Solvay SA

Quarterly Report • Nov 3, 2022

First nine months 2022

Financial report

Regulated information

Published on November 3, 2022, at 7:00 a.m.

Contents

Forenote 2
Underlying business review 3
Supplementary information 10
Condensed interim consolidated financial statements[1] 16
Notes to the condensed consolidated financial statements 20
Glossary 26

Forenote

In addition to IFRS accounts, Solvay also presents alternative performance indicators to provide a more consistent and comparable indication of the Group's underlying financial performance and financial position, as well as cash flows. These indicators provide a balanced view of the Group's operations and are considered useful to investors, analysts and credit rating agencies as these measures provide relevant information on the Group's past or future performance, position or cash flows. These indicators are generally used in the sector it operates in and therefore serve as a useful aid for investors to compare the Group's performance with its peers. The underlying performance indicators adjust IFRS figures for the non-cash Purchase Price Allocation (PPA) accounting impacts related to acquisitions, for the coupons of perpetual hybrid bonds, classified as equity under IFRS but treated as debt in the underlying statements, for impairments and for other elements that would distort the analysis of the Group's underlying performance. The comments on the results made on pages 3 to 8 are on an underlying basis, unless otherwise stated.

Underlying business review

Highlights

• Record Net Sales in the third quarter of 2022 were up +29.5% organically versus Q3 2021, driven by higher prices, while overall volumes were essentially flat versus the prior year. All regions delivered double-digit organic growth in the quarter. Nine month 2022 sales were also up +29.5% organically thanks to pricing and volume growth versus the nine-month period 2021.
• Record Underlying EBITDA at €917 million in Q3 2022 was up +39.8% organically versus Q3 2021, driven by higher pricing which overcame the significant inflationary costs in the quarter. Nine months 2022 EBITDA was +31.9% organically above the prior-year nine months.
• Record EBITDA margin at 25.4% is +2.1 percentage points higher than Q3 2021 thanks to the sustained progress on pricing which offset the impact from rising raw materials, energy and logistics costs.
• Underlying Net Profit at €509 million in Q3 2022, 86.1% higher than Q3 2021.
• Free Cash Flow increased to €452 million in Q3 2022 (bringing the nine-month 2022 total to €924 million), and was positive for the 14th consecutive quarter. The FCF conversion ratio (LTM) was 36.8%.
• ROCE reached an all-time high at 15.4% versus 11.4% at the end of 2021.
• Further strengthening of the balance sheet with underlying net debt slightly down to €3.8 billion, reaching a historic low leverage of 1.2x.
• Interim dividend of €1.54 gross per share validated by the Board of Directors, to be paid on January 18, 2023.

		Third quarter			First nine months
Underlying (in € million)	2022	2021	% yoy	% organic	2022	2021	% yoy	% organic
Net sales	3,609	2,573	+40.3%	+29.5%	10,141	7,402	+37.0%	+29.5%
EBITDA	917	599	+53.2%	+39.8%	2,493	1,784	+39.7%	+31.9%
EBITDA margin	25.4%	23.3%	+2.1pp	-	24.6%	24.1%	+0.5pp	-
FCF	452	276	+63.8%	-	924	692	+33.5%	-
FCF conversion ratio (LTM)	36.8%	39.5%	-2.6pp	-	36.8%	39.5%	-2.6pp	-
ROCE	15.4%	10.6%	+4.8pp	-	15.4%	10.6%	+4.8pp	-

Ilham Kadri, CEO

"I am so incredibly proud of our people for delivering another quarter of outstanding performance. We again set new records in Sales, EBITDA, and ROCE, which is a clear demonstration of the hard work by our teams and real transformation that has occurred in the past three and a half years. We remain focused on bringing new innovations to the market that deliver measurable value to our customers, and we are prioritizing investments in strategic growth areas. Today's announcement is another example of our commitment to serve the growing electrification trend by expanding manufacturing of high performance polymers for batteries in North America. I could not be more pleased with these accomplishments and excited about our bright future as we progress with our plan to separate into two independent, strong companies."

2022 Outlook

On October 24, the company upgraded its full year 2022 EBITDA estimate to grow organically by around 28%. Today the company increased its Free Cash Flow estimate from around €750 million to around €1 billion for the year, including capital investments which may reach €1 billion.

Key figures

Underlying key figures

(in € million)	Q3 2022	Q3 2021	% yoy	9M 2022	9M 2021	% yoy
Net sales	3,609	2,573	+40.3%	10,141	7,402	+37.0%
EBITDA	917	599	+53.2%	2,493	1,784	+39.7%
EBITDA margin	25.4%	23.3%	+2.1pp	24.6%	24.1%	+0.5pp
EBIT	709	421	+68.3%	1,909	1,227	+55.6%
Net financial charges	-57	-64	+10.8%	-163	-181	+9.6%
Income tax expenses	-140	-74	-88.2%	-378	-228	-65.6%
Tax rate				23.2%	24.0%	-0.8pp
Profit from discontinued operations	2	1	n.m.	5	2	n.m.
(Profit) / loss attributable to non-controlling interests	-6	-10	-46.3%	-25	-30	-14.6%
Profit / (loss) attributable to Solvay shareholders	509	273	+86.1%	1,347	790	+70.6%
Basic earnings per share (in €)	4.90	2.64	+85.9%	12.99	7.63	+70.2%
of which from continuing operations	4.88	2.63	+85.6%	12.94	7.62	+69.9%
Capex	233	171	+36.3%	564	412	+36.9%
FCF to Solvay shareholders from continuing operations	452	276	+63.8%	924	692	+33.5%
FCF to Solvay shareholders	452	276	+63.8%	924	681	+35.7%
FCF conversion ratio (LTM)				36.8%	39.5%	-2.6pp
Net financial debt				3,809
Underlying leverage ratio				1.2

Group performance

Net sales

Net sales of €3,609 million increased +40.3% (+29.5% organically) versus Q3 2021 driven largely by pricing. Continued strong demand across most markets, particularly driven by automotive, electronics, civil aeronautics, mining, agriculture & food, and healthcare contributed to growth. All regions delivered double-digit organic sales growth, with Europe up +42%, North America up +17%, Latin America up 32% and Asia Pacific by 30% versus the third quarter 2021.

Underlying EBITDA

Underlying EBITDA reached a record high of €917 million in Q3 2022, +53.2% as a result of pricing actions, volume & mix effects, and positive foreign exchange impacts. Excluding the impacts of foreign exchange and scope, underlying EBITDA increased by +39.8% organically. EBITDA margin increased +2.1pp to 25.4% compared to Q3 2021 thanks to higher pricing and improved mix, more than offsetting higher variable and fixed costs.

Free cash flow to shareholders from continuing operations increased to a record-high level of €452 million in the third quarter, reflecting both the high profitability and working capital discipline. Free cash flow in the nine months of 2022 was €924 million, significantly higher than nine months 2021 (€692 million).

Underlying net debt

Underlying leverage reached another record low at 1.2x and net financial debt was slightly down at €3.8 billion.

Provisions

Provisions decreased by €506 million, compared to December 2021, to €2.1 billion. Higher discount rates and an additional €155 million voluntary contribution to our pension assets in Germany decreased the provisions for employee benefits, partially offset by lower assets performance. Environmental

provisions increased €93 million, reflecting the estimated cost of certain remediation activities in West Deptford, NJ over the next 20 years. Additional information is available in the financial report.

Interim dividend

Interim Dividend of €1.54 gross per share represents 40% of the 2021 total dividend (€3.85 per share) and is aligned with Solvay's policy and historic practices. This reflects a +2.7% increase compared to the interim dividend paid in January 2021.

Performance by segments

Net sales bridge

Net sales Q3	Underlying
(in € million)	Q3 2021	Scope	Forex conversion	Volume & mix	Price	Q3 2022
Solvay	2,573	-3	217	-15	836	3,609
Materials	752	3	60	69	230	1,114
Chemicals	856	-	68	-47	359	1,236
Solutions	964	-6	89	-39	248	1,257
CBS	1	-	-	1	-	2

Net sales 9M	Underlying
(in € million)	9M 2021	Scope	Forex conversion	Volume & mix	Price	9M 2022
Solvay	7,402	-67	498	306	2,002	10,141
Materials	2,152	-4	137	253	503	3,041
Chemicals	2,466	-17	161	-27	811	3,393
Solutions	2,780	-45	200	78	688	3,700
CBS	5	-	-	2	-	7

Materials

Segment sales in Q3 2022 increased +48.1% (+36.6% organically) driven by significant price increases, volume growth and continued strong demand for Specialty Polymers and Composite Materials.

Sales in Specialty Polymers were at record-high levels increasing +49.5% (+39.7% organically) compared to the third quarter 2021, and by 5% sequentially versus Q2 2022. Both pricing and volume contributed to sales growth, and demand remained strong in most markets – particularly in automotive (incl. EV batteries), electronics (particularly in semiconductors), and healthcare.

Composite Materials sales were up +43.8% year on year (+27.4% organically) driven by the continued recovery in civil aero, mainly single-aisle programs driving volume growth. Pricing also contributed to offset inflationary costs.

Third quarter segment EBITDA increased +56.5% (+43.4% organically) compared to Q3 2021, reflecting both price and volume growth in Specialty Polymers and Composite Materials. This led to a record 34.6% EBITDA margin in the third quarter or +1.9 percentage points higher versus last year.

Chemicals

Segment sales in Q3 2022 were up +44.4% (+33.8% organically) with each business contributing double-digit sales growth driven by pricing and resilient demand, while overall volume was slightly lower mainly in Coatis.

Soda Ash & Derivatives sales were up +65.8% (+55.3% organically) driven by continued demand strength on tight supply and price increases to offset increased energy and logistics costs. Volume growth was constrained in the quarter by a production issue which is now resolved. Bicarbonate sales increased on growth in flue gas treatment and pharmaceutical applications.

Peroxides sales rose +39.4% (+29.2% organically), driven by higher pricing. Volumes were down versus Q3 2021 as lower sales in HPPO outweighed volume increases in merchant market industries.

Coatis sales were up +10.4%. Organically, when excluding scope and FX conversion, sales were slightly down - 1.1% versus a strong comparable in Q3 2021 as price increases were offset by lower volumes.

Silica sales grew +41.0% (+33.8% organically) mainly from price increases while sales volumes were slightly lower.

Segment EBITDA was up +33.1% (+21.8% organically) versus Q3 2021. Pricing measures compensated for the modest volume declines. Earnings in Coatis and Rusvinyl continue to normalize to mid-cycle levels as competitive pressure increases and demand softens, particularly in Europe. As a result, the segment delivered an EBITDA margin of 25.2% in the third quarter or -2.1 percentage points lower versus last year.

Solutions

Sales in the third quarter of 2022 were up +30.3% (+19.9% organically), driven primarily by price increases, while volumes were modestly lower. Strong demand in Agro, Electronics and Mining were the biggest growth drivers in the quarter.

Third quarter sales in Novecare increased by +32.8% (+20.0% organically) versus the previous-year quarter. Growth was driven by strong demand in Agro backed by higher prices across all markets. Sales volumes were down for the quarter in certain segments of Industrial and Building & Construction markets.

Special Chem sales increased +24.8% (+23.2% organically) thanks to price increases across most business lines. Sales growth to the electronics market was partially offset by weakness in automotive catalysts.

Technology Solutions sales increased +30.3% (+16.4% organically) compared to Q3 2021 due to sustained strong demand in mining, particularly copper.

Aroma Performance sales were +22.6% (+13.3% organically) on sustained demand in food & beverage, and flavors & fragrance markets.

Oil & Gas Solutions sales grew +40.6% (+26.0% organically) supported by increased volume and pricing in the core market.

Third quarter EBITDA in the segment was up +35.7% (+21.0% organically) year on year, with strong demand and pricing outweighing the impact of rising raw materials, energy and logistics costs. EBITDA margin in the segment increased +0.8 percentage points year on year to 19.1% in Q3 2022.

Corporate & Business Services

Corporate and Business Services reported a loss of €-19 million to the Group EBITDA. This represents an improvement of +€39 million versus Q3 2021, due to phasing impacts on digital transformation and cybersecurity and an improvement in our energy supply business to third parties.

Key segment figures

Segment review	Underlying
				%				%
(in € million)	Q3 2022	Q3 2021	% yoy	organic	9M 2022	9M 2021	% yoy	organic
Net sales	3,609	2,573	+40.3%	+29.5%	10,141	7,402	+37.0%	+29.5%
Materials	1,114	752	+48.1%	+36.6%	3,041	2,152	+41.3%	+33.1%
Specialty Polymers	853	570	+49.5%	-	2,333	1,617	+44.3%	-
Composite Materials	262	182	+43.8%	-	707	534	+32.4%	-
Chemicals	1,236	856	+44.4%	+33.8%	3,393	2,466	+37.6%	+30.0%
Soda Ash & Derivatives	629	380	+65.8%	-	1,648	1,124	+46.6%	-
Peroxides	217	156	+39.4%	-	576	461	+24.8%	-
Coatis	225	204	+10.4%	-	685	538	+27.3%	-
Silica	164	117	+41.0%	-	485	343	+41.5%	-
Solutions	1,257	964	+30.3%	+19.9%	3,700	2,780	+33.1%	+26.1%
Novecare [1]	511	384	+32.8%	-	1,469	1,113	+32.0%	-
Special Chem	261	209	+24.8%	-	785	630	+24.7%	-
Technology Solutions [1]	189	145	+30.3%	-	550	417	+32.0%	-
Aroma Performance	146	119	+22.6%	-	454	338	+34.1%	-
Oil & Gas [1]	151	107	+40.6%	-	441	281	+57.0%	-
Corporate & Business Services	2	1	n.m.	+158.3%	7	5	+42.7%	+62.4%
EBITDA	917	599	+53.2%	+39.8%	2,493	1,784	+39.7%	+31.9%
Materials	385	246	+56.5%	+43.4%	984	672	+46.4%	+37.2%
Chemicals	311	234	+33.1%	+21.8%	906	723	+25.4%	+18.3%
Solutions	240	177	+35.7%	+21.0%	769	521	+47.8%	+37.8%
Corporate & Business Services	-19	-58	+67.2%	-	-167	-132	-26.8%	-
EBITDA margin	25.4%	23.3%	+2.1pp	-	24.6%	24.1%	+0.5pp	-
Materials	34.6%	32.7%	+1.8pp	-	32.4%	31.2%	+1.1pp	-
Chemicals	25.2%	27.3%	-2.1pp	-	26.7%	29.3%	-2.6pp	-
Solutions	19.1%	18.3%	+0.8pp	-	20.8%	18.7%	+2.1pp	-

(1) Sales of Novecare and Technology Solutions in prior periods have been restated to reflect the creation of an Oil & Gas GBU as from July 1, 2021. More information can be found in the note 3 on page 23.

Key IFRS figures

Q3 key figures		IFRS			Underlying
(in € million)	Q3 2022	Q3 2021	% yoy	Q3 2022	Q3 2021	% yoy
Net sales	3,609	2,573	+40.3%	3,609	2,573	+40.3%
EBITDA	775	513	+51.2%	917	599	+53.2%
EBITDA margin				25.4%	23.3%	+2.1pp
EBIT	527	300	+75.8%	709	421	+68.3%
Net financial charges	-1	-27	n.m.	-57	-64	+10.8%
Income tax expenses	-71	-11	n.m.	-140	-74	-88.2%
Profit from discontinued operations	-	5	n.m.	2	1	n.m.
(Profit) / loss attributable to non-controlling interests	-5	-10	-46.8%	-6	-10	-46.3%
Profit / (loss) attributable to Solvay shareholders	451	255	+76.4%	509	273	+86.1%
Basic earnings per share (in €)	4.34	2.47	+76.2%	4.90	2.64	+85.9%
of which from continuing operations	4.34	2.42	+79.3%	4.88	2.63	+85.6%
Capex				233	171	+36.3%
FCF to Solvay shareholders from continuing operations				452	276	+63.8%
FCF to Solvay shareholders				452	276	+63.8%
Net financial debt				3,809
Underlying leverage ratio				1.2

9M key figures	IFRS				Underlying
(in € million)	9M 2022	9M 2021	% yoy	9M 2022	9M 2021	% yoy
Net sales	10,141	7,402	+37.0%	10,141	7,402	+37.0%
EBITDA	2,578	1,476	+74.6%	2,493	1,784	+39.7%
EBITDA margin				24.6%	24.1%	+0.5pp
EBIT	1,879	802	n.m.	1,909	1,227	+55.6%
Net financial charges	-63	-85	+26.2%	-163	-181	+9.6%
Income tax expenses	-298	-109	n.m.	-378	-228	-65.6%
Tax rate				23.2%	24.0%	-0.8pp
Profit from discontinued operations	1	5	-85.2%	5	2	n.m.
(Profit) / loss attributable to non-controlling interests	-25	-30	-16.1%	-25	-30	-14.6%
Profit / (loss) attributable to Solvay shareholders	1,493	582	n.m.	1,347	790	+70.6%
Basic earnings per share (in €)	14.39	5.62	n.m.	12.99	7.63	+70.2%
of which from continuing operations	14.39	5.58	n.m.	12.94	7.62	+69.9%
Capex				564	412	+36.9%
FCF to Solvay shareholders from continuing operations				924	692	+33.5%
FCF to Solvay shareholders				924	681	+35.7%
FCF conversion ratio (LTM)				36.8%	39.5%	-2.6pp
Net financial debt				3,809
Underlying leverage ratio				1.2

Supplementary information

Reconciliation of alternative performance metrics

Solvay measures its financial performance using alternative performance metrics, which can be found below. Solvay believes that these measurements are useful for analyzing and explaining changes and trends in its historical results of operations, as they allow performance to be compared on a consistent basis. Definitions of the different metrics presented here are included in the glossary at the end of this financial report.

(in € million)		9M 2022	9M 2021
Profit / (loss) for the period before taxes	a	1,746	1,046
Earnings from associates & joint ventures	b	132	109
Interests and realized foreign exchange gains (losses) on the RusVinyl joint venture	c	-14	-15
Income taxes	d	-378	-228
Tax rate	e = -d/(a-b-c)	23%	24%

Free cash flow (FCF)
(in € million)		Q3 2022	Q3 2021	9M 2022	9M 2021
Cash flow from operating activities	a	505	454	1,362	1,086
of which voluntary pension contributions	b	-155	-	-155	-102
of which cash flow related to internal portfolio management and excluded from Free Cash Flow	c	-19	-3	-35	-3
Cash flow from investing activities	d	-162	-144	-424	-257
Acquisition (-) of subsidiaries	e	-	-	-	-22
Acquisition (-) of investments - Other	f	-	-6	-6	-8
Loans to associates and non-consolidated companies	g	4	-	-5	3
Sale (+) of subsidiaries and investments	h	24	11	51	114
Payment of lease liabilities	i	-30	-24	-82	-72
FCF	j = a-b-c+d-e-f-g-h+i	461	284	1,007	777
FCF from discontinued operations	k	-	-	-	-11
FCF from continuing operations	l = j-k	461	284	1,007	788
Net interests paid	m	-2	-7	-11	-42
Coupons paid on perpetual hybrid bonds	n	-	-	-55	-48
Dividends paid to non-controlling interests	o	-7	-1	-17	-6
FCF to Solvay shareholders	p = j+m+n+o	452	276	924	681
FCF to Solvay shareholders from continuing operations	q = p-p	452	276	924	692
FCF to Solvay shareholders from continuing operations (LTM)	r	1,074	854	1,074	854
Dividends paid to non-controlling interests from continuing operations (LTM)	s	-54	-33	-54	-33
Underlying EBITDA (LTM)	t	3,065	2,248	3,065	2,248
FCF conversion ratio (LTM)	u = (r-s)/t	36.8%	39.5%	36.8%	39.5%

Net working capital		2022	2021
(in € million)		September 30	December 31
Inventories	a	2,376	1,745
Trade receivables	b	2,431	1,805
Other current receivables	c	3,143	2,004
Trade payables	d	-2,656	-2,131
Other current liabilities	e	-3,081	-2,051
Net working capital	f = a+b+c+d+e	2,212	1,372
Sales	g	4,410	3,277
Annualized quarterly total sales	h = 4*g	17,639	13,108
Net working capital / sales	i = f / h	12.5%	10.5%
Year-to-date average	j = µ(Q1,Q2,Q3,Q4)	12.4%	12.7%

Capital expenditure (capex)

(in € million)		Q3 2022	Q3 2021	9M 2022	9M 2021
Acquisition (-) of tangible assets	a	-184	-128	-415	-288
Acquisition (-) of intangible assets	b	-19	-19	-67	-53
Payment of lease liabilities	c	-30	-24	-82	-72
Capex	d = a+b+c	-233	-171	-564	-412
Underlying EBITDA	e	917	599	2,493	1,784
Cash conversion	f = (d+e)/e	74.5%	71.5%	77.4%	76.9%

Net financial debt		2022	2021
		September	December
(in € million)		30	31
Non-current financial debt	a	-2,562	-2,576
Current financial debt	b	-833	-773
IFRS gross debt	c = a+b	-3,395	-3,349
Underlying gross debt	d = c+h	-5,195	-5,149
Other financial instruments (current + non-current)	e	442	259
Cash & cash equivalents	f	944	941
Total cash and cash equivalents	g = e+f	1,387	1,199
IFRS net debt	i = c+g	-2,009	-2,149
Perpetual hybrid bonds	h	-1,800	-1,800
Underlying net debt	j = i+h	-3,809	-3,949
Underlying EBITDA (LTM)	k	3,065	2,356
Underlying leverage ratio	l = -j/k	1.2	1.7

ROCE		Q3 2022	Q3 2021
(in € million)		As calcu lated	As calcu lated
EBIT (LTM)	a	2,283	1,486
Accounting impact from EUAs and amortization & depreciation of purchase price allocation (PPA) from acquisitions	b	-148	-153
Numerator	c = a+b	2,134	1,333
WC industrial	d	1,962	1,536
WC Other	e	-106	-156
Property, plant and equipment	f	5,069	4,744
Intangible assets	g	2,159	2,125
Right-of-use assets	h	481	420
Investments in associates & joint ventures	i	809	530
Other investments	j	44	42
Goodwill	k	3,483	3,312
Denominator	l = d+e+f+g+h+i+j+k	13,900	12,553
ROCE	m = c/l	15.4%	10.6%

Reconciliation of underlying income statement indicators

In addition to IFRS accounts, Solvay also presents underlying Income Statement performance indicators to provide a more consistent and comparable indication of Solvay's economic performance. These figures adjust IFRS figures for the non-cash Purchase Price Allocation (PPA) accounting impacts related to acquisitions, for the coupons of perpetual hybrid bonds classified as equity under IFRS but treated as debt in the underlying statements, and for other elements to generate a measure that avoids distortion and facilitates the appreciation of performance and comparability of results over time.

Consolidated income statement Q3		Q3 2022			Q3 2021
(in € million)	IFRS	Adjust ments	Under lying	IFRS	Adjust ments	Under lying
Sales	4,410	-	4,410	2,864	-	2,864
of which revenues from non-core activities	801	-	801	291	-	291
of which net sales	3,609	-	3,609	2,573	-	2,573
Cost of goods sold	-3,295	-	-3,295	-2,116	3	-2,113
Gross margin	1,115	-	1,115	748	3	751
Commercial costs	-90	-	-90	-70	-	-70
Administrative costs	-258	-	-258	-236	-	-236
Research & development costs	-98	1	-98	-72	1	-72
Other operating gains & losses	-34	38	3	-35	37	1
Earnings from associates & joint ventures	36	1	37	47	-	46
Result from portfolio management & major restructuring	-6	6	-	-40	40	-
Result from legacy remediation & major litigations	-137	137	-	-41	41	-
EBITDA	775	142	917	513	86	599
Depreciation, amortization & impairments	-248	40	-208	-213	35	-177
EBIT	527	182	709	300	122	421
Net cost of borrowings	-24	3	-22	-25	-	-25
Coupons on perpetual hybrid bonds	-	-21	-21	-	-21	-21
Interests and realized foreign exchange gains (losses) on the RusVinyl joint venture	-	-9	-9	-	-7	-7
Cost of discounting provisions	25	-31	-6	-5	-10	-14
Result from equity instruments measured at fair value	-1	1	-	2	-	2
Profit / (loss) for the period before taxes	526	125	652	272	85	357
Income taxes	-71	-69	-140	-11	-63	-74
Profit / (loss) for the period from continuing operations	456	56	512	261	22	283
Profit / (loss) for the period from discontinued operations	-	2	2	5	-4	1
Profit / (loss) for the period	456	58	514	266	18	284
attributable to Solvay share	451	58	509	255	18	273
attributable to non-controlling interests	5	-	6	10	-	10
Basic earnings per share (in €)	4.34	0.56	4.90	2.47	0.17	2.64
of which from continuing operations	4.34	0.54	4.88	2.42	0.21	2.63
Diluted earnings per share (in €)	4.34	0.56	4.90	2.46	0.17	2.64
of which from continuing operations	4.34	0.54	4.88	2.42	0.21	2.63

EBITDA on an IFRS basis totaled €775 million, versus €917 million on an underlying basis. The difference of €142 million is explained by the following adjustments to IFRS results, which are done to improve the comparability of underlying results:

• €1 million in "Earnings from associates & joint ventures" for Solvay's share in the financial charges of the RusVinyl joint venture.
• €5 million to adjust for the "Result from portfolio management and major restructuring" (excluding depreciation, amortization and impairment elements), includes separation costs incurred for the project aimed at the separation of the Group into two independent, publicly listed companies and other results related to final price adjustments.
• €137 million to adjust for the "Result from legacy remediation and major litigations". See Note on Environmental Liabilities set out in page 22 for more information.

EBIT on an IFRS basis totaled €527 million, versus €709 million on an underlying basis. The difference of €182 million is explained by the above-mentioned €142 million adjustments at the EBITDA level and €40 million of "Depreciation, amortization & impairments". The latter consist of:

• €38 million to adjust for the non-cash impact of purchase price allocation (PPA), consisting of amortization charges on intangible assets, which are adjusted in "Research & development costs" for €1 million, and in "Other operating gains & losses" for €38 million.
• €2 million to adjust for the impact of impairments reported in "Result from portfolio management and major restructuring" resulting primarily from the impairment of non-performing assets.

Net financial charges on an IFRS basis were €-1 million versus €-57 million on an underlying basis. The €-56 million adjustment made to IFRS net financial charges mainly consists of:

• €-21 million reclassification of coupons on perpetual hybrid bonds, which are treated as dividends under IFRS, and as financial charges in underlying results.
• €-9 million reclassification of financial charges and realized foreign exchange result on the €-denominated debt of RusVinyl as net financial charges.
• €-31 million for the net impact of increasing discount rates on the valuation of environmental liabilities in the period.

Income taxes on an IFRS basis were €-71 million, versus €-140 million on an underlying basis. The €-69 million adjustment relates to the adjustments of the earnings before taxes described above and to recognition of deferred taxes on losses.

Profit / (loss) attributable to Solvay shareholders was €451 million on an IFRS basis and €509 million on an underlying basis. The delta of €58 million reflects the above-mentioned adjustments to EBIT, net financial charges and income taxes.

9M consolidated income statement		9M 2022			9M 2021
		Adjust	Under		Adjust	Under
(in € million)	IFRS	ments	lying	IFRS	ments	lying
Sales	12,164	-	12,164	8,157	-	8,157
of which revenues from non-core activities	2,024	-	2,024	755	-	755
of which net sales	10,141	-	10,141	7,402	-	7,402
Cost of goods sold	-9,091	-	-9,091	-5,926	3	-5,923
Gross margin	3,073	-	3,073	2,231	3	2,234
Commercial costs	-250	-	-250	-210	-	-210
Administrative costs	-790	-	-790	-679	-	-678
Research & development costs	-263	2	-261	-238	2	-236
Other operating gains & losses	243	-238	5	-102	110	8
Earnings from associates & joint ventures	142	-10	132	109	-	109
Result from portfolio management & major restructuring	-62	62	-	-235	235	-
Result from legacy remediation & major litigations	-214	214	-	-74	74	-
EBITDA	2,578	-85	2,493	1,476	308	1,784
Depreciation, amortization & impairments	-699	115	-584	-675	117	-558
EBIT	1,879	30	1,909	802	425	1,227
Net cost of borrowings	-75	9	-66	-73	-	-73
Coupons on perpetual hybrid bonds	-	-61	-61	-	-61	-61
Interests and realized foreign exchange gains (losses) on the RusVinyl joint venture	-	-14	-14	-	-15	-15
Cost of discounting provisions	21	-43	-22	-16	-19	-35
Result from equity instruments measured at fair value	-10	10	-	4	-	4
Profit / (loss) for the period before taxes	1,816	-70	1,746	716	329	1,046
Income taxes	-298	-80	-378	-109	-119	-228
Profit / (loss) for the period from continuing operations	1,518	-150	1,368	608	210	818
Profit / (loss) for the period from discontinued operations	1	4	5	5	-3	2
Profit / (loss) for the period	1,519	-146	1,373	612	207	819
attributable to Solvay share	1,493	-146	1,347	582	208	790
attributable to non-controlling interests	25	-	25	30	-1	30
Basic earnings per share (in €)	14.39	-1.41	12.99	5.62	2.01	7.63
of which from continuing operations	14.39	-1.45	12.94	5.58	2.04	7.62
Diluted earnings per share (in €)	14.37	-1.40	12.97	5.61	2.00	7.61
of which from continuing operations	14.37	-1.44	12.92	5.56	2.03	7.60

EBITDA on an IFRS basis totaled €2,578 million, versus €2,493 million on an underlying basis. The difference of €-85 million is explained by the following adjustments to IFRS results, which are done to improve the comparability of underlying results:

• €-345 million in "other operating gains and losses", for the gains related to the management of the CO2 hedges, not accounted for as Cash Flow Hedge, deferred until the maturity of the economic hedge.
• €-10 million in "Earnings from associates & joint ventures" for Solvay's share in the financial charges of the RusVinyl joint venture and the foreign exchange results on the €-denominated debt of the joint venture, due to the strengthening of the RUB against the EUR over the period.
• €58 million to adjust for the "Result from portfolio management and major restructuring" (excluding depreciation, amortization and impairment elements), includes separation costs incurred for the project aimed at the separation of the Group into two independent, publicly listed companies.
• €214 million to adjust for the "Result from legacy remediation and major litigations". See Note on Environmental Liabilities set out in page 22 for more information.

EBIT on an IFRS basis totaled €1,879 million, versus €1,909 million on an underlying basis. The difference of €30 million is explained by the above-mentioned €-85 million adjustments at the EBITDA level and €115 million of "Depreciation, amortization & impairments". The latter consist of:

• €111 million to adjust for the non-cash impact of purchase price allocation (PPA), consisting of amortization charges on intangible assets, which are adjusted in "Research & development costs" for €2 million, and in "Other operating gains & losses" for €108 million.
• €4 million to adjust for the impact of impairments reported in "Result from portfolio management and major restructuring" resulting primarily from the impairment of non-performing assets.

Net financial charges on an IFRS basis were €-64 million versus €-163 million on an underlying basis. The €-99 million adjustment made to IFRS net financial charges mainly consists of:

• €-61 million reclassification of coupons on perpetual hybrid bonds, which are treated as dividends under IFRS, and as financial charges in underlying results.
• €-14 million reclassification of financial charges and realized foreign exchange result on the € denominated debt of RusVinyl as net financial charges.
• €-43 million for the net impact of increasing discount rates on the valuation of environmental liabilities in the period.
• €10 million for losses on financial instruments at fair value

Income taxes on an IFRS basis were €-298 million, versus €-378 million on an underlying basis. The €-80 million adjustment relates to the adjustments of the earnings before taxes described above and recognition of deferred taxes on losses.

Profit / (loss) attributable to Solvay shareholders was €1,493 million on an IFRS basis and €1,347 million on an underlying basis. The delta of €-146 million reflects the above-mentioned adjustments to EBIT, net financial charges and income taxes. There was no impact from non-controlling interests.

Condensed interim consolidated financial statements[1]

Consolidated income statement	IFRS
(in € million)	Q3 2022	Q3 2021	9M 2022	9M 2021
Sales	4,410	2,864	12,164	8,157
of which revenues from non-core activities [2]	801	291	2,024	755
of which net sales	3,609	2,573	10,141	7,402
Cost of goods sold	-3,295	-2,116	-9,091	-5,926
Gross margin	1,115	748	3,073	2,231
Commercial costs	-90	-70	-250	-210
Administrative costs	-258	-236	-790	-679
Research & development costs	-98	-72	-263	-238
Other operating gains & losses [3]	-34	-35	243	-102
Earnings from associates & joint ventures	36	47	142	109
Result from portfolio management & major restructuring [4]	-6	-40	-62	-235
Result from legacy remediation & major litigations [5]	-137	-41	-214	-74
EBIT	527	300	1,879	802
Cost of borrowings	-30	-26	-88	-80
Interest on loans & short term deposits	5	3	10	7
Other gains & losses on net indebtedness	1	-2	3	-1
Cost of discounting provisions	25	-5	21	-16
Result from equity instruments measured at fair value	-1	2	-10	4
Profit / (loss) for the period before taxes	526	272	1,816	716
Income taxes	-71	-11	-298	-109
Profit / (loss) for the period from continuing operations	456	261	1,518	608
attributable to Solvay share	450	251	1,493	577
attributable to non-controlling interests	5	10	25	30
Profit / (loss) for the period from discontinued operations	-	5	1	5
Profit / (loss) for the period	456	266	1,519	612
attributable to Solvay share	451	255	1,493	582
attributable to non-controlling interests	5	10	25	30
Weighted average of number of outstanding shares, basic	103,752,919	103,623,463	103,739,852	103,491,768
Weighted average of number of outstanding shares, diluted	103,874,625	103,655,964	103,879,921	103,766,670
Basic earnings per share (in €)	4.34	2.47	14.39	5.62
of which from continuing operations	4.34	2.42	14.39	5.58
Diluted earnings per share (in €)	4.34	2.46	14.37	5.61
of which from continuing operations	4.34	2.42	14.37	5.56

Consolidated statement of comprehensive income IFRS

(in € million)	Q3 2022	Q3 2021	9M 2022	9M 2021
Profit / (loss) for the period	456	266	1,519	612
Gains and losses on hedging instruments in a cash flow hedge [6]	-23	58	147	73
Currency translation differences from subsidiaries & joint operations [7]	343	122	859	340
Share of other comprehensive income of associates and joint ventures [8]	-12	2	199	26
Recyclable components	308	182	1,205	439
Gains and losses on equity instruments measured at fair value through other comprehensive income	-18	8	-26	26
Remeasurement of the net defined benefit liability [9]	54	29	297	452
Non-recyclable components	37	36	271	479
Income tax relating to recyclable and non-recyclable components	-4	-33	-122	-99
Other comprehensive income/(loss), net of related tax effects	341	185	1,354	818
Total comprehensive income/(loss)	797	451	2,872	1,430
attributable to Solvay share	790	438	2,843	1,394
attributable to non-controlling interests	7	13	29	36

[1] Subject to limited review by the auditors for 9M 2021 and 2022 only.

[2] The increase in revenues from non-core activities is mainly related to higher gas and electricity prices.

[3] Includes €346 million of gains related to the management of the CO2 hedges, not accounted for as Cash Flow Hedge in Q2, 2022, deferred in Adjustments until the maturity of the economic hedge.

[4] 9M 2021 Result from portfolio management & major restructuring mainly relates to the €150 million provision in relation with the strategic transformation announced in February 2021, resulting in a net reduction of approximately 500 roles.

[5] €93 million relates to an environmental provision recorded for PFAS.

[6] The gains and losses on hedging instruments in a cash flow hedge were mainly resulting from the increase in the gas price in 9M 2022.

[7] The gains from currency translation differences from subsidiaries & joint operations are mainly related to the revaluation of the USD and the RUB against the EUR in the period.

[8] The higher Share of other comprehensive income of associates and joint ventures in 9M 2022 mainly results from currency translation adjustments related to the Rusvinyl Equity investment, following the strengthening of the RUB against EUR.

[9] The remeasurement of the net defined benefit liability of €297 million (€452 million in 9M 2021) was mainly due to the increase of discount rates applicable to post-employment provisions in the Euro-zone, the UK and US, partly offset by the return on plan assets.

Consolidated statement of cash flows
(in € million)	Q3 2022	IFRS Q3 2021	9M 2022	9M 2021
Profit / (loss) for the period	456	266	1,519	612
Adjustments to profit / (loss) for the period	418	290	1,180	1,073
Depreciation, amortization & impairments	248	213	699	675
Earnings from associates & joint ventures	-36	-47	-142	-109
Additions & reversals of provisions	149	130	242	364
Other non-operating and non-cash items	-13	-44	25	-49
Net financial charges	-1	27	58	84
Income tax expenses	71	11	298	109
Changes in working capital	-100	-1	-787	-198
Uses of provisions	-66	-78	-229	-216
Use of provisions for additional voluntary contributions (pension plans)	-155		-155	-102
Dividends received from associates & joint ventures	3	29	14	76
Income taxes paid (excluding income taxes paid on sale of investments)	-50	-52	-179	-158
Cash flow from operating activities	505	454	1,362	1,086
of which cash flow related to internal portfolio management and excluded from Free Cash Flow	-19	-3	-35	-3
Acquisition (-) of subsidiaries	-	-	-	-22
Acquisition (-) of investments - Other	-	-6	-6	-8
Loans to associates and non-consolidated companies	4	-	-5	3
Sale (+) of subsidiaries and investments	24	11	51	114
Acquisition (-) of tangible and intangible assets (capex)	-203	-147	-482	-340
of which property, plant and equipment	-184	-128	-415	-288
of which intangible assets	-19	-19	-67	-53
Sale (+) of property, plant and equipment & intangible assets	15	3	17	16
Dividends from equity instruments measured at fair value through other comprehensive income	-	2	2	4
Changes in non-current financial assets	-	-7	-1	-23
Cash flow from investing activities	-162	-144	-424	-257
Acquisition (-) / sale (+) of treasury shares	-5	-	6	41
Increase in borrowings	9	33	160	206
Repayment of borrowings [1]	-431	-165	-490	-192
Changes in other financial assets [2]	-66	-52	-172	-91
Payment of lease liabilities	-30	-24	-82	-72
Net interests paid	-2	-7	-11	-42
Coupons paid on perpetual hybrid bonds	-	-	-55	-48
Dividends paid	-7	-1	-417	-394
of which to Solvay shareholders	-	-	-399	-388
of which to non-controlling interests	-7	-1	-17	-6
Acquisitions of non-controlling interests [3]	-	-	-109	-
Other [4]	4	99	206	155
Cash flow from financing activities	-529	-116	-963	-437
Net change in cash and cash equivalents	-185	193	-25	393
Currency translation differences	6	-4	29	3
Opening cash balance	1,124	1,216	941	1,009
Closing cash balance	944	1,405	944	1,405

[1] €378 million relates to the early payment of the senior 1.675% coupon bonds in Q3, 2022.

[2] Changes in other financial assets in 9M 2022 mainly relates to initial deposit margin calls.

[3] The €109 million in 9M 2022 relates to the acquisition, in Q2 2022, of the 20% minority stake of AGC in the Soda Ash JV operated in Green River, WY, USA, in May 2022.

[4] In 9M 2022, the Other cash flow from financing activities of €206 million mainly relate to excess margin calls ("out of the money" instruments) of €219 million.

Statement of cash flow from discontinued operations	IFRS
(in € million)	Q3 2022	Q3 2021	9M 2022	9M 2021
Cash flow from operating activities	-	-	-	-11
Net change in cash and cash equivalents	-	-	-	-11

Consolidated statement of financial position	2022	2021
(in € million)	September 30	December 31
Intangible assets	2,251	2,103
Goodwill	3,625	3,379
Property, plant and equipment	5,284	4,943
Right-of-use assets	500	466
Equity instruments measured at fair value	74	114
Investments in associates & joint ventures	968	637
Other investments	45	42
Deferred tax assets	801	779
Loans & other assets [1]	1,111	724
Other financial instruments	30	30
Non-current assets	14,690	13,216
Inventories	2,376	1,745
Trade receivables	2,431	1,805
Income tax receivables	156	109
Other financial instruments	412	229
Other receivables [1]	3,143	2,004
Cash & cash equivalents	944	941
Assets held for sale	26	-
Current assets	9,487	6,833
Total assets	24,177	20,049
Share capital	1,588	1,588
Share premiums	1,170	1,170
Other reserves	8,507	5,982
Non-controlling interests	72	112
Total equity	11,336	8,851
Provisions for employee benefits	996	1,574
Other provisions	800	724
Deferred tax liabilities	640	462
Financial debt	2,562	2,576
Other liabilities [1]	716	331
Non-current liabilities	5,715	5,666
Other provisions Financial debt [2]	298 833	302 773
Trade payables	2,656	2,131
Income tax payables	253	115
Dividends payables	5	160
Other liabilities [1]	3,081	2,051
Current liabilities	7,126	5,531
Total equity & liabilities	24,177	20,049

[1] The increase is largely driven by the fair value adjustments of energy-related financial assets and liabilities due to price increases in gas and electricity. As the fair value adjustments are on sale and purchase contracts of energy, they impact both assets and liabilities.

[2] The increase of the current financial debt is mainly explained by the margin calls (+219M€), the reclassification of Cytec senior bonds from non-current financial liabilities (+€201 million) and the reimbursement of the Senior bond for €378 million.

Consolidated statement of changes in equity	Revaluation reserve (fair value)
(in € million)	Share capital	Share premiums	Treasury shares	Perpetual hybrid bonds	Retained earnings	Currency translation differences	Equity instruments measured at fair value	Cash flow hedges	Defined benefit pension plans	Total other reserves	Non controlling interests	Total equity
Balance on December 31, 2020	1,588	1,170	-286	1,786	4,985	-1,153	12	14	-919	4,439	106	7,304
Profit / (loss) for the period	-	-	-	-	582	-	-	-	-	582	30	612
Items of other comprehensive income	-	-	-	-	-	360	21	53	379	812	6	818
Comprehensive income	-	-	-	-	582	360	21	53	379	1,394	36	1,430
Cost of share based payment plans	-	-	-	-	6	-	-	-	-	6	-	6
Dividends	-	-	-	-	-233	-	-	-	-	-233	-6	-239
Coupons of perpetual hybrid bonds	-	-	-	-	-48	-	-	-	-	-48	-	-48
Sale (acquisition) of treasury shares	-	-	41	-	-	-	-	-	-	41	-	41
Other	-	-	-	-	-16	5	-	-	12	1	-	1
Balance on September 30, 2021	1,588	1,170	-245	1,786	5,276	-789	33	67	-528	5,600	137	8,495
Balance on December 31, 2021	1,588	1,170	-232	1,786	5,467	-645	23	3	-421	5,982	112	8,851
Profit / (loss) for the period	-	-	-	-	1,493	-	-	-	-	1,493	25	1,519
Items of other comprehensive income	-	-	-	-	-	1,055	-20	104	211	1,350	4	1,354
Comprehensive income	-	-	-	-	1,493	1,055	-20	104	211	2,843	29	2,872
Cost of share based payment plans	-	-	-	-	9	-	-	-	-	9	-	9
Dividends	-	-	-	-	-244	-	-	-	-	-244	-18	-262
Coupons of perpetual hybrid bonds	-	-	-	-	-55	-	-	-	-	-55	-	-55
Sale (acquisition) of treasury shares	-	-	6	-	-	-	-	-	-	6	-	6
Other	-	-	-	-	-61	25	-	-	1	-34	-51	-85
Balance on September 30, 2022	1,588	1,170	-226	1,786	6,610	434	3	107	-209	8,507	72	11,336

9M 2022 Equity increased by €1,055 million after currency translation differences mainly due to the USD and RUB revaluation against EUR during the period.

The Other €-61 million reductions in Retained earnings mainly relates to the difference between the consideration paid and the net book value of the non-controlling interests in the Soda Ash JV in the USA.

Notes to the condensed consolidated financial statements

1. General information and significant events

Solvay is a public limited liability company governed by Belgian law and listed on Euronext Brussels and Euronext Paris. These condensed consolidated financial statements were authorized for issue by the Board of Directors on November 2, 2022.

Dombasle

Solvay and Veolia are launching the construction of an industrial energy transition project, "Dombasle Énergie", which aims to replace coal with refuse-derived fuel (RDF) for the production of clean and competitive energy for the historical Dombasle-sur-Meurthe plant, as from 2024. In this regard, Solvay holds a 10% share in an equity accounted investment. The project, which is valued at €225 million, is financed largely through non-recourse debt executed in February 2022 and government subsidies.

Tavaux PVDF

On February 1, 2022, the Group announced a €300 million investment to build a fully integrated and digitalized PVDF operation which will increase capacity at Solvay's site in Tavaux, France to 35 kilotons – making it the largest PVDF production site in Europe. This investment will be completed by December 2023 and reinforces Solvay's global leadership in this field, positioning it to capitalize on the growing demand for electric and hybrid vehicles.

Separation plan

On March 15, 2022, the Group announced its plans to separate into two independent publicly traded companies:

• EssentialCo would comprise leading mono-technology businesses including Soda Ash, Peroxides, Silica and Coatis, which are reported as the Company's Chemicals segment, as well as the Special Chem business. These businesses generated approximately €4.1 billion in net sales in 2021.
• SpecialtyCo would comprise the Company's currently reported Materials segment, including its high-growth, high-margin Specialty Polymers, its high-performance Composites business, as well as the majority of its Solutions segment, including Novecare, Technology Solutions, Aroma Performance, and Oil & Gas. These businesses combined generated approximately €6.0 billion in net sales in 2021.

Each company would have a tailored capital structure that best supports its value creation objectives. SpecialtyCo would be committed to a strong investment-grade rating. The company would have full financial flexibility at the time of separation to fund its growth plan. EssentialCo would maintain a prudent financial policy to support cash generation. The current investment grade rating of Solvay SA is intended to be preserved until the separation. Solvay SA is committed to offer current USD and EUR senior and hybrid bondholders the option to be transferred to SpecialtyCo in due time. The dividend at the outset is intended to be aligned with Solvay's current level.

Under the separation plan, Solvay's shareholders would retain their current shares of Solvay stock, which will continue to be listed on Euronext Brussels and Euronext Paris. The separation would be effected by means of a partial demerger of Solvay whereby the specialty businesses will be spun off to SpecialtyCo. Solvay shareholders at the time of separation would receive shares in SpecialtyCo pro rata to their shareholding in Solvay SA. The shares of each company would be expected to be listed on Euronext Brussels and Euronext Paris. The company expects to structure the separation in a manner that would be tax efficient for a significant majority of shareholders in key jurisdictions.

The composition of the Boards and management teams, as well as naming for each company, will be provided at a later date.

The transaction is subject to general market conditions and customary closing conditions, including final approval by Solvay's Board of Directors, consent of certain financing providers and shareholder approval at an extraordinary general meeting, and is expected to be completed in the second half of 2023. The Board of Directors of Solvac, Solvay's long-standing reference shareholder, has confirmed its support of Solvay's transaction.

Green River

On May 4, 2022, Solvay announced the acquisition of the 20% minority stake of AGC in the Soda Ash JV operated in Green River, WY, USA, building on its leadership position in trona-based soda ash production.

At a cash purchase price of US\$120 million, this transaction will be significantly value accretive to Solvay, with a post-tax cash return on capital in excess of 15%. The transaction was completed on May 4, 2022.

Post-retirement benefits

A voluntary contribution of €155 million was made in Germany in September 2022.

Senior Bonds

On September 1, 2022, Solvay decided to exercise its residual maturity call option on the 2022 €-senior bonds 1.625%, ISIN BE6282459609 (outstanding of € 378 million out of the initial amount of € 750 million). The exercise was implemented in accordance with the terms and conditions of the related prospectus.

Financial implication of the Russia/Ukraine Crisis

Russia's actions in Ukraine combined with the Group decision to suspend the dividends distribution from our RusVinyl Joint Venture (50%) in Russia have been considered as a trigger for an impairment test as of Q2 2022.

As a result, the Group performed an impairment test based on dividend discount models prepared for different business scenarios, considering the following key assumptions:

• RusVinyl maintains business continuity and is able to secure raw materials to maintain production,
• 0% long term growth rate, to reflect the long term impacts of the conflict on economic growth in Russia,
• dividends stream would resume from 2027, assuming a long lasting conflict and sanctions against Russia,
• a long term WACC used for the Terminal Value which reflects pre-crisis levels and a long term uncertainty premium.

The carrying amount of RusVinyl equity investment at the end of Q2 2022 was €560 million, based on the closing exchange rate of 56.4 RUB/EUR. The results of the impairment test indicated that no such impairment existed. The impairment test is not sensitive to any reasonable change of assumptions: for instance, an increase of the long term WACC by 200 bp or a decrease of the Long term growth rate by 100 bp would not lead to any impairment.

The assumptions used and conclusions reached in the Q2 2022 impairment test of RusVinyl remain valid at the end of Q3 2022 considering that the value of the equity investment has not changed significantly and the EU import ban on PVC products from Russia introduced in October 2022 was anticipated in the Q2 2022 impairment analysis.

In accordance with IFRS 11 Joint Arrangements, the Group has assessed whether the changes in the legal and operating environment of Russia have impacted the ability to exercise its joint control over RusVinyl. There are no changes in facts and circumstances as of Q3 2022 that may significantly limit our ability to exercise our rights or governance with respect to RusVinyl.

Financial guarantees related to RusVinyl amounted to €83 million at December 31, 2021 (€ 84 million at the end of 2020) and was disclosed as contingent liabilities in the 2021 Annual Report. Those guarantees have been given on the basis of several liability by both shareholders, Solvin/Solvay and SIBUR, proportionate to their equity interest (50/50). In Q3 2022, RusVinyl reimbursed its outstanding debt resulting in the aforementioned financial guarantees being released.

Financial implication of rising energy prices

The volatility in gas and electricity prices experienced by the Group can largely be attributed to the conflict in Ukraine, which has impacted the financial statements of Solvay in several ways including:

• Increased non-core trading revenues
• Substantially increased the fair value adjustments of energy-related financial assets and liabilities due to the price increases in gas and electricity. As the fair value adjustments are on sale and purchase contracts of energy, they impact both assets and liabilities.
• Increased raw material and logistics costs

The Group will continue to monitor the inflationary pressure and manage the impacts on the financial statements – see the Underlying Business Review for additional information.

Market Capitalization

On September 30, 2022, the market capitalization of the Group (€8.4 billion) was lower than its total equity (€11.3 billion). Management did not perform any additional impairment testing at the reporting date as all the relevant criteria included in IAS 36 Impairment of Assets, paragraph 99¹ were met and accordingly it was concluded that no impairment should be recognized.

Cash Flow Hedge derecognition

In the wake of the European energy crisis impacting gas consumption in several countries and due to the European Union's sanctions on the sourcing of gas and coal from Russia, the Group revised the expected activity of several of its cogeneration units in Europe in Q3 2022 with a view to both preserving business continuity and reducing gas consumption. These developments triggered the need to reassess the probability and conditions of future energy

¹ Par 99 foresees that: (i) if the assets and liabilities of the CGUs have not changed significantly since the most recent test; (ii) if the most recent impairment test resulted in a substantial headroom; and (iii) if the likelihood that a current recoverable amount determination would be less than the current carrying amount of the unit is remote, the value in use determined in the most recent impairment test can also be used in the present period.

consumption at each site when updating the Cash Flow Hedge (CFH) documentation. As part of this reassessment, the Group identified certain hedges for which the underlying future energy purchases are no longer highly probable (but still expected to occur) or subject to modified purchasing conditions, resulting in those hedges ceasing to meet the qualifying criteria for CFH accounting during Q3. The discontinuation of hedge accounting resulted in a favorable €39 million accumulated mark-to-market that will remain in Other Comprehensive Income with future recycling to the consolidated income statement as the underlying transactions occur (half in 2022, half in 2023).

European Union Allowances (EUAs)

Management practices related to hedging of CO² exposure were changed in the previous quarter, in view of both increased volatility in energy and CO² markets and the plan to separate Solvay SA into two independent groups. Consequently, the Group has reconsidered the conditions of the own use exemption and accordingly the entire portfolio of EUA futures has been accounted for at the end of Q2 2002 in accordance with the general rules of IFRS 9 Financial Instruments, and a profit of €346 million has been classified as "Other operating gains and losses".

Since the economic substance of hedging future CO² exposures remains unchanged, such gains and losses are deferred in Adjustments until the maturity of the economic hedge.

As from Q3 2022, cash flow hedge accounting is applied to the entire portfolio of EUAs.

Environmental Liabilities

In the United States, Solvay Specialty Polymers USA LLC (SpP) has made significant progress toward determining the scope of remedial activities pertaining to the per- and polyfluoroalkyl substances (PFAS) related to the West Deptford, New Jersey site. Due to recent technical studies and in cooperation with the local authorities, Solvay was able to reasonably estimate future expenses for this remediation. As a consequence, and in line with Solvay's accounting practices, a corresponding provision of €93 million was booked in Q3 2022.

The environmental provision recorded is based on the net present value of the cash flow forecast needed, for current and future years, to settle the remediation obligations. Forecasted expenditures are based on external consultants' estimates, where appropriate and possible. The resulting cash outflows are expected to occur over a minimum 20 year period with 50% of the outflows occurring within the next 2 years.

This liability was recorded in "Other non-current provisions" in the Consolidated Statement of Financial Position and the associated impact in the Consolidated Income Statement was recorded in "Results from legacy remediation and major litigations" together with all the other remediation impacts that relate to legacy activities. Legacy remediation costs are considered Adjustments to our IFRS Results. This provision reduces though does not eliminate the associated contingent liabilities previously reported.

2. Accounting policies

Solvay prepares its condensed consolidated interim financial statements on a quarterly basis, in accordance with IAS 34 Interim Financial Reporting using the same accounting policies as those adopted for the preparation of the consolidated financial statements for the year ended December 31, 2021. They do not include all the information required for the preparation of the annual consolidated financial statements and should be read in conjunction with the consolidated financial statements for the year ended December 31, 2021. The consolidated financial statements for 2021 were published in early April 2022.

The critical accounting judgments and key sources of estimation uncertainty included in the 2021 annual report remain applicable. Relevant updates on specific topics are included in these notes and should be read together with the 2021 annual report.

Below are the standards, interpretations and amendments that became effective as of January 1, 2022 and which are relevant to the Group.

Property, plant and equipment: Proceeds before Intended Use – Amendments to IAS 16

In May 2020, the IASB issued an amendment to IAS 16 Property, plant and equipment (effective January 1, 2022) which prohibits entities from deducting from the cost of an item of property, plant and equipment, any proceeds of the sale of items produced while bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Instead an entity recognizes the proceeds from selling such items, and the costs of producing those items, in profit or loss. This amendment did not have any impact on the Group's condensed consolidated interim financial statements.

Onerous Contracts – Costs of Fulfilling a Contract – Amendments to IAS 37

In May 2020, the IASB issued amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets (effective January 1, 2022) to specify which costs an entity needs to include when assessing whether a contract is onerous or loss-making. The amendments apply a 'directly related cost approach'. The costs that relate directly to a contract to provide goods or services include both incremental costs (e.g., the costs of direct labor and materials) and an allocation of costs directly related to contract activities (e.g., depreciation of equipment used to fulfill the contract as well as costs of contract management and supervision). General and administrative costs do not relate directly to a contract and are excluded unless they are explicitly chargeable to the counterparty under the contract. This amendment did not have more than an insignificant impact on the Group's condensed consolidated interim financial statements.

Fees in the "10 per cent" test for derecognition of financial liabilities – Amendments to IFRS 9

In May 2020, the IASB issued an amendment to IFRS 9 Financial Instruments (effective January 1, 2022) that clarifies the fees that an entity includes when assessing whether the terms of a new or modified financial liability are substantially different from the terms of the original financial liability. These fees include only those paid or received between the borrower and the lender, including fees paid or received by either the borrower or lender on the other's behalf. This amendment did not have more than an insignificant impact on the Group's condensed consolidated interim financial statements.

3. Segment information

Solvay is organized in the following operating segments:

Materials offer a unique portfolio of high-performance polymers and composite technologies used primarily in sustainable mobility applications. Its solutions enable weight reduction and enhance performance while improving CO² and energy efficiency. Major markets served include next-generation mobility in automotive and aerospace, healthcare and electronics. Chemicals host chemical intermediate businesses focused on mature and resilient markets. Solvay is a world leader in soda ash and peroxides and major markets served include building and construction, consumer goods and food. Its Silica, Coatis and RusVinyl businesses are also high quality assets with strong positions in their markets. This segment provides resilient cash flows and the company selectively invests in these businesses to become the #1 cash conversion chemical player.

Solutions offer a unique formulation & application expertise through customized specialty formulations for surface chemistry & liquid behavior, maximizing yield and efficiency of the processes they are used in while minimizing the ecoimpact. Novecare, Technology Solutions, Aroma, Special Chem and Oil & Gas focus on specific areas such as resources (improving the extraction yield of metals, minerals and oil), industrial applications (such as coatings) or consumer goods and healthcare (including vanillin and guar for home and personal care).

Corporate & Business Services includes corporate and other business services, such as Group research & innovation or energy services, whose mission is to optimize energy consumption and reduce CO² emissions.

(in € million)	Q3 2022	Q3 2021	9M 2022	9M 2021
Net sales	3,609	2,573	10,141	7,402
Materials	1,114	752	3,041	2,152
Chemicals	1,236	856	3,393	2,466
Solutions	1,257	964	3,700	2,780
Corporate & Business Services	2	1	7	5
Underlying EBITDA	917	599	2,493	1,784
Materials	385	246	984	672
Chemicals	311	234	906	723
Solutions	240	177	769	521
Corporate & Business Services	-19	-58	-167	-132
Underlying depreciation, amortization & impairments	-208	-177	-584	-558
Underlying EBIT	709	421	1,909	1,227
Accounting impact from EUAs and amortization & depreciation of purchase price allocation (PPA) from acquisitions	-38	-40	236	-116
Net financial charges of the RusVinyl joint venture	-1	-	10	-
Result from portfolio management & major restructuring	-6	-40	-62	-235
Result from legacy remediation & major litigations	-137	-41	-214	-74
EBIT	527	300	1,879	802
Net financial charges	-1	-27	-63	-85
Profit / (loss) for the period before taxes	526	272	1,816	716
Income taxes	-71	-11	-298	-109
Profit / (loss) for the period from continuing operations	456	261	1,518	608
Profit / (loss) for the period from discontinued operations	-	5	1	5
Profit / (loss) for the period	456	266	1,519	612
attributable to non-controlling interests	5	10	25	30
attributable to Solvay share	451	255	1,493	582

Reconciliation of segment, underlying and IFRS data

The non-cash PPA impacts can be found in the reconciliation table on page 12.

The Oil & Gas GBU was created on July 1, 2021, regrouping activities that were previously included in Novecare and Technology Solutions. The following table presents restated figures for these GBUs for 2021 and 2022 to date.

Net sales (in € million)				Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022			Q3 2022
Novecare (excl. Oil & Gas)	354	375	384	433	452	506	511
Special Chemicals	211	210	209	210	243	285	261
Technology Solutions (excl. Oil & Gas)	133	139	145	143	151	207	189
Aroma Performance	110	110	119	135	142	167	146
Oil & Gas	83	91	107	137	147	143	151
Solutions	891	925	964	1,058	1,135	1,309	1,257

4. Financial Instruments

Valuation techniques

Compared to December 31, 2021, there are no changes in valuation techniques.

Fair value of financial instruments measured at amortized cost

For all financial instruments not measured at fair value in Solvay's consolidated statement of financial position, the fair value of those financial instruments as of September 30, 2022, is not significantly different from the ones published in Note F32 of the consolidated financial statements for the year ended December 31, 2021.

Financial instruments measured at fair value

For financial instruments measured at fair value in Solvay's consolidated statement of financial position, the fair value of those instruments as of September 30, 2022 increased Other receivables by €1.0 billion and Other liabilities by €0.8 billion when compared to December 31, 2021. The main driver of the increases is due to the rise in electricity and gas prices during the period.

5. Events after the reporting period

There were no significant events after the reporting period.

6. Declaration by responsible persons

Ilham Kadri, Chief Executive Officer, and Karim Hajjar, Chief Financial Officer, of the Solvay Group, declare that to the best of their knowledge:

• The condensed consolidated financial information, prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union, reflects a faithful image of the assets and liabilities, financial situation and results of the Solvay Group;
• The management report contains a faithful presentation of significant events occurring during the first nine months of 2022, and their impact on the condensed consolidated financial information;
• The main risks and uncertainties are in accordance with the assessment disclosed in the Risk Management section of the Solvay 2021 Annual Integrated Report, taking into account the current economic and financial environment.

Glossary

Adjustments: Each of these adjustments made to the IFRS results is considered to be significant in nature and/or value. Excluding these items from the profit metrics provides readers with relevant additional information on the Group's underlying performance over time because it is consistent with how the business' performance is reported to the Board of Directors and the Executive Committee. These adjustments consist of:

• Results from portfolio management and major restructurings,
• Results from legacy remediation and major litigations,
• Amortization of intangible assets resulting from Purchase Price Allocation (PPA) and inventory step-up in gross margin,
• Net financial results related to changes in discount rates, coupons of hybrid bonds deducted from equity under IFRS and debt management impacts (mainly including gains/(losses) related to the early repayment of debt,
• Adjustments of equity earnings for impairment gains or losses and unrealized foreign exchange gains or losses on debt,
• Results from equity instruments measured at fair value,
• Gains and losses, related to the management of the CO² hedges not accounted for as Cash Flow Hedge, deferred in adjustments until the maturity of the economic hedge
• Tax effects related to the items listed above and tax expense or income of prior years

All adjustments listed above apply to both continuing and discontinuing operations, and include the impacts on noncontrolling interests

Basic earnings per share: Net income (Solvay's share) divided by the weighted average number of shares, after deducting own shares purchased to cover stock option programs.

Capital expenditure (capex): Cash paid for the acquisition of tangible and intangible assets presented in cash flows from investing activities, and cash paid on the lease liabilities (excluding interests paid), presented in cash flows from financing activities. This indicator is used to manage capital employed in the Group.

Cash conversion: Is a ratio used to measure the conversion of EBITDA into cash. It is defined as (Underlying EBITDA + Capex from continuing operations) / Underlying EBITDA.

CFROI: Cash Flow Return on Investment measures the cash returns of Solvay's business activities. Movements in CFROI levels are relevant indicators for showing whether economic value is being added, though it is accepted that this measure cannot be benchmarked or compared with industry peers. The definition uses a reasonable estimate (management estimate) of the replacement cost of assets and avoids accounting distortions, e.g. for impairments. It is calculated as the ratio between recurring cash flow and invested capital, where:

• Recurring cash flow = Underlying EBITDA + (Dividends from associates and joint ventures Underlying Earnings from associates and joint ventures) + Recurring capex + Recurring income taxes;
• Invested capital = Replacement value of goodwill & fixed assets + Net working capital + Carrying amount of associates and joint ventures;
• Recurring capex is normalized at 2.3% of the Replacement value of fixed assets net of Goodwill;
• Recurring income taxes are normalized at 28% of (Underlying EBIT Underlying Earnings from associates and joint ventures).

CTA: Currency Translation Adjustment

Diluted earnings per share: Net income (Solvay's share) divided by the weighted average number of shares adjusted for the effects of dilution.

Discontinued operations: Component of the Group which the Group has disposed of or which is classified as held for sale, and:

• Represents a separate major line of business or geographical area of operations;
• Is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations; or
• Is a subsidiary acquired exclusively with a view to resale

EBIT: Earnings before interest and taxes. Performance indicator that is a measure of the Group's operating profitability irrespective of the funding's structure.

EBITDA: Earnings before interest and taxes, depreciation and amortization. The Group has included EBITDA as an alternative performance indicator because management believes that the measure provides useful information to assess the Group's operating profitability as well as the Group's ability to generate operating cash flows.

Extra-financial indicators: Indicators used that measure the sustainability performance of the company in complement to financial indicators. Solvay has selected 10 indicators that are included in the ONE Planet initiative. For more information, we refer to the last available annual report available on www.solvay.com

Free cash flow: Cash flows from operating activities (excluding cash flows linked to acquisitions or disposals of subsidiaries and cash outflows of Voluntary Pension Contributions, as they are deleveraging in nature as a reimbursement of debt), cash flows from investing activities (excluding cash flows from or related to acquisitions and disposals of subsidiaries, cash flows related to internal management of portfolio (one-off costs of internal carve-out, related taxes...) and other investments, and excluding loans to associates and non-consolidated investments, and recognition of factored receivables), payment of lease liabilities, and increase/decrease of borrowings related to environmental remediation. Prior to the adoption of IFRS 16, operating lease payments were included within free cash flow. Following the application of IFRS 16, because leases are generally considered to be operating in nature, free cash flow incorporates the payment of the lease liability (excluding the interest expense). Excluding this item in the free cash flow would result in a significant improvement of free cash flow compared to prior periods, whereas the operations themselves have not been affected by the implementation of IFRS 16. It is a measure of cash generation, working capital efficiency and capital discipline of the Group.

Free cash flow to Solvay shareholders: Free cash flow after payment of net interests, coupons of perpetual hybrid bonds and dividends to non-controlling interests. This represents the cash flow available to Solvay shareholders, to pay their dividend and/or to reduce the net financial debt.

Free cash flow conversion: Calculated as the ratio between the free cash flow to Solvay shareholders of the last rolling 12 months (before netting of dividends paid to non-controlling interest) and underlying EBITDA of the last rolling 12 months.

GBU: Global business unit.

HPPO: Hydrogen peroxide propylene oxide, new technology to produce propylene oxide using hydrogen peroxide.

IFRS: International Financial Reporting Standards.

LTM: Last twelve months

Leverage ratio: Net debt / underlying EBITDA of last 12 months. Underlying leverage ratio = underlying net debt / underlying EBITDA of last 12 months.

Mandatory contributions to employee benefits plans: For funded plans, contributions to plan assets corresponding to amounts required to be paid during the respective period, in accordance with agreements with trustees or regulation, as well as, for unfunded plans, benefits paid to beneficiaries.

Net cost of borrowings: cost of borrowings netted with interest on loans and short-term deposits, as well as other gains (losses) on net indebtedness.

Net financial debt: Non-current financial debt + current financial debt – cash & cash equivalents – other financial instruments. Underlying net debt reclassifies as debt 100% of the hybrid perpetual bonds, considered as equity under IFRS. It is a key measure of the strength of the Group's financial position and is widely used by credit rating agencies.

Net financial charges: Net cost of borrowings, and costs of discounting provisions (namely, related to postemployment benefits and Health Safety and Environmental liabilities).

Net pricing: The difference between the change in sales prices versus the change in variable costs.

Net sales: Sales of goods and value added services corresponding to Solvay's know-how and core business. Net sales exclude Revenue from non-core activities.

Net working capital: Includes inventories, trade receivables and other current receivables, netted with trade payables and other current liabilities.

OCI: Other Comprehensive Income.

Operational deleveraging: Reduction of liabilities (net debt or provisions) through operational performance only, i.e. excluding impacts from acquisitions and divestitures, as well as remeasurement impacts (changes of foreign exchange, inflation, mortality and discount rates).

Organic growth: Growth of Net sales or underlying EBITDA excluding scope changes and forex conversion effects. The calculation is made by rebasing the prior period at the business scope and forex conversion rate of the current period.

PA: Polyamide, polymer type.

pp: Unit of percentage points, used to express the evolution of ratios.

PPA: Purchase Price Allocation (PPA) accounting impacts related to acquisitions, primarily for Rhodia and Cytec.

Pricing power: The ability to create positive net pricing.

PSU: Performance Share Unit.

PVC: Polyvinyl chloride, polymer type.

Research & innovation: Research & development costs recognized in the income statement and as capital expenditure before deduction of related subsidies, royalties and depreciation and amortization expense. It measures the total cash effort in research & innovation, regardless of whether the costs were expensed or capitalized.

Research & innovation intensity: Ratio of Research & innovation / net sales

Result from legacy remediation and major litigations: It includes:

• The remediation costs not generated by on-going production facilities (shut-down of sites, discontinued productions, previous years' pollution), and
• The impact of significant litigations

Results from portfolio management and major restructuring: It includes:

• Gains and losses on the sale of subsidiaries, joint operations, joint ventures, and associates that do not qualify as discontinued operations;
• Acquisition costs of new businesses;
• One-off operating costs related to internal management of portfolio (carve-out of major lines of businesses);
• Gains and losses on the sale of real estate not directly linked to an operating activity;
• Restructuring charges driven by portfolio management and by major reorganization of business activities, including impairment losses resulting from the shutdown of an activity or a plant;
• Impairment losses resulting from testing of Cash Generating Units (CGUs);
• It excludes non-cash accounting impact from amortization and depreciation resulting from the purchase price allocation (PPA) from acquisitions

Revenue from non-core activities: Revenues primarily comprising commodity and utility trading transactions and other revenue, considered to not correspond to Solvay's know-how and core business.

ROCE: Return on Capital Employed, calculated as the ratio between underlying EBIT (before adjustment for the amortization of PPA) and capital employed. Capital employed consists of net working capital, tangible and intangible assets, goodwill, rights-of-use assets, investments in associates & joint ventures and other investments, and is taken as the average of the situation at the end of the last 4 quarters.

SBTi: Science-based target initiative

SOP: Stock Option Plan.

SPM: The Sustainable Portfolio Management tool is integrated into the Solvay Way framework (linked to five practices). It serves as a strategic tool for developing information on our portfolio and analyzing the impacts of sustainability megatrends on our businesses.

Underlying: Underlying results are deemed to provide a more comparable indication of Solvay's fundamental performance over the reference periods. They are defined as the IFRS figures adjusted for the "Adjustments" as defined above. They provide readers with additional information on the Group's underlying performance over time as well as the financial position and they are consistent with how the business' performance and financial position are reported to the Board of Directors and the Executive Committee.

Underlying Tax rate: Income taxes / (Result before taxes – Earnings from associates & joint ventures – interests & realized foreign exchange results on RusVinyl joint venture) – all determined on an Underlying basis. The adjustment of the denominator regarding associates and joint ventures is made as these contributions are already net of income taxes. This provides an indication of the tax rate across the Group.

Voluntary pension contributions: Contributions to plan assets in excess of Mandatory Contributions to employee benefits plans. These payments are discretionary and are driven by the objective of value creation. These voluntary contributions are excluded from free cash flow as they are deleveraging in nature as a reimbursement of debt.

WACC: Weighted Average Cost of Capital

yoy: Year on year comparison.

Contacts

Investor relations Media relations

Geoffroy d'Oultremont Martial Tardy +32 2 264 29 97 +32 475 83 01 14

Bisser Alexandrov Peter Boelaert

Alex Sokolowski +1 609 860 4728

investor.relations@solvay.com media.relations@solvay.com

Jodi Allen Nathalie Van Ypersele +1 609 860 4608 +32 478 20 10 62

+32 2 264 36 87 +32 479 30 91 59

Safe harbor

This press release may contain forward-looking information. Forward-looking statements describe expectations, plans, strategies, goals, future events or intentions. The achievement of forward-looking statements contained in this press release is subject to risks and uncertainties relating to a number of factors, including general economic factors, interest rate and foreign currency exchange rate fluctuations, changing market conditions, product competition, the nature of product development, impact of acquisitions and divestitures, restructurings, products withdrawals, regulatory approval processes, all-in scenario of R&I projects and other unusual items. Consequently, actual results or future events may differ materially from those expressed or implied by such forward-looking statements. Should known or unknown risks or uncertainties materialize, or should our assumptions prove inaccurate, actual results could vary materially from those anticipated. Solvay undertakes no obligation to publicly update or revise any forward-looking statements.

About Solvay

Solvay is a science company whose technologies bring benefits to many aspects of daily life. With more than 21,000 employees in 64 countries, Solvay bonds people, ideas and elements to reinvent progress. The Group seeks to create sustainable shared value for all, notably through its Solvay One Planet plan crafted around three pillars: protecting the climate, preserving resources and fostering better life. The Group's innovative solutions contribute to safer, cleaner, and more sustainable products found in homes, food and consumer goods, planes, cars, batteries, smart devices, health care applications, water and air purification systems. Founded in 1863, Solvay today ranks among the world's top three companies for the vast majority of its activities and delivered net sales of €10.1 billion in 2021. Solvay is listed on Euronext Brussels and Paris (SOLB). Learn more at www.solvay.com.

About Solvay Investor Relations

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