Integrated Report 2011
INDEX GROUP PORTRAIT Who we are Our mission Our companies Our brands Breakdown of turnover Our main sustainability partners Some results for the year Some financial indicators
5 5 5 6 6 6 7 7
REPORT PROFILE The purpose of an integrated report Report boundary The principles applied and the reporting process Letter to stakeholders
9 9 9 11
THE IDENTITY OF THE SOFIDEL GROUP
1. PRODUCTION PROCESS AND MARKETS 1.1. The tissue production process 1.2 Our lines of business 1.3 The quality and safety of our products 2. GOVERNANCE 2.1 The Group company structure 2.2 Organizational model under Leg. Dec. 231 2.3 The strategic tools for sustainability 2.4 Management of corporate responsibility 3. OUR BUSINESS MODEL 3.1 Creation and distribution of value 3.2 Management of intangible assets 3.3 Group culture 3.4 Management systems 3.5 Human resources management
13 13 13 15 15 15 16 16 16 17 17 18 18 18 19
2 THE OPERATIONAL CONTEXT 1. THE GLOBAL MARKET AND THE TISSUE MARKET 2. RELATIONS WITH STAKEHOLDERS 2.1 Management of relations 2.2 Initiatives to promote communication and dialogue with stakeholders
23 23 23 24
Sofidel Integrated Report 2011
SOCIAL AND ENVIRONMENTAL PERFORMANCE
1. HUMAN RIGHTS 27 1.1 Equal opportunities, diversity, non discriminatory practices 27 2. LABOUR PRACTICES 27 2.1 Turnover 27 2.2 Industrial relations 27 2.3 Health and safety 28 2.4 Training and development 30 2.5 Pay and incentive systems 31 2.6 Communication and participation 32 3. SUPPLIERS 33 3.1 Supplier qualification and analysis 33 4. SOCIETY 33 4.1 Initiatives to benefit the local communities 33 5. ENVIRONMENTAL RESOURCES 35 5.1 Raw materials from forestry sources 35 5.2 Other raw materials 37 5.3 Water 37 39 5.4 Energy and CO2 emissions 5.5 Other emissions 42 5.6 Waste 42 5.7 Ecological products 43
1. MAIN RISKS AND UNCERTAINTIES TO WHICH THE GROUP IS EXPOSED AND FINANCIAL AND NON FINANCIAL RISK MANAGEMENT POLICIES 1.1 Risk management policies
5 Layouts of the financial statements and notes 2011 1. Layouts of the consolidated financial statements 51 1.1 Consolidated Balance Sheet 51 1.2 Consolidated Income Statement 53 2. Notes to the Consolidated Financial Statements 54 3. BOARD OF AUDITOR’S REPORT 83 4. AUDITORS’ REPORT 85
6 FUTURE OBJECTIVES 1. STRATEGIC OBJECTIVES 1.1 Short, medium and long term objectives 2. PERFORMANCE IMPROVEMENT TARGETS
7 1. TABLE OF KPIS PER GRI
87 87 87
GROUP PORTRAIT WHO WE ARE
BREAKDOWN OF TURNOVER
OUR MAIN SUSTAINABILITY PARTNERS
SOME RESULTS FOR THE YEAR
SOME FINANCIAL INDICATORS
Sofidel Integrated Report 2011
WHO WE ARE The Sofidel Group, funded with Italian capital, is the second biggest producer in Europe of tissue paper for sanitary and household use. Founded over 40 years ago, it has 28 companies and 25 production sites spread over 12 countries - Italy, Spain, Sweden, the United Kingdom, Belgium, France, Croatia, Germany, Poland, Romania, Greece and Turkey - and 4,461 employees, with consolidated turnover of 1456 million euros.
OUR MISSION “To make daily life better, cleaner, safer and more pleasant, by valuing people, innovation and promoting conduct based on the principles of sustainability, commercial transparency and respect for rules with the aim of creating value for customers, employees, partners , shareholders and the community”.
OUR COMPANIES Key
Trading Paper Mills SE
IT EL ES
Buñuel ES Nancy-Pompey FR Buxeuil FR
Wernshausen DE OMEGA
Paper Mill - Bagni di Lucca (LU) IT THP Logistick
Roanne Cedex FR
Paper Mill - Porcari (LU) IT Converting Plant - Capannori (LU) IT Converting Plant - Porcari (LU) IT Integrated Plant - Valdottavo (LU) IT
Leicester-Hamilton UK Leicester-Rothley Lodge UK
Honaz Denizli TR
Duffel BE Services - Porcari (LU) IT
Paper Mill - Porcari (LU) IT Converting Plant - Porcari (LU) IT
BREAKDOWN OF TURNOVER Breakdown of turnover by country 1,5% 1,8% 2,0% 2,5%
Breakdown of turnover by line of business
Brand Private Label
Eire Romania Greece
OUR MAIN SUSTAINABILITY PARTNERS In the area of institutional relations, a fundamental role is played by the partnerships developed as part of our pursuit of sustainability policies: the United Nations Global Compact, the International WWF and the Sodalitas Foundation.
Sofidel Integrated Report 2011
SOME RESULTS FOR THE YEAR 99.3% of pulp supplies from sources certified or tested under the main certification schemes
Initiatives developed in Italy, Romania and Germany, in partnership with the local community, to safeguard and protect the environmental heritage
Adoption of the first Group Sustainable Development Plan
Start up, to coincide with the European Year of the Volunteer, of new voluntary service initiatives
Launch in France of own brand products with FSC certificate of forestry origin
Start of implementation on a voluntary basis of corporate administrative liability systems (for Italy, implementation of Leg. Decree 231/2001)
Plan Sustainability 2 - 2014 201
SOME FINANCIAL INDICATORS Sales (Sales Revenue) EBITDA (Gross Operating Profit) EBIT (Net Operating Profit) EBT (Profit Before Tax) Total net profit (loss) for the year Attributable to the Group Minority interest
1.455.632 182.125 82.353 58.440 36.041 35.691 350
Net capital invested Total Shareholders’ Equity Group Minority interest Net financial position (if negative, payables exceed liquidity) Net Operating Cash Flow Free cash flow (Operating cash flow net of cash flows from investing) Investments in intangible assets net of disinvestments Investments in tangible assets net of disinvestments
1.221.054 433.891 427.776 6.115
EBITDA/Sales ROS (“Return on sales”) (EBIT/Sales) ROI (“Return on investment”) (EBIT/Total capital employed) ROE (“Return on equity”) (Net profit/Shareholders’ equity) Net financial position/EBITDA Net financial position/Shareholders’ equity
Main econimic data 2011 (in thousands of Euro)
Main financial and asset data 2011 (in thousands of Euro)
(726.675) 180.052 100.459 3.930 78.887 12,51% 5,66% 5,03% 8,31% (3,99) (1,67)
Key Indicators 2011
REPORT PROFILE THE PURPOSE OF AN INTEGRATED REPORT
THE PRINCIPLES APPLIED AND THE REPORTING PROCESS
LETTER TO STAKEHOLDERS
Sofidel Integrated Report 2011
THE PURPOSE OF AN INTEGRATED REPORT
he first edition of the Integrated Report published by the Sofidel Group marks a cut-off point from the reporting process followed by the company up to last year. The Integrated Report, in fact, aims to present the strategies, governance and performance of the Group alongside the financial, social and environmental context within which the Group operates. While taking into account the current uncertainties surrounding the system in question and the need for a gradual adaptation of the organization to the new design, the Sofidel Integrated Report is intended as an aid to enable stakeholders to evaluate the company in terms of efficiency and sustainability. In particular, the Integrated Report this year constitutes the sole reporting document produced by the Sofidel Group, bringing together in one brief, innovative and easy to read report both the economic and financial statements which make up the certified Consolidated Financial Statements and the Key Performance Indicators (KPI) which describe the economic, social and environmental dimensions of the business. At the same time, this report confirms the ongoing approach and philosophy of the Group in relation to its own stakeholders and the markets, based on research into different forms of communication and dialogue, drawing strength from the clarity, accuracy and transparency of the information and data provided to the public. Our ambition to be the first player in the tissue sector to publish an Integrated Report fits perfectly with our management philosophy: always on the hunt for innovation, opportunities to improve the company and to achieve full social, environmental and financial sustainability. Further details and information on the activities of the Group are available on the website www.sofidel.it.
he reporting boundary for this Integrated Report includes all the companies controlled by the lead company, Sofidel S.p.A. Within the reporting boundary, company transactions aimed at simplification have taken place, involving among others Papernet and Imbalpaper, for detail on which we refer you to the paragraph on “Changes to the Consolidation Area” in the Supplementary Notes. The reference period is represented by the 2011 financial year, which coincided with the solar year running from 1 January to 31 December 2011.
THE PRINCIPLES APPLIED AND THE REPORTING PROCESS
n compiling this report use has been made of the guidelines set out by the InternationalIntegrated Reporting Committee (IIRC), the body created by the International Federation of Accountants (IFAC), the Global Reporting Initiative (GRI) and The Prince’s Accounting for Sustainability Project for the development of an integrated report covering the economic-financial, environmental and social performance of public and private organizations. In particular, use was made of the guidelines in the “Framework for integrated reporting and theintegrated report” produced by the Integrated Reporting Committee (IRC) of South Africa, which in the absence of an international scheme, still at the preparatory stage, represents the only valid and reliable benchmark, used moreover by the Johannesburg Stock Exchange as a compulsory reporting model for companies listed on the stock exchange. The Sofidel Group has, as suggested by the South African model better known as “King III”, integrated in its Key Performance Indicators (KPI) based reporting of financial, social and environmental performance the Global Reporting Initiative Guidelines version 3.1, keeping to the instructions and principles contained therein, including that of prudence (Article 15 of the Rio Principles). 9
In December 2010 the Sofidel Group formalized its membership of the Global Compact, the International United Nations initiative aimed at promoting respect of the ten Global Compact principles. Sofidel, as an effective member, is involved in the activities of the Global Compact Italian Network together with other major domestic companies. In particular, Sofidelâ€™s commitment to responsible and sustainable conduct, as witnessed by this Integrated Report, reflects the ten Global Compact principles as shown in the table.
Table linking the Global Compact principles and the KPIs proposed by the Global Reporting Initiative Guidelines CATEGORIES HUMAN RIGHTS
GLOBAL COMPACT PRINCIPLES I.
businesses should support and respect the protection of internationally proclaimed human rights within their sphere of influence; make sure that they are not, even indirectly, complicit in human rights abuses;
EC5 LA4, LA6-9, LA13-14 HR3-7
uphold freedom of association for workers and recognize the right to collective bargaining;
elimination of all forms of forced and compulsory labour;
EC7 LA2, LA4-5, LA13-14 HR3-7
effective abolition of child labour;
elimination of every form of discrimination in respect of employment and occupation;
businesses should support a precautionary approach to environmental challenges; undertake initiatives to promote greater environmental responsibility;
encourage the development and diffusion of environmentally friendly technologies;
businesses should work against corruption in all its forms, including extortion and bribery.
EC2 EN2, EN5-7, EN10, EN18, EN26-27, EN30 PR3-4 SO2-3 SO5-3
For information on the Integrated Report and the reporting process adopted please contact: Dr. Antonio Pereda, Dr. Arianna Vita Sofidel S.p.A. via di Lucia, 23 55016 Porcari (LU) e-mail: email@example.com e-mail: firstname.lastname@example.org telephone: +39.0583.2681
Sofidel Integrated Report 2011
LETTER TO STAKEHOLDERS
n an international context marked by the slowdown in economic growth and continuing financial instability, with repercussions on consumer spending and social dynamics in many countries, the Sofidel Group, following the acquisitions made in the previous year, has concentrated its attention during 2011 on consolidating its growth.
This choice has been systematically put into practice at several levels: by stabilization of investment; by working hard to integrate and improve production and organizational processes; by implementation of the choices made to limit and further reduce environmental impact; by investment in our own brands and by taking further action to make corporate social responsibility a factor in innovation and competitive development. The more significant steps taken include the extension of the SAP management system to the recently acquired production units; the optimization of management in Sofidel UK and Delicarta; the new converting lines in Papyros and the Monfalcone paper mill; the start up of the combined heat and power plant in Delitissue (Poland), which, as well as allowing a significant reduction in CO2 emissions, supplies hot water to the central heating system for the town of Ciechanov. As part of its commitment to integrate sustainability within its value creation process, the Sofidel Group has produced a “Sustainable Development Plan”, its first long term corporate sustainability plan and, in the context of an ever increasing focus on Supply Chain Value practices, has adopted “Supplier Guidelines” which introduce new sustainability criteria into the selection of and management of relations with our business partners. To coincide with the International Year of the Forest proclaimed by the United Nations, further initiatives to promote awareness and protection of this precious resource have been undertaken, using internal communication campaigns and by the start-up of specific tree planting partnerships in some of the local communities where we work. Even in a difficult year like 2011, Sofidel has not given up its plans for the future and has worked hard to make itself stronger and to prepare itself for when the economic situation improves. With regard to these and other aspects of our work, this report aims to give our stakeholders a complete, transparent, accurate and exhaustive picture of the organization, based on a precise analysis of the targets achieved and the strategic direction taken. By doing so, we are convinced that we will be able to continue our evolution and develop an industrial organism capable of increasing competitiveness even more at an international level whilst operating in accordance with the highest ethical and production standards.
Emi Stefani 11
THE IDENTITY OF THE SOFIDEL GROUP
1. PRODUCTION PROCESS AND MARKETS
3. OUR BUSINESS MODEL
Sofidel Integrated Report 2011
1. PRODUCTION PROCESS AND MARKETS 2011
1.1 THE TISSUE PRODUCTION PROCESS
he Sofidel Group produces and sells tissue paper. This term defines the type of paper used to obtain products for sanitary or domestic use, at home and away from home: toilet paper, kitchen towel, napkins, tablecloths, handkerchiefs, facial tissues, towels, sheets for medical use, industrial reels etc. Group companies cover the whole of
the production process: from tissue production to manufacturing processes through to the finished product. The first main part of the production process takes part in the Group’s paper mills where the raw material (pulp, or less commonly, paper mache) is melted in hot water, refined and then used in the machines for producing big reels of tissue paper (jumbo rolls or parent reels).
The second stage, downstream from the first, takes place in the paper converting plants, that is, the plants in which the parent reels are transformed into finished products. For further detail on our responsible purchasing and sourcing policies and practices for raw materials please refer to the section on “Environmental Resources”.
1.2 OUR LINES OF BUSINESS
he Sofidel Group has now been present for several years in the main European markets with the Regina® brand, whose strength is based on a full assortment of toilet paper, kitchen towels, napkins, handkerchiefs and facial tissues. (The product leaders include: Rotoloni, Carta Camomilla, Softis, Asciugoni, Regina di cuori and Blitz). In some countries, the Regina® brand is flanked with other brands acquired in the course of the last few years, such as for example Soft&Easy® in Poland, Yumy® in Turkey, Onda® e Volare® in Romania, Softis® in Germany and Austria, Le Trèfle® and Sopalin® in France. It is worth noting the activities developed to relaunch these last 3 brands:
- with regard to Softis®, the introduction of Regina-Softis toilet paper into the main European markets (Germany, the UK, France, Italy and Poland). This revolutionary product, using patented technology which is the fruit of years of research, is one of the strengths on which Sofidel will base its future development; - for the two brands, Le Trèfle® and Sopalin®, acquired at the end of 2009, a relaunch and revamp of the range was started in 2010 and completed with further refinements in 2011; - Onda® and Volare® have taken up positions immediately behind the current brand leader on the Romanian market. In the near future these two product ranges will be given a ”facelift” to strengthen their brand image.
An overall growth in brand product sales of 16% has been recorded in the last three financial years. Following the 11.8% increase between 2009 and 2010, which took into account the positive effect of the acquisition of the Romanian company Comceh, the additional growth of 4.2% between 2010 and 2011, in an extremely unfavourable period, confirms the solid nature of the brand line of business, with excellent results in Italy, Germany, Poland, the UK, France and Romania. The strategy adopted in this area, aimed at offering innovative products, characterised by an optimum quality/ quantity-price ratio and accompanied by targeted publicity, has contributed to a continuing growth in customer loyalty, with significant results.
INVESTMENT IN ADVERTISING The positive results recorded for the brand line have also been achieved thanks to specific advertising using the press, TV, radio and Internet. The lion’s share of spending has benefited the Italian and German markets, which alone absorb 2/3 of the investment in advertising due to their large size and the level of customer loyalty achieved, but advertising covering about 10% of total costs has also been carried out in less significant markets in terms of size, such as Austria or the ex Jugoslavian countries.
Private Label The big retail groups entrust the production of their Private Label products to suppliers who can combine quality of product and process (e.g. reliable traceability systems) at a reasonable price. Sofidel’s strategy in this sector continues to focus on the top end of the market (Premium and Luxury), offering innovative products which often make use of patents registered by Sofidel or advanced technology such as Through Air Drying (TAD). As part of Sofidel’s sales and marketing organization, it has been decided to include in the Private Label channel, in addition to the retailers’ labels, other marks such as Nicky, Valenty, Florex,
Away From Home Away from home is the market most affected by the consumer crisis which has been underway for years, because in this sector purchase decisions are mainly influenced by price. For this reason, the strategy adopted by the Group in this area has aimed at product diversification, focusing on newly acquired technology (TAD) and, from 2012 on, the launch of the unique Papernet® brand, designed to ex-
Parent Reels Volumes in this sector are constantly
Daily, Talent, Temis and Tyril, traditionally used as “temporary supports” for retailers while they await the development of their own brands. Among these a development worthy of note is the growth of the Nicky brand, which from 2006 to date has produced a high quality range of products in the medium price band. The development of sales in the private label sector has, in the last three financial years, been marked in an obvious manner by the consistent growth recorded following the acquisition by Sofidel of the LPC Group. The 49.4% increase in sales between 2009 and 2010 was substantially consolidated in 2011.
The best results, in terms of the value of retail private label sales, have been achieved in the UK, Germany, France, Italy, Spain and Poland. Partnerships with the large scale retail trade have also been favoured by the choice made to acquire important forms of certification aimed at guaranteeing the safety, quality, and legality of products [BRC® (British Retail Consortium), Consumer Products and IFS/HPC (International Featured Standards – Household and Personal Care products)] and of raw materials [FSC© (Forest Stewardship Council), PEFC™ (Program for Endorsement of Forest Certification) and Ecolabel®].
ploit the Group’s position in the main European markets. The main sources of inspiration for the new single brand are the same as those which have marked out Sofidel for many years: sustainability and innovation. Partnerships have also been formed with the larger European distributors in the sector. This has been possible due to the Group’s presence in all the most important continental markets.
The trend in sales in the Away from Home segment has shown, in the last three financial years, constant and regular growth, with growth rates of 11.6% from 2009 to 2010 and 7.6% from 2010 to 2011. Today the German market is the most important one, but the East European markets are also acquiring increasing importance in terms of future outlook, showing significant growth margins.
growing, thanks also to the numerous acquisitions that the Group has made
in the last few years, leading to an expansion in the market.
Some products in the “Brand” line
Sofidel Integrated Report 2011
1.3 THE QUALITY AND SAFETY OF OUR PRODUCTS
he Sofidel Group, from the outset of research and development of a new product, evaluates all the variables which come into play in the product life cycle and, which may, even if only to a minimal extent, compromise respect for our quality and safety standards In fact, systematic physical-mechanical and chemical-microbiological analysis are carried out to support product design and the internal self inspection system. From this viewpoint, great importance is given to the gradual spread within Group plants of the principles establi-
shed by the BRC (Consumer Products) and IFS (Household and Personal Care) standards, currently certified in 10 plants covering 66.4% of our total production. This standard is mainly based on the performance of a risk assessment (using the analytical methodology known as HACCP) on the various production cycles within a plant, so as to remove or reduce the risk of chemical, physical or microbiological contamination. The traceability system in the Group’s converting plants then enables us to guarantee the quality and safety of products at the distribution stage, ensuring that they can be recalled if necessary.
In 2011 no cases of non conformity or failure to comply with legislation and standards regarding the impact of products on consumer health and safety have been recorded. Monitoring of the quality of finished products takes place, finally, also by application of an index of the non conformities revealed in the course of the various stages of the production process, weighted according to their degree of impact. The results for the companies in which the system has already been operating for several years shows a level of compliance which has never dropped below 95%.
Product compliance index %
2009 2010 2011
Delipapier Nancy Delipapier (FR) Buxeuil (FR)
Imbalpaper Delipapier GmbH (IT) (DE)
Werra New Line (DE)
Implementation of monitoring activities and therefore calculation of the index is being extended to other Group sites currently not included in the table
2. LA GOVERNANCE 2.1 THE GROUP COMPANY STRUCTURE
ofidel is governed by a Board of Directors (BoD) elected by the Shareholders’ Meeting and composed of members of the controlling families. The members of the Board of Directors reflect the shareholders, are all executive and non independent, and have the required skills for the responsible management of the business in line with sustainable deve-
lopment objectives. The directors assume full responsibility for the financial, social and environmental performance of the Group, which is subject to approval by the Shareholders’ Meeting on an annual basis. The Board also assigns management roles, taking into account the qualifications and skills needed to implement sustainable strategies. At the moment there are no formal channels through which employees
can send recommendations to the Board of Directors, but the constant presence of the Chairman and the CEO within the companies of the Group nevertheless allows for good interaction with the personnel. The Board of Directors of Sofidel S.p.A is supported by the Board of Auditors, composed of professionals and university academics.
2.2 ORGANIZATIONAL MODEL UNDER LEG. DEC. 231
n September 2011 Sofidel, in order to adapt its control system to the requirements laid down by Legislative Decree 231/2001, considered it opportune to set up a specific project aimed at the creation of a prevention and risk management system and the adoption of an organizational Model based on the requirements of Legislative Decree 231/2001,
the principles of which are already rooted in the corporate philosophy and governance culture of the Group. At the end of 2011 the project involved about 20% of Sofidel Corporate staff and a number of managers from the production companies, for about 100 hours in total, during which time the consultants from Ernst&Young carried out the aforementioned analysis.
In general, the Sofidel Group has not been subject to sanctions for non compliance with laws or regulations coming under the scope of the legislation in question. Moreover, in accordance with GRI guidelines, we can report that in the course of the reporting period no episodes of corruption have been recorded.
2.3 THE STRATEGIC TOOLS FOR SUSTAINABILITY
2012 - 2014
2.4 MANAGEMENT OF CORPORATE RESPONSIBILITY
he Sofidel Group has taken on Corporate Social Responsibility (CSR) as the strategic direction for its sustainable development and has equipped itself with a specific system of governance, aimed at transversally integrating sustainability, from strategic level to operating level, in all areas and companies of the Group. Within this framework CSR is now organized and monitored in a similar manner to every other sector of strategic importance to the Group. The Board of Directors of Sofidel exercises its role in directing and controlling CSR through the CEO who, in
turn, refers to the Corporate Social Responsibility Director, coordinator of the Corporate Social Responsibility Committee (CSR Committee), which all those reporting directly to the CEO belong to. Since 2010, the CSR Committee has been flanked by the CSR Reporting Team which, in addition to annual compilation and publication of the Sustainability Report, and from this year the Integrated Report, is tasked with putting the policies and choices adopted by the CSR Committee into operation. The Reporting Team is coordinated by the CSR Manager who also liaises with the CSR Committee and those outside
the Group. During 2010, in order to keep partners and stakeholders informed and to monitor and ensure respect for and application of the values and principles shared by the Group, as well as to ensure a more timely and comprehensive flow of information to the corporate centre for the reporting process, promote training activities and support the verification activities of the certification bodies in the company units present in the various countries, a CSR Local Committee was formed in each foreign company within the Group.
Sofidel Integrated Report 2011
3. OUR BUSINESS MODEL 3.1 CREATION AND DISTRIBUTION OF VALUE
alue added measures the wealth produced by the company in the financial year, with reference to the stakeholders
who participate in its distribution. The production and distribution of value added represents the main link to the financial statements. Calculation of value added shows the
GLOBAL VALUE ADDED (in thousands of Euro) A) Value of production 1. Revenue from sales and services - revenue adjustments or write down of bad debt 2. Changes in inventories of work in progress, semi-finished and finished goods 3. Capitalised internal works 4. Change in contract work in progress 5. Others revenue and income Revenue from normal production 5. Revenue from atypical production (economy production) B) Intermediate costs of production 6. Consumption of raw materials, ancillaries, consumables and goods Change in inventories of raw materials, ancillaries 7. Cost of services 8. Leasing and rental costs 9. Set aside for risks 10. Other provisions 11. Sundry operating charges GROSS CHARACTERISTIC VALUE ADDED C) Accessory and extraordinary items 12. +/- Accessory operating balance - Accessory revenue - Accessory costs 13. +/- Balance of extraordinary items - Extraordinary revenue - Extraordinary costs GLOBAL GROSS VALUE ADDED
Distribution of Value Added
to the Company
Groupâ€™s ability to generate wealth for the various stakeholders, while managing operations efficiently and economically and meeting stakeholder expectations.
1.020.344 -540 -5.187 0 0 11.969 1.026.586 0 658.608 334.472 2.222 303.587 9.827 1.936 171 6.393 367.978
1.453.333 -1.467 9.091 0 0 17.114 1.478.071 0 1.059.005 669.226 -27.201 389.742 19.465 605 182 6.986 419.066
1.094.675 629.488 4.890 429.230 21.765 595 189 8.518 389.289
3.226 2.743 483 1.455 3.145 -1.690 372.659
4.195 5.054 -859 -28 7.605 -7.633 423.233
1.877 1.941 -64 444 4.572 -4.128 391.610
to Human Resources
1.455.632 -912 11.500 0 12 17.732 1.483.964
to Loan Capital
in thousands of Euro 6,24% 23.267
2009 Total: 372.659
2010 Total: 423.233 48,54% 205.444
2011 Total: 391.610 52,70% 206.364
3.2 MANAGEMENT OF INTANGIBLE ASSETS
or Sofidel intangible resources, that is the knowhow and interrelated skills which constitute intangible assets, are a fundamental driver for the creation of value. Sofidel identifies the following among its intangible assets: - the level of customer satisfaction;
- brand penetration; - the high skill levels of its employees; - information and communication; - the image of the Group held by customers; - the degree of sustainability of the business model; - the level of its ethical reputation among stakeholders;
Management of these elements by Sofidel is still at the embryonic stage, but the Group’s target is to develop over time appropriate tools to analyse and evaluate these important areas.
the introduction of employee incentives not provided for in the contract from the mid 70’s, substitution of fossil fuels with low sulphur content natural gas during the 80’s, construction of cogeneration plant at some sites and receipt of the first Quality and Environment certifications in the 90’s, use of renewable energy, attainment of the most important ecological product quality marks and the introduction of sustainability among
the criteria which guide the strategic choices made by management in the last decade. This pathway has helped to define the culture of the Group, which is based on a strong work ethic and on responsibility, honesty, good conduct and transparency, key values which Sofidel reflects in its everyday behaviour and actions, seeking to build both internal and external relationships based on trust.
3.3 GROUP CULTURE
he culture of the Sofidel Group emerges strongly from a review of the salient features of its 40 year life: recovery of scrap materials from the end of the 60’s, care for the local community shown by participation in the construction of an ecological treatment plant for waste water in the area around Lucca at the start of the 70’s, the start up of industrial relations and
3.4 MANAGEMENT SYSTEMS
he management system used in the majority of the companies in the Sofidel Group aims to organize and codify the activities linked to management of certain critical factors which characterize the normal operations of the company. The implementation of these systems, which involves a wholely voluntary investment of resources, is considered by management to be a strategic element, useful for improving the
performance and profitability of the company, and able to provide timely responses to the needs expressed by stakeholders. The management systems used on the Group production sites comply with the most common recognized international standards, based on which the following certifications have been received from third party inspection bodies: - ISO 9001:2008 for the Quality Management Systems;
- ISO 14001:2004 and EMAS (Regulation (EC) No 1221/2009) for Environmental Management Systems; - OHSAS 18001:2007 for Occupational Health and Safety Management Systems; - BRC Consumer Products and IFS Household and Personal Care for Sanitary/Hygiene Self Monitoring Systems; - SA 8000:2008 for Social Accountability.
Sofidel Integrated Report 2011
Summary of the certified management systems present in the Group companies
Fibrocellulosa Cartiera Monfalcone Imbalpaper Delipapier SA
P P P
P P P
P P P P P
International Featured Standards HPC
Product Safety and Legality Brc Consumer Product
P P P
Der Blaue Engel
Health and Safety
Ibertissue Werra Papier Omega Papier Thuringer Hygiene Papier Th端ringer Hyg Papier Logistic
P P P P
P P P
P P P P P
Sofidel Papir Papyros Comceh Sofidel UK LPC Belgium Swedish Tissue LPC France (1) (2)
P P P
Limited to the Porcari paper mill Limited to the Nancy plant
P P P P (3) (4)
Paper mill only Tassignano plant only
P P P (5)
P P P P P
Converting plant only
3.5 HUMAN RESOURCES MANAGEMENT
s of 31/12/2011 Sofidel was able to count on the professional assistance of 4,461 staff. The companies within
the Group recognize the central role played by human resources in the value creation process and, based on our conviction that the key success factor for all companies is the active invol-
vement and professional contribution of the people who work for them, for Sofidel our employees represent a competitive asset to be safeguarded, valued and developed.
Breakdown of Sofidel Group employees 4.000 by type and gender
The overall percentage of female staff in the Group is 13.9%, accounting for
13.7% of managers, 40.0% of whitecollar staff and 6.2% of bluecollar staff.
Breakdown of employees of Sofidel Group companies by type and geographical area
This confirms a distribution skewed in favour of professional staff.
400 302 200
Belgium Totali: 144
81 29 20
The data show that the Italian employees make up the majority of Sofidel Group staff at every professional level, accounting for 36.2% of managers,
31.9% of white collar staff and 23.5% of blue collar staff. After this, the largest numerical share (18.2%, 16.4% and 14.1% respectively)
of positions are occupied by employees in the UK, Germany and France.
Sofidel Integrated Report 2011
Full time Total 4.410
Breakdown of Sofidel Group employees by type and nature of contract Blue Collar
Part time Total 51
The percentage of Group employees taken on with a permanent contract is 97.3%; almost all (98.9%) work full time. Sofidel also gives priority in its staff recruitment to workers belonging to the local communities where it carries out its business, thus contributing to
the growth in employment and income in the area from which it extracts productive resources, and also to the achievement of a higher level of sustainability thanks to the associated reduction in home-work travel. This policy also applies to the managerial positions in the Group. It is sufficient
Breakdown of employees of Sofidel Group companies by type and age group
< 30 years old Total: 461
here to point out that over 95% of the senior managers, that is of professional staff responsible for decision making and management of work for the achievement of corporate objectives, come from the local community in which they work.
Blue Collar White Collar
30 - 50 years old Total: 3.115
> 50 years old Total: 885
The graph shows that the majority of the Group’s employees fall in the middle age band. There remains however a significant number of employees aged over 50,
which will need to be managed appropriately in the future, with the right tools with regard to the increase in working age across Europe following the reform of pension legisla-
tion. These topics are currently under review by the relevant work groups within the Fondazione Sodalitas, in which representatives from our Group actively participate.
the interrelationships between the various SAP modules, and thus to allow management of an integrated group system for all activities involving Human Resources. Following the completion of related activities in the Group’s Italian plants,
the SAP Human Resources module is gradually being implemented in the Group’s foreign associates, starting with “Delipapier” in France and “Ibertissue” in Spain.
SAP HUMAN RESOURCES PROJECT During 2011 further progress was made on developing the projects started by the Human Resources Department in 2010: most notably the “SAP Human Resources” project. The aim is to produce a single information system capable of exploiting
THE OPERATING CONTEXT 1. THE GLOBAL MARKET AND THE TISSUE MARKET
2. RELATIONS WITH STAKEHOLDERS
2011 Integrated Report 22
Sofidel Integrated Report 2011
1. THE GLOBAL MARKET AND THE TISSUE MARKET
011 was a year of severe recession in the world economy. After a start characterized by a mainly positive economic trend, the economy slowed down sharply in the second and third quarters and then stopped growing completely. Severe negative impact on economic and financial trends resulted, firstly following the severe earthquake
which hit Japan, the revolts in North Africa (the “Arab Spring”), the contemporary slowdown in growth in the United States of America and then finally, the crisis which hit the sovereign debt of certain European states, including Greece, Eire, Portugal, Spain and Italy, which brought instability to the financial market and had worrying repercussions on the employment and social equilibrium of many countries.
The tissue market was affected by these events. Against this background Sofidel has continued to work on organizational improvement; optimization of management and production processes; increasing its brand value and strengthening its activities in the area of sustainability. Even in a difficult year Sofidel has not ceased to invest and look to the future.
2. RELATIONS WITH STAKEHOLDERS 2.1 MANAGEMENT OF RELATIONS CO NS TIO M P ISA N A VIRONM N E S EN ON T NI
AN R RESOU
TN ER SI S TIE S MED IA
TI INS PUBLIC C H RC EA RES
LDERS EHO AR SH
NON PRO FIT
OR IT ET
TU AR TIO P NS EN RS E S ER I U L P P TR IV ES UN ASSOC TIONS IA
Sofidel’s biggest assets are its stakeholders and among these a fundamental role is played by its customers, mainly consumers and distributors, whose needs and demands the Group constantly monitors and is committed to satisfying. To its customers Sofidel proposes itself as an innovative Group, which pays the maximum attention: - to the culture of customer service, through respect for delivery times, product quality, and its Customer Care service; - to limiting its environmental impact, thanks to investment in CO2 reduction1 and ongoing compliance with the requirements of the main eco-
logical certification bodies; - to technology, through use of the most up to date techniques available both at production level and in terms of distribution, to manage information and provide services to customers; - to investment in advertising, which by promoting its own brands adds to the reputation of Sofidel products and indirectly benefits retailers.
At an institutional level, the Sofidel Group is also a member of the ETS (European Tissue Symposium) and the CEPI (Confederation of European
Paper Industries). The Italian companies, starting from the Group’s parent company, also belong on a voluntary basis to Assocarta, the association which represents industrialists in the paper sector within Confindustria, as well as the Industrial Associations for the provinces in which our plants are located. Membership of these bodies gives us an opportunity to contribute our experience and results, as an aid to increasing the overall sustainability of the world economic system. For the same reasons, Sofidel does not give any form of funding or financial help to political institutions, parties or politicians in any of the various countries in which it has a presence.
In 2011 Sofidel was the only company in the tissue sector to belong to the international WWF Climate Savers programme
2.2 INITIATIVES TO PROMOTE COMMUNICATION AND DIALOGUE WITH STAKEHOLDERS
iven the importance of the process aimed at increasing stakeholder involvement started in 2009, and the success obtained to date, the Sofidel Group intends to go ahead with implementation of the engagement process. The communication and dialogue initiatives put forward by Sofidel also include identifying the level of customer satisfaction with Group products and
services. For this activity, which does not require any direct involvement, a single questionnaire has been put together which every company in the Group sends to its customers in order to obtain feedback in the areas of communication, product and marketing and the extent to which these meet customer requirements. In 2011, of 985 questionnaires sent, 461 (46.8%) were returned correctly
Customer satisfaction by type 5 4,0
filled in; the forms returned represented 41.8% of Sofidel Group turnover. As can be seen from the graph below, analysis of the responses provided during 2011 showed a further improvement compared to the evaluation index obtained in 2010 and the result obtained in 2009 (3.9), revealing a global average of 4.2 points out of a maximum of 5.
Evaluation: the opinion expressed by the customer on each question in the survey Importance: the significance of the area for the customer
Is it easy to Is the behaviour Are our staff skilled communicate with (courtesy and enough to respond our offices? attitude) of our staff satisfactorily to satisfactory? your questions or requests?
The other side of the coin relates to management of reports and complaints from customers, whether they be retailers or final consumers. This type of interface, in particular, is of fundamental importance both for the management of the relationship of trust with the stakeholders in question and for management of aspects related to product quality.
Are response times satisfactory?
Are orders met satisfactorily (in terms of absence of errors or missing products?)
Are agreed delivery times complied with?
In 2011, a total of 2,897 complaints were received; none of these regarded violation of privacy or loss of consumer data. For Italian consumers of Regina速, finally, a Freephone number has been set up to collect reports: compared to 2010 the number of calls has gone down by 19.5%, from 4,431 to 3,565. Of these calls, 32.4% were requests
Is the quality of our products satisfactory?
for information on the prize for the points competition, 62.5% were requests for product information and the remainder (2.4%) were on other subjects.
Detail of calls to the Freephone number % 100
Other Information Information about prizes&rewards
Is the quality of Is the product our products information on sufficiently the packaging consistent across sufficient? (Only for the various Brand products) supplies?
Sofidel Integrated Report 2011
The services of the Sofidel Group’s communications unit are also obviously directed towards stakeholders. The services/products produced, managed or promoted include: - press reviews and Internet monitoring; - annual surveys of organizational well-being; - publication of an in-house magazine (People and Paper); - publication of a newsletter devoted to sustainability (Soft & Green); - production of a six monthly publication (Working Safety Together) dedicated to promotion of health and safety;
- management of Sofidel’s web site, which is coordinated and integrated with the sites devoted to the product; - publication of Sofidel Informa/Sofidel news; - internal and external institutional communication campaigns; - assistance with the drafting of Sustainability documents; - relations with the media. For further information on this subject see also paragraph 2.6 “Communication and participation”.
KEEPING A WATCHFUL EYE
In a move to raise awareness of environmental issues, the UN declared 2011 as the International Year of Forests. This is an issue that has always been important to us at Sofidel. As the second largest tissue producer in Europe, we have developed a policy of responsible sourcing of raw materials and strengthened our methods for assessing and selecting our suppliers of cellulose. We have also resorted to using only producers who adopt rigorous methods of sound forest management. 94.2% of our production capacity now relies on supplies from certified or controlled sources. Together with WWF, who has inspected our supply chain, we have been working on consolidating this important commitment. As far as Sofidel is concerned every year is the Year of Forests. WWF ITALY AND SOFIDEL FOR THE INTERNATIONAL YEAR OF FORESTS
Institutional communication campaign 2011
SOCIAL AND ENVIRONMENTAL PERFORMANCE 1. HUMAN RIGHTS
2. LABOUR PRACTICES
5. ENVIRONMENTAL RESOURCES 35
2011 Integrated Report 26
Sofidel Integrated Report 2011
1. HUMAN RIGHTS 1.1 EQUAL OPPORTUNITIES, DIVERSITY AND NON DISCRIMINATORY PRACTICES
support of this, an anonymous communication system has been established at all the companies in the Group by providing “boxes” to collect any reports of non compliance from employees. To date no reports of human rights abuses or discriminatory practices have been received.
n its relations with its employees Sofidel is committed to promoting equal opportunities and diversity as an asset to be cultivated and made the most of, encouraging comparison with best practice for innovation and development. Sofidel has formalized its commitment to these principles not only in its own Ethical Code but also through voluntary subscription to the “Charter for Equal Opportunities and Treatment in the Workplace”, a voluntary statement of intent on the dissemination of a corporate culture based on ethics as well as human resources policies which are free of discrimination and prejudice, and which reward and value talent in all its diverse forms. Also in
In 2011 the Italian companies in the Sofidel Group located in the area around Lucca took part in the project “Womenomics - balance for economic development”, promoted by the Region of Tuscany and aimed at piloting, within private enterprises, innovative organizational solutions to achieve work-life balance for women.
The number of employees who took parental leave (discretionary maternity/paternity leave) was 11 in Italy and 72 abroad. In Italy the employees who took leave have all now returned to work whileon foreign sites only one employee remained on leave after the end of the financial year.
As regards “protected categories”, the Group meets the obligations set out in the relevant regulations in all the countries in which it operates. In 2011 there were 84 staff belonging to these categories.
2. LABOUR PRACTICES 2.1 TURNOVER Staff Turnover Rate In The Sofidel Group BY GEOGRAPHICAL AREA Italian Companies
BY AGE GROUP
30 – 50 years
Rate of turnover: leavers as of 31 December/employees in post as of 31 December
The rate of turnover for the Group once again shows low values for the 2011 year.
2.2 INDUSTRIAL RELATIONS
ofidel’s system of industrial relations respects the autonomy and responsibility of the trade unions and the principle of freedom of association, allowing us to jointly de-
fine methods for efficient and timely review of the solutions proposed by the parties. In the Italian companies all employees come under the relevant National Collective Work Contract. In the other
Group companies the work contracts for about 14.57% of employees are governed by some form of national collective contract, while the remainder are subject to individual and/or company contracts.
Breakdown of employees in the foreign companies of the Sofidel Group by type of contract National collective labour agreement (CCNL)
Employees of foreign companies
Communication regarding organizational changes
nal changes takes place in accordan-
tional regulation or collective agree-
ce with the timetables and methods
Communication regarding organizatio-
established within each individual na-
2011: SIGNIFICANT TRADE UNION EVENTS Below we report the most significant events that have taken place during 2011 from a trade union viewpoint: ITALY: negotiations have been undertaken to renew the additional company contract in the Delicarta converting plant. In addition information has been given to union representatives and the local trade union organizations on the merger by incorporation of Imbalpaper and Papernet within Delicarta. And finally agreement was reached on renewal of the agreement on Sunday and holiday working for the Delicarta and Soffass paper mills. UK: Agreements were reached on the work shifts for 2012. GERMANY: In Delipapier GmbH the company contract has been amended to reflect a gradual realignment to the national contract which will be completed in 2020. BELGIUM: a collective agreement has been reached for blue collar workers for the 2011/2012 period.
2.3 HEALTH AND SAFETY
he Sofidel Group safeguards the health and safety of its employees, contractors and visitors. Coordination of health and safety policies is delegated to a specific corporate unit, made up of qualified personnel. This unit, together with the Health & Safety managers for all the Groupâ€™s plants, regularly takes part in the International Safety Committee, which aims to harmonize policies on health and safety and conducts research into new operating
methods to reduce risks. In June 2011 the Fourth International Safety Committee met at the LPC Belgium plant. During the year, audit work was intensified in all the Groupâ€™s companies, both to disseminate the culture of safety from an organizational, technical and procedural point of view and to assist with implementation of Occupational Health and Safety Management Systems (OHSMS). As regards the latter, the plants in Tassignano (Delicarta Tassignano) and Monfalcone (Cartiera di Monfalcone S.p.A.)
have made a start on the process for OHSAS 18001 certification. The detailed breakdown of health and safety costs incurred during 2011 shows that over 73% of expenditure was invested in technology, thus used to purchase safety machinery and equipment and to improve the safety standards of plants already owned by the Group. It is obvious that such expenditure results in a reduction in risks for employees and an improvement in accident statistics.
Sofidel Integrated Report 2011
H&S Expenditure Items (Workplace Health and Safety)
Safety maintenance for buildings/factories Purchase of machinery/equipment to reduce risks
Total Sofidel Group € 3.212.866
Maintenance/improvement of lighting Improvement of safety standards for plants and/or machinery
€ 186.171 Thanks to work done to improve workplace health and safety in excess of that required by domestic legislation, the Italian companies in the Group have obtained a reduction in the average INAIL (National Institute
for Insurance against Accidents) tax rate.
Indices to measure progress of accident prevention Sofidel monitors the trend in accidents
Table showing the Accident Rate and Index of Gravity for Sofidel Group plants 2
total n° of accidents x 200.000 total n° of hours worked
total n° of work days lost total n° of hours worked
For both indicators the multiplier used was 200,000, based on 40 hours a week for 50 working weeks for 100 employees: accordingly the resulting rate is based on the total number of employees and not on the number of hours. 4
(*): the 2011 report includes the latest acquisitions of the Sofidel Group, including Comceh, LPC Belgium, LPC France, Sofidel UK and Swedish Tissue.
Sofidel Group Accident Indices TI: Accident rate IG: Index of Gravity
As can be seen from the data for the last three years, the two indicators have shown a significant improvement.
In 2011 the absence rate in the Group’s companies, that is, the ratio
and injuries in its various plants using a series of indices, the most significant of which are the accident rate2 (TI) and the index of gravity3 (IG)4.
Company Monfalcone paper mill Delicarta paper mill Delicarta converting plant Fibrocellulosa Delicarta Valdottavo Delicarta converting plant Porcari Soffass paper mill Soffass converting plant Comceh (*) Delipapier Buxeuil Delipapier Frouard Delipapier GmbH Delitissue Ibertissue Intertissue LPC Belgium (*) LPC France (*) Papyros Sofidel Kagit Sofidel UK (*) Swedish Tissue (*) Werra Papier (Werra) Werra Papier (Omega) Werra Papier (THP) Werra Papier (THP-L) TOTAL SOFIDEL GROUP
TI 2,63 11,18 3,86 0 0 3,57 3,60 1,66 0,44 8,70 5,88 11,15 4,60 8,01 2,24 1,84 5,62 1,84 0 2,07 3,41 3,22 3,95 2,60 4,48 4,10
of hours of employee absence from work to working hours was 3.75%
Rate of sickness absence: sickness hours/contracted working hours Rate of accident absence: accident hours/contracted working hours
IG 34,20 307,51 39,87 0 0 85,79 94,70 20,81 70,65 241,85 136,81 131,48 94,78 169,90 36,13 111,54 488,27 311,52 0 68,41 65,61 56,82 89,85 23,39 164,11 101,47
due to sickness5 and 0.33% due to accidents6.
2011 PREVENTION CAMPAIGNS In order to raise staff awareness in the area of health and safety, every year Sofidel organizes large scale prevention campaigns. In 2011 this activity consisted mainly of the following initiatives: - in Delipapier SAS a prevention campaign was organized to focus on high blood pressure and the cardiovascular risks caused by smoking as well as information campaigns on the correct diet to follow to reduce health risks. Within the plant an employee awareness initiative called “Flash sécurité” (Safety Flash) was also held, split into three activities covering respectively, dissemination of safety data via a series of meetings with the instructors, display of posters inside the plant and distribution of specific safety procedures; - in Delipapier GmbH a prevention campaign was conducted on manual handling of loads and associated muscularskeletal problems and work station ergonomics; - Swedish Tissue conducted an awareness campaign on the need for exercise to protect physical well-being; - in LPC Belgium campaigns were conducted to raise awareness among employees of the specific risks present in the work environment, the risks caused by consumption of alcohol and drugs and the use of personal protection equipment.
2.4 TRAINING AND DEVELOPMENT
o support the professional development of its employees, each year Sofidel produces a broad based Training Plan focused on the development of both technical and managerial skills. In 2011 64.923 hours of training were provided in total, involving 30.4% of managers, 26.1% of white collar staff and 8.2% of blue collar staff. The subjects which attracted the most
interest, both from the company and employees, were: - health and safety of the work environment; - best practice in the operating arena in terms of technical and production improvements and the introduction of new machinery; - English language studies; - introduction and alignment to the management system and education in procedures for newly recruited
company employees; - management systems in terms of their implementation and maintenance; - legislative updates on employee rights and duties, including protection of the fundamental human rights included in the ILO Conventions and the United Nations Global Compact principles.
SPREADING THE CULTURE OF SAFETY Health and safety training programmes are offered every year in all the companies in the Sofidel Group. In the various plants each category of employee is trained for dealing with risks and for the implementation of prevention and protection measures and, for each specific role, given “on the job” training. In the Group’s plants action is also being taken to plan training more systematically to make it more widespread and efficient. In 2011, solely for health and safety, 18,470 hours of training were given, in the following areas: - course for newly recruited staff; - course for supervisors and managers; - update seminars for RSPP (prevention and protection safety managers) and H&S managers; - course for those working for the company first aid service; - course for fire fighters and emergency workers; - course on the use of lifting equipment; - course on the use of fork lift trucks;
To provide instruction on training courses, Sofidel made use, in addition to qualified outside bodies, of specifically skilled internal staff for a total of 3,854 hours, equal to 5.9% of the total. Investment in training, which also benefited from incentives and contributions, 30
- - - - - - -
course on the use of aerial platforms; course on use of category III PPE; course on working at height; course on ergonomic, noise-related and vibration-related risks; course on chemical risk; course on manual handling of loads; course on electrical risk.
amounted to €615,502, which is an increase of about 30% compared to 2010. One of the most important projects started during 2011, developed together with the Scuola di Direzione Aziendale (SDA) (Management School) of Bocconi University, is the “Sofidel Academy”
which aims to create a process of continuous and systematic innovation, both in terms of products and management of production processes, via the implementation and dissemination of Lean Management principles.
Sofidel Integrated Report 2011
As regards giving value to human resources, during 2011 the Italian com-
panies in the Group saw three of their employees receive the “Stelle al merito del lavoro”, medals awarded by the President of the Republic for the hard
work and dedication shown by 25 uninterrupted years of work for the same company.
2.5 PAY AND INCENTIVE SYSTEMS
ofidel, in line with its own principles, determines salaries in accordance with legal standards and ensures compliance with criteria of equity and transparency. Based on an analysis carried out in all the areas where the Group is present, it has emerged that minimum salaries, where applicable, are more than adequately covered in all cases. Moreover, almost all the companies in the Group have performance evaluation programmes for all employees included in the so-called “bonus system”. This essentially consists of an interview based around completion of
a questionnaire which considers the strategic aspects of work performance. Many companies in the Group have, in particular, adopted bonus systems based on the definition of specific, measurable and achievable targets, shared in such a way that employees are able, by their conduct, to have an impact on them. Checks on target achievement may also cover performance in relation to sustainability such as reduction in CO2 emissions and containment of energy consumption, which managers in the various areas are responsible for. The Group’s Human Resources Department, wishing to fully analyse the
various components which make up the cost of personnel (contractual salary elements and MBO [management by objectives]) and the various company factors (estimated labour costs, recruitment, promotions, absenteeism etc.) which underlie it, has equipped itself with a specific budgeting and monitoring tool to cover each of these areas. In 2011 more than 13.3% of employees of companies in the Group received bonuses, while more than 30.3% benefited from pay increases. The benefits granted to employees are paid without any distinction between full-time and part-time employees.
In line with what has been recorded for the job market at an international level, the above data show that, although Group policies and pay policies
are based on equity and equality of treatment between men and women, women in general, occupy posts of lesser responsibility and consequently
receive on average lower pay than the men employed by the company. This is mainly due to the difficulty that women have, despite their best efforts, in reconciling their family responsibilities with work demands. The cause of this situation often lies in the greater responsibility and variety of tasks that the domestic role reserves for them. With a view to improving this situation, the Sofidel Group has equipped itself with rules which allow for flexible timetables for coming to and leaving work and supports the Charter for Equal Opportunities promoted by the Sodalitas Foundation.
150.000 Ratio between male and female pay for the same qualification level Male
Female Gross average salary (€/a)
37.500 20.366 0
Sofidel’s relationship with its employees is also distinguished by the large number of institutions and initiatives designed to benefit the workforce. For employees in Italy, France, the UK and Germany, for example, there are complementary forms of benefit operated through the use of specific funds.
2.6 COMMUNICATION AND PARTICIPATION For Sofidel the communication process is a tool for transforming employees’
quality of work, enabling organizational improvement and company deve-
lopment, and contributing to the growth of social well-being.
SOFIDEL GROUP PUBLICATIONS Publication in Italian and English of “Group Portrait” a sort of company profile, which describes the situation and size of the Group, its commitment to sustainability and the main results achieved.
Two further publications in the series “Notebooks for growth” have been produced, dedicated respectively to Soffass Paper Mill and Delicarta Paper Mill. The notebooks originated from a series of meetings involving managers from all levels of the plants designed to reflect upon the values and types of behaviour which characterize the Group. Periodic publication of the in-house magazine “People & Paper” and “Soft&Green”, the newsletter dedicated to sustainability.
In the international year of the forest an internal and external corporate communication campaign dedicated to responsible purchasing of pulp. In partnership with WWF Italia we have published “The Year of the Forest. The value of an ever greener planet” which offers information on the state of the forests, the main threats to them, the role of Europe in the timber market, sustainable management, the value of certification and the commitment made by WWF and Sofidel in this area. This publication was distributed to all Italian employees in the Group at Christmas. Other copies are for use in public events.
Through the periodic publication “Working Safely Together” distributed to all employees, the Group disseminates information, targets, results and safety statistics. In Intertissue the newsletter “Keep it Safe - Keep it Green” is published, containing information on how to reduce risks for employee health and safety and the environment.
LISTENING TO EMPLOYEES Work has continued with the Department of Psychology at the University of Florence to produce a suitable company climate survey questionnaire which is scientifically certified and “culture free” (that is, not conditioned by particular cultural backgrounds) to use in all the Italian and foreign companies in the Group. During the first 6 months of 2011 a number of Focus Groups were held, led by an Occupational Psychologist, on the basis of which an initial questionnaire has been developed which will be distributed to 10% of the Group’s employees.
Sofidel Integrated Report 2011
3. SUPPLIERS 3.1 SUPPLIER QUALIFICATION AND ANALYSIS
ualification of key suppliers for companies in the Sofidel Group is performed by means of a periodic assessment of consolidated suppliers and a prior assessment of new ones. The selection criteria for suppliers used by Sofidel, in addition to cost, are: - performance, properly evaluated and monitored; - meeting of requirements in terms of product, service and flexibility. The regular evaluation of consolidated suppliers is carried out using both performance indicators and audit based monitoring. Thirty audits have been carried out on key suppliers in the last three years, nine of which took place in the last year. These checks as part of qualification or ongoing monitoring are increasingly focused on 12,05% themes related to corporate social
Invoiced by suppliers of the Sofidel Group 12,05%
cluded in the EIRIS list of Countries of Concern in terms of abuse of human rights . In choosing its suppliers therefore, Sofidel adopts principles based on legality and transparency with the aim of ensuring impartiality and respect for equal opportunities for all the entities and individuals involved. Accordingly, from 2004, the Group has used an e-procurement tool which, being based on the drafting of clear and invariable specifications for all suppliers, has enabled us to award on a best value basis supply contracts which are valued at just over €37 million, 5 of which, equivalent to 13.5% of the total, were awarded in the last year alone. During 2011 92.6% of supplies purchased by the Sofidel Group related essentially to raw materials and ser7,37% vices.
responsibility and aspects of health and hygiene. Given the large number of suppliers and the volumes of materials and services purchased, close attention to the relevant sustainability profile is not only a social responsibility for the Sofidel Group but also represents a significant opportunity to improve operational performance. In 2011, based on the Supplier Guidelines which reflect Sofidel’s Ethical Code, specific self-assessment questionnaires were produced with the aim of providing standard tools for ethical evaluation of the supply chain for the various purchasing departments. In 2012 Sofidel intends to give a “new look” to the assessment questionnaires in order to increase suppliers’ involvement in the area of sustainability. It should in any case be remembered 12,28% that none of the countries in which the Group’s plants are based are in-
Raw materials and other goods 32,58%
Plant and other fixed assets 7,37% 7,37%
excludes Comceh and LPC Group
2011*** 60,05% 60,05%
excludes the last 5 months of supplies for Sofidel UK and the last 2 months of supplies for Swedish Tissue
4. SOCIETY 4.1 INITIATIVES TO BENEFIT THE LOCAL COMMUNITY
he first and most important thing that Sofidel does for local communities relates to its decision to pay maximum atten-
tion to the productive activities in the areas where it carries out its business of purchasing goods and services. The ability to obtain a part of the production inputs required for the manufac-
turing cycle locally contributes to the development of the local economy.
Concentration of expenditure on local suppliers by area
2009 (the data exclude the company Papyros) 2010 (the data exclude the companies Comceh and LPC Group) 2011 (the data exclude the last 5 months of supplies for Sofidel UK and the last 2 months of supplies for Swedish Tissue)
% 100 80 60 40 20 0
The data for the concentration of expenditure on local suppliers show that the Group never directs a share of less than 30% of its purchases to local suppliers, with peaks, in some countries, as high as 80-90% of the total. Supplies relate mainly to services or capital goods, which on a three year comparison show differing
trends by geographical area, passing from stable situations to situations characterized by greater variability. If we limit the comparison to countries in which the Group’s companies have been present for a long time, it can be seen that the reduction in local expenditure recorded in 2010 was substantially compensated for during
2011, with values realigned to those of the 2009 financial year. In line with its sustainable approach, the Sofidel Group also undertakes to raise the quality of life in the local communities where it is based, by supporting or setting up initiatives in the fields of environment, infrastructure, social assistance and culture.
SOCIAL COMMITMENT: SOME EXAMPLES Following the earthquake which in October 2001 struck the province of Van in Turkey, Sofidel Kagit, as a contribution to alleviating the difficulties and suffering caused, donated and sent toilet paper and kitchen towel to the earthquake zone, while employees voluntarily collected and sent basic necessities. During 2011 the cogeneration plant in the Delitissue plant at Ciechanow, in Poland, came fully on line. In addition to reducing the carbon footprint of the Group, the plant, which consists of a new generation 4.5 MW gas turbine, with the capacity to cover the entire electricity and steam requirement of the plant, contributes to the supply of hot water to the heating system of Ciechanow, a town with about 40,000 inhabitants. Since 2008 Sofidel has been working on a project started by numerous public entities to produce an inter-modal railway station to serve the industrial district of the Piana di Lucca in Italy. Thanks to this infrastructural work the railway will come right up to the two new warehouses of the Delicarta converting plant in Tassignano (Lucca), allowing easier use of rail for the transportation of goods, with obvious positive effects in terms of logistical and environmental impact. The Sofidel Group is directly bearing the construction costs of the rail branch with an expenditure of €3.9 million. The works are at an advanced stage and the inauguration, originally expected to take place in October 2011, will now be in 2012. To coincide with the International Year of the Forest a project entitled “The Forest - Shield against Natural Disasters” was developed in Calarasi, in Romania, by the Association for Sustainable Development “Dunarea de Jos” and Comceh SA. The initiative aims to inform young people about the important role played by forests in maintaining the hydrogeological stability of the earth’s structure and, more generally, to encourage a responsible attitude towards natural resources. The project is long term, covering a three year period (2011 - 2013) and is divided into three stages: 1) reforestation of an area of 5 hectares of land through the planting of 2,638 new trees by volunteers from “Dunarea de Jos” and pupils of the technical college “Stefan Banulescu”; 2) maintenance work; 3) a final conference for the presentation of the results of the project. In addition to financing the reforestation, Comceh SA is contributing with its own resources to the environmental education activities of the “Dunarea de Jos” association and offering support in terms of promotion and launch of the project. 34
Sofidel Integrated Report 2011
Following agreement between Werra Papier GMbH, the countryside association “Thuringer Wald e. V. Dorfstr” and Naturpark “Thuringer Wald e. V. Dorfstr” a project was started in Germany, to be completed in 2013, to construct a natural path approx. 450 m in length which will connect for tourism purposes the cycling path through the Werra river valley to the Rennsteig, a charming panoramic viewpoint not far from the Werra lake. To counterbalance the CO2 emissions linked to the activities of the stand put up by Group companies who took part in 2011 in the “PMLA - World of Private Label international trade fair” in Amsterdam and “CMS (Cleaning Management Services) in Berlin, Sofidel in partnership with Opera delle Mura di Lucca, an Italian public institution which deals with the maintenance and care of the renaissance walls of the Tuscan town, planted 30 new trees along the defensive structure. In 2011 the Italian companies in the Group located in the Lucca paper district, together with INAIL, USL 2 Lucca (the Local Health Office), the Ufficio Scolastico Provinciale (Provincial Schools Office) the Fire Brigade and Assindustria, took part in the “Schools and companies: training in prevention” project. The project brings together schools, firms and public entities to promote and spread health and safety culture among the young students of the technical schools. The training course, divided into a number of three day modules, involved teachers, public workers and Sofidel technicians and included a visit to the company’s plants - one paper mill and one converting - with analysis of the respective production cycles and the related risks.
5. ENVIRONMENTAL RESOURCES 5.1 RAW MATERIALS FROM FORESTRY SOURCES
he importance of raw materials derived from timber has been underlined once more by the United Nations, which dedicated the year 2011 to the Earth’s forests. Sofidel, although it does not possess forests of its own, considers itself to form an integral part of the forest supply chain and has mobilized itself to make a contribution. One of the most significant initiatives realized is without a doubt the signing of an agreement with WWF Italia, the objectives of which can be set out as follows: 1) Sofidel commits itself to reach an overall target of purchasing 95% of the total virgin fibre acquired over the three year period 2012-14 from FSC, FSC-CW, PEFC certified sources or sources meeting any other standard recognized as valid by WWF International, while maintaining the current percentages of FSC or FSC-CW certified pulp. Sofidel also undertakes to check with WWF Italia the potential for transforming the percentage of non certified fibre into FSC-CW certified
fibre by 2015; 2) for the share of forestry raw material that does not have any of the certifications referred to in paragraph 1) Sofidel undertakes to avoid purchasing from countries or districts defined as at high forestry risk and listed in a list of critical areas agreed between Sofidel and WWF Italia. In the exceptional case that this is not possible, a specific procedure is required. 3) Sofidel recognizes all the forest management schemes referred to in paragraph 1 unless the raw material comes from countries or districts which give insufficient gua-
rantees of the protection of civil and traditional rights. In this case Sofidel undertakes to give priority gradually to the purchase of solely raw material with FSC chain of custody certification or certification based on the FSC-CW standard from countries where such rights are not guaranteed. These objectives, deemed to be consistent with the Group’s pulp purchasing policy, take account both of the need to protect forestry assets and of the complex dynamics of the pulp market and the strategic role that this raw material plays in Sofidel’s business.
SOURCING POLICY FOR RAW FIBRE The predominant use of raw material composed of virgin wood fibre and the knowledge of the role that the forests play in the protection of the environment and the maintenance of biodiversity have pushed the Sofidel Group to adopt a precise purchasing policy for fibrous raw materials, which is set out as follows:
- “...The Sofidel Group condemns the practice of illegal felling and the conversion of natural forests into plantations and takes measures to ensure that its suppliers can prove the source of the timber used to produce pulp”; - “...Sofidel is committed to checking, as far as possible, for the existence of social conflicts in the locations from which the wood originates, avoiding purchases from areas subject to conflict, from protected zones or from genetically modified organisms”; - “...Sofidel believes in the use of sustainable forest management systems, certified in accordance with recognized, credible schemes and based on verification by independent third parties”; - “...Sofidel encourages its suppliers to certify the source of their forestry resources and gives precedence to suppliers who can produce certificates of good forestry management”.
In the Group there are also sites which exclusively or partially use recycled paper for their production, derived from either local separated waste collection
plants, thus reducing use of virgin raw material by a total, in 2011, of 39,343 tons.
or from waste products from other industrial processes. The production trimmings generated by paper production are reused within the production
of virgin fibre raw material and recycled material used
Virgin fibre raw material (tonnes) Recycled fibrous raw material (tonnes)
(t) 1.125.000 165.572 750.000 127.113
17,7% 837.423 590.136
Breakdown of virgin raw material acquired by the Sofidel Group
FSC certified raw material
FSC-CW standard certified raw material
PEFC certified raw material
Other forestry certification schemes 0,7%
The origin of the fibrous material used has remained more or less stable over the years, with the majority
of supplies coming from South America, the area in which most of the new international projects to produce
short, high quality and 100% forestry certified raw material are being developed.
Sofidel Integrated Report 2011
Breakdown by geographical source of the pulp purchased by the Sofidel Group 14,0%
5.2 OTHER RAW MATERIALS
ther raw materials used in significant quantities are plastic film and paper, both used in packaging. During 2011, following a long period of work by the Research and Development de-
partment together with some packaging suppliers, the use of a new type of plastic film for the packaging of a certain number of Regina brand items was introduced. The new film, the thickness of which is reduced by over 10% compared to the film in use up
to 2010, enables a significant reduction in the waste produced by consumers. The full recyclability and technical characteristics of the new material remain nevertheless unaltered.
RENEWABLE AND NON RENEWABLE RAW MATERIALS In 2011 the amount of non renewable raw materials used to contribute to production was 21,334 tonnes, which is 2% of the total raw materials used, while material from renewable sources equalled 1,010,292 tonnes, accounting for the remaining 98%.
he increase in production capacity achieved by the end of 2010 through the acquisition of five new plants has inevitably led the Sofidel Group to increase its use of many resources, including water. In 2011 total water consumption by the Group’s companies equalled 7.7 Mm³, an increase of approx. 60% compared to the year before. In addition to absolute consumption there was also an increase in specific water consumption, which increased from 7.13 m³/t paper to 8.74 m³/t..This result is due to the lower efficiency of the plants acquired. To address this problem action has already been taken to improve efficiency of water use through targeted investment. This investment had already resulted in an appreciable reduction in consumption in the last few months of 2011. It should in any case be remem-
bered that, although there is a slight deterioration, total water consumption still falls significantly below the indu-
stry benchmark for tissue paper, which allows for consumption of between 10 and 25 m per tonne of paper.
IMPACT OF EXTRACTION ON THE WATER BALANCE Quantity of water drawn in relation to the average capacity of the rivers involved
In order to evaluate the impact that the Sofidel Groupâ€™s activities have on certain important water sources, a study has recently
been conducted to quantify the total use of water in comparison to the capacity of the rivers from which water is extracted. The impact study was conducted by comparing the quantity of
water extracted with the average capacity of the water courses involved, and thereby calculating the percentage extracted com-
pared to average capacity. 0,015
The data show that the impact of extraction on the water balance
of the rivers covered by the study is very low, also taking into ac-
count the water extracted but then put back into the same bodies
THP, Omega, Werra
of water following purification treatment, as in the case of the Ebro and Werra rivers. The total volume of waste water resulting from production activity and di-
scharged into water courses by Group plants was 5.2 MmÂł. Waste water is
treated mainly using biological plants owned or managed by third parties.
3,00 Average specific emissions in water for the Sofidel Group (kg/tonne of paper) COD
BOD5 Suspended solids
0,97 1,50 0,16 0,21
Total quantity, destination and treatment of waste water
Sea (biologically purified)
River (biologically purified)
River (chemical-physical purification)
Public sewers 6,3%
12,8% 28,2% 37,1%
Total: 2,6 Mm
Total: 2,8 Mm
Total: 5,2 Mm3
Sofidel Integrated Report 2011
INITIATIVES TO PROTECT BIODIVERSITY In order to assess the impact of its activities on biodiversity, Sofidel has calculated the surface area of production sites which are close to areas of great natural beauty. From this analysis it has emerged that sites located at a distance of less than 3km from special areas of conservation (SACs) and special protection areas (SPAs) as defined by Directive 92/43/EC and Directive 2009/147/EC occupy in total a surface area of 2 million square metres. These sites did not generate significant impact on the biodiversity and protected habitats involved in 2011. Given the Group’s ever increasing commitment in the delicate area of protecting habitats and the biological diversity contained within them, the subsidiary Werra Papier GmbH, as part of an agreement signed with the countryside association “Thuringer Wald e. V. Dorfstr” and the “Thuringer Wald e. V. Dorfstr” Naturpark (country park), has also set up a project to protect the countryside and climate in the upper valley of the Werra river. The initiative involves specific work to promote both biodiversity and CO2 reduction, thanks to the creation of humus, as a long term curative measure over a five year period.
5.4 ENERGY AND CO2 EMISSIONS
he extreme volatility of the markets and the unexpected rise in prices in 2011 presented considerable challenges to an energy intensive company like Sofidel. The Group’s commitment in this direction has been demonstrated on several fronts: - in Germany and the UK purchases of gas and electricity have been made
through specialized traders who operate on a daily basis in the free market; - in Italy, as in past years, purchasing of energy and gas has been managed directly by the Tuscan Energy Consortium; - in France the Delipapier Nancy plant has continued to benefit from reduced electricity prices and, from 2012 on, LPC Roanne will bene-
fit from prices guaranteed by the NOME law (Nouvelle Organisation des Marches de l’Electricité). The end of year figures showed that the average price of electricity in the main European countries (Italy, Germany, the UK, Spain and Sweden) had increased on average by 15-20% compared to 2010, while the average price of gas had undergone a more significant increase, of between 20 and 25%.
ENERGY SUPPLIES IN ITALY In 2011 the average cost of electricity in Italy, including all the fixed charges and taxes, remained above the European average by about 37%; while for gas supplies the average cost exceeded the European average by 10%, except for Greece where the market has not been liberalized. Once again in 2011, the Italian companies within the Group offered to reduce their daily capacity for use of gas in the case of climate emergency in the first quarter of the year by adhering to the national call for Measures to Contain Natu-
ral Gas Consumption. Once again the service of Instant Interruptibility of Electricity Supply was maintained both for the paper mill and the converting plant. For the second time Delicarta and Soffass benefited from the Interconnector service, which allows selected industrial entities a share of funding for interconnection infrastructures with entities abroad. Thanks to the CTE Consortium, the Sofidel Group’s Italian paper mills also took part in the call by the Italian Regulatory Authority for Electricity and Gas, for proposals to obtain early benefits from the storage of gas for entities investing in new capacity, as laid down by Legislative Decree No. 130 of 13 August 2010. The revenue generated by this activity is estimated at just under €0.5 million just for 2011. With the merger of Papernet into Delicarta, it finally became possible to supply electricity to the converting plant directly from the Delicarta paper mill, thus benefiting from High Voltage (HV) tariffs, which are much more advantageous, reducing the energy cost by about 25%.
With regard to energy consumption, the substantial variance between the
data in absolute terms for 2010 and 2011 is explained by the increase in
the number of plants resulting from the acquisitions made by the Group.
Breakdown of energy resources consumed by the Sofidel Group Natural gas
Other fossil fuels
* Energy calculated using lower calorific powers 0,1% 0,4%
Specific energy consumption is increasing, in contrast with CO2 emissions, because the self production of electrici-
ty in the plants brought on line in 2011 in Delitissue and Imbalpaper involves higher fuel consumption compared to
purchasing from the national grid, but reduced emissions of CO2 due to increased efficiency.
Breakdown of natural gas usage in Sofidel Group plants Production processes and central heating
Combined generation of electricity and heat 13,7%
During 2011 the Group considerably improved its energy efficiency thanks
to the now well established work on raising environmental awareness car-
Sofidel Group investments in energy efficiency 2009
ried out in all plants.
Investments in increasing energy efficiency Investments in plants to produce energy from renewable sources
Investments in cogeneration plants € 817.518
In addition to continuous initiatives to optimize energy use, adopted by each company, measures have been
implemented to reduce consumption, above all in recently acquired plants: - in Comceh a new refinery has been
installed which has the capacity to significantly reduce electricity consumption;
Sofidel Integrated Report 2011
- in Sofidel UK the PM1 drives have been replaced with the latest model available. Extraordinary maintenance has been carried out on the wet
hood and a new condensation recovery system implemented for the two continuous paper machines - in Swedish Tissue the condensation
Methods of self production of electricity in the Sofidel Group
recovery plant of the two paper machines has been optimized and the heads of the PM3 polishing unit have been insulated.
From photovoltaic plants
From hydroelectric plants
Percentage of total electricity consumption
In the renewables sector, in addition to the definitive start up of the Fibro-
cellulosa hydroelectric plant, benefit has been drawn from the full operation of the three photovoltaic plants installed in Italy, which in one year have produced 2 GWh of electricity. The activities described, together with the contribution provided by the new cogeneration plant which came into
operation in Delitissue at the end of 2010, have enabled the Group to significantly reduce its specific CO2 emissions, which have gone down from 801kg/t in 2010 to 773 kg/t in 2011, in line with the target agreed as part of the Climate Savers project.
REDUCTION OF CO2 EMISSIONS AND CLIMATE SAVERS In December 2008 Sofidel joined the WWF international Climate Savers project, which brings together big companies which are leaders in their own sectors to implement ambitious programmes to reduce carbon dioxide emissions. Sofidelâ€™s target is to reduce its direct emissions of carbon dioxide by 11% by 2012 and by 26% by 2020 compared to levels in 2007. THE RESULTS OF THE CLIMATE SAVERS PROJECT (CO2 emitted by use of fuels at production sites and consumption of electricity from the national grid) TOTAL EMISSIONS CO2(t)* TOTAL EMISSIONS CO2(t) CARBON INTENSITY (kg CO2/t)* CARBON INTENSITY (kg CO2/t)** % reduction in CARBON INTENSITY* compared to 2007 % reduction in CARBON INTENSITY** compared to 2007 * companies present in 2007, reference year for the Climate Savers agreement
** companies in the Group in the year of reference
The Emissions Trading mechanism 2013 will signal the start of the third phase of the Emissions Trading mechanism in Europe, on the basis of which community members will no longer allocate their annual share of allowances (quota) free of charge to companies but will sell it directly on the market. Some industrial sectors, including the paper industry, will however continue to benefit from a percentage of free quota, aimed at protecting those busi-
reducing CO2 emissions. In 2011 Sofidel recorded a positive balance in terms of emissions. However, the unused allocations will not be used in speculative transactions designed to take advantage of variations in the prices of the quotas, but will be used to reduce the risk of under allocation in the next phase of Emissions Trading (2013-2020).
nesses located in Europe which, faced with increased costs resulting from the Emissions Trading mechanism, might transfer their production to non EU countries (carbon leakage). The calculation of allocation free of charge under the community mechanism is essentially based on the amount of paper produced. This choice of criteria has certainly not favoured plants which, using cogeneration, self produce the energy which they need, significantly
5.5 OTHER EMISSIONS
ther significant emissions resulting from productive activity are nitrogen oxides (NOx). Emissions of other greenhouse gases or gases which are hazardous for the environment, such as CFCs, are not significant, being outside the normal activities of the Group.
Average specific emissions of nitrogen oxides (Nox) from Sofidel Group plants
5.6 WASTE Production of waste by Group Sofidel plants
Waste disposed of (thousands of tonnes)
Kg of waste/tonne of paper produced
157 Non hazardous waste Hazardous waste
he waste produced by paper production consists mainly of sludge, which is a waste product from production which uses
pulp as a raw material. This type of waste is normally made use of in various types of recovery operation, such as production of bricks or tiles or environmental resto-
Sofidel UK data and LPC Duffel data not available.
ration of mining areas. Hazardous waste is instead traceable to normal industrial plant operation, including neon tubes, waste oils, lead batteries etc.
Sofidel Integrated Report 2011
Percentage breakdown of non hazardous waste produced by the Sofidel Group by type Sludge (used for production of bricks and tiles,compost, agricultural use and landfill
Recycled materials (metal, plastic, wood and paper)
Pulp waste (used for production of energy from heat)
5,2% 67,8% 75,1%
In each Sofidel Group, plant waste is managed in line with strict procedures, with the aim of increasing the subdivision of material by standard category and increasing the amount recycled or reused.
The operators responsible for transportation and processing of waste are, in addition, subjected to frequent checks on their work, both inside and outside the plants. Following this monitoring it has been possible to con-
firm that during 2011 there were no significant spills of polluting substances into the soil or into water courses or bodies.
5.7 ECOLOGICAL PRODUCTS
n 2011, the International Year of the Forest, the Sofidel Group launched for the first time in France two product lines under the Le Trèfle (toilet paper) and Sopalin (kitchen paper) brand names, made with FSC certified pulp. Although in some markets the FSC mark is widely used, as for example in the UK, the initiative nevertheless represents an innovation, given that for the first time the Sofidel Group has decided to use forestry certification as a marketing tool for brand retailing, and what’s more in such an important market as the French one. This represents both a significant development for the company’s marketing strategy, and a valid test in terms of confirming
the response of consumers in a market context where FSC certification is not particularly widespread. More generally it is important to remember that sourcing of the raw material used by Sofidel to make its products, already carries significant guarantees in terms of sustainable forest management, and that the number of clients, above all in the “private label” channel, supplied with products displaying chain of forest custody certification (PEFC, FSC) is increasing all the time. With a view to constantly achieving production which respects environmental and consumer health and safety, Sofidel displays on the packaging of its
products all the essential details for the final user in terms of the source, content, use and correct disposal method for the packaging. In particular the Sofidel Guarantee, with which the company commits to meet product quality requirements, contains information on the method of disposal for the cardboard roll, for rolled products, and the plastic packaging.
RISK MANAGEMENT 1. MAIN RISKS AND TO WHICH THE GROUP IS EXPOSED AND FINANCIAL AND NON FINANCIAL RISK MANAGEMENT POLICIES
2011 Integrated Report 44
Sofidel Integrated Report 2011
1. MAIN RISKS AND UNCERTAINTIES TO WHICH THE GROUP IS EXPOSED AND FINANCIAL AND NON FINANCIAL RISK MANAGEMENT POLICIES 1.1 RISK MANAGEMENT POLICIES
elow we highlight the risk factors or uncertainties which have the potential to significantly affect the Group’s business and
the policies put in place by the Group to limit them. Risks for the company are constantly identified, monitored and managed for all the companies in the Group by a specific corporate unit
which is responsible for this area. The analysis is broken down as follows: economic and industrial risks; strategic risks; operating risks; financial risks and other risks.
ECONOMIC AND INDUSTRIAL RISKS The economic and financial situation and wealth of the Group are influenced above allby the various factors which affect the macro and microeconomic performance of the countries in which the Group operates, including the growth in GDP; the level of confidence among consumers and companies; the trend in interest rates; the cost of raw materials and energy and the rate of unemployment and thereby the trend in household consumption. The deteriorating macro and microeconomic situation analysed above has therefore had a negative impact on Group results in the last two years. Against this background it should however be emphasised that the countries in which the Group has most of its
turnover are also historically the major economic powers on the continent (Germany, France, the UK and Italy). This significantly reduces the risk, also given the measures taken in these countries to rebuild economic and social stability and encourage a recovery in consumption.
More specifically, the European consumer market, in which the Group primarily operates, has the characteristics described in the paragraph “Our lines of business”. In this context the Group: - for the market in its own brands, offers innovative products, with an
excellent quality/quantity-price ratio, accompanied by targeted marketing operations; - for the Private Label market, uses product differentiation as described above, giving priority to the “premium” category over other areas, including the use of well known types of certification for food related products (BRC®) and raw materials (FSC©, PEFC™ and Ecolabel®), which are increasingly in demand from retailers; - for the Away from Home market, offers a competitive price and uses product differentiation, proposing innovative products.
STRATEGIC RISKS â€œStrategicâ€? risks include factors which influence the opportunities and threats arising from the competitive system, such as: product life cycle, leadership (cost or differentiation), organizational structure, resource planning and allocation, new acquisitions, strategic alliances, know-how, patents, trademarks, etc.
sible broaden the competitive advantages acquired over the years. The levers used are: - internationalization; - localization of production plants alongside reference markets; - modern high performance plants; - own brands; - sustainability.
In order to confront these risks the Group has put in place adequate strategies to consolidate and where pos-
In order to implement, manage and maximise the benefits of the strategy adopted, since 2008 consistent work
The strategic choices made and the new organizational culture, together with the Groupâ€™s traditional propensity towards innovation, have enabled us to face up to the present competitive environment with the appropriate tools.
Operating risks associated with sourcing and procurement
- ecologically sustainable management of forest resources;
Operating risks associated with production
In order to reduce to a minimum all the related risks, the Group has for some years adopted a purchasing plan which is integrated with production, starting from the annual budget set at individual plant level. In practice, the main items purchased are pulp and energy.
During 2011, almost all purchases (99.3%) were of pulp from certified sources or sources inspected under the main certification schemes. Exchange rate risk is dealt with in the section on financial risks.
has been carried out to equip the Group with a more integrated organizational structure which facilitates the pursuit of predefined strategic objectives.
OPERATING RISKS Below we describe the management policies for operating risks, subdivided into: - operating risks associated with sourcing and procurement; - operating risks associated with production; - operating risks associated with distribution logistics; - operating risks associated with employee relations; - operating risks associated with compliance with environmental and health and safety legislation.
Pulp The operating results for the Group are influenced by variations in the price of pulp as well as the euro/dollar exchange rate, given that the reference price for this raw material is quoted in US dollars. Moreover, the production cycle is vulnerable to delays due to shortages or delays in delivery of raw material. In this area the Group takes appropriate measures: - through long term supply contracts; - selection of suppliers based on guarantees in terms of quantity and timeliness of delivery; - fibre quality; 46
Energy The paper making process requires significant amounts of energy, mainly purchased in the form of electricity and natural gas. The Group has a specific corporate function responsible for this which works to: - reduce consumption; - increase use of renewable energy sources; - monitor the electricity and gas markets in order to limit purchasing costs: - select suppliers on the basis of guarantees offered in terms of continuity of supply, diversifying suppliers by country.
The complexity of the production process and the production plant exposes the Group to the consequent risks. The policy of planned maintenance adopted over the years and constant technological renewal of the plant have allowed the risk of machinery breakdowns or downtime to be reduced. As for the risks associated with reductions in plant efficiency and performance, a specific corporate function monitors to ensure continuous alignment with the standards set by the Group.
Operating risks associated with distribution logistics The Group, being extended on an international scale, is exposed to the risks relating to large scale operations. The growth in size which has occurred over the years, aimed at bringing production closer to the consumer, has without a doubt reduced the impact of this risk.
Sofidel Integrated Report 2011
In addition we adopt: - careful selection of transport providers, choosing those which provide the best guarantees in terms of continuity and timeliness of delivery; - diversification of suppliers to avoid any risk of dependence; - careful logistics planning coordinated by a specific corporate function, including the implementation of specific software to reduce inefficiencies to a minimum; - continuous monitoring of the performance of the various production sites;
Operating risks associated with employee relations and compliance with environmental and health and safety legislation Please refer to the relevant sections of the report. (See paragraph: Industrial Relations, Health and Safety and Environmental Resources).
FINANCIAL RISKS The Sofidel Group, as part of its ordinary operations, is exposed to the following financial risks: - exchange rate risk; - interest rate risk; - credit risk; - liquidity risk. The general objective of the Group’s financial risk management is above all to address the unpredictability of the financial markets, aiming to minimize any possible negative effects on the financial performance of the Group. These financial risks are addressed, in general, by: - definition, at a corporate level, of guidelines on which management must be based; - identification of financial instruments to cover risk which are appropriate for the specific operating environment; - exclusion of any speculative transactions involving financial instruments such as futures contracts and derivatives. Below we describe the management policies for the aforementioned risks, appropriately reclassified.
Exchange rate risk Exchange rate risk derives from the fact that some of the Sofidel Group’s business is conducted in currencies other than the euro (mainly USD and GBP). These risks may be divided into three different categories: - economic risk, arising from costs and revenues denominated in foreign currency which may be influenced by fluctuations in the exchange rate with a consequent
impact on trade margins; - transaction risk, represented by payables and receivables, of both a trade and financial nature, which are denominated in foreign currency and may be affected by changes in the exchange rate used, with an effect on our financial results; - translation risk, relating to the effect that fluctuations in exchange rates may have on the consolidated profit and net assets of the parent company, due to the fact that the financial statements of some of its subsidiaries are drawn up in currencies other than the euro and subsequently converted into euro. The Group aims to minimise economic and transaction risks by setting up appropriate financial instruments to cover them. However, translation risk is not covered. In general, the Sofidel Group centralizes management of exchange rate risk, offsetting negative and positive exposures deriving from its various business activities and using the market to cover the remaining exposure, maximizing the benefits to be had from netting. At the end of the financial year, exchange rate risks were mainly covered by foreign currency futures (forward) contracts.
Interest rate risk Oscillations in interest rates affect the Group’s cash flow and the level of net financial charges. The Group’s financial policy is to regularly assess its exposure to the risk of variations in interest rates and to manage this using instruments designed to cover such risk, giving preference
to arrangements which allow us to benefit in the short term from the lower cost of variable rates compared to fixed rates, with a consequent saving in financial charges, taking account however of possible future rises in interest rates.
Credit risk Credit risk is the Group’s exposure to potential losses arising from non-fulfilment of the obligations assumed by trade and financial counterparts. This risk arises mainly from the possibility of a deterioration in the economic/financial situation of the counterpart or, in the extreme case, default by them. The maximum theoretical exposure to credit risk for the Group is represented by the accounting value of trade receivables. The Group takes action to counter this risk by: - taking out insurance policies with the top companies operating at an international level and diversifying insurance companies between the various companies in the Group; - respect for insurance conditions; - provisions for early payment for areas not covered by insurance; - a policy of reducing concentrations of credit to a minimum. As concerns the credit risk relating to the receivables included in “Net financial indebtedness” it is noted that the management of Group liquidity is based on prudential criteria and consists mainly of money market operations, investing any temporary cash surpluses arising during the year, where these are expected to be reabsorbed in a short period of time. 47
In order to limit the risk of non-fulfilment of the obligations assumed by counterparts, company deposits are made with leading banks with a high credit rating and lending capacity. Moreover, deposits are only made for periods of less than three months. The Group, with the aim of minimizing credit risk, also follows a policy of diversifying its use of liquidity and the allocation of credit positions between the various banking counterparts. Thus there are no significant positions with individual counterparts.
Liquidity risk In the case of liquidity risk the Group becomes unable to meet its payment commitments due to difficulty in obtaining funds (funding liquidity risk) or in liquidating its assets quickly on the market (asset liquidity risk). Accordingly the Group - through careful treasury planning - tries to ensure an adequate level of liquidity at all times, minimizing the relevant opportunity cost and maintaining equilibrium in terms of the duration and make up of its debts.
Moreover, through the credit system, the Group has access to a wide range of sources of finance - from short to medium to long term - at competitive costs, in spite of the external picture, which is characterized by rigidity. There are no additional financial or trade payables other than those shown in the balance sheet, which commit the Group to making payments on the basis of specific agreements.
OTHER RISKS Finally we analyse the other risks which may potentially have an impact on the Group’s profits: - reporting risk; - risks connected with the use of computer equipment; - legal/compliance/reputation risks.
Reporting risk relates to the reliability of the information provided as part of the internal and external reporting process. To deal with this risk, the Group has implemented in the past, and is continuing to implement at individual companies, administrative, accounting and management procedures which help to reduce the risk to a minimum. In particular, the work in progress aims to make the economic and financial planning process more integrated and efficient and to enable an increase in the quality of monitoring for all company sectors. These activities are coordinated by the central corporate offices and supported by functional outposts present in all the companies. The operating instruments used include: - SAP; - Bw sem; - Tagetik. Certification of the financial statements by a leading auditing company represents an additional tool for verification of the reporting process.
ter equipment relate to the protection and integrity of computer data. Implementation of the SAP management software, administered on line at a centralized level by the corporate office - together with “business continuity”, “disaster recovery” and “intrusion prevention” systems- represents an important tool to protect against the risks connected with the use of computer equipment as well as for data protection. Precise and well defined separation of duties, also reflected in the structure of the information system itself, using preventative controls such as passwords and authorization, also enables the risk of internal fraud to be minimized as well as ensuring full traceability of access.
Risks connected to the use of computer equipment
The risks linked to the use of compu-
Legal/compliance/reputation risks relate
to the possibility of incurring penalties and/or financial losses as a result of infringements of laws, secondary legislation, rules, company standards and codes of conduct. The Group sees its ethical standards as a driver for growth and development and operates at all levels to limit these risks which cut across the various corporate processes. It does this through: - the corporate units responsible for the various aspects, which perform management and control functions; - proactive management of intangible assets, aimed at the creation and protection of our credibility and the maintenance of the relationship of trust and partnership with all the Group’s stakeholders; - the integration of sustainability in the business as a strategic line of development.
Sofidel Integrated Report 2011
During 2011 no significant environmental penalties have been recorded. Moreover, during the same period the Group has not been involved in any form of legal action relating
to unfair competition or monopolistic market practices, nor has it ever been subject to review by the antitrust authorities operating in any of the countries in which its companies are based. At the same time, no cases
of non compliance with regulations or codes of conduct relating to the advertising, marketing or sponsoring of its products have been identified.
â€œThe report of the board of auditors and the certification report attached after the chapter containing the consolidated financial statements as of
31 December 2011 refer to those financial statements and to the report on operations for the consolidated financial statements as of 31 Decem-
ber 2011, documents approved by the Shareholdersâ€™ Meeting held on 15 March 2012 and filed at the head office of the Group.
Layouts of the financial statements and notes 2011
2011 Integrated Report 50
1. Layouts of the consolidated financial statements
2. Notes to the Consolidated Financial Statements
3. Board of Auditorâ€™s Report
4. Auditorsâ€™ Report
Sofidel Integrated Report 2011
1. Layouts of the consolidatedBilancio2011 Integrato financial statements 1.1 Consolidated Balance Sheet Assets (amounts in thousands of EUR) A) Subscribed capital unpaid (including already called-up) B) Fixed assets I. Intangible fixed assets 1) Start-up and expansion costs 2) Cost of research, development and advertising 3) Patents and know-how 4) Franchise, licences, trademarks and similar rights 5) Goodwill 6) Work in progress and advance payments 7) Other
II. Tangible fixed assets 1) Land and buildings 2) Plant and equipment 3) Fixtures and fittings, tools and other equipment 4) Other assets 5) Work in progress and advance payments III. Financial fixed assets 1) Equity investments in: d) other companies 2) Receivables d) due from others - within 12 months - over 12 months Total fixed assets C) Current assets I. Inventories 1) Raw materials and consumables 4) Finished goods and goods for resale 5) Advances
II. Receivables 1) due from customers - within 12 months 4-bis) Tax receivables - within 12 months 4-ter) Prepaid taxes - within 12 months 5) Due from others - within 12 months
III. Short-term investments 6) Other securities IV. Cash and cash equivalents 1) Banks and postal current accounts 2) Cheques 3) Cash on hand Total current assets D) Accrued income and prepaid expenses - miscellaneous Total assets
1.474 160 99 44.459 7.607 871 1.492 56.162
1.112 65 37 41.178 5.064 656 1.873 49.985
356.165 574.479 1.609 15.192 20.438 967.883
355.047 581.029 1.580 15.662 14.963 968.281
21 243 264 978 1.025.023
34 275 309 1.146 1.019.412
138.590 102.930 3.013 244.533
125.738 116.578 588 242.904
9.390 9.390 320.081
11.164 11.164 316.217
75.020 328 75.348 639.962
50.495 6 91 50.592 613.744
6.148 6.148 1.671.133
3.697 3.697 1.636.853
Liabilities & Shareholders’ Equity (amounts in thousands of EUR) A) Shareholders’ equity I. Share capital III. Revaluation reserves IV. Legal reserve VII. Other reserves Extraordinary reserve Exchange rate gains reserve Reg. subsidy Law no. 10/91 (46/89) Reg. EEC subsidy 2088 6% fund purs. to art. 15, Law no. 130/1983 Reg. sub. purs. to art. 111 of Law no. 10/91 Consolidation reserve Undivided profits Exchange-rate differences
IX. Profit for the year Total Group shareholders’ equity Third party capital Profit attributable to minority interest Total minority shareholders’ equity Total Shareholders’ equity B) Provisions for risks and charges 1) Pensions and similar obligations 2) Taxes, incl. deferred taxes 3) Other Total provisions for risks and charges C) Employee severance fund D) Payables 1) Bonds - within 12 months - over 12 months 4) Payables due to banks - within 12 months - over 12 months 6) Advances - within 12 months 7) Trade payables - within 12 months - over 12 months 12) Income taxes payable - within 12 months 13) Due to social security institutions - within 12 months 14) Other payables - within 12 months - over 12 months Total payables E) Accrued liabilities and deferred income - miscellaneous Total liabilities and shareholders’ equity
31/12/2010 33.000 43.604 6.600
31/12/2011 33.000 46.600 6.600
117.182 54 28 4 10 936 1.127 130.457 (8.179) 241.619 65.964 390.786 4.186 1.174 5.360 396.146
217.573 497 28 4 10 936 95.977 (9.140) 305.885 35.691 427.776 5.765 350 6.115 433.891
2.473 33.809 4.765 41.047 13.600
2.670 28.647 2.973 34.290 13.659
1.550 2.250 3.800
1.250 1.000 2.250
433.567 387.920 821.487
256.378 508.483 764.861
270.011 7.058 277.069
258.132 13.785 271.917
20.517 41 20.558 1.150.733
19.870 41 19.911 1.085.411
69.606 69.606 1.671.133
69.602 69.602 1.636.853
Sofidel Integrated Report 2011
1.2 Consolidated Income Statement (amounts in thousands of EUR)) A) Valore della produzione 1) Revenues from sales and services 2) Change in inventories of work in progress, semi-finished and finished products 4) Own work capitalised 5) Other revenues and income: - miscellaneous Total value of production B) Cost of production 6) Raw materials, consumables and goods for resale 7) Services 8) Use of third-party assets 9) Personnel costs a) Wages and salaries b) Social security costs c) Employee severance fund d) Pensions and similar obligations e) Other costs
10) Amortisation, depreciation and write-downs a) Amortisation of intangible fixed assets b) Depreciation of tangible fixed assets d) Write-downs of receivables in current assets and of cash and cash equivalents 11) Changes in inventories of raw materials, consumables and goods for resale 12) Provisions for risks 13) Other provisions 14) Other operating expenses Total cost of production Difference between value and cost of production (A - B) C) Financial income and charges 15) Income from equity investments: - other 16) Other financial income: d) other income: - other 17) Interest and other financial charges: - other 17-bis) Foreign exchange gains and losses: Total financial income and charges E) Extraordinary income and charges 20) Income: - miscellaneous 21) Charges: - miscellaneous Total extraordinary items Profit before tax (A-BÂąCÂąDÂąE) 22) Income tax expense (current, deferred and prepaid) a) Current tax payable b) Deferred (prepaid) tax 23) Profit (loss) for the year Attributable to: Minority interest Group
1.453.333 9.091 -
1.455.632 11.500 12
20.831 20.831 1.483.255
23.826 23.826 1.490.970
669.226 412.296 19.465
629.488 449.518 21.765
133.783 35.405 2.973 2.660 8.069 182.890
134.597 38.476 3.273 572 9.158 186.076
11.413 81.237 1.468 94.118 (27.201) 605 182 14.305 1.365.886 117.369
10.382 87.695 912 98.989 4.890 595 189 17.107 1.408.617 82.353
2.096 2.096 5.054
1.941 1.941 1.941
21.609 21.609 (859) (17.414)
26.234 26.234 (64) (24.357)
7.632 7.632 (27) 99.928
4.128 4.128 444 58.440
25.697 7.093 32.790 67.138
25.311 (2.912) 22.399 36.041
2. Notes to the Consolidated Financial Statements Applied regulations and accounting principles The financial statements were drawn up in compliance with the provisions of Art.
32, paragraph 1 of Legislative Decree no. 127 of 9 April 1991, and of Art. 2423
et seq. of the Italian Civil Code, as interpreted by national accounting principles.
2423-ter, paragraph five, of the Italian Civil Code, while omitting the specification of items which do not involve any value for both years; the option – provided for by Article 2423-ter, paragraph two, of the Italian Civil Code – of grouping or subdividing the items pursuant to the above-mentioned norms was not utilised, and it was not deemed necessary to proceed with adapting existing items or adding new items, in accordance with paragraphs 3 and 4 of the same article and without prejudice to the reporting of the shareholders’ equity and net income of third parties within the consolidated
balance sheet and income statement. The currency used is the Euro and all amounts are rounded to nearest thousand of Euro, except where otherwise specified, pursuant to Art. 29, paragraph 6 of Legislative Decree no. 127 of 9 April 1991. Reporting data in thousands of Euro may imply minor differences in the various statements, which however do not affect the significance of this document. The reported amounts are comparable to those of the previous year and, where necessary, have been opportunely reclassified.
Reporting data The structure and content of the consolidated balance sheet and income statement comply with the provisions set out in Art. 2424 and 2425 of the Italian Civil Code – which have been already adopted by the Parent Company and by Italian companies of the Group – since they are considered the most suitable to meet the requirements for a clear, true and fair representation of the economic and financial position of the Group. The amount relative to the preceding year has been specified for each item of the balance sheet and the income statement, in accordance with Article
Contents of the consolidated financial statements The consolidated financial statements include, in accordance with Article 26, paragraphs 1 and 2, of Legislative Decree no. 127 of 9 April 1991, the values booked within the financial statements of the year of the Parent Company and of Italian and foreign companies included within the scope
of consolidation, which are those. - where the Parent Company can rely on sufficient votes to play a dominant role; - on which it can – by virtue of agreements or special statutory provisions, where permitted by applicable laws – play a dominant role;
- of which – also due to agreements with other shareholders – it alone controls the majority of voting rights exercisable during ordinary shareholders’ meetings, also considering the votes pertaining to subsidiaries, trust companies or third parties.
General drafting criteria and consolidation principles Reference has been made to the financial statements approved by the administrative bodies of the companies included in the scope of consolidation or, if this was not possible, those prepared for approval by the relevant corporate bodies. The financial statements of all companies included within the scope of con-
solidation summarise the transactions carried out between 1 January and 31 December 2011. Accordingly, these consolidated financial statements include the transactions of the Group between 1 January and 31 December 2011. Where necessary, the said financial statements have been appropriately adju-
sted for consistency with the accounting standards and valuation criteria of the “Group”, which have been adopted by the Parent Company and the Italian companies of the Group for the preparation of their financial statements, i.e. those allowed pursuant to Art. 2423 et seq. of the Italian Civil Code.
the costs and revenues of companies included within the scope of consolidation, are included on a line-byline basis, regardless of the percentage interest held; b) the book value of the investments held in these companies is elimina-
ted against the corresponding portion of shareholders’ equity. Any related negative difference that is not attributable to forecasts of unfavourable economic results for these companies, is classified as a consolidation reserve within consolidated
Consolidation method The financial statements of the companies included within the scope of consolidation have all been consolidated on a line-by-line basis. This method of consolidation implies the following adjustments: a) the assets and liabilities, as well as 54
Sofidel Integrated Report 2011
shareholders’ equity. On the other hand, any negative difference attributable to forecasts of unfavourable economic results for the investee companies in the financial years subsequent to their acquisition is classified among provisions for risks and charges; such amounts are then booked to the income statement if such losses are actually incurred over a period not exceeding five years. If there is a positive difference, the portion that cannot be allocated to subsidiaries’ assets is reported under item “Goodwill” and is amortised over five years; c) Shareholders’ equity and the result of the year pertaining to minority interests are reported separately. More specifically, the shareholders’ equity attributable to minority interest is stated in a separate item of the consolidated balance sheet, while the profit (loss) for the year attributable to minority interest is booked to the income statement; d) unrealised profits and losses resulting from transactions between Group companies – excluding contract work in progress – are eliminated together with all receivables, payables, costs, revenues and effects of all transactions between the said companies, even if they are recorded in the memorandum accounts; e) any distributed dividend is eliminated from the income statement and booked to consolidated shareholders’ equity reserves; the same ap-
plies to cover losses among those companies included within the scope of consolidation and to the related write-downs; f) any adjustments and provisions made exclusively for tax purposes, if present, are eliminated unless they are insignificant for the purposes of the information to be provided in this document; g) lastly, deferred tax effects – receivable and payable – resulting from the above adjustments are recognised among the income statement, with offsetting entry under provisions for risks and charges. More specifically, the main adjustments referred to: - the elimination of purchase/sale of cellulose and/or tissue paper reels and/or finished products between Group companies, as well as of the related credit/debit ratios; - the elimination of costs/revenues arising from other commercial transactions and financial relations between Group companies, as well as of the related amounts receivable /payable; - the elimination of financial relations between Group companies reported in their memorandum accounts; - the elimination of intragroup dividends; - the elimination of economic and financial effects resulting from the sale of tangible and intangible assets between Group companies; - the elimination of profits and losses
in inventories, due to the sale of cellulose and/or tissue paper reels and/ or finished products between Group companies; - the adjustment of amortisation/depreciation of some foreign companies to adjust them to those adopted by the Group; - the adjustment of the balance sheet and income statement accounts for the implementation of the substance over form principle to the recognition of leasing and lease-back transactions of Italian companies, as well as to the recognition of the transfer of a leasing agreement by Italian companies; - the recognition of the negative goodwill on consolidation in the “consolidation reserve”, for the consolidation of some equity investments; - the recognition of the positive goodwill on consolidation under the item “goodwill” that emerges from the elimination of newly acquired equity investments with the related shareholders’ equity; - the elimination of tax implications in the financial statements of some foreign companies. The foregoing adjustments resulted in the recognition of deferred and/or prepaid taxes, which are better detailed in the section of these notes about income statement taxes. No equity investments have been consolidated on a proportional basis or valued using the shareholders’ equity method.
Translation of financial statements in foreign currency As in the past, the translation into euro of financial statements originally denominated in foreign currency was carried out using the year-end exchange rates for balance sheet items and the average exchange rates for the year for the income statement. The related shareholders’ equity items were tranCurrency PLN (Zloty Polonia) GBP (Sterlina G.B.) TRY (Lira Turchia) RON (Leu Romania) Kuna (Croazia)
slated using historical exchange rates. Any differences resulting from translation of shareholders’ equity at historical exchange rates as compared to year-end exchange rates, as well as the differences resulting from the application of different exchange rates to balance sheet and income statement
Year ended 31/12/2010 Average exchange rate Closing exchange rate 3,9947 3,9750 0,8578 0,8608 1,9966 2,0694 4,2122 4,2620 7,2891 7,3830
Specifically, the financial statement values of the Swedish company (“Swedish Tissue A.b.”) and the Indian
company (“Styx Back Office Services Private L.t.d.”) are drawn up with the Euro currency and with the GBP cur-
items were booked to the consolidated shareholders’ equity under “Translation differences”. The exchange rates applied for converting into Euro the financial statements of subsidiaries denominated in currencies other than the Euro are reported below: Year ended 31/12/2011 Average exchange rate Closing exchange rate 4,1187 4,4580 0,8678 0,8353 2,3351 2,4432 4,2386 4,3233 7,4384 7,5370
Information on the scope of consolidation COMPANY NAME
Share capital (euro/000)
100% 100% 59,18% 40,82% 100% 99,96% 0,03% 0,01% 100% 100% 100% 100% 63,85% 100% 100% 100% 100% 99,76% 100% 100% 100% 100% 100% 94,00% 94,00% 100% 100% 100% 100% 100%
Sofidel S.p.a. Sofidel S.p.a. Sofidel S.p.a. Delicarta S.p.a. Sofidel S.p.a. Sofidel S.p.a. Delicarta S.p.a. Soffass S.p.a. Sofidel S.p.a. Sofidel S.p.a. Sofidel S.p.a. Sofidel S.p.a. Sofidel S.p.a. Sofidel S.p.a. Sofidel S.p.a. Sofidel S.p.a. Soffass S.p.a. Delitissue Sp.z.o.o. Delicarta S.p.a. Delicarta S.p.a. Delipapier S.a.s. Werra Papier Holding G.m.b.H. Werra Papier Holding G.m.b.H. Werra Papier Holding G.m.b.H. Werra Papier Holding G.m.b.H. Sofidel UK L.t.d. Sofidel UK L.t.d. Sofidel UK L.t.d. Sofidel UK L.t.d. Swedish Tissue A.b.
Parent company: Sofidel S.p.a.
Subsidiaries consolidated with the line by line method: COMPANY NAME
Porcari (Italy) Porcari (Italy)
Share capital (euro/000) 32.000 32.000
Soffass S.p.a. Delicarta S.p.a. Delipapier S.a.s.
Swansea, Wales (U.K.) Monfalcone (Italy) Tudela (Spain) Tudela (Spagna) Wernshausen (Germany) Katerini (Greece) Zagreb (Croatia) Leicester (U.K.) Ciechanòw (Poland) Romania Cologne (Germany) Swansea, Wales (U.K.) Rouanne (France) Wernshausen (Germany)) Wernshausen (Germany)) Wernshausen (Germania) Wernshausen (Germania) Leicester (U.K.) Leicester (U.K.) Gurgaon (India) Kisa (Sweden) Duffel (Belgium)
EURO GBP EURO EURO EURO EURO KUNA GBP PLN RON EURO GBP EURO EURO EURO EURO EURO GBP GBP INR SEK EURO
2.000 42.792 4.493 18.000 26 3.860 69 306 40.326 12.275 25 60 2.050 511 26 30 25 72 61 2 10 62
Delipapier G.m.b.H. Sofidel Kagit Intertissue L.t.d. Cartiera di Monfalcone S.p.a. Ibertissue S.l.u. Ibertissue S.l.u. Werra Papier Holding G.m.b.H. (*) Papyros Paper Mill S.a. Sofidel Papir Doo Sofidel UK L.t.d. Delitissue Sp.z.o.o. Comceh S.A. Delisoft G.m.b.H. Imbalpaper UK L.t.d. LPC Produits Papier S.a.s. Werra Papier Wernshausen G.m.b.H. Omega Papier Wernshausen G.m.b.H. Thuringer Hygiene Papier G.m.b.H. T.H.P. Logistik G.m.b.H. LPC U.K. L.t.d. Kamns Paper Mill L.t.d. Styx Back Office Services Private L.t.d. Swedish Tissue A.b. LPC Belgium N.v.
(*) The “Werra Papier Holding G.m.b.H.” owns treasury shares equal to 30% of its own share capital.
The companies included within the scope of consolidation are directly or indirectly controlled by the Parent Company, pursuant to Art. 2359, paragraph 1, no. 1 of the Italian Civil Code.
The option provided by Art. 39, paragraph 4 of Legislative Decree No. 127 of 9 April 1991 was not applied given that the group’s situation was not applicable. According to this option, it
is possible to omit companies included within the scope of consolidation whose inclusion may cause serious damages to consolidated companies.
Group corporate structure
Wearra Holding GER *
Cartiera di Fibrocellulosa Monfalcone IT IT
Sofidel Kagit TR **
Imbal Paper UK
Kamns Paper Mill UK
Swedish Tissue SE
STYX Back Office
LPC Produits Papier FR
Werra Papier DE
Omega Papier DE
Sofidel Papir HR
30% Own Shares
** Sofidel Kagit Turkey Sofidel 99,96% Delicarta 0,03% Soffass 0,01%
THP Log DE
Sofidel Integrated Report 2011
Changes in the scope of consolidation In the financial period under review, following the logic of the consolidation of investments made in the past, some extraordinary transactions were completed in view of a rationalisation of the Group corporate structure. In particular, the following transactions were carried out, broken down by country:
Italy - merger through incorporation of “Imbalpaper S.p.a.” in the “Papernet S.p.a” subsidiary and of the latter in “Delicarta S.p.a.”
U.K. - transfer of the companies managed by the “L.P.C. U.K. L.t.d” and “Kamns Paper Mill L.t.d.” companies to “L.P.C. Group L.t.d.” that subsequently changed its name in “Sofidel U.K. L.t.d.”; the “L.P.C. U.K. L.t.d” and “Kamns Paper Mill L.t.d.” companies will be put into liquidation waiting for their final discontinuance.
S.a.s.”, later merged by the Parent Company itself. - sale of the shareholding in “L.P.C. Holding France S.a.” to “Delipapier S.a.s.”. - merger through incorporation of “LPC Produits Papier S.a.s.” in “L.P.C. Holding France S.a.” that later on took the name of the merged company (“L.P.C. Produits Papier S.a.s.”).
France - sale of the shareholding in “LPC Properties France S.c.i.” to “Delipapier
Restrictions to the availability of equity investments in subsidiaries The project financing limited recourse operation which was implemented for the construction of the Ameburg Plant of “Delipapier G.m.b.H.”, stipulated with “Unicredit Bank AG” and “Intesa San Paolo S.p.a. – Frankfurt Branch”, provide for the pledging of shares of the company in favour of financing banks that will therefore re-
tain the right to receive potential disbursements of net income or capital in general, but will not receive voting rights that will be provided to the Parent Company “Sofidel S.p.a.”. In accordance with the stipulated contract, these banks will also receive all the privileges relative to receivables deriving from company activities as well
as those deriving from the warehouse, the buildings, the plants and generally any good present within the facility. No restrictions exist with regard to the availability of other equity investments, nor option rights or other liens in favour of third parties.
The following should also be noted: – The accounting standards and the valuation criteria adopted are the same used for the preparation of the consolidated financial statements for the previous year. – No derogation option pursuant to
Art. 29, paragraphs 4 and 5 of Legislative Decree no. 127 of 9 April 1991 was exercised. The most important valuation criteria adopted for the preparation of the financial statements are described in detail below.
– there is an impairment loss, the asset is written down accordingly; if, in subsequent years, the reasons for the write-down no longer apply, the asset is restated at its original value, adjusted by depreciation that has not been previously applied due to the writedown.
cific law provisions. The costs recorded are shown under balance sheet assets, net of any related depreciation, applied on a straight-line basis over the theoretical useful life of the assets, which is originally estimated and periodically reviewed. If – irrespective of the depreciation that has been previously recognised – there is an impairment loss, the asset is written down accordingly; if, in subsequent years, the reasons for the write-down no longer apply, the asset is restated at its original value, adjusted by depreciation that has not been previously applied due to the writedown.
Valuation criteria The valuation of recorded items was carried out in compliance with general criteria of prudence, accruals and going concern, taking into account the substance over form principle, when not expressly in contrast with other specific rules on financial statements.
Fixed Assets These include intangible, tangible and financial assets held for the long term within the Group and more specifically:
Intangible fixed assets These are recorded at purchase cost, including any additional charges; the book value of intangible assets also includes any revaluation made on the basis of specific law provisions. The costs recorded are shown under balance sheet assets, net of any related amortisation, applied on a straight-line basis over their theoretical useful life, which is originally estimated and periodically reviewed. If – irrespective of the depreciation that has been previously recognised
Tangible fixed assets They are recorded at purchase cost, including additional charges and other costs incurred in order to make the individual assets usable; trade discounts are always deducted from cost, while cash discounts are deducted only if significant. The cost also includes any revaluation made on the basis of spe-
Maintenance costs – which imply an extension of the residual useful life of the asset they refer to, an increase in productivity and/or safety, a reduction in the environmental impact, or a qualitative improvement of products manufactured with it – are capitalised at asset cost and depreciated on the basis of its useful life, that is originally estimated and periodically reviewed. Maintenance costs that do not feature such characteristics are charged to the income statement. Spare parts having a significant unit value and that are seldom used are recorded together with the cost of the assets they are connected to by means of a relevance, complementa-
rity and accessoriness relation. If so, depreciation is allocated based on the lower of the useful life of assets they are connected to and their own. Spare parts, which although having a significant unit value are frequently used, are charged to the income statement and, if necessary, are booked to inventories at year end. Once eligible, plant investments are recognised in relation to the depreciation of the assets to which they refer, and are charged to “accrued liabilities and deferred income”, with offsetting entry under “Value of production Other income”. If these investments are allocated after the start of depreciation, the part correlated to the de-
preciation that was previously booked within the income statement will be booked under extraordinary income.
Financial fixed assets Equity interests are recorded at the purchase cost, which includes directly charged accessory expenses, or subscription expenses, adjusted, when necessary, to take into account impairment losses; the book value of equity investments includes the value of capital account payments made by the company. Receivables are stated at their estimated realisable value.
Inventories They were recorded on the basis of the lesser value between the purchase cost and the realisation value derived from the market prices; if the reasons which rendered necessary the write-down to the realization value of the inventory cease to exist, the original cost is re-instated. The purchase cost also includes directly chargeable accessory charges
and such cost excludes returns, commercial discounts, allowances, rebates and contributions given by suppliers. Cash discounts are always recognised among financial income. In order to determine the realisable value inferred, reference is made – wherever possible – to price lists and to market valuations for the same categories of goods with the same mar-
keting situation at year end, taking account of events after the end of the financial year, if they confirm situations already existing at that date. Obsolete or slow-moving stock is written down in relation to their estimated future use or realisation, by setting aside a specific adjusting provision to the value of inventories.
losses due to irrecoverability that have already occurred but are not yet definitive, and losses that have not yet occurred but which – based on
the experience and knowledge of the sector in which the Group operates – can be considered intrinsic to account balances.
of the market. The original cost is restored if the reasons that determined the reduction to the realisable value
no longer apply.
Current receivables Receivables are recorded at their estimated realisable value, obtained, if necessary, by deducting an appropriate bad debt provision to cover both
Short-term investments These are reported at the lower of the purchase cost and the realisable value that can be inferred from the course
Cash and cash equivalents Bank account balances are recorded at their estimated realisable value, while cash is stated at its nominal value.
Accrued income and prepaid expenses/Accrued liabilities and deferred income The recognition is based on the accrual principle, even if it differs from the accruals accounting.
Sofidel Integrated Report 2011
Provisions for risks and charges Potential liabilities are booked in the financial statements and booked under provisions when they are deemed probable and the amount of the relative charge can be reasonably estimated; risks for losses or liabilities whose exi-
stence is only possible or probable, but that cannot be objectively estimated, will in any case be mentioned within the relative section of this document. Provisions reflect the best estimate, based on outstanding commitments
and other available data, including information obtained subsequent to year-end and up until the date of preparation of this document.
require a mandatory provision. The amount set aside has been revalued using official indices and is recogni-
sed net of the advances paid to employees during the year or in previous financial years.
payables – any invoicing adjustments (for returned goods, premiums, al-
lowances, price variations, etc.) that may have been agreed.
in more detail in the relevant section of this document, which contains a statement of reconciliation between shareholders’ equity and profit or loss
for the year of the Parent Company and the consolidated shareholders’ equity and the profit or loss for the year.
of any accumulated amortisation/depreciation; payables include outstanding principal repayments (per capital quota), net of any macro-instalment paid; depreciation/amortisation for the period – calculated according to
the economic-technical life of assets – and the financial charges resulting from the related agreements are recognised separately in the income statement.
Employee severance fund This item includes the total liability at year-end to the employees of Group companies located in countries that
Payables They are recognised at their nominal value, less – with regard to trade
Shareholders’ equity This represents the difference between assets’ and liabilities’ items, according to the above-mentioned criteria and principles. This item is explained
Finance lease transactions Finance lease transactions are recognised according to the financial method, based on the principle of substance over form. According to this method, the value of the assets is recognised among fixed assets, net
Commitments and memorandum accounts These include guarantees that are provided either directly or indirectly or to third parties for third party payables, distinguishing between guarantees, backing, other personal guarantees
and collateral; they also include significant commitments assumed with respect to third parties and the value of third party goods that are potentially retained.
The risks for guarantees and commitments are recorded at nominal value, whilst third-party assets are recorded at their current value, when available.
performed and completed. Costs are recorded according to the matching principle with revenues for the year, based on: - association of cause and effect between costs and revenues, on an analytical basis (e.g. for commissions) or based on assumptions (as in the case of inventories); - distribution of long-term usefulness
or functionality on a systematic basis (as in the case of amortisation/ depreciation); - direct charging of cost to the income statement or because it is timerelated, or given the fact that the usefulness or functionality of the same no longer exists.
Costs and revenues Costs and revenues are recorded net of returned goods, unconditional discounts, allowances and premiums. Revenues are recorded when the production process of goods and/or services has been completed, or when the transfer has already taken place, i.e. with the substantial and not only formal transfer of the related property and/or when the service has been
Income taxes for the year (current, deferred and prepaid) Income taxes were recognised on an accrual basis and include: - current taxes for the year, calculated according to the current rates and regulations in force in the countries where the companies included within the scope of consolidation are located; - the amount of deferred or prepaid taxes in relation to timing differences between the value of an asset or liability calculated according to statutory purposes and the value attributed to such asset or liability for tax purposes, based on the rate in force when such differences will be reversed in the countries where the companies have their registered office. Adequate adjustments shall be made in case of a change in rate
compared to previous years, provided that the law that governs such change has already been issued at the balance sheet date; - the amount of deferred or prepaid taxes recorded in relation to consolidation transactions referred to earlier in these notes. Prepaid taxes are recorded as offsetting entry and stated under consolidated balance sheet assets only if there is reasonable certainty of their full recovery through future taxable income of each single Group company or of fiscal units that are present, according to the tax regulations in force in the countries concerned, or through deferred taxes recorded under balance sheet’s liabilities of the companies. The latter are recorded – again as of-
fsetting entry – under “tax provisions, incl. deferred tax” only to the extent that it cannot be proved that their payment is unlikely to occur. In this regard, it should be noted that prepaid taxes and the provision for deferred taxes deriving from the financial statements of each consolidated company are not offset for practical reasons only, in compliance with the national accounting standard no. 25, since the alteration resulting therefrom is insignificant for accurate information purposes that this document is meant to provide. Conversely, prepaid and deferred taxes resulting from consolidation transactions are offset and recorded among “Tax provisions, incl. deferred tax”.
Bank of Italy in the Italian Official Gazette. More specifically, short-term assets and liabilities, as well as non-current receivables, are recorded at the spot exchange rate applicable at the balance sheet date; profits and losses resulting from the translation of receivables and payables are respectively credited and charged to the income statement under the item “Foreign exchange gains and losses”; any net profit resulting from the adjustment of the foreign currency items to yearend exchange rates will help determine the profit/loss for the period and
– upon approval of the financial statements and the following distribution of profits – is allocated (with regard to the portion that is not absorbed by any loss for the period) to a non-distributable reserve until realised. Conversely, foreign currency fixed assets are recognised at the exchange rate applicable at the time of purchase or at the lower exchange rate recorded at the balance sheet date, only if negative changes resulted in the impairment of the fixed assets concerned.
chase commitment (or corresponding payables), the difference between the spot exchange rate and the forward exchange rate indicated in the forward contract is determined on an accrual basis over the duration of the contract, according to the accruals method.
In the case of interest rate swaps (IRS), the positive or negative difference at the end of each contract is determined over the term of the contract according to the accruals method.
not be determined, but the market of its components is available, it is determined based on the market value of the components. In all other cases,
the fair value is determined on the basis of generally accepted valuation models and methods.
Foreign currency transactions Revenues and costs relating to foreign currency transactions are recorded at the exchange rate applicable when the transaction took place. Related offsetting entries – i.e. the related receivables or payables – are recorded at the same exchange rate. Receivables and payables originally denominated in foreign currency and still recorded in the financial statements at year-end are restated at the exchange rates applicable at the end of the financial year, and accounted for in compliance with the procedures set out by the European System of Central Banks and published by the
Financial futures and derivatives All forward contracts and derivatives held are for hedging purposes, in line with the strategy adopted by the Group. In the case of currency forward contracts for future sales commitment (or the corresponding receivables) or pur-
Fair value of financial instruments The fair value of financial instruments is determined on the basis of the market value of the instruments for which there is an active market; if this can-
Sofidel Integrated Report 2011
INFORMATION ON THE CONSOLIDATED BALANCE SHEET Assets Each single item reported under assets in the consolidated balance sheet is broken down as follows, and shows the following changes when compared to the previous financial year: Description B) Fixed assets C) Current assets D) Accrued income and prepaid expenses Total
31/12/2010 1.025.023 639.962 6.148 1.671.133
31/12/2011 1.019.412 613.744 3.697 1.636.853
Change (5.611) (26.218) (2.451) (34.280)
The breakdown and changes of each single item posted under balance sheet liabilities are shown below.
B) FIXED ASSETS These total 1,019,412 and are broken down as follows: I. Intangible fixed assets II. Tangible fixed assets III. FInancial fixed assets
49.985 968.281 1.146
The composition and movements of each item are as follows.
I. Intangible fixed assets These show the following changes compared to the previous year: BALANCE AS AT 31/12/2010 56.162
BALANCE AS AT 31/12/2011 49.985
The following information is provided on individual items.
Start-up and expansion costs Research, development and advertising costs Patents and know-how Franchise, licenses, trademarks and similar rights Goodwill Work in progress and advance payments Other Total
The item “Start-up and expansion costs” includes the costs incurred to support the launch of corporate activities and mainly refers to “Papyros Paper Mill S.a” (903). The item “R&D and advertising costs” is almost entirely composed of costs relative to investments in advertising that were capitalised before the acquisition of the shareholding from “Comceh S.a.” (129); the residual amount is almost entirely relative to investments in communications that are implemented by “Delisoft G.m.b.H.” (7) for the launch of the Regina® brand within the German market. The item “patents and know-how” includes the costs incurred for the acquisition and/or registration of patents mainly by “Sofidel Kagit” (19) and “Delicarta S.p.a.” (12).
INITIAL BALANCE 1.474 160 99 44.459 7.607 871 1.492 56.162
INCREASES 777 3 3.054 939 4.773
DECREASES (626) (217) (843)
AMORTISATION EXCHANGE-RATE OTHER /DEPRECIATION DIFFERENCE TRANSACTIONS (1.219) 79 (60) (2) (37) (12) (2) (47) (6.560) (37) 888 (2.500) (5) (38) (2) (213) (211) (1) (129) (10.561) (49) 503
The item “costs for franchise, licences, trademarks and similar rights” includes: - the transfer value of the Regina® brand owned by “Soffass S.p.a.” (32,000), which was subject to monetary revaluations in the past; - the costs sustained for the acquisition of the brand Softis® (3,574) and the trademarks Le Trefle® (1,214) and Sopalin® (80) always on the part of “Soffass S.p.a.”; - the costs incurred for the acquisition of the SAP management software, owned by the Parent Company (2,867); - the costs incurred for the acquisition of some brands by “Delitissue Sp.z.o.o.” (308). Residual amounts are represented by the costs incurred for the registration of other corporate trademarks and the
TOTAL 1.111 65 37 41.178 5.065 656 1.873 49.985
acquisition of other licensed software, primarily from “Delipapier S.a.” (725) and from “Ibertissue S.l.u.” (159). Increases mainly refer to costs incurred for the acquisition of modules and implementations of the SAP, APO and SEM software, on the part of the Parent Company. The item “goodwill” almost entirely includes the positive difference arising from the consolidation of “Papyros Paper Mill S.a.”; the residual amount, equal to 195, refers to the goodwill paid for the transfer of a company branch during the course of 2005. The item “Work in progress and advance payments” includes the advance payments disbursed for the SAP – APO implementation modules on the part of the Parent Company (522); the residual amount is relative 61
to “Comceh S.a.” (133). In general, “Other intangible fixed assets” include costs attributable to more than one financial year and not classifiable elsewhere, which will be reasonably recovered with future corporate revenues. More specifically, they consist of costs
incurred by “Delipapier G.m.b.H.” for the “project financing limited recourse” (654); an amount of EUR 990 is relative to costs incurred for the acquisition of financing on the part of the Parent Company, of “Delicarta S.p.a.” and of “Soffass S.p.a.”. Residual amounts mainly refer to costs
incurred for improvements on thirdparty assets always by other Italian companies of the Group. Increases mainly refer to costs incurred for the acquisition of financing on the part of the Italian companies of the Group.
trademarks and similar rights” were amortised as follows: - The Regina® brand and other trademarks, on the basis of the theoretical useful lifetime of fifteen and ten years, respectively; - Software was amortised on the basis of an estimated useful life of five years; - The item “goodwill” was amortised on the basis of an estimated useful life of five years; - “Other intangible fixed assets” were amortised as follows: - for the costs incurred for the project financing limited recourse
transaction, based on the duration of the transaction; - for the costs incurred for the acquisition of the right of perpetual leases, based on the duration of the contract; - for the costs incurred for the acquisition of financing, based on their duration; - for the costs incurred for improvements on third-party assets over the lesser of the period of use of the asset – estimated from time to time – and the residual period of the contract under which the assets are held.
Amortisation/depreciation Amortisation has always been calculated starting from the financial year in which the said costs began to be useful for the companies, according to the criteria used in the previous financial year. More specifically: - “Start-up and expansion costs” were amortised on the basis of an estimated useful lifetime of five years; - “R&D and advertising costs” were amortised on the basis of an estimated useful lifetime of five years; - “Patents and know-how” were amortised on the basis of an estimated useful lifetime of five years; - The “Costs for franchise, licences,
Recoverability of booked values, write-downs and revaluations The book value of intangible fixed assets does not exceed the amount recoverable through future revenues. No impairment losses were recorded so as to justify any write-down. Moreover, no discretionary or voluntary
revaluations have been carried out and those made pursuant to specific legislation did not exceed the valuein-use of the fixed asset concerned, determined on an objective basis.
The intangible fixed assets’ items that are still booked – and that were subject to monetary revaluations – and the corresponding amounts are listed below:
LAW APPLIED Law 350/2003 Law 266/2005
Franchise, licenses and trademarks Total
AMOUNT 35.000 30.651 65.651
Specifically, this relates to the Regina® brand, which was revaluated in 2003 and 2005.
Financial charges capitalised under intangible fixed assets In the current and past years, no significant financial charges were booked to items under intangible fixed assets.
Significant commitments undertaken for the acquisition of intangible fixed assets No significant commitments were undertaken towards suppliers for the acquisition of intangible fixed assets.
II. Tangible fixed assets These show the following changes compared to the previous year: BALANCE AS AT 31/12/2010 967.883
BALANCE AS AT 31/12/2011 968.281
The following information is provided on individual items.
Sofidel Integrated Report 2011
Movements of the year and composition Description Land and buildings Plant and equipment Fixtures and fittings, tools and other equipment Other assets Work in progress and advance payments Total
31/12/2010 356.165 574.479 1.609 15.192 20.438 967.883
31/12/2011 355.047 581.029 1.580 15.662 14.963 968.281
Change (1.118) 6.550 (29) 470 (5.475) 398
More specifically: DESCRIPTION Historical cost Increases Decreases Exchange-rate difference (negative) Re-classifications and transfers Revaluations Other transactions Total historical cost Accumulated amortisation Decreases Exchange-rate difference (negative) Re-classifications and transfers Amortisation/depreciation Other transactions Total accumulated amortisation Final balance
LANDS AND BUILDINGS
PLANT AND EQUIPMENT
485.891 15.327 (318) (1.758) 2.184 2.732 504.058 (129.725) 33 1.076 394 (20.789) (149.011) 355.047
980.388 59.282 (8.554) (3.694) 12.672 (11.225) 1.028.870 (405.909) 4.384 2.736 848 (62.390) 12.491 (447.840) 581.029
FIXTURES AND FITTINGS, TOOLS AND OTHER ASSETS OTHER EQUIPMENT 9.146 40.823 599 5.895 (228) (1.411) (15) (182) 41 189 (3.197) 9.543 42.118 (7.537) (25.632) 191 1.161 22 165 (10) (31) (653) (4.726) 23 2.606 (7.964) (26.457) 1.580 15.662
WORK IN PROGRESS AND ADVANCE PAYMENTS 20.438 8.294 47 (13.288) (529) 14.963 14.963
FIXTURES AND FITTINGS, TOOLS AND OTHER ASSETS OTHER EQUIPMENT 46 908 473 1.564 226 1.251 28 499 44 1.064 130 1.080 877 43 316 8 2.139 15 531 45 4.042 196 9 327 1.383 1.580 15.662
WORK IN PROGRESS AND ADVANCE PAYMENTS 1.125 2.554 3.817 811 546 1.022 361 5 67 593 153 3.909 14.963
TOTAL 1.536.686 89.398 (10.510) (5.602) 1.799 2.732 (14.951) 1.599.552 (568.803) 5.770 3.998 1.201 (88.558) 15.119 (631.272) 968.280
Fixed assets are owned as follows: COMPANY Sofidel UK L.t.d. Delicarta S.p.A. Delipapier S.a.s. Delipapier G.m.b.H. Intertissue L.t.d. Soffass S.p.A. Comceh S.a. Ibertissue S.l.u. Sofidel S.p.a. Delitissue Sp.z.o.o. Thuringer Hygiene Papier G.m.b.H. Swedish Tissue A.b. Other Total
LAND AND BUILDINGS
PLANT AND EQUIPMENT
29.898 44.140 39.278 36.270 36.840 21.189 27.289 19.361 47.045 12.393 6.763 4.678 29.903 355.047
81.242 59.845 61.495 64.876 57.425 41.615 25.450 33.451 95 30.818 24.196 27.411 73.109 581.029
More specifically: - land and buildings include the industrial building complexes owned by the companies of the Group; - plant and equipment include general and specific plant - the latter consisting of lines for the production of tissue paper reels and lines for the transformation into finished products; COMPANY NAME Delicarta S.p.A. Cartiera di Monfalcone S.p.A. Soffass S.p.A. Sofidel UK L.d.t. Comceh S.a. LPC Produits France S.a.s. Delipapier S.a.s. Intertissue L.t.d. Werra Papier Wernshausen G.m.b.H.
Delitissue Sp.z.o.o Delipapier G.m.b.H. Other Total
- fixtures and fittings, tools and other equipment are primarily composed of miscellaneous equipment in support of production plants. - other assets mainly include electronic equipment, motor vehicles and internal means of transport, fixtures and furnishings, which are mainly located at the Group companies
LAND AND BUILDINGS
PLANT AND EQUIPMENT
8.322 149 4.343 519 830 380 206 7 20 110 439 15.327
5.951 12.867 4.362 6.617 6.866 6.222 2.581 4.537 3.244 2.285 1.606 2.145 59.282
TOTAL 113.218 108.577 106.067 102.484 95.918 65.037 53.977 53.176 49.287 43.823 35.639 32.446 108.631 968.280
that carry out production and/or transformation activities. - work in progress and advance payments mainly refer to investments in progress. The main increases concerned the following companies:
FIXTURES AND FITTINGS, TOOLS AND OTHER ASSETS OTHER EQUIPMENT 133 258 64 461 47 453 50 901 635 15 86 224 31 267 16 44 1 313 24 277 147 2.047 599 5.895
WORK IN PROGRESS AND ADVANCE PAYMENTS 1.886 668 520 1.083 90 57 3.325 26 55 586 8.294
TOTAL 16.550 14.208 9.725 9.170 8.421 6.674 6.422 4.841 3.350 2.599 2.072 5.364 89.398
Amortisation/depreciation Depreciation was allocated using rates representing the useful life of the assets, determined for homogenous asset classes and on the basis of their
economic/technical duration, except when a direct estimate was made of the residual useful life of the specific asset on the basis of a specific ap-
DESCRIPTION Industrial building complexes General plant and equipment Plant and equipment for transformation processes Plant and equipment for paper mills Sundry industrial equipment Motor vehicles and means of transport Cars Electronic machines Fixtures and furnishings
Depreciation was calculated at constant annual rates, starting from the time when the individual assets became usable and operational; with regard to the investments that were
praisal, according to criteria that are unchanged from the previous year.
RATE 5,5% 9% residual useful life residual useful life 25% 20% 25% 20% 12%
completed and became available for use during the year, depreciation was equal to 50% of the normal rates and generally reflected the actual use of the assets. Investments that were not
completed during the course of the year were not depreciated; the goods sold during the course of the year were not depreciated, not even on a pro-quota basis.
Recoverability of booked values, write-downs and revaluations The book value of the tangible fixed assets does not exceed the value recoverable through the future use of each single asset. No impairment los-
ses were recorded so as to justify any write-down. Revaluations were carried out in the past and did not exceed the value-in-
use of the fixed asset concerned, determined on an objective basis.
Monetary revaluations ASSET Plant and equipment Plant and equipment Plant and equipment
COMPANY Fibrocellulosa S.p.a. Delicarta S.p.a. Soffass S.p.a.
LAW 1.805 1.805
LEGGE 350/2003 2.000 13.000 15.000
COMPANY Delicarta S.p.a. Delicarta S.p.a.
ORIGINAL REVALUATION 314 405 719
RESIDUAL VALUE 314 222 536
Voluntary revaluations ASSET Land Buildings Total
It should be noted that the restated value of the fixed assets following extraordinary events is consistent with the value resulting from the appraisal made to transform at the time “Imbalpaper S.p.a.” (currently “Delicarta S.p.a.”) from a “società in accomandita semplice” (limited partnership)
into a “società per azioni” (joint-stock company). Such appraisal was prepared in July 2001 by an expert appointed by the Chairman of the relevant court. This value is also consistent with the value resulting from the appraisal prepared in 2011 on the owned lands and buildings.
Moreover, no deferred taxes were calculated on the difference between the accounting value and the tax value of these fixed assets, pursuant to the Italian accounting standard no. 25, since – based on current corporate plans – there is little likelihood that this debt will arise.
Financial charges allocated to tangible fixed assets No significant financial charges were allocated to tangible fixed asset items during the current and past financial years.
Sofidel Integrated Report 2011
Charges on fixed assets In addition to real-estate mortgages – which are detailed in the payables’ section – the following charges are applied to fixed assets: DESCRIPTION Plant and equipment Land and buildings Plant and equipment Plant and equipment Plant and equipment Plant and equipment Plant and equipment Total
TYPE OF CHARGE Retention of title Retention of title Retention of title Retention of title Retention of title Retention of title Lien
VALUE OF CHARGE 500 4.495 2.358 2.467 2.486 660 1.650 14.616
USE 72 1.498 2.358 2.467 2.486 660 1.386 10.927
MATURITY DATE 31/05/2012 17/06/2013 31/12/2015 31/08/2016 30/09/2016 30/11/2016 30/11/2016
Fixed assets with charges relate to “Delipapier S.a.s.”, “Ibertissue S.l.u.”, “Cartiera di Monfalcone S.p.a.”, “Comceh S.a.” and “Delicarta S.p.a.”.
Significant commitments undertaken for the acquisition of tangible fixed assets No significant commitments were undertaken towards suppliers for the acquisition of tangible fixed assets.
Grants The following grants related to assets were obtained during the course of the year for new investments: COMPANY Delipapier G.m.b.H. Comceh S.a. Total
AMOUNT 1.698 1.649 3.347
III. Financial fixed assets These show the following changes compared to the previous year: BALANCE AS AT 31/12/2010 978
BALANCE AS AT 31/12/2011 1.146
This class is composed of the following items: DESCRIPTION Equity investments Receivables Total
31/12/2010 714 264 978
31/12/2011 837 309 1.146
CHANGE 123 45 168
Equity investments DESCRIPTION Other companies Total
31/12/2010 714 714
INCREASE 123 123
31/12/2011 837 837
No impairment losses were recorded so as to justify any write-down and no revaluations have ever been made.
Write-downs and revaluations of equity investments No impairment losses were recorded so as to justify any write-down and no revaluations have ever been made.
Changes in the allocation of equity investments No allocation changes were made with regard to any equity investment.
Restrictions to the availability of equity investments There are no restrictions to the availability of any equity investment by the stakeholding company, nor any option right or privilege in favour of third parties.
Receivables DESCRIPTION Other Total
31/12/2010 264 264
INCREASES 45 45
31/12/2011 309 309
These include guarantee deposits paid by the various companies for open-ended contracts, such as those for utilities and similar contracts.
Distribution of receivables by geographical area The distribution of receivables by geographical area is not significant.
Financial fixed assets booked at a value higher than their fair value There are no financial fixed assets recorded at a value higher than their fair value.
C) CURRENT ASSETS These total 613,744 and are broken down as follows: C C C C
I. Inventories II. Receivables III. Financial assets IV. Cash and cash Equivalents
242.904 316.217 4.031 50.592
The composition and movements of each item are as follows.
I. INVENTORIES These show the following changes compared to the previous year: BALANCE AS AT 31/12/2010 244.533
BALANCE AS AT 31/12/2011 242.904
This class is composed of the following items: Description Raw materials and consumables Finished goods and goods for resale Advances Total
As these are replaceable goods, the purchase cost of raw materials, consumables and maintenance materials and the production cost for finished products have been determined ac-
31/12/2010 138.590 102.930 3.013 244.533
31/12/2011 125.738 116.578 588 242.904
CHANGE (12.852) 13.648 (2.425) (1.629)
cording to the weighted average cost formula, except for consignments of cellulose that were still en route at year-end, as well as cloths and felts, for which the specific costs were applied.
The measurement criteria adopted have remained unchanged from the previous year.
value in certain companies, specific funds were allocated; the individual
total amount is, however, not significant.
Provision for obsolete goods For the purposes of adjustment of inventory values to the (lower) market
Comparison with current values at year-end The value of inventories does not differ significantly from current costs at year-end.
Sofidel Integrated Report 2011
Financial charges allocated to inventories No financial charges were allocated to inventories.
II. Receivables This item shows the following changes compared to the previous year: BALANCE AS AT 31/12/2010 320.081
BALANCE AS AT 31/12/2011 316.217
This class is composed of the following items: Description Due from customers - due within one year Tax receivables - due within one year Prepaid taxes - due within one year Due from others - due within one year Total
9.390 9.390 320.081
11.164 11.164 316.217
1.774 1.774 (3.864)
These changes relative to the previous year were mainly due to the reduction in tax receivables. To this end, the following information is supplied.
Receivables with residual life of more than five years There are no receivables with a residual life of more than five years.
Breakdown of receivables by geographical area DESCRIPTION Italy Germany England/Ireland France Poland Romania Spain Greece Belgium/The Netherlands Switzerland/Austria Sweden Croatia Turkey Hungary Other EEC countries Other Extra EEC countries Total
AMOUNT 77.845 51.837 50.003 34.813 17.228 8.843 7.506 6.961 4.735 2.545 1.975 1.435 1.394 880 8.796 2.602 279.398
% 27,86% 18,55% 17,90% 12,46% 6,17% 3,16% 2,69% 2,49% 1,69% 0,91% 0,71% 0,51% 0,50% 0,31% 3,15% 0,93% 100,00%
Significant amounts of foreign currency receivables There are no significant amounts of foreign currency receivables for each consolidated company.
Breakdown and changes of single items Receivables “due from customers” of EUR 279,398 are generally covered by an insurance policy for an average of 85% of their amount. DESCRIPTION Initial balance Increases Decreases Exchange-rate difference Final balance
With regard to the portion of trade receivables that is not covered by insurance, the bad debt provision was calculated, on a customer-by-custoDescription Revenue credit Direct Taxes Revenue VAT account - Turkey Revenue VAT account - France Revenue VAT account - Belgium VAT guarantee deposits - Germany Revenue VAT account - Swedish Revenue VAT account Revenue VAT account - Poland Revenue VAT account - Germany Revenue VAT account - United Kingdom Revenue VAT account - Romania Revenue VAT account - Spain Revenue VAT account of the Italian Group Other minor amounts Total
“Prepaid taxes” (EUR 14,779) refer to timing differences between the value of DESCRIPTION Ibertissue S.l.u. Delicarta S.p.a. Soffass S.p.a. Werra Papier Wernshausen G.m.b.H. Delitissue Sp.z.o.o Omega Papier Wernshausen G.m.b.H. Cartiera di Monfalcone S.p.A. Thuringer Hygiene Papier G.m.b.H. Sofidel S.p.a. Fibrocellulosa S.p.a. Delipapier S.a.s. THP Logistik G.m.b.H. Total
The losses for which prepaid taxes were allocated are derived from circumstances that are well determined and identified and are reasonably recoverable, in accordance with the provisions of fiDescription Receivables for grants Suppliers’ advance account Expenditure funds Insurance receivables Guarantee deposits On other minor amounts Total
The adjustment of the nominal value of receivables “due from customers” to their estimated realisable value was obtained through a bad debt provision
of EUR 4,413, which recorded the following changes during the financial year:
AMOUNT 4.499 965 (1.012) (39) 4.413
mer basis, by taking into account the age of each receivable and any useful data, including information obtained subsequent to year-end. 31/12/2010 7.992 1.853 583 976 715 1.576 304 77 757 654 462 523 151 16.623
an asset for statutory purposes and the value of the same asset for tax purpo-
The breakdown and changes of “tax receivables” – equal to EUR 10,876 - compared to the previous financial year are as follows: 31/12/2011 4.003 1.789 1.062 954 934 872 407 130 127 17 12 5 564 10.876
Change (3.989) (64) 479 (22) 218 (704) 103 53 (630) (637) 12 (457) (523) 413 (5.747)
ses, as well as previous tax losses, which are broken down specifically as follows:
AMOUNT 5.761 3.682 2.649 1.970 175 157 124 76 69 69 43 4 14.779
scal regulations that are in effect in the countries of operation of the companies that generated them, as illustrated in the drafted multi-year economic plans. The breakdown and changes of recei31/12/2010 4.121 2.582 135 43 25 2.484 9.390
vables “due from others” – and equal to EUR 11,164 - compared with the previous financial year are as follows:
31/12/2011 4.051 1.129 111 101 29 5.743 11.164
Change (70) (1.453) (24) 58 4 3.259 1.774
Other information It is further specified that: - In general, the amounts shown are in line with the payment terms obtained. - There are credit and debit items towards the same subjects, which 68
were entered separately under receivables and payables as they cannot be offset pursuant to the law, following specific agreements between the parties. - Furthermore, no receivables are re-
stricted in any way and none have been discounted, in compliance with the correct accounting standards; - There are no transactions with a term reconveyance obligation.
Sofidel Integrated Report 2011
III. Financial assets This item shows the following changes compared to the previous year: BALANCE AS AT 31/12/2010 -
BALANCE AS AT 31/12/2011 4.031
La classe è costituita dalle seguenti voci: DESCRIPTION Other securities Total
Securities and equity investments included in current assets, held for a
INCREASES 4.031 4.031
short period of time, were reported at the lower of the purchase cost and the
31/12/2011 4.031 4.031
realisable value that can be inferred from the course of the market.
More specifically, they are owned by the following companies: COMPANY Intertissue L.t.d. Delitissue Sp.z.o.o Papyros Paper Mill S.a. Comceh S.a. Total
AMOUNT 3.232 611 185 2 4.031
The market to which reference was made to compare the cost is the official market.
IV. Cash and cash equivalents These show the following changes compared to the previous financial year: BALANCE AS AT 31/12/2010 75.348
BALANCE AS AT 31/12/2011 50.592
This class is composed of the following items: Description Banks and postal current accounts Cheques Cash and cash on hand Total
31/12/2010 75.020 328 75.348
Credit balances of deposits and banks and postal current accounts include the cheques issued and the payment orders placed by year-end, as well as the amounts collected and credited to
accounts before the end of the year. They also include accrued interest income, net of the withholding tax applied by the bank, any interest expense and bank charges, even if credited/
31/12/2011 50.495 6 91 50.592
CHANGE (24.525) 6 (237) (24.756)
charged after the balance sheet date. These changes relative to the previous year were related to the other changes in working capital.
D) ACCRUALS AND DEFERRALS These show the following changes compared to the previous financial year: BALANCE AS AT 31/12/2010 6.148
BALANCE AS AT 31/12/2011 3.697
More specifically: Description Prepaid expenses Accrued income Total
Accrued income and prepaid expenses were all calculated according to the “passing of time” principle, i.e. to the
31/12/2010 1.948 4.200 6.148
number of accrual days, since costs or revenues are all proportionate to the passing of time.
31/12/2011 2.116 1.581 3.697
CHANGE 168 (2.619) (2.451)
At the balance sheet date, there are no accruals and deferrals with a duration of more than five years.
Shareholders’ equity and liabilities The macro-classes posted under liabilities in the consolidated balance sheet are broken down as follows and reported the following changes compared to the previous financial year: Description A) Shareholders' equity B) Provisions for risks and charges C) Employee severance fund D) Payables E) Accruals and deferrals Total
31/12/2010 396.147 41.047 13.600 1.150.733 69.606 1.671.133
31/12/2011 433.891 34.290 13.659 1.085.411 69.602 1.636.853
CHANGE 37.744 (6.757) 59 (65.322) (4) (34.280)
The breakdown and changes of each single item posted under balance sheet liabilities are shown below.
A) SHAREHOLDERS’ EQUITY This shows the following changes compared to the previous financial year: BALANCE AS AT 31/12/2010 396.147
BALANCE AS AT 31/12/2011 433.891
Information on individual classes is reported below. DESCRIPTION
Share capital Revaluation reserve Legal reserve Other reserves Profit (loss) for the period Group shareholders' equity Capital and reserves attributable to minority interests Minority interests Minority shareholders’ equity Total Shareholders’ equity
TRANSFER OF 2010 PROFIT
33.000 43.604 6.600 241.619 65.963 390.786 4.186 1.174 5.360 396.146
PROFIT FOR 2011
65.963 (65.963) 1.174 (1.174) -
35.691 35.691 350 350 36.041
TRANSFERS OF CONSOLIDATE ADJUSTMENTS 2.996 (1.697) 1.299 405 405 1.704
31/12/2011 33.000 46.600 6.600 305.885 35.691 427.776 5.765 350 6.115 433.891
For more information on the item “Other reserve”, the revaluation reserves have been transferred to their own item.
Movements of shareholders’ equity items in the last two years DESCRIPTION Balance as at 31/12/2009 Allocation of profit - Parent Company Allocation of profit - subsidiaries Other movements (**) Profit (loss) for 2010 Balance as at 31/12/2010 Allocation of profit - Parent Company Allocation of profit - subsidiaries Monetary revaluations Other movements (**) Profit (loss) for 2011 Balance as at 31/12/2011
SHARE CAPITAL 33.000 33.000 33.000
LEGAL RESERVE 6.600 6.600 6.600
OTHER RESERVES(*) 195.007 2.585 86.267 1.364 285.223 35 65.928 2.678 (1.379) 352.485
PROFIT FOR THE YEAR 88.852 (2.585) (86.267) 65.963 65.963 (35) (65.928) 35.691 35.691
TOTAL 323.459 1.364 65.963 390.786 2.678 (1.379) 35.691 427.776
* The item “other reserves” also includes the revaluation reserve amounting to EUR 46,600. **) Other movements mainly include changes in translation reserves.
( ) (
Breakdown of the item “Other reserves” The item “other reserves” is broken down as follows: Description Extraordinary reserve Undivided profits Reg. subsidy Law no. 10/91, Art. 111 Reserve for unrealised foreign exchange gains Reg. subsidy Law no. 10/91 (46/89) 6% fund, pursuant to Art. 15 of Law no. 130/83 Reg. EEC subsidy 2088 Exchange-rate differences Consolidation reserve Total
31/12/2010 117.182 130.457 936 54 28 10 4 (8.179) 1.127 241.619
31/12/2011 117.272 195.648 936 28 10 4 (9.140) 1.127 305.885
CHANGE 90 65.191 (54) (961) 64.266
Sofidel Integrated Report 2011
Breakdown of “Revaluation reserves” The revaluation reserve of EUR 46,600 was generated by the Parent Company and within the subsidiaries on the basis of the revaluation reserves issued after the initial consolidation.
Reconciliation between the Shareholders’ equity of the Parent Company and the consolidated Shareholders’ equity The reconciliation between the items of the Parent Company shareholders’ equity and the items of the consolidated shareholders’ equity is detailed below: Description Financial statements of the Parent Company Effect of consolidation of equity investments Effect of the elimination of French tax provisions Effect of the elimination of property leaseback transaction Effect of the reclassification of intragroup sales Effect of the elimination of inter-company stock profit Effect of the recalculation of foreign provisions for depreciation with Parent Company’s rates Effect of the elimination of equity investments Effect of the recording of deferred tax assets on foreign subsidiaries Effect of other minor items Total Group shareholders’ equity Capital and reserves attributable to minority interests Minority interests Total minority shareholders’ equity Consolidated shareholders’ equity
31/12/2010 159.459 773.063 12.309 (419) (904) (9.006) (544.027) 438 (128) 390.786 4.186 1.174 5.360 396.146
31/12/2011 159.622 812.028 12.309 (391) (600) (1.595) (10.871) (542.727) 427.776 5.765 350 6.115 433.891
CHANGE 163 38.965 28 (600) (691) (1.865) 1.300 (438) (128) 36.990 1.579 (824) 755 37.745
Reconciliation between the profit (loss) of the Parent Company and the consolidated profit (loss) The reconciliation between the profit (loss) of the Parent Company and the consolidated profit (loss) is detailed below: Description Financial statements of the Parent Company Effect of consolidation of equity investments Effect of cancellation of results of new acquisitions in the first half of 2010 Effect of other minor items Effect of the elimination of property leaseback transaction Effect of the recording of deferred tax assets on foreign subsidiaries Effect of the reclassification of intragroup sales Effect of the elimination of inter-company stock profit Effect of the recalculation of foreign provisions for depreciation with Parent Company’s rates Effect of the elimination of equity investments Effect of the elimination of French tax provisions Group profit Minority interests Profit attributable to minority interest Group and third-party profit (loss) for the year
31/12/2010 35 69.333 (2.687) 99 34 (554) (340) (1.829) 102 1.767 65.960 1.174 1.174 67.134
31/12/2011 163 44.140 1.471 471 28 (33) (691) (2.760) (6.156) 35.691 350 350 36.041
CHANGE 128 (25.193) 2.687 1.471 372 (6) 521 (351) (931) (6.258) (1.767) (30.269) (824) (824) 31.093
Breakdown of the items of the Parent Company shareholders’ equity by possibility of use, distribution and utilisation in previous years
DESCRIPTION Share capital Legal reserve Revaluation reserve, Law no. 72/83 Revaluation reserve, Law no. 413/91 Extraordinary reserve 6% fund, pursuant to art. 15, Law no. 130/83 Provision per Law no. 526 Reg. subsidy Law no. 10/91 (46/89) Reg. subsidy pursuant to Art. 111 of Law no. 10/91 Reg. EEC subsidy 2088 Profit of the year Total Non-distributable portion Revaluation reserve, Law no. 72/83 Revaluation reserve, Law no. 413/91 Residual amount distributable
POSSIBILITY OF USE (*)
33.000 6.600 138 1.472 117.272 10 28 936 4 163 159.622
B A,B A,B A,B,C A,B,C A,B,C A,B,C A,B,C A,B,C A,B,C
AMOUNT AVAILABLE (**) 138 1.472 117.272 10 28 936 4 163 120.022
UTILISATION IN THE THREE PREVIOUS FINANCIAL YEARS TO COVER FOR OTHER LOSSES REASONS -
(138) (1.472) 118.413
* “A”: for share capital increase, “B”: for coverage of losses, “C”: for distribution to shareholders **) Details on distribution of reserves and profits are shown in a separate schedule
( ) (
Analysis of restrictions to distribution of Parent Company reserves and profits Restrictions to the distribution Description
Legal reserve Revaluation reserve, Law no. 72/83 Revaluation reserve, Law no. 413/91 Extraordinary reserve 6% fund, pursuant to art. 15, Law no. 130/83 Provision per Law no. 526 Reg. subsidy Law no. 10/91 (46/89) Reg. subsidy pursuant to Art. 111 of Law no. 10/91 Reg. EEC subsidy 2088 Profit of the year Total
Art.2430 c.c. Art.2431 c.c.
Revaluation laws (*)
138 1.472 1.610
Freely distributable 117.272 10 0 28 936 4 163 118.413
* Restrictions on certain reserves are only conventional, as they are generic and not specific.
Nature of shareholders’ equity items of the Parent Company DESCRIPTION
PROFIT RESERVES (*)
Share capital Legal reserve Revaluation reserve, Law no. 72/83 Revaluation reserve, Law no. 413/91 Extraordinary reserve 6% fund, pursuant to art. 15, Law no. 130/83 Provision per Law no. 526 Reg. subsidy Law no. 10/91 (46/89) Reg. subsidy pursuant to Art. 111 of Law no. 10/91 Reg. EEC subsidy 2088 Total
17.807 6.600 117.272 141.679
CAPITAL RESERVES /SHAREHOLDERS’ CONTRIBUTIONS (**) 14.099 14.099
SUSPENDED RESERVES (***) 1.093 138 1.472 10 28 935 4 3.680
TOTAL 33.000 6.600 138 1.472 117.272 10 0 28 935 4 159.459
* In case of distribution, profit reserves participate in forming the taxable income of shareholders, but not that of the company, regardless of the period when they originated **) In case of distribution, capital reserves do not participate in forming the taxable income of the company or shareholders, regardless of the period when they originated ***) In case of distribution, suspended reserves participate in forming the taxable income of the company and shareholders, regardless of the period when they originated
( ) ( (
Suspended reserves in the share capital are the following: RESERVES Revaluation reserve, Law no. 72/83 Revaluation reserve, Law no. 413/91 Taxable reserve, Law no. 413/91 Reserve, Art. 18 of Law no. 675/77 Reserve, Art. 55 of Law no. 526/82 Total
AMOUNT 679 380 27 4 3 1.093
Profit reserves in the share capital are the following: RESERVES Extraordinary reserve Total
AMOUNT 17.807 17.807
With regard to suspended reserves in both the shareholders’ equity (as a separate reserve) and the share capital,
no deferred taxation has been calculated, pursuant to the accounting standard no. 25, considering that a remote
possibility exists that such debt may arise.
Breakdown of the share capital At year-end, the share capital amounting to EUR 33,000 is broken down as follows: SHARES Ordinary shares Total
NUMBER 6.600 6.600
PAR VALUE 0,05 0,05
Sofidel Integrated Report 2011
B) PROVISIONS FOR RISKS AND CHARGES This item shows the following changes compared to the previous year: BALANCE AS AT 31/12/2010 41.047
BALANCE AS AT 31/12/2011 34.290 INITIAL BALANCE 2.473 33.809 4.765 41.047
Pensions and similar obligations Tax provision Other funds Total
The provision for “pensions and similar obligations” mainly consists of the Directors’ end-of-office severance indemnity allocated by the Italian companies of the Group. The provision for “taxes, including de-
257 3.136 1.597 4.990
(45) (10.977) (891) (11.913)
ferred taxes” mainly consists of deferred taxes calculated on the differences between the value of a given asset and liability for statutory and tax purposes, as well as the differences arising from consolidation transactions.
EXCHANGE-RATE OTHER DIFFERENCE TRANSACTIONS (15) 439 2.240 (1) (2.497) 423 (257)
FINAL BALANCE 2.670 28.647 2.973 34.290
The item “other provisions” includes the allocations for litigation in progress and for the CO2 quotas to be purchased in compliance with the emission trading regulation.
C) EMPLOYEE SEVERANCE FUND This item shows the following changes compared to the previous financial year: BALANCE AS AT 31/12/2010 13.600
BALANCE AS AT 31/12/2011 13.659
The changes are detailed below: DESCRIPTION Balance as at 31/12/2010 Increases Decreases Balance as at 31/12/2011
AMOUNT 13.600 421 (362) 13.659
D) PAYABLES These show the following changes compared to the previous financial year: BALANCE AS AT 31/12/2010 1.150.733
BALANCE AS AT 31/12/2011 1.085.411
This class is composed of the following items: Description Bonds - due within one year - due after one year Payables due to banks - due within one year - due after one year Advances - due within one year Trade payables - due within one year - due after one year Income taxes payable - due within one year Due to social security - due within one year Other payables - due within one year - due after one year Total
1.550 2.250 3.800
1.250 1.000 2.250
(300) (1.250) (1.550)
433.567 387.920 821.487
256.378 508.483 764.861
(177.189) 120.563 (56.626)
270.011 7.058 277.069
258.132 13.785 271.917
(11.879) 6.727 (5.152)
20.517 41 20.558 1.150.733
19.870 41 19.911 1.085.411
(647) (647) (65.322)
The change from the previous year is mainly due to the decrease in borrowings to banks. To this end, the following information is supplied.
Breakdown of payables by due date DESCRIPTION
DUE WITHIN ONE YEAR
DUE AFTER ONE YEAR
MORE THAN 5 YEARS
1.250 256.378 139 258.132 20.184 6.149 19.870 562.102
1.000 342.316 13.785 41 357.142
Bonds Payables due to banks Advances Trade payables Income taxes payable Payables due to social security Other payables Total
TOTAL 2.250 764.861 139 271.917 20.184 6.149 19.911 1.085.411
Breakdown of payables by geographical area GEOGRAPHICAL AREA Italy Germany England/Ireland Hungary France Switzerland/Austria Sweden Finland Belgium/The Netherlands Spain Poland Romania Turkey Greece Croatia Other EEC countries Other Extra EEC countries Total
AMOUNT 85.624 34.885 21.272 17.849 16.210 14.954 12.985 12.183 10.074 6.387 3.176 3.006 677 184 71 18.816 13.564 271.917
% 31,49% 12,83% 7,82% 6,56% 5,96% 5,50% 4,78% 4,48% 3,70% 2,35% 1,17% 1,11% 0,25% 0,07% 0,03% 6,92% 4,99% 100,00%
Significant amounts of payables in foreign currency At the end of the year, there were no significant amounts of payables in foreign currency for the individual con-
solidated companies, with the exception of a payable of USD 88,301 of “Sofidel S.p.a.” which was covered by
foreign currency contracts, in compliance with the strategy set at the Group level.
Breakdown and changes of single items The following information is provided. ”Bond issue”, equal to EUR 2,250 and which exclusively refers to Italian DESCRIPTION Delicarta S.p.a. Delicarta S.p.a. Sofidel S.p.a. Total
companies, is equal to the issue value of each loan.
MATURITY DATE 01/08/2011 01/08/2012 07/07/2013
Payables “due to banks” – equal to EUR 764,861 – include short-term bank financing (EUR 175,927) and, for the remaining amount, payable loans. Loans are entered
31/12/2010 1.550 1.250 1.000 3.800
in the balance sheet for a total amount of EUR 588,934, compared to an original issued amount of EUR 705,686. The repayments made during the year are equal
In particular, bond issue is analysed below by issuer and maturity date: 31/12/2011 1.250 1.000 2.250
CHANGE (1.550) (1.550)
to EUR 59,580. New loans were issued during the year for a total amount of EUR 203,281.
The amounts that shall be reimbursed in the next five years are broken down as follows: YEAR 2012 2013 2014 2015 2016 and beyond Total
INSTALMENTS FALLING DUE 80.451 97.835 88.103 84.246 238.299 588.934
Reference rates may vary according to market spreads. “Advances”, amounting to EUR 139, refer to
advances received for supplies not yet delivered or shipped at year-end. “Trade payables”, amounting to EUR
271,917, are stated net of trade discounts, rebates and returns agreed with the counterparty concerned.
Sofidel Integrated Report 2011
The portion ���after 12 months” relates to the supply of plants and refers to the following companies: DESCRIPTION Cartiera di Monfalcone S.p.a. Intertissue L.t.d. Delicarta S.p.a. LPC Produits Papier S.a.s. Ibertissue S.l.u. Delipapier S.a.s. Sofidel UK L.t.d. Soffass S.p.a. Totale
AMOUNT 4.952 3.388 1.925 1.686 749 660 249 176 13.785
The breakdown and changes of “tax payables” – totalling EUR 20,184 - compared to the previous financial year are as follows: DESCRIPTION VAT - UK IRES balance from national tax consolidation Irpef for employees and directors VAT - France VAT - Italy VAT - Germany VAT - Poland VAT - Romania VAT - Spain VAT - Greece Miscellaneous Total
The item “payables due to social security” of EUR 6,149 includes payables due
31/12/2010 3.563 6.503 2.157 1.057 3.073 595 186 147 266 171 17.718
31/12/2011 5.207 4.615 2.623 2.242 1.888 1.683 580 316 257 65 708 20.184
to social security institutions at year-end. Payables “due to others”, equal to
Change 1.644 (1.888) 466 1.185 1.888 (1.390) (15) 130 110 (201) 537 2.466
EUR 19,911, mostly relate to residual liabilities of negligible value.
Payables secured by collaterals on Group assets Payables secured by collaterals on assets owned by Group companies, together with any related guarantee, can be summarised as follows: DESCRIPTION
Payables of “Delicarta S.p.a.” secured by mortgage on own assets: Banca Intesa – Mediocredito Payables of “Sofidel S.p.a.” secured by mortgage on assets of “Delicarta S.pa.”: Banca Nazionale del Lavoro S.p.a. Payables of “Sofidel S.p.a.” secured by mortgage on assets of “Soffass S.pa.”: Banca Nazionale del Lavoro S.p.a. Payables of “Delipapier S.a.s.” secured by mortgage on own assets: Monte Paschi Banque S.a.s. Payables of “Delipapier G.m.b.H.” secured by mortgage on own assets: HVB AG e San Paolo IMI Payables of “Papyros Paper Mill S.A.” secured by mortgage on own assets: Piraeus Bank S.A. Piraeus Bank S.A. Piraeus Bank S.A. Payables of “Ibertissue S.l.u.” secured by mortgage on own assets: Caja de Ahorro de Navarra Banco Sabadell Banco Santander Central Hispanico
With regard to the guarantees related to the project financing limited
2.289 947 1.025
3.600 1.875 1.500
2017 2017 2017
10.560 4.400 2.640
20.500 6.875 4.125
2020 2020 2020
recourse transaction of “Delipapier G.m.b.H.”, reference is made to speci-
fic comments in the first section of this document.
Other guarantees given by third parties in relation to Group’s payables At year-end, there were no guarantees issued by third parties in relation to payables of Group companies.
Payables with term reconveyance obligation There are no payables with a term reconveyance obligation.
E) ACCRUALS AND DEFERRALS These show the following changes compared to the previous financial year: BALANCE AS AT 31/12/2010 69.606
BALANCE AS AT 31/12/2011 69.602
More specifically: DESCRIPTION Accrued liabilities - accrued liabilities for financial interest - accrued liabilities for 14th month salary - Accrued liabilities on forward contracts - on other minor amounts Deferred income - contributions due pursuant to provisions of law (of which EUR 24,176 due after one year and EUR 24,042 due after five years) Other deferrals Total
Accrued liabilities and deferred income were calculated according to the “pas-
31/12/2010 10.606 2.358 2.053 26 5.772 59.355
31/12/2011 3.936 2.184 30 2.965
1.578 131 3 (2.807)
sing of time” principle, i.e. to the number of accrual days, since costs or reve-
nues are all proportionate to the passing of time.
Information about memorandum accounts At year-end, the Group companies had no risks, significant commitments or third-party assets that need to be reported.
INFORMATION ON THE CONSOLIDATED INCOME STATEMENT The income statement shows a total profit of EUR 36,041, which is broken down as follows: DESCRIPTION A) Value of production B) Cost of production Difference between value and cost of production (A-B) C) Financial income and charges D) Value adjustments to financial assets E) Extraordinary income and charges Profit before tax Taxes for the year Profit for the year
31/12/2010 1.483.255 (1.365.886) 117.369 (17.414) (27) 99.928 (32.790) 67.138
31/12/2011 1.490.970 (1.408.617) 82.353 (24.357) 444 58.440 (22.399) 36.041
CHANGE 7.715 (42.731) (35.016) (6.943) 471 (41.488) 10.391 (31.097)
The breakdown and changes of income statement’s items compared to the previous financial year are as follows.
A) VALUE OF PRODUCTION This shows the following changes compared to the previous financial year: BALANCE AS AT 31/12/2010 1.483.255
BALANCE AS AT 31/12/2011 1.490.970
Nello specifico: DESCRIPTION Revenues from sales and services Change in product inventories Own work capitalised Other revenues and income Total
31/12/2010 1.453.333 9.091 20.831 1.483.255
31/12/2011 1.455.632 11.500 12 23.826 1.490.970
CHANGE 2.299 2.409 12 2.995 7.715
31/12/2010 1.156.571 101.362 165.924 29.476 1.453.333
31/12/2011 1.169.806 109.093 155.682 21.051 1.455.632
CHANGE 13.236 7.731 (10.242) (8.425) 2.299
The following information is provided:
Revenues by business segment DESCRIPTION Sales of finished products in the consumer segment Sales of finished products in the A.F.H. segment Sales of tissue paper reels Other Total
Sofidel Integrated Report 2011
More specifically: - sales of products for the consumer segment are divided into own-brand sales (almost entirely represented by Regina®, and Softis®) and sales of
large-scale retail distribution brands; - the sales of reels refer to cotton wool reels not used in the internal manufacturing process; - sales of products for the Away From
Home segment are also divided into own-brand sales and private brand sales; - The item “other” refers to residual sales.
Revenues by geographical area Geographical area Italy U.K. Germany France Poland Spain Ireland Romania Greece Switzerland Other Total
31/12/2010 23,30% 19,03% 21,53% 10,78% 5,21% 2,93% 2,02% 2,08% 13,12% 100,00%
31/12/2011 23,68% 18,94% 18,84% 12,81% 5,25% 2,69% 2,54% 2,04% 1,75% 1,46% 10,01% 100,00%
The item “Own work capitalised” includes works performed internally on own fixed assets.
Other revenues and income They include all those residual operating costs, which cannot be recor-
ded in the items commented above, and the costs of accessory operations,
DESCRIPTION Contributions on investment Decreases in provisions and adjustment to allocations in previous years Sales of electricity and gas and recoveries for interruptibility Gains Sale of CO2 quotas Rent income Other contributions (office, work, etc.) Insurance refunds Revenues from suppliers Recovery of personnel expenses and advanced expenses Royalties Sundry monetary revenues Total
31/12/2010 5.509 6.068 4.124 1.164 669 5 64 142 320 2.766 20.831
whose breakdown and changes from the previous year are as follows: 31/12/2011 6.044 5.271 5.183 986 919 798 673 108 26 25 5 3.788 23.826
CHANGE 535 (797) 1.059 (178) 919 129 669 44 (116) 25 (315) 1.022 2.995
31/12/2011 629.488 449.518 21.765 134.597 38.476 3.273 572 9.158 10.382 87.695 912 4.890 595 189 17.107 1.408.617
CHANGE (39.738) 37.222 2.300 814 3.071 300 (2.088) 1.089 (1.031) 6.458 (556) 32.091 (10) 7 2.802 42.731
B) COST OF PRODUCTION This item shows the following changes compared to the previous year: BALANCE AS AT 31/12/2010 1.365.886
BALANCE AS AT 31/12/2011 1.408.617
Nello specifico: DESCRIPTION Raw materials and goods for resale Services Use of third-party assets Wages and salaries Social security costs Employee severance fund Pensions and similar obligations Other personnel costs Amortisation of intangible fixed assets Depreciation of tangible fixed assets Write-down of current receivables Change in raw materials’ inventories Provision for risks Other provisions Other operating expenses Total
31/12/2010 669.226 412.296 19.465 133.783 35.405 2.973 2.660 8.069 11.413 81.237 1.468 (27.201) 605 182 14.305 1.365.886
With regard to each single cost item, the following information is provided.
Costs for raw materials, consumables and goods for resale These include all costs incurred for the purchase of raw materials – mainly
cellulose and cotton wool – used in the production cycle, as well as consu-
mables also used in production.
corporate business. Such costs mainly include electricity, methane gas, main-
tenance, commissions, customer promotions, consultancy and transport.
Costs for services These include the costs related to the acquisition of services for the ordinary
Costs for use of third-party assets This item includes the costs incurred for the use of third-party assets.
Personnel costs This item includes total expenditure for employed personnel, including promotions by merit, upgrading, automatic cost-of-living increases, costs for holidays accrued and not taken and provisions imposed by law and pursuant to
collective labour agreements. “Employee severance fund” includes – in addition to the amount set aside during the period – the amount accrued and paid out to employees hired and dismissed during the same period, as
DESCRIPTION Managers Clerical staff Manual workers Total
31/12/2010 40 1.208 3.278 4.526
well as the amount paid to external retirement benefit plans. Employment by Group companies at year-end is analysed by category below and compared to the previous financial year: 31/12/2011 38 1.198 3.225 4.461
CHANGE (2) (10) (53) (65)
Average employment by Group companies during the year is analysed by category below and compared to the previous financial year: DESCRIPTION Managers Clerical staff Manual workers Total
The employees of Italian Group companies have a national labour contract for the paper sector, while foreign
31/12/2010 40 1.223 3.279 4.542
subsidiaries use the collective labour agreements established by law or by other agreements in force in the
31/12/2011 39 1.203 3.276 4.518
CHANGE (1) (20) (3) (24)
Amortisation, depreciation and write-downs This item includes all amortisation/depreciation recorded in the year based on the methods described above, as well as the write-down of receivables included in the current assets.
Provisions for risks These are provisions for specific risks made by Group companies. Each single amount is of no significant value.
Other operating expenses This item includes all other operating expenses that cannot be allocated to
above-mentioned items, as well as costs for taxation (other than income
taxes), membership fees and expenses related to the business purpose.
Sofidel Integrated Report 2011
C) FINANCIAL INCOME AND CHARGES This item shows the following changes compared to the previous year: BALANCE AS AT 31/12/2010 (17.414)
BALANCE AS AT 31/12/2011 (24.357)
The profit (loss) for the period includes financial income amounting to EUR 1,941, financial charges amounting to
EUR 26,234 and exchange differences totalling EUR 64. The changes compared to the previous financial year
DESCRIPTION From equity investments Interest and other financial income Interest and other financial charges Foreign exchange gains (losses) Financial balance
31/12/2010 2.958 2.096 (21.609) (859) (17.414)
are detailed below:
31/12/2011 1.941 (26.234) (64) (24.357)
CHANGE (2.958) (155) (4.625) 795 (6.943)
31/12/2011 19.390 3.451 (19.210) (3.695) (64)
CHANGE 520 46 77 152 795
More specifically, “interest and other financial income” is broken down as follows: Description Discounts received Banking interest income Other interest income Positive interest-rate swap spread Income from forward contracts Interest income from customers Other income Total
31/12/2011 989 608 180 103 35 8 18 1.941
The item “Interest and other financial charges” is broken down as follows: Description Loan interest payable Banking interest expense Discounts granted Negative interest-rate swap spread Charges on forward contracts Other payable interest Leasing interest expense Bond issue interest expense Allowances and rounding off Interest expense to suppliers Total
31/12/2011 15.618 6.369 1.165 1.018 837 763 277 141 25 21 26.234
The item “Foreign exchange gains and losses” is broken down as follows: DESCRIPTION Realised foreign exchange gains Unrealised foreign exchange gains Realised foreign exchange losses Unrealised foreign exchange losses Total
31/12/2010 18.870 3.405 (19.287) (3.847) (859)
E) EXTRAORDINARY INCOME AND CHARGES This item shows the following changes compared to the previous year: BALANCE AS AT 31/12/2010 (27)
BALANCE AS AT 31/12/2011 444
The profit/loss for the period includes extraordinary income amounting to
EUR 4,572 and extraordinary charges totalling EUR 4,128. These show the
DESCRIPTION - Miscellaneous Total income - Miscellaneous Total expenses Total
31/12/2010 7.605 7.605 7.632 7.632 (27)
following changes compared to the previous year: 31/12/2011 4.572 4.572 4.128 4.128 444
CHANGE (3.033) (3.033) (3.504) (3.504) 471
These income items were recognised due to events which are not included in the ordinary business.
Income taxes for the year (current, deferred and prepaid) These show the following changes compared to the previous year: BALANCE AS AT 31/12/2010 32.790
BALANCE AS AT 31/12/2011 22.399
The breakdown and changes of this item compared to the previous financial year are as follows: DESCRIPTION Current taxes Deferred/prepaid taxes Total
31/12/2010 25.697 7.093 32.790
31/12/2011 25.311 (2.912) 22.399
CHANGE (386) (10.005) (10.391)
Prepaid and deferred taxation The balance of deferred taxation (prepaid and deferred taxes) is broken down as follows: STATUTORY AGGREGATE
GERMAN DEFERRED TAXES 680
TOTAL AS AT 31/12/2011
Information on the financial position of the Group The following table summarises the net financial position at year-end, prepared - together with any appropriate amendments - in accordance with the C.E.S.R. (“Committee of European Securities Regulators”) recommendation
“Recommendations for the uniform implementation of the EC Regulation on prospectuses” dated 10 February 2005, paragraph 127 “Capitalisation and indebtedness”: it should be noted that the net financial position for the
Description (amounts in thousands of EUR) Cash Cash equivalents A. Liquidity B. Contributions and other current financial relations Current bank payables (financing accounts) Portion of loans due within the following year Bonds maturing within the following year Current payables due to plant suppliers and other C. Gross current borrowings D. Net current borrowings (A+B+C) E. Non-current loans Loans due beyond the following year Bonds maturing beyond the following year Non-current payables due to plant suppliers and other F. Gross non-current borrowings G. Net non-current borrowings (E+F) H. Total net borrowings (D+G)
year 2010 was significantly affected by the contribution resulting from the new companies acquired during the year and therefore included within the scope of consolidation.
31/12/2010 326 75.020 75.346 3.277 (373.936) (59.631) (1.550) (16.694) (451.811) (373.188) 243 (387.920) (2.250) (7.099) (397.269) (397.026) (770.214)
31/12/2011 98 50.495 50.592 7.648 (175.927) (80.451) (1.250) (4.254) (261.882) (203.642) 275 (508.483) (1.000) (13.826) (523.309) (523.034) (726.675)
Change (228) (24.525) (24.754) 4.371 198.009 (20.820) 300 12.440 189.929 169.546 32 (120.563) 1.250 (6.727) (126.040) (126.008) 43.539
4.915 (4.008) (6.673) 154.022 9.417 (65.002) (70.497) (4.455) 105.886 129.371 (5.439) (94.741) 1.164 (213) 1.059 (242.910) (341.080) 9 132.040 (76.288) (121) (5.276) (1.500) 48.864 5.176 (157.669) (140.922) (298.591)
1.696 (6.257) (6.044) 123.514 (2.126) (2.825) 1.628 12.990 558 133.739 (3.930) (78.887) (123) 3.347 (79.593) (4.066) 203.281 (59.850) (340) (5.710) (1.550) 131.765 (12.656) 173.255 (298.591) (125.336)
The consolidated cash flow statement is provided below Description (amounts in thousands of EUR) Profit (loss) for the year (Group and minority interest) Amortisation/depreciation: - amortisation of intangible assets - depreciation of tangible assets Provisions: - for risks and charges Other non-monetary items Capital gains on transfers and grants (a) Sub-total Change in provisions Change in current receivables Change in inventories Change in other liabilities/assets Change in trade payables (b) A. Cash flow from generated (absorbed) from management activities Investments in intangible assets net of disinvestments Investments in tangible assets net of disinvestments Price obtained on transfer of fixed assets Purchase (transfer) of other financial fixed assets Grants received during the year (c) Change in the scope of consolidation and other transactions B. Cash flow generated (absorbed) from investing activities (Increase) decrease in loans Bank loans Loan repayment Change in loans for grants to be received in the year Change in loans payable to plant suppliers and other Change in bonds C. Cash flow generated (absorbed) from financing activities D. Other changes and exchange rate differences Change in net cash for the period (A+B+C+D)(d) Net cash at the beginning of the year Net cash at the end of the year
The item “subsidies” refers to the portion of contributions obtained by the various companies and booked to the income statement under the item A5 “other revenues”. Net of financial payables. Contributions collected by the different companies of the Group during the year; (d) “Net cash” includes cash, bank and postal accounts, cheques and financing accounts, used as overdraft. The item does not include short-term and highly liquid investments, which can be readily converted into cash and are subject to an insignificant risk of changes in value (a)
Sofidel Integrated Report 2011
Other information to the consolidated financial statements Information on forward contracts and derivatives
Derivatives contracts Interest rate swap transactions carried out by the companies of the Group, amounting to EUR 90,223, are broken down as follows BANK Intesa-San Paolo S.p.a. B.N.L. B.N.L. B.N.L. HVB HVB Banca Pop.Emilia R. Total
30/03/2006 29/10/2009 04/05/2010 04/11/2009 18/04/2006 03/02/2005 11/10/2010
05/12/2012 15/04/2015 23/02/2015 25/11/2013 31/12/2013 09/02/2015 29/02/2016
3,740 2,28 (floor) - 3,75 (cap) 3,02 se Eur6m>1,50% 1,94 (floor) - 3,75 (cap) 3,950 Euribor/6m 1,915
10.200 9.800 15.600 10.500 16.952 10.000 437 73.489
These contracts were signed in this order: the first three by the Parent Com-
pany, the fourth by “Soffass S.p.a.”, the fifth by “Delipapier G.m.b.H.”, the
MARK TO MARKET PROFIT/(LOSS) (170) (255) (150) (83) (797) 217 (6) (1.214)
sixth by “Werra Holding G.m.b.H. and the last by “Intertissue L.t.d.”
Forward contracts With regard to exchange risk hedging, the Group companies enter into forward contracts in the respective currencies. To this end, the following information is provided. COMPANY Sofidel S.p.a. Sofidel S.p.a. Soffass S.p.a. Sofidel UK L.t.d. Intertissue L.t.d. Intertissue L.t.d. Delitissue S.p.z.o.o. Total
DOMESTIC FOREIGN BUY/SELL CURRENCY CURRENCY EUR EUR EUR GBP GBP GBP PLN
F.buy F.sell F.buy F.buy F.buy F.sell F.buy
AGGREGATE AMOUNT IN FOREIGN FORWARDAMOUNT CURRENCY
USD RON USD EUR EUR EUR EUR
101.930 55.000 1.048 1.717 4.252 114 150
74.845 12.699 762 1.471 3.684 100 606
AMOUNT IN DOMESTIC CURRENCY MARK TO MARKET (ECB EXCHANGE RATE PROFIT/(LOSS)IN EUR AS AT 31/12/2011) 78.007 3.162 12.719 20 810 49 1.440 (37) 3.564 (143) 104 5 671 15 3.071
Transactions with related parties The Group did not carry out transactions with related parties according to abnormal market conditions, as defined by the IAS 24 international accounting standard.
Agreements not contained in the balance sheet The Group does not have significant agreements in place that are not contained in the consolidated Balance Sheet.
Remuneration of directors, statutory auditors and independent auditors Pursuant to art. 38, letter o) of Legislative Decree no. 127 of 9 April 1991, the remuneration of the Parent
Company’s directors and statutory auditors—as well as to the auditing company - is analysed below and includes
TYPE OF REMUNERATION
Remuneration Provision for end-of-service allowance Remuneration Remuneration
Directors Board of Statutory Auditors Auditing company
The auditing company – in addition to the remuneration for auditing the accounts of the Parent Company and
WITHIN THE PARENT COMPANY 310
the amounts earned for the performance of such duties even in other consolidated companies:
WITHIN OTHER COMPANIES OF THE GROUP 1.047
of other companies – received a remuneration totalling EUR 3 for other verification services, EUR 7 for mi-
scellaneous fiscal services and EUR 8 for other services other than auditing.
Potential liabilities A legal dispute is currently underway between the company “Soffass S.p.a.” and the financial administration relative to “Delfinet B.V.”, a company that was previously liquidated and closed in 2008. After winning before the Provincial
There are no significant risks for losses or liabilities whose existence is only possible but not probable but which in any case cannot be estimated objectively, not indicated in the financial statement accounts and which need to be disclosed herein.
Tax Commission and losing before the Regional Tax Commission, an appeal has been presented before the Supreme Court, for which the lawyer entrusted with the task stated the existence of good chances of victory and, for this reason, no provision was made.
Exchange rate trends after the ending date of the financial year In accordance with article 2427, paragraph 1, no. 6 of the Italian Civil Code, the trend of the exchange rates, mainly EUR/ USD, did not entail any significant effects on the financial statement values to be mentioned herein.
These consolidated financial statements – which include the balance sheet, the income statement and the notes – give a true and fair view of the economic and financial position and the results of operations for the year of the Sofidel S.p.a. and its subsidiaries.
Porcari, 3 February 2012 For the Board of Directors
The Chief Executive Officer
Mr. Luigi Lazzareschi
Sofidel Integrated Report 2011
3. BOARD OF AUDITOR’S REPORT
Sofidel Integrated Report 2011
4. AUDITORS’ REPORT
1. STRATEGIC OBJECTIVES
2. PERFORMANCE IMPROVEMENT TARGETS
Sofidel Integrated Report 2011
1. STRATEGIC OBJECTIVES 1.1 SHORT, MEDIUM AND LONG TERM OBJECTIVES
he Sofidel Group’s short, medium and long term targets are defined and set out in the company’s Sustainable Development Plan (SDP) under social, economic and environmental headings. These objectives are in line with the “Sofidel Group Sustainability Charter” and represent the commitments of
Sofidel with regards to all of its stakeholders. The SDP constitutes the main tool for integration between the sustainability strategy and the business objectives of the Group. The SDP is based on 3 principles: - inclusiveness: the Sofidel Group considers the needs and expectations of the stakeholders in defining
its sustainability objectives; - materiality: the Plan covers only the more incisive and significant aspects for the organization and for stakeholders; - relevance: the Plan highlights the response that the Sofidel Group is able to give, in terms of performance, to the legitimate expectations of stakeholders.
2. PERFORMANCE IMPROVEMENT TARGETS Environment - reductions in carbon dioxide emissions by 26% by 2020 compared to levels in 2007. - consolidation of the responsible purchasing process for fibrous raw material in agreement with WWF; - reduction in water use.
Company climate - work with the University of Florence to produce a unique climate survey form to spread across all the companies in the group.
targeted at certain stakeholders; - implementation of an improvement plan to achieve more complete and integrated company reporting; - “work experience for employee’s sons and daughters” project.
Training - definition and implementation of a procedure to establish a three year training plan.
CSR - planning of an update and development programme for the Sustainable Development Plan; - development of ethical checks on the Supply Chain, with a special focus on contractual aspects; - development of stakeholder engagement through specific projects
Quality - certification by the end of 2012 for the Delipapier Nancy and Delicarta Tassignano plants of compliance with the IFS Household and personal care standard; - ISO 9001 certification, by mid 2012, for the Papyros Quality Management System.
Human resources - distribution and updating of the organizational manual;
Corporate communication - diffusion of the Sofidel Group’s institutional video focused on aspects of corporate social responsibility; - continuation of the “Notebooks for Growth” series; - new corporate communication campaign devoted to our commitment to sustainable growth; - broadening of the reference audience; - publication to coincide with the United Nations conference on sustainable development RIO+20; - implementation of the use of social media.
sibility of inserting environmental declarations.
- completion of the part of the organizational manual relating to the balance of skills and knowledge; - approval of the “Good Leadership” charter; - research and implementation of measures to promote the social fund.
Marketing & Sales - staff training on product innovation and distribution of information on production capacities and processes for all marketing and sales staff; - set up of work groups cutting across business lines to share information about the requirements of the various markets and to draft new sales and marketing strategies; - understanding of the level of customer engagement and the potential for working together and comparing results on sustainability; - development of sustainable product features, also in relation to the pos-
Health and safety - completion and implementation of the OHSAS 18001 safety management system in the Italian plants; - adoption of a standard safety management system for all the Italian plants; - organization of the Safety forum (international forum on health and safety issues); - development of further projects with INAIL; - implementation and spreading to all plants of the format for a specific method of data collection, for statistical purposes, for the calculation of accident indices.
ATTACHMENTS 1. TABLE OF KPI PER GRI
2011 2011 Bilancio Integrated Integrato Report 88
Sofidel Integrated Report 2011
1. TABLE OF KPIS PER GRI In order to report on the economic, social and environmental performance of the Sofidel Group the Key Perfor-
INDICATOR 1.1 1.2 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 2.10 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 3.9 3.10 3.11 3.12 3.13 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.10 4.11 4.12 4.13 4.14 4.15 4.16 4.17
mance Indicators (KPI) contained in the GRI Guidelines Version 3.1 have been used. Below we show the cor-
ASPECT Strategy and Analysis Strategy and Analysis Organizational Profile Organizational Profile Organizational Profile Organizational Profile Organizational Profile Organizational Profile Organizational Profile Organizational Profile Organizational Profile Organizational Profile Report Profile Report Profile Report Profile Report Profile Report Scope and Boundary Report Scope and Boundary Report Scope and Boundary Report Scope and Boundary Report Scope and Boundary Report Scope and Boundary Report Scope and Boundary GRI content index N/A Assurance N/A Governance Governance Governance Governance Governance Governance Governance Governance Governance Governance Commitments to external initiatives Commitments to external initiatives Commitments to external initiatives Stakeholder engagement Stakeholder engagement Stakeholder engagement Stakeholder engagement
LEVEL OF COVERAGE • • • • • • • • • • • • • • • • • • • • • • • N/A N/A • • • • • • • • • • • • • • • • –
ECONOMIC PERFORMANCE INDICATORS INDICATOR EC1-core EC2-core EC3-core EC4-core EC5-add EC6-core EC7-core EC8-core EC9-add
ASPECT Economic performance Economic performance Economic performance Economic performance Market presence Market presence Market presence Indirect economic impact Indirect economic impact
LEVEL OF COVERAGE • • • • • • • • •
EN22-core EN23-core EN24-add EN25-add EN26-core EN27-core EN28-core EN29-add EN30-add
relation table showing the level of reporting achieved with the 2011 Integrated Report:
Emissions, effluents and Emissions, effluents and Emissions, effluents and Emissions, effluents and Products and services Products and services Compliance Transport Overall
waste waste waste waste
• • • • • • • – º
SOCIAL PERFORMANCE INDICATORS INDICATOR LA1-core LA2-core LA3-add LA4-core LA5-core LA6-add LA7-core LA8-core LA9-add LA10-core LA11-core LA12-add LA13-core LA14-core HR1-core HR2-core HR3-add HR4-core HR5-core HR6-core HR7-core HR8-add HR9-add SO1-core SO2-core SO3-core SO4-core SO5-core SO6-add SO7-add SO8-core
LEVEL OF COVERAGE Employment • Employment • Employment • Industrial relations • Industrial relations • Occupational health and safety • Occupational health and safety • Occupational health and safety • Occupational health and safety • Training and education • Training and education • Training and education • Diversity and equal opportunity • Diversity and equal opportunity • Investment and procurement practices • Investment and procurement practices º Investment and procurement practices º Non-discrimination • Freedom of association and collective bargaining • Child labour • Forced and compulsory labour • N/A Security practices N/A Indigenous rights Local communities • Corruption • Corruption º Corruption • Public policy • Public policy • Anti-competitive behaviour • Compliance • ASPECT
PRODUCT RESPONSIBILITY PERFORMANCE INDICATORS LEVEL OF INDICATOR ASPECT COVERAGE PR1-core Consumer health and safety • PR2-add Consumer health and safety • PR3-core Product and service labelling • PR4-add Product and service labelling • PR5-add Product and service labelling • PR6-core Marketing communications • PR7-add Marketing communications • PR8-add Customer privacy • PR9-core Compliance •
ENVIRONMENTAL PERFORMANCE INDICATORS INDICATOR EN1-core EN2-core EN3-core EN4-core EN5-add EN6-add EN7-add EN8-core EN9-add EN10-add EN11-core EN12-core EN13-add EN14-add EN15-add EN16-core EN17-core EN18-add EN19-core EN20-core EN21-core
ASPECT Raw materials Raw materials Energy Energy Energy Energy Energy Water Water Water Biodiversity Biodiversity Biodiversity Biodiversity Biodiversity Emissions, effluents Emissions, effluents Emissions, effluents Emissions, effluents Emissions, effluents Emissions, effluents
and and and and and and
waste waste waste waste waste waste
LEVEL OF COVERAGE • • • • • • • • • • • • N/A N/A N/A • • • • • •
• º – N/A
KEY Fully reported Partially reported Not reported Indicator not applicable to Group activities
Sofidel Integrated Report 2011
Graphic design: BACHI FASCETTI ASSOCIATI Printing: San Marco Litotipo - Lucca
Printing of this document was completed in June 2012 Printed on FSC certified paper.
Sofidel S.p.A. via di Lucia - Porcari (Lucca) - tel. +39 0583 2681
This document is the property of the Sofidel Group which reserves all rights over it. Reproduction, including partial reproduction, is not allowed without prior written authorization. 91
Integrated Report 2011