Exhibit 99
Avecia Group plc
Financial Statements – December 31, 2002
TABLE OF CONTENTS
Consolidated Profit and Loss Accounts for the financial years ended December 31, 2002, December 31, 2001 and December 31, 2000.
Consolidated Balance Sheets as at December 31, 2002 and December 31, 2001.
Consolidated Cash Flow Statements for the financial years ended December 31, 2002, December 31, 2001 and December 31, 2000.
Selected Notes to Financial Statements
The financial information set out in this document in relation to the twelve months ended December 31, 2002 is unaudited, and does not constitute the company’s statutory accounts for that period. The UK statutory accounts for the twelve months ended December 31, 2002, will be finalised on the basis of financial information presented by the directors in this preliminary announcement and will be delivered to the Registrar of Companies in due course, and similarly the form 20-F will be delivered to the SEC in due course.
Avecia Group plc
Year ended December 31, 2002
Consolidated profit and loss accounts |
| For the year ended December 31, 2002 | For the year ended December 31, 2002 | For the year ended December 31, 2001 | For the year ended December 31, 2001 | For the year ended December 31, 2000 | For the year ended December 31, 2000 | |||||||||||||||||
| £million | £million | £million | £million | £million | £million | |||||||||||||||||
| Note | ||||||||||||||||||||||
| Turnover: group and share of joint ventures | 589.2 | 815.1 | 800.5 | |||||||||||||||||||
| Less: share of joint ventures’ turnover | (13.5 | ) | (11.5 | ) | (10.9 | ) | ||||||||||||||||
Group turnover | 3 | |||||||||||||||||||||
| Continuing operations | 575.7 | 590.1 | 564.6 | |||||||||||||||||||
| Discontinued operations | – | 213.5 | 225.0 | |||||||||||||||||||
| 575.7 | 803.6 | 789.6 | ||||||||||||||||||||
| Operating costs | 4 | (600.1 | ) | (759.4 | ) | (718.7 | ) | |||||||||||||||
| Other operating income | 7.6 | 4.2 | 3.9 | |||||||||||||||||||
Group operating (loss)/ profit | ||||||||||||||||||||||
| Continuing operations | (16.8 | ) | 19.6 | 42.7 | ||||||||||||||||||
| Discontinued operations | – | 28.8 | 32.1 | |||||||||||||||||||
| (16.8 | ) | 48.4 | 74.8 | |||||||||||||||||||
| Share of operating profit of joint ventures | 2.2 | 1.4 | 1.4 | |||||||||||||||||||
| Profit on disposal of business | 5 | 9.4 | 4.0 | – | ||||||||||||||||||
| (Loss) / Profit on ordinary activities before interest and taxation | (5.2 | ) | 53.8 | 76.2 | ||||||||||||||||||
| Other interest receivable and similar income | 7 | 34.5 | 2.6 | 3.8 | ||||||||||||||||||
| Interest payable and similar charges | 8 | (65.4 | ) | (88.9 | ) | (107.4 | ) | |||||||||||||||
Loss on ordinary activities before taxation | 6 | (36.1 | ) | (32.5 | ) | (27.4 | ) | |||||||||||||||
| Taxation on loss on ordinary activities | (6.5 | ) | (5.8 | ) | (8.1 | ) | ||||||||||||||||
Loss on ordinary activities after taxation | (42.6 | ) | (38.3 | ) | (35.5 | ) | ||||||||||||||||
| Appropriation | (6.0 | ) | (5.4 | ) | (4.5 | ) | ||||||||||||||||
Retained loss for the financial period | (48.6 | ) | (43.7 | ) | (40.0 | ) | ||||||||||||||||
The accompanying notes are an integral part of these financial statements.
1
Avecia Group plc
Year ended December 31, 2002
Consolidated balance sheet |
| Avecia Group plc Consolidated | ||||||||||
| Balance Sheet as at | ||||||||||
| December 31, 2002 | December 31, 2001 | |||||||||
| Note | £ million | £ million | ||||||||
Fixed assets | ||||||||||
| Intangible assets | ||||||||||
Goodwill | 318.3 | 500.4 | ||||||||
Other intangible assets | 11.7 | 11.4 | ||||||||
| 330.0 | 511.8 | |||||||||
| Tangible assets | 336.1 | 401.8 | ||||||||
| Investments | ||||||||||
Investments in joint ventures | ||||||||||
Share of gross assets and goodwill | 23.3 | 28.3 | ||||||||
Share of gross liabilities | (1.5 | ) | (1.1 | ) | ||||||
| 21.8 | 27.2 | |||||||||
| 687.9 | 940.8 | |||||||||
Current assets | ||||||||||
| Stocks | 83.8 | 130.6 | ||||||||
| Debtors | 137.9 | 166.8 | ||||||||
| Cash at bank and in hand | 16.2 | 12.6 | ||||||||
| 237.9 | 310.0 | |||||||||
Creditors: amounts falling due within one year | 9 | (127.1 | ) | (155.3 | ) | |||||
Net current assets | 110.8 | 154.7 | ||||||||
Total assets less current liabilities | 798.7 | 1,095.5 | ||||||||
Creditors: amounts falling due after more than one year | 10 | (545.3 | ) | (790.2 | ) | |||||
Provisions for liabilities and charges | (33.6 | ) | (31.8 | ) | ||||||
Net assets | 219.8 | 273.5 | ||||||||
Capital and reserves | ||||||||||
| Called up share capital | 330.5 | 330.4 | ||||||||
| Share premium account | 15.2 | 16.4 | ||||||||
| Profit and loss account | (128.7 | ) | (77.1 | ) | ||||||
| Shares to be issued | 2.8 | 2.7 | ||||||||
Shareholders’ funds | 219.8 | 272.4 | ||||||||
of which: equity shareholders’ funds | 184.8 | 240.4 | ||||||||
non-equity shareholders’ funds | 35.0 | 32.0 | ||||||||
| 219.8 | 272.4 | |||||||||
| Minority interests | – | 1.1 | ||||||||
Shareholders’ funds and minority interests | 219.8 | 273.5 | ||||||||
The accompanying notes are an integral part of these financial statements
2
Avecia Group plc
Year ended December 31, 2002
Consolidated cash flow statements |
| Avecia Group plc Consolidated | |||||||||||||
| For the year ended December 31, 2002 | For the year ended December 31, 2001 | For the Year ended December 31, 2000 | |||||||||||
| Note | £ million | £ million | £ million | ||||||||||
| Net cash inflow from operating activities | 13 | 107.8 | 120.5 | 147.2 | |||||||||
| Dividends from joint ventures | 14 | 5.5 | 2.9 | 2.7 | |||||||||
| Returns on investments and servicing of finance | 14 | (56.9 | ) | (73.3 | ) | (74.6 | ) | ||||||
| Taxation | (4.1 | ) | (7.7 | ) | (9.2 | ) | |||||||
| Capital expenditure and financial investment | 14 | (43.1 | ) | (62.1 | ) | (64.2 | ) | ||||||
| Acquisitions and disposals | 14 | 196.2 | 31.1 | (36.6 | ) | ||||||||
| Cash inflow/(outflow) before financing | 205.4 | 11.4 | (34.7 | ) | |||||||||
| Financing | 14 | (201.2 | ) | (20.3 | ) | (12.5 | ) | ||||||
| Increase/(Decrease) in cash in the period | 4.2 | (8.9 | ) | (47.2 | ) | ||||||||
Increase/(decrease) in cash in the period | 4.2 | (8.9 | ) | (47.2 | ) | ||||||||
| Cash inflow from increase in debt and lease financing | (39.0 | ) | (63.0 | ) | (26.0 | ) | |||||||
| Cash outflow from decrease in debt and lease financing | 240.3 | 82.6 | 36.1 | ||||||||||
| Change in net debt resulting from cash flows | 205.5 | 10.7 | (37.1 | ) | |||||||||
| Cash/(loans and finance leases) acquired with subsidiary | – | 0.5 | (0.3 | ) | |||||||||
| Translation differences | 41.2 | (10.1 | ) | (37.2 | ) | ||||||||
| Non-cash items | (5.1) | 0.9 | (3.4 | ) | |||||||||
Movement in net debt in the period | 241.6 | 2.0 | (78.0 | ) | |||||||||
| Net debt at the start of the period | (792.9 | ) | (794.9 | ) | (716.9 | ) | |||||||
Net debt at the end of the period | (551.3 | ) | (792.9 | ) | (794.9 | ) | |||||||
The accompanying notes are an integral part of these financial statements.
3
Avecia Group plc
Year ended December 31, 2002
Consolidated statements of total recognized gains and losses |
| Avecia Group plc Consolidated | ||||||||||
| For the year ended December 31, | For the year ended December 31, | For the year ended December 31, | ||||||||
| 2002 | 2001 | 2000 | ||||||||
| £ million | £ million | £ million | ||||||||
Loss for the financial period | ||||||||||
| Group | (44.8 | ) | (39.8 | ) | (37.0 | ) | ||||
| Share of joint ventures | 2.2 | 1.5 | 1.5 | |||||||
| (42.6 | ) | (38.3 | ) | (35.5 | ) | |||||
| Net exchange differences on the retranslation of net investments and related borrowings | (9.0 | ) | (3.4 | ) | 2.3 | |||||
Total recognized losses relating to the financial Period | (51.6 | ) | (41.7 | ) | (33.2 | ) | ||||
Reconciliation of consolidated movements in shareholders’ funds
| Avecia Group plc Consolidated | |||||||||||
| For the year ended December 31, | For the year ended December 31, | For the year ended December 31, | |||||||||
| 2002 | 2001 | 2000 | |||||||||
| Notes | £ million | £ million | £ million | ||||||||
Loss for the financial period | (42.6 | ) | (38.3 | ) | (35.5 | ) | |||||
| Appropriation of profit relating to non equity shares | (6.0 | ) | (5.4 | ) | (4.5 | ) | |||||
| (48.6 | ) | (43.7 | ) | (40.0 | ) | ||||||
| Other recognized gains and losses relating to the period (net) | (10.1 | ) | (3.1 | ) | 4.1 | ||||||
| New share capital subscribed | 0.2 | 0.1 | 0.2 | ||||||||
| Premium on share issues (net of issue costs) | 5.3 | 4.6 | 3.5 | ||||||||
| Shares to be issued | 0.2 | 0.4 | 0.4 | ||||||||
| Amortization of share issue costs | 0.4 | 0.4 | 0.5 | ||||||||
Net addition to shareholders’ funds | (52.6 | ) | (41.3 | ) | (31.3 | ) | |||||
| Opening shareholders’ funds | 272.4 | 313.7 | 345.0 | ||||||||
Closing shareholders’ funds | 219.8 | 272.4 | 313.7 | ||||||||
The accompanying notes are an integral part of these financial statements.
4
Avecia Group plc
Year ended December 31, 2002
Notes to the consolidated financial statements (forming part of the financial statements) |
1 Basis of preparation |
General
The financial statements have been prepared in accordance with generally accepted accounting standards in the United Kingdom (‘UK GAAP’), and under the historical cost accounting rules. These accounting standards differ in certain significant aspects from generally accepted accounting principles in the United States (‘US GAAP’).
According to the requirements of UK Financial Reporting Standard 3 – ‘Reporting Financial Performance’, the Stahl business has been classified as a discontinued operation. Its results have therefore been presented separately for all periods presented here.
Consolidated financial statements
The consolidated financial statements include the financial statements of the company and its subsidiary undertakings for the year ended December 31, 2002, the year ended December 31, 2001 and year ended December 31, 2000. The acquisition method of accounting has been adopted. Under this method, the results of subsidiary undertakings acquired or disposed of in the year are included in the consolidated profit and loss account from the date of acquisition or up to the date of disposal. All significant intercompany accounts and transactions have been eliminated.
A joint venture is an undertaking in which the group has a long term interest and over which it exercises joint control. The group’s share of the profits less losses of joint ventures is included in the consolidated profit and loss account, and its interest in their net assets is included in investments in the consolidated balance sheet.
Going Concern
The Directors have reviewed the Group’s budget for the current year including cash flows and forecasts of headroom available against debt covenants. Following this review, the Directors have formed a judgment that at the time of preparation of these financial statements, the Group is planning to operate within the terms of its finance facilities, and within the resources available. For this reason, the Directors have prepared these financial statements on a going concern basis.
New UK Accounting Standards
No new UK accounting standards were adopted during the year ended December 31, 2002.
5
Avecia Group plc
Year ended December 31, 2002
Notes to the consolidated financial statements (continued) |
| 2 | Accounting policies |
The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the financial statements.
Goodwill |
On the acquisition of a business, fair values are attributed to the net assets acquired. Purchased goodwill, representing the excess of the fair value of the consideration given over the fair value of the separable net assets acquired, is capitalized and is amortized to nil by equal annual installments over its estimated useful life.
Goodwill arising on the acquisition of the Specialty Chemicals division of AstraZeneca plc and subsequent acquisitions is being amortised over 15 years. On the subsequent disposal or termination of a business acquired, the profit or loss on disposal or termination is calculated after charging/crediting the unamortised amount of any related goodwill/negative goodwill.
Goodwill is reviewed for impairment whenever events or changes in circumstances indicate that the full carrying amount may not be recoverable.
Investments |
A joint venture is an entity in which an interest is held on a long term basis and which is jointly controlled with one or more other venturers under a contractual agreement.
The share of the profits and losses of all significant joint ventures is included in the consolidated profit and loss account on the equity accounting method. The holding value of significant joint ventures in the balance sheet is calculated by reference to equity in the net assets of such joint ventures, as shown by the most recent accounts available, adjusted where appropriate.
Fixed asset investments, other than in joint ventures and associates, are stated at cost less provision for any impairment.
Depreciation and amortization |
The book value of each tangible fixed asset is written off evenly over its estimated remaining life. Reviews are made periodically of the estimated remaining lives of individual productive assets, taking account of commercial and technological obsolescence as well as normal wear and tear. Under this policy it becomes impracticable to calculate average asset lives exactly. However, the total lives approximate to 15 years for buildings and 10 years for plant and equipment. Depreciation of assets qualifying for grants is calculated on their full cost. Intangible assets acquired, including patents and intellectual property rights, are capitalized and amortized on a straight line basis over their estimated useful lives (not exceeding 20 years). If related products fail, the remaining unamortized amounts are immediately written off to revenue expense. Internally developed intangible assets are not capitalized.
Impairment of long-lived assets |
Long-lived assets and certain identifiable intangibles are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of such an asset to future net cash flows expected to be generated by them. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed their fair value. Assets to be disposed of are reported at the lower of their carrying amount or fair value less costs to sell.
Environmental liabilities |
The business is exposed to environmental liabilities relating to operations, principally in respect of soil and groundwater remediation costs. Provisions for these costs are made when expenditure on remedial work is probable and the cost can be estimated within a reasonable range of possible outcomes.
6
Avecia Group plc
Year ended December 31, 2002
Notes to the consolidated financial statements (continued) |
| 2 | Accounting policies |
Foreign currencies |
Profit and loss accounts in foreign currencies are translated into sterling at average rates for the relevant accounting periods. Assets and liabilities are translated at rates prevailing at the balance sheet date.
Exchange differences on short-term foreign currency borrowings and deposits are included within net interest payable. Exchange differences on all other transactions, except relevant foreign currency loans, are taken to operating profit. In the consolidated financial statements exchange differences arising from the translation of the net investments of overseas subsidiaries, joint ventures and associates are taken directly to reserves. Differences on relevant foreign currency loans, together with related tax, are taken to reserves via the statement of total recognized gains and losses and offset against the differences on net investments, as they are considered to be a hedge against movements on the net investments.
Leases |
Assets held under finance leases are capitalized and included in tangible fixed assets. Each asset is depreciated over the shorter of the lease term or its useful life. The obligations related to finance leases, net of finance charges in respect of future periods, are included as appropriate under creditors due within, or creditors due after, one year. The interest element of the rental obligation is allocated to accounting periods during the lease term to reflect a constant rate of interest on the remaining balance of the obligation for each accounting period. Rentals under operating leases are charged to the profit and loss account on a straight-line basis over the lease term.
Post-retirement benefits |
The pension costs relating to UK retirement plans are assessed in accordance with the advice of independent qualified actuaries. The amounts so determined include the regular cost of providing the benefits under the plans which it is intended should remain a level percentage of current and expected future earnings of the employees covered under the plans. Variations from the regular pension cost are spread on a systematic basis over the estimated average remaining service lives of current employees in the plans. Retirement plans of non-UK subsidiary undertakings are accounted for in accordance with local conditions and practice.
With minor exceptions, these subsidiary undertakings recognize the expected cost of providing pensions on a systematic basis over the average remaining service lives of employees in accordance with the advice of independent qualified actuaries. The costs of providing post-retirement benefits other than pensions, principally healthcare, are charged to the profit and loss account on a consistent basis over the average service lives of employees. Such costs are assessed in accordance with the advice of independent qualified actuaries.
Research and development and advertising expenditure |
Research and development and advertising expenditure is charged to the profit and loss account in the period in which it is incurred.
Stocks valuation |
Finished goods are stated at the lower of cost and net realizable value and raw materials and other stocks at the lower of cost or replacement price. The first-in, first-out or an average method of valuation is used. In determining cost, depreciation is included but selling expenses and certain overhead expenses (principally central administration costs) are excluded. Net realizable value is determined as selling price less costs of disposal.
7
Avecia Group plc
Year ended December 31, 2002
Notes to the consolidated financial statements (continued) |
| 2 | Accounting policies |
Taxation |
The charge for taxation is based on the profits for the year and takes into account taxation deferred because of timing differences between the treatment of certain items for taxation and for accounting purposes. Deferred tax assets are recognized to the extent that, on the basis of all available evidence, it can be regarded as more likely than not that there would be suitable profits from which the future reversal of the underlying timing differences can be deducted.
Turnover and revenue recognition |
The company generates revenue through sales of specialty chemicals in the open market, through raw material conversion and supply and development contracts. Turnover excludes inter-segment turnover and value added taxes.
Revenue is recognized when services have been rendered and significant risks and rewards in respect of ownership of the products are passed to the customer. Where multiple-element sales arrangements exist, this entails the company recognizing revenue on individual contract elements for work performed or services rendered during the period.
Cash and liquid resources |
Cash, for the purpose of the cash flow statement, comprises cash in hand and deposits repayable on demand, less overdrafts payable on demand.
Liquid resources are current asset investments which are disposable without curtailing or disrupting the business and are either readily convertible into known amounts of cash at or close to their carrying values or traded in an active market. Liquid resources comprise term deposits of less than one year (other than cash), government securities and investments in money market managed funds.
Financial instruments |
Derivative financial instruments are used to hedge exposures to fluctuations in interest and foreign exchange rates. Instruments accounted for as hedges are structured so as to reduce the market risk associated with the underlying transaction being hedged and are designated as a hedge at the inception of the contract. Receipts and payments on interest rate instruments are recognized on an accrual basis over the lives of the instruments. Gains and losses on contracts hedging forecast transaction cash flows are recognized in the same hedged periods. Cash flows associated with derivative financial instruments are classified in the cash flow statement in a manner consistent with those of the transactions being hedged. Finance costs associated with debt issuances are netted against the carrying value of the related debt and charged to the profit and loss account over the lives of the issue. If the underlying transaction to a hedge ceases to exist, the hedge is terminated and the profits and losses on termination are recognized in the profit and loss account immediately.
If the hedge transaction is terminated, the profits and losses on termination are held on the balance sheet and amortized over the life of the original underlying transaction.
Use of estimates |
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
8
Avecia Group plc
Year ended December 31, 2002
Notes to the consolidated financial statements (continued) |
| 3 | Segmental information |
Classes of business |
Avecia is a global group of specialized chemical businesses, which develop, manufacture and market chemical products to customers in a wide range of industries.
Avecia operates through four main businesses, all of which report to the central Avecia management team. Inter segment sales are nominal. Following is a brief description of each business segment:
Fine Chemicals – produces chemical intermediates for pharmaceutical and agrochemical products and for biotechnology applications.
Electronic Materials – supplier of color and black ink for ink jet printers, consumables for color photocopiers and laser printers; and organic light emitting polymers for flat panel displays.
Specialty Products – manufacture of chlorine-free and bromine-free sanitizers for pools and spas; and of preservatives, fungicides and disinfectants for industrial and consumer products, copper extraction products, pigments and additives for coatings and plastics products.
NeoResins – a supplier of water-borne resins used as binders and additives in the paint, coating, adhesives and printing ink industries.
The Stahl business, which supplied leather finishes and coatings, dyestuffs, syntans and oils, was sold in January 2002 and is now classified as discontinued.
The following tables analyze certain profit and loss and net assets items by business segment. No segment allocation has been shown for interest and taxation as they have not historically been allocated to these businesses. The accounting policies for each segment are the same as those for the consolidated business. Central costs and overheads are not allocated to individual segments. The group’s policy is to transfer products internally at external market prices.
9
Avecia Group plc
Year ended December 31, 2002
Notes to the consolidated financial statements (continued) |
| 3 | Segmental information (continued) |
The tables below set out information for each of the industry segments and geographic areas of operation.
Avecia Group plc consolidated |
| For the year ended December 31, 2002 | ||||||||||||||||||||||
| Fine Chemicals | Electronic Materials | Specialty Products | NeoResins | Stahl (Discontinued) | Other | Total | ||||||||||||||||
| £ million | £ million | £ million | £ million | £ million | £ million | £ million | ||||||||||||||||
Turnover | ||||||||||||||||||||||
| Total sales | 175.8 | 77.3 | 158.9 | 167.2 | – | 10.5 | 589.7 | |||||||||||||||
| Inter-segmental sales | – | – | (0.4 | ) | (0.1 | ) | – | – | (0.5 | ) | ||||||||||||
| Joint venture sales | – | (13.5 | ) | – | – | – | – | (13.5 | ) | |||||||||||||
| Sales to third parties | 175.8 | 63.8 | 158.5 | 167.1 | – | 10.5 | 575.7 | |||||||||||||||
Segment operating profit before: | (4.7 | ) | 2.1 | 28.2 | 29.9 | – | 1.1 | 56.6 | ||||||||||||||
| Share of operating profit in joint ventures | – | 2.2 | – | – | – | – | 2.2 | |||||||||||||||
| Profit on disposal of business | – | – | – | – | – | 9.4 | 9.4 | |||||||||||||||
Segment profit before interest, taxation and minority interests | (4.7 | ) | 4.3 | 28.2 | 29.9 | – | 10.5 | 68.2 | ||||||||||||||
| Unallocated costs | (73.4 | ) | ||||||||||||||||||||
Group (loss) / profit before interest, taxation and minority interests | (5.2 | ) | ||||||||||||||||||||
Net assets as at December 31, 2002 | 203.4 | 60.1 | 70.2 | 71.9 | – | 10.6 | 416.2 | |||||||||||||||
| Unallocated net liabilities | – | – | – | – | – | (206.5 | ) | |||||||||||||||
| Share of joint ventures’ net assets | 10.1 | 10.1 | ||||||||||||||||||||
Total net assets as at December 31, 2002 | 219.8 | |||||||||||||||||||||
Unallocated costs relate to amortization, depreciation and UK and US head office costs.
Unallocated net liabilities relate to goodwill plus corporate assets and external loans.
10
Avecia Group plc
Year ended December 31, 2002
Notes to the consolidated financial statements (continued) |
| 3 | Segmental information (continued) |
| For the year ended December 31, 2001 | ||||||||||||||||||||||
| Fine Chemicals | Electronic Materials | Specialty Products | NeoResins | Stahl (Discontinued) | Other | Total | ||||||||||||||||
| £ million | £ million | £ million | £ million | £ million | £ million | £ million | ||||||||||||||||
Turnover | ||||||||||||||||||||||
| Total sales | 193.6 | 79.6 | 160.1 | 162.1 | 215.4 | 11.9 | 822.7 | |||||||||||||||
| Inter-segmental sales | (0.6 | ) | (0.6 | ) | (1.0 | ) | (3.5 | ) | (1.9 | ) | – | (7.6 | ) | |||||||||
| Joint venture sales | – | (11.5 | ) | – | – | – | – | (11.5 | ) | |||||||||||||
| Sales to third parties | 193.0 | 67.5 | 159.1 | 158.6 | 213.5 | 11.9 | 803.6 | |||||||||||||||
Segment operating profit before: | 13.2 | 6.7 | 23.6 | 26.5 | 28.8 | 0.7 | 99.5 | |||||||||||||||
| Share of operating profit in joint ventures | – | 1.4 | – | – | – | – | 1.4 | |||||||||||||||
| Profit on disposal of business | – | – | – | – | 4.0 | – | 4.0 | |||||||||||||||
Segment profit before interest, taxation and minority interests | 13.2 | 8.1 | 23.6 | 26.5 | 32.8 | 0.7 | 104.9 | |||||||||||||||
| Unallocated costs | (51.1 | ) | ||||||||||||||||||||
Group profit before interest, taxation and minority interests | 53.8 | |||||||||||||||||||||
Net assets as at December 31, 2001 | 203.9 | 65.9 | 89.3 | 70.8 | 95.7 | 14.6 | 540.2 | |||||||||||||||
| Unallocated net liabilities | (279.5 | ) | ||||||||||||||||||||
| Share of joint ventures’ net assets | – | 12.8 | – | – | – | – | 12.8 | |||||||||||||||
| Total net assets as at December 31, 2001 | 273.5 | |||||||||||||||||||||
Unallocated costs relate to amortization, depreciation and UK and US head office costs.
Unallocated net liabilities relate to goodwill less corporate liabilities and external loans.
11
Avecia Group plc
Year ended December 31, 2002
Notes to the consolidated financial statements (continued) |
| 3 | Segmental information (continued) |
Avecia Group plc consolidated |
| For the year ended December 31, 2000 | ||||||||||||||||||||||
| Fine Chemicals | Electronic Materials | Specialty Products | NeoResins | Stahl (Discontinued) | Other | Total | ||||||||||||||||
| £ million | £ million | £ million | £ million | £ million | £ million | £ million | ||||||||||||||||
Turnover | ||||||||||||||||||||||
| Total sales | 140.2 | 91.7 | 166.0 | 170.5 | 227.9 | 15.6 | 811.9 | |||||||||||||||
| Inter-segmental sales | (1.9 | ) | (0.9 | ) | (1.1 | ) | (4.6 | ) | (2.9 | ) | – | (11.4 | ) | |||||||||
| Joint venture sales | – | (10.9 | ) | – | – | – | – | (10.9 | ) | |||||||||||||
| Sales to third parties | 138.3 | 79.9 | 164.9 | 165.9 | 225.0 | 15.6 | 789.6 | |||||||||||||||
Segment operating profit before: | 16.1 | 22.9 | 28.3 | 29.9 | 32.1 | 0.5 | 129.8 | |||||||||||||||
| Share of operating profit in joint ventures | – | 1.4 | – | – | – | – | 1.4 | |||||||||||||||
Segment profit before interest, taxation and minority interests | 16.1 | 24.3 | 28.3 | 29.9 | 32.1 | 0.5 | 131.2 | |||||||||||||||
| Unallocated costs | (55.0 | ) | ||||||||||||||||||||
Group profit before interest, taxation and minority interests | 76.2 | |||||||||||||||||||||
Net assets as at December 31, 2000 | 168.3 | 77.1 | 91.4 | 68.3 | 98.6 | 27.2 | 530.9 | |||||||||||||||
| Unallocated net liabilities | (229.1 | ) | ||||||||||||||||||||
| Share of joint ventures’ net assets | – | 13.0 | – | – | – | – | 13.0 | |||||||||||||||
Total net assets as at December 31, 2000 | 314.8 | |||||||||||||||||||||
Unallocated costs relate to amortization, depreciation and UK and US head office costs.
Unallocated net liabilities relate to goodwill less corporate liabilities and external loans.
12
Avecia Group plc
Year ended December 31, 2002
Notes to the consolidated financial statements (continued) |
| 3 | Segmental information (continued) |
Avecia Group plc consolidated |
| For the year ended December 31, 2002 | ||||||||||||||||
| UK | Continental Europe | The Americas | Asia, Africa and Australasia | Total | ||||||||||||
| £ million | £ million | £ million | £ million | £ million | ||||||||||||
Turnover | ||||||||||||||||
Sales by destination | ||||||||||||||||
| Total sales | 91.6 | 163.3 | 254.5 | 80.3 | 589.7 | |||||||||||
| Inter-segmental sales | (0.2 | ) | (0.3 | ) | – | – | (0.5 | ) | ||||||||
| Sales to joint ventures | – | (3.2 | ) | (10.3 | ) | – | (13.5 | ) | ||||||||
| Sales to third parties | 91.4 | 159.8 | 244.2 | 80.3 | 575.7 | |||||||||||
Sales by origin | ||||||||||||||||
| Total sales | 168.7 | 123.0 | 251.1 | 46.9 | 589.7 | |||||||||||
| Inter-segmental sales | (0.3 | ) | (0.1 | ) | (0.1 | ) | – | (0.5 | ) | |||||||
| Joint venture sales | (4.4 | ) | – | (9.1 | ) | – | (13.5 | ) | ||||||||
| Sales to third parties | 164.0 | 122.9 | 241.9 | 46.9 | 575.7 | |||||||||||
Segment operating profit before: | (10.5 | ) | (14.3 | ) | 6.1 | 1.9 | (16.8 | ) | ||||||||
| Share of operating profit in joint ventures | 0.9 | – | 1.3 | – | 2.2 | |||||||||||
| Profit on disposal of business | (15.9 | ) | 34.0 | (10.6 | ) | 1.9 | 9.4 | |||||||||
Segment/group profit before interest, taxation and minority interests | (25.5 | ) | 19.7 | (3.2 | ) | 3.8 | (5.2 | ) | ||||||||
Net assets as at December 31, 2002 | (33.4 | ) | 237.9 | 3.6 | 1.6 | 209.7 | ||||||||||
| Joint ventures | 6.0 | – | 4.1 | – | 10.1 | |||||||||||
Total net assets as at December 31, 2002 | 219.8 | |||||||||||||||
13
Avecia Group plc
Year ended December 31, 2002
Notes to the consolidated financial statements (continued)
| 3 | Segmental information (continued) |
Avecia Group plc consolidated |
| For the year ended December 31, 2001 | ||||||||||||||||
| UK | Continental Europe | The Americas | Asia, Africa and Australasia | Total | ||||||||||||
| £ million | £ million | £ million | £ million | £ million | ||||||||||||
Turnover | ||||||||||||||||
Sales by destination | ||||||||||||||||
| Total sales | 122.4 | 239.3 | 328.0 | 133.0 | 822.7 | |||||||||||
| Inter-segmental sales | (1.2 | ) | (5.1 | ) | (1.2 | ) | (0.1 | ) | (7.6 | ) | ||||||
| Sales to joint ventures | – | (2.9 | ) | (8.6 | ) | – | (11.5 | ) | ||||||||
| Sales to third parties | 121.2 | 231.3 | 318.2 | 132.9 | 803.6 | |||||||||||
Sales by origin | ||||||||||||||||
| Total sales | 205.6 | 216.1 | 303.6 | 97.4 | 822.7 | |||||||||||
| Inter-segmental sales | (1.5 | ) | (4.8 | ) | (1.2 | ) | (0.1 | ) | (7.6 | ) | ||||||
| Joint venture sales | (3.2 | ) | – | (8.3 | ) | – | (11.5 | ) | ||||||||
| Sales to third parties | 200.9 | 211.3 | 294.1 | 97.3 | 803.6 | |||||||||||
Segment operating profit before: | 6.9 | 23.4 | 5.1 | 13.0 | 48.4 | |||||||||||
| Share of operating profit in joint ventures | 0.4 | – | 1.0 | – | 1.4 | |||||||||||
| Profit on disposal of business | (3.6 | ) | 9.3 | (1.0 | ) | (0.7 | ) | 4.0 | ||||||||
Segment/group profit before interest, taxation and minority interests | 3.7 | 32.7 | 5.1 | 12.3 | 53.8 | |||||||||||
Net assets as at December 31, 2001 | 116.1 | 129.0 | (3.4 | ) | 19.0 | 260.7 | ||||||||||
| Joint ventures | 6.9 | – | 5.9 | – | 12.8 | |||||||||||
Total net assets as at December 31, 2001 | 273.5 | |||||||||||||||
14
Avecia Group plc
Year ended December 31, 2002
Notes to the consolidated financial statements (continued)
| 3 | Segmental information (continued) |
Avecia Group plc consolidated |
| For the year ended December 31, 2000 | |||||||||||||||
| UK | Continental Europe | The Americas | Asia, Africa and Australasia | Total | |||||||||||
| £ million | £ million | £ million | £ million | £ million | |||||||||||
Turnover | |||||||||||||||
Sales by destination | |||||||||||||||
| Total sales | 129.3 | 241.4 | 302.5 | 138.7 | 811.9 | ||||||||||
| Inter-segmental sales | (1.2 | ) | (7.4 | ) | (2.7 | ) | (0.1 | ) | (11.4 | ) | |||||
| Sales to joint ventures | (3.0 | ) | (0.6 | ) | (7.3 | ) | – | (10.9 | ) | ||||||
| Sales to third parties | 125.1 | 233.4 | 292.5 | 138.6 | 789.6 | ||||||||||
Sales by origin | |||||||||||||||
| Total sales | 178.4 | 230.1 | 300.1 | 103.3 | 811.9 | ||||||||||
| Inter-segmental sales | (2.8 | ) | (6.7 | ) | (1.9 | ) | – | (11.4 | ) | ||||||
| Joint venture sales | (3.7 | ) | – | (7.2 | ) | – | (10.9 | ) | |||||||
| Sales to third parties | 171.9 | 223.4 | 291.0 | 103.3 | 789.6 | ||||||||||
Segment operating profit before: | 46.6 | 1.5 | 16.4 | 10.3 | 74.8 | ||||||||||
| Share of operating profit in joint ventures | 0.7 | – | 0.7 | – | 1.4 | ||||||||||
Segment/group profit before interest, taxation and minority interests | 47.3 | 1.5 | 17.1 | 10.3 | 76.2 | ||||||||||
Net assets as at December 31, 2000 | 138.2 | 128.3 | 18.4 | 16.9 | 301.8 | ||||||||||
| Joint ventures | 7.2 | – | 5.8 | – | 13.0 | ||||||||||
Total net assets as at December 31, 2000 | 314.8 | ||||||||||||||
15
Avecia Group plc
Year ended December 31, 2002
Notes to the consolidated financial statements (continued)
| 3 | Segmental information (continued) |
| Avecia Group plc Consolidated | |||||||
Total assets | As at December 31, 2002 | As at December 31, 2001 | |||||
| £ million | £ million | ||||||
| Fine Chemicals | 249.1 | 247.1 | |||||
| Electronic Materials | 73.2 | 76.4 | |||||
| Specialty Products | 94.0 | 108.6 | |||||
| NeoResins | 96.2 | 107.9 | |||||
| Stahl (Discontinued) | – | 132.5 | |||||
| Other | 413.3 | 578.3 | |||||
| 925.8 | 1,250.8 | ||||||
Other includes all goodwill
| Avecia Group plc Consolidated | |||||||||
Capital expenditure on tangible and intangible fixed assets | For the Year ended December 31, 2002 | For the year ended December 31, 2001 | For the year ended December 31, 2000 | ||||||
| £ million | £ million | £ million | |||||||
| Fine Chemicals | 34.9 | 34.1 | 23.7 | ||||||
| Electronic Materials | 4.7 | 3.9 | 8.7 | ||||||
| Specialty Products | 2.5 | 3.7 | 7.4 | ||||||
| NeoResins | 3.3 | 9.9 | 7.3 | ||||||
| Stahl (discontinued) | – | 7.7 | 8.2 | ||||||
| Other | 0.6 | 1.9 | 5.0 | ||||||
Total | 46.0 | 61.2 | 60.3 | ||||||
16
Avecia Group plc
Year ended December 31, 2002
Notes to the consolidated financial statements (continued)
| 3 | Segmental information (continued) |
| Avecia Group plc Consolidated | ||||||||||
Depreciation and amortization | For the year ended December 31, 2002 | For the year ended December 31, 2001 | For the year ended December 31, 2000 | |||||||
| £ million | £ million | £ million | ||||||||
| Fine Chemicals | 30.0 | 17.9 | 12.2 | |||||||
| Electronic Materials | 6.5 | 5.4 | 3.6 | |||||||
| Specialty Products | 5.4 | 6.5 | 5.9 | |||||||
| NeoResins | 6.1 | 6.6 | 6.0 | |||||||
| Stahl (discontinued) | – | 7.6 | 6.9 | |||||||
| Other | 54.8 | 45.1 | 44.5 | |||||||
Total | 102.8 | 89.1 | 79.1 | |||||||
Included in the year ended 31 December, 2002 is £8.6 million of fixed asset impairment charge in Fine Chemicals (2001: £3.3million; 2000: nil). Other includes amortization of all goodwill.
17
Avecia Group plc
Year ended December 31, 2002
Notes to the consolidated financial statements (continued)
| 3 | Segmental information (continued) |
Geographic areas |
| Avecia Group plc Consolidated | |||||||
Net assets | As at December 31, 2002 | As at December 31, 2001 | |||||
| £ million | £ million | ||||||
| United Kingdom | (27.4 | ) | 123.0 | ||||
| Continental Europe | 237.9 | 129.0 | |||||
| The Americas | 7.7 | 2.5 | |||||
| Asia, Africa and Australasia | 1.6 | 19.0 | |||||
| 219.8 | 273.5 | ||||||
| Avecia Group plc Consolidated | |||||||
Tangible fixed assets | As at December 31, 2002 | As at December 31, 2001 | |||||
| £ million | £ million | ||||||
| United Kingdom | 208.8 | 210.1 | |||||
| Continental Europe | 35.9 | 59.7 | |||||
| The Americas | 91.0 | 122.3 | |||||
| Asia, Africa and Australasia | 0.4 | 9.7 | |||||
| 336.1 | 401.8 | ||||||
| Avecia Group plc Consolidated | ||||||||||
Average number of employees | For the year ended December 31, 2002 | For the year ended December 31, 2001 | For the year ended December 31, 2000 | |||||||
| United Kingdom | 1,934 | 1,969 | 2,004 | |||||||
| Continental Europe | 605 | 1,236 | 1,348 | |||||||
| The Americas | 843 | 1,283 | 1,285 | |||||||
| Asia, Africa and Australasia | 58 | 295 | 280 | |||||||
| 3,440 | 4,783 | 4,917 | ||||||||
18
Avecia Group plc
Year ended December 31, 2002
Notes to the consolidated financial statements (continued)
| 4 | Group operating profit |
| Avecia Group plc Consolidated | |||||||||||||||||||
| For the year ended December 31, 2002 | For the year ended December 31, 2001 | ||||||||||||||||||
| Continuing operations | Discontinued operations | 2002 Total | Continuing operations | Discontinued operations | 2001 Total | ||||||||||||||
| £ million | £ million | £ million | £ million | £ million | £ million | ||||||||||||||
Operating costs | |||||||||||||||||||
| Cost of sales | (361.7 | ) | – | (361.7 | ) | (374.3 | ) | (123.8 | ) | (498.1 | ) | ||||||||
| Distribution costs | (26.9 | ) | – | (26.9 | ) | (25.3 | ) | (20.7 | ) | (46.0 | ) | ||||||||
| Research and development | (58.8 | ) | – | (58.8 | ) | (52.5 | ) | (8.0 | ) | (60.5 | ) | ||||||||
| Selling, general and administrative expenses | (152.7 | ) | – | (152.7 | ) | (122.6 | ) | (32.2 | ) | (154.8 | ) | ||||||||
| (600.1 | ) | – | (600.1 | ) | (574.7 | ) | (184.7 | ) | (759.4 | ) | |||||||||
Other operating income | |||||||||||||||||||
| Royalty income | 0.8 | – | 0.8 | 0.1 | – | 0.1 | |||||||||||||
| Other income | 6.8 | – | 6.8 | 4.1 | – | 4.1 | |||||||||||||
| 7.6 | – | 7.6 | 4.2 | – | 4.2 | ||||||||||||||
| Total charge for depreciation, amortization and impairment included above | (101.8 | ) | – | (101.7 | ) | (79.9 | ) | (7.6 | ) | (87.5 | ) | ||||||||
| Avecia Group plc Consolidated | ||||||||||
| For the year ended December 31, 2000 | ||||||||||
| Continuing operations | Discontinued operations | Total | ||||||||
| £ million | £ million | £ million | ||||||||
Operating costs | ||||||||||
| Cost of sales | (330.5 | ) | (130.2 | ) | (460.7 | ) | ||||
| Distribution costs | (22.9 | ) | (19.8 | ) | (42.7 | ) | ||||
| Research and development | (47.0 | ) | (8.1 | ) | (55.1 | ) | ||||
| Selling, general and administrative expenses | (125.1 | ) | (35.1 | ) | (160.2 | ) | ||||
| (525.5 | ) | (193.2 | ) | (718.7 | ) | |||||
Other operating income | ||||||||||
| Royalty income | – | – | – | |||||||
| Other income | 3.6 | 0.3 | 3.9 | |||||||
| 3.6 | 0.3 | 3.9 | ||||||||
| Total charge for depreciation, amortisation and impairment included above | (71.1 | ) | (6.9 | ) | (78.0) | |||||
Selling, general and administrative expenses includes restructuring and site closure costs of £11.1m (2001: nil; 2000: nil), goodwill impairment of £21.5m (2001: nil) and fixed assets impairment of £8.6m (2001 : £3.3m; 2000: nil).
19
Avecia Group plc
Year ended December 31, 2002
Notes to the consolidated financial statements (continued)
| 5 | Profit on disposal of business |
| In January 2002 the Group completed the sale of the Stahl business. |
| The principal effects on the reported results are as follows: |
| 2002 £ million | ||||
Cash flow | ||||
| Cash disposed | (3.7 | ) | ||
| Sale of business | 201.4 | |||
Profit on disposal | ||||
| Goodwill written off on disposal | 124.1 | |||
| Net assets disposed | 84.8 | |||
| Disposal costs | 7.4 | |||
| Profit on disposal | 9.0 | |||
| Cash/overdrafts disposed | 3.7 | |||
| Minority interest | (1.1 | ) | ||
| 227.9 | ||||
Consideration Cash | 207.4 | |||
| Deferred | 20.5 | |||
| 227.9 | ||||
Additionally the group reported £0.4m profit and received £2.0m deferred consideration relating to the sale of Novacote in 2001.
20
Avecia Group plc
Year ended December 31, 2002
Notes to the consolidated financial statements (continued)
| 6 | (Loss)/profit on ordinary activities before taxation |
| Avecia Group plc Consolidated | ||||||||||
| For the year ended December 31, 2002 | For the year ended December 31, 2001 | For the year ended December 31, 2000 | ||||||||
| £ million | £ million | £ million | ||||||||
(Loss)/profit on ordinary activities before taxation is stated after charging | ||||||||||
| Auditors’ remuneration: | ||||||||||
| Group – audit | 0.4 | 0.4 | 0.4 | |||||||
| – fees paid to the auditors and their associates in respect of other services | – | 0.1 | 0.1 | |||||||
| Depreciation and other amounts written off tangible fixed assets: | ||||||||||
| Owned | 39.1 | 41.0 | 35.1 | |||||||
| Leased | 0.3 | 0.8 | 0.7 | |||||||
| Impairment of tangible fixed assets | 8.6 | 3.3 | – | |||||||
| Impairment of goodwill | 21.5 | – | – | |||||||
| Amortization of goodwill | 30.7 | 41.8 | 41.4 | |||||||
| Amortization of goodwill for joint ventures | 1.0 | 1.1 | 1.1 | |||||||
| Amortization of intellectual property rights | 1.6 | 1.1 | 0.8 | |||||||
| Exchange losses | 1.4 | – | 0.8 | |||||||
| Other operating leases | – | 0.3 | 0.4 | |||||||
| Research and development expenditure | 58.8 | 60.5 | 55.1 | |||||||
after crediting | ||||||||||
| Exchange gains | 33.1 | 0.1 | 2.1 | |||||||
21
Avecia Group plc
Year ended December 31, 2002
Notes to the consolidated financial statements (continued)
| 7 | Other interest receivable and similar income |
| Avecia Group plc Consolidated | ||||||||||
| For the year ended December 31, 2002 | For the year ended December 31, 2001 | For the year ended December 31, 2000 | ||||||||
| £ million | £ million | £ million | ||||||||
| Net exchange gains | 32.6 | – | – | |||||||
| On bank deposits | 1.9 | 2.0 | 2.8 | |||||||
| Other | – | 0.5 | 0.9 | |||||||
| Share of net interest receivable from joint ventures | – | 0.1 | 0.1 | |||||||
| 34.5 | 2.6 | 3.8 | ||||||||
| 8 | Interest payable and similar charges |
| Avecia Group plc Consolidated | ||||||||||
| For the year ended December 31, 2002 | For the year ended December 31, 2001 | For the year ended December 31, 2000 | ||||||||
| £ million | £ million | £ million | ||||||||
| Net exchange losses | 1.5 | 5.1 | 24.6 | |||||||
| On bank loans and overdrafts | 15.1 | 34.5 | 34.8 | |||||||
| On all other loans | 41.9 | 42.2 | 43.3 | |||||||
| Amortization of finance fees | 6.4 | 6.6 | 4.2 | |||||||
| Finance charges payable in respect of finance leases and hire purchase contracts | 0.4 | 0.5 | 0.5 | |||||||
| Losses on early repayments of debt | 0.1 | – | – | |||||||
| 65.4 | 88.9 | 107.4 | ||||||||
22
Avecia Group plc
Year ended December 31, 2002
Notes to the consolidated financial statements (continued)
| 9 | Creditors: amounts falling due within one year |
| Avecia Group plc | |||||||
| December 31, 2002 | December 31, 2001 | ||||||
| £ million | £ million | ||||||
| Bank loans and overdrafts | 26.4 | 22.2 | |||||
| Obligations under finance leases and hire purchase contracts | 0.7 | 0.8 | |||||
| Trade creditors | 53.6 | 66.1 | |||||
| Taxation and social security | 10.4 | 25.0 | |||||
| Other creditors | 6.3 | 7.3 | |||||
| Accruals and deferred income | 29.7 | 33.9 | |||||
| 127.1 | 155.3 | ||||||
Bank loans at December 31, 2002 are shown net of finance costs of £4.2 million (2001: £5.1 million) which are being amortized over the life of the debt.
| 10 | Creditors: amounts falling due after more than one year |
| Avecia Group plc | |||||||
| December 31, 2002 | December 31, 2001 | ||||||
| £ million | £ million | ||||||
| Bank loans and overdrafts | 210.3 | 417.4 | |||||
| Other loans | 324.5 | 359.2 | |||||
| Amounts owed to related undertakings | 2.2 | 2.1 | |||||
| Obligations under finance leases and hire purchase contracts | 5.6 | 5.8 | |||||
| Other creditors | 1.2 | 3.5 | |||||
| Accruals and deferred income | 1.5 | 2.2 | |||||
| 545.3 | 790.2 | ||||||
Bank loans and other loans as at December 31, 2002 are shown net of finance costs of £16.2 million (2001: £20.1 million) which are being amortized over the life of the debt.
23
Avecia Group plc
Year ended December 31, 2002
Notes to the consolidated financial statements (continued) |
| 11 | Borrowings, financial instruments and risk management |
Analysis of debt shown net of unamortized issuance costs |
| Avecia Group plc | |||||||
| Gross repayable December 31, 2002 | Net of fees December 31, 2002 | ||||||
| £ million | £ million | ||||||
| Debt can be analyzed as falling due: | |||||||
| In one year or less, or on demand | 30.6 | 26.4 | |||||
| Between one and two years | 33.8 | 29.6 | |||||
| Between two and three years | 45.1 | 40.9 | |||||
| Between three and four years | 52.4 | 49.3 | |||||
| Between four and five years | 53.8 | 51.8 | |||||
| In five years or more | 365.9 | 363.2 | |||||
| 581.6 | 561.2 | ||||||
Amounts repayable in more than five years:
| Gross repayable December 31, 2002 | Net of fees December 31, 2002 | ||||||
| £ million | £ million | ||||||
| Term A Loan | – | – | |||||
| Term B Loan | – | – | |||||
| Term C Loan | 28.9 | 28.8 | |||||
| High Yield Bonds | 337.0 | 334.4 | |||||
| 365.9 | 363.2 | ||||||
24
Avecia Group plc
Year ended December 31, 2002
Notes to the consolidated financial statements (continued) |
| 11 | Borrowings, financial instruments and risk management (continued) |
| Avecia Group plc | |||||||
| Gross repayable December 31, 2001 | Net of fees December 31, 2001 | ||||||
| £ million | £ million | ||||||
| Debt can be analyzed as falling due: | |||||||
| In one year or less, or on demand | 27.3 | 22.2 | |||||
| Between one and two years | 47.4 | 42.4 | |||||
| Between two and three years | 56.9 | 52.4 | |||||
| Between three and four years | 75.9 | 72.7 | |||||
| Between four and five years | 92.9 | 90.2 | |||||
| In five years or more | 523.7 | 519.0 | |||||
| 824.1 | 798.9 | ||||||
Amounts repayable in more than five years:
| Gross repayable December 31, 2001 | Net of fees December 31, 2001 | ||||||
| £ million | £ million | ||||||
| Term A Loan | – | – | |||||
| Term B Loan | 60.8 | 60.8 | |||||
| Term C Loan | 91.0 | 90.4 | |||||
| High Yield Bonds | 371.9 | 367.8 | |||||
| 523.7 | 519.0 | ||||||
Debt is repayable between 2003 and 2008. Approximately 60% (2001: 50%) of the term debt is fixed or capped at rates between 4.0% (2001: 3.8%) and 6.5% (2001: 6.5%). The balance carries interest at LIBOR plus a margin of between 2% and 3%. The High Yield Bond is repayable in 2009 and interest is fixed at 11%. The debt listed above is shown in order of priority. The difference between net and gross repayable is unamortised fees.
25
Avecia Group plc
Year ended December 31, 2002
Notes to the consolidated financial statements (continued) |
| 12 | Acquisitions |
The group acquired the remaining 85% of Covion Organic Semiconductors Gmbh which it did not already own on 31 December 2001 for a consideration of €4.6m (£2.9m). The acquisition method of accounting was applied. The resulting goodwill was capitalized to be written off over 15 years. Consideration of €2.1m (£1.3m) was paid in March 2002. A further €2.5m (£1.6m) is due in March 2003.
In March 2002 Avecia acquired the whole trade and assets of Biomonomer Technologies Inc for a consideration of £0.4m with further deferred consideration of £0.3m expected to be paid in 2004/5.
The group made a further acquisition of intellectual property (including the granting of an exclusive license by Michigan State University over intellectual property previously exclusively licensed to Synthon) and stocks from Synthon Chiragenics Corporation on 11 December 2002 for a total purchase price of $2.5 million (£1.6 million). The impact on the group balance sheet was as follows.
| Book value and Fair Value | ||||
| £m | ||||
| Intangible fixed assets | 0.6 | |||
| Current assets | 0.4 | |||
| Net assets | 1.0 | |||
| Goodwill | 0.6 | |||
| Purchase consideration and cost of acquisition | 1.6 | |||
26
Avecia Group plc
Year ended December 31, 2002
Notes to the consolidated financial statements (continued) |
| 13 | Net cash inflow from operating activities |
| Avecia Group plc Consolidated | ||||||||||
| For the year ended December 31, 2002 | For the year ended December 31, 2001 | For the year ended December 31, 2000 | ||||||||
| £ million | £ million | £ million | ||||||||
| Operating (loss)/profit | (16.8 | ) | 48.4 | 74.8 | ||||||
| Non cash items | 3.6 | (3.8 | ) | (0.1 | ) | |||||
| Depreciation, amortization and impairment charges | 101.8 | 87.5 | 78.0 | |||||||
| Increase in provision for pensions and similar obligations | 0.9 | 3.1 | 2.1 | |||||||
| Decrease in environmental provision | (0.1 | ) | (1.2 | ) | (0.5 | ) | ||||
| Increase in other provisions | 10.8 | 1.9 | – | |||||||
| (Profit)/loss on sale of fixed assets | (0.7 | ) | (0.2 | ) | 0.1 | |||||
| (Increase)/decrease in stocks | 8.7 | (0.9 | ) | (22.0 | ) | |||||
| Decrease in debtors | 1.1 | 16.5 | 1.5 | |||||||
| (Decrease)/increase in creditors | (1.5 | ) | (30.8 | ) | 13.3 | |||||
| Net cash inflow from operating activities | 107.8 | 120.5 | 147.2 | |||||||
27
Avecia Group plc
Year ended December 31, 2002
Notes to the consolidated financial statements (continued) |
14 Analysis of cash flows |
| Avecia Group plc Consolidated | |||||||||||||||||||
| For the year ended December 31, | For the year ended December 31, | For the year ended December 31, | |||||||||||||||||
| 2002 | 2002 | 2001 | 2001 | 2000 | 2000 | ||||||||||||||
| £ million | £ million | £ million | £ million | £ million | £ million | ||||||||||||||
Dividends from joint ventures and associates | |||||||||||||||||||
| Joint ventures | 5.5 | 2.9 | 2.7 | ||||||||||||||||
| 5.5 | 2.9 | 2.7 | |||||||||||||||||
Returns on investment and servicing of finance | |||||||||||||||||||
| Interest received | 1.9 | 3.3 | 3.1 | ||||||||||||||||
| Interest paid | (58.4 | ) | (76.2 | ) | (77.2 | ) | |||||||||||||
| Interest element of finance lease rental payments | (0.4 | ) | (0.4 | ) | (0.5 | ) | |||||||||||||
| (56.9 | ) | (73.3 | ) | (74.6 | ) | ||||||||||||||
Capital expenditure and financial investment | |||||||||||||||||||
| Purchase of tangible fixed assets | (42.9 | ) | (59.9 | ) | (59.2 | ) | |||||||||||||
| Purchase of intangible fixed assets | (0.3 | ) | (2.7 | ) | (5.0 | ) | |||||||||||||
| Sale of tangible fixed assets | 0.1 | 0.5 | – | ||||||||||||||||
| (43.1 | ) | (62.1 | ) | (64.2 | ) | ||||||||||||||
28
Avecia Group plc
Year ended December 31, 2002
Notes to the consolidated financial statements (continued) |
14 Analysis of cash flows (continued) |
| Avecia Group plc Consolidated | |||||||||||||||||||
| For the year ended December 31, | For the year ended December 31, | For the year ended December 31, | |||||||||||||||||
| 2002 | 2002 | 2001 | 2001 | 2000 | 2000 | ||||||||||||||
| £ million | £ million | £ million | £ million | £ million | £ million | ||||||||||||||
Acquisitions and disposals | |||||||||||||||||||
| Purchase of subsidiary undertaking | (3.4 | ) | (2.6 | ) | (36.9 | ) | |||||||||||||
| Net cash acquired/(disposed) with subsidiary | (3.7 | ) | 0.5 | 0.3 | |||||||||||||||
| Purchase of interest in joint ventures and other investments | – | – | – | ||||||||||||||||
| Disposal of subsidiary undertaking | 203.3 | 33.2 | – | ||||||||||||||||
| 196.2 | 31.1 | (36.6 | ) | ||||||||||||||||
Financing | |||||||||||||||||||
| Loans to related parties | 0.1 | (0.1 | ) | (2.4 | ) | ||||||||||||||
| Loans repaid by related parties | – | – | – | ||||||||||||||||
| Debt due within one year: | |||||||||||||||||||
| New loan repayable in 2002 | 39.0 | 63.0 | 26.0 | ||||||||||||||||
| Loan repayments | (239.4 | ) | (82.6 | ) | (35.5 | ) | |||||||||||||
| Capital element of finance lease rental payments | (0.9 | ) | (0.6 | ) | (0.6 | ) | |||||||||||||
| Exchange and translation effects | – | – | – | ||||||||||||||||
| (201.2 | ) | (20.3 | ) | (12.5 | ) | ||||||||||||||
Transfers of cash by certain subsidiary undertakings are restricted to specific purposes under the terms of certain financing agreements.
29
