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AkzoNobel Q4 2013


Overview


Our results at a glance*

  • Revenue for both Q4 and full year down 5 percent, due to adverse currency effects and divestments
  • Q4 volume development positive in all three Business Areas and ROS% excluding restructuring costs and incidentals increased, continuing the trend from Q3
  • 2013 operating income at €958 million (excluding €61million incidentals: €897 million; 2012: €908 million excluding impairment)
  • Net income attributable to shareholders €724 million (2012: €386 million excluding impairment) and adjusted EPS at €2.62 (2012: €2.55)
  • Net debt down €769 million at €1,529 million (2012: €2,298 million)
  • Total dividend for 2013 proposed at €1.45 (2012: €1.45)
  • Performance improvement program completed one year ahead of schedule; target exceeded with €545 million total savings achieved
  • On track to deliver 2015 targets despite expected continued fragile economic environment and volatile foreign currencies in 2014

AkzoNobel around the world
Revenue by destination

(44 percent in high growth markets)

AkzoNobel around the world – Revenue by destination (pie chart)

* Unless indicated otherwise, numbers throughout this report exclude the 2012 impairment in Decorative Paints of €2,106 million.


Financial highlights

2013 revenue was down 5 percent, mainly due to adverse currency effects and divestments. Operating income was €958 million and included €61 million incidental results. Excluding these, operating income was €897 million (2012: €908 million). Net debt was €769 million lower at €1,529 million (2012: €2,298 million). The performance improvement program exceeded targets and has now successfully been completed, one year ahead of schedule.

Summary of financial outcomes

4th quarter

 

 

 

 

 

January - December

2012

 

2013

 

Δ%

 

in € millions

 

2012

 

2013

 

Δ%

1

With impairment of Decorative Paints excluded from invested capital for the full year: 8.9 percent

3,673

 

3,482

 

(5)

 

Revenue

 

15,390

 

14,590

 

(5)

36

 

116

 

 

 

Operating income

 

908

 

958

 

6

1.0

 

3.3

 

 

 

ROS%

 

5.9

 

6.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Invested capital

 

10,062

 

9,281

 

 

 

 

 

 

 

 

ROI

 

7.71

 

9.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

205

 

208

 

1

 

EBITDA

 

1,597

 

1,513

 

(5)

394

 

234

 

 

 

Capital expenditures

 

826

 

666

 

 

630

 

309

 

(51)

 

Net cash from operating activities

 

737

 

716

 

(3)

 

 

 

 

 

 

Net debt

 

2,298

 

1,529

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5)

 

35

 

 

 

Net income from continuing operations

 

450

 

593

 

32

(22)

 

16

 

 

 

Net income from discontinued operations

 

(64)

 

131

 

 

(27)

 

51

 

 

 

Net income attributable to shareholders

 

386

 

724

 

88

(27)

 

51

 

 

 

Net income attributable to shareholders (including impairment)

 

(2,092)

 

724

 

 

(0.11)

 

0.21

 

 

 

Earnings per share from total operations (in €)

 

(8.82)

 

3.00

 

 

0.10

 

(0.01)

 

 

 

Adjusted earnings per share (in €)

 

2.55

 

2.62

 

 

 

 

 

 

 

 

Number of employees

 

50,610

 

49,560

 

 


Revenue

4th quarter

 

 

 

 

 

January - December

2012

 

2013

 

Δ%

 

in € millions

 

2012

 

2013

 

Δ%

995

 

934

 

(6)

 

Decorative Paints

 

4,297

 

4,174

 

(3)

1,394

 

1,367

 

(2)

 

Performance Coatings

 

5,702

 

5,571

 

(2)

1,320

 

1,200

 

(9)

 

Specialty Chemicals

 

5,543

 

4,949

 

(11)

(36)

 

(19)

 

 

 

Other activities/eliminations

 

(152)

 

(104)

 

 

3,673

 

3,482

 

(5)

 

Total

 

15,390

 

14,590

 

(5)

Revenue development 2013

Revenue development 2013 (bar chart)

in % versus 2013

 

Volume

 

Price/mix

 

Divestments

 

Exchange
rates

 

Total

Decorative Paints

 

3

 

 

(1)

 

(5)

 

(3)

Performance Coatings

 

 

1

 

 

(3)

 

(2)

Specialty Chemicals

 

(2)

 

(1)

 

(6)

 

(2)

 

(11)

Total

 

1

 

 

(2)

 

(4)

 

(5)

Revenue development Q4 2013

Revenue development Q4 2013 (bar chart)

in % versus Q4 2013

 

Volume

 

Price/mix

 

Divestments

 

Exchange
rates

 

Total

Decorative Paints

 

5

 

 

(4)

 

(7)

 

(6)

Performance Coatings

 

2

 

1

 

 

(5)

 

(2)

Specialty Chemicals

 

3

 

(2)

 

(6)

 

(4)

 

(9)

Total

 

4

 

(1)

 

(3)

 

(5)

 

(5)

Volume development per quarter
(year-on-year)

 

Q4 12

 

Q1 13

 

Q2 13

 

Q3 13

 

Q4 13

Decorative Paints

 

2

 

(1)

 

4

 

5

 

5

Performance Coatings

 

(2)

 

(3)

 

 

2

 

2

Specialty Chemicals

 

(1)

 

(4)

 

(5)

 

 

3

Total

 

(1)

 

(3)

 

 

2

 

4

Price/mix development per quarter
(year-on-year)

 

Q4 12

 

Q1 13

 

Q2 13

 

Q3 13

 

Q4 13

Decorative Paints

 

 

(1)

 

(2)

 

2

 

Performance Coatings

 

3

 

1

 

 

 

1

Specialty Chemicals

 

1

 

(2)

 

(2)

 

 

(2)

Total

 

2

 

(1)

 

(1)

 

1

 

(1)


Divestments

During 2013, several divestments were concluded:

In addition, we concluded smaller divestments, such as the Primary Amides and Purate businesses, and agreed to sell the German stores in Decorative Paints in 2014. In 2012, Chemicals Pakistan was divested.


Operating income

In 2012, the ongoing businesses of Decorative Paints recorded a goodwill impairment of €2,106 million. An amount of €372 million was recorded for the Decorative Paints business in North America in results from discontinued operations. In this report, impairments from the 2012 numbers are excluded from operating income to present comparable financial outcomes.

Full-year average raw material costs were down, having stabilized during the year.

Operating income

4th quarter

 

 

 

January - December

2012

 

2013

 

in € millions

 

2012

 

2013

(91)

 

146

 

Decorative Paints

 

94

 

398

114

 

73

 

Performance Coatings

 

542

 

525

73

 

(30)

 

Specialty Chemicals

 

500

 

297

(60)

 

(73)

 

Other activities/eliminations

 

(228)

 

(262)

36

 

116

 

Total

 

908

 

958


Performance improvement program

The performance improvement program announced in October 2011 has exceeded targets and achieved €545 million in EBITDA for the period 2011 through 2013. This successfully completes the performance improvement program a year ahead of schedule. Further efficiency and cost reduction measures have been identified as part of continuous improvement initiatives which are integrated in the regular business activities.

Full-year restructuring costs were €348 million (2012: €292 million) with €204 million in Q4 (2012: €115 million).


Outlook and 2015 targets

Although we have seen early signs of stabilization in the second half of 2013 in some of our businesses, the economic environment remains fragile and foreign currencies volatile. We will continue to significantly restructure our businesses in 2014 to reduce our cost base further to offset the expected continued weak recovery. The company is on track to achieve the strategic priorities announced in February 2013:

Amsterdam, February 6, 2014
The Board of Management


Financial calendar

February 26, 2014
Annual report 2013

April 17, 2014
Report for the 1st quarter 2014

April 29, 2014
Annual General Meeting of shareholders

May 2, 2014
Ex-dividend date of 2013 final dividend

May 6, 2014
Record date of 2013 final dividend

May 7, 2014 - May 22, 2014
Election period cash or stock interim dividend

May 23, 2014
Determination of exchange ratio

May 28, 2014
Payment date of cash dividend and delivery of new shares

July 23, 2014
Report for the 2nd quarter 2014

October 21, 2014
Report for the 3rd quarter 2014


Decorative Paints – Overview

  • Full-year revenue down 3 percent due to adverse currency effects and divestments
  • Full-year volumes flat in Europe, with positive volume development in all other regions
  • Margins improved as a result of strong margin management and lower raw material prices
  • Operating income well above the previous year, due to the divestment gain on Building Adhesives, lower costs and lower restructuring charges

Full-year revenue in Decorative Paints declined 3 percent compared with 2012 due to adverse currency effects and divestments. Volumes were up 3 percent for the year with increases in all regions except Europe, which was flat overall, reflecting the difficult trading conditions. Margins improved due to margin management and lower raw material prices, both for the full year and the fourth quarter.

Q4 revenue was down 6 percent due to the divestment of Building Adhesives and adverse currency effects. Volumes in Q4 were up in all regions, against a low base in 2012.

Performance improvement programs and restructuring measures have lowered the cost base by more than 3 percent. Restructuring charges were below the previous year, resulting in higher operating income compared with 2012 before the divestment gain of €198 million on Building Adhesives.

Revenue development 2013

Decorative Paints – Revenue development 2013 (bar chart)

Revenue development Q4 2013

Decorative Paints – Revenue development Q4 2013 (bar chart)
 

Key figures

Revenue

4th quarter

 

 

 

 

 

January - December

2012

 

2013

 

Δ%

 

in € millions

 

2012

 

2013

 

Δ%

1

With impairment of Decorative Paints excluded from invested capital for the full year: 3.0 percent

544

 

489

 

(10)

 

Decorative Paints Europe

 

2,640

 

2,508

 

(5)

174

 

162

 

(7)

 

Decorative Paints Latin America

 

603

 

591

 

(2)

279

 

283

 

1

 

Decorative Paints Asia

 

1,048

 

1,075

 

3

(2)

 

 

 

 

Other/intragroup eliminations

 

6

 

 

 

995

 

934

 

(6)

 

Total

 

4,297

 

4,174

 

(3)

 

 

 

 

 

 

 

 

 

 

 

 

 

(91)

 

146

 

 

 

Operating income

 

94

 

398

 

 

(9.1)

 

15.6

 

 

 

ROS%

 

2.21

 

9.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Invested capital

 

2,981

 

2,589

 

 

 

 

 

 

 

 

ROI%

 

2.01

 

13.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(36)

 

(13)

 

 

 

EBITDA

 

284

 

362

 

27

92

 

65

 

 

 

Capital expenditures

 

206

 

171

 

 

 

 

 

 

 

 

Number of employees

 

17,020

 

16,240

 

 


Europe

Full-year revenue in Europe was down 5 percent. The divestment of Building Adhesives had an impact of 2 percent. Volumes were stronger in Eastern Europe (especially Turkey and Russia), but most countries continued to be impacted by weak demand. Restructuring measures and various operational efficiency improvement programs led to a lower cost base. As a result, operating income was higher than the previous year.

In Q4, revenue was down 10 percent due to an impact from divestments (7 percent) and adverse currency effects.


Latin America

Full-year revenue decreased 2 percent, with strong trading development offset by an adverse currency impact, mainly in Brazil and Argentina. Margins improved due to lower raw material costs and improved formulations. Costs increased as a result of additional manpower to support growth.

In Q4, revenue was 7 percent down on the previous year, due to adverse currencies, which was partly offset by price/mix.


Asia

Full-year revenue was up 3 percent, with strong volumes offset by an adverse currency impact in the region. China saw healthy growth in all segments. Profitability increased due to lower costs.

In Q4, revenue was up 1 percent due to strong volumes, offset by adverse currencies.


Performance Coatings – Overview

  • Full-year revenue down 2 percent impacted by adverse currency effects
  • Full-year operating income down 3 percent to €525 million (2012: €542 million), with underlying improvements offset by higher restructuring charges and adverse currency effects
  • Full-year ROS 9.4 percent (2012: 9.5 percent)
  • Operational efficiency improvements contributed in all businesses
  • Restructuring initiatives accelerated in Q4

Revenue declined 2 percent compared with the previous year, due to adverse currencies and overall flat volumes, but with continued variability between individual segments. Volumes were down at the start of the year compared with 2012 – reflecting the difficult trading conditions – but gradually improved, with Q4 volumes being up 2 percent. Despite higher restructuring costs, margins were stable.

Q4 revenue was down 2 percent after a 5 percent currency impact. Restructuring initiatives accelerated, with the intended closure of seven sites located in Europe, Brazil and China being communicated. This resulted in lower operating income compared with 2012.

Revenue development 2013

Performance Coatings – Revenue development 2013 (bar chart)

Revenue development Q4 2013

Performance Coatings – Revenue development Q4 2013 (bar chart)
 

Performance Coatings – Key figures

Revenue

4th quarter

 

 

 

 

 

January - December

2012

 

2013

 

Δ%

 

in € millions

 

2012

 

2013

 

Δ%

392

 

371

 

(5)

 

Marine and Protective Coatings

 

1,577

 

1,495

 

(5)

330

 

332

 

1

 

Automotive and Aerospace Coatings

 

1,299

 

1,321

 

2

245

 

246

 

 

Powder Coatings

 

997

 

982

 

(2)

436

 

424

 

(3)

 

Industrial Coatings

 

1,856

 

1,799

 

(3)

(9)

 

(6)

 

 

 

Other/intragroup eliminations

 

(27)

 

(26)

 

 

1,394

 

1,367

 

(2)

 

Total

 

5,702

 

5,571

 

(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

114

 

73

 

(36)

 

Operating income

 

542

 

525

 

(3)

8.2

 

5.3

 

 

 

ROS%

 

9.5

 

9.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Invested capital

 

2,439

 

2,251

 

 

 

 

 

 

 

 

ROI%

 

21.7

 

21.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

147

 

110

 

(25)

 

EBITDA

 

673

 

663

 

(1)

57

 

65

 

 

 

Capital expenditures

 

123

 

143

 

 

 

 

 

 

 

 

Number of employees

 

21,310

 

21,360

 

 


Marine and Protective Coatings

Full-year revenue declined 5 percent, due to adverse currencies and price/mix. Volumes ended flat, with growth in Protective Coatings – especially in the oil and gas segment – whereas volumes declined in Marine and Yacht.

Despite higher volumes in Q4, revenue was down 5 percent on the previous year, mainly due to adverse currencies.


Automotive and Aerospace Coatings

Full-year revenue was up 2 percent on 2012, driven by price/mix and volumes, with an adverse currency impact. Volumes in the vehicle refinishes market showed recovery in the US and Canada, with growth continuing in Latin America and China. Demand in Western Europe remained weak. Strong customer demand was also experienced in the consumer electronics and aerospace markets. In Q4, revenue increased 1 percent, impacted by adverse currencies. Volume development was in line with the full-year trend.


Powder Coatings

Full-year revenue was 2 percent down on 2012. Positive volumes and price/mix were more than offset by adverse currencies. Europe, the Americas and most high growth markets showed positive results with growth in volumes.

Revenue in Q4 was flat due to adverse currency effects and positive volume and price/mix developments. Europe continued its positive trend, with the transportation and general metal finishes sectors performing well. Three intended site closures were announced during the quarter.


Industrial Coatings

Full-year revenue declined 3 percent, due to adverse currencies. Overall volumes declined, with growth in Coil Coatings being more than offset by declines in Packaging and Wood.

In Q4, revenue declined 3 percent, mainly due to adverse currencies. Volume and price/mix were favorable and, apart from Packaging in North America and Europe, all businesses grew. Four intended site closures were announced during the quarter.


Specialty Chemicals – Overview

  • Full-year revenue down 11 percent due to divestments (6 percent), adverse currency effects and weaker end markets
  • Full-year operating income at €297 million, adversely impacted by restructuring costs and an asset impairment of €139 million
  • Implementation of comprehensive performance improvement program at Functional Chemicals on track
  • Divestment of both the Primary Amides and Purate businesses completed in Q4

It was a year of continued soft demand for Specialty Chemicals, with low activity being particularly evident in construction-related products, pulp bleaching and the plastics industries. In addition to the general slowdown in demand, new plant start-ups and extended maintenance stops earlier in the year impacted production temporarily. The results include a non-cash impairment charge of €139 million on a business held for sale. Focus on cost control and margin management was maintained in all businesses, with a comprehensive performance improvement program being implemented at Functional Chemicals.

Revenue in Q4 was down 9 percent, mainly due to the Chemicals Pakistan divestment and adverse currency effects, although volumes rose 3 percent compared with Q4 2012 with higher volumes in most businesses and the absence of the previous year’s production issues.

Revenue development 2013

Specialty Chemicals – Revenue development 2013 (bar chart)

Revenue development Q4 2013

Specialty Chemicals – Revenue development Q4 2013 (bar chart)
 

Specialty Chemicals – Key figures

Revenue

4th quarter

 

 

 

 

 

January - December

2012

 

2013

 

Δ%

 

in € millions

 

2012

 

2013

 

Δ%

457

 

447

 

(2)

 

Functional Chemicals

 

1,963

 

1,872

 

(5)

296

 

300

 

1

 

Industrial Chemicals

 

1,188

 

1,173

 

(1)

229

 

234

 

2

 

Surface Chemistry

 

1,085

 

1,012

 

(7)

295

 

259

 

(12)

 

Pulp and Performance Chemicals

 

1,153

 

1,036

 

(10)

72

 

 

 

 

Chemicals Pakistan

 

287

 

 

 

(29)

 

(40)

 

 

 

Other/intragroup eliminations

 

(133)

 

(144)

 

 

1,320

 

1,200

 

(9)

 

Total

 

5,543

 

4,949

 

(11)

 

 

 

 

 

 

 

 

 

 

 

 

 

73

 

(30)

 

 

 

Operating income

 

500

 

297

 

(41)

5.5

 

(2.5)

 

 

 

ROS%

 

9.0

 

6.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Invested capital

 

3,528

 

3,355

 

 

 

 

 

 

 

 

ROI%

 

13.6

 

8.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

152

 

169

 

11

 

EBITDA

 

830

 

726

 

(13)

177

 

102

 

 

 

Capital expenditures

 

484

 

346

 

 

 

 

 

 

 

 

Number of employees

 

10,750

 

10,430

 

 


Functional Chemicals

Business conditions remained difficult throughout the year, with continued weak demand from the construction market in Europe and general manufacturing. Full-year revenue was down 5 percent, mainly due to adverse currencies, while volumes were down 1 percent. The performance improvement program is contributing to margin improvement and cost reduction. However, overall profitability was impacted by higher restructuring costs. During the year, the intended phase out of organic peroxides production at the Deventer site in the Netherlands was announced, with capacity being consolidated at other sites.

Q4 revenue was down 2 percent compared with the previous year, mainly due to adverse currencies. This was slightly offset by a 4 percent volume increase for the quarter, mainly noticeable at ethylene amines. The divestment of the Primary Amides business was successfully completed during the quarter.


Industrial Chemicals

Demand during the first half of the year was adversely impacted by an extended maintenance stop, which temporarily impacted production. Overall revenue for 2013 was down 1 percent, with volumes on a par with last year as volumes later in the year improved due to better capacity utilization.

Revenue in Q4 was up 1 percent compared with the previous year, primarily on the back of better volumes.


Surface Chemistry

It was a challenging year, with revenue down 7 percent, mainly as a result of adverse currencies and the closure of the fatty acid business in Boxing, China. Overall volumes in the Americas were stable, with Asia and Europe being lower. Margin management and cost reduction measures contributed to the overall performance.

Q4 revenue was up 2 percent, mainly due to volume improvements in Asia and the US, although Europe remained challenging.


Pulp and Performance Chemicals

Markets were generally slow in 2013, with mixed patterns across all regions. Revenues were down 10 percent as a result of adverse currencies, divested businesses and lower volumes. Bleaching chemical volumes were slower at the start of the year due to soft demand in the US, but later recovered due to additional capacity at our chemical islands in Brazil and demand from Asia and Europe. Q4 revenue was down 12 percent, impacted by adverse currencies, divested businesses and price pressure. The divestment of the Purate water treatment business was successfully completed during the quarter.


Condensed financial statements


Consolidated statement of income

4th quarter

 

 

 

January - December

2012

 

2013

 

in € millions

 

2012

 

2013

 

 

 

 

 

 

 

 

 

Continuing operations

3,673

 

3,482

 

Revenue

 

15,390

 

14,590

(2,358)

 

(2,198)

 

Cost of sales

 

(9,591)

 

(8,951)

1,315

 

1,284

 

Gross profit

 

5,799

 

5,639

 

(139)

 

Impairment

 

(2,106)

 

(139)

(819)

 

(767)

 

Selling expenses

 

(3,192)

 

(3,023)

(358)

 

(380)

 

General and administrative expenses

 

(1,275)

 

(1,345)

(99)

 

(97)

 

Research and development expenses

 

(384)

 

(373)

(3)

 

215

 

Other operating income/(expenses)

 

(40)

 

199

36

 

116

 

Operating income

 

(1,198)

 

958

(38)

 

(48)

 

Net financing expenses

 

(205)

 

(200)

(1)

 

1

 

Results from associates and joint ventures

 

13

 

14

(3)

 

69

 

Profit before tax

 

(1,390)

 

772

16

 

(21)

 

Income tax

 

(203)

 

(111)

13

 

48

 

Profit for the period from continuing operations

 

(1,593)

 

661

 

 

 

 

 

 

 

 

 

Discontinued operations

 

 

 

 

(22)

 

16

 

Profit for the period from discontinued operations

 

(436)

 

131

(9)

 

64

 

Profit for the period

 

(2,029)

 

792

 

 

 

 

 

 

 

 

 

Attributable to

 

 

 

 

(27)

 

51

 

Shareholders of the company

 

(2,092)

 

724

18

 

13

 

Non-controlling interests

 

63

 

68

(9)

 

64

 

Profit for the period

 

(2,029)

 

792


Consolidated statement of comprehensive income

4th quarter

 

 

 

January - December

2012

 

2013

 

in € millions

 

2012

 

2013

(9)

 

64

 

Profit for the period

 

(2,029)

 

792

 

 

 

 

 

 

 

 

 

Other comprehensive income

 

 

 

 

(116)

 

(142)

 

Exchange differences arising on translation of foreign operations

 

34

 

(510)

(1)

 

(4)

 

Cash flow hedges

 

(7)

 

(2)

(274)

 

(54)

 

Post-retirement benefits

 

(1,298)

 

(200)

4

 

(21)

 

Tax relating to components of other comprehensive income

 

254

 

(71)

(387)

 

(221)

 

Other comprehensive income for the period (net of tax)

 

(1,017)

 

(783)

(396)

 

(157)

 

Comprehensive income for the period

 

(3,046)

 

9

 

 

 

 

 

 

 

 

 

Comprehensive income for the period attributable to

 

 

 

 

(400)

 

(162)

 

Shareholders of the company

 

(3,093)

 

(20)

4

 

5

 

Non-controlling interests

 

47

 

29

(396)

 

(157)

 

Comprehensive income for the period

 

(3,046)

 

9


Condensed consolidated balance sheet

in € millions

 

December 31, 2012*

 

December 31, 2013

*

Restated for the revised IAS 19

Assets

 

 

 

 

Non-current assets

 

 

 

 

Intangible assets

 

4,454

 

3,906

Property, plant and equipment

 

3,739

 

3,589

Other financial non-current assets

 

2,628

 

2,219

Total non-current assets

 

10,821

 

9,714

 

 

 

 

 

 

 

 

 

 

Inventories

 

1,545

 

1,426

Trade and other receivables

 

2,698

 

2,536

Cash and cash equivalents

 

1,752

 

2,098

Other current assets

 

91

 

86

Assets held for sale

 

921

 

203

Total current assets

 

7,007

 

6,349

Total assets

 

17,828

 

16,063

 

 

 

 

 

Equity and liabilities

 

 

 

 

Total equity

 

6,228

 

6,021

 

 

 

 

 

Non-current liabilities

 

 

 

 

Provisions and deferred tax liabilities

 

3,111

 

2,327

Long-term borrowings

 

3,388

 

2,666

Total non-current liabilities

 

6,499

 

4,993

 

 

 

 

 

Current liabilities

 

 

 

 

Short-term borrowings

 

662

 

961

Trade and other payables

 

3,242

 

3,218

Other short-term liabilities

 

845

 

821

Liabilities held for sale

 

352

 

49

Total current liabilities

 

5,101

 

5,049

Total equity and liabilities

 

17,828

 

16,063


Changes in equity*

in € millions

 

Subscribed share capital

 

Additional paid-in capital

 

Cashflow hedge reserve

 

Cumulative translation reserves

 

Other reserves

 

Share-
holders’ equity

 

Non-
controlling interests

 

Total equity

*

Restated for the revised IAS 19

Balance at January 1, 2012

 

469

 

47

 

(9)

 

4

 

8,520

 

9,031

 

529

 

9,560

Profit for the period

 

 

 

 

 

(2,092)

 

(2,092)

 

63

 

(2,029)

Other comprehensive income

 

 

 

(8)

 

57

 

(1,050)

 

(1,001)

 

(16)

 

(1,017)

Comprehensive income for the period

 

 

 

(8)

 

57

 

(3,142)

 

(3,093)

 

47

 

(3,046)

Dividend paid

 

7

 

121

 

 

 

(342)

 

(214)

 

(42)

 

(256)

Equity-settled transactions

 

 

 

 

 

43

 

43

 

 

43

Issue of common shares

 

2

 

6

 

 

 

 

8

 

 

8

Acquisitions and divestments

 

 

 

 

 

(11)

 

(11)

 

(70)

 

(81)

Balance at
December 31, 2012

 

478

 

174

 

(17)

 

61

 

5,068

 

5,764

 

464

 

6,228

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at January 1, 2013

 

478

 

174

 

(17)

 

61

 

5,068

 

5,764

 

464

 

6,228

Profit for the period

 

 

 

 

 

724

 

724

 

68

 

792

Other comprehensive income

 

 

 

(2)

 

(478)

 

(264)

 

(744)

 

(39)

 

(783)

Comprehensive income for the period

 

 

 

(2)

 

(478)

 

460

 

(20)

 

29

 

9

Dividend paid

 

6

 

133

 

 

 

(349)

 

(210)

 

(76)

 

(286)

Equity-settled transactions

 

 

 

 

 

46

 

46

 

 

46

Issue of common shares

 

1

 

12

 

 

 

 

13

 

 

13

Acquisitions and divestments

 

 

 

 

 

1

 

1

 

10

 

11

Balance at
December 31, 2013

 

485

 

319

 

(19)

 

(417)

 

5,226

 

5,594

 

427

 

6,021


Condensed consolidated statement of cash flows

4th quarter

 

 

 

 

 

January - December

2012

 

2013

 

in € millions

 

2012

 

2013

1,307

 

2,107

 

Cash and cash equivalents at beginning of period

 

1,335

 

1,558

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments to reconcile earnings to cash generated from
operating activities

 

 

 

 

13

 

48

 

Profit for the period from continuing operations

 

(1,593)

 

661

161

 

152

 

Amortization and depreciation

 

625

 

616

469

 

277

 

Changes in working capital

 

251

 

(13)

8

 

(41)

 

Changes in provisions

 

(703)

 

(395)

(21)

 

(127)

 

Other changes

 

2,157

 

(153)

630

 

309

 

Net cash from operating activities

 

737

 

716

(330)

 

(234)

 

Capital expenditures

 

(826)

 

(666)

132

 

309

 

Acquisitions and divestments net of cash acquired

 

122

 

313

(40)

 

(5)

 

Other changes

 

(22)

 

24

(238)

 

70

 

Net cash from investing activities

 

(726)

 

(329)

(12)

 

(362)

 

Changes from borrowings

 

570

 

(253)

(67)

 

(70)

 

Dividends

 

(256)

 

(286)

4

 

1

 

Other changes

 

(43)

 

13

(75)

 

(431)

 

Net cash from financing activities

 

271

 

(526)

317

 

(52)

 

Net cash used for continuing operations

 

282

 

(139)

(38)

 

(17)

 

Cash flows from discontinued operations

 

(53)

 

675

279

 

(69)

 

Net change in cash and cash equivalents of total operations

 

229

 

536

(28)

 

(18)

 

Effect of exchange rate changes on cash and cash equivalents

 

(6)

 

(74)

1,558

 

2,020

 

Cash and cash equivalents at December 31

 

1,558

 

2,020


Notes to the condensed financial statements


Quarterly statistics

2012

 

 

 

 

 

 

 

 

 

 

 

2013

Q1

 

Q2

 

Q3

 

Q4

 

year

 

in € millions

 

Q1

 

Q2

 

Q3

 

Q4

 

year

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

974

 

1,187

 

1,141

 

995

 

4,297

 

Decorative Paints

 

925

 

1,179

 

1,136

 

934

 

4,174

1,369

 

1,472

 

1,467

 

1,394

 

5,702

 

Performance Coatings

 

1,331

 

1,458

 

1,415

 

1,367

 

5,571

1,399

 

1,431

 

1,393

 

1,320

 

5,543

 

Specialty Chemicals

 

1,244

 

1,253

 

1,252

 

1,200

 

4,949

(35)

 

(46)

 

(35)

 

(36)

 

(152)

 

Other activities/eliminations

 

(35)

 

(25)

 

(25)

 

(19)

 

(104)

3,707

 

4,044

 

3,966

 

3,673

 

15,390

 

Total

 

3,465

 

3,865

 

3,778

 

3,482

 

14,590

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA

68

 

155

 

97

 

(36)

 

284

 

Decorative Paints

 

88

 

141

 

146

 

(13)

 

362

159

 

204

 

163

 

147

 

673

 

Performance Coatings

 

163

 

197

 

193

 

110

 

663

235

 

235

 

208

 

152

 

830

 

Specialty Chemicals

 

174

 

198

 

185

 

169

 

726

(52)

 

(40)

 

(40)

 

(58)

 

(190)

 

Other activities/eliminations

 

(50)

 

(62)

 

(68)

 

(58)

 

(238)

410

 

554

 

428

 

205

 

1,597

 

Total

 

375

 

474

 

456

 

208

 

1,513

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11.1

 

13.7

 

10.8

 

5.6

 

10.4

 

EBITDA margin (in %)

 

10.8

 

12.3

 

12.1

 

6.0

 

10.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation

(27)

 

(26)

 

(26)

 

(27)

 

(106)

 

Decorative Paints

 

(28)

 

(28)

 

(24)

 

(26)

 

(106)

(23)

 

(25)

 

(23)

 

(24)

 

(95)

 

Performance Coatings

 

(25)

 

(25)

 

(24)

 

(28)

 

(102)

(61)

 

(63)

 

(62)

 

(65)

 

(251)

 

Specialty Chemicals

 

(62)

 

(64)

 

(66)

 

(65)

 

(257)

(3)

 

(1)

 

(4)

 

(3)

 

(11)

 

Other activities/eliminations

 

(4)

 

(2)

 

(3)

 

2

 

(7)

(114)

 

(115)

 

(115)

 

(119)

 

(463)

 

Total

 

(119)

 

(119)

 

(117)

 

(117)

 

(472)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization

(16)

 

(17)

 

(18)

 

(19)

 

(70)

 

Decorative Paints

 

(17)

 

(11)

 

(15)

 

(13)

 

(56)

(9)

 

(8)

 

(10)

 

(9)

 

(36)

 

Performance Coatings

 

(9)

 

(9)

 

(9)

 

(9)

 

(36)

(13)

 

(15)

 

(13)

 

(14)

 

(55)

 

Specialty Chemicals

 

(13)

 

(13)

 

(12)

 

(13)

 

(51)

(1)

 

 

 

 

(1)

 

Other activities/eliminations

 

 

 

(1)

 

 

(1)

(39)

 

(40)

 

(41)

 

(42)

 

(162)

 

Total

 

(39)

 

(33)

 

(37)

 

(35)

 

(144)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBIT

25

 

112

 

53

 

(82)

 

108

 

Decorative Paints

 

43

 

102

 

107

 

(52)

 

200

127

 

171

 

130

 

114

 

542

 

Performance Coatings

 

129

 

163

 

160

 

73

 

525

161

 

157

 

133

 

73

 

524

 

Specialty Chemicals

 

99

 

121

 

107

 

91

 

418

(56)

 

(41)

 

(44)

 

(61)

 

(202)

 

Other activities/eliminations

 

(54)

 

(64)

 

(71)

 

(57)

 

(246)

257

 

399

 

272

 

44

 

972

 

Total

 

217

 

322

 

303

 

55

 

897

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6.9

 

9.9

 

6.9

 

1.2

 

6.3

 

EBIT margin (in %)

 

6.3

 

8.3

 

8.0

 

1.6

 

6.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

25

 

112

 

(2,058)

 

(91)

 

(2,012)

 

Decorative Paints

 

43

 

102

 

107

 

146

 

398

127

 

171

 

130

 

114

 

542

 

Performance Coatings

 

129

 

163

 

160

 

73

 

525

140

 

154

 

133

 

73

 

500

 

Specialty Chemicals

 

99

 

121

 

107

 

(30)

 

297

(56)

 

(49)

 

(63)

 

(60)

 

(228)

 

Other activities/eliminations

 

(54)

 

(64)

 

(71)

 

(73)

 

(262)

236

 

388

 

(1,858)

 

36

 

(1,198)

 

Total

 

217

 

322

 

303

 

116

 

958

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6.4

 

9.6

 

6.3

 

1.0

 

5.9

 

ROS% before impairment

 

6.3

 

8.3

 

8.0

 

3.3

 

6.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Incidentals per Business Area

 

 

(2,111)

 

(9)

 

(2,120)

 

Decorative Paints

 

 

 

 

198

 

198

 

 

 

 

 

Performance Coatings

 

 

 

 

 

(21)

 

(3)

 

 

 

(24)

 

Specialty Chemicals

 

 

 

 

(121)

 

(121)

 

(8)

 

(19)

 

1

 

(26)

 

Other activities/eliminations

 

 

 

 

(16)

 

(16)

(21)

 

(11)

 

(2,130)

 

(8)

 

(2,170)

 

Total

 

 

 

 

61

 

61

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Incidentals included in operating income

 

 

 

 

 

Restructuring costs

 

 

 

 

 

 

 

(2,106)

 

 

(2,106)

 

Impairment

 

 

 

 

(139)

 

(139)

(21)

 

2

 

(1)

 

 

(20)

 

Results related to major legal and environmental cases

 

 

 

 

 

 

 

(5)

 

(25)

 

(30)

 

Results on acquisitions and divestments

 

 

 

 

216

 

216

 

(13)

 

(18)

 

17

 

(14)

 

Other incidental results

 

 

 

 

(16)

 

(16)

(21)

 

(11)

 

(2,130)

 

(8)

 

(2,170)

 

Total

 

 

 

 

61

 

61

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation net financing expense

15

 

17

 

16

 

11

 

59

 

Financing income

 

9

 

8

 

6

 

9

 

32

(57)

 

(65)

 

(58)

 

(59)

 

(239)

 

Financing expenses

 

(56)

 

(57)

 

(54)

 

(54)

 

(221)

(42)

 

(48)

 

(42)

 

(48)

 

(180)

 

Net interest on net debt

 

(47)

 

(49)

 

(48)

 

(45)

 

(189)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other interest movements

(1)

 

(1)

 

 

(1)

 

(3)

 

Financing expenses related to pensions

 

(5)

 

(5)

 

(5)

 

(6)

 

(21)

(3)

 

(18)

 

(9)

 

1

 

(29)

 

Interest on provisions

 

(12)

 

15

 

(8)

 

(3)

 

(8)

(4)

 

 

1

 

10

 

7

 

Other items

 

1

 

6

 

5

 

6

 

18

(8)

 

(19)

 

(8)

 

10

 

(25)

 

Net other financing charges

 

(16)

 

16

 

(8)

 

(3)

 

(11)

(50)

 

(67)

 

(50)

 

(38)

 

(205)

 

Net financing expenses

 

(63)

 

(33)

 

(56)

 

(48)

 

(200)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarterly net income analysis

4

 

5

 

5

 

(1)

 

13

 

Results from associates and joint ventures

 

3

 

6

 

4

 

1

 

14

(14)

 

(22)

 

(9)

 

(18)

 

(63)

 

Profit attributable to non-controlling interests

 

(16)

 

(25)

 

(14)

 

(13)

 

(68)

190

 

326

 

(1,903)

 

(3)

 

(1,390)

 

Profit before tax

 

157

 

295

 

251

 

69

 

772

(66)

 

(89)

 

(64)

 

16

 

(203)

 

Income tax

 

(45)

 

38

 

(83)

 

(21)

 

(111)

124

 

237

 

(1,967)

 

13

 

(1,593)

 

Profit for the period from continuing operations

 

112

 

333

 

168

 

48

 

661

35

 

27

 

(3)

 

533

 

(15)

 

Effective tax rate (in %)

 

29

 

(13)

 

33

 

30

 

14

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share from continuing operations (in €)

0.47

 

0.90

 

(8.29)

 

(0.02)

 

(6.98)

 

Basic

 

0.40

 

1.28

 

0.64

 

0.14

 

2.46

0.46

 

0.90

 

(8.29)

 

(0.02)

 

(6.98)

 

Diluted

 

0.40

 

1.27

 

0.64

 

0.14

 

2.44

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share from discontinued operations (in €)

(0.11)

 

0.02

 

(1.65)

 

(0.09)

 

(1.84)

 

Basic

 

(0.03)

 

0.50

 

 

0.07

 

0.54

(0.11)

 

0.02

 

(1.65)

 

(0.09)

 

(1.84)

 

Diluted

 

(0.03)

 

0.50

 

 

0.07

 

0.54

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share from total operations (in €)

0.36

 

0.92

 

(9.94)

 

(0.11)

 

(8.82)

 

Basic

 

0.37

 

1.78

 

0.64

 

0.21

 

3.00

0.35

 

0.92

 

(9.94)

 

(0.11)

 

(8.82)

 

Diluted

 

0.37

 

1.77

 

0.64

 

0.21

 

2.98

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of shares (in millions)

235.1

 

236.9

 

238.2

 

238.6

 

237.2

 

Weighted average number of shares

 

239.4

 

241.0

 

242.1

 

242.4

 

241.2

235.6

 

238.2

 

238.2

 

239.0

 

239.0

 

Number of shares
at end of quarter

 

239.8

 

242.1

 

242.1

 

242.6

 

242.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted earnings (in € millions)

190

 

326

 

(1,903)

 

(3)

 

(1,390)

 

Profit before tax from continuing operations

 

157

 

295

 

251

 

69

 

772

21

 

11

 

2,130

 

8

 

2,170

 

Incidentals reported
in operating income

 

 

 

 

(61)

 

(61)

39

 

40

 

41

 

42

 

162

 

Amortization of intangible assets

 

39

 

33

 

36

 

36

 

144

(84)

 

(103)

 

(82)

 

(5)

 

(274)

 

Adjusted income tax

 

(57)

 

28

 

(93)

 

(34)

 

(156)

(14)

 

(22)

 

(9)

 

(18)

 

(63)

 

Non-controlling interests

 

(16)

 

(25)

 

(14)

 

(13)

 

(68)

152

 

252

 

177

 

24

 

605

 

Adjusted net income for continuing operations

 

123

 

331

 

180

 

(3)

 

631

0.65

 

1.06

 

0.74

 

0.10

 

2.55

 

Adjusted earnings per share (in €)

 

0.51

 

1.37

 

0.74

 

(0.01)

 

2.62


Notes to the statement of income

Operating income in other activities

Operating income in other activities was lower than the previous year due to pensions. In 2012, there was an one-off gain and in 2013 additional costs were incurred due to the de-risking of the pension liabilities in the US.

4th quarter

 

 

 

January - December

2012

 

2013

 

in € millions

 

2012

 

2013

(135)

 

(63)

 

Corporate costs

 

(225)

 

(229)

22

 

(3)

 

Pensions

 

38

 

(11)

(4)

 

(5)

 

Insurances

 

(10)

 

(1)

57

 

(2)

 

Other

 

(31)

 

(21)

(60)

 

(73)

 

Operating income in “other”

 

(228)

 

(262)

Net financing expenses

Net financing expenses for the year decreased by €5 million, from €205 million to €200 million, mainly due to the net effect of:

Operating income to net income

4th quarter

 

 

 

January - December

2012

 

2013

 

in € millions

 

2012

 

2013

36

 

116

 

Operating income (excluding impairment)

 

908

 

958

 

 

Goodwill impairment Decorative Paints in 2012

 

(2,106)

 

36

 

116

 

Operating income (including 2012 goodwill impairment in Decorative Paints)

 

(1,198)

 

958

(38)

 

(48)

 

Net financing expenses

 

(205)

 

(200)

(1)

 

1

 

Results from associates and joint ventures

 

13

 

14

(3)

 

69

 

Profit/(loss) before tax

 

(1,390)

 

772

16

 

(21)

 

Income tax

 

(203)

 

(111)

13

 

48

 

Profit from continuing operations

 

(1,593)

 

661

(22)

 

16

 

Profit/(loss) from discontinued operations

 

(436)

 

131

(9)

 

64

 

Profit for the period

 

(2,029)

 

792

(18)

 

(13)

 

Non-controlling interests

 

(63)

 

(68)

(27)

 

51

 

Net income

 

(2,092)

 

724

Tax

The year-to-date tax rate is 14 percent (2012: 31 percent excluding the goodwill impairment charge of €2,106 million) due to a non-cash gain as a result of the recognition of previously unrecognized deferred tax assets and several non-taxable items. Excluding these effects, the tax rate is 30 percent.


Shareholders’ equity

Shareholders’ equity was €5.6 billion at year-end. This decrease of €0.2 billion is mainly due to the net effect of:

Offset by:


Dividend

Our dividend policy is to pay a stable to rising dividend. We will propose a 2013 final dividend of €1.12 per share, which would make a total 2013 dividend of €1.45 (2012: €1.45) per share. There will be a stock dividend option with cash dividend as default. Please refer to the financial calendar of this report for dividend payment dates.


Pensions

The funded status of the pension plans at year-end 2013 was a deficit of €0.6 billion (year-end 2012: €1.1 billion as reported, €0.9 billion on restated basis). The movement compared with year-end 2012 is primarily due to:

Offset by:


Workforce

At year-end 2013, the workforce amounted to 49,560 employees (year-end 2012: 50,610 employees). The net decrease was due to:


Invested and operating working capital

Invested capital

in € millions

 

December 31, 2012

 

December 31, 2013

Trade receivables

 

2,174

 

2,087

Inventories

 

1,545

 

1,426

Trade payables

 

(2,147)

 

(2,129)

Operating working capital

 

1,572

 

1,384

Other working capital items

 

(870)

 

(774)

Non-current assets

 

10,821

 

9,714

Less investments in associates and joint ventures

 

(185)

 

(183)

Less pension assets

 

(842)

 

(471)

Deferred tax liabilities

 

(434)

 

(389)

Invested capital

 

10,062

 

9,281

Invested capital at year-end 2013 totaled €9.3 billion, €0.8 billion lower than at year-end 2012. Invested capital was mainly impacted by the net effect of:

Operating working capital

in € millions, % of revenue

 

December 31, 2012

 

December 31, 2013

Decorative Paints

 

353

 

8.9

 

228

 

6.1

Performance Coatings

 

742

 

13.3

 

693

 

12.7

Specialty Chemicals

 

564

 

10.7

 

553

 

11.5

Other activities

 

(87)

 

 

 

(90)

 

 

Total

 

1,572

 

10.7

 

1,384

 

9.9

AkzoNobel – Operating working capital (bar chart)

Cash flows and net debt

Operating activities in 2013 resulted in cash inflows of €716 million (2012: €737 million). The change is the net impact of higher operating income (excluding impairment) and lower cash outflow from provisions partly offset by lower inflow from working capital, as 2012 had an exceptional impact. The movement in other changes relates to the non-cash impairment, that was included in profit from continuing operations in 2012.

Net debt decreased from €2,298 million at year-end 2012 to €1,529 million at year-end 2013 as a consequence of the net impact of:


General information

Accounting policies and restatements

The financial outcomes in this report are preliminary and unaudited. The Financial statements for 2013 will be published on February 26, 2014. Except for the implementation of the revised IAS 19 “Employee Benefits”, the accounting principles are as applied in the 2012 financial statements.

As of 2013, we apply stricter rules to qualify items as incidental items and have restated the relevant performance measures. In addition, invested capital was restated to exclude the receivable from pension funds in an asset position. Further, moving average ROI is now to be calculated with use of last twelve months operating income instead of, the so far used, EBIT. Operating working capital now comprises the total company and therefore includes, besides the inventories, trade receivables and trade payables in the Business Areas, the same items for the other activities.

Comparative numbers for 2012 have been restated accordingly. Please refer to our website for the details of these restatements, as issued at the time of our Strategy update on February 20, 2013.

Seasonality

Revenue and results in Decorative Paints are impacted by seasonal influences. Revenue and profitability tend to be higher in the second and third quarter of the year as weather conditions determine whether paints and coatings can be applied. In Performance Coatings, revenue and profitability vary with building patterns from original equipment manufacturers. In Specialty Chemicals, the Functional Chemicals and the Surface Chemistry businesses experience seasonal influences. Revenue and profitability are affected by developments in the agricultural season and tend to be higher in the first half of the year.

The “other” category

In the category “other” we report activities which are not allocated to a particular business area. Corporate costs are the unallocated costs of our head office and shared services center in the Netherlands. Pensions reflects pension costs after the elimination of interest cost (reported as financing expenses). Insurances are the results from our captive insurance companies. Other includes the cost of share-based compensation and company projects, the results of treasury and legacy operations as well as the unallocated cost of some country organizations.


Glossary

Adjusted earnings per share are the basic earnings per share from continuing operations excluding incidentals in operating income, amortization of intangible assets and tax on these adjustments.

Comprehensive income is the change in equity during a period resulting from transactions and other events other than those changes resulting from transactions with shareholders in their capacity as shareholders.

EBIT is operating income before incidentals.

EBIT margin is EBIT as percentage of revenue.

EBITDA is EBIT before depreciation and amortization and refers to EBITDA before incidentals.

EBITDA margin is EBITDA as percentage of revenue.

Emerging Europe: Central and Eastern Europe (excluding Austria), Baltic States and Turkey.

Incidentals are special charges and benefits, results on acquisitions and divestments, impairment charges, and charges related to major legal, anti-trust, and environmental cases. As of 2013, we apply stricter rules to qualify items as incidental.

Invested capital is total assets (excluding cash and cash equivalents, investments in associates, the receivable from pension funds in an asset position, assets/liabilities held for sale) less current income tax payable, deferred tax liabilities and trade and other payables.

Mature markets comprise of Western Europe, the US, Canada, Japan and Oceania.

Moving average ROI is calculated as operating income of the last twelve months divided by average invested capital. For this calculation operating income has been adjusted for the Q3 2012 impairment of the Decorative Paints business of €2,106 million.

Net debt is defined as long-term borrowings plus short-term borrowings less cash and cash equivalents.

Operating income is defined in accordance with IFRS and includes the relevant incidental results.

Operating working capital is defined as the sum of inventories, trade receivables and trade payables of the total company. When expressed as a ratio, operating working capital is measured against four times last quarter revenue.

ROS% is operating income as percentage of revenue.