KERLING PLC Quarter ended March 31, 2012

Transcription

1 KERLING PLC Quarter ended March 31, 2012

2 PROFIT AND LOSS ACCOUNTS (UNAUDITED) Three-Month Period Ended March 31, Turnover Cost of sales (480.7) (656.5) Gross profit Distribution costs (51.9) (60.8) Administrative expenses (12.8) (14.0) Exceptional administrative expenses - (0.9) Operating profit Share of operating profit of joint ventures Share of operating profit/(loss) of associated undertakings 0.2 (0.2) Profit on disposal of business Net finance charges (34.8) (25.8) Loss on ordinary activities before taxation (17.6) (14.3) Taxation on loss on ordinary activities (0.4) (2.3) Loss for the financial period (18.0) (16.6) 1

3 CONSOLIDATED BALANCE SHEETS December 31, 2011 March 31, 2012 (Audited) (Unaudited) Fixed assets Investments Tangible fixed assets 1, ,060.0 Goodwill Negative goodwill (270.5) (266.9) Current assets Stocks Debtors: amounts falling due within one year Debtors: amounts falling due after one year Cash at bank and in hand Creditors: amounts falling due within one year (429.8) (465.5) Net current assets Total assets less current liabilities 1, ,300.3 Creditors: amounts falling due after one year (909.7) (947.0) Provisions for liabilities and charges (56.8) (56.1) Deferred income (40.4) (43.5) Net assets excluding pension liabilities Net pension liabilities (273.7) (273.3) Net liabilities including pension liabilities (4.1) (19.6) 2

4 CONSOLIDATED CASH FLOW STATEMENTS (UNAUDITED) Three-Month Period Ended March 31, Operating profit Depreciation, impairment and amortisation of fixed assets (Increase)/decrease in stocks (20.4) 27.8 Increase in debtors (61.6) (72.4) Increase in creditors and provisions Exchange adjustments and other items Net cash flow from operating activities Returns on investments and servicing of finance Interest received Interest and other financing charges paid (42.7) (43.3) Issue cost of debt finance raised - (0.1) (42.2) (43.3) Taxation (3.1) (0.7) Capital expenditure and financial investments Payment to acquire tangible fixed assets (12.6) (13.4) (12.6) (13.4) Acquisitions and disposals of businesses Purchase of businesses - (11.2) Disposal of business (7.0) Net cash outflow before financing (56.5) (13.3) Financing Receivables Securitisation Facility Other loans 1.3 (8.8) (Decrease)/increase in cash (18.4)

5 RECONCILIATION OF MOVEMENTS IN NET ASSETS Total Net Assets At January 1, 2012 (4.1) Retained loss for the current period (16.6) Currency translation differences 1.1 At March 31, 2012 (19.6) 4

6 NOTES TO THE COMBINED CONDENSED INTERIM FINANCIAL INFORMATION (UNAUDITED) 1. BASIS OF PREPARATION Kerling plc (Kerling or the Company ) was incorporated on September 23, 2009 as a holding company to house the ownership interests in certain chemical businesses acquired and controlled by a common owner. The condensed interim financial information presents the combined financial records of Kerling plc and its subsidiaries, which together form the Group. This condensed interim financial information does not comprise statutory accounts within the meaning of Section 434 of the Companies Act The accompanying condensed interim financial information are unaudited. The basis of preparation and accounting policies applied in this condensed interim financial information for the three-months ended March 31, 2012 is consistent with those of the annual financial information for the year ended December 31, The condensed financial information includes all subsidiaries of the Company. Intra-group transactions and balances have been eliminated on consolidation. The financial and operating results for any period less than a year are not necessarily indicative of the results that may be expected for a full year. 2. PRINCIPAL ACCOUNTING POLICIES The financial information has been prepared using accounting policies in accordance with UK GAAP. The financial information has been prepared under the historical cost convention and in accordance with the accounting policies set out in the Company s annual report for the year ended December 31,

7 NOTES TO THE COMBINED CONDENSED INTERIM FINANCIAL INFORMATION (UNAUDITED) (Continued) 3. SEGMENTAL INFORMATION Class of business The Company reports under the following two business segments: ChlorVinyls and Enterprises. The turnover and operating profit attributable to each different class of business as measured under UK GAAP is as follows: Three-Month Period Ended March 31, Turnover ChlorVinyls Enterprises Corporate / Eliminations (7.5) (8.3) EBITDA before exceptionals ChlorVinyls Enterprises Reconciliation of earnings before operating exceptional items, interest, taxation, depreciation and amortisation ( EBITDA before exceptionals ) to operating profit: Three-Month Period Ended March 31, EBITDA before exceptionals Depreciation and amortisation (20.1) (26.6) Exceptional administrative expenses - (0.9) Operating profit

8 NOTES TO THE COMBINED CONDENSED INTERIM FINANCIAL INFORMATION (UNAUDITED) (Continued) 4. EXCEPTIONAL ITEMS Three-Month Period Ended March 31, Exceptional items included in administrative expenses Pension scheme change (1) Restructuring costs (2) Total exceptional items (1) The defined benefit pension schemes of UK based employees have been under review and a project to implement pension scheme change commenced in A part of this project, certain employees exiting from the UK defined benefit schemes into a defined contribution scheme have received transition payments. In addition, the exceptional item includes the costs of pensions and legal advisors relating to this project. (2) Following the acquisition of Limburgse Vinyl Maatschappij NV, further costs have been incurred in 2012 relating to severance costs of 0.1 million and 0.1 million for integration costs associated with the acquisition. 5. INVENTORY December 31, 2011 March 31, 2012 Raw materials and consumables Work in progress Finished products BORROWINGS Borrowing obligations as of December 31, 2011 and March 31, 2012 are as follows: December 31, 2011 March 31, 2012 Borrowings due after more than one year: % Senior Secured Notes % Senior Secured Notes Securitisation facility Unamortised debt issue costs (32.9) (31.4)

9 NOTES TO THE COMBINED CONDENSED INTERIM FINANCIAL INFORMATION (UNAUDITED) (Continued) 7. BORROWINGS (Continued) Senior Facilities Agreement The Group is a party to a Senior Facilities Agreement dated September 27, 2007 (as amended) with Barclays Bank PLC and Merrill Lynch Capital Corporation ( Senior Facility ). The maturity date of the Senior Facilities Agreement is January 28, The Senior Facility includes a 95.0 million Revolving Credit Facility and 5.0 million Ancillary Facilities, of which nil was drawn-down as at March 31, 2012, although certain bank guarantees and letters of credit of the Group were provided for amounting to 19.7 million. In April 2012, the Group received confirmation that the Secretary of State for Business, Innovation and Skills that one of the bank guarantees under the facilities of 16.8 million could be released following confirmation that all conditions under a Regional Selective Grant have been completed % Senior Secured Notes On January 28, 2010, the Group issued Senior Secured Notes due 2017 in an aggregate principal amount of million. The Senior Secured Notes are listed on the Luxembourg Stock Exchange and bear interest at % per annum, payable semi-annually in arrears commencing on August 1, Unless previously redeemed as noted below, the % Senior Secured Notes will be redeemed by the Group at their principal amount on February 1, The % Senior Secured Notes are subject to redemption at any time prior to February 1, 2014 at the option of the Group, in whole but not in part, at a redemption price equal to 100% of the principal amount plus the Applicable Redemption Premium (as defined in the Indenture). The % Senior Secured Notes will be subject to redemption at any time on or after February 1, 2014 at the option of the Group, in whole or in part, at the following redemption prices (expressed as percentages of the principal amount), if redeemed during the twelve-month period beginning February 1 of the years indicated below: Year Redemption price % % 2016 and thereafter % The % Senior Secured Notes are secured on the assets of certain of the Group s subsidiaries. The % Senior Secured Notes contains a number of operating and financial covenants including limitations on indebtedness, restricted payments, transactions with affiliates, liens, sale of assets and dividend payments % Senior Secured Notes The Group issued Notes in an aggregate nominal principal amount of 75.0 million pursuant to a Senior Subscription Agreement dated June 16, 2011 between Kerling plc, Banc of America Securities Limited (as Arranger), Merrill Lynch International (as Original Purchaser), Bank of New York Mellon (as Agent) and Barclays Bank PLC (as Security Trustee). The Notes bear interest at % per annum, payable semi-annually in arrears commencing on December 31, The Group will repay the aggregate principal amount of the Notes in full five years after the utilization date of June 30, The Group may prepay the whole or any part by redeeming the Notes (but if in part, by redeeming Notes, the aggregate principal amount of which is not less than 5.0 million). 8

10 NOTES TO THE COMBINED CONDENSED INTERIM FINANCIAL INFORMATION (UNAUDITED) (Continued) 7. BORROWINGS (Continued) % Senior Secured Notes (Continued) The Notes are secured on the assets of certain of the Group s subsidiaries. The % Senior Secured Notes contains a number of operating and financial covenants including limitations on indebtedness, restricted payments, transactions with affiliates, liens, sale of assets and dividend payments. Securitisation facility The Securitisation facility bears interest at a rate equal to EURIBOR plus 2.25% per annum and the facility is repayable in full by January 30, This facility is secured on certain of the Group s trade receivables. The total committed facility amount available under the Company s receivables Securitisation facility is million, of which million was drawn-down as at March 31, CONTINGENCIES The Company is subject to various proceedings instituted by governmental authorities arising under the provisions of applicable laws or regulations relating to the discharge of materials into the environment or otherwise relating to the protection of the environment. In management s opinion, none of the proceedings is material to the financial condition or results of operation of the Company. 9. DISPOSALS On February 23, 2012 the Group sold 100% of the share capital of INEOS Asiatic Chemical Company Limited to Siam PVS Chemicals Co. Limited for a consideration of 4.2 million. 10. POST BALANCE SHEET EVENT Subsequent to the quarter-end, the Group has re-negotiated it Senior Facilities Agreement with Barclays Bank PLC, Merrill Lynch Capital Corporation, ING Bank NV and Credit Industriel et Commercial. The Senior Facilities Agreement has been amended; an extension of the maturity date to May 2015 and a reduction of the size of the facility from million to 40.0 million. 9

11 FORWARD-LOOKING STATEMENTS The Company includes forward-looking statements, within the meaning of the US securities laws, based on our current expectations and projections about future events, including: Our high degree of leverage and significant debt service obligations as well as future cash flow and earnings; Our sales growth across our principal businesses and our strategy for controlling costs, growing margins, increasing manufacturing capacity and production levels and making capital expenditures; Raw material costs or supply arrangements; Our technological and manufacturing assets and our ability to utilise them to further increase sales and the profitability of our businesses; Our ability to retain existing customers and obtain new customers; Our ability to develop new products and technologies successfully; The cyclical and highly competitive nature of our businesses; Risks related to environmental costs, liabilities or claims; and Currency fluctuations. All statements other than statements of historical facts included in this report including, without limitation, statements regarding our future financial position, risks and uncertainties related to our business 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 forwardlooking 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. 10

12 OPERATING AND FINANCIAL REVIEW AND PROSPECTS The following discussion is based upon the unaudited consolidated historical financial information of Kerling plc prepared in accordance with UK GAAP. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in these forward-looking statements. Overview Combined Business We are the leading European supplier of polyvinyl chloride, or PVC, caustic soda and caustic potash, measured by volume. We are under common ownership with the INEOS Group; the world s third largest chemical company measured by turnover, but are operated and financed on an independent basis. Our principal business unit is our ChlorVinyls Business. The ChlorVinyls Business includes a Chlorine Derivatives Business, which is a leader in the production of various chlorine derivatives, with strong market positions in the United Kingdom and globally. Our other business is our Enterprise Business, which is made up of a portfolio of diversified smaller businesses. The Enterprise Business is operated on a stand-alone basis and also provides us with key inputs for manufacturing our core products in the ChlorVinyls Business. Our businesses are integrated upstream into ethylene and salt, which is unique in our industry in Europe, as well as downstream into the manufacturing of PVC resins and compounds. Our combined businesses currently operate 17 manufacturing sites in eight countries. We own 50.0% of the Noretyl ethylene cracker in Rafnes, Norway and a 35.7% interest in a PVC business in Suzhou, China. Our interest in the Noretyl cracker allows us to capture ethylene margins in addition to margins on PVC production. Results of Operations Consolidated The following table sets forth, for the periods indicated, our turnover and expenses and such amounts as a percentage of turnover. Three-Month Period Ended March 31, m % m % Turnover Cost of sales (480.7) (85.8) (656.5) (88.4) Gross profit Distribution costs (51.9) (9.2) (60.8) (8.1) Administrative expenses (12.8) (2.3) (14.0) (1.9) Exceptional administrative expenses - - (0.9) (0.1) Operating profit Share of operating profit of joint ventures Share of operating profit of associated undertakings (0.2) - Profit on disposal of business Net finance charges (34.8) (6.2) (25.8) (3.5) Loss on ordinary activities before taxation (17.6) (3.1) (14.3) (1.9) Taxation on loss on ordinary activities (0.4) (0.1) (2.3) (0.3) Loss for the financial period (18.0) (3.2) (16.6) (2.2) 11

13 OPERATING AND FINANCIAL REVIEW AND PROSPECTS Three-Month Period Ended March 31, 2012, Compared to Three-Month Period Ended March 31, 2011 Turnover. Turnover increased by million, approximately 32.6%, to million in the three months ended March 31, 2012 as compared to million for the same period in The LVM businesses were acquired on August 1, 2011 and so the 2011 turnover does not include the LVM businesses. Turnover in 2012 for the LVM businesses was million, with eliminations of 4.8 million. On a like-for-like basis excluding the acquired entities, turnover increased by 12.6 million, approximately 2.2%, to million in the three months ended March 31, 2012 as compared to million for the same period in The majority of the increase has derived from the Enterprises business, with an improvement in the biofuels business due to increasing volumes. In addition the sulphur chemicals sales have increased, with good volumes across many market sectors; this business was affected in 2011 by the force majeure during the early part of In the ChlorVinyls business, SPVC turnover reduced as average PVC prices decreased, although volumes remained steady. Caustic soda sales increased, both in terms of prices and volumes. Cost of sales. Cost of sales increased by million, approximately 36.6%, to million in the three months ended March 31, 2012 as compared to million for the same period in The LVM businesses were acquired on August 1, 2011 and so the 2011 cost of sales does not include the LVM businesses. Cost of sales in 2012 for the LVM businesses was million, with eliminations of 4.8 million. On a like-for-like basis excluding the acquired entities, cost of sales increased by 20.5 million, approximately 4.3%, to million in the three months ended March 31, 2012 as compared to million for the same period in In the ChlorVinyls segment, the variable cost per tonne has increased, compared to the same period in The average ethylene monthly contract price during Quarter was 1,215/te compared to 1,147/te for the same period last year. The rise is due to higher crude oil prices. Gross profit. Gross profit increased by 6.9 million, approximately 8.7%, to 86.5 million in the three months ended March 31, 2012 as compared to 79.6 million for the same period in The LVM businesses were acquired on August 1, 2011 and so the 2011 gross profit does not include the LVM businesses. Gross profit in 2012 for the LVM businesses was 14.8 million. On a like-for-like basis excluding the acquired entities, gross profit decreased by 7.9 million, approximately 9.9%, to 71.7 million in the three months ended March 31, 2012 as compared to 79.6 million for the same period in Margins were squeezed as a result of not passing ethylene price increases onto customers. Excluding the acquired entities, gross profit as a percentage of sales has reduced to 12.5% from 14.2%. Distribution costs. Distribution costs increased by 8.9 million, approximately 17.1%, to 60.8 million in the three months ended March 31, 2012 as compared to 51.9 million for the same period in The 2011 distribution costs do not include the acquired LVM entities, which amounted to 10.2 million in On a like-for-like basis, distribution costs have decreased by 1.3 million, approximately 2.5%, to 50.6 million in the three months ended March 31, 2012 as compared to 51.9 million for the same period in Administrative expenses. Administrative expenses before exceptional items increased by 1.2 million, approximately 9.4%, to 14.0 million in the three months ended March 31, 2012 as compared to 12.8 million for the same period in The 2011 administrative expenses do not include the acquired LVM entities, which amounted to 5.5 million in In addition, the negative goodwill created on the acquisition of the LVM entities has been amortised in 2012 totalling 1.7 million. On a like-forlike basis, administrative expenses have decreased by 2.6 million, approximately 20.3%, to 10.2 million in the three months ended March 31, 2012 as compared to 12.8 million for the same period in The majority of the decrease relates to energy grid fee credits received in Germany of 2.3 million relating to a rebate on energy grid fees paid in previous years as a result of a change in German legislation. Exceptional administrative expenses. Exceptional administrative expenses were 0.9 million in the three months ended March 31, 2012 as compared to nil for the same period in As part of the project to implement pension change in the UK, certain employees exiting from the UK defined benefit schemes into a defined contribution scheme have received transition payments. In addition, the 12

14 OPERATING AND FINANCIAL REVIEW AND PROSPECTS exceptional item includes the costs of pensions and legal advisors relating to this project. Following the acquisition of the LVM entities, further costs have been incurred in 2012 relating to severance costs of 0.1 million and 0.1 million for integration costs. Operating profit. Operating profit decreased by 4.1 million, approximately 27.5%, to 10.8 million for the three months ended March 31, 2012 compared to 14.9 million for the same period in The 2011 operating profit does not include the acquired LVM entities, which amounted to a loss of 1.1 million in On a like-for-like basis, operating profit has decreased by 3.0 million, approximately 20.1%, to 11.9 million in the three months ended March 31, 2012 as compared to 14.9 million for the same period in Share of operating profit of joint ventures and associated undertakings. Share of operating profit of joint ventures and associated undertakings decreased by 2.4 million, to a loss of 0.1 million in the three months ended March 31, 2012 as compared to a profit of 2.3 million for the same period in The decrease is attributable to lower profits reported by most of our joint ventures. Net finance charges. Net finance charges decreased by 9.0 million, approximately 25.9%, to 25.8 million for the three months ended March 31, 2012 as compared to 34.8 million for the same period in The majority of the decrease is due to large exchange losses experienced in the first quarter of 2011, compared to exchange gains in the same period in This gain is offset by additional costs relating to the new % Senior Secured Notes that were issued in June Loss on ordinary activities before taxation. Loss on ordinary activities decreased by 3.3 million, to a loss of 14.3 million for the three months ended March 31, 2012 as compared to a loss of 17.6 million for the same period in Taxation on loss on ordinary activities. Taxation increased by 1.9 million to a charge of 2.3 million for the three months ended March 31, 2012 as compared to a charge of 0.4 million for the same period in Tax is payable on profits made by the German and Swedish entities. In general, no tax charges or credits arise on profits or losses made by the United Kingdom entities. Loss for the financial period. Loss for the financial period decreased by 1.4 million to a loss of 16.6 million for the three months ended March 31, 2012 as compared to a loss of 18.0 million for the same period in

15 Business segments KERLING PLC OPERATING AND FINANCIAL REVIEW AND PROSPECTS The Group reports under the following two business segments: ChlorVinyls and Enterprises. The following table provides an overview of the historical turnover and EBITDA before exceptionals of each of the business segments for the periods indicated: Three-Month Period Ended March 31, Turnover ChlorVinyls Enterprises Corporate / Eliminations (7.5) (8.3) EBITDA before exceptionals ChlorVinyls Enterprises ChlorVinyls Turnover. Turnover in the ChlorVinyls segment increased by million, or 33.9%, to million for the three months ended March 31, 2012, as compared to million for the same period in The LVM businesses were acquired on August 1, 2011 and so the 2011 turnover does not include the LVM businesses. Turnover in 2012 for the LVM businesses was million, with eliminations of 4.8 million. On a like-for-like basis excluding the acquired entities, turnover in the ChlorVinyls segment increased by 2.1 million, or 0.4%, to million for the three months ended March 31, 2012, as compared to million for the same period in Excluding the acquired entities, SPVC turnover reduced, although volumes remained steady. The average of the European PVC price (as reported by IHS Chemical) was 1,098/te for the first quarter of 2012, compared to 1,112/te for the first quarter of Excluding the acquired entities, caustic soda sales increased, both in terms of prices and volumes. Caustic demand improved and export volumes were stable. European caustic soda prices increased in Europe; however spot caustic soda prices declined, due to increased competition from the Middle East into the Mediterranean region. EBITDA before exceptionals. EBITDA before exceptionals in the ChlorVinyls segment increased by 1.9 million, or 7.1% to 28.7 million for the three months ended March 31, 2012 as compared to 26.8 million for the same period in The LVM businesses were acquired on August 1, 2011 and so the 2011 EBITDA does not include the LVM businesses. EBITDA in 2012 for the LVM businesses was 4.5 million. On a like-for-like basis excluding the acquired entities, EBITDA in the ChlorVinyls segment decreased by 2.6 million, or 9.7%, to 24.2 million for the three months ended March 31, 2012, as compared to 26.8 million for the same period in Margins were squeezed as a result of not passing ethylene price increases to customers. Average contract ethylene prices increased from 1,147/te in the first quarter of 2011 to 1,215/te in the first quarter of Enterprises Turnover. Turnover in the Enterprises business increased by 11.3 million, or 18.8%, to 71.5 million for the three months ended March 31, 2012, as compared to 60.2 million for the same period in The main improvement in turnover is derived from the biofuels business, as a result of improving volumes. The position in 2012 in the biofuels market is good with a sizable contract base. The sulphur chemicals business also improved with good volumes across many market sectors; this business was affected in 2011 by the force majeure in place during the early part of 2011 following the breakdown of the plant that meant restricted sales. Esters sales have reduced, due to severe weather conditions and a low activity in the automotive business. 14

16 OPERATING AND FINANCIAL REVIEW AND PROSPECTS EBITDA before exceptionals. EBITDA before exceptionals in the Enterprises segment increased by 1.4 million, or 17.1%, to 9.6 million for the three months ended March 31, 2012 as compared to 8.2 million for the same period in The increase is mainly seen in the sulphur chemicals business, whereby the force majeure that was in place during the early part of 2011 resulted in additional maintenance costs during Quarter and restricted sales. EBITDA has decreased in the salt business, resulting from a very mild winter. Stocks of cheaper, low quality sale intended for de-icing are leaking into the value added-market affecting margins. Margins are being squeezed in the esters business, with lower sales prices only partially offset by lower raw material costs. Financial condition and liquidity Our Senior Secured Credit Facilities consist of a Revolving Credit Facility of 95.0 million and Ancillary Facilities of 5.0 million. Of these facilities, nil was drawn-down as at March 31, 2012, although certain bank guarantees of the Group amounting to 19.7 million were provided for. The Group also has a Receivables Securitisation Facility in place of million. As at March 31, 2012, million has been drawn down under this facility. Management believes that cash generated from operations, together with borrowings under the revolving credit facility will be sufficient for the operating needs of the business and to meet debt service requirements as they become due in the foreseeable future. The future operating performance and ability to service or refinance debt, will however be subject to future economic conditions and to financial, business and other factors, many of which are beyond management's control. Net cash flow from operating activities was an inflow of 51.1 million for the three months ended March 31, 2012 (inflow of 1.4 million in the three months ended March 31, 2011). This inflow was due to the cash generated from operations, with working capital outflows of 8.2 million for the three months ended March 31, 2012 (working capital outflows of 35.4 million for the three months ended March 31, 2011). The working capital inflow in 2012 was driven by a decrease in stocks held as a result of higher sales compared to the previous quarter, and increase in creditors resulting from improved credit terms on some suppliers. This is offset by outflows on debtors, as debtors have increased in line with sales and some customers opting for longer payment terms instead of taking early payment discounts. Interest payments of 43.3 million were made in the three months ended March 31, 2012 ( 42.7 million in the three months ended March 31, 2011). The interest payments mainly relate to interest on the % Senior Secured Notes of 41.7 million paid on February 1, Taxation paid was 0.7 million in the three months ended March 31, 2012 ( 3.1 million payments in the three months ended March 31, 2011). This predominantly reflects payments made for the Swedish businesses. Capital expenditure during the three months ended March 31, 2012 was 13.4 million analysed by business segment as follows: ChlorVinyls 8.2 Enterprises 5.2 The main capital expenditures for ChlorVinyls in the period were overhauls in the UK and Norway. In addition, expenditure was incurred on the chloromethane plant, the fridge plant, work on cooling towers and boilers in the UK and the replacement of the legacy ERP systems in the UK and Germany. In Enterprises, the main capital expenditures relates to a crude brine purge project, gas saturators and work on ERP systems. Total net debt as at March 31, 2012 was million (December 31, 2011: million). The Group held net cash balances of million as at March 31, 2012 (December 31, 2011: 82.8 million)