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Exhibit 99.1

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Independent Auditorsʼ Report

ARKEMA S.A.

Registered office: 420, rue d’Estienne d’Orves

92700 Colombes

FRANCE

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Years ended December 31, 2020 and 2019

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To the Chairman and Chief Executive Officer of Arkema S.A.,

We have audited the accompanying combined carve-out financial statements of Mallarmé, which comprise the combined carve-out statements of financial position as of December 31, 2020 and 2019 and the related combined carve-out income statements, combined carve-out statements of comprehensive income, combined carve-out cash flow statements and combined carve-out statements of changes in the Owner’s net investment for the years then ended and the related notes to the combined carve-out financial statements (the “Combined Carve-Out Financial Statements”).

Managementʼs Responsibility for the Combined Carve-Out Financial Statements

Management of Arkema S.A. is responsible for the preparation and fair presentation of the Combined Carve-Out Financial Statements in conformity with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”); this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of combined carve-out financial statements that are free from material misstatements, whether due to fraud or error.

Auditorsʼ Responsibility

Our responsibility is to express an opinion on these combined carve-out financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the combined carve-out financial statements are free from material misstatement.

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An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the combined carve-out financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the combined carve-out financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the combined carve-out financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the combined carve-out financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the combined Carve-Out financial statements referred to above present fairly, in all material respects, the combined carve-out financial position of Mallarme as of December 31, 2020 and 2019 and its combined carve-out financial performance and its combined carve-out cash flows for the years then ended in conformity with IFRS as issued by the IASB.

Emphasis of Matter

We draw your attention to the matter set out in Note 2.2 "Basis of preparation of the combined carve-out financial statements" to the combined carve-out financial statements with respect to the principles and conventions applied to the preparation and presentation of the combined carve-out financial Statements. Our opinion is not modified with respect to this matter.

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Paris La Defense, February 24, 2021

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KPMG AuditERNST & YOUNG Audit

Departement de KPMG S.A.

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/s/ Bertrand Desbarrières/s/ Eric Dupré/s/ Ernst & Young Audit

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1. Combined carve-out financial statements as of and for the years ended December 31, 2020 and 2019

Unless otherwise stated, the combined carve-out financial statements (hereafter ‘combined carve-out financial statements’) are presented in millions of euros, rounded to the nearest hundred thousand euros. Rounding differences may therefore occur between the different statements presented and within tables.

Combined carve-out income statements

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Combined carve-out statements of comprehensive income

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Combined carve-out statements of financial position

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Combined carve-out cash flow statements

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Combined carve-out statements of changes in the Owner’s net investment

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2. Notes to the combined carve-out financial statements

2.1 Presentation of the Mallarmé business

The reporting entity (hereafter “Mallarmé” or the “Mallarmé business” or the “Mallarmé combined group”) is an integrated leader in methyl methacrylate (“MMA”) and polymethyl methacrylate (“PMMA”), also called “acrylic glass”, which develops innovative acrylic sheet and resins used in a wide range of industrial sectors. The Mallarmé business is part of the Arkema group (hereafter the “Owner”, “Arkema”, or the “Arkema group”).

The Mallarmé business mainly addresses end-markets such as building & design, visual communication, automotive & transportation and lighting & sanitary industries through different widely recognized professional brands: Altuglas®, Plexiglas® in the United States of America (“United States”), Oroglas® and Solarkote®. It operates in Europe, in the United States and Mexico (together “Americas”) and in South Korea with eight dedicated manufacturing sites and benefits from a strategic MMA supply capacity reservation contract.

The combined carve-out financial statements for the Mallarmé business have been prepared in conjunction with its contemplated disposal by Arkema. They represent the financial position and performance of the Mallarmé business and consider the proposed terms of the transaction. The combined carve-out financial statements portray the reporting entity consistently with the purpose for which they are prepared.

2.2 Basis of preparation of the combined carve-out financial statements

The combined carve-out financial statements for the financial years ended December 31, 2020 and 2019 have been prepared in accordance with the International Financial Reporting Standards (IFRS) as issued by the IASB as of December 31, 2020. They are prepared under the responsibility of the Chairman and CEO of Arkema and are approved by the Chairman and CEO of Arkema and the CFO of Arkema on February 24, 2021. They have, at the time of approval of the Mallarmé combined carve-out financial statements, a reasonable expectation that the combined group has adequate resources to continue in its operational existence for the foreseeable future. Thus, they continue to apply the going concern basis of accounting in preparing the Mallarmé combined carve-out financial statements.

2.2.1.    Scope of combination

The Mallarmé business does not form a separate legal group of legal entities in all years presented. The accompanying combined carve-out financial statements are prepared on a standalone basis and are derived (carved-out) from Arkema group’s consolidated financial statements and accounting records, which are prepared in accordance with International Financial Reporting Standards (IFRS), as adopted by the European Union. They include all legal entities fully dedicated to Mallarmé business and all Mallarmé businesses operated within Arkema group’s legal entities.

The list of legal entities whose individual financial statements and accounting records have been used for the preparation of the combined carve-out financial statements is the following:

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For the legal entities fully dedicated to the Mallarmé business, their individual financial statements consolidated by the Arkema group as of and for the years ended December 31, 2020 and 2019 have been included in the combined carve-out financial statement of the Mallarmé group for the same periods. These entities are presented in section 1 of the above list.

Some Mallarmé business activities are carried out by certain legal entities which also performed other Arkema activities. In order to retain only the Mallarmé business in the combined carve-out financial statements, these other activities have been extracted from the financial statements of the legal entities that are not included in the scope of combination. These entities are presented in section 2 of the above list.

The Mallarmé combined group shares distribution back-offices with the Arkema group in Europe, Americas and Asia. Revenue resulting from those shared distribution back-offices and related to the Mallarmé business is reflected in the combined carve-out financial statements for the presented years, as well as related costs, as the contractual customers risks are borne by the Mallarmé combined group.

The Mallarmé combined group operates a manufacturing site in South Korea which is part of Arkema Co. Ltd. Although this site is not included in the scope of the contemplated transaction, the potential buyer of the Mallarmé combined group plans to enter into tolling and distribution business agreements with the Owner in order to purchase all the PMMA products manufactured by this site. Regardless of the discussions related to those agreements, the Mallarmé business of Arkema Co. Ltd has been carved-out and reflected in the Mallarmé combined carve-out financial statements.

2.2.2.    Approach for the preparation of the combined carve-out financial statements

The accounting policies applied in the combined carve-out financial statements are, to the extent applicable, consistent with accounting policies applied in the Arkema consolidated financial statements, as described in Section 2.3.2 – Accounting policies. In particular, the Mallarmé combined group has decided to apply IFRS 1.D16(a) whereby it retains the carrying amounts of its assets and liabilities as they were reported into Arkema’s consolidated financial statements. IFRS 1 - First-time adoption of international financial reporting standards was applied for the first time as of January 1, 2018, as the Mallarmé combined group was considered a first-time adopter on that date.

The combined carve-out financial statements reflect all historical assets, liabilities, revenue, expenses, and cash flows that are reasonably attributable to the combined group. All of the allocations and estimates in the combined carve-out financial statements are based on assumptions that the management of Arkema believes are reasonable. However, they may not necessarily be indicative of the Mallarmé combined group’s financial position, results of operations, or cash flows had the combined group operated as a separate standalone group during the periods presented, nor are they necessarily indicative of future results. Furthermore, the combined carve-out financial statements do not reflect the financial impact of the separation of the Mallarmé combined group from Arkema, such as contractual agreements that were not effective in the presented periods.

The Mallarmé business have been included in the combined scope as follows:

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The main basis for the preparation of the combined carve-out financial statements are disclosed below:

a.   Intercompany balances and transactions

All significant intercompany balances and transactions taking place within the combined group have been eliminated. Other balances and transactions taking place with other Arkema entities have not been eliminated but are presented as balances and transactions with related parties. Refer to Note 21 – Related parties for more details.

b.    Fixed assets

b.1.    Trademarks

The Plexiglas® trademark in the United States and the Altuglas trademark both pertain to the Mallarmé business and are owned by Arkema France SA. Thus, they are reflected in the combined statement of financial position at their historical costs.

b.2.    Property, plant and equipment and other intangible assets

All assets fully dedicated to the Mallarmé business are included in the combined scope. For legal entities carrying out several businesses, some property, plant and equipment, as well as intangible assets are shared between activities. In this case, they have been allocated in accordance with their use. The underlying depreciations have been allocated accordingly. However, shared assets which will not be legally transferred to the Mallarmé combined group have not been included in the combined scope. They consist mainly in shared headquarters and R&D centers, both located in the United States. An allocation of expenses related to the use of these shared assets is recorded in the combined income statement.

b.3.    Right-of use assets

Right-of-use assets and lease liabilities related to the Mallarmé business have been identified and included in the combined group for the preparation of the combined carve-out financial statements based on a detailed review of the underlying lease contracts and reflect those leases that are expected to be transferred to the Mallarmé combined group.

c.    Financial assets and liabilities

c.1.    Financial debts and financial instruments

Management determined that no debt maintained at the Owner level, or in the legal entities carrying out several businesses, was specifically or entirely related to the combined group, nor did the combined group guarantee or pledge its assets as collateral for the Owner’s debt. As such, no Owner level debt has been allocated to the combined carve-out financial statements. However, the combined carve-out financial statements reflect loans and borrowings, and the related interest and financing costs, contracted by existing legal entities fully dedicated to the Mallarmé business with the Owner (considered as related parties’ transactions) and/or third parties.

There are no derivatives financial instruments allocated to Mallarmé combined carve-out financial statements.

c.2.    Cash

Amounts for cash are reflected in the combined carve-out financial statements only for legal entities fully dedicated to Mallarmé business. For carve-out business, cash are not reflected in the combined carve-out financial statements.

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For carve-out business, cash flows form part of additional funding from / (paid to) the Owner and are disclosed in the “Contribution from / (paid to) the Owner” line item of the combined statement cash flow statement. See Note i. for further details. These cash flows have been analyzed on a basis consistent with the methods and assumptions used to allocate assets and liabilities to each business. These flows derived from the Arkema historical consolidated financial statements. For instance, after the proper allocation of fixed assets to the carve-out business, the related cash flow statement implications associated with these balances (e.g., additions, disposals, and depreciation expense) have been allocated.

d.    Provisions for pensions and other long-term benefits

The employees of the Mallarmé combined group participate in defined benefit pension plans and other long-term benefit plans. For all carve out entities, expenses related to defined benefit pension plans and other long-term benefit plans have been allocated based on the list of employees working for the Mallarmé business for each presented year. These expenses are recognized in the combined income statement as follows:

In the U.S., Arkema Inc. provides the benefits to eligible employees and retirees of Mallarmé. These plans have been considered multiemployer plans and the costs of participating employees of Mallarmé in these plans are reflected in the combined carve-out financial statements, while the related assets and liabilities are retained by Arkema Inc.

e.    Other provisions, liabilities and contingent liabilities

Provisions, liabilities and contingent liabilities historically related to the Mallarmé business have been identified and allocated to the combined group on an item by item basis.

f.    Income statement items

f.1.    R&D costs

Certain R&D services carried out at Arkema France SA shared R&D centers and related to R&D projects dedicated to the Mallarmé business are reflected in the carve-out combined income statement. Allocated R&D costs are not material.

f.2.    Service and fees costs

Service and fees costs are disclosed as Selling and administrative expenses and include corporate expenses related to the Mallarmé business incurred by the Owner and the historical legal entities supporting the Mallarmé business. They are either recharged through management fees or directly incurred by legal entities.

The management fees reflected in the combined carve-out financial statements are based on the amounts historically charged to Mallarmé legal entities by other Arkema entities. Fees charged to entities operating Mallarmé activities and other activities are allocated between the Mallarmé and other activities based on the same allocation keys historically applied at the legal entity level. Historical allocation keys consist in a pro rata allocation of fixed costs incurred by the legal entity per the total fixed costs incurred by all the legal entities of the Arkema group.

The management fees may not reflect the actual cost that would have been incurred if the Mallarmé business operated as a stand-alone basis for the periods presented. The expenses primarily related to manufacturing support services (health, safety and environment department, operational excellence department, supply chain, etc.) and support functions (finance, legal counsel, etc.), excluding Arkema’s Executive Committee.

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Corporate costs consist in costs incurred by legal entities and not recharged to other entities. They mainly include manufacturing support services and support functions (IT, HR, finance, legal counsel, etc.). They have been allocated to the combined group based on internal management input, including the related share of Mallarmé business in the overall fixed costs incurred by the legal entity. The allocations of corporate costs may not be indicative of the actual expense that would have been incurred had the Mallarmé combined group operated on a standalone basis.

g.    Income taxes

For existing legal entities, the expense and the balances recognized in the combined carve-out financial statements correspond to the historical current and deferred income tax charges and balances.

For the legal entities operating Mallarmé activities and other activities, income tax has been reflected as follows:

The current tax balances resulting from the accounting entries described above have been adjusted through the contribution from / (paid to) the Owner’s net investment of the combined carve-out financial statements as the “Corporate income tax” payable only reflects the historical tax payable balance due to the tax authorities in relation to existing legal entities fully dedicated to the Mallarmé business. Refer to Note 4 – Income taxes for more detail.

Carried-forward tax losses are recognized as Deferred tax assets in the combined statement of financial position if they are deemed recoverable. Their recoverability is assessed based on estimates of taxable profits in the foreseeable future. When the recovery is no longer considered probable, the change in deferred tax balances is recognized in the income statement, except to the extent that it relates to items previously recognized outside the income statement.

h.    Share-based payments

Some employees of the combined group participate in various share-based payment plans of the Owner. They have been granted free shares and performance shares in the periods and the related share-based compensation expenses, as determined under IFRS 2 - Share based payment, have been allocated to the Mallarmé combined group based on the amount of expense attributable to each employee assigned to the Mallarmé business during the presented periods with a corresponding increase in the Owner’s net investment.

i.    Owner’s net investment

The Owner’s net investment includes the contribution from / (paid to) the owner, the dividend paid to the owner, the translation adjustments and the actuarial gains and losses on post-employment benefit obligations.

The contribution from / (paid to) the owner balance in the combined carve-out financial statements of the Mallarmé combined group constitutes Arkema’s contribution, as the Owner, to the combined group and represents the excess of total assets over total liabilities. Thus, it is disclosed as transactions with related parties. It includes the effects of carve-out allocations from the Owner and the movements of financing provided to the carve-out Mallarmé business by the Owner in the absence of contractual agreement.

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j.    Subsequent events

The combined carve-out financial statements are consistent with the estimates reflected in Arkema consolidated financial statements as of and for the years ended 2020 and 2019. The Mallarmé group has evaluated subsequent events and transactions for disclosure through February 24, 2021, the date the financial statements were available to be issued.

2.3 Accounting standards and policies

2.3.1.    Accounting standards

The following standards, amendments and interpretations - which had not been applied early by the Mallarmé combined group - had no significant impact on the combined carve-out financial statements.

The following standards, amendments and interpretations - which have not been applied early by the Mallarmé combined group – are not yet mandatory for accounting periods commencing on or after January 1, 2020.

2.3.2.    Accounting policies

The preparation of the combined carve-out financial statements of the Mallarmé combined group required Arkema’s management to make estimates and determine assumptions that can have an impact on the amounts recognized in assets and liabilities at the statement of financial position date and have a corresponding impact on the income statement.

Arkema’s management made its estimates and determined its assumptions based on past experience and taking into account different factors considered to be reasonable for the valuation of assets and liabilities. Use of different assumptions could have a material effect on these valuations. The main assumptions made by Arkema’s management in preparing the

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combined carve-out financial statements are those used for measuring the recoverable value of accounts receivable and inventory, property, plant and equipment and intangible assets, pension benefit obligations, deferred taxes and provisions. The disclosures concerning contingent assets and liabilities and off-balance sheet commitments also involve the use of estimates.

The combined carve-out financial statements are prepared according to the historical cost convention, except for certain financial assets and liabilities which are recognized at fair value.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. IFRS 13 – Fair value measurement utilizes a fair value hierarchy across three levels:

The functional operating currency of foreign companies in the scope of combination is their local currency, in which most of their transactions are denominated. Their balance sheets are translated into euros based on exchange rates at the end of the period; the statements of income and of cash flows are translated using the average exchange rates during the period, unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the date of transactions are used. Foreign exchange differences resulting from translation of the financial statements of these subsidiaries are recorded in “translation adjustments” in the Owner’s net investment in the combined carve-out financial statements. As a first-time adopter on January 1, 2018, the Mallarmé combined group has applied the exemption under IFRS 1.D13(a) to deem the cumulative foreign exchange differences to be zero on that date.

In application of IAS 21 - The effects of changes in foreign exchange rates, transactions denominated in foreign currencies are translated by the entity carrying out the transaction into its functional currency at the exchange rate applicable on the transaction date. Monetary balance sheet items are restated at the closing exchange rate at the balance sheet date. Gains and losses resulting from translation are recognized in current operating income, unless they result from unhedged financing, in which case they are included in the financial result.

Intangible assets principally include patents and technologies, trademarks, software and IT licenses and capitalized contracts. Intangible assets are recognized in the statement of financial position at their acquisition or production cost, less any accumulated amortization and impairment losses recognized.

Intangible assets other than trademarks with indefinite useful lives are amortized on a straight-line basis over 3 to 20 years depending on the pattern according to which the entity envisages using the future economic benefits related to the asset.

The main categories of intangible assets and the amortization periods applied by the group are as follows:

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Trademarks are recorded in the context of a business combination. As they have an indefinite useful life, they are subject to impairment tests as soon as any indicators of potential impairment are identified. Impairment tests are performed at least annually.

Software development expenses for the design, programming and test phases are capitalized. Training costs, expenses related to change management, data transfer and subsequent maintenance costs are expensed.

As no specific IFRS IC interpretations exist on the subject, the Mallarmé combined group applies the following methods based on IAS 38 –Intangible assets :

The gross value of items of property, plant and equipment other than rights of use corresponds to their acquisition or production cost in accordance with IAS 16 - Property, plant & equipment. Gross value is not subject to revaluation.

Equipment subsidies are deducted directly from the cost of the assets which they financed. In accordance with IAS 23, borrowing costs that are directly attributable to financing tangible assets that necessarily take a substantial period of time to get ready for their intended use or sale are eligible for capitalization as part of the cost of the assets for the portion of the cost incurred over the construction period.

Routine maintenance and repairs are charged to expense in the period in which they are incurred. Costs related to major maintenance turnarounds of industrial facilities which take place at intervals greater than 12 months are capitalized at the time they are incurred and depreciated over the period between two such turnarounds.

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In compliance with IFRS 16 – Leases, the right of use is recognized at an amount corresponding to the initial debt, adjusted for prepaid and accrued payments on the original lease, and any estimated repair costs. The right of use is amortized on a straight-line basis over the term of the lease.

Depreciation is calculated on a straight-line basis based on the acquisition or production cost. Assets are depreciated over their estimated useful lives by category of asset. The principal categories and useful lives are as follows:

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These useful lives are reviewed annually and modified if expectations change from the previous estimates. Such changes in accounting estimate are accounted for on a prospective basis.

The recoverable amount of property, plant and equipment and intangible assets is tested as soon as any indication of impairment is identified. A review to identify if any such indication exists is performed at each year end. This impairment test is performed at least once a year for the trademarks with indefinite useful lives.

An asset’s recoverable amount corresponds to the greater of its value in use and its fair value net of costs of disposal. The value in use is determined based on the discounted future cash flows that are expected to be generated by the assets in question. Trademarks amount to

€1.9M as of December 31, 2020 and 2019. They mainly relate to the Plexiglas® and Altuglas® whose rights have been acquired in 1951 and 1992, respectively.

Leases are recognised as follows:

The Mallarmé combined group opted to use the following practical expedients:

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These securities are recognized at fair value in accordance with IFRS 9 – Financial instruments.

These financial assets are recognized at amortized cost. The Mallarmé group recognizes a loss allowance for expected credit losses on investments in debt instruments that are measured at amortized costs. The amount of expected credit losses (ECL) is updated at year end to reflect changes in credit risk since initial recognition of the respective financial instrument.

Accounts receivable are initially recognized at the amount of consideration to which the group expects to be entitled in exchange for transferring promised goods or services. The Mallarmé group always recognizes lifetime ECL for accounts receivable. The expected credit losses on these financial assets are estimated using a provision matrix based on the Mallarmé group’s historical credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the current as well as the forecast direction of conditions at year end, including time value of money where appropriate.

Cash are liquid assets.

Non-current and current debt (other than derivatives) is recognized at amortized cost.

Inventories are valued in the combined carve-out financial statements at the lower of cost and net realizable value, in accordance with IAS 2 -

Inventories. Cost of inventories is generally determined using the weighted average cost (WAC) method.

Cost of manufactured products inventories includes raw material and direct labor costs, and an allocation of production overheads and depreciation based on normal production capacity. Start-up costs and general and administrative costs are excluded from the cost of manufactured products inventories.

The net realizable value is the sale price as estimated for the normal course of business, less estimated costs for completion and sale.

The recoverability is assessed based on the most reliable information on the date thereof and a valuation allowance is recorded to write down the inventories whose recovery is not considered probable.

In accordance with IAS 19 (Revised) - Employee benefits, payments made in the context of defined contribution plans are recognized in expenses of the period, and obligations in respect of defined benefit plans are valued using the actuarial projected unit credit method, when applicable.

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For defined benefit plans, the valuation of obligations under the projected unit credit method principally considers:

In respect of other long-term benefits, and in accordance with applicable laws and regulations, provisions are recognized using a simplified method. Thus, if an actuarial valuation using the projected unit cost method is required, actuarial gains and losses and all past service costs are recognized immediately in the provision, with a corresponding entry being recognized to the income statement.

The net expense related to pension benefit obligations and other employee benefit obligations is recognized in current operating income, except for:

A provision is recognized when:

Provisions for protection of the environment, which are established or reviewed when a business is closed down or upon a formal request from the authorities, are the subject of an internal review every two years. These provisions are recognized or updated by a dedicated team which calls in specialized external assistance as and when required by the matters identified.

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When it is expected that the Mallarmé combined group will obtain partial or total reimbursement of the cost that was provided against, the expected reimbursement is recognized in receivables if, and only if, the Mallarmé combined group is virtually certain of the receipt.

Long-term provisions, other than provisions for pensions and post-employment benefit obligations, are not inflation-indexed or discounted as the Mallarmé combined group considers that the impact of such adjustments would not be significant.

The current (less than one year) portion of provisions is maintained within the “Other provisions” caption.

j.1.Sales

Sales consist of sales of chemicals produced or marketed by the Mallarmé combined group. Sales are measured at the amount of the consideration to which the Mallarmé group expects to be entitled in exchange for transferring promised goods or service, net of returns, trade discounts and volume rebates. Sales are recognized when control of the goods is transferred to the customer. The transfer of control is determined mainly based on the terms and conditions of the sales contracts.

j.2.Operating expenses

Operating expenses correspond to the full cost of sales excluding research and development expenses and selling and administrative expenses which are reported on specific lines.

j.3.Research and development expenses

Research and development expenses include salaries, purchases, external services and amortization, and are recognized as incurred. Grants received are recognized as a deduction from research expenses.

j.4.Other income and expenses

Other income and expenses concern a limited number of non-current items of income and expense of a particularly material nature that the Mallarmé combined group presents separately in its income statement in order to facilitate understanding of its current operational performance. These items of income and expense notably include restructuring and environmental expenses which would hamper the interpretation of current operating income (including substantial modifications to employee benefit plans and the effect of onerous contracts).

k.1.Current taxes

Current taxes are the amount of income taxes that the Mallarmé combined group expects to pay in respect of taxable profits of combined companies in the period. They also include adjustments to current taxes in respect of prior periods.

k.2.Deferred taxes

The group uses the liability method whereby deferred taxes are recognized based upon the temporary differences between the financial statement and tax basis of assets and liabilities, as well as on tax loss carry forwards and other tax credits, in accordance with IAS 12 – Income taxes.

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Deferred tax assets and liabilities are valued at the tax rates that are expected to be applied in the year in which the asset will be realized or the liability settled, on the basis of tax rates and tax legislation that have been enacted or virtually enacted at the balance sheet date. The effect of any changes in tax rates is recognized in income for the period, unless it relates to items that were previously debited or credited through equity. Deferred tax assets and liabilities are not discounted.

Deferred tax assets are recognized to the extent that their recovery is probable. In order to assess the likelihood of recovery of such assets, account is notably taken of the profitability outlook at the end of each period, determined by the Mallarmé combined group and historical taxable profits or losses.

Deferred tax assets and liabilities are offset if a legally enforceable right to offset current tax assets and liabilities exists and if they relate to income taxes levied by the same tax authority.

Cash flows in foreign currencies are translated into euros using the average exchange rates of each period. Cash flow statements exclude foreign exchange differences arising from the translation into euros of assets and liabilities recognized in the statements of financial position denominated in foreign currencies at the end of the period (except for cash). In consequence, cash flows cannot be recalculated based on the amounts shown in the statement of financial position.

The combined cash flow statement has been prepared using the indirect method, whereby income or loss is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments, and items of income or expense associated with investing or financing cash flows.

For legal entities fully dedicated to the Mallarmé business, cash movements are pooled and transferred to a central treasury function outside of the combined group’s scope on a regular basis, resulting in the recognition of financing receivables (“cash advance”) or payables (“Other current debt”) in the combined carve-out financial statements and for which cash movements are presented in cash flows from (used in) investing activities or cash flows from (used in) financing activities depending on whether the amount is due from or due to the Owner. Refer to Intercompany balances and transactions paragraph in section 2.2.2, Note 8 – Other non-current assets and cash advance and Note 16 – Debt.

In application of IFRS 2 – Share-based payments, free shares and free performance shares (“free shares”) granted by Arkema to management and certain Mallarmé group employees are measured at their fair value at the date of grant, which generally corresponds to the date of the Arkema Board of Directors’ meeting that granted the free shares.

The fair value of rights under free share grants corresponds to the opening market price of the shares on the day of the Arkema Board of Directors’ meeting that decides on the grant, adjusted for dividends not received during the vesting period. The expense recognized also reflects the probability that the presence condition and performance criteria will be fulfilled. This expense is included in personnel expenses on a straight-line basis over the vesting period of the of the rights.

Note 1 - Information by operating segment and geographical area

Information by operating segment

As required by IFRS 8 – Operating segments, segment information for the Mallarmé group is presented in accordance with the business divisions identified in the internal reports that are regularly reviewed by the Senior executives and the Managing Director in order to allocate resources and assess financial performance.

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The Mallarmé combined group has operating segments (hereafter “divisions”): Europe, Americas and South Korea. Senior executives supervise these divisions. They report directly to the Managing Director of the Mallarmé group, the group’s chief operating decision-maker as defined by IFRS 8 and are in regular contact with her for the purpose of discussing their sector’s operating activity, financial results, forecasts and plans.

The content of the divisions is as follows:

Operating income and assets are allocated between business divisions. Inter-division sales are sales with other divisions. They take place at market prices.

The financial performance of 2020 was marked strongly by the effects of the Covid-19 pandemic. Sales for the year were significantly impacted by the substantial decline in global demand, linked to the scale of the governmental lockdown measures introduced in many countries, initially in the spring, then a lesser extent in the autumn during the second wave of the pandemic.

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Current operating income and adjusted EBITDA

To monitor and analyze the financial performance of the Mallarmé group and its activities, The Managing Director of the Mallarmé group uses certain financial indicators. These financial indicators, that are not defined by the IFRS, are defined as follows:

The following chart presents a reconciliation of these indicators and the aggregates from the combined carve-out financial statements under IFRS.

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Information on sales by geographical area

Sales, which correspond to sales with third parties to the Arkema group and sales with related parties to the Mallarmé group, are presented based on the geographical location of customers.

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Intangible assets and property, plant and equipment, net at year end are presented based on the location of the assets.

Note 2 - Other income and expenses

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In 2020, restructuring and environment expenses mainly relate to the gain on the disposal of the Bernouville land.

In 2019, restructuring and environment expenses mainly relate to the Bernouville site, see Note 15 – Liabilities and contingent liabilities.

Note 3 - Financial loss

Financial loss includes the cost of debt adjusted for capitalized financial expenses, and as regards provisions for pensions and employee benefits, the interest cost, the expected return on plan assets and the actuarial gains and losses related to changes in the discount rate on other long-term benefits.

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Note 4 - Income taxes

Income tax expense

The income tax expense is broken down as follows:

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Analysis by source of net deferred tax assets (liabilities)

The analysis by source of the net deferred tax assets (liabilities) is as follows, before offset of assets and liabilities at fiscal entity level:

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After offsetting assets and liabilities at fiscal entity level, deferred taxes are presented as follows in the balance sheet:

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Reconciliation between income tax expense and pre-tax income