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This alert will be permanently deleted.
Good
morning,
everyone.
For
those,
I
haven't
had
the
chance
to
meet
yet,
my
name
is
Michael
Willome.
I
spent
most
of
my
professional
life
in
speciality
chemicals.
I
have
worked
and
lived
for
many
years
in
Asia,
in
North
America,
in
Turkey,
in
Europe,
and
now
I'm
very
happy
to
be
here.
I'm
looking
forward
to
meeting
you
in
person
in
the
coming
weeks
or
months.
It
is
a
great
pleasure
to
be
with
you
from
a
maiden
set
of
results,
a
very
warm
welcome
for
those
who
are
in
the
room
and
also
to
everyone
joining
online.
I'm
conscious
that
it
is
a
busy
day
and
we
are
grateful
for
your
time,
so
let's
make
a
start.
In
terms
of
today's
agenda,
I
will
begin
with
some
highlights
before
handing
over
to
Steve,
who
will
provide
a
detailed
overview
of
the
financials.
I
will
then
come
back
to
talk
about
some
of
my
initial
observations
and
a
strong
platform
of
profitable
growth
that
I
believe
we
have
at
Synthomer.
I
will
wrap
up
with
a
summary
and
our
views
on
outlook
before
we
take
your
questions.
2021
was
without
doubt
an
exceptional
year
for
Synthomer.
Sales
increased
by
47%
to
ÂŁ2.3
billion
and
EBITDA
doubled
to
ÂŁ522
million.
This
performance
was
both
materially
ahead
of
last
year
and
very
significantly
improved
in
2019
as
well.
This
significant
uplift
in
profitability
was
led
by
Performance
Elastomers,
with
our
NBR
business
saw
unprecedented
demand
driven
by
the
pandemic.
But
our
results
reflect
strong
growth
in
all
areas
of
the
business.
Functional
Solutions
was
significantly
up
as
we
started
to
see
the
impact
of
our
enhanced
global
positioning
following
the
OMNOVA
acquisition
in
2020.
Industrial
Specialities
also
had
a
good
year,
benefiting
from
its
leading
market
positions
and
speciality
portfolio.
And
Acrylate
Monomers,
while
it's
not
the
core
business
was
up
year-on-year,
completing
a
clean
sweep.
It
is
very
important
to
note
in
the
high
inflation
environment,
we
successfully
passed
on
the
steep
rise
in
raw
material
prices
to
our
customers.
Strong
free
cash
flow
and
the
equity
placing
that
we
did
in
October
meant
that
our
leverage
dropped
markedly
by
the
year-end.
Our
balance
sheet
is
well-positioned
to
accommodate
the
Adhesive
Technologies
acquisition
and
digest
the
normalized
NBR
margins.
It
is
a
priority
for
us
to
use
our
strong
cash
generation
to
bring
the
leverage
to
our
targeted
range
to
1 times
to
2
times
EBITDA
within
12
to
24
months
on
closing
the
transaction.
Today,
we
have
announced
that
we
are
making
a
provision
of
ÂŁ57.2
million
in
relation
to
the
ongoing
investigation
by
the
European
Commission.
In
June 2018,
we
told
the
market
that
the
European
Commission
had
initiated
an
investigation
into
past
practices
relating
to
the
purchase
of
Styrene
monomer
by
companies
operating
in
the
European
Economic
Area,
including
Synthomer.
This
provision
is
based
on
our
understanding
of
the
current
facts
and
circumstances.
The
investigation
is
ongoing
and
due
to
confidentiality
imposed
on
us
by
the
commission,
I'm
afraid
we
cannot
comment
any
further
for
now.
Our
acquisition
of
Eastman
Adhesive
Resins
business
was
an
important
strategic
development
for
us
last
year,
and it
is
something
I'm
very
excited
about.
Not
only
does
it
add
a
new
growth
dimension
to
our
existing
platform,
but
it
enhances
our
position
in
attractive
end-markets
where
we
already
have
a
prominent
position,
most
especially
in
building
and
construction
and
in
packaging.
During
the
year,
we
launched
our
ESG
Vision
2030,
setting
out
10 goals
to
drive
forward
our
climate
and
diversity
ambitions
as
we
look
to
build
on
recent
progress
that
we
have
made.
And
finally,
the
Board
proposes
a
final
dividend
of
ÂŁ0.213
per
share,
in
line
with
the
group's
dividend
policy.
This
represents
a
total
payment
to
our
shareholders
in
July
2022
of
ÂŁ100
million.
One
thing
that
struck
me
very
early
on
was
the
strong
sustainability
story
Synthomer
has.
It
is
stronger
than
many
might
think,
and
it
is
stronger
in
two
ways.
Firstly,
the
progress
that
we
are
making
to
reduce
our
own
carbon
footprint,
34%
lower
than
we
were
in
2019,
and
that
includes
a
significant
reduction
in
2021.
This
year,
we
will
introduce
science-based
targets
as
we
aim
to
decrease
our
Scope
3
emissions
by
10%
by
2030.
Plans
are
in
place
to
ensure
that
we
make
a
significant
improvement
on
this
target
already
this
year,
2022.
We
are
also
closing
our
coal
power
station
in the
Czech
Republic
in
Q1
2022,
ending
the
use
of
coal
at
Synthomer.
The
Vision
2030
roadmap
underlines
our
commitment
to
be
net
zero
by
2050,
with
our
environmental
targets
now
inextricably
linked
to
our
financial
performance.
We
are
also
making
our
culture
more
diverse
and
inclusive,
increasing
the
gender
diversity
in
senior
leadership
to
20%,
with
a
target
to
increase
that
further
in
the
next
three
years.
We
have
also
increased
diversity
on
our
Board
and
that
will
rise
further
this
year.
We
recognize
that
there
is
a
lot
more
to
do,
but
we
are
making
serious
progress.
It
is
a
key
priority
for
the
business.
Secondly,
the
demand
for
more
sustainable
products
has
never
been
greater.
As
the
market
leader
in
water-based
polymers,
which
have
a
lower
environmental
impact
than
solvent-based
alternatives,
the
opportunity
to
take
advantage
of
this
trend
is
very
significant
indeed.
This
year,
we
were
awarded
the
London
Stock
Exchange
Green
Economy
Mark,
given
companies
that
derive
more
than
50%
of
their
revenues
from
sustainable
solutions.
Let
me
pause
here
and
hand
over
to
Steve,
who
is
going
through
the
financials
in
more
detail.
Thank
you,
Michael.
Good
morning,
everybody.
Welcome
to
those
in
the
room,
and
for
those
joining
us
online.
As
Michael has
already
said,
2021,
our
50th
year
as
a
listed
company,
was
something
of
a
unique
year
for
our
business.
The
bridge
on
the
top
right
hand
part
of
this
slide
sets
out
the
stark
contrast
in
profitability
between
2019,
2020
and
2021.
And
now,
we
have
delivered
a
doubling
in
the
EBITDA
in
2021
itself.
As
you
are
all
aware,
a
significant
part
of
the
increase
in
the
EBITDA
was
the
result
of
the
NBR
contribution
that
came
in
the
last
12
months.
But
we
shouldn't
ignore
SBR
either,
which
has
made
a
meaningful
step
forward
to
the
performance
of
the
Performance
Elastomers
division,
culminating
in
an
increase
in
profitability
of
that
division
of
ÂŁ195
million
EBITDA.
Aside
from
PE,
we
saw
strong
contributions
from
Functional
Solutions,
where
the
EBITDA
increased
by
ÂŁ47.6
million
and
also
a
contribution
from
the
Industrial
Specialities,
a
further
increase
of
ÂŁ7.6
million
(sic) [ÂŁ7.8 million] (00:07:54) of
EBITDA.
You'll
also
notice
Acrylate
Monomers,
which
we
started to
report
separately
back
in
2019
due
to its
cyclicality
had
a
very
strong
exceptional
year,
and
contributed
an
increase
in
profitability
of
ÂŁ37.6
million
EBITDA
and
moved
forward from
a
small
loss
in
2020.
Aside
from
the
corporate
costs,
FX
was
a
headwind
for
us
this
year,
with
sterling
depreciating
against
our
three
principal
trading
currencies,
the
Malaysian
ringgit,
the
US
dollar
and
the
European
euro,
and
we'll
see
this
later
on
in
the
presentation.
The
tax
rate
was
broadly
in
line
with
last
year
at
22.5%,
and
a
little
bit
lower
than
what
we
reported
at the
half
year,
which
was
just
over
23%.
The
reason
being
the
continued
strong
momentum
in
the
European
results
that
we
saw
in
the
second
half
of
2021.
The
strong
increase
in
profits
has
meant
that
we
have
reported
an
increase
in
the
earnings
per
share
to
ÂŁ0.752,
which
is
160%
ahead
of
the
prior
year.
The
increase
in
profits
is
partly
offset
by
the
increase
in
the
weighted
average
number
of
shares,
following
the
placing
that
we
put
in
October
2021
ahead
of
the
financing
of
the
Adhesive
Technologies
transaction.
Finally,
on
this
slide,
I'm
going
to
reflect
on
the
differences
between
the
group
that
was
there
in
2019
when
we
reported
ÂŁ178
million
EBITDA
and
the
group
we
have
today.
The
2019
EBITDA
predates
the
COVID
pandemic
of
course,
but
it
also
predates
the
OMNOVA
acquisition,
which
came
to
us
in
April
2020.
And
of
course
predates
the
acquisition
of
the
Adhesive
Technologies
transaction,
which
we
expect
to
complete
at
the
end
of
this
month.
It
predates
the
NBR
investment
in
the
extra
60,000 tonnes
expansion,
which
again
comes
online
this
month,
and
it
also
predates
the
investment
in
Functional
Solutions,
both
our Roebuck and Worms
sites.
So
some
quite
marked
changes,
contrast
with
where
we
are
in
2022
EBITDA
that
will
reflect
now
the
two
transformational
transactions
that
we
have
done
being
OMNOVA
and
Adhesive
Technologies,
both
of
which
should
contribute
in
excess
of
$100
million
of
EBITDA
when
they're
fully
integrated
and
the
significant
growth
CapEx
on
NBR
and
Functional
Solutions.
So
what
does
all
that
mean
for
our
business
today?
It
means
the
group
today
is
more
diverse
from
a
geographic
perspective,
more
diverse
from
an
end-market
perspective,
more
specialized
products
from
both
acquisitions,
contributing
a
higher
average
unit
gross
margin
than
the
legacy
Synthomer
business
and
has
more
platforms
for
growth.
And
of
course,
as
a
culmination
of
that,
is
an
order
of
magnitude
bigger
both
in
terms
of
revenue
and
EBITDA
than
it
was
in
2019.
So
turning
to
each
of
the
divisions,
starting
with
Performance
Elastomers. Performance Elastomers
saw
its
EBITDA
grow
by
137% at
constant
currency
to
ÂŁ320.7
million
EBITDA.
Alongside
the
exceptional
demand
for
NBR
that
we've
talked
about,
we
also
benefited
from
being
able to
utilize
the
extra
90,000
tonnes
that
we
brought
online
at
the
backend
of
2019
[indiscernible]
(00:11:32)
start
of
2020,
the
JOB5
expansion
that
you've
heard
us
talk
about
before.
NBR
saw
record
volumes
and
unit
margins
in
the
first
half
of
the
year.
The
picture
changed
in
the
second
half of
the
year
as
anticipated
and
as
indicated
at
our
interim
results,
with
guidance
of
an
excess
of
ÂŁ500 million
for
the
full
year.
When
we've
delivered
ÂŁ322
million
in
the
half
year,
demonstrably
indicating
that
second
half
was
going
to
show
some
slowdown
in
our
NBR
business.
The
Emergency
Movement
Control
Order
imposed
by
the
Malaysian
government
impacted
NBR
customer
growth
capacity
and
production,
and
the
demand
was
also
impacted
towards the
latter
end
of
the
year
by
the
overstocking
that
was
there
in
the
supply
chain.
And
that
notwithstanding
the
ongoing
threat
of
new
COVID
variants
in
the
latter
part
of
the
year.
As
a
result,
margins
started
to
soften
in
the
second
half
and
also
volumes
returning
to
pre-COVID
levels
by
January
2022.
Volumes
were
lower
than
the
very
high
levels
experienced
in
H1
to
H2
2020
and
H1
2021,
and
again
returning
to
2019
levels
at
the
backend
of
2021.
As
I
said
earlier, it's
important
to recognize
that
PE
is
not
just
about
NBR,
it's
also
how's
the
SBR
business
in
that.
And
that
contributed
to
the
record
performance
that
we
had
in
2021,
partly
reflecting
the
rationalization
of
the
European
network
that
we
implemented
at
the
start
of
the
year.
The
closure
of
our
Oulu
site
happened
at
the
end
of
February
and
reduced
the
paper
volumes
in
our
business
by
55,000
tonnes
and
took
100,000
tonnes
of
capacity
out
of
the
market.
An
improved
market
environment
alongside
the
positive
impact
from
OMNOVA
contribution
in
that
part
of
our
business
helped
to
drive
stronger
volume
and
improve
the
mix
to
stronger
unit
margins
in
the second
half
of
2021.
Turning
to
Functional
Solutions.
Functional
Solutions'
EBITDA
itself
grew –
EBITDA
grew
by
an
impressive
50%
constant
currency
to ÂŁ139.2
million,
aided
by
strong
cost
control,
synergy
realization,
with
all
regions
contributing
to
the
growth.
This
reflected
improvements
across
all
end-markets
that
we
served,
as
well
as
the
expanded
global
position
that
we
now
have
following
the
acquisition
of
OMNOVA.
Volumes
were
up
10.9%,
again
partly
reflecting
the
OMNOVA
contribution
on
an
annual
basis,
but
also
due
to
increased
cross-selling
opportunities
as
we
brought
the
legacy
businesses
together.
We
also
benefited,
and
I touched
on
it
earlier,
from
the
increasing
capacity
that
we
brought
online
in
Roebuck
and
Worms
in
the
USA
and
Germany.
Unit
margins
were
up
in
the
year,
a
combination
of
higher
unit
margins
from
OMNOVA
and
also
the
greater
proportion
of
the
speciality
product
portfolio
that
we
have,
where
our
margins
are
higher.
We
have
successfully
been
moving
our
product
portfolio
towards
the
value-enhancing
end
of
the
range,
and
of
course
that
brings
with
it
higher
margins.
And
we
expect
this
trend
to
continue
as
we
move
forwards.
Finally,
and
as
Michael
mentioned
at
the
start,
we
have
seen
a
significant
escalation
in
raw
material
prices
during
the
course
of
2021,
where
our –
some
of
our
main
raw
material
prices,
namely
Butadiene
and
Styrene
increased
by
more
than
50%
over
the
prior
year.
Positively,
and
as
we've
talked
about
before,
we've
been
successful
again
in
passing
on
the
raw
material
cost
increases
through
to
our
customers.
Turning
to
Industrial
Specialities,
the
EBITDA
here
grew
by
19%
at
constant
currency
to
ÂŁ47.6
million.
As
you
are
aware,
our focus
area
is
more
on
speciality
niche
areas,
Speciality
Additives,
which
supplies
coatings,
delivered
a
strong
performance
with
good
volume
and
unit
margin
improvement.
We
also
saw
a
similar
trend
in
Powder
Coatings.
Both
coated
fabrics
and
laminates
and
films,
which
came
to
us
from
the
OMNOVA
business,
also
delivered
strong
top
line
growth
and
on
top
of
a
solid
year
in
2020.
Volumes
were
up
nearly
27%,
reflecting
the
rebound
from
the
legacy
businesses
where
their
volumes
were
up over
10%
and
the
first-time
contribution
from
OMNOVA.
In
terms
of
Acrylate
Monomers,
following
a
small
loss
last
year
2020,
the
business
saw
a
strong
improvement
in
EBITDA
in
2021
and
reported
an
increase
to
ÂŁ35.3
million.
Volumes
slightly
lower,
reflecting
a
change
in
product
mix,
as
well
as
a
challenged
operational
environment
and
raw
material
challenges.
Notwithstanding
the
site –
the
Sokolov
site
transformation
project,
which
contributed
to
a
lower
cost
base
for
the
site
in
the
year,
the
return
to
profit
was
mainly
driven
by
a
substantial
increase
in
unit
margins,
reflecting
a
significant
increase
in
demand
and
a
tight
supply
demand
balance
across
Europe.
Supply
issues
resulting
from
competitors
mothballing
sites
and
having
[ph]
FMs (00:17:09)
also
contributed
to
it,
as
well
as
logistical
constraints to
get
product
into
the
area.
These
conditions
are
expected
to
normalize
as
we
go
through
2022.
Talking
cash
flow
on
slide
14.
Free
cash
flow,
excluding
working
capital
movements,
more
than
doubled
to
ÂŁ300
million,
representing
58%
of
our
EBITDA
and
continuing
the
strong
historical
cash
flows
of
the
group.
Notwithstanding
the
investment
in
working
capital
for
the
full
year,
ÂŁ82
million
and
you'll
recall
it
was
ÂŁ160
million
at
the
half
year
as a
result
of
significant
raw
material
price
inflation
that
I've touched
on
already.
The
raw
material
prices
stayed
elevated
towards
the
end
of
the
year
and
although
activity
levels
came
off
due
to seasonality,
we
still
have
ÂŁ80
million
invested
in
working
capital.
That
said,
our
rule
of thumb
holds
true
and
we
continue
to
see
working
capital
at
approximately
10%
of
sales.
CapEx
is
higher
this
year,
partly
reflecting
the
lower
investment
in
2020
in
our
part
response
to
the
COVID
pandemic
and
partly
reflecting
our
continued
investment
in
our
Malaysian
NBR
capacity
coming
online
later
this
month,
so
that's
the
60,000 tonnes
you've
heard
of
talk
us
before.
Depending
on
the
development
of
our NBR
opportunities
as
we
look
forward,
we
are
guiding
CapEx
to
ÂŁ130
million
in
2022,
and
this
includes
an
allowance
for
the
Adhesive
Technologies
transaction
again,
which
will
complete
at
the
end
of
this
month.
Looking
at
the
balance
sheet
and
how
we've
set
it
up
to
accommodate
the
Adhesive
Technologies
acquisition,
the
strong
free
cash
flow
I've
already
touched
on
and
the
ÂŁ203
million
equity
placing
ahead
of
the
transaction,
has
reduced
our
net
debt
to
ÂŁ114.2
million
at
the
end
of
2021.
And
that
represents
0.3
times
EBITDA
leverage.
In
line
with
guidance
provided at
the
time
of
the
acquisition,
we
see
the
leverage
rising
to
1.6
times
at
completion,
so at
the
end
of
this
month.
Again,
that
was
in
line
with
the
announcement that
we
made
in
October.
But
similarly
consistent
with
the
announcement
we
made
in
October
with
the
debt
and
equity
financing
structure
put
in
place
at
the
time
of
signing,
leverage
is
expected
to
rise
during
the
course
of
2022
as
the
well-trailed
normalization
of
NBR
occurs,
resulting
in
leverage
at
the
end
of
2022
of
circa
2.5
times
and
reducing
from
that
point
forward.
You
will
recall
that our
capital
allocation
policy,
which
targets
normal
course
leverage
of
between
1
and
2
times,
permits
exceptional
leverage,
i.e.
above
2
times
in
the
event
of
M&A
activity.
And
on
the
understanding
that
it
will
reduce
back
to
the
normal
range
between
1 times
and
2
times
within
12
to
24
months
of
the
transaction
occurring,
and
this
is
the
plan.
Last
slide
for
me
on
technical
guidance,
and
I'm not
going
to
dwell
on
it
too
much.
This
guidance
there
on
the
effective
tax
rate,
which
we
continue
to
see
in
the
range
of
23%
to
25%,
depending
on
the
geographic
mix
of
profits
and
that's broadly
aligned
with
our
neutral
– our
natural
tax
rate
across
the
group
and
absent
any
concessions
from
any
of
the
main
tax
jurisdictions
in
which
the
group
operates
overseas.
Lastly,
I
draw
your
attention
to
the
marked
reduction
in
the
defined
benefit
pension
scheme
liabilities.
The
liabilities
reduced
by
50%,
circa
50%
between
the
end
of
2020
and
2021,
from
ÂŁ221
million
to
ÂŁ122
million
at
the
end
of
the
year.
Material
reduction
not
only
reflects
the
contributions
that
we've
made
to
those
schemes
during
the
course
of
2021,
but
also
improved
asset
returns
and
the
rising
discount
rate
under
favorable
experience
on
actuarial
assumptions,
so
good
news
there.
With
that,
I'm
going
to
hand
you
back
now
to
Michael,
who's
going
to
talk about
the
strong
platform
for
growth.
Thanks,
Michael.
Thank
you
very
much,
Steve.
I
want
to
spend
the
next
few
minutes
talking
about
where
I
think
Synthomer
is
today,
highlight
what
I
believe
are
the
key
attributes
and
why
I'm
excited
to
be
here
as
the
company's
Chief
Executive.
I
also
want
to
talk
a
little
more
in
detail
about
the
NBR space
before
closing
with
an
update
on
our
outlook
on
2022.
One
of
the
things
that
excites
me
the
most
about
the
business
is
the
strength
and
depth
of
our
portfolio
in
across
three,
soon
to
be
four,
core
divisions.
Within
Performance
Elastomers, NBR
is
firmly
established
as
an
integral
part
of
our
business,
with
a
leading
position
in
a
market
that
has
a
proven
track
record
of
growing
8%
to
10%
per
annum.
We
have
significant
opportunity
to
leverage
our
leadership
with
further
innovation
and
by
investing
in
more
capacity,
providing
the
conditions,
the
location
and
the
timing
are
right.
Our
SBR
business
is
being
successfully
restructured,
and
today
it
is
stable
with
improving
levels
of
profitability.
In
Functional
Solutions,
we
are
a
top
five
player
with
strong
geographical
positioning
to
support
our
regional
businesses
and
expand
our
coatings
and
construction
growth
platforms.
This
is
where
the
sustainability
of
that
I talked
about
before
is
especially
compelling
and
where,
of
course,
we
are
seeing
the
benefits
from
OMNOVA.
OMNOVA
has
already
proven
itself
to
be
an
excellent
deal
for
Synthomer
and
we
have
exciting
opportunities
to
build
on
the
progress
that
we
have
made
this
year
with
more
cross-selling.
As
well
as
enhancing
our
portfolio,
OMNOVA
helped
to
address
the
gap
that
we
had
in
North
America,
a
key
market
for
us
and
the
region
where
I
believe
that
we
can
grow
strongly
in
the
years
ahead.
The
Industrial
Specialities
business
has
a
very
attractive
portfolio
of
speciality
products
and
niche
market
positions.
The
decision
to
invest
in
more
capacity
has
paid
significant
dividends
because
we
have
seen
high
capacity
utilization
demonstrating
the
strong
market
positions
that
we
have.
So
here,
too,
I
believe
that
there
are
exciting
opportunities
to
grow.
Finally,
our
new
Adhesive
Technologies
business
adds
to
a
new
growth
dimension
in
Synthomer.
As
we
set
out
at
the
time
of
the
transaction,
it
is
exposed
to
attractive
end
markets
with
GDP
plus
growth
fundamentals,
several
of
which
we
already
have
a
leading
presence
in.
But
the
portfolio
also
takes
us
into
more
specialized,
more
global
and
higher
growth
segments.
As
a
part
of
Synthomer,
we
are
confident
that
this
new
division will
be
able
to
expand
significantly.
We
also
like
the
R&D
capability
and
focus
on
innovation,
something
that
I
think
we will
be
able
to
learn
from
in
due
course.
We
have
talked
a
lot
about
NBR,
but
let
me
say
a
few
more
words
about
this
topic.
Steve
has
highlighted
the
significant
impact
that
the
exceptional
demand
for
NBR
had
on
our
EBITDA
in
the
past
two
years.
We
have
been
able
to
take
full
advantage
of
this
material
increase
in
profits
and
cash
flows
to
make
investments
that
drive
our
future
growth,
more
significantly
the
acquisition
of
Adhesive
Resins.
The
pandemic
fueled
the
unique
period
of
demands
that
we
are
unlikely
to
see
again,
but
that
doesn't
make
the
NBR
market
any
less
attractive.
As
I
said
earlier,
the
underlying
growth
rate
is
8%
to
10%
and
we
are
a
market
leader. So
we
will
continue
to
invest
in
this
business
to
support
further
innovative
growth.
The
market
is
likely
to
remain
subdued
over
the
coming
months
as
the
high
inventory
levels
of
rubber
gloves
are
gradually
used
up,
but
as
things
stand,
we
expect
conditions
to
have
returned
to
normality
in
the
second
half
of
this
year.
As
you
can
see
from
the
chart,
glove
demand
has
gone
up
every
year.
The
bar
chart
tracks
the
number
of
pieces
sold.
This
has
fueled
demand
in
NBR
and
natural
rubber.
It
highlights
that
hygiene
and
food
safety
are
global
megatrends
driving
strong,
sustainable
demand
for
gloves
and
this
is
not
going
to
go
away.
The
orange
line
illustrates
Synthomer's
margin
profile
over
the
same
period
of
time.
As
you
can
see,
it
has
been
pretty
stable.
The
slight
escalation
that
we
saw
in
2015
was
a
result
of
Ebola.
And
then
clearly,
the
sharp
spike
in
2020
and
into
2022
was
the
result
of
COVID-19.
You
can
see
that
whilst
margins
escalated
very
sharply,
so
they
have
also
dropped
very
sharply,
returning
to
normal
levels.
This
has
more
to
do
with
the
pandemic
rather
than
with
the
cyclicality
in
the
business.
The
dotted
line
represents
the
average
margin.
And
as
you
can
see,
we
have
now
returned
to
those
average
levels.
However,
over
the
medium-term,
we
see
upside
to
this
margin
as
the
business
provides
innovation
and
growth
potential
to
us.
So
turning
next
to
the
priorities
as
I
see
them.
The
first
one
I
want
to
talk
about
is
that
Synthomer
could
be
more
focused
on
our
end
markets.
We
have
to
think
more
through
the
lens
of
the
consumers
to
enhance
the
value
that
we
can
bring
to
our
customers.
Synthomer
has
strong
position
in
some
very
attractive
end
markets,
health
and
protection,
building
and
construction,
coatings
and
shortly
adhesives.
By
getting
even
closer
to
them,
I
think
we
will
be
well-positioned
to
unlock
more
growth.
Innovation
must
be
at
the
heart
of
our
business
and
I
recognized
a
significant
progress
that
has
been
made
in
this
area
over
the
last
five
years.
In
2021,
Synthomer
generated
24%
of
its
sales
from
patented
and
products
launched
in
the
last
five
years.
We
need
to
continue
to
invest
in
application
development
to
drive
innovation
forward,
again
ensuring
that
its
end-market
and
consumer-oriented.
It
also
needs
to
support
our
continued
progress
towards
being
more
specialized.
I
want
also
to
look
at
ways
to
enhance
the
use
of
our
technology
and
digitization
across
the
business
as
a
way
of
engaging
more
frequently
and
more
efficiently
with
our
customers
and
being
more
collaborative
in
the
way
that
we
work
within
the
organization.
I
don't
want
to
[ph]
label
sustainability (00:28:22),
and
I
think
that
I
have
been
clear
already
about
the
enormous
opportunity
I
see
here.
We
have
to
leverage
our
portfolio
more
to
help
our
customers
meet
their
own
sustainability
targets.
Our
new
SyNovus
Plus
product
in
our
NBR
business
is
one
such
example.
We
will
increase
our
focus
on
markets
where
we
see
an
opportunity
to
leverage
our
sustainable
technology.
And
at
the
same
time,
we
will
continue
to
work
hard
to
accelerate
Synthomer's
own
ambitions
to
reduce
carbon
emissions.
The
second
priority
I
would
like
to
talk
about
is
people.
It
is
all
too
easy
to
say
but
our
people
are
the
greatest
asset
that
we
have.
I
want
to
look
at
ways
to
improve
the
speed
of
decision-making
and
increase
accountability
in
the
business.
By
being
more
agile,
decentralized
and
flexible,
we
will
become
more
efficient
and
more
responsive
to
our
customers.
We
will reorganize
ourselves
with
appropriate
levels
of
resources
allocated
according
to
the
size
of
the
market
opportunity.
The
leadership
team
is
being
reshaped
with
increased
diversity
and
[ph]
incentivize
our
performance (00:29:37).
We
will
invest
even
more
in
talent
development.
Whilst
I
have
been
impressed
by
the
way
we
have
integrated
acquired
businesses,
we
need
to
increase
the
levels
of
collaboration
across
the
businesses
to
make
us
a
more
joined-up,
cohesive
organization.
Thirdly,
we
will
continue
to
look
for
ways
to
expand
into
new
markets,
both
organically
and
inorganically.
Inorganic
growth
will
be
especially
focused
on
our
Functional
Solutions
business
and
our
new
Adhesive
Technologies
platform,
as
well
as
looking
into
speciality
adjacencies.
My
geographic
priorities
include,
but
are
not
confined
to
North
America
and
Asia,
including
China.
We
will
allocate
capital
according
to
where
we
see
opportunities
to
support
our
growth
in
attractive
end
markets
with
a
focus
on
higher
margin,
more
speciality,
more
sustainable
and
less
cyclical
areas.
A
critical
KPI
will
be
return
on
invested
capital.
Everything
we
do
has
to
generate
compelling
returns.
And
finally,
business
excellence,
I
have
talked
already
about
the
end
markets
I
want
to
prioritize.
We
will
continue
to
progress
the
excellent
start
that
we
have
made
to
recognize
synergies
from
the
OMNOVA
acquisition.
Whilst
I
think
Synthomer
has
high
manufacturing
standards, we
will
continue
to
look
for
further
improvements
by
reviewing
the
footprints
that
we
have
today
and
by
looking
for
ways
to
use
technology
and
digital
channels
and
tools
more
than
we
do
already.
Commercial
excellence
is
also
a
priority.
I
want
to
review
our
pricing
strategy
and
sales
systems
to
extract
further
benefits
there.
Finally,
as
in
any
well-run
business,
we
will
continue
to
review
all
parts
of
the
portfolio
to
ensure
that
we
are
well-positioned
to
grow
the
value
of
our
company
in
each
of
the
areas
we are
active
in.
As
I
have
already
said,
I
believe
that
I'm
joining
Synthomer
at
a
very
exciting
point.
There
has
been
huge
progress –
a
huge
amount
of
progress
of
strategic
and
financial
items
in
the
business
since
2015.
The
previous
management
team
and
Calum
did
an
excellent
job,
helping
to
enforce
Synthomer
across
four
important
areas.
First,
by
completing
two
strategically
important
acquisitions
in
the
last
two
years,
that
have
meaningfully
enhanced
our
global
position
and
scale.
As
such,
Synthomer
has
evolved
from
being
a
predominantly
European
player
to
having
a
significant
presence
in
the
US
and
growing
positions
in
Asia.
Second,
we
now
have
significantly
enhanced
proximity
to
an
increased
customer
base
and
increased
exposure
to
attractive
end
markets.
Third,
high
levels
of
CapEx
alongside
a
renewed
focus
on
operational
efficiency
mean
that
Synthomer
has
well
invested
assets
that
are
efficiently
run.
And
finally,
as
demonstrated
by
this
year's
financial
performance,
we
have
a
very
attractive
portfolio
across
the
three
core
businesses,
all
of
which
offer
exciting
opportunities
for
GDP
plus
growth.
From
the
second
quarter
this
year,
we
will
have
[indiscernible]
(00:33:14)
division
where
the
growth
perspectives
are
as
compelling,
if
not
more
so.
All
that
adds
up
to
what
we
are
calling
a
new
Synthomer,
and
I'm
confident
that
it
has
an
exciting
future.
I
would
like
to
wholeheartedly
thank
Calum
and
Steve
for
the
work
they
have
done
for
the
company
and
for
the
way
they
have
welcomed
and
introduced
me
to
Synthomer.
So
in
summary,
record
levels
of
profitability
in
2021
have
enabled
the
group
to
make
significant
inorganic
and
organic
investments
to
strengthen
the
platform
for
future
growth
and
value
creation.
We
are
confident
of
being
able
to
generate
significant
opportunities
from
our
enlarged
Functional
Solutions
business
and
our
new
Adhesive
Technologies
division,
which
will
start
to
contribute
from
the
second
quarter
of
this
year.
Looking
ahead,
as
set
out
in
our
February
trading
statement,
NBR
margins
have
normalized.
The
unprecedented
pandemic
premium
is
entirely
gone.
And
we
expect
high
inventory
levels
in
the
global
downstream
channels
in
this
part
of
the
business
to
gradually
be
worked
through
during
the
first
half
of
the
year.
All
other
divisions
have
had
an
encouraging
start
to
the
year,
and
we
are
confident
of
continued
strategic,
commercial
and
operational
progress
in
2022.
The
Board
remains
confident
that
the
benefits
from
recent
acquisitions
and
a
disciplined
capital
allocation
focused
on
organic
growth,
inorganic
growth
and
dividends
will
underpin
growing
sustainable
profits
and
value
creation
in
the
coming
years.
Let
me
stop
here.
Steve,
and
I
would
be
very
happy
to
take
your
questions.
Thank you...
Yes,
Sebastian,
please.
Hello,
good
morning.
Sebastian
Bray
of
Berenberg
Bank.
Thank
you
for
taking
my
questions.
I
have
two
categories
please.
The
first
focus
is
on
the
graph
showing
the
Nitrile
gross
margins and
the
gross
unit
margins
at
Synthomer.
What
does
the
capacity
outlook
on
a
two
or
three
year
view
looks
like,
because
the
fear
is
that
those
margins
might
revert
back
to
the
level
of
2014,
if
LG, Kumho
and
others
start
to
add
aggressively
to
the
market
as
opposed
to
just
stay
normal?
So
if
you
could
give
us
an
outlook
of
what
that
capacity
looks
like?
My
second
is
on
the
CapEx
levels
of
the
group.
Am
I
right
in
saying
that
most
of
the
businesses
at
Functional
Solutions
and
Industrial
Specialities
are
now
running
close
to
100%
utilization?
And
what
scope
is
there
for
growing
volumes
ex-acquisition
over
the
next
two
or
three
years?
Do
you need
more
CapEx
to
do
this?
Thank
you.
Thank
you
very
much,
Sebastian.
On
your
first
questions,
I
would
separate
the
question
to
a
short-term
and
the
long-term
or
mid-term
outlook.
I
think
short-term
in
the
current
situation
of
the
destocking,
which
we
said
will
go
on
into
the
– into
this
year,
gradually
coming
back
to
normal
during
the
second
half
of
the
year,
we
can
see
some
overcapacity
or
underutilization.
I
have
to
say
that
we
have
seen
this
in
the
past
as
well.
And
if
you
look
at
our
margin
charts,
the
margins
were
stable
even
in
times
of
overcapacity.
So
I
would
make
– not
make
a
natural
link
that
overcapacity
means
reduced
margins.
I
believe
we
have
seen
this
in
the
past.
It
was
not
the
case.
Looking
at
the
broader
picture,
probably
second
half
of
this
year
going
forward,
we
are
studying
and
we
have
quite
a
good
knowledge
what
happens
in
the
markets,
including
in
China.
What
we
see
is
that
we
have
a
market
that
grows
8%
to
10%
per
annum.
We
assume
that
we
have
about
2
million
tonnes
right
now
of
demand.
So
that
means
that
each
year
you
need
something
between
160,000
tonnes
and
200,000 tonnes
of
new
capacity.
When
we
look
forward
in
all the
announced
investment,
we
see
this
as
a
balanced
market
going
forward.
So
we
do
not
see
any
significant
overcapacity
in
the
mid-term,
which
I
would
call
again
starting
second
half
of
this
year.
We
see
it
quite
balanced.
I
have
one
thing
which
you
have
seen
on
one
slide.
You
mentioned
that
there
is
limited
visibility
in
China.
We
know
all
the
players
that
contemplate
investing
that
are
investing,
but
we
see
sometimes
a
bit
of
an
erratic
behavior
there
because
everybody
sees
the
destocking
and
the
problems
in
the
markets
that
we
are
having
now
since
the
second
half
of
last
year.
So
there
are
some
decisions
of
delaying it.
It
is
sometimes
a
bit
erratic.
Some
of
the
companies,
especially
in
China,
they
are
redirecting
investments
into
SBR
again
instead
of
NBR.
So
that
is
the
only
thing
which
I
think
is
now
going
on.
Some
of
the
decisions
to
invest
of our Kumho's
and
LG's,
the
most
immediate
competitors
or
the
companies
that
are
downstream
our
customers
to
invest
upstream
in
the
NBR space.
Here,
we
see
some
of
them
are
hesitating,
some
of
them
are
delaying
it,
moving
it
out
of
them.
But
as
I
said,
our
company
is
committed
to
this
business.
We
see
mid-term
a
balanced
capacity
situation.
We
believe
as
a
market
leader
with
top
innovation
features
and
with
the
potential
to
grow
our
technology,
our
center
of
excellence
in
Asia
in
Malaysia
is
the
ideal
location
to
continue
this
leadership
position.
So
I
think
going
forward
after
this
destocking
ends,
we
will
come
back
to
our
leadership
position,
our
innovation.
And
that's
why
I
believe
that
those
are
the
margins
compared
to
where
we
are
now,
we'll
have
some
further
upsides
again
because
of
capacity
we
have
and
because
of
the
innovation
potential
in
this
business.
Now,
on
your
second
question
about
CapEx
levels.
You
are
right
and
that
is
an
important
feature
for
I
think
every
speciality
chemicals
business. We
are
very –
running
at
very
good
capacity
utilizations.
I
think
our
CapEx
plans,
and
Steve
lined
it
out,
is
relatively
high
this
year
for
ÂŁ130
million. We'll
see
how
much
of
this
we'll
be
using
because
a
big
chunk
of
it
is
geared
towards
the
NBR investments
where
we
do
have
some
flexibility.
So,
I
think
we
are
absolutely
in
a
position
to
support
the
IS
business
and
the
FS
business
to
make
the
necessary
capacity
investments.
As
I
have
mentioned
in
my
words,
we
will
also
look
at
the
footprint.
You
can
rationalize
capacities
there
to
have
certain
closures
has
been
done.
And Steve
mentioned
of
Marl
3
of
Oulu
in
Finland
in
the
SBR space.
So
I
think
we
are
quite
well-positioned
to
support
these
businesses.
And as
I
say,
especially
in
speciality
chemicals
company,
you
need
the
high
capacity
utilization,
but
we
will
not
allow
that
we
cannot
supply
the
market.
So,
I
think
here
we
are
relatively
flexible.
We
own
this
space.
You
don't
need
long,
long
lead
times,
you
can add
capacity
in
relatively
short-term.
So,
I
think
we
are
absolutely
positioned
to
capture
those
opportunities.
But
as I
said,
capital
allocation
in
a
disciplined
way
where
we
get
a
return
on
the
invested
capital
back.
So,
we
will not
invest
into
low
margin
businesses. We'll
invest
into
again
most
speciality
higher
margins,
less
cyclicality
areas
where
we
see
the
future.
So,
I
think
having
this
disciplined
allocation,
having
the
balance
sheet
what
we
are
having,
I
think
we
are
in
a
good
position
to
support
the
business
[indiscernible]
(00:41:04) again
the
attractive
end
markets
that
we
want
to
be.
So
I
think
we
are
well-placed
here.
Great.
Kevin
Fogarty
from
Numis.
Three,
if
I
could
do.
One
just
in
terms
of
NBR
stabilization,
I
just
wondered
if
you
could
talk
about
sort
of what
you've
seen
year-to-date
that
gives
you
some
sort
of
evidence
of
stabilization.
Second
one
was
on
capital
allocation.
I
just
wondered
given
the
outlook
now,
what
does
that
do
for
your
sort
of
desire
for
transformational
M&A?
How
sort
of
staged
might
that
be,
I
guess,
as
you
roll
forward?
And
then
just
finally
in
terms
of
your
key
priorities
outlined,
you've
talked
about
portfolio
optimization.
Does
that
sort
of
open
the
door
for
disposals
as
well,
given
the
returns
metrics
you
might
use
to
measure
businesses?
Thank
you,
Kevin.
So
on
the
NBR
margins
we
have
seen,
let's
say,
from
the third
quarter
of
2021,
we
have
seen
a
relatively
steep
decline
in
the
margins,
you
have
seen
it
on
the
chart.
Unprecedented
upwards
4.5
fold
upwards,
sharply
downwards.
The
most
steepest
decline
we
have
seen
in
December
and
January.
We
see
now
in
February,
going
into
March,
we
see
a
stabilization
of
this.
We
have
less
of
a
decline;
you
can
also
see
it
on
the
chart.
We
have
kind
of
a
stop
in
the
level
of
the
average
margins,
if
you
go
back
to
the
last
– to
the
last
several
years.
We
have
some
indications
from
our
customers,
from
our
end
customers,
from
our
distributors,
especially
the
smaller
ones
that
it
has
coming
to,
I
wouldn't
say
a
stop,
but
it
has
– it
is
finding
the
bottom.
These
are
early
indications.
As
I
said,
the
situation
in
December
and
in
January
was
unfortunate,
but
we
see
now
since
the
last
six
to
eight
weeks,
we
see
kind
of
the
market,
the
margins,
the
volumes,
finding
the
bottom.
But
again
let's
not
get
too
much
excited.
It's
very
clear
that
the
problem
of
the
destocking
will
continue
for
the
next
several
months.
I
believe
that
only
then
the
margins
can
come
up.
And
us
as
an
innovation
lead,
will
get
the
premiums
again
that
I
believe
we
deserve
in
our
offerings.
So
in
a
nutshell,
early
signs
that
it
is
stabilizing,
early
signs
that
the
demand
might
go
up
again
in
the
next
couple
of
months.
Your
second
question
on
leverage
and
our
appetite
for
M&A.
I
believe
we
are
soon
going
to
spend
$1
million.
So
clearly
that
puts
our
leverage
to
1.6
times,
as
Steve
has
pointed
out,
as
we
have
pointed
out
at
the
time
of
the
transaction
in
October.
So
I
think
we
are
very
consistent
here.
This
will
go
further up.
We
know
all
our
cash
outflows.
We
have
decided
to
pay
the
dividend,
[ph]
a ÂŁ100
million (00:44:06).
You
have
seen
the
fine
discussion
on
which
I
will
not
go
further
in,
but
you
have
a
number
for
this.
We
are
confident
that
we
have
reasonable
EBITDA
levels
for
the
months
going
forward.
So
I
think
we
have
a
strong
balance
sheet
as
Steve
has
pointed
out,
and
that
means
that
in
line,
consistent
with
our
strategy
and
I
mentioned
it
a
few
times,
inorganic
growth
remains
part
of
the
strategy.
Now
I
would
focus
right
now
more
on
bolt-on
acquisitions.
We
have
an
absolute
appetite
to
look
into
bolt-on
acquisitions.
As
I
mentioned
it,
it
is
mainly
in
the
space
of
the
Functional
Solutions,
the
construction
and
coatings
and
markets,
it
will
be
second
in
the
space
of
Adhesive
Technologies.
Even
so,
you
have
to
do
first
the
closing
on
the
division.
But
as
you
know
in FS,
we
do
have
some
exposure
to
adhesives
markets
already,
so
we
know
these
markets
more
or
less.
And
thirdly,
as
mentioned,
we
are
looking
into
speciality
adjacencies.
I
think
that
is
a
third space,
which
is
absolutely
open.
Again
more
speciality,
less
cyclicality,
more
sustainability.
So
these
are
the
areas
just
from
topics
what
we
are
looking
at.
I
think
you
should
not
expect
a
big
transformational
M&A
in
the
next
12
to
18
months
because
obviously,
it
is
our
priority
now
to
integrate
the
Eastman
business.
It
is
our
priority
to
do
this
operationally
properly,
like
we
have
done
in
all
our
acquisitions
in
the
past
and
to
get
the
synergies,
hopefully,
even
a little
bit
more
as
it
is
also
in
the
history
of
the
company.
So
I
think
these
are
our priorities
for
now.
And
as
I
always
say,
if
there
is
some
magic
opportunity
in
the
market
coming
up,
we'll
be
looking
into
it.
We
will
always
have
opportunities
to
look
into
our
balance
sheet,
but
it's
definitely
not
the
priority
and
such
a
thing
would
mean
that
it
is
this
unbelievable
target
that
would
100%
fit
to
our
company.
And
in
a
way,
the
leverage
discussion
now
on
the
balance
sheet
and
the
M&A
discussion
brings
me
to
your
third
question,
what
about
portfolio
management?
I
have
said
I
think
portfolio
management
for
me,
for
the
management
team
is
a
key
standing
issue, and
is
part
of
our
job.
I
think
portfolio
management
has
two
directions;
inbound
and
outbound.
I
have
no
plans
that we
will make
a
strategy
exercise
within
the
next
three
months
until
June.
I
have
no
plans
to
divest
business.
We
have
no
imminent
M&A
business
inbound
right
now.
Our
focus,
again,
is
to
make
money
in
an
organic
way.
Our
focus
is
to
integrate
the
Eastman
business.
So
there
are
no
imminent
plans,
but
we
are
watching
the
market
carefully.
So
the
answer
to your
question
is
very
clearly
that
divestments
are
not
excluded,
but
as
always,
it
has
to
make
sense.
It
has
to
make
sense
for
our
return
on
invested
capital,
for
our
speciality
profile
and
for
the
overarching
targets
we
have
in
our
company.
But
portfolio
management
is
in
and
out,
that
is
correct.
Thank
you
very much.
Yeah.
More
questions
from
the
room.
Yeah,
Sebastian.
So
just
one
more,
can
I
ask
about
the
confirmed
Nitrile
capacity
increases?
Because
this
–
the 200
kilotonne
figure
that I
believe
is
referenced
in
the
slides,
but
it's
not
an
exact
date.
Is
it
just
fair
to
assume
this
is
Malaysia
and
2022?
And
likewise
for this
year, am I right in
saying
it's
60 kilotonnes
from
Malaysian
expansion
and
40 kilotonnes
from
the
conversion
of
SBR
in
Italy?
Is
that
a
fair
summary
or?
I
think
the
60,000 tonnes
that
is
our
famous
JOB6,
we
are
completing
this,
we
are
bringing
it
online.
That
is
the
line
where
we
have
the
highest
productivity
because
we
have
the
latest
technology
there
we
can
produce
in
this
line
more
capacity
for
our
SyNovus
Plus.
That
means
our
mix
is
positively
affected
because
we
get
the
premium
on
our
SyNovus
Plus
offering.
So,
definitely
we'll bring
this
on
stream
that
is
almost
completed.
We
are
now
into
technical
commissioning.
So,
I
think
by
end
of
March,
early
April,
we
will
have
it
online.
That's
a
60,000
tonnes.
On
the
Italian
part
that
you
are
mentioning,
I
think
that
is
something
which
we
are
reviewing
right
now,
because
as
I
said,
our
capital
allocations,
they
have
to
be
the
right
sites
that
you
have
economies
of
scale,
they
have
to
be
the
right
continent,
the
right
location, and
has
to
be
the
right
timing.
So
I
think
that
is
something
we
are
reviewing
and
we
will decide
in
due
course
if
we
are
going
ahead
with
this
project
or
not.
Right
now,
as
you
see
the
capacity
utilization
situation
until
the
second
half
of
this
year,
there's
definitely
no
urgency
for
this.
And
again
we
will
look
where
we
put
our
capital,
and
potentially
Italy
is
not
the
right
location.
But
again,
it
is
under
review
and
we
will see,
but we
will
only
make
things
that
makes
sense
for
us
long-term.
As
I
have
mentioned
in
general,
the
capacity
utilization
for
this
year,
there
will
be
underutilization,
there
will
be
overcapacity
until
the
destocking
has
ended
but
then
mid-term
after
this
period
is
over,
we
believe
in
a
balanced
– in
a
balanced
situation.
That
is
helpful.
And
just
as
a
final
one,
the
CapEx
level of –
over
the
next
two,
three
years; are
we
talking
ÂŁ140
million, ÂŁ150
million
for
2023
if
your
Nitrile
plant
in
Malaysia
goes
ahead
and
approved?
And
just
is
it
simply
a
question
of
timing
why
this
hasn't
been
made
official
yet
we
are
building
XYZ
or
is
there
a
consideration
about
either
resizing
or
delaying
the
project
to
until
there's
visibility
on
the
market
situation?
Thank
you.
I
mean
here
again
the
commitment
to
the
NBR
market
for
our
side
is clear,
and
that's
why
the
projects
in
Asia
but
we
also
have
projects
in
the
US.
I
can
say
that
we
are
in
discussions
with
governments
in
the
US
and
in
Asia
because
a
lot
of
countries
these
days
post-pandemic
they
would
like
to
localize
the
production
of
those
gloves.
So
that
is
for
us
a
unique
opportunity.
And
if
we
could
find
agreements
with
those
governments,
which
we
don't
know
yet,
it
would
obviously
have
a
severe
impact
on
the
levels
of
CapEx
that
is
required
from
our
side.
So
I
think
that
is
also
an
angle
we
have
to
look
at.
If
you
look
at
CapEx
levels
going
forward,
I
believe
they
will
be
lower than
[indiscernible]
(00:50:48)
have
right
now.
I
believe
they
will
be
back
in
the
area
like
of
last
year
ÂŁ80
million
to
ÂŁ90 million
more,
half
of
this
being
sustenance
and
safety.
We
will
have
these
chunks
if
you
would
invest
into
a
new
NBR
capacity.
We
have
ordered
long
lead
time
items
for
this
expansions.
As
we
have
announced
I
think
one
year
ago
[ph]
three (00:51:12)
or
even
longer.
But
having
ordered
these
long
time
items
it
also
gives
you
a bit
of
flexibility
because
it
doesn't
say
where
exactly
you
have
to
put
them.
So
I
think
here
we
do
have
some
flexibility,
we
are
looking
into
this
projects.
And
again,
as
I
have
mentioned,
we
only
invest
if
the
conditions,
which
means
the
economies
are
right,
if
the
timing
is
right
and
if
the
location
is
right.
So
I
would
say
we
are
evaluating
this
situation,
there's
no
rush
for
us
right
now
to
come
to
a
final
conclusion
where
we
do
this
investment.
Because
right
now,
and
for
the
foreseeable
future,
including
this
JOB6
60,000
tonnes,
we
are
very
well
balanced
to
supply
the
markets.
Just
to
confirm
it
means
we
–
you
don't
necessarily
say
this
will
go
ahead
in
2024
or
is
that
just
a
[indiscernible]
(00:52:05)?
I
think
that
is
safe
to
assume. We –
I
cannot
tell
you
exactly
when
this
is
coming
online.
I
know
that
usually
you
invest
when
the
market
is
lower,
that
you
are
ready
when
the
market
is
higher.
We
believe
in
this
8%
to
10%
market
growth,
but
we
will
have
to
see
because
as
I
mentioned,
there are a
few
items
playing
into
this
decision.
Is
it
Malaysia?
Is
it
the
US?
Is
it
other
countries
in
Asia?
So
we
have
options
here.
I
just
want
to
come
to –
I
don't
want
to
come
to
a
decision
which
at
the
end
plays
out
that
it
has
been
the
wrong
one.
I
think
we
want
to
be really
sure
that
in
terms
of
all
those
aspects,
again
also
as
the
government
angles
that
we
do
the
right
decision.
How
long
this
will
take?
I
think
we
are
–
it's
a
question
of
the
next
few
months.
We
are
doing
these
calculations.
We
are
doing
these
reviews.
And
what
I'm
absolutely
sure
with
our
offering
that
we're
having
right
now,
we
will
not
be
in
a
position
that
we
cannot
supply
the
market
in
2024.
I
think
this
capacity
will
be
available.
If
it
comes
a
new
capacity
potentially
wherever
that
is,
comes
online
a bit
late.
I
think
that's
not
a
problem
for
us.
But
important
is
that
these
are
sizeable
investment
amounts,
and it's
important
to
study
this
is the right
project.
Further
questions?
Are
there
any
questions
from
the
operator?
Thank
you.
[Operator Instructions]
We
have
a
question
from
Matthew
Yates
from
Banks
of America.
Please
go
ahead.
Your
line
is
now
open.
Hi,
gentlemen.
Sorry, couldn't
be
there
in
person.
I'd
just
like
to
ask a
question
about
the
start
you've
seen
to
2022,
and
particularly
in
terms
of
volume
growth
in
parts
of
the
Functional
Solutions
division.
Obviously,
I
guess
it's
in
certain
parts
of
your
portfolio
that
has
benefited
from
some
of
the
so-called
lockdown
trades
like
DIY
that
you've called
out.
Are
you
seeing
any
change
in
the
volume
trajectory
there
in
the
order
book and
in
early
trading
so
far
this
year?
Thank
you.
Yeah.
Thank
you.
Yeah.
We
have
a
clear
answer
on
this.
I
mentioned
that
we
had
an
encouraging
start
into
all
businesses,
except
well-known
NBR
situation.
I
have
to
say
that
it
is
mainly
the
stronger
part
of
this
encouraging
start
into
2022
is
on
the
margin
side
and
less
on
the
volume
side,
but
also
on
the
volume
side,
what
I
have
heard
many
times
towards
the
end
of
last
year
that
the
do-it-yourself
business
is
going
down,
we
can
actually
not
confirm
this.
There
is
less
of
an
increase,
less
of
a
growth
there,
but
there's
absolutely
no
decline.
And
I
would
call
[ph]
it
an E
slight
growth (00:55:12),
so
we
cannot
confirm
these
concerns
about
the
do-it-yourself
markets.
Generally
I
would
call
it,
again
as
I
said,
there
is
volume
growth.
There
is
volume
growth
in
our
order
books
going
forward,
but
the
stronger
item
on
the
equation
is
on
the
margins
right
now
and
it
is now
in
our
hands
as
good
management
to
balance
exactly
how
much
margin
would
we
potentially
give
up
to
secure
more
volumes. But
I
think
that
is
the
natural
game.
We
do
not
have
kind
of
a
used
price
over
volume
strategy.
I
think
this
in
the
long-term
doesn't
work.
So
we
will
not
hold
on
to
high
margins
if
not
needed
but
I
think
that
is
just
our
management,
which
in
the
past
I
have
to
say
works
extremely
well.
You
have
seen
our
pricing
power.
And
I
have
hardly
seen
this
in
my
mind
more
than
20
years
in
chemicals
where
the
FS
division
last
year
they've
done
on
price
pass
on
to
our
customers.
I
think
that
was
an
excellent
job
being
done.
Excellent.
And
I
have
no
reasons
to
believe
that
we
do
have
this
position
and
that
this
will
go
on.
I
have
no
reasons
to
believe
that
we
will
have
to
give
up
and
make
too
much
of
compromises
there.
So
short
answer;
encouraging
start
mainly
driven
by
margins,
very
high
margins
also
driven
by
volumes,
but
to
a
lesser
degree
order
books
full
for
the
next
three,
four
months.
That's
usually
our
visibility.
The
same
is
valid
for
the
IS
division.
I
can
say
also
here
capacity
and
again
for
us
it's
crucial
that
the
sites
are
full,
capacity
situation
remains
very
positive.
And
if
you
mention
especially
the
DIY
market, we
do
not
see
massive
growth
there but we do
not
see declines
at all.
Thanks. And maybe just a follow up, your point to
pricing power,
which
has
proved
to
be
pretty
good
recently.
Potentially
I
guess
there
may
be
another
need for
another
round
of
price
increases.
Can
you
just
remind
me
across
the
FS
and
IS
divisions,
how
much
of your
portfolio
has
sort
of
natural
indexation
clause
built
into
contracts?
How
much
is
more
bilateral
negotiations?
And
are
you
seeing
any
pushback
from
customers
in
terms
of
digesting
potentially
another
round
of
price
increases
over
the
coming
months?
Yeah.
Yeah.
We
have
about
30%
indexed
formula
pricing.
Our
30%
if
you
go
over
IS
and
FS
divisions,
is
about
30%.
So
here
there
is
little
space
to
maneuver.
So
the
large
majority
of
70%
is
kind
of
spot
business
or
longer-term
business,
or
un-contracted
business
or
contracted
business
with
open
terms.
And
as
I
said,
I
think
I
cannot
give
you
a
guidance
how
this
is
going
to
play
up.
I
think
we
have
to
make
sure
that
we
find
the
right
balance
between
keeping
the
volumes,
keeping
our
sites
full,
keeping
our
market
positions
in
these
attractive
end
markets
of
coatings,
adhesives,
construction
and
how
much
of
pricing
power
we
will
exercise.
But
definitely,
I
see
no
change
to
the
fundamentals of
last
year.
So,
I
believe
if
you
had
pricing
power
last
year,
you'll
also
have
pricing
power
this
year.
Thank
you,
Michael.
And
thank
you,
Stephen,
as
well
for
everything.
Bye.
We
have
another
question
from
Geoff
Haire
from
UBS.
Please
go
ahead.
Yeah.
Good
morning,
everybody.
I'm
sorry,
I couldn't
be
there.
Just
had
one
question
just
on
the
outlook.
If
I
look
at
where
the
margins
in
Performance
Elastomers
were
in
the
second
half
of
2019,
that's
roundabout a
14%
EBITDA
margin,
if
my
numbers
are
right.
What
is
– is
there
a
potential
that
you
may
see
that? And
you
say
you're
returning
to
the
trading
environment
of
the
second
half
of
2019.
Does
that
also
comment
on
where
the
margins
are
going
as
well
for
the
Performance
Elastomers
business?
I
thank
you
for
this
question
because
that
is
really
the
comparison.
The
2019
performance
of
the
business
and
the
2019
margins
for
the
business,
I
think
we're all
a
bit
blinded
by
the
events
which
started
in
Q2
2020
and
culminated
in
the
middle
of
2021.
So
the
fair
comparison
really
is
going
back
to
2019,
which
is
exactly
what
you
are
doing.
We
have
now,
I
would
say,
2019
and
again
you
can
see
it
in
the
chart.
2019
had
margins,
which
are
pretty
much
average
margins
over
the
last
I
think 10
years
we
have
it
in.
Again,
there's
only
this
one
spike
in
2015;
Ebola,
but
the
rest
was
kind
of
consistent,
stable
margins.
So
we
are
back
there
basically
in
2019
margins.
What
I
can
say
is
that
our
expectations
is
that
we
will not
reach
the
2020
levels
on
the
Performance
Elastomer
side
because
they
were,
as
of
Q2,
highly
influenced
by
exploding
NBR
margins.
But
we
will
expect
to
come
in
higher
than
2019.
And
why
is
that?
Because
we
do
have
more
capacity
on
the
ground,
including
the
JOB6,
we
do
have
higher
productivity
because
it
is
latest
production
technology.
And
most
especially,
thirdly,
we
do
have
our
SyNovus
Plus,
we
have
our
innovation
offerings
which
we
didn't
have
at
the
time
in
2019.
So
if
you
want
to
have
a
statement
from
me,
I
think
we
will
come
clearly
ahead of
2019
and
we
will
come
below
2020
in
the
Performance
Elastomers
division
on
the
PE
side.
And
then
also
as
we
have
mentioned
today,
and
it's
only
15%
to
20%
of
the
division.
Also
on
the
SBR
side,
we
have
made
progress.
We
are
clearly
not
there
where
we
want
to
be.
The
business
is
clearly
not
accretive
to
the
divisional
or
to
the
company's
percentages
of
returns,
but
we
have
made
clear
focusing
of
the
business,
we
have
made
site
closures,
we
have
[indiscernible]
(01:01:35)
we
try
to
bet
more
on the
attractive
end
markets
because
I
think
that
is
what
guiding
us.
So
we
have
made
clear
progress
there,
but
definitely
we
are
not
yet
there
where
we
want
to
be.
But
even
this
business
is
going
into
the
right
direction.
But
the
main
music
obviously
plays
in
the
NBR
business
and
there
the
situation
is
that
I
have
mentioned
with
clear
progress
compared
to
2019.
For
the
three
reasons
I
mentioned;
capacity,
innovation
and
production
technology,
more
productive,
better
yields.
Is
that
okay
or?
Silence
probably
means
okay.
Yeah.
Okay.
And
we
have
– we just
have
one
other
question
come
through
the
webcast
from
David
Farrell
at
Jefferies.
So
could
you
give
some
comment
Michael,
on
the
data
points
that
you're
looking
at
as
you
build
your
confidence
that
the
destocking
is
happening
in
the
first
half of
this
year
on
the
Nitriles
business?
I
mean first,
I
would
like
to
make
a
different
comment
actually.
I
would
like
to
say
that
you
saw
on
the
chart
of
the
new
Synthomer,
you
saw
that
PE
division
again
80%
let's
say
NBR,
20%
SBR
is
36%
of
our
sales
in
terms
of
revenue.
Now
this
is
driven
– these
are –
that's
based
in
2021
numbers
with
the
super
high
fly
sales
and
margins
of
the
PE
division.
Probably
going
forward,
the
share
of
our
PE
division
is
more
30%.
So
I
would
like
to
highlight
that
70%
of
our
business
is
actually
in
a
way
the
business
we
should
talk
about
because
it
is
70%
now.
We
mentioned
our
leading
positions,
our
super
high
attractive
end
markets
in
IS
speciality
portfolios
and
in
Functional
Solutions.
So
I
would
like
– I
speak
so
much
about
NBR
and
I
know
that
we
have
to
and
I
know
that
the
impact
of
NBR
is
huge,
and
the
sensitivity
on
our
results
basically
every
tonne
makes
a
difference
in
our
EBITDA.
I
fully
recognize
that.
But
I
would
still
suggest
that
we
also
talk
about the
70%
of
the
business
which
is
becoming
more
and
more
important,
Adhesive
Technologies,
IS
and
Functional
Solutions.
So
the
NBR,
the
NBR
space
now
I
think
it
is
the
margins
are –
as
I
said,
the
margins
are
coming,
we
believe
they
are
stabilizing
now.
The
destocking
will
last
another –
till
the
middle
of
the
year.
I
mentioned
that
we
have
certain
signs
of
finding
the
bottoms.
I
mentioned
that
smaller
distributors,
not
yet
the
large
ones,
smaller
distributors
are
reordering
which
we
haven't
seen
now
for
a
long
time.
So
there
are
these
signs
in
the
markets.
We
are
in intensive
contact
with
our
customers.
We
try
to
liaise
with
our
end-consumers
often government
institutions.
But
we
just
have
to
say
that
there
are
warehouses
in
this
world
still
full
of
medical
gloves
and
this
has
to
be
worked
through
and
this
will
take
another
several
months
until
we
are
in
kind
of
a
normal
supply/demand
situation.
So
I
think,
Steve,
I
don't
know
if
you
have
more,
but
there's
not
much
more
we
can
say.
The
only
thing
is
sometimes
you
are
blamed
of
that
we
don't
have
the
visibility,
and
I
have
to
say
we
do
sometimes
not
have
the
visibility
because
again
this
is
not
a
cyclical
business,
that's
a
pandemic
business.
You
go
back
in
the
chart,
the
famous
chart
that
says
it
all,
you
go
back
like
10 years
and
the
demand
was
all
the
time,
we
have
a
CAGR
of
8%
to
10%
in
the
market.
We
have
margins
that
are
relatively
stable.
We
have
upside
on
the
margins
because
of
Synthomer's
leading
position
in
innovation,
in
production
technology.
So,
I
believe
that
this
rebalancing
will
take –
will
come
in.
It
is
only
driven
by
the
pandemic
and
if
this
pandemic
is
gone
and
we
have
found
again
a
balanced
solution,
I
think
then
we
can
go
on
and
then
we
can
play
our
advantages,
which
I
have
mentioned
before.
But
none
of
us
has
seen
a
pandemic.
None
of
us
has
seen
an
explosion
of
margins.
I
have
never
seen
this
in
my
25
years
or
so
in
chemicals
that
margins
went
up
by
4.5
times
within
months
and
came
down
within
months
to
levels
again
4.5
times
below.
So,
I
think
this
is
just
a
unique
situation
which
we
all
have
to
learn
from.
We
have
to
try
to
map
this
in
the
future
that
we
can
see
it,
but
we
have
to
accept
that
there
will
be
a
certain
uncertainty
when
exactly
the
destocking
ends
for
the
next
coming
few
months.
I
think
much
more,
I
cannot
say.
I
can
ensure
you
that
we
have
extreme
close
intelligence
on
our
competitors,
what
are
they
doing
with
capacities.
We
have
very
good
intelligence
together
with
our
customers
looking
into
the
end
consumers
of
the
business,
which
I
mentioned
I
think
is
something
we
should
do
more
in
Synthomer.
So,
I
think
that
is
the
situation
where
we
are
right
now.
But
again,
we
are
a
market
leader
in
a
fundamentally
positive
position
to
continue
this
market.
No
more
questions.
No.
Well good.
Okay.
That's
it for
questions.
Yeah.
If
there
are
no
more
questions,
then
I
thank
everybody
for
the
interest,
and
I
wish
you
a
good
day.
Thank
you
very
much.