Operating segments

The Group’s business is organized by product for corporate management purposes and has the following two reportable operating segments for all periods presented: “Rubber” and “Specialties”.

The executive management committee, which is composed of the CEO, CFO and certain other senior management members is the chief operating decision maker in accordance with IFRS 8.7. The executive management committee monitors the operating segments’ results separately in order to facilitate decisions regarding the allocation of resources and determine the segments’ performance. “Adjusted EBITDA” is the management’s measure of the segment result.The executive management committee does not review reportable segment asset or liability information for purposes of assessing performance or allocating resources.

Adjustment items are not allocated to the individual segments as they are managed on a group basis.

Segment reconciliation for the years ended December 31, 2017, 2016 and 2015:



	In EUR k						In EUR k						In EUR k
	2017						2016						2015
	Rubber		Specialties		Total segments		Rubber		Specialties		Total segments		Rubber		Specialties		Total segments
Revenue	752,639		424,571		1,177,210		644,217		385,877		1,030,094		730,288		381,488		1,111,776
Cost of sales	(585,988	)	(256,411	)	(842,399	)	(483,339	)	(208,445	)	(691,784	)	(564,559	)	(226,908	)	(791,467	)
Gross profit	166,651		168,160		334,811		160,878		177,432		338,310		165,729		154,580		320,309
Adjusted EBITDA	98,757		128,900		227,657		86,108		136,658		222,766		93,704		115,006		208,710
Adjusted EBITDA Margin	13.1	%	30.4	%	19.3	%	13.4	%	35.4	%	21.6	%	12.8	%	30.1	%	18.8	%
Depreciation amortization and impairment of intangible assets and property, plant and equipment	(52,277	)	(33,633	)	(85,910	)	(59,116	)	(29,600	)	(88,716	)	(44,815	)	(27,963	)	(72,778	)
Share of profit of joint venture	(484	)	—		(484	)	(419	)	—		(419	)	(492	)	—		(492	)
Adjustment items					(17,485	)					(28,839	)					(13,047	)
EBIT					123,778						104,792						122,393

Definition of “adjusted EBITDA”

“EBIT” (operating result) is defined as profit or loss for the period before income taxes and finance income and finance costs. “EBITDA” is defined as EBIT before depreciation, amortization and impairment losses. For management reporting purposes and as defined in the credit agreement governing our term loans “Adjusted EBITDA” is defined as EBITDA adjusted for acquisition related expenses, restructuring expenses, consulting fees related to Group strategy, share of profit or loss of joint venture and certain other adjustments. The Company believes that each of these items have less bearing on its performance of the underlying core business.

Adjusted EBITDA is reconciled to profit or (loss) as follows:



Reconciliation of profit or (loss)	In EUR k
Reconciliation of profit or (loss)	2017		2016		2015
Profit for the period	66,823		44,626		42,874
Income taxes	20,737		23,240		23,838
Profit before income taxes	87,560		67,866		66,712
Add back finance costs	77,126		62,490		73,448
Deduction share of profit of joint ventures	(484	)	(419	)	(492	)
Deduction other finance income	(40,424	)	(25,145	)	(17,275	)
Earnings before taxes and finance income/costs (operating result (EBIT))	123,778		104,792		122,393
Add back depreciation, amortization and impairment of intangible assets and property, plant and equipment ⁽⁴⁾	85,910		88,716		72,778
EBITDA	209,688		193,508		195,171
Share of profit of joint venture	484		419		492
Restructuring expenses⁽¹⁾	4,612		17,623		—
Consulting fees related to Group strategy⁽²⁾	2,485		2,563		1,502
Long Term Incentive Plan	7,770		3,575		907
Other adjustments⁽³⁾	2,618		5,078		10,638
Adjusted EBITDA	227,657		222,766		208,710

(1) Restructuring expenses for the period ended December 31, 2017 are related to further actions undertaken to realign our worldwide Rubber footprint in particular in Korea and to a lesser extent in the USA. Restructuring expenses for the period ended December 31, 2016 relate to the strategic realignment of the worldwide Rubber footprint, resulting in a decision to cease production by December 31, 2016 of the plant in Ambès, France. These expenses comprise personnel related costs of EUR6.1 million and demolishing, site remediation and securing as well as accrued other expenses for the cessation of €11.5 million.

(2) Consulting fees related to the Group strategy include external consulting fees relating to the restructuring of our rubber footprint and associated activities of EUR1.2 million, external consulting fees relating to the Acquisition of EUR 0.5 million and other external consulting fees for establishing and implementing our operating, tax and organizational strategies including merger and acquisition strategies.

(3) Other adjustments (from items with less bearing on the underlying performance of the Company's core business) in the period ended December 31, 2017 primarily relate to costs associated with our EPA enforcement action of EUR 2.1 million, costs to remediate damages incurred by hurricane Harvey of EUR1.4 million and costs associate with the secondary offering of our shares, offset by EUR 1.3 million of reimbursements of reassessed real estate transfer taxes. Other adjustments for the period ended December 31, 2016 primarily relate to cost of EUR4.1 million associated with our EPA enforcement action (including accrued expenses for penalties and mitigation projects). Other adjustments in 2015 mainly include EUR 5.0 million costs related to address the EPA enforcement action, in particular to evaluate emission-removal technologies and legal advice, EUR1.8 million Sarbanes-Oxley first time implementation costs, EUR 1.8 million OECQ post acquisition-related costs and EUR 1.5 million reassessed real estate transfer tax related to the 2011 acquisition.

(4) Includes EUR10.3 million impairment of fixed assets at our Ambès, France plant for the period ended December 31, 2016 following the decision to cease production by December 31, 2016.

Geographic information



Revenues	In EUR k
Revenues	2017	2016	2015
Germany	464,638	398,430	415,944
United States	293,148	273,177	329,669
South Korea	218,377	199,772	234,442
Brazil	71,016	55,175	51,793
China	56,849	41,062	8,361
South Africa	41,592	33,231	43,669
Other	20,560	21,319	20,175
Rest of Europe*	11,030	7,928	7,723
Total	1,177,210	1,030,094	1,111,776

* Only a holding company is located in Luxembourg, accordingly no revenue is generated in the country of domicile.

Revenue generated for the year ended December 31, 2017 from the largest customer in the “Rubber”segment amounted to EUR 127,805k. Revenue from the largest customer in the “Rubber” segment for the year ended December 31, 2016 was EUR 102,699k and for the year ended December 31, 2015 revenue from the largest two customers in the “Rubber” segment were EUR120,609k and EUR 110,387k, respectively. There are no other customers with more than 10% of revenue in the three periods presented.



Goodwill, intangible assets, property, plant and equipment	In EUR k
	As at Dec 31,
	2017	2016
Germany	121,602	131,975
Sweden	67,518	67,432
Italy	60,852	61,438
Poland	41,635	40,319
Rest of Europe	3,705	3,321
Subtotal Europe	295,312	304,485
United States	58,809	85,123
South Korea	91,641	71,590
South Africa	26,688	27,684
Brazil	11,391	16,839
China	8,949	8,468
Other	23	34
Total	492,813	514,223