2010 Annual Report - S&B

2010: Recapturing value• Strengthened demand supports return to growth and value recapture• Opportune capacity investments focused in high growth geographies• Continued emphasis on environmental, health and safety improvements• Operational challenges related to permitting procedures largely resolvedating facilities in the city of SantaCruz. Furthermore, in the latter partof the year, our Perlite Division establishedanother joint venture in Turkey,through which we will gain access tohigh quality reserves and target thehigh performing construction marketsof the CIS and Asia. Last but notleast, in June, we embarked on anew partnership with Canada-basedAdventus, this time in the field of environmentalremediation. A new venturethat fits perfectly with ourcorporate vision for sustainability andinnovation, leverages our existingbusiness and service capabilities incivil and environmental engineeringprojects, and allows us to diversifyinto more specialized and valueaddedenvironmental applications.Beyond new business developmentthrough investments in ventures andacquisitions, we remained active oninnovative initiatives through whichwe can gain access to new marketsegments with pioneering highervalueproducts. We seek to use innovativetechnologies for thedevelopment of a new generation ofeco-friendly products, such as functionalfillers for paints and plastics,special additives for building materialsand insulating formulations. Theresearch team of our Perlite Divisionhas made great progress through itssuccessful involvement in various EUfundedprograms, such as ExPerl,EE-Quarry, NIKER and ARISTON.These programs will derive newvalue-added products based on engineeredamorphous aluminosilicatesor from specially treated perlite rejectswhich were previously not commerciallyuseable. Similarly, our otherbusiness Divisions continue to be engagedin innovation programs thatrange from transferring Europeanbentonite technology for applicationon U.S. raw materials, to developingsoftware programs for the depictionof the steel casting process that willdeliver a new level of customer serviceand enhance further the competitivenessfor our CCF Division.We maintained our commitment toCorporate Social Responsibility andmade notable progress on varioussustainability initiatives. Safety remaineda priority for our operationsworldwide with emphasis on behaviorimprovement at work. The proactivesafety practices, which havebeen on the top of our sustainabilityagenda for the past decade, havebeen further extended to our operationsin Germany and also initiated inBulgaria during 2010. Greater emphasiswas placed on encouragingnear miss reports, which doubledcompared to 2009, with actions tofacilitate reporting and sharing of informationamong all Group sites.2010 also marked a governance reviewof Environmental Health &Safety (EHS) structures with the establishmentof a third EHS Council inNorth America. We have not yetreached the “zero accidents” targetset forth in 2002, however, we arecontinuously improving our procedures,the working environment andmore importantly, workers’ capacityto recognize and mitigate risk that willultimately lead the Group to achievethis target. Sustainable developmentfor our business is secured by longtermaccess to quality mineral andore reserves. Proactive in our approach,we go to great lengths to ensurethis by working closely with localcommunities, by continuously reviewingour environmental performanceand by developing commonprojects not related directly to ourbusiness. We account for our overallperformance and for the past 10years have published Annual SocialReports, mostly in accordance withthe GRI Sustainability ReportingGuidelines. In this context, our socialcontribution initiatives continued unabatedin Greece, but also abroad,always with emphasis on the localcommunities where we operate. Inparallel, we honored the declarationof 2010 by the United Nations as InternationalYear of Biodiversity by executinga number of initiatives thatpromoted the value of protecting biodiversity.Last but not least, in ourcontinuous quest to strengthen theaccountability and methodologicalrigor of our non-financial reporting,we initiated an Assurance ReadinessCheck of our Social Report at theend of 2010, to identify gaps andareas for improvement and work towardsestablishing an assuranceprocess over the next two years.As we look forward, we draw confidencefrom our solid performancein 2010 and the value we have recapturedin our business. Our recoveryhas been supported by theincreasingly favorable economicconditions in the market segmentswe serve. We anticipate steady andcontinued progress during 2011. Atthe same time, we are closely monitoringexternal cost parameters,such as third party raw materials andfuel prices, which have been risingsharply in the past few months. Ouraim will be to sustain our momentumfrom last year into 2011 and our effortswill remain focused on costcontrol and further profit margin expansion.In addition, we expect thatthe gradual return of bauxite operationsto normal levels will contributepositively to the Group’s overall performance.As in 2010, we will activelyseek targeted investments throughwhich we can increase our capacityand our presence in high growth geographies.Our acquisition pipelineis active, while our balance sheetand cash position remain strong,able and ready to support our plansfor additional shareholder value creation.In relation to the latter, andwith the intent to efficiently rewardour shareholders, our Board proposeda capital return of €0.25 pershare, to be approved at its AnnualGeneral Meeting on 1 June 2011.This proposal reflects our optimismin a very tangible way and is consistentwith our practice of rewardingshareholders in alignment with earningsprogression over time.The past couple of years have beenextremely challenging for our company.The adverse macro-economicconditions have tested the commitmentof our employees, the trust ofour shareholders, the support of ourcustomers. We believe that our abilityto emerge from the global financialcrisis stronger than before bears testamentto the goodwill and faith ofour stakeholders, whom we wouldlike to thank sincerely. Importantly,we also believe that S&B's strategicvision has been vindicated by theevents of the last two years, confirmingthe actions taken by the leadershipteam over the same period. Weare confident that we are well placedto continue our journey and we areexcited by the many opportunitiesthat lie ahead for our company.Ulysses P. KyriacopoulosChairman of the BoardEfthimios O. VidalisChief Executive Officer18 S&B Industrial Minerals S.A.