We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Register for streaming realtime charts, analysis tools, and prices.
| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Synthomer Plc | LSE:SYNT | London | Ordinary Share | GB00BNTVWJ75 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| -2.50 | -1.03% | 240.50 | 239.00 | 241.00 | 243.00 | 236.50 | 241.50 | 151,678 | 10:03:44 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Chemicals & Chem Preps, Nec | 2.02B | -67M | -0.4096 | -5.83 | 390.93M |
From Apr 2019 to Apr 2024
TIDMSYNT
RNS Number : 3368N
Synthomer PLC
08 August 2017
Synthomer plc
Interim Results for the six months ended 30 June 2017
Solid progress in H1 2017 - Underlying PBT up 17.4%; full year expectations unchanged
Hot Features
Premium
H1 HIGHLIGHTS 2017 2016 Increase / (decrease)
Underlying performance Reported Constant
(1) Currency(2)
------- ------- --------- -------------
GBPm GBPm % %
Revenue 770.3 446.2 72.6 64.8
------- ------- ---------
Volumes (ktes) 730.2 621.7 17.5
------- ------- ---------
Europe and North 64.3 46.8 37.4 30.8
America (ENA)
Asia and ROW (ARW) 18.1 24.2 (25.2) (28.5)
Unallocated (5.9) (6.1) 3.3 3.3
------- ------- ---------
Operating Profit 76.5 64.9 17.9 11.9
------- ------- ---------
Profit before Tax 71.6 61.0 17.4 10.8
------- ------- ---------
EPS (p) 16.8 13.8 21.7
DPS (p) - ordinary 3.7 3.5 5.7
IFRS Profit before
Tax 53.4 57.4 (7.0)
IFRS EPS (p) 12.5 14.0 (10.7)
--------------------------------- ------- ------- --- --------- -------------
1 - Underlying performance excludes Special Items. Comments on Underlying performance and a detailed analysis of the Special Items are set out in note 3.
2 - Constant currency sales and profit: these reflect current year results for Heritage business translated at the prior year's average exchange rates, and include the impact of acquisitions.
H1 highlights:
-- Underlying profit before tax up 17.4% to GBP71.6m (constant currency up 10.8%): -- Two 'bolt-on' acquisitions completed in last 12 months successfully integrated -- Europe & North America continue to grow in line with GDP -- Asia & Rest of World in line with guidance with H1 Nitrile Latex margins stable vs Q4 2016 -- Positive FX impact -- IFRS profit before tax GBP53.4m -- R&D delivering sustainable growth: new products represent circa 20% total sales* (2016: 18%) -- Underlying earnings per share up 21.7% at 16.8p per share -- Interim dividend of 3.7p (2016: 3.5p); increase of 5.7% in line with dividend policy -- Strong and flexible balance sheet maintained - leverage 1.3x EBITDA
*Heritage business only. Metric to be rebased for Full Year 2017
Commenting on the results, Neil Johnson, Chairman, said:
"We have made solid progress during the first half of this year. The positive impact of the 'bolt-on' acquisitions, Europe and North America continuing to grow in line with GDP and positive currency translation more than offset the anticipated margin pressure in the Nitrile Latex market in Asia and Rest of the World, leading to a 17.4% increase in Underlying profit before tax.
Looking ahead, we continue to focus on driving sustainable growth, through capital investment projects, R&D and business efficiency programmes. We also continue to evaluate acquisition opportunities and will remain highly disciplined in our selection criteria. Accepting the H2 seasonality inherent in our markets, and in the absence of any currency benefit in the second half, the Board's expectations for the full year remain unchanged."
IFRS Information H1 2017 H1 2016
------------------------------- -------------------------------
Underlying Special IFRS Underlying Special IFRS
performance Items performance Items
GBPm GBPm GBPm GBPm GBPm GBPm
Revenue 770.3 - 770.3 446.2 - 446.2
------------- -------- ------ ------------- -------- ------
Europe and North
America (ENA) 64.3 (16.2) 48.1 46.8 (1.6) 45.2
Asia and ROW (ARW) 18.1 (1.9) 16.2 24.2 (2.1) 22.1
Unallocated (5.9) (0.1) (6.0) (6.1) - (6.1)
------------- -------- ------ ------------- -------- ------
Operating profit
(including share
of JV's) 76.5 (18.2) 58.3 64.9 (3.7) 61.2
Finance costs (4.9) - (4.9) (3.9) 0.1 (3.8)
------------- -------- ------ ------------- -------- ------
Profit/(loss)
before taxation 71.6 (18.2) 53.4 61.0 (3.6) 57.4
------------- -------- ------ ------------- -------- ------
EPS (p) 16.8 (4.3) 12.5 13.8 0.2 14.0
DPS (p) 3.7 3.5
Underlying performance
As more fully described in note 3, the Group's management uses Underlying performance to plan for, control and assess the performance of the Group. Underlying performance differs from the statutory IFRS performance as it excludes the effect of Special Items, which are also detailed in note 3. The Board's view is that Underlying performance provides additional clarity for the Group's investors and so it is the primary focus of the Group's narrative reporting. Where appropriate, IFRS performance inclusive of Special Items is also described. References to 'unit margin' and 'margin' are used in the commentary on Underlying performance. Unit margin (or margin) is calculated on selling price less variable raw material and logistics costs.
The Heritage business is the Synthomer Group at 1 January 2016 as adjusted for disposals and the Existing business is the Synthomer Group at 1 January 2017.
The table below bridges the H1 2016 operating profit to that for the current period, showing the change in the Existing business, the impact of acquisitions, the impact of the weakness of sterling on translation and the effect of the Special Items.
Asia
&
Europe Rest Unallocated
& North of corporate
America World expenses Total
GBPm GBPm GBPm GBPm
--------- ------ ------- -------- ------------ ----- ------- -------
2016 - IFRS 45.2 22.1 (6.1) 61.2
Add back: 2016 -
Special Items 1.6 2.1 - 3.7
--------- ------- ------------ -------
2016 - Underlying
performance 46.8 24.2 (6.1) 64.9
2017 - Underlying
Existing business
change at 2016 exchange
rates 12.6 (6.0) 0.2 6.8
2017 - Impact of
acquisition of Oxo
Belgium 1.8 - - 1.8
2017 - Impact of
disposal of South
Africa - (0.9) - (0.9)
--------- ------- ------------ -------
2017 - Underlying
business change
at 2016 exchange
rates 14.4 30.8% (6.9) (28.5)% 0.2 3.3% 7.7 11.9%
2017 - Impact of
2017 exchange rates 3.1 0.8 - 3.9
--------- ------- ------------ -------
2017 - Underlying
performance 64.3 37.4% 18.1 (25.2)% (5.9) 3.3% 76.5 17.9%
Deduct: 2017 - Special
Items (16.2) (1.9) (0.1) (18.2)
--------- ------- ------------ -------
2017 - IFRS 48.1 6.4% 16.2 (26.7)% (6.0) 1.6% 58.3 (4.7)%
--------- ------ ------- -------- ------------ ----- ------- -------
Cautionary statement
The purpose of this report is to provide information to the members of the Company. It contains certain forward-looking statements with respect to the operations, performance and financial condition of the Group. By their nature, these statements involve uncertainty since future events and circumstances can cause results and developments to differ materially from those anticipated. The forward-looking statements reflect knowledge and information available at the date of preparation of this report and the Company undertakes no obligation to update these forward-looking statements. Nothing in this report should be construed as a profit forecast.
ENQUIRIES:
Calum MacLean, Chief Executive Tel: 01279 436211 Officer Stephen Bennett, Chief Financial Tel: 01279 436211 Officer Charles Armitstead / Rosie Oddy, Tel: 020 3603 5220 Teneo Blue Rubicon
The Company will host a meeting for analysts and investors at 09.00 today at Canaccord Genuity (88 Wood Street, London EC2V 7QR). The presentation will be webcast on the Company's website www.synthomer.com.
Chief Executive Officer's Review
Solid progress in H1 2017
A continued focus on organic growth combined with the benefits of two recent 'bolt-on' acquisitions enabled us to deliver a solid performance in H1 2017. These factors together with a favourable currency tailwind increased Group Underlying profit before tax by 17.4% to GBP71.6m.
The Europe and North America ('ENA') segment increased Underlying operating profit by 37.4% to GBP64.3m largely reflecting our successful integration of the dispersions PAC acquisition (from Hexion) and polymer additives Oxo Belgium acquisition (from Perstorp), the two transactions that we completed in the last 12 months. We remain on track to deliver the forecasted synergies by the end of 2018. In addition, the Heritage business continued to perform as expected, growing in-line with GDP.
Our Asia and Rest of World ('ARW') segment traded in line with expectations and consistent with the guidance given at the full year results. H1 Underlying operating profit was GBP18.1m (H1 2016: GBP24.2m), reflecting the disposal of our South Africa business in H2 2016, the weaker trading environment in the Middle East, and lower Nitrile Latex margins relative to a strong comparative period although they remain in line with Q4 2016.
We continue to see the benefits of our investment in R&D, with sales of new products increasing to circa 20% of sales (2016: 18%) in our Heritage business. We have continued to make good progress with our Business Development, Manufacturing Excellence and Procurement initiatives. Our capital investment projects are on track and which will result in the significant expansion of our facilities in Pasir Gudang, Worms and Roebuck with new capacity coming online in 2018.
H1 Results - Underlying
Group revenue increased 72.6% to GBP770.3m (2016: GBP446.2m) principally reflecting higher volumes from the acquisitions, the impact of higher raw materials prices and the favourable translation effect of a stronger Euro and US dollar relative to the comparative period.
H1 2017 Underlying profit before tax increased to GBP71.6m (2016: GBP61.0m), a rise of 17.4%, or 10.8% at constant currency. The Underlying results benefitted from the movement in sterling relative to the Euro (H1 2017 GBP1:EUR1.16, H1 2016 GBP1:EUR1.27) and relative to Malaysian Ringgit (H1 2017 GBP1:MYR 5.55, H1 2016 GBP1:MYR 5.74), resulting in an overall favourable FX translation impact of GBP3.9m.
Underlying earnings per share was up 21.7% at 16.8 pence per share (2016: 13.8 pence per share).
H1 Results - IFRS
IFRS profit before tax was GBP53.4m in H1 2017 relative to GBP57.4m in H1 2016. The IFRS profit before tax reflects the Underlying profit before tax as adjusted for the Special Items set out in note 3.
Special Items net charges have increased from GBP3.7m in H1 2016 to GBP18.2m in H1 2017, with the increase principally attributable to a one-off gain of GBP13.1m related to the FX contract put in place to hedge the purchase price of the PAC acquisition recorded in H1 2016 and which has not repeated in H1 2017.
Segmental review
Europe and North America (ENA)
H1 H1 Increase / (decrease)
2017 2016 Reported Constant
Currency
------ ------ ----------- -----------
% %
Volumes (ktes) 550.7 427.7 28.8
Revenue (GBPm) 593.2 305.5 94.2 85.3
EBITDA 75.2 53.6 40.3 33.6
Operating profit - Underlying
performance (GBPm) 64.3 46.8 37.4 30.8
Operating profit - IFRS
(GBPm) 48.1 45.2 6.4
------------------------------- ------ ------ ----------- -----------
Underlying operating profit in the ENA segment was GBP17.5m higher at GBP64.3m (2016: GBP46.8m), an increase of 37.4% or 30.8% at constant currency.
This improved performance largely reflects the benefits of the recent acquisitions, both of which are now fully integrated into our results for the first time. The dispersions PAC business was acquired from Hexion on 30 June 2016 and the polymer additives Oxo Belgium business was acquired from Perstorp on 5 March 2017.
Total volumes were up 28.8%. We continued to see volume growth in Construction & Coatings, Textiles and Adhesives, and Foam with marginally reduced volumes in Carpets and Paper.
Group unit margins have strengthened relative to prior year notwithstanding the significant raw materials price volatility in the period. Overall unit margins remained robust, benefitting from new product introductions, business development, manufacturing excellence and procurement initiatives.
Asia and Rest of World (ARW)
H1 H1 Increase / (decrease)
2017 2016 Reported Constant
Currency
------ ------ ----------- -----------
% %
Volumes (ktes) 179.5 194.0 (7.5)
Revenue (GBPm) 177.1 140.7 25.9 19.6
EBITDA 24.6 29.4 (16.3) (19.3)
Operating profit - Underlying
performance (GBPm) 18.1 24.2 (25.2) (28.5)
Operating profit - IFRS
(GBPm) 16.2 22.1 (26.7)
------------------------------- ------ ------ ----------- -----------
The trading performance of the ARW segment is consistent with the guidance given at the time of the 2016 full year results. Underlying operating profit was GBP18.1m relative to GBP24.2m in H1 2016, in part reflecting the sale of our South African business in August 2016 which contributed GBP0.9m of profit in H1 2016, the weaker trading environment in the Middle East (GBP0.6m), the ongoing integration of Chonburi (GBP0.9m) and the more challenging market economics in our Nitrile Latex business, relative to a strong comparative.
ARW volumes were stable relative to the prior year and the reduction in volumes of 14.5kt is attributable to the sale of our South African business.
Positively, the volumes in our Nitrile Latex business remained robust during a period of unprecedented raw material price volatility in Asia, where Butadiene prices rose and fell three fold in Q1 and Q2 respectively, and with the incremental production capacity introduced to the market in H2 2016.
Unit margin performance of our Nitrile Latex business is in line with expectations and, although down year on year against a stronger market driven comparative, is consistent with unit margins delivered by the business in Q4 2016.
Unallocated central costs
Unallocated central costs of GBP5.9m (2016: GBP6.1m) remain well controlled and are broadly in line with the prior year.
Special Items
H1
2017 H1 2016
GBPm GBPm
------- --------
Restructuring and site closure (3.3) (1.2)
Sale of land 1.4 -
Acquisition costs (1.2) (3.5)
Gain on foreign exchange contracts relating
to PAC acquisition - 13.1
Amortisation of acquired intangibles (15.1) (12.1)
------- --------
Impact on operating profit (18.2) (3.7)
------- --------
Tax on Special Items 3.5 4.0
------- --------
The following items of income and expense have been reported as Special Items, which are excluded to show Underlying performance:
-- Restructuring costs relate to the post acquisition integration of the PAC and Oxo Belgium businesses. The 2016 spend related to the PAC acquisition.
-- Profit on sale of land in 2017 related to a disposal of land in Hapton, UK.
-- Acquisition costs relate to costs incurred in relation to Oxo Belgium (H1 2016: PAC) and other acquisitions which have not occurred.
-- In 2016 we recognised a gain of GBP13.1m on the foreign exchange contracts taken out as a hedge against the US dollar PAC purchase consideration.
-- Amortisation of intangibles increased during the period, partly due to foreign currency movements and partly due to the intangibles acquired as part of the PAC and Oxo Belgium acquisitions.
Of the tax credit of GBP3.5m (2016: GBP4.0m), GBP3.2m (2016:GBP3.7m) related to the notional tax credit on the intangibles amortisation expense.
Taxation
The Group's Underlying tax rate at 20% (H1 2016: 22%, Full Year 2016: 20%) is lower due to changes in the geographical composition of profits.
Cash performance and balance sheet items
The Group generated operating cash flow of GBP13.0m (2016: GBP38.4m). 2017 was lower than 2016 because of the investment in working capital. This was due to the significant rise in key raw material prices during the period which resulted in higher inventory and trade receivable balances partly offset by higher trade payables balances.
Cash tax increased to GBP11.6m (2016:GBP6.7m) due to the acquisitions and the timing of settlement of tax liabilities.
The increase in capital expenditure to drive organic growth reflects the cash spend on the previously announced Nitrile Latex capacity increase in Pasir Gudang, Malaysia (GBP6m) and Dispersions capacity at Worms, Germany (GBP5m). Consistent with previous guidance, capital expenditure is expected to continue to rise to approximately GBP50-60m for the full year (2016: GBP45.6m) as work on these projects together with our ongoing sustenance and compliance capex continue.
On 5 March 2017, the Group paid GBP66.1m for the purchase of Oxo Belgium. The acquisition was funded through a drawdown under the Revolving Credit Facility. The allocation of the purchase price between goodwill, intangibles, tangible fixed assets and other net assets of GBP23.8m, GBP41.4m, GBP8.9m and GBP7.0m respectively, offset by a deferred tax liability of GBP15.0m remains provisional.
The Group paid the 2016 final ordinary dividend of 7.8 pence per share to shareholders on 6 July, resulting in a cash outflow of GBP26.5m after the period end.
After other operating, investing and financing flows, this led to an increase in cash, cash equivalents and bank overdrafts of GBP14.2m (2016: increase GBP40.8m).
The final tranche of Malaysian land for sale of approximately 400 acres is under offer on similar terms to the last tranche with completion expected end 2018/Q1 2019. The Group's 70% share of the proceeds at current foreign currency rates is expected to be approximately GBP10m.
The Group Pension liability has decreased to GBP184.5m from GBP186.7m at 31 December 2016 mainly reflecting a reduction in the UK pension liability of GBP9m and an increase in the overseas liability of GBP7m. The reduction in the UK pension liability reflects the reduction in the UK discount rate, more than offset by the growth in assets and contributions made under the deficit recovery programme. The rise in the overseas liability mainly reflects the incremental liability associated with the Oxo Belgium acquisition GBP3m and the fx translation impact of GBP3m.
Dividend and capital management
The Board has declared an interim dividend of 3.7 pence per share, an increase of 0.2 pence or 5.7%. This remains in line with our Group dividend and capital management policy.
Outlook
Looking ahead, we continue to focus on driving sustainable growth, through capital investment projects, R&D and business efficiency programmes. We also continue to evaluate acquisition opportunities and will remain highly disciplined in our selection criteria. Accepting the H2 seasonality inherent in our markets, and in the absence of any currency benefit in the second half, the Board's expectations for the full year remain unchanged.
Calum MacLean
Chief Executive Officer
7 August 2017
CONsolidated income statement for the SIX MONTHSED 30 JUNE 2017
Six months ended 30 Six months ended
June 2017 30 June 2016
------------------------------------- -------------------------------------
Underlying Special IFRS Underlying Special IFRS
performance Items performance Items
GBPm GBPm GBPm GBPm GBPm GBPm
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
Group revenue 770.3 - 770.3 446.2 - 446.2
============= ========== ========== ================= ========== ==========
Company and subsidiaries
before Special
Items 75.8 - 75.8 63.6 - 63.6
Restructuring and
site closure - (3.3) (3.3) - (1.2) (1.2)
Gain on foreign
exchange contracts
relating to acquisition - - - - 13.1 13.1
Acquisition costs - (1.2) (1.2) - (3.5) (3.5)
Sale of land - 1.4 1.4 - - -
Amortisation of
acquired intangibles - (15.1) (15.1) - (12.1) (12.1)
------------- ---------- ---------- ----------------- ---------- ----------
Company and subsidiaries 75.8 (18.2) 57.6 63.6 (3.7) 59.9
Share of joint
ventures 0.7 - 0.7 1.3 - 1.3
------------- ---------- ---------- ----------------- ---------- ----------
Operating profit
/ (loss) 76.5 (18.2) 58.3 64.9 (3.7) 61.2
============= ========== ========== ================= ========== ==========
Interest payable (3.1) - (3.1) (1.6) - (1.6)
Interest receivable 0.6 - 0.6 0.2 - 0.2
------------- ---------- ---------- ----------------- ---------- ----------
(2.5) - (2.5) (1.4) - (1.4)
IAS 19 interest
charge (2.4) - (2.4) (2.5) - (2.5)
Fair value adjustment - - - - 0.1 0.1
------------- ---------- ---------- ----------------- ---------- ----------
Finance costs (4.9) - (4.9) (3.9) 0.1 (3.8)
Profit / (loss)
before taxation 71.6 (18.2) 53.4 61.0 (3.6) 57.4
Taxation (14.3) 3.5 (10.8) (13.4) 4.0 (9.4)
------------- ---------- ---------- ----------------- ---------- ----------
Profit / (loss)
for the period 57.3 (14.7) 42.6 47.6 0.4 48.0
============= ========== ========== ================= ========== ==========
Profit / (loss)
attributable to
non-controlling
interests 0.3 - 0.3 0.6 (0.1) 0.5
Profit / (loss)
attributable to
equity holders
of the Company 57.0 (14.7) 42.3 47.0 0.5 47.5
------------- ---------- ---------- ----------------- ---------- ----------
57.3 (14.7) 42.6 47.6 0.4 48.0
============= ========== ========== ================= ========== ==========
Earnings per share
Basic 16.8p (4.3)p 12.5p 13.8p 0.2p 14.0p
Diluted 16.7p (4.3)p 12.4p 13.7p 0.2p 13.9p
Special Items
The Special Items are shown in more detail in note 3.
Year ended 31 December
2016
------------------------- --------
Underlying Special IFRS
performance Items
GBPm GBPm GBPm
Audited Audited Audited
Group revenue 1,045.7 - 1,045.7
=============== ======== ========
Company and subsidiaries
before Special Items 128.2 - 128.2
Restructuring and site
closure - (5.2) (5.2)
Sale of business - 4.7 4.7
Gain on foreign exchange
contracts relating to
acquisition - 13.1 13.1
Acquisition Costs - (4.3) (4.3)
Sale of land - 33.2 33.2
Amortisation of acquired
intangibles - (27.0) (27.0)
Company and subsidiaries 128.2 14.5 142.7
Share of joint ventures 2.0 - 2.0
--------------- -------- --------
Operating profit 130.2 14.5 144.7
=============== ======== ========
Interest payable (4.2) - (4.2)
Interest receivable 0.7 - 0.7
--------------- -------- --------
(3.5) - (3.5)
IAS 19 interest charge (4.5) - (4.5)
Finance costs (8.0) - (8.0)
Profit before taxation 122.2 14.5 136.7
Taxation (24.5) 9.1 (15.4)
--------------- -------- --------
Profit for the year 97.7 23.6 121.3
=============== ======== ========
Profit attributable to
non-controlling interests 1.5 9.4 10.9
Profit attributable to
equity holders of the
Company 96.2 14.2 110.4
--------------- -------- --------
97.7 23.6 121.3
=============== ======== ========
Earnings per share
Basic 28.3p 4.2p 32.5p
Diluted 28.1p 4.2p 32.3p
Special Items
The Special Items are shown in more detail in note 3.
Consolidated STATEMENT OF COMPREHENSIVE INCOME for the SIX MONTHSED 30 June 2017
Six months ended 30 Six months ended
June 2017 30 June 2016
---------------------------------------- ----------------------------------------
Equity Non-controlling Total Equity Non-controlling Total
holders interests holders interests
of the of the
Company Company
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
GBPm GBPm GBPm GBPm GBPm GBPm
Profit for the
period 42.3 0.3 42.6 47.5 0.5 48.0
---------- ---------------- ---------- ---------- ---------------- ----------
Actuarial gains
/ (losses) on
pension scheme 1.9 - 1.9 (45.0) - (45.0)
Tax relating
to components
of other comprehensive
income 0.3 - 0.3 3.2 - 3.2
---------- ---------------- ---------- ---------- ---------------- ----------
Total items that
will not be reclassified
to profit or
loss 2.2 - 2.2 (41.8) - (41.8)
---------- ---------------- ---------- ---------- ---------------- ----------
Exchange differences
on translation
of foreign operations (6.2) (0.2) (6.4) 43.5 1.6 45.1
Gains / (losses)
on a hedge of
a net investment
taken to equity 5.0 - 5.0 (2.9) - (2.9)
Total items that
may be reclassified
subsequently
to profit or
loss (1.2) (0.2) (1.4) 40.6 1.6 42.2
---------- ---------------- ---------- ---------- ---------------- ----------
Other comprehensive
income / (expense)
for the period 1.0 (0.2) 0.8 (1.2) 1.6 0.4
---------- ---------------- ---------- ---------- ---------------- ----------
Total comprehensive
income for the
period 43.3 0.1 43.4 46.3 2.1 48.4
========== ================ ========== ========== ================ ==========
Year ended 31 December
2016
-------------------------------------
Equity Non-controlling Total
holders interests
of the
Company
Audited Audited Audited
GBPm GBPm GBPm
Profit for the
year 110.4 10.9 121.3
--------- ---------------- --------
Actuarial losses (49.1) - (49.1)
Tax relating to
components of
other comprehensive
income 0.9 - 0.9
--------- ---------------- --------
Total items that
will not be reclassified
to profit or loss (48.2) - (48.2)
--------- ---------------- --------
Exchange differences
on translation
of foreign operations 47.0 1.2 48.2
Exchange differences
recycled on sale
of business 3.3 - 3.3
Losses on a hedge
of a net investment
taken to equity (6.4) - (6.4)
Total items that
may be reclassified
subsequently to
profit or loss 43.9 1.2 45.1
--------- ---------------- --------
Other comprehensive
(expense) / income
for the year (4.3) 1.2 (3.1)
--------- ---------------- --------
Total comprehensive
income for the
year 106.1 12.1 118.2
========= ================ ========
Consolidated STATEMENT OF CHANGES IN EQUITY
Share Share Capital Hedging Retained Total Non-controlling Total
capital premium redemption and earnings interests equity
reserve translation
reserve
--------- --------- ------------ --------------- ---------- ------- ---------------- --------
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1 January
2017 34.0 230.5 0.9 (4.4) 65.2 326.2 18.0 344.2
--------- --------- ------------ --------------- ---------- ------- ---------------- --------
Profit for
the period - - - - 42.3 42.3 0.3 42.6
Other
comprehensive
(expense)
/ income for
the period - - - (1.2) 2.2 1.0 (0.2) 0.8
--------- --------- ------------ --------------- ---------- ------- ---------------- --------
Total
comprehensive
(expense)
/ income for
the period - - - (1.2) 44.5 43.3 0.1 43.4
Share based
payments - - - - (2.3) (2.3) - (2.3)
Dividends
payable - - - - (26.5) (26.5) - (26.5)
At 30 June
2017
(Unaudited) 34.0 230.5 0.9 (5.6) 80.9 340.7 18.1 358.8
========= ========= ============ =============== ========== ======= ================ ========
Share Share Capital Hedging Retained Total Non-controlling Total
capital premium redemption and earnings interests equity
reserve translation
reserve
--------- --------- ------------ ------------- ---------- ------- ---------------- --------
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1 January
2016 34.0 230.5 0.9 (48.3) 32.3 249.4 9.1 258.5
--------- --------- ------------ ------------- ---------- ------- ---------------- --------
Profit for
the period - - - - 47.5 47.5 0.5 48.0
Other
comprehensive
income /
(expense)
for the period - - - 40.6 (41.8) (1.2) 1.6 0.4
--------- --------- ------------ ------------- ---------- ------- ---------------- --------
Total
comprehensive
income for
the period - - - 40.6 5.7 46.3 2.1 48.4
Share based
payments - - - - (0.2) (0.2) - (0.2)
Dividends
payable - - - - (18.3) (18.3) - (18.3)
At 30 June
2016 (Unaudited) 34.0 230.5 0.9 (7.7) 19.5 277.2 11.2 288.4
========= ========= ============ ============= ========== ======= ================ ========
Share Share Capital Hedging Retained Total Non-controlling Total
capital premium redemption and earnings interests equity
reserve translation
reserve
--------- --------- ------------ ------------- ---------- ------- ---------------- --------
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1 January
2016 34.0 230.5 0.9 (48.3) 32.3 249.4 9.1 258.5
--------- --------- ------------ ------------- ---------- ------- ---------------- --------
Profit for
the period - - - - 110.4 110.4 10.9 121.3
Other
comprehensive
income /
(expense)
for the period - - - 43.9 (48.2) (4.3) 1.2 (3.1)
--------- --------- ------------ ------------- ---------- ------- ---------------- --------
Total
comprehensive
income for
the period - - - 43.9 62.2 106.1 12.1 118.2
Share based
payments - - - - 1.0 1.0 - 1.0
Dividends
payable - - - - (30.3) (30.3) (3.2) (33.5)
At 31 December
2016 (Audited) 34.0 230.5 0.9 (4.4) 65.2 326.2 18.0 344.2
========= ========= ============ ============= ========== ======= ================ ========
Consolidated balance sheet as at 30 June 2017
30 June 30 June 31 December
2017 2016 2016
---------- ---------- ------------
Unaudited Unaudited Audited
GBPm GBPm GBPm
Non-current assets
Goodwill 328.0 321.7 301.4
Acquired intangible assets 81.7 45.0 54.2
Other intangible assets 0.2 0.6 0.2
Property, plant and equipment 304.1 260.6 293.3
Deferred tax assets 18.4 14.2 19.4
Investment in joint ventures 8.5 8.0 9.0
---------- ---------- ------------
Total non-current assets 740.9 650.1 677.5
---------- ---------- ------------
Current assets
Inventories 139.6 94.8 104.3
Trade and other receivables 264.6 206.9 195.7
Cash and cash equivalents 147.9 93.1 117.4
Derivatives at fair value - 19.1 -
---------- ---------- ------------
Total current assets 552.1 413.9 417.4
---------- ---------- ------------
Asset classified as held
for sale 0.3 6.5 0.7
---------- ---------- ------------
Current liabilities
Borrowings (80.7) (65.2) (65.4)
Trade and other payables (254.5) (189.8) (213.5)
Current tax liability (42.0) (37.9) (39.0)
Dividends payable (26.5) (18.3) -
Provisions for other liabilities
and charges (2.9) (3.0) (3.0)
Total current liabilities (406.6) (314.2) (320.9)
---------- ---------- ------------
Non-current liabilities
Borrowings (291.5) (247.1) (202.3)
Trade and other payables (1.3) - (2.7)
Deferred tax liability (44.0) (23.4) (33.1)
Post retirement benefit
obligations (184.5) (190.1) (186.7)
Provisions for other liabilities
and charges (6.6) (7.3) (5.7)
---------- ---------- ------------
Total non-current liabilities (527.9) (467.9) (430.5)
---------- ---------- ------------
Net assets 358.8 288.4 344.2
========== ========== ============
Equity
Called up share capital 34.0 34.0 34.0
Share premium 230.5 230.5 230.5
Capital redemption reserve 0.9 0.9 0.9
Hedging and translation
reserve (5.6) (7.7) (4.4)
Retained earnings 80.9 19.5 65.2
---------- ---------- ------------
Equity attributable to
equity holders of the
parent 340.7 277.2 326.2
Non-controlling interests 18.1 11.2 18.0
---------- ---------- ------------
Total equity 358.8 288.4 344.2
========== ========== ============
The interim financial statements were approved by the Board of Directors and authorised for issue on 7 August 2017.
Analysis of net borrowingS
Cash and cash equivalents 147.9 93.1 117.4
Current borrowings (80.7) (65.2) (65.4)
Non-current borrowings (291.5) (247.1) (202.3)
-------- -------- --------
Net borrowings (224.3) (219.2) (150.3)
Special item: deduct fair - 4.2 -
value adjustment
Net borrowings (Underlying
performance) (224.3) (215.0) (150.3)
======== ======== ========
Consolidated cash flow STATEMENT for the SIX MONTHSED 30 JUNE 2017
Six months Six months Year ended
ended ended 30 31 December
30 June 2017 June 2016 2016
---------------------- ---------------------- --------------------
Unaudited Unaudited Unaudited Unaudited Audited Audited
GBPm GBPm GBPm GBPm GBPm GBPm
Operating
Cash generated
from operations 27.1 46.5 157.0
Interest received 0.6 0.2 0.7
Interest paid (3.1) (1.6) (4.0)
---------- ---------- --------
Net interest paid (2.5) (1.4) (3.3)
UK corporation - - -
tax paid
Overseas corporate
tax paid (11.6) (6.7) (17.1)
---------- ---------- --------
Total tax paid (11.6) (6.7) (17.1)
---------- ---------- --------
Net cash inflow
from operating
activities 13.0 38.4 136.6
---------- ---------- --------
Investing
Dividends received
from joint ventures 1.0 2.0 2.1
Purchase of property,
plant and equipment (17.2) (8.9) (45.6)
Sale of property,
plant and equipment 2.2 0.1 34.4
Net capital expenditure (15.0) (8.8) (11.2)
Purchase of business (64.1) (165.5) (165.8)
Sale of business - - 12.8
Net cash outflow
from investing
activities (78.1) (172.3) (162.1)
---------- ---------- --------
Financing
Ordinary dividends
paid - - (30.3)
Dividends paid
to non-controlling
interests - - (3.2)
Settlement of
equity-settled
share based payments (2.8) - (0.4)
Proceeds of borrowings 133.1 184.7 186.0
Repayment of borrowings (51.0) (10.0) (82.7)
Net cash inflow
from financing
activities 79.3 174.7 69.4
---------- ---------- --------
Increase in cash
and bank overdrafts
during the period 14.2 40.8 43.9
========== ========== ========
Comprised of:
Cash, cash equivalents
and bank overdrafts
at 1 January 52.0 8.5 8.5
Cash inflows /
(outflows)
Cash and cash
equivalents 28.1 49.7 63.8
Bank overdrafts (13.9) (8.9) (19.9)
---------- ---------- --------
14.2 40.8 43.9
Exchange and other
movements 1.0 (3.7) (0.4)
---------- ---------- --------
Cash, cash equivalents
and bank overdrafts
at period end 67.2 45.6 52.0
========== ========== ========
Reconciliation of net cash flow from operating activities to movement in net borrowings
Six months Six months Year ended
ended ended 31 December
30 June 30 June 2016
2017 2016
----------- ----------- -------------
Unaudited Unaudited Audited
GBPm GBPm GBPm
Net cash inflow from
operating activities 13.0 38.4 136.6
Add back: dividends
received from joint
ventures 1.0 2.0 2.1
Less: net capital expenditure (15.0) (8.8) (11.2)
Less: net purchase of
business (64.1) (165.5) (153.0)
(65.1) (133.9) (25.5)
Ordinary dividends paid - - (30.3)
Dividends paid to non-controlling
interests - - (3.2)
Settlement of equity-settled
share based payments (2.8) - (0.4)
Exchange movements (6.1) (3.7) (13.5)
----------- ----------- -------------
Increase in net borrowings
(Underlying performance) (74.0) (137.6) (72.9)
=========== =========== =============
NOTES TO THE FINANCIAL STATEMENTS
1. General information
The information for the year ended 31 December 2016 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditors' report on those accounts was not qualified, did not contain a reference to any matters which the auditor drew attention by way of emphasis without qualifying the report, and did not contain statements under section 498 (2) or (3) of the Companies Act 2006.
2. Accounting policies and basis of preparation
The annual financial statements of Synthomer plc are prepared in accordance with IFRSs as adopted by the European Union and applicable law. This condensed set of financial statements has been prepared in accordance with applicable law, the Disclosure and Transparency Rules of the Financial Conduct Authority and with International Accounting Standards 34 'Interim Financial Reporting', as adopted by the European Union. The same accounting policies and methods of computations are followed in these financial statements as in the most recent audited annual financial statements except as described below.
Taxes on income in the interim periods are accrued using the tax rate that would be applicable to the expected total annual profit or loss.
After making enquiries and taking account of reasonably possible changes in trading performance, the Directors are satisfied that, at the time of approving the interim financial statements for the Group, it is appropriate to adopt the going concern basis.
3. Segmental performance & Special Items
The Group's Executive Committee, chaired by the Chief Executive Officer, examines the Group's performance and has identified two reportable segments of its business:
Europe & North America
These markets are well developed and are typically growing at GDP.
Asia & Rest of World
These markets are characterised by growth rates generally above GDP coupled with an increased penetration of more sophisticated products into wider uses.
The Group's Executive Committee primarily uses Underlying operating profit, being operating profit before Special Items to assess the performance of the operating segments. No information is provided to the Committee at the segment level concerning interest income, interest expenses, income taxes or other material non-cash items.
No single customer accounts for more than 10% of the Group's revenues.
The chief operating decision maker is the Group's Executive Committee.
IFRS and Underlying Performance
The IFRS profit measures show the performance of the Group as a whole and as such includes all sources of income and expense, including both one-off items and those that do not relate to the Group's ongoing businesses. To provide additional clarity on the ongoing trading performance of
the Group's businesses, management uses "Underlying" performance as an alternative performance measure to plan for, control and assess the performance of the segments. Underlying performance differs from the IFRS measures as it excludes Special Items.
Special Items
The definition of Special Items is shown in note 18 and has been consistently applied. These Special Items are either irregular, and therefore including them in the assessment of a segment's performance would lead to a distortion of trends, or are technical adjustments which ensure the Group's financial statements are in compliance with IFRS but do not reflect the operating performance of the segment in the year, or both. An example of the latter is the amortisation of acquired intangibles, which principally relates to acquired customer relationships. The Group incurs costs, which are recognised as an expense in the income statement, in maintaining these customer relationships. The Group considers that the exclusion of the amortisation charge on acquired intangibles from Underlying performance avoids the potential double counting of such costs and therefore excludes it as a Special Item from Underlying performance.
A segmental analysis of Underlying performance and Special Items is shown below.
Reconciliation Six months ended June Six months ended June
of Underlying 2017 2016
performance to
IFRS
------------------------------------------------ ----------
Europe Asia Unallocated Total Europe Asia Unallocated Total
& North & Rest corporate & North & Rest corporate
America of World expenses America of expenses
World
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
---------- ---------- ------------ ---------- ------------ ---------- ------------ ----------
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Revenue -
Underlying
and IFRS 593.2 177.1 770.3 305.5 140.7 446.2
---------- ---------- ---------- ------------ ---------- ----------
Operating
profit/(loss)
- including share
of joint ventures
Underlying
operating
profit/(loss) 64.3 18.1 (5.9) 76.5 46.8 24.2 (6.1) 64.9
Special Items
Restructuring
and site
closure (3.2) - (0.1) (3.3) (1.2) - - (1.2)
Gain on
foreign
exchange
contracts
relating to
acquisition - - - - 12.4 0.7 - 13.1
Acquisition
costs (1.2) - - (1.2) (3.3) (0.2) - (3.5)
Sale of land 1.4 - - 1.4 - - - -
Amortisation
of acquired
intangibles (13.2) (1.9) - (15.1) (9.5) (2.6) - (12.1)
---------- ---------- ------------ ---------- ------------ ---------- ------------ ----------
(16.2) (1.9) (0.1) (18.2) (1.6) (2.1) - (3.7)
---------- ---------- ------------ ---------- ------------ ---------- ------------ ----------
IFRS operating
profit/(loss) 48.1 16.2 (6.0) 58.3 45.2 22.1 (6.1) 61.2
---------- ---------- ------------ ---------- ------------ ---------- ------------ ----------
Year ended December
2016
-------------------------------------------
Europe Asia Unallocated Total
& North & corporate
America Rest expenses
of
World
Audited Audited Audited Audited
--------- -------- ------------ --------
GBPm GBPm GBPm GBPm
Revenue - Underlying
and IFRS 746.1 299.6 1,045.7
--------- -------- --------
Operating profit/(loss)
- including share
of joint ventures
Underlying operating
profit/(loss) 93.3 48.7 (11.8) 130.2
Special Items
Restructuring
and site closure (4.7) (0.3) (0.2) (5.2)
Profit on sale
of South African
Business - 4.7 - 4.7
Gain on foreign
exchange contracts
relating to acquisition 12.4 0.7 - 13.1
Acquisition costs (4.1) (0.2) - (4.3)
Sale of land - 33.2 - 33.2
Amortisation
of acquired intangibles (21.5) (5.5) - (27.0)
(17.9) 32.6 (0.2) 14.5
--------- -------- ------------ --------
IFRS operating
profit/(loss) 75.4 81.3 (12.0) 144.7
--------- -------- ------------ --------
The restructuring and site closure costs in H1 2017 relate to post-acquisition integration costs and an onerous lease provision. Further integration costs are expected in H2 2017.
Acquisition costs relate to costs incurred in relation to Oxo Belgium (2016: PAC) and other acquisitions which have not occurred.
The profit on sale of land in 2017 related to a disposal of land in Hapton, UK. The profit on sale of land in 2016 related to the disposal of tranches of Malaysian land.
The amortisation of acquired intangibles has increased during the year, partly due to exchange movements and partly due to the intangibles acquired as part of the acquisitions made in the last twelve months.
The tax credit on special items was GBP3.5m (2016: GBP4.0m).
Further details are provided in the Chief Executive's Business Review and the glossary of terms in note 18.
4. EBITDA
The Group uses EBITDA as an alternative performance measure as it provides an indication of the level of cash being generated by the business from its trading activities in the period by excluding the "non cash" depreciation and amortisation charges. This is also the principal profit measure used for the financial covenants in the Group's debt facilities. The definition of EBITDA is shown in note 18.
Reconciliation Six months ended June Six months ended June
of Underlying 2017 2016
performance to
IFRS
------------------------------------------------ ----------
Europe Asia Unallocated Total Europe Asia Unallocated Total
& North & Rest corporate & North & Rest corporate
America of World expenses America of expenses
World
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
---------- ---------- ------------ ---------- ------------ ---------- ------------ ----------
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
EBITDA 75.2 24.6 (5.7) 94.1 53.6 29.4 (5.9) 77.1
Depreciation
and
amortisation (10.9) (6.5) (0.2) (17.6) (6.8) (5.2) (0.2) (12.2)
---------- ---------- ------------ ---------- ------------ ---------- ------------ ----------
Operating profit
- Underlying
performance 64.3 18.1 (5.9) 76.5 46.8 24.2 (6.1) 64.9
Special Items (16.2) (1.9) (0.1) (18.2) (1.6) (2.1) - (3.7)
---------- ---------- ------------ ---------- ------------ ---------- ------------ ----------
Operating profit
- IFRS 48.1 16.2 (6.0) 58.3 45.2 22.1 (6.1) 61.2
========== ========== ============ ========== ============ ========== ============ ==========
5. Reconciliation of profit from operations to cash generated from operations
Six months Six months Year ended
ended 30 ended 31 December
June 2017 30 June 2016
2016
----------- ----------- -------------
Unaudited Unaudited Audited
GBPm GBPm GBPm
IFRS Operating profit
- continuing operations 58.3 61.2 144.7
Less: share of profit
of joint ventures (0.7) (1.3) (2.0)
----------- ----------- -------------
57.6 59.9 142.7
Adjustments for:
Depreciation 17.5 12.2 29.7
Amortisation (Underlying) 0.1 - 0.2
Amortisation (Special
Items) 15.1 12.1 27.0
Restructuring and site
closure (Special Items) 3.3 1.2 5.2
Gain on foreign exchange
contracts relating
to acquisition (Special
Items) - (13.1) (13.1)
Acquisition costs (Special
Items) 1.2 3.5 4.3
Share based payments 0.5 (0.2) 2.0
Profit on sale of land
(Special Items) (1.4) - (33.2)
Profit on sale of business
(Special Items) - - (4.7)
Cash impact of restructuring
and site closure (2.2) (1.6) (5.5)
Cash impact of foreign
exchange contracts
relating to acquisition - (1.4) 13.1
Cash impact of acquisition
costs (1.1) (1.4) (4.0)
IAS 19 interest charge (2.4) (2.5) (4.5)
Pension funding in
excess of IAS 19 charge (5.4) (4.5) (12.4)
Increase in inventories (28.2) (6.0) (13.3)
Increase in trade and
other receivables (59.7) (22.8) (13.5)
Increase in trade and
other payables 32.2 11.1 37.0
Cash generated from
operations 27.1 46.5 157.0
=========== =========== =============
6. Tax
Tax on the Underlying profit before taxation for the six month period is charged at 20.0% (six months ended 30 June 2016: 22.0%; year ended 31 December 2016: 20.0%), representing the best estimate of the average annual effective income tax rate expected for the full year. Inclusion of the best estimate for the tax charge on the Special Items results in a tax rate of 20.2% (six months ended 30 June 2016: 16.4%; year ended 31 December 2016: 11.3%), on the IFRS profit before taxation. The difference in the effective tax rate on the Underlying profit before tax and the IFRS profit before tax reflects the tax associated with the Special Items, some of which are not taxable or subject to tax deductions.
7. Dividends
The interim dividend of 3.7 pence per ordinary share was approved by the Board on 7 August 2017 and will be paid on 6 November 2017 to members on the register at the close of business on 6 October 2017.
The final dividend in respect of 2016, which was approved by the AGM on 27 April 2017, was paid on 6 July 2017.
8. Earnings per share
Six months Six months Year ended
ended ended 31 December
30 June 30 June 2016
2017 2016
------------ ------------ -------------
Unaudited Unaudited Audited
'000 shares '000 shares '000 shares
Weighted average number
of shares in issue
- basic 339,881 339,799 339,854
Weighted average number
of shares in issue
- diluted 342,142 342,232 342,189
Six months ended Six months ended
30 June 2017 30 June 2016
------------------------------------- -------------------------------------
Underlying Special IFRS Underlying Special IFRS
performance Items performance Items
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
GBPm GBPm GBPm GBPm GBPm GBPm
Earnings Profit
/ (loss) attributable
to equity holders
of the Company 57.0 (14.7) 42.3 47.0 0.5 47.5
------------- ---------- ---------- ------------- ---------- ----------
Basic earnings
per share 16.8p (4.3)p 12.5p 13.8p 0.2p 14.0p
Diluted earnings
per share 16.7p (4.3)p 12.4p 13.7p 0.2p 13.9p
Year ended 31 December
2016
---------------------------------
Underlying Special IFRS
performance Items
Audited Audited Audited
GBPm GBPm GBPm
Earnings Profit
attributable
to equity holders
of the Company 96.2 14.2 110.4
------------- -------- --------
Basic earnings
per share 28.3p 4.2p 32.5p
Diluted earnings
per share 28.1p 4.2p 32.3p
9. Assets classified as held for sale
The assets classified as held for sale comprise GBP0.3m in respect of the decision to sell agricultural land owned by the Group in Malaysia (30 June 2016: GBP6.5m; 31 December 2016: GBP0.3m). In 31 December 2016 a further GBP0.4m was included in respect of land in Hapton, UK which was subsequently sold, as disclosed in note 3. No further disposals were made in the six month period to 30 June 2017.
10. Financial instruments
The risks associated with the Group's financial instruments and related polices are detailed in note 23 of the 2016 annual financial statements. There have been no changes in the risks and the management thereof since 31 December 2016.
Fair values have been obtained from the relevant institutions where appropriate. Where market values are not available, fair values of financial assets and financial liabilities have been calculated by discounting expected future cash flow at prevailing interest rates and by applying period end exchange rates. The carrying amount of borrowings approximates to book value.
The fair value of the Group's financial instruments are measured using inputs other than quoted prices that are directly or indirectly observable. (Level 2 as defined in IFRS 13.)
There are no significant differences between the carrying value and fair value of either financial assets or financial liabilities.
11. Defined benefit schemes
The defined benefit plan assets have been updated to reflect their market value as at 30 June 2017. Actuarial gains or losses are recognised in the Statement of Comprehensive Income in accordance with the Group's accounting policy. The liabilities have been updated to reflect the change in the discount rate assumption.
12. Acquisition of subsidiary
Acquisition of Perstorp Oxo Belgium AB
The Group acquired 100% of the issued share capital of Perstorp Oxo Belgium AB, a specialities chemical company, on 5 March 2017, to complement the Group's existing markets and customers.
Provisional
fair value
------------
GBPm
Net assets acquired
Intangible assets 41.4
Property, plant and
equipment 8.9
Deferred tax liabilities (15.0)
Inventories 5.6
Trade and other receivables 5.7
Cash and cash equivalents 2.0
Trade and other payables (3.6)
Post retirement benefit
obligations (2.7)
------------
Provisional fair value
of net assets acquired 42.3
------------
Goodwill arising on
acquisition 23.8
------------
Total consideration 66.1
------------
Satisfied by
Cash consideration 66.1
Cash flow
Cash consideration 66.1
Cash acquired (2.0)
Net movement on borrowings 64.1
Including provisional amounts, the total expected impact on borrowings is -
GBPm
Net movement on borrowings per above 64.1
Cash impact of acquisition costs 0.5
Total movement on borrowings relating
to acquisition, to 30 June 2017 64.6
International Financial Reporting Standard 3 "Business Combinations" (revised 2008) requires the assets acquired to be initially recorded at Fair Value at the date of acquisition. Any such Fair Value adjustments are provisional and will be finalised within twelve months of the acquisition date. Any resulting changes in the fair values may have an impact on the depreciation from the date of acquisition and would be recorded in the financial statements.
The goodwill arising on the acquisition of the business represents the premium the Group paid to acquire companies which complement the business and create significant opportunities for cross-selling and other synergies.
Transaction costs expensed relating GBPm
to acquisition of subsidiary
In 12 months to 31 -
December 2016
In 6 months to 30 June
2017 0.5
-----
0.5
-----
The acquired company contributed revenue of GBP12.6m and an operating profit of GBP1.8m to the results of the Group in the six month period to 30 June 2017. If the acquisition had been made on 1 January 2017, then the company would have contributed revenue of GBP18.0m and an operating profit of GBP2.8m to the results of the Group.
Acquisition of Performance and Adhesive Coatings business of Hexion Inc ("PAC")
Upon the acquisition of PAC on 30 June 2016, in accordance with International Financial Reporting Standard 3 "Business Combinations" (revised 2008), an extensive review was initiated of the PAC assets, liabilities and accounting policies. This review was completed by the 30 June 2017, and as a result a further GBP0.8m of adjustments to assets and liabilities has been made, in addition to adjustments made in the prior year. This resulted in an increase of GBP0.8m of goodwill, principally related to the accrual of additional liabilities.
13. Capital Commitments
The capital expenditure authorised but not provided for in the interim financial statements as at 30 June 2017 was GBP22.3m (2016: GBP16.7m).
14. Related party transactions
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not included in this note. There were no other related party transactions requiring disclosure.
15. Seasonality
Historically, there has been no visible fixed pattern to seasonality in H1 compared to H2 performance in the Group, but, everything else being equal, because of the summer and Christmas break periods in Europe, management would normally expect the first half profits to be slightly stronger than the second half year.
16. Risks and uncertainties
There are a number of potential risks and uncertainties which could have a material impact on the Group's performance over the remaining six months of the financial year and could cause actual results to differ materially from expected and historical results. The directors do not consider that the principal risks and uncertainties have changed since the publication of the Annual Report for the year ended 31 December 2016. These risks include:
-- Volatility and cyclicality of the global chemicals and polymers markets may adversely affect the results of the Group. The political risk of Brexit and other events on the worldwide economy together with economic slowdowns in growth markets could impact the business.
-- The markets in which the Group operates are highly competitive and the Group may lose market share to other producers of speciality chemicals or to other products that can be substituted for the products of the Group.
-- The ability of the Group to compete is highly dependent on its ability to protect its intellectual property and trade secrets as well as defend manufacturing sites from potential cyber-attack.
-- The Group could suffer significant losses of intellectual property or other assets through theft. The Group is exposed to continually evolving cyber and other security risks which could lead to regulatory fines, reputational damage and loss of opportunity.
-- Capacity enhancements designed to take advantage of growth and new markets, or other projects, are dependent on Synthomer managing projects well to correctly anticipate and deliver the benefits associated with the enhancement.
-- The Group's strategic plan involves significant M&A activity to enhance market positions including expanding the target search to adjacent speciality chemical businesses to provide new technologies. There is a risk that we fail to identify enough suitable opportunities, pay too high a price, fail to integrate acquired assets and drive planned synergies across the business, or encounter performance, funding and cash flow issues and potentially unknown liabilities.
-- Volatility in the prices of raw materials and energy prices may adversely affect the profitability of the Group and its working capital position.
-- The manufacture, storage and transportation of chemicals is inherently dangerous and any incidents relating to the hazards which the Group faces may adversely impact its financial condition, results of operations and reputation.
-- The failure or loss of a manufacturing plant, process, information or communication system, whether temporarily or permanently could occur, directly or otherwise, through natural disaster, failure of supplier, sabotage or cyber-attack, and would have an adverse impact on operations.
-- The Group may be liable for damages based on product liability claims brought against its customers in end-use markets.
-- Compliance with extensive environmental, health and safety laws and regulations could require material expenditure, changes in the operations of the Group or site remediation. Failure to comply could result in fines or the loss of a licence to operate.
-- The Group could suffer substantial penalties, damage to reputation and other sanctions for any failure to control anti-competitive behaviour, such as bribery and corruption, or otherwise not be in compliance with laws and regulations in the jurisdictions where we operate.
-- A significant proportion of the Group's turnover and assets are in currencies other than UK sterling and fluctuations in currency exchange rates may significantly impact the results of the Group.
-- The Group's balance sheet and cash flow, and also credit market conditions and credit ratings, may restrict the ability of the Group to obtain credit facilities or to refinance its existing debt facilities in the longer term.
-- The Group has funding risks relating to defined benefit pension schemes, the value of which are highly dependent on volatile stock markets.
The Group continues to manage these risks as set out in the Annual Report.
17. Further information
The interim financial statements were approved by the Board of Directors on 7 August 2017.
This statement can be obtained by the public from the Company's registered office at Temple Fields, Harlow, Essex, CM20 2BH, or on the company website www.synthomer.com.
18. Glossary of terms
EBITDA EBITDA is calculated as operating profit
from continuing operations before depreciation,
amortisation and Special Items.
----------------------- ------------------------------------------------------------------------------
Operating Operating profit represents profit from
profit continuing activities before finance
costs and taxation.
----------------------- ------------------------------------------------------------------------------
Special Items The following are disclosed separately
as Special Items in order to provide
a clearer indication of the Group's
Underlying performance:
* Amortisation of acquired intangible assets;
* Impairment of non-current assets;
* Costs of business combinations as defined by IFRS 3
and related debt issue costs;
* Re-structuring and site closure costs;
* Fair value adjustment - mark to market adjustments in
respect of cross currency and interest rate
derivatives used for hedging purposes where IAS 39
hedge accounting is not applied;
* Items of income and expense that are considered
material, either by their size and/or nature;
* Tax impact of above items; and
* Settlement of prior period tax issues.
----------------------- ------------------------------------------------------------------------------
Underlying Underlying performance represents the
performance statutory performance of the Group under
IFRS, excluding Special Items.
----------------------- ------------------------------------------------------------------------------
Net cash /(borrowings) Net cash /(borrowings) represent cash
and cash equivalents less short and
long term borrowings, as adjusted for
the effect of related derivative instruments
irrespective of whether they qualify
for hedge accounting, non-recourse factoring
arrangements, and the inclusion of financial
assets.
----------------------- ------------------------------------------------------------------------------
Ktes Kilotonne or 1,000 tonnes (metric).
----------------------- ------------------------------------------------------------------------------
Responsibility statement
The directors' confirm that these interim financial statements have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and that the interim management report includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8, namely:
- an indication of important events that have occurred during the first six months and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and
- material related-party transactions in the first six months and any material changes in the related-party transactions described in the last Annual Report
The directors of Synthomer plc are listed in the Synthomer plc Annual Report for 31 December 2016.
On behalf of the Board
C G MacLean S G Bennett Chief Executive Officer Chief Financial Officer 7 August 2017
INDEPENT REVIEW REPORT TO SYNTHOMER PLC
Report on the interim financial statements
Our conclusion
We have reviewed Synthomer plc's interim financial statements (the "interim financial statements") in the interim results of Synthomer plc for the 6 month period ended 30 June 2017. Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements are not prepared, in all material respects, in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.
What we have reviewed
The interim financial statements comprise:
-- the consolidated balance sheet as at 30 June 2017;
-- the consolidated income statement and consolidated statement of comprehensive income for the period then ended;
-- the consolidated cash flow statement for the period then ended; -- the consolidated statement of changes in equity for the period then ended; and -- the explanatory notes to the interim financial statements.
The interim financial statements included in the interim results have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.
As disclosed in note 2 to the interim financial statements, the financial reporting framework that has been applied in the preparation of the full annual financial statements of the Group is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the directors
The interim results, including the interim financial statements, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim results in accordance with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.
Our responsibility is to express a conclusion on the interim financial statements in the interim results based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of complying with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority and for no other purpose. We do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
What a review of interim financial statements involves
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.
A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the interim results and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants
7 August 2017
London
Notes:
a) The maintenance and integrity of the Synthomer plc website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the interim financial statements since they were initially presented on the website.
b) Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR SSMFWWFWSEIA
(END) Dow Jones Newswires
August 08, 2017 02:00 ET (06:00 GMT)
1 Year Synthomer Chart |
1 Month Synthomer Chart |
It looks like you are not logged in. Click the button below to log in and keep track of your recent history.
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions
