Alternative performance measures

EBITDA

Corbion believes the measure provides valuable insight in the understanding of operating profitability and the cash flow component thereof. Further, it is a common APM used by other companies, therefore providing better comparability of Corbion's performance to other companies. This APM is also relevant for bonus targets (IAS 19/ IFRS 2), segment information (IFRS 8) and impairment testing (IAS 36).

Adjustments, Adjusted EBITDA, Adjusted operating result, Adjusted result after taxes, Adjusted EBITDA margin%

Adjustments and the related adjusted APMs show items that in view of management require disclosure to assist in making appropriate comparisons with prior periods and to assess the underlying operating performance of the business as it excludes sizeable items of an incidental/one-off nature. This APM is also relevant for bonus targets (IAS 19/ IFRS 2), segment information (IFRS 8) and impairment testing (IAS 36).

Organic EBITDA growth, Organic sales growth, Organic operating profit growth, Adjusted EBITDA excluding acquisitions and divestments, at constant currencies

The organic growth measures are used to explain the underlying result development of the business by separate disclosing, and thus excluding, the impacts from currencies and acquisitions and divestments. It thus provides a better basis for comparison and assessment of business performance without distortion from these external sources.

Covenant EBITDA, Interest cover, Covenant net debt position, Total net debt position

Corbion believes these measures are important as the existing debt providers to the company (RCF and USPP lenders) require these measures to be used in the external loan documentation.

ROCE, Capital employed, Average capital employed

ROCE and the related APMs are relevant measures analyzing profitability and for comparing profitability levels across companies in terms of capital sizes and returns therefrom. Further, these are widely used APM’s by other companies, and therefore are providing better comparability of Corbion’s performance to other companies. This APM is also relevant for bonus targets (IAS 19/ IFRS2).

Free cash flow

This measure provides insight into the cash flows available for debt reduction and dividend payments. Free cash flow should not be read as an alternative to, for example, operating cash flow. This APM is also relevant for bonus targets (IAS 19).

EBITDA

The operating result before depreciation, amortization, and (reversal of) impairment of (in)tangible fixed assets.

Adjusted EBITDA

EBITDA as defined above after applying adjustments.

Adjusted EBITDA margin %

Adjusted EBITDA as defined above divided by net sales x 100.

Adjusted EBITDA excluding acquisitions and divestments, at constant currencies

Adjusted EBITDA as defined above excluding the impact of acquisitions and divestments, based on prior-year currency rates.

Covenant EBITDA

Adjusted EBITDA as defined above increased by cash dividend of joint ventures received and annualization effect of newly acquired and/or divested subsidiaries.

Organic EBITDA growth

Adjusted EBITDA as defined above versus prior year excluding impact of acquisitions and divestments and excluding currency impact.

Organic sales growth

Sales versus prior year excluding impact of acquisitions and divestments and excluding currency impact.

Adjusted operating result

Operating result after adjustments.

Adjusted result after taxes

Result after taxes after adjustments.

Interest cover

Covenant EBITDA as defined above divided by net interest income and charges.

Covenant net debt position

Borrowings (excluding subordinated loans) and lease liabilities less cash and cash equivalents, including third-party guarantees which are required to be included under the debt covenants.

Total net debt position

Borrowings and lease liabilities less cash and cash equivalents, including third-party guarantees which are required to be included under the debt covenants.

Capital employed

The sum of equity, borrowings, lease liabilities, and other non-current liabilities minus cash and cash equivalents.

Average capital employed

Average of the quarterly average capital employed in the reporting period.

Free cash flow

Cash flow from operating activities plus cash flow from investment activities.

Return on capital employed (ROCE)

Adjusted operating profit as defined above, including adjusted operating profit from joint ventures and associates, divided by the average capital employed x 100.

Adjustments

Adjustments relate to significant items in the income statement of such size, nature, or incidence that in view of management require disclosure to assist in making appropriate comparisons with prior periods and to assess the operating performance of the business. These items include amongst others write-down of inventories to net realizable value, reversals of write-downs, impairments, reversals of impairments, additions to and releases from provisions for restructuring and reorganization, results on assets sold, gains on the sale of subsidiaries, joint ventures and associates, and any other provision being formed or released. Restructuring costs are defined as the estimated costs of initiated reorganizations, which have been approved by the Executive Committee, and which generally involve the realignment of certain parts of the organization. The company only adjusts for items when the aggregate amount of the events per line item of the income statement exceeds a yearly threshold of € 0.5 million as well as adjustments, each above € 0.1 million, in relation to previously recognized adjustments.