Styrolution Group IRSH Interim Financial Report Q3 2012

  Styrolution Group (IRSH) - Interim Financial Report Q3 2012

RNS Number : 4273R
Styrolution Group GmbH
19 November 2012




                           Styrolution Group GmbH

    Unaudited Interim Financial Statements -three and nine months ended 30
                                September 2012

                          Forward Looking Statements

The following  report  includes  "forward-looking statements",  based  on  our 
current expectations and projections about future events, including:

· the cyclical nature of our businesses and their sensitivity  to 
changes in supply and demand;

·  raw  material  availability  and  costs,  as  well  as  supply 
arrangements, including arrangements with principal feedstock suppliers;

· the highly competitive nature of our principal industries;

· current or future  environmental requirements, including  those 
related to greenhouse gas  and other air emissions,  and the related costs  of 
maintaining compliance and addressing liabilities;

· currency fluctuations and  economic downturns in the  countries 
in which we operate;

· our  ability  to  implement our  business  and  cost  reduction 
strategies;

· our  ability  to  successfully  integrate  our  businesses  and 
realize anticipated synergies and cost savings; and

· our substantial indebtedness following the consummation of  the 
Joint Venture Transaction may  affect our ability  to service our  outstanding 
indebtedness, which would likely impact the way we operate our business.

All statements  other than  statements of  historical facts  included in  this 
report,  without  limitation,  statements   regarding  our  future   financial 
position, risks  and  uncertainties related  to  our Company  and  the  notes, 
strategy, capital expenditures, projected costs  and our plans and  objectives 
for future operations, may be  deemed to be forward-looking statements.  These 
forward-looking  statements   are   subject  to   a   number  of   risks   and 
uncertainties.  Words  such  as  "believe,"  "expect,"  "anticipate",  "may", 
"intend",  "will",  "should",  "estimate"  and  similar  expressions  or   the 
negatives of  these  expressions  are  intended  to  identify  forward-looking 
statements. In addition, from time to time we or our representatives,  acting 
in  respect  of   information  provided  by   us,  have  made   or  may   make 
forward-looking statements  orally or  in  writing and  these  forward-looking 
statements may be included in but are not limited to press releases (including
on our website),  reports to  our security holders  and other  communications. 
Although we believe  that the expectations  reflected in such  forward-looking 
statements are reasonable,  we can  give no assurance  that such  expectations 
will prove to  be correct. We  undertake no obligation  to publicly update  or 
revise any forward-looking statements, whether as a result of new information,
future events or otherwise.

       Styrolution Group GmbH - Unaudited Interim Financial Statements

   Consolidated Statement of Income for the three and nine months ended 30
                                September 2012

In millions of EUR               1 July - 30 September      1 January - 30
                                          2012              September 2012

                                                        
Revenue                                         1,484.0                4,553.9
Cost of sales                                 (1,358.1)              (4,113.1)
Gross profit                                      125.9                  440.8
Selling expenses                                 (83.6)                (244.9)
General and administrative                       (14.5)                 (59.9)
expenses
Research and development                          (3.8)                  (9.5)
expenses
Other operating expenses (net)                   (12.7)                 (22.4)
Result from operating                              11.3                  104.1
activities
Interest income                                     2.9                    4.9
Interest expense                                 (12.9)                 (40.4)
Other finance gain (loss) (net)                   (4.4)                    0.7
Net finance costs                                (14.4)                 (34.8)
Income (loss) before tax                          (3.1)                   69.3
Income tax benefit (expense)                        0.7                 (22.6)
Net income (loss)                                 (2.4)                   46.7


Attributable to:                                                            

Non-controlling interests                           0.4                    0.7
Owners of the company                             (2.8)                   46.0



       Styrolution Group GmbH - Unaudited Interim Financial Statements

 Consolidated Statement of Comprehensive Income (loss) for the three and nine
                        months ended 30 September 2012



In millions of EUR                        1 July - 30 September 1 January - 30
                                                  2012          September 2012
Net income (loss)                                         (2.4)           46.7
Other comprehensive loss:
Foreign currency translation reserve                     (13.2)           15.9
Actuary gains and losses on defined                           -              -
benefit plans
Total other comprehensive income (loss)                  (13.2)           15.9
Total comprehensive income (loss)                        (15.6)           62.6


Attributable to:                                                            

Non-controlling interests                                   0.5            0.7
Owners of the company                                    (16.1)           61.9

                                      

                                      



       Styrolution Group GmbH - Unaudited Interim Financial Statements

                 Consolidated Statement of Financial Position

In millions of EUR                          30 September 2012 31 December 2011
Assets
Property, plant and equipment                           780.2            809.4
Intangible assets and goodwill                        1,236.2          1,241.1
Deferred tax assets                                      25.7             22.8
Other receivables and miscellaneous                       6.7              7.1
non-current assets
Non-current assets                                    2,048.8          2,080.4
Inventories                                             560.1            463.6
Accounts receivable, trade                              767.1            756.3
Other receivables and miscellaneous                     199.5            360.3
current assets
Cash and cash equivalents                               225.4            266.0
Assets held for sale                                        -             13.2
Current assets                                        1,752.1          1,859.4
Total assets                                          3,800.9          3,939.8
Equity
Share capital                                            10.0             10.0
Contributed Surplus                                   1,641.4          1,641.4
Other reserves                                           35.3             24.0
Accumulated deficit                                    (23.2)           (69.2)
Equity attributable to owners of the                  1,663.5          1,606.2
Company
Non-controlling interest                                  7.1              8.4
Total equity                                          1,670.6          1,614.6
Liabilities
Financial indebtedness                                  470.0            468.2
Employee benefits                                        45.6             42.8
Deferred tax liabilities                                360.9            367.8
Other liabilities and other long term                    67.5            124.4
provisions
Non-current liabilities                                 944.0          1,003.2
Accounts payable, trade                                 674.3            728.0
Financial indebtedness                                  322.0            439.6
Current tax liabilities                                   0.8             13.1
Other liabilities and short term                        189.2            137.6
provisions
Liabilities held for sale                                   -              3.7
Current liabilities                                   1,186.3          1,322.0
Total liabilities                                     2,130.3          2,325.2
Total equity and liabilities                          3,800.9          3,939.8

       Styrolution Group GmbH - Unaudited Interim Financial Statements

                 Consolidated Statement of Changes in Equity







                                                              Equity
                                                               attributable
In   millions  Share                      Accumulated Other    to owners of Non-controlling Total
of EUR         Capital ContributedSurplus deficit     Reserves the company  interest        Equity
At         31  10.0    1,641.4            (69.2)      24.0     1,606.2      8.4             1,614.6
December 2011



Net income                                46.0                 46.0         0.7                46.7
Other                                                 15.9     15.9                            15.9
Comprehensive
income
Total                                     46.0        15.9     61.9         0.7                62.6
comprehensive
income
India share                                           (4.6)    (4.6)        (2.0)             (6.6)
repurchase
At 30          10.0    1,641.4            (23.2)      35.3     1,663.5      7.1             1,670.6
September
2012



       Styrolution Group GmbH - Unaudited Interim Financial Statements

                     Consolidated Statement of Cash Flows

                                      

In millions of EUR                                    1 January - 30 September
                                                                2012
Cash flows from operating activities
Income before tax                                                         69.3
Adjustment for:
Depreciation and impairment  of property, plant  and                      84.6
equipment
Amortization and impairment of intangible assets                          43.2
Change in pension provisions, other liabilities  and                    (18.7)
charges
Net finance cost                                                          34.8
Current income tax paid                                                 (59.2)
Working capital adjustments:
- Inventories                                                     (94.5)

                                                                            ))
- Trade receivables                                                (9.4)
- Other receivables                                                  6.0
- Trade payables                                                    64.7
Cash generated from operating activities                                 120.8
Interest paid                                                           (26.2)
Net cash flows from operating activities                                  94.6
Cash flows from investing activities
Investments in  property,  plant and  equipment  and                    (60.4)
intangible fixed assets


Proceeds  from  disposal  of  property,  plant   and                         -
equipment and intangible assets
Proceeds from sale of disposal group (ELIX)                               22.1
Net cash flows used in investing activities                             (38.3)
Cash flows from financing activities
Share repurchase India                                                   (6.6)
Repayment of asset securitization, net                                  (29.1)

                                                                 ))
Receipt from borrowings from related parties                              29.5
Repayment of borrowings from related parties                           (106.5)
Receipt of other borrowings                                               58.4
Repayment of other borrowings                                           (40.8)
Net cash flows used in financing activities                             (95.1)
Net changes in cash and cash equivalents                                (38.8)
Cash and cash equivalents at 31 December 2011                            266.0
Effect of exchange rate fluctuations on cash held                        (1.8)
Cash and cash equivalents at 30 September 2012                           225.4

       Styrolution Group GmbH - Unaudited Interim Financial Statements

                                    Notes

1. Reporting entity

Styrolution Group GmbH ('Group' or  the 'Company') is an intermediate  holding 
Company which is wholly owned by Styrolution Beteiligungs GmbH, a wholly owned
subsidiary of Styrolution Holding  GmbH. Styrolution Holding  GmbH is a  joint 
venture ultimately owned by two shareholders, INEOS Industries Holdings  Ltd., 
a subsidiary of INEOS AG, and BASF SE ("BASF"). INEOS Industries Holdings Ltd.
("INEOS") owns 50% of the shares of Styrolution Holding GmbH. BASF SE directly
owns 15.95% of the shares of  Styrolution Holding GmbH and indirectly  through 
BASF Antwerpen N.V. (a wholly owned subsidiary) another 34.05%. The Company is
domiciled in Germany and  has its registered office  at Erlenstrasse 2,  60325 
Frankfurt am Main, Germany. The Company was incorporated on 19 April 2011.

On 1 October 2011, BASF contributed the BASF Styrenics Business to the Company
and INEOS contributed the INEOS Styrenics Business and the INEOS ABS  Business 
to the Company by way  of the Joint Venture  Transaction. As used herein,  the 
"Joint Venture Transaction" means  the consummation of  the Joint Venture  and 
related financings by and among BASF SE and INEOS Industries Holdings  Limited 
as described in the Styrolution Group  GmbH Offering Memorandum dated May  12, 
2011 (the  "Offering Memorandum").  Also as  used herein,  the BASF  Styrenics 
Business, the INEOS Styrenics Business and  the INEOS ABS Business shall  have 
the meanings  set  forth  in  the  Offering  Memorandum.  BASF  SE  and  INEOS 
Industries Holdings Limited  are sometimes  referred to herein  as the  "Joint 
Venture Partners". The  Company accounts for  these contributions as  business 
combinations.  The   consolidated  interim   financial  statements   are   not 
accompanied by comparative  financial information preceding  its formation  as 
these businesses were  previously not under  common control. The  consolidated 
interim financial  statements of  the  Company comprise  the Company  and  its 
subsidiaries (together referred to as  the 'Group' and individually as  'Group 
entities'). The Group is  the leading global  producer, marketer and  merchant 
seller of styrene monomer and styrenics polymers.

2. Basis for preparation

(a) Statement of compliance

These consolidated interim financial statements of Styrolution Group GmbH  for 
the period ended 30 September 2012  have been prepared in accordance with  IAS 
34 Interim Financial Reporting. They do not provide all of the information and
disclosures included  in complete  consolidated financial  statements and  are 
therefore to be read in conjunction with the consolidated financial statements
as of and for the period ending 31 December 2011.

The consolidated interim financial statements were authorized for issue by the
Managing Directors on 19 November 2012.

(b) Basis of measurement

The  basis  of  measurement  for  the  consolidated  financial  statements  is 
generally the historical  cost basis  except for  those financial  instruments 
categories measured at fair value.

On 1  October 2011  the Group  engaged in  the Joint  Venture Transaction  and 
acquired the BASF  Styrenics Business,  the INEOS Styrenics  Business and  the 
INEOS ABS Business from  the respective Joint Venture  Partners by means of  a 
combination of contributions in kind and cash payments. The fair value of  the 
consideration  exchanged  in  the  transaction  has  been  allocated  to   the 
identified  assets  acquired  and  liabilities  assumed.  In  particular,  the 
following fair values had originally  been determined on a provisional  basis: 
intangible  assets  (including  goodwill),  property,  plant  and   equipment, 
employee  benefit  obligations,  liabilities  related  to  unfavorable  supply 
agreements with  related parties,  provisions  and deferred  taxes. As  of  30 
September  2012,  the  Company  finalized  the  allocation  for  those  assets 
contributed and liabilities assumed based on information obtained about  facts 
and circumstances that existed  at the acquisition  date. The finalization  of 
the allocation resulted in an increase of the goodwill of EUR 13.3 million and
corresponding increases, primarily affecting  deferred tax liabilities.  These 
changes were not significant to the consolidated financial statements for  the 
year ended  31  December 2011  and  are  reflected in  the  interim  financial 
statements for the third quarter of 2012.

The  accounting  and  valuation  methods   disclosed  in  the  notes  to   the 
consolidated financial statements as of and for the period ending 31  December 
2011 have  been  applied consistently,  except  for the  finalization  of  the 
allocation of the fair value of consideration exchanged.

(c) Functional and presentation currency

These consolidated interim financial statements are presented in EUR, which is
the Company's functional currency. All financial information presented in  EUR 
has been rounded  to the  nearest tenth of  a million,  except when  otherwise 
indicated.

(d) Use of estimates and judgments

The preparation  of  financial statements  in  conformity with  IFRS  requires 
management to  make  judgments,  estimates and  assumptions  that  affect  the 
application of  accounting  policies  and  the  reported  amounts  of  assets, 
liabilities, income  and  expenses.  Actual  results  may  differ  from  these 
estimates. Estimates and  underlying assumptions  are reviewed  on an  ongoing 
basis. Revisions to accounting estimates are recognized in the period in which
the estimates are revised and in any future periods affected.

(e) Segment reporting

Segment  results  that  are  reported  to  the  CEO  include  items   directly 
attributable to a segment as  well as those that can  be allocated on a  basis 
considered reasonable. Unallocated items comprise mainly assets that are  used 
across segments (primarily the Company's headquarters), head office  expenses, 
and tax  assets  and  liabilities.  The  Company  has  defined  the  following 
operating segments:

- EMEA

- Americas

- Asia

Detailed information by segment for the three months ended 30 September 2012
is presented in the following tables.

In millions of EUR     External sales Inter-segment sales    EBITDA before
                                                             Special Items
EMEA                            621.4                22.6                 26.3
Americas                        506.6                11.8                 24.6
Asia                            356.0                 1.6                 16.0
Corporate and eliminations                         (36.0)
Total for the period          1,484.0                 0.0                 66.9



Detailed information by segment for the first nine months ended 30 September
2012 is presented in the following tables.

In millions of EUR     External sales Inter-segment sales    EBITDA before
                                                             Special Items
EMEA                        1,939.6**                66.4                108.0
Americas                     1,564.6*               84.9*                112.8
Asia                        1,049.7**                 4.6                 29.9
Corporate and eliminations                       (155.9)*
Total for the period         4,553.9*                 0.0                250.7



* In the first quarter 2012, the Company reported certain internal sales of
styrene monomer sales in the Americas region as external sales. These sales
have been properly reported in the tables above.

** In the first two quarters of 2012, the Company reported external sales for
certain location and time swaps. These swaps are not included as external
sales in the tables above. Management considers this to be a better
presentation of the actual trading and revenue of the Company.

Reconciliation of EBITDA before special items to Income (loss) before tax:

In millions of EUR                        1 July - 30 September 1 January - 30
                                                  2012          September 2012
                                                                       
EBITDA before special items                          66.9                250.7
Special items (restructuring                       (15.3)               (18.8)
expenses)
Depreciation and Amortization                      (40.3)              (127.8)

Results from operations                              11.3                104.1

Net finance costs                                  (14.4)               (34.8)
Income (loss) before tax                            (3.1)                 69.3

The special items primarily include estimated contract termination costs.

3. Disposal group held for sale

As part of the Joint Venture Transaction on 1 October 2011, the Group acquired
shares in  ELIXPolymers S.L.  On June  1,  2011, the  EU Commission  gave  its 
approval for the completion  of the Joint Venture  Transaction subject to  the 
requirement that the  Company divest  its interest  in ELIX  Polymers S.L.  In 
December 2011 the Group agreed to an agreement to sell ELIX Polymers S.L.  for 
an amount of EUR 23  million in cash, subject to  adjustment for any debt  and 
certain working capital  requirements defined  in the  agreement. The  Company 
retained certain liabilities of the disposal group. The price obtained on  the 
market was used as a basis for measuring the fair value of ELIX Polymers  S.L. 
in the Joint Venture Transaction purchase price allocation.

The sale  of  ELIX  Polymers  S.L.  was completed  on  30  March  2012.  After 
adjustments, the Company received  proceeds on 1 April  2012 from the sale  of 
EUR 22.1 million in cash.

4. Income taxes

Income tax expense is  recognized based on management's  best estimate of  the 
income tax rate expected for the year 2012 applied to the income before  taxes 
of the third quarter 2012. The Group's consolidated effective tax rate for the
first three quarters of 2012 was 32.6%.

5. Equity

As a result of the Joint Venture  transactions the Company undertook and on  6 
February 2012  completed  a  public  offer  to  purchase  the  non-controlling 
interest in Styrolution ABS (India) Limited (formerly INEOS ABS (India) Ltd.).
As a result of this process the Company increased its share in Styrolution ABS
(India) Limited  from  83.33% to  87.26%.  The  total amount  paid  from  this 
increase was  EUR  6.6  million. The  reduction  in  the total  value  of  the 
non-controlling interest is EUR 2.0 million.



6. Financial indebtedness

In millions of EUR                          30 September 2012 31 December 2011


Current liabilities
Short term borrowings from related parties                0.8            106.5
Short term borrowings from asset                        300.5            329.1
securitizations
Short term borrowings other                              20.3              1.8
Short term finance lease liabilities                      0.4              2.2
Total                                                   322.0            439.6



The Group repaid interest-bearing loans from shareholders that were due on  15 
February 2012.  The loans  primarily  originated in  the contribution  of  the 
businesses under the  capital increase  resolution and  represent excess  cash 
balances contributed.

7. Related parties



In millions of EUR                Transaction value       Balance outstanding
                            1 January - 30 September 2012  30 September 2012
Sale of products
- BASF**                                      233.3
- INEOS                                       120.1
Purchase of raw materials
- BASF**                                    1,413.1
- INEOS                                       741.4
Services received
- BASF                                         51.3
- INEOS                                        27.5
Trade and other receivables
- BASF                                                             85.7
- INEOS                                                            16.6
- Shareholder                                                      56.6
Trade and other payables
- BASF                                                          (300.8)
- INEOS                                                          (79.9)



** In the first two quarters of 2012, the Company reported external sales for
certain location and time swaps. To the extent that these swaps involve a
shareholder of the Company, they are not included as sales of product in the
table above - see also note 2.

The Company completed a settlement agreement with its shareholder who  assumed 
trade payable balances  of EUR  119.6 million  in exchange  for the  Company's 
receivable due from  shareholder. The corresponding  receivables and  payables 
were extinguished as a result of the settlement agreement.

On 19 March 2012 the Company  announced the termination of tolling  agreements 
with INEOS concerning the styrenics plant of INEOS in Marl, Germany. Supply of
polystyrene and styrene from Marl continued through October 2012.As a  result 
of the termination of the agreement,  the Company will accelerate payments  of 
approximately EUR 43.2 million  under the contract of  which EUR 33.5  million 
was identified as an unfavorable  contractual agreement in accounting for  the 
business combination.



    Presentation of the Styrolution third quarter 2012 business results of
                                  operation

The Company prepared this discussion and analysis of its results of operations
by comparing its unaudited consolidated interim financial statements of income
and cash flows for the  three and nine months ended  30 September 2012 to  the 
pro forma information for the corresponding  periods, i.e. the three and  nine 
months ended 30  September 2011.  The pro forma  information is  based on  the 
combined performance of the businesses that were contributed to the Company by
its shareholders  in  connection with  the  completion of  the  Joint  Venture 
transaction on 1  October 2011,  but do not  include the  effects of  purchase 
accounting which affect the actual financial information for 2012.

In millions of EUR           1 July - 30   Pro forma 1 July -   %
                            September 2012      30 September 2011
Revenue                            1,484.0                      1,540.8  (3.7)
Cost of sales                    (1,358.1)                    (1,400.2)    3.0
Gross profit                         125.9                        140.6 (10.5)
Selling expenses                    (83.6)                       (85.1)    1.8
General and administrative          (14.5)                       (25.7)   43.6
expenses
Research and development             (3.8)                        (3.0) (26.7)
expenses
Other operating income              (12.7)                          1.6 >(100)
(expenses)
Result from operating                 11.3                         28.4 (60.2)
activities
Interest income                        2.9                            -      -
Interest expense                    (12.9)                       (11.6) (11.2)
Other finance gain (loss)            (4.4)                          0.2 >(100)
(net)
Net finance costs                   (14.4)                       (11.4) (26.3)
Income (loss) before tax             (3.1)                         17.0 >(100)
Income tax benefit                     0.7                       (10.3)   >100
(expense)
Net income (loss)                    (2.4)                          6.7 >(100)


Attributable to:                                                           

Non-controlling interests              0.4                            -      -
Owners of the company                (2.8)                          6.7 >(100)









 Presentation of the Styrolution first nine months year 2012 business results
                                 of operation



In millions of EUR       1 January - 30    Pro forma 1    Delta in %
                         September 2012 January - 30 September 2011
Revenue                         4,553.9                     4,959.0      (8.2)
Cost of sales                 (4,113.1)                   (4,399.8)        6.5
Gross profit                      440.8                       559.2     (21.2)
Selling expenses                (244.9)                     (248.5)        1.4
General and                      (59.9)                      (59.1)      (1.4)
administrative expenses
Research and                      (9.5)                       (8.8)      (8.0)
development expenses
Other operating income           (22.4)                      (13.5)     (65.9)
(expenses)
Result from operating             104.1                       229.3     (54.6)
activities
Interest income                     4.9                           -          -
Interest expense                 (40.4)                      (35.0)     (15.4)
Other finance gain                  0.7                       (9.8)       >100
(loss) (net)
Net finance costs                (34.8)                      (44.8)       22.3
Income before tax                  69.3                       184.5     (62.4)
Income tax expense               (22.6)                      (50.2)       55.0
Net income                         46.7                       134.3     (65.2)


Attributable to:                                                           

Non-controlling                     0.7                           -          -
interests
Owners of the company              46.0                       134.3     (65.7)



Revenue: Revenue in the third quarter of 2012 amounts to EUR 1,484.0  million, 
a decrease of EUR (56.8) million or (3.7%) compared to EUR 1,540.8 million  in 
the third  quarter  2011. Revenue  reduced  mainly because  of  lower  styrene 
monomer sales. The Company optimized its styrene balance by using more styrene
internally, part of Styrolution's strategy. The Sarnia styrene plant was  down 
due to a force  majeure while Texas  City and Antwerp  were in turnaround  for 
several weeks during  the quarter  which also reduced  styrene sales  volumes. 
This reduction was partly offset by the strengthened USD compared to the Euro.

The polymer  sales  volumes  slightly  increased in  the  third  quarter  2012 
compared to third quarter 2011, mainly in Asia and EMEA. The Company benefited
from low Inventory volumes  in the industry and  subsequent restocking of  our 
customers. This increase was accelerated  by the strengthened USD compared  to 
the Euro.

As of the fourth  quarter 2011 Styrolution does  not recognize any sales  from 
the operations of the  ELIX Polymers S.L. Tarragona  ABS Specialties plant  in 
Spain. This asset was sold on March 30  2012 and is treated in that way  under 
IFRS accounting rules. This decreased the third quarter 2012 sales compared to
previous quarter last year.

Revenues by segment:

In millions of EUR 1 July - 30 September    Pro forma 1 July - 30     %
                           2012                September 2011
EMEA                               621.4                       731.6    (15.1)
Americas                           506.6                       472.0       7.3
Asia                               356.0                       337.2       5.6
Revenue                          1,484.0                     1,540.8     (3.7)



Revenues by product:

In millions of EUR       1 July - 30   Pro forma 1 July - 30 September  %
                        September 2012              2011
Acrylonitrile Butadiene          227.0                           217.2     4.5
Styrene
Polystyrene                      625.8                           594.2     5.3
Styrene Monomer                  318.4                           347.3   (8.3)

Specialties                      312.8                           382.1  (18.1)
Revenue                        1,484.0                         1,540.8   (3.7)



The Company has  slightly revised  the reporting structure  of its  portfolio. 
While the  Company still  has  the same  product groupings:  styrene  monomer, 
polystyrene and ABS, the Company has  identified a number of ABS grades  which 
will join  copolymers to  be classified  as specialties  in the  future.  This 
change is reflected  in the  reporting starting  in Q1  2012. The  comparative 
revenues for 2011 have been adjusted  accordingly. Prior to the third  quarter 
of 2012, the  Company reported external  sales for certain  location and  time 
swaps. These swaps  are not included  as external sales  in the tables  above. 
Management considers  this to  be a  more representative  presentation of  the 
actual trading and revenue  of the Company  and adjusted comparative  revenues 
accordingly.

Cost of Sales: Cost of  sales decreased by EUR 42.1  million, or 3.0%, to  EUR 
(1,358.1) million compared to EUR (1,400.2) million in the previous year. This
decrease is due to the reduction in third party styrene sales volumes,  partly 
offset by improved  margins for  polymers mainly in  Asia and  Americas. As  a 
result of the  Purchase Price allocation  the cost of  sales increased by  EUR 
15.6 million in the third quarter of 2012. This was mainly higher depreciation
and amortization costs. Cost of  sales increased because of the  strengthening 
of the US dollar against the Euro.

Gross profit: Gross profit decreased by EUR (14.7) million, or (10.5%) to  EUR 
125.9 million compared  to EUR 140.6  million in the  previous year. This  was 
mainly due  to  higher depreciation  and  amortization expenses  of  EUR  22.8 
million in the  third quarter  2012 compared to  the third  quarter 2011.  The 
Company's cost of sales increased as  a results of purchase price  allocations 
by EUR 15.6 million.

The Company was able to improve its polymer margins in the third quarter  2012 
in Asia and the Americas. This and an improved supply demand balance  resulted 
in improved gross profit compared  to the third quarter  2011 in Asia and  the 
Americas. Margins  reduced in  EMEA due  to the  uncertainty of  the  European 
economic climate.

The gross  profit of  the  styrene business  reduced  significantly due  to  a 
decrease in margins  in EMEA,  the turnaround at  our Texas  City and  Antwerp 
styrene plants and the force majeure in the Sarnia plant in the Americas.

Selling expenses: Selling expenses decreased by EUR 1.5 million or 1.8% to EUR
(83.6) million  compared to  EUR  (85.1) million  in  the previous  year.  The 
decrease mainly reflects lower  freight and selling  costs. Freight costs  are 
not always related to external sales volumes, because of freight costs related
to captive use.

General and  administrative  expenses:  General  and  administrative  expenses 
decreased by EUR11.2  million, or  43.6%, to EUR(14.5)  million compared  to 
EUR(25.7) million in  the previous year.  The decrease is  caused by  several 
unusual items  including  a  bad debts  release  of  EUR 3.5  million  in  the 
Americas.

Research and development expenses:Research and development expenses  increased 
by EUR(0.8) million, or (26.7%),  to EUR(3.8) million compared to  EUR(3.0) 
million in the previous year.

Other operating expenses:Other operating expenses were EUR (12.7) million,  an 
increase of EUR (14.3) million compared  to other operating income of  EUR1.6 
million in the  previous year.  The increase  is mainly  because of  estimated 
contract termination and project integration costs.

EBITDA before special items:EBITDA before special items increased by  EUR20.0 
million, or  42.6%, from  EUR 46.9  million  to EUR  66.9 million.  The  third 
quarter of 2012 was  an acceptable volume and  margin quarter in an  uncertain 
economic environment. The increase  is mainly due  to improved performance  of 
the polymers  business,  mainly  in  Asia and  Americas.  Special  items  were 
incurred in the context of the formation of the Joint Venture, the termination
of certain contracts or the integration of activities.

Reconciliation of EBITDA before special items to income (loss) before tax:

In millions of EUR               1 July - 30   Pro forma 1 July - Delta in EUR
                                September 2012 30 September 2011
EBITDA before special items (1)           66.9               46.9         20.0
Special  items   (restructuring         (15.3)              (1.0)       (14.3)
expenses)
                                        (40.3)             (17.5)       (22.8)
Depreciation and Amortization
Results from operations                   11.3               28.4       (17.1)
Net finance costs                       (14.4)             (11.4)        (3.0)
Income (loss) before tax                 (3.1)               17.0       (20.1)





(1) EBITDA represents income from operations plus depreciation of property,
plant and  equipment  and amortization  of  intangible assets.  EBITDA  before 
special items represents EBITDA less special items. Although EBITDA and EBITDA
before special items should not  be considered substitute measures for  profit 
and net cash  flow from  operating activities,  we believe  that they  provide 
useful  information  regarding  our  ability  to  meet  future  debt   service 
requirements. EBITDA and EBITDA before special items may not be comparable  to 
similarly titled measures used by other companies.

                       LIQUIDITY AND CAPITAL RESOURCES

The cash flow statement  is prepared in accordance  with the indirect  method. 
Cash and cash equivalents do not include deposits and guarantees that are  not 
immediately available. These amounts are included in other receivables.

Cash provided by operating activities

Cash provided by operating activities by  Styrolution in the first nine  month 
of 2012, excluding  interest payments was  EUR 120.8 million.  The cash  flows 
generated by  operations  were  significantly  higher  than  the  result  from 
operations  on  the  income  statement   due  to  material  depreciation   and 
amortization amounts included in the result from operations. The Company  used 
cash to fund its  working capital needs.  By the end of  the third quarter  of 
2012, feedstock prices had  increased compared to the  beginning of the  year, 
which tends to have an increasing effect on the cash flow requirements of  the 
Company. In addition, interest and income  taxes paid reduced cash flows  from 
operations.

Cash used in investing activities

The cash used  in investing  activities of EUR  38.3 million  consists of  two 
items. The cash used  for capital expenditures was  EUR 60.4 million.  Capital 
expenditures relate to regular maintenance and new investments in our  plants, 
including an  extension  of  our  plant in  Ulsan,  Korea,  dedicated  to  the 
production of  styrene acrylonitrile  copolymers and  inaugurated on  19  July 
2012. Proceeds from sale of ELIX were EUR 22.1 million.

Cash used in financing activities

The Company used cash  flow in financing activities  primarily to repay  loans 
from related  parties of  a net  amount of  EUR 77.0  million and  reduce  the 
balance from  asset  securitizations  by  EUR  29.1  million,  offset  by  net 
additional borrowings of EUR  17.6 million. In addition,  EUR 6.6 million  was 
paid in connection with the tender offer in India.

Financing of Styrolution

The financing of the Company is  through the issuance of Senior Secured  Notes 
of EUR480 million, a Trade Receivables Securitization Facility (up to EUR 500
million) and ancillary lines for instruments such as guarantees and letters of
credit.

The financing of Styrolution and the use of funds at the end of September 2012
of the Company was as follows:



In millions of EUR
Senior secured bond                                                      480.0
Short term borrowings from asset securitizations and other borrowings    322.0
Total Financing on 30 September 2012                                     802.0
Cash and cash equivalents                                              (225.4)
Net Debt on 30 September 2012                                            576.6







 This announcement has been issued through the Companies Announcement Service
                                      of

                          the Irish Stock Exchange.





                     This information is provided by RNS
           The company news service from the London Stock Exchange

END


ISEEANFNFDXAFEF -0- Nov/19/2012 09:40 GMT
 
Press spacebar to pause and continue. Press esc to stop.