TIDMELM
RNS Number : 8153R
Elementis PLC
05 March 2019
5 March 2019
ELEMENTIS plc
PRELIMINARY RESULTS FOR THE YEARED 31 DECEMBER 2018
Robust 2018 performance and continued positive momentum against
strategy
-- Revenue from continuing operations up 5% from $783m to $822m,
driven by extra contribution from SummitReheis and Mondo.
Underlying revenue progress in Personal Care, stable Coatings and
declines in Chromium and Energy.
-- Adjusted operating profit increased 8% to $133m with improved
profitability in Personal Care and Chromium. Group adjusted
operating margin up 40bps to 16.1%. Statutory operating profit down
7% to $85m(4) .
-- Net debt to adjusted pro forma EBITDA 2.5x (1.9x at 31
December 2017) following Mondo acquisition; on track to reduce
leverage to around 2.0x by end of 2019. Working capital reduction
target increased from $18m to $25m by 2020.
-- Ordinary dividend up 4% to 8.4c per share.
Portfolio transformation creating a higher quality, higher
margin group
-- Completed acquisition of Mondo; performance strong and in
line with expectations, $2m cost synergies identified and full
integration expected by end of 2019.
-- Portfolio transformation has created a platform for improved
returns and future growth, with c. 80% of pro forma earnings
collectively from:
- A substantial, high margin Personal Care business
- A focused Coatings business delivering operational
improvement, and
- A well-positioned, high margin Talc business with significant
growth potential under Elementis ownership
In 2019 expect good progress led by self-help initiatives
-- Whilst global market conditions remain challenging, expect
good progress with focus on Talc integration, self-help initiatives
and deleveraging.
-- Investor day planned for November 2019.
FINANCIAL SUMMARY
2018 2017 % Change
--------------------------------------- ----- --------- --------
Revenue $822m $783m +5%
Statutory profit for the period $41m $118m -65%
Statutory basic earnings per share(2) 7.9c 23.3c ^ -66%
Adjusted operating profit(1) $133m $123m +8%
Adjusted profit before tax(1) $113m $110m +3%
Adjusted diluted earnings per share(2) 16.9c 17.0c^ -1%
Adjusted operating cash flow(3) $78m $107m -27%
Net debt(3) $498m $291m +71%
Ordinary dividend per share 8.4c 8.1c^ +4%
--------------------------------------- ----- --------- --------
Unless otherwise stated, KPIs refer to continuing operations
only.
- Total operations (both continuing and discontinued
operations).
^ - Rebased for bonus element of rights issue.
1 - See note 5.
2 - See note 7.
3 - See Finance Report.
4 - Operating profit impacted by non-recurring items. See note
5.
Commenting on the results, CEO, Paul Waterman said:
"Elementis delivered good overall results for 2018 in a
challenging operating environment, with adjusted operating profit
rising by 8% to $133m.
The acquisition of Mondo in 2018 is a major step to further
improve the quality of our portfolio. Elementis today is
increasingly focused on three highly profitable businesses of scale
in Personal Care, Coatings and Talc that each have attractive
growth prospects.
In 2019, whilst global market conditions remain challenging,
particularly in coatings, we will seek to capture synergies as we
integrate Mondo, transform Coatings and grow Personal Care. This
will reduce leverage via the Group's inherently strong cash
generation. We are confident of making further progress in the year
ahead and over the longer term."
Business performance overview
-- Personal Care revenue up 17% to $210m driven by an extra
quarter of SummitReheis. Organic* revenue growth of 1%. Adjusted
operating profit up 17%; adjusted operating margin of 24.8%.
- After a subdued H1 in cosmetics and AP actives due to
distributor de-stocking and raw material price inflation, improved
H2 revenue performance with 6% and 5% organic* growth respectively.
Cosmetics and AP actives represent c.90% Personal Care profits.
- Operating profit improvement driven by pricing actions and
synergy delivery. Margin solid despite significant price inflation
of two key raw materials, aluminium and zirconium.
-- Coatings revenue $362m with flat organic* growth. Adjusted
operating profit $53m, representing 7% organic* growth.
- Revenue growth* in Americas, but subdued H2 demand in Asia and
EMEA.
- Excluding the impact of business disposals and FX, adjusted
operating profit up 7% with early benefits from Coatings
transformation programme; more to come in 2019.
-- Talc performance in line with expectations. In two months of
ownership revenue of $22m, adjusted operating profit $4m and strong
margin of 18%.
- As expected at the time of the acquisition, full year constant
currency revenue up 10% to $158m and adjusted operating profit up
26% to $25m due to continued momentum in industrial business and
monetisation of other minerals.
- Integration plan in place and progressing well. Cost synergy
opportunities of $2m identified.
-- Chromium revenue down 1% to $184m; adjusted operating profit up 10% to $33m.
- Volumes down 6% due to weather related production outages,
partially offset by improved pricing.
- Impact of outages on adjusted operating profit largely
mitigated by insurance cover. Adjusted operating profit up 10% due
to pricing benefit resulting from tightening market.
-- Energy constant currency revenue down 7%; adjusted operating profit of $7m.
- Volumes impacted by lower drilling due to infrastructure
constraints in North America.
- Adjusted operating profit down 27% to $7m on lower volumes and
weaker mix.
Further information
A presentation for investors and analysts will be held at 09:30
GMT on 5 March 2019. The presentation will be webcast on
www.elementisplc.com. Conference call dial in details:
UK: 020 3936 2999 Other locations: +44 20 3936 2999
Participant access code: 14 93 82
Enquiries
Elementis
James Curran, Investor Relations 020 7067 2994
Tulchan
Martin Robinson 020 7353 4200
David Allchurch
Notes:
* Adjusted for constant currency (where constant currency
reflects prior year results translated at current year exchange
rates) and the impact of acquisitions (SummitReheis and Mondo) and
business disposals (US Colourants business and Surfactants,
Coatings and Personal Care portfolio elimination following the
Delden asset sale). See Finance Report.
-S -
Chairman's statement
As I reflect on the second year of the Reignite Growth strategy
at Elementis, I am pleased to report a year of strategic
progress.
The acquisition of Mondo, sale of the Surfactants business and
investment in a new production facility in India are a clear
reflection of the significant change taking place at Elementis.
At Elementis we are focused on enhancing our customers' product
performance through the application of our expertise and
innovation.
FINANCIAL RESULTS
In 2018, we experienced a mixed economic environment with good
levels of growth in the Americas but some deterioration in Europe
and Asia.
Against this backdrop, the business delivered a solid set of
results. Adjusted operating profit from continuing operations rose
8% from $123m to $133m, with growth a result of improved
profitability in Personal Care and Chromium. These positive factors
more than offset declines in Coatings and Energy. We also saw a
full year of profits from the SummitReheis acquisition as well as
an initial contribution from Mondo. Reported operating profit fell
7% to $85m, due to an increase in non-recurring costs. Group
adjusted diluted earnings per share declined 1% from 17.0 cents in
2017 to 16.9 cents as a result of higher tax, net finance costs and
weighted average share count.
MONDO
The acquisition of Mondo in October represents a compelling
value creation opportunity and a major step in our ambition to
Reignite Growth at Elementis. Mondo is an attractive, high quality
additives business with strong competitive advantages serving
resilient, growing end markets. The business is highly
differentiated with complementary product markets built on
application driven research and development.
In Personal Care and Coatings, a total of $20-$25m of revenue
synergies are anticipated to arise by 2023 through the geographic
expansion and increased customer penetration of Mondo, utilising
the global sales and technical service relationships of Elementis.
In addition, the combination is anticipated to unlock new business
opportunities for the Group through the application of Elementis'
expertise in surface chemistry modification to talc.
BREXIT
Whilst the timing and impact of the United Kingdom's exit from
the EU (Brexit) remains uncertain, Elementis is well prepared to
react to the potential outcome of a 'no deal' Brexit. Of Elementis'
21 manufacturing sites, one is located in the UK, and 96% of Group
revenue is from outside of the UK. We recognise that there may be
short term disruption to logistics, however steps have been taken
to pro-actively manage our supply chain to mitigate any potential
impact. This includes ensuring sufficient raw materials are held at
our production site in Livingston, Scotland as well as having
sufficient finished goods throughout our global distribution
network.
BALANCE SHEET
Following the acquisition of Mondo, Elementis' net debt position
has increased from $291m at the end of 2017 to $498m, representing
a net debt to adjusted pro forma EBITDA of 2.5x. Looking forward we
plan to rapidly deleverage the Group through organic cash
generation and self-help initiatives. Our debt repayment profile
will also be accelerated by the 2018 triennial review of the UK
pension scheme which concluded that no cash top up payments will be
required from Elementis until at least 2021. We anticipate net debt
to EBITDA to be around 2x by the end of 2019.
DIVID POLICY
Under the dividend policy introduced in 2018, it is our
intention to pay progressive ordinary dividends, normally with a
dividend cover of at least 2 times adjusted earnings, and to seek
to make additional returns to shareholders when net debt is
structurally below one times earnings (EBITDA).
This year the Board is recommending a total ordinary dividend of
8.65 cents per share, or 8.40 cents per share on an adjusted basis
(2017: 8.80 cents per share, 8.05 cents per share on an adjusted
basis), reflecting its confidence in the Group's business model and
ability to generate cash, its medium term prospects and the levels
of investment required over the short to medium term to deliver the
Reignite Growth strategy.
The final dividend will be paid on 31 May 2019 in pounds
sterling at an exchange rate of GBP1.00:$1.3377 (equivalent to a
sterling amount of 4.2611 pence per share) to shareholders on the
register at 3 May 2019. The Board declared an interim dividend at
the time of the Interim Results announcement of 2.95 cents per
share or 2.70 on an adjusted basis (2017: 2.70 cents, 2.47 on an
adjusted basis).
GOVERNANCE AND BOARD
The Board leads an ongoing programme to ensure the highest
standards of corporate governance and integrity right across
Elementis. We regard this as critical to the Group's continued
success and viability. The interactions and communication flows
between Executives and Non-Executive Directors have been strong and
as a result the Board is well placed to challenge, guide and
support the Executives in the delivery of our Reignite Growth
strategy. The Board considers that it has fully applied all of the
principles and provisions of the UK Corporate Governance Code
during 2018.
In 2018 we completed an externally facilitated Board evaluation.
The overall result was positive, concluding that the Board
continues to perform effectively with good leadership, competent
and engaged members and with the appropriate focus on both in-year
performance and strategy for the future. Further detail on the
evaluation process, together with the Board's remit, operations and
the topics the Board regularly review can be found in the corporate
governance report which will be published in the Annual Report
PEOPLE AND CULTURE
We now have approximately 1,500 employees in the Group, spread
over more than 20 manufacturing sites and offices, with 200 joining
as part of the Mondo acquisition. As the Group increases in size,
it is important to develop consistent and efficient working
practices across our teams. We believe our values - Safety,
Solutions, Ambition, Respect and Team - are core to our high
performance culture and enable us to work effectively in
partnership with our customers.
This year the Group has reported underlying profitability growth
in a challenging and demanding market place. At the same time, we
have achieved our best ever safety performance. The Board
recognises the contribution made by all employees. Our drive for
safe and sustainable growth remains unchanged and on behalf of the
Board, I would like to thank each and every employee for their
commitment this year.
SUMMARY
The solid results and significant strategic progress made by the
Group in 2018 are strong evidence that the Group is adopting the
right strategy and creating a stronger platform for growth. Our
priorities in 2019, the third year of the strategy, are to deliver
safe, reliable operations, to integrate Mondo and to continue
implementing the Reignite Growth strategy. We are looking forward
to a year of further progress.
Andrew Duff
Chairman
5 March 2019
Chief Executive Officer's overview
In 2018, the second year of our Reignite Growth strategy, we
delivered good organic profit growth and made material strategic
progress in transforming our portfolio, capabilities and customer
service. Moving into 2019 we have a stronger platform from which to
grow the value of Elementis.
RESULTS
Starting with the Group financial results, I am pleased to
report a year of solid adjusted operating profit growth. Adjusted
operating profit from continuing operations rose by 8% on the prior
year to reach $133m, driven by an extra quarter of contribution
from SummitReheis, two months contribution from Mondo and good
growth in Personal Care and Chromium. These positive factors more
than offset a decline in Coatings, where 7% organic growth in
adjusted operating profit helped offset the impact of the Delden
plant disposal, and in Energy where the market was impacted by
infrastructure constraints in North America, leading to lower
drilling volumes. Further details on each business segment's
performance is detailed below. Profit before tax fell 17% to $65m
due to an increase in non-recurring items and higher net finance
costs.
Following the acquisition of Mondo in October 2018, Elementis'
net debt position has increased from $291m at the end of 2017 to
$498m, representing a leverage ratio of 2.5x adjusted pro forma
EBITDA. Looking forward we see a rapid deleveraging profile for the
Group as a result of strong underlying cash generation, the impact
of our cash focused self-help initiatives and the positive outcome
of the UK pension scheme triennial review.
SAFETY
Safety remains our top priority and in 2018 I am pleased to
report significantly improved performance, with three recordable
injuries (2017: 16) and a total recordable incident rate of 0.22
(2017: 1.1), the lowest on record at Elementis. This improvement
was driven by investment to reduce operational risks, safety
leadership training and the implementation of Elementis safety
processes at former SummitReheis sites. Going forward, we will
focus on maintaining and improving this record still further.
CSR AND SUSTAINABILITY
With wider consideration of how we do business, sustainability
is a core value at Elementis, and here too we made strides in 2018.
We continue to improve our CSR and sustainability performance
across all aspects of the organisation. Examples include our
Milwaukee leather tanning plant which is a zero water, air and
solid wastes discharge plant, and an innovative R&D programme
that is focusing on new products built around natural and
sustainable ingredients. In addition, we have increased the
transparency of our commitments by becoming a UN Global Compact
signatory.
The green credentials of our products are foremost in our mind
and we have verified the naturalness of our products against
rigorous standards such as ISO, COSMOS and Ecolabel which enables
our customers to make sustainability claims about their
products.
Reflective of our progress, in 2018 Elementis was ranked by
Ecovadis in the top 7% of companies for CSR in the global chemical
manufacturing sector, up from 23% in 2014. This is a welcome
achievement and more information on our initiatives in this area
will be available in our Annual Report.
PEOPLE
Our people and the culture that they embody are at the centre of
our success. I am pleased to welcome all Mondo employees to
Elementis. Mondo has an experienced management team with a proven
track record of repositioning the business and delivering growth,
and I am pleased to say Christian Kather, previously Mondo CEO, has
joined our leadership team, as VP Talc.
After a career in the chemicals industry of 23 years, and with
Elementis for ten years, Ken Smith, VP Technology retired at the
end of 2018. Technology is a cornerstone of what we do and I would
like to thank Ken for the huge contribution he has made to
Elementis - his impact on the business will be felt for years to
come. Whilst it is sad to see Ken go, I am pleased to welcome Joe
Lupia to Elementis as his successor. Joe has a career of more than
30 years in the chemicals industry and joins Elementis from BASF
where he most recently held the position of director, Technical
Innovations and Customer Support - Care Chemicals USA.
MONDO
The acquisition of Mondo, the second largest producer of premium
talc based additives in the world, represents a great opportunity
for Elementis. Our new Talc business segment will strengthen us as
a higher quality, higher margin company with attractive growth
potential, consistent with our Reignite Growth strategy.
Our Talc business has strong competitive advantages and a track
record of growth. Aligned with Elementis' hectorite based value
chain, Mondo leverages access to a distinctive, high quality
natural resource to create high value additives that deliver
exceptional product performance improvement to customers at a
relatively low percentage of the end products cost. Premium talc
follows a specialty additive logic driven by custom formulations,
customer demand for quality, reliability and service and rigorous
supplier qualification which results in value based pricing and
high customer loyalty.
Demand for talc additives is anticipated to grow at around 5%
per annum, sustained by favourable structural trends, including the
light weighting of vehicles and fast growth in life sciences such
as cosmetics and pharmaceuticals. Mondo is well positioned to grow
at or above this rate, over the medium term, by further developing
its position in high end talc markets.
We see significant opportunities in Coatings, Personal Care and
the broader innovation space from combining Mondo with Elementis'
surface chemistry expertise, global scale and relationships. These
synergy opportunities will unlock additional value for Elementis
stakeholders.
REIGNITE GROWTH
In November 2016, we launched our Reignite Growth strategy. In
the second year of strategic implementation we have made
significant progress against our four priorities.
1) Pursue best growth opportunities
Coatings Asia
In Asia, we have a strong presence centred upon China. In 2018,
under the direction our new global Coatings team, we began to
transform our business through rigorous evaluation of our product
offering, routes to market and cost base. This has resulted in
moves to improve product differentiation, rationalise our product
portfolio and implement standardised service level agreements to
reduce working capital and improve supply efficiency. Our global
Coatings transformation will continue at pace in 2019.
In December 2018 we acquired a production facility in Mumbai for
$4m, a key step in developing a direct presence in India. This
facility will allow us to bring our distinctive technology to the
market and enable us to strengthen our customer proposition. The
plant, which will start production in 2019 and ramp up in 2020,
will serve the Coatings, Personal Care and Energy markets in India
and beyond, and is an exciting development for Elementis in
Asia.
Personal Care global growth
Owning the only commercial high grade hectorite mine in the
world provides access to a raw material that is natural, white and
an outstanding rheology modifier. In 2018, we continued to grow our
hectorite based business and made progress diversifying our product
portfolio. Rheoluxe(R) , our new polymer based thickener, won
Sensory Gold at the In-Cosmetics Global Conference and is building
momentum with customers - revenue rose 13% in 2018. Our natural,
Meadowfoam based ingredients also made good progress in 2018,
seeing incorporation into ground breaking skin care products such
as Supergoop Unseen Sunscreen.
In the first full year of ownership, our antiperspirant active
business has demonstrated the ability to balance cost recovery and
the strength of our customer relationships in the face of
significant raw material price increases.
In 2019 we will roll out new products targeted at skin care
including Bentone(R) Hydroclay, drive penetration of our Bentone(R)
gel product range and introduce more customers to our wide range of
natural ingredients.
Global key account management
Key account management is about improving how we work with our
most important global customers. In 2018, we leveraged our new
processes and systems, repositioned our thinking from a regional to
global perspective and engaged with our customers at the most
senior levels possible. As a result, our dialogue with key
customers has improved and we are seeing increased technical
collaboration. In 2018, revenue from these key accounts rose by
6%.
2) Pursue supply chain transformation
Manufacturing productivity
Production within our network of assets is being optimised to
improve efficiency and reduce cost. In 2018, we made significant
progress at our organoclay operations. In China, we closed the
Changxing site and consolidated capacity at the nearby Anji
facility, whilst in the US we relocated our flash dryer capacity
from Charleston to St Louis. Both of these moves allowed us to
improve utilisation rates and lower operating costs.
During the year we vigorously pursued our $18m working capital
improvement target by 2020. Standardised service level agreements,
new inventory management systems and the removal of low sales and
low margin items that create excess inventory, resulted in $12m of
savings. We have increased our overall ambition from $18m to a $25m
sustainable reduction in working capital, and are well placed to
deliver the rest of the target in 2019 and 2020.
Address disadvantaged assets
In 2018, we exited two significant assets. In February, we
completed the sale of our Surfactants business, including the
Delden production site, for EUR 39m and in August we agreed to sell
the Jersey City site, previously home to the US Colourants
business, for $17m. Exiting these assets has generated cash,
simplified our supply chain, significantly reduced ongoing
maintenance capex and allowed the re-allocation of capital to
higher margin growth opportunities. In November, we closed our
organoclay site in Changxing. In 2019, we will continue to focus on
continuous improvement of our assets across sectors and
geographies.
Pursue procurement savings
Procurement optimisation continues to create shareholder value.
In 2018, we qualified new raw material sources for more than 10% of
our raw material spend and achieved more than $6m of cost savings.
Smarter procurement enabled the partial mitigation of raw material
cost inflation, particularly within the antiperspirant actives
business. Finally, we rationalised our logistics network and
re-negotiated utility suppliers. In 2019, we will be focused on
further improvement in this area.
3) Innovate for high margins and distinctiveness
Deliver new product pipeline
Our innovation pipeline contains many new projects coming to
market in 2019. In Personal Care, natural functional ingredients
are in demand, and consumers also want products that have great
application aesthetics. Our new Bentone Hydroclay(TM) product line
delivers these requirements, enabling cosmetic formulators to
create natural skin care products that also deliver novel sensory
experiences.
Greener technology, improved performance and efficiency are also
key drivers in the Coatings industry. Our Thixatrol(R) organic
thixotropes allow customers to formulate products at lower
temperatures, saving energy and increasing product throughput time.
Thixatrol(R) is comprised of a high percentage of renewable
materials and still can be used for the most demanding
applications.
With the acquisition of Mondo, the addition of Talc opens up an
exciting new pillar in our technology portfolio. Looking forward,
we will continue to leverage our core competencies to drive
innovation and identify opportunities to transfer our technologies
between industry segments.
Sustain innovation leadership
We drive innovation to meet our customers' needs and the trends
impacting our business segments, to deliver superior performance,
improved efficiency and increased sustainability. Leveraging our
core competencies in natural mineral-based technologies and polymer
architecture, we create innovative solutions aimed at transforming
the markets which we serve. To increase the speed and success of
our innovation pipeline, we work with strategic partners around the
world.
4) Create a culture of high performance
Structure
In 2018, we accelerated the shift from a regional to a global
Coatings organisation with the creation of a cross functional
leadership team and a number of personnel changes in key account
management, service delivery and within our Asian business. We are
confident that our team in Coatings now has the talent and drive to
propel the organisation forwards.
Following the acquisition of Mondo in October 2018 we
established a specific project team and the integration of Mondo
has begun at pace.
Processes
In 2018, improved demand planning, inventory management and
performance management tracking were some of the areas in which we
made progress as part of our commitment to deliver a targeted $25m
of sustainable working capital improvement.
Our digital strategy aims to make it easier for customers to do
business with Elementis. In 2018, we commenced the improvement of
our CRM systems and customer facing websites, and increased the
resources dedicated to data protection and transparency - a key
part of our commitment to customers and staff seeking assurance and
visibility.
To further improve our safety performance we rolled out Enablon,
a comprehensive safety information management system. Enablon
improves our ability to both track, trend and analyse safety data,
and implement corrective and preventative actions.
As part of our employee development offer, we continue to
utilise workday(R), our automated human resources system, to
improve our performance culture and performance management.
Looking to 2019, priorities include increased employee
engagement and the integration of Mondo.
OUTLOOK
Going forward we will focus on actions that will create
sustainable shareholder value. Maintaining our focus on safe,
reliable operations will create a strong foundation for growth. The
quality and commitment of our people is at the core of our success
and at Elementis we are fortunate to have a talented, dedicated and
improving team.
Whilst global market conditions remain challenging, particularly
in coatings, we have entered 2019 with a strong platform to deliver
long term growth and improved returns. In the year ahead we are
confident of delivering further progress and this will be
underpinned by the integration and synergies of the Talc segment,
delivery on self-help initiatives and an unrelenting focus on cash
generation and deleveraging.
Paul Waterman
CEO
5 March 2019
Business Commentaries
Revenue
Effect
of Increase/
Revenue exchange (decrease) Revenue
Impact
2017 rates of M&A** 2018 2018
$m $m $m $m $m
----------------------------------------------- ------- ---------- --------- ------------ -------
Personal Care 179.3 5.4 24.4 1.2 210.3
Coatings 372.9 7.5 (19.3) 1.1 362.2
Talc - - 21.5 - 21.5
Chromium 186.7 - - (2.4) 184.3
Energy 58.8 0.4 (0.1) (4.2) 54.9
Inter-segment (15.0) - - 4.0 (11.0)
----------------------------------------------- ------- ---------- --------- ------------ -------
Revenue from continuing operations 782.7 13.3 26.5 (0.3) 822.2
Discontinued operations - Surfactants 47.8 - (43.0) - 4.8
Inter-segment from discontinued operations (0.2) - - 0.2 -
----------------------------------------------- ------- ---------- --------- ------------ -------
Total revenue from continuing and discontinued
operations 830.3 13.3 (16.5) (0.1) 827.0
----------------------------------------------- ------- ---------- --------- ------------ -------
Adjusted operating profit
Effect
Operating of Increase/ Operating
profit exchange (decrease) profit
Impact
2017(DELTA>) rates of M&A** 2018 2018(DELTA>)
$m $m $m $m $m
---------------------------------------------- --------------- ---------- --------- ------------- ---------------
Personal Care 44.6 1.3 2.6 3.7 52.2
Coatings 54.7 1.8 (7.6) 3.6 52.5
Talc - - 3.9 - 3.9
Chromium 30.1 - - 2.9 33.0
Energy 9.7 0.1 (0.2) (2.5) 7.1
Central costs (16.4) - - 0.3 (16.1)
---------------------------------------------- --------------- ---------- --------- ------------- ---------------
Adjusted operating profit from continuing
operations 122.7 3.2 (1.3) 8.0 132.6
Discontinued operations - Surfactants 5.4 - (6.0) - (0.6)
---------------------------------------------- --------------- ---------- --------- ------------- ---------------
Total adjusted operating profit from
continuing
and discontinued operations 128.1 3.2 (7.3) 8.0 132.0
---------------------------------------------- --------------- ---------- --------- ------------- ---------------
(DELTA>) after adjusting items - see note 5.
Personal Care
In Personal Care, revenue was $210.3m compared with $179.3m last
year, a 17% increase on a reported basis. Excluding the impact of
FX and M&A (i.e. on an organic basis), revenue rose by 1%
following a weak first half performance due to distributor
de-stocking in cosmetics and volume declines in antiperspirant (AP)
actives in response to raw material related pricing actions. In the
second half of the year, cosmetics and AP actives returned to
growth, achieving 6% and 5% organic* growth respectively versus the
prior year period. Cosmetics and AP actives represent approximately
90% of Personal Care profitability.
Adjusted operating profit rose 17% to $52.2m, with adjusted
operating margins solid at 25% despite significant price inflation
for two key raw materials, aluminium and zirconium. On an organic*
basis adjusted operating profit rose by 8% driven by the delivery
of SummitReheis related cost synergies and underlying price
increases.
Coatings
In Coatings, revenue declined 3% to $362.2m primarily driven by
portfolio elimination following the Surfactants business sale and
the continued upgrading of the product portfolio, in line with the
value over volume strategy of our global Coatings transformation
programme. Excluding the impact of FX and business disposals,
Coatings revenue was flat on 2017 at $362.2m. Whilst Coatings
America performed well with organic revenue* growth of 3% due to
customer wins and positive momentum with direct customers, the rest
of the world experienced tougher trading conditions. Revenue in
Coatings Asia finished the year flat*, with a managed decline in
low value resins and lower overall activity levels, primarily in
China, offset by improved pricing and mix. Coatings EMEA finished
down 2%* as a result of a deterioration in demand, particularly in
the fourth quarter.
On an organic* basis, adjusted operating profit rose by 7% to
$52.5m, reflective of initial efficiency gains as part of the
global Coatings transformation programme. Initiatives launched in
2018 include the streamlining of the product portfolio and cost
base, implementation of more efficient routes to market and
creation of a global Coatings organisation.
Talc
Following the acquisition of Mondo on 23 October 2018, the Talc
division contributed $21.5m of revenue in approximately 2 months of
ownership. On a 12 month pro forma*** and constant currency basis,
the Talc business grew by 10% to reach $158.4m of revenue, driven
by continued momentum in the industrial talc business, serving high
value applications, and the monetisation of other minerals, namely
nickel and cobalt.
In the two months of ownership, Talc contributed $3.9m of
adjusted operating profit, at a margin of 18%. As expected at the
time of the acquisition, on a 12 month***, constancy currency
basis, adjusted operating profit rose 26% to $24.6m as a result of
top line growth, better utilisation levels and improved mix,
representing a margin of 16%.
Chromium
In Chromium, revenue was $184.3m compared to $186.7m in the
previous year, a decrease of 1%. As a result of production outages
at our Castle Hayne plant in February (extreme cold weather) and
September (Hurricane Florence) totalling five weeks, volumes fell
by 6%. Outages aside, demand levels in North America and the rest
of the world were strong and drove global industry utilisation
levels to above 90%. As a result, average selling prices increased
by 5% on 2017.
Adjusted operating profit rose 10% to $33.0m, with the impact of
production outages largely offset by insurance recovery and upside
provided by improved pricing.
Energy
In Energy, revenue declined by 7% on a constant currency basis
to $54.9m. Whilst oil prices were on average 28% above the levels
of 2017, drilling activity levels were negatively impacted by
infrastructure constraints in North America and a one time
inventory reduction as two of our key customers merged. In the
second half of 2018 activity levels modestly improved with 3%
reported revenue growth on the first half of the year.
Adjusted operating profit declined by 27% to $7.1m, and margins
fell from 17% to 13% due lower volumes and weaker product mix.
* Adjusted for FX (where constant currency reflects prior year
results translated at current year exchange rates) and the impact
of M&A.
** M&A impact includes the impact of business acquisitions
(SummitReheis in Personal Care and Mondo) and business disposals
(US Colourants business and Surfactants, Coatings and Personal Care
portfolio elimination following the Delden asset sale).
*** See pro forma information.
Finance report
Revenue
2018 2017 Change
$m $m
----------------------------------------------- ------ ------ -------
Personal Care 210.3 179.3 17%
Coatings 362.2 372.9 -3%
Talc 21.5 - n/a
Chromium 184.3 186.7 -1%
Energy 54.9 58.8 -7%
Inter-segment (11.0) (15.0) -27%
----------------------------------------------- ------ ------ -------
Revenue from continuing operations 822.2 782.7 5%
Discontinued operations - Surfactants 4.8 47.8 -90%
Inter-segment from discontinued operations - (0.2) n/a
----------------------------------------------- ------ ------ -------
Total revenue from continuing and discontinued
operations 827.0 830.3 0%
----------------------------------------------- ------ ------ -------
Operating profit
Adjusting 2018
Adjusted 2017 Adjusted
operating operating
2018 Operating profit 2017 Operating Adjusting profit
profit items (1) profit items (1)
$m $m $m $m $m $m
--------------------------------- -------------- --------- ----------- -------------- --------- -------------
Personal Care 40.4 11.8 52.2 29.2 15.4 44.6
Coatings 57.6 (5.1) 52.5 54.6 0.1 54.7
Talc (0.2) 4.1 3.9 - - -
Chromium 15.8 17.2 33.0 28.8 1.3 30.1
Energy 7.1 - 7.1 9.7 - 9.7
Central costs (35.8) 19.7 (16.1) (30.9) 14.5 (16.4)
--------------------------------- -------------- --------- ----------- -------------- --------- -------------
Operating profit from continuing
operations 84.9 47.7 132.6 91.4 31.3 122.7
Discontinued operations
- Surfactants (10.4) 9.8 (0.6) 5.8 (0.4) 5.4
--------------------------------- -------------- --------- ----------- -------------- --------- -------------
Operating profit from continuing
and discontinued operations 74.5 57.5 132.0 97.2 30.9 128.1
--------------------------------- -------------- --------- ----------- -------------- --------- -------------
Total operations (both continuing and discontinued).
(1) After adjusting items - see note 5.
Group results
In 2018 revenue from continuing operations rose 5% to $822.2m
due to an extra quarter's contribution from SummitReheis and two
months contribution from the recently acquired Talc business.
Revenue in the Personal Care segment rose 1% on an organic basis,
with growth in cosmetics and antiperspirant actives impacted by
customer destocking and raw material price inflation respectively.
Coatings revenue remained flat on an organic basis with strong
performance in the Americas offset by weaker demand in the rest of
the world. Energy faced headwinds in 2018 from infrastructure
constraints in North America with sales decreasing by 7% on a
constant currency basis to $54.9m in 2018. Sales in Chromium
decreased by 1% to $184.3m in 2018 due to weather related
production outages at our Castle Hayne plant in North Carolina. The
new Talc segment formed following the acquisition of Mondo
performed in line with expectations in the first two months of
ownership with revenue of $21.5m.
Reported Group operating profit for 2018 was $84.9m compared to
$91.4m in the previous year, a decrease of 7.0%, due to an increase
in non-recurring items. Adjusted operating profit from continuing
operations rose to $132.6m compared with $122.7m in 2017, an
increase of 8%. This was driven by growth in Personal Care and
Chromium, and a first contribution from Talc, partially offset by
declines in Coatings and Energy. Profit after tax decreased from
$117.6m in 2017 to $41.4m in 2018 mainly due to the impact in 2017
of the one off tax credit of $51.0m in relation to US tax reforms,
and increased interest expense as a result of higher borrowings in
relation to the Mondo acquisition alongside the decrease in group
operating profit.
Adjusting items
In addition to the statutory results the Group uses alternative
performance measures such as adjusted operating profit and adjusted
diluted earnings per share to provide additional useful analysis of
the performance of the business. The Board considers these non-GAAP
measures as an alternative way to measure the Group's performance
so it is comparable to the prior year. Adjusting items in 2018
resulted in a charge of $57.5m before tax, an increase of $26.6m
against last year. The key categories of adjusting items are
summarised below, for more information on adjusting items and the
Group's policy for adjusting items please see Note 5 and Note 1 to
the financial statements respectively.
Personal Central Continuing Discontinued
Care Coatings Talc Chromium Energy Costs operations operations
Credit/(charge) $m $m $m $m $m $m $m $m Total
----------------------------- -------- -------- ----- -------- ------ ------- ----------- ------------ ------
Restructuring - - - - - (0.2) (0.2) - (0.2)
Business transformation - (5.6) - - - - (5.6) - (5.6)
Environmental provisions - - - (17.0) - 0.5 (16.5) - (16.5)
Costs related to acquisition
activities (0.2) - - - - (16.3) (16.5) - (16.5)
Uplift due to fair value
of Mondo inventory - - (2.9) - - - (2.9) - (2.9)
Sale of Colourants business
and closure of Jersey
City site - 12.7 - - - - 12.7 - 12.7
Sale of Surfactants
business - - - - - (0.5) (0.5) - (0.5)
Amortisation of intangibles
arising on acquisition (11.6) (2.0) (1.2) (0.2) - - (15.0) - (15.0)
GMP pension - - - - - (3.2) (3.2) - (3.2)
Surfactants commercial
settlement - - - - - - - (9.8) (9.8)
----------------------------- -------- -------- ----- -------- ------ ------- ----------- ------------ ------
Total (11.8) 5.1 (4.1) (17.2) - (19.7) (47.7) (9.8) (57.5)
----------------------------- -------- -------- ----- -------- ------ ------- ----------- ------------ ------
Restructuring
In 2018, restructuring costs relate to the tail end of the IFRS
2 cost of buyouts associated with the CEO and CFO's appointments in
2016.
Business transformation
In 2018 a programme to transform the Coatings segment has been
implemented focusing on re-engineering our approach to markets
(direct vs distributor), our underlying asset base and our product
offerings in order to leverage our international networks and key
account management. It is anticipated this will continue through
2019 driving a step change in coatings segment performance.
Environmental provisions
The Group's environmental provision is calculated on a
discounted cash flow basis, reflecting the time period over which
spending is estimated to take place. Assessments with our external
advisers at the end of 2018 have resulted in a $16.5m provision
increase. As these costs relate to non-operational facilities the
costs associated are classed as adjusting items.
Costs related to acquisition activities
These are one-off costs predominantly associated with the
acquisition of Mondo in October 2018 including financing costs,
legal fees and retention incentives for key Mondo employees.
Uplift due to fair value of Mondo inventory
In accordance with IFRS 3, inventory held within Mondo was
revalued to fair value on acquisition, representing an uplift of
$2.9m over the book value. As all stock acquired with Mondo was
sold by the year end, the additional expense recognised in cost of
sales due to this fair value uplift has been classed as an
adjusting item.
Sale of Surfactants business
The loss on sale of the Surfactants business has been treated as
an adjusting item in 2018 and the one-off associated costs incurred
in 2017 were also classed as adjusting items.
Sale of Jersey City site
The Group completed the sale of the site of the US Colourants
business in August 2018 for consideration of $17.0m. After disposal
costs of $4.3m the profit recognised on disposal was $12.7m. The US
Colourants business was disposed of in March 2017 to Chromaflo
Technologies.
Amortisation of intangibles arising on acquisition
Amortisation of $15.0m (2017: $11.8m) represents the charge in
respect of the Group's acquired intangible assets. As in previous
years these are included in adjusting items in order to present a
more reflective view of the Group's overall performance and the key
business drivers that underpin it.
GMP Pension
On 26 October 2018, the High Court ruled on the Lloyds Bank
Guaranteed Minimum Pension inequalities case. In response to this
our actuaries have included in their calculations a past service
cost of $3.2m for the estimated costs arising from the
judgement.
Surfactants commercial settlement
These are costs incurred in settlement of a commercial dispute
relating to the Surfactants business disposed of in 2018.
Currency hedging
The Group transacts in multiple currencies including US dollars,
euros, pounds sterling and Chinese renminbi. Cash flow hedges are
used as part of a programme to manage our exposure to foreign
exchange risk particularly associated with EUR denominated sales.
In 2018, overall currency movements were such that the net impact
of these hedge transactions was a credit to operating profit of
$0.1m (2017: charge of $0.3m).
Central costs
Central costs are those costs that are not identifiable as
expenses of a particular business and comprise expenditures of the
Board of Directors and corporate head office. In 2018, central
costs of $16.1m were broadly similar to the $16.4m of central costs
for the previous year.
Other expenses
Other expenses are administration costs incurred and paid by the
Group's pension schemes, which relate primarily to former employees
of legacy businesses, and were $1.6m in 2018 compared to $1.2m in
the previous year.
Net finance costs
2018 2017
$m $m
------------------------------ ------- -------
Finance income 0.3 0.2
Finance cost of borrowings (16.8) (9.7)
------------------------------ ------- -------
(16.5) (9.5)
Net pension finance costs (0.4) (1.1)
Discount unwind on provisions (1.0) (1.1)
------------------------------ ------- -------
Net finance costs (17.9) (11.7)
------------------------------ ------- -------
Net finance costs for 2018 were $17.9m, an increase of $6.2m on
last year. The increase was primarily due to the acquisition of
Mondo completed in October 2018 which was part funded by an
increase in borrowings. Finance costs comprise interest payable on
borrowings calculated using the effective interest rate method,
facility arrangement fees and the unwinding of discounts on the
Group's environmental provisions. Pension finance costs which are a
function of discount rates under IAS 19 and the value of schemes'
deficit or surplus positions were $0.7m lower in 2018 at $0.4m as a
result of changes in the discount rate. The discount unwind on
provisions relates to the annual time value of the Group's
environmental provisions which are calculated on a discounted basis
and at $1.0m for 2018 is broadly similar to the previous year.
Taxation
Tax charge
2018 Effective 2017 Effective
rate rate
$m per cent $m per cent
---------------------- ---- -------------- ------ --------------
Reported tax charge 15.6 23.9 (34.2) (43.6)
Adjusting items 8.8 - 56.7 -
---------------------- ---- -------------- ------ --------------
After adjusting items 24.4 21.6 22.5 20.5
---------------------- ---- -------------- ------ --------------
The Group incurred a tax charge of $24.4m (2017 $22.5m) on
adjusted profit before tax excluding discontinued operations
resulting in an effective tax rate of 21.6% (2017: 20.5%). The
Group operates across several jurisdictions internationally and is
therefore subject to a variety of overseas tax rates and laws,
changes to which will affect the future tax charges of the Group.
The Group's tax rate in 2018 was impacted by the updated US s163(j)
TCJA regulations in respect of the treatment of depreciation
capitalised within inventory, resulting in a less favourable
financing position compared to prior periods. Tax on adjusting
items primarily related to the acquisition of Mondo and the
disposal of the Group's Delden operations.
Earnings per share
To better understand the underlying performance of the Group,
earnings per share reported under IFRS is adjusted for items
classified as adjusting and includes profits from both continuing
and discontinued operations.
During the year the Group undertook a rights issue as part of
the funding strategy for the Mondo acquisition. In accordance with
IAS 33 the earnings per share figures for all comparative periods
shown have been restated to reflect the effects of the rights
issue.
Adjusted diluted earnings per share was 16.9 cents for 2018
compared to 17.9 cents in the previous year, a decrease of 6% due
to higher tax and net finance costs as well as the increased
weighted average number of shares following the rights issue in
October 2018. Basic earnings per share before adjusting items was
7.9 cents compared to 23.3 cents in 2017. Adjusting items increased
basic earnings per share by 9.1 cents in 2018 (reduced by 5.2 cents
in 2017).
Note 7 provides disclosure of earnings per share calculations
both including and excluding the effects of adjusting items and the
potential dilutive effects of outstanding and exercisable
options.
Distributions to shareholders
During 2018, the Group paid a final dividend in respect of the
year ended 31 December 2017 of 6.10 cents per share (2017: 5.75
cents). An interim dividend of 2.95 cents per share (2017: 2.70
cents) was paid on 28 September 2018 and the Board is recommending
a final dividend of 5.70 cents per share which will be paid on 31
May 2019.
Total operations (both continuing and discontinued).
Rebased for the effects of the rights issue.
1 After adjusting items - see note 5.
Adjusted cash flow
The adjusted cash flow which excludes the cash effect of
adjusting items from operating cash flow is summarised below. A
reconciliation of statutory operating profit to EBITDA is shown in
note 5.
2018 2017
$m $m
--------------------------------- -------------- --------
EBITDA 162.9 156.0
Change in working capital (29.9) 0.4
Capital expenditure (50.8) (41.6)
Other (4.5) (7.7)
--------------------------------- -------------- --------
Adjusted operating cash flow 77.7 107.1
Pension deficit payments (1.2) (6.3)
Interest and tax (21.2) (17.0)
Adjusting items (21.8) (10.5)
Other (0.3) (1.4)
--------------------------------- -------------- --------
Free cash flow 33.2 71.9
Issue of shares 223.3 -
Dividends paid (41.9) (77.8)
Acquisitions and disposals (426.7) (361.8)
Currency fluctuations 5.1 (0.9)
--------------------------------- -------------- --------
Movement in net cash (207.0) (368.6)
Net (debt)/cash at start of year (291.1) 77.5
--------------------------------- -------------- --------
Net (debt) at end of year (498.1) (291.1)
--------------------------------- -------------- --------
EBITDA - earnings before interest, tax, adjusting items,
depreciation and amortisation.
Adjusted operating cash flow has decreased by $29.4m to $77.7m
for 2018 as a result of changes in working capital, predominantly a
result of inventory planning decisions in our Chromium segment and
antiperspirant actives business. Capital expenditure increased to
$50.8m compared to $41.6m in 2017. This is primarily due to the
inclusion of our new Talc segment for two months and spend on our
new production site in India which is anticipated to commence
production in 2019.
Free cash flow decreased from $71.9m to $33.2m as a result of
working capital increases, predominantly in relation to raw
material planning decisions, increased interest on borrowings used
to part fund the Mondo acquisition and the increased cash flow
impact of adjusting items. Pension payments decreased from $6.3m in
2017 to $1.2m in 2018 as a result of the cessation of pension top
up payments into the UK pension scheme. The 2018 triennial review
of the UK pension scheme concluded that no cash top up payments
will be required from Elementis until at least 2021.
Net debt to pro forma adjusted EBITDA was 2.5x*** compared to
1.9x*** in 2017, the increase is due to the acquisition of Mondo
which was part funded by increased borrowings.
*** See pro forma information below.
Balance sheet
2018 2017
$m $m
-------------------------------------------- -------- --------
Intangible fixed assets 976.6 717.2
Tangible fixed assets 478.2 219.5
Working capital 189.5 151.4
Net tax liabilities (131.6) (86.8)
Provisions & retirement benefit obligations (58.7) (43.2)
Financial liabilities (40.3) -
Net debt (498.1) (291.1)
Asset held for sale - 35.3
-------------------------------------------- -------- --------
Total Equity 915.6 702.3
-------------------------------------------- -------- --------
Group equity increased by $213.3m in 2018 (2017: increase of
$75.2m). Intangible fixed assets increased by $259.4m with
intangibles and goodwill associated with Mondo contributing $88.3m
and $200.5m respectively on acquisition. As part of the Reignite
Growth strategy a production site has been acquired in Mumbai at a
cost of $4.0m. Tangible fixed asset additions resulting from the
Mondo acquisition include mineral rights and production and
warehouse facilities in Finland and Amsterdam.
The funding put in place to complete the acquisition of Mondo
has increased net debt from $291.1m in 2017 to $498.1m in 2018. As
referenced in the Chairman's statement we see a material
deleveraging profile for the Group going forward further aided by
self help business improvement initiatives, capital expenditure
discipline and working capital improvements.
Working capital comprises inventories, trade and other
receivables, trade and other payables and derivatives. Working
capital increased by $38.0m driven primarily by underlying growth
of the business, the acquisition of Mondo and raw material planning
decisions. Inventories rose from $143.6m in 2017 to $188.7m in 2018
as a result of procurement decisions to purchase raw material
inputs for Chromium and antiperspirant actives businesses in
advance. Trade and other receivables and trade and other payables
have increased by $14.8m and $22.9m respectively primarily due to
inclusion of Mondo.
Net tax liabilities increased by $44.8m, as the tax charge on
profits for the year after adjusting items and including
discontinued operations of $24.1m and currency translation
adjustments exceeded actual cash tax paid. Movements in provisions
and retirement benefit obligations are discussed elsewhere in this
report.
ROCE has fallen from 22% in 2017 to 15% due to the increase in
capital employed (excluding goodwill) arising on the acquisition of
Mondo.
The main dollar exchange rates relevant to the Group are set out
below.
2018 2017
Year end Average Year end Average
---------------- --------- --------- --------- ---------
Pounds sterling 0.79 0.75 0.74 0.78
Euro 0.87 0.84 0.83 0.89
---------------- --------- --------- --------- ---------
Provisions
The Group records a provision in the balance sheet when it has a
present obligation as a result of past events, which is expected to
result in an outflow of economic benefits in order to settle the
obligation. The Group calculates provisions on a discounted basis.
At the end of 2018, the Group held provisions of $48.8m (2017,
excluding provisions within liabilities classified as held for
sale: $32.7m), consisting of environmental provisions of $43.3m
(2017: $27.8m), self insurance provisions of $1.5m (2017: $2.2m)
and restructuring and other provisions of $4.0m (2017: $2.7m).
Environmental provisions have increased by $18.8m in 2018, with
$16.5m taken through adjusting items and $2.3m capitalised within
fixed assets. The increase of $16.5m is due to the results of
assessments carried out during the year at our legacy sites which
indicated that remedial activities would be required over a longer
time horizon than previously forecast. The self-insurance provision
represents the Group's estimate of its liability arising from
retained liabilities under the Group's insurance programme. Within
the restructuring and other provisions categories, the $4.0m
balance includes the remaining liability under a right of first
refusal agreement and costs of adjusting head count, training,
relocation and other costs of restructuring where a need to do so
has been identified by Management.
Pensions and other post retirement benefits
2018 2017
$m $m
------------------------- ------- -------
Net (surplus)/liability:
UK (22.1) (21.9)
US 21.3 21.1
Other 10.7 11.3
------------------------- ------- -------
9.9 10.5
------------------------- ------- -------
UK plan
The largest of the Group's retirement plans is the UK defined
benefit pension scheme ('UK Scheme') which at the end of 2018 had a
surplus, under IAS 19, of $22.1m (2017: $21.9m). The UK Scheme is
relatively mature, with approximately two thirds of its gross
liabilities represented by pensions in payment, and is closed to
new members. Liability adjustments of $45.7m (2017: $(12.9)m) which
arose due to higher discount rates based on real corporate bond
yields outweighed a lower return on plan assets of $(21.8)m (2017:
$42.1m) . Company contributions of $0.5m reflect the funding
agreement reached with the UK Trustees following the 2018 triennial
valuation. Under this agreement top up contributions are no longer
required for a period of at least 3 years.
US plans
In the US, the Group reports two post retirement plans under IAS
19: a defined benefit pension plan with a deficit value at the end
of 2018 of $15.7m (2017: $14.9m), and a post retirement medical
plan with a liability of $5.6m (2017: $6.2m). The US pension plan
is smaller than the UK plan, in 2018 the overall deficit value of
this plan increased by $0.2m as the financial cost of the liability
of $4.6m (2017: $5.2m) and a negative return on plan assets of 4%
(2017: improvement of 16%) exceeded the actuarial decreases on the
liability of $8.2m (2017: increases of $5.5m) and employer
contributions of $1.2m (2017: $2.6m).
Other plans
Other liabilities at 31 December 2018 amounted to $10.7m (2017:
$11.3m) and relate to pension arrangements for a relatively small
number of employees in Germany, certain UK legacy benefits and two
pension schemes acquired as part of the SummitReheis transaction in
2017.
FINANCIAL LIABILITIES
Financial liabilities at 31 December 2018 include $21.4m of
contingent consideration in respect of Mondo ($22.3m at date of
acquisition, revalued at year end rates) and $18.9m due to the
previous owner of Mondo on resolution of an outstanding tax case in
Finland.
BREXIT
Our assessment of the impact of Brexit on our business and
customers has been monitored throughout the year and whilst the
specific details and timing of Brexit remain unclear, we have
proactively managed our supply chain in order to minimise the
impact on our customers. In addition, we continue to monitor the
impact of sterling in respect of interest rate and cost of capital
and are taking steps to ensure there is continuity in the REACH
registrations which apply to our manufactured and imported
products. The Board's assessment remains that the impact of Brexit
on the Group is expected to be of low materiality, however, we will
continue to monitor political developments and modify plans
accordingly. Further information on how we have assessed and are
mitigating the risks associated with Brexit can be found in the
principal risks section of the 2018 Annual Report.
Events after the balance sheet date
On 26th February 2019 the Group received notice of a payment due
in settlement of a commercial dispute with a customer of the
Surfactants business disposed of in 2018. The total amount payable
of $9.8m has been recognised as a liability at 31st December 2018.
This amount was not recognised in previous accounts.
There were no other significant events after the balance sheet
date.
Consolidated income statement
for the year ended 31 December 2018
2018 2017
$m $m
-------------------------------------------- ------- -------
Revenue 822.2 782.7
Cost of sales (516.6) (487.6)
-------------------------------------------- ------- -------
Gross profit 305.6 295.1
Distribution costs (111.6) (98.0)
Administrative expenses (109.0) (105.6)
Net impairment losses on financial assets (0.1) (0.1)
-------------------------------------------- ------- -------
Operating profit 84.9 91.4
-------------------------------------------- ------- -------
Other expenses(1) (1.6) (1.2)
Finance income 0.3 0.2
Finance costs (18.2) (11.9)
-------------------------------------------- ------- -------
Profit before income tax 65.4 78.5
Tax (15.6) 34.2
-------------------------------------------- ------- -------
Profit from continuing operations 49.8 112.7
-------------------------------------------- ------- -------
Profit/(loss) from discontinued operations (8.4) 4.9
-------------------------------------------- ------- -------
Profit for the year 41.4 117.6
-------------------------------------------- ------- -------
Attributable to:
Equity holders of the parent 41.4 117.6
-------------------------------------------- ------- -------
41.4 117.6
-------------------------------------------- ------- -------
Earnings per share
-------------------------------------------- ------- -------
From continuing operations
Basic (cents)(2) 9.5 22.3
Diluted (cents)(2) 9.5 22.0
-------------------------------------------- ------- -------
From continuing and discontinued operations
Basic (cents)(2) 7.9 23.3
Diluted (cents)(2) 7.9 23.0
-------------------------------------------- ------- -------
1 Other expenses comprise administration expenses for the Group's pension schemes.
2 2017 earnings per share amounts restated to reflect
adjustments associated with the rights issue (see Note 7).
Consolidated statement of comprehensive income
for the year ended 31 December 2018
2018 2017
$m $m
-------------------------------------------------------------- ------ -----
Profit for the year 41.4 117.6
-------------------------------------------------------------- ------ -----
Other comprehensive income:
Items that will not be reclassified subsequently
to profit and loss:
Remeasurements of retirement benefit obligations 5.3 18.1
Deferred tax associated with retirement benefit
obligations 0.7 (7.3)
Items that may be reclassified subsequently to profit
and loss:
Exchange differences on translation of foreign operations 0.5 (0.2)
Effective portion of change in fair value of net
investment hedge (20.5) 22.9
Recycling of deferred foreign exchange losses on
disposal 4.2 -
Effective portion of changes in fair value of cash
flow hedges 1.4 0.1
Fair value of cash flow hedges transferred to income
statement (0.1) 0.3
Exchange differences on translation of share options
reserves (0.4) 0.1
-------------------------------------------------------------- ------ -----
Other comprehensive income (8.9) 34.0
-------------------------------------------------------------- ------ -----
Total comprehensive income for the year 32.5 151.6
-------------------------------------------------------------- ------ -----
Attributable to:
Equity holders of the parent 32.5 151.6
-------------------------------------------------------------- ------ -----
Total comprehensive income for the year 32.5 151.6
-------------------------------------------------------------- ------ -----
Consolidated balance sheet
as at 31 December 2018
2018 2017
31 December 31 December
$m $m
--------------------------------------------------- -------------- --------------
Non-current assets
Goodwill and other intangible assets 976.6 717.2
Property, plant and equipment 478.2 219.5
ACT recoverable 9.8 16.2
Deferred tax assets 24.4 0.2
--------------------------------------------------- -------------- --------------
Total non-current assets 1,489.0 953.1
--------------------------------------------------- -------------- --------------
Current assets
Inventories 188.7 143.6
Trade and other receivables 139.4 124.6
Derivatives 2.0 0.9
Current tax assets 3.0 4.3
Cash and cash equivalents 96.1 55.0
--------------------------------------------------- -------------- --------------
Total current assets 429.2 328.4
--------------------------------------------------- -------------- --------------
Assets classified as held for sale - 58.2
--------------------------------------------------- -------------- --------------
Total assets 1,918.2 1,339.7
--------------------------------------------------- -------------- --------------
Current liabilities
Bank overdrafts and loans (2.8) (2.7)
Trade and other payables (140.6) (117.7)
Financial liabilities (0.1) -
Current tax liabilities (17.1) (14.1)
Provisions (7.3) (10.8)
--------------------------------------------------- -------------- --------------
Total current liabilities (167.9) (145.3)
--------------------------------------------------- -------------- --------------
Non-current liabilities
Loans and borrowings (591.4) (343.4)
Retirement benefit obligations (9.9) (10.5)
Deferred tax liabilities (151.7) (93.4)
Provisions (41.5) (21.9)
Financial liabilities (40.2) -
--------------------------------------------------- -------------- --------------
Total non-current liabilities (834.7) (469.2)
--------------------------------------------------- -------------- --------------
Liabilities classified as held for sale - (22.9)
--------------------------------------------------- -------------- --------------
Total liabilities (1,002.6) (637.4)
--------------------------------------------------- -------------- --------------
Net assets 915.6 702.3
--------------------------------------------------- -------------- --------------
Equity
Share capital 52.1 44.4
Share premium 237.6 21.9
Other reserves 85.5 99.0
Retained earnings 540.4 537.0
--------------------------------------------------- -------------- --------------
Total equity attributable to equity holders of the
parent 915.6 702.3
Total equity 915.6 702.3
--------------------------------------------------- -------------- --------------
Consolidated statement of changes in equity
for the year ended 31 December 2018
Share Share Translation Hedging Other Retained Total
capital premium reserve reserve reserves earnings equity
$m $m $m $m $m $m $m
----------------------------------- -------- -------- ----------- -------- --------- --------- -------
Balance at 1 January 2017 44.4 20.9 (79.9) (7.3) 162.4 486.6 627.1
----------------------------------- -------- -------- ----------- -------- --------- --------- -------
Comprehensive income
Profit for the year - - - - - 117.6 117.6
Other comprehensive income
Exchange differences - - 22.7 - 0.1 - 22.8
Fair value of cash flow hedges
transferred
to the income statement - - - 0.1 - - 0.1
Effective portion of changes
in fair value
of cash flow hedges - - - 0.3 - - 0.3
Remeasurements of retirement
benefit obligations - - - - - 18.1 18.1
Deferred tax adjustment on pension
scheme deficit - - - - - (7.3) (7.3)
Transfer - - - - (2.2) 2.2 -
----------------------------------- -------- -------- ----------- -------- --------- --------- -------
Total other comprehensive income - - 22.7 0.4 (2.1) 13.0 34.0
----------------------------------- -------- -------- ----------- -------- --------- --------- -------
Total comprehensive income - - 22.7 0.4 (2.1) 130.6 151.6
----------------------------------- -------- -------- ----------- -------- --------- --------- -------
Transactions with owners
Purchase of own shares - - - - - (2.4) (2.4)
Issue of shares by the Company - 1.0 - - - - 1.0
Share based payments - - - - 2.8 - 2.8
Dividends paid - - - - - (77.8) (77.8)
----------------------------------- -------- -------- ----------- -------- --------- --------- -------
Total transactions with owners - 1.0 - - 2.8 (80.2) (76.4)
----------------------------------- -------- -------- ----------- -------- --------- --------- -------
Balance at 31 December 2017 44.4 21.9 (57.2) (6.9) 163.1 537.0 702.3
----------------------------------- -------- -------- ----------- -------- --------- --------- -------
Balance at 1 January 2018 44.4 21.9 (57.2) (6.9) 163.1 537.0 702.3
------------------------------------- ---- ----- ------ ----- ----- ------ ------
Impact following adoption of
IFRS 15 - - - - - (0.9) (0.9)
------------------------------------- ---- ----- ------ ----- ----- ------ ------
Revised at 1 January 2018 44.4 21.9 (57.2) (6.9) 163.1 536.1 701.4
------------------------------------- ---- ----- ------ ----- ----- ------ ------
Comprehensive income
Profit for the year - - - - - 41.4 41.4
Other comprehensive income
Exchange differences - - (20.0) - (0.4) - (20.4)
Recycling of deferred foreign
exchange losses on disposal - - 4.2 - - - 4.2
Fair value of cash flow hedges
transferred
to the income statement - - - (0.1) - - (0.1)
Effective portion of changes
in fair value
of cash flow hedges - - - 1.4 - - 1.4
Remeasurements of retirement
benefit obligations - - - - - 5.3 5.3
Deferred tax adjustment on pension
scheme deficit - - - - - 0.7 0.7
Transfer - - - - (1.5) 1.5 -
------------------------------------- ---- ----- ------ ----- ----- ------ ------
Total other comprehensive income - - (15.8) 1.3 (1.9) 7.5 (8.9)
------------------------------------- ---- ----- ------ ----- ----- ------ ------
Total comprehensive income - - (15.8) 1.3 (1.9) 48.9 32.5
------------------------------------- ---- ----- ------ ----- ----- ------ ------
Transactions with owners:
Purchase of own shares - - - - - (0.3) (0.3)
Issue of shares by the Company(1) 7.7 215.7 - - - - 223.4
Share based payments - - - - 2.9 - 2.9
Deferred tax on share based payments
recognised within equity - - - - - (2.4) (2.4)
Dividends paid - - - - - (41.9) (41.9)
------------------------------------- ---- ----- ------ ----- ----- ------ ------
Total transactions with owners 7.7 215.7 - - 2.9 (44.6) 181.7
------------------------------------- ---- ----- ------ ----- ----- ------ ------
Balance at 31 December 2018 52.1 237.6 (73.0) (5.6) 164.1 540.4 915.6
------------------------------------- ---- ----- ------ ----- ----- ------ ------
1 The rights issue raised gross proceeds of $232.7m. The total
amount capitalised to share capital and share premium was $222.2m
($232.7m less issuance costs of $10.5m).
Consolidated cash flow statement
for the year ended 31 December 2018
2018 2017
$m $m
------------------------------------------------------- ------- -------
Operating activities:
Profit for the year 41.4 117.6
Adjustments for:
Other expenses 1.6 1.2
Finance income (0.2) (0.2)
Finance costs 18.2 11.9
Tax charge 13.6 (33.3)
Depreciation and amortisation 45.9 39.7
Decrease in provisions 9.2 (8.5)
Pension payments net of current service cost 1.9 (6.3)
Share based payments 2.8 2.8
Profit on disposal of business (12.1) -
------------------------------------------------------- ------- -------
Operating cash flow before movement in working capital 122.3 124.9
Increase in inventories (24.6) (2.2)
Increase in trade and other receivables (2.8) (2.4)
Increase in trade and other payables 10.6 11.5
------------------------------------------------------- ------- -------
Cash generated by operations 105.5 131.8
Income taxes paid (6.9) (9.1)
Interest paid (14.3) (8.0)
------------------------------------------------------- ------- -------
Net cash flow from operating activities 84.3 114.7
------------------------------------------------------- ------- -------
Investing activities:
Interest received - 0.1
Disposal of property, plant and equipment 0.6 3.3
Purchase of property, plant and equipment (50.0) (43.2)
Purchase of business net of cash acquired (484.7) (361.8)
Disposal of business 58.0 -
Acquisition of intangible assets (1.4) (1.7)
------------------------------------------------------- ------- -------
Net cash flow from investing activities (477.5) (403.3)
------------------------------------------------------- ------- -------
Financing activities:
Issue of shares by the Company and the ESOT net
of issue costs 223.3 1.0
Dividends paid (41.9) (77.8)
Purchase of shares by the ESOT (0.3) (2.4)
Proceeds on issue of debt 554.7 336.0
Repayment of debt (296.7) -
------------------------------------------------------- ------- -------
Net cash used in financing activities 439.1 256.8
------------------------------------------------------- ------- -------
Net increase in cash and cash equivalents 45.9 (31.8)
Cash and cash equivalents at 1 January 55.0 82.6
Foreign exchange on cash and cash equivalents (4.8) 4.2
------------------------------------------------------- ------- -------
Cash and cash equivalents at 31 December 96.1 55.0
------------------------------------------------------- ------- -------
No cash or cash equivalents were included in assets held for
sale as at 31 December 2017.
Notes to the financial statements
1. Preparation of the preliminary announcement
The financial information in this statement does not constitute
the Company's statutory accounts for the years ended 31 December
2018 or 2017 but is derived from those accounts. Statutory accounts
for 2017 have been delivered to the Registrar of Companies, and
those for 2018 will be delivered in due course. The auditor has
reported on those accounts; their reports were (i) unqualified,
(ii) did not include a reference to any matters to which the
auditors drew attention by way of emphasis without qualifying their
report and (iii) did not contain a statement under section 498(2)
or (3) of the Companies Act 2006.
This preliminary announcement was approved by the Board of
Directors on 5 March 2019.
2. Basis of preparation
Elementis plc (the "Company") is incorporated in the UK. The
information within this document has been prepared based on the
Company's consolidated financial statements which are prepared in
accordance with International Financial Reporting Standards as
adopted by the EU (adopted IFRS) and consistent with the accounting
policies as set out in the previous consolidated financial
statements.
The Group's financial statements have been prepared on the
historical cost basis except that derivative financial instruments
are stated at their fair value. Non-current assets held for sale
are stated at the lower of carrying amount and fair value less
costs to sell. The preparation of financial statements requires the
application of estimates and judgements that affect the reported
amounts of assets and liabilities, revenues and costs and related
disclosures at the balance sheet date.
The Group's accounting policies have been updated following the
adoption of a number of new standards and amendments to standards
that have been issued and are now effective for the Group. The most
significant of these, and their impact on the Group's accounting,
are set out below:
IFRS 9 Financial Instruments (effective from 1 January 2018)
IFRS 9 'Financial Instruments' has been implemented by the Group
from 1 January 2018. The Standard replaces the provisions of IAS 39
that relate to the recognition, classification, measurement and
de-recognition of financial instruments, impairment of financial
assets and hedge accounting. The financial impact of the new
standard on the measurement of, and provisioning for, the Group's
financial assets is immaterial at both period opening and closing
dates. The comparative financial information has not been restated,
with this change applied retrospectively from 1 January 2018. The
Group applied the IFRS 9 simplified approach to measuring expected
credit loss which uses a life time expected loss allowance for all
trade receivables. To measure the expected credit losses, trade
receivables have been grouped based on shared credit risk
characteristics and the days past due. On that basis Group
determined loss allowance for trade receivables as at 1 January
2018 will not give rise to an additional loss allowance under IFRS
9.
IFRS 15 Revenue from Contracts with Customers (effective from 1
January 2018)
The standard is based on the principle that revenue is
recognised when performance obligations within a customer contract
are fulfilled rather than when risk, reward and control passes to a
customer. There has been no material impact of the new standard to
the Group's recognition of revenue. The comparative financial
information has not been restated with this change applied
prospectively from 1 January 2018.
In addition, "Amendments to IFRS 2 Share Based Payments" was
effective from 1 January 2018. The impact on the Group from
adopting this is immaterial.
Going concern
The Group and Company financial statements have been prepared on
the going concern basis, as the directors are satisfied that the
Group and Company have adequate resources to continue to operate
for at least a period of 12 months from the date of approval of the
financial statements. An explanation of the directors' assessment
of using the going concern basis is given in the Directors' report
in the Annual Report and Accounts 2018 which will be made available
to shareholders on 22 March 2019.
Reporting currency
As a consequence of the majority of the Group's sales and
earnings originating in US dollars or US dollar linked currencies,
the Group has chosen the US dollar as its reporting currency. This
aligns the Group's external reporting with the profile of the
Group, as well as with internal management reporting.
3. Finance income
2018 2017
$m $m
-------------------------- ----- -----
Interest on bank deposits 0.3 0.2
-------------------------- ----- -----
4. Finance costs
2018 2017
$m $m
---------------------------------------------- ----- -----
Interest on bank loans 16.8 9.7
Pension and other post retirement liabilities 0.4 1.1
Unwind of discount on provisions 1.0 1.1
---------------------------------------------- ----- -----
18.2 11.9
---------------------------------------------- ----- -----
5. Adjusting items and alternative performance measures
Adjusting Adjusting
items on items on
discontinued discontinued
2018 operations 2018 2017 operations 2017
$m $m $m $m $m $m
--------------------------------- ------ ------------- ------ ------ ------------- ------
Restructuring 0.2 - 0.2 0.6 - 0.6
Business transformation 5.6 - 5.6 3.4 - 3.4
Environmental provisions
Increase in provisions
due to additional remediation
work identified 16.5 - 16.5 2.1 - 2.1
Costs related to acquisition
activities 16.5 - 16.5 9.7 - 9.7
Uplift due to fair value
of SummitReheis inventory - - - 4.0 - 4.0
Uplift due to fair value
of Mondo inventory 2.9 - 2.9 - - -
Sale of Colourants business
and closure of Jersey
City site (12.7) - (12.7) (2.5) - (2.5)
Release of legal provision - - - - (0.7) (0.7)
Sale of Surfactants business 0.5 - 0.5 - - -
Disposal costs - - - 2.2 0.3 2.5
Amortisation of intangibles
arising on acquisition 15.0 - 15.0 11.8 - 11.8
GMP Pension 3.2 - 3.2 - - -
Surfactants commercial
settlement - 9.8 9.8 - - -
--------------------------------- ------ ------------- ------ ------ ------------- ------
47.7 9.8 57.5 31.3 (0.4) 30.9
Tax credit in relation
to adjusting items (11.5) (1.7) (13.2) (5.7) - (5.7)
Tax arising on the restructuring
of German operations 2.7 - 2.7 - - -
Adjusting tax item (US
tax reform) - - - (51.0) - (51.0)
--------------------------------- ------ ------------- ------ ------ ------------- ------
38.9 8.1 47.0 (25.4) (0.4) (25.8)
--------------------------------- ------ ------------- ------ ------ ------------- ------
Cashflows relating to
adjusting items (21.8) (10.5)
--------------------------------- ------ ------------- ------ ------ ------------- ------
A number of items have been recorded under 'adjusting items' in
2018 by virtue of their size and/or one time nature in, in line
with our accounting policies, in order to provide a better
understanding of the Group's results. The net impact of these items
on the Group profit before tax for the year is a debit of $57.5m
(2017: debit of $30.9m). The items fall into a number of
categories, as summarised below:
Restructuring - in 2016 this related to the appointment of a new
CEO, CFO and costs associated with reorganising the management
structure. In subsequent years, the cost relates to the IFRS 2 cost
of buyouts associated with the new CEO and CFO.
Business transformation - the costs incurred in 2017 relate to
delivery of the global key account management, and working capital
improvement phases of the transformation commenced in 2016. In 2018
a programme to transform the Coatings segment has been implemented
focusing on re-engineering our approach to markets (direct vs
distributor), our underlying asset base and our product offerings
in order to leverage our international networks and key account
management. It is anticipated this will continue through 2019
driving a step change in the Coatings segment.
Increase in environmental provisions due to additional
remediation work identified - assessments at the end of both 2017
and 2018 have resulted in an increased provision required at a
number of our legacy sites. As these costs relate to
non-operational facilities the costs associated are classed as
adjusting items.
Acquisition costs - these are one-off costs predominantly
associated with the acquisition of Mondo in 2018 and SummitReheis
in 2017 - primarily the write off of the set-up costs of the
previous financing syndicate, now replaced by a new facility, bank
and lawyers fees and retention bonuses for key employees.
Uplift due to fair value of Mondo inventory - in accordance with
IFRS 3, inventory held within Mondo was revalued to fair value on
acquisition, representing an uplift of $2.9m over the book value.
As all Talc stock to which this uplift relates was sold by the year
end, the additional expense recognised in cost of sales due to this
fair value uplift has been classed as an adjusting item.
Uplift due to fair value of SummitReheis inventory - in
accordance with IFRS 3, inventory held within SummitReheis was
revalued to fair value on acquisition, representing an uplift of
$4m over the book value. As all stock acquired with SummitReheis
was sold by the year end, the additional expense recognised in cost
of sales due to this fair value uplift has been classed as an
adjusting item.
Sale of Colourants business and closure of Jersey City site - in
March 2017, Elementis disposed of its US Colourants business and
closed the Jersey City site. The profit on sale of the business and
costs associated with the closure of the site are classed as
adjusting item. In 2018 the site was disposed of and the profit on
disposal has been treated as an adjusting item due to its size and
one-off nature relating to the sale of land.
Release of legal provision - during 2017 the Group released
$0.7m from a provision set up in 2015 relating to a regulatory case
in Europe.
Sale of Surfactants business / Disposal costs - in 2017
Elementis incurred a number of costs associated with the sale of
the Delden facility and Surfactants business. The profit on sale of
the assets and business has been treated as an adjusting item in
2018 and the one-off associated costs were classed similarly in
2017.
Amortisation of intangibles arising on acquisition - these costs
are excluded from operating profit to provide readers of the
accounts with a better understanding of the Group's results on its
operating activities. In 2018 this item includes amortisation on
intangibles acquired as part of the Mondo transaction that
completed in October 2018.
GMP Pension - on 26 October 2018, the High Court ruled on the
Lloyds Bank Guaranteed Minimum Pension inequalities case. In
response to this our actuaries have included a past service cost of
$3.2m for the estimated costs arising from the judgment.
Surfactants commercial settlement - these are costs incurred in
settlement of a commercial dispute relating to the Surfactants
business disposed of in 2018.
Tax on adjusting items - this is the net impact of tax relating
to the adjusting items listed above.
Tax arising on the restructuring of German operations - during
the year an internal restructuring exercise was undertaken in order
to optimise the future operational efficiency of the Group. This
restructuring resulted in a one-off tax charge.
Adjusting tax item (US tax reform) - In 2017 the Group
recognised a reduction in the net deferred tax liability arising
from timing differences and US goodwill amortisation recognised in
the US for tax purposes. Given the one-off nature of the reduction
to future tax liabilities, this was recognised as an adjusting
item.
To support comparability with the financial statements as
presented in 2018, the reconciliation to the adjusted consolidated
income statement is shown below.
2018 2018 2018
Profit Profit Profit
and loss 2018 and loss and loss
2018 2018 after Profit 2018 after after
Profit Adjusting adjusting and loss Adjusting adjusting adjusting
and loss items items on on items on items on items on
on continuing on continuing continuing discontinued discontinued discontinued total
operations operations operations operations operations operations operations
$m $m $m $m $m $m $m
--------------- ------------- ------------- ------------ ------------- ------------- ------------- ------------
Revenue 822.2 - 822.2 4.8 - 4.8 827.0
Cost of sales (516.6) - (516.6) (4.3) - (4.3) (520.9)
--------------- ------------- ------------- ------------ ------------- ------------- ------------- ------------
Gross profit 305.6 - 305.6 0.5 - 0.5 306.1
Distribution
costs (111.6) - (111.6) (0.8) - (0.8) (112.4)
Administrative
expenses (109.0) 47.7 (61.3) (10.1) 9.8 (0.3) (61.6)
Net impairment
losses on
financial
assets (0.1) - (0.1) - - - (0.1)
--------------- ------------- ------------- ------------ ------------- ------------- ------------- ------------
Operating
profit 84.9 47.7 132.6 (10.4) 9.8 (0.6) 132.0
--------------- ------------- ------------- ------------ ------------- ------------- ------------- ------------
Other expenses (1.6) - (1.6) - - - (1.6)
Finance income 0.3 - 0.3 - - - 0.3
Finance costs (18.2) - (18.2) - - - (18.2)
--------------- ------------- ------------- ------------ ------------- ------------- ------------- ------------
Profit before
income
tax 65.4 47.7 113.1 (10.4) 9.8 (0.6) 112.5
Tax (15.6) (8.8) (24.4) 2.0 (1.7) 0.3 (24.1)
--------------- ------------- ------------- ------------ ------------- ------------- ------------- ------------
Profit for the
year 49.8 38.9 88.7 (8.4) 8.1 (0.3) 88.4
--------------- ------------- ------------- ------------ ------------- ------------- ------------- ------------
Attributable
to:
Equity holders
of the parent 49.8 38.9 88.7 (8.4) 8.1 (0.3) 88.4
--------------- ------------- ------------- ------------ ------------- ------------- ------------- ------------
Earnings per
share
Basic (cents) 9.5 7.5 17.0 (1.6) 1.6 - 17.0
Diluted (cents) 9.5 7.4 16.9 (1.6) 1.6 - 16.9
--------------- ------------- ------------- ------------ ------------- ------------- ------------- ------------
2017 2017 2017
Profit Profit Profit
2017 and loss 2017 and loss and
Profit 2017 after Profit 2017 after loss after
and Adjusting adjusting and Adjusting adjusting adjusting
loss on items on items on loss on items on items on items on
continuing continuing continuing discontinued discontinued discontinued total
operations operations operations operations operations operations operations
$m $m $m $m $m $m $m
---------------- ----------- ------------- ------------- ------------- ------------- ------------- ------------
Revenue 782.7 - 782.7 47.6 - 47.6 830.3
Cost of sales (487.6) - (487.6) (32.8) - (32.8) (520.4)
---------------- ----------- ------------- ------------- ------------- ------------- ------------- ------------
Gross profit 295.1 - 295.1 14.8 - 14.8 309.9
Distribution
costs (98.0) - (98.0) (6.3) - (6.3) (104.3)
Administrative
expenses (105.6) 31.3 (74.3) (2.7) (0.4) (3.1) (77.4)
Net impairment
losses on
financial
assets (0.1) - (0.1) - - - (0.1)
---------------- ----------- ------------- ------------- ------------- ------------- ------------- ------------
Operating profit 91.4 31.3 122.7 5.8 (0.4) 5.4 128.1
---------------- ----------- ------------- ------------- ------------- ------------- ------------- ------------
Other expenses (1.2) - (1.2) - - - (1.2)
Finance income 0.2 - 0.2 - - - 0.2
Finance costs (11.9) - (11.9) - - - (11.9)
---------------- ----------- ------------- ------------- ------------- ------------- ------------- ------------
Profit before
income
tax 78.5 31.3 109.8 5.8 (0.4) 5.4 115.2
Tax 34.2 (56.7) (22.5) (0.9) - (0.9) (23.4)
---------------- ----------- ------------- ------------- ------------- ------------- ------------- ------------
Profit for the
year 112.7 (25.4) 87.3 4.9 (0.4) 4.5 91.8
---------------- ----------- ------------- ------------- ------------- ------------- ------------- ------------
2017 2017 2017
Profit Profit Profit
2017 and loss 2017 and loss and
Profit 2017 after Profit 2017 after loss after
and Adjusting adjusting and Adjusting adjusting adjusting
loss on items on items on loss on items on items on items on
continuing continuing continuing discontinued discontinued discontinued total
operations operations operations operations operations operations operations
$m $m $m $m $m $m $m
---------------- ----------- ------------- ------------- ------------- ------------- ------------- ------------
Attributable to:
Equity holders
of the parent 112.7 (25.4) 87.3 4.9 (0.4) 4.5 91.8
---------------- ----------- ------------- ------------- ------------- ------------- ------------- ------------
Earnings per
share
restated
Basic (cents) 22.3 (5.1) 17.2 1.0 (0.1) 0.9 18.1
Diluted (cents) 22.0 (5.0) 17.0 1.0 (0.1) 0.9 17.9
---------------- ----------- ------------- ------------- ------------- ------------- ------------- ------------
Earnings per
share
(as reported in
2017)
Basic (cents) 24.3 (5.5) 18.8 1.1 (0.1) 1.0 19.8
Diluted (cents) 24.0 (5.4) 18.6 1.0 (0.1) 0.9 19.5
---------------- ----------- ------------- ------------- ------------- ------------- ------------- ------------
To support comparability with the financial statements as
presented in 2018, a reconciliation from reported profit/(loss)
before interest to adjusted profit before income tax by segment is
shown below for each year.
2018
Total
of
Personal Segment Central continuing Discontinued
Care Coatings Talc Chromium totals costs operations operations Total
$m $m $m $m Energy$m $m $m $m $m $m
------------------- -------- -------- ----- -------- -------- ------- ------- ---------- ------------ ------
Reported operating
profit/(loss) 40.4 57.6 (0.2) 15.8 7.1 120.7 (35.8) 84.9 (10.4) 74.5
------------------- -------- -------- ----- -------- -------- ------- ------- ---------- ------------ ------
Adjusting Items
Restructuring - - - - - - 0.2 0.2 - 0.2
Business
Transformation - 5.6 - - - 5.6 - 5.6 - 5.6
Increase in
environmental
provisions due
to
additional
remediation
work
identified - - - 17.0 - 17.0 (0.5) 16.5 - 16.5
Costs related
to
acquisition
activities 0.2 - - - - 0.2 16.3 16.5 - 16.5
Uplift due to
fair
value of Mondo
inventory - - 2.9 - - 2.9 - 2.9 - 2.9
Sale of
Colourants
business and
closure
of Jersey City
site - (12.7) - - - (12.7) - (12.7) - (12.7)
Sale of
Surfactants
business - - - - - - 0.5 0.5 - 0.5
Amortisation of
intangibles
arising
on acquisition 11.6 2.0 1.2 0.2 - 15.0 - 15.0 - 15.0
GMP Pension - - - - - - 3.2 3.2 - 3.2
Surfactants
commercial
settlement - - - - - - - - 9.8 9.8
------------------- -------- -------- ----- -------- -------- ------- ------- ---------- ------------ ------
Adjusted operating
profit /(loss) 52.2 52.5 3.9 33.0 7.1 148.7 (16.1) 132.6 (0.6) 132.0
------------------- -------- -------- ----- -------- -------- ------- ------- ---------- ------------ ------
Other expenses - - - - - - (1.6) (1.6) - (1.6)
Finance income - - - - - - 0.3 0.3 - 0.3
Finance costs - - - - - - (18.2) (18.2) - (18.2)
------------------- -------- -------- ----- -------- -------- ------- ------- ---------- ------------ ------
Adjusted profit
before income tax 52.2 52.5 3.9 33.0 7.1 148.7 (35.6) 113.1 (0.6) 112.5
------------------- -------- -------- ----- -------- -------- ------- ------- ---------- ------------ ------
Rebased for the effects of the rights issue.
2017
Total of
Personal Segment Central continuing Discontinued
Care Coatings Chromium Energy totals costs operations operations Total
$m $m $m $m $m $m $m $m $m
--------------------------- -------- -------- -------- ------ ------- ------- ----------- ------------ ------
Reported operating
profit/(loss) 29.2 54.6 28.8 9.7 122.3 (30.9) 91.4 5.8 97.2
--------------------------- -------- -------- -------- ------ ------- ------- ----------- ------------ ------
Adjusting Items
Restructuring - (0.3) - - (0.3) 0.9 0.6 - 0.6
Business Transformation - - - - - 3.4 3.4 - 3.4
Increase in
environmental
provisions due to
additional remediation
work identified - - 1.1 - 1.1 1.0 2.1 - 2.1
SummitReheis
acquisition
costs 2.6 - - - 2.6 7.1 9.7 - 9.7
Uplift due to fair
value of SummitReheis
inventory 4.0 - - - 4.0 - 4.0 - 4.0
Sale of Colourants
business and closure
of Jersey City site - (2.5) - - (2.5) - (2.5) - (2.5)
Release of legal
provision - - - - - - - (0.7) (0.7)
Disposal costs - 0.1 - - 0.1 2.1 2.2 0.3 2.5
Amortisation of
intangibles arising
on acquisition 8.8 2.8 0.2 - 11.8 - 11.8 - 11.8
--------------------------- -------- -------- -------- ------ ------- ------- ----------- ------------ ------
Adjusted operating
profit /(loss) 44.6 54.7 30.1 9.7 139.1 (16.4) 122.7 5.4 128.1
--------------------------- -------- -------- -------- ------ ------- ------- ----------- ------------ ------
Other expenses - - - - - (1.2) (1.2) - (1.2)
Finance income - - - - - 0.2 0.2 - 0.2
Finance costs - - - - - (11.9) (11.9) - (11.9)
--------------------------- -------- -------- -------- ------ ------- ------- ----------- ------------ ------
Adjusted profit
before income tax 44.6 54.7 30.1 9.7 139.1 (29.3) 109.8 5.4 115.2
--------------------------- -------- -------- -------- ------ ------- ------- ----------- ------------ ------
A reconciliation from reported profit for the year to earnings
before interest, tax, depreciation and amortisation (EBITDA) is
provided to support understanding of the summarised cash flow
included within the Finance report.
2018 2017 2017 2017
2018 2018 Profit Profit Profit Profit
Profit Profit and loss and and and
and loss and loss on loss on loss on loss on
on continuing on discontinued total continuing discontinued total
operations operations operations operations operations operations
$m $m $m $m $m $m
------------------------------ -------------- ---------------- ----------- ----------- ------------- -----------
Profit for the year 49.8 (8.4) 41.4 112.7 4.9 117.6
------------------------------ -------------- ---------------- ----------- ----------- ------------- -----------
Adjustments for
Finance income (0.3) - (0.3) (0.2) - (0.2)
Finance costs and other
expenses after adjusting
items 19.8 - 19.8 13.1 - 13.1
Tax charge 15.6 (2.0) 13.6 (34.2) 0.9 (33.3)
Depreciation and
amortisation 45.6 0.3 45.9 38.0 1.7 39.7
Excluding intangibles
arising on acquisition (15.0) - (15.0) (11.8) - (11.8)
Adjusting items impacting
profit
before tax 47.7 9.8 57.5 31.3 (0.4) 30.9
------------------------------ -------------- ---------------- ----------- ----------- ------------- -----------
EBITDA 163.2 (0.3) 162.9 148.9 7.1 156.0
------------------------------ -------------- ---------------- ----------- ----------- ------------- -----------
There are also a number of key performance indicators (KPIs)
used in this report. The reconciliations to these are given
below.
Operating cash flow
Operating cash flow is defined as the net cash flow from
operating activities less net capital expenditure but excluding
income taxes paid or received, interest paid or received, pension
contributions net of current service cost and adjusting items.
Contribution margin
The Group's contribution margin, which is defined as sales less
all variable costs, divided by sales and expressed as a
percentage.
2018 2017
$m $m
--------------------- ------- -------
Revenue 827.0 830.3
--------------------- ------- -------
Variable costs (444.2) (437.4)
--------------------- ------- -------
Non variable costs (76.7) (50.2)
--------------------- ------- -------
Cost of sales (520.9) (487.6)
--------------------- ------- -------
Adjusted Group profit before tax
Adjusted Group profit before tax is defined as the Group profit
before tax on total operations (both continuing and discontinued)
after adjusting items, excluding adjusting items relating to
tax.
Return on operating capital employed
The return on operating capital employed ('ROCE') is defined as
operating profit after adjusting items divided by operating capital
employed, expressed as a percentage. Operating capital employed
comprises fixed assets (excluding goodwill), working capital and
operating provisions. Operating provisions include self insurance
and environmental provisions but exclude retirement benefit
obligations.
Average trade working capital to sales ratio
The trade working capital to sales ratio is defined as the 12
month average trade working capital divided by sales, expressed as
a percentage. Trade working capital comprises inventories, trade
receivables (net of provisions) and trade payables. It specifically
excludes repayments, capital or interest related receivables or
payables, changes due to currency movements and items classified as
other receivables and other payables.
Adjusted operating profit/operating margin
Adjusted operating profit is the profit derived from the normal
operations of the business. Adjusted operating margin is the ratio
of operating profit, after adjusting items, to sales.
6. Income tax expense
2018 2017
$m $m
------------------------------------------------------ ----- ------
Current tax on continuing operations:
------------------------------------------------------ ----- ------
Recognition of UK Advance Corporation Tax credits - -
UK Corporation tax 8.1 6.9
Overseas corporation tax on continuing operations 11.7 16.0
Adjustments in respect of prior years:
United Kingdom (0.9) -
Overseas (0.2) -
------------------------------------------------------ ----- ------
Total current tax 18.7 22.9
------------------------------------------------------ ----- ------
Deferred tax:
United Kingdom (1.4) 1.0
Overseas 3.8 (59.3)
Adjustment in respect of prior years:
United Kingdom (0.4) 0.3
Overseas (5.1) 0.9
------------------------------------------------------ ----- ------
Total deferred tax (3.1) (57.1)
------------------------------------------------------ ----- ------
Income tax (credit)/expense for the year 15.6 (34.2)
------------------------------------------------------ ----- ------
Comprising:
------------------------------------------------------ ----- ------
Income tax expense for the year 15.6 (34.2)
------------------------------------------------------ ----- ------
Adjusting items (1)
Overseas taxation on adjusting items 6.6 5.7
UK taxation on adjusting items 2.2 -
Recognition of change in rate of tax (US) - 51.0
------------------------------------------------------ ----- ------
Taxation on adjusting items 8.8 56.7
------------------------------------------------------ ----- ------
Income tax expense for the year after adjusting items 24.4 22.5
------------------------------------------------------ ----- ------
(1) see Note 5 for details of adjusting items.
The tax charge on profits represents an effective rate after
adjusting items for the year ended 31 December 2018 of 21.6% (2017:
20.5%). The Group is international. It has operations in several
jurisdictions and benefits from cross border financing
arrangements. Accordingly, tax charges of the Group in future
periods will be affected by the profitability of operations in
different jurisdictions, changes to tax rates and regulations in
the jurisdictions within which the Group has operations, as well as
the ongoing impact of the Group's funding arrangements. The medium
term expectation for the Group's effective tax rate is around
22.0%.
The total charge for the year can be reconciled to the
accounting profit as follows:
2018 2018 2017 2017
$m per cent $m per cent
------------------------------------------- ------ ----------- ------- -----------
Profit before tax on continuing operations 65.4 78.5
------------------------------------------- ------ ----------- ------- -----------
Tax on ordinary activities at 19.00
per cent (2017: 19.25 per cent)(1) 12.4 19.0 15.1 19.2
Difference in overseas effective tax
rates 1.5 2.3 (1.2) (1.5)
Income not taxable and impact of tax
efficient financing (6.8) (10.5) (4.3) (5.5)
Expenses not deductible for tax purposes 16.6 25.4 6.0 7.6
Adjustments in respect of prior years (6.6) (10.2) 1.2 1.5
Tax rate changes (1.3) (2.0) - -
Movement in unrecognised deferred tax (0.2) (0.3) - -
Recognition of adjusting tax items - - (51.0) (64.9)
------------------------------------------- ------ ----------- ------- -----------
Tax charge and effective tax rate for
the year 15.6 23.9 (34.2) (43.6)
------------------------------------------- ------ ----------- ------- -----------
(1) The UK corporation tax rate will reduce to 17 percent from 1 April 2020; this reduction was substantively enacted on 26 October 2015.
The tax charge related to discontinued operations is $2.0m
(2017: $0.9m).
7. Earnings per share
The calculation of the basic and diluted earnings per share
attributable to the ordinary equity holders of the parent is based
on the following:
Discontinued
Continuing Total of Continuing Discontinued Total of
operations Operations all operations operations operations all operations
2018 2018 2018 2017 2017 2017
$m $m $m $m $m $m
------------------------- ----------- ------------ --------------- ----------- ------------ ---------------
Earnings:
Earnings for the purpose
of basic earnings per
share 49.8 (8.4) 41.4 112.7 4.9 117.6
Adjusting items net of
tax 38.9 8.1 47.0 (25.4) (0.4) (25.8)
------------------------- ----------- ------------ --------------- ----------- ------------ ---------------
Adjusted earnings 88.7 (0.3) 88.4 87.3 4.5 91.8
------------------------- ----------- ------------ --------------- ----------- ------------ ---------------
Rebased Reported
--------------------------------------------------- ----- ------- --------
2018 2017 2017
m m m
--------------------------------------------------- ----- ------- --------
Number of shares:
Weighted average number of shares for the purposes
of basic earnings per share 520.9 506.1 463.2
Effect of dilutive share options 5.4 6.9 6.3
--------------------------------------------------- ----- ------- --------
Weighted average number of shares for the purposes
of diluted earnings per share 526.3 513.0 469.5
--------------------------------------------------- ----- ------- --------
Rebased Reported
---------- ------------------------------------ ------------------------------------ ------------------------------------
Total Total Total
Continuing Discontinued of all Continuing Discontinued of all Continuing Discontinued of all
operations operations operations operations operations operations operations operations operations
2018 2018 2018 2017 2017 2017 2017 2017 2017
cents cents cents cents cents cents cents cents cents
---------- ---------- ------------ ---------- ---------- ------------ ---------- ---------- ------------ ----------
Earnings
per
share:
Basic 9.5 (1.6) 7.9 22.3 1.0 23.3 24.3 1.1 25.4
Diluted 9.5 (1.6) 7.9 22.0 1.0 23.0 24.0 1.0 25.0
Basic
after
adjusting
items 17.0 - 17.0 17.2 0.9 18.1 18.8 1.0 19.8
Diluted
after
adjusting
items 16.9 - 16.9 17.0 0.9 17.9 18.6 0.9 19.5
---------- ---------- ------------ ---------- ---------- ------------ ---------- ---------- ------------ ----------
8. Contingent liabilities
As is the case with other chemical companies, the Group
occasionally receives notices of litigation relating to regulatory
and legal matters. A provision is recognised when the Group
believes it has a present legal or constructive obligation as a
result of a past event, and it is probable that an outflow of
economic benefits will be required to settle the obligation. Where
it is deemed that an obligation is merely possible and that the
probability of a material outflow is not remote, the Group would
disclose a contingent liability.
In 2013 the British Government (through HMRC) introduced a UK
tax incentive for certain group financing arrangements. In October
2017, the European Commission opened a State aid investigation into
the rules relating to this incentive under the UK controlled
foreign company regime. HMRC has provided certain information and
maintains that the exemption and the way it is applied does not
represent unfair State aid. Elementis could be impacted by the
outcome of this investigation as it has, along with many other UK
based multinationals, benefited from the arrangements. No provision
for this potential liability has been provided in these financial
statements as the final outcome remains uncertain.
Unaudited pro forma information
To better understand the full year performance of the business
segments operated by the Group as at 31 December 2018 the
information below includes the results for the Talc segment for the
10 months prior to acquisition.
Group Performance Continuing
operations Talc
Pro forma
1 Jan to continuing
2018 22 Oct operations
$m (1) $m (2) $m
-------------------------- ----------- --------- -----------
Revenue 822.2 136.9 959.1
-------------------------- ----------- --------- -----------
Adjusted operating profit 132.6 20.7 153.3
Adjusted operating margin 16.1% 15.1% 16.0%
-------------------------- ----------- --------- -----------
Adjusted EBITDA 163.2 36.6 199.8
-------------------------- ----------- --------- -----------
Net Debt 498.1 498.1
-------------------------- ----------- --------- -----------
Net Debt / EBITDA * 2.49
-------------------------- ----------- --------- -----------
External revenue by business Continuing
segment operations Talc
Pro forma
1 Jan to continuing
2018 22 Oct operations
$m (1) $m (2) $m %
----------------------------- ----------- --------- ----------- ------
Personal Care 210.3 136.9 210.3 21.9%
Coatings 362.2 - 362.2 37.8%
Talc 21.5 136.9 158.4 16.5%
Chromium 173.3 - 173.3 18.1%
Energy 54.9 - 54.9 5.7%
----------------------------- ----------- --------- ----------- ------
822.2 136.9 959.1 100.0%
----------------------------- ----------- --------- ----------- ------
External revenue by geography Continuing
operations Talc
Pro forma
1 Jan to continuing
2018 22 Oct operations
$m (1) $m (2) $m %
------------------------------ ----------- --------- ----------- ------
North America 290.3 6.0 296.3 30.9%
Europe 233.2 116.1 349.3 36.4%
Rest of World 298.7 14.8 313.5 32.7%
------------------------------ ----------- --------- ----------- ------
822.2 136.9 959.1 100.0%
------------------------------ ----------- --------- ----------- ------
Mondo performance 12 months 12 months
to 31 Dec to 31 Dec
2018 2017
EURm (2) EURm (2)
-------------------------- ---------- ----------
Revenue 134.3 122.2
-------------------------- ---------- ----------
Adjusted operating profit 20.8 16.5
* Net Debt/ EBITDA where EBITDA is the Adjusted EBITDA on
continuing operations of the Group and including full prior months
of Mondo is the definition of Net Debt / EBITDA for Elementis' core
banking covenants.
(1) Source - Elementis annual accounts.
(2) Source - Mondo management accounts for the relevant
period.
*****************************************************
Annual Financial Report
In accordance with Disclosure and Transparency Rule 6.3.5, the
following additional information is required to be made through a
Regulatory Information Service ("RIS"): Principal risks and
uncertainties; and Directors' responsibility statement. The
information below, which is summarised and extracted from the 2018
Annual report and accounts that is to be published on 22 March
2019, is included solely for the purpose of complying with DTR
6.3.5(2) and the requirements it imposes on issuers on what
material is to be communicated to the media in unedited full text
through a RIS. A fuller description is set out in the 2018 Annual
report and accounts.
Risk management
Elementis faces a number of risks and uncertainties in the
course of its operations, the effective management of those risks
supports the successful delivery of our strategic objectives. A
risk management framework is in place to identify, assess, mitigate
and monitor the risks we face as a business.
The Board has overall responsibility for risk management in the
Company and sets the Group's policies, culture and tone on risk, as
well as providing support and oversight to management. The Audit
Committee plays an important role in supporting the work of the
Board and has specific responsibility for monitoring financial
reporting, as well as the internal and external audit programmes,
one of the primary purposes of which is to provide assurance on
financial, operational and compliance controls.
The CEO, supported by the Executive Leadership Team (ELT), is
responsible for implementing Group policies, risk management
performance, identifying principal risks and ensuring resources are
allocated for effective risk management and mitigation. Each ELT
member is responsible for identifying, assessing and monitoring
their respective business and functional risks as well as measuring
the impact and likelihood of the risk to the business. On an annual
basis, the ELT reviews operational risks and the Board carries out
a review of the principal risks and uncertainties.
Principal risks and uncertainties
The following is a summary of the principal risks agreed by the
Board: uncertain global economic conditions and competitive
pressure in the marketplace (including from currency movement);
business interruption as a result of a major event (e.g.
operations/ HSE, IT, transport or workplace incident caused by
process/ system failure and/or human error, or by fire, storm
and/or flood), or a natural catastrophe); business interruption as
a result of supply chain failure of key raw materials and/or third
party service provision); increasing regulatory and product
stewardship challenges; major regulatory enforcement action,
litigation and/or other claims arising from products and/or
historical and ongoing operations; intellectual property and
know-how; portfolio innovation and technology; talent management
and succession planning; IT, cyber and GDPR. A full description of
these risks and the mitigating actions taken by the Company will
appear in the 2018 Annual report and accounts.
Emerging risks
Brexit risks
The impact of Brexit has been kept under review by the Board
since 2016. In 2018 in response to the growing political
uncertainty, a cross-functional working group was established to
focus on a 'no deal' outcome. Analysis included; supply chain
footprint, regulatory & export controls, VAT, international
trade compliance and customs, financial and people/communications.
Our UK manufacturing site, Livingston receives raw materials and
manufactures goods for onward transport to EU customers. In the
short to medium term and in the event of a 'no deal' Brexit, our
supply chain is well positioned to mitigate the potential impact to
customers. This includes ensuring sufficient raw materials are held
at Livingston as well as having adequate finished goods throughout
our global distribution network. Steps are being taken to ensure
continuity in the REACH registrations which apply to our
manufactured and imported products. Management remain of the view
that the impact of Brexit on the Group is expected to be of low
materiality, however, we will continue to monitor political
developments and modify plans.
Climate change
There is a growing trend around climate related risk relating to
supply chain disruption, policy, regulatory developments and
sustainable solutions for our customers. During 2018, our Chromium
operations suffered from two distinct climate related weather
events; sustained freezing and winter conditions and Hurricane
Florence which resulted in property damage and business
interruption. In 2019, we will conduct a specific climate change
risk assessment and develop mitigation plans and internal controls.
In addition, we will continue to ensure our operations are
protected and have sufficient business interruption plans in place
to deal with these types of events as and when they occur. We
recognise that our customers continue to look for sustainable
product solutions which reduce their carbon footprint, our R&D
and Product Stewardship teams work closely with customers to
achieve this.
Related party transactions
The Company is a guarantor to the UK pension scheme under which
it guarantees all current and future obligations of UK subsidiaries
currently participating in the pension scheme to make payments to
the scheme, up to a specified maximum amount. The maximum amount of
the guarantee is that which is needed (at the time the guarantee is
called on) to bring the scheme's funding level up to 105 per cent
of its liabilities, calculated in accordance with section 179 of
the Pensions Act 2004. This is also sometimes known as a Pension
Protection Fund ("PPF") guarantee, as having such a guarantee in
place reduces the annual PPF levy on the scheme.
Directors' responsibility statement
The following is an extract of the full statement prepared in
connection with the Company's Annual Report and Accounts
(comprising both consolidated and parent company financial
statements) for the year ended 31 December 2018. The full text of
the Directors' responsibility statement will appear in the 2018
Annual report and accounts.
The Directors of the Company confirm that to the best of their
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.
-- The management report includes a fair review of the
development and performance of the business and the position of the
issuer and the undertakings included in the consolidation taken as
a whole, together with a description of the principal risks and
uncertainties that they face.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR JIMJTMBMMTLL
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