Segment information

Operating segments

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

The performance of the operating segments is assessed by reference to Adjusted EBITDA (as defined below), which is the segment's measure of profit or loss. Group financing (including finance costs and finance income), adjustment items and income taxes are managed on a Group basis and are not allocated to the operating segments.

Segment reconciliation for the three months ended September 30, 2018 and 2017:



	In USD k						In USD k
	For the Three Months Ended Sep 30,						For the Three Months Ended Sep 30,
	2018						2017
	Rubber		Specialties		Total segments		Rubber		Specialties		Total segments
Revenue	259,800		134,154		393,954		209,873		125,063		334,936
Cost of sales	(198,851	)	(85,947	)	(284,798	)	(166,901	)	(72,978	)	(239,879	)
Gross profit	60,949		48,207		109,156		42,972		52,085		95,057
Adjusted EBITDA	37,886		34,671		72,557		23,745		40,341		64,086
Adjusted EBITDA Margin	14.6	%	25.8	%	18.4	%	11.3	%	32.2	%	19.1	%
Depreciation amortization and impairment of intangible assets and property, plant and equipment	(13,482	)	(9,322	)	(22,804	)	(14,621	)	(9,303	)	(23,924	)
Share of profit of joint venture	(160	)	—		(160	)	(142	)	—		(142	)
Adjustment items					(7,750	)					(6,659	)
EBIT					41,843						33,361

Segment reconciliation for the nine months ended September 30, 2018 and 2017:



	In USD k						In USD k
	For the Nine Months Ended Sep 30,						For the Nine Months Ended Sep 30,
	2018						2017
	Rubber		Specialties		Total segments		Rubber		Specialties		Total segments
Revenue	773,743		418,496		1,192,239		625,128		363,486		988,614
Cost of sales	(599,649	)	(258,258	)	(857,907	)	(489,728	)	(215,412	)	(705,140	)
Gross profit	174,094		160,238		334,332		135,400		148,074		283,474
Adjusted EBITDA	109,465		120,232		229,697		78,090		112,953		191,043
Adjusted EBITDA Margin	14.1	%	28.7	%	19.3	%	12.5	%	31.0	%	19.3	%
Depreciation amortization and impairment of intangible assets and property, plant and equipment	(42,856	)	(28,977	)	(71,833	)	(43,392	)	(26,809	)	(70,201	)
Share of profit of joint venture	(453	)	—		(453	)	(404	)	—		(404	)
Adjustment items					12,222						(11,838	)
EBIT					169,633						108,600

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 has less bearing on the performance of its underlying core business. “Adjusted EBITDA” is the management’s measure of the segment result.

Adjusted EBITDA is reconciled to profit or loss as follows:



Reconciliation of profit or loss	In USD k				In USD k
	For the Three Months Ended Sep 30,				For the Nine Months Ended Sep 30,
	2018		2017		2018		2017
Profit for the period	24,151		15,140		101,070		50,383
Add back income taxes	12,169		8,436		45,891		27,422
Profit before income taxes	36,320		23,576		146,961		77,805
Add back finance costs	18,956		22,190		48,858		64,330
Add back share of profit of joint ventures	(160	)	(142	)	(453	)	(404	)
Add back other finance income	(13,273	)	(12,263	)	(25,733	)	(33,131	)
Earnings before taxes and finance income/costs (operating result (EBIT))	41,843		33,361		169,633		108,600
Add back depreciation, amortization and impairment of intangible assets and property, plant and equipment	22,804		23,924		71,833		70,201
EBITDA	64,647		57,285		241,466		178,801
Add back share of profit of joint venture	160		142		453		404
Add back restructuring (income)/expenses, net ⁽¹⁾	905		952		(27,580	)	1,674
Add back consulting fees related to Group strategy ⁽²⁾	2,016		1,100		3,051		2,149
Add back long term incentive plan	3,552		3,110		9,505		6,319
Add back other adjustments ⁽³⁾	1,277		1,497		2,802		1,696
Adjusted EBITDA	72,557		64,086		229,697		191,043

(1) Restructuring income or expenses are related to further actions undertaken to realign our worldwide Rubber footprint and reflects in particular the proceeds of the land sale in South Korea exceeding the associated cessation costs in the nine months ended September 30, 2018.

(2) Consulting fees related to external consulting for establishing and executing Group strategies relating to Rubber footprint realignment, conversion to US dollar and US GAAP, as well as costs relating to our assessment of feasibility for inclusion in certain US indices.

(3) Other adjustments in the three months ended September 30, 2018 related in particular to EPA related costs of USD 0.6 million. Other adjustments in the nine months ended September 30, 2018 related in particular to license fees required for certain innovative technologies to meet the EPA requirements of USD 1.1 million and other EPA related costs of USD 1.1 million. Other adjustments in the three months ended September 30, 2017 include costs related to hurricane Harvey flooding in our Kingwood, Texas office and Orange, Texas plant of USD 0.9 million and costs in association with our EPA enforcement action of USD 0.5 million. Other adjustments in the nine months ended September 30, 2017 include costs of USD 1.8 million in connection with our EPA enforcement action and hurricane Harvey flooding in our Kingwood, Texas office and Orange, Texas plant of USD 0.9 million, partially offset by a reimbursement following a successful objection against reassessed real estate transfer taxes in Germany of USD 1.5 million.

Geographic information by legal entity



Revenues	In USD k		In USD k
	For the Three Months Ended Sep 30,		For the Nine Months Ended Sep 30,
	2018	2017	2018	2017
Germany	155,138	133,077	480,112	394,952
United States	104,027	83,042	300,932	249,449
South Korea	62,871	62,135	208,929	180,337
Brazil	25,191	20,249	68,456	59,345
China	19,939	16,370	58,425	42,203
South Africa	15,106	12,163	43,731	36,095
Other	8,568	5,255	19,124	17,751
Rest of Europe*	3,114	2,645	12,530	8,482
Total	393,954	334,936	1,192,239	988,614


*	Country of domicile of the Group (Luxembourg) USD nil



Goodwill, intangible assets, property, plant and equipment	In USD k	In USD k
	As at Sep 30,	As at Dec 31,
	2018	2017
Germany	128,034	145,837
Sweden	83,732	80,974
Italy	71,997	72,980
Poland	48,347	49,933
Rest of Europe	4,282	4,443
Subtotal Europe	336,392	354,167

United States	72,281	70,530
South Korea	85,592	109,905
South Africa	29,319	32,007
Brazil	8,982	13,661
China	10,581	10,733
Other	22	28
Total	543,169	591,031