.9) (11.5)
----- -----
10 NET CASH INFLOW FROM OPERATING ACTIVITIES.................... 24.7 16.1
RETURNS ON INVESTMENTS AND SERVICING OF
FINANCE......................................................
Interest paid................................................ (2.7) (3.8)
Interest received............................................ 0.3 1.3
----- -----
(2.4) (2.5)
----- -----
TAXATION..................................................... (0.5) (1.7)
CAPITAL EXPENDITURE..........................................
Purchase of tangible fixed assets............................ (14.1) (14.7)
Sale of tangible fixed assets................................ 0.3 0.4
----- -----
(13.8) (14.3)
----- -----
ACQUISITIONS AND DISPOSALS...................................
Sale of businesses and investments........................... -- 0.6
Other items.................................................. (0.1) (0.7)
----- -----
(0.1) (0.1)
----- -----
EQUITY DIVIDENDS PAID........................................ (3.9) (1.8)
11 NET CASH INFLOW/(OUTFLOW) BEFORE FINANCING................... 4.0 (4.3)
MANAGEMENT OF LIQUID RESOURCES...............................
Sale of cash investments..................................... 0.7 0.2
FINANCING....................................................
New loans.................................................... -- 3.2
Repayment of amounts borrowed................................ (2.8) --
----- -----
(2.8) 3.2
----- -----
12 INCREASE/(DECREASE) IN CASH.................................. 1.9 (0.9)
===== =====
</TABLE>
9
<PAGE>
HICKSON INTERNATIONAL PLC
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31:
-------------------------
Note 1999 1998
------ -------- --------
(Pounds)m (Pounds)m
<S> <C> <C> <C>
Fixed Assets
Tangible fixed assets......................................... 13 83.4 101.5
Investments................................................... 14 4.1 4.2
----- -----
87.5 105.7
----- -----
Current Assets
Stocks........................................................ 15 29.9 34.4
Debtors....................................................... 16 54.5 54.4
Cash at bank and in hand...................................... 17 15.2 13.7
----- -----
99.6 102.5
Creditors Amounts Falling Due Within One Year................. 18 (55.2) (49.6)
----- -----
Net Current Assets............................................ 44.4 52.9
----- -----
Total Assets Less Current Liabilities......................... 131.9 158.6
----- -----
Creditors Amounts Falling Due After More Than One Year........ 19 (42.6) (45.5)
Provisions for Liabilities and Charges........................ 21 (16.2) (18.2)
----- -----
Net Assets.................................................... 73.1 94.9
===== =====
Capital and Reserves
Called up share capital....................................... 22 44.0 44.0
Share premium account......................................... 23 24.5 24.5
Profit and loss account....................................... 23 4.6 26.4
----- -----
Shareholders' Funds--Equity Interest.......................... 23 73.1 94.9
===== =====
</TABLE>
10
<PAGE>
HICKSON INTERNATIONAL PLC
ACCOUNTING POLICIES
Basis of Accounting
The financial statements have been prepared in accordance with applicable UK
accounting standards under the historical cost convention.
Basis of Consolidation
The Group financial statements consolidate the accounts of Hickson International
PLC and its subsidiary undertakings. The results of the businesses are
consolidated from the effective date of their acquisition to the effective date
of their sale.
Goodwill
Prior to 31 December 1997, goodwill, being the amount by which the consideration
for new Group and associated undertakings differs from the fair value of net
assets acquired, was set against reserves in the year in which it arose. From 1
January 1998, goodwill arising on future acquisitions will be carried as an
asset in the balance sheet and amortised as appropriate, in equal annual
instalments over its estimated economic life, being a period not exceeding 20
years. There were no acquisitions made in the current period. The reported
profit or loss on any future sale or termination of a business will include any
goodwill which has not been amortised through the profit and loss account or
which was previously charged directly to reserves.
Associated Undertakings
A company is treated as an associated undertaking when the Group has a
participating interest in its equity share capital and exercises a significant
influence over operating and financial policy. The Group's interests in
associated undertakings in the consolidated balance sheet reflect the Group's
share of the underlying net tangible assets.
Deferred Taxation
No provision is made for deferred taxation resulting from timing differences
between profits computed for taxation purposes and profits stated in the
accounts unless there is reasonable probability that such timing differences
will give rise to a taxation liability in the foreseeable future.
Foreign Currencies
Transactions denominated in foreign currencies are translated at the rate of
exchange on the day the transaction occurs or at the contracted rate if the
transaction is covered by a forward exchange contract.
11
<PAGE>
HICKSON INTERNATIONAL PLC
Assets and liabilities denominated in foreign currencies are translated at the
exchange rate ruling at the balance sheet date or if appropriate at the forward
contract rate. Exchange differences arising in the accounts of individual
companies are included in the profit and loss account except that, where foreign
currency borrowings have been used to finance equity investments in foreign
currencies, exchange differences arising on the borrowings are dealt with
through reserves to the extent that they are covered by exchange differences
arising on the net assets represented by the equity investments. The accounts of
overseas subsidiaries and associated undertakings are translated into sterling
on the following bases:
Assets and liabilities at the rate of exchange ruling at the year end date.
Profit and loss account items at the average rate of exchange ruling during
the financial year.
Exchange differences arising on the re-translation of opening net assets
into sterling are recorded as movements on reserves in the Group balance
sheet.
Financial Instruments
The Group uses derivative financial instruments (interest rate swaps and forward
exchange contracts) to hedge its exposure to fluctuations in interest and
foreign exchange rates. Instruments accounted for as hedges are designated as a
hedge at the inception of contracts.
Receipts and payments on interest rate instruments are recognised on an accruals
basis over the life of the instrument.
Gains and losses on foreign currency hedges are recognised on maturity of the
underlying transaction, other than translational hedges of foreign currency
investments, which are taken to reserves.
Gains and losses arising from the re-timing of foreign exchange transactional
cover and those arising on hedging instruments which are cancelled due to the
termination of the underlying exposure, are taken to the profit and loss
account.
Stock Valuation
Stocks are stated at the lower of cost, on a first in first out basis, and
estimated net realisable value.
Long-Term Contracts
In relation to substantial long-term contracts, turnover and profits are
recognised by reference to the estimated outcome for the contract as a whole, on
stages completed within specification.
12
<PAGE>
HICKSON INTERNATIONAL PLC
Depreciation and Carrying Values of Fixed Assets
Depreciation is calculated at rates appropriate to write off individual fixed
assets from the time they become fully operational by equal annual instalments
over their estimated useful lives which are reviewed on a regular basis. The
assumed life of buildings is 40 years or the term of the lease if shorter; plant
and machinery are written off over 4 to 20 years; vehicles over 4 to 5 years and
fixtures and fittings over 3 to 5 years. Freehold land, long leasehold land and
assets in the course of construction are not depreciated.
The carrying value of fixed assets is reviewed for impairment if events or
changes in circumstances suggest that their carrying amount may not be
recoverable. When an impairment review is undertaken, the recoverable amount is
calculated as the net present value of expected future cash flows of the
relevant income generating unit. The discount rate used in these calculations is
based upon the Group's weighted average cost of capital adjusted for the risks
associated with the relevant unit.
Leased Assets
Where assets are acquired under finance leases the amount representing the
outright purchase price of such assets is included in tangible fixed assets.
Depreciation is provided at rates designed to write off the net cost in equal
annual amounts over the shorter of the estimated useful lives of the assets
(which are the same as those for assets purchased outright) or the period of the
leases. The capital element of future rentals is treated as a liability and the
interest element is charged to the profit and loss account over the period of
the leases in proportion to the balances outstanding. Operating lease rentals
are charged to the profit and loss account when incurred.
Investment Grants
Grants related to expenditure on tangible fixed assets are credited to the
profit and loss account over a period approximating to the lives of the
qualifying assets.
Environmental Liabilities
Environmental costs that relate to an existing condition caused by past
operations and that do not contribute to current or future earnings are
expensed. Liabilities for environmental costs are recognised when environmental
assessments or cleanups are required and the associated costs can be reasonably
estimated.
Research and Development
All research and development expenditure is charged against profits in the year
in which it is incurred.
13
<PAGE>
HICKSON INTERNATIONAL PLC
Pensions
The cost of providing pension benefits is charged to the profit and loss account
so as to spread the cost of pensions over the employees' working lives.
NOTES TO THE ACCOUNTS
1 SEGMENTAL INFORMATION
<TABLE>
<CAPTION>
Operating profit/(loss) Operating (loss)/profit
----------------------- -----------------------
Turnover before after
-------- ------ -----
exceptional items exceptional items
----------------- -----------------
1999 1998 1999 1998 1999 1998
---- ---- ---- ---- ---- ----
(Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m
<S> <C> <C> <C> <C> <C> <C>
Parent Company
and Group
undertakings 208.2 217.4 7.4 14.3 (14.3) 8.3
Associated
undertakings 10.8 9.8 1.1 1.0 1.1 1.0
----- ----- ---- ---- ----- ----
219.0 227.2 8.5 15.3 (13.2) 9.3
===== ===== ==== ==== ===== ====
Organic Chemicals 65.5 84.3 (4.0) 6.3 (25.7) 6.3
Protection and
Coatings 153.5 141.5 15.4 12.4 15.4 6.4
Discontinued
operations -- 1.4 -- -- -- --
Group/shared
services................. -- -- (2.9) (3.4) (2.9) (3.4)
----- ----- ---- ---- ----- ----
219.0 227.2 8.5 15.3 (13.2) 9.3
===== ===== ==== ==== ===== ====
</TABLE>
<TABLE>
<CAPTION>
Operating assets
----------------
1999 1998
--------- ---------
(Pounds)m (Pounds)m
<S> <C> <C>
Parent Company and Group undertakings............. 94.9 120.8
Associated undertakings........................... 3.2 3.0
---- -----
98.1 123.8
==== =====
Organic Chemicals................................. 76.4 100.9
Protection and Coatings........................... 25.6 30.8
Discontinued operations........................... 5.7 5.0
Group/shared services............................. (9.6) (12.9)
---- -----
98.1 123.8
==== =====
</TABLE>
14
<PAGE>
HICKSON INTERNATIONAL PLC
Operating assets shown above are derived from the balance sheet total of
(Pounds)73.1m (1998 (Pounds)94.9m) by excluding cash at bank and in hand of
(Pounds)15.2m (1998 (Pounds)13.7m) and gross borrowings of (Pounds)40.2m (1998
(Pounds)42.6m).
2 GEOGRAPHICAL INFORMATION--PARENT COMPANY AND GROUP UNDERTAKINGS
<TABLE>
<CAPTION>
Operating profit/(loss) Operating (loss)/profit
----------------------- -----------------------
Turnover before after
-------- ------ -----
exceptional items exceptional items
----------------- -----------------
1999 1998 1999 1998 1999 1998
---- ---- ---- ---- ---- ----
(Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m
<S> <C> <C> <C> <C> <C> <C>
Analysis by countries of
origin:
United Kingdom......... 77.7 92.1 (6.9) 2.1 (28.6) 2.1
Rest of Europe......... 61.0 62.1 6.5 6.4 6.5 6.4
The Americas........... 65.5 59.4 7.5 5.7 7.5 (0.3)
Africa, Asia,
Australasia............ 4.0 3.8 0.3 0.1 0.3 0.1
----- ----- ---- ---- ---- ----
208.2 217.4 7.4 14.3 (14.3) 8.3
===== ===== ==== ==== ==== ====
</TABLE>
<TABLE>
<CAPTION>
Operating
---------
assets
------
1999 1998
---- ----
(Pounds)m (Pounds)m
--------- ---------
<S> <C> <C>
Analysis by countries of origin:
United Kingdom.................. 60.7 79.3
Rest of Europe.................. 12.8 16.8
The Americas.................... 20.0 23.8
Africa, Asia, Australasia....... 1.4 0.9
---- -----
94.9 120.8
==== =====
</TABLE>
<TABLE>
<CAPTION>
Turnover
--------------------
1999 1998
--------- ---------
(Pounds)m (Pounds)m
--------- ---------
<S> <C> <C>
Analysis by location of customer:
United Kingdom.................. 27.5 26.9
Rest of Europe.................. 90.1 105.7
The Americas.................... 78.4 70.5
Africa, Asia, Australasia....... 12.2 14.3
----- -----
208.2 217.4
===== =====
</TABLE>
15
<PAGE>
HICKSON INTERNATIONAL PLC
3 COSTS AND OVERHEADS
<TABLE>
<CAPTION>
1999 1998
---------- ----------
(Pounds)m (Pounds)m
<S> <C> <C>
Raw materials and consumables................ 97.5 111.1
Other operating charges...................... 48.4 48.0
Staff costs (see note 5)..................... 43.7 44.0
Depreciation................................. 31.0 11.6
Change in work in process and finished goods. 3.6 (3.8)
Own work capitalised......................... (1.0) (1.6)
Other operating income....................... (0.7) (0.2)
----- -----
222.5 209.1
===== =====
</TABLE>
Costs and overheads include research and development expenditure of (Pounds)3.7m
(1998 (Pounds)3.9m), civil litigation costs of (Pounds)nil (1998 (Pounds)6.0m),
auditors' remuneration of (Pounds)0.2m (1998 (Pounds)0.2m) and other fees
payable to the auditors of (Pounds)0.2m principally for taxation services (1998
(Pounds)0.1m).
Depreciation in 1999 includes a (Pounds)20.0m impairment charge (see note 4).
4 EXCEPTIONAL ITEMS
<TABLE>
<CAPTION>
1999 1998
--------- ---------
(Pounds)m (Pounds)m
<S> <C> <C>
Impairment of fixed assets......... 20.0 --
Rationalisation costs.............. 1.7 --
Civil litigation costs............. -- 6.0
Loss on termination of operations.. -- 7.0
Loss on disposal of operations..... -- --
---- ----
21.7 13.0
==== ====
</TABLE>
In accordance with the requirements of FRS11 'Impairment of fixed assets and
goodwill', an impairment review was performed in 1999 on the fixed assets at
Hickson & Welch, Castleford. The standard requires fixed assets to be written
down where their recoverable amount falls below their carrying value. The
resulting exceptional charge has been calculated using a pre-tax discount rate
of 11.5%.
Rationalisation costs in 1999 relate to a provision for severance costs at
Hickson & Welch, Castleford.
16
<PAGE>
HICKSON INTERNATIONAL PLC
In 1998 civil litigation costs comprise a provision for the total financial
impact of the jury's verdict on the wood preservative chemical spillage at a
railroad yard in Tennessee in 1994. This provision should not be interpreted as
the Directors' view of the likely outcome of the appeal which is being
prosecuted vigorously.
In 1998 the loss on termination of operation of (Pounds)7.0m relates to the
closure of certain Fine Chemical Intermediate facilities at Hickson & Welch,
Castleford and is stated after provisions of (Pounds)3.0m principally in
connection with severance costs.
The net tax charge in the profit and loss account includes an amount of
(Pounds)nil for 1999 (1998 (Pounds)2.0m credit) in respect of the exceptional
items.
5 DIRECTORS AND EMPLOYEES
<TABLE>
<CAPTION>
1999 1998
--------- ---------
(Pounds)m (Pounds)m
<S> <C> <C>
Staff costs:
Wages and salaries........................ 35.0 35.3
Social security costs..................... 5.9 5.6
Other pension costs....................... 2.8 3.1
----- -----
43.7 44.0
===== =====
</TABLE>
<TABLE>
<CAPTION>
Number Number
------ ------
<S> <C> <C>
Average number of employees:
UK........................................ 676 816
Overseas.................................. 683 677
Employees of discontinued operations...... -- 9
----- -----
1,359 1,502
===== =====
At year end............................... 1,352 1,421
===== =====
</TABLE>
17
<PAGE>
HICKSON INTERNATIONAL PLC
<TABLE>
<CAPTION>
Total Emoluments
--------------------------
Payments in
Salary Benefits in Annual lieu of
DIRECTORS' EMOLUMENTS or fees kind /(7)/ bonus pension 1999 1998
(Pounds)'000 (Pounds)'000 (Pounds)'000 (Pounds)'000 (Pounds)'000 (Pounds)'000
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Chairman
Sir James Hann /(1)/ (Resigned
30 September 1999) 75 75 75
D.J. Wilbraham /(2)/ (Appointed
1 October 1999) 183 10 46 20 259 304
Executive Directors
J.S. Court /(3)/ (Resigned 30 June 1999) 69 6 18 7 100 191
J.F. Langton 135 10 53 198 179
J.K. Maiden (Appointed 1 July 1999) 55 5 16 4 80
J.H. Markham /(4)/ 144 90 /(8)/ 33 11 278 170
D.H.D. Toolin (Appointed 16 August 1999) 41 37 /(8)/ 8 2 88
Non-Executive Directors
K.W. Humphreys /(5)/ 40 40 40
R. Jordan 20 20 20
M.E. Llowarch (Resigned 1 September 1999) 13 13 26
J.A. Roberts /(5)/ 20 20 20
-------------------------------------------------------------------------------------
Total 795 158 174 44 1,171 1,025
=====================================================================================
</TABLE>
Notes
(1) By a consultancy agreement between the Company, James Hann Management
Services Limited and Sir James Hann dated 5 December 1994, as amended by a
letter dated 9 July 1997, James Hann Management Services Limited agreed to
provide the services of Sir James Hann as Chairman of the Company until the
date of the AGM in 1999, after which the agreement continued on an annual
basis and terminated in December 1999 following the retirement of Sir
James. In the year ended 31 December 1999 (Pounds)75,000 (1998
(Pounds)75,000) was paid under this agreement. No remuneration was paid
directly to Sir James.
(2) Dr. Wilbraham received salary of (Pounds)164,000, benefits in kind of
(Pounds)10,000, bonus of (Pounds)46,000 and payments of (Pounds)20,000 for
the period he was Group Chief Executive. He received a salary of
(Pounds)19,000 for the period he was Chairman and no other benefits.
(3) Following his resignation Mr. Court completed a number of projects for the
Company and received salary and benefits totalling (Pounds)80,000 as an
employee. He is no longer employed by the Group.
(4) The highest paid Director in 1999 was Mr. Markham whose emoluments were
(Pounds)278,000. His accrued pension entitlement at the end of the year
under the defined benefit scheme was (Pounds)8,000. The highest paid
Director in 1998 was Dr. Wilbraham whose emoluments were (Pounds)304,000.
His accrued pension entitlement at the end of 1998 under the defined
benefit scheme was (Pounds)4,000.
(5) Dr. Humphreys receives an additional fee at the rate of (Pounds)20,000 per
annum in respect of his work as Chairman of the Group's Responsible Care
Supervisory Board.
(6) By letter of agreement dated 1 December 1993, as varied by a letter dated
28 June 1996, (Pounds)20,000 (1998 (Pounds)20,000) was paid to Picram
Company for the services of Dr. Roberts.
(7) Benefits in kind relate to car and petrol benefits, private medical and
other insurance paid by the Company.
(8) The benefits in kind for Mr. Markham and Mr. Toolin include their expenses
in relocating to Yorkshire which was a stipulation of the Board on their
respective new appointments.
18
<PAGE>
HICKSON INTERNATIONAL PLC
PENSIONS
DEFINED BENEFIT SCHEMES
The following information relates to the five Executive Directors, apart from
Mr. Langton, who participated in the Hickson pension schemes up to the Inland
Revenue earnings cap (currently (Pounds)90,600). Payments are made to these
Directors in lieu of contributions in respect of earnings in excess of the cap.
<TABLE>
<CAPTION>
Increase in Accumulated total Transfer value of
accrued pension accrued pension at increase in
in year 31 December 1999 pension year
(Pounds)'000 (Pounds)'000 (Pounds)'000
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
J.S. Court 1 6 8
J.K. Maiden 1 1 6
J.H. Markham 2 8 25
D.H.D. Toolin 1 1 6
D. J. Wilbraham 1 5 16
</TABLE>
Notes
(1) The pension benefits exclude any further pension purchased by Additional
Voluntary Contributions.
(2) The transfer value has been calculated on the basis of actuarial advice and
excludes Directors' contributions.
(3) Dr. Wilbraham has a deferred pension from the Company relating to his
period as Group Chief Executive. None of the other Non-Executive Directors
receive any pension benefits from the Company.
MONEY PURCHASE SCHEME
One Executive Director, Mr. Langton, accrues retirement benefits under a money
purchase scheme. Payments amounting to (Pounds)26,612 (1998 (Pounds)27,401)
were made to this personal pension arrangement.
DIRECTORS' INTERESTS
The Directors have beneficial interests in the Ordinary share capital of the
Company as detailed below:
<TABLE>
<CAPTION>
Share Options Ordinary Shares
----------------------------------------------------------------------------
31 Dec 99 1 Jan 99 31 Dec 99 1 Jan 99
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
K.W. Humphreys - - 9,000 9,000
R. Jordan - - 5,794 5,794
J.F. Langton 160,000 160,000 7,007 7,007
J.K. Maiden 52,932 52,932 1,000 -
J.H. Markham 315,985 315,985 30,224 27,903
J.A. Roberts - - 2,159 2,159
D.H.D. Toolin 9,832 9,832 - -
D.J. Wilbraham 1,127,113 1,127,113 201,500 101,500
</TABLE>
19
<PAGE>
HICKSON INTERNATIONAL PLC
Options held by the Directors at the year end were as follows:
<TABLE>
<CAPTION>
SAYE Granted Granted and
and not yet not yet
exercisable exercisable Granted Granted Granted
Option price: 40p 66p 78p 135p 204p
Issue date: 2 October 98 21 March 97 24 April 96 12 May 95 29 April 94
Exercise date: 2 October 2003 21 March 2000 24 April 99 12 May 98 29 April 97
Expiry date: 2 April 2004 21 March 2007 24 April 2006 12 May 2005 29 April 2004
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
J.F. Langton - - - - 160,000
J.K. Maiden 2,932 - - 50,000 -
J.H. Markham 9,832 - 306,153 - -
D.H.D. Toolin 9,832 - - - -
D.J. Wilbraham 9,832 606,000 511,281 - -
</TABLE>
The mid-market share price at 31 December 1999 was 31.5p and the range during
the year was 31.5p to 62p.
There were no changes in the above interests between 31 December 1999 and 20
March 2000.
Conditional awards held by Directors under the shareholder approved long term
share incentive plan at the year end were as follows:
<TABLE>
<CAPTION>
Share awards Share awards
31 Dec 99 31 Dec 98
---------------------------------------------------------------------------------------------
<S> <C> <C>
J.F. Langton 307,335 165,060
J.K. Maiden 109,985 57,546
J.H. Markham 304,237 163,195
D.H.D. Toolin 57,432 -
D. J. Wilbraham 501,775 269,487
</TABLE>
The above conditional `zero-cost' share awards were made in accordance with the
provisions of the Hickson International Long Term Share Incentive Plan as
described in the Board's report on executive remuneration on page 21.
The 1997 share award issue date was 13 March 1997, and their earliest exercise
date was 13 March 2000. Performance criteria underlying this scheme were not
met and so all conditional awards made in 1997 were cancelled on 13 March 2000.
The 1998 share award issue date was 13 March 1998, their earliest date is 13
March 2001 and they expire on 13 March 2005. The 1999 share award issue date
was 8 April 1999, their earliest exercise date is 8 April 2002 and they expire
on 8 April 2006.
6 INTEREST
<TABLE>
<CAPTION>
1999 1998
---------- ----------
(Pounds)m (Pounds)m
<S> <C> <C>
Interest payable:
Bank overdrafts and other short term
loans................................... (0.5) (0.7)
Medium term loans......................... (2.2) (3.1)
---- ----
(2.7) (3.8)
Interest receivable....................... 0.3 1.3
---- ----
(2.4) (2.5)
==== ====
</TABLE>
20
<PAGE>
HICKSON INTERNATIONAL PLC
7 TAXATION (CHARGE)/CREDIT
<TABLE>
<CAPTION>
(Pounds)m (Pounds)m
<S> <C> <C>
Based on the profit for the year:
UK Corporation tax at 30% (1998 31%) -- --
Overseas tax................................. (3.1) (1.2)
Deferred taxation............................ -- 0.7
Prior year adjustments....................... 0.8 1.5
---- ----
(2.3) 1.0
Associated undertakings...................... (0.3) (0.3)
---- ----
(2.6) 0.7
==== ====
</TABLE>
The element of the tax charge which is attributable to exceptional items is
(Pounds)nil (1998 (Pounds)2.0m credit).
8 DIVIDENDS
<TABLE>
<CAPTION>
1999 1998
---------- ----------
(Pounds)m (Pounds)m
<S> <C> <C>
Interim paid 0.6p (1998 0.6p)............ (1.1) (1.1)
Final proposed 1.0p (1998 1.0p).......... (1.7) (1.7)
---- ----
(2.8) (2.8)
==== ====
</TABLE>
If approved the final dividend of 1.0p per share will be paid on 19 June 2000 to
the shareholders on the register on 31 March 2000.
9 EARNINGS/(LOSS) PER SHARE
In view of the significance of the exceptional items, the Directors consider it
appropriate to disclose earnings per share calculated both before and after
these items:-
<TABLE>
<CAPTION>
1999 1998
-------------- -------------
(Pounds)m (Pounds)m
<S> <C> <C>
(Loss)/profit on ordinary activities attributable
to Hickson International PLC...................... (18.2) 0.5
Impairment of fixed assets......................... 20.0 --
Rationalisation costs.............................. 1.7 --
Loss on termination of operations.................. -- 7.0
Civil litigation costs............................. -- 6.0
Attributable taxation.............................. -- (2.0)
----- ----
Earnings for the year before exceptional items..... 3.5 11.5
===== ====
</TABLE>
21
<PAGE>
HICKSON INTERNATIONAL PLC
<TABLE>
<CAPTION>
Number (m) Number (m)
---------- ----------
<S> <C> <C>
Weighted average number of ordinary shares in
issue during the year............................. 176.0 176.0
Shares held by share trust......................... (2.1) (2.0)
----- -----
Basic.............................................. 173.9 174.0
Effect of dilutive options......................... -- 0.1
----- -----
Diluted............................................ 173.9 174.1
===== =====
Earnings per share before exceptional items
Basic............................................ 2.01p 6.61p
Diluted.......................................... 2.01p 6.61p
(Loss)/earnings per share exceptional items
Basic............................................ (10.47)p 0.29p
Diluted.......................................... (10.47)p 0.29p
</TABLE>
10 CASH FLOWS FROM OPERATING ACTIVITIES
<TABLE>
<CAPTION>
1999 1998
---------- ----------
(Pounds)m (Pounds)m
<S> <C> <C>
Operating profit excluding associated undertakings and
exceptional items........................................ 7.4 14.3
Dividends received from associated undertakings............ 0.8 0.7
Depreciation............................................... 11.0 11.6
Loss on disposal of tangible fixed assets.................. 0.2 --
Decrease/(increase) in working capital
Stocks..................................................... 3.7 (3.7)
Debtors.................................................... (1.6) 5.3
Creditors.................................................. 7.1 (0.6)
---- -----
28.6 27.6
Exceptional items.......................................... (3.9) (11.5)
---- -----
24.7 16.1
==== =====
</TABLE>
The movement in creditors shown above excludes taxation and dividends.
11 RECONCILIATION TO NET DEBT
<TABLE>
<CAPTION>
1999 1998
---------- ----------
(Pounds)m (Pounds)m
<S> <C> <C>
Net cash inflow/(outflow) before financing..... 4.0 (4.3)
Translation difference......................... (0.1) --
----- -----
Movements in net debt in period................ 3.9 (4.3)
Net debt at 1 January 1999..................... (28.9) (24.6)
----- -----
Net debt at 31 December 1999................... (25.0) (28.9)
===== =====
</TABLE>
22
<PAGE>
HICKSON INTERNATIONAL PLC
12 ANALYSIS OF NET DEBT
<TABLE>
<CAPTION>
Cash Finance
----- -------
Cash investments debt Total
---- ----------- ---- -----
(Pounds)m (Pounds)m (Pounds)m (Pounds)m
<S> <C> <C> <C> <C>
At 1 January 1999.......... 9.9 3.8 (42.6) (28.9)
Net cash flow.............. 1.9 (0.7) 2.8 4.0
Translation difference..... 0.3 -- (0.4) (0.1)
---- ---- ----- -----
At 31 December 1999........ 12.1 3.1 (40.2) (25.0)
==== ==== ===== =====
</TABLE>
Cash at 31 December 1999 represents cash at bank and in hand of (Pounds)12.1m
(1998 (Pounds)9.9m) less overdrafts of (Pounds)nil (1998 (Pounds)nil).
13 TANGIBLE FIXED ASSETS
<TABLE>
<CAPTION>
Fixtures,
---------
Plant, fittings, Assets in
------ --------- ---------
Land and machinery tools and course of
-------- --------- --------- ---------
buildings and vehicles equipment construction Total
--------- ------------ ---------- ------------ -------
(Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m
<S> <C> <C> <C> <C> <C>
COST
At 1 January 1999................. 44.8 149.6 17.7 5.8 217.9
Additions......................... 0.3 3.3 1.3 9.2 14.1
Disposals......................... (0.2) (1.1) (0.7) -- (2.0)
Re-classifications................ 0.3 8.9 0.5 (9.7) --
Arising on currency
translation...................... (0.9) (0.4) (0.4) (0.1) (1.8)
---- ----- ---- ---- -----
At 31 December 1999............... 44.3 160.3 18.4 5.2 228.2
---- ----- ---- ---- -----
DEPRECIATION
At 1 January 1999................. 15.3 89.2 11.9 -- 116.4
Disposals......................... (0.2) (0.6) (0.9) -- (1.7)
Charge for the year............... 1.5 28.1 1.4 -- 31.0
Arising on currency
translation...................... (0.4) (0.3) (0.2) -- (0.9)
---- ----- ---- ---- -----
At 31 December 1999............... 16.2 116.4 12.2 -- 144.8
---- ----- ---- ---- -----
NET BOOK AMOUNTS AT
31 DECEMBER 1999................. 28.1 43.9 6.2 5.2 83.4
==== ===== ==== ==== =====
Net book amounts at 31
December 1998.................... 29.5 60.4 5.8 5.8 101.5
==== ===== ==== ==== =====
</TABLE>
LAND AND BUILDINGS
<TABLE>
<CAPTION>
1999 1998
--------- ---------
(Pounds)m (Pounds)m
<S> <C> <C>
Freeholds............ 28.1 29.5
Long leaseholds...... -- --
---- ----
28.1 29.5
==== ====
</TABLE>
23
<PAGE>
HICKSON INTERNATIONAL PLC
The net book value of tangible fixed assets includes an amount of (Pounds)3.2m
(1998 (Pounds)0.3m) in respect of assets held under finance leases.
14 INVESTMENTS
<TABLE>
<CAPTION>
Shares in
---------
associated Other
---------- -----
undertakings investments Total
------------ ----------- --------
(Pounds)m (Pounds)m (Pounds)m
<S> <C> <C> <C>
At 1 January 1999.......... 3.0 1.2 4.2
Movements in year.......... 0.2 (0.4) (0.2)
Currency translation....... 0.1 -- 0.1
--- ---- ----
At 31 December 1999........ 3.3 0.8 4.1
=== ==== ====
</TABLE>
Other investments comprise 2,068,295 Company shares held by the Hickson
International PLC Employee Trust.
The Trust was established in May 1996 and holds shares on trust for employees
participating in the Hickson International Long Term Share Incentive Plan and
the annual Deferred Bonus Scheme.
The trustees, who are based in Jersey and are independent of the Company, have
wide powers to invest the Trust Fund and to apply the income and capital of the
fund for the benefit of the beneficiaries, being the employees of the Group.
Conditional awards of zero cost options are made to Executive Directors and
senior executives on an annual basis. The options are exercisable on performance
conditions as determined by the Remuneration Committee. The estimated cost of
each annual plan is amortised over its respective life.
At 31 December 1999, 3,500,176 shares are conditionally allocated against
options which have not yet been exercised. As the number of awards outstanding
exceeds the number of shares held by the trust a letter of undertaking has been
given to the Trustees whereby the Company will provide sufficient funds in order
to purchase the additional shares should they be required to satisfy the awards.
The market value of shares held by the trust at 31 December 1999 was
(Pounds)0.7m.
Income from the trust, net of operating costs, is included in the Group profit
and loss account on an accruals basis. Dividend income has been waived. At 31
December 1999 the trust had cash on deposit of (Pounds)30,000 and no external
loans/borrowings.
Group and associated undertakings
The value of interests in associated undertakings includes (Pounds)3.3m (1998
(Pounds)3.0m) in respect of the Group's share of post acquisition retained
profits of those undertakings.
24
<PAGE>
HICKSON INTERNATIONAL PLC
15 STOCKS
<TABLE>
<CAPTION>
1999 1998
--------- ---------
(Pounds)m (Pounds)m
<S> <C> <C>
Raw materials and consumables........... 9.6 10.5
Work in process and finished goods...... 20.3 23.9
---- ----
29.9 34.4
==== ====
</TABLE>
16 DEBTORS
<TABLE>
<CAPTION>
1999 1998
--------- ---------
(Pounds)m (Pounds)m
<S> <C> <C>
Trade debtors.............................. 32.9 33.0
Amounts recoverable on contracts........... 11.4 11.0
Amounts owed by Group undertakings......... -- --
Other debtors.............................. 1.1 1.4
Assets held for sale....................... 5.7 5.4
Prepayments................................ 3.4 3.6
---- ----
54.5 54.4
==== ====
</TABLE>
Prepayments include prepaid pension costs of (Pounds)1.7m (1998 (Pounds)1.6m).
Amounts recoverable on contracts include (Pounds)2.1m falling due after more
than one year (1998 (Pounds)nil).
17 CASH AT BANK AND IN HAND
<TABLE>
<CAPTION>
1999 1998
--------- ---------
(Pounds)m (Pounds)m
<S> <C> <C>
Cash at bank and in hand............. 12.1 9.9
Cash investments--liquid resources... 3.1 3.8
---- ----
15.2 13.7
==== ====
</TABLE>
Cash investments include cash deposits with maturities of less than 30 days.
25
<PAGE>
HICKSON INTERNATIONAL PLC
18 CREDITORS
<TABLE>
<CAPTION>
1999 1998
----- -----
(Pounds)m (Pounds)m
<S> <C> <C>
Amounts falling due within one year
Bank overdrafts........................... 1.4 --
Obligations under finance leases.......... 0.1 --
Trade creditors........................... 27.6 24.6
Corporate taxation........................ 4.3 2.6
Other taxes and social security........... 1.3 1.2
Other creditors........................... 3.4 6.7
Accruals and deferred income.............. 15.4 11.7
Proposed dividends........................ 1.7 2.8
---- ----
55.2 49.6
==== ====
</TABLE>
19 CREDITORS
<TABLE>
<CAPTION>
1999 1998
----- -----
(Pounds)m (Pounds)m
<S> <C> <C>
Amounts falling due after more than one year
Medium term bank loans.................... 36.0 42.4
Obligations under finance leases.......... 2.7 0.2
Other creditors........................... 3.9 2.9
---- ----
42.6 45.5
==== ====
</TABLE>
20 DERIVATIVES AND OTHER FINANCIAL INSTRUMENTS
The information that follows deals with the financial assets and liabilities,
including financial derivatives as defined by Financial Reporting Standard 13
'Derivatives and other Financial Instruments: Disclosures'. Short term debtors
and creditors have been taken into account in note (d) only.
(a) Maturity of financial liabilities
The maturity profile of the Group's financial liabilities is as follows:
26
<PAGE>
HICKSON INTERNATIONAL PLC
<TABLE>
<CAPTION>
On demand Between Between Total
--------- ------- ------- -----
or within one and two two and five More than Financial
--------- ----------- ------------ --------- ---------
one year years years five years liabilities
-------- ----- ----- ---------- -----------
(Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m
<S> <C> <C> <C> <C> <C>
Bank loans/overdrafts...... 1.4 -- 36.0 -- 37.4
Finance lease creditors.... 0.1 0.7 1.0 1.0 2.8
--- --- ---- --- ----
At 31 December 1999........ 1.5 0.7 37.0 1.0 40.2
=== === ==== === ====
Bank loans/overdrafts...... -- 1.4 41.0 -- 42.4
Finance lease creditors.... -- -- 0.2 -- 0.2
--- --- ---- --- ----
At 31 December 1998........ -- 1.4 41.2 -- 42.6
=== === ==== === ====
</TABLE>
(b) Borrowing facilities
In August 1997, the Group agreed a committed Revolving Credit Facility for a
term of not less than 3 years with a number of core relationship banks. Since
that time the Facility has been extended for a further two years to August 2002.
The Facility, which is unsecured, is cross-guaranteed by all material
subsidiaries of the Group and is available for use at any time.
The undrawn balance is (Pounds)29.0m (1998 (Pounds)24.0m).
(c) Interest rate and currency profile of financial assets and financial
liabilities
The currency and interest rate profile of the financial liabilities of the
Group, after taking into account interest rate swaps is:
<TABLE>
<CAPTION>
Fixed rates
-----------
weighted average
----------------
Interest Fixed Period
-------- ------------
Floating Fixed Total rate % in years
-------- ------- ------- ------ --------
(Pounds)m (Pounds)m (Pounds)m
<S> <C> <C> <C> <C> <C>
At 31 December 1999
Sterling................... 0.1 5.0 5.1 5.98 4.9
US Dollar.................. 1.9 15.5 17.4 6.16 1.2
Euro....................... 16.3 -- 16.3 -- --
Other...................... 1.4 -- 1.4 -- --
---- ---- ---- ---- ---
Total................... 19.7 20.5 40.2 6.12 2.4
==== ==== ==== ==== ===
At 31 December 1998
Sterling................... 10.0 6.0 16.0 7.53 0.3
US Dollar.................. 2.0 15.5 17.5 6.16 2.2
Euro....................... -- 7.7 7.7 5.32 1.0
Other...................... 1.4 -- 1.4 -- --
---- ---- ---- ---- ---
Total................... 13.4 29.2 42.6 6.22 1.5
==== ==== ==== ==== ===
</TABLE>
27
<PAGE>
HICKSON INTERNATIONAL PLC
The floating rates on the majority of interest bearing liabilities are based on
London Inter Bank Offered Rates ('LIBOR').
The currency profile of the financial assets of the Group is:
<TABLE>
<CAPTION>
1999 1998
--------- ---------
(Pounds)m (Pounds)m
<S> <C> <C>
Sterling....... 6.7 8.4
US Dollar...... 2.3 2.1
Euro........... 5.5 2.6
Other.......... 0.7 0.6
---- ----
15.2 13.7
==== ====
</TABLE>
The financial assets comprise cash at bank and in hand and cash investments, and
are all subject to floating rates of interest, based on local market rates.
(d) Currency exposures
The table below shows the currency exposures arising on the monetary assets and
monetary liabilities of the Group that are not denominated in the functional
currency of the operating unit involved. This excludes certain non-sterling
borrowings treated as hedges of net investments in overseas operations. As at 31
December 1999, these exposures were as follows:
<TABLE>
<CAPTION>
Net foreign currency monetary
assets/(liabilities)
Functional Currency Sterling US Dollar Euro Other Total
----------- ----------- --------- --------- ---------
(Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m
<S> <C> <C> <C> <C> <C>
Sterling........... -- (1.4) 0.6 1.0 0.2
US Dollar.......... -- -- -- 0.1 0.1
Euro............... -- 0.1 -- 0.1 0.2
Other.............. -- 0.5 -- 0.1 0.6
----------- ---- --- --- ---
-- (0.8) 0.6 1.3 1.1
=========== ==== === === ===
</TABLE>
The amounts shown in the table above take into account the effect of any forward
contracts entered into to manage these currency exposures. As at 31 December
1999, the Group also held open various forward contracts that the Group had
taken out to hedge expected future foreign currency sales and purchases.
(e) Fair values of financial assets and financial liabilities
Set out below is a comparison by category of book values and fair values of the
Group's financial assets and financial liabilities as at 31 December 1999.
28
<PAGE>
HICKSON INTERNATIONAL PLC
<TABLE>
<CAPTION>
Book value Fair value
---------- ----------
1999 1999
---- ----
(Pounds)m (Pounds)m
<S> <C> <C>
Primary financial instruments held or issued to finance the
group's operations
Cash at bank and in hand including cash investments.............. 15.2 15.2
Borrowings due within one year................................... (1.5) (1.5)
Borrowings due after more than one year.......................... (38.7) (38.7)
----- -----
Derivative financial instruments held to manage the interest rate
profile of the group:
Interest rate swaps.............................................. -- (0.1)
----- -----
Derivative financial instruments held or issued to hedge the
currency exposure on expected future sales and purchases:
Forward foreign currency contracts............................... -- (0.1)
===== =====
</TABLE>
The fair value of cash and bank borrowings equate to their book value because
they are floating rate instruments and, as such, reprice frequently at market
rates.
Market values have been used to determine the fair value of all swaps and
forward foreign currency contracts.
(f) Gains and losses on hedges
The Group uses hedging derivatives to manage certain interest rate risks and
currency risks, using interest swaps and forward foreign currency contracts.
Gains and losses on instruments used for hedging are not recognised until the
exposure that is being hedged is itself recognised. Unrecognised gains and
losses on instruments used for hedging, and the movements therein, are as
follows:
<TABLE>
<CAPTION>
Total Net
Gains/(Losses)
--------------
(Pounds)m
<S> <C>
Gains and losses arising in 1999 that were not recognised in 1999..... (0.2)
----
Of which:
Gains and losses expected to be recognised in 2000................. (0.1)
Gains and losses expected to be recognised in 2001 or later........ (0.1)
----
</TABLE>
29
<PAGE>
HICKSON INTERNATIONAL PLC
21 PROVISIONS FOR LIABILITIES AND CHARGES
<TABLE>
<CAPTION>
Environmental Insurance
------------- ---------
Restructuring Legal Disposals claims Total
------------- ----- --------- ------ -----
(Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m
<S> <C> <C> <C> <C> <C>
Opening balance at 1
January 1999............. 4.9 11.9 1.3 0.1 18.2
Reclassification.......... (0.7) -- -- 0.9 0.2
Created................... 1.7 1.8 -- -- 3.5
Utilisation............... (4.0) (1.3) (0.3) (0.1) (5.7)
---- ---- ---- ---- ----
Closing balance at 31
December 1999............ 1.9 12.4 1.0 0.9 16.2
==== ==== ==== ==== ====
</TABLE>
Termination of certain operations at Castleford was provided for in 1998. The
provision has been almost fully utilised in 1999. A further provision was made
in 1999 for severance costs at the Castleford site. This provision will be fully
utilised in 2000. The residual restructuring provision is largely to cover head
office cost rationalisation and will be substantially utilised in 2000.
Environmental remediation programmes are being undertaken on a number of sites
owned/formerly owned by the Group. Scale and timing of these remediation
programmes are subject to negotiation with relevant local authorities. It is not
possible to be precise over timing of the utilisation of these provisions other
than to indicate that the bulk of the provision is expected to have been
utilised in the next five years.
Legal provisions comprise the total financial impact of the jury's verdict,
announced in 1998, on a civil litigation concerning wood preservative chemical
spillage at a railroad yard in Tennessee in 1994. This provision should not be
interpreted as the Director's view of the likely outcome of the appeal which is
being prosecuted vigorously. The results of our appeal are expected within the
next two years.
Provisions for disposals includes the residual costs associated with various
businesses which were sold by the Group in recent years. The Group has retained
a number of onerous lease contracts from businesses disposed of. Costs of these
leases have been mitigated where possible by arranging sub-tenants. The
provision represents management's estimate of the liability arising from these
contracts. The leases have varying unexpired terms of up to 42 years.
A liability also exists to make disability payments to certain former employees,
provided strict criteria are met. Utilisation of this provision is subjective as
it is based on the former employees' health. The liability exists until the
relevant employees reach age 65 resulting in the provision being fully utilised
by 2016.
The Group's captive insurance subsidiary contains provision for liabilities
arising from claims against insurance policies. Existing claims are expected to
be settled within a three-year period.
30
<PAGE>
HICKSON INTERNATIONAL PLC
Deferred Taxation
The potential liability for deferred taxation in respect of accelerated capital
allowances and other short term timing differences for which no provision has
been made in the accounts amounts to (Pounds)nil (1998 (Pounds)nil). Deferred
taxation is not provided in respect of liabilities which may arise on the
distribution of accumulated reserves of overseas subsidiary and associated
undertakings.
22 CALLED UP SHARE CAPITAL
<TABLE>
<CAPTION>
Allotted called up
------------------
Authorized & fully paid
-------------------- ------------
1999 1998 1999 1998
--------- --------- ---------- ----------
(Pounds)m (Pounds)m (Pounds)m (Pounds)m
<S> <C> <C> <C> <C>
Ordinary shares of 25p each....... 61.3 61.3 44.0 44.0
Unclassified shares of (Pounds)1 0.1 0.1 -- --
each............................. ---- ---- ---- ----
61.4 61.4 44.0 44.0
==== ==== ==== ====
</TABLE>
Movement in Share Capital during Year
<TABLE>
<CAPTION>
Nominal
-------
Number value
------------- ---------
(Pounds)m
<S> <C> <C>
At 1 January 1999.............. 175,967,498 44.0
Exercise of options at 40p..... 2,911 --
----------- ---------
At 31 December 1999............ 175,970,409 44.0
</TABLE>
Options
At 31 December 1999 there were 5,783,574 (1998 6,516,003) options outstanding
over ordinary shares in respect of Hickson share option schemes for staff.
<TABLE>
<CAPTION>
Number of shares Period
---------------- ------
under option Price exercisable
------------ ---------------- -----------
<S> <C> <C> <C>
Savings related share options..... 2,819,422 40p to 78p 2001 to 2004
Executive share options........... 2,793,507 66p to 223p 1993 to 2007
Executive share options (US)...... 170,645 $2.18 to $3.16 1993 to 2005
</TABLE>
The weighted average subscription price of all options outstanding at 31
December 1999 was 81p (1998 81p). During 1999 movements in the number of shares
under option comprised 2,911 options exercised and 729,518 options lapsed or
surrendered.
31
<PAGE>
HICKSON INTERNATIONAL PLC
23 MOVEMENT IN SHAREHOLDERS' FUNDS
<TABLE>
<CAPTION>
Group
---------------------------------
Share Profit and
----- ----------
Share premium loss Total Total
----- ------- ---- ----- -----
capital account account 1999 1998
------- ------- ------- ---- ----
(Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m
<S> <C> <C> <C> <C> <C>
Retained (loss) for the financial
year............................... -- -- (21.0) (21.0) (2.3)
Currency translation adjustment..... -- -- (0.8) (0.8) 0.5
---- ---- ----- ----- ----
-- -- (21.8) (21.8) (1.8)
At 1 January........................ 44.0 24.5 26.4 94.9 96.7
---- ---- ----- ----- ----
At 31 December...................... 44.0 24.5 4.6 73.1 94.9
==== ==== ===== ===== ====
</TABLE>
Since 1982 cumulative goodwill written off against the Group's reserves, net of
goodwill relating to disposals, amounts to approximately (Pounds)69m (1998
(Pounds)69m).
24 CONTINGENT LIABILITIES
In the normal course of business the Group has given guarantees and counter
indemnities in respect of commercial transactions and has entered into forward
contracts for the sale and purchase of foreign currencies by reference to its
forecast requirements.
25 FINANCIAL COMMITMENTS
Pensions
The Group operates a number of pension schemes throughout the world. The major
scheme operates in the United Kingdom and is a funded defined benefit scheme.
The assets of this scheme are held in a separate trustee administered fund and
are managed by outside investment managers.
Contributions to the main United Kingdom scheme are charged to the profit and
loss account so as to spread the cost of pensions over the employees' average
remaining service lives. The contributions are determined by a qualified actuary
on the basis of triennial valuations using the projected unit method. The last
formal valuation was carried out as at 1 January 1997. The main long term
actuarial assumptions adopted in that valuation were that investment returns
would be 9.0% per annum, that earnings increases and increases to pensions in
payment would average 7.5% per annum and 5.0% per annum respectively and that
dividends on equities would increase by 5.0% per annum. This valuation shows a
market value of scheme assets of (Pounds)86.6 million and the actuarial value of
these assets represents 99% of the benefits that had accrued to members, after
allowing for expected future increases in earnings. In the case of one minor
scheme operating for the benefit of certain United Kingdom employees, the
actuarial value of assets represented 98% of the accrued liabilities.
32
<PAGE>
HICKSON INTERNATIONAL PLC
The Group pension charge for the year was (Pounds)2.8m (1998 (Pounds)3.1m),
after allowing for the amortisation of surpluses and deficiencies over the
average remaining service lives of employees.
Operating Leases
The Group has total commitments under operating leases which cannot be cancelled
as follows:
<TABLE>
<CAPTION>
Plant, machinery
----------------
Land and buildings and vehicles
------------------ ------------
1999 1998 1999 1998
--------- --------- ---------- ---------
(Pounds)m (Pounds)m (Pounds)m (Pounds)m
<S> <C> <C> <C> <C>
Expiry within one year................. 0.4 0.4 0.9 0.9
Expiry between one and five years...... 1.0 1.1 1.0 1.1
Expiry after five years................ 0.3 0.3 2.4 --
---- ---- ---- ----
1.7 1.8 4.3 2.0
==== ==== ==== ====
</TABLE>
Future Capital Expenditure
1999 1998
------- -------
(Pounds)m (Pounds)m
Contracted for..... 2.2 1.7
26 RELATED PARTY TRANSACTIONS
During the year the Group sold protection and coating products amounting to
(Pounds)2.1m (1998 (Pounds)2.3m) to its associated undertakings. At 31 December
1999 the Group was owed (Pounds)0.6m (1998 (Pounds)0.3m) in respect of trading
with its associated undertakings.
PRINCIPAL SUBSIDIARY & ASSOCIATED UNDERTAKINGS
<TABLE>
<CAPTION>
Principal products
-----------------------------
<S> <C>
SUBSIDIARY UNDERTAKINGS
*Hickson & Welch Ltd., Castleford, West Yorkshire, England....... Organic chemicals
Hickson DanChem Corporation, Danville, Virginia, USA............ Organic chemicals
Hickson Coatings Italia SpA, Bologna, Italy..................... Coatings and lacquers
Hickson Coatings France SA, Paris, France....................... Coatings and lacquers
*Hickson Coatings UK Ltd., Knottingley, West Yorkshire,
England........................................................ Coatings and lacquers
*Hickson Timber Products Ltd., Knottingley, West Yorkshire,
England........................................................ Timber protection chemicals
Hickson-Garantor Nederland BV, Nijmegen, Holland................ Timber protection chemicals
Hickson Corporation, Atlanta, Georgia, USA...................... Timber protection chemicals
</TABLE>
33
<PAGE>
HICKSON INTERNATIONAL PLC
ASSOCIATED UNDERTAKINGS
<TABLE>
<S> <C>
Hemel Emprenye Sanayi ve Ticaret AS. (33%)...................... Timber protection chemicals
Koppers-Hickson Investments Pty Ltd. (49%)...................... Timber protection chemicals
Proteccion de Madera Ltda. (50%)................................ Timber protection chemicals
</TABLE>
Except where described these undertakings are wholly owned and operate in the
country of incorporation or registration as shown. All are included in the
consolidated accounts. A full list of subsidiary undertakings will be annexed to
the annual return for the Company.
The results for Koppers-Hickson Investments Pty Ltd included in the Group
results for the year to 31 December 1999 are based on the audited accounts of
the associated undertaking for the eleven month period to 30 November 1999 and
the management accounts for the subsequent period to 31 December 1999.
The businesses, assets and liabilities of Hickson & Welch Ltd., Hickson Coatings
UK Ltd. and Hickson Timber Products Ltd. are held by Hickson Ltd. and these
companies trade as agents for Hickson Ltd*.
*Directly owned by Hickson International PLC.
Associated Undertakings
Further details of the Group's interests in associated undertakings are set out
below:
<TABLE>
<CAPTION>
Country of
----------
Capital and Profit for last incorporation
----------- --------------- -------------
reserves financial year and operation Issued share capital
-------- -------------- ------------- ----------------------
<S> <C> <C> <C> <C>
Hemel Emprenye Sanayi
ve Ticaret AS............... TL378bn TL158bn Turkey TL75bn
Koppers-Hickson
Investments Pty Ltd.......... A$15.7m A$2.9m Australasia A$3,060,000 'A'
S. Africa & shares of $1 each and
S.E. Asia A$2,940,000 'B'
shares of $1 each
Proteccion de Madera
Ltda........................ Ch$392m Ch$259.8m Chile Ch$10,000,000
shares of Ch$1 each
</TABLE>
The Group's share of their contingent liabilities was (Pounds)nil. There were no
capital commitments at 31 December 1999.
34
<PAGE>
HICKSON INTERNATIONAL PLC
27 SUMMARY OF PRINCIPAL DIFFERENCES BETWEEN UNITED KINGDOM AND UNITED STATES
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
The accompanying consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United Kingdom
("UK GAAP"), which differ in certain material respects from generally accepted
accounting policies in the United States ("US GAAP"). Such differences involve
methods for measuring the amounts shown in the financial statements.
The following is a summary of the material adjustments to consolidated profit
for the financial year and consolidated shareholders' funds that would have been
required in applying the significant differences between UK and US GAAP.
Reconciliation of consolidated (loss) profit for the financial year
<TABLE>
<CAPTION>
Year ended December 31
---------------------------
Note 1999 1998
(Pounds)m (Pounds)m
---------- ----------
<S> <C> <C> <C>
(Loss) profit for the financial year under UK GAAP (18.2) 0.5
US GAAP adjustments:
Goodwill amortisation (i) (4.9) (2.3)
Revenue recognition (ii) 1.1 (0.9)
Pensions (iii) (1.8) (1.6)
Deferred taxation (iv) (3.8) 1.6
Options (v) 0.4 -
Restructuring costs (vi) (0.3) (1.0)
Capitalisation of interest (vii) - 0.1
Hedging transactions (viii) - (0.1)
Taxation effect of US GAAP adjustments 0.2 1.1
---------- ----------
Total US GAAP adjustments (9.1) (3.1)
---------- ----------
Loss for the financial year under US GAAP (27.3) (2.6)
========== ==========
Presentation of loss per share under US GAAP
Basic (15.70)p (1.49)p
Diluted (15.70)p (1.49)p
</TABLE>
35
<PAGE>
HICKSON INTERNATIONAL PLC
Reconciliation of consolidated shareholders' funds
<TABLE>
<CAPTION>
Year ended December 31
--------------------------
Note 1999 1998
(Pounds)m (Pounds)m
----------- ----------
<S> <C> <C> <C>
Shareholders' funds under UK GAAP 73.1 94.9
US GAAP adjustments:
Goodwill (i) 68.5 68.5
Goodwill amortisation (i) (26.8) (21.9)
Revenue recognition (ii) (4.4) (5.5)
Pensions (iii) (14.3) (20.5)
Deferred taxation (iv) 2.2 6.0
Options (v) (0.8) (1.2)
Restructuring costs (vi) 1.6 1.9
Capitalisation of interest (vii) 2.9 2.9
Hedging transactions (viii) (0.1) (0.1)
Ordinary dividends (ix) 1.7 1.7
Taxation effect of US GAAP adjustments 4.7 7.0
----- -----
Total US GAAP adjustments 35.2 38.8
----- -----
Shareholders' funds under US GAAP 108.3 133.7
----- -----
</TABLE>
A summary of the principal differences giving rise to the above adjustments,
applicable to the Group are set out below:
(i) Goodwill and amortisation
Both UK GAAP and US GAAP now require purchase consideration to be allocated to
the net assets acquired at their fair value on the date of acquisition, with the
difference between the consideration and the fair value of the identifiable net
assets recorded as goodwill. Under UK GAAP for periods ending prior to January
1, 1998 goodwill could be written off directly to the profit and loss reserve in
the year of acquisition and this was the policy followed by the Group up to this
time. If a subsidiary or a business is subsequently sold or closed, previously
written off goodwill which was the result of the initial acquisition is taken
into account in determining the profit or loss on sale or closure
For the purposes of US GAAP, all goodwill written off against reserves under UK
GAAP has been reinstated as an asset on the balance sheet and is being amortised
using the straight line method over an estimated useful life of 30 years.
36
<PAGE>
HICKSON INTERNATIONAL PLC
(ii) Revenue recognition
Revenues are generally recognised when goods are shipped to customers or
services rendered, less provision, if any, for estimated returns. Two products
which provide significant revenues and profits to Organic Chemicals have been
accounted for as long-term contracts under UK GAAP, SSAP 9 Stocks and long-term
contracts, in 1999, 1998 and prior years. Guidance under US GAAP on revenue
recognition contains more specific criteria which must apply for long-term
contract accounting to be accepted. Under US GAAP; revenue is recognised on
these products when they have been shipped and the risk of loss has passed to
the customer.
(iii) Pensions
The Group operates a number of pension schemes for its employees throughout the
world. The major scheme operates in the UK and is a funded defined benefit
scheme.
Under UK GAAP the cost of providing pension benefits is expensed over the
average expected service lives of eligible employees in accordance with the
provisions of Statement of Standard Accounting Practice 24 (SSAP 24) Accounting
for Pension Costs. SSAP 24 aims to produce an estimate of cost based on long-
term actuarial assumptions. Variations from the regular pension cost arising
from, for example, experience deficiencies or surpluses, are charged or credited
to the profit and loss account over the expected average remaining service lives
of current employees in the schemes.
Under US GAAP, the annual pension cost comprises the estimated cost of benefits
accruing in the period as determined in accordance with Statement of Financial
Accounting Standards 87 (SFAS 87) Employers Accounting for Pensions, which
requires readjustment of the significant actuarial assumptions annually to
reflect current market and economic conditions. Under SFAS 87, part of the
excess of plan assets over plan liabilities (surplus) or excess of plan
liabilities over plan assets (net deficit) has been recognised in the balance
sheet as appropriate. The remainder of the unrecognised surplus is spread over
the employees' remaining service lifetimes, subject to the corridor allowed by
SFAS 87. Pursuant to SFAS 87 the Group recorded an additional minimum pension
liability adjustment of (Pounds)9.1 million as of 31 December 1998, representing
the amount by which the accumulated benefit obligation exceeded the fair value
of the plan assets plus accrued amounts previously unrecognised. The additional
liability has been offset by an intangible asset to the extent of previously
unrecognised prior service costs of (Pounds)1 million as of 31 December 1998.
Additional minimum pension liabilities are recorded as a separate component of
shareholders' funds and would be presented net of tax, which at 31 December 1998
was (Pounds)2.5 million. The tax effect associated with the additional minimum
liability is shown in the reconciliation on the line "Taxation effect of US GAAP
adjustments." As of 31 December 1999 there is no additional minimum pension
liability and accordingly no intangible asset.
37
<PAGE>
HICKSON INTERNATIONAL PLC
(iv) Taxation
Deferred taxation
Under UK GAAP, a provision is recorded for deferred taxation under the liability
method, at the expected applicable rates, to the extent that such taxation is
expected to crystallise within the foreseeable future. This means that the full
potential liability is not necessarily provided. Additionally, deferred tax
assets are recognised only when they are expected to be recoverable within the
foreseeable future.
Under US GAAP, deferred taxation is provided for on a full liability basis.
Under the full liability method, deferred taxation assets or liabilities are
recognised for differences between the financial and taxation basis of assets
and liabilities and for tax loss carry forwards at the statutory rate at each
reporting date. A valuation allowance is established when it is more likely than
not that some portion or all of the deferred taxation assets will not be
realised.
(v) Options
Employee share option plan (ESOP)
An employee share option plan has been established in order to fulfill
obligations in respect of options issued under certain employee share option
schemes. Under UK GAAP the Company's ordinary shares held by the employee share
trust are included at historic net book value, less any impairment, in
investments. Under US GAAP, such shares are carried at cost, treated as treasury
stock and included as a debit in shareholders' equity. An impairment write-down
of (Pounds)0.4m was recorded under UK GAAP during 1999, and accordingly this
write-down has been reversed under US GAAP.
Save As You Earn scheme (SAYE)
Inland Revenue approved SAYE schemes for all employees were established in 1996
and 1998. Under the scheme, employees were invited to save a portion of their
monthly salary over a period of five years. At the end of this period, the
employee had the option to purchase Ordinary Shares with the accumulated funds
at a purchase price determined on commencement of the scheme. The terms of the
1998 scheme provided a discount of 19.2% on the market price prevailing at the
time of the employee's participation in the plan commenced. No discount was
provided in the 1996 scheme. Under UK GAAP, the Group is not required to
recognise compensation cost under SAYE schemes approved by the Inland Revenue
which provide discounts below 20%. Under US GAAP, the discount offered by non-
compensatory schemes may not exceed 15%. Accordingly, the SAYE Scheme is a
compensation scheme and therefore the compensation expense is recognised in
accordance with APB 25, Accounting for Stock Issued to Employees. The cost of
the discount, representing the difference between the market price on
commencement of the scheme and the discounted option price, is expensed over the
vesting period of the scheme under US GAAP.
38
<PAGE>
HICKSON INTERNATIONAL PLC
(v) Options - continued
The effect on the net income of the above option scheme under US GAAP is,
however, not material.
Long term incentive plan
A long term share incentive plan was in effect from 1996 through 1999. This plan
granted zero cost options to senior management. In order for the options to be
exercisable, certain performance criteria must be met. Under UK GAAP, as a
conditional share option arrangement, the excess of the fair value of the shares
at the date of the grant over the exercise price is written off over the service
period to which the shares relate, after taking into account the likelihood of
whether or not the performance criteria will be satisfied. Under US GAAP, this
plan is considered a variable plan, and compensation expense is calculated based
upon the current market price of the stock, after taking into consideration
vesting criteria and the likelihood of whether or not the performance criteria
will be satisfied. However, as it is unlikely that the performance criteria will
be met, no expense has been recognised under either UK GAAP or US GAAP.
(vi) Restructuring costs
Under UK GAAP, prior to the implementation of Financial Reporting Standard 12
(FRS 12) Provisions, Contingent Liabilities and Contingent Assets in 1999, the
recognition of restructuring provisions was allowable when a decision was taken
to restructure part of a company's operations, and no specific criteria had to
be fulfilled. US GAAP requires a number of specific criteria to be met before
such anticipated costs can be recognised as a liability. Costs which do not meet
the specific criteria under US GAAP are recognised as liabilities only when an
obligation exists to pay cash or otherwise sacrifice assets. Following
implementation of FRS 12 criteria similar to that set forth under US GAAP must
be met before a provision may be recorded under UK GAAP.
The majority of the adjustment under US GAAP relates to timing of the
recognition of voluntary severance arrangements.
(vii) Capitalisation of interest
There is no requirement under UK GAAP at December 31, 1998 and 1999 to
capitalise interest. Under US GAAP, SFAS 34 Capitalisation of interest cost,
requires interest incurred as part of the costs of constructing fixed assets to
be capitalised and amortised over the life of the assets. The resulting
adjustment takes into consideration the capitalisation of interest, as well as
any depreciation taken in subsequent periods.
39
<PAGE>
HICKSON INTERNATIONAL PLC
(viii) Hedging transactions
Foreign exchange hedging transactions
Under UK GAAP, gains or losses arising on foreign exchange forward contracts
taken out in respect of anticipated trading receipts from overseas subsidiaries
may be deferred and recognised at the time of the trading receipt; whereas,
under US GAAP, such gains or losses may only be deferred where there is a firm
foreign currency commitment. As the Group takes forward exchange contracts based
on a rolling 12 month forecast, the contracts do not meet the hedge criteria
under US GAAP; the contracts are therefore accounted for as speculative
contracts.
(ix) Ordinary dividends
Under UK GAAP, ordinary dividends are recorded for in the period in which they
relate, although approval of the final dividend may not take place until the
Annual General Meeting subsequent to the year-end. Under US GAAP, such dividends
are provided for in the year in which they are declared and approved by the
Board of Directors.
Cash flow information
Under UK GAAP, the Consolidated Cash Flow Statements are presented in accordance
with FRS 1, as revised, Cash Flow Statements. The statements prepared under FRS
1 present substantially the same information as that required under US GAAP as
interpreted by SFAS 95 Statement of Cash Flows.
The definition of "cash flow" differs between UK and US GAAP. Cash flow under UK
GAAP represents increases or decreases in "cash", which comprises cash in hand
and repayable on demand overdrafts. Under US GAAP, cash flow represents
increases or decreases in "cash and cash equivalents", which include short term,
highly liquid investments with original maturities of less than 90 days, and
exclude overdrafts, unless a right of set-off exists.
40
<PAGE>
HICKSON INTERNATIONAL PLC
Cash flow information - continued
Under UK GAAP, cash flows are presented for operating activities; dividends
received from partnerships and other associates; returns on investments and
servicing of finance; taxation; capital expenditure and financial investment;
acquisitions and disposals; equity dividends paid; management of liquid
resources and financing. US GAAP requires the classification of cash flows as
resulting from operating, investing and financing activities.
Cash flows under UK GAAP in respect of interest received, interest paid,
investment income and taxation would be included within operating activities
under US GAAP. Capital expenditure and financial investment, dividends received
from partnerships and associates, and cash flows from acquisitions and disposals
would be included within investing activities under US GAAP. Equity dividends
paid would be included within financing activities under US GAAP. Management of
liquid resources may be included within financing activities or the liquid
resources may be considered a cash equivalent under US GAAP, depending on the
nature of the liquid resources.
A summary of the Group's operating, investing and financing activities,
classified in accordance with US GAAP, are as follows:
<TABLE>
<CAPTION>
1999 1998
(Pounds)m (Pounds)m
<S> <C> <C>
Net cash provided by operating activities 21.8 11.9
Net cash used in investing activities (13.9) (14.4)
Net cash (used in) provided by financing activities (6.1) 1.6
Foreign exchange differences (0.3) -
--------- ---------
1.5 (0.9)
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents under US GAAP at the beginning of the
year 13.7 14.6
Cash and cash equivalents under US GAAP at the end of the year 15.2 13.7
</TABLE>
41
<PAGE>
INTERIM FINANCIAL STATEMENTS
<PAGE>
HICKSON INTERNATIONAL PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNT
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended Six Months Ended
June 30, 2000 June 30, 1999
(pounds)m (pounds)m Note
--------------------- --------------------- ------------
<S> <C> <C> <C>
Turnover by principal activity
Organic Chemicals 24.9 29.5
Protection & Coatings 82.1 78.5
--------------------- ---------------------
Total turnover 107.0 108.0 2
Operating profit/(loss) by principal activity
Organic Chemicals (3.7) (1.0)
Protection & Coatings 9.0 7.3
Group costs (1.1) (1.6)
--------------------- ---------------------
Operating profit before exceptionals 4.2 4.7
Exceptional costs (1.0) -
--------------------- ---------------------
Operating profit 3.2 4.7
Interest (1.1) (1.3)
--------------------- ---------------------
Profit before taxation 2.1 3.4 2
Taxation (2.0) (0.8)
--------------------- ---------------------
Profit after taxation 0.1 2.6
Dividends - (1.1)
--------------------- ---------------------
Retained profit 0.1 1.5
===================== =====================
Earnings per share:
before exceptional items 3
Basic 0.63p 1.50p
Diluted 0.63p 1.49p
after exceptional items 3
Basic 0.06p 1.50p
Diluted 0.06p 1.49p
Dividends per share nil 0.60p 4
</TABLE>
42
<PAGE>
HICKSON INTERNATIONAL PLC
SUMMARIZED CASH FLOW STATEMENTS
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended Six Months Ended
June 30, 2000 June 30, 1999
(pounds)m (pounds)m Note
------------------- ------------------- ------------
<S> <C> <C> <C>
Cash flows from operating activities before 3.7 10.3 5
exceptional costs
Exceptional costs (3.7) (4.1)
------------------- -------------------
Cash flows from operating activities - 6.2
Returns on investments and servicing of finance
Net interest paid (1.1) (1.3)
Taxation (0.8) (0.2)
Net capital expenditure (3.3) (4.7)
Acquisitions and disposals
Purchase of subsidiary undertakings (1.0) -
Other items (0.1) -
Equity dividends paid (1.7) (2.8)
------------------- -------------------
Net cash outflow/(inflow) before financing (8.0) (2.8)
Management of liquid resources 0.2 2.1
Financing
New loans and finance leases 8.0 2.5
------------------- -------------------
8.0 2.5
------------------- -------------------
Increase in net cash 0.2 1.8
=================== ===================
</TABLE>
43
<PAGE>
HICKSON INTERNATIONAL PLC
RECONCILIATION OF NET DEBT
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended Six Months Ended
June 30, 2000 June 30, 1999
(pounds)m (pounds)m Note
--------------------- --------------------- -------
<S> <C> <C> <C>
Increase in net cash 0.2 1.8
Cash inflow from new loans and lease financing (8.0) (2.5)
Cash outflow from management of liquid resources (0.2) (2.1)
Borrowings of subsidiary acquired (0.5) -
--------------------- ---------------------
Change in net debt resulting from cashflows (8.5) (2.8)
Translation difference (1.2) (0.6)
--------------------- ---------------------
Movement in net debt in the period (9.7) (3.4)
Opening net debt (25.0) (28.9)
--------------------- ---------------------
Closing net debt (34.7) (32.3) 6
===================== =====================
Gearing % 47% 33%
</TABLE>
44
<PAGE>
HICKSON INTERNATIONAL PLC
CONSOLIDATED BALANCE SHEETS
(unaudited)
<TABLE>
<CAPTION>
June 30, 2000 June 30, 1999
(pounds)m (pounds)m
----------------- ------------------
<S> <C>
Fixed assets
Tangible fixed assets 82.5 101.0
Intangible fixed assets 1.3 -
Investments 4.0 4.3
----------------- ------------------
87.8 105.3
----------------- ------------------
Current assets
Stocks 30.8 36.8
Debtors 62.5 53.9
Cash at bank and in hand 15.4 13.2
----------------- ------------------
108.7 103.9
Creditors: amounts falling due within one year (58.4) (52.3)
----------------- ------------------
Net current assets 50.3 51.6
----------------- ------------------
Total assets less current liabilities 138.1 156.9
Creditors: amounts falling due after more than one year (50.1) (46.2)
Provisions for liabilities and charges (14.2) (14.0)
----------------- ------------------
Net assets 73.8 96.7
================= ==================
Capital and reserves
Called up share capital 44.0 44.0
Share premium account 24.5 24.5
Profit and loss account 5.3 28.2
----------------- ------------------
Shareholders' funds 73.8 96.7
================= ==================
</TABLE>
45
<PAGE>
HICKSON INTERNATIONAL PLC
NOTES TO THE INTERIM REPORT
(unaudited)
1. Nature of financial information
The financial information for the six months to June 30, 2000, which has
been neither audited nor reviewed by our auditors, has been prepared on the
basis of the accounting policies set out in the annual accounts for the
year ended December 31, 1999.
Full accounts, which received an unqualified audit report, have been filed
with the Registrar of Companies.
2. Associated undertakings
Turnover and profit before taxation includes the following amounts in
respect of associated undertakings:
Six Months Ended Six Months Ended
June 30, 2000 June 30, 1999
(pounds)m (pounds)m
-------------------- ------------------
Turnover 4.8 5.0
Profit before taxation 0.7 0.3
-------------------- ------------------
3. Earnings per share
In view of the significance of the exceptional items in the year ended
December 31, 1999, the Directors consider it appropriate to disclose
earnings per share calculated both before and after such items:
<TABLE>
<CAPTION>
Six Months Ended Six Months Ended
June 30, 2000 June 30, 1999
(pounds)m (pounds)m
---------------------- ----------------------
<S> <C> <C>
Profit/(loss) on ordinary activities attributable to 0.1 2.6
Hickson International PLC
Rationalization costs 1.0 -
---------------------- ----------------------
Earnings for the period before exceptional items 1.1 2.6
====================== ======================
</TABLE>
46
<PAGE>
HICKSON INTERNATIONAL PLC
NOTES TO THE INTERIM REPORT - Continued
(unaudited)
<TABLE>
<CAPTION>
June 30, 2000 June 30, 1999
------------- -------------
Weighted average number of: Number (m) Number (m)
<S> <C> <C>
Ordinary shares in issue during the year 176.0 176.0
Shares held by share trust (2.1) (2.1)
--------------------- ---------------------
Basic 173.9 173.9
Effect of dilutive options - 0.4
--------------------- ---------------------
Diluted 173.9 174.3
===================== =====================
Earnings per share before exceptional items Pence Pence
Basic 0.63p 1.50p
Diluted 0.63p 1.49p
Earnings per share after exceptional items
Basic 0.06p 1.50p
Diluted 0.06p 1.49p
4. Interim dividend
There is no interim dividend proposed
(1999 0.60p per share)
5. Cash Flows from Operating Activities
Six Months Ended Six Months Ended
June 30, 2000 June 30, 1999
(pounds)m (pounds)m
--------------------- ---------------------
Operating profit excluding associated undertakings 3.5 4.4
and exceptional items
Dividends received from associated undertakings 0.2 0.2
Depreciation 5.3 6.0
Decrease/(increase) in working capital
Stocks (0.1) (2.7)
Debtors (5.9) (0.2)
Creditors 0.7 2.6
--------------------- ---------------------
Net cash inflow from operating activities 3.7 10.3
===================== =====================
6. Net Debt
Six Months Ended Six Months Ended
June 30, 2000 June 30, 1999
(pounds)m (pounds)m
--------------------- ---------------------
Debt repayable
Between one and two years (1.9) (1.5)
Dividends received from associated undertakings (48.2) (44.0)
--------------------- ---------------------
Depreciation (50.1) (45.5)
Decrease/(increase) in working capital
Cash at bank and in hand 15.4 13.2
--------------------- ---------------------
Net debt (34.7) (32.3)
===================== =====================
</TABLE>
47
<PAGE>
HICKSON INTERNATIONAL PLC
NOTES TO THE INTERIM REPORT - Continued
(unaudited)
7. UK to US GAAP Adjustments
<TABLE>
<CAPTION>
Six months ended June 30
-----------------------------------------------
2000 1999
(pounds)m (pounds)m
--------------------- ---------------------
<S> <C> <C>
Profit for the financial year under UK GAAP 0.1 2.6
US GAAP adjustments
Goodwill amortisation (1.2) (1.2)
Revenue recognition 0.5 3.4
Pensions 0.6 (0.9)
Deferred taxation (0.3) (1.9)
Restructuring costs (1.6) (1.3)
Hedging transactions 0.1 (0.1)
Taxation effect of US GAAP adjustments 0.1 (0.4)
--------------------- ---------------------
Total US GAAP adjustments (1.8) (2.4)
--------------------- ---------------------
(Loss)/profit for the period under US GAAP (1.7) 0.2
===================== =====================
Presentation of earnings/(loss) per share under US GAAP
Basic (0.98)p 0.17p
Diluted (0.98)p 0.17p
Reconciliation of consolidated shareholders' funds
June 30
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2000 1999
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(pounds)m (pounds)m
Shareholders' funds under UK GAAP 73.8 96.7
US GAAP adjustments:
Goodwill 68.5 68.5
Goodwill amortisation (28.0) (23.1)
Revenue recognition (3.9) (2.1)
Pensions (13.7) (17.4)
Deferred taxation 1.9 4.1
Options (0.8) (1.2)
Restructuring costs - 0.6
Capitalisation of interest 2.9 2.9
Ordinary dividends - 1.1
Taxation effect of US GAAP adjustments 4.8 5.3
--------------------- ---------------------
Total US GAAP adjustments 31.7 38.7
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Shareholders' funds under US GAAP 105.5 135.4
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