IBERPAPEL GESTION, S.A.

Transcription

Annual Accounts and Directors’ Report
31 December 2009
Annual accounts and Directors’ Report for 2009
On 25 February 2010 and in accordance with the requirements of Article 171 of the Spanish
Companies Act and Article 37 of the Code of Commerce, the Board of Directors of Iberpapel
Gestión, S.A. prepares the annual accounts and directors’ report for the year ended 31
December 2009, consisting of the documents attached hereto, set out on official paper numbered
sequentially.
The Board of Directors
Signature
Mr Iñigo Echevarría Canales
Mr. Iñigo Solaun Garteiz
Deceased
Mr Néstor Basterra Larroude
Mr Baltasar Errazti Navarro
Mr Martín González del Valle Chávarri
Mr Ignacio Peñalba Ceberio
Mr Iñaki Usandizaga Aranzadi
Mrs. María Luisa Guibert Ucin
Madrid, 25 February 2010
2
CONTENTS OF THE ANNUAL ACCOUNTS OF IBERPAPEL GESTIÓN, S.A.
Note
Page
Balance sheet
5
Income statement
7
Statement of recognized income and expense
8
Statement of changes in equity
9
Cash flow statement
11
Notes to the annual accounts
12
1.
General information
12
2.
Basis of presentation
12
3.
Accounting policies
14
3.1. Intangible assets
14
3.2. Property, plant and equipment
15
3.3. Impairment losses on non-financial assets
16
3.4. Financial assets
16
3.5. Equity
17
3.6. Financial liabilities
18
3.7. Current and deferred taxes
18
3.8. Employee benefits
19
3.9. Provisions and contingent liabilities
19
3.10. Revenue recognition
20
3.11. Leases
21
3.12. Foreign currency transactions
21
3.13. Related-party transactions
22
Financial risk management
22
4.1. Financial risk factors
22
5.
Intangible assets
25
6.
Property, plant and equipment
26
7.
Analysis of financial instruments
27
7.1. Analysis by category
27
7.2. Analysis by maturity date
28
7.3. Credit quality of financial assets
29
4.
8.
Shares in group companies, jointly-controlled entities and associates
30
9.
Loans and receivables
32
10.
Cash and cash equivalents
33
11.
Capital and share premium
34
12.
Prior year reserves and results
35
13.
Profit for the year
36
14.
Borrowings and other payables
37
15.
Deferred taxes
37
16.
Income and expense
38
3
Note
Page
17.
Corporate income tax and tax situation
40
18.
Financial results
42
19.
Cash flows from operating activities
42
20.
Cash flows from investing activities
43
21.
Cash flows from financing activities
43
22.
Commitments
44
23.
Board of Directors and senior management compensation
44
24.
Other related-party transactions
47
25.
Auditors’ fees
48
26.
Significant port-balance sheet events
48
Directors’ report
1
4
BALANCE SHEET AT 31 December 2009 and 2008
(Thousand euro)
Year ended
31 December
Note
NON-CURRENT ASSETS
2009
2008
46,006
46,057
Intangible assets
5
4
2
6
19
29
Long-term investments in group and associated companies
8
45,980
45,980
45,980
45,980
3
3
3
3
Equity instruments
Long-term investments
7
Other financial assets
Deferred tax assets
15
CURRENT ASSETS
Trade and other receivables
9
Current tax assets
Short-term investments in group and associated companies
8
Loans to companies
TOTAL ASSETS
10
43
22,097
18,660
71
153
71
153
21,934
18,340
21,934
18,340
92
167
68,103
64,717
5
BALANCE SHEET AT 31 December 2009 AND 2008
(Thousand euro)
Year ended
31 December
Note
2009
2008
EQUITY
Equity
67,654
64,362
Share capital
11
6,980
6,980
Share premium account
11
27,104
28,027
Reserves
12
29,901
24,314
Treasury shares
11
(1,556)
(1,469)
Profit for the year
13
6,148
6,510
Interim dividends
11 and 13
(923)
CURRENT LIABILITIES
Short-term borrowings
14
Other financial liabilities
Trade and other payables
Sundry creditors
Other payables to public entities
TOTAL LIABILITIES
14
449
355
245
260
245
260
204
95
8
45
196
50
68,103
64,717
6
INCOME STATEMENT FOR THE YEARS ENDED 31 DECEMBER 2009 AND 2008
(Thousand euro)
Year ended
31 December
Note
2009
2008
CONTINUED OPERATIONS
Net revenues
16
7,220
7,709
Dividends from shareholdings in Group companies
2 and 16
5,937
6,200
Interest on loans to Group companies
2 and 16
615
849
668
660
(416)
(412)
(364)
(363)
Staff welfare expenses
(52)
(49)
Other operating costs
(558)
(634)
(556)
(634)
Services rendered
Staff costs
16
Wages, salaries and similar remuneration
External services
Taxes
(2)
Fixed asset depreciation/amortization
OPERATING RESULTS
(14)
(17)
6,232
6,646
Financial income
FINANCIAL RESULTS
2
18
RESULTS BEFORE TAXES
Corporate income tax
PROFIT FOR YEAR FROM CONTINUED OPERATIONS
17
2
6,232
6,648
(84)
(138)
6,148
6,510
6,148
6,510
DISCONTINUED OPERATIONS
PROFIT FOR YEAR FROM DISCONTINUED OPERATIONS NET OF TAXES
PROFIT/LOSS FOR THE YEAR
7
STATEMENT OF CHANGES IN EQUITY FOR THE YEARS ENDED 31
DECEMBER 2009 AND 2008
A) STATEMENT OF RECOGNIZED REVENUE AND EXPENSES (Thousand euro)
Year ended
31 December
2009
2008
Profit for the year
6,148
6,510
TOTAL RECOGNIZED REVENUES AND EXPENSES
6,148
6,510
8
STATEMENT OF CHANGES IN EQUITY FOR THE YEARS ENDED 31 December 2008 AND 2007
B) STATEMENT OF TOTAL CHANGES IN EQUITY (Thousand euro)
Share
capital
CLOSING BALANCE 2007
Share
Legal reserve
premium
Other
Reserves
Treasury shares Profit for year
TOTAL
6,980
30,918
1,434
19,076
(823)
6,119
63,704
6,980
30,918
1,434
19,076
(823)
6,119
63,704
6,510
6,510
(2,315)
(5,206)
Adjustments due to changes in policy
ADJUSTED OPENING BALANCE 2008
Total recognized revenues and expenses
Transactions with shareholders or owners
Capital increases
Capital reduction
Conversion of financial liabilities into equity
Dividend payment
(2,891)
Transactions involving treasury shares (net)
(646)
(646)
Other transactions with shareholders or owners
Other changes in equity
3,804
6,980
28,027
1,434
22,880
(3,804)
(1,469)
6,510
64,362
9
STATEMENT OF CHANGES IN EQUITY FOR THE YEARS ENDED 31 DECEMBER 2009 AND 2008
B) STATEMENT OF TOTAL CHANGES IN EQUITY (Thousand euro)
Share
capital
Share
premium
Legal
Other
reserve
Reserves
Treasury shares
Profit for
Interim
year
dividend
TOTAL
6,980
28,027
1,434
22,880
(1,469)
6,510
64,362
6,980
28,027
1,434
22,880
(1,469)
6,510
64,362
6,148
6,148
Adjustments due to changes in policy
ADJUSTED OPENING BALANCE 2009
Total recognized revenues and expenses
Transactions with shareholders or owners
Capital increases
Capital reduction
Conversion of financial liabilities into equity
Distribution of dividends (Notes 11 and 13)
(923)
(923)
(923)
(2,769)
Transactions involving treasury shares (net)
Other transactions with shareholders or owners
Other changes in equity
(87)
(87)
5,587
6,980
27,104
1,434
28,467
(5,587)
(1,556)
6,148
(923)
67,654
10
CASH FLOW STATEMENT FOR THE YEARS ENDED 31 DECEMBER 2009 AND 2008
(Thousand euro)
Year ended
at 31 December
Note
2008
2,787
5,370
6,232
6,648
Profit adjustments
(6,538)
(7,034)
Changes in working capital
(3,418)
(1,295)
6,511
7,051
(6)
(9)
(6)
(9)
(2,856)
(5,852)
(87)
(646)
(2,769)
(5,206)
(75)
(491)
Cash and equivalents at the start of the year
167
658
Cash and equivalents at the end of the year
92
167
CASH FLOWS FROM OPERATING ACTIVITIES
19
2009
Profit for year before taxes
Other cash flows from operating activities
CASH FLOWS FROM INVESTMENT ACTIVITIES
20
Investment payments
Divestment proceeds
CASH FLOWS FROM FINANCE ACTIVITIES
Payments received and paid for equity instruments
21
Payments received and paid for financial liability instruments
Dividend payments and compensation from other equity instruments
EFFECT OF EXCHANGE RATE CHANGES
NET INCREASE / (DECREASE) IN CASH AND EQUIVALENTS
11
NOTES TO THE ANNUAL ACCOUNTS FOR 2009
(Thousand euros)
1.
General information
Iberpapel Gestión, S.A. is a trading company and was incorporated on 21 July 1997 before the
notary of Madrid, Mr Juan Carlos Caballería Gómez, and number 2,427 of his protocol. The
Company is registered in the Mercantile Register of Guipúzcoa, volume 1,910, book 0, sheet 43,
section 8, page SS 19511, and its registered office is located at Avenida Sancho el Sabio 2, San
Sebastián. Its tax ID number is No. A-21248893.
The corporate purpose of Iberpapel Gestión consists of:
a) Sales operations of all kinds, on behalf of and representing itself or third parties, relating to
any goods or objects.
b) Possession and exploitation of any municipal, rural, agricultural, forestry and industrial
property.
c) Subscription, derivative acquisition, holding, use, administration, purchase or sale of securities
and shares, except those which relate to activities regulated by Law 46/84 or by specific
legislation.
2.
a)
True and fair view
The annual accounts have been prepared on the basis of the Company’s accounting records and
are presented in compliance with current Spanish Company Law and the Spanish General
Accounting Plan approved by Royal Decree 1514/2008 so as to provide a true and fair view of the
Company’s net worth, its financial situation and the results of its operations, as well as the
accuracy of the cash flows included in the cash flow statement.
The figures contained in the documents that make up these annual accounts, the balance sheets,
the income statements, the statement of changes in equity, the cash flow statement and these
notes, are expressed in thousands of euro.
12
b)
Comparability
Some amounts relating to 2008 have been reclassified in these annual accounts in order to make
them comparable to this year and facilitate their comparison. The most significant reclassification
was as follows:
Debit
Credit
Financial income
6,200
849
Net revenues
6,200
849
7,049
7,049
In accordance with Consultation 2 published in the BOICAC 79/2009, dividends from shares in
capital and any interest from loans granted by a holding company will be classified as revenue.
c)
Critical aspects of measuring and estimating uncertainty
The preparation of the financial statements requires the use by the Company of certain estimates
and judgements in relation to the future that are assessed constantly and are based on historical
experience and other factors, including expectations of future events considered reasonable.
The resulting accounting estimates will, by definition, seldom equal the related actual results.
d)
Groupings of items
For clarity, the items presented in the balance sheet, income statement, statement of changes in
equity and cash flow statement are grouped together and, where necessary, a breakdown is
included in the relevant notes to the accounts.
13
e)
Consolidated Annual Accounts
The Company is the parent of a group of companies in accordance with Royal Decree 1815/1991
(20 December) and therefore it must present consolidated annual accounts, which have been
prepared in accordance with International Financial Reporting Standards (IFRS) adopted for use by
the European Union, approved by the European Commission and in force at 31 December 2009.
The Directors have decided to prepare the consolidated accounts separately at 25 February 2010.
The consolidated accounts reflect a net consolidated profit of € 7,033 thousand and capital and
reserves, excluding net profit for the year, of € 165,820 thousand.
3.
Accounting policies
3.1.
Intangible assets
a)
Research and development costs
Research expenditure is recognised as an expense when incurred. Development costs incurred in
projects are recognised as intangible assets when it is probable that the project will be a success
considering its technological and commercial feasibility, there are sufficient technical and financial
resources to complete it, the costs incurred may be measured reliably and a profit is likely to be
generated.
Other development expenses are recognised as an expense when incurred. Development costs
previously recognised as an expense are not recognised as an asset in subsequent years.
Development costs with a finite useful life that have been capitalised are amortised on a straightline basis over the period of the project’s expected benefit, not exceeding five years.
When an asset’s carrying amount exceeds its estimated recoverable amount, the carrying amount
is written down immediately to the recoverable amount.
If the circumstances favouring the project that permitted the capitalisation of the development
costs change, the unamortized portion is expensed in the year of change.
b)
Computer software
Acquired computer software licences are capitalised on the basis of the costs incurred to acquire
and bring to use the specific software. These costs are amortised over their estimated useful lives
(four years).
14
The costs relating to the maintenance of computer programs are recognized as an expense when
incurred. Costs directly related to the production of identifiable and unique computer programs
controlled by the Company and that will probably generate economic benefits exceeding costs
beyond one year are recognised as intangible assets. Direct costs include the software
development employee costs and an appropriate portion of relevant overheads.
Software development costs recognised as assets are amortised over the software’s estimated
useful life which does not exceed four years.
3.2.
Property, plant and equipment is stated at acquisition price or production cost less accumulated
depreciation and accumulated impairment losses recognised.
Own work capitalised is measured is calculated by adding to the price of the consumable
materials used the direct or indirect costs attributable to the assets.
Costs incurred to extend, modernise or improve property, plant and equipment are only
recorded as an increase in the value of the asset when the capacity, productivity or useful life of
the asset is extended and it is possible to ascertain or estimate the carrying amount of the assets
that have been replaced in inventories.
The cost of major repairs is capitalised and depreciated over the estimated useful life of the asset,
while recurring maintenance costs are charged to the income statement in the year in which they
are incurred.
Depreciation of property, plant and equipment, with the exception of land, which is not
depreciated, is calculated systematically using the straight-line method over the assets’ estimated
useful lives based on the actual decline in value brought about by operation, use and possession.
Estimated useful lives are as follows:
Estimated years of useful life
Data-processing equipment
4 years
The residual values and useful lifes of assets are reviewed and adjusted, if necessary, at each
balance sheet date.
If an asset’s carrying amount is greater than its estimated recoverable amount, its carrying amount
is written down immediately to its recoverable amount ( Note 3.3).
15
Gains and losses on the disposal of property, plant and equipment are calculated by comparing the
sale revenue with the carrying amount and are recognised in the income statement.
3.3.
Losses due to impairment of non-financial assets
Intangible assets that have an indefinite useful life such as goodwill, are not subject to amortization
and are tested annually for impairment Other non-financial assets are tested for impairment
provided that some event or change in circumstances indicates that carrying value may not be
recoverable. An impairment loss is recognized for the amount by which the asset's carrying
amount exceeds its recoverable amount, understood as the asset's fair value less the higher of
costs to sell and value in use. For the purposes of determining impairment, the assets are grouped
at the lowest level at which cash flows may be independently identified (cash generating units).
Non-financial assets, other than goodwill, which are impaired are reviewed at the balance sheet
date for reversal of the loss.
3.4.
Financial assets
a)
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that
are not quoted on an active market. They are included in current assets, except for maturities
greater than 12 months after the balance sheet date. These are classified as non-current assets.
Loans and receivables are included in “Loans to companies” and “Trade and other receivables” in
the balance sheet.
Financial assets are initially carried at fair value, including directly attributable transaction costs,
and are subsequently measured at amortized cost. Accrued interest is recognized at the effective
interest rate, which is the discount rate that brings the instrument’s carrying amount into line
with all estimated cash flows to maturity. Trade receivables falling due in less than one year are
carried at their face value at both initial recognition and subsequent measurement, provided that
the effect of not discounting flows is not significant.
16
At the year end, at least, the necessary value adjustments are made to account for impairment
when there is objective evidence that all receivables will not be collected.
The amount of the impairment loss is the difference between the asset’s carrying amount and the
present value of estimated future cash flows, discounted at the effective interest rate prevailing at
the date of initial recognition. Value adjustments, and reversals, where applicable, are recognized
in the income statement.
b)
Investments in the equity of group, multigroup and associated companies
They are stated at cost less, where appropriate, accumulated value adjustments for impairment.
Nonetheless, when there is an investment prior to its classification as a group company, jointlycontrolled entity or associate, its carrying value prior to that classification is regarded as the
investment cost. Previous value adjustments accounted for directly in equity are held under this
heading until they are written off
If there is objective evidence that the carrying value is not recoverable, the relevant value
adjustments are reflected for the difference between the carrying value and recoverable amount,
understood as the higher of fair value less costs to sell and the present value of cash flows from
the investment Unless better evidence is available of the recoverable amount, when estimating the
impairment of these investments, the investee's equity is taken into account, adjusted for any
latent capital gains existing at the measurement date. The value adjustment and, if appropriate, its
reversal, are reflected in the income statement for the year in which they arise
3.5.
Equity
Share capital consists of ordinary shares.
The costs of issuing new shares or options are recognised directly in equity as a reduction in
reserves.
In the event that the Company’s acquires treasury shares, the price paid, including any directly
attributable incremental cost, is deducted from equity until the treasury shares are redeemed,
reissued or sold. When treasury shares are subsequently sold or reissued, any amount received is
taken to equity net of directly attributable incremental costs.
17
3.6.
Financial liabilities
a)
This includes trade and non-trade payables. Borrowings are classed as current liabilities unless the
Company has an unconditional right to defer settlement for at least 12 months as from the
balance sheet date.
Payables are initially recognised at fair value, adjusted for directly attributable transaction costs,
and subsequently measured at amortised cost using the effective interest method. The effective
interest rate is the discount rate that brings the instrument’s carrying amount into line with the
expected future flow of payments to the maturity date of the liability.
Trade payables falling due in less than one year without a contractual interest rate are carried at
their face value at both initial recognition and subsequent measurement, provided that the effect
of not discounting flows is not significant.
In the event of the renegotiation of existing debts, the financial liability is not deemed to change
significantly when the lender of the new loan is the same as the initial lender and the present value
of cash flows, including net fees, is not more than 10% higher or lower than the present value of
cash flows payable on the original liability, calculated using the same method.
3.7.
Current and deferred taxes
Income tax expense (income) is that amount of income tax that accrues during the period. It
includes both current and deferred tax expense (income).
Both current and deferred tax expense (income) is recognized in the income statement.
However, the tax effect of items recorded directly in equity is recognized in equity.
Current tax assets and liabilities are carried at the amounts that are expected to be payable to or
recoverable from the tax authorities, in accordance with prevailing legislation or regulations that
have been approved and are pending publication at the year end.
18
Deferred income tax is calculated, using the liability method, on temporary differences arising
between the tax bases of assets and liabilities and their carrying amounts. However, if the
deferred tax arises from the initial recognition of a liability or an asset on a transaction other than
a business combination that at the time of the transaction has no effect on reported or taxable
results, they are not recognized. The deferred tax is determined applying tax regulations and rates
approved or about to be approved at the balance sheet date and which are expected to be
applied when the corresponding deferred tax asset is realized or deferred tax liability is settled.
Deferred income tax assets are recognized to the extent that it is probable that future taxable
profit will be available against which the temporary differences can be utilized.
Deferred taxes on temporary differences arising on investments in subsidiaries, associates and
joint ventures are recognized, except where the Company is able to control the reversal date of
the temporary differences and such differences are unlikely to reverse in the foreseeable future.
3.8.
Employee benefits
a)
Termination benefits
Termination benefits are payable when employment is terminated before the normal retirement
date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The
Company recognizes these benefits when it has demonstrably undertaken to terminate current
employees’ employment in accordance with a formal detailed plan that cannot be withdrawn, or
to provide severance indemnities as a result of an offer made to encourage voluntary redundancy.
Benefits that will not be paid within 12 months of the balance sheet date are discounted to their
present value.
3.9.
Provisions and contingent liabilities
Provisions for environmental restoration, restructuring costs and legal claims are recognized
when the Company has a present legal or constructive obligation as a result of past events, an
outflow of funds will probably be necessary to settle the obligation, and the amount may be
reliably estimated. Restructuring provisions comprise lease termination penalties and employee
termination payments. Provisions are not recognized for future operating losses.
19
Provisions are carried at the present value of forecast payments that are expected to be required
to settle the obligation, using a rate before taxes that reflects the current market assessment of
the time value of money and the specific risks of the obligation. Adjustments made to update the
provision are recognized in finance costs as they accrue.
Provisions maturing in one year or less the financial effect of which is immaterial are not
discounted.
Where a part of the outflow necessary to settle the obligation is expected to be reimbursed by a
third party, the reimbursement is recognized as a separate asset, provided collection is virtually
assured.
A contingent liability is a potential obligation arising from past events, the materialization of which
is dependent on the occurrence or non-occurrence of one or more future events beyond the
Company’s control. These contingent liabilities are not recorded in the accounts but are
described in the notes presenting the financial statements.
Revenue comprises the fair value of the consideration receivable and represents amounts
receivable for goods delivered and services rendered in the ordinary course of the Company’s
activities, net of returns, rebates, discounts and value added tax.
The Company recognizes revenue when the amount may be reliably estimated, it is likely that the
future economic benefits will flow to the Company and the specific conditions are fulfilled for
each activity, as described below. A reliable calculation of the amount of revenue is not deemed
possible until all sale-related contingencies have been resolved. The Company’s estimates are
based on historical results, taking into account customer type, transaction type and specific terms.
a)
Interest income
Interest income is recognized using the effective interest method. When a receivable is impaired,
the Company reduces the carrying amount to the recoverable amount and discounts the
estimated future cash flows at the original effective interest rate of the instrument and continues
to carry the discount as a decrease in interest income. Interest income on loans that have
become impaired is recognized using the effective interest rate method.
b)
Services rendered
Sales of services are recognized in the accounting period in which the services are provided by
reference to the completion of the specific transaction, assessed based on the actual service
20
provided as a percentage of the total service to be provided.
c)
Dividend income
Dividend income is recognized as income in the income statement at the time the entitlement to
receive the dividends is established. Nonetheless, if the dividends paid derive from profits
generated prior to the date of acquisition, they are recognized as a decrease in the carrying value
of the investment and not as income.
3.11. Leases
a)
When the Company is the lessee – operating lease
Leases in which a significant portion of the risks and rewards of ownership are retained by the
lessor are classified as operating leases. Payments made under operating leases (net of any
incentives received from the lessor) are charged to the income statement in the period of accrual
on a straight-line basis over the period of the lease.
a)
Functional and presentation currency
The financial statements are presented in euro, which is the Company’s functional and
presentation currency.
b)
Transactions and balances
Foreign currency transactions are translated to the functional currency using the exchange rates
prevailing at the transaction dates. Foreign currency gains and losses resulting from the settlement
of such transactions and from the translation at year-end exchange rates of monetary assets and
liabilities denominated in foreign currency are recognized in the income statement, except when
deferred in equity as qualifying cash flow hedges or qualifying net investment hedges.
21
3.13. Related-party transactions
In general, transactions between group companies are initially recognized at fair value. If
applicable, where the agreed price differs from the fair value, the difference is recognized based
on the economic reality of the transaction. Transactions are subsequently measured in
accordance with applicable standards.
For mergers, splits and non-monetary contributions of a business, the Company applies the
following:
a)
For transactions between group companies involving the parent of the group or of a
subgroup and its subsidiary, directly or indirectly, the assets representing the business acquired
are carried at the amount at which, following the transactions, is attributable to them in the
group’s or subgroup’s consolidated financial statements.
b)
For intercompany transactions, the assets of the business are stated at their carrying value
in the individual financial statements prior to the transaction.
The difference that may arise is reflected in reserves.
4.
Financial risk management
4.1.
Financial risk factors
The Company's activities are exposed to several financial risks: market risk (including the interest
rate risk, exchange rate risk and price risk ), credit risk and liquidity risk. The Company’s overall
risk management program focuses on unpredictability of financial markets and seeks to minimize
the potential adverse effects on the Company’s financial performance.
Risk management is carried out by the Company’s Treasury Department, which identifies,
evaluates and hedges financial risks in accordance with the policies approved by the Board of
Directors. The Board provides written policies for overall risk management and for specific areas
such as foreign exchange risk, interest rate risk, liquidity risk and investment of cash surpluses.
22
a)
Market risk
(i) Foreign exchange risk
The Company operates nationally and is therefore exposed to foreign exchange risk arising from currency
transactions.
(ii) Price risk
The Company is not exposed to equity instrument price risk because it has no
investments held and classified on the balance sheet either as available for sale or carried
at fair value through profit or loss. The Company is not exposed to commodity price
risk.
(iii) Cash flow interest rate risk and fair value risk
Since the Company does not hold any significant interest-bearing assets, the revenues
and cash flows from the Company's operating activities are largely unaffected by changes
in market interest rates.
b)
Credit risk
The credit risk is managed by group. Credit risk derives from cash and cash equivalents and bank
and other deposits.
The table below sets out the balances with the most significant counterparties at the balance
sheet date:
2009
Counterparty
S&P rating
Balance
Bank A
AA-
54
Bank B
AA
5
Bank C
Unrated
33
92
23
c)
Liquidity risk
The prudent management of the liquidity risk entails holding sufficient cash, as well as available
financing through sufficient credit facilities and the capacity to settle market positions. Given the
dynamic nature of the underlying businesses, the company’s Cash Department has the objective of
maintaining flexible financing.
Management monitors the Company’s liquidity reserve requirements, including the availability of
credit lines (Note 9) and cash and cash equivalents (Note 10), on the basis of expected cash flows.
The liquidity reserve forecast at 15 December 2009, the date on which the Board of Directors agreed to distribute an
interim dividend (Note 13) is as follows:
2009
Opening balance
Collections from operations
Payments of operations
Closing balance
127
23,348
(17,182)
6,293
The table below sets out an analysis of the Company's financial liabilities that will be settled at the
net amount, grouped together by maturity, on the basis of the periods remaining at the balance
sheet date to the maturity date stipulated in the contract. The amounts set out in the table relate
to the cash flows stipulated in the contract without discounting. Balances payable within 12
months are equivalent to their carrying values since the effect of discounting is not significant.
2009
Less than 1
year
449
24
5.
Intangible assets
Cost
Computer software
Balance at
31/12/2007
Additions
Disposals
Transfers
Balance at
31/12/2008
11
11
11
11
Accumulated amortization
Computer software
Net amount
Cost
Computer software
(6)
(3)
(9)
(6)
(3)
(9)
5
2
Balance at
31/12/2008
Additions
11
3
14
11
3
14
(9)
(1)
(10)
(9)
(1)
(10)
Disposals
Transfers
Balance at
31/12/2009
Computer software
Net amount
2
4
25
Fully amortized assets
At 31 December 2009, fully-amortized intangible assets with an original cost of € 9 thousand
(2008: € 0 thousand) are still in use.
6.
Cost
Other fixed assets
Balance at
31/12/2007
Additions
72
9
3
Disposals
Transfers
Balance at
31/12/2008
81
3
75
9
84
(37)
(15)
(52)
Other fixed assets
(3)
(40)
Net amount
35
(3)
(15)
(55)
29
26
Cost
Other fixed assets
Balance at
31/12/2008
Additions
81
3
Disposals
Transfers
Balance at
31/12/2009
84
3
3
84
3
87
(52)
(13)
(65)
Other fixed assets
(3)
(55)
Net amount
a)
29
(3)
(13)
(68)
19
At 31 December 2009, fully-depreciated property, plant and equipment with an original cost of €
36 thousand (2008: € 25 thousand) are still in use.
b)
Operating leases
The income statement includes operating lease expenses relating to machinery rentals amounting
to € 3 thousand.
7.
Analysis of financial instruments
7.1.
Analysis by category
The carrying value of each category of financial instruments set out in the standard on accounting
and measurement of financial instruments, except for investments in the equity of group
companies, jointly-controlled entities and associates (Note 8), is as follows:
27
Long-term financial assets
Other
Other financial assets (Note 9)
2009
2008
3
3
3
3
Current financial assets
Other
2009
Current tax assets
Short-term loans to Group companies (Note 9)
2008
71
153
21,934
18,340
92
167
22,097
18,660
Current financial liabilities
Other
Creditors and payables (Note 14)
7.2.
2009
2008
449
355
449
355
Analysis by maturity date
Financial instruments having fixed or determinable maturities are shown below by year of
maturity:
Financial assets
2009
2008
Investments in group companies and associates
Current tax assets
Short-term loans to Group companies (Note 9)
71
153
21,934
18,340
22,005
18,493
28
7.3.
Credit quality of financial assets
The credit quality of the financial assets that have not yet matured or are not impaired may be
assessed on the basis of the credit rating afforded by external bodies or using historical default
data.
2009
2008
Public institutions
71
153
Total receivables
71
153
Receivables
Cash at bank and short-term bank deposits
Counterparty
Bank A
2009
S&P rating
AA-
54
Bank B
AA
5
Bank C
Unrated
33
92
None of the financial assets pending maturity has been renegotiated during the year.
29
8.
Shares in group companies, jointly-controlled entities and associates
a)
Shareholdings in group companies
At 31 December 2009 and 2008 shareholdings in Group companies were as follows:
% interest held
Name and address
Legal
Activity
form
Direct
%
Indirect
%
Voting rights
Direct
Indirect
%
Distribuidora Papelera
Madrid (Spain)
S.A.
Paper wholesaler
100
100
Moliner, Domínguez y Cía.
Barcelona (Spain)
S.A.
Paper wholesaler
100
100
Ibereucaliptos
La Palma del Condado
(Spain)
S.A.
Reforestation and forestry
100
100
Papelera Guipuzcoana de
Zicuñaga
Hernani (Spain)
S.A.
Manufacture, transformation and sale of
paper
100
100
Central de Suministros de
Artes GráficasPapel Madrid
(Spain)
S.A.
Paper wholesaler
100
100
Iberbarna Papel
Barcelona (Spain)
S.A.
Paper wholesaler
100
100
Zicuimex France
Hendaye (France)
%
S.A.R.L.
Promotion of exports
100
100
Zicupap
San Sebastián (Spain)
S.A.
100
100
Copaimex
San Sebastián (Spain)
S.A.
100
100
Iberpapel Argentina
Colón (Rep. Argentina)
S.A.
100
100
Papeteries de l'Atlantique
Hendaye (France)
S.A.
Rent of moveable and real property, in
liquidation.
99.99
99.99
Los Eucaliptus
Paysandú (Uruguay)
S.A.
100
100
Samakil
Montevido (Uruguay)
S.A.
Timber merchant
100
100
G. Gil
Colón (Rep. Argentina)
S.A.
Timber merchant
100
100
100
100
Nueva Andalucía
Montevido (Uruguay)
S.R.L.
None of the Group companies in which the Company holds an interest are listed on a stock
exchange.
30
Set out below are the figures for capital, reserves and results for 2008 and other information of
interest as per the Company's annual accounts:
Reserves
Company
Carrying
Share
and
Profit for
value at
Dividends
capital
Other
year
parent
received
Distribuidora Papelera, S.A.
60
434
Moliner, Domínguez y Cía.,S.A.
60
539
9,300
11,459
(299)
3,995
46,277
92,609
5,786
41,516
Central de Suministros de Artes Gráficas Papel, S.A.
60
422
102
60
Iberbarna Papel, S.A.
60
329
41
60
7
64
15
7
60
53
96
60
475
76
5
475
3,783
(305)
942
4,377
37
297
54
37
13,165
2,218
(28)
15,364
873
11
(30)
858
2,224
(62)
17
2,179
Ibereucaliptos, S.A.
Papelera Guipuzcoana de Zicuñaga, S.A.
Zicuimex FRANCE, S.A.R.L.
Zicupap, S.A.
Copaimex, S.A.
Iberpapel Argentina, S.A.
Papeteries de l'Atlantique, S.A.
Los Eucaliptus, S.A.
Samakil, S.A.
G. Gil, S.A.
Nueva Andalucia, S.R.L.
4
222
60
6,200
(197)
31
Set out below are the figures for capital, reserves and results for 2009 and other information of
interest as per the Company's annual accounts:
Reserves
Share
Company
Moliner, Domínguez y Cía.,S.A.
and
capital
Carrying
Profit for
Other
year
value at
Dividends
parent
received
60
438
3
222
60
540
(70)
60
9,300
11,033
1,419
3,993
46,277
86,715
5,505
41,516
5,700
60
424
7
60
100
60
329
12
60
41
8
79
(8)
7
60
53
12
60
Zicuimex FRANCE, S.A.R.L.
Zicupap, S.A.
Copaimex, S.A.
475
81
4
475
3,367
(529)
21
3,916
37
151
(31)
37
17,809
2,642
(468)
19,913
Samakil, S.A.
1,052
16
12
962
G. Gil, S.A.
4,098
(40)
(91)
3,971
9.
96
114
Loans and other receivables
The fair value of loans and other receivables is as follows:
2009
2008
21,934
18,340
21,934
18,340
Short-term loans and receivables
Loans to group companies (Note 24)
32
The carrying values of loans and receivables is denominated in the following currencies:
Euro
2009
2008
21,934
18,340
21,934
18,340
All other accounts included under “Loans and receivables” has not undergone any impairment.
10.
Cash at bank and in hand
2009
2008
92
167
92
167
For the purposes of the cash flow statement, cash and cash equivalents includes:
2009
2008
92
167
92
167
33
11.
Capital and share premium
a)
Share capital
Authorized capital is made up of 11,633,140 ordinary fully paid bearer shares with a par value of €
0.60 each.
There are no restrictions on the transfer of the shares.
At 31 December 2009, the Company has no knowledge of any companies holding interests
exceeding 10% in its share capital.
All company shares are listed on the Madrid and Bilbao stock exchanges.
b)
This reserve is freely available for distribution.
On 2 June 2009 the General Shareholders’ Meeting approved the partial reimbursement of the
share premium to shareholders at a rate of 0.08 euro per share amounting to € 923 thousand.
c)
Treasury shares
During the year the Company acquired 9,991 treasury shares on the stock market. The amount
paid for the shares totaled € 87 thousand. At 31 December 2009 the Company holds a total of
98,869 treasury shares with an original cost of € 1,556 thousand. These shares represent 0.850%
of the Company’s share capital. These shares are held as treasury shares.
On 02 June 2009 Shareholders at a General Meeting adopted a Resolution to authorize the Board
of Directors, including the express authority for replacement, to acquire Treasury shares by the
Company and/or its subsidiaries, in the terms established by Law thereby canceling the
authorization granted by the General Meeting on 04 June 2008.
34
12.
Prior year reserves and results
a)
Reserves
2009
2008
1,434
1,434
1,434
1,434
28,455
22,868
12
12
28,467
22,880
Legal reserve
Legal reserve
Other reserves
Voluntary reserves
Differences on conversion of capital to euro
(i) Legal reserve
Appropriations to the legal reserve are made in compliance with Article 214 of the
Spanish Companies Act, which stipulates that 10% of the profits for each year must be
transferred to this reserve until it represents at least 20% of share capital.
The legal reserve is not available for distribution. Should it be used to offset losses in the
event of no other reserves being available, it must be replenished out of future profits.
(ii) Differences on conversion of capital to euro
This reserve is not available.
In accordance with Law 46/1998 (17 December 1998) on the introduction of the euro,
the Company records an unavailable reserve for differences arising on the conversion of
share capital to euro.
35
13.
Profit for the year
a)
Proposal for distributing results
The proposal to be presented to the General Meeting regarding the distribution of results and
reserves is as follows:
2009
2008
6,148
6,510
6,148
6,510
Available for distribution
Profit and loss for the year
Application
Dividend
Voluntary reserves
b)
923
923
5,225
5,587
6,148
6,510
Interim dividend
In accordance with a resolution adopted by the Board of Directors on 15 December 2009, on 22
December 2009 the Company distributed an interim dividend of € 0.08 per share, totaling € 923
thousand.
This amount did not exceed the results profits obtained since the end of the previous period,
after deducting the estimated corporate income tax payable on those results, as results down in
Article 216 of the Spanish Companies Act of 27 December 1989.
The provisional accounting statement prepared in accordance with applicable law, which shows
that there are sufficient cash resources available to pay the above-mentioned dividend, is set out
in Note 4.
36
14.
2009
2008
8
45
Short-term borrowings and payables
Trade payables
Taxes payable
196
50
Other financial liabilities
245
260
449
355
2009
2008
15.
Deferred taxes
The breakdown of deferred taxes is as follows:
Deferred tax assets
Other tax credits
43
Deferred taxes
43
Tax assets and liabilities are offset if at that time the Company has the right to offset the
recognized amounts and has the intention of settling the amounts at the net value or to realize
the asset and cancel the liability simultaneously. Deferred tax assets and liabilities that have been
offset are as follows:
2009
2008
Deferred tax assets
Current year
43
Net deferred taxes
43
37
Gross movement in the Deferred taxes heading was as follows:
2009
Opening balance
Charge to the income statement (Note 17)
43
181
(43)
(138)
43
Closing balance
16.
Income and expense
a)
Services rendered
2008
The Company's revenues are distributed geographically as follows:
2009
2008
5,937
6,200
615
849
Services rendered
668
660
7,220
7,709
2009
2008
Wages, salaries and similar remuneration
364
363
Employer’s Social Security contributions
52
49
416
412
All services rendered by the Company took place in Spain.
b)
Staff costs
38
The average number of employees during the year, classified by category, is as follows:
2009
2008
Directors
8
9
Graduates, technicians and administrative staff
4
4
12
13
The distribution of employees by gender at the year end is as follows:
2009
Men Women
Directors
Graduates,
8
technicians
administrative staff
and
Total
2008
Men
8
9
Women
Total
9
2
2
4
2
2
4
10
2
12
11
2
13
39
17.
Corporate income tax and tax situation
The reconciliation of the net revenues and expenses during the year and the corporate income
tax base is as follows:
Income statement
6,148
Revenue and expense balance for the year
Increases
Corporate income tax
Decreases
40
Permanent differences
Temporary differences
arising during the year
44
arising in prior years
Offsetting of tax-loss carryforwards
84
Taxable income
6,232
The corporate income tax charge for the year is analyzed below:
2009
Corporate income tax payable for the year
40
Deferred tax (Note 15)
44
84
40
Current income tax results from applying a tax rate of 28% (2008: 28 %) of the tax base.
Deductions to tax payable applied in 2009 amounted to € 1,917 thousand (2008: € 1,917) and
withholdings and interim payments totaled € 111 thousand (2008: € 153 thousand). The amount
receivable from the tax authorities totals € 153 thousand (2008: € 153 thousand).
All the Company’s tax returns for the last four years for the principal taxes to which it is subject
are open to inspection by the tax authorities.
As a result, among other things, of the different interpretations to which Spanish tax legislation
lends itself, additional tax assessments may be raised in the event of a tax inspection. The
Directors considers, however, that any additional assessments that might be made would not
significantly affect these accounts.
Legislation applicable to the assessment of corporate income tax for 2009 is that contained in
Provincial Regulation 7/1996 of 4 July 1996 with the amendments included in Provincial DecreeRegulation 4/2009, of 23 December, in force at the year end. There is no evidence at the current
date of any appeals having been filed against such legislation.
The Company’s Directors have calculated the amounts associated with this tax for 2009 and
those years open to inspection in accordance with provincial legislation in force at each year end
on the understanding that the various legal proceedings and final outcome of the appeals filed in
this respect will not have a significant impact on the annual accounts taken as a whole.
The Company has applied applicable tax legislation at all times. It therefore considers remote the
effect, if any, that this Supreme Court ruling dated 9 December 2004 may have on the figures
recorded in these annual accounts with respect to the years open to inspection.
41
18.
Financial results
2009
2008
Financial income
2
Other financial income
2
19.
2009
2008
6,232
(6,538)
6,648
(7,034)
14
17
(6,552)
(7.051)
(3,418)
(1,295)
82
(41)
(3,594)
(1,285)
94
31
6,511
7,051
5,937
6,200
Collection of interest
615
851
Corporate income tax payments made/(received) (-/+)
(41)
Profit for year before taxes
Profit adjustments
Fixed asset depreciation/amortization
Financial income
Other current assets
Other cash flows from operating activities
Interest payments
Collection of dividends
2,787
5,370
42
20.
Investment payments
2009
2008
(6)
(9)
Group and associated companies
Intangible assets
(3)
Other financial assets
(3)
(9)
(6)
(9)
2009
2008
(87)
(646)
(87)
(646)
(2,769)
(5,206)
(2,769)
(5,206)
(2,856)
(5,852)
Other assets
21.
Payments received and paid for equity instruments
Issue of equity instruments
Write-off of equity instruments
Acquisition of Treasury shares
Disposal of Treasury shares
Subsidies, donations and bequests received
Dividend payments and compensation from other equity instruments
Dividends
43
22.
Commitments
a)
Operating lease commitments (when the Company is the lessee)
The Company leases computer equipment under operating lease agreements that can be
canceled. The Company must provide six months advance notice before canceling the agreement.
The minimum total future payments for operating leases that cannot be canceled are as follows
2009
Less than 1 year
4
Between one and five years
1
5
The expense recognized in the income statement during the year for operating leases totals € 3
thousand.
23.
Board of Directors and senior management compensation
a)
Board member compensation
In 2009 the amount accrued by the members of the Board of Directors totaled € 335 thousand
(2008: € 313 thousand) and consists of the following items and amounts:
2009
Salaries
Compensation for pertaining to the Board
2008
90
90
196
223
286
313
44
As was the case in 2008, in 2009 no contributions to pension plans or plans were made on behalf
of former or current members of the Company’s Board of Directors. No obligations in this
respect were incurred during the year.
The Company has not obtained any life insurance policies and therefore has no obligation to pay
life insurance premiums.
The Members of the Order Directors have not received any compensation consisting of profit
sharing or bonuses. They have not received any shares or stock options during the year and have
not exercised any options and there are no options outstanding.
b)
Compensation and loans to senior management
Total compensation paid in 2009 to senior management amounted to € 187 thousand (2008: €
190 thousand). The Company has obtained a life insurance policy covering a member of senior
management.
During 2009 the Company did not grant any loans to senior management.
It was not necessary to create any provision for loans to senior management.
c)
Shareholdings and positions held by the members of the Board of Directors in other
similar companies
Article 127 ter, paragraph 4 of the Spanish Companies Act (LSA), as worded in Law 26/2003 (18
July), whereby the Stock Market Act and the Spanish Companies Act were amended to increase
transparency in listed companies, obliges Board directors to inform the company of any
shareholdings in companies engaged in activities that are the same as or similar or complementary
to the company’s corporate purpose, any offices or duties performed in such companies, and any
activities that are the same as or similar or complementary to the company’s objects, carried out
for their own account or for the account of third parties.
In this respect, we note the following information provided to the Company by Directors that at
31 December 2009 occupied positions on the Company’s Board of Directors:
45
Director
Mr Iñigo Echevarría
Canales
Company
Activity
Position or office
Papelera Guipuzcoana
de Zicuñaga, S.A.
Manufacture of all kinds of paper
Chairman
Forestry purchase, lease or
consortium and purchase-sale and
marketing of forestry products
Interest
percentage in
Iberpapel Gestión
0.225%
Director
Mr Néstor Basterra
Larroude
Mr Ignacio Peñalba
Ceberio
de Zicuñaga, S.A.
Director
Director
Director
0.704%
0.940%
Mr Baltasar Errazti
Navarro
0.008%
Mr Iñaki Usandizaga
Aranzadi
2.063%
Mr Iñigo Solaun Garteiz
Mr Martín González del
Valle Chávarri
de Zicuñaga, S.A.
Director
0.236%
0.003%
No Director performs the same, analogous or supplementary activity to that which constitutes
the Company's corporate objects on their own behalf or on the behalf of any other person.
46
24.
Other related-party transactions
The Company is the parent of Iberpapel Group.
The transactions set out below were carried out with related parties:
a)
Services rendered
The Company renders tax, commercial, administrative and computer advisory services to the
various Group companies.
2009
2008
Amount
Amount
118
116
C.S.A.G. Papel, S.A.
94
93
71
70
47
47
Moliner, Domínguez y Cía., S.A.
47
47
Services rendered
Zicupap, S.A.
b)
47
47
244
240
668
660
2009
2008
18,340
17,055
3,594
1,285
21,934
18,340
Loans granted to Group companies
Opening balance
Loans granted during the year
47
Short-term loans to Group companies include the amount of € 13,389 thousand drawn down on
the loan facility granted to the Group company Papelera Guipuzcoana de Zicuñaga, S.A. The loan
bears interest at a rate of 3.549% throughout 2009 and the limit on the facility amounts to €
22,000.
This heading also records the amount drawndown totaling € 8,545 thousand under the contract
with Ibereucaliptos, S.A. The interest rate applied in 2009 amounts to 3.549% and the limit is €
12,000 thousand. Both loans matured on 31 December 2009 and are renewed annually.
In 2009 and 2008 there has been no need to record any provision for loans to directors and
other associated companies.
The Company's transactions with associated parties consist mainly of sales of goods and services.
The prices applied by associated companies, with respect to physical flows and the rendering of
services, have been determined in accordance with the arm's length principle. In this connection,
prices have been calculated based on the net margin method for all operations, applying the net
margin on sales for the sale/acquisition of products and the net margin on costs for services
rendered.
As regards the loans granted by Iberpapel Gestión to Ibereucaliptos and to Papelera Guipuzcoana
de Zicuñaga, the comparable market price method was used.
25.
Auditors’ fees
The fees accrued during the year by PricewaterhouseCoopers Auditores, S.L. for audit and other
verification services totaled € 16 thousand (2008: € 16 thousand) and € 35 thousand (2008: € 27
thousand), respectively.
26.
Significant Post-balance sheet events
At the preparation date of these annual accounts, no significant post-balance sheet events had
taken place.
48
DIRECTORS' REPORT FOR 2009
1.
Development of the business
In accordance with Consultation 2 published in the BOICAC 79/2009, dividends from shares in
capital and any interest from loans granted by a holding company will be classified as revenue.
In accordance with publication 79, some amounts relating to 2008 have been reclassified in these
annual accounts in order to make them comparable to this year and facilitate their comparison. The
reclassification in the income statement is set out below:
Debit
Credit
Financial income
6,200
849
Net revenues
6,200
849
7,049
7,049
Movements in the principal profit and loss account figures are set out below (thousand euro):
Net revenues
2.
2009
2008
7,220
7,709
Treasury shares
During the year the Company acquired 9,991 treasury shares on the stock market. The amount
paid for the shares totaled € 87 thousand. At 31 December 2009 the Company holds a total of
98,869 treasury shares with an original cost of € 1,556 thousand. These shares represent 0.850%
of the Company’s share capital. These shares are held as treasury shares.
1
3.
Research & Development
In 2009 the Company has not undertaken any significant R&D projects.
4.
Use of financial instruments by the company.
There are no hedging instruments.
5.
Environment
The Company makes no investments with respect to the environment, and is unaware of
disputes relating to environmental issues affecting the Company.
6.
Risk management
The Company’s corporate objects consist of:
a)
Sales operations of all kinds, on behalf of and representing itself or third parties, relating to
any goods or objects.
b)
Possession and exploitation of any municipal, rural, agricultural, forestry and industrial
property.
c)
Subscription, derivative acquisition, holding, use, administration, purchase or sale of
securities and shares, except those which relate to activities regulated by Law 46/84 or by specific
legislation.
The company has control systems which have been designed to ensure effective risk identification
and assessment. These systems generate sufficient and reliable information for the different units
and bodies with risk management authority to decide whether such risks should be assumed
under controlled conditions.
7.
taken place.
2
8.
In compliance with Article 116 bis of Law 24/2008 of 28 July 2007, on the
Securities Market, introduced by Law 6/2008 of 12 April 2007, the Board of Directors
of Iberpapel Gestión, S.A. issues this explanatory report on those aspects of the
Directors’ Report envisaged therein for submission to the Company’s General
Shareholders’ Meeting.
a)
The capital structure, including securities traded on a Community regulated market,
indicating, where appropriate, the different classes of shares and for each class of shares, the
rights and obligations granted and percentage of capital represented.
The share capital of Iberpapel Gestión, S. A. at 31 December 2009 amounts to € 6,979,884.00
and has been fully paid in and is divided into 11,633,140 ordinary shares of a single class and
series, with a par value of € 0,60 each, fully subscribed and paid in.
b)
Restriction on the transfer of shares.
There are no legal restrictions or restrictions in the bylaws concerning the free acquisition or
transfer of shareholdings.
Article 6 of the bylaws lays down that the shares are represented by accounting entries.
c)
Significant direct or indirect shareholdings in capital.
At 31 December 2009 the only significant shareholdings known are as follows:
Name
Banco Guipuzcoano
%
Direct
%
Indirect
5.226
Bestinver Gestion, S.A., S.G.I.I.C.
No. of Direct
rights
No. of
indirect rights
607,923
1,059,706 (1)
9.109
Bestinver Bolsa, FI
4.246
493,918
Onchena, S.L.
7.583
882,188
3
(1) Through:
Name of indirect holder
Through: Name of direct holder of
Number of
% total voting
of the stake
the stake
direct voting
rights
rights
ABEDUL 1999, S.A. SICAV
1,447
0.012
BESTINVER GESTION, S.A.
ACCIONES CUP. Y OBLI.
1,876
0.016
S.G.I.I.C.
SEGOVIANAS.
BESTINFOND, F.I.
265,908
2.286
BESTINVER BOLSA, F.I.
493,918
4.246
BESTINVER MIXTO, F.I.
84,545
0.727
BESTINVER AHORRO,F.P.
41,192
0.354
BESTINVER BESTVALUE SICAV
46,129
0.397
BESTINVER GLOBAL, F.P.
49,640
0.427
BESTINVER EMPLEO FP S.A.
2,249
0.019
DIIVALSA DE INVERSIONES SICAV, S.A.
2,434
0.021
LINKER INVERSIONES, SICAV, S.A.
1,385
0.012
LOUPRI INVERSIONES
3,825
0.033
SOIXA SICAV
50,732
0.436
TEXRENTA INVERSIONES,
14,426
0.124
S.G.I.I.C.
S.G.I.I.C.
S.G.I.I.C.
S.G.I.I.C.
S.G.I.I.C.
S.G.I.I.C.
S.G.I.I.C.
S.G.I.I.C.
S.G.I.I.C.
S.G.I.I.C.
S.G.I.I.C.
S.G.I.I.C.
S.G.I.I.C.
4
d)
Restrictions on voting rights
There are no legal restrictions or restrictions in the bylaws on the exercising of voting rights.
e)
Quasi-corporate pacts.
The company has received no notification of the existence of any quasi-corporate pacts including
the regulation of the exercise of voting rights at General Meetings or restrictions on the free
transfer of the shares of Iberpapel Gestión, S.A.
f)
Regulations applicable to the appointment and replacement of the members of the
Administrative Body and amendment of the corporate objects.
Article 9 of the Bylaws lays down that the General Shareholders’ Meeting is authorized to
appoint and dismiss Directors and ratify or revoke provisional appointments of such directors
effected by the Board itself.
Article 21 of the Bylaws lays down that the Board of Directors shall be made up of a minimum of
three and a maximum of 10 members, designated by the General Shareholders’ Meeting.
The Directors will hold office for a maximum of six years and may be re-elected one or more
times for identical periods.
The Board of Directors will be empowered to cover provisionally any vacancies that may arise in
the same, designating the replacements in the legally established manner until the first General
Those persons involved in a legal conflict of interest or declared legally incapable may not be
directors.
5
Article 7 of the Board’s Regulations lays down:
i) The General Shareholders’ Meeting shall determine the number of directors, with a
minimum of three and a maximum of ten, as established by the Bylaws.
ii) The Directors shall hold office for a maximum of six years and may be re-elected once or
more times for identical periods at the most.
The proposals which the Board submits to the General Shareholders’ Meeting relating to the
appointment or re-election of directors within the limits set out in the Bylaws, shall be made
following the proposal of the Appointments and Remuneration Committee for independent
directors and following a report from such Committee for other directors and will include the
presence on the Board of a reasonable number of independent directors and shall have a
majority of external directors not involved in management.
The directors shall cease to hold office when the period for which they were appointed elapses,
in accordance with Article 145 of the Mercantile Registry Regulations, and when so decided by
the General Shareholders’ Meeting in accordance with the powers conferred to it.
Moreover, the directors shall place their position at the disposal of the Board of Directors and
formalize, if deemed appropriate, their resignation in the following cases:
i) When they are involved in a legal conflict of interest.
ii) When their remaining on the Board may jeopardize the Company’s interests or when the
reasons for which they were appointed no longer exist.
iii) In the event of an accusation or instigation of oral proceedings connected with any of the
crimes indicated in Article 124 of the Spanish Companies Act, the Board shall examine the
case as soon as possible and decide the appropriateness of the Director continuing to hold
office or otherwise.
iv) Domanial directors shall resign when the shareholder whom they represent sells his
shareholding in full.
6
Amendment of the Company’s bylaws
Article 9 of the Bylaws lays down that authority to amend the bylaws lies with the General
Article 12 of the Bylaws lays down that in order for the General Meeting to validly agree to issue
bonds, increase or decrease share capital, transform, merge or split the Company or any other
bylaw amendment, half of voting capital shall be present at the first call. On second call, it shall be
sufficient for 25% of voting share capital to be represented.
g)
Powers of attorney of the members of the Board of Directors and, in particular, those
relating to the possibility of issuing or repurchasing shares.
Executive directors hold wide-ranging powers of attorney and administration commensurate with
the characteristics and needs of the positions held.
Article 6 of the Boards’ Regulations lays down that the policy concerning dividends and treasury
shares and in particular, their limits, shall be known exclusively by the Board of Directors.
In accordance with Article 75 of the Spanish Companies Act, the General Shareholders’ Meeting,
in the meeting held on 02 June 2009, granted authorization to the Board of Directors, with the
power to delegate, for the derivative acquisition of treasury shares by the Company and / or
part of its subsidiaries in accordance with applicable legislation.
i) Maximum number: the number of treasury shares may in no event exceed the maximum
limit contained in the Spanish Companies Act for listed companies ( 5% of share capital.)
ii) Term: 14 months as from 2 June 2009.
iii) The price shall be a minimum of the par value and a maximum of € 40 per share.
h)
Any significant agreements that have been concluded by the company and enter into effect
may be amended or terminated in the event of a change in control of the company as a result of a
public offering and their effects, except when disclosure would have a serious adverse effect for
the company. This exception shall not apply when the company is legally required to disclose this
information.
7
The company has not entered into any agreements in this respect.
i)
The agreements between the company and its administration and management officers or
employees that provide for indemnities in the event of resignation or wrongful dismissal or if the
employer/ employee relation comes to an end as a result of a public offering.
The Company has no agreements other than those contained in the Workers’ Statute with its
administration and management officers or employees that provide for indemnities in the event of
resignation or wrongful dismissal or if the employer/ employee relation comes to an end as a
result of a public offering.
8
ANNUAL CORPORATE GOVERNANCE REPORT
LISTED COMPANIES
ISSUER IDENTIFICATION
YEAR END DATE
31-12-2009
C.I.F A21248893
Name:
9
MODEL ANNUAL CORPORATE GOVERNANCE REPORT FOR LISTED
COMPANIES
To better understand and fill in this model report, the instructions included at the end should be
read.
A
OWNERSHIP STRUCTURE
A.1 Complete the following table on the company’s capital:
Date of latest modification
Share capital (€ )
Number of shares
26-06-2006
6,979,884.00
11,633,140
Number of voting
rights
11,633,140
State whether there are different classes of shares with different associated rights:
No
A.2 Give details on the direct and indirect holders of significant interest in your company at the
year-end, excluding Directors:
Name of shareholder
BESTINVER GESTION, S.A. S.G.I.I.C.
ONCHENA,S.L.
Number of direct
Number of indirect
% total voting
voting rights
voting rights (*)
rights
0
1,059,706
9.109
882,188
0
7.583
BANCO GUIPUZOANO, S.A.
607,923
0
5.226
BESTINVER BOLSA, FI
493,918
0
4.246
10
(*) Through:
Number of
% total voting
of the stake
the stake
direct voting
rights
rights
1,447
0.012
ACCINES CUP. Y OBLI.
1,876
0.016
S.G.I.I.C.
SEGOVIANAS.
BESTINFOND, F.I.
265,908
2.286
493,918
4.246
84,545
0.727
41,192
0.354
46,129
0.397
49,640
0.427
2,249
0.019
2,434
0.021
1,385
0.012
LOUPRI INVERSIONES
3,825
0.033
SOIXA SICAV
50,732
0.436
14,426
0.124
S.G.I.I.C.
S.G.I.I.C.
S.G.I.I.C.
S.G.I.I.C.
S.G.I.I.C.
S.G.I.I.C.
S.G.I.I.C.
S.G.I.I.C.
S.G.I.I.C.
S.G.I.I.C.
S.G.I.I.C.
S.G.I.I.C.
S.G.I.I.C.
11
Indicate the principal movements in the shareholding structure during the year:
Name of shareholder
Date of the transaction
Description of the transaction
BESTINVER GESTION, S.A. S.G.I.I.C
19/11/2009
Reduced from 10% of share capital
A.3 Complete the following tables on Directors’ shareholding interests in the company:
Name of the Director
Number of direct
voting rights
Number of
indirect voting
% total voting rights
rights (*)
Mr. IÑIGO ECHEVARRIA CANALES
25,701
490
0.225
Mr. NESTOR BASTERRA LARROUDE
61,796
20,157
0.704
873
0
0.008
108,799
600
0.940
Mr. IÑIGO SOLAUN GARTEIZ
13,213
14,215
0.236
Mr. IÑAKI USANDIZAGA ARANZADI
240,016
0
2.063
400
0
0.003
Mr. BALTASAR ERRAZTI NAVARRO
Mr. IGNACIO PEÑALBA CEBERIO
Mr. MARTIN GONZALEZ DEL VALLE CHAVARRI
(*) Through:
Name of indirect holder of the stake
Through: Name of direct
Number of
% total voting
holder of the stake
direct voting
rights
rights
Mr. JAIME ECHEVARRIA AGUIRRE
490
0.004
LINET INVERSIONES 2012, S.L.
13,425
0.115
Mr. NESTOR E IGNACIO
6,732
0.058
14,215
0.122
600
0.005
BASTERRA MARTINEZ
Mr. IÑIGO SOLAUN GARTEIZ-GOXEASCOA
Mrs. Mª ANGELES BUSTILLO
BASTERRA
Mrs. MAGDALENA OTADUY
SALCEDO
% total of voting rights held by the Board of Directors
4.180
12
Complete the following tables on Directors with stock options in the Company:
A.4 Indicate family, commercial, contractual or corporate relationships among significant
shareholders known to the company, if any, except any that are insignificant and those
deriving from ordinary commercial business:
A.5 Indicate commercial, contractual or corporate relationships between significant shareholders
and the company and/or its group, if any, except any that are insignificant and those deriving
from ordinary commercial business:
A.6 Indicate any shareholders’ agreements of which the Company has been notified in pursuance
of Article 112 of the Stock Market Act. Describe briefly, if any, indicating the shareholders
bound by the agreement:
NO
Expressly indicate any change or break-up of those agreements or concerted actions, if any, that
have taken place during the year:
A.7 Indicate any individuals or entities that exercise or may exercise control over the Company
in pursuance of Article 4 of the Stock Market Act. Identify any that exist:
NO
A.8 Complete the following tables on the Company’s treasury stock:
At the year-end:
Number of direct shares
Number of indirect shares
% total of share capital
98,869
0
0.850
13
(*) Through:
Total:
0
Give details on any significant variations during the year, according to the provisions of Royal
Decree 1362/2007:
Gains/(Losses) obtained during the year on trading treasury shares (thousand euro)
0
A.9 Indicate the terms and conditions of the authorization granted by the General Meeting to the
Board to buy or sell treasury shares.
The Board of Directors is authorized to acquire treasury shares by the Company and/or its subsidiaries, in
accordance with the terms established by Law and by shareholders at the general Meeting held on 02 June 2009,
as follows:
(i) Maximum number: the number of treasury shares may in no event exceed the maximum limit contained in
the Spanish Companies Act for listed companies ( 5% of share capital.)
(ii) Term:14 months as from today's date.
(iii) The price shall be a minimum of the par value and a maximum of € 40 per share.
A.10 Indicate any constraints established in law or the Articles of Association on the exercise of
voting rights and legal restrictions on the acquisition and disposal of shares in the capital.
Indicate whether there are any legal constraints on the exercise of voting rights:
NO
Maximum percentage of voting rights that may be exercised by a shareholder due to legal
0
restrictions
Indicate whether the Articles of Association establish any constraints on the exercise of voting
rights:
NO
14
Maximum percentage of voting rights that may be exercised by a shareholder due to
0
bylaw restrictions
Indicate whether there are any legal restrictions on the acquisition and disposal of shares in the
capital:
NO
A.11 Indicate whether the General Shareholders’ Meeting has resulted in measures to neutralize
a takeover bid under Law 6/2007.
NO
If so, explain the measures approved and the terms under which the constraints would become
ineffective.
B
MANAGEMENT STRUCTURE OF THE COMPANY
B.1
Board of Directors
B.1.1
State the maximum and minimum numbers of Directors stipulated in the Articles of
Association:
Maximum number of Directors:
Minimum number of Directors:
10
3
15
B.1.2 Complete the following table with details of the members of the Board:
Date of first
Date of last
appointment
appointment
CHAIRMAN
21-07-1997
19-06-2007
VICE CHAIRMAN
21-10-1997
19-06-2007
DIRECTOR
21-10-1997
19-06-2007
DIRECTOR
21-10-1997
19-06-2007
DIRECTOR
21-10-1997
19-06-2007
DIRECTOR
21-07-1997
19-06-2007
DIRECTOR
22-02-2005
2-06-2009
Representative
Position
Mr. IÑIGO ECHEVARRIA
Election procedure
SHAREHOLDER VOTE
CANALES
Mr. NESTOR BASTERRA
SHAREHOLDER VOTE
LARROUDE
Mr. BALTASAR ERRAZTI
SHAREHOLDER VOTE
NAVARRO
Mr. IGNACIO PEÑALBA
SHAREHOLDER VOTE
CEBERIO
Mr. IÑAKI
SHAREHOLDER VOTE
USANDIZAGA
ARANZADI
Mr. IÑIGO SOLAUN
SHAREHOLDER VOTE
GARTEIZ
Mr. MARTIN MARIA
SHAREHOLDER VOTE
GONZALEZ DEL VALLE
CHAVARRI
Total Number of Directors
7
Indicate any exits from the Board of Directors during the year:
Mr. JAIME ECHEVARRÍA ABONA
Status of the Director at the time of
Date of
exit
exit
EXECUTIVE
31/12/2009
16
B.1.3 Complete the following tables on the types of Board Members:
EXECUTIVE DIRECTORS
Nominating Committee
Position in Company’s
organization
NOMINATIONS AND
CHAIRMAN
COMPENSATION
Total number of executive Directors
Total percent of the Board
1
14.286
INSTITUTIONAL OUTSIDE DIRECTORS
Name of the significant
shareholder represented or
that proposed the
appointment
NOMINATIONS AND
Mr. IÑAKI USANDIZAGA
COMPENSATION COMMITTEE
ARANZADI
NOMINATIONS AND
IGNACIO PEÑALBA CEBERIO
Total number of Institutional Directors
2
28.571
INDEPENDENT OUTSIDE DIRECTORS
Profile
Doctorate in Industrial Engineering from Escuela Superior de Ingenieros Industriales in Bilbao.
Director of Grupo Tamoin, Director of Probask and Director of Bestergy.
Simultaneously, he has been one of the key proponents of configuration and consolidation of business organizations in
Euskadi and between 1984 and 1993 he was the Vice Chairman of the Basque Business Confederation (Cofebask). He
chaired this organization between 25 October 1993 and July 1999.
He has also formed part of the Executive Committees of the Basque Metal Industry Federation and the Vizcaya
Industrial and Mercantile Center (currently called Cebek) and chaired the Industry and Energy Committee at the
17
CEOE. He was on the Executive Committee of CEOE and chaired its Technology Innovation Committee.
Profile
Degree in Law from Universidad de Valladolid.
He has been a Director of Garteiz, S.A, Prado Hnos, S.A, Garate Anitua y Cia S.A., Sebastián de la Fuente, S.A,
Administrador Único de Productos Fotográficos, Valca,S,A, and Invelasa, S.A. (Patricio Echevarria, S.A.)
Profile
Degree in Law from Fundación Universitaria San Pablo CEU
MBA from INSEAD- Fontainebleau in 1984.
Founding Partner of Realza Capital SGECR, S.A
CEO of Investindustrial Partners Spain, S.A.
Assistant General Manager of Crédit Agricole Indosuez, Director of Corporate Finance
Senior Director of Mercapital, S.A.
He started his professional career at Duro Felguera, Baxter Travenol (health) and Socelec, S.A. (Technical lighting),
holding various positions of responsibility.
Chairman of Esindus, S.A.
Director of Hamon&Compagnie
Profile
Degree in Law and Diploma in Economics from Universidad de Deusto MBA from IESE
Responsible for the Large Company Department Banco Santander Central Hispano.
Bank of América: Corporate banking and Capital Markets
Vice-Chairman of Viscofan, S.A.
Director of Amistra SGC S.A
Total number of independent Directors
4
57.143
OTHER OUTSIDE DIRECTORS
State the reasons why they cannot be considered institutional or independent directors and their
association with either the Company, executives or shareholders.
18
Indicate any variations during the year in the type of each Director:
B.1.4 Explain why institutional directors have been appointed at the proposal of shareholders with
less than 5% interest in the Company, if appropriate:
Indicate whether any formal requests for a presence on the Board have not been met from shareholders with
an interest equal to or greater than that of others at whose request institutional directors have been appointed.
If so, explain why such requests have not been met:
NO
B.1.5 Indicate whether any director has left the position before the end of his/her term, whether
he/she explained the reasons for leaving the Board and how; if done in a letter addressed to
the entire Board, explain at least the reasons stated therein:
Reason for exit
Resignation
B.1.6 Indicate the powers delegated to the Managing Director(s), if any:
Name
Brief description
Board authority, except for those that cannot be delegated as listed in the Regulations and those pertaining to the
General Meeting.
19
B.1.7 Name the Board members, if any, who are also directors or executives of other companies
in the same group as the listed company:
Name of the group company
Position
IBEREUCALIPTOS, S.A
DIRECTOR
LOS EUCALIPTOS, S.A.
VICE CHAIRMAN
PAPELERA
PAPETERIES DE L´ATLANTIQUE, S.A.
CHAIRMAN
SAMAKIL, S.A.
VICE CHAIRMAN 2
IBEREUCALIPTOS, S.A.
DIRECTOR
PAPELERA
GUIPUZCOANA
DE CHAIRMAN
ZICUÑAGA, S.A.
GUIPUZCOANA
DE DIRECTOR
ZICUÑAGA ,S.A.
SAMAKIL, S.A
VICE CHAIRMAN 1
IBEREUCALIPTOS, S.A.
DIRECTOR
PAPELERA
GUIPUZCOANA
DE DIRECTOR
ZICUÑAGA ,S.A.
B.1.8 Name company directors, if any, on the Boards of non-group companies listed on Spanish
stock exchanges, insofar as the company has been notified:
Name of the listed company
Position
BANCO GUIPUZCOANO
DIRECTOR
VISCOFAN, S.A.
VICE CHAIRMAN
B.1.9 Indicate and, if appropriate, explain whether the company has established rules on the
number of boards on which its Directors may sit:
Yes
20
Explanation of the rules
The Board Of Directors approved a Resolution stating that Company Directors may not form part of more than 10
Boards of Directors, in addition to Iberpapel Gestión, S.A, except for:
The Boards of companies pertaining to Iberpapel Group.
- Shareholdings held by the Director or close family members.
B.1.10 With regard to recommendation number 8 of the Unified Code, indicate the general
policies and strategies of the company reserved for approval by the full Board:
YES
Investment and financing policy
YES
Definition of the structure of the group of companies
YES
Corporate governance policy
YES
Corporate social responsibility policy
YES
Strategic or business plan, management objectives and annual budget
YES
Compensation policy and senior executive performance evaluation
YES
Risk management and control policy, and regular monitoring of internal information and
control systems
YES
Dividend policy, treasury stock policy, especially limits.
21
B.1.11 Complete the following tables on the aggregate directors’ compensation accrued during
the year:
a)
At the reporting company:
Compensation
Thousand euro
Fixed compensation
90
Variable compensation
196
Per diems
0
Statutory compensation
0
Stock options and/or other financial instruments
0
Other
0
TOTAL:
Other Benefits
286
Thousand euro
Pre-payments
0
Loans granted
0
Pension Plans and Funds: Contributions
0
Pension Plans and Funds: Contractual obligations
0
Life insurance premiums
0
Guarantees provided by the Company for Directors
0
b)
For company Directors who are on other Boards and/or in senior management of group
companies:
Compensation
Thousand euro
Fixed compensation
169
41
Per diems
6
0
0
Other
0
TOTAL:
216
22
Other Benefits
Thousand euro
Pre-payments
0
Loans granted
0
0
0
0
0
c)
Total compensation by type of Director:
Type of directors
By company
Executives
189
Institutional outside directors
47
7
Independent outside directors
103
20
0
0
286
216
Other outside directors
Total
d)
By group
136
Regarding profits attributed to the parent company:
Total director compensation (thousand euro)
502
Total compensation for directors/profit attributed to the parent company (expressed in
8.2
%)
B.1.12 Identify the members of senior management who are not Executive Directors and indicate
the aggregate compensation accrued to them during the year:
Name
Position
Mr. FERMIN URTASUN ERRO
ASSISTANT CEO
Mr. FRANCISCO FORTIN ALVAREZ
TREASURY DIRECTOR
Mr. LUIS GONZALEZ GUTIERREZ
FINANCE DIRECTOR
Mr. JOAQUIN MANSO RAMON
LEGAL DIRECTOR
Mr. MIGUEL A. TAPIADOR SILANET
PURCHASING DIRECTOR
Mr. IGNACIO BURUTARAN USANDIZAGA
SALES DIRECTOR - EXPORTS
Mr. PABLO FUENTES ARTOLA
SALES DIRECTOR - DOMESTIC
Mr. JOSE MARIA REPARAZ ABAITUA
HUMAN RESOURCE DIRECTOR
23
Total senior management compensation (thousand euro)
859
B.1.13 Indicate overall whether any golden parachute clauses have been established for senior
management, including Executive Directors, at the Company or its group in the event of
dismissal or change of ownership. State whether these contracts have to be reported to
and/or approved by the governing bodies at the Company or its group:
Number of beneficiaries
0
Board of Directors
General Meeting
NO
NO
Body authorizing the clauses
Is the General Meeting informed of the clauses?
NO
B.1.14 Explain the process for establishing the compensation for Board Members and the relevant
Articles of Association:
Processes for establishing the compensation for Board Members
and statutory clauses
Compensation for the members of the Board of Directors is established under Article 22 of the bylaws, which
states: “The Board of Directors will receive compensation consisting of 4% of net profits which will only be
deducted from said profits after having made all necessary contributions to the legal reserve and, if appropriate, any
other mandatory reserves as well as the distribution of a dividend to shareholders of at least 4% of share capital paid
in.
Each year the Board of Directors will establish pacific amount to be received by each Director, adjusting the amount
to be received by each one based on their membership to Board Committees, the position held on those
committees as well as their dedication to the Company”
Article 6 of the Board Regulations stipulates that the Board is exclusively authorized to determine the compensation
for Directors and, in the case of executives, any additional compensation for executive duties and any other
contractual conditions and, at the proposal of the CEO, the appointment and removal of senior management, as well
as their severance packages.
Article 1.3 of the Regulations stipulates that the Nomination and Compensation Committee will propose to the
Board of Directors:
24
i. The compensation policy for directors and senior management;
ii. The individual compensation and other contractual conditions of executive directors.
iii. The standard conditions for senior management employment contracts.
This Article stipulates that the mission of the aforementioned Committee will be: report the appointments and
resignations of senior executives that the chief executive has proposed to the Board of Directors.
Indicate whether approvals of the following decisions are reserved for the full Board:
Upon recommendation by the CEO, the appointment and possible removal of senior
YES
management and any indemnity clauses.
Directors’ compensation and, in the case of Executive Directors, additional compensation for
YES
their management duties and other contractual conditions.
B.1.15 Indicate whether the Board of Directors approves a detailed compensation policy and
specify the issues it regulates:
Yes
Amount of fixed compensation, including the details of per diems for Board and
YES
Committee Meetings and an estimate of the fixed annual compensation.
Principal features of retirement systems, estimating the annual cost or equivalent amount.
Contract conditions for executive directors
YES
YES
YES
25
B.1.16 Indicate whether the Board submits a report on Director compensation policy to voting at
the General Meeting, as a separate item on the Agenda and with an advisory nature. If so,
explain the aspects of the report on the compensation policy approved by the Board for
future years, the most significant changes in those policies in respect of the policy applied
during the year and an overall summary of how the compensation policy was applied
during the period. Describe the role played by the Compensation Committee and
whether external consultants have been used, and if so, the identity of the external
consultants:
Yes
Issues addressed by the Compensation policy report
The report contains explanations regarding the general principles governing the compensation policy for Iberpapel
Directors and the compensation system for Executive Directors, including fixed compensation and any variable
components.
Compensation for Directors is established under Article 22 of the bylaws, which states: “The Board of Directors
will receive compensation consisting of 4% of net profits which will only be deducted from said profits after having
made all necessary contributions to the legal reserve and, if appropriate, any other mandatory reserves as well as
the distribution of a dividend to shareholders of at least 4% of share capital paid in.
Each year the Board of Directors will establish pacific amount to be received by each Director, adjusting the amount
to be received by each one based on their membership to Board Committees, the position held on those
Article 1.3 of the Board Regulations states that one of the duties of the Nomination and Compensation Committee
is to propose to the Board of Directors:
Were external consultants used?
Identity of the external consultants
B.1.17 Name any Board Members who are also directors or executives of companies holding
significant interest in the listed company and/or companies pertaining to its Group:
26
Describe any significant relationships other than those contemplated in the previous
section between Board Members and significant shareholders and/or companies pertaining
to their Group:
B.1.18 Indicate whether any modifications have been made during the year to the Board of
Directors’ Regulations:
NO
B.1.19 Describe the procedures for appointment, re-election, evaluation and removal of
Directors. Indicate the competent bodies, the formalities and the criteria to be followed
in each of these procedures.
This area is regulated by the Bylaws and the Board Regulations, which state:
Bylaws:
Article 21.- The Board of Directors shall be made up of a minimum of three and a maximum of
10 members, designated by the General Shareholders’ Meeting.
The Board of Directors will be empowered to cover provisionally any vacancies that may arise
in the same, designating the replacements in the legally established manner until the first
General Shareholders’ Meeting.
A Director does not have to be a shareholder.
If a legal person is appointed Director, a natural person must be appointed as its representative
to fulfill the duties of the post.
directors.
Board Regulations:
ARTICLE 6.- Exclusive authority.
h) The appointment of a Director in the event of a vacancy until the next General Meeting is
held, at the proposal of the Nomination and Compensation Committee.
i) The acceptance of Director resignations.
ARTICLE 7.- Composition of the Board.
27
1. The General Shareholders’ Meeting shall determine the number of directors, with a
minimum of three and a maximum of ten, as established by the Bylaws.
2. The Directors will hold office for a maximum of six years and may be re-elected one or
more times for identical periods.
ARTICLE 8.- Appointment of Directors.
appointment or re-election of directors within the limits set out in the Bylaws, shall be made
ARTICLE 9.- Board components.
9.1- The Chair
a) The Chairman of the Board of Directors will be selected from among the members. The
term will coincide with the term of his appointment to the Board. As a result, if he is reelected
to the Board reelection to the position of Chairman is not necessary.
9.4 - Secretary
The appointment and removal of the Secretary to the Board or, if appropriate, the ViceSecretary, will be approved by the full Board after receiving a report from the Nominations and
Compensation Committee.
1.3 Nominations and Compensation Committee.
1. The Nominations and Compensation Committee will be responsible for:
a) Supervise the process of selecting Directors and senior executives at the Company.
b) Propose the appointment or reelection of independent Directors to the Board of Directors
c) Report to the Board of Directors on the appointment or reelection of other Directors
2. The full Board of Directors is responsible for the appointment or removal of its members,
and there will be at least three members. The members of the Committee will automatically
cease to hold their positions when they are no longer members of the Board of Directors
ARTICLE 12. The evaluation of the Board and Committees
On an annual basis the Board of Directors will evaluate:
a) The quality and efficiency of the Board's operation;
b) The performance by the Chairman of the Board and the Company’s CEO based on a report
that will be prepared by the Nominations and Compensation Committee;
c) The operation of the Board Committees based on a report prepared by each Committee.
28
B.1.20 Indicate the cases in which Directors are required to retire.
This area is regulated by the Board Regulations, as follows:
ARTICLE 15.- Step-down of Directors
The directors shall cease to hold office when the period for which they were appointed
elapses, in accordance with Article 145 of the Mercantile Registry Regulations, and when so
decided by the General Shareholders’ Meeting in accordance with the powers conferred to it.
Moreover, the directors shall place their position at the disposal of the Board of Directors and
formalize, if deemed appropriate, their resignation in the following cases:
a) When they are involved in a legal conflict of interest or situation of incompatibility.
b) When their remaining on the Board may jeopardize the Company’s interests or when the
c) In the event of an accusation or instigation of oral proceedings connected with any of the
crimes indicated in Article 124 of the Spanish Companies Act, the Board shall examine the
d) Domanial directors shall resign when the shareholder whom they represent sells his
29
B.1.21 Explain whether the Chairman of the Board is the Chief Executive Officer of the Company.
If so, state what measures have been adopted to limit the risks of one single person
accumulating powers:
Yes
Measures to limit risks
Article 9 of the Board Regulations stipulates that the Chairman will have power-of-attorney to be exercised through
the Board of Directors by appropriate Resolution or ratified by the Board when the urgency of the situation makes it
inadvisable to postpone the exercising of the authority. All decisions of significant importance must be taken by the
Board of Directors.
Article 23 of the Bylaws stipulates that the Board will meet whenever requested by two of its members.
The general risk policy and the risk management systems described in sections D.1 and D.3 of this Report, prepared
based on the risk control and management policy, as well as the regular monitoring of information and control
systems by the Board of Directors, in accordance with Article 6 of the Board Regulations.
Article 9.3 of the Board Regulations which stipulates that if the position of Chairman of the Board of Directors and
the CEO of the Company are held by the same person one independent Director will be appointed to perform the
following duties:
a) request a Board meeting be called or include new points on the agenda
b) Co-ordinate outside Directors and report their concerns.
c) Direct the Board's evaluation of the Chairman.
The duties attributed to the Audit Committee and the Nominations and Compensation Committee (Articles 1.2 and
1.3 of the Board Regulations)
No qualified majority is required for termination
of the Chairman when the Board deems it necessary. Therefore, the Board’s capacity to control this position may
manifest itself through a Resolution to dismiss adopted by a simple majority.
Indicate and, if appropriate, explain whether rules have been established to enable one of the independent directors to
request the calling of the Board for the inclusion of new items on the agenda, to coordinate and echo the concerns of
outside Directors and to direct evaluation by the Board of Directors.
YES
30
By virtue of Article 9.3 of the Board Regulations, if the position of Chairman of the Board of Directors and the CEO
of the Company are held by the same person one independent Director will be appointed to perform the following
duties:
B.1.22 Are special majorities differing from those stipulated by Log required for any type of
decision?:
NO
Explain how Resolutions are adopted out by the Board, indicating at least the quorum and the
majorities required for adopting Resolutions:
B.1.23 Explain whether or not there are any specific requirements, other than those established
for Directors, to be appointed Chairman:
NO
B.1.24 Indicate whether the Chairman has a casting vote:
YES
Areas in which there is a casting vote
Article 23 of the bylaws stipulates that Resolutions will be adopted by absolute majority of those attending the
Meeting.
In the event of a tie, the Chairman will issue a casting vote.
Written, personal votes without any meeting being held will be valid if no Director opposes such action.
Indicate whether the Articles of Association or the Board Regulations establish any age limit for
Directors:
NO
Age limit for Chairman
Age limit for CEO
Age limit for Director
0
0
0
31
B.1.26 Indicate whether the Articles of Association or the Board Regulations establish any limit on
the term of office for Independent Directors:
NO
Maximum term (years)
0
B.1.27 If there are few or no female Directors, explain why and what actions have been taken to
remedy this situation.
Explain reasons and initiatives
Iberpapel Group’s equal opportunity policy avoids any discrimination against anyone for any reason with respect to
joining the company or to occupying any post within the company. Among the new duties of the Nominations and
Compensation Committee, in addition to supervising the process of selecting Directors and senior executives for the
Company and proposing the appointment or reelection of Independent Directors to the Board of Directors and
reporting the appointment or reelection of other Directors to the Board of Directors, it must also report gender
diversity to the Board. The equal opportunity principle has always presided over the Nominations and Compensation
Committee’s work and therefore no additional measures are necessary.
In order to obtain adequate gender diversity, the Board of Directors appointed a woman independent Director to fill
the vacancy relating to an Executive Director.
In particular, state whether the Nominations and Compensation Committee has established
procedures to ensure that the selection procedures are not affected by implicit bias that could
hamper the selection of female Directors and that women with the required profile are
deliberately included among the candidates:
NO
B.1.28 Indicate whether there are any formal processes for proxy voting in the Board of
Directors. Describe briefly, if any:
The representation or delegation of votes within the Board may be conferred through a letter
addressed to the Chairman, as described under Article 23 of the Bylaws.
B.1.29 State the number of meetings held by the Board of Directors during the year. In addition,
indicate, if appropriate, how many times the Board has met without the Chairman:
32
Number of Board meetings
9
Number of Board meetings held without the Chairman
1
Indicate the number of meetings held during the year by the various Board Committees:
Number of meetings held by the Executive or Delegate Committee
0
Number of meetings held by the Audit Committee
6
Number of meetings held by the Nominations and Compensation Committee
3
Number of meetings held by the Nominations Committee
0
Number of meetings held by the Compensation Committee
0
B.1.30 State the number of meetings held by the Board of Directors during the year without all
members being in attendance. Non-attendance is deemed to include any proxies made
without specific instructions.
Number of Director absences during the year
3
% Number of absences compared with the total votes cast during the year
3
B.1.31 Indicate whether the individual and consolidated annual accounts presented to the Board
for approval were previously certified:
YES
If appropriate, name the person(s) who certify the Company’s individual or consolidated annual
accounts before they are approved by the Board:
Name
Position
CHAIRMAN
FINANCE DIRECTOR
33
B.1.32 Explain the mechanisms, if any, established by the Board to avoid a qualified audit report on
the individual and consolidated annual accounts from being presented to shareholders at a
General Meeting.
The Company has an Audit Committee, which is responsible for the following, among other
things:
a) Monitoring the financial reporting process and the Company’s internal control systems.
b) Reporting on the Annual Accounts, as well as the half yearly and quarterly financial
statements which must be sent to regulators or market supervisors, making mention of internal
control systems, monitoring controls and compliance through internal audit, when appropriate,
as well as the accounting principles applied. The board must also be informed of any change in
accounting policies and all balance sheet and off-balance sheet risks.
c) Receive regular information from the external auditor on the progress and findings of the
audit program, and check that senior management are acting on its recommendations.
B.1.33 Is the Secretary to the Board a Director?
NO
B.1.34 Explain the procedures for appointing and removing the Secretary to the Board, indicating
whether or not a report is issued by the Nominations Committee and whether or not the
person is approved by the full Board.
Procedure for appointment and removal
Article 9 of the Board Regulations stipulates that the appointment and removal of the Secretary to the Board or, if
appropriate, the Vice-Secretary, must be approved by the full Board after receiving a report from the Nominations and
34
Does the Nominations Committee report the nomination?
Does the Nominations Committee report removals?
YES
YES
Does the full Board approve the nomination?
YES
Does the full Board approve the removal?
YES
Does the Secretary to the Board have the responsibility of specifically monitoring Good
Governance recommendations?
NO
Observations
Although Article 9 of the Board Regulations does not specifically assign this duty, it is responsible for assuring formal
legality which includes the good governance recommendations.
The audit Committee is responsible, among other things, for supervising compliance
with internal codes of conduct and corporate governance rules.
B.1.35 Describe any mechanisms established by the Company to preserve the independence of
the auditor, financial analysts, investment banks and rating agencies.
The Audit Committee is responsible for proposing the selection, appointment, reelection and
replacement of the external auditors to the Board of Directors.
Regularly receive information from the external auditors on the audit plan and results of their
work, and check that senior management takes their recommendations into account.
Monitor the independence of the external auditor, to which end:
The company should notify any change of auditor to the CNMV as a significant event,
accompanied by a statement of any disagreements arising with the outgoing auditor and the
reasons for the same.
The company should ensure that the company and the auditor respect rules in force regarding
the rendering of services other than audit services, business concentration limits affecting the
auditor and, in general, all of the rules established to ensure the independence of auditors;
The Committee should investigate the issues giving rise to the resignation of any external
auditor.
We provide information to financial analysts and rating agencies when requested.
35
B.1.36 Indicate whether or not the Company has changed its external auditor during the year. If
so, name the outgoing and incoming auditor:
NO
Outgoing auditor
Incoming auditor
If the Company had any disagreements with the outgoing auditor, indicate their contents:
NO
B.1.37 State whether or not the audit firm does any work for the Company and/or its Group
other than standard audit work and, if so, indicate the amount of the fees received for
such work and the percentage it represents of the total fees invoiced to the Company
and/or its group:
YES
Company
Amount of work other than standard audit
Group
Total
35
0
35
68.63
0.000
68.63
work (thousand euro)
work/Total amount invoiced by the audit
firm (in %)
B.1.38 State whether or not the audit report on the Annual Accounts for the previous year
contains any qualifications or reservations. If so, indicate the reasons given by the
Chairman of the Audit Committee to explain the content and scope of those
qualifications or reservations.
NO
B.1.39 State the number of years in succession that the current audit firm has audited the
Company’s annual accounts and/or its group. In addition, indicate the ratio of the number
of years audited by the current auditors to the total number of years that the annual
accounts have been audited:
36
Number of years without interruption
Company
Group
13
13
Company
Group
100.000
100.000
Number of years audited by the current audit firm/Number
of years that the company has been audited (in %)
B.1.40 Indicate the stake held by Members of the Company’s Board of Directors in the capital of
companies that carry out the same, similar or supplementary activities as those
constituting the Company and Group’s corporate purpose and which have been reported
to the Company. Indicate their positions or duties at those companies:
B.1.41 Indicate, and provide details, if there is an established procedure for Directors to receive
external advice:
YES
Procedure details
Article 13.2 of the Board’s Regulations lays down: Directors may request, through the Chairman, the hiring of any
outside advisors considered to be necessary to properly carry out their duties.
The full Board must adopt an appropriate Resolution in each case based on whether or not to obtain such external
advisory services, the person or firm to provide the service, access to confidential company information that this
advisor may have and the approval, if appropriate, of the relevant expense.
B.1.42 Indicate, providing details as necessary, if there is an established procedure for Directors
to obtain any information they may need to prepare for the Meetings of the governing
bodies sufficiently in advance:
YES
37
Procedure details
Article 13.1 of the Board’s Regulations lays down: Directors will receive precise information to fulfill their duties on
time and with adequate depth as appropriate for the issues at hand.
They may requested additional information when deemed advisable which is channeled through the Secretary to the
Board.
B.1.43 Indicate, providing details if appropriate, if the Company has established rules requiring
Directors to report and, if necessary, resigned in any cases that could be detrimental to
the Company’s reputation:
YES
Explain the rules
Article 14.3 of the Board Regulations expressly states that in accordance with the loyalty duty falling to Directors,
they may not use the Company’s name or their position as Director to carry out any transactions on their own behalf
or on the behalf of any associated person.
Director may carry out, to their benefit for the benefit of any associated person, investments or any other transaction
associated with the Company’s assets which are known to them as a result of their position when the investment for
transaction would have been offered to the Company or the Company would be interested in the transaction,
provided that the Company did not rule out that investment or transaction without the influence of the Director.
Directors must report any direct or indirect situation of conflict to the Board of Directors when involving any
Company interests and Directors will not attend or intervene in debates that involve any issue in which they have a
personal interest or affects an associated person.
Directors must report any criminal cases involving them, as well as all subsequent procedural issues, to the Board of
Directors.
Article 15 of the Board Regulations stipulates that Directors must offer their resignation to the Board of Directors
and formalize their resignation, if deemed advisable, in the following cases:
b) When their remaining on the Board may jeopardize the Company’s interests or when the reasons for which they
were appointed no longer exist.
c) In the event of an accusation or instigation of oral proceedings connected with any of the crimes indicated in
Article 124 of the Spanish Companies Act, the Board shall examine the case as soon as possible and decide the
appropriateness of the Director continuing to hold office or otherwise.
38
B.1.44 Indicate whether the Company has been notified by any Board Member that he/she has
been charged with, or is being tried for, any of the crimes contemplated under Article 124
of the Spanish Companies Act:
NO
Indicate whether or not the Board of Directors has analyzed the case. If so, give a reasoned
explanation of the decision made as to whether or not the Director in question should remain in
office.
NO
Decision taken
Reasoned explanation
B.2. Board of Directors’ Committees
B.2.1 List all the Board of Directors’ Committees and their Members:
AUDIT COMMITTEE
Name
Position
Type
CHAIRMAN
INDEPENDENT
DIRECTOR
INSTITUTIONAL
DIRECTOR
INDEPENDENT
POSITION
TYPE
Mr. MARTIN MARIA GONZALEZ DEL VALLE CHAVARRI
DIRECTOR
INDEPENDENT
DIRECTOR
INDEPENDENT
NOMINATIONS AND COMPENSATION COMMITTEE
NAME
39
B.2.2 Indicate whether or not the following duties correspond to the Audit Committee:
Supervise the integrity and process of preparing the financial information regarding the
Company and its Group, ensuring compliance with all requirements, adequate definition of the
YES
consolidated group and the correct application of accounting principles.
Regularly check the internal control and risk management systems, ensuring that the principal
risks are identified, handled and reported adequately.
Guarantee the independence and efficiency of the internal audit department, propose the
selection, appointment, re-election and removal of the Chief Audit Officer, propose the budget
YES
YES
for this department, receive regular information regarding its activities and check that senior
management takes into account the conclusions and recommendations made in its reports.
Establish and oversee a mechanism whereby employees may report confidentially and, if
appropriate, anonymously, any potentially important irregularities, particularly those relating
YES
to financial and accounting areas that they may detect within the Company.
Submit proposals to the Board for the election, appointment, re-election and replacement of
YES
the external auditors and the terms and conditions of their engagement.
YES
work, and check that senior management takes their recommendations into account.
YES
Ensure the independence of the external auditors
In the case of groups, encourage the Group’s auditors to audit the group companies
YES
B.2.3 Describe the rules of organization and procedure, and responsibilities attributed to each
Committee.
40
Name of the Committee
Nominations and Compensation Committee.
Brief description
Nominations and Compensation Committee
Article 1.3 of the Board Regulations
In accordance with the provisions of that Article, the Nominations and
Compensation
Committee
is
responsible for:
d) Report on the senior officer appointments and removals which the chief executive proposes to the Board.
e) Report gender diversity issues to the Board.
f) Make proposals to the Board of Directors regarding:
The full Board of Directors is responsible for the appointment or removal of its members, and there will be at
least three members. The members of the Committee will automatically cease to hold their positions when
they are no longer members of the Board of Directors
Members will be appointed by the full Board and there will be no less than three members.
The Board of Directors is responsible for both appointing and removing members. : The members of the
Committee will automatically cease to hold their positions when they are no longer members of the Board of
Directors
Currently the Company has two Committees, the Audit Committee and the Nominations and Compensation
Committee. Both Committees were created by the Board of Directors at the meeting held on 12 January
1999, following the recommendations of the Good Governance Code.
Article 11 of the For Regulations stipulates that Committees will meet when called by their respective
chairmen, who may do so of their own accord or at the proposal of members, or when necessary in
accordance with the bylaws.
41
Audit Committee.
Brief description
In accordance with the provisions of Article 24 the Bylaws, the Audit Committee will be governed as follows:
A minimum of two and a maximum of four Directors will form part of the Audit Committee and all must be
Outside Directors.
The full Board of Directors is responsible for both appointing and removing members. The members of the
Directors
The Committee members will hold office for a maximum of four years and may be re-elected one or more
The Committee will elect a Chairman from among its members, who will be appointed for a term of four
years and may be reelected after 1 year has elapsed after last holding the office. The Secretary to the
Committee will be the Secretary to the Board of Directors.
The competencies of the Audit Committee will be as follows:
Report to the General Meeting regarding issues raised by shareholders in the Committee’s area of
responsibility.
Propose the appointment of external auditors to the Board of Directors for submission to the General
Meeting for approval
Supervision of internal audit services, if any.
Monitoring the financial reporting process and the Company’s internal control systems.
Relationships with external auditors to receive information regarding those issues that may put their
independence at risk in any other issues relating to the audit process, as well as any other communications
established by audit legislation or by technical audit standards.
Report on the Annual Accounts, as well as the half yearly and quarterly financial statements which must be
sent to regulators or market supervisors, making mention of internal control systems, monitoring controls
and compliance through internal audit, when appropriate, as well as the accounting principles applied. The
board must also be informed of any change in accounting policies and all balance sheet and off-balance sheet
risks.
Prepare an annual report regarding the Committee’s activities which must be included in the Directors’
Report.
42
Article 1.2 of the Board Regulations stipulates:
Outside Directors.
Directors
The Committee will elect a Chairman from among its members, who will be appointed for a term of four
Any Director, including the CEO, or any Company employee asked to do so must attend Committee
meetings and cooperate and provide all available information.
a) Report to the General Meeting regarding issues raised by shareholders in the Committee’s area of
responsibility.
b) Supervise internal audit services.
c) Monitor the financial reporting process and the Company’s internal control systems.
d) Supervise compliance with internal codes of conduct and corporate governance rules.
e) With respect to external auditors:
i.- Bring to the Board all proposals relating to the selection, appointment, reelection and replacement of the
external auditor.
ii.- Regularly receive information from the external auditors on the audit plan and results of their work, and
check that senior management takes their recommendations into account.
iii.- Ensure the independence of the external auditor, to which end:
1. The company should notify any change of auditor to the CNMV as a significant event, accompanied by a
statement of any disagreements arising with the outgoing auditor and the reasons for the same.
2. The company should ensure that the company and the auditor respect rules in force regarding the
rendering of services other than audit services, business concentration limits affecting the auditor and, in
general, all of the rules established to ensure the independence of auditors;
3. The Committee should investigate the issues giving rise to the resignation of any external auditor.
f) Report on the Annual Accounts, as well as the half yearly and quarterly financial statements which must be
sent to regulators or market supervisors, making mention of internal control systems, monitoring controls
and compliance through internal audit, when appropriate, as well as the accounting principles applied. The
risks.
43
g) Prepare an annual report regarding the Committee’s activities which must be included in the Directors’
Report.
B.2.4 Indicate, where appropriate, the advisory, consultation and delegation authority held by each
of the Committees:
Brief description
Supervise the process of selecting Directors and senior executives at the Company. The establishment and
supervision of executive compensation policies.
Audit Committee.
Brief description
Inform the General Meeting of any issues raised by Shareholders regarding its area of authority, propose the
appointment of external auditors to the Board of Directors for submission to the General Meeting.
Supervision of internal audit services, if any. Monitor the financial reporting process and the Company’s
internal control systems. Relationships with external auditors to receive information regarding those issues
that may put their independence at risk in any other issues relating to the audit process, as well as any other
communications established by audit legislation or by technical audit standards. Report on the Annual
Accounts, as well as the half yearly and quarterly financial statements which must be sent to regulators or
market supervisors, making mention of internal control systems, monitoring controls and compliance through
internal audit, when appropriate, as well as the accounting principles applied, and it must also report any
change in accounting policy and balance sheet and off-balance sheet risks to the Board. Prepare an annual
report regarding the Committee’s activities which must be included in the Directors’ Report.
44
B.2.5 Indicate the existence, if appropriate, of Board Committee Regulations, where they are
available for consultation and any modifications made during the year. State whether or not
an annual report has been issued voluntarily on the activities of each Committee.
Brief description
There are no specific regulations for Board Committees since they are regulated by the Bylaws and the
Regulations governing the Board of Directors. These Bylaws and Regulations are available at the Company's
website.
The composition and structure of the Nominations and Compensation Committee is also available on the
company's website.
AUDIT COMMITTEE
Brief description
website.
company's website.
B.2.6 Indicate whether or not the composition of the Executive Committee reflects the
participation on the Board of different types of Directors:
YES
C
RELATED PARTY TRANSACTIONS
C.1 Indicate whether or not the full Board has reserved the approval, subject to a favorable
report by the Audit Committee or any other Committee assigned this task, of any
transactions that the Company may enter into with Directors, significant shareholders or
shareholders represented on the Board, or with persons related to them:
YES
45
C.2 List any significant transactions involving a transfer of resources or obligations between the
Company and/or Companies in its group and significant Company shareholders:
Company and/or Companies in its group and Company administrators or executives:
C.4 List any significant transactions with other companies in the group that are not eliminated in
the consolidated financial statements and which do not, by virtue of their object or terms,
relate to the Company’s normal business:
C.5 Indicate whether or not the Company’s Directors have been involved with any conflict of
interest during the year, in accordance with Article 127 ter of the Spanish Companies Act.
C.6 Explain the mechanisms established to detect and resolve possible conflicts of interest
between the Company and/or its Group and its Directors, senior management or
significant shareholders.
1) There are various rules included in the Board Regulations:
Article 14.3 states:
a) Directors may not use the Company’s name or their position as Director to carry out any transactions on
their own behalf or on the behalf of any associated person
b) No Director may carry out, to their benefit for the benefit of any associated person, investments or any
other transaction associated with the Company’s assets which are known to them as a result of their position
when the investment for transaction would have been offered to the Company or the Company would be
interested in the transaction, provided that the Company did not rule out that investment or transaction
without the influence of the Director.
c) Directors must report any direct or indirect situation of conflict to the Board of Directors when involving
any Company interests and Directors will not attend or intervene in debates that involve any issue in which
they have a personal interest or affects an associated person.
In any event, any situations of conflict of interest affecting Company Directors must be reported in the Annual
Corporate Governance Report.
14.6 Abstention duty
46
Directors’ duty to abstain means not making private use of confidential information received as a result of the
position of Director and not making investments or commercial transactions deriving from holding the position
of Director. This duty also covers any activity carried out by an associated person.
14.7 Associated person.
For the purposes of this Article, a person associated with the a Director will be deemed to be as follows:
a) The spouse of the Director or any person in a similar position.
b) Ascendants, descendents and siblings of the Director or the spouse of the Director
c) The spouses of ascendants, descendents and the siblings of the Director.
d) Companies in which the Director, personally or through an intermediary, is in one of these situations listed
under Article 4 of Law 24/1988 (28 July) on the Stock Market.
Associates of legal persons appointed to directorships are considered to be the following:
d) Shareholders which are, with respect to the legal person Director, in one of these situations listed under
Article 4 of Law 24/1988 (28 July) on the Stock Market.
b) Directors, in law or de facto, liquidators and legal representatives with general power-of-attorney at the
legal person Director
c) Companies that form part of the same group as defined by Article 4 of Law 24/1988 (28 July) on the Stock
Market and their shareholders.
d) Persons considered to be associated with the legal person Directors, in accordance with the provisions of
the preceding paragraph.
2) Furthermore, there are Stock Market Conduct Regulations consisting of a group of rules intended to detect
and regulate possible conflicts of interest between the Company and/or its Group, and their Directors,
executives or significant shareholders.
The regulations are applied with respect to securities issued by Iberpapel Gestion, to the members of the Board
of Directors and any Board Committee or Commission, their representatives when members are legal persons
and the Secretary or Vice-Secretary, if they are not Directors.
Executives or personnel at a similar hierarchical level, and, in general, employees that directly or indirectly carry
out activities relating to the stock market, particularly those relating to the Company’s treasury shares, investor
relationships, public reporting or relevant information.
In accordance with the definition provided by Royal Decree 377/1991 (15 March) on the Reporting of Significant
Shareholdings in Listed Companies and the Acquisition of Treasury Shares (hereinafter "RD 377/1991"),
executives are considered to be general managers or similar positions that perform senior management duties
under the direct supervision of the governing bodies, executive committee or the Company CEO.
Any other person that could have access to privileged information.
Any person that knowingly possesses privileged information, or should know, may not prepare or carry out any
direct or indirect transactions on their own behalf or on the behalf of a third-party involving the securities to
which the privileged information refers.
47
This prohibition does not include (i) the preparation or performance of transactions whose existence
constitutes the privileged information; (ii) transactions carried out to comply with an outstanding obligation to
acquire or assign securities when covered by an agreement concluded before the person concerned possesses
the privileged information; or (iii) any transactions carried out in conformance with applicable legislation.
All persons subject to the Regulations are prohibited from (i) reporting the privileged information to third
parties, unless that forms part of the normal course of their work, profession or position; and (ii) providing
recommendations to a third party to acquire or assign securities or to instruct another party to acquire or
assign securities based on that information (duty of confidentiality).
All persons subject to the Regulations will ensure that the privileged information is duly safeguarded,
notwithstanding their duty to report to, and collaborate with, legal and administrative authorities in accordance
with the terms established under the Stock Market Act or any legislation in force at any given time.
In addition, they must adopt adequate measures to prevent the privileged information from abuse or improper
use and, if appropriate, will immediately take all necessary measures to correct the consequences deriving from
such activities.
Persons subject to the Regulations may not carry out personal transactions when they possess privileged
information.
Personal transactions will be understood to be those carried out by the persons concerned involving securities,
as well as any that may be carried out by others associated with those persons.
Associated persons are (i) E. Spouse or domestic partner, except for transactions involving private assets or
when there is a formal separation of assets agreement in place; (ii) minor children subject to parental authority
and dependent adults; (iii) companies effectively controlled by the person concerned; and (iv) intermediary
persons as defined by Article 3 of RD 377/1991.
Such persons will report any possible conflict of interest with Iberpapel or its Group to the person responsible
for monitoring such situations when they arise for any reason and such persons will abstain from carrying out
any type of personal transaction or transaction covered by a portfolio management agreement when there
could be any conflict of interest, unless advance express authorization is obtained from the person responsible
for monitoring such situations, in accordance with their obligations for loyal behavior deriving from stock
market, corporate and employment legislation and this Internal Code of Conduct Regulations.
C.7 Are more than one of the Group’s companies listed in Spain?
NO
48
Identify the subsidiaries listed in Spain:
D
RISK CONTROL SYSTEMS
D.1 General description of the Company’s risk policy and/or its Group, including detailed and an
evaluation of the risks covered by the system, together with information supporting those
systems’ adaptation to the profile of each type of risk.
Iberpapel Group has carried out risk control and management actions which
have afforded an adequate
valuation in this respect. In this respect, systems have been implemented that enable the following risks affecting
the Group to be identified, assessed, managed and controlled.
Risk control systems, which are a component of decision-making management and assistance in the Iberpapel
Group are defined on the basis of four major aspects:
Principal risks of the Iberpapel Group.
Risk assessment
Risk control and hedges
Organization and management responsibilities
In 2009 the risks assessed and for which there is sufficient coverage include the following:
Risk concerning the global economic situation
Market / competition and selling / raw material prices risks.
Forestry risks.
Regulatory/ environmental risks.
Risks relating to new investments and other
Risks of material damages and loss of earnings.
Risk assessment
a) Control systems
The Group’s control systems are considered appropriate in light of the Group’s risk profile and may be grouped
together in the following categories:
Maintaining a highly competitive cost structure that enables the impact of market crises to be addressed
comparatively better than in the competition.
49
Systems of control over the distribution of forestry assets: three distant forestry areas (Argentina, Uruguay and
Huelva), with the reasonable distribution of properties in each area. Moreover, forest cleaning, firebreak work
etc is carried out on a regular basis, thereby reducing the impact of potential damages from fire.
Improvement in competitiveness and environmental efficiency through the launch of a 50 MWh high-efficiency
cogeneration plan which gives rise to an additional competitive advantage due to cost reductions and lowered
dependence on electricity prices.
Plans and systems to ensure the quality of products and services: the top priority under the Iberpapel Group’s
defined quality policy is customer satisfaction and on-going improvement and therefore to ensure that products
and services meet quality standards. In this connection, the Group has ISO 9001 and 14001 certificates, AENOR
certificates for the Custodial Chain Model and Integrated Environmental Authorization obtained in 2008. The
Iberpapel Group’s basic quality policy objectives are as follows:
To review, improve and optimize existing processes and controls in order to ensure product quality and
traceability.
To provide an adequate response to claims, implementing a process to examine, record and respond to such
claims.
Systems to control environmental risks: the Iberpapel group is committed to complying with applicable
European, central government and regional legislation and participates actively in the development of new
environmental commitments. In this respect, progress is being made on the gradual implementation of Available
Technology Improvements deriving from Community Directive IPPC 96/61/EC on integrated pollution control
and the processing of Integrated Environmental Management. A series of actions carried out by the Group in
this connection are particularly noteworthy:
Odor elimination systems.
Elimination of elementary chloride as a bleaching agent.
Installation of on-going emission measurement systems in conjunction with the Basque regional government.
Utilization of the best available technologies to improve emissions and disposals and reduce waste.
Installation of a new effluent treatment facility.
The Iberpapel Group has continued to implement its reforestation policy, focusing on so-called Clean
Development Mechanisms (CDM). This policy aims to secure, through such mechanisms contained in the Kyoto
Protocol and European legislation, financing to ensure the feasibility of the projects started up, enabling,
moreover, the obtainment of an optimum supply of raw materials for our facilities in Hernani.
The aforementioned project has mainly been developed through a reforestation program based on the variety
of seed or development eucalyptus cloned at the properties purchased by the group’s subsidiaries in Argentina
50
and Uruguay which were previously used as grazing land. In the past few years approximately 4,200 hectare in
Argentina and 7,300 hectare in Uruguay, respectively, have been reforested.
In past years Iberpapel Group obtained several environmental certificates, among them the AENOR certificate
for the Custodial Chain Model for Forestry Products (PEFC) in the industrial division, together with the
Sustainable Forestry Management Certificate in accordance with the FSC Standard (Forest Stewardship Council)
in the forestry division.
In 2009 Iberpapel Group continued with the process of making environmental improvements by obtaining new
certificates such as the Custodial Chain certificate in accordance with the FSC standard by the industrial division
and the forestry division (national and international).
There is an investment development analysis and monitoring program in place that allows business growth
processes to be satisfactorily handled and relates to the growth of the generation of electricity that the Group
plans to export to the grid.
Other preventive procedures: it is Iberpapel group’s policy to arrange the necessary insurance policies and
hedges to mitigate as far as possible the risks deriving from the loss of earnings, material damages, customer
collection, machine breakdowns etc .
The decline in profits (including all industrial operations)
Machine fault insurance (Including damages and loss of earnings)
Material damages (comprehensive insurance)
Trade receivables (the group arranges insurance for both domestic and export sales)
Third-party liability (including causing agent and damages)
Third-party liability of Directors and Managers
b) Internal supervision procedure
The Group has assessed the risks on the basis of a universal model and carried out the reviews considered
necessary to update the risk map. Similarly, the impact of those risks has been calculated together with the
follow-up and management actions relating to each of the aforementioned areas.
D.2 Indicate whether any of the risks (operating, technological, financial, legal, reputational, tax,
etc.) affecting the Company and/or its Group have actually arisen during the year:
NO
51
If so, indicate the underlying circumstances and whether or not the established control systems
work adequately.
D.3 Is there a Committee or other governing body responsible for establishing and supervising
the control systems?
YES
If so, state its duties.
Name of the Committee or Body
AUDIT COMMITTEE
Description of duties
It is authorized by the Board of Directors in the exercise of its duties to supervise risks.
BOARD OF DIRECTORS.
The Board is responsible for maintaining the internal control system, including the follow-up and
control of the significant risks of the Iberpapel corporate group. On the basis of the assessment of
operational risks supervised by the Audit Committee, the Board of Directors carries out risk
control and management.
Risk Control and Management Systems in the Group. On the basis of the assessment of
operational risks supervised by the Audit Committee, the Board of Directors carries out risk
D.4
Identification and description of processes for complying with the various regulations
affecting the Company and/or its Group.
The Group has implemented the necessary mechanisms to control and manage risks in accordance with the
universal assessment model which takes into account any kind.
52
Because of its universal and dynamic nature, the system enables the on-going management of the risks affecting
the Iberpapel Group, making it possible to tailor it to changes in the environment, to review its objectives and
strategies and upgrade its monitoring and supervisory process.
With respect to compliance with the different regulations which affect the Iberpapel Group, it should be noted
that the Group has a legal department and external advisors when required such that at all times it is in a
position to comply with the regulations applicable to the Group in its operations.
In this respect, it should be noted that as a listed Group, it complies with its quarterly, six-monthly and annual
reporting obligations and issues the Significant Events report and other information requested by the National
Securities Market Commission.
Integrated risk management in the Iberpapel Group and companies which form it enables a profitability / risk
balance to be attained, reducing the impact on results.
E
GENERAL MEETING
E.1 Indicate whether there are any differences between the quorums for General Meetings and
the minimums stipulated in the Spanish Companies Act and, if appropriate, explain.
NO
% quorum other than that established
under Art. 102 LSA for general cases
under Art. 103 LSA for the special
cases established under Art. 103
Quorum required on
0
0
0
0
first call
Quorum required on
second call
E.2 Indicate and explain, if appropriate, if there are any differences between the system used for
adopting corporate resolutions in the system stipulated in the Spanish Companies Act:
No
Describe how it differs from the system contemplated in the Spanish Companies Act.
E.3 Describe any shareholders’ rights with regard to General Meetings that differ from those
established by the Spanish Companies Act.
53
The Bylaws and the General Meeting Regulations govern shareholder rights in accordance with the provisions of
the Spanish Companies Act. There is no limitation whatsoever on the number of shares required to attend
General Meetings.
E.4 Describe the measures adopted, if any, to encourage the participation of shareholders at
General Meetings.
All shareholders may attend the General Meeting and take part in deliberations. Speaking and voting rights, in
accordance with the provisions of the Bylaws and the General Meaning Regulations.
In addition to the right to request callings of meetings, information and attendance as well as representation and
remote voting, Iberpapel has a policy of encouraging shareholder participation in the General Meeting by
applying the following measures:
The meeting is held at the premises with the best conditions for holding and monitoring the meeting, located in
the center of the municipality in which the Company’s domicile is located.
Exercising of voting rights and delegation using electronic means.
Personalized assistance and information for shareholders through the Shareholder Service Office.
Publication on the Company’s website of all information regarding the General Meeting and the Agenda, details
regarding the calling of the meeting, proposed Resolutions made by the Board of Directors and the means of
communicating with the Company through which details regarding the meeting may be requested.
E.5 Indicate if Chairman of the Board chairs the General Meeting. List any measures adopted to
ensure the independence and correct operation of the General Meeting:
YES
Details regarding the measures
In order to guarantee the independence and proper operation of the General Meeting, the Ordinary General Meeting
held on 15 June 2004 approved a Meeting Resolution providing detailed and transparent regulations for the meeting.
E.6 Indicate any modifications made during the year to the Regulations governing the General
Shareholders’ meeting.
E.7 Provide details of attendance records at General Meetings held during the year to which this
report refers:
Attendance information
54
Date of the
% physically present
% remote voting
represented Electronic
by proxy
voting
General
Meeting
02/06/2009
%
6.836
48.412
Total
Other
0.000
55.248
E.8 Briefly indicate the Resolutions adopted at the General Meetings held during the year to which
this report refers and the percentage of votes with which each Resolution was adopted.
The Ordinary General Shareholder Meeting held on 02 June 2009 adopted the following Resolutions
(summarized):
1. The appointment of representatives to approve the Meeting Minutes was approved.
Unanimously approved.
2. Approve, in the terms established in the legal documentation, the Annual Accounts (Balance sheet, Income
Statement and Notes to the Annual Accounts), both for Iberpapel Gestion S.A. and its consolidated Group, as
well as the individual and consolidated Directors' Report relating to the year ended 31 December 2008.
Approve the proposed application of profits totaling six million five hundred ten thousand one hundred and
eighty eight euro and forty five cents (€ 6,510,188.45), which will be distributed as follows:
- Nine hundred twenty three thousand four hundred ninety three euro and ninety two cents (€ 923,493.92)
which have already been distributed as interim dividend as approved by the Board of Directors at the meeting
held on 8 January 2009.
- Voluntary reserves have been allocated five million five hundred eighty six thousand six hundred ninety four
euro and fifty three cents (€ 5,586,694.53).
Approve the management by the Governing Body during the year.
3. – The partial refund of a share premium to shareholders totaling € 0.08 per share was approved.
4.- The Board of Directors was authorized to acquire Treasury Shares by the Company and/or its subsidiaries
through the acquisition of a maximum of 5% of share capital over a 14 month and for a minimum price of the
share par value and a maximum of € 40.
5. The reelection of the auditor PriceWaterhouseCoopers Auditores, SL. for a term of one year was approved
for the audit of the individual and consolidated annual accounts for 2009.
6. Mr. Martín González del Valle Chavarri was re-elected to the board for a six year term.
Votes in favor: 97.227% of the shares present and represented.
Votes against: 2.773% of the shares present and represented.
7.- A resolution was adopted to delegate authority to the Chairman of the Board or to the Secretary to
formalize, interpret, correct and execute the Resolutions adopted by the General Meeting.
55
E.9 State whether any restrictions are established in the Articles of Association requiring a
minimum number of shares to attend General Meetings:
No
Number of shares necessary to attend the General Meeting
E.10 Describe and justify the Company’s policies regarding proxy votes at General Meetings.
The policy followed by the Board of Directors of Iberpapel Gestión, S.A has always been to facilitate the
presence of shareholders at General Meetings, either personally or through representation. For that reason
representation to attend a Meeting may fall to another person who does not have to be a shareholder.
The delegation of votes at the General Meeting is governed by the Company’s Bylaws and the Meeting
Regulations as well as by the Board Regulations.
According to Article 14 of the Bylaws, shareholders with a right to attend meetings may delegate representation
authority to another person. The representative must be named and that must be extended in writing for each
Meeting. The above is notwithstanding the provisions of Article 108 of the Spanish Companies Act.
In addition, shareholders may delegate representation via electronic or remote means that duly guarantee the
representation authority granted and the identity of the representative when the Board of Directors considers
that there are adequate guarantees of authenticity and identification of the shareholder conferring the
representation authority. The representation authority granted using these means will be sent to the Company
using the procedure and within the deadline established by the Board of Directors in the Resolution to call the
meeting.
The Board of Directors will determine, in accordance with the calling of each meeting, the procedure,
requirements, system and deadline for granting and sending the Company representation or delegation of vote
authority issued electronically.
These circumstances will be stated in the announcements concerning the calling of the Meeting.
In the event of a public request for representation, the provisions of Article 107 of the current Spanish
Companies Act will be applicable and, if appropriate, so will the provisions of Article 114 of Law 24/1988 (28
July) on the Stock Market.
According to Article 11 of the Board Regulations, shareholders with a right to attend meetings may delegate
representation authority to another person.
The representation authority must be accepted by the representative. It must be specific to each Meeting and
may be conferred through the following means:
a) By sending the card referred to under Article 12, duly filled in and signed by the shareholder, in accordance
with the terms and conditions established in the Bylaws.
b) Using electronic or remote means that duly guarantee the representation authority granted and the identity
of the representative when the Board of Directors considers that there are adequate guarantees of authenticity
and identification of the shareholder conferring the representation authority. The representation authority
granted using these means will be sent to the Company using the procedure and within the deadline established
by the Board of Directors in the Resolution to call the meeting.
3. In the event of a public request for representation, the provisions of Article 107 of the current Spanish
Companies Act will be applicable and, if appropriate, so will the provisions of Article 114 of Law 24/1988 (28
56
July) on the Stock Market. In particular, the document containing the power-of-attorney must contain or bear
an appendix containing the Agenda, as well as a request for instructions to exercise the right to vote and an
indication of how the representative will vote in the event that no precise instructions are given.
4. Individual shareholders who do not have full legal capacity and corporate shareholders may be represented by
their legal representatives, when adequately proven. Both in these cases, as well as in the case in which a
shareholder delegates a right to attend the Meeting, more than one representative cannot be used.
5. Representation authority is always revocable. If the shareholder attends the Meeting, and any vote issued
revokes any delegated authority whatever the date.
Article 19 of the Board Regulation stipulates that public requests for the delegation of votes made by the Board
of Directors or any member must expressly state the manner in which the representative will vote in the event
that the shareholder does not provide instructions.
A Director obtaining representation authority may not exercise the right to vote relating to the represented
shares for any points of the Agenda for which there is a conflict of interest.
Article 21 of the Board Regulations stipulates that delegated votes received by the Board of Directors or any
Member will be faithfully executed in accordance with the instructions received in this respect and the Minutes
will reflect the vote and the identification of the voting instructions received, including any vote against Board
proposals, with the aim of safeguarding the rights that may fall to the delegating shareholder.
E.11 Indicate whether the company is aware of the policies of institutional investors regarding
their participation or not in company decisions:
NO
E.12 Indicate the address and access to the corporate governance contents on the company’s
website.
www.iberpapel. es
Shareholders and investors
Corporate Governance
57
F
EXTENT OF COMPLIANCE WITH THE CORPORATE GOVERNANCE
RECOMMENDATIONS
Indicate the degree of compliance by the company with the recommendations of the Unified
Good Governance Code.
In the event of non-compliance with any recommendations, explain the recommendations,
standards, practices or principles applied by the company.
1.
The bylaws of listed companies should not place an upper limit on the votes that can be
cast by a single shareholder, or impose other obstacles to the takeover of the company by
means of share purchases on the market.
See sections:
A.9, B.1.22, B.1.23 and E.1, E.2.
Comply
2.
When a dominant and a subsidiary company are stock market listed, the two should
provide detailed disclosure on:
a)
The type of activity they engage in and any business dealings between them, as well as
between the subsidiary and other group companies;
b)
The mechanisms in place to resolve possible conflicts of interest.
See sections:
C.4 and C.7
Not applicable
58
3.
Even when not expressly required under company law, any decisions involving a
fundamental corporate change should be submitted to the General Shareholders' Meeting
for approval or ratification. In particular:
a)
The transformation of listed companies into holding companies through the process
of subsidiarization, i.e., reallocating core activities to subsidiaries that were previously
carried out by the originating firm, even though the latter retains full control of the
former;
b)
Any acquisition or disposal of key operating assets that would effectively alter the
company's corporate purpose;
c)
Operations that effectively add up to the company's liquidation.
Comply
4.
Detailed proposals of the resolutions to be adopted at the General Shareholders’ Meeting,
including the information stated in Recommendation 28, should be made available at the
same time as the publication of the Meeting notice.
Comply
5.
Separate votes should be taken at the General Shareholders’ Meeting on materially separate
items, so shareholders can express their preferences in each case. This rule shall apply in
particular to:
a)
The appointment or ratification of directors, with separate voting on each candidate;
b)
Amendments to the bylaws, with votes taken on all articles or groups of articles that
are materially different.
See section:
E.8
Comply
59
6.
Companies should allow split votes, so financial intermediaries acting as nominees on behalf
of different clients can issue their votes according to instructions.
See section:
E.4
Comply
7.
The Board of Directors should perform its duties with unity of purpose and independent
judgment, according all shareholders the same treatment. It should be guided at all times by
the company's best interest and, as such, strive to maximize its value over time.
It should likewise ensure that the company abides by the laws and regulations in its dealings
with stakeholders; fulfills its obligations and contracts in good faith; respects the customs
and good practices of the sectors and territories where it does business; and upholds any
additional social responsibility principles it has subscribed to voluntarily.
Comply
8.
The Board should see as core components of its mission: to approve the company's
strategy and authorize the organizational resources to carry it forward, and to ensure that
management meets the objectives set while pursuing the company's interests and corporate
purpose. As such, the Board in full should reserve the right to approve:
a)
The company's general policies and strategies, and in particular:
i) The strategic or business plan, management targets and annual budgets;
ii)
Investment and financing policy;
iii)
Design of the structure of the corporate group;
iv)
Corporate governance policy;
v)
Corporate social responsibility policy;
60
vi)
Compensation and evaluation of senior officers;
vii)
Risk control and management, and periodic monitoring of internal information
and control systems;
viii)
Dividend policy, treasury stock policy, especially limits.
See sections:
b)
The following decisions:
i)
See section:
ii)
See section:
c)
B.1.10, B.1.13, B.1.14 and D.3
Upon recommendation by the CEO, the appointment and possible removal of
senior management and any indemnity clauses.
B.1.14.
Directors’ compensation and, in the case of Executive Directors, additional
compensation for their management duties and other contractual conditions.
B.1.14.
iii)
The financial information listed companies must periodically disclose.
iv)
Investments or operations considered strategic by virtue of their amount or
special characteristics, unless their approval corresponds to the General
Shareholders’ Meeting;
v)
The creation or acquisition of shares in special purpose entities resident in
jurisdictions considered tax havens, and any other transactions or operations
of a comparable nature whose complexity might impair the transparency of
the group.
Transactions which the company conducts with directors, significant shareholders,
shareholders with board representation or other persons related thereto (“relatedparty transactions”).
61
However, Board authorization need not be required for related-party transactions
that simultaneously meet the following three conditions:
1. They are governed by standard form agreements applied on an across-the-board
basis to a large number of clients;
2. They go through at market rates, generally set by the person supplying the
goods or services;
3. Their amount is no more than 1% of the company's annual revenues.
It is advisable that related-party transactions should only be approved on the basis
of a favorable report from the Audit Committee or committee handling the same
function; and that the directors involved should neither exercise nor delegate their
votes, and should withdraw from the meeting room while the Board deliberates and
votes.
Ideally, the above powers should not be delegated with the exception of those mentioned in b)
and c), which may be delegated to the Delegate Committee in urgent cases and later ratified by
the full Board.
See sections:
C.1 and C.6
Comply
9.
In the interests of maximum effectiveness and participation, the Board of Directors should
ideally comprise no fewer than five and no more than fifteen members.
See section:
B.1.1
Comply
10.
External directors, proprietary and independent, should occupy an ample majority of Board
places, while the number of executive directors should be the minimum practical, bearing in
mind the complexity of the corporate group and the ownership interests they control.
See sections:
A.2, A.3, B.1.3 and B.1.14.
Comply
62
11.
In the event that some external director can be deemed neither proprietary nor
independent, the company should disclose this circumstance and the links that person
maintains with the company or its senior officers, or its shareholders.
See section:
B.1.3
Not applicable
12.
That among external directors, the relation between proprietary members and
independents should match the proportion between the capital represented on the Board
by institutional directors and the remainder of the company’s capital.
This proportional criterion can be relaxed so the weight of institutional directors is greater
than would strictly correspond to the total percentage of capital they represent:
1. In large-cap companies where few or no equity stakes attain the legal threshold for
significant shareholdings, despite the considerable sums actually invested.
2. In companies with a plurality of shareholders represented on the Board but not
otherwise related.
See sections:
B.1.3, A.2 and A.3
Comply
13.
The number of independent directors should represent at least one third of all Board
members.
See section:
B.1.3
Comply
14.
Such determination should subsequently be explained by the Board to the General Meeting
and be confirmed or reviewed in each year’s Annual Corporate Governance Report, after
verification by the Nomination Committee. The said Report should also disclose the
reasons for the appointment of institutional directors at the urging of shareholders
controlling less than 5% of capital; and explain any rejection of a formal request for a Board
place from shareholders whose equity stake is equal to or greater than that of others
applying successfully for a institutional directorship.
See sections:
B.1.3 and B.1.4
Comply
63
15.
When women directors are few or non-existent, the Board should state the reasons for
this situation and the measures taken to correct it; in particular, the Nomination
Committee should take steps to ensure that:
a)
The process of filling Board vacancies has no implicit bias against women candidates;
b)
The company makes a conscious effort to include women with the target profile
among the candidates for Board places.
See sections:
B.1.2, B.1.27 and B.2.3.
Comply
The Nominations and Compensation Committee initiates the process of selecting Directors and the near
executives for the Company in order to prepare subsequent proposals for the Board of Directors and does
not consider that gender should be a selection criteria but rather the candidate must meet required profile.
The principle of equal opportunity has always presided over the criteria applied by the Nominations and
Compensation Committee. In addition, the Committee is also responsible for reporting gender diversity
issues to the Board.
16.
The Chairman, as the person responsible for the proper operation of the Board of
Directors, should ensure that directors are supplied with sufficient information in advance
of Board meetings, and work to procure a good level of debate and active involvement of
all members, safeguarding their rights to freely express and adopt positions; he or she
should organize and coordinate regular evaluations of the Board and, where appropriate,
the company’s chief executive, along with the chairmen of the relevant Board committees.
See section:
B.1.42
Comply
64
17.
When a company's Chairman is also its chief executive, an independent director should be
empowered to request the calling of Board meetings or the inclusion of new business on
the agenda; to coordinate and give voice to the concerns of external directors; and to lead
the Board’s evaluation of the Chairman.
See section:
B.1.21
Comply
18.
The Secretary should take care to ensure that the Board’s actions:
a)
Adhere to the spirit and letter of laws and their implementing regulations, including
those issued by regulatory agencies;
b)
Comply with the company bylaws and the regulations of the General Shareholders'
Meeting, the Board of Directors and others;
c)
Are informed by those good governance recommendations of the Unified Code that
the company has subscribed to.
In order to safeguard the independence, impartiality and professionalism of the Secretary,
his or her appointment and removal should be proposed by the Nomination Committee
and approved by a full Board meeting, the relevant appointment and removal procedures
being spelled out in the Board’s regulations.
See section:
B.1.34
Partial compliance
Although Article 9 of the Board Regulations does not specifically assign the duty of ensuring, in any special
way, that good governance recommendations are followed it is responsible for ensuring formal legality which
includes, in a broad sense, good governance recommendations.
65
In addition, the Audit Committee is responsible for, among other things, supervising compliance with internal
codes of conduct and corporate governance rules and the Secretary to that Committee ensures compliance
with the duties falling to that Committee which include Corporate Good Governance rules.
19.
The Board should meet with the necessary frequency to properly perform its functions, in
accordance with a calendar and agendas set at the beginning of the year, to which each
director may propose the addition of other items.
See section:
B.1.29
Comply
20.
Director absences should be kept to the bare minimum and quantified in the Annual
Corporate Governance Report. When directors have no choice but to delegate their vote,
they should do so with instructions.
See sections:
B.1.28 and B.1.30
Comply
21.
When directors or the Secretary express concerns about some proposal or, in the case of
directors, about the company's performance, and such concerns are not resolved at the
meeting, the person expressing them can request that they be recorded in the minute
book.
Comply
22.
The Board in full should evaluate the following points on a yearly basis:
b) Starting from a report submitted by the Nomination Committee, how well the
Chairman and chief executive have carried out their duties;
c) The performance of its committees on the basis of the reports furnished by the same.
See section:
B.1.19
Partial compliance
66
Article 12 of the Board Regulations called: The evaluation of the Board and the Committees, literally states
the following:
b) The performance by the Chairman of the Board and the Company’s CEO based on a report that will be
prepared by the Nominations and Compensation Committee;
In addition, Article 9.3 of these Regulations stipulates that if the Chairman of the Board and the Company’s
CEO are the same person one of the Independent Directors will be appointed to direct the Board’s
evaluation of the Chairman. In order to comply with the provisions of this Article, on 8 January 2009 the
Board of Directors appointed Mr. Néstor Basterra Larroude to perform these duties.
However, given the resignation of the Company's Chairman and CEO in December 2009 this evaluation has
not been possible as a new Chairman was appointed.
23.
All directors should be able to exercise their right to receive any additional information
they require on matters within the Board's competence. Unless the bylaws or Board
regulations indicate otherwise, such requests should be addressed to the Chairman or
Secretary.
See section:
B.1.42
Comply
24.
All directors should be entitled to call on the company for the advice and guidance they
need to carry out their duties. The company should provide suitable channels for the
exercise of this right, extending in special circumstances to external assistance at the
company's expense.
See section:
B.1.41
Comply
25.
Companies should organize induction programmers for new directors to acquaint them
rapidly with the workings of the company and its corporate governance rules. Directors
should also be offered refresher programs when circumstances so advise.
Comply
67
26.
Companies should require their directors to devote sufficient time and effort to perform
their duties effectively, and, as such:
a)
Directors should apprise the Nomination Committee of any other professional
obligations, in case they might detract from the necessary dedication;
b)
Companies should lay down rules about the number of directorships their Board
members can hold.
See sections:
B.1.8, B.1.9 and B.1.17
Comply
27.
The proposal for the appointment or renewal of directors that the Board submits to the
General Shareholders’ Meeting, as well as provisional appointments by the method of cooption, should be approved by the Board:
a)
On the proposal of the Nomination Committee, in the case of independent directors.
b)
Subject to a report from the Nomination Committee in all other cases.
See section:
B.1.2
Comply
28.
Companies should post the following directorship particulars on their websites and keep
them permanently updated:
a)
Professional experience and background;
b)
Directorships held in other companies, listed or otherwise;
c)
An indication of the director's classification as appropriate, stating, in the case of
institutional directors, the shareholder they represent or are associated with.
d)
The date of their first and subsequent appointments as a company director, and;
e)
Shares held in the company and any options on the same.
Comply
68
29.
Independent directors should not stay on as such for a continuous period of more than 12
years.
See section:
B.1.2
Comply
The Board has not considered it advisable to implement recommendation 29 since it would
lead to the loss of Directors whose presence on the Board is in its corporate interests due
to their qualifications, contributions and experience without their presence affecting their
independence.
30.
Institutional directors should resign when the shareholders they represent dispose of their
ownership interest in its entirety. If such shareholders reduce their stakes, thereby losing
some of their entitlement to institutional directors, the latter’s number should be reduced
accordingly.
See sections:
A.2, A.3 and B.1.2
Comply
31.
The Board of Directors should not propose the removal of independent directors before
the expiry of their tenure as mandated by the bylaws, except where just cause is found by
the Board, based on a proposal from the Nomination Committee. In particular, just cause
will be presumed when a director is in breach of his or her fiduciary duties or comes under
one of the disqualifying grounds enumerated in section III.5 (Definitions) of this Code.
The removal of independents may also be proposed when a takeover bid, merger or similar
corporate operation produces changes in the company’s capital structure, in order to meet
the proportionality criterion set out in Recommendation 12.
See sections:
B.1.2, B.1.5 and B.1.26
Comply
69
32.
Companies should establish rules obliging directors to inform the Board of any
circumstance that might harm the organization’s name or reputation, tendering their
resignation as the case may be, with particular mention of any criminal charges brought
against them and the progress of any subsequent trial.
The moment a director is indicted or tried for any of the crimes stated in article 124 of the
Public Limited Companies Law, the Board should examine the matter and, in view of the
particular circumstances and potential harm to the company's name and reputation, decide
whether or not he or she should be called on to resign. The Board should also disclose all
such determinations in the Annual Corporate Governance Report.
See sections:
B.1.43, B.1.44
Comply
33.
All directors should express clear opposition when they feel a proposal submitted for the
Board's approval might damage the corporate interest. In particular, independents and
other directors unaffected by the conflict of interest should challenge any decision that
could go against the interests of shareholders lacking Board representation.
When the Board makes material or reiterated decisions about which a director has
expressed serious reservations, then he or she must draw the pertinent conclusions.
Directors resigning for such causes should set out their reasons in the letter referred to in
the next Recommendation.
The terms of this Recommendation should also apply to the Secretary to the Board,
Director or otherwise.
Comply
34.
Directors who give up their place before their tenure expires, through resignation or
otherwise, should state their reasons in a letter to be sent to all members of the Board.
Irrespective of whether such resignation is filed as a significant event, the motive for the
same must be explained in the Annual Corporate Governance Report.
See section:
B.1.5
Comply
70
35.
The company's compensation policy, as approved by its Board of Directors, should specify
at least the following points:
a)
The amount of the fixed components, itemized where necessary, of Board and
Board Committee attendance fees, with an estimate of the fixed annual payment
they give rise to;
b)
Variable components, in particular:
i) The types of directors they apply to, with an explanation of the relative weight of
variable to fixed compensation items;
ii) Performance evaluation criteria used to calculate entitlement to the award of
shares or share options or any performance-related compensation;
iii) The main parameters and grounds for any system of annual bonuses or other,
non cash benefits; and
iv) An estimate of the sum total of variable payments arising from the compensation
policy proposed, as a function of degree of compliance with pre-set targets or
benchmarks.
c)
The main characteristics of pension systems (for example, supplementary pensions,
life insurance and similar arrangements), with an estimate of their amount or annual
equivalent cost.
d)
The conditions to apply to the contracts of executive directors exercising senior
management functions. Among them:
i)
Duration;
ii) Notice periods; and
iii) Any other clauses covering hiring bonuses, as well as indemnities or
‘golden parachutes’ in the event of early termination of the contractual
relation between company and executive director.
See section:
B.1.15
Comply
71
36.
Compensation comprising the delivery of shares in the company or other companies in the
group, share options or other share-based instruments, payments linked to the company’s
performance or membership of pension schemes should be confined to executive directors.
The delivery of shares is excluded from this limitation when directors are obliged to retain
them until the end of their tenure.
See sections:
A.3, B.1.3
Comply
37.
External directors' compensation should sufficiently compensate them for the dedication,
abilities and responsibilities that the post entails, but should not be so high as to
compromise their independence.
Comply
38.
In the case of compensation linked to company earnings, deductions should be computed
for any qualifications stated in the external auditor’s report.
Comply
39.
In the case of variable awards, compensation policies should include technical safeguards to
ensure they reflect the professional performance of the beneficiaries and not simply the
general progress of the markets or the company’s sector, atypical or exceptional
transactions or circumstances of this kind.
Comply
40.
The Board should submit a report on the directors’ compensation policy to the advisory
vote of the General Shareholders’ Meeting, as a separate point on the agenda. This report
can be supplied to shareholders separately or in the manner each company sees fit.
The report will focus on the compensation policy the Board has approved for the current
year with reference, as the case may be, to the policy planned for future years. It will
address all the points referred to in Recommendation 34, except those potentially entailing
the disclosure of commercially sensitive information. It will emphasize the most significant
changes to those policies compared with the policy referring to the General Meeting
applied last year. It will also include an overall summary of how the compensation policy
was applied last year.
72
The role of the Compensation Committee in designing the policy should be reported to the
Meeting, along with the identity of any external advisors engaged.
See section:
B.1.16
Comply
41.
The notes to the annual accounts should list individual directors’ compensation in the year,
including:
a) A breakdown of the compensation obtained by each company director, to include where
appropriate:
i) Participation and attendance fees and other fixed director payments;
ii)
Additional compensation for acting as chairman or member of a Board
Committee
iii)
Any payments made under profit-sharing or bonus schemes, and the reason for
their accrual;
iv)
Contributions on the director’s behalf to defined-contribution pension plans, or
any increase in the director’s vested rights in the case of contributions to
defined-benefit schemes;
v)
Any severance packages agreed or paid;
vi)
Any compensation they receive as directors of other companies in the group;
vii)
The compensation executive directors receive in respect of their senior
management posts;
viii) Any kind of compensation other than those listed above, of whatever nature and
provenance within the group, especially when it may be accounted as a relatedparty transaction or when its omission would detract from a true and fair view
of the total compensation received by the director.
73
b) An individual breakdown of deliveries to directors of shares, share options or other
share-based instruments, itemized by:
i) Number of shares or options awarded in the year, and the terms set for their
execution;
ii) Number of options exercised in the year, specifying the number of shares
involved and the exercise price;
iii) Number of options outstanding at the annual close, specifying their price, date and
other exercise conditions;
iv) Any change over the year in the exercise terms of previously-awarded options.
c) Information on the relation in the year between the compensation obtained by executive
directors and the company’s profits, or some other measure of enterprise results.
Comply
42.
When the company has a Delegate Committee, the breakdown of its members by director
category should be similar to that of the Board itself. The Secretary of the Board should
also act as secretary to the Delegate Committee.
See sections:
B.2.1 and B.2.6
Not applicable
43.
The Board should be kept fully informed of the business transacted and decisions made by
the Delegate Committee. To this end, all Board members should receive a copy of the
Committee’s minutes.
Not applicable
44.
In addition to the Audit Committee mandatory under the Securities Market Law, the Board
of Directors should form a committee, or two separate committees, of Nomination and
Compensation.
74
The rules governing the make-up and operation of the Audit Committee and the
committee or committees of Nomination and Compensation should be set forth in the
Board regulations, and include the following:
a)
The Board of Directors should appoint the members of such committees with regard
to the knowledge, aptitudes and experience of its directors and the terms of
reference of each committee; discuss their proposals and reports; and be responsible
for overseeing and evaluating their work, which should be reported to the first Board
plenary following each meeting;
b) These committees should be formed exclusively of external directors and have a
minimum of three members. Executive directors or senior officers may also attend
meetings, for information purposes, at the Committees’ invitation.
c) Committees should be chaired by an independent director.
d) They may engage external advisors, when they feel this is necessary for the discharge of
their duties.
e) Meeting proceedings should be minuted and a copy sent to all Board members.
See sections:
B.2.1 and B.2.3
Comply
The Company complies with the sections regarding the Recommendation, except for those included under
paragraphs b) and c)
With respect to paragraph b) an Executive Director forms part of the Nominations and Compensation
Committee. This Director does not receive any compensation whatsoever for his executive duties.
With respect to paragraph c) this Committee is led by and Executive Director who, as was explained above,
does not receive compensation for the executive duties carried out.
75
45.
The job of supervising compliance with internal codes of conduct and corporate
governance rules should be entrusted to the Audit Committee, the Nomination Committee
or, as the case may be, separate Compliance or Corporate Governance committees.
Comply
46.
All members of the Audit Committee, particularly its chairman, should be appointed with
regard to their knowledge and background in accounting, auditing and risk management
matters.
Comply
47.
Listed companies should have an internal audit function, under the supervision of the Audit
Committee, to ensure the proper operation of internal reporting and control systems.
Comply
48.
The head of internal audit should present an annual work program to the Audit
Committee; report to it directly on any incidents arising during its implementation; and
submit an activities report at the end of each year.
Comply
49.
Control and risk management policy should specify at least:
a)
The different types of risk (operational, technological, financial, legal, reputational…)
the company is exposed to, with the inclusion under financial or economic risks of
contingent liabilities and other off-balance-sheet risks;
b)
The determination of the risk level the company sees as acceptable;
c)
Measures in place to mitigate the impact of risk events should they occur;
d)
The internal reporting and control systems to be used to control and manage the
above risks, including contingent liabilities and off-balance-sheet risks.
See section: D
Comply
76
50.
The Audit Committee’s role should be:
1. With respect to internal control and reporting systems:
a)
Monitor the preparation and the integrity of the financial information prepared on
the company and, where appropriate, the group, checking for compliance with legal
provisions, the accurate demarcation of the consolidation perimeter, and the correct
application of accounting principles.
b)
Review internal control and risk management systems on a regular basis, so main
risks are properly identified, managed and disclosed.
c)
Monitor the independence and efficacy of the internal audit function; propose the
selection, appointment, reappointment and removal of the head of internal audit;
propose the department’s budget; receive regular report-backs on its activities; and
verify that senior management are acting on the findings and recommendations of its
reports.
d)
Establish and supervise a mechanism whereby staff can report confidentially and, if
necessary, anonymously, any irregularities they detect in the course of their duties, in
particular financial or accounting irregularities, with potentially serious implications
for the firm.
2. With respect to the external auditor:
a)
Make recommendations to the Board for the selection, appointment, reappointment
and removal of the external auditor, and the terms and conditions of the
engagement.
b)
Receive regular information from the external auditor on the progress and findings of
the audit program, and check that senior management are acting on its
recommendations.
c)
Monitor the independence of the external auditor, to which end:
i) The company should notify any change of auditor to the CNMV as a significant
event, accompanied by a statement of any disagreements arising with the
outgoing auditor and the reasons for the same.
77
ii)
iii) The company should ensure that the company and the auditor respect rules in
force regarding the rendering of services other than audit services, business
concentration limits affecting the auditor and, in general, all of the rules
established to ensure the independence of auditors;
iii) The Committee should investigate the issues giving rise to the resignation of any
external auditor.
d)
In the case of groups, encourage the Group’s auditors to audit the group companies
See sections:
B.1.35, B.2.2, B.2.3 and D.3
Comply
51.
The Audit Committee should be empowered to meet with any company employee or
manager, even ordering their appearance without the presence of another senior officer.
Comply
52.
The Audit Committee should prepare information on the following points from
Recommendation 8 for input to Board decision-making:
a)
The financial information listed companies must periodically disclose. The Committee
should ensure that interim statements are drawn up under the same accounting
principles as the annual statements and, to this end, may ask the external auditor to
conduct a limited review.
b)
jurisdictions considered tax havens, and any other transactions or operations of a
comparable nature whose complexity might impair the transparency of the group.
c)
Related-party transactions, except where their scrutiny has been entrusted to some
other supervision and control committee.
See sections:
B.2.2 and B.2.3
Partial compliance
78
The Board Regulations do not expressly state that the Audit Committee must inform the Board
beforehand of any decisions taking regarding the issues indicated under paragraph b).
53.
The Board of Directors should seek to present the annual accounts to the General
Shareholders’ Meeting without reservations or qualifications in the audit report. Should
such reservations or qualifications exist, both the Chairman of the Audit Committee and
the auditors should give a clear account to shareholders of their scope and content.
See section:
B.1.38
Comply
54.
The majority of Nomination Committee members – or Nomination and Compensation
Committee members as the case may be – should be independent directors.
See section:
B.2.1
Comply
55.
The Nomination Committee should have the following functions in addition to those
stated in earlier recommendations:
a)
Evaluate the balance of skills, knowledge and experience on the Board, define the
roles and capabilities required of the candidates to fill each vacancy, and decide the
time and dedication necessary for them to properly perform their duties.
b)
Examine or organize, in appropriate form, the succession of the chairman and the
chief executive, making recommendations to the Board so the handover proceeds in
a planned and orderly manner.
c)
Report on the senior officer appointments and removals which the chief executive
proposes to the Board.
d)
Report to the Board on the gender diversity issues discussed in Recommendation 14
of this Code.
See section:
B.2.3
Partial compliance
79
The Nominations and Compensation Committee has not been formally given the authority listed under
paragraph b).
56.
The Nomination Committee should consult with the company’s Chairman and chief
executive, especially on matters relating to executive directors.
Any Board member may suggest directorship candidates to the Nomination Committee for
its consideration.
Comply
57.
The Compensation Committee should have the following functions in addition to those
a)
Make proposals to the Board of Directors regarding:
i) The compensation policy for directors and senior management;
ii) The individual compensation and other contractual conditions of executive
directors.
iii) The standard conditions for senior management employment contracts.
b)
Oversee compliance with the compensation policy set by the company.
See sections:
B.1.14, B.2.3
Comply
58.
The Compensation Committee should consult with the Chairman and chief executive,
especially on matters relating to executive directors and senior officers.
Comply
80
G OTHER INFORMATION OF INTEREST
If you consider there to be an important principle or aspects regarding the corporate governance
practices applied by your Company that have not been mentioned in this report, indicate them
below and explain their contents.
This section may be used to include any other information, clarification or qualification relating to
the previous sections of the report.
Specifically, state whether the company is subject to any laws other than the laws of Spain on
corporate governance and, if this is the case, include whatever information the Company may be
required to provide when different from the information included in this report.
Binding definition of independent director:
Indicate whether any of the independent directors have or have had any relationship with the
company, its significant shareholders or its executives, which, if sufficiently significant or
important, would have meant that the director could no longer be considered independent,
pursuant to the definition sat out in Section 5 of the Unified Good Governance Code:
NO
This annual report on corporate governance was approved by the Board of Directors of the
Company on 25/02/2010
Indicate whether any Directors have voted against or abstained in connection with the approval of
this Report.
NO
81
IBERPAPEL GESTIÓN, S.A. AND SUBSIDIARIES
Consolidated Annual Accounts and Directors’ Report
at 31 December 2009
Consolidated annual accounts and Directors’ Report for 2009
On 25 February 2010 and in accordance with the requirements of Article 171 of the Spanish
Companies Act and Article 37 of the Code of Commerce, the Board of Directors of Iberpapel
Gestión, S.A. prepares the consolidated annual accounts and directors’ report for the year ended 31
December 2009, consisting of the documents attached hereto, set out on official paper numbered
sequentially.
The Board of Directors
Signature
Mr. Iñigo Solaun Garteiz
Deceased
Ms. María Luisa Guibert Ucin
2
CONTENT PAGE OF THE CONSOLIDATED ANNUAL ACCOUNTS FOR IBERPAPEL
GESTION, S.A. AND SUBSIDIARIES AT 31 DECEMBER 2009
Note
Page
Consolidated balance sheet
5
Consolidated income statement
7
Overall statement of consolidated profits
8
Consolidated statement of changes in equity
9
Consolidated cash flow statement
11
Notes to the consolidated annual accounts
12
1.
General information
12
2.
Summary of the main accounting policies
13
2.1. Basis of presentation
13
2.2. Consolidation principles
14
2.3. Segment reporting
15
15
2.5. Property, plant and equipment
16
2.6. Biological assets
17
2.7. Intangible assets
19
2.8. Interest costs
21
2.9. Losses due to impairment of non-financial assets
21
2.10. Financial assets
21
2.11. Compensation for financial instruments
23
2.12. Financial asset impairment losses
23
2.13. Inventories
25
2.14. Trade receivables
25
2.15. Cash and cash equivalents
25
2.16. Share capital
26
2.17. Government grants
26
2.18. Trade payables
26
2.19. Borrowings
27
2.20. Current and deferred taxes
27
2.21. Employee benefits
28
2.22. Provisions
29
29
2.24. Non-current assets (or disposal groups) held for sale
30
2.25. Dividend payment
31
2.26. Leases
31
2.27. New standards (IFRS /IAS) and interpretations (IFRIC)
31
3
CONTENT PAGE OF THE CONSOLIDATED ANNUAL ACCOUNTS FOR IBERPAPEL
GESTION, S.A. AND SUBSIDIARIES AT 31 DECEMBER 2009
3.
Financial risk and capital management
44
4.
Accounting estimates and judgments
49
5.
Segment reporting
50
6.
53
7.
Biological assets (Eucalyptus)
55
8.
Intangible assets
55
9.
Financial instruments
57
10.
59
11.
Inventories
61
12.
61
13.
Share capital
62
14.
Retained earnings and other reserves
64
15.
Cumulative translation difference
65
16.
Availability and restrictions on Reserves and Retained earnings and Other Reserves
66
17.
68
18.
Borrowings
69
19.
Deferred taxes
72
20.
Provisions and other liabilities
74
21.
Net turnover and other revenues
75
22.
Expenses by nature
75
23.
Employee benefit expenses
76
24.
Net financial costs
76
25.
Income tax
77
26.
Earnings per share
79
27.
Dividends per share
80
28.
Cash generated by operations Cash Flow
80
29.
Contingencies
80
30.
Related- party transactions
81
31.
Environment
84
32.
Other information
85
33.
Significant port-balance sheet events
85
Appendix I
86
Directors’ report
1
4
CONSOLIDATED ANNUAL ACCOUNTS OF IBERPAPEL GESTION, S.A. AND
SUBSIDIARIES AT 31 DECEMBER 2009 AND 2008
CONSOLIDATED BALANCE SHEET
(Thousand euro)
Year ended
at 31 December
Note
NON-CURRENT ASSETS
2009
2008
196,884
200,249
6
164,304
170,542
Biological assets
7
13,296
11,136
Intangible assets
8
5,705
4,484
Deferred tax assets
19
13,541
14,047
38
40
66,978
81,732
Financial accounts receivable
CURRENT ASSETS
Inventories
11
21,923
27,327
10
41,437
49,826
12
3,618
4,579
263,862
281,981
TOTAL ASSETS
The accompanying notes included in pages 12 to 87 are an integral part of these consolidated
annual accounts.
5
CONSOLIDATED ANNUAL ACCOUNTS OF IBERPAPEL GESTION, S.A.
AND SUBSIDIARIES AT 31 DECEMBER 2009 AND 2008
CONSOLIDATED BALANCE SHEET
(Thousand euro)
Year ended
at 31 December
Note
TOTAL EQUITY
2009
2008
172,853
166,530
Share capital
13
6,980
6,980
13
27,104
28,027
Treasury shares
13
(1,556)
(1,469)
15
(1,189)
(3,334)
14
142,437
136,326
Interim dividend
(923)
NON-CURRENT LIABILITIES
45,346
62,010
Borrowings
18
41,543
57,773
Deferred tax liabilities
19
3,743
4,147
Provisions for other liabilities and charges
20
60
90
45,663
53,441
CURRENT LIABILITIES
17
29,219
39,243
Current tax liabilities
17
2,187
1,793
Borrowings
18
10,668
8,563
Provisions for other liabilities and charges
20
3,589
3,842
91,009
115,451
263,862
281,981
TOTAL LIABILITIES
TOTAL EQUITY AND LIABILITIES
annual accounts.
6
CONSOLIDATED ANNUAL ACCOUNTS FOR IBERPAPEL GESTION, S.A.
AND SUBSIDIARIES AT 31 DECEMBER 2009 AND 2008
CONSOLIDATED INCOME STATEMENT
(Thousand euro)
Year ended
at 31 December
Note
2009
2008
Net revenues
21
180,760
182,859
Other revenues
21
7,782
8,115
Changes in inventories of finished goods and work in progress
22
(4,521)
1,732
Raw materials and consumption of materials utilized
22
(72,980)
(89,426)
Employee benefit expense
23
(17,302)
(17,301)
Depreciation/Amortization
22
(12,692)
(10,046)
Other net (expenses)/gains
22
(71,803)
(68,573)
9,244
7,360
(903)
(1,433)
8,341
5,927
(1,308)
1,549
7,033
7,476
7,033
7,476
7,033
7,476
Operating profit
Net financial costs
24
Profit before taxes
Income tax
25
Profit / (loss) after taxes on continuing activities
Discontinued operations
Profit after taxes on discontinued activities
PROFIT FOR YEAR
Profit attributable to:
Owners of the parent company
Minority interests
Earnings per share from continued and discontinued activities attributed to
the holders of equity instruments during the year (Expressed in euro per
share)
Basic
26
0.613
0.652
Diluted
26
0.613
0.652
annual accounts.
7
CONSOLIDATED ANNUAL ACCOUNTS FOR IBERPAPEL GESTION, S.A. AND
OVERALL STATEMENT OF CONSOLIDATED PROFITS
(Thousand euro)
Year ended
at 31 December
Note
Profit for the year
2009
2008
14
7,033
7,476
15
2,145
(1,594)
2,145
(1,594)
9,178
5,882
9,178
5,882
9,178
5,882
Other overall profits
Differences on exchange
Other overall profits net of taxes
Overall profit for the year
Attributable
Owners of the parent company
Minority interests
Overall profit for the year
annual accounts.
8
CONSOLIDATED ANNUAL ACCOUNTS FOR IBERPAPEL GESTION, S.A. AND SUBSIDIARIES AT 31
December 2008
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Thousand euro)
Attributable to the Company’s shareholders
Notes
Balance at 1 January 2008 Overall results
Profits for 2008
Share
capital
Share
premium
account
Treasury
shares
Cumulative
translation
difference
Retained
earnings
Total
equity
6,980
30,918
(823)
(1,740)
131,231
166,566
7,476
7,476
14
Other overall profits:
Conversion differences
15
(1,594)
Total overall results
(1,594)
(1,594)
7,476
5,882
Transactions with owners:
Treasury shares acquired
13
(646)
(646)
Dividend payment:
Results
27
Due to share premium account
13
Variation internal dividends
14
(2,315)
(2,891)
Total transactions with owners:
Balance at 31 December 2008
6,980
(2,315)
(2,891)
(2,891)
(646)
28,027
(1,469)
(3,334)
(66)
(66)
(2,381)
(5,918)
136,326
166,530
The accompanying notes included in pages 12 to 87 are an integral part of these consolidated annual accounts.
9
CONSOLIDATED ANNUAL ACCOUNTS FOR IBERPAPEL GESTION, S.A. AND SUBSIDIARIES AT 31
DECEMBER 2009
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Thousand euro)
Attributable to the Company’s shareholders
Notes
Balance at 1 January 2009 Overall results
Profits for 2009
Share
capital
Share
premium
account
Treasury
shares
Cumulative
translation
difference
Retained
earnings
6,980
28,027
(1,469)
(3,334)
136,326
166,530
7,033
7,033
14
Interim
dividend
Total
equity
Other overall profits:
Conversion differences
15
2,145
Total overall results
2,145
2,145
7,033
9,178
Transactions with owners:
13
(87)
(87)
Dividend payment:
Results
27
Due to share premium account
13
(922)
(923)
Total transactions with owners:
(923)
6,980
(1,845)
(923)
(923)
(87)
27,104
(1,556)
(1,189)
(922)
(923)
(2,855)
142,437
(923)
172,853
The accompanying notes included in pages 12 to 87 are an integral part of these consolidated annual accounts.
10
CONSOLIDATED ANNUAL ACCOUNTS OF IBERPAPEL GESTION, S.A. AND
CONSOLIDATED STATEMENT OF CASH FLOWS (Thousand euro)
Year ended
31 December
Notes
CASH FLOWS FROM OPERATING ACTIVITIES
2009
2008
22,020
12,973
Cash generated from operations
28
23,191
16,307
Interest paid
24
(862)
(1,569)
(309)
(1,765)
(6,430)
(23,386)
(6,411)
(23,383)
(19)
(3)
(16,432)
3,046
Taxes paid
CASH FLOWS FROM INVESTMENT ACTIVITIES
Acquisition of property, plant and equipment and biological assets
Acquisition of intangible assets
6 and 7
8
CASH FLOWS FROM FINANCE ACTIVITIES
Acquisition of Treasury shares
13
(87)
(646)
Income from borrowings
18
(13,577)
8,898
Dividends paid to the Company’s shareholders
27
(1,845)
(2,315)
Return of Share premium account
13
(923)
(2,891)
(842)
(7,367)
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS
Cash and bank overdrafts at beginning of the year
12
4,579
12,066
Exchange gains /(losses) on cash and bank overdrafts
24
(119)
(120)
CASH AND BANK OVERDRAFTS AT THE YEAR END
12
3,618
4,579
The accompanying notes included on pages 12 to 87 form an integral part of these consolidated
annual accounts.
11
CONSOLIDATED ANNUAL ACCOUNTS FOR IBERPAPEL GESTION, S.A. AND
SUBSIDIARIES AT 31 DECEMBER 2009
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS
(Thousand euro)
1.
General information
At the 2009 year end IBERPAPEL GESTION, S.A. (hereinafter the Group) forms a group
(hereinafter the Group) made up of 16 companies: IBERPAPEL GESTION, S.A., the parent
company, and 15 subsidiaries. Appendix 1 to these notes contains additional information
concerning the entities included in the consolidation using the full consolidation method. All
parent company shares are listed on the Madrid and Bilbao stock exchanges.
The Group has a single manufacturing plant in Hernani and it sells mainly in Europe, and its main
activity is the manufacture and marketing of writing and printing paper.
For the purposes of preparing the consolidated annual accounts, a group is understood to exist
when the parent company has one or more subsidiaries, understood as those entities which the
parent company controls directly or indirectly. The principles applied in the preparation of the
Group’s consolidated annual accounts together with the consolidation scope.
IBERPAPEL GESTION, S.A., the Group’s parent company, was set up in Madrid on 21 July 1997 as
a public limited company. It is entered in the Mercantile Register of Guipúzcoa, page SS-19511,
sheet 43 of volume 1910, book 0, section 8 of the Companies Book. The latest amendment of the
Articles of Association in order to comply with the first final provision of Law 19/2005 of 14
November 2005 on European Public Limited Companies, domiciled in Spain, was approved by the
General Shareholders’ Meeting of 26 June 2006. The General Shareholders’ Meeting similarly
approved the amendment of Article 5 relating to Share Capital. This resulted in entry 16 in the
Mercantile Register of Guipúzcoa.
The registered office of IBERPAPEL GESTION, S.A. is located at Avenida de Sancho el Sabio, Nº
2-1º, San Sebastian.
12
The Company’s corporate purposes are described in Article 2 of its Articles of Association and
consist of:
i) Sales operations of all kinds, on behalf of and representing itself or third parties, relating
to any goods or objects.
ii) Possession and exploitation of any municipal, rural, agricultural, forestry and industrial
property.
iii) Subscription, derivative acquisition, holding, use, administration, purchase or sale of
securities and shares, except activities regulated by Law 46/84 or by specific legislation.
These consolidated annual accounts were prepared by the Board of Directors on 25 February
2010. They will be submitted to the General Shareholders’ Meeting within the established time
periods. The Parent Company’s directors consider that they will be approved without significant
changes.
2.
Summary of the main accounting policies
The main accounting policies adopted in the preparation of these consolidated annual accounts
are described below. These policies have been applied uniformly to all years presented unless
otherwise stated.
2.1.
The Group’s consolidated annual accounts at 31 December 2009 have been prepared in
accordance with International Financial Reporting Standards (IFRS) adopted for use in the
European Union and approved by the European Commission Regulations and effective at 31
December 2009, and the IFRIC interpretations and the commercial legislation applicable to
companies that prepare information in accordance with IFRS-EU.
The consolidated annual accounts have been prepared on a cost basis, although modified by the
measurement under IAS 41 of forestry assets.
13
The preparation of consolidated annual accounts under IFRS requires the use of certain critical
accounting estimates. The use of IFRS also requires that Management exercise judgment in the
process of applying the Company’s accounting policies. Note 4 discloses the areas that require a
higher level of judgment or entail greater complexity or the areas where assumptions and
estimates are significant for the consolidated annual accounts.
2.2.
Consolidation principles
Subsidiaries are all those companies where the Group is able to manage the financial and
operating policies which is generally accompanied by a shareholding involving more than half of
the voting rights. When assessing whether the Group controls another company, the existence
and effects of potential voting rights which may be currently exercised or converted are taken
into account. Subsidiaries are consolidated as from the date on which control is transferred to the
Group and are excluded from the consolidation on the date on which such control ceases.
The Group accounts for the acquisition of subsidiaries under the purchase method. Acquisition
cost is the fair value of the asset delivered, the equity instruments issued and the liabilities
incurred or assumed at the date of exchange, plus the costs directly attributable to the
acquisition. The identifiable assets acquired and identifiable contingencies assumed in a business
combination are initially measured at fair value on the acquisition date, irrespective of minority
interests. The excess of acquisition cost over the fair value of the Group’s interest in identifiable
net assets acquired is recognized as goodwill. If the acquisition cost is less than the fair value of
net assets in the subsidiary acquired, the difference is recognized directly in the income statement.
Intercompany transactions, balances and unrealized gains on transactions between Group
companies are eliminated. Unrealized losses are also eliminated unless the transaction provides
evidence of impairment losses on the asset transferred. When necessary to ensure consistency
with Group policies, subsidiaries’ accounting policies are changed accordingly.
Appendix 1 hereto set outs the identification details of the 15 subsidiaries included in
consolidation under the full consolidation method.
the
14
2.3.
Segment reporting
Reporting segments are presented in coherence with the internal information provided to the
maximum decision taking body. The maximum decision taking body that is responsible for
assigning resources to operating segments and to evaluate their performance is the Board of
Directors.
2.4.
Foreign currency transactions
a)
Functional and presentation currency
The items included in the annual accounts of each of the Group companies are measured using
the currency of the principal economic environment in which the company operates («functional
currency»). The consolidated annual accounts are presented in thousands of euro, which is the
Group’s functional and presentation currency.
b)
Transactions and balances
Transactions in foreign currency are translated to the functional currency using the exchange
rates in force at the transaction dates. Foreign exchange gains and losses resulting from the
settlement of these transactions and translation at the year- end exchange rates of monetary
assets and liabilities denominated foreign currency are recognized in the income statement.
Exchange differences on non-monetary assets and liabilities are recognized in the income
statement as part of the gain or loss on fair value.
c)
Group companies
Results and the financial situation of all Group companies (none of which has the currency of a
hyperinflationary economy), with a functional currency that differs from the presentation currency
are translated to the presentation currency as follows:
i) The assets and liabilities on each balance sheet presented are translated at the closing
exchange rate at the balance sheet date ;
15
ii) The income and expenses in each income statement are translated at the average
exchange rates, unless this average is not a reasonable approximation of the cumulative
effect of the rates existing at the transaction dates, in which case income and expenses
are translated at the rates on the transaction dates; and
iii) All resulting exchange differences are recognized as a separate component of equity.
On consolidation, any exchange differences resulting from the translation of a net investment in
foreign companies and loans and other instruments in foreign currency designated as hedges of
those investments are taken to equity. When sold, such exchange differences are recognized in
the income statement as part of the profit or loss on the sale.
2.5.
Property, plant and equipment are recognized at cost less depreciation and cumulative impairment
losses, except for land which is presented net of impairment losses.
Cost includes the expenses directly attributable to purchases of property, plant and equipment.
Subsequent costs are included in the carrying value of the asset or recognized as a separate asset
only when it is probable that the future economic benefits associated with the asset are to flow to
the Group and the cost of the asset may be reliably determined. Other repair and maintenance
expenses are charged in the income statement in the year in which they are incurred.
No depreciation is charged on land. Depreciation of other assets is calculated using the straightline method over the following estimated useful lives:
Estimated years of useful life
Buildings
33 years
Plant
3-10-20 years
Machinery and tooling
5-10-20 years
Furnishings
Vehicles
10 years
4 years
10 years
16
The residual value and useful lifes of assets are reviewed, if necessary, at each balance sheet date.
When an asset’s carrying value exceeds its estimated recoverable value, carrying value is reduced
immediately to the recoverable amount .
Gains and losses on the sale of property, plant and equipment are calculated by comparing the
revenue obtained with the carrying value and are included in the income statement.
2.6.
Biological assets
On each balance sheet date the Group initially recognizes biological assets at fair value less
estimated costs at the point of sale.
Gains or losses on the initial recognition of a biological asset at fair value less estimated costs at
the point of sale and those resulting from all successive changes in fair value less estimated costs
at the point of sale are included in the net profit or loss for the year.
Government grants associated with a biological asset are recognized when and only when they
are payable.
a)
Calculation of inventories
The Group carries out a count of its biological assets every two years, grouping them together
on the basis of their physical and geographical characteristics.
i) It considers that the basic unit for grouping the biological assets is the “batch”,
understood as the set of biological assets associated with a specific plot of land and with
common physical characteristics.
ii) As the main physical characteristics when defining batches, the Group takes into account
the species of the biological assets and its level of maturity, since these parameters are the
basic determinants of value.
17
b)
Basic characteristics of batches
For each batch of biological assets, geographical location is indicated together with common
physical properties. The main characteristics are:
i) Species: The species of the biological asset identifies the families of a group of biological
assets (trees).
ii) Quality: Characteristic that identifies the different qualities of each species (seed, clone).
iii) Average annual increase (AAI): Value that establishes the annual growth of biological
assets for the year, based on measurements by technical personnel and statistical data.
iv) Level of maturity: Code that identifies the degree of the assets’ biological
transformation:
Immature: Those assets that have not reached conditions for harvesting or the biological
transformation of which has been insignificant.
Maturity: Those assets which are in condition for harvesting or which are able to
support regular production or harvesting.
Agricultural products: Agricultural products result from the processing or harvesting of
mature biological assets.
c)
Measurement of Biological Asset batches
Once the qualitative and quantitative characteristics of each batch have been ascertained, fair
value is determined less estimated costs at point of sale of the same.
Fair value is defined as the amount at which an asset may be exchanged between knowledgeable
willing parties carrying out an arm’s length transaction.
18
Costs at point of sale include commissions to intermediaries and sales staff, charges that relate to
regulatory agencies and stock exchanges or organized commodity markets and taxes and charges
on transfers. Costs at point of sale do not include transport and other necessary costs to take
the assets to market.
In order to determine fair value and costs at point of sale of the biological assets identified, the
quoted prices of standing timber on the most significant active markets have been used as a basis,
as appropriate. When active markets are not significant or when there are no active markets for
the biological markets identified, the following have been used:
i) the most recent transaction price on the market, assuming that there have been no
major changes in the economic circumstances between the transaction and balance
sheet dates;
ii) the market prices of similar assets, as adjusted to reflect existing differences; and
iii) sector references.
When the biological transformation since the initial costs were incurred has been limited or the
impact on the price of the biological transformation is not expected to be significant, the costs
incurred have been considered a valid approximation of fair value.
2.7.
Intangible assets
a)
Computer programs
Software licenses acquired are capitalized on the basis of the costs incurred in their acquisition
and preparation for the use of the specific program. These costs are amortized over the assets’
estimated useful lives (4 years).
19
Expenses relating to software development or maintenance are recognised when incurred. Costs
directly related to the production of single identifiable computer programs controlled by the
Group and which will probably generate economic benefits in excess of costs for more than one
year are recognised under intangible assets. Direct costs include the software development
employee costs and an appropriate portion of relevant overheads.
b)
Research and development costs
Research expenses are recognised as an expense when incurred. The costs incurred in
development projects (associated with the design and testing of new products or upgrades) are
recognised as an intangible asset when the project will probably be successful, taking into account
its technical and commercial feasibility and provided that the costs involved may be reliably
estimated. Other development expenses are recognised as an expense when incurred.
Development costs previously recognised as an expense are not recognised as an asset in
subsequent years. Capitalised development costs with a finite useful life are amortised from the
start-up of the product’s commercial production on a straight-line basis over the period in which
profits are expected to be generated but in no event over more than five years.
c)
CO2 Emission rights
CO2 emission rights are carried at fair value at the beginning of the year by credit to deferred
income since the authorities’ transfer of these rights constitutes a grant. Since the assets involved
are quoted on a regulated market, the fair value agrees with the quoted value of these rights at
that date.
“Other operating expenses” in the income statement record the expense pertaining to total
emissions arising in the year, by credit to provisions for short-term liabilities and charges under
liabilities on the balance sheet.
This provision will continue to be recorded under the obligation is settled through the delivery of
the rights to the Administration by 30 April of the following year.
Additionally, deferred income will be adjusted as and when the aforementioned expenses are
accounted for.
20
2.8.
Interest costs
The Group capitalizes borrowing costs that are directly attributable to the acquisition,
construction or production of qualifying assets.
2.9.
Impairment losses on non-financial assets
Intangible assets with indefinite useful lives are not subject to amortization and are tested annually
for impairment losses. Other non-financial assets are tested for impairment provided that some
event or change in circumstances indicates that carrying value may not be recoverable. An
impairment loss is recognized for the amount in excess of the recoverable book value. The
recoverable amount is the higher of fair value of an asset less selling costs and value in use. For
the purposes of determining impairment, the assets are grouped at the lowest level at which cash
flows may be independently identified (cash generating units). Non-financial assets, other than
goodwill, which are impaired are reviewed at the balance sheet date for reversal of the loss.
2.10.
Financial assets
2.10.1. Classification
The Group classifies its financial assets into the following categories: loans and receivables,
available-for-sale assets. The classification depends on the purpose for which the financial assets
were acquired. Management determines the classification of financial assets at the time of initial
recognition.
a)
Financial assets at fair value through profit or loss
Financial assets at fair value through changes in profit or loss are financial assets held for trading.
21
A financial asset is classified under this category if it is mainly acquired for sale in the short term
or if it is thus designated by management. Derivatives are also classified as acquired for trading
unless they are designated as hedges. Assets in this category are classified as current assets.
b)
Loans and other receivables and accounts receivable are non-derivative financial assets involving
fixed or determinable payments, which are not listed on an active market. They arise when the
Group supplies money, goods or services directly to a debtor and does not intend to trade with
the account receivable. They are included in current assets, except for maturities greater than 12
months after the balance sheet date. These are classified as non-current assets. Group loans and
receivables consist of the headings "Trade and other receivables" and "Cash and cash equivalents".
c)
Available-for-sale financial assets
Available-for-sale financial assets are not derivatives. They are financial assets designated under
this category or not classified in other categories. They are included in non-current assets unless
management intends to sell the investment within 12 months of the balance sheet date.
2.10.2. Recognition and measurement
Acquisitions and disposals of investments are recognized at the trading date, i.e., on the date the
Group undertakes to acquire or sell the asset. Investments are recognized initially at fair value
plus the transaction costs for all financial assets not carried at fair value through profit or loss
Investments are written off when the rights to receive cash flows from them have expired or have
been transferred and the Group has transferred substantially all the risks and advantages deriving
from ownership. Available-for-sale financial assets and financial assets at fair value through profit
or loss are subsequently accounted for at fair value. Loans and accounts receivable and
investments which it is intended to hold to maturity are accounted for at amortized cost under
the effective interest rate method.
22
2.11.
Compensation for financial instruments
Financial assets and liabilities are offset and are presented net in the balance sheet, when there is a
legal right to offset the amounts recognized, and the Group has the intention of settling for the
net amount of to simultaneously realize the asset and cancel the liability.
2.12.
Losses due to the impairment of financial assets.
a) Assets at amortized cost.
At the balance sheet date, the Group assesses whether there is objective evidence of impairment
losses with respect to a financial asset or group of financial assets. A financial asset or a group of
financial assets is impaired, and an impairment loss is recognized, when and only when there is
objective evidence of the impairment as a result of one or more events that took place after the
asset was initially recognized (and event that causes the loss) and that causing event or events has
an impact on the future estimated cash flows from the financial asset or group of financial assets
and it can be reliably estimated.
The Group's policies for determining whether or not there is objective evidence of an impairment
loss include:
(a) Significant financial difficulties affecting the issuer or the obligated party.
(b) Failure to comply with contractual clauses, such as failures to make, or delays in, payment of
interest or principal.
(c) For financial or legal reasons relating to financial difficulties faced by the borrower, the Group
grants the borrower concessions or advantages that under other circumstances would not
have been the case.
(d) It is progressively more likely that the borrower will enter into bankruptcy or any other kind
of financial reorganization.
(e) The disappearance of an active market for the financial asset in question, due to financial
difficulties, or
(f) Observable data indicate that there has been a measurable decrease in the estimated future
cash flows for a group of financial assets since their initial recognition, although the decrease
cannot be identified with respect to the Group's individual financial assets, including:
23
i) Adverse changes in the payment conditions for Group borrowers, or
ii) Local or national financial conditions are related to defaults involving the group's assets.
The Group first evaluates whether or not there is objective evidence of impairment.
The loss is calculated as the difference between the carrying value of the asset and the present
value of estimated future cash flows (excluding future credit losses that have not been incurred)
discounted at the asset's original effective interest rate. The asset's carrying value is reduced and
the amount of the loss is recognized in the income statement. If a loan or investment held to
maturity bears a variable interest rate, the discount rate applied to calculate the impairment loss
is the current effective interest rate stipulated in thge contract. For practical purposes, the Group
calculates impairment based on the fair value of the instrument using an observable market price.
If in a subsequent period the amount of the impairment decreases and the decrease may be
objectively attributed to an event taking place after the impairment has been recognized (such as
an improvement in the borrower's credit rating), the reversal of the previously recognized
impairment will be recorded in the consolidated income statement.
b) Assets classified as held for sale
At the end of each accounting period the Group determines whether or not there is any
objective evidence that a financial asset or group of financial assets has become impaired. For debt
instruments the Group uses policy (a) described above. In the case of investments in equity
instruments classified as held for sale, a significant or prolonged decline in the fair value of the
instrument below cost is considered to be evidence of the impairment of the asset. If there is any
evidence of this type for financial assets held for sale, the cumulative loss determined as the
difference between the acquisition cost and current fair value, less any impairment loss in that
financial asset previously recognized in results is eliminated from equity and recognized in the
separate consolidated income statement. Impairment losses on equity instruments recognized in
the separate consolidated income statement no not reverse in the separate consolidated income
statement. If in a subsequent period the fair value of a debt instrument classified as held for sale
increases and the increase may be objectively attributed to an event taking place after the
impairment loss was recognized in the income statement, the impairment loss will reverse in the
separate consolidated income statement.
24
Evidence of the impairment of receivables is described in Note 2.14.
2.13.
Inventories
Inventories are measured at the lower of cost and net realizable value. Cost is determined using
the average weighted cost method. The cost of finished products and work in progress includes
raw material costs, direct labor costs, other direct costs and manufacturing overheads (based on
normal operating capacity). However, it does not include interest costs. The net realizable value is
the estimated selling price in the ordinary course of business, less applicable variable cost of sales.
2.14. Trade receivables
Trade receivables are amounts owed by customers for the sale or goods or services rendered
during the normal course of business. If the amount is expected to be collected within one year
or less (or in the normal operating cycle if longer), they are classified under current assets. If this
is not the case they are presented as non-current assets.
Trade accounts receivable are initially recognized at fair value and subsequently at amortized cost
in accordance with the effective interest rate method, less the provision for impairment losses.
2.15.
Cash and cash equivalents include cash, demand deposits at credit institutions, other short-term
highly liquid investments with an original maturity of three months or less and bank overdrafts. In
the balance sheet, bank overdrafts are classified as borrowings under current liabilities.
25
2.16.
Share capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are presented in
equity as a deduction, net of taxes, from the revenue obtained.
When a Group company acquires Company shares (treasury shares), the consideration paid,
including any directly attributable incremental cost (net of income tax) is deducted from equity
attributable to the Company’s shareholders through to redemption, reissue or disposal. When
these shares are sold or subsequently reissued, any amount received, net of any incremental cost
on the transaction which is directly attributable and the corresponding income tax effects, is
included in equity attributable to the Company’s shareholder.
2.17.
Government grants
Government grants are recognized at fair value when there is reasonable assurance that the grant
will be collected and the Group will comply with all established terms and conditions.
Government grants related to costs are deferred and recognized in the income statement over
the necessary period to match them to the costs which it is intended to cover.
Government grants for the acquisition of property, plant and equipment are included in noncurrent liabilities as deferred government grants and credited to the income statement on a
straight-line basis over the expected lives of the corresponding assets.
2.18.
Trade payables
Trade payables are payment obligations for goods or services received from suppliers during the
normal course of business. Payables are classified as a current liability of the payments fall due in
one year or less (or fall due during the normal operating cycle if longer). If this is not the case
they are presented as non-current liabilities.
26
Trade payables are initially recognized at fair value and subsequently are measured at their
amortized cost using the effective interest rate method.
2.19.
Borrowings
Borrowings are recognized initially at fair value, net of the costs incurred in the transaction.
Borrowings are subsequently measured at amortized cost. Any differences between the funds
obtained (net of the necessary costs incurred in their obtainment) and repayment value are
recognized in the income statement over the life of the debt in accordance with the effective
interest rate method.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer
settlement for at least 12 months as from the balance sheet date.
2.20.
Current and deferred taxes
Tax expense for the year includes current and deferred taxes. The tax is recognized in the
income statement, except to the extent that it relates to items recognized directly under
equity. In this case, the tax is also recognized under equity.
Current tax expense is calculated based on tax laws that have been approved or are about to be
approved at the balance sheet date in the countries in which its subsidiaries and associates
operate and which generate profits subject to taxation. Management regularly evaluates the
positions taken with respect to tax returns concerning situations in which tax law is subject to
interpretation and creating, if appropriate, all necessary provisions based on the amounts that are
expected to be paid to the tax authorities.
Deferred taxes are recognized in accordance with the liability method on the temporary
differences between the tax bases of assets and liabilities and their carrying values in the
consolidated annual accounts. However, if the deferred taxes arise from the initial recognition of
a liability or an asset on a transaction other than a business combination that at the time of the
transaction has no effect on the tax gain or loss, they are not accounted for. The deferred tax is
determined using tax rates (and laws) approved or about to be approved at the balance sheet
date and which are expected to be applied when the corresponding deferred tax asset is realized
or the deferred tax liability is settled.
27
Deferred tax assets are recognised insofar as future tax profits will probably arise against which to
offset the temporary differences.
Deferred taxes on temporary differences arising on investments in subsidiaries and associates are
recognized, except where the Group may control the date on which the temporary differences
reverse and such temporary differences are unlikely to reverse in the foreseeable future.
Deferred tax assets are recognized insofar as future tax profits will probably arise against which
to offset the temporary differences.
Deferred taxes on temporary differences arising on investments in subsidiaries and associates are
recognized, except where the Group may control the date on which the temporary differences
reverse and such temporary differences are unlikely to reverse in the foreseeable future.
Deferred tax assets and liabilities are offset if, and only if, there is a legally recognized right to
offset current tax assets against current tax liabilities and when the deferred tax assets and
liabilities derive from income tax payable to the same tax authority, payable by the same company
or taxpayer, or different companies or taxpayers that wish to settle current tax assets and
liabilities at their net amount.
2.21.
a)
Employee benefits
Severance indemnities are paid to employees as a result of the Group’s decision to
terminate employment contracts before the normal retirement age or when employees
voluntarily agree to resign in return for such benefits. The Group recognizes these benefits
when it has demonstrably undertaken to terminate current employees’ employment in
accordance with a formal detailed plan that cannot be withdrawn, or to provide severance
indemnities as a result of an offer made to encourage voluntary redundancy. Benefits that
will not be paid within 12 months of the balance sheet date are discounted to their present
value.
28
b)
Pension commitments
The Company is a member of the retirement organization "Geroa", in accordance with the
Collective Wage Agreement for Pulp, Paper and Cardboard Manufacturers in Guipuzcoa
and defined contributions must be made through regular payments.
2.22.
Provisions
Provisions for environmental restoration, restructuring and litigations are recognized when:
i) The Group has a present obligation, legal or implicit, as a result of past events;
ii) It is more probable than not that an outflow of funds will be required to settle the
obligation.
iii) The amount may be reliably estimated.
When there is a number of similar obligations, the probable need for an outflow to settle them is
determined taking into account the type of obligations as a whole. A provision is recognized even
if the probability of an outflow with respect to any item included in the same class of obligations
may be regarded as remote.
Provisions are stated at the actual value of the payments that are expected to be necessary to
settle the obligation using a before tax rate that reflects current market evaluations of the
temporary value of money and the specific risks affecting the obligation. Any increase in the
provision due to the passing of time is recognized as an interest expense.
2.23.
Revenue recognition
Ordinary revenues include the fair value of compensation received or to be received for the sale
of assets and services during the Group's ordinary course of business. Ordinary revenues are
stated net of value added tax, returns, discounts and rebates, and after eliminating intra-group
sales.
29
The Group recognizes revenues when the amount concerned may be reliably measured, it is likely
that future profits will flow to the company and the specific conditions for each of the Group's
activities is met, as is described below. Revenues are not considered to be reliable until all
contingencies relating to a sale have been resolved. The Group bases its estimates on past results,
taking into account the type of client, the type of transaction and the specific terms of each
agreement.
a)
Sales of paper, wood and electricity
Sales of assets are recognized when a Group company has delivered the products to the
customer, the customer has accepted the products and the collectability of the relevant accounts
receivable is reasonably assured.
b)
Sales of services
Sales of services are recognized in the accounting period in which the services are provided by
reference to the completion of the specific transaction, assessed based on the actual service
provided as a percentage of the total service to be provided.
c)
Interest income
Interest income is recognized using the effective interest method. When there is an impairment
loss in respect of an account receivable, the Group reduces the carrying value to the recoverable
amount, discounting estimated future cash flows at the original effective interest rate of the
instrument and continues to carry the discount as a decrease in interest revenue. Interest
revenue on loans in respect of which there are impairment losses is recognized when the cash is
collected or on the basis of the recovery of cost when conditions are guaranteed.
2.24.
Non-current assets (or disposal groups) held for sale
Non-current assets (or disposal groups) are classified as assets held for sale and are recognized at
the lower of carrying value and fair value less selling costs, if the carrying value is mainly
recovered through a sale instead of continuing use.
30
2.25.
Dividend payment
The payment of dividends to the Company’s shareholders is recognized as a liability in the
Group’s consolidated annual accounts in the year in which the dividends are approved by the
Company’s shareholders.
2.26.
Leases
Leases in which the lessor retains a substantial part of the risks and advantages deriving from
ownership are classified as operating leases. Operating lease payments (net of any incentive
received by the lessor) are debited in the income statement on a straight- line basis over the lease
period
The Group leases certain property, plant and equipment. Leases of property, plant and equipment
in which the Group holds substantially all the risks and advantages deriving from ownership are
classified as finance leases. Finance leases are capitalized at the start of the lease at the lower of
the leased asset’s fair value and the present value of the minimum lease payments.
Each lease payment is distributed between the liability and the financial charge such that a
consistent interest rate is obtained on the balance of the debt payable. The lease obligations, net
of financial charges, are included under long-term payables. The interest associated with the
financial charge is debited in the income statement over the period during which the lease is in
effect in order to obtain a constant regular interest rate on the balance of the debt payable in
each period. Property, plant and equipment acquired under finance lease are depreciated over the
lower of their useful lives and the lease period.
2.27.
a)
New standards (IFRS /IAS) and interpretations (IFRIC)
Standards, amendments and interpretations effective in 2009
On 1 January 2009 the Group adopted the new IFRS and IFRS amendments indicated below:
IFRS 7 (Revised) “Financial Instruments: Disclosures") (in force as from 1 January 2009).
31
This amendment requires further disclosures regarding fair value measurement and liquidity
risk. Specifically, the amendment requires disclosures of fair value in accordance with a
hierarchical order of fair value parameters. Since the change in the accounting standard only
requires additional disclosures, there is no impact on earnings per share.
IFRS 8 (Revised) "Operating segments" (in force as from 1 January 2009).
IRFS 8 replaces IAS 14 and brings the presentation of segment financial information into line
with the US standard SFAS 131 “Disclosures about segments of an enterprise and related
information”. The new Standard requires a management approach under which segment
information is presented on the same basis as which it is used for internal purposes. The
manner in which the information is presented has been changed to bring it into line with
the internal information prepared and supplied to decision making bodies.
IAS 1 (Revised) “Presentation of financial statements” (in force since 1 January 2009)
The amended standard prohibits the presentation of revenues and expenses (i.e. changes in
equity carried out with non-owners") in the statement of changes in equity and requires
that these items be presented separately in an overall income statement. As a result, the
Group presents all changes in equity deriving from transactions with owners in the
consolidated statement of changes in equity, such that all changes in equity deriving from
transactions with non-owners are presented in the consolidated overall income statement.
Comparative information has been restated in accordance with the amended standard.
Since the modification only affects presentation issues, there is no impact on earnings per
share.
b)
Standards, amendments and interpretations effective in 2009 but the application of which
has no effect on the Group's accounts
At the date these accounts were prepared, the IASB had published the interpretations set
out below, which are mandatory for all years commencing as from 1 January 2009, but
whose application did not have any effect on the Group's accounts:
32
IFRS 2 (Revised) "Share-based payments" (in force since 1 January 2009).
This amendment covers vesting conditions and cancellations. This standard clarifies that
only service and performance conditions may be considered concession conditions. Other
characteristics of share-based payments are not considered to be concession conditions but
rather should be included in the calculation of fair value at the concession date within the
transactions with employees and third-parties that rent or similar services, such that
neither the number of awards that are expected to vest more their subsequent
measurement at the concession date do not have any effect. All cancellations, both those
made by the Company and by third-parties, must receive the same accounting treatment.
This amendment did not have any effect on the Group's financial statements.
IAS 23 (Revised), "Borrowing costs" (in force as from 1 January 2009)
With respect to borrowing costs relating to qualifying assets that started to be capitalized
after 1 January 2009, borrowing costs that are directly attributable to the acquisition,
construction or production of the asset are capitalized by the Group as part of the cost of
the asset concerned. Before the entry of this amendment into force, the Group had chosen
to apply the alternative treatment permitted by the preceding IAS 23, and therefore the
adoption of IAS 23 "Borrowing costs" (2007) did not have a significant effect on the
Group's financial statements.
IAS 32 – (Revised) “Financial Instruments: Presentation" and IAS 1 (Revised) "Presentation
of financial statements"-"Puttable instruments and obligations arising on liquidation" (in
force since 1 January 2009).
These amendments require companies that reclassify puttable instruments and instruments
(or components thereof) that require the company to deliver a fraction of net assets in the
event of an equity settlement, provided that the instrument has certain characteristics and
meets certain conditions. The Group has applied IAS 32 and IAS 1 (Revised) as from 1
January 2009, although they did not have any effect on the financial statements.
33
IFRS 1 (Revised) “First-time adoption of IFRS” and IAS 27 “Consolidated and separate
financial statements" (in force since 1 January 2009).
The amended standard allows first-time adopters to use fair value, or the carrying value
resulting from applying the previous accounting standards, as the attributed cost of
investments in subsidiaries, combined businesses and associated companies in the separate
financial statements. The amendment also eliminates the definition of the cost method from
IAS 27 and replaces it with a requirement to present dividends as revenues in the investor's
separate financial statements. The Group has also applied IFRS 1 (Revised) as from 1
January 2009, the date on which the Group's subsidiaries transition to IFRS. This
amendment did not have any effect on the Group's financial statements.
IFRIC 14, “IAS 19 - The limit on a defined benefit asset, minimum funding requirements and
their interaction (in force since 1 January 2009) which establishes the guidelines for
evaluating the limit established under IAS 19 regarding any surplus that may be recognized
as an asset.” It also explains the manner in which current pension liabilities may be affected
by minimum funding obligations established by contract or by law. This interpretation has
no impact on the Group’s accounts.
Improvement project published by the IASB in May 2008, and which affects the following
standards and interpretations:
IAS 1 (Revised) “Presentation of financial statements” (in force since 1 January 2009)
This amendment clarifies that some, but not all, financial instruments classified as held
for trading, in accordance with IAS 39 "Financial Instruments: Recognition and
measurement" are examples of current assets and liabilities, respectively. The Group has
applied this amendment as from 1 January 2009 and it did not have any effect on its
financial statements.
IAS 19 (Revised), "Employee benefits" (in force as from 1 January 2009).
34
(i) This amendment clarifies that improvements to a plan that give rise to change, to
the extent that promised benefits will be affected by future salary increases, are
considered to be a reduction whereas amendments that give rise to a change in
benefits attributable to past services results in a negative past service cost, provided
that this originates from a decline in the present value of the defined benefit
obligation.
(ii) The definition of the yield from assets linked to the plan has been changed to
indicate that the plan's administration costs are deducted from the calculation of
the yield from the assets linked to the plan only to the extent that these costs have
been excluded from the measurement of the defined benefit obligation.
(iii) A distinction made between long and short-term employee benefits is based on
whether or not the benefits will be settled within 12 months following the date on
which the services have been rendered or after that date.
(iv) IAS 37 “Provisions, contingent liabilities and contingent assets" requires that
contingent liabilities be broken down, not that they be recognized, in the financial
statements. IAS 19 has been amended in line with this policy.
The adoption of this standard did not have any effect on the Group's financial statements.
IAS 23 (Revised), "Borrowing costs" (in force as from 1 January 2009). The definition of
borrowing costs has been modified so that interest is calculated in accordance with the
effective interest rate defined by IAS 39 "Financial Instruments: Recognition and
measurement". This eliminates the inconsistency between the terminology used by IAS 39
and IAS 23.
IAS 28 (Revised) "Investments in Associates" (and relevant changes in IAS 32 "Financial
instruments: Presentation" and IFRS 7: “Financial instruments: Disclosures") (in force as
from 1 January 2009). An investment in an associate is considered to be a separate asset for
the purposes of calculating impairment. Any impairment loss is not taken to specific assets
included within the investment, for example, goodwill. Any reversal of impairment losses is
recognized as an adjustment in the investment balance to the extent that the in recoverable
amount of the investment has increased. The Group has applied IAS 28 (Revised) to the
35
impairment test for investments in subsidiaries and related impairment losses as from 1
January 2009, although it had no effect on the financial statements.
IAS 36 (Revised), "Impairment of assets" (in force as from 1 January 2009). In the cases in
which fair value less selling costs is calculated based on discounted cash flows, the
equivalent breakdowns of the value-in-use calculation must be presented.
IAS 38 (Revised), "Intangible assets" (in force as from 1 January 2009). A pre-payment may
only be recognized when early payment was made to obtain access to certain assets or
services.
IAS 39 – (Revised) “Financial Instruments: Recognition and measurement") (in force as from
1 January 2009).
(i) This amendment clarifies that movements from and to the heading financial assets at fair
value through changes in profit and loss may exist in cases in which a derivative
commences (or ceases) to pertain to the hedge instrument classification in a cash flow or
net investment hedge.
(ii) The definition of a financial asset or liability at fair value through changes in profit and loss
is also modified, to the extent that it refers to items held-for-trading. A financial asset or
liability that forms part of a financial instrument portfolio that is jointly managed and for
which there is evidence of a recent short-term profit matrix, is included in that portfolio
as from initial recognition.
(iii) The current guidelines for designating and documenting hedging relationships stipulate
that a hedge instrument must involve a third party outside the unit presenting financial
information and uses the example of a company segment. This means that in order to
apply hedge accounting at the segment level, the segment must meet the hedge
accounting requirements. The amendment eliminates the segment examples to bring them
into line with IFRS 8 “Operating segments" that requires segment reporting be based on
information that is presented to the members of management responsible for taking
decisions. For the purposes of presenting segment information, currently each subsidiary
designates cash contracts with the Group as cash flow hedges such that these hedges are
presented in the segment to which the hedged item pertains. This presentation is
coherent with the information received at the decision-taking level. After the amendment
enters into force, the hedge will continue to be effective and will be reflected in the
segment to which the hedged item pertains (and information reported to management
36
taking decisions), although the Group will not formally document or test this hedging
relationship.
(iv) When this debt instrument is re-measured, once the hedge accounting at fair value has
ceased, the amendment clarifies that the revised effective interest rate method must be
used.
The Group has applied IFRS 39 (Revised) as from 1 January 2009, and there has not been
any effect on the Group’s income statement.
Other minor changes to IFRS 7 “Financial instruments: Disclosures", IAS 8 “Accounting
policies, changes in accounting estimates and errors", IAS 10 “Events after the reporting
period", IAS 18 "Ordinary revenue" and IAS 34 "Interim financial reporting" which did not
have any effect on the Group's financial statements.
IFRIC 9 (Revised) "Reassessment of embedded derivatives" and IAS 39 (Revised) "Financial
instruments: Recognition and measurement (in force for all years ended as from 30 June
2009).
This amendment requires that the company determine whether or not an embedded
derivative must be separated from the main contract at the time a hybrid asset is
reclassified from a category of financial assets at fair value through changes in profit or loss.
This evaluation must be carried out based on the circumstances existing at the most recent
of the following dates: (a) the date on which the company first becomes a party to the
contractor, (b) the date on which there is a change in the terms of the contract that
significantly modify the cash flows resulting from that contract. Its application did not have
any effect on the Group's financial statements.
37
IFRIC 13 “Customer loyalty programs" (in force as from 1 July 2008). IFRIC 13 clarifies that
in cases in which assets or services are rendered together with a loyalty incentive (for
example, loyalty points or free products), the agreement is considered to be a multiple item
contract and the amount received or to be received from the customer must be attributed
among the components of the agreement at fair value. Its application did not have any effect
on the Group's financial statements.
The amendments listed below, which relate to the improvement project published by the
IASB in May 2008, and which have been adopted by the European Union in January 2009:
IAS 16 (Revised) “Property, plant and equipment” (and the relevant amendment of IAS 7
"Cash flow statement") (in force as from 1 January 2009). Those companies whose primary
activity consists of leasing and then subsequently selling assets, will present the amounts
obtained on those sales as revenue and the assets must be reclassified to inventories at the
time at which the asset becomes held-for-sale. As a result, IAS 7 is amended, indicating that
the cash flows deriving from the acquisition, rental and sale of such assets are classified as
cash flows from operations. This amendment will not have any impact on the Group's
activities since no group company leases and sells assets.
IAS 27 (Revised) “Consolidated and separate financial statements” (in force since 1 January
2009) In those cases in which an investment in a subsidiary is recognized in accordance with
IAS 39 "Financial instruments: Recognition and measurement", it is classified as held for sale,
in accordance with IFRS 5 "Non-Current assets held for sale and discontinued operations",
IAS 39 will continue to be applicable. This modification will not have any impact on the
Group since it applies the policy of recording investments in subsidiaries at cost in the
separate financial statements. This amendment will be applied on a prospective basis.
IAS 28 (Revised) "Investments in Associates" (and relevant changes in IAS 32 "Financial
instruments: Presentation" and IFRS 7 "Financial instruments: Disclosures") (in force as
from 1 January 2009). When an investment in an associate is recognized in accordance with
IAS 39 "Financial instruments: Recognition and measurement", only certain breakdowns of
IAS 28 must be included, in addition to the requirements of IAS 32 "Financial instruments:
Presentation" and IFRS 7 “Financial instruments: Disclosures".. This amendment will not
have any effect on the Group's operations given that the Group's policy is to recognize
investments in Associates in accordance with the equity method. This amendment may be
applied on a prospective basis.
38
IAS 29 (Revised) “Financial reporting in hyperinflationary economies” (in force since 1
January 2009). The standard's guidelines change with respect to clarifying that certain assets
and liabilities must be recognized at fair value instead of at historic cost. This amendment
will not have any effect on the Group's operations since no subsidiary or associate operates
in hyperinflationary economies.
IAS 31 (Revised) “Interests in joint ventures" (and the relevant amendments to IAS 32 and
IFRS 7) (in force as from 1 January 2009). When an investment in a joint venture is
recorded in accordance with IAS 39, only some of the breakdowns demanded by IAS 31
are required, in addition to those required by IAS 32 (Financial instruments: Presentation"
and IFRS 7 "Financial instruments: Disclosures".. This amendment will not have any effect on
the Group's operations given that the Company does not hold any interests in joint
ventures. This amendment may be applied on a prospective basis.
IAS 38 (Revised), "Intangible assets" (in force as from 1 January 2009). This amendment
eliminates the mention of "rarely, or perhaps never" to justify the use of a method that
results in an amortization rate that is lower than that which results from applying the
straight line method. This amendment will not have an effect on the Group's operations,
given that all intangible assets are amortized on a straight line basis.
IAS 40 (Revised) "Investment property" (and related amendments to IAS 16) (in force as
from 1 January 2009). Buildings that are under construction or being developed for future
use as investment properties are included within the scope of IAS 40. Accordingly, when
the fair value model is used these buildings must be recognized at fair value. However,
when the fair value of investment properties under construction cannot be reliably
determined, the property will be measured at cost until the date on which construction
ends or until the date on which the fair value can be reliably determined, if earlier. This
amendment will not have any effect on the Group's operations since it does not have any
investment properties.
39
IAS 41 (Revised), "Agriculture" (in force as from 1 January 2009). It requires the use of a
market discount rate in those cases in which fair value is calculated based on discounted
cash flows and the elimination of the prohibition from taking into consideration biological
transformation when calculating fair value. This amendment will not have any effect on the
Group's operations given that it does not carry out any activities in the agriculture sector.
This amendment will be applied on a prospective basis.
IAS 20 (Revised) “Accounting for government grants and disclosure of government
assistance" (in force as from 1 January 2009). The benefit of a loan at a lower-than-market
rate granted by a public entity is measured as the difference between the carrying value in
accordance with IAS 39 (Financial instruments: Recognition and measurement", and the
amount received is recognized in accordance with IAS 20. This amendment will not have
any effect on the Group's operations given that it has not received any government loans or
other assistance. This amendment will be applied on a prospective basis.
Other minor amendments of IAS 20 “Accounting for government grants and disclosure of
government assistance”, IAS 29 “Financial reporting in hyperinflationary economies”, IAS 40
"Investment properties" and IAS 41 "Agriculture" will not have any effect on the Group's
financial statements for the reasons indicated above.
c)
Standards and amendments and interpretations of existing standards which are not yet
effective and which the Group has not adopted early
IFRIC 12 “Customer loyalty programs" (in force as from 01 January 2010).
This interpretation affects public-private service concession agreements when the grantor
regulates the services that must be rendered by the concessionaire for the infrastructure,
who the service must be rendered to, at what price and controls any significant residual
share in the infrastructure at the end of the agreement. The Group will apply the IFRIC 12
as from 1 January 2010.
IFRIC 16 “Hedges of a net investment in a foreign operation" (in force for all years
commencing as from 30 June 2009). This interpretation clarifies the accounting treatment
to be applied with respect to the hedging of a net investment, including the fact that the net
investment hedge refers to differences involving the functional currency and not the
reporting currency, as well as the fact that the hedge instrument may be maintained at any
part of the Group. The requirements established by IAS 21 "The effects of changes in
40
foreign exchange rates" are applicable to the hedged item. The Group will apply the IFRIC
16 as from 1 January 2010. This is not expected to have any effect on the Group's financial
statements.
IFRIC 17 “Distribution of assets other than cash to owners” (in force as from 1 July 2009).
This interpretation forms part of the annual IASB improvement project published in April
2009. This interpretation provides guidelines for recognizing those agreements under which
a company distributes assets other than case to owners, either as a distribution of reserves
or as dividends. IFRS 5 has also been amended to require that assets be classified as held
for distribution only if they are available for distribution in their current state and provided
that such distribution is highly likely. The Group and the Company will apply IFRIC 17 on a
prospective basis as from 1 January 2010. This is not expected to have any effect on the
Group's financial statements.
IFRIC 18 "Transfers of assets from customers" (in force for years commencing as from 1
July 2009).
This interpretation provides guidelines as to how to record property, plant and equipment
received from customers, or the cash received that will be used to acquire or build specific
assets. This interpretation is only applicable to those assets that are used to connect the
customer to a network or to provide continuous access to goods or services, or both. This
amendment must be applied on a retroactive basis. This is not expected to have any effect
on the Group's financial statements.
IAS 27 (Revised) “Consolidated and separate financial statements” (in force since 1 January
2009)
The amended standard requires that the effects of all transactions involving non-controlling
shareholdings be recorded under equity if there is no change in control, such that these
transactions no longer generate goodwill, or gains or losses. The standard also covers the
accounting treatment to be applied when control is lost. Any residual shareholding
maintained in the company is restated at fair value and a gain or loss is recognized in the
income statement. The Group will apply IAS 27 (Revised) on a prospective basis to all
transactions with minority shareholders as from 1 January 2010.
IFRS 3 (Revised) "Business combinations" (in force as from 1 July 2009).
41
The revised standard maintains the acquisition method for business combinations, although
it introduces important changes. For example, all payments made to acquire a business are
recognized at fair value at the acquisition date and contingent payments that are classified as
liabilities are measured at each closing date at fair value, and all changes are recorded in the
income statement. An accounting policy option is introduced and is applicable to the
business combination level, consisting of measuring minority shareholdings at fair value or
the proportional amount of the net assets and liabilities recorded by the target company.
All transactional costs are expensed. The Group will apply IFRS 3 (Revised) on a
prospective basis to all business combinations as from 1 January 2010.
IFRS 5 (Revised), “Non-current assets held for sale and Discontinued operations” (and the
relevant amendment of IFRS 1 "First-time adoption of IFRS) (in force as from 1 July 2009).
This amendment is part of the annual IASB improvement project from 2008 and clarifies
that all assets and liabilities at a subsidiary must be classified as held for sale if control over
the subsidiary is lost as a result of a plan for its partial sale. In the event that the conditions
are met to consider an operation to be discontinued, the relevant breakdowns regarding
the subsidiary must be included. As a result, IFRS 1 also has been adapted to take into
account this amendment, such that its application will be done on a prospective basis as
from the date of transition to IFRS. The Group will adopt IFRS 5 (Revised) on a prospective
basis effective for all partial sales of subsidiaries taking place as from 1 January 2010.
IFRS 1 (Revised) "First time adoption of IFRS" (in force as from 1 January 2009). In 2007 the
Board proposed, as part of its annual improvement project, to amend IFRS 1 to make it
more understandable to users and to design it such that future amendments could be
better accommodated. This version, revised in November 2008, maintains the substance of
the preceding version, but it has a modified structure.
42
IAS 32 (Revised) "Classification of rights issues" (in force for years commencing as from 1
February 2010). This amendment covers the classification of the issue of rights (rights to
shares, options, warrants) denominated in a currency other than the issuer's functional
currency. The amendment indicated that if the issued is a pro-rata for the issuer's
shareholders, and in a fixed amount in any currency, it must be classified as equity,
regardless of the currency in which the strike price is denominated.
IAS 39 (Revised) “Items that may be classified as hedged” (in force since 1 July 2009). This
amendment introduces two important changes that prohibit designating inflation as a
component that may be hedged by fixed rate debt and include the temporary value as part
of the hedged risk when options are designated to be hedges.
In addition, at the date these financial statements were prepared, the IASB had published
the rules indicated below, which have yet to be adopted by the European Union:
(i) Improvement project for 2009, published in April 2009 by the IASB, which amends IFRS 2,
5 and 8, IAS 1, 7, 17, 18, 36, 38 and 29 and IFRIC 9 and 16. The amendments introduced
by this improvement project are mandatory for years commencing as from 1 January
2010, except for the amendments of IFRS 2 and IAS 38, which enter into force for years
commencing as from 1 July 2009.
(ii) IFRIC 2 (Revised) "Pre-payment of minimum financing requirements" (in force for years
commencing as from 01 January 2010).
(iii) IFRS 1 (Revised) "Additional exemptions for first time adopters" (in force for years
(iv) IAS 24 (Revised) "Disclosures regarding related parties" (in force for years commencing as
from 1 January 2011).
43
(v) IFRS 9 (Revised) "Financial instruments" (in force for years commencing as from 1 January
2013).
(vi) IFRIC 19 "Elimination of a financial liability with equity instruments" (in force for years
commencing as from 1 July 2010).
(vii) IFRIC 14 (Revised) "Pre-payment of minimum financing requirements" (in force for years
d)
Standards and amendments and interpretations of existing standards which are not yet
effective and which are not relevant to the Group’s operations
IFRIC 15 "Agreements for the construction of real estate" (in force as from 01 January
2010).
This interpretation clarifies when, for certain transactions, IAS 18 "Ordinary revenue" or
IAS 11 "Construction contracts" should be applied, which makes it more likely that IAS 18
will be applied to a larger number of transactions. This interpretation is not relevant to the
Group's operations given that all revenue is recorded in accordance with IAS 18 and not
IAS 11.
3.
Financial risk and capital management
The Group's activities are exposed to several financial risks: market risk (including the interest rate
risk, exchange rate risk and price risk), credit risk and liquidity risk. The Group’s risk management
program focuses on minimizing the effects of uncertainty on the financial markets and attempts to
minimize the potential adverse effects on the Group’s financial performance.
Risk management is controlled through various levels of supervision in accordance with the policies
approved by the Board of Directors that is responsible for maintaining the internal control system
which includes the follow-up and control of the Group’s significant risks.
44
Similarly, the Audit Committee is responsible for risk supervision, in accordance with the
authorization of the Board of Directors.
On the basis of the assessment of the operational risks supervised by the Audit Committee, the
Board of Directors carries out the relevant risk control and management, approving, where
appropriate, the actions aimed at improving existing procedures.
a)
Market risk
i) Foreign exchange risk
The exchange rate risk is limited since most transactions are carried out in the functional
currency. Additionally, sales to other countries outside of that environment are also made
in euro (mainly Africa).
The Group has various investments abroad, mainly, forestry investments, whose net assets
are exposed to foreign currency translation risks.
ii) Price risk
In order to mitigate the risk in selling prices the Group maintains a very competitive cost
structure.
Similarly, in order to reduce exposure to the price risk of the Group’s principal raw
material (wood), it manages 25,448 hectares distributed between Argentina (8,527
hectares), Uruguay (10,804 hectares) and Spain (6,117 hectares), reforested and in the
process of reforestation, mainly with eucalyptus.
The Group has improved is competitive structure and environmental efficiency through the
launch in 20098 of a new 50 Mw/h high-efficiency cogeneration plant.
iii) Cash flow interest rate risk
As the Group has no major interest-bearing assets, revenues and cash flows from operating
activities are relatively independent of variations in market interest rates.
45
The Group’s interest rate risk results from long-term borrowings. Borrowings issued at
variable interest rates expose the Group to cash flow interest rate risk. However, the
impact would not have been significant since if at 31 December 2009 interest rates on
borrowings (loans and credit facilities with financial institutions) at variable rates had been
10% higher or lower, all other variables remaining constant, the profit after tax for the
year would have been between € 56 thousand and € 73 thousand higher or lower,
respectively, as a result of the difference in the interest expense on variable interest loans.
b)
Credit risk
The Group’s main financial assets are cash and bank balances, trade and other receivable balances,
which represent the Group’s maximum credit risk exposure in relation to financial assets.
The Group’s credit risk is mainly attributable to its trade debts. The amounts involved are
recorded in the balance sheet, net of bad debt provisions, which are estimated by Group
management on the basis of prior year experience and an assessment of the current economic
environment.
The Group’s credit risk concentration is not significant and exposure is distributed among a large
number of counterparties. In addition, the Group insures practically all paper sales and as a result,
most trade receivables, using the following insurance companies.
Insurance company
S&P rating
Mapfre
AA
Euler Hermes
AA-
Crédito Y Caución
Cesce
AUnrated
Similarly, excluding accounts receivable, the Iberpapel Group concentrates most of its investment
in financial assets, short-term deposits maturing on average at 8 to 10 days, amounting to € 155
thousand at 31 December 2009 (€ 366 thousand at 31 December 2008).
The Group has no direct risks with the Company’s Directors at 31 December 2009.
46
c)
Liquidity risk
The prudent management of the liquidity risk entails maintaining sufficient cash, having financing
available through a sufficient amount of committed credit facilities and having capacity to settle
market positions.
Management carries out a regular follow-up of the Group’s liquidity forecasts on the basis of forecast
cash flows. The Group has sufficient cash to cover its liquidity needs. Additionally, it has unutilized
credit lines amounting to € 29 million at 31 December 2009 in order to cover specific cash needs.
The table below presents an analysis of the Group’s financial liabilities, grouped together by maturity,
in accordance with the time at the balance sheet date to maturity as stipulated in the relevant
contract.
Less than 1 Between 1 and 2 Between 2 and More than 5
year
years
9,621
19,399
years
years
At 31 December 2009
Bank loans and overdrafts
Suppliers and creditors
Amounts payable to official bodies
29,219
904
2,187
Other payables
3,589
3.1.
655
1,254
Capital risk management
The Group’s aim in relation to capital management is to have a low level of leverage making it easy
for it to obtain additional borrowings, if necessary, in order to carry out new investments. A large
part of the Group’s borrowings are made up of advances repayable to official bodies and generate no
interest expense as they are subsidized.
47
The Group follows up capital in accordance with the gearing ratio. This ratio is calculated as net debt
divided by equity. Net debt is calculated as total borrowings (loans and credit facilities with credit
institutions) less cash and cash equivalents. Equity is reflected in the relevant balance sheet heading, as
shown in the consolidated accounts.
Gearing ratios at 31 December 2009 and 2008 were as follows:
2009
2008
Borrowings and other payables (Note 18)
29,983
42,179
Less: Cash and cash equivalents
(3,618)
(4,579)
Net debt
26,365
37,600
Equity
172,853
166,530
Leveraging index
15.25%
22.58%
3.2.
Estimate of fair value
It is assumed that the carrying value less the provision for impairment of accounts receivable and
payable approximates fair value. The fair value of financial liabilities for reporting purposes is
estimated by discounting future contractual cash flows at the current market interest rate which may
be available to the Group for similar financial instruments .
48
4.
Significant accounting estimates and judgments
Estimates and judgments are assessed on an on-going basis and are based on historic experience
and other factors, including expectations of future events which may be considered reasonable in
the circumstances.
4.1.
Significant estimates and assumptions
The Group makes estimates and assumptions relating to the future. The resulting accounting
estimates will, by definition, no exactly equal the related actual results. The most significant
estimates and judgments that could affect subsequent financial years are explained below, although
Group management considers it unlikely that material adjustments will arise.
Useful lives of property, plant and equipment
Group management determines the estimated useful lives and the associated depreciation charges
for property, plant and equipment. This may change as a result, mainly, of significant technological
innovation. Management increases the depreciation charge when the useful lives are lower than
the previously estimated lives, or will write-off or otherwise eliminate technically obsolete or
non-strategic assets that have been abandoned or sold. A 20% change in the estimated useful lives
of property, plant and equipment will give rise to an increase or decrease in the depreciation
expense for 2009 and 2008 totaling approximately € 540 thousand and € 445 thousand,
respectively.
4.2.
Significant judgments when applying accounting policies
a)
Measurement of forestry assets
As is indicated in Note 2.6, the Group establishes certain assumptions regarding the measurement
of the value of biological assets. To determine fair value, the biological assets are grouped in
accordance with their qualitative characteristics and are sized in accordance with their
quantitative characteristics.
49
5.
Segment reporting
The Board of Directors considers the business primarily from a product point of view,
independent of the geographic area where the business takes place.
The operating segments reported thus obtain their ordinary revenue mainly from the manufacture
and marketing of paper, the sale le electricity produced through gas co-generation plans and,
finally, revenue from the investments in forestry assets held by the Group.
The start of operations of a gas co-generation plant at the beginning of 2009 has given rise to
separate information being disclosed regarding a new operating segment this year (electricity).
The ordinary revenues from this activity represent 10% of the Group's ordinary revenues.
The Board of Directors evaluates the development of each segment based on an income
statement and balance sheet segmented by activity.
The segment reporting provided to the Board of Directors for those segments that must be
reported in the year ended 31 December 2009, is as follows:
Paper
Total segment revenues
Activity
Forestry and
Electricity
Others
Group
271,711
37,048
44,197
352,956
Inter-segment sales
(117,150)
(10,207)
(41,578)
(168,935)
Sales to outside customers
154,561
26,841
2,619
184,021
(9,896)
(2,704)
(86)
(12,686)
Depreciation of property, plant and equipment (Note 6)
Amortization of intangible assets (Note 8)
(6)
(6)
Impairment of trade receivables (Note 10)
(456)
(456)
Operating profit
3,519
5,424
301
9,244
Net financial costs (Note 24)
(258)
(423)
(222)
(903)
Profit before taxes
3,261
5,001
79
8,341
Income tax
1,420
(2,116)
(612)
(1,308)
Profit for the year
4,681
2,885
(533)
7,033
50
Paper
Electricity
Forestry
Activity
Group
163,213
65,565
35,084
263,862
1,065
2,048
2,028
5,141
(68,298)
(15,714)
(6,997)
(91,009)
Paper
Forestry
Activity
Group
296,389
48,934
345,323
Inter-segment sales
(107,428)
(45,189)
(152,617)
Sales to outside customers
188,961
3,745
192,706
(9,950)
(83)
(10,033)
(10)
(3)
Impairment of trade receivables (Note 10)
(352)
Operating profit
5,722
1,638
7,360
Net financial costs (Note 24)
(677)
(756)
(1,433)
Total assets
Of which:
Fixed asset investments (Notes 6 and 8)
Total liabilities
The information relating to 2008 is as follows:
Total segment revenues
(13)
(352)
Profit before taxes
5,045
882
5,927
Income tax
2,451
(902)
1,549
Profit for the year
7,496
(20)
7,476
Forestry
Paper
Activity
Group
250,860
31,121
281,981
250,860
31,121
281,981
Liabilities
108,403
7,048
115,451
Fixed asset investments (Notes 6 and 8)
22,073
1,310
23,383
Assets
Total assets
At 31 December 2008 property, plant and equipment totaling € 42,046 thousand was under
construction, consisting of investments made to launch the gas co-generation plant in 2009.
51
Transfers or transactions between segments are conducted under ordinary business terms and
conditions that should also be available to non-related third parties.
The following tables show the Group's ordinary revenues and total assets by geographic area:
Sales
2009
2008
European Union (excluding Spain)
64,982
74,759
Africa
18,401
22,211
1,107
2,782
96,270
83,107
180,760
182,859
South America
Spain
Sales are assigned on the basis of the country where the customer is located.
Total assets
Spain
France
South America
2009
2008
229,021
254,282
350
624
34,491
27,075
263,862
281,981
Total assets are assigned on the basis of the assets’ location.
Assets in South America relate mainly to biological assets at various stages of development,
measured in accordance with IAS 41 "Agriculture".
The geographic distribution of the investment in assets is as follows:
Fixed asset investment
2009
2008
Spain
3,119
22,073
South America
2,022
1,310
5,141
23,383
52
The breakdown of sales by category was as follows:
Distribution of sales by category
Sale of paper and electricity
Sale of timber
Sale of electricity
2009
2008
142,560
179,638
2,619
3,221
35,581
180,760
6.
182,859
Set out below is a breakdown together with movements in the different categories of property,
plant and equipment:
Cost
Land and buildings
Balance at
31/12/2007
Additions
Disposals
35,051
2,395
(2,275)
210,973
967
(41,606)
Fixtures, fittings, tools and equipment
17,511
922
(355)
Payments on account and assets in course
of construction
23,247
19,071
(68)
834
28
287,616
Plant and machinery
Other fixed assets
Transfers
Translation
differences
Balance at
31/12/2008
(1,700)
33,471
(148)
170,385
(33)
18,045
(5)
42,046
(299)
(12)
551
23,383
(44,603)
(1,898)
264,498
(8,908)
(438)
2,347
10
(6,989)
(110,749)
(7,942)
41,606
69
(77,016)
(8,170)
(1,607)
367
24
(9,386)
(718)
(46)
202
(3)
(565)
(128,545)
(10,033)
44,522
100
(93,956)
199
(199)
Buildings
Plant and machinery
Fixtures, fittings, tools and equipment
Other fixed assets
Net amount
159,071
170,542
53
Balance at
31/12/2008
Cost
Land and buildings
Plant and machinery
Fixtures, fittings, tools and
equipment
Payments on account and assets in
course of construction
Other fixed assets
Additions
33,471
2,047
170,385
2,661
18,045
387
42,046
Transfers
42,046
Translation
differences
Consolidation
adjustments
Balance at
31/12/2009
1,370
36,888
18
215,110
2
1,146
19,580
(42,046)
551
27
6
584
264,498
5,122
1,396
(6,989)
(474)
31
(77,016)
(10,469)
50
(9,386)
(1,688)
54
(11,020)
(565)
(55)
14
(606)
(93,956)
(12,686)
149
1,146
272,162
Buildings
Plant and machinery
Fixtures, fittings, tools and
equipment
Other fixed assets
Net amount
a)
(7,432)
(1,365)
(1,365)
170,542
(88,800)
(107,858)
164,304
At 31 December 2009 fully depreciated property, plant and equipment still in use totaled € 28,791
thousand (2008: € 27,724 thousand).
At 31 December assets had been delivered to third parties as guarantees (Note 29).
The acquisition of certain fixed assets has been partly financed through capital grants received
amounting to € 13,553 thousand (Note 18).
54
7.
Biological assets (Eucalyptus)
2009
2008
At beginning of the year
11,136
9,879
Gain due to physical changes
Decrease owing to sales
Differences on exchange and other
At end of the year
2,502
(611)
269
13,296
2,353
(745)
(351)
11,136
8.
Intangible assets
The movement in the main intangible asset classes, broken down between those generated
internally and other intangible assets, is as follows:
Cost
Computer software
CO2 rights
Balance at
31/12/2007
Additions
Disposals
678
3
(82)
599
1,268
4,477
(1,268)
4,477
1,946
4,480
(1,350)
5,076
(662)
(13)
83
(592)
(662)
(13)
83
(592)
Transfers
Translation
differences
Balance at
31/12/2008
Computer software
Net amount
1,284
4,484
55
Balance at
31/12/2008
Cost
Computer software
CO2 rights
Additions
Disposals
Translation
Transfers differences
Balance at
31/12/2009
599
19
4,477
4,878
(3,670)
5,685
618
5,076
4,897
(3,670)
6,303
(592)
(6)
(598)
(592)
(6)
(598)
Computer software
Net amount
a)
4,484
5,705
At 31 December 2009 fully amortized intangible assets still in use totaled € 586 thousand
(2008: € 569 thousand).
b)
CO2 Emission rights
On 8 November 2007, the Group company Papelera Guipuzcoana de Zicuñaga received
notification from the Ministry of the Environment stating that it had been granted 173,150
emission rights for the period 2008-2012.
In April 2009 this company received a new assignment of 110,405 emission rights due to the
launch of the new co-generation plant. Furthermore, 88,324 emission rights were granted for
2010, 2011 and 2012.
56
The volume of rights assigned for the period 2009 through 2012 totals:
CO2 emission rights assigned
2009
2010
2011
2012
Total
283,555
261,474
261,474
261,474
1,067,977
The emission rights granted in 2009 have been recorded at current-use value which agrees with
the quoted value at the beginning of the year of 15.68 € / right (2008: € 23.00/ right).
In December 2009 the company Papelera Guipuzcoana de Zicuñaga, S.A. acquired 30,000 rights
(CER) at € 14.40, for a total amount of € 432 thousand.
9.
Financial instruments
9.1.
Financial instruments by categories
2009
Assets
Liabilities
Loans and
receivables
2008
Loans and
receivables
41,437
49,826
3,618
4,579
45,055
54,405
2009
2008
Other financial
liabilities at
amortized cost
Other financial
liabilities at
amortized cost
Borrowings (Note 18)
52,211
66,336
Borrowings and payables (Note 17)
29,219
39,243
81,430
105,579
57
a)
Credit quality of financial assets
The credit quality of financial assets which have not yet matured and which have not suffered
impairment may be assessed on the basis of the credit rating assigned by third parties or, in the
case of customers without a credit rating, by differentiating those relating to the Social Security
and Official Bodies that, by nature, are not subject to impairment.
Receivables
2009
2008
Customers with no outside credit rating
"A" Customers
"B" Customers
6,609
5,133
8,532
11,469
"C" Customers
5,339
9,127
"D" Customers
13,480
15,051
"E" Customers
2,529
"F" Customers
2,677
722
Public institutions
4,800
5,795
41,437
49,826
The Group insures practically all paper sales using a credit policy from the institutions indicated
below, which are also rated by S&P.
Receivables
Counterparty
2009
2008
6,609
5,133
S&P rating
Mapfre
AA
Crédito y Caución
AA-
8,532
11,469
A-
5,339
9,127
Unrated
13,480
15,051
Euler Hermes
Cesce
Trade receivables
Other
Public institutions
A
Unrated
2,529
2,677
722
4,800
5,795
41,437
49,826
58
Cash at bank and short-term bank deposits
Counterparty
2009
2008
S&P rating
A Banks
AA
943
2,462
B Banks
AA-
1,098
198
C Banks
A
D Banks
Unrated
10.
383
1,194
1,919
3,618
4,579
2009
2008
Trade receivables
36,552
42,839
Less: Provision for impairment losses on accounts receivable
(2,074)
(1,780)
Trade receivables – Net
34,478
41,059
6,959
8,767
41,437
49,826
Other receivables net
Total current portion
The fair values of trade and other receivables do not differ significantly from their current values as
they mainly consist of balances receivable in less than one year and are possibly subject to interest if
collection is delayed beyond that time.
The carrying values of accounts receivable are denominated in euros.
In 2009 impairment losses on accounts receivable amounted to € 456 thousand (€ 352 thousand
in 2008). The amount of the provision amounted to € 2,074 thousand at 31 December 2009 (€
1,780 thousand at 31 December 2008).
59
The movement in the provision for impairment losses on trade receivables is as follows:
Opening balance
Provision for impairment losses on accounts receivable
Application
Closing balance
2009
2008
(1,780)
(1,437)
(456)
(352)
162
9
(2,074)
(1,780)
Other accounts included in receivables contain no assets that have suffered impairment.
The company considers that trade receivables due and payable outstanding for more than three
months have not suffered any impairment. At 31 December 2009 receivables totaling € 288
thousand had fallen due but had not yet been collected, although they have not suffered any
impairment loss. These accounts relate to a number of independent customers that do not have
any recent history of non-payment. The analysis of the age of these accounts is as follows:
2009
Up to 3 months
Between 3 and 6 months
49
239
288
60
11.
Inventories
2009
2008
Raw materials
5,653
6,036
Other supplies
3,134
3,006
Work in progress
216
156
Finished products
11,299
16,092
1,462
1,908
159
129
21,923
27,327
2009
2008
3,463
4,213
155
366
3,618
4,579
Agricultural products (cubic meters de-barked)
Advance payment
12.
Cash and banks
Short-term bank deposits
The effective interest rate on short-term deposits at credit institutions stood at 1.75% (2008:
3.90%). These deposits mature on average at 8 and 10 days in both 2009 and 2008.
61
13.
Share capital
At 01 January 2008
No. of
shares
Share
capital
Share
premium
t
Treasury
shares
Total
11,633,140
6,980
30,918
(823)
37,075
Return of the share premium account
(2,891)
(2,891)
(646)
(646)
(1,469)
33,538
Redemption of Treasury Shares
11,633,140
6,980
Return of the share premium account
28,027
(923)
11,633,140
6,980
27,104
(923)
(87)
(87)
(1,556)
32,528
The total authorized number of ordinary shares is 11,633,140 shares (2008: 11,633,140 shares)
with a par value of 0.60 € / share (2008: 0.60 € / share).
In 2009 Iberpapel Gestión, S.A. acquired 9,991 treasury shares on the stock exchange. The
amount paid to acquire the shares totaled € 87 thousand, net of taxes, which are held as Treasury
Shares.
At 31 December 2009 the Company holds a total of 98,869 own shares amounting to € 1,556
thousand. These shares represent 0.850% of the Company’s share capital. The value of these
shares is included in Treasury shares as a decrease in the value of equity in accordance with IAS
32.
There are no restrictions on the transfer of the shares.
All company shares are listed on the Madrid and Bilbao stock exchanges.
All shares issued have been paid in.
62
At 31 December 2009, the Company has no knowledge of any companies holding interests
exceeding 10% in its share capital. Significant direct or indirect shareholdings in capital are as
follows:
%
Direct
Name
Banco Guipuzcoano
%
Indirect
5.226
No. of Direct
rights
607,923
1,059,706 (1)
9.109
Bestinver Bolsa, FI
4.246
566,396
Onchena, S.L.
7.583
882,188
(1)
No. of
indirect rights
Through:
Number of
% total voting
of the stake
the stake
direct voting
rights
rights
1,447
0.012
1,876
0.016
S.G.I.I.C.
SEGOVIANAS.
BESTINFOND, F.I.
265,908
2.286
493,918
4.246
84,545
0.727
41,192
0.354
46,129
0.397
49,640
0.427
2,249
0.019
2,434
0.021
S.G.I.I.C.
S.G.I.I.C.
S.G.I.I.C.
S.G.I.I.C.
S.G.I.I.C.
S.G.I.I.C.
S.G.I.I.C.
S.G.I.I.C.
S.G.I.I.C.
63
1,385
0.012
LOUPRI INVERSIONES
3,825
0.033
SOIXA SICAV
50,732
0.436
14,426
0.124
S.G.I.I.C.
S.G.I.I.C.
S.G.I.I.C.
S.G.I.I.C.
14.
Reserves in
consolidated
companies
At 01 January 2008
Chang in reserves in Consolidated
90,972
Restatement
reserve
Retained
earnings and
other reserves
Total
12
40,247
131,231
5,860
(5,860)
Dividends
2008 profit
Change in reserves in Consolidated
96,832
12
2,716
(2,315)
(2,315)
7,476
7,476
(66)
(66)
39,482
136,326
(2,716)
Dividends
(922)
(922)
2009 profit
7,033
7,033
42,876
142,437
99,548
12
Retained earnings and other reserves include the legal reserve amounting to € 1,435 thousand
(2008: € 1,435 thousand), and reserve for redeemed capital amounting to € 191 thousand (2008:
191).
In accordance with Law 46/1998 (17 December 1998) on the introduction of the euro, Iberpapel
Gestión, S.A. records an unavailable reserve for differences arising on the conversion of share
capital to euro, amounting to € 12 thousand.
64
15.
Translation
1 January 2008
(1,740)
Translation differences
(1,594)
31 December 2008
(3,334)
Translation differences
2,145
31 December 2009
(1,189)
The breakdown of the cumulative translation difference by company / subgroup at the 2009 and
2008 year ends is as follows:
2009
2008
Company or subgroup
G. Gil, S.A.
Samakil, S.A.
(1,755)
(1,274)
1,912
(1,021)
(1,035)
(560)
(318)
(494)
7
15
(1,189)
(3,334)
65
16.
Availability and restrictions on Reserves and Retained earnings and Other
Reserves
The breakdown by company at 31 December 2009 and 2008 of Results in Consolidated
Companies and for IFRS is as follows:
Company or subgroup
2009
2008
329
329
Moliner, Domínguez y Cia., S.A.
540
539
276
273
424
422
Zicuimex France, S.A.R.L
Copaimex, S.A.
Zicupap, S.A.
79
65
80,598
79,192
81
76
151
296
24,851
24,791
53
53
(115)
82
(6,133)
(7,587)
(1,829)
(1,954)
Samakil, S.A.
G. Gil, S.A.
389
418
(146)
(163)
99,548
96,832
At 31 December 2009 unavailable reserves and retained earnings amounted to € 1.638 thousand
(2008: € 1,638 thousand) relating to the legal reserve, reserve for the translation of share capital
to euro and reserve for redeemed capital.
Appropriations to the legal reserve amounting to € 1,435 thousand have been made in compliance
with Article 214 of the Spanish Companies Act which stipulates that 10% of the profits for each
year must be transferred to this reserve until it represents at least 20% of share capital.
The legal reserve is not available for distribution. Should it be used to offset losses in the event of
no other reserves being available, it must be replenished out of future profits.
66
The contribution of each company included in the scope of consolidation to consolidated results,
indicating the part that pertains to minority interests, is as follows:
Company/ subgroup
Iberpapel Gestión, S.A.
Moliner, Domínguez y Cia., S.A.
2009
2008
Consolidated
results
Consolidated
results
212
310
6,886
5,418
408
60
12
41
(70)
1
3
4
7
102
236
1,455
G. Gil, S.A.
(91)
17
(32)
54
(674)
125
12
(30)
4
5
Samakil, S.A.
Copaimex, S.A.
(8)
15
Zicupap, S.A.
13
96
115
(197)
7,033
7,476
67
The proposed distribution of 2009 profits of the parent company, determined in accordance with
mercantile legislation and accounting principles used in the preparation of the parent company’s
individual annual accounts to be submitted to the General Shareholders’ Meeting and the
approved distribution for 2008 are as follows:
2009
2008
6,148
6,510
6,148
6,510
Available for distribution
Profit and loss for the year
Application
Dividends
923
923
5,225
5,587
6,148
6,510
2009
2008
Trade payables
25,156
35,251
Other payables
4,063
3,992
29,219
39,243
2,187
1,793
31,406
41,036
Voluntary reserves
17.
Total
68
18.
Borrowings
2009
2008
20,245
34,546
2,726
4,107
18,572
19,120
41,543
57,773
9,738
7,633
Non-current
Bank borrowings and credit facilities
Other payables
Government grants
Current
Other payables
Total borrowings
930
930
10,668
8,563
52,211
66,336
Bank borrowings and credit facilities (current) include € 6,556 thousand which relates to Shortterm debts on discounting of bills and short-term interest on bank borrowings amounting to € 30
thousand.
a)
The exposure of the Group’s loans and credit facilities to interest rate variations and the contract
dates on which prices are reviewed is as follows:
At 31 December 2008
Total borrowings
At 31 December 2009
Total borrowings
6 months
or less
Total
34,546
34,546
34,546
34,546
23,396
23,396
23,396
23,396
69
The overall limit on credit lines and loans with credit institutions at 31 December 2009 amounts
to € 52,210 thousand (2008: € 46,810 thousand).
The carrying and fair values of non-current borrowings (bank loans and lines of credit) are as
follows:
Carrying value
Bank loans
Fair value
2009
2008
2009
2008
20,245
34,546
19,824
34,888
The fair value of current borrowings equals the carrying value, given that the effect of the
discount is not significant. Fair values are based on cash flows discounted at a rate based on the
2.145% borrowing rate (2008: 4.159%)
Non-current borrowings have the following maturities:
Between 2 and 5 years
2009
2008
20,245
34,546
2009
2008
%
%
2.15
5.03
Effective interest rates on the balance sheet date were as follows:
Bank loans and credit facilities
The carrying value of short-term borrowings approximates fair value.
70
b)
Other payables
Other payables include a loan amounting to € 5,456 thousand (reimbursable amount) granted in
January 2000 by the Ministry of Industry and Energy to the company Papelera Guipuzcoana de
Zicuñaga. This loan matures on 31 October 2014 and its balance at 31 December 2009 amounts
to € 2,480, of which € 1,984 thousand falls due in more than one year and € 496 thousand in less
than one year.
Similarly, this includes two loans to this company amounting to € 1,758 thousand and € 361
thousand granted by the Ministry of Science and Technology. These loans mature on 26
December 2010 and 31 October 2011, respectively. The outstanding balance falling due in the
short-term at 31 December 2009 with respect to the first loan totals € 251 thousand. With
respect to the second loan, at 31 December 2009 the balance pending maturity amounts to € 103
thousand, of which € 51 thousand falls due in more than one year and € 52 thousand in less than
one year.
Finally, on 31 December 2006 the C.D.T.I. granted a loan to the company in the amount of € 855
thousand, falling due on 31 December 2013. The outstanding balance at 31 December 2009 the
balance pending maturity amounts to € 525 thousand, of which € 394 thousand falls due in more
than one year and € 131 thousand in less than one year.
The restated amount pending reimbursement for the aforementioned advance payments
totals € 2,909 thousand, € 1,979 thousand in more than one year and € 930 thousand in
less than one year.
c)
Government grants
Capital grants break down as follows:
Date granted
30/06/1998
30/12/1999
26/12/2000
23/01/2001
23/01/2001
18/06/2002
Purpose
New factory project
Water saving
Expansion of cellulose plant
Environmental improvements
Amount granted
To be released to
income
8 799
120
4 243
60
126
205
13,553
4,473
12
2,758
18
33
105
7,399
71
At 31 December 2009 there are no grants pending collection.
In relation to the tax advantages for investment in new fixed assets, they have been recorded in
accordance with IAS 20 for an amount of € 9,218 thousand (2008: € 10,634 thousand). These
deductions are considered government assistance connected with depreciable assets and are
recorded as grants.
d)
Foreign currency balances
The carrying value of the group’s borrowings is denominated in the following currencies:
Euro
19.
2009
2008
52,211
66,336
52,211
66,336
2009
2008
9,900
7,364
(102)
2,536
9,798
9,900
Deferred taxes
Gross movement in the Deferred taxes heading was as follows:
At 1 January
Debited/(credited) to results
At 31 December
Deferred tax assets and liabilities are offset if there is a legally enforceable right to set off current
and deferred tax assets and liabilities with respect to the same tax authorities.
72
Movements during the year in deferred tax assets and liabilities, not taking into account the offset
of balances relating to the same tax authorities are as follows:
Deferred tax liabilities
At 01 January 2008
At 31 December 2008
At 31 December 2009
Deferred tax assets
Deduction
new fixed
assets
At 01 January 2008
10,243
At 31 December 2008
At 31 December 2009
Provision
for
portfolio
Assets
assets
3,447
209
3,656
491
4,147
(463)
59
(404)
3,193
550
3,743
Deductions
R&D+i
Other
Total
288
6
3,741
203
(6)
406
Tax loss
carryforwards Inventories Other
Total
608
32
222
11,105
129
121
(81)
2,942
3,000
737
153
141
14,047
1,000
(608)
(36)
(109)
(506)
4,000
129
117
32
13,541
(227)
3,000
10,016
(753)
9,263
Deferred tax assets in respect of tax losses available for offset are recognized insofar as the
realization of the relevant tax benefit through future tax profits is probable.
73
20.
Provisions and other liabilities
At 01 January 2008
Current year
Non-current
CO2 rights
Litigation
Total
909
174
1,083
Charged to the income statement
Additional provisions
Applied during the year
At 31 December 2008
3,842
3,842
(909)
(84)
(993)
3,842
90
3,932
Charged to the income statement
Additional provisions
Applied during the year
At 31 December 2009
3,589
3,589
(3,842)
(30)
(3,872)
3,589
60
3,649
2009
2008
Analysis of total provisions
Non-current
Current
60
90
3,589
3,842
3,649
3,932
Transfers amounting to € 3,589 thousand relate to the valuation of Emission Rights consumed in
2009.
Applications made during 2009 relate to the reversal of a short-term provision for liabilities and
charges concerning CO2 emission rights.
The Group company Papeteries de L’Atlantique records a provision amounting to € 60 thousand
for litigation with its former employees.
74
21.
Net turnover and other revenues
Sale of paper
Sale of Electricity
Sale of timber
Net revenues
2009
2008
142,560
168,763
35,581
10,875
2,619
3,221
180,760
182,859
Lease revenues
217
198
Revenues from different services
398
130
5,524
5,962
Capital grants released to income during the year
Provisions applied
196
Other revenue
1,447
1,825
Total other revenues
7,782
8,115
188,542
190,974
2009
2008
Depreciation/Amortization
12,692
10,046
Employee benefit expense
17,302
17,301
4,521
(1,732)
72,980
89,426
9,245
10,706
Total
22.
Expenses by nature
Changes in inventories of finished goods and work in progress
Raw materials and consumables used
Transport
Repairs and maintenance
9,462
8,792
Supplies
38,425
36,214
Other expenses
14,671
12,861
179,298
183,614
Total
75
23.
Employee benefit expenses
2009
2008
(2008: € 58 thousand).
13,435
13,415
Social Security expense
3,680
3,686
187
200
17,302
17,301
2009
2008
Bank loans and credit facilities
(862)
(1,569)
Losses on exchange
(925)
(1,199)
(11)
(9)
(1,798)
(2,777)
726
1,079
Wages and salaries, including severance indemnities amounting to € 133 thousand
Other benefits
24.
Net financial costs
Other financial expenses
Interest costs:
Income from fixed interest securities
Gains on exchange
Other financial income
169
265
Interest income
895
1,344
(903)
(1,433)
76
25.
Income tax
2009
2008
Corporate income tax payable for the year
2,218
1,793
Deferred tax (Note 19)
(910)
(3,342)
1,308
(1,549)
The Group’s profit before income tax differs from the theoretical amount that would have been
obtained had the average weighted tax rate applicable to the consolidated companies’ profits been
used as follows:
Profit before taxes
Tax calculated at the Group's average tax rate
Income not subject to tax
Deferred tax assets (R&D+i deductions)
2009
2008
8,341
5,927
(2,504)
(1,900)
396
396
1,000
3,000
(200)
(76)
(1,308)
1,549
129
Deferred tax assets (tax-loss carryforwards)
Tax losses for which no deferred tax asset was recognized.
Corporate income tax expense
The Group's average tax rate in 2009 was 30.02% (2008: 32.06%)
At 31 December 2009 the amount of deductions pending application for corporate income tax
purposes in future years, included under Deferred tax assets on the asset side of the consolidated
balance sheet, totals € 9,263 thousand in respect of new fixed assets (Note 19) and € 4,000
thousand for R&D+i deductions.
77
Depending on the taxable income generated in previous years and on the basis of forecast taxable
income in subsequent years, the directors of Papelera Guipuzcoana de Zicuñaga, S.A. have no
reasonable doubts as to the recoverability of the deductions for investment capitalized and
pending application for tax purposes mentioned above.
The group company Papelera Guipuzcoana de Zicuñaga, S.A. is not affected by additional
provision ten of Provincial Regulation 7/1997 (27 December 1997).
Additionally, the group company Papelera Guipuzcona de Zicuñaga, S.A. has deductions
amounting to € 15,757 thousand granted by the Provincial Authorities of Guipúzcoa in respect of
R&D, as a result of the verification carried out by this body in 2004. These deductions are
available for application in future corporate income tax assessments. For reasons of prudence, the
Directors have not recognized this amount under assets in the consolidated balance sheet at 31
December 2009.
Legislation applicable to the assessment of corporate income tax for 2009 is that contained in
Provincial Regulation 7/1996 of 4 July 1996 with the amendments included in Provincial DecreeRegulation 4/2009, of 23 December, in force at the year end. There is no evidence at the current
date of any appeals having been filed against such legislation.
The Company’s Directors have calculated the amounts associated with this tax for 2009 and
those years open to inspection in accordance with provincial legislation in force at each year end
on the understanding that the various legal proceedings and final outcome of the appeals filed in
this respect will not have a significant impact on the annual accounts taken as a whole.
The years open to a tax inspection vary for the different companies pertaining to the
consolidated group located in Spain although the returns for the past four years are generally
open to inspection. The tax situation of the foreign subsidiaries is subject to applicable legislation
in their respective countries.
78
In accordance with current legislation, tax assessments may not be considered definitive until the
returns filed have been inspected by the tax authorities or the inspection period has elapsed. The
Directors of the parent company do not expect any additional significant liabilities to arise in the
event of an inspection.
Under applicable accounting standards, contingencies considered probable are provided for while
those other contingencies which are deemed remote are not recognized as such or disclosed,
except when the level of probability may be rated at least possible.
Deferred tax liabilities have not been recognized in respect of withholdings and other taxes
payable on profits not remitted by foreign subsidiaries since the amounts involved are
permanently reinvested and, in any event, the company is able to control the dividend payment
policy in the same.
26.
Earnings per share
Basic
Basic earnings per share are calculated by dividing the profit attributable to the Company’s
shareholders by the weighted average number of ordinary shares in the year, excluding treasury
shares acquired by the Company (Note 13).
Profit attributable to the Company shareholders (thousand)
Weighted average number of ordinary shares
Basic earnings per share (€ per share)
2009
2008
7,033
7,476
11,473,847
11,544,902
0.613
0.652
The calculation of diluted earnings per share does not differ from the amount reflected with
respect to basic earnings per share.
79
27.
Dividends per share
The dividends paid in January and December 2009 amounted to € 923 thousand (0.08 € /share,
gross) and € 923 thousand (0.08 € /share, gross), respectively.
28.
Cash generated by Cash Flow operations
Profit for the year
Adjustments:
2009
2008
7,033
7,476
12,340
8,206
1,308
(1,549)
12,686
10,033
6
13
Net movements in provisions (Note 20)
(196)
(47)
Interest income
(895)
265
Taxes (Note 25)
Interest costs (Note 24)
Grants released to income for the year
Inventories
Cash generated from operations
29.
1,798
1,569
(2,367)
(2,078)
3,818
625
5,404
(4,811)
8,438
(3,754)
(10,024)
9,190
23,191
16,307
Contingencies
Through a public document executed before the Notary of Madrid, Mr Luis Maiz Cal, on 29
December 2000, with protocol number 5.228, the Group company Ibereucaliptos, S.A. arranged a
mortgage with Banco Zaragozano (currently the Barclays Group) for a maximum liability of €
6,611 thousand on property it owns (Las Medianillas and El Vinagre), as security for guarantees
furnished by this bank to Papelera Guipuzcoana de Zicuñaga, S.A., amounting to € 2,977 thousand
and maturing on 1 January 2025.
80
30.
Related- party transactions
The transactions set out below were carried out with related parties:
a)
Compensation paid to key management personnel and directors
2009
2008
Salaries and other short-term compensation paid to Directors
498
525
Salaries and other short-term compensation paid to key executives
859
904
1,357
1,429
Set out below is the compensation accrued by each member of the Parent Company’s Board of
Directors for all items.
Remuneration
as members of
the Parent
Company’s
Board
Remuneration
as members of
other Boards
Per diems
Mr Jaime Echevarría Abona
23
12
2
23
12
2
23
7
28
23
24
28
23
Remuneration
Senior
Management
remuneration
2
7
259
81
The Group does not record pension and life insurance commitments with any member of the
Board.
Mr. Iñigo Echevarría Canales is the only Director who, as an employee of Papelera Guipuzcoana
de Zicuñaga, S.A., and as is stipulated by the Provincial Collective Wage Agreement, benefits like
any other employee from company contributions to EPSV Geroa, in the same amount as received
by other employees.
Papelera Guipuzcoana de Zicuñaga, S.A has obtained life insurance policies that cover disability
and death contingencies, of which Mr. Iñigo Echevarría Canales benefits just like any other
employee.
The Company has granted no types of guarantees in favor of Board members.
b)
Related- party loans
In accordance with the provisions of Article 127 ter.4 of the Spanish Companies Act, introduced
by Law 26/2003 (17 July), whereby Law 24/1998 (28 July) on the Securities Market is amended,
and the Spanish Companies Act , in order to reinforce transparency in public limited companies, it
is reported that the members of the Board of Directors hold no holdings in the capital of
companies that carry out an identical, analogous or supplementary kind of activity to that which
makes up the company’s corporate objects outside the Iberpapel Group.
Similarly, the members of the Board of Directors have carried out no activities on their own
account or on account of other companies carrying on an analogous or complementary kind of
activity to that which constitutes the corporate objects of Iberpapel Gestión, S.A. In accordance
with the interpretation by the Spanish Institute of Auditors and Accountants of Article 127, the
positions held by the Directors of this Company in other group companies together with the
percentage of share capital held are as follows.
82
Director
Mr Iñigo Echevarría
Canales
Mr Néstor Basterra
Larroude
Mr Ignacio Peñalba
Ceberio
Company
Activity
Position or office
de Zicuñaga, S.A.
Manufacture of all kinds of
paper
Chairman
consortium and purchase-sale
and marketing of forestry
products
de Zicuñaga, S.A.
paper
products
products
Interest
percentage in
Iberpapel Gestión
0.225%
Director
Director
Director
Director
0.704%
0.940%
Mr Baltasar Errazti
Navarro
0.008%
Mr Iñaki Usandizaga
Aranzadi
2.063%
Mr Martín González del
Valle Chávarri
de Zicuñaga, S.A.
paper
Director
0.236%
0.003%
83
c)
Key management personnel
Key management personnel consist of those individuals who have been granted power-ofattorney and who report directly to management.
The Company's transactions with associated parties consist mainly of sales of goods and services.
The prices applied by associated companies, with respect to physical flows and the rendering of
services, have been determined in accordance with the arm's length principle. In this connection,
prices have been calculated based on the net margin method for all operations, applying the net
margin on sales for the sale/acquisition of products and the net margin on costs for services
rendered.
As regards the loans granted by Iberpapel Gestión to Ibereucaliptos and to Papelera Guipuzcoana
de Zicuñaga, the comparable market price method was used.
31.
Environment
The Iberpapel group is committed to complying with applicable European, central government and
regional legislation and participates actively in the development of new environmental
commitments. In this respect, progress is being made on the gradual implementation of Available
Technology Improvements deriving from Community Directive IPPC 96/61/EC on integrated
pollution control and the processing of Integrated Environmental Management.
The Group has ISO 9001 and 140001 certificates, AENOR certificates for the custodial chain
model and Integrated Environmental Authorization.
In 2009 Papelera Guipuzcoana de Zicuñaga did not make any significant environmental
investments. Furthermore, the expenses incurred for the protection and improvement of the
environment taken directly to the income statement total € 291 thousand (2008: € 266 thousand).
Potential environmental contingencies, indemnities and other environmental risks that could affect
Group companies are adequately covered by the civil liability insurance policies that it has
obtained.
84
32.
a)
Other information
Average number of employees in the Iberpapel Group by category
Women
2008
Total
8
43
17
260
27
11
8
43
44
271
328
38
366
Men
Women
2009
Total
8
48
8
262
25
13
8
48
33
275
326
38
364
Men
Managers
Technical personnel
Administrative staff
Factory workers
Managers
Technical personnel
Administrative staff
Semi-skilled workers and specialists
b)
Fees of the auditors and group or related companies
The fees for the audit and other services provided by PricewaterhouseCoopers Auditores in
2009 amounted to € 139 thousand (in 2008 € 130 thousand).
The fees charged for other services rendered by other companies using the
PricewaterhouseCoopers Trademark in 2009 totalled € 58 thousand (in 2008 € 22 thousand).
The fees for the audit services provided by other companies in 2009 amounted to € 29 thousand
(in 2008 € 24 thousand).
33.
taken place.
85
APPENDIX I
Subsidiaries included in the Consolidation
interest
Name
Papelera Guipuzcoana de
Zicuñaga, S.A.
Distribuidora Papelera,
S.A.
Moliner, Domínguez y
Cia., S.A.
Central de Suministros de
Artes Gráficas Papel, S.A.
Zicupap, S.A.
Address
Bº de Zicuñaga, S/N
Hernani (Spain)
C/ Velázquez, 105
Madrid (Spain)
C/ Bogatell, 43-49
Sant Adriá de Besós
(Spain)
C/ Velázquez, 14 La
Palma del Condado
(Spain)
C/ Velázquez, 105
Madrid (Spain)
C/ Bogatell, 43-49
Sant Adriá de Besós
(Spain)
Z.I. des Joncaux.
Bâtiment C. Hendaya
(France)
Avda. Sancho el Sabio,
2-1º. San Sebastián
(Spain)
Plaza Cagancha, 1335
oficina 1101
Montevido (Uruguay)
Copaimex, S.A.
Avda. Sancho el Sabio,
2-1º. San Sebastián
(Spain)
C/ General Urquiza,
137. Colón
(Argentina)
Z.I. des Joncaux.
Papeteries de L’Atlantique,
Bâtiment C. Hendaya
S.A. (in liquidation)
(France)
Samakil, S.A.
G. Gil, S.A.
Paraje Constancia
Padrones, Nº 222982- y 9370
Paysandú. (Uruguay)
Plaza Cagancha, 1335
oficina 1101
Montevido (Uruguay)
C/ Lugones, 40. Colon
(Argentina)
Cost in €
’000
% par
value
Company
holding the
interest
Iberpapel
Gestión, S.A.
Reason
for
Consolidation
Activity
Auditor
a
1
A
41,516
100
222
100
Iberpapel
Gestión, S.A.
a
2
A
60
100
Iberpapel
Gestión, S.A.
a
2
A
3,994
100
Iberpapel
Gestión, S.A.
a
3
A
60
100
Iberpapel
Gestión, S.A.
a
2
A
60
100
Iberpapel
Gestión, S.A.
a
2
A
8
100
Iberpapel
Gestión, S.A.
a
4
C
60
100
Iberpapel
Gestión, S.A.
a
4
A
d
3
B
475
100
Papelera
Guipuzcoana
de Zicuñaga,
S.A.
a
4
A
3,916
100
Ibereucaliptos,
S.A.
a
3
B
Papelera
Guipuzcoana
de Zicuñaga,
S.A.
a
5
C
37
99.99
19,913
100
Ibereucaliptos,
S.A.
a
3
B
962
100
Ibereucaliptos,
S.A.
a
6
B
3,971
100
Ibereucaliptos,
S.A.
a
6
B
86
APPENDIX I
Notes:
Reason for Consolidation
The cases defined by Article 42 of the Commercial Code are:
a)
The parent company holds a majority of the voting rights.
b)
The parent company is empowered to appoint or remove the majority of the administrative
body’s members.
c)
The parent company may cast, by virtue of the agreements concluded with other
shareholders, the majority of the voting rights.
d)
The parent company has appointed solely with its votes the majority of the administrative
body’s members, who hold their positions at the time the consolidated accounts are drawn up
and for the two immediately preceding years.
For such purposes, the rights held through other subsidiaries or persons acting in their own name
but on account of the parent company or other subsidiaries or those held by agreement with any
other person will be added to the rights held by the parent company.
It will similarly be assumed that there is a single decision-making unit when, through any other
means, one or several companies are under a single management team. In particular, when the
majority of the members of the subsidiary’s administrative body are members of the
administrative body or senior managers of the parent company or any other company controlled
by the latter.
Unless otherwise stated, the closing date of the annual accounts is 31 December 2009.
Activity:
1) Manufacture, transformation and sale of paper
2) Paper wholesaler
3) Reforestation and forestry activities.
4) Promotion of exports.
5) Rent of moveable and real property
6) Timber merchant
Auditor:
A) Audited by PricewaterhouseCoopers Auditores, S. L..
B) Audited by P & A Auditores.
C) Audited by Sogeca.
87
1.
Development of the business
The development of the paper industry in 2009 was characterized by significant declines in
demand and paper product prices. This trend affected practically all European markets, with Spain,
the United Kingdom and France being affected the most. In this environment, Iberpapel has
benefited from the flexibility of its sales policy, its energy efficiency policy and cost control plan,
which have allowed it to continue to improve its operating margins and significantly reduce its
debt.
1.1.
Consolidated Management Results at 31 December 2009
Net turnover totaled € 180,760 thousand represents a 1.1% decline compared with last year
(2008: € 182,859 thousand). The Group's total revenues reached € 188,542 thousand (2008: €
190,974 thousand).
EBITDA totaled € 21,936 thousand (2008: € 17,406 thousand) and grew by 26.0%. The gross
operating margin on revenues improved significantly to 11.6%.
EBIT at 31 December 2009 stood at € 9,244 thousand (2008: € 7,360 thousand), 25.6% higher.
The profit before taxes recorded by Iberpapel Group rose by 40.7% to € 8,341 thousand (2008: €
5,927 thousand).
Net profit rose during the twelve months of 2009 to € 7,033 thousand (2008: € 7,476 thousand).
The Group's investments amounted to € 5,141 thousand.
Short and long-term bank borrowings totaling € 29,983 thousand fell by € 12,196 thousand
(28.9%), which reduced leverage by 15.3%.
88
1.2.
Income statement
a)
Operating revenues and profits
Accumulated net revenues recorded by Iberpapel Group at 31 December 2009 amounted to €
180,760 thousand (2008: € 182,859 thousand), which is a 1.1% decline. The most significant
components were as follows:
31/12/2009
31/12/2008
Var. %
Sale of paper
142,560
168,763
-15.5%
Sale of timber
2,619
3,221
-18.7%
Sale of Electricity
35,581
10,875
227.2%
Paper sales fell by 15.5% due to the negative market situation, which mainly affected selling prices,
but also the number of physical units sold dropped by around 6%.
IBG PAPER PRICES. BASE 100 INDICES 2000
The cost of supplies totaled € 72,980 thousand, an 18% decline that is mainly due to the
purchasing policies that have allowed action to be taken with respect to raw material prices. The
prices to acquire timber and long and short fibers underwent substantial declines in 2009. Supply
costs were also helped by a higher contribution of in-house cellulose production for the
manufacture of paper.
89
The heading "Other expenses" shows the positive effect that the fall in gas prices has had on this
heading, which was partially offset by higher consumption by the new co-generation plant.
Up until December 2009 Iberpapel Group imported three shipments of Eucalyptus from its
properties in South America (72,250 cubic meters).
Personnel costs totaling € 17,302 thousand remain at the same level as in 2008 (€ 17,301
thousand).
The Group's gross operating profit rose to € 21,936 thousand (2008: € 17,406), which is 26.0%
more. EBITDA reflects the sharp decline in paper prices, offset in part by the decline in raw
material prices, the significant fall in gas prices and the increase in electricity sold by the Group
subsidiary Papelera Guipuzcoana de Zicuñaga.
b)
Payroll
At 31 December 2009 the average number of employees stood at 364 (2008: 366).
EVOLUTION OF WORKFORCE
1.3.
a)
Consolidated balance sheet
Other intangible assets
This heading includes CO2 emission rights granted this year and measures at the price established
at 1 January 2009.
b)
Biological assets
The measurement of biological assets is done on an annual basis by the independent expert
“GALTIER FRANCO IBERICA, S.A.”
90
c)
Investment
The Group made investments totaling € 5,141 thousand in 2009 (2008: € 23,383 thousand), of
which € 2,048 thousand relate to the co-generation activity, € 2,028 to forestry activities and €
1,065 to paper manufacturing activities.
d)
Bank loans and overdrafts
Short and long-term bank borrowings at 31 December 2009 totaled € 29,983 thousand (2008: €
42,179 thousand). The Group reduced its debt by € 12,196 thousand (-28.9%), which reduced its
leveraging to 15.3% (2008: 22.6%)
€ ’000
31/12/2009
31/12/2008
Bank borrowings and overdrafts falling due within and after one year
29,983
42,179
Less: Cash and cash equivalents
(3,618)
(4,579)
Net debt
26,365
37,600
172,853
166,530
15.3%
22.6%
Equity
Leveraging index
LEVERAGE %
The decrease in debt allowed the Group to improve its financial structure. At 31 December 2009
the Group's capital and reserves represent 65.5% of total liabilities.
91
FINANCIAL STRUCTURE
Equity
1.4.
Liabilities
Relevant events
11/03/2009
The Company announced that on 2 March 2009,the Guipúzcoa Mercantile
Registry recorded the termination of the Director Mr. José María Cuevas Salvador
due to his death.
29/04/2009
The Company called a General Meeting
03/06/2009
The Company sent the Resolutions adopted by the General Meeting.
16/12/2009
The Company issued information regarding the interim dividend distributed from
2009 profits as agreed by the Board of Directors at a meeting held in 15
December 2009.
17/12/2009
Mr. Echevarría Abona resigned as the Chairman of the Board fn CEO and Mr.
Echevarría Canales was appointed.
2.
Treasury shares
In 2009 Iberpapel Gestión, S.A. acquired 9,991 treasury shares on the stock exchange. The
amount paid for the shares totaled € 87 thousand, net of taxes.
92
At 31 December 2009 the Company holds a total of 98,869 own shares amounting to € 1,556
thousand. These shares represent 0.850% of the Company’s share capital. The value of these
shares is included in Treasury shares as a decrease in the value of equity in accordance with IAS
32.
3.
Research & Development
The Company continues to focus its efforts on R&D and innovation programs in the search for
new products, the improvement of the production process and the on-going follow-up of the
technologies affecting each business process.
4.
Risk management
4.1.
General description of the risk policy.
The Iberpapel Group has carried out risk control and management actions which have afforded
an adequate valuation in this respect. In this respect, systems have been implemented that enable
the following risks affecting the Group to be identified, assessed, managed and controlled.
a)
The Group’s control systems are considered appropriate in light of the Group’s risk profile and
may be grouped together in the following categories:
i) Market / competition and selling / raw material prices risks.
Maintaining a highly competitive cost structure that enables the impact of market crises
to be addressed comparatively better than in the competition.
Improvement in competitiveness and environmental efficiency through the launch of a 50
MWh high-efficiency cogeneration plan which gives rise to an additional competitive
advantage due to cost reductions and lowered dependence on electricity prices.
93
ii) Forestry risks.
Systems of control over the distribution of forestry assets: three distant forestry areas
(Argentina, Uruguay and Huelva), with the reasonable distribution of properties in each
area. Moreover, forest cleaning, firebreak work etc is carried out on a regular basis,
thereby reducing the impact of potential damages from fire.
iii) Regulatory/ environmental risks.
Plans and systems to ensure the quality of products and services: the top priority under
the Iberpapel Group’s defined quality policy is customer satisfaction and on-going
improvement and therefore to ensure that products and services meet quality standards.
In this connection, the Group has ISO 9001 and 14001 certificates, AENOR certificates
for the Custodial Chain Model and Integrated Environmental Authorization obtained in
2008. The Iberpapel Group’s basic quality policy objectives are as follows:
To review, improve and optimize existing processes and controls in order to ensure
product quality and traceability.
To provide an adequate response to claims, implementing a process to examine,
record and respond to such claims.
Systems to control environmental risks: the Iberpapel group is committed to complying
with applicable European, central government and regional legislation and participates
actively in the development of new environmental commitments. In this respect,
progress is being made on the gradual implementation of Available Technology
Improvements deriving from Community Directive IPPC 96/61/EC on integrated
pollution control and the processing of Integrated Environmental Management. A series
of actions carried out by the Group in this connection are particularly noteworthy:
94
Installation of on-going emission measurement systems in conjunction with the
Basque regional government.
Utilization of the best available technologies to improve emissions and disposals and
reduce waste.
The Iberpapel Group has continued to implement its reforestation policy, focusing on
so-called Clean Development Mechanisms (CDM). This policy aims to secure, through
such mechanisms contained in the Kyoto Protocol and European legislation, financing to
ensure the feasibility of the projects started up, enabling, moreover, the obtainment of
an optimum supply of raw materials for our facilities in Hernani.
This project is a worldwide benchmark for the forestry sector since the calculation
methods developed by the Group may be applied to any other project .
The aforementioned project has mainly been developed through a reforestation
program based on the variety of seed or development eucalyptus cloned at the
properties purchased by the group’s subsidiaries in Argentina and Uruguay which were
previously used as grazing land. The total number of reforested hectares over the past
few years is approximately 4,200 in Argentina and 7,300 in Uruguay.
Iberpapel Group is developing a specific energy and climate change program to improve
the balance of CO2 emissions and to facilitate a favorable competitive position, including
the improvement of CO2 emissions and the strengthening of the use biomass as fuel.
In past years Iberpapel Group obtained several environmental certificates, among them
the AENOR certificate for the Custodial Chain Model for Forestry Products (PEFC) in
the industrial division, together with the Sustainable Forestry Management Certificate in
accordance with the FSC Standard (Forest Stewardship Council) in the forestry division.
95
In 2009 Iberpapel Group continued with the process of making environmental
improvements by obtaining new certificates such as the Custodial Chain certificate in
accordance with the FSC standard by the industrial division and the forestry division
(national and international).
iv) Risks relating to new investments and other
There is an investment development analysis and monitoring program in place that
allows business growth processes to be satisfactorily handled and relates to the growth
of the generation of electricity that the Group plans to export to the grid.
v) Risks of material damages and loss of earnings.
Other preventive procedures: it is Iberpapel group’s policy to arrange the necessary
insurance policies and hedges to mitigate as far as possible the risks deriving from the
loss of earnings, material damages, customer collection, machine breakdowns etc .
Customer collections (the group arranges insurance for both domestic and export
sales)
b)
Risk control and coverage
The Group has assessed the risks on the basis of a universal model and carried out the reviews
considered necessary to update the risk map. Similarly, the impact of those risks has been
calculated together with the follow-up and management actions relating to each of the
aforementioned areas.
96
In order to reinforce the control environment, Iberpapel Group hired Deloitte & Touche, S.L. to
perform an internal audit of the Group. This consultant reported directly to the Audit
Commission as the body responsible for supervising internal control.
c)
Organization and responsibilities
The Company controls and manages the risks of the Iberpapel Group at different supervisor,
control and management levels.
i) Board of Directors: The Board is responsible for maintaining the internal control
system, including the follow-up and control of the significant risks of the Iberpapel
corporate group.
ii) Audit Committee. The Audit Committee carries out the risk management policy and the
regular follow-up of information and control systems.
iii) Risk Control and Management Systems in the Group. On the basis of the assessment of
operational risks supervised by the Audit Committee, the Board of Directors carries out
risk control and management and supervises the internal audit services.
The Group has implemented the necessary mechanisms to control and manage risks in
accordance with the universal assessment model which takes into account any kind.
Because of its universal and dynamic nature, the system enables the on-going management of the
risks affecting the Iberpapel Group, making it possible to tailor it to changes in the environment,
to review its objectives and strategies and upgrade its monitoring and supervisory process.
With respect to compliance with the different regulations which affect the Iberpapel Group, it
should be noted that the Group has a legal department and external advisors when required such
that at all times it is in a position to comply with the regulations applicable to the Group in its
operations.
97
In this respect, it should be noted that as a listed Group, it complies with its quarterly, sixmonthly and annual reporting obligations and issues the Significant Events report and other
information requested by the National Securities Market Commission.
Integrated risk management in the Iberpapel Group and companies which form it enables a
profitability / risk balance to be attained, reducing the impact on results.
4.2.
Derivative financial instruments and hedge accounting
The Group does not trade in derivative financial instruments and does not carry out hedge
accounting.
4.3.
Foreign currency transactions
The Group’s functional currency is the euro. As a result, transactions in currencies other than the
euro are considered to be denominated in foreign currency and are recorded at the exchange
rates prevailing on the transaction dates.
At the balance sheet date, monetary assets and liabilities denominated in foreign currency are
translated at the rates in force at the balance sheet date. Gains or losses are taken directly to the
income statement.
On consolidation, the assets and liabilities of the Group’s foreign operations are translated at the
exchange rates in force at the balance sheet dates. Income and expense items are translated at
the average exchange rates for the period unless such rates fluctuate significantly. Any exchange
differences that may arise are classified as equity. Such translation differences are recognized as
income or expenses in the period in which the investment is made or sold.
4.4.
Risks associated with assets
The Group has formalized insurance policies to cover the possible risks to which certain
property, plant and equipment are subject and the possible claims that may be filed in relation to
the performance of its operations. These policies are understood to provide sufficient coverage of
the risks to which such assets are subject.
98
4.5.
Credit risk
The Group’s main financial assets are cash and bank balances, trade and other receivable balances
and investments, which represent the Group’s maximum credit risk exposure in relation to
financial assets.
The Group’s credit risk is mainly attributable to its trade debts. The amounts involved are
recorded in the balance sheet, net of bad debt provisions, which are estimated by Group
management on the basis of prior year experience and an assessment of the current economic
environment.
The Group has no significant credit risk concentration and exposure is spread among a large
number of counterparties. Moreover, the group insures almost all paper sales.
The Group has no direct risks with the Company’s Directors at 31 December 2009.
In all cases, the transactions that gave rise to these balances were completed on an arm’s length
basis.
5.
Events after the balance sheet date
taken place.
99
6. In compliance with Article 116 bis of Law 24/2008 of 28 July 2007, on the
Securities Market, introduced by Law 6/2008 of 12 April 2007, the Board of Directors
of Iberpapel Gestión, S.A. issues this explanatory report on those aspects of the
Directors’ Report envisaged therein for submission to the Company’s General
a)
The capital structure, including securities traded on a Community regulated market,
indicating, where appropriate, the different classes of shares and for each class of shares, the
rights and obligations granted and percentage of capital represented.
The share capital of Iberpapel Gestión, S. A. at 31 December 2009 amounts to € 6,979,884.00
and has been fully paid in and is divided into 11,633,140 ordinary shares of a single class and
series, with a par value of € 0,60 each, fully subscribed and paid in.
b)
Restriction on the transfer of shares.
There are no legal restrictions or restrictions in the bylaws concerning the free acquisition or
transfer of shareholdings.
Article 6 of the bylaws lays down that the shares are represented by accounting entries.
c)
Significant direct or indirect shareholdings in capital.
At 31 December 2009 the only significant shareholdings known are as follows:
Name
Banco Guipuzcoano
%
Direct
%
Indirect
5.226
No. of Direct
rights
No. of
indirect rights
607,923
1,059,706 (1)
9.109
Bestinver Bolsa, FI
4.246
493,918
Onchena, S.L.
7.583
882,188
100
(1) Through:
Number of
% total voting
of the stake
the stake
direct voting
rights
rights
1,447
0.012
1,876
0.016
S.G.I.I.C.
SEGOVIANAS.
BESTINFOND, F.I.
265,908
2.286
493,918
4.246
84,545
0.727
41,192
0.354
46,129
0.397
49,640
0.427
2,249
0.019
2,434
0.021
1,385
0.012
LOUPRI INVERSIONES
3,825
0.033
SOIXA SICAV
50,732
0.436
14,426
0.124
S.G.I.I.C.
S.G.I.I.C.
S.G.I.I.C.
S.G.I.I.C.
S.G.I.I.C.
S.G.I.I.C.
S.G.I.I.C.
S.G.I.I.C.
S.G.I.I.C.
S.G.I.I.C.
S.G.I.I.C.
S.G.I.I.C.
S.G.I.I.C.
101
d)
Restrictions on voting rights
There are no legal restrictions or restrictions in the bylaws on the exercising of voting rights.
e)
Quasi-corporate pacts.
The company has received no notification of the existence of any quasi-corporate pacts including
the regulation of the exercise of voting rights at General Meetings or restrictions on the free
transfer of the shares of Iberpapel Gestión. S.A.
f)
Regulations applicable to the appointment and replacement of the members of the
Administrative Body and amendment of the corporate objects.
Article 9 of the Bylaws lays down that the General Shareholders’ Meeting is authorized to appoint
and dismiss Directors and ratify or revoke provisional appointments of such directors effected by
the Board itself.
Article 21 of the Bylaws lays down that the Board of Directors shall be made up of a minimum of
three and a maximum of 10 members. designated by the General Shareholders’ Meeting.
The Board of Directors will be empowered to cover provisionally any vacancies that may arise in
the same. designating the replacements in the legally established manner until the first General
directors.
102
i) The General Shareholders’ Meeting shall determine the number of directors. with a
minimum of three and a maximum of ten. as established by the Bylaws.
ii) The Directors shall hold office for a maximum of six years and may be re-elected once or
more times for identical periods at the most.
appointment or re-election of directors within the limits set out in the Bylaws. shall be made
The directors shall cease to hold office when the period for which they were appointed elapses.
in accordance with Article 145 of the Mercantile Registry Regulations. and when so decided by
the General Shareholders’ Meeting in accordance with the powers conferred to it.
Moreover. the directors shall place their position at the disposal of the Board of Directors and
formalize. if deemed appropriate. their resignation in the following cases:
i) When they are involved in a legal conflict of interest.
ii) When their remaining on the Board may jeopardize the Company’s interests or when the
iii) In the event of an accusation or instigation of oral proceedings connected with any of the
crimes indicated in Article 124 of the Spanish Companies Act. the Board shall examine the
iv) Domanial directors shall resign when the shareholder whom they represent sells his
103
Amendment of the Company’s bylaws
Article 9 of the Bylaws lays down that authority to amend the bylaws lies with the General
Article 12 of the Bylaws lays down that in order for the General Meeting to validly agree to issue
bonds. increase or decrease share capital. transform. merge or split the Company or any other
bylaw amendment. half of voting capital shall be present at the first call. On second call. it shall be
sufficient for 25% of voting share capital to be represented.
g)
Powers of attorney of the members of the Board of Directors and. in particular. those
relating to the possibility of issuing or repurchasing shares.
Executive directors hold wide-ranging powers of attorney and administration commensurate with
the characteristics and needs of the positions held.
Article 6 of the Boards’ Regulations lays down that the policy concerning dividends and treasury
shares and in particular. their limits. shall be known exclusively by the Board of Directors.
In accordance with Article 75 of the Spanish Companies Act. the General Shareholders’ Meeting.
in the meeting held on 02 June 2009. granted authorization to the Board of Directors. with the
power to delegate. for the derivative acquisition of treasury shares by the Company and / or
part of its subsidiaries in accordance with applicable legislation.
i) Maximum number: the number of treasury shares may in no event exceed the maximum
limit contained in the Spanish Companies Act for listed companies ( 5% of share capital.)
ii) Term: 14 months as from 2 June 2009.
iii) The price shall be a minimum of the par value and a maximum of € 40 per share.
h)
Any significant agreements that have been concluded by the company and enter into effect
may be amended or terminated in the event of a change in control of the company as a result of a
public offering and their effects. except when disclosure would have a serious adverse effect for
the company. This exception shall not apply when the company is legally required to disclose this
information.
104
The company has not entered into any agreements in this respect.
i)
The agreements between the company and its administration and management officers or
employees that provide for indemnities in the event of resignation or wrongful dismissal or if the
employer/ employee relation comes to an end as a result of a public offering.
The Company has no agreements other than those contained in the Workers’ Statute with its
administration and management officers or employees that provide for indemnities in the event of
resignation or wrongful dismissal or if the employer/ employee relation comes to an end as a
result of a public offering.
105
ANNUAL CORPORATE GOVERNANCE REPORT
LISTED COMPANIES
ISSUER IDENTIFICATION
YEAR END DATE
31-12-2009
C.I.F A21248893
Name:
IBERPAPEL GESTION. S.A.
106
MODEL ANNUAL CORPORATE GOVERNANCE REPORT FOR LISTED
COMPANIES
To better understand and fill in this model report. the instructions included at the end should be
read.
A
OWNERSHIP STRUCTURE
A.1 Complete the following table on the company’s capital:
Date of latest modification
Share capital (€ )
Number of shares
26-06-2006
6,979,884.00
11,633,140
Number of voting
rights
11,633,140
State whether there are different classes of shares with different associated rights:
No
A.2 Give details on the direct and indirect holders of significant interest in your company at the
year-end. excluding Directors:
Name of shareholder
BESTINVER GESTION. S.A. S.G.I.I.C.
ONCHENA.S.L.
Number of direct
Number of indirect
% total voting
voting rights
voting rights (*)
rights
0
1,059,706
9.109
882,188
0
7.583
BANCO GUIPUZOANO. S.A.
607,923
0
5.226
BESTINVER BOLSA. FI
493,918
0
4.246
107
(*) Through:
Number of
% total voting
of the stake
the stake
direct voting
rights
rights
ABEDUL 1999. S.A. SICAV
1,447
0.012
BESTINVER GESTION. S.A.
ACCINES CUP. Y OBLI.
1,876
0.016
S.G.I.I.C.
SEGOVIANAS.
BESTINFOND. F.I.
265,908
2.286
BESTINVER BOLSA. F.I.
493,918
4.246
BESTINVER MIXTO. F.I.
84,545
0.727
BESTINVER AHORRO.F.P.
41,192
0.354
46,129
0.397
BESTINVER GLOBAL. F.P.
49,640
0.427
2,249
0.019
DIIVALSA DE INVERSIONES SICAV. S.A.
2,434
0.021
LINKER INVERSIONES. SICAV. S.A.
1,385
0.012
LOUPRI INVERSIONES
3,825
0.033
SOIXA SICAV
50,732
0.436
TEXRENTA INVERSIONES.
14,426
0.124
S.G.I.I.C.
S.G.I.I.C.
S.G.I.I.C.
S.G.I.I.C.
S.G.I.I.C.
S.G.I.I.C.
S.G.I.I.C.
S.G.I.I.C.
S.G.I.I.C.
S.G.I.I.C.
S.G.I.I.C.
S.G.I.I.C.
S.G.I.I.C.
108
Indicate the principal movements in the shareholding structure during the year:
Name of shareholder
Date of the transaction
Description of the transaction
BESTINVER GESTION. S.A. S.G.I.I.C
19/11/2009
Reduced from 10% of share capital
A.3 Complete the following tables on Directors’ shareholding interests in the company:
Number of direct
voting rights
Number of
indirect voting
% total voting rights
rights (*)
25,701
490
0.225
61,796
20,157
0.704
873
0
0.008
108,799
600
0.940
13,213
14,215
0.236
240,016
0
2.063
400
0
0.003
(*) Through:
Name of indirect holder of the stake
Through: Name of direct
Number of
% total voting
holder of the stake
direct voting
rights
rights
Mr. JAIME ECHEVARRIA AGUIRRE
490
0.004
LINET INVERSIONES 2012. S.L.
13,425
0.115
Mr. NESTOR E IGNACIO
6,732
0.058
14,215
0.122
600
0.005
BASTERRA MARTINEZ
Mr. IÑIGO SOLAUN GARTEIZ-GOXEASCOA
Mrs. Mª ANGELES BUSTILLO
BASTERRA
Mrs. MAGDALENA OTADUY
SALCEDO
% total of voting rights held by the Board of Directors
4,180
109
Complete the following tables on Directors with stock options in the Company:
A.4 Indicate family. commercial. contractual or corporate relationships among significant
shareholders known to the company. if any. except any that are insignificant and those
deriving from ordinary commercial business:
A.5 Indicate commercial. contractual or corporate relationships between significant shareholders
and the company and/or its group. if any. except any that are insignificant and those deriving
from ordinary commercial business:
A.6 Indicate any shareholders’ agreements of which the Company has been notified in pursuance
of Article 112 of the Stock Market Act. Describe briefly. if any. indicating the shareholders
bound by the agreement:
NO
Expressly indicate any change or break-up of those agreements or concerted actions. if any. that
have taken place during the year:
A.7 Indicate any individuals or entities that exercise or may exercise control over the Company
in pursuance of Article 4 of the Stock Market Act. Identify any that exist:
NO
A.8 Complete the following tables on the Company’s treasury stock:
At the year-end:
Number of direct shares
Number of indirect shares
% total of share capital
98,869
0
0.850
110
(*) Through:
Total:
0
Give details on any significant variations during the year. according to the provisions of Royal
Decree 1362/2007:
Gains/(Losses) obtained during the year on trading treasury shares (thousand euro)
0
A.9 Indicate the terms and conditions of the authorization granted by the General Meeting to the
Board to buy or sell treasury shares.
The Board of Directors is authorized to acquire treasury shares by the Company and/or its subsidiaries. in
accordance with the terms established by Law and by shareholders at the general Meeting held on 02 June 2009.
as follows:
(i) Maximum number: the number of treasury shares may in no event exceed the maximum limit contained in
the Spanish Companies Act for listed companies ( 5% of share capital.)
(ii) Term:14 months as from today's date.
(iii) The price shall be a minimum of the par value and a maximum of € 40 per share.
A.10 Indicate any constraints established in law or the Articles of Association on the exercise of
voting rights and legal restrictions on the acquisition and disposal of shares in the capital.
Indicate whether there are any legal constraints on the exercise of voting rights:
NO
Maximum percentage of voting rights that may be exercised by a shareholder due to legal
0
restrictions
Indicate whether the Articles of Association establish any constraints on the exercise of voting
rights:
NO
111
Maximum percentage of voting rights that may be exercised by a shareholder due to
0
bylaw restrictions
Indicate whether there are any legal restrictions on the acquisition and disposal of shares in the
capital:
NO
A.11 Indicate whether the General Shareholders’ Meeting has resulted in measures to neutralize
a takeover bid under Law 6/2007.
NO
If so. explain the measures approved and the terms under which the constraints would become
ineffective.
B
B.1
MANAGEMENT STRUCTURE OF THE COMPANY
Board of Directors
B.1.1 State the maximum and minimum numbers of Directors stipulated in the Articles of
Association:
Maximum number of Directors:
Minimum number of Directors:
10
3
112
B.1.2 Complete the following table with details of the members of the Board:
Date of first
Date of last
appointment
appointment
CHAIRMAN
21-07-1997
19-06-2007
VICE CHAIRMAN
21-10-1997
19-06-2007
DIRECTOR
21-10-1997
19-06-2007
DIRECTOR
21-10-1997
19-06-2007
DIRECTOR
21-10-1997
19-06-2007
DIRECTOR
21-07-1997
19-06-2007
DIRECTOR
22-02-2005
2-06-2009
Representative
Position
Mr. IÑIGO ECHEVARRIA
Election procedure
SHAREHOLDER VOTE
CANALES
Mr. NESTOR BASTERRA
SHAREHOLDER VOTE
LARROUDE
Mr. BALTASAR ERRAZTI
SHAREHOLDER VOTE
NAVARRO
Mr. IGNACIO PEÑALBA
SHAREHOLDER VOTE
CEBERIO
Mr. IÑAKI
SHAREHOLDER VOTE
USANDIZAGA
ARANZADI
Mr. IÑIGO SOLAUN
SHAREHOLDER VOTE
GARTEIZ
Mr. MARTIN MARIA
SHAREHOLDER VOTE
GONZALEZ DEL VALLE
CHAVARRI
Total Number of Directors
7
Indicate any exits from the Board of Directors during the year:
Status of the Director at the time of
Date of
exit
exit
EXECUTIVE
31/12/2009
113
B.1.3 Complete the following tables on the types of Board Members:
EXECUTIVE DIRECTORS
Position in Company’s
organization
NOMINATIONS AND
CHAIRMAN
COMPENSATION
Total number of executive Directors
1
14,286
INSTITUTIONAL OUTSIDE DIRECTORS
Name of the significant
shareholder represented or
that proposed the
appointment
NOMINATIONS AND
Mr. IÑAKI USANDIZAGA
ARANZADI
NOMINATIONS AND
IGNACIO PEÑALBA CEBERIO
Total number of Institutional Directors
2
28,571
INDEPENDENT OUTSIDE DIRECTORS
Profile
Doctorate in Industrial Engineering from Escuela Superior de Ingenieros Industriales in Bilbao.
Director of Grupo Tamoin. Director of Probask and Director of Bestergy.
Simultaneously. he has been one of the key proponents of configuration and consolidation of business organizations in
Euskadi and between 1984 and 1993 he was the Vice Chairman of the Basque Business Confederation (Cofebask). He
chaired this organization between 25 October 1993 and July 1999.
He has also formed part of the Executive Committees of the Basque Metal Industry Federation and the Vizcaya
Industrial and Mercantile Center (currently called Cebek) and chaired the Industry and Energy Committee at the
114
CEOE. He was on the Executive Committee of CEOE and chaired its Technology Innovation Committee.
Profile
Degree in Law from Universidad de Valladolid.
He has been a Director of Garteiz. S.A. Prado Hnos. S.A. Garate Anitua y Cia S.A.. Sebastián de la Fuente. S.A.
Administrador Único de Productos Fotográficos. Valca.S.A. and Invelasa. S.A. (Patricio Echevarria. S.A.)
Profile
Degree in Law from Fundación Universitaria San Pablo CEU
MBA from INSEAD- Fontainebleau in 1984.
Founding Partner of Realza Capital SGECR. S.A
CEO of Investindustrial Partners Spain. S.A.
Assistant General Manager of Crédit Agricole Indosuez. Director of Corporate Finance
Senior Director of Mercapital. S.A.
He started his professional career at Duro Felguera. Baxter Travenol (health) and Socelec. S.A. (Technical lighting).
holding various positions of responsibility.
Chairman of Esindus. S.A.
Director of Hamon&Compagnie
Profile
Degree in Law and Diploma in Economics from Universidad de Deusto MBA from IESE
Responsible for the Large Company Department Banco Santander Central Hispano.
Bank of América: Corporate banking and Capital Markets
Vice-Chairman of Viscofan. S.A.
Director of Amistra SGC S.A
Total number of independent Directors
4
57,143
OTHER OUTSIDE DIRECTORS
State the reasons why they cannot be considered institutional or independent directors and their
association with either the Company. executives or shareholders.
115
Indicate any variations during the year in the type of each Director:
B.1.4 Explain why institutional directors have been appointed at the proposal of shareholders with
less than 5% interest in the Company. if appropriate:
Indicate whether any formal requests for a presence on the Board have not been met from shareholders with
an interest equal to or greater than that of others at whose request institutional directors have been appointed.
If so. explain why such requests have not been met:
NO
B.1.5 Indicate whether any director has left the position before the end of his/her term. whether
he/she explained the reasons for leaving the Board and how; if done in a letter addressed to
the entire Board. explain at least the reasons stated therein:
Reason for exit
Resignation
B.1.6 Indicate the powers delegated to the Managing Director(s). if any:
Name
Brief description
Board authority. except for those that cannot be delegated as listed in the Regulations and those pertaining to the
General Meeting.
116
B.1.7 Name the Board members. if any. who are also directors or executives of other companies
in the same group as the listed company:
Name of the group company
Position
IBEREUCALIPTOS. S.A
DIRECTOR
LOS EUCALIPTOS. S.A.
VICE CHAIRMAN
PAPELERA
PAPETERIES DE L´ATLANTIQUE. S.A.
CHAIRMAN
SAMAKIL. S.A.
VICE CHAIRMAN 2
IBEREUCALIPTOS. S.A.
DIRECTOR
PAPELERA
GUIPUZCOANA
DE CHAIRMAN
ZICUÑAGA. S.A.
GUIPUZCOANA
DE DIRECTOR
ZICUÑAGA .S.A.
SAMAKIL. S.A
VICE CHAIRMAN 1
IBEREUCALIPTOS. S.A.
DIRECTOR
PAPELERA
GUIPUZCOANA
DE DIRECTOR
ZICUÑAGA .S.A.
B.1.8 Name company directors. if any. on the Boards of non-group companies listed on Spanish
stock exchanges. insofar as the company has been notified:
Name of the listed company
Position
BANCO GUIPUZCOANO
DIRECTOR
VISCOFAN. S.A.
VICE CHAIRMAN
B.1.9 Indicate and. if appropriate. explain whether the company has established rules on the
number of boards on which its Directors may sit:
Yes
117
The Board Of Directors approved a Resolution stating that Company Directors may not form part of more than 10
Boards of Directors. in addition to Iberpapel Gestión. S.A. except for:
The Boards of companies pertaining to Iberpapel Group.
- Shareholdings held by the Director or close family members.
B.1.10 With regard to recommendation number 8 of the Unified Code. indicate the general
policies and strategies of the company reserved for approval by the full Board:
YES
Investment and financing policy
YES
Definition of the structure of the group of companies
YES
Corporate governance policy
YES
Corporate social responsibility policy
YES
Strategic or business plan. management objectives and annual budget
YES
Compensation policy and senior executive performance evaluation
YES
Risk management and control policy. and regular monitoring of internal information and
control systems
YES
Dividend policy. treasury stock policy. especially limits.
118
B.1.11 Complete the following tables on the aggregate directors’ compensation accrued during
the year:
a)
At the reporting company:
Compensation
Thousand euro
Fixed compensation
90
196
Per diems
0
0
0
Other
0
TOTAL:
Other Benefits
286
Thousand euro
Pre-payments
0
Loans granted
0
0
0
0
0
b)
For company Directors who are on other Boards and/or in senior management of group
companies:
Compensation
Thousand euro
Fixed compensation
169
41
Per diems
6
0
0
Other
0
TOTAL:
216
119
Other Benefits
Thousand euro
Pre-payments
0
Loans granted
0
0
0
0
0
c)
Total compensation by type of Director:
Type of directors
By company
Executives
189
Institutional outside directors
47
7
Independent outside directors
103
20
0
0
286
216
Other outside directors
Total
d)
By group
136
Regarding profits attributed to the parent company:
Total director compensation (thousand euro)
502
Total compensation for directors/profit attributed to the parent company (expressed in
8.2
%)
B.1.12 Identify the members of senior management who are not Executive Directors and indicate
the aggregate compensation accrued to them during the year:
Name
Position
Mr. FERMIN URTASUN ERRO
ASSISTANT CEO
Mr. FRANCISCO FORTIN ALVAREZ
TREASURY DIRECTOR
FINANCE DIRECTOR
Mr. JOAQUIN MANSO RAMON
LEGAL DIRECTOR
Mr. MIGUEL A. TAPIADOR SILANET
PURCHASING DIRECTOR
Mr. IGNACIO BURUTARAN USANDIZAGA
SALES DIRECTOR - EXPORTS
Mr. PABLO FUENTES ARTOLA
SALES DIRECTOR - DOMESTIC
Mr. JOSE MARIA REPARAZ ABAITUA
HUMAN RESOURCE DIRECTOR
120
Total senior management compensation (thousand euro)
859
B.1.13 Indicate overall whether any golden parachute clauses have been established for senior
management. including Executive Directors. at the Company or its group in the event of
dismissal or change of ownership. State whether these contracts have to be reported to
and/or approved by the governing bodies at the Company or its group:
Number of beneficiaries
0
Board of Directors
General Meeting
NO
NO
Body authorizing the clauses
Is the General Meeting informed of the clauses?
NO
B.1.14 Explain the process for establishing the compensation for Board Members and the relevant
Articles of Association:
Processes for establishing the compensation for Board Members and the relevant Articles of
Association
and statutory clauses
Compensation for the members of the Board of Directors is established under Article 22 of the bylaws. which
states: “The Board of Directors will receive compensation consisting of 4% of net profits which will only be
deducted from said profits after having made all necessary contributions to the legal reserve and. if appropriate. any
other mandatory reserves as well as the distribution of a dividend to shareholders of at least 4% of share capital paid
in.
Each year the Board of Directors will establish pacific amount to be received by each Director. adjusting the amount
to be received by each one based on their membership to Board Committees. the position held on those
Article 6 of the Board Regulations stipulates that the Board is exclusively authorized to determine the compensation
for Directors and. in the case of executives. any additional compensation for executive duties and any other
contractual conditions and. at the proposal of the CEO. the appointment and removal of senior management. as well
as their severance packages.
Article 1.3 of the Regulations stipulates that the Nomination and Compensation Committee will propose to the
121
Board of Directors:
This Article stipulates that the mission of the aforementioned Committee will be: report the appointments and
resignations of senior executives that the chief executive has proposed to the Board of Directors.
Indicate whether approvals of the following decisions are reserved for the full Board:
Upon recommendation by the CEO. the appointment and possible removal of senior
YES
management and any indemnity clauses.
Directors’ compensation and. in the case of Executive Directors. additional compensation for
YES
their management duties and other contractual conditions.
B.1.15 Indicate whether the Board of Directors approves a detailed compensation policy and
specify the issues it regulates:
Yes
Amount of fixed compensation. including the details of per diems for Board and
YES
Committee Meetings and an estimate of the fixed annual compensation.
Principal features of retirement systems. estimating the annual cost or equivalent amount.
YES
YES
122
YES
Contract conditions for executive directors
B.1.16 Indicate whether the Board submits a report on Director compensation policy to voting at
the General Meeting. as a separate item on the Agenda and with an advisory nature. If so.
explain the aspects of the report on the compensation policy approved by the Board for
future years. the most significant changes in those policies in respect of the policy applied
during the year and an overall summary of how the compensation policy was applied
during the period. Describe the role played by the Compensation Committee and
whether external consultants have been used. and if so. the identity of the external
consultants:
Yes
Issues addressed by the Compensation policy report
The report contains explanations regarding the general principles governing the compensation policy for Iberpapel
Directors and the compensation system for Executive Directors. including fixed compensation and any variable
components.
Compensation for Directors is established under Article 22 of the bylaws. which states: “The Board of Directors
will receive compensation consisting of 4% of net profits which will only be deducted from said profits after having
made all necessary contributions to the legal reserve and. if appropriate. any other mandatory reserves as well as
the distribution of a dividend to shareholders of at least 4% of share capital paid in.
Each year the Board of Directors will establish pacific amount to be received by each Director. adjusting the amount
to be received by each one based on their membership to Board Committees. the position held on those
Article 1.3 of the Board Regulations states that one of the duties of the Nomination and Compensation Committee
is to propose to the Board of Directors:
Were external consultants used?
Identity of the external consultants
123
B.1.17 Name any Board Members who are also directors or executives of companies holding
significant interest in the listed company and/or companies pertaining to its Group:
Describe any significant relationships other than those contemplated in the previous
section between Board Members and significant shareholders and/or companies pertaining
to their Group:
B.1.18 Indicate whether any modifications have been made during the year to the Board of
Directors’ Regulations:
NO
B.1.19 Describe the procedures for appointment. re-election. evaluation and removal of
Directors. Indicate the competent bodies. the formalities and the criteria to be followed
in each of these procedures.
This area is regulated by the Bylaws and the Board Regulations. which state:
Bylaws:
Article 21.- The Board of Directors shall be made up of a minimum of three and a maximum of
10 members. designated by the General Shareholders’ Meeting.
The Board of Directors will be empowered to cover provisionally any vacancies that may arise
in the same. designating the replacements in the legally established manner until the first
General Shareholders’ Meeting.
A Director does not have to be a shareholder.
If a legal person is appointed Director. a natural person must be appointed as its representative
to fulfill the duties of the post.
directors.
Board Regulations:
ARTICLE 6.- Exclusive authority.
h) The appointment of a Director in the event of a vacancy until the next General Meeting is
held. at the proposal of the Nomination and Compensation Committee.
i) The acceptance of Director resignations.
124
ARTICLE 7.- Composition of the Board.
1. The General Shareholders’ Meeting shall determine the number of directors. with a
minimum of three and a maximum of ten. as established by the Bylaws.
2. The Directors will hold office for a maximum of six years and may be re-elected one or
more times for identical periods.
ARTICLE 8.- Appointment of Directors.
appointment or re-election of directors within the limits set out in the Bylaws. shall be made
ARTICLE 9.- Board components.
9.1- The Chair
a) The Chairman of the Board of Directors will be selected from among the members. The
term will coincide with the term of his appointment to the Board. As a result. if he is reelected
to the Board reelection to the position of Chairman is not necessary.
9.4 - Secretary
The appointment and removal of the Secretary to the Board or. if appropriate. the ViceSecretary. will be approved by the full Board after receiving a report from the Nominations and
1.3 Nominations and Compensation Committee.
1. The Nominations and Compensation Committee will be responsible for:
2. The full Board of Directors is responsible for the appointment or removal of its members.
and there will be at least three members. The members of the Committee will automatically
cease to hold their positions when they are no longer members of the Board of Directors
ARTICLE 12. The evaluation of the Board and Committees
125
b) The performance by the Chairman of the Board and the Company’s CEO based on a report
that will be prepared by the Nominations and Compensation Committee;
B.1.20 Indicate the cases in which Directors are required to retire.
This area is regulated by the Board Regulations. as follows:
ARTICLE 15.- Step-down of Directors
The directors shall cease to hold office when the period for which they were appointed
elapses. in accordance with Article 145 of the Mercantile Registry Regulations. and when so
decided by the General Shareholders’ Meeting in accordance with the powers conferred to it.
Moreover. the directors shall place their position at the disposal of the Board of Directors and
formalize. if deemed appropriate. their resignation in the following cases:
b) When their remaining on the Board may jeopardize the Company’s interests or when the
c) In the event of an accusation or instigation of oral proceedings connected with any of the
crimes indicated in Article 124 of the Spanish Companies Act. the Board shall examine the
d) Domanial directors shall resign when the shareholder whom they represent sells his
126
B.1.21 Explain whether the Chairman of the Board is the Chief Executive Officer of the Company.
If so. state what measures have been adopted to limit the risks of one single person
accumulating powers:
Yes
Measures to limit risks
Article 9 of the Board Regulations stipulates that the Chairman will have power-of-attorney to be exercised through
the Board of Directors by appropriate Resolution or ratified by the Board when the urgency of the situation makes it
inadvisable to postpone the exercising of the authority. All decisions of significant importance must be taken by the
Board of Directors.
Article 23 of the Bylaws stipulates that the Board will meet whenever requested by two of its members.
The general risk policy and the risk management systems described in sections D.1 and D.3 of this Report. prepared
based on the risk control and management policy. as well as the regular monitoring of information and control
systems by the Board of Directors. in accordance with Article 6 of the Board Regulations.
Article 9.3 of the Board Regulations which stipulates that if the position of Chairman of the Board of Directors and
the CEO of the Company are held by the same person one independent Director will be appointed to perform the
following duties:
The duties attributed to the Audit Committee and the Nominations and Compensation Committee (Articles 1.2 and
1.3 of the Board Regulations)
It should be noted that there is no requirement of a qualified majority to remove the Chairman when the Board
deems it necessary. Therefore. the Board’s capacity to control this position may manifest itself through a Resolution
to dismiss adopted by a simple majority.
Indicate and. if appropriate. explain whether rules have been established to enable one of the independent directors to
request the calling of the Board for the inclusion of new items on the agenda. to coordinate and echo the concerns of
outside Directors and to direct evaluation by the Board of Directors.
YES
127
By virtue of Article 9.3 of the Board Regulations. if the position of Chairman of the Board of Directors and the CEO
of the Company are held by the same person one independent Director will be appointed to perform the following
duties:
B.1.22 Are special majorities differing from those stipulated by Log required for any type of
decision?:
NO
Explain how Resolutions are adopted out by the Board. indicating at least the quorum and the
majorities required for adopting Resolutions:
B.1.23 Explain whether or not there are any specific requirements. other than those established
for Directors. to be appointed Chairman:
NO
B.1.24 Indicate whether the Chairman has a casting vote:
YES
Areas in which there is a casting vote
Article 23 of the bylaws stipulates that Resolutions will be adopted by absolute majority of those attending the
Meeting.
In the event of a tie. the Chairman will issue a casting vote.
Written. personal votes without any meeting being held will be valid if no Director opposes such action.
Indicate whether the Articles of Association or the Board Regulations establish any age limit for
Directors:
NO
Age limit for Chairman
Age limit for CEO
Age limit for Director
0
0
0
128
B.1.26 Indicate whether the Articles of Association or the Board Regulations establish any limit on
the term of office for Independent Directors:
NO
Maximum term (years)
0
B.1.27 If there are few or no female Directors. explain why and what actions have been taken to
remedy this situation.
Explain reasons and initiatives
Iberpapel Group’s equal opportunity policy avoids any discrimination against anyone for any reason with respect to
joining the company or to occupying any post within the company. Among the new duties of the Nominations and
Compensation Committee. in addition to supervising the process of selecting Directors and senior executives for the
Company and proposing the appointment or reelection of Independent Directors to the Board of Directors and
reporting the appointment or reelection of other Directors to the Board of Directors. it must also report gender
diversity to the Board. The equal opportunity principle has always presided over the Nominations and Compensation
Committee’s work and therefore no additional measures are necessary.
In order to obtain adequate gender diversity. the Board of Directors appointed a woman independent Director to fill
the vacancy relating to an Executive Director.
In particular. state whether the Nominations and Compensation Committee has established
procedures to ensure that the selection procedures are not affected by implicit bias that could
hamper the selection of female Directors and that women with the required profile are
deliberately included among the candidates:
NO
B.1.28 Indicate whether there are any formal processes for proxy voting in the Board of
Directors. Describe briefly. if any:
The representation or delegation of votes within the Board may be conferred through a letter
addressed to the Chairman. as described under Article 23 of the Bylaws.
B.1.29 State the number of meetings held by the Board of Directors during the year. In addition.
indicate. if appropriate. how many times the Board has met without the Chairman:
129
Number of Board meetings
9
Number of Board meetings held without the Chairman
1
Indicate the number of meetings held during the year by the various Board Committees:
Number of meetings held by the Executive or Delegate Committee
0
Number of meetings held by the Audit Committee
6
Number of meetings held by the Nominations and Compensation Committee
3
Number of meetings held by the Nominations Committee
0
Number of meetings held by the Compensation Committee
0
B.1.30 State the number of meetings held by the Board of Directors during the year without all
members being in attendance. Non-attendance is deemed to include any proxies made
without specific instructions.
Number of Director absences during the year
3
% Number of absences compared with the total votes cast during the year
3
B.1.31 Indicate whether the individual and consolidated annual accounts presented to the Board
for approval were previously certified:
YES
If appropriate. name the person(s) who certify the Company’s individual or consolidated annual
accounts before they are approved by the Board:
Name
Position
CHAIRMAN
FINANCE DIRECTOR
130
B.1.32 Explain the mechanisms. if any. established by the Board to avoid a qualified audit report on
the individual and consolidated annual accounts from being presented to shareholders at a
General Meeting.
The Company has an Audit Committee. which is responsible for the following. among other
things:
a) Monitoring the financial reporting process and the Company’s internal control systems.
b) Reporting on the Annual Accounts. as well as the half yearly and quarterly financial
statements which must be sent to regulators or market supervisors. making mention of internal
control systems. monitoring controls and compliance through internal audit. when appropriate.
as well as the accounting principles applied. The board must also be informed of any change in
accounting policies and all balance sheet and off-balance sheet risks.
c) Receive regular information from the external auditor on the progress and findings of the
audit program. and check that senior management are acting on its recommendations.
B.1.33 Is the Secretary to the Board a Director?
NO
B.1.34 Explain the procedures for appointing and removing the Secretary to the Board. indicating
whether or not a report is issued by the Nominations Committee and whether or not the
person is approved by the full Board.
Procedure for appointment and removal
Article 9 of the Board Regulations stipulates that the appointment and removal of the Secretary to the Board or. if
appropriate. the Vice-Secretary. must be approved by the full Board after receiving a report from the Nominations and
131
Does the Nominations Committee report the nomination?
Does the Nominations Committee report removals?
YES
YES
Does the full Board approve the nomination?
YES
Does the full Board approve the removal?
YES
Does the Secretary to the Board have the responsibility of specifically monitoring Good
Governance recommendations?
NO
Observations
Although Article 9 of the Board Regulations does not specifically assign this duty. it is responsible for assuring formal
legality which includes the good governance recommendations.
The audit Committee is responsible. among other things. for supervising compliance with internal codes of conduct
and corporate governance rules.
B.1.35 Describe any mechanisms established by the Company to preserve the independence of
the auditor. financial analysts. investment banks and rating agencies.
The Audit Committee is responsible for proposing the selection. appointment. reelection and
replacement of the external auditors to the Board of Directors.
work. and check that senior management takes their recommendations into account.
Monitor the independence of the external auditor. to which end:
The company should notify any change of auditor to the CNMV as a significant event.
accompanied by a statement of any disagreements arising with the outgoing auditor and the
reasons for the same.
The company should ensure that the company and the auditor respect rules in force regarding
the rendering of services other than audit services. business concentration limits affecting the
auditor and. in general. all of the rules established to ensure the independence of auditors;
The Committee should investigate the issues giving rise to the resignation of any external
auditor.
We provide information to financial analysts and rating agencies when requested.
132
B.1.36 Indicate whether or not the Company has changed its external auditor during the year. If
so. name the outgoing and incoming auditor:
NO
Outgoing auditor
Incoming auditor
If the Company had any disagreements with the outgoing auditor. indicate their contents:
NO
B.1.37 State whether or not the audit firm does any work for the Company and/or its Group
other than standard audit work and. if so. indicate the amount of the fees received for
such work and the percentage it represents of the total fees invoiced to the Company
and/or its group:
YES
Company
Group
Total
35
0
35
68.63
0.000
68.63
work (thousand euro)
work/Total amount invoiced by the audit
firm (in %)
B.1.38 State whether or not the audit report on the Annual Accounts for the previous year
contains any qualifications or reservations. If so. indicate the reasons given by the
Chairman of the Audit Committee to explain the content and scope of those
qualifications or reservations.
NO
B.1.39 State the number of years in succession that the current audit firm has audited the
Company’s annual accounts and/or its group. In addition. indicate the ratio of the number
of years audited by the current auditors to the total number of years that the annual
accounts have been audited:
133
Number of years without interruption
Company
Group
13
13
Company
Group
100.000
100.000
Number of years audited by the current audit firm/Number
of years that the company has been audited (in %)
B.1.40 Indicate the stake held by Members of the Company’s Board of Directors in the capital of
companies that carry out the same. similar or supplementary activities as those
constituting the Company and Group’s corporate purpose and which have been reported
to the Company. Indicate their positions or duties at those companies:
B.1.41 Indicate. and provide details. if there is an established procedure for Directors to receive
external advice:
YES
Procedure details
Article 13.2 of the Board’s Regulations lays down: Directors may request. through the Chairman. the hiring of any
outside advisors considered to be necessary to properly carry out their duties.
The full Board must adopt an appropriate Resolution in each case based on whether or not to obtain such external
advisory services. the person or firm to provide the service. access to confidential company information that this
advisor may have and the approval. if appropriate. of the relevant expense.
B.1.42 Indicate. providing details as necessary. if there is an established procedure for Directors
to obtain any information they may need to prepare for the Meetings of the governing
bodies sufficiently in advance:
YES
134
Procedure details
Article 13.1 of the Board’s Regulations lays down: Directors will receive precise information to fulfill their duties on
time and with adequate depth as appropriate for the issues at hand.
They may requested additional information when deemed advisable which is channeled through the Secretary to the
Board.
B.1.43 Indicate. providing details if appropriate. if the Company has established rules requiring
Directors to report and. if necessary. resigned in any cases that could be detrimental to
the Company’s reputation:
YES
Explain the rules
Article 14.3 of the Board Regulations expressly states that in accordance with the loyalty duty falling to Directors.
they may not use the Company’s name or their position as Director to carry out any transactions on their own behalf
or on the behalf of any associated person.
Director may carry out. to their benefit for the benefit of any associated person. investments or any other transaction
associated with the Company’s assets which are known to them as a result of their position when the investment for
transaction would have been offered to the Company or the Company would be interested in the transaction.
provided that the Company did not rule out that investment or transaction without the influence of the Director.
Directors must report any direct or indirect situation of conflict to the Board of Directors when involving any
Company interests and Directors will not attend or intervene in debates that involve any issue in which they have a
personal interest or affects an associated person.
Directors must report any criminal cases involving them. as well as all subsequent procedural issues. to the Board of
Directors.
Article 15 of the Board Regulations stipulates that Directors must offer their resignation to the Board of Directors
and formalize their resignation. if deemed advisable. in the following cases:
b) When their remaining on the Board may jeopardize the Company’s interests or when the reasons for which they
were appointed no longer exist.
c) In the event of an accusation or instigation of oral proceedings connected with any of the crimes indicated in
Article 124 of the Spanish Companies Act. the Board shall examine the case as soon as possible and decide the
appropriateness of the Director continuing to hold office or otherwise.
135
B.1.44 Indicate whether the Company has been notified by any Board Member that he/she has
been charged with. or is being tried for. any of the crimes contemplated under Article 124
of the Spanish Companies Act:
NO
Indicate whether or not the Board of Directors has analyzed the case. If so. give a reasoned
explanation of the decision made as to whether or not the Director in question should remain in
office.
NO
Decision taken
Reasoned explanation
B.2. Board of Directors’ Committees
B.2.1 List all the Board of Directors’ Committees and their Members:
AUDIT COMMITTEE
Name
Position
Type
CHAIRMAN
INDEPENDENT
DIRECTOR
INSTITUTIONAL
DIRECTOR
INDEPENDENT
POSITION
TYPE
Mr. MARTIN MARIA GONZALEZ DEL VALLE CHAVARRI
DIRECTOR
INDEPENDENT
DIRECTOR
INDEPENDENT
NAME
136
B.2.2 Indicate whether or not the following duties correspond to the Audit Committee:
Supervise the integrity and process of preparing the financial information regarding the
Company and its Group. ensuring compliance with all requirements. adequate definition of the
YES
consolidated group and the correct application of accounting principles.
Regularly check the internal control and risk management systems. ensuring that the principal
risks are identified. handled and reported adequately.
Guarantee the independence and efficiency of the internal audit department. propose the
selection. appointment. re-election and removal of the Chief Audit Officer. propose the budget
YES
YES
for this department. receive regular information regarding its activities and check that senior
management takes into account the conclusions and recommendations made in its reports.
Establish and oversee a mechanism whereby employees may report confidentially and. if
appropriate. anonymously. any potentially important irregularities. particularly those relating
YES
to financial and accounting areas that they may detect within the Company.
Submit proposals to the Board for the election. appointment. re-election and replacement of
YES
the external auditors and the terms and conditions of their engagement.
YES
work. and check that senior management takes their recommendations into account.
YES
Ensure the independence of the external auditors
In the case of groups. encourage the Group’s auditors to audit the group companies
YES
B.2.3 Describe the rules of organization and procedure. and responsibilities attributed to each
Committee.
137
Nominations and Compensation Committee.
Brief description
Article 1.3 of the Board Regulations
In accordance with the provisions of that Article. the Nominations and
Compensation
Committee
is
responsible for:
d) Report on the senior officer appointments and removals which the chief executive proposes to the Board.
e) Report gender diversity issues to the Board.
f) Make proposals to the Board of Directors regarding:
The full Board of Directors is responsible for the appointment or removal of its members. and there will be at
least three members. The members of the Committee will automatically cease to hold their positions when
they are no longer members of the Board of Directors
The Board of Directors is responsible for both appointing and removing members. : The members of the
Directors
Currently the Company has two Committees. the Audit Committee and the Nominations and Compensation
Committee. Both Committees were created by the Board of Directors at the meeting held on 12 January
1999. following the recommendations of the Good Governance Code.
Article 11 of the For Regulations stipulates that Committees will meet when called by their respective
chairmen. who may do so of their own accord or at the proposal of members. or when necessary in
accordance with the bylaws.
138
Audit Committee.
Brief description
In accordance with the provisions of Article 24 the Bylaws. the Audit Committee will be governed as follows:
Outside Directors.
Directors
The Committee will elect a Chairman from among its members. who will be appointed for a term of four
Report to the General Meeting regarding issues raised by shareholders in the Committee’s area of
responsibility.
Propose the appointment of external auditors to the Board of Directors for submission to the General
Meeting for approval
Supervision of internal audit services. if any.
Monitoring the financial reporting process and the Company’s internal control systems.
Relationships with external auditors to receive information regarding those issues that may put their
independence at risk in any other issues relating to the audit process. as well as any other communications
established by audit legislation or by technical audit standards.
Report on the Annual Accounts. as well as the half yearly and quarterly financial statements which must be
sent to regulators or market supervisors. making mention of internal control systems. monitoring controls
and compliance through internal audit. when appropriate. as well as the accounting principles applied. The
risks.
Prepare an annual report regarding the Committee’s activities which must be included in the Directors’
Report.
139
Article 1.2 of the Board Regulations stipulates:
Outside Directors.
Directors
The Committee will elect a Chairman from among its members. who will be appointed for a term of four
Any Director. including the CEO. or any Company employee asked to do so must attend Committee
meetings and cooperate and provide all available information.
a) Report to the General Meeting regarding issues raised by shareholders in the Committee’s area of
responsibility.
b) Supervise internal audit services.
c) Monitor the financial reporting process and the Company’s internal control systems.
d) Supervise compliance with internal codes of conduct and corporate governance rules.
e) With respect to external auditors:
i.- Bring to the Board all proposals relating to the selection. appointment. reelection and replacement of the
external auditor.
ii.- Regularly receive information from the external auditors on the audit plan and results of their work. and
check that senior management takes their recommendations into account.
iii.- Ensure the independence of the external auditor. to which end:
1. The company should notify any change of auditor to the CNMV as a significant event. accompanied by a
statement of any disagreements arising with the outgoing auditor and the reasons for the same.
2. The company should ensure that the company and the auditor respect rules in force regarding the
rendering of services other than audit services. business concentration limits affecting the auditor and. in
general. all of the rules established to ensure the independence of auditors;
3. The Committee should investigate the issues giving rise to the resignation of any external auditor.
f) Report on the Annual Accounts. as well as the half yearly and quarterly financial statements which must be
sent to regulators or market supervisors. making mention of internal control systems. monitoring controls
and compliance through internal audit. when appropriate. as well as the accounting principles applied. The
risks.
140
g) Prepare an annual report regarding the Committee’s activities which must be included in the Directors’
Report.
B.2.4 Indicate. where appropriate. the advisory. consultation and delegation authority held by each
of the Committees:
Brief description
Supervise the process of selecting Directors and senior executives at the Company. The establishment and
supervision of executive compensation policies.
Audit Committee.
Brief description
Inform the General Meeting of any issues raised by Shareholders regarding its area of authority. propose the
appointment of external auditors to the Board of Directors for submission to the General Meeting.
Supervision of internal audit services. if any. Monitor the financial reporting process and the Company’s
internal control systems. Relationships with external auditors to receive information regarding those issues
that may put their independence at risk in any other issues relating to the audit process. as well as any other
communications established by audit legislation or by technical audit standards. Report on the Annual
Accounts. as well as the half yearly and quarterly financial statements which must be sent to regulators or
market supervisors. making mention of internal control systems. monitoring controls and compliance through
internal audit. when appropriate. as well as the accounting principles applied. and it must also report any
change in accounting policy and balance sheet and off-balance sheet risks to the Board. Prepare an annual
report regarding the Committee’s activities which must be included in the Directors’ Report.
141
B.2.5 Indicate the existence. if appropriate. of Board Committee Regulations. where they are
available for consultation and any modifications made during the year. State whether or not
an annual report has been issued voluntarily on the activities of each Committee.
Brief description
website.
company's website.
AUDIT COMMITTEE
Brief description
website.
company's website.
B.2.6 Indicate whether or not the composition of the Executive Committee reflects the
participation on the Board of different types of Directors:
YES
C
RELATED PARTY TRANSACTIONS
C.1 Indicate whether or not the full Board has reserved the approval. subject to a favorable
report by the Audit Committee or any other Committee assigned this task. of any
transactions that the Company may enter into with Directors. significant shareholders or
shareholders represented on the Board. or with persons related to them:
YES
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Company and/or Companies in its group and significant Company shareholders:
Company and/or Companies in its group and Company administrators or executives:
C.4 List any significant transactions with other companies in the group that are not eliminated in
the consolidated financial statements and which do not. by virtue of their object or terms.
relate to the Company’s normal business:
C.5 Indicate whether or not the Company’s Directors have been involved with any conflict of
interest during the year. in accordance with Article 127 ter of the Spanish Companies Act.
C.6 Explain the mechanisms established to detect and resolve possible conflicts of interest
between the Company and/or its Group and its Directors. senior management or
significant shareholders.
1) There are various rules included in the Board Regulations:
Article 14.3 states:
a) Directors may not use the Company’s name or their position as Director to carry out any transactions on
their own behalf or on the behalf of any associated person
b) No Director may carry out. to their benefit for the benefit of any associated person. investments or any
other transaction associated with the Company’s assets which are known to them as a result of their position
when the investment for transaction would have been offered to the Company or the Company would be
interested in the transaction. provided that the Company did not rule out that investment or transaction
without the influence of the Director.
c) Directors must report any direct or indirect situation of conflict to the Board of Directors when involving
any Company interests and Directors will not attend or intervene in debates that involve any issue in which
they have a personal interest or affects an associated person.
In any event. any situations of conflict of interest affecting Company Directors must be reported in the Annual
Corporate Governance Report.
14.6 Abstention duty
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Directors’ duty to abstain means not making private use of confidential information received as a result of the
position of Director and not making investments or commercial transactions deriving from holding the position
of Director. This duty also covers any activity carried out by an associated person.
14.7 Associated person.
For the purposes of this Article. a person associated with the a Director will be deemed to be as follows:
a) The spouse of the Director or any person in a similar position.
b) Ascendants. descendents and siblings of the Director or the spouse of the Director
c) The spouses of ascendants. descendents and the siblings of the Director.
d) Companies in which the Director. personally or through an intermediary. is in one of these situations listed
under Article 4 of Law 24/1988 (28 July) on the Stock Market.
Associates of legal persons appointed to directorships are considered to be the following:
d) Shareholders which are. with respect to the legal person Director. in one of these situations listed under
Article 4 of Law 24/1988 (28 July) on the Stock Market.
b) Directors. in law or de facto. liquidators and legal representatives with general power-of-attorney at the
legal person Director
c) Companies that form part of the same group as defined by Article 4 of Law 24/1988 (28 July) on the Stock
Market and their shareholders.
d) Persons considered to be associated with the legal person Directors. in accordance with the provisions of
the preceding paragraph.
2) Furthermore. there are Stock Market Conduct Regulations consisting of a group of rules intended to detect
and regulate possible conflicts of interest between the Company and/or its Group. and their Directors.
executives or significant shareholders.
The regulations are applied with respect to securities issued by Iberpapel Gestion. to the members of the Board
of Directors and any Board Committee or Commission. their representatives when members are legal persons
and the Secretary or Vice-Secretary. if they are not Directors.
Executives or personnel at a similar hierarchical level. and. in general. employees that directly or indirectly carry
out activities relating to the stock market. particularly those relating to the Company’s treasury shares. investor
relationships. public reporting or relevant information.
In accordance with the definition provided by Royal Decree 377/1991 (15 March) on the Reporting of Significant
Shareholdings in Listed Companies and the Acquisition of Treasury Shares (hereinafter "RD 377/1991").
executives are considered to be general managers or similar positions that perform senior management duties
under the direct supervision of the governing bodies. executive committee or the Company CEO.
Any other person that could have access to privileged information.
Any person that knowingly possesses privileged information. or should know. may not prepare or carry out any
direct or indirect transactions on their own behalf or on the behalf of a third-party involving the securities to
which the privileged information refers.
144
This prohibition does not include (i) the preparation or performance of transactions whose existence
constitutes the privileged information; (ii) transactions carried out to comply with an outstanding obligation to
acquire or assign securities when covered by an agreement concluded before the person concerned possesses
the privileged information; or (iii) any transactions carried out in conformance with applicable legislation.
All persons subject to the Regulations are prohibited from (i) reporting the privileged information to third
parties. unless that forms part of the normal course of their work. profession or position; and (ii) providing
recommendations to a third party to acquire or assign securities or to instruct another party to acquire or
assign securities based on that information (duty of confidentiality).
All persons subject to the Regulations will ensure that the privileged information is duly safeguarded.
notwithstanding their duty to report to. and collaborate with. legal and administrative authorities in accordance
with the terms established under the Stock Market Act or any legislation in force at any given time.
In addition. they must adopt adequate measures to prevent the privileged information from abuse or improper
use and. if appropriate. will immediately take all necessary measures to correct the consequences deriving from
such activities.
Persons subject to the Regulations may not carry out personal transactions when they possess privileged
information.
Personal transactions will be understood to be those carried out by the persons concerned involving securities.
as well as any that may be carried out by others associated with those persons.
Associated persons are (i) E. Spouse or domestic partner. except for transactions involving private assets or
when there is a formal separation of assets agreement in place; (ii) minor children subject to parental authority
and dependent adults; (iii) companies effectively controlled by the person concerned; and (iv) intermediary
persons as defined by Article 3 of RD 377/1991.
Such persons will report any possible conflict of interest with Iberpapel or its Group to the person responsible
for monitoring such situations when they arise for any reason and such persons will abstain from carrying out
any type of personal transaction or transaction covered by a portfolio management agreement when there
could be any conflict of interest. unless advance express authorization is obtained from the person responsible
for monitoring such situations. in accordance with their obligations for loyal behavior deriving from stock
market. corporate and employment legislation and this Internal Code of Conduct Regulations.
C.7 Are more than one of the Group’s companies listed in Spain?
NO
145
Identify the subsidiaries listed in Spain:
D
RISK CONTROL SYSTEMS
D.1 General description of the Company’s risk policy and/or its Group. including detailed and an
evaluation of the risks covered by the system. together with information supporting those
systems’ adaptation to the profile of each type of risk.
Iberpapel Group has carried out risk control and management actions which
have afforded an adequate
valuation in this respect. In this respect. systems have been implemented that enable the following risks affecting
the Group to be identified. assessed. managed and controlled.
Risk control systems. which are a component of decision-making management and assistance in the Iberpapel
Group are defined on the basis of four major aspects:
Risk assessment
Risk control and hedges
Organization and management responsibilities
In 2009 the risks assessed and for which there is sufficient coverage include the following:
Risk concerning the global economic situation
Market / competition and selling / raw material prices risks.
Forestry risks.
Risks relating to new investments and other
Risks of material damages and loss of earnings.
Risk assessment
a) Control systems
The Group’s control systems are considered appropriate in light of the Group’s risk profile and may be grouped
together in the following categories:
Maintaining a highly competitive cost structure that enables the impact of market crises to be addressed
comparatively better than in the competition.
146
Systems of control over the distribution of forestry assets: three distant forestry areas (Argentina. Uruguay and
Huelva). with the reasonable distribution of properties in each area. Moreover. forest cleaning. firebreak work
etc is carried out on a regular basis. thereby reducing the impact of potential damages from fire.
Improvement in competitiveness and environmental efficiency through the launch of a 50 MWh high-efficiency
cogeneration plan which gives rise to an additional competitive advantage due to cost reductions and lowered
dependence on electricity prices.
Plans and systems to ensure the quality of products and services: the top priority under the Iberpapel Group’s
defined quality policy is customer satisfaction and on-going improvement and therefore to ensure that products
and services meet quality standards. In this connection. the Group has ISO 9001 and 14001 certificates. AENOR
certificates for the Custodial Chain Model and Integrated Environmental Authorization obtained in 2008. The
Iberpapel Group’s basic quality policy objectives are as follows:
To review. improve and optimize existing processes and controls in order to ensure product quality and
traceability.
To provide an adequate response to claims. implementing a process to examine. record and respond to such
claims.
Systems to control environmental risks: the Iberpapel group is committed to complying with applicable
European. central government and regional legislation and participates actively in the development of new
environmental commitments. In this respect. progress is being made on the gradual implementation of Available
Technology Improvements deriving from Community Directive IPPC 96/61/EC on integrated pollution control
and the processing of Integrated Environmental Management. A series of actions carried out by the Group in
this connection are particularly noteworthy:
Installation of on-going emission measurement systems in conjunction with the Basque regional government.
Utilization of the best available technologies to improve emissions and disposals and reduce waste.
The Iberpapel Group has continued to implement its reforestation policy. focusing on so-called Clean
Development Mechanisms (CDM). This policy aims to secure. through such mechanisms contained in the Kyoto
Protocol and European legislation. financing to ensure the feasibility of the projects started up. enabling.
moreover. the obtainment of an optimum supply of raw materials for our facilities in Hernani.
The aforementioned project has mainly been developed through a reforestation program based on the variety
of seed or development eucalyptus cloned at the properties purchased by the group’s subsidiaries in Argentina
147
and Uruguay which were previously used as grazing land. In the past few years approximately 4.200 hectare in
Argentina and 7.300 hectare in Uruguay. respectively. have been reforested.
In past years Iberpapel Group obtained several environmental certificates. among them the AENOR certificate
for the Custodial Chain Model for Forestry Products (PEFC) in the industrial division. together with the
Sustainable Forestry Management Certificate in accordance with the FSC Standard (Forest Stewardship Council)
in the forestry division.
In 2009 Iberpapel Group continued with the process of making environmental improvements by obtaining new
certificates such as the Custodial Chain certificate in accordance with the FSC standard by the industrial division
and the forestry division (national and international).
There is an investment development analysis and monitoring program in place that allows business growth
processes to be satisfactorily handled and relates to the growth of the generation of electricity that the Group
plans to export to the grid.
Other preventive procedures: it is Iberpapel group’s policy to arrange the necessary insurance policies and
hedges to mitigate as far as possible the risks deriving from the loss of earnings. material damages. customer
collection. machine breakdowns etc .
Trade receivables (the group arranges insurance for both domestic and export sales)
b) Internal supervision procedure
The Group has assessed the risks on the basis of a universal model and carried out the reviews considered
necessary to update the risk map. Similarly. the impact of those risks has been calculated together with the
follow-up and management actions relating to each of the aforementioned areas.
D.2 Indicate whether any of the risks (operating. technological. financial. legal. reputational. tax.
etc.) affecting the Company and/or its Group have actually arisen during the year:
NO
148
If so. indicate the underlying circumstances and whether or not the established control systems
work adequately.
D.3 Is there a Committee or other governing body responsible for establishing and supervising
the control systems?
YES
If so. state its duties.
AUDIT COMMITTEE
It is authorized by the Board of Directors in the exercise of its duties to supervise risks.
BOARD OF DIRECTORS.
The Board is responsible for maintaining the internal control system. including the follow-up and
control of the significant risks of the Iberpapel corporate group. On the basis of the assessment of
operational risks supervised by the Audit Committee. the Board of Directors carries out risk
Risk Control and Management Systems in the Group. On the basis of the assessment of
operational risks supervised by the Audit Committee. the Board of Directors carries out risk
D.4
Identification and description of processes for complying with the various regulations
affecting the Company and/or its Group.
The Group has implemented the necessary mechanisms to control and manage risks in accordance with the
universal assessment model which takes into account any kind.
149
Because of its universal and dynamic nature. the system enables the on-going management of the risks affecting
the Iberpapel Group. making it possible to tailor it to changes in the environment. to review its objectives and
strategies and upgrade its monitoring and supervisory process.
With respect to compliance with the different regulations which affect the Iberpapel Group. it should be noted
that the Group has a legal department and external advisors when required such that at all times it is in a
position to comply with the regulations applicable to the Group in its operations.
In this respect. it should be noted that as a listed Group. it complies with its quarterly. six-monthly and annual
reporting obligations and issues the Significant Events report and other information requested by the National
Securities Market Commission.
Integrated risk management in the Iberpapel Group and companies which form it enables a profitability / risk
balance to be attained. reducing the impact on results.
E
GENERAL MEETING
E.1 Indicate whether there are any differences between the quorums for General Meetings and
the minimums stipulated in the Spanish Companies Act and. if appropriate. explain.
NO
under Art. 102 LSA for general cases
under Art. 103 LSA for the special
cases established under Art. 103
Quorum required on
0
0
0
0
first call
Quorum required on
second call
E.2 Indicate and explain. if appropriate. if there are any differences between the system used for
adopting corporate resolutions in the system stipulated in the Spanish Companies Act:
No
Describe how it differs from the system contemplated in the Spanish Companies Act.
E.3 Describe any shareholders’ rights with regard to General Meetings that differ from those
established by the Spanish Companies Act.
150
The Bylaws and the General Meeting Regulations govern shareholder rights in accordance with the provisions of
the Spanish Companies Act. There is no limitation whatsoever on the number of shares required to attend
General Meetings.
E.4 Describe the measures adopted. if any. to encourage the participation of shareholders at
General Meetings.
All shareholders may attend the General Meeting and take part in deliberations. Speaking and voting rights. in
accordance with the provisions of the Bylaws and the General Meaning Regulations.
In addition to the right to request callings of meetings. information and attendance as well as representation and
remote voting. Iberpapel has a policy of encouraging shareholder participation in the General Meeting by
applying the following measures:
The meeting is held at the premises with the best conditions for holding and monitoring the meeting. located in
the center of the municipality in which the Company’s domicile is located.
Exercising of voting rights and delegation using electronic means.
Personalized assistance and information for shareholders through the Shareholder Service Office.
Publication on the Company’s website of all information regarding the General Meeting and the Agenda. details
regarding the calling of the meeting. proposed Resolutions made by the Board of Directors and the means of
communicating with the Company through which details regarding the meeting may be requested.
E.5 Indicate if Chairman of the Board chairs the General Meeting. List any measures adopted to
ensure the independence and correct operation of the General Meeting:
YES
Details regarding the measures
In order to guarantee the independence and proper operation of the General Meeting. the Ordinary General Meeting
held on 15 June 2004 approved a Meeting Resolution providing detailed and transparent regulations for the meeting.
E.6 Indicate any modifications made during the year to the Regulations governing the General
Shareholders’ meeting.
151
E.7 Provide details of attendance records at General Meetings held during the year to which this
report refers:
Attendance information
Date of the
% physically present
General
Meeting
02/06/2009
%
% remote voting
represented Electronic
by proxy
voting
6.836
48.412
Total
Other
0.000
55.248
E.8 Briefly indicate the Resolutions adopted at the General Meetings held during the year to which
this report refers and the percentage of votes with which each Resolution was adopted.
The Ordinary General Shareholder Meeting held on 02 June 2009 adopted the following Resolutions
(summarized):
1. The appointment of representatives to approve the Meeting Minutes was approved.
2. Approve. in the terms established in the legal documentation. the Annual Accounts (Balance sheet. Income
Statement and Notes to the Annual Accounts). both for Iberpapel Gestion S.A. and its consolidated Group. as
well as the individual and consolidated Directors' Report relating to the year ended 31 December 2008.
Approve the proposed application of profits totaling six million five hundred ten thousand one hundred and
eighty eight euro and forty five cents (€ 6.510.188.45). which will be distributed as follows:
- Nine hundred twenty three thousand four hundred ninety three euro and ninety two cents (€ 923.493.92)
which have already been distributed as interim dividend as approved by the Board of Directors at the meeting
held on 8 January 2009.
- Voluntary reserves have been allocated five million five hundred eighty six thousand six hundred ninety four
euro and fifty three cents (€ 5.586.694.53).
Approve the management by the Governing Body during the year.
3. – The partial refund of a share premium to shareholders totaling € 0.08 per share was approved.
4.- The Board of Directors was authorized to acquire Treasury Shares by the Company and/or its subsidiaries
through the acquisition of a maximum of 5% of share capital over a 14 month and for a minimum price of the
share par value and a maximum of € 40.
5. The reelection of the auditor PriceWaterhouseCoopers Auditores. SL. for a term of one year was approved
for the audit of the individual and consolidated annual accounts for 2009.
152
6. Mr. Martín González del Valle Chavarri was re-elected to the board for a six year term.
Votes in favor: 97.227% of the shares present and represented.
Votes against: 2.773% of the shares present and represented.
7.- A resolution was adopted to delegate authority to the Chairman of the Board or to the Secretary to
formalize. interpret. correct and execute the Resolutions adopted by the General Meeting.
E.9 State whether any restrictions are established in the Articles of Association requiring a
minimum number of shares to attend General Meetings:
No
Number of shares necessary to attend the General Meeting
E.10 Describe and justify the Company’s policies regarding proxy votes at General Meetings.
The policy followed by the Board of Directors of Iberpapel Gestión. S.A has always been to facilitate the
presence of shareholders at General Meetings. either personally or through representation. For that reason
representation to attend a Meeting may fall to another person who does not have to be a shareholder.
The delegation of votes at the General Meeting is governed by the Company’s Bylaws and the Meeting
Regulations as well as by the Board Regulations.
According to Article 14 of the Bylaws. shareholders with a right to attend meetings may delegate representation
authority to another person. The representative must be named and that must be extended in writing for each
Meeting. The above is notwithstanding the provisions of Article 108 of the Spanish Companies Act.
In addition. shareholders may delegate representation via electronic or remote means that duly guarantee the
representation authority granted and the identity of the representative when the Board of Directors considers
that there are adequate guarantees of authenticity and identification of the shareholder conferring the
representation authority. The representation authority granted using these means will be sent to the Company
using the procedure and within the deadline established by the Board of Directors in the Resolution to call the
meeting.
The Board of Directors will determine. in accordance with the calling of each meeting. the procedure.
requirements. system and deadline for granting and sending the Company representation or delegation of vote
authority issued electronically.
These circumstances will be stated in the announcements concerning the calling of the Meeting.
In the event of a public request for representation. the provisions of Article 107 of the current Spanish
Companies Act will be applicable and. if appropriate. so will the provisions of Article 114 of Law 24/1988 (28
July) on the Stock Market.
According to Article 11 of the Board Regulations. shareholders with a right to attend meetings may delegate
representation authority to another person.
The representation authority must be accepted by the representative. It must be specific to each Meeting and
may be conferred through the following means:
a) By sending the card referred to under Article 12. duly filled in and signed by the shareholder. in accordance
with the terms and conditions established in the Bylaws.
153
b) Using electronic or remote means that duly guarantee the representation authority granted and the identity
of the representative when the Board of Directors considers that there are adequate guarantees of authenticity
and identification of the shareholder conferring the representation authority. The representation authority
granted using these means will be sent to the Company using the procedure and within the deadline established
by the Board of Directors in the Resolution to call the meeting.
3. In the event of a public request for representation. the provisions of Article 107 of the current Spanish
Companies Act will be applicable and. if appropriate. so will the provisions of Article 114 of Law 24/1988 (28
July) on the Stock Market. In particular. the document containing the power-of-attorney must contain or bear
an appendix containing the Agenda. as well as a request for instructions to exercise the right to vote and an
indication of how the representative will vote in the event that no precise instructions are given.
4. Individual shareholders who do not have full legal capacity and corporate shareholders may be represented by
their legal representatives. when adequately proven. Both in these cases. as well as in the case in which a
shareholder delegates a right to attend the Meeting. more than one representative cannot be used.
5. Representation authority is always revocable. If the shareholder attends the Meeting. and any vote issued
revokes any delegated authority whatever the date.
Article 19 of the Board Regulation stipulates that public requests for the delegation of votes made by the Board
of Directors or any member must expressly state the manner in which the representative will vote in the event
that the shareholder does not provide instructions.
A Director obtaining representation authority may not exercise the right to vote relating to the represented
shares for any points of the Agenda for which there is a conflict of interest.
Article 21 of the Board Regulations stipulates that delegated votes received by the Board of Directors or any
Member will be faithfully executed in accordance with the instructions received in this respect and the Minutes
will reflect the vote and the identification of the voting instructions received. including any vote against Board
proposals. with the aim of safeguarding the rights that may fall to the delegating shareholder.
E.11 Indicate whether the company is aware of the policies of institutional investors regarding
their participation or not in company decisions:
NO
E.12 Indicate the address and access to the corporate governance contents on the company’s
website.
www.iberpapel. es
Shareholders and investors
Corporate Governance
154
F
EXTENT OF COMPLIANCE WITH THE CORPORATE GOVERNANCE
RECOMMENDATIONS
Indicate the degree of compliance by the company with the recommendations of the Unified
Good Governance Code.
In the event of non-compliance with any recommendations. explain the recommendations.
standards. practices or principles applied by the company.
1.
The bylaws of listed companies should not place an upper limit on the votes that can be
cast by a single shareholder. or impose other obstacles to the takeover of the company by
means of share purchases on the market.
See sections:
A.9. B.1.22. B.1.23 and E.1. E.2.
Comply
2.
When a dominant and a subsidiary company are stock market listed. the two should
provide detailed disclosure on:
a)
The type of activity they engage in and any business dealings between them. as well as
between the subsidiary and other group companies;
b)
The mechanisms in place to resolve possible conflicts of interest.
See sections:
C.4 and C.7
Not applicable
155
3.
Even when not expressly required under company law. any decisions involving a
fundamental corporate change should be submitted to the General Shareholders' Meeting
for approval or ratification. In particular:
a)
The transformation of listed companies into holding companies through the process
of subsidiarization. i.e.. reallocating core activities to subsidiaries that were previously
carried out by the originating firm. even though the latter retains full control of the
former;
b)
Any acquisition or disposal of key operating assets that would effectively alter the
company's corporate purpose;
c)
Operations that effectively add up to the company's liquidation.
Comply
4.
Detailed proposals of the resolutions to be adopted at the General Shareholders’ Meeting.
including the information stated in Recommendation 28. should be made available at the
same time as the publication of the Meeting notice.
Comply
5.
Separate votes should be taken at the General Shareholders’ Meeting on materially separate
items. so shareholders can express their preferences in each case. This rule shall apply in
particular to:
a)
The appointment or ratification of directors. with separate voting on each candidate;
b)
Amendments to the bylaws. with votes taken on all articles or groups of articles that
are materially different.
See section:
E.8
Comply
156
6.
Companies should allow split votes. so financial intermediaries acting as nominees on behalf
of different clients can issue their votes according to instructions.
See section:
E.4
Comply
7.
The Board of Directors should perform its duties with unity of purpose and independent
judgment. according all shareholders the same treatment. It should be guided at all times by
the company's best interest and. as such. strive to maximize its value over time.
It should likewise ensure that the company abides by the laws and regulations in its dealings
with stakeholders; fulfills its obligations and contracts in good faith; respects the customs
and good practices of the sectors and territories where it does business; and upholds any
additional social responsibility principles it has subscribed to voluntarily.
Comply
8.
The Board should see as core components of its mission: to approve the company's
strategy and authorize the organizational resources to carry it forward. and to ensure that
management meets the objectives set while pursuing the company's interests and corporate
purpose. As such. the Board in full should reserve the right to approve:
a)
The company's general policies and strategies. and in particular:
i) The strategic or business plan. management targets and annual budgets;
ii)
Investment and financing policy;
iii)
Design of the structure of the corporate group;
iv)
Corporate governance policy;
v)
Corporate social responsibility policy;
157
vi)
Compensation and evaluation of senior officers;
vii)
Risk control and management. and periodic monitoring of internal information
and control systems;
viii)
Dividend policy. treasury stock policy. especially limits.
See sections:
b)
The following decisions:
i)
See section:
ii)
See section:
c)
B.1.10. B.1.13. B.1.14 and D.3
Upon recommendation by the CEO. the appointment and possible removal of
senior management and any indemnity clauses.
B.1.14.
Directors’ compensation and. in the case of Executive Directors. additional
compensation for their management duties and other contractual conditions.
B.1.14.
iii)
The financial information listed companies must periodically disclose.
iv)
Investments or operations considered strategic by virtue of their amount or
special characteristics. unless their approval corresponds to the General
Shareholders’ Meeting;
v)
jurisdictions considered tax havens. and any other transactions or operations
of a comparable nature whose complexity might impair the transparency of
the group.
Transactions which the company conducts with directors. significant shareholders.
shareholders with board representation or other persons related thereto (“relatedparty transactions”).
158
However. Board authorization need not be required for related-party transactions
that simultaneously meet the following three conditions:
1. They are governed by standard form agreements applied on an across-the-board
basis to a large number of clients;
2. They go through at market rates. generally set by the person supplying the
goods or services;
3. Their amount is no more than 1% of the company's annual revenues.
It is advisable that related-party transactions should only be approved on the basis
of a favorable report from the Audit Committee or committee handling the same
function; and that the directors involved should neither exercise nor delegate their
votes. and should withdraw from the meeting room while the Board deliberates and
votes.
Ideally. the above powers should not be delegated with the exception of those mentioned in b)
and c). which may be delegated to the Delegate Committee in urgent cases and later ratified by
the full Board.
See sections:
C.1 and C.6
Comply
9.
In the interests of maximum effectiveness and participation. the Board of Directors should
ideally comprise no fewer than five and no more than fifteen members.
See section:
B.1.1
Comply
10.
External directors. proprietary and independent. should occupy an ample majority of Board
places. while the number of executive directors should be the minimum practical. bearing in
mind the complexity of the corporate group and the ownership interests they control.
See sections:
A.2. A.3. B.1.3 and B.1.14.
Comply
159
11.
In the event that some external director can be deemed neither proprietary nor
independent. the company should disclose this circumstance and the links that person
maintains with the company or its senior officers. or its shareholders.
See section:
B.1.3
Not applicable
12.
That among external directors. the relation between proprietary members and
independents should match the proportion between the capital represented on the Board
by institutional directors and the remainder of the company’s capital.
This proportional criterion can be relaxed so the weight of institutional directors is greater
than would strictly correspond to the total percentage of capital they represent:
1. In large-cap companies where few or no equity stakes attain the legal threshold for
significant shareholdings. despite the considerable sums actually invested.
2. In companies with a plurality of shareholders represented on the Board but not
otherwise related.
See sections:
B.1.3. A.2 and A.3
Comply
13.
The number of independent directors should represent at least one third of all Board
members.
See section:
B.1.3
Comply
14.
Such determination should subsequently be explained by the Board to the General Meeting
and be confirmed or reviewed in each year’s Annual Corporate Governance Report. after
verification by the Nomination Committee. The said Report should also disclose the
reasons for the appointment of institutional directors at the urging of shareholders
controlling less than 5% of capital; and explain any rejection of a formal request for a Board
place from shareholders whose equity stake is equal to or greater than that of others
applying successfully for a institutional directorship.
See sections:
B.1.3 and B.1.4
160
Comply
15.
When women directors are few or non-existent. the Board should state the reasons for
this situation and the measures taken to correct it; in particular. the Nomination
Committee should take steps to ensure that:
a)
The process of filling Board vacancies has no implicit bias against women candidates;
b)
The company makes a conscious effort to include women with the target profile
among the candidates for Board places.
See sections:
B.1.2. B.1.27 and B.2.3.
Comply
The Nominations and Compensation Committee initiates the process of selecting Directors and the near
executives for the Company in order to prepare subsequent proposals for the Board of Directors and does
not consider that gender should be a selection criteria but rather the candidate must meet required profile.
The principle of equal opportunity has always presided over the criteria applied by the Nominations and
Compensation Committee. In addition. the Committee is also responsible for reporting gender diversity
issues to the Board.
16.
The Chairman. as the person responsible for the proper operation of the Board of
Directors. should ensure that directors are supplied with sufficient information in advance
of Board meetings. and work to procure a good level of debate and active involvement of
all members. safeguarding their rights to freely express and adopt positions; he or she
should organize and coordinate regular evaluations of the Board and. where appropriate.
the company’s chief executive. along with the chairmen of the relevant Board committees.
See section:
B.1.42
Comply
161
17.
When a company's Chairman is also its chief executive. an independent director should be
empowered to request the calling of Board meetings or the inclusion of new business on
the agenda; to coordinate and give voice to the concerns of external directors; and to lead
the Board’s evaluation of the Chairman.
See section:
B.1.21
Comply
18.
The Secretary should take care to ensure that the Board’s actions:
a)
Adhere to the spirit and letter of laws and their implementing regulations. including
those issued by regulatory agencies;
b)
Comply with the company bylaws and the regulations of the General Shareholders'
Meeting. the Board of Directors and others;
c)
Are informed by those good governance recommendations of the Unified Code that
the company has subscribed to.
In order to safeguard the independence. impartiality and professionalism of the Secretary.
his or her appointment and removal should be proposed by the Nomination Committee
and approved by a full Board meeting. the relevant appointment and removal procedures
being spelled out in the Board’s regulations.
See section:
B.1.34
Partial compliance
Although Article 9 of the Board Regulations does not specifically assign the duty of ensuring. in any special
way. that good governance recommendations are followed it is responsible for ensuring formal legality which
includes. in a broad sense. good governance recommendations.
162
In addition. the Audit Committee is responsible for. among other things. supervising compliance with internal
codes of conduct and corporate governance rules and the Secretary to that Committee ensures compliance
with the duties falling to that Committee which include Corporate Good Governance rules.
19.
The Board should meet with the necessary frequency to properly perform its functions. in
accordance with a calendar and agendas set at the beginning of the year. to which each
director may propose the addition of other items.
See section:
B.1.29
Comply
20.
Director absences should be kept to the bare minimum and quantified in the Annual
Corporate Governance Report. When directors have no choice but to delegate their vote.
they should do so with instructions.
See sections:
B.1.28 and B.1.30
Comply
21.
When directors or the Secretary express concerns about some proposal or. in the case of
directors. about the company's performance. and such concerns are not resolved at the
meeting. the person expressing them can request that they be recorded in the minute
book.
Comply
22.
The Board in full should evaluate the following points on a yearly basis:
b) Starting from a report submitted by the Nomination Committee. how well the
Chairman and chief executive have carried out their duties;
c) The performance of its committees on the basis of the reports furnished by the same.
See section:
B.1.19
Partial compliance
163
Article 12 of the Board Regulations called: The evaluation of the Board and the Committees. literally states
the following:
b) The performance by the Chairman of the Board and the Company’s CEO based on a report that will be
prepared by the Nominations and Compensation Committee;
In addition. Article 9.3 of these Regulations stipulates that if the Chairman of the Board and the Company’s
CEO are the same person one of the Independent Directors will be appointed to direct the Board’s
evaluation of the Chairman. In order to comply with the provisions of this Article. on 8 January 2009 the
Board of Directors appointed Mr. Néstor Basterra Larroude to perform these duties.
However. given the resignation of the Company's Chairman and CEO in December 2009 this evaluation has
not been possible as a new Chairman was appointed.
23.
All directors should be able to exercise their right to receive any additional information
they require on matters within the Board's competence. Unless the bylaws or Board
regulations indicate otherwise. such requests should be addressed to the Chairman or
Secretary.
See section:
B.1.42
Comply
24.
All directors should be entitled to call on the company for the advice and guidance they
need to carry out their duties. The company should provide suitable channels for the
exercise of this right. extending in special circumstances to external assistance at the
company's expense.
See section:
B.1.41
Comply
25.
Companies should organize induction programmers for new directors to acquaint them
rapidly with the workings of the company and its corporate governance rules. Directors
should also be offered refresher programs when circumstances so advise.
Comply
164
26.
Companies should require their directors to devote sufficient time and effort to perform
their duties effectively. and. as such:
a)
Directors should apprise the Nomination Committee of any other professional
obligations. in case they might detract from the necessary dedication;
b)
Companies should lay down rules about the number of directorships their Board
members can hold.
See sections:
B.1.8. B.1.9 and B.1.17
Comply
27.
The proposal for the appointment or renewal of directors that the Board submits to the
General Shareholders’ Meeting. as well as provisional appointments by the method of cooption. should be approved by the Board:
a)
On the proposal of the Nomination Committee. in the case of independent directors.
b)
Subject to a report from the Nomination Committee in all other cases.
See section:
B.1.2
Comply
28.
Companies should post the following directorship particulars on their websites and keep
them permanently updated:
a)
Professional experience and background;
b)
Directorships held in other companies. listed or otherwise;
c)
An indication of the director's classification as appropriate. stating. in the case of
institutional directors. the shareholder they represent or are associated with.
d)
The date of their first and subsequent appointments as a company director. and;
e)
Shares held in the company and any options on the same.
Comply
165
29.
Independent directors should not stay on as such for a continuous period of more than 12
years.
See section:
B.1.2
Comply
The Board has not considered it advisable to implement recommendation 29 since it would
lead to the loss of Directors whose presence on the Board is in its corporate interests due
to their qualifications. contributions and experience without their presence affecting their
independence.
30.
Institutional directors should resign when the shareholders they represent dispose of their
ownership interest in its entirety. If such shareholders reduce their stakes. thereby losing
some of their entitlement to institutional directors. the latter’s number should be reduced
accordingly.
See sections:
A.2. A.3 and B.1.2
Comply
31.
The Board of Directors should not propose the removal of independent directors before
the expiry of their tenure as mandated by the bylaws. except where just cause is found by
the Board. based on a proposal from the Nomination Committee. In particular. just cause
will be presumed when a director is in breach of his or her fiduciary duties or comes under
one of the disqualifying grounds enumerated in section III.5 (Definitions) of this Code.
The removal of independents may also be proposed when a takeover bid. merger or similar
corporate operation produces changes in the company’s capital structure. in order to meet
the proportionality criterion set out in Recommendation 12.
See sections:
B.1.2. B.1.5 and B.1.26
Comply
166
32.
Companies should establish rules obliging directors to inform the Board of any
circumstance that might harm the organization’s name or reputation. tendering their
resignation as the case may be. with particular mention of any criminal charges brought
against them and the progress of any subsequent trial.
The moment a director is indicted or tried for any of the crimes stated in article 124 of the
Public Limited Companies Law. the Board should examine the matter and. in view of the
particular circumstances and potential harm to the company's name and reputation. decide
whether or not he or she should be called on to resign. The Board should also disclose all
such determinations in the Annual Corporate Governance Report.
See sections:
B.1.43. B.1.44
Comply
33.
All directors should express clear opposition when they feel a proposal submitted for the
Board's approval might damage the corporate interest. In particular. independents and
other directors unaffected by the conflict of interest should challenge any decision that
could go against the interests of shareholders lacking Board representation.
When the Board makes material or reiterated decisions about which a director has
expressed serious reservations. then he or she must draw the pertinent conclusions.
Directors resigning for such causes should set out their reasons in the letter referred to in
the next Recommendation.
The terms of this Recommendation should also apply to the Secretary to the Board.
Director or otherwise.
Comply
34.
Directors who give up their place before their tenure expires. through resignation or
otherwise. should state their reasons in a letter to be sent to all members of the Board.
Irrespective of whether such resignation is filed as a significant event. the motive for the
same must be explained in the Annual Corporate Governance Report.
See section:
B.1.5
Comply
167
35.
The company's compensation policy. as approved by its Board of Directors. should specify
at least the following points:
a)
The amount of the fixed components. itemized where necessary. of Board and
Board Committee attendance fees. with an estimate of the fixed annual payment
they give rise to;
b)
Variable components. in particular:
i) The types of directors they apply to. with an explanation of the relative weight of
variable to fixed compensation items;
ii) Performance evaluation criteria used to calculate entitlement to the award of
shares or share options or any performance-related compensation;
iii) The main parameters and grounds for any system of annual bonuses or other.
non cash benefits; and
iv) An estimate of the sum total of variable payments arising from the compensation
policy proposed. as a function of degree of compliance with pre-set targets or
benchmarks.
c)
The main characteristics of pension systems (for example. supplementary pensions.
life insurance and similar arrangements). with an estimate of their amount or annual
equivalent cost.
d)
The conditions to apply to the contracts of executive directors exercising senior
management functions. Among them:
i)
Duration;
ii) Notice periods; and
iii) Any other clauses covering hiring bonuses. as well as indemnities or
‘golden parachutes’ in the event of early termination of the contractual
relation between company and executive director.
See section:
B.1.15
Comply
168
36.
Compensation comprising the delivery of shares in the company or other companies in the
group. share options or other share-based instruments. payments linked to the company’s
performance or membership of pension schemes should be confined to executive directors.
The delivery of shares is excluded from this limitation when directors are obliged to retain
them until the end of their tenure.
See sections:
A.3. B.1.3
Comply
37.
External directors' compensation should sufficiently compensate them for the dedication.
abilities and responsibilities that the post entails. but should not be so high as to
compromise their independence.
Comply
38.
In the case of compensation linked to company earnings. deductions should be computed
for any qualifications stated in the external auditor’s report.
Comply
39.
In the case of variable awards. compensation policies should include technical safeguards to
ensure they reflect the professional performance of the beneficiaries and not simply the
general progress of the markets or the company’s sector. atypical or exceptional
transactions or circumstances of this kind.
Comply
40.
The Board should submit a report on the directors’ compensation policy to the advisory
vote of the General Shareholders’ Meeting. as a separate point on the agenda. This report
can be supplied to shareholders separately or in the manner each company sees fit.
The report will focus on the compensation policy the Board has approved for the current
year with reference. as the case may be. to the policy planned for future years. It will
address all the points referred to in Recommendation 34. except those potentially entailing
the disclosure of commercially sensitive information. It will emphasize the most significant
changes to those policies compared with the policy referring to the General Meeting
applied last year. It will also include an overall summary of how the compensation policy
was applied last year.
169
The role of the Compensation Committee in designing the policy should be reported to the
Meeting. along with the identity of any external advisors engaged.
See section:
B.1.16
Comply
41.
The notes to the annual accounts should list individual directors’ compensation in the year.
including:
a) A breakdown of the compensation obtained by each company director. to include where
appropriate:
i) Participation and attendance fees and other fixed director payments;
ii)
Additional compensation for acting as chairman or member of a Board
Committee
iii)
Any payments made under profit-sharing or bonus schemes. and the reason for
their accrual;
iv)
Contributions on the director’s behalf to defined-contribution pension plans. or
any increase in the director’s vested rights in the case of contributions to
defined-benefit schemes;
v)
Any severance packages agreed or paid;
vi)
Any compensation they receive as directors of other companies in the group;
vii)
The compensation executive directors receive in respect of their senior
management posts;
viii) Any kind of compensation other than those listed above. of whatever nature and
provenance within the group. especially when it may be accounted as a relatedparty transaction or when its omission would detract from a true and fair view
of the total compensation received by the director.
170
b) An individual breakdown of deliveries to directors of shares. share options or other
share-based instruments. itemized by:
i) Number of shares or options awarded in the year. and the terms set for their
execution;
ii) Number of options exercised in the year. specifying the number of shares
involved and the exercise price;
iii) Number of options outstanding at the annual close. specifying their price. date and
other exercise conditions;
iv) Any change over the year in the exercise terms of previously-awarded options.
c) Information on the relation in the year between the compensation obtained by executive
directors and the company’s profits. or some other measure of enterprise results.
Comply
42.
When the company has a Delegate Committee. the breakdown of its members by director
category should be similar to that of the Board itself. The Secretary of the Board should
also act as secretary to the Delegate Committee.
See sections:
B.2.1 and B.2.6
Not applicable
43.
The Board should be kept fully informed of the business transacted and decisions made by
the Delegate Committee. To this end. all Board members should receive a copy of the
Committee’s minutes.
Not applicable
44.
In addition to the Audit Committee mandatory under the Securities Market Law. the Board
of Directors should form a committee. or two separate committees. of Nomination and
Compensation.
171
The rules governing the make-up and operation of the Audit Committee and the
committee or committees of Nomination and Compensation should be set forth in the
Board regulations. and include the following:
a)
The Board of Directors should appoint the members of such committees with regard
to the knowledge. aptitudes and experience of its directors and the terms of
reference of each committee; discuss their proposals and reports; and be responsible
for overseeing and evaluating their work. which should be reported to the first Board
plenary following each meeting;
b) These committees should be formed exclusively of external directors and have a
minimum of three members. Executive directors or senior officers may also attend
meetings. for information purposes. at the Committees’ invitation.
c) Committees should be chaired by an independent director.
d) They may engage external advisors. when they feel this is necessary for the discharge of
their duties.
e) Meeting proceedings should be minuted and a copy sent to all Board members.
See sections:
B.2.1 and B.2.3
Comply
The Company complies with the sections regarding the Recommendation. except for those included under
paragraphs b) and c)
With respect to paragraph b) an Executive Director forms part of the Nominations and Compensation
Committee. This Director does not receive any compensation whatsoever for his executive duties.
With respect to paragraph c) this Committee is led by and Executive Director who. as was explained above.
does not receive compensation for the executive duties carried out.
172
45.
The job of supervising compliance with internal codes of conduct and corporate
governance rules should be entrusted to the Audit Committee. the Nomination Committee
or. as the case may be. separate Compliance or Corporate Governance committees.
Comply
46.
All members of the Audit Committee. particularly its chairman. should be appointed with
regard to their knowledge and background in accounting. auditing and risk management
matters.
Comply
47.
Listed companies should have an internal audit function. under the supervision of the Audit
Committee. to ensure the proper operation of internal reporting and control systems.
Comply
48.
The head of internal audit should present an annual work program to the Audit
Committee; report to it directly on any incidents arising during its implementation; and
submit an activities report at the end of each year.
Comply
49.
Control and risk management policy should specify at least:
a)
The different types of risk (operational. technological. financial. legal. reputational…)
the company is exposed to. with the inclusion under financial or economic risks of
contingent liabilities and other off-balance-sheet risks;
b)
The determination of the risk level the company sees as acceptable;
c)
Measures in place to mitigate the impact of risk events should they occur;
d)
The internal reporting and control systems to be used to control and manage the
above risks. including contingent liabilities and off-balance-sheet risks.
See section: D
Comply
173
The Audit Committee’s role should be:
1. With respect to internal control and reporting systems:
a)
Monitor the preparation and the integrity of the financial information prepared on
the company and. where appropriate. the group. checking for compliance with legal
provisions. the accurate demarcation of the consolidation perimeter. and the correct
application of accounting principles.
b)
Review internal control and risk management systems on a regular basis. so main
risks are properly identified. managed and disclosed.
c)
Monitor the independence and efficacy of the internal audit function; propose the
selection. appointment. reappointment and removal of the head of internal audit;
propose the department’s budget; receive regular report-backs on its activities; and
verify that senior management are acting on the findings and recommendations of its
reports.
d)
Establish and supervise a mechanism whereby staff can report confidentially and. if
necessary. anonymously. any irregularities they detect in the course of their duties. in
particular financial or accounting irregularities. with potentially serious implications
for the firm.
2. With respect to the external auditor:
a)
Make recommendations to the Board for the selection. appointment. reappointment
and removal of the external auditor. and the terms and conditions of the
engagement.
b)
Receive regular information from the external auditor on the progress and findings of
the audit program. and check that senior management are acting on its
recommendations.
c)
Monitor the independence of the external auditor. to which end:
i) The company should notify any change of auditor to the CNMV as a significant
event. accompanied by a statement of any disagreements arising with the
outgoing auditor and the reasons for the same.
ii) The company should ensure that the company and the auditor respect rules in
force regarding the rendering of services other than audit services. business
concentration limits affecting the auditor and. in general. all of the rules
established to ensure the independence of auditors;
174
iii) The Committee should investigate the issues giving rise to the resignation of any
external auditor.
d)
In the case of groups. encourage the Group’s auditors to audit the group companies
See sections:
B.1.35. B.2.2. B.2.3 and D.3
Comply
50.
The Audit Committee should be empowered to meet with any company employee or
manager. even ordering their appearance without the presence of another senior officer.
Comply
51.
The Audit Committee should prepare information on the following points from
Recommendation 8 for input to Board decision-making:
a)
The financial information listed companies must periodically disclose. The Committee
should ensure that interim statements are drawn up under the same accounting
principles as the annual statements and. to this end. may ask the external auditor to
conduct a limited review.
b)
jurisdictions considered tax havens. and any other transactions or operations of a
comparable nature whose complexity might impair the transparency of the group.
c)
Related-party transactions. except where their scrutiny has been entrusted to some
other supervision and control committee.
See sections:
B.2.2 and B.2.3
Partial compliance
175
The Board Regulations do not expressly state that the Audit Committee must inform the Board
beforehand of any decisions taking regarding the issues indicated under paragraph b).
52.
The Board of Directors should seek to present the annual accounts to the General
Shareholders’ Meeting without reservations or qualifications in the audit report. Should
such reservations or qualifications exist. both the Chairman of the Audit Committee and
the auditors should give a clear account to shareholders of their scope and content.
See section:
B.1.38
Comply
53.
The majority of Nomination Committee members – or Nomination and Compensation
Committee members as the case may be – should be independent directors.
See section:
B.2.1
Comply
54.
The Nomination Committee should have the following functions in addition to those
a)
Evaluate the balance of skills. knowledge and experience on the Board. define the
roles and capabilities required of the candidates to fill each vacancy. and decide the
time and dedication necessary for them to properly perform their duties.
b)
Examine or organize. in appropriate form. the succession of the chairman and the
chief executive. making recommendations to the Board so the handover proceeds in
a planned and orderly manner.
c)
Report on the senior officer appointments and removals which the chief executive
proposes to the Board.
d)
Report to the Board on the gender diversity issues discussed in Recommendation 14
of this Code.
See section:
B.2.3
Partial compliance
176
The Nominations and Compensation Committee has not been formally given the authority listed under
paragraph b).
55.
The Nomination Committee should consult with the company’s Chairman and chief
executive. especially on matters relating to executive directors.
Any Board member may suggest directorship candidates to the Nomination Committee for
its consideration.
Comply
56.
The Compensation Committee should have the following functions in addition to those
a)
Make proposals to the Board of Directors regarding:
i) The compensation policy for directors and senior management;
ii) The individual compensation and other contractual conditions of executive
directors.
iii) The standard conditions for senior management employment contracts.
b)
Oversee compliance with the compensation policy set by the company.
See sections:
B.1.14. B.2.3
Comply
57.
The Compensation Committee should consult with the Chairman and chief executive.
especially on matters relating to executive directors and senior officers.
Comply
177
G OTHER INFORMATION OF INTEREST
If you consider there to be an important principle or aspects regarding the corporate governance
practices applied by your Company that have not been mentioned in this report. indicate them
below and explain their contents.
This section may be used to include any other information. clarification or qualification relating to
the previous sections of the report.
Specifically. state whether the company is subject to any laws other than the laws of Spain on
corporate governance and. if this is the case. include whatever information the Company may be
required to provide when different from the information included in this report.
Binding definition of independent director:
Indicate whether any of the independent directors have or have had any relationship with the
company. its significant shareholders or its executives. which. if sufficiently significant or
important. would have meant that the director could no longer be considered independent.
pursuant to the definition sat out in Section 5 of the Unified Good Governance Code:
NO
This annual report on corporate governance was approved by the Board of Directors of the
Company on 25/02/2010
Indicate whether any Directors have voted against or abstained in connection with the approval of
this Report.
NO
178

IBERPAPEL GESTION, S.A.

Transcription

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