Transcription of Elementis plc
1 2015. Elementis plc Annual report and accounts Our global locations +. 1,400+ 30 Locations Employees 9 Countries Key Executive management HQ. Corporate head office Specialty Products Chromium Surfactants Our success factors Our success factors are common to all three businesses 1. and at the heart of 2. everything we do. 4. 3. 5. 6. For more information on our success factors, go to the 1. Strong leadership Business model 2. Clear strategy description on page 5. 3. Availability of finance 4. Long term relationships 5. Innovation 6. Global infrastructure Our businesses Specialty Products Chromium Surfactants Centres of excellence Organoclay leadership Our strategy of stable earnings and Our shared site in Delden, Our innovation model comprises We have a strong network of cash flow is centred around a Netherlands, is well managed three R&D centres of excellence facilities to support our global flexible manufacturing model that and maintained and, together with and five technical service centres.
2 Organoclay business which relies on operational excellence our expertise in surface chemistry, R&D centres focus on new product services various end use markets: from strategic sourcing and is able to carry out a broad range development and the technical industrial and decorative coatings, procurement to health, safety of chemical processes including service centres focus on ensuring oilfield and personal care. and environment. polymerisation and condensation these new products deliver value reactions, ethoxylation, in the customers' formulations. Markets Our principal facility in Castle propoxylation, phosphation, Together they generate a seamless Hayne, North Carolina, is sulphation, sulphonation and and synergistic process that starts Industrial coatings accredited in the STAR programme quaternisation. and ends with the customers' which is the highest recognition needs. Decorative coatings level under the US OSHA's voluntary protection programme All R&D centres of excellence Oilfield and recognises the achievement of collaborate on global projects and exemplary occupational health and specialise in specific areas.
3 Personal care safety performance and standards. Sites East Windsor, NJ, US Sites Rheology for all St. Louis, MO, US. Rheological additives Oilfield additives Personal care additives Charleston, WV, US. Delden, Netherlands Surface chemistry Specialty building blocks Specialty coatings additives Newberry Springs, CA, US. Green solutions Hsinchu, Taiwan Industrial additives Livingston, Scotland, UK. Adhesion promoters Dispersing and wetting agents Slip and levelling agents Anji, Zhejiang province, Reaction chemistry capability China One of our key R&D focuses has been to target the decorative coatings market and in particular Specialty Products the global market for acrylic and Changxing, Zhejiang province, For more information associative thickeners. China go to page 6. Elementis is a global supplier with reaction chemistry capability in all of our three regions: Americas, Europe and Asia. Sites New Martinsville, WV, US. Palmital, Brazil Livingston, Scotland, UK. Delden, Netherlands Shanghai, China Who we are Elementis plc is a global specialty chemicals company with operations worldwide that serve customers in North and Latin America, Europe and Asia in a wide range of markets and sectors.
4 The Company has a premium listing in the UK on the London Stock Exchange and is a member of the FTSE 250 and FTSE4 Good Indices. At a glance Specialty Chromium Surfactants Products is a leading manufactures provides high value producer a wide range functional additives of chromium of surface active to the industrial and chemicals that ingredients and decorative coatings, make its customers' products that oilfield drilling and products more are used as personal care durable. intermediates markets that Read more on page 8 in the production improve the flow of chemical characteristics and performance $ compositions. Read more on page 10. Revenue of its customers'. products or production $ Revenue processes. Read more on page 6. $ Revenue Cautionary statement: The Annual Report and Accounts for the financial year ended 31 December 2015, as contained in this document ( Annual Report ), contain 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.
5 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 Annual Report should be construed as a profit forecast. Highlights Contents Group sales reduced by 14 per cent due to lower oilfield drilling and impact of IFC Who we are stronger US dollar. Strategic report Specialty Products delivered improved contribution margins and market share 2 Chairman's statement gains, successes include: 4 Our objectives, strategies and North American decorative coatings* up 15 per cent. business model European coatings* up 3 per cent. 6 Our businesses Personal care* up 3 per cent for the year; 6 per cent in the second half. 11 Finance report 14 Key performance indicators Another year of excellent cash generation: 15 Risk management report 20 Corporate responsibility report Net cash position increased to $ million.
6 Corporate governance Total dividends for the year increased by 7 per cent to cents: 26 Board of Directors and senior Final dividend maintained at previous year level. executives Special dividend increased by 15 per cent; fourth consecutive payment. 28 Chairman's letter on governance 29 Corporate governance report 31 Nomination Committee report * constant currency sales 32 Audit Committee report 35 Directors' remuneration report 52 Directors' report 54 Directors' responsibility statement 55 Independent auditor's report Financial summary Financial statements 2015 2014. 58 Consolidated income statement Sales $ $ 58 Consolidated statement of Operating profit** $ $ comprehensive income 59 Consolidated balance sheet Profit before tax** $ $ 60 Consolidated statement of changes Diluted earnings per share** in equity Operating cash flow $ $ 61 Consolidated cash flow statement 62 Notes to the Consolidated financial Net cash $ $ statements 90 Parent company statutory accounts 92 Notes to the company financial Profit for the year $ $ statements of Elementis plc Basic earnings per share Shareholder information 96 Glossary Dividends to shareholders: 97 Five year record Interim dividend 98 Shareholder services Final proposed 99 Corporate information 99 Financial calendar Special dividend 99 Annual General Meeting Total for the year 99 Principal offices ** before non-recurring items Elementis plc Annual report and accounts 2015 1.
7 CHAIRMAN'S STATEMENT. Andrew Duff Net cash Chairman $m 90 75 60 45 30 15. 0. 2011 2012 2013 2014 2015. After five years of successive earnings fully in the Finance report. After taking account The final and special dividends will be paid on growth**, the market environment in 2015 of these items, Group diluted earnings per share 27 May 2016 , in pounds sterling at an exchange turned out to be challenging for the Group. was cents compared to cents in 2014. rate of :$ (equivalent to a sterling Periods of challenging demand patterns amount of pence per share), to such as this are often a good test of the core Balance sheet shareholders on the register on 29 April 2016 . qualities of a business and I am pleased to The Group's balance sheet remains in a very report that our key strengths in terms of sound position following another year of positive Health, safety and the environment market position, customer relationships, cash generation. The Group's net cash position In this important aspect of our business I am value proposition and cash generation have at the end of 2015 is $ million, compared pleased to report that our overall performance all shown impressive resilience in 2015.
8 To $ million at the end of the previous year. continues to be of a high standard compared to the industry. However, we also recognise that Lower oil prices had a significant impact on The IAS 19 deficit, on the Group's post continuous improvement and an ultimate goal our oilfield drilling business and the appreciation retirement benefit plans also improved during of zero incidents are absolutely essential to our of the US dollar against most global currencies the year from $ million at the end of 2014 philosophy. As regulators around the world led to changes in the competitive landscape to $ million. The UK pension plan accounts rightly demand ever increasing engagement for both Elementis and its customers, for the majority of the Group's pension in this area, we will continue to be cooperative creating an additional headwind during the obligations and a new funding agreement was and proactive, while striving always to exceed year for Chromium and our North American concluded during the year, based on a triennial their expectations.
9 Industrial coatings business. valuation date of 30 September 2014. As a result the Group's total annual contributions to Board changes Innovation continues to be important to our all plans are expected to be below $ million As previously announced Paul Waterman success, as demonstrated by the growing in each of the next three years. became Group Chief Executive and joined proportion of our sales coming from new the Board on 8 February 2016 . Paul has an products, which continues to be encouraging. Dividends impressive business background, having most Following on from the successful commissioning Under the dividend policy introduced in 2012, recently been the Global CEO of BP's of our new decorative coatings facility in New the Board undertook to pay approximately one Lubricants business. He is fully engaged in Martinsville we have continued to commit further third of earnings, before non-recurring items, getting to know Elementis and its people and investment to our Specialty Products business each year in a combination of interim and final is excited about the opportunity to take the and have recently completed an investment dividends.
10 In addition, a special dividend is paid Group forward. in a new castor wax facility in Taiwan. each year of up to 50 per cent of the net cash balance at the end of the year, provided there David Dutro, who retired as Group Chief Our track record of consistent cash generation are no immediate investment plans for that Executive on 7 February 2016 , continued over the last six years has been an important cash. However, the Board is maintaining the final to assist the Board until 29 February 2016 . component of the Group's equity story. In 2015, dividend at the same level as the previous year, as a Special Advisor to facilitate a smooth despite the more challenging environment, the to reflect its confidence in the Group's business transition. David has led the Group through a Group still delivered a positive cash flow model and medium term prospects. In addition, period of impressive progress and shareholder performance, helped by the sale of a portion the year end net cash balance increased and value creation and the Board would like to thank of our site in Corpus Christi and lower pension we will be paying a special dividend of 50 per him sincerely for his outstanding contribution.
