Note 3: Alternative performance measures
In presenting and discussing AkzoNobel’s operating results, management uses certain alternative performance measures not defined by IFRS, which exclude the so-called identified items. These alternative performance measures should not be viewed in isolation as alternatives to the equivalent IFRS measures and should be used as supplementary information in conjunction with the most directly comparable IFRS measures. Alternative performance measures do not have a standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other companies. Where a non-financial measure is used to calculate an operational or statistical ratio, this is also considered an alternative performance measure.
|
2018 |
2019 |
||||||||
---|---|---|---|---|---|---|---|---|---|---|
In € millions |
Continuing operations |
Discontinued operations |
Total |
Continuing operations |
Discontinued operations |
Total |
||||
|
||||||||||
Operating income |
605 |
656 |
1,261 |
841 |
– |
841 |
||||
|
|
|
|
|
|
|
||||
APM adjustments to operating income |
|
|
|
|
|
|
||||
- Transformation costs1 |
130 |
29 |
159 |
204 |
– |
204 |
||||
- UK guaranteed minimum pension equalization |
57 |
– |
57 |
|
– |
– |
||||
- Gain on disposal |
– |
– |
– |
(54) |
– |
(54) |
||||
- Legal |
6 |
– |
6 |
– |
– |
– |
||||
Total APM adjustments (identified items) |
193 |
29 |
222 |
150 |
– |
150 |
||||
Adjusted operating income |
798 |
685 |
1,483 |
991 |
– |
991 |
||||
Profit for the period attributable to shareholders of the company |
410 |
6,264 |
6,674 |
517 |
22 |
539 |
||||
APM adjustments to operating income |
193 |
29 |
222 |
150 |
_ |
150 |
||||
APM adjustment Interest on tax settlement |
(30) |
– |
(30) |
– |
– |
– |
||||
APM adjustments to income tax2 |
(86) |
(6) |
(92) |
(7) |
– |
(7) |
||||
APM adjustment deal result on sale Specialty Chemicals, net of tax |
– |
(5,811) |
(5,811) |
– |
(22) |
(22) |
||||
Total APM adjustments |
77 |
(5,788) |
(5,711) |
143 |
(22) |
121 |
||||
Adjusted profit for the period attributable to shareholders of the company |
487 |
476 |
963 |
660 |
– |
660 |
In € millions |
2018 |
2019 |
||||||||
---|---|---|---|---|---|---|---|---|---|---|
|
||||||||||
Group revenue |
|
|
||||||||
Decorative Paints |
3,699 |
3,703 |
||||||||
Performance Coatings |
5,587 |
5,563 |
||||||||
Other |
(30) |
10 |
||||||||
Total |
9,256 |
9,276 |
||||||||
|
|
|
||||||||
Operating income |
|
|
||||||||
Decorative Paints |
308 |
425 |
||||||||
Performance Coatings |
577 |
565 |
||||||||
Other |
(280) |
(149) |
||||||||
Total |
605 |
841 |
||||||||
|
|
|
||||||||
Total APM adjustments (identified items) |
|
|
||||||||
Decorative Paints |
(38) |
7 |
||||||||
Performance Coatings |
(52) |
(123) |
||||||||
Other |
(103) |
(34) |
||||||||
Total |
(193) |
(150) |
||||||||
|
|
|
||||||||
Adjusted operating income1 |
|
|
||||||||
Decorative Paints |
346 |
418 |
||||||||
Performance Coatings |
629 |
688 |
||||||||
Other |
(177) |
(115) |
||||||||
Total |
798 |
991 |
||||||||
|
|
|
||||||||
OPI margin%2 |
|
|
||||||||
Decorative Paints |
8.3 |
11.5 |
||||||||
Performance Coatings |
10.3 |
10.2 |
||||||||
Other4 |
|
|
||||||||
Total |
6.5 |
9.1 |
||||||||
|
|
|
||||||||
ROS%3 |
|
|
||||||||
Decorative Paints |
9.4 |
11.3 |
||||||||
Performance Coatings |
11.3 |
12.4 |
||||||||
Other4 |
|
|
||||||||
Total |
8.6 |
10.7 |
AkzoNobel uses alternative performance measure adjustments (APM adjustments) to the IFRS measures to provide supplemetary information on reporting on the underlying developments of the business. These APM adjustments may affect the IFRS measures operating income, net profit and earnings per share. A reconciliation of the alternative performance measures to the most directly comparable IFRS measures can be found in the tables for adjusted operating income and adjusted earnings from continuing operations in this note.
In € millions |
2018 |
2019 |
||||||
---|---|---|---|---|---|---|---|---|
|
||||||||
Average invested capital |
|
|
||||||
Decorative Paints |
2,798 |
3,106 |
||||||
Performance Coatings |
3,066 |
3,325 |
||||||
Other |
476 |
595 |
||||||
Total |
6,340 |
7,026 |
||||||
|
|
|
||||||
Adjusted operating income1 |
|
|
||||||
Decorative Paints |
346 |
418 |
||||||
Performance Coatings |
629 |
688 |
||||||
Other |
(177) |
(115) |
||||||
Total |
798 |
991 |
||||||
|
|
|
||||||
ROI%2 |
|
|
||||||
Decorative Paints |
12.4 |
13.4 |
||||||
Performance Coatings |
20.5 |
20.7 |
||||||
Other3 |
|
|
||||||
Total |
12.6 |
14.1 |
In € millions |
2018 |
2019 |
||
---|---|---|---|---|
|
||||
Profit for the period attributable to shareholders of the company from continuing operations |
410 |
517 |
||
APM adjustments to operating income |
193 |
150 |
||
APM adjustment to interest |
(30) |
– |
||
APM adjustment to income tax |
(86) |
(7) |
||
Adjusted profit from continuing operations attributable to shareholders of the company* |
487 |
660 |
||
Weighted average number of shares |
254.9 |
213.1 |
||
Earnings per share from continuing operations (in €) |
1.61 |
2.43 |
||
Adjusted earnings per share from continuing operations (in €) |
1.91 |
3.10 |
The implementation of IFRS 16 as per January 1, 2019, has impacted the alternative performance measures as presented in this note. Details on the impact of the implementation of IFRS 16 on these alternative performance measures are disclosed in Note 1.
Identified items are special charges and benefits, results on acquisitions and divestments, major restructuring and impairment charges and charges and benefits related to major legal, anti-trust, environmental and tax cases.
This is income excluding net financing expenses, results from associates and joint ventures, income tax and profit from discontinued operations. Operating income includes the share of non-controlling interests. Operating income includes identified items to the extent these relate to lines included in operating income.
Net income attributable to shareholders divided by the weighted average number of common shares outstanding during the year.