TIDMELM
RNS Number : 2320U
Elementis PLC
28 July 2015
28 July 2015
ELEMENTIS plc
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2015
Elementis plc (ELM.L) ("Elementis", the "Company" or the
"Group"), a Global Specialty Chemicals Company, announces its
results for the six months ended 30 June 2015.
HIGHLIGHTS
-- Results in line with recent trading update
-- Continued progress in leveraging strong market positions,
geographic diversity and innovative products
-- Specialty Products adversely impacted by low oilfield activity
o Coatings sales up 1 per cent*
-- North American decorative coatings sales up 8 per cent
-- Sales in Asia Pacific lower by 1 per cent* due to Q2 slowdown
in China
-- European coatings sales up 4 per cent*
o Personal care sales performance slightly higher than previous
period*
o Oilfield revenues down by 30 per cent* as low oil prices
impact activity
-- Chromium
o Generating consistent operating profit in line with
strategy
-- Group operating margin stable at 19 per cent
-- Net balance sheet cash position increased to $16.1 million
-- Interim dividend maintained at 2.70 cents
* constant currency
FINANCIAL SUMMARY
2015 2014
Sales $360.4m $400.0m
Operating profit $68.6m $76.8m
Operating margin 19% 19%
Profit before tax $65.3m $72.4m
Diluted earnings per share 11.2c 12.7c
Net cash $16.1m $5.0m
Interim dividend to shareholders 2.70c 2.70c
Basic earnings per share 11.3c 12.8c
Commenting on the results, Group Chief Executive, David Dutro
said:
"In the first half of the year, Elementis continued to leverage
its strong market positions, geographic diversity and innovative
products to deliver growth in most markets. However, as previously
indicated, our performance was negatively impacted by the ongoing
weakness in oil prices and the subsequent reduction in drilling and
exploration in North America, as well as some destocking in China
in advance of an anticipated market slowdown. Despite these
external dynamics we saw strong underlying revenue growth from new
and IP-protected products and, importantly, improved contribution
margins in our Specialty Products business. We have also continued
to invest in the future growth of our Specialty Products business,
while balancing near term profitability and future value creation.
Though these investments require additional costs to be absorbed in
the near term, they are the fundamental building blocks that will
drive long term profitable growth.
We will continue to pursue our strategic vision which has
delivered the exemplary performance that our shareholders have come
to expect, driving our Specialty Products business to the next
level of market leadership. In an environment of economic
uncertainty Elementis' strong global market position, combined with
its robust business model and track record of generating strong
profits and cash flow, is a distinct advantage and gives us
confidence that the Group can continue to make progress in the
medium term."
- ENDS -
Enquiries
Elementis plc Tel: 020 7408 9300
David Dutro, Group Chief
Executive
Brian Taylorson, Finance
Director
FTI Consulting Tel: 020 3727 1000
Deborah Scott
Matthew Cole
Chairman's statement
Following five years of significant earnings improvement, 2015
is turning out to be a more challenging year for Elementis. The
much publicised reduction in drilling activity in the oilfield
sector combined with signs of a general economic slowdown in China
have negatively impacted the Group's results for the first six
months of the year. In an environment in which currency movements
have also been less than helpful, the Group is finding it difficult
to achieve earnings that are ahead of the previous year.
The Group's strategy is built upon leveraging and evolving our
strong market positions in our chosen markets, a differentiated
service and technical capability to our customers and a broad based
geographic platform. Underpinning this is a cash generative
operating model that provides the flexibility to finance growth
while also delivering attractive returns to our shareholders. As
such, the Board remains firmly of the opinion that this strategy is
the appropriate one to ensure the Group's continued success.
Financial results
Revenues in the period were $360.4 million, compared to $400.0
million in the same period last year, which is a reduction of 10
per cent or, 4 per cent excluding currency movements. Group
operating margins remained at 19 per cent and operating profit was
$68.6 million, compared to $76.8 million in the first six months of
last year, representing a reduction of 11 per cent, or 8 per cent
excluding currency. Diluted earnings per share in the period was
11.2 cents compared to 12.7 cents.
Balance sheet
Strong cash flow generation and attractive returns on operating
capital continue to be important features of the Group's
performance. The first six months of the year typically experience
higher cash outflows than the second half, due to seasonal
increases in working capital associated with the coatings market
and the fact that the final and special dividends are paid out in
this period. It is therefore a testament to the Group's ability to
generate positive cash flow that, despite these outflows in the
period being reported, the Group balance sheet is in an improved
net cash position of $16.1 million, as at 30 June 2015, and this is
expected to increase as the year progresses.
Pensions
During the period the deficit, under IAS 19, on the Group's post
retirement plans improved by $47.5 million to a net position of
$18.3 million. This was largely as a result of increases in
corporate bond yields and contributions from the Company. In
addition, the latest triennial valuation of the Group's UK pension
scheme, conducted as of 30 September 2014, resulted in a lower than
anticipated funding deficit and a revised funding agreement is
expected to be concluded by the end of the year.
Governance
Following the announcement earlier this year that our Chief
Executive, David Dutro, has decided to retire in 2016, the Board
has been actively engaged in a process to identify his replacement.
Good progress is being made and the Board expects to be in a
position to announce a successor sometime during the second half of
the year.
Interim dividend
The Board is declaring an interim dividend of 2.70 cents per
share, the same as in the previous year, which will be paid on 2
October 2015, in pounds sterling at an exchange rate of
$1.5626:GBP1.00 (equivalent to a sterling amount of 1.7279 pence
per share), to shareholders on the register on 11 September
2015.
Health, safety and environment
Our performance in this important aspect of our business is
fundamental to our sustainability and the relationship with our
customers, employees and the communities in which we operate.
Incident rates continue to be well below recognised industry
averages. However we are firmly of the view that even one incident,
however minor, is one too many, hence our processes and performance
targets are designed around continuous improvement with an ultimate
goal of zero incidents.
People
In more challenging periods such as these, we rely even more
heavily on the skills and hard work of our employees around the
world. On behalf of the Board, I would therefore like to thank them
and their families for their hard work and dedication.
Outlook
Despite a more challenging period of trading, Elementis remains
well positioned to benefit from a number of significant global
trends, is confident of its strategy and has a sound platform from
which to create value for our shareholders.
Andrew Duff
Chairman
28 July 2015
Business review
Group Chief Executive's report
During the first half of the year, Specialty Products continued
to leverage its strong market positions, geographic diversity and
innovative products to deliver growth in most markets. However
performance was negatively impacted by the ongoing weakness of oil
prices and the subsequent reduction in drilling and exploration in
North America, as well as some destocking by our customers in China
in advance of an anticipated market slowdown. Outside these areas
Specialty Products delivered strong underlying revenue growth from
new and IP-protected products and, importantly, improved its
contribution margins.
We have continued to invest in the future growth of our
Specialty Products business, while balancing near term
profitability and future value creation. Although in the near term
such investments will require some additional costs to be absorbed,
they are the fundamental building blocks that will drive the long
term profitable growth of Elementis.
These investments have been funded by the strong cash generation
that continues to be a key feature of the Group's performance. We
anticipate being in a net cash position at the end of the year and
therefore would pay a further special dividend under the terms of
our dividend policy.
2015 first half highlights
-- Continued progress in leveraging strong market positions,
geographic diversity and innovative products
-- Specialty Products adversely impacted by low oilfield activity
o Coatings sales up 1 per cent*
-- North American decorative coatings sales up 8 per cent
-- Sales in Asia Pacific lower by 1 per cent* due to Q2 slowdown
in China
-- European coatings sales up 4 per cent*
o Personal care sales performance slightly higher than previous
period*
o Oilfield revenues down by 30 per cent* as low oil prices
impact activity
-- Chromium
o Generating consistent operating profit in line with
strategy
-- Group operating margin stable at 19 per cent
-- Net balance sheet cash position increased to $16.1 million
-- Interim dividend maintained at 2.70 cents
* constant currency
Specialty Products
The Specialty Products business provides a strong growth
platform from its balanced geographic exposure across both mature
and emerging economies, strong technology base and strategic market
diversification. The business has a significant technical service
and application support presence in its chosen markets, which has
been built on long term relationships of trust, collaboration and
technical expertise. We help our customers improve the performance
of their products, lower their costs or improve regulatory
compliance by introducing additives that represent a low percentage
of the formula cost but are critical to product performance. Our
differentiated, innovative product offering is supported by best in
class process technology and tightly held manufacturing know
how.
Sales of coatings additives in North America were unchanged from
the prior year as 8 per cent growth in decorative coatings, driven
by the recent expansion of our New Martinsville facility product
portfolio, was offset by softer industrial coatings demand.
Constant currency sales in Latin America were 4 per cent higher as
a result of ongoing synergy projects from the previously acquired
Watercryl business and improved pricing. In Europe, constant
currency sales grew by 4 per cent with strong industrial coatings
demand despite a mixed economic environment. Constant currency
sales in Asia Pacific were 1 per cent below prior year as softness
in China's manufacturing sector and a decline in Chinese exports
resulted in customers destocking during the second quarter. Overall
sales of coatings additives, on a constant currency basis, finished
the first half 1 per cent higher than prior year.
In Personal care, constant currency sales were slightly higher
than prior year as continued solid growth in our traditional North
American and European personal care applications, and expansion
through new product sales and improved distribution in Asia, were
offset by lower sales in Latin America. Significant local currency
weakness in Latin America resulted in the business opting to cease
supply to a number of applications where returns had fallen below
an acceptable threshold. In the meantime we are taking action to
address this competitive dynamic.
In Oilfield, constant currency sales were 30 per cent below the
prior year due to a significant reduction in North America drilling
activity, with US rig counts at their lowest level in over a
decade. Sales in the first half were negatively impacted by an
earlier than usual end to the Canadian winter drilling season and a
significant decline in US shale gas and oil drilling. Fortunately,
conditions in this market appear to have stabilised more recently,
with less volatility in oil prices and some increase in rig
counts.
Innovation remains a vital platform from which to drive our
continued success. Our R&D pipeline is bigger than ever and
most importantly our new products are delivering real value to our
customers and contributing to our bottom line. Our ability to
consistently deliver innovative products has been a critical
component of the Group's growth strategy. Elementis believes in and
executes a collaborative approach to customer innovation. Under
this approach we work very closely with our customers to develop
products and technologies that will add immediate value for them,
as well as investing in customer driven projects to enable the
development of new products for tomorrow. While these market driven
projects allow our customers to be more successful, it is equally
important that these also position Elementis as their trusted and
indispensable partner.
We are committed to continually expanding our portfolio of
specialty chemicals. In addition to Specialty Products' organic
growth strategy, Elementis continues to look for appropriate bolt
on acquisitions. We are interested in businesses with value added
technologies that participate in our chosen market segments, with a
particular focus on higher growth regions.
Surfactants
Consistent with our strategy we continue to improve the quality
and breadth of the product portfolio of our Surfactants business.
This business, which is located at our Delden facility in the
Netherlands, shares its production facility with the Specialty
Products business. The goal remains to utilise more of the
facility's capacity to support the higher margin product range of
our Specialty Products business. The Delden facility is a large and
well invested site and we are pleased to have this capacity to
support the Specialty Products growth strategy.
Chromium
The Chromium business strategy is focused on reducing cyclical
fluctuations and consistently delivering high quality earnings and
cash flow. The business operates at high rates of capacity
utilisation and serves a diverse number of customers, geographies
and applications, allowing it to quickly shift products and
resources towards those markets with the greatest opportunity.
As the only North American based manufacturer of chromium
chemicals, the business is able to provide its North American
customers with a differentiated and highly valued closed loop
delivery model. This model would be extremely difficult for a
non-domestic supplier to replicate and therefore offers a long term
competitive advantage. The business has a significant share of
chromium chemical sales in North America with 58 per cent of its
sales coming from customers in this region in the first half of the
year.
Elementis Chromium has again demonstrated its ability to
leverage its flexible production platform and efficient operational
base to respond to shifts in market demand. This saw the business
deliver first half operating profit of $27 million, in line with
prior year performance, despite currency driven competitive
behaviour outside of North America and a pedestrian global economy.
Contribution margins were sustained, in line with prior year, as
shifts in pricing were offset by improved raw material costs and
operating efficiencies at our plants. We successfully grew the
operating margin as a result of tightly controlled fixed costs and
a one time fixed cost benefit related to the successful resolution
of a legacy legal issue.
As ever, we will continue to pursue our strategic vision which
has delivered the exemplary performance that our shareholders have
come to expect, through our strategy to drive our Specialty
Products business to the next level of market leadership. Despite
the uncertain economic environment our strong global market
position, combined with a robust business model and track record of
generating strong profits and cash flow, is a distinct advantage
and gives us confidence that Elementis can continue to make
progress in the medium term.
David Dutro
Group Chief Executive
28 July 2015
Finance report
Revenue for the six
months Effect of (Decrease)/
ended 30 June
Revenue exchange increase Revenue
2014 rates 2015 2015
$million $million $million $million
--------------------- --------- ------------ -------------- ---------
Specialty Products 268.5 (16.3) (8.1) 244.1
Chromium 103.2 - (11.3) 91.9
Surfactants 34.2 (6.4) 1.9 29.7
Inter-segment (5.9) - 0.6 (5.3)
---------------------- --------- ------------ -------------- ---------
400.0 (22.7) (16.9) 360.4
--------------------- --------- ------------ -------------- ---------
Operating profit for the Operating Effect Operating
six months ended 30 June of
profit exchange Decrease profit
2014 rates 2015 2015
$million $million $million $million
--------------------------- ------------ --------- --------- ------------
Specialty Products 52.6 (3.4) (4.4) 44.8
Chromium 27.7 0.2 (0.9) 27.0
Surfactants 3.2 (0.6) (0.2) 2.4
Central costs (6.7) 1.7 (0.6) (5.6)
---------------------------- ------------ --------- --------- ------------
76.8 (2.1) (6.1) 68.6
--------------------------- ------------ --------- --------- ------------
Group results
Group revenue was $360.4 million in the first half of 2015,
compared to $400.0 million in the same period last year,
representing a decrease of 10 per cent, or 4 per cent excluding
currency. Group operating profit was $68.6 million, compared to
$76.8 million in the same period last year, which is a reduction of
11 per cent, or 8 per cent on a constant currency basis. Currency
movements impacted Group operating profit by $2.1 million due to
the euro weakening against both the US dollar and sterling. The
largest impact occurred in Specialty Products which has a
significant proportion of its sales and costs in euro and sterling.
Currency reduced operating profit in that business by $3.4 million,
net of hedging gains. Operating profit in Surfactants was also
reduced by $0.6 million due to currency movements, while there was
no material impact in Chromium as it is largely a US dollar based
business. These costs were offset by $1.7 million of translational
gains on sterling based central costs and positive contributions
from Group treasury activities.
Group operating margin was stable at 19 per cent between the two
reporting periods.
Specialty Products
Revenue in Specialty Products for the first half of 2015 was
$244.1 million, compared to $268.5 million in the same period last
year, representing a decrease of 9 per cent, or 3 per cent
excluding currency movements. The remainder of this business
commentary refers to constant currency sales.
In coatings additives, global sales improved by 1 per cent on 5
per cent higher volumes as the business continued to benefit from
its broad geographic presence, alignment with the leading coatings
companies and the introduction of new products for decorative
coatings, particularly in North America. Sales in North America
were at a similar level to the same period last year on 5 per cent
higher volumes. Decorative coatings products, particularly from the
recently constructed plant in New Martinsville, made a positive
contribution. Additives for decorative coatings applications have
similar margins to industrial coatings products, but often have
lower selling prices. Hence the shift towards decorative coatings
products naturally led to the growth in sales volumes being higher
than sales revenue. Sales in industrial coatings were impacted by a
reduction in customer orders for export sales as a result of the
stronger US dollar. In Asia Pacific, sales were 1 per cent lower
than the previous year on 4 per cent higher volumes as the business
experienced a slowdown in demand and customer destocking in China,
which impacted more on some higher margin applications. In Europe,
sales increased by 4 per cent on 8 per cent higher volumes, as the
weaker Euro appeared to be stimulating increased customer demand
for exported products. Sales in Latin America were 4 per cent
higher than the previous year on 5 per cent lower volumes, as the
business continued to successfully expand sales outside of Brazil
and improve margins in response to local currency weakness.
Sales of personal care products were similar to the previous
year on 8 per cent lower volumes as the business continued to
expand through new product sales and investments into new
geographies. However, sales in Latin America were impacted by
significant local currency weakness, which resulted in the business
opting to cease supplying to a number of applications where returns
had fallen to an unacceptable level. This action reduced sales
volumes but improved the sales mix. Otherwise, the business
continued to make good progress, particularly in North America and
Asia Pacific.
Sales in oilfield drilling were 30 per cent lower than the
previous year, with volumes lower by 42 per cent. The well
publicised trend of declining activity in North American oilfield
projects was a prominent feature during the first six months of the
year, leading to lower sales volumes. However there was an
improvement in the sales mix as lower margin applications, such as
dry process bentonite organoclays for shallow and vertical
drilling, declined at a faster rate.
Operating profit for the period was $44.8 million, compared to
$52.6 million in the previous year, which is a reduction of $7.8m.
Currency movements reduced operating profit by $3.4 million, while
lower sales of oilfield products largely accounted for the
remainder. Pricing and raw material costs were relatively stable
between the two periods and contribution margins improved due to
several margin enhancement initiatives. However operating margin
was impacted by lower sales and was therefore 120 basis points
below the previous period at 18.4 per cent.
Chromium
Revenue in Chromium was $91.9 million compared to $103.2 million
in the same period last year, with currency translation having no
material impact. Sales volumes were 5 per cent lower than the same
period last year as demand for refractory grade oxide in North
America, which was particularly strong in 2014, returned to more
normal levels following completion of a number of significant
customer projects. Pricing and mix effects accounted for the
balance of the reduction in revenue, as markets outside of North
America continued to be strongly influenced by currency related
pricing trends.
Operating profit for the period was $27.0 million compared to
$27.7 million in the same period last year, with no material impact
from currency movements. Operating margin improved from 27 per cent
in the previous period to 29 per cent as the business was able to
offset the effect of lower sales with plant optimisation savings,
lower raw material costs and a favourable outcome to a legacy legal
case.
Surfactants
Revenue in Surfactants was $29.7 million in the first half of
2015, compared to $34.2 million in the same period last year, which
is a reduction of 13 per cent. Adjusting for currency movements,
sales increased by 6 per cent and sales volumes increased by 13 per
cent. The strategy for Surfactants is to transition the Delden,
Netherlands facility, where surfactants are produced, towards
manufacturing more higher margin additives for Specialty Products.
Hence sales volumes in Surfactants will generally decrease over
time. Despite this, some shorter term opportunities in the first
six months of the year resulted in a temporary reversal of this
trend with an increase in sales volumes for the period. The period
saw prices reduce but remain in line with lower raw material
costs.
Operating profit for the period was $2.4 million compared to
$3.2 million, with $0.6 million of the reduction arising from
currency movements.
Central costs
Central costs are costs that are not identifiable as expenses of
a particular business and comprise the Board of Directors and
corporate offices in the UK and US. Costs for the first half of
2015 were $5.6 million compared to $6.7 million in the same period
last year. Currency gains of $1.7 million were the main source of
the reduction in costs and consisted of positive translation gains
from the sterling component of central costs, as well gains from
Group treasury activities. Otherwise, costs were relatively stable
between the two periods.
Other expenses
Other expenses are administration costs incurred and paid by the
Group's pension schemes, which relate primarily to former employees
of legacy businesses, and were $1.0 million in the current period
compared to $1.1 million in the previous year.
Net finance costs
30 June 30 June
2015 2014
$million $million
----------------------------- --------- ---------
Finance income 0.1 0.1
Finance cost of borrowings (0.7) (0.7)
----------------------------- --------- ---------
(0.6) (0.6)
Net pension finance expense (1.0) (1.7)
Discount on provisions (0.7) (1.0)
----------------------------- --------- ---------
(2.3) (3.3)
----------------------------- --------- ---------
Net finance costs in the first half of 2015 were $2.3 million
compared to $3.3 million in the same period last year. Net interest
costs were the same in each year, at $0.6 million, and consisted
mostly of amortised fees on the Group's borrowing facilities. Net
pension finance expenses were $0.7 million lower than the previous
period, at $1.0 million, due to a decrease in the IAS 19 deficit
between the two periods. Discount charges on provisions were $0.3
million lower than the previous period, at $0.7 million, due to a
reduction in discount rate in line with lower market yields.
Tax
The provision for tax on profits was $13.2 million, or 20.2 per
cent, in the first half of 2015 (2014: $13.5 million, or 18.7 per
cent) and is based on the likely tax payable in those jurisdictions
where taxable profits arise and deferred tax provisions where these
are applicable. The rate for the first half of the year benefited
from prior year credits, hence the estimated rate for the full year
is 20 per cent - 22 per cent. The rate is sensitive to the mix of
profits from different jurisdictions.
Earnings per share
Basic and diluted earnings per share for the first half of 2015,
calculated on the reported earnings of $52.1 million (2014: $58.9
million), were 11.3 cents and 11.2 cents, respectively, compared to
12.8 cents and 12.7 cents in the same period last year.
Cash flow
Cash flow is summarised below:
30 June 2015 30 June 2014
$million $million
---------------------------------------------- ------------- -------------
Earnings before interest, tax, exceptionals,
depreciation and
amortisation (EBITDA) 82.0 89.3
Change in working capital (30.9) (25.9)
Capital expenditure (16.0) (17.7)
Other (0.8) (0.7)
---------------------------------------------- ------------- -------------
Operating cash flow 34.3 45.0
Pension deficit payments (12.4) (30.6)
Interest and tax (9.3) (8.0)
Other (1.2) 1.2
---------------------------------------------- ------------- -------------
Free cash flow 11.4 7.6
Dividends (58.7) (52.4)
Acquisitions - (4.1)
Currency fluctuations (0.8) (0.2)
---------------------------------------------- ------------- -------------
Movement in net cash (48.1) (49.1)
Net cash at start of period 64.2 54.1
---------------------------------------------- ------------- -------------
Net cash at end of period 16.1 5.0
---------------------------------------------- ------------- -------------
Net cash expended in the first six months of 2015 was $1.0
million lower than the same period last year at $48.1 million.
EBITDA in the period was $7.3 million lower than the previous year,
while working capital outflows increased by $5.0 million largely
due to payment patterns towards the end of the period. Working
capital cash flows are seasonal due to the Group's participation in
the global coatings market so a significant part of the outflow
experienced in the first six months of the year will reverse by the
end of the year. Capital expenditure in the period was $1.7 million
lower than last year at $16.0 million, due to completion in 2014 of
the new Specialty Products additives facility for decorative
coatings in New Martinsville, US. Capital expenditure for the whole
of 2015 is expected to be approximately $30 million (2014: $34.9
million). Pension deficit payments in the period were $18.2 million
lower than the previous year due to a significant reduction in
contributions to the UK scheme, following a one time payment to the
UK scheme of $15.2 million in 2014. Otherwise, contributions
consist of regular annual payments mainly to the Group's UK and US
schemes. Dividend payments were $58.7 million in the period
compared to $52.4 million in the first six months of 2014, the
increase being the result of increases in both the final and
special dividends for 2014, as announced in February 2015.
Acquisition spending in the first six months of 2014 was $4.1
million and related to the acquisition of a minority interest in a
majority owned business in China. Overall, the Group had a net cash
position on its balance sheet of $16.1 million at the end of the
period.
Working capital
Working capital days
30 June 30 June 31 Dec
2015 2014 2014
--------------------------------------- -------- -------- -------
Inventory 95 91 92
---------------------------------------- -------- -------- -------
Debtors 56 53 49
---------------------------------------- -------- -------- -------
Creditors 63 60 74
---------------------------------------- -------- -------- -------
Average working capital to sales (per
cent) 22.2 21.0 21.0
---------------------------------------- -------- -------- -------
Inventory days were higher at the end of the period than they
were at the same time last year. Inventory days increased from the
comparable period last year due to lower sales during the latter
part of the first half. Adjusted production rates in the second
half of the year are likely to reduce inventory days back towards
previous levels. Overall, working capital remained tightly
controlled and the net difference between debtor and creditor days
remained stable between the two periods at 7 days, while the
average working capital to sales ratio temporarily increased to
22.2 per cent due to higher inventory days.
Balance sheet
30 June 2015 30 June
2014
$million $million
------------------------------- ------------- ---------
Property, plant and equipment 213.4 211.2
Other net assets 430.8 332.4
Net cash 16.1 5.0
------------------------------- ------------- ---------
Equity 660.3 548.6
------------------------------- ------------- ---------
Property, plant and equipment increased by $2.2 million compared
to the previous period, due to capital spending between the two
dates of $33.4 million and depreciation of $26.1 million, with the
balance largely coming from currency movements. Other net assets
increased by $98.4 million due mainly to the recognition of UK
advance corporation tax credits in the second half of 2014 ($42.0m)
and a reduction in retirement benefit obligations of $59.7 million.
Equity increased by $111.7 million as a result of profit for the
intervening period of $168.6 million, dividends paid of $71.0
million and $24.5 million of pension actuarial gains net of
tax.
The main dollar currency exchange rates in the period were:
2015 2015 2014 2014
30 June Average 30 June Average
---------- -------- -------- -------- --------
Sterling 0.64 0.65 0.58 0.60
---------- -------- -------- -------- --------
Euro 0.90 0.89 0.73 0.73
---------- -------- -------- -------- --------
Pensions and post retirement plans
Total
$million
------------------------------------------ ---------
Movement in net deficit
Net deficit in schemes at 1 January 2015 (65.8)
Current service cost (0.8)
Contributions 13.2
Administration costs (1.0)
Net interest expense (1.0)
Actuarial gain 36.1
Currency translation differences 1.0
------------------------------------------ ---------
Net deficit in schemes at 30 June 2015 (18.3)
------------------------------------------ ---------
During the period the deficit, under IAS 19, on the Group's
pension and post retirement medical plans improved by $47.5 million
to $18.3 million. The improvement was largely the result of
contributions from the Group, increases in real corporate bond
yields and positive experience adjustments from the latest
triennial valuation of the UK scheme, as at 30 September 2014.
Contributions totalled $14.0 million (2014: $32.1 million) of which
$12.4 million (2014: $30.6 million) related to deficit reduction
payments. Most of the deficit payments in the period related to the
UK scheme (2014: $28.0 million) and were significantly lower than
the same period last year due to an additional one time payment in
2014 of $15.2 million. Total deficit contributions for the whole of
2015 are expected to be approximately $24 million. Actuarial gains
of $36.1 million (2014: loss of $5.2 million) were largely a result
of increases in real corporate bond yields and positive experience
adjustments from the UK triennial valuation. Asset returns in the
period were approximately 0.4 per cent (2014: 7.3 per cent) and 5.6
per cent (2014: 10.7 per cent), respectively, in the UK and US
schemes.
Principal risks and uncertainties
The Group has policies, processes and systems in place to help
identify, evaluate and manage risks at all levels throughout the
organisation. Certain key risks, because of their size, likelihood
and/or severity, are reviewed regularly by the senior management
team and the Board, to ensure that appropriate action is taken to
eliminate, reduce or mitigate, wherever practicable, significant
risks that can lead to financial loss, harm to reputation, business
failure or which threaten the safety of our employees. The
following is a summary of the principal risks faced by the Group
that could impact the second half of the year: global economic
conditions deteriorate and/or competitive pressure in the
marketplace increases; growth opportunities and product innovation
may not materialise; disruption to key raw materials, supply chain
and/or infrastructure; major regulatory enforcement action;
litigation and/or other claims arising from products and/or
historical and ongoing operations; UK pension fund deficit
deteriorates; increased regulation and/or technological advances
erode our competitiveness; business disruption due to a major event
or catastrophe (eg IT failure or operations incident); disruption
to business payment practices due to failings in the global or
regional banking systems; and increasing scrutiny of corporate tax
affairs due to the current political and financial environment. A
full description of these risks and the mitigating actions taken by
the Company can be found in the 2014 Annual report and accounts on
pages 18 to 19.
Cautionary statement
The Elementis plc interim results announcement for the half year
ended 30 June 2015, which comprises the Chairman's statement, Group
Chief Executive's report, Finance report and the Directors'
responsibility statement (which taken together constitute the
Interim management report) and the interim financial statements and
accompanying notes (incorporating a Condensed consolidated balance
sheet at 30 June 2015, Condensed consolidated income statement,
Condensed consolidated statement of comprehensive income, Condensed
consolidated cash flow statement and Condensed consolidated
statement of changes in equity, each for the six months ended 30
June 2015) (altogether 'Half yearly financial report'), contains
information which viewers or readers might consider to be forward
looking statements relating to or in respect of the financial
condition, results, operations or businesses of Elementis plc. Any
such statements involve risk and uncertainty because they relate to
future events and circumstances. There are many factors that could
cause actual results or developments to differ materially from
those expressed or implied by any such forward looking statements.
Nothing in this Half yearly financial report should be construed as
a profit forecast.
Related party transactions
There were no material related party transactions entered into
during the first half of the year and there have been no material
changes to the related party transactions disclosed in the
Company's 2014 Annual report and accounts on page 92.
Directors' responsibility statement
A full list of the directors can be found on the Elementis
corporate website at: www.elementisplc.com. These directors are
also shown on page 26 of the Company's 2014 Annual report and
accounts.
The directors confirm that to the best of their knowledge:
-- The condensed set of financial statements setout in this Half
yearly financial report has been prepared in accordance with IAS 34
Interim Financial Reporting as adopted by the EU.
-- The interim management report contained in this Half yearly
financial report includes a fair review of the information required
by:
o DTR 4.2.7R of the Disclosure and Transparency Rules, being an
indication of the important events that have occurred during the
first six months of the financial year 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 year.
o DTR 4.2.8R of the Disclosure and Transparency Rules, being
related party transactions that have taken place in the first six
months of the current financial year and that have materially
affected the financial position or performance of the entity during
that period; and any changes in related party transactions
described in the 2014 Annual report and accounts that could have a
material effect on the financial position or performance of the
entity during the first six months of the current financial
year.
Approved by the Board on 28 July 2015 and signed on its behalf
by:
David Dutro Brian Taylorson
Group Chief Executive Finance Director
28 July 2015 28 July 2015
Independent review report to Elementis plc
Introduction
We have been engaged by the Company to review the condensed set
of financial statements in the half yearly financial report for the
six months ended 30 June 2015 which comprises the condensed
consolidated income statement, the condensed consolidated statement
of comprehensive income, the condensed consolidated balance sheet,
the condensed consolidated cash flow statement, the condensed
consolidated statement of changes in equity and the related
explanatory notes. We have read the other information contained in
the half-yearly financial report and considered whether it contains
any apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
This report is made solely to the Company in accordance with the
terms of our engagement to assist the company in meeting the
requirements of the Disclosure and Transparency Rules (the 'DTR')
of the UK's Financial Conduct Authority (the 'UK FCA'). Our review
has been undertaken so that we might state to the company those
matters we are required to state to it in this report and for no
other purpose. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the company
for our review work, for this report, or for the conclusions we
have reached.
Directors' responsibilities
The half yearly financial report is the responsibility of, and
has been approved by, the Directors. The Directors are responsible
for preparing the half-yearly financial report in accordance with
the DTR of the UK FCA.
As disclosed in note 2, the annual financial statements of the
Group are prepared in accordance with IFRSs as adopted by the EU.
The condensed set of financial statements included in this
half-yearly financial report has been prepared in accordance with
IAS 34 - Interim Financial Reporting as adopted by the EU.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half yearly
financial report based on our review.
Scope of review
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
UK. 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 Ireland) 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.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half yearly financial report for the six months ended 30
June 2015 is not prepared, in all material respects, in accordance
with IAS 34 as adopted by the EU and the DTR of the UK FCA.
Lynton Richmond
for and on behalf of KPMG LLP
Chartered Accountants
15 Canada Square
London
E14 5GL
28 July 2015
Condensed consolidated income statement
for the six months ended 30 June 2015
2015 2014 2014
Six months Six months Year
ended ended ended
30 June 30 June 31 December
Note $million $million $million
------------------------- ----- ------------ ------------ -------------
Revenue 4 360.4 400.0 790.4
Cost of sales (220.5) (242.9) (486.1)
--------------------------- ----- ------------ ------------ -------------
Gross profit 139.9 157.1 304.3
Distribution costs (45.5) (47.2) (92.3)
Administrative expenses (25.8) (33.1) (61.9)
--------------------------- ----- ------------ ------------ -------------
Operating profit before
exceptional items 68.6 76.8 150.1
Exceptional items - - 6.3
--------------------------- ----- ------------ ------------ -------------
Operating profit 4 68.6 76.8 156.4
Other expenses (1.0) (1.1) (1.9)
Finance income 5 0.1 0.1 0.3
Finance costs 6 (2.4) (3.4) (6.6)
--------------------------- ----- ------------ ------------ -------------
Profit before income
tax 4 65.3 72.4 148.2
--------------------------- ----- ------------ ------------ -------------
Tax before exceptionals (13.2) (13.5) (26.3)
Exceptional items - - 53.5
--------------------------- ----- ------------ ------------ -------------
Tax 7 (13.2) (13.5) 27.2
--------------------------- ----- ------------ ------------ -------------
Profit for the period 52.1 58.9 175.4
--------------------------- ----- ------------ ------------ -------------
Attributable to equity
holders of the parent 52.1 58.9 175.4
--------------------------- ----- ------------ ------------ -------------
Earnings per share
Basic (cents) 8 11.3 12.8 38.1
--------------------------- ----- ------------ ------------ -------------
Diluted (cents) 8 11.2 12.7 37.7
--------------------------- ----- ------------ ------------ -------------
Condensed consolidated statement of comprehensive income
for the six months ended 30 June 2015
2015 2014 2014
Six months Six months Year
ended ended ended
30 June 30 June 31 December
$million $million $million
-------------------------------------------------- ------------ ------------ -------------
Profit for the period 52.1 58.9 175.4
-------------------------------------------------- ------------ ------------ -------------
Other comprehensive income:
Items that will not be reclassified subsequently
to profit or loss:
Actuarial gain / (loss) on pension and
other post retirement schemes 36.1 (5.2) (18.5)
Deferred tax associated with pension
and other post retirement schemes (10.8) 1.6 14.1
-------------------------------------------------- ------------ ------------ -------------
25.3 (3.6) (4.4)
Items that may be reclassified subsequently
to profit or loss:
Exchange differences on translation of
foreign operations (5.6) (1.4) (11.6)
Effective portion of changes in fair
value of cash flow hedges 1.1 0.7 0.1
Fair value of cash flow hedges transferred
to income statement (0.1) (0.3) (0.3)
Tax benefit associated with exercise
of share options - - 2.8
-------------------------------------------------- ------------ ------------ -------------
(4.6) (1.0) (9.0)
-------------------------------------------------- ------------ ------------ -------------
Other comprehensive income, net of tax 20.7 (4.6) (13.4)
-------------------------------------------------- ------------ ------------ -------------
Total comprehensive income for the period 72.8 54.3 162.0
-------------------------------------------------- ------------ ------------ -------------
Attributable to:
-------------------------------------------------- ------------ ------------ -------------
Equity holders of the parent 72.8 54.3 162.0
-------------------------------------------------- ------------ ------------ -------------
Total comprehensive income for the period 72.8 54.3 162.0
-------------------------------------------------- ------------ ------------ -------------
Condensed consolidated balance sheet
at 30 June 2015
2015 2014 2014
30 June 30 June 31 December
$million $million $million
--------------------------------------- --------- --------- ------------
Non-current assets
Goodwill and other intangible assets 369.6 383.4 373.0
Property, plant and equipment 213.4 211.2 211.7
ACT recoverable 42.0 - 42.0
Deferred tax assets 1.6 8.4 14.4
Employee retirement benefits 13.4 - -
--------------------------------------- --------- --------- ------------
Total non-current assets 640.0 603.0 641.1
---------------------------------------- --------- --------- ------------
Current assets
Inventories 134.5 134.8 137.5
Trade and other receivables 135.9 147.9 121.4
Derivatives 1.8 1.0 0.7
Cash and cash equivalents 69.8 56.3 73.7
---------------------------------------- --------- --------- ------------
Total current assets 342.0 340.0 333.3
---------------------------------------- --------- --------- ------------
Total assets 982.0 943.0 974.4
---------------------------------------- --------- --------- ------------
Current liabilities
Bank overdrafts and loans (13.4) (15.1) (8.1)
Trade and other payables (103.8) (113.6) (122.0)
Derivatives (0.1) - (0.2)
Current tax liabilities (5.2) (15.8) (5.1)
Provisions (6.7) (6.8) (6.7)
---------------------------------------- --------- --------- ------------
Total current liabilities (129.2) (151.3) (142.1)
---------------------------------------- --------- --------- ------------
Non-current liabilities
Loans and borrowings (40.3) (36.2) (1.4)
Employee retirement benefits (31.7) (78.0) (65.8)
Deferred tax liabilities (95.7) (98.4) (92.7)
Provisions (24.8) (30.4) (28.3)
Government grants - (0.1) -
--------------------------------------- --------- --------- ------------
Total non-current liabilities (192.5) (243.1) (188.2)
---------------------------------------- --------- --------- ------------
Total liabilities (321.7) (394.4) (330.3)
---------------------------------------- --------- --------- ------------
Net assets 660.3 548.6 644.1
---------------------------------------- --------- --------- ------------
Equity
Share capital 44.4 44.3 44.4
Share premium 19.2 17.8 18.7
Other reserves 113.4 130.4 116.4
Retained earnings 483.3 356.1 464.6
---------------------------------------- --------- --------- ------------
Equity attributable to equity holders
of the parent 660.3 548.6 644.1
Total equity and reserves 660.3 548.6 644.1
---------------------------------------- --------- --------- ------------
Condensed consolidated cash flow statement
for the six months ended 30 June 2015
2015 2014 2014
Six months Six months Year
ended ended ended
30 June 30 June 31 December
$million $million $million
----------------------------------------------- ---- ----------- ----------- -------------
Operating activities:
Profit for the period 52.1 58.9 175.4
Adjustments for:
Other expenses 1.0 1.1 1.9
Finance income (0.1) (0.1) (0.3)
Finance costs 2.4 3.4 6.6
Tax 13.2 13.5 (27.2)
Depreciation and amortisation 13.4 12.5 25.2
Decrease in provisions (2.6) (2.4) (2.8)
Pension contributions net of current
service cost (12.4) (30.6) (49.5)
Share based payments 1.8 1.6 2.5
Exceptional items - - (6.3)
Cash flow in respect of exceptional
items (1.5) - (3.1)
----------------------------------------------------- ----------- ----------- -------------
Operating cash flows before movements
in working capital 67.3 57.9 122.4
Decrease/(increase) in inventories 2.4 (6.2) (12.7)
Increase in trade and other receivables (16.0) (21.3) (0.1)
(Decrease)/increase in trade and other
payables (17.3) 1.6 17.1
----------------------------------------------------- ----------- ----------- -------------
Cash generated by operations 36.4 32.0 126.7
Income taxes paid (8.8) (7.4) (12.0)
Interest paid (0.6) (0.7) (1.6)
----------------------------------------------------- ----------- ----------- -------------
Net cash flow from operating activities 27.0 23.9 113.1
----------------------------------------------------- ----------- ----------- -------------
Investing activities:
Interest received 0.1 0.1 0.3
Disposal of property, plant and equipment 0.3 0.3 0.9
Purchase of property, plant and equipment (15.7) (17.7) (35.4)
Purchase of business - (4.1) (4.1)
Acquisition of intangibles (0.6) (0.2) (0.4)
----------------------------------------------------- ----------- ----------- -------------
Net cash flow from investing activities (15.9) (21.6) (38.7)
----------------------------------------------------- ----------- ----------- -------------
Financing activities:
Issue of shares 0.3 1.2 2.1
Dividends paid (58.7) (52.4) (64.7)
Receipt of unclaimed dividends - - 0.2
Increase/(decrease) in borrowings 44.2 41.1 (0.3)
----------------------------------------------------- ----------- ----------- -------------
Net cash used in financing activities (14.2) (10.1) (62.7)
----------------------------------------------------- ----------- ----------- -------------
Net (decrease)/increase in cash and
cash equivalents (3.1) (7.8) 11.7
Cash and cash equivalents at beginning
of period 73.7 64.5 64.5
Foreign exchange on cash and cash equivalents (0.8) (0.4) (2.5)
----------------------------------------------------- ----------- ----------- -------------
Cash and cash equivalents at end of
period 69.8 56.3 73.7
----------------------------------------------------- ----------- ----------- -------------
Condensed consolidated statement of changes in equity
for the six months ended 30 June 2015
Non-controlling
Share Share Other Retained
capital premium reserves earnings Total interest Total
equity
$million $million $million $million $million $million $million
-------------------------------- --------- --------- --------- ----------- --------- ---------------- ---------
At 1 January 2015 44.4 18.7 116.4 464.6 644.1 - 644.1
Profit for the period - - - 52.1 52.1 - 52.1
Other comprehensive
income:
Exchange differences - - (5.6) - (5.6) - (5.6)
Movement in cash
flow hedges - - 1.0 - 1.0 - 1.0
Actuarial gain on
pension scheme - - - 36.1 36.1 - 36.1
Deferred tax adjustment
on pension
scheme deficit - - - (10.8) (10.8) - (10.8)
Transactions with
owners:
Issue of shares - 0.5 (0.2) - 0.3 - 0.3
Share based payments - - 1.8 - 1.8 - 1.8
Dividends paid - - - (58.7) (58.7) - (58.7)
Changes of ownership
interests in subsidiaries
Acquisition of non-controlling - - - - - - -
interest
-------------------------------- --------- --------- --------- ----------- --------- ---------------- ---------
At 30 June 2015 44.4 19.2 113.4 483.3 660.3 - 660.3
-------------------------------- --------- --------- --------- ----------- --------- ---------------- ---------
Share Share Other Retained Non-controlling
capital premium reserves earnings Total interest Total
equity
$million $million $million $million $million $million $million
--------------------------------- --------- --------- --------- --------- --------- ---------------- ---------
At 1 January 2014 44.1 16.7 129.9 353.2 543.9 1.6 545.5
Profit for the period - - - 58.9 58.9 - 58.9
Other comprehensive
income:
Exchange differences - - (1.4) - (1.4) - (1.4)
Movement in cash
flow hedges - - 0.4 - 0.4 - 0.4
Actuarial loss on
pension scheme - - - (5.2) (5.2) - (5.2)
Deferred tax adjustment
on pension
scheme deficit - - - 1.6 1.6 - 1.6
Transactions with
owners:
Issue of shares 0.2 1.1 (0.1) - 1.2 - 1.2
Share based payments - - 1.6 - 1.6 - 1.6
Dividends paid - - - (52.4) (52.4) - (52.4)
Changes of ownership
interests in subsidiaries
Acquisition of non-controlling
interest - - - - - (1.6) (1.6)
--------------------------------- --------- --------- --------- --------- --------- ---------------- ---------
At 30 June 2014 44.3 17.8 130.4 356.1 548.6 - 548.6
--------------------------------- --------- --------- --------- --------- --------- ---------------- ---------
Notes to the interim financial statements for the six months
ended 30 June 2015
1 General Information
Elementis plc (the 'Company') and its subsidiaries (together,
the 'Group') manufactures specialty chemicals. The Group has
operations in the US, UK, Netherlands, Brazil, Germany, China,
Taiwan, Malaysia and India. The Company is a limited liability
company incorporated and domiciled in England, UK and is listed on
the London Stock Exchange.
2 Accounting policies
Basis of preparation
This condensed set of financial statements (also referred to as
'interim financial statements' in this announcement) has been
prepared in accordance with IAS 34 Interim Financial Reporting as
adopted by the EU.
As required by the Disclosure and Transparency Rules of the
Financial Services Authority, the condensed set of financial
statements has been prepared applying the accounting policies and
presentation that were applied in the preparation of the Company's
published consolidated financial statements for the year ended 31
December 2014, except when new or revised accounting standards have
been applied.
The following amendments to published standards and
interpretations are effective for the Group for the half year ended
30 June 2015:
Defined Benefit Plan: Employee Contributions - Amendments to IAS
19
The amendments introduce a relief that will reduce the
complexity and burden of accounting for certain contributions from
employees or third parties.
The comparative figures for the financial year ended 31 December
2014 are not the Company's statutory accounts for that financial
year, but are derived from those accounts. Those accounts have been
reported on by the Company's auditors and delivered to the
registrar of companies. The report of the auditors was (i)
unqualified, (ii) did not include a reference to any matters to
which the auditors drew attention by way of emphasis without
qualifying their report, and (iii) did not contain a statement
under section 498(2) or (3) of the Companies Act 2006.
The preparation of these interim financial statements requires
management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported
amounts of income, expense, assets and liabilities. The significant
estimates and judgements made by management were consistent with
those applied to the consolidated financial statements for the year
ended 31 December 2014.
3 Going concern
After making appropriate enquiries, the directors consider that
the Group has adequate resources to remain in operational existence
for the foreseeable future and have therefore continued to adopt
the going concern basis for preparing the interim financial
statements.
4 Segment reporting
For management purposes the Group is currently organised into
three operating divisions - Specialty Products, Surfactants and
Chromium. Principal activities are as follows:
Specialty Products - production of rheological additives,
compounded products and colourants.
Surfactants - production of surface active ingredients.
Chromium - production of chromium chemicals.
Six months ended 30 Six months ended Year ended 31 December
June 2015 30 June 2014 2014
Gross Inter-segment External Gross Inter-segment External Gross Inter-segment External
$million $million $million $million $million $million $million $million $million
---------------- --------- -------------- --------- --------- -------------- --------- --------- -------------- ---------
Revenue
Specialty
Products 244.1 - 244.1 268.5 - 268.5 519.7 - 519.7
Surfactants 29.7 - 29.7 34.2 - 34.2 67.1 (0.2) 66.9
Chromium 91.9 (5.3) 86.6 103.2 (5.9) 97.3 216.5 (12.7) 203.8
---------------- --------- -------------- --------- --------- -------------- --------- --------- -------------- ---------
365.7 (5.3) 360.4 405.9 (5.9) 400.0 803.3 (12.9) 790.4
---------------- --------- -------------- --------- --------- -------------- --------- --------- -------------- ---------
All revenues relate to the sale of goods
2015 2014 2014
Six months Six months Year
ended ended ended
30 June 30 June 31 December
$million $million $million
----------------------- ----------- ----------- ------------
Operating profit
Specialty Products 44.8 52.6 100.1
Surfactants 2.4 3.2 8.2
Chromium 27.0 27.7 56.8
Central costs (5.6) (6.7) (8.7)
----------------------- ----------- ----------- ------------
68.6 76.8 156.4
Other expenses (1.0) (1.1) (1.9)
Finance income 0.1 0.1 0.3
Finance costs (2.4) (3.4) (6.6)
----------------------- ----------- ----------- ------------
Profit before tax 65.3 72.4 148.2
----------------------- ----------- ----------- ------------
5 Finance income
2015 2014 2014
Six months Six months Year
ended ended ended
30 June 30 June 31 December
$million $million $million
------------------------------ ----------- ----------- ------------
Interest on bank deposits 0.1 0.1 0.3
------------------------------ ----------- ----------- ------------
6 Finance costs
2015 2014 2014
Six months Six months Year
ended ended ended
30 June 30 June 31 December
$million $million $million
-------------------------------------------------- ----------- ----------- ------------
Interest on bank loans 0.7 0.7 1.6
Unwind of discount on provisions 0.7 1.0 1.9
Pension and other post-retirement liabilities 1.0 1.7 3.1
-------------------------------------------------- ----------- ----------- ------------
2.4 3.4 6.6
-------------------------------------------------- ----------- ----------- ------------
7 Tax
The provision for tax on profits of $13.2 million (2014: $13.5
million) is based on the likely tax charge in those jurisdictions
where profits arise and takes account of the change in the UK tax
rate from 21 per cent to 20 per cent.
8 Earnings per share
2015 2014 2014
Six months Six months Year
ended ended ended
30 June 30 June 31 December
$million $million $million
--------------------------------------------- ------------ ------------ -------------
Earnings for the purposes of basic earnings
per share 52.1 58.9 175.4
Exceptional items net of tax - - (59.8)
--------------------------------------------- ------------ ------------ -------------
Adjusted earnings 52.1 58.9 115.6
--------------------------------------------- ------------ ------------ -------------
Number(m) Number(m) Number(m)
--------------------------------------------- ------------ ------------ -------------
Weighted average number of shares for the
purposes of basic earnings per share 461.8 460.0 460.7
Effect of dilutive share options 4.5 4.9 4.7
--------------------------------------------- ------------ ------------ -------------
Weighted average number of shares for the
purposes of diluted earnings per share 466.3 464.9 465.4
--------------------------------------------- ------------ ------------ -------------
2015 2014 2014
Six months Six months Year
ended ended ended
30 June 30 June 31 December
cents cents cents
---------------------------------- ------------ ------------ -------------
Earnings per share:
Basic 11.3 12.8 38.1
---------------------------------- ------------ ------------ -------------
Diluted 11.2 12.7 37.7
---------------------------------- ------------ ------------ -------------
Basic before exceptional items 11.3 12.8 25.1
---------------------------------- ------------ ------------ -------------
Diluted before exceptional items 11.2 12.7 24.8
---------------------------------- ------------ ------------ -------------
9 Dividends
The following dividends were declared and paid by the Group:
2015 2014 2014
Six months Six months Year
ended ended ended
30 June 30 June 31 December
$million $million $million
----------------------------------- ------------ ------------ -------------
Dividends paid on ordinary shares 58.7 52.4 64.7
----------------------------------- ------------ ------------ -------------
An interim dividend of 2.70 cents per share (2014: 2.70 cents)
has been declared by the Board of Directors and will be paid on 2
October 2015 to shareholders on the register at 11 September 2015.
The interim dividend will be paid in sterling at an exchange rate
of $1.5626:GBP1.00.
10 Pension
Valuations for IAS 19 purposes were conducted as of 30 June
2015. The valuation of the UK pension scheme used updated
membership data that had been utilised during the triennial
valuation as at 30 September 2014, which will form the basis of the
revised funding agreement for the scheme and which is expected to
be agreed by the end of 2015. The Group is reporting a net deficit
on its combined retirement benefit obligations of $18.3 million at
the end of June 2015, compared to balances of $78.0 million at the
same time last year and $65.8 million at the end of December
2014.
11 Movement in net cash/(borrowings)
2015 2014 2014
Six months Six months Year
ended ended ended
30 June 30 June 31 December
$million $million $million
-------------------------------------------------- ----------- ----------- ------------
Change in net cash/(borrowings) resulting
from cash flows
(Decrease)/increase in cash and cash equivalents (3.1) (7.8) 11.7
(Increase)/decrease in borrowings (44.2) (41.1) 0.9
-------------------------------------------------- ----------- ----------- ------------
(47.3) (48.9) 12.6
Currency translation differences (0.8) (0.2) (2.5)
-------------------------------------------------- ----------- ----------- ------------
(Decrease)/increase in net cash (48.1) (49.1) 10.1
Net cash at beginning of period 64.2 54.1 54.1
-------------------------------------------------- ----------- ----------- ------------
Net cash at end of period 16.1 5.0 64.2
-------------------------------------------------- ----------- ----------- ------------
12 Financial risk management
The Group has exposure to the following financial risks:
-- credit risk,
-- liquidity risk,
-- market risk.
The Board of Directors has overall responsibility for the
establishment and oversight of the Group's risk management
framework. The Group's risk management policies are established to
identify and analyse the risks faced by the Group, to set
appropriate risk limits and controls, and to monitor risks and
adherence to limits. Risk management policies and systems are
reviewed regularly to reflect changes in market conditions and the
Group's activities. The Group's Audit Committee, assisted by
Internal Audit, oversees how management monitors compliance with
the Group's risk management policies and procedures and reviews the
adequacy of the risk management framework in relation to the risks
faced by the Group. These interim financial statements do not
include all the financial risk management information and
disclosures that are required in the Annual report and accounts and
should be read in conjunction with the financial statements for the
year ended 31 December 2014. The Group's risk management policies
have not changed since the year end.
The Group measures fair values in respect of financial
instruments in accordance with IFRS 13, using the following fair
value hierarchy that reflects the significance of the inputs used
in making the measurements:
Level 1: Quoted market price (unadjusted) in an active market
for an identical instrument.
Level 2: Valuation techniques based on observable inputs, either
directly or indirectly.
Level 3: Valuation techniques using significant unobservable
inputs.
The Group categorises its trade and other receivables and
payables, excluding derivatives, within level 3 and all other
financial instruments, including cash, loans and derivatives within
level 1. At both 30 June 2015 and 31 December 2014 there was no
difference between the carrying value and fair value of financial
instruments.
13 Contingent liabilities
As is the case with other chemical companies, the Group
occasionally receives notices of litigation relating to regulatory
and legal matters. A provision is recognised when the Group
believes it has a present legal or constructive obligation as a
result of a past event, and it is probable that an outflow of
economic benefits will be required to settle the obligation. Where
it is deemed that an obligation is merely possible and that the
probability of a material outflow is not remote, the Group would
disclose a contingent liability. No contingent liability was
considered to be reportable at 30 June 2015.
14 Post balance sheet event
On 26 July 2015 Elementis through its wholly owned subsidiary,
American Chrome & Chemicals Inc, signed an agreement with
Magellan Terminals Holdings L.P. ("Magellan") to sell approximately
110 acres of its 424 acre site in Corpus Christi, Texas, for a cash
consideration of $25 million. Net proceeds, after taxes, will be
approximately $15 million. In addition, Magellan will pay American
Chrome & Chemicals Inc $1 million per annum over a ten year
period for access and related rights in relation to other land on
the same site.
- ENDS -
This information is provided by RNS
The company news service from the London Stock Exchange
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