yule catto  co plc
annual report
for the year ended 31 december 2008
being part  
of all our  
lives
yule catto  co plc
temple fields
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wwwyulecattocom
yule catto  co plc   annual report 2008 contents 
01 financial highlights
02 group overview
03 yule catto around the world
04 chairman’s statement
business review
06  chief executive’s report  
06 polymer chemicals 
10 pharma chemicals 
13 impact chemicals 
14 financial review 
16 corporate social responsibility report
23 directors and advisers
24 report of the directors
26 corporate governance
30 directors’ remuneration report
33 directors’ interests
35 statement of directors’ responsibilities
group financial statements
36 independent auditors’ report 
38 consolidated income statement
39 consolidated balance sheet
40 consolidated cash flow statement
41  consolidated statement of recognised income and expense
42 notes to the consolidated financial statements
company financial statements
72 independent auditors’ report 
73 company balance sheet
74 notes to the company financial statements
other information
81 principal subsidiaries and joint ventures
82 five year financial summary
83 notice of meeting
2008 saw further steady progress 
in operational performance and the 
implementation of our strategic plans 
against the backdrop of an increasingly 
challenging economic environment
designed and produced by 
the college  wwwthecollegeukcom yule catto  co plc
annual report and accounts 2008 
01
financial highlights
•	 	 u n d e r ly i n g 	 pr o fi t 	 be f o r e 	 t ax 	 u p 	 5  	 t o 	 £3 2  7 	 m i l l i o n 	
•	 	 p o ly m e r 	 c h e m i c a l s 	 pr o fi t s 	 a h e a d 	 i n 	 a 	 v e ry 	 d i ffi c u l t 	 e c o n o m i c 	 e n v i r o n m e n t
•	 	 s u b s t a n t i a l 	 pr og r e s s 	 i n 	 i m p a c t 	 c h e m i c a l s 	 w i t h 	 f o u r 	 b us i n e s s e s 	 so l d 	 f o r 	 £6 3 	 m i l l i o n
•	 	 u n d e r ly i n g 	 n e t 	 d e b t 	 r e d u c e d 	 t o 	 £ 1 3 5 	 m i l l i o n	 
total sales
£6022m
earnings per share
1 7 9p
profit before taxation
£327m
increase in profit before taxation
5
 underlying performance
 underlying performance
a
 ifrs
  
 20 0 8 2007 20 0 8 2007
 £ ’000 £’000 £ ’000 £’000
total sales
b
 6021 53 512925 6021 53 512925
ebitda
c
 5 8 6 3 0 56242 5 8 6 3 0 56242
operating profit 431 92 42696 407 86 41032
profit before taxation 3 2 6 9 0 31199 3 8 89 9 33982
earnings per share 1 79p 160p 22  2 p 1 79p
dividends per share
d
 40 p 96p 40 p 96p
net borrowings
e
 135482 170831 1 61448 150341
cash generated from operations 4 4 2 9 9 49447 4 4 2 9 9 49447
free cash flow before dividends
f
 7781 14012 7781 14012
the above table represents the results of yule catto  co plc its subsidiaries and its share of joint ventures
a underlying performance excludes special items as shown on the consolidated income statement
b as defined in the accounting policies at note 2
c as defined in the accounting policies at note 2 and reconciled at note 36
d dividends comprise an interim dividend paid during the year and a final dividend proposed at the year end see note 11
e as shown on the consolidated balance sheet on page 39
f as shown within the consolidated cash flow statement on page 40 yule catto  co plc
annual report and accounts 2008 
02
group overview
total sales by destination
as derived from note 4 to the financial statements on page 49
divisional operating profit
as derived from note 4 to the financial statements on page 47
profit before taxation
 £3 2  7m
 underlying performance
increase in earnings per share
 12
polymer chemicals – 860 
pharma chemicals – 107 
impact chemicals – 33 
uk – 140 
other europe – 362 
asia – 301 
rest of the world – 197
polymer	chemicals 
k e y 	 pr oduc ts
–  emulsions
–  synthetic latices
–  adhesives
–  natural rubber latex
–  liquid polybutadiene
–  polyvinyl alcohol
–  polyvinyl acetate
–  alkyd and polyester resins
ma r k ets
–  surface coatings
–  construction
–  dipping – eg gloves
–  carpets and nonwoven
pharma	chemicals 
k e y 	 pr oduc ts
–  generic and ethical  
pharmaceutical actives
–  development and manufacture  
of clinical phase compounds
ma r k ets
–  generic and ethical drug manufacture
–  generic drugs
impact	chemicals 
k e y 	 pr oduc ts
–  inorganic specialities
ma r k ets
–  catalyst precursors
–  flame retardants
– iodates yule catto  co plc
annual report and accounts 2008 
03
8
9
10 11
14 15
13
16
12
18 19
20
17
1
3
2
4
5
6
7
yule catto around the world
locations
1 cuernavaca – uquifa mexico sacv
2 durban – revertex chemical pty ltd
3 dammam – synthomer middle east company
4 kluang – revertex malaysia  synthomer sdn bhd
5 klang – revertex finewaters sdn bhd
6 guangzhou – yule catto asia ltd 
7 ho chi minh city – synthomer vietnam co ltd
8 accrington – william blythe ltd
9 batley – synthomer ltd
10 ossett – synthomer ltd
11 stallingborough – synthomer ltd
12 harlow – synthomer ltd
13 langelsheim – synthomer gmbh
14 oss – synthomer bv
15 hasselt – synthomer hasselt bv
16 mouscron – synthomer sa
17 milan – uquifa italia spa
18 lliçà de vall – uquifa sa
19 barcelona – uquifa sa
20 sant celoni – uquifa sa
polymer chemicals 
 
pharma chemicals 
 
impact chemicals 
p ri n c i p al 	 s u b si d i ari es 	 an d 	 j o i n t 	 v en t u res 	 as 	 l i sted 	 o n 	 p a ge 	 8 1  yule catto  co plc
annual report and accounts 2008 
04
chairman’s statement
2008 saw further steady progress  
in operational performance and  
the implementation of our strategic 
plans against the backdrop of  
an increasingly challenging  
economic environment
2008 was another good year for the 
group given the marked deterioration  
in the global economy over the year and 
what looks set to be the worst recession 
in several decades 
the polymers business finished the year 
slightly ahead after a strong firsthalf start 
to the year volumes contracted in the 
second half as the economic downturn 
took hold and for the year as a whole 
volumes were slightly lower 
our strategy in polymers remains 
focused on geographical expansion 
around existing business hubs and 
developing market sectors where our 
product technology and manufacturing 
capabilities give us real competitive 
advantage we believe this strategy has 
served us well in the current environment 
during the year we completed further 
substantial expansion of our nitrile 
capacity in malaysia to take advantage  
of the continued rapid growth in the 
synthetic glove market we also completed 
the acquisition of a small dispersions 
company in vietnam to support our 
global customers 
our pharma business continued to  
grow the range of generic and ethical 
products it plans to manufacture with the 
registration of six further drug master 
files in line with its annual target as we 
entered 2008 we anticipated that the 
pharma business would improve on 
2007 albeit heavily skewed towards the 
second half of the year as it transpired 
customer demand and destocking over 
the second half meant that 2008 results 
were lower than 2007  we have previously 
announced plans to exit our italian site  
to improve our operational cost base and 
the productivity of the business and we 
remain on track to do so by the middle  
of 2009 which should benefit the year 
our strategy for impact chemicals has 
been to manage it for value which has 
involved restructuring its component 
businesses and improving their 
performance in the shortterm with a 
view to divestment at appropriate prices 
i am pleased that we have now managed 
to sell four of the five impact businesses 
with the last of these completed shortly 
after the year end we believe we have 
delivered substantial value to our 
shareholders through this strategy 
the remaining business in the portfolio 
was restructured early in 2008 and  
it too is now trading profitably
overall underlying group profit before 
taxation increased by some 5 to 
£327 million the group’s reported 
taxation charge was substantially lower 
and consequently underlying earnings  
per share rose by 12 to 179 pence  
per share
the strategic actions we have taken 
through the year have been heavily 
focused on deleveraging the balance 
sheet and we have succeeded in 
lowering net debt substantially with the 
decline in the economy and the scarcity 
of liquidity from financial institutions this 
has proved to be well timed our aim is 
to reduce the group’s net debt to below 
£100 million the board has reluctantly 
taken the decision to suspend further 
dividends until we achieve this which is 
expected to be within the next two years 
this decision together with our recent 
refinancing should ensure that we have 
access to sufficient liquidity to see us 
through the current global financial crisis yule catto  co plc
annual report and accounts 2008 
05
the working conditions and safety 
of our employees everywhere remain 
paramount in the operation of our 
business we set targets annually to 
reduce levels of lost time accidents 
and against this measure we have been 
improving our safety performance for 
many years i am pleased to report 
that we have made further progress 
in 2008 and have had our best ever 
year in terms of both ‘all accident’ and 
‘lost time accident’ rates we remain 
fully committed to the principles of 
sustainable development and have  
made further progress against all of 
the 10year targets in our sustainable 
development programme
after some 30 years on our board and 
the last eight years as chairman anthony 
richmondwatson retired at the end of 
january 2009 and i succeeded him as 
chairman i would like to express our 
gratitude to tony for his many years of 
service as a nonexecutive director and 
his wise counsel and guidance of the 
group as chairman through a period 
of much change on 1 march 2009 
we were pleased to appoint graham 
menzies as an additional independent 
nonexecutive director
this has been another year in which 
much has been achieved on behalf  
of the directors and shareholders  
i would like to thank all our employees 
worldwide for their commitment and 
contribution towards the company’s 
success
o u tl o ok
the deterioration in the global economy 
has been far more severe than generally 
anticipated at the beginning of 2008 
and it has been exacerbated by the 
global financial crisis whilst polymer 
volumes were down 3 in the year they 
declined by some 14 yearonyear 
during the fourth quarter and demand 
has remained depressed in the early 
part of 2009 as a result both of lower 
demand and of continued destocking 
by customers
this situation creates a very high degree 
of uncertainty as to how the coming  
year will develop and the board believes 
it is therefore too early to offer any firm 
guidance on the outturn for 2009
the group’s impact chemicals and 
pharma chemicals businesses should 
benefit from recent restructuring 
the pharma sector generally is not 
particularly cyclical and should weather 
the downturn reasonably well
within our polymer chemicals business 
we anticipate the demand in our asian 
businesses to be more robust than that 
of our european businesses due to local 
market conditions and a more resilient 
demand profile from our targeted 
markets however overall we anticipate 
our volumes globally could well be  
lower in 2009
the recent weakness of sterling against 
the dollar euro and malaysian ringgit 
should it continue will assist the 
reported sterling earnings for a number 
of our businesses
overall therefore there are a number 
of positive factors that should support 
the business during 2009 we have 
substantially delivered on our strategic 
goals of two years ago and are clearly 
focused both on continuing to improve 
the quality and performance of our 
business and on further strengthening 
our balance sheet this makes us well 
placed to weather the challenges that  
lie ahead
peter wood
11 march 2009  yule catto  co plc
annual report and accounts 2008 
06
chief executive’s report
over view
we entered 2008 cautiously optimistic 
about the year against what was seen 
at the time as a challenging environment 
with rapidly rising raw material costs 
as it has transpired we now see a 
global financial crisis and an economic 
downturn far more severe than anyone 
had reasonably anticipated
against this background the company 
has delivered a 5 improvement in 
underlying profit before tax and  
a substantial reduction in debt through 
four successful divestments this must 
be seen as good progress given the 
circumstances
polymers 84 of sales saw sales 
volumes decline by 3 whilst increasing 
profit by 3 to £424 million this was 
achieved in an environment of highly 
volatile raw material prices and a decline 
in global demand through the second 
half of the year
we completed and successfully 
commissioned our thirdphase nitrile 
capacity expansion in malaysia to 
support our customers in the high growth 
global synthetic glove market we remain 
the leading supplier to this market  
we also completed the acquisition of 
a new dispersion business in vietnam 
to support our global customers in the 
country and to gain a foothold in another 
high growth asian economy
pharmaceuticals 11 of sales saw  
a 28 decline in profit on revenues up 
3 margins were adversely impacted 
by rising raw material prices and a weak 
dollar in the first half of the year and 
customer destocking during the second 
half we continued to reconfigure our 
production capacity with the phased 
closure of our italian site and the transfer 
of a proportion of its production to our 
other sites the italian plant closure 
has been structured to support our 
major customers and it will fully cease 
production in the middle of 2009  
when product transfers are complete  
a further six drug master files dmfs 
were filed in the year as we continued 
the development of our generic pipeline
we have now completed the sale of 
four of the five businesses that comprised 
the impact chemicals division we 
received £63 million of gross proceeds 
for these businesses of which £10 million 
was received post the year end the 
remaining business william blythe 
limited was restructured in the first 
quarter and subsequently returned to 
profit for the full year having been 
lossmaking in 2007 
polymer 	 chemicals
polymers has manufacturing assets 
around the world and comprises 
dispersion latex and various speciality 
polymers dispersions are principally 
used in surface coatings such as paint 
and varnish adhesives such as wood 
glues and construction applications such 
as sealants and fillers sbr latex  
is used in the manufacture of carpet floor 
coverings and construction materials 
such as speciality cement whilst nbr 
latex is mainly sold into the fastgrowing 
nitrile glove market speciality polymers 
includes rubber polymers to regulate 
pvc manufacture and sealants for the 
motor industry
polymer division operates 19 production 
units on 13 sites within four geographical 
regions – europe south east asia 
middle east and south africa – and 
employs approximately 1500 people 
the core products of the division are 
waterbased polymers based on vinyl 
acetate and acrylic co and terpolymer 
dispersions styrene and nitrile butadiene 
rubber as well as polyvinyl alcohol
acetate and a number of smaller 
specialist products serving a range  
of industries
2008 was a year where all business 
units faced challenges on a number 
of fronts the division started the year 
very positively and made good progress 
through the first half however the 
growing turmoil in the global economy 
started to have its effect in a number of 
market segments in the third quarter and 
in all by the final quarter fluctuations 
in currency availability and pricing of 
monomers rising energy costs and 
slower customer demand all contributed 
to the creation of a very complex and 
difficult environment however against 
that background the division did 
continue to make progress in a  
number of areas
the monomer supply position was 
until the final quarter extremely difficult 
rising oil prices and surging demand 
placed a strain on supply in a number 
of areas but in particular butadiene 
where strong demand and lack of 
availability meant additional costs 
were incurred to ensure continuity of 
supply to our customers this situation 
began to improve in the final quarter 
as demand dropped and oil prices 
followed however monomer prices 
fell very rapidly leading customers to 
destock their supply chains in the hope 
of securing lower input prices and 
resulted in further lowering demand for 
our products
business review yule catto  co plc
annual report and accounts 2008 
7
polymer
 chemicals
polymer chemicals is a 
leading supplier of water
based polymers to the surface 
coatings paper adhesives 
and textile industries we have 
two groups of companies 
synthomer and revertex and 
operate 13 factories across 
europe the pacific rim the 
middle east and south africa 
our operations benefit from 
knowledgesharing around 
the group particularly in the 
areas of best practice and 
new developments in  
products and technology 
dispersions
product development 
understanding our customers’ needs 
and how our products can add value 
is core to the product development 
process in our research development 
and application laboratories around  
the world
multisite manufacture 
manufacturing flexibility is essential 
to meet the globalisation challenges 
faced by many of our customers most 
recently we expanded our vinyl acetate 
and acrylic dispersion capacity to over   
300000 tonnes with the acquisition of 
a production facility in vietnam above 
adding to our existing operations in the 
uk belgium south africa the middle 
east and malaysia
distribution 
regional manufacturing and global 
distribution mean ontime delivery  
for our customers wherever they are  
in the world
end product 
the functionality delivered by our 
polymer dispersions helps define many  
of the attributes of our customers’ 
finished paints such as gloss sheen 
texture and moisture resistance
business review
being part of all our lives
we provide a comprehensive 
range of vinyl acetate 
copolymers terpolymers 
styrene acrylics and pure 
acrylics utilised in a wide 
variety of applications 
 
• 	 	 m a t t s  	 s i l k s  	 e g g s h e l l 	 a n d	
gloss paints for interior exterior 
and industrial coatings 
•	 flexible 	 r oof 	 coatings
•	 varnishes 	 and 	 lacquers 	 and
• 	 	 w o o d s t a i n s 	 a n d 	 p r o t e c t i v e	
coatings  yule catto  co plc
annual report and accounts 2008 
08
the division’s turnover in sterling was 
19 ahead of prior year driven by higher 
selling prices and currency movements 
overall volumes for the business were 
3 down on prior year but this masks 
some good performances in a number  
of core markets operating profit ended 
3 ahead whilst 2008 operating 
margins were 8 
polymer division’s expansion strategy  
in asia continued in 2008 with further 
investments in both latex and 
dispersions within our nitrile latex 
business the successful commissioning 
of the phase 3 expansion at the kluang 
plant in malaysia in august means that 
capacity has more than doubled over the 
last 18 months as synthomer continues 
to keep pace with the growing demand 
for synthetic latex gloves our ability to 
increase capacity rapidly to meet growth 
in customer demand places the business 
in an excellent position to maintain its 
leadership in this dynamic market the 
year also saw additional investment in 
kluang with the installation of a new 
nitrile pilot plant and development 
laboratory both aimed at giving the 
business stateoftheart facilities that  
will allow faster product and process 
development which are essential to 
meet the changing requirements of 
our customers
within dispersions our geographic 
expansion strategy saw the acquisition 
of a controlling interest in chemtech in 
vietnam the business is located near 
ho chi minh city and is a major supplier 
of dispersions to the coating and 
adhesives industries in one of asia’s  
fastdeveloping economies 
during the latter part of the year  
a number of restructuring activities  
were announced in the uk these 
changes were required to combat the 
lower levels of activity the business has 
experienced in this market this is an 
unfortunate situation but it is critical that 
the polymer division continues to 
balance its manufacturing assets to  
meet anticipated market demand
s y nthe tic 	 l at e x 	
the latex market globally saw a number 
of changes during the year with the 
exit of a leading competitor drlc 
from the nitrile dipping market and the 
announcement of mothballing of three 
competitive latex plants in the uk in 
sbr latex although the market tightened 
during the year as the economy slowed 
our speciality volumes ended slightly up 
on 2007 with the only reduction being 
seen in the carpet market 
in nitrile latex the exit of drlc created 
a number of opportunities which lifted 
volumes by 12 in malaysia setting 
a new record at the same time the 
business had to contend with rapidly 
rising butadiene prices and of more 
concern a lack of the monomer’s 
availability particularly in asia however 
the final quarter of the year saw an 
equally rapid decline in prices hitting 
shortterm demand as customers 
emptied their supply chains to try and 
take advantage of lower monomer 
input costs 
d is p e r s io n s
the dispersion market produced a 
variable set of results in 2008 although 
overall volume was marginally up on 
2007 positive progress was made in a 
number of european technical grades 
where volumes more than doubled in 
2008 and in our middle east business 
where volume grew by 8 however 
we also experienced a decline in the uk 
where volumes were 13 down as a 
result of much slower customer demand 
predominantly due to the sluggish 
housing market
s p e cia l itie s
polyvinyl alcohol
we continued to maintain our leadership 
position in the supply of low hydrolysis 
polyvinyl alcohol to the pvc industry 
a very strong start to the year was 
followed by a much slower final quarter 
as pvc manufacturers started to idle 
capacity overall volume for the primary 
and secondary alcotex stabilisers were 
marginally ahead of 2007 and margins 
were maintained in a difficult and 
competitive environment the business 
continued to experience significant rises 
in operating costs as a result of higher 
energy tariffs and maintenance costs 
however these were offset by a better 
mix of products and some benefits from 
currency during the year a number 
of investments were made to improve 
manufacturing performance and these 
should begin to deliver benefits in 2009 
business review
increase in divisional operating profit
3
sales divisional operating profit
 underlying performance
2007 	 	 £4252m
2008 	 	 £5071m
2007 	 	 £412m
2008 	 	 £424m
chief executive’s report continued nitrile
pilot plant – kluang 
improving time to market has been a 
particular focus in our nitrile business 
and investment in a new nbr pilot plant 
in kluang has significantly increased 
the speed of new product and process 
development to meet the changing 
requirements of our customers
new labs – kluang 
product innovation is critical to sustained 
leadership in our markets and as part 
of our ongoing improvement to our 
innovation processes investments 
have been made in a new nitrile 
rd laboratory located close to 
our customers to enable increased 
responsiveness by our development 
team in delivering new products
kluang site – polymer 
t o support our customers’ growing 
demand for dipping latex a third phase 
of expansion was commissioned at 
synthomer in malaysia in 2008 this 
latest investment in kluang means we 
have more than doubled our nitrile  
latex capacity at this plant in the last  
18 months
gloves 
our range of nitrile and natural rubber 
products are used to support a growing 
range of glove and other healthcare 
applications
business review
being part of all our lives  
 
we produce a comprehensive 
range of polymer latices 
including styrene butadiene 
copolymers and nitrile latices 
in addition our harlow  
site in the uk produces  
a range of lowhydrolysis 
polyvinyl alcohols used as 
a stabiliser for suspension 
pvc we also produce natural 
rubber systems liquid 
polybutadienes solid and 
solution polyvinyl acetates 
alkyds and polyesters 
 
our markets include 
•	 surface 	 coatings 
•	 construction 
•	 paper 	 and 	 textiles 
•	 glove 	 dipping 
•	 floor 	 coverings 	 and 
•	 adhesives
polymer
 chemicals yule catto  co plc
annual report and accounts 2008 
10
chief executive’s report continued
liquid polybutadiene
in 2008 we have increased the focus on 
the development of our lithene business 
by establishing a crossfunctional team 
to develop and expand our presence 
in this market after a very positive first 
half the business slowed progressively 
through the third and fourth quarters as 
the recession started to impact on the 
automotive industry the main market  
for lithene products overall volume for 
the year was down by 27 all coming 
in the second half however operating 
profit held up better than expected as 
a result of stronger margins and cost 
saving actions 
alkyds and polyester
our resin business operates from 
the kluang malaysia site with sales 
predominantly in south east asia like 
other business units sales were robust 
through the first half of the year with 
the first signs of slowdown arriving in 
september and remaining through the 
year end the polyester resin business 
had a challenging year with the final 
quarter being the most difficult the 
slowdown created a highly competitive 
environment with prices and volumes 
under severe pressure however 
operating profit was only slightly down 
on prior year the alkyd resin business 
also had a difficult final quarter and 
volumes ended the year slightly down 
on 2007 however excellent margin and 
cost management ensured that 2008 
delivered a record operating profit for  
this business
pharma 	 chemicals
pharma chemicals from its 
manufacturing plants in spain and 
mexico produces a range of active 
pharmaceutical ingredients apis for 
the generic and ethical pharmaceutical 
industries these products are sold to 
formulators who produce and distribute 
the drug in its final physical form apis 
produced range from antibacterial  
antiulcer and antiparasitic to heart 
drugs the company currently produces 
over 75 products 
2008 was a mixed year for the pharma 
chemicals business underlying 
volumes were reasonably robust with 
a number of new products contributing 
to volumes and margins we also 
made considerable progress in the site 
rationalisation programme and filed 
an additional six drug master files 
the business was adversely affected 
throughout the majority of the year by 
the impact of the strength of the euro 
on dollar sales and the increasing raw 
material input prices
in our spanish business despite a 
successful programme implemented in 
late 2007 to increase prices 2008 saw 
increased competitive pressure in our 
generic regulated markets governments 
imposed reference prices applying 
pressure to customer pricing with the 
weakness of the dollar further impacting 
us sales on translation meanwhile the 
currency benefit on the raw material 
input side was outweighed by the 
surging price for oilbased raw materials 
affecting all producers including asian 
competition this negatively affected 
gross margin and outweighed the  
benefit of continued robust volume 
in generics our omeprazole franchise 
continues to be very important for us 
despite some volume pressure we 
remain competitive through process 
improvements and with the benefit of 
our outsourcing strategy are well placed 
at the beginning of 2009 ranitidine 
volumes were strong in the first half 
to the usa as our ‘over the counter’ 
franchise continues to do well
business review
sales divisional operating profit
 underlying performance
2007 	 	 £622m
2008 	 	 £639m
2007 	 	 £74m
2008 	 	 £53m yule catto  co plc
annual report and accounts 2008 
11
pharma
 chemicals
pharma chemicals 
manufactures and develops 
active pharmaceutical  
ingredients and fine chemical 
intermediates for the generic  
‘big pharma’ and biotech 
sectors of the life science 
industry our global 
manufacturing facilities  
give us the ability to  
develop products from  
the gram scale in the  
laboratory to multitonne 
industrial scale we now 
distribute products to over 
95 countries worldwide and 
we have been increasingly 
involved in developing country 
programmes to eradicate 
lifethreatening diseases in 
developing countries 
 
our markets include 
• 	 	 g e n e r i c 	 a n d 	 e t h i c a l 	 d r u g	 
manufactures and
•	 generic 	 drugs
global sourcing 
raw materials and intermediates are 
sourced from around the world and have 
to meet stringent quality specifications
manufacturing 
multistage transformation takes place  
in our three flexible fda approved sites 
in spain and mexico
demanding quality standards 
products undergo demanding 
further clean room processing to the 
appropriate physical form – important  
for absorption into the body
finished product 
our finished product apis are analysed 
to ensure compliance with demanding 
specifications and supplied to the 
formulator and marketer for supply  
to consumers around the globe
business review
being part of all our lives  
 
the business services  
a range of therapeutic areas 
and is particularly strong  
in antiulceratives
we are leading producers  
of omeprazole  ranitidine  
two of the most widely taken 
pharmaceuticals for the 
reduction of acid in the stomach yule catto  co plc
annual report and accounts 2008 
12
most of our other generics held up 
well and we have begun to build 
our franchises in pantoprazole and 
quetiapine as the patents expire in 
europe we also saw ketorolac a niche 
analgesic gain approvals in the usa and 
europe the dossier business where we 
accelerate regulatory clearance for our 
formulation partners’ products based  
on our apis continued to develop as  
we rolled out our terbinafine and 
zolpidem franchises in europe the 
competitive nature of our processes 
supported by the regulatory package  
we can offer smaller companies bodes 
well as generic medicines continue to 
take a growing share of pharmaceutical 
spend in europe and the usa 
in the latter part of the year a 
strengthening of the dollar helped 
the us selling position while volume 
although relatively robust was affected 
by customers’ desire to conserve cash 
and minimise stocks in the current 
economic circumstances as these 
factors normalise and raw material price 
reductions pass through the chain they 
should provide a comparative benefit 
if maintained through 2009
subcontract development work to big 
pharmaceutical customers was quiet 
during the year some of which was 
caused by phasing however we will 
see a relatively strong start to 2009 
as a number of subcontract product 
orders have already been taken and 
manufacture begun 
the transfer of products from italy and 
germany has been a key objective in 
2008 and all our customers have been 
able to progress the registration process 
for these products volume demand 
from customers has been strong for 
transferring products and as such 
the transfer will complete in the first half 
of 2009 at the same time a business 
improvement process is well underway 
in spain focused on further improving 
efficiency on top of the increased 
utilisation that will come from the italian 
and german product transfers
in research and development our 
api pipeline grew with the filing of 
six new dmfs throughout the world 
someprazole the api contained  
in ‘nexium’ development work has  
been successful and we have a  
number of key partners who are 
including us in their registrations  
we have further strengthened our 
future growth with work on the  
‘sartan’ therapeutic category and 
products in the cytostatic field 
mexican sales dropped back from 
the record year in 2007 the key 
products the site produces for ethical 
customers are typically on a contract 
basis and were impacted by phasing 
issues in 2008 there was also similar 
competitive pressure on generics pricing 
to that experienced in spain the site 
successfully passed an fda audit 
and made substantial progress with 
expanding capacity in key products that 
it produces for a major ethical customer 
this plant to be completed in march 
2009 will allow us to supply a significant 
volume increase as they roll out their 
who aid programme our mexican 
operation will also benefit from some 
larger volume product transfers from 
the italian facility as customer approvals 
are scheduled to be complete in the 
coming year together with the phasing 
benefits and strengthening franchises 
in terbinafine ciprofloxacine and 
ketoconazole we expect a substantial 
improvement in mexican performance 
in 2009 
pharma chemicals tends to show 
resilient performance during a downturn 
and with the underlying progress that 
has been made in 2008 we enter 2009 
with healthy order books and with 
optimism for substantially improved 
divisional financial performance in 2009
business review
chief executive’s report continued yule catto  co plc
annual report and accounts 2008 
13
impact 	 chemicals
impact chemicals’ remaining 
business william blythe from its uk 
manufacturing facility is a worldwide 
supplier of inorganic specialities based 
on copper iodine and tin products 
are used in a range of applications 
such as semiconductor manufacture 
pharmaceutical actives nontoxic flame 
retardant safety glass coatings and 
catalysts
the strategy for this division has been to 
run it for value over the last two years 
the group has put considerable focus 
on initially halting the historical financial 
decline of these businesses and then in 
turn significantly improving their financial 
performance
we have had considerable success 
in turning these businesses round and 
subsequently disposing of them for 
values significantly above those that 
would have been possible when we 
started this programme at the start  
of 2008 the division comprised
•	 	 holliday pigments manufacturing 
ultramarine pigments
•	 	 james robinson manufacturing hair 
photochromic and other dyes
•	 	 pfw manufacturing aroma 
chemicals
•	 	 oxford chemicals manufacturing 
highimpact flavour chemicals and 
•	 	 william blythe manufacturing iodine 
and metal salts
the first four of these have now been 
sold for gross proceeds of £63 million 
and their results are reported in the 
special items column the remaining 
business william blythe was loss 
making in 2007 the business was 
restructured in the first quarter and 
was profitable for the full year
substantial turnaround in profitability sales divisional operating lossprofit
 underlying performance
2007 	 	 £255m
2008 	 	 £311m
2007 	 £02m
2008	 £16m
£ 16m yule catto  co plc
annual report and accounts 2008 
14
financial review
i nc o m e 	 s t at e m e nt 	 – 	 u n de r l y i ng	
p e r f o r m a nc e
total sales increased by 174 to 
£6022 million translation accounted 
for 89 of this with the balance of the 
change mainly from the impact of higher 
pricing needed to recover the higher 
monomer costs experienced during the 
year turnover remains predominately 
within europe with some 50 of sales 
2007 55 however we continue to 
make progress in other parts of the 
world in particular asia assisted by 
ongoing investment in the malaysian 
facility asian sales now account for 
30 of the business 2007 27 
with the international nature of the 
business movements in foreign 
currency exchange rates can affect 
the value of transactions made by the 
group where pricing of our products 
is in nondomestic currency and in 
the translation of results from overseas 
subsidiaries with regard to the former 
of these two effects the group generally 
hedges transactions once entered into 
and in addition where exchange rates 
continue to be adverse we look to 
increase sale prices or price in domestic 
currency to mitigate the impact where 
this is commercially possible the latter 
is mainly influenced by the euro and 
the malaysian ringgit in 2008 currency 
movements adversely affected the 
margins in our pharma business from 
dollardenominated sales and our uk 
polymer business where the majority of 
its raw materials are purchased in euros 
we estimate the impact on the business 
to be some £3 million adverse from this 
the weakness of sterling against the 
euro and the malaysian ringgit however 
delivered some £4 million improvement 
to operating profit from translation
the underlying tax rate of 15 reflects 
the benefits of pioneer status on 
our investment in malaysia and the 
settlement of some large prior year 
tax positions this is an improvement 
on the prior year rate of 20
profit attributable to minority interests 
was £17 million similar to last year
the resultant underlying earnings per 
share of 179 pence is a yearonyear 
increase of 12 the board declared an 
interim dividend of 40 pence per share 
the group announced in december 
that given the prevailing financial crisis 
and to strengthen the group’s balance 
sheet it would not be recommending 
the payment of dividends until such 
time as underlying net debt is below 
£100 million the cash cost to the 
group of dividend payments in 2008 
was £141 million the board expects to 
recommence the payment of a dividend 
within the next two years at which time 
the dividend will be rebased to a level 
consistent with its peers in the chemical 
sector consequently no final dividend 
will be proposed for 2008
i nc o m e 	 s t at e m e nt 	 – 	 s p e ci a l 	 i t e m s
to provide a clearer indication of the 
group’s underlying performance a 
number of special items are shown 
in a separate column of the income 
statement special items include 
•   during 2007 we announced the 
closure of holliday pigments’ hull 
site and the james robinson 
manufacturing plant in dieburg 
germany residual site closure 
and rundown costs for these 
activities are disclosed in special 
items we also committed to further 
impact restructuring of £650000 
for william blythe limited in the 
first quarter of 2008 which is also 
included
•	  we utilise various cross currency 
and interest rate swaps for hedging 
purposes which involve maturities 
of up to 8 years ifrs requires that 
where the strict requirements of  
ias 39 are not met changes in the 
market value should be recognised 
annually in the income statement 
however such financial instruments 
are maintained by the group for 
the length of the contract and over 
their lifetime have a fair value of nil 
hence the notional annual adjustment 
is segregated from the underlying 
performance
•	  the operating results of the four 
impact businesses we have divested 
and the operating results of our italian 
pharma business which will close in 
mid2009
p e ns ions
in the main uk defined benefit pension 
scheme the majority of investments 
are in equities equity markets declined 
substantially in 2008 and overall the 
fund delivered an actual negative return 
of 26 and consequently asset values 
have substantially reduced the yield on 
highquality corporate bonds increased 
significantly during the year which has 
reduced liabilities the overall effect 
of these changes was a substantial 
increase in the net balance sheet liability 
to £674 million for this scheme 
ifrs
on an unadjusted ifrs basis group 
revenue increased by £865 million to 
£5844 million profit before taxation at 
£389 million was £49 million higher than 
the previous period of which £15 million 
relates to a better trading performance 
with the remainder being an increase 
in the special items
business review yule catto  co plc
annual report and accounts 2008 
15
b o r r o w i ng s	
underlying net debt reduced 
significantly during the year to 
£135 million 2007 £171 million mainly 
as a result of the divestment of three  
of the impact businesses
in 2007 we reported a year of increased 
capital expenditure following a number 
of years of lower capital investment 
this has continued in 2008 as we 
have invested in further expansion of 
the malaysia nitrile facility and in the 
relocation of some manufacturing 
from our italian pharma site capital 
expenditure should now slow 
substantially in 2009 
investment in restructuring the impact 
portfolio and the cash costs of running 
the italian pharma site came to some 
£24 million whilst net proceeds from 
divestments totalled £507 million
working capital outflow for the year 
was £15 million control of working 
capital is a core focus of the business 
management and the outflow reflects 
good control of working capital offset 
by the impact of substantially higher raw 
material costs and selling prices in the 
polymer business
through the year the group carried  
up to €80 million of its net debt in euros 
as an economic hedge against its euro 
based businesses the strengthening 
of the euro against sterling accounted 
for £98 million of the increase in the 
sterling net debt 
post the year end we received 
£825 million for the sale of oxford 
chemicals limited ocl ocl is 
excluded from the underlying profit 
before tax of £327 million and had the 
proceeds been received before the year 
end net debt would have been  
£127 million
r e fi n a nci ng 	 a n d 	 l i q ui d i t y
during the year the group repaid 
£33 million due under its us private 
placements the group also replaced 
its maturing £60 million revolving credit 
facility with a new £30 million threeyear 
loan which was completed at the year 
end and in january 2009 secured an 
additional £19 million of borrowings in 
malaysia under a sixyear amortising 
loan facility 
net debt at the end of the year at 
£135 million was £6 million below the 
outstanding balance on the private 
placement notes of £141 million which 
were themselves the group’s only  
longterm drawn borrowing arrangements 
at the end of the year the group’s only 
repayment commitment of the longterm 
funding arrangements for 2009 is to 
repay the £33 million current element 
of these notes in september 2009 
this will be done from the new borrowing 
facilities total £49 million the proceeds 
from ocl £8 million and free cash flow yule catto  co plc
annual report and accounts 2008 
16
corporate social responsibility report
intr o du c tio n
yule catto’s safety health and environmental she 
performance improved sharply for the second year in a row 
making 2008 easily the company’s best year ever for she 
performance the number of over3day lost time accidents 
o3d accidents in group companies owned on 1 january 
2008 halved to give an accident rate better than the average 
for the uk chemical industry as measured by the uk chemical 
industries association this was the target we set for 2008 
equally encouraging there was a significant drop in the all  
lost time accident lta rate which reduced to 60 of 
the latest figure reported by cefic the european chemical 
industry’s representative body
the group’s environmental performance was also very positive 
with an 85 improvement in the group’s energy performance 
per production tonne while the group’s global warming burden 
fell by nearly 10 hazardous waste disposal to land again 
dropped significantly by over 40 compared to 2008 and is 
now less than 16th of the figure for the baseline year of 2000
 
o u r 	 p ol ic y 	 c om mitme nt s
yule catto’s commitment to responsible care
®
 and 
sustainable development sd remains at the core of our 
efforts towards excellence in corporate social responsibility 
responsible care
®
 is the global chemical industry’s 
programme to improve and enhance its performance year on 
year in safety health and environmental matters all yule catto 
sites are expected to adhere to these principles and the group 
she audit programme is designed to confirm compliance 
in 2005 the yule catto group was amongst the first to publicly 
support the uk chemical industries association’s sd guiding 
principles these principles were adopted for all sites – in the 
uk europe and the wider world – and have been used to set 
improvement targets for our environmental performance they 
represent significant she commitments by the group and help 
to define a route to a safe and sustainable chemical industry 
key amongst the targets is open reporting of our performance  
and full respect for the people and communities amongst 
whom we work
highlights 	 a nd 	 achie v ements 	 dur ing 	 2 0 0 8
having achieved or bettered the she targets set in 2007 
yule catto set equally demanding targets for 2008 these 
included a further 4 reduction in both energy and water 
usage per production tonne a 5 reduction in hazardous 
waste disposal and achieving an o3d lost time accident rate 
of 024 accidents per 100000 hours worked together with an 
alllta rate of 040 the o3d figure is equal to the average for 
the uk chemical industry as measured by the uk chemical 
industries association and the alllta rate just less than 
60 of the most recent average for the european chemical 
industry as published by cefic as a proactive measure all 
sites were set a target of identifying reporting and dealing with 
two she improvement opportunities – defined as conditions 
which could potentially cause an injury or loss – per employee 
during the year each of these targets was in addition to or 
superseded the existing 10year sd targets
most of the environmental targets were met and indeed 
bettered by a significant margin the group’s achievement 
against our energy target is particularly notable performance 
improved by over twice the target with the group achieving  
an 85 reduction per tonne water use per production tonne 
fell again though by a more modest 07 compared to 2007 
both of these improvements were achieved on the back of 
sustained improvement each year since 2001 which means 
that most of the ‘quick wins’ have already been implemented 
the group’s energy use per tonne of product is now some 
33 lower than it was in 2000 and for water the reduction  
is even larger down to less than 60 of the 2000 figure  
the reporting of she improvement opportunities was 50 
above the target with over three per employee reported over 
the year compared to the target of two both measures of 
accident performance improved significantly with the group 
reducing the rate of o3d accidents by 33 in 2008 to achieve 
its target of just 024 per 100000 hours worked this is the 
second year in a row that the accident rate has fallen by 
over 30
other sd targets have also been met or exceeded for 
example the discharge of heavy metals which we handle in 
significant quantities from our sites is now less than 110th of 
what it was in 2000 similarly the release of nitrogen oxides 
nox from sites fell by 15 in 2008 and is nearly 75 less 
than it was in 2000 the total global warming burden of our 
operations which is a measure which combines both carbon 
dioxide release and other global warming gases is down 60 
from its peak in 2001 the disposal of waste to landfill has 
continued to decline and one polymer site managed to have  
all the solid waste from its effluent treatment plant dealt with  
by composting producing a saleable soilenhancer rather than 
a waste problem
business review yule catto  co plc
annual report and accounts 2008 
17
m a n a g i ng 	 s af e t y 	 a n d 	 e n v i r o n m e nt a l 	 p e r f o r m a nc e
the safety of all our staff and the operation of our sites  
in a way that protects the environment are primary duties 
of all yule catto employees equally management of our 
she performance in the same way that all other business 
objectives are managed is a fundamental priority for the line 
management function at all levels in the group we have  
a number of management processes which assist this
•	  she performance is discussed in all management 
meetings as the first agenda item
•	  the group accident and incident management system 
aims is used to collect data on all accidents incidents 
and near misses on our sites to ensure that all of these are 
appropriately investigated and to ensure that the identified 
actions to prevent recurrence are put in place
•	  key measures of she performance are collected monthly 
or quarterly as appropriate and reported to the group 
executive and to the board this process is mirrored at 
company and site level to give management and staff a 
clear picture of current performance and
•	  senior managers have she targets as part of their annual 
objectives and bonuses other employees have similar 
objectives set either on an individual or a site basis and 
these are linked to bonus schemes as determined locally
hea lth 	 s af et y 	 a nd 	 accident 	 per f or ma nce
like most companies in the uk yule catto uses a headline 
measure of the rate of o3d lost time accidents to measure 
occupational safety performance across the european union 
these are generally the accidents which have to be reported to 
the appropriate regulatory authorities as noted above for the 
second year in a row the group set itself a target of significantly 
improving this measure and for the second year in a row an 
improvement of over 30 was achieved for the companies 
owned by yule catto in january 2008 the absolute number of 
o3d accidents halved from 22 to 11 and the rate fell to 0215 
accidents per 100000 hours below our target of 024 and 
below the average for the uk chemical industry as measured 
by the uk cia to put this rate in context 100000 hours very 
broadly represents a working lifetime 
reportable lost time accident frequency rates
00
02
04
06
08
10
12
07 08 06 05 04 03 02 01 00
o3dlost time accident frequency rate per 100000 hours
the number of significant reportable safety incidents remains 
at a very low level none of the incidents during the year 
caused harm to people or the environment
reportable safety incidents
08 07 06 05 04 03 02 01 00
444 4
2
4
26 26
66
audit programme
the group’s audit programme has continued throughout 2008 
and nearly all sites have now been audited on the revised and 
more demanding audit introduced in 2007 the audits have 
clearly identified areas where improvement in our performance 
should be possible and have enabled a reporting system to  
be developed which enables the group executive committee 
to have a clearer picture of current performance site by site 
the audit programme will continue throughout 2009 and 
beyond and should enable sites to monitor their progress  
as they improve their underlying she performance
asset protection and insurance inspections
yule catto losses from fire or process safety related incidents 
have been at a low level for a number of years and this 
remained true in 2008 our own internal management and  
our she audit processes contribute to this performance and 
we are assisted by biennial risk audits carried out by our global 
property and business risk insurers these external audits 
produce loss control recommendations which are discussed 
and assessed for their practicality and costeffectiveness  
this transparent partnership working with our insurers has 
helped the group to keep good control of and indeed reduce 
the cost of our global risk insurance yule catto  co plc
annual report and accounts 2008 
18
corporate social responsibility report continued
reach
work on the registration evaluation authorisation and 
restriction of chemicals reach regulations occupied  
a significant amount of group and individual company 
resource during the year as the regulations came into full 
force the first phase of reach implementation ended on 
1 december 2008 when all chemicals which are currently 
used or sold in europe had to be preregistered with the 
newly created european chemicals agency echa from 
1 december 2008 only preregistered chemicals may be 
produced or imported into the eu unless and until they go 
through the full registration process chemicals which are  
preregistered will have to go through the process of 
registration over the next 10 years to a timescale dependent 
on the tonnage of the chemical used and the current level  
of concern about the chemical 
yule catto companies in europe registered all the chemicals 
which they produce or use as intermediates and registered 
key raw materials which are currently imported or which the 
company may need to import in the future polymer division 
also opted to make synthomer ltd the ‘only representative’ 
for all polymer division companies worldwide ‘only 
representative’ has a specific meaning under the regulations 
and the agreement makes synthomer ltd responsible for all 
reach matters for any polymer division company in this role 
synthomer ltd preregistered a number of materials for non
eu polymer division companies and will carry these materials 
forward to registration as required
the total number of preregistrations by group companies 
was approximately 1250 a significant number but a very 
small proportion of the over 26 million preregistrations made 
with echa 
the implementation of reach in yule catto was regularly 
monitored by the group executive committee the costs 
to the group both direct costs and employee time were 
considerable towards the end of 2008 we estimate that the 
group had the equivalent of seven fulltime employees working 
on reach polymer division alone – despite the fact that 
polymers are exempt from registration – estimated their costs 
as £75000 in 2008 with similar costs expected in 2009 over 
the group as a whole the costs in 2008 were some £250000 
and the costs can be expected to be broadly similar in the 
coming year
reach will continue to be a significant focus of work and 
cost for the group into the foreseeable future however  
the overall process is part of yule catto’s commitment to  
the safe and sustainable production and use of chemicals  
our commitment to the principles of product stewardship  
this is a set of principles which yule catto and the rest of 
the chemical industry support the overall aim being to give 
europe’s citizens greater confidence in the safety of the 
chemical products handled and sold across the eu
s u s t a i n a b l e 	 d e v e l o p m e n t 	 p e r f o r m a n c e	
r epo r t 	 2 008
m a n a g i ng 	 ou r 	 e n v i r o n m e nt a l 	 r e s p o n s i b i l i tie s
the yule catto group signed the uk cia sustainable 
development goals as soon as they were published and is 
committed to a 10year programme of reducing the group’s 
environmental impact sustainable development takes 
the group’s performance in the year 2000 as a base and 
then targets sustained improvements in performance over 
the period to 2010 specific targets were set in 2005 and 
considerable progress was made against all the targets in 
2006 and 2007 2008 saw further significant improvements 
across group companies such that yule catto has already 
achieved the reductions required to comply with our 2010 
goals with current performance at 25 to 94 better than  
the 2010 targets
energy
as previously noted the group had a third year of excellent 
performance on energy consumption in 2008 reducing the 
energy used to make each tonne of product by a further 85 
specific energy consumption has been reduced by 26 in the 
three years since 2005 achieved by a combination of more 
efficient plant eg boilers better maintenance of for example 
steam systems and better use of existing production plant 
the reduction achieved was three times the target of 4 and 
this target has been set again for 2009 asking companies 
to achieve a further 4 reduction on their already much 
improved performance
energy consumption
0
1
2
3
4
5
6
10 09 08 07 06 05 04 03 02 01 00
actual
10year target
gigajoules used per production tonne
business review yule catto  co plc
annual report and accounts 2008 
19
global warming
yule catto’s impact on global warming is closely related to 
our energy consumption but is also influenced by the release 
of a number of other gaseous materials into the atmosphere 
the group’s global warming burden is expressed as tonnes 
of carbon dioxide equivalent and alongside the improvements 
in energy efficiency we reduced the releases of other global 
warming gases to give a further 95 improvement in our 
performance in 2008 over 2007 the group is currently 
performing over 20 better than the target set for 2010
global warming burden
000
005
010
015
020
025
030
035
040
045
10 09 08 07 06 05 04 03 02 01 00
actual
10year target
tonnes carbon dioxide equivalent release per production tonne
atmospheric acidification
the emissions per tonne in 2008 were only 3 of those in the 
baseline year of 2000 this is an area where yule catto has 
undertaken significant investment for the good of the environment 
and can show a very significant improvement in environmental 
performance to the benefit of the surrounding communities
atmospheric acidification burden
 
 
00
10
20
30
40
50
60
10 09 08 07 06 05 04 03 02 01 00
actual
10year target
kgs sulphur dioxide equivalent released per production tonne
water use
yule catto sites do not generally have significant problems with 
water supply indeed some are ‘selfsufficient’ in that we collect 
our own water from a renewable source which we can show is 
not being depleted equally water is an essential resource for 
our own production many of our polymers are manufactured 
and sold as dispersions in water therefore security and quality 
of water supply is of great importance to the group and using 
water carefully and wisely is an important goal in ensuring that 
group companies are fully sustainable
in 2008 for the third year in a row water use per tonne fell  
but by less than our target giving a 07 reduction in water 
use per tonne compared to 2007 it has fallen by over 40 
since 2000 and compared to our sustainable development 
goal for 2010 we are already 265 below the target
water consumption
 
00
10
20
30
40
50
60
70
80
90
100
10 09 08 07 06 05 04 03 02 01 00
actual
10year target
m3 per production tonne
waste disposal
the disposal of hazardous waste to landfill was reduced very 
sharply in 2008 and has fallen to little more than 12 of the 
quantities disposed of in the early years of this decade in 2008 
yule catto produced just 15 kilograms of hazardous waste 
for every tonne of saleable product we made down from 
12 kilograms in 2002 
hazardous waste disposed to land
0000
0002
0004
0006
0008
0010
0012
0014
10 09 08 07 06 05 04 03 02 01 00
actual
10year target
tonnes waste per production tonne yule catto  co plc
annual report and accounts 2008 
20
corporate social responsibility report continued
the management of hazardous waste has been backed up  
by significant efforts to reduce the total amount of waste being 
disposed of from our sites to landfill although this is not part of 
our sustainable development objectives and there is therefore 
no agreed industrywide reduction target nonhazardous 
waste has been reduced from 26 kilograms per tonne in 
2005 to 10 kilograms per tonne in 2008 this has been done 
in a number of innovative ways – for example all of the solid 
waste from the effluent plant at one polymer site synthomer 
at ossett in the uk was disposed of via a composting 
plant where it was mixed with other organic waste to make 
agricultural fertilizer ossett pioneered this disposal route and 
used it throughout 2008 other sites in the group are now 
using this example to find similar outlets for their solid waste 
with some success 
nonhazardous waste disposed to land
0000
0005
0010
0015
0020
0025
0030
10 09 08 07 06 05 04 03 02 01 00
tonnes per production tonne
environmental incidents
most damage to the environment is done by longterm 
continuous releases of polluting or harmful materials these 
are increasingly tightly controlled and releases are reducing 
across the chemical industry generally environmental incidents 
can also cause significant damage if hazardous materials 
are unexpectedly ejected into the environment however the 
environment almost always recovers quite quickly from these 
events and the damage can often be undetectable within a 
relatively short period this is not to minimise the importance of 
avoiding environmental incidents but to put them into context 
– a context of very significant reduction in the environmental 
burden the chemical industry is placing on the environment
disappointingly the number of environmental incidents 
reportable to the authorities rose during 2008 from 8 to 19 this 
has largely been due to tighter reporting conditions imposed  
in the eu with the full implementation of the integrated pollution 
prevention and control ippc directive on all of our sites 
there were no incidents which caused known environmental 
damage offsite
our statistics for ‘environmental incidents’ cover two very 
different types of event a sudden failure which releases 
harmful material to the environment though often only to the 
onsite environment with a release being contained or diluted 
to below a damaging concentration before it reaches the site 
boundary or a continuously monitored outflow exceeding the 
permitted limit often by a very small amount these occasions 
when release limits are exceeded should also be seen in the 
light of the ever tighter limits within which we have to work 
we support this improvement in environmental standards 
certainly whenever it has environmental benefits but it does 
mean that the actual environmental harm caused by exceeding 
a limit by a few percent for a short period becomes smaller 
and smaller all events are treated very seriously by yule catto 
group companies they are fully investigated and any remedial 
measures required put into place
reportable environmental incidents
08 07 06 05 04 03 02 01 00
88
19
4
7
4
22
44
49
business review yule catto  co plc
annual report and accounts 2008 
21
environmental kpis
the uk department for food environment and rural affairs defra published guidelines for reporting environmental key 
performance indicators in 2006 the three key measures suggested were energy use waste disposal and water consumption  
yule catto has reported on these indicators for a number of years but up to 2007 this was not done in the suggested format 
in 2007 for the first time defra’s preferred format was used to aid transparency of environmental performance reporting  
the same format is used in the table below which gives the data for the period 20062008
         change
     20 0 8 2007 2006 20062008
e ne r g y 	 c o n s u m p ti o n
1
gjs    2  63 3 940 3063455 3186354 17 34
gas    93 4577 1159183 1257 724 
light oil    82 9 2 0 82120 83070 
heavy oil    3 5 25 4 46202 73630 
steam    1 65912 179939 187  173 
electricity primary basis    1409021 1596011 1584757
gjstonne production    3  3 2 7 3640 3910 1491
emis sions 	 t o 	 a ir
2
carbon dioxide co
2

tonnes    1 31787 153308 160421 17 85
tonnes co
2
tonne production    0 173 0182 0197
sulphur dioxide so
2

tonnes    114 261 452 7478
kilos so
2
tonne production    0 144 0310 0554
nitrous oxides nox     
tonnes    3 0  84 4 38460 64250 5199
kilos noxtonne production    0 0 3 9 0046 0079
volatile organic compounds vocs
3
 
tonnes    3 8 9 636
kilos vocstonne production    0  491 0755
w at e r 	 u s a g e	
cubic metres m
3
   	 441 7697 4733336 5095279 1330
public potable supply   	 1 358  7 0 5 1480577 1618898
raw water from river    2  28 53 0 7 2439170 2651619
raw water from borehole    4 4 33 0 8 420921 446747
raw water from canal    15282 5169 37304
raw water from other   	 315094 387 499 340711
m
3
tonne production   	 5 5 8 0 5620 5820 412
1 data relates to site usage of all fuels excluding transport
2  emissions to air have been calculated from the usage of all fuels excluding transport fuel and therefore include both direct emissions and indirect emissions  
related to boughtin electricity
3 accurate figures for earlier years are not available yule catto  co plc
annual report and accounts 2008 
22
corporate social responsibility report continued
         change
     20 0 8 2007 2006 20062008
w a s te 	 ma nagement	
hazardous waste
’000 tonnes    1 8 8 4 8 23469 21438 1208
     
ha z a r dous 	 w a s te 	 sent 	 of f site
recycled – with energy recovery    4 8 5 5 5675 4195
recycled – separated reprocessed    51 64 6749 6350
incinerated – with no energy recovery    4  232 2106 2438
disposed by landfill    1 158 2075 2326
other    0 11 9 0151 0225
ha z a r dous 	 w a s te 	 dispose d 	 on site
incinerated onsite with energy recovery    1  3 35 4181 2878
incinerated onsite with no energy recovery   1986 2532 2925
disposed to onsite landfill
tonnestonne production    0 024 0027 0026 7 69
nonhazardous waste
’000 tonnes    15201 16466 21057 27 81
n o n  h a z a r d ou s 	 w a s t e 	 s e nt 	 o f f  s i t e 	 	 	 	 	
recycled – with energy recovery    34 13 3669 4349
recycled – separated reprocessed    2  32 6 1930 1900
incinerated – with no energy recovery    0 0 22 0022 0022
disposed by landfill    69 7 1 9051 12490
other – municipality    1437 0770 0943
n o n  h a z a r d ou s 	 w a s t e 	 d is p os e d 	 o n  s i t e
recycled – with energy recovery    0000 0000 0000
incinerated – with no energy recovery    0000 0000 0017
disposed by landfill    1031 1024 1337
n o n  h a z a r d ou s 	 w a s t e 	 t o n ne s  t o n ne 	 p r o d u c ti o n   0019 0020 0026 2692
p r o d u c ti o n	
tonnes    791 711 842578 815812 295
business review yule catto  co plc
annual report and accounts 2008 
23
directors and advisers
e x e cutiv e 	 dir e c t or s
a m whitfield
4
 – chief executive
joined the group and appointed to the board in march 2006 
he assumed the role of chief executive in august 2006 prior 
to appointment he was chief executive of the plastics division 
of d s smith plc age 47
d c blackwood – finance director
joined the group and appointed to the board in october 
2007 prior to appointment he was group treasurer of imperial 
chemical industries plc age 50
no n  e x e cu tiv e 	 d ir e c t or s
p s wood
2
 – chairman
joined the board in 2001 and was appointed chairman on  
1 february 2009 he was chief executive of the bss group 
plc until retirement at the end of 2005 and is chairman of 
white young green plc and a nonexecutive director of 
rpc group plc and grafton group plc he is a member of 
the institute of chartered accountants of england and wales 
age 61
the hon a g catto
4
 
joined the board in 1981 he is managing director of cairnsea 
investments ltd a private investment company and a non
executive director of several early stage companies that have 
been backed by cairnsea until 1995 he was a managing 
director of lazard brothers and prior to this he was with  
j p morgan and morgan grenfell  co age 56
dr a a dobbie
23
joined the board in august 2007 he is a founding director 
of cogency chemical consultants limited a director of 
nitech solutions limited and chairman of chemical sciences 
scotland evolva sa and warwick international group limited 
age 57
r h hunting
12
joined the board in 2000 he is chairman of hunting plc  
age 62
dato’ lee hau hian
4
joined the board in 1993 and stood down in 2000 to become 
an alternate director he rejoined the board in 2002 he is  
a director of kuala lumpur kepong bhd and batu kawan bhd 
age 55
dato’ seri lee oi hian 
joined the board in 1981 he is chief executive of kuala 
lumpur kepong bhd and chairman of batu kawan bhd  
age 58
j k maiden
13
joined the board in august 2007 he is group finance 
director of national express group plc he is a fellow of the 
chartered institute of management accountants age 47
g r menzies
1234
 
joined the board with effect from 1 march 2009 he was 
chief executive of senior plc until retirement in april 2008 and 
is a nonexecutive director of heywood williams group plc  
age 61
1 member of audit committee
2 member of nomination committee
3 member of remuneration committee
4 standing for reelection at 2009 agm
re gis ter e d 	 of fice
yule catto  co plc
temple fields
harlow
essex
cm20 2bh
registered no 98381
secr eta r y
richard atkinson
b a nk e r s
banco de sabadell sa
barclays bank plc
dresdner bank ag
fortis bank nederland nv 
hsbc bank plc
maybank – malayan banking berhad
the royal bank of scotland plc
m e r c h a nt 	 ba nk e r s
merrill lynch international
s t ock br ok er s
merrill lynch international
r e g is tr a r s
computershare investor services plc
lochside house
7 lochside avenue
edinburgh park
edinburgh
eh12 9dj
auditor s
deloitte llp
s ol icit or s
linklaters llp
hammonds llp
pinsent masons llp yule catto  co plc
annual report and accounts 2008 
24
report of the directors
for the year ended 31 december 2008
the directors submit their annual report and the audited 
financial statements for the year ended 31 december 2008
results and dividends
profit attributable to shareholders for the year was 
£54845000
the interim dividend of 40p per share was paid on 
11 november 2008 on 29 december 2008 the company 
announced the suspension of the payment of dividends and 
accordingly no final dividend is recommended by the directors
principal activities and business review 
the principal activities of the company and a business  
review are set out on pages 6 to 22
disposals
on 30 may 2008 the sale of the entire issued share capital 
of james robinson limited and other associated assets 
to vivimed labs limited was completed on 24 june 2008 
the group sold its interest in james robinson india private 
limited to its joint venture partner on 11 august 2008 the 
sale of the entire issued share capital of holliday pigments 
sa holliday pigments international sa holliday france sa 
and holliday chemical españa sa to rockwood specialities 
group inc was completed on 3 december 2008 the entire 
issued share capital of pfw aroma chemicals bv was sold 
to keva uk limited on 5 january 2009 conditional contracts 
were exchanged with frutarom uk limited for the sale of the 
business and assets of oxford chemicals limited and the sale 
was completed on 30 january 2009 
financial instruments
details of the group’s use of financial instruments and  
its financial risk management objectives and policies and  
of its exposure to price credit liquidity and cash flow risk  
in relation to such instruments is contained in note 21 to the 
financial statements
directors
the present membership of the board is shown on page 23  
all of whom served throughout the year apart from 
mr g r menzies who was appointed on 1 march 2009 
mr a e richmond‑watson served throughout the year as 
chairman of the board until his retirement on 1 february 2009
the hon a g catto dato’ lee hau hian mr g r menzies and 
mr a m whitfield retire and will be seeking re‑election at the 
forthcoming annual general meeting dato’ seri lee oi hian 
and mr r h hunting retire and will not be seeking re‑election 
at the forthcoming annual general meeting
mr whitfield has a service contract which contains a notice 
period of 12 months none of the other directors seeking 
re‑election has a service contract details of directors’ 
emoluments and the interests of each director in the share 
capital of the company are shown in the remuneration report 
on pages 30 to 32
director indemnity provisions
under the company’s articles of association the directors 
of the company have the benefit of a qualifying third‑ party 
indemnity provision which provides that they shall be 
indemnified by the company against certain liabilities as 
permitted by sections 232 and 234 of the companies act 
2006 and against costs incurred by them in relation to any 
liability for which they are indemnified the company has 
purchased and maintains insurance against directors’ and 
officers’ liabilities in relation to the company
share capital and control
details of the company’s share capital are contained in note 25 
to the financial statements during 2008 no shares were issued 
or re‑purchased a total of 91844 shares were purchased  
on the open market on behalf of shareholders who elected  
to participate in the dividend reinvestment plan
the rights and obligations attaching to the company’s ordinary 
shares being the only class of issued share capital as well 
as the powers of the company’s directors are set out in the 
company’s articles of association copies of which can be 
obtained from companies house or by writing to the company 
secretary there are no restrictions on the voting rights 
attaching to the company’s ordinary shares or on the transfer 
of securities in the company no person holds securities in the 
company carrying special rights with regard to the control of 
the company the company is not aware of any agreements 
between holders of securities that may result in restrictions on 
the transfer of securities or on voting rights unless expressly 
specified to the contrary in the articles of association of the 
company the company’s articles of association may be 
amended by special resolution of the company’s shareholders
other than in relation to its borrowings which unless certain 
conditions are satisfied become repayable on a takeover 
the company is not party to any significant agreements that 
would take effect alter or terminate upon a change of control 
following a takeover bid
the company does not have agreements with any director  
or employee that would provide compensation for loss of office 
or employment resulting from a takeover
all of the company’s share schemes contain provisions relating 
to a change of control outstanding options and awards would 
normally vest and become exercisable on a change of control 
subject to the satisfaction of any performance conditions  
at that time
major shareholdings
other than the shareholdings disclosed as directors’ interests 
in the remuneration report as at 20 february 2009 the 
company had been notified under section 5 of the 
disclosure and transparency rules of the uk listing 
authority of the following significant holdings of voting rights 
in its ordinary shares
  percent
 ordinary of ordinary 
 shares shares in nature of
 number issue holding
kuala lumpur   
kepong berhad 27414414 1882 direct interest
franklin resources inc 10169079 698 indirect interest
tameside mbc 5855353 402 direct interest
ubs global asset 13372875 918 part direct
management –     interest
traditional  part indirect
     interest yule catto  co plc
annual report and accounts 2008 
25
employment policies
the group gives every consideration to applications for 
employment from disabled persons employees who become 
disabled are given every opportunity to continue employment 
under normal terms and conditions with appropriate training 
career development and promotion wherever possible 
the group seeks to achieve equal opportunities in employment 
through recruitment and training policies
authority to purchase own shares
the company has a general authority which expires at the 
conclusion of the 2009 annual general meeting to make 
market purchases of not more than 14566318 of the 
company’s ordinary shares in accordance with the terms  
of the special resolution passed at the 2008 annual general 
meeting a resolution will be tabled at the 2009 annual  
general meeting to renew this authority
employee involvement
the group is organised on a decentralised basis so as  
to promote greater employee involvement and better 
communications with employees each group company  
is encouraged to make its employees aware of the financial 
and economic factors affecting the performance of the 
company performance related bonus schemes are in 
operation in a number of group companies
a long‑ term share incentive plan for directors and senior 
executives was introduced in 2002 with the approval of 
shareholders
uk pension funds
the trustees have reviewed the independent investment 
management of the assets of the company pension schemes 
in the united kingdom and assured themselves of the security 
and controls in place in particular it is the trustees’ policy not 
to invest in yule catto shares nor lend money to the company
creditor payment policy
the group’s policy is to make payments to creditors and  
other suppliers in accordance with terms of payment agreed  
at the time the contract of supply is made subject to all 
the terms and conditions of the order being satisfied by the 
supplier trade creditor days of the company for the year ended 
31 december 2008 were 27 days 2007 31 days based on the 
ratio of trade creditors at the year end to the amounts invoiced 
during the year by trade creditors
charitable donations
charitable donations in the year amounted to £108000  
2007 £54000 there were no political donations during  
the year
statement as to disclosure of information to auditors
each director of the company confirms that so far as he 
is aware there is no relevant audit information of which the 
company’s auditors are unaware and that he has taken all 
the steps that he ought to have taken as a director in order 
to make himself aware of any relevant audit information and 
to establish that the company’s auditors are aware of that 
information for these purposes relevant audit information 
means information needed by the company’s auditors in 
connection with preparing their reports on pages 36 to 37 
and 72 this confirmation is given and should be interpreted in 
accordance with section 234za of the companies act 1985
going concern
the directors have acknowledged the latest guidance on  
going concern and in reaching their conclusions have taken 
into account factors including
the required repayment of £33 million on the us loan notes •	
in september 2009 and 
the availability of an additional £49 million of undrawn •	
facilities negotiated in the uk and malaysia described above
the directors have appropriately considered the group’s risks 
and uncertainties as fully described in the business review  
on pages 6 to 22 including
the current economic conditions and potential impact  •	
of the level of demand for the group’s products
recent volatility in the currency markets and the ability  •	
of the company to hedge exposures
volatility in prices of the group’s raw materials and •	
the group’s exposures to credit and liquidity risk see •	
note 21
after making enquiries and taking account of possible changes 
in trading performance the directors have concluded that the 
company and the group have adequate resources to continue 
in operational existence for the foreseeable future
accordingly they continue to adopt the going concern basis  
in preparing the annual report and accounts
cautionary statement
the purpose of this report is to provide information to the 
members of the company it contains certain forward‑looking 
statements with respect to the operations performance 
and financial condition of the group by their nature these 
statements involve uncertainty since future events and 
circumstances can cause results and developments to 
differ materially from those anticipated the forward‑looking 
statements reflect knowledge and information available at the 
date of preparation of this report and the company undertakes 
no obligation to update these forward‑looking statements 
nothing in this report should be construed as a profit forecast
auditors
a resolution to re‑appoint deloitte llp as the company’s 
auditors will be proposed at the annual general meeting
annual general meeting
the annual general meeting will be held at 1030 am on 
thursday 14 may 2009 at saddlers’ hall 40 gutter lane 
london ec2v 6br
by o  rder of the board
r atkinson
secretary
11 march 2009 yule catto  co plc
annual report and accounts 2008 
26
corporate governance
this compliance statement is produced in relation to the 
combined code on corporate governance ‘the code’ 
which was published in june 2006 by the financial 
reporting council
statement of compliance
the company considers that it has complied throughout the 
financial year ended 31 december 2008 with the provisions 
set out in section 1 of the code
application of the code
the main principles of section 1 of the code were applied 
as follows
the board
operation of the board
the activities of the company are controlled by the board 
which during 2008 comprised two executive directors and  
nine non‑executive directors until the resignation of 
mr c j williams on 27 august 2008 following which the 
number of non‑executive directors reduced to eight  
following a review of its size and composition during 2008  
the board now comprises two executive directors and eight 
non‑executive directors the number of non‑executives will 
further reduce to six following the 2009 annual general 
meeting as a result of the decision of dato’ seri lee oi hian 
and mr r h hunting not to stand for re‑election the roles  
of chairman and chief executive are clearly divided between 
mr p s wood who heads the board in his capacity as 
non‑executive chairman and mr a m whitfield who has 
responsibility for the running of the company’s business as 
chief executive the non‑executive directors all have wide 
business and boardroom experience gained in a broad range 
of business sectors
the board has reserved to itself a schedule of matters which 
includes setting long‑ term objectives for the group and the 
strategies to be employed in achieving them setting policies 
in the areas of safety health and the environment recruitment 
and employment risk management and treasury and subject 
to materiality thresholds decisions on the raising of capital 
financial commitments capital expenditure acquisitions 
and disposals and the prosecution defence and settlement 
of litigation
the board meets quarterly to review current and projected 
performance and to determine strategic issues the 
directors receive in advance full information on all matters 
to be discussed at board meetings as well as a detailed 
quarterly review of performance prepared by the chief 
executive the board has established audit nomination 
and remuneration committees which are discussed below
in addition arrangements are made each year for the board  
to visit up to two of the group’s operational sites and meet 
local management ad hoc site visits are facilitated for 
individual non‑ executive directors on request
the board has delegated to the chief executive responsibility 
for the development and preparation of the business plan for 
the group and the annual group budget for recommendation 
to the board as the senior executive director the chief 
executive is responsible for all aspects of day‑ to‑ day 
operational control of the group and execution of the group 
strategy the chief executive has established and chairs an 
executive committee whose other members are the divisional 
chief executives the finance director the deputy finance 
director the company secretary and the director of group 
human resources to assist him in the performance of his 
duties and which meets once a month the chairman receives 
the minutes of the executive committee and all directors 
receive a monthly trading summary and commentary
board membership and balance
the chairman and chief executive are identified on page 23 
the chairmen and members of the audit nomination and 
remuneration committees are identified below following  
the appointment of mr p s wood as chairman the board has 
under consideration the choice of his successor as senior 
independent director
the board met on five occasions in 2008 all board and 
committee meetings were fully attended during 2008 except 
for the board meetings held in march when mr p s wood 
was unable to attend august when dato’ seri lee oi hian 
mr j k maiden and mr c j williams were unable to attend and 
december when dato’ seri lee oi hian was unable to attend 
and the remuneration committee meetings held in november 
and december when mr j k maiden was unable to attend
the board considers the following non‑executive directors 
to be independent in accordance with the provisions of 
the code dr a a dobbie mr r h hunting mr j k maiden 
and mr g r menzies mr p s wood was considered to 
be independent up until his appointment as chairman 
on 1 february 2009 mr c j williams was considered to 
be independent up until the date of his resignation on 
27 august 2008
induction and training
induction arrangements are in place in order to ensure  
new directors receive a full formal and tailored induction  
on appointment the skills and knowledge of board members  
are updated by briefings provided by the company’s internal 
resources and materials and seminars offered by 
external advisers
performance evaluation
performance evaluations of the board its committees and 
its directors were carried out in the last year by the following 
internal processes
an assessment of the performance of individual non‑ •	
executive directors is carried out by the chairman through 
a rolling programme of one‑to‑one discussions using 
performance evaluation questions as the centrepiece for 
those discussions every non‑executive director is assessed 
in this way once a year
the performance of the executive directors was reviewed •	
in august 2008 at a meeting of the non‑executive directors 
chaired by the chairman yule catto  co plc
annual report and accounts 2008 
27
a meeting of the non‑executive directors in the absence  •	
of the chairman chaired by the senior independent director 
was held in december 2008 to evaluate the performance  
of the chairman taking into account the views of the 
executive directors and
the board and its committees carry out an annual self‑ •	
assessment of performance led by the chairman and the 
chairman of each committee respectively the results of 
assessment questionnaires completed by those chairmen 
were reviewed by the relevant committees and the board 
and were shared with and discussed by the board as  
a whole at its meeting in november 2008
non‑executive directors are appointed for three ‑ year terms 
those non‑executive directors who have served longer than 
nine years on the board are subject to annual re‑election  
by shareholders with other directors subject to re‑election  
at least every three years
shareholder communications
dialogue with institutional investors is conducted on a regular 
basis by the chief executive and the finance director and 
meetings take place following the announcement of interim and 
full year results and at other times according to circumstances
the board has adopted a set of shareholder communication 
principles in order to ensure that board members develop an 
understanding of the views of the group’s major shareholders 
these principles require the chairman to be present with  
the chief executive and the finance director at sufficient 
shareholder presentations and meetings that he fully 
understands the issues and concerns of major shareholders 
the chairman reports on shareholder relations at each board 
meeting communications with shareholders relating to 
corporate governance matters are conducted by the chairman 
with the assistance of the chairmen of the audit nomination 
and remuneration committees written reports on all meetings 
between non‑ executive directors and institutional shareholders 
and their representative bodies are presented to the board  
at the first opportunity following such meetings as is all 
correspondence with them
the board seeks to encourage participation of all shareholders 
and in particular private investors at the company’s annual 
general meeting and endeavours to ensure all board 
members are in attendance in particular the chairmen of the 
remuneration audit and nomination committees are available 
to answer questions
the company makes use of its website wwwyulecattocom  
to communicate with its shareholders where it publishes 
interim and full year results company announcements share 
price and corporate governance and other investor information
board committees
the board has formally established audit nomination and 
remuneration committees each with their own terms of 
reference which set out their respective roles and the 
authority delegated to them by the board copies of the 
terms of reference are available upon request from the 
company secretary and can also be downloaded from the 
company’s website
audit committee
the audit committee comprised mr p s wood chairman 
mr r h hunting mr c j williams and mr j k maiden until 
27 august 2008 when mr williams resigned from the board 
thereafter it comprised the three remaining members 
with mr maiden taking over as chairman on 5 november 
2008 mr wood left the committee on 5 march 2009 and 
dr a a dobbie and mr g r menzies joined on that date 
mr wood was and mr maiden is considered by the board  
to have ‘recent and relevant financial experience’ for the 
purposes of provision c31 of the code the committee 
has established a detailed remit regarding the application of 
financial reporting and internal control principles the finance 
director and senior members of his department attend 
meetings of the committee as part of the review of the 
group’s interim and final statements prior to their submission 
to the board the committee meets periodically with the 
company’s auditors to discuss the adequacy of the group’s 
financial management internal controls and information 
systems the committee’s remit includes the review of the 
cost‑ effectiveness independence and objectivity of the 
auditors including the extent of non‑audit services and fees 
payable to the auditors which is carried out and discussed 
with the auditors on a periodic basis with regard to seeking 
to ensure the independence and objectivity of the auditors 
the audit committee’s policy is to avoid the auditors providing 
services in areas which may create or be perceived to create 
a conflict of interest accordingly other than in circumstances 
where time constraints render it impractical or assignments 
are of a minor nature the auditors are not invited to tender or 
propose for services of the following nature corporate finance 
legal information technology and systems recruitment or 
remuneration accounting internal audit or control acquisition 
due diligence valuations or appraisals actuarial or general 
business consulting in addition the auditors have been 
requested not to provide services to executive directors or 
senior executives non‑executive directors are required to 
disclose any relationship they have with the auditors
the group does not have an internal audit function 
the committee has reviewed this during the year and has 
concluded that there are in place appropriate procedures  
for assuring the integrity and effectiveness of the group’s 
governance risk management and control processes 
the board has accepted this recommendation
the current auditors were first appointed in 2002 and their 
appointment was reviewed by the committee in 2006 details 
of audit and non‑audit fees paid to them in 2008 are set out in 
note 6 on page 50 non‑audit fees principally relate to taxation 
advice the board accepts the committee’s recommendation 
that the current auditors be proposed for re‑appointment  
at the forthcoming annual general meeting
the committee met formally four times during 2008 and the 
chairman of the committee had regular dialogue with the 
auditors during the course of the year as well as complying 
with the terms of its remit during the year the committee 
reviewed its remit yule catto  co plc
annual report and accounts 2008 
28
nomination committee
the nomination committee comprised during 2008 
mr r h hunting chairman dr a a dobbie and mr p s wood 
with mr g r menzies joining on 5 march 2009 the committee 
is responsible for the regular review of the structure size and 
composition of the board and the making of recommendations 
with regard to any changes leading the process for board 
appointments and nominating candidates for non‑executive 
positions and considering succession planning 
the committee led the process for appointing a new chairman 
of the board and nominating mr g r menzies for appointment 
as a non‑executive director which involved a thorough 
review of a range of candidates put forward by a recruitment 
consultancy which conducted an extensive search process 
the nomination committee held six formal meetings during 
2008 and a number of informal discussions and interviews 
associated with the foregoing appointment processes
remuneration committee
all matters relating to the remuneration committee and 
remuneration are covered in the remuneration report set out 
on pages 30 to 32
accountability
an explanation of the directors’ responsibility for preparing the 
financial statements their report that the business is a going 
concern a responsibility statement and their statement as to 
disclosure of information to the auditors are set out on pages 
35 and 25 respectively statements by the auditors about their 
reporting responsibilities are set out on pages 36 to 37 and 72 
respectively a report on the approach to internal control is set 
out below the directors endeavour to make the annual report 
and financial statements as informative and understandable 
as possible
internal control
the board of directors has ultimate responsibility for the 
group’s system of internal control and sets appropriate policies 
to ensure that the code requirements on internal control 
are met
the system of internal control deployed within the group 
is designed to reduce the risks of failure to meet business 
objectives but these risks cannot be eliminated the internal 
control system adopted can therefore only provide reasonable 
not absolute assurance about meeting such business 
objectives or against material mis‑statement or loss
a process for identifying evaluating and managing significant 
business risks faced by the group has been in place since 
2000 this has since been built upon so as to embed further 
the process into the businesses and to enhance the usefulness 
of the relevant processes and information and has been 
operated throughout 2008 and up to the date of approval of 
the annual report and accounts and accords with the turnbull 
guidance
the system is applied at all material subsidiaries and  
a ‘bottom up’ risk profile is created by evaluating the information 
at business divisional and group level individual directors 
within yule catto’s businesses identify and assess key risks 
associated within their area of responsibility based on formal 
management information and interaction with colleagues 
customers suppliers and other parties
the individual submissions are consolidated reviewed and 
agreed at a board meeting of the subsidiary a business risk 
report is prepared that is closely linked to business strategy 
and takes account of key internal and external factors risks 
are prioritised using a common risk matrix which forms the 
basis of a single corporate risk report that is reviewed and 
discussed by the yule catto audit committee
the individual business risk reports are formally reviewed  
at a board meeting of the subsidiary every six months out  
of which a revised report is submitted which identifies changes 
in the risk environment
the process was last reviewed by the yule catto board  
of directors in march 2008
the nature of the risks identified as a result of this process 
during the year primarily relate to matters of an operational and 
financial nature and the most significant of those which faced 
the group in 2008 are reviewed in the reports of the chairman 
chief executive and group finance director
risks associated with safety health and the environment are 
by the nature of the group’s business always of the utmost 
concern and the corporate social responsibility report on 
pages 16 to 22 reviews the group’s performance in this 
connection in 2008
the processes which are used by the board either directly 
or where appropriate through the audit committee to review 
the effectiveness of the internal control system include the 
following
a review of the external audit work plan •	
consideration of reports from management and external •	
parties including the auditors on the system of internal 
financial control and any material control weaknesses
quarterly review of safety health and environmental •	
performance
discussion with management of the actions taken on any •	
possible problem areas for the business identified by board 
members or in the audit report and
consideration of a consolidated risk management report •	
setting out the main conclusions from the internal control 
process
corporate governance continued yule catto  co plc
annual report and accounts 2008 
29
in addition the board
receives copies of the minutes from all audit committee •	
meetings
considers the role of the group insurance programme •	
receives regular written and oral reports from management •	
on all aspects of production operations financial and risk 
management matters and
in compliance with provision c21 of the combined code •	
the board regularly reviews and approves the effectiveness 
of the group’s system of internal controls
environmental social and governance matters
in january 2007 the association of british insurers abi 
published a revised version of its guidelines on responsible 
investment disclosure these guidelines require statements 
on the extent to which environmental social and governance 
matters are taken into account by the board and identified 
assessed managed and monitored particularly in relation 
to the risks and opportunities they present to the value of 
the company
environmental matters
the maintenance of high standards of environmental 
together with health and safety protection is central to the 
company’s business a separate statement on safety health 
and environmental she matters has been a feature of the 
annual report for a number of years the corporate social 
responsibility report statement on pages 16 to 22 incorporates 
the abi guidelines and includes a report on the initiatives the 
company has adopted regarding sustainable development
social and ethical matters
the board takes account of social and ethical matters as part 
of its review of internal control which by virtue of its approach 
to risk identification covers areas which encompass social  
and ethical matters
the board is conscious of its responsibility to the communities 
in which the group’s businesses operate and is supportive  
of local initiatives by management
the board is also aware of the reputational risk associated 
with social and ethical issues and has a group‑ wide code 
of business conduct on corruption and anti‑competitive 
activities which is available on the company’s website and 
upon request from the company secretary the purpose 
of this code is to ensure that the group’s employees have 
a clear understanding of the principles that are important 
in these areas when conducting the group’s business the 
application of the code is explained to senior management at 
regular intervals and they are charged with its communication 
throughout their businesses a compliance procedure was 
initiated in 2007 involving annual certification by the senior 
management of each operating company a report is made to 
the audit committee annually on the code and the company’s 
whistleblowing procedure
governance
the board’s approach to governance training of directors  
and identification and assessment of risk is set out above yule catto  co plc
annual report and accounts 2008 
30
directors’ remuneration report
the following report complies with the directors’ remuneration 
report regulations 2002 and satisfies the requirements 
of the listing rules of the financial services authority and 
the combined code on corporate governance which was 
published in june 2006 by the financial reporting council
remuneration committee
the remuneration committee comprised mr p s wood 
chairman dr a a dobbie mr j k maiden and mr c j williams 
until 27 august 2008 when mr williams resigned from the 
board thereafter it comprised the three remaining members 
until mr wood left the committee on 5 march 2009 with  
dr dobbie replacing him as chairman of the committee and   
mr g menzies joining the committee on that date 
the committee is responsible for determining the company’s 
policy on executive remuneration and the specific remuneration 
for the chairman and each of the executive directors including 
pension rights the committee is also responsible for reviewing 
the remuneration of senior executives throughout the group 
the committee was assisted in its deliberations on executive 
directors’ remuneration by the chief executive the board as 
a whole determines the remuneration of the non‑executive 
directors including members of the remuneration committee 
the remuneration committee met three times during 2008
remuneration policy
non‑executive directors’ remuneration
it is the board’s policy to review fees paid to non‑executive 
directors periodically a review of non‑executive director 
remuneration was last carried out in december 2006 
with the assistance of advice provided by monks part of 
pricewaterhousecoopers llp with effect from 1 january 
2007 non‑executive director fees are as follows £30000 pa 
for those who do not sit on a committee £33000 pa for 
those who do sit on a committee £36000 pa for those who 
are committee chairmen the fees payable to the chairman 
of the board are £110000 pa
non‑executive directors are not eligible to receive awards 
under any of the company’s share schemes or other employee 
benefit schemes nor does the company make any contribution 
to their pension arrangements
executive directors’ remuneration
the company’s policy for 2008 was and continues to be to 
structure executive pay in such a way that key executives 
may be recruited motivated and retained through being 
offered remuneration packages that are competitive for this 
purpose the committee uses industry and sector data and 
surveys whilst not adopting set formulae the committee is 
also sensitive to the pay and employment conditions elsewhere 
in the group when considering annual salary increases and 
total remuneration the committee also has the discretion to 
consider the company’s performance on environmental social 
and governance matters when setting the remuneration of the 
executive directors
the major element of the remuneration package of senior 
executives is a competitive basic salary which is reviewed 
with effect from 1 january each year for executive directors 
this review is conducted with the assistance of independent 
surveys of salaries at uk listed companies with a similar profile 
to the company in terms of turnover and market capitalisation 
the committee then uses this information to recommend 
basic salaries for the executive directors in line with the 
board’s policy of awarding for good performance a basic 
salary of approximately the market median for companies 
of a similar size and complexity in addition the remuneration 
committee has overseen the introduction of incentives which 
are designed to reward the achievement of predetermined 
targets by the individuals concerned these incentives which 
were designed in accordance with the provisions of schedule 
a to the code currently comprise annual cash bonuses 
and membership of an approved longer term incentive plan 
the ‘performance plan’ the committee does not consider 
that the incentive structure for senior executives gives rise 
to environmental social or governance risks by inadvertently 
motivating irresponsible behaviour
• 	 a nn u a l 	 c a s h 	 bo n u s e s
  for 2008 the annual cash bonus payment for the executive 
directors and senior head office employees was an amount 
equal to a percentage of basic pay calculated by reference 
to the annual growth in the company’s basic earnings per 
share for underlying performance eps after taking account 
of the annual rise in the rate of headline inflation rpi for 
the maximum bonus to be awarded eps growth must have 
exceeded rpi plus 10 for the minimum bonus to be 
awarded eps growth must have exceeded rpi plus 25 
the percentage of basic pay awarded for performance 
between these points was calculated on a straight‑ line basis 
with no bonus being awarded if eps growth is rpi plus 25 
or less for 2008 the maximum and minimum percentage 
of basic pay awardable to the executive directors upon 
attainment of the maximum and minimum performance 
criteria was 80 and 5 respectively for 2009 the 
remuneration committee consider it appropriate to move 
away from a target based on eps and propose to replace 
this with performance criteria linked to achievement of an 
appropriate combination of specified targets for profit before 
tax debt and working capital and personal objectives 
the maximum percentage of basic pay awardable to 
executive directors in 2009 will remain at 80
  for divisional chief executives and managing directors of 
subsidiary companies the annual cash bonus payments 
are based on appropriate combinations of profit cash flow 
working capital and safety and environmental targets in 
2008 the bonuses were subject to limits of 60 and 50 
of basic pay respectively yule catto  co plc
annual report and accounts 2008 
31
•	 shar e 	 plan
  the performance plan was introduced in 2002 following 
shareholder approval at that year’s annual general meeting 
and covers the executive directors divisional chief executives 
and senior managers and head office employees an award 
consists of a right to acquire shares which can be exercised 
for a nominal price subject to the company satisfying 
performance conditions the value of shares awarded under 
the performance plan in any financial year to any individual 
currently may not exceed 100 of their annual basic salary 
following review by the remuneration committee and 
shareholder approval awards made since 2006 have been 
subject to performance conditions related to relative and 
absolute growth in total shareholder return in order to better 
align the interests of the participants in the performance plan 
with shareholders details of performance conditions are set 
out at pages 33 to 34 an award which vests in accordance 
with the performance conditions will only be exercisable 
and allocated shares may only be transferred as to one‑ half 
after the third anniversary of the date the award is made 
and as to the remaining half after the fourth anniversary 
of the date the award is made in order to further align the 
interests of the executive directors and shareholders there 
are share ownership requirements in connection with the 
performance plan requiring the retention of a percentage of 
the shares acquired by executive directors until such time as 
ordinary shares in the company have been built up to a level 
equivalent in value to their annual basic salary
  during 2008 777865 shares were awarded under the 
performance plan
  executive directors are entitled to participate in grants of 
options made under the company’s savings‑related share 
option scheme as and when these are made
•	 p e nsion 	 ar rangeme n ts
  mr a m whitfield and mr d c blackwood are not members 
of the company pension scheme and receive payments 
from the company to enable them to make their own 
arrangements there are no unfunded pension promises 
or similar arrangements for directors 
•	 re mune ra tion 	 de tails
  the amount and components of the directors’ remuneration 
are set out below no elements of remuneration other than 
basic salary are pensionable 
• 	 se r v i c e 	 c o n t r a ct s
  no director other than mr a m whitfield and mr d c blackwood 
has a service contract mr whitfield’s contract is dated  
22 november 2005 has no unexpired term provides for  
a notice period of one year and makes no provision for 
pre‑determined compensation on termination mr blackwood’s 
contract is dated 12 september 2007  has no unexpired term 
provides for a notice period of one year and makes no 
provision for pre‑determined compensation on termination 
  the remuneration committee’s policy on contracts and 
notice periods for executive directors is to seek to comply 
with best practices in corporate governance
  all non‑executive directors are appointed in writing the first 
year of each director’s appointment is shown in the directors’ 
biographies on page 23 the periods of appointment and  
the requirements for re‑election of non‑executive directors 
are provided within the performance evaluation section  
of the corporate governance report on page 27
• 	 	 n o n ‑ e x e c u t i v e 	 d i r e ct or s hi p s 	 h e l d 	 b y 	 t h e 	 e x e c u t i v e	
directors
  mr whitfield is a non‑executive director of the chemical 
industries association limited for which he does not receive 
any remuneration mr blackwood is a non‑ executive member 
of the cabinet office audit and risk committee and is  
a member of the board for actuarial standards for which  
he receives and retains £4000 and £10000 pa respectively
•	 t o tal 	 shar e holde r 	 r e tur n 	 o v e r 	 fiv e 	 y e ars
  the following graph compares the share price performance 
of the company by reference to total shareholder return 
with that of the ftse 250 and is considered to be the most 
appropriate index against which to make a comparison
yule catto total shareholder return versus ftse 250 total return 
cumulative years ended 31 december
0
50
100
150
200
250
2008 2007 2006 2005 2004 2003
yule catto
ftse 250
agm approval
the directors’ remuneration report has been submitted  
to the 2009 annual general meeting for approval yule catto  co plc
annual report and accounts 2008 
32
directors’ remuneration report continued
audited information
directors’ remuneration
       2008 2007
emoluments      £’000 £’000
the total amounts for directors’ remuneration and other benefits were
emoluments      1405 1156 
compensation for loss of office      – 293 
      1405 1449 
the emoluments of the individual executive directors holding office during the year were
    base
    salary bonuses benefits total total
    2008 2008 2008 2008 2007
    £ £ £ £ £
a m whitfield – highest paid director   355000 284000 26104 665104 621016
d c blackwood   230000 138000 16779 384779 94607
pension arrangements
a m whitfield and d c blackwood are not members of the company’s defined benefit pension scheme the yule catto group 
retirement benefits scheme to fund their pension arrangements they received the following payments
       2008 2007
       £ £
a m whitfield      88750 83750 
d c blackwood      46000 11500 
directors’ fees
the fees of the individual non‑executive directors holding office during the year were
       2008 2007
       £ £
a e richmond‑watson – chairman      110000 110000 
the hon a g catto      30000 30000 
dr a a dobbie      33000 12269 
r h hunting      36000 36000 
dato’ lee hau hian      30000 30000 
dato’ seri lee oi hian      30000 30000 
j k maiden      33726 12269 
dr m j peagram      – 8758 
p j welch      – 13799 
c j williams      16500 33000 
p s wood      36000 36000 
      355226 352095 
the non‑executive directors receive no other remuneration in addition to their fee yule catto  co plc
annual report and accounts 2008 
33
directors’ interests
shareholdings
given below are details of the interests of the directors in the share capital of the company at 31 december 2008 and  
31 december 2007
     ordinary shares options
     2008 2007 2008 2007
d c blackwood    17500 10000 144654 –
the hon a g catto    1215604 1187 1 70  
    5197093 5593192  
dr a a dobbie    10000 nil  
r h hunting    6000 6000  
dato’ lee hau hian    10613 10613  
dato’ seri lee oi hian    27248 27248  
j k maiden    nil nil  
a e richmond‑watson    798647 798647  
    159632 159632  
a m whitfield    6000 6000 482430 259160
p s wood    2500 2500  
 non‑beneficial interest
on 7 january 2009 dr a a dobbie purchased 20000 shares
between 31 december 2008 and 20 february 2009 there were no other changes in the directors’ holdings
executive and savingsrelated options
       notional
 at      at exercise value exercise
 010108  granted lapsed exercised 311208 price  £ period
a m whitfield 124352 i – – – 124352 – 68394 2009‑ 2016
 134808 ii – – – 134808 – 74144 2010‑ 2017
 – iii 223270 – – 223270 – 122799 2011‑ 2018
 259160  223270 – – 482430 –  
       notional
 at      at exercise value exercise
 010108  granted lapsed exercised 311208 price  £ period
d c blackwood – iii 144654 – – 144654 – 79560 2011‑ 2018
 –  144654 – – 144654 –  
i  for the award made in 2006 to mr a m whitfield it would have vested in respect of 50 of the shares only if the company’s 
total shareholder return tsr over a three‑ year period ending on 31 december 2008 had increased by the rise in rpi 
plus 1576 or more compared with the company’s tsr at the start of the three‑ year performance period if growth in the 
company’s tsr had been equal to the rise in rpi plus 769 over the three‑ year performance period 25 of the shares 
subject to the award would have vested performance between these points would have resulted in between 25 to 50 
of the shares vesting on a straight‑ line basis with lesser performance resulting in no part of the 50 of the shares vesting 
vesting of the other 50 of the shares subject to the award was based on the growth in the company’s tsr compared with 
the growth of the ftse 250 total return index over the same three‑ year period if the company’s tsr had exceeded the ftse 
250 total return index by 769 or more over the three‑ year period 50 of the shares subject to an award would have vested 
if growth in the company’s tsr had been equal to the ftse 250 over the three‑ year performance period 5 of the shares 
subject to the award would have vested performance between these points would have resulted in between 5 to 50  
of the shares vesting on a straight‑ line basis with lesser performance resulting in no part of the 50 of the shares vesting
number of options 
during the year
number of options 
during the year yule catto  co plc
annual report and accounts 2008 
34
ii  for the award made in 2007 to mr a m whitfield it will vest in respect of 50 of the shares only if the company’s total 
shareholder return tsr over a three‑ year period ending on 31 december 2009 has increased by the rise in rpi plus 1576 
or more compared with the company’s tsr at the start of the three‑ year performance period if growth in the company’s 
tsr is equal to the rise in rpi plus 927 over the three‑ year performance period 25 of the shares subject to the award will 
vest performance between these points will result in between 25 to 50 of the shares vesting on a straight‑ line basis with 
lesser performance resulting in no part of the 50 of the shares vesting vesting of the other 50 of the shares subject to an 
award will be based on the growth in the company’s tsr compared with the growth of the ftse 250 total return index over 
the same three‑ year period if the company’s tsr exceeds the ftse 250 total return index by 769 or more over the three 
year period 50 of the shares subject to an award will vest if growth in the company’s tsr is equal to the ftse 250 over the 
three‑ year performance period 5 of the shares subject to the award will vest performance between these points will result 
in between 5 to 50 of the shares vesting on a straight‑ line basis with lesser performance resulting in no part of the 50  
of the shares vesting
iii  for the awards made in 2008 to mr a m whitfield and mr d c blackwood the same performance conditions apply as for the 
award made to mr a m whitfield in 2007 over a three‑ year period ending on 31 december 2010
the notional value of unexercised share options is based on the mid‑ market price of a share on 31 december 2008 of 55 pence 
during the year the market price ranged between 525 pence and 1925 pence
by order of the board
r atkinson
secretary
11 march 2009
directors’ interests continued yule catto  co plc
annual report and accounts 2008 
35
statement of directors’ responsibilities
financial statements including adoption 
of going concern basis
the directors are responsible for preparing the annual report 
directors’ remuneration report and the financial statements  
in accordance with applicable law and regulations
company law requires the directors to prepare financial 
statements for each financial year the directors are required 
by the ias regulation to prepare the group financial 
statements under international financial reporting standards 
ifrss as adopted by the european union the group 
financial statements are also required by law to be properly 
prepared in accordance with the companies act 1985 and 
article 4 of the ias regulation 
international accounting standard 1 requires that ifrs 
financial statements present fairly for each financial year the 
company’s financial position financial performance and cash 
flows this requires the faithful representation of the effects 
of transactions other events and conditions in accordance 
with the definitions and recognition criteria for assets 
liabilities income and expenses set out in the international 
accounting standards board’s ‘framework for the preparation 
and presentation of financial statements’ in virtually all 
circumstances a fair presentation will be achieved by 
compliance with all applicable ifrss however directors 
are also required to
properly select and apply accounting policies •	
present information including accounting policies in  •	
a manner that provides relevant reliable comparable  
and understandable information and 
provide additional disclosures when compliance with the •	
specific requirements in ifrss are insufficient to enable 
users to understand the impact of particular transactions 
other events and conditions on the entity’s financial position 
and financial performance
the directors have elected to prepare the parent company 
financial statements in accordance with united kingdom 
generally accepted accounting practice united kingdom 
accounting standards and applicable law the parent 
company financial statements are required by law to give a true 
and fair view of the state of affairs of the company in preparing 
these financial statements the directors are required to
select suitable accounting policies and then apply them •	
consistently
make judgments and estimates that are reasonable and •	
prudent
state whether applicable uk accounting standards have •	
been followed subject to any material departures disclosed 
and explained in the financial statements and
prepare the financial statements on the going concern basis •	
unless it is inappropriate to presume that the company will 
continue in business
the directors are responsible for keeping proper accounting 
records that disclose with reasonable accuracy at any time 
the financial position of the company and enable them to 
ensure that the parent company financial statements comply 
with the companies act 1985 they are also responsible for 
safeguarding the assets of the company and hence for taking 
reasonable steps for the prevention and detection of fraud and 
other irregularities
other matters
the directors are responsible for the maintenance and 
integrity of the corporate and financial information included 
on the company’s website legislation in the united kingdom 
governing the preparation and dissemination of financial 
statements may differ from legislation in other jurisdictions
responsibility statement
we confirm that to the best of our knowledge
the group financial statements prepared in accordance •	
with international financial reporting standards and the 
company financial statements prepared in accordance with 
united kingdom accounting standards each give a true and 
fair view of the assets liabilities financial position and profit 
and loss of the group taken as a whole and the company 
respectively and
the management report includes a fair review of the •	
development and performance of the business and the 
position of the company and the group taken as a whole 
together with a description of the principal risks and 
uncertainties that they face
we are only liable to investors under this statement to the 
extent provided under english law and any liability to a person 
who has demonstrated reliance on any untrue or misleading 
statement or omission shall be determined in accordance with 
section 90a of the financial services and markets act 2000
by order of the board
a m whitfield  d c blackwood 
chief executive  group finance director
11 march 2009 independent auditors’ report to the members  
of yule catto  co plc
yule catto  co plc
annual report and accounts 2008 
36
we have audited the group financial statements of yule catto  
co plc for the year ended 31 december 2008 which comprise 
the consolidated income statement the consolidated 
balance sheet the consolidated cash flow statement 
the consolidated statement of recognised income and 
expense and the related notes 1 to 36 these group financial 
statements have been prepared under the accounting policies 
set out therein we have also audited the information in the 
directors’ remuneration report that is described as having 
been audited
we have reported separately on the parent company 
financial statements of yule catto  co plc for the year ended 
31 december 2008
this report is made solely to the company’s members as 
a body in accordance with section 235 of the companies 
act 1985 our audit work has been undertaken so that we 
might state to the company’s members those matters we 
are required to state to them in an auditors’ report and for no 
other purpose to the fullest extent permitted by law we do 
not accept or assume responsibility to anyone other than the 
company and the company’s members as a body for our audit 
work for this report or for the opinions we have formed
respective responsibilities of directors and auditors
the directors’ responsibilities for preparing the annual report 
the directors’ remuneration report and the group financial 
statements in accordance with applicable law and international 
financial reporting standards ifrss as adopted by the 
european union are set out in the statement of directors’ 
responsibilities
our responsibility is to audit the group financial statements in 
accordance with relevant legal and regulatory requirements 
and international standards on auditing uk and ireland
we report to you our opinion as to whether the group 
financial statements give a true and fair view whether the 
group financial statements have been properly prepared in 
accordance with the companies act 1985 and article 4 of 
the ias regulation and whether the part of the directors’ 
remuneration report described as having been audited has 
been properly prepared in accordance with the companies 
act 1985 we also report to you whether in our opinion the 
information given in the directors’ report is consistent with 
the group financial statements the information given in 
the directors’ report includes that specific information that 
is cross‑ referred from the business review section of the 
directors’ report
in addition we report to you if in our opinion we have not 
received all the information and explanations we require for 
our audit or if information specified by law regarding directors’ 
remuneration and other transactions is not disclosed
we review whether the corporate governance statement 
reflects the company’s compliance with the nine provisions 
of the 2006 combined code specified for our review by the 
listing rules of the financial services authority and we 
report if it does not we are not required to consider whether 
the board’s statements on internal control cover all risks and 
controls or form an opinion on the effectiveness of the group’s 
corporate governance procedures or its risk and control 
procedures
we read the other information contained in the annual report 
as described in the contents section and consider whether 
it is consistent with the audited group financial statements 
the other information comprises only the directors’ report 
the chairman’s statement the unaudited part of the directors’ 
remuneration report the enhanced business review and 
the corporate governance statement we consider the 
implications for our report if we become aware of any apparent 
misstatements or material inconsistencies with the group 
financial statements our responsibilities do not extend to  
any further information outside the annual report
basis of audit opinion
we conducted our audit in accordance with international 
standards on auditing uk and ireland issued by the auditing 
practices board an audit includes examination on a test 
basis of evidence relevant to the amounts and disclosures in 
the group financial statements and the part of the directors’ 
remuneration report to be audited it also includes an 
assessment of the significant estimates and judgments made 
by the directors in the preparation of the group financial 
statements and of whether the accounting policies are 
appropriate to the group’s circumstances consistently applied 
and adequately disclosed
we planned and performed our audit so as to obtain all 
the information and explanations which we considered 
necessary in order to provide us with sufficient evidence to 
give reasonable assurance that the group financial statements 
and the part of the directors’ remuneration report to be 
audited are free from material misstatement whether caused 
by fraud or other irregularity or error in forming our opinion 
we also evaluated the overall adequacy of the presentation of 
information in the group financial statements and the part  
of the directors’ remuneration report to be audited yule catto  co plc
annual report and accounts 2008 
37
opinion
in our opinion
the group financial statements give a true and fair view in •	
accordance with ifrss as adopted by the european union 
of the state of the group’s affairs as at 31 december 2008 
and of its profit for the year then ended
the group financial statements have been properly prepared •	
in accordance with the companies act 1985 and article 4  
of the ias regulation 
the part of the directors’ remuneration report described •	
as having been audited has been properly prepared in 
accordance with the companies act 1985 and
the information given in the directors’ report is consistent •	
with the group financial statements
separate opinion in relation to ifrss
as explained in note 2 to the group financial statements 
the group in addition to complying with its legal obligation to 
comply with ifrss as adopted by the european union has 
also complied with the ifrss as issued by the international 
accounting standards board
in our opinion the group financial statements give a true and 
fair view in accordance with ifrss of the state of the group’s 
affairs as at 31 december 2008 and of its profit for the year 
then ended
deloitte llp
chartered accountants and registered auditors 
cambridge united kingdom
11 march 2009 yule catto  co plc
annual report and accounts 2008 
38
consolidated income statement
for the year ended 31 december 2008
 2008 2007
   underlying   underlying
   performance special items ifrs  performance special items ifrs
  note £’000 £’000 £’000 £’000 £’000 £’000
continuing operations 
group revenue 45 584373 – 584373 497879 – 497879 
share of joint ventures’ revenue 45 17780 – 17780 15046 – 15046 
total sales  602153 – 602153 512925 – 512925 
group revenue  584373 – 584373 497879 – 497879 
company and subsidiaries  
before special items  41577 – 41577 41567 – 41567 
operations sold or closed  
during the year 4 – 2406 2406 – 12461 12461
uk pension fund 
– past service credit 24 – – – – 10797 10797 
company and subsidiaries  41577 2406 39171 41567 1664 39903 
share of joint ventures 45 1615 – 1615 1129 – 1129 
operating profitloss 5 43192 2406 40786 42696 1664 41032 
interest payable 8 15983 – 15983 16046 – 16046
interest receivable 8 5481 – 5481 4549 – 4549 
   10502 – 10502 11497 – 11497
fair value adjustment 8 – 8615 8615 – 4447 4447 
finance costs  10502 8615 1887 11497 4447 7050
profit before taxation  32690 6209 38899 31199 2783 33982 
taxation 9 4904 – 4904 6289 – 6289
profit for the year from  
continuing operations  27786 6209 33995 24910 2783 27693 
discontinued operations 
profitloss for the year from  
discontinued operations 3 – 22568 22568 – 12229 12229
profitloss for the year  27786 28777 56563 24910 9446 15464
profit attributable to  
minority interests 26 1718 – 1718 1679 – 1679
profitloss attributable to equity  
holders of the parent 26 26068 28777 54845 23231 9446 13785
  27786 28777 56563 24910 9446 15464
earnings per share
from continuing operations
– basic 12 179p 43p 222p 160p 19p 17 9p 
– diluted 12 178p 42p 220p 159p 19p 17 8p 
from continuing and discontinued operations
– basic 12 179p 198p 377p 160p 65p 95p 
– diluted 12 178p 196p 374p 159p 65p 94p
special items
the special items are shown in more detail in note 3 yule catto  co plc
annual report and accounts 2008 
39
       2008 2007
      note £’000 £’000
non‑current assets         
goodwill     14 154027 172443  
other intangible assets     15 869 591  
property plant and equipment     16 118106 108468  
deferred tax assets     10 457 762  
investment in joint ventures     17 4948 31 77 
       278407 285441
current assets         
inventories     18 63507 65001  
trade and other receivables     19 126136 115078  
cash and cash equivalents     20 26576 108352  
derivatives at fair value     21 33887 1813
       250106 290244 
assets held for sale     22 7377 –
total current assets      257483 290244 
current liabilities         
borrowings     20 57972 133585  
trade and other payables     23 152621 148300  
current tax liability     9 44528 48948  
derivatives at fair value     21 – 26000 
       255121 356833 
liabilities directly associated with assets classified as held for sale   22 1400 – 
total current liabilities      256521 356833 
non‑current liabilities        
borrowings     20 130052 125108  
trade and other payables     23 167 460  
deferred tax liability     10 6899 6445  
post retirement benefit obligations     24 75559 41236 
       212677 173249 
net assets      66692 45603 
equity         
called up share capital     25 14566 14566  
share premium     26 33034 33034  
capital redemption reserve     26 949 949  
hedging and translation reserve     26 6252 9087  
cash flow hedging reserve     26 678 –  
retained earnings     26 2056 416
equity attributable to equity holders of the parent     57535 39878  
minority interests     26 9157 5725
total equity      66692 45603 
analysis of net borrowings         
cash and cash equivalents     20 26576 108352  
current borrowings     20 57972 133585  
non‑current borrowings     20 130052 125108
net borrowings      161448 150341  
deductadd back special items     20 25966 20490
 net borrowings underlying performance     135482 170831 
the financial statements were approved by the board of directors and authorised for issue on 11 march 2009 they are signed  
on its behalf by
a m whitfield
d c blackwood
directors
consolidated balance sheet
31 december 2008 yule catto  co plc
annual report and accounts 2008 
40
consolidated cash flow statement
for the year ended 31 december 2008
      2008  2007 
    note £’000 £’000 £’000 £’000
operating         
cash generated from operations   27  44299  49447 
 interest received    5481  4549   
 interest paid    16835  15611  
net interest paid     11354  11062
 uk corporation tax received    207  1179   
 overseas corporate tax paid    10421  11636 
total tax paid     10214  10457
net cash inflow from operating activities     22731  27928 
investing         
dividends received from joint ventures   17  816  1202 
 purchase of property plant and equipment   17707  16994   
 sale of property plant and equipment    2282  2413 
net capital expenditure and financial investment    15425  14581
 purchase of businesses   29 468  –  
 sale of businesses   28 50676  –  
net cash impact of acquisitions and disposals    50208  – 
net cash inflowoutflow from investing activities    35599  13379
          
financing         
equity dividends paid   11  14129  13689
dividends paid to minority interests   26  341  537
purchase of own shares     –  25
repayment of borrowings     33512  – 
proceeds of non‑current borrowings   30  166  174 
net cash outflow from financing activities    47816  14077
increase in cash and bank overdrafts during the year    10514  472 
comprised of         
cash and cash equivalents   30  64475  51896 
bank overdrafts   30  74989  51424
     10514  472 
reconciliation of net cash flow from operating 
activities to movement in net borrowings    
net cash inflow from operating activities     22731  27928 
add back dividends received from joint ventures  17  816  1202 
less net capital expenditure and financial investment    15425  14581
less dividends paid to minority interests  26  341  537
free cash flow before dividends     7781  14012 
    
net cash impact of acquisitions and disposals  2829  50208  – 
purchase of own shares   26  –  25
equity dividends paid   11  14129  13689
exchange movements     8511  4858
movement in net borrowings underlying performance    35349  4560 yule catto  co plc
annual report and accounts 2008 
41
consolidated statement of recognised  
income and expense
for the year ended 31 december 2008
   2008  2007 
   minority equity holders  minority equity holders
   interests  of the parent total  interests of the parent total
   £’000 £’000 £’000 £’000 £’000 £’000
actuarial gains and losses  – 39111 39111 – 21698 21698 
tax on items recognised directly in equity – 48 48 – 519 519
exchange differences  2055 16017 18072 512 1716 1204
profit for the year  1718 54845 56563 1679 13785 15464 
total recognised income for the year  3773 31703 35476 2191 33248 35439 yule catto  co plc
annual report and accounts 2008 
42
notes to the consolidated financial statements
31 december 2008
yule catto  co plc
annual report and accounts 2008 
42
1 general information
yule catto  co plc is a company incorporated in the united 
kingdom under the companies act 1985 the address of the 
registered office is given on page 23 
these financial statements are presented in pounds sterling 
because that is the currency of the primary economic 
environment in which the group operates foreign operations 
are included in accordance with the policies set out in note 2
three interpretations issued by the international financial 
reporting interpretations committee are effective for 
the current period these are ifric 11 ifrs2 group and 
treasury share transactions ifric 12 service concession 
arrangements and ifric 14 ias 19 the limit of a defined 
benefit asset minimum funding requirements and their 
interaction the adoption of these interpretations has not 
led to any changes in the group’s accounting policies
at the date of authorisation of these financial statements  
the following standards and interpretations which have not 
been applied in these financial statements were in issue but  
not yet effective 
ifrs 1 revised first‑ time adoption of ifrs
amendments to ifrs 2 vesting conditions and cancellations
ifrs 3 revised business combinations 
ifrs 8 operating segments
ifric 12 service concession arrangements
ifric 13 customer loyalty programmes
ifric 15 agreements for the construction of real estate
ifric 16 hedges of a net investment in a foreign operation
ifric 17 distributions of non‑cash assets to owners
ifric 18 transfers of assets from customers
ias 1 revised presentation of financial instruments
ias 23 revised borrowing costs 
amendments to ias 27 consolidated and separate 
financial statements
ias 32 amendedias 1 amended puttable financial 
instruments and obligations arising on liquidation
amendments to ias 39 financial instruments recognition 
and measurement eligible hedged items
amendments to ias 39 reclassification of financial assets 
effective date and transition
2 significant accounting policies
basis of accounting
the financial statements have been prepared in accordance 
with international financial reporting standards ifrss the 
financial statements have also been prepared in accordance 
with ifrss adopted by the european union and therefore the 
group financial statements comply with article 4 of the eu ias 
regulation the financial statements have been prepared on 
the historical cost basis except for the revaluation of certain 
properties and financial instruments as discussed in the 
report of the directors on page 25 the financial statements 
have been prepared on a going concern basis the principal 
accounting policies adopted are as follows
basis of consolidation
the consolidated financial statements incorporate the financial 
statements of the company and entities controlled by the 
company its subsidiaries made up to 31 december each 
year control is achieved where the company has the power 
to govern the financial and operating policies of an investee 
entity so as to obtain benefits from its activities the results 
of subsidiaries acquired or disposed of during the year are 
included in the consolidated income statement from the 
effective date of acquisition or up to the effective date of 
disposal as appropriate where necessary adjustments are 
made to the financial statements of subsidiaries to bring the 
accounting policies used into line with those used by the 
group the results of joint ventures are accounted for using 
equity accounting
minority interests in the net assets of consolidated subsidiaries 
are identified separately from the group’s equity therein 
minority interests consist of the amount of those interests 
at the date of the original business combination see below 
and the minority’s share of changes in equity since the date 
of combination subsequently any losses applicable to the 
minority interest in excess of the minority interest are allocated 
against the interests of the parent except to the extent that 
the minority has a binding obligation and is able to make an 
additional investment to cover the losses
all intra‑group transactions balances income and expenses 
are eliminated on consolidation
goodwill 
goodwill arising on consolidation represents the excess of the 
cost of acquisition over the group’s interest in the fair value of 
the identifiable assets and liabilities of a subsidiary associate 
or jointly controlled entity at the date of acquisition goodwill 
is recognised as an asset and reviewed for impairment at least 
annually any impairment is recognised immediately in profit 
or loss and is not subsequently reversed
for the purpose of impairment testing goodwill is allocated to 
each of the group’s cash‑ generating units expected to benefit 
from the synergies of the combination cash‑generating units 
to which goodwill has been allocated are tested for impairment 
annually or more frequently when there is an indication that 
the unit may be impaired if the recoverable amount of the 
cash‑generating unit is less than the carrying amount of 
the unit the impairment loss is allocated first to reduce the 
carrying amount of any goodwill allocated to the unit and then 
to the other assets of the unit pro‑rata on the basis of the 
carrying amount of each asset in the unit an impairment loss 
recognised for goodwill is not reversed in a subsequent period
on disposal of a subsidiary associate or jointly controlled 
entity the attributable amount of goodwill is included in the 
determination of the profit or loss on disposal yule catto  co plc
annual report and accounts 2008 
43
2 significant accounting policies continued
goodwill arising on acquisitions before the date of transition 
to ifrss has been retained at the previous uk gaap amounts 
subject to being tested for impairment at that date goodwill 
written off to reserves under uk gaap prior to 1998 has 
not been reinstated and is not included in determining any 
subsequent profit or loss on disposal
other intangible assets
software development and environmental licensing costs 
resulting in development of a long‑ term intangible asset are 
measured initially at cost and are amortised on a straight‑line 
basis over their estimated useful lives
an internally‑generated intangible asset arising from the 
group’s product development is recognised only if all of the 
following conditions in ias 38 are met
an asset is created that can be separately identified such  •	
as software and new processes
it is probable that the asset created will generate future •	
economic benefits and
the development cost of the asset can be measured reliably •	
no research or development costs met the criteria for required 
capitalisation under ias 38 during the year
where no internally‑generated intangible asset can be 
recognised development expenditure is recognised as an 
expense in the period in which it is incurred 
property plant and equipment
property plant and equipment is stated at cost net of 
depreciation and any provision for impairment except for 
freehold land and land grants in malaysia which are not 
depreciated the cost or valuation of property plant and 
equipment is depreciated on a straight‑ line basis over 
its expected useful life as follows
freehold buildings – 50 years 
leasehold land and buildings –  the lesser of 50 years 
and the period of the lease
plant and equipment – between 3 and 10 years
impairment of tangible and intangible assets  
excluding goodwill 
at each balance sheet date the group reviews the carrying 
amounts of its tangible and intangible assets to determine 
whether there is any indication that those assets have 
suffered an impairment loss if any such indication exists 
the recoverable amount of the asset is estimated in order to 
determine the extent of the impairment loss if any where the 
asset does not generate cash flows that are independent from 
other assets the group estimates the recoverable amount of 
the cash‑generating unit to which the asset belongs 
recoverable amount is the higher of fair value less costs to 
sell and value in use in assessing value in use the estimated 
future cash flows are discounted to their present value using a 
pre‑tax discount rate that reflects current market assessments 
of the time value of money and the risks specific to the asset 
for which the estimates of future cash flows have not been 
adjusted
if the recoverable amount of an asset or cash‑generating unit 
is estimated to be less than its carrying amount the carrying 
amount of the asset or cash‑generating unit is reduced to its 
recoverable amount an impairment loss is recognised as an 
expense immediately unless the relevant asset is carried at a 
revalued amount in which case the impairment loss is treated 
as a revaluation decrease
operating leases
operating lease payments are expensed on a straight‑ line 
basis to the income statement over the term of the relevant 
lease any benefits received as an incentive to enter into an 
operating lease are also spread on a straight‑ line basis over 
the lease term
inventories
inventories are stated at the lower of cost and net realisable 
value cost comprises direct materials and where applicable 
direct labour costs and those overheads that have been 
incurred in bringing the inventories to their present location 
and condition cost is calculated using the weighted average 
method net realisable value represents the estimated selling 
price less all estimated costs of completion and costs to be 
incurred in marketing selling and distribution provision is 
made for obsolete slow‑moving or defective items where 
appropriate
financial instruments
financial assets and financial liabilities are recognised on the 
group’s balance sheet when the group becomes a party to 
the contractual provisions of the instrument
loans and receivables
trade receivables
trade receivables are measured at initial recognition at fair 
value and are subsequently measured at amortised cost using 
the effective interest rate method appropriate allowances 
for estimated irrecoverable amounts are recognised in profit 
or loss where there is objective evidence that the asset is 
impaired 
amortised costs
bank borrowings
interest‑bearing bank loans and overdrafts are recorded at the 
proceeds received net of direct issue costs finance charges 
including premiums payable on settlement or redemption and 
direct issue costs are accounted for on an accruals basis to 
the income statement using the effective interest method and 
are added to the carrying amount of the instrument to the 
extent that they are not settled in the period in which they arise yule catto  co plc
annual report and accounts 2008 
44
notes to the consolidated financial statements continued
31 december 2008
2 significant accounting policies continued
trade payables
trade payables are measured at initial recognition at fair value 
and are subsequently measured at amortised cost using the 
effective interest rate method
fair value through the income statement
derivative financial instruments
the group uses derivative financial instruments to reduce 
exposure to foreign exchange risk and interest rate 
movements the group does not hold or issue derivative 
financial instruments for speculative purposes 
the use of financial derivatives is governed by the group’s 
policies approved by the board of directors which provide 
written principles on the use of financial derivatives as set 
out in note 21
impairment of financial assets
at each balance sheet date the group reviews the carrying 
amounts of its financial assets to determine whether there is 
any indication that those assets have suffered an impairment 
loss if any such indication exists the recoverable amount of 
the asset is estimated in order to determine the extent of the 
impairment loss if any
finance costs
finance costs of debt are recognised in the income statement 
over the term of such instruments at a constant rate on the 
carrying amount finance costs that are directly attributable  
to the construction of tangible fixed assets are capitalised  
as part of the cost of those assets in accordance with ias 23
foreign currencies 
in preparing the financial statements of the individual 
companies transactions in currencies other than the 
entity’s functional currency are recorded at the rates of 
exchange prevailing on the dates of the transactions at each 
balance sheet date monetary assets and liabilities that are 
denominated in foreign currencies are retranslated at the 
rates prevailing on the balance sheet date non‑monetary 
assets and liabilities carried at fair value that are denominated 
in foreign currencies are translated at the rates prevailing at 
the date when the fair value was determined non‑monetary 
items that are measured in terms of historical cost in a foreign 
currency are not retranslated
in order to hedge its exposure to certain foreign exchange 
risks the group enters into forward contracts and options see 
below for details of the group’s accounting policies in respect 
of such derivative financial instruments
on consolidation the assets and liabilities of the group’s 
overseas operations are translated at exchange rates prevailing 
on the balance sheet date income and expense items are 
translated at the average exchange rates for the period unless 
exchange rates fluctuate significantly exchange differences 
arising if any are classified as equity and transferred to the 
group’s translation reserve such translation differences are 
recognised as income or as expenses in the period in which 
the operation is disposed of
goodwill and fair value adjustments arising on the acquisition 
of a foreign entity are treated as assets and liabilities of the 
foreign entity and translated at the closing rate the group 
has elected to treat goodwill and fair value adjustments arising 
on acquisitions before the date of transition to ifrss as 
sterling‑denominated assets and liabilities
derivative financial instruments
the group enters into a variety of derivative financial 
instruments to manage its exposure to interest rate and 
foreign exchange rate risk including foreign exchange forward 
contracts interest rate swaps and foreign currency options
derivatives are initially recognised at fair value at the date 
a derivative contract is entered into and are subsequently 
remeasured to their fair value at each balance sheet date 
a derivative with a positive fair value is recognised as a 
financial asset whereas a derivative with a negative fair value 
is recognised as a financial liability the resulting gain or 
loss is recognised in profit or loss immediately unless the 
derivative is designated and effective as a hedging instrument 
in which event the timing of the recognition in profit or loss 
depends on the nature of the hedge relationship the group 
designates certain derivatives as either hedges of highly 
probable forecast transactions or hedges of foreign currency 
risk of firm commitments cash flow hedges or hedges of 
net investments in foreign operations
hedge accounting 
the group designates certain hedging instruments which 
include derivatives embedded derivatives and non‑derivatives 
in respect of foreign currency risk as either cash flow hedges 
or hedges of net investments in foreign operations hedges of 
foreign exchange risk on firm commitments are accounted for 
as cash flow hedges
at the inception of the hedge relationship the entity documents 
the relationship between the hedging instrument and the 
hedged item along with its risk management objectives 
and its strategy for undertaking various hedge transactions 
furthermore at the inception of the hedge and on an ongoing 
basis the group documents whether the hedging instrument 
that is used in a hedging relationship is highly effective in 
offsetting changes in cash flows of the hedged item
cash flow hedge
the effective portion of changes in the fair value of derivatives 
that are designated and qualify as cash flow hedges are 
deferred in equity the gain or loss relating to the ineffective 
portion is recognised immediately in profit or loss and is 
included in the ‘other gains and losses’ line of the income 
statement
amounts deferred in equity are recycled in profit or loss in the 
periods when the hedged item is recognised in profit or loss 
in the same line of the income statement as the recognised 
hedged item however when the forecast transaction that 
is hedged results in the recognition of a non‑financial asset 
or a non‑financial liability the gains and losses previously 
deferred in equity are transferred from equity and included in 
the initial measurement of the cost of the non‑financial asset 
or non‑financial liability yule catto  co plc
annual report and accounts 2008 
45
hedge accounting is discontinued when the group revokes 
the hedging relationship the hedging instrument expires or 
is sold terminated or exercised or no longer qualifies for 
hedge accounting any cumulative gain or loss deferred in 
equity at that time remains in equity and is recognised when 
the forecast transaction is ultimately recognised in profit or 
loss when a forecast transaction is no longer expected to 
occur the cumulative gain or loss that was deferred in equity 
is recognised immediately in profit or loss
hedges of net investments in foreign operations
hedges of net investments in foreign operations are accounted 
for similarly to cash flow hedges any gain or loss on the 
hedging instrument relating to the effective portion of the 
hedge is recognised in equity in the foreign currency translation 
reserve the gain or loss relating to the ineffective portion  
is recognised immediately in profit or loss and is included in 
the ‘other gains and losses’ line of the income statement
taxation
the tax expense represents the sum of the tax currently 
payable and deferred tax
the tax currently payable is based on taxable profit for the year 
taxable profit differs from net profit as reported in the income 
statement because it excludes items of income or expense that 
are taxable or deductible in other years and it further excludes 
items that are never taxable or deductible the group’s liability 
for current tax is calculated using tax rates that have been 
enacted or substantially enacted by the balance sheet date
deferred tax is the tax expected to be payable or recoverable 
on differences between the carrying amounts of assets and 
liabilities in the financial statements and the corresponding 
tax bases used in the computation of taxable profit and 
is accounted for using the balance sheet liability method 
deferred tax liabilities are generally recognised for all taxable 
temporary differences and deferred tax assets are recognised 
to the extent that it is probable that taxable profits will be 
available against which deductible temporary differences  
can be utilised 
deferred tax liabilities are recognised for taxable temporary 
differences arising on investments in subsidiaries and 
associates and interests in joint ventures except where the 
group is able to control the reversal of the temporary difference 
and it is probable that the temporary difference will not reverse 
in the foreseeable future
the carrying amount of deferred tax assets is reviewed  
at each balance sheet date and reduced to the extent that 
it is no longer probable that sufficient taxable profits will be 
available to allow all or part of the asset to be recovered
deferred tax is calculated at the tax rates that are expected 
to apply in the period when the liability is settled or the asset 
is realised deferred tax is charged or credited in the income 
statement except when it relates to items charged or credited 
directly to equity in which case the deferred tax is also dealt 
with in equity
retirement benefit costs
the costs of defined benefit contributions to the group’s 
pension schemes and of augmenting existing pensions are 
charged to the income statement on a systematic basis over 
the expected period of benefits from employees’ service
payments to defined contribution retirement benefit schemes 
are charged as an expense as they fall due
actuarial gains on the defined benefit schemes are recognised 
in full in each period in which they occur they are recognised 
outside of profit or loss and are presented in the statement of 
recognised income and expense
the uk defined benefit scheme is funded with the assets 
of the scheme held separately from those of the group in 
separate trustee‑administered funds 
for the german schemes the assets are included within the 
assets of the respective companies as permitted under local 
laws the assets of the other overseas schemes are held 
separately from those of the group
provisions
provisions for warranty costs are recognised at the date of sale 
of the relevant products at the directors’ best estimate of the 
expenditure required to settle the group’s liability
provisions for restructuring costs are recognised when the 
group has a detailed formal plan for the restructuring that has 
been communicated to affected parties
revenue recognition 
revenue is measured at the fair value of the consideration 
received or receivable and represents amounts receivable for 
goods and services provided in the normal course of business 
net of discounts vat and other sales‑related taxes
sales of goods are recognised when goods are delivered and 
title has passed where delivery is defined in accordance with 
incoterms 2000
share‑ based payments
the group has applied the requirements of ifrs 2 
share‑based payments in accordance with the transitional 
provisions ifrs 2 has been applied to all grants of equity 
instruments after 7 november 2002 that were unvested as 
of 1 january 2006
the group issues equity‑settled share‑based payments to 
certain employees equity‑settled share‑based payments 
are measured at fair value at the date of grant the fair value 
determined at the grant date of the equity‑settled share‑based 
payments is expensed on a straight‑line basis over the vesting 
period based on the group’s estimate of shares that will 
eventually vest yule catto  co plc
annual report and accounts 2008 
46
notes to the consolidated financial statements continued
31 december 2008
2 significant accounting policies continued
definitions
total sales
total sales represent the total of revenue from yule catto  
co plc its subsidiaries and its share of the revenue of joint 
ventures
operating profit
operating profit represents profit before financing costs  
and taxation
ebitda
ebitda is calculated as operating profit before depreciation 
amortisation and non‑recurring items
non‑recurring items
non‑recurring items includes those items that are not directly 
or indirectly associated with the group’s trading performance 
which need to be separately disclosed in order to enable 
improved understanding of the accounts by users
non‑recurring items are defined as
profit or loss impact arising from the sale or closure  •	
of an operation
impairment of non‑current assets and •	
other non‑operating or one‑off items •	
special items
the following are disclosed separately in note 3 as special 
items in order to provide a clearer indication of the group’s 
underlying performance
non‑recurring items •	
mark to market adjustments in respect of cross currency  •	
and interest rate derivatives used for hedging purposes 
where ias 39 hedge accounting is not applied and
revaluation of us dollar loan notes from the rate of the  •	
related cross currency swaps to the year end rate
net borrowings
net borrowings represents cash and cash equivalents together 
with short‑ and long‑ term borrowings as adjusted for the effect 
of related derivative instruments irrespective of whether they 
qualify for hedge accounting 
critical accounting judgements and key sources of 
estimation uncertainty
in the process of applying the group’s accounting policies 
which are described above management has made the 
following judgements that have the most significant effect on 
the amounts to be recognised in the financial statements apart 
from those involving estimations which are dealt with below
impairment of goodwill 
determining whether goodwill is impaired requires an 
estimation of the value in use of the cash‑generating units to 
which goodwill has been allocated the value in use calculation 
requires the entity to estimate the future cash flows expected 
to arise from the cash‑generating unit and a suitable discount 
rate in order to calculate present value
post retirement benefit obligations
included in the actuaries’ calculation of the post retirement 
benefit obligations are a number of assumptions these are 
shown in detail in note 24 
current tax liability
when calculating the current tax liability an appropriate 
estimate has been made regarding the outstanding items in 
respect of previous years with various tax authorities for which 
the outcome of discussions is uncertain
closure of manufacturing sites
included in costs to close the manufacturing sites are 
estimates for redundancy decontamination and dismantling 
costs these estimates are based on experience gained in 
previous closures yule catto  co plc
annual report and accounts 2008 
47
3 special items
special items
the special items are made up as follows 
       special items special items
       2008 2007
       £’000 £’000
continuing operations
operating loss       
loss arising from the sale or closure of operations see note 7    2406 12461
uk pension fund – past service credit      – 10797
       2406 1664
finance costs
fair value adjustment see note 8      8615 4447
profit for the year from continuing operations     6209 2783
discontinued operations
total sales 
revenue of operations sold or closed during the year     52900 66167
operating profitloss of discontinued operations 
operating profit of operations sold or closed during the year    4113 3318
profitloss arising from the sale or closure of operations see note 7    20067 15776
       24180 12458
taxation 
taxation on operating profitloss of operations sold or closed during the year   884 229
taxation on profitloss arising from the sale or closure of operations    728 –
profitloss for the year from discontinued operations     22568 12229
4 segmental analysis 
primary format
   total sales operating profit
   underlying special  underlying special
   performance items ifrs  performance items ifrs
2008  £’000 £’000 £’000 £’000 £’000 £’000
analysis by activity
continuing activity
polymer chemicals  489350 – 489350 40829 – 40829
share of polymer joint ventures  17780 – 17780 1615 – 1615
   507130 – 507130 42444 – 42444
pharma chemicals  63891 – 63891 5265 1756 3509
impact chemicals  31132 – 31132 1634 650 984
total sales  602153 – 602153
divisional operating profit     49343 2406 46937
unallocated corporate expenses     6151 – 6151
operating profit     43192 2406 40786 yule catto  co plc
annual report and accounts 2008 
48
notes to the consolidated financial statements continued
31 december 2008
4 segmental analysis continued
   total sales operating profit
   underlying special  underlying special
   performance items ifrs  performance items ifrs
2007  £’000 £’000 £’000 £’000 £’000 £’000
analysis by activity
continuing activity
polymer chemicals  410175 – 410175 40028 – 40028
share of polymer joint ventures  15046 – 15046 1129 – 1129
   425221 – 425221 41157 – 41157
pharma chemicals  62235 – 62235 7 351 12461 5110
impact chemicals  25469 – 25469 221 – 221
total sales  512925 – 512925
divisional operating profit     48287 12461 35826
unallocated corporate expenses     5591 10797 5206
operating profit     42696 1664 41032
special items
       unallocated 
     pharma impact corporate
     chemicals chemicals expenses total
2008    £’000 £’000 £’000 £’000
loss arising from the sale or closure of operations   1756 650 – 2406
       unallocated 
     pharma impact corporate
     chemicals chemicals expenses total
2007    £’000 £’000 £’000 £’000
loss arising from the sale or closure of operations   12461 – – 12461
uk pension fund – past service credit    – – 10797 10797
    12461 – 10797 1664
        depreciation
     total total capital and
     assets liabilities expenditure amortisation
2008    £’000 £’000 £’000 £’000
analysis by activity   
continuing activity
polymer chemicals    215098 152764 14815 9372
pharma chemicals    75324 31004 4823 9658
impact chemicals    20387 21558 1327 3213
     310809 205326 20965 22243
holding companies    39604 75848 147 4679
    350413 281174 21112 17564
share of polymer joint ventures    11236 6362
goodwill see note 14    154027
net borrowings     161448
     515676 448984
net assets     66692 yule catto  co plc
annual report and accounts 2008 
49
4 segmental analysis continued
        depreciation
     total total capital and
     assets liabilities expenditure amortisation
2007    £’000 £’000 £’000 £’000
analysis by activity
continuing activity
polymer chemicals    175479 110894 11758 7 111
pharma chemicals    61525 25242 3289 5205
impact chemicals    54121 44605 3511 3079
     291125 180741 18558 15395
holding companies    664 90652 129 618
    291789 271393 18687 16013
share of polymer joint ventures    7 338 4233
goodwill see note 14    172443
net borrowings     150341
net assets    471570 425967
     45603
secondary format
    total sales segment net assets capital expenditure
   2008 2007 2008 2007 2008 2007
   £’000 £’000 £’000 £’000 £’000 £’000
analysis by region of operation
united kingdom  182043 157693 102209 61329 2646 4617
other europe  209007 186213 104044 34668 5562 7029
asia  178327 134596 62775 40955 10750 6489
rest of world  32776 34423 9503 9207 2154 552
  602153 512925 74113 23501 21112 18687
goodwill    154027 172443  
net borrowings    161448 150341
net assets    66692 45603
       2008 2007
       £’000 £’000
analysis of total sales by destination 
united kingdom      84132 83001
other europe      217680 200312
asia      181451 138388
africa and middle east      68898 53200
rest of world      49992 38024
      602153 512925
inter‑segmental sales
in addition to the amounts included above inter‑ segmental sales of £2743000 2007 £2837 000 were made as set out below 
these sales were eliminated on consolidation 
     polymer pharma impact
     chemicals  chemicals  chemicals total
2008    £’000 £’000 £’000 £’000
polymer chemicals    – – – –
pharma chemicals    – – 551 551
impact chemicals    – 2192 – 2192
total    – 2192 551 2743
     polymer pharma impact
     chemicals  chemicals  chemicals total
2007    £’000 £’000 £’000 £’000
polymer chemicals    – – – –
pharma chemicals    – – 673 673
impact chemicals    – 2164 – 2164
total    – 2164 673 2837 yule catto  co plc
annual report and accounts 2008 
50
notes to the consolidated financial statements continued
31 december 2008
5 operating profit
   company and joint  company and joint
   subsidiaries  ventures total subsidiaries ventures total
   2008 2008 2008 2007 2007 2007
   £’000 £’000 £’000 £’000 £’000 £’000
total sales  584373 17780 602153 497 879 15046 512925
cost of sales  471626 14438 486064 382589 12381 394970
gross profit  112747 3342 116089 115290 2665 11 7 955
distribution costs  45075 1013 46088 43299 784 44083
administrative expenses  26095 714 26809 19627 752 20379
special items  2406 – 2406 12461 – 12461
operating profit  39171 1615 40786 39903 1 129 41032
       2008 2007
       £’000 £’000
operating profit is stated after chargingcrediting the following 
depreciation      15336 13299
amortisation      102 247
hire of plant and equipment      1570 1649
other lease rentals      2790 2643
research and development expenditure      10172 7302
loss arising from the sale or closure of operations     2406 12461
uk pension fund – past service credit      – 10797
6 auditors’ remuneration
       2008 2007
       £’000 £’000
fees payable to the company’s auditors for
 – audit of the company’s annual accounts     7 7
fees payable to the company’s auditors and their associates for
 – audit of the company’s subsidiaries pursuant to legislation    478 478
total audit fees      485 485
tax services      55 56
other services      34 29
total non‑audit fees      89 85
the other services provided by the group auditors relate to assistance given in grant applications and sundry projects
7 profit or loss arising from the sale or closure of operations
      2008  2007
     cash fixed asset  
     costs write back total total
     £’000 £’000 £’000 £’000
profit or loss arising from the sale or closure of operations
continuing operations
closure of uquifa’s italian manufacturing site   1756 – 1756 12461
restructuring of william blythe limited    650 – 650 –
     2406 – 2406 12461
discontinued operations
closure of holliday pigments uk manufacturing site   450 – 450 7616
closure of james robinson’s german manufacturing site  2354 2169 4523 9919
sale of huddersfield site    – – – 1759 
sale of james robinson limited and james robinson gmbh  5637 – 5637 –
sale of james robinson india pvt ltd    362 – 362 –
sale of holliday pigments sa and holliday france sa   8265 – 8265 –
sale of holliday chemical españa sa    409 – 409 –
sale of pfw aroma chemicals bv    774 – 774 –
sale of hull site    1351 – 1351 –
sale of dieburg site    568 – 568 –
     17898 2169 20067 15776
    15492 2169 17661 28237
in each case assets retained that cannot be sold are written off to the extent that workers are not redeployed termination terms 
are agreed yule catto  co plc
annual report and accounts 2008 
51
8 finance costs
       2008 2007
       £’000 £’000
interest payable on bank loans and overdrafts     11219 11316
interest payable on other loans      4764 4730
       15983 16046
less interest receivable      5481 4549
net interest payable      10502 11497
fair value adjustment      8615 4447
total finance costs      1887 7050
the fair value adjustment is the mark to market adjustment in respect of cross currency and interest rate derivatives used for 
hedging purposes where ias 39 hedge accounting is not applied
9 current taxation
       2008 2007
       £’000 £’000
continuing operations
current tax
uk corporation tax      103 1763
overseas taxation      4278 8399
       4175 6636
deferred tax
origination and reversal of temporary differences     729 347
total tax on profit before taxation      4904 6289
discontinued operations
tax on special items – uk      – 178
tax on special items – overseas      1612 407
tax charge for the year on discontinued operations     1612 229
uk corporation tax is calculated at 285 2007 30 of the estimated assessable profit for the year taxation for other 
jurisdictions is calculated at the rates prevailing in the respective jurisdictions
       2008 2007
       £’000 £’000
tax expense
continuing operations      4904 6289
discontinued operations      1612 229
total tax expense      6516 6060
reconciliation of tax expense to profit before taxation
the differences between the total tax expense shown above and the amount calculated by applying the standard rate of 
uk corporation tax to the profit before tax is as follows
       2008 2007
       £’000 £’000
profit before taxation – continuing operations     38899 33982
profit before taxation – discontinued operations     24180 12458
profit before taxation      63079 21524
tax on profit before taxation at standard uk corporation tax rate of 285 2007 30  17978 6457
effects of
expenses not deductible for tax purposes     1409 503
tax incentives and items not subject to tax     12061 3089
losses not recognised less utilisation of losses not previously recognised   639 1691
lowerhigher tax rates on overseas earnings     171 837
tax effect on share of results of joint ventures     – 339
tax charge for year      6516 6060 yule catto  co plc
annual report and accounts 2008 
52
notes to the consolidated financial statements continued
31 december 2008
9 current taxation continued
tax charges to equity
       2008 2007
       £’000 £’000
current tax charge on items recognised directly in equity    – –
deferred tax charge on items recognised directly in equity    48 519
      48 519
current tax liabilities
       2008 2007
       £’000 £’000
current tax liabilities      44528 48948
10 deferred taxation
deferred tax assets have been recognised in respect of all tax losses and other temporary differences giving rise to deferred  
tax assets to the extent that it is probable that these assets will be recovered no deferred tax is recognised on the unremitted 
earnings of overseas subsidiaries and joint ventures as the earnings are continually reinvested by the group no tax is expected  
to be payable on them in the foreseeable future
the movements in deferred tax assets and liabilities prior to offset are shown below
deferred tax liabilities
     accelerated tax
      depreciation other total
2008     £’000 £’000 £’000
at 1 january     5209 1236 6445
charge to income statement     36 436 472
disposal of subsidiaries     2142 42 2100 
exchange adjustment     1599 483 2082
at 31 december     4702 2197 6899
deferred tax assets
      pensions other total
2008     £’000 £’000 £’000
at 1 january     762 – 762 
charged to income statement     257 – 257
charged through retained earnings     48 – 48
at 31 december     457 – 457
all of the deferred tax assets were available for offset against deferred tax liabilities and hence the net deferred tax provision  
at 31 december 2008 is as follows
net deferred tax liability
        total
        £’000
at 31 december 2008       6442
at 31 december 2007       5683
deferred tax asset not recognised
deferred tax has not been recognised where it has been assumed that the deferred tax asset is not recoverable the amounts  
of deferred tax not recognised at the balance sheet dates are as follows
       2008 2007
       £’000 £’000
uk pension liability      16920 9419
tax losses      957 3463
accelerated capital allowances      10139 11 183
other timing differences      2434 2731
      30450 26796
in march 2007 the uk government announced that it would introduce legislation that would reduce the corporation tax rate 
to 28 with effect from 1 april 2008 this legislation was substantively enacted on 26 june 2007 as a consequence the 
deferred tax balances are now stated at 28 of the temporary differences in addition the blended tax rate for the year ended 
31 december 2008 has reduced to 285 yule catto  co plc
annual report and accounts 2008 
53
10 deferred taxation continued
deferred tax on unremitted overseas earnings
the estimated deferred tax relating to the retained profits held within subsidiary group companies and not yet remitted excluding 
any mitigation through use of loss relief double taxation credits and other reliefs is as follows
       2008 2007
       £’000 £’000
deferred tax not recognised      87548 66965
at the balance sheet date the aggregate amount of temporary differences associated with undistributed earnings of subsidiaries 
associates and joint ventures was £882 million 2007 £673 million calculation of the potential deferred tax liability has not been 
undertaken as the group is in a position to control the timing of the reversal of the temporary differences and it is probable that 
the differences will not reverse in the foreseeable future if the temporary differences were to reverse in the future it is probable 
that the majority of the potential tax liability would be covered by tax credits in respect of tax paid locally
11 dividends
       2008 2007
       £’000 £’000
ordinary
 – prior year final of 57 pence per share 2006 55 pence    8303 8011
 – interim of 40 pence per share 2007 39 pence     5826 5678
      14129 13689
 – proposed final of nil pence per share 2007 57 pence    – 8303
12 earnings per share
    2008 2007
   underlying special  underlying special
   performance items ifrs  performance items ifrs
   £’000 £’000 £’000 £’000 £’000 £’000
from continuing operations
earnings profit attributable to  
equity holders of the parent  26068 6209 32277 23231 2783 26014
earnings per share  179p 43p 222p 160p 19p 17 9p
diluted earnings per share  178p 42p 220p 159p 19p 17 8p
from continuing and discontinued operations
earnings profit attributable to  
equity holders of the parent  26068 28777 54845 23231 9446 13785
earnings per share  179p 198p 377p 160p 65p 95p
diluted earnings per share  178p 196p 374p 159p 65p 94p
earnings per share are calculated using the weighted average number of shares in issue during the year of 145645000 
2007 145639000
diluted earnings per share are calculated using the weighted average number of shares in issue in the year as adjusted for dilutive 
share options of 146653000 2007 146355000
13 employees
       2008 2007
       number number
the average monthly number of employees during the year by activity was
polymer chemicals      1497 1442
pharma chemicals      458 473
impact chemicals      438 604
holding companies      41 45
       2434 2564
share of joint ventures      51 108
      2485 2672 yule catto  co plc
annual report and accounts 2008 
54
notes to the consolidated financial statements continued
31 december 2008
13 employees continued
       2008 2007
       £’000 £’000
the aggregate remuneration of all group employees comprised
wages and salaries      57990 57646
social security costs      9948 9642
post retirement benefit obligations      5225 3472
      73163 70760
14 goodwill
       2008 2007
       £’000 £’000
cost
at 1 january      309371 309371
recognised on acquisition of a subsidiary     412 –
derecognised on disposal of a subsidiary     45844 –
at 31 december      263939 309371
accumulated impairment losses
at 1 january      136928 136928
derecognised on disposal of a subsidiary     27016 –
at 31 december      109912 136928
net book value
at 31 december      154027 172443
the group tests goodwill annually for impairment or more frequently if there are indications that goodwill might be impaired
cash‑ generating units ‘cgus’ comprise primarily acquired entities monitored at business unit level the exception is where 
management monitors a cgu across similar businesses as a whole or components of businesses largely independent of other  
parts of those businesses
the allocation of the carrying value of goodwill is represented below
    31 december 31 december   
    2006 2007 31 december 2008
    net net recognised derecognised net
    book book on acquisition on disposal of book
    value value of a subsidiary a subsidiary value
polymer chemicals
synthomer ltd and harlow chemical company ltd  70521 70521 – – 70521
synthomer gmbh   13120 13120 – – 13120
synthomer hasselt bv   3089 3089 – – 3089
synthomer vietnam co ltd   – – 412 – 412
    86730 86730 412 – 87142
pharma chemicals
uquifa spain sa   61713 61713 – – 61713
uquifa mexico sacv   5172 5172 – – 5172
    66885 66885 – – 66885
impact chemicals
holliday chemical españa sa   97 97 – 97 –
holliday france sa   136 136 – 136 –
holliday pigments ltd and sa   14977 14977 – 14977 –
james robinson gmbh   3382 3382 – 3382 –
other   236 236 – 236 –
    18828 18828 – 18828 –
total   172443 172443 412 18828 154027 yule catto  co plc
annual report and accounts 2008 
55
14 goodwill continued
in compiling the above table the recoverable amounts for the cgus are determined from value in use calculations based upon 
discounted cash flows the key assumptions for the discounted cash flow calculations are those regarding the discount rate 
profit and growth rate management estimates pre‑tax discount rates that reflect current market assessments of the time value 
of money and the risks specific to each cgu a discount rate of 90 has been used the profit used in the cash flows for the 
first five years is derived from management forecasts for years 6 to 10 a growth rate is applied the profit for year 10 is then 
assumed to apply without further growth into perpetuity growth rates of between 40 and 50 have been used representing 
management’s best estimate of each cgus circumstances and these do not exceed average long‑ term growth rates for the 
markets concerned
15 other intangible assets
expenditure on research activities is recognised as an expense in the period in which it is incurred
no development expenditure met the requirements to be recognised as an internally generated intangible asset therefore all 
development costs in the period were expensed
       environmental 
      software licences total
      £’000 £’000 £’000
cost
at 1 january 2008     6104 215 6319
exchange adjustments     1024 – 1024
additions     579 – 579
disposals     1544 – 1544
at 31 december 2008     6163 215 6378
accumulated amortisation and impairment
at 1 january 2008     5513 215 5728
exchange adjustments     983 – 983
amortisation charge for the year     102 – 102
disposals     1304 – 1304
at 31 december 2008     5294 215 5509
net book value
at 31 december 2008     869 – 869
       environmental 
      software licences total
      £’000 £’000 £’000
cost
at 1 january 2007     6035 215 6250
exchange adjustments     280 – 280
additions     349 – 349
at 31 december 2007     6104 215 6319
accumulated amortisation and impairment
at 1 january 2007     5596 215 5811
exchange adjustments     330 – 330
amortisation charge for the year     247 – 247
at 31 december 2007     5513 215 5728
net book value
at 31 december 2007     591 – 591 yule catto  co plc
annual report and accounts 2008 
56
notes to the consolidated financial statements continued
31 december 2008
16 property plant and equipment
     land and buildings
     leaseholds plant and
    freeholds long short equipment total
    £’000 £’000 £’000 £’000 £’000
cost 
at 1 january 2008   53305 4598 1534 313257 372694
exchange adjustments   17260 18 1370 52797 71445
additions   331 102 995 19105 20533
write‑ back of assets previously impaired   1939 – – 396 2335
disposals   6609 143 – 45356 52108
reclassified as held for sale   4249 – – 8158 12407
at 31 december 2008   61977 4575 3899 332041 402492
accumulated depreciation and impairment
at 1 january 2008   22665 2100 104 239357 264226
exchange adjustments   3081 2 140 43395 46618
depreciation charge for the year   1198 125 182 15957 17462
on assets previously impaired   – – – 166 166
disposals   2306 10 – 33665 35981
on assets reclassified as held for sale   914 – – 7 191 8105
at 31 december 2008   23724 2217 426 258019 284386
net book value
at 31 december 2008   38253 2358 3473 74022 118106
     land and buildings
     leaseholds plant and 
    freeholds long short equipment total
    £’000 £’000 £’000 £’000 £’000
cost
at 1 january 2007   60185 4818 809 343428 409240
exchange adjustments   2944 16 166 16658 19784
additions   940 20 595 16783 18338
assets written off on closure of business   10660 – – 61947 72607
disposals   104 256 36 1665 2061
at 31 december 2007   53305 4598 1534 313257 372694
accumulated depreciation and impairment
at 1 january 2007   27 198 1987 40 269848 299073
exchange adjustments   1306 2 18 12144 13470
depreciation charge for the year   1265 125 80 14296 15766
assets written off on closure of business   7 093 – – 55335 62428
disposals   11 14 34 1596 1655
at 31 december 2007   22665 2100 104 239357 264226
net book value
at 31 december 2007   30640 2498 1430 73900 108468
freehold land amounting to £9357 000 2007 £9357 000 has not been depreciated
of the depreciation charge for the year £2126000 2007 £2467 000 relates to discontinued operations yule catto  co plc
annual report and accounts 2008 
57
17 investment in joint ventures
     2008 2008 2007 2007
     £’000 £’000 £’000 £’000
at 1 january
share of non‑current assets     975  1012
share of current assets     6439  6516
share of current liabilities     4237  4228
      3177  3300
share of income    17780  15046
share of expenses    16113  13806
     1667  1240
tax    52  111
dividends paid during the year    816   1202
exchange adjustments    972  50
retained profitloss    1771  123
at 31 december
share of non‑current assets     1091  975
share of current assets     10219  6439
share of current liabilities     6362  4237
      4948  31 77
there are no significant contingent liabilities to which the group is exposed nor does the group have any significant contingent 
liabilities in relation to its interest in the joint ventures
a list of principal subsidiary undertakings and joint ventures is given on page 81
18 inventories
       2008 2007
       £’000 £’000
raw materials and consumables      27584 22457
work in progress      1677 4513
finished goods      34246 38031
      63507 65001
the value of stock written off during the year was £1780000 2007 £1228000
there is no material difference between the balance sheet value of inventories and their replacement cost
19 trade and other receivables
       2008 2007
       £’000 £’000
trade receivables      108140 102169
amounts owed by joint ventures      390 44
other receivables      11522 9557
prepayments and accrued income      6084 3308
      126136 115078 
the directors consider that the carrying amount of trade and other receivables approximates to their fair value
credit risk
amounts presented in the balance sheet are net of allowances for doubtful receivables estimated by the group’s management  
based on prior experience and their assessment of the current economic environment the group has no significant concentration  
of credit risk with exposure spread over a large number of customers 
before accepting a new customer the group uses appropriate procedures to assess the potential customer’s credit quality 
in order to set a credit limit yule catto  co plc
annual report and accounts 2008 
58
notes to the consolidated financial statements continued
31 december 2008
19 trade and other receivables continued
ageing and other receivables
       2008 2007
       £’000 £’000
not yet due      88290 86262
0 – 60 days overdue      18793 15353
61 – 120 days overdue      2356 1287
over 120 days due      1423 1042
       110862 103944
less provision for impairment      2722 1775
       108140 102169
provision for impairment of receivables
       2008 2007
       £’000 £’000
at 1 january      1775 1949
exchange adjustments      320 80
chargecredit for the year      906 12
amounts written off as uncollectible      263 233
amounts recovered previously written off     16 9
at 31 december      2722 1775
the provision is predominantly against trade receivables more than 61 days overdue
20 cash and borrowings
cash pooling
the group runs notional pooling facilities in a number of countries principally the uk the structure facilitates interest and balance 
compensation of cash and bank overdrafts this notional pooling does not meet the strict set‑off rules under ifrs and as a result 
the cash and bank overdraft balances must be reported ‘gross’ on the balance sheet
the table below shows the impact of netting the cash and overdraft balances in each of the pooled facilities it is the opinion 
of the directors that this treatment reflects the commercial reality of the group’s position with its banks
 2008 2007
      bank loans  bank loans
      and  and
     cash overdrafts cash overdrafts
     £’000 £’000 £’000 £’000
as disclosed under ifrs    26576 20844 108352 104623
notional pooling adjustment    6986 6986 82646 82646
underlying position    19590 13858 25706 21977
       2008 2007
       £’000 £’000
current borrowings
bank loans
bank loans and overdrafts      20844 104623
other loans
136000000 766 guaranteed senior unsecured notes due 8 september 2010   32168 24013
£15000000 699 guaranteed senior unsecured notes due 8 september 2010   5000 5000
       58012 133636
less capitalised costs      40 51
      57972 133585  yule catto  co plc
annual report and accounts 2008 
59
20 cash and borrowings continued
       2008 2007
       £’000 £’000
non‑current borrowings
bank loans
unsecured £60 million revolving credit facility cancelled 24 december 2008   na –
unsecured £30 million revolving credit facility expiring 2011    – na
other loans
136000000 766 guaranteed senior unsecured notes due 8 september 2010   32168 48025
£15000000 699 guaranteed senior unsecured notes due 8 september 2010   5000 10000
43000000 555 guaranteed senior unsecured notes due 2 september 2012   29698 21529
70000000 578 guaranteed senior unsecured notes due 2 september 2014   48346 35048
22000000 598 guaranteed senior unsecured notes due 2 september 2016   15195 11015
       130407 125617
less capitalised costs      355 509
      130052 125108 
 these notes are repayable in two equal tranches on 8 september 2009 and 2010
bank loans are denominated in a number of currencies and bear interest based on libor or foreign equivalents or government 
bond rates appropriate to the country in which the borrowing is incurred 
at 31 december 2008 the group had available £30 million 2006 £60 million of undrawn committed borrowing facilities in respect 
of which all conditions precedent had been met
the directors calculate the carrying value of the group’s borrowings as follows
analysis of borrowings at carrying value by currency
    sterling us dollar euro other total
    £’000 £’000 £’000 £’000 £’000
31 december 2008
 bank loans and overdrafts   7908 4632 8255 49 20844
 loan notes   10000 157575 – – 167575
 capitalised costs   395 – – – 395
    17513 162207 8255 49 188024
cash and cash equivalents       26576
net borrowings       161448
deduct special item       25966
net borrowings underlying performance      135482
31 december 2007
 bank loans and overdrafts   44780 2638 55517 1688 104623
 loan notes   15000 139630 – – 154630
 capitalised costs   560 – – – 560
    59220 142268 55517 1688 258693
cash and cash equivalents       108352
net borrowings       150341
add back special item       20490
net borrowings underlying performance      170831
cash and cash equivalents comprise cash at bank and other short‑ term highly liquid investments with a maturity of three months  
or less
the special item represents the revaluation of us dollar loan notes from the rate of the related cross currency swaps to the year 
end rate together with the transitional adjustment required to reflect movements in fair value caused by variations in interest rates 
and subsequent amortisation thereof to the extent that these constituted effective hedges prior to the adoption of ifrs yule catto  co plc
annual report and accounts 2008 
60
notes to the consolidated financial statements continued
31 december 2008
21 financial instruments
the group’s treasury function operates procedures designed to reduce or eliminate financial risk and ensure that funds are available 
for current and future needs the policies are approved by the board and the use of financial instruments is strictly controlled 
the group manages its capital to ensure that entities in the group will be able to continue as going concerns while maximising the 
return to stakeholders through the optimisation of the debt and equity balance the capital structure of the group consists of debt 
which includes the cash and borrowings disclosed in note 20 and equity attributable to equity holders of the parent comprising 
issued capital reserves and retained earnings as disclosed in note 26
the group’s principal financial instruments comprise borrowings some cash and liquid resources and various items such as 
trade debtors and trade creditors that arise directly from its operations the group also uses interest rate swaps currency swaps 
and forward foreign currency contracts to manage the interest rate and currency risks arising from the group’s operations and its 
sources of finance
it is and has been throughout the period under review the group’s policy that no trading in financial instruments shall be 
undertaken
set out below is a comparison by category of book values and fair values of the group’s financial assets and liabilities
 carrying values fair values
 at 31 december  at 31 december
     2008 2007 2008 2007
     £’000 £’000 £’000 £’000
fair value of financial assets
trade and other receivables excluding prepayments   120052 111770 120052 111770
cash and cash equivalents    26576 108352 26576 108352
derivatives at fair value    33887 1813 33887 1813
     180515 221935 180515 221935
fair value of financial liabilities
loan notes    167180 154070 124225 1 74741
bank loans and overdrafts    20844 104623 20844 104623
derivatives at fair value    – 26000 – 26000
trade and other payables    152788 148760 152788 148760
    340812 433453 297857 454124
fair values have been obtained from the relevant institutions where appropriate where market values are not available fair values  
of financial assets and financial liabilities have been calculated by discounting expected future cash flow at prevailing interest rates 
and by applying year end exchange rates the carrying amount of short‑ term borrowings approximates to book value
the main risks arising from the group’s financial instruments are market risk and liquidity risk the board reviews and agrees  
policies for managing each of these risks and they are summarised below together with related disclosure required by ifrs
market risk
the group’s main exposure to market risk is in the form of interest rate risk and foreign currency risk the policies adopted 
to address these risks are as follows
interest rate risk
the group finances its operations through a mixture of retained profits loan notes and bank borrowings the group borrows at  
both fixed and floating rates of interest and uses interest rate swaps to generate the desired interest profile in order to manage the 
group’s exposure to interest rate fluctuations
foreign currency risk
the group uses currency borrowings forward contracts and currency swaps to hedge overseas net assets which are 
predominantly denominated in euros profit translation exposures are not hedged
the group hedges currency transaction exposures at the point of confirmed order using forward foreign exchange contracts the 
group’s policy is where practicable to hedge all exposures on monetary assets and liabilities consequently there are no material 
currency exposures to disclose 2007 none
impact on income statement
changes in the fair value of derivative contracts amounting to £8614461 have been credited to the income statement in the year 
2007 credit of £4446883 these changes are shown separately as a special item in the consolidated income statement yule catto  co plc
annual report and accounts 2008 
61
21 financial instruments continued
hedge accounting
the group has a number of cross currency and interest rate swaps that are used to reduce the exposure to interest rate and 
currency risk
these swaps are fully effective at eliminating the risks they address
the group has reviewed the requirements necessary to permit the application of hedge accounting under ias 39 it has  
concluded that the costs involved in meeting these requirements cannot be justified and therefore ias 39 hedge accounting will  
not be applied
changes in the fair value of derivative financial instruments to which hedge accounting is not applied are recognised in the income 
statement as they arise
given the recent volatility in currency rates the group has taken out forward foreign exchange contracts to fix the euro value of  
a percentage of the anticipated us dollar sales these contracts have been accounted for as cash flow hedges as permitted by ias 39 
interest rate risk profile
financial liabilities
after taking into account the various interest rate and currency swaps entered into by the group the currency and interest rate 
exposure of the group as at 31 december 2008 was
   floating rate fixed rate total floating rate fixed rate total
   borrowings borrowings borrowings borrowings borrowings borrowings
   2008 2008 2008 2007 2007 2007
   £’000 £’000 £’000 £’000 £’000 £’000
sterling  24122 125000 149122 89340 130000 219340
euro  8255 – 8255 55517 – 55517
us dollar  4632 – 4632 2638 – 2638
other  49 – 49 1688 – 1688
  37058 125000 162058 149183 130000 279183
cash and cash equivalents    26576   108352
net borrowings underlying performance   135482   170831
the effective interest rate for the year was 69 2007 68
sensitivity analysis 
the following table illustrates the effect on the income statement and items that are recognised directly in equity that would result 
from reasonably possible movements in uk and us interest rates and in euro and us dollar to sterling exchange rates before the 
effect of tax
 2008 2007
   income statement  equity income statement  equity
   underlying ifrs ifrs underlying ifrs ifrs
    £m  £m  £m ‑  £m ‑  £m ‑  £m
interest rate sensitivity analysis
uk interest rate ‑ 10  02 38 – 08 54 –
euro interest rate ‑ 10  01 – – 06 06 –
us interest rate ‑ 10  – 59 – – 64 –
foreign currency sensitivity analysis
euro exchange rate ‑ 10  – 11 28 – 09 41
us dollar exchange rate ‑ 10  05 45 – 03 13 –
the interest rate sensitivity analysis has been determined based on the exposure to interest rates for both derivatives and 
non‑derivative instruments at the balance sheet date for floating rate liabilities the analysis is prepared assuming the amount  
of liability outstanding at the balance sheet date was outstanding for the whole year
the foreign currency sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their 
translation at the period end for a 10 change in foreign currency rates the sensitivity analysis includes external loans as well as 
loans to foreign operations within the group where the denomination of the loan is in a currency other than the functional currency  
of the lender or borrower yule catto  co plc
annual report and accounts 2008 
62
notes to the consolidated financial statements continued
31 december 2008
21 financial instruments continued
liquidity risk
the objective of the group is to meet financial commitments as and when they fall due the board closely monitors liquidity  
through monthly management accounts
at the year end yule catto  co plc had the following principal facilities
a committed syndicated bank revolving credit facility of £30 million which expires in december 2011 this credit facility was 
negotiated in december 2008
unsecured loan notes totalling approximately £141 million raised from the us private placement market in 1999 and 2004
with maturity between 2009 and 2016 these loan notes provide the group’s long‑ term requirements please see note 20 for  
further details
in january 2009 yule catto additionally arranged a further malaysian ringgits 100 million £19 million six‑ year amortising loan through 
its malaysian subsidiary synthomer sdn bhd and received £825 million from the sale of oxford chemicals limited
the following table details the remaining contractual maturity for the group’s non‑derivative financial liabilities
 2008 2007
 amount due amount due
 within between between   within between between
 one 1 and 2 and after  one 1 and 2 and after 
 year 2 years 5 years 5 years total year 2 years 5 years 5 years total
  £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
non‑interest ‑bearing
trade and other  
payables 152621 167 – – 152788 148300 460 – – 148760 
variable interest  
rate instruments
bank loans and  
overdrafts 20844 – – – 20844 104623 – – – 104623
fixed interest rate  
instruments
loan notes 33472 33472 23672 50598 141214 33461 33429 33461 74209 174560
  206937 33639 23672 50598 314846 286384 33889 33461 74209 427 943
the following table details the remaining contractual maturity for the group’s non‑derivative financial assets
 2008 2007
 amount due amount due
 within between between   within between between
 one 1 and 2 and after  one 1 and 2 and after 
 year 2 years 5 years 5 years total year 2 years 5 years 5 years total
  £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
non‑interest ‑bearing
trade and other 
receivables excluding  
prepayments 120052 – – – 120052 111770 – – – 111770
variable interest  
rate instruments
cash and 
cash equivalents 26576 – – – 26576 108352 – – – 108352
  146628 – – – 146628 220122 – – – 220122 yule catto  co plc
annual report and accounts 2008 
63
21 financial instruments continued 
 2008 2007
 amount due amount due
 within between between   within between between
 one 1 and 2 and after  one 1 and 2 and after 
 year 2 years 5 years 5 years total year 2 years 5 years 5 years total
  £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
interest rate swaps 1101 1506 – – 2607 148 171 119 – 142
cross currency  
swaps 2964 4251 4275 1478 12968 1904 1485 3305 1368 8062
foreign exchange  
forward contracts 232 – – – 232 1152 – – – 1152
  1631 2745 4275 1478 10129 2908 1656 3424 1368 9356
in accordance with ifrs 7  the above table shows undiscounted cash flows in contrast ias 39 requires these items to be carried 
in the balance sheet at fair value which is based on discounted cash flows
22 assets held for sale
included within assets held for sale are assets belonging to oxford chemicals limited totalling £5114000 being property plant 
and equipment of £2039000 inventories of £1637000 and trade and other receivables of £1438000 the remaining £2263000 
related to land belonging to james robinson gmbh liabilities directly associated with assets classified as held for sale include 
trade and other receivables belonging to oxford chemicals limited of £1400000 liabilities directly associated with assets 
classified as held for sale in james robinson gmbh are nil
the sale of the oxford chemicals limited business was completed on 30 january 2009 a contract to sell the land owned by 
james robinson gmbh was exchanged on 30 january 2009
23 trade and other payables
       2008 2007
       £’000 £’000
amount due within one year
trade creditors      100790 89964
other creditors      27710 26845
accruals and deferred income      24121 31491
       152621 148300
amount due in greater than one year
other creditors      167 460
      152788 148760
accruals and deferred income includes £6097 000 2006 £14171000 in respect of restructuring costs
average trade creditor days in 2008 was 66 2007 67 this figure represents trade creditor days for all trading operations within  
the group calculated as a weighted average based on cost of sales
the directors consider that the carrying amount of trade payables approximates to their fair value
24 post retirement benefit obligations
charge to income statement in respect of the group’s pension schemes
   2008   2007   2006   2005   2004
  uk overseas total uk overseas total uk overseas total uk overseas total uk overseas total
  £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
defined benefit 977 427 1404 1598 763 2361 2200 763 2963 4000 226 4226 4700 217 4917
defined contribution 388 771 1159 159 952 1111 299 712 1011 347 710 1057 338 636 974
  1365 1198 2563 1757 1715 3472 2499 1475 3974 4347 936 5283 5038 853 5891
defined benefit  
– special item –  –  –  10797 –  10797 –  –  –  –  –  –  –  –  – 
  1365 1198 2563 9040 1715 7 325 2499 1475 3974 4347 936 5283 5038 853 5891 yule catto  co plc
annual report and accounts 2008 
64
notes to the consolidated financial statements continued
31 december 2008
24 post retirement benefit obligations continued
the fair value of the assets in the schemes and the present value of the liabilities in the schemes at each balance sheet date were
   2008   2007   2006   2005   2004
  uk overseas total uk overseas total uk overseas total uk overseas total uk overseas total
  £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
present value of  
funded defined  
benefit obligations 205721 13449 219170 228966 15530 244496 260425 16591 277 016 225000 16233 241233 203800 14297 218097
fair value of  
scheme assets 138293 531 8 1 43611 195325 7 935 203260 191 137 7 995 199 132 167 400 4 196 1 71596 138500 3795 142295
post retirement  
benefit obligations 67428 8131 75559 33641 7 595 41236 69288 8596 77 884 57 600 12037 69637 65300 10502 75802
uk pension schemes
the group participates in a funded scheme with both a defined benefit and defined contribution section the yule catto group 
retirement benefit scheme the scheme’s defined benefit section was closed to new members with effect from 31 december 1998 
and with effect from 1 january 1999 a defined contribution section was introduced and is open to all eligible group employees
the assets of the scheme are held separately from those of the companies concerned 
contributions to the scheme are charged to the income statement to spread the cost of pensions over employees’ working  
lives within the group
defined benefit scheme
a full actuarial valuation was carried out as at 6 april 2006 and updated to 31 december 2008 by a qualified actuary the major 
assumptions used by the actuary were
    2008 2007 2006 2005 2004
rate of increase in salaries   260 310 330 350 360
rate of increase in pensions in payment   250 250 250 250 250
discount rate   650 590 520 490 540
rates of return on plan assets   731 733 695 721 726
inflation assumption   260 310 280 250 260
amount chargedcredited to operating profit
       2008 2007
       £’000 £’000
current service cost      1795 2252
past service credit      – 10797
expected return on plan assets      14047 13885
interest cost relating to pension scheme liabilities     13229 13231
      977 9199
the past service credit related to reductions in the benefits provided by the scheme which were actioned during the prior year  
this item is disclosed as a special item
actuarial lossgain recognised in the statement of recognised income and expense 
       2008 2007
       £’000 £’000
actual return less expected return on pension scheme assets    64742 5891
experience gains and losses arising on the scheme liabilities    25273 25872
      39469 19981 yule catto  co plc
annual report and accounts 2008 
65
24 post retirement benefit obligations continued
history of experience gains and losses
    2008 2007 2006 2005 2004
difference between the expected and actual  
return on scheme assets
amount £’000   64742 5891 13800 17 200 8300
percentage of scheme assets   4682 302 722 1027  599
experience gains and losses arising on  
the scheme liabilities
amount £’000   25273 25872 30988 12100 5500
percentage of the present value of scheme liabilities  1229 1130 1190 538 270
total actuarial lossesgains recognised in the  
statement of recognised income and expense
amount £’000   39469 19981 17 188 5100 2800
percentage of the present value of scheme liabilities  1919 873 661 227 137
the actual return on plan assets was a loss of £50695000 2007 a gain of £7 994000
movements in the present value of defined benefit obligations were as follows
       2008 2007
       £’000 £’000
at 1 january      228966 260425
current service cost      1795 2252
past service credit      –  10797
interest cost      13229 13231
contributions from scheme members      739 746
experience gains arising on the scheme liabilities     25273 25872
benefits paid      13735 11019
at 31 december      205721 228966
movements in the fair value of the scheme assets were as follows
       2008 2007
       £’000 £’000
at 1 january      195325 191137
expected return on scheme assets      14047 13885
actual return less expected return on pension scheme assets    64742 5891
contributions from sponsoring companies     6659 6467
contributions from scheme members      739 746
benefits paid      13735 11019
at 31 december      138293 195325
contributions from the sponsoring companies are expected to be £6566000 in 2009
the fair value of the assets in the scheme the present value of the liabilities in the scheme and the expected rate of return at each 
balance sheet date were
 2008 2008 2007 2007 2006 2006 2005 2005 2004 2004
  £’000  £’000  £’000  £’000  £’000
equities 900 90241 800 148447 790 154821 750 134900 775 110000
bonds 670 47614 517 44925 492 36316 463 31800 513 27 600
cash 425 438 425 1953 425 –  400 700 400 900
total fair value  
of assets  138293  195325  191137  167400  138500
present value of  
scheme liabilities  205721  228966  260425  225000  203800
post retirement  
benefit obligations  67428  33641  69288  57600  65300 yule catto  co plc
annual report and accounts 2008 
66
notes to the consolidated financial statements continued
31 december 2008
24 post retirement benefit obligations continued
overseas pension schemes
the group operates a number of smaller overseas pension and post retirement schemes the assets of these schemes are held 
separately from those of the group with the exception of the german schemes where in line with common practice the assets  
are held within the respective company 
defined benefit schemes
the aggregated pension disclosure below for the overseas defined benefit schemes has been compiled from a number of actuarial 
valuations at 31 december 2008 the major assumptions do not differ significantly from those disclosed above in relation to the  
uk pension schemes 
amount charged to operating profit
       2008 2007
       £’000 £’000
current service cost      369 417
gain on settlements and curtailments      325 – 
expected return on plan assets      310 397
interest cost relating to pension scheme liabilities     693 743
      427 763
actuarial gain recognised in the statement of recognised income and expense
       2008 2007
       £’000 £’000
actual return less expected return on pension scheme assets    377 1481
experience gains arising on the scheme liabilities     735 2784
changes in assumptions underlying the present value of the scheme liabilities   –  414
      358 1717
the actual return on plan assets was a loss of £67000 2007 £1084000
analysis of the movements in the net balance sheet liability before deferred tax
       2008 2007
       £’000 £’000
net liability at 1 january      7595 8596
total expense as detailed above      427 763
contributions made      938 733
actuarial gain      358 1717
sale of pfw aroma chemicals bv      846 – 
exchange movements      2251 686
net liability at 31 december      8131 7 595
25 share capital
       2008 2007
       £’000 £’000
authorised
219 111230 2007 219111230 ordinary shares of 10 pence each    21911 21911
issued and fully paid
145663187 2007 145663187 ordinary shares of 10 pence each    14566 14566
ordinary shares carry no right to fixed income yule catto  co plc
annual report and accounts 2008 
67
25 share capital continued
share options
as at 31 december 2008 the following options were outstanding
executive share options      number option price
exercisable between 2009‑2010      1884 a
exercisable between 2009‑2012      4797 a
exercisable between 2009‑2015      57 876 a
exercisable between 2009‑2013      4328 a
exercisable between 2009‑2016      209040 a
exercisable between 2010‑2017      264298 a
exercisable between 2011‑2018      684312 a
saye options      number option price
exercisable in 2010      13872 2610p
a options granted under the performance share plan longer‑term deferred bonus plan and the deferred bonus plan 2006 with a total exercise price of £38
26 changes in equity
   capital hedging and cash flow
 share share redemption own translation hedging minority retained
 capital premium reserve shares reserve reserve interest earnings total
 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
at 1 january 2008 14566 33034 949 – 9087 – 5725 416 45603
profit for the year – – – – – – 1718 54845 56563
actuarial losses – – – – – – – 39111 39111
tax on items recognised  
directly in equity – – – – – – – 48 48
exchange differences on  
cash flow hedging deferred  
to equity – – – – – 678 – – 678
exchange differences on  
translation of overseas – – – – 39956 – 2055 – 42011
operations
net investment hedging – – – – 24617 – – – 24617
total recognised income  
for the period – – – – 15339 678 3773 15686 35476
dividends paid – – – – – – 341 14129 14470
share‑ based payments – – – – – – – 83 83
at 31 december 2008 14566 33034 949 – 6252 678 9157 2056 66692
   capital hedging and cash flow
 share share redemption own translation hedging minority retained
 capital premium reserve shares reserve reserve interest earnings total
 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
at 1 january 2007 14566 33034 949 – 7 371 – 4071 21031 24218
profit for the year – – – – – – 1679 13785 15464
actuarial gains – – – – – – – 21698 21698
tax on items recognised  
directly in equity – – – – – – – 519 519
exchange differences on  
translation of overseas – – – – 7 429 – 512 – 7 941
operations
net investment hedging – – – – 9145 – – – 9145
total recognised expenditure 
income for the period – – – – 1716 – 2191 34964 35439
dividends paid – – – – – – 537 13689 14226
shares purchased by esop trust – – – 25 – – – – 25
share‑ based payments – – – 25 – – – 172 147
at 31 december 2007 14566 33034 949 – 9087 – 5725 416 45603 yule catto  co plc
annual report and accounts 2008 
68
notes to the consolidated financial statements continued
31 december 2008
27 reconciliation of operating profit to cash generated from operations
       2008 2007
       £’000 £’000
operating profit – continuing operations      40786 41032
operating profitloss for the year from discontinued operations    24180 12458
less share of profits of joint ventures      1615 1129
       63351 27445
depreciation and amortisation      16890 16013
profitloss arising from the sale or closure of operations    17661 28237
uk pension fund – past service credit      – 10797
lossprofit on sale of fixed assets      79 196
share‑ based payments      470 298
cash impact of termination of businesses     10283 8985
pension funding in excess of ias 19 charge     6301 5550
decrease in inventories      1070 3925
decreaseincrease in trade and other receivables     3399 6398
decreaseincrease in trade and other payables     5931 6434
unrealised exchange gains      784 979
cash generated from operations      44299 49447
28 disposal of subsidiaries
the group disposed of the following interests in group companies in 2008
company name date of sale purchaser division sale type
james robinson limited and 
james robinson gmbh 30 may 2008 third party trade impact chemicals sharesassets
james robinson india pvt ltd 28 june 2008 third party trade impact chemicals shares
holliday pigments sa holliday 
pigments international sa and 
holliday france sa 11 august 2008 third party trade impact chemicals shares
holliday chemical españa sa 11 august 2008 third party trade pharma chemicals shares
pfw aroma chemicals bv 3 december 2008 third party trade impact chemicals shares
the net assets of the companies at the date of disposal were as follows
   james robinson  holliday pigments sa
   limited and  holliday pigments holliday
   james robinson james robinson international sa and chemical pfw aroma
   gmbh india pvt ltd holliday france sa españa sa chemicals bv total
   £’000 £’000 £’000 £’000 £’000 £’000
property plant and equipment  467 1459 7 712 – 3853 13491
inventories  878 927 3586 143 4125 9659
trade receivables  2128 334 6437 527 1983 11409
net borrowing  4081 472 1387 192 2909 8657
deferred tax liability  – 74 1145 – 534 1753
current tax liability  30 11 598 2 58 695
trade payables  1383 699 6114 407 3531 12134
attributable goodwill  3382 235 15113 97 – 18827
minority interest  – 513 – – – 513
   1361 1186 23604 554 2929 29634
profitloss on disposal  5637 362 8265 409 774 13175
total consideration  6998 824 31869 963 2155 42809
satisfied by
cash net of disposal costs  6208 824 31869 963 2155 42019
deferred consideration  790 – – – – 790
   6998 824 31869 963 2155 42809
net cash inflow arising on disposal
cash consideration  6531 866 33096 1014 2488 43995
net borrowing disposed of  4081 472 1387 192 2909 8657
   10612 1338 34483 822 5397 52652
less costs of disposal  323 42 1227 51 333 1976
  10289 1296 33256 771 5064 50676
the impact of these disposals on the group’s results in the current period and prior periods is disclosed in note 3 yule catto  co plc
annual report and accounts 2008 
69
29 acquisition of subsidiary
on 16 january 2008 the group acquired 60 per cent of the issued share capital of synthomer vietnam co ltd formerly  
chemtech industry co ltd
the net assets of the company at the date of acquisition were as follows
        synthomer
        vietnam co ltd
        £’000
property plant and equipment       207
inventories       530
trade receivables       750
net borrowing       303
trade payables       893
minority interest       359
exchange movement       29
        509
goodwill       412
total consideration       921
satisfied by
cash       771
deferred consideration       150
        921
net cash outflow arising on acquisition
cash consideration       771
net borrowing acquired       303
       468
30 analysis of changes in net borrowings
       exchange
    1 january reclassification cash inflows and other 31 december
     2008 of borrowings outflows movements 2008
    £’000 £’000 £’000 £’000 £’000
cash and cash equivalents   108352 – 64475 17 301 26576
current borrowing – bank overdrafts   104623 – 74989 8790 20844
    3729 – 10514 8511 5732
current borrowings – loan notes   28962 37 129 33512 4549 37128
non‑current borrowings   125108 37129 166 41907 130052
net borrowings   150341 – 43860 54967 161448
deductadd back special item   20490    25966
net borrowings underlying performance  170831    135482
the special item represents the revaluation of us dollar loan notes from the rate of the related cross currency swaps to the year 
end rate together with the transitional adjustment required to reflect movements in fair value caused by variations in interest rates 
and subsequent amortisation thereof to the extent that these constituted effective hedges under uk gaap 
31 related party transactions
transactions between the company and its subsidiaries which are related parties have been eliminated on consolidation 
and are not included in this note transactions between the company and its subsidiaries are disclosed in the company’s 
financial statements where appropriate
key management compensation
       2008 2007
       £’000 £’000
short‑ term employee benefits      2975 3242
post retirement benefit obligations      239 279
share‑ based payments      1115 1185
      4329 4706
the key management figures given above include the directors and all participants of the performance share plan yule catto  co plc
annual report and accounts 2008 
70
notes to the consolidated financial statements continued
31 december 2008
32 commitments
       2008 2007
       £’000 £’000
capital expenditure authorised but not provided for in the accounts
contracted      607 6240
       2008 2007
       £’000 £’000
commitments under operating leases are as follows
payments under operating leases which fall due
within 1 year      3600 3419
between 2 and 5 years      11280 7627
after 5 years      41236 41075
      56116 52121
33 contingent assets contingent liabilities and guarantees
guarantees of the parent company in respect of bank and other facilities of subsidiaries and joint ventures totalled £7 071000  
2007 £18178000 
other guarantees and contingent liabilities of the group amount to £1523000 2007 £1361000 
the company and its subsidiaries have in the normal course of business entered into guarantees and counter‑indemnities 
in respect of performance bonds relating to the group’s own contracts
34 sharebased payments
save as you earn share option plan
this plan which is available to almost all uk employees provides for a grant price equal to the average quoted market price of 
the group shares on the date of grant the vesting period is five to seven years followed by an exercise period of six months 
after which the options expire furthermore options are forfeited if the employee leaves the group before the options vest
      weighted  weighted
      av exercise  av exercise
     options price £ options price £
     2008 2008 2007 2007
outstanding at 1 january    293974 2610 333980 2610
exercised during the period    –  –
lapsed during the period    280102 2610 40006 2610
outstanding at 31 december    13872 2610 293974 2610
exercisable at 31 december    –  259431
no grants have been made under the plan since 7 november 2002 and the group has elected not to apply ifrs 2 to awards  
made before that date for options expected to be settled with shares purchased by the yule catto employee benefit trust in the 
open market the charge to profit reflects the anticipated cash cost of these shares spread over the vesting period for options 
expected to be settled by the issue of new shares no charge to profit is made
for options outstanding as at 31 december 2008 the exercise price is £261 and the weighted average remaining contractual life 
was 14 years 2007 07 years yule catto  co plc
annual report and accounts 2008 
71
34 sharebased payments continued
executive share option schemes
details of the share option schemes available to senior management are included in the remuneration report on pages 30 to 32
for grants made after 7 november 2002 the charge to profit is calculated on the assumption that given that the exercise price  
is effectively nil the share price at grant provides a reasonable estimate of the option value at grant
for grants made before 7 november 2002 the charge to profit is based on the anticipated cash cost of acquiring shares to meet 
the options exercised
      weighted  weighted
      av exercise  av exercise
     options price £ options price £
     2008 2008 2007 2007
outstanding at 1 january    715781 – 973539 0057
granted during the period    777865 – 321340 –
exercised during the period    17471 – 35328 1579
lapsed during the period    249640 – 543770 –
outstanding at 31 december    1226535 – 715781 –
exercisable at 31 december    64557  1884
for options outstanding as at 31 december 2008 the exercise price was £nil and the weighted average remaining contractual  
life was 53 years 2007 5 years
yule catto employee benefit trust
the company established a trust the yule catto employee benefit trust on 17 july 1996 to distribute shares to employees 
enabling the obligations under the yule catto longer‑term performance share plan and the yule catto longer‑term deferred 
bonus plan to be met the trust is managed by the rbc trustees guernsey limited an independent company located in 
guernsey at 31 december 2008 the trust held 1 7767 2007 24161 ordinary shares in the company with a market value 
of £10000 2007 £45000 the dividends on these shares have been waived all of the shares are under option costs are 
amortised over the life of the plans
35 share price information
the middle market value of the listed ordinary shares at 31 december 2008 was 550 pence during the year the market price 
ranged between 525 pence and 1925 pence the market value of the listed ordinary shares at 31 march 1982 was 195 pence 
the latest ordinary share price is available on the financial times cityline service telephone 09058 171690
36 reconciliation of ebitda
 underlying performance ifrs
     2008 2007 2008 2007
     £’000 £’000 £’000 £’000
operating profit    43192 42696 40786 41032
add operating profit or loss of businesses sold or closed during the year – – 2406 12461
less uk pension fund – past service credit   – – – 10797
add back amortisation    102 247 102 247
add back depreciation    15336 13299 15336 13299
ebitda    58630 56242 58630 56242 yule catto  co plc
annual report and accounts 2008 
72
independent auditors’ report to the members  
of yule catto  co plc
we have audited the parent company financial statements of 
yule catto  co plc for the year ended 31 december 2008 
which comprise the balance sheet and the related notes 1  
to 16 these parent company financial statements have been 
prepared under the accounting policies set out therein
we have reported separately on the group financial statements 
of yule catto  co plc for the year ended 31 december 2008 
and on the information in the directors’ remuneration report 
that is described as having been audited
this report is made solely to the company’s members as 
a body in accordance with section 235 of the companies 
act 1985 our audit work has been undertaken so that we 
might state to the company’s members those matters we 
are required to state to them in an auditors’ report and for no 
other purpose to the fullest extent permitted by law we do 
not accept or assume responsibility to anyone other than the 
company and the company’s members as a body for our audit 
work for this report or for the opinions we have formed
respective responsibilities of directors and auditors
the directors’ responsibilities for preparing the annual report 
and the parent company financial statements in accordance 
with applicable law and united kingdom generally accepted 
accounting practice are set out in the statement of directors’ 
responsibilities
our responsibility is to audit the parent company financial 
statements in accordance with relevant legal and regulatory 
requirements and international standards on auditing  
uk and ireland
we report to you our opinion as to whether the parent 
company financial statements give a true and fair view and 
whether the parent company financial statements have 
been properly prepared in accordance with the companies 
act 1985 we also report to you whether in our opinion the 
directors’ report is consistent with the parent company 
financial statements the information given in the directors’ 
report includes that specific information that is cross‑ referred 
from the business review section of the directors’ report
in addition we report to you if in our opinion the company has 
not kept proper accounting records if we have not received all 
the information and explanations we require for our audit or if 
information specified by law regarding directors’ remuneration 
and other transactions is not disclosed
we read the other information contained in the annual report 
as described in the contents section and consider whether 
it is consistent with the audited parent company financial 
statements we consider the implications for our report if we 
become aware of any apparent misstatements or material 
inconsistencies with the parent company financial statements 
our responsibilities do not extend to any further information 
outside the annual report
basis of audit opinion
we conducted our audit in accordance with international 
standards on auditing uk and ireland issued by the auditing 
practices board an audit includes examination on a test 
basis of evidence relevant to the amounts and disclosures in 
the parent company financial statements it also includes an 
assessment of the significant estimates and judgments made 
by the directors in the preparation of the parent company 
financial statements and of whether the accounting policies 
are appropriate to the company’s circumstances consistently 
applied and adequately disclosed
we planned and performed our audit so as to obtain all 
the information and explanations which we considered 
necessary in order to provide us with sufficient evidence to 
give reasonable assurance that the parent company financial 
statements are free from material misstatement whether 
caused by fraud or other irregularity or error in forming 
our opinion we also evaluated the overall adequacy of the 
presentation of information in the parent company financial 
statements
opinion
in our opinion
 the parent company financial statements give a true and •	
fair view in accordance with united kingdom generally 
accepted accounting practice of the state of the company’s 
affairs as at 31 december 2008
 the parent company financial statements have been properly •	
prepared in accordance with the companies act 1985 and
 the information given in the directors’ report is consistent •	
with the parent company financial statements
deloitte llp
chartered accountants and registered auditors 
cambridge united kingdom
11 march 2009 yule catto  co plc
annual report and accounts 2008 
73
company balance sheet 
31 december 2008
       2008 2007
      note £’000 £’000
fixed assets 
tangible fixed assets     6 2597 2602 
investments     7 334125 194253 
       336722 196855 
current assets     
debtors     8 1303 245333 
cash at bank and in hand      2641 868 
derivatives at fair value      33655 –
       37599 246201 
creditors – due within one year     
borrowings     9 46940 118750
other creditors     10 66470 11913
derivatives at fair value      – 23035
       113410 153698
net current liabilitiesassets      75811 92503 
total assets less current liabilities      260911 289358 
creditors – due after more than one year    
borrowings     9 130052 125107
net assets      130859 164251 
capital and reserves     
called up share capital     11 14566 14566 
share premium     12 33034 33034 
revaluation reserve     12 826 828 
capital redemption reserve     12 949 949 
profit and loss account     12 81484 114874 
capital employed      130859 164251 
analysis of net borrowings     
cash at bank and in hand      2641 868 
borrowings due in less than one year      46940 118750
borrowings due after more than one year     130052 125107
net borrowings      174351 242989
deductadd back special items      25966 20490
net borrowings underlying performance    9 148385 263479 
approved on 11 march 2009
a m whitfield
d c blackwood
directors yule catto  co plc
annual report and accounts 2008 
74
notes to the company financial statements
31 december 2008
1 accounting policies
the principal accounting policies are summarised below  
they have all been applied consistently throughout the year 
and the preceding year
basis of accounting
the financial statements have been prepared under the 
historical cost convention as modified by the revaluation 
of certain fixed assets and comply with applicable uk 
accounting standards
foreign currencies
transactions in foreign currencies are recorded at the rate 
of exchange at the date of the transaction or if hedged at 
the forward contract rate monetary assets and liabilities 
denominated in foreign currencies at the balance sheet date 
are reported at the rates of exchange prevailing at that date or 
if appropriate at the forward contract rate
tangible fixed assets
tangible fixed assets are stated at cost or valuation net of 
depreciation and any provision for impairment except for 
freehold land which is not depreciated the cost or valuation  
of tangible fixed assets is depreciated on a straight‑ line basis 
over their expected useful lives as follows
freehold buildings – 50 years
leasehold land and buildings –  the lesser of 50 years and  
the period of the lease
plant and equipment – between 3 and 10 years
revaluation of properties
the company has taken advantage of the transitional 
provisions of frs 15 tangible fixed assets and retained the 
book amounts of certain freehold properties which were 
revalued prior to implementation of that standard
where depreciation charges are increased following a 
revaluation an amount equal to the increase is transferred 
annually from the revaluation reserve to the profit and loss 
account as a movement on reserves on the disposal or 
recognition of a provision for impairment of a revalued fixed 
asset any related balance remaining in the revaluation  
reserve is also transferred to the profit and loss account  
as a movement on reserves
investments
fixed asset investments are shown at cost less provision  
for impairment
debt
debt is initially stated at the amount of the net proceeds after 
deduction of issue costs
dividends
dividends are accrued where declared and unpaid at the 
balance sheet date 
taxation
current tax including uk corporation tax and foreign tax is 
provided at amounts expected to be paid or recovered using 
the tax rates and laws that have been enacted or substantively 
enacted by the balance sheet date
deferred taxation
deferred tax is recognised in respect of all timing differences 
that have originated but not reversed at the balance sheet date 
where transactions or events that result in an obligation to pay 
more tax in the future or a right to pay less tax in the future 
have occurred at the balance sheet date timing differences 
are differences between the group’s taxable profits and its 
results as stated in the financial statements that arise from the 
inclusion of gains and losses in tax assessments in periods 
different from those in which they are recognised in the 
financial statements
a net deferred tax asset is regarded as recoverable and 
therefore recognised only when on the basis of all available 
evidence it can be regarded as more likely than not that there 
will be suitable taxable profits from which the future reversal of 
the underlying timing differences can be deducted
deferred tax is measured at the average tax rates that 
are expected to apply in the periods in which the timing 
differences are expected to reverse based on tax rates and 
laws that have been enacted or substantively enacted by the 
balance sheet date 
deferred tax is measured on a non‑ discounted basis
financial instruments
financial assets and financial liabilities are recognised on the 
group’s balance sheet when the group becomes a party to 
the contractual provisions of the instrument
trade receivables
trade receivables do not carry any interest and are stated at 
their nominal value as reduced by appropriate allowances for 
estimated irrecoverable amounts 
bank borrowings
interest‑ bearing bank loans and overdrafts are recorded at the 
proceeds received net of direct issue costs finance charges 
including premiums payable on settlement or redemption and 
direct issue costs are accounted for on an accrual basis to 
the profit and loss account using the effective interest method 
and are added to the carrying amount of the instrument to the 
extent that they are not settled in the period in which they arise
trade payables
trade payables are not interest‑ bearing and are stated at their 
nominal value
equity instruments
equity instruments issued by the company are recorded at the 
proceeds received net of direct issue costs
derivative financial instruments
the company uses derivative financial instruments to 
reduce exposure to foreign exchange risk and interest rate 
movements
the company does not hold or issue derivative financial 
instruments for speculative purposes
the use of financial derivatives is governed by the group’s 
policies approved by the board of directors which provide 
written principles on the use of financial derivatives yule catto  co plc
annual report and accounts 2008 
75
1 accounting policies continued
net borrowings
net borrowings represents cash and cash equivalents together with short‑ and long‑ term borrowings as adjusted for the effect  
of related derivative instruments irrespective of whether they qualify for hedge accounting
pension funding
the costs of contributions to the group’s pension schemes and of augmenting existing pensions are charged to the profit and  
loss account on a systematic basis over the expected period of benefits from employees’ service
the uk defined benefit scheme is funded with the assets of the scheme held separately from those of the group in separate 
trustee‑ administered funds 
payments to defined contribution retirement benefit schemes are charged as an expense as they fall due
2 auditors’ remuneration
the audit fee of yule catto  co plc amounted to £6500 2007 £6500
3 employees
       2008 2007
       number number
the average monthly number of employees during the year was    30 34 
 
       2008 2007
       £’000 £’000
the aggregate remuneration of all company employees comprised 
wages and salaries      2440 2495 
social security costs      289 293 
post retirement benefits      294 354 
      3023 3142 
4 loss attributable to equity shareholders   
       2008 2007
       £’000 £’000
uk gaap basis
attributable to yule catto  co plc      19261 15304
as permitted by section 230 of the companies act 1985 no profit and loss account is presented for yule catto  co plc
 the above has been calculated on a uk gaap basis as this is consistent with the continued presentation of yule catto and co plc’s accounts under uk gaap
5 dividends
       2008 2007
       £’000 £’000
ordinary – prior year final of 57 pence per share 2006 55 pence    8303 8011
  – interim of 40 pence per share 2007 39 pence    5826 5678
        14129 13689
  – proposed final of nil pence per share 2007 57 pence    – 8303 yule catto  co plc
annual report and accounts 2008 
76
notes to the company financial statements continued
31 december 2008
6 tangible fixed assets
    land and buildings
      long plant and
     freeholds leaseholds equipment total
     £’000 £’000 £’000 £’000
cost or valuation 
at 1 january 2008    2777 89 1459 4325 
additions    – – 147 147 
disposals    – – 124 124
at 31 december 2008    2777 89 1482 4348 
at cost    12 – 1482 1494 
at professional valuation in 1985    2765 89 – 2854
     2777 89 1482 4348 
depreciation 
at 1 january 2008    450 43 1230 1723 
charge for the year    20 2 92 114 
eliminated on disposals    – – 86 86
at 31 december 2008    470 45 1236 1751 
net book value 
at 31 december 2008    2307 44 246 2597 
net book value 
at 31 december 2007    2327 46 229 2602 
properties included at valuation would have been stated on a historical cost basis at cost of £1877 000 2007 £1877 000 and 
depreciation of £403000 2007 £386000 
freehold land amounting to £1781000 2007 £1781000 has not been depreciated
7 investments 
      joint other
     subsidiaries ventures investments total
     £’000 £’000 £’000 £’000
cost 
at 1 january 2008    195062 500 46 195608
additions    139880 – – 139880
at 31 december 2008    334942 500 46 335488
provisions 
at 1 january 2008    1118 220 17 1355
amortisation    – – 8 8 
at 31 december 2008    1118 220 25 1363
net book value 
at 31 december 2008    333824 280 21 334125 
net book value 
at 31 december 2007    193944 280 29 194253
details of the principal group companies are given on page 81
8 debtors
       2008 2007
       £’000 £’000
amounts owed by subsidiaries      – 238403 
other debtors      1190 2430 
prepayments and accrued income      113 88 
corporate tax      – 4412 
       1303 245333  yule catto  co plc
annual report and accounts 2008 
77
9 borrowings
       2008 2007
       £’000 £’000
current borrowings     
bank loans      
bank loans and overdrafts      9812 89788 
     
other loans     
136000000 766 guaranteed senior unsecured notes due 8 september 2010   32168 24013 
£15000000 699 guaranteed senior unsecured notes due 8 september 2010   5000 5000 
       46980 118801 
less capitalised costs      40 51
       46940 118750 
non‑ current borrowings
bank loans
unsecured £60 million revolving credit facility cancelled 24 december 2008   na –
unsecured £30 million revolving credit facility expiring 2011    – na
other loans     
136000000 766 guaranteed senior unsecured notes due 8 september 2010   32168 48025 
£15000000 699 guaranteed senior unsecured notes due 8 september 2010   5000 10000 
43000000 555 guaranteed senior unsecured notes due 2 september 2012   29698 21529 
70000000 578 guaranteed senior unsecured notes due 2 september 2014   48346 35048 
22000000 598 guaranteed senior unsecured notes due 2 september 2016   15195 11015 
       130407 125617 
less capitalised costs      355 510
       130052 125107 
 these notes are repayable in two equal tranches on 8 september 2009 and 2010
bank loans are denominated in a number of currencies and bear interest based on libor or foreign equivalents
at 31 december 2008 the company had available £30 million 2007 £60 million of undrawn committed borrowing facilities  
in respect of which all conditions precedent had been met
the directors calculate the carrying value of the company’s borrowings as follows
analysis of borrowings at carrying value by currency 
     sterling us dollar euro total
     £’000 £’000 £’000 £’000
31 december 2008   
 bank loans and overdrafts    6242 3221 349 9812 
 loan notes    10000 157 575 – 167575 
 capitalised costs    395 – – 395
     15847 160796 349 176992 
 cash and cash equivalents       2641
 net borrowings       174351 
 deduct special item       25966
 net borrowings underlying performance      148385 
      yule catto  co plc
annual report and accounts 2008 
78
notes to the company financial statements continued
31 december 2008
9 borrowings continued
analysis of borrowings at carrying value by currency continued
     sterling us dollar euro total
     £’000 £’000 £’000 £’000
31 december 2007    
 bank loans and overdrafts    33082 2489 54217 89788
 loan notes    15000 139630 – 154630
 capitalised costs    561 – – 561
     47521 142119 54217 243857 
 cash and cash equivalents       868
 net borrowings       242989 
 add back special item       20490 
 net borrowings underlying performance      263479 
     
cash and cash equivalents comprise cash at bank and other short‑ term highly liquid investments with a maturity of three months  
or less
  the special item represents the revaluation of us dollar loan notes from the rate of the related cross currency swaps to the year end rate together with the  
transitional adjustment required to reflect movements in fair value caused by variations in interest rates and subsequent amortisation thereof to the extent that  
these constituted effective hedges under pre frs 26 uk gaap
10 other creditors
       2008 2007
       £’000 £’000
amount due within one year   
trade creditors      579 1110 
other taxation and social security      127 131 
other creditors      2164 1944 
amounts owed to subsidiaries      54788 –
accruals and deferred income      8812 8728
      66470 11913 
11 share capital 
       2008 2007
       £’000 £’000
authorised    
219 111230 2007 219111230 ordinary shares of 10 pence each    21911 21911 
 
issued and fully paid   
145663187 2007 145663187 ordinary shares of 10 pence each    14566 14566 
    
share options   
as at 31 december 2008 the following options were outstanding   
    
executive share options      number option price
exercisable between 2009‑ 2010      1884 a
exercisable between 2009‑ 2012      4797 a
exercisable between 2009‑ 2015      57 876 a
exercisable between 2009‑ 2013      4328 a
exercisable between 2009‑ 2016      209040 a
exercisable between 2010‑ 2017      264298 a
exercisable between 2011‑ 2018      684312 a
    
saye options      number option price
exercisable in 2010      13872 2610p
a options granted under the performance share plan the longer‑ term deferred bonus plan and the deferred bonus plan 2006 with a total exercise price of £38 yule catto  co plc
annual report and accounts 2008 
79
12 share premium and reserves
      capital
    share revaluation redemption profit and
    premium reserve reserve loss account total
    £’000 £’000 £’000 £’000 £’000
at 1 january 2008   33034 828 949 114874 149685
loss for the year   – – – 19261 19261
dividends   – – – 14129 14129
retained loss for the year   – – – 33390 33390
revaluation depreciation   – 2 – – 2
at 31 december 2008   33034 826 949 81484 116293
 
13 related party transactions
there were no related party transactions during the year 2007 none
14 guarantees and other financial commitments
the company has given guarantees amounting to £7 071000 2007 £18178000 in respect of bank and other facilities  
of subsidiaries and joint ventures
15 pension commitments 
the group participates in a funded scheme with both a defined benefit and defined contribution section the yule catto group 
retirement benefit scheme the scheme’s defined benefit section was closed to new members with effect from 31 december 1998 
and with effect from 1 january 1999 a defined contribution section was introduced and is open to all eligible group employees
the assets of the scheme are held separately from those of the companies concerned
the pension charge for the year for the company amounted to £3838000 2007 £2623000
in accordance with frs 17  the company will account for its contributions to the defined benefit scheme as if it were a defined 
contribution scheme because it is not possible to identify the company’s share of the assets and liabilities in the scheme on  
a consistent and reasonable basis the latest actuarial valuation of the scheme prepared for the purposes of making transitional 
disclosure in accordance with frs 17 shows a net pension liability of £67128000 at 31 december 2008
frs 17 disclosure  
due to the application of ias 19 to the group financial statements resulting in changes to the required disclosures at group level  
the disclosure requirements of frs 17 for the group have been included below
a full actuarial valuation was carried out as at 6 april 2006 and updated to 31 december 2008 by a qualified actuary the major 
assumptions used by the actuary were  
    2008 2007 2006 2005 2004
rate of increase in salaries   260 310 330 350 360
rate of increase in pensions in payment   250 250 250 250 250
discount rate   650 590 520 490 540
inflation assumption   260 310 280 250 260
the fair value of the assets in the scheme the present value of the liabilities in the scheme and the expected rate of return at each 
balance sheet date were
   2008 2008 2007 2007 2006 2006 2005 2005 2004 2004
    £’000  £’000  £’000  £’000  £’000
equities  900 90541 800 148747 790 155121 750 135200 775 110300
bonds  670 47614 517 44925 492 36316 463 31800 513 27 600
cash  425 438 425 1953 425 – 400 700 400 900
total fair value of assets  138593  195625  191437  167700  138800  
present value of  
scheme liabilities  205721  228966  260425  225000  203800
deficit in the scheme  67128  33341  68988  57300  65000
related deferred tax asset  –  –  –  –  –
net pension liability  67128  33341  68988  57300  65000
contributions from the sponsoring companies are expected to be £6566000 in 2009 yule catto  co plc
annual report and accounts 2008 
80
notes to the company financial statements continued
31 december 2008
15 pension commitments continued
analysis of the amount that would have been charged to operating profit under frs 17
       2008 2007
       £’000 £’000
current service cost      1795 2252 
past service credit      – 10797
      1795 8545
analysis of the amount that would have been charged to net finance income under frs 17
       2008 2007
       £’000 £’000
expected return on pension scheme assets     14047 13885
interest on pension scheme liabilities      13229 13231 
      818 654
  
analysis of the actuarial lossgain that would have been recognised in the statement of total recognised gains and losses
       2008 2007
       £’000 £’000
actual return less expected return on pension scheme assets    64742 5891
experience gains and losses arising on the scheme liabilities    25273 25872
      39469 19981
  
history of experience gains and losses 
    2008 2007 2006 2005 2004
difference between the expected and 
actual return on scheme assets 
amount £’000   64742 5891 13800 17 200 8300
percentage of scheme assets   4671 301 721 1026 598
experience gainslosses on scheme liabilities  
amount £’000   25273 25872 30988 12100 5500
percentage of the present value of scheme liabilities  1229 1130 1190 538 270
total actuarial lossesgains recognised in the  
statement of total recognised gains and losses  
amount £’000   39469 19981 17188 5100 2800 
percentage of the present value of scheme liabilities  1919 873 661 227 137
16 sharebased payments
for details of share‑ based payments please refer to note 34 to the consolidated financial statements on page 70 yule catto  co plc
annual report and accounts 2008 
81
principal subsidiaries and joint ventures
        effective
       country of group interest
      incorporation and in equity
operating companies     operation 
arkem pty ltd      south africa 50 
distributor of speciality chemicals and allied products   
james robinson gmbh      germany 100 
fine chemicals 
oxford chemicals ltd      england 100 
flavour chemicals 
revertex chemicals pty ltd      south africa 100 
synthetic resin and emulsions and allied products 
revertex finewaters sdn bhd      malaysia 63 
adhesives 
revertex malaysia sdn bhd      malaysia 70 
synthetic resin and emulsions natural rubber latices plasticers and allied products 
synthomer bv      netherlands 100 
compounds of synthetic rubber latices
synthomer gmbh      germany 100 
synthetic rubber latices and related compounds
synthomer hasselt bv      netherlands 100 
compounds of synthetic rubber latices
synthomer ltd      england 100 
synthetic rubber latices and emulsions
synthomer middle east company      saudi arabia 49 
synthetic resin emulsions 
synthomer sa      belgium 100 
compounds dispersions and adhesives
synthomer sdn bhd      malaysia 100 
synthetic rubber latices and related compounds
synthomer vietnam co ltd      vietnam 60 
synthetic adhesives 
union quimico farmaceutica sa uquifa     spain 100 
pharmaceutical actives and intermediates
uquifa italia spa      italy 100 
pharmaceutical actives and intermediates
uquifa mexico sacv      mexico 100 
pharmaceutical actives and intermediates
william blythe ltd      england 100 
inorganic chemicals 
holding companies 
holliday chemical holdings      england 100
holliday international sa      france 100
yule catto bv      netherlands 100
yule catto financing ltd      ireland 100
yule catto holdings gmbh      germany 100
yule catto international ltd      england 100
yule catto spain sl      spain 100
yule catto nederland bv      netherlands 100
 joint ventures 
 shares held by yule catto  co plc  five year financial summary
yule catto  co plc
annual report and accounts 2008 
82
underlying performance a   2008 2007 2006 2005 2004
    £’000 £’000 £’000 £’000 £’000
total sales   602153 512925 474524 430796 412499 
ebitda  b 58630 56242 47235 49724 49422 
operating profit  c 43192 42696 34350 36230 34944 
finance costs   10502 11497 11443 11741 12930
profit before taxation   32690 31199 22907 24489 22014 
earnings per share   179p 160p 88p 98p 68p 
dividends per share   40p 96p 93p 90p 134p 
dividend cover   45 17 09 11 05 
net borrowings  e 135482 170831 166271 165591 187641
free cash flow before dividends  d 7781 14012 8479 19786 13344 
capital expenditure   17707 16994 18468 14331 16920 
ifrs – continuing operations   2008 2007 2006 2005 2004
    £’000 £’000 £’000 £’000 £’000
total sales   602153 512925 474524 430796 412499 
ebitda  b 58630 56242 47235 49724 49422 
operating profit  c 40786 41032 12842 36239 34803 
finance costs   1887 7 050 7 825 14162 13190
profit before taxation   38899 33982 5017 22077 21613 
earnings per share   222p 179p 36p 82p 62p 
dividends per share   40p 96p 93p 90p 134p 
dividend cover   55 19 04 09 05 
net borrowings  e 161448 150341 150656 171266 178537
free cash flow before dividends  d 7781 14012 8479 19786 13344 
capital expenditure   17707 16994 18468 14331 16920 
 
a as presented in the consolidated income statement on page 38 
b as defined in the accounting policies at note 2 and derived in note 36
c as defined in note 2 to the financial statements on pages 42 to 46
d as shown with the consolidated cash flow statement on page 40
e as defined in note 2 to the financial statements and derived in note 30 yule catto  co plc
annual report and accounts 2008 
83
notice of meeting
notice is hereby given that the annual general meeting of 
the company will be held at saddlers’ hall 40 gutter lane 
london ec2v 6br on thursday 14 may 2009 at 1030 am 
for the following purposes
ordinary business
1  to receive and adopt the report of the directors and audited 
financial statements for the year ended 31 december 2008
2  to approve the report of the board on directors’ 
remuneration for the year ended 31 december 2008
3 to re‑ elect as a director the hon a g catto
4 to re‑ elect as a director dato’ lee hau hian
5 to re‑ elect as a director mr g r menzies
6 to re‑ elect as a director mr a m whitfield
7  to re‑ appoint deloitte llp as auditors of the company to 
hold office until the conclusion of the next annual general 
meeting at which accounts are laid before the company
8  to authorise the directors to determine the remuneration  
of the auditors
special business
to consider and if thought fit to pass the following 
resolutions resolution 9 being proposed as an ordinary 
resolution and resolutions 10 11 and 12 being proposed as 
special resolutions
9 that
 i  the authority conferred on the directors by paragraph 
92 of article 9 of the company’s articles of association 
be renewed for the period ending on the date of the 
annual general meeting in 2010 or on 14 august 2010 
whichever is the earlier and for such period the section 
80 amount shall be £4855439 and
 ii  such authority shall be in substitution for all previous 
authorities pursuant to section 80 of the companies act 
1985 which are hereby revoked without prejudice to any 
allotment of securities prior to the date of this resolution 
or thereafter pursuant to any offer or agreement made 
prior thereto
10 that
 i  subject to the passing of resolution 9 set out in the 
notice of annual general meeting dated 11 march 2009 
the power conferred on the directors by paragraph 93 
of article 9 of the company’s articles of association be 
renewed for the period referred to in such resolution 
and for such period the section 89 amount shall be 
£728315 and
 ii  such authority shall be in substitution for all previous 
powers pursuant to section 89 of the companies act 
1985 which are hereby revoked without prejudice to 
any allotment or sale of securities prior to the date of 
this resolution or thereafter pursuant to any offer or 
agreement made prior thereto
11  that the company be unconditionally and generally 
authorised for the purpose of section 166 of the companies 
act 1985 ‘the act’ to make market purchases as defined 
in section 163 of the act of ordinary shares of 10p each in 
the capital of the company provided that
 a  the maximum number of shares which may be 
purchased is 14566318
 b  the minimum price which may be paid for each share 
is 10p exclusive of expenses
 c  the maximum price which may be paid for a share is 
an amount equal to 105 of the average of the closing 
middle market quotations of the company’s ordinary 
shares as derived from the london stock exchange 
daily official list for the five business days immediately 
preceding the day on which such share is contracted 
to be purchased exclusive of expenses and
 d  this authority shall expire at the conclusion of the next 
annual general meeting of the company or if earlier 
15 months after the passing of this resolution except 
in relation to the purchase of shares the contract for 
which was concluded before the expiry of such authority 
and which might be executed wholly or partly after 
such expiry unless such authority is renewed prior to 
such time
12  that a general meeting other than an annual general 
meeting may be called on not less than 14 clear days’ 
notice
by order of the board
r atkinson
secretary
11 march 2009
temple fields
harlow
essex
cm20 2bh yule catto  co plc
annual report and accounts 2008 
84
notes
i  a member of the company entitled to attend and vote at the 
above meeting may appoint one or more proxies to attend 
speak and vote in his stead a proxy need not also be a 
member of the company the right to appoint a proxy does 
not apply to persons whose shares are held on their behalf 
by another person and who have been nominated to receive 
communications from the company in accordance with 
section 146 of the companies act 2006 to enjoy information 
rights ‘nominated persons’ nominated persons may have 
a right under an agreement with the registered shareholder 
who holds the shares on their behalf to be appointed or 
to have someone else appointed as a proxy alternatively 
if nominated persons do not have such a right or do not 
wish to exercise it they may have a right under such an 
agreement to give instructions to the person holding the 
shares as to the exercise of voting rights
ii  a form of proxy is enclosed which to be valid must 
be completed and deposited with computershare 
investor services plc the pavilions bridgwater road 
bristol bs99 6zy not less than 48 hours before the time 
appointed for holding the meeting or any adjourned 
meeting the completion and return of a form of proxy will 
not prevent a member who wishes to do so from attending 
and voting in person
iii  the company pursuant to regulation 41 of the 
uncertificated securities regulations 2001 specifies that 
only those holders of ordinary shares registered in the 
register of members of the company at close of business 
on tuesday 12 may 2009 shall be entitled to attend and 
vote at the aforesaid annual general meeting in respect of 
such number of shares registered in their name at that time 
changes to entries on the register of members after close 
of business on tuesday 12 may 2009 shall be disregarded 
in determining the rights of any person to attend or vote at 
the meeting
iv  in order to facilitate voting by corporate representatives 
at the meeting arrangements will be put in place at the 
meeting so that i if a corporate shareholder has appointed 
the chairman of the meeting as its corporate representative 
with instructions to vote on a poll in accordance with the 
directions of all of the other corporate representatives 
for that shareholder at the meeting then on a poll those 
corporate representatives will give voting directions to the 
chairman and the chairman will vote or withhold a vote 
as corporate representative in accordance with those 
directions and ii if more than one corporate representative 
for the same corporate shareholder attends the meeting but 
the corporate shareholder has not appointed the chairman 
of the meeting as its corporate representative a designated 
corporate representative will be nominated from those 
corporate representatives who attend who will vote on a 
poll and the other corporate representatives will give voting 
directions to that designated corporate representative 
corporate shareholders are referred to the guidance 
issued by the institute of chartered secretaries and 
administrators on proxies and corporate representatives 
– wwwicsaorguk – for further details of this procedure 
the guidance includes a sample form of representation 
letter if the chairman is being appointed as described 
in i above
v  the company’s capital consists of 145663187 ordinary 
shares with voting rights
notice of meeting continued contents 
01 financial highlights
02 group overview
03 yule catto around the world
04 chairman’s statement
business review
06  chief executive’s report  
06 polymer chemicals 
10 pharma chemicals 
13 impact chemicals 
14 financial review 
16 corporate social responsibility report
23 directors and advisers
24 report of the directors
26 corporate governance
30 directors’ remuneration report
33 directors’ interests
35 statement of directors’ responsibilities
group financial statements
36 independent auditors’ report 
38 consolidated income statement
39 consolidated balance sheet
40 consolidated cash flow statement
41  consolidated statement of recognised income and expense
42 notes to the consolidated financial statements
company financial statements
72 independent auditors’ report 
73 company balance sheet
74 notes to the company financial statements
other information
81 principal subsidiaries and joint ventures
82 five year financial summary
83 notice of meeting
2008 saw further steady progress 
in operational performance and the 
implementation of our strategic plans 
against the backdrop of an increasingly 
challenging economic environment
designed and produced by 
the college  wwwthecollegeukcom yule catto  co plc
annual report
for the year ended 31 december 2008
being part  
of all our  
lives
yule catto  co plc
temple fields
harlow
essex cm20 2bh
t 44 01279 442 791
f 44 01279 641 360
wwwyulecattocom
yule catto  co plc   annual report 2008


Summary:
 yule catto  co plc
annual report and accounts 2008 
04
chairman’s statement
2008 saw further steady progress  
in operational performance and  
the implementation of our strategic 
plans against the backdrop of  
an increasingly challenging  
economic environment
2008 was another good year for the 
group given the marked deterioration  
in the global economy over the year and 
what looks set to be the worst recession 
in several decades 
the polymers business finished the year 
slightly ahead after a strong firsthalf start 
to the year volumes contracted in the 
second half as the economic downturn 
took hold and for the year as a whole 
volumes were slightly lower 
our strategy in polymers remains 
focused on geographical expansion 
around existing business hubs and 
developing market sectors where our 
product technology and manufacturing 
capabilities give us real competitive 
advantage we believe this strategy has 
served us well in the current environment 
during the year we completed further 
substantial expansion of our nitrile 
capacity in malaysia to take advantage  
of the continued rapid growth in the 
synthetic glove market we also completed 
the acquisition of a small dispersions 
company in vietnam to support our 
global customers 
our pharma business continued to  
grow the range of generic and ethical 
products it plans to manufacture with the 
registration of six further drug master 
files in line with its annual target as we 
entered 2008 we anticipated that the 
pharma business would improve on 
2007 albeit heavily skewed towards the 
second half of the year as it transpired 
customer demand and destocking over 
the second half meant that 2008 results 
were lower than 2007  we have previously 
announced plans to exit our italian site  
to improve our operational cost base and 
the productivity of the business and we 
remain on track to do so by the middle  
of 2009 which should benefit the year 
our strategy for impact chemicals has 
been to manage it for value which has 
involved restructuring its component 
businesses and improving their 
performance in the shortterm with a 
view to divestment at appropriate prices 
i am pleased that we have now managed 
to sell four of the five impact businesses 
with the last of these completed shortly 
after the year end we believe we have 
delivered substantial value to our 
shareholders through this strategy 
the remaining business in the portfolio 
was restructured early in 2008 and  
it too is now trading profitably
overall underlying group profit before 
taxation increased by some 5 to 
£327 million the group’s reported 
taxation charge was substantially lower 
and consequently underlying earnings  
per share rose by 12 to 179 pence  
per share
the strategic actions we have taken 
through the year have been heavily 
focused on deleveraging the balance 
sheet and we have succeeded in 
lowering net debt substantially with the 
decline in the economy and the scarcity 
of liquidity from financial institutions this 
has proved to be well timed our aim is 
to reduce the group’s net debt to below 
£100 million the board has reluctantly 
taken the decision to suspend further 
dividends until we achieve this which is 
expected to be within the next two years 
this decision together with our recent 
refinancing should ensure that we have 
access to sufficient liquidity to see us 
through the current global financial crisis yule catto  co plc
annual report and accounts 2008 
05
the working conditions and safety 
of our employees everywhere remain 
paramount in the operation of our 
business we set targets annually to 
reduce levels of lost time accidents 
and against this measure we have been 
improving our safety performance for 
many years i am pleased to report 
that we have made further progress 
in 2008 and have had our best ever 
year in terms of both ‘all accident’ and 
‘lost time accident’ rates we remain 
fully committed to the principles of 
sustainable development and have  
made further progress against all of 
the 10year targets in our sustainable 
development programme
after some 30 years on our board and 
the last eight years as chairman anthony 
richmondwatson retired at the end of 
january 2009 and i succeeded him as 
chairman i would like to express our 
gratitude to tony for his many years of 
service as a nonexecutive director and 
his wise counsel and guidance of the 
group as chairman through a period 
of much change on 1 march 2009 
we were pleased to appoint graham 
menzies as an additional independent 
nonexecutive director
this has been another year in which 
much has been achieved on behalf  
of the directors and shareholders  
i would like to thank all our employees 
worldwide for their commitment and 
contribution towards the company’s 
success
o u tl o ok
the deterioration in the global economy 
has been far more severe than generally 
anticipated at the beginning of 2008 
and it has been exacerbated by the 
global financial crisis whilst polymer 
volumes were down 3 in the year they 
declined by some 14 yearonyear 
during the fourth quarter and demand 
has remained depressed in the early 
part of 2009 as a result both of lower 
demand and of continued destocking 
by customers
this situation creates a very high degree 
of uncertainty as to how the coming  
year will develop and the board believes 
it is therefore too early to offer any firm 
guidance on the outturn for 2009
the group’s impact chemicals and 
pharma chemicals businesses should 
benefit from recent restructuring 
the pharma sector generally is not 
particularly cyclical and should weather 
the downturn reasonably well
within our polymer chemicals business 
we anticipate the demand in our asian 
businesses to be more robust than that 
of our european businesses due to local 
market conditions and a more resilient 
demand profile from our targeted 
markets however overall we anticipate 
our volumes globally could well be  
lower in 2009
the recent weakness of sterling against 
the dollar euro and malaysian ringgit 
should it continue will assist the 
reported sterling earnings for a number 
of our businesses
overall therefore there are a number 
of positive factors that should support 
the business during 2009 we have 
substantially delivered on our strategic 
goals of two years ago and are clearly 
focused both on continuing to improve 
the quality and performance of our 
business and on further strengthening 
our balance sheet this makes us well 
placed to weather the challenges that  
lie ahead
peter wood
11 march 2009