Annual Report 2008 English [PDF, 2.69 MB] - Tessenderlo Group
Annual Report 2008 English [PDF, 2.69 MB] - Tessenderlo Group
Annual Report 2008 English [PDF, 2.69 MB] - Tessenderlo Group
You also want an ePaper? Increase the reach of your titles
YUMPU automatically turns print PDFs into web optimized ePapers that Google loves.
annual report <strong>2008</strong><br />
MAKING IT SUCCEED
MAKING IT WORK<br />
MAKING IT TOGETHER<br />
MAKING IT INSPIRING<br />
MAKING IT CONVINCING<br />
MAKING IT LASTING<br />
MAKING IT FIT
annual report <strong>2008</strong><br />
The group<br />
in a few figures<br />
The group in a few figures<br />
over 10 years (*)<br />
(millions EUR)<br />
Revenue<br />
Rebitda<br />
Rebit<br />
Non-recurring items<br />
Ebit<br />
Profit (+) / loss (-)<br />
Net cash flow<br />
Profit (+) / loss (-)/Revenue<br />
Rebit/Revenue<br />
Net cash flow/Revenue<br />
Capital Employed (CE)<br />
Working Capital<br />
Roce<br />
Capital expenditure (PP&E)<br />
Equity attributable to equity shareholders of the group<br />
Return on equity (ROE)<br />
Net financial liabilities<br />
Net financial liabilities/Equity (Gearing)<br />
Net financial liabilities/Rebitda<br />
Interest coverage<br />
Dividend paid<br />
Pay out ratio<br />
Headcount<br />
(*) A financial glossary is available on pg 182
<strong>Tessenderlo</strong> <strong>Group</strong><br />
IFRS<br />
<strong>2008</strong> 2007 2006 2005 2004 2003 2002 2001 2000 1999<br />
2,765.0 2,405.9 2,238.3 2,149.6 2,062.9 1,972.0 1,934.0 1,890.0 1,818.0 1,571.0<br />
344.7 261.6 188.4 191.8 220.8 204.0 259.0 230.0 251.0 213.0<br />
239.1 152.3 72.3 67.4 106.2 82.0 115.0 109.0 135.0 102.0<br />
- 26.9 35.1 - 76.9 - 8.2 - 25.0<br />
212.2 187.4 - 4.6 59.2 81.2<br />
140.4 128.7 - 24.3 35.1 53.6 43.0 71.0 65.0 90.0 70.0<br />
280.1 248.1 142.8 161.0 195.6 162.0 207.0 168.0 211.0 180.0<br />
5.1 5.3 -1.1 1.6 2.6 2.2 3.7 3.4 5.0 4.4<br />
8.6 6.3 3.2 3.1 5.1 4.2 5.9 5.8 7.4 6.5<br />
10.1 10.3 6.4 7.5 9.5 8.2 10.7 8.9 11.6 11.5<br />
1,282.7 1,118.9 1,181.3 1,258.0 1,166.0 1,136.0 1,141.0 1,259.0 1,114.0 1,013.0<br />
552.5 367.0 392.7 447.0 413.2 425.0 436.0 521.0 452.0 390.0<br />
18.6 13.6 6.1 5.4 9.1 7.2 10.1 8.7 12.1 10.1<br />
94.2 98.6 119.3 172.5 171.1 119.0 110.0 133.0 137.0 133.0<br />
900.0 800.2 709.5 774.3 755.5 756.0 758.0 836.0 796.0 729.0<br />
16.5 17.0 - 3.3 4.6 7.2 5.7 9.5 9.2 13.3 10.5<br />
294.6 243.8 411.0 428.9 351.4 339.0 303.0 341.0 242.0 209.0<br />
32.7 30.4 57.8 55.4 46.5 44.8 40.0 41.0 30.0 28.0<br />
0.9 0.9 2.2 2.2 1.6 1.7 1.2 1.5 1.0 1.0<br />
14.3 10.9 0.5 3.9 5.2 5.0 8.0 5.0 7.0 9.0<br />
36.9 35.0 33.3 32.7 32.7 30.7 30.6 30.5 30.3 26.8<br />
26.3 27.2 n/a 94.4 58.0 71.5 43.1 46.9 33.7 38.3<br />
8,237 8,121 8,124 8,123 8,181 8,223 7,934 7,849 7,087 6,847
<strong>Tessenderlo</strong> <strong>Group</strong><br />
Summary<br />
1 The group in a few figures<br />
Key figures p. 2<br />
Financial calendar p. 7<br />
2 Message from the chairman p. 10<br />
3 General presentation<br />
Company profile p. 14<br />
Strategy p. 16<br />
International presence p. 18<br />
Markets and Applications p. 22<br />
4 Activity <strong>Report</strong><br />
Highlights of <strong>2008</strong> p. 26<br />
Chemicals p. 28<br />
Inorganics p. 30<br />
PVC/Chlor-alkali p. 35<br />
Plastics Converting p. 40<br />
Profiles p. 42<br />
Plastic pipe systems p. 46<br />
Compounds p. 50<br />
Specialities p. 54<br />
Fine chemicals p. 56<br />
Gelatin p. 60<br />
Natural derivatives p. 64<br />
1<br />
5 Commitments<br />
Human Resources p. 70<br />
Environment, Quality, Safety and Risk Management p. 74<br />
Corporate Governance p. 81<br />
6 Information for shareholders p. 92<br />
7 Financial report<br />
<strong>Annual</strong> accounts <strong>2008</strong><br />
- Consolidated Financial <strong>Report</strong> p. 100<br />
- Statutory Financial <strong>Report</strong> p. 168<br />
8 General information<br />
Production units p. 172<br />
Addresses of the plants and sales offices p. 175<br />
Index p. 181<br />
Financial Glossary p. 182
annual report <strong>2008</strong><br />
<strong>Tessenderlo</strong> <strong>Group</strong> in a few charts<br />
Revenue (millions EUR)<br />
<br />
<br />
<br />
<br />
<br />
<br />
IFRS<br />
2,765<br />
<br />
1999<br />
2000<br />
2001<br />
2002<br />
2003<br />
2004<br />
2005<br />
2006<br />
2007<br />
<strong>2008</strong><br />
Rebitda (millions EUR)<br />
2<br />
<br />
345<br />
<br />
<br />
IFRS<br />
<br />
<br />
<br />
<br />
<br />
1999<br />
2000<br />
2001<br />
2002<br />
2003<br />
2004<br />
2005<br />
2006<br />
2007<br />
<strong>2008</strong><br />
Profit (+) / loss (-) (millions EUR)<br />
<br />
140.5<br />
<br />
<br />
<br />
IFRS<br />
<br />
<br />
<br />
1999<br />
2000<br />
2001<br />
2002<br />
2003<br />
2004<br />
2005<br />
2006<br />
2007<br />
<strong>2008</strong>
<strong>Tessenderlo</strong> <strong>Group</strong><br />
ROCE (%) Net financial liabilities/Equity (%)<br />
<br />
18.6<br />
<br />
IFRS<br />
<br />
<br />
IFRS<br />
<br />
<br />
<br />
33<br />
<br />
<br />
<br />
<br />
1999<br />
2000<br />
2001<br />
2002<br />
2003<br />
2004<br />
2005<br />
2006<br />
2007<br />
<strong>2008</strong><br />
<br />
1999<br />
2000<br />
2001<br />
2002<br />
2003<br />
2004<br />
2005<br />
2006<br />
2007<br />
<strong>2008</strong><br />
Working capital / Revenue (%) Return on equity (%)<br />
3<br />
<br />
<br />
<br />
IFRS<br />
20.0<br />
<br />
<br />
16.5<br />
<br />
<br />
IFRS<br />
<br />
<br />
<br />
<br />
<br />
1999<br />
2000<br />
2001<br />
2002<br />
2003<br />
2004<br />
2005<br />
2006<br />
2007<br />
<strong>2008</strong><br />
<br />
1999<br />
2000<br />
2001<br />
2002<br />
2003<br />
2004<br />
2005<br />
2006<br />
2007<br />
<strong>2008</strong><br />
Equity attributable to equity<br />
shareholders of the group<br />
(millions EUR)<br />
Capital expenditure (PP&E)<br />
(millions EUR)<br />
<br />
IFRS<br />
900<br />
<br />
IFRS<br />
<br />
<br />
<br />
<br />
<br />
94<br />
<br />
<br />
<br />
1999<br />
2000<br />
2001<br />
2002<br />
2003<br />
2004<br />
2005<br />
2006<br />
2007<br />
<strong>2008</strong><br />
<br />
1999<br />
2000<br />
2001<br />
2002<br />
2003<br />
2004<br />
2005<br />
2006<br />
2007<br />
<strong>2008</strong>
annual report <strong>2008</strong><br />
Synthetic consolidated balance sheet<br />
IFRS<br />
(millions EUR) <strong>2008</strong> % 2007 %<br />
Property, plant and equipment 652.0 677.8<br />
Goodwill 38.3 37.2<br />
Intangible assets 39.9 36.9<br />
Other non-current assets 79.9 71.9<br />
Non-current assets 810.1 45 823.8 49<br />
Inventories 473.7 339.9<br />
Trade and other receivables 474.9 425.9<br />
Cash and cash equivalents 53.5 93.6<br />
Current assets 1,002.1 55 859.4 51<br />
Non-current assets held for sale 0.7 0.0<br />
Assets 1,812.9 100 1,683.2 100<br />
4<br />
Issued capital and share premium 181.3 179.0<br />
Reserves 313.4 238.6<br />
Retained earnings 405.3 382.6<br />
Minority interests 2.0 2.0<br />
Equity 902.0 50 802.2 48<br />
Provisions and deferred taxes 171.9 146.7<br />
Financial liabilities<br />
- Non-current 96.7 122.6<br />
- Current 251.4 214.8<br />
Other liabilities 390.9 396.9<br />
Liabilities 910.9 50 881.0 52<br />
Equity and Liabilities 1,812.9 100 1,683.2 100<br />
Synthetic consolidated P&L account<br />
IFRS<br />
(millions EUR) <strong>2008</strong> 2007<br />
Revenue 2,765.0 2,405.9<br />
Cost of sales -2,165.9 -1,873.6<br />
Gross profit 599.1 532.3<br />
Distribution expenses -144.6 -165.2<br />
Sales and marketing expenses -62.7 -77.4<br />
Administrative expenses -126.1 -125.2<br />
Other operating income/expenses -26.6 -12.2<br />
REBIT 239.1 152.3<br />
Non-recurring items -26.9 35.1<br />
EBIT 212.2 187.4<br />
Finance costs -21.6 -17.6<br />
Share of result of investements accounted for using the equity method 11.5 6.0<br />
Profit (+) / loss (-) before tax 202.1 175.8<br />
Income tax expense -61.7 -47.1<br />
Profit (+) / loss (-) for the period 140.4 128.7<br />
Attributable to :<br />
Equity holders of the group 140.5 128.9<br />
Minority interests -0.1 -0.2
<strong>Tessenderlo</strong> <strong>Group</strong><br />
Distribution of the revenue <strong>2008</strong><br />
Per business group<br />
Per destination<br />
Specialities<br />
21 %<br />
Chemicals<br />
51 %<br />
Rest of the world<br />
12 %<br />
USA<br />
11 %<br />
Europe<br />
77 %<br />
Plastics Converting<br />
28 %<br />
5<br />
Per country of production<br />
Per consumption market<br />
The Netherlands<br />
6 %<br />
Italy<br />
4 % Other<br />
5 %<br />
Belgium<br />
45 %<br />
Health & Hygiene<br />
14 %<br />
Household<br />
5 %<br />
Building Industry<br />
& Public Works<br />
32 %<br />
USA<br />
10 %<br />
Great Britain<br />
10 %<br />
France<br />
20 %<br />
Industry<br />
20 %<br />
Fertilisers &<br />
Animal Nutrition<br />
29 %
annual report <strong>2008</strong><br />
Key figures per business group<br />
Rebit<br />
Specialities<br />
13.6 %<br />
Plastics Converting<br />
8.8 %<br />
Chemicals<br />
77.6 %<br />
Capital expenditures (PP&E)<br />
Headcount<br />
6<br />
Specialities<br />
33 %<br />
Chemicals<br />
33 %<br />
Specialities<br />
33 %<br />
Chemicals<br />
24 %<br />
Plastics Converting<br />
34 %<br />
Plastics Converting<br />
43 %<br />
Key figures per share<br />
EUR <strong>2008</strong> 2007<br />
Basic earnings per share<br />
(Basic EPS)<br />
5.08 4.69<br />
Net cash flow per share 10.11 8.98<br />
Shareholders’ equity per<br />
share<br />
32.55 29.04<br />
Net dividend per normal<br />
share<br />
1.00 0.95<br />
Net dividend per normal<br />
share with VVPR strips<br />
1.13 1.08<br />
Number of shares 27,713,288 27,626,444<br />
<br />
<br />
<br />
<br />
<br />
<br />
Evolution of the net dividend<br />
per share (EUR)<br />
1999<br />
2000<br />
2001<br />
2002<br />
2003<br />
IFRS<br />
2004<br />
2005<br />
2006<br />
2007<br />
1.00<br />
<strong>2008</strong>
<strong>Tessenderlo</strong> <strong>Group</strong><br />
Financial calendar<br />
Results<br />
<strong>Tessenderlo</strong> <strong>Group</strong> publishes quarterly releases of its consolidated results through the news<br />
media. The dates of the releases will be as follows:<br />
• 31 December <strong>2008</strong> results March 12 th , 2009<br />
• 1 st quarter 2009 results April 23 th , 2009<br />
• 1 st half-year 2009 results August 27 th , 2009<br />
• 3 rd quarter 2009 results November 5 th , 2009<br />
General Meeting<br />
• Approval of the financial statements <strong>2008</strong> June 2 nd , 2009<br />
• Approval of the financial statements 2009 June 1 st , 2010<br />
Dividend<br />
• Payment dividend <strong>2008</strong> June 9 th , 2009<br />
(coupon n° 72)<br />
7<br />
News releases: see our website www.tessenderlogroup.com under ‘News & Media’ - ‘News’.<br />
Contacts<br />
Shareholders’ service<br />
Jo VERSPECHT<br />
Tel.: +32 2 639 18 31 - e-mail: jo.verspecht@tessenderlo.com<br />
Investor relations<br />
Christian VREBOSCH (CFO)<br />
Tel.: +32 2 639 18 87 - e-mail: christian.vrebosch@tessenderlo.com<br />
Media relations<br />
Geert DUSAR<br />
Tel: +32 2 639 17 75 - e-mail: geert.dusar@tessenderlo.com
MAKING<br />
IT<br />
TOGETHER
To find out what our customers exactly need, we visit them.<br />
Together we find the answers to their specific questions.<br />
Not every type of feed phosphate is suitable for every<br />
breed. To determine exactly which products the farmers need,<br />
our sales representatives provide guidance for cattle feed<br />
manufacturers and cattle farmers.<br />
9
annual report <strong>2008</strong><br />
Message from the<br />
chairman<br />
Gérard Marchand<br />
Chairman<br />
10<br />
In <strong>2008</strong>, the group encountered variations<br />
in the prices of its primary raw materials<br />
on a scale that had never seen before. The<br />
spectacular increases in the first half of the<br />
year reached historical records during the<br />
summer. After that prices declined until<br />
the end of the year, to return by the start of<br />
2009 to more normal price levels.<br />
This exceptional context was constantly<br />
taken into account in the management<br />
decisions of the group, which was therefore<br />
able not only to bear these increases, but<br />
even to raise its margins.<br />
The group thus recorded excellent results<br />
for <strong>2008</strong>. Its revenue increased by around<br />
15 % and its recurring operating result by<br />
57 %.<br />
In practice, the improvement came entirely<br />
from the Chemicals business, and more<br />
particularly from products intended for<br />
the agricultural sector. Demand in this<br />
sector has remained very high, borne by<br />
the growth in the food needs of the world<br />
population.<br />
The group, one-third of whose activity is<br />
focused on these markets, historically in<br />
Europe but now also in the United States,<br />
therefore benefited from this excellent<br />
economic climate.<br />
The PVC & Alkalis activities recorded less<br />
impressive performances than those for<br />
2007, even if the sustained demand for<br />
alkali products significantly offset the<br />
impact of the decline in PVC.
<strong>Tessenderlo</strong> <strong>Group</strong><br />
The Specialities are also progressing. The<br />
good performance of gelatin, animal byproducts<br />
and the continued recovery of the<br />
organic chlorine derivatives compensated<br />
for a weak year in pharmaceutical<br />
intermediates.<br />
At the end of the year, Plastics Converting<br />
notably suffered from the difficulties<br />
of the construction sector. All building<br />
professions are affected, but it is once<br />
again that of profiles which has been<br />
hardest hit.<br />
harder-to-find credit with a balance sheet<br />
which is relatively unencumbered by debts.<br />
We are also continuing the cost-cutting<br />
efforts. The creation in the spring <strong>2008</strong> of<br />
a shared service centre for the accounting<br />
operations on the European level is one<br />
example of this. Naturally these efforts will<br />
continue in 2009.<br />
We are recording a net profit of<br />
140.5 million EUR, which is a new historical<br />
result for the group.<br />
11<br />
The events of <strong>2008</strong> and the economic crisis<br />
are not causing us to modify our strategy,<br />
which consists of having ultimately less<br />
than 30 % of commodities in our activities<br />
portfolio and retaining only the businesses<br />
where one can obtain at least a 12 % return<br />
on capital employed.<br />
The acquisitions of the year in the sector of<br />
plastics converting and in the specialities<br />
of our American subsidiary <strong>Tessenderlo</strong><br />
Kerley Inc. are in conformity with this line.<br />
These good results make it possible for<br />
your Board of Directors to propose to the<br />
General Meeting to raise the dividend to<br />
1.00 EUR net per ordinary share, i.e. an<br />
increase of slightly more than 5 %.<br />
On behalf of the Board, I wish to thank all<br />
employees and managerial staff whose<br />
excellent work has enabled us to present<br />
these results.<br />
We are poised to seize the new growth<br />
opportunities which are certain to present<br />
themselves. However, the economic crisis<br />
has led us to be more selective, so as to get<br />
through this period of more expensive and<br />
Gérard Marchand<br />
Chairman
MAKING<br />
IT<br />
FIT
The products and services of <strong>Tessenderlo</strong> <strong>Group</strong> match the<br />
requirements of users perfectly. Whenever possible, we offer<br />
our customers a total solution. Like at Dyka Plastics.<br />
Our specialists use a plan to calculate which plastic pipes and<br />
fittings are necessary for water, gas and electricity. The next<br />
morning, everything is ready to be picked up at a Dyka sales<br />
point of choice, as close to the customer as possible.<br />
13
annual report <strong>2008</strong><br />
Company profile<br />
14<br />
Chemistry between<br />
three business groups<br />
<strong>Tessenderlo</strong> <strong>Group</strong> is a diversified,<br />
international group active in many areas of<br />
the chemical industry, plastics converting,<br />
gelatin, pharma and natural derivatives.<br />
The group is characterised by an extensive<br />
integration of its activities.<br />
<strong>Tessenderlo</strong> <strong>Group</strong>’s activities are divided<br />
into three business groups:<br />
• Chemicals with two business units;<br />
inorganics and pvc/chlor-alkali;<br />
• Plastics converting and its business<br />
units profiles, plastic pipe systems and<br />
compounds;<br />
• Specialities with its business units<br />
fine chemicals, gelatin and natural<br />
derivatives.<br />
To emphasise the cohesion of some of the<br />
group’s activities and to link them even<br />
better to the strategy of the group, the<br />
business groups will be reshuffeld as<br />
from 1 January 2009:<br />
• Chemicals will, in addition to sulfates,<br />
phosphates and PVC/chlor-alkali, include<br />
the organic chlorine derivatives coming<br />
from fine chemicals. <strong>Tessenderlo</strong> Kerley<br />
moves to the Specialities business group.<br />
• Plastics converting remains the same;<br />
• Specialities adds <strong>Tessenderlo</strong> Kerley to<br />
its portfolio. It also includes pharma,<br />
gelatin and products of natural origin.<br />
Present in everyday<br />
life<br />
<strong>Tessenderlo</strong> <strong>Group</strong>’s products form an<br />
integral part of our everyday lives and<br />
are used in various applications, from<br />
high-quality fertilisers and animal feed to<br />
medicine and car dashboards. A little bit<br />
of <strong>Tessenderlo</strong> <strong>Group</strong> can also be found<br />
in sweets, perfumes, batteries, blood
<strong>Tessenderlo</strong> <strong>Group</strong><br />
bags, water treatment products, washing<br />
powders and window profiles – just to<br />
mention a few examples.<br />
This explains the group’s motto: ‘Bringing<br />
chemistry to life’.<br />
A few figures<br />
• A worldwide personnel count of<br />
about 8,200.<br />
• More than 100 establishments in over<br />
20 countries.<br />
• Consolidated revenues of 2.8 billion EUR<br />
in <strong>2008</strong>.<br />
• A net dividend per share set at 1.00 EUR<br />
in <strong>2008</strong> .<br />
<strong>Tessenderlo</strong> group as a<br />
market leader<br />
<strong>Tessenderlo</strong> <strong>Group</strong> occupies a position of<br />
leadership in a number of diverse markets.<br />
At the world level, the group is:<br />
• The largest producer of liquid<br />
sulphur-containing fertilisers, benzyl<br />
acetate, benzyl chloride, and alphahexylcinnamaldehyde;<br />
• The second largest supplier of<br />
phosphates for animal feed, potassium<br />
sulphate for specialised fertilisers and of<br />
triacetin;<br />
• The third largest manufacturer of highquality<br />
gelatins;<br />
• One of the leading suppliers of<br />
compounds for dashboard skins.<br />
At the European level the group is:<br />
• The number one producer of caustic<br />
potash;<br />
• The second largest supplier of ferric<br />
chloride<br />
• The fourth largest manufacturer of PVC<br />
compounds;<br />
• The fifth largest supplier of PVC.<br />
15
annual report <strong>2008</strong><br />
<strong>Tessenderlo</strong> <strong>Group</strong>’s<br />
strategy<br />
16<br />
At the general meeting of 5 June 2007<br />
<strong>Tessenderlo</strong> <strong>Group</strong>’s strategy for the<br />
coming years was modelled.<br />
This strategy can be summarised as<br />
follows:<br />
• Leading market positions in niche<br />
markets.<br />
• Strengthening and further<br />
diversification of a balanced and<br />
integrated activity portfolio.<br />
• Increase of the specialities share to<br />
70 % of the revenue by 2012 by:<br />
- further developing the Plastics<br />
Converting activities in Europe<br />
- strengthening the gelatin activity’s<br />
top-three position in the world<br />
- further developing the activities<br />
that combine customer service and<br />
by-product valorisation.<br />
• Continuously increase profitability.<br />
• A return on capital employed<br />
(ROCE) of minimum 12 % for all<br />
businesses by 2012.<br />
• Dividend policy aimed at stable<br />
growth.
<strong>Tessenderlo</strong> <strong>Group</strong><br />
<strong>Tessenderlo</strong> <strong>Group</strong>’s<br />
assets<br />
• World leadership and European<br />
leadership for the vast majority of<br />
its niche markets’ products;<br />
• A large and diversified product<br />
range;<br />
• The industrial integration of the<br />
various production processes,<br />
focusing on valorisation of byproducts,<br />
which in turn become raw<br />
materials for new products;<br />
• The orientation to products with a<br />
high added value and a non-cyclical<br />
market;<br />
• A sound financial situation;<br />
• Close to end-user markets and a<br />
strong development of distribution<br />
networks in Plastics Converting;<br />
• <strong>Annual</strong> investments in the amount<br />
of 100 million EUR average (excl.<br />
acquisitions)<br />
• The devotion of experienced and<br />
highly qualified employees;<br />
• Permanent focus on cost control in<br />
order to maximise profitability<br />
17
annual report <strong>2008</strong><br />
International presence<br />
59 Production units<br />
1 Canada<br />
11 United States of America<br />
1 Argentina<br />
4 Great Britain<br />
7 Belgium<br />
5 Netherlands<br />
2 Poland<br />
1 Germany<br />
22 France<br />
3 Italy<br />
18<br />
2 China<br />
Sales offices &<br />
distribution centres<br />
Belgium<br />
Chile<br />
China<br />
Czech Republic<br />
France<br />
Germany<br />
Great Britain<br />
Hong Kong<br />
Hungary<br />
Italy<br />
Lebanon<br />
Mexico<br />
Netherlands<br />
Peru<br />
Poland<br />
Romania<br />
Slovakia<br />
Spain<br />
Switzerland<br />
Turkey<br />
Canada<br />
1<br />
United States of America<br />
11<br />
Argentina<br />
1
<strong>Tessenderlo</strong> <strong>Group</strong><br />
4 22 7 5 1 2 3<br />
Great Britain France Belgium Netherlands Germany Poland Italy<br />
19<br />
China<br />
2
annual report <strong>2008</strong><br />
<strong>Tessenderlo</strong> <strong>Group</strong><br />
<strong>Tessenderlo</strong> Chemie NV<br />
WYMAR<br />
INTL.<br />
(BE)<br />
TESSENDERLO NL<br />
HOLDING BV<br />
(NL)<br />
TESSENDERLO<br />
HOLDING UK<br />
(GB)<br />
TEFIPAR<br />
(FR)<br />
DYNAPLAST<br />
EXTRUCO<br />
82 % (CA)<br />
PB LEINER<br />
ARGENTINA<br />
(AR)<br />
PB GELATINS<br />
UK (GB)<br />
SAV (FR)<br />
SAPLAST (FR)<br />
TC<br />
ROTTERDAM<br />
(NL)<br />
TESSENDERLO<br />
FINE CHEMICALS<br />
(GB)<br />
PC LOOS<br />
(FR)<br />
CALAIRE<br />
CHIMIE (FR)<br />
20<br />
DYKA<br />
BV<br />
(NL)<br />
John<br />
Davidson<br />
Pipes<br />
(GB)<br />
TESSENDERLO<br />
FINANCE NV<br />
(BE)<br />
EUROCELL<br />
(GB)<br />
PLASTIVAL<br />
(FR)<br />
SOTRA-<br />
SEPEREF (FR)<br />
CHEMILYL<br />
(FR)<br />
AKIOLIS<br />
GROUP (FR)<br />
LVM<br />
LI<strong>MB</strong>URG<br />
(NL)<br />
THERMOPLASTIQUES<br />
COUSIN-TESSIER<br />
(FR)<br />
FERSO<br />
50 % (FR)<br />
TESSENDERLO<br />
CHEMIE<br />
MAASTRICHT (NL)<br />
PROFEX<br />
(FR)<br />
TESSENDERLO<br />
SERVICES (FR)<br />
PB GELATINS<br />
GmbH (DE)<br />
PB GELATINS<br />
PINGYANG Co Ltd<br />
(CN)<br />
TESSENDERLO<br />
TRADING<br />
SHANGHAI (CN)<br />
NYLOPLAST<br />
EUROPE<br />
(NL)
<strong>Tessenderlo</strong> <strong>Group</strong><br />
TESSENDERLO<br />
PARTICIP (IT)<br />
TESSENDERLO<br />
USA (US)<br />
LVM<br />
(BE)<br />
TESSENDERLO<br />
ITALIA (IT)<br />
PB LEINER<br />
USA (US)<br />
IMMO<br />
WATRO<br />
(BE)<br />
FARCHEMIA<br />
(IT)<br />
CHELSEA B.P.<br />
(US)<br />
TESSENDERLO<br />
KERLEY (US)<br />
JUPITER<br />
SULPHUR<br />
50 % (US)<br />
ALKEMIN<br />
49 % (MX)<br />
TAILE (CN)<br />
TCT<br />
POLSKA<br />
(PL)<br />
21<br />
H Holding<br />
C<br />
K<br />
S<br />
D<br />
Chemicals<br />
Plastics converting<br />
Specialities<br />
Service company<br />
MPR<br />
SERVICES<br />
(US)<br />
TESSENDERLO<br />
AGROCHEM<br />
(TR)<br />
DYKA<br />
PLASTICS<br />
(BE)<br />
DYKA<br />
POLSKA<br />
(PL)<br />
ZEOLINE<br />
50 % (BE)<br />
TERELUX<br />
(LU)<br />
TCI<br />
(BE)<br />
T-POWER<br />
33 %<br />
(BE)
annual report <strong>2008</strong><br />
Markets and applications<br />
<strong>Tessenderlo</strong> <strong>Group</strong>: Bringing Chemistry to Life<br />
CONSTRUCTION INDUSTRY<br />
PVC and Compounds C P plastic pipe systems, door and window profiles, facade<br />
cladding, panelling, cable sleeves and cable insulation,<br />
floor covering, conservatories<br />
Zeolites C double-glazing<br />
AGRICULTURE<br />
22<br />
Ammonium, calcium and<br />
potassium thiosulphate<br />
C<br />
Animal fats S animal nutrition<br />
liquid fertilisers for large-scale cultivation<br />
Caustic potash C horticulture, fertilisers for irrigation systems<br />
Cereal based by-products S animal nutrition<br />
Crop protection products C plant health of speciality crops<br />
Dehydrated proteins S fertilisers, composting<br />
Feed phosphates C animal feed ingredients<br />
Glycine and derivatives S animal feed, agrochemicals<br />
Organic chlorine derivatives S advanced intermediates for agrochemicals<br />
Potassium sulphate C specialised fertilisers, which are particularly suited<br />
for vegetable, flower, fruit and tobacco growing and<br />
fertirrigation<br />
Sulphuric acid C fertilisers, crop protection products<br />
Triazone: slow release nitrogen<br />
fertilisers<br />
C<br />
speciality and broadacre crops<br />
INDUSTRY<br />
Acetates C antifreeze products, for e.g. runways<br />
Animal fats S biodiesel, lipochemistry, green energy (combustion)<br />
Benzyl alcohol S paints<br />
Caustic potash C batteries, oildrilling, biodiesel<br />
Caustic soda C aluminium, rayon, paper, pulp<br />
Dehydrated proteins S green energy<br />
Electrolysis products C photography, leather tanning, water treatment, mining
<strong>Tessenderlo</strong> <strong>Group</strong><br />
Ferric chloride C water treatment<br />
Gelatin S photographic paper and -film, paintballs, electro-plating<br />
Mono-ammonium phosphate C fire extinguisher, fire retardant<br />
Organic chlorine derivatives S paint, photography, coatings<br />
Potassium sulphate C plasterboards<br />
PVC and Compounds C P automotive industry: dashboards skins, airbag covers,<br />
seals, interior trim<br />
other: road safety cones, furniture, shoe soles,<br />
tarpaulins, cables, fencing systems,<br />
Sulphuric acid C batteries, car windows, billiard balls<br />
HEALTH AND HYGIENE<br />
Active pharmaceutical ingredients S medicines<br />
Caustic soda C detergents, soaps<br />
Chlorine C water disinfection, disinfectants, PVC<br />
Gelatin S capsules for e.g. drugs, skin cream, treatment of wounds<br />
Glycine S pharmaceutical products eg. buffer in isotonic solutions<br />
Organic chlorine derivatives S various pharmaceutical products for people, plants and<br />
animals, perfumes, shampoo, UV stabilisers<br />
Pharmaceutical intermediates S a wide range of medicines<br />
PVC and Compounds C P blood bags, infusion bags and tubes, catheters, gloves,<br />
bottles for shower and bath foam, toothbrush grip<br />
Sodium hypochlorite C sanitiser, water treatment, bleaching<br />
23<br />
HOUSEHOLD<br />
Animal fats S pet food<br />
Electrolysis products C detergents<br />
Dehydrated proteins S pet food<br />
Feed phosphates C pet food<br />
Gelatin S foodstuffs such as dairy and ‘light’ products,<br />
confectionery, energy bars and drinks<br />
Glycine S foodstuffs, aspics<br />
PVC and Compounds C P packaging films, tablecloths, shower curtains, credit<br />
cards, furniture, inflatable articles such as balls,<br />
swimming pools, boats, seals for refrigerators, tool<br />
handles.<br />
Caustic soda C detergents<br />
Zeolites C washing powders<br />
C Chemicals P Plastics Converting S Specialities
MAKING<br />
IT<br />
INSPIRING
<strong>Tessenderlo</strong> <strong>Group</strong> looks ahead. Every day we work on<br />
products that make life more comfortable and benefit the<br />
environment. These range from recyclable plastics for cars<br />
to low-calorie gelatins and environmental-friendly fertilisers.<br />
This is precisely why we want to inspire young people<br />
too.<br />
25
annual report <strong>2008</strong><br />
Highlights of <strong>2008</strong><br />
26<br />
March<br />
Eurocell, a UK subsidiary company<br />
of <strong>Tessenderlo</strong> <strong>Group</strong> and British<br />
market leader for the production and<br />
distribution of pvc profiles, acquires<br />
the distributor Peninsula Plastics and<br />
reinforces its position in the North West<br />
of England.<br />
April<br />
Eurocell acquires the assets of Sprint<br />
1233, formerly Plastmo Profiles Ltd<br />
(Northampton, UK). This acquisition<br />
will secure Eurocell’s position as the<br />
number one PVC-window profiles<br />
extruder in the UK, as well as<br />
complementing its existing product<br />
range<br />
<strong>Tessenderlo</strong> <strong>Group</strong> sets up a Shared<br />
Service Centre (SSC) in Leuven<br />
(Belgium) to centralise its accounting<br />
department at the European level. The<br />
aim of the SSC is to further optimise all<br />
its accounting processes and systems<br />
and standardise and harmonise them.<br />
The expansion of SSC will take place<br />
gradually between <strong>2008</strong> and 2011.<br />
September<br />
<strong>Tessenderlo</strong> <strong>Group</strong> announces<br />
changes in management, effective as<br />
from 1 January 2009. Frank Coenen<br />
is appointed Chief Operating Officer<br />
(COO) of <strong>Tessenderlo</strong> <strong>Group</strong>. He will<br />
lead the business groups Chemicals,<br />
Plastics Converting and Specialities,<br />
that respectively will be headed by<br />
Pol Deturck, Albert Vasseur and Jan<br />
Vandendriessche<br />
October<br />
<strong>Tessenderlo</strong> <strong>Group</strong> acquires the<br />
Dutch company Nyloplast Europe<br />
BV. Nyloplast manufactures<br />
large-diameter plastic fittings for<br />
pressureless pipe systems used for<br />
draining sewage and rain water. This
<strong>Tessenderlo</strong> <strong>Group</strong><br />
acquisition enables the Plastic Pipe<br />
Systems Business Unit to extend its<br />
range of products and services for total<br />
water management and to strengthen<br />
its position in Europe.<br />
November<br />
Caillaud, a French subsidiary company<br />
of <strong>Tessenderlo</strong> <strong>Group</strong> that specialises<br />
in the collection, processing and<br />
valorisation of organic by-products<br />
changes its name to Akiolis. This<br />
is with a view to the international<br />
development of its activities.<br />
December<br />
Eurocell Profiles Ltd (UK) acquires<br />
Cavalok Building Products.<br />
Cavalok manufactures window and door<br />
cavity closer systems made from postconsumer<br />
recycled PVC.<br />
is extended for 20 years. <strong>Tessenderlo</strong><br />
<strong>Group</strong> has made a clear choice for a<br />
sustainable approach and will invest in<br />
additional environmental activities.<br />
T-Power, a joint venture between<br />
<strong>Tessenderlo</strong> Chemie NV, Siemens<br />
Project Ventures GmbH, and<br />
International Power plc, achieved<br />
financial close of its 420 MW CCGT<br />
(Combined Cycle Gas Turbine) power<br />
plant in <strong>Tessenderlo</strong> (Belgium).<br />
The power plant will commence<br />
operation in 2011 and will increase the<br />
competitiveness of the production plant<br />
in <strong>Tessenderlo</strong>.<br />
The phosphates activities are clustered<br />
in a new dedicated organisation named<br />
Aliphos.<br />
27<br />
The environmental permit for the<br />
Ham and <strong>Tessenderlo</strong> plant (Belgium)
annual report <strong>2008</strong><br />
Chemicals<br />
The Chemicals business group is comprised of two business units:<br />
Inorganics and Chlor-alkali/PVC. It is characterised by an integrated<br />
production process in which the various end-products and by-products are<br />
utilised internally in order to create maximum added value. The business<br />
group’s products are used in industry and agriculture and have applications<br />
in a large number of aspects of everyday life, from batteries and paper to<br />
animal nutrition, speciality fertilisers and water treatment.<br />
28<br />
<strong>2008</strong> in a nutshell<br />
<strong>2008</strong> was a record year for the Chemicals business group following a very successful<br />
year in 2007. The lower results in Chlor-alkali/PVC were amply compensated for by<br />
Inorganics. Despite the high raw material prices, among other things due to rising<br />
oil prices in the first three quarters, profitability was improved. The Inorganics<br />
business unit in particular was able to improve margins for agricultural products.<br />
For the Chlor-Alkali activity, the margins for caustic potash and caustic soda were<br />
higher than in 2007. However, this could not compensate for the decline in the PVC<br />
activity. The results of the latter were unsatisfactory in the last quarter. The new<br />
strategy whereby <strong>Tessenderlo</strong> <strong>Group</strong> and the Chemicals business group focus more<br />
on specialities and less on commodities, has resulted in excellent performance in the<br />
United States with <strong>Tessenderlo</strong> Kerley Inc. (TKI) recording strong figures.
<strong>Tessenderlo</strong> <strong>Group</strong><br />
Key figures<br />
<strong>2008</strong> 2007<br />
Revenue (millions EUR) 1,402 1,027<br />
REBIT (millions EUR) 197 83<br />
ROCE (%) 33 18<br />
Capital expenditures (PP&E) (millions EUR) 28 37<br />
Headcount 1,965 2,009<br />
Market leadership<br />
• The largest producer of liquid sulphurcontaining<br />
fertilisers (thiosulphates) at<br />
world level.<br />
• The second largest supplier in the world<br />
of phosphates for animal feed and of<br />
potassium sulphate for specialised<br />
fertilisers<br />
• The largest producer of caustic potash<br />
in Europe.<br />
• The second largest producer of ferric<br />
chloride at European level.<br />
29<br />
Revenue breakdown over 10 years<br />
(millions EUR)<br />
1,500<br />
1,402<br />
1,200<br />
900<br />
IFRS<br />
600<br />
300<br />
0<br />
99<br />
00<br />
01<br />
02<br />
03<br />
04<br />
05<br />
06<br />
07<br />
08
annual report <strong>2008</strong><br />
Inorganics<br />
In <strong>2008</strong>, the Inorganics business unit was confronted with a historical increase in raw<br />
material prices. However, these increases could be passed on to the market through<br />
higher sales prices. Margins for agricultural products were finally restored after<br />
several difficult years. Sales of potassium sulphate for fertilisers remained at the<br />
level of 2007, while demand for animal feed phosphates fell in the second half of the<br />
year.<br />
30<br />
Activities and products<br />
The Inorganics business unit operates in<br />
a variety of different markets. Potassium<br />
sulphate is a fertiliser that is extremely<br />
suited for use in dry areas and for<br />
highly sensitive crops such as flowers,<br />
vegetables, fruit, and tobacco. <strong>Tessenderlo</strong><br />
<strong>Group</strong> invested mainly in potassium-based<br />
specialities for modern agriculture.<br />
Sulphur-based liquid fertilisers (including<br />
ammonium, potassium, calcium and<br />
magnesium thiosulphate) are used in<br />
North America as fertilisers for cereal and<br />
broad-acre crops, and for arboricultural<br />
and vegetable cultivation. Other sulphur<br />
derivatives are used for different industrial<br />
applications including mining, water and<br />
waste-water treatment and in a wide range<br />
of chemical processes.<br />
Mineral phosphates are used in the animal<br />
feed industry. The range of phosphate<br />
products is so diverse that <strong>Tessenderlo</strong><br />
<strong>Group</strong> is able to offer the required quality<br />
for all kinds of feed applications. The<br />
optimal digestibility of the animal feed<br />
phosphates allows a perfect balance to be<br />
struck between the development of the<br />
animal and respect for the environment.<br />
Trends and facts in <strong>2008</strong><br />
Raw material prices continued to rise until<br />
September. In some cases, prices were<br />
300 % higher than in 2007. <strong>Tessenderlo</strong><br />
<strong>Group</strong> succeeded in passing these price<br />
increases on to the market.
<strong>Tessenderlo</strong> <strong>Group</strong><br />
The range of<br />
fertilisers continues<br />
to evolve towards<br />
high-grade<br />
specialities<br />
Potassium sulphate volumes remained at<br />
their 2007 level. SoluPotasse®,<br />
a highly water-soluble potassium fertiliser,<br />
strengthened its position as world leader<br />
in irrigation fertilisation. GranuPotasse®,<br />
that is used extensively by fertiliser<br />
formulators, advanced strongly.<br />
This success is helping <strong>Tessenderlo</strong> <strong>Group</strong><br />
to drive its product range towards highgrade<br />
specialities.<br />
Given that the majority of sales is in euros,<br />
the exchange rate evolution of the American<br />
dollar had little impact on the results.<br />
Sales of animal feed phosphates dropped<br />
across Europe, with a dramatic fall in<br />
Central Europe. Due to the low prices for<br />
pork, East European farmers have reduced<br />
their pig inventories by 30 %. The shortage<br />
of animal feed phosphates in the first<br />
quarter of <strong>2008</strong>, combined with very high<br />
prices, has led to many feed producers to<br />
use the phytase enzyme alongside mineral<br />
phosphates.<br />
31
annual report <strong>2008</strong><br />
32<br />
Margins for<br />
agricultural products<br />
could be restored<br />
A closer look at<br />
<strong>Tessenderlo</strong> Kerley Inc.<br />
(US)<br />
<strong>Tessenderlo</strong> Kerley, Inc (TKI) and its<br />
business units in the United States<br />
achieved solid performance under very<br />
challenging conditions in the market place.<br />
Fertiliser volumes for <strong>2008</strong> were on an<br />
increase due to higher farm commodity<br />
prices in the first half of the year. TKI was<br />
able to maintain margins in <strong>2008</strong>.<br />
The speciality fertiliser products,KTS®<br />
(potassium thiosulphate), N-Sure® and<br />
Trisert® slow release nitrogen products as<br />
well as CaTs® (calcium thiosulphate) have<br />
enjoyed a strong year in <strong>2008</strong>. Demand has<br />
been strong in all cropping areas and in<br />
several cases exceeded supply in most of<br />
the broadacre and speciality crop areas.<br />
Fertilisers and crop<br />
protection products are<br />
doing very well in the US<br />
in <strong>2008</strong><br />
NovaSource®, TKI’s crop protection<br />
business unit, enjoyed a year of strong<br />
growth and above average profitability in<br />
<strong>2008</strong> as the result of the Surround® and<br />
Sinbar® product acquisitions made in<br />
late 2007. In addition, good growth was<br />
experienced in its existing business range.<br />
In <strong>2008</strong>, <strong>Tessenderlo</strong> Kerley Inc. acquired<br />
the assets of Agrochem in Turkey. It also<br />
acquired an interest in Wolf Mountain<br />
Products.<br />
MPR Services, Inc, TKI’s Solvent<br />
Services Business that supplies<br />
services to refineries for the treatment<br />
of flue gasses and solvents, continued its<br />
world-wide growth in both<br />
mobile services and permanently installed<br />
units. In addition to its international<br />
sales agents, MPR became the operating<br />
company for MPR Middle East WLL (MME),<br />
a joint venture between Gulf Technologies<br />
WLL and <strong>Tessenderlo</strong> NL Holding BV.,<br />
based in the Kingdom of Bahrain.<br />
MME will service the energy industry in the<br />
GCC and Egypt.<br />
The TKI Refinery Services model is being<br />
pursued with refineries in the U.S.A. TKI<br />
has production plants linked to refineries<br />
to recover sulphur and other residuals that<br />
are in turn used to manufacture sulphurbased<br />
fertilisers.
<strong>Tessenderlo</strong> <strong>Group</strong><br />
Strategy and prospects<br />
for 2009<br />
The volumes for potassium sulphate<br />
are expected to fall below <strong>2008</strong> levels in<br />
Europe. Farmers have trouble obtaining<br />
credit from their banks and will not be able<br />
to place orders.<br />
Sales of SoluPotasse® will continue to<br />
rise. The growing shortage of water and<br />
agricultural land forces farmers to switch<br />
to drip irrigation that requires more watersoluble<br />
fertilisers.<br />
It is yet to be seen how the world<br />
financial markets will affect<br />
<strong>Tessenderlo</strong> Kerley and its business<br />
unit’s performance in 2009. It will<br />
be a challenging year, one that will<br />
be influenced by commodity pricing,<br />
availability of raw materials, declining<br />
world oil prices and the availability of<br />
water in the Western US for agriculture<br />
enterprises. TKI will continue to<br />
develop and extend its activity model of<br />
diversification and profitable growth by<br />
acquisitions and maintain its position as a<br />
lower cost producer in its major markets.<br />
Prices will probably remain stable or<br />
drop slightly. However, margins will be<br />
maintained.<br />
With the set up of a dedicated division for<br />
feed ingredients, Aliphos, <strong>Tessenderlo</strong><br />
<strong>Group</strong> wants to optimise its production<br />
facilities for animal feed phosphates.<br />
Demand for animal feed is declining<br />
fast due to dropping meat consumption,<br />
the result of the worldwide economic<br />
crisis. Phosphate prices are expected to<br />
drop significantly compared to late <strong>2008</strong>.<br />
Volumes will however be similar to <strong>2008</strong><br />
levels because more mineral calcium will<br />
again be used in animal feed instead of the<br />
phytase enzyme.<br />
After a strong <strong>2008</strong>, Thio-Sul® (ammonium<br />
thiosulphate) fertiliser sales of TKI will<br />
come under pressure in the first quarter<br />
of 2009 due to carry-over inventory on the<br />
dealer/distributor level and further fear<br />
of prices moving downward in the market<br />
place. Lower farm commodity prices<br />
in relationship to input costs will be an<br />
influence in 2009.<br />
Allocation of speciality fertiliser products<br />
in the market place will continue through<br />
2009. The completion of the KTS®<br />
(potassium thiosulphate) and CaTs®<br />
(calcium thiosulphate) plant in Ham,<br />
Belgium in 2009 will help in alleviating a<br />
portion of the supply situation. TKI’s plant<br />
nutrients main challenge will be the<br />
33
annual report <strong>2008</strong><br />
availability of raw materials and the rising<br />
costs of these inputs.<br />
of the Specialities business group as from<br />
1 January 2009.<br />
34<br />
The challenges for the crop protection<br />
business unit in 2009 will be to expand<br />
the cropping applications for the new<br />
products; striving to become the least-cost<br />
producer in all of the NovaSource ® range<br />
and adding profitable new products to its<br />
existing business base.<br />
Unlike the other products of the Chemicals<br />
business group which can be considered as<br />
commodities, TKI products are specialised<br />
products for <strong>Tessenderlo</strong> <strong>Group</strong> and as<br />
such constitute an area of growth for the<br />
future. For this reason, financial reporting<br />
about TKI activities will be part<br />
Strategy for the<br />
inorganics business<br />
unit<br />
• Reduce production costs<br />
throughout the value chain as<br />
much as possible.<br />
• Seek alliances in order to<br />
strengthen our competitive<br />
position.
<strong>Tessenderlo</strong> <strong>Group</strong><br />
PVC / Chlor-Alkali<br />
The PVC activity has experienced a difficult year. Until the start of the autumn,<br />
sales volumes were at the same level as in 2007. Prices were generally high but<br />
with gradually decreasing margins. Demand and margins plummeted in the fourth<br />
quarter.<br />
Activities and products<br />
Vinyl chloride monomer (VCM) is the main<br />
raw material in the production of polyvinyl<br />
chloride (PVC). VCM is produced from<br />
chlorine or hydrochloric acid and ethylene.<br />
Chlorine and hydrochloric acid are<br />
produced at the same site at <strong>Tessenderlo</strong><br />
(Belgium) making road transport<br />
unnecessary. Ethylene is bought in<br />
externally and delivered via a specially<br />
designed secure and environmentallyfriendly<br />
pipeline network.<br />
Netherlands and in Northern France.<br />
These two plants are among the largest<br />
in Europe, with a total capacity of 480,000<br />
tonnes.<br />
PVC is one of the most versatile plastic<br />
resins in the world. It has a very extensive<br />
range of applications, ranging from plastic<br />
pipe systems, window and door profiles,<br />
flexible and hard films and sheathings for<br />
cables and wires.<br />
Trends and facts in<br />
<strong>2008</strong><br />
35<br />
Chlorine is produced in the group’s<br />
electrolysis units, while hydrochloric<br />
acid is a by-product of the production of<br />
sulphates, allowing a unique integration of<br />
raw materials to be achieved. <strong>Tessenderlo</strong><br />
<strong>Group</strong>’s annual VCM production capacity is<br />
550,000 tonnes.<br />
The polymerisation of VCM to PVC occurs<br />
at two locations, in the South of the<br />
The crisis in the<br />
construction and<br />
automotive industry has<br />
resulted in a sharp<br />
decline in PVC use<br />
During the first six months of the year,<br />
sales volumes were slightly higher than in<br />
2007. Margins deteriorated as a result of
annual report <strong>2008</strong><br />
the continued increase of ethylene prices<br />
that follow the evolution of oil prices.<br />
Demand quickly slowed down after the<br />
summer and the fourth quarter turned<br />
out to be a catastrophe. Sales dropped by<br />
an average of around 30 %, a reflection of<br />
the crisis in the most cyclically sensitive<br />
sectors, such as the construction and<br />
automotive industries. In addition, the<br />
plummeting of raw material prices at the<br />
end of the year and scarce credit resulted<br />
in a general reduction of stocks.<br />
Outlook for 2009<br />
has resulted in a sharp downturn of the<br />
construction industry in Eastern Europe as<br />
well.<br />
In the long term, PVC will continue to<br />
be a competitive commodity business.<br />
Therefore, <strong>Tessenderlo</strong> <strong>Group</strong> is continuing<br />
to focus on cost reduction, increased<br />
productivity and the improvement of<br />
quality and service. This is the only way<br />
for <strong>Tessenderlo</strong> <strong>Group</strong> to strengthen its<br />
position as a specialist in the field of<br />
suspension PVC.<br />
36<br />
Forecasts remain unfavourable as long as<br />
the general economic climate does not pick<br />
up. This seems to be improbable for 2009.<br />
Ethylene prices will probably be negotiated<br />
on a monthly basis instead of every quarter.<br />
This means PVC prices will fluctuate even<br />
more. Furthermore, imports from the<br />
United States and Asia, where production<br />
costs are lower, also threaten prices.<br />
Focus on low costs and<br />
high productivity to<br />
strengthen our market<br />
position<br />
Strategy for the PVC<br />
activity<br />
Forecasts for PVC<br />
for 2009 are not<br />
very bright<br />
The European PVC market has become<br />
a mature market with minimal growth<br />
potential. The current financial crisis<br />
• Keep costs throughout the value<br />
chain as low as possible.<br />
• Offer maximum added value<br />
with existing products and<br />
resources.<br />
• Pursue maximum productivity.
<strong>Tessenderlo</strong> <strong>Group</strong><br />
Chlor-Alkali / PVC<br />
In <strong>2008</strong>, the profitability of the Chlor-Alkali activity was mainly determined by caustic<br />
soda and caustic potash. Although the margins of these products were higher than<br />
in the previous year, they were not sufficient to compensate for the deteriorating<br />
margins of the PVC activity. The project for the construction of an electricity power<br />
station by 2011 is on schedule.<br />
Activities and products<br />
The electrolysis departments of<br />
<strong>Tessenderlo</strong> <strong>Group</strong> have an annual capacity<br />
of 400,000 tonnes of chlorine. This is<br />
mainly used internally for the production<br />
of vinyl chloride monomer (VCM), used to<br />
make polyvinyl chloride (PVC), and in fine<br />
chemicals.<br />
Caustic potash and caustic soda are<br />
released during the production of chlorine.<br />
Caustic potash is used in food processing,<br />
fertilisers, alkali batteries, defrosting<br />
products for airports, detergents and<br />
other processes within the chemical<br />
industry. Caustic soda is used for water<br />
purification and in the manufacture of<br />
soaps and detergents. In addition to these<br />
areas, there are many applications in the<br />
chemical, the aluminium and the paper<br />
industry.<br />
From these electrolysis basic products,<br />
various products are derived which are<br />
used in photography, the food sector, water<br />
purification and the extraction of ores.<br />
Ferric chloride and aluminium chloride<br />
are also produced in addition to the classic<br />
electrolysis products. Both products are<br />
indispensable in the fast-growing water<br />
purification sector.<br />
Trends and facts in<br />
<strong>2008</strong><br />
The prices of caustic potash rose in the<br />
second half of the year above the level<br />
of 2006-2007 due to the shortage of the<br />
product in the United States. European<br />
stocks were practically consistently below<br />
the long-term average. Demand remained<br />
high until the autumn but dropped sharply<br />
in the last two months of the year.<br />
37
annual report <strong>2008</strong><br />
The prices of caustic<br />
potash and caustic soda<br />
were higher than in 2007<br />
This had no effect on the margins for the<br />
derivatives bleach and ferric chloride.<br />
The prices for sodium sulphide lagged<br />
behind.<br />
From the third quarter onwards, the prices<br />
of caustic potash rose to unprecedented<br />
heights, the result of an acute and<br />
worldwide shortage of the raw material<br />
potassium chloride. This meant demand<br />
could not be fully met.<br />
The construction of<br />
our own electricity power<br />
plant in <strong>Tessenderlo</strong><br />
has started<br />
38<br />
The margins of caustic soda as well as<br />
caustic potash both rose in comparison<br />
with 2007.<br />
The T-Power project has started for the<br />
construction of a 420 MW natural gas-fired<br />
electricity installation at the <strong>Tessenderlo</strong>
<strong>Tessenderlo</strong> <strong>Group</strong><br />
site. Completion is targeted by 2011, has<br />
started. The modern, high-performance<br />
power plant will result in a reduction of<br />
electricity transportation costs, and in<br />
addition, increase the competitiveness of<br />
the site in <strong>Tessenderlo</strong>.<br />
Outlook for 2009<br />
remains scarce and expensive. However,<br />
lower demand should soon restore the<br />
balance.<br />
The prices of caustic soda continued<br />
to rise at the beginning of 2009, and a<br />
considerable price reduction is unlikely in<br />
2009.<br />
The expansion of the ferric chloride<br />
capacity in <strong>Tessenderlo</strong> (Belgium) with<br />
30,000 tonnes has been delayed slightly<br />
and is sheduled for a spring start-up. This<br />
expansion will help meet the growing<br />
European demand for ferric chlorides<br />
mainly used as coagulants in the treatment<br />
of drinking water and the purification<br />
of wastewater. This investment also<br />
strengthens the position of <strong>Tessenderlo</strong><br />
<strong>Group</strong> as the number two producer of ferric<br />
chlorides in Europe.<br />
Increased capacity<br />
shall strengthen our<br />
position on the ferric<br />
chloride market for water<br />
purification<br />
The cost price of electricity may rise once<br />
again. Currently, potassium chloride<br />
used for the production of caustic potash<br />
The margins for caustic potash are less<br />
predictable. They will mainly depend on<br />
the evolution of supply and the price of<br />
potassium chloride.<br />
Strategy for the<br />
Chlor-Alkali activity<br />
• Reduce costs and offer<br />
maximum added value<br />
with existing products and<br />
resources.<br />
• Maximise our competitive<br />
advantages.<br />
• Invest in specific projects with a<br />
high added-value potential.<br />
39
annual report <strong>2008</strong><br />
Plastics Converting<br />
For over twenty years, <strong>Tessenderlo</strong> <strong>Group</strong> has resolutely pursued a<br />
downstream integration policy. With this goal in mind, the group has<br />
taken over several PVC converters holding numerous patents and<br />
registered trademarks in Europe and the United States. The products,<br />
comprising profiles and plastic pipe systems, are almost all intended for<br />
the construction and renovation sectors. Another activity that is closely<br />
linked to PVC processing is the production of compounds for the injection<br />
and extrusion market. The Plastics Converting business group is also<br />
responsible for distribution to end-users in a number of countries. This<br />
40<br />
enables it to improve its market position and profitability.<br />
<strong>2008</strong> in a nutshell<br />
Overall, <strong>2008</strong> was a difficult year for the Plastics Converting business group. Total<br />
sales fell by 3 %. Plastic Pipe Systems were initially affected less than Profiles and<br />
Compounds. However, the economic crisis also made its impact felt in this sector<br />
over the last quarter. The decline of the construction market which started in the<br />
United States in 2007, hit Great Britain and the European continent in the second half<br />
of <strong>2008</strong>. Activities dropped while raw material prices remained high, in line with the<br />
cost of oil. Lower oil prices at the end of last year will only be felt in 2009, with lower<br />
raw material prices and higher margins.
<strong>Tessenderlo</strong> <strong>Group</strong><br />
Key figures<br />
<strong>2008</strong> 2007<br />
Revenue (millions EUR) 776 816<br />
REBIT (millions EUR) 22 49<br />
ROCE (%) 7 13<br />
Capital expenditures (PP&E) (millions EUR) 29 33<br />
Headcount 3,517 3,349<br />
Market leadership<br />
• The number one producer of plastic<br />
pipe systems in Benelux and the third<br />
largest in France<br />
• The largest TPE compounder<br />
(thermoplastic elastomers) and<br />
the fourth largest producer of PVC<br />
compounds in Europe<br />
• British market leader for pvc-profiles<br />
• One of the leading suppliers of<br />
compounds for dasboards (Marvyflo®)<br />
at world level.<br />
41<br />
Revenue breakdown over 10 years<br />
(millions EUR)<br />
800<br />
600<br />
IFRS<br />
776<br />
400<br />
200<br />
0<br />
99<br />
00<br />
01<br />
02<br />
03<br />
04<br />
05<br />
06<br />
07<br />
08
annual report <strong>2008</strong><br />
Profiles<br />
The sharp decline of the construction market in 2007 spread across the whole of<br />
Europe in <strong>2008</strong>. Sales in the Profiles business unit dropped as a result of this decline<br />
by 3 %. Lower sales were also accompanied by an increase of raw material prices<br />
which reduced profitability.<br />
42<br />
Activities and products<br />
The Profiles business unit brings together<br />
the production of various PVC profiles for<br />
the construction industry, such as door,<br />
window and conservatory profiles, profiles<br />
for roofline, fences, the cladding of façades<br />
and various finishing products.<br />
Trends and facts in <strong>2008</strong><br />
The market slowed down substantially in<br />
Great Britain, especially in the second half<br />
of the year. Despite these unfavourable<br />
conditions, the Profiles business unit is<br />
continuing to invest in the development of<br />
its activities.<br />
This is reflected in the further growth of<br />
the distribution network that consisted<br />
of 90 depots at the end of the year, and a<br />
number of acquisitions:<br />
• Eurocell, a subsidiary of <strong>Tessenderlo</strong><br />
<strong>Group</strong> and the British market leader<br />
in the production and distribution<br />
of PVC window and roofline profiles,<br />
acquired distributor Peninsula Plastics<br />
in March. Peninsula Plastics recorded a<br />
turnover of more than 3 million pounds<br />
and has distribution branches in the<br />
northwest of England. The locations<br />
complement the existing Eurocell<br />
branch network, resulting in the<br />
company strengthening its presence<br />
in this part of the country.<br />
• In April, Eurocell announced the<br />
acquisition of the assets of Sprint<br />
1233, formerly known as Plastmo<br />
Profiles Ltd. based in Northampton.<br />
The acquisition and the transfer of the<br />
activities to the Alfreton production<br />
site increase production efficiency and<br />
Eurocell’s market share.
<strong>Tessenderlo</strong> <strong>Group</strong><br />
• In December, Eurocell acquired<br />
Cavalok Building Products. Cavalok<br />
produces window and door cavity<br />
closer systems made from postconsumer<br />
recycled PVC. The range<br />
complements Eurocell’s existing<br />
products and serves to strengthen the<br />
company’s market position further.<br />
Substantial expansion<br />
of the product range and<br />
distribution network in<br />
Great Britain<br />
The product offering in Great Britain was<br />
further expanded to include a number<br />
of innovations. In <strong>2008</strong>, the range of<br />
composite doors was expanded with new<br />
products that do extremely well in terms of<br />
safety as well as looks. The Thermologik<br />
window system was introduced on the<br />
market to meet the new standards for<br />
energy-friendly homes. Two new systems<br />
for rotating and vertically sliding windows<br />
were also launched.<br />
Thanks to the acquisitions and new<br />
products, sales – expressed in pound<br />
sterling - in the UK rose by over 9 %,<br />
despite a slowdown of the market. Due to<br />
high raw material prices, profitability was<br />
much lower than previous years.<br />
In Eastern and Central Europe, where the<br />
market also slowed down, we consciously<br />
chose to scale down activities in regions<br />
where margins are too low. From the third<br />
quarter, this was reflected by 10 % lower<br />
sales compared to the same period in 2007.<br />
Profitability was also considerably lower.<br />
43
annual report <strong>2008</strong><br />
44<br />
In this context, the business unit<br />
concentrated its activities on the European<br />
continent in Benelux and France. The<br />
introduction of new window systems and<br />
the improvement of existing products meet<br />
new market requirements with respect to<br />
durable and energy-efficient construction<br />
materials.<br />
New window systems<br />
meet the demand<br />
for durable and<br />
energy-efficient<br />
building<br />
The strategy of creating synergies between<br />
Wymar (Belgium) and Plastival (France)<br />
gained momentum during <strong>2008</strong>.<br />
The situation in the United States was<br />
even less favourable than in 2007. The<br />
number of new-build and renovation<br />
projects alike dropped dramatically. With<br />
the introduction of new products, Chelsea<br />
Building Products (CBP) again succeeded<br />
in confining the sales decline to less than<br />
10 % while the market contracted overall<br />
by 20 %. Due to the dollar exchange<br />
rate, high raw material prices in the<br />
United States had a stronger impact on<br />
profitability than in Europe.<br />
In <strong>2008</strong>, efforts were made in the<br />
development of composite windows,<br />
where metal is replaced with plastic.<br />
This important innovation has the major<br />
benefit that own materials can be used and<br />
purchasing of metal can be limited.<br />
Sales of Chelsea<br />
Building Products (US)<br />
fell less than the market<br />
average<br />
Wymar, which produces PVC profiles for<br />
windows and doors, as well as interior and<br />
exterior finishing systems, is continuing<br />
to develop new, lead-free systems. The<br />
objective in the long term is to phase out<br />
lead as a material to stabilise PVC. Thanks<br />
to the wider range of products, sales of<br />
these new environment-friendly systems<br />
are increasing while the share of the<br />
traditional systems is dropping.<br />
In Canada, an oil-producing country, the<br />
impact of the economic crisis was only<br />
felt at the end of the year, when oil prices<br />
began to drop. Slightly higher sales could<br />
not compensate for raw material price<br />
increases which meant profitability also<br />
decreased in this country.<br />
In <strong>2008</strong>, the merger of the production units<br />
in Jonquière and Montreal on one site
<strong>Tessenderlo</strong> <strong>Group</strong><br />
in Montreal was completed. The site in<br />
Jonquière was closed.<br />
Innovations in <strong>2008</strong> included the<br />
development of new patio doors. These will<br />
be introduced onto the market in 2009.<br />
material prices following the drop in oil<br />
prices towards the end of <strong>2008</strong>, will provide<br />
the leverage to restore margins.<br />
The synergies between Wymar and Plastival<br />
will also bear fruits from 2009 onwards.<br />
Outlook for 2009<br />
Due to the worldwide economic<br />
uncertainty, it is very difficult to make<br />
predictions. Improvements in the<br />
construction sector are not predicted for<br />
the immediate future. Low margin levels<br />
in Central and Eastern Europe should bring<br />
<strong>Tessenderlo</strong> <strong>Group</strong> to reveiw its position in<br />
these markets.<br />
The development<br />
of new products<br />
continues<br />
To meet these challenges, the Profiles<br />
business unit will adjust its production<br />
capacity to market conditions where<br />
necessary. In the United States and Great<br />
Britain, the development of new products<br />
will continue. The distribution network in<br />
Great Britain will also be expanded further.<br />
Strategy for the<br />
Profiles business unit<br />
• Increase the profitability of<br />
the European continent region<br />
through operational excellence<br />
and synergies between the<br />
production units.<br />
• Expand and improve the<br />
distribution network in Great<br />
Britain to obtain further growth<br />
and higher profitability.<br />
• Continue to expand the product<br />
range in the United States<br />
and Canada, and increase<br />
profitability by maximising<br />
the synergies between the<br />
production units.<br />
45<br />
The focus in 2009 will be on increasing<br />
profitability. In this respect, lower raw
annual report <strong>2008</strong><br />
Plastic Pipe Systems<br />
The Plastic Pipe Systems business unit succeeded in limiting the drop in sales<br />
compared to <strong>2008</strong>, despite the weak economic cycle. A slight increase during the<br />
first three quarters could not fully compensate the decline in the fourth quarter.<br />
Profitability fell slightly due to high raw material prices which could not be passed on<br />
to the market swiftly enough.<br />
46<br />
Activities and products<br />
The Plastic Pipe Systems business unit<br />
produces pipes and fittings for water<br />
supply and drainage systems, and pipe<br />
systems for gas, telecommunications and<br />
other applications. The raw materials are<br />
PVC, polyethylene, and polypropylene.<br />
Trends and facts in <strong>2008</strong><br />
The business unit continued its strategic<br />
growth, based on the two known pillars:<br />
geographic expansion and a wider product<br />
range, especially in the field of water<br />
management.<br />
Geographic expansion<br />
and a wider product<br />
range continue to be<br />
the main growth pillars<br />
In this respect, an important acquisition<br />
was made in October. <strong>Tessenderlo</strong> <strong>Group</strong><br />
acquired Nyloplast Europe BV, a subsidiary<br />
of Nyloplast NV. The Dutch company<br />
Nyloplast Europe BV in ’s Gravendeel<br />
produces plastic fittings for pressureless<br />
piping systems in a large diameter for the<br />
European market. The systems are used
<strong>Tessenderlo</strong> <strong>Group</strong><br />
for draining sewage and rainwater. This<br />
major addition to the product range of<br />
special fittings strengthens the position of<br />
the Plastics Piping Systems business unit<br />
in Europe.<br />
With regard to Benelux, sales at Dyka<br />
Belgium to the construction and public<br />
works sectors rose by 4 %, despite a<br />
decline of gas-related activities. These<br />
favourable results can be explained by the<br />
broadening of the product range.<br />
Dyka sales in<br />
Belgium rose<br />
by 4 % despite<br />
the crisis<br />
In The Netherlands, activities were<br />
maintained at the satisfactory level of 2007<br />
but profitability fell slightly. The product<br />
offering was expanded here too. Services<br />
to customers were also improved by<br />
developing e-business and adapting the<br />
sales network. Specifically, a number of<br />
depots were transferred to more accessible<br />
locations and opening hours were adapted<br />
to the customers’ requirements.<br />
Conditions in France were extremely<br />
unfavourable. While the situation in the<br />
beginning of the year was more or less<br />
respectable, the market plummeted in<br />
the second half of the year. This had an<br />
extremely negative impact on sales as well<br />
as profitability.<br />
The market in Great Britain also<br />
experienced the impact of the economic<br />
crisis. However, John Davidson Pipes (JDP)<br />
was able to maintain sales at the 2007 level<br />
in pound sterling. Despite the slight decline<br />
in profitability, the situation in Great Britain<br />
continues to remain favourable.<br />
Strong growth of<br />
activities in Central and<br />
Eastern Europe<br />
This also applies to the situation in Poland.<br />
Operating out of the production units in<br />
Poland, activities in Central and Eastern<br />
Europe were able to be developed further,<br />
thanks to higher product supply and a<br />
larger distribution network. At the current<br />
time, there are 13 depots in Poland, 3<br />
in the Czech Republic and 1 in Slovakia.<br />
47
annual report <strong>2008</strong><br />
Sales rose by 20 % and profitability also<br />
increased, despite higher raw material<br />
prices. For Plastic Pipe Systems, this<br />
region has the advantage that it is less<br />
subject to the worldwide crisis than<br />
Western Europe.<br />
Outlook for 2009<br />
The influence of the recession on the<br />
construction and public works sectors<br />
is difficult to forecast. The impact on<br />
the Plastic Pipe ystems is expected<br />
to be less due to the strong focus on<br />
water management and interest in new<br />
developments. The Plastic Pipe Systems<br />
business unit will therefore continue its<br />
trusted growth strategy as planned.<br />
Furthermore, the acquisition of Nyloplast<br />
Europe BV will contribute in full to our<br />
results from 2009 onwards.<br />
Innovating<br />
systems available<br />
in all countries<br />
from 2009<br />
48
<strong>Tessenderlo</strong> <strong>Group</strong><br />
The so-called biaxially oriented pipe<br />
systems, which are produced by Sotra-<br />
Seperef in France, have firmly established<br />
themselves on the French market. They<br />
will also be available in other countries<br />
from 2009. The production process for this<br />
type of piping systems requires that the<br />
molecular structure of PVC is modified in<br />
order to improve the mechanical properties<br />
of the pipe. In particular, a biaxially<br />
oriented pipe system withstands a higher<br />
internal pressure than a normal PVC pipe<br />
with the same wall thickness. This makes<br />
it possible to reduce the amount of raw<br />
materials required.<br />
Polyethylene pipe systems for geothermal<br />
applications is another innovative product<br />
that performs well on the French market.<br />
These will also be available in other<br />
countries from 2009.<br />
Dyka Rainclean, a new high-performance<br />
system for the temporary collection and<br />
storage of rainwater will be introduced in<br />
2009. It filters and treats rainwater that is<br />
recovered from roads and car parks, before<br />
draining into the ground.<br />
In order to offer optimal service in the<br />
field of water management, the team<br />
that performs the necessary calculations<br />
for customers and develops water<br />
management systems has been expanded.<br />
Important steps were made in research<br />
and development to design new lead-free<br />
canalisation systems. Practically no lead is<br />
currently used to stabelise PVC.<br />
Strategy for the<br />
Plastic Pipe Systems<br />
business unit<br />
• Further expand the distribution<br />
network and improve customer<br />
service.<br />
• Offer complete systems<br />
whenever possible by expanding<br />
the product range.<br />
• Maximise synergies between<br />
the production units.<br />
• Strengthen our presence and<br />
growth in the Central and<br />
Eastern European markets.<br />
49
annual report <strong>2008</strong><br />
Compounds<br />
Like the other activities in the Plastics Converting business group, Compounds<br />
also suffered in <strong>2008</strong> from the slowdown in the construction activity. Moreover, this<br />
business unit also suffered the impact of lower car sales. PVC compounds were hit<br />
the worst. The thermoplastic elastomers were also subject to the crisis. However,<br />
sales to the construction sector and the automotive industry rose.<br />
50<br />
Activities and products<br />
The Compounds business unit produces a<br />
variety of ready-to-use PVC mixtures and<br />
mixtures of thermoplastic elastomers.<br />
These are mainly intended for the injection<br />
and extrusion markets, with applications<br />
in the construction industry (roller<br />
blinds, façade cladding, window fittings),<br />
the automotive sector (airbag covers,<br />
dashboard skins, interior trims and sealing<br />
systems) and the market for consumer<br />
goods (handles for household appliances,<br />
pens and toothbrushes).<br />
Trends and facts in <strong>2008</strong><br />
With regard to PVC compounds, sales<br />
volumes dropped by more than 10 %. A<br />
first explanation is the slowdown in the<br />
construction sector, but high raw material<br />
prices also played a role. Furthermore,<br />
demand fell as a result of consolidation<br />
within the companies that process the<br />
compounds.<br />
Lower demand and<br />
higher raw material<br />
prices have an adverse<br />
effect on margins for<br />
PVC compounds<br />
Lower sales volumes and increased<br />
supply in the market resulted in narrower<br />
margins. Efforts to restore them inevitably<br />
had a negative impact on sales volumes.<br />
Saplast (France) suffered the most from<br />
this, both on the home market and in<br />
export countries.<br />
The margins for plasticised PVC<br />
compounds were under even more
<strong>Tessenderlo</strong> <strong>Group</strong><br />
pressure than those for non-plasticised.<br />
Prices of softening agents used in these<br />
products rose sharply during <strong>2008</strong>.<br />
The number of applications of<br />
thermoplastic elastomers (TPEs)<br />
continued to rise despite the economic<br />
context affecting this activity too. However,<br />
TCT Polska (Poland) and Thermoplastiques<br />
Cousin-Tessier (France) managed to<br />
increase sales by 5 % in <strong>2008</strong>, both in<br />
the construction sector as well as the<br />
automotive industry.<br />
Number of<br />
TPE applications<br />
increases thanks to<br />
innovation<br />
On the other hand, the profitability of this<br />
activity was lower as a result of higher raw<br />
material prices. These could only be passed<br />
on in higher sales prices towards the end of<br />
the year.<br />
An important new compound was<br />
introduced in <strong>2008</strong> to replace polyurethane<br />
for the covering of car steering wheels.<br />
Marvyflo®, a compound intended for<br />
dashboards, was confronted with higher<br />
raw material prices and a drop in demand.<br />
The higher raw material prices could only<br />
be charged to the market during the second<br />
half of the year. In addition, the separate<br />
management team for Marvyflo® which<br />
was created in 2007, was able to improve<br />
industrial performance and customers<br />
service.<br />
51
annual report <strong>2008</strong><br />
Outlook for 2009<br />
The expectations for the PVC compounds<br />
market are not very favourable. There is<br />
no indication that any of these sectors<br />
will improve in the near future, and<br />
especially not in the construction industry.<br />
These activities are faced with two major<br />
challenges. Firstly, to increase margins<br />
to an acceptable level as a result of the<br />
decreasing raw material prices. Secondly,<br />
the production structures must be adjusted<br />
to the lower volumes and the future<br />
evolution of the market.<br />
Production structures<br />
for PVC compounds<br />
must be adjusted to<br />
lower demand<br />
Margins are also a major concern for the<br />
thermoplastic elastomers. It is expected<br />
that they will reach their normal level<br />
in 2009, considering the higher sales<br />
prices and the lower raw material prices.<br />
The impact of the economic crisis will<br />
52
<strong>Tessenderlo</strong> <strong>Group</strong><br />
undoubtedly be felt. However, lower<br />
volumes will be avoided thanks to several<br />
new applications. The compounds listed<br />
above for covering car steering wheels and<br />
a number of developments in the sealants<br />
sector are examples.<br />
A new range of products will be introduced<br />
in 2009, based on the Dow Chemical’s<br />
‘Infuse’ polymers which <strong>Tessenderlo</strong><br />
<strong>Group</strong> is producing under licence for the<br />
European market.<br />
Marvyflo® is counting<br />
on interest from the<br />
automotive sector,<br />
also in China<br />
looks promising, with a growing share<br />
of the dashboard skins market. In 2009,<br />
<strong>Tessenderlo</strong> <strong>Group</strong> hopes to considerably<br />
increase its sales to the automotive<br />
industry in China. Although this sector<br />
is currently experiencing difficulties, the<br />
growth prospects are still quite attractive.<br />
Strategy for the<br />
Compounds business<br />
unit<br />
• Reduce costs by producing<br />
as effectively as possible and<br />
through operational excellence.<br />
53<br />
Specifically for Marvyflo®, increased<br />
demand from the automotive industry<br />
is key. Currently, preparations are being<br />
made to have Marvyflo®, certified for<br />
new car models that will be marketed<br />
in the near future. Although this activity<br />
will decrease slightly in 2009 due to the<br />
contracting automotive market, the future<br />
• Focus on speciality compounds.<br />
• Further strengthen our<br />
presence in the automotive<br />
industry by increasing our<br />
presence in the United States<br />
and especially Asia.
annual report <strong>2008</strong><br />
Specialities<br />
The Specialities business group consists of a number of diverse activities which<br />
differ by the added value that they create. The Fine Chemicals business unit<br />
deals partially with raw materials that are produced by <strong>Tessenderlo</strong> <strong>Group</strong><br />
itself. These raw materials are transformed into specialist products for the<br />
agro-chemical, pharmaceutical and perfume industries. The Gelatin business<br />
unit turns the skins and bones of cattle and pigs into high-quality gelatin<br />
for use in the food and pharmaceutical industries. The Natural Derivatives<br />
business unit processes animal and vegetable by-products for use as raw<br />
materials in pet food and in the soap industry.<br />
54<br />
<strong>2008</strong> in a nutshell<br />
The Fine Chemicals business unit did not perform so well in <strong>2008</strong>. While the<br />
operating result of organic chlorine derivatives was satisfactory, the intermediates<br />
and active ingredients for the pharmaceutical industry performed less favourably. On<br />
the other hand, the Gelatin business unit had an excellent year. Despite the economic<br />
crisis, demand for gelatin continues to grow, in part as a result of new applications<br />
and developments. The Natural Derivatives business unit recorded a satisfactory<br />
year. In the quest for new activities of a high added value, further diversification into<br />
the valorising by-products based on cereal crops was initiated.
<strong>Tessenderlo</strong> <strong>Group</strong><br />
Key figures<br />
<strong>2008</strong> 2007<br />
Revenue (millions EUR) 587 563<br />
REBIT (millions EUR) 35 32<br />
ROCE (%) 10 10<br />
Capital expenditures (PP&E) (millions EUR) 28 29<br />
Headcount 2,755 2,763<br />
Market leadership<br />
• The largest producer of benzyl<br />
acetate, benzyl chloride, alphahexylcinnamaldehyde<br />
at world level<br />
• The number two producer of benzyl<br />
alcohol worldwide<br />
• The third largest manufacturer of highquality<br />
gelatins worldwide<br />
55<br />
Revenue breakdown over 10 years<br />
(millions EUR)<br />
600<br />
500<br />
400<br />
300<br />
200<br />
100<br />
0<br />
IFRS<br />
587<br />
99<br />
00<br />
01<br />
02<br />
03<br />
04<br />
05<br />
06<br />
07<br />
08
annual report <strong>2008</strong><br />
Fine Chemicals<br />
The intermediates and active ingredients for the pharmaceutical industry did not<br />
perform so well in <strong>2008</strong>. In addition, contrary to expectations, the ‘organic chlorine<br />
derivates’ activity was unable to sufficiently sustain the positive trend of 2007. The<br />
Fine Chemicals business unit was hardest hit by the impact of the weak dollar. The<br />
competitive loss and the lower margins which were the result of this in the first half<br />
of the year were compensated in the second half of the year.<br />
56<br />
Activities and products<br />
A first segment comprises the<br />
manufacturing of intermediates and active<br />
pharmaceutical ingredients. The business<br />
unit is the preferred supplier to important<br />
international pharmaceutical companies.<br />
<strong>Tessenderlo</strong> <strong>Group</strong>’s glycine and glycine<br />
derivates mainly have applications in the<br />
pharmaceutical industry.<br />
The second segment comprises organic<br />
chlorine derivatives, whose production is<br />
mostly based on toluene combined with<br />
chlorine produced by <strong>Tessenderlo</strong> <strong>Group</strong><br />
itself. Toluene derivatives are produced<br />
for customers in the agro-chemical,<br />
pharmaceutical and perfume industries.<br />
Close cooperation between the various<br />
<strong>Tessenderlo</strong> <strong>Group</strong> units makes it possible<br />
to work in a highly flexible manner<br />
1. Intermediates and active<br />
ingredients for the<br />
pharmaceutical industry<br />
Trends and facts in <strong>2008</strong><br />
The results for the intermediates and<br />
active ingredients for the pharmaceutical<br />
industry are lower than in 2007. However,<br />
these activities performed much better<br />
than planned in the first half of <strong>2008</strong><br />
because a number of customers ordered<br />
higher quantities than initially planned. On<br />
the other hand, demand in the second half<br />
of the year was lower for this very reason.<br />
Furthermore, many customers delayed
<strong>Tessenderlo</strong> <strong>Group</strong><br />
their purchases in view of the economic<br />
situation.<br />
<strong>Tessenderlo</strong> <strong>Group</strong> is committed to<br />
providing quality on a continuous basis<br />
to ensure that its products meet the<br />
standards and guidelines in its various<br />
markets. Within this context, the sites in<br />
Italy and France were audited in <strong>2008</strong> by<br />
the Pharmaceutical and Medical Devices<br />
Agency (PMDA) of the Japanese Ministry<br />
of Health. The PMDA inspections are<br />
known to be the strictest in the world. The<br />
outcome of these audits was excellent<br />
- just like the other audits performed in<br />
<strong>2008</strong>.<br />
With regard to food safety, all current<br />
studies concerning HACCP (Hazard<br />
Analysis Critical Control Points)<br />
were completed at the Belgian site in<br />
<strong>Tessenderlo</strong>.<br />
Strict and successful<br />
audits confirm quality<br />
guarantee<br />
<strong>2008</strong>. In the beginning of the year, imports<br />
from China of glycine for the manufacture<br />
of additives for food and pet feed came to<br />
a standstill. This meant that <strong>Tessenderlo</strong><br />
<strong>Group</strong> was able to produce large volumes<br />
of glycine, and sales doubled in comparison<br />
with the same period in 2007.<br />
The business poured further investments<br />
in the optimal treatment of waste flows.<br />
Specifically, a number of incineration<br />
installations were renovated or improved.<br />
Focus on waste<br />
treatment is key<br />
in investment<br />
programme<br />
Due to increasing demand, the Farchemia<br />
site in Italy has taken a new production unit<br />
for benzoyl peroxide into service. Benzoyl<br />
peroxide is used in the pharmaceutical<br />
industry to produce ointments to treat acne<br />
for example.<br />
57<br />
The sale of glycine for pharmaceutical<br />
applications – of which <strong>Tessenderlo</strong> <strong>Group</strong><br />
is the last remaining manufacturer in<br />
Europe – was overall at a normal level in<br />
Outlook for 2009<br />
The expiry of the patent protection for<br />
a very successful drug will cause sales<br />
volumes to drop considerably in 2009.
annual report <strong>2008</strong><br />
The good news is that a number of other<br />
active ingredients have been in the<br />
development pipeline since 2007 and<br />
<strong>2008</strong>. These products will not be able<br />
to compensate for the decline in 2009.<br />
However, they do offer good prospects<br />
from 2010<br />
and the British pound during the first<br />
half of the year. This resulted in lower<br />
competitiveness and margins. Raw<br />
material prices were also unpredictable.<br />
In a market with ample supply, these<br />
price increases could not be passed on<br />
completely to customers.<br />
58<br />
Products in the<br />
development portfolio<br />
can compensate for<br />
patent loss as of 2010<br />
In the meantime, <strong>Tessenderlo</strong> <strong>Group</strong> will<br />
continue to promote itself as a company<br />
that is not only strong in the field of<br />
research and development, but can also<br />
offer its customers pilot capacity. As such,<br />
the company can guarantee quality as well<br />
supply commitments.<br />
2. Organic chlorine derivatives<br />
Trends and facts in <strong>2008</strong><br />
While 2007 saw a revival of the ‘organic<br />
chlorine derivatives’ activity, this positive<br />
trend could not be benefitted from<br />
sufficiently in <strong>2008</strong>.<br />
Same as the intermediates for the<br />
pharmaceutical industry, organic chlorine<br />
derivatives also suffered from the volatile<br />
exchange rates of the American dollar<br />
Volatile exchange rates<br />
and raw material<br />
prices had an adverse<br />
effect on competitiveness<br />
and margins<br />
The situation improved initially in the<br />
second half of the year. Sales prices and<br />
margins rose. However, demand for all<br />
products dropped drastically in December.<br />
With regard to investments in <strong>2008</strong>, the<br />
site in Pieve (Italy) decided that one of the<br />
two hydroelectric power stations will be<br />
renovated. Besides a slight increase of the<br />
power capacity, the major advantage is<br />
the fact that the company will obtain green<br />
energy certificates for this investment.<br />
Works are scheduled to begin in 2009<br />
and will be carried out during the winter<br />
months for three years, in order to reduce<br />
interruptions in manufacturing to a<br />
minimum.<br />
Contrary to earlier announcements<br />
made as part of the industrial plan for
<strong>Tessenderlo</strong> <strong>Group</strong><br />
the company, the electrolysis will not be<br />
discontinued in Pieve. Sufficient sales<br />
have materialised in the meantime for<br />
the electrolysis products, in line with the<br />
available capacity.<br />
However, the production of<br />
chlorobenzenes will be discontinued as<br />
announced but this will be later than<br />
initially planned. An extra investment for<br />
the production of synthetic hydrochloric<br />
acid will be implemented first, as decided<br />
in <strong>2008</strong>. The production of chlorobenzene<br />
can then be discontinued at the end of<br />
2009 or the beginning of 2010.<br />
Improvement of cost<br />
structure should not<br />
influence productivity<br />
and capacity<br />
Outlook for 2009<br />
Competition from China and India is<br />
expected to increase in all areas, from basic<br />
chemicals to the advanced pharmaceutical<br />
intermediates. In view of the economic<br />
situation and the fluctuating raw material<br />
prices, it is impossible to make any<br />
predictions for the future.<br />
However, next year we shall continue to<br />
work towards improving the cost structure<br />
but without affecting productivity or<br />
production capacity.<br />
The products of the Organic Chlorine<br />
Derivates business unit have evolved to<br />
become commodity products and are now<br />
more closely related to the products, the<br />
activities and the strategy of the Chemicals<br />
business group. As such, they will be part<br />
of the latter as from 1 January 2009.<br />
Strategy for the Fine<br />
Chemicals business<br />
unit<br />
• Intermediates and active<br />
ingredients for the<br />
pharmaceutical industry<br />
Strengthen the position as<br />
a supplier of intermediates<br />
and active ingredients for the<br />
pharmaceutical industry.<br />
• Organic chlorine derivatives<br />
Reduce the cost structure<br />
throughout the entire value<br />
chain and maximise added<br />
value in order to increase<br />
profitability.<br />
Consolidate the activities and<br />
integrate them in the Chemicals<br />
business group as from 2009.<br />
59
annual report <strong>2008</strong><br />
Gelatin<br />
<strong>2008</strong> was another outstanding year for the Gelatin business unit, despite the<br />
worldwide economic downturn in the second half of the year. The results rose<br />
sharply. The reversal that began in 2007 continued in this sector. This positive trend<br />
was strengthened by the continued growth of the demand for gelatin.<br />
60<br />
Activities and products<br />
The Gelatin business unit produces a wide<br />
range of quality gelatins based on the<br />
bones and skin of pigs and cattle. About<br />
two thirds of the gelatin is intended for<br />
the food industry. Gelatine is a gelling<br />
agent and an important source of protein,<br />
and it contains no cholesterol, fat or<br />
carbohydrates. It is also converted into<br />
specific foodstuffs for diabetics and<br />
products with a low glycaemic index, and<br />
it is produced for the pharmaceutical<br />
industry (capsules) and a wide range<br />
of technical applications (such as<br />
photography).<br />
good prices for the by-products fats and<br />
phosphates. In the beginning of the year,<br />
sales prices of gelatin dropped due to<br />
ample market supply. The second half of<br />
the year was characterised by a shortage<br />
of rind as a raw material and this resulted<br />
in lower production levels in Europe. This<br />
resulted in a lower supply of rind gelatin on<br />
the market with prices gradually rising and<br />
payment terms tightening.<br />
Demand for<br />
gelatin rose<br />
despite the<br />
economic crisis<br />
Trends and facts in <strong>2008</strong><br />
The results of the Gelatin business unit<br />
rose by 20 % in comparison with 2007.<br />
This growth was mainly a result of the<br />
At the same time, demand in various<br />
markets evolved favourably. The estimated<br />
world production output grows by around<br />
4 % each year.
<strong>Tessenderlo</strong> <strong>Group</strong><br />
• In the new economies, including China,<br />
the use of gelatin in the food sector<br />
continues to rise. The use of gelatin in<br />
confectionery, which was initially only a<br />
European and American phenomenon,<br />
is now more widespread in Asia too.<br />
technical assistance for the production<br />
and commercial activities, other market<br />
segments could be approached for the<br />
gelatins of the Chinese production unit,<br />
such as the food sector and capsules for<br />
the pharmaceutical industry.<br />
• Demand from the pharmaceutical<br />
industry continues to grow due to the<br />
gradual aging of the population.<br />
• The impact of digital photography<br />
in the market for classic silver<br />
systems for film has been dealt<br />
with in the meantime. This is being<br />
compensated by the growing demand<br />
for photographic paper, although the<br />
quality requirements of the gelatin are<br />
lower for these applications.<br />
Our American sites also experienced the<br />
shortage of rind in the second half of the<br />
year, but to a lesser extent than in Europe.<br />
Lower production levels and their impact<br />
on sales prices were less significant there.<br />
For the joint venture in China, further<br />
major efforts were made to improve<br />
the quality of the produced gelatin. This<br />
resulted in higher sales prices. Although<br />
the results for the whole year are still<br />
negative, positive figures were recorded<br />
in the fourth quarter. Thanks to the<br />
Chinese site will be<br />
break-even in 2009.<br />
Quality improvement<br />
opens new markets<br />
Research into new applications and<br />
product development continued in <strong>2008</strong>.<br />
• The important role that gelatin plays<br />
to reduce calories, especially when<br />
combined with lower fat use, resulted<br />
in a number of new applications in the<br />
food industry, such as meat and cheese<br />
production, and bakery applications.<br />
The research into the healthy, biological<br />
role of gelatin and related products led<br />
to the first upscaling steps.<br />
The role of<br />
gelatin in healthy<br />
food continues<br />
to grow<br />
61
annual report <strong>2008</strong><br />
• The development of gelatins that<br />
dissolve easily and are therefore more<br />
user-friendly is ongoing.<br />
• The gelatin hydrolysates with a low<br />
molecular weight are on the threshold<br />
of production. These types of gelatin<br />
hydrolysates have a low gel strength<br />
which means they dissolve more<br />
easily and are absorbed faster by the<br />
body. This is extremely important for<br />
applications such as energy drinks.<br />
of gelatin films. These have been<br />
translated into the different production<br />
preparations and will be used for a<br />
further qualification in the pharma<br />
sector.<br />
• In <strong>2008</strong>, the first steps were made<br />
towards technological innovation of the<br />
gelatin production process. This will be<br />
continued in 2009.<br />
Outlook for 2009<br />
62<br />
• In the past year, new insights have been<br />
obtained into the dissolving behaviour<br />
It is expected that sales prices will<br />
continue to rise due to the growing
<strong>Tessenderlo</strong> <strong>Group</strong><br />
demand. This means that the higher<br />
raw material and energy prices will be<br />
compensated. In the second half of <strong>2008</strong>,<br />
price increases were introduced with a<br />
delay which means that the adjusted sales<br />
prices will only have their full effect in the<br />
figures for 2009.<br />
Impact of higher<br />
sales prices will only be<br />
felt fully in 2009<br />
Strategy for the<br />
Gelatin business unit<br />
• To strengthen the position of<br />
<strong>Tessenderlo</strong> <strong>Group</strong> as one of the<br />
world’s top 3 players.<br />
• To look out for new<br />
opportunities in Asia and South<br />
America.<br />
There is a possibility that fewer cattle<br />
hides will be available on the raw materials<br />
market. The consumption of leather in the<br />
automotive sector has dropped as a result<br />
of the economic crisis and this means that<br />
skin by-products for the gelatin industry<br />
are more scarce. A solution is being sought<br />
for this.<br />
• To put in place optimal<br />
synergies between the six<br />
production units with a focus on<br />
increased cost-efficiency.<br />
63<br />
Additional investments will be made in<br />
China in order to maintain quality at a high<br />
level. The joint venture in China is expected<br />
to break even in 2009.<br />
The Gelatin business unit is striving<br />
towards further profit growth through<br />
acquisitions, the starting up of new<br />
sites and/or the optimal use of vertical<br />
integration opportunities.
annual report <strong>2008</strong><br />
Natural Derivatives<br />
In <strong>2008</strong>, the French subsidiary Caillaud was renamed the Akiolis <strong>Group</strong>, with its head<br />
office in Le Mans. The new legal structure reflects the various activities of the group<br />
and provides the foundation for the international development of Akiolis in the future.<br />
This also includes a new and complementary scope, i.e. the valorising of by-products<br />
based on cereal crops. This diversification is possible thanks to the know-how of the<br />
group in the field of collecting, processing and selling valorised animal by-products.<br />
This means Akiolis is able to expand its offering for producers of pet foods and<br />
animal feed.<br />
64<br />
Activities and products<br />
In this respect, Akiolis supplies:<br />
Via the French subsidiary Akiolis,<br />
<strong>Tessenderlo</strong> <strong>Group</strong> plays an important role<br />
in collecting and processing animal byproducts.<br />
Akiolis is the number two on the<br />
French market and the third largest player<br />
in Europe.<br />
- bones for the extraction of gelatines<br />
- proteins and animal fats for use in<br />
pet food<br />
- animal fats for the soap industry and<br />
lipochemistry<br />
- animal proteins for fertilisers<br />
In the field of animal by-products,<br />
Akiolis is active in two different but<br />
complementary sectors.<br />
• The valorisation of animal by-products<br />
which are suitable for consumption.<br />
• As a rendering plant, it handles the<br />
collection and the processing of risk<br />
waste, and protects hygiene on cattle<br />
farms. The processed products are<br />
mainly used as fuel by the cement<br />
industry.
<strong>Tessenderlo</strong> <strong>Group</strong><br />
Diversification towards<br />
the valorisation<br />
of by-products based<br />
on cereal crops<br />
Since <strong>2008</strong>, Akiolis is also active in the<br />
valorisation of the by-products of cereal<br />
crops from the food industry. These<br />
products are meant for the production of<br />
animal feed and pet food.<br />
Trends and facts in <strong>2008</strong><br />
The results of Akiolis are overall<br />
satisfactory, thanks to the combined<br />
effect of a number of contradictory<br />
developments:<br />
- a slight drop of volumes as a result<br />
of a structural decline of cattle<br />
farming in France;<br />
- an improvement of the margins<br />
thanks to very high market prices for<br />
animal fats in the first ten months of<br />
the year;<br />
- higher production costs as a result<br />
of more expensive energy and the<br />
restructuring costs related to the<br />
closing of four sites.<br />
As far as production is concerned, the<br />
market share in the fertiliser sector grew<br />
considerably. The market prices for animal<br />
fats remained high and this was very<br />
favourable for the results of the rendering<br />
plant activities for slaughterhouses that<br />
make use of the services of Akiolis.<br />
In <strong>2008</strong>, major restructuring took place<br />
after sites were acquired or demergered.<br />
Furthermore, two production plants in the<br />
west of France were closed. The rendering<br />
plant activities in this region and the<br />
supply of raw materials to be rationalised,<br />
increased the productivity of the collection<br />
and processing installations.<br />
The rationalisation<br />
of rendering<br />
plant activities led<br />
to higher<br />
productivity<br />
Productivity also grew as a result of<br />
better management of the industrial<br />
processes, combined with the introduction<br />
of new information technology systems,<br />
and thanks to an improved approach to<br />
collection in all subsidiaries.<br />
65
annual report <strong>2008</strong><br />
Simultaneously, the group continued to<br />
develop new markets. The collection and<br />
processing of used household oil from<br />
restaurants was extended to two additional<br />
regions: the west and the Paris region.<br />
In addition, a manager was hired for the<br />
methanisation activity.<br />
Akiolis has focused extra attention on<br />
searching for markets that offer the<br />
highest possible added value for the<br />
finished products, especially within the pet<br />
food industry. New markets were explored<br />
abroad. Furthermore, new applications<br />
were presented for existing products, such<br />
as the use of degreased bones for filtering<br />
in the sugar industry.<br />
Outlook for 2009<br />
Akiolis must adjust to the consequences<br />
of the worldwide crisis in raw materials. In<br />
this respect, the market price for animal<br />
fats dropped by more than 50 % at the<br />
end of <strong>2008</strong>. However, the restructuring<br />
efforts implemented in recent years should<br />
alleviate the impact of this crisis, especially<br />
for the meat-related activities.<br />
66
<strong>Tessenderlo</strong> <strong>Group</strong><br />
Restructuring efforts in<br />
recent years are helping<br />
to alleviate the impact<br />
of the crisis in raw<br />
materials<br />
Furthermore, the biofuel project using<br />
animal fats is planned to start in 2009. This<br />
project was delayed in <strong>2008</strong> because the<br />
French government changed its subsidy<br />
policy for this activity. Government aid<br />
continues. However in the future it will be<br />
linked to the environmental impact and<br />
more specifically to CO 2<br />
emissions. The<br />
subsidies will also focus on the production<br />
of second-generation biofuels. Akiolis<br />
meets both conditions.<br />
Strategy for the<br />
Natural Derivatives<br />
business unit<br />
• Strengthen our market position<br />
in the sector of collection and<br />
processing of animal byproducts.<br />
• Develop new applications such<br />
as the biofuel, pet food and<br />
methanising projects.<br />
67<br />
In July 2009, the rendering plant activities<br />
were completely privatised and they will no<br />
longer be a public service.<br />
Akiolis continues its policy of consolidation<br />
by dealing with ISO certification for the<br />
various sites in a straightforward manner,<br />
by implementing the new IT system<br />
across the entire group, and by focusing<br />
recruitment efforts.<br />
Finally, our efforts in the field of<br />
methanising should result in specific<br />
projects across the whole of France.
MAKING<br />
IT<br />
LASTING
Sustainable entrepreneurship is an<br />
ongoing assignment for <strong>Tessenderlo</strong> <strong>Group</strong>. We are committed<br />
to the environment, and the safety and health of our employees<br />
and the population, in all our activities. We constantly<br />
measure the impact of our activities on humans and nature,<br />
and strive to reduce this to a minimum.<br />
69
annual report <strong>2008</strong><br />
Commitments<br />
Human Resources<br />
70<br />
Employment<br />
In <strong>2008</strong>, the headcount rose from 8,121<br />
to 8,237. The workforce mainly increased<br />
in Plastics Converting, through the<br />
acquisition of Nyloplast in the Netherlands<br />
and the ongoing development of the<br />
Eurocell activities in Great-Britain. This<br />
rise largely exceeded the slight drop of<br />
the workforce in the other activities of the<br />
group.<br />
Within Chemicals headcount slightly<br />
fell as a result of previously initiated<br />
restructurings. As in Plastics Converting,<br />
the workforce in Specialities increased<br />
due to an acquisition. Additionally, organic<br />
growth of the activities positively influenced<br />
the headcount in Plastics Converting.<br />
Human Resources<br />
policy<br />
The Management Committee is strongly<br />
convinced that high-performing employees<br />
are crucial for success and for achieving<br />
the strategic objectives in a complex and<br />
ever-changing economic context.<br />
To implement this vision in concrete<br />
terms, the HR department has been<br />
developed further at group level and the<br />
roles of Corporate Talent Management,<br />
Compensation & Benefits, and Operational<br />
Design & Development, and HR projects<br />
have been created.<br />
The core mission consists of the following:<br />
• to attract and retain the best available<br />
employees
<strong>Tessenderlo</strong> <strong>Group</strong><br />
• to detect and develop talent in the<br />
company for future management<br />
positions, and to develop and maintain<br />
the necessary know-how<br />
• to support changes within the company<br />
and the organisation structure<br />
• to implement a remuneration policy that<br />
motivates employees and that is in line<br />
with market conditions<br />
• to strengthen constructive co-operation<br />
within the entire company<br />
Corporate Talent<br />
Management<br />
To accomplish this, a Performance<br />
Management Cycle for the entire<br />
<strong>Tessenderlo</strong> <strong>Group</strong> will be implemented<br />
in 2009. This is a process of motivating<br />
and inspiring managers and employees<br />
to perform actions that contribute to the<br />
achievement of the team, department<br />
and organisations goals and to the<br />
71<br />
Employment per business group<br />
Employment per country<br />
0<br />
500<br />
1,000<br />
1,500<br />
2,000<br />
2,500<br />
3,000<br />
3,500<br />
4,000<br />
0<br />
500<br />
1,000<br />
1,500<br />
2,000<br />
2,500<br />
Chemicals<br />
1,965<br />
France<br />
2,277<br />
Specialities<br />
2,755<br />
Belgium<br />
United Kingdom<br />
2,073<br />
1,393<br />
Plastics Converting<br />
3,517<br />
North America<br />
Netherlands<br />
685<br />
660<br />
Total<br />
8,237<br />
Italy<br />
289<br />
South America<br />
199<br />
Germany<br />
90<br />
China<br />
304<br />
Others<br />
267<br />
Total<br />
8,237
annual report <strong>2008</strong><br />
72<br />
implementation of its strategies in an<br />
effective and efficient way, with respect<br />
for individual growth and aspirations<br />
and shared values. This Performance<br />
Management Cycle will be the basic tool<br />
for Training and Development, Reward and<br />
Talent Review & Succession Planning.<br />
In addition, the recruitment process is set<br />
to be made more professional in light of<br />
the ongoing war for talent by promoting the<br />
employer branding of the group and the<br />
introduction of competence management.<br />
Furthermore, the implementation of a<br />
Succession Planning cycle for the top<br />
management will also get underway, linked<br />
to the strategic objectives in the short and<br />
medium-long term of the Business.<br />
In addition, investments are also being<br />
made in Training Development. One of<br />
the principal projects is the offering of an<br />
International Customised Management<br />
Development Programme for our<br />
executives. In co-operation with a number<br />
of external partners, including the Vlerick<br />
Leuven Ghent Management School we are<br />
offering an 18-day programme, spread over<br />
a year. The programme is a tailor-made<br />
mini-<strong>MB</strong>A and consists of 6 modules with<br />
a due focus on business understanding,<br />
personal leadership, personal mastery and<br />
project management.<br />
Moreover, many other training initiatives<br />
exist for all employees at all levels for<br />
acquiring technical knowledge and skills,<br />
using IT tools, languages, communication<br />
techniques and people management skills.<br />
Compensation &<br />
Benefits<br />
In <strong>2008</strong>, a variable pay system was<br />
introduced for the group’s top management<br />
as part of the implementation of the<br />
Performance Management project. In<br />
addition, preparations were made for the<br />
introduction in 2009 of a variable bonus<br />
plan for all managers.<br />
The salary house that was built for all<br />
Business activities was benchmarked<br />
to ensure internal fairness and external<br />
competitiveness of the remuneration<br />
package.<br />
The expatriation policy is constantly being<br />
adapted to the ever-changing social trends<br />
in this respect, and pension schemes<br />
are adapted to the changes of statutory<br />
regulations in the various countries.
<strong>Tessenderlo</strong> <strong>Group</strong><br />
Organisation Design &<br />
Development<br />
In <strong>2008</strong>, the development of common tools<br />
such as Job Descriptions and Job Grading<br />
began for all companies of the group, in<br />
order to optimise the change processes and<br />
the efficiency of the HR policy with regard to<br />
the ongoing evolution of the organisation.<br />
Job classification which had already been<br />
developed for the top management and<br />
managers of the Chemicals business<br />
group was also implemented in the other<br />
business groups in <strong>2008</strong>.<br />
Evolution of the average employment figures for Belgium and abroad<br />
73<br />
10,000<br />
8,000<br />
Total : 8,230<br />
6,000<br />
Abroad : 6,151<br />
4,000<br />
2,000<br />
Belgium : 2,079<br />
0<br />
1999<br />
2000<br />
2001<br />
2002<br />
2003<br />
2004<br />
2005<br />
2006<br />
2007<br />
<strong>2008</strong>
annual report <strong>2008</strong><br />
Environment, quality, safety and risk management<br />
74<br />
Manufacturing in a way that is<br />
environmentally responsible, taking into<br />
account the health and safety of employees<br />
and the population, is a fundamental<br />
requirement for every industrial activity.<br />
For this very reason, <strong>Tessenderlo</strong> <strong>Group</strong><br />
is committed to protecting people and<br />
the environment as a key consideration<br />
in its day-to-day policy. In this respect,<br />
we aspire to go further than the statutory<br />
requirements. To accomplish this objective,<br />
the group makes available considerable<br />
funds each year.<br />
To lend substance to this policy,<br />
<strong>Tessenderlo</strong> <strong>Group</strong> relies on internationally<br />
recognised principles, including<br />
Responsible Care, Best Available<br />
Techniques, ISO 14001, OHSAS 18001 and<br />
NFPA standards. These serve as a guide for<br />
optimisation.<br />
Incidents must be avoided at any cost -<br />
every accident can be prevented in theory.<br />
This can be achieved by putting in place the<br />
necessary precautions. Multi-disciplinary<br />
teams analyse the situation in the field on<br />
a continuous basis for this purpose. It is a<br />
key element of the ‘learning organisation’.<br />
Strict health and safety and environmental<br />
standards apply for the various sites of<br />
the group, including those with a low-risk<br />
classification. These standards are applied<br />
through an active risk management policy,<br />
the company’s own audits and insurance<br />
audits.<br />
Trends and facts in<br />
<strong>2008</strong><br />
Environmental care<br />
Each year, extensive investments are<br />
made in environmental projects in each<br />
of the various sites. Thanks to this<br />
policy, emission levels have already been<br />
substantially reduced in the past.<br />
In <strong>2008</strong>, <strong>Tessenderlo</strong> <strong>Group</strong> also invested<br />
in various projects that benefit the<br />
environment.
<strong>Tessenderlo</strong> <strong>Group</strong><br />
Product stewardship<br />
As part of the preparations for REACH,<br />
the new chemicals policy of the European<br />
Union, the focus in <strong>2008</strong> was on the<br />
so-called phase-in substances. A total<br />
of more than 500 substances were preregistered<br />
for 18 legal entities with the<br />
European Chemical Agency (ECHA). The<br />
highest number of registrations was for<br />
the pharmaceutical subsidiaries Calaire<br />
Chemie (France) and Farchemia (Italy).<br />
Mobility and Transport with regard to the<br />
ADR regulations.<br />
The voluntary commitment by the PVC<br />
industry, which has been signed by the<br />
group, delivered the expected results. For<br />
more information about the commitment,<br />
and the results, please log on to<br />
www.vinyl2010.org. www.vinyl2010.org.<br />
In addition, within the framework of<br />
REACH, consortiums were set up where<br />
producers and importers jointly prepare<br />
the applications for the registration of<br />
certain substances. One example is that<br />
of the chlor-alkali products. <strong>Tessenderlo</strong><br />
<strong>Group</strong> will play a leading role in a number<br />
of consortiums, such as the consortium for<br />
caustic potash as just one example.<br />
Risk analyses were carried out in<br />
collaboration with the production units, on<br />
products that are used in food and animal<br />
feeds.<br />
In <strong>2008</strong>, the <strong>Tessenderlo</strong> site was visited<br />
by the Organisation for the Prevention of<br />
Chemical Weapons (OPCW). The inspection<br />
was completed without remarks. A<br />
successful audit was also carried out by<br />
the Federal Government Department for<br />
Water, air and soil<br />
In <strong>2008</strong>, several of the group’s sites<br />
carried out investments to further reduce<br />
emission levels into the atmosphere and<br />
effluent discharges to the lowest possible<br />
levels.<br />
The re-licensing application for the three<br />
sites of <strong>Tessenderlo</strong> Chemie in Limburg<br />
(Belgium) was successfully completed in<br />
December <strong>2008</strong>. The Flemish government<br />
has renewed the environmental permits<br />
for a period of twenty years. This was<br />
made possible thanks to the intensive<br />
dialogue between the company and the<br />
government.<br />
75
annual report <strong>2008</strong><br />
Under the terms of the agreements,<br />
salt discharges will be reduced to<br />
one tenth of current levels by 2014 at<br />
the latest. For this purpose,<br />
10 million EUR are being invested<br />
in the modification of the production<br />
installations in the plant at Ham. In<br />
addition, 20 million EUR will be invested<br />
in cleaning up sludge basins, and the<br />
company will co-operate to clean up the<br />
historic pollution of the banks of the local<br />
streams Laak and Winterbeek.<br />
Focus on energy<br />
The necessary energy surveys were<br />
carried out in <strong>2008</strong> in the companies that<br />
signed the Flemish Covenant on Energy<br />
Benchmarking. These surveys serve as the<br />
basis for the energy plans for the period<br />
<strong>2008</strong>-2012.<br />
A better insight into the energy situation<br />
resulted in further energy savings in<br />
several places.<br />
76<br />
Thanks to the new production process used<br />
in Ham, considerably less sludge needs<br />
to be stored. This means that 30 hectares<br />
of land will become available for new<br />
industrial estates. In joint agreement with<br />
the Flemish and the Limburg authorities,<br />
<strong>Tessenderlo</strong> <strong>Group</strong> is keen to convert the<br />
vacant space in Ham into industrial land.<br />
Its location along the Albert canal is an<br />
important advantage.<br />
Quality department<br />
In <strong>2008</strong>, the quality department continued<br />
to assist the various departments in<br />
implementing and maintaining the quality<br />
management systems in accordance<br />
with the international standards, and<br />
maintaining the required certificates for<br />
the marketing of products in the various<br />
markets.<br />
With regard to the historic soil<br />
contamination of the factory sites in<br />
Limburg, the extent of the contamination<br />
has been outlined in descriptive soil<br />
surveys as agreed with the public<br />
authorities. These surveys specify the risks<br />
as well as the necessity to clean up the soil.<br />
At the same time, the soil decontamination<br />
activities that were already underway, are<br />
being continued.<br />
Health, safety and risk management<br />
The production units of <strong>Tessenderlo</strong> <strong>Group</strong><br />
made major investments in health and<br />
safety in <strong>2008</strong>. For example, a new digital<br />
work permit system was introduced at<br />
the sites in West-Limburg (Belgium).<br />
Preparations for maintenance works now<br />
occur in a uniform and structured manner.
<strong>Tessenderlo</strong> <strong>Group</strong><br />
These preparations are an important step<br />
in the safe execution of any given project.<br />
In the factory, a focus of attention is<br />
made to go out to communicate on<br />
health and safety, for example at the<br />
toolbox meetings. Small panel groups<br />
are put together to discuss specific<br />
health and safety topics on the shop floor.<br />
Opportunities for improving health and<br />
safety are also discussed during the health<br />
and safety observation and communication<br />
tours.<br />
The standard training for operators also<br />
focuses on health and safety. The socalled<br />
TOPS project (Training Operators)<br />
also gives practical tips on working safely,<br />
alongside basic health and safety aspects.<br />
The Risk Management Department carried<br />
out health and safety audits in the past<br />
year in the following plants:<br />
• China:<br />
Taile Chemical Industry (Lianyungang)<br />
PB Gelatins (Ping Yang)<br />
• Poland:<br />
Dyka Warehouses (Wroclaw and Lotz)<br />
• The Netherlands :<br />
Nyloplast (‘s-Gravendeel)<br />
Many other sites were audited by<br />
an external insurance company, in<br />
collaboration with the Risk Management<br />
Department. All of these served to confirm<br />
that the initiatives of <strong>Tessenderlo</strong> <strong>Group</strong><br />
to increase the health and safety of its<br />
employees, the company, the surroundings<br />
and the environment, are effective. Another<br />
very positive conclusion is that this is a<br />
continuous and dynamic process. The<br />
following factories were audited in <strong>2008</strong>:<br />
• United States:<br />
Jupiter Sulphur LLC (Ponca City)<br />
77
annual report <strong>2008</strong><br />
78<br />
<strong>Tessenderlo</strong> Kerley (Coffeyville)<br />
PB Leiner (Davenport)<br />
• France:<br />
Caillaud (Saint Langis)<br />
France Gras (Le Sourn)<br />
Point (Viriat)<br />
Plastival (Clerval)<br />
• The Netherlands:<br />
LVM Limburg BV (Beek)<br />
<strong>Tessenderlo</strong> Chemie Maastricht<br />
<strong>Tessenderlo</strong> Chemie Rotterdam<br />
• Italy:<br />
<strong>Tessenderlo</strong> Italia (Pieve Vergonte,<br />
Ceppo Morelli and Megolo)<br />
Farchemia (Treviglio)<br />
• Germany:<br />
PB Gelatins GmbH (Nienburg)<br />
• Poland:<br />
Dyka Polska (Wroclaw)<br />
TCT Polska (Sochaczew)<br />
• Belgium:<br />
PB Gelatins (Vilvoorde)<br />
The Risk Management Department<br />
primarily focused its attention on<br />
prevention. For example, a DVD was<br />
distributed with examples of good and bad<br />
human conduct on the shop floor. The DVD<br />
is available to be used in all departments<br />
of the group for training purposes. The<br />
department also gave presentations to<br />
the commercial teams on product liability<br />
and how problems can be avoided. The<br />
department also continued work on<br />
the development of health and safety<br />
standards for <strong>Tessenderlo</strong> <strong>Group</strong> as a<br />
whole.<br />
Community relations<br />
A crucial aspect of corporate social<br />
responsibility is good community relations<br />
in the way <strong>Tessenderlo</strong> <strong>Group</strong> maintains<br />
with the local community around the<br />
various sites. It is very important that<br />
the company and local residents have a<br />
good relationship. Openness and good<br />
communications play a key role in this<br />
respect. A good example of this are the<br />
open house days when local residents<br />
are informed about the activities at the<br />
production sites.<br />
The social role of the company goes even<br />
further than the immediate surroundings.<br />
It is especially important that youngsters<br />
receive objective information about<br />
the chemical industry in general and<br />
<strong>Tessenderlo</strong> <strong>Group</strong> in particular.<br />
They must be made aware of the major<br />
role this industry plays in their daily lives.<br />
A close co-operation with educational<br />
authorities is important to accomplish this.<br />
This specifically translates into company<br />
visits and a variety of initiatives that bridge<br />
the gap between industry and education.
<strong>Tessenderlo</strong> <strong>Group</strong><br />
Outlook for 2009<br />
Environmental care<br />
With respect to water, over the years ahead<br />
the sites in Limburg will focus on adapting<br />
the waste water circuit. This is the result<br />
of changes to the production process in the<br />
Ham factory. Further investments will also<br />
be made for effluent treatment at several<br />
other sites of the group.<br />
The necessary soil decontamination<br />
projects are also getting underway for the<br />
sites of <strong>Tessenderlo</strong> Chemie in Limburg.<br />
This is the follow-up to the descriptive<br />
soil surveys that outline the historic soil<br />
contamination.<br />
Various measures to protect the soil<br />
and further reduce emissions into the<br />
atmosphere will also be implemented.<br />
Furthermore, several energy-saving<br />
measures are also scheduled.<br />
With regard to product stewardship,<br />
considerable efforts will be made in the<br />
context of the European REACH legislation<br />
(Registration, Evaluation, Authorisation<br />
and limitations of Chemicals). The<br />
so-called Euclid documents detailing<br />
physiochemical, toxic and ecotoxic<br />
characteristics are being prepared for the<br />
substances with production levels in excess<br />
of 1,000 tonnes.<br />
The mandatory SIEF activities (Substance<br />
Information Exchange Forum) will also be<br />
carried out and followed up. This forum<br />
has been set up for all manufacturers<br />
and importers that have registered or<br />
pre-registered hazardous substances.<br />
They must exchange all available<br />
information amongst themselves to prevent<br />
unnecessary tests on animals. They must<br />
also ensure that the classification and<br />
labelling of substances occurs in a uniform<br />
manner.<br />
The IT tools required to work efficiently<br />
with the REACH regulations will be<br />
implemented in 2009 and the following<br />
years. Communication to customers and<br />
suppliers is also an important issue.<br />
Furthermore in respect to product<br />
stewardship, the European integration of<br />
the Surround® crop protection products<br />
will also be continued in 2009.<br />
The GHS regulations (Global Harmonised<br />
System) will also be implemented. This<br />
worldwide uniform system relates to the<br />
labelling and hazard signs on product<br />
labels. This is gradually being introduced<br />
since1 January 2009.<br />
79
annual report <strong>2008</strong><br />
80<br />
Moreover, an electronic system will be<br />
developed to make the Material Safety<br />
Data Sheets (MSDS) of hazardous products<br />
available to customers and to follow this up<br />
within the organisation.<br />
Health, safety and risk management<br />
In 2009, the health and safety theme<br />
‘Working together for more safety’ will<br />
be launched. The importance of a good<br />
co-ordination between maintenance and<br />
manufacturing when preparing work will<br />
be emphasised.<br />
Next to the human aspects, and in<br />
particular the health and safety<br />
conduct of employees, the safety of the<br />
installations will also be reviewed in<br />
detail and further improved. The training<br />
programme with customised training<br />
sessions will be developed further. Special<br />
attention will be paid to emergency<br />
planning in 2009.<br />
The risk analysis that was started in <strong>2008</strong><br />
for the Chemicals business group, will be<br />
developed further in 2009 and extended<br />
to include other business groups and<br />
business units. In this respect, efforts<br />
will be made to map out and evaluate<br />
a large variety of risks. This will enable<br />
<strong>Tessenderlo</strong> <strong>Group</strong> to reduce risks where<br />
possible and to manage these risks more<br />
effectively.<br />
The internal audits will continue with the<br />
same frequency as in 2009, with new risk<br />
assessment visits and revisits.
<strong>Tessenderlo</strong> <strong>Group</strong><br />
Corporate Governance<br />
Transparent<br />
management<br />
<strong>Tessenderlo</strong> Chemie subscribes to the nine<br />
principles of Corporate Governance stated<br />
in the Belgian Corporate Governance Code.<br />
In fulfilment of this, the Board of Directors<br />
approved its Corporate Governance Charter<br />
(the ‘Charter’) on 10 November 2005<br />
and an update on 8 November 2007. The<br />
Charter can be consulted on our website<br />
www.tessenderlogroup.com.<br />
Compliance with the recommendations<br />
contained in the Belgian Corporate<br />
Governance Code and fine-tuning the<br />
working of the Board of Directors, the<br />
special committees and the Management<br />
Committee (*) to fulfil the requirements<br />
of Corporate Governance is an ongoing<br />
process. <strong>Tessenderlo</strong> Chemie undertakes,<br />
therefore, to review the Charter at regular<br />
intervals and to modify it where necessary.<br />
Board of Directors<br />
81<br />
By introducing organisational and<br />
operational rules, the decision-making<br />
process within the Board of Directors,<br />
the special committees set up under the<br />
auspices of the Board of Directors, and<br />
the Management Committee becomes<br />
more transparent, taking into account the<br />
interests of the company, its shareholders<br />
and others directly or indirectly involved in<br />
events affecting the company, the so-called<br />
‘stakeholders’.<br />
Role and responsibilities<br />
The Board of Directors is the highest administrative<br />
body of the company, which has<br />
full powers under Article 18 of the Articles<br />
of Association. The Board of Directors is a<br />
body with collective responsibility, which<br />
reports to the General Meeting on its<br />
activities.<br />
(*) To date, it has been decided not to exercise the option offered under Article 524bis of the Belgian<br />
Companies Code to set up an Executive Committee.
annual report <strong>2008</strong><br />
82<br />
The role of the Board of Directors consists<br />
in ensuring the long-term success<br />
of <strong>Tessenderlo</strong> Chemie and <strong>Tessenderlo</strong><br />
<strong>Group</strong>. The Board of Directors promotes<br />
and guarantees entrepreneurial leadership<br />
and ensures that risks can be assessed and<br />
managed. The Board of Directors decides<br />
on the values and the strategy of the company,<br />
its risk profile, and the key elements<br />
of its policy. The Board of Directors also<br />
exercises major monitoring and compliance<br />
responsibilities.<br />
The company is validly represented either<br />
by the Chairman of the Board of Directors<br />
or by two directors acting jointly.<br />
Composition<br />
Non-executive directors:<br />
• Michel Nicolas (June 2010)<br />
• François Schwartz (June 2011)<br />
• Jacques Zyss (June 2010)<br />
Independent non-executive directors*:<br />
• Valère Croes (June 2009)<br />
• Paul de Meester (June 2011)<br />
• Jaak Gabriels (June 2011)<br />
• Baudouin Michiels (June 2011)<br />
• Bernard Pache (June 2011)<br />
• Thierry Piessevaux (June 2011)<br />
• Alain Siaens (June 2010)<br />
• Karel Vinck (June 2011)<br />
The Board of Directors is supported by<br />
Adrien Carton de Wiart, in his capacity as<br />
the Secretary General of the company.<br />
At 31 December <strong>2008</strong>, the <strong>Tessenderlo</strong><br />
Chemie Board of Directors was composed<br />
as follows:<br />
Chairman, executive director:<br />
Gérard Marchand (appointment ends June<br />
2010)<br />
Remuneration policy<br />
Pursuant to Article 21 of the Articles<br />
of Association, as modified by the<br />
extraordinary meeting of 5 June 2007, it<br />
is the responsibility of the <strong>Tessenderlo</strong><br />
Chemie Board of Directors to make<br />
(*) Pursuant to paragraph 4.10 of the Charter, a director is regarded as being independent, if he or she at the<br />
very least satisfies the independence criteria contained in Article 526 ter of the Belgian Companies Code. When<br />
assessing independence, the conditions outlined in Annex A to the Belgian Corporate Governance Code will<br />
also be considered. According to the information at the disposal of the Board of Directors, the independent<br />
directors of <strong>Tessenderlo</strong> Chemie meet the above-mentioned independence criteria. No exceptions were<br />
reported to the Board.
<strong>Tessenderlo</strong> <strong>Group</strong><br />
proposals concerning the remuneration<br />
granted to Board members.<br />
and 3,000 EUR for the director chairing the<br />
Committee.<br />
A special committee set up within<br />
the Board of Directors, namely the<br />
Remuneration Committee, formulates<br />
proposals to the Board of Directors<br />
concerning:<br />
• The remuneration for participating in<br />
the four annual Board meetings;<br />
• The remuneration granted for<br />
assignments related to special<br />
mandates.<br />
The Remuneration Committee also<br />
assesses the implementation of the various<br />
decisions taken on this matter.<br />
Non-executive directors receive fixed<br />
remuneration and reimbursement of<br />
travel expenses to meetings. Total annual<br />
remuneration amounts to 53,679 EUR<br />
per mandate, excluding reimbursement<br />
of travel expenses. Attendance fees<br />
amounting to 1,240 EUR are also granted<br />
per meeting of the Remuneration<br />
Committee and the Appointments<br />
Committee and, if the situation arises, the<br />
Independent Directors Committee to be set<br />
up pursuant to Article 524 of the Belgian<br />
Companies Code. With regard to the<br />
Audit Committee, the attendance fees per<br />
meeting amount to 2,000 EUR per director<br />
The executive director receives a<br />
remuneration package consisting of three<br />
different components proposed by the<br />
Remuneration Committee, namely:<br />
• A fixed remuneration of 590,352 EUR in<br />
<strong>2008</strong> compared to 560,320 EUR in 2007;<br />
• A variable remuneration of 472,282 EUR<br />
relating to <strong>2008</strong> compared to a bonus of<br />
425,843 EUR in 2007;<br />
• The granting of stock options under<br />
the stock option plan for group<br />
topmanagement.<br />
In common with all employees, the<br />
executive director also participates in the<br />
company’s benefits plan.<br />
Operation<br />
Pursuant to Article 16 of the <strong>Tessenderlo</strong><br />
Chemie Articles of Association, the Board<br />
of Directors convenes whenever it deems<br />
necessary, following notice given by the<br />
Chairman or if requested by any two<br />
directors. The Board of Directors may only<br />
validly deliberate if the majority of the<br />
directors is present or represented. The<br />
Board of Directors strives to take decisions<br />
by unanimous vote. If unanimity cannot be<br />
reached, the decision is taken by simple<br />
83
annual report <strong>2008</strong><br />
84<br />
majority, with the meeting Chairman<br />
having the deciding vote.<br />
During 2007, the Board of Directors<br />
convened five times. Average attendance in<br />
<strong>2008</strong> was 75 % against 92 % in 2007.<br />
Special committees<br />
General<br />
The Board of Directors may set up special<br />
committees under its auspices to analyse<br />
certain specific matters and to advise the<br />
Board. However, the ultimate decisionmaking<br />
authority remains with the Board of<br />
Directors in accordance with the statutory<br />
provisions and the Memorandum and<br />
Articles of Association.<br />
The <strong>Tessenderlo</strong> Chemie Board of Directors<br />
has set up an Appointments Committee,<br />
a Remuneration Committee, and an Audit<br />
Committee.<br />
recommendations of the special committee<br />
in question.<br />
Appointments Committee<br />
The task of the Appointments Committee<br />
consists in advising the Board of Directors<br />
on and assisting it with the appointment of<br />
directors, or assisting the CEO with and advising<br />
on the appointment of Management<br />
Committee members. The Appointments<br />
Committee ensures that the (re)appointment<br />
procedures are carried out in a professional<br />
and objective manner. However,<br />
the ultimate decision-making authority<br />
remains with the General Meeting or the<br />
Board of Directors respectively.<br />
At 31 December <strong>2008</strong>, the Appointments<br />
Committee was composed as follows:<br />
• Paul de Meester (Chairman)<br />
• Baudouin Michiels<br />
• Jacques Zyss.<br />
A special committee strives to take<br />
decisions by unanimous vote. If unanimity<br />
cannot be reached, the decision is taken by<br />
simple majority.<br />
Following each committee meeting, the<br />
Board of Directors receives a verbal or<br />
written report of the deliberations and<br />
The Appointments Committee convened<br />
once during the year under review. As in<br />
2007, the attendance rate was 100 %.<br />
Remuneration Committee<br />
The task of the Remuneration Committee<br />
consists in advising the Board of Directors
<strong>Tessenderlo</strong> <strong>Group</strong><br />
on and assisting it with formulating the<br />
remuneration policy for the executive and<br />
non-executive directors and Management<br />
Committee members. However, the ultimate<br />
decision-making authority remains<br />
with the General Meeting as far as the directors<br />
are concerned, and with the Board<br />
of Directors in the case of Management<br />
Committee members.<br />
At 31 December <strong>2008</strong>, the Remuneration<br />
Committee was composed as follows:<br />
obligation relates to <strong>Tessenderlo</strong> <strong>Group</strong> as<br />
a whole and refers to financial reporting,<br />
internal control and risk management, in<br />
addition to the internal and external audit<br />
process.<br />
At 31 December <strong>2008</strong>, the Audit Committee<br />
was composed as follows:<br />
• Valère Croes (Chairman)<br />
• Thierry Piessevaux<br />
• François Schwartz.<br />
• Valère Croes (Chairman)<br />
• Paul de Meester<br />
• Alain Siaens<br />
• Jacques Zyss<br />
The Financial Director, the Internal<br />
Auditor, the Management Controller and<br />
the Statutory Auditor may be invited to attend<br />
Audit Committee meetings.<br />
85<br />
The Remuneration Committee convened<br />
once during the year under review. As in<br />
2007, the attendance rate was 100 %.<br />
The Audit Committee convened three times<br />
during the year under review. As in 2007<br />
the attendance rate was 100 %.<br />
Audit Committee<br />
The task of the Audit Committee consists<br />
in providing the Board of Directors with assistance<br />
with and advice on its supervisory<br />
responsibilities concerning compliance in<br />
the most general sense.<br />
The compliance task of the Audit<br />
Committee and the associated reporting
annual report <strong>2008</strong><br />
86<br />
Eddy Vandenbriele<br />
Frank Coenen Albert Vasseur Pol Deturck<br />
Adrien Carton de Wiart Christian Vrebosch<br />
Gérard Marchand<br />
Jan Vandendriessche<br />
Management Committee<br />
Role and responsibilities<br />
The operational management of the<br />
company is entrusted by the Board of<br />
Directors to the Chief Executive Officer<br />
(CEO). The CEO is assisted by the members<br />
of the Management Committee.<br />
The operational management of the<br />
company includes, inter alia:<br />
• the day-to-day management of the<br />
company;<br />
• preparing and implementing decisions<br />
taken by the Board of Directors;<br />
• organising the internal audit, without<br />
prejudicing the supervisory function<br />
exercised by the Board of Directors;<br />
• preparing the budget and financial<br />
reporting, following these up, and<br />
explaining them to the Board of<br />
Directors;<br />
• preparing the annual accounts in<br />
accordance with the company’s<br />
accounting principles and valuation<br />
rules.<br />
Composition<br />
At 31 December <strong>2008</strong>, the <strong>Tessenderlo</strong><br />
Chemie Management Committee was
<strong>Tessenderlo</strong> <strong>Group</strong><br />
composed as follows:<br />
• Gérard Marchand – Chairman<br />
• Frank Coenen – Chemicals business<br />
group<br />
• Albert Vasseur – Plastics Converting<br />
business group<br />
• Jozef Housen – Gelatin business unit<br />
• Jan Vandendriessche – Fine Chemicals<br />
business unit<br />
As of 1 January 2009, the <strong>Tessenderlo</strong><br />
Chemie Management Committee is<br />
composed as follows:<br />
• Gérard Marchand – Chairman<br />
• Frank Coenen – Chief Operating Officer<br />
• Albert Vasseur – Plastics Converting<br />
business group<br />
• Jan Vandendriessche – Organic<br />
Specialities business group<br />
• Pol Deturck – Chemicals business<br />
group<br />
The ordinary meetings of the Management<br />
Committee are also attended by the<br />
Secretary General, Adrien Carton de Wiart,<br />
the Director ICT, Internal Audit and Human<br />
Resources, Eddy Vandenbriele and the<br />
CFO, Christian Vrebosch.<br />
Remuneration policy<br />
The remuneration of Management<br />
Committee members is determined on the<br />
basis of the recommendations made by the<br />
Remuneration Committee.<br />
The remuneration package and the<br />
composition thereof are analysed annually<br />
on the basis of a study conducted by a<br />
specialised external agency, in order<br />
to take into account prevailing market<br />
conditions.<br />
The fixed remuneration must be situated at<br />
internationally competitive levels with the<br />
objective of promoting complete motivation<br />
and loyalty of managers towards the group.<br />
The variable component amounting to<br />
on average 30 % of total remuneration<br />
sets quantitative and qualitative targets<br />
to be met by managers, taking into<br />
account the specific circumstances in<br />
the sector of activities or business units,<br />
which they manage. In common with all<br />
senior executives at the subsidiaries,<br />
Management Committee members are<br />
also entitled to participate in the annual<br />
stock option plan. The apportionment of<br />
subscription rights is entrusted to the<br />
Remuneration Committee.<br />
The pension plan, in which the executive<br />
director and the Management Committee<br />
members participate, is the same plan<br />
as that for all employees and executives<br />
of the company and is of the type<br />
‘defined benefits obligations’. The annual<br />
remuneration for the Management<br />
Committee, including remuneration for<br />
the executive director, amounts to 2.555<br />
million EUR including the bonus for <strong>2008</strong>.<br />
In 2007 the remuneration amounted to<br />
2.410 million EUR, bonus included.<br />
87
annual report <strong>2008</strong><br />
88<br />
Stock options<br />
In 2007 the group issued a first section of<br />
160,000 warrants, as part of a five-year<br />
plan relating to a maximum of 800,000<br />
warrants that could be subscribed for.<br />
These subscription rights can only be<br />
exercised after three years and this for two<br />
successive years. The list of beneficiaries,<br />
namely the Management Committee and<br />
the senior executives of the group (the<br />
‘Executive Team’), is established by the<br />
Board of Directors every year. The Board<br />
of Directors entrusts the Remuneration<br />
Committee with apportioning subscription<br />
rights among beneficiaries. The<br />
subscription rights are registered and<br />
non-transferable, except in the event of<br />
death. This issue enables the group’s<br />
senior executives to be connected with<br />
its financial results and this in the long<br />
term. The issued and offered subscription<br />
rights needed to be accepted fully or<br />
partially before 10 February 2009. The<br />
price at which the subscription rights can<br />
be exercised was set at 23.08 EUR. For the<br />
subplans for France and the USA the prices<br />
are respectively 22.07 EUR and 22.09 EUR.<br />
At 31 December <strong>2008</strong>, the situation of<br />
the total of the number of warrants,<br />
which can still validly be exerted by the<br />
‘Executive Team’, is the following: 258,595<br />
in total, including 77,460 for Management<br />
Committee members and 181,135 for<br />
senior executives of the group.<br />
Operation<br />
In principle, the Management Committee<br />
convenes once a month. The Management<br />
Committee may only validly deliberate,<br />
if half of its members are present or<br />
represented. The Management Committee<br />
strives to take decisions by unanimous vote.<br />
The Management Committee reports to<br />
the Board of Directors on the principal<br />
decisions it has taken.<br />
During the year under review, the<br />
Management Committee convened eleven<br />
times. Attendance was 100 %.<br />
Conflict of interests<br />
regulation<br />
Paragraphs 4.9 and 6.6 of the Charter<br />
set out the conflict of interests regulation<br />
applicable to the Board of Directors and<br />
the Management Committee respectively.<br />
During the year under review, the Board<br />
of Directors was informed of a conflict of<br />
interest affecting one of its members as it<br />
was noted in the notarial deed concerning<br />
the emission of warrants.
<strong>Tessenderlo</strong> <strong>Group</strong><br />
Policy on inside<br />
information and market<br />
manipulation<br />
Chapter 8 of the Charter sets out the<br />
company’s policy on inside information and<br />
market manipulation.<br />
The Board of Directors has appointed the<br />
Secretary General, Adrien Carton de Wiart,<br />
as Compliance Officer. In his absence, the<br />
Director ICT, Internal Audit and Human<br />
Resources will perform the function of<br />
Compliance Officer.<br />
The Compliance Officer is responsible<br />
for overseeing compliance with the<br />
policy outlined by the company on inside<br />
information and market manipulation and<br />
acts as a point of contact for enquiries<br />
concerning the application of the policy.<br />
External Audit<br />
The position of statutory auditor is fulfilled<br />
by Klynveld Peat Marwick Goerdeler<br />
Bedrijfsrevisoren (KPMG), represented by<br />
Ludo Ruysen. Its mandate will expire in<br />
June 2010.<br />
audit committee and board of directors.<br />
Worldwide audit and other audit related<br />
fees for <strong>2008</strong> in relation to services<br />
provided by KPMG Bedrijfsrevisoren<br />
amounted to 0.70 million EUR (2007:<br />
0.47 million EUR), which was composed<br />
of audit services for the annual financial<br />
statements of 0.39 million EUR (2007:<br />
0.32 million EUR) and audit related<br />
services of 0.31 million EUR (2007:<br />
0.15 million EUR).<br />
Audit and other fees for <strong>2008</strong> in relation<br />
to services provided by other offices of the<br />
KPMG network amounted to 0.64 million<br />
EUR (2007: 0.55 million EUR) which was<br />
composed of audit services for the annual<br />
financial statements of 0.45 million EUR<br />
(2007: 0.47 million EUR), tax services of<br />
0.19 million EUR (2007: 0.08 million EUR).<br />
Dividends policy<br />
The dividend policy remains unchanged. In<br />
fact: one-third of the net consolidated profit<br />
average is paid out as dividend. However,<br />
this policy can be adjusted in order to<br />
ensure that the dividend grows or at least<br />
remains stable.<br />
89<br />
Fees for auditing the annual financial<br />
statements of <strong>Tessenderlo</strong> Chemie NV<br />
and its subsidiaries are determined by<br />
the general meeting of shareholders after<br />
review and approval by the company’s<br />
For the financial year <strong>2008</strong>, a net dividend<br />
of 1.00 EUR per share will be proposed to<br />
the General Meeting of June 2, 2009, which<br />
is an increase of 5.3 % compared to last<br />
year’s dividend.
MAKING<br />
IT<br />
CONVINCING
<strong>Tessenderlo</strong> <strong>Group</strong> inspires confidence. Among<br />
customers and also among shareholders and investors. For<br />
many products we are the market leader in Europe and even<br />
in the world. In addition, <strong>Tessenderlo</strong> <strong>Group</strong> is financially a<br />
healthy company. Costs are monitored very closely. Our<br />
dividend policy is focused on stable growth.<br />
91
annual report <strong>2008</strong><br />
Information for<br />
shareholders<br />
<strong>Tessenderlo</strong> Chemie shares<br />
92<br />
<strong>Tessenderlo</strong> Chemie shares are listed on The shares are included in the<br />
the Brussels Stock Exchange with code ‘Kempen SNS Smaller European Social<br />
TESB. They are traded on the continuous Responsibility Index’. This index only<br />
market and are included in the following includes companies that fulfill stringent<br />
indices: BEL Mid and Next 150.<br />
criteria and practices in terms of business<br />
ethics and social and environmental<br />
performance.<br />
Shareholder structure on 31 December <strong>2008</strong><br />
Shareholder Share Last notification<br />
SNPE SA (FR) 25.93 % 30 October <strong>2008</strong><br />
M&G Investment Management Ltd (UK) 4.03 % 24 October <strong>2008</strong><br />
ID Sparinvest A/S (DK) 3.03 % 31 October <strong>2008</strong><br />
Sub-total 32,99 %<br />
Staff (Nominative shares) 1.28 %<br />
Free float (100 -25,93) 74,07 %
<strong>Tessenderlo</strong> <strong>Group</strong><br />
The total number of shares constituting<br />
the issued capital of <strong>Tessenderlo</strong> Chemie<br />
NV is 27,713,288. Including the shares that<br />
may be issued as a result of the exercise of<br />
warrants, the total is 27,971,883.<br />
In <strong>2008</strong>, JP Morgan Chase & Co that<br />
officially notified to own a stake of at least<br />
3 % in the share capital of <strong>Tessenderlo</strong><br />
Chemie NV, fell below the 3 % threshold.<br />
Stock market data as at 31 December<br />
2004* 2005 2006 2007 <strong>2008</strong><br />
Number of shares 27,210,399 27,269,568 27,419,876 27,626,444 27,713,288<br />
Farthest prices<br />
Fixed ordinary share (EUR) 27.24/33 36.00/25.75 26.03/32.53 31.27/47.2 20.05/38.21<br />
93<br />
Market continuous<br />
Closing price (EUR) 31.14 27.35 32.3 33.2 21.63<br />
Average daily volume 35,536 59,890 64,063 97,787 103,308<br />
Velocity (in %)** 51.38 56.44 59.58 90.26 95.43<br />
Volume 9,203,713*** 15,391,688 16,336,185 24,935,571 26,446,820<br />
* As from 2004 figures are stated according to IFRS<br />
** Sum of the velocities of the 12 months of the year<br />
*** Exclusive the sale of 4,693,794 shares of EMC Parbel<br />
Financial data per share (consolidated accounts)<br />
on 31 December<br />
2004* 2005 2006 2007 <strong>2008</strong><br />
Data per share (EUR)<br />
Value of shareholders’ equity 27.77 28.41 25.96 29.04 32.55<br />
Profit (+) / Loss (-) 1.97 1.29 -0.89 4.69 5.08<br />
Net cash flow 7.19 5.91 5.21 8.99 10.11<br />
Net dividend per ordinary share 0.90 0.90 0.90 0.95 1.00<br />
Capital (millions EUR) 134.00 135.00 136.00 137.02 138.00<br />
Capitalisation at the end of year (millions EUR) 847.30 745.80 885.70 917.20 599.40<br />
* As from 2004 figures are stated according to IFRS
annual report <strong>2008</strong><br />
Dividend<br />
On 2 June 2009, a proposal will be put to<br />
the <strong>Annual</strong> General Meeting to approve a<br />
net dividend of 1.00 EUR (coupon n° 72).<br />
This corresponds to a gross dividend<br />
of 1.3333 EUR. The net dividend for<br />
shares with VVPR strips attached will be<br />
1.1333 EUR. The net dividend of 1.00 EUR<br />
means an increase of 5.3 % compared with<br />
financial year 2007.<br />
The net dividend will be payable as<br />
from June 9, 2009 either per transfer to<br />
registered and dematerialised shares, or<br />
against handing-over of the coupon for<br />
materialised shares (and if necessary from<br />
strips VVPR) to Belgian banks and financial<br />
institutions, the financial service being<br />
ensured by ING Belgium.<br />
94<br />
Financial communication and<br />
investor relations<br />
Road shows and events<br />
Each year, the financial managers work<br />
with the Corporate Communication<br />
department on a number of initiatives to<br />
raise awareness of <strong>Tessenderlo</strong> <strong>Group</strong><br />
among institutional and private investors.<br />
Between ‘roadshows’, the group regularly<br />
participates in events for investors and<br />
organises company visits and meetings<br />
with the group management.<br />
The group also invites analysts on a regular<br />
base in order to comment on the results<br />
and future developments. In a ddition the<br />
group organises conferences calls for<br />
analysts to explain the quarterly results.<br />
Financial calendar<br />
Financial year <strong>2008</strong> Announcement of results 12 March 2009<br />
General Meeting 2 June 2009<br />
Payment of dividend 9 June 2009<br />
First quarter 2009 Announcement of quarterly results 23 April 2009<br />
First half year 2009 Announcement of quarterly results 27 August 2009<br />
Third quarter 2009 Announcement of quarterly results 5 November 2009
<strong>Tessenderlo</strong> <strong>Group</strong><br />
Full financial and non-financial information<br />
about the group is available on the website<br />
at www.tessenderlogroup.com. Anyone<br />
wishing to receive <strong>Tessenderlo</strong> <strong>Group</strong> press<br />
releases by e-mail may register on the<br />
mailing list on this website.<br />
The <strong>Tessenderlo</strong> Chemie share price is<br />
published on www.tessenderlogroup.<br />
com and on the Euronext website: www.<br />
euronext.com.<br />
Contacts<br />
The following people are available to<br />
answer any questions about <strong>Tessenderlo</strong><br />
<strong>Group</strong>:<br />
Investors and analysts<br />
Christian Vrebosch (CFO)<br />
Tel: +32 2 639 18 87<br />
E-mail:<br />
christian.vrebosch@tessenderlo.com<br />
Providers of financial<br />
information<br />
Providers of <strong>Tessenderlo</strong> <strong>Group</strong> financial<br />
information publish under the following<br />
codes:<br />
Shareholders<br />
Jo Verspecht<br />
Tel: +32 2 639 18 31<br />
E-mail: jo.verspecht@tessenderlo.com<br />
95<br />
• Bloomberg: TESB BB<br />
• Reuters: TESBt.BR<br />
• Datastream: B:TES<br />
• TBM: 23IT081<br />
• SEDOL: 4-884-006<br />
• ALPHA: TES<br />
• ISIN: BE 000 3 555 639<br />
“The stock market price of<br />
<strong>Tessenderlo</strong> Chemie shares<br />
generally held its own in relation<br />
to the Belgian or European stock<br />
exchange indices and continued to<br />
do so until November <strong>2008</strong>. As of<br />
this time, prices of chemical shares<br />
sustained a downward sweep as<br />
a result of the uncertainty as to<br />
the performance of industrial<br />
businesses for the months ahead.”<br />
Gérard Marchand<br />
CEO
annual report <strong>2008</strong><br />
Shareholders equity & Stock market capitalisation<br />
(millions EUR)<br />
2, 000<br />
1,000<br />
Shareholders’ equity<br />
96<br />
0<br />
Stock market<br />
capitalisation<br />
Net dividend per share (EUR)<br />
<br />
IFRS<br />
1.00<br />
<br />
<br />
<br />
<br />
<br />
1999<br />
2000<br />
2001<br />
2002<br />
2003<br />
2004<br />
2005<br />
2006<br />
2007<br />
<strong>2008</strong><br />
1999<br />
2000<br />
2001<br />
2002<br />
2003<br />
2004<br />
2005<br />
2006<br />
2007<br />
<strong>2008</strong>
<strong>Tessenderlo</strong> <strong>Group</strong><br />
Return on dividends reinvested<br />
200<br />
150<br />
100<br />
50<br />
Dec. 03<br />
2004<br />
2005<br />
97<br />
40<br />
30<br />
20<br />
10<br />
Jan. 08<br />
Feb. 08<br />
March 08<br />
April 08<br />
May 08<br />
June 08<br />
July 08<br />
Aug. 08<br />
Sept. 08<br />
Oct. 08<br />
Nov. 08<br />
Dec. 08<br />
2006<br />
2007<br />
Dec. 08<br />
Change in the <strong>Tessenderlo</strong> Chemie share price<br />
in <strong>2008</strong> (EUR)
MAKING<br />
IT<br />
WORK
Co-operation means working together. Effective<br />
communication between employees is the key<br />
to success. Like at PB Gelatins in Vilvoorde. All maintenance<br />
works are discussed and planned at the weekly team meeting<br />
between the managers of maintenance and production.<br />
99
financial report <strong>2008</strong><br />
CONSOLIDATED FINANCIAL REPORT<br />
CONSOLIDATED INCOME STATEMENT<br />
(Millions EUR) note <strong>2008</strong> 2007<br />
Revenue 2,765.0 2,405.9<br />
Cost of sales -2,165.9 -1,873.6<br />
Gross profit 599.1 532.3<br />
Distribution expenses -144.6 -165.2<br />
Sales and marketing expenses -62.7 -77.4<br />
Administrative expenses -126.1 -125.2<br />
Other operating income and expenses 4 -26.6 -12.2<br />
Profit from operations before non-recurring items 239.1 152.3<br />
100<br />
Gain on disposals 5 12.8 58.4<br />
Restructuring (incl. impairment losses) 5 -18.2 -15.6<br />
Environmental provisions 5 -14.2 -2.8<br />
Other 5 -7.3 -4.9<br />
Profit (+) / loss (-) from operations 212.2 187.4<br />
Finance expenses 8 -29.8 -23.9<br />
Finance income 8 8.2 6.3<br />
Finance expenses - net -21.6 -17.6<br />
Share of result of investments accounted<br />
for using the equity method<br />
13 11.5 6.0<br />
Profit (+) / loss (-) before tax 202.1 175.8<br />
Income tax expense 9 -61.7 -47.1<br />
Profit (+) / loss (-) for the period 140.4 128.7<br />
Attributable to:<br />
- Equity holders of the <strong>Group</strong> 140.5 128.9<br />
- Minority interests -0.1 -0.2<br />
Basic earnings per share (EUR) 21 5.08 4.69<br />
Diluted earnings per share (EUR) 21 5.08 4.68
<strong>Tessenderlo</strong> <strong>Group</strong><br />
CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE<br />
(Millions EUR) note <strong>2008</strong> 2007<br />
Translation differences 20 -8.8 -12.4<br />
Net income (+) / expense (-) recognised directly in equity -8.8 -12.4<br />
Profit (+) / loss (-) for the period 140.4 128.7<br />
Total recognised income (+) and expense (-) for the period 131.6 116.3<br />
Attributable to:<br />
Equity holders of the <strong>Group</strong> 131.7 116.5<br />
Minority interests -0.1 -0.2<br />
Total recognised income (+) and expense (-) for the period 131.6 116.3<br />
101
financial report <strong>2008</strong><br />
CONSOLIDATED BALANCE SHEET<br />
(Millions EUR) note <strong>2008</strong> 2007<br />
ASSETS<br />
Non-current assets 810.1 823.8<br />
Property, plant and equipment 10 652.0 677.8<br />
Goodwill 11 38.3 37.2<br />
Intangible assets 12 39.9 36.9<br />
Investments accounted for using the equity method 13 39.6 24.0<br />
Investments 14 5.2 6.1<br />
Deferred tax assets 15 17.7 26.3<br />
Trade and other receivables 16 17.4 15.5<br />
Current assets 1,002.1 859.4<br />
Inventories 17 473.7 339.9<br />
Trade and other receivables 16 469.5 424.0<br />
Derivative financial instruments 25 5.4 1.9<br />
Cash and cash equivalents 18 53.5 93.6<br />
Non current assets classified as held for sale 19 0.7 0.0<br />
Total assets 1,812.9 1,683.2<br />
102<br />
(Millions EUR) note <strong>2008</strong> 2007<br />
EQUITY & LIABILITIES<br />
Equity<br />
Equity attributable to equity holders of the <strong>Group</strong> 20 900.0 800.2<br />
Issued capital 20 138.0 137.0<br />
Share premium 20 43.3 42.0<br />
Reserves 20 313.4 238.6<br />
Retained earnings 20 405.3 382.6<br />
Minority interests 20 2.0 2.0<br />
Total equity 902.0 802.2<br />
Liabilities<br />
Non-current liabilities 267.7 269.3<br />
Financial liabilities 22 96.7 122.6<br />
Employee benefits 23 40.9 46.4<br />
Provisions 24 85.7 63.1<br />
Deferred tax liabilities 15 44.4 37.2<br />
Current liabilities 643.2 611.7<br />
Financial liabilities 22 251.4 214.8<br />
Trade and other payables 25 388.9 385.9<br />
Current tax liabilities 2.0 2.4<br />
Provisions 24 0.9 8.6<br />
Total liabilities 910.9 881.0<br />
Total equity and liabilities 1,812.9 1,683.2
<strong>Tessenderlo</strong> <strong>Group</strong><br />
CONSOLIDATED CASH FLOW STATEMENT<br />
(Millions EUR) note <strong>2008</strong> 2007<br />
OPERATING ACTIVITIES<br />
Profit (+) / loss (-) from operations 212.2 187.4<br />
Depreciation, impairment and amortisation 144.8 128.9<br />
Changes in provisions 9.3 -5.7<br />
Loss / (profit) on sale of non-current assets -12.4 -56.2<br />
Non cash items -1.4 0.5<br />
Changes in inventories -149.1 -1.7<br />
Changes in trade and other receivables -52.8 8.9<br />
Changes in trade and other payables 2.6 18.1<br />
Cash generated from operating activities 153.2 280.2<br />
Interest paid -14.6 -17.9<br />
Interest received 2.8 4.2<br />
Income tax (paid) / received -57.6 -48.0<br />
Dividends received from investments accounted for using the<br />
30 10.2 4.9<br />
equity method<br />
Cashflow from operating activities 94.0 223.4<br />
INVESTING ACTIVITIES<br />
Acquisition of property, plant and equipment 10 -94.2 -98.6<br />
Acquisition of intangible assets 12 -7.2 -5.5<br />
Acquisition of investments accounted for using the equity method 3 -3.1 -<br />
Acquisition of businesses, net of cash acquired 3 -18.5 -25.8<br />
Acquisition of investments -0.4 -<br />
Proceeds from sale of property, plant and equipment 15.1 11.0<br />
Proceeds from sale of intangible assets - 1.0<br />
Proceeds from sale of subsidiaries, net of cash disposed of 3 - 3.6<br />
Proceeds from sale of investments accounted for using the equity 3 - 68.7<br />
method<br />
Proceeds from sale of investments 0.1 -<br />
Proceeds from government grants - 12.5<br />
Cashflow from investing activities -108.2 -33.1<br />
103<br />
FINANCING ACTIVITIES<br />
Increase/(decrease) of issued capital 20 2.3 6.5<br />
Increase/(decrease) of financial liabilities 10.1 -105.7<br />
(Increase)/decrease of long term receivables -2.4 0.9<br />
Dividends paid to shareholders 20 -35.0 -33.5<br />
Cashflow from financing activities -25.0 -131.8<br />
Net increase/(decrease) in cash and cash equivalents -39.2 58.5<br />
Effect of exchange rate differences -0.9 -1.2<br />
Cash and cash equivalents at the beginning of the year 18 93.6 36.3<br />
Cash and cash equivalents at the end of the year 18 53.5 93.6
financial report <strong>2008</strong><br />
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS<br />
104<br />
Summary of significant accounting policies 1<br />
Segment reporting 2<br />
Acquisitions and disposals 3<br />
Other operating income and expenses 4<br />
Non-recurring items 5<br />
Payroll and related benefits 6<br />
Additional information on operating expenses by nature 7<br />
Finance income and expense 8<br />
Income tax expense 9<br />
Property, plant and equipment 10<br />
Goodwill 11<br />
Intangible assets 12<br />
Investments accounted for using the equity method 13<br />
Investments 14<br />
Deferred tax assets and liabilities 15<br />
Trade and other receivables 16<br />
Inventories 17<br />
Cash and cash equivalents 18<br />
Non-current assets held for sale 19<br />
Equity 20<br />
Earnings per share 21<br />
Financial liabilities 22<br />
Employee benefits 23<br />
Provisions 24<br />
Trade and other payables 25<br />
Financial instruments 26<br />
Operating leases 27<br />
Guarantees and commitments 28<br />
Contingencies 29<br />
Related parties 30<br />
Information on the auditors’ assignment and related fees 31<br />
Subsequent events 32<br />
Consolidated companies 33<br />
Critical accounting estimates and judgements 34
<strong>Tessenderlo</strong> <strong>Group</strong><br />
1. Summary of significant accounting policies<br />
<strong>Tessenderlo</strong> Chemie NV (hereafter referred to as the « Company ») is a company domiciled in Belgium.<br />
The consolidated financial statements for the year ended 31 December <strong>2008</strong> comprise the Company and<br />
its subsidiaries (together referred to as the « <strong>Group</strong> ») and the <strong>Group</strong>’s interests in associates and jointly<br />
controlled entities.<br />
The IFRS financial statements were authorised for issue by the Board of Directors of <strong>Tessenderlo</strong><br />
Chemie NV on Thursday 12 March 2009.<br />
(A) Statement of compliance<br />
The consolidated financial statements have been prepared in accordance with International Financial<br />
<strong>Report</strong>ing Standards (formerly named IAS) issued by the International Accounting Standards Board<br />
(IASB) as adopted by the European Union.<br />
(B) Basis of preparation<br />
The financial statements are presented in euro, rounded to the nearest million. They are prepared on<br />
the historical cost basis except for derivative financial instruments and investments available-for-sale,<br />
which are stated at fair value.<br />
105<br />
Non-current assets and disposal groups held for sale are stated at the lower of carrying amount and fair<br />
value less costs to sell.<br />
The preparation of financial statements in conformity with IFRSs requires management to make<br />
judgements, estimates and assumptions that affect the application of policies and reported amounts<br />
of assets and liabilities, income and expenses. The estimates and associated assumptions are based<br />
on historical experience and various other factors that are believed to be reasonable under the<br />
circumstances, the results of which form the basis of making the judgements about carrying values of<br />
assets and liabilities that are not readily apparent from other sources. Actual results may differ from<br />
these estimates.<br />
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting<br />
estimates are recognised in the period in which the estimate is revised if the revision affects only that<br />
period, or in the period of the revision and future periods if the revision affects both current and future<br />
periods.<br />
Judgements made by management in the application of IFRS that have significant effect on the financial<br />
statements and estimates with a significant risk of material adjustment in the next year are discussed in<br />
note 34.<br />
The consolidated financial statements are presented before the effect of the profit appropriation of the<br />
Company proposed to the General Assembly of shareholders.<br />
The accounting policies set out hereafter have been applied consistently by the <strong>Group</strong> to all periods<br />
presented in these consolidated financial statements.
financial report <strong>2008</strong><br />
(C) Principles of consolidation<br />
Companies controlled by the <strong>Group</strong> (i.e. in which the <strong>Group</strong> has, directly, or indirectly, an interest of<br />
more than one half of the voting rights or is able to exercise control over the operations, further also<br />
“subsidiaries”) have been fully consolidated. In assessing control, potential voting rights that presently<br />
are exercisable or convertible are taken into account. The financial statements of subsidiaries are<br />
included in the consolidated financial statements from the date that control commences until the date<br />
that control ceases. Separate disclosure is made of minority interests.<br />
Investments in associates and jointly controlled entities (joint ventures) are included in the consolidated<br />
financial statements using the equity method. The investments in associates are those in which the<br />
<strong>Group</strong> has significant influence over the financial and operating policies, but which it does not control.<br />
In general, it is the case when the <strong>Group</strong> holds between 20 % and 50 % of the voting rights. The equity<br />
method is used as from the date that significant influence commences until the date that significant<br />
influence ceases. When the <strong>Group</strong>’s share of losses exceeds its interest in an associate, the <strong>Group</strong>’s<br />
carrying amount is reduced to nil and recognition of further losses is discontinued except to the extent<br />
that the <strong>Group</strong> has incurred legal or constructive obligations in respect of the associate.<br />
106<br />
All intercompany transactions, balances and unrealised gains and losses on transactions between group<br />
companies have been eliminated. Unrealised gains arising from transactions with associates and jointly<br />
controlled entities are eliminated to the extent of the <strong>Group</strong>’s interest in the entity. Unrealised losses<br />
are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of<br />
impairment.<br />
(D) Foreign currency<br />
• Foreign currency transactions<br />
Foreign currency transactions are accounted for at exchange rates prevailing at the date of the<br />
transaction. Monetary assets and liabilities denominated in foreign currencies are translated at balance<br />
sheet date rate. The resulting gains and losses of these transactions are recognised in the income<br />
statement of the period.<br />
Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value<br />
are translated to euro at foreign exchange rates ruling at the dates the fair value was determined. For<br />
available for sale non-monetary assets, foreign exchange gains and losses are not separated from the<br />
total fair value changes.<br />
• Foreign currency translation<br />
Assets and liabilities of foreign entities included in the consolidation are translated to euro at the<br />
foreign exchange rates ruling at the balance sheet date. The income statement of the foreign entities is<br />
translated to euro at the annual average foreign exchange rates (approximating the foreign exchange<br />
rates prevailing at the dates of the transactions). The components of equity attributable to equity holders<br />
of the <strong>Group</strong> are translated at historical rates. Exchange differences arising from the translation of the<br />
equity attributable to the equity holders of the <strong>Group</strong> to euro at year-end exchange rates are taken to<br />
“Translation reserves” in Equity.
<strong>Tessenderlo</strong> <strong>Group</strong><br />
• Exchange rates<br />
The following exchange rates have been used in preparing the financial statements:<br />
Closing rate<br />
Average rate<br />
1 EUR equals : <strong>2008</strong> 2007 <strong>2008</strong> 2007<br />
Brazilian real 3.2332 2.7490 2.6701 2.6622<br />
Canadian dollar 1.6998 1.4449 1.5600 1.4678<br />
Chinese yuan 9.4956 10.7524 10.2211 10.4178<br />
Czech crown 26.8750 26.6280 24.9519 27.7656<br />
Hungarian forint 266.7000 253.7300 251.5800 251.3500<br />
Polish zloty 4.1535 3.5935 3.5143 3.7837<br />
Pound sterling 0.9525 0.7333 0.7969 0.6843<br />
Slovak koruna 30.1260 33.5830 31.2576 33.7745<br />
Swiss franc 1.4850 1.6547 1.5871 1.6427<br />
US dollar 1.3917 1.4721 1.4705 1.3705<br />
(E) Intangible assets<br />
• Research and development<br />
Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical<br />
knowledge and understanding, is recognised in the income statement as an expense as incurred.<br />
107<br />
Expenditure resulting from development activities, whereby research findings are applied to a plan or<br />
design for production of new or substantially improved products and processes, is capitalised if the<br />
product or process is technically and commercially feasible and the company has sufficient resources to<br />
complete development.<br />
The capitalised expenditure includes the cost of materials, direct labour and an appropriate proportion<br />
of overheads. Other development expenditure is recognised in the income statements as an expense<br />
as incurred. Capitalised development is stated at cost less accumulated amortisation (see below) and<br />
impairment losses (see accounting policy J).<br />
• Emission allowances<br />
The cost of acquiring emission allowances is recognised as intangible asset, whether they have been<br />
purchased or received free of charge (in the latter the acquisition cost is zero). A provision is set up to<br />
cover obligations to refund allowances depending on emissions if, during a given period, the number of<br />
allowances required exceeds the total number of allowances received. This provision is measured at the<br />
estimated amount of the expenditure required to settle the obligation.<br />
• Other intangible assets<br />
Other intangible assets, acquired by the <strong>Group</strong>, are stated at cost less accumulated amortisation (see<br />
below) and impairment losses (see accounting policy J).
financial report <strong>2008</strong><br />
• Subsequent expenditure<br />
Subsequent expenditure on capitalised intangible assets is capitalised only when it increases the future<br />
economic benefits embodied in the specific asset to which it relates. All other expenditure is expensed<br />
as incurred.<br />
• Amortisation<br />
Intangible assets with a finite life are amortised using the straight-line method over their estimated<br />
useful lives.<br />
The estimated useful lives of the respective asset categories are as follows:<br />
Development<br />
Software<br />
Concessions, licenses, patents and other<br />
5 years<br />
3 to 5 years<br />
10 to 20 years<br />
Intangible assets with an indefinite useful life are tested for impairment on an annual basis.<br />
(F) Goodwill<br />
108<br />
• Goodwill<br />
Goodwill represents the excess of the cost of an acquisition over the fair value of the company’s share of<br />
the net identifiable assets of the acquired subsidiary, jointly controlled entity or associate at the date of<br />
acquisition.<br />
All goodwill has been frozen on the 1st of January 2004 and is not amortised anymore, but tested at<br />
least annually for impairment and whenever there is an indicator that the unit to which the goodwill has<br />
been allocated may be impaired (see accounting policy J).<br />
Goodwill is expressed in the currency of the subsidiary, jointly controlled entity or associate to which it<br />
relates.<br />
• Negative goodwill<br />
Negative goodwill represents the excess of the fair value of the company’s share of the net identifiable<br />
assets acquired over the cost of acquisition. Any negative goodwill is recognised directly in the income<br />
statement.<br />
• Subsequent measurement<br />
Goodwill is measured at cost less accumulated impairment losses. In respect of equity accounted<br />
investees, the carrying amount of goodwill is included in the carrying amount of the investment.
<strong>Tessenderlo</strong> <strong>Group</strong><br />
(G) Property, plant and equipment<br />
• Owned assets<br />
Items of property, plant and equipment (further also “PP&E”) are stated at cost less accumulated<br />
depreciation and impairment losses. Cost includes the purchase price and any costs directly attributable<br />
to bringing the asset to the location and condition necessary for it to be capable of operating in the<br />
manner intended by management (e.g. non refundable tax, transport and the costs of dismantling and<br />
removing the items and restoring the site on which they are located, if applicable). The cost of a selfconstructed<br />
asset is determined using the same principles as for an acquired asset and includes the<br />
cost of materials, direct labour and an appropriate proportion of indirect costs. Borrowing costs directly<br />
attributable to the acquisition, construction or production of an asset, requiring a long preparation, are<br />
included in the cost of the asset.<br />
Where parts of an item of property, plant and equipment have different useful lives, they are accounted<br />
for as separate items of property, plant and equipment.<br />
• Subsequent expenditure<br />
Subsequent expenditure incurred in replacing or renewing components of some items of property,<br />
plant and equipment is accounted for as the acquisition of a separate asset and the replaced asset is<br />
written off. Capitalisation of subsequent expenditure is only done when it increases the future economic<br />
benefits embodied in the item of property, plant and equipment. Repair and maintenance, which do not<br />
increase the future economic benefits of the asset to which they relate, are expensed as incurred.<br />
109<br />
• Depreciation<br />
Depreciation is charged to the income statement as from the date the asset is available for use, on<br />
a straight-line basis over the estimated useful lives of each part of an item of property, plant and<br />
equipment.<br />
The estimated useful lives of the respective asset categories are as follows:<br />
Improvements to land<br />
Buildings<br />
Building improvements<br />
Plant installations<br />
Machinery and equipment<br />
Furniture and office equipment<br />
Extrusion and tooling equipment<br />
Laboratory and research – infrastructure<br />
Vehicles<br />
Computer equipment<br />
10 to 20 years<br />
20 to 40 years<br />
10 to 20 years<br />
6 to 20 years<br />
5 to 15 years<br />
4 to 10 years<br />
3 to 7 years<br />
3 to 5 years<br />
4 to 10 years<br />
3 to 5 years<br />
Land is not depreciated as it is deemed to have an indefinite life.
financial report <strong>2008</strong><br />
• Government grants<br />
Government grants relating to the purchase of property, plant and equipment are deducted from the<br />
carrying amount of the related asset when there is reasonable assurance that they will be received and<br />
the company will comply with the conditions attached to it. They are recognised in the income statement<br />
as other operating income on a straight-line basis over the estimated useful life of the associated asset.<br />
(H) Leased assets<br />
Leases of property, plant and equipment where the company assumes substantially all the risks and<br />
rewards of ownership are classified as finance leases. Finance leases are capitalised at the lower of<br />
the fair value and the present value of the minimum lease payments at inception of the lease, less<br />
accumulated depreciation (see accounting policy G) and impairment losses (see accounting policy J).<br />
Each lease payment is allocated between the liability and finance charges so as to achieve a constant<br />
periodic rate of interest on the outstanding finance balance. The corresponding obligations, net of<br />
finance charges, are included in other long-term payables. The interest element is charged to the<br />
income statement as a finance charge over the lease period. Property, plant and equipment acquired<br />
under finance lease contract is depreciated over the useful life of the asset (see accounting policy G).<br />
110<br />
Leases of assets under which the lessor substantially retains all the risks and rewards of ownership are<br />
classified as operating leases. The payments made under operating leases are charged to the income<br />
statement on a straight-line basis over the term of the lease.<br />
(I) Investments<br />
Each category of investment is accounted for at trade date.<br />
• Investments in equity securities<br />
Investments in equity securities are undertakings in which the <strong>Group</strong> does not have significant<br />
influence or control. This is generally evidenced by ownership of less than 20 % of the voting rights.<br />
Such investments are designated as available for sale financial assets and are recorded at their fair<br />
value unless the fair value cannot be reliably determined in which case they are carried at cost less<br />
impairment losses. The fair value is the quoted bid price at balance sheet date. Changes in fair value are<br />
directly recognised in equity, except for impairment losses. On disposal of an investment, the cumulative<br />
gain or loss previously recognised directly in equity is recognised in profit or loss.<br />
• Other investments<br />
The other investments mainly include cash guarantees.<br />
(J) Impairment<br />
At each balance sheet date, the <strong>Group</strong> reviews the carrying amounts of the <strong>Group</strong>’s assets, other than<br />
inventories (see accounting policy K) and deferred tax assets (see accounting policy R), to determine<br />
whether there is any indication of impairment. If such an indication exists, the asset’s recoverable
<strong>Tessenderlo</strong> <strong>Group</strong><br />
amount is estimated. An impairment loss is recognised whenever the carrying amount of an asset or its<br />
cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in the income<br />
statement.<br />
Goodwill, intangible assets with indefinite useful life and intangible assets not yet available for use<br />
were tested for impairment at 1 January 2004, the date of transition to IFRS, even if no indication of<br />
impairment existed.<br />
Impairment losses recognised in respect of cash-generating units are allocated first to reduce the<br />
carrying amount of any goodwill allocated to cash-generating units and then, to reduce the carrying<br />
amount of other assets in the unit on a pro rata basis.<br />
• Calculation of recoverable amount<br />
The recoverable amount is the higher of the fair value less costs to sell and its value in use. The value in<br />
use is the net present value of the estimated future cash flows from the use of an asset. The recoverable<br />
amount is calculated at the level of the cash-generating unit to which the asset belongs. In assessing<br />
the value in use, the estimated future cash flows are discounted to their present value using a discount<br />
rate that reflects current market assessments of the time value of money and the risks specific to the<br />
asset, to the business etc.<br />
• Reversal of impairment<br />
111<br />
If there has been a change in the estimates used to determine the recoverable amount on assets other<br />
than goodwill, the carrying amount is partially or totally re-established through the non-recurring items<br />
in the income statement, to the extent that the asset’s carrying amount does not exceed the carrying<br />
amount that would have been determined, net of depreciation or amortisation, if no impairment loss had<br />
been recognised.<br />
An impairment loss in respect of goodwill cannot be reversed.<br />
(K) Inventories<br />
Inventories are stated at the lower of cost and net realisable value. The cost is determined by the<br />
weighted average cost method.<br />
The cost of finished goods and work in progress comprises raw materials, other production materials,<br />
direct labour, other direct cost and an allocation of fixed and variable overhead based on normal<br />
operating capacity. Cost of inventories includes the purchase, conversion and other costs incurred<br />
to bring the inventories to their present location and condition. Net realisable value represents the<br />
estimated selling price, less all estimated costs of making the product ready for sale.<br />
(L) Trade and other receivables<br />
Trade and other receivables are stated at amortised cost less appropriate allowances for nonrecoverable<br />
amounts.
financial report <strong>2008</strong><br />
(M) Cash and cash equivalents<br />
Cash includes cash in hand and cash with banks. Cash equivalents are short-term, highly liquid<br />
investments that are readily convertible into known amounts of cash, have a remaining maturity date of<br />
three months or less and are subject to an insignificant risk of change in value.<br />
(N) Issued capital<br />
• Ordinary shares<br />
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary<br />
shares and share options are recognised as a reduction from equity, net of any tax effects.<br />
• Repurchase of issued capital<br />
When share capital recognised as equity is repurchased, the amount of the consideration paid, including<br />
directly attributable costs, is recognised as a change in equity. Repurchased shares are classified as<br />
treasury shares and presented as a deduction from total equity. When treasury shares are sold or<br />
reissued subsequently, the amount received is recognised as an increase in equity, and the resulting<br />
surplus or deficit on the transaction is transferred to/from retained earnings.<br />
112<br />
• Dividends<br />
Dividends are recognised as a liability in the period in which they are declared.<br />
(O) Financial liabilities<br />
Financial liabilities are recognised initially at cost, less attributable transaction costs. Subsequent<br />
to initial recognition, interest-bearing loans and borrowings are stated at amortised cost with any<br />
difference between cost and redemption value being recognised in the income statement over the period<br />
of borrowings on an effective interest basis.<br />
(P) Provisions<br />
Provisions are recognised in the balance sheet when the company has a present obligation (legal or<br />
constructive) as a result of a past event, it is probable that an outflow of resources embodying economic<br />
benefits will be required to settle the obligation and a reliable estimate can be made of the amount of<br />
the obligation.<br />
If the effect is material, provisions are determined by discounting the expected future cash flows at a<br />
rate that reflects current market assessments of the time value of money and, where appropriate, the<br />
risks specific to the liability.<br />
• Restructuring<br />
A provision for restructuring is recognised when the company has approved a detailed and formal<br />
restructuring plan, and the restructuring has either commenced or has been announced to those<br />
affected by it. Future operating costs are not provided for.
<strong>Tessenderlo</strong> <strong>Group</strong><br />
• Environmental obligations<br />
Environmental provisions are based on legal and constructive obligations from past events,<br />
in accordance with applicable legal requirements.<br />
• Onerous contracts<br />
A provision for onerous contracts is recognised when the expected benefits to be derived by the company<br />
from a contract are lower than the unavoidable cost of meeting its obligations under the contract. Such<br />
provision is measured at the present value of the lower of the expected cost of terminating the contract<br />
and the expected net cost of continuing with the contract. Before a provision is established, the <strong>Group</strong><br />
recognises any impairment loss on the assets associated with that contract.<br />
• Others<br />
Includes provisions for litigations and warranties.<br />
(Q) Employee benefits<br />
• Post employment benefits<br />
Post employment benefits include pensions and medicare benefits. The <strong>Group</strong> operates a number of<br />
defined benefits and defined contribution plans throughout the world, the assets of which are generally<br />
held in separate pension funds. Separate trusts and insurers generally hold the pension plans.<br />
113<br />
- Defined contribution plans:<br />
Contributions to defined contribution pension plans are recognised as an expense in the income<br />
statement as incurred.<br />
- Defined benefit plans:<br />
For defined benefit plans, the pension accounting costs are assessed separately for each plan using the<br />
projected unit credit method. Under this method, the cost of providing pensions is charged to the income<br />
statement in order to spread the regular cost over the service lives of employees in accordance with<br />
the advice of qualified actuaries who carry out a full valuation of the plans. The amounts charged to the<br />
income statement consist of current service cost, interest cost, the expected return on any plan assets,<br />
actuarial gains and losses and past service costs.<br />
The pension obligation recognised in the balance sheet is determined as the present value of the defined<br />
benefit obligation (using interest rates of high quality corporate bonds which have terms to maturity<br />
approximating the terms of the related liability) adjusted for unrecognised actuarial gains and losses,<br />
less unrecognised past service costs and less the fair value of the plan assets.<br />
All actuarial gains and losses as at 1 January 2004, the date of transition to IFRS, were recognised. In<br />
respect of actuarial gains and losses that arise subsequent to 1 January 2004 in calculating the <strong>Group</strong>’s<br />
obligation in respect of a plan, to the extent that any cumulative unrecognised actuarial gain or loss
financial report <strong>2008</strong><br />
exceeds 10 % of the greater of the present value of the defined benefit obligation and the fair value of<br />
plan assets, that portion is recognised in the income statement over the expected average remaining<br />
working lives of the employees participating in the plan. Otherwise, the actuarial gain or loss is not<br />
recognised.<br />
Where the calculation results in a benefit to the <strong>Group</strong>, the recognised asset is limited to the net total<br />
of any unrecognised actuarial losses and past service costs and the present value of any future refunds<br />
from the plan or reductions in future contributions to the plan.<br />
• Termination benefits (pre-retirement plans, other termination obligations)<br />
These benefits arise as a result of the company’s decision to terminate the employment of an employee<br />
or group of employees before the normal retirement date or of an employee’s decision to accept<br />
voluntary redundancy in exchange for those benefits.<br />
These benefits are accrued for at the moment of notification.<br />
• Equity compensation benefits<br />
114<br />
A stock option plan allows senior management to acquire shares of the Company. The option’s exercise<br />
price equals the lowest of the average market price of the underlying shares in the 30 trading days<br />
preceding the offer date or the market price on the last day preceding the offer date. These share-based<br />
payments are recognised in the financial statements based on the fair value of the awards measured at<br />
grant date, spread over the vesting period. When the options are exercised, equity is increased by the<br />
amounts of the proceeds received.<br />
• Short-term benefits<br />
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as<br />
the related service is provided.<br />
A liability is recognised for the amount expected to be paid under short-term cash bonus or profitsharing<br />
plans if the <strong>Group</strong> has a present legal or constructive obligation to pay this amount as a result of<br />
past service provided by the employee and the obligation can be estimated reliably.<br />
(R) Income tax<br />
Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is<br />
recognised in the income statement except to the extent that it relates to items recognised directly to<br />
equity, in which case it is recognised in equity.<br />
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or<br />
substantially enacted at the balance sheet date, and any adjustment to tax payable in respect of previous<br />
years.<br />
Deferred tax is provided using the balance sheet liability method, for temporary differences arising<br />
between the carrying values of assets and liabilities for financial reporting purposes and the basis used<br />
for taxation purposes. The following temporary differences are not provided for: the initial recognition<br />
of assets or liabilities that affects neither accounting nor taxable profit and differences relating to
<strong>Tessenderlo</strong> <strong>Group</strong><br />
investments in subsidiaries to the extent that will probably not reverse in the foreseeable future. The<br />
amount of deferred tax provided is based on the expected manner of realisation or settlement of the<br />
carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance<br />
sheet date.<br />
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will<br />
be available against which the deductible temporary differences, unused tax losses and credits can be<br />
utilised. A deferred tax asset is reduced to the extent that it is no longer probable that related tax benefit<br />
will be realised.<br />
Additional income taxes that arise from the distribution of dividends are recognised at the same time as<br />
the liability to pay the related benefit.<br />
(S) Trade and other payables<br />
Trade and other payables are stated at cost.<br />
(T) Income<br />
• Revenue<br />
For the sale of goods, revenue is recognised in the income statement when the significant risks and<br />
rewards of ownership have been transferred to the buyer.<br />
115<br />
Revenue is recognised when there are no significant uncertainties regarding recovery of the<br />
consideration due, when the associated costs and possible return of goods can be estimated reliably and<br />
when there is no continuing management involvement with the goods and the amount of revenue can be<br />
estimated reliably.<br />
• Financial income<br />
Financial income comprises interest receivable on funds invested, dividend income, foreign exchange<br />
gains and gains on derivative financial instruments.<br />
Interest income is recognised in the income statement as it accrues, taking into account the effective<br />
yield on the asset.<br />
Dividend income is recognised in the income statement on the date the entity’s right to receive payments<br />
is established.<br />
(U) Expenses<br />
• Financial expenses<br />
Financial expenses comprise interest payable on borrowings, foreign exchange losses and losses on<br />
derivative financial instruments.<br />
All interest and other costs incurred in connection with borrowings are expensed as incurred as part<br />
of financial expenses. The interest expense component of finance lease payments is recognised in the<br />
income statement using the effective interest rate method.
financial report <strong>2008</strong><br />
(V) Derivative financial instruments<br />
The <strong>Group</strong> uses derivative financial instruments to hedge its exposure to foreign exchange and interest<br />
rate risks arising from operational, financial and investment activities. In accordance with its treasury<br />
policy, the <strong>Group</strong> does not hold or issue derivative financial instruments for trading purposes.<br />
Derivative financial instruments are recognised initially at cost. Subsequent to initial recognition,<br />
derivative financial instruments are stated at fair value. The gain or loss on remeasurement to fair value<br />
is recognised immediately in profit or loss.<br />
(W) Non-current assets held for sale and discontinued operations<br />
Immediately before classification as held for sale, the remeasurement of the assets (and all assets and<br />
liabilities in a disposal group) is brought up-to-date in accordance with applicable IFRSs. Then, on initial<br />
classification as held for sale, non-current assets and disposal groups are recognised at the lower of<br />
carrying amount and fair value less costs to sell.<br />
Impairment losses on initial classification as held for sale are included in the profit or loss. The same<br />
applies to gains and losses on subsequent remeasurement.<br />
116<br />
A discontinued operation is a component of the <strong>Group</strong>’s business that represents a separate major line<br />
of business or a geographical area of operations or is a subsidiary acquired exclusively with a view to<br />
resale.<br />
Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria<br />
to be classified as held for sale, if earlier. A disposal group that is to be abandoned may also qualify.<br />
(X) Earnings per share<br />
The <strong>Group</strong> presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS<br />
is calculated by dividing the profit or loss attributable to equity holders of the <strong>Group</strong> by the weighted<br />
average number of ordinary shares outstanding during the period.<br />
The diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and<br />
the weighted average number of ordinary shares outstanding for the effects of all dilutive potential<br />
ordinary shares, which comprise share options granted to the management.<br />
(Y) Segment reporting<br />
A segment is a distinguishable component of the <strong>Group</strong> that is engaged either in providing products<br />
or services (business groups), or in providing products or services within a particular economic<br />
environment (geographical segment), which is subject to risks and rewards that are different from those<br />
of other segments.<br />
Segment information is produced according to two different criteria: a primary segment reporting<br />
format is based on the <strong>Group</strong>’s sector of activity (business groups), a secondary segment reporting<br />
format is based on the main geographical regions.
<strong>Tessenderlo</strong> <strong>Group</strong><br />
(Z) Recently issued IFRS<br />
To the extent that new IFRS requirements are expected to be applicable in the future, they have been<br />
summarised hereafter.<br />
• IFRS 8 Operating segments<br />
IFRS 8 “Operating segments” introduces the “management approach” to segment reporting. IFRS 8,<br />
which becomes mandatory for the <strong>Group</strong>’s 2009 financial statements, will require the disclosure of<br />
segment information based on the internal reports regularly reviewed by the <strong>Group</strong>’s Chief Operating<br />
Decision Makers in order to assess each segment’s performance and to allocate resources to them.<br />
Currently the <strong>Group</strong> presents segment information in respect of its business and geographical segments<br />
(see note 2 “Segment reporting”). IFRS 8 is not expected to trigger a material change to the <strong>Group</strong>’s<br />
current segment reporting.<br />
• Revised IAS 23 Borrowing costs<br />
Revised IAS 23 “Borrowing costs” removes the option to expense borrowing costs and requires that an<br />
entity capitalises borrowing costs directly attributable to the acquisition, construction or production of<br />
a qualifying asset as part of the cost of that asset. The revised IAS 23 will become mandatory for the<br />
<strong>Group</strong>’s 2009 financial statements and will not constitute a change in accounting policy for the <strong>Group</strong>.<br />
• IFRIC 13 Customer Loyalty Programs<br />
117<br />
IFRIC 13 “Customer Loyalty Programs” addresses the accounting by entities that operate, or otherwise<br />
participate in, customer loyalty programs for their customers. It relates to customer loyalty programs<br />
under which the customer can redeem credits for awards such as free or discounted goods or services.<br />
The <strong>Group</strong> has not yet determined the potential impact of the interpretation, which becomes mandatory<br />
for the <strong>Group</strong>’s 2009 financial statements.<br />
• Revised IAS 1 Presentation of financial statements<br />
Revised IAS 1 Presentation of Financial Statements (2007) (endorsed by the European Union) introduces<br />
the term total comprehensive income, which represents changes in equity during a period other than<br />
those changes resulting from transactions with owners in their capacity as owners. Total comprehensive<br />
income may be presented in either a single statement of comprehensive income (effectively combining<br />
both the income statement and all non-owner changes in equity in a single statement), or in an<br />
income statement and a separate statement of comprehensive income. Revised IAS 1, which becomes<br />
mandatory for the <strong>Group</strong>’s 2009 consolidated financial statements, is not expected to have an impact on<br />
the presentation of the consolidated financial statements.<br />
• Amendments to IAS 32 Financial Instruments: Presentation and IAS 1 Presentation<br />
of Financial Statements – Puttable Financial Instruments and Obligations Arising on<br />
Liquidation<br />
Amendments to IAS 32 Financial Instruments: Presentation and IAS 1 Presentation of Financial<br />
Statements – Puttable Financial Instruments and Obligations Arising on Liquidation (endorsed by the
financial report <strong>2008</strong><br />
European Union) requires puttable instruments, and instruments that impose on the entity an obligation<br />
to deliver to another party a pro rata share of the net assets of the entity only on liquidation, to be<br />
classified as equity if certain conditions are met. The <strong>Group</strong> has not yet determined the potential impact<br />
of the amendments, which become mandatory for the <strong>Group</strong>’s 2009 consolidated financial statements,<br />
with retrospective application required.<br />
• Revised IFRS 3 Business Combinations (<strong>2008</strong>)<br />
118<br />
Revised IFRS 3 Business Combinations (<strong>2008</strong>) incorporates the following changes that are likely to be<br />
relevant to the <strong>Group</strong>’s operations:<br />
- The definition of a business has been broadened, which is likely to result in more acquisitions being<br />
treated as business combinations.<br />
- Contingent consideration will be measured at fair value, with subsequent changes therein<br />
recognised in profit or loss.<br />
- Transaction costs, other than share and debt issue costs, will be expensed as incurred.<br />
- Any pre-existing interest in the acquiree will be measured at fair value with the gain or loss<br />
recognised in profit or loss.<br />
- Any non-controlling (minority) interest will be measured at either fair value, or at its proportionate<br />
interest in the identifiable assets and liabilities of the acquiree, on a transaction-by-transaction<br />
basis.<br />
The <strong>Group</strong> has not yet determined the potential impact of the revised IFRS 3, which becomes mandatory<br />
for the <strong>Group</strong>’s 2010 consolidated financial statements.<br />
• Amended IAS 27 Consolidated and Separate Financial Statements (<strong>2008</strong>)<br />
Amended IAS 27 Consolidated and Separate Financial Statements (<strong>2008</strong>) requires accounting for<br />
changes in ownership interests by the <strong>Group</strong> in a subsidiary, while maintaining control, to be recognised<br />
as an equity transaction. When the <strong>Group</strong> loses control of a subsidiary, any interest retained in the<br />
former subsidiary will be measured at fair value with the gain or loss recognised in profit or loss.<br />
The amendments to IAS 27, which become mandatory for the <strong>Group</strong>’s 2010 consolidated financial<br />
statements, are not expected to have any material impact on the <strong>Group</strong>’s consolidated financial<br />
statements.<br />
• Amendment to IFRS 2 Share-based Payment – Vesting Conditions and Cancellations<br />
Amendment to IFRS 2 Share-based Payment – Vesting Conditions and Cancellations (endorsed by the<br />
European Union) clarifies the definition of vesting conditions, introduces the concept of non-vesting<br />
conditions, requires non-vesting conditions to be reflected in grant-date fair value and provides the<br />
accounting treatment for non-vesting conditions and cancellations. The amendments to IFRS 2, that<br />
will become mandatory for the <strong>Group</strong>’s 2009 consolidated financial statements, with retrospective<br />
application, are not expected to have any material impact on the <strong>Group</strong>’s consolidated financial<br />
statements.<br />
• IFRIC 15 Agreements for the Construction of Real Estate<br />
IFRIC 15 Agreements for the Construction of Real Estate concludes that revenues for real estate<br />
construction projects will have to be recognised using the completed contract method in many cases,
<strong>Tessenderlo</strong> <strong>Group</strong><br />
except for specific situations where the percentage of completion method of revenue recognition can<br />
be applied. This is the case when a contract relates to the sale of assets, but during the construction of<br />
these assets revenue recognition criteria are met on a continuous basis (in relation to the completed<br />
part of the project). IFRIC 15, which becomes mandatory for the <strong>Group</strong>’s 2009 consolidated financial<br />
statements, with retrospective application, is not expected to have any material impact on the <strong>Group</strong>’s<br />
consolidated financial statements.<br />
• IFRIC 16 Hedges of a Net Investment in a Foreign Operation<br />
IFRIC 16 Hedges of a Net Investment in a Foreign Operation discusses a number of issues in relation<br />
to hedging currency risks on foreign operations (net investment hedges). IFRIC 16 specifically confirms<br />
only the risk from differences between the functional currencies of the parent and the subsidiary can be<br />
hedged. Additionally, currency risks can only be hedged by every (direct or indirect) parent company, as<br />
long as the risk is only hedged once in the consolidated financial statements. IFRIC 16 also determines<br />
the hedge instrument of a net investment hedge can be held by every group company, except for foreign<br />
operation itself. The <strong>Group</strong> has not yet determined the potential impact of IFRIC 16, which becomes<br />
mandatory for the <strong>Group</strong>’s 2009 consolidated financial statements, with prospective application.<br />
• IFRIC 17 Distributions of Non-cash Assets to Owners<br />
IFRIC 17 Distributions of Non-cash Assets to Owners addresses the treatment of distributions in kind<br />
to shareholders. Outside the scope of IFRIC 17 are distributions in which the assets being distributed<br />
are ultimately controlled by the same party or parties before and after the distribution (common control<br />
transactions). A liability has to be recognised when the dividend has been appropriately authorised and<br />
is no longer at the discretion of the entity, to be measured at the fair value of the non-cash assets to be<br />
distributed. IFRIC 17, which becomes mandatory for the <strong>Group</strong>’s 2010 consolidated financial statements,<br />
with prospective application, is not expected to have any material impact on the <strong>Group</strong>’s consolidated<br />
financial statements.<br />
119<br />
• IFRIC 18 Transfers of Assets from Customers<br />
IFRIC 18 Transfers of Assets from Customers addresses the accounting by access providers for<br />
property, plant and equipment contributed to them by customers. Recognition of the assets depends on<br />
who controls it. When the asset is recognised by the access provider, it is measured at fair value upon<br />
initial recognition. The timing of the recognition of the corresponding revenue depends on the facts<br />
and circumstances. IFRIC 18, which becomes mandatory for the <strong>Group</strong>’s 2010 consolidated financial<br />
statements, with prospective application, is not expected to have any material impact on the <strong>Group</strong>’s<br />
consolidated financial statements.<br />
• Amendments to IFRS 1 First-time Adoption of IFRSs and IAS 27 Consolidated and<br />
Separate Financial Statements – Cost of an Investment in a Subsidiary, Jointly-controlled<br />
Entity or Associate<br />
Amendments to IFRS 1 First-time Adoption of IFRSs and IAS 27 Consolidated and Separate Financial<br />
Statements – Cost of an Investment in a Subsidiary, Jointly-controlled Entity or Associate (endorsed by<br />
the European Union) revises, amongst others, the accounting for ‘pre-acquisition dividends’ received<br />
from participating interests. Those dividends should be recognised as revenue, but such dividends may
financial report <strong>2008</strong><br />
imply an indicator for the impairment of the participating interest. The amendment, which becomes<br />
mandatory for the <strong>Group</strong>’s 2009 consolidated financial statements, with prospective application, is not<br />
expected to have any material impact on the <strong>Group</strong>’s consolidated financial statements.<br />
• Amendment to IAS 39 Financial Instruments: Recognition and Measurement – Eligible<br />
Hedged Items<br />
Amendment to IAS 39 Financial Instruments: Recognition and Measurement – Eligible Hedged Items<br />
provides additional guidance concerning specific positions that qualify for hedging (‘eligible hedged<br />
items’). The <strong>Group</strong> has not yet determined the impact of the amendment to IAS 39, which becomes<br />
mandatory for the <strong>Group</strong>’s 2010 consolidated financial statements, with retrospective application.<br />
• Improvements to IFRSs (<strong>2008</strong>)<br />
Improvements to IFRSs (<strong>2008</strong>) (endorsed by the European Union) is a collection of minor improvements<br />
to existing standards. The <strong>Group</strong> has not yet determined the potential impact of this collection, which<br />
becomes mandatory for the <strong>Group</strong>’s 2009 consolidated financial statements.<br />
120
<strong>Tessenderlo</strong> <strong>Group</strong><br />
2. Segment reporting<br />
The segment reporting is based on two segment reporting formats. The primary reporting format<br />
represents the three business groups of the <strong>Group</strong>’s internal financial reporting, the secondary reporting<br />
format represents the <strong>Group</strong>’s two main geographical markets.<br />
Segment assets and liabilities include items directly attributable to a segment as well as those that can<br />
be allocated on a reasonable basis.<br />
Segment capital expenditures include the cost of acquiring property, plant and equipment and intangible<br />
assets.<br />
Inter-segment pricing is determined on an arm’s length basis.<br />
Business segments<br />
The <strong>Group</strong> is reporting three business segments (business groups). Each includes several business<br />
units:<br />
- The “Chemicals” business group includes the Inorganics, Chlor-alkali and PVC business units.<br />
- The “Specialities” business group includes the Fine Chemicals, Gelatin and Natural Derivatives<br />
business units.<br />
- The “Plastics Converting” business group includes the Profiles, Plastic Pipe Systems and<br />
Compounds business units.<br />
121<br />
Geographical segments<br />
The three business segments (business groups) operate worldwide, however mainly in two geographical<br />
areas, Europe and the USA.<br />
Segment revenue is based on the geographical location of customers, while segment assets and<br />
liabilities are based on the geographical location of the assets.
financial report <strong>2008</strong><br />
Chemicals<br />
<strong>2008</strong> 2007<br />
122<br />
KEY DATA BY PRIMARY REPORTING SEGMENT<br />
Revenue (internal and external) 1,502.5 1,122.8<br />
Revenue (internal) 100.7 95.7<br />
Revenue 1,401.8 1,027.1<br />
Profit (+) / loss (-) from operations before non-recurring items (REBIT) 197.5 82.7<br />
Non-recurring items -15.0 -4.7<br />
Profit (+) / loss (-) from operations (EBIT) 182.5 78.0<br />
Return on revenue (REBIT/revenue) 14.1% 8.1%<br />
Finance costs - -<br />
Share of result of investments accounted for using the equity method 7.7 2.9<br />
Income tax expense - -<br />
Profit (+) / loss (-) for the period - -<br />
Segment assets 776.8 627.2<br />
Investments accounted for using the equity method 19.4 10.4<br />
Investments - -<br />
Deferred tax assets - -<br />
Cash and cash equivalents - -<br />
Other unallocated receivables - -<br />
Total Assets - -<br />
Segment liabilities 280.5 240.3<br />
Financial liabilities - -<br />
Deferred tax liabilities - -<br />
Equity - -<br />
Total Equity & Liabilities - -<br />
Capital expenditures: PP&E and intangible assets 29.1 39.5<br />
Amortisation and depreciation -40.9 -41.4<br />
Impairment losses on intangible assets and property, plant and equipment - -<br />
Number of employees at year end (headcount) 1,965 2,009<br />
Europe<br />
<strong>2008</strong> 2007<br />
KEY DATA BY SECONDARY REPORTING SEGMENT<br />
Revenue by market 2,125.2 1,881.4<br />
Segment assets 1,470.2 1,376.3<br />
Segment liabilities 488.3 472.9<br />
Capital expenditures: PP&E and intangible assets 90.8 91.4<br />
The unallocated segment assets mainly include the office buildings and receivables within<br />
the holding companies.<br />
The unallocated segment liabilities comprise mainly the payables within those holding companies.
<strong>Tessenderlo</strong> <strong>Group</strong><br />
Specialities Plastics Converting Unallocated <strong>Tessenderlo</strong> <strong>Group</strong><br />
<strong>2008</strong> 2007 <strong>2008</strong> 2007 <strong>2008</strong> 2007 <strong>2008</strong> 2007<br />
593.8 569.2 776.5 831.7 - - 2,872.8 2,523.7<br />
7.1 6.8 - 15.3 - - 107.8 117.8<br />
586.7 562.4 776.5 816.4 - - 2,765.0 2,405.9<br />
34.6 31.9 22.4 49.2 -15.4 -11.5 239.1 152.3<br />
8.2 -9.8 -19.5 -1.8 -0.6 51.4 -26.9 35.1<br />
42.8 22.1 2.9 47.4 -16.0 39.9 212.2 187.4<br />
5.9% 5.7% 2.9% 6.0% - - 8.6% 6.3%<br />
- - - - - - -21.6 -17.6<br />
3.8 3.1 - - - - 11.5 6.0<br />
- - - - - - -61.7 -47.1<br />
- - - - - - 140.4 128.7<br />
413.5 401.5 454.3 491.3 51.6 13.2 1,696.2 1,533.2<br />
15.6 13.6 - - 4.6 - 39.6 24.0<br />
- - - - 5.2 6.1 5.2 6.1<br />
- - - - 17.7 26.3 17.7 26.3<br />
- - - - 53.5 93.6 53.5 93.6<br />
- - - - 0.7 - 0.7 -<br />
- - - - - - 1,812.9 1,683.2<br />
103.2 109.9 101.0 122.9 33.7 33.3 518.4 506.4<br />
- - - - 348.1 337.4 348.1 337.4<br />
- - - - 44.4 37.2 44.4 37.2<br />
- - - - 902.0 802.2 902.0 802.2<br />
- - - - - - 1,812.9 1,683.2<br />
30.8 31.5 32.4 33.5 9.1 - 101.4 104.5<br />
-33.3 -40.8 -32.3 -34.8 -3.1 -2.8 -109.6 -119.8<br />
-6.4 -12.3 - - - -12.3 -6.4<br />
2,755 2,763 3,517 3,349 - - 8,237 8,121<br />
123<br />
USA Rest of the world <strong>Tessenderlo</strong> <strong>Group</strong><br />
<strong>2008</strong> 2007 <strong>2008</strong> 2007 <strong>2008</strong> 2007<br />
296.7 260.2 343.1 264.3 2,765.0 2,405.9<br />
185.0 120.4 41.0 36.5 1,696.2 1,533.2<br />
23.1 27.3 7.0 6.2 518.4 506.4<br />
7.0 9.8 3.6 3.3 101.4 104.5
financial report <strong>2008</strong><br />
3. Acquisitions and disposals<br />
Acquisitions – Activities / Subsidiaries<br />
• In April <strong>2008</strong>, Eurocell ltd, a UK subsidiary within the business unit Profiles, acquired the assets of<br />
Sprint 1233, formerly Plastmo Profiles Ltd (Northampton, UK). Taking over the interests of Plastmo<br />
will allow Eurocell to benefit from improved production efficiencies and economies of scale.<br />
In December <strong>2008</strong>, Eurocell ltd acquired the assets and operations of Cavalok Building Products.<br />
Cavalok Building Products is the only manufacturer of BBA-accredited cavity closure systems<br />
made from 100% post-consumer recycled PVC-u. This acquisition will extend the Eurocell product<br />
offering and will help deliver significant operational efficiency benefits.<br />
As Plastmo and Cavalok were immediately integrated in the Eurocell operations, no separate<br />
reporting is maintained on their contributions to the profit of the <strong>Group</strong>, however in <strong>2008</strong> these are<br />
considered to have been immaterial.<br />
• In June <strong>2008</strong>, Akiolis <strong>Group</strong>, a French subsidiary within the business unit Natural Derivatives,<br />
acquired SR Collecte sas and Collectoco sarl. In August <strong>2008</strong>, Akiolis <strong>Group</strong> also acquired<br />
Recup’Food Sarl. These acquisitions will allow Akiolis <strong>Group</strong> to realise economies of scale.<br />
124<br />
These acquisitions by Akiolis <strong>Group</strong> did not have a significant contribution to the <strong>2008</strong> profit of the<br />
<strong>Group</strong>. If the acquisition date of SR Collecte sas, Collectoco sarl and Recup’Food Sarl had been<br />
1 January <strong>2008</strong>, the impact on the revenue and profit of the <strong>Group</strong> would have been insignificant as<br />
well.<br />
• In September <strong>2008</strong>, <strong>Tessenderlo</strong> Kerley acquired the assets, marketing and distribution channels of<br />
Agrochem (Izmir, Turkey). Agrochem has been a key distributor for <strong>Tessenderlo</strong> Kerley in the area<br />
for the past 14 years and has been manufacturing <strong>Tessenderlo</strong> Kerley plant nutrient solutions.<br />
This acquisition did not have a significant contribution to the <strong>2008</strong> profit of the <strong>Group</strong>. If the<br />
acquisition date had been 1 January <strong>2008</strong>, the impact of this acquisition on the revenue and the<br />
profit of the <strong>Group</strong> would have been insignificant as well.<br />
• In October <strong>2008</strong>, the <strong>Group</strong> reached an agreement with Nyloplast NV to take over all shares<br />
of its subsidiary Nyloplast Europe BV (‘s Gravendeel, the Netherlands). Nyloplast Europe BV<br />
manufactures large diameter plastic fittings for presureless pipe systems for the European market.<br />
The systems are used for draining sewage and rain water. This extension of the range of products<br />
and services will strengthen the position of the Plastic Pipe Systems business unit in Europe and<br />
further develop its strategy for growth.<br />
The acquisition of Nyloplast Europe BV did not yet have a significant impact on the <strong>2008</strong> revenue or<br />
profit of the <strong>Group</strong>. If the acquisition date had been 1 January <strong>2008</strong>, the revenue of the <strong>Group</strong> would<br />
be higher by approximately 11.7 million EUR.
<strong>Tessenderlo</strong> <strong>Group</strong><br />
The table below summarises the impact of these agreements on the financial position of the <strong>Group</strong>:<br />
Pre-acquisition<br />
carrying<br />
amounts<br />
Fair value<br />
adjustments<br />
Recognised<br />
values on<br />
acquisition<br />
Property, plant and equipment 5.7 5.9 11.6<br />
Intangible assets 0.1 2.1 2.2<br />
Non-current assets 5.8 8.0 13.8<br />
Inventories 4.5 -0.8 3.7<br />
Trade and other receivables 4.2 - 4.2<br />
Cash and cash equivalents -1.6 - -1.6<br />
Current assets 7.1 -0.8 6.3<br />
Trade and other payables 5.0 - 5.0<br />
Current liabilities 5.0 0.0 5.0<br />
Non-current liabilities 0.7 1.4 2.1<br />
Net assets 7.2 5.8 13.0<br />
Goodwill on acquisition 5.1<br />
Negative goodwill on acquisition -1.2<br />
Consideration (paid)/received, satisfied in cash -16.9<br />
Cash acquired/(disposed) of -1.6<br />
Net cash (outflow)/inflow -18.5<br />
125<br />
The fair value adjustments performed at acquisition date are based on valuation studies performed<br />
as well internally as by external experts. The intangible assets at acquisition date mainly relate to the<br />
valuation of customer lists (note 12).<br />
Acquisitions – Investments accounted for using the equity method<br />
In October <strong>2008</strong> <strong>Tessenderlo</strong> Kerley acquired 30 % of the shares of Wolf Mountain Products LLC, Lindon,<br />
Utah (USA). <strong>Tessenderlo</strong> Kerley also has an option to purchase an additional 20 % interest in Wolf<br />
Mountain Products during the first half of 2014. Wolf Mountain Products offers a broad range of high<br />
quality bark and wood-based products used as soil amendments, ground covers and playground chips.<br />
This acquisition did not yet have a significant contribution to the <strong>2008</strong> profit of the <strong>Group</strong>. If the<br />
acquisition date would have been 1 January <strong>2008</strong>, the impact on the profit of the <strong>Group</strong> would also have<br />
been insignificant.
financial report <strong>2008</strong><br />
The table below summarises the impact of this agreement on the financial position of the <strong>Group</strong>:<br />
Pre-acquisition<br />
carrying<br />
amounts<br />
Fair value<br />
adjustments<br />
Recognised<br />
values on<br />
acquisition<br />
Equity 2.4 8.0 10.4<br />
Share <strong>Group</strong> (30%) 0.7 2.4 3.1<br />
Goodwill on acquisition 0.0<br />
Consideration (paid)/received, satisfied in cash -3.1<br />
Cash acquired/(disposed) of 0.0<br />
Net cash (outflow)/inflow -3.1<br />
Disposals<br />
No disposals were made during <strong>2008</strong>.<br />
126<br />
4. Other income and expenses<br />
<strong>2008</strong> 2007<br />
Release of provisions 3.6 -<br />
Additions to provisions - -<br />
Research cost -14.3 -7.4<br />
Grants 0.3 0.1<br />
Depreciation -2.2 -2.3<br />
Gains on disposal of PP&E and intangible assets -0.4 0.2<br />
Write down debtors -2.7 -2.7<br />
Other -10.9 -0.1<br />
Total -26.6 -12.2<br />
“Other” mainly includes taxes other than income taxes.
<strong>Tessenderlo</strong> <strong>Group</strong><br />
5. Non-recurring items<br />
<strong>2008</strong> 2007<br />
Gain on disposals 12.8 58.4<br />
Restructuring (incl. impairment losses) -18.2 -15.6<br />
Environmental provisions -14.2 -2.8<br />
Other income and expenses -7.3 -4.9<br />
Total -26.9 35.1<br />
The non-recurring items for <strong>2008</strong> show an expense of 26.9 million EUR (2007: income of<br />
35.1 million EUR).<br />
The gain on disposals mainly includes the sale of land in England. The land has been sold for<br />
5.7 million GBP, while the land had no carrying amount. The non-recurring result of this sale amounts<br />
to 7.1 million EUR.<br />
The impairment losses amount to 12.3 million EUR and are mainly related to property, plant and<br />
equipment of subsidiaries in the business group Plastics Converting (12.2 million EUR).<br />
On December 10th <strong>2008</strong>, the environmental permit of <strong>Tessenderlo</strong> Chemie NV (Belgium) was extended<br />
for a period of 20 years. <strong>Tessenderlo</strong> Chemie NV committed itself to invest in a new production process<br />
and to find a durable solution to its environmental problems in Limburg (Belgium). As a consequence<br />
of these commitments additional discounted environmental provisions were recorded for an amount of<br />
14.5 million EUR.<br />
127<br />
Other income and expenses in <strong>2008</strong> relate to several incurred charges, including expenses as a<br />
consequence of acquisitions, provisions on receivables and exceptional charges which are not covered by<br />
insurance.<br />
The non-recurring items in 2007 mainly included the gain realised on the sale of <strong>Tessenderlo</strong> Davison<br />
Companies (TDC), a joint marketing venture with Davison Petroleum Products, (DDP), Ruston, United<br />
States. The non-recurring gain of this business disposal amounted to 52.0 million EUR. In addition, the<br />
sale of the subsidiary PB Gelatins France and the sale of land of <strong>Tessenderlo</strong> Kerley generated a nonrecurring<br />
gain of 4.2 million EUR.<br />
The restructuring provisions and expenses, as well as the environmental provisions, in 2007 mainly<br />
concerned the final phase of the Target 2007 restructuring plan (9.1 million EUR) in the business group<br />
Chemicals (7.5 million EUR) and the business unit Fine Chemicals (1.6 million EUR).<br />
The impairment losses in 2007 amounted to EUR 8.4 million EUR and were mainly related to property,<br />
plant and equipment in the business unit Fine Chemicals (3.9 million EUR) and the business unit Gelatin<br />
(2.6 million EUR).
financial report <strong>2008</strong><br />
6. Payroll and related benefits<br />
note <strong>2008</strong> 2007<br />
Wages and salaries -286.3 -285.6<br />
Employer’s social security contributions -76.8 -77.8<br />
Other personnel costs -43.1 -31.1<br />
Contributions to defined contribution<br />
-3.8 -3.9<br />
plans<br />
Increase in liability for defined benefit<br />
23 -4.6 -8.3<br />
plans<br />
Movement in asset for defined benefit<br />
23 -0.5 -1.1<br />
plans<br />
Total -415.1 -407.8<br />
The average number of FTEs for <strong>2008</strong> amount to 7,878 (2007: 7,794).<br />
128
<strong>Tessenderlo</strong> <strong>Group</strong><br />
7. Additional information on operating expenses<br />
by nature<br />
Depreciation, amortisation and impairment losses are included in the following line items in the<br />
income statement in <strong>2008</strong>:<br />
Depreciation<br />
and impairment<br />
losses on PP&E<br />
Amortisation and<br />
impairment losses on<br />
intangible assets<br />
Total<br />
Cost of sales -91.1 -3.8 -94.9<br />
Administrative expenses -9.8 - -9.8<br />
Sales and Marketing - -2.7 -2.7<br />
Other operating (income)/expenses -2.2 - -2.2<br />
Restructuring (incl. impairment losses) -12.3 - -12.3<br />
Total -115.4 -6.5 -121.9<br />
Total depreciation charges and impairment losses in <strong>2008</strong> amount to 124.4 million EUR (note 10 and<br />
12). Taking into account the effect of government grants in <strong>2008</strong> (note 10), the net depreciation charges<br />
amount to 121.9 million EUR.<br />
Depreciation, amortisation and impairment losses are included in the following line items in the<br />
income statement in 2007:<br />
129<br />
Depreciation<br />
and impairment<br />
losses on PP&E<br />
Amortisation and<br />
impairment losses on<br />
intangible assets<br />
Total<br />
Cost of sales -104.4 -4.1 -108.5<br />
Administrative expenses -9.1 - -9.1<br />
Other operating income/(expenses) -2.1 - -2.1<br />
Restructuring (incl. impairment losses) -6.5 - -6.5<br />
Total -122.1 -4.1 -126.2
financial report <strong>2008</strong><br />
8. Finance income and expense<br />
Finance expense:<br />
<strong>2008</strong> 2007<br />
Interest expense on financial liabilities measured at amortised<br />
-15.2 -17.7<br />
cost<br />
Foreign exchange losses -12.1 -5.0<br />
Other -2.5 -1.2<br />
Total -29.8 -23.9<br />
Finance income:<br />
<strong>2008</strong> 2007<br />
Interest income from cash and cash equivalents 2.8 4.2<br />
Dividend income, non-consolidated companies 0.4 0.2<br />
Revaluation to fair value of derivatives 5.0 1.9<br />
Total 8.2 6.3<br />
130<br />
The net interest expense of 12.4 million EUR (2007: 13.5 million EUR) decreased by 1.1 million EUR<br />
thanks to the further decrease of the average outstanding net financial debt in <strong>2008</strong> compared to 2007<br />
(see note 22).
<strong>Tessenderlo</strong> <strong>Group</strong><br />
9. Income tax expense<br />
<strong>2008</strong> 2007<br />
RECOGNISED IN THE INCOME STATEMENT<br />
Current tax expense -49.1 -50.3<br />
Adjustment current tax expense previous periods 1.1 -<br />
Deferred tax expense -13.7 3.2<br />
Total income tax expense in the income statement -61.7 -47.1<br />
Profit (+) / loss (-) before tax 202.1 175.8<br />
Less share of result of associates, net of taxes 11.5 6.0<br />
Profit (+) / loss (-) before tax and before result from associates 190.6 169.8<br />
Effective tax rate 32.4% 27.7%<br />
RECONCILIATION OF EFFECTIVE TAX RATE<br />
Profit (+) / loss (-) before tax and before results from<br />
190.6 169.8<br />
associates<br />
Theoretical tax rate (*) 33.1% 35.2%<br />
Expected income tax at the theoretical tax rate -63.1 -59.9<br />
131<br />
Difference between theoretical and effective tax expenses 1.4 12.8<br />
Adjustment on deferred taxes 0.1 -4.7<br />
Change in tax rates 0.1 -1.4<br />
Impairment (-) / reversal of an impairment (+) of a recognised<br />
deferred tax asset<br />
- -3.3<br />
Adjustment on tax expenses 1.3 17.5<br />
Non deductible expenses -2.8 -2.8<br />
Special tax regimes 5.7 4.8<br />
Use or recognition of tax losses / tax credits not previously<br />
0.4 18.1<br />
recognised<br />
Tax losses for which no deferred tax asset has been recorded -5.6 -1.2<br />
Impact of tax consolidation regimes - -<br />
Adjustment current tax expense previous periods 1.1 -<br />
Other 2.5 -1.4<br />
(*) Theoretical aggregated weighted tax rate of all group companies<br />
The impact of the change in tax rates amounts to 0.1 million EUR in <strong>2008</strong>, which is related to the change<br />
in tax rates in Luxembourg. The impact in 2007 amounted to -1.4 million EUR and was related to the<br />
change in tax rates, announced or already effective, in Germany, Italy and the United Kingdom.
financial report <strong>2008</strong><br />
10. Property, plant and equipment<br />
Land and<br />
buildings<br />
Plant,<br />
machinery<br />
and<br />
equipment<br />
Furniture<br />
and<br />
vehicles<br />
Under<br />
construction<br />
Total<br />
ACQUISITION COST<br />
At 1 January <strong>2008</strong> 416.7 1,860.4 110.7 23.0 2,410.8<br />
. acquisitions through<br />
5.5 5.9 0.2 - 11.6<br />
business combinations<br />
(note 3)<br />
. capital expenditure 7.7 42.4 10.6 33.5 94.2<br />
. sales and disposals -1.6 -14.8 -4.8 -0.6 -21.8<br />
. transfers 0.6 23.3 1.3 -26.5 -1.3<br />
. translation differences -5.8 -43.0 -1.0 -0.3 -50.1<br />
At 31 December <strong>2008</strong> 423.1 1,874.2 117.0 29.1 2,443.4<br />
132<br />
DEPRECIATION AND IMPAIRMENT LOSSES<br />
At 1 January <strong>2008</strong> -198.1 -1,431.1 -93.2 0.0 -1,722.4<br />
. acquisitions through<br />
- - - - 0.0<br />
business combinations<br />
. depreciation -13.5 -84.5 -7.7 - -105.7<br />
. sales and disposals 1.0 13.7 4.6 - 19.3<br />
. impairment losses -1.4 -10.7 -0.1 - -12.2<br />
. transfers 0.5 0.3 -0.2 - 0.6<br />
. translation differences - 36.4 0.6 - 37.0<br />
At 31 December <strong>2008</strong> -211.5 -1,475.9 -96.0 0.0 -1,783.4<br />
CARRYING AMOUNTS BEFORE GOVERNMENT GRANTS<br />
Net government grants - -8.0 - - -8.0<br />
CARRYING AMOUNTS<br />
At 1 January <strong>2008</strong> 218.6 418.7 17.5 23.0 677.8<br />
At 31 December <strong>2008</strong> 211.6 390.3 21.0 29.1 652.0
<strong>Tessenderlo</strong> <strong>Group</strong><br />
Land and<br />
buildings<br />
Plant,<br />
machinery<br />
and<br />
equipment<br />
Furniture<br />
and<br />
vehicles<br />
Under<br />
construction<br />
Total<br />
ACQUISITION COST<br />
At 1 January 2007 415.9 1,826.8 109.4 19.4 2,371.5<br />
. acquisitions through<br />
- 6.5 - - 6.5<br />
business<br />
combinations<br />
. capital expenditure 10.0 44.1 8.9 35.6 98.6<br />
. sales and disposals -5.4 -18.4 -7.0 -0.3 -31.1<br />
. transfers 1.7 27.9 0.7 -31.2 -0.9<br />
. translation differences -5.5 -26.5 -1.3 -0.5 -33.8<br />
At 31 December 2007 416.7 1,860.4 110.7 23.0 2,410.8<br />
DEPRECIATION AND IMPAIRMENT LOSSES<br />
At 1 January 2007 -188.7 -1,362.9 -93.3 0.0 -1,644.9<br />
. acquisitions through<br />
- - - - 0.0<br />
business combinations<br />
. depreciation -14.2 -94.4 -7.1 - -115.7<br />
. sales and disposals 4.4 13.0 6.2 - 23.6<br />
. impairment losses -1.0 -5.4 - - -6.4<br />
. transfers - 0.6 - - 0.6<br />
. translation differences 1.4 18.0 1.0 - 20.4<br />
At 31 December 2007 -198.1 -1,431.1 -93.2 0.0 -1,722.4<br />
133<br />
CARRYING AMOUNTS BEFORE GOVERNMENT GRANTS<br />
Net government grants - -10.6 - - -10.6<br />
CARRYING AMOUNTS<br />
At 1 January 2007 227.2 463.9 16.1 19.4 726.6<br />
At 31 December 2007 218.6 418.7 17.5 23.0 677.8<br />
The capital expenditure amounts to 94.2 million EUR and is broken down per business segment, in the<br />
“Segment reporting” section (note 2).<br />
An amount of 11.6 million EUR is disclosed as acquisition through business combinations. The detailed<br />
information is disclosed in “Acquisitions and disposals” (note 3).<br />
Impairment losses for an amount of 12.2 million EUR were recognised during the second quarter of<br />
<strong>2008</strong> and are mainly related to impairment losses recognised on the property, plant and equipment of<br />
subsidiaries in the business group Plastics Converting. The market for the related companies’ products<br />
continued to deteriorate in <strong>2008</strong> as a consequence of the current economic difficulties, which in turn<br />
caused the <strong>Group</strong> to reevaluate its projections and views of the market’s ability to improve.<br />
The recoverable amount of these assets has been determined based on value in use calculations, and<br />
was compared to the fair value of these assets.
financial report <strong>2008</strong><br />
The impairment losses of 2007 were recorded on property, plant and equipment in the business unit<br />
Fine Chemicals and the business unit Gelatin. The recoverable amount has been determined based on<br />
value in use calculations.<br />
In 2007, the Flemish government granted <strong>Tessenderlo</strong> Chemie NV and Limburgse Vinyl Maatschappij NV<br />
12.5 million EUR for large-scale environmental investments. The remaining net government grant as<br />
per 31 December <strong>2008</strong> amounts to 8.0 million EUR (2007: 10.6 million EUR).<br />
No property, plant and equipment is pledged as security for liabilities.<br />
Assets for an amount of 0.7 million EUR are classified as non-current assets held for sale (note 19).<br />
The <strong>Group</strong> leases property, plant and equipment under a number of finance lease agreements. At the<br />
end of each of the leases, the <strong>Group</strong> has the option to purchase the equipment at a beneficial price. As<br />
per 31 December <strong>2008</strong>, the net carrying amount of leased property, plant and equipment amounted to<br />
4.8 million EUR (2007: 5.8 million EUR). For an overview of the lease payables, we refer to note 22.<br />
The finance leases mainly consist of land and buildings (4.8 million EUR).<br />
134<br />
11. Goodwill<br />
ACQUISITION COST<br />
At 1 January <strong>2008</strong> 64.6<br />
. acquisitions through business combinations 5.1<br />
. sales and disposals -<br />
. transfers 0.7<br />
. translation differences -6.5<br />
At 31 December <strong>2008</strong> 63.9<br />
IMPAIRMENT LOSSES<br />
At 1 January <strong>2008</strong> -27.4<br />
. acquisitions through business combinations -<br />
. sales and disposals -<br />
. transfers -<br />
. translation differences 1.8<br />
At 31 December <strong>2008</strong> -25.6<br />
CARRYING AMOUNTS<br />
As per 1 January <strong>2008</strong> 37.2<br />
As per 31 December <strong>2008</strong> 38.3
<strong>Tessenderlo</strong> <strong>Group</strong><br />
ACQUISITION COST<br />
At 1 January 2007 69.5<br />
. acquisitions through business combinations 0.2<br />
. sales and disposals -<br />
. transfers -<br />
. translation differences -5.1<br />
At 31 December 2007 64.6<br />
IMPAIRMENT LOSSES<br />
At 1 January 2007 -29.4<br />
. acquisitions through business combinations -<br />
. sales and disposals -<br />
. transfers -<br />
. translation differences 2.0<br />
At 31 December 2007 -27.4<br />
CARRYING AMOUNTS<br />
As per 1 January 2007 40.1<br />
As per 31 December 2007 37.2<br />
During the fourth quarter of <strong>2008</strong>, the <strong>Group</strong> completed its annual impairment test for goodwill and<br />
concluded, based on the assumptions below, that no impairment charge was deemed necessary.<br />
The <strong>Group</strong> cannot foresee whether an event that triggers impairment will occur, when it will occur or<br />
how it will affect the asset values reported. The <strong>Group</strong> believes that all of its estimates are reasonable.<br />
They are consistent with the internal reporting and reflect management’s best estimates.<br />
135<br />
Goodwill only accounts for approximately 2.1 % of the <strong>Group</strong>’s total assets as at 31 December <strong>2008</strong><br />
(2007: 2.2 %). The impairment testing on goodwill, relies on a number of critical judgements, estimates<br />
and assumptions.<br />
Goodwill has been tested for impairment on company level or at the most relevant level based on valuein-use<br />
calculations. The key judgements, estimates and assumptions used in these calculations are as<br />
follows:<br />
- The cash flow projection of the first year is based on the current year financial budget (2009).<br />
- For the next four years (2010-2013), cash flow projections used are based on a long term plan for<br />
the coming 5 years.<br />
- In order to calculate the terminal value, the data of the fifth year are extrapolated by using<br />
simplified assumptions such as constant quantities sold, combined with constant costs.<br />
- Projections are made in the functional currency of the company and are discounted at the company<br />
level Weighted Average Cost of Capital.<br />
Although the <strong>Group</strong> believes that its judgements, assumptions and estimates are appropriate, actual<br />
results may differ from these estimates under different assumptions or conditions.
financial report <strong>2008</strong><br />
12. Intangible assets<br />
USEFUL LIFE<br />
DEVELOPMENT<br />
CONCESSIONS,<br />
PATENTS,<br />
LICENSES<br />
SOFTWARE<br />
CUSTOMER<br />
LISTS<br />
OTHER<br />
OTHER<br />
TOTAL<br />
FINITE<br />
INDEFINITE<br />
136<br />
ACQUISITION VALUE<br />
At 1 January <strong>2008</strong> 3.7 27.8 12.5 10.6 19.0 1.8 75.4<br />
. acquisitions through business - - - 2.2 - - 2.2<br />
combinations (note 3)<br />
. capital expenditure - 3.9 2.1 1.0 0.2 - 7.2<br />
. sales and disposals - - - - - - 0.0<br />
. transfers - 3.3 0.3 -0.2 -3.4 - 0.0<br />
. translation differences - 0.3 -1.0 -0.4 0.7 - -0.4<br />
At 31 December <strong>2008</strong> 3.7 35.3 13.9 13.2 16.5 1.8 84.4<br />
AMORTISATION AND IMPAIRMENT LOSSES<br />
At 1 January <strong>2008</strong> -1.1 -19.4 -9.4 -3.8 -4.8 0.0 -38.5<br />
. acquisitions through business - - - - - - 0.0<br />
combinations<br />
. amortisation -0.7 -2.1 -1.5 -1.0 -1.2 - -6.5<br />
. sales and disposals - - - - - - 0.0<br />
. transfers - -0.8 -0.2 - 1.0 - 0.0<br />
. translation differences - -0.1 0.6 0.2 -0.2 - 0.5<br />
At 31 December <strong>2008</strong> -1.8 -22.4 -10.5 -4.6 -5.2 0.0 -44.5<br />
CARRYING AMOUNTS<br />
At 1 January <strong>2008</strong> 2.6 8.4 3.1 6.8 14.2 1.8 36.9<br />
At 31 December <strong>2008</strong> 1.9 12.9 3.4 8.6 11.3 1.8 39.9
<strong>Tessenderlo</strong> <strong>Group</strong><br />
USEFUL LIFE<br />
DEVELOPMENT<br />
CONCESSIONS,<br />
PATENTS,<br />
LICENSES<br />
SOFTWARE<br />
CUSTOMER LISTS<br />
OTHER<br />
OTHER<br />
TOTAL<br />
FINITE<br />
INDEFINITE<br />
ACQUISITION VALUE<br />
At 1 January 2007 3.7 22.2 12.2 6.8 9.8 2.1 56.8<br />
. acquisitions through business - 3.6 - 2.4 9.7 - 15.7<br />
combinations<br />
. capital expenditure - 2.5 0.3 1.5 1.2 - 5.5<br />
. sales and disposals - -0.4 - - - - -0.4<br />
. transfers - - 0.3 - - - 0.3<br />
. translation differences - -0.1 -0.3 -0.1 -1.7 -0.3 -2.5<br />
At 31 December 2007 3.7 27.8 12.5 10.6 19.0 1.8 75.4<br />
137<br />
AMORTISATION AND IMPAIRMENT LOSSES<br />
At 1 January 2007 -0.2 -19.0 -8.2 -3.3 -4.2 0.0 -34.9<br />
. acquisitions through business - - - - - - 0.0<br />
combinations<br />
. amortisation -0.7 -0.8 -1.4 -0.3 -0.9 - -4.1<br />
. sales and disposals - 0.2 - - - - 0.2<br />
. transfers -0.2 0.2 - - - - 0.0<br />
. translation differences - - 0.2 -0.2 0.3 - 0.3<br />
At 31 December 2007 -1.1 -19.4 -9.4 -3.8 -4.8 0.0 -38.5<br />
CARRYING AMOUNTS<br />
At 1 January 2007 3.5 3.2 4.0 3.5 5.6 2.1 21.9<br />
At 31 December 2007 2.6 8.4 3.1 6.8 14.2 1.8 36.9<br />
The capital expenditure amounts to 7.2 million EUR and is broken down per business segment, in the<br />
“Segment reporting” section (note 2).<br />
An amount of 2.2 million EUR is disclosed as acquisition through business combinations. The detailed<br />
information is disclosed in “Acquisitions and disposals” (note 3).<br />
The “other” intangible assets with finite useful lives consist mainly of two non-competition agreements,<br />
know how, a product label and land-use rights. The non-compete agreements, the product label and the<br />
know-how are being amortised on a straight-line basis over 5-15 years.
financial report <strong>2008</strong><br />
The intangible assets with indefinite useful life relate to trademarks which are considered to have an<br />
indefinite life unless plans would exist to discontinue the related activity. The intangible assets with<br />
indefinite useful life have been tested for impairment and no impairment charge was deemed necessary.<br />
No intangible assets are pledged as security for liabilities.<br />
13. Investments accounted for using the equity<br />
method<br />
Investments accounted for using the equity method consist of joint ventures and associates.<br />
The joint ventures of the <strong>Group</strong> are:<br />
Ownership<br />
Country <strong>2008</strong> 2007<br />
138<br />
Jupiter Sulphur US 50% 50%<br />
Zéoline Belgium 50% 50%<br />
Siram France 50% 50%<br />
SH Capital (<strong>Group</strong>e Fiso) France 50% 50%<br />
Ferso Bio (<strong>Group</strong>e Fiso) France 50% 50%<br />
Fiso Developpement (<strong>Group</strong>e Fiso) France 50% 50%<br />
Solagra (<strong>Group</strong>e Fiso) France 50% 50%<br />
Labrousse (<strong>Group</strong>e Fiso) France 50% 25%<br />
Ispac (<strong>Group</strong>e Fiso) France 50% 25%<br />
MPR Middle East Bahrain 50% -<br />
The associates of the <strong>Group</strong> are:<br />
Ownership<br />
Country <strong>2008</strong> 2007<br />
Alkemin US 49.50% 49.50%<br />
T-Power Belgium 33.33% -<br />
Wolf Mountain Products US 30% -<br />
Bonnet (<strong>Group</strong>e Fiso) France 25% 25%<br />
Michel (<strong>Group</strong>e Fiso) France 25% 25%
<strong>Tessenderlo</strong> <strong>Group</strong><br />
The carrying amount of the investments accounted for using the equity method is as follows:<br />
<strong>2008</strong> 2007<br />
Alkemin 0.0 0.0<br />
<strong>Group</strong>e Fiso 14.8 12.8<br />
Jupiter Sulphur 13.5 7.0<br />
MPR Middle East 0.1 -<br />
Siram 0.8 0.9<br />
T-Power 4.6 -<br />
Wolf Mountain Products 2.8 -<br />
Zéoline 3.0 3.3<br />
Total 39.6 24.0<br />
Summary financial information on investments accounted for using the equity method at 100 percent:<br />
<strong>2008</strong> 2007<br />
Current assets 123.6 56.7<br />
Non-current assets 141.6 48.3<br />
Current liabilities 68.8 30.6<br />
Non-current liabilities 108.0 21.9<br />
Revenue 121.0 105.8<br />
Profit (+) / loss (-) from operations 38.5 21.0<br />
Profit for the period (+) / loss (-) attributable to equity holders 23.0 12.0<br />
139<br />
The above financial information includes results of the new associates T-Power and Wolf Mountain<br />
Products as from December <strong>2008</strong>. The results of MPR Middle East are insignificant and are included as<br />
from January <strong>2008</strong>.<br />
14. Investments<br />
<strong>2008</strong> 2007<br />
Investments in equity securities 4.5 5.6<br />
Cash guarantees / deposits 0.7 0.5<br />
Total 5.2 6.1<br />
Investments in equity securities <strong>2008</strong> 2007<br />
TC Nederland, Netherlands 0.8 0.8<br />
Indaver, Belgium 0.6 0.6<br />
TC Espana, Spain 0.6 0.6<br />
GLOBE International, Belgium 0.5 0.5<br />
LVM United Kingdom Ltd, United Kingdom 0.2 0.2<br />
Polycoop, Argentina - 1.1<br />
Ashdec Umwelt, Austria 0.4 -<br />
Other 1.4 1.8<br />
Total 4.5 5.6<br />
The investments in unquoted companies are measured at cost as their fair value can not be reliably<br />
determined.
financial report <strong>2008</strong><br />
15. Deferred tax assets and liabilities<br />
ASSETS LIABILITIES NET<br />
<strong>2008</strong> 2007 <strong>2008</strong> 2007 <strong>2008</strong> 2007<br />
Property, plant & equipment 5.5 3.5 -31.1 -31.0 -25.6 -27.5<br />
Goodwill 1.4 1.7 - - 1.4 1.7<br />
Intangible assets 1.4 2.3 - - 1.4 2.3<br />
Inventories 2.4 2.7 -8.3 -1.9 -5.9 0.8<br />
Receivables - 0.1 - - 0.0 0.1<br />
Derivative financial instruments - - -0.1 -0.2 -0.1 -0.2<br />
Other current assets 0.8 0.5 - - 0.8 0.5<br />
Employee benefits 3.1 4.9 -3.2 -3.9 -0.1 1.0<br />
Provisions 3.4 4.0 -16.2 -15.5 -12.8 -11.5<br />
Other items - 0.1 -0.3 - -0.3 0.1<br />
Losses carried forward 26.3 33.6 - - 26.3 33.6<br />
Impairment of deferred tax assets -11.8 -11.8 - - -11.8 -11.8<br />
Gross deferred tax assets / (liabilities) 32.5 41.6 -59.2 -52.5 -26.7 -10.9<br />
Set off of tax -14.8 -15.3 14.8 15.3<br />
140<br />
Net deferred tax assets / (liabilities) 17.7 26.3 -44.4 -37.2 -26.7 -10.9<br />
All movements of deferred tax assets and deferred tax liabilities are recorded through the income<br />
statement, except for conversion differences (-0.7 million EUR in <strong>2008</strong>) and the existing deferred tax<br />
assets and deferred tax liabilities at date of acquisitions (-1.4 million EUR in <strong>2008</strong>).<br />
On 31 December <strong>2008</strong>, a deferred tax liability of 18.6 million EUR (2007: 15.8 million EUR) relating<br />
to undistributed reserves within the subsidiaries of the <strong>Group</strong> has not been recognised because<br />
management believes that this liability will not be incurred in the foreseeable future.<br />
Tax losses carried forward on which no deferred tax asset is recognised amount to 45.7 million EUR<br />
(2007: 78.8 million EUR). These tax losses have an indefinite life. Deferred tax assets have not been<br />
recognised on these items because it is not probable that future taxable profits (within the next 5 years)<br />
will be available against which the unused tax losses can be utilised.
<strong>Tessenderlo</strong> <strong>Group</strong><br />
16. Trade and other receivables<br />
<strong>2008</strong> 2007<br />
Non-current trade and other receivables<br />
Trade receivables 0.7 0.2<br />
Gross trade receivables 0.7 0.2<br />
Amounts written off - -<br />
Other receivables 2.2 5.1<br />
Prepayments - -<br />
Receivables from related parties - -<br />
Assets related to employee benefit schemes 14.5 10.2<br />
Total 17.4 15.5<br />
<strong>2008</strong> 2007<br />
Current trade and other receivables<br />
Trade receivables 401.7 378.5<br />
Gross trade receivables 416.2 391.6<br />
Amounts written off -14.5 -13.1<br />
Other receivables 58.1 44.3<br />
Prepayments 0.6 0.9<br />
Receivables from related parties 9.1 0.3<br />
Total 469.5 424.0<br />
141<br />
Receivables from related parties concern receivables on joint-ventures and associates (note 30).<br />
17. Inventories<br />
<strong>2008</strong> 2007<br />
Consumables 132.3 95.1<br />
Work in progress 23.2 21.4<br />
Finished goods 274.3 184.3<br />
Goods purchased for resale 43.9 39.1<br />
Total 473.7 339.9<br />
There are no inventories pledged for security.<br />
The cost of inventories recognised as an expense in <strong>2008</strong>, amounts to 1,414.7 million EUR<br />
(2007: 1,078.3 million EUR), included in cost of sales.<br />
The carrying amount of inventory, which was set at net realisable value as per year-end <strong>2008</strong> amounts to<br />
146.1 million EUR (2007: 38.0 million EUR). An amount of 22.7 million EUR was expensed in <strong>2008</strong><br />
(2007: 3.7 million EUR) of which 19.4 million EUR relates to an inventory write-off during the fourth quarter<br />
of <strong>2008</strong>. This inventory write-off was mainly the consequence of the strong decrease of sales prices in the<br />
beginning of 2009.<br />
In <strong>2008</strong> an insignificant income was recognised as a reverse of a write-off on inventories.
financial report <strong>2008</strong><br />
18. Cash and cash equivalents<br />
<strong>2008</strong> 2007<br />
Term accounts 0.5 0.2<br />
Current accounts 53.0 93.4<br />
Cash in hand - -<br />
Total 53.5 93.6<br />
19. Non-current assets held for sale<br />
<strong>2008</strong> 2007<br />
Non-current assets held for sale 0.7 -<br />
The non-current assets held for sale at 31 December <strong>2008</strong> include the land and buildings of two sites of<br />
a subsidiary in the Business <strong>Group</strong> Plastics Converting. Following a restructuring of its activities, these<br />
assets remain unused and are set for sale.<br />
142
<strong>Tessenderlo</strong> <strong>Group</strong><br />
20. Equity<br />
Reconciliation of movement in equity<br />
Issued capital<br />
Share premium<br />
Other reserves<br />
Translation<br />
reserves<br />
Negative goodwill<br />
Retained earnings<br />
Equity attributable<br />
to equity holders<br />
of the <strong>Group</strong><br />
Minority interest<br />
Total Equity<br />
Balance at 1 January 2007 136.0 36.5 238.9 -5.6 0.4 303.3 709.5 2.2 711.7<br />
Total recognised income and<br />
- - - -12.4 - 128.9 116.5 -0.2 116.3<br />
expense<br />
Shares issued 1.0 5.5 - - - - 6.5 - 6.5<br />
Dividends paid to shareholders - - - - - -33.5 -33.5 - -33.5<br />
Share based payments - - 1.2 - - - 1.2 - 1.2<br />
Other movements - - 16.1 - - -16.1 0.0 - 0.0<br />
Balance at 31 December 2007 137.0 42.0 256.2 -18.0 0.4 382.6 800.2 2.0 802.2<br />
Balance at 1 January <strong>2008</strong> 137.0 42.0 256.2 -18.0 0.4 382.6 800.2 2.0 802.2<br />
Total recognised income and<br />
- - - -8.8 - 140.5 131.7 -0.1 131.6<br />
expense<br />
Shares issued 1.0 1.3 - - - - 2.3 - 2.3<br />
Dividends paid to shareholders - - - - - -35.0 -35.0 - -35.0<br />
Share based payments - - 0.8 - - - 0.8 - 0.8<br />
Other movements - - 82.8 - - -82.8 0.0 0.1 0.1<br />
Balance at 31 December <strong>2008</strong> 138.0 43.3 339.8 -26.8 0.4 405.3 900.0 2.0 902.0<br />
143<br />
Issued capital and share premium<br />
Ordinary shares<br />
<strong>2008</strong> 2007<br />
On issue at 1 January 27,626,444 27,419,876<br />
Issued for cash at 4 September 2007 206,568<br />
Issued for cash at 1 September <strong>2008</strong> 86,844<br />
On issue at 31 December – fully paid 27,713,288 27,626,444<br />
The number of shares comprised 7,602,211 registered shares (2007: 7,664,192) and 20,111,077 ordinary<br />
shares (2007: 19,962,252). The shares are without nominal value.<br />
Translation reserves<br />
The translation reserves comprise all foreign exchange differences arising from the translation of the<br />
financial statements of foreign operations.<br />
Dividends<br />
After the balance sheet date, the Board of Directors will propose to the shareholders at the <strong>Annual</strong><br />
Shareholders’ meeting of 2 June 2009, to approve a dividend distribution of 36.9 million EUR or a net<br />
dividend per share of 1.00 EUR. The dividend has not been accounted for.
financial report <strong>2008</strong><br />
21. Earnings per share<br />
Basic earnings per share<br />
The calculation of the basic earnings per share is based on the profit attributable to ordinary<br />
shareholders and the weighted average number of ordinary shares outstanding during the year.<br />
The weighted average number of ordinary shares and the earnings per share are calculated as follows:<br />
<strong>2008</strong> 2007<br />
Number of ordinary shares at 1 January 27,626,444 27,419,876<br />
Effect of shares issued 28,789 66,964<br />
Weighted average number of ordinary shares 27,655,233 27,486,840<br />
Profit (+) / loss (-) attributable to equity holders of the <strong>Group</strong><br />
140.5 128.9<br />
(in million EUR)<br />
Basic earnings per share (in EUR) 5.08 4.69<br />
Diluted earnings per share<br />
144<br />
The calculation of diluted earnings per share is based on the profit attributable to ordinary shareholders<br />
and the diluted weighted average number of ordinary shares outstanding during the year.<br />
The weighted average number of ordinary shares (diluted) and the diluted earnings per share are<br />
calculated as follows:<br />
<strong>2008</strong> 2007<br />
Weighted average number of ordinary shares at 31st December 27,655,233 27,486,840<br />
Effect of share option on issue 6,622 35,898<br />
Diluted weighted average number of ordinary shares at 31st December 27,661,855 27,522,738<br />
Profit (+) / loss (-) attributable to equity holders<br />
140.5 128.9<br />
of the <strong>Group</strong> (in million EUR)<br />
Diluted earnings per share (in EUR) 5.08 4.68<br />
22. Financial liabilities<br />
<strong>2008</strong> 2007<br />
Non-current financial liabilities 96.7 122.6<br />
Current financial liabilities 251.4 214.8<br />
Total financial liabilities 348.1 337.4<br />
Cash and cash equivalents -53.5 -93.6<br />
Net financial liabilities 294.6 243.8
<strong>Tessenderlo</strong> <strong>Group</strong><br />
The net debt equity ratio at the end of <strong>2008</strong> is 32.7 % (year end 2007: 30.4 %).<br />
<strong>2008</strong> 2007<br />
Non-current financial liabilities<br />
Lease payables 1.9 2.6<br />
Credit institutions 94.8 120.0<br />
Total 96.7 122.6<br />
Terms and debt repayment schedule <strong>2008</strong>:<br />
other<br />
currencies<br />
in EUR<br />
in EUR Total Rate (%)<br />
Effective<br />
rate (%)<br />
Maturity<br />
Credit institutions - 20.0 floating 3.59 June ‘10-’13<br />
Credit institutions - 40.0 3.368 (fixed) - Oct ‘10-’13<br />
Credit institutions - 30.0 3.65 (fixed) - Dec ‘10-’12<br />
Credit institutions - 4.8 floating 0-4.5 ‘10-’15<br />
Lease payables - 1.9 5,8 (fixed) - ‘10-’16<br />
Total 0.0 96.7<br />
Total: equivalent in EUR 0.0 96.7 96.7<br />
145<br />
Terms and debt repayment schedule 2007:<br />
other<br />
currencies<br />
in EUR<br />
in EUR Total Rate (%)<br />
Effective<br />
rate (%)<br />
Maturity<br />
Credit institutions - 25.0 floating 5.18 June ‘09-’13<br />
Credit institutions - 50.0 3.368 (fixed) - Oct ‘09-’13<br />
Credit institutions - 40.0 3.65 (fixed) - Dec ‘09-’12<br />
Credit institutions 0.8 4.2 floating 0-4.5 ‘09-’15<br />
Lease payables - 2.6 5.8 (fixed) - ‘08-’16<br />
Total 0.8 121.8<br />
Total: equivalent in EUR 0.8 121.8 122.6<br />
Some covenants like balance sheet or interest coverage ratios or coverage of net debt by EBITDA may<br />
apply to long term debt and medium term facilities. All ratios have been respected in <strong>2008</strong>.<br />
<strong>2008</strong> 2007<br />
Current financial liabilities<br />
Current portion long term financial liabilities 25.0 25.0<br />
Lease payable within 1 year 0.1 0.1<br />
Credit institutions and commercial paper 226.3 189.7<br />
Total 251.4 214.8
financial report <strong>2008</strong><br />
Of the current financial liabilities per 31 December <strong>2008</strong>, 71.6 million EUR (2007: 51.6 million EUR) are<br />
represented by treasury bills (commercial paper) issued by <strong>Tessenderlo</strong> Finance (25.8 million EUR), a<br />
Belgian subsidiary and by <strong>Tessenderlo</strong> Nl Holding (45.8 million EUR), a Dutch subsidiary. The interest<br />
rate on this commercial paper amounts from Euribor +0.10% to Euribor +0.17%, depending on the<br />
duration of the loan.<br />
The <strong>Group</strong> uses short-term credit lines with credit institutions for the remaining part of the financing.<br />
Analysis of non-current and current financial liabilities by currency (<strong>2008</strong>):<br />
EUR USD GBP Others Total<br />
Current financial liabilities (*) 211.8 22.0 15.0 2.6 251.4<br />
Non-current financial liabilities 96.7 - - - 96.7<br />
Total financial liabilities 308.5 22.0 15.0 2.6 348.1<br />
In percentage of total financial liabilities 88.62% 6.32% 4.31% 0.75% 100.00%<br />
Analysis of non-current and current financial liabilities by currency (2007):<br />
EUR USD GBP Others Total<br />
146<br />
Current financial liabilities (*) 180.2 22.8 3.7 8.1 214.8<br />
Non-current financial liabilities 121.8 - - 0.8 122.6<br />
Total financial liabilities 302.0 22.8 3.7 8.9 337.4<br />
In percentage of total financial liabilities 89.51% 6.76% 1.10% 2.64% 100.00%<br />
(*) Part of these loans are denominated in EUR and afterwards swapped in GBP (see also note 26). The<br />
original loan remains in EUR.<br />
Terms and repayment schedule for finance lease contracts for 2007 and <strong>2008</strong>:<br />
Lease<br />
payables<br />
<strong>2008</strong><br />
Interest<br />
<strong>2008</strong><br />
Principal<br />
<strong>2008</strong><br />
Lease<br />
payables<br />
2007<br />
Interest<br />
2007<br />
Principal<br />
2007<br />
Less than one year 0.2 0.1 0.1 0.3 0.2 0.1<br />
Between one and five years 1.9 0.2 1.7 2.5 0.3 2.2<br />
More than five years 0.2 0.0 0.2 0.5 0.1 0.4<br />
Total 2.3 0.3 2.0 3.3 0.6 2.7
<strong>Tessenderlo</strong> <strong>Group</strong><br />
23. Employee benefits<br />
The provision for early retirement and defined benefit pension plans recognised in the balance sheet is<br />
as follows:<br />
Early<br />
retirement<br />
provision<br />
Defined benefit<br />
pension plan<br />
Total<br />
Balance at 1 January <strong>2008</strong> 16.8 29.6 46.4<br />
Additions 0.6 1.6 2.2<br />
Use of provision - -0.3 -0.3<br />
Reversal of provision -4.6 -5.3 -9.9<br />
Translation differences - -0.3 -0.3<br />
Transfers 2.8 - 2.8<br />
Balance at 31 December <strong>2008</strong> 15.6 25.3 40.9<br />
The entity’s accounting policy for recognising actuarial gains and losses<br />
The recognition of actuarial gains and losses is determined separately for each defined benefit plan.<br />
All actuarial gains and losses as at 1 January 2004, the date of transition to IFRSs, were recognised. All<br />
actuarial gains and losses subsequent to 1 January 2004 exceeding a corridor of 10 % of the higher of<br />
the present value of the defined benefit obligations and the fair value of plan assets are recognised in<br />
the income statement over the expected average remaining working lives of employees participating in<br />
the plan. Otherwise, the actuarial gain or loss is not recognised.<br />
147<br />
A general description of the type of plan<br />
• Employee Benefits<br />
These provisions are recorded to cover the post employment benefits and cover the pension plans and<br />
other benefits in accordance with local practices and conditions, following an actuarial calculation taking<br />
into account the financing of insurance companies and other pension funds. The most important pension<br />
plans are located in Belgium, the Netherlands, the United States of America, the United Kingdom,<br />
Germany and Italy.<br />
• Defined contribution plans<br />
The defined contribution pension plans are plans for which the company pays pre-determined<br />
contributions to a legal entity or a separate fund, in accordance with the settings of the plans. The<br />
company’s legal or constructive obligation is limited to the amount contributed. The contributions are<br />
recognised as an expense in the income statement as incurred and are included in “Payroll and related<br />
benefits” (note 6).<br />
• Defined benefit plans<br />
These plans are financed externally by pension funds or insurance companies. Independent actuaries<br />
perform an actuarial valuation on a regular basis. All actuarial gains and losses as at 1 January 2004,<br />
the date of transition to IFRSs, were recognised.
financial report <strong>2008</strong><br />
The amounts recognised in the balance sheet are as follows:<br />
<strong>2008</strong> 2007 2006 2005 2004<br />
Present value of wholly funded obligations 78.9 83.7 93.2 77.8 50.3<br />
Present value of partially funded obligations 71.2 75.4 76.2 92.3 94.4<br />
Present value of wholly unfunded obligations 18.0 18.9 17.3 19.4 18.2<br />
Total present value of obligations 168.1 178.0 186.7 189.5 162.9<br />
Fair value of plan assets 147.3 161.7 167.6 159.1 135.8<br />
Deficit 20.8 16.3 19.1 30.4 27.1<br />
Unrecognised actuarial gains (losses) -10.0 3.1 -2.5 -13.0 -3.1<br />
Net liability 10.8 19.4 16.6 17.4 24.0<br />
Unrecognised in % of funded obligations 5.95% -1,74% 1,34% 6,86% 1,90%<br />
Unrecognised in % of plan assets 6.79% -1.92% 1.49% 8.17% 2.28%<br />
Amounts in the balance sheet:<br />
Liabilities 25.3 29.6 29.4 29.7 28.7<br />
Assets (note 16) 14.5 10.2 12.8 12.4 4.7<br />
Net liability 10.8 19.4 16.6 17.3 24.0<br />
148<br />
The amounts recognised in the income statement are as follows:<br />
<strong>2008</strong> 2007<br />
Current service cost 6.0 5.8<br />
Interest cost 9.0 9.1<br />
Expected return on plan assets -9.5 -9.5<br />
Past service cost (benefit) -0.4 4.0<br />
Total, included in ‘payroll and related benefits’ (note 6) 5.1 9.4<br />
The past service cost in 2007 was mainly related to a plan settlement in a US subsidiary, a plan<br />
curtailment in the Italian subsidiaries and a change in French law concerning employee benefits.<br />
These items are presented under non-recurring items.<br />
The net periodic pension cost is included in the following line items of the income statement:<br />
<strong>2008</strong> 2007<br />
Cost of sales 3.0 3.5<br />
Distribution expenses 0.1 0.1<br />
Sales and marketing expenses 0.7 1.0<br />
Administrative expenses 1.3 0.8<br />
Other operating income/(expenses) - -<br />
Non-recurring items, net - 4.0<br />
Total 5.1 9.4
<strong>Tessenderlo</strong> <strong>Group</strong><br />
Changes in the present value of the defined benefit obligation are as follows:<br />
<strong>2008</strong> 2007<br />
Opening defined benefit obligation 178.0 186.7<br />
Change in scope of consolidation - 4.0<br />
Current service cost 7.3 7.2<br />
Past service cost - 2.1<br />
Interest cost 9.0 9.1<br />
Actuarial losses (gains) -11.1 -10.3<br />
Exchange differences on foreign plans -5.6 -3.0<br />
Settlement - -7.7<br />
Benefits paid -9.5 -10.1<br />
Closing defined benefit obligation 168.1 178.0<br />
Changes in the fair value of plan assets are as follows:<br />
<strong>2008</strong> 2007<br />
Opening fair value of plan assets 161.7 167.6<br />
Change in scope of consolidation - 0.7<br />
Expected return 9.5 9.5<br />
Actuarial gains and (losses) -21.9 -4.1<br />
Contributions by employee 1.3 1.3<br />
Contributions by employer 13.9 7.7<br />
Exchange differences on foreign plans -7.7 -3.2<br />
Settlement - -7.7<br />
Benefits paid -9.5 -10.1<br />
Closing fair value of plan assets 147.3 161.7<br />
149<br />
The expected rates of return on individual categories of plan assets are determined by reference to<br />
relevant indices. The overall expected rate of return is calculated by weighting the individual rates in<br />
accordance with the anticipated balance in the total investment portfolio.<br />
The actual return on plan assets in <strong>2008</strong> and 2007 was -15.1 million EUR and 5.2 million EUR<br />
respectively.<br />
The <strong>Group</strong> expects to contribute 9.2 million EUR to its defined benefit pension plans in 2009.<br />
The major categories of plan assets as a percentage of total plan assets are as follows:<br />
<strong>2008</strong> 2007<br />
Equities 20% 26 %<br />
Fixed interest investments 11% 12 %<br />
Cash and deposits 11% 10 %<br />
Property 3% 2 %<br />
Insurance contracts 55% 50 %<br />
Total 100% 100%
financial report <strong>2008</strong><br />
The principal actuarial assumptions at the balance sheet date (expressed as weighted averages) are:<br />
<strong>2008</strong> 2007<br />
Discount rate at 31 December 6.1% 5.3 %<br />
Expected return on plan assets at 31 December 5.8% 5.7 %<br />
Future salary increases 3.4% 3.2 %<br />
Termination benefits (pre-retirement plans, other termination obligations)<br />
These benefits arise as a result of the company’s decision to terminate the employment of an employee<br />
or group of employees before the normal retirement date or of an employee’s decision to accept<br />
voluntary redundancy in exchange for those benefits. These benefits are accrued for at the moment of<br />
notification.<br />
Share based payments<br />
150<br />
A warrant plan has been created in order to increase the loyalty and motivation of the <strong>Group</strong>’s senior<br />
management. The plan gives senior management the opportunity to accept warrants which gives them<br />
the right to subscribe to shares. The Board of Directors yearly determines the list of beneficiaries. There<br />
exist no conditions on the number of years of service, however the beneficiaries may not have resigned<br />
or been dismissed (and serving their notice), except for persons who retire or take pre-retirement.<br />
The exercise price of the warrant equals the lower of the average market price of the underlying shares<br />
in the 30 trading days preceding the offer date or the market price on the last day preceding the offer<br />
date.<br />
The table below gives an overview of the granted and accepted warrants at 31 December <strong>2008</strong>.<br />
Allocation date<br />
Last exercise<br />
date<br />
Exercise price<br />
Number of<br />
outstanding<br />
warrants<br />
November ‘01 July ‘09 24.07 1,740<br />
November ‘02 July ‘12 25.87 12,200<br />
November ‘03 July ‘10 26.45 9,800<br />
November ‘04 July ‘11 31.69 32,600<br />
November ‘05 July ‘12 27.11 42,200<br />
November ‘06 July ‘13 30.02 62,880<br />
January ‘08 December ‘12 43.10 97,175<br />
Total 258,595<br />
IFRS 2 requires share based payments made to employees to be recognised in the financial statements<br />
based on the fair value of the warrants measured at grant date. According to the transition provisions<br />
included in IFRS 2, the warrants granted before 7 November 2002 and not yet vested at 1 January 2005<br />
are not amortised through the income statement.<br />
The fair value of the warrants granted is determined using the Black & Scholes valuation model.
<strong>Tessenderlo</strong> <strong>Group</strong><br />
A new share based program was issued as per 8 November 2007. On December 12th <strong>2008</strong>, the Board of<br />
Directors decided to offer a second tranche of warrants, which had to be accepted by their beneficiaries<br />
by February 10th 2009. On February 10th 2009, 130.750 warrants were granted to senior management<br />
(exercise price of 22.07 EUR for French residents, 22.09 EUR for American residents, 23.08 EUR for all<br />
others).<br />
The weighted average fair value of the warrants and assumptions used in the measurement of the<br />
warrants, granted in <strong>2008</strong>, are:<br />
<strong>2008</strong> 2007<br />
Fair value of warrants (EUR) 2.3 -<br />
Share price (EUR) 30.72 -<br />
Exercise price (EUR) 43.10 -<br />
Expected volatility 24.20% -<br />
Expected option life (years) 4.5 -<br />
Expected dividend yield 3.61% -<br />
Risk free interest rate 4.12% -<br />
The number and weighted average exercise price of share warrants is as follows:<br />
Weighted<br />
average<br />
exercise<br />
price<br />
Number of<br />
warrants<br />
Weighted<br />
average<br />
exercise<br />
price<br />
Number of<br />
warrants<br />
<strong>2008</strong> 2007<br />
151<br />
Outstanding at the beginning of the<br />
29.10 167,420 29.00 259,240<br />
period<br />
Forfeited during the period 31.69 6,000 44.63 4,080<br />
Exercised during the period - - 28.10 87,740<br />
Granted during the period 43.10 97,175 - -<br />
Outstanding at the end of the period 34.30 258,595 29.10 167,420<br />
Exercisable at the end of the period 29.28 56,340 25.98 23,740<br />
No warrants were exercised in <strong>2008</strong>.<br />
The weighted average remaining contractual life of the warrants outstanding as per 31 December <strong>2008</strong><br />
amounts to 3.6 years (2007: 4.5 years).
financial report <strong>2008</strong><br />
24. Provisions<br />
<strong>2008</strong> 2007<br />
Non-current provisions 85.7 63.1<br />
Current provisions 0.9 8.6<br />
Total 86.6 71.7<br />
ENVIRONMENT RESTRUCTURING OTHER TOTAL<br />
Balance at 1 January <strong>2008</strong> 12.9 5.7 53.1 71.7<br />
Additions 14.5 - 9.1 23.6<br />
Use of provision -1.0 -0.4 -2.3 -3.7<br />
Reversal of provision -0.7 -2.3 -0.5 -3.5<br />
Effect of discounting - - - 0.0<br />
Other movements 4.8 -2.8 -3.5 -1.5<br />
Balance at 31 December <strong>2008</strong> 30.5 0.2 55.9 86.6<br />
The increase of provisions can be mainly explained by the recording of additional environmental<br />
provisions, next to the fluctuations of provisions due to the normal business activities.<br />
152<br />
On December 10th <strong>2008</strong>, the environmental permit of <strong>Tessenderlo</strong> Chemie NV (Belgium) was extended<br />
for a period of 20 years. <strong>Tessenderlo</strong> Chemie NV committed itself to invest in a new production process<br />
and to find a durable solution to its environmental problems in Limburg (Belgium). As a consequence<br />
of these commitments additional discounted environmental provisions were recorded for an amount of<br />
14.5 million EUR.<br />
“Other” provisions include mainly a non-recurring provision of 37.0 million EUR set up following the<br />
investigations performed by the European Commission on feed phosphates. The European Commission<br />
performed an investigation in 2004 on pretended contra competitive practices in the segment of the feed<br />
phosphates. In relation with this investigation, the <strong>Group</strong> recorded a provision of 20,0 million EUR in<br />
2004 and an additional 17,0 million EUR in 2006. This investigation is still ongoing.<br />
For the majority of the non-current provisions, a cash-outflow is not expected to take place within<br />
5 years.<br />
25. Trade and other payables<br />
<strong>2008</strong> 2007<br />
Trade payables 290.1 290.1<br />
Other amounts payable 41.6 43.5<br />
Remuneration and social security 57.2 52.5<br />
Total 388.9 386.1
<strong>Tessenderlo</strong> <strong>Group</strong><br />
26 Financial instruments<br />
Exposure to foreign currency, credit risk and interest rate risk arises in the normal course of the <strong>Group</strong>’s<br />
business. Derivative financial instruments are used to reduce the exposure to fluctuations in foreign<br />
exchange rates. While these are subject to the risk of market rates changing subsequent to acquisition,<br />
such changes are generally offset by opposite effects on the hedged items.<br />
Foreign currency risk<br />
Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in<br />
foreign exchange rates. The <strong>Group</strong> incurs foreign currency risks on sales, purchases, investments and<br />
borrowings that are denominated in a currency other than the company’s functional currency.<br />
The currencies giving rise to this risk are primarily GBP, USD, PLN, HUF, YEN and CHF.<br />
Subsidiaries are required to submit information on their net foreign exchange positions when invoiced<br />
(customers, suppliers) to <strong>Tessenderlo</strong> Finance, a Belgian subsidiary created in January 2006.<br />
All the positions are netted at the level of <strong>Tessenderlo</strong> Finance and the net positions (long/short), which<br />
are very small, are then sold or bought on the market.<br />
The main management tools are the spot, purchase and sales of currencies followed by currencyswaps.<br />
<strong>Group</strong> borrowings are generally carried out by the <strong>Group</strong>’s holding and finance companies, which make<br />
the proceeds of these borrowings available to the operating entities.<br />
In principle, operating entities are financed in their own local currencies, with this currency being<br />
obtained, where appropriate, by currency-swaps against the currency held by the finance company.<br />
In that way, there is no exchange risk either in the finance company or in the company finally using the<br />
funds. The cost of this currency-swap is included in the finance costs.<br />
153<br />
In emerging countries, it is not always possible to borrow in local currency because local financial<br />
markets are too narrow, or funds are not available or because the financial conditions are too onerous.<br />
Those amounts are relatively small for the <strong>Group</strong>.<br />
• Exposure to foreign currency risk<br />
The <strong>Group</strong>’s exposure to foreign currency risk was as follows based on nominal amounts (for the<br />
exchange rates used, we refer to note 1 “Summary of significant accounting policies”):<br />
<strong>2008</strong> 2007<br />
EUR USD GBP EUR USD GBP<br />
Assets 4.3 29.2 77.7 10.6 79.6 92.7<br />
Liabilities -9.8 -39.7 -8.5 -11.1 -52.1 -4.9<br />
Gross exposure -5.5 -10.5 69.2 -0.5 27.5 87.8<br />
Forward exchange contracts 3.6 12.5 -70.0 -5.7 -40.7 -89.8<br />
Net exposure -1.9 2.0 -0.8 -6.2 -13.2 -2.0<br />
Net exposure (in EUR) -1.9 1.4 -0.8 -6.2 -9.0 -1.5
financial report <strong>2008</strong><br />
The difference between the amount covered and the amount in position is due to a mismatching between<br />
the recording and the value date of the operations. Coverage of exposure is done on a continuous basis.<br />
Credit risk<br />
The <strong>Group</strong> is high risk averse. In its strategy to increase shareholder value, the <strong>Group</strong> aims at a dynamic<br />
corporate portfolio management to develop confidently new markets: corporate exposure, asset quality,<br />
portfolio diversification are considered together with the maximisation of market shares, which requires<br />
efficient processes, cost effective payment default protection and CRM good practices.<br />
The international financial and economic crisis results in a deep crisis of confidence. The <strong>Group</strong> focuses<br />
especially on its stable relationships with long term partners. Special and legitimate attention is given to<br />
new relationships, for which, if necessary, secured payment methods are used.<br />
A Corporate Credit Procedure, a quick and consistent credit decision process, appropriate payment<br />
terms, an efficient collection tool and an accurate risk mitigation tool are used to accelerate the cash<br />
flow, to minimize bad debts and to increase sales.<br />
An in-house scoring model aims at defining, with the use of sector-based benchmarks, the portfolio<br />
in term of risks through an analysis of performance indicators and the financial structure. When a<br />
risk cannot be assessed or when it is too high, the <strong>Group</strong> resorts to credit insurance or other forms of<br />
guarantees.<br />
154<br />
At 31 December <strong>2008</strong>, no significant concentrations of credit risk existed. The liquidities available at the<br />
end of the year are deposited at very short term at local ranking banks.<br />
The maximum exposure to credit risk at the reporting date was:<br />
<strong>2008</strong> 2007<br />
Trade receivables 402.4 378.7<br />
Gross trade receivables 416.9 391.8<br />
Amounts written off -14.5 -13.1<br />
Other receivables 60.3 49.4<br />
Receivables from related parties 9.1 0.3<br />
Assets related to employee benefit schemes 14.5 10.2<br />
Derivative financial instruments 5.4 1.9<br />
Cash & cash equivalents 53.5 93.6<br />
Total 545.2 534.1<br />
The maximum exposure to credit risk for trade receivables at the reporting date by business group was<br />
(see also note 16):<br />
<strong>2008</strong> 2007<br />
Chemicals 181.8 152.2<br />
Specialities 105.1 93.1<br />
Plastics Converting 112.8 132.1<br />
Unallocated 2.7 1.6<br />
Total 402.4 379.0
<strong>Tessenderlo</strong> <strong>Group</strong><br />
The aging of trade receivables at the reporting date was:<br />
Gross<br />
Amounts<br />
written off Gross<br />
Amounts<br />
written off<br />
<strong>2008</strong> <strong>2008</strong> 2007 2007<br />
Not past due 271.7 3.5 263.8 0.1<br />
Past due 0-30 days 87.1 1.1 74.0 0.6<br />
Past due 31-120 days 38.9 1.3 36.5 0.6<br />
Past due 121-365 days 12.5 1.9 8.7 2.8<br />
More than one year 6.6 6.6 9.1 9.0<br />
Total 416.8 14.4 392.1 13.1<br />
The movement in the allowance for impairment in respect of trade receivables during the year was as<br />
follows:<br />
<strong>2008</strong> 2007<br />
Balance at 1 January 13.1 11.6<br />
Impairment loss recognised 4.3 3.9<br />
Reversal of impairment loss -1.0 -1.6<br />
Other movement -2.0 -0.8<br />
Balance at 31 December 14.4 13.1<br />
155<br />
Interest risk<br />
At the reporting date, the interest rate policy of the <strong>Group</strong>’s interest-bearing financial instruments was:<br />
<strong>2008</strong> 2007<br />
Fixed rate instruments<br />
Financial assets - -<br />
Financial liabilities note 22 92.0 112.7<br />
Variable rate instruments<br />
Financial assets note 18 53.5 93.6<br />
Financial liabilities note 22 256.1 224.7<br />
On the total amount of financial liabilities at the end of <strong>2008</strong>, 72.0 million EUR and 20.0 million EUR<br />
carry a fixed interest rate respectively until 2010-2016 and until 2009.<br />
• Fair value sensitivity analysis for fixed rate instruments<br />
The <strong>Group</strong> does not account for any fixed rate financial liabilities at fair value through profit and loss,<br />
and the <strong>Group</strong> does not designate derivatives (interest rate swaps) as hedging instruments under a fair<br />
value hedge accounting model. Therefore a change in interest rates at the reporting date would not<br />
affect profit or loss.
financial report <strong>2008</strong><br />
• Cash flow sensitivity analysis for variable rate instruments<br />
The average interest rate on the average debt in <strong>2008</strong> amounted to 4.7 % (2007: 4.8 %).<br />
An increase (decrease) of 100 basis points in interest rates at the reporting date would have decreased<br />
(increased) profit and loss by 1.4 million EUR (2007: 1.3 million EUR). This analysis assumes that all<br />
other variables, in particular foreign currency rates, remain constant.<br />
Liquidity risk<br />
The <strong>Group</strong> will be able to meet its financial obligations as they fall due.<br />
The <strong>Group</strong>’s approach to manage liquidity is to ensure, as far as possible, that it will always have<br />
sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without<br />
incurring unacceptable losses or risking damage to the <strong>Group</strong>’s reputation.<br />
The <strong>Group</strong> establishes forecasts on a regular base on short and longer term in order to be able to adapt<br />
financial means to forecasted needs.<br />
In addition, the <strong>Group</strong> maintains the following credit lines:<br />
156<br />
• A credit line of 420.0 million EUR, which is not confirmed.<br />
• A credit line of 30.0 million USD. This credit line is valid till June 2009, and the interest rate would<br />
be libor + 0.55 %.<br />
In addition, the <strong>Group</strong> uses a commercial paper program of maximum 200.0 million EUR.<br />
The following are the contractual maturities of financial liabilities, including interest payments and<br />
excluding the impact of netting agreements.<br />
<strong>2008</strong><br />
Carrying<br />
amount<br />
Contractual<br />
cashflows<br />
less than<br />
one year<br />
between<br />
1 and 5<br />
years<br />
more<br />
than 5<br />
years<br />
Non-Derivative Financial liabilities<br />
Credit institutions 25.0 27.3 5.8 21.5 -<br />
Credit institutions 50.0 55.1 11.7 43.4 -<br />
Credit institutions 40.0 43.7 11.5 32.2 -<br />
Credit institutions 231.1 233.1 228.1 3.3 1.7<br />
Finance lease liabilities 2.0 2.3 0.2 1.9 0.2<br />
Derivative Financial liabilities<br />
Forward exchange contracts 5.2 - - - -<br />
Inflow - -97.4 -97.4 - -<br />
Outflow - 92.5 92.5 - -<br />
Total 353.3 356.6 252.4 102.3 1.9
<strong>Tessenderlo</strong> <strong>Group</strong><br />
2007<br />
Carrying<br />
amount<br />
Contractual<br />
cashflows<br />
less than<br />
one year<br />
between<br />
1 and 5<br />
years<br />
more<br />
than 5<br />
years<br />
Non-Derivative Financial liabilities<br />
Credit institutions 30.0 34.3 6.3 22.9 5.1<br />
Credit institutions 60.0 67.1 12.0 44.8 10.3<br />
Credit institutions 50.0 55.6 11.9 43.7 -<br />
Credit institutions 194.7 196.0 191.5 2.0 2.5<br />
Finance lease liabilities 2.7 3.3 0.3 2.5 0.5<br />
Derivative Financial liabilities<br />
Forward exchange contracts -1.5 - - - -<br />
Inflow - -170.6 -170.6 - -<br />
Outflow - 169.0 169.0 - -<br />
Total 335.9 354.7 220.4 115.9 18.4<br />
Fair value of financial assets and liabilities<br />
The fair values together with the carrying amounts shown in the balance sheet are as follows:<br />
Note<br />
Carrying<br />
amount<br />
<strong>2008</strong><br />
Fair<br />
value<br />
<strong>2008</strong><br />
Carrying<br />
amount<br />
2007<br />
Fair<br />
value<br />
2007<br />
157<br />
Derivative financial instruments 26 5.4 5.4 1.9 1.9<br />
Cash and cash equivalents 18 53.5 53.5 93.6 93.6<br />
Investments 14 5.2 5.2 6.1 6.1<br />
Trade and other receivables 16 472.4 472.4 429.3 429.3<br />
Non-current financial liabilities 22 -96.7 -91.5 -122.6 -117.5<br />
Leasing payables 22 -1.9 -1.8 -2.6 -2.5<br />
Credit institutions 22 -94.8 -89.7 -120.0 -115.0<br />
Current financial liabilities 22 -251.4 -251.0 -214.8 -214.5<br />
Current portion long term financial<br />
22 -25.0 -24.6 -25.0 -24.7<br />
liabilities<br />
Leasing payables 22 -0.1 -0.1 -0.1 -0.1<br />
Credit institutions and commercial paper 22 -226.3 -226.3 -189.7 -189.7<br />
Trade and other payables 25 -388.9 -388.9 -364.6 -364.6<br />
-200.5 -194.9 -171.1 -165.7<br />
Estimation of fair values<br />
• Derivative financial instruments<br />
The fair value of a derivative financial instrument is the amount for which an asset could be exchanged,<br />
or a liability settled, between knowledgeable, willing parties in an arm’s length transaction.<br />
The fair value of forward contracts is calculated as the discounted value of the difference between the<br />
contract rate and the current forward rate.
financial report <strong>2008</strong><br />
The fair value of these instruments generally reflects the estimated amounts that the <strong>Group</strong> would<br />
receive on settlement of favorable contracts or be required to pay to terminate unfavorable contracts<br />
at the reporting date, and thereby takes into account the current unrealised gains or losses on open<br />
contracts.<br />
The fair value of forward exchange contracts used at 31 December <strong>2008</strong> was 5.2 million EUR recognised<br />
in the income statement on the line net revaluation to fair value of derivatives, which is included in the<br />
finance income (2007: 1.5 million EUR).<br />
The following table indicates the fair values of all outstanding derivative financial instruments at yearend:<br />
Contractual<br />
Contractual<br />
amount Fair value amount<br />
<strong>2008</strong> 2007<br />
Fair value<br />
Forward exchange contracts 97.4 5.2 169.0 1.5<br />
The contractual amount indicates the volume of outstanding derivatives at the balance sheet date and<br />
therefore does not reflect the group’s exposure to risks from such transactions.<br />
158<br />
In respect to the forward exchange contracts, the table below indicates the underlying contractual<br />
amount of the outstanding contracts per currency at year-end (selling of foreign currencies).<br />
Amount<br />
in foreign<br />
currency<br />
Amount in<br />
EUR<br />
Amount<br />
in foreign<br />
currency<br />
Amount in<br />
EUR<br />
<strong>2008</strong> 2007<br />
GBP 70.0 78.2 93.9 128.1<br />
USD 17.5 12.9 42.9 29.1<br />
Other - 6.3 - 11.8<br />
Total 97.4 169.0<br />
The <strong>Group</strong> also holds a position in emission allowances of which the fair value as per 31 December <strong>2008</strong>,<br />
amounted to 0.2 million EUR (2007: 0.4 million EUR).<br />
• Interest-bearing loans and borrowings<br />
The fair value is calculated based on discounted expected future principal and interest cash flows.<br />
The interest rates used to discount estimated cash flows, where applicable, are based on the<br />
government yield curve at the reporting date plus an adequate credit spread, and were as follows:<br />
<strong>2008</strong> 2007<br />
Loans and borrowings 5.9-6.0% 5.0-5.2%
<strong>Tessenderlo</strong> <strong>Group</strong><br />
• Financial lease payables<br />
The fair value is estimated as the present value of future cash flows, discounted at market interest rates<br />
for homogeneous financial lease agreements. The estimated fair values reflect the change in interest<br />
rates.<br />
The interest rates used to discount estimated cash flows, where applicable, are based on the<br />
government yield curve at the reporting date plus an adequate credit spread, and were as follows:<br />
<strong>2008</strong> 2007<br />
Leases 8.0 % 8.0 %<br />
• Trade and other receivables/payables<br />
For current trade and other receivables/payables, the notional amount is deemed to reflect the fair<br />
value. Non-current receivables/payables are discounted to determine the fair value.<br />
27. Operating leases<br />
The non-cancellable operating leases are payable as follows:<br />
159<br />
<strong>2008</strong> 2007<br />
Less than one year 4.8 3.6<br />
Between one and five years 16.2 12.6<br />
More than five years 5.5 4.7<br />
Total 26.5 20.9<br />
During the current year, 11.2 million EUR was recognised as an expense in the income statement in<br />
respect of operating leases (2007: 9.5 million EUR).<br />
Operating leases mainly consist of land and buildings (7.8 million EUR), property, plant and equipment<br />
(15.0 million EUR) and furniture and vehicles (3.7 million EUR).<br />
28. Guarantees and commitments<br />
<strong>2008</strong> 2007<br />
Guarantees given by third parties on our behalf 39.0 20.5<br />
Guarantees given on behalf of third parties 4.3 6.9<br />
Guarantees received from third parties 4.7 4.4<br />
Total 48.0 31.8
financial report <strong>2008</strong><br />
Guarantees given by third parties on our behalf mainly relate to the fulfillment of our environmental<br />
obligations. The increase in <strong>2008</strong> can be explained by a new guarantee which was given on our behalf for<br />
an amount of 18.0 million EUR.<br />
Guarantees given on behalf of third parties mainly relate to guarantees given for the proper execution of<br />
projects.<br />
The guarantees received from third parties concern guarantees, which suppliers grant to the <strong>Group</strong> as<br />
guarantee for the proper execution of investment projects.<br />
29. Contingencies<br />
The <strong>Group</strong> could be confronted with a number of potential claims and disputes, which are a<br />
consequence of the daily operational activities. These claims and disputes are not of such nature that<br />
they could be subject today to a suitable provision.<br />
160<br />
It is the <strong>Group</strong>’s policy to recognise environmental provisions in the balance sheet, when the company<br />
has a present obligation (legal or constructive) as a result of a past event, when it is probable that an<br />
outflow of resources embodying economic benefits will be required to settle the obligation and a when<br />
reliable estimate can be made of the amount of the obligation.<br />
These provisions are reviewed periodically and adjusted, if necessary, as assessments and<br />
cleanups proceed and additional information becomes available. Environmental liabilities can<br />
change substantially due to the emergence of additional information on the nature or extent of the<br />
contamination, a change in legislation or other factors of a similar nature.<br />
As stated in note 24, the environmental provisions in accordance with the above policies aggregated to<br />
30.5 million EUR at 31 December <strong>2008</strong> (2007: 12.9 million EUR).<br />
While it is not feasible to predict the outcome of all pending environmental exposures, it is reasonably<br />
possible that there will be a need for future provisions for environmental costs which, in management’s<br />
opinion, based on information currently available, would not have a material effect on the <strong>Group</strong>’s<br />
financial position but could be material to the <strong>Group</strong>’s results in any one accounting period.<br />
In order to acquire the remaining 50 % stake in Fiso <strong>Group</strong>, the <strong>Group</strong> has signed call agreements with<br />
the owner of that share. The call option may be exercised from 1 June 2009 until 30 September 2009.<br />
The exercise price is determined by a formula, which takes into account the financial figures of Fiso<br />
<strong>Group</strong>.<br />
In order to acquire an additional stake of 20 % in Wolf Mountain Products, the <strong>Group</strong> holds, as agreed<br />
with the current owners of that share, an option which may be exercised from 1 January 2014 until 30<br />
June 2014. The exercise price is determined by a formula, which takes into account the financial figures<br />
of Wolf Mountain Products.<br />
The <strong>Group</strong> has been granted emission allowances for the period <strong>2008</strong>-2012 (575 KT CO2 emission
<strong>Tessenderlo</strong> <strong>Group</strong><br />
allowances per year). These granted emission allowances have been obtained free of charge.<br />
The total number of allowances which will be used by the <strong>Group</strong> in this period cannot yet be determined<br />
reliably.<br />
30. Related parties<br />
The <strong>Group</strong> has a related party relationship with its subsidiaries, associates, joint ventures and with its<br />
directors and its management committee.<br />
Transactions with joint ventures<br />
<strong>2008</strong> 2007<br />
Revenue 2.2 1.8<br />
Cost of sales -28.2 -13.3<br />
Other operating income 0.1 0.1<br />
Finance costs -0.1 -0.1<br />
Current assets 0.4 0.3<br />
Current liabilities 3.1 3.0<br />
Transactions with associates<br />
161<br />
<strong>2008</strong> 2007<br />
Revenue - -<br />
Cost of sales - -<br />
Other operating income - -<br />
Finance costs - -<br />
Current assets 8.7 -<br />
Current liabilities - -<br />
Dividends were received from joint-ventures and associates for an amount of 10.2 million EUR (2007: 4.9<br />
million EUR).<br />
Transactions with joint ventures and associates are due to the ordinary course of business and are at<br />
arm’s length.<br />
Transactions with the members of the management committee<br />
<strong>2008</strong> 2007<br />
Short-term employee benefits 2.5 2.4<br />
Post-employment benefits 0.4 0.3<br />
Share based payments 0.2 0.2<br />
Total 3.1 2.9
financial report <strong>2008</strong><br />
Short-term employee benefits include salaries (including social security contributions), bonuses earned<br />
during the year, car leases and other allowances where applicable.<br />
Director’s payments consist mainly of director’s fees (tantièmes).<br />
31. Information on the auditor’s assignments and<br />
related fees<br />
Our statutory auditor is KPMG Bedrijfsrevisoren / Réviseurs d’Entreprises, represented by Ludo Ruysen,<br />
engagement partner.<br />
Fees for auditing the annual financial statements of <strong>Tessenderlo</strong> Chemie NV and its subsidiaries are<br />
ultimately determined by the general meeting of shareholders. Audit and audit related fees for <strong>2008</strong><br />
in relation to services provided by KPMG Bedrijfsrevisoren amounted to 0.70 million EUR (2007 : 0.47<br />
million EUR), which was composed of audit services for the annual financial statements of 0.39 million<br />
EUR (2007: 0.32 million EUR) and audit related services of 0.31 million EUR (2007: 0.15 million EUR).<br />
Audit related services mainly relate to services incurred in connection with consolidation and BPM.<br />
162<br />
Audit and other fees for <strong>2008</strong> in relation to services provided by other offices of the KPMG network<br />
amounted to 0.64 million EUR (2007: 0.55 million EUR)which was composed of audit services for the<br />
annual financial statements of 0.45 million EUR (2007: 0.47 million EUR), tax services of 0.19 million<br />
EUR (2007 : 0.08 million EUR) and audit related services of 0.0 million EUR (2007: 0.0 million EUR).<br />
32. Subsequent events<br />
On January 7th 2009, Wymar International (Oeselgem, Belgium), a subsidiary of the Business Unit<br />
Profiles, in the Business <strong>Group</strong> Plastics Converting, has announced its intention to restructure its<br />
operations. The causes for this decision rest with the structural macroeconomic downturn on the<br />
various markets where Wymar operates, combined with the negative impact of the financial crisis on the<br />
investment behaviour of end consumers (new-build and renovation). These adverse market conditions<br />
are also being felt on the Central and Eastern European markets in particular. To safeguard the future<br />
of Wymar’s activities at its Oeselgem plant, it could be that redundancies cannot be ruled out. The<br />
current plan could translate in a loss of 46 jobs at Wymar International in Oeselgem. At this moment the<br />
financial impact of this restructuring of operations could not yet be determined reliably.
<strong>Tessenderlo</strong> <strong>Group</strong><br />
33. Consolidated companies<br />
Listed below are the most important <strong>Tessenderlo</strong> <strong>Group</strong> companies. A complete list of the <strong>Group</strong><br />
companies is available at <strong>Tessenderlo</strong> Chemie NV, Troonstraat 130, 1050 Brussel.<br />
The total number of consolidated companies is 96.<br />
List of the most important consolidated companies on 31 December <strong>2008</strong><br />
accounted for by the full consolidation method<br />
Europe<br />
Belgium Dyka Plastics NV 3900 Overpelt 100%<br />
Belgium Immo Watro SA 1050 Brussels 100%<br />
Belgium Limburgse Vinyl Maatschappij NV 1050 Brussels 100%<br />
Belgium <strong>Tessenderlo</strong> Chemie NV 1050 Brussels 100%<br />
Belgium <strong>Tessenderlo</strong> Chemie International NV 1050 Brussels 100%<br />
Belgium <strong>Tessenderlo</strong> Finance NV 1050 Brussels 100%<br />
Belgium Wymar International NV 8720 Oeselgem 100%<br />
Czech Republic Dyka s.r.o. 27361 Velka Dobra 100%<br />
France Akiolis <strong>Group</strong> SAS 72000 Le Mans 100%<br />
France Calaire Chimie SAS 62100 Calais 100%<br />
France Chemilyl SAS 59120 Loos 100%<br />
France Collectoco SAS 67220 Neubois 100%<br />
France Ets Caillaud SAS 61400 Saint-Langis-Les-Mortagne 100%<br />
France Ets. Point SAS 01440 Viriat 100%<br />
France France Gras SA 56300 Le Sourn 100%<br />
France Plastival SAS 25340 Clerval 100%<br />
France Produits Chimiques de Loos SAS 59120 Loos 100%<br />
France Profex SAS 62210 Avion 100%<br />
France Progilor-Bouvart SAS 55100 Charny sur Meuse 99.90%<br />
France Saplast SAS 67100 Strasbourg 100%<br />
France Société Artésienne de Vinyle SAS 59120 Loos 100%<br />
France Soleval SAS 61400 Saint-Langis-Les-Mortagne 100%<br />
France Soparcail SAS 61400 Saint-Langis-Les-Mortagne 100%<br />
France Sotra-Seperef SAS 69650 Quincieux 100%<br />
France SR Collecte SAS 67220 Neubois 100%<br />
France Tefipar SA 75009 Paris 100%<br />
France Thermoplastiques Cousin-Tessier SAS 85130 Tiffauges 100%<br />
France Union de la Boucherie Lyonnaise SA 69960 Corbas 94.20%<br />
Germany Dyka Gmbh 14513 Teltow 100%<br />
Germany PB Gelatins GmbH 31582 Nienburg/Weser 100%<br />
Italy Farchemia srl 24047 Treviglio (BG) 100%<br />
Italy <strong>Tessenderlo</strong> Italia srl 24047 Treviglio (BG) 100%<br />
Italy <strong>Tessenderlo</strong> Partecipazioni SpA 24047 Treviglio (BG) 100%<br />
Luxembourg Térélux SA GD 2633 Luxembourg 100%<br />
Poland Dyka Polska Sp.zo.o. 55-221 Jecz-Laskowice 100%<br />
Poland T.C.T. Polska Sp.zo.o. 96-500 Sochaczew 100%<br />
Poland Wymar Polska Sp.zo.o 62-100 Wagrowiec 100%<br />
Switzerland <strong>Tessenderlo</strong> Schweiz AG 5330 Zurzach 100%<br />
The Netherlands Dyka BV 8331 LJ Steenwijk 100%<br />
The Netherlands <strong>Tessenderlo</strong> NL Holding BV 4854 MT Bavel 100%<br />
The Netherlands LVM Limburg BV 6167 RZ Geleen 100%<br />
The Netherlands Nyloplast Europe BV 3295KG s-Gravendeel 100%<br />
163
financial report <strong>2008</strong><br />
The Netherlands <strong>Tessenderlo</strong> Chemie Maastricht BV 6222 Maastricht 100%<br />
The Netherlands <strong>Tessenderlo</strong> Chemie Rotterdam BV 3133 KA Vlaardingen 100%<br />
United Kingdom Eurocell Building Plastics Ltd Alfreton-Derbyshire DE55 4 RF 100%<br />
United Kingdom Eurocell plc Alfreton-Derbyshire DE55 4 RF 100%<br />
United Kingdom Eurocell Profiles Ltd Alfreton-Derbyshire DE55 4 RF 100%<br />
United Kingdom John Davidson Pipes Ltd Longtown-Carlisle CA6 5LY 100%<br />
United Kingdom PB Gelatins UK Ltd CF 375 SQ Treforest-Mid Glamorgan 100%<br />
United Kingdom <strong>Tessenderlo</strong> Fine Chemicals Ltd ST13 8UZ Leek; Staffordshire 100%<br />
United Kingdom <strong>Tessenderlo</strong> Holding UK Ltd CF 375 SU Treforest 100%<br />
United Kingdom <strong>Tessenderlo</strong> UK Ltd Widnes, Cheshire, WA8 ONY 100%<br />
United Kingdom Wymar Systems Ltd DY13 9EZ Worcestershire 100%<br />
USA<br />
USA Chelsea Building Products Inc Oakmont - Pennsylvania 15139 100%<br />
USA PB Leiner USA Corp Davenport - Iowa 52809 100%<br />
USA <strong>Tessenderlo</strong> Kerley Inc Phoenix - Arizona 85008-3279 100%<br />
USA <strong>Tessenderlo</strong> U.S.A. Inc. Phoenix - Arizona 85008-3279 100%<br />
USA Tessendelo Kerley Services Inc New Mexico-88 220 Carlsbad 100%<br />
USA MPR Services Inc Phoenix - Arizona 85008-3279 100%<br />
Rest of the world<br />
164<br />
Argentina PB Leiner Argentina SA Santa Fe CC108-S3016WAC - Santo 100%<br />
Tomé<br />
Canada Dynaplast-Extruco Inc. G7X OB6 Jonquière - Québec 82.17%<br />
China<br />
Lianyungang Taile Chemical Industry, Lianyungang City - 222023 Jiangsu 100%<br />
Co. Ltd.<br />
Province<br />
China PB Gelatins (Pingyang) Ping Yang County - 325401 Zhejiang 80%<br />
Province<br />
China <strong>Tessenderlo</strong> Asia Holding Ltd. Chine R.P. - Hongkong 100%<br />
China <strong>Tessenderlo</strong> Trading Shanghai Chine R.P. - 20021 Shanghai 100%<br />
List of the most important consolidated companies on 31 December <strong>2008</strong><br />
accounted for by the equity method<br />
Europe<br />
Belgium T-Power SA 1050 Brussels 33.33%<br />
Belgium Zéoline SA 4480 Engis 50%<br />
France Bonnet 34500 Beziers 25%<br />
France Ferso Bio SAS 47521 Le Passage 50%<br />
France Ispac 64130 Mauleon 50%<br />
France Labrousse 46120 Anglars 50%<br />
France Michel 31800 Villeneuve de Rivière 25%<br />
France Siram SARL 50390 Nehou 50%<br />
France SH Capital 47520 Le Passage 50%<br />
France Solagra SAS 40370 Rion Des Landes 50%<br />
USA<br />
Mexico Alkemin S de RL de CV Mexico D.F. 11700 49.50%<br />
USA Jupiter Sulphur LLC Phoenix -Arizona 85008-3279 50%<br />
USA Wolf Mountain Products LLC Lindon - Utah 84042 30%
<strong>Tessenderlo</strong> <strong>Group</strong><br />
34. Critical accounting estimates and judgements<br />
The preparation of the financial statements in conformity with IFRS as adopted for use by the<br />
European Union requires management to make estimates and assumptions that affect the reported<br />
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the<br />
financial statements and the reported amounts of revenue and expenses during the reporting period.<br />
Management bases its estimates on historical experience and various other assumptions that are<br />
believed to be reasonable under the circumstances, the results of which form the basis for making<br />
the reported amounts of revenue and expenses that may not be readily apparent from other sources.<br />
Actual results could differ from those estimates. Estimates are used in accounting for allowances for<br />
uncollectible receivables, inventory obsolescence and lower of cost of net realisable value adjustments,<br />
depreciation, employee benefits, taxes, restructuring provisions and contingencies. Estimates and<br />
assumptions are reviewed periodically and the effects of revisions are reflected in the financial<br />
statements in the period they are determined to be necessary.<br />
The <strong>Group</strong> has applied significant estimates and judgements in order to prepare the consolidated<br />
financial statements with respect to property, plant and equipment (note 10), goodwill (note 11), lower<br />
of cost of net realisable value adjustments with respect to inventories (note 17), provisions (note 24),<br />
income taxes (note 9 and 15), employee benefits (note 23) and contingencies (note 29).<br />
Statement on the true and fair view of the consolidated financial statements and<br />
the fair overview of the management report<br />
165<br />
G. Marchand (Chairman of the Board of Directors and CEO) and C. Vrebosch (CFO) certify, on behalf and<br />
for the account of the company, that, to his/their knowledge,<br />
a) the consolidated financial statements which have been prepared in accordance with International<br />
Financial <strong>Report</strong>ing Standards as adopted by the European Union, give a true and fair view of the<br />
assets, liabilities, financial position and profit or loss of the company, and the entities included in<br />
the consolidation as a whole,<br />
b) the consolidated management report includes a fair overview of the development and performance<br />
of the business and the position of the company, and the entities included in the consolidation,<br />
together with a description of the principal risks and uncertainties which they are exposed to.<br />
<strong>Report</strong> according to article 119 of the Belgian Companies Code<br />
This annual report is prepared and includes the provisions as required in article 119 of the Company<br />
Law.
financial report <strong>2008</strong><br />
AUDITOR’S REPORT<br />
166
<strong>Tessenderlo</strong> <strong>Group</strong><br />
167
financial report <strong>2008</strong><br />
STATUTORY FINANCIAL REPORT<br />
Balance sheet of <strong>Tessenderlo</strong> Chemie NV<br />
(Millions EUR) <strong>2008</strong> 2007<br />
ASSETS<br />
Intangible assets 4.0 4.7<br />
Tangible assets 202.1 205.9<br />
Financial assets 428.2 420.3<br />
Fixed assets 634.3 630.9<br />
Stocks and orders in progress 189.2 73.5<br />
Receivables due within on year 186.6 124.7<br />
Investments 0.0 30.0<br />
Cash and cash equivalents 5.5 1.4<br />
Prepaid expenses and accrued income 0.8 0.5<br />
Current assets 382.1 230.1<br />
Total assets 1,016.4 861.0<br />
168<br />
LIABILITIES<br />
Share capital 138.0 137.0<br />
Share premiums 43.4 42.0<br />
Reserves 19.3 17.5<br />
Retained earnings 314.4 264.8<br />
Capital grants 8.0 8.7<br />
Shareholders' equity 523.1 470.1<br />
Provisions 95.4 77.5<br />
Deferred taxes 1.4 0.5<br />
Provisions and deferred taxes 96.8 78.0<br />
Liabilities due in more than one year 60.2 75.2<br />
Liabilities due within one year 334.4 237.0<br />
Accrued expenses and deferred income 1.9 0.7<br />
Current liabilities 396.5 312.9<br />
Total liabilities 1,016.4 861.0
<strong>Tessenderlo</strong> <strong>Group</strong><br />
Profit and loss statement of <strong>Tessenderlo</strong> Chemie NV<br />
(Millions EUR) <strong>2008</strong> 2007<br />
Sales and operating income<br />
Sales 931.9 643.8<br />
Change in work in progress, finished goods and orders in<br />
77.5 -15.3<br />
progress (increase+/decrease-)<br />
Production capitalised 2.0 2.0<br />
Other operating income 36.3 25.5<br />
Total operating income 1,047.7 656.0<br />
Cost of sales and operating charges (-)<br />
Raw materials and goods purchased for resale<br />
1. Purchases 623.3 318.3<br />
2. Changes in stocks (increase-/decrease+) -38.5 -0.5<br />
Services and other goods 203.4 179.0<br />
Wages, salaries, social charges and pensions 114.4 109.1<br />
Depreciations and amortizations on formation expenses, tangible<br />
25.3 28.8<br />
and intangible assets<br />
Amounts written-off stocks and trade receivable ( charges+ /<br />
0.1 -0.1<br />
write-back- )<br />
Provision for liabilities and charges (charges less utilisations and<br />
17.9 -4.8<br />
write-backs)<br />
Other operating charges 5.0 6.2<br />
Total operating charges 951.0 636.1<br />
Operating result 96.8 19.9<br />
Net financial result 17.8 29.5<br />
Ordinary profit (+) / losses (-) before taxes 114.5 49.4<br />
Extraordinary charges/income 0.1 0.0<br />
Profit before taxes 114.6 49.4<br />
Income taxes -25.3 0.6<br />
Deferred taxes -0.9 -0.2<br />
Profit (+) / losses (-) 88.4 49.8<br />
Untaxed reserves -1.7 -0.4<br />
Profit (+) / losses (-) for the year to be allocated 86.7 49.4<br />
169
financial report <strong>2008</strong><br />
Allocations and distributions<br />
(Millions EUR) <strong>2008</strong> 2007<br />
The <strong>Tessenderlo</strong> Chemie NV Board of Directors propose to allocate the<br />
- Profits, being 86.7 49.4<br />
- Increased by prior years' retained earnings 264.8 250.8<br />
Totalling: 351.5 300.2<br />
In the following manner:<br />
- Reserves 1.0 0.4<br />
- Dividends 37.0 35<br />
- Retained earnings 314.4 264.8<br />
Totalling: 351.5 300.2<br />
If the General Meeting of 2 June 2009 approves this proposed allocation, the gross dividend will be<br />
1.3333 EUR or a net dividend of 1.0000 EUR for the 27 713 288 ordinary shares and for the VVPR dividend<br />
a net amount of 1.1333 EUR remittance of coupon n° 72.<br />
170
<strong>Tessenderlo</strong> <strong>Group</strong><br />
Excerpt from the <strong>Tessenderlo</strong> Chemie NV separate (non-consolidated) financial<br />
statements prepared in accordance with Belgian GAAP<br />
The following information is extracted from the separate Belgian GAAP financial statements of<br />
<strong>Tessenderlo</strong> Chemie NV. These separate financial statements, together with the management report of<br />
the Board of Directors to the general assembly of shareholders as well as the auditors’ report, will be<br />
filed with the National Bank of Belgium within the legally foreseen time limits. These documents are<br />
also available on request from: <strong>Tessenderlo</strong> Chemie NV, Troonstraat 130, 1050 Brussel.<br />
It should be noted that only the consolidated financial statements present a true and fair view of the<br />
financial position and performance of <strong>Tessenderlo</strong> <strong>Group</strong>.<br />
Since <strong>Tessenderlo</strong> Chemie NV is essentially a holding company, which recognises its investments at cost<br />
in its non-consolidated financial statements, these separate financial statements present no more than<br />
a limited view of the financial position of <strong>Tessenderlo</strong> Chemie NV. For this reason, the Board of Directors<br />
deemed it appropriate to publish only an abbreviated version of the non-consolidated balance sheet and<br />
income statement prepared in accordance with Belgian GAAP as at, and for the year ended 31 December<br />
<strong>2008</strong>.<br />
The statutory auditor’s report is unqualified and certifies that the non-consolidated financial statements<br />
of <strong>Tessenderlo</strong> Chemie NV prepared in accordance with Belgian GAAP for the year ended 31 December<br />
<strong>2008</strong> give a true and fair view of the financial position and results of <strong>Tessenderlo</strong> Chemie NV in<br />
accordance with all legal and regulatory dispositions.<br />
171
annual report <strong>2008</strong><br />
General information<br />
Production Units<br />
Chemicals<br />
Inorganics Production Units Main Products<br />
PB Gelatins (Vilvoorde)<br />
feed phosphates<br />
Belgium<br />
<strong>Tessenderlo</strong> Chemie Ham<br />
feed phosphates, hydrochloric<br />
acid, potassium sulphate,<br />
sulphuric acid<br />
Zeoline (Engis - Liège)<br />
zeolites<br />
172<br />
France<br />
Italy<br />
Produits Chimiques de Loos<br />
<strong>Tessenderlo</strong> Italia (Cologna<br />
Veneta) (Italphos)<br />
hydrochloric acid, potassium<br />
sulphate<br />
feed phosphates<br />
Netherlands <strong>Tessenderlo</strong> Chemie Rotterdam feed phosphates<br />
North America<br />
PVC / Chlor-alkali<br />
Belgium<br />
France<br />
<strong>Tessenderlo</strong> Kerley (Phoenix)<br />
9 production sites<br />
extensive distribution network<br />
LVM <strong>Tessenderlo</strong><br />
<strong>Tessenderlo</strong> Chemie <strong>Tessenderlo</strong><br />
Produits Chimiques de Loos<br />
SAV - Mazingarbe<br />
liquid sulphur fertilisers:<br />
ammonium, calcium, magnesium<br />
and potassium thiosulphate<br />
crop protection products, slow<br />
release nitrogen solutions<br />
vinyl chloride monomer (VCM)<br />
caustic soda, caustic potash,<br />
chlorine, ferric chloride, hydrogen<br />
sulphide, potassium carbonte<br />
lye, sodium sulphide, sodium<br />
hypochlorite (bleach)<br />
caustic potash, caustic potash<br />
flakes, mineral chlorides<br />
(aluminium, ferric and zinc),<br />
sodium hypochlorite (bleach)<br />
PVC<br />
Netherlands LVM Limburg Beek PVC<br />
North America <strong>Tessenderlo</strong> Kerley (Phoenix) sulphurous products
<strong>Tessenderlo</strong> <strong>Group</strong><br />
Plastics Converting<br />
Profiles Production Units Main Products<br />
Belgium<br />
Wymar International (Oeselgem)<br />
PVC profiles for windows and<br />
doors, as well as interior and<br />
exterior finishing systems<br />
Canada<br />
Dynaplast Extruco (Montreal)<br />
PVC window and door profiles and<br />
profiles for various sectors<br />
France<br />
Plastival (Clerval)<br />
window and door profiles, profiles<br />
for fences, facade cladding<br />
Great Britain<br />
Eurocell Profiles<br />
Eurocell Building Plastics<br />
+ 90 distribution centers<br />
PVC profiles for windows,<br />
doors and components for<br />
conservatories and foamed<br />
profiles used as roofing<br />
components and facade cladding<br />
United States<br />
Chelsea Building Products<br />
(Oakmont)<br />
Rigid and foamed PVC profiles<br />
for building products, moulding,<br />
shutters, cladding and flooring.<br />
Rigid and foamed PVC compounds<br />
Plastic Pipe Systems<br />
Belgium<br />
France<br />
Dyka Plastics (Overpelt)<br />
+ 7 distribution centers in Belux<br />
Sotra-Seperef<br />
(St. Austreberthe and Quincieux)<br />
plastic pipe systems in PVC, PE<br />
and PP<br />
Design and production of plastic<br />
pipe systems for the construction<br />
and public works sector, the<br />
agricultural sector and the<br />
industry in general<br />
173<br />
Netherlands<br />
Dyka BV (Steenwijk)<br />
+ 20 distribution centers in The<br />
Netherlands<br />
PVC pipe systems<br />
Nyloplast<br />
fittings<br />
Poland<br />
Dyka Polska (Jelcz-Laskowice)<br />
+ 13 distribution centers<br />
PVC, PE and PP pipe systems<br />
UK<br />
John Davidson Pipes<br />
+ 27 distribution centers<br />
distribution of plastic pipe systems<br />
Compounds<br />
France<br />
CTS - Cousin-Tessier (Tiffauges)<br />
CTS - Saplast (Strasbourg)<br />
ready for use PVC and TPE<br />
mixtures mainly for injection<br />
mouldings and extrusions and<br />
thermoplastic elastomers for the<br />
car industry and for construction<br />
PVC compounds for cable and<br />
construction<br />
Plastival (Clerval)<br />
Marvyflo® compound for<br />
dashboards for cars<br />
Poland CTS - TCT Polska (Sochaczew) PVC and TPE compounds
annual report <strong>2008</strong><br />
Specialities<br />
Fine Chemicals Production Units Main Products<br />
Organic Chlorine Derivatives<br />
Belgium<br />
China<br />
Great Britain<br />
<strong>Tessenderlo</strong> Chemie <strong>Tessenderlo</strong><br />
Taile Chemical Industry<br />
(Lyanyungang)<br />
<strong>Tessenderlo</strong> Trading Shanghai<br />
<strong>Tessenderlo</strong> Fine Chemicals (Leek)<br />
benzyl chloride, benzylidene<br />
chloride benzotrichloride and<br />
derivatives<br />
benzyl chloride, benzaldehyde<br />
Trading office for all<br />
<strong>Tessenderlo</strong> <strong>Group</strong> activities<br />
acetic acid esters and triacetin<br />
aromas benzyl acetate,<br />
hexylcinnamaldehyde<br />
Italy <strong>Tessenderlo</strong> Italia (Pieve Vergonte) chlorotoluenes<br />
Netherlands <strong>Tessenderlo</strong> Chemie Maastricht benzyl alcohol<br />
Pharmaceutical Intermediates<br />
174<br />
Belgium <strong>Tessenderlo</strong> Chemie (<strong>Tessenderlo</strong>) glycine and derivatives<br />
France<br />
Calaire Chimie (Calais)<br />
pharmaceutical intermediates<br />
active pharmaceutical<br />
ingredients<br />
Italy<br />
Chemilyl (Loos)<br />
Farchemia (Treviglio)<br />
oxalyl chloride and derivatives<br />
pharmaceutical intermediates,<br />
active pharmaceutical<br />
ingredients<br />
Gelatins<br />
Argentina<br />
PB Leiner Argentina (Santa Fé)<br />
+ 2 collection centers<br />
gelatins<br />
Belgium PB Gelatins (Vilvoorde) gelatins & ossein<br />
China PB Gelatins (Pingyang) gelatins<br />
Germany PB Gelatins Germany (Nienburg) gelatins<br />
Great Britain PB Gelatins UK (Treforest) gelatins<br />
USA PB Leiner USA (Davenport) gelatins<br />
Natural Derivatives<br />
France<br />
Akiolis (Le Mans)<br />
4 rendering plants<br />
9 plants for valorisation<br />
including:<br />
*15 units for valorisation of<br />
animal materials<br />
*2 units for treatment of used<br />
vegetable oils<br />
43 collection centers
Addresses<br />
TESSENDERLO GROUP<br />
General Management,<br />
Corporate Secretary,<br />
Human Resources, IT and Organisation,<br />
Finance and Accounting Management<br />
Corporate Communication<br />
rue du Trône, 130<br />
BE-1050 Bruxelles (Belgium)<br />
Troonstraat 130<br />
BE-1050 Brussel (Belgium)<br />
Tel.: + 32 2 639 18 11<br />
Fax: + 32 2 639 19 99<br />
Website: www.tessenderlogroup.com<br />
TESSENDERLO CHEMIE NV<br />
Headoffice<br />
Stationstraat - Entrance 2<br />
Industrieterrein Schoonhees – Zone 1<br />
BE-3980 <strong>Tessenderlo</strong><br />
Tel.: + 32 13 61 22 11<br />
Fax: + 32 13 66 81 40<br />
Website: www.tessenderlogroup.com<br />
TESSENDERLO CHEMIE INTERNATIONAL NV<br />
SHARED SERVICE CENTER<br />
Ubicenter<br />
Philipssite 5 – 3rd floor<br />
BE-3001 Leuven (Belgium)<br />
Tel.: +32 16 70 72 00<br />
Fax: +32 16 70 72 80<br />
Chemicals<br />
HEADOFFICE CHEMICALS<br />
H. Hartlaan 21 – Entrance 5<br />
Industrieterrein Schoonhees – Zone 1<br />
BE-3980 <strong>Tessenderlo</strong> (Belgium)<br />
Tel.: +32 13 61 22 11<br />
Fax: +32 13 66 86 04<br />
Website: www.tessenderlogroup.com<br />
INORGANICS<br />
PRODUITS CHIMIQUES<br />
DE LOOS SAS<br />
BP 39 - FR-59374 Loos (France)<br />
rue Clémenceau<br />
FR-59120 Loos (France)<br />
Tel.: +33 320 22 58 58<br />
Fax: +33 320 93 59 80<br />
Website: www.tessenderlogroup.com<br />
<strong>Tessenderlo</strong> <strong>Group</strong><br />
TESSENDERLO CHEMIE NV<br />
Industrieterrein Ravenshout 1010 – Zone 1<br />
Bergstraat, 32 - Entrance 1<br />
BE-3945 Ham (Belgium)<br />
Tel.: +32 13 61 22 11<br />
Fax: +32 13 61 12 32<br />
Website: www.tessenderlogroup.com<br />
TESSENDERLO CHEMIE<br />
ROTTERDAM B.V.<br />
Zevenmanshaven, 139<br />
NL-3133 CA Vlaardingen (The Netherlands)<br />
Tel.: +31 10 445 27 77<br />
Fax: +31 10 445 27 38<br />
Website: www.tessenderlogroup.com<br />
TESSENDERLO ITALIA srl<br />
Feed Phosphate Plant – Division Italphos<br />
Via Quari Destra 41<br />
IT-37044 Cologna Veneta (Verona) (Italy)<br />
Tel.: +39 0442 41 38 11<br />
Fax: +39 0442 41 38 28<br />
Website: www.tessenderlogroup.com<br />
TESSENDERLO KERLEY Inc.<br />
2255 N° 44th Street, Suite 300<br />
US-Phoenix - Arizona 85008 – 3279 (USA)<br />
Tel.: +1 602 889 83 00<br />
Fax: +1 602 889 84 30<br />
Website: www.tkinet.com<br />
ZEOLINE SA<br />
rue J. Wauters, 144<br />
BE-4480 Engis (Belgium)<br />
Tel.: +32 42 73 92 63<br />
Fax: +32 42 75 79 60<br />
Sales offices<br />
HGS Handelsgesellschaft für<br />
Spezialfuttermittel mbH<br />
Mörkenstrasse 5<br />
DE-22767 Hamburg (Germany)<br />
Tel.: +49 408 797987-0<br />
Fax: +49 408 797987-60<br />
Website: www.tessenderlogroup.com<br />
TESSENDERLO CHEMIE ESPAÑA TCE SA<br />
POSTAL ADDRESS<br />
Apartado de Correos 134<br />
ES-28400 Collado Villalba (Madrid) (Spain)<br />
Tel.: +34 91 357 32 04<br />
Fax: +34 91 351 32 04<br />
Website: www.tessenderlogroup.com<br />
175
annual report <strong>2008</strong><br />
176<br />
TESSENDERLO CHEMIE<br />
ROTTERDAM B.V.<br />
Zevenmanshaven, 139<br />
NL-3133 CA Vlaardingen (The Netherlands)<br />
Tel.: +31 10 445 27 77<br />
Fax: +31 10 445 27 38<br />
Website: www.tessenderlogroup.com<br />
TESSENDERLO ITALIA srl<br />
Feed Phosphate Plant – Division Italphos<br />
Via Quari Destra 41<br />
IT-37044 Cologna Veneta (Verona) (Italy)<br />
Tel.: +39 0442 41 38 11<br />
Fax: +39 0442 41 38 28<br />
Website: www.tessenderlogroup.com<br />
TESSENDERLO KERLEY LATINOAMERICANA SA<br />
Andres de Fuenzalida 133 depto A<br />
CL-9358 Santiago (Chile)<br />
Tel.: +56 2 334 65 71<br />
Fax: +56 2 334 88 12<br />
Website: www.tkinet.com<br />
TESSENDERLO KERLEY MEXICO SA de CV<br />
Blvd. Rodolpho Elias Calles 515-13 OTE<br />
Obregon, Sonora<br />
MX-Mexico 85000 (Mexico)<br />
Tel.: +11 52 64 44 17 59 53<br />
Fax: +11 52 64 44 17 96 00<br />
Website: www.tkinet.com<br />
TESSENDERLO KERLEY MIDDLE EAST<br />
Business Center/6th floor<br />
Box 2795<br />
LA-Jounieh (Lebanon)<br />
Tel.: +961 99 34 635<br />
Fax: +961 96 43 125<br />
Website: www.tkinet.com<br />
TESSENDERLO KERLEY PERU SAC<br />
Parque Industrial<br />
Jacinto Ibanez 131<br />
PE-Arequipa (Peru)<br />
Tel.: +51 54 24 18 24<br />
Fax: +51 54 23 28 55<br />
Website: www.tkinet.com<br />
TESSENDERLO POLSKA Sp.z o.o.<br />
ul. Szarych Szeregów 7<br />
PL-60-462 Poznan (Poland)<br />
Tel.: +48 61 840 00 40<br />
Fax: +48 61 840 02 96<br />
Website: www.tessenderlogroup.com<br />
TESSENDERLO AGROCHEM TARIM VE KIMYA<br />
SAN. VE TIC. Ltd<br />
Kustepe Mahallesi<br />
Leylak Sokak, Murat Is Merkezi<br />
B. Blok, K:11 D:37<br />
TR-34387 /Istanbul (Turkey)<br />
Tel.: +90 212 217 56 26<br />
Fax: +90 212 217 56 31<br />
Website: www.tkinet.com<br />
PVC / CHLOR-ALKALI<br />
PRODUITS CHIMIQUES<br />
DE LOOS SAS<br />
BP 39 - FR-59374 Loos (France)<br />
rue Clémenceau<br />
FR-59120 Loos (France)<br />
Tel.: +33 320 22 58 58<br />
Fax: +33 320 93 59 80<br />
Website: www.tessenderlogroup.com<br />
TESSENDERLO CHEMIE NV<br />
Stationsstraat – Entrance 2<br />
Industrieterrein Schoonhees - Zone 1<br />
BE-3980 <strong>Tessenderlo</strong> (Belgium)<br />
Tel.: +32 13 61 22 11<br />
Fax: +32 13 66 81 40<br />
Website: www.tessenderlogroup.com<br />
TESSENDERLO ITALIA S.r.L.<br />
30/32 Via Mario Massari<br />
IT-28886 Pieve Vergonte (VB) (Italy)<br />
Tel.: +39 0324 86 03 59<br />
Fax: +39 0324 86 03 73<br />
Sales offices<br />
TESSENDERLO SCHWEIZ AG<br />
Zürcherstrasse 42<br />
CH-5330 Bad Zurzach (Switzerland)<br />
Tel.: +41 56 249 09 69<br />
Fax: +41 56 249 09 67<br />
Website: www.tessenderlo.ch<br />
PVC / CHLOR-ALKALI<br />
LVM Limburgse Vinyl<br />
Maatschappij NV<br />
H. Hartlaan, 21 – Entrance 5<br />
Industrieterrein Schoonhees 2030<br />
BE-3980 <strong>Tessenderlo</strong> (Belgium)<br />
Tel.: +32 13 61 22 11<br />
Fax: +32 13 66 84 06<br />
Website: www.lvm.be
<strong>Tessenderlo</strong> <strong>Group</strong><br />
LVM Limburg B.V.<br />
Koolwaterstofstraat 1<br />
NL-6161 RA Geleen (The Netherlands)<br />
Tel.: +31 464 76 81 48<br />
Fax: +31 464 76 46 41<br />
R & D Polymers<br />
H. Hartlaan, 21 – Entrance 5<br />
Industrieterrein Schoonhees 2030<br />
BE-3980 <strong>Tessenderlo</strong> (Belgium)<br />
Tel.: +32 13 61 22 11<br />
Fax: +32 13 67 20 18<br />
SAV SAS Plant Mazingarbe<br />
Chemin des Soldats<br />
BP 49<br />
FR-62160 Bully-les-Mines (France)<br />
Tel.: +33 321 72 85 06<br />
Fax: +33 321 72 82 60<br />
Website: www.tessenderlogroup.com<br />
Plastics Converting<br />
HEADOFFICE PLASTICS CONVERTING<br />
rue du Trône, 130<br />
BE-1050 Bruxelles (Belgium)<br />
Troonstraat 130<br />
BE-1050 Brussel (Belgium)<br />
Tel.: + 32 2 639 18 11<br />
Fax: + 32 2 639 19 99<br />
Website: www.tessenderlogroup.com<br />
PROFILES<br />
CHELSEA BUILDING PRODUCTS Inc.<br />
565, Cedar Way<br />
US-Oakmont, Pennsylvania 15139 (USA)<br />
Tel.: + 1 412 826 80 77<br />
Fax: +1 412 826 80 96<br />
Website: www.chelseabuildingproducts.com<br />
DYNAPLAST EXTRUCO Inc.<br />
10500, rue Colbert<br />
Anjou<br />
Montréal H1J 2H8 (Canada)<br />
Tel.: +1 514 355 68 68<br />
Fax: +1 514 355 03 52<br />
Website: www.dynaplastextruco.com<br />
EUROCELL PROFILES Ltd<br />
Clover Nook road<br />
Alfreton-Derbyshire<br />
GB-DE 55 4RF (Great Britain)<br />
Tel.: +44 1773 842 100<br />
Fax: +44 1773 842 109<br />
Website: www.eurocell.co.uk<br />
PLASTIVAL SAS<br />
2, Route de Santoche<br />
FR-25340 Clerval (France)<br />
Tel.: +33 381 99 18 18<br />
Fax: +33 381 97 84 97<br />
Website: www.plastival.fr<br />
WYMAR INTERNATIONAL NV<br />
Brugstraat 27<br />
BE-8720 Oeselgem (Belgium)<br />
Tel.: +32 9 388 95 71<br />
Fax: +32 9 388 64 95<br />
Website: www.wymar.com<br />
Sales offices<br />
EUROCELL BUILDING PLASTICS Ltd<br />
Clover Nook road<br />
Alfreton-Derbyshire<br />
GB-DE 55 4RF (Great Britain)<br />
Tel.: +44 1773 842 100<br />
Fax: +44 1773 842 109<br />
Website: www.eurocell.co.uk<br />
PROFEX SAS<br />
rue de Vimy - ZI les Quatorze<br />
FR-62210 Avion (France)<br />
Tel.: +33 321 08 57 20<br />
Fax: +33 321 08 57 30<br />
Website: www.profex.fr<br />
WYMAR HUNGARIA Kft<br />
Csepeli Út. 15<br />
HU-2310 Szigetszentmiklos (Hungary)<br />
Tel.: +36 24 444 800<br />
Fax: +36 24 443 553<br />
Website: www.wymar.hu<br />
WYMAR POLSKA Sp. z o.o.<br />
Ul. Gnieznienska 47<br />
PL-62-100 Wagrowiec (Poland)<br />
Tel.: + 48 67 26 26 246<br />
Fax: + 48 67 26 27 510<br />
Website: www.wymar.com<br />
177
annual report <strong>2008</strong><br />
178<br />
PLASTIC PIPE SYSTEMS<br />
DE HOEVE<br />
KUNSTSTOFRECYCLING B.V.<br />
De Nieuwe Haven, 16<br />
NL-7772 BC Hardenberg (The Netherlands)<br />
Tel.: +31 523 28 83 89<br />
Fax: +31 523 26 03 89<br />
DYKA B.V.<br />
Produktieweg, 7<br />
NL-8331 LJ Steenwijk (The Netherlands)<br />
Tel.: +31 521 53 49 11<br />
Fax: +31 521 53 43 35<br />
Website: www.dyka.com<br />
DYKA PLASTICS NV<br />
Nolimpark 4004<br />
Stuifzandstraat 47<br />
BE-3900 Overpelt (Belgium)<br />
Tel.: +32 11 80 04 20<br />
Fax: +32 11 64 42 46<br />
Website: www.dyka.com<br />
DYKA POLSKA Sp. z o.o.<br />
ul. Belgijska 5<br />
PL-55-221 Jelcz-Laskowice (Poland)<br />
Tel.: +48 71 301 00 00<br />
Fax: +48 71 301 00 01<br />
Website: www.dyka.com<br />
NYLOPLAST EUROPE B.V.<br />
Mijlweg 45<br />
NL- 3295 KG ‘s Gravendeel (The Netherlands)<br />
Tel: +31 78 673 20 44<br />
Fax: + 31 78 673 44 89<br />
SOTRA-SEPEREF SAS<br />
25, Route de Brévillers<br />
FR-62140 Ste Austreberthe (France)<br />
Tel.: +33 321 86 59 00<br />
Fax: +33 321 86 59 01<br />
Website: www.sotra-seperef.com<br />
SOTRA-SEPEREF SAS (2)<br />
Z.I. de Quincieux 2, BP 1<br />
FR-69650 Quincieux (France)<br />
Tel.: +33 472 26 29 72<br />
Fax: +33 478 91 19 98<br />
Website: www.sotra-seperef.com<br />
Sales offices<br />
DYKA B.V. – EXPORT<br />
Deccaweg 25<br />
NL-1042 AE Amsterdam (The Netherlands)<br />
Tel.: +31 20 50 60 081<br />
Fax: + 31 20 61 35 646<br />
Website: www.dyka.com<br />
DYKA GmbH<br />
Birkenweg, 5<br />
OT Wilhelmshorst<br />
DE-14552 Milchendorf (Germany)<br />
Tel.: +49 33 205 24 25 11<br />
Fax: +49 33 205 24 25 20<br />
Website: www.dyka.com<br />
DYKA s.r.l.<br />
46, Grigore Cobalcescu Street<br />
ap.9<br />
RO- Bucharest, sector 1 (Romania)<br />
Tel: + 40 364 262 803<br />
Fax: + 40 364 262 803<br />
Website: www.dyka.com<br />
DYKA SK s.r.o.<br />
Nejedlého 49/9<br />
SK-841 02 Bratislava (Slovak Republic)<br />
Tel.: +421 918 973 286<br />
Fax: +420 336 406 701<br />
Website: www.dyka.com<br />
DYKA s.r.o.<br />
Unhostská 505<br />
CZ-27361 Velká Dobrá (Czech Republic)<br />
Tel.: +420 312 666 011<br />
Fax: +420 312 685 026<br />
Website: www.dyka.com<br />
JOHN DAVIDSON PIPES Ltd<br />
Townfoot Industrial Estate<br />
Longtown, Carlisle<br />
GB-Cumbria CA6 5LY (Great Britain)<br />
Tel.: +44 1228 79 15 03<br />
Fax: +44 1228 79 20 51<br />
Website: www.jdpipes.co.uk<br />
COMPOUNDS<br />
CTS - COUSIN-TESSIER SAS<br />
Zone Industrielle BP 3<br />
FR-85130 Tiffauges (France)<br />
Tel.: +33 251 65 71 43<br />
Fax: +33 251 65 71 61<br />
Website: www.cts-compounds.com
<strong>Tessenderlo</strong> <strong>Group</strong><br />
CTS - SAPLAST SAS<br />
22-24, rue de la Rochelle<br />
Port du Rhin<br />
FR-67100 Strasbourg (France)<br />
Tel.: +33 388 65 82 00<br />
Fax: +33 388 40 00 80<br />
Website: www.cts-compounds.com<br />
CTS - TCT POLSKA Sp. z o.o.<br />
Ul. 15 Sierpnia 106<br />
PL-96-500 Sochaczew (Poland)<br />
Tel.: +48 46 863 13 60<br />
Fax: +48 46 863 13 80<br />
Website: www.cts-compounds.com<br />
Website: www.tct.pl<br />
PLASTIVAL SAS<br />
2, Route de Santoche<br />
FR-25340 Clerval (France)<br />
Tel.: +33 381 99 18 18<br />
Fax: +33 381 97 84 97<br />
Website: www.plastival.fr<br />
Sales offices<br />
MARVYFLO<br />
H. Hartlaan, 21 – Entrance 5<br />
Industrieterrein Schoonhees 2030<br />
BE-3980 <strong>Tessenderlo</strong> (Belgium)<br />
Tel.: +32 13 61 22 11<br />
Fax: +32 13 66 84 06<br />
Website: www.tessenderlogroup.com<br />
Specialities<br />
HEADOFFICE SPECIALITIES<br />
rue du Trône, 130<br />
BE-1050 Bruxelles (Belgium)<br />
Troonstraat 130<br />
BE-1050 Brussel (Belgium)<br />
Tel.: + 32 2 639 18 11<br />
Fax: + 32 2 639 19 99<br />
Website: www.tessenderlogroup.com<br />
FINE CHEMICALS<br />
CALAIRE CHIMIE SAS<br />
Z.I. du Pont du Leu<br />
1, Quai d’Amérique, B.P. 215<br />
FR-62104 Calais Cedex (France)<br />
Tel.: +33 321 46 21 21<br />
Fax: +33 321 46 21 20<br />
CHEMILYL SAS<br />
BP 39 – FR-59374 Loos (France)<br />
rue Clémenceau<br />
FR-59120 Loos (France)<br />
Tel.: +33 320 22 58 58<br />
Fax: +33 320 93 59 80<br />
FARCHEMIA S.r.L.<br />
Via Bergamo, 121<br />
IT-24047 Treviglio (BG) (Italy)<br />
Tel.: +39 0363 31 401<br />
Fax: +39 0363 45 985<br />
Website: www.farchemia.it<br />
TAILE CHEMICAL INDUSTRY<br />
188, Xinhai Road<br />
Lianyungang City,<br />
CN-Jiangsu Province 222023 (China)<br />
Tel.: +86 518 85 25 20 50<br />
Fax: +86 518 85 25 56 86<br />
Website: www.taile.com<br />
TESSENDERLO CHEMIE NV<br />
H. Hartlaan 21 – Entrance 3-4<br />
Industrieterrein Schoonhees 2030<br />
BE-3980 <strong>Tessenderlo</strong> (Belgium)<br />
Tel.: +32 13 61 22 11<br />
Fax: +32 13 66 29 53<br />
Website: www.tessenderlogroup.com<br />
TESSENDERLO CHEMIE MAASTRICHT B.V.<br />
Ankerkade, 111<br />
NL-6222 NL Maastricht (The Netherlands)<br />
Tel.: +31 433 52 59 59<br />
Fax: +31 433 52 59 55<br />
TESSENDERLO FINE CHEMICALS Ltd<br />
Macclesfield Road<br />
GB-Leek, Staffs ST13 8LD (Great Britain)<br />
Tel.: +44 1 538 39 91 00<br />
Fax: +44 1 538 39 90 25<br />
Website: www.tessenderlofinechemicals.co.uk<br />
TESSENDERLO ITALIA S.r.L.<br />
Fine Chemicals Plant<br />
30/32 Via Mario Massari<br />
IT-28886 Pieve Vergonte (VB) (Italy)<br />
Tel.: +39 0324 86 03 59<br />
Fax: +39 0324 86 03 73<br />
179
annual report <strong>2008</strong><br />
180<br />
Sales offices<br />
TESSENDERLO CHEMIE NV – FINE CHEMICALS<br />
Rue du trône 130<br />
1050 Bruxelles (Belgium)<br />
Troonstraat 130<br />
BE-1050 Brussel (Belgium)<br />
Tel.: + 32 2 639 18 11<br />
Fax: + 32 2 639 19 99<br />
GELATIN<br />
TESSENDERLO CHEMIE NV, AFDELING<br />
VILVOORDE<br />
PB GELATINS<br />
Bedrijvenzone “Centrale”<br />
Marius Duchéstraat, 260<br />
BE-1800 Vilvoorde (Belgium)<br />
Tel.: +32 2 255 62 21<br />
Fax: +32 2 253 96 18<br />
Website: www.pbgelatins.com<br />
PB GELATINS GmbH<br />
Große Drakenburger Straße 43<br />
DE-31582 Nienburg/Weser (Germany)<br />
Tel.: +49 50 21 60 100<br />
Fax: +49 50 21 60 10 60<br />
Website: www.pbgelatins.com<br />
PB GELATINS (Pingyang) Co, LTD<br />
Fuqian Road, Wubanqiao,<br />
Aojiang Town, Pingyang County, Wenzhou City<br />
CN-Zhejiang Province 325401 (China)<br />
Tel.: +86 577 63 66 80 05<br />
Fax: +86 577 63 66 81 83<br />
Website: www.pbgelatins.com<br />
PB GELATINS UK Ltd<br />
Treforest Industrial Estate<br />
Building A6, Severn road<br />
GB-Pontypridd CF37 5SQ (Great Britain)<br />
Tel.: +44 1443 849 300<br />
Fax: +44 1443 844 209<br />
Website: www.pbgelatins.com<br />
PB LEINER ARGENTINA<br />
Parque Industrial Sauce Viejo<br />
S3017W16 - Sauce Viejo<br />
Post Office: CC108-S3016WAC<br />
AR-Santa Fe (Argentina)<br />
Tel.: +54 342 450 1100<br />
Fax: +54 342 450 1112<br />
Website:<br />
www.pbgelatins.com - www.gelatin.com<br />
PB LEINER USA<br />
7001 Brady Street<br />
US-Davenport, Iowa 52806 (USA)<br />
Tel.: +1 563 386 8040<br />
Fax: +1 563 391 1138<br />
Website:<br />
www.pbgelatins.com - www.gelatin.com<br />
NATURAL DERIVATIVES<br />
AKIOLIS GROUP<br />
72, av. Olivier Messiaen<br />
FR-72000 Le Mans (France)<br />
Tel.: +33 2 44 81 50 10<br />
Fax: +33 2 44 81 50 12<br />
General Sales Office China<br />
TESSENDERLO TRADING SHANGHAI<br />
Room 2201,<br />
Shanghai Times Square Office Tower<br />
Huai Hai Zhong Road, 93<br />
CN-200021 Shanghai (China)<br />
Tel.: +86 21 63 91 80 66 ext 15<br />
Fax: +86 21 63 91 80 77<br />
Website: www.tessenderlogroup.com
<strong>Tessenderlo</strong> <strong>Group</strong><br />
Index<br />
page<br />
Accounting Policies 105<br />
Addresses 175<br />
Animal feed phosphates 30<br />
Applications 22<br />
Audit (committee) 85<br />
Auditor’s report 166<br />
Balance sheet NV 168<br />
Balance (consolidated) 102<br />
Board of Directors 81<br />
BEL Mid 92<br />
Business <strong>Group</strong>s:<br />
Chemicals 28<br />
Plastics Converting 40<br />
Specialities 54<br />
Calendar (financial) 7<br />
Call warrants 88<br />
Capital 143<br />
Cash flow<br />
cover<br />
Cash flow statement 103<br />
Chart of the group 20<br />
Committees 84<br />
Compounds (pvc/tpe) 50<br />
Consolidated balance sheet 102<br />
Consolidated companies 163<br />
Consolidated income statement 100<br />
Consolidated revenue<br />
cover<br />
Contacts 7<br />
Corporate Governance 81<br />
Dividend 94<br />
Energy 76<br />
Environment 74<br />
Equity (shareholders) 143<br />
Events (recent) 26<br />
Fertilisers 30<br />
Figures over 10 years<br />
cover<br />
Financial communication 94<br />
Financial assets 138<br />
Financial notes 104<br />
Financial ratios 2<br />
Gearing 145<br />
Gelatin 60<br />
General Meeting 7<br />
Goodwill 134<br />
Graphs 2<br />
Guarantees 159<br />
Headcount 71<br />
Human resources 70<br />
IFRS 105<br />
Important figures<br />
cover<br />
Index (stock exchange) 92<br />
page<br />
Intangible assets 136<br />
International presence 18<br />
Investor relations 94<br />
Key figures<br />
cover<br />
Leadership 15<br />
Liabilities (long-term) 144<br />
Management Committee 86<br />
Markets 22<br />
Natural derivatives 64<br />
Next 150 92<br />
Number of shares NV 93<br />
Off-balance sheet commitment 159<br />
Organisation chart companies 20<br />
Pension plan 147<br />
Personnel (costs for) 128<br />
Pharmaceuticals 56<br />
Plastics 40<br />
Plastic Pipe Systems 46<br />
Press releases (dates) 7<br />
Principles of consolidation 106<br />
Production units 172<br />
Products 22<br />
Profile 14<br />
Profiles 42<br />
Profit distribution 144/170<br />
Provisions 152<br />
PVC 35<br />
Results (consolidated) 100<br />
Results NV 169<br />
Revenue breakdown 5<br />
Revenue (consolidated)<br />
cover<br />
Risk Management 76<br />
Safety 74<br />
Sales offices 175<br />
Segment <strong>Report</strong>ing 121<br />
Share <strong>Tessenderlo</strong> Chemie NV 92<br />
Shareholders 92<br />
Stock Exchange data 93<br />
Stock options 88<br />
Strategy of the group 16<br />
Subsidiary companies (consolidated) 163<br />
Tangible assets 132<br />
Taxes 131<br />
Vinyl 2010 75<br />
Water treatment 37<br />
www 184<br />
181
annual report <strong>2008</strong><br />
Financial Glossary<br />
Basic earnings per share (Basic EPS)<br />
EBITDA<br />
Profit (+) / loss (-) for the period attributable<br />
to equity holders of the group divided by the<br />
weighted average number of ordinary shares.<br />
Earnings before interests, taxes, depreciation,<br />
amortisation and provisions<br />
(Profit (+) / loss (-) from operations plus<br />
depreciation, amortisation and provisions).<br />
182<br />
Capital employed (CE)<br />
The carrying amount of property, plant and<br />
equipment (PP&E), intangible assets and<br />
goodwill together with working capital.<br />
Dividend per share (gross)<br />
Total amount paid as dividend divided by the<br />
number of shares issued at closing date.<br />
Diluted earnings per share (Diluted EPS)<br />
Profit (+) / loss (-) for the period attributable<br />
to equity holders of the group divided by the<br />
fully diluted weighted average number of<br />
ordinary shares.<br />
Diluted weighted average number of ordinary<br />
shares<br />
Weighted average number of ordinary shares,<br />
adjusted by the effect of share options on<br />
issue.<br />
EBIT<br />
Earnings before interests and taxes<br />
(Profit (+) / loss (-) from operations).<br />
Gearing<br />
Net financial liabilities divided by equity.<br />
Interest coverage<br />
Profit (+) / loss (-) for the period plus income<br />
tax expense and interest expense, divided by<br />
the interest expense.<br />
Market capitalisation<br />
Number of shares issued (at the end of the<br />
period) multiplied by the market price per<br />
share (at the end of the period).<br />
Net cash flow<br />
Profit (+) / loss (-) for the period and all<br />
non cash flow items included in the income<br />
statement (provisions, amortisations,<br />
deprecation and impairment losses).<br />
Net financial liabilities<br />
Non-current and current financial liabilities<br />
minus cash and cash equivalents.
<strong>Tessenderlo</strong> <strong>Group</strong><br />
Non-recurring items<br />
Items related to restructuring, impairment<br />
losses, claims and other income or expenses,<br />
which do not occur regularly as part of the<br />
normal activities of the company.<br />
Pay out ratio<br />
Gross dividend divided by profit for the period<br />
attributable to equity holders of the group.<br />
REBIT<br />
Recurring earnings before interests and taxes<br />
(Profit from operations before non-recurring<br />
items).<br />
REBITDA<br />
Recurring earnings before interests, taxes,<br />
depreciation, amortisation and provisions<br />
(Profit from operations plus depreciation,<br />
amortisation and provisions).<br />
Theoretical aggregated weighted tax rate<br />
Calculated by applying the statutory tax rate<br />
of each country on the profit before tax of<br />
each entity and by dividing the resulting tax<br />
charge by the total profit before tax of the<br />
group.<br />
Weighted average number of ordinary shares<br />
Number of shares outstanding at the<br />
beginning of the period, adjusted by the<br />
number of shares cancelled, repurchased or<br />
issued during the period multiplied by a timeweighting<br />
factor.<br />
Working capital<br />
Inventories, trade and other receivables<br />
minus trade and other payables.<br />
183<br />
Return on capital employed (ROCE)<br />
REBIT divided by capital employed.<br />
Return on equity (ROE)<br />
Profit (+) / loss (-) for the period divided by<br />
average equity attributable to equity holders<br />
of the group.
annual report <strong>2008</strong><br />
Editor<br />
M. Vandenbergen – Corporate Communication<br />
<strong>Tessenderlo</strong> <strong>Group</strong><br />
Troonstraat 130<br />
B-1050 Brussels (BE)<br />
Tel.: +32 2 639 18 11<br />
Concept & Pre-press<br />
Comfi & Publishing, www.comfi.be<br />
184<br />
Het jaarverslag is tevens beschikbaar in het Nederlands.<br />
Le rapport annuel est également disponible en français.<br />
The <strong>Annual</strong> <strong>Report</strong> (in <strong>English</strong>, Dutch, French) may be viewed on our website:<br />
www.tessenderlogroup.com; see News & Media – Publications.<br />
A user-friendly interactive (html) version of the <strong>English</strong> <strong>Annual</strong> <strong>Report</strong> is also available on<br />
the website.<br />
TESSENDERLO CHEMIE NV<br />
Administrative Headquarters<br />
Troonstraat 130<br />
B-1050 Brussels (Belgium)<br />
Tel. +32 2 639 18 11<br />
Fax +32 2 639 19 99<br />
BTW BE 0 412 101 728<br />
RPR Hasselt<br />
Website: www.tessenderlogroup.com
www.tessenderlogroup.com
Making it together<br />
Making it FIT<br />
Making it LASTING<br />
Making it INSPIRING<br />
Making it CONVINCING<br />
Making it WORK<br />
www.tessenderlogroup.com