Notes to the condensed financial statements
Invested capital
Invested capital at the end of Q3 2016 totaled €9.9 billion (Q3 2015: €10.2 billion), down €0.3 billion. Operating working capital was €70 million lower than September 30, 2015.
in € millions |
September 30, 2015 |
December 31, 2015 |
September 30, 2016 |
Trade receivables |
2,580 |
2,267 |
2,484 |
Inventories |
1,581 |
1,504 |
1,568 |
Trade payables |
(2,291) |
(2,386) |
(2,252) |
Operating working capital |
1,870 |
1,385 |
1,800 |
Other working capital items |
(833) |
(787) |
(910) |
Non-current assets |
10,031 |
10,284 |
9,795 |
Less investments in associates and joint ventures |
(167) |
(165) |
(162) |
Less pension assets |
(317) |
(528) |
(310) |
Deferred tax liabilities |
(400) |
(360) |
(333) |
Invested capital |
10,184 |
9,829 |
9,880 |
Operating working capital
In % of revenue
Pensions
The net balance sheet position (IAS19) of the pension plans at the end of Q3 2016 was a deficit of €1.0 billion (year-end 2015: €0.6 billion). This was the result of the net effect of:
- Lower discount rates in the key countries
- De-risking of pension liabilities through non-cash buy-in transactions totaling €3.2 billion (£1.7 billion in Q3 and £0.9 billion in the first half of 2016), related to the ICI Pension Fund, which led to an adverse €0.6 billion impact in Other comprehensive income
Offset by:
- Top-up payments of €293 million, predominantly into the UK pension plans
- Higher asset returns
Workforce
At September 30, 2016, we employed 45,800 people (September 30, 2015: 45,800). With the introduction of our Global Business Services (GBS) organization as of January 1, 2016, some employees are now reported at corporate level instead of within the Business Areas.
Accounting policies and restatements
This interim financial report is in compliance with IAS 34 "Interim Financial Reporting". This report is unaudited. The IFRS changes applicable as from January 1, 2016 do not have any or only an immaterial effect on our Consolidated financial statements. Otherwise the accounting principles are as applied in the 2015 financial statements.
Seasonality
Revenue and results in Decorative Paints are impacted by seasonal influences. Revenue and profitability tend to be higher in the second and third quarter of the year as weather conditions determine whether paints and coatings can be applied. In Performance Coatings, revenue and profitability vary with building patterns from original equipment manufacturers. In Specialty Chemicals, the Functional Chemicals and the Surface Chemistry businesses experience seasonal influences. Revenue and profitability are affected by developments in the agricultural season and tend to be higher in the first half of the year.
Other activities
In other activities, we report activities which are not allocated to a particular Business Area. Corporate costs are the unallocated costs of our head office and shared services center in the Netherlands and also include country holdings. Pensions reflects pension costs after the elimination of interest cost (reported as financing expenses). Insurances are the results from our captive insurance companies. Other costs include the cost of share-based compensation, the results of treasury and legacy operations.