ANNUAL REPORT I 2005
CONSOLIDATED KEY FIGURES (1)
(in millions)
2005 EUR
2004 EUR
2003 EUR
2002 EUR
2001 EUR
2000 EUR
1999 EUR
1998 EUR
1997 EUR
1996 EUR
1995 EUR
316,2 25,5 (5,5) 20,0 13,6 25,5 43,6 29,5 13,6 17,9 63,5 4.645
309,8 27,0 (7,3) 19,6 13,1 27,0 44,8 31,1 12,3 17,8 61,7 4.500
272,8 27,2 (11,0) 16,2 8,9 24,4 52,8 37,3 8,6 22,1 54,5 4.689
237,7 24,6 (8,7) 15,9 11,0 23,1 42,8 30,2 10,0 19,8 47,0 4.271
226,0 33,8 (6,7) 27,1 17,3 32,4 50,9 35,8 16,9 18,6 42,8 3.924
192,4 32,6 (3,0) 29,6 19,0 31,5 45,0 32,5 18,8 14,1 34,5 3.420
161,1 28,4 (1,3) 27,1 17,6 27,3 37,8 29,5 18,6 11,6 30,9 2.857
141,2 19,6 (1,7) 17,9 12,3 19,0 27,1 20,7 12,2 7,1 24,1 2.555
107,9 15,0 (1,2) 13,8 9,1 14,5 19,6 14,2 9,0 4,7 17,3 1.552
85,1 9,7 (1,1) 8,6 6,8 9,2 13,2 10,8 6,5 3,2 13,0 1.231
66,8 7,7 (1,9) 5,8 4,5 7,2 10,3 7,6 4,3 2,8 10,3 930
129,4 66,9 126,8 337,7 107,6 16,6 142,3
118,3 68,5 117,7 330,7 90,9 7,1 141,4
123,5 89,0 148,1 346,9 108,9 11,9 175,8
125,3 95,1 134,6 331,8 118,5 30,6 153,1
123,9 83,4 118,4 310,3 117,3 27,1 138,9
112,0 66,2 91,6 262,9 101,4 27,4 115,7
97,5 57,3 71,1 227,6 81,4 28,3 99,5
79,8 42,5 56,7 185,3 73,6 22,4 73,6
33,6 35,8 44,7 112,6 43,6 15,6 40,7
25,1 30,3 40,6 89,5 40,7 10,9 29,1
18,6 14,0 31,1 70,1 31,7 4,5 21,9
8,1% 13,8% 4,30% 9,34% 1,38 38,3% 0,98 11% 7,09%
8,7% 14,5% 4,24% 10,04% 1,33 35,8% 1,00 10% 8,13%
9,0% 19,4% 3,3% 13,7% 1,40 35,6% 1,20 6,9% 10,0%
9,7% 18,0% 4,4% 12,7% 1,78 37,7% 1,07 8,1% 9,6%
14,3% 22,5% 7,6% 15,8% 1,91 39,9% 0,96 15,1% 15,6%
16,4% 23,4% 9,9% 16,9% 2,05 42,6% 0,82 19,3% 18,1%
17,0% 23,5% 11,8% 18,3% 2,11 42,8% 0,73 23,4% 19,3%
13,5% 19,2% 8,9% 14,6% 2,12 43,1% 0,71 36,3% 23,3%
13,5% 18,1% 8,5% 13,2% 1,92 29,8% 1,33 35,7% 21,5%
10,8% 15,5% 7,9% 12,7% 2,00 28,1% 1,62 34,8% 18,3%
10,8% 15,5% 6,8% 11,4% 1,40 26,5% 1,68 29,1% 19,4%
PROFIT AND LOSS ACCOUNT Turnover Operating profit (EBIT) Financial result Profit on ordinary activities before taxation Profit on ordinary activities after taxation EBIT (8) EBITDA (9) Cash flow (4) Net profit (group’s share) Depreciation Personnel costs Number of employees (in units) BALANCE SHEET Equity Long-term financial debt Net financial debts (2) Balance sheet total Working capital (3) Net investment in tangible fixed assets (10) Fixed assets RATIOS EBIT (8) EBITDA (9) Net profit margin (7) Cash flow/turnover Liquidity (current assets/short-term debt) Solvency (equity/balance sheet total) Net financial debt/equity Return on equity (5) Return on capital (6) (1) (2) (3) (4) (5) (6) (7) (8) (9) (10)
As from 2004 IFRS Financial debt – cash deposits and cash at bank and in hand. Financial fixed assets + current assets (minus cash deposits and cash at bank and in hand) – non financial debt up to one year – accrued charges and deferred income Consolidated net profit + depreciation & amortization + provisions for liabilities and charges + deferred taxes Profit for the year (group’s share) /equity at end of previous financial year. Operating profit/ ((equity + minority interests + provisions for liabilities and charges + net financial debt) at the start of the period). Net profit /turnover for the financial year. Earnings Before Interests and Taxes = Operating profit – Amortization of consolidation differences (goodwill) Earnings Before Interests, Taxes, Depreciations and Amortizations = Operating profit + depreciation + amortization + provisions for liabilities and provisions. Purchases of tangible fixed assets - transfers and decommissionings and booking out of related depreciation
Consolidated key figures per share (1)
2005 EUR Operating profit 1,19 Profit on ordinary activities after taxation 0,64 Net profit (group’s share) 0,63 Cash flow 1,38 Consolidated equity 6,05 Gross dividend 0,24 Net dividend 0,18 Pay-out (%) 37,8% Maximum share price 10,49 Minimum share price 7,85 Price at Dec. 31. (2) 8,30 Change in share price (4) (19%) Price/Earnings Ratio (5) 13,1 Price/Cash flow Ratio (6) 6,0 Average daily trading volume (no. of shares) (3) 12.771 Average monthly trading volume (no. of shares) (3) 268.200 Annual trading volume (in millions) 29,5 Number of Sioen Industries shares outstanding (in thousands) (1) 21.391 Stock market capitalization (millions) (4) 177,5 (1) (2) (3) (4) (5) (6)
2004 EUR 1,26 0,61 0,61 1,45 5,53 0,22 0,1650 35,9% 10,70 8,24 10,29 35% 16,8 7,1 6.550 137.550 16,2 21.391 220,1
2003 EUR 1,27 0,42 0,40 1,74 5,77 0,20 0,15 49,8% 9,16 4,70 8,24 8% 20,5 4,7 4.406 92.895 8,3 21.391 176,3
2002 EUR 1,15 0,52 0,47 1,41 5,86 0,17 0,13 35,9% 14,95 6,00 7,65 (33%) 16,4 5,4 5.310 112.837 10,4 21.391 163,6
2001 EUR 1,58 1,27 0,79 1,67 5,79 0,16 0,12 20,2% 23,51 10,1 11,50 (45%) 14,5 6,9 5.104 107.194 20,7 21.391 246,0
Recalculated after the 1 to 55 share split by 55 on 13/09/96 and the 1 to 10 split on 05/11/98; as from 2004 IFRS On March 31, 2006 the price of the Sioen Industries share was EUR 9.08 per share. 1996 data are strongly influenced by the high volumes just after the stock market flotation of 18 October 1996. Price at end-December. Share price/net profit (group share) per share Share price/cash flow per share
2000 EUR 1,52 0,89 0,88 1,52 5,24 0,14 0,11 15,8% 33,65 18,4 20,90 (36,7%) 23,8 13,8 9.548 199.710 63,7 21.391 447,1
1999 EUR 1,33 0,82 0,87 1,38 4,56 0,12 0,09 14,2% 47,5 28,5 33,00 (14%) 37,9 23,9 13.216 277.530 122,5 21.391 705,9
1998 EUR 0,92 0,58 0,57 0,97 3,73 0,09 0,07 15,7% 43,13 9,92 38,18 283% 67,0 39,4 26.671 557.863 162,6 21.391 816,6
1997 EUR 0,75 0,43 0,45 0,71 1,68 0,07 0,05 15,5% 10,68 3,92 9,97 154% 22,1 14,0 20.950 434.762 33,9 19.965 199,0
1996 EUR 0,48 0,32 0,32 0,54 1,26 0,05 0,04 14,5% 4,02 3,84 3,92 13% 12,1 7,3 43.410 855.860 8,2 19.965 78,2
1995 EUR 0,38 0,21 0,21 0,38 0,93 19.965 -
KEY FIGURES 1993 - 2005 (in millions EUR) 40
20%
35 16%
30 25
12%
20 8%
15 10
4%
5 0%
0 ‘93
‘94
‘95
GROUP PROFIT
‘96
‘97
‘98
‘99
CONSOLIDATED CASH FLOW
‘00
EBIT
‘01
‘02
EBIT/TURNOVER
‘03
‘04
‘05
CASH FLOW/TURNOVER
60%
350 300 250
55%
200 150 50%
100 50
45%
0 ‘93
‘94
‘95
ADDED VALUE
‘96
‘97
GROSS MARGIN
‘98
‘99
‘00
TURNOVER
‘01
GROSS MARGIN %
INVESTMENTS IN 1993 - 2005 (in millions EUR) 35 30 25 20 15 10 5 0 ‘93
‘94
‘95
COATING
‘96
‘97
APPAREL
‘98
‘99
‘00
‘01
‘02
‘03
‘04
‘05
INDUSTRIAL APPLICATIONS
FINANCING OF ASSETS 1993 - 2005 (in %) 100% 80% 60% 40% 20% 0% ‘93
‘94
‘95
‘96
ST LIABILITIES
‘97
‘98
‘99
LT LIABILITIES
‘00
‘01
‘02
‘03
‘04
‘05
PROVISIONS
EQUITY/MINORITY INTERESTS
DEVELOPMENT OF EMPLOYMENT 1993 - 2005 5.000 4.000 3.000 2.000 1.000 0 ‘93
‘94
‘95
COATING
‘96
‘97
APPAREL
‘98
‘99
‘00
‘01
‘02
‘03
INDUSTRIAL APPLICATIONS
‘04
‘05
TOTAL
STOCK PRICE (to 31-03-06) in EUR 50 SIOEN
45
EURO STOXX50
40 35 30 25 20 15 10 5 0 18
-1
’96 0-
18
-1
’97 0-
18
-1
’98 0-
18
-1
’99 0-
18
-1
’00 0-
18
-1
’01 0-
18
-1
’02 0-
18
-1
’03 0-
18
-1
’04 0-
31
-0
’06 3-
‘02
‘03
‘04
‘05
1
SIOEN COATING NV ❱ Fabriekstraat 23 B-8850 Ardooie België ❱ BTW BE 402.753.106 ❱ RPR 0402.753.106 Brugge ❱ T +32 51 74 09 00 ❱ F +32 51 74 09 64 ❱ sioline@sioen.be SAINT FRERES SAS ❱ 4 route de Ville BP 1F-80420 Flixecourt France ❱ TVA FR 76408448850 ❱ RCS AMIENS B 408 448 850 ❱ T +33 322 51 51 45 ❱ F +33 322 51 51 49 ❱ sfe@sioen.com SIOEN COATING DISTRIBUTION NV ❱ Fabriekstraat 23 B-8850 Ardooie België ❱ BTW BE 436.241.167 ❱ RPR 0436.241.167 Brugge ❱ T +32 51 74 09 00 ❱ F +32 51 74 09 64 ❱ sioline@sioen.be SIOEN FABRICS SA ❱ Zoning Industriel du Blanc Ballot Avenue Urbino 6B-7700 Mouscron Belgique ❱ TVA BE 458.801.684 ❱ RPM 0458.801.684 Tournai COATING ❱ T +32 56 85 68 80 ❱ F +32 56 34 61 31 ❱ sioenfabrics@sioen.be ❱ WEAVING ❱ T +32 56 85 01 40 ❱ F +32 56 85 01 49 ❱ weaving@sioen.be EUROPEAN MASTER BATCH NV – E.M.B. NV ❱ Rijksweg 15 B-2880 Bornem België ❱ BTW BE 421.485.289 ❱ RPR 0421.485.289 Mechelen ❱ T+32 3 890 64 00 ❱ F+32 3 899 26 03 ❱ emb@sioen.be INDUCOLOR SA ❱ Chemin Preuscamps 12 B-7822 Ath (Meslin-L’Evêque) Belgique ❱ TVA BE 400.685.125 ❱ RPM 0400.685.125 Tournai ❱ T+32 68 25 02 30 ❱ F+32 68 55 26 02 ❱ inducolor@sioen.be SIOEN FIBRES SA - extrusion ❱ Zoning Industriel du Blanc Ballot Boulevard Métropole 9 B-7700 Mouscron Belgique ❱ TVA BE 463.789.464 ❱ RPM 0463.789.464 Tournai T+32 56 48 12 70 ❱ F+32 56 48 12 85 ❱ fibres.extrusion@sioen.be SIOEN COATED FABRICS (SHANGHAI) TRADING CO. LTD ❱ Room O, Floor 15, Hengji Building No 99, Huaihai Road (East) 200021 Shanghai P.R. of China ❱ T+86 21 63 84 25 21 ❱ F+86 21 63 84 27 39 ❱ sioen@online.sh.cn SIOFAB SA ❱ Indústria de Revestimentos Têxteis Rua da Indústria PT-4795-074 Vila das Aves Santo Tirso Portugal Santo Tirso SOB O N° 4641 NIF 505.046.644 ❱ T+351 252 87 47 14 ❱ F+351 252 94 29 68 ❱ siofab@net.sapo.pt TIS NV ❱ Driehoekstraat 2A B-9451 Haaltert (Kerksken) België ❱ BTW BE 405.085.064 ❱ RPR 0405.085.064 Aalst ❱ T+32 53 85 92 20 ❱ F+32 53 85 92 56 ❱ tis@sioen.be VERANNEMAN TECHNICAL TEXTILES NV ❱ Fabriekstraat 31 B-8850 Ardooie België ❱ BTW BE 429.387.623 ❱ RPR 0429.387.623 Brugge ❱ T+32 51 24 81 70 ❱ F+32 51 22 61 68 ❱ info@veranneman.be PENNEL AUTOMOTIVE SAS ❱ 310 Rue d’Alger F-59100 Roubaix France ❱ TVA FR 53448273615 ❱ RCS Roubaix-Tourcoing B 448 273 615 ❱ T+33 320 76 21 10 ❱ F+33 320 76 21 12 ❱ automotive@pennel.sioen.com
SIOEN NV ❱ Fabriekstraat 23 B-8850 Ardooie - België ❱ BTW BE 478.652.141 ❱ RPR 0478.652.141 Brugge ❱ T+32 51 74 08 00 ❱ F+32 51 74 09 62 ❱ customer@sioen.be CONFECTION TUNISIENNE DE SECURITE SA – C.T.S. SA ❱ 5 Impasse n° 2 Rue 8612 – (Z.I.) La Charguia TN-2035 Tunis Tunisie ❱ Code TVA 03030 V / A / M / 000 ❱ RC B 133171996 ❱ T+216 71 77 34 77 ❱ F+216 71 78 40 47 ❱ cts@sioen.com GAIRMEIDI CAOMHNAITHE DHUN NA NGALL TEORANTA LTD ❱ (Donegal Protective Clothing Ltd –Sioen Ireland) - Industrial Estate Bunbeg Co. Donegal Ireland ❱ VAT IE 4621355M ❱ Company Nr. 78212 ❱ T+353 74 953 11 69 ❱ F+353 74 953 15 91 ❱ ireland@sioen.ie MULLION MANUFACTURING LTD ❱ 44 North Farm Road South Park Industrial Estate Scunthorpe North Lincolnshire DN17 2AY - UK ❱ VAT GB 365.1873.34 ❱ Company Nr. 1871440 ❱ T+44 1724 28 00 77 ❱ F+44 1724 28 01 46 ❱ mullion@sioen.com SIOEN FRANCE-DIVISION SIP PROTECTION ❱ Pavillon Hermès 110 avenue Gustave Eiffel ZI La Coupe F-11100 Narbonne France ❱ TVA FR 49300774767 ❱ RCS Narbonne B 300 774 767 ❱ T+33 4 68 42 35 15 ❱ F+33 4 68 42 27 43 ❱ sip-protection@sip-protection.com P.T. SIOEN INDONESIA ❱ Jl. Irian Raya Blok E-26 Nusantara Bonded Zone (Kawasat Berikat Nusantara) Cakung Cilincing Jakarta 14140 Indonesia ❱ NPWP 1.068.001.5-052 ❱ T+62 21 440 33 88 ❱ F+62 21 440 14 28 ❱ indonesia@sioen.com PT SUNGINTEX ❱ Jalan Raya Narogong Km 12,5 Pangkalan IV Desa Cikiwul Kec. Bantar Gebang Bekasi Barat 17310 Indonesia ❱ NPWP 1.068.012.2-407 ❱ T+62 21 825 22 22 ❱ F+62 21 825 44 44 ❱ indonesia@sioen.com SIOEN FIBRES SA – distribution ❱ Zoning Industriel du Blanc Ballot Boulevard Métropole 9 B-7700 Mouscron Belgique ❱ TVA BE 463.789.464 ❱ RPM 0463.789.464 Tournai ❱ T+32 56 85 54 30 ❱ T+32 56 34 66 10 ❱ distribution@sioen.be SIOEN FRANCE SAS ❱ Pavillon Hermès 110 avenue Gustave Eiffel ZI La Coupe F-11100 Narbonne France ❱ TVA FR 49300774767 ❱ RCS Narbonne B 300 774 767 ❱ T+33 4 68 42 35 15 ❱ F+33 4 68 42 27 43 ❱ sioen.france@sioen.com SIOEN TUNISIE SA ❱ 7 Impasse N° 2 Rue 8612 – (Z.I.) La Charguia TN-2035 Tunis Tunisie ❱ Code TVA 614715 S / A / M / 000 ❱ RC B 19711998 ❱ T+216 71 80 75 47 ❱ F+216 71 80 92 62 ❱ sioen.tunisie@sioen.com SIOEN UK Ltd ❱ Unit 2 Windsor House Ackhurst Business Park Foxhole Road Chorley Lancashire PR7 1NY UK ❱ VAT GB 732.4071.62 ❱ Company Nr 3761142 ❱ T+44 1257 27 72 44 ❱ F+44 1257 27 72 45 ❱ sales@uk.sioen.com SIOEN ZAGHOUAN SA ❱ Zone Industrielle de Zaghouan TN-1100 Zaghouan Tunisie ❱ Code TVA 747023 F / A / M / 000 ❱ RC B 177132000 ❱ T+216 72 68 06 60 ❱ F+216 72 68 26 60 ❱ sioen.zaghouan@sioen.com SIOEN FRANCE DIVISION VIDAL PROTECTION ❱ Zone Industrielle Le Passage Jean-Rostand BP167 F 81300 Graulhet ❱ T+33 5 63 34 52 46 ❱ F+33 5 63 34 69 99 ❱ vidal@sioen.com SIOEN USA Inc. ❱ c/o Flom, French & Goodwin, L.L.C. 675 Line Road Building 4, Suite B Aberdeen, NJ 07747 USA ❱ T+1 732 441 12 50 ❱ F+1 732 441 12 53 ❱ cgoodwin@FFG-CPA.COM SIOEN NV – BALENO ❱ Fabriekstraat 23 B-8850 Ardooie België ❱ T+32 51 74 08 00 ❱ F+32 51 74 09 63 ❱ baleno@sioen.be SIOEN DEUTSCHLAND ❱ Am Zirkel 8 49757 Werlte Deutschland (Allemagne) ❱ T+49 59 51 99 47 0 ❱ F+49 59 51 99 47 47 ❱ info@sioen.de
COATEX NV ❱ Industriezone Sappenleen Sappenleenstraat 3-4 B-8970 Poperinge België ❱ BTW BE 434.140.425 ❱ RPR 0434.140.425 Ieper ❱ T+32 57 34 61 60 ❱ F+32 57 33 35 23 ❱ coatex@sioen.be SAINT FRERES CONFECTION SAS ❱ 2 route de Ville BP 37 F-80420 Flixecourt France ❱ TVA FR 44408449098 ❱ RCS Amiens 408 449 098 ❱ T+33 322 51 51 70 ❱ F+33 322 51 51 79 ❱ sfc@sioen.com SIOEN NORDIFA SA ❱ Rue Ernest Solvay 181 B-4000 Liège Belgique ❱ TVA BE 474.276.154 ❱ RPM 0474.276.154 Liège ❱ T+32 4 252 21 50 ❱ F+32 4 253 04 25 ❱ nordifa@sioen.be ROLAND INTERNATIONAL B.V. ❱ Kasteellaan 33 NL-5932AE Tegelen Nederland ❱ BTW NL003812522B01 ❱ HR Venlo 12011983 ❱ T+31 77 376 92 92 ❱ F+31 77 373 69 66 ❱ info@roland-int.org ROLTRANS GROUP AMERICA INC. ❱ 3212 Pinewood Drive Arlington, Texas 76010 USA 75-1994308 Delaware Corporation # 2044811 ❱ T+1 817 607 00 80 ❱ F+1 817 607 00 88 ❱ info@roltrans.com ROLAND PLANEN GMBH ❱ Am Zirkel 8 49757 Werlte Deutschland ❱ Ust-id.Nr.: DE 812873033 ❱ Osnabrück HRB 122296 ❱ T+49 59 51 99 55 70 ❱ F+49 59 51 99 55 71 ❱ info@roland-int.org ROLTRANS GROUP POLSKA SP.Z.O.O. ❱ Ul. Nadbrzezna 1 PL-62500 Konin Polska ❱ NIP 665-100-18-19 ❱ RHB 1210 ❱ T+ 48 632 44 39 25 ❱ F+48 632 44 39 21 ❱ info@roland-int.org ROLAND UKRAINE LLC Kievskaya 64-A Rivne Ukraine ❱ T+38 362 28 65 39 ❱ F+38 362 28 65 39 ❱ roland@rivne.com ROLAND TILTS UK Ltd ❱ Unit 1 Usher Street Off Wakefield Road Bradford BD4 7DS UK ❱ VAT GB 311746186 ❱ Company Nr 1380441 ❱ T+44 1274 39 16 45 ❱ F+44 1274 30 51 56 ❱ info@roland-int.org
DEFINITIONS Gross margin % (Turnover +/- stock movements finished goods - purchases raw materials -/+ stock movements raw materials)/turnover EBITDA Earnings Before Interest, Taxes, Depreciation and Amortization = Operating profit + amortization + provisions for liabilities and other risks + depreciation EBIT Earnings Before Interest and Taxes = Operating profit EBT Profit Before Taxation EAT Profit After Taxation NOPAT EBIT - Taxes EVA NOPAT - cost of capital at start of the period ROE Net result part of the group / equity at end of previous financial year ROCE NOPAT / Capital employed of the period Cash flow consolidated net profit + depreciation + amortization + provisions for liabilities and charges + deferred taxes FFO Net result + depreciations + provisions for liabilities and taxes + amortization + deferred taxes. Net debt Financial debt - cash deposits and cash equivalents Free operating CF Funds from operations - funds from investing activities Capital Equity + minority interests + provisions for liabilities and charges + amounts payable after one year Working capital Financial fixed assets + current assets (minus cash deposits and cash equivalents) - non financial debt up to one year - accrued charges and deferred income. Capital employed Working capital + tangible and intangible fixed assets + goodwill
FINANCIAL CALENDAR
Annual Meeting of Shareholders - Friday May 26, 2006 Trading update first quarter results 2006 - Friday May 26, 2006 Announcement of 2006 first semester results - Thursday September 14, 2006 Trading update third quarter results 2006 - Wednesday November 15, 2006
FINANCIAL INFORMATION AND INVESTOR RELATIONS For all further information, institutional investors and financial analysts are advised to contact: Geert Asselman Chief Financial Officer
Fabriekstraat 23 • B-8850 Ardooie T +32(0)51 74 09 80 F +32(0)51 74 09 79 E corporate@sioen.be W www.sioen.com
JAARVERSLAG/RAPPORT ANNUEL/ANNUAL REPORT Dit jaarverslag is beschikbaar in het Nederlands, het Frans en het Engels. Ce rapport annuel est disponible en français, en néerlandais et en anglais. This annual report is available in English, Dutch and French.
Realization: www.kliek.be - T 0032 51 40 43 12 - (05 661) - ‘06/05
INDEX
04 06 30 32 34 36 38 40 42 44 48 50 52 58 64 70 72 74 76 82 84 86 149 150 Only the Dutch version of the annual report has evidential value.
2
LETTER TO THE SHAREHOLDERS SIOEN INDUSTRIES, ALWAYS AND EVERYWHERE SIOEN INDUSTRIES, PROTECTION THROUGH INNOVATION PROFILE MISSION AND STRATEGY R&D PERSONNEL ENVIRONMENTAL POLICY QUALITY VERTICAL INTEGRATION GROUP STRUCTURE SIOEN WORLDWIDE COATING DIVISION APPAREL DIVISION INDUSTRIAL APPLICATIONS SIOEN INDUSTRIES REPORT OF THE BOARD OF DIRECTORS IMPORTANT EVENTS CORPORATE GOVERNANCE SHARE INFORMATION GENERAL INFORMATION FINANCIAL REVIEW FINANCIAL CALENDAR ADDRESSES
OT E
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TI O N A V O NN
3
SIOEN INDUSTRIES I
letter
TO THE SHAREHOLDERS
Dear Shareholders,
“Sioen Industries, Protection through Innovation” is our company slogan. Inspiration, innovation, integration and diversification are our driving forces. Seeking the right combination of people and technology is our approach. It is on these principles that the Sioen group has been built, and they remain the foundation for our future. This was confirmed during 2005, a year marked by record prices for oil and derivatives, an unstable economic and social environment in certain parts of the world and fierce competition from the Far East. In this hypercompetitive market it is people that make the difference and assure the company’s success. I therefore consider it one of my biggest challenges to create the right atmosphere and to attract the best people to ensure the continued success of the company. People and technology together are the basis of our long-term vision. Our long-term strategy is one of vertical integration, with a focus on growth and profit. Vertical integration in our case means maintaining control of the entire production process from raw material through to finished product: spinning, weaving, coating, fabricating pigments, cutting and processing technical textiles – we do it all. Man and machine, creativity and daring, entrepreneurship and drive, flexibility and innovation, customer relations and productivity... In 2005 the group increased its consolidated turnover by 2.08% or EUR 6.4 million to EUR 316.2 million. The Coating Division accounted for 54% of this figure, the Apparel Division 24.8% and the Industrial Applications Division 21.2%. Net profit came to EUR 13.58 million or 4.3% of turnover, cash flow to EUR 29.5 million and EBITDA and EBIT to EUR 43.65 million (13.8% of turnover) and EUR 25.47 million (8.1%) respectively.
Coating Division Sioen is the only company in the world to manage five different coating techniques, and this clearly reaps rewards. Our technical products are used in a wide range of industries. Sioen Industries Group products dominate particularly where technical specifications are decisive. It is therefore the most technical product lines that account for the greatest growth.
4
The Coating Division performed well in the fourth quarter to close slightly up on the previous year’s result. Operating cash flow (EBITDA) for the year amounted to 15% of turnover. In 2005 Sioen invested in additional capacity, better profitability and automation. The group is also working continuously to increase efficiency and cut costs. This enabled the Coating Division to maintain its profit margins, notwithstanding high raw materials prices.
Apparel Division In this division, too, the diversity of the product range and the focus on technically advanced products is reaping rewards. Sioen is a household name in niche markets for high-quality protective clothing such as bulletproof vests, hunting gear and advanced military clothing, forestry clothing and fire-fighting clothing. Service companies, governments, police and army are major customers. Here, too, protective clothing has to meet ultrastringent technical specifications. Thanks to its presence in Indonesia, Sioen is able to supply a comprehensive range of products from very high quality to low-end. Thanks to this approach turnover grew by 14.5% to EUR 78.1 million, including both European sales and sales through our Indonesian outlets. Operating cash flow (EBITDA) last year amounted to 7% of turnover.
Industrial Applications The Industrial Applications Division is organised around three main “heavy duty textiles” centres of activity.
Other industrial applications. The Sioen Group puts its know-how to good use in a very wide range of industrial markets with the production of tent kadors, inflatable silos, filters and laser cutting of airbags. Turnover was down 5.67% at EUR 70 million. This fall is chiefly attributable to the temporary withdrawal of an order for laser cutting. A military order has also been slow to materialize. The operating cash flow (EBITDA) of the Industrial Applications Division is 13% of turnover. Sioen is the world market leader in coated technical textiles and industrial protective clothing, a niche specialist in fine chemicals and a market leader in the processing of technical textile into semi-finished products and technical end products. The key to our success is our corporate culture, in which everything turns around know-how, innovation and creativity. In short, R&D, in all its aspects, plays a central role in our organization. Our R&D team, backed up by all group employees, focuses on a targeted search for new products, markets, applications and process improvements. Thanks to this approach, the group is active in widely differing niche markets with a well-defined ambition of market leadership. The company is run from the head office in the heart of West Flanders, and has been so for more than 40 years by my parents, and now - one generation on - by myself and my two sisters. We are constantly supported by a board of external advisors. The company is where it should be: financially sound, full of exciting projects, with a dynamic management, strong and solid, and ready for the future.
Transport-related activities With its sliding covers and tarpaulins for trucks and containers, Sioen is the preferred partner of Europe’s top name trailer manufacturers. We also produce railway tarpaulins, in which we have acquired an important position on the European market, once again thanks to technical innovation. Military applications The group is also active in the military market with truck and jeep tarpaulins (with and without printed camouflage patterns), camouflage netting, tents, etc.
Michele Sioen MJS Consulting b.v.b.a. Director
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SIOEN INDUSTRIES I
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ALWAYS AND EVERYWHERE
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SIOEN INDUSTRIES I ALWAYS AND EVERYWHERE
TRANSPORT Truck tarpaulins and curtains, mud flaps, inflatable containers, railway wagon tarpaulins, protective and industrial clothing for railway, bus, transport and airline companies
“In the transport product group we have firm control of all the steps in the production process. We spin the yarn, weave a base fabric which we then coat with a paste (we make the pigment pastes ourselves, too), cut the coated fabric, and make it into curtains, covers and tarpaulins”.
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SIOEN INDUSTRIES I ALWAYS AND EVERYWHERE
“Coatex in Poperinge (B) is a world player in the production of kadors, made with directly coated fabric and a flexible PVC tube. Here, too, vertical integration is an asset. The yarn, the fabric, the pigments, the coating, the cutting and the processing - all are carried out within the group.”
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TENTS Camping tents, party tents, awnings, canopies, halls, semi-permanent buildings, kadors.
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SIOEN INDUSTRIES I ALWAYS AND EVERYWHERE
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SPORTS Gym mats, buffers, partition walls in sports centres, children’s playing mats, clothing for hunters, golfers and fishermen, motorcyclist’s clothing, safety nets, reflective clothing for joggers, cyclists and other outdoor sportsmen, pool covers and pool reinforcement nets, camouflage clothing for hunters, surfer’s, ski and skater’s clothing. .
“Direct coating is one of the group’s five coating techniques. The PVC paste (coloured with our own EMB and Inducolor pigment paste) is applied directly to the fabric. The new line in Saint-Frère Enduction (F) and the high-performance line in Ardooie are the guarantee of quality, service and flexibility.”
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SIOEN INDUSTRIES I ALWAYS AND EVERYWHERE
AUTOMOBILE Airbags, dashboards, sun shades, door panels, gearlever covers, floor mats, seats, filters, trunk curtains.
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“A good example of vertical integration is the production of airbags. The polyamide yarn is produced in the group’s spinning mill. This high-tech spinning mill is among the most modern in the world. The yarn is then processed into fabrics which are then given a coating layer in one of the group’s six coating plants. Laser cutting is the final step.”
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SIOEN INDUSTRIES I ALWAYS AND EVERYWHERE
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“Sioen masters five coating techniques, including transfer coating. Sioen Fabrics Coating and the Portuguese company Siofab are specialised in transfer coating and light direct coating. In these hi-tech plants the coating paste is applied, first on paper and then on the material. The companies concentrate on new applications of polyurethane, silicone or other types of coating for protective clothing, mattress protectors, tablecloths, airbags, etc.”.
CHEMISTRY, PETROCHEMISTRY, AIR AND WATER TREATMENT Specific protective clothing, oil dams, filters, air conditioning and mine shaft air ducts.
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SIOEN INDUSTRIES I ALWAYS AND EVERYWHERE
Windbreak nets drainage protective clothing damming film filters pond foil ultra-low temperature clothing hygienic protective clothing
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AGRICULTURE, HORTICULTURE, FORESTRY AND FOOD INDUSTRY
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SIOEN INDUSTRIES I ALWAYS AND EVERYWHERE
“The ultra-modern spinning mill in Moeskroen is at the beginning of the industrial chain. Here we extrude yarn from polyester and polyamide granulates. We make maximum use of the capacity and process some 15,000 tons of granulates per year. With the yarn we weave the fabric which is then used as a base in the various coating plants.�
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NAVIGATION, FISHING INDUSTRY AND WATER SPORTS Floatation suits, life jackets, protective aquatic clothing, inatable boats, boat tarpaulins, yacht canvas, ship tarpaulins.
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SIOEN INDUSTRIES I ALWAYS AND EVERYWHERE
MEDICAL Protective clothing, air filters, mattress protectors, pillowcases.
INTERIOR Yarns and pigments for carpets, wall coverings, insulation, suspended ceilings, etc…
“Plastylon is the brand name for washable wall covering. In the Pennel Automotive plant in Roubaix (F) the film is produced, treated and packed for sale. This ‘wallpaper’ is extremely suitable for schools, hospitals, airports, hotels and other public buildings.”
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SIOEN INDUSTRIES I ALWAYS AND EVERYWHERE
“The central, fully automatic dispatch and distribution centre of the Apparel Division guarantees an optimal stock policy and a rapid and efficient distribution of our end products. From the various production centres the finished products are sent to the central dispatch and distribution centre, where they are temporarily stored before being sent on to the various customers.”
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PUBLIC SECTOR Clothing, including for ďŹ reďŹ ghters, police, military, railways, airlines and postal services, tents and truck tarpaulins.
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SIOEN INDUSTRIES I ALWAYS AND EVERYWHERE
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ADVERTISING AND PROMOTION Indoor and outdoor advertising banners, promotional clothing.
CORPORATE IDENTITY WEAR Clothing for courier services, electricity companies, service stations, breweries, telecom businesses and airlines.
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SIOEN INDUSTRIES I ALWAYS AND EVERYWHERE
CONSTRUCTION AND ROADWORKS Reinforcement for gyproc boards, insulation, road reinforcement, scaffolding nets, protective clothing (high visibility), silos, storage tents, awnings, sewerage piping, ďŹ lters.
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“In Sioen Fabrics Weaving (Moeskroen, B), brand new looms produce the high-quality synthetic materials which will be further processed in the Coating Division. In addition to the weaving of polyester high-tenacity fabrics, TIS (Haaltert, B) also specialises in the weaving of yacht sail cloth and other technical textiles. Veranneman Technical Textiles (Ardooie, B) weaves open-structure fabrics that are immediately coated after weaving.�
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SIOEN INDUSTRIES I
PROTECTION THROUGH INNOVATION
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SIOEN INDUSTRIES I
PROFILE
Specialist know-how and experience When Jean-Jacques and Jacqueline Sioen launched their first coating line, 46 years ago, it was the start of Sioen Industries as we know it today - a healthy listed company with some 39 subsidiaries, 4,600 employees and a turnover of 316.2 million euros.
Market leader Sioen Industries is the world market leader in coated technical textiles, the European market leader in industrial protective clothing, a niche specialist in fine chemicals and one of the biggest global players in the processing of technical textiles into semi-manufactured goods and technical end products.
Three divisions under one roof The Coating Division specialises in the integrated coating of technical textiles and controls the entire production process, from the extrusion of yarns (spinning), via the weaving of technical fabric and the production of pigment pastes and granulates through to coating with various materials. This vertical integration represents a distinct competitive advantage. The Apparel Division designs and produces high-quality protective clothing for both industrial and recreational applications. Sioen has a reputation for quality and flexibility. The Industrial Applications Division is responsible for the processing of coated fabrics and PVC film. The division covers all the group’s ‘heavy duty product’ manufacturing activities: pond liners, tent kadors, airbags, side curtains and tarpaulin covers, filters, roller shutters, and so on. This is another area in which Sioen is a major global player.
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“The highly qualified R&D team thinks actively with the customer and works out fully customised solutions. Thanks to these enormous efforts in the search for new materials and new applications, Sioen Industries can guarantee its technological edge and adopt a prominent position in fast-growing markets.”
Global player
Ongoing research and development
Sioen Industries produces in 16 different countries, sells its products in 80 countries and has employees of 19 different nationalities.
Sioen Industries is an innovative business in terms of both production techniques and applications and markets. With input from a highly effective sales and marketing team and the work of a high-quality R&D team, we are continually identifying new applications. For a knowledge-intensive business such as Sioen Industries, a sound R&D policy is indispensable. We are well aware that innovation is only possible with the help of new knowledge. For such new knowledge, systematic research has to be conducted into solutions to practical problems. Business ideas are then further elaborated and research results lead to completely new or improved products and production processes. To this end, Sioen Industries relies on its own researchers and development experts, and works with other businesses, research establishments and universities.
Spreading risk through diversification Sioen Industries markets a wide variety of products, but all have one feature in common - their technical sophistication. Our corporate slogan is ‘Protection through innovation’, and aptly so, because we offer protection to both man and his possessions with high-tech protective clothing for all branches of industry and with technical textiles for products such as tarpaulin covers and side curtains for trucks, airbags, pool covers, tents and structures, windbreak nets, water tanks, oil booms and road reinforcements.
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SIOEN INDUSTRIES I
MISSION & STRATEGY
Mission Sioen Industries: protection through innovation. We offer our customers technical products, made-to-measure solutions, quality and flexibility, in every area in which we are active: technical textiles, protective clothing and the processing of ‘heavy duty’ technical textiles into semi-manufactured goods and end products. ❱ We want to retain and further extend our market leadership in all segments, and our emphasis at all times is on technically sophisticated products and innovation. ❱ We offer our shareholders a sound investment with reliable results and a growing dividend stream. ❱ We work with well-trained, result-oriented employees to achieve our objectives, with a concern for safety and the environment as fundamental values.
Strategy In our strategic plan, drawn up to accomplish our mission to the best of our ability, vertical integration, sustainable growth, quality, innovation and profitability are central. We take Inspiration, Innovation, Integration and Diversification seriously, and they are recurrent themes throughout every part of our business.
Vertical Integration Sioen seeks to bring as many components of the value chain within the organisation as possible. This concept represents an increasingly important strategic cornerstone: customers are offered an integrated mix of products and services can rely on thorough internal quality control. We keep the entire production process, from raw material to finished product, inhouse: we spin, weave, coat, make pigments for, cut and process technical textiles. The group’s three divisions embody this vertical integration. More can be found on this subject in the group profile on page 32, 33 and on pp. 46 and 47.
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Innovation: development and investment Sioen Industries aims to consolidate and further extend its technical lead in each of the areas in which it is active. The development and research team is continually reinforced and consolidated with people, materials, buildings and testing lines.
Existing plants are subject to continuous process testing, and adapted to the latest technological developments. Sioen Industries invests in new plants and in modernising its existing plants. The chapter on R&D is on pages 36 and 37.
Diversification and market penetration To ensure sustainable growth and profitability, Sioen strives to diversify its activities. The group has three divisions corresponding to different market segments, each with its own pattern of development and its own market requirements: the Coating Division, the Apparel Division and the Industrial Applications Division (see also pp. 52 to 69). Market segments Sioen Industries is faithful to its policy of vertical and horizontal integration through the development of new products and the acquisition of complementary firms which open up new market segments.
Geographical spread Sioen Industries is exploring new markets and expanding its existing ones. Globalisation Sioen is continually building on its worldwide organisation. It operates production plants for its various activities in several continents. Sioen currently operates 39 subsidiaries in 16 countries.
Inspiration: People and environment We create a stimulating working climate in an optimal working environment, and offer career opportunities and a fair remuneration system. Our employees are able to maximise their self-development in a dynamic company where there is space for entrepreneurship and creativity. We operate an active environmental policy and invest in recycling and energy recovery techniques. You can read more about personnel and environment on pages 38 to 41.
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SIOEN INDUSTRIES I
R&D
RESEARCH AND DEVELOPMENT We have a concerted focus on knowledge, innovation and creativity: on new materials, new production processes, new services, new niches, new markets and new requirements. Knowledge is our fundamental principle - yesterday’s, today’s and tomorrow’s capital.
Sioen organizes its research and development activities around three main areas: product development, process improvement and technological innovations, because the products we develop must be those which both meet customer expectations and create added value for the business. Technological innovations connected with continuous process optimisation contribute substantially to the company’s effectiveness.
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Protection through Innovation
Cooperation
Our corporate slogan is ‘Protection through innovation’. We protect both man and his possessions with high-tech protective clothing for all branches of industry and with technical textiles for products such as tarpaulin covers and side curtains for trucks, airbags, pool covers, tents and structures, windbreak nets, water tanks, oil booms and road reinforcements. We are an innovative business in terms of both production techniques and applications and markets. Thus we have experience in not less than five coating techniques as well as various weaving and welding techniques, with our extrusion plant we are among the world’s leading companies for spinning polyester yarn, and our production site in Indonesia where clothing is produced is one of the most efficient in the world. With input from a highly effective sales and marketing team and the work of a high-quality R&D team, we are continuously identifying new applications. Just one example of our innovations is Siosteel: an anti-vandalism technical textile for trucks. We consistently prospect new markets and sell faster than our competitors in high-potential sales areas.
The Sioen Industries n.v. Group’s R&D team cooperates closely with various national and international universities, European research institutes and scientific funds. New products and applications also result from cooperation with other businesses and customers. In addition, the R&D team works in partnership with a number of suppliers.
Spider’s web structure Wanting to keep ahead of the market means ongoing investment in research and development. The group has therefore built a central R&D centre at its headquarters in Ardooie. Here, professionals work on product development and innovation and on process improvement. The strength of this research unit, besides its state-of-the-art facilities, lies in the knowledge and experience of its employees. In addition to this central R&D centre, Sioen has ten more research teams worldwide, with the main production sites boasting their own research teams which conduct specific research and product tests in restricted areas. The work performed by the various research centres is coordinated and managed from the R&D centre in Ardooie. 42 people are employed at this centre, and their operating costs amount to EUR 2.3 million, not including production time and costs.
Equipment – new lab Sioen’s R&D centres and labs are fully equipped with the latest testing equipment. Tests such as those for tractile and breaking strength, flame retardation, chemical resistance, water column, colour fastness, ageing and so on are all performed inhouse, and Sioen can stand comparison with the world’s top research institutes in this area. In 2005, the Apparel Division constructed a new ultramodern lab in Ardooie, as conforming to standards and obtaining the associated certification is one of Sioen’s strengths. Sioen deliberately opts for promising niches. For example, it has decided to play a leading role in the development of fire-retardant protective clothing. With its own sophisticated test equipment, it is able to conduct flame tests (EN367) and thermal radiation tests (EN ISO 6942) inhouse. Thanks to this research, Sioen was one of the first producers in Europe to obtain certification for the new standard EN469: 2005 (protective clothing for firefighters). The lab also includes a shooting laboratory where the impact of bullets is tested on body armour.
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SIOEN INDUSTRIES I
PERSONNEL
On 31 December 2005, Sioen Industries had 4,645 employees worldwide, compared with 4,500 at the end of December 2004. The ratio of blue to white-collar workers is 82/18, i.e. 3,785 blue-collar and 860 white-collar workers.
The number of blue-collar workers increased by 147 in 2005, while the number of white-collar workers fell by 12. The overall increase of 145 employees is associated with an increase in personnel costs of EUR 1,7 million. Personnel costs expressed as a percentage of turnover rose from 19.9% to 20,1%. In the Coating Division, the number of personnel members rose by 4% (or 31 employees) to 795 (compared with 764 last year). 21 of these new personnel members are employed at Saint Frères Enduction, the French direct coating plant. At this plant, there has been a new extra coating line since last year, which will be fully operational from the second quarter of 2006. The Coating Division is capital-intensive and has production plants in Belgium, France and Portugal. Turnover growth at the Apparel Division was associated with a workforce increase of 5% (155 employees). On 31 December 2005 this division employed 3,076 people. The rationalisation and automation at the production workshops in Indonesia and in Tunisia were pursued further. The Apparel Division continues to invest in high-tech production and design facilities and in highly qualified personnel. However, there was also a turnover increase of 14.4%, which meant that a proportionate number of additional units were produced. The Industrial Applications Division closed 2005 with 713 employees, a decrease of 53 (-7%) from last year’s figure. The decrease is mainly located in Poland, where the production plant was reorganised in 2005.
Personnel per country
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% % % % % % % % % % % % ,41 0,34 8,75 6,28 0,90 3,40 0,15 0,54 0,53 6,96 0,73 0,32 l 4 19 3 1 m China any rance eland esia lands land tuga isia 1 UK USA u i g F Ir don ther Po Por Tun rm Bel Ge In Ne
The group’s various divisions and plants receive management support in the areas of personnel policy, financial and cash flow management, budgeting, ICT, marketing and legal matters from Sioen Industries n.v. in Ardooie, the group’s centralised holding company. To provide these services, Sioen invests in resources every year. On 31 December 2005, there were 61 employees
working at group level, a 25% increase. The transition to the ERP package SAP is also requiring a substantial investment in highly specialised personnel. Sioen Industries employs people in 16 different countries: Belgium, China, Germany, France, Ireland, Indonesia, Portugal, Tunisia, UK, the Netherlands, Poland, Ukraine, Romania, USA, Austria, Denmark, Finland and Luxembourg.
Personnel per division 66,22%
17,12%
15,35% 1,31%
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SIOEN INDUSTRIES I
ENVIRONMENTAL POLICY
For Sioen Industries, taking care of the environmental is a matter of day-to-day endeavour. The group complies with all legal requirements, and as a market leader also seeks to operate a proactive environmental policy.
This policy rests on two pillars: The group invests every year to keep the emission of harmful substances to a minimum, and applies stricter standards than those required by law. Sioen Industries invests in incinerators which make it possible to approach zero emissions and make maximum use of recovered heat in the furnaces for the coating lines. The group is making increasing use of recycling and energy recovery technologies. Its investment in a distillation tower at the Moeskroen plant, for example, ensures maximum recovery of raw materials. This reduces emissions to a minimum and also leads to a considerable cost saving because of the recovered raw materials. The direct coating sites have also been ďŹ tted with a distillation column, as a result of which solvents used during the cleaning process can be recovered as much as possible. The coating plants use solvents to clean paste containers. This is another closed-circuit process, ensuring that the contaminated solvents can be distilled for re-use. In addition to its tasks associated with developing new products, technologies and processes, the R&D team is also intensively engaged in research into and development of recycling options. The recycling of used technical textiles, for instance in bags, insulation materials, mud aps and so on are among the possibilities.
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SIOEN INDUSTRIES I
QUALITY
Quality Quality means satisfying the customer’s expectations in terms of products and delivered services. This principle of meeting all the customer’s expectations applies throughout the organisation, and is not confined to those departments which come into direct contact with the customer. In all Sioen departments, quality is central: production, sales, accounting, customer service, R&D, purchasing, etc. Quality is a key principle for all employees of the Sioen Industries group as they perform their work. Our quality policy includes an ongoing improvement process, with customer service being the motivation behind all our efforts.
Certification Sioen has obtained ISO 9001 certification. It also holds the AQAP-120 certificate, the quality label for military procurement. The five areas of focus for this standard form part of Sioen’s integral quality assurance system: quality management system, management responsibility, management of resources, production of the product, and measurement, analysis and improvement.
Business culture Within the Sioen Industries Group, everyone is aware that the business objectives can only be achieved with a business culture in which the customer is central. Our success depends largely on the quality of our products and services and on the competence and motivation of our employees. Accordingly, our employees’ satisfaction is constantly being surveyed and analysed.
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Quality monitoring
Working conditions
Quality monitoring calls for an approach in which the quality of the delivered product must meet the customer’s most stringent criteria. This is why Sioen Industries does not confine itself to inspecting the end product, but uses an efficient quality policy to ensure the necessary monitoring throughout the production process.
However, Sioen Industries does not only focus on the quality of its products. The necessary care is also given to achieving a quality working environment. The creation of a stimulating working climate in which everyone has the chance to develop to their full potential is one of the cornerstones of the Sioen Industries Group. Moreover, a flat corporate structure ensures maximum information flow from the executive directors through to the workfloor. The advantage of this is that decisions can be taken quickly and accurately.
This monitoring starts with the screening of the suppliers, from whom a consistent quality level is required. In addition, the necessary specialists are deployed to ensure permanent workfloor supervision and undertake the required sampling. The latest communication and IT applications are used here.
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VERTICAL INTEGRATION
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SIOEN INDUSTRIES I
VERTICAL INTEGRATION
COATING DIVISION Spinning (extrusion of yarn) Weaving (3 weaving mills) Pigmentation (2 plants, pastes and granulates) Coating (5 coating techniques, 6 plants) Distribution
APPAREL DIVISIE Design- Production - Distribution
INDUSTRIAL APPLICATIONS Heavy duty textiles, processing of technical textiles
Both the “Apparel Division” and the “Industrial Applications” Division use the technical textiles produced by the Coating Division.
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SIOEN INDUSTRIES I
GROUP STRUCTURE(1)
SIOEN INDUSTRIES NV COATING DIVISION 99% Sioen Coating n.v. Direct Coating Belgium
APPAREL DIVISION
INDUSTRIAL APPLICATIONS
99% Sioen n.v. Apparel Belgium
25% Coatex n.v. 75%(2) Processing of coated fabrics and films Belgium
100% Saint Frères s.a.s. Direct Coating France
Confection Tunisienne de Sécurité s.a. Apparel Tunisia
99%
100% Sioen Coating Distribution n.v. Sales office Belgium
Donegal Protective Clothing Ltd.(4) Apparel Ireland
100%
100% Sioen Fabrics s.a. Weaving/Transfer coating Belgium
100% Saint Frères Confection s.a.s. Heavy-duty manufacturing France 100% Sioen Nordifa s.a. Production filters Belgium
100% Mullion Manufacturing Ltd. Apparel U.K.
100% Sioen Fibres s.a. Spinning Belgium
95% P.T. Sioen Indonesia Apparel Indonesia
5%
100% Sioen Shanghai(3) Sales office China
95% P.T. Sungintex Apparel Indonesia
5%
100% Siofab s.a. Transfer coating Portugal 100% TIS n.v. Weaving 99% Veranneman TT n.v. Weaving mill/Direct coating Belgium 100% Pennel Automotive s.a.s. Calendering France 90% European Masterbatch n.v. 10% (5) Master batch production Belgium 100% Inducolor s.a. Pigment paste production Belgium
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100% Sioen Fibres s.a. Central distribution centre Belgium Sioen France s.a.s. Sales office France 100% Sioen Tunisie s.a. Sales office Tunisia 100% Sioen UK Ltd. Sales office UK 99% Sioen Zaghouan s.a. Apparel Tunisia 95% Sioen USA Inc.(6) Sales office USA
100% Roland International(7) b.v. Manufacturing of tilts
100%
Roltrans Group America Inc
100%
Roland Planen GmbH
100%
Roltrans Group Polska sp.z.o.o.
100%
100% JV Roland Ukraine llc Roland Tilts UK ltd
(1) The quoted percentages have been rounded, and reflect the situation on 31 March 2006. (2) Via Sioen Coating nv. (3) The official name is Sioen Coated Fabrics Shanghai Trading Ltd. (4) The official name is Gairmeidi Caomhnaithe Dhun na nGall Teoranta. (5) Via Sioen Coating nv. (6) 5% via P.T. Sungintex (7) Via Monal s.a. and Roltrans Group
60% 100%
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t a r g
in n io
ru c t u re t s p u g ro
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SIOEN INDUSTRIES I
SIOEN WORLDWIDE
1 Sioen Coating Division - Sioen Apparel Division Veranneman TT Sioen Coating Distribution - ARDOOIE 2 Coatex - POPERINGE 3 Sioen Fibres - distribution/spinning - Sioen Fabrics weaving and coating - MOUSCRON 4 TIS - KERKSKEN 5 European Masterbatch/EMB - BORNEM 6 Sioen Nordifa - LIÈGE 7 Inducolor - MESLIN-L’EVÊQUE 8 Donegal Protective Clothing - DONEGAL 9 Mullion Manufacturing Ltd. - SCUNTHORPE 10 Saint Frères - Saint Frères Confection FLIXECOURT 11 Roland International - TEGELEN 12 Roland Tilts UK - BRADFORD 13 Sioen France - NARBONNE 14 Roltrans Group Polska - KONIN 15 Sioen Tunisie - CTS - Sioen Zaghouan - TUNIS 16 Siofab - SANTO TIRSO 17 P.T.Sungintex - BEKASI BARAT 18 P.T.Sioen Indonesia - JAKARTA 19 Sioen Shanghai - SHANGHAI 20 Sioen - LANCASHIRE 21 Pennel - ROUBAIX 22 Roltrans Group America - TEXAS 23 Roland Ukraine – RIVNE
2
6
4
7
19
22
17 18
50
5
1 3
20 8
9 12
14 11 10
23
21
13 16
15
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SIOEN INDUSTRIES I
52
COATING DIVISION
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SIOEN INDUSTRIES I
COATING DIVISION
THE COATING DIVISION IS WORLD LEADER IN THE INTEGRATED COATING OF TECHNICAL FABRICS
Coating, a definition Sioen has been specialising in the coating of textile fabrics for 46 years. Put in simple terms, coating is the covering of a support with a protective layer, to make the material waterproof, fireproof, anti-static, breathable, printable, and so on, and to afford protection against wind, water, cold and chemical matter.
Vertical integration Sioen handles the entire production process: spinning, weaving and coating. Capacity, flexibility, automation, quality, innovation and targeted R&D are key concepts characterising the Coating Division.
Vertical integration: the coating layer EMB and Inducolor produce the pigment pastes and granulates used for colouring the coating layer. In fully automatic paste kitchens, the pastes are mixed and then brought to the coating line by robots. EMB and Inducolor produce master batches that are used as raw materials for the colouring of all kinds of materials. EMB also produces special varnishes, compounds and all kinds of paints. Both lines have a solid standard range, a strong position in production and an individual approach.
Turnover evolution 1993-2005 (in millions of euros) (as from 2004 IFRS) Exclusive intersegment sales
170,6 170,7 151,6 134,0
139,7
119,1 100,4 86,9 70,4 54,9 43,7 30,1 16,0
‘93
54
‘94
‘95
‘96
‘97
‘98
‘99
‘00
‘01
‘02
‘03
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‘05
Vertical integration: the support
Applications and sectors
Yarn (spinning/extruding): Sioen has the most modern spinning mill in the world with an output of approx. 15,000 tons of polyester and/or polyamide high-tenacity yarns. Some of the yarn is twisted in the twisting plant. Fabric: The yarn is supplied as raw material to the three weaving mills which in turn produce fabrics with high technical requirements. Sioen has also secured certificates of approval for automotive applications. Non-woven: needle felt (Sioen Nordifa, Industrial Applications division)is used, among other things, as a support in extrusion coating.
Sioen technical fabric can be found in just about all sectors: agriculture and horticulture, clothing, the car industry, the medical sector, construction, and so on. Technical fabric is used, among other things, for tarpaulins and curtains for trailers and train wagons, protective clothing, swimming pool covers, sewer renovation, dashboards, door panels and sun visors... Sioen manages to increase its market share and strengthen its competitive position year on year. Technical know-how, service and quality are fundamental to this.
Sales Vertical integration: technological and technical fabric Sioen carries out several coating processes, each of which serves a different market. In total Sioen Industries has seven coating plants, which are fully automated and equipped with the most modern machines. Direct coating: In direct coating, the PVC coating paste is directly applied to the fabric. Applications: curtains for lorries and train compartments, sports mats, swimming pool covers, tarpaulins… Transfer coating: The coating paste (polyurethane, silicone, etc.) is placed on a fabric using a paper support. Applications: protective clothing, outdoor sports clothing, shoe protectors, mattress protectors, airbags, etc. ... Online coating: In online coating, the fabric goes into a coating bath before being wound. Applications: geogrids, swimming pool covers, reinforcement nets, windbreak nets, filters, etc. ... Extrusion coating: This technique enables us to use other basic materials and coat them with various polymers. Applications: ventilation pipes, plastic sheeting for ponds, plastic film for windows, sewer renovation, etc. ... Calendering (rolling): TPO and PVC films are processed with rollers in order to achieve the required motif/texture. Applications: car sector for dashboards, door panels, wall covering etc. ...
In addition to permanent sales staff operating out of Ardooie, Moeskroen and Roubaix, and a number of local agents, the Coating Division has sales offices in Germany, France, China and the USA.
Geographical markets 87% of the Coating Division’s turnover is recorded in the traditional Western European countries, with France, Germany, the Benelux and Great Britain being the largest markets. Eastern Europe and Asia remain important markets. Our sales structure and experience enables us to find new markets and to penetrate these quickly.
Competitive position Sioen accounts for 41% of total coating capacity at European level. The other 59% is shared among some German competitors and a large number of small competitors in Spain, Italy, Austria, Germany, France, Scandinavia, etc. The smaller coaters increase their specialization.
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SIOEN INDUSTRIES I
COATING DIVISION
Investments: new products and developments
Key figures
The Coating Division’s high-performance R&D centre concentrates on product development and innovation but also on process improvement and optimisation. It is therefore also the most technical product lines that account for the largest growth: ❱ last year Sioen made further investments in its yarn extrusion plant in order thereby to maintain its technical lead over its competitors. ❱ Further investments were also made in new looms in the weaving mills so that the company could continue to focus on niche markets such as airbag fabric, cloth for sailing ships and filter cloth. ❱ After a period of intensive research and development, the transfer coating department successfully tapped a number of new markets (carpet foam, ski bags, industrial adhesive films, etc.). ❱ The open-structure fabrics product line, based on the online coating technique, continues to record strong growth (a fourfold increase since 1999). In 2005 investments were made chiefly in extra capacity and automation. ❱ The more traditional truck and sign (advertising signs) product lines had to cope with a small drop in their activity last year compared with 2004, which was an exceptional year. ❱ The industrial films produced by the calendering technique (films for dashboards, door panels, sun visors, wall cladding, etc.) enjoyed steady growth.
The Coating Division’s turnover remained stable in 2005 at EUR 170.8 million. Profit came under heavy pressure from the high raw materials prices but extra efforts to cut costs ensured a stable EBITDA of 15% on turnover.
‘000 Euro
2005
2004
Turnover External turnover Intersegment turnover EBITDA % of turnover EBIT % of turnover Operating profit Personnel
193.431 170.740 22.691 28.423 15% 15.356 8% 15.356 795
189.835 170.645 19.190 32.100 17% 19.853 10% 19.853 764
56
% as compared to last year 1,89%
-11,45% -22,65% -22,65%
The historically high oil prices and uncertainty over economic development in certain countries mean that the whole sector is having to deal with a constant rise in prices of the main raw materials (polyester granulates, PVC powders, softeners, technical fi llers, pigments, etc.). Polymers and raw materials derived from petroleum are the bulk of our purchases. In order to mitigate the effect of this extra cost as far as possible, the group is making sustained efforts in the field of improved efficiency and cost cutting. In Saint Frères Enduction in France, for example, a new modern coating line was set up. The new technologies also offer opportunities for the traditional textile architecture and advertising banner product lines.
Turnover by geographical markets 01 02 03 04 05 06 07 08 09 10 11 12 13 14
France Germany Belgium UK Netherlands Eastern Europe Italy Scandinavia Spain USA Switzerland Austria Ireland Other
18,8 13,7 12,9 5,9 6,7 13,0 6,9 4,6 4,3 0,7 1,9 1,3 0,5 8,7
% % % % % % % % % % % % % %
14 13 12 11 10
01
09 08
02
07
06 03 05
04
57
SIOEN INDUSTRIES I
58
APPAREL DIVISION
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SIOEN INDUSTRIES I
APPAREL DIVISION
MARKET LEADER IN TECHNICAL PROTECTIVE CLOTHING
Protective clothing Sioen makes clothing offering the wearer protection from wind, water, cold, chemical matter, etc. Safety, comfort, value for money, speed, reliability and flexibility are our calling cards in this field.
R&D The R&D team develops new materials, techniques, processes and applications and makes Sioen a strong player. Market knowledge, know-how, the most high-performance testing equipment, superior experience and knowledge of standards and rules... these are just a few of our assets.
‘000 Euro
2005
2004
Turnover External turnover Intersegment turnover EBITDA % of turnover EBIT % of turnover Operating profit Personnel
78.138 78.127 11 5.800 7% 3.456 4% 3.456 3.076
68.226 68.259 (33) 5.243 8% 4.638 7% 4.638 2.921
60
% as compared to last year 14,53%
10,62% -25,49% -25,49%
Turnover by geographical markets 01 02 03 04 05 06 07 08 09 10 11 12 13 14
France Germany Belgium UK Netherlands Eastern Europe Italy Scandinavia Spain USA Switzerland Austria Ireland Other
32,0 6,2 11,8 12,2 11,7 0,4 0,4 1,8 0,7 2,5 1,8 1,8 3,7 13,1
% % % % % % % % % % % % % %
14 01 13 12 11 10 09 08 07 06
05 02
04
03
Design
Sales and distribution
The creative designers and textile engineers always design a comfortable, elegant and technically perfect item of clothing, without ever losing sight of functionality, comfort, legal requirements, technical requirements and the customer.
The head office houses a team of experienced sales people with a thorough technical grounding. We also have local sales offices in France, Scandinavia, Indonesia, Germany, and the UK, from where staff and agents serve the market. Eighty-eight percent of the products are sold under brand names of our own. The dispatch and distribution centre in Mouscron also guarantees swift and efficient delivery every time.
Production High-tech production centres where we permanently invest in the latest technologies in order to be able to meet the strictest quality standards. Sioen has the most recent ISO 9002/EN 29001 certificates and also holds AQAP certification.
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SIOEN INDUSTRIES I
APPAREL DIVISION
Applications and sectors Sioen is present in just about all sectors: public works, agriculture and market gardening, fisheries, foodstuffs, chemicals and petrochemicals, road construction. It serves both government institutions (city departments, police forces, the army, etc.) and private companies, and even private individuals via specialised distributors. The Industry range accounts for 70% of the Apparel division. Our presence in Indonesia allows Sioen to supply our customers with a comprehensive range of products. We supply from the “low-end” to the very high quality products. The remaining 30% of Sioen’s output is in very technical niche markets with specific protective clothing for forestry, fire fighting, shipping and body armours. Thanks to vertical integration, the production equipment, the R&D department and specialised product management, Sioen is strengthening its market position in these niche areas. Baleno is the brand name for fashionable, comfortable and functional outdoor sports and leisurewear, specially designed for hunters, fishermen and golfers.
Geographical markets The geographical spread of sales remains stable and is located in the traditional Western European markets. The largest market for the Apparel Division is France, followed by the Benelux, Great Britain and Germany. In the Benelux, our home market, turnover continues to grow steadily. Turnover evolution (as from 2004 IFRS) (in millions of euros) Exclusive intersegment sales
Key figures
78,1
75,8 71,9 71,5 68,3
The Apparel Division recorded an increase in turnover of 14.4% last year, from EUR 68.2 million to EUR 78 million. The persistent commercial pressure on markets with large volumes and low technicity has had an effect on the EBITDA, which comes out at 7% on turnover (compared to 8% last year).
62,0
48,6 44,8
31,4 24,6 21,1 17,0 13,0
‘93
62
‘94
‘95
‘96
‘97
‘98
‘99
‘00
‘01
‘02
‘03
‘04
‘05
63
SIOEN INDUSTRIES I
64
INDUSTRIAL APPLICATIONS
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SIOEN INDUSTRIES I
INDUSTRIAL APPLICATIONS
HEAVY DUTY TEXTILES IN THE INDUSTRIAL APPLICATIONS DIVISION
Vertical integration and diversification The processing companies in the processing division each have their specialist area and form the final piece in the vertical integration of Sioen Industries. These companies process technical fabric and other materials produced in house into finished products. The markets in which they are active are as extensive as they are different: the car industry, the recreational sector, the food industry, heavy industry and the chemicals industry, transport, construction, etc.
Kadors Coatex in Poperinge processes the coated technical fabric produced in the companies of the coating division. The company has built up an international reputation in kadors and offers both a standard range and bespoke solutions. Worldwide there are only a few producers of such kadors made form a flexible PVC tube surrounded by a technically coated fabric. Coatex is one of the largest producers in the world and has the most modern machines.
Sio-steel Sio-steel is a patented composite consisting of a PVC coated steel net and double-sided PVC coated polyester fabric. Using Sio-steel tarpaulins avoids theft and damaging of the cargo and thus trucks to be immobilized.
Turnover evolution 1993-2005 (in millions of euros) (as from 2004 IFRS) Exclusive intersegment sales 70,9
Sio-steel is unique and is being used more and more frequently. In France, as well as in other countries, the insurance of a trailer equipped with Sio-steel is much more advantageous
67,4
49,6
26,0 16,2 9,4
66
1,1
1,3
2,0
‘93
‘94
‘95
5,7
6,1
‘96
‘97
‘98
12,0 11,3
‘99
‘00
‘01
‘02
‘03
‘04
‘05
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SIOEN INDUSTRIES I
INDUSTRIAL APPLICATIONS
Cutting and punching
Filters and filter cloths
We supply bespoke fretwork made of the technical fabric coated by the coating division. As well, Coatex also cuts materials for car interiors and other materials.
Nordifa is specialised in the production of felt and derived products such as filters and filter cloths for the food industry (water and air treatment in sugar refineries, breweries, etc.), heavy industry (metallurgy, coke industry, mining, power stations, paper processing, cement companies), the chemicals industry (such as the production of dyes), city water purification and after-burning plants. New since 2005 is the production of panels for acoustic and thermal insulation, to be used both invisibly and invisibly.
Laser cutting Airbags, among other things, are cut on the four high-tech laser-cutting machines. The machines are unique and are among the most high-performance of their kind in the world. Cutting is done in several layers simultaneously, which means that the machines can process very large volumes extremely quickly.
Tents, covering systems, roll-down shutter doors, compartment covers and silos
Loss of an order resulted in this activity dropping back in 2005. For 2006 Coatex predicts an increase again as a system supplier for an important producer in the car sector.
The fabric coated in house is processed into finished products for high-tech niche markets such as the army, the railways, the airline industry, and the construction sector.
Pond and dam sheeting
Camouflage fabric
Cutting, splicing and packaging of pond sheeting and sheeting for water reservoirs for customers all over the world. Among other things these PVC films are used in the construction of recreational ponds and industrial reservoirs, cultivating beds and dam sheeting.
Bacam is specialised in the design, production and marketing of camouflage fabric and multi-spectral camouflage netting.
‘000 Euro
2005
2004
Turnover External turnover Intersegment turnover EBITDA % of turnover EBIT % of turnover Operating profit Personnel
70.066 67.369 2.697 8.760 13% 6.743 10% 6.743 713
74.277 70.898 3.379 6.442 9% 2.626 4% 2.626{1} 766
% as compared to last year -5,67%
35,98% 156,78% 156,78%
{1} In the result of 2004 there is a one-off restructuring cost of 1.015.00 million Euro.
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This high-tech market calls for considerable technical knowledge and research and development. Worldwide there are only a few companies active in this segment.
Turnover by geographical markets 01 02 03 04 05 06 07 08 09 10 11 12 13 14
France Germany Belgium UK Netherlands Eastern Europe Italy Scandinavia Spain USA Switzerland Austria Ireland Other
10,1 40,7 11,2 11,4 8,8 4,5 1,4 1,4 0,8 5,8 0,1 0,6 0,0 3,1
% % % % % % % % % % % % % %
10 08 07
13 14 1112
01
09
06
05
04 02
03
Curtains and tarpaulins
Key figures
Roland International is market leader (with some 45% of the market for tarpaulins and curtains for new trailers) in the production of curtains and tarpaulins for trucks and containers. Roland International uses the coating division’s technical fabric for this. The company focuses on the batch production of large volumes.
The Industrial Applications division recorded a turnover of EUR 67.3 million in 2005, a decrease of 5% compared to last year. This drop is largely attributable to the temporary loss of a large cutting contract and a military order which is pending. The Industrial Applications division’s operational cash flow (EBITDA) is 13%. Apart from the markets in Western Europe and Australia, the countries in Eastern Europe are major centres for growth for the Industrial Applications division.
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70
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SIOEN INDUSTRIES I
REPORT OF THE BOARD OF DIRECTORS
SIOEN INDUSTRIES GROUP ❱ Turnover rose from EUR 309.8 million in 2004 to EUR 316.2 million this year, representing growth of 2.08%. ❱ Under the influence of higher raw materials costs and eroding sales prices of certain low-end products, the gross profit margin fell from 51.04% in 2004 to 50.18% in 2005. ❱ The cost structure remains solidly under control. The only item is the creation of a provision of EUR 800,000, relating to a dispute over property tax. ❱ The lower gross profit margin is also reflected in the operating result, which totalled EUR 25.5 million for 2005, as compared to EUR 26.9 million last year. ❱ Net financial charges fell, under the effect of the low interest rate situation and the exchange rate gains realised under the current hedging contracts. ❱ Thanks to the better financial results, Sioen recorded a pretax profit of EUR 19.9 million, compared with EUR 19.6 million last year. ❱ With almost no minority shareholders left in the subsidiaries, net profit (group share) rises to EUR 13.6 million in 2005, compared with EUR 12.3 million in 2004.
SIOEN COATING The Coating Division specialises in the integrated coating of technical textiles and manages the entire production process from extrusion of yarn (spinning), via the weaving of technical fabric and the production of pigment pastes and granulates, through to coating with various materials. The group is the only company in the world to master five different coating techniques. Especially where technical specifications are the decisive factor, Sioen has a dominant presence. It is therefore the most technical product lines that account for the strongest growth: ❱ Last year Sioen further invested in its yarn extrusion plant to extend its technical lead over its competitors. ❱ In the weaving mills, too, the company invested in new looms to enable it to focus on niche markets (airbag fabric, sailcloth, filter cloth, etc.).
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❱ After a period of intensive research and development, the transfer coating department successfully tapped a number of new markets (carpet foam, ski bags, industrial adhesive films, etc.). ❱ The open-structure fabric product line (reinforcement netting, geotextiles, windbreak nets, advertising banners, etc.), based on the online coating technique, continues to grow very strongly (a fourfold increase since 1999). In 2005 investments were made chiefly in extra capacity and automation. ❱ The more traditional product lines (truck and advertising banners) faced a slight fall in activities last year in comparison with 2004, which was an exceptional year. ❱ Calandered industrial films (for dashboards, door panels, sun visors, wall cladding, etc.) continue to grow steadily.
Operating cash flow (EBITDA) was heavily influenced last year by historically high oil prices and the uncertainty surrounding economic development in certain countries. As a result the entire sector is still contending with continuously rising prices for its principal raw materials (polyester granulates, PVC powders, softeners, technical fillers, pigments, etc.). Petroleum-derived polymers make up the bulk of raw materials purchases. The effects of these increased costs were mitigated as far as possible by price increases and by relentless efforts to increase efficiency and cut costs. These include a new coating line at Saint Frères Enduction, in France, whilst new technologies offer attractive opportunities for the textile architecture and advertising banner product lines.
SIOEN APPAREL The Apparel Division designs and produces high-quality protective clothing for both industrial and recreational uses. Quality and flexibility characterise Sioen’s reputation. In this division, the diversity of the product range and the focus on the technical nature of the products are reaping rewards. In niche markets for high-quality protective clothing such as bulletproof vests, hunting suits, forestry clothing, advanced military clothing, etc., Sioen is a household name. Service companies, the police and the army are important customers. Here, too, extremely strict technical demands are laid down with which the protective clothing must comply. Thanks to its presence in Indonesia, Sioen is able to supply a comprehensive range of products from very high quality to low-end. Thanks to this approach and intensive investment in R & D, more and more successes are being notched up in niche markets such as ballistics, firefighting and chemicals. Here, too, just as in the market for industrial protective clothing, Sioen has a solid reputation, based on quality and reliability. Overall turnover rose by 14.5% to EUR 78 million. With the changes in the sales mix and the additional “low-end” products, the operational cash flow (EBITDA) over the past year is 7% compared to 8% last year. The EBIT follows the same pattern. Depreciation charges and write-downs on customers and non-rotating stocks have risen.
❱ Military applications The group is also active in the military market with truck and jeep tarpaulins (with or without printed camouflage patterns), camouflage netting, tents, etc. It is in this segment that the group is awaiting the definitive attribution of a number of tenders it has won. These may contribute to turnover in 2006. ❱ Other industrial applications. The Sioen Group puts its know-how to good use in a very wide range of industrial markets with the production of tent kadors, inflatable silos and the laser cutting of airbags. With the filtration market also developing positively, it was decided in mid-2005 to invest in a new production line. This will be operational from the second half of 2006. This division’s operating cash flow amounts to 12% on turnover as compared to 9% last year. This is chiefly attributable to a marked increase in efficiency in these subsidaires’ industrial processes. This improved industrial process efficiency also took EBIT from 4% to 10% of turnover (EUR 1.3 million lower personnel costs than in 2004 on the same turnover). It was also possible to reverse a number of major provisions on accounts receivable, set up in 2004.
SIOEN INDUSTRIAL APPLICATIONS The Industrial Applications Division is responsible for the processing of coated fabrics and PVC films. The division covers all the group’s activities in heavy-duty textiles and is organised around three main centres of activity: ❱ Transport-related activities. Via a number of subsidiaries, the Sioen Group successfully taps a number of markets in the transport sector and is the preferred partner for Europe’s top name trailer manufacturers in the production of sliding covers and tarpaulins for trucks and containers. The group also produces railway tarpaulins in which, again thanks to technical innovations, we have acquired an important position on the European market.
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IMPORTANT EVENTS
Important events Expansion in France France Saint-Frères Enduction is today a state-of-the-art production plant with an advanced direct coating line. The extension and the inclusion of a second machine in the line last year provides extra capacity and greater flexibility. The photos show the transformation the plant has undergone in the last few months.
Showroom A former storeroom and warehouse were converted in 2005 into an immense showroom. Here at the head office in Ardooie, Sioen displays a selection of its end products. The 2,000 m2 surface area tells the story of Sioen, from production process through to vertical integration and products. The range of protective clothing is given special attention with more than 200 mannequins throughout the display room.
R&D - lab Next to the showroom is a brand new R&D centre with advanced testing equipment. Bulletproof vests are tested on the adjoining shooting range. Further details on R&D are given on p. 36-37.
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TIS The two very different activities at the Haaltert production plant have been reduced to one. The coating line is to be dismantled to make room for the extension of the weaving mill. The latter is highly specialised and focuses on high-tech fabric.
Royal visit On 22/2/2006 His Majesty King Albert II visited the head office in Ardooie. This working meeting covered subjects such as internationalisation, R&D and innovation. The visit of the company’s premises ended with a reception.
Techtextil and A&A trade fairs Every other year Sioen is one of the largest exhibitors at the Techtextil and A&A trade fairs. Just about all group divisions and companies were presented during Techtextil on a 286 m2 double stand. Meanwhile, Sioen displayed its new collection of protective clothing at the professional A&A trade fair.
Insulation panels in Liège The new machine in Nordifa (Liège) produces up to 600,000 panels a year. Those panels, made of felt, are used in new housing development and renovation and offer a perfect insulation.
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SIOEN INDUSTRIES I
CORPORATE GOVERNANCE
The Sioen family has been supported by external, independent directors since 1986. Their expertise and experience contribute to the effective and correct management of the company. On 22 March 2005 the Board of Directors adopted a Corporate Governance Charter, in accordance with the Belgian Corporate Governance Code. The Corporate Governance Charter has been in force since the 2005 general meeting, and can be consulted on the Sioen Industries web site (www.sioen.com). No changes were made to the Corporate Governance Charter during the 2005 accounting period.
76
Composition (situation as at 1 May 2006) The directors’ mandates expire at the 2008 general meeting.
CHAIRMAN MANAGING DIRECTOR
DIRECTORS
Mr J. J. Sioen(1), chairman/director in various other companies MJS Consulting b.v.b.a., Represented by its business manager Ms M. Sioen(1) Director in various other companies Ms J. N. Sioen-Zoete(1), director in various other companies D-Lance b.v.b.a., Represented by its business manager Ms D. Parein-Sioen(1) Director in various other companies P. Company b.v.b.a., Represented by its business manager Ms P. Sioen(1) Director in various other companies Pol Bamelis n.v., Represented by its managing director Mr P. Bamelis(2) Director in various other companies Revam b.v.b.a., Represented by its business manager Mr W. Vandepoel(2) Managing director Lessius Corporate Finance n.v.; director in various other companies Sheng n.v., Represented by its managing director Mr L.-H. Verbeke(2) Chairman of Mitiska N.V./Director in various other companies K.E.M.P. n.v. Represented by its chairman Mr Luc Sterckx(2) CEO of SPE/Director in various other companies Vean n.v., Represented by its managing director Mr L. Vansteenkiste(2) Managing director of Recticel n.v. Director in various other companies
SECRETARY
(3)
STATUTORY AUDITOR
Mr G. Asselman CFO Sioen Industries Group Deloitte Reviseurs d’Entreprises SC s.f.d. SCRL Represented by Mr G. Verstraeten and Mr G. Wygaerts (1) Executive director (2) Independent director. In deciding on the independent directors, the Company has opted for the criterion whereby a director may not remain in his post for more than three four-year mandates, this to be brought into effect as of the general meeting of 2005. The consequence of this is that three current directors are considered as independent, although they have already held a directorship for more than twelve years in the Sioen Group. This is to ensure the continuity of the Company and its management. (3) The Statutory Auditor’s mandate expires at the ordinary general meeting in 2008.
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SIOEN INDUSTRIES I
CORPORATE GOVERNANCE
The Board of Directors and how it works In accordance with the Articles of Association, the board of directors meets regularly in function of the company’s needs and interests. In 2005 it met six times. The number of meetings attended by the individual members of the board in 2005 were as follows: Mr Jean-Jacques Sioen Ms Michèle Sioen Ms Jacqueline Sioen-Zoete Ms Danielle Sioen Ms Pascale Sioen Mr Pol Bamelis Mr Wilfried Vandepoel Mr Louis-Henri Verbeke Mr Luc Sterckx Mr Luc Vansteenkiste
6 6 4 6 6 6 5 5 6 6
The permanent agenda of every board of directors meeting includes the discussion of and deliberation on the individual results of companies in the group, division results, consolidated results, current investments and projects, new projects and proposals for investment opportunities. The board also deals with specific points on the agenda in accordance with specific matters and subjects of topical interest.
78
Working committees
Remuneration of the directors and the Executive Management
The Sioen Industries Group calls on three working committees: Audit Committee: In 2005 the Audit Committee consisted of four independent directors, namely Messrs Vandepoel (Chairman), Verbeke, Sterckx and Bamelis. The Audit Committee met four times in 2005. The number of meetings individually attended by the members of the Audit Committee in 2005 was as follows: Mr. Wilfried Vandepoel Mr. Louis-Henri Verbeke Mr. Luc Sterckx Mr. Bamelis
4 4 4 4
Remuneration Committee In 2005 the Remuneration Committee was made up of three independent directors, namely Messrs Bamelis (chairman), Sterckx and Vansteenkiste. The Remuneration Committee advises the Board of Directors on pay policy in general and on the fees paid to the members of the Board of Directors and the Management Committee in particular. The share option plans also fall under its remit. The Remuneration Committee met once in 2005. Appointments Committee On 22 March 2005 an Appointments Committee was set up in accordance with Sioen Industries’ Corporate Governance Charter. It is made up of two independent directors (Messrs Bamelis and Sterckx) and one executive director (Mr Jean-Jacques Sioen).
Management Committee
In 2005 the following fees were paid to the members of the board of directors and the executive management: ❱ Non-executive and independent directors, as well as the members of the executive management in their capacity as director: Mr Jean-Jacques Sioen Ms Michele Sioen Ms Jacqueline Sioen-Zoete Ms. Danielle Sioen Ms Pascale Sioen Mr Pol Bamelis Mr Wilfried Vandepoel Mr. Louis-Henri Verbeke Mr Luc Sterckx Mr Luc Vansteenkiste
EUR 20,000 EUR 20,000 EUR 20,000 EUR 20,000 EUR 20,000 EUR 27,500 EUR 26,000 EUR 26,000 EUR 27,500 EUR 21,500
❱ Ms Michele Sioen received in 2005, in her capacity of CEO and in addition to her director’s fees, fixed remuneration of EUR 300,000. She received no variable or other forms of remuneration. ❱ The total remuneration received by the Executive Management amounted in 2005 to EUR 2,126,123.64. This amount includes contributions to the group insurance scheme. All amounts given are gross amounts, and therefore represent the full cost of the company. In 2005 there were no shares, share options or other rights for the acquisition of shares granted to the CEO and the other members of the executive management. There are no specific recruitment agreements or agreements for a golden handshake with the members of the executive management.
On 27 May 2005 a new Management Committee was brought into operation. The members of the Management Committee (as of 1 May 20061) are: ❱ MJS Consulting BVBA, represented by Ms M. Sioen ❱ D-Lance BVBA, represented by Ms D. Parein-Sioen ❱ P.Company BVBA, represented by Ms P. Sioen ❱ Mr Geert Asselman ❱ Mr Erwin Van Uytvanck ❱ Mr Michel Devos Secretary: Mr Loebrecht Lievens 1)
Retail Partners BVBA, represented by Mr. Filiep Blontrock, left the Management Committee as from 1 January 2006.
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CORPORATE GOVERNANCE
External audit
Share option plans
Within the Sioen Industries group, external audit is chiefly carried out by Deloitte Reviseurs d’Entreprises. This involves the auditing of both the statutory annual accounts and the consolidated annual accounts of Sioen Industries N.V. and its subsidiaries. To the extent that the audit of a number of subsidiaries is carried out by other audit companies, Deloitte Reviseurs d’Entreprises based themselves on the audit work performed by other audit firms, as stated in the statutory audit report. During the past financial year the group paid a fee of EUR 273,992 with regard to the mandate of statutory auditor. Our statutory auditor also billed EUR 45,977 for services rendered relating to his mission and EUR 76,453 for tax consultancy and for other activities outside the Audit mandate.
On the occasion of the stock exchange introduction in October 1996, the board of directors of Sioen Industries created a 1996 Share Option Plan for the benefit of its senior executives, directors and consultants with a long-tern cooperation agreement. The aim was to promote commitment and motivation in the long term and increase and perpetuate the group’s profitability. However, among the various option plans (see table), no options were granted to the directors at that stage.
The mandate of Deloitte Reviseurs d’Entreprises as statutory auditor of Sioen Industries N.V. expires at the annual meeting of 2008. Deloitte Reviseurs d’Entreprises is represented by Mr G. Verstraeten and Mr G. Wygaerts.
Within the framework of this plan, the board of directors made a total of 200,000 options available. Each option entitles the holder to acquire one Sioen Industries NV share at an exercise price equal to the stock exchange price applicable at the time of the option. The price of an option was fixed in 1996 at 10% of the stock exchange price at the time of granting. The options could in each case be exercised to the tune of 50% in the third and fourth year after granting. In the event of exercising Sioen Industries N.V. would acquire shares in its own capital on the stock exchange. On 30 June 1999 and 10 October 2000 the board of directors of Sioen Industries decided, in accordance with the new statutory rules on the subject, to set up new share option plans within the allocation of the remaining options of the 1996 Share Option Plan. The price for an option under the 1999 and 2000 share option plans was set at 7.5% of the average stock exchange price of the Sioen Industries N.V. shares during the 30-day period preceding the date of the offer. Allocation of the option is deemed to have taken place on the sixtieth day after the date of the offer, unless the beneficiary has given written notice, before expiry of the term, of his refusal to accept the offer. On 26 May 2003 the board of directors of Sioen Industries, in accordance with Article 407 of the programme law of 24 December 2002, decided to offer all beneficiaries a proposal to extend the term for the exercising of the 1999 and 2000 share option plans. An overwhelming majority of the beneficiaries went along with this offer. The original periods for the exercising of the options were thereby extended by three years. An overview of the situation of the various option plans is presented below.
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OVERVIEW OF SHARE OPTION PLANS BASIC INFORMATION Date of Board decision Option price as % of the option price Option price Option exercise price Available at the time of the 1996 flotation Allocation Unused Total used under option plans Balance available EXERCISE OF OPTIONS Balance available Balance to be exercised Options exercised in 1999 – average buy-in price Options exercised in 2000 – average buy-in price FUTURE EXERCISE Balance available Exercise January 2004-2007 Exercise January 2005-2008
1999 Plan 30/06/1999 7,5% 2,5000 33,3200
2000 Plan 10/10/2000 7,5% 1,5375 20,3550
6.050 (3.200) 2.850
6.500
2.850 2.850
6.500 6.500
9.350 9.350
2.850 (2.850)
6.500 (3.250)
9.350 (6.100)
0
(3.250)
(3.250)
6.500
Total
200.000 12.550 (3.200) 9.350 158.000
(1) After the 1 to 10 share split on 05/11/98
Protocol to prevent insider trading In order to prevent privileged information from being used unlawfully by directors, shareholders and members of the management and staff (insiders), or even to avoid such an impression being created, the board of directors of Sioen Industries has produced a protocol to prevent insider trading (“1997 Protocol”). A new Protocol was approved by the Board of Directors on March 22, 2005 in accordance with Directive 2003/6/EU. The Protocol is primarily designed to protect the market, to ensure compliance with the law and to uphold the group’s reputation. Besides a number of probibitions concerning trading in Sioen Industries financial instruments when insiders have privileged information which is not (yet) available to the public, the Protocol also contains a set of preventive measures and guidelines to safeguard the confidentiality of privileged information. Every insider who qualifies has signed this Protocol. A Compliance Officer has been appointed to ensure compliance with the Protocol.
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SIOEN INDUSTRIES I
Listing In order to be able to continue following and ensuring the company’s fast growth, and in the conviction that a transparent policy would further strengthen the group’s growth possibilities, the Sioen Industries share was introduced on the cash market, double fixing, of the Brussels Stock Exchange, on 18 October 1996. A year later the share was listed on the semi-continuous segment of the forward market and then, as of 11 March 1998, has been quoted on the continuous segment of the Brussels forward market, which has since become Euronext Brussels.
Evolution of the share The share was quoted at its highest price on 24 February 2005, at EUR 10.49. Since its lowest price on 1 July 2005 (namely EUR 7.85), the share was quoted at EUR 8.30, or 19% lower, on 30 December 2005. Due to the combination of steady growth of turnover, cash flow and profit, on the one hand, and the presence in the Next Prime segment and an active communication policy, on the other, we want to arouse the investor’s interest in a pro-active manner. Market capitalisation amounted to EUR 177.5 million on 31 December 2005.
At the moment 8,484,858 shares or 39.7% of the total number of shares are spread among the public. 60.3% are controlled via the holding company Sihold n.v., controlled by the Sioen family.
Indices In mid June 2000 the Sioen Industries share was included in the IN.fl anders, a share index made up of the 100 most important listed employers in Flanders. The selection and weighting of the companies in the index are in function of employment, established on the basis of the following three criteria: ❱ for subsidiaries of foreign enterprises, the number of employees in Flanders ❱ for Flemish enterprises, the number of employees worldwide ❱ the evolution of employment in Flanders for the subsidiaries, or worldwide for the Flemish company. The Sioen Industries share in this index is 1.46% (30/09/05). In addition since March 1998 the share has been included in the investment register of Ethibel, an independent design office and control body for socio-ethical and environmental investments.
SHARE PRICE
50
SHARE INFORMATION
PRICE
VOLUME 250.000
45 40
200.000
35 30
150.000
25 100.000
20 15
50.000
10 5
0
0
’96 0-1 18
’98 4-0 01
’99 9-0 07
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’01 2-0 20
’02 8-0 12
’04 1-0 13
’05 6-0 09
2005: financial communication policy The Sioen Industries share was included on Euronext Brussels in Compartment B (Mid-Caps).
Dividend policy The Board of Directors wishes to continue striving for a pay-out ratio of more than 15% and to have the dividend increase year after year, in order thereby to have the dividend closely linked to the cash flow expectations on the one hand, and on the other hand to reward the shareholders’ confidence in the company.
The pay out ratio for 2005 amounts to 37.8%, as compared to 38.4% last year and 49.8% the year before. At EUR 0.24 gross (EUR 0.18 net), the dividend is 9.1% higher than last year. The dividend is made payable at the counters of Dexia Bank, ING-Bank, Fortis Bank and KBC Bank from 9 June 2006.
Consolidated core figures per share (2) Operating profit Current profit after taxes Net profit group share Cash flow Consolidated equity capital Gross dividend Net dividend Pay-out (%) Max./Min. prices
Maximum price Minimum price Price at end December (3) Evolution of the share (5) Price/Earnings Ratio (5) Price/Cashflow Ratio (5) Average number of traded shares per day (4) Average number of traded shares per month (4) Annual volume (in EUR million) Number of Sioen Industries shares (in thousands) (2) Market capitalisation (in millions) (5)
2005 EUR 1,19 0,64 0,63 1,38 6,05 0,2400 0,1800 37,8%
2004 EUR 1,26 0,61 0,61 1,45 5,53 0,2200 0,1650 38,4%
2003 EUR 1,27 0,42 0,40 1,74 5,77 0,20 0,15 49,8%
2002 EUR 1,15 0,52 0,47 1,41 5,86 0,17 0,13 35,9%
2001 EUR 1,58 1,27 0,79 1,67 5,79 0,16 0,12 20,2%
2000 EUR 1,52 0,89 0,88 1,52 5,24 0,14 0,11 15,8%
1999 EUR 1,33 0,82 0,87 1,38 4,56 0,12 0,09 14,2%
1998 EUR 0,92 0,58 0,57 0,97 3,73 0,09 0,07 15,7%
1997 EUR 0,75 0,43 0,45 0,71 1,68 0,07 0,05 15,5%
1996 EUR 0,48 0,32 0,32 0,54 1,26 0,05 0,04 14,5%
10,49 7,85 8,30 (19%) 13,1 6,0 12.771 268.200 29,5 21.390 177,5
10,70 8,24 10,29 35% 16,8 7,1 6.550 137.550 16,2 21.391 220,1
9,16 4,70 8,24 8% 20,5 4,7 4.406 92.895 8,3 21.391 176,3
14,95 6,00 7,65 (33%) 16,4 5,4 5.310 112.837 10,4 21.391 163,6
23,51 10,1 11,50 (45%) 14,5 6,9 5.104 107.194 20,7 21.391 246,0
33,65 18,4 20,90 (36,7%) 23,8 13,8 9.548 199.710 63,7 21.391 447,1
47,5 28,5 33,00 (14%) 37,9 23,9 13.216 277.530 122,5 21.391 705,9
43,13 9,92 38,18 283% 67,0 39,4 26.671 557.863 162,6 21.391 816,6
10,68 3,92 9,97 154% 22,1 14,0 20.950 434.762 33,9 19.965 199,0
4,02 3,84 3,92 13% 12,1 7,3 43.410 855.860 8,2 19.965 78,2
(2) Recalculated after the splitting of the share into 55 on 13/09/96 and the splitting into 10 on 05/11/98; as from 2004 IFRS. (3) On 31 March 2006 the price of the Sioen Industries share stood at EUR 9.08/share. (4) The data concerning 1996 were heavily influenced by the high volumes just after the stock exchange introduction of 18 October 1996. (5) Price as at end of December.
ISIN Euronext code Type Market
BE0003743573 MEP BE0003743573 Mnemo Stock - Ordinary stock - Continuous Euronext Brussels - Eurolist - Local shares
BRU SIOE
Local
Segment B (Mid-Caps)
ICB Sector classification 3000, Consumer Goods 3700, Personal & Household Goods 3760, Personal Goods 3763, Clothing & Accessories Reuters SIOE.BR Bloomberg SIO.BB Datastream B:SIO
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SIOEN INDUSTRIES I
GENERAL INFORMATION
Registered office and name (Articles 1 and 2) The registered office of Sioen Industries, a limited liability company under Belgian law, is established at Fabriekstraat 23, B-8850 Ardooie. The company is listed under enterprise number 441.642.780. Incorporation and publication Sioen Industries was incorporated under the name “Sihold” by deed executed before notary-public Ludovic du Faux in Moeskroen on 3 September 1990, published in the appendix to the Belgian Official Journal of 28 September 1990, under no.: 900928-197. Financial year (Article 36) The financial year begins on 1 January and ends on 31 December every year. Term (Article 4) The company is established for an indefinite period. Object of the company (Article 3) The company’s object, in Belgium and abroad, on its own behalf and on behalf of third parties, is: ❱ The weaving of fibres of all kinds, the coating of fabrics and all other material, the printing thereof, the manufacture of plastic and plasticised material, the manufacture, purchasing and sale, both at home and abroad, of material useful for or relating to aforesaid products and raw materials, as well as the manufacture of chemical products and pigments; ❱ The manufacture of pre-made outer clothing in woven material, the manufacture of all kinds of bespoke clothing and embroidery; the making of outer clothing in knitted fabrics, and of household linen and upholstery items; the manufacture of wall cladding, the printing and finishing of all fibres; the manufacture of ready-towear items of clothing and outfits for ladies and gentlemen; knitwear, embroidery, household and table linen, children’s clothing. The manufacture of safety and signalling articles. Wholesale and retail trade in all the above-mentioned items; ❱ The investment, subscription to, permanent takeover, placing, purchase, selling, and trading of shares, dividend certificates, bonds, certificates, claims, monies and other moveable securities, issued by Belgian or foreign companies, whether or not in the form of trading companies, administration offices, institutions and associations either with or without a (semi-) public status;
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❱ The management of investments and shareholdings in subsidiaries, the assumption of director’s duties, the giving of advice, management and other services to or in accordance with the activities that the company carries out itself. These services may be provided further to contractual or statutory appointment and in the capacity of external consultant or a body of the customer. All this insofar as the company complies with the statutory requirements. The company may, in Belgium and abroad, effect all industrial, trading, financial, moveable property and real estate transactions that may develop or promote its business directly or indirectly. It may acquire all moveable or immovable goods even if these are not related directly or indirectly to the company’s object. It may, in any way, acquire participating interests in all associations, businesses, enterprises or companies that are striving towards the same or a similar or related object or which can promote its business or facilitate the sale of its products or services, and it may work together or merge therewith. Consultation of documents The statutory and consolidated annual accounts of the company and the accompanying reports are filed with the National Bank of Belgium. The shareholders may request the articles of association and the special reports required by the Companies Act as well as the annual and half-yearly reports and all information published for the benefit of the shareholders, at the registered office of the company. The articles of association, the annual and half-yearly reports can also be downloaded from the website www.sioen.com.
Historical development of the capital The historical development of the capital is included under the comments to the consolidated annual accounts on Page 89. Authorised capital The board of directors is authorised to increase the subscribed capital on one or more occasions, by a maximum amount of forty-six million euros, during a period of five years counting from publication in the appendices to the Belgian Official Journal of the deed concerning the amendment of the articles of association of the thirtieth of May 2003 (BOJ of 17 June 2003). This renewable authority is valid for capital increases in cash, in kind or by conversion of reserves. At the moment this amount is still wholly available. In the framework of the authorised capital, the board of directors is authorised, in the interest of the company and subject to observance of the conditions laid down in Articles 535 and 592 to 599 of the Companies Code, to remove or limit the preferential right of subscription accorded to the shareholders by the law. The board of directors is authorised to limit or remove the preferential right of subscription in favour of one or more particular people, even if these are not members of staff of the company or its subsidiaries. On the occasion of the increase of the subscribed capital, carried out within the bounds of the authorised capital, the board of directors is authorised to ask for an issue premium. If the board of directors decides to do this, this issue premium should be booked in a blocked reserve account that can only be reduced or eliminated further to a decision of the general meeting taken in the manner required for the amendment of the articles of association.
expressly gave the board of directors the authority to increase the subscribed capital on one or more occasions, from the date of notification by the Banking and Finance Commission to the company of a public takeover bid for the company’s shares, by a cash contribution with removal or limitation of the existing shareholders’ preferential right of subscription, or by contribution other than in cash, in accordance with Articles 557 and 607 of the Companies Code. This authority was granted for a period of three years from 27 May 2005. Acquisition by the company of shares in its own capital The general meeting of the twenty-seventh of May two thousand and five expressly authorised the board of directors, in accordance with the provisions of the companies law, to acquire shares in its own capital or profit-sharing certificates, or to avail itself thereof, if the acquisition is necessary to avoid the threat of serious harm for the company. This authorisation is valid for a period of three years from the announcement of the above-mentioned decision in the appendices to the Belgian Official Journal (BOJ of 17 June 2005). The general meeting of the twenty-seventh of May two thousand and five authorised the board of directors, in accordance with Articles 620 to 623 and 625 of the Companies Code, to obtain shares in the company’s own capital by purchase or swap for the maximum number permitted by the law, and subject to a price equal to the market value of the shares. This authorisation applies for a period of eighteen months counting from the announcement of this decision in the appendices to the Belgian Official Journal (BOJ of 17 June 2005) and may be extended.
In the event of a lack of express authorisation given by the general meeting to the board of directors, the board of directors’ authority to increase the subscribed capital by a cash contribution with removal or limitation of the existing shareholders’ preferential right of subscription, or by contribution other than in cash, is suspended from the date of the Banking and Finance Commission’s notification to the company of a public takeover bid for the company’s shares. This authority comes into force again immediately after closure of such a takeover bid. The general meeting of the thirty-first of May two thousand and three
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