REG - Elementis PLC - Preliminary results year ended 31 December 2024
06/03/2025 07:15
For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20250306:nRSF5489Za&default-theme=true
RNS Number : 5489Z Elementis PLC 06 March 2025
Elementis plc
Preliminary results for the year ended 31 December 2024
Self-help actions driving strong performance
· Revenue up 3% on constant currency basis to $738 million driven by
growth platforms and improved volumes.
· Adjusted(1) operating profit up 24% on constant currency basis to
$129 million, driven by self-help initiatives, including lower costs, further
supported by higher volumes.
· Statutory operating loss was $27 million, reflecting Talc impairment
of $126 million.
· Significant improvement in adjusted operating margin to 17.4%, from
14.6%.
· Net debt(2) of $157 million, net debt to EBITDA(3) reduced to 1.0x
from 1.4x.
· Final dividend of 2.9 cents per share, up 38%, resulting in a
full-year dividend of 4.0 cents per share.
Continued strategic progress
· $18 million of annual cost savings delivered, with Fit for the Future
restructuring largely completed.
· $26 million of above-market revenue growth across six growth
platforms.
· $60 million of new business delivered.
· Consolidated manufacturing footprint with closure of AP actives plant
in Middletown.
· Talc strategic review is progressing.
Confidence in achieving 2026 Capital Markets Day targets
· Solid start to the year amid challenging demand environment.
· 2025 delivery underpinned by strong new business pipeline and 15
new products across six growth platforms.
· Efficiency programmes on track to deliver an additional $12
million of savings in 2025.
Financial summary
Statutory results (IFRS) Adjusted results(1)
2024 2023 Change 2024 2023 Change Change constant currency
Revenue ($million) 738 713 3% 738 713 3% 3%
Operating (loss)/profit ($million) (27) 59 n.m. 129 104 24% 24%
Diluted (loss)/earnings per share (c) (8.1) 4.7 n.m. 13.3 10.8 23%
Net debt(2) ($million) 157 202 (22)%
Net debt to EBITDA(3) 1.0x 1.4x
Ordinary dividend per share (c)(4) 4.0 2.1 90%
Commenting on the results, Paul Waterman, CEO, said:
"Elementis delivered a strong performance in 2024, outperforming the market in
a flat demand environment.
Our strategy is working. Innovation and new business continue to drive growth,
with $60 million of new business of which 75% was from our core growth
platforms. At the same time, our efficiency programmes are accelerating, with
$18 million of annual costs savings delivered in 2024 and the remaining $12
million expected in 2025. These actions support our progress towards 19%+
operating margins and over 90% cash conversion, whilst our return on capital
employed is now 19%, excluding the impact of Talc impairment.
We've also strengthened our balance sheet by reducing net debt to EBITDA from
1.4x to 1.0x and have recommended a final dividend of 2.9 cents per share. In
recognition of our strong balance sheet and the positive outlook for the
business, the Board will evaluate a range of options for additional
shareholder returns.
Leading Elementis for the past nine years has been a privilege. We have
transformed the company into a pure-play specialty chemicals leader that is
well-positioned for continued success."
Further information
A presentation for investors and analysts will be held at 09.00 am GMT on 6
March 2025 via a live webcast, and can be accessed via a link:
www.investis-live.com/elementis/67936b38cddd8c000f4332e9/yerer
(http://www.investis-live.com/elementis/67936b38cddd8c000f4332e9/yerer) .
Conference call dial in details:
UK: +44 (0) 20 3936 2999 Other: Global Dial-In Numbers
(https://nam12.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.netroadshow.com%2Fconferencing%2Fglobal-numbers%3FconfId%3D59949&data=05%7C02%7Ceva.hatfield%40elementis.com%7C4d6a210a49ad4186cb2a08dc18373a9d%7Cbddf226eb2554875a364b0ea4bfb7a5e%7C0%7C0%7C638411872795557451%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=hv1b%2BrwCnZMM37g0XFMBAndaB%2FP547Zyu%2BW7%2B6OCQ9w%3D&reserved=0)
Participant access code: 157600
Enquiries
Investors: Eva Hatfield/Zeeshan Maqbool, Elementis plc
Tel: +44 (0) 7553 340 380
Press: Martin Robinson/Olivia Peters,
Teneo Tel: +44 (0) 20 7353 4200
Notes:
1. Adjusted figures exclude the adjusting items set out in Note 5.
2. Pre IFRS 16 basis, refer to unaudited information on page 34 for further
information.
3. Earnings before interest, tax, depreciation and amortisation, refer to
unaudited information on page 34 for further information.
4. Dividend reinstated in March 2024. Only the final dividend was paid in
2023.
Chief Executive Officer's overview
When I became CEO in 2016, Elementis was a very different company.
Approximately 30% of revenues were from more cyclical, commodity-oriented
businesses such as Chromium and Surfactants. At that time, Personal Care
contributed less than 10% to the Group's revenues, and our Coatings business
was a collection of regional market positions.
Elementis is now a focused specialty chemical business, with a strong customer
proposition and attractive growth opportunities globally. Today 80% of our
revenues come from high-quality, high-margin businesses with compelling growth
opportunities. We sold low-margin, commodity-oriented businesses, and focused
our investment on new product innovation and developing the capabilities of
our people. And we significantly improved the efficiency of our operations as
well as our organisation. Importantly, over this time, we have reduced risk by
strengthening our safety culture and materially improving our sustainability
performance.
In August 2024, we announced a strategic review of our Talc business. Talc
volumes across our key European markets (automotive, paint and paper) have
reduced significantly since 2019, post COVID-19. Today, customers
demand regional supply resilience, hence limiting our opportunity to
expand beyond Europe. Equally, we consider that Talc remains a high-quality
business. The strategic review is progressing, and a further update will be
provided in due course.
The Innovation, Growth and Efficiency strategy introduced in November 2019 is
working well, as demonstrated by the strong results delivered in 2024. But
none of this would be possible without the fantastic team of people who bring
their best to work every day, passionately serving customers across the
markets in which we operate and helping them to solve their toughest
formulation challenges.
I consider myself privileged to have led this great team over the past nine
years and feel confident to leave the Group in an excellent financial
position, well positioned for continued future success.
Performance
Elementis delivered strong financial performance in 2024. Revenue grew by 3%
to $738 million (2023: $713 million), and we achieved record adjusted
operating profit in both Personal Care and Coatings. A great result amid a
continued environment of weak market demand faced by our industry over the
past few years.
Group adjusted operating profit increased 24% to $129 million (2023: $104
million), and adjusted operating margin improved by 280bps to 17.4% (2023:
14.6%). Growth in profit was driven by self-help initiatives, including lower
costs and favourable price and mix benefits, further supported by higher
volumes in the year. Statutory operating loss of $27 million (2023: profit of
$59 million) reflects $126 million of Talc impairment (2023: nil).
Personal Care revenue increased 4% to $217.4 million (2023: $209.3 million),
driven by improved volumes as well as price and mix benefits. Revenues were
higher across all regions, with Asia up 18%, benefitting from consistent
continued investment in our capabilities in recent years and innovative new
product launches. We delivered a record adjusted operating profit of $61.6
million (2023: $50.3 million), driven by improved volumes, self-help actions
that reduced costs, and margin accretive route-to-market changes. This
resulted in a significant improvement of adjusted operating margin to 28.3%
(2023: 24.1%).
Performance Specialties revenues were 3% higher than the prior year at $521
million (2023: $504 million) and adjusted operating profit increased 23% to
$86 million (2023: $70 million), driven by Coatings.
Coatings, which represents approximately half of Elementis revenues, delivered
strong performance, with revenue up 5% to $386 million (2023: $368 million),
benefitting from improved volumes and price and mix benefits. Performance
varied across the regions, with revenues up 8% in both the Americas and
Europe, driven by industrial coatings. Asia revenues reduced 1%, driven by
China, where sales were weaker in the second half. We saw strong growth across
many other key regions, including Japan, Indonesia, Malaysia as well as India.
We continued to leverage new product launches, and delivered $36 million of
new business in 2024, driven by our focus on growth platforms. We delivered
record adjusted operating profit of $78.4 million (2023: $56.1 million) and
adjusted operating profit margin of 20.3% (2023: 15.3%), reflecting the
combination of ongoing self-help actions, better mix and more normalised
volumes.
Talc faced a challenging year, with lower revenues and profit, reflecting a
nationwide strike in Finland in the first half, which closed all ports and
railways in the country for a month, and continued weak demand across our
European markets, which represent over 80% of our business. Revenue reduced 1%
to $135 million (2023: $136 million). The overall impact of the Finnish strike
on Talc operating profit was around $3 million, due to lost sales and higher
costs in H1 2024. As a result, the adjusted operating profit reduced to $8.0
million (2023: $14.0 million) and adjusted operating margin declined to 5.9%
(2023: 10.3%). The impact of the nationwide strike, alongside weak market
demand, triggered a preparation of a new business plan for the Talc business,
which resulted in an impairment of assets of $66.1 million in the first half.
In September 2024, the Risk Assessment Committee ("RAC") of the European
Chemicals Agency ("ECHA") recommended that talc be classified as STOT RE1 and
Carc 1B(1). A final decision by the European Commission ("EC") is expected in
H2 2026, creating ongoing uncertainty for the European talc industry. As a
result, there is a high degree of uncertainty with regards to the future
demand and profitability profile of the Talc business, which gave rise to a
further impairment of $59.9 million in the second half of 2024.
Our balance sheet further strengthened over the year, with net debt reducing
to $157 million (2023: $202 million) driven by higher earnings. As a result,
the net debt to EBITDA ratio reduced to 1.0x (2023: 1.4x). The Board has
recommended a final dividend of 2.9 cents per share (2023: 2.1 cents),
resulting in a full-year dividend of 4.0 cents per share. In recognition of
our strong balance sheet and the positive outlook for the business, the Board
will evaluate a range of options for additional shareholder returns
Innovation, Growth and Efficiency strategy is delivering, we are on track to
achieve our 2026 financial targets
We made good progress implementing our strategy, launching 22 new products,
and delivering $60 million of new business. We delivered 15% of revenues from
innovation sales and currently hold a new business opportunities pipeline of
$327 million at the end of 2024.
At the November 2023 Capital Markets Day ("CMD"), we communicated the growth
and efficiency initiatives that will underpin our performance through 2026.
Our ambition is to deliver above-market revenue of $75 million across six
growth platforms(2) by 2026 and $30 million annual cost savings by 2025.
We made good progress on both goals in 2024. We achieved $18 million of annual
savings. The Fit for the Future organisational restructuring is largely
completed, with a few remaining roles exiting in Q1 2025. Our new research and
development ("R&D") support centre in Porto will be completed in 2025. In
addition, we delivered material efficiencies across our global supply chain,
further consolidating our manufacturing footprint and improving our supply and
demand management processes, leveraging digital tools. We are investing in
AI-driven automation, which alongside upgrades to our data processes will lead
to further efficiency savings in the coming years.
Across procurement, we focused on improving our supply resilience by reducing
the number of raw materials that are single sourced and adding 90 new vendors
to diversify our coverage. In 2025, we are looking to implement efficiencies
via further reduction in single sourcing as well as enhancing efficiencies
through our new digital vendor management system.
In the first year of our three-year growth programme, we delivered $26 million
of above-market revenue growth, against a flat demand environment. Personal
Care and Coatings platforms delivered above-market revenue growth of $6
million and $20 million respectively.
In the Colour Cosmetics market segment, we saw growth across all regions,
particularly in Asia, driven by new and existing relationships with local
players and route-to-market optimisation. We launched two new customised
products developed specifically for emerging markets. Growth over the coming
years is underpinned by innovative products including a range of
patent-pending Bentone® Ultimate products, with a higher efficacy in use and
a fully natural activation mechanism.
In Skin Care, the strategy focuses on creating products with natural
ingredients to meet the increasing demand for sustainable products. We
launched two new products, including Bentone Hydroluxe(TM) 360, which together
with the existing products, will enable us to expand our share in the natural
rheology modifier market for skin care, worth over $200 million.
We have a global leading position in the Antiperspirants sub segment, and
the growth here has been driven by innovative high-efficacy products and the
successful consolidation of our production plants. We launched four new
products, including a lower carbon antiperspirant active product, and are
excited about the launch of a new deodorant active, at the in-cosmetics trade
show in April 2025.
Growth in Architectural Coatings was supported by strong growth in Asia,
where we added a new non-ionic synthetic associated thickeners ("NiSATs")
facility in China and expanded our localised production. We have a big
opportunity to tap into the growing demand for high-end paints in Asia, which
is an attractive $300 million ingredients market. Our recently launched
RHEOLATE® biobased NiSATs are targeting this market.
Revenue across Industrial Coatings increased 9% despite flat market demand,
improving across all regions. Growth was driven by increasing demand for our
hectorite-based solutions. We launched two new products in 2024 that continue
to support the transition from solvent-based to water-based coating systems.
Over the next 12 months, we will complete our testing phase to refineour
market expansion strategy for the powder coating industry, leveraging our
hectorite and organic thixotrope-based portfolio, and helping us expand into
this fast-growing market, currently worth around $200 million.
We saw a strong growth in the Adhesives, Sealants, and Construction Additives
market, which is a relatively new adjacency that leverages our hectorite
position and our organic thixotrope technology. Revenue growth was driven by
success of our THIXATROL® range, up over 40%, and our hectorite-based
additives, which increased over 25%. We now have a dedicated global sales and
technical team in place and are well-positioned to gain momentum and
accelerate penetration in 2025.
Ongoing investment in innovation is a key driver of growth and we take a
multi-year approach to launching distinctive products. In 2024 we launched 22
new products, and as a result, our revenues from innovation sales have
continued to grow to 15.3% of sales (2023: 14.3%).
The combination of growth and efficiency programmes has underpinned financial
delivery against our 2026 CMD objectives. Adjusted operating profit margin
stood at 17.4% against our 19%+ target. The three-year average operating cash
conversion increased to 88% (2023: 77%), with an annual cash conversion of
104% in 2024. This gives me a lot of confidence that we will reach our 90%+
target. Finally, we have a 2026 return on capital employed ("ROCE") target of
20%+. In 2024, our ROCE improved to 19% (2023: 15%), excluding the impact of
Talc impairment. Including the Talc impairment, ROCE was 23%.
Safety
Safety is one of our fundamental values and is key to the success of
Elementis. We have an ambition of becoming a zero-injury business, and we made
a good ongoing progress against this objective, reducing the recordable
injuries by 50% to two, with 90% of our sites remaining injury free over the
year. We continued to drive further improvements, training our people and
maintaining our assets. We rolled out a global health, safety and environment
("HSE") management framework, aligned with the international standards for
health and safety at work, and published life-critical global standards. We
also developed a process safety management dashboard to track high-risk
equipment and enhanced our global HSE Week to include health and environmental
initiatives.
Sustainability
Sustainability is a key component of our strategy. Our aim is to develop
high-performance additives that deliver positive, sustainable outcomes for the
environment and for society. We seek to design products that use fewer
resources and create less pollution. We are committed to reducing our impact
on the environment, by reducing our global greenhouse gas ("GHG") emissions
and helping our customers on their sustainability journeys.
Our absolute Scope 1 and 2 GHG emissions this year increased 18% to 77kt CO2e
(2023: 65kt CO2e). This was mainly driven by increased production at our India
plant, which uses relatively high-emission grid electricity, as well as a
greater mix of higher-energy intensity products. Despite this, we made good
progress on strengthening our sustainability processes and implementing tools
and systems that will support our efforts to achieve our ambition of becoming
net zero by 2050. For example, we developed more detailed ten-year GHG
emission reduction plans, covering every manufacturing site. We also reduced
the annual GHG emissions at Sotkamo by over 90%, and 77% of our purchased
electricity was certified zero carbon. Furthermore, we have developed a
science-based target ("SBT") for overall GHG emissions reduction and shared it
with the Science Based Targets initiative for validation. Our target was
approved by the SBTi in early March 2025 and will be published in due course.
We are aware of the impact our products and processes have on our customers.
To help them deliver and improve their sustainability objectives, we continue
to expand our use of product lifecycle analysis across our product portfolio.
In addition, we focus on finding unique solutions to emerging sustainability
challenges. For example, our new biobased NiSATs are based on a waste stream
of sugarcane molasses and hence provide additional sustainability benefits,
without compromising on performance, and our lower-carbon antiperspirant
active utilises upcycled aluminium waste, resulting in a lower product carbon
footprint for both Elementis and our customers. Today we have a high natural
material content in our product portfolio and 69% of Group revenues (2023:
68%) were generated from natural or naturally-derived ingredients (as defined
by ISO 16128).
We continue to improve our environmental, social and governance disclosure
processes across Elementis. This year we implemented a comprehensive due
diligence system for all clients and suppliers, enhancing our compliance
practices. We also published a new Human Rights Policy Statement, reinforcing
our commitment to ethical business conduct. I am pleased that our efforts are
recognised, having achieved a Gold rating from EcoVadis for the fourth
consecutive year. A Gold rating puts Elementis in the top 5% of all companies
assessed by EcoVadis.
People, culture and values
The strong results we delivered this year would not be possible without the
hard work and commitment of our people. We have seen a lot of change over the
past year, affecting our global workforce. The Fit for the Future
organisational restructuring we announced in 2023 triggered over 190
redundancies, the large majority of which were completed in 2024. Decisions
such as these are difficult to make but will deliver a more streamlined and
efficient organisation. All employees affected by this change have
demonstrated incredible loyalty and resilience and I am grateful for their
contribution while at Elementis. We also welcomed over 100 new people in our
new Porto, Portugal, office, bringing a lot of energy and new ideas to our
organisation. We continue to monitor employee engagement throughout the year,
and I am pleased to see that, in spite of all the change, our scores are
improving. In addition, gender diversity across the organisation, including
our leadership is continuing to improve, with 42% of our senior leadership
being female.
Thank you
Any CEO's goal is to leave the company they lead in far better shape than when
they arrived. This was certainly my goal. As I prepare to hand over the
leadership of Elementis to the new CEO, I am confident the Company is well
positioned to deliver further performance improvement in the near term,
despite a market environment that will likely remain challenging. Our strategy
of ongoing new product innovation, and our focus on the most compelling growth
opportunities and on delivering further efficiency will underpin future
success. This is a very talented team, and I am deeply appreciative of their
ongoing commitment to the success of Elementis.
Notes:
Revenue and adjusted operating profit growth rates quoted on a reported basis.
1. STOT RE 1 defined as 'specific target organ
toxicity - repeated exposure, category 1'. Carcinogenicity category 1B defined
as 'presumed to have carcinogenic potential for humans'.
2. Due to the ongoing strategic review of Talc, we now
exclude the Talc growth platform from the overall 2023 CMD growth programme.
Finance report
Revenue
$million 2024 2023
Coatings 386.4 367.6
Talc 134.5 136.5
Performance Specialties 520.9 504.1
Personal Care 217.4 209.3
Revenue 738.3 713.4
Operating profit
$million 2024 Adjusting 2024 2023 Operating profit/(loss) Adjusting items 2023 Adjusted operating profit/(loss)(1)
items
Adjusted operating profit/(loss)(1)
Operating (loss)/profit
Coatings 73.5 4.9 78.4 55.2 0.9 56.1
Talc (124.3) 132.3 8.0 8.6 5.4 14.0
Performance Specialties (50.8) 137.2 86.4 63.8 6.3 70.1
Personal Care 49.3 12.3 61.6 43.2 7.1 50.3
Central costs (25.1) 5.9 (19.2) (48.1) 31.6 (16.5)
Operating (loss)/profit (26.6) 155.4 128.8 58.9 45.0 103.9
1. After adjusting items, see Note 5 for detail.
Group results
In 2024 revenue increased 3% on a reported (and constant currency) basis to
$738.3 million (2023: $713.4 million) with improved mix and pricing, as well
as higher volumes across Coatings and Personal Care.
Reported operating loss was $26.6 million (2023: profit of $58.9 million),
primarily as a result of the impairment of Talc assets. Adjusted operating
profit increased 24% on a reported and constant currency basis to $128.8
million (2023: $103.9 million), driven by self-help initiatives, including
lower costs and favourable price and mix benefits, further supported by higher
volumes in the year. Statutory loss after tax was $47.8 million (2023: profit
of $28.2 million).
Central costs
Central costs are those costs that are not identifiable as expenses of a
particular business segment and comprise expenditures of the Board of
Directors and corporate head office. Adjusted central costs increased to $19.2
million (2023: $16.5 million), largely driven by higher variable remuneration
due to improved
performance.
Adjusting items
In addition to the statutory results, the Group uses alternative performance
measures to provide additional analysis of the performance of the business.
The Board considers these non-GAAP measures as an alternative way to measure
the Group's performance. Adjusting items in 2024 resulted in a charge
of $154.6 million before tax (2023: $44.7 million). The key categories of
adjusting items are summarised below. For more information on adjusting
items please see Note 5 to the financial statements respectively.
Credit/(charge) Coatings Talc Performance Specialties Personal Care Central costs Total
$ million
Business transformation (0.5) (2.2) (2.7) (4.2) (4.1) (11.0)
Environmental provisions - - - - (1.8) (1.8)
Impairment of assets - (126.0) (126.0) - - (126.0)
Settlement of Brazil customs matter (3.0) - (3.0) - - (3.0)
St Louis fire (1.3) - (1.3) - - (1.3)
Amortisation of intangibles arising on acquisitions (0.1) (4.1) (4.2) (8.1) - (12.3)
Total charge to operating profit (4.9) (132.3) (137.2) (12.3) (5.9) (155.4)
Unwind of discount on restructuring provision - - - - (0.4) (0.4)
Interest on EU state aid receivable - - - - 1.2 1.2
Total (4.9) (132.3) (137.2) (12.3) (5.1) (154.6)
Business transformation
Business transformation costs of $11.0 million (2023: $26.1 million) primarily
included: charges of $1.6 million recognised in respect of the closure of the
Middletown plant, announced in March 2024; charges of $0.2 million in relation
to the sale of the Eaglescliffe site, announced in March 2024; charges of $3.5
million in relation to the strategic review of the Talc business, announced in
August 2024; charges of $2.1 million in relation to the execution of the
Group's data transformation programme; charges of $2.8 million (2023: $25.4
million) in relation to the Fit for the Future organisation restructuring
programme, announced in September 2023; and charges of $0.5 million (2023:
$0.7 million) in relation to the closure of the Charleston plant, announced in
November 2020. See Note 5 for further detail.
Environmental provisions
The Group's environmental provision is calculated on a discounted cash flow
basis and reflects the time period over which spending is estimated to take
place. A net charge of $1.8 million (2023: $6.2 million) to the environmental
provision reflects the impact of changes in discount rates of $2.2 million
(2023: $0.4 million), and additional remediation work identified of $4.0
million (2023: $6.6 million).
Impairment of assets
In the first half of 2024, Talc performance was adversely impacted by
continued weak end-market demand and strike action in Finland. Accordingly, a
new business plan was prepared for the Talc business which resulted in an
impairment of assets of $66.1 million. In September 2024, the RAC of ECHA made
a recommendation that talc be classified as STOT RE1 and Carc 1B. A final
decision by the EC is expected in H2 2026, with implementation currently
expected in Q3 2028, at the earliest. As a result, there is a high degree of
uncertainty with regards to the future demand and profitability profile of the
Talc business, which gave rise to a further impairment of $59.9 million in the
second half of 2024. See Note 5 for further detail.
Settlement of the Brazil customs matter
The Group agreed a settlement with the Brazilian tax authorities in relation
to a customs matter, of which $3.0 million (2023: nil) has been recognised as
an adjusting item. See Note 5 for further detail.
St Louis fire
In November 2024, a fire incident at our St Louis plant resulted in a cost of
$1.3 million. Of this, $0.7 million related to items of property, plant and
equipment which were written off.
Amortisation of intangibles arising on acquisitions
Amortisation of $12.3 million (2023: $12.7 million) represents the charge in
respect of the Group's acquired
intangible assets.
Interest on EU state aid receivable
Finance income of $1.2 million (2023: $1.4 million) has been recognised in
respect of interest due to the Group.
Net finance costs
$million 2024 2023
Finance income 0.3 0.5
Finance cost of borrowings (20.3) (17.5)
Net finance cost of borrowings (20.0) (17.0)
Net pension finance income 1.4 1.0
Discount unwind on provisions (2.4) (1.4)
Fair value movement on derivatives - 0.4
Interest on EU state aid receivable 1.2 1.4
Interest on lease liabilities (1.4) (1.3)
Net finance costs (21.2) (16.9)
Net finance costs increased to $21.2 million (2023: $16.9 million). Net
finance costs comprise interest payable on borrowings, calculated using the
effective interest rate method, facility arrangement fees, the unwinding of
discounts on the Group's environmental provisions, net pension interest
income/expense, fair value movement on derivatives, interest receivable on the
EU state aid receivable balance and interest charged on lease liabilities.
The increase in net finance costs is primarily due to the higher finance cost
of borrowings as a result of higher interest rates, partially offset by a
lower net debt level during 2024.
Net pension finance income of $1.4 million (2023: $1.0 million) is a function
of discount rates under IAS 19, and the value of the schemes' deficit or
surplus positions.
The Group's environmental provisions are calculated on a discounted basis,
reflecting the time period over which the spending is estimated to take place.
The discount unwind on provisions of $2.4 million in 2024 was greater than the
prior year due to higher discount rates and the increased rehabilitation
provisions for Talc.
Interest receivable of $1.2 million (2023: $1.4 million) has been recognised
in respect of interest due to the Group.
Both finance income and the interest on lease liabilities were broadly
consistent with the prior year.
Taxation
$ million 2024 Effective rate $ million 2023 Effective
%
rate
%
Reported tax (credit)/charge (1.8) 3.6 11.5 29.0
Adjusting items tax credit (26.8) - (8.4) -
Adjusted tax charge 25.0 23.8 19.9 23.5
The Group incurred a tax charge of $25.0 million (2023: $19.9 million) on
adjusted profit before tax, resulting in an effective tax rate of 23.8% (2023:
23.5%). The Group's adjusted effective tax rate in 2024 is broadly in line
with the prior year.
Tax on adjusting items relates primarily to the impairment of assets,
amortisation of intangible assets and the Fit for the Future restructuring
programme.
The medium-term expectation for the Group's adjusted effective tax rate is
around 26%.
Earnings per share
To aid comparability of the underlying performance of the Group,
earnings/(loss) per share ("EPS") reported under IFRS is adjusted for items
classified as adjusting.
2024 2023
(Loss)/profit after tax ($ million) (47.8) 28.2
Adjusting items net of tax ($ million) 127.8 36.3
Adjusted profit after tax ($ million) 80.0 64.5
Weighted average number of shares for the purpose of basic EPS (million) 588.9 585.7
Effect of dilutive shares options (million) 11.9 11.2
Weighted average number of shares for the purpose of diluted EPS (million) 600.8 596.9
Basic EPS before adjusting items (cents) (8.1) 4.8
Diluted EPS before adjusting items (cents) (8.1) 4.7
Adjusted basic EPS (cents) 13.6 11.0
Adjusted diluted EPS (cents) 13.3 10.8
Adjusted diluted EPS increased 23% to 13.3 cents (2023: 10.8 cents), primarily
due to a higher adjusted profit after tax. Basic EPS before adjusting items
decreased to a loss of 8.1 cents per share (2023: earnings of 4.8 cents)
primarily due to the impairment of assets, resulting in a statutory loss after
tax.
Note 7 provides disclosure of EPS calculations both including and excluding
the effects of adjusting items and the potential dilutive effects of
outstanding and exercisable options.
Distributions to shareholders
The Board has considered the strength of the balance sheet and the near-term
prospects for the business and in line with the dividend policy, recommended a
final dividend of 2.9 cents per share (2023: 2.1 cents), which will be paid in
pounds sterling, resulting in a full-year dividend of 4.0 cents per share. A
dividend of 2.28 pence per share has been determined by converting the 2.9
cents into pounds sterling using the forward rate of £1.00:$1.2693, as
determined on 27 of February 2025. If approved at the AGM, the dividend will
be paid on 30 May 2025 to shareholders included on the share register on 2 May
2025.
Cash flow
As per the statutory cash flow statement, net cash inflow from operating
activities increased to $100.0 million (2023: $76.8 million), primarily as a
result of higher operating cash flow before movement in working capital of
$138.4 million (2023: $132.6 million), a higher net working capital inflow of
$4.3 million (2023: inflow of $2.1 million) related to movements in
inventories, debtors and creditors, and the non-repeat of the 2023 net cash
outflow used in operating activities from discontinued operations of $12.5
million related to the Chromium business.
Net cash flow in relation to investing activities decreased to an outflow of
$37.5 million (2023: inflow of $101.1 million), primarily due to the gross
cash proceeds from the sale of the Chromium business of $139.2 million in
2023.
Net cash outflow in relation to financing activities decreased to $59.8
million (2023: $168.0 million), primarily due to the repayment of borrowings
following the sale of the Chromium business in 2023.
The adjusted cash flow, which excludes the effect of adjusting items from
operating cash flow and is therefore distinct from the statutory cash flow
referenced above, is summarised below. A reconciliation between statutory
operating profit and EBITDA is shown in the alternative performance measures
("APM") section.
Adjusted cash flow
$million 2024 2023
EBITDA(1) 167.6 145.8
Change in working capital 4.4 2.1
Capital expenditure (37.8) (38.2)
Adjusted operating cash flow 134.2 109.7
Pension payments (0.6) (3.3)
Interest (18.0) (17.8)
Tax (24.5) (27.3)
Adjusting items (33.3) (10.0)
Other(2) (2.0) (6.3)
Free cash flow 55.8 45.0
Issue of shares, net of share repurchases by ESOT 0.5 (1.0)
Dividends paid (18.8) -
Acquisitions and disposals - 139.2
Discontinued operations - (12.5)
Currency fluctuations 7.3 (5.9)
Movement in net debt 44.8 164.8
Net debt at start of year (202.0) (366.8)
Net debt at end of year (157.2) (202.0)
1. Earnings before interest, tax, adjusting items, depreciation and
amortisation.
2. Other includes share-based payments, movement in provisions, movement in
derivatives and payment of lease liabilities.
Adjusted operating cash flow increased to $134.2 million (2023: $109.7
million), primarily driven by an improvement in adjusted EBITDA.
Free cash flow increased to $55.8 million (2023: $45.0 million), primarily
driven by improved operating cashflow, lower tax payments offset by higher
cash adjusting items and a lower impact from the movement in provisions,
included in other.
Adjusting items increased to $33.3 million (2023: $10.0 million), including
$18.0 million for the organisational restructuring, $4.2 million for the
environmental provisions and $3.5 million for the ongoing strategic review of
Talc. See the unaudited information section at the end of this report, for
further detail.
Net debt decreased to $157.2 million (2023: $202.0 million), a reduction of
$44.8 million. Net debt to adjusted EBITDA decreased to 1.0x in 2024 on a
pre-IFRS 16 basis (2023: 1.4x).
Balance sheet
$million 31 December 2024 31 December 2023
Intangible fixed assets 585.9 650.6
Tangible fixed assets 338.0 423.6
Working capital 137.4 147.2
Net tax liabilities (68.3) (101.5)
Provisions and retirement benefit obligations (29.4) (48.8)
Financial assets and liabilities 3.9 11.3
Lease liabilities (34.7) (36.2)
Unamortised syndicate fees 3.7 3.1
Net debt (157.2) (202.0)
Net assets held for sale (22.3) -
Total equity 757.0 847.3
Group equity decreased to $757.0 million (2023: $847.3 million), principally
driven by lower fixed assets partially offset by lower net debt. Intangible
fixed assets decreased by $64.7 million, due to $47.1 million of impairment,
$12.8 million of amortisation and $5.1 million of foreign exchange losses. The
reduction in tangible fixed assets of $85.6 million was driven by $78.9
million of impairment, depreciation of $38.8 million and foreign exchange
losses of $16.6 million, which were partially offset by gross additions of
$44.9 million and right-of-use asset capitalisation of $4.8 million.
Working capital, which comprises inventories, trade and other receivables, and
trade and other payables, decreased to $137.4 million (2023: $147.2 million).
The decrease was driven by lower inventories and receivables at the end of the
year, partially offset by lower payables.
Net tax liabilities decreased to $68.3 million (2023: $101.5 million)
primarily as a result of the impairment, leading to a reduction in the
associated deferred tax liability.
Adjusted ROCE (excluding goodwill) increased to 23% (2023: 15%), reflecting
higher adjusted operating profit and lower operating capital employed,
partially offset by lower provisions (see the APM section for more detail).
Foreign currency
The financial information is presented in US dollars. The main dollar exchange
rates relevant to the Group are set out below.
Year end 2024 Year end 2023
Average
Average
Pounds sterling 0.80 0.78 0.78 0.81
Euro 0.97 0.92 0.91 0.93
Provisions
The Group records a provision in the balance sheet when it has a present
obligation as a result of past events, which is expected to result in an
outflow of economic benefits in order to settle the obligation and the amount
can be reliably estimated. The Group calculates provisions on a discounted
basis. At the end of 2024, the Group held provisions of $48.4 million (2023:
$81.9 million) consisting of environmental provisions of $43.2 million (2023:
$60.5 million), self-insurance provisions of $0.2 million (2023: $0.5
million), restructuring provisions of $4.7 million (2023: $20.1 million) and
other provisions of $0.3 million (2023: $0.8 million).
The decrease in the environmental provisions was attributable to the
classification of the Eaglescliffe business as held for sale as of 30 June
2024 of $20.8 million. The decrease is also impacted by the change in the
discount rate applied to the provisions of $1.4 million, currency translation
of $2.4 million and utilisation of provisions of $1.9 million. These decreases
were partially offset by additional provisions of $7.5 million in relation to
extra rehabilitation and closure costs in relation to the Group's Finnish talc
mines, $0.2 million in relation to extra remediation work required for other
environmental provisions, and the unwind of discount in the year of $1.6
million.
The self-insurance provision represents the Group's estimate of its liability
arising from retained liabilities under the Group's insurance programme and
remained flat during the period.
The restructuring provision reflects the adjustments to head count and other
costs of restructuring, where a need to do so has been identified by
management. The provision decreased primarily as a result of $16.3 million of
provision utilised during 2024, partially offset by $0.1 million of additional
provisions, $0.4 million of unwind of discount on these provisions, and $0.4
million of currency translation differences.
Pensions and other post-retirement benefits
$million 2024 2023
Net (surplus)/liability:
UK (23.0) (38.7)
US (1.2) -
Other 5.2 5.6
(19.0) (33.1)
UK plan
The largest of the Group's retirement plans is the UK defined benefit pension
scheme ("UK Scheme"), which at the end of 2024 had a surplus, under IAS 19, of
$23.0 million (2023: $38.7 million). The UK Scheme is relatively mature, with
approximately two thirds of its gross liabilities represented by pensions in
payment, and is closed to new members. The decrease in net surplus was largely
driven by losses on plan assets of $46.2 million (2023: returns of $9.7
million) which was offset by liability adjustments, primarily due to lower
discount rates and other actuarial adjustments of $30.9 million (2023: losses
of $0.3 million). Company contributions of $nil (2023: $1.8 million) reflect
the funding agreement reached with the UK trustees following the 2023
triennial valuation, which concluded in 2024.
US plan
In the US, the Group reports two post retirement plans under IAS 19: a defined
benefit pension plan with a net surplus at the end of 2024 of $4.6 million
(2023: $3.4 million), and a post retirement medical plan with a liability of
$3.4 million (2023: $3.4 million). The US pension plans are smaller than the
UK plan. In 2024, the overall deficit on the US plans increased by $1.2
million, as a result of the returns on liability adjustments of $3.2 million
2023: losses of $1.3 million) and employer contributions of $0.4 million,
being offset by losses on plan assets of $2.2 million (2023: returns of $4.3
million).
Other plans
Other pension plans amounted to $5.2 million (2023: $5.6 million) and relate
to pension arrangements for a relatively small number of employees in Germany,
certain UK legacy benefits and one pension scheme acquired as part of the
SummitReheis transaction in 2017.
Financial assets and liabilities
The Group uses cash flow hedges to manage exposure to interest rate and
commodity price risks, particularly those associated with US dollar and euro
interest payments and aluminium and nickel pricing. In 2024, interest rate and
commodity price movements resulted in a net gain from the hedge transactions
of $4.4 million (2023: gain of $6.3 million) recycled to the income statement.
Net financial assets are represented by net derivative financial assets of
$3.9 million (2023: $11.3 million), which relate to the valuation of various
risk management instruments.
Events after the balance sheet date
There were no significant events after the balance sheet date.
( )
Business performance overview
$million 2024 Effect of Increase/ 2023
exchange
rates (decrease) 2024
Coatings 386.4 (0.2) 19.0 367.6
Talc 134.5 0.8 (2.8) 136.5
Performance Specialties 520.9 0.5 16.3 504.1
Personal Care 217.4 0.2 7.9 209.3
Revenue 738.3 0.8 24.2 713.4
$million Operating Effect of Increase/ Operating
profit
exchange
profit
2024(1)
rates (decrease)
2023(1)
2024
Coatings 78.4 (0.3) 22.6 56.1
Talc 8.0 (0.1) (5.9) 14.0
Performance Specialties 86.4 (0.4) 16.7 70.1
Personal Care 61.5 0.2 11.1 50.3
Central costs (19.1) - (2.6) (16.5)
Adjusted operating profit 128.8 (0.3) 25.2 103.9
1 After adjusting items - see Note 5.
Personal Care financial performance
Personal Care revenue increased 4% on both reported and constant currency
basis, to $217.4 million (2023: $209.3 million), driven by improved volumes
and price/mix benefits. Revenues were higher across all regions, with Asia up
18%, benefitting from continued investment in our capabilities in recent
years.
Adjusted operating profit increased 22% on a reported and constant currency
basis, to $61.6 million (2023: $50.3 million). Growth was driven by improved
volumes and self-help actions, including cost savings and route-to-market
improvements. Self-help actions and innovative new products drove a
significant improvement in adjusted operating margin to 28.3% (2023: 24.1%).
Personal Care strategic progress
Personal Care operates in attractive growth markets globally. It develops and
delivers high-value additives to its customers, based on unique chemistry and
formulation expertise. Our medium-term Personal Care growth strategy is
focused on three core market segments: Skin Care, Colour Cosmetics and
Antiperspirants. At our 2023 CMD, we announced an ambition to deliver
above-market revenue growth across our growth platforms, over the three years
to 2026. Personal Care growth platforms are expected to deliver around a third
of the $75 million growth target by 2026. In the first year, we delivered
$6 million of above-market revenue growth, supported by all three platforms.
Colour Cosmetics revenue increased 7% (market(1) growth of 4%), with revenues
higher across all regions, especially in Asia, where we have significantly
enhanced our sales and marketing capabilities in recent years. We saw strong
growth in China, driven by new and existing relationships with the local
players. Furthermore, the improved capabilities in this region allowed us to
optimise our route to market, and we now serve more of our Chinese customers
on a direct basis.
In 2024, we launched two new customised products targeting emerging markets.
We continue to leverage our expertise in rheology and formulation solutions,
combined with growing demand for hectorite as a key ingredient.
We see good growth over the coming years, supported by innovative products
including a range of patent-pending Bentone® Ultimate products, with a higher
efficacy in use and a fully natural activation mechanism. We believe these
innovative products will further strengthen our leading position in natural
rheology.
The Skin Care growth platform saw revenues up 17%, against the global
market(1) growing 4% on average. Recent growth in the Skin Care segment has
been supported by increasing demand from consumers looking for more
sustainable products with natural ingredients. Our hectorite-based additives
are well positioned to benefit from this trend, as they work equally
effectively in both water-based and oil-based products. Our strategy in this
segment focuses on natural rheology, creating products that offer attractive
new functionalities. For example, this year we launched Bentone Hydroclay™
2101, a product customised for a leading European suncare manufacturer, and
Bentone Hydroluxe™ 360, an all-in-one hectorite based solution which
provides outstanding sensory, and texture benefits enabling formulators to
create products with a variety of textures. This is our first product in a new
Bentone Hydroluxe™ line. In a future launch, we are looking at an
additional functionality of hectorite as a natural co-emulsifier. Together
with existing products, this will enable us to expand our share in the natural
rheology modifier market for skin care, worth over $200 million. In 2025, we
also plan to launch water-resistant film formers for sun care.
The third growth platform is Antiperspirants, a market segment where we have a
global leading position in AP actives. In this market, we see trends for
longer-lasting sweat protection, and increasingly, growing demand for more
natural products and alternative antiperspirant actives. As recognised
innovation leaders in this field, we are focusing on a range of new products
that address these market needs.
The above-market(2) revenue growth of 2% was driven by increased demand for
our high-efficacy products, enabled by our strong relationships with global
key accounts and the successful full production at the new Taloja plant in
India. In July 2024, we closed one of the three AP actives plants,
consolidating the existing footprint into two. We already saw benefits of this
in lower costs and margin improvement in H2, with the full impact expected in
2025. Having two plants in two key locations strengthens our competitive
position and supply resilience.
In 2024, we launched four new high-efficacy products, including a lower-carbon
antiperspirant active. Our new lower-carbon grade of antiperspirant
ingredients utilises upcycled aluminium waste to partially replace virgin
aluminium feedstock, leading to a lower product carbon footprint for us and
our customers. In 2025, at the in-cosmetics trade show in Amsterdam, we plan
to launch a new deodorant active that can provide sweat reduction benefits.
Innovation remains a key driver of growth in Personal Care. We have introduced
nine new products in 2024: two which expand our technology toolkit and seven
highly customised products, based on individual customer specifications. This
innovation approach is helping us gain momentum with our customers and drive
revenue growth. Sales from new and innovation products increased to 17% (2023:
11%). Those products offer sustainability benefits to our customers, either
because of a higher efficacy or because they are replacing a product of
synthetic origin.
Skin Care, Antiperspirants and Colour Cosmetics all represent material growth
opportunities with a record $89 million pipeline of new business established.
We will continue to focus on helping our clients with their formulation
challenges and building strong partnerships with global key accounts. Our new
R&D facility in Porto is expected to be fully operational in 2025 and will
further strengthen our customer proposition.
Performance Specialties
Performance Specialties was created at the beginning of 2023, by combining the
Talc and Coatings businesses. We will continue to report Coatings' and Talc's
performance separately for transparency.
Performance Specialties revenues increased 3%, both on reported and constant
currency basis, to $520.9 million (2023: $504.1 million) and adjusted
operating profit increased 24% on a constant currency basis, to $86.4 million
(2023: $70.1 million), driven by Coatings.
Coatings financial performance
Overall revenue increased 5% on both reported and constant currency basis to
$386.4 million (2023: $367.6 million), benefitting from higher volumes and
improved mix and price benefits. Coatings also includes our specialised Energy
business, which accounts for circa 10% of total Coatings sales.
Adjusted operating profit increased 40% on a reported basis, up 41% on a
constant currency basis, to $78.4 million (2023: $56.1 million), driven by
self-help actions, as well as improved volumes and mix benefits.
Self-help actions led to a significant improvement in adjusted operating
margin of 20.3% (2023: 15.3%), demonstrating the quality and resilience of
this business, amid a continued weak demand environment.
Coatings strategic progress
Our medium-term growth strategy for Coatings is focused on three
differentiated, technology-led growth platforms: Architectural Coatings,
Industrial Coatings and Adhesives, Sealants and Construction Additives.
At our 2023 CMD, we announced an ambition to deliver above-market revenue
growth across our growth platforms, over the three years to 2026. Coatings
growth platforms are expected to deliver around two thirds of the $75 million
target by 2026. In the first year, we delivered $20 million of above-market
revenue growth, supported by all three platforms.
The first of these, Architectural Coatings, is an important market for
Elementis. We have a big opportunity to tap into the growing demand for
high-end paints in Asia, which is an attractive $300 million ingredients
market. To capture this opportunity, we expanded our manufacturing footprint
in Asia, adding a new NiSAT facility in Songjiang, China. The new facility is
expected to bring enhanced performance and environmentally friendly benefits
to the Chinese architectural sector. In 2024, Architectural Coatings saw 3%
revenue growth, while the market(3) reduced 0.4% globally. We saw particularly
strong growth in Asia, supported by improved localised production as well as
innovative customised formulation solutions for an Indian paint manufacturer.
We launched four new products, including two RHEOLATE® biobased NiSATs,
which are based on a waste stream of sugarcane molasses, and hence provide
additional sustainability benefits, without compromising on performance. We
believe that our innovative products, alongside our manufacturing footprint
across three key regions, will support our ambition to grow at twice the
market by 2026, in this attractive market segment.
The second growth platform is Industrial Coatings, where we see growing demand
for more sustainable coatings and coating additives, driven by regulations and
market trends. Here we focus on additives for high-performance segments such
as marine, protective and automotive industries. Our leadership position in
rheology additives supports our ability to provide full formulation to our
customers.
In 2024, Industrial Coatings revenues increased 9% against a flat global
market(3). Revenue was higher across all regions, driven by increasing demand
for our hectorite-based solutions. We launched two new products in 2024,
including NUOSPERSE® FX 7600W and SUPREAD™ 3410, supporting the transition
from solvent-based to water-based coating systems. Over the next 12 months, we
will complete our testing phase to refine our market expansion strategy for
the powder coating industry, leveraging our hectorite and organic
thixotrope-based portfolio. Powder coatings do not require solvents and the
latest technology developments are enabling lower curing temperatures. This
makes them suitable for heat sensitive materials such as wood coatings,
creating additional growth opportunities.
Our third growth platform comprises Adhesives, Sealants and Construction
Additives, where we offer high-performance additives for a range of
applications, for example, pressure-sensitive adhesives, water-based
construction sealants and cement-based tile mortars. This is a market that
we are only starting to penetrate but where our technologies bring both
sustainability and performance benefits. We are looking to double our market
share from 3% to 6% by 2026. In 2024, we saw revenues growing 15%
(from a small base) versus global markets(4) being only marginally up. Our
recent growth has been supported by the success of our THIXATROL® range,
which grew 40% in the year, as well as hectorite-based additives. Our
THIXATROL® ingredients are natural, safer to handle, and provide the
required rheology profiles for the end product. Importantly, our products can
reduce in-process energy usage by up to 80%. We see strong demand for
hectorite-based additives, where hectorite is seen as a more sustainable
ingredient, but also one that provides additional benefits. One key area where
we see rapid growth is in hectorite for tile mortars. This is a $100 million
market, where we are replacing bentonite-based products and significantly
improving end-product efficiency. Innovation is crucial here, and we have six
new products in the pipeline, launching over the next two years.
Innovation is a key driver of growth in Coatings. We launched 12 new products
in 2024, of which six were across the growth platforms, and six targeting
other markets including new adjacencies. Here we expanded our plastic
additives portfolio with CHARGUARD™ fire retardant synergists, designed to
enhance anti-drip and char formation properties of non-halogenated
fire-retardants, potentially replacing certain types of polyfluoroalkyl
substances used in this application.
Another major component of our growth strategy is our key account management
programme. We have built strong technical and commercial relationships with
major customers and cooperate in the development of new formulations to
enhance their products and processes. This drives volume and revenue growth
and deepens our relationships with major customers. This approach, combined
with our innovation focus, is helping us explore new market segments and
create new growth opportunities.
Talc financial performance
Talc revenue reduced 1% on a reported basis, down 2% on a constant currency
basis, to $134.5 million (2023: $136.5 million), with lower volumes offsetting
positive mix and price benefit. Revenues were impacted by the Finnish
nationwide strike in H1 2024, and lower demand across key European markets.
The overall impact of the Finnish strike on Talc operating profit was around
$3 million, due to lost sales and higher costs, in H1 2024. As a result, the
adjusted operating profit reduced to $8.0 million (2023: $14.0 million) and
adjusted operating margin declined to 5.9% (2023: 10.2%).
Talc strategic progress
In H2 2024 we put in place a dedicated Talc sales, customer service and
support team to enable greater focus on improving business performance. We
have gained good traction over the year, with stable trading and have gained
market share despite continued weak market demand.
We continue to believe that Talc is a business with strong fundamentals and we
are focusing our strategy on higher-margin applications that require talc of
high and consistent quality. Those include, for example, long-life plastics,
technical ceramics and barrier coatings. In long-life plastics, our Finntalc K
line boosts plastic strength by up to 20%. In 2024, we launched another
product in this series, popular for its highly lamellar ore. In technical
ceramics, the internal combustion engine particulate filters require a highly
engineered grade of talc to get the right efficiency. We have demonstrated the
quality, purity and consistency needed in this market and built a solid base.
We gained good traction with new customers this year and continue to expand
our customer base further through tailored product developments and
high-quality service.
In August, we announced a strategic review of the Talc business, to establish
whether the full potential of Talc can best be delivered as part
of Elementis, or via a divestment.
In September 2024, the RAC recommended that talc be classified as
carcinogenic. This opinion has been adopted by the RAC but not published and a
final decision is expected at the earliest in H2 2026.
Due to the ongoing strategic review of Talc, we now exclude the Talc growth
platform from our overall 2023 CMD growth programme.
(Sources: 1. Statista; 2. Euromonitor, Elementis insight; 3. Orr & Boss;
4. Markets and Markets.)
Consolidated income statement
for the year ended 31 December 2024
$m 2024 2023
Revenue 738.3 713.4
Cost of sales (400.3) (429.1)
Gross profit 338.0 284.3
Distribution costs (127.9) (108.7)
Administrative expenses (236.7) (116.7)
Operating (loss)/profit (26.6) 58.9
Other expenses(1) (1.8) (2.3)
Finance income 2.9 4.4
Finance costs (24.1) (21.3)
(Loss)/profit before income tax (49.6) 39.7
Tax 1.8 (11.5)
(Loss)/profit from continuing operations (47.8) 28.2
Loss from discontinued operations - (1.7)
(Loss)/profit for the year (47.8) 26.5
Attributable to:
Equity holders of the parent (47.8) 26.5
Earnings per share
From continuing operations
Basic (loss)/earnings (cents) (8.1) 4.8
Diluted (loss)/earnings (cents) (8.1) 4.7
From continuing and discontinued operations
Basic (loss)/earnings (cents) (8.1) 4.5
Diluted (loss)/earnings (cents) (8.1) 4.4
1 Other expenses comprise administration expenses for the Group's pension
schemes.
Consolidated statement of comprehensive income
for the year ended 31 December 2024
$m 2024 2023
(Loss)/profit for the year (47.8) 26.5
Other comprehensive income:
Items that will not be reclassified subsequently to profit and loss:
Remeasurements of retirement benefit obligations (14.3) 12.3
Deferred tax associated with retirement benefit obligations 3.5 (2.8)
Items relating to discontinued operations, net of tax - -
Items that may be reclassified subsequently to profit and loss:
Exchange differences on translation of foreign operations (23.9) (5.1)
Effective portion of change in fair value of net investment hedge 6.5 14.8
Tax associated with change in fair value of net investment hedge - (0.1)
Effective portion of changes in fair value of cash flow hedges 2.3 12.7
Fair value of cash flow hedges transferred to income statement (4.4) (6.3)
Tax associated with changes in cashflow hedges (0.4) (0.6)
Recycling of deferred foreign exchange gains on disposal - 9.3
Exchange differences on translation of share options reserves 0.1 0.2
Other comprehensive (loss)/income (30.6) 34.4
Total comprehensive (loss)/income for the year (78.4) 60.9
Attributable to:
Equity holders of the parent (78.4) 60.9
( )
Consolidated balance sheet
as at 31 December 2024
$m 2024 2023
31 December
31 December
Non-current assets
Goodwill and other intangible assets 585.9 650.6
Property, plant, and equipment 338.0 423.6
Tax recoverable - 20.0
Derivative financial assets 1.8 6.0
Deferred tax assets 7.4 19.6
Net retirement benefit surplus 27.6 42.1
Total non-current assets 960.7 1,161.9
Current assets
Inventories 152.5 163.3
Trade and other receivables 93.3 101.8
Derivative financial assets 3.6 7.4
Tax recoverable 21.0 -
Current tax assets 11.2 11.2
Cash and cash equivalents 59.9 65.8
Total current assets 341.5 349.5
Assets classified as held for sale 6.2 -
Total assets 1,308.4 1,511.4
Current liabilities
Trade and other payables (108.4) (117.9)
Derivative financial liabilities (1.5) -
Current tax liabilities (9.8) (13.6)
Lease liabilities (5.9) (5.9)
Provisions (6.3) (21.5)
Total current liabilities (131.9) (158.9)
Non-current liabilities
Loans and borrowings (219.2) (264.7)
Retirement benefit obligations (8.6) (9.0)
Deferred tax liabilities (98.1) (138.7)
Lease liabilities (28.8) (30.3)
Provisions (42.1) (60.4)
Derivative financial liabilities - (2.1)
Total non-current liabilities (396.8) (505.2)
Liabilities classified as held for sale (22.7) -
Total liabilities (551.4) (664.1)
Net assets 757.0 847.3
Equity
Share capital 52.7 52.5
Share premium 239.7 239.2
Other reserves 51.5 70.1
Retained earnings 413.1 485.5
Total equity attributable to equity holders of the parent 757.0 847.3
Total equity 757.0 847.3
Consolidated statement of changes in equity
for the year ended 31 December 2024
$m Share Share Translation reserve Hedging Other Retained Total
capital
premium
reserve
reserves
earnings
equity
Balance at 1 January 2023 52.3 238.7 (122.4) (1.0) 165.5 450.8 783.9
Comprehensive income:
Profit for the year - - - - - 26.5 26.5
Other comprehensive income:
Exchange differences - - 9.7 - 0.2 - 9.9
Effective portion of changes in fair value - - - 12.7 - - 12.7
of cash flow hedges
Fair value of cash flow hedges transferred to the - - - (6.3) - - (6.3)
income statement
Tax associated with changes in cash flow hedges - - - - - (0.6) (0.6)
Tax associated with changes in fair value of net investment hedge - - - - - (0.1) (0.1)
Remeasurements of retirement benefit obligations - - - - - 12.3 12.3
Deferred tax adjustment on pension scheme deficit - - - - - (2.8) (2.8)
Recycling of deferred foreign exchange losses on disposal - - 9.3 - - - 9.3
Transfer - - - - (2.3) 2.3 -
Total other comprehensive income/(loss) - - 19.0 6.4 (2.1) 11.1 34.4
Total comprehensive income/(loss) - - 19.0 6.4 (2.1) 37.6 60.9
Transactions with owners:
Issue of shares by the Company 0.2 0.5 - - - - 0.7
Deferred tax on share based payments recognised within equity - - - - - (1.6) (1.6)
Share based payments - - - - - (1.3) (1.3)
Fair value of cash flow hedges transferred to net assets - - - - 4.2 - 4.2
Reserve reclassification - - - 0.5 - - 0.5
Total transactions with owners 0.2 0.5 - 0.5 4.2 (2.9) 2.5
Balance at 31 December 2023 52.5 239.2 (103.4) 5.9 167.6 485.5 847.3
Comprehensive income:
Loss for the year - - - - - (47.8) (47.8)
Other comprehensive income:
Exchange differences - - (17.4) - 0.1 - (17.3)
Effective portion of changes in fair value - - - 2.3 - - 2.3
of cash flow hedges
Fair value of cash flow hedges transferred to the - - - (4.4) - - (4.4)
income statement
Tax associated with changes in cashflow hedges - - - - - (0.4) (0.4)
Tax associated with change in fair value of net - - - - - - -
investment hedge
Remeasurements of retirement benefit obligations - - - - - (14.3) (14.3)
Deferred tax adjustment on pension scheme deficit - - - - - 3.5 3.5
Transfer - - - - (5.3) 5.3 -
Total other comprehensive loss - - (17.4) (2.1) (5.2) (5.9) (30.6)
Total comprehensive loss - - (17.4) (2.1) (5.2) (53.7) (78.4)
Transactions with owners:
Issue of shares by the Company 0.2 0.5 - - - - 0.7
Dividends paid - - - - - (18.8) (18.8)
Deferred tax on share based payments recognised within equity - - - - - 0.1 0.1
Share based payments - - - - 5.7 - 5.7
Fair value of cash flow hedges transferred to net assets - - - 0.4 - - 0.4
Total transactions with owners 0.2 0.5 - 0.4 5.7 (18.7) (11.9)
Balance at 31 December 2024 52.7 239.7 (120.8) 4.2 168.1 413.1 757.0
Consolidated cash flow statement
for the year ended 31 December 2024
$m 2024 2023
Operating activities:
(Loss)/profit from continuing operations (47.8) 28.2
Adjustments for:
Other expenses 1.8 2.3
Finance income (2.9) (4.4)
Finance costs 24.1 21.3
Tax (credit)/charge (1.8) 11.5
Depreciation and amortisation 52.7 55.7
Impairment loss on property, plant, and equipment 126.0 -
(Decrease)/increase in provisions and financial liabilities (19.2) 16.7
Pension payments net of current service cost (0.6) (3.1)
Share based payments expense 6.1 4.4
Operating cash flow before movement in working capital 138.4 132.6
Decrease in inventories 4.9 22.5
Decrease/(increase) in trade and other receivables 4.1 (0.3)
Decrease in trade and other payables (4.7) (20.1)
Cash generated by operations 142.7 134.7
Income taxes paid (24.5) (27.3)
Interest paid (18.2) (18.1)
Net cash flow used in operating activities from discontinued operations - (12.5)
Net cash flow from operating activities 100.0 76.8
Investing activities:
Interest received 0.3 0.4
Purchase of property, plant and equipment (37.4) (38.1)
Disposal of business - 139.2
Acquisition of intangible assets (0.4) (0.1)
Net cash flow used in investing activities from discontinued operations - (0.3)
Net cash flow from investing activities (37.5) 101.1
Financing activities:
Issue of shares by the Company and the ESOT net of issue costs 0.5 (1.0)
Repayment of term loans (25.0) (50.0)
Net movement on other loans and borrowings (9.8) (110.5)
Dividends paid (18.8) -
Payment of interest on lease liabilities (1.4) (1.3)
Payment of gross lease liabilities (5.3) (5.2)
Net cash used in financing activities (59.8) (168.0)
Net increase in cash and cash equivalents 2.7 9.9
Cash and cash equivalents at 1 January 65.8 54.9
Foreign exchange on cash and cash equivalents (2.7) 1.0
Less: cash and cash equivalents classified as held for sale (5.9) -
Cash and cash equivalents at 31 December 59.9 65.8
Notes to the financial statements
1. Preparation of the preliminary announcement
The financial information in this statement does not constitute the Company's
statutory accounts for the years ended 31 December 2024 or 2023 but is derived
from those accounts. Statutory accounts for 2023 have been delivered to the
Registrar of Companies, and those for 2024 will be delivered in due course.
The auditor has reported on those accounts; their reports were (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.
This preliminary announcement was approved by the Board of Directors on 5
March 2025.
2. Basis of preparation
Elementis plc (the "Company") is incorporated in the UK. The information
within this document has been prepared based on the Company's consolidated
financial statements which are prepared in accordance with International
Financial Reporting Standards as adopted by the UK (adopted IFRS) and
consistent with the accounting policies as set out in the previous
consolidated financial statements.
The Group's financial statements have been prepared on the historical cost
basis except that derivative financial instruments are stated at their fair
value. Non-current assets held for sale are stated at the lower of carrying
amount and fair value less costs to sell. The preparation of financial
statements requires the application of estimates and judgements that affect
the reported amounts of assets and liabilities, revenues and costs and related
disclosures at the balance sheet date.
The accounting policies adopted are consistent with those of the previous
financial year.
Going concern
The Group and Company financial statements have been prepared on the going
concern basis, as the Directors are satisfied that the Group and Company have
adequate resources to continue to operate for at least a period of 12 months
from the date of approval of the financial statements. An explanation of the
Directors' assessment of using the going concern basis is given in the
Directors' report in the Annual Report and Accounts 2024 which will be made
available to shareholders on 25 March 2024.
Reporting currency
As a consequence of the majority of the Group's sales and earnings originating
in US dollars or US dollar linked currencies, the Group has chosen the US
dollar as its presentational currency. This aligns the Group's external
reporting with the profile of the Group, as well as with internal management
reporting.
3. Finance income
$m 2024 2023
Interest on bank deposits 0.3 0.5
Pension and other post retirement liabilities 1.4 1.0
Fair value movement on derivatives - 1.5
Interest on EU state aid receivable 1.2 1.4
2.9 4.4
4. Finance costs
$m 2024 2023
Interest on bank loans 20.3 17.5
Unwind of discount on provisions 2.4 1.4
Interest on lease liabilities 1.4 1.3
Fair value movement on derivatives - 1.1
24.1 21.3
5. Adjusting items and alternative performance measures
$m 2024 2023
Business transformation 11.0 26.1
Environmental provisions
Increase in provisions due to additional remediation work identified 4.0 6.6
Decrease in provisions due to change in discount rate (2.2) (0.4)
Impairment of assets 126.0 -
Settlement of Brazil customs matter 3.0 -
St Louis fire 1.3 -
Amortisation of intangibles arising on acquisition 12.3 12.7
155.4 45.0
Unrealised mark to market of derivative financial instruments - 1.1
Unwind of discount on restructuring provision 0.4 -
Interest on EU state aid receivable (1.2) (1.4)
Tax credit in relation to adjusting items (26.8) (8.4)
127.8 36.3
A number of items have been recorded under adjusting items by virtue of their
size and/or one time nature, in line with our accounting policy in Note 1 to
the consolidated financial statements, in order to provide additional useful
analysis of the Group's results. The Group considers the adjusted results to
be an important measure used to monitor how the businesses are performing as
they achieve consistency and comparability between reporting periods. The net
impact of these items on the Group profit before tax for the year is a debit
of $154.6 million (2023: $44.7 million). The items fall into a number of
categories, as summarised below:
Business transformation - In March 2024, the Group announced the closure of
its Middletown plant. Costs of $1.6 million associated with the closure of the
site were classified as an adjusting item, including charges of $0.7 million
relating to a restructuring provision and $0.9 million of other costs. The
plant was closed by 31 December 2024.
In March 2024, the Group announced the sale of the Eaglescliffe site. Costs of
$0.2 million associated with disposal activities were classified as an
adjusting item. The transaction is conditional on regulatory approval.
In August 2024, the Group announced a strategic review of the Talc business,
to establish whether the full potential of the Talc business can best be
delivered as part of the Group, or via a divestment. Costs of $3.5 million
have been incurred and recognised as an adjusting item in relation to this
strategic review. The review is expected to be completed in 2025.
In the year, the Group commenced a data transformation programme to develop a
new internal data analytics platform to deliver a unified, global view of our
data, leveraging advanced analytical technology, and primed for future
integration with GenAI. Costs of $2.1 million were recognised in 2024, and the
new platform is expected to be fully implemented in 2026.
In September 2023, the Fit for the Future organisation restructuring programme
was announced, for which costs of $2.8 million were recognised in 2024 (2023:
$25.4 million); reflecting $3.4 million of additional costs and a credit of
$0.6 million in relation to the revaluation of the restructuring provision. In
addition, a charge of $0.4 million has been recognised within finance costs in
relation to the unwind of discount for this provision. Total estimated costs
for the programme are $29.7 million, of which $23.7 million has been utilised
since 2023. The programme is expected to be completed in 2025.
In November 2020, the closure of the Charleston plant was announced. Costs of
$0.5 million ($0.7 million in 2023) associated with the closure of the site
are classified as an adjusting item and the site is planned to be disposed of
in the future. Since November 2020, $23.9 million has been incurred in
relation to the closure of the site.
Environmental provisions - The Group's environmental provision is calculated
on a discounted cash flow basis, reflecting the time period over which
spending is estimated to take place. The movement in the provision relates to
a change in discount rates that has decreased the liability by $2.2 million in
the year (2023: $0.4 million) and extra remediation work identified in the
year, which has resulted in a $4.0 million increase to the liability (2023:
$6.6 million). As these costs relate to non-operational facilities, they are
classified as adjusting items.
Impairment of assets - In the first half of 2024, Talc performance was
adversely impacted by continued weak end-market demand and a strike action in
Finland. Accordingly, a new business plan was prepared for the Talc business
which resulted in an impairment of assets of $66.1 million.
In September 2024, the Risk Assessment Committee of the European Chemicals
Agency made a recommendation that the talc mineral be classified as a Carc 1B
carcinogen. A final decision by the European Commission is expected in H2
2026. As a result, there is a high degree of uncertainty with regards to the
future demand and profitability profile of the Talc business, which gave rise
to a further impairment of $59.9 million in the second half of 2024.
The cumulative impairment losses recognised during the year comprised of $23.1
million in relation to customer lists, $24.0 million in relation to other
intangible assets, $78.1 million in relation to plant and machinery and $0.8
million in relation to land and buildings.
Settlement of the Brazil customs matter - In August 2022, the Brazilian tax
authorities opened a tax audit into the Group's Brazilian entity. The audit
was focused on the customs classification code used since 2017 for one of the
entity's imported raw materials. In 2024, the Group agreed a settlement with
the Brazilian tax authorities in relation to a customs matter, of which $3.0
million has been recognised as an adjusting item.
St Louis fire - In November 2024, a fire incident at our St Louis plant
resulted in a cost of $1.3 million. Of this, $0.7 million relates to items of
property, plant and equipment which were written off.
Amortisation of intangibles arising on acquisition - Amortisation of $12.3
million (2023: $12.7 million) represents the charge in respect of the Group's
acquired intangible assets. As in previous years, these are included in
adjusting items as they are a non-cash charge arising from historical
investment activities.
Unrealised mark to market of derivatives - The unrealised movements in the
mark-to-market valuation of financial instruments that are not in hedging
relationships are treated as adjusting items as they are unrealised non-cash
fair value adjustments that will not affect the cash flows of the Group.
Interest on EU state aid receivables - Finance income of $1.2 million (2023:
$1.4 million) has been recognised in respect of interest due to the Group.
Tax on adjusting items - This is the net impact of tax relating to the
adjusting items listed above.
To support comparability with the financial statements as presented in 2024,
the reconciliation to the adjusted consolidated income statement is shown
below.
2024 2023
$m Profit and loss Adjusting items Profit and loss after adjusting items Profit and loss Adjusting items Profit and loss after adjusting items
Revenue 738.3 - 738.3 713.4 - 713.4
Cost of sales (400.3) - (400.3) (429.1) - (429.1)
Gross profit 338.0 - 338.0 284.3 - 284.3
Distribution costs (127.9) - (127.9) (108.7) - (108.7)
Administrative expenses (236.7) 155.4 (81.3) (116.7) 45.0 (71.7)
Operating (loss)/profit (26.6) 155.4 128.8 58.9 45.0 103.9
Other expenses (1.8) - (1.8) (2.3) - (2.3)
Finance income 2.9 (1.2) 1.7 4.4 (1.4) 3.0
Finance costs (24.1) 0.4 (23.7) (21.3) 1.1 (20.2)
(Loss)/profit before income tax (49.6) 154.6 105.0 39.7 44.7 84.4
Tax 1.8 (26.8) (25.0) (11.5) (8.4) (19.9)
(Loss)/profit from continuing operations (47.8) 127.8 80.0 28.2 36.3 64.5
Earnings per share
From continuing operations
Basic (loss)/earnings (cents) (8.1) 21.7 13.6 4.8 6.2 11.0
Diluted (loss)/earnings (cents) (8.1) 21.4 13.3 4.7 6.1 10.8
To support comparability with the financial statements as presented in 2024, a
reconciliation from reported profit/(loss) before interest to adjusted
operating profit/(loss) by segment is shown below for each year.
2024 Coatings Talc Performance Specialties totals Personal Care Segment totals Central Total
costs
$m
Reported operating (loss)/profit 73.5 (124.3) (50.8) 49.3 (1.5) (25.1) (26.6)
Adjusting Items
Business transformation 0.5 2.2 2.7 4.2 6.9 4.1 11.0
Increase in environmental provisions due to additional remediation work - - - - - 4.0 4.0
identified
Decrease in environmental provisions due to change in discount rate - - - - - (2.2) (2.2)
Impairment of assets - 126.0 126.0 - 126.0 - 126.0
Settlement of Brazil customs matter 3.0 - 3.0 - 3.0 - 3.0
St Louis fire 1.3 - 1.3 - 1.3 - 1.3
Amortisation of intangibles arising on acquisition 0.1 4.1 4.2 8.1 12.3 - 12.3
Adjusted operating profit /(loss) 78.4 8.0 86.4 61.6 148.0 (19.2) 128.8
2023 Talc Performance Specialties Personal Care Segment totals Central Total
costs
$m Coatings totals
Reported operating profit/(loss) 55.2 8.6 63.8 43.2 107.0 (48.1) 58.9
Adjusting Items
Business transformation 0.7 - 0.7 - 0.7 25.4 26.1
Increase in environmental provisions due to additional remediation work - - - - - 6.6 6.6
identified
Decrease in environmental provisions due to change in discount rate - - - - - (0.4) (0.4)
Amortisation of intangibles arising on acquisition 0.2 5.4 5.6 7.1 12.7 - 12.7
Adjusted operating profit /(loss) 56.1 14.0 70.1 50.3 120.4 (16.5) 103.9
6. Income tax expense
$m 2024 2023
Current tax:
UK corporation tax 12.9 6.2
Overseas corporation tax on continuing operations 7.6 8.7
Adjustments in respect of prior years:
United Kingdom 0.7 (0.7)
Overseas 0.2 (3.0)
Total current tax 21.4 11.2
Deferred tax:
United Kingdom 6.0 (0.2)
Overseas (28.8) (1.6)
Adjustment in respect of prior years:
United Kingdom - -
Overseas (0.4) 2.1
Total deferred tax (23.2) 0.3
Income tax (credit)/expense for the year (1.8) 11.5
Comprising:
Income tax (credit)/expense for the year (1.8) 11.5
Adjusting items (1)
Overseas taxation on adjusting items (27.0) (4.0)
UK taxation on adjusting items 0.2 (4.4)
Taxation on adjusting items (26.8) (8.4)
Income tax expense for the year after adjusting items 25.0 19.9
1 See Note 5 for details of adjusting items.
The tax charge on profits represents an effective rate of 3.6% (2023: 29.0%)
and an effective tax rate after adjusting items of 23.8% (2023: 23.5%).
The tax impact of the adjusting items outlined within note 5 and within the
consolidated income statement relates to the following:
2024 2023
$m Gross Tax impact Gross Tax impact
Business transformation 11.0 2.4 26.1 5.2
Environmental provisions 1.8 - 6.2 1.3
Impairment of property, plant and equipment 126.0 27.2 - -
Settlement of Brazil customs matter 3.0 - - -
Mark to market of derivative financial instruments - - 1.1 0.2
Interest on EU state aid receivable (1.2) (0.3) (1.4) (0.4)
Amortisation of intangibles arising on acquisition 12.3 2.8 12.7 2.1
St Louis fire 1.3 0.3 - -
Unwind of discount on restructuring provision 0.4 0.1 - -
Derecognition of deferred tax asset regarding Eaglescliffe - (5.7) - -
Total 154.6 26.8 44.7 8.4
The Group is international and has operations across a range of jurisdictions.
Accordingly, tax charges of the Group in future periods will be affected by
the profitability of operations in different jurisdictions and changes to tax
rates and regulations in the jurisdictions within which the Group has
operations. The Group's adjusted effective tax rate in 2024 is broadly in line
with the prior year. The medium-term expectation for the Group's adjusted
effective tax rate is around 26%.
On 20 December 2021, the OECD published its Global Anti-Base Erosion Model
Rules (Pillar Two). The report provides a model for a coordinated system of
taxation that imposes a top-up tax on profits arising in a jurisdiction
whenever the effective tax rate, determined on a jurisdictional basis, is
below the minimum tax rate of 15%. The UK enacted legislation to enshrine this
into domestic law in July 2023. The Group is below the revenue threshold for
the legislation to apply and therefore there is no impact on the financial
statements.
The total charge for the year can be reconciled to the accounting profit as
follows:
2024 2023
$m % $m %
(Loss)/profit before tax (49.6) 39.7
Tax at 25.0% (2023: 23.5%) (12.4) 25.0 9.4 23.5
Difference in overseas effective tax rates 3.4 (6.8) 1.9 4.9
Income not taxable (2.8) 5.6 - -
Expenses not deductible for tax purposes 3.2 (6.5) 7.1 17.9
Adjustments in respect of prior years 0.4 (0.8) (1.5) (3.7)
Tax rate changes - - - -
Tax associated with disposal of discontinued operations - - (12.8) (32.2)
Movement in unrecognised deferred tax 6.4 (12.9) 7.4 18.6
Total (credit)/charge and effective tax rate for the year (1.8) 3.6 11.5 29.0
7. Earnings per share
The calculation of the basic and diluted earnings per share attributable to
the ordinary equity holders of the parent is based on the following:
$m 2024 2023
Earnings:
Adjusted earnings 80.0 64.5
Adjusting items net of tax (127.8) (36.3)
(Loss)/earnings for the purpose of basic earnings per share (47.8) 28.2
Loss from discontinued operations - (1.7)
(Loss)/earnings from continuing and discontinued operations (47.8) 26.5
m 2024 2023
Number of shares:
Weighted average number of shares for the purpose of basic earnings per share 588.9 585.7
Effect of dilutive share options 11.9 11.2
Weighted average number of shares for the purpose of diluted earnings per 600.8 596.9
share
The dilutive (loss)/earnings per share calculation for 2024, in the table
below, does not include the impact of the 11.9 million dilutive share options,
as the inclusion of these potential shares would have an anti-dilutive impact
on the diluted loss per share from continuing operations; it would decrease
the diluted loss per share from continuing operations.
cents 2024 2023
Earnings per share from continuing operations:
Basic (loss)/earnings (8.1) 4.8
Diluted (loss)/earnings (8.1) 4.7
Basic after adjusting items 13.6 11.0
Diluted after adjusting items 13.3 10.8
Earnings per share from discontinued operations:
Basic (loss)/earnings - (0.3)
Diluted (loss)/earnings - (0.3)
Earnings per share from continuing and discontinued operations:
Basic (loss)/earnings (8.1) 4.5
Diluted (loss)/earnings (8.1) 4.4
8. Contingent liabilities
As is the case with other chemical companies, the Group occasionally receives
notice 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.
The Group has not received any notice of litigation relating to events arising
prior to the balance sheet date that is expected to lead to a material
exposure.
During 2021, HM Revenue and Customs ("HMRC") opened a tax audit into the 2019
tax returns of certain UK Group entities, focused specifically on the tax
efficient financing structure set up in 2014. The Group has been working
constructively with HMRC and is hopeful of bringing these matters to a
conclusion during 2025. At this stage, management have concluded that there is
a possible obligation but that any such obligation cannot be measured with
sufficient reliability.
During 2022, the Group terminated a distribution agreement with one of its
distributors. The distributor has brought a claim for compensation as a result
of the termination. This matter has now proceeded to arbitration and
management have concluded at this stage that the obligation cannot be measured
with sufficient reliability.
During Q4 2023, an environmental incident occurred at the Eaglescliffe site,
which following investigation during H1 2024, is likely to require additional
remediation work at the site and could result in a fine from the relevant
supervisory body. Under the terms of the sale and purchase agreement with
Flacks Group, signed in March 2024, Flacks Group are responsible for the cost
of any remediation and associated fine. As the transaction has not yet
completed Elementis have disclosed the event. Management have concluded at
this stage that the obligation cannot be measured with sufficient reliability.
As part of ongoing submission of mining closure plans to the Finnish Safety
and Chemicals Agency, the Group has noted that further costs associated with
activities for the closure and termination of mining activities will be
incurred. The Group has recognised a provision where a reliable estimate of
the costs required for mining closure is available. A reliable estimate of
future costs is not available for all sites as the work to determine these
costs and the future mining closure plans is still in progress. A contingent
liability is therefore disclosed in respect of these costs.
9. Related party transactions
The Company is a guarantor to the UK pension scheme under which it guarantees
all current and future obligations of UK subsidiaries currently participating
in the pension scheme to make payments to the scheme, up to a specified
maximum amount. The maximum amount of the guarantee is that which is needed
(at the time the guarantee is called on) to bring the scheme's funding level
up to 105% of its liabilities, calculated in accordance with section 179 of
the Pensions Act 2004. This is also sometimes known as a Pension Protection
Fund ("PPF") guarantee, as having such a guarantee in place reduces the annual
PPF levy on the scheme.
10. Events after the balance sheet date
There were no significant events after the balance sheet date.
Alternative performance measures and unaudited information
Alternative performance measures
A reconciliation from reported profit for the year to earnings before
interest, tax, depreciation and amortisation ("EBITDA") is provided to support
understanding of the summarised cash flow included within the Finance report.
Profit and loss $m 2024 2023
(Loss)/profit for the year (47.8) 26.5
Adjustments for
(Loss)/profit from discontinued operations - 1.7
Finance income (2.9) (4.4)
Finance costs and other expenses 25.9 23.5
Tax (credit)/charge (1.8) 11.5
Depreciation and amortisation 51.1 54.7
Excluding intangibles arising on acquisition (12.3) (12.7)
Adjusting items before finance costs and depreciation 155.4 45.0
Adjusted EBITDA 167.6 145.8
There are also a number of key performance indicators ("KPIs") used in this
report. The reconciliations to these are given below.
Constant currency
Constant currency is calculated by applying the prior-year average local
currency to US dollar translation rates to translate revenue and adjusted
operating profit. Constant currency rates are determined as the reported rates
excluding the impact of changes in the average translation exchange rates
during the period.
Adjusted operating cash flow
Adjusted operating cash flow is defined as the net cash flow from operating
activities less net capital expenditure but excluding, income taxes paid or
received, interest paid or received, movement in provisions and financial
liabilities, pension contributions net of current service cost, share-based
payment expense and adjusting items.
$m 2024 2023
Net cash flow from operating activities 100.0 76.8
Less:
Net cash flow used in operating activities from discontinued operations - 12.4
Capital expenditure (37.8) (38.2)
Add:
Income tax paid or received 24.5 27.3
Interest paid or received 18.2 18.1
Decrease/(increase) in provisions and financial liabilities 19.2 (16.7)
Pension contributions net of current service cost 0.6 3.1
Share-based payment expense (6.1) (4.4)
Adjusting items - non cash (17.7) 21.3
Adjusting items - cash 33.3 10.0
Adjusted operating cash flow 134.2 109.7
Adjusted operating cash conversion
Adjusted operating cash conversion is defined as adjusted operating profit
divided by adjusted operating cash flow plus provisions and share based
payments.
$m 2024 2023
Adjusted operating profit 128.8 103.9
Adjusted operating cash flow 134.2 109.7
Adjusted operating cash flow conversion 104% 106%
Free cash flow
Free cash flow is defined as adjusted operating cash flow (as defined above),
less pension contributions net of current service cost, net interest paid,
income tax paid, cash flow relating to adjusting items and other, which
includes share-based payments, movement in provisions and derivatives, and
payment of lease liabilities.
Adjusted return on operating capital employed
Adjusted return on operating capital employed ("ROCE") is defined as operating
profit from total operations after adjusting items divided by operating
capital employed, expressed as a percentage. Operating capital employed
comprises fixed assets (excluding goodwill but including tax recoverable),
working capital and operating provisions. Operating provisions include
self-insurance and environmental provisions but exclude retirement
benefit obligations.
$m 2024 2023
Adjusted operating profit 128.8 103.9
Fixed assets excluding goodwill 464.7 612.0
Working capital 137.4 147.2
Operating provisions (48.4) (81.9)
Operating capital employed 553.7 677.3
Adjusted return on capital employed 23% 15%
Average trade working capital to sales ratio
Trade working capital to sales ratio is defined as the 12-month average trade
working capital divided by sales, expressed as a percentage. Trade working
capital comprises inventories, trade receivables (net of provisions) and trade
payables. It specifically excludes repayments, capital- or interest-related
receivables or payables, changes due to currency movements, and items
classified as other receivables and other payables.
Adjusted operating profit/operating margin
Adjusted operating profit is the profit derived from the normal operations of
the business. Adjusted operating margin is the ratio of operating profit,
after adjusting items, to sales.
Net debt
Net debt is defined as borrowings less cash and cash equivalents, including
any restricted or held for sale cash and cash equivalents. Pre IFRS 16 net
debt does not include lease liabilities.
Unaudited information
Net debt/EBITDA
To support a full understanding of the performance of the Group, the
information below provides the calculation of net debt/EBITDA.
$m 2024 2023
Revenue 738.3 713.4
Adjusted operating profit 128.8 103.9
Adjusted operating margin 17.4% 14.6%
Net debt/EBITDA pre-IFRS 16
Adjusted EBITDA 167.6 146.2
IFRS 16 adjustment (6.7) (6.5)
Adjusted EBITDA pre-IFRS 16 160.9 139.7
Net Debt (1) 157.2 202.0
Net debt/EBITDA (2) pre-IFRS 16 1.0 1.4
Net debt/EBITDA post-IFRS 16
Adjusted EBITDA 167.6 146.2
Net debt (1) 157.2 202.0
IFRS 16 lease liabilities 34.5 35.6
Net debt including lease liabilities 191.7 237.6
Net debt/EBITDA (2) post-IFRS 16 1.1 1.6
1 Net debt excludes lease liabilities.
2 Net debt/EBITDA, where EBITDA is the adjusted EBITDA on continuing
operations of the Group.
Cash adjusting items
To support a full understanding of the performance of the Group, the
information below provides the following analysis of cash adjusting items.
$million 2024 2023
Business transformation (25.5) (5.6)
Environmental provisions (4.2) (4.4)
Settlement of Brazil customs matter (3.0) -
St Louis fire (0.6) -
Total cash adjusting items (33.3) (10.0)
The cash adjusting items increased to $33.3 million (2023: $10.0 million).
Business transformation cash outflow of $25.5 million (2023: $5.6 million)
primarily includes $18.0 million in relation to the Fit for the Future
organisational restructuring, $3.5 million for the ongoing strategic review of
Talc, $2.1 million in relation to the execution of the Group's data
transformation programme and $1.4 million in relation to the closure of the
Middletown plant. The cash outflows of $4.2 million for the environmental
provisions (2023: $4.4 million), primarily related to the Eaglescliffe site.
In addition, we reported a $3.0 million (2023: nil) settlement for the Brazil
customs matter and a cash outflow of $0.6 million (2023: nil) in relation to
the St Louis fire.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR JAMTTMTBMTAARecent news on Elementis
See all newsREG - Elementis PLC - Total Voting Rights
AnnouncementREG - Elementis PLC - Result of AGM
AnnouncementREG - Elementis PLC - First quarter trading update
AnnouncementREG - Elementis PLC - Annual Financial Report & Notice of AGM
AnnouncementREG - Elementis PLC - Holding(s) in Company
Announcement