Discontinued operations (including Specialty Chemicals)

The sale of the Specialty Chemicals business was completed on October 1, 2018

Discontinued operations and held for sale

The results and cash flows from discontinued operations in 2018, as well as 2017, almost completely relate to the Specialty Chemicals business. The balance sheet at divestment date relates to the Specialty Chemicals business.

This business consists of the former Specialty Chemicals activities and certain other assets and liabilities and income and expenses which are directly attributed to the Specialty Chemicals business from the Other activities. As from December 22, 2017, the Specialty Chemicals business is classified as held for sale and discontinued operations, therefore the consolidated statement of income for 2017 has been represented to show the results of the Specialty Chemicals business as discontinued operations. The sale of the Specialty Chemicals business closed on October 1, 2018; hence in this report the business is included as discontinued operations until October 1, 2018.

Deal result

Included in the profit from discontinued operations is the deal result on the sale of the Specialty Chemicals business to The Carlyle Group and GIC for an enterprise value of €10.1 billion, which was completed on October 1, 2018. At year-end 2018, AkzoNobel made a best estimate of the expected deal proceeds for the sale of the Specialty Chemicals business, including the net debt/working capital settlement that is to be finalized in 2019. The deal result after tax is €5.8 billion.

Specialty Chemicals business

Profit from discontinued operations also includes the operational results of the Specialty Chemicals business until October 1, 2018. During that period, revenue was impacted by currencies and positive price/mix. Adjusted operating income was negatively impacted by restructuring costs related to manufacturing network optimization projects, environmental and other one-off costs and adverse currencies, partly offset by strong price/mix and productivity improvements.

Profit and loss discontinued operations

Fourth quarter

 

January-December

2017

2018

in € millions

2017

2018

1,222

Revenues

4,963

3,791

(1,123)

4

Expenses

(4,402)

(3,158)

99

4

Profit before tax

561

633

(52)

(1)

Income tax

(168)

(168)

47

3

Profit for the period after tax

393

465

1

Results related to discontinued operations in previous years

1

(2)

(1)

Tax related to discontinued operations in previous years

(1)

47

3

Profit for the period

393

463

5,811

Gain on the sale of the Specialty Chemicals Business

5,811

47

5,814

Total profit for the period from discontinued operations

393

6,274

Deal result

in € millions

2018

Consideration for shares sold

8,284

Net assets and liabilities

(2,112)

Liabilities assumed, cost allocated, recycling of currency translation and cash flow hedge reserves and taxes

(361)

Deal result after tax

5,811

Cash flows from discontinued operations

Fourth quarter

 

January-December

2017

2018

in € millions

2017

2018

*

Including the cash inflow from the divestment of €9,321 million

227

(76)

Net cash from operating activities

691

351

(117)

9,000 *

Net cash from investing activities

(354)

8,723 *

332

Net cash from financing activities

323

(116)

442

8,924

Cash flows from discontinued operations

660

8,958

Cash inflow from divestment

in € millions

2018

Consideration for shares sold

8,284

Repayment of intercompany loan indebtedness

1,037

Total cash inflow

9,321

Balance sheet at divestment date

in € millions

2018

Intangible assets

796

Property, plant and equipment

2,490

Financial non-current assets

253

Inventories

540

Other current assets

283

Non-current liabilities

(792)

Short-term borrowings

(232)

Other current liabilities

(1,226)

Net assets and liabilities

2,112

Assets and liabilities held for sale

in € millions

December 31, 2017

December 31, 2018

Intangible assets

787

Property, plant and equipment

2,266

Financial non-current assets

205

Inventories

503

Receivables

840

Assets held for sale

4,601

Non-current liabilities

765

Short-term borrowings

341

Current payables

1,090

Liabilities held for sale

2,196