synthomer plc 
annual report 2014 
leading innovation  
in aqueous polymers
synthomer plc annual report 2014 innovation growth 
excellence
synthomer is a specialty 
chemical company and one 
of the world’s leading producers 
of aqueous polymers
using our innovative technology we 
produce sophisticated formulations 
for thousands of customers in a 
diversity of industries from coatings 
and construction to healthcare 
and automotive
we help our customers to create 
marketleading products ranging from 
adhesives and sealants to medical 
gloves carpets and paints which are 
used every day all around the globe
we have built a strong platform for 
growth through our leading market 
positions in europe and expansion into 
emerging markets which is underpinned 
by our exposure to global megatrends 
including an increasing demand for 
environmentally friendly technology
contents
overview 
01 financial and commercial highlights
02 chairman’s statement
strategic report
04 our business model 
05 our strategy 
06 our products
07 our markets
08 our locations
10 our people
12 chief executive officer’s report
16 financial review
18 principle risks and uncertainties
20 corporate social responsibility report
governance
24 directors and advisers
25 corporate governance
33 directors’ remuneration report
46 report of the directors
49 statement of directors’ responsibilities
group financial statements
51 independent auditor’s report
56 consolidated income statement
57 consolidated statement of 
comprehensive income
57 consolidated statement of changes in equity
58 consolidated balance sheet
58 analysis of net borrowings
59 consolidated cash flow statement
59 reconciliation of net cash flow from operating 
activities to movement in net borrowings
60 notes to the consolidated financial statements
company financial statements
97 independent auditor’s report
99 company balance sheet
100 notes to the company financial statements
other information
107 principal subsidiaries and joint ventures
108 fiveyear financial summary overview
synthomer plc annual report 2014 01
financial highlights
underlying  
performance
a
ifrs
as reported
2014
£m
2013
£m
2014
£m
2013
£m
continuing operations
total sales
b
9905 10549 9905 10548
ebitda note 5 1180 1240 1180 1240
operating profit 965 1048 651 750
profit before taxation 860 901 538 591
earnings per share 195p 207p 133p 142p
ordinary dividend per share note 10 78p 60p 78p 60p
special dividend per share note 10 78p – 78p –
net borrowings
c
1121 1336 1141 1385
a
 
underlying performance excludes special items as shown in the consolidated income statement 
 this is primarily amortisation of acquired intangibles of £270 million 2013 £284 million
b
 total sales includes group revenue and share of joint venture revenue
c
 see page 58
commercial highlights
•	 £860 million pbt 
•	 successfully refinanced 
five year £210 million committed 
bank facility
•	 successfully completed purchase of 
final 50 of synthomer finland oy
•	 commissioned new 28 kte 
production line in saudi arabia 
•	 16 new product launches achieved 
during the year and seven patent 
applications made
£860m
profit before 
taxation

  
£9905m
total sales

 based on underlying performance
 19  5p
earnings  
per share

 15  6p
dividend  
per share 
ordinary 
and special
30
change  
in ordinary 
dividend  
per share
£1121m
net debt

financial and commercial highlights 02 synthomer plc annual report 2014
overview
after a positive start to the year the european economy 
faltered causing demand to weaken during the second half 
in asia we saw the opposite with a more intense competitive 
environment putting pressure on nitrile margins during the 
first half of the year but an improving position during the 
second half in the final two months we saw a substantial 
decline in our raw material costs as the price of oil fell and 
these movements are expected to have some benefit on 
the performance of the group in 2015
in the context of this challenging macroeconomic 
environment the group’s underlying volumes in 2014 
remained in line with 2013 as i wrote last year synthomer 
has continued to demonstrate its resilience and focus on 
cost control product innovation research and development 
and capacity expansions in emerging markets
full year performance
underlying group total sales declined 61 to £9905 million 
2013 £10549 million although on a constant currency 
basis sales reduced by 20 on underlying volume in line 
with the prior year 
underlying group operating profit for the year was 
£965 million down 79 2013 £1048 million this was 
partly due to the weakening of the euro that impacted 
operating profits in our european and north american ena 
business by £34 million on a constant currency basis profit 
was down by 34 mainly due to the lower margin issues 
we had in nitrile in our asia and row business arw in 
the first half
underlying group profit before tax was £860 million 
2013 £901 million a decline of 46 whilst earnings 
per share at 195p 2013 207p were down by 58 
after deducting special items ifrs profit before tax 
was £538 million 2013 £591 million
strategy
our strategy remains unchanged and we continue to focus 
on delivering growth through geographic expansion in 
emerging markets where megatrends such as population 
growth urbanisation and increasing wealth are driving 
demand for our products in these highgrowth regions 
we are able to leverage our european ‘centres of excellence’ 
in leading technology rd and manufacturing capability 
to give us a strong competitive advantage we have started 
to see the results of the operational efficiency programme 
we began during 2014 in europe and we anticipate this 
will be rolled out into key facilities in asia later in 2015
additionally as part of this strategy we continue to look 
for further investment opportunities to expand our footprint 
in asia
investment
synthomer continues to be a highly cash generative business 
giving us the means to invest in future growth during the 
year we commissioned a new 28 kte dispersion line in our 
saudi arabian plant and we completed the upgrade of one 
of our german plants to allow us to produce our biolatex 
products for the paper industry our investment in rd 
continues to benefit the business with 16 of 2014 sales 
coming from products developed in the last five years and  
a further seven patent application filings during the year
balance sheet
net debt at £1121 million was £215 million lower than the 
start of the year this represents a net borrowing to ebitda 
ratio of less than one times which the board considers to 
be at the lower end of our target leverage position
dividend
the board has recommended an increased final ordinary 
dividend of 48p per share making a total ordinary dividend 
for the year of 78p the full year ordinary dividend represents 
an increase of 30 over the previous year and a dividend 
cover of 25 times in line with the policy we announced with 
our interim results
in the interim results we also set out our new framework for 
balance sheet management and consistent with that i am 
also pleased to announce that the board recommends a 
special dividend of 78p per share bringing the total dividend 
for the year to 156p
chairman’s statement overview
synthomer plc annual report 2014 03
safety health and environment
the group is committed to the continuous improvement 
of its performance in respect of safety health and the 
environment i am pleased that we have been able to improve 
our safety record yet again and reduce our greenhouse gas 
emissions continuous improvement of our safety health 
and environmental performance remains a key priority for 
the group going forward 
our people
one of the keys to our continuing success is our people 
this year the group introduced a ‘core values’ programme 
that defines the qualities and characteristics that we would 
like to see in ourselves our colleagues and our business 
these core values have at their foundation safety health 
and environment and will be an important element in defining 
the group and its ongoing success i would like to thank 
our people for the positive way they have embraced this 
programme and for their support and hard work during 2014
board composition
i am delighted that calum maclean has joined as ceo 
just after the year end he was previously at ineos where 
he held a number of senior roles since 1998 most recently 
as board director ineos group and chairman styrolution 
 petroineos he has succeeded adrian whitfield who has 
over the last eight years transformed the group from a 
diverse chemical conglomerate into the focused aqueous 
polymer business that you see today i would like to thank 
adrian for his enormous contribution to the group and on 
behalf of the board and the group wish him every success 
for the future
as previously announced david blackwood chief financial 
officer for the past seven years advised the board in 
december of his intention to retire from the company during 
2015 similarly after eight years as a nonexecutive director 
chairing the audit committee and more recently fulfilling the 
role of senior independent director jez maiden has 
indicated that he will not be standing for reelection at the 
2015 agm searches for suitable successors for both 
positions are well advanced there will be other opportunities 
to thank both david and jez for their outstanding 
contributions to synthomer but i would like to record my 
personal thanks to all three departing board colleagues 
adrian david and jez for their support and hard work over 
many years
outlook
we remain cautious on the european economy and its 
impact on demand but some benefit from lower raw material 
prices may help offset any volume weakness however 
the weakness of the euro will affect the translation of our 
european business results in asia we expect to see an 
improved performance from nitrile given the continuing 
tightening in the supply demand position and improving 
margins overall the board is confident the group is well 
positioned for future growth
neil johnson
chairman
25 february 2014 04 synthomer plc annual report 2014
innovation
•	 close to customers understanding their needs
•	 added value formulations created not chemicals
•	 highly skilled and experienced people
•	 global rd capabilities close to customers
•	 development and protection of intellectual property
•	 challenging manufacturing processes for efficiency
excellence
•	 commitment to excellence in our safety health and 
environmental performance 
•	 global view with local market expertise
•	 highly cost effective flexible production capabilities
•	 world class people
•	 flexible logistics operations
•	 commercial model
growth
•	 leveraging global megatrends
•	 focus on development in high growth markets
•	 over 4000 customers across the world
•	 broad product range
•	 european manufacturing engine room and centre of excellence
•	 expand global footprint sharing group technology 
and knowledge
•	 local production sites are close to customers and keep 
high water content polymers economic
our business model
how we create value
innovation
excellence
growth strategic report
synthomer plc annual report 2014 05
actions in 2014
•	 successfully launched 16 new products 
including innovative wood coating products 
see page 15
•	 more than doubled the patent applications 
in 2014 compared with 2013 with seven 
patents applications filed
•	 completed the restructuring in our rd 
department to create three ‘centres of 
excellence’ across the world 
actions in 2014
•	 reviewing and challenging our operational 
performance through our ‘synthomer 2015’ 
programme in europe see page 11
•	 introduced synthomer ‘core values’ 
for our people see page 10
•	 continuing the development of our skills 
through the use of the ‘cogent gold 
standard’ programme in the uk  
see page 11
•	 increased rd capability in asia to 
provide 24 hour a day services in our 
polymerisation laboratory
actions in 2014
•	 products issued in the last five years have 
grown to 16 of revenue 2013 12
•	 design of new latex products for the 
glove market have not only improved 
properties but freed up capacity in our 
manufacturing facilities 
•	 invested in butadiene gas storage facility 
that protects our raw material supply
our strategy
driving our  
business forward
investing in innovation and knowledge
•	 continue to develop a strong pipeline on new and 
innovate products
•	 develop a portfolio of commercial patents
•	 share best practice and knowledge across the group
creating excellence in our business 
•	 embedding safety health and environmental performance 
in all our operations
•	 ‘centres of excellence’ in europe in innovation manufacturing 
and engineering to provide a strong base to grow the rest  
of the business
•	 investing in our people
driving growth 
•	 growing our new product sales contribution
•	 aligns synthomer and market needs
•	 develop supply chain excellence  06 synthomer plc annual report 2014
sales by product
47
latex
25
specialties
35
nbr
65
sbr
4
compounds
24
dispersions
our products
no 1 
nbr latex 
producer 
globally
no 1 
sbr latex producer 
in europe
no 1
high solids 
sbr latex 
producer 
globally
synthetic latex
consists of three principal product families styrene 
butadiene rubber sbr manufactured in germany 
finland italy and malaysia nitrile butadiene rubber 
nbr manufactured in italy and malaysia and 
high solids styrene butadiene rubber hssbr 
produced in germany hssbr is shown in 
specialties in the chart
dispersions
consists of primarily vinyl and acrylic based 
emulsion polymers used in a wide range of 
applications including in the coating construction 
adhesives and textile industries these products are 
manufactured at our facilities in germany italy uk 
south africa middle east malaysia and vietnam
compounds
these products are specially formulated at our 
plants in the uk netherlands and egypt using sbr 
latex hssbr latex natural rubber latex and a wide 
range of other functional materials
specialties
comprise a number of specialty polymers mainly 
nonaqueous including polyvinyl alcohol liquid 
polybutadiene hssbr latex and chloroprene 
specialties also includes inorganic products based 
on copper tin and iodine from the group’s one 
remaining nonpolymer business strategic report
synthomer plc annual report 2014 07
health and protection
medical clean room and industrial gloves medical 
devices eg catheters condoms and other dipped 
latex goods 
paper  
coated paper and board graphic paper packaging 
and specialty paper 
construction and coatings
construction
cement and mortar modification bitumen 
modification concrete repair systems primers 
flooring and construction adhesives liquid applied 
membranes twopack membranes flexible roof 
coatings sealants and primers
coatings
acrylic and vinyl acetate copolymers for walls interior 
and exterior glosssemigloss emulsion paints 
plasterstextured finishes flexible wall coatings wood 
paints varnishes and stains anticorrosion paints 
industrial coatings and waterbased fillers 
carpet compounds and foam
binding and backing of tufted and other carpets foam 
backed carpets automotive and artificial turf foams 
for mattresses pillows and shoes
functional polymers
nonwoven fabrics insulation textile coatings 
printing gaskets masking tapes specialty 
nongraphic papers abrasives tyre cord pressure 
sensitive adhesives packaging and wood adhesives 
performance polymers
lithene ultra
®
 – low voc liquid polymers for 
automotive sound damping alcotex – polyvinyl 
alcohol used as a suspending agent in the pvc 
polymerisation process polyvinyl acetate – for solvent 
adhesives polyester resins and composites inorganic 
nonpolymer specialties – for catalysts flame 
retardants and other niche applications
sales by market
1 construction and coatings – 27
2 health and protection – 19
3 carpet compounds and 
 foam – 17 
4 paper – 16
5 functional polymers – 13
6 performance polymers – 8
1
4
5
6
2
3
sales by destination
1 western europe – 53 
2 eastern europe – 6
3 north america – 4 
4 asia – 28
5 africa and middle east – 9 
6 rest of world – 1
1
4
5
6
2
3
our markets
no 1
dispersions 
producer in 
malaysia 
37
of total sales 
to emerging 
markets
no 1 
acrylic and vinylic  
producer in the  
middle east 08 synthomer plc annual report 2014
06
05
09
08
14
15
10
11
03
04
20
12
01
17
02
16
18
07
19
13
our locations
global focus
locations
china 01 shanghai synthomer chemical co ltd  
guangzhou and shanghai
  
egypt 02 synthomer sae 10th of ramadan city 
england 03
03
04
05
06
synthomer uk ltd harlow
synthomer plc harlow
synthomer uk ltd ossett
synthomer uk ltd stallingborough
william blythe ltd accrington
  
 
finland 07 synthomer finland oy oulu
germany 08
09
10
synthomer deutschland gmbh langelsheim
synthomer deutschland gmbh marl
synthomer deutschland gmbh worms
  
italy 11 synthomer srl filago 
malaysia 12 
13
 revertex malaysia sdn bhd and
synthomer sdn bhd kluang and kuala lumpur
synthomer sdn bhd and  
quality polymer sdn bhd pasir gudang
  
netherlands 14
15
synthomer bv  hasselt
synthomer bv  oss 
saudi arabia 16 synthomer middle east company dammam 
south africa 17 synthomer pty ltd durban  
uae 18 synthomer sales gmbh dubai
usa 19 synthomer llc atlanta
vietnam 20 synthomer vietnam co ltd ho chi minh city
key  manufacturing site  sales office  rd centre  head office
 sales by destination
 several sites have more than one manufacturing plant
69 
europe and 
north america 
sales
13 manufacturing plants  
2 rd centres
 sales by destination

 strategic report
synthomer plc annual report 2014 09
20
12
01
17
02
16
18
07
19
13
our manufacturing plants in europe are well located to supply our customers with 
a strong presence in germany the industrial heartland of europe in asia we have 
manufacturing in malaysia and vietnam and growing sales and technical services 
activities in china and we also have long established positions in the middle east 
and south africa
31 
asia and  
rest of world 
sales
8 manufacturing plants 
1 rd centre

 10 synthomer plc annual report 2014
empowering our employees
our people
37  
employees  
in emerging 
markets
2138 
total group 
employees
our people are at the heart of everything we do 
from rd and manufacturing to sales and logistics 
we rely on every employee to help create our culture 
and drive the business forward 
the organisation has almost doubled in size over the 
past five years and we understand that it is important 
to maintain consistency in our approach and goals to 
ensure the continued success of our business and 
people in 2014 we implemented our ‘core values’ 
programme which defines the qualities and 
characteristics that we would like to see in ourselves 
our colleagues and our business the values were 
created through consultation with staff from across 
the group a range of aspects and topics which were 
deemed important to a successful business were 
discussed and formulated into six values leadership 
decision making communication diversity teamwork 
and performance these values were seen as all 
contributing to and enforcing our commitment to 
safety health and environment she 
these values when fully embedded will create focus 
and empower our employees to develop their own 
skills and work together towards common goals 
across the business
diversity
total male female
board 9 9 –
senior management 23 19 4
employees 2138 1746 392
240 
employees working  
in innovation  strategic report
synthomer plc annual report 2014 11
sharing operational 
excellence
excellence 
in 2014 synthomer began a review of operational 
performance through the ‘synthomer 2015’ 
programme across europe the aim was to challenge 
areas of reduced efficiency and share operational 
best practice throughout the european facilities 
a team of synthomer staff worked extensively with 
an external consultant visiting each of the european 
businesses to find areas where efficiency or 
production improvements could be made the review 
highlighted a number of areas at each site where 
improvements could be made the recommendations 
included streamlining procedures and workplace 
standards as well as defining competency models 
and training schemes to ensure our people have the 
right knowledge to manage our operations effectively 
although ‘quickwin’ changes have already been made 
the synthomer ‘operational excellence’ team is 
continuing to support local management teams in 
transforming their operations and implementing further 
improvements the team has already spent time at our 
three sites in germany and will be working with the 
management of the other european sites over 2015 
in addition the programme is now planned to be rolled 
out in malaysia in 2015 and 2016
elsewhere in europe we are continuing the 
development of our staff with great successes 
through the cogent gold standard programme 
in the uk at our harlow and stallingborough sites 
the cogent gold standard is a framework of 
continuous professional development which sets 
out the skills and competencies required for top level 
performance in key roles within the manufacturing 
and chemical industry within synthomer the 
framework is now used to ensure all manufacturing 
staff possess the level of skill and knowledge to carry 
out their roles to the high standards we expect in 
our business 
innovation
excellence
growth 12 synthomer plc annual report 2014
we continue to invest in our business with the commissioning 
of a new 28 kte production line in our saudi plant which 
has taken the name plate capacity of the plant to 100 ktes 
we also completed the upgrade of one of our german sbr 
plants to allow us to produce our biolatex for the paper 
industry which we had previously introduced into our oulu 
plant in finland this will allow us to move almost half of our 
paper latex sales to the new biolatex grade – and we expect 
to be at this run rate by the end of 2015
our oulu plant in finland was a 5050 joint venture in 
october 2014 we acquired the remaining 50 per cent to 
make the business a whollyowned subsidiary
we continue to invest in our people and during 2014 we 
have engaged in a number of development programmes 
to support our staff and our business these programmes 
include the introduction of synthomer ‘core values’ 
these core values have at their foundation safety health 
and environment and will be an important element in defining 
the group and its ongoing success
after a reasonably benign year for raw materials in 2013 
2014 saw some substantial movements vinyl acetate 
monomer spiked severely midyear and all monomers 
declined sharply towards the end of the year due to falling 
oil prices and deteriorating supply demand positions for the 
producers of our core monomers such as butadiene and 
styrene overall these movements were actively managed 
in our selling prices to customers
 
divisional performance
we report the performance of the group as two segments 
‘europe and north america’ ena and ‘asia and rest of 
world’ arw 
the reported results are on an ‘origination basis’ meaning 
the segmental sales and operating profits are reported based 
on where the product is manufactured in 2014 ena 
accounted for 69 of group sales and arw for 31 of 
group sales as we export many specialty products from 
europe to asia looking at sales on a destination basis ena 
comprises 62 of group sales with arw accounting for 
38 within the two segments we split our sales and 
marketing activities into six areas which we refer to as 
strategic business units sbus these comprise ‘paper’ 
‘carpet compounds and foam’ ccf ‘construction and 
coatings’ cc ‘functional polymers’ fp ‘performance 
polymers’ pp and ‘health and protection’ hp – which 
includes our asian nitrile latex business
europe and north america ena
underlying performance 2014 2013
sales £m 6872 7448
operating profit £m 857 898
volumes ktes 7943 8055
having joined synthomer as your chief executive officer 
in january 2015 i have not led the business through the 
year under review however whilst the broader trading 
environment in both europe and asia has undoubtedly 
made it a difficult year i believe that the group’s robust 
performance in the current environment demonstrates 
its ongoing potential for future growth
in my first few weeks i have enjoyed exploring the business 
and listening to the views of my colleagues i look forward 
to working closely with my new colleagues in the year ahead 
and taking synthomer forward 
overview
2014 was another challenging year for the group with the 
absence of a sustained recovery in europe and a tough 
competitive environment impacting margins in nitrile during 
the first half of the year underlying group operating profit of 
£965 million was down 79 34 on a constant currency 
basis on prior year
in the first half of 2014 we saw some encouraging signs 
in europe with good underlying growth in our construction 
related markets only to see the position reverse later in 
the year as the prospect of a european economic recovery 
fell away in asia we had a disappointing start to the year 
as competitive pressure and overcapacity amongst our 
customers the glove manufacturers combined to put 
downward pressure on nitrile margins after we had seen 
improvements over the course of 2013 encouragingly we 
saw nitrile margins improve again over the course of the 
second half of 2014 as the supply demand position for 
nitrile latex tightened
net of lower interest costs and a slightly higher tax rate 
underlying earnings per share were down 58 at 195p 
2013 207p
our rate of innovation is accelerating with a total of seven 
patent filings in 2014 these patents covered not only 
extensions of our existing technology but also included new 
processes and a new polymer composition patent 
we have also had a record number of new product launches 
this year with a total of 16 products coming to market 
these include products designed to improve wood coatings 
and new nitrile latex grades for the thin walled glove market 
we have a good pipeline of products in development for the 
coming years new products launched in the last five years 
contributed over 16 of 2014 group revenues compared 
with 12 in 2013 we remain confident of being able to 
improve this percentage and have a mediumterm target 
for new products launched in the preceding five years to 
contribute 20 of annual group revenues
chief executive officer’s report strategic report
synthomer plc annual report 2014 13
asia and rest of world arw 
underlying performance 2014 2013
sales £m 3033 3101
operating profit £m 178 231
volumes ktes 3965 3762
operating profit in our arw segment was £178 million 
down £53 million 229 compared with 2013 and down 
17 on a constant currency basis volumes have increased 
by 203 ktes 54
nitrile volumes were ahead some 3 on 2013 with a 
noticeable strengthening in demand towards the end of 2014 
nitrile was impacted significantly in the first half of the year by 
intense competition and customer pressure due to excess 
glove manufacturing capacity we recovered our margins in 
the second half with margins progressively strengthening 
exiting the year ahead of 2013 average levels
the arw nonnitrile business has seen good demand with 
volumes up though margin was slightly lower due to the 
competitive effects of new manufacturing capacity coming 
on line in malaysia
there has been a big focus on product development for the 
asian coatings market with the launch of a new vinylic based 
binder that gives formulating flexibility to optimise the cost
performance balance we have also extended our alkyd 
product line with a product offering improved gloss retention 
to extend the lifetime of interior and exterior paints gloss finish 
coatings additionally a number of other coatings products 
are in the initial commercialisation phase for example for 
use as concrete primer systems premium interior paints and 
exterior coatings
we launched two new nitrile grades towards the end of the 
year which could create up to 50 ktes of new capacity 
compared to older grades due to their shorter 
manufacturing times
in the middle east our new 28 kte line was commissioned 
taking the site’s capacity to 100 ktes we still anticipate 
strong nitrile growth going forward and are considering 
carefully the timing of new nitrile capacity expansion over 
and above that created by our recent product launches
calum maclean
chief executive officer
25 february 2015
underlying operating profit in our ena segment was down by 
46 yearonyear 07 down on a constant currency basis
aggregate volumes were 14 lower this includes the full 
recognition of synthomer finland oy formerly eka 
synthomer oy from the acquisition date of our jv partner’s 
50 holding and the effect of exiting 18 ktes of very low 
margin compound business during the year excluding these 
volumes decreased by 08 in 2014 having been 26 
ahead at the half year on the same basis
the drop in demand in the second half reflected the general 
european economic climate and some destocking towards 
the end of the year following a drop in the cost of raw 
materials and customers choosing to wait for prices to 
stabilise before rebuilding stocks overall volumes in our 
main sbus were broadly flat other than paper where we 
are continuing to see a structural decline in this market
we saw some margin erosion in 2013 reaching a low point 
as we exited that year margins recovered over the course 
of 2014 with average margins ahead of 2013 on a constant 
currency basis towards the end of 2014 margins were 
helped by declining raw material prices though the benefit 
of this looking forward is likely to be modest margins were 
weaker in paper but improved in ccf fp and cc
there have been a number of product launches in ena 
during the year our focus on high performance coatings 
applications has led to the introduction of binder systems for 
parquet flooring and exterior joinery applications also the 
latest regulatory requirements have resulted in us launching 
new products into a number of markets these include a 
range of sbr latex for cement flexibilisation a formaldehyde 
free nonwoven binder and a flooring adhesive that meets 
the most stringent european regulations we have also been 
able to use our proprietary acrylic technology in new cement 
membrane applications and introduce two new sbr 
products in the coated paper market where we also saw 
further market uptake of our biopolymer hybrid the first 
half of the year saw the market introduction of our new 
alcotex product for the pvc industry
we have been progressing with our performance 
improvement programme for europe named ‘synthomer 
2015’ which we announced with our 2013 results this 
programme has reviewed aspects of our processes energy 
efficiency and productivity and established ways to optimise 
these across all functions all the european plants have been 
reviewed during 2014 and areas for improvement have been 
identified our internal team is now spending time with each 
of the plants and working with them in order to implement 
planned improvements we continue to expect efficiencies 
and savings of at least €10 million per annum with some of 
those savings expected to crystallise in 2015 the costs of 
the project are still in line with our expectations of €15 million 
of which €5 million will be capital we have recognised costs 
of €56 million £45 million in the year and these can be seen 
in the special items note of the 2014 financial statements 14 synthomer plc annual report 2014
growth 
innovation
excellence
growth
never stay still
since the commissioning of our first nbr latex plant 
in malaysia in 2000 we have moved from strength to 
strength in this area and continuously expanded and 
upgraded our facilities 
in particular our plant in pasir gudang originally 
commissioned in 2009 with a capacity of 100 ktes 
per year has been developed into a world class 
facility through substantial expansion and investment 
in 2012 and 2013 the site now features two 
additional reactor lines and production capacity that 
has increased to 160 ktes per year also as part of 
this investment the facility was upgraded in order to 
produce our xsbr grades 
our commitment to growth and innovation never 
stops and we began preparing for the next generation 
of latices for the manufacture of protective gloves in 
2015 and beyond the two new grades produced 
‘synthomer 6330’ and ‘synthomer 6338’ can be 
formulated to allow low glove weight with excellent 
tensile strength and elongation ‘synthomer 6338’ 
is our new flagship offering for ‘disposable’ protective 
gloves and was introduced to the market at the end 
of 2014 this new synthetic nbr latex product shows 
superior elastomeric performance and is targeted at 
the medical glove market where gloves need to 
provide good touch and feel 
in creating these new grades we also invested in new 
technology to produce our grades more effectively 
whilst at the same time reducing production time 
which allows greater capacity from the same 
production facilities 
with quality and customer service at the forefront of 
our business we believe that these and future planned 
investments in product innovations and new technology 
will allow us to remain at the forefront of the industry  strategic report
synthomer plc annual report 2014 15
innovation
innovation
excellence
growth
global trends drive  
innovation in coatings 
synthomer’s commercial and rd teams continually 
monitor global trends and the impact that they may 
have on our markets two trends that have intersected 
that provided an opportunity for synthomer to create 
new products are governmental regulations that 
require a move away from high emission solvent 
based paints and the growing use in building of 
wood both as a construction material and in flooring 
these trends are very noticeable in both europe 
and asia
synthomer has developed a new range of water
based acrylic dispersions for use in interior and 
exterior wood coating products that combine high 
performance while meeting the latest emission 
regulations two products recently launched are
•	 plextol w 1078 which is designed as a standalone 
binder for parquet floor coatings this pure acrylic 
emulsion helps achieve a high hardness and good 
chemical resistance for the final product whilst 
making it easier to apply featuring faster drying 
time and reducing the level of solvent required 
by using our innovative polymerisation technology 
the binder can be formulated into high quality 
speciality coatings increasingly replacing solvent 
based ones and 
•	 plextol w 1080 which is an acrylic emulsion for 
high performance exterior joinery coatings  
this new polymer system allows a number of key 
performance criteria to be met simultaneously 
notably allowing a coating to be flexible even in cold 
conditions and still providing good adhesion onto 
different types of woods in addition it is designed 
to provide a coating with the necessary properties 
to allow the coating to last for a long time even in 
challenging climatic conditions
 technical details of these products can be found on our website –  
wwwsynthomercom 16 synthomer plc annual report 2014
income statement
sales operating profit and profit before tax – 
underlying performance
total sales decreased by 61 to £9905 million 
2013 £10549 million with group operating profit 79 
lower at £965 million 2013 £1048 million this was due 
to weakening exchange rates the generally difficult economic 
environment in europe and continued challenging market 
conditions in asia primarily in the first half of the year on 
a constant currency basis sales and ebit were 20 and 
34 down respectively
with lower interest costs in 2014 the group’s profit before 
tax at £860 million was down by 46 and similar to 2013 
on a constant currency basis
 
tax and eps – underlying performance
the group’s underlying tax rate of 214 2013 20 remains 
low reflecting the benefits of pioneer status extended tax 
holiday on one of our businesses in malaysia and a zero rate 
in the uk the group does not expect to pay tax in the uk 
for the foreseeable future due to brought forward losses and 
deficit contributions to the uk pension scheme which are 
tax deductible
profit attributable to noncontrolling interests was £14 million 
2013 £18 million
as a result the underlying earnings per share for 2014 was 
195p compared to 207p per share for 2013 a decrease 
of 58
special items and ifrs
the group reports its financial results according to 
international financial reporting standards ifrs however 
to provide a clearer indication of the group’s underlying 
performance a number of special items are split out and 
shown in a separate column of the consolidated income 
statement due to their oneoff or noneconomic nature and 
are excluded from the comments on underlying performance 
above and throughout the chief executive’s review of 
business performance special items comprise
•	 net acquisition credit of £01 million
•	 restructuring costs associated with the ‘synthomer 2015’ 
european programme of £45 million there will be some 
additional costs associated with this programme during 
2015 and 2016 with the total cost for the project expected 
to be £8 million €10 million 
•	 various crosscurrency and interest rate swaps for 
hedging purposes which involve maturities of up to three 
years ifrs requires that where the strict requirements of 
ias 39 are not met changes in the market value should 
be recognised annually in the income statement however 
such financial instruments are maintained by the group for 
the length of the contract and over their lifetime have a fair 
value of nil hence the notional annual adjustment a loss 
of £08 million 2013 £12 million loss is segregated from 
the underlying performance
•	 amortisation of intangibles of £27 0 million comprising 
£258 million in the company and subsidiaries and 
£12 million in share of joint ventures ifrs acquisition 
accounting requires an explicit number to be placed on 
certain intangibles and amortised through the consolidated 
income statement with the balance of the excess of the 
purchase price over the physical assets being carried as 
goodwill which is subject to annual impairment testing 
the amortisation expense arising from this has been 
treated as a special item and will continue to be so until 
the associated intangible assets are fully amortised 
after deducting special items from underlying performance 
the ifrs profit before tax was £538 million 2013 £591 million 
and earnings per share were 133p 2013 142p
dividend
the board proposes an increased final ordinary dividend of 
48p which with the interim ordinary dividend of 30p brings 
the total ordinary dividend for the year to 78p per share 
this is 25 times covered 2013 35 times and in line with 
the group’s new capital management policy issued with 
the half year results
in addition a special dividend of 78p will be proposed 
in line with the group’s updated policy on balance sheet 
management – issued with the half year results this will 
be paid at the same time as group’s final dividend payment
balance sheet
goodwill decreased to £2328 million at the end of 2014 
from £2411 million at the end of 2013 due to foreign 
currency translation
acquired intangible assets decreased to £807 million at 
31 december 2014 from £1095 million in the prior year 
this movement reflects the intangible assets of £21 million 
acquired on the acquisition of synthomer finland oy regular 
annual amortisation of £258 million reported in special items 
and currency translation
property plant and equipment increased to £2054 million 
at 31 december 2014 compared to £2031 million at 
31 december 2013 additions during the year were 
£216 million
following on from the malaysian land sales announced with 
the 2013 results further progress has been made in january 
2015 contracts have been exchanged on a further plot of 
land this has brought total sales proceeds for contracted 
land sales to myr 2328 million in the group’s 70 owned 
subsidiary revertex malaysia sdn bhd of which proceeds 
due to the group will amount to myr 1548 million net of 
land taxes approximately £28 million at year end rates 
some 440 acres approximately one quarter of the total land 
originally offered for sale remains for which we continue to 
seek a buyer
the deferred tax liability has decreased to £355 million from 
£438 million during the year due mainly to the amortisation 
of intangible assets 
financial review strategic report
synthomer plc annual report 2014 17
this year we have disclosed separately provisions for other 
liabilities and charges to provide additional clarity to our 
financial statements albeit that the amounts are not material 
these have remained broadly unchanged yearonyear at 
£65 million 2013 £66 million the largest element of this 
provision is £34 million relating to certain legal and customer 
claims against the group
pensions 
in the main uk defined benefit pension scheme the majority 
of investments are in equities all asset classes performed well 
over the course of 2014 with a total return on assets excluding 
cash of 10 1 the yield on highquality corporate bonds 
decreased by 09 in the year which increased liabilities 
the company made cash contributions to the fund in the year 
of £90 million which included a £4 1 million prepayment of 
2015 contributions the overall effect of these changes was 
that there was an increase in the deficit of the scheme to 
£838 million at the end of 2014 2013 £603 million due to 
the prepayment cash contributions in 2015 are expected 
to be of the order of £9 million
the uk scheme was closed to future accrual during 2009 
and there are no active members in the scheme
overseas net pension liabilities increased to £669 million 
2013 £526 million due to the impact of lower yields on high 
quality euro bonds the nonuk schemes are primarily 
traditional german unfunded ‘on balance sheet’ arrangements
borrowings cash flow and liquidity 
the following cash flow is in the format used by management 
and it provides a clearer presentation of the movements in 
underlying net borrowings than the ifrs statement
2014
audited
£m
2013
audited
£m
underlying operating profit  
before joint ventures 912 999
movement in working capital 91 58
depreciation and amortisation underlying 215 192
capital expenditure net 215 350
interest paid net 68 93
tax paid 181 174
pension funding in excess of ias 19 charge 107 87
noncontrolling interest  
 and joint venture cash flows 47 38
free cash flow 512 583
cash impact of restructuring 38 38
purchase of business 86 –
dividends paid 224 194
exchangeother 51 129
movement in underlying borrowings 215 222
closing underlying net borrowings 1121 1336
 exchangeother includes £26 million paid in settlement of longterm   
 incentive schemes 2013 £62 million
2014
audited
£m
2013
audited
£m
ebitda – management
operating profit inc joint ventures 965 1048
depreciation and amortisation underlying 215 192
total management ebitda 1180 1240
underlying net borrowings reduced during the year to 
£1121 million
group management ebitda decreased to £1180 million 
reflecting the lower operating profit 
net capital expenditure decreased in 2014 to £215 million 
and is net of proceeds received from the sale of a plot of land 
in the uk following the closure of the facility at batley in 2013 
gross expenditure was £220 million
pension funding in excess of ias 19 charge of £107 million 
includes the £41 million prepayment to the uk pension fund
financing and liquidity
as at the end of 2014 the group had the following drawn 
term funding in place
£m
euro denominated bank loan maturing july 2019 1247
us private placements 141
factoring with recourse 19
less associated currency hedges and costs 37
total 1370
this compares to a net borrowing position of £1121 million
the group’s £210 million committed loan facility maturing 
july 2019 had £853 million undrawn at the end of the year
net cash held at the year end cash and cash equivalents 
less shortterm overdrafts was £249 million
the us private placements £141 million 220 million 
is repayable on 2 september 2016 net of derivatives 
associated with this and maturing at the same time this 
is equivalent to a repayment of £121 million
 
underlying net borrowings to ebitda the group’s key 
leverage metric was just below 10 times at the end of 2014 
2013 11 times
david blackwood
chief financial officer
25 february 2015 18 synthomer plc annual report 2014
principal risks and uncertainties
strategic risks strategy for mitigation
conditions in the global economy economic fluctuations 
in customer industries and volatility and cyclicality of the 
global chemicals and polymers markets may adversely 
affect the results of the group
the group maintains a balanced portfolio of products 
serving a wide range of end markets around the globe 
business performance at business unit and geographical 
level is closely monitored and corrective actions are taken 
as necessary 
the markets in which the group operates are highly 
competitive and the group may lose market share to other 
producers of waterbased polymers or to other products 
that can be substituted for the products of the group
the group continues to invest in existing and new 
products and technologies through rd the group 
continues to invest in new facilities to allow the group to 
maintain its key market positions as part of the group’s 
strategic planning process it identifies and converts 
acquisition targets to enhance market positions and 
provide new technologies
the ability of the group to compete is highly dependent 
on its ability to develop technological innovations to 
introduce new products and to protect its intellectual 
property trade secrets and knowhow failure to do 
so could have an adverse affect on the group
the group continues to invest in existing and new 
products and technologies through rd as part of the 
group’s strategic planning process it identifies and 
converts acquisition targets to enhance market positions 
and provide new technologies
the failure of the group to procure key raw materials may 
lead to production interruptions and volatility in the prices 
of such raw materials and energy prices may adversely 
affect the profitability of the group and its working 
capital position
sourcing strategies are in place groupwide to access 
multiple sources for key raw materials and the group 
works closely with key suppliers to ensure availability 
the group looks to identify alternative raw materials 
where possible
the group actively manages margins and recovers input 
cost increases from customers
operational risks
the group may be liable for damages based on 
product liability claims brought against its customers 
in enduse markets
technically qualified personnel and control systems are in 
place around the group to ensure products meet quality 
requirements all sites operate quality management 
systems iso etc
the group has a groupwide product liability insurance 
which provides £50 million of cover strategic report
synthomer plc annual report 2014 19
operational risks continued strategy for mitigation
compliance with extensive environmental health and 
safety laws and regulations could require material 
expenditure changes in the operations of the group 
or site remediation
the manufacture storage and transportation of chemicals 
is inherently dangerous and any incidents relating to the 
hazards which the group faces may adversely affect its 
financial condition results of operations and reputation
detailed safety health and environmental processes are 
documented in operating guidance which is updated and 
communicated to staff on a regular basis 
robust maintenance programmes are undertaken in order 
to ensure that our facilities meet up to group and local 
legal requirements
the group operates a central internal audit function 
dedicated to she issues and programmes for continuous 
improvement across all major she areas are in place 
groupwide
the ongoing success of the group is dependent 
on attracting and retaining high quality senior 
management and staff who can effectively manage 
the group’s operations
the group offers competitive compensation packages 
with annual bonus and longterm incentive arrangements 
for key employees appropriate notice periods and 
noncompete clauses are used to mitigate shortterm 
risk for key employees the group is also developing 
a succession plan for key positions
financial risks
as a significant proportion of the group’s turnover and 
assets are in currencies other than uk sterling fluctuations 
in currency exchange rates may significantly impact 
the results of the operations of the group and may 
significantly affect the comparability of financial results 
between financial periods
the group has a policy of hedging all significant foreign 
exchange transactional exposure at operating company 
level and also holds debt facilities in several key currencies 
to offset fluctuations in overseas asset values
the group’s balance sheet and cash flow or credit market 
conditions and credit ratings may restrict the ability of the 
group to obtain credit facilities or to refinance its existing 
debt facilities in the longer term in addition interest rate 
fluctuations and increases in bank lending margins may 
increase the group’s costs of borrowing
the group closely monitors cash flow and working capital 
performance on a monthly basis and regularly reviews 
covenant compliance 
the group has a policy on leverage limits and has 
adequate headroom on a twelve month forecast basis 
through a range of facilities with varying expiry dates
interest rate risk is managed through the use of interest 
rate hedging
the group has funding risks relating to defined benefit 
pension schemes and any deterioration in the value of 
assets in which the pension scheme have invested as 
against the financial obligations to make payments to 
members of the schemes could have an adverse affect  
on the group
the uk scheme was closed to future accrual during 
2009 the risks are mitigated by paying appropriate 
contributions into the funds and through balanced 
investment strategies which are designed to avoid 
a material impact to the fund assets  20 synthomer plc annual report 2014
commitment to safety health and  
environmental she performance
the board chief executive and group executive committee 
are fully committed to improving she performance and the 
involvement of staff at all levels across our sites in our she 
programmes she performance is a primary duty for 
management at all levels in the group and is aligned to 
our three longterm goals
1 to minimise any environmental burden created 
by our activities
2 to have no accidents or incidents and
3 to have no adverse impact on the health of those who 
work in or live near our operations nor on the health 
of those who use our products
the group adopts the following she management practices 
with the aim of continuously improving she performance
•	 she performance is discussed in all management 
meetings as the first agenda item
•	 the group implemented in 2014 a ‘core values’ 
programme which has she performance as the 
foundation for all the other values see page 10 for more 
details of the ‘core values’ programme
•	 the group conducts regular indepth she audits of all 
sites to assess performance and identify opportunities 
for improvement 
•	 the board monitors the group’s process safety 
performance and progress with sites’ annual process 
safety improvement plans this is supported by a 
continuing process safety training programme for 
technical production and engineering staff
•	 the group accident and incident management system 
aims is used to collect and analyse data on all 
accidents incidents and ‘near misses’ on our sites 
•	 sites implement the group’s safety health and 
environment management system shems or an 
equivalent system
•	 sites provide training for staff to ensure that they 
understand group and site systems both in she and 
more generally 
•	 key measures and she performance indicators are 
collected and reported to the group executive and to the 
board these include positive safety interactions – a 
programme of one to one and small group discussions on 
she issues and inspections and engineering performance
•	 senior managers have she targets as part of their annual 
objectives and
•	 central she staff regularly visit sites to carry out training 
and development of key staff 
the group publishes an annual corporate social 
responsibility csr report which is available online  
it discusses a wider range of safety health and 
environmental measures of our performance as well 
as other csr measures and activities please go to  
wwwsynthomercom to find a copy of the most 
recent report
health safety and accident performance
the group’s accident performance improved in 2014 to 
give synthomer its best ever performance there were 
10 over threeday accidents during the year and a 
consequent frequency rate of 020 per 100000 hours 
worked this rate is almost five times better than we 
achieved in 2000 and close to the average for the uk 
chemical industries association cia member companies 
it is notable that the synthomer finland oy site has now 
achieved 13 years without a lost time accident
 
actual rate
uk cia rate
12
10
08
06
04
02
00
3 day lost time accident frequency rates
13 14
accidents per 100000 hours worked
03 00 01 02 04 07 09 11 12 06 05 08 10
in common with many other chemical companies 
synthomer also collects data on a wider range of accidents 
and incidents – essentially monitoring all accidents involving 
more than first aid treatment this data is used to calculate 
a recordable accident rate our frequency rate for 2014 of 
052 per 100000 hours worked was a 60 reduction on the 
rate in 2011 and is showing a falling trend our performance 
is now broadly in line with the figures reported by similar 
international chemical companies of our size and we remain 
committed to further improvements
actual rate
14
12
10
08
06
04
02
00
all recordable accident frequency rates
13 14
accidents per 100000 hours worked
11 12
employee health issues were a focus during 2014 there 
were two cases of disease attributed to occupational factors 
during the year both dermatitis 
the group had a number of safety incidents which did not 
cause injury but which were either reportable to the local 
regulatory authorities or would have been reportable under 
the proposed international council of chemical associations 
icca reporting structure none of these incidents caused 
injury significant plant damage or detectable environmental 
damage they are discussed in the full csr report 
corporate social responsibility report strategic report
synthomer plc annual report 2014 21
environmental performance
since 2000 we have reported significant reductions 
yearonyear in each of our main environmental targets 
global warming burden energy and water consumption 
per tonne of production and waste disposal from our sites 
the group can report that our emissions of greenhouse 
gases ghgs reduced in 2014 by 74 however whilst 
the group remains ahead of our longterm targets our 
energy and water consumption targets have increased 
compared with 2013 the performance of each of the 
measures are discussed below in 2014 we rebased our 
10 year target to 2005 actual levels crystallizing the actual 
improvements we made between 2000 and 2005 
some data has been restated for 2012 and 2013 due to a 
review of performance reporting at three of our sites details 
can be found in notes 8 and 9 to the environmental kpi table 
on page 23
energy
total net primary energy usage ie energy use per tonne of 
production increased in 2014 by 3 compared with 2013 
despite this adverse movement 2014 was the third best year 
in the group’s history and we remain nearly 30 better than 
our rebased 2014 sustainable development target
the increase in consumption was spread across the group’s 
sites and can be attributed to smaller production volumes in 
a number of cases consumption was also impacted by a 
new boiler installed in our site in kluang malaysia which was 
needed to destroy volatile organic compounds vocs 
however there was a 23 improvement in energy efficiency 
in stallingborough following the move of production to the 
site from closed sites at mouscron and batley 
 
actual rate
target – base 2005
60
50
40
30
20
10
00
energy consumption
13 14
gigajoules per production tonne
05 07 09 11 12 06 08 10
 see note 8 in the environmental kpi table on page 23
water use
water consumption increased by 5 in 2014 up from a 
record low in 2013 our products contain a significant quantity 
of water however we have managed over the 10 year period 
since 2005 to halve our specific water consumption the 
strategy is to reduce our consumption further in addition 
a number of sites face significant water constraints and we 
have ongoing projects to use onsite water capture not only 
to avoid production problems but as an environmentally 
preferable way of obtaining the water we use
actual rate
target – base 2005
0006
0005
0004
0003
0002
0001
0000
hazardous waste disposed to land
13 14
tonnes waste per production tonne
05 07 09 11 12 06 08 10
actual rate
target – base 2005
80
70
60
50
40
30
20
10
00
water consumption
13 14
m
3
 per production tonne
05 07 09 11 12 06 08 10
 see note 9 in the environmental kpi table on page 23
 
waste disposal
during the year the closed site in batley was cleared and 
a number of sites removed significant quantities of legacy 
waste despite this activity we have been able to maintain 
the amount of hazardous waste going to landfill at 700 grams 
per tonne of production 
 
actual rate
target – base 2005
0006
0005
0004
0003
0002
0001
0000
hazardous waste disposed to land
13 14
tonnes waste per production tonne
05 07 09 11 12 06 08 10
actual rate
target – base 2005
0006
0005
0004
0003
0002
0001
0000
hazardous waste disposed to land
13 14
tonnes waste per production tonne
05 07 09 11 12 06 08 10
 see note 8 in the environmental kpi table on page 23
 
greenhouse gas emissions
the company has reported environmental kpis in the format 
recommended by the department of environment food and 
rural affairs defra since the annual report for 2007 the 
suggested format includes energy water waste and ghg 
emissions this data is available for each year since 2005 on 
a three year rolling basis last year the format was revised to 
comply with defra’s 2013 guidance which takes account of 
the ghg emission reporting requirements under the 
companies act 2006 strategic report and directors’ 
report regulations 2013 internal data collection was also 
revised for the 2013 financial year to give improved 
compliance with the revised guidance 
reporting parameters
the 2014 financial year reporting includes all manufacturing 
operations all office locations colocated with manufacturing 
and those listed as contact locations in the annual report or 
on the company’s website it does not include some very 
small locations such as home offices these locations will 
have no material effect on the group’s overall ghg 
emissions being estimated at considerably less than 01 
of the group total 22 synthomer plc annual report 2014
corporate social responsibility report
continued
all known emissions from manufacturing process have been 
included specifically energy directly used and the indirect 
energy costs of heating cooling and other site services 
where these are provided by a third party they include 
estimates for the effects of the release of vocs and 
refrigerant gases the only known emissions which have 
not been included are direct emissions of co 2 from onsite 
waste treatment this has not currently been quantified
the group has no known uses or releases of 
perfluorocarbons or sulphur hexafluoride all releases 
of nitrous oxide or methane are associated with energy 
production and are not separately quantified the group 
continues to report scope 1 and 2 emissions no estimate 
has been made of scope 3 emissions the group continues 
to use emissions per production tonne as its intensity ratio 
the data source for all emissions factors co 2 equivalent 
co 2e is defra may 2014
calculation methods
all direct energy production from fossil fuels has been 
aggregated on a groupwide basis and converted to co 2e 
by using the appropriate defra emissions factors no 
allowance has been made for possible country to country 
variation in calorific value or co 2 emission factors electricity 
has been converted to co 2e on a country by country basis 
using the conversion factors given by defra for 2014 and 
previous years it should be noted that these generally refer 
to actual country performance two years earlier than the 
quoted date ie 2014 factors relate to 2012 performance
synthomer’s site in stallingborough uk takes most of its 
electricity from an exclusive contract with an adjacent waste 
incinerator this electricity is certified as ‘green’ by the uk 
government and has an emission factor of 033 this figure 
has been used for the proportion of stallingborough’s 
electricity which comes from the incinerator our site in oss 
netherlands signed a contract to buy only green electricity 
from 1 january 2014 and has dutch governmental 
certification to confirm this this electricity has been given 
an emission factor of 000 the site in marl germany 
signed a contract to purchase 100 green electricity 
from 1 october 2014 and has german certification for 
this contract this proportion of marl’s electricity has also 
been given an emission factor of 000 
vocs have been aggregated on a group basis and 
converted to co 2e using a factor of 11 this figure has been 
used by uk cia member companies since 2005 and is at the 
upper end of the range for vocs information on the release 
of refrigerant gases has been collected for 2011 to 2014 
the releases for each individual gas has been aggregated 
in each year to give a group release and then converted 
to co 2e using the equivalence factors given by defra for 
each gas
performance in 2014
although we have seen increases in our energy and water 
consumption the group reduced its overall emissions of 
greenhouse gases by 74 in 2014 to give the group’s best 
ever performance on a per tonne basis the inclusion of 
refrigerant gases and the calculation of co 2e for electricity 
on a country by country basis had a significant impact on 
the group’s calculated greenhouse gas emissions in 2013 
however in 2014 the group achieved a 22 reduction 
in the global warming impact of refrigerant gas losses an 
area where we expect significant improvement over the next 
few years the changes in the emissions factors for electricity 
generation in different countries also have a significant 
impact over which the company has no control this year 
the emission factor for the uk increased by 109 and it 
increased by 35 for germany these increases largely 
offset the reduction of 54 seen in malaysia although 
emissions there remain 40 higher per unit of electricity 
than in europe 
the group did achieve very significant reductions in voc 
releases in 2014 a new boiler which burns residual voc with 
full heat recovery at the kluang malaysia nbr plant came 
on stream early in 2014 this reduced the plant’s voc losses 
from over 1100 tonnes to below 50 tonnes the harlow 
cryogenic voc recovery unit which came online towards 
the end of 2013 has proved very effective in reducing site 
losses by nearly 70 the combined effect of these changes 
reduced the ghg equivalent of the group’s voc losses by 
15000 tonnes co 2e an 88 reduction 
the combined effect of the group’s efforts produced an 
absolute reduction of some 19000 tonnes expressed as 
co 2e in the group’s ghg emissions in 2014 despite the 
rise in energy consumption 
actual rate
target – base 2005
030
025
020
0 15
0 10
005
0
global warming burden
13 14
tonnes co 2 equivalent released per 
production tonne includes co 2 from 
energy generationuse
05 07 09 11 12 06 08 10
 see note 8 in the environmental kpi table opposite strategic report
synthomer plc annual report 2014 23
environmental kpis
the tables present environmental kpis for 201214 with a coverage and format inline with defra’s 2013 guidance to comply 
with the reporting required under the companies act 2006 strategic report and directors’ report regulations 2013
2014
 2013  
 restated
89
 2012  
 restated
8
  change
201214
7
  change 
201314
7
energy consumption
1
gj 3418716 3359870 3350342 204 175
gas 745329 724837 747745
light oil 27340 30716 28568
heavy oil – 4778 2964
steam 701117 719593 770207
electricity primary basis 1940581 1875134 1796093
gjtonne production 2634 2556 2595 149 303
emissions to air
2
carbon dioxide equivalent co 2e from energy tonnes
3
189735 190439 179315 581 037
tonnes co 2e tonne production 0146 0145 0139 524 088
sulphur dioxide so 2 tonnes 180 261 211 1479 3115
kilos so 2tonne production 00139 00199 00164 1526 3029
nitrous oxides nox tonnes
4
2456 3847 6999 6491 3617
kilos noxtonne production 00189 00293 00542 6510 3537
volatile organic compounds voc tonnes 185 1550 1800 8971 8805
kilos voctonne production 0143 1179 1394 8976 8790
refrigerant releases hcfc and others kgs
5
4277 4741 4013 660 977
tonnes co 2e 11816 15231 12646
kilos refrigeranttonne production 00033 00036 00031 602 863
total carbon dioxide equivalent co 2e tonnes
6
203589 222724 211764 386 859
tonnes co 2etonne production 0157 0169 0164 438 744
notes
1 data relates to site usage of all fuels excluding transport of goods to and from site and the movement of these vehicles on site internal transport on site 
is included
2 emissions to air have been calculated from the usage of all fuels excluding transport fuel they therefore include both direct emissions and indirect 
emissions related to boughtin electricity steam compressed air cooling water etc with the exception of transmission and distribution losses for electricity 
these losses are in scope 3 this report is for scope 1 and 2
3 co2e emissions include contributions from ch4 and n2o associated with combustion
4 nox emissions are predominantly those from combustion processes the co2e global warming potential contribution from these releases is already 
included in the co2 from energy figure above
5 data on refrigerant gas losses has been collected for 2014 and 2013 and was collected for 2012 wherever possible where site data was not available for 
2012 losses have been assumed to be the same as in 2013 annual losses of refrigerant have been converted to the co2e figures using the substance by 
substance figures published by defra based on the materials consumed within the group
6 the total co2e figure is the total of the co2e from energy and the voc contribution assuming an average factor of 11kg co2e per kg voc and the 
refrigerant contribution
7 percentage changes are calculated from the base data and may differ slightly from changes calculated from the data in the tables because of rounding
8 the energy consumption data for 2012 and 2013 has been restated following a review of the data assumptions at two of our malaysian sites this has also 
impacted the greenhouse emissions reporting for 2012 and 2013
9 the water consumption numbers for 2013 have been revised following the acquisition of synthomer finland oy and the alignment of water consumption 
on that site 24 synthomer plc annual report 2014
executive directors
c g maclean – chief executive officer
joined the group and was appointed to the board in january 
2015 prior to appointment he was a senior board executive 
of ineos and was a founder member of the business in 
1998 age 51
d c blackwood – chief financial officer
joined the group and was appointed to the board in 
october 2007 prior to appointment he was group treasurer 
of imperial chemical industries plc age 55
nonexecutive directors
n a johnson
2
 – chairman
joined the board in september 2011 and was appointed 
chairman in may 2012 he is chairman of motability 
operations group plc and e2v technologies plc and the 
senior independent nonexecutive director of the business 
growth fund age 65
the hon a g catto
joined the board in 1981 he is managing director of 
cairnsea investments limited a private investment company 
and a nonexecutive director of several early stage 
companies that have been backed by cairnsea age 62
j chen
joined the board in october 2012 he is a corporate vice 
president of alcoa inc and a board member of china zhong 
nan university age 62
b w d connolly
1 2 3
joined the board in january 2014 until june 2013 he was 
a senior executive at intertek group plc and had previously 
been chief executive officer of moody international which 
was acquired by intertek in 2011 he is a nonexecutive 
director of cape plc age 58
dr j j c jansz
1 3
joined the board in april 2012 until july 2010 he was head 
technology business and a member of the management 
team of lyondellbasell he is founder and managing director 
of expertise beyond borders bv an independent business 
and technology management consultancy age 58
dato’ lee hau hian
joined the board in 1993 and stood down in 2000 to 
become an alternate director he rejoined the board in 2002 
he is a director of kuala lumpur kepong bhd and batu 
kawan bhd age 61
j k maiden
1 2 3
 – senior independent director
joined the board in august 2007 he is group finance 
director of croda international plc and a fellow of the 
chartered institute of management accountants age 53
1 member of audit committee
2 member of nomination committee
3 member of remuneration committee
registered office 
synthomer plc 
temple fields
harlow
essex
cm20 2bh
registered number 98381
company secretary
richard atkinson
bankers
barclays bank plc 
commerzbank ag 
hsbc bank plc
joint stockbrokers
barclays and canaccord genuity limited
registrars
computershare investor services plc 
lochside house
7 lochside avenue 
edinburgh park 
edinburgh
eh12 9dj
independent auditors
pricewaterhousecoopers llp
chartered accountants and statutory auditor
st albans uk
solicitors
herbert smith freehills llp 
pinsent masons llp
squire patton boggs uk llp
 directors and advisers governance
synthomer plc annual report 2014 25
statement of compliance
the company considers that it has complied throughout the 
financial year ended 31 december 2014 with the provisions 
set out in the code except in relation to the composition of 
the board and its committees in that
•	 the audit committee comprised two independent 
nonexecutive directors instead of three until march 2014
•	 the remuneration committee comprised two independent 
nonexecutive directors instead of three until 23 january 
2014 and the chairman of the board was chairman of that 
committee until 1 march 2014
•	 the nomination committee was not composed of a 
majority of independent nonexecutive directors until 
august 2014
further details on these matters and how they have been 
addressed are set out in this report
application of the code
the main principles of the code were applied as follows
leadership and effectiveness
operation of the board
the activities of the company are controlled by the board 
which during 2014 comprised two executive directors 
and seven nonexecutive directors the roles of chairman 
and chief executive officer are clearly divided between  
mr n a johnson who heads the board in his capacity as 
nonexecutive chairman and mr c g maclean who has  
from 22 january 2015 responsibility for the running of the 
company’s business as chief executive officer prior to 
which mr a m whitfield was the chief executive officer the 
nonexecutive directors all have wide business and boardroom 
experience gained in a broad range of business sectors
the board has reserved to itself a schedule of matters which 
includes setting longterm objectives for the group and the 
strategies to be employed in achieving them setting policies 
in the areas of safety health and the environment recruitment 
and employment risk management and treasury and 
subject to materiality thresholds decisions on the raising 
of capital financial commitments capital expenditure 
acquisitions and disposals and the prosecution defence 
and settlement of litigation
during 2014 the board held six scheduled meetings to 
review current and projected performance and to determine 
strategic issues with a half day dedicated to an annual 
strategy development review in addition three meetings 
were held at short notice to deal with specified matters the 
directors receive in advance full information on all matters to 
be discussed at board meetings as well as a detailed review 
of performance prepared by the chief executive officer the 
board has established audit nomination and remuneration 
committees which are discussed on page 26
corporate governance
report from the chairman
dear shareholder
i am pleased to report on a year of good progress 
in the development of our corporate governance 
practices against a background of the significant 
change that has been announced in the composition 
of your board over the last several months
i handed over the chair of the remuneration committee 
to brendan connolly in march 2014 who oversaw the 
implementation of our new remuneration policy which 
received a high level of support at the company’s 2014 
agm the composition of your board and its 
committees was brought into compliance with best 
practice during 2014 and an externally facilitated board 
and committee performance evaluation process has 
been carried out with the results reviewed by the board 
in february 2015 as a result the company entered 2015 
having eliminated all areas of noncompliance with the 
2012 uk corporate governance code reported on in 
our 2013 corporate governance report for 2015 i will 
lead a process for implementing the suggestions for 
improving your board’s effectiveness arising from the 
evaluation process with a focus on boardroom dynamics 
and culture
the nomination committee which i also chair has  
had an intense period of activity since june 2014 when 
adrian whitfield notified his decision to step down as 
chief executive officer the successful recruitment of 
calum maclean has been followed by the nomination 
committee initiating the ongoing recruitment exercise 
for a chief financial officer to replace david 
blackwood whose retirement was announced in 
december 2014 as announced on 26 february 2015 
jez maiden has decided to retire from his position as 
an independent nonexecutive director chair of the 
audit committee and the board’s senior independent 
director the nomination committee will also lead the 
search exercise for a successor and is approaching 
both board vacancies in full recognition of the need 
to address gender diversity
the full report on our corporate governance compliance 
in 2014 is set out in the rest of this report which i hope 
confirms your board’s commitment to achieving best 
practice in all areas
neil johnson
chairman 26 synthomer plc annual report 2014
in addition arrangements are made each year for the board 
to visit up to two of the group’s operational sites and meet 
local management ad hoc site visits are facilitated for 
individual nonexecutive directors on request during 2014 
the board held a meeting in marl germany and in kluang 
malaysia at the offices of its businesses in conjunction with 
those board meetings presentations were given by local 
senior management and the directors were given the 
opportunity to visit the group’s plants
the board has delegated to the chief executive officer 
responsibility for the development and preparation of the 
business plan for the group and the annual group budget 
for recommendation to the board as the senior executive 
director the chief executive officer is responsible for all 
aspects of daytoday operational control of the group and 
execution of the group strategy the chief executive officer 
has established and chairs an executive committee whose 
other members are the chief financial officer the chief 
counsel and company secretary and the operational vice 
presidents for the group to assist him in the performance 
of his duties and which meets once a month the chairman 
has available to him the minutes of the executive committee 
and all directors receive a monthly trading summary and 
commentary from the chief financial officer
board membership and balance
the chairman chief executive officer and senior 
independent director are identified on page 24 the 
chairmen and members of the audit nomination and 
remuneration committees are identified below the board 
considers mr j k maiden dr j j c jansz mr j chen and 
mr b w d connolly are independent in accordance with the 
provisions of the code
the board held a total of nine meetings in 2014 in addition 
the nonexecutive directors also met once without the 
chairman to appraise his performance
the table opposite shows the number of meetings of the 
board audit remuneration and nomination committees 
held during the year and the number of meetings attended by 
each director where a director is unable to attend a board 
or committee meeting his views on agenda items are 
canvassed in advance of the meeting and incorporated 
into the discussions
board audit remuneration nomination
number of  
meetings held 9 4 3 1
number of  
meetings attended
d c blackwood 99 na na na
a g catto 99 11 na na
j chen 79 na na na
b w d connolly 79 23 33 11
j j c jansz 99 44 33 na
n a johnson 99 na 22 11
lee hau hian 89 na na na
j k maiden 99 44 33 11
a m whitfield 99 na na na
induction and training
induction arrangements are in place in order to ensure new 
directors receive a full formal and tailored induction on 
appointment the chairman reviews and agrees the training 
and development needs of the directors and the skills and 
knowledge of the board as a whole are updated by briefings 
provided by the company’s internal resources and materials 
and seminars offered by external advisers
performance evaluation
performance evaluations of the board its committees and 
its directors were carried out in the last year by the following 
internal and external processes
•	 an assessment of the performance of individual non
executive directors is carried out by the chairman through 
a rolling programme of onetoone discussions using 
performance evaluation questions as the centrepiece 
for those discussions every nonexecutive director is 
assessed in this way once a year
•	 the performance of the executive directors was reviewed 
against their personal objectives for 2014
•	 a meeting of the nonexecutive directors in the absence 
of the chairman chaired by the senior independent 
director was held in november 2014 to evaluate the 
performance of the chairman taking into account the 
views of the executive directors and
•	 the effectiveness of the board and its committees 
audit nomination remuneration was evaluated for the 
first time by way of an externally facilitated process using 
independent board review a division of independent 
audit limited who have no other connection with the 
company and their online assessment service thinking 
board this facilitation helped ensure a rigorous review 
was carried out covering the important influences on the 
board’s effectiveness the focus and coverage of the 
board and committee questionnaires was discussed in 
advance with independent audit who then administered 
the questionnaires on a confidential basis analysed the 
results independently from the board and management 
and presented the findings and their suggestions in a 
paper which was discussed with the chairman and 
subsequently provided to all directors
corporate governance
continued governance
synthomer plc annual report 2014 27
nonexecutive directors are appointed for oneyear terms 
all directors submit themselves for annual election at each 
annual general meeting
board committees
the board has formally established nomination audit 
and remuneration committees each with their own terms 
of reference which set out their respective roles and the 
authority delegated to them by the board copies of the 
terms of reference are available upon request from the 
company secretary and can also be downloaded from 
the company’s website all nonexecutive directors have 
a standing invitation to attend committee meetings unless 
they are notified otherwise
audit committee
dear shareholder
i am pleased to report on the work of the audit 
committee during 2014 which was strengthened by 
the appointment of brendan connolly in march 2014 
returning its composition to three independent 
nonexecutive directors
the committee fulfilled its primary responsibilities 
during the year and in addition had detailed 
presentations from the chief financial officer on 
recently completed significant capital expenditure 
projects the refinancing of the group’s main credit 
facility the group’s erp systems and associated 
disaster recovery and security processes and 
approved a new cash management policy following 
on from our audit tender process in 2012 the 
implications of the reform of the auditor appointment 
and audit tender processes and associated obligations 
and reporting requirements on audit committees is 
being considered and will be incorporated into the 
committee’s policies procedures and remit in 2015
the final year of our three year work plan relating to 
cosourced internal audit services was successfully 
concluded at the end of 2014 a new three year plan 
proposed by the chief financial officer and involving 
a continuation of the cosourced approach focused 
on annual reviews of the group’s largest entities with 
an extension of scope to include a review of it 
systems was considered and approved
as i shall be retiring from the board at the forthcoming 
agm this will be my last report and i would like to thank 
the committee members for their support and the 
chief financial officer and his team for their assistance 
over the last seven years
jez maiden 
audit committee chairman
audit committee membership since 1 january 2014
jez maiden  chairman
just jansz 
brendan connolly   from 1 march 2014
alex catto  until 1 march 2014
the role of the audit committee
in 2014 the audit committee was chaired by mr j k maiden 
and comprised two independent nonexecutive directors 
together with one nonindependent nonexecutive director 
until 1 march 2014 following the appointment of  
mr b w d connolly to the committee with effect from 
1 march 2014 the committee comprised three independent 
nonexecutive directors mr maiden is considered by the 
board to have ‘recent and relevant financial experience’ 
for the purposes of provision c31 of the code due to his 
current financial role outside the group 
the committee has established a detailed remit regarding 
the application of financial reporting and internal control 
principles which covers
•	 monitoring the integrity of the financial statements 
of the group and any formal announcements 
relating to the group’s financial performance and 
reviewing significant financial reporting judgements 
contained in them
•	 reviewing the group’s internal financial controls 
and the group’s internal control and risk 
management systems
•	 monitoring and reviewing the effectiveness of the 
group’s internal audit function
•	 making recommendations to the board regarding 
the selection and appointment of the external 
auditor and approving their remuneration and terms 
of engagement
•	 reviewing and monitoring the external auditor’s 
independence and objectivity and the effectiveness 
of the audit process 
•	 developing and implementing policy on the 
engagement of the external auditor to supply 
nonaudit services
•	 advising the board in connection with its obligation 
under section c11 of the code on whether the 
annual report and accounts taken as a whole is 
fair balanced and understandable and provides the 
information necessary for shareholders to assess 
the performance of the group along with its 
business model and strategy
•	 ensuring that the external audit services contract is 
put out to tender at least once every ten years and
•	 reporting on the significant issues that it considered 
in relation to the financial statements and how these 
were addressed 28 synthomer plc annual report 2014
the chief financial officer and senior members of his 
department attend meetings of the committee as part of the 
review of the group’s interim and annual financial statements 
prior to their submission to the board and as part of the 
internal audit process the committee meets periodically 
with the company’s auditor without management present to 
discuss the adequacy of the group’s financial management 
internal controls and information systems and to review the 
terms of the auditor’s engagement effectiveness 
independence and objectivity
activities during the year
the committee met formally four times during 2014 and 
carried out the following main activities in addition to the 
items mentioned in the chairman’s overview
•	 reviewed the financial statements in the 2013 annual 
report and the 2014 interim statement in conjunction with 
papers prepared by the chief financial officer regarding 
accounting policies and basis of preparation and a 
number of disclosure considerations
•	 advised the board in connection with its obligation under 
section c11 of the code
•	 reviewed the scope and effectiveness of the external audit
•	 agreed changes to the half year and year end processes 
to improve reporting effectiveness and reviewed the 
financial reporting council’s frc periodic routine 
review of the external auditors work
•	 received reports from the external auditor on the major 
findings of its work
•	 approved the annual external audit plan and the basis 
on which the auditor assesses materiality
•	 reviewed the provision of nonaudit services by the 
external auditor
•	 approved a new policy on cash management
•	 reviewed the remit and effectiveness of the committee 
•	 reviewed the group’s whistleblowing arrangements 
•	 reviewed the group’s risk register
•	 monitored the effectiveness of internal controls and 
risk management
•	 reviewed the group’s internal audit plan and
•	 received detailed reports and presentations from 
kpmg the cosourced internal auditor and the 
reviews undertaken by the group corporate controller 
reviewed reports relating to the implementation of 
recommendations from internal audit visits to enable the 
committee to assess the improvements in the group’s 
controls and reporting and where further actions are 
required considered and approved the new scope and 
plan for cosourced internal audit reviews for a three year 
cycle commencing in 2015
in addition the chairman of the committee had regular 
dialogue with the external auditor chief financial officer and 
other senior members of the head office finance team during 
the course of the year
auditor objectivity and independence
with regard to seeking to ensure the independence and 
objectivity of the auditor the audit committee’s policy is to 
ensure that the auditor’s integrity is not compromised by 
restricting their involvement in the provision of nonaudit 
services where a conflict of interest real or perceived may 
exist the policy splits the approval of nonaudit work into 
three categories
•	 services which are prohibited
•	 services which are preapproved subject to limits and
•	 services which require specific approval on a  
casebycase basis
prohibited services include
•	 maintaining or preparing accounting records and  
financial statements
•	 the design and implementation of financial information 
systems or financial controls
•	 secondments to the group
•	 recruitment and remuneration related services for key 
management positions
•	 appraisal valuation and actuarial services
•	 tax services which require interpretation of tax law or 
reliance on accounting treatments
•	 legal services unrelated to the audit
a full copy of the policy on the provision of nonaudit services 
by the external auditor is available on the company website
in addition the auditor has been requested not to provide 
services to executive directors or senior executives except 
where approved by the audit committee nonexecutive 
directors are required to disclose any relationship they have 
with the auditor prior to appointment in july 2012 
pricewaterhousecoopers llp were providing and continued 
to provide during 2014 personal tax advice to the former 
chief executive officer mr a m whitfield and expatriate tax 
services to the group’s senior managers who are required 
to work outside their home country the committee does 
not consider that the provision of these services creates 
any conflict of interest as they are of a minor nature and are 
provided by individuals and teams who are not involved in 
the audit and accordingly have approved their continuation
details of audit and nonaudit fees paid to the auditor in 2014 
are set out in note 6 on page 71 nonaudit fees principally 
relate to tax compliance and other tax advisory services and 
related to services which were approved within the terms 
of the committee’s policy
assessment of effectiveness of the external audit
during the year the committee evaluated the performance 
independence and effectiveness of the external auditors 
as part of this process feedback was obtained from head 
office and operating company staff involved with the external 
audit together with the committee’s meetings with the 
external auditors the committee assessed the robustness 
corporate governance
continued governance
synthomer plc annual report 2014 29
of the audit the quality of delivery of the audit against the 
agreed plan and the competence with which the auditors 
handle key accounting and audit adjustments considering 
all of these factors the committee concluded that the 
external auditors were effective
reappointment of the auditor
as a result of an external audit tender process in 2012 
pricewaterhousecoopers llp was appointed in july that 
year following the assessment of the effectiveness of the 
external audit referred to above the committee is pleased to 
recommend the reappointment of pricewaterhousecoopers 
llp at the 2015 annual general meeting the committee will 
consider its policy on audit tendering during 2015
financial reporting and significant judgements
as part of their monitoring of the integrity of the financial 
statements the committee reviews whether suitable 
accounting policies have been adopted whether 
management has made appropriate estimates and 
judgements and also seeks support from the external 
auditors to assess these outcomes
the main issues reviewed in the year ended 31 december 
2014 are set out below
•	 impairment of goodwill and intangibles
the group holds £3135 million of goodwill and acquired 
intangible assets as set out in notes 13 and 14 annually 
management performs impairment assessments on these 
balances to ensure there in no evidence of impairment 
the review is done using management’s specialised 
knowledge of the underlying businesses and the markets 
in which they operate as part of their audit the external 
auditor reviewed the impairment assessment calculation 
for reasonableness of the growth rate assumptions and 
discount rates used and compared the assumptions with 
related external market data the committee reviewed the 
assessments by management and the external auditors 
and considered the related disclosure 
•	 provisions for uncertain taxation positions
significant judgement is exercised by management 
with advice from appropriate tax advisors to arrive at the 
amounts provided for tax as the final tax outcome of 
several transactions is uncertain and may not be known 
for several years as part of their audit the external auditor 
reviewed the judgements that had been made using tax 
specialists as appropriate and provided the committee 
with an assessment of the appropriateness of 
management judgements the committee reviewed the 
provisions and judgements taken by management and 
also the auditor’s conclusions 
•	 defined benefit pension accounting
the group operates a number of defined benefit 
schemes which have significant liabilities as outlined in 
note 25 to the group financial statements although the 
uk schemes are closed to future accrual they are 
sensitive to changes in actuarial assumptions during their 
audit the external auditor evaluated the assumptions and 
methodologies used by the group’s actuarial advisors 
and management and assessed whether the assumptions 
made were appropriate and not materially different from 
external benchmarks the external auditors reported to 
us that they were satisfied with the assumptions used and 
with the way that the schemes had been accounted for 
the committee reviewed the assumptions used by the 
management methodology and conclusions
priorities for 2015
in addition to its routine business the committee will consider 
the appropriateness of a new chair the new audit tendering 
requirements the frc’s guidance on risk management 
internal control and related financial and business 
reporting and will work with a new chief financial officer 
to ensure a seamless handover from david blackwood
nomination committee
nomination committee membership since 1 january 2014
neil johnson  chairman
jez maiden 
brendan connolly   from 7 august 2014
adrian whitfield until 7 august 2014
the committee is responsible for the regular review of 
the structure size and composition of the board and the 
making of recommendations with regard to any changes 
leading the process for board appointments and nominating 
candidates for nonexecutive positions and considering 
succession planning
until 7 august 2014 the nomination committee did not 
comply with the composition requirements of code provision 
b21 in that a majority of its members were not independent 
nonexecutive directors following the appointment of 
brendan connolly to the committee and the retirement of 
adrian whitfield on 7 august 2014 the committee has been 
in compliance with this code provision 
the committee led the process for nominating calum 
maclean for appointment as chief executive officer this 
process involved a thorough review of a range of candidates 
put forward by an independent recruitment consultancy 
korn ferry with which the company has no other 
connection which conducted an extensive search process 
the diversity including gender of the board was taken into 
account by the committee when making this nomination 30 synthomer plc annual report 2014
the committee also reviewed senior management succession 
planning within the group during the course of the year
the nomination committee held one formal meeting during 
2014 and a number of informal meetings and telephone calls 
as well as several interviews in connection with the 
nomination process referred to above
the board adopted a policy on diversity in march 2013 
this policy seeks to ensure that diversity in its broadest 
sense is taken into account in the process of making 
appointments on merit against objective selection criteria 
the committee has put in hand search processes for the 
recruitment of a chief financial officer to succeed david 
blackwood and of a replacement for jez maiden the chair 
of the audit committee and the senior independent director 
who announced their retirement from the board on 
18 december 2014 and 26 february 2015 respectively 
russell reynolds associates an independent recruitment 
consultancy with no connection to the company has 
been appointed to conduct both search processes 
the committee will lead the nomination processes in full 
recognition of the need to address the gender diversity  
of the board
a copy of the diversity policy is available at  
wwwsynthomercom further details on the company’s 
approach to diversity is contained within the strategic report
remuneration committee
all matters relating to the remuneration committee and 
remuneration are covered in the directors’ remuneration 
report set out on pages 33 to 45
relations with shareholders
dialogue with institutional investors is conducted on a regular 
basis by the chief executive officer and the chief financial 
officer and meetings take place following the announcement 
of interim and full year results and at other times according 
to circumstances
the board has adopted a set of shareholder communication 
principles in order to ensure that board members develop an 
understanding of the views of the group’s major shareholders 
these principles require the chairman to be present with the 
chief executive officer and the chief financial officer at 
sufficient shareholder presentations and meetings that he fully 
understands the issues and concerns of major shareholders 
alternatively the chairman is also available for meetings with 
major shareholders at their request
the chief executive officer reports on shareholder relations 
at each board meeting communications with shareholders 
relating to corporate governance matters are conducted by 
the chairman with the assistance of the chairmen of the 
audit and remuneration committees written reports on all 
meetings between nonexecutive directors and institutional 
shareholders and their representative bodies are presented 
to the board at the first opportunity following such meetings 
as is all correspondence with them
the senior independent director is available to shareholders 
if they have concerns which contact through the normal 
channels of the chairman or the chief executive officer has 
failed to resolve or for which such contact is inappropriate
the board seeks to encourage participation of all 
shareholders and in particular private investors at the 
company’s annual general meeting and endeavours to 
ensure all board members are in attendance in particular 
the chairmen of the remuneration audit and nomination 
committees are available to answer questions
the company makes use of its website  
wwwsynthomercom to communicate with its shareholders 
where it publishes interim and full year results company 
announcements share price and corporate governance 
and other investor information
accountability
an explanation of the directors’ responsibility for preparing 
the financial statements their report that the business is 
a going concern a responsibility statement and their 
statement as to disclosure of information to the auditor are 
set out on pages 47 to 48 and 49 respectively statements 
by the auditor about its reporting responsibilities are set out 
on pages 51 to 55 and 97 to 98 respectively
a report on the approach to internal control is set out 
below the directors endeavour to make the annual report 
and financial statements as informative and understandable 
as possible
risk management and internal control
the board of directors has ultimate responsibility for the 
group’s system of internal control and sets appropriate 
policies to ensure that the code requirements on internal 
control are met the system of internal control deployed 
within the group is designed to reduce the risks of failure 
to meet business objectives but these risks cannot be 
eliminated the internal control system adopted can 
therefore only provide reasonable not absolute assurance 
about meeting such business objectives or against material 
misstatement or loss
corporate governance
continued governance
synthomer plc annual report 2014 31
the group’s internal controls over the financial reporting and 
consolidation processes are designed under the supervision 
of the chief financial officer to provide reasonable assurance 
regarding the reliability of financial reporting and the 
preparation and fair presentation of the group’s published 
financial statements for external reporting purposes in 
accordance with ifrs
an ongoing process for identifying evaluating and managing 
significant business risks faced by the group has been in 
place since 2000 this has since been built upon so as to 
embed further the process into the businesses and to 
enhance the usefulness of the relevant processes and 
information and has been operated throughout 2014 and 
up to the date of approval of the annual report and 
accounts and accords with the financial reporting council 
guidance on internal control
the system is applied across the group on a functional and 
regional basis and a ‘bottom up’ risk profile is created by 
evaluating the information at an operational and group level 
individual senior managers within synthomer’s businesses 
identify and assess key risks associated within their area of 
responsibility based on formal management information 
and interaction with colleagues customers suppliers and 
other parties
the individual submissions are consolidated reviewed and 
agreed by the executive committee a business risk report 
is prepared that is closely linked to business strategy and 
takes account of key internal and external factors risks are 
prioritised using a common risk matrix which forms the 
basis of a single corporate risk report that is reviewed and 
discussed by the audit committee
the individual business risk reports are formally reviewed 
every six months out of which a revised report is submitted 
which identifies changes in the risk environment
the process was last reviewed by the synthomer board of 
directors in february 2015 the nature of the risks identified 
as a result of this process during the year primarily relate to 
matters of an operational and financial nature and the most 
significant of those which faced the group in 2014 are 
reviewed in the strategic report
risks associated with safety health and the environment are 
by the nature of the group’s business always of the utmost 
concern and the corporate social responsibility report on 
pages 20 to 23 reviews the group’s performance in this 
connection in 2014
the processes which are used by the board either directly 
or where appropriate through the audit committee to review 
the effectiveness of the internal control and risk management 
systems including in relation to the financial reporting process 
and the process for preparing consolidated accounts include 
the following
•	 a review of the external audit work plan
•	 consideration of reports from management and external 
parties including the internal and external auditor on the 
system of internal financial control and any material 
control weaknesses
•	 a quarterly review of safety health and environmental 
performance 
•	 discussion with management of the actions taken on any 
possible problem areas for the business identified by 
board members or in the audit report
•	 consideration of a consolidated risk management report 
setting out the main conclusions from the internal control 
process and
•	 a biannual report from the internal audit function
in addition the board
•	 receives copies of the minutes from all audit committee 
meetings
•	 considers the role of the group insurance programme
•	 receives regular written and oral reports from 
management on all aspects of production operations 
financial and risk management matters and
•	 in compliance with provision c21 of the combined code 
the board regularly reviews and approves the 
effectiveness of the group’s system of internal controls
the board confirms that a review of the effectiveness of the 
company’s risk management and internal control systems 
was carried out in 2014
environmental matters
the maintenance of high standards of environmental 
together with health and safety protection is central to the 
company’s business a separate statement on safety health 
and environmental she matters has been a feature of the 
annual report for a number of years the corporate social 
responsibility report on pages 20 to 23 includes a report on 
the initiatives the company has adopted regarding 
sustainable development 32 synthomer plc annual report 2014
social community and human rights matters
the board takes account of social and ethical matters as 
part of its review of internal control which by virtue of its 
approach to risk identification covers areas which 
encompass social and ethical matters
the board is conscious of its responsibility to the communities 
in which the group’s businesses operate and encourages 
local engagement by management which includes supporting 
environmental health and education initiatives
the board is also aware of the reputational and legal risks 
associated with social and ethical issues and has a group
wide code of business conduct on corruption and anti
competitive activities which is available on the company’s 
website and upon request from the company secretary 
the purpose of this code is to ensure that the group’s 
employees have a clear understanding of the principles that 
are important in these areas when conducting the group’s 
business the application of the code is explained to senior 
management at regular intervals and they are charged with 
its communication throughout their businesses supported 
by internal and external training a compliance procedure 
involving annual certification by senior management and 
a procedure for maintaining a register of and where 
appropriate gaining prior approval for gifts entertainment 
and corporate hospitality operates throughout the group 
a report is made to the audit committee annually on the 
code and the company’s whistleblowing procedure
the group’s operating activities are highly regulated in 
all territories and largely carried out in countries that have 
established legislation on human rights issues as such 
information on human rights issues is not considered to 
be necessary for an understanding of the development 
performance or position of the group’s business the group 
has nonetheless adopted a policy on equal opportunities 
diversity and human rights which is available at  
wwwsynthomercom
the company is a member of the ftse4good index
corporate governance
continued governance
synthomer plc annual report 2014 33
directors’ remuneration report
remuneration committee chairman’s statement 
dear shareholder
directors’ remuneration policy
i am pleased to present the company’s directors’ remuneration report for the financial year ended 31 december 2014 
i was delighted to join the committee in january 2014 assume the role of chairman in march and follow through on the 
policy work put in place by my predecessor neil johnson our board chairman
our new remuneration policy and annual report on remuneration received overwhelming approval at the company’s 
2014 annual general meeting and i would like to thank our shareholders for this support the policy has been in force 
since 1 may 2014 and following a review toward the end of the year the committee considers that it remains 
appropriate and therefore no changes are being proposed for shareholder approval in 2015 for convenience the policy 
principles and a table summarising the main elements of the policy have been reproduced on pages 34 to 37
committee activities during the year
during 2014 the committee worked closely with the nomination committee and the board in 
•	 defining the termination arrangements for adrian whitfield following his decision to step down as chief executive 
officer in july 2014 and in setting the remuneration terms for calum maclean who joined as chief executive officer 
in january 2015
•	 agreeing terms with david blackwood for his retirement as chief financial officer which was announced in 
december 2014
the remuneration arrangements in 2015 for mr maclean and mr blackwood are set out on page 39 and the 
termination arrangements agreed with mr whitfield and mr blackwood are set out on page 43
the committee also considered the new requirements for the recovery or withholding of variable pay contained in 
the updated uk corporate governance code published in september 2014 as the committee already has wide 
discretionary powers in relation to the operation of the annual bonus plan it has been decided to implement explicit 
malus and clawback arrangements in that plan from 2015 in line with those already contained in the company’s 
performance share plan
the committee is already giving consideration to future policy changes to be implemented in 2017 when a new vote 
on policy will be required accordingly the committee has decided that in the light of emerging best practice it will 
introduce a two year holding requirement for vested awards under the performance share plan following the three year 
performance period from 2017 onwards
outturns from 2014
for 2015 base salaries have been increased by 24 which is in line with the average across the senior 
management population 
under the annual bonus plan the group profit before tax performance of £909 million on a constant currency basis 
resulted in 491 of the profit before tax element of the 2014 plan being awarded which together with health and safety 
and personal objective performance led to the chief executive officer and the chief financial officer each receiving a 
bonus of 573 and 568 of their 2014 annual basic salary respectively details of the performance targets are set out 
on pages 39 to 40
the relative total shareholder return and earnings per share conditions attached to the awards made in 2012 under the 
performance share plan were not met and accordingly these awards will lapse in march 2015
performance measures linked to strategy
the board and the committee seek to align our strategy namely investing in innovation driving growth and creating 
excellence see page 5 to both the performance share plan and the annual bonus plan performance share plan 
strategic goals include asian growth and expansion and an increase in revenue from new products reflecting expansion 
in emerging markets and innovation the performance share plan also includes a cash generation goal from the 
mature european operations which funds both product development and innovation and international growth safety 
health and environmental goals in the annual bonus plan promote excellence in our ways of working our strategy is 
intended to deliver value for our shareholders accordingly a significant portion of the long term incentive plan is linked 
to eps growth with targets which are stretching but do not encourage undue risktaking and tsr performance 
relative to the ftse 250 the committee believes therefore that there is good alignment between our strategy and the 
remuneration of the executive directors  34 synthomer plc annual report 2014
directors’ remuneration report
continued
directors’ remuneration – policy principles
the key principles for executive directors’ remuneration at synthomer are as follows
•	 sufficient to attract and retain executive directors of the ability and expertise necessary to achieve the strategic goals 
of the company
•	 incentivise executive directors by rewarding performance and driving the right behaviours
•	 align executive director reward with the experience of shareholders 
in setting executive directors’ remuneration the committee takes account of pay and conditions throughout the company 
the committee also considers corporate governance requirements and best practice in terms of remuneration structures 
and the process of setting executive remuneration 
the committee reviews performance targets regularly to ensure that they do not encourage or motivate inappropriate risk 
taking furthermore the committee when necessary will take into account any environmental social and governance 
esg events and the audit committee’s risk assessment when assessing performance
the following diagram provides an overview of the key elements of reward for executive directors and the performance 
measures used
base salary pension  
and benefits
annual bonus
•	 at least 70 –  
profit before tax
•	 up to 30 –  
strategic and 
operational objectives
•	 at least 40 –  
relative tsr
•	 at least 40 –  
eps growth
•	 up to 20 –  
strategic measures
performance  
share plan
directors’ remuneration policy summary
set out in the table below is a summary of our directors’ remuneration policy the ‘policy’ as it applies to executive directors 
the policy was put forward for and received shareholder approval at the company’s 2014 agm in accordance with section 
439a of the companies act 2006 the policy is effective from 1 may 2014 and is available in full at wwwsynthomercom
remuneration committee chairman’s statement continued
directors’ remuneration report
as our directors’ remuneration policy was subject to a binding vote at our 2014 annual general meeting and is 
effective for three years from 1 may 2014 it will not be subject to a vote at our 2015 agm however the annual report 
on remuneration will be subject to an advisory vote we hope we will have the support of our shareholders for the 
annual report on remuneration 
remuneration committee
i would like to thank neil johnson for his work as chairman of the committee prior to my appointment and the other 
members of the committee for their work and support throughout 2014
brendan connolly
chairman governance
synthomer plc annual report 2014 35
policy table
element
purpose and  
link to strategy operation
maximum  
opportunity
performance  
measures
base salary supports the 
recruitment and 
retention of 
executive 
directors
reflects the 
individual’s skills 
experience 
performance and 
role within the 
company
salary levels are generally 
reviewed annually by the 
committee
when reviewing salary 
levels the committee  
takes into account
•	 the individual’s skills 
experience and 
performance 
•	 the size and scope  
of the individual’s 
responsibilities 
•	 pay and conditions 
elsewhere in the group
•	 pay at companies of 
similar size and
•	 the complexity and 
international scope  
of the group
for 2015 executive 
director salaries are
•	 chief executive officer 
£525000
•	 chief financial officer 
£328132
there is no overall 
maximum for salary 
opportunity or increases  
salary increases will 
normally be in line with the 
increases awarded to 
other employees within 
the group 
larger increases may 
be made under certain 
circumstances including 
but not limited to
•	 an increase in the 
scope andor 
responsibility of the 
individual’s role 
•	 the development of the 
individual within the role
•	 alignment to market 
levels and
•	 corporate events 
such as a significant 
acquisition or group 
restructuring which 
impact the scope  
of the role
none although 
individual and company 
performance are factors 
taken into account 
when considering 
salary increases
benefits provided to 
support the 
retention and 
recruitment 
of executive 
directors
benefits to executive 
directors may include 
private health insurance 
life insurance and a fully 
expensed car from time 
to time the committee  
may review the benefits 
provided the 
remuneration committee 
may remove benefits that 
executive directors receive 
or introduce other benefits 
if it considers it is 
appropriate to do so 
any other benefits will be 
proportionate with the 
current benefits provided
where executive directors 
are required to relocate or 
complete an international 
assignment the 
remuneration committee 
may offer additional 
benefits or vary benefits 
according to local practice
there is no overall 
maximum for benefits 
the cost of insurance 
benefits may vary from 
yeartoyear depending 
on the individual 
circumstances 
the level of any relocation 
benefits allowances and 
expenses will depend  
on the specific 
circumstances
none 36 synthomer plc annual report 2014
directors’ remuneration report
continued
policy table continued
element
purpose and  
link to strategy operation
maximum  
opportunity
performance  
measures
annual 
bonus
incentivises the 
delivery of 
financial strategic 
and operational 
objectives 
selected to 
support our 
business strategy 
within the year
performance targets will 
be determined by the 
committee at the 
beginning of the annual 
performance period 
the committee will assess 
performance against these 
targets following the end of 
the performance period
the committee may 
adjust awards upward or 
downward to reflect the 
overall performance of the 
company or the individual  
100 of salary at least 70 of awards are 
subject to adjusted profit 
before tax or other 
relevant financial 
measure targets
up to 30 of awards are 
subject to strategic and 
operational measures 
including personal 
objectives
the award for threshold 
performance is normally 
20 of maximum
2011 
performance 
share plan
approved by 
shareholders 
at the 2011 
egm
incentivises 
executive 
directors to 
deliver sustained 
performance 
and sustainable 
returns for 
shareholders over 
the longer term 
awards of shares or 
nilcost options are made 
annually with vesting 
conditional on the 
company’s performance 
against longterm targets 
over a three year 
performance period
the committee may 
reduce or defer the level of 
vesting of an award where 
an event has occurred 
such as a material health 
or safety incident
awards may give rise to 
dividend equivalents
the committee may 
clawback awards up to 
three years after vesting if 
the group’s accounts have 
been materially misstated 
or there has been an error 
in the calculation of any 
performance conditions 
which results in 
overpayment
all vested awards net of 
tax if applicable must be 
retained by executive 
directors until share 
ownership guidelines 
are met
under the plan rules 
approved by shareholders 
the value of shares 
awarded to an individual  
in any one year may not 
normally exceed 150  
of salary 
annual awards to 
executive directors are
•	 chief executive officer 
125 of salary
•	 chief financial officer 
110 of salary 
under the plan rules 
approved by shareholders 
there is the ability to make 
additional awards in 
exceptional circumstances
additional awards may be 
made in the case of a 
transformative company 
event any such awards 
would be subject to 
additional shareholding 
guidelines or holding 
periods to be determined 
by the committee
any additional award 
would be subject to the 
overall plan limit of 300 
of salary
•	 at least 40 based 
on relative tsr 
performance 
•	 at least 40 based 
on eps growth targets 
•	 up to 20 based on 
performance measures 
linked to the delivery of 
the business strategy 
•	 no single measure will 
constitute more than 
50 of an annual 
award
a maximum of 25 of 
each element will vest for 
threshold performance
the committee may 
amend the final vesting 
level under the tsr 
element if it does not 
consider it to be reflective 
of the underlying 
performance of the group 
any additional awards 
made in exceptional 
circumstances will be 
subject to performance 
conditions and vesting 
schedules as determined 
by the committee at the 
time of award  governance
synthomer plc annual report 2014 37
element
purpose and  
link to strategy operation
maximum  
opportunity
performance  
measures
pension provide a 
competitive level 
of retirement 
benefits to 
support both 
retention and 
recruitment of 
executive 
directors
executive directors are 
eligible to participate in 
the group personal 
pension plan
executive directors may 
receive payments as a 
cash allowance which 
they may use either in 
conjunction with that plan 
andor to enable them 
to make their own 
arrangements 
maximum of 25 of 
base salary
none
shareholding 
guidelines
the company operates shareholding guidelines for executive directors the current guidelines are detailed 
in the annual report on remuneration page 38
the committee reserves the right to make any remuneration payments and payments for loss of office including exercising 
any discretions available to it in connection with such payment notwithstanding that they are not in line with the policy set 
out below where the terms of the payment were agreed i before the policy came into effect or ii at a time when the relevant 
individual was not a director of the company and in the opinion of the committee the payment was not in consideration for 
the individual becoming a director of the company for these purposes ‘payments’ includes the committee satisfying awards 
of variable remuneration and in relation to an award over shares the terms of the payment were ‘agreed’ at the time the 
award is granted 
provisions to withhold or recover sums paid under the annual bonus plan will be introduced into that plan in 2015 in line 
with those already contained in the 2011 performance share plan no other elements of remuneration are subject to 
recovery provisions
the committee may make minor amendments to the policy for regulatory exchange control tax or administrative purposes 
or to take account of a change in legislation without obtaining shareholder approval for that amendment 
annual report on remuneration for the year ended 31 december 2014
operation of the executive director remuneration policy for 2015
the policy has been in force since 1 may 2014
the specific remuneration arrangements for 2015 are described below adrian whitfield and david blackwood were chief 
executive officer and chief financial officer respectively and executive directors of the company throughout 2014 adrian 
whitfield stood down as chief executive officer and as a director of the company on 22 january 2015 and was succeeded 
by calum maclean david blackwood announced his retirement as chief financial officer on 18 december 2014 and will 
remain in position until his successor has been appointed 38 synthomer plc annual report 2014
directors’ remuneration report
continued
base salary salary increases of 24 effective 1 january 2014 or date of joining if later which were in line with the 
average across the senior management population 
2015 annual salaries
•	 c g maclean £525000 – mr maclean joined the company on 19 january 2015 and was appointed  
chief executive officer on 22 january 2015 his salary was set at a level 24 higher than his 
predecessor as chief executive officer a m whitfield whose salary for the role in 2014 was £512500
•	 d c blackwood £328132
pension and 
benefits
no changes executives receive a cash allowance in lieu of pension contributions a fully expensed car or car 
allowance and private health insurance 
2015 cash allowances in lieu of pension contributions
•	 c g maclean 25 of salary
•	 d c blackwood 20 of salary
mr maclean will receive relocation expenses equivalent to up to three months’ salary to assist with 
relocation to the uk from switzerland
annual 
bonus 
for 2015 performance under the annual bonus will be measured on the following basis
•	 80 subject to performance against underlying profit before tax targets
•	 10 subject to performance measures against key safety health and environmental targets
•	 10 subject to performance against individual strategic and operational goals
•	 targets and objectives for 2015 are by their financial and commercial nature considered by the board  
to be unsuitable for disclosure in advance however the committee will provide information on targets 
and objectives retrospectively
2015 maximum award opportunity
•	 c g maclean 100 of salary
•	 d c blackwood 100 of salary
performance 
share plan
for awards made in 2015 performance will be measured on the same basis as for awards made in 2014 
as follows
•	 40 based on relative tsr performance versus ftse 250 excluding investment trusts and financial 
services companies
 − 25 of this element will vest for median performance
 − 100 vesting for upper quartile performance 
 − vesting on a straightline basis between these points
•	 40 based on underlying eps growth
 − 25 of this element will vest for eps growth of 45 per annum
 − 100 vesting for eps growth of 10 per annum 
 − vesting on a straightline basis between these points 
 − this target range was set following consideration of the longterm strategy and the outlook for the 
markets in which we operate
•	 20 based on performance against three equally weighted measures directly linked to the delivery of 
the business strategy 
 − proportion of sales from new products measured over the 5 years to the end of the performance  
period – incentivising greater innovation through new product development
 − growth in asia ebit – incentivising growing the scale and profitability of operations in 
emerging markets
 − cumulative europe ebitda – incentivising the delivery of stable cash flows from our more mature 
european business to fund this international growth
 − for each of these measures 25 will vest for threshold performance
 − the targets for these measures and the level of performance achieved will be disclosed following 
the end of the performance period
2015 maximum award opportunity
•	 c g maclean 125 of salary 
•	 d c blackwood 110 of salary
shareholding 
guidelines
executives are required to build unfettered interests in shares of at least 100 of salary the committee will 
keep the level under review governance
synthomer plc annual report 2014 39
single figure of remuneration for executive directors
 year
 base  
 salary
 £
 benefits
1
£
 annual  
 bonus
 £
longterm
incentives
2
£
 pension
 £
 total 
 £
executive directors
a m whitfield 2014 512500 32738 293662 – 128125 967025
2013 500000 32457 – 265812 125000 923269
d c blackwood 2014 320441 27067 182010 – 64089 593607
2013 312625 26275 – 159503 62525 560928
notes
1 this is the total taxable value of benefits received by each director during 2014 the table below provides details of the main component of the relevant 
benefits paid to executive directors
 car expenses
a m whitfield £31985
d c blackwood £26314
2 for 2013 the longterm incentives are the value i of the award granted under the 2002 psp and made in 2011 which vested in april 2014 and ii of the award 
granted under the 2011 psp and also made in 2011 which vested in june 2014 both based on the share price at the date of vesting further information 
about the level of vesting is provided in this report
additional information for single figure remuneration
base salary
the base salary for senior executives is reviewed with effect from 1 january each year the committee reviewed the 
positioning of executive director base salaries in late 2014 in the context of the prevailing economic circumstances and taking 
into account pay and employment conditions elsewhere in the company the base salary levels effective 1 january 2015 
or date of joining if later are set out below
executive directors 2014 base salary 2015 base salary  change
a m whitfield
1
£512500 £512500 0
d c blackwood £320441 £328132 24
c g maclean na £525000 24 compared with mr whitfield’s 2014 base salary
notes
1 adrian whitfield stood down as chief executive officer and as a director of the company on 22 january 2015 and will receive his salary until 30 june 2015
annual bonus
2014 award
for 2014 the company operated a cash bonus plan for the executive directors related to the achievement of profit before 
tax targets health  safety targets and individual strategic and operational goals
the achievement of the profit before tax target represented up to 80 of the maximum bonus opportunity achievable of 
100 of annual basic salary this was set by reference to the board approved internal budget for the group with the 2014 
result adjusted such that it is on a constant currency basis
the health  safety targets were given a 10 weighting of the maximum achievable with the balance of 10 relating 
to individual strategic and operational goals
overall bonuses for the year ended 31 december 2014
executive directors
 maximum bonus as a 
 of salary
 total bonus as a
 of maximum
 total bonus  
 £
a m whitfield 100 573 293662
d c blackwood 100 568 182010 40 synthomer plc annual report 2014
directors’ remuneration report
continued
further information of the three elements of the bonus are as follows
profit before tax
threshold achieved target maximum
bonus achieved  
as  of  
maximum 
weighting 80 491
20 491 60 100
the adjustment for constant currency resulted in a £49 million positive adjustment to the reported 2014 profit before tax 
underlying performance of £86 million which in aggregate was slightly below the on target performance for the year of 
£93 million
health  safety
targets with an aggregate weighting of 10 related to improvements in personal and process safety and as a result of the 
strong performance in these areas set out in the corporate social responsibility report on pages 20 to 23 the maximum 
bonus opportunity was achieved
individual strategic and operational goals – a m whitfield
individual goals with an aggregate weighting of 10 included identification of evaluated possible acquisition opportunities  
and development of executive management succession planning and talent pool and an award of 8 of the maximum 
opportunity was made
individual strategic and operational goals – d c blackwood
individual goals with an aggregate weighting of 10 included improvement and development of financial reporting and it 
systems and an award of 75 of the maximum opportunity was made
2011 performance share plan
2012 award included in single figure of remuneration for 2014
the awards made on 9 march 2012 under the 2011 psp were calculated on the basis of 100 of 2012 salary chief executive 
officer £472500 and chief financial officer £305000 and using a share price of 2289p and were subject to a relative 
shareholder return performance condition and an absolute earnings per share performance condition as follows
relative total shareholder  
return condition eps condition
company relative tsr performance against 
the ftse 250 index excluding investment 
trusts and financial services companies over 
3 year period ended 31 december 2014
eps for the 2014  
financial year 
percentage of award 
that will vest performance achieved
upper quartile 32 pence or more 50
eps of 195 pence and 
tsr performance below 
median giving nil vesting
between median 
and upper quartile
between 28 pence 
and 32 pence
on a straightline basis 
between 125 and 50
median 28 pence 125
below median less than 28 pence 0
the 2012 awards will lapse in march 2015 as follows
no of shares in award no of shares that lapse no of shares that vest
a m whitfield 206422 206422 0
d c blackwood 133245 133245 0 governance
synthomer plc annual report 2014 41
2014 award
the awards made on 3 march 2014 were as follows
executive directors scheme basis of award
 number  
 of shares face value
 percentage  
 vesting at  
 threshold  
 performance
 performance  
 period end date
a m whitfield
 2011 psp –  
 nilcost options 125 of salary 241562 £640625 25 31122016
d c blackwood
 2011 psp – 
 nilcost options 110 of salary 132912 £352485 25 31122016
the face value of the awards is calculated using the share price on the dealing day prior to the date of grant being 
28 february 2014 which was 2652 pence per share and 2014 salaries of £512500 and £320441 for the chief executive 
officer and the chief financial officer respectively
the awards made on 3 march 2014 under the 2011 psp were subject to the following performance conditions
relative total shareholder  
return condition eps condition
company relative tsr performance against 
the ftse 250 index excluding investment 
trusts and financial services companies over 
3 year period ending 31 december 2016 eps for the 2016 financial year percentage of award that will vest
upper quartile 2755 pence or more 40
between median 
and upper quartile
between 2362 pence  
and 2755 pence
on a straightline basis between 10 
and 40
median 2362 pence 10
below median less than 2362 pence 0
a further 20 of the award is subject to strategic measures as referred to on page 33 the targets for which will be disclosed 
following the end of the performance period
pension entitlements 
both executive directors receive a cash allowance in lieu of pension contributions no additional benefit is receivable in the 
event of a director retiring early
cash allowance  salary
chief executive officer 25
chief finance officer 20 42 synthomer plc annual report 2014
directors’ remuneration report
continued
single figure of remuneration for nonexecutive directors
nonexecutive directors base fee
 committee
 membership fee
 committee 
 chair fee total
n a johnson 2014 160000 – – 160000
2013 140000 – – 140000
the hon a g catto 2014 40000 833 – 40833
2013 40000 4167 – 44167
j chen 2014 40000 – – 40000
2013 40000 – – 40000
b w d connolly
1
2014 37622 4703 4703 47028
2013 – – – –
dr j jansz 2014 40000 5000 – 45000
2013 40000 5000 – 45000
dato’ lee hau hian 2014 40000 – – 40000
2013 40000 – – 40000
j k maiden
2
2014 45000 5000 5000 55000
2013 40000 5000 5000 50000
1 appointed on 20 january 2014
2 base fee includes an amount of £5000 for role as senior independent director
the nonexecutive director and chairman’s fees were reviewed in january 2014 with the assistance of independent advice 
provided by deloitte nonexecutive director fees were left unchanged from 2013 except that it was determined that an 
additional fee of £5000 would be introduced for the nonexecutive director undertaking the role of the senior independent 
director with effect from 1 january 2014 the chairman’s fee was increased from £140000 to £160000 with effect from 
same date
directors’ shareholding and share interests number of sharesoptions
directors
 interests in
 company
 shares
 31 december
2014
vested 
unexercised 
performance 
related options 
31 december 
2014
total 
unfettered 
interests in 
shares and 
vested options 
31 december 
2014
unvested 
performance 
related 
options 
31 december 
2014
1 2
share 
options 
exercised 
during 2014
share 
ownership 
requirements 
 of salary
interests 
in shares at 
31 december 
2014
 of salary
3
a m whitfield 197388 0 197388 714792 517670 100 91
d c blackwood 143190 0 143190 432979 303917 100 106
the hon a g catto 1746955
 7741950
j chen  –
b w d connolly 2200
dato’ lee hau hian 44763
dr j j c jansz 10000
n a johnson 100000
j k maiden 2523
 nonbeneficial interest
1 this includes unvested nilcost options relating to the 2012 psp award which will lapse in march 2015 for a m whitfield this is a nilcost option over 
206422 shares for d c blackwood this is a nilcost option over 133245 shares 
2 unvested performance related options comprise the awards made under the 2011 psp in 2012 2013 and 2014 details of the performance conditions 
attaching to the 2012 and 2014 awards are set out on pages 40 and 41 respectively governance
synthomer plc annual report 2014 43
the performance conditions attaching to the awards made on 24 april 2013 are as follows and were calculated on the basis 
of 100 of 2013 salary chief executive officer £500000 and chief financial officer £312625 and using a share price of 
1874 pence
relative total shareholder return condition eps condition
company relative tsr performance against 
the ftse 250 index excluding investment 
trusts and financial services companies over 
3 year period ending 31 december 2015 eps for the 2015 financial year percentage of award that vests
upper quartile 293 pence or more 50
between median 
and upper quartile between 255 pence and 293 pence
on a straightline basis between  
125 and 50
median 255 pence 125
below median less than 255 pence 0
3 executive directors are required to hold 100 of their annual salary in the company’s shares until this requirement is met no sales of shares that 
vest under longterm incentive plans are permitted other than to satisfy tax liabilities that arise on the exercise of share awards under such plans the 
committee considers that unfettered unexercised vested nilcost awards are economically equivalent to shares and as such that they should count 
on a net of tax basis toward compliance with the 100 salary guideline the committee will keep the guideline level of share interest under review
payments to past directors
no payments were made to past directors during the year
arrangements for a m whitfield and d c blackwood
a m whitfield
on 1 july 2014 adrian whitfield announced his intention to step down from his role as chief executive officer and director 
of the company he agreed to give 12 months’ notice and to continue as chief executive officer to allow sufficient time for 
a replacement to be found and an orderly transition to take place 
as a result of the appointment of calum maclean as mr whitfield’s successor on 22 january 2015 mr whitfield agreed 
with the board to step down as chief executive officer but to remain an employee of the company until the end of his 
notice period on 30 june 2015 during his notice period mr whitfield continues to be paid in line with the terms of his 
service agreement and is entitled to receive his normal salary benefits and pension arrangements 
it was agreed at the time of his giving notice that he would receive neither a bonus nor an award under the performance 
share plan in 2015 he remained eligible for a bonus in respect of performance in 2014 as detailed on pages 39 and 40 
the remuneration committee determined that taking into account the circumstances of the departure the transition 
between the leadership of the company and mr whitfield’s contribution to the business during his tenure his unvested 
awards under the performance share plan would continue in line with the approved policy the awards will be reduced on a 
timeapportioned basis which will be calculated to 31 march 2015 ie prior to ceasing employment awards will be subject 
to the relevant performance conditions which will be measured at the normal time vesting of awards will also be subject to 
mitigation to the extent that mr whitfield subsequently takes up employment with a competitor of the company 
d c blackwood
david blackwood gave notice of his intention to retire from his role as chief financial officer on 18 december 2014 and 
agreed to remain with the company until 31 december 2015 in order for his successor to be recruited and a handover to  
take place during 2015 mr blackwood will continue to be paid in line with the terms of his service agreement and is entitled 
to receive his normal salary benefits and pension arrangements it was agreed that mr blackwood would not be required to 
work for six weeks during this period in addition to his normal holiday entitlement
mr blackwood will participate in the 2015 annual bonus scheme and receive an award under the performance share plan 
in 2015 
on retirement in line with the approved policy mr blackwood’s unvested awards under the performance share plan will 
continue but will be reduced on a timeapportioned basis calculated to 31 december 2015 awards will be subject to the 
relevant performance conditions which will be measured at the normal time
payments for loss of office
no payments for loss office were made during the year 44 synthomer plc annual report 2014
directors’ remuneration report
continued
performance graph and table
the graph and the table below allow comparison of the total shareholder return of the company and the chief executive 
officer remuneration outcomes over the last six years
synthomer plc
ftse 250
300
250
200
150
100
50
0
total shareholder return
13 14
total shareholder return
09 11 12 10
the graph compares the total shareholder return performance of the company with that of the ftse 250 which is considered 
to be the most appropriate index against which to make a comparison
2009 2010 2011 2012 2013 2014
ceo total single figure of  
remuneration £000 786 1484 3934 1487 923 967
bonus  of maximum awarded 100 100 100 27 0 573
lti  of maximum vesting 0 100 100 100 50 0
the ceo total single figure of remuneration includes salary benefits and pension contributions paid in the year together 
with bonuses and longterm incentive awards which vested based on performance in the year
percentage change in remuneration of director undertaking the role of chief executive  
compared with uk group employees
the table below sets out the increase in total remuneration of the chief executive officer and that of the employees of the 
group’s main uk trading subsidiary total employee pay is based on the total salary benefits and bonuses for employees of 
that company comprising some 338 employees the directors consider that this employee population is the most relevant for 
comparison purposes taking into account geographical location and remuneration structure
salary 
 increase
taxable benefits 
 increase
annual bonus 
 increase
a m whitfield 25 10 –
t otal employee pay benefits and bonuses 28 81 –
relative importance of spend on pay
the table below shows the relative importance of the group’s all employee remuneration expense compared with returns 
to shareholders by way of dividends
2014
£m
2013
£m  change
dividends 224 194 155
total employee remuneration 680 687 10
dividends are the dividends paid in the year total employment remuneration is the consolidated salary cost for all 
group employees
emoluments
2014
£000
2013
£000
the total amounts for directors’ remuneration and other benefits were
emoluments 1798 1249 governance
synthomer plc annual report 2014 45
external appointments
executive directors are permitted to accept external appointments with the prior approval of the board provided that there is 
no adverse impact to their role and duties to the company any fees arising from such appointments may be retained by the 
executive directors where the appointment is unrelated to the group’s business
mr a m whitfield is a nonexecutive director of the chemical industries association limited and assumed the role of president 
on 1 july 2013 and does not receive any remuneration for either position
remuneration committee
remuneration committee membership since 1 january 2014
brendan connolly
1
 chairman
jez maiden
just jansz   
neil johnson
2
 until 1 march 2014
1 brendan connolly joined the committee on 23 january 2014 and became chairman of the committee on 1 march 2014 
2 neil johnson was chairman of the committee until 1 march 2014 on which date he retired from the committee
the committee’s composition was noncompliant with the requirements of code provision d21 i for some 3 weeks in 
january 2014 when it was comprised of only two independent nonexecutive directors and ii until 1 march 2014 as the 
chairman of the board was also chairman of the committee
attendance at committee meetings is set out on page 26
key duties of the committee
the committee is responsible for determining in agreement with the board the company’s policy on executive remuneration 
and the specific remuneration for the chairman and each of the executive directors including pension rights within the terms of 
the agreed policy the committee is also responsible for reviewing the remuneration of senior executives throughout the group 
advisers
the chief executive officer chief financial officer and company secretary are invited to attend committee meetings to 
contribute to the committee in its deliberations however no individual is involved in discussions or is part of any decisions 
relating to their own remuneration
the committee received independent advice from deloitte llp who were appointed as the committee’s independent 
remuneration advisors in april 2013 
during the year deloitte provided advice on new reporting regulations market data and other remuneration matters that 
materially assisted the committee the fees paid to deloitte in respect of this work were charged on a time and expenses 
basis and totalled £22900 for advice in 2014 deloitte also provided tax services to the company in the year the committee 
was satisfied that this did not compromise the independence of the advice received
deloitte is a founding member of the remuneration consultants group and adhere to its code of conduct deloitte was 
appointed directly by the committee and the committee is satisfied that the advice received was objective and independent
statement of voting at general meeting
the table below sets out the results of the vote on the directors’ remuneration report in 2014
 votes for votes against votes withheld
member number  of vote number  of vote number
2014 directors’ remuneration policy 231516858 93 17333766 7 4858658
2014 annual report on remuneration 237964411 97 7087825 3 8657357
by order of the board
r atkinson
company secretary
25 february 2015 46 synthomer plc annual report 2014
the directors submit their annual report and the audited 
consolidated financial statements for the year ended 
31 december 2014 the report of the directors comprises 
pages 46 to 48 and the following sections of the annual 
report which are incorporated by reference
item
 location in  
 annual report
directors’ responsibility statements page 49 
financial instruments and financial 
risk management
 financial statements  
 – note 22
present membership of the board page 24 
corporate governance report pages 25 to 32 
strategic report including principal 
activities and principal risks and 
uncertainties pages 4 to 19
directors’ remuneration report pages 33 to 45
share capital
 financial statements  
 – note 27
corporate social responsibility pages 20 to 23
results and dividends
the profit attributable to shareholders for the year was 
£453 million the interim dividend of 30 pence per share 
was paid on 6 november 2014 the directors recommend 
a final ordinary dividend of 48 pence per share and a special 
dividend of 78 pence per share both payable on 3 july 2015 
to those shareholders registered at the close of business on 
5 june 2015 a dividend reinvestment plan is available to 
shareholders and this alternative will continue to be offered 
until further notice
acquisitions
on 22 october 2014 the group acquired the remaining 50 
of eka synthomer oy now called synthomer finland oy 
owned by akzonobel its joint venture partner further details 
of this transaction is contained in note 29
directors
all the directors will retire and will be seeking election or 
reelection as appropriate at the forthcoming annual general 
meeting other than mr j k maiden who will retire from the 
board at the close of the annual general meeting
none of the directors seeking election or reelection has a 
service contract other than mr maclean and mr blackwood 
who each have a service contract which contains a twelve 
month notice period 
director indemnity provisions
under the company’s articles of association the directors 
of the company have the benefit of a qualifying thirdparty 
indemnity provision which provides that they shall be 
indemnified by the company against certain liabilities as 
permitted by sections 232 and 234 of the companies act 
2006 and against costs incurred by them in relation to any 
liability for which they are indemnified the company has 
purchased and maintains insurance against directors’ and 
officers’ liabilities in relation to the company
share capital and control
during 2014 no shares were issued or repurchased a total of 
70122 shares were purchased on the open market on behalf 
of the shareholders who elected to participate in the dividend 
reinvestment plan
the rights and obligations attaching to the company’s 
ordinary shares being the only class of issued share capital 
as well as the powers of the company’s directors are set 
out in the company’s articles of association copies of 
which can be obtained from companies house or can be 
downloaded from the company’s website there are no 
restrictions on the voting rights attaching to the company’s 
ordinary shares or on the transfer of securities in the 
company no person holds securities in the company 
carrying special rights with regard to the control of the 
company the company is not aware of any agreements 
between holders of securities that may result in restrictions 
on the transfer of securities or on voting rights unless 
expressly specified to the contrary in the articles of 
association of the company the company’s articles of 
association may be amended by special resolution of the 
company’s shareholders
other than in relation to its borrowings which unless certain 
conditions are satisfied become repayable on a takeover 
the company is not party to any significant agreements that 
would take effect alter or terminate upon a change of control 
following a takeover bid the company does not have 
agreements with any director or employee that would provide 
compensation for loss of office or employment resulting from 
a takeover
all of the company’s share schemes contain provisions 
relating to a change of control outstanding options and 
awards would normally vest and become exercisable on 
a change of control subject to the satisfaction of any 
performance conditions at that time
report of the directors
for the year ended 31 december 2014 governance
synthomer plc annual report 2014 47
major shareholdings
other than the shareholdings disclosed as directors’ 
interests in the directors’ remuneration report as at 
13 february 2015 the company had been notified under 
section 5 of the disclosure and transparency rules of the 
uk listing authority of the following significant holdings of 
voting rights in its ordinary shares
 ordinary 
 shares 
 number 
 percentage 
 of ordinary 
 shares in 
  issue
nature 
of holding
kuala lumpur 
kepong berhad 
group 66879401
  
 1968
 direct  
 interest
standard life 
investments limited 49377978 1453
 direct and  
 indirect  
 interest
fil limited 17182396 505
 indirect  
 interest
ubs global asset 
management 17029199 501
 direct and  
 indirect  
 interest
old mutual plc 15608853 459
 direct  
 interest and  
 qualifying  
 financial  
 instruments
employment policies
the group gives every consideration to applications for 
employment from disabled persons employees who become 
disabled are given every opportunity to continue employment 
under normal terms and conditions with appropriate training 
career development and promotion wherever possible the 
group seeks to achieve equal opportunities in employment 
through recruitment and training policies
authority to purchase own shares
the company has a general authority which expires at the 
conclusion of the 2014 annual general meeting to make 
market purchases of not more than 33988076 of the 
company’s ordinary shares in accordance with the terms 
of the special resolution passed at the 2014 annual general 
meeting a resolution will be tabled at the 2015 annual 
general meeting to renew this authority
employee involvement
the group encourages employee involvement in its affairs 
and makes use of an intranet system to promote such 
involvement and to aid communication with employees 
the group began the roll out of a ‘core values’ initiative at 
the beginning of 2014 with a view to engendering a common 
‘synthomer culture’ supporting the group’s growth plans 
and improving the work place environment the roll out will 
be completed by the middle of 2015 annual regional 
management conferences are held to bring senior managers 
together to share ideas and develop policy and values and 
behaviours briefings are given regularly to all employees 
to make them aware of the financial and economic factors 
affecting the performance of the group performance related 
bonus schemes are in operation throughout the group
political donations
no political donations were made in the year
uk pension funds
the trustees have reviewed the independent investment 
management of the assets of the company pension schemes 
in the uk and assured themselves of the security and controls 
in place in particular it is the trustees’ policy not to invest in 
synthomer plc shares nor lend money to the company
subsidiaries
the group’s subsidiaries and joint ventures whose results 
of financial position in the opinion of the directors principally 
affected the group’s financial statements are listed on 
page 107
a full list of the group’s subsidiaries joint ventures and 
related undertaking will be annexed to the company’s 
next annual return
statement as to disclosure of information to auditor
each director of the company confirms that so far as he 
is aware there is no relevant audit information of which the 
company’s auditor is unaware and that he has taken all 
the steps that he ought to have taken as a director in order 
to make himself aware of any relevant audit information 
and to establish that the company’s auditor is aware of that 
information for these purposes relevant audit information 
means information needed by the company’s auditor in 
connection with preparing their reports on pages 51 to 
55 and 97 to 98
this confirmation is given and should be interpreted in 
accordance with section 418 of the companies act 2006 48 synthomer plc annual report 2014
independent auditors
a resolution to appoint pricewaterhousecoopers llp 
as the company’s auditor will be proposed at the annual 
general meeting
annual general meeting
the annual general meeting will be held at 1100 am 
on 30 april 2015 at manor of groves hotel high wych 
sawbridgeworth hertfordshire cm21 0ju
by order of the board
r atkinson
company secretary
25 february 2015
going concern
the directors have acknowledged the latest guidance on 
going concern and in reaching their conclusions have taken 
into account factors including
•	 the refinancing of the group’s main credit facility in 
july 2014 which involved the putting in place of a new 
£210 million multicurrency revolving loan for a term of 
five years 
•	 the final repayment under the 2004 series private 
placement notes of us22 million due in september 2016
after making enquiries and taking account of reasonably 
possible changes in trading performance the directors have 
concluded that the company and the group have adequate 
resources to continue in operational existence for the 
foreseeable future
accordingly they continue to adopt the going concern basis 
in preparing the annual report and accounts
cautionary statement
the purpose of this report is to provide information to the 
members of the company it contains certain forward
looking statements with respect to the operations 
performance and financial condition of the group by their 
nature these statements involve uncertainty since future 
events and circumstances can cause results and 
developments to differ materially from those anticipated 
the forwardlooking statements reflect knowledge and 
information available at the date of preparation of this report 
and the company undertakes no obligation to update these 
forwardlooking statements nothing in this report should 
be construed as a profit forecast
report of the directors
for the year ended 31 december 2014 continued governance
synthomer plc annual report 2014 49
statement of directors’ responsibilities
the directors are responsible for keeping adequate 
accounting records that are sufficient to show and explain 
the company’s transactions and disclose with reasonable 
accuracy at any time the financial position of the company 
and enable them to ensure that the financial statements 
comply with the companies act 2006 they are also 
responsible for safeguarding the assets of the company 
and hence for taking reasonable steps for the prevention 
and detection of fraud and other irregularities
other matters
the directors are responsible for the maintenance and 
integrity of the corporate and financial information included 
on the company’s website legislation in the united kingdom 
governing the preparation and dissemination of financial 
statements may differ from legislation in other jurisdictions
responsibility statement
we confirm that to the best of our knowledge
•	 the financial statements prepared in accordance with the 
relevant financial reporting framework give a true and fair 
view of the assets liabilities financial position and profit or 
loss of the company and the undertakings included in the 
consolidation taken as a whole and
•	 the strategic report includes a fair review of the 
development and performance of the business and the 
position of the company and the undertakings included 
in the consolidation taken as a whole together with a 
description of the principal risks and uncertainties that 
they face
•	 as required by the uk corporate governance code 
the annual report and financial statements taken as a 
whole provides the information necessary to assess the 
group’s performance business model and strategy and 
is fair balanced and understandable
by order of the board
c g maclean  d c blackwood
chief executive officer chief financial officer
financial statements including adoption  
of going concern basis
the directors are responsible for preparing the annual 
report and the financial statements in accordance with 
applicable law and regulations
company law requires the directors to prepare financial 
statements for each financial year under that law the 
directors are required to prepare the group financial 
statements in accordance with international financial 
reporting standards ifrss as adopted by the european 
union and article 4 of the ias regulation and have elected 
to prepare the parent company financial statements in 
accordance with united kingdom generally accepted 
accounting practice united kingdom accounting 
standards and applicable law under company law the 
directors must not approve the accounts unless they are 
satisfied that they give a true and fair view of the state of 
affairs of the company and of the profit or loss of the 
company for that period
in preparing the parent company financial statements 
the directors are required to
•	 select suitable accounting policies and then apply 
them consistently
•	 make judgements and accounting estimates that are 
reasonable and prudent
•	 state whether applicable uk accounting standards have 
been followed subject to any material departures 
disclosed and explained in the financial statements and
•	 prepare the financial statements on the going concern 
basis unless it is inappropriate to presume that the 
company will continue in business
in preparing the group financial statements international 
accounting standard 1 requires that directors
•	 properly select and apply accounting policies
•	 present information including accounting policies in 
a manner that provides relevant reliable comparable 
and understandable information
•	 provide additional disclosures when compliance with the 
specific requirements in ifrss are insufficient to enable 
users to understand the impact of particular 
transactions other events and conditions on the entity’s 
financial position and financial performance and
•	 make an assessment of the company’s ability to 
continue as a going concern financial statements
and other information
50 synthomer plc annual report 2014 group financial statements
synthomer plc annual report 2014 51
report on the group financial statements
our opinion
in our opinion synthomer plc’s group financial statements the ‘financial statements’
•	 give a true and fair view of the state of the group’s affairs as at 31 december 2014 and of its profit and cash flows for the 
year then ended
•	 have been properly prepared in accordance with international financial reporting standards ifrss as adopted by the 
european union and
•	 have been prepared in accordance with the requirements of the companies act 2006 and article 4 of the ias regulation
what we have audited
synthomer plc’s financial statements comprise
•	 the consolidated balance sheet and analysis of net borrowings as at 31 december 2014 
•	 the consolidated income statement and consolidated statement of comprehensive income for the year then ended
•	 the consolidated cash flow statement for the year then ended
•	 the consolidated statement of changes in equity for the year then ended and
•	 the notes to the financial statements which include a summary of significant accounting policies and other 
explanatory information
the financial reporting framework that has been applied in the preparation of the financial statements is applicable law and
ifrss as adopted by the european union
our audit approach
overview
materiality •	 overall group materiality £38 million which represents 45 of underlying profit before tax
audit scope •	 we conducted audit work over the complete financial information of the operating companies 
in germany malaysia and the uk together with various head office companies which were also 
subject to audits of their complete financial information
•	 the companies within our scope accounted for 82 of the group’s revenue 82 of the group’s 
operating profit and 79 of the group’s underlying operating profit
areas of focus •	 impairment of goodwill and intangibles
•	 provisions for uncertain tax positions
•	 defined benefit pension accounting
the scope of our audit and our areas of focus
we conducted our audit in accordance with international standards on auditing uk and ireland isas uk and ireland
we designed our audit by determining materiality and assessing the risks of material misstatement in the financial
statements in particular we looked at where the directors made subjective judgements for example in respect of significant
accounting estimates that involved making assumptions and considering future events that are inherently uncertain as in
all of our audits we also addressed the risk of management override of internal controls including evaluating whether there
was evidence of bias by the directors that represented a risk of material misstatement due to fraud
the risks of material misstatement that had the greatest effect on our audit including the allocation of our resources and
effort are identified as ‘areas of focus’ in the table below we have also set out how we tailored our audit to address these
specific areas in order to provide an opinion on the financial statements as a whole and any comments we make on the 
results of our procedures should be read in this context this is not a complete list of all the risks identified by our audit
independent auditor’s report
to the members of synthomer plc 52 synthomer plc annual report 2014
area of focus how our audit addressed the area of focus
impairment of goodwill and intangibles
the group holds £3135 million of goodwill and acquired 
intangible assets as set out in notes 13 and 14 to the 
financial statements
management identifies the following two cash generating 
units cgus for the purposes of its impairment review and 
performs separate annual impairment assessments over 
goodwill and intangible asset balances in each
•	 europe and north america and
•	 asia and rest of world
we focused on this area because of the size of the balances 
involved in the context of the group’s balance sheet and 
the fact that determining whether these assets are impaired 
involves a number of significant judgements as disclosed 
in note 13 to the financial statements the principal 
assumptions underpinning management’s impairment 
assessment are
•	 annual revenue growth of 2 for europe and north 
america and 5 for asia and rest of world
•	 discount rates of 11 for europe and north america and 
12 for asia and rest of world and
•	 the sustainability of year 10 profitability into perpetuity
our audit work has focused on these key assumptions 
as we regard them as subject to the most judgement and 
as being those assumptions to which the impairment 
assessment is most sensitive
we evaluated the directors’ future cash flow forecasts and 
the process by which they were drawn up and tested the 
mathematical accuracy of calculations within the forecasts
we used our own knowledge and external market data in 
relation to items such as market and country risk premium 
to independently derive a weighted average cost of capital 
for each of the cgus subject to impairment reviews to 
assess the appropriateness of the discount rates applied 
by management
we considered the reasonableness of management’s 
growth rate assumptions in the context of the recent 
performance of the business in each of the cgus and by 
comparison with external market data on growth rates within 
the geographic areas where the cgus operate
we performed sensitivity testing on the forecasts by 
sensitising key assumptions in relation to growth rates and 
discount rates to assess the extent to which a change in 
any one or more of the key assumptions could indicate the 
risk of an impairment
we also assessed management’s historic forecasting 
accuracy by comparing the 2014 results with the group’s 
budget for 2014 considering the implications of this on 
our assessment of the reliability of forecasts for 2015 and 
future years
based on the audit evidence obtained we did not identify  
any indicators of impairment relation to goodwill or intangible 
assets held
defined benefit pension accounting 
as set out in note 25 on pages 88 to 91 the group has 
significant defined benefit pension schemes these primarily 
represent the yule catto group retirement benefits scheme 
in the uk and two unfunded schemes in germany which 
account for £147 4 million of the net pension deficit of 
£1507 million recorded on the group balance sheet at 
the year end
we focused on the pension liabilities in particular as the 
determination of the amounts reflected in the financial 
statements for defined benefits schemes is impacted to a 
large degree by various assumptions as set out on page 89 
with the amount being sensitive to relatively small changes 
in a few key assumptions most notably the discount 
rate applied
we also had regard to the fact that the group uses 
thirdparty actuaries to calculate the amounts to reflect 
in the financial statements in respect of these schemes 
our focus was therefore to assess the competency and 
objectivity of management’s experts the appropriateness of 
the scope of their work for the purposes of our audit and the 
appropriateness of the assumptions used in calculating the 
net pension deficit
we obtained detailed external actuarial reports of the uk
and german schemes at the year end which set out the
calculations and assumptions underpinning the year end 
pension scheme valuation
we assessed the competency and objectivity of the 
external actuaries commissioned by the group to perform 
the year end calculations by considering their technical 
expertise and independence from the group we identified 
no concerns over their competency or objectivity
we read the actuaries’ reports and were satisfied that the 
scope of their work was such that we could use this work 
to provide evidence for the purpose of our audit
we used our own actuarial knowledge to evaluate all 
the key assumptions used in each of the three schemes 
by comparing these assumptions to our expectations 
for similar schemes as at the year end we found 
management’s assumptions to be consistent with 
our expectations and within an acceptable range
independent auditor’s report
to the members of synthomer plc continued group financial statements
synthomer plc annual report 2014 53
area of focus how our audit addressed the area of focus
provisions for uncertain tax positions
the group has a wide geographic footprint and is 
subject to a range of tax laws in a number of different tax 
jurisdictions in determining the amount to record at the 
year end for tax liabilities there is an element of judgement 
as to what amounts will ultimately be payable for assessed 
tax exposures
as set out in note 8 at 31 december 2014 the group 
has recorded current tax liabilities totalling £327 million 
a significant element of this tax liability relates to uncertain 
tax positions
we focused on this area due to the size of the amounts 
involved and level of judgement needed to determine the 
estimated provisions
we used our tax knowledge to assess the level of provisions 
held against various tax exposures and to consider their 
appropriateness having regard to the nature of the individual 
exposures and any developments in the year
as part of this work we inspected correspondence with 
tax authorities and the group’s tax advisors we challenged 
the judgements made by assessing individual provisions 
against our expectations of potential exposures having 
regard to the facts of each case and where deemed 
necessary we involved pwc component auditors in the 
relevant overseas territory
no significant matters arose from this work to suggest 
that the judgements made and amounts recorded 
were inappropriate
how we tailored the audit scope
we tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial 
statements as a whole taking into account the geographic structure of the group the accounting processes and controls 
and the industry in which the group operates
as set out on page 12 the group reports its results as two businesses ‘europe and north america’ and ‘asia and rest  
of world’ the group financial statements are a consolidation of reporting units being holding companies intermediate
holding companies and nineteen operating companies across thirteen countries three countries – the uk germany and
malaysia – account for the majority for the group’s results we accordingly focused our work on the six key reporting units
in these countries which were subject to audits of their complete financial information these components accounted for
82 of the group’s revenue 82 of the group’s operating profit and 79 of the group’s underlying operating profit 
in addition to the work at the six key reporting units we performed local statutory audit work in relation to the year ended  
31 december 2014 at a number of other operating companies accounting for a further 14 of the group’s underlying 
operating profit with these teams reporting to the group team any unadjusted items in excess of £200000 from their work 
which was substantially completed as at the date of this opinion
where work was performed by component auditors we determined the level of involvement we needed to have in the audit
work at those reporting units to be able to conclude whether sufficient appropriate audit evidence had been obtained as a
basis for our opinion on the group financial statements as a whole the group team also attended the closing audit meetings 
in the largest overseas territories
materiality
the scope of our audit was influenced by our application of materiality we set certain quantitative thresholds for materiality 
these together with qualitative considerations helped us to determine the scope of our audit and the nature timing and extent 
of our audit procedures and to evaluate the effect of misstatements both individually and on the financial statements as a whole
based on our professional judgement we determined materiality for the financial statements as a whole as follows
overall group materiality £38 million 2013 £41 million
how we determined it 45 of underlying profit before tax
rationale for benchmark applied we have used underlying profit being profit before tax adjusted for special items 
because it is the principal metric against which the group’s financial performance 
is measured
we agreed with the audit committee that we would report to them misstatements identified during our audit above £200000 
2013 £200000 as well as misstatements below that amount that in our view warranted reporting for qualitative reasons 54 synthomer plc annual report 2014
going concern
under the listing rules we are required to review the directors’ statement set out on page 49 in relation to going concern
we have nothing to report having performed our review
as noted in the directors’ statement the directors have concluded that it is appropriate to prepare the financial statements 
using the going concern basis of accounting the going concern basis presumes that the group has adequate resources 
to remain in operation and that the directors intend it to do so for at least one year from the date the financial statements 
were signed as part of our audit we have concluded that the directors’ use of the going concern basis is appropriate 
however because not all future events or conditions can be predicted these statements are not a guarantee as to the 
group’s ability to continue as a going concern
other required reporting
consistency of other information
companies act 2006 opinion
in our opinion the information given in the strategic report and the report of the directors for the financial year for which 
the financial statements are prepared is consistent with the financial statements
ias uk  ireland reporting
under isas uk  ireland we are required to report to you if in our opinion
•	 information in the annual report is
 − materially inconsistent with the information in the audited financial 
statements or
 − apparently materially incorrect based on or materially inconsistent with  
our knowledge of the group acquired in the course of performing our audit or
 − otherwise misleading
we have no exceptions to report arising 
from this responsibility
•	 the statement given by the directors on page 49 in accordance with provision 
c11 of the uk corporate governance code the code that they consider 
the annual report taken as a whole to be fair balanced and understandable 
and provides the information necessary for members to assess the group’s 
performance business model and strategy is materially inconsistent with our 
knowledge of the group acquired in the course of performing our audit
we have no exceptions to report arising 
from this responsibility
•	 the section of the annual report on page 29 as required by provision c38 of 
the code describing the work of the audit committee does not appropriately 
address matters communicated by us to the audit committee
we have no exceptions to report arising 
from this responsibility
adequacy of information and explanations received
under the companies act 2006 we are required to report to you if in our opinion we have not received all the information  
and explanations we require for our audit we have no exceptions to report arising from this responsibility
directors’ remuneration
under the companies act 2006 we are required to report to you if in our opinion certain disclosures of directors’ 
remuneration specified by law are not made we have no exceptions to report arising from this responsibility
corporate governance statement
under the listing rules we are required to review the part of the corporate governance statement relating to the parent 
company’s compliance with ten provisions of the uk corporate governance code we have nothing to report having 
performed our review
independent auditor’s report
to the members of synthomer plc continued group financial statements
synthomer plc annual report 2014 55
responsibilities for the financial statements and the audit
our responsibilities and those of the directors
as explained more fully in the statement of directors’ responsibilities the directors are responsible for the preparation  
of the financial statements and for being satisfied that they give a true and fair view
our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and isas
uk  ireland those standards require us to comply with the auditing practices board’s ethical standards for auditors
this report including the opinions has been prepared for and only for the company’s members as a body in accordance
with chapter 3 of part 16 of the companies act 2006 and for no other purpose we do not in giving these opinions accept
or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it
may come save where expressly agreed by our prior consent in writing
what an audit of financial statements involves
an audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give 
reasonable assurance that the financial statements are free from material misstatement whether caused by fraud or error 
this includes an assessment of
•	 whether the accounting policies are appropriate to the group’s circumstances and have been consistently applied 
and adequately disclosed
•	 the reasonableness of significant accounting estimates made by the directors and
•	 the overall presentation of the financial statements
we primarily focus our work in these areas by assessing the directors’ judgements against available evidence forming 
our own judgements and evaluating the disclosures in the financial statements
we test and examine information using sampling and other auditing techniques to the extent we consider necessary 
to provide a reasonable basis for us to draw conclusions we obtain audit evidence through testing the effectiveness 
of controls substantive procedures or a combination of both
in addition we read all the financial and nonfinancial information in the annual report 2014 the ‘annual report’ to identify 
material inconsistencies with the audited financial statements and to identify any information that is apparently materially 
incorrect based on or materially inconsistent with the knowledge acquired by us in the course of performing the audit  
if we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report
other matter
we have reported separately on the parent company financial statements of synthomer plc for the year ended  
31 december 2014 and on the information in the directors’ remuneration report that is described as having been audited
andrew latham senior statutory auditor
for and on behalf of pricewaterhousecoopers llp
chartered accountants and statutory auditors  
st albans
25 february 2015 56 synthomer plc annual report 2014
2014 2013
note
underlying 
performance
£m
special 
items
£m
ifrs
£m
underlying 
performance
£m
special 
items
£m
ifrs
£m
continuing operations
group revenue 45 9364 – 9364 9927 – 9927 
share of joint ventures revenue 45 541 – 541 622 – 622 
total sales 9905 – 9905 10549 – 10549 
group revenue 9364 – 9364 9927 – 9927 
company and subsidiaries 
before special items 912 – 912 999 – 999 
restructuring and site closure 3 – 45 45 – 14 14
acquisition 3 – 01 01 – – – 
amortisation of acquired 
intangibles 3 – 258 258 – 267 267
company and subsidiaries 912 302 610 999 281 718 
share of joint ventures 45 53 12 41 49 17 32 
operating profitloss 5 965 314 651 1048 298 750 
interest payable 7 67 – 67 105 – 105
interest receivable 7 08 – 08 09 – 09 
59 – 59 96 – 96
ias 19 interest charge 46 – 46 51 – 51
fair value adjustment 37 – 08 08 – 12 12
finance costs 105 08 113 147 12 159
profitloss before taxation 860 322 538 901 310 591 
taxation 8 184 109 75 180 85 95
profitloss for the year 676 213 463 721 225 496 
profit attributable to 
noncontrolling interests 14 04 10 18 05 13 
profitloss attributable to equity 
holders of the parent 662 209 453 703 220 483 
676 213 463 721 225 496 
earningsloss per share 
 – basic 11 195p 62p 133p 207p 65p 142p 
 – diluted 11 193p 61p 132p 205p 64p 141p 
special items
the special items are shown in more detail in note 3
consolidated income statement
for the year ended 31 december 2014 group financial statements
synthomer plc annual report 2014 57
consolidated statement of comprehensive income
for the year ended 31 december 2014
2014 2013
equity 
holders of 
the parent
£m
non
controlling 
interests
£m
total
£m
equity 
holders of 
the parent
£m
non
controlling 
interests
£m
total
£m
profit for the year 453 10 463 483 13 496 
actuarial gains and losses 478 – 478 44 – 44 
t ax relating to components of other comprehensive income 
see note 8 59 – 59 – – – 
t otal items that will not be reclassified to profit or loss 419 – 419 44 – 44 
gains on cash flow hedges arising during the year – – – 23 – 23 
exchange differences on translation of foreign operations 153 – 153 115 10 125
exchange differences recycled on deemed disposal of joint 
venture see note 29 10 – 10 – – – 
gainslosses on a hedge of a net investment taken to equity 111 – 111 36 – 36
t otal items that may be reclassified subsequently to profit 
or loss 32 – 32 128 10 138
other comprehensive expense for the year 451 – 451 84 10 94
t otal comprehensive income for the year 02 10 12 399 03 402 
share
capital
£m
share
premium
£m
capital
redemption
reserve
£m
own 
shares
£m
hedging
and
translation
reserve
£m
cash 
flow
hedging
reserve
£m
retained
earnings
£m
total
£m
non
controlling 
interests
£m
total
equity
£m
at 1 january 2014 340 2305 09 – 200 – 451 2905 120 3025
profit for the year – – – – – – 453 453 10 463
actuarial gains and losses – – – – – – 478 478 – 478
gains on cash flow hedges arising during 
the year – – – – – – – – – –
exchange differences on translation of 
foreign operations – – – – 153 – – 153 – 153
exchange differences recycled on disposal 
of noncontrolling interest see note 29 – – – – 10 – – 10 – 10
gains on a hedge of a net investment 
taken to equity – – – – 111 – – 111 – 111
t ax relating to components of other 
comprehensive income see note 8 – – – – – – 59 59 – 59
t otal comprehensive expenseincome 
for the year – – – – 32 – 34 02 10 12
dividends paid to shareholders – – – – – – 224 224 – 224
dividends paid to noncontrolling interests – – – – – – – – 22 22
sharebased payments – – – – – – 20 20 – 20
at 31 december 2014 340 2305 09 – 232 – 241 2663 108 2771
at 1 january 2013 340 2305 09 – 49 23 167 2749 117 2866
profit for the year – – – – – – 483 483 13 496
actuarial gains and losses – – – – – – 44 44 – 44
gains on cash flow hedges arising during 
the year – – – – – 23 – 23 – 23
exchange differences on translation of 
foreign operations – – – – 115 – – 115 10 125
gains on a hedge of a net investment 
taken to equity – – – – 36 – – 36 – 36
t otal comprehensive expenseincome 
for the year – – – – 151 23 527 399 03 402
dividends paid – – – – – – 194 194 – 194
sharebased payments – – – – – – 49 49 – 49
at 31 december 2013 340 2305 09 – 200 – 451 2905 120 3025
consolidated statement of changes in equity
for the year ended 31 december 2014 58 synthomer plc annual report 2014
note
2014
£m
2013
£m
noncurrent assets
goodwill 13 2328 2411
acquired intangible assets 14 807 1095
other intangible assets 15 05 05
property plant and equipment 16 2054 2031
deferred tax assets 9 144 99
investment in joint ventures 18 75 130
total noncurrent assets 5413 5771
current assets
inventories 19 754 794
trade and other receivables 20 1378 1333
financial asset 17  – 58
cash and cash equivalents 21 249 590
derivatives at fair value 22 23 64
total current assets 2404 2839
assets classified as held for sale 23 11 11
current liabilities
borrowings 21 19 424
trade and other payables 24 1413 1544
current tax liability 8 327 386
provisions for other liabilities and charges 26 12 09
total current liabilities 1771 2363
noncurrent liabilities
borrowings 21 1371 1609
deferred tax liability 9 355 438
post retirement benefit obligations 25 1507 1129
provisions for other liabilities and charges 26 53 57
total noncurrent liabilities 3286 3233
net assets 2771 3025
equity 
called up share capital 27 340 340
share premium 2305 2305
capital redemption reserve 09 09
hedging and translation reserve 232 200
cash flow hedging reserve – –
retained earnings 241 451
equity attributable to equity holders of the parent 2663 2905
noncontrolling interests 108 120
total equity 2771 3025
the financial statements on pages 56 to 96 were approved by the board of directors and authorised for issue on 25 february 
2015 they are signed on its behalf by   
   
c g maclean d c blackwood   
director director   
consolidated balance sheet
31 december 2014
note
2014
 £m
2013
 £m
cash and cash equivalents 21 249 590
current borrowings 21 19 424
financial asset 17  – 58
noncurrent borrowings 21 1371 1609
net borrowings 1141 1385
special item deduct fair value adjustment 21 20 49
net borrowings underlying performance 1121 1336
analysis of net borrowings group financial statements
synthomer plc annual report 2014 59
2014 2013
note £m £m £m £m
operating
cash generated from operations 28 891 925 
 interest received 08 09 
 interest paid 76 102
net interest paid 68 93
 uk corporation tax paid – – 
 overseas corporate tax paid 181 174
total tax paid 181 174
net cash inflow from operating activities 642 658 
investing 
dividends received from joint ventures 18 47 38 
 purchase of property plant and equipment 220 391
 sale of property plant and equipment 05 41 
net capital expenditure 215 350
 purchase of businesses 29 39 – 
proceeds from financial asset 17 61 –
net cash outflow from investing activities 146 312
financing
ordinary dividends paid 10 224 194
dividends paid to noncontrolling interests 22 – 
settlement of equitysettled sharebased payments 26 62
repayment of borrowings 30 599 – 
net cash outflow from financing activities 871 256
decreaseincrease in cash cash equivalents and bank 
overdrafts during the year 375 90 
cash cash equivalents and bank overdrafts 
at 1 january 2014 30 590 533 
cash outflowsinflows
 cash and cash equivalents 30 375 86 
 bank overdrafts 30 – 04 
375 90 
exchange and other movements 30 34 33
cash cash equivalents and bank overdrafts 
at 31 december 2014 30 249 590 
consolidated cash flow statement
for the year ended 31 december 2014
note
2014
£m
2013
£m
net cash inflow from operating activities 642 658 
add back reduction in factored invoices – 204 
add back dividends received from joint ventures 18 47 38 
less net capital expenditure 215 350
less purchase of businesses 29 86 –
388 550 
ordinary dividends paid 10 224 194
dividends paid to noncontrolling interests 22 – 
settlement of equitysettled sharebased payments 26 62
exchange movements 99 72
movement in net borrowings underlying performance 215 222 
reconciliation of net cash flow from operating activities 
to movement in net borrowings 60 synthomer plc annual report 2014
1 general information
synthomer plc is a company incorporated in the united kingdom under the companies act the address of the registered 
office is given on page 24
these financial statements are presented in pounds sterling because that is the currency of the primary economic 
environment in which the group operates foreign operations are included in accordance with the policies set out in note 2
new and amended standards adopted by the group
the following standards have been adopted by the group for the first time for the financial year beginning on or after 
1 january 2014 and have a material impact on the group 
 
ifrs 12 ‘disclosures of interests in other entities’ includes the disclosure requirements for all forms of interests in other 
entities including joint arrangements associates special purpose vehicles and other off balance sheet vehicles the adoption 
of this standard will have no impact on the primary statements the only significant impact will be an increase in the disclosure 
relating to the investment in joint ventures
new standards and interpretations not yet adopted 
a number of new standards and amendments to standards and interpretations are effective for annual periods beginning after 
1 january 2014 and have not been applied in preparing these consolidated financial statements none of these is expected 
to have a significant effect on the consolidated financial statements of the group except the following set out below 
ifrs 15 ‘revenue from contracts with customers’ is a converged standard from the iasb and fasb on revenue recognition 
the standard will improve the financial reporting of revenue and improve comparability of the top line in financial statements 
globally this new standard is not expected to impact on the accounting of revenue in the group however increased 
disclosure requirements are expected
ifrs 9 ‘financial instruments’ this standard replaces the guidance in ias 39 it includes requirements on the classification 
and measurement of financial assets and liabilities it also includes an expected credit losses model that replaces the current 
incurred loss impairment model
this new standard is not expected to impact on the accounting however an increase in disclosure is expected
2 significant accounting policies 
basis of accounting
these financial statements have been prepared in accordance with international financial reporting standards as adopted 
by the european union ifrss as adopted by the eu ifric interpretations and the companies act 2006 applicable to 
companies reporting under ifrs the financial statements have been prepared on the historical cost basis except for the 
revaluation of financial instruments as discussed in the report of the directors on page 48 the financial statements have 
been prepared on a going concern basis the principal accounting policies adopted are set out below
basis of consolidation
the consolidated financial statements incorporate the financial statements of the company and entities controlled by the 
company its subsidiaries made up to 31 december each year control is achieved where the company is exposed or has 
rights to variable returns from its involvement with the investee and has the ability to affect those returns through its power 
over the investee
the results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from 
the effective date of acquisition or up to the effective date of disposal as appropriate where necessary adjustments are 
made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the group
the results of joint ventures are accounted for using equity accounting
noncontrolling interests in the net assets of consolidated subsidiaries are identified separately from the group’s equity 
therein noncontrolling interests consist of the amount of those interests at the date of the original business combination 
see below and the noncontrolling interest’s share of changes in equity since the date of combination
all intragroup transactions balances income and expenses are eliminated on consolidation
goodwill 
goodwill arising on consolidation represents the excess of the cost of acquisition over the group’s interest in the fair value of 
the identifiable assets and liabilities of a subsidiary associate or joint venture at the date of acquisition goodwill is recognised 
as an asset and reviewed for impairment at least annually at the cash generating unit level any impairment is recognised 
immediately in the consolidated income statement and is not subsequently reversed
should the fair value of the identifiable assets exceed the cost of acquisition a ‘bargain purchase’ the excess is credited 
to the income statement immediately on acquisition
notes to the consolidated financial statements
31 december 2014 group financial statements
synthomer plc annual report 2014 61
for the purpose of impairment testing goodwill is allocated to each of the group’s cash generating units expected to benefit 
from the synergies of the combination cashgenerating units to which goodwill has been allocated are tested for impairment 
annually or more frequently when there is an indication that the unit may be impaired if the recoverable amount of the 
cashgenerating unit is less than the carrying amount of the unit the impairment loss is allocated first to reduce the carrying 
amount of any goodwill allocated to the unit and then to the other assets of the unit prorata on the basis of the carrying 
amount of each asset in the unit
on disposal of a subsidiary associate or jointly controlled entity the attributable amount of goodwill is included in the 
determination of the profit or loss on disposal
goodwill arising on acquisitions before the date of transition to ifrss has been retained at the previous uk gaap amounts 
subject to being tested for impairment at that date goodwill written off to reserves under uk gaap prior to 1998 has not 
been reinstated and is not included in determining any subsequent profit or loss on disposal
business combinations 
acquisitions of subsidiaries and businesses are accounted for using the acquisition method the consideration for each 
acquisition is measured at the aggregate of the fair values at the date of exchange of assets given liabilities incurred or 
assumed and equity instruments issued by the group in exchange for control of the acquiree acquisitionrelated costs are 
recognised in profit or loss as incurred
the acquiree’s identifiable assets liabilities and contingent liabilities that meet the conditions for recognition under ifrs 3 
2008 are recognised at their fair value at the acquisition date except that 
•	 deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements are recognised and 
measured in accordance with ias 12 income taxes and ias 19 employee benefits respectively and
•	 assets or disposal groups that are classified as held for sale in accordance with ifrs 5 noncurrent assets held for sale 
and discontinued operations are measured in accordance with that standard
if the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination 
occurs the group reports provisional amounts for the items for which the accounting is incomplete those provisional 
amounts are adjusted during the measurement period see below or additional assets or liabilities are recognised to reflect 
new information obtained about facts and circumstance that existed as of the acquisition date that if known would have 
affected the amounts as of that date
the measurement period is the period from the date of acquisition to the date the group obtains complete information about 
facts and circumstances that existed as of the acquisition date and is subject to a maximum of one year
if the business combination is achieved in stages the acquisition date carrying value of the acquirer’s previously held 
investment is remeasured to fair value at the acquisition date any gains or losses from such remeasurment are recognised 
in the income statement
acquired intangible assets 
intangible assets acquired through acquisition are measured at their fair value and are amortised on a straightline basis over 
their estimated useful lives on the following bases 
customer relationships – between 5 and 8 years 
technology – 10 years 
where necessary the fair value at acquisition and estimated useful lives for these intangible assets are based on independent 
valuation reports
 
other intangible assets 
software development resulting in development of a longterm intangible asset are measured initially at cost and are 
amortised on a straightline basis over their estimated useful lives as follows 
software  – between 3 and 5 years  62 synthomer plc annual report 2014
2 significant accounting policies continued
an internallygenerated intangible asset arising from the group’s product development is recognised only if all of the following 
conditions in ias 38 are met 
•	 an asset is created that can be separately identified such as software and new processes 
•	 it is technically feasible to complete the asset 
•	 management intends to complete the development 
•	 there is an ability to use or sell the asset once development has been completed 
•	 it is probable that the asset created will generate future economic benefits 
•	 adequate technical financial and other resources to complete the development are available and 
•	 the development cost of the asset can be measured reliably
no research or development costs met the criteria for required capitalisation under ias 38 during the year
where no internallygenerated intangible asset can be recognised development expenditure is recognised as an expense 
in the period in which it is incurred
property plant and equipment 
property plant and equipment is stated at cost original purchase price and the costs attributable to bringing the asset to its 
working condition for its intended use net of accumulated depreciation and any provision for impairment except for freehold 
land and land grants in malaysia which are not depreciated the cost of property plant and equipment is depreciated on a 
straightline basis over its expected useful life as follows 
freehold buildings   – 50 years 
leasehold land and buildings  – the lesser of 50 years and the period of the lease 
plant and equipment   – between 3 and 10 years 
impairment of property plant and equipment and intangible assets excluding goodwill 
at each balance sheet date the group reviews the carrying amounts of its plant property and equipment and intangible 
assets to determine whether there is any indication that those assets have suffered an impairment loss if any such indication 
exists the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss if any where 
the asset does not generate cash flows that are independent from other assets the group estimates the recoverable amount 
of the cashgenerating unit to which the asset belongs
recoverable amount is the higher of fair value less costs to sell and value in use in assessing value in use the estimated 
future cash flows are discounted to their present value using a pretax discount rate that reflects current market assessments 
of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not 
been adjusted
if the recoverable amount of an asset or cashgenerating unit is estimated to be less than its carrying amount the carrying 
amount of the asset or cashgenerating unit is reduced to its recoverable amount an impairment loss is recognised as an 
expense immediately
when an impairment loss subsequently reverses the carrying amount of the asset or cashgenerating unit is increased 
to the revised estimate of its recoverable amount but so that the increased carrying amount does not exceed the carrying 
amount that would have been determined had no impairment loss been recognised in prior years a reversal of an impairment 
loss is recognised immediately in profit or loss
operating leases 
operating lease payments are expensed on a straightline basis to the income statement over the term of the relevant lease 
any benefits received as an incentive to enter into an operating lease are also spread on a straightline basis over the 
lease term
inventories 
inventories are stated at the lower of cost and net realisable value cost comprises direct materials and where applicable 
direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and 
condition cost is calculated using the weighted average method net realisable value represents the estimated selling price 
less all estimated costs of completion and costs to be incurred in marketing selling and distribution provision is made for 
obsolete slowmoving or defective items where appropriate
financial instruments 
financial assets and financial liabilities are recognised on the group’s balance sheet when the group becomes a party  
to the contractual provisions of the instrument
notes to the consolidated financial statements
continued group financial statements
synthomer plc annual report 2014 63
loans and receivables 
trade receivables 
trade receivables are measured at initial recognition at fair value and are subsequently measured at amortised cost using 
the effective interest rate method appropriate allowances for estimated irrecoverable amounts are recognised in profit or 
loss where there is objective evidence that the asset is impaired
all trade receivables that are factored by third parties are done so on a nonrecourse basis at the point of factoring the 
group forfeits the right to future cash flows from these receivables and those amounts are derecognised the cost of 
factoring receivables is recognised as a finance cost in the period in which the receivable is factored
amortised costs 
bank borrowings 
interestbearing bank loans and overdrafts are recorded at the proceeds received net of direct issue costs finance charges 
including premiums payable on settlement or redemption and direct issue costs are accounted for on an accruals basis to 
the income statement using the effective interest method and are added to the carrying amount of the instrument to the 
extent that they are not settled in the period in which they arise
trade payables 
trade payables are measured at initial recognition at fair value and are subsequently measured at amortised cost using the 
effective interest rate method
derivative financial instruments 
the group uses derivative financial instruments to reduce exposure to foreign exchange risk and interest rate movements 
the group does not hold or issue derivative financial instruments for speculative purposes
the use of financial derivatives is governed by the group’s policies approved by the board of directors which provide written 
principles on the use of financial derivatives as set out in note 22
impairment of financial assets 
at each balance sheet date the group reviews the carrying amounts of its financial assets to determine whether there is any 
indication that those assets have suffered an impairment loss if any such indication exists the recoverable amount of the 
asset is estimated in order to determine the extent of the impairment loss if any
finance costs 
finance costs of debt are recognised in the income statement over the term of such instruments at an effective interest rate 
on the carrying amount finance costs that are directly attributable to the construction of property plant and equipment are 
capitalised as part of the cost of those assets in accordance with ias 23
foreign currencies 
in preparing the financial statements of the individual companies transactions in currencies other than the entity’s functional 
currency are recorded at the rates of exchange prevailing on the dates of the transactions at each balance sheet date 
monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the 
balance sheet date nonmonetary assets and liabilities carried at fair value that are denominated in foreign currencies are 
translated at the rates prevailing at the date when the fair value was determined nonmonetary items that are measured in 
terms of historical cost in a foreign currency are not retranslated
in order to hedge its exposure to certain foreign exchange risks the group enters into forward contracts and options see 
below for details of the group’s accounting policies in respect of such derivative financial instruments
on consolidation the assets and liabilities of the group’s overseas operations are translated at exchange rates prevailing 
on the balance sheet date income and expense items are translated at the average exchange rates for the period unless 
exchange rates fluctuate significantly exchange differences arising if any are classified as equity and transferred to the 
group’s translation reserve such translation differences are recognised as income or as expenses in the period in which 
the operation is disposed of
goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the 
foreign entity and translated at the closing rate the group has elected to treat goodwill and fair value adjustments arising 
on acquisitions before the date of transition to ifrss as sterlingdenominated assets and liabilities
derivative financial instruments 
the group enters into a variety of derivative financial instruments to manage its exposure to interest rate and foreign exchange 
rate risk including foreign exchange forward contracts interest rate swaps and foreign currency options 64 synthomer plc annual report 2014
2 significant accounting policies continued
derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently 
remeasured to their fair value at each balance sheet date a derivative with a positive fair value is recognised as a financial 
asset whereas a derivative with a negative fair value is recognised as a financial liability the resulting gain or loss is 
recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument in which 
event the timing of the recognition in profit or loss depends on the nature of the hedge relationship the group designates 
certain derivatives as either hedges of highly probable forecast transactions or hedges of foreign currency risk of firm 
commitments cash flow hedges or hedges of net investments in foreign operations
hedge accounting 
the group designates certain hedging instruments which include derivatives embedded derivatives and nonderivatives 
in respect of foreign currency risk as either cash flow hedges or hedges of net investments in foreign operations
at the inception of the hedge relationship the entity documents the relationship between the hedging instrument and the 
hedged item along with its risk management objectives and its strategy for undertaking various hedge transactions 
furthermore at the inception of the hedge and on an ongoing basis the group documents whether the hedging instrument 
that is used in a hedging relationship is highly effective in offsetting changes in cash flows of the hedged item
cash flow hedges 
the effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are 
deferred in equity the gain or loss relating to the ineffective portion is recognised immediately in the consolidated 
income statement
amounts deferred in equity are recycled in profit or loss in the periods when the hedged item is recognised in profit or loss in 
the same line of the income statement as the recognised hedged item however when the forecast transaction that is hedged 
results in the recognition of a nonfinancial asset or a nonfinancial liability the gains and losses previously deferred in equity 
are transferred from equity and included in the initial measurement of the cost of the nonfinancial asset or nonfinancial liability
hedge accounting is discontinued when the group revokes the hedging relationship the hedging instrument expires or is 
sold terminated or exercised or no longer qualifies for hedge accounting any cumulative gain or loss deferred in equity at 
that time remains in equity and is recognised when the forecast transaction is ultimately recognised in profit or loss when 
a forecast transaction is no longer expected to occur the cumulative gain or loss that was deferred in equity is recognised 
immediately in profit or loss
hedges of net investments in foreign operations 
hedges of net investments in foreign operations are accounted for similarly to cash flow hedges any gain or loss on the 
hedging instrument relating to the effective portion of the hedge is recognised in equity in the foreign currency translation 
reserve the gain or loss relating to the ineffective portion is recognised immediately in profit or loss and is included in the 
‘other gains and losses’ line of the income statement
 
cash and cash equivalents 
cash and cash equivalents includes cash in hand deposits held at call with banks restricted cash balances which become 
fully liquid within three months or less and other shortterm highly liquid investments with original maturities of three months 
or less
 
taxation 
the tax expense represents the sum of the tax currently payable and deferred tax
the tax currently payable is based on taxable profit for the year taxable profit differs from net profit as reported in the 
consolidated income statement because it excludes items of income or expense that are taxable or deductible in other years 
and it further excludes items that are never taxable or deductible the group’s liability for current tax is calculated using tax 
rates that have been enacted or substantively enacted by the balance sheet date
deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and 
liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and is 
accounted for using the balance sheet liability method deferred tax liabilities are generally recognised for all taxable 
temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be 
available against which deductible temporary differences can be utilised
deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates 
and interests in joint ventures except where the group is able to control the reversal of the temporary difference and it is 
probable that the temporary difference will not reverse in the foreseeable future
notes to the consolidated financial statements
continued group financial statements
synthomer plc annual report 2014 65
the carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no 
longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered
deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset 
is realised deferred tax is charged or credited in the income statement except when it relates to items charged or credited 
directly to equity in which case the deferred tax is also dealt with in equity
deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets 
against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the 
same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the 
balances on a net basis
retirement benefit costs 
the costs of defined benefit contributions to the group’s pension schemes and of augmenting existing pensions are charged 
to the consolidated income statement on a systematic basis over the expected period of benefits from employees’ service
 
payments to defined contribution retirement benefit schemes are charged as an expense as they fall due
actuarial gains on the defined benefit schemes are recognised in full in each period in which they occur they are recognised 
outside of the consolidated income statement and are presented in the consolidated statement of comprehensive income
 
the liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined 
benefit obligation at the end of the reporting period less the fair value of plan assets the defined benefit obligation is 
calculated annually using the projected unit credit method the present value of the defined benefit obligation is determined 
by discounting the estimated future cash outflows using interest rates of highquality corporate bonds that are denominated 
in the currency in which the benefits will be paid and that have terms to maturity approximating to the terms of the related 
pension obligation
 
the uk defined benefit scheme is funded with the assets of the scheme held separately from those of the group in separate 
trusteeadministered funds
for the german schemes the assets are included within the assets of the respective companies as permitted under local 
laws the assets of the other overseas schemes are held separately from those of the group
provisions 
provisions for restructuring costs are recognised when the group has a detailed formal plan for the restructuring that has 
been communicated to affected parties
revenue recognition 
revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for 
goods provided in the normal course of business net of discounts vat and other salesrelated taxes
sales of goods are recognised when goods are delivered and title has passed where delivery is defined in accordance with 
incoterms 2010
sharebased payments 
the group has applied the requirements of ifrs 2 sharebased payments
the group issues equitysettled sharebased payments to certain employees equitysettled sharebased payments are 
measured at fair value at the date of grant the fair value determined at the grant date of the equitysettled sharebased 
payments is expensed on a straightline basis over the vesting period the group will on occasion at its own discretion 
settle the sharebased payments in cash rather than equity
 
definitions 
total sales 
total sales represent the total of revenue from the company its subsidiaries and its share of the revenue of joint ventures
 
operating profit 
operating profit represents profit from continuing activities before financing costs and taxation
 
ebitda 
ebitda is calculated as operating profit before depreciation amortisation and special items as defined overleaf 66 synthomer plc annual report 2014
2 significant accounting policies continued
special items 
the following are disclosed separately in order to provide a clearer indication of the group’s underlying performance 
•	 amortisation of acquired intangible assets 
•	 impairment of noncurrent assets 
•	 costs of business combinations 
•	 restructuring and site closure costs 
•	 fair value adjustment – mark to market adjustments in respect of cross currency and interest rate derivatives used 
for hedging purposes where ias 39 hedge accounting is not applied 
•	 amounts advanced in respect of invoices sold under nonrecourse factoring arrangements 
•	 other nonrecurring and nonoperating items 
•	 tax impact of the above items and 
•	 settlement of prior period tax issues
underlying performance 
underlying performance represents the statutory performance of the group under ifrs excluding special items
net borrowings 
net borrowings represents cash and cash equivalents together with short and longterm borrowings as adjusted for the 
effect of related derivative instruments irrespective of whether they qualify for hedge accounting nonrecourse factoring 
arrangements and the inclusion of financial assets
critical judgements in applying accounting policies 
the following are the critical judgements apart from those involving estimations see below that the group has made 
in the process of applying the accounting policies and that have the most significant effect on the amounts recognised 
in the financial statements
 
recognition of deferred tax assets 
the group activities give rise to significant potential deferred tax assets particularly in respect of the uk pension liability 
tax losses and accelerated capital allowances determination of whether these assets should be recognised requires a high 
degree of management judgement and is dependent on management’s ability to project future earnings from activities that 
may apply loss positions carried forward against future income taxes
key sources of estimation uncertainty 
the preparation of consolidated financial statements requires that management make estimates and assumptions that affect 
reported amounts of assets and liabilities income and expenses the estimates and associated assumptions are based on 
historical experience and various other factors that are believed to be reasonable under the circumstances the result of which 
form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other 
sources actual results may differ from these estimates the estimates and underlying assumptions are reviewed on an 
ongoing basis taking the current and expected future market conditions into consideration
impairmentreversal of impairment 
the group has significant investments in property plant and equipment acquired intangibles and goodwill changes in the 
circumstances or expectations of future performance of an individual asset may be an indicator that the asset is impaired 
requiring the book value to be written down to its recoverable amount impairments excluding goodwill are reversed if the 
conditions for impairment are no longer present evaluating whether an asset is impaired or if an impairment should be 
reversed requires a high degree of judgement and may depend to a large extent on the selection of key assumptions about 
the future
determining whether goodwill is impaired requires an estimation of the value in use of the cashgenerating units to which 
goodwill has been allocated the value in use calculation requires the entity to estimate the future cash flows expected to 
arise from the cashgenerating unit and a suitable discount rate in order to calculate present value the growth rates used 
within the forecast future cash flows are developed with reference to external sources but are subject to estimation 
uncertainty see note 13 for more details
post retirement benefit obligations 
included in the actuaries’ calculation of the post retirement benefit obligations are a number of assumptions any changes 
in these assumptions will impact the carrying value of the obligations these are shown in detail in note 25
notes to the consolidated financial statements
continued group financial statements
synthomer plc annual report 2014 67
current tax liability and deferred tax 
the group annually incurs significant amounts of income taxes payable to various jurisdictions around the world 
and it also recognises significant changes in deferred tax assets and deferred tax liabilities all of which are based on 
management’s interpretations of applicable laws regulations and relevant court decisions the quality of these estimates 
is highly dependent upon management’s ability to properly apply what can be very complex sets of rules and to recognise 
changes in applicable rules
3 special items
the special items are made up as follows
2014
£m
2013
£m
continuing operations
operating profitloss
acquisition of controlling interest in eka synthomer oy
 excess of net assets acquired over consideration paid – ‘bargain purchase’ 12 –
 recycling of foreign exchange on deemed disposal of noncontrolling interest 10 –
 acquisition costs 01 –
01 –
restructuring and site closure 45 14
amortisation of acquired intangibles see note 14
 subsidiaries 258 267
 share of joint ventures 12 17
314 298
finance costs
fair value adjustment see note 7 08 12
loss before taxation from continuing operations 322 310
taxation see note 8 109 85
loss for the year from continuing operations 213 225
the restructuring and site closure costs charged to the consolidated income statement above are in respect of the european 
cost reduction programme 68 synthomer plc annual report 2014
4 segmental analysis
substantially all revenues earned by the group are from the sale of polymer products derived from petrochemical monomers 
no single customer accounts for more than 10 of the group’s revenues no information is provided at the divisional level 
to the executive committee the chief operating decision maker concerning interest revenues interest expense depreciation 
or amortisation income taxes or other material noncash items
total sales operating profit
2014
underlying 
performance
£m
special 
items
£m
ifrs
£m
underlying 
performance
£m
special 
items
£m
ifrs
£m
analysis by activity
continuing activity
europe and north america
subsidiaries 6614 – 6614 840 245 595
share of joint ventures 258 – 258 17 12 05
6872 – 6872 857 257 600
asia and rest of world
subsidiaries 2750 – 2750 142 57 85
share of joint ventures 283 – 283 36 – 36
3033 – 3033 178 57 121
total sales 9905 – 9905
reported segment operating profit 1035 314 721
unallocated corporate expenses 70 – 70
operating profitloss 965 314 651
total share of joint ventures
europe and north america 258 – 258 17 12 05
asia and rest of world 283 – 283 36 – 36
541 – 541 53 12 41
total sales operating profit
2013
underlying 
performance
£m
special 
items
£m
ifrs
£m
underlying 
performance
£m
special 
items
£m
ifrs
£m
analysis by activity
continuing activity
europe and north america
subsidiaries 7103 – 7103 882 219 663
share of joint ventures 345 – 345 16 17 01
7448 – 7448 898 236 662
asia and rest of world
subsidiaries 2824 – 2824 198 62 136
share of joint ventures 277 – 277 33 – 33
3101 – 3101 231 62 169
total sales 10549 – 10549
reported segment operating profit 1129 298 831
unallocated corporate expenses 81 – 81
operating profitloss 1048 298 750
total share of joint ventures
europe and north america 345 – 345 16 17 01
asia and rest of world 277 – 277 33 – 33
622 – 622 49 17 32
notes to the consolidated financial statements
continued group financial statements
synthomer plc annual report 2014 69
2014
europe and 
north 
america
£m
asia and 
rest of 
world
£m
unallocated 
corporate 
expenses
£m
total
£m
acquisition of controlling interest in eka synthomer oy 01 – – 01
restructuring and site closure – cash costs 45 – – 45
amortisation of acquired intangibles 201 57 – 258
share of joint ventures special items 12 – – 12
257 57 – 314
2013
europe and 
north 
america
£m
asia and 
rest of 
world
£m
unallocated 
corporate 
expenses
£m
total
£m
restructuring and site closure – cash costs 14 – – 14
amortisation of acquired intangibles 205 62 – 267
share of joint ventures special items 17 – – 17
236 62 – 298
2014
total
assets
£m
total 
liabilities
£m
capital 
expenditure
£m
depreciation 
and 
amortisation
£m
analysis by activity
continuing activity
subsidiaries
europe and north america 2316 854 127 118
asia and rest of world 1843 512 93 97
4159 1366 220 215
unallocated assets and liabilities 66 112 – –
4225 1478 220 215
share of joint ventures see note 18 130 55
goodwill see note 13 2328 –
acquired intangibles and related deferred tax 807 241
current and deferred taxation – 297
post retirement benefit obligations – 1507
net borrowings see note 21 – 1141
7490 4719
net assets 2771 70 synthomer plc annual report 2014
4 segmental analysis continued
2013
total
assets
£m
total 
liabilities
£m
capital 
expenditure
£m
depreciation 
and 
amortisation
£m
analysis by activity
continuing activity
subsidiaries
europe and north america 2310 876 151 110
asia and rest of world 1814 563 199 82
4124 1439 350 192
unallocated assets and liabilities 114 171 – –
4238 1610 350 192
share of joint ventures see note 18 257 127
goodwill see note 13 2411 –
acquired intangibles and related deferred tax 1095 333
current and deferred taxation – 392
post retirement benefit obligations – 1129
net borrowings see note 21 – 1385
8001 4976
net assets 3025
analysis of total sales by destination
2014
£m
2013
£m
western europe 5274 5746
eastern europe 560 500
north america 390 382
asia 2739 2907
africa and middle east 919 960
rest of world 23 54
9905 10549
of the total sales to western europe £769 million 2013 £809 million were made to the uk and £1692 million 
2013 £1899 million were made to germany of the total sales to asia £1441 million 2013 £1708 million were made 
to malaysia
intersegmental sales
in addition to the amounts included above intersegmental sales of £119 million 2013 £192 million were made as set out 
below these sales were eliminated on consolidation
2014
europe
and north
america
£m
asia and 
rest of 
world
£m
total
£m
europe and north america – 94 94
asia and rest of world 25 – 25
total 25 94 119
2013
europe
and north
america
£m
asia and 
rest of 
world
£m
total
£m
europe and north america – 117 117
asia and rest of world 75 – 75
total 75 117 192
notes to the consolidated financial statements
continued group financial statements
synthomer plc annual report 2014 71
5 operating profit
2014
£m
2013
£m
group revenue 9364 9927 
share of joint ventures revenue 541 622 
total sales 9905 10549 
group revenue 9364 9927 
cost of sales 7724 8193
gross profit 1640 1734 
sales and marketing costs 219 233
administrative expenses 294 310
share of joint ventures 53 49 
ebitda 1180 1240 
depreciation and amortisation 215 192
operating profit – underlying performance 965 1048 
special items 314 298
operating profit – ifrs 651 750 
operating profit is stated after charging the following
2014
£m
2013
£m
amortisation acquired intangibles see note 14 258 267 
amortisation other intangibles see note 15 03 02 
depreciation see note 16 212 190 
hire of plant and equipment 30 34 
other lease rentals 34 30 
research and development expenditure 128 135 
6 auditors’ remuneration
2014
£000
2013
£000
fees payable to the companys auditor for 
audit of the company’s annual accounts and the consolidated accounts 87 87
fees payable to the companys auditor and their associates for other services to the group 
audit of the company’s subsidiaries 386 374
total audit fees 473 461
audit related assurance services 1 5
tax compliance services 79 147
other taxation advisory services 20 64
other services 57 156
total nonaudit fees 157 372
details of the company’s policy on the use of the auditor for nonaudit services the reasons why the auditor was used 
rather than another supplier and how the auditor’s independence and objectivity was safeguarded are set out in the 
audit committee section of the corporate governance report on pages 27 to 29 no services were provided pursuant 
to contingent fee arrangements 72 synthomer plc annual report 2014
7 finance costs
2014
£m
2013
£m
interest payable on bank loans and overdrafts 51 84
interest payable on other loans 16 21
67 105
less interest receivable 08 09
59 96
ias 19 interest charge 46 51
net interest payable 105 147
fair value adjustment 08 12
total finance costs 113 159
the fair value adjustment is the mark to market adjustment in respect of cross currency and interest rate derivatives used 
for hedging purposes where ias 39 hedge accounting is not applied
8 taxation
2014
£m
2013
£m
current tax
uk corporation tax – – 
overseas taxation 162 172 
162 172 
deferred tax
origination and reversal of temporary differences 22 08 
184 180 
special items
current tax
restructuring and site closure costs 32 04
deferred tax
amortisation of acquired intangibles 77 81
109 85
total tax on profit before taxation 75 95 
uk corporation tax is calculated at 215 2013 2325 of the estimated assessable profit for the year taxation for other 
jurisdictions is calculated at the rates prevailing in the respective jurisdictions
reconciliation of tax expense to profit before taxation
the differences between the total tax expense shown above and the amount calculated by applying the standard rate  
of uk corporation tax to the profit before tax is as follows
2014
£m
2013
£m
profit before taxation – continuing operations 538 591 
tax on profit before taxation continuing operations at standard uk corporation  
tax rate of 215 2013 2325 115 137 
effects of
expenses not deductible for tax purposes 20 26 
tax incentives and items not subject to tax 50 47
higher tax rates on overseas earnings 14 14 
other deferred tax asset not recognised less amounts now recognised 25 45
adjustments to tax charge in respect of prior periods 02 02 
effect of change of rate on deferred tax 03 08 
tax charge for year 75 95 
notes to the consolidated financial statements
continued group financial statements
synthomer plc annual report 2014 73
tax charges to other comprehensive income
2014
£m
2013
£m
deferred tax credit in respect of actuarial losses 59 – 
current tax liabilities
2014
£m
2013
£m
current tax liabilities 327 386
9 deferred taxation
deferred tax assets have been recognised in respect of all tax losses and other temporary differences giving rise to deferred 
tax assets to the extent that it is probable that these assets will be recovered no deferred tax is recognised on the unremitted 
earnings of overseas subsidiaries and joint ventures as the earnings are continually reinvested by the group no tax is 
expected to be payable on them in the foreseeable future
the movements in deferred tax assets and liabilities prior to offset are shown below
deferred tax liabilities
2014
accelerated 
tax 
depreciation
£m
acquired 
intangibles
£m
other
£m
total
£m
at 1 january 109 333 04 438
chargedcredited to income statement 04 77 04 69
exchange adjustment 03 19 – 22
acquisition of subsidiary undertaking 04 04 – 08
at 31 december 114 241 – 355
deferred tax assets
2014
pensions
£m
at 1 january 99 
charged to income statement 14
credited to statement of comprehensive income 59 
at 31 december 144
deferred tax asset not recognised
deferred tax assets are not recognised when it is not probable that taxable profits will be available against which the deferred 
tax asset could be utilised
the amounts of deferred tax not recognised at the balance sheet dates are as follows
2014
£m
2013
£m
uk pension liability 124 55
tax losses 79 92
accelerated capital allowances 20 20
other timing differences 06 03
217 164 74 synthomer plc annual report 2014
10 ordinary dividends
2014
pence per
share
2013
pence per
share
2014
£m
2013
£m
interim dividend 30 24 102 81 
proposed final dividend 48 36 163 122 
in addition to the final dividend of 48p mentioned above the directors are proposing a special dividend of 78p the proposed 
final dividend and the special dividend are subject to approval by shareholders at the annual general meeting and have not 
been included as a liability in these financial statements
11 earnings per share
number of shares
2014
number 
’000
2013
number 
’000
weighted average number of ordinary shares for the purposes of basic earnings per share 339764 339549 
effect of dilutive potential ordinary shares
share options 2724 4010 
weighted average number of ordinary shares for the purposes of diluted earnings per share 342488 343559 
earnings per share
2014 2013
underlying 
performance
£m
special 
items
£m
ifrs
£m
underlying 
performance
£m
special 
items
£m
ifrs
£m
from continuing operations
earnings profit attributable to equity holders 
of the parent 662 209 453 703 220 483 
basic earnings per share 195p 62p 133p 207p 65p 142p 
diluted earnings per share 193p 61p 132p 205p 64p 141p 
12 employees
2014
number
2013
number
the average monthly number of employees during the year by activity was
continuing activity
europe and north america 1238 1168 
asia and rest of world 836 842 
holding companies 17 20 
2091 2030 
share of joint ventures 47 67 
2138 2097 
the share of joint ventures is calculated by applying the group’s effective interest to the average number of employees 
for each joint venture
2014
£m
2013
£m
the aggregate remuneration of all group employees comprised
wages and salaries 680 687 
social security costs 93 93 
pension costs 98 110 
sharebased payments 03 08 
874 898 
directors’ emoluments are disclosed in the directors’ remuneration report on pages 33 to 45
notes to the consolidated financial statements
continued group financial statements
synthomer plc annual report 2014 75
13 goodwill
2014
£m
2013
£m
cost
at 1 january 3510 3508
exchange adjustments 83 02
at 31 december 3427 3510
accumulated impairment losses
at 1 january and at 31 december 1099 1099
net book value
at 31 december 2328 2411
the group tests goodwill annually for impairment at the balance sheet date or more frequently if there are indications that 
goodwill might be impaired
goodwill acquired in a business combination is allocated at acquisition to the cash generating units cgus that are 
expected to benefit from that business combination
the allocation of the carrying value of goodwill is represented below
net book 
value at 
1 january 
2013
£m
exchange 
adjustments
£m
net book 
value at 
31 december 
2013
£m
exchange 
adjustments
£m
net book 
value at 
31 december 
2014
£m
europe and north america 2083 31 2114 83 2031
asia and rest of world 326 29 297 – 297
total 2409 02 2411 83 2328
the recoverable amounts for cgus are determined from value in use calculations based upon discounted cash flows the 
key assumptions for those discounted cash flow calculations are the discount rate profitability and growth rate the discount 
rate is based on the group’s weighted average cost of capital adjusted where appropriate for the risk premium attributable 
to the particular cgu’s activities and geography of operation profitability and growth rates are based on past experience 
combined with management’s expectations for future business performance which is informed by a number of factors 
including economic growth internal plans and competitor and customer activity
discount rates of 11 2013 11 and 12 2013 12 have been used in the above calculations for europe and north 
america and asia and rest of world respectively
the profit used in the cash flows for the first year is derived from management forecasts for years 2 to 10 a growth rate is 
applied the profit for year 10 is then assumed to apply without further growth into perpetuity growth rates of 2 2013 2 
and 5 2013 5 have been used for europe and north america and asia and rest of world respectively representing 
management’s best estimate of each cgu’s circumstances and these do not exceed the longterm growth rates for the 
markets concerned
there is no reasonably possible change in key assumptions that would lead to an impairment
of the net book value of goodwill at 31 december 2014 £705 million 2013 £705 million is located in the uk 76 synthomer plc annual report 2014
14 acquired intangible assets
customer 
relationships
£m
technology
£m
total
£m
cost 
at 1 january 2014 1763 30 1793 
acquisition of subsidiary undertaking 21 – 21 
exchange adjustments 92 02 94
at 31 december 2014 1692 28 1720 
accumulated amortisation and impairment
at 1 january 2014 690 08 698 
exchange adjustments 43 – 43
amortisation charge for the year 255 03 258 
at 31 december 2014 902 11 913 
net book value
at 31 december 2014 790 17 807 
customer 
relationships
£m
technology
£m
total
£m
cost 
at 1 january 2013 1766 29 1795 
exchange adjustments 03 01 02
at 31 december 2013 1763 30 1793 
accumulated amortisation and impairment
at 1 january 2013 434 05 439 
exchange adjustments 08 – 08
amortisation charge for the year 264 03 267 
at 31 december 2013 690 08 698 
net book value
at 31 december 2013 1073 22 1095 
analysis of net book value by segment
2014
£m
2013
£m
europe and north america 617 848
asia and rest of world 190 247
807 1095
notes to the consolidated financial statements
continued group financial statements
synthomer plc annual report 2014 77
15 other intangible assets
expenditure on research activities is recognised as an expense in the period in which it is incurred
no development expenditure met the requirements to be recognised as an internally generated intangible asset therefore 
all development costs in the period were expensed
software
£m
cost 
at 1 january 2014 60 
exchange adjustments 02
additions 04 
disposals 12
at 31 december 2014 50 
accumulated amortisation and impairment
at 1 january 2014 55 
exchange adjustments 01
amortisation charge for the year 03 
disposals 12
at 31 december 2014 45 
net book value
at 31 december 2014 05 
software
£m
cost 
at 1 january 2013 60 
exchange adjustments 01
additions 01 
at 31 december 2013 60 
accumulated amortisation and impairment
at 1 january 2013 54 
exchange adjustments 01
amortisation charge for the year 02 
at 31 december 2013 55 
net book value
at 31 december 2013 05  78 synthomer plc annual report 2014
16 property plant and equipment
land and buildings
leaseholds
freeholds
£m
long
£m
short
£m
plant and 
equipment
£m
total
£m
cost 
at 1 january 2014 393 52 189 3937 4571 
exchange adjustments 15 – 01 83 99
additions 12 16 09 179 216 
acquisition of subsidiary undertaking 10 01 – 54 65 
disposals 05 – – 64 69
at 31 december 2014 395 69 197 4023 4684 
accumulated depreciation and impairment
at 1 january 2014 181 28 20 2311 2540 
exchange adjustments 07 – – 46 53
depreciation charge for the year 19 02 07 184 212 
disposals 05 – – 64 69
at 31 december 2014 188 30 27 2385 2630 
net book value
at 31 december 2014 207 39 170 1638 2054 
land and buildings
leaseholds
freeholds
£m
long
£m
short
£m
plant and 
equipment
£m
total
£m
cost 
at 1 january 2013 434 53 170 3769 4426 
exchange adjustments – – 15 104 119
additions 07 – 34 308 349 
transferred to assets classified as held for sale 11 – – – 11
disposals 37 01 – 36 74
at 31 december 2013 393 52 189 3937 4571 
accumulated depreciation and impairment
at 1 january 2013 163 27 17 2223 2430 
exchange adjustments 01 – 02 41 44
depreciation charge for the year 19 01 05 165 190 
disposals – – – 36 36
at 31 december 2013 181 28 20 2311 2540 
net book value
at 31 december 2013 212 24 169 1626 2031 
freehold land amounting to £40 million 2013 £37 million has not been depreciated
notes to the consolidated financial statements
continued group financial statements
synthomer plc annual report 2014 79
analysis of net book value by location
2014
£m
2013
£m
uk 294 271
germany 543 584
malaysia 1060 1070
other 157 106
2054 2031
analysis of net book value by segment
2014
£m
2013
£m
europe and north america 969 939
asia and rest of world 1085 1092
2054 2031
17 financial asset 
the group disposed of its pharma chemicals business on 30 november 2011 part of the consideration agreed with 
the buyer totalling 100 million was in the form of a deferred payment to the group this deferred payment was shown 
as a financial asset of £58 million in 2013 the payment of 100 million £61 million was received from the buyer on 
30 september 2014 as agreed at the time of the original transaction
18 investment in joint ventures
details of the group’s joint ventures are as follows
 of ownership
name of entity
place of 
incorporation 2014 2013 principal activity
synthomer middle east company saudi arabia 49 49 manufacturer and sale of acrylic 
and vinyl resin emulsions
eka synthomer oy finland see comments
below
50 manufacturer and sale of styrene 
butadiene latex products
specialty arkem pty ltd south africa 50 50 distributor of specialty chemicals 
and allied products
super sky ltd united kingdom 50 50 nontrading
with the exception of eka synthomer oy these joint ventures are accounted for using the equity method in these 
financial statements
eka synthomer oy is accounted for using the equity method up to 21 october 2014 on 22 october the group acquired the 
remaining 50 of its share capital from this date it is fully consolidated as a 100 subsidiary see note 29
summarised financial information in respect of the joint ventures is set out below this information represents amounts in the 
joint ventures’ financial statements adjusted for differences in accounting policies between the group and the joint venture 
and not the group’s share of those amounts 80 synthomer plc annual report 2014
18 investment in joint ventures continued
summarised balance sheet 100
synthomer middle east 
company eka synthomer oy other
2014
£m
2013
£m
2014
£m
2013
£m
2014
£m
2013
£m
noncurrent assets 34 20 86 120 – –
cash and cash equivalents 20 21 – 01 02 06
other current assets 191 162 153 171 18 17
total current assets 211 183 153 172 20 23
financial liabilities excluding trade payables – – 47 48 – –
other current liabilities 112 84 90 121 01 03
total current liabilities 112 84 137 169 01 03
net assets 133 119 102 123 19 20
net assets group share 65 58 – 62 10 10
summarised statement of comprehensive income 100
synthomer middle east 
company eka synthomer oy other
2014
£m
2013
£m
2014
£m
2013
£m
2014
£m
2013
£m
revenue 545 529 517 691 30 37
operating profit from continuing operations 70 62 30 37 03 04
interest – – 01 01 – –
taxation – – 04 03 – 01
amortisation of intangibles – – 24 34 – –
profit from continuing operations 70 62 09 01 03 03 
exchange differences on translation 12 07 07 04 – 03
total comprehensive income 82 55 02 03 03 – 
dividends paid 68 47 23 30 04 –
movement in retained earnings 14 08 21 27 01 – 
profit for the year group share 34 30 05 – 02 02
exchange differences on translation 
group share 06 03 04 02 – 02
dividends paid group share 33 23 12 15 02 –
the following table reconciles the summary information above to the carrying amount of the group’s interest in the joint ventures
investment in joint venture
synthomer 
middle east 
company
£m
eka 
synthomer
oy
£m
other
£m
total
£m
at 1 january 2014 58 62 10 130
profit from continuing operations 34 05 02 41
exchange differences on translation 06 04 – 02
dividend paid 33 12 02 47
deemed disposal on acquisition of controlling interest see note 29 – 51 – 51
at 31 december 2014 65 – 10 75
 amounts reflect the period from 1 january 2014 to 21 october 2014 the date it became a subsidiary
notes to the consolidated financial statements
continued group financial statements
synthomer plc annual report 2014 81
19  inventories
2014
£m
2013
£m
raw materials and consumables 326 302 
finished goods 428 492 
754 794 
the value of stock written off during the year was £01 million 2013 £01 million
the cost of inventory recognised as an expense and included in cost of sales amounted to £7120 million 2013 £7637 million
there is no material difference between the balance sheet value of inventories and their net realisable value
the nature of the chemical reaction necessary to produce finished goods from raw materials is such that ‘work in progress’ 
is not a material part of the group’s inventory at any given point of time
20 trade and other receivables
2014
£m
2013
£m
trade receivables 1250 1224 
amounts owed by joint ventures 01 06 
other receivables 97 89 
prepayments and accrued income 30 14 
1378 1333 
the directors consider that the carrying amount of trade and other receivables approximates to their fair value
credit risk
amounts presented in the balance sheet are net of allowances for doubtful receivables estimated by the group’s 
management based on prior experience and their assessment of the current economic environment the group has 
no significant concentration of credit risk with exposure spread over a large number of customers
before accepting a new customer the group uses appropriate procedures to assess the potential customer’s credit quality 
in order to set a credit limit
ageing of trade receivables
2014
£m
2013
£m
not yet due 1023 976 
0 – 60 days overdue 236 263 
61 – 120 days overdue 11 12 
over 120 days due 28 25 
1298 1276 
less provision for impairment 48 52
1250 1224 
provision for impairment of receivables
2014
£m
2013
£m
at 1 january 52 52 
exchange adjustments 02 01 
creditcharge for the year – 02
amounts written backoff as uncollectible 02 01 
at 31 december 48 52 
the provision is predominantly against overdue trade receivables 82 synthomer plc annual report 2014
21 cash and borrowings
2014
£m
2013
£m
current borrowings
bank loans
bank loans and overdrafts – – 
factoring with recourse 19 – 
700 million 578 guaranteed senior unsecured notes due 2 september 2014 – 424 
19 424 
noncurrent borrowings
bank loans
unsecured £1500 million multicurrency term loan facility expiring march 2015 – 1485 
unsecured £2100 million multicurrency revolving credit facility expiring 30 july 2019 1247 –
other loans
220 million 598 guaranteed senior unsecured notes due 2 september 2016 141 133 
1388 1618 
less capitalised costs 17 09
1371 1609 
 in aggregate £141 million 2013 £357 million associated with which is the currency impact of derivatives of £20 million 2013 £49 million net £121 million 
2013 £158 million
bank loans are denominated in a number of currencies and bear interest based on libor or foreign equivalents or 
government bond rates appropriate to the country in which the borrowing is incurred
at 31 december 2014 the group had available £853 million 2013 £600 million of undrawn committed borrowing facilities 
in respect of which all conditions precedent had been met
the directors calculate the carrying value of the group’s borrowings as follows
analysis of borrowings at carrying value by currency
sterling
£m
us dollar
£m
euro
£m
other
£m
total
£m
31 december 2014
bank overdrafts – – – – –
factoring with recourse – – 19 – 19
bank loans – – 1247 – 1247
loan notes – 141 – – 141
capitalised costs 17 – – – 17
17 141 1266 – 1390
cash and cash equivalents 249
financial asset – see note 17 –
net borrowings 1141
deduct special item fair value adjustment 20
net borrowings underlying performance 1121
31 december 2013
bank overdrafts – – – – –
factoring with recourse – – – – –
bank loans – – 1485 – 1485
loan notes – 557 – – 557
capitalised costs 09 – – – 09
09 557 1485 – 2033
cash and cash equivalents 590
financial asset – see note 17 58
net borrowings 1385
deduct special item fair value adjustment 49
net borrowings underlying performance 1336
notes to the consolidated financial statements
continued group financial statements
synthomer plc annual report 2014 83
the special item fair value adjustment represents the revaluation of us dollar loan notes from the rate of the related cross 
currency swaps to the year end rate together with the transitional adjustment required to reflect movements in fair value 
caused by variations in interest rates and subsequent amortisation thereof to the extent that these constituted effective 
hedges prior to the adoption of ifrs
cash and cash equivalents are deposited with financial institutions with a credit rating of a or higher
22 financial instruments
the group’s treasury function operates procedures designed to reduce or eliminate financial risk and ensure that funds 
are available for current and future needs the policies are approved by the board and the use of financial instruments 
is strictly controlled 
the group manages its capital to ensure that entities in the group will be able to continue as going concerns while 
maximising the return to stakeholders through the optimisation of the debt and equity balance the capital structure of 
the group consists of debt which includes the cash and borrowings disclosed in note 21 and equity attributable to equity 
holders of the parent comprising issued capital reserves and retained earnings it is management’s intention to maintain 
the underlying net borrowings to ebitda metric to between one and two times
2014
£m
2013
£m
net borrowings – underlying performance 1121 1336
ebitda see note 5 1180 1240
underlying net borrowings ebitda 10 11
2014 2013
financial assets
loans and 
receivables
£m
fair value 
through 
profit or 
loss 
£m
loans and 
receivables 
£m
fair value 
through 
profit or 
loss
£m
trade and other receivables excluding prepayments 1348 – 1319 –
cash and cash equivalents 249 – 590 –
financial asset – – 58 –
derivatives at fair value – 23 – 64
1597 23 1967 64
2014 2013
financial liabilities
amortised 
cost
£m
derivative 
instruments 
in designated 
hedge 
accounting
£m
amortised 
cost
£m
derivative 
instruments 
in designated 
hedge 
accounting 
£m
loan notes 141 – 557 –
bank loans and overdrafts 1247 – 1485 –
derivatives at fair value – – – –
trade and other payables 1413 – 1544 –
2801 – 3586 –
set out opposite is a comparison by category of book values and fair values of the group’s financial assets and liabilities 84 synthomer plc annual report 2014
22 financial instruments continued
carrying values at  
31 december
fair values at  
31 december
2014
£m
2013
£m
2014
£m
2013
£m
fair value of financial assets
trade and other receivables excluding prepayments 1348 1319 1348 1319
cash and cash equivalents 249 590 249 590
financial asset – 58 – 58
derivatives at fair value 23 64 23 64
1620 2031 1620 2031
fair value of financial liabilities
loan notes 141 557 144 572
bank loans and overdrafts 1247 1485 1247 1485
derivatives at fair value – – – –
trade and other payables 1413 1544 1413 1544
2801 3586 2804 3601
fair values have been obtained from the relevant institutions where appropriate where market values are not available fair values 
of financial assets and financial liabilities have been calculated by discounting expected future cash flow at prevailing interest 
rates and by applying year end exchange rates the carrying amount of shortterm borrowings approximates to book value
the fair value of the group’s financial instruments are measured using inputs other than quoted prices that are directly or 
indirectly observable level 2 as defined by ifrs 13
the main risks arising from the group’s financial instruments are market risk and liquidity risk the board reviews and agrees 
policies for managing each of these risks and they are summarised below together with related disclosure required by ifrs 
market risk
the group’s main exposure to market risk is in the form of interest rate risk and foreign currency risk the policies adopted 
to address these risks are as follows
interest rate risk
the group finances its operations through a mixture of retained profits loan notes and bank borrowings the group borrows 
at both fixed and floating rates of interest and uses interest rate swaps to generate the desired interest profile in order to 
manage the group’s exposure to interest rate fluctuations
foreign currency risk
the group uses currency borrowings forward contracts and currency swaps to hedge overseas net assets which are 
predominantly denominated in euros profit translation exposures are not hedged
 
the group hedges currency transaction exposures at the point of confirmed order using forward foreign exchange contracts 
the group’s policy is where practicable to hedge all exposures on monetary assets and liabilities consequently there are 
no material currency exposures to disclose 2013 none
impact on income statement
changes in the fair value of derivative contracts amounting to £08 million have been debited to the income statement in the 
year 2013 debit of £12 million these changes are shown separately as a special item in the consolidated income statement
hedge accounting
the group has a number of cross currency swaps that are used to reduce the exposure to interest rate and currency risk
these swaps are fully effective at eliminating the risks they address the group has reviewed the requirements necessary 
to permit the application of hedge accounting under ias 39 it has concluded that the costs involved in meeting these 
requirements cannot be justified and therefore ias 39 hedge accounting will not be applied
changes in the fair value of derivative financial instruments to which hedge accounting is not applied are recognised in 
the income statement as they arise
in addition the group has taken out forward foreign exchange contracts to fix the sterling value of its net investments in 
certain foreign operations which have a euro functional currency these contracts together with €1600 million drawn on 
the multicurrency term loan facility have been accounted for as net investment hedges as permitted by ias 39
notes to the consolidated financial statements
continued group financial statements
synthomer plc annual report 2014 85
interest rate risk profile
financial liabilities
after taking into account the various interest rate and currency swaps entered into by the group the currency and interest 
rate exposure of the group as at 31 december 2014 was
2014 2013
floating rate 
borrowings
£m
fixed rate 
borrowings
£m
total 
borrowings
£m
floating rate 
borrowings
£m
fixed rate 
borrowings
£m
total 
borrowings
£m
sterling 23 100 123 199 300 499 
euro 1247 – 1247 1485 – 1485 
us dollar – – – – – – 
other – – – – – – 
1270 100 1370 1684 300 1984 
cash and cash equivalents 249 590
financial asset – see note 17 – 58
add special item nonrecourse factoring – – 
net borrowings underlying performance 1121 1336 
the effective interest rate for the year was 25 2013 47
sensitivity analysis
the following table illustrates the effect on the income statement and items that are recognised directly in equity that would 
result from reasonably possible movements in uk and us interest rates and in euro and us dollar to sterling exchange rates 
before the effect of tax
2014 2013
income statement equity income statement equity
underlying
 £m 
ifrs
 £m
ifrs
 £m
underlying
 £m 
ifrs
 £m
ifrs
 £m
interest rate sensitivity analysis
uk interest rate  10 – 02 – 02 03 – 
euro interest rate  10 12 12 – 15 15 – 
us interest rate  10 – 02 – – 07 – 
foreign currency sensitivity analysis
euro exchange rate  10 – – 28 – – 23 
us dollar exchange rate  10 – 03 – – 04 – 
the interest rate sensitivity analysis has been determined based on the exposure to interest rates for both derivatives and 
nonderivative instruments at the balance sheet date for floating rate liabilities the analysis is prepared assuming the amount 
of liability outstanding at the balance sheet date was outstanding for the whole year
the foreign currency sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts 
their translation at the period end for a 10 change in foreign currency rates the sensitivity analysis includes external loans 
as well as loans to foreign operations within the group where the denomination of the loan is in a currency other than the 
functional currency of the lender or borrower
liquidity risk
the objective of the group is to meet financial commitments as and when they fall due the board closely monitors liquidity 
through monthly management accounts
at the year end synthomer plc had the following principal facilities
•	 a new five year £210 million committed revolving credit facility this facility replaced the group’s main debt facility which 
comprised of a €178 million term loan combined with the undrawn £60 million revolving credit line maturing march 2015 
both the introduction and cancellation of the respective facilities took place at the end of july 2014
•	 unsecured loan notes totalling approximately £141 million raised from the us private placement market in 2004 with 
a maturity date of september 2016 700 million of private placements was repaid in september 2014 please see  
note 21 for further details 86 synthomer plc annual report 2014
22 financial instruments continued
the following table details the remaining contractual maturity for nonderivative financial assets
2014 2013
amount due total amount due total
within 
one year
£m
between 
1 and 
2 years
£m
between 
2 and 
5 years
£m
after 
5 years
£m £m
within 
one year
£m
between 
1 and 
2 years
£m
between 
2 and 
5 years
£m
after 
5 years
£m £m
noninterest bearing
trade and other receivables 
excluding prepayments 1348 – – – 1348 1319 – – – 1319 
financial asset – – – – – 58 – – – 58 
variable interest rate 
instruments
cash and cash equivalents 249 – – – 249 590 – – – 590 
1597 – – – 1597 1967 – – – 1967 
the following table details the remaining contractual maturity for nonderivative financial liabilities
2014 2013
amount due total amount due total
within 
one year
£m
between 
1 and 
2 years
£m
between 
2 and 
5 years
£m
after 
5 years
£m £m
within 
one year
£m
between 
1 and 
2 years
£m
between 
2 and 
5 years
£m
after 
5 years
£m £m
noninterest bearing
trade and other payables 1413 – – – 1413 1544 – – – 1544 
variable interest rate 
instruments
bank loans and overdrafts 15 15 1287 – 1317 35 1494 – – 1529 
fixed interest rate 
instruments
loan notes 08 150 – – 158 457 08 141 – 606 
1436 165 1287 – 2888 2036 1502 141 – 3679 
the following table details the remaining contractual maturity for its derivative financial instruments
2014 2013
amount due total amount due total
within 
one year
£m
between 
1 and 
2 years
£m
between 
2 and 
5 years
£m
after 
5 years
£m £m
within 
one year
£m
between 
1 and 
2 years
£m
between 
2 and 
5 years
£m
after 
5 years
£m £m
interest rate swaps – – – – – – – – – – 
cross currency swaps 02 01 – – 03 12 02 01 – 15
foreign exchange forward 
contracts – – – – – – – – – –
02 01 – – 03 12 02 01 – 15
in accordance with ifrs 7  the above table shows undiscounted cash flows in contrast ias 39 requires these items to be 
carried in the balance sheet at fair value which is based on discounted cash flows
notes to the consolidated financial statements
continued group financial statements
synthomer plc annual report 2014 87
23 asset classified as held for sale
2014
£m
2013
£m
freehold land 11 11 
the group owns approximately 1900 acres of agricultural land in malaysia on which is currently operated a palm oil and 
natural rubber plantation
the land is owned by kind action sdn bhd which is a whollyowned subsidiary of revertex malaysia sdn bhd which has 
a 30 minority interest
the directors decided in 2013 to dispose of this land excluding the 300 acres immediately surrounding the manufacturing 
facilities on the open market
at 31 december 2014 contracts have been exchanged on 700 2013 700 acres for a total consideration of £27 million 
2013 £27 million
in january 2015 contracts were exchanged for a further 400 acres for a total consideration of £16 million
these disposals are subject to regulatory approval which may take up to two years
24 trade and other payables
2014
£m
2013
£m
amount due within one year
trade payables 1021 1098 
other payables 185 185 
accruals 207 261 
1413 1544 
average trade payable days in 2014 was 58 2013 60 this figure represents trade payable days for all trading operations 
within the group calculated as a weighted average based on cost of sales
the directors consider that the carrying amount of trade payables approximates to their fair value
£66 million of the amount shown as other payables in the 2013 annual report has been reclassified to provisions for other 
liabilities and charges see note 26 88 synthomer plc annual report 2014
25 post retirement benefit obligations
charge to income statement in respect of the group’s pension schemes
2014 2013
uk
£m
overseas
£m
total
£m
uk
£m
overseas
£m
total
£m
defined benefit 33 14 47 37 26 63
defined contribution 17 34 51 13 34 47
50 48 98 50 60 110
amounts recognised in the statement of comprehensive income
2014 2013
uk
£m
overseas
£m
total
£m
uk
£m
overseas
£m
total
£m
actuarial gains and losses 294 184 478 44 – 44 
amount included in the balance sheet arising from the group’s defined benefit scheme obligation
2014 2013
uk
£m
overseas
£m
total
£m
uk
£m
overseas
£m
total
£m
present value of funded defined 
benefit obligation 3610 746 4356 3159 596 3755
fair value of scheme assets 2772 77 2849 2556 70 2626 
net liability arising from defined 
benefit obligation 838 669 1507 603 526 1129
uk pension schemes
the group’s uk defined benefit scheme was closed to future accrual in 2009 all pension benefits since that time are 
provided by way of a defined contribution scheme
the assets of the schemes are held separately from those of the companies concerned
defined benefit scheme
the defined benefit scheme is administered by a separate fund that is legally separated from the company
the trustees of the pension fund are required by law to act in the interest of the fund and of all relevant stakeholders in the 
scheme the trustees of the pension are responsible for the investment policy with regard to the assets of the fund
a full actuarial valuation was carried out as at 6 april 2012 and updated to 31 december 2014 by a qualified actuary
the group has agreed that it will aim to eliminate the pension plan deficit over the next seven years
the scheme is exposed to a number of risks the most significant of which are detailed below
asset return risk  the plan liabilities are calculated using a discount rate set with reference to corporate bond 
yields if plan assets underperform this yield this will increase the deficit the scheme holds 
a significant proportion of equities which are expected to outperform corporate bonds in the 
longterm while providing volatility and risk in the shortterm
interest rate risk  a decrease in corporate bond yields will increase plan liabilities although this will be partially 
offset by an increase in the value of the plans’ bond holdings
longevity risk  the majority of the plans’ obligations are to provide benefits for the life of the member so 
increases in life expectancy will result in an increase in the plans’ liabilities 
the risk relating to benefits to be paid to the dependants of scheme members widow and orphan benefits is reinsured 
by an external insurance company
notes to the consolidated financial statements
continued group financial statements
synthomer plc annual report 2014 89
the major assumptions used for the purposes of the actuarial valuations were as follows
2014 2013
rate of increase in pensions in payment 300 330
rate of increase in pensions in deferment 200 230
discount rate 365 455
inflation assumption 300 330
assumptions regarding future mortality are based on actuarial advice in accordance with published statistics 
these assumptions translate into an average life expectancy in years for a pensioner retiring at 65 as follows
2014 2013
retiring today
males 875 875
females 900 899
retiring in 20 years
males 893 892
females 920 919
significant actuarial assumptions for the determination of the defined benefit obligation are discount rate and mortality 
the sensitivity analysis below has been determined based on reasonably possible changes of the assumptions occurring 
at the end of the reporting period assuming that all other assumptions are held constant
assumption change in assumption impact on scheme liabilities
discount rate increasedecrease by 1 decreaseincrease by £54 million
rate of mortality increase by 1 year increase by £12 million
the above sensitivities are based on a change of assumption while holding all other assumptions constant in practice this is 
unlikely to occur and changes in some of the assumptions may have some correlation when calculating the sensitivity of the 
defined benefit obligation to significant actuarial assumptions the same method present value of the defined benefit obligation 
calculated with the projected unit credit method at the end of the reporting period has been applied as when calculating the 
pension liability recognised within the balance sheet
the movements in the net liability arising from defined benefit obligation over the year is as follows
2014 2013
present 
value of 
funded 
defined 
benefit 
obligation
£m
fair value
of scheme 
assets
£m
net liability 
arising from 
defined 
benefit 
obligation
£m
present 
value of 
funded 
defined 
benefit 
obligation
£m
fair value
of scheme 
assets
£m
net liability 
arising from 
defined 
benefit 
obligation
£m
at 1 january 3159 2556 603 3015 2320 695
current service cost 05 – 05 05 – 05
interest expenseincome 144 116 28 139 107 32
amounts recognised in income in respect 
of defined benefit schemes 149 116 33 144 107 37
remeasurement
 return on plan assets excluding amounts  
 included in interest expenseincome – 130 130 – 164 164 
 losses from changes in financial   
 assumptions 424 – 424 120 – 120
amounts recognised in the statement 
of comprehensive income 424 130 294 120 164 44 
contributions
 employers 05 87 92 05 80 85 
payments from plans
 benefit payments 117 117 – 115 115 – 
at 31 december 3610 2772 838 3159 2556 603 90 synthomer plc annual report 2014
25 post retirement benefit obligations continued
plan assets are comprised as follows
2014
£m
2013
£m
equities 1244 1205 
bonds 1234 1046 
property 244 222 
cash 50 83 
total fair value of assets 2772 2556 
all investments in equities bonds and property are quoted
the weighted average duration of the benefit obligation at the end of the reporting period is 163 years 2013 155 years
contributions from the sponsoring companies are expected to be £103 million in 2015
overseas pension schemes
the group operates a number of smaller overseas pension and postretirement schemes the assets of these schemes 
are held separately from those of the group with the exception of the unfunded german schemes net liability £662 million 
2013 £513 million where in line with common practice the assets are held within the respective companies
defined benefit schemes
the aggregated pension disclosure below for the overseas defined benefit schemes has been compiled from a number 
of actuarial valuations at 31 december 2014
the largest of these schemes accounts for £454 million 2013 £383 million of the deficit at 31 december 2014 the major 
assumptions used in the actuarial valuation of this scheme are
2014 2013
rate of increase in salaries 300 300
rate of increase in pensions 200 200
discount rate 220 380
mortality assumptions
investigations have been carried out within the past three years into the mortality experience of the group’s defined benefit 
scheme these investigations concluded that the current mortality assumptions include sufficient allowance for future 
improvements in mortality rates the assumed life expectations on retirement at age 65 are
2014 2013
retiring today
males 839 837
females 879 878
retiring in 20 years
males 865 864
females 905 903
the major assumption used in the valuation of the other overseas schemes do not differ significantly from the above
notes to the consolidated financial statements
continued group financial statements
synthomer plc annual report 2014 91
the movements in the net liability arising from defined benefit obligation over the year is as follows
2014 2013
present 
value of 
funded 
defined 
benefit 
obligation
£m
fair value
of scheme 
assets
£m
net liability 
arising from 
defined 
benefit 
obligation
£m
present 
value of 
funded 
defined 
benefit 
obligation
£m
fair value
of scheme 
assets
£m
net liability 
arising from 
defined 
benefit 
obligation
£m
at 1 january 596 70 526 568 66 502
current service cost 07 – 07 07 – 07
gains on settlements and curtailments 03 – 03 – – – 
past service credit 08 – 08 – – – 
interest expenseincome 20 02 18 21 02 19
amounts recognised in income in respect 
of defined benefit schemes 16 02 14 28 02 26
remeasurement
 return on plan assets excluding amounts  
 included in interest expenseincome – 09 09 – 01 01 
 gainslosses from changes in  
 financial assumptions 193 – 193 01 – 01
amounts recognised in the statement 
of comprehensive income 193 09 184 01 01 – 
contributions less payments from plans 15 – 15 15 – 15 
exchange adjustments 44 04 40 14 01 13
at 31 december 746 77 669 596 70 526
26 provisions for other liabilities and charges
environmental 
restoration
£m
legal and 
customer 
claims
£m
fundamental 
restructuring
£m
liability arising 
on a business 
combination
£m
total
£m
at 1 january 2014 15 29 12 10 66 
chargedcredited to the income statement – 08 – – 08 
utilised during the year – 03 04 02 09
at 31 december 2014 15 34 08 08 65 
analysis of provisions
31 december 
2014
£m
noncurrent 53 
current 12 
65 
analysis of chargecredit to the income statement
2014
£m
underlying performance 08 
special items –
08 
environmental restoration
a provision is recognised for the costs to be incurred in the restoration of land which is no longer being used as 
a manufacturing site 92 synthomer plc annual report 2014
26 provisions for other liabilities and charges continued
legal and customer claims
this amount represents a provision for certain legal and customer claims brought against the group in the directors’ opinion 
after taking appropriate legal advice the outcome of these claims will not give rise to any significant loss beyond the amounts 
provided at 31 december 2014
fundamental restructuring
the group underwent a significant restructuring following the acquisition of polymerlatex in 2011 the cost of these 
restructuring programs is charged to special items in the income statement when permitted by ias 37 the provision reflects 
the amount that has been charged but not yet spent
liability arising on a business combination
as part of the acquisition of polymerlatex in 2011 the group acquired a leasehold interest in an empty property the provision 
reflects this onerous contract
the provisions are expected to be fully utilised over the next five years
27 share capital
2014
£m
2013
£m
issued and fully paid
339880769 2013 339880769 ordinary shares of 10 pence each 340 340 
ordinary shares carry no right to fixed income 
share options
as at 31 december 2014 the following options were outstanding
number
executive share options
exercisable between 20152022 812779 
exercisable between 20162023 1065197 
exercisable between 20172024 846116 
2724092
the total exercise price for all the above grants is £nil
notes to the consolidated financial statements
continued group financial statements
synthomer plc annual report 2014 93
28 reconciliation of operating profit to cash generated from operations
2014
£m
2013
£m
operating profit – continuing operations 651 750
less share of profits of joint ventures 41 32
610 718
adjustments for
 depreciation underlying 212 190
 amortisation underlying 03 02
 amortisation special items 258 267
 restructuring and site closure 45 14
 sharebased payments 03 08
 profit on sale of fixed assets 04 03
cash impact of restructuring and site closure 38 38
ias 19 interest charge 46 51
pension funding in excess of ias 19 charge 61 36
decreaseincrease in inventories 60 33
decrease in trade and other receivables 25 34
decrease in trade and other payables 176 147
cash generated from operations 891 925
reconciliation of movement in working capital
decreaseincrease in inventories 60 33
decrease in trade and other receivables 25 34
decrease in trade and other payables 176 147
movement in working capital 91 146
add back reduction in factoring invoices – 204
movement in working capital underlying 91 58
29 acquisition of subsidiary
the group has held 50 of the issued share capital of eka synthomer oy since 1 april 2011 and has accounted for this 
investment as a joint venture on 22 october 2014 the group acquired the other 50 of the share capital thereby obtaining 
control as required by ifrs 3 this transaction is accounted for as the deemed disposal of the 50 joint venture followed by 
the immediate acquisition of a 100 subsidiary
eka synthomer oy is a finnish company with a plant in oulu finland where it manufactures styrene butadiene latex for sale 
to the paper and board industries with customers mainly in the nordic region
the amounts recognised in respect of the identifiable assets acquired and liabilities assumed 100 are summarised as follows
£m
intangible assets – customer relationships 21 
property plant and equipment 65 
inventories 37 
trade and other receivables 116 
trade and other payables 82
cash and cash equivalents –
current borrowings – factoring with recourse 47
current tax liability –
deferred tax liability 08
total identifiable net assets 102 
the fair value of the identifiable net assets was reviewed and was agreed to be consistent with the book values used for the 
equity accounting of the 50 joint venture immediately prior to acquisition 94 synthomer plc annual report 2014
29 acquisition of subsidiary continued
deemed disposal of 50 joint venture
£m
deemed consideration fair value of existing noncontrolling interest 50 51 
less book value noncontrolling interest 51
profit on deemed disposal before recycling of foreign exchange –
recycling of foreign exchange 10
loss on deemed disposal 10
acquisition of 100 subsidiary
£m
consideration paid 39 
fair value of existing holding 51 
deemed consideration for 100 holding 90 
less fair value of identifiable assets acquired 102 
excess of net assets acquired over consideration paid – ‘bargain purchase’ 12
the ‘bargain purchase’ reflects the fact that the vendor was prepared to accept a consideration below fair value to ensure the 
quick disposal of an unwanted investment to avoid complicating a much larger transaction with another third party
£m
consideration paid was satisfied by
cash 39 
£m
cash consideration 39 
cash acquired –
net cash outflow arising on purchase of business 39 
borrowings acquired 47 
increase in net debt arising on purchase of business 86 
acquisition related costs of £01 million have been charged to operating profit in the special items column of the consolidated 
income statement see note 3
the revenue included in the consolidated income statement since 22 october 2014 was £158 million the increase in holding 
from 50 to 100 contributed an additional operating profit of £05 million over the same period
had eka been consolidated from 1 january 2014 the proforma consolidated income statement would show the following
1 january to  
21 october 2014
group
as reported
£m
add 
controlling 
interest 
acquired
£m
less non
controlling 
interest 
disposed of
£m
group
proforma
£m
group revenue 9364 517 – 9881
share of joint ventures’ revenue 541 – 259 282
total sales 9905 517 259 10163
company and subsidiaries 610 30 – 640
share of joint ventures 41 – 15 26
operating profit 651 30 15 666
finance costs 113 01 – 114
profit before taxation 538 29 15 552
taxation 75 04 – 71
profit after taxation 463 33 15 481
notes to the consolidated financial statements
continued group financial statements
synthomer plc annual report 2014 95
30 analysis of changes in net borrowings
1 january 
2014
£m
cash inflows
outflows
£m
debt of 
acquired 
business
£m
exchange 
and other 
movements
£m
31 december 
2014
£m
cash and cash equivalents 590 375 – 34 249 
current borrowing – bank overdrafts – – – – – 
590 375 – 34 249 
financial asset 58 61 – 03 – 
current borrowings 424 449 47 03 19
noncurrent borrowings 1609 150 – 88 1371
net borrowings 1385 163 47 128 1141
deduct special item fair value adjustment 49 – – 29 20 
net borrowings underlying performance 1336 163 47 99 1121
the special item represents the revaluation of us dollar loan notes from the rate of the related cross currency swaps to the 
year end rate together with the transitional adjustment required to reflect movements in fair value caused by variations in 
interest rates and subsequent amortisation thereof to the extent that these constituted effective economic hedges
31 related party transactions
transactions between the company and its subsidiaries which are related parties have been eliminated on consolidation and 
are not included in this note transactions between the company and its subsidiaries are disclosed in the company’s financial 
statements where appropriate
key management compensation
2014
£m
2013
£m
shortterm employee benefits 39 32 
post retirement benefit obligations 03 04 
sharebased payments 02 05 
44 41 
the key management figures given above include the directors and members of the executive committee
32 commitments
2014
£m
2013
£m
capital expenditure authorised but not provided for in the financial statements
contracted 26 69 
2014
£m
2013
£m
commitments under operating leases are as follows
payments under operating leases which fall due
within 1 year 32 33 
between 2 and 5 years 60 67 
after 5 years 117 140 
209 240 
operating leases relates largely to property leases 96 synthomer plc annual report 2014
33 contingent assets contingent liabilities and guarantees
guarantees of the parent company in respect of bank and other facilities of subsidiaries and joint ventures totalled 
£140 million 2013 £55 million
other guarantees and contingent liabilities of the group amount to £03 million 2013 £04 million
the company and its subsidiaries have in the normal course of business entered into guarantees and counterindemnities 
in respect of performance bonds relating to the group’s own contracts
34 sharebased payments
executive share option schemes
details of the share option schemes available to senior management are included in the directors’ remuneration report on 
pages 33 to 45
options
2014
weighted
av exercise
price £
2014
options
2013
weighted
av exercise
price £
2013
outstanding at 1 january 4010166 – 5527087 – 
granted during the period 884817 – 1087019 – 
exercised during the period 1124390 – 2570983 – 
lapsed during the period 1046501 – 32957 – 
outstanding at 31 december 2724092 – 4010166 – 
exercisable at 31 december – 374181 
for options outstanding as at 31 december 2014 the exercise price was £nil the weighted average remaining contractual life 
was 50 years 2013 46 years
yule catto employee benefit trust
the company established a trust the yule catto employee benefit trust on 17 july 1996 to distribute shares to employees 
enabling the obligations under the yule catto longerterm performance share plan and the yule catto longerterm deferred 
bonus plan to be met the trust is managed by the rbc trustees guernsey limited an independent company located 
in guernsey
at 31 december 2014 the trust held 82425 2013 331502 ordinary shares in the company with a market value of 
£02 million 2013 £08 million
the dividends on these shares have been waived all of the shares are under option costs are amortised over the life 
of the plans
the weighted average share price at the date of exercise was £262 2013 £207
the weighted average fair value of the options at the measurement date granted during the period was £032 2013 £047 
the valuation was based on the following inputs and assumptions
2014 2013
weighted average share price £ 265 187
option price £ – –
value of optionality nil nil
vesting assumption 12 25
given the option price is £nil the only circumstance in which a vested option will not be exercised is if the current share price 
is £nil there is some value associated with the timing of when the exercise would be made but this is considered to be 
minimal and therefore this has not been modelled
the vesting assumption is the estimate at the measurement date of the percentage of the options that will ultimately vest and 
is based on management’s assessment of the likelihood of achievement of the performance criteria
35 share price information
the middle market value of the listed ordinary shares at 31 december 2014 was 2370 pence during the year the market 
price ranged between 1891 pence and 2916 pence the latest ordinary share price is available on the financial times 
cityline service telephone 09058 171690
notes to the consolidated financial statements
continued company financial statements
synthomer plc annual report 2014 97
report on the parent company financial statements
our opinion
in our opinion synthomer plc’s parent company financial statements the ‘financial statements’
•	 give a true and fair view of the state of the parent company’s affairs as at 31 december 2014
•	 have been properly prepared in accordance with international financial reporting standards ifrss as adopted 
by the european union and as applied in accordance with the provisions of the companies act 2006 and
•	 have been prepared in accordance with the requirements of the companies act 2006 
what we have audited 
synthomer plc’s financial statements comprise
•	 the parent company balance sheet as at 31 december 2014 and
•	 the notes to the financial statements which include a summary of significant accounting policies and other 
explanatory information
the financial reporting framework that has been applied in the preparation of the financial statements is applicable law and
ifrss as adopted by the european union and as applied in accordance with the provisions of the companies act 2006
other required reporting
consistency of other information
companies act 2006 opinion
in our opinion the information given in the strategic report and the report of the directors for the financial year for which
the financial statements are prepared is consistent with the financial statements
isas uk  ireland reporting
under international standards on auditing uk and ireland isas uk  ireland we are required to report to you if  
in our opinion information in the annual report is
•	 materially inconsistent with the information in the audited financial statements or
•	 apparently materially incorrect based on or materially inconsistent with our knowledge of the company acquired 
in the course of performing our audit or
•	 otherwise misleading
we have no exceptions to report arising from this responsibility
adequacy of accounting records and information and explanations received
under the companies act 2006 we are required to report to you if in our opinion
•	 we have not received all the information and explanations we require for our audit or
•	 adequate accounting records have not been kept by the parent company or returns adequate for our audit have not been 
received from branches not visited by us or
•	 the financial statements and the part of the directors’ remuneration report to be audited are not in agreement with the 
accounting records and returns
we have no exceptions to report arising from this responsibility
independent auditor’s report
to the members of synthomer plc 98 synthomer plc annual report 2014
directors’ remuneration
directors’ remuneration report – companies act 2006 opinion
in our opinion the part of the directors’ remuneration report to be audited has been properly prepared in accordance with the 
companies act 2006
other companies act 2006 reporting
under the companies act 2006 we are required to report to you if in our opinion certain disclosures of directors’ 
remuneration specified by law are not made we have no exceptions to report arising from this responsibility
responsibilities for the financial statements and the audit
our responsibilities and those of the directors
as explained more fully in the statement of directors’ responsibilities the directors are responsible for the preparation  
of the financial statements and for being satisfied that they give a true and fair view
our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and isas 
uk  ireland those standards require us to comply with the auditing practices board’s ethical standards for auditors 
this report including the opinions has been prepared for and only for the company’s members as a body in accordance 
with chapter 3 of part 16 of the companies act 2006 and for no other purpose we do not in giving these opinions accept 
or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it 
may come save where expressly agreed by our prior consent in writing
what an audit of financial statements involves
we conducted our audit in accordance with isas uk  ireland an audit involves obtaining evidence about the amounts 
and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from 
material misstatement whether caused by fraud or error this includes an assessment of
•	 whether the accounting policies are appropriate to the parent company’s circumstances and have been consistently 
applied and adequately disclosed
•	 the reasonableness of significant accounting estimates made by the directors and
•	 the overall presentation of the financial statements
we primarily focus our work in these areas by assessing the directors’ judgements against available evidence forming our
own judgements and evaluating the disclosures in the financial statements
we test and examine information using sampling and other auditing techniques to the extent we consider necessary to 
provide a reasonable basis for us to draw conclusions we obtain audit evidence through testing the effectiveness of controls 
substantive procedures or a combination of both
in addition we read all the financial and nonfinancial information in the annual report 2014 the ‘annual report’ to identify 
material inconsistencies with the audited financial statements and to identify any information that is apparently materially 
incorrect based on or materially inconsistent with the knowledge acquired by us in the course of performing the audit if we 
become aware of any apparent material misstatements or inconsistencies we consider the implications for our report
other matter
we have reported separately on the group financial statements of synthomer plc for the year ended 31 december 2014
andrew latham senior statutory auditor 
for and on behalf of pricewaterhousecoopers llp
chartered accountants and statutory auditors 
st albans
25 february 2015
independent auditor’s report
to the members of synthomer plc continued company financial statements
synthomer plc annual report 2014 99
note
2014
£m
2013
£m
fixed assets
tangible fixed assets 5 22 22 
investments 6 2921 3022 
2943 3044 
current assets
debtors 7 7142 7370 
cash at bank and in hand 112 156 
derivatives at fair value 23 64 
7277 7590 
creditors – amounts falling due within one year
borrowings 8 372 571
other creditors 10 1457 1358
1829 1929
net current assets 5448 5661 
total assets less current liabilities 8391 8705 
creditors – amounts falling due after more than one year
borrowings 8 1371 1608
net assets 7020 7097 
capital and reserves
share capital 11 340 340 
share premium 12 2305 2305 
revaluation reserve 12 08 08 
capital redemption reserve 12 09 09 
profit and loss account 12 4358 4435 
total shareholders funds 7020 7097 
analysis of net borrowings
cash at bank and in hand 112 156 
borrowings due in less than one year 372 571
borrowings due after more than one year 1371 1608
net borrowings 1631 2023
deduct special item 19 49 
net borrowings underlying performance 8 1612 1974
the financial statements of synthomer plc registered number 98381 on pages 99 to 106 were approved on 25 february 2015
c g maclean d c blackwood
director director
company balance sheet
31 december 2014 100 synthomer plc annual report 2014
1 accounting policies
the principal accounting policies are summarised below they have all been applied consistently throughout the year and 
the preceding year
the company has taken advantage of the exemption from preparing a cash flow statement under the terms of frs 1 
‘cash flow statement’ the cash flows of the company are included in the synthomer plc group financial statements
basis of accounting
the financial statements have been prepared on the going concern basis under the historical cost convention as modified by 
the revaluation of certain fixed assets and comply with applicable uk accounting standards and the companies act 2006
foreign currencies
transactions in foreign currencies are recorded at the rate of exchange at the date of the transaction or if hedged at the 
forward contract rate monetary assets and liabilities denominated in foreign currencies at the balance sheet date are reported 
at the rates of exchange prevailing at that date or if appropriate at the forward contract rate
tangible fixed assets
tangible fixed assets are stated at cost or valuation net of depreciation and any provision for impairment cost includes the 
original purchase price of the asset plus the costs attributable to bringing the asset to its working condition for its intended 
use except for freehold land which is not depreciated the cost or valuation of tangible fixed assets is depreciated on a 
straightline basis over their expected useful lives as follows
freehold buildings  – 50 years
leasehold land and buildings – the lesser of 50 years and the period of the lease
plant and equipment  – between 3 and 10 years
revaluation of properties
where depreciation charges are increased following a revaluation an amount equal to the increase is transferred annually 
from the revaluation reserve to the profit and loss account as a movement on reserves on the disposal or recognition of a 
provision for impairment of a revalued fixed asset any related balance remaining in the revaluation reserve is also transferred 
to the profit and loss account as a movement on reserves
investments
fixed asset investments are shown at cost less provision for impairment
intercompany
intercompany balances are shown gross unless a right of set off exists
borrowings
borrowings are initially stated at the amount of the net proceeds after deduction of issue costs
taxation
current tax including uk corporation tax and foreign tax is provided at amounts expected to be paid or recovered using 
the tax rates and laws that have been enacted or substantively enacted by the balance sheet date
deferred taxation
deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date 
where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future 
have occurred at the balance sheet date timing differences are differences between the company’s taxable profits and its 
results as stated in the financial statements that arise from the inclusion of gains and losses in tax assessments in periods 
different from those in which they are recognised in the financial statements
a net deferred tax asset is regarded as recoverable and therefore recognised only when on the basis of all available evidence 
it can be regarded as more likely than not that there will be suitable taxable profits from which the future reversal of the 
underlying timing differences can be deducted
deferred tax is measured at the average tax rates that are expected to apply in the periods in which the timing differences are 
expected to reverse based on tax rates and laws that have been enacted or substantively enacted by the balance sheet date  
deferred tax is measured on a nondiscounted basis
notes to the company financial statements
31 december 2014 company financial statements
synthomer plc annual report 2014 101
financial instruments
financial assets and financial liabilities including derivative instruments are recognised on the company balance sheet 
when the company becomes a party to the contractual provisions of the instrument
trade debtors
trade debtors do not carry any interest and are stated at their nominal value as reduced by appropriate allowances for 
estimated irrecoverable amounts
bank borrowings
interestbearing bank loans and overdrafts are recorded at the proceeds received net of direct issue costs finance charges 
including premiums payable on settlement or redemption and direct issue costs are accounted for on an accrual basis 
to the profit and loss account using the effective interest method and are added to the carrying amount of the instrument 
to the extent that they are not settled in the period in which they arise
trade creditors
trade creditors are not interestbearing and are stated at their nominal value
equity instruments
equity instruments issued by the company are recorded at the proceeds received net of direct issue costs
derivative financial instruments
the company enters into derivative financial instruments to manage its exposure to interest rate and foreign exchange rate 
risk including cross currency interest rate swaps and forward foreign exchange contracts the company does not hold 
or issue derivative financial instruments for speculative purposes
derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently 
remeasured to their fair value at each balance sheet date a derivative with a positive fair value is recognised as a financial 
asset whereas a derivative with a negative fair value is recognised as a financial liability the resulting gain or loss is 
recognised in the profit and loss account immediately unless the derivative is designated and effective as a hedging 
instrument in which event the timing of the recognition in the profit and loss account depends on the nature of the hedge 
relationship the company designates certain derivatives as fair value hedges
the use of financial derivatives is governed by the group’s policies approved by the board of directors which provide written 
principles on the use of financial derivatives
fair value hedge accounting
changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the profit and loss 
account together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk 
the company only applies fair value hedge accounting for foreign currency exposure associated with the underlying hedged 
item the gain or loss relating to the ineffective portion is also recognised in the profit and loss account
net borrowings
net borrowings represents cash and cash equivalents together with short and longterm borrowings as adjusted for the 
effect of related derivative instruments irrespective of whether they qualify for hedge accounting
pension funding
in accordance with frs 17  the company accounts for its contributions to the defined benefit scheme as if it were a defined 
contribution scheme because it is not an employer making the pension payments
the uk defined benefit scheme is funded with the assets of the scheme held separately from those of the group in separate 
trusteeadministered funds
payments to defined contribution retirement benefit schemes are charged as an expense as they fall due
2 auditors’ remuneration
the audit fee of synthomer plc amounted to £4000 2013 £4000 102 synthomer plc annual report 2014
3 profit attributable to equity shareholders
uk gaap basis
2014
£m
2013
£m
attributable to synthomer plc 167 484 
 the above has been calculated on a uk gaap basis as this is consistent with the continued presentation of synthomer plc’s financial statements under 
uk gaap
as permitted by section 408 of the companies act 2006 no profit and loss account is presented for synthomer plc
4 ordinary dividends
2014
pence 
per share
2013
pence 
per share
2014
£m
2013
£m
interim dividend 30 24 102 81 
proposed final dividend 48 36 163 122 
in addition to the final dividend of 48p mentioned above the directors are proposing a special dividend of 78p 
the proposed final dividend is subject to approval by shareholders at the annual general meeting and has not been included 
as a liability in these financial statements 
5 tangible fixed assets
land and buildings
freeholds
£m
long
leaseholds
£m
plant and 
equipment
£m
total
£m
cost or valuation
at 1 january 2014 28 – – 28 
disposals – – 
at 31 december 2014 28 – – 28 
at cost – – – – 
at professional valuation in 1985 28 – – 28 
28 – – 28 
accumulated depreciation
at 1 january 2014 06 – – 06 
eliminated on disposals – – – – 
at 31 december 2014 06 – – 06 
net book value
at 31 december 2014 22 – – 22 
net book value
at 31 december 2013 22 – – 22 
properties included at valuation would have been stated on a historical cost basis at cost of £19 million 2013 £19 million 
and depreciation of £05 million 2013 £05 million
freehold land amounting to £18 million 2013 £18 million has not been depreciated 
notes to the company financial statements
continued company financial statements
synthomer plc annual report 2014 103
6 investments
subsidiaries
£m
joint
ventures
£m
other
investments
£m
total
£m
cost
at 1 january 2014 3019 05 01 3025 
additions – – – – 
disposals – – 01 01
hedge adjustment see below 101 – – 101
at 31 december 2014 2918 05 – 2923 
provisions
at 1 january 2014 – 02 01 03 
released on disposals – – 01 01
at 31 december 2014 – 02 – 02 
net book value
at 31 december 2014 2918 03 – 2921 
net book value
at 31 december 2013 3019 03 – 3022 
details of the principal subsidiaries and joint ventures are given on page 107
the company has designated its euro denominated £140 million 2013 £150 million multicurrency revolving credit facility 
of ¤1600 million 2013 ¤1778 million see note 8 and a forward contract of ¤400 million 2013 nil as a frs 26 fair value 
hedge against the designated euro portion of its investment in ennismore limited of ¤2000 million 2013 €1778 million 
under frs 26 the hedged portion of this investment is retranslated at the year end spot rate with the resulting gain or loss 
being taken to the profit and loss account where it is fully offset by the exchange gain or loss resulting from the retranslation 
of the revolving credit facility and the forward contract at the same date
directors consider the value of investments to be supported by underlying assets
7 debtors
2014
£m
2013
£m
amounts owed by group undertakings 7136 7369 
other debtors 06 01 
7142 7370  104 synthomer plc annual report 2014
8 borrowings
2014
£m
2013
£m
current borrowings
bank loans
bank loans and overdrafts 372 146 
other loans
700 million 578 guaranteed senior unsecured notes due 2 september 2014 – 425 
372 571 
noncurrent borrowings
bank loans
unsecured £1500 million multicurrency term loan facility expiring march 2015 – 1485 
unsecured £2100 million multicurrency revolving credit facility expiring 30 july 2019 1247 – 
other loans
220 million 598 guaranteed senior unsecured notes due 2 september 2016 141 133 
1388 1618 
less capitalised costs 17 10
1371 1608 
  i n a g g re g a t e £141 million 2013 £558 million associated with which is the currency impact of derivatives of £19 million 2013 £49 million net £122 million 
2013 £509 million 
bank loans are denominated in a number of currencies and bear interest based on libor or foreign equivalents
at 31 december 2014 the company had available £853 million 2013 £600 million of undrawn committed borrowing 
facilities in respect of which all conditions precedent had been met
analysis of borrowings at carrying value by currency
the directors calculate the carrying value of the company’s borrowings as follows
sterling
£m
us dollar
£m
euro
£m
total
£m
31 december 2014
bank loans and overdrafts 320 15 1284 1619 
loan notes – 141 – 141 
capitalised costs 17 – – 17
303 156 1284 1743 
cash and cash equivalents 112
net borrowings 1631 
deduct special item 19
net borrowings underlying performance 1612 
31 december 2013
bank loans and overdrafts 78 – 1553 1631 
loan notes – 558 – 558 
capitalised costs 10 – – 10
68 558 1553 2179 
cash and cash equivalents 156
net borrowings 2023 
deduct special item 49
net borrowings underlying performance 1974 
  the special item represents the revaluation of us dollar loan notes from the rate of the related cross currency swaps to the year end rate together with the 
transitional adjustment required to reflect movements in fair value caused by variations in interest rates and subsequent amortisation thereof to the extent 
that these constituted effective hedges under pre frs 26 uk gaap
cash and cash equivalents comprise cash at bank and other shortterm highly liquid investments with a maturity of three 
months or less
notes to the company financial statements
continued company financial statements
synthomer plc annual report 2014 105
9 financial instruments
the fair value of derivative financial instruments has been disclosed in the company’s balance sheet as 
2014 2013
fair value of financial assets
loans and 
receivables
£m
fair value 
through 
profit and 
loss
£m
total
carrying
value
£m
loans and 
receivables
£m
fair value 
through 
profit and 
loss
£m
total
carrying
value
£m
trade and other receivables excluding 
prepayments 7142 – 7142 7370 – 7370
cash and cash equivalents 112 – 112 156 – 156
derivatives at fair value – 23 23 – 64 64
7254 23 7277 7526 64 7590
2014 2013
fair value of financial liabilities
loans and 
payables at 
amortised 
cost
£m
fair value 
through 
profit and
loss
£m
total
carrying
value
£m
loans and 
payables at 
amortised 
cost
£m
fair value 
through 
profit and 
loss
£m
total
carrying
value
£m
loan notes 141 – 141 558 – 558
bank loans and overdrafts 1602 – 1602 1621 – 1621
trade and other payables 1457 – 1457 1358 – 1358
3200 – 3200 3537 – 3537
a fuller description of financial instruments is included in note 22 of the consolidated financial statements on pages 83 to 86
10 other creditors
2014
£m
2013
£m
amount due within one year
trade creditors – –
amounts owed to group undertakings 1438 1314 
other taxation and social security – – 
other creditors 08 09 
accruals and deferred income 11 35 
1457 1358 
11 called up share capital
details of the company’s share capital and outstanding share options are shown in note 27 of the consolidated financial 
statements on page 92
12 share premium and reserves
share
premium
£m
revaluation
reserve
£m
capital
redemption
reserve
£m
profit and
loss account
£m
total
£m
at 1 january 2014 2305 08 09 4435 6757 
profit for the year – – – 167 167 
dividends – – – 224 224
retained loss for the year – – – 57 57
sharebased payments – – – 20 20
at 31 december 2014 2305 08 09 4358 6680  106 synthomer plc annual report 2014
13 related party transactions
the company has elected to take the allowable exemption in terms of frs 8 3c to not disclose transactions with 
whollyowned subsidiaries
14 guarantees and other financial commitments
the company has given guarantees amounting to £140 million 2013 £55 million in respect of bank and other facilities 
of subsidiaries and joint ventures
15 pension commitments
the group participates in a funded scheme with both a defined benefit and defined contribution section the yule catto 
group retirement benefit scheme the scheme’s defined benefit section was closed to new members with effect from 
31 december 1998 and with effect from 1 january 1999 a defined contribution section was introduced and is open to all 
eligible group employees during 2009 the group announced that it intended to close the defined benefit scheme to future 
accrual this process commenced in 2009 and was completed in september 2010
the assets of the scheme are held separately from those of the companies concerned
the pension charge for the year for the company amounted to £nil million 2013 £nil million
a valuation under frs 17 has not been performed at group level and therefore the deficit calculated in accordance with 
ias 19 of £838 million 2013 £603 million is disclosed as a permitted alternative
for details of the ias 19 valuation assumptions and movement in the year please refer to the uk pension scheme section 
of note 25 to the consolidated financial statements on pages 88 to 91
16 sharebased payments
for details of sharebased payments please refer to note 34 to the consolidated financial statements on page 96
notes to the company financial statements
continued other information
synthomer plc annual report 2014 107
operating companies
country of 
incorporation 
and operation
group 
interest in 
equity

arkem pty ltd
distributor of specialty chemicals and allied products
south africa 50
quality polymer sdn bhd
acrylic and vinyl polymer dispersions
malaysia 70
revertex malaysia sdn bhd
synthetic resin and emulsions natural rubber latices plasticers and allied products
malaysia 70
synthomer pty ltd
synthetic resin and emulsions and allied products
south africa 100
synthomer uk ltd
synthetic emulsions latex based compounds polyvinyl alcoholacetate and liquid polybutadiene
england 100
synthomer bv
latex based compounds
netherlands 100
synthomer deutschland gmbh
synthetic rubber latices and emulsions
germany 100
synthomer finland oy formerly eka synthomer oy
styrenebutadiene latex products
finland 100
synthomer middle east company
acrylic and vinyl resin emulsions
saudi arabia 49
synthomer sae
latex based compounds
egypt 88
synthomer sdn bhd
synthetic rubber latices
malaysia 100
synthomer srl
synthetic rubber latices and acrylic polymer dispersions
italy 100
synthomer vietnam co ltd
acrylic and vinyl emulsions
vietnam 60
william blythe ltd
inorganic chemicals
england 100
holding companies
synthomer holdings ltd england 100
yule catto holdings gmbh germany 100
yule catto nederland bv netherlands 100
 joint ventures
 shares held by synthomer plc
principal subsidiaries and joint ventures 108 synthomer plc annual report 2014
underlying performance
a b
2014
£m
2013
£m
2012
restated
h

£m
2011
restated
h

£m
2010
restated
h

£m
total sales c 9905 10549 11118 11168 5829 
ebitda d 1180 1240 1296 1172 613 
operating profit e 965 1048 1112 984 510 
finance costs 105 147 166 162 112
profit before taxation 860 901 946 822 398 
basic earnings per share 195p 207p 209p 180p 133p 
dividends per share 78p 60p 55p 35p 26p 
dividend cover 25 35 38 51 51 
net borrowings f 1121 1336 1558 1643 634
capital expenditure g 220 391 392 242 106 
ifrs – continuing operations
b
2014
£m
2013
£m
2012
restated
h

£m
2011
restated
h

£m
2010
restated
h

£m
total sales c 9905 10549 11118 11168 5885 
ebitda d 1180 1240 1296 1172 613 
operating profit e 651 750 771 563 600 
finance costs 113 159 183 195 86
profit before taxation 538 591 588 368 514 
basic earnings per share b 133p 142p 156p 90p 195p 
dividends per share 78p 60p 55p 35p 26p 
dividend cover 17 24 28 26 75 
net borrowings f 1141 1385 1415 1561 760
capital expenditure g 220 391 392 242 106 
a as presented in the consolidated income statement on page 56
b 2010 figures exclude pharma chemicals segment
c total sales includes group revenue and share of joint venture revenue
d as defined in the accounting policies at note 2 and reconciled in note 5
e as defined in note 2 to the financial statements on page 65
f  as defined in note 2 to the financial statements and reconciled in note 21
g as shown with the consolidated cash flow statement
h restated for impact of ias 19 revised
fiveyear financial summary designed and produced by instinctif partners wwwinstinctifcom
photographs on page 3 courtesy of cssasynthomer
photographs on page 10 courtesy of synthomerdes head cssasynthomer synthomer
photographs on page 11 courtesy of synthomerstudio 9 cssa
photographs on page 14 courtesy of synthomer synthomerpeter lempertz
photographs on page 15 courtesy of shutterstockdigital storm istockterminator 1 synthomerstudio 9
this report has been printed in the uk by empress litho they have utilised their iso 14001 iso 9001 and 
forest stewardship council fsc certified environmental print production processes all materials used in the 
production of this report are environmentally sustainable vegetable based inks have been used throughout 
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virgin fibre which is elemental chlorine free ecf and from sustainable wellmanaged sources
 
when you have finished with this report and do not wish to keep it please pass it on to other interested 
readers or recycle it thank you  synthomer plc
temple fields 
harlow
essex cm20 2bh  
uk
t 44 01279 436 211
f 44 01279 444 025
wwwsynthomercom


Summary:
 overview
synthomer plc annual report 2014 01
financial highlights
underlying  
performance
a
ifrs
as reported
2014
£m
2013
£m
2014
£m
2013
£m
continuing operations
total sales
b
9905 10549 9905 10548
ebitda note 5 1180 1240 1180 1240
operating profit 965 1048 651 750
profit before taxation 860 901 538 591
earnings per share 195p 207p 133p 142p
ordinary dividend per share note 10 78p 60p 78p 60p
special dividend per share note 10 78p – 78p –
net borrowings
c
1121 1336 1141 1385
a
 
underlying performance excludes special items as shown in the consolidated income statement 
 this is primarily amortisation of acquired intangibles of £270 million 2013 £284 million
b
 total sales includes group revenue and share of joint venture revenue
c
 see page 58
commercial highlights
•	 £860 million pbt 
•	 successfully refinanced 
five year £210 million committed 
bank facility
•	 successfully completed purchase of 
final 50 of synthomer finland oy
•	 commissioned new 28 kte 
production line in saudi arabia 
•	 16 new product launches achieved 
during the year and seven patent 
applications made
£860m
profit before 
taxation

  
£9905m
total sales

 based on underlying performance
 19  5p
earnings  
per share

 15  6p
dividend  
per share 
ordinary 
and special
30
change  
in ordinary 
dividend  
per share
£1121m
net debt

financial and commercial highlights