Earnings Release • Feb 26, 2014
Earnings Release
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REGULATED INFORMATION FEB 26, 2014 07:30 AM CET
All references to 2012 Income Statement data are restated for:
the Group's new business organization effective as from January 1, 2013;
the application of IAS 19 revised;
the Group's European Chlorovinyls activities planned to be contributed to the JV with Ineos.
The European Chlorovinyls business activities are reflected as "Assets Held For Sale" on the Balance Sheet (in one single line) and as discontinued operations in the Income Statement as required by IFRS.
As from December 31, 2013, Benvic (the PVC compounding business) is reflected in the Balance Sheet as "Assets Held for Sale", but as continued operations in the Income Statement.
Chemlogics is consolidated in the financial statements from November 1, 2013.
Furthermore, Solvay is presenting Adjusted Income Statement performance indicators that exclude non-cash Purchase Price Allocation (PPA) accounting impacts related to the Rhodia acquisition.
In 2013, Solvay made headway in creating a higher growth, less cyclical and more valuable company, while keeping a healthy balance sheet and generating solid free cash flows. The numerous excellence programs, ranging from manufacturing to innovation and marketing and sales, have started to bear fruit. In 2014, the Group will continue its transformation with a specific focus on the completion of initiated projects.
So far into the year some of Solvay's end markets have shown early signs of improvement and the Group is well-placed to benefit from better macroeconomic conditions. Although Solvay remains cautious, it is confident that 2014 will show REBITDA growth supported by the delivery of excellence programs.
| In million EUR Key data (in million EUR) |
Adjusted Q4 2013 |
Adjusted Q4 2012 |
% YoY evolution |
IFRS Q4 2013 |
IFRS Q4 2012 |
|---|---|---|---|---|---|
| Net Sales | 2,417 | 2,541 | (5)% | 2,417 | 2,541 |
| REBITDA | 384 | 407 | (6)% | ||
| REBIT | 200 | 250 | (20)% | 171 | 218 |
| Non-recurring | (68) | 92 | ns | (68) | 92 |
| EBIT | 131 | 342 | (62)% | 102 | 310 |
| Net financial expenses | (18) | (86) | 79% | (18) | (86) |
| Result before taxes | 113 | 257 | (56)% | 84 | 225 |
| Income taxes | (84) | (77) | (10)% | (74) | (66) |
| Net result from continuing operations | 28 | 181 | (84)% | 10 | 159 |
| Net result from discontinued operations | 1 | (4) | ns | 1 | (4) |
| Net income | 29 | 176 | (83)% | 11 | 155 |
| Non controlling interest | (4) | 21 | ns | (4) | 21 |
| Net income, Group share | 25 | 198 | (87)% | 7 | 176 |
| Basic EPS | 0.30 | 2.39 | (0.87) | 0.08 | 2.13 |
| Free cash flow | 246 | 251 | (2)% | 246 | 251 |
In the fourth quarter of 2013, Group net sales of € 2,417 m, fell (5)% as a deflationary raw material environment affected pricing (3)% and foreign exchange developments weighed (4)%. This was partly compensated for by Chemlogics' two month contribution +3%. Volumes at Group level were down (1)% entirely due to the phasing out of carbon credit (CER) sales in the course of the year. Excluding the CER phase-out, volumes would have grown 1%. Net sales stood stable in Advanced Formulations, were down (4)% in Advanced Materials, (2)% in Performance Chemicals and (10)% in Functional Polymers.
REBITDA at € 384 m (€ 407 m in 2012), declined (6)%. Allowing for the phasing out of CER sales, the guar exceptionals and Chemlogics, the REBITDA of the quarter would have grown by 8%.
Overall, in a deflationary raw material context, the reduction of selling prices of € (79) m yoy was substantially offset by reductions of € 77 m in raw material and energy costs. The resulting € (2) m negative net price effect on REBITDA is primarily due to the tail end of the guar effect in Advanced Formulations. Advanced Materials showed stable pricing, as Specialty Polymers' strong positioning compensated for a continued margin squeeze at Rare Earth Systems. Functional Polymers benefited from positive pricing thanks to the success of commercial excellence initiatives at Engineering Plastics. Excellence initiatives across businesses and functions offset fixed costs increases.
The yoy quarterly REBITDA evolution per operating segment broke down as follows: Advanced Formulations (16)%, Advanced Materials 18%, Performance Chemicals 4% and Functional Polymers ( € 14 m vs € (1) m in 2012).
The Group's REBITDA margin on net sales came in at 15.9% against 16.0% in 2012, a significant improvement on an underlying basis when taking into account the effects from the exceptional elements between periods.
Non-recurring Items of € (68) m (€ 92 m in 2012) included restructuring expenses € (14) m related to excellence initiatives and integration plans, as well as other costs primarily linked to environmental and litigation provisions of € (24) m. Furthermore, in the context of the advanced stage in the divestment process, Benvic PVC compounding business has been classified under Assets Held for Sale in the quarter, resulting in a non-cash impairment charge of € (32) m. As a reminder, the fourth quarter of 2012 included a positive € 149 m impact from the partial reversal of impairments relating to Soda Ash.
Adjusted EBIT amounted to € 131 m (€ 342 m in 2012), down (62)%, and included amortization and depreciation charges of € (164) m. On an IFRS basis, EBIT totaled € 102 m. The difference between IFRS and adjusted figures reflects the Rhodia purchase price allocation (PPA) amortization impact of € (29) m.
Net Financial Expenses narrowed to € (18) m (€ (86) m in 2012). Net charges on net debt amounted to € (41) m versus € (28) m in 2012, which included a € 17 m one-off non-cash income effect related to the decision to exercise the 2014 call option of the € 500 m Rhodia HY bond maturing in 2018.
The cost of discounting provisions for environmental and pension liabilities diminished to € (21) m from € (51) m in 2012. This was chiefly related to environmental reserves in the quarter including a positive one-off impact of € 9 m from higher discount rates. This compares with a € (16) m negative impact from lower discount rates in the fourth quarter of 2012.
Income from available for sale investments amounted to € 38 m (€ (2) m in 2012) and primarily included a € 36 m capital gain from the disposal of a non-core financial investment.
Adjusted Income Taxes of € (84) m (€ (77) m in 2012). They included non-cash provisions for prior-year items of € (68) m and a recognition of net deferred tax assets of € 40 m.
Net result from discontinued operations came in at € 1 m (€ (4) m in 2012) and comprised 3 main elements: Net income of the European chlorovinyls activities to be contributed to the JV with Ineos € (16) m, the non-cash impairment from the fair valuation of Solvay Indupa € (78) m and the last cash milestone of € 100 m received in connection with the divested pharma business.
Adjusted Net Income was € 29 m (€ 176 m in 2012). Adjusted Net income Group Share came in at € 25 m and adjusted basic earnings per share at € 0.30. On an IFRS basis, Net income Group share amounted to € 7 m.
| Key data (in million EUR) | Adjusted 2013 |
Adjusted 2012 |
% YoY evolution |
IFRS 2013 |
IFRS 2012 |
|---|---|---|---|---|---|
| Net Sales | 9,938 | 10,515 | (5)% | 9,938 | 10,515 |
| REBITDA | 1,663 | 1,896 | (12)% | ||
| REBIT | 1,035 | 1,303 | (21)% | 886 | 1,127 |
| Non-recurring | (239) | 55 | n.s. | (239) | 55 |
| EBIT | 796 | 1,357 | (41)% | 647 | 1,181 |
| Net financial expenses | (210) | (360) | (42)% | (210) | (360) |
| Result before taxes | 585 | 997 | (41)% | 437 | 820 |
| Income taxes | (229) | (291) | (21)% | (187) | (241) |
| Net result from continuing operations | 357 | 705 | (49)% | 249 | 579 |
| Net result from discontinued operations | 65 | 1 | n.s. | 65 | 1 |
| Net income | 422 | 707 | (40)% | 315 | 580 |
| Non controlling interest | (44) | (17) | n.s. | (44) | (17) |
| Net income, Group share | 378 | 690 | (45)% | 270 | 563 |
| Basic EPS | 4.54 | 8.37 | (46)% | 3.25 | 6.84 |
| Free cash flow | 524 | 787 | (33)% | 524 | 787 |
Group net sales amounted to € 9,938 m (€ 10,515 m in 2012), down (5)% yoy, due to volumes (2)%, pricing (2)% in a deflationary raw material environment, forex changes (3)%, and scope effect +1%. Excluding the CER phase-out, volumes declined (1)%. Net sales were down (5)% in Advanced Formulations, (7)% in Advanced Materials, (1)% in Performance Chemicals and (7)% in Functional Polymers.
In a challenging macro economic environment and against demanding comparables, REBITDA amounted to € 1,663 m (€ 1,896 m in 2012), broadly flat allowing for the CER phase out, exceptional guar effects and Chemlogics.
Overall pricing power was preserved in a deflationary raw material context with the reduction of selling prices of € (202) m more than offset by savings in raw material and energy costs of € 205 m. By Operating Segment, pricing power at Advanced Materials and at Engineering Plastics (within Functional Polymers) compensated for a major margin squeeze at Advanced Formulations, where the Novecare business unit suffered from the impacts in the guar derivatives business. Excellence initiatives across businesses and functions helped to substantially mitigate inflationary effects on the Group's fixed cost base.
The yoy REBITDA evolution per operating segment broke down as follows: Advanced Formulations (29)%, Advanced Materials 3%, Performance Chemicals (3)% and Functional Polymers (7)%.
The Group's REBITDA margin on net sales came in at 16.7% compared with 18.0% in 2012.
Non-recurring Items were € (239) m (€ 55 m in 2012) and included restructuring expenses, primarily from Soda Ash and integration plans € (115) m. Non-cash impairment charges amounted to € (65) m (Benvic and Plextronics). Other costs of € (59) m were linked to environmental and litigation provisions. As a reminder, 2012 included a € 149 m positive impact from the partial reversal of impairments from Soda Ash.
Adjusted EBIT amounted to € 796 m (€ 1,357 m in 2012), down (41)%, and included amortization and depreciation charges of € (603) m. On an IFRS basis, EBIT was at € 647 m. The difference between IFRS and adjusted figures reflects the Rhodia PPA depreciation impact of € (149) m.
Net Financial Expenses narrowed to € (210) m (€ (360) m in 2012). Net charges on net debt were € (162) m versus € (151) m in 2012 and included a € 17 m one-off non-cash income effect from the decision to exercise the 2014 call option of the € 500 m Rhodia HY bond maturing in 2018.
The cost of discounting provisions for environmental reserves and pension liabilities narrowed to € (87) m from € (200) m in 2012. This was mainly due to environmental reserves which in 2013 included an overall € 41 m one-off contribution following discount rates increases, whereas in 2012, decreases in discount rates resulted in a negative impact of € (50) m.
Income from available for sale investments amounted to € 40 m (€ (2) m in 2012) and primarily included a € 36 m capital gain from the disposal of a non-core financial investment.
Adjusted Income Taxes of € (229) m (€ 291 m in 2012) included provisions for prior-year items worth € (68) m as well as the recognition of net deferred tax assets movements of € 40 m which led to a nominal tax rate of 46% (or 35% when taking into account non-recurring elements).
Net Result from discontinued operations was € 65 m (€ 1 m in 2012). Net results comprised 3 principal elements: Net income of the European chlorovinyls activities to be contributed to the JV with Ineos € 27 m, the non-cash impairment resulting from the fair valuation of Solvay Indupa € (68) m and the last cash milestone payment of € 100 m received in connection with the disposed pharma business.
Adjusted Net Income was € 422 m (€ 707 m in 2012). Adjusted Net income Group Share came in at € 378 m and Adjusted basic earnings per share at € 4.54. On an IFRS basis, Net income Group share amounted to € 270 m.
Solvay accelerated its transformation in 2013 and set the stage to become a provider of innovative chemical solutions with higher growth, higher returns and stronger cash generation.
Solvay deployed its new organization after a review of business processes and functions, with a decentralized and agile management structure to seize growth opportunities and focus on performance. Solvay's Executive Committee, which recently welcomed Pascal Juery and Karim Hajjar (also as the Group's CFO), forms the team that will lead the Group's profound transformation and that will deliver on the Group's strategic commitments. Management long term incentives are aligned to the Group's 2016 value growth objectives.
Solvay made significant progress in upgrading its portfolio. It took steps to reduce its cyclicality, balance its regional presence and invest in its growth engines to provide customers with differentiated solutions. Solvay announced a European chlorovinyls joint venture project with Ineos, which is awaiting EU clearance, and an agreement to sell its majority stake in Indupa to Brazil's Braskem. The takeover of U.S.-based Chemlogics bolstered Solvay's know-how in the growing oil & gas market and positioned the Group to capture future oil & gas opportunities world wide. Today, Solvay announces that it is exploring strategic options for its Eco Services business, which generates strong and stable cash flows in the United States.
More than 120 major commercial and manufacturing excellence programs are under way, across all of Solvay's businesses in the 55 countries where it is present. Efficiency measures, ranging from energy to procurement or maintenance costs, will enhance Solvay's competitiveness and deliver the bulk of the Group's operational growth through to 2016. A key contribution will come from soda ash, where a breakthrough competitiveness program in Europe will reduce the annual cost base by € 100 m by 2016 and improve long-term profitability. Polyamide & Intermediates will, as of 2015, also reduce its cost base by € 100 m.
Solvay bases its investment decisions on strategic criteria, including a focus on its growth engines Advanced Formulations and Advanced Materials and on society's mega trends. Two large-scale alkoxylation plants in Singapore and the U.S. are being built to meet growing demand for specialty surfactants for the home & personal care market. South-East Asia's dynamic healthcare and food markets led Solvay to construct the region's largest sodium bicarbonate plant in Thailand. Solvay and Sadara are building one of the world's largest hydrogen peroxide plants In Saudi Arabia, enhancing Solvay's HP technology and market leadership.
Solvay's extensive transformation has geared the Group towards sustainable and value creating growth driven by customer centricity and supported by relentlessly striving for operational excellence, corporate social responsibility and innovation in sustainable chemistry.
Figures represent percentage of 2013 net sales (including pro-forma Chemlogics sales)
| Key data (in million EUR) | Q4 2013 | Q4 2012 | % YoY evolution |
FY 2013 | FY 2012 | % YoY evolution |
|---|---|---|---|---|---|---|
| Net sales | 2,417 | 2,541 | (5)% | 9,938 | 10,515 | (5)% |
| Advanced Formulations | 644 | 646 | - | 2,432 | 2,565 | (5)% |
| Advanced Materials | 603 | 626 | (4)% | 2,551 | 2,743 | (7)% |
| Performance Chemicals | 784 | 798 | (2)% | 3,125 | 3,162 | (1)% |
| Functional Polymers | 384 | 427 | (10)% | 1,763 | 1,888 | (7)% |
| Corporate and Energy | 2 | 45 | (96)% | 67 | 157 | (57)% |
| REBITDA | 384 | 407 | (6)% | 1,663 | 1,896 | (12)% |
| Advanced Formulations | 87 | 103 | (16)% | 369 | 518 | (29)% |
| Advanced Materials | 160 | 136 | 18% | 646 | 627 | 3% |
| Performance Chemicals | 186 | 179 | 4% | 724 | 750 | (3)% |
| Functional Polymers | 14 | (1) | n.m | 93 | 100 | (7)% |
| Corporate and Energy | (64) | (10) | n.m | (169) | (99) | (71)% |
€ 369 m FY 2013 REBITDA
| Key data (in million EUR) | Q4 2013 | % YoY evolution | FY 2013 | % YoY evolution |
|---|---|---|---|---|
| Net sales | 644 | - | 2,432 | (5)% |
| Novecare | 438 | 4% | 1,581 | (6)% |
| Coatis | 114 | (7)% | 486 | (4)% |
| Aroma Performance | 92 | (8)% | 365 | (3)% |
| REBITDA | 87 | (16)% | 369 | (29)% |
Net Sales at Advanced Formulations, previously named Consumer Chemicals, were stable at € 644 m. Foreign exchange headwinds (6)% and price declines (5)% were offset by the consolidation of solid sales at Chemlogics for two months 11%.
Novecare sales grew 4% to € 438 m. Most end-markets showed stable or growing demand with higher volumes except for Oil & Gas and Home and Personal Care (HPC). Guar derivatives were impacted by lower prices compared to unsustainably high prices in 2012.
Coatis net sales fell (7)% to € 114 m as a result of tough competition in Brazil and the depreciation of the local currency.
Aroma Performance net sales reached € 92 m, down (8)% compared to 2012 due to lower prices in Hydroquinone and an unfavorable currency conversion.
REBITDA of Advanced Formulations amounted to € 87 m in the fourth quarter (€ 103 m in 2012). Novecare's performance was impacted by the continued effects related to guar, though expensive guar inventories acquired at early 2013 highs have largely been consumed.
Excluding the impact of Guar derivatives margin squeeze, Oil & Gas performed strongly and the Agro and Coating segments continued to benefit from demand growth. The contribution of Chemlogics was in line with expectations.
Coatis was impacted by persisting difficult economic conditions in Brazil. Aroma Performance suffered from competitive pressure in Ethyl-Vanillin and by a particularly strong result in 2012 influenced by an operation outage at a large competitor which drove up hydroquinone prices.
Net Sales of Advanced Formulations amounted to € 2,432 m (€ 2,565 m in 2012) while the operating segment's REBITDA reached € 369 m (€ 518 m in 2012).
Performance at Advanced Formulations was mainly impacted in 2013 by adverse developments in Novecare's guar business:
(i) The phase-out of 2012's exceptional profit on peak native guar prices at our JV Hichem (accounting for c. € (100) m yoy decline), (ii) a c. € (50) m exceptional adverse guar derivative margin effect yoy.
Novecare's other businesses grew, in particular Agro, Oil &Gas (guar excluded) and Coatings.
The performance of Coatis improved during the year thanks to positive pricing power driven by sales indexed in US dollars and despite Brazil's difficult economic situation.
Aroma Performance continued its growth in food & flavor volumes. Volume growth in Fluor was offset by price decreases in Hydroquinone (which compares to high Hydroquinone prices in 2012 when supplies were tight after an unexpected operational outage at a large competitor).
€ 646 m FY 2013 REBITDA
| Key data (in million EUR) | Q4 2013 | % YoY evolution | FY 2013 | % YoY evolution |
|---|---|---|---|---|
| Net sales | 603 | (4)% | 2,551 | (7)% |
| Specialty Polymers | 308 | (1)% | 1,288 | (4)% |
| Silica | 101 | 8% | 416 | 9% |
| Rare Earth Systems | 70 | (18)% | 298 | (31)% |
| Special Chemicals | 124 | (9)% | 549 | (5)% |
| REBITDA | 160 | 18% | 646 | 3% |
Net sales of Advanced Materials amounted to € 603 m in the quarter, (€ 626 m in 2012). Although volumes were up 4%, they were fully offset by foreign exchange headwinds (4)% and price declines (4)%.
Specialty Polymers net sales were (1)% down, due to adverse foreign currency effects, particularly related to the Japanese Yen. However, volumes grew thanks to strong demand in Healthcare, Automotive and Consumer Goods markets. Deliveries for smart devices remained solid on a sequential basis, but stood lower than 2012 record volumes. Demand in the energy sector showed early signs of improvement.
Silica net sales grew 8% yoy, reaching € 101 m and were chiefly driven by volumes +13%, only partly offset by foreign exchange impacts. Demand benefited from growth in the Asian automotive sector and improved demand in Europe from low 2012 levels.
Net sales in Rare Earth Systems fell (18)% to € 70 m, as volumes growth in catalysis for Mixed Oxides were insufficient to compensate for lower prices.
Special Chemicals recorded lower net sales of € 124 m, (€ 135 m in 2012) essentially explained by the completion of the divestment of lossmaking Life Science activities.
REBITDA for Advanced Materials increased 18% to € 160 m, compared to 2012. The operating segment's strong performance was reflected in all of its 4 Global Business Units (GBUs).
The improvement of Specialty Polymers was driven by volume growth and positive pricing-power.
Silica continued to generate double-digit REBITDA growth, reflecting strong customer demand for innovative products.
Rare Earths Systems REBITDA grew in catalysis market and margins stabilized as market price declines slowed.
Special Chemicals' REBITDA improved, benefiting from lower losses in the Life Science business, as strategic divestments were delivered.
Net Sales of Advanced Materials ended at € 2,551 m (€ 2,743 m in 2012). REBITDA increased 3% to € 646 m driven by a favorable product mix and pricing power.
Performance was supported by the positive momentum in Specialty Polymers, Silica and Special Chemicals. Rare Earth Systems was penalized by sustained price decreases in rare earths and subsequent margin squeeze, which however stabilized during the year. Specialty Polymers posted growth in a difficult environment thanks to the delivery of its excellence programs. Silica benefited from its strong position in the energy efficient tire market and Special Chemicals succeeded in the execution of its strategic exit from loss-making Life Science businesses.
€ 724 m FY 2013 REBITDA
| Key data (in million EUR) | Q4 2013 | % YoY evolution | FY 2013 | % YoY evolution |
|---|---|---|---|---|
| Net sales | 784 | (2)% | 3,125 | (1)% |
| Essential Chemicals | 451 | - | 1,756 | (3)% |
| Acetow | 164 | 3% | 658 | 7% |
| Eco-Services | 67 | (13)% | 288 | (8)% |
| Emerging Biochemicals | 101 | (6)% | 424 | 1% |
| REBITDA | 186 | 4% | 724 | (3)% |
Net sales of Performance Chemicals stood at € 784 m (€ 798 m in 2012). Higher sales at Acetow were more than offset by lower sales in Emerging Biochemicals and Eco Services.
Net sales of Essential Chemicals totaled € 451 m, stable compared to 2012. The volume growth of 3% was offset by foreign exchange headwinds.
Soda Ash volumes increased supported by reduced seasonality in the glass industry. The benefits were offset by lower prices in some export markets even though these showed a gradual improvement during the latter part of the year.
Sales of bicarbonate were stable. Hydrogen Peroxide activities were underpinned by improved demand from emerging countries and for new applications which offset lower sales to the pulp & paper industry in mature regions.
Net sales of Acetow grew to € 164 m, from € 160 m in 2012 as a result of pricing power and stable volumes.
Eco-Services net sales were down at € 67 m (€ 78 m in 2012). Increased sales volumes were offset by the conversion impact of the lower U.S. dollar rate on the net sales of this U.S.-based business.
Emerging Biochemicals recorded net sales of € 101 m (from € 108 m a year earlier). The domestic PVC business continued to face fierce competition from Northeast Asian players and Epichlorohydrin faced year-end inventories management.
The operating segment's REBITDA increased by 4% to reach € 186 m. The good performance in Essential Chemicals, Acetow and Eco-Services was partially offset by a decrease in the Emerging Biochemicals business. Essential Chemicals' REBITDA was slightly up yoy, benefiting from volume increase and operational excellence to offset negative product mix (higher exports) and foreign exchange.
Acetow posted strong REBITDA growth, driven by strong pricing power, improved industrial performance and by supply chain optimization. Volume increases in Eco Services' Regen segment and reduced fixed costs increased REBITDA at Eco Services.
The REBITDA of Emerging Biochemicals declined. The effect of decreasing net sales was coupled with an increase in raw material and energy prices.
Net Sales of Performance Chemicals ended at € 3,125 m, (€ 3,162 m in 2012) while its REBITDA amounted to € 724 m (€ 750 m in 2012).
The record results at Acetow did not fully offset the result at Emerging Biochemicals. Essential Chemicals delivered strong REBITDA despite challenging market conditions in the flat glass sector early in 2013 and despite prices pressure in some export markets, a performance that was further supported by improved results in the US Green River operations. The targeted € 100m cost saving plan (by year-end 2015) is on track and the closure of the Povoa plant was completed in January 2014.
Acetow enjoyed strong demand and volumes sold out coupled with pricing power. Eco Services volumes were stable while Emerging Biochemicals continued to be affected by poor demand in both PVC and Epichlorohydrin and price pressure from competition.
| Key data (in million EUR) | Q4 2013 | % YoY evolution | FY 2013 | % YoY evolution |
|---|---|---|---|---|
| Net sales | 384 | (10)% | 1,763 | (7)% |
| Polyamide | 336 | (13)% | 1,557 | (8)% |
| Chlorovinyls | 48 | 13% | 206 | 3% |
| REBITDA | 14 | n.m | 93 | (7)% |
Following the filing for EU clearance of the Chlorovinyls joint venture project with Ineos, the related activities have been classified as discontinued operations as from September 30, 2013. Chlorovinyls residual businesses are the activities that are not to be contributed to the JV, mainly the PVC compounding business (Benvic).
As from December 31, 2013, Benvic is presented in the Balance Sheet under "Assets Held for Sale", but as continued operations in the Income Statement.
Functional Polymers reported net sales of € 384 m in the quarter (€ 427 m in 2012).
Net sales of Polyamide Materials amounted to € 336 m, down (13)% compared to 2012. Engineering Plastics sales were relatively stable thanks to improved sales volumes in Asia and despite lower raw materials prices. Polyamide and Intermediates suffered from weak PA66 demand and price pressure on intermediates. Fibras continued to be affected by challenging market conditions in the textile and industrial yarns segment.
Net sales of residual PVC compounding business grew 5% to € 36 m.
Functional Polymers returned to profit with REBITDA at € 14 m against € (1) m in the fourth quarter of 2012. Polyamide Materials improved compared to the fourth quarter of 2012 supported by pricing power at Engineering Plastics benefiting from the implementation of commercial excellence programs.
Performance of European chlorovinyls business to be contributed to the planned JV with Ineos stood broadly in line with the prior year. In the quarter net sales amounted to € 438 m and REBITDA amounted to € 14 m. European PVC demand in the quarter continued its slow recovery.
Net Sales of Functional Polymers amounted to € 1,763 m, down (7)% from 2012's € 1,888 m, while the operating segment's REBITDA also fell (7)% to € 93 m.
The successful structural repositioning of Engineering Plastics bolstered performance with volume increases and strong pricing power. However, performance was held back by a difficult competitive environment for Polyamide & Intermediates and Fibras.
Performance of the European chlorovinyls business to be contributed to the planned JV with Ineos stood broadly in line with 2012. Net sales were € 1,904 m and REBITDA amounted to € 153 m in 2013.
| Key data (in million EUR) | Q4 2013 | % YoY evolution | FY 2013 | % YoY evolution |
|---|---|---|---|---|
| Net sales | 2 | n.m | 67 | (57)% |
| Energy Services | 2 | n.m | 67 | (57)% |
| CBS and NBD | 0 | n.m | 0 | n.m |
| REBITDA | (64) | n.m | (169) | (71)% |
Net sales amounted to € 2 m and resulted from the on-going Solvay Energy Services businesses such as the Paraiso cogeneration plant in Brazil.
REBITDA amounted to € (64) m compared to € (10) m in Q4 2012. The end of CER sales in 2013, but seasonally high in 2012, explained the REBITDA evolution to a large extent. Furthermore, the yoy evolution was also explained by a one-time € 15 m positive impact recorded in the fourth quarter of 2012 related to the monetization of a litigation.
Net sales and REBITDA for 2013 respectively amounted to € 67 m and € (169) m. The end of CERs sales resulted in a REBITDA drop of € 90 m compared to 2012.
Excellence initiatives across corporate functions and services helped to neutralize cost inflation, while costs linked to the Group's 150-year anniversary celebration and new branding efforts where offset by oneoffs like the positive impact from the realignment of insurance policies of the Group.
| 626 | 603 | |||||
|---|---|---|---|---|---|---|
| 4% | (4)% | (4)% | 0% | |||
| Q4'12 | Volume | Price | Conversion Forex | Structure | Q4'13 |
| 798 | 784 | ||||
|---|---|---|---|---|---|
| 2% | 0% | (3)% | 0% | ||
| Q4'12 | Volume | Price | Conversion Forex | Structure | Q4'13 |
| 3,162 | 3,125 | ||||
|---|---|---|---|---|---|
| +1% | (1)% | (2)% | 0% | ||
| FY'12 | Volume | Price | Conversion Forex | Structure | FY'13 |
| FULL YEAR | |||||
|---|---|---|---|---|---|
| Million EUR (except for per-share figures in EUR) | IFRS | Adjusted2 | |||
| 2013 | 2012 | 2013 | 2012 | ||
| Sales | 10,367 | 10,910 | 10,367 | 10,910 | |
| Other non-core revenues | 429 | 395 | 429 | 395 | |
| Net sales | 9,938 | 10,515 | 9,938 | 10,515 | |
| Cost of goods sold | (8,043) | (8,546) | (8,043) | (8,502) | |
| Gross margin | 2,324 | 2,364 | 2,324 | 2,409 | |
| Commercial and administrative costs | (1,199) | (1,076) | (1,199) | (1,076) | |
| Research and development costs | (237) | (247) | (237) | (247) | |
| Other operating gains and losses | (94) | (97) | 55 | 35 | |
| Earnings from associates and joint ventures accounted for using the equity method |
92 | 183 | 92 | 183 | |
| REBIT | 886 | 1,127 | 1,035 | 1,303 | |
| Non-recurring items | (239) | 55 | (239) | 55 | |
| EBIT | 647 | 1,181 | 796 | 1,357 | |
| Cost of borrowings | (187) | (167) | (187) | (167) | |
| Interest on lendings and short-term deposits | 25 | 16 | 25 | 16 | |
| Other gains and losses on net indebtedness | (2) | (8) | (2) | (8) | |
| Cost of discounting provisions | (87) | (200) | (87) | (200) | |
| Income/loss from available-for-sale investments | 40 | (3) | 40 | (3) | |
| Result before taxes | 437 | 820 | 585 | 997 | |
| Income taxes | (187) | (241) | (229) | (291) | |
| Result from continuing operations | 249 | 579 | 357 | 705 | |
| Result from discontinued operations | 65 | 1 | 65 | 1 | |
| Net income | 315 | 580 | 422 | 707 | |
| Non-controlling interests | (44) | (17) | (44) | (17) | |
| Net income Solvay share | 270 | 563 | 378 | 690 | |
| Basic EPS from continuing operations | 2.47 | 6.28 | 3.76 | 7.81 | |
| Basic EPS | 3.25 | 6.84 | 4.54 | 8.37 | |
| Diluted EPS from continuing operations | 2.45 | 6.25 | 3.73 | 7.77 | |
| Diluted EPS | 3.23 | 6.81 | 4.50 | 8.33 |
1 The comparative financial statements have been restated to include the effects of IAS-19 revised as of January 1, 2012, the Group's new business organization effective as from January 1st 2013, and the Group's European Chlorovinyls activities planned to be contributed to the JV with Ineos presented as discontinued operations - see note 2
2 Exclude depreciation PPA accounting impacts related to the Rhodia acquisition
| FOURTH QUARTER | |||||
|---|---|---|---|---|---|
| Million EUR (except for per-share figures in EUR) | IFRS | Adjusted2 | |||
| 2013 | 2012 | 2013 | 2012 | ||
| Sales | 2,542 | 2,671 | 2,542 | 2,671 | |
| Other non-core revenues | 126 | 130 | 126 | 130 | |
| Net sales | 2,417 | 2,541 | 2,417 | 2,541 | |
| Cost of goods sold | (2,016) | (2,110) | (2,016) | (2,110) | |
| Gross margin | 526 | 561 | 526 | 561 | |
| Commercial and administrative costs | (308) | (289) | (308) | (289) | |
| Research and development costs | (57) | (63) | (57) | (63) | |
| Other operating gains and losses | (17) | (15) | 12 | 17 | |
| Earnings from associates and joint ventures accounted for using the equity method |
26 | 25 | 26 | 25 | |
| REBIT | 171 | 218 | 200 | 250 | |
| Non-recurring items | (68) | 92 | (68) | 92 | |
| EBIT | 102 | 310 | 131 | 342 | |
| Cost of borrowings | (53) | (31) | (53) | (31) | |
| Interest on lendings and short-term deposits | 12 | 3 | 12 | 3 | |
| Other gains and losses on net indebtedness | 5 | (5) | 5 | (5) | |
| Cost of discounting provisions | (21) | (51) | (21) | (51) | |
| Income/loss from available-for-sale investments | 38 | (2) | 38 | (2) | |
| Result before taxes | 84 | 225 | 113 | 257 | |
| Income taxes | (74) | (66) | (84) | (77) | |
| Result from continuing operations | 10 | 159 | 28 | 181 | |
| Result from discontinued operations | 1 | (4) | 1 | (4) | |
| Net income | 11 | 155 | 29 | 176 | |
| Non-controlling interests | (4) | 21 | (4) | 21 | |
| Net income Solvay share | 7 | 176 | 25 | 198 | |
| Basic EPS from continuing operations | 0.11 | 1.76 | 0.33 | 2.02 | |
| Basic EPS | 0.08 | 2.13 | 0.30 | 2.39 | |
| Diluted EPS from continuing operations | 0.11 | 1.74 | 0.33 | 2.00 | |
| Diluted EPS | 0.08 | 2.11 | 0.30 | 2.37 |
1 The comparative financial statements have been restated to include the effects of IAS-19 revised as of January 1, 2012, the Group's new business organization effective as from January 1st 2013, and the Group's European Chlorovinyls activities planned to be contributed to the JV with Ineos presented as discontinued operations - see note 2
2 Exclude depreciation PPA accounting impacts related to the Rhodia acquisition
The table hereafter reconciles Q4 and FY IFRS results with Q4 and FY Adjusted results for both 2012 and 2013.
| Key data (in million EUR) | Q4 | FY | ||
|---|---|---|---|---|
| 2013 | 2012 | 2013 | 2012 | |
| EBIT IFRS | 102 | 310 | 647 | 1,181 |
| Non recurring items (-) | 68 | (92) | 239 | (55) |
| REBIT IFRS | 171 | 218 | 886 | 1,127 |
| PPA Rhodia: Inventories at FV | 45 | |||
| PPA Rhodia: Amortization | 29 | 32 | 148 | 132 |
| Adjusted REBIT | 200 | 250 | 1,035 | 1,303 |
| PPA Chemlogics: Inventories at FV and retention bonus | 14 | 14 | ||
| Depreciation and amortization (recurring) without PPA Rhodia | 164 | 157 | 603 | 593 |
| Equity Earnings Rusvinyl (pre-operational stage) | 6 | 11 | ||
| REBITDA (key performance indicator monitored by Management) |
384 | 407 | 1,663 | 1,896 |
| Million EUR | Q4 | FY | |||
|---|---|---|---|---|---|
| 2013 | 2012 | 2013 | 2012 | ||
| Net income | 11 | 155 | 315 | 580 | |
| Other comprehensive income | |||||
| Recyclable components | |||||
| Hyperinflation | 30 | 0 | 30 | 0 | |
| Gains and losses on available-for-sale financial assets | (35) | 1 | (23) | 14 | |
| Gains and losses on hedging instruments in a cash flow hedge | 7 | 5 | (9) | 11 | |
| Currency translation differences | (130) | (76) | (356) | (129) | |
| Non recyclable components | |||||
| Remeasurement of the net defined benefit liability | (66) | (206) | 109 | (419) | |
| Income tax relating to recyclable and non recyclable components | |||||
| Income tax relating to components of other comprehensive income | (13) | 32 | (38) | 44 | |
| Other comprehensive income, net of related tax effects | (207) | (243) | (287) | (478) | |
| Comprehensive income attributed to | (196) | (90) | 28 | 102 | |
| Owners of the parent | (183) | (60) | 25 | 101 | |
| Non-controlling interests | (13) | (30) | 3 | 1 |
| Million EUR | December 31, 2013 |
December 31, 2012 Restated |
|---|---|---|
| Non-current assets | 11,191 | 11,602 |
| Intangible assets | 1,620 | 1,462 |
| Goodwill | 3,096 | 2,717 |
| Tangible assets | 4,679 | 5,393 |
| Available-for-sale investments | 38 | 66 |
| Investments in joint ventures and associates – equity method | 889 | 869 |
| Other investments | 110 | 123 |
| Deferred tax assets | 502 | 548 |
| Loans and other non-current assets | 257 | 424 |
| Current assets | 7,242 | 6,728 |
| Inventories | 1,267 | 1,422 |
| Trade receivables | 1,322 | 1,657 |
| Income tax receivables | 35 | 13 |
| Dividends receivable | 1 | 0 |
| Other current receivables - Financial instruments | 481 | 758 |
| Other current receivables – Other | 582 | 685 |
| Cash and cash equivalents | 1,932 | 1,768 |
| Assets held for sale | 1,621 | 425 |
| TOTAL ASSETS | 18,433 | 18,330 |
| Total equity | 7,453 | 6,574 |
| Share capital | 1,271 | 1,271 |
| Reserves | 5,804 | 4,859 |
| Non-controlling interests | 378 | 443 |
| Non-current liabilities | 6,838 | 8,226 |
| Long-term provisions: employees benefits | 2,684 | 2,987 |
| Other long-term provisions | 773 | 1,214 |
| Deferred tax liabilities | 469 | 489 |
| Long-term financial debt | 2,745 | 3,321 |
| Other non-current liabilities | 166 | 216 |
| Current liabilities | 4,142 | 3,530 |
| Short-term provisions: employees benefits | 0 | 63 |
| Other short-term provisions | 339 | 243 |
| Short-term financial debt | 769 | 331 |
| Trade liabilities | 1,353 | 1,617 |
| Income tax payable | 17 | 69 |
| Dividends payable | 112 | 103 |
| Other current liabilities | 602 | 768 |
| Liabilities linked to assets held for sale | 949 | 337 |
| TOTAL EQUITY & LIABILITIES | 18,433 | 18,330 |
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT COMPANY
| Revaluation reserve (fair value) |
||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| EUR Million | 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 after IAS19 Revised |
1,271 | 18 | 5,998 | (160) | (453) | 17 | 15 | (575) | 4,860 | 443 | 6,574 | |
| Net profit for the period | 270 | 270 | 44 | 315 | ||||||||
| Items of OCI | 20 | (315) | (23) | (9) | 81 | (245) | (41) | (287) | ||||
| Comprehensive income | 291 | 0 | (315) | (23) | (9) | 81 | 25 | 3 | 28 | |||
| Deeply subordinated bonds | 1,194 | 1,194 | 1,194 | |||||||||
| Cost of stock options | 10 | 10 | 10 | |||||||||
| Dividends | (276) | (276) | (76) | (352) | ||||||||
| Acquisitions/sale of treasury shares | (1) | (1) | (1) | |||||||||
| Results on sales of treasury shares | (29) | 29 | 0 | |||||||||
| Increase (decrease) through changes in ownership interests in subsidiaries that do not result in loss of control |
(8) | (8) | 8 | 0 | ||||||||
| Other | 0 | |||||||||||
| Balance at 31/12/2013 | 1,271 | 18 | 5,986 | 1,194 | (132) | (769) | (5) | 6 | (494) | 5,804 | 378 | 7,453 |
| MEUR | Q4 | FY | |||
|---|---|---|---|---|---|
| 2012 | 2013 | 2012 | |||
| Net income | 11 | 155 | 315 | 580 | |
| Depreciation, amortization and impairments (-) | 298 | 178 | 929 | 794 | |
| Equity earnings (-) | (26) | (25) | (93) | (184) | |
| Net financial charges and income / loss from available-for-sale investments (-) | 30 | 239 | 245 | 401 | |
| Income tax (-) | 86 | 94 | 232 | 295 | |
| Changes in working capital | 164 | 220 | 54 | 54 | |
| Changes in provisions | (0) | (245) | (245) | (310) | |
| Dividends received from associates and joint ventures accounted for using equity method |
37 | 5 | 83 | 53 | |
| Income taxes paid | (45) | (70) | (262) | (179) | |
| Others | (36) | (43) | 20 | (47) | |
| Cash flow from operating activities | 518 | 508 | 1,278 | 1,457 | |
| Acquisition (-) of subsidiaries | (881) | (2) | (878) | (2) | |
| Acquisition (-) of investments - Other | (58) | (15) | (121) | (39) | |
| Loans to associates and non consolidated subsidiaries | (20) | (23) | |||
| Sale (+) of subsidiaries and investments | 50 | 12 | 44 | 191 | |
| Acquisition (-) of tangible and intangible assets | (298) | (285) | (810) | (785) | |
| Sale (+) of tangible and intangible assets | 8 | 34 | 33 | 109 | |
| Income from available-for-sale investments | 2 | (0) | 4 | 1 | |
| Changes in non-current financial assets | 16 | (7) | 18 | 4 | |
| Cash flow from investing activities | (1,181) | (261) | (1,732) | (520) | |
| Proceeds from bond issuance classified as equity | 1,191 | 0 | 1,191 | 0 | |
| Capital increase (+) / redemption (-) | (0) | 0 | (0) | (28) | |
| Acquisition (-) / sale (+) of treasury shares | 6 | 31 | (1) | 142 | |
| Changes in borrowings | (146) | (141) | (120) | (379) | |
| Changes in other current financial assets | 381 | 230 | 205 | (294) | |
| Net cash out related to cost of borrowings and interest on lendings and term deposits |
(25) | (36) | (198) | (176) | |
| Other | 6 | (5) | (61) | (67) | |
| Dividends paid | (31) | (7) | (343) | (278) | |
| Cash flow from financing activities | 1,382 | 73 | 672 | (1,081) | |
| Net change in cash and cash equivalents | 719 | 320 | 218 | (144) | |
| Currency translation differences | 0 | (13) | (53) | (22) | |
| Opening cash balance | 1,224 | 1,470 | 1,778 | 1,943 | |
| Ending cash balance | 1,943 | 1,778 | 1,943 | 1,778 |
| From continuing operations | 234 | 217 | 290 | 679 |
|---|---|---|---|---|
| From discontinued operations | 13 | 34 | 235 | 108 |
| Total free cash flow | 246 | 251 | 524 | 787 |
| Million EUR | Q4 | FY | ||||
|---|---|---|---|---|---|---|
| 2013 | 2012 | 2013 | 2012 | |||
| Cash flow from operating activities | 44 | 76 | 337 | 252 | ||
| Cash flow from investing activities | (31) | (42) | (102) | (144) | ||
| Cash flow from financing activities | (7) | 7 | (22) | (29) | ||
| Net change in cash and cash equivalents | 5 | 41 | 213 | 79 |
Cash flow from operating activities was € 518 m compared to € 508 m last year. Besides net income of € 11 m, it consisted of:
Cash flow from investing activities was € (1,181) m, and included Chemlogics acquisition for € (881) m and capital expenditures which amounted to € (298) m, including € (31) m from discontinued operations
Free Cash Flow was € 246 m, and included cash flow from discontinued operations for € 13 m
Cash flow from operating activities was € 1,278 m compared to € 1,457 m last year. Besides net income of € 315 m, it consisted of:
Cash flow from investing activities was € (1,732) m included Chemlogics acquisition € (881) m and capital expenditures which amounted to € (810) m including € (102) m from discontinued operations
Free Cash Flow was € 524 m, including cash flow from discontinued operations for € 235 m
Solvay is a public limited liability company governed by Belgian law and quoted on NYSE Euronext Brussels and NYSE Euronext Paris.
The following unusual items had an impact on the consolidated financial statements for the twelve months ended December 31, 2013:
The Group's consolidated financial statements for the year ended December 31, 2013 were prepared in accordance with IFRS (International Financial Reporting Standards) as adopted by the European Union.
In 2011, the IASB published a revised IAS-19 Employee Benefits, applicable for annual periods beginning on or after January 1, 2013. Solvay applied the IAS-19 revised for the first time in the condensed consolidated financial statements as of March 31, 2013.
The comparative financial statements have been restated to include the effects of IAS-19 revised as of January 1, 2012. The effects of this restatement on the consolidated statement of financial position ended December 31, 2012 are as follows
| January 1, 2012 | Change in 2012 | December 31, 2012 | |
|---|---|---|---|
| Assets | |||
| Deferred tax assets | 1 | 1 | |
| Liabilities | |||
| Equity | (21) | (2) | (23) |
| Retained earnings | (21) | (20) | (41) |
| Other comprehensive income | 0 | 18 | 18 |
| Employee benefits provisions | 21 | 3 | 24 |
The impact of the IAS 19 revision on the measurement of the related provisions is limited to the inclusion of the taxes on contributions.
On the consolidated income statement for the twelve months ended December 31, 2012, net result was negatively impacted for € 20 m. This is mainly due to the replacement of the interest cost on the defined benefit obligation and the expected return on plan assets with a net interest cost based on the net defined benefit liability and the discount rate.
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, low-energy 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.
| Q4 2013 | Q4 2012 | FY 2013 | FY 2012 | |
|---|---|---|---|---|
| Net sales by Segment | ||||
| Advanced Formulations | 644 | 646 | 2,432 | 2,565 |
| Advanced Materials | 603 | 626 | 2,551 | 2,743 |
| Performance Chemicals | 784 | 798 | 3,125 | 3,162 |
| Functional Polymers | 384 | 427 | 1,763 | 1,888 |
| Corporate and Business Services | 2 | 45 | 67 | 157 |
| Total Net sales | 2,417 | 2,541 | 9,938 | 10,515 |
| REBITDA by Segment | ||||
| Advanced Formulations | 87 | 103 | 369 | 518 |
| Advanced Materials | 160 | 136 | 646 | 627 |
| Performance Chemicals | 186 | 179 | 724 | 750 |
| Functional Polymers | 14 | (1) | 93 | 100 |
| Corporate and Business Services | (64) | (10) | (169) | (99) |
| Total REBITDA | 384 | 407 | 1,663 | 1,896 |
| PPA depreciation | (29) | (32) | (148) | (132) |
| Recurring depreciation | (164) | (157) | (603) | (593) |
| Adjustments of Chemlogics inventories at FV (PPA) | (14) | 0 | (14) | 0 |
| Adjustments inventory step(up PPA Rhodia | 0 | 0 | 0 | (45) |
| Adjustments RusVinyl (pre operational stage) | (6) | 0 | (11) | 0 |
| REBIT | 171 | 218 | 886 | 1,127 |
| Non recurring items | (68) | 92 | (239) | 55 |
| EBIT by segment | ||||
| Advanced Formulations | 15 | 72 | 196 | 388 |
| Advanced Materials | 108 | 76 | 424 | 388 |
| Performance Chemicals | 126 | 274 | 440 | 663 |
| Functional Polymers | (44) | (30) | (57) | 83 |
| Corporate and Business Services | (104) | (80) | (356 | (339) |
| Total EBIT | 102 | 310 | 647 | 1,181 |
| Net financial expenses | (18) | (86) | (210) | (360) |
| Result before taxes | 84 | 224 | 437 | 820 |
| Income taxes | (74) | (66) | (187) | (241) |
| Result from continuing operations | 10 | 159 | 249 | 579 |
| Result from discontinued operations | 1 | (4) | 65 | 2 |
| Net income | 11 | 155 | 315 | 580 |
On May 6, 2013 Solvay and Ineos signed a Letter of Intent to combine their European chlorovinyls activities in a 50 - 50 joint venture. The joint venture would pool both groups' assets across the entire chlorovinyls chain, including PVC, caustic soda and chlorine derivatives. RusVinyl, Solvay's Russian joint venture in chlorovinyls with Sibur, is excluded from the transaction. In September 2013, Solvay and Ineos submitted their application for competition clearance with the European Commission. Subject to obtaining antitrust clearance, the joint venture is expected to be formed within the next 6 months.
The criteria for classifying this operation as "Assets held for sale" and "Discontinued operations" in accordance with "IFRS 5 - Non-current Assets Held for Sale and Discontinued Operations" are met since September 30, 2013.
Benvic (PVC Compound) is an asset held for sale and is not in discontinued operations as it is not a major line of business.
The recent significant devaluation of Argentina Pesos (ARS) will have an additional negative impact on the result of the sale of Solvay Indupa.
Early 2014, a process to explore the divestment of Eco Services (Performance Chemicals) has been initiated. Eco Services is active in the recycling of sulfuric acid in the US oil and gas business.
On October 31, 2013, Solvay acquired 100% of the privately-held Chemlogics, a company offering products to ease frictions in drilling. This acquisition enables Solvay's Novecare business unit to become a leader with an extensive portfolio of tailored chemical solutions for the fast-growing oil & gas market.
The acquisition of Chemlogics will generate significant synergies. Synergies will come from an extended client base and thanks to a comprehensive offering of innovative products and technologies enabling oilfield service players worldwide to competitively and safely extract oil and gas while reducing water consumption. The goodwill arising from the acquisition reflects the synergies expected from the acquisition and the potential of growth.
This goodwill is expected to be deductible for US income tax purposes over 15 years.
| Total consideration transferred (cash) | 888 |
|---|---|
| Recognised amounts of identifiable assets acquired and liabilities assumed | 359 |
| Tangible Fixed assets | 30 |
| Intangibles assets | 317 |
| Inventories | 56 |
| Non Industrial Working Capital | (6) |
| Accounts receivable and payable | 22 |
| Net debt | (60) |
| Goodwill | 529 |
The fair value of Intangible assets mainly corresponds to customer relationships.
The revenue included in the consolidated statement of comprehensive income since October 31, 2013 contributed by Chemlogics was € 58 m. Chemlogics also contributed operational profit (REBIT) for € 7 m over the same period.
Had Chemlogics been consolidated from 1 January 2013, the consolidated statement of comprehensive income would have included revenue of € 10,258 m and operational profit (REBIT) for € 962 m.
Contingent consideration (€ 60 m) is included in the acquisition price and is related to the achievement of performance targets.
The sale agreement contains a retention plan of € 17 m for key employees subject to future services. This cost is recognized in the REBIT over the 3 year-vesting period.
Acquisition costs amounted to € 5 m and are recorded in the non-recurring items.
The amount paid for the acquisition is € 881 m after deducting € 7 m of cash acquired.
In November 2013, following the acquisition of Chemlogics for \$ 1,345 m financed with available cash, the Group issued € 1.2 bn deeply subordinated hybrid bonds with the aim to further strengthen the Group's balance sheet ahead of its refinancing of debt maturities from 2014 onwards.
In accordance with IAS-32 – Financial instruments, these bonds are treated as equity for the following reasons:
Deloitte confirmed that the fieldwork related to the audit of the consolidated financial statements of Solvay SA/NV ("the company") and its subsidiaries (jointly "the Group"), prepared in accordance with International Financial Reporting Standards as adopted by the European Union and with the legal and regulatory requirements applicable in Belgium, is substantially completed. Deloitte confirmed that the financial information shown in this press release requires no comments on its part and is in agreement with the consolidated financial statements of the Group. The complete audit report related to the audit of the consolidated financial statements will be shown in the 2013 annual report that will be published on the Internet (www.solvay.com) on March 31, 2014.
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
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 Post-employment 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 step-up of inventories related to the Rhodia and Chemlogics acquisitions and pre-operational gain/(losses) of Rusvinyl resulting from financial expenses (not capitalized).
The comparative financial statements have been restated to include the effects of IAS-19 revised as of January 1, 2012, the Group's new business organization effective as from January 1, 2013, and the Group's European Chlorovinyls activities planned to be contributed to the JV with Ineos presented as discontinued operations
March 31, 2014: Annual report 2013 on www.solvay.com May 6, 2014: Announcement of the 1 st quarter 2014 results (at 7:30am) May 13, 2014: Annual Shareholders' Meeting (at 10:30 am) May 20, 2014: Payment of the balance of the 2013 dividend (coupon no. 94). Trading ex-dividend as from May 15, 2014 July 31, 2014: Announcement of the 2nd quarter and of the six months 2014 results (at 07:30 am) November 13, 2014: Announcement of the 3rd quarter and the nine months 2014 results and the interim dividend for 2013 (payable in January 2015, coupon no. 95) (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 S.A.
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 NYSE Euronext in Brussels and Paris (Bloomberg: SOLB.BB - Reuters: SOLBt.BR).
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