yule catto  co plc
annual report 2011
being p art of  
all our lives what we do
innovation is critical  
to our success
yule catto is a trusted partner of its customers around the world we don’t sell chemicals –  
we sell formulations our innovative formulations and application knowhow are an integral  
part of our customers’ products which cover a wide range of industries including coatings 
building products gloves carpets paper adhesives plastics pvc and many more
our approach
our approach is to work closely with our customers we understand their product and  
process requirements the combination of this intimate understanding and our technology  
and process knowhow are the key to our and our customers’ business success
reshaped business
during 2011 we completed the acquisition of polymerlatex and sold the group’s 
remaining noncore business – pharma this completed a transformation started  
in 2007 which has taken the group from a small diversified chemical business  
to being a substantial focused leading producer of specialty aqueous polymers
contents
overview
financial highlights 01 
our business 02 
chairman’s statement 09
group financial statements
independent auditor’s report 47 
consolidated income statement 48 
consolidated statement  
of comprehensive income 49 
consolidated statement  
of changes in equity 49 
consolidated balance sheet 50 
consolidated cash flow statement 51 
notes to the consolidated  
financial statements 52
business review
chief executive’s report 10
financial review 16
corporate social  
responsibility report 20
company financial statements
independent auditor’s report 90 
company balance sheet 91 
notes to the company  
financial statements 92
governance
directors and advisers 30 
report of directors 31
corporate governance 34
directors’ renumeration report 39 
statement of directors’  
responsibilities 46
other information
principal subsidiaries and  
joint ventures 99 
five year financial summary 100 overview yule catto  co plc  annual report 201 1 1
financial highlights
total sales
£111 7m
earnings per share
 188 p
 underlying performance
profit before taxation
£848m
increase in profit before taxation
  9 9
as reported
continuing operations
underlying performance
a
ifrs
2011
£’000
2010
£’000
2011
£’000
2010
£’000
total sales
b
1116862 582858 1116862 588547
ebitda
c
115208 60716 115208 60716
operating profit 96368 50435 54329 59414
profit before taxation 84795 42595 39439 54219
earnings per share
g
188p 145p 98p 207p
dividends per share
d
35p 26p 35p 26p
net borrowings
e
164325 63370 156129 76044
cash generated from operations
f
80191 42228 80191 42228
free cash flow before dividends
f
36331 9825 36331 9825
 
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 see note 11
e as shown on the consolidated balance sheet on page 50
f as shown within the consolidated cash flow statement on page 51
g see note 12
underlying performance
the group’s management uses underlying performance to plan for control and assess the performance of the group underlying performance differs from the statutory  
ifrs performance as it excludes the effect of special items which are defined in note 2 the board’s view is that underlying performance provides more meaningful information 
for the group’s investors and so it is the primary focus of the group’s narrative reporting where appropriate statutory performance inclusive of special items is also described
proforma
continuing operations
underlying performance
a
2011
£’000
2010
£’000
total sales 1268845 1077694
ebitda 132189 120385
operating profit 109650 93206
profit before taxation 95977 76966
 
proforma numbers reflect the results of polymerlatex as though it were under the group’s ownership for the relevant reporting periods with an estimate of the associated 
notional finance cost for those periods see the chairman’s statement on page 9 for a fuller explanation overview yule catto  co plc  annual report 201 1 2
who we are toda y
the polymer chemical business of yule catto
synthomer is the trading name of yule catto’s  
polymer business and for over 50 years  
has stood for reliability and innovation in  
the emulsion polymer market to find more 
details about our business please go to  
wwwsynthomercom
asia  rest of world
41 of sales
1  sbr latex plant  
marl germany
2  nbr latex plant  
pasir gudang malaysia
34  r d e ur o p e  
marl germany  
and harlow uk
5  r d a si a  
kluang malaysia
4 5
41
europe  north america
59 of sales
59
1 2
3
 proforma basis sales by destination eastern europe included in asia  rest of world
8 manufacturing plants 
1 rd centre
 13 manufacturing plants
2 rd centres overview yule catto  co plc  annual report 201 1 3
the global locations of yule catto
where we are toda y
our manufacturing plants in europe are well 
located to supply our customers with a strong 
presence in germany the industrial heartland 
of europe in asia we have manufacturing  
in malaysia and vietnam and a growing selling 
and distribution activity in china and we also 
have long established positions in the middle 
east and south africa
key
 plant location
 sales office
  r d c e n t r e
 head office
locations
china 01 synthomer shanghai chemical co ltd
guangzhou  shanghai
egypt 02 synthomer sae 10th of ramadan city
england 03
04
04
05
06
07
 synthomer ltd batley
synthomer ltd harlow
yule catto  co plc harlow
synthomer ltd ossett
synthomer ltd stallingborough
william blythe ltd accrington
finland 08 eka synthomer oy oulu
germany 09
10
 
11
synthomer gmbh langelsheim
synthomer deutschland gmbh marl 
synthomer deutschland gmbh worms
italy 12 synthomer srl filago
malaysia 13 
14
 revertex malaysia sdn bhd  
synthomer sdn bhd kluang
polymerlatex sdn bhd  
quality polymer sdn bhd pasir gudang
netherlands 15
16
synthomer bv hasselt
synthomer bv oss
saudi arabia 17 synthomer middle east company  
dammam
south africa 18 synthomer chemical pty ltd durban 
uae 19 synthomer sales gmbh dubai
usa 20 synthomer llc atlanta
vietnam 21 synthomer vietnam co ltd  
ho chi minh city
12
11
15
16
10
04
06
07
03
05
09
europe
20
18
02
17
19
13
21
01
14
08
rest of world overview yule catto  co plc  annual report 201 1 4
our products
our products combine chemical reaction  
and formulation based on a diverse range  
of chemistries
synthetic latex
consists of three principal product families styrene butadiene 
rubber sbr manufactured in germany and italy nitrile butadiene 
rubber nbr manufactured in italy and malaysia and high solids 
styrene butadiene hssbr produced in germany hssbr is 
shown in specialties in the chart
dispersions
consists of primarily vinyl and acrylic based emulsion polymers 
used in a wide range of applications including in the coating 
construction adhesives and textile industries these products are 
manufactured at our facilities in germany italy uk south africa 
middle east malaysia and vietnam
compounds
these products are specially formulated at our plants in the uk 
netherlands and egypt using sbr latex hssbr latex natural 
rubber latex and a wide range of other functional materials
specialties
comprise a number of specialty polymers mainly non aqueous 
including polyvinyl alcohol liquid polybutadiene high solid sbr 
latex and chloroprene specialties also includes inorganic products 
based on copper tin and iodine from the group’s one remaining 
nonpolymer business
a  latex – 49
b  specialties – 24
c  compounds – 5
d  dispersions – 22
a  nbr – 36
b  sbr – 64
sales by product
no1
nbr latex
producer globally
no1
high solid sbr latex 
producer globally
b
a
a
b
c
d overview yule catto  co plc  annual report 201 1 5
our markets
our products are used in many different  
end use markets across the globe providing 
the business with substantial application  
and geographic diversification
health  protection
medical clean room and industrial gloves medical devices  
eg catheters condoms and other dipped latex goods
paper
coated paper and paperboard finecoated paper lightweight 
coated paper food packaging and other specialty paper grades
construction  coatings
construction
cement and mortar modification bitumen modification concrete 
repair systems and plasticisers bonding aids primers flooring and 
construction adhesives liquid applied membranes flexible roof 
coatings sealants and primers
coatings
acrylic and vinyl acetate copolymers for walls interior  exterior 
glosssemigloss emulsion paints plasterstextured finishes 
flexible wall coatings wood paints and stains anticorrosion paints 
industrial coatings and water based fillers
carpet compounds  foam
binding and backing of tufted and other carpets foam backed 
carpets automotive and artificial grass foams for mattresses 
pillows and shoes
functional polymers
nonwoven fabrics insulation textile coatings printing gaskets 
masking tapes specialty nongraphic papers abrasives tyre cord 
pressure sensitive adhesives packaging and wood adhesives
performance polymers
lithene – for various automotive applications in electrical  
insulation and sound damping
alcotex – polyvinyl alcohol used as a stabilising material  
in the pvc polymerisation process
polyvinyl acetate – for solvent adhesives polyester resins  
and composites  
inorganic nonpolymer specialties – for catalysts flame 
retardants and other niche applications
no1
sbr latex producer 
in europe
no3
acrylic dispersion 
producer in europe
no1
acrylic and vinylic  
dispersion producer 
in the middle east
a  construction and coatings – 231
b  health and protection – 222
c  carpet compounds and foam – 194
d  paper – 159
e  functional polymers – 145
f  performance polymers – 49
sales by market
a
b
c
d
e
f
a  western europe – 56
b  eastern europe – 4
c  north america – 3
d  asia – 27
e  africa  middle east – 8
f  rest of world – 2
sales by destination
a
b
c
d
e
f overview yule catto  co plc  annual report 201 1 6
the right formula
innovation is at our core we have excellent product 
application knowhow and consistently develop and 
produce quality products using our leading process 
capability and well located facilities
1 customer  
focus
central to our success is the  
in depth understanding of our 
customers’ needs from application 
performance to product formulation 
to service requirements
3 the right 
knowledge
we have been developing 
specialty polymers for over  
50 years and have over 150 
highly experienced rd and 
technical support professionals  
at our three research centres  
we have a culture of continued 
technical learning built through 
interaction with our customers 
suppliers industry bodies  
and academia
2 changing  
markets
we have a deep understanding  
of the megatrends and  
industry specific drivers  
that affect our markets  
allowing a unique insight  
into future requirements overview yule catto  co plc  annual report 201 1 7
5 reliable  
service
our sites are well located for  
our customers and we use our 
experience in logistics to get the 
right product to our customers 
when and where they need it 
technical service support is 
provided by our experienced 
personnel so that our customers 
can maximize the performance 
benefits that our products  
can bring
4 the right 
formula
a thorough understanding of  
our core chemistry formulation 
knowhow and applications 
technology is essential for us to 
create market leading products  
a fast time to market is achieved 
through the combination of our 
state of the art development 
facilities extensive applications 
capabilities and flexible modern 
manufacturing facilities
global rd centres
 
harlow england
 
marl germany
 
kluang maylasia
01
02
03
03
01
02 overview yule catto  co plc  annual report 201 1 8
the right formula for growth
we deliver growth from the application of knowledge and our ability  
to develop and produce the right product for our customers with leading 
process capability and well located manufacturing
•  customer knowledge  
and relationships
•  applications technology  
and understanding
•  highly experienced  
and expert personnel
•  access to multiple  
polymer technologies
•  differentially managed  
product portfolio
•  value sales approach
•  access to asian and  
emerging markets
•  manufacturing close  
to customers
•  proximity to suppliers
•  cost effective production
•  flexible and effective 
organisation
•  fast and commercially  
focused rd
the  
right knowledge
the  
right locations
the  
right product
the  
right processes overview yule catto  co plc  annual report 201 1 9
chairman’s statement
overview
2011 was an exceptional year for yule catto we delivered a very 
strong set of financial results just as importantly though it marked 
the end of a process of transformation for the group from a small 
diversified chemical business in 2007 through to a much larger 
focused specialty polymer business in 2011 with a broad product 
offering and exposure to high growth markets
at the end of march we completed the acquisition of polymerlatex 
effectively doubling the size of our business subsequently in 
november we concluded the sale of our pharmaceutical business 
the last noncore asset we needed to divest to complete  
the transformation process to become a focused specialty  
polymer business
strategy
our broad strategy remains unchanged we are focused on 
geographic expansion around existing business hubs further 
increasing our presence in emerging markets and in developing 
market sectors where our technology new product development 
and manufacturing capabilities give us a real competitive advantage 
consistent with this strategy we commenced construction of 
70000 tonnes of new nitrile latex capacity in the year in malaysia 
due on line in the fourth quarter of 2012 and completed the 
acquisition of a small dispersion manufacturer there in late 2011
performance
we delivered a very strong set of financial results the group 
reported underlying profit before tax of £848 million an increase 
of some 100 and underlying sales were £1117 million an 
increase of 92 over 2010 throughout the year the board has 
reviewed the performance of the business on a proforma basis 
which includes the results of polymerlatex for 2010 and 2011 in 
full with an allowance for the finance cost of the acquisition for the 
periods we did not actually own the business on this basis and 
excluding the divested pharma business the comparisons are more 
representative and are very strong with sales of £1269 million  
up 18 and underlying profit before tax of £960 million up 25
integration progress
when we announced the acquisition of polymerlatex we  
committed to deliver hard synergies of at least £20 million from  
the combination of both polymer businesses i am pleased to say 
that at the end of 2011 only nine months after the acquisition  
we had already established a synergy run rate annualised rate  
of delivery of £15 million the board now anticipates we will  
achieve an annual run rate of £25 million by march 2013
balance sheet
the acquisition of polymerlatex was structured so as to ensure  
that the enlarged group had a solid balance sheet with an 
estimated ratio of net borrowings to ebitda at the date of 
acquisition of just below 20 the strong performance during the 
year and the divestment of the pharma business have resulted in 
net borrowings reducing substantially from the position at the date  
of acquisition and our closing net borrowings was £1643 million 
this represents a proforma underlying net borrowings to ebitda  
of 12 which the board considers to be a prudent leverage position 
dividend
the board has recommended a final dividend of 23p per share 
making a total dividend per share for the full year of 35p  
this represents growth of 35 on the adjusted full year dividend  
per share for 2010 looking ahead the board expects to increase 
the dividend ahead of earnings growth in accordance with the 
board’s stated intention of pursuing a progressive dividend policy
safety health and environment
the group is absolutely committed to the continuous improvement 
of its performance in respect of safety health and the environment  
i am pleased that most of the metrics that we measure in this  
area showed good improvement over the course of the year 
people
the group’s employees including those who have left as part  
of the restructuring have worked extremely hard this year to deliver  
the transformation of the group and the board thanks them  
for all their efforts
board composition
at the forthcoming agm i shall not be seeking re election  
as chairman after eleven years as a director the last three  
being as chairman and after the transformational year of 2011  
i feel this is the right time for a change dr a a dobbie has  
also indicated he will not be seeking reelection he has been  
a director for five years and chairman of the remuneration 
committee for the last three we thank him for his valuable 
contribution and wish him well in the future
in january 2012 dominique fournier joined the board as  
a nonexecutive director dominique subsequently became  
potentially conflicted and he decided to step down from the  
board on 13 march 2012
the appointment of three new nonexecutive directors is well 
advanced and we expect to make further announcements shortly
during 2011 we brought neil johnson onto the board as our  
senior independent nonexecutive director and i am very  
pleased he has agreed to succeed me as chairman
current trading and outlook
looking forward we continue to anticipate several years of  
low growth in western economies with global growth generally 
driven by emerging markets where we have a significant and 
increasing presence
whilst the general economic environment requires a degree  
of caution i am pleased that the business has made a solid  
start to the year earnings will benefit from the synergies from  
the polymerlatex acquisition coming through over the course  
of 2012 and the board remains confident about the prospects  
for the group in 2012 and beyond
peter wood 
chairman 
14 march 2012 business review yule catto  co plc  annual report 201 1 10
chief executive’s report
overview
2011 was a pivotal year in the development of the yule catto 
group the acquisition of polymerlatex was announced in 
december 2010 and completed at the end of march 2011 when 
we received the relevant clearances with the sale of our pharma 
business in november 2011 and the increased scale created by the 
polymerlatex acquisition yule catto has now become a substantial 
focused specialty polymer business with a strong and diversified 
portfolio of products and well invested facilities in europe and asia
as part of the integration the combined polymer business has 
adopted the synthomer brand name and we now operate all of  
our polymer operations around the world under this well recognised 
and respected name
the integration process between polymerlatex and synthomer 
started in april following completion of the acquisition this has  
been an intense process covering all operating regions in europe 
this has so far resulted in the closure of the mouscron site in 
belgium and the exit from latex production in stallingborough in  
the uk in addition to this manufacturing network rationalisation 
there have been significant changes to the commercial and 
technical organisations with the closure of synthomer’s technical 
service and research laboratories in frankfurt germany and 
dispersion research laboratories in harlow uk every effort  
has been made to retain core skills and fill defined vacancies as  
a result of these changes during the year some 200 people left  
the business as a result of these changes the resulting savings  
will be mainly seen in 2012
in asia the operations of synthomer in kluang and polymerlatex 
in pasir gudang have also been brought under one management 
structure in rd the implementation of a combined innovation 
process is well underway with the very clear aim of pursuing strong 
market needs fast speed to market and delivering added value  
to our customers
the integration process absorbed a lot of management effort in 
2011 clearly much of the focus was on delivering the synergies 
we committed to on launching the acquisition however and just as 
importantly it has been about building a strengthened management 
team and greater capability throughout the organisation overall this 
process has been very successful in parallel with the integration 
process we have remained very focused on driving performance 
where we have seen very good results with group proforma 
operating profit of £1097 million 18 ahead of 2010
18
increase in 
operating profits
 proforma basis business review yule catto  co plc  annual report 201 1 11
a  western europe – 56 
b  eastern europe – 4
c  north america – 3
d  asia – 27
e  africa  middle east – 8
f  rest of world – 2
2011 sales £1269m by destination
when we announced the acquisition of polymerlatex we anticipated 
at least £20 million of annual synergies as at the end of december 
2011 the annualised run rate from synergies stood at £15 million 
we now anticipate that by the end of march 2013 the annual run 
rate of synergies will be £25 million this should result in a benefit  
to operating profit in 2012 of some £15 million compared to 2011
the macroeconomic environment deteriorated over the course of 
2011 as the sovereign debt crisis developed end market demand 
for our products was generally good through the first half of the 
year with volumes ahead 3 with european volumes broadly flat 
but strong growth in asia the second half however saw significant 
destocking this arose from a combination of the macroeconomic 
uncertainties and customers delaying orders to take full advantage 
of the benefits of falling input costs this was most noticeable  
in the fourth quarter where demand was down by some 13  
this was a similar pattern to what we saw in 2009 and as then 
margin management generally compensated for the volume 
shortfall resulting in our strong overall financial performance
raw material price volatility in basic monomers created difficulties 
through the year which the business worked hard to overcome 
most monomer prices moved up strongly during the first half of 
the year and this combined with a tight supply situation created 
a challenging environment for the business raw material prices 
fell sharply in the fourth quarter creating different challenges as 
customers destocked throughout this volatile period the business’ 
priority has remained on ensuring a balanced approach to margin 
and volume with a continued focus on value delivery which was 
broadly successful
we manage the business in two segments ‘europe  north 
america’ and ‘asia  rest of world’ the reported results are  
on an ‘origination basis’ meaning the segmental sales and operating 
profits are reported based on where the product is manufactured 
we export many specialty products from europe to asia looking 
at sales on a destination basis europe  north america comprises 
63 of group turnover with asia  rest of world accounting  
for 37
£1097m
operating profit
a  asia  rest of world – 28
b  europe  usa – 72
2011 divisional operating profit 
£1185m by origination
a
b
41
of total sales to 
emerging markets
 proforma basis
a
b
c
d
e
f business review yule catto  co plc  annual report 201 1 12
chief executive’s report
continued
europe  north america ena
our formulas 
are part of  
all our lives
yule catto’s formulas in aqueous and specialty polymers are  
used in a diverse range of applications that we see around us
you will find our products all around you
inside the home and buildings you will find them in wall plaster 
paints matt gloss and vinyl wood stains and varnishes floor  
tile and wood adhesives cushions table cloths blinds foam  
in the sofa wipes kitchen gloves and many many more
outside you will see our products in masonry paint gloss lacquers  
mortar plasters adhesives insulation panels waterproof membranes 
pvc products and as a bitumen modifier
you will find our products in cars and boats and many  
other places such as thin walled medical gloves  
an essential product in modern health and hygiene  
even the paper this report is printed on contains  
our latex
  underlying performance excludes special items as shown  
on the consolidated income statement
  reconciliation of underlying performance to proforma results  
provided in the financial review
7777
3358
2011
2010
underlying – as reported  
sales £’m
731
364
2011
2010
operating profit £’m
855
776
2011
2010
operating profit £’m
9130
7799
2011
2010
underlying – proforma  
sales £’m business review yule catto  co plc  annual report 201 1 13
proforma operating profit in our ena business was ahead by 10
volumes for the year were down affected by the destocking activity 
we saw over the second half of 2011 the destocking was broad 
based with volumes down across almost all segments our focus 
on margin management and benefits from our innovation pipeline 
ensured that overall profitability still increased substantially
alongside the plant closures in europe we are investing in our 
stallingborough dispersions facility to raise the overall capability  
of the site during the year we made some modest increases  
to our hssbr capacity by debottlenecking these changes  
have created a much more capable robust manufacturing  
network in europe
some £3 million of synergy benefits from cost reductions came 
through in the group results for the year and these are almost 
entirely reflected in the ena segment
the coming together of polymerlatex and yule catto’s rd 
activities has created a stronger rd capability in europe  
we now have a broad portfolio of projects primarily focused  
on commercially driven projects to develop technically leading 
products in both key growth segments and traditional business 
segments where our strong market positions can be maintained 
the development programme has led to new product launches in  
a number of segments during the year including specialty adhesives 
construction paper coating and synthetic grass applications
products  
interior
01  d e c o ra ti v e c o a ti n g s
02  c a r p et s a n d  
flooring adhesives
03  w a te r p r o ofi n g m e m b r a n e s 
and sealants
exterior
04  m a s o nr y p a i n t s
05 anticorrosion coatings
roof
06 roof tile coatings
07 insulation systems
leisure
08 automotive sealants
09  p o l y e s t e r c o m p o si t e s
01
02
03
06
07
08
05
09
04 business review yule catto  co plc  annual report 201 1 14
chief executive’s review
continued
asia  rest of world arw
 ex pa nsi o n
into asia
we have been in asia for over 100 years  
leveraging our capabilities there is key  
to the group’s future growth
product 
development 
our rd facility is heavily 
focused on nitrile nbr 
latex which we supply to  
the medical glove industry –  
a market growing  
at some 15 a year
3391
2470
2011
2010
underlying – as reported  
sales £’m
321
239
2011
2010
operating profit £’m
330
255
2011
2010
operating profit £’m
3558
2978
2011
2010
underlying – proforma  
sales £’m
  underlying performance excludes special items as shown  
on the consolidated income statement
  reconciliation of underlying performance to proforma results  
provided in the financial review business review yule catto  co plc  annual report 201 1 15
proforma operating profit in our arw segment was ahead by 29 
manufactured volumes in arw were 9 up at the half year but 
destocking particularly in nitrile resulted in full year volumes 
showing no growth
in order to maintain leadership in the fast growing synthetic glove 
market a 70000 tonne nitrile latex expansion to the pasir gudang 
plant was sanctioned during the year and is now under construction 
the new capacity will come on stream in q4 2012 this expansion 
will also be structured to allow sbr production and we are aiming 
to build a growing presence in asia in sbr leveraging our leading 
technology over the coming years this was one of the strategic  
objectives we set ourselves at the time of the polymerlatex 
acquisition taking advantage of our greater financial flexibility  
and scale
our dispersions facilities in asia operated near capacity through 
most of 2011 in october we completed the acquisition of quality 
polymer a malaysian dispersions manufacturer owned by one of 
our major customers 
this has resolved our nearterm dispersion capacity issue in the 
region whilst improving our market share in malaysia
in asia the integration of the rd activities has been focused on 
optimising the combined range of nbr latex to ensure the best and 
most comprehensive of offerings to our customers for glove dipping 
applications and also on improvements in product consistency 
and quality to deliver improved operational efficiencies in parallel 
to support the changing needs of the market and drive sustained 
growth in the region extensive research and applications work is 
ongoing to develop the next generation of latices this development 
work is focused on improving the strength and feel of gloves whilst 
maintaining the key barrier and chemical resistance properties  
of the latex
adrian whitfield 
chief executive 
14 march 2012
70000 tonnes  
of capacity
we are constructing another 
70000 tonnes of nbr latex 
capacity due for completion  
by the end of 2012 this will  
allow us to both support the  
fast growing nitrile market  
and sell sbr latex products  
into the region
state of the  
art production 
facilities
our latex facility in pasir  
gudang is only three years  
old – and will deliver over 
200000 tonnes of nbr  
and sbr latex emulsion 
when the new expansion  
is complete
acquisition
in 2011 we expanded our 
dispersion polymerisation 
capacity with the purchase  
of quality polymer from  
one of our major customers  
in the region
china
our ability to sell into china  
was enhanced in 201 1 with  
the creation of our new subsidiary 
which will promote our high  
value specialty products into  
the country
locations
01
 
shanghai china
02
 
guangzhou china
03
 
ho chi minh city vietnam
04
 
kluang malaysia
05 pasir gudang malaysia
03
04
05
01
02 business review yule catto  co plc  annual report 201 1 16
financial review
income statement
the acquisition of polymerlatex substantially changed the size 
of the group the acquisition was completed on 31 march 2011 
after competition clearance was received to allow a meaningful 
comparison of the results for 2011 the table below shows pro
forma results by adjusting the underlying performance of the group 
to include the underlying results of polymerlatex for 2010 and 
2011 and to allow for an estimated interest cost of £21 million per 
quarter for the periods that the business was not actually owned 
the underlying proforma results provide the most meaningful 
comparison of year on year performance
sales operating profit and profit before tax –  
underlying proforma
total sales increased by 18 to £1269 million volumes for the 
year were 3 lower and the increase in sales value was driven in 
the main by the recovery of monomer price increases translation 
increased turnover by 1
underlying proforma operating profit of £1097 million was ahead 
by 18 with strong profit growth in both segments
had polymerlatex been bought on 1 january 2011 then it is 
estimated that the finance costs for the year would have been some 
£21 million higher resulting in a proforma underlying profit before 
tax for the group of £960 million an increase of 25 on the 
equivalent result calculated on the same proforma basis in 2010
improving profitability through
transformation
the focus on specialty polymers has allowed the group to grow earnings 
strongly whilst improving the financial strength and scale of the group
2007
£223m
2008
£259m
2009
£340m
2010
£426m
2011
£960m
proforma
profit before tax business review yule catto  co plc  annual report 201 1 17
2007
74p
2009
113p
2011
188p
20072009
yule catto divested four 
businesses and with the 
performance improvements in 
polymers and working capital 
management delivered sufficient 
cash to put the balance sheet  
on a solid base
20102011
the acquisition of polymerlatex 
announced at the end of 2010 
was done with a conservative 
capital structure allowing the 
group to near double in size 
substantially improve proforma 
earnings and exit the year with  
a strong balance sheet
earnings per share
00
05
10
15
20
25
30
net debt to ebitda
06 07 08 09 10 11
0
50
100
150
200
250
300
share price graph
mar
09
sep
09
mar
10
sep
10
mar
11
sep
11
mar
12
2011 2010
underlying
£’m
polymerlatex
q1 2011
£’m
proforma
£’m
underlying
£’m
polymerlatex
full year 2010
£’m
proforma
£’m
group
sales 11168 1520 12688 5828 4949 10777
operating profit 964 133 1097 504 428 932
profit before tax 848 112 960 426 344 770
europe  north america
sales 7777 1353 9130 3358 4441 7799
operating profit 731 124 855 364 412 776
asia  row
sales 3391 167 3558 2470 508 2978
operating profit 321 09 330 239 16 255
unallocated
operating profit 88 00 88 99 00 99
proforma results business review yule catto  co plc  annual report 201 1 18
financial review
continued
sales operating profit and profit before tax –  
underlying non proforma
total sales increased by 92 to £1117 million whilst group 
operating profit increased by 91 mainly due to the polymerlatex 
acquisition finance costs increased due to higher borrowings for 
the acquisition partly mitigated by the beneficial impact of the 
repayment of some high coupon fixed rate debt in september 2010 
as a result profit before tax increased by 99 to £848 million
tax and eps
the underlying tax rate of 23 2010 20 was low reflecting 
the benefits of pioneer status extended tax holiday on our nitrile 
investments in malaysia and a zero rate in the uk as a result 
of losses after deduction of the contributions to the uk pension 
scheme the overall rate whilst low has increased as a result of  
the polymerlatex acquisition as much of the acquired business’ 
profits are made in germany which has an overall corporate rate  
of the order of 32
profit attributable to minority interests was £16 million  
2010 £13 million
as a result overall underlying earnings per share for 2011 was 
188p per share compared to a 145p per share for 2010 as 
adjusted to reflect the rights issue in december 2010 this is an 
increase in underlying earnings per share of 30 on a proforma 
basis including the first quarter’s results of polymerlatex eps 
would have been 211p an increase of 46
dividend
the group committed to a minimum dividend per share of  
30p for 2011 at the time of the interim announcement with an 
interim dividend of 12p the board has recommended a higher 
full year dividend of 35p and therefore a final dividend of 23p per 
share is recommended payable on 6 july 2012 to shareholders  
on the register on 8 june 2012
special items and ifrs
the group reports its financial results according to international 
financial reporting standards ifrs however to provide a 
clearer indication of the group’s underlying performance a number 
of special items are split out and shown in a separate column 
of the consolidated income statement due to their oneoff or 
noneconomic nature and are excluded from the comments on 
underlying performance above and throughout the chief executive’s 
review of business performance special items comprise
•  restructuring costs associated with delivering the synergy targets 
for the polymerlatex acquisition at the time of the acquisition  
the group announced an estimated total cash expenditure  
of £20 million to deliver these synergies of which £158 million  
was incurred in 2011 some £44 million of noncash asset write 
downs have also been expensed as a result of the plant closures 
giving a total expense of £202 million
•  acquisition costs relating mainly to the purchase of polymerlatex 
of £14 million charged in the year
•  various cross currency and interest rate swaps for hedging 
purposes which involve maturities of up to five 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 a loss of £09 million 2010 gain £26 million  
is segregated from the underlying performance during the year 
the group also settled the mark to market position on a number  
of interest rate swaps acquired with the former polymerlatex 
business the associated charge to special items was £24 million
•  amortisation of intangibles of £204 million comprising £191 
million in the company and subsidiaries and £13 million in share  
of joint ventures ifrs acquisition accounting requires an explicit 
number to be placed on certain intangibles and amortised through 
the consolidated income statement with the balance of the 
excess of the purchase price over the physical assets being 
carried as goodwill which is subject to annual impairment testing 
the amortisation expense arising from this in 2011 represents  
nine months’ amortisation and has been treated as a special item 
and will continue to be so as the associated intangible assets  
are amortised down to zero
•  tax credits of £15 million of which £75 million related to historic 
issues that were closed during 2011 £51 million was in respect  
of the release of deferred tax associated with the amortisation  
of acquired intangibles and £24 million represented the tax relief 
from restructuring and site closure costs incurred during the year
on an ifrs reported basis group revenue increased by 86 to 
£1059 million reflecting the effect of the polymerlatex acquisition 
and profit before tax declined to £394 million 2010 £542 million 
whilst underlying profit before tax doubled with the polymerlatex 
acquisition the ifrs results include the special items above  
a loss from discontinued operations of £403 million was recorded 
in the year which principally represents the impairment of the  
noncore pharma business offset by £41 million of operating  
profits prior to sale
balance sheet
goodwill increased to £2447 million at the end of 2011 from 
£1240 million at the end of 2010 £1642 million was recognised  
on acquisition of the polymerlatex group during the year offset 
by a recognised impairment on the noncore pharma business of 
£369 million at 30 june 2011 prior to its disposal on 30 november 
2011 currency translation reduced goodwill by £66 million
acquired intangible assets increased to £1654 million at 
31 december 2011 from £nil in the prior year acquired intangibles 
of £1912 million were recognised as a result of the acquisition of 
the polymerlatex group and quality polymers sdn bhd relating  
to customer relationships and technology these additions were 
offset by amortisation charges of £191 million and currency 
translation adjustments of £67 million
property plant and equipment ppe was £1836 million at 
31 december 2011 compared to £1026 million at 31 december 
2010 additions during the year comprised £255 million of capital 
expenditure and £1204 million due to acquisitions £318 million  
of the acquired asset value resulted from fair value adjustments 
these additions were offset by depreciation exchange adjustments 
and an impairment on the pharma assets prior to sale business review yule catto  co plc  annual report 201 1 19
deferred tax liability has increased from £67 million to £614  
million during the year the primary driver of this movement  
was the recognition of deferred tax liabilities on the recognised 
intangible assets and ppe fair value uplifts
pensions
in the main uk defined benefit pension scheme the majority  
of investments are in equities equities were little changed over 
the course of 2011 the yield on highquality corporate bonds 
decreased substantially 06 during the year which increased 
liabilities the company made cash contributions to the fund  
in the year of £126 million the overall effect of these changes  
was that there was an increase in the accounting deficit of  
the scheme which stood at £739 million at the end of 2011  
2010 £565 million
the uk scheme was closed to future accrual during 2009 and 
there are no active members in the scheme 
overseas net pension liabilities increased to £441 million 2010 
£95 million reflecting the inclusion of liabilities in the polymerlatex 
germany scheme of some £345 million the polymerlatex scheme 
is a traditional german unfunded ‘on balance sheet’ arrangement
borrowings cash flow and liquidity
the following cash flow is in the format used by management and  
it provides a clearer presentation of the movements in underlying  
net borrowings than the ifrs statement
2011
audited
£’m
2010
audited
£’m
underlying operating profit  
 before joint ventures 915 475
operating profit from  
 discontinued operations 41 44
movement in working capital 50 107
depreciation and amortisation   
 underlying 228 146
capital expenditure net 219 105
interest paid net 152 92
tax paid 199 87
pension funding in excess  
 of ias 19 charge 109 122
minority interest and  
 joint venture cash flows 63 38
operating cash flow 518 114
cash impact of restructuring  
 and termination of businesses 62 14
acquisitions and disposals net 3620 157
acquisition costs 44 12
dividends paid 85 29
net proceeds on issue of shares 2169 –
exchangeother 115 31
movement in underlying borrowings 1009 247
closing underlying net borrowings 1643 634
 
  includes £40 million of depreciation from the discontinued pharma business  
in 2011 2010 £43 million
underlying net borrowings increased significantly during the  
year to £1643 million with the additional leverage for the 
polymerlatex acquisition
group proforma ebitda increased substantially to £1322 million 
reflecting the polymerlatex acquisition
capital expenditure increased substantially in 2011 to £242 million 
£219 million net of proceeds from asset disposals this reflects 
the increased scale of the group
underlying working capital outflow for the year was an outflow  
of £50 million ifrs basis £148 million after a substantial  
outflow in the first half of 2011 the position mainly reversed  
on the back of lower input costs and volumes over the second 
half of the year control of working capital is a core focus of the 
business management
cash spend on acquisitions comprised the £3861 million we 
spent on polymerlatex of which £2169 million was funded from 
the rights issue and £101 million spent on quality polymer the 
malaysian dispersion business purchased in october divestment 
proceeds of £342 million were received for the sale of the  
pharma business comprising £285 million in cash and £57  
million deferred consideration
whilst net borrowings overall increased to £1643 million this 
closing position represents a reduction of over £70 million from  
the position at the date of the polymerlatex acquisition
financing and liquidity
as at the year end the group had us private placement debt  
net of derivatives of £75 million and £14 million in a four year 
amortising loan in malaysian ringgit in december 2010 the group 
agreed a new three year £210 million loan facility comprising  
a term loan of £150 million and an undrawn revolving facility of  
£60 million for the acquisition of polymerlatex this loan facility 
had an original maturity of december 2013 but during 2011 this 
date was extended to march 2015 in aggregate this amounts to 
£299 million of term debt at the end of year of which £239 million 
was borrowed
alongside the undrawn £60 million loan facility the group had 
£86 million of cash in hand repayments due in 2012 under loan 
arrangements comprise £24 million net of derivatives of us private 
placements and £4 million under the malaysian loan facility
in arriving at the group’s net borrowings some £209 million 
of non recourse off balance sheet factoring has been added 
back excluding this adjustment net borrowings would have been 
£1434 million
underlying proforma net borrowings to ebitda the group’s  
key leverage metric was 12 at the end of 2011
david blackwood 
finance director 
14 march 2012 business review yule catto  co plc  annual report 201 1 20
corporate social responsibility report
introduction
2011 was a year which saw very significant changes for the  
yule catto group with the integration of polymerlatex from  
april onwards and the sale of uquifa at the end of november  
the sale of uquifa in particular following the sale of other chemical 
businesses operating in a range of sectors changed the group to 
an almost exclusive focus on relatively highvolume waterbased 
polymers this change in structure coupled with the location of 
most of the polymerlatex sites on integrated chemical parks 
means that comparisons with previous years are harder to make 
than usual nonetheless the outturn figures on many of our headline 
environmental measures especially water and energy use per tonne 
of production are very significantly better than previous years
for the yule catto group water use per tonne of production fell  
by 265 and energy use fell by 105 in 2011 compared to 2010 
the fall in energy use led to a fall in carbon dioxide emitted per 
tonne of 107 and this was accompanied by a further reduction 
of 786 in the sulphur dioxide emissions per tonne of production 
this latter figure comes on top of the 99 reduction in sulphur 
dioxide production already achieved by the group in the 10 years  
to 2010 for continuing activities the production of waste was  
also sharply better seeing a reduction of more than a third in the 
waste produced per tonne however there was an exceptional 
amount of waste exported by the kluang site as material previously 
deposited in an onsite landfill was moved to a secure landfill off
site it should be noted that the waste was included in the figures  
for waste production in previous years and that the movement  
was a oneoff event which will not be repeated it has therefore 
been treated as an exceptional item and excluded from the 
environmental kpi tables and the year on year graphs
there was a rise in the number of personal injury accidents in  
the group for the second year in a row though the rate achieved  
is considerably less than half the rate being achieved 10 years ago 
this rise has been discussed in the group from shop floor to the 
board and programmes are being developed involving staff at all 
levels to return our performance to our previous best – and then  
to improve it further it is also notable that the absolute total costs  
of water and energy both more than doubled during the year –  
the group’s energy bill rose to £2325 million – and that despite  
the improved performance achieved the cost per tonne of each  
one rose by 21 achieving the group’s environmental targets 
remains a very high priority both for social responsibility and for 
business reasons 
the uk chemical industries association cia in common with 
other national associations set the industry sustainable development 
targets for its 2010 performance given the changing nature of the 
uk chemical industry these targets are difficult to carry forward 
for the industry as a whole but we have continued to use them 
as one marker of our performance on the measures we focus 
on we continue to improve and the group has remained ahead 
of the notional 2011 targets on all the measures we have also 
continued to meet our targets on involvement in our safety health 
and environments she system as measured by staff ‘near miss’ 
reporting more properly hazard reporting and removal rates  
these achievements are a continuing tribute to the hard work  
and commitment of our staff to she improvement
our policy commitments
yule catto’s central commitments to good she performance  
remain unchanged the group remains committed to both the  
global chemical industry’s responsible care
®
 initiative and to the 
principles of sustainable development as set out in the uk cia 
sustainable development sd guiding principles
responsible care
®
 aims to improve and enhance the chemical 
industry’s she performance year on year yule catto has  
been committed to responsible care
®
 since the 1990s and this 
commitment remains at the core of our efforts towards excellence  
in corporate social responsibility all yule catto sites are required 
to adhere to these principles and actively support the group’s efforts 
to achieve continuous improvement in our she performance
the yule catto group has been committed to the cia’s sd guiding 
principles since they were published in 2005 and we have reported 
annually against the targets set out in those principles each year 
since then the commitment was reconfirmed in 2010 when 
the sd principles were resigned by the current chief executive 
and the chairman of the yule catto board the sd principles are 
followed by the group’s sites around the world and are used both 
to set annual improvement targets especially for our environmental 
performance and to help the group to define its route to a safe 
and sustainable business yule catto’s principles include a strong 
commitment to open reporting of our environmental performance 
reflected in this annual report and full respect for the people and 
communities amongst whom we work
as with quality systems we accept the importance of demonstrating 
the strength of our environmental management systems through 
external accreditation by using the strengths of the new 
enlarged group yule catto has set itself the target of achieving 
uniform accreditation of the whole company to the environmental 
management standard iso 14001 by the end of 2014  business review yule catto  co plc  annual report 201 1 21
with a significant part of our operations being in europe yule catto 
is heavily affected by the eu’s carbon reduction commitments 
these require very significant absolute reductions in carbon dioxide 
production over the period to 2020 and then an 80 reduction 
by 2050 as reported below yule catto has already achieved 
very significant reductions in specific energy use that is energy 
consumption per tonne of production we also already have  
a longterm commitment to take low carbon energy electricity  
from the waste incinerator built next to synthomer’s stallingborough 
plant which was built expressly for this purpose to continue this 
improvement and safeguard our operations in the changing energy 
environment yule catto is committed to seeking to decarbonise 
our energy supply and will continue to seek to use carbonneutral 
energy supply options where feasible
yule catto has been a member of ftse4good for a number  
of years and is committed to maintaining our membership of  
that index
she performance and achievements during 2011
the longterm performance of yule catto against our targets and 
metrics improved noticeably in 2011 and in nearly all areas set high 
standards of performance for the new group of the five ‘headline’ 
measures used to monitor group performance two showed 
significant improvement over 2010 two were broadly neutral  
and one deteriorated
both energy and water use showed very significant gains with 
energy use per tonne of production improving by 105 and water 
use by 265 both energy and water use are less than 50  
of what they were in 2001 despite these gains the cost of energy  
and water both rose by 21 per tonne ‘near miss’ reporting –  
a leading indicator of both staff involvement and sites’ intent to 
spot and remove hazards – remained strong overall with the group 
achieving nearly four ’near miss’ reports per employee during 
the year easily exceeding the target of three further different 
measures of staff involvement in the she system are being 
discussed particularly with the newer sites to ensure maximum 
involvement by staff in all regions
the total amount of hazardous waste produced in 2011 was the 
same as in 2010 despite production being 68 higher of this 
waste 63 was able to be either recycled or recovered or burnt 
as a fuel – in a cement kiln for example the most difficult of the 
remaining hazardous wastes have to be incinerated which is energy 
consuming and environmentally unpopular in 2011 over 1200 
tonnes less had to be incinerated despite the increased production 
however this reduction in incineration meant that the amount  
to be disposed of to landfill increased more than the increase  
in production giving a rise in the amount of hazardous waste sent  
to landfill for the second year in a row whilst the amount sent  
to landfill per tonne of production was above that seen in 20089  
the absolute quantity was less than 60 of the 2000 amount 
despite production having over doubled and less than 35 of  
the extrapolated sd target
the number of reportable lost time accidents rltas increased 
compared to 2010 with the group’s rlta frequency rate increasing 
to 042 per 100000 hours worked on a positive note our site at 
oulu in finland achieved 10 years without a single day lost due to 
an accident on many other measures environmental performance 
improved despite increasing production at our accrington site in 
2011 our measured discharges of heavy metals are less than 6 
of the figures for 2000 our releases of acid gases to atmosphere 
reduced again and are now less than 02 of their 2000 values 
and our releases of phosphorous to water were down by more  
than 50 compared to 2010 to just over 10 of their 2000 value 
all on a per tonne basis
following further improvements to our measurement systems  
and increased output in kluang our recorded discharge of volatile 
organic compounds vocs increased again in 2011 a project to 
abate these releases is progressing and the recovery plant should 
be operational by the end of 2012 giving major reductions in 2013
there were more reportable safety incidents in 2011 but the number 
of reportable environmental incidents fell
the yule catto board and the group executive committee continue 
to monitor performance in all these areas and provide leadership  
in driving the group to continued improvements across all aspects  
of she performance
managing safety and environmental performance
safety and environmental performance is the responsibility of all 
yule catto staff and all staff are expected to be responsible for 
their own safety and to take care of those around them likewise 
all staff have a role to play in the environmental performance of our 
sites whether it is in recycling energy conservation or managing 
their site’s environmental performance the management of safety 
and environmental performance is fully integrated into yule catto’s 
management structure with all staff having responsibility for those 
who report to them
yule catto has two principal systems to assist in the management 
of she all accidents events which cause personal injury and 
incidents events which cause property damage environmental 
release cause complaints or result in other harm are recorded  
in the group’s aims accident and incident management system 
database aims has been in place for nearly 10 years and the 
system is used both to record and categorise then to manage  
the investigation of all accidents and incidents the system is also 
used to record and manage near misses events or hazardous 
situations which under other circumstances could have caused  
an accident or incident the system provides a way of tracking 
events and examining what is happening on our sites for trends  
or common failings business review yule catto  co plc  annual report 201 1 22
corporate social responsibility report
continued
the second system is a set of management policies and procedures 
which make up the yule catto she management system shems 
the elements of this system set the standards sites are expected 
to achieve and provide guidance on how they should achieve those 
standards it covers most areas of she performance and provides 
comprehensive coverage of the procedures yule catto expects 
all sites to have in place sites are expected to operate to these 
standards or to equivalent standards when they have their own 
suitable standards already in place
she performance is always a primary duty for management at all 
levels in the group the practices adopted in previous years remain 
a cornerstone of our efforts towards continuous improvement in 
she performance the practices include
•  she performance is discussed in all management meetings  
as the first agenda item
•  yule catto conduct regular indepth she audits of all sites to 
assess performance and identify opportunities for improvement 
the results of the audits are discussed both with the site  
involved and with wider management for example at the group 
executive committee
•  the group aims is used to collect and analyse data on all 
accidents incidents and ‘near misses’ on our sites the system 
ensures that all of these are appropriately investigated with  
the most serious or potentially serious incidents being fully 
investigated to root causes the system is then used to ensure 
that the identified actions to prevent recurrence are put in place
•  sites are expected to implement policies procedures and 
practices in line with the group’s safety health and environment 
management system shems and to provide training for all  
their staff to ensure that these are used by staff at all times
•  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
•  key leading performance indicators covering items such as 
inspections and engineering performance metrics are being 
collected and reported to senior management to give assurance  
of good performance at site hardware level
•  senior managers have she targets as part of their annual 
objectives other employees have similar objectives set  
either on an individual or a site basis and
•  group she visits sites to carry out training and development  
of key staff
health safety and accident performance
the most widely used comparative measures of occupational  
safety are lost time accident rates either all lost time accidents 
ltas or ‘reportable’ – that is over three days away from work – 
lost time accidents rltas yule catto has for many years used 
rltas as our primary measure and it is disappointing to report  
that the group’s performance on rltas was slightly worse in 2011 
than in 2010 there were 23 rltas in the year and although this 
is for a larger company there was a consequent rise in the group’s 
rlta frequency rate from 036 to 042 per 100000 hours worked 
100000 hours is very broadly a working lifetime despite this 
rise in 2011 a yule catto employee was still much less than half  
as likely to have a reportable accident in 201 1 as they were in 2001
the number of accidents resulting in less than three days lost time 
lta’s also increased in 2011 this meant that the group was just 
below the most recently reported frequency rate for all lost time 
accidents quoted by the european chemical industry council 
cefic in their responsible care report for 2010 the uk chemical 
industry remains amongst the safest manufacturing industries in  
the world and the uk chemical industries association cia collects 
data on its member’s performance yule catto’s objective remains  
to be operating at or below the average accident frequency rate  
for cia member companies in all our operations around the world
00
02
04
06
08
10
12
00 01 02 03 04 05 06 07 08 09 10 11
099
095
073
057
057
043
054
037 0245
0235
036
042
actual
reportable lost time accident frequency rates
3 day lost time accident frequency rate
per100000 hours business review yule catto  co plc  annual report 201 1 23
process safety and reportable safety incidents
process safety – the set of procedures and practices which ensure 
that our processes are safe to operate – is an essential topic in 
the chemical industry process incidents have the potential to be 
very damaging to people plant and the environment – our aim is 
always to have multilayered systems and procedures to prevent 
serious incidents process incidents and upsets which could lead to 
significant incidents are analysed and the lessons shared internally 
and externally this understanding is why yule catto contributed 
to and has benefited from the institution of chemical engineers 
icheme process safety courses for both operational staff and  
for senior managers
there were an increased number of process safety incidents in 
2011 this included the failure of a pressure filter in our divested 
pharma business uquifa a reaction runaway in kluang and striking 
an unmarked 11kv cable during the removal of diseased trees on 
the kluang plantation only the first of these caused any injury and 
none of these incidents caused any lasting environmental damage 
the secondary safety system contained nearly all material in the 
reaction runaway in kluang and no material was lost offsite  
in uquifa 
improved process safety procedures are a focus of work in yule 
catto learning from the work done between hse ea and william 
blythe in the last five years a process safety manager has been 
appointed in malaysia and the strengthened central she team 
in synthomer includes a process safety specialist two process 
safety training courses were run inhouse in 2011 one for the yule 
catto executive and senior managers the second for technical 
engineering and production staff across the group staff in south 
africa and malaysia attended icheme public courses in those 
countries further courses are planned for 2012
reportable safety incidents
00 02 01 04 03 06 05 07 08 10 09 11
0
10
20
30
40
50
60
70
occupational health and hygiene
all of our sites have programmes to limit the exposure of our staff 
to hazardous materials and these programmes have shown notable 
progress over the last couple of years with significant improvements 
in handling systems at our kluang site for example our aim is 
always to limit the exposure of our staff to the chemicals they 
handle using the standard hierarchy of removal reduction control 
and protection much of our chemistry is complex and precise 
necessarily using hazardous materials to give our products the exact 
qualities required to satisfy our customers’ needs for this reason 
it will never be possible to remove all hazardous chemicals from our 
sites and this in turn means that control of exposure by engineering 
means backed up by the extensive use of personal protective 
equipment ppe will always be a focus of activity for operational 
and she staff to assist in the thorough assessment of the risk to 
our staff from exposure to hazardous chemicals the group has an 
assessment programme based on the principles of the uk control 
of substances hazardous to health regulations this system  
has continued to be rolled out to our sites and is now in use on  
all sites except the former polymerlatex sites assessment of  
the adequacy of controls at site level and the provision of advice  
on how to improve controls on chemical exposure has continued  
to be a matter of discussion during – and recommendations 
following – the group she audits
the health of our staff is monitored by a comprehensive set 
of medical arrangements on each site staff who work with 
chemicals are provided with regular medical examinations by trained 
occupational health nurses or doctors whilst always respecting 
medical confidentiality the occupational health personnel who 
provide the service to each site inform the local company in the 
case of a reportable disease which could be caused by a work 
activity they are also asked to inform the company if their overview 
of the health of our staff causes them concern 
audit programme
yule catto has an internal she auditing programme whereby an 
internal team reviews the she performance of sites on a two year 
rolling cycle the reports from the audits are used to provide  
senior management – at site divisional and group level – with  
a consistent view of the she performance of group operations  
the audits incorporate a scoring system and were developed from 
the principles of the cia’s responsible care
®
 management system 
the audits are used to provide recommendations to each site on 
priority areas for improvement
the results of the audits are monitored closely by the group 
executive committee who are committed to achieving high 
standards of she performance on all yule catto sites an overview 
of the outcome of the audits is also discussed by the yule catto 
board during 2011 some auditing resources were reallocated at 
both site and group level to give support to sites to improve their 
she performance where problems have been identified the audit 
programme in 2012 will mainly focus on sites which have recently 
joined the yule catto group business review yule catto  co plc  annual report 201 1 24
corporate social responsibility report
continued
asset protection and insurance inspections
there were no major insured losses in 2011 and the reinstatement 
of the stallingborough latex plant after a fire in 2010 was 
completed the group has continued to work closely with our 
property insurers to ensure that our risks are accurately understood 
by the underwriters and the correct insurance is in place this  
process continues to be aided by the series of twiceyearly 
meetings held with the insurer’s risk management team to discuss 
the group’s risk profile and by the biennial insurance surveys  
carried out during a joint visit by the insurers and yule catto’s 
internal auditors the surveys are a useful opportunity for the  
yule catto auditors to discuss current standards and thinking with 
the insurance surveyors and have identified areas where sites  
can make improvements the improvements made following these 
visits have enabled our sites to improve the insurer’s rating of our 
risk profile and this improvement has enabled the group to control 
our insurance costs
regulatory affairs reach and ghs
2011 was a year of reduced external regulatory pressure as 
the 2010 deadline for ghs globally harmonised system 
implementation had passed and the next deadline for reach  
the eu’s registration evaluation authorisation and restriction  
of chemicals regulations registration is not until june 2013  
despite this the regulatory workload was significant with a 
continuing rise in customer expectations the need to consolidate 
ghs and be ready for the next stages of reach and – for 
synthomer – the need to integrate all synthomer’s sites across  
the world in a new global structure
all yule catto’s european operations have successfully switched  
to ghs as the new system for labelling chemicals with their 
hazards so far the switch has only applied to single chemicals  
with mixtures not due to change until 2015 nonetheless the impact 
was significant and work is continuing to be ready for the next 
change the impact of the new system was also seen on our sites 
around the world as other countries adopted the new system  
the switch meant submitting dossiers on 60 chemicals to the 
european chemicals agency echa which was done on time 
without problem
preparatory work has continued for the next round of reach 
registrations in 2013 though the bulk of the work will fall into 2012 
the costs in 20123 are expected to be around £1 million for the 
registrations yule catto companies need to make
feedback from customers and suppliers on our regulatory affairs 
work continues to be very good and the service we give in this area 
is recognised as an essential part of our business offering the new 
group structure has provided the opportunity for the concentration 
of expertise into a central regulatory affairs group mainly in 
harlow serving the whole of the polymer business this centre 
of excellence in the company provides an ‘only representative’ 
service to the whole polymer business easing access to european 
markets it also ensures that the right information is provided to 
all our customers around the world and that the group remains 
compliant in the changing regulatory landscape
sustainable development  
performance report 2011
managing our environmental responsibilities
as a company yule catto is committed to operating in conformity 
to local laws and regulations and to improving its environmental 
performance year on year the group are also signatory to the 
programme of sustainable development sd goals put forward by 
uk chemical industry association cia to its member companies in 
2005 – indeed yule catto were one of the first signatory companies 
to those principles the company’s commitment to these sd goals 
has led to a significant reduction of our environmental impacts since 
2000 the commitment has also been shown by our continuous 
record of investment in environmental improvement and an equally 
continuous record of achievement against the targets set the targets 
used internally over the last five years have been those which were 
set by cia these were set for the period up to 2010 the chemical 
industry at both national and european level is currently discussing 
how sd targets should be set for the future and so until these 
discussions are completed yule catto have extrapolated the existing 
targets forward for 2011
not all of the group’s measures of our sd performance are 
recorded in the graphs presented in this report most of the  
other measures which we use internally also show very significant 
improvement over the last 10 years as examples our releases of 
nitrogen oxides to air have fallen by more than 75 per production 
tonne since 2000 our releases of phosphorous to water have  
fallen by nearly 90 since 2000 and our releases of heavy  
metals are down from 45 gmtonne to 0106 gmtonne a better 
than 96 reduction these have been achieved by investment  
in better systems for environmental control the development  
of better processes better process control focusing on avoiding 
releases and other losses and incremental improvement in the 
operational systems on our sites all of this is underpinned by the 
performance of our site staff who have driven improvement and 
whose aims are to produce better quality product using more 
carefully husbanded resources whilst producing less waste
this record of success is reflected in the formally reported sd 
measures all of which have improved both in 2011 and very 
considerably since 2000 all of the sd targets set for the group 
have been comfortably bettered there were three measures on 
which the group performed less well in 2010 energy waste and 
voc releases in 2011 the group significantly improved its energy 
performance and regained its longterm trend for our continuing 
operations waste production per tonne of product was down and  
the proportion being recycled was up on absolute voc releases 
there was a further increase in the declared quantity but schemes 
now in place are expected to significantly reduce releases from  
the end of 2012 business review yule catto  co plc  annual report 201 1 25
energy
specific energy consumption measured across the yule catto  
group improved by over 10 in 2011 this continues the longterm 
trend and means that in 2011 the group used less than half the 
energy per tonne that was used in 2001 and that consumption  
was 38 better than the extrapolated 2011 target the reduction  
in 2011 has been helped by different technologies brought into  
the group from polymerlatex and the use of these across the 
group offers opportunities for further improvements in future
despite the improvements achieved the cost of energy remains 
a significant challenge to yule catto with the energy bill rising 
to £2325 million this represented a 21 increase in the cost 
of energy per tonne of production compared to 2010 the most 
significant part of this was electricity use where the electricity 
consumed fell by 16 per tonne of production but the cost  
of electricity rose by 17 per tonne of production
the reduction in specific energy use has improved the group’s 
carbon dioxide co 2 emissions per tonne and this is reflected in  
the global warming burden discussed below the co 2 release 
figure quoted in the environmental kpi section does include both the 
direct release from carbon fuels burned onsite and the calculated 
release from the electricity consumed yule catto’s co 2 releases 
have fallen in line with the reduction in energy used and this is a 
significant contribution to reducing overall co 2 emissions however 
in line with our goal of decarbonising the group’s energy use we 
will be exploring different energy supplies with the aim of reducing 
co 2 releases faster than improvements in our energy consumption 
this will put the group in line with the eu’s commitment to 
decarbonisation of energy supplies and help us meet national 
governments’ targets most notably in britain and germany
0
1
2
3
4
5
6
00 01 02 03 04 05 06 07 08 09 10 11
476
471 466
460 455 450 445
439 434 429
476
419
476
557 
509
452
412
452
391
364
333
283 294
263
10 year target actual
energy consumpton 
gigajoules used per production tonne
global warming
there are two significant releases from yule catto companies 
which contribute to global warming co 2 released during energy 
generation and the release of vocs the improvement in  
energy consumption has been discussed above and this led  
to a 106 improvement in co 2 releases unfortunately reported 
voc releases increased for the third year in a row the increase  
was concentrated at our kluang nbr plant and was due to 
continued improvements in the measurements and calculation  
of voc releases and to further increases in the production of 
nitrile latex to supply the rapid expansion of glove manufacturing 
in malaysia across the yule catto group absolute voc releases 
increased by over 50 in 2011 though per tonne of production 
voc releases fell by just over 8
the combination of these two improvements meant that the  
global warming burden of the group’s activities improved in 2011 
by some 10 reversing the slight upward trend seen in the last 
two years and giving the group its best ever performance in 2011 
group performance was nearly 60 better than it was in 2001  
and the group was just less than 25 below the extrapolated  
target for 2011
after a period spent examining different options a scheme to 
recover a large proportion of the voc released from the nbr plant 
at kluang has been developed and the project is expected to be 
constructed during 2012 significant reductions in voc release 
should be seen once the recovery plant is running
00 01 02 03 04 05 06 07 08 09 10 11
0287
0294
0279
0265
0272
0257
0250 0243
0235
0228
0221
0214
000
005
010
015
020
025
030
035
040
045
0294
0406
0229
0185
0221
0237
0197
0182
0173 0176
0185
0167
10 year target actual
global warming burden
tonnes co 2 equivalent release per production tonne business review yule catto  co plc  annual report 201 1 26
corporate social responsibility report
continued
atmospheric acidification
there was a further sharp reduction in the group’s emissions of 
acid gases in 2011 with the amount of sulphur dioxide so
2
 falling 
by a further 65 to less than 10 tonnes for the year the group’s 
emissions per tonne of so
2
 are now less than 02 of what they 
were in 2000 and less than 04 of the extrapolated 2011 target  
it is worth stressing that the change is due to real reduction 
achieved by yule catto companies over the 10 year period not just 
changes due to the structure of the group the residual emissions 
are almost entirely due to the quality of gas and oil used in sites’ 
boilers or electrical generation sets given the variable quality of gas 
and oil in different countries further reductions will be quite difficult 
to achieve in future
0
1
2
3
4
5
6
00 01 02 03 04 05 06 07 08 09 10 11
4818
4580
4340
4100
3850
3610
3370
3132
2891
2650
2409
2168
4818
3916
 
4291
4502
2223
0592
0554
0310
0145
0039 0008 0038
10 year target actual
atmospheric acidification burden
kgs so 2 equivalent released per production tonne
water use
water consumption by yule catto’s companies underwent a step 
change in 2011 reducing by 265 compared to the year before 
whilst a large part of this is due to different technology used on 
the former polymerlatex sites requiring far less cooling water it is 
notable that the other european sites in synthomer also reduced 
their water consumption significantly during the year water use  
per tonne of production has now reduced by nearly two thirds since 
2000 645 reduction and is less than 45 of the extrapolated 
target for 2011 despite this very large improvement the cost of 
water increased by 21 on a per tonne basis
water is a vital resource for nearly all chemical plants and this is 
especially true for our polymer manufacturing units where the final 
product is a dispersion in water the water is also an essential part 
of the safety system in our polymer reactors ensuring that heat can 
be absorbed and transferred out of the system for both of these 
reasons secure and high quality water is a vital resource for our 
plants we are fortunate in malaysia that on our kluang site we have 
onsite water collection systems which provide the great majority  
of our water this onsite supply has now been strengthened by the 
provision of a further piped supply from offsite sources elsewhere 
in the group we are aware that there is significant growth in demand 
for water in the areas around our sites as improvements to living 
standards and further industrialisation continue  
there are also constraints on supply which exist currently and  
which may become more severe if weather patterns change with 
global warming the group continues to target a 4 reduction  
in water use per tonne each year and further initiatives to reduce  
water usage are underway with trials reusing cleaned effluent 
water for vessel washing – which is a constant and important use  
of water on our polymer plants – proposed in 2012
0
1
4
6
8
10
00 01 02 03 04 05 06 07 08 09 10 11
950
931
 
912
893
874
855
836
817
798 779
741
760
950
780
712
584 600
665
582
562
558
473
460
337
10 year target actual
water consumption
m
3
 per production tonne
waste disposal
for a number of years the site in kluang operated an onsite landfill 
in a disused part of the plantation which whilst acknowledged by 
the authorities was not fully licensed in recent years the landfill  
was only used for nonhazardous waste and there is no known harm 
resulting from this activity however in 2010 it was decided between 
the malaysian authorities and the site that the landfill should be 
closed and the land returned to beneficial use this operation 
involved the removal of 29599 tonnes of material though some 
natural rubber was able to be recovered for beneficial use the great 
majority went to an offsite landfill the operation lasted for several 
months and the site has now been restored monitoring protocols  
to confirm that there is no environmental impact have been agreed 
with the malaysian department of the environment and the land  
is likely to return to being part of the plantation once settlement  
has finished
this material from the landfill was included in the figures for waste 
production in previous years and declared as ‘waste disposed  
to onsite landfill’ this waste movement has therefore not been 
included in the figures for 2011
the total amount of hazardous waste produced in 2011 was the 
same as in 2010 despite production being 68 higher of this 
waste 63 was able to be either recycled or recovered or burnt  
as a fuel – in a cement kiln for example over 1200 tonnes less  
had to be incinerated despite the increased production this left  
an amount to be disposed of to landfill which increased in line with 
the increase in production whilst the amount sent to landfill per 
tonne of production was above that seen in 20089 the quantity 
was roundly one quarter of the figure in 2000 and less than 35  
of the extrapolated sustainable development target business review yule catto  co plc  annual report 201 1 27
00 01 02 03 04 05 06 07 08 09 10 11
00088 00090
00086
00081
00083
00079 00077
00074
00072
00070
00068
00066
0000
0002
0004
0006
0008
0010
0012
0014
00090
00120 00120
00090
00060
00055
00030
00025
00011
00024 00024
00014
10 year target actual
hazardous waste disposed to land
tonnes waste per production tonne
the quantity of nonhazardous waste going to landfill fell again  
in 2011 and is now little more than 10 of the quantity disposed  
of to landfill in 2000 this has been achieved by the imaginative  
use of recycling recovery and reuse of waste materials in particular 
the use of polymer waste as a soil improver when incorporated  
into compost this process suffered a hiccough in 2011 while the  
uk doe reassessed the process to ensure its acceptability for a 
period material previously going to composting had to go to landfill 
which significantly increased the quantity sent to landfill during  
the year however doe reauthorised the process and composting 
has recommenced with an improvement in uk site performance 
and genuine environmental benefits
the use of imaginative environmentally friendly disposal routes  
has been so successful that for a number of synthomer’s sites  
the net production of waste is now zero – all their waste is recovered 
recycled or reused the lessons learned by these sites are being 
shared with other sites in the yule catto group to reduce the 
quantity of waste requiring final disposal still further
00 01 02 03 04 05 06 07 08 09 10 11
0000
0005
0010
0015
0020
0025
0030
0022
0018
0021
0016
0015
0026
0017
0012
0009
0010
0003
0002
nonhazardous waste disposed to land 
tonnes waste per production tonne
environmental incidents 
the headline number of environmentally reportable incidents 
which led to a release which involved the environmental regulators 
fell to seven in 2011 all of the incidents have been investigated 
to determine their cause and to determine what preventive 
or mitigation measures should be put in place to prevent any 
environmental harm none of the incidents during the year were 
found to have caused more than transitory environmental harm
five of these releases were problems in the outflow from the 
effluent treatment plants etps in either kluang or durban  
south africa the durban site planned to construct a new etp 
during 2011 but this was not possible due to delays in receiving 
regulatory approval approval has now been received and the 
scheme will be completed in 2012 which should give an outflow 
well below the current consent limits it should also ensure that 
excursions away from the consent limits are much less likely
in kluang the nbr plant etp was significantly improved during  
the year by putting an ammonia stripper unit in the outfall  
this deals directly with one of the environmental incidents in 2011 
improvements are currently being planned for both of the etp  
at kluang to deal with the other environmental incidents which 
have occurred there over the past two years also although the 
site is currently in consent synthomer’s vietnam plant is currently 
investing in a new combined chemical and biological etp to  
meet tightening consent limits
0
10
20
30
40
30
reportable environmental incidents
00 02 01 04 03 06 05 07 08 10 09 11 business review yule catto  co plc  annual report 201 1 28
corporate social responsibility report
continued
environmental kpis
the uk department for environment food and rural affairs defra published guidelines for reporting environmental key performance 
indicators in 2006 the key measures suggested were energy use emissions to air waste disposal and water consumption on an absolute 
and a per tonne basis yule catto has reported on these indicators for a number of years and to aid transparency in environmental 
performance reporting yule catto adopted defra’s preferred format in 2008 for the report on our 2007 performance this format  
is used in the table below which gives the data for the period 20092011
2011 2010 2009
 change
20092011
 change
20102011
energy consumption
1
gj 3144349 2092339 1967478 5982 5028
gas 793671 698891 641691
light oil 25884 28178 24885
heavy oil 57166 64326 61046
steam 657120 161617 147456
electricity primary basis 1604767 1138600 1086779
gjtonne production 2633 2942 2765 478 1051
emissions to air
2
carbon dioxide co 2
tonnes 156900 104572 98289 5963 5004
tonnes co 2tonne production 0131 0147 0138 480 1065
sulphur dioxide so 2
tonnes 98 272 279 6501 6406
kilos so 2tonne production 0008 0038 0039 7915 7860
nitrous oxides nox
tonnes 4230 1945 2003 11115 11743
kilos noxtonne production 0035 0027 0028 2581 2947
volatile organic compounds voc
tonnes 3704 2407 2155 7190 5387
kilos voctonne production 3101 3385 3028 242 837
water usage
cubic metres m
3
 4036053 3271018 3366442 1989 2339
public potable supply 1003420 879006 938084
raw water from river 1277868 1514427 1609773
raw water from borehole 524965 337058 308738
raw water from canal – – 2565
raw water from other 1229800 540527 507282
m
3
tonne production 3380 4600 4731 2857 2653
 
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 business review yule catto  co plc  annual report 201 1 29
2011 2010 2009
 change
 20092011
 change
 20102011
waste management
3
 
hazardous waste
tonnes 21635 21946 12131 7834 142
hazardous waste sent offsite
recycled – energy recovery 6920 5243 1981 
recycled – separated reprocessed 6736 9010 3865
incinerated – no energy recovery 5116 6332 3462
disposed by landfill 2837 1126 817
other 24 7 65
hazardous waste disposed onsite
incinerated onsite with energy recovery – – –
incinerated onsite with no energy recovery – 129 1941
disposed to onsite landfill 2 10039 –
hazardous waste tonnestonne production 0018 0031 0017 626 4130
nonhazardous waste
tonnes 11709  9002  12809 858 3008
nonhazardous waste sent offsite
recycled – energy recovery 2855 1940 3077
recycled – separated reprocessed 4665 3311 1418
incinerated – no energy recovery 22 – 78
disposed by landfill 2407 2084 6041
other – municipality 1711 1606 1580
nonhazardous waste disposed of onsite
recycled – energy recovery – – –
incinerated – no energy recovery – – –
disposed by landfill 50 60 616
nonhazardous waste tonnestonne production 0010 0013 0018 4553 2254
total waste tonnestonne production 0028 0044 0035 2034 3584
production 
tonnes 1194232 711138 711560 6783 6793
 
3  the 2011 figures in this table are for the continuing operations as noted in the text 29599 tonnes of waste transferred from a landfill on the kluang site to a secure  
offsite landfill are not included in the figures the production of this waste was included in the figures for previous years’ waste arising see entries ‘hazardous waste 
disposed onsite – disposed to onsite landfill’ and ‘nonhazardous waste disposed onsite – disposed by landfill’ governance yule catto  co plc  annual report 201 1 30
directors and advisers
executive directors
a m whitfield
2
 – chief executive
joined the group and was 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 50
d c blackwood – finance director
joined the group and was appointed to the board in october 2007 
prior to appointment he was group treasurer of imperial chemical 
industries plc age 52
nonexecutive directors
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 a nonexecutive director 
of rpc group plc he is a member of the institute of chartered 
accountants of england and wales age 64
the hon a g catto
joined the board in 1981 he is managing director of  
cairnsea investments ltd a private investment company and a 
nonexecutive 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 59
dr a a dobbie
123
joined the board in august 2007 he is a founding director of 
cogency chemical consultants limited a director of nitech 
solutions limited and marine biopolymers limited and is chairman 
of chemical sciences scotland age 60
n a johnson
123
 – senior independent director
joined the board on 1 september 2011 he is chairman of 
motability operations group plc hornby group plc and umeco plc 
age 62
dato’ lee hau hian
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 58
j k maiden
123
joined the board in august 2007 he is group finance director of 
national express group plc and a fellow of the chartered institute 
of management accountants age 50
1 member of audit committee
2 member of nomination committee
3 member of remuneration committee
registered office
yule catto  co plc
temple fields
harlow
essex
cm20 2bh
registered no 98381
secretary
richard atkinson
bankers
barclays bank plc
commerzbank ag
hsbc bank plc
maybank – malayan banking berhad
joint stockbrokers
barclays capital and collins stewart europe limited
registrars
computershare investor services plc
lochside house
7 lochside avenue
edinburgh park
edinburgh
eh12 9dj
auditor
deloitte llp
chartered accountants and statutory auditor
cambridge uk
solicitors 
pinsent masons llp
salans llp
squire sanders uk llp governance yule catto  co plc  annual report 201 1 31
report of the directors
for the year ended 31 december 201 1
the directors submit their annual report including a management 
report and the audited financial statements for the year ended 
31 december 2011
results and dividends
the loss attributable to shareholders for the year was £6946000
the interim dividend of 12 pence per share was paid on 
10 november 2011 the directors recommend a final dividend of 
23 pence per share payable on 6 july 2012 to those shareholders 
registered at the close of business on 8 june 2012 a dividend  
reinvestment plan is available to shareholders and this alternative 
will continue to be offered until further notice
principal activities and business review 
the principal activities of the company and a business review  
are set out on pages 9 to 29 and form part of the report of  
the directors
acquisitions and disposals
on 31 march 2011 the group completed the acquisition of 
polymerlatex deutschland beteiligungsgesellschaft mbh 
polymerlatex from polymerlatex holdings bv on 14 october 
2011 the group acquired quality polymer sdn bhd from nippon 
paint m sdn bhd through its 70 subsidiary revertex malaysia 
sdn bhd the group sold its pharmachem division comprising 
union químico farmacéutica sa and uquifa mexico sa de cv 
to vivimed labs on 30 november 2011 further details of these 
transactions are contained in notes 28 and 29
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 are contained in note 23 to the financial statements
directors
the present membership of the board is shown on page 30 all of 
whom served throughout the year except for mr n a johnson who 
joined the board on 1 september 2011 all the directors will retire 
and will be seeking election or reelection as appropriate at the 
forthcoming annual general meeting except for mr p s wood and 
dr a a dobbie who are leaving the board mr d d fournier joined 
the board on 1 january 2012 and resigned on 13 march 2012
none of the directors seeking election or reelection has a service 
contract other than mr whitfield and mr blackwood who each  
have a service contract which contains a 12 month notice period 
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 39 to 45
director indemnity provisions
under the company’s articles of association the directors of the 
company have the benefit of a qualifying thirdparty 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 26 
to the financial statements on 31 december 2010 194217582 
shares were provisionally allotted nil paid in connection with the 
rights issue announced on 13 december 2010 on 17 january 2011 
such 194217582 shares were allotted fully paid no shares were 
repurchased in 2011 a total of 38517 shares were purchased 
on the open market on behalf of the 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 can be downloaded from the company’s 
website 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 governance yule catto  co plc  annual report 201 1 32
report of the directors
continued
contractual arrangements
the group has contractual and other arrangements with numerous  
third parties in support of its business operations the disclosure  
in this report of information about any such third parties is  
not considered to be necessary for an understanding of the 
development performance or position of the group’s business
major shareholdings
other than the shareholdings disclosed as directors’ interests in  
the remuneration report as at 17 february 2011 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
ordinary
shares
number
percentage
of ordinary
shares in
issue
 nature
of holding
kuala lumpur
kepong berhad group 64111401 1886 direct interest
standard life
investments limited 30804259 906
direct and
indirect interest
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 2012 annual general meeting to make market 
purchases of not more than 33988076 of the company’s ordinary 
shares in accordance with the terms of the special resolution passed 
at the 2011 annual general meeting a resolution will be tabled  
at the 2012 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 new longterm share incentive plan for directors and senior 
executives was introduced in 2011 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 uk 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 2011 were 
28 days 2010 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 £53500 2010 
£73507 there were no political donations during the year
statement as to disclosure of information to auditor
each director of the company confirms that so far as he is aware 
there is no relevant audit information of which the company’s auditor 
is 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 auditor 
is aware of that information for these purposes relevant audit 
information means information needed by the company’s auditor  
in connection with preparing their reports on pages 47 and 90
this confirmation is given and should be interpreted in accordance 
with section 418 of the companies act 2006
corporate governance
the corporate governance report is set out on pages 34 to 38  
and forms part of the report of the directors
principal risks and uncertainties
the directors have appropriately considered the group’s principal 
risks and uncertainties including the following
•  conditions in the global economy economic fluctuations in 
customer industries and volatility and cyclicality of the global 
chemicals and polymers markets may adversely affect the results 
of operations financial condition and cash flows of the group
•  volatility in raw material prices and energy prices may adversely 
affect the profitability of the group and its working capital position
•  the failure of the group to procure key raw materials may lead to 
production interruptions that may adversely affect the profitability 
of the group and its working capital position
•  the markets in which the group operates are highly competitive 
and the group may lose market share to other producers or  
sellers of water based polymers or to other products that can  
be substituted for the products of the group governance yule catto  co plc  annual report 201 1 33
•  the group operates in a number of different geographies  
which may present different legal and regulatory risks in addition  
the group operates in a number of different tax regimes which 
may increase the volatility of the effective tax rate and cash  
tax rate of the group
•  the ability of the group to compete is highly dependent on its 
ability to develop technological innovations to introduce new 
products and to protect its intellectual property trade secrets  
and knowhow failure to do so could have an adverse affect  
on the group
•  the group may be liable for damages based on product liability 
claims brought against its customers in enduse markets in 
addition compliance with extensive environmental health and 
safety laws and regulations could require material expenditure 
changes in the operations of the group or site remediation
•  the manufacture storage and transportation of chemicals is 
inherently dangerous and any incidents relating to the hazards 
which the group faces may adversely affect its financial  
condition results of operations and reputation
•  fluctuations in currency exchange rates may significantly  
impact the results of the operations of the group and may 
significantly affect the comparability of financial results  
between financial periods
•  credit market conditions and credit ratings may restrict the  
ability of the group to obtain credit facilities or to refinance  
its existing debt facilities in the longer term in addition interest  
rate fluctuations and increases in bank lending margins may 
increase the group’s costs of borrowing in the longer term and 
•  the group has funding risks relating to defined benefit pension 
schemes and any deterioration in the value of assets in which  
the pension scheme has invested as against the financial 
obligations to make payments to members of the schemes  
could have an adverse affect on the group
not all these risks can be managed or substantially mitigated  
the group has a number of key processes to effect reduction  
and some mitigation of operational risks where reasonably  
practical including
•  active management processes to manage margins and  
recover input cost increases from customers
•  sourcing strategies to access multiple sources for key  
raw materials
•  actively managed innovation processes
•  product quality control and testing processes
•  a centralised internal audit function dedicated to she issues  
and programmes for continuous improvement across all major 
she areas and 
•  internal audit and business performance review processes  
the format of which has been enhanced for 2012
financial risks are partly mitigated through currency and interest  
rate hedging and the group has a policy on leverage limits  
and seeks to ensure it has adequate borrowing headroom  
on a 12 month forecast basis
going concern
the directors have acknowledged the latest guidance on going 
concern and in reaching their conclusions have taken into account 
factors including
•  the group’s euro denominated £150 million term loan facility  
and £60 million multicurrency revolving credit facility the 
termination dates of which were extended from 13 december 
2013 to 31 march 2015 on 22 december 2011 and
•  the first repayment under the 2004 series private placement  
notes of us43 million due in september 2012
further discussion on liquidity and financing is provided in the 
financial review
after making enquiries and taking account of reasonably 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
key performance indicators
management monitors a number of financial and nonfinancial 
key performance indicators which are disclosed within the chief 
executive’s report the financial review and corporate social 
responsibility report these key performance indicators include 
divisional sales and underlying operating profit net borrowings 
reportable safety incidents energy usage and water consumption
cautionary statement
the purpose of this report is to provide information to the members 
of the company it contains certain forwardlooking 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 
forwardlooking statements reflect knowledge and information 
available at the date of preparation of this report and the company 
undertakes no obligation to update these forwardlooking 
statements nothing in this report should be construed as  
a profit forecast
auditor
a resolution to reappoint deloitte llp as the company’s auditor  
will be proposed at the annual general meeting
annual general meeting
the annual general meeting will be held at 1100 am on 
thursday 17 may 2012 at manor of groves hotel high wych 
sawbridgeworth hertfordshire cm21 0ju
by order of the board
r atkinson
secretary
14 march 2012 governance yule catto  co plc  annual report 201 1 34
report from the chairman
this section of the annual report sets out how the board and its 
committees apply the principles of good governance in the uk 
corporate governance code ‘the code’ which was published  
in june 2010 by the financial reporting council
i am pleased that we were able to strengthen the effectiveness of 
the board by the appointment of mr n a johnson who will succeed 
me as chairman in may with regard to gender diversity we have 
taken note of the recommendations contained in the davies report 
on women on boards’ the board will be seeking to address these 
points over time as it makes new appointments a process is already 
well advanced to recruit three new independent nonexecutive 
directors to maintain board balance following the retirement of 
myself and dr dobbie at the end of the forthcoming annual general 
meeting and the resignation of mr d d fournier
our full statements on compliance and the application of the  
main principles of the code are set out in the following sections  
of this report
peter wood
chairman
statement of compliance
the company considers that it has complied throughout the 
financial year ended 31 december 2011 with the provisions set out 
in the code except in relation to the composition of the board and 
its committees and the annual reelection of all directors further 
details on these matters and how they have been addressed  
are set out in this report
application of the code
the main principles of the code were applied as follows
leadership and effectiveness
operation of the board
the activities of the company are controlled by the board which 
during 2011 comprised two executive directors and five non
executive directors until 1 september 2011 when mr n a johnson 
was appointed and the number of nonexecutive directors increased 
to six mr d d fournier was appointed with effect from 1 january 
2012 and he resigned on 13 march 2012 the roles of chairman 
and chief executive are clearly divided between mr p s wood 
who heads the board in his capacity as nonexecutive chairman 
and mr a m whitfield who has responsibility for the running of 
the company’s business as chief executive the nonexecutive 
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 longterm 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
during 2011 the board held six scheduled meetings 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 
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  
nonexecutive directors on request during 2011 the board held a 
meeting at the offices and research  development facilities in marl 
germany in conjunction with the board meeting presentations were 
given by the senior management of the polymer division and the 
directors visited the group’s plants at the marl chemical park
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 daytoday 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 finance director the chief executive of the 
polymer division 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 has available to him the minutes of the 
executive committee and all directors receive a monthly trading 
summary and commentary from the finance director and an  
update report from the chief executive
board membership and balance
the chairman chief executive and senior independent director  
are identified on page 30 the chairmen and members of the audit 
nomination and remuneration committees are identified below  
the board considers mr d d fournier was and that dr a a dobbie 
mr n a johnson and mr j k maiden are independent in accordance 
with the provisions of the code
corporate governance governance yule catto  co plc  annual report 201 1 35
during 2011 the company was not in compliance with the 
requirement of code provision b12 for half the board excluding 
the chairman to comprise independent nonexecutive directors 
following a recruitment exercise in 2011 the board returned to 
compliance with this requirement with effect from 1 january 2012 
until 13 march 2012 when mr fournier resigned from the board 
the board is seeking to return to compliance and has a well 
advanced recruitment process in hand for this purpose
the board held a total of six meetings in 2011 in addition the 
chairman held one separate meeting with the nonexecutive 
directors without the executive directors being present to  
appraise the performance of the executive management the  
nonexecutive directors also met once without the chairman to 
appraise his performance
the table below shows the number of meetings of the board audit 
remuneration and nomination committees held during the year 
and the number of meetings attended by each director where a 
director is unable to attend a board or committee meeting his views 
on agenda items are canvassed in advance of the meeting and 
incorporated into the discussions
number of
meetings held board audit remuneration nomination
6 5 4 2
number of
meetings attended
d c blackwood 66 na na na
a g catto 66 na na na
a a dobbie 66 55 44 22
n a johnson 22 na na na
lee hau hian 66 na na na
j k maiden 66 55 44 22
a m whitfield 66 na na 22
p s wood 66 na na 22
 
  appointed on 1 september 2011
the committee has not implemented early adoption of the 
amendment to the code requiring reporting on boardroom diversity 
policy including gender associated objectives and progress toward 
achieving them the committee will be giving consideration during 
2012 as to how to implement these requirements with effect from 
2013 as required by the code
induction and training
induction arrangements are in place in order to ensure new  
directors receive a full formal and tailored induction on appointment 
the chairman reviews and agrees the training and development 
needs of the directors and the skills and knowledge of the board as 
a whole 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 nonexecutive 
directors is carried out by the chairman through a rolling 
programme of onetoone discussions using performance 
evaluation questions as the centrepiece for those discussions 
every nonexecutive director is assessed in this way once a year
•  the performance of the executive directors was reviewed in 
august 2011 at a meeting of the nonexecutive directors chaired 
by the chairman
•  a meeting of the nonexecutive directors in the absence of the 
chairman chaired by the senior independent director was held  
in november 2011 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 2011
the board is formulating its policy on the extent and frequency  
of any externally facilitated evaluation
nonexecutive directors are appointed for threeyear terms  
all directors will submit themselves for annual election for the  
first time with effect from the 2012 annual general meeting  
the board did not comply with this provision of the code in 2011  
as it wished to fully consider its implications before doing so
board committees
the board has formally established nomination audit 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 during 2011  
the nomination audit and remuneration committees did not 
comply with the composition requirements of code provisions b21  
c31 and d21 respectively until 9 november 2011 when  
mr johnson joined the committees all nonexecutive directors  
have a standing invitation to attend committee meetings unless  
they are notified otherwise governance yule catto  co plc  annual report 201 1 36
audit committee
during 2011 the audit committee comprised mr j k maiden 
chairman and dr a a dobbie until 9 november 2011 when 
mr n a johnson joined the committee mr maiden is considered 
by the board to have ‘recent and relevant financial experience’ for 
the purposes of provision c31 of the code due to his current 
financial position outside the group the committee has established 
a detailed remit regarding the application of financial reporting and 
internal control principles which covers
•  monitoring the integrity of the financial statements of the group 
and any formal announcements relating to the group’s financial 
performance and reviewing significant financial reporting 
judgements contained therein and
•  reviewing the group’s internal financial controls and the group’s 
internal control and risk management systems
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 financial statements prior to their submission 
to the board the committee meets periodically with the 
company’s auditor to discuss the adequacy of the group’s 
financial management internal controls and information systems 
the committee’s remit also includes the review of the terms of 
engagement effectiveness independence and objectivity of the 
auditor including the extent of nonaudit services and fees payable 
to the auditor which is carried out and discussed with the auditor on 
a periodic basis with regard to seeking to ensure the independence 
and objectivity of the auditor the audit committee’s policy is to 
avoid the auditor 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 auditor is 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 auditor has been requested not to provide 
services to executive directors or senior executives nonexecutive 
directors are required to disclose any relationship they have with  
the auditor
for 2011 the group did not have a dedicated internal audit function 
and use was made periodically of outsourced internal audit services 
during 2011 the committee reviewed this in view of the significant 
increase in the size of the group as a result of the acquisition of 
polymerlatex the committee has concluded that whilst there 
are in place appropriate procedures for assuring the integrity and 
effectiveness of the group’s governance risk management and 
control processes these should be supplemented by a formalised 
programme of outsourced internal audit services the board has 
accepted this recommendation and this new function will operate 
from the first quarter of 2012 with reports being made to the 
committee twice a year
the current auditor was first appointed in 2002 and its appointment 
was reviewed by the committee in 2009 the senior statutory 
auditor is subject to retirement every seven years and in accordance 
with this requirement mr r knight replaced mr s henderson with 
effect from the 2011 audit details of audit and nonaudit fees  
paid to them in 2011 are set out in note 6 on page 64 nonaudit 
fees principally relate to tax compliance and advisory services  
the board accepts the committee’s recommendation that the 
current auditor be proposed for reappointment at the forthcoming 
annual general meeting
the committee met formally five times during 2011 and carried  
out the following main activities
•  reviewed the financial statements in the 2010 annual report  
and the 2011 interim statement
• reviewed the scope and effectiveness of the external audit
•  monitored the effectiveness of the internal controls  
and risk management
•  received reports from the external auditor on the major  
findings of its work
• approved the annual audit plan
• reviewed its remit
in addition the chairman of the committee had regular dialogue  
with the auditor during the course of the year as well as complying 
with the terms of its remit during the year the committee carried  
out a review of its content
nomination committee
during 2011 the nomination committee comprised mr p s wood 
chairman dr a a dobbie mr j k maiden and mr a m whitfield 
on 9 november 2011 mr n a johnson joined the committee 
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 nominating mr n a johnson 
and mr d d fournier for appointment as independent nonexecutive 
directors this process involved a thorough review of a range 
of candidates put forward by a recruitment consultancy which 
conducted an extensive search process the diversity including 
gender of the board was taken into account by the committee 
however an appropriate female candidate could not be found for 
nomination at that time
the nomination committee held two formal meetings during 2011 
and a number of informal meetings and telephone calls as well as 
numerous interviews in connection with the nomination process 
referred to above
corporate governance
continued governance yule catto  co plc  annual report 201 1 37
the election by the board of mr johnson as chairman to succeed 
mr wood with effect from the close of the 2012 annual general 
meeting was based on the specification for the role as fulfilled 
by mr wood in addition in making the appointment the board 
assessed the expected time commitment required of mr johnson  
in the role of chairman and was satisfied that this was not at  
odds with his other significant commitments which are set out  
on page 30
as a result of the resignation of mr fournier the retirement  
of mr wood and dr dobbie and mr johnson assuming the role  
of chairman there is an immediate need for the appointment  
of one additional independent nonexecutive director and the  
need for two further independent nonexecutive directors to be  
appointed by may 2012 in order for continued compliance with  
code provision b12 accordingly the committee has a well 
advanced recruitment process in hand
remuneration committee
all matters relating to the remuneration committee and 
remuneration are covered in the remuneration report set out  
on pages 39 to 45
relations with shareholders
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 chief executive 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 nonexecutive 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
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 auditor are set out on pages 46 
and 32 respectively statements by the auditor about its reporting 
responsibilities are set out on pages 47 and 90 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 misstatement 
or loss
the group’s internal controls over the financial reporting and 
consolidation processes are designed under the supervision of the 
group finance director to provide reasonable assurance regarding 
the reliability of financial reporting and the preparation and fair 
presentation of the group’s published financial statements for 
external reporting purposes in accordance with ifrs
an ongoing 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 2011 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 each 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 governance yule catto  co plc  annual report 201 1 38
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 2011 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 2011 are reviewed in the reports of the chairman 
chief executive group finance director and the directors’ report
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 20 to 29 
reviews the group’s performance in this connection in 2011
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 and risk management systems 
including in relation to the financial reporting process and the 
process for preparing consolidated accounts include the following
•  a review of the external audit work plan
•  consideration of reports from management and external  
parties including the auditor on the system of internal  
financial control and any material control weaknesses
•  a 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
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
the board confirms that a review of the effectiveness of the 
company’s risk management and internal control systems was 
carried out in 2011
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
the company is a member of the ftse4good index
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 20 to 29 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 groupwide code of business 
conduct on corruption and anticompetitive 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 supported by internal and external 
training a compliance procedure involving annual certification by  
the senior management of each operating company and a procedure 
for maintaining a register of and where appropriate gaining prior 
approval for gifts entertainment and corporate hospitality operates 
throughout the group 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
corporate governance
continued governance yule catto  co plc  annual report 201 1 39
the following report complies with the relevant provisions of the 
large and mediumsized companies and groups accounts and 
reports regulations 2008 and satisfies the requirements of 
the listing rules of the financial services authority and the uk 
corporate governance code which was published in june 2010  
by the financial reporting council
principal areas of focus for the committee during 2011
2011 was an exceptional year for the company with the delivery 
of a very strong set of financial results and the transformation of 
the group into a focused specialty polymer business at the end 
of march 2011 the acquisition of polymerlatex was completed 
and as a result of this acquisition the committee conducted 
a comprehensive review of its policies in early 2011 with the 
assistance of new bridge street a key area of focus for that  
review was the ongoing competitiveness of the remuneration  
paid to the company’s senior executives compared with its peers  
in the following sectors chemicals and process manufacturing  
a broader base of similar sized companies in the ftse 250 
excluding financial services companies investment trusts and 
consumer focused companies and the ftse 250 as a whole  
it was considered appropriate to review this range of sectors  
due to the small size of the ftse 250 chemical sector and the 
fact that the company rejoined the ftse 250 index in september 
2010 and has subsequently moved up that index following the  
rights issue that took place in january 2011 in conjunction with  
the acquisition of polymerlatex the outcome of that review 
resulted in the increases in executive directors’ basic salaries  
and the enhancements to the maximum bonus potential under  
the annual incentive arrangements set out below
the committee also reviewed the longterm incentive provision  
at the company during the year following advice from new bridge 
street and consultation with the company’s major institutional 
shareholders the committee concluded that the company’s existing 
performance share plan should be replaced with a similar scheme 
incorporating latest best practice this recommendation was 
approved by the board and shareholders in june 2011
in conjunction with the review of the executive remuneration  
nonexecutive director remuneration was also reviewed during 
2011 the last review having been carried out in 2006 as a result 
of this review the chairman’s fee was found by the committee to 
be substantially below market rates for similar positions and was 
increased accordingly fees for the other nonexecutive directors 
were also increased as in the board’s view these had also fallen  
well below competitive market rates and in addition were proving 
to be an impediment to the recruitment of the new nonexecutive 
directors to fill vacant positions on the board
role of the remuneration committee and its advisers
during 2011 the remuneration committee comprised 
dr a a dobbie chairman and mr j k maiden until 9 november 
2011 when mr n a johnson was appointed to the committee
the committee is responsible for determining in agreement  
with the board the company’s policy on executive remuneration 
and the specific remuneration for the chairman and each of the 
executive directors including pension rights within the terms of  
the agreed policy the committee is also responsible for reviewing 
the remuneration of senior executives throughout the group  
the committee was assisted in its deliberations on the chairman’s 
and the finance director’s remuneration by the chief executive and 
also took independent advice from and used the services of new 
bridge street a trading name of aon hewitt limited aon hewitt 
limited is part of aon group as is aon limited which provides 
insurance broking services to the group the committee is satisfied 
that this in no way compromises the provision of independent  
advice by new bridge street
new bridge street was paid £65000 for its services in 2011  
which included assistance with the review of executive and non
executive director remuneration and the design and implementation 
of the 2011 performance share plan as well as general advice to  
the committee no director is involved in any discussions relating  
to their own remuneration
the remuneration committee met four times during 2011
remuneration policy
executive directors’ remuneration
the company’s central policy for 2011 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 the committee 
has the discretion to consider the company’s performance on 
environmental social and governance matters when setting the 
remuneration of the executive directors
remuneration of the executive directors comprises
• a base salary
•  performance related incentives being an annual cash bonus  
plan and the 2011 performance share plan and
• pension and ancillary benefits
incentive arrangements were designed in accordance with the 
provisions of schedule a to the code no elements of remuneration 
other than basic salary are pensionable
the details of these are set out below
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
directors’ remuneration report governance yule catto  co plc  annual report 201 1 40
base salaries
the basic element of the remuneration package of senior executives 
is a salary which is reviewed with effect from 1 january each year 
the committee also takes into account the pay and employment 
conditions elsewhere in the group when considering annual salary 
increases and total remuneration
changes to the basic salaries of the executive directors in 2011 
have been as follows
chief executive – the chief executive’s basic annual salary was 
increased by 184 to £450000 with effect from 1 april 2011 
2010 £380000 following an interim increase to £430000 with 
effect from 1 january 2011 pending the outcome of the review 
of executive remuneration referred to above with effect from 
1 january 2012 the chief executive received a 5 increase to 
£472500 per annum
finance director – the finance director’s basic annual salary was 
increased by 10 to £270000 with effect from 1 january 2011 
2010 £245000 with effect from 1 january 2012 the finance 
director received a 13 increase to £305000 per annum in order 
to fully reflect the outcome of the executive remuneration review 
carried out in 2011
annual incentive arrangements
for 2011 the company operated a cash bonus plan for the 
executive directors and senior group employees related to the 
achievement of profit before tax targets
the maximum profit before tax target for 2011 was £911 million 
being 2010 proforma profit before tax for the enlarged group  
plus 10 plus synergies from the polymerlatex acquisition planned 
for delivery in 2011 the actual profit before tax result was above 
this giving rise to maximum payments to be made to the executive 
directors and other participants under the plan the maximum 
amount payable to the executive directors under the plan was 
increased in 2011 from 60 and 80 of basic annual salary  
for the finance director and chief executive respectively to 100  
of basic annual salary for each of them this increase was reflective 
of the outcome of the committee’s review of remuneration 
conducted in the year for senior operational management the  
2011 annual cash bonus payments were based on appropriate 
combinations of profit cash flow working capital and safety and 
environmental targets in 2011 their bonuses were subject to 
limits of between 50 to 80 of basic pay depending on levels 
of seniority as a result of the acquisition of polymerlatex the 
company inherited bonus arrangements for senior management 
which paid up to 140 of basic pay in 2011 and other than for  
one individual such arrangements have been terminated with  
effect from 2012 for 2012 the annual bonus will operate within  
a similar framework to 2011
share plan
a final grant of awards was made under the 2002 performance 
share plan psp in april 2011 and this plan has now been 
superseded by the 2011 performance share plan which was 
introduced in june 2011 for the awards granted in 2011 the 
committee retained the absolute total shareholder return tsr 
condition for 50 of the shares comprised in each award as used  
in prior years however the relative tsr condition for the other  
50 of the shares comprised in each award was replaced with  
a tsr condition linked to performance against a comparator group 
comprising the companies listed in the ftse 250 index full details 
of the performance conditions attaching to these awards are set out 
on page 44
2011 performance share plan
the 2011 performance share plan was introduced in 2011 
following shareholder approval at a general meeting held in june 
2011 and covers the executive directors and senior management 
it was introduced i to replace the psp which was nine years old 
and had only one more year to run and ii to take into account the 
acquisition of polymerlatex 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 2011 performance share plan in any financial 
year to any individual normally may not exceed 150 of their annual 
basic salary however in exceptional circumstances up to a further 
150 of salary may be granted in line with market practice
the award policy for 2012 is for annual awards of 100 of salary 
and should this policy increase the remuneration committee  
would consult with key shareholders in advance
the current policy is that two performance conditions will apply  
to normal annual awards under the 2011 performance share  
plan one half of the awards will vest subject to a relative total 
shareholder return tsr performance condition comparing the 
company’s tsr against the tsr of the constituents of the  
ftse 250 index excluding investment trusts and financial services 
companies over a three year period an underpin will apply to the 
tsr performance condition which permits the committee at its 
discretion to scale down the vesting of this part of an award in 
exceptional circumstances if it considers that the level of vesting  
is not reflective of the company’s underlying financial performance 
the other half of the awards will vest subject to an earnings per 
share eps performance condition relating to the annualised three 
year growth in eps the committee will have the discretion to 
reduce or defer the level of vesting of an award under both the 
tsr and eps performance conditions where an event has occurred 
such as a material health and safety incident as a result of which 
the committee considers that it would be inappropriate for vesting to 
occur in accordance with the tsr and eps performance conditions 
the 2011 performance share plan provides for clawback if the 
group’s accounts have been materially misstated or there has been 
an error in the calculation of any performance conditions which 
results in an overpayment
directors’ remuneration report
continued governance yule catto  co plc  annual report 201 1 41
no normal annual awards were made under the 2011 performance 
share plan in 2011 due to its introduction at the end of the first half 
of the year the first normal awards under the 2011 performance 
share plan will be made in march 2012 as set out in the notice of 
egm when it was approved exceptional awards were made under 
the 2011 performance share plan immediately after its approval in 
june 2011 as the committee wanted to put in place an incentive for 
the achievement of truly exceptional business performance delivered 
by key executives following the acquisition of polymerlatex 
accordingly exceptional awards of 100 of salary were made to the 
chief executive and the finance director and awards of between 
50 and 100 of salary were made to a restricted group of senior 
executives the performance conditions attaching to those awards 
are set out on page 44
in order to further align the interests of the executive directors and 
shareholders there are share ownership requirements in connection 
with both the psp and the 2011 performance share plan requiring 
the retention of 30 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 
progress toward this target as at 31 december 2011 is as follows
director
actual share ownership
as a  of 2011 salary
 based on closing share
 price on 311211
actual share ownership
plus 30 of vested
unexercised awards 
as a  of salary based on
share price on 311211
a m whitfield 6 43
d c blackwood 25 66
during 2011 671290 shares were the subject of awards made in 
april that year under the psp and 739845 shares were the subject 
of awards made in june that year as exceptional awards under  
the 2011 performance share plan
the shares comprised in the awards granted in 2009 under the 
psp have vested in full as the performance conditions were 
exceeded by a margin of over 200 the value of shares comprised 
in the awards granted in 2009 did not exceed 100 of the then 
applicable annual salary of any individual and the number of shares 
in each award is reflective of the company’s share price of 4125p 
on the day prior to the grant of the awards
pension arrangements
mr a m whitfield and mr d c blackwood are eligible to participate  
in the group personal pension plan and receive payments of 25 
and 20 of basic annual salary respectively from the company 
which they may use either in conjunction with that plan andor 
to enable them to make their own arrangements there are no 
unfunded pension promises or similar arrangements for directors
benefits
ancillary benefits comprise a fully expensed car and private  
health insurance
executive directors’ service contracts
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 and mr blackwood’s is dated 12 september 2007 both 
contracts have no unexpired term provide for a notice period of  
one year and make no provision for predetermined 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
nonexecutive directorships held by the executive directors
mr whitfield is a nonexecutive director of the chemical industries 
association limited for which he does not receive any remuneration 
he is also a nonexecutive director of az electronic materials sa  
for which he receives and retains £50000 pa mr blackwood is a 
member of the board for actuarial standards for which he received 
and retains £10000 pa
nonexecutive directors’ remuneration and terms of appointment
the board determines the remuneration of the nonexecutive 
directors including members of the remuneration committee
it has been the board’s policy to review fees paid to non
executive directors periodically a review of nonexecutive director 
remuneration was carried out in 2011 the previous review having 
been carried out in december 2006 with the assistance of 
advice provided by new bridge street as a result of this review 
the committee determined that the chairman’s fee be increased 
from £110000 pa to £140000 pa with effect from 1 april 2011 
also with effect from 1 april 2011 the board determined that 
nonexecutive director fees be increased as follows £40000 pa 
previously £30000 pa for those who do not sit on a committee 
£45000 pa previously £33000 pa for those who do sit on  
a committee £50000 pa previously £36000 pa for those  
who are committee chairmen and the senior independent director 
the committee has decided that in future nonexecutive directors’ 
remuneration will be reviewed on a biennial basis
nonexecutive 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
all nonexecutive directors are appointed in writing
in addition to mr n a johnson’s letter of appointment as a non
executive director the company has entered into a consultancy 
agreement with ci international consulting limited for the 
provision of consultancy services by mr johnson the total of the 
annual fees paid to mr johnson and to ci international consulting 
limited equates to the fees due to an individual fulfilling the role  
of senior independent director of the company of £50000 pa  
the first year of each director’s appointment is shown in the 
directors’ biographies on page 30 the periods of appointment  
and the requirements for reelection of nonexecutive directors  
are provided within the performance evaluation section of the 
corporate governance report on page 35 governance yule catto  co plc  annual report 201 1 42
total shareholder return over five years
the following graph compares the share price performance of the company by reference to total shareholder return  
with that of the ftse 250 which is considered to be the most appropriate index against which to make a comparison
06 07 08 09 10 11
20
0
40
60
80
100
120
140
160
yule catto  co plc ftse 250
yule catto shareholder return versus ftse 250 total return
cumulative years ended 31 december
agm approval
the directors’ remuneration report has been submitted to the 2012 annual general meeting for approval
remuneration details
the amount and components of the directors’ remuneration are set out below
audited information
directors’ remuneration
emoluments
2011
£’000
2010
£’000
the total amounts for directors’ remuneration and other benefits were
emoluments 1799 1381
the emoluments of the individual executive directors holding office during the year were
 base
salary
2011
£
annual
incentive
arrangement
1
2011
£
benefits
2011
£
total
2011
£
total
2010
£
a m whitfield – highest paid director 445000 445000 29807 919807 711374
d c blackwood 270000 270000 22281 562281 410156
 
1  before its award a m whitfield and d c blackwood each sacrificed part of their cash bonus entitlement pension contributions equal to the amount given up were made into 
pension plans for the benefit of their dependants the amount shown in the annual incentive arrangement column reflects the full amount earned
the annual incentive arrangement is discussed in more detail on page 40 of the remuneration report
directors’ remuneration report
continued governance yule catto  co plc  annual report 201 1 43
pension arrangements
to fund their pension arrangements mr a m whitfield and mr d c blackwood received the following payments
2011
£
2010
£
a m whitfield 111250 95000
d c blackwood 54000 49100
directors’ fees
the fees of the individual nonexecutive directors holding office during the year were
2011
£
2010
£
p s wood – chairman 132500 110000
the hon a g catto 37500 30000
dr a a dobbie 46500 36000
dato’ lee hau hian 37500 30000
n a johnson 16667 –
j k maiden 46500 36000
g r menzies – 18000
317167 260000
the nonexecutive directors receive no other remuneration in addition to their fee
shareholdings
given below are details of the interests of the directors in the share capital of the company at 31 december 2011 and 31 december 2010
ordinary shares options
2011 2010 2011 2010
d c blackwood 40833 40833 1602826 1345442
the hon a g catto 2046955 2046955 – –
7741950 7741950 – –
dr a a dobbie 114853 114853 – –
dato’ lee hau hian 24763 24763 – –
n a johnson – – – –
j k maiden 2523 – – –
a m whitfield 14000 14000 2507862 2078889
p s wood 51914 51914 – –
 
 nonbeneficial interest
between 31 december 2011 and 17 february 2012 there were no changes in the directors’ holdings governance yule catto  co plc  annual report 201 1 44
directors’ remuneration report
continued
executive options
at
010111
number of options during the year
at
 311211
exercise
price
notional
value
£
exercise
period granted lapsed exercised
a m whitfield 346738
i
– – – 346738 – 569691 20112018
1392992
ii
– – – 1392992 – 2288686 20122019
339159
iii
– – – 339159 – 557238 20132020
– 222551
iv
– – 222551 – 365651 20142021
– 206422
v
– – 206422 – 339151 20142021
2078889 428973 – – 2507862 – 4120417
 
at
010111
number of options during the year
at
311211
exercise
price
notional
value
£
exercise
period granted lapsed exercised
d c blackwood 224647
i
– – – 224647 – 369095 20112018
901681
ii
– – – 901681 – 1481462 20122019
219114
iii
– – – 219114 – 360004 20132020
– 133531
iv
– – 133531 – 219391 20142021
– 123853
v
– – 123853 – 203491 20142021
1345442 257384 – – 1602826 – 2633443
vested awards
i the awards made in 2008 under the psp were subject to the following performance conditions
a  absolute total shareholder return condition vesting in respect of 50 of the shares comprised in the award upon the company’s 
total shareholder return tsr over a three year period ended on 31 december 2010 increasing by the rise in rpi plus 1576 or 
more compared with the company’s tsr at the start of the three year performance period vesting in respect of 25 of the shares 
comprised in the award upon the company’s tsr increasing by the rise in rpi plus 927 over the three year performance period 
and vesting in respect of between 25 to 50 of the shares for performance between these points on a straightline basis with 
lesser performance resulting in no part of the 50 of the shares vesting
b  relative total shareholder return condition vesting in respect of 50 of the shares comprised in the award upon the growth in 
the company’s tsr over the three year performance period exceeding the growth of the ftse 250 total return index over the 
same three year period by 769 or more vesting in respect of 5 of the shares comprised in the award upon the growth in the 
company’s tsr over the three year performance period being equal to the growth of the ftse total return index over the same 
period and vesting in respect of between 5 to 50 of the shares for performance between these points on a straightline basis 
with lesser performance resulting in no part of the 50 of the shares vesting 
 
the 2008 awards vested in march 2011 in full due to the maximum performance criteria being exceeded
ii  for the awards made in 2009 under the psp the same performance conditions applied as for the awards made in 2008 measured  
over a three year period ending on 31 december 2011 
 
the 2009 awards have vested in full due to the maximum performance criteria being exceeded governance yule catto  co plc  annual report 201 1 45
unvested awards
iii  for the awards made in 2010 under the psp the same performance conditions apply as for the awards made in 2008 measured  
over a three year period ending on 31 december 2012
iv  for the awards made in april 2011 under the psp the same absolute total shareholder condition applied to 50 of the shares 
comprised in the award for the other 50 of the shares comprised in the award the following conditions applied vesting in respect of 
50 of the shares comprised in the award upon the company’s tsr at the end of the three year period ending on 31 december 2013 
being in the top quartile of the tsr of the companies in the ftse 250 index vesting in respect of 5 of the share comprised in the  
award upon the company’s tsr at the end of the three year period ending on 31 december 2013 being at least equal to the ftse  
250 total return index and vesting in respect of between 5 and 50 of the shares for performance between these points on  
a straightline base with lesser performance resulting in no part of the 50 of the shares vesting
v  for the exceptional awards made in june 2011 under the 2011 performance share plan 100 of the shares comprised in the award 
vest if earnings per share eps for 2013 is equal to or greater than 303 pence per share no shares will vest if eps for 2013 is less 
than 273 pence per share and between 273 pence and 303 pence per share vesting will be on a straightline basis
the notional value of unexercised share options is based on the midmarket price of a share on 31 december 2011 of 1643 pence  
during the year the market price ranged between 1480 pence and 2530 pence
by order of the board
r atkinson
secretary
14 march 2012 governance yule catto  co plc  annual report 201 1 46
financial statements including adoption  
of going concern basis
the directors are responsible for preparing the annual 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 under that law the directors are required 
to prepare the group financial statements in accordance with 
international financial reporting standards ifrss as adopted  
by the european union and article 4 of the ias regulation and  
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 under company law the directors must not approve the 
accounts unless they are satisfied that they give a true and fair  
view of the state of affairs of the company and of the profit  
or loss of the company for that period
in preparing the parent company financial statements the directors 
are required to
•  select suitable accounting policies and then apply  
them consistently
•  make judgments and accounting 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
in preparing the group financial statements international 
accounting standard 1 requires that directors
•  properly select and apply accounting policies
•  present information including accounting policies  
in a manner that provides relevant reliable comparable  
and understandable information 
•  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 and
•  make an assessment of the company’s ability to continue  
as a going concern
the directors are responsible for keeping adequate accounting 
records that are sufficient to show and explain the company’s 
transactions and disclose with reasonable accuracy at any time  
the financial position of the company and enable them to ensure 
that the financial statements comply with the companies act  
2006 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 financial statements prepared in accordance with the relevant 
financial reporting framework give a true and fair view of the 
assets liabilities financial position and profit or loss of the 
company and the undertakings included in the consolidation  
taken as a whole and
•  the management report includes a fair review of the development 
and performance of the business and the position of the company 
and the undertakings included in the consolidation taken as  
a whole together with a description of the principal risks and 
uncertainties that they face
by order of the board
a m whitfield d c blackwood
chief executive group finance director
14 march 2012
statement of directors’ responsibilities group financial statements yule catto  co plc  annual report 201 1 47
independent auditor’s report to  
the members of yule catto  co plc
we have audited the group financial statements of yule catto  co 
plc for the year ended 31 december 2011 which comprise the  
consolidated income statement the consolidated statement of 
comprehensive income the consolidated statement of changes 
in equity the consolidated balance sheet the consolidated 
cash flow statement and the related notes 1 to 36 the financial 
reporting framework that has been applied in their preparation  
is applicable law and international financial reporting standards 
ifrss as adopted by the european union
this report is made solely to the company’s members as a body  
in accordance with chapter 3 of part 16 of the companies act 
2006 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 auditor’s 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 auditor
as explained more fully in the directors’ responsibilities statement 
the directors are responsible for the preparation of the group 
financial statements and for being satisfied that they give a true  
and fair view our responsibility is to audit and express an opinion  
on the group financial statements in accordance with applicable  
law and international standards on auditing uk and ireland  
those standards require us to comply with the auditing practices 
board’s ethical standards for auditors
scope of the audit of the financial statements
an audit involves obtaining evidence about the amounts and 
disclosures in the financial statements sufficient to give reasonable 
assurance that the financial statements are free from material 
misstatement whether caused by fraud or error this includes an 
assessment of whether the accounting policies are appropriate to 
the group’s circumstances and have been consistently applied and 
adequately disclosed the reasonableness of significant accounting 
estimates made by the directors and the overall presentation of 
the financial statements in addition we read all the financial and 
nonfinancial information in the annual report to identify material 
inconsistencies with the audited financial statements if we become 
aware of any apparent material misstatements or inconsistencies  
we consider the implications for our report
opinion on financial statements
in our opinion the group financial statements
•  give a true and fair view of the state of the group’s affairs as  
at 31 december 2011 and of its loss for the year then ended
•  have been properly prepared in accordance with ifrss as  
adopted by the european union and
•  have been prepared in accordance with the requirements of  
the companies act 2006 and article 4 of the ias regulation
opinion on other matter prescribed  
by the companies act 2006
in our opinion the information given in the directors’ report for the 
financial year for which the group financial statements are prepared 
is consistent with the group financial statements
matters on which we are required to report by exception
we have nothing to report in respect of the following
under the companies act 2006 we are required to report to you if 
in our opinion
•  certain disclosures of directors’ remuneration specified  
by law are not made or
•   we have not received all the information and explanations  
we require for our audit
under the listing rules we are required to review
•  the directors’ statement contained within the directors’ report  
in relation to going concern
•  the part of the corporate governance statement relating to  
the company’s compliance with the nine provisions of the uk 
corporate governance code specified for our review and
•  certain elements of the report to shareholders by the board  
on directors’ remuneration
other matter
we have reported separately on the parent company financial 
statements of yule catto  co plc for the year ended 31 december 
2011 and on the information in the directors’ remuneration report 
that is described as having been audited
robert knight senior statutory auditor
for and on behalf of deloitte llp
chartered accountants and statutory auditor
cambridge united kingdom
14 march 2012 group financial statements yule catto  co plc  annual report 201 1 48
consolidated income statement
for the year ended 31 december 201 1
 2011 2010
note
underlying 
performance
£’000
special
items
£’000
ifrs
£’000
underlying
performance
£’000
special
items
£’000
ifrs
£’000
continuing operations
group revenue 45 1059438 –  1059438 563832 5689 569521 
share of joint ventures revenue 45 57424 –  57424 19026 –  19026 
total sales 1116862 –  1116862 582858 5689 588547 
group revenue 1059438 – 1059438 563832 5689 569521
company and subsidiaries  
 before special items 91549 –  91549 47501 –  47501 
restructuring and site closure 3 –  20230 20230 –  –  –  
acquisition costs 3 –  1427 1427 –  4182 4182
amortisation of acquired intangibles 3 –  19096 19096 –  –  –  
operations sold or closed  
 during the year 4 –  –  –  –  13161 13161 
company and subsidiaries 91549 40753 50796 47501 8979 56480 
share of joint ventures 45 4819 1286 3533 2934 –  2934 
operating profitloss 5 96368 42039 54329 50435 8979 59414 
interest payable 8 12312 – 12312 8266 – 8266
interest receivable 8 739 – 739 426 – 426 
11573 – 11573 7840 – 7840
fair value adjustment 38 – 3317 3317 – 2645 2645 
finance costs 11573 3317 14890 7840 2645 5195
profitloss before taxation 84795 45356 39439 42595 11624 54219 
taxation 9 19438 14955 4483 8432 6558 1874
profitloss for the year from  
 continuing operations 65357 30401 34956 34163 18182 52345 
discontinued operations
lossprofit for the year from  
 discontinued operations 3 – 40257 40257 – 2929 2929 
profitloss for the year 65357 70658 5301 34163 21111 55274 
profit attributable to minority interests 1645 – 1645 1300 4236 5536 
profitloss attributable to equity  
 holders of the parent 63712 70658 6946 32863 16875 49738 
65357 70658 5301 34163 21111 55274 
earningsloss per share 
from continuing operations
– basic 12 188p 90p 98p 145p 62p 207p 
– diluted 12 184p 88p 96p 141p 60p 201p 
from continuing and  
 discontinued operations
– basic 12 188p 208p 20p 145p 75p 220p 
– diluted 12 184p 204p 20p 141p 73p 214p 
special items
the special items are shown in more detail in note 3 group financial statements yule catto  co plc  annual report 201 1 49
consolidated statement of comprehensive income
for the year ended 31 december 201 1
 2011 2010
equity
holders of
 the parent
£’000
minority
interests
£’000
total
£’000
equity
holders of
 the parent
£’000
minority
interests
£’000
total
£’000
lossprofit for the year 6946 1645 5301 49738 5536 55274
actuarial gains and losses 33959 – 33959 76 – 76
lossesgains on cash flow hedges  
 arising during the period 7344 – 7344 4495 – 4495 
exchange differences on translation  
 of foreign operations 4402 202 4604 6030 649 6679
gains on a hedge of a net investment  
 taken to equity 509 – 509 1732 – 1732
tax relating to components of other  
 comprehensive income see note 9 1295 – 1295 300 – 300
other comprehensive income for the period 43901 202 44103 12633 649 13282 
total comprehensive income for the period 50847 1443 49404 62371 6185 68556
 
consolidated statement of changes in equity
for the year ended 31 december 201 1
share
capital
£’000
share
premium
£’000
capital
redemption
reserve
£’000
own
shares
£’000
hedging and
translation
reserve
£’000
cash flow
hedging
reserve
£’000
retained
earnings
£’000
total
£’000
minority
interest
£’000
total
equity
£’000
at 1 january 2011 14566 33034 949 – 6828 4495 46444 106316 6249 112565
lossprofit for the year – – – – – – 6946 6946 1645 5301
other comprehensive 
  income for the period – – – – 3893 7344 32664 43901 202 44103
total comprehensive 
 income for the period – – – – 3893 7344 39610 50847 1443 49404
dividends paid – – – – – – 8489 8489 – 8489
investment by 
 minority interest – – – – – – – – 2920 2920
issue of share capital 19422 205871 – – – – – 225293 – 225293
expenses on issue 
 of shares – 8371 – – – – – 8371 – 8371
shares purchased  
 by esop trust – – – 659 – – – 659 – 659
sharebased payments – – – 659 – – 609 50 – 50
at 31 december 2011 33988 230534 949 – 2935 2849 1046 264511 10612 275123
share
capital
£’000
share
premium
£’000
capital
redemption
reserve
£’000
own
shares
£’000
hedging and
translation
reserve
£’000
cash flow
hedging
reserve
£’000
retained
earnings
£’000
total
£’000
minority
interest
£’000
total
equity
£’000
at 1 january 2010 14566 33034 949 – 934 – 19 47634 6903 54537
profit for the year – – – – – – 49738 49738 5536 55274
other comprehensive  
 income for the period – – – – 7762 4495 376 12633 649 13282
total comprehensive  
 income for the period – – – – 7762 4495 50114 62371 6185 68556
dividends paid – – – – – – 2913 2913 6585 9498
investment by  
 minority interest
– – – – – – – – 130 130
divestment by  
 minority interest – – – – – – – – 384 384
sharebased payments – – – – – – 776 776 – 776
at 31 december 2010 14566 33034 949 – 6828 4495 46444 106316 6249 112565 group financial statements yule catto  co plc  annual report 201 1 50
consolidated balance sheet
31 december 201 1
note
2011
£’000
2010 
£’000
noncurrent assets
goodwill 14 244690 124027
acquired intangible assets 15 165366 –
other intangible assets 16 863 363
property plant and equipment 17 183599 102568
financial asset 18 5589 –
deferred tax assets 10 1116 161
investment in joint ventures 19 14325 3716
 615548 230835
current assets
inventories 20 73825 65379
trade and other receivables 21 146692 111285
cash and cash equivalents 22 85922 36211
derivatives at fair value 23 17368 22765
total current assets 323807 235640
current liabilities
borrowings 22 31739 9876
trade and other payables 24 193630 140079
current tax liability 9 37864 28763
derivatives at fair value 23 5628 –
total current liabilities 268861 178718
noncurrent liabilities
borrowings 22 215901 102379
trade and other payables 24 181 144
deferred tax liability 10 61379 6672
post retirement benefit obligations 25 117910 65997
 395371 175192
net assets 275123 112565
equity
called up share capital 26 33988 14566
share premium 230534 33034
capital redemption reserve 949 949
hedging and translation reserve 2935 6828
cash flow hedging reserve 2849 4495
retained earnings 1046 46444
equity attributable to equity holders of the parent 264511 106316
minority interests 10612 6249
total equity 275123 112565
analysis of net borrowings
cash and cash equivalents 22 85922 36211 
current borrowings 22 31739 9876
financial asset 18 5589 – 
noncurrent borrowings 22 215901 102379
net borrowings 156129 76044
special item deduct fair value adjustment 22 12759 12674
special item add nonrecourse factoring 22 20955 –
net borrowings underlying performance 164325 63370
the financial statements were approved by the board of directors and authorised for issue on 14 march 2012  
they are signed on its behalf by
a m whitfield
d c blackwood
directors group financial statements yule catto  co plc  annual report 201 1 51
consolidated cash flow statement
for the year ended 31 december 201 1
2011 2010
note £’000 £’000 £’000 £’000
operating
cash generated from operations 27 80191 42228 
 interest received 739 426 
 interest paid 15954 9630
net interest paid 15215 9204
 uk corporation tax paid 52 39
 overseas corporate tax paid 19878 8693
total tax paid 19930 8732
net cash inflow from operating activities 45046 24292
investing 
dividends received from joint ventures 19 3399 2667 
 purchase of property plant and equipment 24248 10592
 sale of property plant and equipment 2327  43
net capital expenditure and financial investment 21921 10549
 purchase of businesses 29 365379 371
 sale of businesses 28 28460 16075 
net cash impact of acquisitions and disposals 336919 15704
net cash outflowinflow from investing activities 355441 7822
financing
equity dividends paid 11 8489 2913
dividends paid to minority interests – 6585
investment by minority shareholder 2920 130
proceeds on issue of shares 225293 – 
expenses on issue of shares 8371 – 
purchase of own shares 659 – 
repayment of borrowings 30 4340 35978
proceeds of noncurrent borrowings 30 154100 – 
net cash inflowoutflow from financing activities 360454 45346
increasedecrease in cash and bank overdrafts during the year 50059 13232
comprised of
cash and cash equivalents 30 42208 10657
bank overdrafts 30 7851 2575
50059 13232
reconciliation of net cash flow from operating activities  
to movement in net borrowings
net cash inflow from operating activities 45046 24292
add back reduction in factored invoices 9807 – 
add back dividends received from joint ventures 19 3399 2667 
less net capital expenditure and financial investment 21921 10549
less dividends paid to minority interests – 6585
free cash flow before dividends 36331 9825 
net cash impact of acquisitions underlying 29 396141 371
net cash impact of disposals underlying 28 34178 16075 
investment by minority shareholder 2920 130 
proceeds on issue of shares 225293 – 
expenses on issue of shares 8371 – 
purchase of own shares 659 – 
equity dividends paid 11 8489 2913
exchange movements 13983 1922 
movement in net borrowings underlying performance 100955 24668 group financial statements yule catto  co plc  annual report 201 1 52
notes to the consolidated financial statements
31 december 201 1
1 general information
yule catto  co plc is a company incorporated in the united 
kingdom under the companies act the address of the registered 
office is given on page 30
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
new and revised standards
in the current year the following new and revised standards have 
been adopted
•  ifrs 7 amended october 2010 – disclosures – transfers  
of assets
•  ias 24 revised november 2009 – related party disclosures
•  ias 32 amended october 2009 – classification of rights issues
•  ifric 14 amended november 2009 – prepayments of  
a minimum funding requirement
•  ifric 19 extinguishing financial liabilities with equity instruments
•  the improvements to ifrss may 2010
in the current financial year the group has adopted ias 24 
‘related party disclosures’ ifric 14 amendment ‘prepayments 
of a minimum funding requirement’ and improvements to ifrss 
2010 – as published in may 2010 ias 24 simplifies the disclosure 
requirements for entities that are controlled jointly controlled or 
significantly influenced by government related entities and clarifies 
the definition of a related party this revision does not impact the 
group’s related party disclosures ifric 14 amendment allows 
an entity to recognise an early payment of contributions to cover 
minimum funding requirements on its pension plan as a prepayment 
this amendment does not represent a material impact on the 
group’s financial statements
the improvements to ifrss 2010 incorporated necessary but 
nonurgent amendments to seven international financial reporting 
standards the amendments most relevant to the group are
•  ifrs 7 – financial instruments – disclosures the required 
enhanced disclosures where applicable have been incorporated  
in these financial statements
•  ias 34 – interim financial reporting emphasises the principle that 
the disclosure about significant events and transactions in interim 
periods should update the relevant information presented in the 
most recent annual report the amended disclosure requirements 
where applicable were included in the group’s interim financial 
statements for the halfyear ended 30 june 2011
the remaining five amendments in this collection of improvements 
do not currently impact the group’s financial statements
the following standards and interpretations are also effective from 
the current financial year but do not currently impact the group’s 
financial statements
•  ias 32 amendment – ‘classification of rights issues’
ifric 19 ‘extinguishing financial liabilities with equity instruments’  
is not currently relevant to the group’s operations
no amendments to these financial statements have been made 
as a result of adopting these new and revised standards and 
interpretations
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 7 amended december 2011 – disclosures –  
offsetting financial assets and financial liabilities
• ifrs 9 financial instruments
• ifrs 10 consolidated financial statements
• ifrs 1 1 joint arrangements
• ifrs 12 disclosure of interest in other entities
• ifrs 13 fair value measurement
•  ias 1 amended june 2011 presentation of items of  
other comprehensive income
• ias 12 deferred tax recovery of underlying assets
• ias 19 revised june 2011 employee benefits
• ias 27 revised may 2011 separate financial statements
•  ias 28 revised may 2011 investments in associates  
and joint ventures
•  ias 32 amended december 2011 offsetting financial  
assets and financial liabilities
•  ifric 20 stripping costs in the production phase  
of a surface mine
the directors do not anticipate that the adoption of these standards 
and interpretations in future periods will have a material impact 
on the financial statements of the group except for additional 
disclosures when the relevant standards come into effect group fi nancial statements yule catto  co plc  annual report 201 1 53
2 signifi cant 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 33 the financial statements have been prepared on  
a going concern basis the principal accounting policies adopted  
are set out below
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 intragroup 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 the consolidated 
income statement 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 cashgenerating 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 cashgenerating  
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 prorata 
on the basis of the carrying amount of each asset in the unit
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
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
business combinations
acquisitions of subsidiaries and businesses are accounted for  
using the acquisition method the consideration for each acquisition 
is measured at the aggregate of the fair values at the date  
of exchange of assets given liabilities incurred or assumed  
and equity instruments issued by the group in exchange for control  
of the acquiree acquisitionrelated costs are recognised in profit  
or loss as incurred
the acquiree’s identifiable assets liabilities and contingent liabilities 
that meet the conditions for recognition under ifrs 3 2008 are 
recognised at their fair value at the acquisition date except that
•  deferred tax assets or liabilites and liabilities or assets related  
to employee benefit arrangements are recognised and measured 
in accordance with ias 12 income taxes and ias 19 employee 
benefits respectively
•  liabilities or equity instruments related to the replacement by  
the group of an acquiree’s sharebased payment awards are 
measured in accordance with ifrs 2 sharebased payment and
•  assets or disposal groups that are classified as held for sale  
in accordance with ifrs 5 noncurrent assets held for sale  
and discontinued operations are measured in accordance with  
that standard group financial statements yule catto  co plc  annual report 201 1 54
2 significant accounting policies continued
if the initial accounting for a business combination is incomplete  
by the end of the reporting period in which the combination occurs 
the group reports provisional amounts for the items for which the 
accounting is incomplete those provisional amounts are adjusted 
during the measurement period see below or additional assets or 
liabilities are recognised to reflect new information obtained about 
facts and circumstances that existed as of the acquisition date that  
if known would have affected the amounts as of that date
the measurement period is the period from the date of acquisition 
to the date the group obtains complete information about facts  
and circumstances that existed as of the acquisition date and is 
subject to a maximum of one year
acquired intangible assets
intangible assets acquired through acquisition are measured  
at their fair value and are amortized on a straightline basis over  
their estimated useful lives on the following bases
customer relationships – between 5 and 8 years 
technology – 10 years
where necessary the fair value at acquisition an
d estimated useful lives for these intangible assets are based on 
independent valuation reports
other intangible assets
software development and environmental licensing costs resulting  
in development of a longterm intangible asset are measured  
initially at cost and are amortised on a straightline basis over  
their estimated useful lives as follows
software  – between 3 and 5 years
an internallygenerated 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 internallygenerated 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 straightline 
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 cashgenerating 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 pretax 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 cashgenerating unit is 
estimated to be less than its carrying amount the carrying amount 
of the asset or cashgenerating 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
when an impairment loss subsequently reverses the carrying 
amount of the asset or cashgenerating unit is increased to the 
revised estimate of its recoverable amount but so that the increased 
carrying amount does not exceed the carrying amount that would 
have been determined had no impairment loss been recognised 
in prior years a reversal of an impairment loss is recognised 
immediately in profit or loss unless the relevant asset is carried  
at its revalued amount in which case the reversal of impairment  
loss is treated as a revaluation increase
operating leases
operating lease payments are expensed on a straightline 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 straightline basis over the lease term
notes to the consolidated financial statements 
continued group financial statements yule catto  co plc  annual report 201 1 55
2 significant accounting policies continued
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 slowmoving 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
all trade receivables that are factored by third parties are done  
so on a nonrecourse basis at the point of factoring the group 
forfeits the right to future cash flows from these receivables and 
those amounts are derecognised the cost of factoring receivables 
is recognised as a finance cost in the period in which the receivable  
is factored
amortised costs
bank borrowings
interestbearing 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 
consolidated 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
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
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 23
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 an effective interest 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 nonmonetary 
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 nonmonetary 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 sterlingdenominated 
assets and liabilities group financial statements yule catto  co plc  annual report 201 1 56
2 significant accounting policies continued
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 nonderivatives in respect  
of foreign currency risk as either cash flow hedges or hedges  
of net investments in foreign operations
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 hedges
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 nonfinancial asset or a nonfinancial liability 
the gains and losses previously deferred in equity are transferred 
from equity and included in the initial measurement of the cost of 
the nonfinancial asset or nonfinancial liability
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 consolidated 
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 substantively 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
notes to the consolidated financial statements
continued group financial statements yule catto  co plc  annual report 201 1 57
2 significant accounting policies continued
taxation continued
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 consolidated 
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 consolidated 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 the consolidated income statement and are presented in the 
consolidated statement of comprehensive income
the uk defined benefit scheme is funded with the assets of 
the scheme held separately from those of the group in separate 
trusteeadministered 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 provided 
in the normal course of business net of discounts vat and other 
salesrelated taxes
sales of goods are recognised when goods are delivered and  
title has passed where delivery is defined in accordance with 
incoterms 2000
sharebased payments
the group has applied the requirements of ifrs 2 sharebased 
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 equitysettled sharebased payments to certain 
employees equitysettled sharebased payments are measured  
at fair value at the date of grant the fair value determined at the 
grant date of the equitysettled sharebased payments is expensed 
on a straightline basis over the vesting period based on the 
group’s estimate of shares that will eventually vest
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 from continuing activities before 
financing costs and taxation
ebitda
ebitda is calculated as operating profit before depreciation 
amortisation and special items
special items
the following are disclosed separately in order to provide  
a clearer indication of the group’s underlying performance
•  amortisation of acquired intangible assets
•  impairment of noncurrent assets
•  costs of business combinations as defined by ifrs 3 and  
related debt issue costs
•  restructuring and site closure costs
•  fair value adjustment – 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
•  amounts advanced in respect of invoices sold under  
nonrecourse factoring arrangements
•  other nonrecurring and nonoperating items
•  tax impact of above items and
•  settlement of prior period tax issues
underlying performance represents the statutory performance  
of the group under ifrs excluding special items group financial statements yule catto  co plc  annual report 201 1 58
2 significant accounting policies continued
net borrowings
net borrowings represents cash and cash equivalents together  
with short and longterm borrowings as adjusted for the effect  
of related derivative instruments irrespective of whether they qualify 
for hedge accounting nonrecourse factoring arrangements  
and the inclusion of financial assets
critical judgements in applying accounting policies
the following are the critical judgements apart from those involving 
estimations see below that the group has made in the process  
of applying the accounting policies and that have the most significant 
effect on the amounts recognised in the financial statements
going concern
the assessment that the financial statements should be 
prepared on a going concern basis requires the directors to 
make a judgement that after taking account of reasonably 
possible changes in trading performance the group has 
adequate resources to continue in operational existence  
for the foreseeable future
recognition of deferred tax assets
the group activities give rise to significant potential deferred 
tax assets particularly in respect of the uk pension liability 
tax losses and accelerated capital allowances determination 
of whether these assets should be recognised requires a 
high degree of management judgement and is dependent on 
management’s ability to project future earnings from activities 
that may apply loss positions carried forward against future 
income taxes
key sources of estimation uncertainty
the preparation of consolidated financial statements requires 
that management make estimates and assumptions that affect 
reported amounts of assets and liabilities income and expenses 
the estimates and associated assumptions are based on historical 
experience and various other factors that are believed to be 
reasonable under the circumstances the result of which form the 
basis of making the judgements about carrying values of assets 
and liabilities that are not readily apparent from other sources 
actual results may differ from these estimates the estimates and 
underlying assumptions are reviewed on an ongoing basis taking the 
current and expected future market conditions into consideration
impairmentreversal of impairment
the group has significant investments in property plant  
and equipment and goodwill changes in the circumstances  
or expectations of future performance of an individual asset  
may be an indicator that the asset is impaired requiring the  
book value to be written down to its recoverable amount 
impairments are reversed if the conditions for impairment  
are no longer present evaluating whether an asset is impaired  
or if an impairment should be reversed requires a high degree  
of judgement and may depend to a large extent on the  
selection of key assumptions about the future
determining whether goodwill is impaired requires an  
estimation of the value in use of the cashgenerating 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 cashgenerating unit and  
a suitable discount rate in order to calculate present value  
the industry growth rates used within the forecast future  
cash flows are developed with reference to external sources  
but are subject to estimation uncertainty
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 25
current tax liability and deferred tax
the group annually incurs significant amounts of income taxes 
payable to various jurisdictions around the world and it also 
recognises significant changes in deferred tax assets and 
deferred tax liabilities all of which are based on management’s 
interpretations of applicable laws regulations and relevant  
court decisions the quality of these estimates is highly 
dependent upon management’s ability to properly apply what 
can be very complex sets of rules and to recognise changes  
in applicable rules
notes to the consolidated financial statements
continued group financial statements yule catto  co plc  annual report 201 1 59
3 special items
the special items are made up as follows
2011
£’000
2010
£’000
continuing operations
total sales
revenue of operations sold or closed during the year – 5689
operating lossprofit
operating profit of operations sold or closed during the year – 890
restructuring and site closure  – cash costs 15792 –
 – noncash costs 4438 –
acquisition costs see note 29 1427 4182
amortisation of acquired intangibles  – subsidiaries 19096 –
 – share of joint ventures 1286 –
profit arising from the sale or closure of operations see note 7 – 12271
42039 8979
finance costs
fair value adjustment see note 8 3317 2645
lossprofit before taxation from continuing operations 45356 11624
taxation see note 9 14955 6558
lossprofit for the year from continuing operations 30401 18182
the restructuring and site closure costs charged to the consolidated income statement above are in respect of post acquisition activities 
to integrate the former polymerlatex business with that of the existing group ‘cash costs’ represent those charges which have or will be 
defrayed in the form of cash settlements to third parties as disclosed in note 27 at 31 december 2011 £5801000 of these costs have 
been physically paid to third parties ‘noncash costs’ represent charges for the write off of specific fixed assets and stocks held on sites 
which are being closed as part of the integration exercise
2011
£’000
2010
£’000
discontinued operations
total sales
revenue of operations sold or closed during the year 63115 62933
operating lossprofit of discontinued operations
operating profit of operations sold or closed during the year 4124 4450
impairment of goodwill see note 14 36885 –
impairment of fixed assets prior to sale of operation see note 17 5620 –
loss arising from the sale or closure of operations see note 7 813 858
39194 3592
taxation
taxation on operating profit of operations sold or closed during the year 1063 663
lossprofit for the year from discontinued operations 40257 2929 
the lossprofit for the year from discontinued operations is attributable solely to equity holders of the parent group financial statements yule catto  co plc  annual report 201 1 60
notes to the consolidated financial statements
continued
4 segmental analysis
the chief operating decision maker of the group is considered to be the executive committee which reviews internal reports prepared  
on a divisional basis in order to allocate the resources of the group and to assess business performance following the acquisition 
of polymerlatex the group revised its reporting to the executive committee for these purposes and now reports under three revised 
reportable segments under ifrs 8 being polymer chemicals europe  north america polymer chemicals asia  rest of world  
and pharma chemicals as noted in the chairman’s statement the group disposed of its pharma chemicals business in the second half 
of 2011 and now recognises this as a discontinued activity in this annual report the group no longer allocates the uk defined benefit 
pension scheme deficit to a specific segment
the segmental analysis below in respect of 2010 has been restated to reflect the change in segmentation discussed above
substantially all revenues earned by the group are from the sale of polymer products derived from petrochemical monomers
no single customer accounts for more than 10 of the group’s revenues no information is provided at the divisional level to the executive 
committee concerning interest revenues interest expense depreciation or amortisation income taxes other material noncash items  
or material items disclosed in accordance with ias 197
2011
total sales operating profit
underlying
performance
£’000
special
items
£’000
ifrs
£’000
underlying
 performance
£’000
special
items
£’000
ifrs
£’000
analysis by activity
continuing activity
polymer chemicals – europe  north america
subsidiaries 743534 – 743534 70649 35495 35154
share of joint ventures 34196 – 34196 2498 1286 1212
777730 – 777730 73147 36781 36366 
polymer chemicals – asia  rest of world
subsidiaries 315904 – 315904 29788 3831 25957
share of joint ventures 23228 – 23228 2321 – 2321
339132 – 339132 32109 3831 28278
total sales 1116862 – 1116862
divisional operating profitloss 105256 40612 64644
unallocated corporate expenses 8888 1427 10315
operating profitloss 96368 42039 54329
total share of joint ventures
polymer chemicals – europe  north america 34196 – 34196 2498 1286 1212
polymer chemicals – asia  rest of world 23228 – 23228 2321 – 2321
57424 – 57424 4819 1286 3533 group financial statements yule catto  co plc  annual report 201 1 61
4 segmental analysis continued 
2010
total sales operating profit
underlying
performance
£’000
special
items
£’000
ifrs
£’000
underlying
performance
£’000
special
items
£’000
ifrs
£’000
analysis by activity
continuing activity
polymer chemicals – europe  north america
subsidiaries 335807 – 335807 36408 – 36408
share of joint ventures – – – – – –
335807 – 335807 36408 – 36408
polymer chemicals – asia  rest of world
subsidiaries 228025 5689 233714 20941 13161 34102
share of joint ventures 19026 – 19026 2934 – 2934
247051 5689 252740 23875 13161 37036
total sales 582858 5689 588547
divisional operating profit 60283 13161 73444
unallocated corporate expenses 9848 4182 14030
operating profit 50435 8979 59414
total share of joint ventures
polymer chemicals – europe  north america – – – – – –
polymer chemicals – asia  rest of world 19026 – 19026 2934 – 2934
19026 – 19026 2934 – 2934
special items
2011
polymer
chemicals –
europe 
north
america
£’000
polymer
chemicals –
asia 
rest of
world
£’000
unallocated
corporate
expenses
£’000
total
£’000
revenue of businesses sold or closed during the year – – – –
restructuring  site closure  – cash costs 15293 499 – 15792
  – noncash costs 4438 – – 4438
amortisation of acquired intangibles 15764 3332 – 19096
share of joint ventures special items 1286 – – 1286
acquisition costs – – 1427 1427
36781 3831 1427 42039
2010
polymer
chemicals –
europe 
north
america
£’000
polymer
chemicals –
asia 
rest of
world
£’000
unallocated
corporate
expenses
£’000
total
£’000
revenue of businesses sold or closed during the year – 5689 – 5689
operating profit of businesses sold or closed during the year – 890 – 890
profit arising from the sale or closure of operations see note 7 – 12271 – 12271
acquisition costs – – 4182 4182
– 13161 4182 8979 group financial statements yule catto  co plc  annual report 201 1 62
notes to the consolidated financial statements
continued
4 segmental analysis continued
2011
total
assets
£’000
total
liabilities
£’000
capital
expenditure
£’000
depreciation
and
 amortisation
£’000
analysis by activity
continuing activity
subsidiaries
polymer chemicals – europe  north america 224209 163630 7239 9393
polymer chemicals – asia  rest of world 162327 70479 13964 9237
386536 234109 21203 18630
unallocated assets and liabilities 36927 131583 216 210
discontinued activity
pharma chemicals – – 4067 4001
423463 365692 25486 22841
share of joint ventures see note 19 25612 11287 
goodwill see note 14 244690 –
acquired intangibles and related deferred tax 165366 50900 
net borrowings see note 22 – 156129
859131 584008
net assets 275123
2010
total
assets
£’000
total 
liabilities
£’000
capital
expenditure
£’000
depreciation
and
amortisation
£’000
analysis by activity
continuing activity
subsidiaries
polymer chemicals – europe  north america 96795 59513 3730 3990
polymer chemicals – asia  rest of world 116019 55166 3909 5984
212814 114679 7639 9974
unallocated assets and liabilities 26638 105715 147 307
discontinued activity
pharma chemicals 63069 21261 2939 4337
302521 241655 10725 14618
share of joint ventures see note 19 8442 4726 
goodwill see note 14 124027 –
net borrowings see note 22 – 76044
434990 322425 
net assets 112565
2011
£’000
2010
£’000 
analysis of total sales by destination
western europe 609166 248283 
eastern europe 35952 23311
north america 38827 28433 
asia 317481 214256 
africa and middle east 95816 64537 
rest of world 19620 9727 
1116862 588547  group financial statements yule catto  co plc  annual report 201 1 63
4 segmental analysis continued
intersegmental sales
in addition to the amounts included above intersegmental sales of £4635000 2010 £4453000 were made as set out below  
these sales were eliminated on consolidation
2011
polymer
chemicals –
europe 
north america
£’000
polymer
chemicals –
asia  rest
 of world
£’000
pharma
chemicals
£’000
total
£’000
polymer chemicals – europe  north america – 1675 312 1987 
polymer chemicals – asia  rest of world 2648 – – 2648 
total 2648 1675 312 4635 
2010
polymer
chemicals –
europe 
north america
£’000
polymer
chemicals –
asia  rest
of world
£’000
pharma
chemicals
£’000
total
£’000
polymer chemicals – europe  north america – 2342 264 2606 
polymer chemicals – asia  rest of world 1847 – – 1847 
total 1847 2342 264 4453 
5 operating profit
company
and
subsidiaries
2011
£’000
joint
ventures
2011
£’000
total
2011
£’000
company
and
subsidiaries
2010
£’000
joint
ventures
2010
£’000
total
2010
£’000
total sales 1059438 57424 1116862 569521 19026 588547
cost of sales 858219 49368 907587 449289 13752 463041
gross profit 201219 8056 209275 120232 5274 125506
distribution costs 75136 1588 76724 44432 1280 45712
administrative expenses 34534 1649 36183 27409 1060 28469
special items 40753 1286 42039 8089 – 8089
operating profit 50796 3533 54329 56480 2934 59414
2011
£’000
2010
£’000
operating profit is stated after chargingcrediting the following
depreciation 22373 14315
amortisation underlying 468 303
amortisation special items 19096 –
hire of plant and equipment 2516 2127
other lease rentals 3792 3004
research and development expenditure 12467 9472
profit arising from the sale or closure of operations – 12271
acquisition costs 1427 4182  group financial statements yule catto  co plc  annual report 201 1 64
6 auditor’s remuneration
2011
£’000
2010
£’000
fees payable to the company’s auditor for
 audit of the company’s annual accounts 7 7
fees payable to the company’s auditor and their associates for
 other services to the group
 audit of the company’s subsidiaries 594 409
total audit fees 601 416
reporting accountant fees – 515
total audit and related service fees 601 931
audit related assurance services 34 24
tax compliance services 22 10
other taxation advisory services 91 –
services relating to the acquisition of polymerlatex 17 235
other services 6 2
total nonaudit fees 170 271
the other services provided by the group auditor in the current year related to foreign translation of financial statements and other sundry 
projects 2010 assistance given in grant applications and sundry projects other taxation advisory services relate to advice on the disposal 
of the pharma business and other sundry projects
details of the company’s policy on the use of auditor for nonaudit services the reasons why the auditor was used rather than another 
supplier and how the auditor’s independence and objectivity was safeguarded are set out in the audit committee report on page 36  
no services were provided pursuant to contingent fee arrangements
7 lossprofit arising from the sale or closure of an operation
2011
£’000
2010
£’000
continuing operations
sale of revertex finewaters sdn bhd – 12271
discontinued operations
closure of uquifa’s italian manufacturing site 355 858 
sale of uquifa pharma business 458 – 
813 858 
total continuing and discontinued operations 813 11413 
in each case assets retained that cannot be sold are written off to the extent that workers are not redeployed termination terms are agreed
8 finance costs
2011
£’000
2010
£’000
interest payable on bank loans and overdrafts 9230 5251
interest payable on other loans 3082 3015
12312 8266
less interest receivable 739 426
net interest payable 11573 7840
fair value adjustment 3317 2645
total finance costs 14890 5195
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
notes to the consolidated financial statements
continued group financial statements yule catto  co plc  annual report 201 1 65
9 current taxation
2011
£’000
2010
£’000
continuing operations
current tax
uk corporation tax 52 58
overseas taxation 20327 9103
20379 9161
deferred tax 
origination and reversal of temporary differences 941 729
19438 8432
special items 
current tax
 historic issues 7435 6558
 restructuring and site closure costs 2410 –
deferred tax
 amortisation on acquisitions 5110 –
14955 6558
total tax on profit before taxation 4483 1874
discontinued operations
tax on special items 1063 663
tax charge for the year on discontinued operations 1063 663
uk corporation tax is calculated at 265 2010 28 of the estimated assessable profit for the year taxation for other jurisdictions  
is calculated at the rates prevailing in the respective jurisdictions
2011
£’000
2010
£’000
tax expense
continuing operations 4483 1874
discontinued operations 1063 663
total tax expense 5546 2537
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
2011
£’000
2010
£’000
profit before taxation – continuing operations 39439 54219
tax on profit before taxation continuing operations at standard uk corporation tax rate of 265 2010 28 10451 15181
effects of
expenses not deductible for tax purposes 8688 3993
tax incentives and items not subject to tax 6552 17192
losses not recognised less utilisation of losses not previously recognised 544 203
higher tax rates on overseas earnings 756 484
other deferred tax asset not recognised less amounts now recognised 3552 88
adjustments to tax charge in respect of prior periods 5940 447
effect of change of rate on deferred tax 88 30
tax charge for year 4483 1874 group financial statements yule catto  co plc  annual report 201 1 66
notes to the consolidated financial statements
continued
9 current taxation continued
tax charges to other comprehensive income
2011
£’000
2010
£’000
deferred tax credit in respect of actuarial losses 1295 300
 
current tax liabilities
2011
£’000
2010
£’000
current tax liabilities 37864 28763
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
2011
accelerated
tax
depreciation
£’000
acquired
intangibles
£’000
other
£’000
total 
£’000
at 1 january 6046 – 626 6672
credit to income statement 726 5110 555 6391 
acquired in the year 9559 58356 600 67315
disposed in the year 3402 – 70 3332 
exchange adjustment 467 2346 72 2885 
at 31 december 11010 50900 531 61379 
deferred tax assets
2011
pensions
£’000
at 1 january 161 
charged to income statement 340 
credited through retained earnings 1295 
at 31 december 1116 
deferred tax asset not recognised
deferred tax assets are not recognised when it is not probable that taxable profits will be available against which the deferred tax asset 
could be utilised the amounts of deferred tax not recognised at the balance sheet dates are as follows
2011
£’000
2010
£’000
uk pension liability 18463 17208 
tax losses 8117 22414 
accelerated capital allowances 3857 3737 
other timing differences 1152 1164 
29285 42195  group financial statements yule catto  co plc  annual report 201 1 67
11 ordinary dividends
2011
pence per
share
2010
pence per
share
2011
£’000
2010
£’000 
interim dividend 12 13 4075 2913 
proposed final dividend 23 13 7817 4414 
the proposed final dividend is subject to approval by shareholders at the annual general meeting and has not been included as a liability  
in these financial statements
12 earnings per share
number of shares
2011
number
’000
2010
number
’000
weighted average number of ordinary shares for the purposes of basic earnings per share 339611 226268 
effect of dilutive potential ordinary shares 
share options 7516 6518 
weighted average number of ordinary shares for the purposes of diluted earnings per share 347127 232786 
earnings per share
2011 2010
underlying
performance
£’000
special
items
£’000
ifrs
£’000
underlying
performance
£’000
special
items
£’000
ifrs
£’000
from continuing operations
earnings profitloss attributable to equity holders
 of the parent 63712 30401 33311 32863 13946 46809
basic earnings per share 188p 90p 98p 145p 62p 207p 
diluted earnings per share 184p 88p 96p 141p 60p 201p 
from continuing and discontinued operations 
earnings profitloss attributable to equity holders
 of the parent 63712 70658 6946 32863 16875 49738 
basic earnings per share 188p 208p 20p 145p 75p 220p 
diluted earnings per share 184p 204p 20p 141p 73p 214p 
13 employees
2011
number
2010
number
the average monthly number of employees during the year by activity was
continuing activity 
polymer chemicals – europe  north america 1300 769 
polymer chemicals – asia  rest of world 747 637 
holding companies 29 33 
2076 1439 
share of joint ventures 65 45 
discontinued activity 
pharma chemicals 398 388 
2539 1872 
the split of employees for 2010 above has been restated in line with the group’s new segmentation as described in note 4 group financial statements yule catto  co plc  annual report 201 1 68
notes to the consolidated financial statements
continued
13 employees continued
2011
£’000
2010
£’000
the aggregate remuneration of all group employees comprised
wages and salaries 79133 50650 
social security costs 10935 8350 
post retirement benefit obligations 7958 4759 
98026 63759 
14 goodwill
2011
£’000
2010
£’000
cost
at 1 january 263939 263939 
recognised on acquisition 164184 – 
exchange adjustments 6636 – 
eliminated on disposal 66885 – 
at 31 december 354602 263939 
accumulated impairment losses
at 1 january 139912 139912 
impairment losses for the year 36885 – 
eliminated on disposal 66885 
at 31 december 109912 139912 
net book value
at 31 december 244690 124027 
the group tests goodwill annually for impairment at the balance sheet date or more frequently if there are indications that goodwill might 
be impaired
with completion of the acquisition of polymerlatex the board undertook a review of future options for the pharma business and concluded 
that it was noncore to the group moving forward as part of this review the carrying value of the goodwill associated with this business 
was reassessed with the conclusion that it had been impaired the goodwill was accordingly written down to zero in the period to 30 june 
2011 on 30 november 2011 the remaining operating entities of the pharma business were disposed of see note 28 for further details
goodwill acquired in a business combination is allocated at acquisition to the cash generating units cgus that are expected to benefit 
from that business combination
following the acquisition of polymerlatex the group reassessed its cgus for goodwill impairment testing the revised cgus better 
reflect the composition and operational structure of the group and the expected benefit of synergies from the acquisition group financial statements yule catto  co plc  annual report 201 1 69
14 goodwill continued
the allocation of the carrying value of goodwill is represented below
31 december 2010 31 december 2011
31 december
 2009
net book
value
£’000
impairment
during the
 year
£’000
net book
value
£’000
recognised
on
acquisition
£’000
exchange
adjustments
£’000
impairment
during
the year
£’000
net book
value
£’000
polymer chemicals
europe  north america 86730 – 86730 130907 6262 – 211375 
asia  rest of world 412 – 412 33277 374 – 33315 
87142 – 87142 164184 6636 – 244690 
pharma chemicals 
uquifa spain sa and uquifa mexico sacv 36885 – 36885 – – 36885 – 
36885 – 36885 – – 36885 – 
total 124027 – 124027 164184 6636 36885 244690 
the recoverable amounts for cgus are determined from value in use calculations based upon discounted cash flows the key 
assumptions for those discounted cash flow calculations are the discount rate profitability and growth rate the discount rate is based  
on the group’s weighted average cost of capital adjusted where appropriate for the risk premium attributable to the particular cgu’s 
activities and geography of operation profitability and growth rates are based on past experience combined with management’s 
expectations for future business performance which is informed by a number of factors including economic growth internal plans  
and competitor and customer activity
discount rates of 11 and 12 have been used in the above calculations
the profit used in the cash flows for the first year is derived from management forecasts for years 2 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 2 and 5 have been 
used representing management’s best estimate of each cgu’s circumstances and these do not exceed the longterm growth rates  
for the markets concerned
15 acquired intangible assets
customer
relationships
£’000
technology
£’000
total
£’000
cost
recognised on acquisition 188102 3077 191179 
exchange adjustments 7156 145 7301 
at 31 december 2011 180946 2932 183878 
accumulated amortisation and impairment
amortisation charge for the year 18869 227 19096 
exchange adjustments 576 8 584 
at 31 december 2011 18293 219 18512 
net book value
at 31 december 2011 162653 2713 165366
the cost of intangibles recognised on acquisition is split as follows
customer
relationships
£’000
technology
£’000
total
£’000
polymerlatex group 177163 3077 180240 
quality polymers sdn bhd 10939 – 10939 
188102 3077 191179 group financial statements yule catto  co plc  annual report 201 1 70
notes to the consolidated financial statements
continued
16 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
software
£’000
environmental
 licences
£’000
total
£’000
cost
at 1 january 2011 6124 215 6339
exchange adjustments 449 – 449
additions 440 – 440
acquisition of subsidiary undertaking 675 – 675
disposals 19 114 133
sale of subsidiary undertaking 784 101 885
at 31 december 2011 5987 – 5987
accumulated amortisation and impairment 
at 1 january 2011 5761 215 5976
exchange adjustments 414 – 414
amortisation charge for the year 468 – 468
disposals 16 114 130 
sale of subsidiary undertaking 675 101 776
at 31 december 2011 5124 – 5124
net book value
at 31 december 2011 863 – 863
software 
£’000
environmental
 licences
£’000
total
£’000
cost
at 1 january 2010 5551 215 5766
exchange adjustments 546 – 546
additions 49 – 49
disposals 22 – 22
at 31 december 2010 6124 215 6339
accumulated amortisation and impairment
at 1 january 2010 4947 215 5162 
exchange adjustments 528 – 528 
amortisation charge for the year 303 – 303
disposals 17 – 17
at 31 december 2010 5761 215 5976
net book value
at 31 december 2010 363 – 363 group financial statements yule catto  co plc  annual report 201 1 71
17 property plant and equipment
land and buildings
leaseholds
plant and 
equipment
£’000
total 
£’000
freeholds
£’000
long
£’000
short
£’000
cost 
at 1 january 2011 44868 4890 8372 338977 397107
exchange adjustments 2223 2 316 14834 17371
additions 920 – 2524 22042 25486
acquisition of subsidiary undertaking 20703 426 6903 92347 120379
sale of subsidiary undertaking 12410 – – 85517 97927
disposals 1809 – 43 1736 3588
at 31 december 2011 50049 5318 17440 351279 424086 
accumulated depreciation and impairment
at 1 january 2011 19126 2433 1151 271829 294539
exchange adjustments 761 1 34 10086 10880
depreciation charge for the year 1996 130 135 20112 22373 
assets written down pending closure of business 1242 – – 2907 4149
impairment of assets prior to sale of subsidiary undertaking – – – 5620 5620
sale of subsidiary undertaking 2345 – – 71512 73857 
disposals – – 4 1453 1457
at 31 december 2011 19258 2564 1248 217417 240487
net book value
at 31 december 2011 30791 2754 16192 133862 183599
land and buildings
leaseholds
plant and
equipment
£’000
total
£’000
freeholds
£’000
long
£’000
short
£’000
cost
at 1 january 2010 45514 4887 7298 329803 387502
exchange adjustments 264 3 1038 2584 3889
additions 345 – 36 10344 10725
sale of subsidiary undertaking 1255 – – 2255 3510
disposals – – – 1499 1499 
at 31 december 2010 44868 4890 8372 338977 397107
accumulated depreciation and impairment
at 1 january 2010 18732 2304 863 261788 283687
exchange adjustments 137 – 124 166 179 
depreciation charge for the year 729 129 164 13293 14315
sale of subsidiary undertaking 198 – – 1599 1797
disposals – – – 1487 1487
at 31 december 2010 19126 2433 1151 271829 294539
net book value
at 31 december 2010 25742 2457 7221 67148 102568
freehold land amounting to £6308000 2010 £9357000 has not been depreciated
of the depreciation charge for the year £4001000 2010 £nil relates to discontinued operations group financial statements yule catto  co plc  annual report 201 1 72
notes to the consolidated financial statements
continued
18 financial asset
as described in note 28 the group disposed of its pharma chemicals business on 30 november 2011 part of the consideration agreed 
with the buyer totalling 10000000 was in the form of a deferred payment to the group which will be made by the buyer on or before  
30 september 2014 in the event that the buyer is unable to fulfil his obligation this deferred consideration is secured by an irrevocable 
bank guarantee held in favour of yule catto  co plc by hsbc bank plc
in view of the security held the directors consider this deferred consideration virtually certain to be received and have therefore included  
it in these financial statements as a noncurrent financial asset and within the group’s definition of net borrowings
the amount of £5589000 included in noncurrent assets represents the agreed amount of 10000000 discounted at the rate of 5 
per annum from 30 september 2014 to date of completion plus an appropriate amount unwound on this discounting in the period up to  
31 december 2011
19 investment in joint ventures
2011
£’000
2011
£’000
2010
£’000
2010
£’000
at 1 january
share of noncurrent assets 974 1028 
share of current assets 7468 6135 
share of current liabilities 4726 3365 
3716 3798 
share of net assets of acquired joint venture 10975 –
14691 3798
 share of income 57424 19026 
 share of expenses including special items 53523 15955 
3901 3071 
 tax 368 137 
3533 2934 
 dividends paid during the year 3399 2667 
 exchange adjustments 500 349
retained loss 366 82 
at 31 december 
share of noncurrent assets 10168 974 
share of current assets 15444 7468 
share of current liabilities 9962 4726 
share of noncurrent liabilities 1325 – 
14325 3716 
during the year the group acquired a 50 interest in eka polymerlatex oy as a part of the acquisition of the polymerlatex group  
see note 29 for further details
a list of principal subsidiary undertakings and joint ventures is given on page 99
20 inventories
2011
£’000
2010 
£’000
raw materials and consumables 28594 26886 
work in progress – 1656 
finished goods 45231 36837
73825 65379
the value of stock written off during the year was £1436000 2010 £1605000
there is no material difference between the balance sheet value of inventories and their replacement cost
the nature of the chemical reaction necessary to produce finished goods from raw materials is such that ‘work in progress’ is not a material 
part of the group’s inventory at any given point of time the work in progress reported for 2010 above represents inventory held by the 
pharma chemicals business group financial statements yule catto  co plc  annual report 201 1 73
21 trade and other receivables
2011
£’000
2010
£’000
trade receivables 121903 100031
amounts owed by joint ventures 952 549
other receivables 22871 8378
prepayments and accrued income 966 2327
146692 111285
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
ageing of trade receivables
2011
£’000
2010
£’000
not yet due 103464 85505
0 – 60 days overdue 18962 14828
61 – 120 days overdue 1886 832
over 120 days due 2028 1633
126340 102798
less provision for impairment 4437 2767
121903 100031
provision for impairment of receivables
2011
£’000
2010
£’000
at 1 january 2767 3356
exchange adjustments 52 22
provisions of acquired businesses 1262 –
provisions of sold businesses 548 –
creditcharge for the year 1510 66
amounts written off as uncollectible 502 501
at 31 december 4437 2767
the provision is predominantly against trade receivables more than 61 days overdue
provisions of acquired businesses represent amounts provided against receivables of acquired companies the fair value of receivables 
acquired is stated net of these amounts as shown in note 29 group financial statements yule catto  co plc  annual report 201 1 74
notes to the consolidated financial statements
continued
22 cash and borrowings
2011
£’000
2010 
£’000
current borrowings
bank loans
bank loans and overdrafts – 6565 
malaysian ringgits 100 million sixyear amortising term loan 3935 3311 
other loans
43000000 555 guaranteed senior unsecured notes due 2 september 2012 27821 – 
31756 9876 
less capitalised costs 17 – 
31739 9876 
noncurrent borrowings
bank loans 
unsecured £150 million multicurrency term loan facility expiring 2015 148995 – 
malaysian ringgits 100 million sixyear amortising term loan 9807 14853 
other bank loans 23 461 
other loans
43000000 555 guaranteed senior unsecured notes due 2 september 2012 – 27794 
70000000 578 guaranteed senior unsecured notes due 2 september 2014 45290 45246 
22000000 598 guaranteed senior unsecured notes due 2 september 2016 14234 14220 
218349 102574 
less capitalised costs 2448 195
215901 102379 
 
 in aggregate £873 million associated with which is the currency impact of derivatives of £127 million net £746 million
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 2011 the group had available £60 million 2010 £30 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
£’000
us dollar
£’000
euro
£’000
other
£’000
total
£’000
31 december 2011
bank loans – – 148995 13765 162760
loan notes – 87345 – – 87345
capitalised costs 2465 – – – 2465
2465 87345 148995 13765 247640
cash and cash equivalents 85922
financial asset – see note 18 5589
net borrowings 156129 
deduct special item fair value adjustment 12759
add special item nonrecourse factoring 20955 
net borrowings underlying performance 164325 group financial statements yule catto  co plc  annual report 201 1 75
22 cash and borrowings continued
sterling
£’000
us dollar
£’000
euro
£’000
other
£’000
total
£’000
31 december 2010
bank loans and overdrafts 3277 97 2967 224 6565
bank loans – – 437 18188 18625
loan notes – 87260 – – 87260
capitalised costs 195 – – – 195
3082 87357 3404 18412 112255
cash and cash equivalents 36211
net borrowings 76044 
deduct special item fair value adjustment 12674
net borrowings underlying performance 63370 
cash and cash equivalents comprise cash at bank and other shortterm highly liquid investments with a maturity of three months or less
the special item fair value adjustment 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
23 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 22 and equity attributable to equity holders of the parent comprising issued capital reserves 
and retained earnings
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 derivative 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 
at 31 december
fair values 
at 31 december
2011
£’000
2010 
£’000
2011
£’000
2010
£’000
fair value of financial assets
trade and other receivables excluding prepayments 145726 108958 145726 108958
cash and cash equivalents 85922 36211 85922 36211
financial asset 5589 – 5589 – 
derivatives at fair value 17368 22765 17368 22765
254605 167934 254605 167934 
fair value of financial liabilities
loan notes 87208 87065 91817 92775 
bank loans and overdrafts 160432 25190 160432 25190 
derivatives at fair value 5628 – 5628 – 
trade and other payables excluding accruals 146297 117699 146297 117699 
399565 229954 404174 235664 
  group financial statements yule catto  co plc  annual report 201 1 76
notes to the consolidated financial statements
continued
23 financial instruments continued
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 shortterm borrowings approximates to book value
the fair value of the group’s financial instruments are measured using inputs other than quoted prices that are directly  
or indirectly observable
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 2010 none
impact on income statement
changes in the fair value of derivative contracts amounting to £3317000 have been debited to the income statement in the year  
2010 credit of £2645000 these changes are shown separately as a special item in the consolidated income statement
hedge accounting
the group has a number of cross currency 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
on 31 march 2011 as part of the acquisition of polymerlatex group see note 29 the group acquired a number of interest rate swap 
agreements that had been used by the former polymerlatex group to hedge external borrowings in the period since completion several 
of these contracts were terminated with the group electing to retain those which in combination represent a floating to fixed interest 
rate swap on a euro amount of €155 million on 1 july 2011 the group designated these remaining contracts as hedging instruments 
in order to use them as an effective hedge against the interest rate exposure associated with a substantial portion of the group’s euro 
denominated floating rate £150 million term loan as such these contracts are now accounted for as cashflow hedges as permitted  
by ias 39
 in addition the group has taken out forward foreign exchange contracts to fix the sterling value of its net investments in certain foreign 
operations which have a euro functional currency these contracts have been accounted for as net investment hedges as permitted  
by ias 39 group financial statements yule catto  co plc  annual report 201 1 77
23 financial instruments continued
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 2011 was
floating rate
borrowings
2011
£’000
fixed rate
borrowings
2011
£’000
total
borrowings
2011
£’000
floating rate
borrowings
2010
£’000
fixed rate
borrowings
2010
£’000
total
borrowings
2010
£’000
sterling 32121 40000 72121 37368 40000 77368
euro 18298 130697 148995 3404 – 3404
us dollar – – – 97 – 97
other 13765 – 13765 18412 – 18412
64184 170697 234881 59281 40000 99281
cash and cash equivalents 85922 36211
financial asset – see note 18 5589 – 
add special item nonrecourse factoring 20955 – 
net borrowings underlying performance 164325 63070
the effective interest rate for the year was 44 2010 48
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
2011 2010
income statement equity income statement equity
underlying
 £m
ifrs
 £m
ifrs
 £m
underlying
 £m
ifrs
 £m
 ifrs
 £m
interest rate sensitivity analysis
uk interest rate  10 03 12 – 04 15 – 
euro interest rate  10 04 04 25 01 01 – 
us interest rate  10 – 22 – – 31 – 
foreign currency sensitivity analysis
euro exchange rate  10 08 08 36 11 11 31 
us dollar exchange rate  10 – 11 – – 12 – 
the interest rate sensitivity analysis has been determined based on the exposure to interest rates for both derivatives and nonderivative 
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 group financial statements yule catto  co plc  annual report 201 1 78
notes to the consolidated financial statements
continued
23 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 facility of £210 million comprising a £150 million term loan which was drawndown in euros on completion  
of the polymerlatex acquisition and a £60 million revolving credit facility which was undrawn at 31 december 2011
unsecured loan notes totalling approximately £75 million raised from the us private placement market in 2004 with maturity between 
2012 and 2016 these loan notes provide the group’s longterm requirements please see note 22 for further details
a rm100 million £18 million six year amortising loan through its malaysian subsidiary synthomer sdn bhd
the following table details the remaining contractual maturity for nonderivative financial liabilities
2011 2010
amount due amount due
within
one year
£’000
between
1 and
2 years
£’000
between
2 and
5 years
 £’000
after
5 years
 £’000
total 
£’000
within
one year
£’000
between
1 and
2 years
£’000
between
2 and
5 years
 £’000
after
5 years
 £’000
total 
£’000
noninterest bearing
 trade and other  
 payables excluding 
 accruals 146116 181 – – 146297 117555 144 – – 117699 
variable interest  
 rate instruments
 bank loans  
 and overdrafts 9733 9900 161409 – 181042 10502 3935 11872 461 26770 
fixed interest  
 rate instruments
 loan notes 32834 3469 64695 – 100998 5008 32802 53027 15071 105908 
188683 13550 226104 – 428337 133065 36881 64899 15532 250377 
the following table details the remaining contractual maturity for nonderivative financial assets
2011 2010
amount due amount due
within
one year
£’000
between
1 and
2 years
£’000
between
2 and
5 years
 £’000
after
5 years
 £’000
total 
£’000
within
one year
£’000
between
1 and
2 years
£’000
between
2 and
5 years
 £’000
after
5 years
 £’000
total 
£’000
noninterest bearing
 trade and other  
 receivables excluding 
 prepayments 145726 – – – 145726 108958 – – – 108958 
 financial asset – – 5589 – 5589 – – – – – 
variable interest rate
  instruments 
 cash and cash  
 equivalents 85922 – – – 85922 36211 – – – 36211 
231648 – 5589 – 237237 145169 – – – 145169  group financial statements yule catto  co plc  annual report 201 1 79
23 financial instruments continued
the following table details the remaining contractual maturity for its derivative financial instruments
2011 2010
amount due amount due
within
one year
£’000
between
1 and
2 years
£’000
between
2 and
5 years
 £’000
after
5 years
 £’000
total 
£’000
within
one year
£’000
between
1 and
2 years
£’000
between
2 and
5 years
 £’000
after
5 years
 £’000
total 
£’000
interest rate swaps 2357 2357 – – 4714 – – – – – 
cross currency swaps 1867 1170 1530 – 4567 2212 2441 2658 186 7497
foreign exchange
 forward contracts 798 – – – 798 4576 – – – 4576 
3426 3527 1530 – 8483 2364 2441 2658 186 2921
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
24 trade and other payables
2011
£’000
2010
£’000
amount due within one year
trade creditors 102720 90880 
other creditors 43396 26675 
accruals and deferred income 47514 22524 
193630 140079
amount due in greater than one year
other creditors 181 144
193811 140223
accruals and deferred income includes £9620000 2010 £nil in respect of restructuring costs associated with the integration of 
polymerlatex into the group’s existing business a further amount of £675000 2010 £756000 is accrued for closure costs in respect 
of activities now classified as discontinued
average trade creditor days in 2011 was 51 2010 64 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
25 post retirement benefit obligations
charge to income statement in respect of the group’s pension schemes
2011 
£’000
2010 
£’000
2009 
£’000
2008 
£’000
2007 
£’000
uk overseas total uk overseas total uk overseas total uk overseas total uk overseas total
defined benefit 1200 2346 3546 1761 717 2478 3168 699 3867 977 427 1404 1598 763 2361
defined
contribution 1776 2636 4412 1400 881 2281 486 762 1248 388 771 1159 159 952 1111
2976 4982 7958 3161 1598 4759 3654 1461 5115 1365 1198 2563 1757 1715 3472
defined benefit
 – special item – – – – – – – – – – – – 10797 – 10797 
2976 4982 7958 3161 1598 4759 3654 1461 5115 1365 1198 2563 9040 1715 7325  group financial statements yule catto  co plc  annual report 201 1 80
notes to the consolidated financial statements
continued
25 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
2011
£’000
2010
£’000
2009
£’000
2008
£’000
2007
£’000
uk overseas total uk overseas total uk overseas total uk overseas total uk overseas total
present value of
 funded defined
 benefit  
 obligations 272071 50042 322113 250180 15274 265454 241475 13971 255446 205721 13449 219170 228966 15530 244496
fair value of 
 scheme assets 198219 5984 204203 193722 5735 199457 171515 5242 176757 138293 5318 143611 195325 7935 203260
post retirement 
 benefit 
 obligations 73852 44058 117910 56458 9539 65997 69960 8729 78689 67428 8131 75559 33641 7595 41236
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 during 2009 the group 
announced that it intended to close the defined benefit scheme to future accrual this process commenced in 2009 and was completed  
in september 2010
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 2009 and updated to 31 december 2011 by a qualified actuary
 
the major assumptions used by the actuary were
2011 2010 2009 2008 2007
rate of increase in salaries na na 300 260 310
rate of increase in pensions in payment 300 325 300 250 250
rate of increase in pensions in deferment 200 225 300 250 250
discount rate 480 540 570 650 590
rates of return on plan assets 662 712 822 731 733
inflation assumption 300 325 300 260 310 group financial statements yule catto  co plc  annual report 201 1 81
25 post retirement benefit obligations continued
amount charged to operating profit
2011
£’000
2010
£’000 
current service cost 678 607 
expected return on plan assets 12707 12296 
interest cost relating to pension scheme liabilities 13229 13450
1200 1761
actuarial loss recognised in the statement of comprehensive income
2011
£’000
2010
£’000 
actual return less expected return on pension scheme assets 10444 7576 
experience gains and losses arising on the scheme liabilities 19055 6500 
29499 1076
2011
£’000
2010
£’000 
cumulative actuarial losses recognised in the statement of other comprehensive income 68743 39244 
history of experience gains and losses
2011 2010 2009 2008 2007
difference between the expected and 
 actual return on scheme assets
amount £’000 10444 7576 21209 64742 5891 
percentage of scheme assets  527 391 1237 4682 302 
experience gains and losses arising on the scheme liabilities
amount £’000 19055 6500 32753 25273 25872
percentage of the present value of scheme liabilities  700 260 1356 1229 1130 
total actuarial lossesgains recognised in the statement  
 of comprehensive income
amount £’000 29499 1076 11544 39469 19981
percentage of the present value of scheme liabilities  1084 043 478 1919 873 
the actual return on plan assets was £2263000 2010 £19872000
movements in the present value of defined benefit obligations were as follows
2011
£’000
2010
£’000 
at 1 january 250180 241475 
current service cost 678 607 
interest cost 13229 13450 
contributions from scheme members – 48 
experience gains and losses arising on the scheme liabilities 19055 6500 
cash paid by sponsoring companies 678 577 
benefits paid 10393 11323 
at 31 december 272071 250180  group financial statements yule catto  co plc  annual report 201 1 82
25 post retirement benefit obligations continued 
movements in the fair value of the scheme assets were as follows
2011
£’000
2010
£’000 
at 1 january 193722 171515 
expected return on scheme assets 12707 12296 
actual return less expected return on pension scheme assets 10444 7576 
contributions from sponsoring companies 12627 13610 
contributions from scheme members – 48 
benefits paid 10393 11323 
at 31 december 198219 193722 
contributions from the sponsoring companies are expected to be £10139000 in 2012
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 
2011

2011 
£’000
2010

2010 
£’000
2009

2009 
£’000
2008

2008 
£’000
2007

2007 
£’000 
equities 660 104769 770 110402 800 113373 900 90241 800 148447 
bonds 480 69432 540 60829 570 54243 670 47614 517 44925 
property 660 18709 770 10480 – – – – – –
cash 080 5309 200 12011 200 3899 425 438 425 1953 
total fair value of assets 198219 193722 171515 138293 195325 
present value of scheme 
 liabilities 272071 250180 241475 205721 228966 
post retirement benefit 
 obligations 73852 56458 69960 67428 33641 
overseas pension schemes
the group operates a number of smaller overseas pension and postretirement schemes the assets of these schemes are held  
separately from those of the group with the exception of the unfunded german schemes net liability £427 million 2010 £83 million 
where in line with common practice the assets are held within the respective companies
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 2011
the largest of these schemes which entered the group as part of the polymerlatex acquisition on 31 march 2011 accounts for  
£345 million of the deficit at 31 december 2011 the major assumptions used in the actuarial valuation of this scheme are
2011
rate of increase in salaries 300 
rate of increase in pensions 200 
discount rate 450 
inflation assumption 300 
the major assumption used in the valuation of the other overseas schemes do not differ significantly from the above
amount charged to operating profit
2011
£’000
2010
£’000
current service cost 456 216
expected return on plan assets 77 68 
interest cost relating to pension scheme liabilities 1967 569
2346 717
notes to the consolidated financial statements
continued group financial statements yule catto  co plc  annual report 201 1 83
25 post retirement benefit obligations continued
actuarial lossgain recognised in the statement of comprehensive income
2011
£’000
2010
£’000 
actual return less expected return on pension scheme assets 367 527 
experience gains and losses arising on the scheme liabilities 4827 1527 
4460 1000 
2011
£’000
2010
£’000 
 cumulative actuarial lossesgains recognised in the statement of other comprehensive income 2741 1719 
the actual return on plan assets was £444000 2010 £595000 gain
analysis of the movements in the net balance sheet liability before deferred tax
2011
£’000
2010
£’000 
net liability at 1 january 9539 8729 
acquisition of polymerlatex 30781 – 
total expense as detailed above 2346 717 
contributions made 1135 490 
actuarial gain 4460 1000 
exchange movements 1933 417 
net liability at 31 december 44058 9539 
26 share capital
2011
£’000
2010
£’000
issued and fully paid
339880769 2010 145663187 ordinary shares of 10 pence each 33988 14566 
issued and nil paid
nil 2010 194217582 ordinary shares of 10 pence each – – 
ordinary shares carry no right to fixed income
share options
as at 31 december 2011 the following options were outstanding
executive share options number option price
exercisable between 20112018 936575 a
exercisable between 20122019 4224840 b
exercisable between 20132020 1040015 c
exercisable between 20142021 1314209 d
 
a options granted under the performance share plan with a total exercise price of £16
b options granted under the performance share plan with a total exercise price of £17
c options granted under the performance share plan with a total exercise price of £20
d options granted under the performance share plan with a total exercise price of £36 group financial statements yule catto  co plc  annual report 201 1 84
notes to the consolidated financial statements
continued
27 reconciliation of operating profit to cash generated from operations
2011
£’000
2010
£’000 
operating profit – continuing operations 54329 59414 
operating profit – discontinued operations 4124 4450 
less share of profits of joint ventures 3533 2934 
54920 60930 
adjustments for
 depreciation underlying 22373 14315 
 amortisation underlying 468 303 
 amortisation special items 19096 – 
 profit arising from the sale or closure of operations – 12271 
 restructuring and site closure –  cash costs 15792 –
   non  c a s h c o s t s 4438 – 
 sharebased payments 1269 333 
 acquisition costs expensed in the period 1427 4182 
 profit on sale of fixed assets 196 36 
acquisition costs cash spent in the period 4421 1188 
termination of interest swap acquired 3026 – 
cash impact of restructuring and site closure 5801 – 
cash impact of termination of discontinued operations 422 1445 
pension funding in excess of ias 19 charge 10933 12191 
decreaseincrease in inventories 7320 8362 
increase in trade and other receivables 8481 14210 
decreaseincrease in trade and other payables 13632 11868 
cash generated from operations 80191 42228 
reconciliation of movement in working capital
2011
£’000
2010
£’000 
decreaseincrease in inventories 7320 8362 
increase in trade and other receivables 8481 14210 
decreaseincrease in trade and other payables 13632 11868 
movement in working capital 14793 10704 
add back reduction in factored invoices 9807 – 
movement in working capital underlying 4986 10704  group financial statements yule catto  co plc  annual report 201 1 85
28 disposal of subsidiaries
the group disposed of the following interest in group companies in 2011
company name date of sale purchaser division sale type
union químico farmacéutica sa 30 november 2011 third party trade pharma chemicals share
holliday international limited 30 november 2011 third party trade pharma chemicals share
uquifa mexico sa de cv 30 november 2011 third party trade pharma chemicals share
the consolidated net assets of the companies at the date of disposal were as follows
£’000
property plant and equipment 24070
other intangibles 109
inventories 13582
trade receivables 15776
net cash 388
deferred tax liability 3332
current tax liability 639
trade payables 14930
35024
loss on disposal 458
total consideration 34566
satisfied by
cash net of disposal costs 28848
financial asset 5718
34566
cash flow 
cash consideration 28848
cash disposed 388
net cash inflow arising on disposal 28460
deferred consideration in form of financial asset 5718
net cash inflow arising on disposal underlying 34178
the financial asset will be settled in cash by the buyer on or before 30 september 2014 and is subject to a bank guarantee  
from hsbc bank plc in favour of yule catto  co plc see note 18
the impact of this disposal on the group’s results in the current period and prior periods is disclosed in note 3
during the year the pharma business contributed £6548000 to the group’s net operating cash flows and paid £4276000  
in respect of investing activities group financial statements yule catto  co plc  annual report 201 1 86
notes to the consolidated financial statements
continued
29 acquisition of subsidiaries
the group acquired the following subsidiary companies during the year ended 31 december 2011
polymerlatex group
the group acquired 100 of the issued share capital of polymerlatex deutschland beteiligungsgesellschaft mbh a group focused  
on the manufacture of aqueous polymer latex on 31 march 2011 for a total consideration of £1503 million further details including 
justification for this acquisition can be found in the chief executive’s report
quality polymer sdn bhd
the group acquired 100 of the issued share capital of quality polymer sdn bhd on 14 october 2011 through its 70 owned subsidiary 
revertex malaysia sdn bhd the total consideration paid was £102 million quality polymer sdn bhd is a manufacturer of aqueous 
acrylic and vinylic polymer dispersions this acquisition has increased the group’s dispersion production capacity and market share in asia
the consideration paid in respect of these acquisitions and the fair value of net assets acquired is summarised as follows
polymerlatex
group
£’000
quality
polymer
£’000
total
£’000
net assets acquired
intangible assets 180240 10939 191179
other intangibles 675 – 675
property plant and equipment 119388 991 120379
investment in joint ventures 10975 – 10975
inventories 32189 437 32626
trade and other receivables 46971 2194 49165
cash and cash equivalents 32347 113 32460
derivatives at fair value 5016 – 5016
trade and other payables 79765 1881 81646
current tax liability 19264 218 19046
borrowings 237367 – 237367
deferred tax liability 64471 2844 67315
post retirement benefit obligations 30781 – 30781
fair value of net assets acquired 13879 10167 3712
goodwill arising on acquisition 164184 – 164184 
total consideration 150305 10167 160472
satisfied by
cash consideration 154884 10167 165051
gain on cash flow hedge 4579 – 4579
150305 10167 160472
cash flow
cash consideration 150305 10167 160472 
cash acquired 32347 113 32460
borrowings acquired 237367 – 237367 
net cash outflow arising on acquisition 355325 10054 365379
special item adjustment for factored invoices 30762 – 30762
net cash outflow arising on acquisition underlying 386087 10054 396141
the ‘fair value adjustments’ to the value of assets acquired including intangible assets property plant and equipment and provisions  
are made in accordance with international financial reporting standard 3 ‘business combinations’ revised 2008
the goodwill arising on the acquisition of the polymerlatex group represents the premium the group paid to acquire companies which 
complement the existing business and create significant opportunities for crossselling and other synergies group financial statements yule catto  co plc  annual report 201 1 87
29 acquisition of subsidiaries continued
acquisition transaction costs expensed
polymerlatex
group
£’000
quality
polymer
£’000
total
£’000
in 12 months to 31 december 2010 4182 – 4182 
in 12 months to 31 december 2011 1159 268 1427 
5341 268 5609
in the period from acquisition to 31 december 2011 the polymerlatex group contributed revenue of £431730000 and operating profit  
of £45658000 to the group’s results
in the period from acquisition to 31 december 2011 quality polymer sdn bhd contributed revenue of £2088000 and operating profit  
of £214000 to the group’s results
if the acquisition of polymerlatex deutschland beteiligungsgesellschaft mbh had been completed on the first day of the financial year 
total sales including share of jv’s for the period would have been £1268845000 and the group’s underlying operating profit including 
share of jv’s would have been £109650000 the preacquisition results of quality polymer sdn bhd are not material to the overall  
result of the group for the year ended 31 december 2011
30 analysis of changes in net borrowings
1 january
2011
£’000
reclassification
of borrowings
£’000
cash inflows
outflows
£’000
exchange
and other
movements
£’000
31 december
2011
£’000
cash and cash equivalents 36211 – 42208 7503 85922 
current borrowing – bank overdrafts 6565 – 7851 1286 – 
29646 – 50059 6217 85922 
financial asset – – 5718 129 5589 
current borrowings 3311 32834 4340 66 31739
noncurrent borrowings 102379 32834 154100 7744 215901
net borrowings 76044 – 93983 13898 156129
deduct special item fair value adjustment 12674 – – 85 12759
63370 – 93983 13983 143370
add special item nonrecourse factoring – 20955
net borrowings underlying performance 63370 164325
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
2011
£’000
2010
£’000
shortterm employee benefits 3719 2987 
post retirement benefit obligations 301 257 
sharebased payments 1393 1148 
5413 4392 
the key management figures given above include the directors and all participants of the performance share plan group financial statements yule catto  co plc  annual report 201 1 88
notes to the consolidated financial statements
continued
32 commitments
2011
£’000
2010
£’000
capital expenditure authorised but not provided for in the accounts
contracted 9441 3970 
2011
£’000
2010
£’000
commitments under operating leases are as follows
payments under operating leases which fall due
within 1 year 3830 3208 
between 2 and 5 years 8524 6090 
after 5 years 17566 5785 
29920 15083 
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 £17465000  
2010 £18782000
other guarantees and contingent liabilities of the group amount to £389000 2010 £1076000
the company and its subsidiaries have in the normal course of business entered into guarantees and counterindemnities in respect  
of performance bonds relating to the group’s own contracts
34 sharebased payments
executive share option schemes
details of the share option schemes available to senior management are included in the remuneration report on pages 39 to 45  
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
options
2011
weighted
av exercise
price £ 
2011
options
2010
weighted
av exercise
price £ 
2010
outstanding at 1 january 6517753 – 5780786 – 
granted during the period 1411135 – 1132673 – 
exercised during the period 124086 – – – 
lapsed during the period 289163 – 395706 – 
outstanding at 31 december 7515639 – 6517753 – 
exercisable at 31 december 1783959 2194
for options outstanding as at 31 december 2011 the exercise price was £nil and the weighted average remaining contractual life was  
44 years 2010 50 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 longerterm performance share plan and the yule catto longerterm 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 2011  
the trust held 331502 2010 3418 ordinary shares in the company with a market value of £545000 2010 £7000
the dividends on these shares have been waived all of the shares are under option costs are amortised over the life of the plans group financial statements yule catto  co plc  annual report 201 1 89
35 share price information
the middle market value of the listed ordinary shares at 31 december 2011 was 1643 pence during the year the market price ranged 
between 1480 pence and 2530 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 reconcilation of ebitda
underlying performance ifrs
2011
£’000
2010
£’000
2011
£’000
2010
£’000
operating profit 96368 50435 54329 59414
less profit arising from the sale or closure of operations – – – 12271
less operating profit of businesses sold or closed during the year – – – 890
add acquisition costs – – 1427 4182
add restructuring and site closure – cash costs – – 15792 –
add restructuring and site closure – noncash costs – – 4438 –
add back amortisation – underlying 468 303 468 303
add back amortisation – special items – – 20382 –
add back depreciation – underlying 18372 9978 18372 9978
ebitda 115208 60716 115208 60716 company financial statements yule catto  co plc  annual report 201 1 90
independent auditor’s 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 2011 which 
comprise the parent company balance sheet and the related  
notes 1 to 16 the financial reporting framework that has been 
applied in their preparation is applicable law and united kingdom 
accounting standards united kingdom generally accepted 
accounting practice
this report is made solely to the company’s members as a body  
in accordance with chapter 3 of part 16 of the companies act 
2006 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 auditor’s 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 auditor
as explained more fully in the directors’ responsibilities statement 
the directors are responsible for the preparation of the parent 
company financial statements and for being satisfied that they  
give a true and fair view our responsibility is to audit and express  
an opinion on the parent company financial statements in 
accordance with applicable law and international standards on 
auditing uk and ireland those standards require us to comply 
with the auditing practices board’s ethical standards for auditors
scope of the audit of the financial statements
an audit involves obtaining evidence about the amounts and 
disclosures in the financial statements sufficient to give reasonable 
assurance that the financial statements are free from material 
misstatement whether caused by fraud or error this includes  
an assessment of whether the accounting policies are appropriate 
to the parent company’s circumstances and have been consistently 
applied and adequately disclosed the reasonableness of significant 
accounting estimates made by the directors and the overall 
presentation of the financial statements in addition we read  
all the financial and nonfinancial information in the annual report 
to identify material inconsistencies with the audited financial 
statements if we become aware of any apparent material 
misstatements or inconsistencies we consider the implications  
for our report
opinion on financial statements
in our opinion the parent company financial statements
•  give a true and fair view of the state of the company’s affairs  
as at 31 december 2011
•  have been properly prepared in accordance with united kingdom 
generally accepted accounting practice and
•  have been prepared in accordance with the requirements  
of the companies act 2006
opinion on other matters prescribed  
by the companies act 2006
in our opinion
•  the part of the directors’ remuneration report to be audited  
has been properly prepared in accordance with the companies 
act 2006 and
•  the information given in the directors’ report for the financial  
year for which the financial statements are prepared is consistent 
with the parent company financial statements
matters on which we are required to report by exception
we have nothing to report in respect of the following matters  
where the companies act 2006 requires us to report to you if  
in our opinion
•  adequate accounting records have not been kept by the parent 
company or returns adequate for our audit have not been received 
from branches not visited by us or
•  the parent company financial statements and the part of the 
directors’ remuneration report to be audited are not in 
agreement with the accounting records and returns or
•  certain disclosures of directors’ remuneration specified by law  
are not made or
•  we have not received all the information and explanations  
we require for our audit
other matter
we have reported separately on the group financial statements  
of yule catto  co plc for the year ended 31 december 2011
robert knight senior statutory auditor
for and on behalf of deloitte llp
chartered accountants and statutory auditor
cambridge united kingdom
14 march 2012 company financial statements yule catto  co plc  annual report 201 1 91
company balance sheet
31 december 201 1
note
2011
£000
2010 
£000
fixed assets
tangible fixed assets 6 2642 2559 
investments 7 272885 334137 
275527 336696 
current assets
debtors 8 370748 1705 
cash at bank and in hand 31065 940 
derivatives at fair value 17368 18189 
419181 20834 
creditors – due within one year
borrowings 9 72337 3266
other creditors 10 10223 109307
82560 112573
net current assetsliabilities 336621 91739
total assets less current liabilities 612148 244957 
creditors – due after more than one year
borrowings 9 206071 87065
net assets 406077 157892 
capital and reserves
called up share capital 11 33988 14566 
share premium 12 230534 33034 
revaluation reserve 12 820 822 
capital redemption reserve 12 949 949 
profit and loss account 12 139786 108521 
capital employed 406077 157892 
analysis of net borrowings
cash at bank and in hand 31065 940 
borrowings due in less than one year 72337 3266
borrowings due after more than one year 206071 87065
net borrowings 247343 89391
deduct special item 12759 12674 
net borrowings underlying performance 9 234584 76717
the financial statements of yule catto  co plc registered number 98381 were approved on 14 march 2012
a m whitfield
d c blackwood
directors company financial statements yule catto  co plc  annual report 201 1 92
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 straightline basis over their expected 
useful lies 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 company’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 nondiscounted basis
financial instruments
financial assets and financial liabilities are recognised on the 
company balance sheet when the company 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
interestbearing 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 interestbearing 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
notes to the company financial statements
31 december 201 1 company financial statements yule catto  co plc  annual report 201 1 93
1 accounting policies continued
net borrowings
net borrowings represents cash and cash equivalents together with short and longterm 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  
trusteeadministered funds
payments to defined contribution retirement benefit schemes are charged as an expense as they fall due
2 auditor’s remuneration
the audit fee of yule catto  co plc amounted to £7000 2010 £7000
3 employees
2011
number
2010
number 
the average monthly number of employees during the year was 23 26 
2011
£’000
2010
£’000 
the aggregate remuneration of all company employees comprised
wages and salaries 2500 2291 
social security costs 319 275 
post retirement benefits 225 155 
3044 2721 
4 profit attributable to equity shareholders
uk gaap basis
2011
£’000
2010
£’000 
attributable to yule catto  co plc 39145 38913
 
 the above has been calculated on a uk gaap basis as this is consistent with the continued presentation of yule catto   co plc’s accounts under uk gaap
as permitted by section 408 of the companies act 2006 no profit and loss account is presented for yule catto  co plc
5 ordinary dividends
2011
pence
per share
2010
pence
per share
2011
£’000
2010
£’000
interim dividend 12 13 4075 2913
proposed final dividend 23 13 7817 4414
the proposed final dividend is subject to approval by shareholders at the annual general meeting and has not been included as a liability  
in these financial statements company fi nancial statements yule catto  co plc  annual report 201 1 94
notes to the company financial statements
continued
6 tangible fi xed assets
land and buildings
freeholds
£’000
long 
leaseholds
£’000
plant and
equipment
£’000
total
£’000
cost or valuation
at 1 january 2011 2777 89 1589 4455 
additions – – 216 216 
disposals – – 67 67
at 31 december 2011 2777 89 1738 4604 
at cost 12 – 1738 1750 
at professional valuation in 1985 2765 89 – 2854 
2777 89 1738 4604 
depreciation
at 1 january 2011 511 49 1336 1896 
charge for the year 20 2 111 133 
eliminated on disposals – – 67 67 
at 31 december 2011 531 51 1380 1962 
net book value
at 31 december 2011 2246 38 358 2642 
net book value
at 31 december 2010 2266 40 253 2559 
properties included at valuation would have been stated on a historical cost basis at cost of £1877000 2010 £1877000  
and depreciation of £454000 2010 £437000
freehold land amounting to £1781000 2010 £1781000 has not been depreciated
7 investments
subsidiaries
£’000
joint
ventures
£’000
other
investments
£’000
total
£’000
cost
at 1 january 2011 334942 500 77 335519 
disposals 61252 – – 61252
at 31 december 2011 273690 500 77 274267 
provisions
at 1 january 2011 and 31 december 2011 1118 220 44 1382 
net book value
at 31 december 2011 272572 280 33 272885 
net book value
at 31 december 2010 333824 280 33 334137 
details of the principal group companies are given on page 99 company fi nancial statements yule catto  co plc  annual report 201 1 95
8 debtors
2011
£’000
2010
£’000
amounts owed by subsidiaries 359052 – 
other debtors 11668 1605 
prepayments and accrued income 28 100 
370748 1705 
9 borrowings
2011
£’000
2010
£’000
current borrowings
bank loans
bank loans and overdrafts 44533 3266
other loans
43000000 555 guaranteed senior unsecured notes due 2 september 2012 27821 –
72354 3266
less capitalised costs 17 –
72337 3266
noncurrent borrowings
bank loans
unsecured £150 million term loan facility expiring 2015 148995 –
other loans
43000000 555 guaranteed senior unsecured notes due 2 september 2012 – 27794 
70000000 578 guaranteed senior unsecured notes due 2 september 2014 45290 45246 
22000000 598 guaranteed senior unsecured notes due 2 september 2016 14234 14220 
208519 87260 
less capitalised costs 2448 195
206071 87065 
 
 in aggregate £873 million associated with which is the currency impact of derivatives of £127 million net £746 million
bank loans are denominated in a number of currencies and bear interest based on libor or foreign equivalents
at 31 december 2011 the company had available £60 million 2010 £30 million of undrawn committed borrowing facilities in respect  
of which all conditions precedent had been met
analysis of borrowings at carrying value by currency
the directors calculate the carrying value of the company’s borrowings as follows
sterling
£’000
us dollar
£’000
euro
£’000
total
£’000
31 december 2011
bank loans and overdrafts 8022 745 184761 193528 
loan notes –  87345 –  87345 
capitalised costs 2465 –  –  2465
5557 88090 184761 278408 
cash and cash equivalents 31065
net borrowings 247343 
deduct special item 12759
net borrowings underlying performance 234584  company financial statements yule catto  co plc  annual report 201 1 96
notes to the company financial statements
continued
9 borrowings continued
analysis of borrowings at carrying value by currency continued
sterling
£’000
us dollar 
£’000
euro 
£’000
total 
£’000
31 december 2010
bank loans and overdrafts 2994 175 97 3266 
loan notes –  87260 –  87260 
capitalised costs 195 –  –  195
2799 87435 97 90331 
cash and cash equivalents 940
net borrowings 89391 
deduct special item 12674
net borrowings underlying performance 76717 
 
  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
cash and cash equivalents comprise cash at bank and other shortterm highly liquid investments with a maturity of three months or less
10 other creditors
2011
£’000
2010
£’000
amount due within one year
trade creditors 1236 1674 
amounts owed to subsidiaries –  96922 
other taxation and social security 126 97 
other creditors 2059 2216 
accruals and deferred income 6802 8398 
10223 109307 
11 share capital
2011
£’000
2010
£’000
issued and fully paid
339880769 2010 145663187 ordinary shares of 10 pence each 33988 14566 
issued and nil paid
nil 2010 194217582 ordinary shares of 10 pence each –  –  
ordinary shares carry no right to fixed income
share options
as at 31 december 2011 the following options were outstanding
executive share options number option price
exercisable between 20112018 936575 a
exercisable between 20122019 4224840 b
exercisable between 20132020 1040015 c
exercisable between 20142021 1314209 d
 
a options granted under the performance share plan with a total exercise price of £16
b options granted under the performance share plan with a total exercise price of £17
c options granted under the performance share plan with a total exercise price of £20
d options granted under the performance share plan with a total exercise price of £36 company fi nancial statements yule catto  co plc  annual report 201 1 97
12 share premium and reserves 
share
premium
£’000
revaluation
reserve
£’000
capital
redemption
reserve
£’000
profit and
loss account
£’000
total
£’000
at 1 january 2011 33034 822 949 108521 143326 
profit for the year –  –  –  39145 39145 
dividends –  –  –  8489 8489
retained profit for the year –  –  –  30656 30656 
issue of shares 197500 –  –  –  197500 
sharebased payments –  –  –  609 609 
revaluation depreciation –  2 –  –  2
at 31 december 2011 230534 820 949 139786 372089 
13 related party transactions
there were no related party transactions during the year 2010 none
14 guarantees and other fi nancial commitments
the company has given guarantees amounting to £17465000 2010 £18782000 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 during 2009 the group 
announced that it intended to close the defined benefit scheme to future accrual this process commenced in 2009 and was completed  
in september 2010
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 £14132000 2010 £14213000
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 £73126000 at 31 december 2011 2010 £56158000
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 2009 and updated to 31 december 2011 by a qualified actuary  
the major assumptions used by the actuary were 
2011 2010 2009 2008 2007
rate of increase in salaries na na 300 260 310
rate of increase in pensions in payment 300 325 300 250 250
rate of increase in pensions in deferment 200 225 300 250 250
discount rate 480 540 570 650 590
inflation assumption 300 325 300 260 310 company financial statements yule catto  co plc  annual report 201 1 98
notes to the company financial statements
continued
15 pension commitments continued
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
2011

2011 
£’000
2010

2010 
£’000
2009

2009 
£’000
2008

2008 
£’000
2007

2007 
£’000
equities 660 105027 770 110702 800 113673 900 90541 800 148747 
bonds 480 69900 540 60829 570 54243 670 47614 517 44925 
property 660 18709 770 10480 –  –  –  –  –  –  
cash 080 5309 200 12011 200 3899 425 438 425 1953 
total fair value 
 of assets 198945 194022 171815 138593 195625 
present value of 
 scheme liabilities 272071 250180 241475 205721 228966
deficit in  
 the scheme 73126 56158 69660 67128 33341
related deferred  
 tax asset –  –  –  –  –  
net pension liability 73126 56158 69660 67128 33341
contributions from the sponsoring companies are expected to be £10139000 in 2012
analysis of the amount that would have been charged to operating profit under frs 17
2011
£’000
2010
£’000
current service cost 678 607 
678 607 
analysis of the amount that would have been charged to net finance income under frs 17
2011
£’000
2010
£’000
expected return on pension scheme assets 12707 12296
interest on pension scheme liabilities 13229 13450 
522 1154 
analysis of the actuarial lossgain that would have been recognised in the statement of total recognised gains and losses
2011
£’000
2010
£’000
actual return less expected return on pension scheme assets 10444 7576 
experience gains and losses arising on the scheme liabilities 19055 6500
29499 1076 
history of experience gains and losses
2011 2010 2009 2008 2007
difference between the expected and  
 actual return on scheme assets
amount £’000 10444 7576 21209 64742 5891
percentage of scheme assets  525 390 1234 4671 301
experience lossesgains on scheme liabilities
amount £’000 19055 6500 32753 25273 25872
percentage of the present value of scheme liabilities  700 260 1356 1229 1130
total actuarial lossesgains recognised in  
 the statement of total recognised gains and losses
amount £’000 29499 1076 11544 39469 19981
percentage of the present value of scheme liabilities  1084 043 478 1919 873
16 sharebased payments
for details of sharebased payments please refer to note 34 to the consolidated financial statements on page 88 printing and paper this report has been printed in the uk by the colourhouse  
they are accredited with iso14001 hold full fsc chain of custody they are also 
carbon neutral all inks used are vegetablebased the paper used is heaven 42 
which is fully recyclable and biodegradable and is an fsc mixed sources accredited 
material using an elemental chlorine free ecf process and is partly bleached  
using a totally chlorine free tcf process one of synthomer’s ‘litex p’ polymers 
was used in the manufacture of this paper 
if you have finished reading this report and no longer wish to retain it  
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wwwyulecattocom other information yule catto  co plc  annual report 201 1 99
operating companies
country of
 incorporation
 and operation
effective
group interest
 in equity

arkem pty ltd south africa 50

distributor of specialty chemicals and allied products
eka synthomer oy finland 50

styrenebutadiene latex products
polymerlatex sdn bhd malaysia 100
synthetic rubber latices
quality polymer sdn bhd malaysia 70
acrylic and vinyl polymer dispersions
revertex malaysia sdn bhd malaysia 70
synthetic resin and emulsions natural rubber latices  
plasticers and allied products
synthomer bv netherlands 100
latex based compounds
synthomer chemicals pty ltd south africa 100
synthetic resin and emulsions and allied products
synthomer deutschland gmbh germany 100
synthetic rubber latices and emulsions
synthomer gmbh germany 100
synthetic rubber latices
synthomer ltd england 100
synthetic rubber latices and emulsions latex based compounds  
polyvinyl alcoholacetate and liquid polybutadine
synthomer middle east company saudi arabia 49

acrylic and vinyl resin emulsions
synthomer sae egypt 88
latex based compounds
synthomer sdn bhd malaysia 100
synthetic rubber latices 
synthomer srl italy 100
synthetic rubber latices and acrylic polymer dispersions
synthomer vietnam co ltd vietnam 60
acrylic and vinyl emulsions
william blythe ltd england 100
inorganic chemicals
holding companies
holliday chemical holdings england 100
yule catto financing ltd ireland 100
yule catto holdings gmbh germany 100
yule catto nederland bv netherlands 100
 
 joint ventures
 shares held by yule catto  co plc
principal subsidiaries and joint ventures other information yule catto  co plc  annual report 201 1 100
five year financial summary
underlying performance a f
2011
£’000
2010
£’000
2009
£’000
2008
£’000
2007
£’000
total sales 1116862 582858 466867 527190 441298 
ebitda b 115208 60716 53976 42038 42029 
operating profit c 96368 50435 43845 36426 33814 
finance costs 11573 7840 9869 10502 11497
profit before taxation 84795 42595 33976 25924 22317 
basic earnings per share 188p 145p 113p 92p 74p 
dividends per share 35p 26p na 26p 62p 
dividend cover 54 56 na 35 12 
net borrowings e 164325 63370 88038 135482 170831
free cash flow before dividends d 36331 9825 39001 7781 14012 
capital expenditure d 24248 10592 8687 17007 16994 
ifrs – continuing operations f
2011
£’000
2010
£’000
2009
£’000
2008
£’000
2007
£’000
total sales 1116862 588547 478103 538262 450690 
ebitda b 115208 60716 53976 42038 42029 
operating profit c 54329 59414 45835 37277 46142 
finance costs 14890 5195 14270 1887 7050
profit before taxation 39439 54219 31565 35390 39092 
basic earnings per share f 98p 207p 118p 129p 133p 
dividends per share 35p 26p na 26p 62p 
dividend cover 28 80 na 50 21 
net borrowings e 156129 76044 97646 161448 150341
free cash flow before dividends d 36331 9825 39001 7781 14012 
capital expenditure d 24248 10592 8687 17007 16994 
 
a as presented in the consolidated income statement on page 48
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 53 to 58
d as shown with the consolidated cash flow statement on page 51
e as defined in note 2 to the financial statements and derived in note 22
f 2007 to 2010 figures restated to exclude pharma chemicals


Summary:
 overview yule catto  co plc  annual report 201 1 9
chairman’s statement
overview
2011 was an exceptional year for yule catto we delivered a very 
strong set of financial results just as importantly though it marked 
the end of a process of transformation for the group from a small 
diversified chemical business in 2007 through to a much larger 
focused specialty polymer business in 2011 with a broad product 
offering and exposure to high growth markets
at the end of march we completed the acquisition of polymerlatex 
effectively doubling the size of our business subsequently in 
november we concluded the sale of our pharmaceutical business 
the last noncore asset we needed to divest to complete  
the transformation process to become a focused specialty  
polymer business
strategy
our broad strategy remains unchanged we are focused on 
geographic expansion around existing business hubs further 
increasing our presence in emerging markets and in developing 
market sectors where our technology new product development 
and manufacturing capabilities give us a real competitive advantage 
consistent with this strategy we commenced construction of 
70000 tonnes of new nitrile latex capacity in the year in malaysia 
due on line in the fourth quarter of 2012 and completed the 
acquisition of a small dispersion manufacturer there in late 2011
performance
we delivered a very strong set of financial results the group 
reported underlying profit before tax of £848 million an increase 
of some 100 and underlying sales were £1117 million an 
increase of 92 over 2010 throughout the year the board has 
reviewed the performance of the business on a proforma basis 
which includes the results of polymerlatex for 2010 and 2011 in 
full with an allowance for the finance cost of the acquisition for the 
periods we did not actually own the business on this basis and 
excluding the divested pharma business the comparisons are more 
representative and are very strong with sales of £1269 million  
up 18 and underlying profit before tax of £960 million up 25
integration progress
when we announced the acquisition of polymerlatex we  
committed to deliver hard synergies of at least £20 million from  
the combination of both polymer businesses i am pleased to say 
that at the end of 2011 only nine months after the acquisition  
we had already established a synergy run rate annualised rate  
of delivery of £15 million the board now anticipates we will  
achieve an annual run rate of £25 million by march 2013
balance sheet
the acquisition of polymerlatex was structured so as to ensure  
that the enlarged group had a solid balance sheet with an 
estimated ratio of net borrowings to ebitda at the date of 
acquisition of just below 20 the strong performance during the 
year and the divestment of the pharma business have resulted in 
net borrowings reducing substantially from the position at the date  
of acquisition and our closing net borrowings was £1643 million 
this represents a proforma underlying net borrowings to ebitda  
of 12 which the board considers to be a prudent leverage position 
dividend
the board has recommended a final dividend of 23p per share 
making a total dividend per share for the full year of 35p  
this represents growth of 35 on the adjusted full year dividend  
per share for 2010 looking ahead the board expects to increase 
the dividend ahead of earnings growth in accordance with the 
board’s stated intention of pursuing a progressive dividend policy
safety health and environment
the group is absolutely committed to the continuous improvement 
of its performance in respect of safety health and the environment  
i am pleased that most of the metrics that we measure in this  
area showed good improvement over the course of the year 
people
the group’s employees including those who have left as part  
of the restructuring have worked extremely hard this year to deliver  
the transformation of the group and the board thanks them  
for all their efforts
board composition
at the forthcoming agm i shall not be seeking re election  
as chairman after eleven years as a director the last three  
being as chairman and after the transformational year of 2011  
i feel this is the right time for a change dr a a dobbie has  
also indicated he will not be seeking reelection he has been  
a director for five years and chairman of the remuneration 
committee for the last three we thank him for his valuable 
contribution and wish him well in the future
in january 2012 dominique fournier joined the board as  
a nonexecutive director dominique subsequently became  
potentially conflicted and he decided to step down from the  
board on 13 march 2012
the appointment of three new nonexecutive directors is well 
advanced and we expect to make further announcements shortly
during 2011 we brought neil johnson onto the board as our  
senior independent nonexecutive director and i am very  
pleased he has agreed to succeed me as chairman
current trading and outlook
looking forward we continue to anticipate several years of  
low growth in western economies with global growth generally 
driven by emerging markets where we have a significant and 
increasing presence
whilst the general economic environment requires a degree  
of caution i am pleased that the business has made a solid  
start to the year earnings will benefit from the synergies from  
the polymerlatex acquisition coming through over the course  
of 2012 and the board remains confident about the prospects  
for the group in 2012 and beyond
peter wood 
chairman 
14 march 2012