Quarterly Report • Aug 4, 2022
Quarterly Report
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Press release
Rotterdam, The Netherlands (4 August 2022) - IMCD N.V. ("IMCD" or "Company"), a leading distributor of speciality chemicals and ingredients, today announces its first half year 2022 results.
Piet van der Slikke, CEO: "IMCD's first six months showed record growth with an increase of 58% of operating EBITA. The trend of strong demand and increased prices continued. In addition, we were able to attract new product lines and the acquired businesses performed beyond expectation. Obviously there is a lot of macro-economic and political uncertainty which makes future developments difficult to predict. We remain however confident in our strong and resilient business model operating with a highly competent and motivated staff across the world in various market segments with a wide variety of products."
| EUR MILLION | JAN. 1 - JUNE 30, 2022 | JAN. 1 - JUNE 30, 20211 | CHANGE | CHANGE | FX ADJ. CHANGE |
|---|---|---|---|---|---|
| Revenue | 2,317.9 | 1,673.9 | 644.0 | 38% | 33% |
| Gross profit | 584.2 | 410.9 | 173.3 | 42% | 36% |
| Gross profit as a % of revenue | 25.2% | 24.5% | 0.7% | ||
| Operating EBITA2 | 296.7 | 187.4 | 109.3 | 58% | 52% |
| Operating EBITA as a % of revenue | 12.8% | 11.2% | 1.6% | ||
| Conversion margin3 | 50.8% | 45.6% | 5.2% | ||
| Net result | 177.0 | 105.6 | 71.4 | 68% | 60% |
| Free cash flow4 | 117.6 | 113.7 | 3.9 | 3% | |
| Cash conversion margin5 | 38.9% | 59.2% | (20.3%) | ||
| Earnings per share (weighted) | 3.11 | 1.86 | 1.25 | 68% | 60% |
| Cash earnings per share (weighted)6 | 3.68 | 2.34 | 1.34 | 57% | 50% |
| Number of full time employees end of period | 4,013 | 3,516 | 497 | 14% |
1 The figures for 2021 have been restated as a result of a change in accounting policy following the IFRIC agenda decision on cloud computing arrangements published in March 2021
2 Result from operating activities before amortisation of intangibles and non-recurring items
3 Operating EBITA in percentage of gross profit
4 Operating EBITDA excluding non-cash share-based payment expenses, less lease payments, plus/less changes in working capital, less capital expenditures
5 Free cash flow in percentage of adjusted operating EBITDA (operating EBITDA plus non-cash share-based payment costs minus lease payments)
6 Result for the year before amortisation (net of tax) divided by the weighted average number of outstanding shares
In the first half of 2022, revenue increased by 38% to EUR 2,317.9 million, compared with the same period of 2021. On a constant currency basis, the increase in revenue is 33%, consisting of organic growth of 26% and the impact of the first-time inclusion of companies acquired in 2021 and 2022 of 7%.
Gross profit, defined as revenue less costs of materials and inbound logistics, increased by 42% from EUR 410.9 million in the first half of 2021 to EUR 584.2 million in the same period of 2022. On a constant currency basis, the gross profit growth was 36%, consisting of organic growth of 30% and the impact of the first-time inclusion of businesses acquired in 2021 and 2022 of 6%.
Gross profit in % of revenue increased by 0.7%-point from 24.5% in the first half of 2021 to 25.2% in 2022. The gross profit margin increase is the result of changes in local market conditions, gross margin improvement initiatives, currency exchange rate movements and fluctuations in the product mix.
Operating EBITA increased by 58% from EUR 187.4 million in the first half of 2021 to EUR 296.7 million in the same period of 2022. On a constant currency basis operating EBITA increased by 52%. The growth in operating EBITA, on a constant currency basis, is a combination of organic growth (+45%) and the impact of the first-time inclusion of companies acquired in 2021 and 2022 (+7%).
The operating EBITA in % of revenue increased by 1.6%-point from 11.2% in the first half of 2021 to 12.8% in 2022.
The conversion margin, defined as operating EBITA as a percentage of gross profit, increased by 5.2%-point from 45.6% in the first half of 2021 to 50.8% in 2022. The increase in conversion margin is the result of substantial organic EBITA growth, whereby organic gross profit growth more than compensated organic own cost growth.
In the first half of 2022, free cash flow was EUR 117.6 million compared with EUR 113.7 million in the first half of 2021 (+EUR 3.9 million).
The cash conversion margin, defined as free cash flow as a percentage of adjusted operating EBITDA (Operating EBITDA adjusted for non-cash share-based payments and lease payments), was 38.9% compared with 59.2% in the first half of 2021. The decrease of the cash conversion margin in 2022 is the result of higher operating EBITDA more than offset by higher investments in net working capital, together with higher capital expenditures, compared to the first half of 2021.
The investment in net working capital (sum of inventories, trade and other receivables minus trade and other payables) in the first half of 2022 was EUR 179.9 million compared with EUR 76.0 million in the first half of 2021. Working capital investments were primarily driven by increased business activities. As at the end of June 2022, net working capital in days of revenue was 65 days (June 2021: 56 days).
Capital expenditure was EUR 5.1 million in the first half of 2022 compared with EUR 2.3 million in the same period of 2021 and mainly relates to investments in the ICT infrastructure, office improvements and technical and office equipment.
As at 30 June 2022, net debt was EUR 1,137.8 million compared with EUR 940.0 million as at 31 December 2021.
The leverage ratio (net debt/operating EBITDA ratio including full year impact of acquisitions) as at the end of June 2022, was 2.2 times EBITDA (31 December 2021: 2.3). Calculated on the basis of the definitions used in the IMCD loan documentation, the leverage ratio at the end of June 2022 was 1.5 times EBITDA (31 December 2021: 1.5), which is well below the maximum of 3.5 as allowed under the loan documentation.
The leverage development in the first half of 2022 is, among other things, influenced by a dividend payment of EUR 92.2 million in May and by considerations paid for acquired business of EUR 92.6 million.
The reporting segments are defined as follows:
The developments by operating segment in the first half of 2022 are as follows.
| EUR MILLION | JAN. 1 - JUNE 30, 2022 | JAN. 1 - JUNE 30, 2021 | CHANGE | CHANGE | FX ADJ. CHANGE |
|---|---|---|---|---|---|
| Revenue | 1,052.3 | 800.6 | 251.7 | 31% | 32% |
| Gross profit | 280.0 | 206.7 | 73.3 | 35% | 36% |
| Gross profit as a % of revenue | 26.6% | 25.8% | 0.8% | ||
| Operating EBITA | 140.4 | 92.5 | 47.9 | 52% | 54% |
| Operating EBITA as a % of revenue | 13.3% | 11.6% | 1.7% | ||
| Conversion margin | 50.1% | 44.8% | 5.3% |
Revenue increased by 31% from EUR 800.6 million in the first half of 2021 to EUR 1,052.3 million in 2022. On a constant currency basis, revenue growth was 32%. Gross profit increased by 35% to EUR 280.0 million in the first half of 2022 (+36% on a constant currency basis). Gross profit margin increased by 0.8%-point to 26.6%.
Operating EBITA increased by 52% from EUR 92.5 million in the first half of 2021 to EUR 140.4 million in 2022. On a constant currency basis the increase in operating EBITA was 54%. Compared with the same period in 2021, operating EBITA in % of revenue increased by 1.7%-point to 13.3% in the first half of 2022.
The first half of 2022 figures include the impact the acquisition of Polychem Handelsges.m.b.H. (Austria and Southeast Europe), completed in February 2022 and Evenlode Foods Ltd (UK), completed in March 2022.
| EUR MILLION | JAN. 1 - JUNE 30, 2022 | JAN. 1 - JUNE 30, 2021 | CHANGE | CHANGE | |
|---|---|---|---|---|---|
| Revenue | 773.1 | 530.6 | 242.5 | 46% | 31% |
| Gross profit | 183.7 | 118.9 | 64.8 | 55% | 39% |
| Gross profit as a % of revenue | 23.8% | 22.4% | 1.4% | ||
| Operating EBITA | 93.1 | 54.4 | 38.7 | 71% | 53% |
| Operating EBITA as a % of revenue | 12.0% | 10.3% | 1.7% | ||
| Conversion margin | 50.7% | 45.8% | 4.9% |
In the first half of 2022, revenue increased by 46% compared to the same period of 2021. On a constant currency basis, revenue growth was 31%. Gross profit increased by 55% to EUR 183.7 million in 2022, compared with EUR 118.9 million in the first half of 2021 (+39% on a constant currency basis). Gross profit margin increased by 1.4%-point from 22.4% in the first half of 2021 to 23.8% in 2022.
Operating EBITA increased by 71% from EUR 54.4 million in the first half of 2021 to EUR 93.1 million in 2022. On a constant currency basis operating EBITA increased by 53%. Operating EBITA in % of revenue increased by 1.7% point to 12.0%.
The first half of 2022 figures include the impact the acquisition of Siliconas y Quimicos (Colombia) and Andes Chemical Corp (Central America, Colombia and Peru) completed in May 2021, Materias Químicas de México S.A. de C.V. and Pluralmex S.A de C.V. (Mexico) completed in August 2021, and Polyorganic® Tecnologia Ltda (Brazil) and Quelaris Internacional S.A. (Colombia, Costa Rica and Peru) completed in March 2022.
| EUR MILLION | JAN. 1 - JUNE 30, 2022 | JAN. 1 - JUNE 30, 2021 | CHANGE | CHANGE | FX ADJ. CHANGE | |
|---|---|---|---|---|---|---|
| Revenue | 492.5 | 342.7 | 149.8 | 44% | 36% | |
| Gross profit | 120.4 | 85.3 | 35.1 | 41% | 34% | |
| Gross profit as a % of revenue | 24.4% | 24.9% | (0.5%) | |||
| Operating EBITA | 79.1 | 54.2 | 24.9 | 46% | 38% | |
| Operating EBITA as a % of revenue | 16.1% | 15.8% | 0.3% | |||
| Conversion margin | 65.7% | 63.6% | 2.1% |
In the first half of 2022, revenue increased by 44% to EUR 492.5 million (+36% on a constant currency basis). Gross profit increased by 41% to EUR 120.4 million in the first half of 2022, compared with EUR 85.3 million in the same period in 2021 (+34% on a constant currency basis). Gross profit in % of revenue was 24.4% in the first half of 2022, compared with 24.9% in the same period of 2021.
Operating EBITA increased by 46% from EUR 54.2 million in the first half of 2021 to EUR 79.1 million in 2022 (+38% on a constant currency basis). In the first half of 2022, operating EBITA in % of revenue was 16.1% compared with 15.8% in the same period of last year.
On 21 June 2022, IMCD signed an agreement to acquire 100% of the shares of Welex S.A. Holdings Limited and certain related business ("Welex"), based in China. Welex focuses on industries covering coatings and inks, textiles, additives for speciality compounding, and agrochemicals. Welex generated a revenue of approximately EUR 39 million in 2021 and has 68 employees across China. The transaction is expected to close in October 2022.
The first half year of 2022 results include the impact of the acquisition of Shanghai Yuanhe Chemicals Co. (China) completed in June 2021, PT Megasetia Agung Kimia (Indonesia) completed in December 2021, Shanghai Syntec Additive Limited and Shanghai Weike Additive Limited (China) and RPL Trading (Australia and New Zealand) completed in January 2022, and Aquatech Speciality (Shanghai) International Trading Co., Ltd. (China) completed in February 2022.
| EUR MILLION | JAN. 1 - JUNE 30, 2022 | JAN. 1 - JUNE 30, 20211 | CHANGE | CHANGE | FX ADJ. CHANGE | |
|---|---|---|---|---|---|---|
| Operating EBITA | (15.9) | (13.8) | (2.1) | (15%) | (13%) | |
| Operating EBITA as a % of revenue | (0.7%) | (0.8%) | 0.1% |
1 The figures for 2021 have been restated as a result of a change in accounting policy following the IFRIC agenda decision on cloud computing arrangements published in March 2021
Operating EBITA of Holding companies represents costs relating to the central head office in Rotterdam and the regional head offices in Singapore and in the USA.
Operating expenses increased by EUR 2.1 million from EUR 13.8 million in the first half of 2021 to EUR 15.9 million in 2022. The cost increase reflects the growth of IMCD and as a consequence the need to further strengthen the support functions in both Rotterdam and the regional head offices.
IMCD operates in different, often fragmented market segments in multiple geographic regions, connecting many customers and suppliers across a very diverse product range. In general, results are impacted by macroeconomic conditions and developments in specific industries.
Results can be influenced from period to period by, among other things, the ability to maintain and expand commercial relationships, the ability to introduce new products and start new customer and supplier relationships and the timing, scope and impact of acquisitions.
IMCD's consistent strategy and resilient business model has led to successful expansion over the years and IMCD remains focused on achieving earnings growth by optimising its services and further strengthening its market positions.
IMCD sees interesting opportunities to further increase its global footprint and expand its product portfolio both organically and by acquisitions.
Based on the performance in the first half year 2022 and the strong fundamentals of its business, IMCD expects operating EBITA growth in 2022.
| 10 November 2022 | First nine months 2022 results | |
|---|---|---|
| 24 February 2023 | Full year 2022 results | |
| 26 April 2023 | First quarter 2023 results | |
| 26 April 2023 | Annual General Meeting | |
| For further information: | Investor Relations | |
| T: +31 (0)102908684 | ||
| [email protected] |
Today's analysts conference call and webcast will start at 10:00 am CET. A recording of the call and webcast will be made available on the IMCD website (www.imcdgroup.com).
IMCD, based in Rotterdam, the Netherlands, is a market leader in the marketing, sales and distribution of speciality chemicals and ingredients. Its result-driven professionals provide market-focused solutions to suppliers and customers across EMEA, Americas and Asia-Pacific, offering a range of comprehensive product portfolios, including innovative formulations that embrace industry trends.
Listed at Euronext, Amsterdam (IMCD), IMCD realised revenues of EUR 3,435 million in 2021 with more than 3,700 employees in over 50 countries on six continents. IMCD's dedicated team of technical and commercial experts work in close partnership to tailor best-in-class solutions and provide value through expertise for around 56,000 customers and a diverse range of world class suppliers.
For further information, please visit www.imcdgroup.com
This press release may contain forward looking statements. These statements are based on current expectations, estimates and projections of IMCD's management and information currently available to the Company. IMCD cautions that such statements contain elements of risk and uncertainties that are difficult to predict and that could cause actual performance and position to differ materially from these statements. IMCD disclaims any obligation to update or revise any statements made in this press release to reflect subsequent events or circumstances, except as required by law.
In the annual report of IMCD N.V. the relevant risk categories and risk factors that could adversely affect the Company's business and financial performance have been described. They are deemed to be incorporated in this release.
This press release contains inside information as meant in clause 7 of the Market Abuse Regulation and was issued on 4 August 2022, 07:00 am CET.
| Condensed consolidated statement of financial position | 10 |
|---|---|
| Condensed consolidated statement of profit or loss and comprehensive income | 12 |
| Condensed consolidated statement of changes in equity | 14 |
| Condensed consolidated statement of cash flows | 15 |
| Notes to the condensed consolidated interim financial statements | 16 |
| EUR 1,000 | NOTE 30 JUNE 2022 |
31 DECEMBER 2021 |
|---|---|---|
| Assets | ||
| Property, plant and equipment | 110,061 | 97,932 |
| Goodwill | 1,366,097 | 1,257,011 |
| Other intangible assets | 569,807 | 551,088 |
| Intangible assets | 1,935,904 | 1,808,099 |
| Equity-accounted investees | 59 | 71 |
| Other financial assets | 5,574 | 5,422 |
| Deferred tax assets | 32,396 | 35,393 |
| Non-current assets | 2,083,994 | 1,946,917 |
| Inventories | 646,453 | 526,300 |
| Trade and other receivables | 857,148 | 619,462 |
| Cash and cash equivalents | 182,695 | 177,879 |
| Current assets | 1,686,296 | 1,323,641 |
| Total assets | 3,770,290 | 3,270,558 |
| EUR 1,000 | NOTE | 30 JUNE 2022 | 31 DECEMBER 2021 |
|---|---|---|---|
| Equity | 9 | ||
| Share capital | 9,118 | 9,118 | |
| Share premium | 1,051,438 | 1,051,438 | |
| Reserves | (2,268) | (63,895) | |
| Retained earnings | 372,779 | 255,888 | |
| Unappropriated result | 177,051 | 207,276 | |
| Total shareholders' equity | 1,608,118 | 1,459,825 | |
| Non-controlling interests | 1,621 | 1,529 | |
| Total equity | 1,609,739 | 1,461,354 | |
| Liabilities | |||
| Loans and borrowings | 10 | 986,015 | 666,853 |
| Employee benefits | 29,171 | 29,258 | |
| Provisions | 12,481 | 6,494 | |
| Deferred tax liabilities | 128,273 | 122,251 | |
| Total non-current liabilities | 1,155,940 | 824,856 | |
| Other short term financial liabilities | 10 | 334,481 | 451,050 |
| Trade payables | 509,039 | 403,010 | |
| Other payables | 161,091 | 130,288 | |
| Total current liabilities | 1,004,611 | 984,348 | |
| Total liabilities | 2,160,551 | 1,809,204 | |
| Total equity and liabilities | 3,770,290 | 3,270,558 |
| EUR 1,000 | NOTE | JAN. 1 - JUNE 30, 2022 | JAN. 1 - JUNE 30, 20211 |
|---|---|---|---|
| Revenue | 6 | 2,317,927 | 1,673,895 |
| Other income | 11,021 | 16,728 | |
| Operating income | 2,328,948 | 1,690,623 | |
| Cost of materials and inbound logistics | (1,733,760) | (1,263,028) | |
| Cost of warehousing, outbound logistics and other services | (67,753) | (48,672) | |
| Wages and salaries | (133,195) | (110,190) | |
| Social security and other charges | (36,279) | (29,258) | |
| Depreciation of property, plant and equipment | (14,827) | (13,129) | |
| Amortisation of intangible assets | (36,904) | (31,669) | |
| Other operating expenses | (53,376) | (37,329) | |
| Operating expenses | (2,076,094) | (1,533,275) | |
| Result from operating activities | 252,854 | 157,348 | |
| Finance income | 993 | 738 | |
| Finance costs | (8,792) | (8,616) | |
| Net finance costs | 7 | (7,799) | (7,878) |
| Share of profit of equity-accounted investees, net of tax | (12) | 11 | |
| Result before income tax | 245,043 | 149,481 | |
| Income tax expense | (68,023) | (43,840) | |
| Result for the year | 177,020 | 105,641 | |
| Result for the year attributable to the shareholders of the Company | 177,051 | 105,641 | |
| Result for the year attributable to non-controlling interest | (31) | - | |
| Result for the year | 177,020 | 105,641 | |
| Gross profit2 | 584,167 | 410,867 | |
| Gross profit in % of revenue | 25.2% | 24.5% | |
| Operating EBITA3 | 4 | 296,714 | 187,395 |
| Operating EBITA in % of revenue | 12.8% | 11.2% |
1 The figures for 2021 have been restated as a result of a change in accounting policy following the IFRIC agenda decision on cloud computing arrangements published in March 2021
2 Revenue minus cost of materials and inbound logistics
3 Result from operating activities before amortisation of intangibles and non-recurring items
| EUR 1,000 | JAN. 1 - JUNE 30, 2022 | JAN. 1 - JUNE 30, 20211 |
|---|---|---|
| Result for the year | 177,020 | 105,641 |
| Defined benefit plan actuarial gains/(losses) | 1,614 | 253 |
| Related tax | (443) | (101) |
| Items that will never be reclassified to profit or loss | 1,171 | 152 |
| Foreign currency translation differences re foreign operations | 68,626 | 24,090 |
| Related tax | (857) | (824) |
| Items that are or may be reclassified to profit or loss | 67,769 | 23,266 |
| Other comprehensive income for the period, net of income tax | 68,940 | 23,418 |
| Total comprehensive income for the period | 245,960 | 129,059 |
| Total comprehensive income attributable to: | ||
| Shareholders of the Company | 245,837 | 129,059 |
| Non-controlling interests | 123 | - |
| Total comprehensive income for the period | 245,960 | 129,059 |
| Weighted average number of shares | 56,947,309 | 56,936,176 |
| Basic earnings per share | 3.11 | 1.86 |
| Diluted earnings per share | 3.15 | 1.89 |
1 The figures for 2021 have been restated as a result of a change in accounting policy following the IFRIC agenda decision on cloud computing arrangements published in March 2021
| UNAPPRO | TOTAL | NON | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| EUR 1,000 | NOTE | SHARE CAPITAL |
SHARE PREMIUM |
TRANSLATION RESERVE |
HEDGING RESERVE |
RESERVE OWN SHARES |
OTHER RESERVES |
RETAINED EARNINGS |
PRIATED RESULT |
SHAREHOLDERS' EQUITY |
CONTROLLING INTEREST |
TOTAL EQUITY |
| Balance as at 31 December 2021 | 9,118 1,051,438 | (58,285) | (100) | (2,172) | (3,337) | 255,888 | 207,276 1,459,825 | 1,529 1,461,354 | ||||
| Adjustment for IAS 29 - Turkey | 3 | - | - | - | - | - | - | 4,953 | - | 4,953 | - | 4,953 |
| Balance as at 1 January 2022 | 9,118 1,051,438 | (58,285) | (100) | (2,172) | (3,337) | 260,841 | 207,276 1,464,778 | 1,529 1,466,307 | ||||
| Appropriation of prior year's result | - | - | - | - | - | - | 115,047 | (115,047) | - | - | - | |
| 9,118 1,051,438 | (58,285) | (100) | (2,172) | (3,337) | 375,887 | 92,229 1,464,778 | 1,529 1,466,307 | |||||
| Result for the year | - | - | - | - | - | - | - | 177,051 | 177,051 | (31) | 177,020 | |
| Total other comprehensive income | - | - | 67,646 | - | - | 1,171 | - | - | 68,817 | 123 | 68,940 | |
| Total comprehensive income for the | ||||||||||||
| year | - | - | 67,646 | - | - | 1,171 | - | 177,051 | 245,868 | 92 | 245,960 | |
| Cash dividend | - | - | - | - | - | - | - | (92,229) | (92,229) | - | (92,229) | |
| Share based payments | - | - | - | - | - | (1,674) | (7,789) | - | (9,463) | - | (9,463) | |
| Purchase and transfer own shares | - | - | - | - | (5,517) | - | 4,681 | - | (836) | - | (836) | |
| Total contributions by and distributions | ||||||||||||
| to owners of the Company | - | - | - | - | (5,517) | (1,674) | (3,108) | (92,229) (102,528) | - | (102,528) | ||
| Balance as at 30 June 2022 | 9 | 9,118 1,051,438 | 9,361 | (100) | (7,689) | (3,840) | 372,779 | 177,051 | 1,608,118 | 1,621 1,609,739 |
| Balance as at 30 June 2021 | 9,118 1,051,438 | (91,063) | (206) | (2,205) | (6,813) | 262,746 | 105,361 | 1,323,213 | - | 1,323,213 | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| to owners of the Company | - | - | - | - | 1,688 | (2,191) | 377 | (58,128) | (58,254) | - | (58,254) |
| Total contributions by and distributions | |||||||||||
| Purchase and transfer own shares | - | - | - | - | 1,688 | - | 4,700 | - | 6,388 | - | 6,388 |
| Share based payments | - | - | - | - | - | (2,191) | (4,323) | - | (6,514) | - | (6,514) |
| Cash dividend | - | - | - | - | - | - | - | (58,128) | (58,128) | - | (58,128) |
| Total comprehensive income for the year |
- | - | 23,266 | - | - | 152 | - | 105,361 | 129,059 | - | 129,059 |
| Total other comprehensive income | - | - | 23,266 | - | - | 152 | - | - | 23,418 | - | 23,418 |
| Result for the year | - | - | - | - | - | - | - | 105,641 | 105,641 | - | 105,641 |
| 9,118 1,051,438 | (114,329) | (206) | (3,893) | (4,774) | 262,369 | 58,128 1,252,408 | - 1,252,408 | ||||
| Appropriation of prior year's result | - | - | - | - | - | - | 62,000 | (62,000) | - | - | - |
| Balance as at 1 January 2021 | 9,118 1,051,438 | (114,329) | (206) | (3,893) | (4,774) | 194,927 | 120,128 1,252,408 | - 1,252,408 | |||
| EUR 1,000 | SHARE CAPITAL |
SHARE PREMIUM |
TRANSLATION RESERVE |
HEDGING RESERVE |
RESERVE OWN SHARES |
OTHER RESERVES |
RETAINED EARNINGS |
PRIATED RESULT |
SHAREHOLDERS' EQUITY |
CONTROLLING INTEREST |
TOTAL EQUITY1 |
| UNAPPRO | TOTAL | NON |
1 The figures for 2021 have been restated as a result of a change in accounting policy following the IFRIC agenda decision on cloud computing arrangements published in March 2021
| EUR 1,000 | NOTE | JAN. 1 - JUNE 30, 2022 | JAN. 1 - JUNE 30, 20211 |
|---|---|---|---|
| Cash flows from operating activities | |||
| Result for the period | 177,020 | 105,641 | |
| Adjustments for: | |||
| • Depreciation of property, plant and equipment |
14,827 | 13,129 | |
| • Amortisation of intangible assets |
36,904 | 31,669 | |
| • Net finance costs excluding currency exchange results |
12,005 | 9,589 | |
| • Currency exchange results |
(4,206) | (1,711) | |
| • One-off other operating income |
- | (6,224) | |
| • Cost of share based payments |
2,538 | 2,150 | |
| • Share of profit of equity-accounted investees, net of tax |
12 | (11) | |
| • Income tax expense |
68,023 | 43,840 | |
| 307,123 | 198,072 | ||
| Change in: | |||
| • Inventories |
(81,695) | (27,822) | |
| • Trade and other receivables |
(184,867) | (115,004) | |
| • Trade and other payables |
86,650 | 66,874 | |
| • Provisions and employee benefits |
(1,547) | (108) | |
| Cash generated from operating activities | 125,665 | 122,012 | |
| Interest paid | (14,026) | (11,743) | |
| Income tax paid | (57,079) | (24,796) | |
| Net cash from operating activities | 54,559 | 85,473 | |
| Cash flows from investing activities Acquisition of subsidiary, net of cash acquired and divestures |
5 | (92,575) | (70,140) |
| Acquisition of intangible assets | (3,448) | (8,523) | |
| Acquisition of property, plant and equipment | (5,077) | (2,290) | |
| Acquisition of other financial assets | 152 | (1,892) | |
| Net cash used in investing activities | (100,947) | (82,845) | |
| Cash flows from financing activities | |||
| Dividends paid | 9 | (92,229) | (58,082) |
| Purchase of and transfer own shares | (7,369) | - | |
| Share based payments | (5,465) | (3,964) | |
| Payment of transaction costs related to loans and borrowings | (2,346) | (0) | |
| Movements in bank loans and other short term financial liabilities | 10, 11 | 32,992 | 2,565 |
| Proceeds from issue of current and non-current loans and borrowings | 504,161 | 136,257 | |
| Repayment of loans and borrowings | 10, 11 | (375,174) | (105,686) |
| Redemption of lease liabilties | (10,746) | (10,029) | |
| Net cash from financing activities | 43,824 | (38,939) | |
| Net increase in cash and cash equivalents | (2,564) | (36,312) | |
| Cash and cash equivalents as at 1 January | 177,879 | 169,008 | |
| Effect of exchange rate fluctuations | 7,380 | 5,688 | |
| Cash and cash equivalents as at 30 June | 182,695 | 138,384 |
1 The figures for 2021 have been restated as a result of a change in accounting policy following the IFRIC agenda decision on cloud computing arrangements published in March 2021
IMCD N.V. (the 'Company') is a public limited company domiciled in The Netherlands and registered in The Netherlands Chamber of Commerce Commercial register under number 21740070. The address of the Company's registered office is Wilhelminaplein 32, Rotterdam. The condensed consolidated interim financial statements of the Company as at and for the first half year ended 30 June 2022, comprise the Company and its subsidiaries (together referred to as the 'Group' and individually as 'Group entities'). The Company is acting as the parent company of the IMCD Group, a group of companies leading in sales, marketing and distribution of speciality chemicals, pharmaceutical and food ingredients. The Group has offices in Europe, Africa, North and Latin America and Asia Pacific.
The condensed consolidated interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting. They do not include all the information required for a complete set of IFRS financial statements and should be read in conjunction with the consolidated financial statements of IMCD as at and for the year ended 31 December 2021. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group's financial position and performance since the last annual consolidated financial statements as at and for the year ended 31 December 2021.
The condensed consolidated interim financial statements were prepared by the Management Board and were authorised for issue by the Supervisory Board on 3 August 2022.
The condensed consolidated interim financial statements are presented in Euro, which is the Company's functional currency. All financial information presented in Euro has been rounded to the nearest thousand, unless mentioned differently.
In preparing the condensed consolidated interim financial statements, Management makes judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.
The significant judgements made by Management in applying the Group's accounting policies and the key sources of estimation uncertainty are the same as those applied to the consolidated financial statements as at and for the year ended 31 December 2021.
Except for the change in accounting referred to hereafter, the accounting policies applied in these interim financial statements are the same as those applied in the Group's consolidated financial statements as at and for the year ended 31 December 2021.
A number of new and amended standards are effective from 1 January 2022 but did not have a material effect on the Company's condensed consolidated financial statements. The Company has not early-adopted any standard, interpretation or amendment that has been issued but is not yet effective and endorsed.
As per June 2022, Turkey has been added to the list of countries with a hyperinflation economy. IAS 29 Financial Reporting in Hyperinflationary Economies has been applied to IMCD's operations in Turkey.
As a consequence, the balance sheet of IMCD Turkey has been restated, which resulted in a positive adjustment of the retained earnings opening balance of EUR 5.0 million.
In presenting information on the basis of operating segments, segment revenue is based on the geographical location of customers. Segment assets are based on the geographical location of the assets with the exception of assets related to holding companies, which are presented in a separate reporting unit.
The reporting segments used are defined as follows:
| EUR 1,000 | JAN. 1 - JUNE 30, 2022 | JAN. 1 - JUNE 30, 2021 | |
|---|---|---|---|
| Revenue | 1,052,307 | 800,595 | |
| Gross profit | 280,019 | 206,685 | |
| Operating EBITA | 140,413 | 92,506 | |
| Result from operating activities | 122,768 | 78,303 | |
| Total Assets | 1,208,289 | 1,010,220 | |
| Total Liabilities | 426,969 | 343,157 |
| EUR 1,000 | JAN. 1 - JUNE 30, 2022 | JAN. 1 - JUNE 30, 2021 |
|---|---|---|
| Revenue | 773,131 | 530,565 |
| Gross profit | 183,734 | 118,856 |
| Operating EBITA | 93,084 | 54,445 |
| Result from operating activities | 83,941 | 53,493 |
| Total Assets | 819,324 | 589,101 |
| Total Liabilities | 269,168 | 201,654 |
| EUR 1,000 | JAN. 1 - JUNE 30, 2022 | JAN. 1 - JUNE 30, 2021 | |
|---|---|---|---|
| Revenue | 492,489 | 342,735 | |
| Gross profit | 120,414 | 85,326 | |
| Operating EBITA | 79,114 | 54,237 | |
| Result from operating activities | 62,339 | 38,968 | |
| Total Assets | 1,364,929 | 993,915 | |
| Total Liabilities | 512,035 | 338,645 |
| EUR 1,000 | JAN. 1 - JUNE 30, 2022 | JAN. 1 - JUNE 30, 20211 | |
|---|---|---|---|
| Operating EBITA | (15,897) | (13,793) | |
| Result from operating activities | (16,194) | (13,416) | |
| Total Assets | 376,051 | 341,486 | |
| Total Liabilities | 952,379 | 728,053 |
1 The figures for 2021 have been restated as a result of a change in accounting policy following the IFRIC agenda decision on cloud computing arrangements published in March 2021
Operating EBITA is defined as the sum of the result from operating activities, amortisation of intangible assets and non-recurring items. Non-recurring items include costs related to corporate restructurings and reorganisations, cost related to realised and non-realised acquisitions and other non-recurring income and expenses.
| EUR 1,000 | JAN. 1 - JUNE 30, 2022 | JAN. 1 - JUNE 30, 20211 | |
|---|---|---|---|
| Result from operating activities | 252,854 | 157,348 | |
| Amortisation of intangible assets | 36,904 | 31,669 | |
| Non-recurring items in result from operating activities | 6,956 | (1,622) | |
| Operating EBITA | 296,714 | 187,395 |
1 The figures for 2021 have been restated as a result of a change in accounting policy following the IFRIC agenda decision on cloud computing arrangements published in March 2021
The non-recurring expenses in 2022 and 2021 relate to acquisitions and divestment of businesses and one-off adjustments to the organisation. The non-recurring expenses in 2022 include the estimated financial impact of the winding down of the operations in Russia.
On 18 January 2022, IMCD acquired 100% of the shares in Shanghai Syntec Additive Limited and Shanghai Weike Additive Limited (jointly "Syntec"). Syntec provides market, technical and formulation expertise in China's personal care, cosmetics, and home care industries. Syntec generated a revenue of approximately EUR 17 million in 2021 and has 25 employees.
On 31 January 2022, IMCD acquired 100% of the shares of RPL Trading, a speciality chemicals distributor focused on services and formulation expertise for customers and partners in the home care and water treatment markets. RPL Trading generated a revenue of approximately EUR 16 million for the fiscal year ended on 30 June 2021 and has 15 employees.
On 8 February 2022, IMCD acquired 100% of the shares in Polychem Handelsges.m.b.H. ("POLYchem"), a leading provider of chemical raw materials and additives in Austria and Southeast Europe. POLYchem offers a diverse portfolio of products for the coatings, construction, and composite industries. POLYchem has 65 employees and generated revenue of EUR 28 million in 2021.
On 28 February 2022, acquired 100% of the shares in Aquatech Speciality (Shanghai) International Trading Co., Ltd. and Aquatech Speciality (Guangzhou) Trading Co., Ltd. ("Aquatech") in China. Aquatech is active in waterborne solutions in coatings, ink, and textile industries. Aquatech has 10 employees and generated a revenue of EUR 6 million in 2021.
On 2 March 2022, IMCD acquired 100% of the shares in Evenlode Foods Ltd ("Evenlode") in the UK. Evenlode is active in speciality food and beverage ingredients throughout the UK and Ireland. Evenlode has 5 employees and generated a revenue of EUR 8.5 million in 2021.
On 4 March 2022, IMCD acquired 100% of the shares in speciality chemicals and ingredients distributor Polyorganic® Tecnologia Ltda ("Polyorganic"). Headquartered in São Paulo, Brazil, Polyorganic is active in the household, industrial and institutional (HI&I), water treatment industry and other industrial markets segment in Brazil. In 2021, Polyorganic generated a revenue of approximately EUR 12 million.
On 22 March 2022, IMCD acquired 100% of the business and the subsidiaries of Quelaris Internacional S.A. ("Quelaris"). Quelaris is a LATAM regional raw material distributor with offices in Colombia, Costa Rica and Peru and has a strong presence in the polyurethane, coatings, adhesives, rubber and other industrial markets throughout the region. With 46 employees, Quelaris generated revenue of approximately USD 52 million in 2021.
On 21 June 2022, IMCD signed an agreement to acquire 100% of the shares of Welex S.A. Holdings Limited and certain related business ("Welex"), based in China. Welex focuses on industries covering coatings and inks, textiles, additives for speciality compounding, and agrochemicals. Welex generated a revenue of approximately EUR 39 million in 2021 and has 68 employees across China. The transaction is expected to close in October 2022.
The aforementioned transactions added EUR 47.8 million of revenue and EUR 3.4 million of result for the year to the Group's results in 2022. If the acquisitions had occurred on 1 January 2022, management estimates that the consolidated revenue would have been EUR 2,336.6 million and the consolidated net profit would have been EUR 178.2 million. In determining these amounts, management has assumed that the fair value adjustments, determined provisionally, that arose on the date of acquisition would have been the same if the acquisition had occurred on 1 January 2022.
The recognised amounts of assets acquired and liabilities assumed on the basis of provisional purchase price allocation at the acquisition dates of the acquisitions completed in the first half of 2022, are as follows:
| EUR 1,000 | TOTAL |
|---|---|
| Property, plant and equipment | 2,561 |
| Intangible assets | 33,141 |
| Deferred tax assets | 1,364 |
| Other financial assets | 46 |
| Inventories | 17,526 |
| Trade and other receivables | 31,173 |
| Cash and cash equivalents | 13,308 |
| Loans and borrowings | (3,474) |
| Other short term financial liabilities | (3,718) |
| Employee benefits and other provisions | (6,038) |
| Deferred tax liabilities | (7,668) |
| Trade and other payables | (22,379) |
| Total net identifiable assets | 55,842 |
The goodwill recognised as a result of the acquisitions is as follows:
| EUR 1,000 | TOTAL |
|---|---|
| Total consideration, including deferred and contingent considerations | 113,776 |
| Less: Fair value of identifiable net assets | 55,842 |
| Goodwill | 57,935 |
The goodwill is mainly attributable to the skills and technical talent of the work force, the international network and the synergies expected to be achieved from integration of acquired companies into the Group's existing distribution business.
The Group generates revenue primarily from the sale and distribution of speciality chemicals and ingredients. Other sources of revenue include revenue from commission where the Group acts as agent in the sale and distribution of speciality chemicals and ingredients.
| EUR 1,000 | JAN. 1 - JUNE 30, 2022 | JAN. 1 - JUNE 30, 2021 |
|---|---|---|
| Sales of goods | 2,310,545 | 1,668,231 |
| Commissions | 7,382 | 5,664 |
| Total revenue | 2,317,927 | 1,673,895 |
In the following tables, revenue from contracts with customers is disaggregated by primary geographical market and their market segments, being Life Science and Industrial.
The breakdown of revenue by geographical market is as follows:
| EUR 1,000 | JAN. 1 - JUNE 30, 2022 | JAN. 1 - JUNE 30, 2021 |
|---|---|---|
| Netherlands | 46,107 | 34,623 |
| Rest of EMEA | 1,006,200 | 765,973 |
| EMEA | 1,052,307 | 800,595 |
| North America | 580,721 | 442,969 |
| Latin America | 192,410 | 87,595 |
| Americas | 773,131 | 530,565 |
| Asia-Pacific | 492,489 | 342,735 |
| Total revenue | 2,317,927 | 1,673,895 |
IMCD's business model is based on long lasting relationships with suppliers of speciality chemicals and ingredients. In order to provide more insight into the market segments served, IMCD breaks down the sales into the market segments Life Science and Industrial.
Life Science consists of the following lines of business: Pharmaceuticals, Beauty & Personal Care and Food & Nutrition. In general, the lines of business within Life Science historically have been less sensitive to economic fluctuations. Furthermore, the Life Science segment generally shows lower order volumes and higher margins than the Industrial market segment.
The Industrial segment contains the lines of business of Coatings & Construction, Lubricants & Energy, Industrial Solutions, Advanced Materials and Home Care and I&I. This segment has a more cyclical nature as the performance is dependent on the developments of the housing and real estate, automotive and oil & gas markets.
The breakdown of sales of goods per market segment is as follows:
| EUR 1,000 | JAN. 1 - JUNE 30, 2022 | JAN. 1 - JUNE 30, 2021 |
|---|---|---|
| Life Science | 1,071,157 | 830,390 |
| Industrial | 1,239,388 | 837,842 |
| Total sales of goods | 2,310,545 | 1,668,231 |
The net finance costs in the first half of 2022 consist of the following items:
| EUR 1,000 | JAN. 1 - JUNE 30, 2022 | JAN. 1 - JUNE 30, 20211 |
|---|---|---|
| Interest income on loans and receivables | 993 | 738 |
| Interest expenses on financial liabilities | (9,697) | (7,509) |
| Changes in deferred considerations | (1,457) | (1,064) |
| Amortisation of finance costs | (388) | (311) |
| Interest expenses related to employee benefits | (205) | (124) |
| Interest expenses on lease liabilities | (1,251) | (1,319) |
| Currency exchange results | 4,206 | 1,711 |
Net finance costs recognised in profit or loss (7,799) (7,878)
1 The figures for 2021 have been restated as a result of a change in accounting policy following the IFRIC agenda decision on cloud computing arrangements published in March 2021
In the first half of 2022, net finance costs were EUR 7.8 million compared with EUR 7.9 million in the same period of 2021. The increase of interest expenses on financial liabilities was offset by positive foreign currency exchange results.
The Group is not strongly subject to seasonal fluctuations throughout the year except for a slight decrease of sales during the normal holiday seasons in the different regions.
Following the decision about the appropriation of the financial result 2021 by the Annual General Meeting of May 2, 2022, the Company distributed a dividend in cash of EUR 92.2 million (EUR 1.62 per share). In 2021, the Company distributed a dividend in cash of EUR 58.1 million (EUR 1.02 per share).
As at 30 June 2022, net debt was EUR 1,137.8 million (31 December 2021: EUR 940.0 million).
In March 2022, IMCD was assigned investment grade rating of Baa3 by Moody's Investors Services and BBB- by Fitch Ratings, both with a stable outlook. In the same month, IMCD issued an EUR 300 million rated corporate bond loan with institutional investors. This five-year senior unsecured bond loan, maturing in March 2027, has a fixed coupon of 2.125%. The bond loan is listed on the Luxembourg Stock Exchange MTF market. The proceeds of the bond loan issue have been used for general corporate purposes, including the refinancing of existing indebtedness.
As at the end of June 2022, the leverage ratio (net debt/operating EBITDA ratio including full year impact of acquisitions) was 2.2 times EBITDA (31 December 2021: 2.3).
The actual leverage as at 30 June 2022, calculated on the basis of the definitions used in the IMCD loan documentation, was 1.5 times EBITDA (31 December 2021: 1.5).
Two leverage covenants are applicable to the Group:
As at 30 June 2022, the actual leverage of 1.5 times EBITDA is well below the applicable maximum leverages.
| 30 JUNE 2022 | CARRYING AMOUNT | FAIR VALUE | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| EUR 1,000 | NOTE | FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS |
AMORTISED COST | FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS |
OTHER FINANCIAL LIABILITIES |
TOTAL | LEVEL 1 | LEVEL 2 | LEVEL 3 | TOTAL |
| Forward exchange contracts used for hedging |
2,985 | - | - | - | 2,985 | - | 2,985 | - | 2,985 | |
| Forward exchange contracts used for hedging |
- | - | 984 | - | 984 | - | 984 | - | 984 | |
| Contingent consideration | 11 | - | - | 325,354 | - | 325,354 | - | - | 325,354 | 325,354 |
| 31 DECEMBER 2021 | CARRYING AMOUNT | FAIR VALUE | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| EUR 1,000 | NOTE | FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS |
AMORTISED COST | FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS |
OTHER FINANCIAL LIABILITIES |
TOTAL | LEVEL 1 | LEVEL 2 | LEVEL 3 | TOTAL |
| Forward exchange contracts used for hedging |
61 | - | - | - | 61 | - | 61 | - | 61 | |
| Forward exchange contracts used for hedging |
- | - | 195 | - | 195 | - | 195 | - | 195 | |
| Contingent consideration | 11 | - | - | 308,856 | - | 308,856 | - | - | 308,856 | 308,856 |
The following tables show the valuation techniques used in measuring Level 2 and Level 3 fair values, as well as the significant unobservable inputs used.
| Type | Valuation technique Significant unobservable inputs |
Inter-relationship between significant unobservable inputs and fair value measurement |
|
|---|---|---|---|
| Contingent consideration |
Discounted cash flows: The valuation model considers the present valueofexpectedpayment,discountedusingarisk-adjusteddiscount rate.Theexpectedpaymentisdeterminedbyconsideringthepossible scenarios of forecast EBITDA, the amount to be paid under each scenario and the probability of each scenario. |
• Forecast EBITDA margin • Risk-adjusted discount rate |
The estimated fair value would increase/(decrease) if: • the EBITDA margins were higher/ (lower); or • the risk-adjusted discount rates were lower/(higher). |
| Forward exchange contracts and interest rate swaps |
Market comparison technique: The fair values are based on broker quotes. Similar contracts are traded in an active market and the quotes reflect the actual transactions in similar instruments. |
Not applicable | Not applicable |
| Type | Valuation technique | Significant unobservable inputs | |
|---|---|---|---|
| Financial assets 1 | Discounted cash flows | Not applicable | |
| Financial liabilities 2 | Discounted cash flows | Not applicable |
1 Financial assets include trade and other receivables and cash and cash equivalents.
2 Financial liabilities include syndicated senior bank loans, other loans and borrowings, other short term financial liabilities, trade payables and other payables.
The following table shows the reconciliation from the opening balances to the closing balances for level 3 values.
| EUR 1,000 | CONTINGENT CONSIDERATION |
|---|---|
| 308,856 | |
| Balance as at 1 January 2022 | |
| Assumed in a business combination | |
| Paid contingent consideration | |
| Result included in profit or loss | |
| Effect of movement in exchange rates | |
| Balance as at 30 June 2022 |
The Group has related party relationships with its shareholders, subsidiaries, associates, Management Board, Supervisory Board and post-employment benefit plans. The financial transactions between the Company and its subsidiaries comprise financing related transactions and operational transactions in the normal course of business and are eliminated in the consolidated financial statements. The related party transactions in the first half of 2022 do not substantially deviate from the transactions as reflected in the financial statements as at and for the year ended 31 December 2021.
There where no material events after 30 June 2022 that would have changed the judgement and analysis by management of the financial conditions at 30 June 2022 or the result for the first half of 2022 of the Company.
The consolidated interim financial statements for the first half year of 2022 have not been audited or reviewed by the external auditor.
The Management Board of IMCD N.V. hereby declares that, to the best of its knowledge, the Interim Consolidated Financial information for the first half year of 2022, as prepared in accordance with IAS 34 Interim Financial Reporting, gives a true and fair view of the assets, liabilities, financial position and the profit or loss of IMCD N.V. and its jointly consolidated companies included in the consolidation as a whole, and that the semi-annual report gives a fair view of the information required in accordance with Section 5:25d subsection 8 and 9 of the Dutch Financial Supervision Act (Wet op het financieel toezicht).
Rotterdam, 3 August 2022
P.C.J. van der Slikke, CEO
H.J.J. Kooijmans, CFO
M. C. Jordan, COO
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