TIDMSYNT
RNS Number : 3128G
Synthomer PLC
01 March 2018
Thursday 1 March 2018
Synthomer plc
Preliminary Results for the year ended 31 December 2017
Solid and sustainable profits growth
FULL YEAR HIGHLIGHTS 2017 2016 Increase / (decrease)
Underlying performance Reported Constant
(1) Currency(2)
-------- -------- --------- -------------
GBPm GBPm % %
Revenue 1,480.2 1,045.7 41.6 38.2
-------- -------- ---------
Volumes (ktes) 1,443.8 1,324.9 9.0
-------- -------- ---------
Europe and North 117.1 93.3 25.5 21.1
America (ENA)
Asia and ROW (ARW) 35.1 48.7 (27.9) (28.1)
Unallocated (13.2) (11.8) 11.9 11.9
-------- -------- ---------
Operating Profit 139.0 130.2 6.8 3.5
-------- -------- ---------
Profit before Tax 130.0 122.2 6.4 3.0
-------- -------- ---------
EPS (p) 30.7 28.3 8.5
DPS (p) - ordinary 12.2 11.3 8.0
IFRS performance
Profit before Tax 86.4 136.7 (36.8)
EPS (p) 21.8 32.5 (32.9)
1 - Underlying performance excludes Special Items. Comments on
Underlying performance and a detailed analysis of the Special Items
are set out in note 1.
2 - Constant currency sales and profit: these reflect current
year results translated at the prior year's average exchange rates,
and include the impact of acquisitions.
Full year highlights:
-- Solid Underlying profit growth with Underlying profit before
tax up 6.4% to GBP130.0m (constant currency up 3.0%)
- Further organic progress in Europe & North America with
increased volumes and margins; growth in line with GDP
- Asia & Rest of World Nitrile latex margins robust and
broadly in line with Q4 2016
- Oxo Belgium contributed GBP3.7m which combined with prior year
acquisitions helped underpin the rise in profits
-- IFRS profit before tax GBP86.4m
-- PAC synergies on track to deliver $12m run rate savings by 2018, and incremental $2m in 2019
-- Continued focus on organic growth with products launched in
the last five years representing 20% of total sales (2016: 20%) and
a record capital investment of GBP60.3m.
-- Underlying earnings per share up 8.5% at 30.7p per share
-- Final dividend of 8.5p (2016: 7.8p) resulting in a total
dividend for the year of 12.2p (2016: 11.3p), in line with dividend
policy
-- Balance sheet remains strong and flexible to deliver our
growth strategy - leverage 1.0x EBITDA
Commenting on the results, Neil Johnson, Chairman, said:
"The Group's solid performance in 2017 reflects both the
benefits of recent bolt-on acquisitions made in 2016 and 2017 and
continued organic growth in our Europe and North America segment.
This progress has more than offset the expected impact of lower
Nitrile latex margins in our Asia and Rest of World segment.
Looking forward, whilst acknowledging the ongoing challenges in
our Nitrile latex and constructions and coatings Dispersions
markets, we are confident of making further solid progress in 2018,
underpinned by underlying growth in both segments, and from
integrating our recent acquisitions.
With our significant organic investment in new capacity being
commissioned in late 2018, we remain confident in continuing to
deliver growth in profitability and driving further value for
shareholders in future years."
IFRS Information 2017 2016
--------------------------------- ---------------------------------
Underlying Special IFRS Underlying Special IFRS
performance Items performance Items
GBPm GBPm GBPm GBPm GBPm GBPm
Revenue 1,480.2 - 1,480.2 1,045.7 - 1,045.7
------------- -------- -------- ------------- -------- --------
Europe and North
America (ENA) 117.1 (39.6) 77.5 93.3 (17.9) 75.4
Asia and ROW (ARW) 35.1 (3.9) 31.2 48.7 32.6 81.3
Unallocated (13.2) (0.1) (13.3) (11.8) (0.2) (12.0)
------------- -------- -------- ------------- -------- --------
Operating profit
(including share
of JV's) 139.0 (43.6) 95.4 130.2 14.5 144.7
Finance costs (9.0) - (9.0) (8.0) - (8.0)
------------- -------- -------- ------------- -------- --------
Profit/loss before
taxation 130.0 (43.6) 86.4 122.2 14.5 136.7
------------- -------- -------- ------------- -------- --------
EPS (p) 30.7 (8.9) 21.8 28.3 4.2 32.5
DPS (p) 12.2 11.3
Underlying performance
As more fully described in note 1, the Group's management uses
Underlying performance to plan for, control and assess the
performance of the Group. Underlying performance differs from the
statutory IFRS performance as it excludes the effect of Special
Items, which are detailed in note 1. The Board's view is that
Underlying performance provides additional clarity for the Group's
investors and so it is the primary focus of the Group's narrative
reporting. Where appropriate, IFRS performance inclusive of Special
Items is also described. References to 'unit margin' and 'margin'
are used in the commentary on Underlying performance. Unit margin
(or margin) is calculated on selling price less variable raw
material and logistics costs.
Cautionary statement
The purpose of this report is to provide information to the
members of the Company. It contains certain forward-looking
statements with respect to the operations, performance and
financial condition of the Group. By their nature, these statements
involve uncertainty since future events and circumstances can cause
results and developments to differ materially from those
anticipated. The forward-looking statements reflect knowledge and
information available at the date of preparation of this report and
the Company undertakes no obligation to update these
forward-looking statements. Nothing in this report should be
construed as a profit forecast.
ENQUIRIES:
Calum MacLean, Chief Executive Officer Tel: 01279 436211
Stephen Bennett, Chief Financial Officer Tel: 01279 436211
Charles Armitstead, Teneo Blue Rubicon Tel: 020 3603 5220
The Company will host a meeting for analysts and investors at
09.00 today at Canaccord Genuity (88 Wood Street, London EC2V 7QR).
The presentation will be webcast on the Company's website
www.synthomer.com.
Chairman's statement
results
Following consecutive years of strong profits growth in 2015 and
2016, I am pleased to report that Synthomer has made further
progress in 2017. Consistent with our expectations, the improved
Underlying profitability of the Group has been delivered, with
incremental profits from our focused M&A activity in 2016 and
2017 and continued organic growth from our investment in our Europe
and North America (ENA) segment more than compensating for the
reduced, but stable, Nitrile latex margins in our Asia and Rest of
the World (ROW) segment. Volumes were higher by 9% to 1,443.8ktes
(2016: 1,324.9ktes) with the increase reflecting a combination of
underlying growth and additional volumes from Oxo Belgium
(Speciality Additives), which was fully integrated during 2017.
Acquisitions helped Group revenue to increase by 42% to a record
GBP1,480.2m (2016: GBP1,045.7m), further supported by higher
average raw material prices and favourable currency
translation.
Underlying profit before tax increased from GBP122.2m to
GBP130.0m, an increase of 6.4% and 3.0% on a constant currency
basis. The rise in Underlying profit before tax reflects underlying
volume and margin growth, the contribution made by Speciality
Additives and the depreciation in Sterling. IFRS profit before tax
decreased from GBP136.7m to GBP86.4m mainly as a result of one-off
items of income in 2016 including the profits on the Malaysian land
sales (GBP33.2m).
Our balance sheet is strong with net debt at 1.0 times EBITDA
which allows us significant flexibility to pursue our growth
strategy through capital investment and strategic acquisitions.
ongoing capital investment programme
We continue to focus on organic growth and see significant
opportunities to drive growth from our existing businesses. To
strengthen our platform for future growth, we initiated a step
change in our capital investment programme in 2016 with significant
plant expansions at our ENA Worms (Germany) Dispersions plant, and
our ARW Pasir Gudang (Malaysia) Nitrile latex plant. The Board is
pleased to see that these investment programmes are progressing
safely, in line with plans, and will be commissioned and brought up
to normal operating levels later in 2018 and early 2019
respectively. We have made further capital commitments to expand
our capabilities in Sant Albano (Italy), Marl (Germany) and Oulu
(Finland) and these investments will also come online in late 2018
and early 2019. As well as growth capital investment, the Group has
invested in sustenance and SHE related capital expenditure to
ensure we are both operating our plants safely and in accordance
with evolving legislation.
M&A and integration activity
Acquisitions also remain a key component of our growth strategy.
During the year, we announced two further bolt-ons: Speciality
Additives, which became part of the Group in March 2017, and BASF
Pischelsdorf which was agreed in September 2017 and completed in
January 2018. These bolt-on acquisitions significantly complement
our existing business. Speciality Additives has strong market
positions which we will leverage into our existing coatings
customer base. The Pischelsdorf site expands our SBR asset and
customer base, and will provide further options for our network
optimisation in an SBR market characterised by over-capacity.
Speciality Additives was successfully integrated into the Group
during the year and we are executing the well planned integration
of BASF Pischelsdorf. Following the acquisition of the Pischelsdorf
site, Synthomer has secured its position as market leader in
European aqueous polymers, another milestone for our business.
Our active search continues for a transformational speciality
chemical company acquisition and we considered a number of options
in 2017. However, we have stringent criteria and we will continue
to be disciplined in our approach in terms of quality, strategic
fit, opportunity and price.
Following our acquisition of the PAC (Dispersions) business in
2016, integration is substantially complete. The actions that we
have taken during 2017 mean that we will not only deliver the $12m
run rate of synergies at the end of 2018 but are looking to deliver
a further $2m in 2019. As part of this integration, we disposed of
one plant in Leuna (Germany) and are engaged in restructuring our
Ribecourt site (France).
Governance and board
We were once again in full compliance with the UK Corporate
Governance Code throughout 2017. Our 2017 AGM resolutions received
overwhelming support and we were particularly pleased to achieve
greater than 99% of votes in favour of our new remuneration
policy.
The Board composition remained unchanged until the end of the
year when Jinya Chen retired after five years' service. I would
like to thank Jinya for his commitment and contribution over that
period. The Nomination Committee has initiated a search for a
replacement independent non-executive director in order to bring
the Board composition back into balance.
An externally facilitated evaluation of the Board and its
Committees was carried out in 2017 with the feedback recognising
good progress in the ongoing programme to improve Board
effectiveness. As we enter 2018, I believe the Board is well
positioned to adapt to the changes in the corporate governance
landscape envisaged by the new Code proposals currently under
consultation and likely to be effective in 2019.
Our people
We now have approximately 2,900 employees in the Group, spread
across 29 manufacturing sites and offices, with 40 joining as part
of the Speciality Additives acquisition. As a Board, we have
visited recently acquired sites over the last year and are
delighted to see how our new colleagues have adapted to our values
and culture, as well as bringing new skills into the Group.
The Group has reported record Underlying profitability in a
challenging and demanding market place and the Board and Executive
team recognise the contribution made by all employees. Our drive
for growth remains unchanged and on behalf of the Board, I would
like to thank each and every employee for their commitment this
year.
safety, health and environment (she)
The nature of our industry involves significant hazards and as
such our high safety, health and environmental standards are
fundamental to what we do across the business. We are pleased to
report that we have recorded our lowest ever level of recordable
injuries (lower than 2016 by 56%).
We are committed to reducing our recordable injuries to zero and
as part of our continuous improvement drive to achieve this we made
the embedding of the SHE Principles and 10 Golden Rules, launched
in 2016, a priority for 2017. There was a focus on systems linked
to permit to work and management of change with the aim of
eliminating work being carried out in a way or in an environment
which could result in a safety incident. New indicators were
developed to track and analyse progress, with specific focus on
live monitoring of permit controlled work and control of high
hazard activities.
Notwithstanding the considerable improvement delivered in 2017,
we are not complacent, and remain absolutely resolute in our
campaign for continuous and sustainable improvement.
Dividend
The Board has proposed an increase to the final ordinary
dividend per share to 8.5p (2016: 7.8p), resulting in a total
dividend per share for the year of 12.2p (2016: 11.3p). This is in
line with the Group's dividend policy of a dividend covered 2.5
times by Underlying earnings per share. The final dividend per
share is subject to shareholder approval at the Annual General
Meeting on 26 April 2018 and will be payable on 6 July 2018 to
those shareholders registered at the close of business on 8 June
2018.
The Board is committed to generating attractive growth for
shareholders through investing in the Group's significant organic
and inorganic growth plans to secure its future progress and the
Capital Management Policy of the Group remains unchanged. The Board
periodically assesses the balance sheet strength in light of these
growth plans, and will consider returning excess capital to
shareholders, if appropriate.
Outlook
Looking forward, whilst acknowledging the ongoing challenges in
our Nitrile latex and constructions and coatings Dispersions
markets, we are confident of making further solid progress in 2018,
underpinned by underlying growth in both segments, and from
integrating our recent acquisitions.
With our significant organic investment in new capacity being
commissioned in late 2018, we remain confident in continuing to
deliver growth in profitability and driving further value for
shareholders in future years.
Neil Johnson
Chairman
1 March 2018
Chief Executive Officer's Review
I am pleased to report that we have delivered solid growth in
Underlying profitability in 2017, with the strong growth in ENA
profits more than offsetting the softer but stable ARW profits.
The strong growth in ENA Underlying profitability was
underpinned by further organic growth, particularly in our SBR
business, the benefits of our focused M&A activity and the
associated synergies in 2016 and 2017, and the depreciation in
Sterling which favourably impacted our first half results. ARW
Underlying profitability has been resilient, and performed in line
with expectations, with Nitrile latex margins broadly stable
throughout 2017 at similar levels to the last quarter of 2016.
Positively, and as guided at the start of 2017, the overall
Underlying profitability of the Group has moved forward in 2017
with the combination of underlying organic growth, M&A activity
and favourable currency impact more than compensating for the
expected softer Nitrile latex margins.
Underlying profit before tax increased by 6.4% from GBP122.2m to
GBP130.0m. This reflected a 25.5% increase in ENA Underlying
operating profits, up from GBP93.3m to GBP117.1m and a decrease in
ARW Underlying operating profits, lower at GBP35.1m from GBP48.7m.
The rise in ENA Underlying profits reflected strong organic growth
(GBP16.0m), including a first full year contribution from PAC
(Dispersions), the 2017 acquisition of Speciality Additives
(GBP3.7m) and favourable foreign currency translation impact
(GBP4.1m). The reduction in ARW Underlying profits principally
related to the expected softening in Nitrile latex margins seen in
the last quarter of 2016, albeit reassuringly the margins broadly
held firm at this level throughout 2017.
IFRS profit before tax decreased by 36.8% from GBP136.7m in 2016
to GBP86.4m in 2017, reflecting the inclusion in 2016 of large
gains on Malaysian land sales (GBP33.2m) and disposal of our South
African business (GBP4.7m), and the foreign currency hedge gain
associated with the PAC (Dispersions) acquisition purchase price
(GBP13.1m).
Cash generated from operations increased to GBP162.6m (2016:
GBP157.0m) and the cash flows were again strong with good
conversion of EBITDA to cash. The cash performance of the business
over the year meant that the Group's leverage at the year end was 1
times net debt:EBITDA. Capital spend increased to a record GBP60.3m
in line with guidance and our stated strategy to invest in our
principal sites. We also invested in our inorganic growth strategy
with the acquisition of Speciality Additives, our second bolt-on
acquisition, for GBP66.1m, and completion of our third bolt-on
acquisition which took place after the year end on 31 January 2018
for a further GBP25.7m. Our strong balance sheet continues to give
us options for both organic and inorganic investment opportunities
to support future growth.
Safety, health and environment
In 2017 we had the best ever recordable injury rate, which was
reduced by 56% relative to 2016, and we are reassured to see
positive movement in our other SHE key performance measures. Whilst
we are pleased with the marked improvement, this is a consequence
of daily attention and vigilance in our working practices and
processes, and we recognise that there is no place for complacency
in this regard. The high standards set by the Group in relation to
safety, health and environment are complemented by the significant
investment we continue to make, and our Group SHE team monitor the
Group's adherence to our standards and report on our performance
against those standards at each Executive team and Board
meeting.
The Group built on the strong platform of safety standards put
in place in the prior year by embedding the SHE Principles and 10
Golden Rules in our operations as well as focussing on eliminating
the opportunity for work to be carried out in an unsafe way or
unsafe environment. A rolling programme of Process Hazard
Assessment Revalidation has been completed on all our high risk
sites and prioritised action plans are being implemented to address
identified gaps. This programme will be expanded to all sites in
2018.
Strong progress has been made in our commitment to the
environment with a 10% reduction in VOC emissions through making
operational changes in our sites, particularly the UK. With the
M&A activity adding new sites to our network, we are in the
process of setting new targets for all our environmental key
performance indicators.
innovation
In 2017, sales of new products launched in the last five years
was again 20%, in line with 2016 and meeting our stated target. We
are excited at the launch of more new products in 2017 with the
major launch being our new and patented Nitrile latex, SyNovus(R) .
The new product launch of SyNovus(R) represented a further
milestone for our innovation team in Malaysia, reducing the
development time from inception to commercialisation, including
patenting the proprietary technology, to just 18 months. The
shortened innovation process, representing a reduction of almost
50% on previous new product developments, is a testament to the
dedication, skill and expertise of our in-house R&D team.
This patented product delivers significant value to both our
customers and the end user markets as the SyNovus(R) formulation
significantly reduces the required operating temperature of glove
manufacturing lines, reducing both energy costs and the associated
environmental impact. It also eliminates maturation time thus
enabling glove manufacturing lines to run at higher throughout
providing manufacturers with increased capacity without capital
expenditure, and additionally eliminates certain additives
introduced to Nitrile latex formulations reducing the risk of
potential allergic reactions with end users.
These benefits, coupled with superior tensile strength, improved
colour and reduced odour resulted in a positive, well-received
product launch in Kuala Lumpur with over 150 glove manufacturing
leaders and guests in attendance.
M&A Integration
With three acquisitions, PAC (Dispersions), Speciality Additives
and BASF Pischelsdorf, over the last two years, and ongoing
discussions in relation to transformational and further bolt-on
acquisitions, our ability to successfully integrate is crucial to
capturing value. We are pleased with the progress made in the
integration of PAC (Dispersions) and Speciality Additives and are
already implementing a detailed plan for the BASF Pischelsdorf
acquisition. The integration of PAC (Dispersions) is substantially
complete with the final two major actions initiated in 2017, the
sale of the Leuna (Germany) site and the announcement of the
restructuring of Ribecourt (France) site. We are on target to
deliver the run rate synergies of $12m by the end of 2018, with a
further $2m run rates savings to be delivered in 2019.
Delivering organic growth
The largest capital investment programme in the Group's history
is well underway. This will help to maintain and upgrade our
current asset base and respond to market demand for our products.
This programme commenced in 2016 and we spent GBP60.3m in 2017
across the Group. Our Project Excellence approach has been
introduced Group-wide and aims to ensure that all of the projects
are completed safely, on time and within budget.
Given the global mega-trends of urbanisation, aging
demographics, evolving middle class, increasing mobility and the
ever more stringent environmental legislation, there is increasing
demand from the market for more of our speciality chemicals and for
enhancements to our product portfolio, and we have invested
accordingly with capacity as well as capability expansions in a
number of our sites.
-- Nitrile latex: 90ktes expansion of our Pasir Gudang
(Malaysia) site due for completion in late 2018 with a further
expansion in an advanced stage of planning to address a market
which is growing at 8% to 10% per annum
-- Dispersions: 36ktes capacity of made-to-order speciality
acrylic lines in Worms (Germany) and a 9ktes increase in acrylic
capacity in Roebuck (USA) scheduled to be complete in early
2019.
-- SBR latex: Enhancement to our Marl (Germany) site to improve
output levels to take advantage of opportunities in the Foam Market
and an upgrading of our Oulu (Finland) site to move from supplying
the declining graphic paper market to the growth markets of
speciality paper and packaging.
We continue to invest in the organisational structure and, over
the last 3 years, have established teams in Operational and
Manufacturing Excellence, Business Development and Specialist
Feedstock Procurement. In 2018 the programmes will be further
enhanced by the introduction of our Commercial Excellence programme
to our commercial organisation, designed to ensure we work more
closely with our customers in generating value.
Delivering M&A growth
Growth through acquisitions is a key part of our growth
strategy. We are highly active in targeting and reviewing
speciality chemical acquisition opportunities. These will include
both bolt-on acquisitions, similar to the ones we have completed,
and more transformational step-change strategic transactions in
adjacent chemistries. Our experienced M&A and due diligence
teams will be opportunistic but disciplined in their approach to
acquisitions.
We have made three speciality chemical company acquisitions in
the last two years, all bolt-on acquisitions complementing our
existing businesses, and have reviewed many other opportunities
that have not resulted in completed acquisitions. Whilst we remain
highly active in M&A processes, we have a clear focus on what
constitutes an attractive acquisition target, what price we are
prepared to pay and a firm commitment to incisive due diligence. We
will remain resolute and disciplined in pursuing only the right
value-enhancing opportunities.
OUTLOOK
Looking forward, whilst acknowledging the ongoing challenges in
our Nitrile latex and constructions and coatings Dispersions
markets, we are confident of making further solid progress in 2018,
underpinned by underlying growth in both segments, and from
integrating our recent acquisitions.
With our significant organic investment in new capacity being
commissioned in late 2018, we remain confident in continuing to
deliver growth in profitability and driving further value for
shareholders in future years.
Calum MacLean
Chief Executive Officer
1 March 2018
Segmental review
Europe and North America (ENA)
Increase / (decrease)
2017 2016 Reported Constant
Currency
-------- ------ ----------- -----------
% %
Volumes (ktes) 1,067.7 936.7 14.0
Revenue (GBPm) 1,134.9 746.1 52.1 47.6
EBITDA 140.9 111.2 26.7 22.5
Operating profit - Underlying
performance (GBPm) 117.1 93.3 25.5 21.1
Operating profit - IFRS
(GBPm) 77.5 75.4 2.8
------------------------------- -------- ------ ----------- -----------
ENA revenue increased from GBP746.1m to GBP1,134.9m, an increase
of 52.1%. The rise in revenue mainly reflects incremental volumes
associated with the PAC (Dispersions) and Speciality Additives
acquisitions, the positive impact of weaker Sterling, and the
higher average raw material prices year on year.
Underlying operating profit at GBP117.1m was 25.5% higher (2016:
GBP93.3m), and IFRS operating profit at GBP77.5m was 2.8% higher
(2016: GBP75.4m).
The significant improvement in ENA's Underlying operating profit
was due to good underlying growth of the existing business
(GBP16.0m) including the full year benefit of PAC (Dispersions),
the acquisition of Speciality Additives (GBP3.7m) and the
favourable currency translation associated with the depreciation in
Sterling (GBP4.1m).
The segment achieved an improved overall margin, driven by
higher unit margins in our SBR and Specialities businesses. Volumes
were 1,067.7ktes (+14.0%) with volume increases in most markets
compensating for a further reduction in paper volumes.
SBR volumes and unit margins in our Carpet and Foam markets
increased in 2017. Paper volumes were slightly lower in line with
the market but margins have been maintained, despite the volatility
in raw material prices during the year. SBR benefited from capital
investment to debottleneck our facility in Marl (Germany) which
delivered additional capacity and allowed us to take advantage of
growing opportunities in the attractive Asian Foam market.
Our Dispersions business increased volumes but, consistent with
other market participants, saw a marginal unit margin decline as a
result of rising raw material prices. Unlike the SBR business, the
contracting model in this market is to negotiate prices mainly on a
monthly basis. The integration of the PAC (Dispersions) business,
including the consolidation and reallocation of production, allows
this business better control over its cost base and improved
flexibility to serve customers through our strategically located
manufacturing network.
The integration of the PAC (Dispersions) business, acquired in
2016 has been substantially completed with a number of actions
taken this year:
-- Our small manufacturing site in Leuna (Germany) was disposed
of on 1 January 2018. This small site lacked the operational scale
required for our manufacturing network and, while the site will
continue to manufacture products for Synthomer for a short period,
its production will be moved to other facilities in our network in
due course; and
-- During December 2017, we commenced a restructuring programme
at our manufacturing site in Ribecourt (France) to right size and
simplify the site operations commensurate with its core activities
of dispersion and spray drying redispersible powders. The site
simplification will enhance its operational efficiency by reducing
the product portfolio as well as reducing the fixed cost base. This
restructuring programme is expected to complete in 2019.
These actions will complete the integration of the PAC
(Dispersions) acquisition and will allow us to deliver, as
previously announced, the run rate synergies savings of $12m by the
end of 2018, with a further incremental $2m of run rate savings to
be delivered in 2019.
Our niche businesses in Specialities showed strong underlying
volume and margin growth along with the contribution made by the
acquisition of Speciality Additives. Speciality Additives, a niche
performance speciality additives business serving the decorative
and industrial coatings industries, has strong market leadership
positions (#1 or #2) and serves a highly attractive, blue-chip
customer base. The business operates from a well located, single
site in Ghent, Belgium where there is potential for growth in
capacity to meet future demand. The business is highly
complementary to Synthomer's existing markets and customers and the
Group is focused on expanding its market position through
developing closer relationships with customers and driving
operational performance.
On 31 January 2018 we completed the acquisition of the SBR
business and assets of BASF Pischelsdorf (Austria) for an
enterprise value of EUR30 million. The business produces SBR used
in the paper industry, notably in packaging end-markets. The
acquisition enhances Synthomer's SBR business and production
network for paper and packaging applications as well as increasing
the Group's access to attractive new opportunities across Europe,
underscoring our long-term commitment to our valued customers in
the paper industry.
The acquisition of the Pischelsdorf site firmly cements
Synthomer as market leader in European aqueous polymers, a
significant milestone in the development of our ENA business.
Our organic growth strategy is as important to our ENA business
as our inorganic M&A growth strategy. We have committed
significant capital resources this year to meet the growing demand
for our products across Europe and America, through targeted growth
capex at our principal sites. These investments included:
-- GBP17m in Worms (Germany) to build made-to-order speciality acrylic lines which is on time for commissioning in early 2019;
-- GBP12m investment in Roebuck (USA) on a new acrylic reactor
line scheduled to be ready in early 2019;
-- GBP3m to expand capacity at our powder coatings business in
Sant Albano (Italy) which will come online in Q4 2018; and.
-- GBP2m in our SBR facility in Oulu (Finland) scheduled to come
online in Q3 2018 to expand our capabilities to supply the growing
packaging and speciality paper markets.
Priorities for 2018
Looking ahead to 2018, ENA management is focused on driving
growth and the future profitability of the business. In delivering
this growth strategy the key priorities for 2018 are:
-- Organic growth at least in line with GDP
-- Continued delivery of acquisition synergies
-- Integration of the BASF Pischelsdorf acquisition into our existing plant network
-- Commissioning our capacity and capability expansions
Asia and Rest of World (ARW)
Increase / (decrease)
2017 2016 Reported Constant
Currency
------ ------ ----------- -----------
% %
Volumes (ktes) 376.1 388.2 (3.1)
Revenue (GBPm) 345.3 299.6 15.3 14.8
EBITDA 48.2 60.4 (20.2) (20.4)
Operating profit - Underlying
performance (GBPm) 35.1 48.7 (27.9) (28.1)
Operating profit - IFRS
(GBPm) 31.2 81.3 (61.6)
------------------------------- ------ ------ ----------- -----------
The performance of our ARW business in 2017 was in line with
expectations, with the lower profitability principally driven by
the well trailed softer Nitrile latex margins, the disposal of our
South African business in August 2016, and the ongoing investment
at our PAC Chonburi (Thailand) site to integrate it into the Asia
dispersion network system.
Underlying operating profit at GBP35.1m was 27.9% below the
prior year (GBP48.7m), and the IFRS operating profit at GBP31.2m
was 61.6% below the prior year (GBP81.3m). The 2016 IFRS operating
profit included the profit on the Malaysian land sale of GBP33.2m
and the profit on the sale of the South African business of
GBP4.7m.
The Nitrile latex margins, whilst lower overall than 2016, have
been reasonably resilient and appear to have settled at a lower
level in 2017, broadly consistent with the margins seen in Q4 2016.
Reassuringly, the Nitrile latex margins achieved have improved over
earlier years when new capacity was brought on line and now reflect
the level of substantial investment made in our customer focussed
research and development, capacity expansion, service and quality.
We are committed to this market and to our important customer
relationships, and our investment in both increased capacity and
the patented SyNovus(R) product are testaments to this.
Our 2017 Nitrile latex volumes were broadly flat relative to
2016 with our existing capacity sold out, except for modest volumes
foregone in short shutdown periods to integrate the incremental
capacity to be brought on line later in 2018.
Volumes in the Dispersions business were also broadly in line
with the prior year despite the disposal in 2016 of our South
African business but, like others, margins were impacted by the
rise in raw material prices. The start-up production facility in
Chonburi (Thailand), which joined the Group as part of the PAC
acquisition in 2016, continued to require operational support to
bring it into line with Synthomer standards and had a negative
contribution of GBP2.3m in the year. A new management team has been
now put in place to take the site forward.
Research and development is a critical part of our Nitrile latex
and Dispersions businesses, and we are currently evaluating the
opportunity to invest in a new state-of-the-art Innovation Centre
in the region by 2020 and in continuing developmental research in
our core markets.
University level sponsorship has been a core part of building
Synthomer's technology and innovation capability. This year our PhD
sponsored student at Manchester University successfully completed
his studies and joined our R&D Team in Klaung, and in Asia the
Group continued its collaboration with Universiti Teknologi
Malaysia (UTM), where a Masters Level student has been sponsored to
work on a Synthomer defined emulsion polymerisation project. On
completion of her degree in Q1 2018, she will also join the R&D
team in Kluang. For the second year running, Synthomer sponsored an
award for Best PhD thesis in Polymer Science at the Institut Kimia
Malaysia (IKM, Malaysian Chemistry Society).
The Nitrile latex market reached the milestone of one million
tonnes per annum of demand during 2017 and continues to grow at
between 8% to 10% per annum. In September 2017, Synthomer's
Innovation Group responded to the demand of end users and glove
manufacturers by launching SyNovus(R) , a ground breaking patented
new product. SyNovus(R) is designed to have significantly reduced
maturation time, superior tensile strength properties, higher
levels of durability and improved chemical resistance with
unprecedented colour and odour improvements. This new product was
warmly received by industry leaders at a dedicated launch event in
Kuala Lumpur. The Innovation Group also launched a new higher
performing XSBR latex application for the Carpet market during the
year.
Our 90ktes capacity expansion of our Nitrile latex facility in
Pasir Gudang (Malaysia), the largest capital investment undertaken
by the Group at GBP45m, is progressing safely, on time and on
budget. We have now completed all the major construction work with
commissioning later in 2018 when our installed capacity will
increase by approximately 40%. As the current expansion moves into
the commissioning phase we have started the evaluation process for
the timing of the next stage of the Pasir Gudang expansion, the
introduction of a further 60kt of capacity, recognising the
infrastructure and civil engineering for this further expansion has
been undertaken in the earlier stage of the project. The continued
growth in demand for Nitrile latex remains significant and we are
well placed to capitalise on this growth with our existing
capacity, our incremental next stage 60kt capacity expansion, and
our exciting new patented SyNovus(R) product.
Priorities for 2018
Turning to 2018 activities, the business is well placed to
secure future growth in profitability and management is keenly
focussed on the principal activities that will allow this potential
to be unlocked. The priorities for 2018 are:
-- Successful completion of capital investment programme in Pasir Gudang
-- Continue to manage Nitrile latex margins in an evolving and competitive market
-- Improve operational efficiency of Chonburi to Synthomer standards
-- Market penetration of SyNovus(R)
-- Finalise planning for the next phase of Nitrile latex capacity expansion
Chief Financial Officer's Review
Overview
2017 has been another progressive year for the Group with solid
growth and the successful integrations of PAC (Dispersions)
acquired in 2016 and Speciality Additives acquired in 2017.
The key drivers behind the improvement in overall performance
were:
-- ENA saw good Underlying profit growth as volumes and unit
margins increased.
-- ARW performed in line with expectations, with stable Nitrile
latex margins relative to the final quarter of 2016.
-- Speciality Additives, a GBP66.1m bolt-on acquisition,
completed and was integrated into the Group.
-- The integration of PAC (Dispersions) was substantially
completed and on target to deliver the $12m run rate synergies by
end of 2018 with a further incremental $2m run rate synergies to be
delivered by the end of 2019. The disposal of our Leuna (Germany)
site and the announcement of the restructuring of our Ribecourt
(France) site were the last significant steps in the
integration.
-- The continuing weakness of Sterling has resulted in a
positive impact on the Group's reported results, albeit this mainly
related to H1.
Alternative performance measures
The Group has consistently used two significant Alternative
Performance Measures ('APMs') since its adoption of International
Financial Reporting Standards ('IFRS') in 2005:
-- Underlying performance, which excludes Special Items from
IFRS profit measures
-- EBITDA, which excludes Special Items, amortisation and
depreciation from IFRS operating profit.
The Board's view is that Underlying performance provides
additional clarity for the Group's investors and so it is the
primary focus of the Group's narrative reporting. Further
information and the reconciliation to the IFRS measures are
included in notes 1 and 5.
Income statement
Operating profit
The table below bridges the 2016 and 2017 IFRS operating profit,
showing the improvement in the existing businesses, the impact of
the 2017 acquisition of Speciality Additives , the impact of the
weakness of Sterling on translation, and the effect of the Special
Items.
Asia
&
Europe Rest Unallocated
& North of corporate
America World expenses Total
GBPm GBPm GBPm GBPm
--------- ------ ------- -------- ------------ -------- ------- --------
2016 - IFRS 75.4 81.3 (12.0) 144.7
Add/(Deduct): 2016
- Special Items 17.9 (32.6) 0.2 (14.5)
--------- ------- ------------ -------
2016 - Underlying
performance 93.3 48.7 (11.8) 130.2
2017 - Underlying
business changes 16.0 17.1% (12.5) (25.7)% (1.4) (11.9)% 2.1 1.6%
--------- ------- ------------ -------
2017 - Underlying
existing business
at 109.3 36.2 (13.2) 132.3
2016 exchange rates
2017 - Acquisition
of Speciality Additives 3.7 - - 3.7
2017 - Disposal
of South Africa - (1.2) - (1.2)
2017 - Impact of
2017 exchange rates 4.1 0.1 - 4.2
--------- ------- ------------ -------
2017 - Underlying
performance at
2017 117.1 25.5% 35.1 (27.9)% (13.2) (11.9)% 139.0 6.8%
exchange rates
--------- ------- ------------ -------
Deduct: 2017 -
Special Items (39.6) (3.9) (0.1) (43.6)
--------- ------- ------------ -------
2017 - IFRS 77.5 2.8% 31.2 (61.6)% (13.3) (10.8)% 95.4 (34.1)%
--------- ------ ------- -------- ------------ -------- ------- --------
The following should be noted:
-- The underlying improvement in the ENA existing business of
GBP16.0m (17.1%) reflects the full year impact of the acquisition
of PAC (Dispersions) as well as improvements in margins in most
markets.
-- ARW Nitrile latex volumes were in line with the prior year
and margins were robust and broadly in line with Q4 2016. Further
operational investment in the PAC Chonburi (Thailand) site has been
made in 2017, impacting Underlying operating profit.
-- Underlying unallocated corporate costs increased by GBP1.4m
reflecting the increase in the cost of share-based payments due to
the rise in share price during 2017 and the crystallisation of the
outcome of strategic targets, and further strengthening of the
management team in the London Head Office.
-- The continuing weakness of Sterling during the year resulted
in an increase in the Group's reported profit in Sterling. For the
European businesses, the rate used for translating profit moved
from GBP1:EUR1.2180 in 2016 to GBP1:EUR1.1430 in 2017, with a
resulting uplift in the 2017 ENA profit of GBP4.1m.
Special Items
2017 2016
GBPm GBPm
------- -------
Restructuring and site closure (11.6) (5.2)
Profit on sale of business - 4.7
Profit on sale of land 1.3 33.2
Gain on foreign exchange contracts relating
to acquisition - 13.1
Acquisition costs (2.3) (4.3)
Amortisation of acquired intangibles (31.0) (27.0)
------- -------
Income/(expense) (43.6) 14.5
------- -------
The following items of income and expense have been reported as
Special Items, in line with the comments above:
-- The restructuring and site closure costs included GBP9.0m in
relation to the post-acquisition integration of the PAC
(Dispersions) business with the majority being attributable to the
rationalisation of the Ribecourt (France) site. A further GBP1.6m
related to the cost of an onerous lease on a site closed during
2017, while GBP0.8m comprised costs for the post-acquisition
integration of Speciality Additives.
-- The profit on sale of business relates to the disposal of our
South African business in 2016.
-- The profit on sale of land in 2017 related to a disposal of
land in Hapton, UK. The profit on sale of land in 2016 related to
the disposal of tranches of Malaysian land.
-- The gain of GBP13.1m in 2016 resulted from foreign exchange
contracts taken out as a hedge against the US dollar purchase
consideration of the PAC (Dispersions) acquisition.
-- Acquisition costs were incurred in relation to Speciality
Additives (2016: PAC (Dispersions)) and for other potential
acquisitions which will not occur or had not occurred before the
balance sheet date.
-- The amortisation of intangibles increased during 2017 due to
a full year of amortisation for the 2016 PAC (Dispersions)
acquisition, the intangibles acquired with Speciality Additives and
due to foreign currency exchange rate movements.
Finance costs & profit before taxation
2017 2016
-------------------------------- -------------------------------
Underlying Special IFRS Underlying Special IFRS
performance Items performance Items
GBPm GBPm GBPm GBPm GBPm GBPm
Operating profit
(including share
of JV's) 139.0 (43.6) 95.4 130.2 14.5 144.7
Finance costs (9.0) - (9.0) (8.0) - (8.0)
------------- -------- ------- ------------- -------- ------
Profit/(loss)
before taxation 130.0 (43.6) 86.4 122.2 14.5 136.7
------------- -------- ------- ------------- -------- ------
Increase in profit/loss
before tax % 6.4 (36.8)
Finance costs are higher than 2016, principally reflecting the
full year impact of the increase in borrowings to fund the PAC
(Dispersions) acquisition, and the further increase in borrowings
to fund the acquisition of Speciality Additives.
Taxation
2017 2016
-------------------------------- -----------------------
Underlying Special IFRS Underlying Special IFRS
performance Items performance Items
Taxation (charge)
/ credit GBPm (24.7) 13.1 (11.6) (24.5) 9.1 (15.4)
Effective tax
rate % 19.0 30.4 13.4 20.0 (62.8) 11.3
------------- -------- ------- ------------- -------- -------
The IFRS effective tax rate is impacted by the tax credit on the
Special Items. It is therefore helpful to consider the underlying
and Special Items separately:
-- The effective tax rate on Underlying performance has reduced
slightly in the year due to prior year adjustments.
-- The effective tax rate for Special Items is principally
driven by the deferred tax credit on the amortisation of acquired
intangibles.
Non-controlling interests
2017 2016
------------------------------ ------------------------------
Underlying Special IFRS Underlying Special IFRS
performance Items performance Items
GBPm GBPm GBPm GBPm GBPm GBPm
------------- -------- ----- ------------- -------- -----
Non-controlling
interests 0.8 0.0 0.8 1.5 9.4 10.9
------------- -------- ----- ------------- -------- -----
The Group continues to have a 70% holding in Revertex (Malaysia)
Sdn Bhd and its subsidiaries. This company and its subsidiaries is
now a relatively minor part of the Group and hence the
non-controlling interests impact on the Underlying performance is
not significant.
The Special Item in 2016 reflects the non-controlling interests
share (30%) in the land sale referred to in the Special Items
section above. The land was owned by Kind Action Sdn Bhd, a 100%
subsidiary of Revertex (Malaysia) Sdn Bhd.
Earnings per share
2017 2016
-------------------------------- ------------------------------
Underlying Special IFRS Underlying Special IFRS
performance Items performance Items
Earnings per share
(p) 30.7 (8.9) 21.8 28.3 4.2 32.5
Growth % 8.5 - (32.9)
------------- -------- ------- ------------- -------- -----
The Group's issued share capital has not changed for a number of
years and therefore the average number of shares in issue remains
similar to last year at 340 million. The changes in Underlying and
IFRS earnings per share shown in the table is therefore driven
predominantly by the same factors that influence the change in
profit before taxation and taxation described above.
Cash performance
The consolidated cash flow statement shows a modest increase in
cash generated from operations, from GBP157.0m in 2016 to GBP162.6m
in 2017. After other operating, investing and financing cash flows,
cash, cash equivalents and bank overdrafts increased by GBP10.7m
(2016: GBP43.9m).
The Group's primary focus is on managing net borrowings rather
than on cash. The following summarises the movement in net
borrowings and is in the format used by management:
2017 2016
GBPm GBPm
------- --------
Underlying operating profit (excluding
joint ventures) 138.0 128.2
Movement in working capital 9.5 10.2
Depreciation and amortisation (Underlying) 37.2 29.9
Purchase of property, plant and equipment (60.3) (45.6)
------- --------
Business cash flow 124.4 122.7
Interest paid (net) (4.8) (3.3)
Tax paid (26.1) (17.1)
IAS 19 interest charge (4.3) (4.5)
Pension funding in excess of IAS 19 charge (12.5) (12.4)
Share based payments variance to IFRS2
charge (0.3) 1.6
Non-controlling interest and joint venture
dividends 1.5 (1.1)
------- --------
Underlying operating cash flow 77.9 85.9
Cash impact of restructuring (6.0) (5.5)
Sale of property, plant and equipment 2.2 34.4
Purchase of business and acquisition
costs (66.2) (156.7)
Sale of business 7.6 12.8
Dividends paid (39.1) (30.3)
Exchange (6.6) (13.5)
------- --------
Movement in net borrowings (30.2) (72.9)
------- --------
Due to the continued strong cash performance of the Group, the
Business cash flow at GBP124.4m (2016: GBP122.7m) has remained
stable, despite a GBP14.7m increase in expenditure on property,
plant and equipment. Further commentary on the other significant
cash flows is provided below.
-- Working capital control remained a key focus of Group
management, demonstrated by achieving a cash inflow in a year of
organic growth and rising raw material prices.
-- The increase in capital expenditure, which is largely being
invested in our plants, reflects the cash spend on the previously
announced Nitrile latex capacity increase in Pasir Gudang
(Malaysia) (GBP15m), and the made-to-order speciality acrylic lines
in Worms (Germany) of GBP8m.
-- The rise in cash tax payments of GBP9m primarily reflects
payments in respect of acquisitions in 2016 and 2017 of GBP4m and
higher payments on account, principally in Italy and Germany of
GBP6m.
-- The amount shown as pension funding in excess of IAS19 charge
mainly reflects the UK defined benefit deficit recovery funding of
GBP14.7m (2016: GBP14.5m).
-- The outflow for purchase of business of GBP66.2m primarily
relates to the acquisition of Speciality Additives. The prior year
outflow of GBP156.7m mainly relates to the purchase of PAC
(Dispersions).
-- The business sale proceeds of GBP7.6m is the amount received
ahead of the year end on the disposal of Synthomer Leuna GmbH, as
disclosed in note 8. The prior year proceeds of GBP12.8m related to
the net cash consideration received on the disposal of our South
African business.
-- Substantial amounts of the Group's borrowings have been
maintained in Euros and US dollars as a natural hedge against the
net asset base in these two currencies. With the devaluation of
Sterling referred to above, the translation at the year end rates
has resulted in an exchange loss and therefore a higher borrowings
amount (offset by a corresponding increase in the net asset base in
these currencies).
Financing and liquidity
The Group retains the use of a committed revolving credit
facility of GBP370m, sourced from five banks. This facility
provided the necessary funds to complete the acquisition of
Speciality Additives, while maintaining substantial headroom. An
additional committed short term bank loan facility of EUR55m
(GBP48.9m) was entered into in November 2017, to provide extra
liquidity in anticipation of the BASF Pischelsdorf SBR business
acquisition on 31 January 2018, for an enterprise value of
EUR30m.
2017 2016
GBPm GBPm
------ ------
Committed facilities 418.9 370.0
Drawn at 31 December 246.7 203.9
------ ------
Headroom 172.2 166.1
------ ------
In addition to the facility headroom identified above, the Group
had cash and cash equivalents at 31 December 2017 of GBP89.6m
(2016: GBP117.4m) offset by overdrafts of GBP24.2m (2016:
GBP65.4m).
The principal financial covenant in the revolving credit
facility remains that net borrowings must be less than 3.0 times
EBITDA at 31 December 2017.
2017 2016
GBPm GBPm
------ ------
Net borrowings 180.5 150.3
EBITDA 176.2 160.1
------ ------
Net borrowings / EBITDA 1.0 0.9
------ ------
The significant facility and covenant headroom demonstrates the
continued financial strength of the Group, which is well positioned
to fund future organic growth and take advantage of further bolt-on
acquisitions.
Pensions
Charge to Post retirement
income statement benefit obligations
-------------------- ---------------------------
2017 2016 2017 2016
GBPm GBPm GBPm GBPm
--------- --------- ----------- ----------
UK 5.1 4.6 78.3 112.5
Overseas 7.2 6.9 78.9 74.2
--------- --------- ----------- ----------
12.3 11.5 157.2 186.7
--------- --------- ----------- ----------
The table sets out the total pension charge included in the
income statement and the total defined benefit obligation included
in the balance sheet.
The following should be noted:
-- The overseas pension cost has increased due to the PAC
(Dispersions) and Speciality Additives acquisitions. The UK pension
cost has increased, mainly due to an increase in net interest
expense in the defined benefit scheme.
-- The reduction in UK defined benefit pensions liabilities of
GBP34.2m primarily relates to an improvement in mortality actuarial
assumptions (GBP18.5m), pension scheme deficit recovery payment of
GBP14.7m, offset by a reduction in the discount rate from 2.7% to
2.5% (GBP11.4m).
Acquisition and disposal accounting
The accounting for the acquisition of Speciality Additives and
the disposal of Synthomer Leuna GmbH are shown in the notes 7 and 8
respectively.
For the acquisition, the assets and liabilities have been
included at fair value with the balance of consideration shown as
goodwill. KPMG LLP were engaged to advise on the fair value of the
Property, Plant and Equipment (PPE). Overall their conclusion was
that the total fair value of the PPE should be increased by
GBP4.8m. KPMG LLP also performed a valuation of the intangibles,
which mainly comprised customer relationships. Accordingly, on
acquisition the Group recognised goodwill and acquired intangibles
of GBP24.1m and GBP41.4m respectively and the valuation is now
final. These intangibles are being amortised over periods of 5 to
14 years.
Post balance sheet events
On 1 January 2018, the Group sold Synthomer Leuna GmbH,
comprising the assets of a plant in Germany for a profit of
GBP1.5m.
On 31 January 2018, the Group completed the purchase of the BASF
Pischelsdorf SBR business and assets, for EUR29.3m. The purchase
consideration was funded from the Group's existing financial
resources.
Stephen Bennett
Chief Financial Officer
1 March 2018
CONsolidated income statement for the YEARED 31 DECEMBER
2017
2017 2016
--------------------------------- ---------------------------------
Note Underlying Special IFRS Underlying Special IFRS
performance Items performance Items
audited audited audited audited audited audited
GBPm GBPm GBPm GBPm GBPm GBPm
Continuing operations
-------------------------- ----- ------------- -------- -------- ------------- -------- --------
Revenue 2 1,480.2 - 1,480.2 1,045.7 - 1,045.7
============= ======== ======== ============= ======== ========
Company and
subsidiaries
before Special
Items 138.0 - 138.0 128.2 - 128.2
Restructuring
and site closure - (11.6) (11.6) - (5.2) (5.2)
Sale of business - - - - 4.7 4.7
Sale of land - 1.3 1.3 - 33.2 33.2
Gains on foreign
exchange contracts
relating to
acquisition - - - - 13.1 13.1
Acquisition
costs - (2.3) (2.3) - (4.3) (4.3)
Amortisation
of acquired
intangibles - (31.0) (31.0) - (27.0) (27.0)
Company and
subsidiaries 138.0 (43.6) 94.4 128.2 14.5 142.7
Share of joint
ventures 1.0 - 1.0 2.0 - 2.0
------------- -------- -------- ------------- -------- --------
Operating profit/(loss) 139.0 (43.6) 95.4 130.2 14.5 144.7
------------- -------- -------- ------------- -------- --------
Interest payable (5.7) - (5.7) (4.2) - (4.2)
Interest receivable 1.0 - 1.0 0.7 - 0.7
------------- -------- -------- ------------- -------- --------
(4.7) - (4.7) (3.5) - (3.5)
IAS19 interest
charge (4.3) - (4.3) (4.5) - (4.5)
Finance costs 3 (9.0) - (9.0) (8.0) - (8.0)
Profit/(loss)
before taxation 130.0 (43.6) 86.4 122.2 14.5 136.7
Taxation (24.7) 13.1 (11.6) (24.5) 9.1 (15.4)
------------- -------- -------- ------------- -------- --------
Profit/(loss)
for the year 105.3 (30.5) 74.8 97.7 23.6 121.3
Profit attributable
to non-controlling
interests 0.8 - 0.8 1.5 9.4 10.9
Profit/(loss)
attributable
to equity holders
of the parent 104.5 (30.5) 74.0 96.2 14.2 110.4
------------- -------- -------- ------------- -------- --------
105.3 (30.5) 74.8 97.7 23.6 121.3
============= ======== ======== ============= ======== ========
Earnings/(loss)
per share
Basic 30.7p (8.9)p 21.8p 28.3p 4.2p 32.5p
Diluted 30.5p (8.9)p 21.6p 28.1p 4.2p 32.3p
Consolidated STATEMENT OF COMPREHENSIVE INCOME
for the YEARED 31 DECEMBER 2017
2017 2016
------------------------------------- -------------------------------------
Equity Non-controlling Total Equity Non-controlling Total
holders interests holders interests
of the of the
parent parent
audited audited audited audited audited audited
GBPm GBPm GBPm GBPm GBPm GBPm
Profit for the
year 74.0 0.8 74.8 110.4 10.9 121.3
--------- ---------------- -------- --------- ---------------- --------
Actuarial gains
and losses 23.6 - 23.6 (49.1) - (49.1)
Tax relating
to components
of other comprehensive
income 2.3 - 2.3 0.9 - 0.9
--------- ---------------- -------- --------- ---------------- --------
Total items that
will not be reclassified
to profit or
loss 25.9 - 25.9 (48.2) - (48.2)
--------- ---------------- -------- --------- ---------------- --------
Exchange differences
on translation
of foreign operations 9.2 - 9.2 47.0 1.2 48.2
Exchange differences
recycled on sale
of business - - - 3.3 - 3.3
Losses on a hedge
of a net investment
taken to equity (7.8) - (7.8) (6.4) - (6.4)
--------- ---------------- -------- --------- ---------------- --------
Total items that
may be reclassified
subsequently
to profit or
loss 1.4 - 1.4 43.9 1.2 45.1
--------- ---------------- -------- --------- ---------------- --------
Other comprehensive
income/ (expense)
for the year 27.3 - 27.3 (4.3) 1.2 (3.1)
--------- ---------------- -------- --------- ---------------- --------
Total comprehensive
income for the
year 101.3 0.8 102.1 106.1 12.1 118.2
========= ================ ======== ========= ================ ========
Consolidated STATEMENT OF CHANGES IN EQUITY
Share Share Capital Hedging Retained Total
capital premium redemption and translation earnings
reserve reserve
audited audited audited audited audited audited
GBPm GBPm GBPm GBPm GBPm GBPm
At 1 January 2017 34.0 230.5 0.9 (4.4) 65.2 326.2
---------------- --------- ------------ ----------------- ---------- --------
Profit for the
year - - - - 74.0 74.0
Actuarial gains - - - - 23.6 23.6
Exchange difference
on translation
of foreign operations - - - 9.2 - 9.2
Loss on a hedge
of a net investment
taken to equity - - - (7.8) - (7.8)
Tax relating to
components of
other comprehensive
income - - - - 2.3 2.3
---------------- --------- ------------ ----------------- ---------- --------
Total comprehensive
income for the
year - - - 1.4 99.9 101.3
Dividends paid
to shareholders - - - - (39.1) (39.1)
Dividends paid - - - - - -
to non-controlling
interests
Share-based payments - - - - (0.5) (0.5)
---------------- --------- ------------ ----------------- ---------- --------
At 31 December
2017 34.0 230.5 0.9 (3.0) 125.5 387.9
================ ========= ============ ================= ========== ========
Non-controlling Total
interests equity
audited audited
GBPm GBPm
At 1 January 2017 18.0 344.2
---------------- ---------
Profit for the
year 0.8 74.8
Actuarial gains - 23.6
Exchange difference
on translation
of foreign operations - 9.2
Loss on a hedge
of a net investment
taken to equity - (7.8)
Tax relating to
components of
other comprehensive
income - 2.3
---------------- ---------
Total comprehensive
income for the
year 0.8 102.1
Dividends paid
to shareholders - (39.1)
Dividends paid
to non-controlling
interests (0.5) (0.5)
Share-based payments - (0.5)
---------------- ---------
At 31 December
2017 18.3 406.2
================ =========
Share Share Capital Hedging Retained Total
capital premium redemption and translation earnings
reserve reserve
audited audited audited audited audited audited
GBPm GBPm GBPm GBPm GBPm GBPm
At 1 January 2016 34.0 230.5 0.9 (48.3) 32.3 249.4
---------------- --------- ------------ ----------------- ---------- --------
Profit for the
year - - - - 110.4 110.4
Actuarial losses - - - - (49.1) (49.1)
Exchange difference
on translation
of foreign operations - - - 47.0 - 47.0
Exchange differences
recycled on sale
of business - - - 3.3 - 3.3
Loss on a hedge
of a net investment
taken to equity - - - (6.4) - (6.4)
Tax relating to
components of
other comprehensive
income - - - - 0.9 0.9
---------------- --------- ------------ ----------------- ---------- --------
Total comprehensive
(expense)/ income
for the year - - - 43.9 62.2 106.1
Dividends paid
to shareholders - - - - (30.3) (30.3)
Dividends paid - - - - - -
to non-controlling
interests
Share-based payments - - - - 1.0 1.0
---------------- --------- ------------ ----------------- ---------- --------
At 31 December
2016 34.0 230.5 0.9 (4.4) 65.2 326.2
================ ========= ============ ================= ========== ========
Non-controlling Total
interests equity
audited audited
GBPm GBPm
At 1 January 2016 9.1 258.5
---------------- ---------
Profit for the
year 10.9 121.3
Actuarial losses - (49.1)
Exchange difference
on translation
of foreign operations 1.2 48.2
Exchange differences
recycled on sale
of business - 3.3
Loss on a hedge
of a net investment
taken to equity - (6.4)
Tax relating to
components of
other comprehensive
income - 0.9
---------------- ---------
Total comprehensive
(expense)/ income
for the year 12.1 118.2
Dividends paid
to shareholders - (30.3)
Dividends paid
to non-controlling
interests (3.2) (3.2)
Share-based payments - 1.0
---------------- ---------
At 31 December
2016 18.0 344.2
================ =========
Consolidated balance sheet as at 31 DECEMBER 2017
2017 2016
-------- --------
audited audited
GBPm GBPm
Non-current assets
Goodwill 329.1 301.4
Acquired intangible assets 66.2 54.2
Other intangible assets 1.9 0.2
Property, plant and equipment 322.1 293.3
Deferred tax assets 23.3 19.4
Investment in joint ventures 7.5 9.0
-------- --------
Total non-current assets 750.1 677.5
-------- --------
Current assets
Inventories 125.1 104.3
Trade and other receivables 229.1 195.7
Cash and cash equivalents 89.6 117.4
Total current assets 443.8 417.4
-------- --------
Assets classified as held
for sale 6.8 0.7
Total assets 1,200.7 1,095.6
Current liabilities
Borrowings (73.1) (65.4)
Trade and other payables (279.3) (213.5)
Current tax liability (40.2) (39.0)
Provisions for other liabilities
and charges (2.4) (3.0)
Total current liabilities (395.0) (320.9)
-------- --------
Non-current liabilities
Borrowings (197.0) (202.3)
Trade and other payables (2.3) (2.7)
Deferred tax liability (35.4) (33.1)
Post retirement benefit
obligations (157.2) (186.7)
Provisions for other liabilities
and charges (7.6) (5.7)
-------- --------
Total non-current liabilities (399.5) (430.5)
-------- --------
Net assets 406.2 344.2
======== ========
Equity
Called up share capital 34.0 34.0
Share premium 230.5 230.5
Capital redemption reserve 0.9 0.9
Hedging and translation
reserve (3.0) (4.4)
Retained earnings 125.5 65.2
-------- --------
Equity attributable to
equity holders of the
parent 387.9 326.2
Non-controlling interests 18.3 18.0
-------- --------
Total equity 406.2 344.2
======== ========
The financial statements were approved by the Board of Directors
and authorised for issue on 1 March 2018.
2017 2016
-------- --------
audited audited
GBPm GBPm
ANALYSIS OF NET BORROWINGS
Cash and cash equivalents 89.6 117.4
Current borrowings (73.1) (65.4)
Non-current borrowings (197.0) (202.3)
-------- --------
Net borrowings (180.5) (150.3)
======== ========
Consolidated cash flow STATEMENT for the YEARED 31 DECEMBER
2017
2017 2016
------------------ ------------------
audited audited audited audited
GBPm GBPm GBPm GBPm
Operating
Cash generated from operations 162.6 157.0
Interest received 1.0 0.7
Interest paid (5.8) (4.0)
-------- --------
Net interest paid (4.8) (3.3)
UK corporation tax paid - -
Overseas corporate tax
paid (26.1) (17.1)
-------- --------
Total tax paid (26.1) (17.1)
-------- --------
Net cash inflow from
operating activities 131.7 136.6
-------- --------
Investing
Dividends received from
joint ventures 2.0 2.1
Purchase of property,
plant and equipment (60.3) (45.6)
Sale of property, plant
and equipment 2.2 34.4
Net capital expenditure (58.1) (11.2)
Purchase of business (64.1) (165.8)
Proceeds from sale of
business 7.6 12.8
Net cash outflow from
investing activities (112.6) (162.1)
-------- --------
Financing
Ordinary dividends paid (39.1) (30.3)
Dividends paid to non-controlling
interests (0.5) (3.2)
Settlement of equity-settled
share-based payments (3.1) (0.4)
Repayment of borrowings (102.0) (82.7)
Proceeds of borrowings 136.3 186.0
Net cash (outflow)/inflow
from financing activities (8.4) 69.4
-------- --------
Increase in cash, cash
equivalents and bank
overdrafts during the
year 10.7 43.9
======== ========
Cash, cash equivalents
and bank overdrafts at
1 January 52.0 8.5
Cash (outflows)/inflows
Cash and cash equivalents (28.5) 63.8
Bank overdrafts 39.2 (19.9)
-------- --------
10.7 43.9
Exchange and other movements 2.7 (0.4)
-------- --------
Cash, cash equivalents
and bank overdrafts at
31 December 65.4 52.0
======== ========
RECONCILIATION OF NET CASH FLOW FROM OPERATING ACTIVITIES TO
MOVEMENT IN NET BORROWINGS FOR THE YEARED 31 DECEMBER 2017
2017 2016
-------- --------
audited audited
GBPm GBPm
Net cash inflow from
operating activities 131.7 136.6
Add back: dividends received
from joint ventures 2.0 2.1
Less: net capital expenditure (58.1) (11.2)
Less: net purchase of
business (56.5) (153.0)
19.1 (25.5)
Ordinary dividends paid (39.1) (30.3)
Dividends paid to non-controlling
interests (0.5) (3.2)
Settlement of equity-settled
share-based payments (3.1) (0.4)
Exchange movements (6.6) (13.5)
-------- --------
Increase in net borrowings (30.2) (72.9)
======== ========
1 Underlying segmental performance and Special Items
The Group's Executive Committee, chaired by the Chief Executive
Officer, examines the Group's performance and has identified two
reportable segments of its business:
Europe & North America
These markets are well developed and are typically growing in
line with GDP.
Asia & Rest of World
These markets are characterised by growing at rates generally
above GDP coupled with an increased penetration of more
sophisticated products into wider uses.
The Executive Committee primarily uses Underlying operating
profit, being operating profit before Special Items to assess the
performance of the operating segments. No information is provided
to the Executive Committee at the segment level concerning interest
income, interest expenses, income taxes or other material non-cash
items.
No single customer accounts for more than 10% of the Group's
revenue.
IFRS and Underlying Performance
The IFRS profit measures show the performance of the Group as a
whole and as such includes all sources of income and expenses,
including both irregular items and those that do not relate to the
Group's ongoing businesses. To provide additional clarity on the
ongoing trading performance of the Group's businesses, the
management uses "Underlying performance" as an alternative
performance measure to plan for, control and assess the performance
of the segments. Underlying performance differs from the IFRS
measures as it excludes Special Items.
Special Items
The definition of Special Items is shown in note 10 and has been
consistently applied. Special Items are either irregular, and
therefore including them in the assessment of a segment's
performance would lead to a distortion of trends, or are technical
adjustments which ensure the Group's financial statements are in
compliance with IFRS but do not reflect the operating performance
of the segment in the year, or both. An example of the latter is
the amortisation of acquired intangibles, which principally relates
to acquired customer relationships. The Group incurs costs, which
are recognised as an expense in the income statement, in
maintaining these customer relationships. The Group considers that
the exclusion of the amortisation charge on acquired intangibles
from Underlying performance avoids the potential double counting of
such costs and therefore excludes it as a Special Item from
Underlying performance.
A segmental analysis of Underlying performance and Special Items
is shown below.
Reconciliation 2017 2016
of Underlying
performance to
IFRS
------------------------------------------- --------
Europe Asia Unallocated Total Europe Asia Unallocated Total
& North & corporate & North & corporate
America Rest expenses America Rest expenses
of of
World World
audited audited audited audited audited audited audited audited
--------- -------- ------------ -------- ------------- -------- ------------ --------
Revenue (GBPm)
Underlying
performance
and IFRS 1,134.9 345.3 1,480.2 746.1 299.6 1,045.7
--------- -------- -------- ------------- -------- --------
Operating
profit/(loss)
(GBPm) - including
share of joint
ventures
Underlying
performance 117.1 35.1 (13.2) 139.0 93.3 48.7 (11.8) 130.2
Special Items
Restructuring
& site closure
- cash costs (11.3) (0.2) (0.1) (11.6) (4.7) (0.3) (0.2) (5.2)
Profit on sale
of business - - - - - 4.7 - 4.7
Sale of land 1.3 - - 1.3 - 33.2 - 33.2
Gain on foreign
exchange
contracts
relating to
acquisition - - - - 12.4 0.7 - 13.1
Acquisition costs (2.3) - - (2.3) (4.1) (0.2) - (4.3)
Amortisation
of acquired
intangibles (27.3) (3.7) - (31.0) (21.5) (5.5) - (27.0)
--------- -------- ------------ -------- ------------- -------- ------------ --------
(39.6) (3.9) (0.1) (43.6) (17.9) 32.6 (0.2) 14.5
--------- -------- ------------ -------- ------------- -------- ------------ --------
IFRS 77.5 31.2 (13.3) 95.4 75.4 81.3 (12.0) 144.7
--------- -------- ------------ -------- ------------- -------- ------------ --------
Of the Asia and Rest of World IFRS operating profit of GBP31.2m
(2016: GBP81.3m), GBP1.0m (2016: GBP2.0m) is the Group's share of
joint ventures.
The restructuring and site closure costs included GBP9.0m in
relation to the post-acquisition integration of the PAC
(Dispersions) business with the majority being attributable to the
rationalisation of the Ribecourt (France) site. A further GBP1.6m
related to the cost of an onerous lease on a site closed during
2017, while GBP0.8m comprised costs for the post-acquisition
integration of Speciality Additives.
The profit on sale of business relates to the disposal of our
South African business in 2016.
The profit on sale of land in 2017 related to a disposal of land
in Hapton, UK. The profit on sale of land in 2016 related to the
disposal of tranches of Malaysian land.
The gain of GBP13.1m in 2016 resulted from foreign exchange
contracts taken out as a hedge against the US dollar purchase
consideration of the PAC (Dispersions) acquisition.
Acquisition costs were incurred in relation to Speciality
Additives (2016: PAC (Dispersions)) and for other potential
acquisitions which will not occur or had not occurred before the
balance sheet date.
The amortisation of intangibles increased during 2017 due to a
full year of amortisation for the 2016 PAC (Dispersions)
acquisition, the intangibles acquired with Speciality Additives and
due to foreign currency exchange rate movements.
2 Revenue by destination
2017 2016
-------- --------
audited audited
GBPm GBPm
Western Europe 778.3 533.6
Eastern Europe 102.8 63.8
North America 94.9 57.4
Malaysia 195.3 168.8
Other Asia 228.8 155.6
Africa and Middle East 58.2 51.9
Rest of World 21.9 14.6
-------- --------
Total revenue 1,480.2 1,045.7
======== ========
3 Finance costs
2017 2016
-------- --------
audited audited
GBPm GBPm
Interest payable on bank loans
and overdrafts 5.7 4.2
Less: interest receivable (1.0) (0.7)
-------- --------
4.7 3.5
Pensions - IAS 19 interest
charge 4.3 4.5
-------- --------
Total finance costs 9.0 8.0
-------- --------
4 Reconciliation of operating profit to cash generated from operations
2017 2016
-------- --------
audited audited
GBPm GBPm
Operating profit - continuing
operations 95.4 144.7
Less: share of profits of joint
ventures (1.0) (2.0)
-------- --------
94.4 142.7
Adjustments for:
Depreciation 36.4 29.7
Amortisation 0.8 0.2
Amortisation - Special Items 31.0 27.0
Restructuring and site
closure - Special Items 11.6 5.2
Share-based payments 2.8 2.0
Profit on sale of land - Special
Items (1.3) (33.2)
Gain on foreign exchange contracts
relating to acquisition - (13.1)
Acquisition costs - Special
Items 2.3 4.3
Profit on sale of business
- Special Items - (4.7)
Cash impact of restructuring
and site closure (6.0) (5.5)
Cash impact of FX relating
to purchase of business - 13.1
Cash impact of acquisition
costs (2.1) (4.0)
IAS 19 interest charge (4.3) (4.5)
Pension funding in excess of
IAS 19 interest charge (12.5) (12.4)
Movement in working capital 9.5 10.2
Cash generated from operations 162.6 157.0
-------- --------
Reconciliation of movement
in working capital
Increase in inventories (13.3) (13.3)
Increase in trade and other
receivables (24.0) (13.5)
Increase in trade and other
payables 46.8 37.0
-------- --------
Movement in working capital 9.5 10.2
-------- --------
5 EBITDA
The Group uses EBITDA as an alternative performance measure as
it provides an indication of the level of cash being generated by
the business from its trading activities in the period by excluding
the "non-cash" depreciation and amortisation charges and Special
Items. This is also the principal profit measure used for the
financial covenants in the Group's debt facilities.
Reconciliation 2017 2016
of EBITDA to
IFRS
------------------------------------------- --------
Europe Asia Unallocated Total Europe Asia Unallocated Total
& North & corporate & North & corporate
America Rest expenses America Rest expenses
of of
World World
audited audited audited audited audited audited audited audited
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
EBITDA 140.9 48.2 (12.9) 176.2 111.2 60.4 (11.5) 160.1
Depreciation
and amortisation (23.8) (13.1) (0.3) (37.2) (17.9) (11.7) (0.3) (29.9)
--------- -------- ------------ -------- ------------- -------- ------------ --------
Operating profit
- Underlying 117.1 35.1 (13.2) 139.0 93.3 48.7 (11.8) 130.2
Special Items (39.6) (3.9) (0.1) (43.6) (17.9) 32.6 (0.2) 14.5
Operating profit
- IFRS 77.5 31.2 (13.3) 95.4 75.4 81.3 (12.0) 144.7
--------- -------- ------------ -------- ------------- -------- ------------ --------
6 Dividends
2017 2016
--------------- ------------------
Pence GBPm Pence GBPm
per per share
share
audited audited
Interim dividend 3.7 12.6 3.5 11.9
Proposed final dividend 8.5 28.9 7.8 26.5
-------- ----- ----------- -----
12.2 41.5 11.3 38.4
-------- ----- ----------- -----
The proposed final dividend is subject to approval by
shareholders at the Annual General Meeting and has not been
included as a liability in these financial statements.
7 Purchase of business
The Group acquired 100% of the issued share capital of Perstorp
Oxo Belgium AB (Speciality Additives), a specialities chemical
company on 5 March 2017, to complement the Group's existing markets
and customers.
The Consideration paid in respect of this acquisition and the
fair value of net assets acquired is summarised as follows:
Net assets acquired
audited
GBPm
Intangible assets 41.4
Property, plant and equipment 8.9
Deferred tax liabilities (15.0)
Inventories 5.6
Trade and other receivables 5.7
Cash and cash equivalents 2.0
Trade and other payables (3.9)
Post retirement benefit obligations (2.7)
--------
Fair value of net assets acquired 42.0
Goodwill arising on acquisition 24.1
--------
Total consideration 66.1
--------
Satisfied by
Cash consideration 66.1
--------
Cash flow
Cash consideration 66.1
Net (cash) / overdraft acquired (2.0)
Net cash outflow arising on acquisition 64.1
--------
The 'Fair Value Adjustments' to the value of assets acquired
including Intangible assets, Property, plant and equipment, and
Provisions are made in accordance with International Financial
Reporting Standard 3 'Business Combinations' (revised 2008).
The goodwill arising on the acquisition on Perstorp Oxo Belgium
represents the premium the Group paid to acquire a company which
complements the existing business and create significant
opportunities for cross-selling and other synergies.
Acquisition costs expensed in 12 Total
months to 31 December 2017
--------
audited
GBPm
Other costs 0.5
--------
0.5
--------
In the period from acquisition to 31 December 2017 Perstorp Oxo
Belgium contributed the following to the Group's results:
Total
--------
audited
GBPm
Revenue of: 26.7
--------
Operating profit of: 3.7
--------
If the acquisition of Perstorp Oxo Belgium had been completed on
the first day of the financial year, the following would have been
included in the Group's result:
Total
--------
audited
GBPm
Revenue of: 31.9
--------
Operating profit of: 4.6
--------
8 Post balance sheet events
Purchase of business
On 31 January 2018 the Group acquired the of BASF Pischelsdorf
SBR business for a total consideration of GBP25.7m.
Book
and
Provisional
Fair
Value
-------------
GBPm
Net assets acquired
Property, plant and equipment 4.8
Inventories 2.2
Trade and other payables (0.6)
Post retirement benefit obligations (0.7)
-------------
Provisional fair value of net assets
acquired 5.7
Goodwill arising on acquisition 20.0
-------------
Total consideration 25.7
Satisfied by
Cash consideration 25.7
-------------
International Financial Reporting Standard 3 "Business
Combinations" (revised 2008) requires the assets acquired to be
initially recorded at Fair Value at the date of acquisition. Any
such Fair Value adjustments are provisional and will be finalised
within twelve months of the acquisition date. Any resulting changes
in the fair values may have an impact on the depreciation from the
date of acquisition and would be recorded in the financial
statements.
Neither a preliminary assessment of intangible assets nor the
Property Plant and Equipment (PPE) valuation had been completed at
the date of these financial statements. When the final valuation
work is concluded, a substantial increase in PPE and intangible
assets values, and a corresponding substantial reduction in
goodwill, is anticipated.
The acquisition of the BASF Pischelsdorf SBR business was
completed on 31 January 2018. The acquired business has therefore
not contributed to the results of the Group for the year ended 31
December 2017. Sufficient information is not currently available to
disclose the contribution to the Group if the acquisition has been
made on 1 January 2017.
Sale of business
On 1 January 2018, the Group disposed of 100% of the share
capital of Synthomer Leuna GmbH for GBP7.6m. The net assets of
Synthomer Leuna GmbH of GBP6.5m were transferred to assets held for
sale prior to disposal.
9 Further information
The financial information set out above does not constitute the
Company's financial statements for the years ended 31 December 2017
or 2016, but is derived from those statements. Financial statements
for 2016 have been delivered to the Registrar of Companies and
those for 2017 will be delivered following the Company's annual
general meeting. The auditor has reported on those statements;
their report was unqualified, did not draw attention to any matters
by way of emphasis and did not contain statements under s498 (2) or
(3) Companies Act 2006 or equivalent preceding legislation. While
the financial information included in this preliminary announcement
has been prepared in accordance with International Financial
Reporting Standards (IFRS), this announcement itself does not
contain sufficient information to comply with IFRS. The company
expects to publish full financial statements that comply with IFRS,
a copy of which will be posted to shareholders, on 26 March
2018.
The financial statements were approved by the Board of Directors
on 1 March 2018.
The accounting policies used to prepare these preliminary
results are the same as those used in the preparation of the
Group's audited accounts for the year ended 31 December 2016 which
have been delivered to the Registrar of Companies. Copies can be
obtained by the public from the Company's registered office Temple
Fields, Harlow, Essex, CM20 2BH, or on the Company website
www.synthomer.com.
The interim dividend of 3.7p per share was paid on 6 November
2017. The Directors recommend a final ordinary dividend of 8.5p per
share payable on 6 July 2018 to those shareholders registered at
the close of business on 8 June 2018.
Earnings per ordinary share are based on the attributable profit
for the period and the weighted average number of shares in issue
during the period - 339.9 million (2016: 339.9 million).
Going concern
The Directors have acknowledged the latest guidance on going
concern and in reaching their conclusions have taken into account
factors which include the amendment and restatement in March 2016
of the Group's main credit facility put in place in July 2014 and
which involved the putting in place of an extended commitment of
GBP370 million under the multicurrency revolving facilities
agreement until July 2019. After making enquiries and taking
account of reasonably possible changes in trading performance, the
Directors are satisfied that, at the time of approving the
financial statements, it is appropriate to adopt the going concern
basis in preparing the financial statements of both the Group and
the parent Company.
10 Glossary of terms
EBITDA EBITDA is calculated as operating profit
before depreciation, amortisation and
Special Items.
Operating Operating profit represents profit from
profit continuing activities before finance
costs and taxation.
Special Items The following are disclosed separately
as Special Items in order to provide
a clearer indication of the Group's
Underlying performance:
* Amortisation of acquired intangible assets;
* Impairment of non-current assets;
* Acquisition costs;
* Re-structuring and site closure costs;
* Fair value adjustment - mark to market adjustments in
respect of cross currency and interest rate
derivatives used for hedging purposes where IAS 39
hedge accounting is not applied;
* Items of income and expense that are considered
material, either by their size and/or nature; and
* Tax impact of above items.
Underlying Underlying performance represents the
performance statutory performance of the Group under
IFRS, excluding Special Items.
Net cash /(borrowings) Net cash /(borrowings) represent cash
and cash equivalents less short and
long term borrowings, as adjusted for
the effect of related derivative instruments
irrespective of whether they qualify
for hedge accounting, non-recourse factoring
arrangements, and the inclusion of financial
assets.
Ktes Kilotonne or 1,000 tonnes (metric)
This information is provided by RNS
The company news service from the London Stock Exchange
END
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