Earnings Release • Nov 13, 2014
Earnings Release
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REGULATED INFORMATION 13/11/2014 7:30 AM CET
U.S.-based Eco Services business is reported under Assets Held for Sale and Discontinued Operations as from Q3 2014. For comparison purposes, 2013 and 2014 Income and Cash Flow Statements data have been restated for Eco Services' business discontinuation as well as for the updated reallocation of shared functions costs from the Corporate & Business Services segment into the Global Business Units.
Both sets of data reflect the Group's application of IFRS 11.
Furthermore, Solvay presents Adjusted Income Statement performance indicators that exclude non-cash Purchase Price Allocation (PPA) accounting impacts related to the Rhodia acquisition.
Solvay in the third quarter extended its robust earnings performance shown so far this year, reflecting the benefits of its ongoing transformation and portfolio reshaping. Innovations at our growth engines Advanced Formulations and Advanced Materials strengthened their already solid market positions, resulting in substantial volume increases. Continuous excellence measures helped to secure pricing power and largely mitigated fixed cost inflation. All in all, Solvay expanded its strong operating margin and posted an operating profit growth of nearly 10 percent in the quarter.
Solvay reiterates its confidence for 2014 and confirms that it expects high single-digit REBITDA growth. While vigilant about the uncertain and challenging macro-economic and geopolitical context, the Group is well-positioned to grow its earnings in this last quarter compared to last year and is determined to generate a strong free cash flow.
(*) One point three repeating decimal. Dividend payments rounded to the nearest Euro cent.
| Key data | Adjusted | IFRS | ||||
|---|---|---|---|---|---|---|
| (in € m) | Q3 2014 | Q3 2013 | % yoy | Q3 2014 | Q3 2013 | % yoy |
| Net sales | 2,585 | 2,395 | 7.9% | 2,585 | 2,395 | 7.9% |
| REBITDA | 458 | 418 | 9.5% | 458 | 418 | 9.5% |
| REBIT | 284 | 264 | 7.7% | 257 | 229 | 12% |
| Non-recurring items | (30) | (33) | 9.3% | (30) | (33) | 9.3% |
| EBIT | 254 | 231 | 10% | 226 | 195 | 16% |
| Net financial charges | (68) | (60) | (14)% | (68) | (60) | (14)% |
| Result before taxes | 186 | 171 | 8.8% | 158 | 136 | 17% |
| Income taxes | (68) | (62) | (9.5)% | (58) | (52) | (12)% |
| Result from continuing operations | 118 | 109 | 8.5% | 100 | 83 | 20% |
| Result from discontinued operations | 23 | 20 | 14% | 23 | 19 | 19% |
| Net income | 141 | 129 | 9.3% | 123 | 103 | 20% |
| Non-controlling interests | (8) | (11) | 25% | (8) | (11) | 25% |
| Net income Solvay share | 133 | 118 | 12% | 115 | 92 | 25% |
| Basic EPS (in €) | 1.60 | 1.42 | 13% | 1.38 | 1.11 | 24% |
| Total free cash flow | 122 | 237 | (49)% | 122 | 237 | (49)% |
In the third quarter, Group net sales rose 7.9% to € 2,585 m driven by organic volume growth of 5% and a favorable scope effect 2% mainly coming from the Chemlogics acquisition, while prices stood stable and the conversion impact from foreign exchange rates was marginal. Net sales in our growth engines grew significantly: 27% in Advanced Formulations and 9.4% in Advanced Materials, both supported by strong innovation-driven demand and each delivering organic volume growth of 10%. Net sales advanced 2.3% in Performance Chemicals underpinned by good pricing while volumes were stable overall. Net sales fell (7.8) % in Functional Polymers due to the divestment of Benvic and to a lesser extent due to lower raw materials prices, butadiene in particular.
REBITDA grew 9.5% to € 458 m from € 418 m in the third quarter of 2013. Strong demand and operating leverage contributed to a volume-related profit expansion of 11% or € 45 m. Scope effects were mostly related to Chemlogics and added € 25 m to REBITDA compared to the year-ago period.
The Group continued to benefit from positive pricing power. Selling prices overall slightly increased € 6 m yoy while raw materials costs fell € 24 m, resulting in a € 30 m positive net price effect on REBITDA.
Excellence measures spanning from manufacturing to marketing and sales strengthened operating performance. Fixed costs slightly increased by € (9) m to € (737) m in the quarter. While operational excellence mostly offset inflation on the cost base, differences in compensation provisions mostly explained the quarter's variance.
Under the caption "Other", an adverse evolution of € (50) m primarily stemmed from an exceptional € 22 m reversal of provisions last year linked to the Group's realignment of insurance policies. This caption also reflected operational forex losses for € (9) m and € (7) m losses from the RusVinyl PVC project, whose operations started in September.
All Operating Segments contributed to Solvay's REBITDA increase but Advanced Formulations was by far the strongest contributor along with Advanced Materials. The Group's REBITDA margin on net sales improved 26 basis points to 17.7% in the quarter, with all operating segments benefiting from margin expansion. In first nine months of the year the REBITDA margin improved by about 110 basis points to 17.9%.
Non-recurring Items of € (30) m compared with € (33) m in the same quarter of 2013, included restructuring expenses of € (10) m, as well as other costs primarily linked to environmental, litigation and portfolio management provisions for a combined € (20) m and against € (30) m a year ago.
Adjusted EBIT grew 10% to € 254 m (€ 231 m in 2013). Besides amortization and depreciation charges of € (163) m, it included € (8) m pre-operational losses related to the RusVinyl joint venture primarily linked to the ruble devaluation in July and August, and € (2) m for Chemlogics holdback payments. On an IFRS basis, EBIT totaled € 226 m. The difference between IFRS and adjusted figures reflects the Rhodia non-cash purchase price allocation (PPA) depreciation impact of € (27) m.
Net Financial Expenses increased to € (68) m from € (60) m in 2013. Net charges on net debt fell to € (29) m from € (44) m in 2013. The negative cost of carry decreased significantly following the repayment of €1.3 billion of gross debt in the first half of this year. However, the cost of discounting provisions for environmental and pension liabilities increased to € (38) m from € (16) m in the same quarter of 2013. This was due to environmental reserves being impacted by a reduction in discount rates in the United Kingdom and in Latin America by 60 bps and 50 bps respectively, representing a combined effect of € (7) m. The same quarter last year had benefited from a € 15 m one-off in a context of increasing discount rates.
Adjusted Income Taxes rose to € (68) m from € (62) m in 2013. The nominal tax rate including non-recurring items was 35%, whereas the underlying tax rate was 33%, in line with expectations.
Net result from continued operations was € 118 m against € 109 m in the same 2013 quarter.
Net result from discontinued operations was € 23 m against € 20 m in the same 2013 quarter, mainly related to the European chlorovinyls and Eco Services activities.
Adjusted Net Income was € 141m (€ 129 m in 2013). Adjusted Net Income Group Share came in at € 133 m (€ 118 m in 2013). Adjusted basic earnings per share amounted to € 1.60. On an IFRS basis, Net Income Group Share amounted to € 115 m.
Solvay has agreed to buy the Ryton® PPS (polyphenylene sulphide) business from U.S.-based petrochemical company Chevron Phillips Chemical Company for \$ 220 m, entering a solid growth market. Solvay Specialty Polymers, which already has the industry's broadest product portfolio, will gain access to new business segments and customers and broaden its offer in many innovative and demanding applications, such as in automotive and electronics. Solvay will buy two Ryton® PPS resin manufacturing units in Borger, Texas, its pilot plant along with R&D laboratories in Bartlesville, Oklahoma, and a compounding plant in Kallo-Beveren, Belgium.
SolVin and its joint venture partner Sibur inaugurated RusVinyl, one of Russia's largest petrochemical investment projects for the production of PVC which launched operations in September. RusVinyl was constructed to meet a significant part of domestic demand and is one of the largest PVC producers in Russia with an annual production capacity of 330 kt of PVC and 225 kt of caustic soda. A world-class competitive and fully integrated site, RusVinyl will benefit from the nearby supply of ethylene, a key raw material for PVC, from the SIBUR-Kstovo's steam cracker while salt will be provided from Belarus and from the Astrakhan Region of Russia. Thanks to cutting-edge vinyl technology, fully automated production and state-of-theart equipment, the facility's environmental footprint is marginal. SolVin is a 75%-25% joint-venture between Solvay and BASF.
As part of Solvay's active management of operating assets, Acetow is adapting its acetate tow capacity to enhance production efficiency and returns by closing two of its less competitive workshops in Germany and in Brazil. The Group will fully focus on maintaining the high-quality standards of its modern energy-efficient sites in Germany, Russia and Brazil and secure its global competitiveness.
The Group is suspending its mining operations at Namibia's Okorusu Fluorspar mine as production is no longer economical. The viable higher grade ore resources at the mine have been depleted after 26 years of operations. Solvay will instead buy fluorspar which is readily available at very competitive prices worldwide. Furthermore, Solvay Special Chemicals is refocusing its strategy towards higher added-value specialties and its needs for fluorspar are progressively reducing.
Both measures will be effective by the year-end.
* Represents percentage of 2013 net sales (including pro-forma Chemlogics sales) RoW: Rest of the World
| (in € m) | Q3 2014 | Q3 2013 | % yoy | 9m 2014 | 9m 2013 | % yoy |
|---|---|---|---|---|---|---|
| Net sales | 2,585 | 2,395 | 7.9% | 7,639 | 7,352 | 3.9% |
| Advanced Formulations | 735 | 581 | 27% | 2,122 | 1,789 | 19% |
| Advanced Materials | 712 | 651 | 9.4% | 2,041 | 1,948 | 4.8% |
| Performance Chemicals | 743 | 726 | 2.3% | 2,184 | 2,171 | 0.60% |
| Functional Polymers | 394 | 428 | (7.8)% | 1,291 | 1,379 | (6.4)% |
| Corporate & Business Services | 1 | 10 | (89)% | - | 65 | n.m. |
| REBITDA | 458 | 418 | 9.5% | 1,369 | 1,237 | 11% |
| Advanced Formulations | 107 | 72 | 49% | 317 | 266 | 19% |
| Advanced Materials | 187 | 164 | 14% | 538 | 469 | 15% |
| Performance Chemicals | 194 | 184 | 5.2% | 534 | 503 | 6.2% |
| Functional Polymers | 21 | 18 | 18% | 96 | 76 | 27% |
| Corporate & Business Services | (50) | (19) | n.m. | (116) | (77) | (52)% |
€ 107 m Q3 2014 REBITDA
As one of Solvay's growth engines, the businesses grouped under Advanced Formulations stand out for their innovation capacity and relatively low capital intensity. Their offerings address energy transition needs and major societal trends, meeting ever stricter requirements to respect the environment and to save energy, and challenges of the mass consumer markets.
| (in € m) | Q3 2014 | Q3 2013 | % yoy | 9m 2014 | 9m 2013 | % yoy |
|---|---|---|---|---|---|---|
| Net sales | 735 | 581 | 27% | 2,122 | 1,789 | 19% |
| Novecare | 525 | 367 | 43% | 1,513 | 1,143 | 32% |
| Coatis | 127 | 123 | 3.8% | 368 | 373 | (1.1)% |
| Aroma Performance | 82 | 91 | (9.7)% | 241 | 273 | (12)% |
| REBITDA | 107 | 72 | 49% | 317 | 266 | 19% |
Net Sales at Advanced Formulations grew 27% to € 735 m from € 581 m in the third quarter of 2013. External growth related to Chemlogics lifted sales by € 94 m, contributing 16% to the year-on-year expansion. Volumes at constant perimeter grew 11% and were fully underpinned by Novecare. Prices decreased close to (1) %.
REBITDA increased 49% to € 107 m in the third quarter driven by Novecare's strong U.S. market dynamics in unconventional Oil & Gas, a remarkable contribution from Chemlogics and a low comparison to last year's quarter.
Novecare benefited from strong demand in the U.S. Oil & Gas market where customers recognize Solvay's broadest product and formulations portfolio and capabilities. Chemlogics' growth was boosted by strong activities in friction reducers. Volume growth at the Agro business was supported by its innovative offering and good demand. While Industrial applications continued to enjoy good dynamics, demand declined at Home & Personal Care.
Coatis' business performance deteriorated due to Brazil's challenging economic situation. Increasing energy and labor costs affected demand and margins. In this context, the GBU continued its operational excellence efforts to mitigate inflation on variable costs and to minimize fixed costs.
At Aroma Performance, industrial production was impacted by temporary technical issues in U.S.and an unexpected shutdown in China due to the Youth Olympic Games in the Region. However, the GBU continued to benefit from positive market trends, both in Aroma ingredients and in Inhibitors. Its operational contribution to the segment was stable.
REBITDA*
A leader in markets with high entry barriers and strong returns on investment, the Advanced Materials segment is a major contributor to the Group's performance and growth. Innovation, a global presence and customer partnerships provide a compelling competitive edge with industries seeking increasingly energy efficiency and less polluting functionalities.
Advanced Materials once again posted a strong REBITDA at € 187 m, up 14% yoy in the third quarter.
37%
| (in € m) | Q3 2014 | Q3 2013 | % yoy | 9m 2014 | 9m 2013 | % yoy |
|---|---|---|---|---|---|---|
| Net sales | 712 | 651 | 9.4% | 2,041 | 1,948 | 4.8% |
| Specialty Polymers | 392 | 334 | 17% | 1,099 | 980 | 12% |
| Silica | 115 | 102 | 12% | 338 | 315 | 7.5% |
| Rare Earth Systems | 64 | 70 | (7.3)% | 197 | 229 | (14)% |
| Special Chemicals | 140 | 144 | (2.8)% | 406 | 425 | (4.4)% |
| REBITDA | 187 | 164 | 14% | 538 | 469 | 15% |
Net sales of Advanced Materials increased 9.4% to € 712 m from € 651 m in the same quarter of 2013. Growth came from a 10% volume increase across all of the segment's GBUs, except Special Chemicals which, in refocusing its portfolio, proceeded with strategic divestments last year.
REBITDA for Advanced Materials rose 14% to € 187 m, mainly due to strong volume growth in most of its businesses. Innovation in the automotive sector and in smart devices drove the performance. The excellence programs in manufacturing, purchasing and commercial activities continued to bear fruit across all the GBUs.
Specialty Polymers reported strong growth in most of its end markets. Smart devices got a boost from new product launches and the automotive market from innovative lightweighting technologies. The industrial market benefited from good demand in electrical & electronics. Demand for Oil & Gas products picked up after a slowdown in the second quarter. Other end markets showed robust growth.
Silica once again posted good performance. Demand at the Original Equipment Manufacturing (OEM) was strong and the tire replacement market was underpinned by the anticipated winter tire season. Mid-single digit volume growth came from all regions except Latin America. Excellence programs also supported the GBU's performance.
At Rare Earth Systems, deflation in raw material prices lowered the value of sales, while activity levels and operating results significantly improved. The catalysis market remained solid as innovation and tighter EU diesel engine emission regulations (Euro 6) bolstered volumes. Electronics showed mixed dynamics with polishing and semi-conductor demand compensating for the continued drop in lighting.
Special Chemicals, which is refocussing its portfolio towards higher added-value specialties, benefited from good business trends for its core products in most of its end markets. The refrigerants business remained subdued.
€ 194 m Q3 2014 REBITDA
Operating mainly in mature resilient markets, this Segment's success is based on economies of scale, competitiveness and quality of service. Solidly cash-generating, the Performance Chemicals businesses are engaged in programs of excellence to create additional sustainable value.
Performance Chemicals REBITDA was up 5.2% yoy at € 194 m in the quarter driven by good pricing power, while volumes remained
| (*) Excludes Corporate & Business Services | ||
|---|---|---|
| (in € m) | Q3 2014 | Q3 2013 | % yoy | 9m 2014 | 9m 2013 | % yoy |
|---|---|---|---|---|---|---|
| Net sales | 743 | 726 | 2.3% | 2,184 | 2,171 | 0.60% |
| Soda Ash & Derivatives | 352 | 342 | 2.9% | 1,019 | 1,002 | 1.7% |
| Peroxides | 135 | 120 | 12% | 380 | 354 | 7.4% |
| Acetow | 153 | 163 | (6.1)% | 483 | 493 | (2.0)% |
| Eco Services | - | - | n.m. | - | - | n.m. |
| Emerging Biochemicals | 103 | 101 | 1.5% | 303 | 323 | (6.2)% |
| REBITDA | 194 | 184 | 5.2% | 534 | 503 | 6.2% |
Forenote:Following the agreement to sell Eco Services, the U.S.-based business, is presented as "Discontinued Operations" in the Income Statement and as "Assets Held for Sale" in the Balance Sheet as from the third quarter 2014. Completion of the transaction is expected before year end.
Net sales of Performance Chemicals grew 2.3% to € 743 m from € 726 m in the third quarter of 2013. Price increases of 3% compensated for adverse foreign exchange developments (1) % while volumes stood stable.
The operating segment's REBITDA increased 5.2% to € 194 m. Good volumes at Soda Ash & Derivatives and at Peroxides were offset by a contraction in orders at Acetow. In addition, most of the segment's GBUs reported positive pricing. The competitive program at Soda Ash & Derivatives continued to significantly improve the cost base.
At Soda Ash & Derivatives, sturdy performance was driven by a combination of slightly higher volumes across all regions, price increases and on-track delivery on the cost savings plan.
Peroxides benefited from growing demand in all regions and all market segments. The mega Hydrogen Peroxide Propylene Oxide (HPPO) plants in Europe and Asia both operated at high capacity rates, contributing to the GBU's good dynamics.
At Acetow, the recent new production capacity in the industry and certain demand softness led to some destocking at our customers, lowering sales volumes and affecting the operational leverage. Yet, pricing power was satisfactory.
At Emerging Biochemicals, challenging conditions persisted in the Southeast Asian PVC market and while demand for Epichlorohydrin improved slightly, levels remained low.
Discontinued Operations: Eco Services reported good performance with net sales of € 78 m, stable compared to last year.
€ 21 m
Q3 2014 REBIDTA The key success factors of this Segment, which primarily groups the Polyamide activities, are continuous manufacturing optimization and innovation. Solvay is one of few players to operate across the entire polyamide 6.6 chain.
In the third quarter, Functional Polymers REBITDA came in at € 21 m, up 18% yoy.
| (in € m) | Q3 2014 | Q3 2013 | % yoy | 9m 2014 | 9m 2013 | % yoy |
|---|---|---|---|---|---|---|
| Net sales | 394 | 428 | (7.8)% | 1,291 | 1,379 | (6.4)% |
| Polyamide | 382 | 380 | 0.36% | 1,180 | 1,220 | (3.3)% |
| Chlorovinyls | 13 | 48 | (73)% | 110 | 158 | (30)% |
| REBITDA | 21 | 18 | 18% | 96 | 76 | 27% |
Reminder:Solvay's European Chlorovinyls businesses, planned to become part of the INOVYN™ joint venture with INEOS, as well as Solvay Indupa, are classified as Discontinued Operations.
The sale of Benvic to OpenGate Capital was completed in June 2014.
The remaining Chlorovinyls businesses refer to the residual trading activities not included in the INEOS joint venture agreement.
Functional Polymers reported net sales of € 394 m compared to € 428 m in the same quarter of 2013. The sale of the Benvic PVC compounding business represented a € (38) m decline.
REBITDA increased 18% to € 21 m from € 18 m in 2013. Polyamide's operating performance improved from the third quarter of 2013, supported by pricing power and the benefits from lower raw material prices and excellence programs. Growing volumes at Engineering Plastics mainly came from Asia. Fibras was impacted by Brazil's weak macro-economic conditions and by further competitive erosion of the domestic industry. The profit restoration plan at Polyamide continued to deliver on reining in fixed and variable costs as well as on improving commercial excellence programs.
The RusVinyl PVC site started operations of PVC-S since September 1, 2014. It is accounted for as equity investments with a total value in Solvay accounts of about € 400 m as of September 30, 2014. Start-up costs of € (7) m weighed on the quarter's REBITDA.
Discontinued Operations: Performance of the European chlorovinyls businesses that should become part of the planned INOVYNTM joint venture is suffering from difficult market conditions with low prices and weak margins. Quarterly net sales amounted to € 475 m (vs € 473 m in 2013) and REBITDA came in at € 23 m, down compared to € 34 m in the last year period.
CORPORATE & BUSINESSSERVICES Q3 AND 9M 2014 BUSINESS REVIEW
€ (50) m Q3 2014 REBITDA This Segment includes the Energy Services business which delivers energy optimization programs within the Group as well as for third parties. It also includes the corporate functions.
| (in € m) | Q3 2014 | Q3 2013 | % yoy | 9m 2014 | 9m 2013 | % yoy |
|---|---|---|---|---|---|---|
| Net sales | 1 | 10 | (89)% | - | 65 | n.m. |
| Energy Services | 1 | 10 | (90)% | - | 65 | n.m. |
| Other Corporate & Business Services |
- | - | n.m. | - | 1 | (54)% |
| REBITDA | (50) | (19) | n.m. | (116) | (77) | (52)% |
Reminder:The last carbon credit (CER) sales occurred in 2013 and were phased out entirely in the first half of that year.
Net sales were € 1 m compared to € 10 m in the same period last year.
REBITDA came in at € (50) m compared to € (19) m in Q3 2013. Energy Services' activities contributed a € 5 m profit in the quarter, similar to last year, mainly related to energy and carbon management services. Over the 9-month period, Energy Services' REBITDA amounted to € 18 m in 2014 versus € 52 m last year.
Excluding Energy Services contribution, corporate expenses amounted to € (55) m in the quarter and € (134) m during the first nine months of this year, reflecting a phasing of certain corporate programs that are concentrated in the second half of 2014 and continued cost discipline. In 2013, corporate expenses, excluding the contribution of Energy Services, were € (24) m in the quarter and € (128) m during the 9-month period. The third quarter of 2013 included a favorable € 22 m one-off reversal of provisions linked to the realignment of the Group's insurance policies.
Q3 2013 Scope Volume Conversion forex Price Q3 2014
Corporate & Business Services
| Adjusted | IFRS | ||||
|---|---|---|---|---|---|
| (in € m) | Q3 2014 | Q3 2013 | Q3 2014 | Q3 2013 | |
| Sales | 2,688 | 2,485 | 2,688 | 2,485 | |
| Other non-core revenues | 103 | 89 | 103 | 89 | |
| Net sales | 2,585 | 2,395 | 2,585 | 2,395 | |
| Cost of goods sold | (2,037) | (1,921) | (2,037) | (1,921) | |
| Gross margin | 651 | 563 | 651 | 563 | |
| Commercial & administrative costs | (303) | (292) | (303) | (292) | |
| Research & innovation costs | (62) | (61) | (62) | (61) | |
| Other operating gains & losses | 6 | 50 | (22) | 15 | |
| Earnings from associates & joint ventures accounted for using the equity method |
(8) | 3 | (8) | 3 | |
| REBIT | 284 | 264 | 257 | 229 | |
| Non-recurring items | (30) | (33) | (30) | (33) | |
| EBIT | 254 | 231 | 226 | 195 | |
| Cost of borrowings | (30) | (45) | (30) | (45) | |
| Interest on loans & short-term deposits | 3 | 4 | 3 | 4 | |
| Other gains & losses on net indebtedness | (2) | (3) | (2) | (3) | |
| Cost of discounting provisions | (38) | (16) | (38) | (16) | |
| Income/loss from available-for-sale investments | - | - | - | - | |
| Result before taxes | 186 | 171 | 158 | 136 | |
| Income taxes | (68) | (62) | (58) | (52) | |
| Result from continuing operations | 118 | 109 | 100 | 83 | |
| Result from discontinued operations | 23 | 20 | 23 | 19 | |
| Net income | 141 | 129 | 123 | 103 | |
| Non-controlling interests | (8) | (11) | (8) | (11) | |
| Net income Solvay share | 133 | 118 | 115 | 92 | |
| Basic EPS from continuing operations (in €) | 1.35 | 1.14 | 1.13 | 0.83 | |
| Basic EPS (in €) | 1.60 | 1.42 | 1.38 | 1.11 | |
| Diluted EPS from continuing operations (in €) | 1.34 | 1.12 | 1.12 | 0.82 | |
| Diluted EPS (in €) | 1.58 | 1.41 | 1.37 | 1.09 |
| Adjusted | IFRS | ||||
|---|---|---|---|---|---|
| (in € m) | 9m 2014 | 9m 2013 | 9m 2014 | 9m 2013 | |
| Sales | 7,935 | 7,660 | 7,935 | 7,660 | |
| Other non-core revenues | 296 | 308 | 296 | 308 | |
| Net sales | 7,639 | 7,352 | 7,639 | 7,352 | |
| Cost of goods sold | (6,011) | (5,883) | (6,011) | (5,883) | |
| Gross margin | 1,924 | 1,777 | 1,924 | 1,777 | |
| Commercial & administrative costs | (889) | (885) | (889) | (885) | |
| Research & innovation costs | (181) | (181) | (181) | (181) | |
| Other operating gains & losses | 16 | 41 | (66) | (74) | |
| Earnings from associates & joint ventures accounted for using the equity method |
9 | 31 | 9 | 31 | |
| REBIT | 879 | 784 | 797 | 669 | |
| Non-recurring items | (106) | (170) | (106) | (170) | |
| EBIT | 773 | 614 | 691 | 498 | |
| Cost of borrowings | (121) | (136) | (121) | (136) | |
| Interest on loans & short-term deposits | 33 | 13 | 33 | 13 | |
| Other gains & losses on net indebtedness | (28) | (7) | (28) | (7) | |
| Cost of discounting provisions | (124) | (66) | (124) | (66) | |
| Income/loss from available-for-sale investments | - | 2 | - | 2 | |
| Result before taxes | 533 | 420 | 451 | 304 | |
| Income taxes | (175) | (127) | (148) | (98) | |
| Result from continuing operations | 358 | 292 | 302 | 206 | |
| Result from discontinued operations | (427) | 100 | (429) | 98 | |
| Net income | (69) | 393 | (127) | 304 | |
| Non-controlling interests | 16 | (40) | 16 | (40) | |
| Net income Solvay share | (53) | 352 | (110) | 264 | |
| Basic EPS from continuing operations (in €) | 3.96 | 3.00 | 3.29 | 1.96 | |
| Basic EPS (in €) | (0.63) | 4.24 | (1.32) | 3.17 | |
| Diluted EPS from continuing operations (in €) | 3.93 | 2.96 | 3.26 | 1.94 | |
| Diluted EPS (in €) | (0.63) | 4.19 | (1.31) | 3.14 |
| (in € m) | Q3 2014 | Q3 2013 | 9m 2014 | 9m 2013 |
|---|---|---|---|---|
| EBIT IFRS | 226 | 195 | 691 | 498 |
| Non recurring items (-) | 30 | 33 | 106 | 170 |
| REBIT IFRS | 257 | 229 | 797 | 669 |
| Amortization of Rhodia PPA on fixed assets | 27 | 35 | 82 | 115 |
| Adjusted REBIT | 284 | 264 | 879 | 784 |
| IFRS depreciation & amortization (recurring) excluding Rhodia PPA |
163 | 150 | 473 | 448 |
| Adjustments of Chemlogics inventories at FV (PPA) & holdback payments |
2 | - | 9 | - |
| Equity Earnings Rusvinyl (pre-operational stage) | 8 | 5 | 7 | 5 |
| REBITDA (key performance indicator monitored by management) |
458 | 418 | 1,369 | 1,237 |
| (in € m) | Q3 2014 | Q3 2013 | 9m 2014 | 9m 2013 |
|---|---|---|---|---|
| Net income | 123 | 103 | (127) | 304 |
| Other comprehensive income | ||||
| Recyclable components | ||||
| Hyperinflation | 2 | - | (14) | - |
| Gains & losses on available-for-sale financial assets | 1 | 5 | - | 12 |
| Gains & losses on hedging instruments in a cash flow hedge | (37) | 12 | (39) | (16) |
| Currency translation differences | 233 | (161) | 270 | (226) |
| Non recyclable components | ||||
| Remeasurement of the net defined benefit liability | (182) | 97 | (331) | 175 |
| Income tax relating to recyclable & non recyclable components |
||||
| Income tax relating to components of other comprehensive income |
19 | (41) | 48 | (25) |
| Other comprehensive income, net of related tax effects | 37 | (88) | (65) | (80) |
| Comprehensive income attributed to | 160 | 14 | (191) | 224 |
| Owners of the parent | 144 | 18 | (191) | 208 |
| Non-controlling interests | 16 | (3) | - | 16 |
| (in € m) | 30/09/2014 | 31/12/2013 |
|---|---|---|
| Non-current assets | 11,339 | 11,217 |
| Intangible assets | 1,493 | 1,621 |
| Goodwill | 3,114 | 3,096 |
| Tangible assets | 5,098 | 5,015 |
| Available-for-sale investments | 42 | 38 |
| Investments in joint ventures & associates – equity method | 654 | 582 |
| Other investments | 144 | 115 |
| Deferred tax assets | 543 | 500 |
| Loans & other non-current assets | 251 | 250 |
| Current assets | 6,312 | 7,306 |
| Inventories | 1,465 | 1,300 |
| Trade receivables | 1,559 | 1,331 |
| Income tax receivables | 9 | 38 |
| Dividends receivable | 2 | 1 |
| Other current receivables – Financial instruments | 18 | 481 |
| Other current receivables – Other | 620 | 572 |
| Cash & cash equivalents | 910 | 1,961 |
| Assets held for sale | 1,729 | 1,621 |
| TOTAL ASSETS | 17,652 | 18,523 |
| Total equity | 7,025 | 7,453 |
| Share capital | 1,271 | 1,271 |
| Reserves | 5,431 | 5,804 |
| Non-controlling interests | 323 | 378 |
| Non-current liabilities | 5,874 | 6,927 |
| Long-term provisions: employees benefits | 2,996 | 2,685 |
| Other long-term provisions | 849 | 793 |
| Deferred tax liabilities | 348 | 473 |
| Long-term financial debt | 1,483 | 2,809 |
| Other non-current liabilities | 197 | 166 |
| Current liabilities | 4,752 | 4,144 |
| Other short-term provisions | 344 | 342 |
| Short-term financial debt | 1,109 | 775 |
| Trade liabilities | 1,312 | 1,340 |
| Income tax payable | 93 | 21 |
| Dividends payable | 3 | 113 |
| Other current liabilities | 724 | 604 |
| Liabilities linked to assets held for sale | 1,166 | 949 |
| TOTAL EQUITY & LIABILITIES | 17,652 | 18,523 |
| Revaluation reserve (fair value) |
||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in € m) | Share capital | Issue premiums | Retained earnings | Hybrid bond | Treasury shares | Currency translation differences |
Available-for-sale investments |
Cash flow hedges | Defined benefit pension plans |
Total reserves | Non-controlling interests |
Total equity |
| Balance at 31/12/2012 | 1,271 | 18 | 5,999 | - | (160) | (455) | 17 | 15 | (574) | 4,859 | 443 | 6,574 |
| Net profit for the period | - | - | 264 | - | - | - | - | - | 264 | 40 | 304 | |
| Items of OCI | - | - | - | - | - | (201) | 12 | (4) | 138 | (56) | (25) | (80) |
| Comprehensive income | - | - | 263 | - | - | (201) | 12 | (4) | 138 | 208 | 16 | 224 |
| Cost of stock options | - | - | 8 | - | - | - | - | - | - | 8 | 8 | |
| Dividends | - | - | (166) | - | - | - | - | - | - | (166) | (43) | (209) |
| Hybrid bond dividends | - | - | - | - | - | - | - | - | - | - | - | - |
| Acquisitions (sale) of treasury shares |
- | - | - | - | (7) | - | - | - | - | (7) | - | (7) |
| Other | - | - | (8) | - | - | - | - | - | - | (8) | 8 | - |
| Balance at 30/09/2013 | 1,271 | 18 | 6,096 | - | (167) | (656) | 29 | 11 | (436) | 4,894 | 424 | 6,588 |
| Balance at 31/12/2013 | 1,271 | 18 | 5,987 | 1,194 | (132) | (770) | (5) | 6 | (493) | 5,804 | 378 | 7,453 |
| Net profit for the period | - | - | (225) | - | - | - | - | - | - | (225) | (25) | (250) |
| Items of OCI | - | - | (11) | - | - | 28 | (1) | (2) | (125) | (111) | 9 | (102) |
| Comprehensive income | - | - | (236) | - | - | 28 | (1) | (2) | (125) | (336) | (16) | (352) |
| Cost of stock options | - | - | 5 | - | - | - | - | - | - | 5 | - | 5 |
| Dividends | - | - | (156) | - | - | - | - | - | - | (156) | (3) | (158) |
| Hybrid bond dividends | - | - | (15) | - | - | - | - | - | - | (15) | - | (15) |
| Acquisitions (sale) of treasury shares |
- | - | - | - | 5 | - | - | - | - | 5 | - | 5 |
| Other | - | - | (2) | (2) | (52) | (54) | ||||||
| Balance at 30/06/2014 | 1,271 | 18 | 5,584 | 1,194 | (127) | (742) | (6) | 4 | (618) | 5,306 | 307 | 6,884 |
| Balance at 30/06/2014 | 1,271 | 18 | 5,584 | 1,194 | (127) | (742) | (6) | 4 | (618) | 5,306 | 307 | 6,884 |
| Net profit for the period | - | - | 115 | - | - | - | - | - | - | 115 | 8 | 123 |
| Items of OCI | - | - | 1 | - | - | 223 | 1 | (33) | (163) | 30 | 8 | 37 |
| Comprehensive income | - | - | 116 | - | - | 223 | - | (33) | (163) | 145 | 16 | 161 |
| Cost of stock options | - | - | 3 | - | - | - | - | - | - | 3 | - | 3 |
| Dividends | - | (1) | - | - | - | - | - | - | (1) | (1) | (2) | |
| Hybrid bond dividends | - | - | - | - | - | - | - | - | - | (1) | - | (1) |
| Acquisitions (sale) of treasury shares |
- | - | - | - | (13) | - | - | - | - | (13) | - | (13) |
| Other | - | (8) | - | - | - | - | - | - | (8) | 1 | (8) | |
| Balance at 30/09/2014 | 1,271 | 18 | 5,693 | 1,193 | (140) | (519) | (6) | (29) | (781) | 5,430 | 323 | 7,024 |
| (in € m) | Q3 2014 | Q3 2013 | 9m 2014 | 9m 2013 |
|---|---|---|---|---|
| Net income | 123 | 103 | (127) | 304 |
| Depreciation, amortization & impairments (-) | 204 | 221 | 1,098 | 657 |
| Earnings from associates & joint ventures accounted for using the equity method (-) |
8 | (3) | (10) | (32) |
| Net financial charges & income / loss from available-for-sale investments (-) |
76 | 67 | 270 | 218 |
| Income tax (-) | 78 | 67 | 199 | 149 |
| Changes in working capital | (29) | 125 | (374) | (118) |
| Changes in provisions | (60) | (104) | (154) | (245) |
| Dividends received from associates & joint ventures accounted for using equity method |
6 | 5 | 13 | 10 |
| Income taxes paid | (41) | (64) | (158) | (221) |
| Others | (2) | 4 | (5) | 55 |
| Cash flow from operating activities | 362 | 420 | 753 | 777 |
| Acquisition (-) of subsidiaries | (34) | 2 | (91) | 4 |
| Acquisition (-) of investments - Other | (16) | (55) | (91) | (69) |
| Loans to associates & non consolidated subsidiaries | 2 | 5 | 10 | (4) |
| Sale (+) of subsidiaries & investments | (11) | - | - | (6) |
| Acquisition (-) of tangible & intangible assets | (239) | (183) | (632) | (516) |
| Sale (+) of tangible & intangible assets | 6 | 7 | 13 | 25 |
| Income from available-for-sale investments | - | - | - | 2 |
| Changes in non-current financial assets | (8) | (6) | (19) | 2 |
| Cash flow from investing activities | (299) | (230) | (810) | (562) |
| Acquisition (-) / sale (+) of treasury shares | (13) | 4 | (8) | (7) |
| Changes in borrowings | (223) | (72) | (975) | 41 |
| Changes in other current financial assets | 28 | (35) | 491 | (176) |
| Net cash out related to cost of borrowings & interest on lendings & term deposits |
(13) | (17) | (224) | (174) |
| Dividends paid | (3) | (4) | (285) | (312) |
| Other | (41) | (46) | (1) | (67) |
| Cash flow from financing activities | (264) | (169) | (1,002) | (696) |
| Net change in cash & cash equivalents | (201) | 20 | (1,059) | (481) |
| Currency translation differences | 7 | (26) | 4 | (54) |
| Opening cash balance | 1,111 | 1,258 | 1,972 | 1,787 |
| Ending cash balance | 917 | 1,252 | 917 | 1,252 |
| Free Cash Flow | 122 | 237 | 114 | 290 |
| From continuing operations | 116 | 169 | 32 | 19 |
| From discontinued operations | 6 | 68 | 82 | 271 |
| (in € m) | Q3 2014 | Q3 2013 | 9m 2014 | 9m 2013 |
|---|---|---|---|---|
| Cash flow from operating activities | 39 | 101 | 172 | 361 |
| Cash flow from investing activities | (33) | (32) | (90) | (89) |
| Cash flow from financing activities | (3) | (17) | (14) | (14) |
| Net change in cash & cash equivalents | 3 | 52 | 68 | 258 |
Cash flow from operating activities was € 362 m compared to € 420 m last year. Besides net income of € 123 m, it consisted of:
Cash flow from investing activities was € (299) m, and included capital expenditures which amounted to € (239) m, including € (34) m from discontinued operations.
Free Cash Flow was € 122 m, and included cash flow from discontinued operations for € 6 m.
Solvay is a public limited liability company governed by Belgian law and quoted on Euronext Brussels and Euronext Paris.
These condensed consolidated financial statements were authorized for issue by the Board of Directors on November 12, 2014.
The following unusual items had an impact on the condensed consolidated financial statements for the nine months ended September 30, 2014: the adoption of IFRS 10 Consolidated Financial Statements, 11 Joint Arrangements and 12 Disclosures of Interests in Other Entities (see 2 below).
On May 8, 2014, the European Commission approved the PVC joint venture between INEOS and Solvay, subject to conditions. On May 18, 2014, Solvay and INEOS signed a non-binding letter of intent for the combination of their respective European chlorovinyls activities into a 50/50 joint venture. On June 26, 2014, the binding agreement has been signed. The proposed transaction is subject to the applicable information/consultation procedures with employee representatives in the countries involved, and fulfillment of the conditions imposed by the European Commission. The occurrence and timing of the completion of the transaction is dependent on the above procedures and approvals. Until the completion, Solvay and INEOS will continue to manage their PVC businesses separately.
On July 30, 2014 Solvay has signed a binding agreement to sell its sulfuric acid virgin production and regeneration Eco Services business to affiliates of CCMP Capital Advisors, LLC. As from the 3rd quarter, Solvay reports Eco Services businesses under Assets Held for Sale and Discontinued Operations. Consequently, Solvay restated its 2013 and 2014 Income Statement and Statement of Cash Flow to reflect the discontinuation of the business. The transaction should be completed in the fourth quarter of the year, with most closing conditions having been met at this stage.
On September 30, 2014 Solvay has finalized the acquisition of Flux Schweiß- und Lötstoffe GmbH (Flux), complementing its aluminum brazing capabilities and products with fast-growing formulations for automotive heat exchangers and stationary heat, ventilation and air conditioning units.
Solvay prepares its condensed consolidated financial statements on a quarterly basis, in accordance with IAS 34 Interim Financial Reporting. 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, 2013.
The condensed consolidated financial statements for the nine months ended September 30, 2014 were prepared using the same accounting policies as those adopted for the preparation of the consolidated financial statements for the year ended December 31, 2013, except for the adoption of IFRS 10 Consolidated Financial Statements, 11 Joint Arrangements and 12 Disclosures of Interests in Other Entities.
In this framework, on April 7, 2014 Solvay published restated financial figures for 2013.
Effective January 1, 2013, Solvay is organized into five Operating Segments.
Advanced Formulations serves the consumer products markets. Its growing product offering is directed at societal megatrends: demographic growth, the increasing purchasing power of emerging markets, the appearance of new modes of consumption, and a demand for safer, more sustainable products and renewable materials-based solutions.
Advanced Materials offers ultra-high-performance applications for aerospace, high-speed trains, health, lowenergy tires, automotive emission control, smartphones and hybrid vehicle batteries.
Performance Chemicals operates in mature and resilient markets, where success is based on economies of scale, competitiveness and quality of service.
Functional Polymers include polyamide based solutions serving mainly the automotive, construction, electrical/electronic and different consumer good markets.
Corporate & Business Services includes the Energy Services GBU and Corporate Functions such as Business Services and the Research & Innovation Center. Energy Services' mission is to optimize energy consumption and reduce emissions.
Following portfolio changes over the past two years, Solvay is restating the segment information by updating the allocation of the shared Functions' services costs in its Corporate & Business Services ("CBS") unit to the Global Business Units. That reallocation primarily concerns unallocated residual costs that arise when the Group divests businesses, less the savings that have been delivered. Cost reductions programs will continue to feature prominently in Solvay's excellence programs.
| (in € m) | Q3 2014 | Q3 2013 | 9m 2014 | 9m 2013 |
|---|---|---|---|---|
| Net sales | 2,585 | 2,395 | 7,639 | 7,352 |
| Advanced Formulations | 735 | 581 | 2,122 | 1,789 |
| Advanced Materials | 712 | 651 | 2,041 | 1,948 |
| Performance Chemicals | 743 | 726 | 2,184 | 2,171 |
| Functional Polymers | 394 | 428 | 1,291 | 1,379 |
| Corporate & Business Services | 1 | 10 | - | 65 |
| REBITDA | 458 | 418 | 1,369 | 1,237 |
| Advanced Formulations | 107 | 72 | 317 | 266 |
| Advanced Materials | 187 | 164 | 538 | 469 |
| Performance Chemicals | 194 | 184 | 534 | 503 |
| Functional Polymers | 21 | 18 | 96 | 76 |
| Corporate & Business Services | (50) | (19) | (116) | (77) |
| IFRS depreciation & amortization (recurring) excluding Rhodia PPA |
(163) | (150) | (473) | (448) |
| Adjustments of Chemlogics inventories at FV (PPA) & holdback payments |
(2) | - | (9) | - |
| Equity Earnings Rusvinyl (pre-operational stage) | (8) | (5) | (7) | (5) |
| Adjusted REBIT | 284 | 264 | 879 | 784 |
| Amortization of Rhodia PPA on fixed assets | (27) | (35) | (82) | (115) |
| REBIT IFRS | 257 | 229 | 797 | 669 |
| Non recurring items (-) | (30) | (33) | (106) | (170) |
| EBIT IFRS | 226 | 195 | 691 | 498 |
| Net financial charges | (68) | (60) | (240) | (194) |
| Result before taxes | 158 | 136 | 451 | 304 |
| Income taxes | (58) | (52) | (148) | (98) |
| Result from continuing operations | 100 | 83 | 302 | 206 |
| Result from discontinued operations | 23 | 19 | (429) | 98 |
| Net income | 123 | 103 | (127) | 304 |
In May 2014 the Group early redeemed its Senior Notes Rhodia in the amount of € 864 m including principal, interests and premiums.
The impairment loss relates to the discontinued operations of the chlorovinyls to be contributed to the 50/50 joint venture with INEOS. The joint venture will pool both groups' assets across the entire chlorovinyls chain, including PVC, caustic soda and chlorine derivatives. The assets classified as held for sale are measured at the lower of their carrying amount and their fair value less costs to sell. This fair value less costs to sell has been calculated based on the agreement signed with INEOS at the end of Q2. It considers the upfront payment of € 175 m at closing, the transfer of liabilities worth € 250 m into the joint venture, as well as Solvay's exit conditions after three years, when it will receive additional cash proceeds targeted at € 250 m. These final cash proceeds at exit will be adjusted based on the joint venture's average REBITDA performance during its three-year period, with a minimum exit payment of € 75 m. Based on this, at 30 June, 2014, an impairment loss of € 477 m, allocated to goodwill (€ 143 m), and property plant and equipment and accruals for cost to sell (€ 335 m) has been recognized. For the period ended September 30, 2014, the impact on net income/loss Group share amounts to € (422) m, after taking into account the portion attributable to non-controlling interests.
On February 24, 2014 the Board of Directors of Solvay SA decided to grant two long-term incentive plans for part of its key executives:
The details of the stock options plan are as follows:
| Stock option plan | |
|---|---|
| Number of stock options | 362,436 |
| Grant date | 24/02/2014 |
| Acquisition date | 01/01/2018 |
| Vesting period | 24/02/2014 to 31/12/2017 |
| Exercise price (in €) | 107.61 |
| Exercise period | 01/01/2018 to 23/02/2022 |
This plan is accounted for as an equity-settled share-based plan. As of September 30, 2014, the impact on the income statement amounts to € 1 m.
The details of the Performance Share Units plan are as follows:
| Performance share units | |
|---|---|
| Number of PSU | 206,495 |
| Grant date | 24/2/2014 |
| Acquisition date | 01/01/2017 |
| Vesting period | 24/2/2014 to 31/12/2016 |
| Performance conditions | 50% of PSU Granted depending upon the level of REBITDA at closing Financial Year 2016 50% of PSU Granted depending upon the level of CFROI at closing Financial Year 2016 |
| Validation of performance conditions | By the board of Directors, subject to confirmation by Solvay Statutory Auditors |
The Performance Share Units is qualified as a cash-settled share-based plan. As of September 30, 2014, the impact on the income statement and statement of financial position amounts to € 5.7 m.
Compared to December 31, 2013, there are no changes in valuation techniques.
For all financial instruments not measured at fair value in Solvay's statement of financial position, the fair value of those financial instruments is not significantly different from the ones published in note 34 of the consolidated financial statements for the year ended December 31, 2013.
For all financial instruments measured at fair value in Solvay's statement of financial position, the fair value of those instruments as of September 30, 2014 is not significantly different from the ones as published in the note 34 "Financial instruments measured at fair value in the consolidated statement of financial position" of the consolidated financial statements for the year ended December 31, 2013.
During the nine months ended September 30, 2014, there were neither reclassification between fair value levels, nor significant changes in the fair value of financial assets and liabilities measured based on level 3 inputs.
On November 12, 2014, the Brazilian competition authority's (CADE) notified its decision to reject the intended acquisition of Solvay's 70.59 percent majority stake in Solvay Indupa by Brazilian chemical producer Braskem. The decision was taken during a public hearing held that day. While Solvay is awaiting details of the decision, it confirms that its strategic direction remains unaffected and that it will, as soon as possible, examine alternative options to sell its participation in Solvay Indupa.
As a consequence, the transaction can no longer be expected to close by the year end. Such is a non-adjusting event after the reporting period ending on September 30, 2014.
The future accounting treatment of Solvay Indupa, more specifically its classification as non-current assets held for sale and discontinued operations should in all likelihood be unaffected given the Group's reaffirmation of its divestment intentions.
Jean-Pierre Clamadieu, Chief Executive Officer, and Karim Hajjar, Chief Financial Officer, of the Solvay Group, declare that to the best of their knowledge:
a. The summarized 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;
b. The 9 months management report contains a faithful presentation of significant events occurring during the nine first months of 2014, and their impact on the summarized financial information;
c. The main risks and uncertainties over the remaining months within the 2014 fiscal year are in accordance with the assessment disclosed in the section "Risk Management" in the Solvay 2013 Annual Report, taking into account the current economic and financial environment.
Solvay SA/NV
To the board of directors
In the context of our appointment as the company's statutory auditor, we report to you on the consolidated interim financial information. This consolidated interim financial information comprises the consolidated condensed statement of financial position as at 30 September 2014, the consolidated condensed income statement, the consolidated condensed statement of comprehensive income, the consolidated condensed statement of changes in equity and the consolidated condensed statement of cash flows for the period of nine months then ended, as well as selective notes 1 to 8.
We have reviewed the consolidated interim financial information of Solvay SA/NV ("the company") and its subsidiaries (jointly "the group"), prepared in accordance with International Financial Reporting Standard IAS 34 – Interim Financial Reporting as adopted by the European Union.
The consolidated condensed statement of financial position shows total assets of 17.652 million EUR and the consolidated condensed income statement shows a consolidated loss (group share) for the period then ended of 110 million EUR.
The board of directors of the company is responsible for the preparation and fair presentation of the consolidated interim financial information in accordance with IAS 34 – Interim Financial Reporting as adopted by the European Union. Our responsibility is to express a conclusion on this consolidated interim financial information based on our review.
We conducted our review of the consolidated interim financial information in accordance with International Standard on Review Engagements (ISRE) 2410 – Review of interim financial information performed by the independent auditor of the entity. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit performed in accordance with the International Standards on Auditing (ISA) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion on the consolidated interim financial information.
Based on our review, nothing has come to our attention that causes us to believe that the consolidated interim financial information of Solvay SA/NV has not been prepared, in all material respects, in accordance with IAS 34 – Interim Financial Reporting as adopted by the European Union.
Diegem, 13 November 2014
BV o.v.v.e. CVBA / SC s.f.d. SCRL
Represented by Eric Nys
To the extent that any statements made in this presentation contain information that is not historical, these statements are essentially forward-looking. The achievement of forward-looking statements contained in this presentation is subject to risks and uncertainties because of 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&D projects and other unusual items.
Consequently, actual results may differ materially from those expressed or implied by such forward-looking statements. Forward-looking statements can be identified by the use of words such as "expects," "plans," "will," "believes," "may," "could" "estimates," "intends", "goals", "targets", "objectives", "potential", and other words of similar meaning. Should known or unknown risks or uncertainties materialize, or should our assumptions prove inaccurate, actual results could vary materially from those anticipated. The Company undertakes no obligation to publicly update any forward-looking statements.
Adjusted performance indicators exclusively exclude non-cash Purchase Price Allocation (PPA) accounting impacts related to the Rhodia acquisition.
Adjusted net income (Solvay share) divided by the weighted average number of shares, after deducting own shares purchased to cover stock option programs
Net income (Solvay share) excluding non-cash Purchase Price Allocation (PPA) accounting impacts related to the Rhodia acquisition
Net result excluding non-cash Purchase Price Allocation (PPA) accounting impacts related to the Rhodia acquisition
REBIT excluding non-cash Purchase Price Allocation (PPA) accounting impacts related to the Rhodia acquisition
Net income (Solvay's share) divided by the weighted average number of shares, after deducting own shares purchased to cover stock option programs
Difference between cost of gross debt and yield on cash financed by debt.
Operating results
Cash flow from operating activities (including dividends from associates and joint ventures) + Cash flow from investing activities (excluding acquisitions and sales of subsidiaries and other investments).
International Financial Reporting Standards
Net financial expenses comprises cost of borrowings minus accrued interests on lending and short-term deposits, plus other gains (losses) on net indebtedness and costs of discounting provisions (namely, related to Postemployment benefits and HSE liabilities)
Sales of goods and value added services corresponding to Solvay's know-how and core business. Net sales exclude other revenues primarily comprising commodity and utility trading transactions and other revenue deemed as incidental by the Group
Operating result, i.e. EBIT before non-recurring items
REBITDA is defined as operating result before depreciation and amortization, non-recurring items, temporary stepup of inventories related to the Rhodia and Chemlogics acquisitions and pre-operational gain/(losses) of Rusvinyl resulting from financial expenses (not capitalized).
REBITDA constitutes the key operating performance indicator monitored by the management.
The comparative financial statements have been restated to include the effects of IFRS 11 applied by Solvay as of January 1, 2013. The Group's European Chlorovinyls activities planned to be contributed to the JV with INEOS, Solvay Indupa and Eco Services' businesses are presented as discontinued operations. For comparison purposes, 2013 and 2014 Income data have also been restated for the updated reallocation of shared functions costs from the Corporate & Business Services segment into the Global Business Units.
January 22, 2015 Payment of the interim dividend for 2014 (coupon no. 95) February 26, 2015 Announcement of the 4th quarter and full year 2014 results (at 07:30)
Maria Alcón-Hidalgo Investor Relations +32 2 264 1984 [email protected]
Geoffroy Raskin Investor Relations +32 2 264 1540 [email protected]
Edward Mackay Investor Relations +32 2 264 3687 [email protected]
Lamia Narcisse Media Relations +33 1 53 56 59 62 [email protected]
Caroline Jacobs Media Relations +32 2 264 1530 [email protected]
Solvay SA
1120 Brussels Belgium
T: +32 2 264 2111 F: +32 2 264 3061
www.solvay.com
As an international chemical group, Solvay assists industries in finding and implementing ever more responsible and value-creating solutions. Solvay generates 90% of its net sales in activities where it is among the world's top three players. It serves many markets, varying from energy and the environment to automotive and aerospace or electricity and electronics, with one goal: to raise the performance of its clients and improve society's quality of life. The group is headquartered in Brussels, employs about 29,400 people in 55 countries and generated 9.9 billion euros in net sales in 2013. Solvay SA (SOLB.BE) is listed on Euronext in Brussels and Paris (Bloomberg: SOLB.BB - Reuters: SOLBt.BR).
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