annual report 2006 - Imerys, Transform to perform

Transcription

ANNUAL
REPORT 2006
CONTENTS
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CHAPTER 1
CHAPTER 2
CHAPTER 3
CHAPTER 4
CHAPTER 5
CHAPTER 6
CHAPTER 7
CHAPTER 8
CHAPTER 9
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Persons responsible for the Reference Document and the Audit of Accounts
Reports on the fiscal year 2006
Financial Statements
The Group’s Business
General information
Corporate Governance
Risk factors and internal Control
Ordinary and Extraordinary Shareholders’General Meeting of May 2, 2007
Table of concordance
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7
27
115
177
199
235
251
273
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ANNUAL REPORT 2006
ANNUAL REPORT 2006
This Document is a full translation of the original French text.
The original document was filed with the AMF (French Securities
Regulator) on March 29, 2007, in accordance with article 212-13 of
the general regulations of the AMF. As such, it may be used to
support a financial transaction if accompanied by a prospectus duly
approved by the AMF.
IMERYS
Société anonyme
à Conseil d'Administration
with a share capital of €126,669,240
Registered office :
154, rue de l'Université
75007 Paris – France
Tel: +33 (0) 1 49 55 63 00
Fax: + 33 (0) 1 49 55 63 01
SIREN 562 008 151 R.C.S. Paris
1
CHAPITER 1 - Persons responsible for the Reference Document and the Audit of Accounts
2
ANNUAL REPORT 2006
1
Persons responsible for the Reference
Document and the Audit of Accounts
pages
4
1 - Person responsible for the Reference Document
4
2 - Certificate of the person
responsible for the Reference Document
5
3 - Auditors
5
4 - Information included
in the Reference Document by reference
5
5 - Person responsible for the financial information
3
1 - Person responsible for the Reference Document
Gérard Buffière, Chief Executive Officer
2 - Certificate of the person
responsible for the Reference Document
I certify, after taking every reasonable measure for that purpose, that the information contained in the present Reference
Document is, to the best of my knowledge, accurate and does not contain any omission that could make it misleading.
I have obtained a letter of completion from the Statutory Auditors in which they state that they have checked the
information on the financial position and the financial statements given in this Reference Document and that they have
read the Document in its entirety.
The financial information presented in the Reference Document is the subject of the Statutory Auditors’ reports. The
general report on the financial statements for the period ending December 31, 2005, incorporated by reference to the
corresponding historical financial statements, contains an observation concerning the change of method resulting from
the first application, as from January 1, 2005, of CRC regulations 2002-10 and 2004-06 on assets.
Paris, March 29, 2007
Gérard Buffière
Chief Executive Officer
4
ANNUAL REPORT 2006
3 - Auditors
A
STATUTORY AUDITORS
Ernst & Young Audit
represented by Jean-Roch Varon
Faubourg de l’Arche
11, allée de l'Arche
92037 Paris - La Défense Cedex - France
first appointed at the Ordinary Shareholders’ General
Meeting of June 11, 1986
Deloitte & Associés
represented by Nicholas L.E. Rolt
185, avenue Charles-de-Gaulle
92524 Neuilly-sur-Seine Cedex - France
first appointed at the Extraordinary and Ordinary
Shareholders’ General Meeting of May 5, 2003
A
ALTERNATE AUDITORS
BEAS
7-9 Villa Houssay
92524 Neuilly-sur-Seine Cedex - France
part of the Deloitte network
first appointed at the Extraordinary and Ordinary
Jean-Marc Montserrat
92037 Paris - La Défense Cedex - France
part of the Ernst & Young network
first appointed at the Ordinary Shareholders’ General
Meeting of June 12, 1985
4 - Information included
in the Reference Document by reference
Pursuant to article 28 of EC Regulation 809/2004 of April 29, 2004, the following information is included in the present
Reference Document by reference:
-
With respect to the financial year ending on December 31, 2005, the consolidated financial statements, annual
financial statements, the related Auditors’ reports and the Auditors’ special report on regulated agreements and the
management report appearing on pages 28-108, 23-25, 285 and 8-22 of the 2005 Reference Document filed with
Autorité des marchés financiers (French Securities Regulator) on April 6, 2006 under number D. 06-0225,
- With respect to the financial year ending on December 31, 2004, the consolidated financial statements, annual financial
statements, the related Auditors’ reports and the Auditors’ special report on regulated agreements and the management
report appearing on pages 28-67, 83-101, 23-25 and 8-19, respectively, of the 2004 Reference Document filed with
Autorité des marchés financiers (French Securities Regulator) on April 14, 2005 under number D. 05-0430.
Any other information that is not included in the present Document is either of no relevance to investors or mentioned in
another part of the Reference Document.
5 - Person responsible for financial information
Christophe Daulmerie
Executive Vice-President Finance & Strategy
Telephone: +33 (0) 1 49 55 66 55 – Fax: +33 (0) 1 49 55 63 98
http://www.imerys.com
5
2
ANNUAL REPORT 2006
2
Reports on the fiscal year 2006
pages
8
1 - Board of Directors’ management report
23
2 - Auditors’ reports
7
CHAPTER 2 - Reports on the fiscal year 2006
1 - BOARD OF DIRECTORS’ MANAGEMENT REPORT
1.1 Financial year 2006
Imerys’ markets showed contrasting trends throughout 2006. The Pigments for Paper and Specialty Minerals business
groups were affected by restructuring in the paper and ceramics industries. However, business remained firm in Building
Materials in France and in Refractories. Abrasives markets were stable and the Filtration sector grew slightly. Rises in
variable costs were particularly sharp in the 1st half of the year but slowed down in the 2nd half. Finally, the 4th quarter
was affected by a slump on US construction markets.
• Specialty Minerals: the business group’s markets showed contrasting conditions: well oriented in Europe, performance
mineral markets (paint, plastics, adhesives, etc.) decreased sharply in the United States towards the end of the year;
ceramic markets remained difficult in Western Europe and North America.
• Pigments for Paper: the world printing and writing paper market grew in 2006, mainly in Asia and Europe. Paper
production in North America, on the other hand, decreased slightly.
• Materials & Monolithics: the business group’s markets were healthy overall with slight growth in new single-family
housing start-ups in France and a firm renovation sector. The Monolithic refractories market particularly benefited from
a dynamic steel industry.
• Refractories, Abrasives & Filtration: during the year, the business group’s general market environment evolved
favorably. Refractory markets were buoyant, abrasive markets were stable over the period and filtration markets grew
slightly, especially in emerging countries.
In that context, the Group continued to grow and post significantly higher performance, proving its reactive ness and its
adaptability. Sale increased + 8.0% (+ 3.2% at comparable Group structure and exchange rates) and current operating
income + 5.7%. Net income from current operations, up + 7.2%, grew for the fifteenth year running.
(€ millions)
2006
2005
% change
Salei
(1)
Current operating income
(2)
Net income from current operations, Group share
Net income, Group share
3,288.1
458.8
308.3
187.4
3,045.2
434.0
287.6
309.4
+ 8,0%
+ 5,7%
+ 7,2%
- 39,4%
Financing
(3)
Current operating cash flow
Paid capital expenditure
Shareholders’ equity
Net financial debt
522.1
217.0
1,646.4
1,086.1
479.8
251.0
1,686.2
1,140.0
+ 8,8%
- 13,5%
- 2,4%
- 4,7%
63,475,098
€ 4.86
€ 1.80
63,426,126
€ 4.53
€ 1.65
+ 7,1%
+ 9,1%
Consolidated results
Data per share (average weighted number)
(2)
Net income from current operations, Group share
Proposed dividend
( 1)
Operating income before other operating revenue and expenses.
(2)
Net income before other operating revenue and expenses, net.
(3)
Current operating income plus net depreciation expenses and provisions, minus notional taxes on current operating income.
8
ANNUAL REPORT 2006
After a particularly active year in terms of external growth in 2005, the Group continued to integrate its acquisitions
successfully in 2006. It also began a major restructuring program in kaolin for paper with the aim of setting up a
competitive cost platform over the long term in the Great Britain for filler kaolins and in particular, in Brazil for coating
kaolins. Capital expenditure remained high.
In 2006 the Group’s net income from current operations rose for the 15th straight year. This growth was achieved despite
tough conditions on some markets and adverse trends in external factors such as energy. It is the result of great efforts
by the Group’s people. Thanks to them, the acquisitions made in 2005 have been successfully integrated, the product
offering has improved and fixed costs remain under control. Moreover, high cash flow generation further improved our
financial strength and our ability to seize acquisition opportunities. 2006 was a year of discipline and good management,
as well as of major decisions including the restructuring undertaken in kaolins, which will give the Group a competitive
cost base from 2008.
Finally, to create new synergies, it was decided to organize the Group around three business groups from January 1,
2007. An Innovation Department was also set up and will help boost growth.
1.2 Detailed commentary on the Group’s results
A
SALES: UP + 8.0% TO €3,288.1 MILLION
This increase reflects the substantial impact of changes in Group structure (+ €160.8 million, i.e. + 5.3%), which include
two opposing items:
• The major positive sales contribution for the period (+ €253.4 million) of the acquisitions made in 2005 (chiefly World
Minerals and Denain-Anzin Minéraux) and in 2006 (mainly AGS);
• The negative effect (- €92.6 million) of the divestments made in the 1st half of 2005 (American Minerals and Larivière).
Exchange rates had a negative impact of - €16.6 million, i.e. - 0.5%, due to the depreciation of the US dollar against the
euro in the 4th quarter.
At comparable Group structure and exchange rates, sales increased + 3.2% (+ 4.6% in the 1st half; + 1.9% in the 2nd),
reflecting:
• An increase in the price/mix component (+ 4.0%), resulting from an improved product offering and efforts to pass
through external cost rises;
• Slight erosion in sales volumes (- 0.7%), mainly recorded in the 4th quarter.
A
CURRENT OPERATING INCOME: UP + 5.7% TO €458.8 MILLION
For the second year running, the Group was faced with high inflation in its variable costs, primarily energy. In that
context, growth in current operating income results from:
• The contribution of acquisitions for the year, with impact + €20.9 million, net of divestments;
• The negative effect of exchange rates for the year (- €7.0 million).
At comparable Group structure and exchange rates, the increase was €10.9 million, with the increase in the price/mix
component (+ €122.5 million) making up for inflation in external costs (- €88.6 million) and the negative impact of
volumes (- €17.8 million). Fixed costs remained under strict control (- €1.7 million).
Over the year, the decrease of Specialty Minerals performance was more than offset by improvement in the three other
business groups. In total, operating margin remained high (14.0% in 2006 vs. 14.3% in 2005) and return on investment
(ROI)( 1 ) remained healthy at 14.5% in 2006, compared with 14.9% in 2005.
1
Current operating income divided by average capital employed (including goodwill).
9
A
NET INCOME FROM CURRENT OPERATIONS, GROUP SHARE: UP + 7.2% TO €308.3 MILLION
This improvement takes into account:
• Stable financial expense (- €46.7 million vs. - €47.3 million in 2005), including non-recurring positive impact from
foreign exchange transactions;
• A current tax charge of - €106.4 million, compared with - €101.0 million in 2005, which represents a slight decrease in
the effective tax rate to 25.8% from 26.1% in 2005.
At €4.86 compared with €4.53 in 2005, net income from current operations per share increased + 7.1% over the period,
while the average weighted number of outstanding shares increased slightly from 63,426,126 in 2005 to 63,475,098
in 2006.
A
NET INCOME, GROUP SHARE
The Group’s share of net income totaled €187.4 million compared with €309.4 million the previous year. In 2005, net
income included + €21.8 million in other income and expense, net (including capital gains on the divestment of the
Larivière distribution network). In 2006, it includes - €120.9 million net of tax in other income and expense, mostly
without impact on the Group’s cash flow, from:
• Provisions for industrial asset deprecation, site restoration and restructuring expenses relating to the major
reorganization program for kaolin production in Great Britain, for a total amount of - €87million;
• Other expenses for - €45 million with respect to asset depreciations and cost reduction actions taken across the Group;
• Sales of non-industrial assets for + €10.9 million.
A
FURTHER IMPROVEMENT IN THE GROUP’S FINANCIAL SOLIDITY
The year was marked by even higher generation of current operating cash flow( 2 ). At €522.1 million compared with
€479.8 million in 2005, it takes into account:
• €643.4 million in EBITDA( 3 ) (€596.9 million in 2005), which represents a + 7.8% increase;
• A notional tax charge on current operating income of - €118.5 million (- €113.4 million in 2005).
Current free operating cash flow ( 4 ) totaled €245.8 million (€219.4 million in 2005) with:
• Capital expenditure that remained high over the period, despite decreasing slightly from the previous year
(representing 111% of depreciation expense( 5 ) in 2006 vs. 127% in 2005). The €217.0 million paid in capital
expenditure (€251.0 million in 2005), was spread among the different business groups;
• Negative change in operating working capital for - €66.8 million (- €18.1 million in 2005), reflecting growth in sales.
After taking into account financial expense net of tax (- €34.6 million after tax vs. - €34.9 in 2005), other working capital
items and non-cash items, for a total of - €12.2 million compared with + €10.6 million in 2005, current free cash flow( 6 )
remained high at €199.0 million (€195.1 million in 2005).
• External growth operations had cash impact of - €32.1 million (mainly the acquisition in late February of AGS,
France) compared with - €439.6 million in 2005.
• Asset sales amounted to + €19.2 million, compared with €183.8 million in 2005, and mainly concern disposals of
property.
2
EBITDA less taxes on current operating income.
3
Current operating income plus amortization, depreciation and change in provisions.
4
Current operating cash flow less paid capital expenditures and change in operating working capital requirements.
5
Accounted capital expenditures divided by increase in asset amortization and depreciation.
6
Current free operating cash flow less financial expenses net of taxes and change in other working capital requirements and non-monetary items (deferred
taxes, financial provisions).
10
ANNUAL REPORT 2006
Imerys continues to enjoy good financial flexibility. Consolidated net financial debt decreased to €1,086.1 million as on
December 31, 2006, compared with €1,140.0 million at the end of 2005. This represents 66.0% of shareholders’ equity
and 1.7 times EBITDA (vs. 67.6% and 1.9, respectively, in 2005).
As on December 31, 2006, the Group’s financial resources totaled €2,208.4 million, i.e. twice the amount of its net
financial debt. The average maturity of those resources is 4.5 years, compared with 5.5 years as on December 31, 2005.
They remain balanced between bank and bond resources, with repayment dates that are spread out over time.
Consequently, Imerys’ financial structure remains extremely robust. The Group has further improved its ability to seize
any new acquisition opportunities that may arise in 2007.
At the Shareholders’ General Meeting on May 2, 2007, the Board of Directors will propose payout of a dividend of €1.80 per
share, compared with €1.65 for 2005 (up + 9.1%). The total amount of approximately €114.0 million represents 37.0% of
the Group share of net income from current operations. The divided will be paid on May 15, 2007.
1.3 Commentary by business group
(€ millions)
SALES
2006
2005
% change
% change on
comparable basis
3,288.1
3,045.2
+ 8.0%
+ 3.2%
Specialty Minerals
892.0
809.3
+ 10.2%
+ 1.0%
Pigments for Paper
762.7
755.0
+ 1.0%
+ 1.4%
Materials & Monolithics
893.0
922.4
- 3.2%
+ 6.4%
Refractories, Abrasives & Filtration
787.8
603.9
+ 30.5%
+ 3.6%
Holding Company & Eliminations
(47.4)
(45.4)
n.s.
n.s.
(€ millions)
CURRENT OPERATING INCOME
Specialty Minerals
Pigments for Paper
2006
2005
% change
458.8
434.0
+ 5.7%
92.3
94.8
- 2.6%
76.7
73.8
+ 3.9%
208.9
197.8
+ 5.6%
110.8
95.8
+ 15.7%
Holding Company & Eliminations
(29.9)
(28.2)
n.s.
11
A
SPECIALTY MINERALS
The business group’s markets showed contrasting trends in 2006.
• Performance minerals markets (paint, plastics, adhesives, etc.) were healthy in Europe, particularly thanks to a firm
construction sector in the region. North American markets were buoyant in the 1st half but slumped in the 4th quarter;
• Fine ceramic markets were marked by capacity reductions in Western Europe and North America and by the transfer
of ceramic production to Eastern Europe, Latin America and Asia. As these markets are also related to the
construction sector, they slowed down significantly in the 4th quarter;
• Graphite markets were dynamic, while the kiln furniture sector began a downturn in the 2nd quarter with harsher
competition.
In that context, with several soft markets and sharp inflation in energy costs, restructuring efforts were stepped up
across the business group through:
• Implementation early in the year of an administrative cost reduction plan in line with the integration of Denain-Anzin
Minéraux (DAM), which was acquired in late October 2005;
• Shutdown of kiln furniture manufacturing on the Lamotte-Beuvron (Loir-et-Cher, France) site in October and the
transfer of production to the business group’s Spanish, Thai and Hungarian sites;
• The announcement in early July of the project to end kaolin mining and refining activities in Devon in early 2008 to focus
British production of kaolin for ceramics and performance minerals on Cornwall;
• The decision made in late 2006 to close the precipitated calcium carbonate (PCC) plant in Arcos (Brazil) and transfer
production to the Bras Cubas site to benefit from more modern and energy-efficient production tools.
Capital expenditure amounted to €61.3 million, i.e. 100% of depreciation expense,
compared with €71.8 million in 2005
It mainly concerned productivity improvements and selective capacity increases.
• In performance minerals, optimization of ground calcium carbonate (GCC) production continued in the United States
with capital expenditure at the Sylacauga (Alabama) plant. In Brazil, the Limeira PCC plant benefited from a capacity
debottlenecking program.
• In minerals for ceramics, production capacity was increased in Thailand to support substantial development by major
sanitaryware customers in the country. Furthermore, kaolin for porcelain reserves in New Zealand are being extended.
• In graphite, a new furnace using an innovative graphitizing procedure is under construction.
Furthermore, the business group continued to strengthen its positions in GCC for performance minerals with the
acquisition in early July of a 70% stake in Mikro Minerals (Turkey), which achieves annual sales of €3.5 million, mainly in
the paint market.
The business group’s sales totaled €892.0 million (up + 10.2% from 2005).
This increase takes into account:
• The impact of changes in structure for + 8.9%, reflecting the acquisitions made during the previous year (primarily
Denain-Anzin Minéraux in late October 2005);
• Virtually neutral effect of exchange rates (+ 0.3%).
At comparable structure and exchange rates, sales rose + 1.0% over the year (+ 3.1% in the 1st half, - 1.0% in the 2nd),
with the improvement in the price/mix component offsetting the drop in volumes in the 2nd half of the year, particularly in
Performance Minerals and Minerals for Ceramics in the United States and in Kiln Furniture.
12
ANNUAL REPORT 2006
Current operating income amounted to €92.3 million (down - 2.6%).
Changes in structure account for + €6.1 million of this figure. Over the period, a greater price/mix component and tight
control over fixed costs limited the impact of higher variable costs and lower sales volumes. This trend comes with a
lower operating margin (10.4% vs. 11.7% in 2005), partly as a result of the integration of Denain-Anzin Minéraux.
A
PIGMENTS FOR PAPER
2006 was marked by estimated + 2.4% growth in world printing and writing paper. Despite this, production overcapacity
in some market segments, particularly in Europe, led the major papermakers to announce a series of machine or mills
shutdowns. This program should lead to better utilization of European papermaking capacities.
Trends by geographic zone were as follows:
• In Europe, paper production increased (+ 2.7%) with an overall rise in underlying demand and the return to a normal
production rate in Finland after the seven-week strike that affected the country’s paper industry in 2005;
• In North America, paper production decreased slightly (- 2.0%), reflecting overall weak demand and the impact of
lock-outs at some manufacturers;
• In Asia, the paper markets were healthy (+ 5.2%) with a significant increase in demand and the start-up of major
production capacities.
Capital expenditure totaled €60.9 million (i.e. 88% of depreciation expense),
compared with €75.6 million the previous year.
It mainly corresponds to the continued implementation of the Group’s development strategy in calcium carbonates. The
new carbonate plants that came on stream in 2005 in Sweden, India and China reached satisfactory utilization levels.
Towards the end of 2006, a new precipitated calcium carbonate (PCC) for paper plant went into service in Sumatra
(Indonesia) as part of a joint venture in which the Group has a majority stake (51%), alongside April, a major Asian
papermaker.
Furthermore, in early July 2006 Imerys announced a major reorganization project for its kaolin for paper production. One
of the project’s main goals is to limit the Group’s exposure to energy costs in Great Britain. This project, which will be
supported by a capital expenditure program totaling approximately €100 million, mainly provides for:
• The shutdown in late 2007 of manufacturing of coating kaolins, the most energy-intensive paper products, in Cornwall.
The corresponding tonnage will be transferred to Brazil (Imerys RCC) where production capacities will be increased
accordingly;
• The concentration of British kaolin for paper production capacities on fillers in order to adapt facilities to the nature of
local mineral reserves. Drying techniques will be modified and adjusted in line with the new energy situation.
Approximately 800 jobs will be reduced from early 2006 to late 2007 when the reorganization is completed. The Group
will then have a competitive cost base for both filler kaolins in Great Britain and for coating kaolins in Brazil.
13
Sales totaled €762.7 million in 2006 (up + 1.0% from 2005).
Excluding the effects of changes in structure (+ 0.7%), corresponding to the acquisition of Yen Bai Banpu in Vietnam in
July 2005 and exchange rates (- 1.1%), sales rose + 1.4% (+ 3.7% in the 1st half, - 0.8% in the 2nd). This trend reflects:
• A significant improvement in the price/mix component;
• A decrease in sales volumes, particularly in the 2nd half, relating to plant shutdowns by some major European
papermakers and by the industrial unrest that affected North American customers.
Current operating income totaled €76.7 million (up + 3.9%).
This trend reflects the business group’s ability to absorb higher variable costs (particularly energy) and lower sales
volumes through an improved price/mix component and lower fixed costs and general expenses. Overall, the business
group’s operating margin improved slightly to 10.1% (vs. 9.8% in 2005).
A
MATERIALS & MONOLITHICS
The business group took full advantage of positive market trends in 2006.
• The French building materials market continued to grow. The roofing segment rose 3% with a slight increase in singlefamily housing start-ups (+ 1%) and a dynamic renovation market. In wall bricks, clay products continued to grow
(+ 13%) with market share gains;
• The monolithic refractories market benefited from sound business, especially in the steel industry.
The production rationalization program in Building Materials in France continued in 2006. The new roof tile line that
came on stream in late 2005 in Sainte-Foy-l’Argentière (Rhône) was used at full capacity in 2006, which enabled
production to be rebalanced between that unit and Pargny sur Saulx (Marne), Saint-Germer-de-Fly (Oise), Quincieux
(Rhône), Commenailles (Jura) and Sainte-Foy-l’Argentière (Rhône). In southwestern France, production was adapted to
local demand with the start-up in September 2006 of a renovated line in Saint-Geours d’Auribat (Landes). Energy cost
reduction efforts also continued. In bricks, the new wall brick manufacturing line in Mably (Loire), which went into service
towards the end of 2005, was gradually ramped up in 2006.
In Monolithic Refractories, industrial and commercial optimization continues. The Scheuerfeld (Germany) plant was
closed and production focused on the division’s two other sites in the country. In China, the new plant built near
Shanghai came on stream on schedule in late 2006 to supply the steelmaking and casting markets.
Capital expenditure committed during the year amounted €45.7 million (130% of depreciation expense),
compared with €52.1 million in 2005.
Sales totaled €893.0 million, down - 3.2% from 2005.
This trend results from the sale of Larivière, a specialized distribution network, in April 2005 (- €81.4 million, i.e. - 8.8%).
At comparable structure, sales grew + 6.4% (+ 6.5% in the 1st half, + 6.3% in the 2nd). This increase reflects the
combined impact, in both Building Materials and Monolithic Refractories, of the rise in sales volumes and improvement
in the price/mix component.
14
ANNUAL REPORT 2006
Current operating income totaled €208.9 million compared with €197.8 million in 2005.
It increases + 5.6% despite the sale of Larivière. Reprocessed to allow for the effect of changes in structure and exchange
rates, the increase was €14.2 million. The business group took full advantage of growth on its markets, with a greater
price/mix component offsetting the negative impact of higher energy costs. Operating margin again improved, at 23.4%
compared with 21.4% in 2005.
A
REFRACTORIES, ABRASIVES & FILTRATION
Over the period, the business group’s market environment was favorable as a whole:
• Refractory markets were buoyant, with overall growth in steel production and a number of projects in aluminum;
• Abrasive markets were stable, with a soft automotive sector offset by firm business in other applications (construction,
aerospace, etc…);
• Filtration markets showed slight growth over the period, particularly in emerging countries.
On February 28, 2006, Imerys acquired the French group AGS, which achieves sales of approximately €50 million from
the production of chamottes and metakaolins. This operation broadens the division’s product lines, enhances its
European market presence in refractories and sanitary ceramics and makes future commercial and industrial synergy
possible within the division. In May 2006, a new brown fused alumina production unit with 10,000 tons annual fusion
capacity was also acquired in China (Kaili).
Capital expenditure totaled €55.7 million, i.e. 146% of depreciation expense,
compared with €27.4 million in 2005.
This increase is due to the major industrial projects carried out during the period:
• In Minerals for Refractories, the Group continued to modernize and improve the operating efficiency of its production
units. More specifically, action plans were implemented in all units in order to soften the short and medium-term
impact of energy cost increases;
• The new ultrafine abrasive powders market in Villach (Austria) went into service on schedule in late 2006;
• In Minerals for Filtration, the integration of World Minerals comes with a major capital expenditure program designed
to improve productivity, extend capacities and rebalance production among plants. Begun in 2006 in the United
States, Mexico, Europe and China, the program should be completed in the 2nd half of 2007. In parallel, a perlite
production unit was shut down in mid-2006 in Utah (USA) and the decision was made to transfer perlite production
from El Ejido (Spain) to the Alicante (Spain) plant.
Sales totaled €787.8 million (up + 30.5% from 2005).
This very substantial increase includes:
• + 28.0% impact of changes in structure (€169.2 million), reflecting the contributions of World Minerals and AGS from
July 2005 and March 2006, respectively, net of the sale of American Minerals (March 2005);
• - 1.1% negative effect of exchange rates.
At comparable structure and exchange rates, sales increased 3.6% (+ 4.4% in the 1st half; + 2.7% in the 2nd), with an
improved price/mix component. Sales volumes were stable overall year-on-year.
15
Current operating income, at €110.8 million compared with €95.8 million in 2005, increased
significantly.
This trend takes into account the net effect of changes in structure for + €16.5 million. The increase in the price/mix
component and productivity gains made up for cost inflation, mostly in variable factors. Volumes were stable compared
with the previous year. The operating margin worked out at 14.1% compared with 15.9% in 2005. This trend results from
margin levels in recent acquisitions (World Minerals and AGS). The optimization plans in progress should help to
improve that margin.
1.4 Adjustment of operating structures
As of January 1, 2007, it was decided to center operating organization on three business groups to boost growth and
optimize synergy in terms of costs, resources and processes between the Group’s various divisions.
An Innovation Department was also created. Under the management of Thierry Salmona, previously in charge of the
Specialty Minerals business group, its role is to speed up the generation of organic growth projects by fostering and
coordinating the joint mobilization of several divisions. A number of projects are in the examination and validation
process and involve the Group’s expertise in high-temperature technologies, ceramics, rheology, crushing and
calcination.
The diagram below shows how the divisions from the Specialty Minerals business group are assigned and how the
Group is organized into three business groups:
• Performance Minerals are grouped together with the divisions from the Pigments for Paper business group to leverage
operating synergy in carbonates and kaolin;
• Minerals for Ceramics and Graphite & Carbon businesses are grouped together with the Refractories, Abrasives &
Filtration activities to respond more effectively to the major changes affecting the sector;
• Kiln Furniture activities have joined the Materials & Monolithics business group.
16
ANNUAL REPORT 2006
1.5 Recent events
A highlight of early 2007 was the signing of agreements for the acquisition of:
• A 65% stake in Yilong and Xinlong, two Chinese sister companies that produce vermiculite and andalusite. With the
Group’s existing production based in Zimbabwe and Australia, this operation will give the Group critical size in
vermiculite (used in construction and horticulture). It will also give Imerys access to a high-quality andalusite reserve
that is being developed to serve the Chinese refractories market, in addition to its current bases in South Africa and
France. Yilong and Xinlong together achieved sales of approximately €11 million in 2006.
• An 85% stake in Baotou Jing Yuan Graphite Co Ltd, a Chinese producer that is small in size but manufactures highperformance natural graphite used locally for mobile energy.
• Additional high quality marble reserves in China to support the development of its local activities (GCC).
These operations remain subject to various conditions precedent, notably the approval of the relevant authorities, and
should be finalized during the 1st half of 2007.
Furthermore, Imerys announced on February 15th the launch of a friendly bid for UCM Group PLC, a British group listed
on the London Stock Exchange. UCM Group PLC’ board of directors has unanimously recommended that its
shareholders accept the offer. With market estimated sales of €55 million in 2006, two sites in Great Britain and two in
the United States, UCM Group PLC is one of the world’s leading producers of fused zirconia for the refractories,
advanced ceramics and automotive industries, and fused magnesia, which is primarily used in the manufacture of
electrical heating elements. This acquisition would enable Imerys to broaden its range of fused minerals, a segment in
which it is already active through its subsidiary Treibacher.
Launched on the basis of 85 pence per share, the public purchase bid values UCM Group PLC at €48 million, i.e. 7.4
times its market estimated 2006 EBITDA.
1.6 2007 outlook
In 2007, the Group’s markets are likely to be healthy as a whole (except perhaps for the new residential housing market
in the United States).
The macroeconomic environment is so far characterized by rising interest rates, which should make servicing the
Group’s debt more expensive, and by a strong euro relative to the US dollar in particular. As regards energy, trends vary
from region to region.
In that context, the Group is likely to continue to develop and have the financial flexibility needed to seize the growth
opportunities that may arise.
1.7 Human Resources and Sustainable Development
As at year-end 2006, the Group had 15,776 employees (compared with 15,934 at the end of 2005).
To support its growth and prepare for the future, Imerys strives to recruit, develop and promote high-quality teams and
talented, mobile managers. The Group is strengthening its central teams in geology, auditing, health and safety and
seeking to develop its future managers. In-house promotion is favored and mobility is heavily encouraged. 50% of
vacancies for experienced personnel were filled by existing employees in 2006.
In parallel, whenever it has to carry out restructuring operations, the Group strives to provide all possible internal and
external placement solutions, backed up by training and personalized support. This is the case, of course, for the plans
currently announced and implemented in France, Great Britain and Brazil.
In 2006, the Group kept up its Sustainable Development process. An EHS charter was defined in 2005 and application
procedures were added in 2006. An EHS audit program (57 audits completed from 2005 to 2006) regularly assesses
units’ compliance with Group regulations and procedures and guides continuous improvement.
17
During the year, Imerys also published a new Code of Ethics and Business Conduct that sets out the principles that all
its employees must apply to ensure that Imerys’ business is conducted with integrity and in compliance with the law.
Imerys considers that ensuring the health and safety of its employees is essential and has taken a great many initiatives
to improve Safety culture in the Group. In 2006, every operation set up a Safety plan. The management team reviews
the plan’s results every quarter. These efforts have resulted in a - 34% decrease in lost-time workplace accidents.
Publication of the Group’s second Sustainable Development report, covering a significantly larger scope, and the
organization of the second in-house Sustainable Development challenge designed to reward the different business
groups’ initiatives, were other highlights of the year.
1.8 Corporate Governance
As regards Governance, following the appointment of Gilbert Milan as a new Director replacing Patrick Kron, half the
members of the Board of Directors are recognized as independent. This proportion would be maintained if shareholders
at the next General Meeting approved the Board’s proposal to renew the positions of the members whose terms of office
are nearing expiry and to appoint Jean Monville as a new Director to replace Yves René Nanot, whose term of office
could not continue for statutory reasons.
The committees that support the Board in its missions were particularly active in 2006.
Furthermore, Imerys strives to comply strictly with new requirements in terms of transparency and communication.
Shorter production times for consolidated financial statements, with a view to meeting new obligations concerning
publication, are an example of this.
The Group continued to improve its risk management processes by factoring in regulatory changes, best practices and
the suggestions of the workgroup organized by French market regulator AMF, in which Imerys took part. A new map of
the Group’s main risks is being drawn up. The study is being initiated at Division level as this is the core of Imerys’
management structure.
An analysis of internal control practices has also been undertaken. It should eventually cover all the processes likely to
generate material risks for the Group.
1.9 The Company's business in 2006
The Company made a net profit of €113.4 million in 2006, a €13.4 million increase compared to the previous period.
An operating loss of - €23.6 million was recorded, €2.3 million less than the previous year. This trend is due to an
decrease in operating expenses of €2.2 to €50.7 million. At the same time, sales and the other revenue increase slightly
by €0.1 million and reach €27.1 million.
A financial income of €99.3 million was posted in 2006, compared with a financial income of €72.6 million in 2005. In
fact, the Company collected €136.8 million in dividends in 2006, the latter reached €121.2 million in 2005. Similarly, the
Company recorded a exchange rate loss of - €7.6 million in 2006, whereas the exchange rate loss in 2005 reached
- €27.8 million in 2005. Finally, because of the external growth operations carried out by the Group during this period,
the net financial expenses are reduced to - €25.4 million in 2006.
Pursuant to the risk management procedure in force in the Group, the Company uses forward or optional financial
instruments to hedge the risks inherent in fluctuations in exchange and interest rates and in energy prices.
The current income amounts to €75.7 million in 2006, against €46.8 million in 2005.
The exceptional income reached €29.0 million in 2005, mainly comprised of gains on the divestment of Larivière
securities. For the 2006 period, it amounts to €15.5 million and is due to the gain on the disposal of the second part of the
Tour Maine - Montparnasse real estate as well as the gain on the Europe Commerce Refractory securities.
18
ANNUAL REPORT 2006
With respect to 2006, Imerys SA recorded tax revenue of €22.2 million, as a result of the tax consolidation of the Group
of French companies headed by Imerys SA.
The balance sheet structure reflects the following transactions on securities by Imerys SA in 2006 : subscription to the
capital increase of Mircal, the disposal of Imerys Minerals Netherland BV securities, as well as the disposal of part of the
Europe Commerce Refractory securities.
This balance sheet structure also reflects the transfer of two loans (USD90.0 million and £23.6 million) to Imerys
Minéraux Belgique for its recapitalization. The funds made available to the Group’s subsidiaries under loan or treasury
agreements thus decreased by €143.0 million.
Financial resources decreased in correlation by €8.0 million. Consequently, as of December 31, 2006, the Company’s
financial debt was made up of the following items:
Amount
Maturity less
than one year
Maturities from
one to five years
Maturities
beyon five years
Bonds
883,344
359,657
50,000
473,687
Commercial papers
320,000
320,000
-
-
Group financial current accounts
508,642
508,642
20,023
20,023
-
-
1,732,009
1,208,322
50,000
473,687
(€ thousands)
Bank overdrafts and accrued interest
Total
A
-
INVENTORY OF INVESTMENT AND MARKETABLE SECURITIES
Information concerning subsidiaries and investments as of December 31, 2006 can be found in note 35 of the Statutory
financial statements.
Pursuant to article L232-7 of the Code of Commerce, the inventory of marketable securities is given below:
Nature
SICAV Natexis Securite Jour
SICAV Dresdner Eurocash
Imerys shares (liquidity provider contract)
19
Quantity
Average cost price
per unit (€)
Average rate
December 2006 (€)
-
-
-
3,856
6,208.06
6,208.06
-
-
-
A
INFORMATION ON CAPITAL AND DISTRIBUTIONS OF DIVIDENDS DURING
THE PAST THREE PERIODS
As of December 31, 2006, the Company’s share capital was made up as follows:
As of December 31, 2006
Pargesa Netherlands BV
Belgian Securities BV
% of interest
17,091,712
26.99%
35.09%
16,744,028
26.44%
34.38%
248,118
0.39%
0.36%
(2)
(3)
Group employees
Owned by the Group
% of voting rights
(1)
Number of shares
0
0.00%
0.00%
Public
29,250,762
46.18%
30.18%
Total
63,334,620
100.00%
100.00%
(1)
Total voting rights : 97,427,907.
(2)
A 100% subsidiary of the Pargesa Holding SA.
(3)
A 100% subsidiary of the Bruxelles Lambert group.
During the 2006 period, 1,419,186 Imerys shares were acquired under the liquidity contract at an average unit price of
€65.83 and, in correlation, 1,427,356 Imerys shares were sold at an average unit price of €66.37.
On January 17, 2006, the Board of Directors of the Company approved of the capital reduction by cancellation of
640,000 treasury shares held as of December 31, 2005.
In addition, in 2006 the Company acquired 685,000 treasury shares directly on the market at the average unit price of
€66.13. On December 19, 2006, the Board of Directors approved of the capital reduction by cancellation of these
shares.
Consequently, as of December 31, 2006, the Company does not hold any treasury shares.
Finally, on December 21, 2006, the Board of Directors authorized the creation of 50,000 shares of a nominal amount of
€2 within the framework of the Employee Shareholding Plan.
The amount of dividends paid during the past three periods was as follows:
2006
2005
2004
For the 2005 period
For the 2004 period
For the 2003 period
Gross dividend per share
€1.65
€1.50
€1.87
Net dividend per share
€1.65
€1.50
€1.25
Total net distribution
M€104.8
M€95.0
M€79.3
20
ANNUAL REPORT 2006
A CAPITAL, OTHER SECURITIES, INCOME AND OTHER KEY INDICATORS
OF THE COMPANY FOR THE PAST FIVE PERIODS
(in euros)
Type of indicators
2006
2005
2004
2003
2002
I - Capital and other shares at the end of the period
Share capital
126,669,240
127,943,730
63,334,620
(2)
Nominal per share
2
(2)
Number of preferred shares (without voting rights)
-
Number of ordinary shares at the end of the period
126,900,040
63,971,865
(2)
€2
(2)
126,965,960
126,015,600
63,450,020
(2)
15,870,745
15,751,950
€2
(2)
€8
€8
-
-
-
-
2,987,703
2,973,228
707,622
825,885
Maximum number of potential ordinary shares:
- by exercise of options
2,989,870
(2)
II - Transactions and income for the period
Pre-tax sales
25,059,348
25,664,553
21,372,751
22,510,908
21,627,994
Income before income taxes, legal profit-sharing
and amortization, depreciation and provisions
92,329,448
67,707,841
266,349,245
108,162,508
126,996,871
Income taxes
22,162,068
24,236,094
18,488,138
4,968,096
2,718,324
Legal employee profit-sharing payable for the perio
-
-
-
-
-
Income after income taxes, legal profit-sharing and
and amortization, depreciation and provisions
113,398,743
99,995,690
282,616,145
151,302,402
160,423,245
Distributed income (excluding withholding)
104,823,279
94,961,064
79,289,415
67,529,346
67,733,385
amortization, depreciation and provisions
1.81
1.44
4.49
6.50
7.89
Income after income taxes, legal profit-sharing and
1.79
‘
1.56
4.45
9.53
10.18
1.80
1.65
1.50
5.00
4.30
98.83
87.50
83.50
77.00
73.92
Payroll for the period
8,564,526
7,616,359
6,833,112
6,549,630
6,022,690
Amount paid as social contribution for the period
5,030,033
5,212,818
4,107,491
4,337,057
4,068,981
1,010,532
882,542
694,646
606,276
596,329
III - Earnings per share (1) (2)
Income after income taxes, legal profit-sharing and before
(3)
IV - Employees
Income after income taxes, legal profit-sharing and before
- of which profit-sharing
(1)
Based on the number of shares at the end of each period
(2)
After the split by 4 of the nominal amount
Proposed for the approval of the Shareholders' General Meeting of May 2, 2007
(3)
A
OTHER INFORMATION
In the 2006 period, no change in accounting methods occurred.
A 2006 POST CLOSING EVENTS AND BUSINESS FORECASTS FOR 2007
In 2007, the Company will continue its activity of providing services to its subsidiaries and continue to manage financial
risks for the entire Group.
21
The present Management Report by the Board of Directors draws on detailed information from the following
chapters of the present Annual Report, in particular:
• Main subsidiaries and affiliates
(Chapter 3 – Financial statements)
• Sustainable Development, Human Resources data, Risks
• Innovation, Research & Technology
(Chapter 4 – The Group’s business)
(Chapter 4 – The Group’s Business)
• Information on share capital (including Group employees participation in the capital of the Company)
and table summarizing existing financial authorizations and share buyback programs
(Chapter 5 – General information)
• Composition and functioning of the Board of Directors, list of offices held by corporate officers and amount
of compensation and benefits of corporate officers, stock options and free shares ; Corporate officer’s
transactions on Imerys securities
(Chapter 6 – Corporate Governance)
• Risks
(Chapter 7 – Risks and internal control)
22
ANNUAL REPORT 2006
2 - AUDITORS’ REPORTS
B.P . 136 - 92524 Neuilly-sur-Seine Cedex
ERNST & YOUNG Audit
92037 Paris - La Défense Cedex
2.1 Statutory Auditors’ Report
on the consolidated financial statements
Fiscal year ended December 31, 2006
(This is a free translation into English of the statutory auditors’ report issued in French and is provided solely for the
convenience of English speaking users. The statutory auditors’ report includes information specifically required by French
law in such reports, whether modified or not. This information is presented below the opinion on the consolidated financial
statements and includes an explanatory paragraph discussing the auditors’ assessments of certain significant accounting
and auditing matters. These assessments were considered for the purpose of issuing an audit opinion on the consolidated
financial statements taken as a whole and not to provide separate assurance on individual account captions or on
information taken outside of the consolidated financial statements. This report should be read in conjunction with, and
construed in accordance with, French law and professional auditing standards applicable in France.)
Dear Shareholders,
In compliance with the assignment entrusted to us by your Annual General Meeting, we have audited the accompanying
consolidated financial statements of Imerys for the year ended December 31, 2006.
The consolidated financial statements have been approved by the Board of Directors. Our role is to express an opinion
on these financial statements based on our audit.
I. OPINION ON THE CONSOLIDATED FINANCIAL STATEMENTS
We conducted our audit in accordance with the professional standards applicable in France. These standards require
that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements
are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial statements presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements give a true and fair view of the financial position and the assets and
liabilities of the consolidated group of companies as at December 31, 2006 and the results of its operations for the year
then ended, in accordance with IFRSs as adopted in the European Union.
II. JUSTIFICATION OF OUR ASSESSMENTS
In accordance with the requirements of Article L.823-9 of the French Company Law (Code de commerce) relating to the
justification of our assessments, we bring to your attention the following matters:
As described in Note 30 to the consolidated financial statements, the Group sets aside provisions for restructuring. As part
of our assessments, we reviewed the data and assumptions used by the Group. On this basis, we assessed the
reasonableness of such estimates.
Imerys performs annual goodwill impairment tests and also assesses whether there is any indication of impairment in
long-term assets, under the terms and conditions described in Notes 3.12 and 21 to the consolidated financial
23
statements. We analyzed the procedures performed to implement this impairment test and the cash flow forecasts and
assumptions used and verified that these notes provide appropriate disclosures.
As described in Notes 3.20 and 30 to the consolidated financial statements, the Group sets aside provisions to cover
costs necessary for mining site restoration. Our procedures consisted in assessing the data and assumptions on which
these estimates are based, reviewing, on a test basis, the calculations performed by the company, comparing the
accounting estimates of previous periods with the corresponding actual figures and analyzing the procedures
implemented by management to approve these estimates. On this basis, we assessed the reasonableness of such
estimates.
The assessments were thus made in the context of the performance of our audit of the consolidated financial statements
taken as a whole and therefore contributed to the formation of our unqualified audit opinion expressed in the first part of
this report.
III. SPECIFIC VERIFICATION
In accordance with professional standards applicable in France, we have also verified the information given in the
Group’s Board of Directors' report. We have no matters to report regarding its fair presentation and consistency with the
consolidated financial statements.
Paris-La Défense and Neuilly-sur-Seine, March 26, 2007
The Statutory Auditors
ERNST & YOUNG Audit
Jean-Roch VARON
Nicholas L.E. ROLT
2.2 Statutory Auditors’ Report
on the Financial Statements
(This is a free translation into English of the statutory auditors’ report issued in the French language and is provided solely
for the convenience of English speaking readers. This report includes information specifically required by French law and
this is presented below the opinion on the financial statements. This information includes an explanatory paragraph
discussing the auditors’ assessments of certain significant accounting matters. These assessments were made for the
purpose of issuing an opinion on the financial statements taken as a whole and not to provide separate assurance on
individual account captions or on information taken outside of the financial statements. The report also includes information
relating to the specific verification of information in the management report. This report should be read in conjunction with
French law and professional auditing standards applicable in France.)
Dear Shareholders,
In compliance with the assignment entrusted to us by your Annual General Meeting, we hereby report to you for the year
ended December 31, 2006 on:
• the audit of the accompanying financial statements of Imerys,
• the justification of our assessments,
• the specific verifications and information required by law.
The financial statements have been approved by the Board of Directors. Our role is to express an opinion on these
financial statements, based on our audit.
24
ANNUAL REPORT 2006
I. OPINION ON THE FINANCIAL STATEMENTS
We conducted our audit in accordance with professional standards applicable in France. These standards require that
we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates
made by management, as well as evaluating the overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the financial statements present fairly, in all material respects, the financial position of Imerys at
December 31, 2006 and the results of its operations for the year then ended, in accordance with the accounting rules
and principles applicable in France.
II. JUSTIFICATION OF ASSESSMENTS
In accordance with the requirements of Article L. 823-9 of the French Company Law (Code de commerce) relating to the
justification of our assessments, we bring to your attention the following matter:
As stated in the note to the financial statements concerning long-term investments, investments in subsidiaries are
valued by taking into account both the percentage of shareholders’ equity they represent and future profitability
forecasts. Our procedures consisted in assessing the data and assumptions on which these estimates are based and
reviewing the calculations performed by the Company. On this basis, we assessed the reasonableness of such
estimates.
The assessments were thus made in the context of the performance of our audit of the financial statements taken as a
whole and therefore contributed to the formation of our audit opinion expressed in the first part of this report.
III. SPECIFIC VERIFICATIONS AND INFORMATION
We have also performed the specific verifications required by law in accordance with professional standards applicable
in France.
We have no matters to report as to:
• the fair presentation and the conformity with the financial statements of the information given in the Board of Directors’
report and in the documents addressed to shareholders with respect to the financial position and the financial statements,
• the fair presentation of the information given in the Directors' Report in respect of remuneration and benefits granted
to the relevant directors and any other commitments made in their favour in connection with, or subsequent to, their
appointment, termination or change in current function.
Furthermore, pursuant to the law, we hereby inform you that, contrary to the provisions of Article L. 225-102-1,
paragraph 2 of the French Company Law, and as specified in the Board of Directors’ report, such information does not
include the remuneration and benefits granted by the companies controlling your Company to the relevant directors, nor
the commitments made in their favour by these companies, with respect to other directorships, roles or engagements
other than those performed personally in or on behalf of your Company.
In accordance with French law, we have ensured that the required information concerning the purchase of investments
and controlling interests and the names of the principal shareholders and holders of the voting rights has been properly
disclosed in the Board of Directors' report.
ERNST & YOUNG Audit
Jean-Roch VARON
Nicholas L.E. ROLT
25
2
ANNUAL REPORT 2006
3
Financial Statements
pages
28
1 - Consolidated financial statements
28
Consolidated income statement
29
Consolidated balance sheet
30
Consolidated cash flow statement
32
Consolidated statement of changes in shareholders' equity
Notes to the financial statements
33
1) Accounting principles and policies
49
2) Notes to the consolidated income statement
55
3) Notes to the consolidated balance sheet
80
4) Notes to the consolidated cash flow statement
82
5) Segment information
89
6) Other information
92
2 - Statutory financial statements
93
Income statement
94
Balance sheet
95
Cash flow statement
96
1) Accounting principles and policies
99
2) Notes to the income statement
101
3) Notes to the balance sheet
108
4) Other information
113
3 - Audit fees
27
CHAPTER 3 - Financial Statements
1 - CONSOLIDATED FINANCIAL STATEMENTS
Consolidated income statement
(€ millions)
Notes
2006
2005
2004
Revenue
7
3,288.1
3,045.2
2,870.5
Raw materials and consumables used
8
(1,119.0)
(1,055.4)
(1,016.0)
Change in W.I.P. and finished goods inventories and assets produced by the entity
9
16.9
36.9
11.5
External expenses
10
(827.4)
(762.5)
(681.1)
Staff expenses
11
(680.9)
(621.2)
(568.1)
(48.6)
(39.9)
(38.3)
(206.7)
(185.3)
(163.0)
22.1
22.4
2.5
14.3
(6.2)
3.8
458.8
434.0
421.8
Taxes and duties
Amortization, depreciation and impairment losses
Net change in operating provisions
Other operational revenue and expenses
12
Gains or losses on asset disposals
16.5
80.4
(1.7)
(192.3)
(83.1)
(43.9)
(175.8)
(2.7)
(45.6)
283.0
431.3
376.2
4.6
5.2
4.3
Gross financial debt expense
(53.9)
(48.0)
(38.6)
Net financial debt expense
(49.3)
(42.8)
(34.3)
2.6
(4.5)
(5.1)
(46.7)
(47.3)
(39.4)
(51.5)
(76.5)
(97.5)
5.2
4.6
3.4
190.0
312.1
242.7
187.4
309.4
240.0
2.6
2.7
2.7
187.4
309.4
240.0
Impairment losses and restructuring
Other operating revenue and expenses
13
Operating income
Revenue from securities
Other financial revenue and expenses
14
Financial income
Income taxes
15
Share in net income of associates
Net income
of which:
16
Net income, Minority interests
16
of which:
Current operating income, Group share
16
308.3
287.6
261.2
Other net operating revenue and expenses, Group share
13
(120.9)
21.8
(21.2)
Net basic earnings per share from current operations
17
4.86
4.53
4.12
Net basic earnings per share
17
2.95
4.88
3.79
Diluted net earnings per share
17
2.95
4.83
3.76
1.2557
1.2447
1.2426
(in €)
Average exchange rate euro/USD
28
ANNUAL REPORT 2006
Consolidated balance sheet
(€ millions)
Notes
2006
2005
2004
560.1
CONSOLIDATED ASSETS
Goodwill
18
793.1
815.3
Intangible assets
19
22.8
35.8
29.0
Mining assets
20
437.8
497.2
459.0
Property, plant and equipment
20
1,175.0
1,276.6
1,053.4
Investments in associates
22
34.1
31.9
25.9
Available-for-sale financial assets
23
12.8
16.0
13.8
Other financial assets
23
11.3
10.3
11.7
Other receivables and other assets
25
18.9
13.9
19.7
Deferred tax assets
32
49.3
34.6
30.0
2,555.1
2,731.6
2,202.6
Total non-current assets
Inventories
26
490.6
475.8
399.5
Trade accounts receivable
27
614.7
590.3
494.5
41.6
66.7
63.2
4.1
61.0
96.3
181.2
134.7
66.6
Derivative instrument assets
Marketable securities and other financial assets
23 - 34
Cash and cash equivalents
24 - 33 - 34
113.7
99.1
91.6
Total current assets
1,445.9
1,427.6
1,211.7
TOTAL CONSOLIDATED ASSETS
4,001.0
4,159.2
3,414.3
126.7
127.9
126.9
158.9
219.5
204.9
1,157.1
1,015.2
781.7
187.4
309.4
240.0
1,630.1
1,672.0
1,353.5
16.3
14.2
9.1
25
CONSOLIDATED LIABILITIES AND SHAREHOLDERS' EQUITY
Capital
28
Share capital premiums
Reserves
Net income
Shareholders' equity, Group share
Minority interests
Shareholders' equity
1,646.4
1,686.2
1,362.6
Provisions for employee benefits
29
199.2
237.1
195.5
Other provisions
30
200.3
161.0
150.0
33 - 34
892.8
943.1
940.6
Loans and financial debts
Other debts
31
27.1
33.2
24.2
Deferred tax liabilities
32
52.4
76.4
83.2
1,371.8
1,450.8
1,393.5
Total non-current liabilities
Other provisions
30
Trade accounts payable
Payable income taxes
Derivative instrument liabilities
34 - 39 - 40
33 - 34
Bank overdrafts
24 - 34
Other debts
31
Total current liabilities
TOTAL CONSOLIDATED LIABILITIES AND SHAREHOLDERS' EQUITY
Net financial debt
33 - 34
Closing exchange rate euro/USD
29
18.4
12.8
12.0
296.8
313.1
273.7
24.9
13.8
10.0
19.4
23.1
9.7
360.7
423.0
144.0
44.7
13.6
20.6
217.9
222.8
188.2
982.8
1,022.2
658,2
4,001.0
4,159.2
3,414.3
1,086.1
1,140.0
889.8
1.3170
1.1797
1.3621
Consolidated cash flow statement
(€ millions)
2006
2005
2004
549.5
587.8
582.8
Cash flow from operating activities
Cash flow generated by current operations (appendix 1)
Paid interests
Income taxes on current operating income and financial income
Dividends received
(54.2)
(60.1)
(51.3)
(107.0)
(105.5)
(131.1)
2.1
1.9
1.5
Cash flow generated by other operating revenue and expenses (appendix 2)
(31.2)
(30.4)
(18.3)
359.2
393.7
383.6
(217.0)
(251.0)
(194.3)
(21.5)
(271.0)
(50.2)
Acquisitions of available-for-sale financial assets
(1.0)
-
-
Disposals of property, plant and equipment and intangible assets
39.9
25.8
13.6
Disposals of investments in consolidated entities after deduction of cash disposed of
10.3
144.5
13.1
Disposals of available-for-sale financial assets
0.1
1.5
0.1
Net change in financial assets
1.1
4.7
(0.2)
Cash flow from investing activities
Acquisitions of property, plant and equipment and intangible assets
Acquisitions of investments in consolidated entities after deduction of cash acquired
Paid-in interests
3.5
3.8
2.1
(184.6)
(341.7)
(215.8)
22.6
15.6
18.2
(83.4)
-
(31.3)
39.2
(38.2)
6.3
(104.8)
(95.0)
(79.3)
(1.3)
(1.4)
(0.5)
3.8
2.9
354.4
(37.5)
(100.9)
(171.7)
8.5
235.7
(267.5)
(152.9)
18.7
(171.4)
21.7
70.7
(3.6)
121.1
46.0
50.9
Change in cash and cash equivalents
21.7
70.7
(3.6)
Impact of changes due to exchange rate fluctuations
(6.3)
4.4
(1.3)
Cash flow from financing activities
Capital increases
Capital decreases
Disposals (acquisitions) of treasury shares
Dividends paid to shareholders
Dividends paid to minority interests
Loan issues
Loan repayments
Net change in other debts
Cash and cash equivalents at the beginning of the period
Impact of changes in accounting policies
-
-
-
Cash and cash equivalents at the end of the period
136.5
121.1
46.0
181.2
134.7
66.6
Bank overdrafts
(44.7)
(13.6)
(20.6)
Cash and cash equivalents at the end of the period
136.5
121.1
46.0
30
ANNUAL REPORT 2006
Appendix 1
(€ millions)
Net income
2006
2005
2004
190.0
312.1
242.7
Adjustments for:
Income taxes
51.5
76.5
97.5
(5.2)
(4.6)
(3.4)
Impairment losses on goodwill
0.2
4.5
4.1
Other operating revenue and expenses excluding impairment losses on goodwill
175.6
(1.8)
41.5
Net operating amortization and depreciation
203.6
181.9
159.6
1.7
(2.3)
(0.5)
Net operating impairment losses on assets
Net operating provisions
(19.1)
(14.5)
0.9
Dividends received
(0.2)
(0.1)
-
Net interests of revenue and expenses
48.4
43.5
50.2
Revaluation gains and losses
10.6
4.7
2.8
Income from current disposals of property, plant and equipment and intangible assets
(14.4)
(9.6)
(3.3)
Change in the working capital requirement
(93.2)
(2.5)
(9.3)
Inventories
(25.8)
(42.4)
(13.6)
Trade accounts receivable, advances and down payments received
(23.7)
(20.2)
(26.8)
Trade accounts payable, advances and down payments paid
(17.3)
44.5
4.3
Other receivables and debts
(26.4)
15.6
26.8
549.5
587.8
582.8
Cash flow generated by current operations
Appendix 2
(€ millions)
Other operating revenue and expenses
2006
2005
2004
(175.8)
(2.7)
(45.6)
0.2
4.5
4.1
123.5
33.8
(0.2)
21.3
12.5
22.9
Adjustments for:
Reversal of negative goodwill (note 21)
Other net operating amortization and depreciation
Other net operating provisions
Income from non-current disposals of property, plant and equipment and intangible assets
(15.1)
13.1
1.7
Income from disposals of consolidated investments and available-for-sale financial assets
(1.4)
(93.5)
-
Income taxes paid on other operating revenue and expenses
Cash flow generated by other operating revenue and expenses
31
16.1
1.9
(1.2)
(31.2)
(30.4)
(18.3)
Consolidated statement of changes in shareholders’ equity
(€ millions)
Shareholders' equity as of
January 1, 2004
Dividends (€1.25 per share)
Variation of the translation reserve
Capital decreases
Capital increases
Impact on minority interests of perimeter
changes and capital increases
Change in fair value of financial instruments
Transactions on treasury shares
Cost of share options
Complement. amortization goodwill
Imerys Ltd 1999-2003 further
to deferred tax adjustment
2004 net income
January 1, 2005
Dividends (€1.50 per share)
Capital increases
2005 net income
January 1, 2006
Proposed dividends (€1.65 per share)
Capital decreases
Capital increases
2006 net income
December 31, 2006
Proposed dividends (€1.80 per share)
Shareholders' equity after allocation
as of January 1, 2007
Other
Share
Fair value of
reserves and
capital
Treasury
financial
Translation accumulated
Capital premiums shares instruments
reserve
income
Total
Group
share
Total
Total
minority shareholders'
interests
equity
127.0
218.1
(4.9)
(0.2)
-
910.9
1,250.9
9.2
1,260.1
-
-
-
-
-
(79.3)
(79.3)
(0.5)
(79.8)
-
-
-
-
(50.6)
-
(50.6)
0.2
(50.4)
(1.3)
(30.0)
-
-
-
-
(31.3)
-
(31.3)
1.2
16.8
-
-
-
-
18.0
0.2
18.2
-
-
-
-
-
-
-
(2.7)
(2.7)
-
-
-
0.4
-
-
0.4
-
0.4
-
-
6.3
-
-
-
6.3
-
6.3
-
-
-
-
-
2.2
2.2
-
2.2
-
-
-
-
-
(3.1)
(3.1)
-
(3.1)
-
-
-
-
-
240.0
240.0
2.7
242.7
126.9
204.9
1.4
0.2
(50.6)
1,070.6
1,353.4
9.2
1,362.6
-
-
-
-
-
(95.0)
(95.0)
(1.4)
(96.4)
-
-
-
-
124.4
-
124.4
0.8
125.2
1.0
14.6
-
-
-
-
15.6
-
-
-
-
-
-
-
3.0
3.0
-
-
-
(1.3)
-
-
(1.3)
-
(1.3)
-
-
(38.3)
-
-
-
(38.3)
-
(38.3)
-
-
-
-
-
3.7
3.7
-
3.7
-
-
-
-
-
309.4
309.4
2.7
312.1
127.9
219.5
(36.9)
(1.1)
73.8
1,288.8
1,672.0
14.2
1,686.2
-
-
-
-
-
(104.8)
(104.8)
(1.3)
(106.1)
(2.6)
(80.8)
-
-
-
-
(83.4)
-
(83.4)
1.4
20.2
-
-
-
-
21.6
1.0
22.6
-
-
-
-
(110.1)
-
(110.1)
(1.7)
(111.8)
-
-
-
-
-
-
-
1.5
1.5
-
-
-
2.2
-
-
2.2
-
2.2
-
-
39.2
-
-
-
39.2
-
39.2
-
-
-
-
-
6.0
6.0
-
6.0
-
-
-
-
-
187.4
187.4
2.6
190.0
126.7
158.9
2.3
1.1
(36.3)
1,377.4
1,630.1
16.3
1,646.4
-
-
-
-
-
(114.0)
(114.0)
-
(114.0)
126.7
158.9
2.3
1.1
(36.3)
1,263.4
1,516.1
16.3
1,532.4
32
15.6
ANNUAL REPORT 2006
1. Accounting principles and policies
1 - ACCOUNTING PRINCIPLES
In accordance with the 1606/2002 European regulation of July 19, 2002, the Imerys financial statements are prepared in
compliance with IFRSs (International Financial Reporting Standards) adopted within the European Union at the balance
sheet date.
Upon first-time adoption of IFRSs, Imerys presented an opening balance sheet as of January 1, 2004 that integrated a
retrospective application of IFRSs, limited by some optional exemptions provided for by standard IFRS 1 on first-time
adoption of IFRSs and exercised by the Group. Thus, business combinations have not been adjusted. The carrying amount
of property, plant and equipment has not been adjusted except for mineral reserves and resources, which are measured at
fair value. Unrecognized actuarial differences of defined benefit plans have been recognized in the consolidated reserves.
Finally, translation differences of consolidated foreign entities have been reclassified in the consolidated reserves.
2 - CHANGES IN ACCOUNTING POLICIES
The accounting policies are identical to those of the prior period except for standards and interpretations adopted within the
European Union in 2006. Among these, the standards and interpretations indicated hereafter apply to the recognition and
measurement of transactions, events or conditions existing within the Group and had not been applied by anticipation as of
December 31, 2005:
• IFRS 6, Exploration for and Evaluation of Mineral Resources;
• IFRIC 4, Determining whether an Arrangement contains a Lease;
• IFRIC 5, Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds;
• IFRIC 6, Liabilities arising from Participating in a Specific Market - Waste Electrical and Electronic Equipment;
• Amendment of IAS 21, The Effects of Changes in Foreign Exchange Rates related to a net investment in a foreign
operation.
These new standards and interpretations did not have any significant impact on the financial statements as of December 31, 2006.
3 - SUMMARY OF THE MAIN ACCOUNTING POLICIES
3.1. Financial statements
The objective of financial statements is to present a true and fair view of the financial position, of the financial
performance and of the cash flows of Imerys. They are established on a going concern basis. The presentation
conventions are identical from one period to the other to ensure comparability and are modified only if the change is
required by standard or interpretation, or results in more reliable and more relevant information. Items of similar nature or
function are aggregated in separate positions in accordance with their materiality. Assets and liabilities on the one hand
and revenue and expenses on the other are not compensated unless required by standard or interpretation. Assets and
liabilities are classified by increasing liquidity and payability, distinguishing between non-current and current items, when
these shall be recovered or settled in more or less than twelve months after the balance sheet date. Period revenue and
expenses are presented by nature in the profit or loss statement of the period. They are only included in the cost of an
asset or a liability when required by standard or interpretation.
The operating income includes the current operating income and other operating revenue and expenses. The current
operating income reflects the performance of the Group’s ordinary activities. The other operating revenue and expenses
correspond to items of revenue and expenses resulting from a limited number of well identified, non-recurring and
significant events, such as the incidence of a restructuring or the disposal of shares in a consolidated entity. The financial
33
income mainly includes the cost of indebtedness, foreign exchange differences (paragraph 3.7), the interest cost related to
the unwinding of the discount of provisions for environment, assets dismantling and mine sites restoration
(paragraph 3.20) and impairment losses on financial assets. The interest cost related to the unwinding of the discount of
provisions for employee benefits is recognized in the current operating income (paragraph 3.21).
Imerys publishes annual financial statements as of December 31 and interim financial statements as of June 30.
Transactions whose incidence relates to the interim closing are recognized and measured in accordance with the same rules
as those of annual financial statements. However, materiality is considered with respect to the interim financial results and
not annual financial results.
3.2. Segment information
The primary segments reported by Imerys correspond to four business segments: Specialty Minerals, Pigments for Paper,
Materials & Monolithics and Refractories, Abrasives & Filtration. Each of these segments is engaged in the production and
rendering of related goods and services, presenting homogeneous risks, returns and long-term financial performances.
Besides, Imerys reports five geographical segments with respect to secondary information: France, Other European
countries, North America, Asia-Oceania and Other countries. These geographical segments represent homogeneous areas
in terms of economic environments and risks, returns and long-term financial performances for the Group activities.
3.3. Earnings per share
The Imerys financial statements disclose basic earnings per share and diluted earnings per share. Basic earnings per share
are further analyzed as net basic earnings per share from current operations and net basic earnings per share. The basic earnings
per share is equal to the net income attributable to holders of ordinary shares divided by the weighted average number of
ordinary shares outstanding over the current period. The denominator excludes treasury shares (paragraph 3.18). As Imerys
is granting share options (paragraph 3.19), the weighted average number of ordinary shares defined above is increased, for
the calculation of the diluted earnings per share, by the weighted average number of ordinary shares that would be issued if
all dilutive options would be exercised at the balance sheet date. The number of dilutive options is calculated by comparison
between the number of shares that would result from the exercise of the share options and the number of shares that would
be issued at the period average market price for an issue of the same amount. The excess of the number of shares from
share options over the number of shares issued under market conditions is the number of dilutive shares.
3.4. Accounting policies, errors and estimates
A change in accounting policies is applied only if it is required by standard or interpretation, or results in more reliable and
more relevant information. Changes in accounting policies are accounted for retrospectively, unless required by the specific
transition provisions of the standard or interpretation. The financial statements concerned by the change in accounting
policies are modified for all reported periods, as if the new policy had always been applied. An error, when discovered, is also
adjusted retrospectively.
Uncertainties inherent to business require the use of estimates for the preparation of financial statements. Estimates result
from judgments intended to provide a reasonable assessment of the latest reliable information available. An estimate is
revised to reflect changes in circumstances, new information available and effects related to experience. Changes in
estimates are accounted for prospectively: they have an impact on the period over which they were performed and where
required, over subsequent periods.
The main estimates carried out for the preparation of the financial statements relate in particular to the hypotheses retained
for the calculation of impairment losses, to income taxes, to optional derivative hedge instruments, to available-for-sale
financial assets, to share options, to provisions for employee benefits and to other provisions (paragraph 5.1). The
information provided in relation to potential assets and liabilities is also the subject of estimates. The estimates used are
detailed in the corresponding notes.
3.5. Events after the balance sheet date
Events occurring between the balance sheet date and the authorization of issue of the financial statements by the Board of
Directors result in an adjustment only if they reveal, specify or confirm situations that existed at the balance sheet date.
34
ANNUAL REPORT 2006
3.6. Consolidation
Entities included in the scope of consolidation are those over which Imerys exercises control or significant influence and are
respectively consolidated under the full consolidation and equity methods. No entity is consolidated under the proportionate
consolidation method. Negative minority interests of entities consolidated under the full consolidation method are allocated
against the Group share. The incidence of intra-group transactions on all positions of the financial statements is eliminated.
3.7. Monetary conversion
The Imerys financial statements are stated in euro. The accumulated incidence of the translation of financial statements of
entities in foreign currencies is recognized in the consolidated equity. Assets and liabilities of foreign entities are converted at
the closing rate and their revenue and expenses at the average rate of the current period.
Non-monetary assets and liabilities related to transactions in foreign currencies which are measured at historical cost are
converted at the rate of the initial transaction. Except for derivatives (paragraph 3.24), monetary assets and liabilities related
to transactions in foreign currencies are converted at the closing rate. The foreign exchange differences are recognized in the
financial income, except for those generated by financial assets and liabilities qualified as net investments in a foreign
operation and for monetary assets and liabilities that are part of net investments in a foreign operation, which are recognized
in the consolidated equity. When a foreign entity is sold, the accumulated incidence of the conversion of its financial
statements, as well as the financial assets and liabilities qualified as hedges are accounted for in the profit or loss statement.
3.8. Goodwill
Goodwill is measured as the excess paid by Imerys over the fair value of a business combination. Determined upon the date
of acquisition, it represents the capacity of the combination to generate future cash flows beyond that fair value. It includes
the fair value of identifiable assets, liabilities and contingent liabilities of the business combination. Its measurement is
finalized over the twelve months following the date of acquisition. Any excess of the fair value of a business combination over
the cost of acquisition is credited to the profit or loss statement of the period of acquisition. The previously described
treatments also apply to every increase in interest realized after the date of acquisition. Goodwill related to foreign business
combinations is accounted for in the foreign currency, and converted in the Group financial statements in accordance with the
rules applicable to the translation of financial statements of foreign entities (paragraph 3.7). Goodwill is not depreciable. It is
allocated to the groups of Cash-Generating Units that benefit from the synergies of the combination and is subject to a first
impairment test (paragraph 3.12) before the balance sheet date of the acquisition period and subsequently to annual tests or
more frequently if there is an indication that it may be impaired.
3.9. Intangible assets
Intangible assets controlled by Imerys are recognized as assets over their useful lives. They are measured at the acquisition
cost, decreased by accumulated amortization and any impairment loss. Expenditures related to the Group research teams to
improve the quality and properties of products and satisfy the customers’ requirements at the lowest cost generally do not
meet the recognition criteria of a development intangible asset as defined by IAS 38 on intangible assets and are recognized
as expenses as incurred. As the greenhouse gases allowances attributed to Imerys exceed the Group’s actual emissions, the
rights received are recognized as intangible assets for a carrying amount of zero. The cost of intangible assets is amortized
on a straight-line basis over the useful lives indicated hereafter:
•
Trademarks, patents and licenses
5 to 40 years
•
Software
1 to 5 years
Where the carrying amount of an intangible asset ceases to be recoverable, it is written-down to its recoverable amount on
the basis of an impairment test (paragraph 3.12).
35
3.10. Mining assets
Exploration expenditures, i.e. the research of new knowledge on the mineral producing potential, technical feasibility and
commercial viability of a geographical area are recognized as expenses as incurred.
Extraction rights are recognized as intangible assets. They are measured at the acquisition cost, decreased by accumulated
amortization and any impairment loss. The cost of these rights is amortized on the basis of extracted quantities.
Mineral reserves are recognized as property, plant and equipment. They are measured initially at the acquisition cost
excluding subsoil, increased by expenditures incurred to determine the tonnage of ore present in the deposit. Overburden
works performed to enable access to the deposit are recognized as property, plant and equipment. Their initial measurement
incorporates their production cost and the discounted value of restoration or dismantling obligations resulting from damages
caused by the construction of these assets (paragraph 3.20). Mining assets recognized as property, plant and equipment are
subsequently measured at cost decreased by accumulated depreciation calculated on the basis of extracted quantities.
Subsoil is not depreciated.
Mining assets recognized as intangible assets and property, plant and equipment are allocated to Cash-Generating Units as
other assets of the Group, and are subject to the same impairment tests (paragraph 3.12).
3.11. Property, plant and equipment
Property, plant and equipment is recognized as assets if it is controlled as a result of a title of ownership, or of a finance lease
contract that transfers the risks and rewards incident to ownership. Property, plant and equipment is measured initially at
acquisition or production cost. The initial cost of items under finance lease is the lower of the fair value of the asset and the
discounted value of future minimum payments.
The cost of borrowings that finance the construction of property, plant and equipment is recorded as an expense. The cost of
property, plant and equipment is decreased, where applicable, by the amount of government grants that finance their
acquisition or construction. Maintenance and repair expenditures are accounted for as expenses, unless they result in future
economic benefits. The cost of property, plant and equipment incorporates, in particular for industrial facilities, the discounted
value of restoration or dismantling obligations, where a real obligation exists (paragraph 3.20).
Property, plant and equipment is subsequently measured at cost, decreased by accumulated depreciation and any
impairment loss. It is depreciated on a straight-line basis over the useful lives indicated hereafter. These ranges reflect,
where appropriate, the useful lives of the components included in property, plant and equipment:
•
Office buildings
10 to 50 years
•
Industrial buildings
10 to 30 years
•
Improvements to office and industrial buildings
5 to 15 years
•
Machinery, tooling, facilities and equipment
5 to 20 years
•
Vehicles
2 to 5 years
Land is not depreciated. Where the carrying amount of an item of property, plant and equipment ceases to be recoverable, it
is written-down to its recoverable amount on the basis of an impairment test (paragraph 3.12).
36
ANNUAL REPORT 2006
3.12. Impairment tests
The Cash-Generating Units (CGUs) are the smallest identifiable groups of assets whose continuing use generates cash
inflows that are largely independent from the cash inflows of other assets or groups of assets The CGUs represent the
analysis structure followed each month by the Imerys General Management in its business reporting. All assets within the
Group including goodwill, are allocated to a CGU, except for the property, plant and equipment of Imerys in Paris.
An impairment test is performed every twelve months on all CGUs. In addition to this annual test, impairment indicators may
require the immediate performance of a test in case of an unfavorable evolution. The main indicators are significant changes
in the entities’ activities, significant variations in interest rates, technological level, obsolescence and level of performance of
assets. Besides, every division manager, under the supervision of business group controllers, ensures that no asset within a
CGU individually presents any impairment loss issue. An impairment loss is recognized as soon as the recoverable amount
of an asset or a group of assets of a CGU becomes inferior to its carrying amount.
The impairment test consists in comparing the carrying amount of these assets to their recoverable amount. The latter is the
higher between the fair value net of disposal costs and the value in use. The fair value corresponds to the resale value. The
value in use is measured by discounting the future cash flows generated by the continuous use of assets and by their final
disposal. The cash flows retained are the free operating cash flows. The discount rate is the Weighted Average Cost of
Capital (WACC) as assessed by some financial analysts with respect to the Imerys investment, increased by a countrymarket risk premium ranging from 0.5% to 2.0%. The terminal value of assets is assessed as 7.5 times the EBITDA, a
multiple resulting from a consensus of the same analysts on the value of the Group.
3.13. Investments and other financial assets
Investments in entities over which Imerys exercises neither control nor significant influence, and which the Group does not
intend to sell in the short run, are designated as available-for-sale financial assets. They are recognized as assets at the
transaction date, i.e. the date of the purchase commitment, and are maintained at a carrying amount that is representative of
their fair value, the changes of the latter being recognized in the consolidated shareholders' equity.
Investments in marketable securities with a view to short-term disposal are designated as financial assets at fair value
through profit or loss. They are recognized as assets between the purchase and sales transaction dates and the changes in
fair value are recognized in the financial income according to market prices published at the end of the period.
Loans and receivables are measured at amortized cost. When after its initial recognition, a loan or receivable proves to be
partially or fully irrecoverable, it is written-down to its recoverable value according to the conditions existing at the balance
sheet date.
3.14. Non-current assets held for sale and discontinued operations
When at the balance sheet date, it is highly probable that non-current assets or groups of directly related assets and liabilities
shall be disposed of, they are designated as non-current assets or groups of assets held for sale. Their sale is considered as
highly probable if, at the balance sheet date, a plan designed to sell them at a price that is reasonable with respect to their
fair value has been initiated to identify a buyer and to conclude definitively the sale within a maximum of one year. Noncurrent assets or groups of assets held for sale are presented in separate positions in the financial statements. They cease to
be depreciated and are measured at the lower of their carrying amount and their fair value net of disposal costs. Non-current
assets or groups of assets that are to be closed rather than sold are non-current assets that are to be abandoned and not
held for sale.
37
Where non-current assets held for sale or to be abandoned correspond to one or several CGUs (paragraph 3.12) and are to
be abandoned as part of a single co-ordinated plan, they qualify as discontinued operations and their related flows are
disclosed separately in the profit or loss statement and in the cash flow statement.
3.15. Inventories
Inventories are recognized at the date of transfer of risks and rewards, and control. Upon the sale, an expense is recognized
at the date the related revenue is accounted for. Inventories are measured at the lower of the cost of production and net
realizable value. The cost of production of inventories presenting similar characteristics is assessed either according to the
first-in, first-out (FIFO) or the weighted average cost formulas. Where the cost of production is not recoverable, it is writtendown to its net realizable value according to the conditions existing at the balance sheet date.
3.16. Trade receivables
A trade receivable is recognized with respect to a sale of goods upon transfer of the risks and rewards, and control. A
receivable is recognized with respect to the rendering of services to the extent of the percentage of completion of services at
the balance sheet date. Besides, both for sales of goods and for rendering of services, a receivable is recognized only if it is
recoverable and the amount of the transaction and that of the costs necessary to complete the transaction can be measured
reliably. Sales of goods and rendering of services are measured at the fair value of the transaction, decreased by trade and
volume rebates, as well as discounts for early payment. After their initial recognition, trade receivables are recorded at their
amortized cost. If a receivable proves to be partially or fully irrecoverable, it is written-down to its recoverable amount
according to the conditions existing at the balance sheet date.
3.17. Cash and cash equivalents
Cash includes cash on hand, demand deposits and cash equivalents. The latter are highly liquid short-term investments
whose equivalent amount in cash is known or subject to insignificant uncertainty. In the consolidated cash flow statement,
cash and cash equivalents also include bank overdrafts presented as liabilities.
3.18. Treasury shares
Imerys shares purchased by the Group in the framework of the shares repurchase program authorized by the Shareholders’
General Meeting are accounted for at their acquisition cost as a decrease in equity. No result is recorded upon any
subsequent disposal and the corresponding gain or loss is accounted for directly in equity.
3.19. Share options
The fair value of services rendered against the grant of Imerys share options granted after November 7, 2002 and not vested
as of January 1, 2005 is measured under the Black & Scholes pricing model by reference to the fair value of options at the
grant date. This measurement takes into consideration the exercise price and life of options, the underlying share price, the
volatility of the Imerys share, as well as the turnover rate of beneficiaries. In the majority of cases, the acquisition of rights is
subject to a condition of duration of service and the fair value of services rendered is amortized as staff expenses over the
vesting period of rights, against an increase in equity. The accounting treatment is identical where, in addition to the duration
of service condition, the acquisition of rights is subject to the achievement of pre-determined Group economic performance
conditions. The assumptions related to the probability of acquisition of rights are revised at each balance sheet date.
38
ANNUAL REPORT 2006
3.20. Provisions
A provision is recognized as soon as it becomes probable that a present obligation resulting from a past event shall require a
settlement whose amount can be measured reliably. Provisions are recognized against the profit or loss statement except for
provisions for assets dismantling and some provisions for mine sites restoration whose counterpart is incorporated in the cost
of the related assets, especially for industrial buildings and mining overburden works (paragraphs 3.10 and 3.11).
The measurement of a provision reflects the best estimate of the amount required to settle the obligation. Provisions whose
settlement is expected within twelve months after the balance sheet date or whose settlement may occur at any time are not
discounted. Provisions whose settlement is expected after twelve months after the balance sheet date are discounted. The
discount rates of such provisions are calculated at each balance sheet date by reference to the rates of bonds issued by
companies rated AA and if unavailable, by reference to the rates of Government bonds. A discount rate is determined by
country for each type of provision, taking into consideration the timing of settlement of each type of obligation: environment,
assets dismantling, mine sites restoration and provisions for defined employee benefits (paragraph 3.21). Changes in
discounted provisions due to a revision of the amount of the obligation, of its timing or of its discount rate, are accounted for
against the current operating income, or, for provisions recognized against assets, as an adjustment of the cost of the latter.
The incidence of the unwinding of the discount reflecting the passage of time is recognized as a debit in the financial income
of the period (paragraph 3.1).
3.21. Employee benefits
Imerys contributes, according to the laws and customs of each country, to the constitution of reserves for the retirement of its
employees by paying, either on a mandatory or voluntary basis, contributions to third parties institutions such as pension
funds, insurance companies or financial institutions. These plans, without guaranteeing the level of benefits returns, are
defined contribution plans. Besides, some entities grant retirement and medical benefits to their employees, that they
themselves manage or outsource. These plans, by which the Group is committed to a level of benefits on a legal, regulatory
or contractual basis, are defined benefit plans.
Plan obligations are measured according to the Projected Unit Credit Method and use financial and demographic actuarial
assumptions. These are used to measure the present value of services rendered over the period on the basis of an estimated
salary at retirement date. Provisions (or assets) recognized in the balance sheet correspond to the discounted value of the
obligation, decreased by the fair value of plan assets, unrecognized past service cost and unrecognized actuarial differences.
The periodic cost of defined benefit plans is accounted for against the current operating income, except for the incidence of
curtailments caused by a restructuring, which are recorded against the other operating revenue and expenses
(paragraph 3.1).
Unrecognized past service cost is progressively incorporated in the measurement of provisions (or assets) recognized in the
balance sheet by a straight-line amortization against the current operating income over an estimation of the average vesting
period of the rights. Actuarial differences are reflected in the provisions (or assets) recognized in the balance sheet as soon
as their accumulated unrecognized amount exceeds 10% of the higher between the obligation and asset’s fair value. The
fraction of actuarial differences that exceeds the higher of these thresholds is recognized by a straight-line amortization
against the current operating income over an estimation of the average remaining working lives of beneficiaries. The
incidence of the unwinding of the discount reflecting the passage of time is recognized as a debit to the current operating
income (paragraph 3.1). Any curtailment or settlement and related actuarial differences and unrecognized past service costs
are recognized in the income statement as they occur.
39
3.22. Loans and other financial liabilities
Loans are initially measured at fair value of the amount received, less direct transaction costs. They are subsequently
measured at amortized cost by using the effective interest rate method. Trade accounts payable and other financial liabilities
are measured at amortized cost.
3.23. Income taxes
Current tax results in the recognition of a liability to the extent it is unpaid and of an asset where the amount already paid
exceeds the amount due or if a tax loss can be carried back.
Deferred tax assets and liabilities are accounted for with respect to all temporary taxable differences between the tax and
accounting values of assets and liabilities in the consolidated balance sheet, except mainly for differences related to the initial
recognition of goodwill and, in the case of taxable temporary differences between the accounting and tax values of
investments, where the Group is in a position to control the date of reversal of the temporary difference and it is probable that
the temporary difference shall not reverse in a foreseeable future. A deferred tax asset is recognized with respect to taxable
temporary differences, tax losses and tax credits only if it is probable that a future taxable profit shall be set against these
elements, or there are taxable temporary differences in the same tax entity, that come to maturity in the period over which
these elements remain recoverable.
Tax rates and laws used are those that are enacted or substantively enacted at the balance sheet date and shall be
applicable over the period of reversal of the timing difference. Deferred taxes are not discounted. In the consolidated balance
sheet, deferred tax assets and liabilities are compensated by tax entity, i.e. by legal entity or tax consolidation group
(note 32).
3.24. Derivative financial instruments and hedging instruments
Imerys uses financial instruments to reduce its exposure to foreign exchange, interest and energy risks. This hedging policy,
centrally defined and operated by the Group Central Treasury Department, is subject to periodic approval by the Board of
Directors and takes no speculative position. Hedging instruments are negotiated on over-the-counter markets with first-rank
banking institutions.
The foreign exchange risk is hedged by currency forwards, currency swaps and foreign exchange options. These instruments
are used to hedge receivables, debts, firm commitments in foreign currencies and net investments in foreign operations
(paragraph 3.7). Besides, in order to reduce their exposure to the foreign exchange transaction risk, Group entities issue, to
the extent it is possible, the invoices related to their trade activity in their functional currencies. Where this is not the case, the
exchange risk associated to trade receivables and debts may be subject to hedging on an individual basis. The interest rate
risk is hedged by interest rate swaps and interest rate options. Energy risks are hedged by forward and option contracts.
The exclusive purpose of the financial instruments used by Imerys is to hedge economic risks to which the Group is exposed.
Financial instruments are recognized at the transaction date, i.e. at the subscription date of the hedging contract. However,
only financial instruments that meet the criteria of hedge accounting defined by IAS 39 on financial instruments follow the
accounting treatment described hereafter. The changes in fair value of financial instruments that do not qualify for hedge
accounting are immediately recorded in the financial income of the period.
40
ANNUAL REPORT 2006
All transactions qualified as hedge accounting are documented by reference to the hedging strategy by identifying the
hedged risk, the hedged item, the hedging instrument, the hedging relationship and the measurement method of the hedge
relationship effectiveness. The measurement of the hedge effectiveness is reviewed at each balance sheet date. Derivatives
are measured at fair value upon initial recognition. Subsequently, the fair value is re-measured at each balance sheet date by
reference to market terms.
Accounting for a hedge derivative depends upon its designation as either fair value hedge, or cash flow hedge or hedge of a
net investment in a foreign operation:
Fair value hedge:
The hedged item and the hedging instrument are re-measured symmetrically against the profit or loss statement at each
balance sheet date. The incidence in the profit or loss statement is limited to the ineffective portion of the hedge;
Cash flow hedge:
At each balance sheet date, the effective portion of the hedge is recorded in equity and the ineffective portion in the profit or
loss statement. When the effect of the hedged transaction is recognized in the profit or loss statement, the effective portion
recognized in equity is recycled in the profit or loss statement, symmetrically to the recognition of the hedged item;
Hedge of a net investment in a foreign operation:
At each balance sheet date, the effective portion of the hedge is recorded in equity and the ineffective portion in the profit or
loss statement. Upon disposal of the foreign operation, the effective portion recognized in equity is recycled in the profit or
loss statement.
4 - STANDARDS AND INTERPRETATIONS EFFECTIVE AFTER THE BALANCE SHEET DATE
The standards and interpretations indicated hereafter have been published but are not effective as of January 1, 2007. They
apply to the recognition, the measurement or the presentation of transactions, events or conditions existing within the Group.
IFRS 8, Operating Segments
Further to the decision taken on January 1, 2007 to change the operational organization of the Group to three business
groups (Ceramics, Refractories, Abrasives & Filtration, Performance Minerals & Pigments and Materials & Monolithics), the
application of this standard will modify the presentation of segment information on these three operating segments. As of
December 31, 2006, four business groups (Specialty Minerals, Pigments for Paper, Materials & Monolithics and Refractories,
Abrasives & Filtration) are presented in accordance with IAS 14 on segment information.
IFRIC 11, IFRS 2 - Group and Treasury Share Transactions
The application of this interpretation should have a limited incidence.
41
5 - INFORMATION SPECIFIC TO THE DECEMBER 31, 2006 CLOSING
5.1. Significant judgments and estimates
The measurement of some assets and liabilities requires judgments and estimates for the preparation of the financial
statements. Judgments and estimates that are likely to result in a material adjustment on the carrying amount of these assets
and liabilities over the subsequent period are presented hereafter.
Impairment tests
The determination of recoverable amounts of the CGUs assessed in the annual impairment test requires an estimate of their
fair value net of disposal costs as well as their value in use. The assessment of the latter requires to set assumptions on the
future free operating cash flows of the CGUs as well as on the discount rates. In 2006, the impairment losses recognized in
the profit or loss amount to €117.1 million (€37.9 million in 2005) of which €0.2 million related to goodwill (€4.5 million in
2005). A decrease of 5.0% in the free operating cash flows would not result in the recognition of any additional impairment
loss. An increase of one percentage point in the discount rate would not result in the recognition of any additional impairment
loss. Complementary disclosures are provided in note 21.
Income taxes
The payable portion of income taxes requires an estimate of the amount that the Group expects to pay in each country
including anticipated potential adjustments. Where the payable amount proves lower or higher than the expected amount, the
difference is recognized in the profit or loss of the period over which that difference is measured. The deferred portion of
income taxes also requires judgment, especially for the assessment of future taxable benefits justifying the recognition of
deferred tax assets. In 2006, the income tax expense amounts to €51.5 million (€76.5 million in 2005). Complementary
disclosures are provided in notes 15 and 32.
Optional derivative hedge instruments
Estimates have to be performed to determine the fair value of optional derivative hedge instruments. The uncertainty related to
the measurement of these instruments arises from both the mathematical model used and the assumptions necessary for the
calculations, especially the estimate of volatility. These estimates are performed from the market conditions existing at the
balance sheet date. As of December 31, 2006, the fair value of optional derivative interest rate, foreign exchange and energy
risk hedge instruments recognized in the balance sheet amount respectively to €0.7 million, - €0.1 million and - €7.5 million
(€1.2 million, €0.1 million and €2.9 million as of December 31, 2005). Complementary disclosures are provided in note 39.
Available-for-sale financial assets
The fair value assessment of investments held in unlisted entities over which the Group exercises neither control nor significant
influence and for which there is no intent to sell in the short run requires an estimate of the future cash flows that these
investments are likely to generate as well as discount rates. As of December 31, 2006, the carrying amount of these investments
designated as available-for-sale financial assets amounts to €12.8 million (€16.0 million as of December 31, 2005).
Complementary disclosures are provided in note 23.
Share options
The implementation of the Black & Scholes pricing model used to assess the fair value of services rendered against the grant
of Imerys share options requires to determine assumptions on the underlying share price, the volatility of the Imerys share
and the turnover rate of beneficiaries. For those options for which, in addition to the duration of service condition, the
acquisition of rights is subject to the achievement of economic performances, an assumption is taken for the probability of
these objectives to be reached. In 2006, the share options expense recognized in the profit or loss amounts to €6.0 million
(€3.7 million in 2005). Complementary disclosures are provided in note 11.
42
ANNUAL REPORT 2006
The actuarial techniques used to assess the value of the defined benefit plans involve financial assumptions (discount rate,
rate of return on assets, medical cost trend rate) and demographic assumptions (salary increase rate, employees’ turnover
rate, mortality rate) estimated by Imerys with the assistance of an independent actuary. The uncertainty inherent to these
estimates arises mainly from the long term character of the plans. As of December 31, 2006, the net provisions recognized in
relation to employee benefits amount to €195.1 million (€235.7 million as of December 31, 2005). An increase (decrease) of
one percentage point in the medical cost trend rate would result in an increase of €0.1 million (decrease of €0.0 million) of the
period expense and an increase of €0.4 million (decrease of €0.3 million) of the corresponding obligation. Complementary
disclosures are provided in note 29.
Other provisions
Provisions for environment and restoration recognized by Imerys with respect to its mining and industrial activities require an
assessment of the amounts that the Group will have to pay and to set assumptions in terms of phasing and discount rate.
The litigation and claims to which the Group is exposed are assessed by the Legal Department with the assistance of lawyers
and are presented to the Audit Committee. Finally, the provisions related to the restructurings carried out throughout the
Group also require estimates. As of December 31, 2006, the provisions amount to €218.7 million (€173.8 million as of
December 31, 2005). Complementary disclosures are provided in note 30.
5.2. Main consolidated entities
Specialty Minerals
The financial statements as of December 31, 2006 include the group Denain-Anzin Minéraux, whose acquisition performed
over the second half of 2005 provided the business group with two minerals which it did not have at its disposal in Europe,
feldspar and mica and consolidated its position in kaolin for ceramic applications and fibreglass. Over the second half of
2006, the business group strengthened its positions in GCC performance minerals through the acquisition of Mikro Minerals
in Turkey.
Pigments for Paper
The operational perimeter of the business group spread in Asia over the first half of 2006 through the control of PT ECC, an
Indonesian entity held with the Asian papermaker group April that completes the business group’s production facilities in
precipitated calcium carbonate (PCC) and of YBB in Vietnam.
No major changes have been made to the business group's perimeter since the sale of the building materials trading activity
Larivière and the integration of the activities of Lafarge Refractories over the first half of 2005.
After having integrated the results of the minerals for filtration activity of World Minerals in the second half of 2005, the
business group acquired the group AGS over the first half of 2006, specialized in chamottes (calcined clays) and
metakaolins, mainly for the refractory and sanitaryware markets and controlled Kaili, a Chinese brown corundum producing
company.
43
COUNTRIES
Entities
Business groups
Consolidation % of interests
method (*)
(**)
FRANCE
AGS
FI
99.5
ARDOISIERES D'ANGERS
FI
100
CALDERYS FRANCE
FI
100
CELITE FRANCE
FI
100
CERADEL SOCOR
Specialty Minerals
FI
100
CERATERA
Specialty Minerals
FI
100
CESAR
Specialty Minerals
FI
100
CHARGES MINERALES DU PERIGORD - CMP
Pigments for Paper
FI
100
DAMREC
FI
100
DENAIN-ANZIN MINERAUX
Specialty Minerals
FI
99.98
HARBORLITE FRANCE
FI
100
IMERYS KILN FURNITURE FRANCE
Specialty Minerals
FI
100
IMERYS MINERAUX FRANCE
Specialty Minerals
FI
100
IMERYS SA
Holding Company
FI
Parent
IMERYS SERVICES
Holding Company
FI
100
IMERYS TABLEWARE FRANCE
Specialty Minerals
FI
100
IMERYS TC
FI
100
MIRCAL
Holding Company
FI
100
MIRCAL EUROPE
Holding Company
FI
100
PLR REFRACTAIRES SAS U
FI
100
QUARTZ DE PIERRE BLANCHE – QPB
Specialty Minerals
FI
99.98
SETAC
FI
100
WORLD MINERALS EUROPE SAS
FI
100
FI
100
EUROPE
Germany
CALDERYS DEUTSCHLAND GmbH & Co. OHG
IMERYS TABLEWARE DEUTSCHLAND GmbH
Specialty Minerals
FI
100
KERAPLAN GmbH
FI
51
MINERALIEN SCHIFFAHRT SPEDITION UND TRANSPORT GmbH
Pigments for Paper
EM
50
MONREFCO GmbH
FI
100
PLR FASSADENSYSTEME GmbH
FI
100
TREIBACHER SCHLEIFMITTEL GmbH
FI
100
TREIBACHER SCHLEIFMITTEL ZSCHORNEWITZ GmbH
FI
100
CALDERYS AUSTRIA GmbH
FI
100
TREIBACHER SCHLEIFMITTEL AG
FI
100
Austria
(*) FI : full integration
EM : equity method
(**) identical to the percentage of control
44
ANNUAL REPORT 2006
COUNTRIES
Entities
Business groups
Consolidation % of interests
method (*)
(**)
Belgium
CALDERYS BELGIUM
FI
100
IMERYS MINERAUX BELGIQUE SA
Specialty Minerals Pigments for Paper
FI
100
TIMCAL BELGIUM
Specialty Minerals
FI
100
Spain
CELITE HISPANICA, SA
FI
100
EUROPERLITA ESPANOLA, SA
FI
100
IMERYS TC ESPANA SA
FI
100
IMERYS KILN FURNITURE ESPANA, SA
Specialty Minerals
FI
97.11
IMERYS TILES MINERALS ESPANA
Specialty Minerals
FI
100
WORLD MINERALS ESPANA, S.L.
FI
100
CALDERYS MAGYARORSZAG K.F.T. (Hungary)
FI
100
IMERYS KILN FURNITURE HUNGARY Kft.
Specialty Minerals
FI
100
4 M.D.P.L.
Specialty Minerals
FI
100
CALDERYS ITALIA Srl
FI
100
GRAN BIANCO CARRARA Srl
Specialty Minerals
FI
60
IMERYS MINERALI SpA
Pigments for Paper
FI
100
IMERYS TILES MINERALS ITALIA
Specialty Minerals
FI
100
MIRCAL ITALIA Srl
Specialty Minerals
FI
100
SPICA Srl
Specialty Minerals
FI
85.87
TREIBACHER SCHLEIFMITTEL SpA
FI
100
WORLD MINERALS ITALIA Srl
FI
100
FI
100
FI
100
FI
100
Specialty Minerals
FI
100
FI
100
FI
100
Hungary
Italy
Luxembourg
WORLD MINERALS INTERNATIONAL SALES
Netherlands
PLIBRICO B.V.
Portugal
CAMPOS-FABRICAS CERAMICAS, SA
Czech Republic
IMERYS TABLEWARE CR s.r.o.
Great Britain
CALDERYS UK Ltd
Specialty Minerals
IMERYS MINERALS Ltd
Pigments for Paper
IMERYS UK Ltd
Holding Company
FI
100
PLIBRICO Ltd
FI
100
POTTERYCRAFTS Ltd
Specialty Minerals
FI
100
EM : equity method
45
COUNTRIES
Consolidation
method (*)
% of interests
(**)
FI
100
FI
100
CALDERYS NORDIC AB
FI
100
IMERYS MINERAL AB
Pigments for Paper
FI
100
PLR HÖGANAS ELDFAST AB
FI
100
Specialty Minerals
FI
100
FI
51.1
ADVANCED MINERALS CORPORATION
FI
100
AMERICARB, Inc.
Pigments for Paper
FI
100
CELITE CORPORATION
FI
100
C-E MINERALS, Inc.
FI
100
ECCA CALCIUM PRODUCTS, Inc.
FI
100
FI
100
FI
100
FI
100
FI
100
Entities
Business groups
Russia
OOO CALDERYS
Slovenia
TREIBACHER SCHLEIFMITTEL D.O.O
Sweden
Switzerland
TIMCAL SA
Ukraine
CALDERYS UKRAINE Ltd
UNITED STATES
HARBORLITE CORPORATION
IMERYS CARBONATES Llc
IMERYS CLAYS, Inc.
IMERYS KAOLIN, Inc.
IMERYS MARBLE, Inc.
Specialty Minerals
FI
100
IMERYS P&A Holdings Llc
Holding Company
FI
100
IMERYS PAPER CARBONATES Llc
Pigments for Paper
FI
100
IMERYS PIGMENTS, Inc.
Holding Company
FI
100
IMERYS USA, Inc.
Holding Company
FI
100
KENTUCKY-TENNESSEE CLAY Company
Specialty Minerals
FI
100
K-T FELDSPAR CORPORATION
Specialty Minerals
FI
100
PERLITE, Inc.
FI
100
TREIBACHER SCHLEIFMITTEL NORTH AMERICA, Inc.
FI
100
REST OF THE WORLD
Republic of South Africa
CALDERYS SOUTH AFRICA (Pty) Ltd
FI
73.97
ECCA HOLDINGS (Pty) Ltd
FI
73.97
IMERYS SOUTH AFRICA (Pty) Ltd
Holding Company
FI
73.97
RHINO MINERALS (Pty) Ltd
FI
73.97
SAMREC (Pty) Ltd
FI
73.97
EM : equity method
46
ANNUAL REPORT 2006
COUNTRIES
Entities
Business groups
Consolidation
method (*)
% of interests
(**)
Argentina
IMERYS ARGENTINA Srl
Specialty Minerals
FI
100
MIRCAL ARGENTINA Srl
Specialty Minerals
FI
100
Pigments for Paper
FI
100
EDK MINERACAO SA
Specialty Minerals
FI
50
IMERYS DO BRASIL COMERCIO DE EXTRACAO DE
MINERIOS Ltda
Specialty Minerals
FI
100
IMERYS RIO CAPIM CAULIM SA
Pigments for Paper
FI
100
MIRCAL DO BRASIL Ltda
Holding Company
FI
100
TREIBACHER SCHLEIFMITTEL BRASIL Ltda
FI
100
IMERYS CANADA LP
Pigments for Paper
FI
100
TIMCAL CANADA, Inc.
Specialty Minerals
FI
100
CELITE CHILE Ltda
FI
100
HARBORLITE CHILE Ltda
FI
100
Australia
IMERYS MINERALS AUSTRALIA Pty Ltd
Brazil
Canada
Chile
China
CELITE PACIFIC Ltd
FI
100
IMERYS MINING DEVELOPMENT (QINGYANG) Co., Ltd
Pigments for Paper
FI
100
IMERYS PIGMENTS (WUHU) Co., Ltd
Pigments for Paper
FI
100
LINJIANG CELITE DIATOMITE Co., Ltd
FI
100
CALDERYS JAPAN Co., Ltd
FI
100
IMERYS MINERALS JAPAN KK
Pigments for Paper
FI
100
Pigments for Paper
FI
100
CELITE MEXICANA, SA de CV
FI
100
K-T CLAY DE MEXICO, SA de CV
Specialty Minerals
FI
100
LIQUID QUIMICA MEXICANA, SA de CV
Specialty Minerals
FI
100
Japan
Malaysia
IMERYS HONAIK (MALAYSIA) SDN BHD
Mexico
New Zealand
IMERYS TABLEWARE ASIA Ltd
Specialty Minerals
FI
100
IMERYS TABLEWARE NEW ZEALAND Ltd
Specialty Minerals
FI
100
CALDERYS TAIWAN Co Ltd
FI
100
IMERYS MINERALS (TAIWAN) Ltd
Pigments for Paper
FI
100
Specialty Minerals
FI
68.89
FI
99.78
Taiwan
Thailand
MRD-ECC Co. Ltd
Turkey
HARBORLITE AEGEAN ENDUSTRI MINERALLERI SANAYI A.S. Refractories, Abrasives & Filtration
EM : equity method
47
5.3. Currency rates
The rates of the main foreign currencies used for the preparation of the consolidated financial statements are indicated
hereafter:
(€)
2006
COUNTRIES
Foreign currencies
Argentina
2005
2004
12.31
Average
12.31
Average
ARS
4.0500
3.8599
3.5990
3.6384
4.0500
3.6543
Australia
AUD
1.6691
1.6669
1.6109
1.6323
1.7459
1.6894
Brazil
BRL
2.8164
2.7338
2.7613
3.0407
3.6156
3.6352
Canada
CAD
1.5281
1.4237
1.3725
1.5095
1.6416
1.6166
China
CNY
10.2793
10.0146
9.5620
10.2009
11.2171
10.2900
Denmark
DKK
7.4560
7.4591
7.4605
7.4518
7.4388
7.4400
United States
USD
1.3170
1.2557
1.1797
1.2447
1.3621
1.2426
Great Britain
GBP
0.6715
0.6817
0.6853
0.6839
0.7051
0.6784
Hungary
HUF (100)
2.5177
2.6430
2.5284
2.4802
2.4597
2.5170
Japan
JPY (100)
1.5693
1.4603
1.3891
1.3687
1.3965
1.3437
New Zealand
NZD
1.8725
1.9374
1.7270
1.7663
1.8871
1.8728
Republic of South Africa
ZAR
9.2124
8.5348
7.4642
7.9187
7.6897
8.0112
Czech Republic
CZK
27.4850
28.3418
28.9998
29.7823
30.4640
31.9080
Sweden
SEK
9.0404
9.2544
9.3885
9.2807
9.0206
9.1262
Switzerland
CHF
1.6069
1.5729
1.5551
1.5483
1.5429
1.5442
Thailand
THB
46.7700
47.6143
48.6074
50.0651
52.7415
50.0490
48
12.31
Average
ANNUAL REPORT 2006
2. Notes to the consolidated income statement
6 - SALES
Consolidated sales evolution
Consolidated sales amount to €3,288.1 million for the 2006 period against €3,045.2 million for the previous period, i.e. an
increase of + 7.98%, including a negative effect of - €16.6 million due to foreign currency variations. At comparable structure
and foreign currency rates, the Group’s sales increased by + 3.2%.
Geographic origins of consolidated sales
(€ millions)
France
Other European countries
2006
2005
2004
817.4
761.8
838.6
1,283.3
1,223.8
1,087.8
North America
812.6
722.1
680.1
Asia - Oceania
236.4
212.0
170.3
Other countries
Total
138.4
125.5
93.8
3,288.1
3,045.2
2,870.5
7 - REVENUE
(€ millions)
Sales of goods
Rendering of services
Total
2006
2005
2004
2,940.2
2,716.3
2,572.8
347.9
328.9
297.7
3,288.1
3,045.2
2,870.5
8 - RAW MATERIALS AND CONSUMABLES USED
The breakdown is as follows:
(€ millions)
2006
2005
2004
Raw materials
(408.2)
(360.4)
(356.5)
Energy
(360.0)
(301.4)
(244.2)
(72.6)
(72.8)
(56.1)
Other raw materials
(173.9)
(146.8)
(126.4)
Merchandises
(120.2)
(188.9)
(242.6)
Chemicals
Change in inventories
Total
15.9
14.9
9.8
(1,119.0)
(1,055.4)
(1,016.0)
9 - CHANGE IN W.I.P. AND FINISHED GOODS INVENTORIES AND ASSETS PRODUCED BY THE ENTITY
The breakdown is as follows:
(€ millions)
2006
2005
2004
Variation of work in progress and finished goods
9.8
28.0
3.7
Property, plant and equipment produced by the entity
7.1
8.9
7.8
16.9
36.9
11.5
Total
49
10 - EXTERNAL EXPENSES
(€ millions)
2006
2005
2004
(384.0)
(350.6)
(320.9)
Operating leases
(47.7)
(44.1)
(41.5)
Subcontracting
(90.6)
(73.3)
(64.8)
Maintenance and repair
(84.6)
(81.1)
(70.2)
Freight
Fees
(50.3)
(58.1)
(40.3)
Other external expenses
(170.2)
(155.3)
(143.4)
Total
(827.4)
(762.5)
(681.1)
11 - STAFF EXPENSES
(€ millions)
2006
2005
2004
(511.7)
(477.7)
(420.6)
Social contributions
(96.7)
(89.5)
(84.1)
Contributions to defined benefit plans
(28.0)
(18.6)
(23.3)
Contributions to defined contribution plans
(17.1)
(13.4)
(14.6)
(6.4)
(5.6)
(4.4)
(21.0)
(16.4)
(21.1)
(680.9)
(621.2)
(568.1)
Salaries
Other employee benefits
Profit-sharing
Total
Salaries include the cost of share option plans broken down as follows:
Plans
Strike
Number price
of options (€)
Average
Turnover dividend
Maturity Volatility
rate
rate
Fair value
of the option
(Black & Scholes)
(€)
Cost of each
plan on 3 years
2004 costs 2005 costs 2006 costs
of the plans of the plans of the plans
(€ millions)
2003
747,720 28.31 5 years 20.0%
13.1%
3.25%
5.51
(3.6)
(1.1)
(1.1)
(0.7)
2004
640,000 48.88 5 years 20.0%
13.1%
3.25%
7.13
(3.9)
(0.8)
(1.2)
(1.4)
2004
200,000 48.88 5 years 20.0%
16.7%
3.25%
7.13
(1.2)
-
(0.4)
(0.4)
2005
635,000 57.58 6 years 20.0%
13.1%
3.20%
8.36
(4.6)
(0.3)
(1.0)
(1.6)
2006
640,000 68.27 6 years 17.5%
13.1%
3.13%
8.97
(5.0)
-
-
(1.1)
38,770 66.55 5 years 17.5%
0.0%
3.13%
8.57
(0.3)
2006ESP
(0.3)
2006 Other
(0.5)
Cost of plans recognized as staff expenses
(2.2)
(3.7)
(6.0)
12 - OTHER CURRENT OPERATIONAL REVENUE AND EXPENSES
(€ millions)
2006
2005
2004
Other revenue
41.3
21.1
20.9
Gains and losses on current disposals of assets
15.1
9.6
3.6
Grants received
1.2
1.4
1.2
Other expenses
(43.3)
(38.3)
(21.9)
14.3
(6.2)
3.8
66.7
41.1
35.4
(52.4)
(47.3)
(31.6)
Total
of which revenue
of which expenses
50
ANNUAL REPORT 2006
13 - OTHER OPERATING REVENUE AND EXPENSES
(€ millions)
Gains and losses on disposals of consolidated investments
Gains and losses on non-current disposals of assets
Restructuring expenses paid
2006
2005
2004
1.4
93.5
-
15.1
(13.1)
(1.7)
(47.3)
(32.3)
(17.1)
Impairment losses on restructuring
(123.5)
(69.1)
(3.1)
Change in restructuring provisions
(21.3)
22.9
(19.6)
(0.2)
(4.5)
(4.1)
(175.8)
(2.7)
(45.6)
63.0
196.0
76.4
(238.8)
(198.7)
(122.0)
54.9
24.5
24.4
(120.9)
21.8
(21.2)
Other operating revenue and expenses - gross
of which revenue
of which expenses
Income taxes on other revenue and expenses
Other operating revenue and expenses - net, Group share
Other operating revenue and expenses are mainly related to the following elements:
Reorganization of the Group’s kaolin production
This reorganization intended to limit the Group’s kaolin production exposure to the rise of energy costs in Great Britain
resulted in the recognition of an impairment loss on industrial and mining assets located in Cornwall and Devon, as well as
social liabilities and complementary provisions (mainly for restoration) for a total of €87 million, net of income taxes. This
reorganization has no incidence on the carrying amount of goodwill.
Other restructuring
Other operating expenses include an amount of €45.0 million net of income taxes related to the impairment of assets and
cost reduction actions taken throughout the Group, mainly in Latin America and in continental Europe.
Former headquarter disposal
In 2006, Imerys disposed of one level of its former headquarters located in the Tour Montparnasse in Paris. The
corresponding gain amounts to €6.0 million net of income taxes.
Prior periods other operating revenue and expenses
In 2005, the disposals mainly related to the sale of the trading activity of building materials Larivière and to disposals of real
estate and mining assets in France and Malaysia. The restructuring expenses amounted to €58.6 million net of income taxes
and related to the Specialty Minerals business group for €30.0 million (restructuring in Cornwall and Devon in Great Britain as
well as in Wyoming and Georgia in the United States), to the Pigments for Paper business group for €20.7 million (write-down
of tax receivables in Brazil and restructuring in Cornwall in Great Britain) and to the Materials & Monolithics business group
for €7.9 million (impairment loss on the assets of the Ardoisières d’Angers and restructuring of Lafarge Refractories). In 2004,
the restructuring related to the Specialty Minerals business group (Americas and Europe), the Pigments for Paper business
group (Europe) and the Materials & Monolithics business group (Europe).
51
14 - OTHER FINANCIAL REVENUE AND EXPENSES
(€ millions)
2006
2005
Dividends
0.2
0.1
2004
-
Net exchange rate differences
5.8
3.9
0.3
0.1
(2.8)
Expenses and revenue on financial instruments
(1.9)
(1.3)
1.6
Unwinding expense
(3.2)
(3.0)
(3.1)
1.6
(1.4)
(3.9)
2.6
(4.5)
(5.1)
67.9
(65.3)
69.0
(73.5)
82.5
(87.6)
Net movements of provisions
Other financial revenue and expenses
Total
of which revenue
of which expenses
15 - INCOME TAXES
Imerys SA and the majority of its French entities are included in a tax consolidation system which notably enables the Group
to compensate within the integrated group potential profits and losses.The French tax consolidation perimeter was increased
by 8 entities in 2006 (Calderys France, Celite Europe, Celite France, Denain-Anzin Minéraux, Harborlite France, PLR
Réfractaires SAS U, Quartz de Pierre Blanche and World Minerals Europe). No entity left the perimeter. The tax
consolidation perimeter includes 33 entities as of December 31, 2006.
Tax consolidation perimeters also exist in other countries, mainly in the United States, Great Britain, in Spain, in Germany
and in Italy.
Income taxes for the period
The breakdown of income taxes for the period is as follows:
(€ millions)
Payable income taxes of the period
Payable income taxes - Prior period adjustments
2006
2005
2004
(96.9)
(101.9)
(100.6)
2.1
5.1
(0.2)
(94.8)
(96.8)
(100.8)
Deferred taxes due to temporary difference variations
43.7
20.5
3.0
Deferred taxes due to rate variations
(0.4)
(0.2)
0.3
Deferred taxes
Total
(€ millions)
Current payable income taxes
Current deferred taxes
Income taxes on current income
43.3
20.3
3.3
(51.5)
(76.5)
(97.5)
2006
2005
2004
(110.9)
(98.7)
(99.6)
4.5
(2.3)
(22.3)
(106.4)
(101.0)
(121.9)
Payable income taxes on other operating revenue and expenses
16.1
1.9
(1.2)
Deferred taxes on other operating revenue and expenses
38.8
22.6
25.6
Income taxes on other operating revenue and expenses
Total
52
54.9
24.5
24.4
(51.5)
(76.5)
(97.5)
ANNUAL REPORT 2006
Income taxes paid over the period
The amount of income taxes paid in 2006 amounts to €90.9 million (€103.6 million in 2005), of which €107.0 million paid on
current operating income and financial income (€105.5 million in 2005) and €16.1 million received on other operating
revenue and expenses (€1.9 million received in 2005).
Reconciliation between the legal income tax rate in France and the effective current operating income tax rate
The effective income tax rate on the current operating income (1) amounts to 25.8% decreasing by 0.3 point by comparison to
2005 (26.1%).
The reconciliation with the legal rate in France for the current and the prior period can be analyzed as follows:
2006
2005
2004
Legal tax rate in France (including surtax and contribution)
34.4%
34.9%
35.4%
Impact of national rate differences
(1.1%)
(1.4%)
(1.6%)
Impact of the permanent differences and tax incentives
(6.0%)
(4.3%)
(2.8%)
Impact of unrecognized tax losses utilized
(0.6%)
(1.2%)
(0.7%)
0.9%
1.3%
0.8%
(1.8%)
(3.2%)
0.7%
25.8%
26.1%
31.8%
Other income taxes at different rates and bases and impact of rate changes on deferred taxes
Other (tax credits, tax losses created and unrecognized tax reassessment
and tax provisions, prior period adjustments)
Effective tax rate on current operating income
(1 )
(1)
Income taxes on current operating income (€106.4 million) divided by the sum of the current operating income (+ €458.8 million) and financial income
(- €46.7 million).
Reconciliation between the legal rate in France and the actual tax rate on other operating revenue and expenses
The effective income tax rate on other operating revenue and expenses (2) amounts to 31.2% in 2006. The 2005 income tax
on other operating revenue and expenses was including the impact of the Larivière disposal with no associated income tax
effect, the corresponding gain having been charged to the Group’s available long-term losses.
2006
2005
2004
Legal tax rate in France (including surtax and contribution)
34.4%
34.9%
35.4%
Impact of national rate differences
(3.1%)
(81.0%)
(2.5%)
Impact of the permanent differences and tax incentives
0.6%
1,077.7%
30.5%
(0.4%)
2.9%
0.3%
0.1%
25.2%
(12.1%)
and tax provisions, prior period adjustments)
(0.4%)
(149.6%)
1.7%
Effective tax rate on other operating revenue and expenses
31.2%
910.1%
53.3%
Impact of unrecognized tax losses utilized
Other income taxes at different rates and bases and impact of rate changes on deferred taxes
Other (tax credits, tax losses created and unrecognized tax reassessment
(2)
Income taxes on other operating revenue and expenses (€54.9 million) divided by the other operating revenue and expenses (- €175.8 million).
53
16 - NET INCOME, GROUP SHARE
(€ millions)
Financial income
Current operating income taxes (note 15)
Minority interests
(€ millions)
2006
2005
2004
458.8
434.0
421.8
(46.7)
(47.3)
(39.4)
(106.4)
(101.0)
(121.9)
5.2
4.6
3.4
(2.6)
(2.7)
(2.7)
308.3
287.6
261.2
25.8%
26.1%
31.8%
2006
2005
2004
308.3
287.6
261.2
Net income of discontinued operations or held for sale
-
-
-
Other operating revenue and expenses - net (note 13)
(120.9)
21.8
(21.2)
187.4
309.4
240.0
17 - EARNINGS PER SHARE
No significant transaction has changed the number of ordinary shares and potential ordinary shares between the balance
sheet date and the authorization of issue of the financial statements by the Board of Directors.
(€ millions)
2006
2005
2004
308.3
287.6
261.2
3.1
2.6
2.1
for the calculation of the diluted earnings per share
311.4
290.2
263.3
Net income attributable to ordinary equity holders
187.4
309.4
240.0
3.1
2.6
2.1
190.5
311.9
242.1
63,475,098
63,426,126
63,363,013
923,988
1,094,147
1,016,108
64,399,086
64,520,273
64,379,121
Net basic earnings per share from current operations
4.86
4.53
4.12
Net basic earnings per share
2.95
4.88
3.79
Diluted net earnings per share from current operations
4.84
4.50
4.09
Diluted net earnings per share
2.95
4.83
3.76
Numerator
Current net income attributable to ordinary equity holders
Incidence of financial income on share options
Current net income attributable to ordinary equity holders used
Incidence of financial income on share options
Net income attributable to ordinary equity holders used
for the calculation of the diluted earnings per share
Denominator
Weighted average of shares used for the calculation
of the basic earnings per share
Impact of share option conversion
Weighted average of shares used for the calculation
of the diluted earnings per share
Basic earnings per share (*) (in €)
(*) Group share
54
ANNUAL REPORT 2006
3. Notes to the consolidated balance sheet
18 - GOODWILL
(€ millions)
2006
2005
2004
823.8
564.1
527.5
(8.5)
(4.0)
-
Net amount
815.3
560.1
527.5
Acquisitions
4.7
226.2
31.1
-
(5.1)
(8.8)
Opening balance
Gross amount
Impairment losses
Disposals
Adjustments and reclassifications
3.5
5.4
26.8
(0.2)
(5.1)
(4.2)
Foreign exchange differences
(30.2)
33.8
(12.3)
Net amount
793.1
815.3
560.1
793.5
823.8
564.1
(0.4)
(8.5)
(4.0)
793.1
815.3
560.1
Impairment losses of the period
Closing balance
Gross amount
Impairment losses
Net amount
The main 2006 external growth transaction relates to the AGS group over the first half of period. The 2005 external growth
transactions mainly related to the Lafarge Refractories group, whose initial accounting, retrospectively effective from
January 1, 2005, had been finalized as of December 31, 2005 and the World Minerals and Denain-Anzin Minéraux groups
acquired over the second half of 2005 whose initial accounting is finalized as of December 31, 2006. The adjustments and
reclassifications performed in 2004 relate mainly (€26.0 million) to the complementary goodwill on Imerys Minerals Limited
further to a deferred tax liabilities correction.
World Minerals
On July 14, 2005, Imerys acquired 100% of the entities' voting rights of the American group World Minerals, the world leader
in the production and sale of filtration minerals for beverages (diatomite and perlite).
As of December 31, 2006, the goodwill adjustment results mainly from the fair value measurement of intangible assets,
property, plant and equipment and liabilities existing at the acquisition date.
Denain-Anzin Minéraux
On October 28, 2005, Imerys acquired 99.97% of the entities' voting rights of the French group Denain-Anzin Minéraux
present in Europe in the production of kaolin, feldspar, mica and quartz for ceramic applications.
As of December 31, 2006, the goodwill was adjusted to reflect the fair value measurement of property, plant and equipment
and liabilities existing at the acquisition date.
AGS
On February 28, 2006, Imerys acquired 99.34 % of the voting rights of the French group Argirec Granger Sodgar (AGS). Out
of clay mining deposits located in Charente-Maritime (France), AGS calcines the greater portion to produce chamottes and
métakaolins sold to the refractory and sanitaryware markets.
After measurement of the mineral reserves, property, plant and equipment and employee benefits and mine sites restoration
liabilities, the excess of the fair value of assets and liabilities of that entity over its acquisition cost was recognized in the
current operating income of the period.
As of December 31, 2006, AGS contributed for €44.6 million to the consolidated sales and for €2.3 million to the consolidated
net income.
If the acquisition had been effective as of January 1, 2006, the contributive revenue would have amounted to €53.5 million
and the net income to €3.2 million.
55
Other acquisitions
In the first half of 2006, the Group increased its share in PT ECC (Indonesia), thus obtaining control over that entity. The
entity, initially consolidated under the equity method, was fully consolidated for the first time over the period. The Group also
obtained control over YBB in Vietnam, Mikro Minerals in Turkey and Kaili in China.
In the table below, the provisional fair value as of December 31, 2005 of assets, liabilities and contingent liabilities of the
2005 incoming entities does not differ significantly from the pre-acquisition IFRS carrying amounts. The adjustments carried
out in 2006 to the fair values of assets, liabilities and contingent liabilities of the entities acquired in 2005 are analyzed as
follows:
World Minerals
(€ millions)
Denain-Anzin Minéraux
Total
Provisional
Provisional
fair values as Adjustments Fair values as fair values as Adjustments Fair values as Fair values as
of 12/31/05 of the period
of 12/31/06 of 12/31/05 of the period
of 12/31/06
of 12/31/06
Assets - non-current
Intangible assets
9.5
(7.3)
2.2
0.8
(0.8)
0.0
2.2
95.2
10.6
105.8
48.9
11.7
60.6
166.4
1.3
-
1.3
0.9
(0.2)
0.7
2.0
0.4
0.3
0.7
-
-
0.0
0.7
Deferred tax assets
2.2
0.7
2.9
3.4
0.6
4.0
6.9
Assets - current
Inventories
37.1
0.4
37.5
8.1
(1.1)
7.0
44.5
46.3
0.3
46.6
20.3
0.4
20.7
67.3
11.7
18.6
0.5
11.7
19.1
0.4
3.8
-
0.4
3.8
12.1
22.9
7.6
0.2
7.8
4.0
-
4.0
11.8
229.9
5.7
235.6
90.6
10.6
101.2
336.8
1.0
-
1.0
0.6
(0.4)
0.2
1.2
28.9
0.2
29.1
2.9
(0.1)
2.8
31.9
6.6
9.4
16.0
6.0
2.4
8.4
24.4
86.1
Total assets
Minority interests
Liabilities - non-current
Other provisions
60.7
0.8
61.5
24.6
-
24.6
Other debts
2.7
(0.5)
2.2
0.1
-
0.1
2.3
5.1
(0.6)
4.5
1.9
4.7
6.6
11.1
16.8
1.5
18.3
12.1
(1.9)
10.2
28.5
Liabilities - current
2.5
-
2.5
0.4
0.1
0.5
3.0
0.0
-
0.0
-
-
0.0
0.0
5.0
-
5.0
0.9
-
0.9
5.9
Bank overdrafts
0.2
-
0.2
-
-
0.0
0.2
20.4
(1.4)
19.0
7.0
(1.8)
5.2
24.2
149.9
9.4
159.3
56.5
3.0
59.5
218.8
Other debts and other liabilities
Total liabilities
Fair value of the acquired net equity
80.0
(3.7)
76.3
34.1
7.6
41.7
118.0
Goodwill
104.3
5.6
109.9
23.1
(6.7)
16.4
126.3
Cost of business combinations
184.3
1.9
186.2
57.2
0.9
58.1
244.3
56
ANNUAL REPORT 2006
At their respective acquisition dates, the fair values of assets, liabilities and contingent liabilities of the entering entities in
2006 do not differ significantly from the pre-acquisition IFRS carrying amounts.
Other incoming
(€ millions)
AGS
entities in 2006
Total
Assets - non-current
Intangible assets
Deferred tax assets
Assets - current
Inventories
0.1
12.3
2.2
0.4
1.0
3.5
0.1
-
1.1
15.8
2.3
0.0
0.4
8.2
12.3
1.5
0.4
2.5
0.6
1.8
0.1
1.2
0.7
8.8
14.1
1.6
1.6
3.2
Total assets
39.9
9.0
48.9
0.1
1.2
1.3
2.4
1.1
0.2
0.4
0.3
-
2.4
1.1
0.5
0.0
0.4
6.3
8.4
0.9
5.8
0.8
2.4
1.6
7.1
0.0
0.0
10.8
0.9
7.4
Total liabilities
25.6
6.3
31.9
Fair value of the acquired net equity
Goodwill
14.3
(2.1)
2.7
5.9
17.0
3.8
12.2
8.6
20.8
Minority interests
Liabilities - non-current
Other provisions
Other debts
Liabilities - current
Bank overdrafts
Other debts and other liabilities
The excess of the fair value of the assets, liabilities and contingent liabilities of AGS over its acquisition cost was recognized
in the profit or loss for €2.1 million.
The following table reconciles the line Goodwill of the above table and the line Acquisitions of the first table of note 18, Goodwill.
(€ millions)
2006
Goodwill of 2006 business combinations
Adjustment of the cost of business combinations prior to 2006
Goodwill on 2006 increases in shares of interest
5.9
(1.1)
(0.1)
Goodwill - Acquisitions
4.7
The net cash flow related to the acquisitions of the period can be broken down as follows:
Increases in shares of
interest and purchase
price adjustments
Total
AGS
Other incoming
entities in 2006
Payables related to business combinations of the period
(12.2)
-
(8.6)
-
(4.2)
(5.1)
(25.0)
(5.1)
Cash paid
(12.2)
(8.6)
(9.3)
(30.1)
(0.3)
1.2
4.0
4.9
(12.5)
(7.4)
(5.3)
(25.2)
(€ millions)
Cash from acquired entities
Acquisition cost of investments consolidated in 2006
after deduction of cash acquired
The acquisition cost of investments consolidated in 2006 corresponds to €21.5 million of acquisitions performed in
2006 and €3.7 million related to an interest acquired in 2005 in YBB, whose control became effective in 2006.
57
19 - INTANGIBLE ASSETS
(€ millions)
Software
Trademarks,
patents and
licences
Mining and
use rights
Others
Total
Opening balance: January 2004
Gross amount
26.6
8.1
-
34.2
69.0
Amortization
(9.5)
(5.6)
-
(19.8)
(35.0)
Net amount
17.1
2.5
0.0
14.4
34.0
Acquisitions of the period
2.3
0.2
-
0.9
3.4
Acquisitions resulting from business combinations
0.1
-
-
-
0.1
-
(0.1)
-
(0.6)
(0.7)
(5.6)
(0.4)
-
(0.5)
(6.5)
-
-
-
(0.3)
(0.3)
(0.4)
-
-
-
(0.4)
2.7
-
-
(3.3)
(0.6)
Disposals of the period
Net increases in amortization
Impairment losses recognized in net income
Reclassification and other
Gross amount
29.8
6.3
-
26.0
62.2
Amortization
(13.6)
(4.1)
-
(15.4)
(33.2)
Net amount
29.0
16.2
2.2
0.0
10.6
1.2
0.4
-
1.7
3.3
2.8
2.2
4.8
3.7
13.5
(1.2)
-
-
(0.5)
(1.7)
(7.5)
(0.6)
-
(0.6)
(8.7)
-
(1.3)
-
(0.2)
(1.5)
1.1
0.1
-
0.4
1.6
4.7
1.8
-
(6.2)
0.3
Gross amount
43.4
12.6
5.4
22.1
83.5
Amortization
(26.1)
(7.8)
(0.6)
(13.2)
(47.7)
Net amount
17.3
4.8
4.8
8.9
35.8
1.3
0.2
0.3
3.4
5.2
(0.5)
(0.1)
(3.3)
(3.1)
(7.0)
-
(0.1)
-
(0.1)
(0.2)
(8.0)
(0.4)
(0.1)
(0.7)
(9.2)
0.1
-
-
-
0.1
(0.5)
(0.3)
(0.2)
(0.2)
(1.2)
1.5
-
0.9
(3.1)
(0.7)
Closing balance: December 2006
Gross amount
39.9
12.6
2.7
17.9
73.1
Amortization
(28.7)
(8.5)
(0.3)
(12.8)
(50.3)
Net amount
11.2
4.1
2.4
5.1
22.8
For its sole production activity of roof tiles and bricks of the business group Materials & Monolithics, Imerys is in the scope of
the European directive no. 2003/87/CE dated October 13, 2003 which establishes within the Community a market for
emission rights of greenhouse gases. At the end of the second year of the first three-year period of the European market
(2005 – 2007), Imerys used 91.3% of the greenhouse gas emission quotas granted to the sites concerned in France, Spain
and Portugal (95.5% as of December 31, 2005). According to paragraph 3.9, Intangible assets, no liability has been
recognized and the rights received have been accounted for as intangible assets for a carrying amount of zero.
58
ANNUAL REPORT 2006
20 - PROPERTY, PLANT AND EQUIPMENT
Down payments
(€ millions)
Mining
Land and
Plant and
and assets under
assets
buildings
equipment
construction
447.0
2,063.0
47.9
210.7
3,303.6
(167.3) (1,436.6)
-
(166.9)
(1,803.5)
Others
Total
Gross amount
535.0
Depreciation
(32.7)
Net amount
502.3
279.7
626.4
47.9
43.8
1,500.1
15.6
8.9
59.3
119.0
17.9
220.7
-
9.2
16.9
0.7
1.3
28.1
(0.6)
(11.7)
(15.6)
(1.3)
(1.5)
(30.7)
(26.5)
(13.6)
(100.0)
-
(12.9)
(153.0)
1.1
(3.0)
(5.6)
-
(0.9)
(8.4)
-
2.3
3.5
-
-
5.8
(16.2)
(8.6)
(21.2)
(2.5)
(0.9)
(49.4)
(16.7)
0.1
71.7
(58.8)
2.9
(0.8)
475.3
2,011.6
105.0
182.1
3,290.8
(212.0) (1,376.2)
-
(132.4)
(1,778.4)
Net increases in depreciation
Impairment losses reversed in net income
Gross amount
516.8
Depreciation
(57.8)
Net amount
459.0
263.3
635.4
105.0
49.7
1,512.4
21.3
11.8
80.5
101.2
9.1
223.9
30.0
39.9
83.2
8.5
9.2
170.8
(18.7)
(26.0)
(11.6)
(0.8)
(5.3)
(62.4)
(29.1)
(14.9)
(113.4)
(2.0)
(14.6)
(174.0)
(4.4)
(1.3)
(27.4)
-
(0.2)
(33.3)
-
1.0
1.0
-
-
2.0
39.7
21.8
56.9
5.5
2.2
126.1
(0.6)
(3.5)
93.0
(78.5)
(2.1)
8.3
517.0
2,412.8
141.4
202.4
3,877.7
(224.9) (1,615.2)
(2.5)
(154.4)
(2,103.9)
Gross amount
604.1
Depreciation
(106.9)
Net amount
497.2
292.1
797.6
138.9
48.0
1,773.8
24.5
11.8
60.5
105.9
11.3
214.0
22.4
(5.6)
32.6
(10.5)
1.4
40.3
(1.3)
(4.6)
(4.2)
(0.3)
(1.5)
(11.9)
(33.5)
(18.6)
(124.4)
(0.7)
(16.3)
(193.5)
(37.3)
(3.2)
(87.9)
-
(0.4)
(128.8)
0.3
1.6
3.1
-
0.3
5.3
(27.1)
(13.9)
(38.8)
(3.0)
(1.6)
(84.4)
(7.4)
12.0
130.8
(138.0)
0.6
(2.0)
487.4
2,554.2
92.9
177.0
3,890.3
(215.8) (1,784.9)
(0.6)
(135.2)
(2,277.5)
92.3
41.8
1,612.8
Gross amount
578.8
Depreciation
(141.0)
Net amount
437.8
271.6
769.3
Property, plant and equipment controlled as a result of a finance lease contract are recognized in the balance sheet for an
amount of €11.0 million as of December 31, 2006 (€10.5 million as of December 31, 2005). It essentially relates to freight
material. Commitments for future rent payments amount to €2.6 million for 2007, €6.4 million from 2008 to 2011 and
€1.3 million beyond.
59
21 - IMPAIRMENT LOSSES
Assumptions
The recoverable amount of a CGU or an individual asset is generally justified by its value in use. The future cash flows used
for the calculation of the assets' value in use are measured after income taxes and are based on the last update of the FiveYear Plan validated by the General Management. The average discount rate used is of 8% after income taxes. It is based on
a weighted average capital cost of 7.5% as assessed by independent financial analysts in Paris, increased by a countrymarket risk premium ranging from 0.5% to 2% depending on the CGUs. The results obtained from this calculation after
income taxes are identical to those which would have been obtained with cash flows and rates before income taxes as
required by IAS 36 on impairment of assets. Where the recoverable amount of a CGU or an individual asset is justified by its
fair value less costs to sell, the latter is assessed by reference to the observable market price for the CGU or the individual
asset.
Cash Generating Units (CGUs)
Every year, Imerys systematically carries out impairment tests on all its CGUs insofar as goodwill is present in all the Group's
CGUs. The table below presents the gross amounts and accumulated impairment losses of Imerys' CGUs and groups of
CGUs:
(€ millions)
Gross amount
2006
Write-down
Carrying amount
148.8
10.4
97.7
48.5
130.2
102.4
99.6
54.0
101.2
0.7
793.5
(0.2)
(0.2)
(0.4)
148.8
10.4
97.7
48.5
130.0
102.4
99.6
53.8
101.2
0.7
793.1
Pigments for Paper
Building Materials
Monolithic Refractories
Minerals for Refractories
Minerals for Abrasives
Minerals for Filtration
Ceramics
Specialties
Performance Minerals
Holdings
Total
In 2006, this test resulted in the recognition of an impairment loss of €0.4 million for goodwill. No impairment loss was
recognized for the CGUs' intangible assets and property, plant and equipment.
Individual assets
In addition to the test carried out on CGUs, impairment indicators may require the immediate performance of this test in case
of an unfavorable evolution on an individual asset. The resulting impairment losses recognized in 2006 amount to
€123.5 million (€69.1 million in 2005).
Coating Kaolin (Cornwall, Great Britain)
The restructuring announced in July 2006 schedules at the end of 2007 the termination of the coating kaolin production of the
Pigments for Paper business group in Great Britain. The recoverable amount of the corresponding industrial and mining
assets has been assessed on the basis of their resale value less costs to sell at the end of their residual useful life. The
resulting impairment loss amounts to €63.8 million and was recognized in the other operating revenue and expenses.
60
ANNUAL REPORT 2006
Kaolin extraction and refining (Devon, Great Britain)
The termination of the kaolin extraction and refining of the Specialty Minerals business group in Devon was announced in
July 2006. The recoverable amount of the corresponding industrial and mining assets has been assessed on the basis of
their resale value less costs to sell at the end of a residual useful life scheduled for the beginning of 2008. The comparison
between the assets’ resulting carrying amount and their recoverable amount required the recognition of an impairment loss of
€24.9 million in the other operating revenue and expenses.
Precipitated Calcium Carbonate (Minas Gerais, Brazil)
The Brazilian precipitated calcium carbonate (PCC) production capacities of the Specialty Minerals business group were
restructured in 2006 through the closing down of the Arcos plant, whose industrial assets measured at their resale value less
costs to sell were impaired by €9.3 million against the other operating revenue and expenses.
Diatomite (California, United States)
The modernization of the industrial tool of the Californian diatomite plant of Lompoc lead the Refractories,
Abrasives & Filtration business group to recognize an impairment of €3.7 million on the industrial assets that will no longer be
in use in the context of the restructuring of that production unit. This impairment loss was measured on the basis of the
assets’ resale value less costs to sell at the end of their residual useful life and recognized in the other operating revenue and
expenses.
Kiln furniture (Loir-et-Cher, France)
The restructuring of the kiln furniture production capacities of the Specialty Minerals business group resulted in October 2006
in the closing down of the French site of Lamotte-Beuvron whose industrial assets were impaired by €1.5 million. This
impairment loss was recognized in the other operating revenue and expenses and measured by comparison between the
assets’ carrying amount and its resale value less costs to sell.
Refractory cements (Rhineland-Palatinate, Germany)
The Materials & Monolithics business group restructured its German production capacities through the closing down of the
Scheuerfeld plant. The €0.2 million impairment loss recognized in the other operating revenue and expenses relates to
industrial assets whose recoverable amount was measured on the basis of their resale value less costs to sell.
Prior periods impairment losses
In 2005, the industrial and mining assets of Ardoisières d'Angers of the Materials & Monolithics business group were subject
to an impairment loss of €4.5 million. In 2004, the Specialty Minerals business group had to impair in full the industrial and
mining assets located in Zimbabwe related to the Vermiculite production capacities of the Advanced Solutions division.
22 - INVESTMENTS IN ASSOCIATES
(€ millions)
2006
2005
2004
Fair value at the beginning of the period
31.9
25.9
29.2
Of which carrying amount of goodwill
1.6
1.6
1.6
Income
Dividends paid
Other
1.2
5.2
(1.9)
(2.3)
(1.0)
2.4
4.6
(1.8)
1.8
3.3
(1.5)
(5.1)
Fair value at the end of the period
34.1
31.9
25.9
1.6
1.6
1.6
Of which carrying amount of goodwill
61
Main associates
Share in capital held
(in %)
Entities
MST Mineralien Schiffahrt
Plibrico S.A. (Spain)
Dalian Jinsheng Fine Chemicals
Other investments
Total
Share in net shareholder's equity
(€ millions)
2006
2005
2004
2006
2005
2004
50.0%
49.9%
50.0%
-
50.0%
49.9%
50.0%
-
50.0%
49.9%
50.0%
-
22.2
4.6
2.3
5.0
34.1
20.2
4.2
2.4
5.1
31.9
17.6
3.8
n.a.
4.5
25.9
Imerys only has a significant influence on the decisions of financial and operational management of the above entities, their
ordinary activities being controlled by the other associates.
(€ millions)
Entities
MST Mineralien Schiffahrt
Plibrico S.A. (Spain)
Dalian Jinsheng Fine Chemicals
Other investments
Total
Share in net income
2006
2005
2004
3.8
0.7
0.1
0.6
5.2
3.1
0.6
0.3
0.6
4.6
2.1
0.5
n.a.
0.8
3.4
2006
Total sales
2005
71.6
19.7
2.2
-
63.4
17.6
1.8
-
2004
Total balance sheet
2006
2005
2004
45.7
16.6
n.a.
-
99.6
14.8
4.9
-
95.3
14.5
6.4
-
94.2
13.9
n.a.
-
Total
23 - CURRENT AND NON-CURRENT FINANCIAL ASSETS
Available-for sale
financial assets
Other non-current
financial assets
Other current
financial assets
Marketable
securities
15.2
11.4
0.6
8.4
35.6
8.3
9.6
-
93.2
111.1
(4.5)
(6.5)
-
(5.9)
(16.9)
2.8
0.5
-
-
3.3
Exchange rate differences
(0.6)
(0.3)
-
-
(0.9)
Other
(7.4)
(3.0)
-
-
(10.4)
13.8
11.7
0.6
95.7
121.8
(€ millions)
Increases of the period
Decreases of the period
Impairment losses
20.2
3.4
2.0
11.4
37.0
(0.5)
(4.5)
(1.7)
(46.5)
(53.2)
(0.7)
Impairment losses
Other
Impairment losses
-
(0.1)
(0.6)
-
(0.5)
0.3
0.2
-
0.0
(17.0)
(0.5)
(0.1)
-
(17.6)
16.0
10.3
0.4
60.6
87.3
2.1
2.5
1.2
1.5
7.3
(0.8)
(2.0)
(0.2)
(59.4)
(62.4)
-
-
-
-
0.0
(0.5)
(0.2)
-
-
(0.7)
Other
(4.0)
0.7
-
-
(3.3)
12.8
11.3
1.4
2.7
28.2
Other current and non-current financial assets correspond to loans and deposits for €6.0 million (€5.4 million as of
December 31, 2005), to defined benefit plan assets for €1.7 million (€0.3 million as of December 31, 2005) and to
reimbursement rights of defined employee benefits for €5.0 million (€5.0 million as of December 31, 2005). Marketable
securities amount to €2.7 million as of December 31, 2006 (€60.6 million as of December 31, 2005). They are measured at
their fair value obtained from banking institutions.
62
ANNUAL REPORT 2006
24 - CASH AND CASH EQUIVALENTS
(€ millions)
2006
2005
2004
177.2
130.6
66.6
4.0
4.1
-
Total cash and cash equivalents
181.2
134.7
66.6
Bank overdrafts
(44.7)
(13.6)
(20.6)
Total net cash
136.5
121.1
46.0
Cash
Short-term deposits
25 - OTHER RECEIVABLES AND OTHER ASSETS – NON-CURRENT AND CURRENT
(€ millions)
2006
2005
2004
Other receivables and other assets - non-current
34.5
31.5
20.8
(15.6)
(17.6)
(1.1)
18.9
13.9
19.7
Depreciation
Total non-current
The greater part of the other non-current receivables and assets and related depreciation corresponds to tax receivables
other than income taxes in Brazil.
(€ millions)
2006
2005
2004
122.3
104.5
96.2
Depreciation
(8.6)
(5.4)
(4.6)
Total current
113.7
99.1
91.6
Other receivables and other assets - current
The greater part of the other non-current receivables and assets and related depreciation corresponds to tax receivables
other than income taxes.
26 - INVENTORIES
(€ millions)
Raw materials
Work in progress
Finished goods
Merchandises
Total
Gross amount
2006
Write-down
Carrying amount
2005
Carrying amount
2004
Carrying amount
180.2
(8.7)
171.5
160.6
123.3
39.4
(0.2)
39.2
46.5
32.5
247.7
(7.6)
240.1
229.5
171.2
41.1
(1.3)
39.8
39.2
72.5
508.4
(17.8)
490.6
475.8
399.5
27 - TRADE ACCOUNTS RECEIVABLE
(€ millions)
2006
2005
2004
634.4
613.0
512.6
Depreciation
(19.7)
(22.7)
(18.1)
Total
614.7
590.3
494.5
63
Variation of depreciation on trade receivables
(€ millions)
Opening balance
Increases
Decreases
Change in the scope of consolidation
Others
Closing balance
2006
2005
2004
(22.6)
(18.1)
(21.0)
(4.9)
(5.9)
(4.6)
6.6
6.6
7.1
(0.1)
(3.8)
(0.4)
0.7
(1.2)
0.4
0.6
(0.3)
0.4
(19.7)
(22.6)
(18.1)
28 - CAPITAL
• On December 19, 2006, the Board of Directors cancelled 685,000 treasury shares bought directly on the market by the
Company during the 2006 period and assigned them in their entirety for cancellation under the share buyback program
approved by the Ordinary and Extraordinary Shareholders’ General Meeting of May 3, 2005 and the Ordinary
Shareholders’ General Meeting of May 2, 2006. This cancellation of self-held shares led to a reduction in the Company’s
capital by a nominal amount of €1,370,000.
• On December 21, 2006, the Chief Executive Officer noted that, under the capital increase reserved for employees as
decided by the Board of Directors at its meeting on November 7, 2006, 50,000 new Imerys shares were subscribed,
leading to an increase in the Company’s capital by a nominal amount of €100,000.
• On January 11, 2007, the Chairman of the Board of Directors noted that, as of December 31, 2006, the share capital had
been increased by a nominal amount of €1,275,510 euros as a result of the exercise in 2006 of 637,755 subscription
options giving the right to the same number of Imerys shares.
As a result of those operations, Imerys’ fully-paid up share capital as of December 31, 2006 totaled €126,669,240; it was
made up of 63,334,620 shares with €2 par value of which 34,093,287 enjoyed double voting rights pursuant to article 22 of
Imerys’ by-laws. Finally, the total number of voting rights attached to existing shares was 97,427,907. Shareholders should
use these numbers, which were notified in the required legal and regulatory publications, when calculating the percentage of
the Company’s share capital and voting rights that they hold.
Share capital did not change and the number of voting rights did not change significantly between December 31, 2006 and
the date of the present Annual Report.
Taking into account the 2,989,870 share subscription options granted to certain employees and executives and not yet
exercised on December 31, 2006 and the absence of any other securities that grant access to share capital, Imerys' potential
share capital - with all rights exercised - was €132,648,980 as of January 1, 2007.
No directly registered shares have been pledged by the Company.
64
ANNUAL REPORT 2006
29 - PROVISIONS FOR EMPLOYEE BENEFITS
(€ millions)
Retirement plans
Medical plans
2006
2005
2004
175.3
212.5
174.4
15.7
18.8
16.3
Other long-term benefits
5.8
4.7
4.5
Termination benefits
2.4
1.1
0.3
199.2
237.1
195.5
Total
The provisions for retirement and medical plans as well as other long-term benefits decrease by €39.2 million in 2006, of which
€34.7 million correspond to reversals set against contributions paid to pension funds as well as direct payments to plan
beneficiaries.
The main actuarial assumptions used for the measurement of defined benefit plans (retirement and medical plans as well as
other long-term benefits) are indicated hereafter. These data constitute the weighted average of the amount of obligations or
assets, depending on whether the assumptions enter the calculation of obligations or assets.
Other
European countries
2006
2005
Countries
(in %)
France
2006
2005
Discount rates
4.50
4.00
5.16
4.77
6.02
5.68
3.04
3.31
9.15
8.12
Expected rates of return on plan assets
4.00
4.69
5.96
6.45
8.19
7.98
1.60
3.47
9.75
8.75
Expected rates of salary increases
3.36
3.01
3.33
3.20
4.02
3.10
3.72
3.32
4.00
7.23
-
-
-
-
9.00 10.25
-
-
7.50
6.65
Medical cost trend rates
North America
2006
2005
Asia - Oceania
2006
2005
Others
2006
2005
The amounts contributed to external institutions to finance some defined benefit plans are invested as indicated hereafter:
(in %)
2006
2005
Shares
69.1
69.8
Bonds
30.4
28.4
Monetary
0.2
1.6
Real estate
0.3
0.2
100.0
100.0
Total
Net expense
(€ millions)
2004
Interest cost
51.2
47.3
44.8
1.1
1.1
1.2
0.2
0.2
Current service cost
14.2
14.4
16.2
0.3
0.3
0.2
0.3
(55.4) (49.2) (44.4)
Assets' expected return
Plan assets ceiling
Past service cost
Actuarial (gains) and losses
Curtailments and settlements
Recognized net expense
Assets' effective return
Medical
2006
2005
Other long-term
employee benefits
2006
2005
2004
Retirement
2006
2005
2004
2006
Total
2005
2004
0.1
52.5
48.6
46.1
0.4
0.4
14.8
15.1
16.8
-
-
-
-
-
-
(1.5)
0.7
0.4
-
-
-
-
-
-
(55.4) (49.2) (44.4)
(1.5)
0.7
0.4
0.7
0.7
0.1
(0.2)
0.2
(0.2)
-
(0.3)
0.3
0.5
0.6
0.2
(0.2)
-
0.6
-
-
-
1.1
(0.3)
0.6
0.9
(0.3)
1.2
(13.6)
(2.2)
(1.7)
(1.5)
-
-
(0.1)
-
-
(15.2)
(2.2)
(1.7)
(4.6)
11.7
16,0
(0.3)
1.6
1.2
1.5
0.0
1.4
(3.4)
13.3
18.6
(64.4) (117.8)
(62.2)
-
-
-
-
-
-
(64.4) (117.8)
(62.2)
65
Change in the discounted value of obligations
(€ millions)
Opening obligations
Retirement
2006
2005
1,060.3
2004
820.7 785.4
Other long-term
employee benefits
2006
2005
2004
Medical
2006
2005
2004
21.2
16.7
18.1
4.7
4.5
2006
Total
2005
2004
2.1
1,086.2
841.9
805.6
Incoming entities
1.3
85.2
-
0.6
0.4
-
0.1
1.4
1.1
2.0
87.0
1.1
Outgoing entities
-
(0.8)
(2.2)
-
-
-
-
-
-
0.0
(0.8)
(2.2)
Interest cost
51.5
47.6
44.9
1.1
1.1
1.2
0.2
0.2
0.1
52.8
48.9
46.2
14.8
14.7
16.2
0.2
0.2
0.2
0.3
0.4
0.4
15.3
15.3
16.8
(46.5) (40.5)
Benefit payments
Employee contributions
Plan amendments
(54.9)
3.5
3.5
(1.4)
(1.9)
(2.3)
(0.5)
(0.2)
(0.1)
(56.8)
(48.6)
(42.9)
2.9
-
-
-
-
-
-
3.5
3.5
2.9
1.0
12.5
0.3
(0.1)
0.4
-
-
-
0.2
0.9
12.9
0.5
(15.9)
(2.4)
(1.3)
(1.6)
-
-
(0.1)
(0.3)
-
(17.6)
(2.7)
(1.3)
(56.0)
88.0
23.3
(2.5)
1.8
0.6
1.1
(0.3)
0.6
(57.4)
89.5
24.5
-
1.1
-
-
-
-
-
(1.0)
0.1
0.0
0.1
0.1
(5.1)
36.7
(8.3)
(2.2)
2.5
(1.1)
-
-
-
(7.3)
39.2
(9.4)
1,000.5
1,060.3 820.7
15.3
21.2
16.7
5.8
4.7
4.5
1,021.6
1,086.2
841.9
937.7
993.9 771.9
Transfers
Closing obligations
of which funded obligations
of which unfunded obligations
62.8
66.4
48.8
-
-
-
-
-
-
937.7
993.9
771.9
15.3
21.2
16.7
5.8
4.7
4.5
83.9
92.3
70.0
Change in fair value of plan assets
(€ millions)
Opening assets
Incoming entities
Benefit payments
Retirement
2006
2005
828.7
2004
644.4 603.5
Medical
2006
2005 2004
Other long-term
employee benefits
2006
2005 2004
0.0
0.0
0.0
0.0
0.0
0.0
2006
Total
2005
2004
828.7
644.4
603.5
-
49.1
-
-
-
-
-
-
-
0.0
49.1
0.0
55.4
49.2
44.4
-
-
-
-
-
-
55.4
49.2
44.4
(46.5) (40.5)
(1.4)
(1.9) (2.3)
(0.5)
(0.2) (0.1)
(56.8)
(48.6)
(42.9)
Employer contributions
34.2
16.8
22.8
1.4
1.9
2.3
0.5
0.2
0.1
36.1
18.9
25.2
3.5
3.5
2.9
-
-
-
-
-
-
3.5
3.5
2.9
Plan amendments
Closing assets
(54.9)
-
13.4
-
-
-
-
-
-
-
0.0
13.4
0.0
(3.1)
(0.2)
18.1
-
-
-
-
-
-
(3.1)
(0.2)
18.1
9.0
69.3
-
-
-
-
-
-
-
9.0
69.3
0.0
(2.6)
29.7 (6.8)
-
-
-
-
-
-
(2.6)
29.7
(6.8)
870.2
828.7 644.4
0.0
0.0
0.0
0.0
0.0
0.0
870.2
828.7
644.4
The expected amount of contributions for the 2007 period is of €36.3 million.
66
ANNUAL REPORT 2006
Assets / liabilities in the balance sheet
(€ millions)
Funded obligations
Retirement
2006
2005
2004
Medical
2006 2005
(937.7) (993.9) (771.9)
-
-
-
-
-
-
2006
Total
2005
2004
(937.7) (993.9) (771.9)
Assets' fair value
870.2
644.4
0.0
0.0
0.0
0.0
0.0
0.0
870.2
Funded status
(67.5) (165.2) (127.5)
0.0
0.0
0.0
0.0
0.0
0.0
(67.5) (165.2) (127.5)
Unfunded obligations
(62.8)
(66.4)
(48.8)
(83.9)
(92.3)
(70.0)
(0.6)
(1.0)
(0.1)
-
(0.1)
(0.3)
-
-
-
(0.6)
(1.1)
(0.4)
Unrecognized past service cost
Closing unrecognized actuarial differences
Unrecognized assets due to a limit on prepaid assets
Assets (provisions) in the balance sheet
of which provisions
of which assets
828.7
2004
Other long-term
employee benefits
2006 2005 2004
(15.3) (21.2) (16.7)
(5.8) (4.7) (4.5)
828.7
644.4
(39.9)
24.5
5.0
(0.4)
2.5
0.7
-
-
-
(40.3)
27.0
5.7
(2.8)
(4.1)
(3.0)
-
-
-
-
-
-
(2.8)
(4.1)
(3.0)
(173.6) (212.2) (174.4)
(15.7) (18.8) (16.3)
(5.8) (4.7) (4.5)
(195.1) (235.7) (195.2)
(175.3) (212.5) (174.4)
(15.7) (18.8) (16.3)
(5.8) (4.7) (4.5)
(196.8) (236.0) (195.2)
1.7
0.3
-
-
-
-
-
-
-
1.7
0.3
-
Evolution of employee benefits aggregates
(€ millions)
Funded obligations
Retirement
2006
2005
2004
Medical
2006
2005
2004
Other long-term
employee benefits
2006
2005
2004
(937.7)
(993.9)
(771.9)
-
-
-
-
-
-
Assets' fair value
870.2
828.7
644.4
0.0
0.0
0.0
0.0
0.0
0.0
Funded status
(67.5)
(165.2)
(127.5)
0.0
0.0
0.0
0.0
0.0
0.0
(62.8)
(66.4)
(48.8)
(15.3)
(21.2)
(16.7)
(5.8)
(4.7)
(4.5)
56.0
(88.0)
(23.3)
2.6
(1.8)
(0.6)
(1.1)
0.3
(0.6)
9.0
69.3
-
-
-
-
-
-
-
Actuarial (gains) losses of the period
- on obligations
- on assets
30 - OTHER PROVISIONS
(€ millions)
Other non-current provisions
Other current provisions
Total
67
2006
2005
2004
200.3
161.0
150.0
18.4
12.8
12.0
218.7
173.8
162.0
The other provisions can be analyzed as follows:
Environmental
provisions and
(€ millions)
Provisions for
provisions for site
Provisions for
Other
management risks
restoration
restructuring
provisions
Total
27.6
52.7
28.1
26.8
135.2
15.6
27.7
7.9
26.1
77.3
Utilization of provisions
(7.0)
(7.5)
(6.7)
(17.4)
(38.6)
Non-utilized decreases
(0.9)
(7.5)
(0.9)
(3.0)
(12.3)
0.4
-
0.5
0.5
1.4
Unwinding expense
-
3.1
-
-
3.1
(1.9)
(0.5)
(0.4)
(0.6)
(3.4)
15.8
3.5
(6.1)
(13.9)
(0.7)
49.6
71.5
22.4
18.5
162.0
6.0
0.5
14.3
10.7
31.5
(12.6)
(7.6)
(10.7)
(8.1)
(39.0)
(0.2)
(0.4)
(5.3)
(3.3)
(9.2)
3.3
8.6
0.2
4.2
16.3
Unwinding expense
-
3.0
-
(0.2)
2.8
3.4
4.0
1.3
1.9
10.6
(0.1)
6.9
(5.0)
(3.0)
(1.2)
49.4
86.5
17.2
20.7
173.8
5.6
13.7
48.1
15.4
82.8
(4.9)
(7.9)
(13.5)
(12.1)
(38.4)
(2.0)
(0.1)
(2.6)
(2.0)
(6.7)
1.9
5.7
-
5.1
12.7
-
3.2
-
-
3.2
(2.2)
(2.6)
(0.2)
(1.5)
(6.5)
(2.8)
0.2
(3.6)
4.0
(2.2)
45.0
98.7
45.4
29.6
218.7
Unwinding expense
The Group is exposed to litigation and claims arising from its ordinary activities. These risks relate to allegations of personal
or financial injury caused by third parties implicating the civil liability of the Group's entities, the potential breach of some of
their contractual obligations or employee, property and environmental law issues. The Group also has certain contractual
indemnity obligations attributable to disposals of assets in the past. The provisions recognized with respect to such
management risks amount to €45.0 million as of December 31, 2006 (€49.4 million as of December 31, 2005). These
provisions have a probable maturity between 2007 and 2011.
In addition, Imerys records provisions intended to cover environmental risks resulting from the Group's industrial activity as
well as provisions for the restoration of mine sites at the end of their exploitation. These provisions amount to €98.7 million as
of December 31, 2006 (€86.5 million as of December 31, 2005). The corresponding obligations have probable maturities
between 2007 and 2011 for €61.2 million, between 2012 and 2021 for €30.9 million and for €6.6 million from 2022 onwards.
Provisions recorded for the restructuring of Group activities and other provisions have a probable maturity between 2007 and
2011.
The Group may conduct restructuring actions, i.e. integrated sets of measures planned, announced and controlled by Management
and conceived to change the nature, importance or conducting of its entities or businesses. In 2006, the Group recognized
€48.1 million of additional provisions in this respect whose counterpart was recognized against the other operating revenue and
expenses (note 13). These provisions mainly relate to the restructuring of the Group's activities in Great Britain, Latin America and
continental Europe.
68
ANNUAL REPORT 2006
31 - OTHER DEBTS
Other non-current debts
(€ millions)
2006
2005
2004
4.6
6.7
7.9
Tax debts
2.6
5.1
6.1
Social debts
0.6
0.9
1.6
Others
19.3
20.5
8.6
Total
27.1
33.2
24.2
(€ millions)
2006
2005
2004
Capital expenditure payables
48.1
45.8
53.4
Other current debts
Tax debts
21.6
25.1
13.0
104.0
99.3
86.8
44.2
52.6
35.0
217.9
222.8
188.2
(€ millions)
2006
2005
2004
Deferred tax assets
49.3
34.6
30.0
(52.4)
(76.4)
(83.2)
(3.1)
(41.8)
(53.2)
Social debts
Others
Total
32 - INCOME TAXES – BALANCE SHEET
Breakdown of the net deferred tax position
Net deferred tax position
In the consolidated balance sheet of Imerys, deferred tax assets and liabilities are compensated by tax entity (legal entity or
tax consolidation group).
Change in deferred taxes
(€ millions)
2006
Income
Translation
Perimeter
Deferred tax assets
49.3
25.5
(11.5)
0.7
34.6
(52.4)
17.8
9.5
(3.3)
(76.4)
(3.1)
43.3
(2.0)
(2.6)
(41.8)
69
2005
Deferred tax analysis by nature
The breakdown by temporary differences nature of deferred tax assets and liabilities and deferred income taxes is as follows:
Income
Deferred tax expense 2006
2006
Balance sheet
2005
2004
(10.0)
45.5
55.0
51.7
Other provisions
7.0
36.3
32.0
28.6
0.5
42.7
48.5
60.7
Intangible assets
(0.7)
1.9
2.1
1.4
Financial assets
1.4
6.1
5.2
3.3
(€ millions)
Deferred tax assets
Provision for retirement
Current assets and liabilities
(1.2)
18.1
7.5
16.2
Tax losses carried forward
4.6
12.3
9.5
7.5
Others
4.9
19.7
27.2
6.1
Total
6.5
182.6
187.0
175.5
38.4
(154.5)
(197.2)
(209.5)
Intangible assets
(0.5)
(0.6)
(0.1)
-
Financial assets
2.7
(7.0)
(10.4)
(9.4)
Current assets and liabilities
(0.5)
(4.5)
(4.3)
(3.7)
Others
(3.3)
(19.1)
(16.8)
(6.1)
Total
36.8
(185.7)
(228.8)
(228.7)
(3.1)
(41.8)
(53.2)
Net deferred tax revenue
43.3
Deferred tax assets are recognized as carried forward tax losses when they are assessed as recoverable. As of
December 31, 2006, these deferred tax assets come to €12.3 million and mainly correspond to the recoverable losses of the
entity IRCC in Brazil. On the other hand, tax losses and credits not having been recognized as deferred tax assets due to
their uncertain recovery, come to respectively €91.0 million and €25.0 million as of December 31, 2006, of which
€64.0 million and €24.0 million expire after 2011 or can be carried forward without any time limit.
Deferred taxes are calculated by using effective rates over the period in question in accordance with the tax laws in force in
each concerned country.
70
ANNUAL REPORT 2006
33 - LOANS, DEBTS AND FINANCIAL RESOURCES
Financial resources are the financing capacities available to the Group. These capacities exist either as drawn financial
borrowings or as financing commitments granted by first-class leading banks.
Financial loans and debts represent the effective utilizations of the Group, obtained either on capital markets, or with banks
or financial institutions.
Financial resources
Imerys manages the amount of its financial resources by comparing them regularly with the amount of its utilizations in order
to measure, from the difference, the financial liquid borrowings to which it may have access.
The robustness of financial resources is assessed on the basis of their amounts and average maturity.
The tables below list resources by their due maturity and nature.
(€ millions)
Maturity less than one year
Maturity from one to five years
2006
2005
2004
359.7
-
-
1,375.0
989.1
1,700.5
Maturity beyond five years
473.7
1,244.5
524.9
Total financial resources
2,208.4
2,233.6
2,225.4
4.6
5.5
5.3
Average life span (years)
(€ millions)
2006
2005
2004
Eurobond / EMTN
609.7
609.7
609.7
Private investments / (EMTN and others)
273.7
294.5
274.9
Bond resources
883.4
904.2
884.6
5.3
6.4
7.4
June 2004 / July 2005 syndicated credit
750.0
750.0
750.0
Miscellaneous bilateral facilities
575.0
579.4
590.8
1,325.0
1,329.4
1,340.8
3.9
4.9
3.9
2,208.4
2,233.6
2,225.4
4.6
5.5
5.3
Bank resources
Total financial resources
Over the past three years, Imerys has sought to maintain the amount of its financial resources at approximately €2.0 billion
(€2,225.4 million as of December 31, 2004, €2,233.6 million as of December 31, 2005 and €2,208.4 million as of
December 31,2006), and to lengthen their maturity.
At the end of 2006, Imerys has a long-term rating of Baa2 by Moody's.
71
The various bilateral bank credit facilities, the June 2004 syndicated credit as well as certain bond issues in the form of
private offerings contain the following terms and conditions:
• purpose: general corporate financing requirements;
• obligations in terms of financial ratio compliance:
(1) net Financial Debt / Consolidated Net Worth ratio below 1.75 (for bond issues under private offerings), 1.60 (for bilateral
bank credit facilities and syndicated credit of July 2005) at each half-yearly closing of consolidated accounts (the ratio as
of December 31, 2006 was 0.66);
(2) net Financial Debt / Consolidated EBITDA ratio below 3.80 at each half-yearly closing of consolidated accounts, the
consolidated EBITDA being calculated for the last 12 months (the ratio as of December 31, 2006 was 1.69);
(3) absence of any lien in favour of lenders;
(4) the failure to comply with the obligations of each loan would lead to the cancellation of its available amount and make
outstanding advances and bonds under the contract immediately callable.
Loans and debts
The table below describes the Group’s loans and debts by maturity date. This analysis does not provide for an assessment of
the stability of the loans and debts, which is described in the “financial resources” paragraph above. Medium-term financial
resources provided by bilateral or syndicated bank credit facilities may be used for very short drawing periods (3 months)
while remaining available for longer maturities (5 years).
(€ millions)
2006
2005
2004
707.9
426.2
119.0
42.0
428.9
376.3
476.8
466.9
536.8
Total gross financial debt
1,226.7
1,322.0
1,032.1
Net cash and cash equivalents
(140.6)
(182.0)
(142.3)
Total net financial debt
1,086.1
1,140.0
889.8
Maturity less than one year
Maturity from one to five years
Maturity beyond five years
The table below describes the loans and debts by nature:
(€ millions)
2006
2005
2004
Eurobond / EMTN
609.7
609.7
609.7
Private investments (EMTN and others)
273.7
294.5
274.9
8.0
6.5
4.1
Bond issues
891.4
910.7
888.7
Commercial papers issues
320.0
380.2
110.0
June 2004 syndicated credit
-
-
-
Accrued interests
Miscellaneous bilateral facilities
-
-
-
Miscellaneous facilities due within one year
15.3
31.1
33.4
Draw-downs on bank facilities
15.3
31.1
33.4
Total gross financial debt
1,226.7
1,322.0
1,032.1
(140.6)
(182.0)
(142.3)
1,086.1
1,140.0
889.8
72
ANNUAL REPORT 2006
Bond issue programs on capital markets
In 2006, Imerys did not legally update its Euro Medium Term Note program (EMTN), preferring to wait for the final evolutions
of the European stock-exchange regulation and considering that this update was not essential for the correct management of
its bond financings. However, the total amount of the program is €1.0 billion. Subject to its legal update, it would be used to
issue notes (considered as ordinary bonds under French law) of a minimum maturity of 1 month and a maximum maturity of
30 years. As of December 31, 2006, outstanding securities total €454.3 million.
As of December 31, 2006, Imerys also has a French commercial paper program ("billets de trésorerie") limited to
€800.0 million. The program is rated P-2 by Moody's. As of December 31, 2006, outstanding securities total €320.0 million.
As of December 31, 2006, Imerys has access to €1,325.0 million of available bank facilities, part of which secures the
€320.0 million commercial paper issue in accordance with the financial policy of the Group.
Available financial resources
The table below can be used to measure the amount of available financial resources after the repayment of financing from
uncommitted resources. It measures the Group's real exposure to an illiquidity crisis on both financial and banking markets.
(€ millions)
2006
Resources Utilization Available
Bonds
883.4
883.4
-
-
320.0
Commercial papers
Committed bank facilities
1,325.0
Bank facilities and accrued interests
Resources, utilizations and
available amounts
2005
Resources Utilization
Available
Resources
2004
Utilization
Available
-
884.6
884.6
-
904.2
904.2
(320.0)
-
380.2
(380.2)
-
110.0
(110.0)
- 1,325.0
1,329.4
-
1,329.4
1,340.8
-
1,340.8
-
23.3
(23.3)
-
37.6
(37.6)
-
37.5
(37.5)
2,208.4
1,226.7
981.7
2,233.6
1,322.0
911.6
2,225.4
1,032.1
1,193.3
As of December 31, 2006, available financial resources, after repayment of uncommitted resources, total €981.7 million
(€911.6 million as of December 31, 2005), which gives the Group substantial room to manœuvre and is a guarantee of
financial stability.
34 - FINANCIAL DEBT ANALYSIS
The net financial debt is an indicator used for the calculation of financial ratios which the Group has to respect due to
financing agreements with financial markets (note 33). The link between this indicator and the consolidated balance sheet is
the following:
(€ millions)
Derivative instrument assets
- less hedging instruments on energy
Loans and financial debts - non-current
- less hedging instruments on energy
Loans and financial debts - current
Bank overdrafts
Net financial debt
73
2006
2005
2004
(41.6)
(66.7)
(63.2)
1.4
5.8
1.8
(4.1)
(61.0)
(96.3)
(181.2)
(134.7)
(66.6)
892.8
943.1
940.6
19.4
23.1
9.7
(6.0)
(6.2)
(0.8)
360.7
423.0
144.0
44.7
13.6
20.6
1,086.1
1,140.0
889.8
Financial net debt distribution between floating and fixed rate by currency as of December 31, 2006
Euro
US
Dollar
British
Pound
Japanese
Yen
Other
foreign
currencies
Total
609.7
129.1
-
44.6
-
783.4
(609.7)
(129.1)
-
(44.6)
-
(783.4)
0.0
0.0
0.0
0.0
0.0
0.0
Debt at floating rate on issue
422.3
3.3
5.9
1.7
10.1
443.3
(60.2)
(21.7)
(5.8)
(4.6)
(48.3)
(140.6)
Swap fixed rate into floating rate
609.7
129.1
-
44.6
-
783.4
Exchange rate swap
(39.7)
(5.8)
(6.1)
(25.5)
77.1
0.0
Total debt at floating rate
932.1
104.9
(6.0)
16.2
38.9
1,086.1
932.1
104.9
(6.0)
16.2
38.9
1,086.1
(€ millions)
Debt at fixed rate on issue
Swap fixed rate into floating rate
Total debt at fixed rate
Financial net debt distribution on issue by due dates
2007
less than 1 year
2008-2012
1 to 5 years
2013 and later
beyond 5 years
Total
Debt at fixed rate on issue
309.7
-
473.7
783.4
Swap fixed rate into floating rate on issue
523.7
(50.0)
(473.7)
0.0
Debt at floating rate on issue
393.3
50.0
-
443.3
(140.6)
-
-
(140.6)
1,086.1
0.0
0.0
1,086.1
(€ millions)
Distribution of interest rate hedging operations December 2006 – December 2007 by currency
(€ millions)
Exposure at floating rate before hedging
Fixed rate hedges
Swap at average rate of:
Capped rate hedges
Cap at average rate of:
Exposure at floating rate after hedging
Euro
US
Dollar
British
Pound
Japanese
Yen
Other
currencies
Total
932.2
104.9
(6.0)
16.2
38.8
1,086.1
(118.4)
-
-
-
-
(118.4)
2.52%
-
-
-
-
-
(794.4)
(110.1)
-
-
-
(904.5)
3.27%
5.16%
-
-
-
-
19.4
(5.2)
(6.0)
16.2
38.8
63.2
74
ANNUAL REPORT 2006
Distribution of interest rate hedging operations in 2006 and later by due dates
2007
less than 1 year
2008-2012
1 to 5 years
2013 and later
beyond 5 years
Total exposure before hedging
1,086.1
1,086.1
1,086.1
Fixed rate hedges
(118.4)
(70.0)
-
2.52%
2.59%
-
(904.5)
(609.6)
-
3.50%
3.80%
-
63.2
406.5
1,086.1
(€ millions)
Swap at average rate of:
Capped rate hedges
Cap at average rate of:
Total exposure after hedging
Sensitivity
As of December 31, 2006, interest rate variations are unlikely to substantially affect the Group’s financial result in 2007. A 1%
rise across all interest rate curves would have a negative impact of only €0.6 million on the Group’s financial expense in 2007
(assuming a stable amount of debt and that every fixed-rate debt is replaced at its term by a floating-rate debt).
35 - EXCHANGE RATE RISK
The Group is exposed to different types of exchange rate risks:
•
the balance sheet exchange rate risk resulting from variations in its net assets in other currencies than the euro (mainly
in US Dollar);
•
the transactional exchange rate risk resulting from variations in trade receivables and payables in foreign currencies.
Balance sheet exchange rate risk
Imerys manages the balance sheet exchange rate risk through the proportion of its financial debts stated in currencies other
than the euro. In this way, any exchange rate fluctuation affecting net assets in these currencies is, to a certain extent, offset
by a symmetrical effect resulting from the exchange rate fluctuation concerning its financial debts in the corresponding
currencies.
75
In that framework, Imerys carried out foreign exchange rate swaps for a notional amount revalued at €39.7 million as of
December 31, 2006. The table below describes the financial debt before and after the impact of these rate swaps.
2006
2005
2004
(€ millions)
Before
exchange
rate swap
Exchange
rate swap
After
exchange
rate swap
Before
exchange
rate swap
Exchange
rate swap
After
exchange
rate swap
Before
exchange
rate swap
Exchange
rate swap
After
exchange
rate swap
Euro
1,032.1
(39.7)
992.4
1,101.1
(249.7)
851.4
823.2
(398.7)
424.5
132.5
(5.8)
126.7
151.8
186.1
337.9
143.2
300.5
443.7
5.9
(6.1)
(0.2)
5.7
4.1
9.8
5.9
67.5
73.4
56.2
51.6
107.8
63.4
59.5
122.9
59.8
30.7
90.5
1,226.7
0.0
1,226.7
1,322.0
0.0
1,322.0
1,032.1
0.0
1,032.1
US Dollar
British Pound
Other currencies
Total
The portion of the financial debt in each currency, after swaps, is as follows:
Euro
US
Dollar
British
Pound
Other
currencies
Total
Financial debts
992.4
126.7
(0.2)
107.8
1,226.7
(60.2)
(21.8)
(5.8)
(52.8)
(140.6)
Net financial debt
932.2
104.9
(6.0)
55.0
1,086.1
(€ millions)
Transactional exchange rate risk
To keep exchange rate risks arising from the Group’s commercial activity to a minimum, as far as possible, entities invoice
their sales or are invoiced for their purchases in their operating currency. Whenever this is not the case, the transactional
exchange rate risk may be hedged on a case-by-case basis. Overall, the Group’s exposure to transactional exchange rate
risks remains relatively low and as of December 31, 2006, there is no centralized policy for managing this risk.
The revenue and the Group’s production costs are stated in a large number of foreign currencies, particularly the US Dollar,
the Brazilian Real and the British Pound.
Sensitivity
Overall, the depreciation of the US Dollar against the euro has a negative impact on the Group’s operating income mainly
due to the conversion effect of the income generated in this currency.
However, this negative impact in terms of operating income is compensated to a certain extent by the associated reduction in
the Group’s financial expense. In fact, approximately 10% of Imerys’ financial net debt is stated in US Dollars.
76
ANNUAL REPORT 2006
36 - INTEREST RATE RISK
Management process: policy, framework and resources
The interest rate risk is managed for the Group’s consolidated net financial debt with the primary objective of guaranteeing its
medium-term cost.
To do so, Imerys manages this risk centrally, based on trends in the Group’s consolidated net financial debt. Knowledge of
this debt is provided by a regular reporting that describes the financial debt of each entity and indicates its various
components and characteristics.
Every year, the Group Treasury Department draws up a management policy document approved by the Financial
Department and the Board of Directors. Reporting is reviewed monthly by the Financial Department and quarterly by the
Board of Directors. This enables the situation to be monitored and the management policy to be adjusted as necessary.
As part of that management process, the Group Treasury Department works with leading banks and obtains data from
leading financial information providers.
Management principles
The Group’s policy is to obtain financing mainly in euro, the most accessible and least costly financial resource, at a floating
rate. Medium-term fixed-rate bond issues are converted to floating rates using interest rate swaps.
In the framework of its general management policy, the Group defined the various derivative instruments to be used solely to
hedge risks on firm and highly probable commitments. These products include interest rate swaps, options - including caps,
floors, swaptions and futures. The Group does not authorize the use of derivatives for speculative purposes.
Finally, given trends in 12-18 month interest rates in 2006, the Group fixed the interest rate for part of its future financial debt
(2007-2008) on various terms (note 33).
37 - ENERGY PRICE RISKS
Like any industrial group, Imerys is exposed to the risk of fluctuating prices for the various energy sources - mainly natural
gas and electricity (and coal to a lesser extent) – that enter into its activities’ production cycle. The Group's geographical
locations and energy supply sources remain diversified, but a general and strong increase in energy prices may have, as was
the case in 2006, a significant impact on the operational profitability. In this type of situation, the Group makes important
efforts to pass on energy price increases to the selling price of its products.
As energy supplies are sourced regionally, some local markets may be subject to significant but non-recurring price
variations. The present situation is highly volatile.
Furthermore since the end of 2003, management of the natural gas risk, in both Europe and the United States, has been
centralized. The Group Treasury Department is responsible for implementing the framework and resources needed for the
application of a common management policy, which includes appropriate use of the financial instruments available in those
markets.
In the United States, the Group consumes slightly over 6.5 million MMBTU (BTU: British Thermal Unit) of natural gas with
supply contracts based on the NYMEX Henry Hub index listed in New York.
As part of the management of its natural gas risk in the United States, the Group had as of December 31, 2006 various
hedging transactions covering 2007.
77
All transactions on gas in the United States as of December 31, 2006 are described in the table below:
Net notional
amount in MMBTU
Underlying position
Maturity
6,500,000
Management transactions
Options
Sales of Puts
1,170,000
< 12 months
Purchases of Calls
1,620,000
< 12 months
Futures
Purchases of Futures
450,000
< 12 months
In Great Britain, the Group consumes approximately 48.4 million therms with supply contracts based on the UK Natural Gas
IPE index listed in London and electricity contracts.
All transactions on gas in Great Britain as of December 31, 2006 are described in the table below:
Amount in therms
Underlying position
Maturity
48,400,000
Options
Sales of Puts
12,950,000
< 12 months
Purchases of Calls
30,150,000
< 12 months
Sales of Calls
(2,850,000)
< 12 months
In France, the Group consumes approximately 1,650 MWH of gas with supply contracts at fixed or variable prices based on
the barrel price of Brent listed in London (equivalent of 613,000 barrels). The 2007 supply contracts have been concluded at
fixed price with the various suppliers.
38 - HEDGES
Fair value hedges
As of December 31, 2006, the Group held interest rate swaps intended to hedge the exposure to changes in fair value of the
different loans. The hedged loans as well as the interest rate swaps present the same characteristics.
Currency
Japanese Yen
Notional amount (in millions)
Fixed rate received
Floating rate paid
7,000
2.39%
Libor Yen 6 months
Euro
58
2.81%
Euribor 3 months
Euro
252
5.00%
Euribor 3 months
Euro
200
4.32%
Euribor 3 months
Euro
100
4.33%
Euribor 3 months
US Dollar
140
4.88%
Libor USD 3 months
US Dollar
30
5.28%
Libor USD 3 months
Cash flow hedges
As of December 31, 2006, the Group held a certain number of exchange rate instruments intended to hedge its future sales
or purchases on the 2007 period. The amount recognized in the shareholders' equity comes to - €0.3 million and relates to
transactions which will occur in 2007.
78
ANNUAL REPORT 2006
As of December 31, 2006, the Group held a certain number of interest rate instruments intended to hedge part of its debt at
floating rate. The amount recognized in the shareholders' equity comes to €5.6 million and mainly relates to a rate swap due
on June 16, 2010.
As of December 31, 2006, the Group held a certain number of instruments intended to hedge the Group's gas consumption
in the United States and in Great Britain. The amount recognized in the shareholders' equity comes to €3.5 million and
relates to transactions which will occur in 2007.
Net investment hedging in foreign entities
Imerys hedges part of its net investments in foreign entities by loans or exchange rate swaps. These transactions aim at
hedging the Group's exposure to the exchange rate risks on these investments. Exchange gains or losses on these
transactions are recorded in the shareholders' equity in order to compensate all exchange gains or losses of net investments
in these entities.
As of December 31, 2006, the main loans and exchange rate swaps hedging net investments in foreign entities are the
following: CHF45 million and JPY1,000 million.
39 - FAIR VALUE OF DERIVATIVE INSTRUMENTS
All derivative instruments on the various financial markets were revalued on the basis of December 31, 2006 prices, provided
by third parties that are active on those markets. The fair value for each type of instrument as of December 31, 2006 amounts
to:
Balance sheet market value
including accrued interest
2006
2005
2004
27.2
44.4
40.2
0.7
1.2
3.0
Forward contracts
(0.9)
(1.6)
9.1
Options
(0.1)
0.1
0.9
2.9
(3.4)
0.0
(7.5)
2.9
1.0
(€ millions)
Interest rate instruments
Forward contracts
Options
Foreign exchange instruments
Energy risk instruments
Forward contracts
Options
40 - MARKET VALUE OF BONDS
For listed bonds, the market value is equal to the closing price as of December 31, 2006.
For unlisted bonds, the market value is obtained by updating the future flows at market rates without risk.
The measurement includes accrued interest.
(€ millions)
Description of the bond
3.40%
listed / unlisted
Effective
tax rate
Market value in €
Balance sheet value
unlisted
3.47%
54.2
44.8
Bond
JPY7 billion
maturity 09/16/2033
Bond
USD140 million
4.88%
maturity 08/06/2013
unlisted
4.98%
106.8
115.1
Bond
USD30 million
5.28%
maturity 08/06/2018
unlisted
5.38%
23.4
24.6
Bond
€300 million
5.13%
maturity 04/25/2014
listed
5.42%
314.1
301.6
Bond
€309.7 million
6.00%
maturity 05/07/2007
listed
6.04%
325.5
321.0
79
4. Notes to the consolidated cash flow statement
41 - RECONCILIATION CURRENT NET INCOME / CURRENT OPERATING CASH FLOW BEFORE
WORKING CAPITAL CHANGES
(€ millions)
Current net income, Group share
2006
2005
2004
308.3
287.6
261.2
206.7
185.3
163.0
(22.1)
(22.4)
(2.5)
Rents of leased assets
(3.1)
(3.4)
(3.5)
Provisions for mining assets
0.3
(0.3)
0.1
Financial impairment losses and unwinding of the discount
4.4
6.0
2.9
(4.4)
2.3
23.6
2.6
2.7
2.7
(5.2)
(4.6)
(3.4)
2.1
1.8
1.6
489.6
455.0
445.7
Current deferred taxes
Minority interests on current income
Dividends received from associates and other
Current operating cash flow before working capital changes
42 - OPERATING CASH FLOW BEFORE TAXES (EBITDA)
(€ millions)
2006
2005
2004
458.8
434.0
421.8
163.0
206.7
185.3
(22.1)
(22.4)
(2.5)
Operating cash flow before taxes (EBITDA)
643.4
596.9
582.3
(3.1)
(3.4)
(3.5)
0.3
(0.3)
0.1
Notional taxes on current operating income
(118.5)
(113.4)
(134.3)
-25.8%
-26.1%
-31.8%
522.1
479.8
444.6
Rents of leased assets
Provisions for mining assets
Current net operating cash flow
43 - CURRENT FREE OPERATING CASH FLOW
(€ millions)
Current net operating cash flow (note 42)
Intangible assets
Overburden mining assets
Debts on acquisitions
Paid capital expenditures
Increases in asset amortization and depreciation
Recognized capital expenditures / asset depreciation ratio
(1)
Carrying amount of current asset disposals
2006
2005
2004
522.1
479.8
444.6
(5.2)
(3.3)
(3.4)
(189.9)
(202.9)
(202.6)
(31.0)
(23.3)
(16.6)
9.1
(21.5)
28.3
(217.0)
(251.0)
(194.3)
203.1
180.5
159.1
111.3%
127.1%
139.9%
7.5
8.7
10.3
Change in the operational working capital requirement
(66.8)
(18.1)
(36.1)
Of which:
Inventories
(25.8)
(42.4)
(13,6)
(23.7)
(20.2)
(26,8)
(17.3)
44.5
4,3
245.8
219.4
224.5
Current free operating cash flow
(1) The recognized capital expenditures / asset depreciation ratio equals the paid capital expenditures (except for debts on acquisitions) divided by the
increases in amortization and depreciation.
80
ANNUAL REPORT 2006
44 - CURRENT FREE CASH FLOW
(€ millions)
2006
2005
2004
Current free operating cash flow
245.8
219.4
224.5
Financial income
(46.7)
(47.3)
(39.4)
4.4
6.0
2.9
Variation of paid / received interests
(2.3)
(13.0)
1.0
Tax on financial income
12.1
12.4
12.6
Financial impairment losses and unwinding of the discount
Tax debt variation on current income
Current deferred tax variation on current income
Variation of other working capital accounts
Change in fair value
Gains on current asset disposals
Current free cash flow
(€ millions)
Current operating cash flow before working capital changes (note 41)
Paid capital expenditures (note 43)
Change in the working capital requirement
Variation due to paid / received interests
Tax debt variation on current income
Working capital requirement sub-total
Change in fair value
Carrying amount of current asset disposals
Current free cash flow
81
3.8
(6.8)
(33.0)
(4.4)
2.3
23.6
(26.4)
15.6
26.8
10.6
4.7
2.8
2.1
1.8
1.5
199.0
195.1
223.3
2006
2005
2004
489.6
455.0
445.7
(217.0)
(251.0)
(194.3)
(93.2)
(2.5)
(9.3)
(2.3)
(13.0)
1.0
3.8
(6.8)
(33.0)
(91.7)
(22.3)
(41.2)
10.6
4.7
2.8
7.5
8.7
10.3
199.0
195.1
223.3
5. Segment information
45 - PRIMARY SEGMENT INFORMATION
Consolidated income statement by segments
(€ millions)
Specialty Pigments
Minerals for Paper
External sales
Inter-segment sales
865.3
756.0
Materials &
Monolithics
Refractories,
Abrasives &
Filtration
Intersegment
Holdings eliminations
892.6
772.8
1.4
-
Total
Imerys
group
3,288.1
26.7
6.7
0.4
15.0
27.7
(76.5)
0.0
892.0
762.7
893.0
787.8
29.1
(76.5)
3,288.1
92.3
76.7
208.9
110.8
(29.9)
-
458.8
Operating income
18.9
(16.5)
203.6
101.4
(24.4)
-
Revenue
Net financial income
283.0
(46.7)
-
-
-
-
-
-
5.2
Income taxes
(51.5)
Net income
190.0
Other elements included in the income statement
(€ millions)
Net increase in operating amortization and depreciation
Net increase in operating provisions
Specialty
Minerals
Pigments
for Paper
Materials &
Monolithics
Refractories,
Abrasives &
Filtration
Holdings
Total
Imerys
group
(61.2)
(69.5)
(35.2)
(38.3)
(2.5)
(206.7)
7.7
13.4
(4.8)
5.4
0.4
22.1
(0.2)
-
-
-
-
(0.2)
-
-
-
2.1
-
2.1
Specialty
Minerals
Pigments
for Paper
Materials &
Monolithics
Refractories,
Abrasives &
Filtration
Holdings
Total
Imerys
group
Management - Employees
1,650
977
1,498
1,089
118
5,332
Workers
3,176
1,869
2,086
3,313
-
10,444
Headcount
4,826
2,846
3,584
4,402
118
15,776
Reversal of negative goodwill
Headcount
82
ANNUAL REPORT 2006
(€ millions)
Specialty Pigments
Minerals for Paper
External sales
Inter-segment sales
784.5
751.8
Materials &
Monolithics
Refractories,
Abrasives &
Filtration
920.4
587.3
Intersegment
1.2
-
Total
Imerys
group
3,045.2
30.4
3.2
2.0
11.0
23.8
(70.4)
0.0
814.9
755.0
922.4
598.3
25.0
(70.4)
3,045.2
95.2
73.8
197.8
95.4
(28.2)
-
434.0
Operating income
56.6
32.7
186.8
88.0
67.2
-
Revenue
431.3
(47.3)
-
3.4
0.6
0.6
-
-
4.6
Income taxes
(76.5)
Net income
312.1
(€ millions)
Specialty
Minerals
Pigments
for Paper
Materials &
Monolithics
Refractories,
Abrasives &
Filtration
Holdings
Total
Imerys
group
(54.1)
(63.7)
(36.1)
(28.7)
(2.7)
(185.3)
6.2
8.5
3.1
3.1
1.5
22.4
(3.3)
-
-
(1.8)
-
(5.1)
-
-
0.2
0.4
-
0.6
Specialty
Minerals
Pigments
for Paper
Materials &
Monolithics
Refractories,
Abrasives &
Filtration
Holdings
Total
Imerys
group
1,708
1,028
1,483
981
102
5,302
Workers
3,452
1,996
2,139
3,045
-
10,632
Headcount
5,160
3,024
3,622
4,026
102
15,934
Reversal of negative goodwill
Headcount
83
(€ millions)
Specialty Pigments
Minerals for Paper
External sales
Inter-segment sales
765.7
757.5
Materials &
Monolithics
Refractories,
Abrasives &
Filtration
849.6
494.6
Intersegment
3.1
-
Total
Imerys
group
2,870.5
29.4
1.7
1.1
7.9
15.9
(56.0)
0.0
795.1
759.2
850.7
502.5
19.0
(56.0)
2,870.5
93.4
97.3
168.3
76.7
(13.9)
-
421.8
Operating income
70.8
79.0
176.0
69.5
(19.1)
-
Revenue
376.2
(39.4)
-
2.1
0.5
0.8
-
-
3.4
Income taxes
(97.5)
Net income
242.7
(€ millions)
Specialty
Minerals
Pigments
for Paper
Materials &
Monolithics
Refractories,
Abrasives &
Filtration
Holdings
Total
Imerys
group
(48.9)
(57.6)
(31.9)
(23.5)
(1.1)
(163.0)
5.8
1.5
(4.2)
(0.4)
(0.2)
2.5
(3.3)
-
-
(0.7)
(0.1)
(4.1)
Headcount
Specialty
Minerals
Pigments
for Paper
Materials &
Monolithics
Refractories,
Abrasives &
Filtration
Holdings
Total
Imerys
group
1,779
1,161
1,492
901
132
5,465
Workers
3,185
1,888
1,468
2,082
-
8,623
Headcount
4,964
3,049
2,960
2,983
132
14,088
84
ANNUAL REPORT 2006
Consolidated balance sheet by segments
Specialty Pigments Materials &
Minerals for Paper Monolithics
(€ millions)
Intangible assets, property, plant and equipment and financial assets
821.8
650.0
411.9
Refractories,
Abrasives &
Filtration Holdings
537.4
Total
Imerys
group
7.6 2,428.7
Inventories
121.6
108.4
98.1
162.5
164.7
105.3
216.8
127.2
0.7
614.7
35.3
49.2
16.6
15.3
16.2
132.6
1,143.4
912.9
743.4
842.4
48.0
31.5
36.6
29.0
1,191.4
944.4
780.0
871.4
1.1
26.4
4.6
2.0
-
34.1
-
-
-
-
-
119.1
Other receivables and other assets - current and non-current
Capital employed - Assets
Segment assets
Unallocated assets
490.6
24.5 3,666.6
36.1
181.2
60.6 3,847.8
Total assets
4,001.0
78.6
62.8
99.6
63.7
(7.9)
296.8
Other debts and other liabilities - current and non-current
63.4
52.4
86.3
38.5
4.3
244.9
142.0
115.2
185.9
102.2
(3.6)
541.7
27.7
16.7
35.8
38.9
82.3
201.4
Other provisions
60.5
68.8
27.0
29.7
30.5
216.5
Bank overdrafts
25.8
0.8
3.6
1.6
12.9
44.7
256.0
201.5
252.3
172.4
Payable income taxes (capital employed)
-
-
-
-
-
Unallocated liabilities
-
-
-
-
- 1,325.3
Capital employed - Liabilities
Segment liabilities
Total current and non-current liabilities
122.1 1,004.3
24.9
2,354.5
Total capital employed
85
(57.8)
(60.0)
(42.1)
(53.9)
(3.2) (217.0)
1,001.4
797.7
557.5
740.2
28.1 3,100.0
(€ millions)
906.6
771.6
Inventories
116.7
170.4
30.2
Unallocated assets
Total
Imerys
group
404.7
533.3
106.7
93.3
159.4
(0.3)
475.8
96.9
204.0
117.7
1.3
590.3
33.8
17.0
19.7
12.3
113.0
1,223.9 1,009.0
719.0
830.1
35.5
30.3
34.7
1,250.3 1,044.5
749.3
864.8
26.4
Segment assets
Refractories,
Abrasives &
Filtration Holdings
8.7 2,624.9
22.0 3,804.0
7.8
134.7
29.8 3,938.7
1.2
26.0
4.2
0.5
-
31.9
-
-
-
-
-
188.6
Total assets
4,159.2
85.5
74.0
101.5
57.1
(5.0)
313.1
64.0
70.3
90.5
41.8
(10.6)
256.0
149.5
144.3
192.0
98.9
(15.6)
569.1
61.8
46.6
58.1
64.0
180.4
410.9
1.3
1.9
2.6
0.7
7.1
13.6
212.6
192.8
252.7
163.6
171.9
993.6
-
-
-
-
-
13.8
Unallocated liabilities
-
-
-
-
- 1,465.6
Provisions
Bank overdrafts
Segment liabilities
2,473.0
86
(77.7)
(85.2)
(57.0)
(27.2)
(3.9) (251.0)
1,074.4
864.7
527.0
731.2
37.6 3,221.1
ANNUAL REPORT 2006
(€ millions)
Inventories
759.0
718.7
Refractories,
Abrasives & x
Filtration x Holdings
302.2
311.7
Total
Imerys
group
9.9 2,101.5
92.9
88.1
106.8
111.7
-
399.5
140.0
94.7
184.7
74.2
0.9
494.5
25.8
42.2
17.2
15.5
10.6
111.3
1,017.7
943.7
610.9
513.1
18.2
20.9
8.7
11.8
1,035.9
964.6
619.6
524.9
-
20.9
3.8
1.2
-
25.9
Unallocated assets
-
-
-
-
-
215.0
Trace accounts receivable
Segment assets
21.4 3,106.8
7.0
66.6
28.4 3,173.4
Total assets
3,414.3
64.6
59.8
113.7
39.1
(3.5)
273.7
58.3
50.2
93.6
19.9
(9.6)
212.4
122.9
110.0
207.3
59.0
(13.1)
486.1
50.0
51.6
49.6
31.0
175.3
357.5
5.3
0.2
4.8
0.9
9.4
20.6
178.2
161.8
261.7
90.9
171.6
864.2
10.0
Provisions
Bank overdrafts
Segment liabilities
-
-
-
-
-
Other unallocated liabilities
-
-
-
-
- 1,177.5
2,051.7
(46.1) (100.1)
(26.8)
(19.8)
(1.5) (194.3)
894.8
403.6
454.1
34.5 2,610.7
87
833.7
46 - SECONDARY SEGMENT INFORMATION
Revenue by geographical destination
The revenue presented below is analyzed according to the customers' geographical location.
(€ millions)
France
2006
2005
2004
668.1
670.6
787.7
1,304.8
1,180.6
1,021.1
North America
780.8
718.2
685.0
Asia-Oceania
330.4
302.1
248.4
Other countries
Total
204.0
173.7
128.3
3,288.1
3,045.2
2,870.5
Segment assets
(€ millions)
France
2006
2005
2004
927.1
788.7
651.3
1,299.8
1,427.0
1,265.3
North America
918.1
1,085.4
763.1
Asia-Oceania
265.0
237.9
185.0
Other countries
437.8
399.6
308.7
3,847.8
3,938.6
3,173.4
34.1
31.9
25.9
119.1
188.7
215.0
4,001.0
4,159.2
3,414.3
Total
Unallocated assets
Total assets
(€ millions)
2006
2005
2004
France
(50.5)
(65.5)
(30.4)
(60.3)
(88.7)
(76.0)
North America
(59.7)
(59.8)
(46.0)
Asia-Oceania
(14.0)
(8.4)
(21.0)
Other countries
(32.5)
(28.6)
(20.9)
(217.0)
(251.0)
(194.3)
Total
Headcount
2006
2005
2004
France
3,666
3,433
3,590
5,314
5,600
5,046
North America
3,042
3,192
2,512
Asia-Oceania
1,834
1,648
944
Other countries
1,920
2,061
1,996
15,776
15,934
14,088
Total
88
ANNUAL REPORT 2006
6. Other information
47 - RELATED PARTIES
External related parties of Imerys
The related parties of Imerys are the Canadian group Power and the Belgian group Frère-CNP. These groups are the
ultimate controlling parties of Imerys. They exercise joint control on the Swiss group Pargesa that controls Imerys through a
direct investment and an indirect investment in the Belgian group GBL; in this respect, Pargesa is a related party. The GBL
group is a related party as it exercises a direct significant influence on Imerys. The amount recognized as an expense in
2006 as a compensation for the strategic assistance services provided by the Pargesa group totals €0.8 million (€0.8 million
in 2005). The amount remaining as a liability as of December 31, 2006 totals €0.4 million (€0.4 million as of
December 31, 2005).
Key management personnel of Imerys
Since the management mode was changed in 2005, the members of the key management personnel qualifying as related
parties are the members of the Board of Directors and the 9 members of the Executive Committee, including the Chief
Executive Officer who is also member of the Board of Directors. Under the management mode in force until 2004 (Managing
Board with Supervisory Board), the members of the key management personnel qualifying as related parties were the
4 members of the Managing Board.
Remuneration and assimilated benefits granted to the main executives which have been recognized as expenses for the
concerned period are the following:
(€ millions)
Notes
2006
2005
2004
Short-term benefits
Long-term benefits
Directors' fees
1
Defined benefit plans
3
3.6
0.0
0.6
0.7
0.3
0.0
2.0
7.2
3.2
0.0
0.6
0.5
0.3
0.0
1.5
6.1
2.3
0.0
0.6
0.4
0.2
0.0
0.7
4.2
2
Contributions to defined contribution plans
Termination benefits
Share-based payments
Total
4
1) Short-term benefits - These amounts include the fixed part of the remuneration paid for the period as well as the variable
one owed for the period but paid the following period.
2) Directors' fees - Board of Directors in 2005 and 2006; Supervisory Board in 2004.
3) Post-employment benefits - A defined retirement benefit plan exists for the main executives of the Group's French entities
who meet the required conditions. The chief executive officer as well as some of the main executives mentioned above (3 in
2004, 6 in 2005 and 6 in 2006) are among the beneficiaries of this benefit plan.
The maximum amount of the life annuity which can be paid to the beneficiaries of this plan as from the liquidation of their
retirement rights is calculated in order to guarantee:
•
a life annuity of a total gross annual amount (after recognition of pensions from obligatory and complementary pension
plans) of 60% of their salary of reference, this salary of reference being limited to 8 times the annual limit of the French
national health and pensions organization;
•
subject to a payment limit of 25% of the above mentioned salary of reference of the last 12 calendar months preceding
the withdrawal from the Group's headcount.
4) Share-based payments – This amount corresponds to expenses recognized as Imerys share options attributed to the
concerned main executives.
89
Post employment benefits for Imerys employees
The post-employment benefit plans for the benefit of Imerys employees are related parties. The amount of the contributions
to external funds recognized as an expense in 2006 totals €27.7 million (€12.9 million in 2005), of which €21.2 million
(€8.6 million in 2005) to Imerys UK Pension Fund Trustees Ltd. / ECC Combined Investment Fund (Great Britain) and
€3.4 million (€2.0 million in 2005) to Sun Trust Bank (United States).
48 - COMMITMENTS GIVEN
The Group’s off balance sheet commitments include asset securities (mortgages, pledges etc.) given on the Group's assets,
and the guarantees granted by Imerys and its entities, net of recognized liabilities.
The main commitments given by the Group are as follows:
(€ millions)
2006
2005
2004
Assets given as guarantee
18.6
29.0
12.9
Avals, sureties, guarantees
30.1
16.4
6.8
Other commitments
243.8
96.8
73.1
Total off balance sheet commitments
292.5
142.2
92.8
Additionally, some of the Group's entities have operating lease commitments, in particular for offices, rail cars and lorries.
Commitments for future rent payments amount to €24.7 million for 2006, €71.6 million from 2008 to 2011 and €124.3 million
beyond.
49 - COMMITMENTS RECEIVED
(€ millions)
2006
2005
2004
Assets received as guarantee
6.4
6.5
9.6
0.6
1.1
8.3
Other commitments
30.4
51.5
3.2
Total
37.4
59.1
21.1
90
ANNUAL REPORT 2006
50 - COUNTRY RISKS
Due to their mining activity and the variety of their final markets, the Group's entities are located in numerous countries.
Imerys thus can be exposed to certain risks peculiar to these countries which may have in the future a certain impact on its
financial situation, its financial performance and its cash flow.
In order to identify high-risk countries, Imerys uses the grading system @rating of the Coface, the main French insurance
company specialized in export credit insurances, which measures to what extent an economic and financial commitment of
an entity is influenced by the economic, financial and political prospects of the concerned countries.
The grading system of the Coface consists of 7 categories from A1 to D, with an increasing order of importance of the
assessed risks. The last two categories corresponding to the highest risks include notably Argentina, Ukraine, Venezuela and
Zimbabwe where the Group is present. The revenue of the entities located in these countries represent 0.77% of the Group
revenue and 0.20% of the current operating income. The balance sheet total of these entities represents 0.38% of the
consolidated balance sheet total of Imerys and 0.03% of the consolidated shareholders' equity, Group share.
The fact that most of the Group's supply sources and final markets are located in developed countries limits the exposure to
these country risks.
51 - EVENTS AFTER THE BALANCE SHEET DATE
The annual consolidated financial statements as of December 31, 2006 were closed by the Board of Directors on
February 14, 2007. As of January 1, 2007, it was decided to change the operational organization of the Group into three
business groups: Ceramics, Refractories, Abrasives & Filtration, Performance Minerals & Pigments and Materials &
Monolithics. Thus, the Performance Minerals activities are grouped together with those of the Pigments for Paper business
group, the activities of Minerals for Cermaics and Carbon & Graphite are grouped together with those of the Refractories,
Abrasives & Filtration business group, the Kiln Furniture activities join the Materials & Monolithics business group. Moreover,
Imerys acquired 65% of the voting rights of Yilong and Xinlong, Chinese producers of Vermiculite and Andalusite, 85% of the
voting rights of Baotou Jing Yuang Graphite, a Chinese producer of natural graphite, as well as a ground calcium carbonate
(GCC) mineral reserve in China. On February 14, 2007, the effective character of these acquisitions was still subject to
suspensive conditions. Imerys also acquired 60% of the voting rights of a new entity created with the Japanese paper
producer Hokuetsu Paper Mills to build a new GCC plant at Niigata in Japan. Finally, Imerys decided to make a friendly
takeover bid for UCM, a British producer of zircon listed on the London stock exchange. Imerys’ offer, set at 85 pence per
share, was unanimously recommended by UCM’s Board of Directors.
91
2 - STATUTORY FINANCIAL STATEMENTS
Financial commentary
The financial statements of Imerys (the “Company”) are those that are submitted to the Shareholders’ General Meeting for
approval. However, they provide a very partial view of the Group’s economic and financial position, which is reflected only in
the consolidated financial statements.
In 2006, the net income of the Company comes to €113.4 million whereas the 2005 net income reached €100.0 million.
The main factors for the period were:
•
The sale of the second part of the Tour Maine - Montparnasse real estate on December 15, 2006.
•
The implementation of an Employee Shareholding Plan within the Imerys group decided by the Board of Directors on
November 7, 2006 (note 33).
•
The evolution of Group investment securities held directly or indirectly by the Company through the following
transactions:
- the acquisition of the AGS group on February 28, 2006;
- the sale of the Europe Commerce Refractory securities on April 28, 2006 to Europe Commerce SA Luxembourg;
- the subscription to the capital increase of Mircal for an amount of €171.0 million;
- the sale of the Imerys Minerals Netherland BV securities to Mircal Europe.
•
The evolution of financial resources:
- The financial debts of Imerys SA which increased by €452.0 million in 2005 and thus financed the acquisitions of this
period, decrease slightly by €8.0 million in 2006.
- The important decrease of €143.0 million of receivables from investment securities can be explained by the transfer
of two loans (USD90.0 million and £23.6 million) dated July 3, 2006, by the Company to Imerys Minéraux Belgique.
- The structure of financing means has not been modified compared to 2005.
•
The improvement of the operating income:
- The operating expenses of the Company decrease by €2.2 million in 2006. This decrease can mainly be explained by
a significant overheads decrease. At the same time, sales and other revenue increase slightly by €0.1 million and
reach €27.1 million.
92
ANNUAL REPORT 2006
Income statement
(€ thousands)
2006
2005
2004
Operating revenue
Notes
27,145
26,997
22,032
Rendering of services
25,059
25,665
21,373
2,086
1,332
659
Operating expenses
(50,707)
(52,887)
(42,796)
Purchases and external services
(31,547)
(35,933)
(28,099)
Decreases in provisions and transfer of expenses
Taxes and duties
(1,163)
(1,469)
(1,379)
(13,595)
(12,829)
(10,941)
Amortization, depreciation and provisions
(2,868)
(2,013)
(1,752)
Other expenses
(1,534)
(643)
(625)
(23,562)
(25,890)
(20,764)
99,261
72,646
(19,200)
Staff expenses
Operating income
Financial income
10
Revenue from subsidiaries and affiliates
136,775
121,175
-
Net financial expenses
(25,435)
(31,803)
(29,974)
Increases and decreases in provisions
(4,511)
11,026
3,548
Exchange rate gains and losses
(7,568)
(27,752)
7,226
Current income
75,699
46,756
(39,964)
15,538
29,004
304,092
Other operating income
11
Other operating revenue
Other operating expenses
Income taxes
12
Net income
93
127,044
190,672
869,660
(111,506)
(161,668)
(565,568)
22,162
24,236
18,488
113,399
99,996
282,616
Balance sheet
(€ thousands)
Notes
2006
2005
2004
ASSETS
Intangible assets
13
4,533
3,313
2,898
Accumulated amortization
13
(2,379)
(1,416)
(892)
2,154
1,897
2,006
Net intangible assets
13
4,974
8,671
11,478
Accumulated depreciation
13
(1,602)
(3,577)
(5,900)
3,372
5,094
5,578
2,642,733
2,473,432
2,544,133
(3,003)
(3,003)
(2,896)
2,639,730
2,470,429
2,541,237
862,650
1,005,561
472,972
(613)
(613)
-
862,037
1,004,948
472,972
2,962
41,065
2,884
3,510,255
3,523,433
3,024,677
24,985
32,307
40,627
6,121
6,904
4,861
26,294
59,900
90,913
2,488
1,953
1,485
59,888
101,064
137,886
13,314
7,445
21,261
3,583,457
3,631,942
3,183,824
Share capital
126,669
127,944
126,900
Additional paid-in capital
158,944
219,453
204,873
Reserves
956,679
956,678
961,666
Retained earnings
420,285
425,113
232,633
Net income for the period
113,399
99,996
282,616
Net property, plant and equipment
Investments
14
Provisions
14 - 20
Net investments
Loans related to investment securities
15 -17
Provisions
20
Loans related to investment securities - net value
Other financial investments
16 - 17
Non-current assets
Other receivables
17
Derivative instruments
Marketable securities
18
Current assets
Regularization accounts
17
TOTAL ASSETS
LIABILITIES AND SHAREHOLDERS' EQUITY
Shareholders' equity
19
1,775,976
1,829,184
1,808,688
Provisions for risks and charges
20
23,683
25,483
36,807
Financial debts
21
1,732,009
1,740,098
1,288,308
Other debts
21
21,435
17,981
21,795
Derivative instruments
21
Debts
Regularization accounts
21
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
94
347
3,487
3,882
1,753,791
1,761,566
1,313,985
30,007
15,709
24,344
3,583,457
3,631,942
3,183,824
ANNUAL REPORT 2006
Cash Flow Statement
(€ thousands)
2006
2005
2004
113,399
99,996
282,616
2,885
2,549
1,403
Net income
Expenses and revenue with no impact on cash flow
Amortization and depreciation
Provisions
(1,792)
(10,600)
(3,666)
Income on disposal of assets
(10,502)
(30,361)
(307,544)
Operating cash flow before working capital changes
103,990
61,584
(27,191)
11,865
5,054
(10,608)
115,855
66,638
(37,799)
Change in working capital requirement
Acquisitions of assets
Intangible assets and property, plant and equipment
(2,189)
(3,792)
(2,764)
(275,554)
(124,202)
(894,874)
9,510
7,573
-
145,770
181,342
859,664
(122,463)
60,921
(37,974)
(2,768)
453,823
164,886
Change in loans and other financial assets
142,911
(532,590)
80,432
140,143
(78,767)
245,318
21,672
15,624
17,957
Financial (investments and related assets)
Disposals of assets
Intangible assets and property, plant and equipment
Financial (investments and related assets)
Change in financial debts
Capital operations
Capital increase
Capital reduction by cancellation of treasury shares
(83,456)
-
(31,244)
Dividends paid
(104,824)
(94,961)
(79,285)
Cash flow from operations on equity
(166,607)
(79,337)
(92,572)
(33,071)
(30,545)
76,973
61,853
92,398
15,425
28,782
61,853
92,398
(33,071)
(30,545)
76,973
2006
2005
2004
Cash and cash equivalents at the beginning of period
Cash and cash equivalents at the end of period
(1)
(1)
Detail of movements on treasury shares
(€ thousands)
Gross amount of treasury shares booked as investments as of January 1
38,159
0
0
Purchases of treasury shares
45,297
38,159
31,244
-
-
-
Sales of treasury shares
Treasury shares allocated to the Employee Shareholding Plan
Capital reduction by cancellation of treasury shares
Gross amount of treasury shares booked as investments as of December 31
(1)
-
-
-
(83,456)
-
(31,244)
0
38,159
0
The cash is composed of marketable securities and cash and cash equivalents in the assets of the balance sheet.
95
Unless otherwise indicated, all values in the tables are in thousands of euros.
1. Accounting principles and policies
The annual accounts are established in accordance with the current French accounting regulations.
The methodology generally used is the historical cost method for the items recorded in the books.
1 - INTANGIBLE ASSETS
Intangible assets are valued at original cost. Software is depreciated over 3 years using the straight-line method.
2 - PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are assessed at original cost or at their contribution value.
The depreciation methods used, straight-line or degressive, are representative of economic depreciation; therefore, no
excess tax depreciation was recorded under liabilities in the balance sheet.
Depreciation methods and periods are as follows:
•
Buildings - Offices
straight-line method
from 20 to 30 years
•
Machinery and equipment
over 10 years
•
Other property, plant and equipment
− Equipment and office furniture
over 5 and 10 years
− Office equipment
over 5 years
− IT equipment
over 3 years
3 - LONG TERM INVESTMENTS
The long term investments are valued at original cost, excluding ancillary expenses.
Investment securities and other long-term investments are estimated at their value in use. The value in use is evaluated
according to the value of the company, based notably on its previous results, its profitability prospects, to the portion of
converted equity owned for these investments and to the net asset value. When this value is higher than the carrying amount
recorded in the balance sheet, the latter is not modified. On the contrary, a provision for depreciation of the investment is
recorded.
Unrealized losses generated from the fluctuations of foreign currencies in which the long term investments are denominated
are not aimed to materialize. Therefore, unrealized exchange losses do not constitute in themselves sufficient criteria to
justify systematically a provision for depreciation.
96
ANNUAL REPORT 2006
4 - RECEIVABLES AND DEBTS IN FOREIGN CURRENCIES
Receivables and debts in foreign currencies are converted at closing rate.
5 - FOREIGN CURRENCY EXPOSURE
When operations in foreign currencies result in the symmetrical book-keeping of an asset and a liability presenting close
deadlines, the related exchange rate impacts that they generate are neutralized reciprocally until the deadline of the
operations. In this case, the exchange risk cannot materialize and assets and liabilities incline towards a global position that
is compensated. The amount of the provision for the currency exchange loss on the asset is limited to the portion of
unrealized losses exceeding unrealized gains.
6 - MARKETABLE SECURITIES
Their value in use is assessed at their average trading price of the last month of the period for the listed stocks, at the last
known redemption price for the SICAV's (money market funds) and at their net asset value for the FCP’s (equity funds).
Unrealized losses of value are subject to a provision for depreciation, the unrealized gains are not recorded.
7 - PROVISIONS
Provisions for risks
The provisions for risks cover identified risks and are determined in the following method:
•
provisions for operational risks include notably litigation in progress related to the current activities;
•
provisions for restructuring concern reorganization plans officially decided and initiated before the end of the period;
•
provisions pertaining to changes in the value of certain equity interests, determined according to the last financial
information available and the evolution prospects.
Provisions for charges
They mainly include:
•
provisions for supplementary pension plans and pensions for the former salaried employees;
•
charge for retirement indemnities calculated according to the retrospective method.
Imerys applies the recommendation no. CNC 2003-R01 concerning the valuation and accounting for pension commitments
and similar advantages.
8 - RISKS PERTAINING TO FINANCIAL MARKETS
As a holding company and head of the Group, the Company implements the management of financial market risks identified
within the Group (exchange rate risk, interest rate risk, energy price risk).
97
The main instruments and risks are described hereafter:
•
The derivative instruments used to cover the exchange rate risk are mainly forward buying and selling foreign currency
contracts as well as change options. A global position of change is established when operations in foreign currencies
(hedged elements and hedging instruments) result in the symmetrical book-keeping of an asset and a liability
presenting close characteristics. For those options conforming to the Group’s risk management policy, but not being
qualified as hedging options, a provision for risks and charges is registered when the market value is inferior to the
original contract value. The unrealized gains are not recognized.
•
The Company implements swaps and options in order to cover the exchange rate risk. The expenses and products
concerning the hedging instruments are recorded in the income statement in a symmetrical way to the expenses and
products of hedged elements.
•
In order to cover energy price risks which affect its participations, the Company uses option contracts as well as
forward buying and selling contracts. The expenses and products concerning hedging instruments are recorded in the
income statement in a symmetrical way to the expenses and products of hedged elements. For those options
conforming to the Group’s risk management policy, but not being qualified as hedging options, a provision for risks and
charges is registered when the market value is inferior to the original contract value. The unrealized gains are not
recognized.
9 - TAX CONSOLIDATION
Since 1993, the Imerys company and some of its French subsidiaries have been assessed under Article 223 A of the French
Tax Code in respect of group taxation. 8 entities joined the tax consolidation perimeter in 2006: Calderys France, Celite
France, Celite Europe, Denain-Anzin Minéraux SA, Harborlite France, PLR Réfractaires SAS U, Quartz de Pierre Blanche
and World Minerals Europe. The tax consolidation perimeter included 33 entities as of December 31, 2006 mentioned below:
· Imerys
· KPCL KVS
· Calderys France
· Marcel Rivereau
· Celite France
· Minemet Holding
· Celite Europe
· Mircal
· Ardoisières d’Angers
· Mircal Brésil
· Ceradel Socor
· Mircal Europe
· Cératéra SAS
· Parimetal
· César
· Parnasse 16
· Charges Minérales du Périgord
· Parnasse 17
· Damrec
· Parnasse 21
· Denain-Anzin Minéraux SA
· Parnasse 22
· Harborlite France
· Parnasse 23
· Imerys Kiln Furniture France
· PLR Réfractaires SAS U
· Imerys Minéraux France
· Quartz de Pierre Blanche
· Imerys Services
· Setac
· Imerys Tableware France
· World Minerals Europe
· Imerys TC
Within the fiscal group headed by Imerys, the relations are governed by a convention whose principles are summarized
below:
•
the tax consolidated entities benefit from a situation identical to the one that they would have had in the absence of tax
consolidation;
•
all supplementary charges are recorded at Imerys which benefits in counterpart from any potential savings generated
by this system.
98
ANNUAL REPORT 2006
2. Notes to the income statement
10 - FINANCIAL RESULTS
(€ thousands)
2006
2005
136,775
121,175
-
116,044
88,738
60,942
2004
Financial revenue
Revenue from subsidiaries and affiliates
Other investment income - net
(1)
(1)
Exchange rate gains
3,814
16,790
19,770
46,768
44,232
59,916
303,401
270,935
140,628
141,479
120,541
90,916
8,325
5,765
16,222
54,336
71,983
52,690
204,140
198,289
159,828
99,261
72,646
(19,200)
192,177
150,959
13,933
22,152
7,240
7,808
Financial expenses
Financial interest and expenses on financial instruments
(2)
Increases in financial provisions
Exchange rate losses
Financial income
(1)
of which revenue related to controlled entities
(2)
of which expenses related to controlled entities
In 2006, the Company received €136.8 million of dividends.
Moreover, the Company recorded a loss on receivables of €3.4 million according to the measures provided for by the
liquidator of SETAC in his report.
As a holding company, Imerys manages its balance sheet exchange rate risk, notably linked to the foreign net assets held
directly or indirectly by the Company and also resulting from the loans and advances granted to the subsidiaries and entities
controlled by the Company in accordance with the intra-group treasury contracts. Therefore, the proportion of the financial
indebtedness drawn in other foreign currencies than the euro is adjusted. In 2006, Imerys recorded a net exchange loss of
€7.6 million (a loss of €27.8 million was realized in 2005 and a gain of €7.2 million in 2004) mainly due to the hedging of
foreign investments by Imerys. These assets are not subject to revaluation based on the closing rate, in absence of
revaluation of the investment securities in the balance sheet.
11 - OTHER OPERATING INCOME
(€ thousands)
Gains and losses on disposals of assets
Other non-current revenue
2006
2005
2004
10,501
30,360
307,544
175
1
7,600
8,492
1,234
2,396
Increases in provisions
(2,232)
(1,996)
(1,995)
Other non-current expenses
(1,398)
(595)
(11,453)
15,538
29,004
304,092
The exceptional gains result from the disposal of the second part of the Montparnasse real estate where the former
headquarters of Imerys were located, as well as the disposal of the Europe Commerce Refractory securities.
The decreases in provisions as of December 31, 2006 concern a provision for Group restructuring (€5.0 million), a provision
for headquarter restructuring (€0.6 million) and a provision for exceptional expenses (€2.7 million).
The increases in 2006 concern a provision for risks (€1.2 million) and a provision for headquarter restructuring (€0.4 million).
99
12 - INCOME TAXES
(€ thousands)
2006
2005
-
-
-
Income taxes
22,162
24,236
18,488
Total
22,162
24,236
18,488
Result after taxes
Taxes on long-term capital gains
2004
Breakdown of the tax charge of the Company
(€ thousands)
Result before taxes
Taxes
Current income
75,699
-
75,699
15,538
-
15,538
-
22,162
22,162
91,237
22,162
113,399
Impact of the tax consolidation
Total
In accordance with the terms of the tax conventions signed by each company of the Group, the tax charge or revenue
recorded in the accounts of Imerys is composed of:
•
the tax charge of the Company, calculated as if it was not fiscally consolidated;
•
the net amount of complementary charges and revenue resulting from the tax consolidation.
In this context, Imerys recorded a revenue of €22.2 million for the 2006 period.
As regards Imerys, it registers in 2006 a loss of €34.3 million which has been used by the consolidated group following the
rules of tax consolidation. At the end of the 2006 period, the balance of carried forward short-term losses is of €206.3 million.
The tax consolidation structure headed by the Imerys company has long-term losses of €22.7 million and no short-term
losses.
Variation of deferred taxes (deferred tax basis)
(€ thousands)
Description
Assets
Liabilities
Assets
Liabilities
Assets
Liabilities
Temporary differences
Deductible next year
-
9,509
-
5,136
-
18,146
Deductible later
-
10,990
-
10,887
-
9,789
not yet recognized
7,391
30,005
1,514
15,405
15,524
24,379
Total
7,391
50,504
1,514
31,428
15,524
52,314
Special reserve for long-term capital gains (1)
-
273,471
-
273,471
-
273,471
Others
-
-
-
-
-
-
Total
-
273,471
-
273,471
-
273,471
Deducted expenses or taxed revenue
Potentially taxable items
(1)
According to article no. 39 of the Financial Rectification Law 2004 (“Loi de Finance Rectificative”), an amount of €200.0 million were transferred from
the special reserves of long-term gains to an account of ordinary reserves after approval of the Shareholders' General Meeting of May 3, 2005. This
transfer was already taken into account in the potential taxation elements published in the 2004 Annual Report.
100
ANNUAL REPORT 2006
3. Notes to the balance sheet
13 - VARIATIONS OF PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS
(€ thousands)
Gross amount
12.31.2005
Acquisitions
Disposals
Gross amount
12.31.2006
3,313
2,152
932
4,533
Intangible assets
Land
302
-
302
0
Buildings
1,969
-
1,969
0
Other property, plant and equipment
6,400
1,111
2,538
4,974
8,671
1,111
4,809
4,974
11,984
3,263
5,740
9,507
Total gross intangible assets and property, plant and
equipment
Amortization and
depreciation
as of 12.31.2005
Increases
Decreases
Amortization and
depreciation
as of 12.31.2006
Amortization of intangible assets
1,416
963
0
2,379
Depreciation of buildings
1,279
59
1,338
0
Depreciation of other property, plant and equipment
2,298
929
1,625
1,602
Depreciation of property, plant and equipment
3,577
988
2,963
1,602
Total amortization and depreciation of intangible assets
and property, plant and equipment
4,993
1,951
2,963
3,981
(€ thousands)
14 - CHANGES IN THE VALUE OF INVESTMENT SECURITIES
The gross value of equity interest decreases by €169.3 million.
The main acquisitions and sales concern the following entities:
•
the subscription to the capital increase of Mircal for €171.0 million;
•
the subscription by Imerys SA to the capital increase of Imerys Minéraux Belgique for €104.5 million has been realized
in the form of a contribution in kind with a loan of USD90.0 million consented to Imerys USA and a loan of £23.6 million
consented to Imerys UK Ltd. Afterwards, the sale of Imerys Minéraux Belgique securities to Mircal at their carrying
value, i.e. for €104.5 million has been realized;
•
the sale of the Imerys Minerals Netherland BV securities to Mircal Europe for a gross amount of €1.7 million;
•
the sale of the Europe Commerce Refractory securities to Europe Commerce SA Luxembourg for a gross amount of
€40 thousand.
Depreciation allowances come to €3.0 million. They have not changed since 2005.
15 - LOANS RELATED TO INVESTMENT SECURITIES
The amount of loans related to investment securities decreases by €142.9 million. On July 3, 2006, the Company transferred
two loans (one long-term loan of USD90.0 million towards Imerys USA and one loan of £23.6 million towards Imerys UK Ltd)
to Imerys Minéraux Belgique for its recapitalization.
These receivables from investment securities correspond to intra-group credit agreements aimed at optimizing the cash
management. Provisions for depreciation amount to €0.6 million.
101
16 - OTHER FINANCIAL INVESTMENTS
The other financial investments mainly include 19,797 QUADREM securities of a gross amount of €2.1 million.
17 - OTHER RECEIVABLES
Gross
amount
Maturity less
than one year
Maturities from
one to five years
862,650
539,277
322,760
613
2,962
34
33
2,895
23,780
23,780
-
-
Bond issuance premium
1,205
173
654
378
Total other receivables
24,985
23,953
654
378
Prepaid expenses
3,870
2,220
1,650
-
Expenses to be amortized over several periods
2,053
271
1,782
-
(€ thousands)
Receivables from investment securities
Other financial investments
Maturities beyond
five years
Other receivables
Operating receivables
Regularization account
Unrealized exchange rate losses
7,391
7,391
-
-
13,314
9,882
3,432
0
903,911
573,146
326,879
3,886
Total regularization account
Total
18 - MARKETABLE SECURITIES – NET VALUES
(€ thousands)
2006
2005
2004
26,294
59,405
90,605
Treasury shares
-
495
253
Deposit for liquidity provider contract
-
-
55
SICAV's and mutual funds
Certificates of deposit and negotiable bonds
-
-
-
Obligations
-
-
-
26,294
59,900
90,913
Quantity
Average cost price
per unit (€)
Average rate
December 2006 (€)
Total
Valorization of marketable securities as of December 31, 2006
Nature
SICAV Natexis Securite Jour
SICAV Dresdner Eurocash
Imerys shares (liquidity provider contract)
102
-
-
-
3,856
6,208.06
6,208.06
-
-
-
ANNUAL REPORT 2006
19 - BREAKDOWN IN CHANGES OF SHAREHOLDERS' EQUITY
Share
(€ thousands)
Number
capital
Reserves
of shares
Capital premiums
Legal Regulated
(1)
Retained
Income
Other
earnings
for the year
473,471 475,470
165,604
Total
Shareholders' equity as of 01/01/2004
before allocation of net income
Allocation of 2003 income
15,870,745 126,966 218,094 12,725
-
-
-
151,302 1,623,632
-
-
-
72,017
(151,302)
(79,285)
63,482,980
-
-
-
-
-
-
-
-
(640,000) (1,280) (29,964)
-
-
-
-
-
(31,244)
Movements of the period:
Split of the nominal: shares of €2 (2)
Cancellation of 640,000 shares of €2
Subscription of 607,040 shares
by exercise of options
Exceptional tax on Regulated Reserves
63,450,020 shares of €2
Net income as of 12/31/2004
607,040
1,214
16,743
-
-
-
-
-
-
-
-
-
-
(4,988)
473,471 475,470
232,633
63,450,020 126,900 204,873 12,725
-
-
-
-
-
-
-
473,471 475,470
232,633
(3)
17,957
(4,988)
0 1,526,072
282,616
282,616
63,450,020 126,900 204,873 12,725
-
-
-
-
-
-
521,845
1,044
14,580
-
-
-
-
-
-
282,616 1,808,688
187,655
(282,616)
(94,961)
-
-
15,624
-
-
0
Reclassification of regulated reserves
Tax on regulated reserves (long-term
gains)
Change in method CRC 04-06
63,971,865 shares of €2
- (200,000) 200,000
(3)
-
-
-
-
- (4,988)
4,988
(3)
-
-
-
-
-
-
(163)
(4)
273,471 670,482
425,113
63,971,865 127,944 219,453 12,725
-
-
-
-
-
-
-
273,471 670,482
-
0
-
(163)
0 1,729,188
99,996
99,996
425,113
99,996 1,829,184
-
-
-
-
(4,828)
(99,996) (104,824)
(640,000) (1,280) (36,879)
-
-
-
-
-
(38,159)
(685,000) (1,370) (43,927)
-
-
-
-
-
(45,297)
-
-
-
-
2,708
-
-
-
-
18,964
273,471 670,482
420,285
63,971,865 127,944 219,453 12,725
-
-
Capital increase reserved for employees
50,000 shares of €2
50,000
100
2,608
-
637,755
1,275
17,689
-
63,334,620 shares of €2
63,334,620 126,669 158,944 12,725
-
-
-
-
-
-
-
273,471 670,482
0 1,662,576
113,399
113,399
63,334,620 126,669 158,944 12,725
Proposition for allocation of income (5)
63,334,620
-
-
-
420,285
113,399 1,775,975
-
(603)
(113,399) (114,002)
273,471 670,482
419,682
0 1,661,973
-
with proposition for allocation of income
(1)
63,334,620 126,669 158,944 12,725
Imerys' shareholders' equity does not include revaluation differences.
(2)
According to the Shareholders' General Meeting on May 3, 2004.
(3)
According to article no. 39 of the Financial Rectification Law 2004 ("Loi de Finance Rectificative") concerning special reserves of long-term gains,
Imerys registered on December 31, 2004 the exceptional tax on special reserves and thus diminished the position "retained earnings" for an amount
of €4.9 million. By decision of the Shareholders' General Meeting of May 3, 2005, this amount has been allocated to reserves and €200.0 million have
thus been transferred from special reserves of long-term gains to ordinary reserves.
(4)
In accordance with the CRC regulation no. 2004-06, the cost of trademark registering included in the assets of January 1, 2005 have been registered
for their value net of taxes by diminishing the retained earnings.
(5)
Proposed to the Shareholders' General Meeting on May 2, 2007.
103
The Shareholders’ General Meeting on May 3, 2004 approved the proposition to reduce the nominal of the Imerys share to
€2 per share. Since then, the nominal of the Imerys share is of €2.
For the 2006 period, the capital movements are the following:
On January 17, 2006, the Company's Board of Directors approved of the capital reduction by cancellation of 640,000
treasury shares held on December 31, 2005.
Moreover, in 2006, the Company purchased 685,000 treasury shares directly on the market at the average unit price of
€66.13. On December 19, 2006, the Board of Directors approved of the capital reduction by cancellation of these shares.
Consequently, as of December 31, 2006, the Company does not hold any treasury shares.
On December 21, 2006, the Board of Directors authorized the creation of 50,000 shares of a nominal amount of €2 within the
framework of the Employee Shareholding Plan (note 33).
Finally, the Chairman of the Board authorized on January 11, 2007 the capital increase as of December 31, 2006 by creation
of 637,755 shares following exercised options.
Detailed information is available in paragraph 5.2 of the Annual Report.
Stock option subscription plans in force as of December 31, 2006
Position as of
12.31.2005
Grant
of options
Exercised
options
Cancellations,
regularizations
Position as of
12.31.2006
Plan
1998
9,796
-
9,796
-
-
Plan
1999
76,300
-
73,300
(2,000)
5,000
Plan
2000
127,080
-
72,020
(3,880)
58,940
Employee Shareholding Plan
2000
37,876
-
7,972
(80)
29,984
Plan
2001
201,855
-
95,655
4,280
101,920
2001
54,128
-
16,924
40
37,164
Plan
2002
324,000
-
148,200
-
175,800
2002
65,664
-
15,876
180
49,608
Plan
2003
650,060
-
197,060
-
453,000
2003
37,244
-
952
8
36,284
Plan
2004
778,700
-
-
12,000
766,700
Plan
2005
625,000
-
-
24,900
600,100
Plan
2006
-
640,000
-
3,400
636,600
2006
38,848
2,989,870
-
38,770
-
2,987,703
678,770
637,755
38,770
Number of potential ordinary shares by exercise of share options
2,989,870
(See the more detailed table in paragraph 6.4.3 of the Annual Report)
Number of shares
Position as of 12.31.2005
63,971,865
Number of shares created in 2006 by exercise of options with a nominal amount of €2
Shares subscribed during the capital increase reserved for employees with a nominal amount of €2
637,755
50,000
Cancellation of shares in 2006 with a nominal amount of €2
(1,325,000)
Position as of 12.31.2006
63,334,620
Number of shares liable to be created
2,989,870
Total number of potential ordinary shares as of 12.31.2006
66,324,490
As of December 31, 2006, the exercise of all granted share options would dilute the share capital by 4.51%.
104
ANNUAL REPORT 2006
20 - PROVISIONS
(€ thousands)
Type of provisions
Amount at
the beginning
Increases
of the period Operating Financial Exceptional
Operating
Amount at
the end of
the period
Decreases
Financial
Exceptional
Provisions for depreciation of assets
Investments
Trade receivables
Non-consolidated investments
Bond issuance premium
Marketable securities
Total
3,003
-
-
-
-
-
-
3,003
-
12
-
-
-
-
-
12
613
-
-
-
-
-
-
613
-
-
-
-
-
-
-
-
380
-
192
-
-
-
-
572
4
-
-
-
-
(4)
-
-
4,000
12
192
-
-
(4)
-
4,200
7,510
-
1,214
(26)
(67)
(5,215)
3,416
Provisions for risks
Management risks
Provisions for exchange rate losses
1,514
-
7,391
-
Staff-related risks
1,733
-
-
408
-
Environmental risks
7,830
-
-
-
-
Financial instruments
1,413
-
-
-
- (1,413)
360
-
-
310
20,360
-
7,391
1,932
Risks on subsidiaries and investments
Subtotal
- (1,514)
(2)
(611)
(816)
7,391
(1)
1,530
-
7,014
-
0
-
-
670
(26) (3,810)
(5,826)
20,021
-
(2)
Provisions for charges
Pensions
1
-
-
-
-
-
-
1
Future employee benefits
2,455
906
-
300
-
-
-
3,661
Other social contributions and tax expenses
2,667
-
-
-
-
-
(2,667)
0
Subtotal
5,123
906
-
300
-
-
(2,667)
3,662
Total
25,483
906
7,391
2,232
(26) (3,810)
(8,493)
23,683
Grand Total
29,483
918
7,583
2,232
(26) (3,814)
(8,493)
27,883
(1)
Provisions decreased in accordance with used amounts for €553 thousand.
(2)
Provisions decreased in accordance with the last available financial elements.
As head of the group, Imerys registers management risk and environmental provisions. They particularly relate to
environmental liability guarantees following the disposal of certain investments.
As of December 31, 2006, no provision for financial risks has been registered. In fact, no unrealized loss on financial
instruments is recorded, concerning hedging transactions on foreign currencies and on energy prices.
Some of these instruments, in accordance with the Group’s financial risk management policy, are not recognized as hedging
instruments at Imerys SA. The financial instruments held as of December 31, 2006 are described in note 25 and following.
The provision for future employee benefits is calculated according to the following hypothesis:
Discount rates
Expected rates of return on plan assets
Expected rates of salary increases
Actuarial differences are recognized according to the "corridor" method.
105
Retirement
France
Other long-term
employee benefits
4.50%
4.50%
4.00%
-
3.00 to 4.50%
3.00%
Net expense
Other long-term
employee benefits
2006
2005
2004
(€ thousands)
Retirement
2006
2005
2004
Interest cost
195
183
176
2
-
466
351
276
2
28
(37)
(58)
Past service cost
(12)
(4)
(30)
12
0
Recognized net expense
Assets' effective return
2006
Total
2005
2004
-
198
183
176
-
-
468
351
276
0
-
-
28
(37)
(58)
(4)
0
-
-
(12)
(4)
(4)
-
195
-
-
165
12
-
-
-
0
-
-
-
-
-
648
505
390
199
0
0
847
505
390
(81)
(211)
(68)
-
-
-
(81)
(211)
(68)
Change in the discounted value of obligations
(€ thousands)
Opening obligations
Retirement
2006
2005
2004
Other long-term
employee benefits
2006
2005
2004
2006
Total
2005
2004
5,248
4,610
3,553
47
47
47
5,295
4,657
3,600
Interest cost
195
183
176
2
-
-
197
183
176
466
351
276
2
-
-
468
351
276
Benefit payments
(19)
-
(9)
(7)
-
-
(26)
-
(9)
0
-
-
0
-
-
-
-
-
165
0
-
0
-
-
165
0
-
Plan amendments
(162)
104
634
195
-
-
33
104
634
Closing obligations
5,894
5,248
4,630
239
47
47
6,133
5,295
4,677
of which funded obligations
5,400
4,804
4,238
-
-
-
5,400
4,804
4,238
494
444
392
239
47
47
733
491
439
2004
Other long-term
employee benefits
2006
2005
2004
of which unfunded obligations
Change in fair value of plan assets
(€ thousands)
Opening assets
Retirement
2006
2005
2,026
1,279
(28)
37
Benefit payments
(19)
-
Employer contributions
19
536
0
-
Plan amendments
0
Closing assets
1,167
2006
Total
2005
2004
1,167
0
-
-
2,026
1,279
58
0
-
-
(28)
37
58
(9)
(7)
-
-
-
-
(9)
53
7
-
-
26
536
53
-
0
-
-
-
-
-
-
-
0
-
-
-
-
-
109
174
10
0
-
-
109
174
10
2,107
2,026
1,279
0
0
0
2,133
2,026
1,279
Assets / liabilities in the balance sheet
(€ thousands)
Funded obligations
Assets' fair value
Funded status
Retirement
2006
2005
(5,400)
2,107
(3,293)
2004
(4,804) (4,238)
2,026
Other long-term
employee benefits
2006
2005
2004
-
-
-
1,279
-
-
-
(2,778) (2,959)
0
0
0
2006
Total
2005
2004
(5,400) (4,804) (4,238)
2,107
2,026
1,279
(3,293) (2,778) (2,959)
(494)
(444)
(392)
(239)
(47)
(47)
(733)
(491)
(439)
Unrecognized past service cost
124
(28)
(32)
-
-
-
124
(28)
(32)
Closing unrecognized actuarial differences
240
841
949
-
-
-
240
841
949
-
-
-
-
-
-
-
-
0
(2,409) (2,434)
(239)
(47)
(47)
Unrecognized assets due to a limit on prepaid assets
Assets (provisions) in the balance sheet
of which provisions for retirement
of which provisions for future employee benefits
(3,423)
(1)
(3,422)
(20)
0
0
0
(2,408) (2,414)
(1)
(239)
(47)
(47)
106
(3,662) (2,456) (2,481)
(1)
(1)
(20)
(3,661) (2,455) (2,461)
ANNUAL REPORT 2006
21 - DEBTS AND REGULARIZATION ACCOUNTS AS OF DECEMBER 31, 2006
(€ thousands)
Financial debts
Other debts
Deferred revenue
Unrealized exchange rate gains
Total
Amount
Maturity less
than one year
Maturities from
one to five years
Maturities beyond
five years
1,732,009
1,208,322
50,000
473,687
21,782
21,782
-
-
3
3
-
-
30,004
30,004
-
-
1,783,798
1,260,111
50,000
473,687
The various bank overdrafts and the syndicate loan do not include any grants or guarantees from the Company to the benefit
of the lending banks.
The financial debts per foreign currency share out as follows:
(€ thousands)
Amount
Euro
1,398,984
US Dollar
223,939
British Pound
18,819
Japanese Yen
45,221
Other foreign currencies
45,046
Total
1,732,009
The analysis of the net external debt by nature and maturity is the following:
(€ thousands)
Bonds
Amount
Maturity less
than one year
Maturities from
one to five years
Maturities beyond
five years
883,344
359,657
50,000
473,687
Commercial papers
320,000
320,000
-
-
Group financial current accounts
508,642
508,642
-
-
Bank overdrafts and accrued interest
Total
20,023
20,023
-
-
1,732,009
1,208,322
50,000
473,687
22 - ACCRUED RECEIVABLES AND PAYABLES
The following items are included in “other receivables” and “other debts”:
(€ thousands)
Accrued receivables
Operating
Financial
25,084
Total
25,333
(1)
Accrued payables
249
accrued interests on swaps.
107
2,954
(1)
6,441
9,395
4. Other information
23 - OFF BALANCE SHEET COMMITMENTS
The significant off balance sheet commitments of the Company are detailed in notes 24 to 28.
The syndicated credit renewed on July 22, 2005 for an authorized amount of €750.0 million is not guaranteed by the
Company. It was neither used as of December 31, 2005, nor as of December 31, 2006.
The amount of bilateral multi-currencies credit lines confirmed, unutilized and available for the benefit of Imerys, is
€537.0 million as of December 31, 2006.
Other commitments given
(€ thousands)
Subsidiaries
70,810
For the benefit of
Equity interest
Other controlled entities
Other
Total
58,837
34,145
163,792
Received from
Equity interest
Other controlled entities
Other
Total
29
4,592
-
Other commitments received
(€ thousands)
Subsidiaries
-
-
4,563
The off balance sheet commitments received from controlled entities consist in redemption clauses which were included in
the debt abandonments consented by the Company in 2005.
The off balance sheet commitment received from Calderys France has been reduced by €1.9 million correlative to the debt
abandonment consented in 2005, for the redemption clause was exercised in 2006.
24 - OTHER COMMITMENTS IN RELATION TO SUBSIDIARIES
In 2006, the Company has granted new letters of intent for €11.7 million. Consequently and considering the commitments
which came to maturity in 2006, the amount of the global commitment increased from €114.6 million as of
December 31, 2005 to €116.5 million as of December 31, 2006.
108
ANNUAL REPORT 2006
25 - COMMITMENTS ON EXCHANGE RATE RISKS
As of December 31, 2006, the Company had net commitments regarding forward purchases and sales against euros divided
up by foreign currencies as follows:
Foreign currency (in thousands)
Forward
purchases
Forward
sales
Forward
net position
Forward net
position exchange
value in €
Australian Dollar
8,650
-
8,650
5,182
Canadian Dollar
-
23,323
23,323
15,263
-
13,303
13,303
8,279
4,090
-
4,090
6,091
Swiss Franc
British Pound
Japanese Yen
4,009,890
-
4,009,890
25,552
Mexican Peso
66,785
-
66,785
4,684
Norwegian Krone
1,670
-
1,670
203
New Zealand Dollar
1,330
-
1,330
710
-
279,260
279,260
30,890
Thai Baht
-
345,590
345,590
7,389
US Dollar
79,000
-
79,000
59,985
South African Rand
23,100
-
23,100
Swedish Krona
Total
2,507
166,736
These transactions have been carried out in order to hedge the exchange rate risk generated by intra-group financing and
investments in foreign currencies.
26 - COMMITMENTS ON INTEREST RATE RISK
Following its policy to manage natural gas risks in the United States, the Group has implemented different hedging
transactions covering 2007 as of December 31, 2006.
All hedging instruments in place correspond to identified risks as of December 31, 2006 at Imerys.
27 - ELEMENTS CONCERNING ENERGY PRICE RISKS
Following its policy to manage centrally energy price risks which affect its participations, the Company has implemented
different hedging options concerning the identified risks as of December 31, 2006 at Imerys:
Hedging of energy price risks in the United States
Net notional
amount in MMBTU
Underlying position
Maturity
6,500,000
Options
Futures
Sales of Puts
1,170,000
<12 months
Purchases of Calls
1,620,000
<12 months
Purchases of Futures
450,000
<12 months
109
Hedging of energy price risks in Great Britain
Amount in therms
Underlying position
Maturity
48,400,000
Options
Sales of Puts
12,950,000
<12 months
Purchases of Calls
30,150,000
<12 months
Sales of Calls
(2,850,000)
<12 months
The above-mentioned transactions mainly cover natural gas risks for 2007.
28 - ELEMENTS RECORDED UNDER MORE THAN ONE BALANCE SHEET ITEM (NET VALUE)
Total
Of which
controlled entities (1)
2,639,730
2,639,730
862,037
862,037
(€ thousands)
Investment securities
Other investments
2,962
-
Other receivables
23,780
22,993
1,732,009
507,229
21,782
7,115
Financial debts
Other debts
(1)
The controlled entities are those that can be consolidated by full integration into the same group.
29 - PRINCIPAL SHAREHOLDERS
Number of shares
% of interest
% of voting rights (1)
17,091,712
26,99%
35,09%
Belgian Securities BV (2)
16,744,028
26,44%
34,38%
248,118
0,39%
0,36%
0
0,00%
0,00%
Group employees
Owned by the Group
Public
29,250,762
46,18%
30,18%
Total
63,334,620
100,00%
100,00%
(1)
Total voting rights : 97,427,907.
(2)
A 100% subsidiary of the Bruxelles Lambert group.
Imerys' consolidated financial statements are included in the consolidation structure of the companies Pargesa Holding SA
and the Bruxelles Lambert group, which are respectively the parent companies of Netherlands BV and Belgian Securities BV.
30 - HEADCOUNT AS OF DECEMBER 31, 2006
Employees of the entity
Full-time
Part-time
Total
110
Non-executives
Executives
Total
22
79
101
3
1
4
25
80
105
ANNUAL REPORT 2006
31 - INDIVIDUAL TRAINING RIGHTS AS OF DECEMBER 31, 2006
As of December 31, 2006, the total number of training hours corresponding to the acquired rights in the framework of the
individual training right amounts to 4,775 hours.
The number of hours not having been requested amounts to 4,495 hours.
32 - REMUNERATION FOR SENIOR MANAGEMENT
(€ thousands)
Board of Directors
(1) (2)
General management
(3)
Total
2006
2005
2004
625
624
622
758
1,092
1,981
1,383
1,716
2,603
(1)
Director's fees.
(2)
Supervisory Board until May 3, 2005 and Board of Directors as of May 3, 2005.
(3)
Including the only corporate representatives, i.e. the members of the Managing Board until May 3, 2005 and the Managing Director as of
May 3, 2005.
33 - EMPLOYEE SHAREHOLDING PLAN
The Board of Directors of November 7, 2006 decided to implement an Employee Shareholding Plan within the Imerys group
for the year 2006, the conditions and general terms of which had been examined and approved of during its session of
July 25, 2006.
In the framework of this Plan, Imerys employees and those of its entities, held directly or indirectly at 50% or more and whose
list is attached to the Group's Savings Plan (GSP) set up on September 1, 2000 and amended for the last time on
September 21, 2006, and whose headquarters are located in South Africa, Germany, Austria, Belgium, Brazil, Canada,
Spain, United States, France, Hungary, Italy, Malaysia, Mexico, Netherlands, Portugal, Great Britain, Singapore, Slovenia,
Sweden, Switzerland and Thailand, and which adhered to the GSP, were offered the following:
•
to subscribe to Imerys shares, directly or indirectly, through the FCPE Imerys Relais 2006 mutual fund, authorized by
the Autorité des Marchés Financiers, the French Securities Exchange Authority, on August 4, 2006, within a maximum
limit of thirty shares per subscribing employee;
•
each of the first fifteen shares of the FCPE Imerys Relais 2006 mutual fund subscribed, under the express condition of
this subscription and according to other terms specific to each country, bears an option entitling to a subscritpion right
of a new Imerys share at a nominal amount of €2.
All employees of the entities totalling three months' service as of November 22, 2006 included were able to participate in this
Plan, except for some local terms specific to each country.
This plan was particularly well perceived among the employees benefitting from this offer, with a global participation rate of
22.5%. 57,735 subscriptions of Imerys shares were requested by the employees, i.e. an oversubscription of 7,735 shares.
The terms of the subscription amount reduction were thus implemented as approved of by the Board of Directors in its
session of November 7, 2006. Consequently, the capital increase amounts to €100,000 (by creation of 50,000 shares of €2)
and the correlative formalities have been complied with.
34 - POST CLOSING EVENTS
No significant post closing event has to be reported for the Company.
111
35 - TABLE OF SUBSIDIARIES AND EQUITY INTERESTS AS OF DECEMBER 31, 2006
Local units (thousands)
capital
Shareholders’
as of
equity other than share
12.31.2006 Capital as of 12.31.2006
Number of
shares held
by Imerys
Type of securities
1 - Subsidiaries
(at least 50% of equity held by Imerys)
Imerys TC
161,228
586,625
80,613,850
shares of €2
Mircal
669,115
136,087
44,607,681
shares of €15
Imerys USA
367,005
491,050
1,000
Imerys Services
Mircal Europe
38
105
2,499
56,365
581,956
56,365,195
% of
interest
held
by
Imerys
Gross
amount
of
securities
held
Net
amount
of
securities
held
100.00
758,369
758,369
(€ thousands)
Loans and
advances Borrowings
Sureties
granted
taken up
avals
by Imerys by Imerys
given
and not
and not
by
repaid
repaid
Imerys
shares of USD0,01
shares of €15
shares of €1
Dividends
collected
by
Imerys
in 2006
2006
sales
2006
net
income
or loss
1 - Subsidiaries
(at least 50% of equity held by Imerys)
Imerys TC
-
131,538
-
103,992 485,285 110,001
Mircal
100.00
801,692
801,692
126,871
-
-
6,319
1
(47)
Imerys USA
100.00
513,530
513,530
152,211
-
70,810
-
0
21,665
Imerys Services
Mircal Europe
99.96
38
38
682
-
-
-
15,297
(894)
100.00
565,483
565,483
-
10,866
-
25,364
-
707
10
10
-
-
-
562
-
-
3,611
608
-
206
-
538
-
-
2,642,733 2,639,730
279,764
142,610
70,810
2 – Equity interests
(10 to 50% of equity held by Imerys)
3 – Miscellaneous equity interests
(in non-significant French entities)
Total
112
136,775 500,583 131,432
ANNUAL REPORT 2006
3 - AUDIT FEES
Terms of service of auditors
The Shareholders’ General Meeting of May 3, 2004 approved the renewal of the term of office of Ernst & Young Audit and
Deloitte & Associés (formerly Deloitte Touche Tohmatsu) for another 6 years.
Organization of the audit of Imerys subsidiaries
For numerous years, the Group has primarily asked, in an equal standing, the two Imerys Statutory Audit firms to conduct the
audit of the subsidiaries throughout the world. However, for practical or historical reasons, other audit firms intervened; the
quantitative details were as follows:
Periods
Audit fees (€ millions)
Hours
2006
2005
2004
6,7
6,2
3,9
46,101
43,645
31,030
Distribution
Ernst & Young Audit
52%
59%
56%
44%
34%
36%
4%
7%
8%
Other firms
Fees as of December 31, 2006:
The total fees paid in 2006 to the two Statutory Audit firms of the parent company Imerys are as follows:
Ernst & Young Audit
2006
2005
(€ millions)
2006
2005
Audit
• Certification and auditing of individual
and consolidated accounts
3.4
3.5
2.9
2.4
- Imerys SA
0.7
1.3
0.6
0.8
- fully integrated subsidiaries
2.7
2.2
2.3
1.6
0.1
0.1
0.1
-
• Other duties and services directly
related to the audit mission
- Imerys SA
- fully integrated subsidiaries
Sub-total
-
0.1
-
-
0.1
-
0.1
-
3.5
3.6
3.0
2.4
0.1
-
-
-
Other services rendered by the network
to fully integrated subsidiaries
• Legal, fiscal, social
• Other (to specify if > 10% of audit fees)
-
0.1
-
-
Sub-total
0.1
0.1
0.1
-
Total
3.6
3.7
3.1
2.4
113
2
ANNUAL REPORT 2006
4
The Group’s Business
pages
116
1 - History and strategy
119
2 - The Group’s general structure
121
3 - Mineral reserves and resources
128
4 - Performance Minerals & Pigments
136
5 - Materials & Monolithics
147
6 - Ceramics, Refractories, Abrasives & Filtration
163
7 - Innovation
165
8 - Sustainable Development
115
CHAPTER 4 - The Group’s Business
1 - HISTORY AND STRATEGY
1.1 History
Established in 1880, the Imerys group had its origins in mining and metallurgy. Its core business was then the
extraction and processing of non-ferrous metals.
In 1974, federated under the name Imetal, the Group acquired the French company Huguenot Fenal, an event which
marked its entry into the clay roof tiles market. The following year, it purchased Copperweld Corporation (United States),
a company specialized in steel production and metals processing. The first significant investment in refractories and
ceramics was made in 1985, with the acquisition of Damrec (France).
The Group then structured its business around three sectors: Building Materials, Industrial Minerals and Metals
Processing. This reorganization was carried out as part of the Group's prior withdrawal from non-ferrous metallurgy.
From 1990 onwards, the Group put a strong development emphasis on industrial minerals 1 . It acquired significant
positions in white pigments: kaolin (Dry Branch Kaolin Company, United States), then calcium carbonate (Georgia
Marble, United States). The Group also expanded into minerals for refractories (C-E Minerals, United States) then their
conversion (Plibrico, Luxembourg), clays (Cératera, France) and ceramic bodies (KPCL, France). Finally, it entered the
graphite (Stratmin Graphite, Canada then Timcal, Switzerland) and technical ceramics markets.
In 1999, with the acquisition of English China Clays plc (ECC, United Kingdom), one of the world’s foremost specialists
in industrial minerals, the Group became a global leader 2 in white pigments. By increasing its stake in Rio Capim Caulim
S.A. (Brazil) from 49.7% to almost 100%, the Group optimized its potential in the kaolin business. In parallel, the Group
continued to extend its industrial base in minerals for refractories (Transtech and Napco in the United States; Rhino
Minerals in South Africa).
Through the acquisition of ECC and the correlating divestment of Copperweld (United States) and ECC’s specialty
chemicals business (Calgon, United States), the Group focused on Minerals Processing exclusively. To reflect that
development, Imetal changed its name to Imerys.
The Group completed the refocusing process by withdrawing from activities that no longer corresponded to its core
business, including dimension stones (Georgia, USA) and trading. The specialty chemicals distribution business (CDM
AB, Sweden) was divested in 2004, followed in 2005 by trading in mainly basic refractories (American Minerals, Inc,
USA) and roofing products distribution (Larivière, France).
Since 2000, the Group has developed by leveraging its unique know-how. From a varied portfolio of rare resources,
Imerys turns industrial minerals into specialties with high added value for its customers. Organized into business groups
that correspond to the sectors its serves, the Group constantly broadens its product range, extends its geographic
network in high-growth zones and enters new markets.
• Refractories activities expanded to include Minerals for Abrasives through a majority stake in the world’s leading
producer of corundum (fused alumina and bauxite), Austria’s Treibacher Schleifmittel group (Austria) in July 2000, with
the remaining shares acquired in July 2002. Minerals for Filtration were added to Minerals for Refractories and
Abrasives in 2005 with the takeover of the sector’s global leader, World Minerals (United States). This acquisition
gave the Group new minerals (diatomite and perlite) that fit well with its businesses and skills. In 2006, Imerys
acquired AGS, a French company producing calcined clays for the refractory and sanitaryware markets
• New Minerals for Ceramics were added to the portfolio, in particular halloysite (New Zealand China Clays), fine
ceramic clays and feldspar (K-T in the USA and Mexico, Denain-Anzin Minéraux in Europe). The Group increased its
Asian market presence for applications that mainly concern sanitaryware (MRD-ECC and MRD, Thailand).
1
Industrial minerals: non-metallic and non-combustible rocks or minerals, mined and transformed for industrial purposes.
2
Throughout the Annual Report, information on market positions corresponds to evaluations made by Imerys on the basis of its market knowledge, or is
derived from trade publications such as Roskill and Industrial Minerals, or from reports drawn up by Kline & Company, Inc..
116
ANNUAL REPORT 2006
• The Performance Minerals products portfolio was developed with calcium carbonate capacity extensions in Central
and South America (Quimbarra, mainly in Brazil), Asia (Honaik, chiefly in Malaysia) and France (AGS-BMP’
carbonates activities). The Group strengthened its positions in Southern Europe (Gran Bianco Carrara, Italy and
Blancs Minéraux de Tunisie, Tunisia), followed in 2006 by the acquisition of a 70% stake in Mikro Minerals (Turkey), a
GCC producer mainly serving the paint market.
• In Pigments for the Paper industry, development has focused on ground and precipitated calcium carbonates with the
construction of four new production units that came on stream in 2005 and 2006 in India (Imerys Newquest (India)
Private Ltd, a joint venture with Ballarpur Industries Ltd, India’s foremost papermaker), China (supplying UPMKymmene for its new paper mill in Changshu, Jiangsu province), Sweden (supplying the M-real plant in Husum) and
Indonesia (joint venture with April, upstream of its production unit in Sumatra).
• The Group’s Building Materials business developed on the Iberian peninsula (Campos Ceramicas Fabricas, Portugal;
Tecasa, Spain) and in France, where it strengthened its positions in terra cotta bricks and facing bricks (Marcel
Rivereau and Terre Cuite Valletaise).
• In Monolithic Refractories, the acquisition of Lafarge Refractories, completed in early 2005, gave Imerys European
leadership in the sector as well as a foothold in Asia for those products. The merger of the new business with Imerys’
existing activities in the same sector (Plibrico) led to the creation of a new entity named Calderys
• Imerys acquired leadership in refractory Kiln Furniture in Europe (Burton Apta, Hungary) and Asia (Siam Refractory
Industry Co, Ltd, Thailand).
1.2 Strategy
Imerys’ strategy is based on disciplined management of its activities, reinvesting of cashflow into the Group’s
development and sharing value creation with its shareholders.
These principles are continuously implemented and enable Imerys to post regular firm growth in profits, which led to an
increase in net income from current operations in 2006 (+ 7.2% from 2005) 3 for the 15th year in succession.
The Group’s development combines internal growth – based on the ability to create new products, optimize the existing
base and selectively extend capacities – and external growth through new activities that fit well with Imerys’ existing
portfolio.
• Organic growth
Imerys’ value creation strategy is based on its ability to propose innovative technical solutions that are adapted to its
customers’ constantly evolving needs. To enhance the creativity of marketing and research teams and boost growth, in
late 2006 the Group set up an Innovation Department.
In addition to the capital expenditure needed to keep its production assets in perfect working order, the Group improves
the performance of its manufacturing base, increases production capacities to support growth on selected markets,
establishes footholds in new countries and develops new products. To do so, Imerys invests 80-130% of its depreciation
expense in organic growth.
In 2006, capital expenditure for internal growth totaled more than €200 million, mainly on production capacity extensions.
These included the start-up towards the end of the year of a precipitated calcium carbonate (PCC) for paper line in
Indonesia; the ramp-up of a new clay bricks unit in France; the start-up of a new monolithic refractories plant in China;
and the construction of a new ultrafine abrasive powders unit in Austria.
Efforts are constantly made on competitiveness. In 2006, production was shut down on the Lamotte-Beuvron (France)
kiln furniture site. Monolithic refractories manufacturing in Germany was focused on two sites. Rationalizing and
rebalancing also continued between clay roof tile production sites. Finally, the Group decided to reorganize its global
kaolin production base in order to limit its exposure to energy costs in the Great Britain and to improve its competitiveness
on a lasting basis.
3
Financial items and highlights for 2006 are developed in the Management Report presented in Chapter 2 of Annual Report.
117
• External growth
The Group develops in three ways through external growth: acquiring minerals that enrich its product portfolio;
penetrating new markets supported by its existing range or through new minerals; and supporting its customers in their
international development to benefit from dynamic markets in high-growth regions such as Asia. This development
model is particularly based on Imerys’ capacity to integrate its acquisitions profitably by calling additional skills into
play – whether in reserves appraisal and mining, industrial mineral transformation, distribution and marketing – and
improve their performance quickly.
The Group has been very active in the past two years, investing more than €500 million in four main acquisitions:
Lafarge Refractories, World Minerals and Denain-Anzin Minéraux in 2005 and AGS in 2006. Together these entities
represent almost 3,000 people, 49 sites and approximately €575 million in additional sales. Their integration mobilized
the Group’s teams extensively throughout 2006.
• Financial structure
Capital expenditure and acquisition projects are carried out with the same profitability criteria and contribute to the
regular generation of substantial cash flow. The Group has constant access to extensive financial resources that are
greater than financial debt, well balanced between bank and debenture resources and with repayment dates that are
spread out over time. Imerys constantly strives to extend the average maturity of its resources and optimize their cost.
With a debt-to-equity ratio of 66.0% on December 31, 2006, Imerys benefits from robust long-term financial flexibility,
enabling it to seize any new opportunities that arise.
At its Shareholders’ General Meeting on May 2, 2007, Imerys will propose a dividend of €1.80 per share with respect to
2006, which represents a + 9.1% increase.
Over the past five years, dividend per share has risen + 94.6% on aggregate. This increase reflects the Group’s constant
concern to share the value created with its shareholders.
118
ANNUAL REPORT 2006
2 - THE GROUP’ S GENERAL STRUCTURE
The Imerys Group is organized into operating divisions that are centered on clearly identified markets and grouped
together in business groups. The division is the basic management unit under Imerys’ decentralized management
principle. Beyond legal structures, a market and business-focused rationale is favored. This customer-oriented approach
fosters the implementation of consistent policies within each division.
As of January 1, 2007 it was decided to center operating organization on three business groups to boost growth and
optimize synergy in terms of costs, resources and processes between the Group’s various divisions. In parallel, an
Innovation Department was created to speed up the generation of organic growth projects by fostering and coordinating
the joint mobilization of several divisions.
Consequently:
• Performance Minerals are grouped together with the divisions from the Pigments for Paper business group;
• Minerals for Ceramics and Carbon & Graphite activities are grouped together with the Refractories, Abrasives &
Filtration activities;
• Kiln Furniture activities have joined the Materials & Monolithics business group.
119
Operations are organized as follows within each business group.
a
a
Performance Minerals & Pigments
business group
• Performance Minerals
• Pigments for Paper
• Building Materials
business group
• Monolithic Refractories
• Kiln Furniture
a
Ceramics, Refractories, Abrasives & Filtration
• Minerals for Ceramics
business group
• Minerals for Refractories
• Minerals for Abrasives
• Minerals for Filtration
• Graphite & Carbon
The Executive Committee, chaired by Gérard Buffière, implements the Group’s strategy. The Committee, made up of the
Group’s principal line and support managers, monitors each business group’s activities, defines policies for Group-wide
actions and fosters the sharing of know-how between business groups.
The role of business group, division and operating department heads is to manage and develop their activities in line
with the Group’s strategic orientations. These are set out in a multi-year plan that includes internal and external growth
objectives.
Executive Committee members
Gérard Buffière
a
Jens Birgersson
a
Deputy CEO
Chief Executive Officer (CEO)
Performance Minerals & Pigments
Pigments for Paper Europe
Pigments for Paper North America
Pigments for Paper South America
Performance Minerals North America
Performance Minerals Europe
Performance Minerals South America
Performance Minerals & Pigments Asia-Pacific
Jérôme Pecresse
a
Deputy CEO
Ceramics, Refractories, Abrasives & Filtration
Minerals for Ceramics
Graphite & Carbon
Christian Schenck
a
Deputy CEO
Building Materials
Kiln Furniture
Richard Bown
a
Research & Technology
a
Finance & Strategy
Denis Musson
a
General Counsel
Thierry Salmona
a
Innovation & Business Support
Bernard Vilain
a
Human Resources
The description of the Group’s activities given in the present Chapter 4 – Description of Activities – takes into account
the new organization set up on January 1, 2007 and effective as on the date of publication of the Annual Report.
Organizational changes are indicated as needed in the relevant sub-chapters. The management report (see chapter 2 of
the Annual Report) and information by segment given in note 45 (see chapter 3 of the Annual Report) to the
consolidated financial statements, which describe activities’ performance during the past financial year, both refer to the
organization based on four business groups.
120
ANNUAL REPORT 2006
3 - MINERAL RESERVES AND RESOURCES
In order to supply its processing plants with a broad range of raw materials and meet its customers’ requirements,
Imerys operates mines and quarries in various countries around the world.
A
IMERYS’ PORTFOLIO OF MINERALS
The geological origins, specific properties, final applications and ore body locations of each mineral mined or processed
by Imerys are presented below.
Minerals mined by Imerys
• Ball clays
Ball clay is a sedimentary material, formed from granitic parent rock in a geological environment and transported by
water to another site before deposition.
After extraction, the raw component clays are selected, processed and blended to provide the desired properties, such
as good rheological stability for casting applications or high plasticity and strength for tableware, sanitaryware and tile
applications. Ball clays also find applications in the rubber industry.
Imerys’ main ball clay deposits are found in France at numerous locations (Charentes, Tournon St Martin, Allier and
Provins basins), in Great-Britain (Devon and Dorset), the United States (Kentucky, Mississippi and Tennessee) and
Thailand (Lampang Province). The Group is also present in Ukraine (Donbas) and China (Guangdong Province).
• Carbonates
Ground calcium carbonate (GCC) includes chalk, limestone and marble. It is a white pigment derived from sediments of
shellfish and other marine fauna, marble is the result of exposure to heat and pressure transformation over time. GCC is
mined from various chalk, limestone and marble quarries. Further processing is applied to develop certain properties
which improve the physical characteristics of finished products. GCC is especially renowned for its whiteness.
GCC is mainly used in the paper industry as well as in performance mineral applications such as paint & coatings,
plastics, sealants and air purification.
The Group directly owns or has long-term supply contracts for extensive calcium carbonate reserves in North America,
Brazil, Malaysia, China, Vietnam, Tunisia, Turkey, France, Italy and Great-Britain for Paper and Performance Mineral
applications.
• Red clays
A sedimentary mineral, this plastic clay develops a red color when fired. It is used to make building materials (roof tiles,
bricks) and must meet specific requirements in terms of color, plasticity and workability before firing, as well as good
performance during drying and firing.
Extensive reserves of clay with sought after qualities are located close to the various production units in France, Spain
and Portugal.
• Feldspar
Feldspar is a natural mineral composed of silicate and aluminum, potassium, sodium or lithium. Different categories of
feldspar impart various properties to a wide range of final applications. Feldspar is used for the vitrification of ceramic
bodies. In powder form, it finds applications in making plastics harder and is also used in paints & coatings and rubber.
The Group has feldspar deposits in France (Burgundy, Allier, Pyrénées Orientales), Germany (Sarre, Bavaria), Italy
(Sardinia), Spain (Caceres - Estremadura, Salamanca and Valencia regions), and the United States (North Carolina).
121
• Graphite
Graphite is one of the crystalline forms of carbon, with a specific micaceous aspect.
Natural graphite is produced from the Lac-des-Iles, Canada mine – the largest graphite mine in North America – to
supply customers worldwide in the mobile energy, engineering materials, additives for polymers, lubricants, refractories
and metallurgy sectors. It is also used as a raw material for high performance value-added products.
• Kaolin
Kaolin is a white alumina-silicate clay derived from the geologic alteration of granite or similar rock types. Also known as
china clay, it is mined in open cast mines or quarries by wet processes or by dry extraction.
For a number of applications, kaolin can be calcined and then further processed. Calcination transforms kaolin at high
temperature (700 –1,200°C), resulting in a more inert mineral that imparts specific properties to end applications, which
includes paper, where properties such as whiteness and opacity, as well as gloss, smoothness and printability, are
specifically sought after by producers; it also includes performance minerals, with paints, rubbers, plastics and sealants;
ceramics, ranging from superwhite tableware to the ever-increasing technical demands of the sanitaryware and floor tile
industries.
Mining assets are located as follows: For paper, high-quality kaolin occurs in three regions around the world. Imerys is
the only producer that is active in all three locations, each of which offers unique and specific geological characteristics:
United Kingdom (Cornwall) for filler kaolins (coating kaolin production in Great-Britain will be discontinued the 4th quarter
of 2007); United States (Georgia) for all coating applications and opacifying effects; and Brazil (the Amazon basin) for
coating applications due to particle size distribution. For Performance Minerals and Ceramics, Imerys mines outstanding
kaolin reserves located in Great-Britain (Cornwall and Devon), France (Brittany and Allier), the United States (South
Carolina and Georgia), New Zealand (Matauri Bay), Ukraine (Beyala Balka), Thailand (Ranong Province) and Australia
(Victoria).
• Minerals for Filtration
Diatomaceous earth is a mineral resulting from the fossilization of microscopic freshwater or marine plants called diatoms.
Perlite is a volcanic rock that contains between 2% and 5% natural combined water. When heated, the contained water
converts instantaneously to steam and the perlite ore explodes like popcorn, expanding up to 20 times its original
volume and creating a multi-cellular material with large surface area and corresponding low density.
These two naturally occurring raw materials have exceptional qualities: low density, high contact surface and high
porosity. Their unique properties mean that Imerys' products are sought after in many applications, particularly as
filtration aids but also as additives in Performance Mineral applications and paint.
Imerys' diatomaceous earth mines are located in the United States (Lompoc, California, Quincy, Washington and
Fernley, Nevada), Mexico (Almeira), Peru, Chile, China, France (Murat) and Spain (Eliche). Perlite mines are located in
the United States (No Agua, New Mexico; Superior, Arizona; Black Springs, Utah).
• Minerals for Refractories
Minerals for refractories offer properties such as high resistance to extreme temperatures in harsh conditions, as well as
resistance to mechanical failure and corrosion.
Among a wide range of minerals for refractories, Imerys supplies high-quality acid refractory products with high alumina
content, of which:
Andalusite is a natural alumina-silicate mineral containing up to 60% alumina that transforms into mullite when it reaches
a temperature of 1,350°C. The division has very high quality alumino-silicate deposits located in Glomel (France) and
South Africa.
Bauxite and Bauxitic kaolin are minerals found in sedimentary deposits and have the unique characteristic of being low
in iron content from which a wide range of refractory products is produced. Deposits are located in South Georgia and
Alabama in the USA.
122
ANNUAL REPORT 2006
Refractory flint clay occurs as a hard and often carbon-rich fine kaolin that, following calcination, gives a high-density
refractory material commonly called “chamotte”.
• Slate
Imerys mines high quality slate from underground mines in Angers, France. This operation is highly specialized in the
extraction and processing of natural slate, which is prized for roofing, particularly for prestigious buildings
• Other minerals
Colored sandstone (“Grès de Thiviers”) is used as body stain for ceramics. Colored sandstones are mined in the French
region of Dordogne. In recent years, a broad range of colors has been developed to widen the market for the red
pigment “Grès de Thiviers” as well as other colors. These include ranges of pinks and browns as well as grays that are
available with or without metallic effects.
Halloysite is especially sought after by the fine porcelain industry worldwide for its translucent effect. New Zealand is the
only producer of this high quality, very white clay.
Mica and Muscovite mica: the term “mica” covers a group of alumino-silicate minerals with a platy structure, each with its
own physical and chemical characteristics. It is distinguished from other minerals by qualities including insulation and
elasticity properties. These advantages are used in plastics and films. Imerys mines muscovite mica as a by-product of
kaolin and feldspar mining. Imerys' mica deposits are located in France (Brittany and Morvan) and the USA (North
Carolina).
Quartz is the most common mineral on earth. It is present in almost all mineral environments and is an essential
component of many rocks. It is an important mineral with multiple applications including metallurgical and refractories.
Imerys produces high-purity quartz in two forms: block (quartz veins) and gravels. The two forms offer similar properties
including strength, attractiveness and resistance to wear and are available in many varieties and colors to supply a
variety of markets. Imerys produces quartz either when mining kaolin or feldspar or from pure quartz deposits in France
(Lot, Dordogne) and Sweden.
Vermiculite is another hydrated micaceous mineral which expands considerably when heated. Applications are
essentially in the horticulture and heat insulation. It is produced from the Group's deposits in Australia and Zimbabwe.
Derived mineral products
• Precipitated calcium carbonate (PCC)
PCC is produced chemically from natural limestone, which is burned to form lime and then re-precipitated by addition of
carbon dioxide. This controlled process delivers a pigment with well defined shape and size parameters and excellent
optical properties.
PCC is mainly used in the paper industry as well as in performance applications such as paint & coatings and plastics.
With the engineering and technological expertise needed to meet its customers’ evolving technical specifications, the
business group produces PCC-based filler and coating pigments in its plants in the United States, Europe, Indonesia,
South America and Brazil, for both paper and performance mineral applications.
• Synthetic corundum
Bauxite is transformed by fusion in an electric arc furnace into synthetic corundum for the production of powders for
abrasive applications. Plants are located in China and Austria.
• Silicon carbide
Silicon carbide is a by-product of graphite production that imparts abrasion resistance and ceramic properties. Silicon
carbide is used in kiln furniture.
123
• Synthetic graphite
Imerys develops its high-quality synthetic graphite through a complex process of baking petroleum coke at very high
temperatures.
• Carbon black
Carbon black is an ultra-fine carbon powder produced in Belgium from selected very high-quality externally procured
sources of carbon raw materials. Processing consists of a steam pyrolysis of hydrocarbon mixtures.
A
MINERAL REPORTING PRINCIPLES APPLIED BY IMERYS
• Imerys mining organization and regulatory framework
Imerys’ team of geologists ensures long-term access to quality deposits by conducting the necessary exploration work
on deposits owned by Imerys or secured under long-term leases in order to establish a long-term vision at each
operation.
Imerys' reporting on mineral reserves and resources is conducted by Competent Persons duly appointed and
responsible for reporting in compliance with the “Code for Reporting of Mineral Exploration Results, Mineral Resources
and Mineral Reserves (Reporting Code) October 2001.”
Similar codes, including JORC (Australia), Samrec (RSA), SEG Industry Guide 7 for the US, the Canadian Institute of
Mining’s definitions as required under N143-101 and the Certification Code (Chile), all in compliance with CRIRSCO 1 ’s
International Reporting Template, form best practices adopted as reporting standards by the mining industry in the
Western world.
A central register of Competent Persons is kept at Group level. A written declaration from each Imerys Competent
Person authorizing the compilation of the estimates reported for public reporting is kept in the register.
In order to ensure Group-wide consistency in reporting and compliance with Reporting Code requirements, internal and
external audits are conducted on a 3-year cycle. Audits are conducted by an experienced Group geologist having no
subordination connection to the audited sites and are designed to ensure compliance with the “Reporting Code” and to
provide for continuous improvement in the management and operation of the Groups’ mineral deposits.
• Definitions
A Mineral Reserve is the economically exploitable part of an ore deposit previously defined as a Measured or Indicated
Resource under realistically assumed present and forecast economic, market, legal, environmental, social and
government factors. These assessments demonstrate at the time of reporting that exploitation is justified. Mineral
Reserves are sub-divided in order of increasing confidence into Probable Mineral Reserves and Proven Mineral
Reserves.
A Probable Mineral Reserve is the economically mineable part of an Indicated and in some circumstances a Measured
Mineral Resource, whereas a Proven Mineral Reserve is the economically mineable part of a Measured Mineral
Resource.
Proven Mineral Reserves represent the highest confidence level of the estimates.
A Mineral Resource is a concentration or occurrence of material of economic interest in or on the earth's crust in such
form, quality and quantity that there are reasonable prospects for eventual economic extraction. The location, grade,
continuity and other geological characteristics are known, estimated or interpreted from specific geological evidence and
1
CRIRSCO: Committee for Mineral Reserves International Reporting Standards
2
CRIRSCO : Comité pour les standards internationaux de reporting de réserves minérales
124
ANNUAL REPORT 2006
knowledge. Mineral Resources are subdivided in order of increasing geological confidence into Inferred, Indicated and
Measured.
An Inferred Mineral Resource is that part of a Mineral Resource for which quantity and grade can be estimated with a
low level of confidence. It is inferred from geological evidence and assumed but not verified geological and/or grade
continuity. It is based on information gathered through appropriate techniques from locations such as outcrops, trenches,
pits, workings and drill holes which is limited or of uncertain quality and reliability.
An Indicated Mineral Resource is that part of a Mineral Resource for which tonnage, densities, shape, physical
characteristics, grade and mineral content can be estimated with a reasonable level of confidence. It is based on
exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops,
trenches, pits, workings and drill holes. The locations are too widely or inappropriately spaced to confirm geological
and/or grade continuity but are spaced closely enough for continuity to be assumed.
A Measured Mineral Resource is that part of a Mineral Resource for which tonnage, densities, shape, physical
characteristics, grade and mineral content can be estimated with a high level of confidence. It is based on detailed and
reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as
outcrops, trenches, pits, workings and drill holes. The locations are spaced closely enough to confirm geological and
grade continuity.
• Risks and uncertainties
Mineral Reserves and Resources are estimates of the size and quality of ore deposits based on currently available
technical, economic, market and other parameters. Due to unforeseen changes in these parameters and the uncertainty
inherently associated with resource evaluation, no assurance can be given that the estimates of Mineral Reserves and
Resources shown in this report will be recovered as anticipated by the Group.
With continued geological exploration and evaluation Mineral Reserves and Resources may change significantly, either
positively or negatively.
To date, there are no known environmental, authorization, legal, ownership, political or other relevant issues that could
materially adversely affect the estimates in these tables.
A
MINERAL RESERVES (estimates as on 12/31/2006 vs. 12/31/2005)
In line with the special conditions relating to the “Reporting of industrial minerals, stone and aggregates” in the
“Reporting Code,” categories of minerals in which mineral types have been grouped to protect commercially sensitive
information have been created for the purpose of Imerys' public reporting of its reserves and resources. Due to this
grouping it is not possible to give the lifespan of each mine.
However, based on the geological work conducted and modifying factors applied, the Group foresees that its mineral
reserves and resources will be adequate to sustain long-term operation of its activities at the current annual rate, using
existing technology and under present and forecast market conditions.
Reserves are quoted in addition to Resources as on December 31, 2006 and are stated on the basis of thousands of
metric tons of dry sellable product. Estimates for 2005 are shown for the sake of comparison.
Movements in Reserves and Resources from year to year are linked to ongoing exploration and evaluation of existing
and new deposits as well as acquisitions and sales related to ongoing business activities.
125
A
MINERAL RESERVES ESTIMATES (as on 12/31/2006 vs. 12/31/2005)
Commodity
Ball Clay
Carbonates
(Calcite, Marble, Chalk, Limestone,
Dolomite & Dimension stone)
Region
2006
2005
Proved
( Kt )
Probable
( Kt )
Total
( Kt )
Proved
( Kt )
Probable
( Kt )
Total
( Kt )
Europe (incl. Africa)
6,847
10,093
16,940
4,098
12,341
16,439
North America
5,517
1,000
6,517
6,535
690
7,225
Asia
1,018
0
1,018
1,029
0
1,029
Total
13,382
11,093
24,476
11,662
13,031
24,693
Europe
North America
South America *
Asia
Total
3,982
6,359
10,341
3,837
7,334
11,171
185,187
43,481
228,668
180,988
49,654
230,642
7,680
0
7,680
15,534
4,000
19,534
0
4,776
4,776
0
5,500
5,500
196,849
54,616
251,465
200,359
66,488
266,847
Clays
(Brick & Roof Tile raw materials)
Europe
74,189
21,363
95,552
75,123
18,704
93,827
Feldspar, Feldspathic
sand & Pegmatite
Europe
24,834
13,735
38,569
23,176
13,897
37,073
1,558
0
1,558
1,100
0
1,100
26,392
13,735
40,127
24,276
13,897
38,173
61
123
184
85
120
205
North America
Total
Graphite
Kaolin
North America
16,638
33,087
49,725
12,070
32,781
44,851
North America
32,972
6,317
39,289
33,507
6,686
40,192
South America
21,216
0
21,216
16,843
0
16,843
439
3,541
3,979
476
3,728
4,205
71,264
42,945
114,209
62,896
43,195
106,091
Asia
Total
(Perlite & Diatomite)
Europe
North America
South America
Asia
(Refractory Kaolin, Bauxitic Kaolin,
Bauxite, Flint Clays, Andalusite
& Quartzite)
326
616
942
343
672
1,015
4,696
0
3,642
1,088
8,338
1,088
6,385
0
1,744
1,117
8,129
1,117
93
149
243
326
0
326
Total
5,116
5,495
10,611
7,054
3,533
10,587
3,411
1,652
5,064
1,751
2,462
4,213
North America
5,835
0
5,835
6,043
0
6,043
South America
0
0
0
0
0
0
9,246
1,652
10,898
7,794
2,462
10,256
Total
Slate
Europe
67
58
125
88
65
153
Other Minerals
(Bentonite, Grès de Thiviers,
Vermiculite, Quartz)
Monde
2,242
1,078
3,320
2,236
1,586
3,822
(* )In South America the production of certain marble grades was discontinued in 2006 due to the underperformance of the local carbonates operations
supplied with those grades. Consequently, the leased properties associated with the discontinued mining activity were returned to their owners. This
resulted in a negative impact of 4 Mt on Reserves. Restated at constant Group structure, the total Reserves was 15,534Kt (proved reserves)
Notes
- Ongoing exploration work, geological assessments, reassessments and mining activities as well as changes in ownership of certain mineral rights due to acquisitions or
sales are reflected in the changes in the estimates reported for 2006 compared with those reported for 2005.
- In line with provisions made for the reporting of industrial minerals in the Reporting Code, reserves estimates have been grouped together to protect their sensitive
nature.
- Estimates are quoted on a contained dry sellable kilo-metric ton equivalent basis.
Clay estimates are quoted as dry processible metric tons
126
ANNUAL REPORT 2006
A
MINERAL RESOURCES ESTIMATES (as on 12/31/2006 vs. 12/31/2005)
Commodity
Ball Clay
CarbonatesCarbonates
(Calcite, Marble, Chalk,
Limestone, Dolomite
& Dimension stone)
Region
2006
2005
Measured
( Kt )
Indicated
( Kt )
Inferred
( Kt )
Total
( Kt )
Measured
( Kt )
Indicated
( Kt )
Inferred
( Kt )
Total
( Kt )
North America
Asia
788
6,762
187
75
17,142
0
6,462
12,539
0
7,325
36,443
187
0
6,762
200
822
16,152
0
7,689
12,435
0
8,511
35,349
200
Total
7,737
17,217
19,001
43,955
6,962
16,974
20,124
44,060
3,720
92,644
11,785
0
11,027
108,852
10,900
25,000
0
167,781
22,983
18,200
14,747
369,277
45,668
43,200
2,220
155,909
35,379
0
13,312
156,300
48,900
25,000
0
163,217
317,983
18,200
15,532
475,426
402,262
43,200
108,149
155,779
208,964
472,892
193,508
243,512
499,400
936,420
12,380
15,372
1,351
29,103
14,069
15,013
1,653
30,735
Europe
North America
South America *
Asia
‘ Total
Clays
(Brick & Roof
Tile raw materials)
Europe
Feldspar, Feldspathic
sand & Pegmatite
Europe
North America
3,016
2,542
4,251
450
25,302
2,430
32,569
5,422
4,776
0
3,980
2,068
25,302
470
34,058
2,538
Total
5,558
4,701
27,732
37,991
4,776
6,048
25,772
36,596
89
0
0
89
0
60
0
60
Graphite
North America
Kaolin
North America
South America *
Asia
2,847
24,487
1,717
0
9,094
13,169
0
5,265
80,678
33,025
12,027
3,178
92,618
70,681
13,744
8,443
3,649
24,106
1,717
0
9,164
12,375
0
5,201
77,637
31,646
9,443
3,178
90,452
68,128
11,160
8,379
Total
29,051
27,529
128,908
185,487
29,473
26,741
121,905
178,119
Europe
North America
South America
Asia
224
1,613
0
0
4,419
40,662
30
0
356,060
50,684
75,702
0
360,703
92,959
75,732
0
224
3,437
0
0
3,793
25,471
30
0
356,551
34,751
75,706
0
360,568
63,659
75,736
0
Total
1,837
45,111
482,446
529,394
3,661
29,294
467,008
499,963
North America
South America
1,149
11,803
0
1,262
0
1,539
4,774
0
0
7,185
11,803
1,539
989
11,954
0
993
0
1,539
5,278
0
0
7,259
11,954
1,539
Total
12,951
2,801
4,774
20,526
12,943
2,532
5,278
20,753
72
78
238
388
91
82
241
414
1,322
1,058
2,635
5,015
1,322
1,087
3,141
5,550
Minéraux pour filtration
(Perlite & Diatomite)
(Refractory Kaolin, Bauxitic
Kaolin, Bauxite, Flint Clays,
Andalusite & Quartzite)
Slate
Europe
Other Minerals
World
(Bentonite, Grès de Thiviers,
Vermiculite, Quartz)
(*) In South America the production of certain marble grades was discontinued in 2006 due to the underperformance of the local carbonates operations
supplied with those grades. Consequently, the leased properties associated with the discontinued mining activity were returned to their owners. This
resulted in a negative impact of 316 Mt on Resources, 255 Mt of which were Inferred Resources. Restated at constant Group structure, Resources total was
86,262Kt (Measured 12,379, Indicated 10,900 and Inferred 62,983Kt)
Notes
- Ongoing exploration work, geological assessments, reassessments and mining activities as well as changes in ownership of certain mineral rights due to acquisitions or
sales are reflected in the changes in the estimates reported for 2006 compared with those reported for 2005.
- In line with provisions made for the reporting of industrial minerals in the Reporting Code, resources estimates have been grouped together to protect their sensitive nature.
- Estimates are quoted on a contained dry sellable kilo-metric ton equivalent basis. Clay estimates are quoted as dry processible metric tons.
127
CHAPTER 4 – The Group’s Business
4 - PERFORMANCE MINERALS & PIGMENTS
Effective January 1, 2007, Performance Minerals & Pigments is a new business group created by the merger of
Performance Minerals and Pigments for Paper activities. Performance Minerals was previously part of the Specialty
Minerals business group. This new organization will enable Imerys to better coordinate its multi-mineral strategy based
on kaolins and carbonates, the minerals produced by the two divisions.
The Performance Minerals activity provides customers with tailor-made solutions in a highly technical field, based on the
processing of kaolins, carbonates, feldspar, mica and ball clays. The development of partnerships with customers is
essential within the value-added markets of performance minerals comprising plastics, rubber, coatings, adhesives,
caulks and sealants, health, beauty & nutrition.
The Pigments for Paper activity, previously an autonomous business group, is comprised of the new business group's in
kaolin and calcium carbonate operations for the paper industry. Its structure is designed to serve the needs of the
changing global paper market. Pigments for Paper supplies more than 350 paper mills, 23% of which are in North
America, 54% in Europe and 23% in the rest of the world, mainly Asia-Pacific, the region driving growth in the paper
industry. More than 20% of those customers buy several pigment categories from Imerys.
The Performance Minerals & Pigments business group's sales for the year ending December 31, 2006 totaled
€1,138 million, which represents 35% of Imerys' consolidated sales.
The business group has 80 industrial sites in 22 countries.
2006 sales: €1,138 million
4,733 employees
2007 organization
2007 organization
34%
66%
40%
60%
Pigments for Paper
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Pigments for Paper
ANNUAL REPORT 2006
4.1 Business group overview
Activity
Products
Applications
Markets
Brands
Market positions
Kaolins
PERFORMANCE MINERALS
Eckalite™, InFilm™, Kaopolite™,
MetaStar™, Neogen™, Opacilite™,
World #1
Additives for:
Polestar™, Polsperse™, Polwhite™,
in minerals
Polarite™, Pool Mix™, Speswhite™,
for
Kaolin
Sealants
Stockalite™, Supreme™
breathable
GCC
Adhesives
Agriculture
Ground Calcium Carbonate (GCC)
polymer films
PCC
Paints
Food
Brasmite ™, Camel-Wite™, Carbital™,
Dolomite
Plastics
Construction
Drikalite™, Filmlink™, Gamaco™,
Mica
Catalyst
Automotive
HeliCal™, Honcal™, Imercarb ™,
Imerseal™, Infusion ™, Lumicarb™,
Feldspar
substrates
Pharmacy
Ball Clays
Rubber
& Personal care
Mar'blend™, Marblemite™, Micronic™,
Micro-White™, Polcarb™, Queensfil™,
Snowflake P.E.™
Precipitated Calcium Carbonate (PCC)
Barralin™, Barraleve™,
Feldspar: Minspar™; Mica: Mica Mu™
Graphic papers
Kaolins
ACME™, Alphatex™, Capim™,
Intrafill™, Intramax™,
Opacitex™
- Printing & writing
Coated woodfree
Coated mechanical
Uncoated woodfree
Uncoated mechanical
PIGMENTS FOR PAPER
Kaolin
GCC
Carbital™, G400™, Intracarb™
PCC
Opti-Cal™
Fillers
- Newsprint
Kaolins
Astra-Cote™, Astra-Glaze™,
Astra-Gloss™, Astra-Jet™,
Astra-Plate™, Astra-Plus™,
Capim™, Contour™, Deltatex™,
KCS™, Premier™, SPS™, Supragloss™,
Supramatt™, Suprasmooth™,
Suprawhite™
Packaging
- Coated packaging
GCC
Coated bleached board
Coated unbleached kraft
Coatings
World #1
in
kaolin for paper
Coated recycled board
World #2
in
GCC for paper
PCC
- Uncoated packaging
GCC
Carbilux™, Carbital™,
Carboflex™, Carbopaque™
Container board
Liner board
Corrugated medium
PCC
Opti-Cal™
129
World #3
in
PCC for paper
4.2 Performance Minerals
A
PRODUCTS
The Performance Minerals activity has access to many high-quality raw materials with differentiated chemical
composition, particle size distribution, shape and exceptional properties such as outstanding whiteness, high mechanical
strength and excellent rheology.
Based on the extensive know-how of these industrial minerals properties, the conversion processes are adapted to the
requirements of specific applications, in order to satisfy the ever-changing needs of their markets.
Raw materials (Functional fillers & Additives)
The main functional fillers and additives produced and marketed by the Performance Minerals activity are kaolins,
ground calcium carbonates (GCC) and precipitated calcium carbonate (PCC). The division also processes feldspar, mica
and ball clays.
For a detailed presentation of these minerals, please refer to section 4.3 Mineral reserves and resources.
Applications
Performance Minerals are processed and marketed worldwide. They are added to finished or intermediary products to
deliver higher functionality and processibility and to reduce total raw material costs. Applications include:
• Paints & coatings: Imerys has an extensive range of kaolins, calcium carbonates, mica and feldspar, used as
extenders to improve paint quality and opacity.
• Plastic & films: the development of increasingly sophisticated applications for plastics and film materials means that
increasingly demanding requirements are placed on fillers and the specific properties they impart. To meet this
challenge, Imerys has an excellent range of high-quality mineral extenders at its disposal including calcium
carbonates, kaolins and micas.
• Rubber: kaolins, ball clays and calcium carbonates as well as feldspars are used in many rubber applications. Imerys'
range of kaolins provides good processibility, chemical resistance and barrier properties, together with good
whiteness and strength dependent on their particle size. Ball clays offer the same properties but with a darker color.
• Sealants & adhesives: kaolins impart good barrier effects and rheology control in adhesives and sealants. The low
surface hydroxyl content of kaolins leads to low moisture pick-up, resulting in excellent performance in moisturesensitive sealant applications. Kaolins are effective as structure building elements. Finely ground calcium carbonates
are also used in a wide range of sealants and adhesive applications to improve rheological properties and reduce the
water or volatile content of the compound. Some products are hydrophobized with stearate coating to reduce moisture
pick-up, make handling easier and improve dispersion.
• Industrial and consumer products: Imerys has a wide range of minerals that enhance the properties of products used
everyday in construction, landscaping, drilling mud and personal care products. These include white marble
aggregates used in coatings for swimming pools and limestone products for lawn care. Calcium carbonates are used
in water treatment systems, air purification, the energy sector and personal care products such as toothpaste and
soap.
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ANNUAL REPORT 2006
A
INNOVATION
The Performance Minerals activity's efforts were bolstered by a dedicated team working on the development of several
new products. The main research areas are functional additives, particle size distribution, nano-composites and new
minerals.
In 2006, Performance Minerals continued to focus efforts on innovation and developing new products in partnership with
its market-leading customers.
With increasing oil and energy prices, customers are continually seeking new ways to maintain or improve their product
quality, while at the same time reducing their usage of oil based resources, thus making their processes more efficient.
The Imerys range of minerals offers many innovative options to meet this need.
New GCC-based products launched during 2005/2006 for the paint and plastics markets have been well received by
customers and encountered a significant growth.
• Paints & coatings: the Imercarb™ range of marble-based additives improves the performance of paint formulas thanks
to controlled mineral whiteness and fineness; in South America, Brasmite™ slurries further developed in the
decorative paints market, replacing mineral products in powder form;
• Plastics & films: fine GCC continued to show good development, particularly in polyolefin blow molding and injectionmolding applications (e.g. bottles for chemicals or household products) as well as in the PVC, as an alternative offered
for facades (stucco, bricks, etc.). It was in particular the case for the Infusion™ range, a specially treated product,
which increases mineral content and reduces PVC quantity while maintaining high strength and reducing raw material
costs. Supercoat™ range also continued to grow, as well as Imerseal™ and FilmLink™ technologies products.
Filmlink 3000™ and FilmLink™ 2500 used in the Bi-axial Oriented Polypropylene (BOPP) market for synthetic paper
and bottle labels realized a successful launch. So did Arbocarb™, a mineral additive for wood-plastic composites, a
"green" product that combines polypropylene or PVC with wood powder or fiber used for floor coatings, railings and
doors. Imerseal™, as well a GCC-based substitute for PCC is used in moisture sensitive sealants and adhesives
applications.
• Rubber: the portfolio of silane-treated clays has been expanded, allowing minerals to be used in new applications.
In addition, promising new products were launched in 2006: HeliCal 3000™ and LumiCarb 395, are dry-ground GCC
produced using a proprietary patented processing technology. They offer high whiteness and steep particle size
distribution for use in color-sensitive high-performance plastic applications and coating applications, respectively.
Efforts were also made to explore alternative applications for muscovite mica, feldspar and ball clays in paint, coatings,
plastics and rubber.
A
MARKETS
In 2006, Performance Mineral markets were difficult overall, while showing some positive signs in Europe.
Trends by geographic zone were as follows.
• Europe: the activity’s business is closely linked to activity in the construction industry. High demand in the residential
construction sector as well as high civil engineering investments, resulted in growth rates in total construction output
of + 3.2% in 2006, compared with + 1.6% in 2005.
• North America: the major contributing factors in the growth of Performance Minerals include the building and
construction markets (roofing, joint compound, PVC siding, etc). Following a firm first half of the year, the construction
market took a sharp downturn in the 4th quarter of 2006.
• South America: the Brazilian economy experienced modest growth in 2006. Internal demand increased mostly due to
higher imports as a consequence of the Real’s appreciation against major hard currencies. In Argentina, strong
growth continued for the fifth year in a row. The main growth market for the activity was decorative paints, as the
construction material market continued to benefit from lower interest rates and credit availability.
• Asia-Pacific continued to benefit from healthy business trends in its main market segments.
131
Main competitors
AKW and Dorfner (Germany); Sibelco group (Belgium); Reverte (Spain); Omya (Switzerland); Goonvean (Great Britain);
Burgess, BASF (which acquired Engelhard in 2006), Franklin Industrial Minerals, J.M. Huber, Specialty Minerals, Unimin
and Zemex (United States).
A
INDUSTRIAL FACILITIES, QUALITY AND SALES ORGANIZATION
Industrial facilities
The Performance Minerals activity has the following industrial facilities:
Europe
Americas
Kaolin
Lee Moor, Devon (Great Britain)
Marsh Mills, Devon (Great Britain)
Other sites in Cornwall (Great Britain)
Embu Guaçu, SP (Brazil)
Dry Branch, Georgia (United States)
Sandersville, Georgia (United States)
GCC
Lixhe (Belgium)
Axat (France)
Villers sous Saint-Leu (France)
Brás Cubas, Mogi das Cruzes(1), SP (Brazil)
Cachoeiro do Itapemirim, ES (Brazil)
Sertaozinho, Maua, SP (Brazil)
Dalian(2), Liao Ning (China)
Nanling, Anhui (China)
Ipoh (Malaysia)
Massa Avenza (Italy) (3)
Denganthza (Mexico)
Lopburi (Thailand)
Beverley, Yorkshire (Great-Britain)
Cockeysville, Maryland (United States)
Feriana(4) (Tunisia)
Gebze (Turkey)
Asia-Pacific & Africa
Dalton, Georgia (United States)
Gouverneur, New York (United States)
Marble Hill, Georgia (United States)
Sahuarita, Arizona (United States)
Sylacauga, Alabama (United States)
Tucson, Arizona (United States)
Whitestone, Georgia (United States)
PCC
Capitan Bermudez (Argentina)
Ledesma, Jujuy (Argentina)
Los Berros, San Juan (Argentina)
Arcos, Minas Gerais (Brazil)
Limeira, São Paulo (Brazil)
Santanésia Pirai, Rio Janeiro (Brazil)
Cuautitlan (Mexico)
(1)
(3)
EDK, a joint venture 50% owned by Imerys.
Gran Bianco Carrara, a joint venture 60% owned by Imerys.
(2)
(4)
Dalian Jinsheng Fine Chemicals Co. Ltd, a joint venture 50% owned by Imerys.
Blancs Minéraux de Tunisie, a joint venture 68% owned by Imerys.
Quality
The Performance Minerals activity is strongly committed to quality improvement.
• Europe: all activities in the Great-Britain are ISO 9001:2000 certified.
• North America: all plants are ISO 9001:2000 certified.
• South America: the Arcos, Bras Cubas, Cachoeiro and Limeira (Brazil) plants are certified ISO 9001:2000.
Sales Organization
The Performance Minerals activity has strategic bases worldwide and products are marketed either by their own sales
teams or by networks of independent agents or distributors.
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ANNUAL REPORT 2006
4.3 Pigments for Paper
A
PRODUCTS
Imerys is a world leader in pigments for the paper industry.
The Pigments for Paper activity offers a wide range of kaolins, ground calcium carbonates (GCC) and precipitated
calcium carbonates (PCC), which are used in the paper industry as fillers and coatings. These products are
differentiated by their chemical composition, particle size distribution, shape, whiteness and viscosity.
Based on extensive know-how of their chemical characteristics, Imerys products deliver all the properties required by the
customer: not only whiteness, gloss, opacity and printability but also high mechanical strength and excellent rheology,
which help to optimize manufacturing processes.
This unique know-how, combined with the great diversity of its products, allows the division to provide a multi-pigment
approach, to meet the customer's formulation needs, through the most effective use of pigments. Imerys offers the
world's broadest range of pigments for the paper industry.
Raw materials
The world's largest producer of kaolin for paper, Imerys is the only group to be active in all three regions containing high
quality kaolin for paper applications. Each location offers specific unique geological characteristics. The Great-Britain
(Cornwall) provides filler and coating kaolins that are especially suited to the European supercalendered paper and
lightweight coated paper markets. From the fourth quarter of 2007, Cornwall will only produce filling grade kaolins for the
paper industry; United States (Georgia) kaolins are used predominately for coating applications on the global paper
market. Calcined Georgia kaolins are used worldwide for their opacifying effect; Brazilian (the Amazon delta) kaolins are
particularly appreciated for coating applications due to particle size distribution that delivers outstanding whiteness and
opacity.Imerys kaolin mines and plants are ideally located near specialized ports with optimized logistical facilities in
Brazil (Barcarena), the United States (Savannah, Georgia) and the Great Britain (Par and Fowey, Cornwall).
Imerys is the world's second-largest producer of GCC for paper. The division's GCC processing plants are located close
to customers' mills to ensure high service quality and logistical flexibility.
Imerys is the world's third-largest producer of PCC. The division produces PCC-based filler and coating pigments in its
plants in the United States, Europe, Asia and South America.
Applications
Kaolin, GCC and PCC are processed in order to obtain the properties required by customers.
• Calcination transforms kaolin at high temperature, resulting in a more inert mineral that imparts different qualities to
end applications such as whiteness and opacity as well as gloss, smoothness and printability.
• GCC pigment improves the physical characteristics of finished products, especially renowned for its whiteness.
• PCC, produced artificially from natural limestone, delivers a pigment with well defined shape and size and excellent
optical properties.
Kaolin, GCC and PCC are used in the paper industry as filling and coating pigments.
• Fillers are added to the paper fiber mixture at the beginning of the papermaking process, just prior to the formation of
the paper web. These mineral fillers are designed to impart texture, opacity, whiteness and printability. Filler pigments
have an increasingly important role in the success of uncoated woodfree, newsprint and supercalendered paper, as
expectations in terms of print performance are constantly rising.
• Coating products are used in sophisticated formulations containing different pigment and chemical components to
achieve high levels of brightness, gloss and print performance. They are applied to the paper surface in a thin, even
film to produce opaque, white, smooth and glossy paper with no increase in weight.
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A
INNOVATION
The Pigments for Paper technical expertise and its ability to constantly improve manufacturing efficiency enable it to
adapt its product portfolio to customers' specific, evolving needs.
Over 100 technology specialists are working worldwide, enabling the division to hold over 175 granted and 126 pending
patents, with patents filed for 2 new technologies in 2006.
Imerys’unique formulating know-how and Research & Development capabilities, together with the division's
comprehensive range of pigments, make it an ideal partner for papermakers around the world. Specifications required
by papermakers are increasingly precise and stringent, not only to meet paper quality criteria but also to achieve
optimum machine performance in terms of speed and utilization rates. The scale of capital expenditure for a modern
paper mill (e.g. almost €500 million for a machine producing approx. 350,000 – 400,000 metric tons of paper per year) is
an increasingly important economic issue for paper manufacturers. The investment cannot be profitable without fullcapacity production of top quality paper. The choice of pigment – or pigment blend – has a major impact on paper
quality, machine efficiency and the number of production defects per manufacturing day.
In 2005, a new carbonate brand, Carboflex™, was launched. It utilizes Imerys' state of the art PCC technology together
with standard GCC to provide enhanced paper quality in top-coating applications. Fully marketed since January 2006, it
replaces the combination of a market-leading ground calcium carbonate and expensive glossing additives in a
technically demanding fine paper grade. Carboflex™ provides for significant cost savings as well as improved runnability
and paper quality. Further market opportunities are being explored for Carboflex™.
The kaolin-based product offering was also broadened. A new Brazilian kaolin was launched for lightweight coated
papers intended for rotogravure. First sales of this product were achieved in 2006, and further growth is expected for this
new technology. First sales were also realized for a North American engineered glossing kaolin, in both fine paper and
packaging grades.
A
MARKETS 1
After a difficult 2005 due to the effects of the Finnish strike and a weak North American market, further growth in Asia
and the European market’s recovery resulted in +2.4% overall growth in paper production in 2006.
However, one of the major issues affecting the printing and writing paper market, particularly Europe, is fundamental
overcapacity in key segments. To address this issue, major paper producers have announced a series of machine or mill
closures. While paper production has continued to increase in line with demand, the mill closures are likely to result in
higher utilization rates at the remaining paper production facilities in Europe.
Trends by geographic zone were as follows.
• In Europe, production of printing and writing grades rose + 2.7% in 2006. This is due to both an underlying growth in
demand and the recovery in paper production following the seven-week strike that affected the Finnish paper industry
in 2005;
• In North America, paper production slightly decreased (- 2.0%) in 2006, following a similar drop in 2005. This trend
reflects weak overall demand and the impact on production levels of industrial disruptions at some papermakers;
• In Asia, printing and writing paper markets were healthy in 2006. Demand rose significantly (+ 3.3%) in most markets,
leading to a + 5.2% increase in paper production. Major production capacities started up in 2006, especially in the
wood-free paper segment.
Main competitors
On a global market, the following competitors have international presence:
• Kaolin: AKW (Germany); PPSA and Cadam (Brazil); BASF (which acquired Engelhard in 2006), Huber and Thiele
(United States);
1
Source: RISI (Resources Information System, Inc.).
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ANNUAL REPORT 2006
• GCC: Omya (Switzerland) and various local competitors;
• PCC: Minerals Technologies (United States); Omya (Switzerland).
A
The Pigments for Paper activity has the following industrial facilities:
Kaolin
Europe
Americas
Asia-Pacific
St Austell, Cornwall (Great-Britain)
Barcarena, Para (Brazil)
Deep Step Road, Georgia (United States)
Pittong (Australia)
Dry Branch, Georgia (United States) (1)
Sandersville, Georgia (United States)
GCC
Lixhe (Belgium)
Bras Cubas, Mogi das Cruzes, SP (Brazil)(1)
Burnie (Australia)
Ste Croix de Mareuil (France)
Avenza (Italy)
Cockeysville, Maryland (United States) (1)
Kimberly, Wisconsin (United States)
Changshu (China)
Nanling (China)
Avezzano (Italy)
Sylacauga, Alabama (United States)(1)
Qingyang (China)
Massa (Italy)
Bhigwan (India)(2)
Köping (Sweden)
Kerinci (Indonesia)(3)
Sundsvall (Sweden)
Fuji (Japan)
Canakkale (Turkey) (4)
Miyagi (Japan)
Salisbury, Wiltshire (Great Britain)
Ipoh (Malaysia)
Kaohsiung (Taiwan)
Van Tien (Vietnam)
PCC
Husum (Sweden)
Capitán Bermúdes, Santa Fé (Argentina)(1)
Kerinci (indonesia)(3)
(1)
Ledesma, Jujuy (Argentina)
Santanésia Pirai, Rio de Janeiro (Brazil)(1)
Limeira, São Paulo (Brazil)(1)
Bennettsville, South Carolina (United States)
Canton, North Carolina (United States)
Somerset, Maine (United States)
Slurry
Kotka (Finland)
make-down
Vlaardingen (Netherlands)
Falkenberg (Sweden)
Gävle (Sweden)
Uddevalla (Sweden)
(1)
(3)
Mainly serving the Performance Minerals market, but also the Paper market
PT. Esensindo Cipta Cemerlang, a joint venture 51% owned by Imerys.
(2)
(4)
Imerys NewQuest (India) Private Limited, a joint-venture 74% owned by Imerys.
Assos Mermer, a joint venture 50% owned by Imerys..
Quality
Pigments for Paper kaolin plants in Georgia (United States), Cornwall (Great Britain) and Barcarena, Para (Brazil) and
its calcium carbonate plants in Alabama and Maryland (United States), Salisbury (Wiltshire, Great-Britain), Lixhe
(Belgium), Massa and Avezzano (Italy), Tunadal and Köping (Sweden) are certified ISO 9001:2000.
Sales organization
The Pigments for Paper products are marketed through its own sales force specializing in paper applications.
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5 - MATERIALS & MONOLITHICS
In its three constituent activities, the Materials & Monolithics business group has strong market positions that it continues
to develop through substantial capital expenditure and an active innovation policy.
With high-quality deposits and high-performance industrial assets, the Building Materials activity is France’s largest
producer of clay roof tiles, bricks and chimney blocks and of high-quality natural slate.
The Monolithic Refractories activity was created in 2005 when Plibrico and Lafarge Refractories’ skills and product lines
were merged to form Calderys. The European leader in monolithic refractories, Calderys’ products are used in the
steelmaking, casting, aluminum, cement, energy, petrochemicals and incineration industries.
The Kiln Furniture activity 1 joined the Materials & Monolithics business group under Imerys’ new organization, effective
January 1, 2007.
The business group is now made up of the following three activities:
• Building Materials,
• Monolithic Refractories,
• Kiln Furniture.
The Materials & Monolithics business group’s sales in 2006 totaled €935 million, contributing 28% of the Group’s
consolidated sales.
2006 sales: € 935 million
4,222 employees
2007 organization
2007 organization
56%
39%
5%
1
52%
33%
15%
Building Materials
Kiln Furniture
Imerys Kiln Furniture, previously part of the Specialty Minerals Business Group.
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Building Materials
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ANNUAL REPORT 2006
Activity
CLAY ROOF
TILES & BRICKS
FRANCE
Products / Applications
Markets
Brands
Roof tiles and accessories
Roofing renovation
Roof tiles:
& new housing
umbrella brand:
Imerys Toiture™
7 regional labels:
Gelis™, Huguenot™,
Jacob™, Ste-Foy™,
Sans™, Phalempin™,
Poudenx™
New housing
Bricks:
Structure materials
umbrella brand:
Imerys Structure™
product brands:
Monomur,
Optibric™
Structure bricks
(walls and bricks partitions)
New housing
Partitions:
umbrella brand:
Imerys Structure™
product brands:
Système "Carrobric"
BUILDING MATERIALS
New housing
Chimney blocks
French #1
for
clay roof tiles
bricks and
chimney blocks
Chimney blocks:
umbrella brand:
Imerys Structure™
product brands:
Conduits Ceramys™,
Système "Tereco™"
&
Concrete products
Market position
New housing
Concrete products:
umbrella brand:
Imerys Structure™
product brands:
Planchers Fabre
Système “Bétoconcept”
CLAY ROOF
TILES & BRICKS
INTERNATIONAL
Roof tiles and accessories
Structure materials
Roofing renovation
& New housing
Roof tiles :
New housing
Partitions:
Structure bricks
(walls and partitions)
ARDOISIERES
D'ANGERS
Natural slates
In Spain - Collado™
au Portugal - Campos™
in Spain- Ladryeso™,
Tecasa
Historical
monuments
Historique H1, H2,
Armor et Armen Ranges
Angers-Trélazé ®
French #1
Public buildings
Gammes Traditionnelles,
Extra-Fort and
Cottage Ranges
Angers-Trélazé ®
Single-family housing
Azur, Angevine,
Domaniale, Citadine
and Manoir Ranges
Angers-Trélazé ®
137
for
natural slates
KILN
FURNITURE
MONOLITHIC
REFRACTORIES
Activity
Applications
Monolithic refractories
Cast/vibrated castables
Gunning materials
Ramming mix
Prefabricated shapes
Dry mix
Taphole clays
Insulating
Cordierite, mullite
or silicon carbide products
for
Kiln furniture and
components
Markets
Brands
Market position
European # 1
Iron & Steel
Foundry
Aluminum
Cement
Incineration
Power generation
Petrochemicals
Alkon®, Elomet®, Kercast®,
Kerex®, Kermag®, Monrox®,
Plicast®, Pliflow®, Pligun®,
Pliline®, Pliram®, Plistix®,
Plitap®, Phlocast, Phlox®,
Refrabloc®, Rodarox®,
Spraycast®, Therco®,
Ultracast®
Roof tiles
Fine ceramics
Floor and wall tiles
Thermal applications
Kiln construction
Imerys Kiln Furniture™
Refral™, Diceron™
Lomba™,
Refractarios Cedonosa™
Apta™
in monolithic
refractories
World # 1
in alumino-silicate
refractories
World # 1
in kiln furniture
for ceramics
applications
5.2 Building Materials
A
PRODUCTS
The Building Materials activity’s products are mainly made from clay and are intended for the construction market,
particularly the individual house building and renovation segments.
The business group has substantial clay reserves near its various production units (refer to 4.3 Mineral Reserves &
Resources). Management policy for these quarries includes the purchase or exchange of land. This allows clay reserves
to be constantly reconstituted, thus ensuring the durable operation of existing production units, while providing for future
site restoration or remediation.
The business group’s customers and partners are mainly traders in building materials.
Clay Roof Tiles & Bricks France
The Clay Roof Tiles & Bricks France division, is comprised of all production and sales activities for clay roof tiles and
roofing accessories, structure bricks, chimney blocks and prestressed concrete products. All these activities are grouped
together in a single legal entity, Imerys TC.
• Roof tiles and accessories
With over 60 models and 100 colors of flat tiles, Roman tiles and large and small interlocking tiles, the department meets
the requirements of local traditions and specificities. Tiles are marketed under an umbrella brand, Imerys Toiture™, and
7 regional labels with high customer awareness for different tile models: Gélis™, Huguenot™, Jacob™, Phalempin™,
Poudenx™, Sans™ and Ste Foy™. The division also markets a wide range of accessories (approx. 700 models),
forming a comprehensive offering for roofers. The range includes roofing elements that are fitted without mortar or seal,
freeing roofers from the finishing work previously carried out on building sites.
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ANNUAL REPORT 2006
• Clay bricks
Imerys Structure’s clay bricks (Monomur and Optibric™) are used to build exterior walls and interior linings and partitions
(terracotta bricks, “Carrobric” system). Their load-bearing or insulating function differentiates them from facing bricks
which serve an essentially decorative purpose.
• Chimney blocks
Clay chimney blocks (Ceramys™) are used to evacuate smoke from boilers or chimneys. The wide range offered by the
department meets the specific requirements of the different energy sources used for housing boilers, inserts and
traditional open-hearth fires. It also includes a range of clay chimney caps that are adapted to the architectural
specificities of every region.
• Prestressed concrete products
Prestressed concrete products, mainly joists, are used for floor construction. Filler blocks are placed between each joist.
These can be made from a variety of materials, including clay, which is Imerys Structure’s specificity. In addition to joists,
the range also includes structural beams that are adapted to each use and allow for quicker installation at the
construction site.
Clay Roof Tiles & Bricks International
The Clay Roof Tiles & Bricks International business unit is comprised of all the production and sales activities for clay
roof tiles, roofing accessories and structure bricks of the company Imerys TC España in Spain, and the production and
sales activities for clay roof tiles and roofing accessories of Campos Fabricas Ceramicas (“Campos”) in Portugal.
Ardoisières d’Angers
Ardoisières d’Angers operates two underground slate quarries in Trélazé (Maine et Loire, France). The slate’s
exceptional purity is guaranteed as it is mined at depths of 350 to 500 meters.
Angers Trélazé® natural slate enjoys almost 90% unassisted awareness with roofing professionals, through the
company’s long history and its presence on the finest jewels in France’s architectural heritage (Versailles, Chambord,
Chenonceaux, the Louvre, etc.). While historical monuments only account for a small proportion of sales, they are an
outstanding showcase for the company, as the prestige of the roofed buildings reflects on all marketed ranges, including
upscale single-family houses.
The advantages of natural slate are that it withstands harsh weather, particularly frost, and is waterproof, stable and
flexible, which makes it easy to use. Slates are especially suited to steeply sloping roofs.
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INNOVATION
Thanks to a dynamic innovation policy supported by perfect knowledge of the entire trade and of the technical
constraints of contractors and end customers, the Building Materials division constantly renews its products.
Innovation efforts are mainly focused on developing increasingly functional and attractive products that combine
technical performance with speed of fitting and on improving customer services.
Clay roof tiles
In France, several innovative models marketed in 2005 found their place on the market in 2006. They include the Canal
Gironde blocking Roman tile and the double Artoise. The Canal Restauration Gélis line, sold in several colors that match
local traditions (“Ventoux” followed by “Esterel” and “Antique”) also enjoyed considerable success because of the
Roman tiles’ aged, powdered appearance, as did the “Rouergue” color for Médiane Gélis.
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A highlight of 2006 was the development of new products, including Rhôna 10, a new tile with a stylish contemporary
design similar to the Diamant model, for quicker and easier fitting on single-family houses; the Thermal Tile, which
broadens the range of solar products. Fitting flush with the roof, the tile is designed to produce electricity and hot water
from solar power. The new model is in addition to the Photovoltaic Tile launched in 2002; The Canal Charentaise
blocked-gauge Roman tile, a new anti-slip product.
New colors also enhanced existing lines. Two new colors, "Paysage" and "Provence Vieux Toits," were added to the
Canal Gélis Roman tile range; "Sérac," intended for mountain areas with a lauze-like appearance, and “Terre de
Beauce” enhanced the Alpha 10 range of large flat-gauge tiles; the "Vignoble" color broadened the Ste Foy 17x27 flat
tile line and "Alezane" and "Vieilli" were added to the Huguenot 20x30 flat tile range in response to growing demand for
new tiles that look like tiles recovered from older roofs.
In Spain, the “Altamira” color was developed for the Canal Roman tile range. Thanks to improved tile interlocking, the
Klinker model’s positioning possibilities have been increased without changing its appearance. Finally, white models
were developed for some accessories used to make partitions and decorative walls. In Portugal, the “Marselha”
traditional tile was adapted to middle Eastern export markets.
Clay bricks
Imerys Structure’s strong business growth is based on a broad offering of clay construction systems that meet three
essential needs voiced by customers: quick laying, construction site ergonomics and added value.
• Wall bricks market
The performance of narrow-join products, based on easy use and fast laying, has driven the success of this new product
type with professionals.
- Monomur narrow-join (30 and 37.5 cm), a distributed insulating construction system, also cuts laying time and makes
the bricklayer’s task easier by improving finishing quality. Insulating, healthy and durable, the brick improves quality
of life and reduces costs;
- Following narrow-join Optibric™, the first large brick of its kind and an alterative to concrete blocks, Imerys Structure
launched vertical-perforation Optibric™ in 2005. The new product offers several benefits: ease and speed of fitting,
improved heat insulation, high mechanical strength and suitability to earthquake-prone regions. Multi-family housing
and public buildings are the relevant market segments.
• Partition brick market
- A large partition brick marketed in early 2006, the Carrée 40x40 has enjoyed significant growth in Western France.
Its size (6.25 per m²) and square shape (40 cm x 40 cm) make fitting quicker (fewer movements per m²) and laying
and cutting easier (bricks laid with 2 hands and cut along cavity lines). This new brick enhances the Marcel Rivereau
brand’s Mégabrique and Maxiplafond lines.
- Carroflam, the only uncoated, quick-laying, fire-resistant clay partition on the market, continued to develop through
public buildings such as hospitals and catering kitchens.
• Chimney block market
Sales of Tereco™, a ventilated chimney block for low-temperature boilers fitted by silicone seal, continue to grow.
Private customers’ expectations in terms of natural, healthy products and comfortable quality living are also driving the
growing success of clay products.
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MARKETS
Building Materials’s activity is predominantly linked to the development of the single-family housing construction and
renovation market.
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ANNUAL REPORT 2006
Clay Roof Tiles & Bricks France
• French clay roof tiles market
In France, following a good 2005, the roofing segment continued its growth in 2006 with an approximately + 3% year-onyear rise 2 , thanks to buoyant single-family house start-ups (+ 1% during the year) and a stable renovation market.
• French clay bricks market
Clay bricks for outside walls and interior partitions mainly concern the single-family house building market, in which they
have approximately 26% penetration. In 2006, clay products grew + 13% with further market share gains. Monomur is
now acknowledged as a building solution (4.8% market share) and grows every year, driven in particular by influencers’
recommendations.
In parallel, clay bricks are enjoying strong growth in the new sectors of multi-family housing and services. They still
account for a very low market share compared with concrete blocks and framed concrete solutions 3 but are increasing
substantially.
A highlight of 2006 was the coming into force of the new RT 2005 thermal regulations. These dispositions, which apply
to building permits issued after September 1, 2006, aim to improve buildings’ energy performance by approximately
15%. In addition, an energy diagnosis has to be drawn up when old buildings are sold. The measures give clay bricks
added attractiveness as they provide three times as much heat insulation as concrete blocks for the same size.
• French clay chimney blocks market
On the clay chimney blocks market, against competition from metal conduits and the development of flueless heating
methods (e.g. vent chimneys), sales decreased slightly in 2006. However, clay remains the most widely used material
for chimney blocks in new single-family housing in France, whether for open or closed hearths. 2006 was marked by the
coming into force of new provisions in air laws. A vertical chimney block must be fitted as a precaution on all new houses
heated by electricity. This has created a new market, as 50% of new buildings are covered by the provisions and so
should be fitted with chimney blocks.
• Clay Roof Tiles & Bricks International
In Spain, the market remained exceptionally high with, however, some production overcapacity. In Portugal, the singlefamily housing market slumped for the fourth successive year.
Ardoisières d’Angers
The French slate market is characterized by oversupply and competition from Spanish slate on ranges intended for
single-family housing. Uprange and renovation segments (public buildings, monuments) continue to favor superior
quality French slate.
Main competitors
• Clay Roof Tiles & Bricks France: Bouyer-Leroux, Lafarge Couverture, Terreal (France) and Wienerberger (Austria);
• Clay Roof Tiles & Bricks International: Borja, Escandella, Mazarron, Uralita, HDR and La Oliva (Spain); Lusoceram,
Coelho da Silva and Margon (Portugal);
• Slate: Cupa Pizarras, Samaca (Spain) and La Canadienne (Canada).
2
Source: FFTB (French bricks and roof tiles federation).
3
Framed concrete is concrete that is cast into metal cases and used for its high mechanical performance in wall construction.
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The Building Materials activity has the following manufacturing and sales locations:
Roof tiles
Wall bricks
Chimney blocks
Concrete products
Blajan (Haute-Garonne)
Bessens (Tarn & Garonne)
Vergongheon (Hte-Loire)
Pibrac (Haute-Garonne)
Tiles & Bricks
Commenailles (Jura)
Colomiers (Haute-Garonne)
Vihiers (Maine et Loire)
France
Damiatte (Tarn)
Gironde-sur-Dropt (Gironde)
Grossouvre (Cher)
La Boissière du Doré (Loire Atlantique)
Léguevin (Haute-Garonne)
Mably (Loire)
Pargny-sur-Saulx (Marne)
Saint-Marcellin (Loire)
Clay Roof
Phalempin (Nord)
Quincieux (Rhône)
Sainte-Foy-l’Argentière (Rhône)
Saint-Geours-d’Auribat (Landes)
Saint-Germer-de-Fly (Oise)
Wardrecques (Pas de Calais)
Clay Roof
Almansa, Albacete (Spain)
Tiles & Bricks
Aveiro (Portugal)
Castellbisbal, Catalogne (Spain)
International
Ardoisières
Trélazé – Les Fresnais (Maine et Loire)
d'Angers
Trélazé – Les Grands Carreaux (Maine et Loire)
Given the essentially local nature of its markets, the Building Materials activity’s industrial and commercial network
ensures that it has optimum coverage of the French market, which represented 90.5% of its sales in 2006.
Quality
All Imerys TC sites have been certified ISO 9001 since November 2004 and all the products manufactured by the
company comply with the relevant standard (NF).
French NF standards certify the following characteristics:
- for roof tiles – appearance, geometry, bending strength, impermeability and frost resistance. The new NF brand (NF
Montagne) label for mountain areas sets even higher quality standards, particularly for frost resistance. Imerys TC is
currently the only French manufacturer to have undertaken a certification process in that respect. Omega 10,
Standard 14, Standard 9, HP 10, Alpha 10 and Delta 10 are the only French roof tiles with the NF Montagne label;
- for bricks: dimensions, physical characteristics, compressive strength, humidity dilation and frost resistance;
- for chimney blocks: dimensions, compressive strength, heat shock resistance, gas impermeability after heat shock,
corrosion resistance, sweeping resistance, condensation resistance and heat resistance.
In 2006, the 9 sites with annual production over 100,000 tons and Imerys TC headquarters obtained ISO 14001
certification following the setup of an environmental management system.
Angers-Trélazé® natural slate was the first state to be awarded the NF-Ardoises label by AFNOR in March 2005.
Angers-Trélazé brand products meet the most stringent French standard.
Sales organization
To meet its customers' needs as closely as possible, the sales organization of the Clay Roof Tiles & Bricks divisions is
structured by regional market and product range – roof tiles, bricks, concrete products and chimney blocks.
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ANNUAL REPORT 2006
The sales teams’ close proximity to their customers is the key factor. For optimal business relations, a single sales
contact, in charge of all stages from ordering through to delivery, is dedicated to every customer and sales regions are
precisely defined. The creation of a sixth sales region in late 2006 completes the national network and supports Imerys
Structure’s development in Western France.
This goal of close customer relations is also supported by a dynamic communication strategy and a wide offering of
services adapted to customers’ needs.
- Launched in 2005, the campaign "From a higher perspective, you can see how earth protects people” is increasing
general public awareness of the Toiture™ and Imerys Structure™ brands.
- Imerys Toiture publishes a twice-yearly magazine with regional editions for its trade customers (L’Observatoire de la
Tuile) to support new product launches while informing professionals of market opportunities.
- The internet service offering continues with both trade and private audiences. Imerys Toiture is supported by a
brand website www.imerys-toiture.com, a portal www.e-toiture.com and a website dedicated to solar products
www.tuile-photovoltaique.fr. Imerys Structure has also set up interactive tools to support local services. With five
trade zones and a private individual zone, www.imerys-structure.com provides specific content for every profession
as well as unique product selection guidance tools (“Précocarrobric", "Logibrique", etc.).
- Training is a priority in terms of the service provided to roofer and bricklayer customers. After setting up in Northern
France, tile fitting training centers have been developed in the South in Saint-Geours d'Auribat (Landes) and
Léguevin (Haute-Garonne). Similarly, to support the national development strategy, an approved training center for
narrow-join product fitting has been created in St Marcellin-en-Forez (Loire). Finally, Imerys Structure facilitates "Le
Club Poseurs" which now includes almost 200 fitting companies.
5.3 Monolithic Refractories
Calderys is the world leader in alumino-silicate monolithic refractories as well as the European leader in monolithic
refractories. The division's technical expertise enables it to offer complete refractory solutions (products, engineering and
supervision).
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PRODUCTS
Monolithic refractories are materials that are used for constructing or repairing refractory linings applied at high
temperatures and in severe conditions. In addition, they are used to make prefabricated refractories, also called ready
shapes.
Monolithic refractories are formulated with natural and/or synthetic mineral raw materials, including chamotte, andalusite,
mullite, bauxite, tabular or fused alumina (alumino-silicate monolithics) and spinel, magnesia, dolomite ("basic"
monolithics). Refractory cements, clays and chemicals are incorporated as binders. Monolithics can be installed by
casting, gunning and/or ramming.
The value added by monolithics, their usefulness for many applications and their relative ease of use are driving slow
but steady market share gain at the expense of shaped refractories (bricks) in all industries.
Applications
The activity's technical solutions are found in every industry where high temperatures are necessary, such as iron &
steel, ferrous and non-ferrous casting (including aluminum), power plants, incinerators, cement and petrochemicals.
Products deliver technical solutions to industrial customers and meet their precise requirements. As well as the
monolithic refractories produced by Calderys, solutions may include ready shapes, insulating products, anchor systems
and accessories. Calderys also offers services such as design, engineering and supervision of product installation.
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Innovation
Innovative products and solutions are developed by industrial segment to meet our customers’ specific needs. Calderys
has developed an innovative castable solution for the channel furnaces used in casting. A research program to cut
product drying times was also launched and will run until 2007. The aim is to reduce customers’ facility downtimes
during refractory relining.
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MARKETS
The monolithic refractories market was firm throughout 2006 due to an increase in global steel production. The
investment rate in fast-growing regions such as the Middle East and Asia also raised the demand for refractories.
The division's main competitors
RHI (Austria), Vesuvius (Belgium), Intocast (Germany) and Allied Minerals (USA).
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The Monolithics Refractories activity has the following industrial sites:
Europe
Americas
Hangelar (Germany)
Puerto Ordaz (Venezuela)
Vereeniging (South Africa)
Neuwied, (Germany)
Unanderra (Australia)
Sézanne (France)
Kaoshu (Taiwan)
Györ (Hungary)
Zhanjiagang (China)
Fiorano (Italy)
Oosterhout (Netherlands)
Leeds (Great Britain)
Amäl (Sweden)
Höganäs (Sweden)
Vladimirovka (Ukraine)
Quality
Except for Puerto Ordaz (Venezuela) and Vladimirovka (Ukraine), for which the certification process is ongoing, all the
activity’s industrial sites of are ISO 9001:2000 certified.
Sales organization
In order to guarantee a market-oriented approach and offer its customers complete refractory solutions, the activity has
sales offices or subsidiaries in all its major markets, i.e. more than 26 countries.
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ANNUAL REPORT 2006
5.4 Kiln Furniture
The Kiln Furniture activity develops, designs, produces and globally markets firing supports and components for
industrial kiln construction, mainly for roof tile production and fine ceramics, including tableware, sanitaryware and wall
and floor tiles, but also for other thermal applications such as metal sintering and ferrites.
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PRODUCTS
The activity offers its customers a wide and diversified range of kiln furniture products specifically designed to cover all
production conditions, including temperature, firing cycles and loading and handling systems. Kiln furniture products are
shaped items made from refractory materials such as cordierite, mullite or silicon carbide and support the final product
during the production process. Kiln furniture must be strong enough to resist mechanical and thermal shocks and be as
lightweight as possible to ensure lower energy consumption and more efficient firing.
Applications
The activity has a design unit that visualizes, models, develops and optimizes kiln furniture products using a computeraided design system that incorporates state-of-the-art simulation programs showing thermal-mechanical performance
and behavior under mechanical shock and vibration. This leading-edge technology is a critical factor in meeting the
requirements of the most demanding customers.
The activity 's main products are used in the following markets.
• Roof tiles
The Kiln Furniture activity manufactures "H" and "U" type firing supports for roof tiles applied in traditional tunnel or
intermittent kilns, usually on kiln cars. The supply chain is enhanced by the design and production of kiln car linings and
substructures that are especially suited to these supports and significantly increases the consumables' lifespan.
Extremely flexible and lightweight firing tray systems are based on superstructures and construction elements that are
produced using the activity 's silicon carbide.
• Fine ceramics
For the fine ceramics markets, the activity produces pressed, cast or extruded individual or stackable firing supports for
tableware and sanitaryware and cast or pressed cassettes for wall and floor tiles. Complete kiln car sub/superstructures
are produced from cordierite-mullite or silicon carbide with the objective of rationalizing available firing capacity and
protecting the product from deformation and contact reaction. Floor and wall tiles are now mainly fired in roller hearth
kilns on extruded and machined mullite-based rollers.
Innovation
To strengthen R&D efforts, two centers have been created in Spain and Hungary for the development of new materials,
designs and processes. New products and product families are currently being tested.
In 2005, the activity developed an ultra-lightweight infrastructure that optimizes the ratio of ceramic end product to kiln
furniture. By reducing the total weight to be heated, this product saves significant energy for the customer, in response
to the sharp rise in energy prices in 2006.
In 2006, the activity innovated with a patented generation of kiln furniture. The groundbreaking new line is based on a
new assembly method that enables pieces made from different kiln furniture items and refractory raw materials to be
assembled. Consequently, each functional part of a kiln furniture system can be designed and manufactured with the
most suitable material, including cordierite, mullite and silicon carbide. This optimized combination of raw materials
provides a highly adapted, economical (longer serving time, weight-saving) and functional (high flexibility, easy
assembly) unit. Products designed with the new assembly method have applications in traditional and high-tech
ceramics, automotive or electronic ceramics.
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MARKETS
2006 was marked by brisk business in roof tile replacement, especially in the construction sector in Germany as a result
of government decisions. Market conditions were also influenced by harsh competition from two new players in the
market with a low cost/low price approach.
The fine ceramics market continued to suffer from low-cost products, mainly Chinese imports. Consequently, capacity
reductions and transfers to countries with lower labor costs continued.
Main competitors
Saint-Gobain (France), Burton GmbH & Co. KG (Germany) and HK (Hungary).
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The Kiln Furniture activity has the following industrial facilities
Europe
Asia-Pacific
Cuntis, Galicia (Spain)
Saraburi (Thailand))
La Guardia, Galicia (Spain)
Hódmezövársárhely (Hungary)
Quality
Every plant in the activity is certified ISO 9001:2000.
Sales organization
The Kiln Furniture activity's products are marketed through an integrated sales organization organized into four
geographic zones and supported by an international network of agents and distributors.
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ANNUAL REPORT 2006
6 - CERAMICS, REFRACTORIES,
ABRASIVES & FILTRATION
As from January 1, 2007, Ceramics, Refractories, Abrasives & Filtration is the new business group resulting from the
combination of Minerals for Ceramics and Graphite & Carbon activities (from the Specialty Minerals business group) with
those of the former Refractories, Abrasives & Filtration business group. This organization will enable Imerys to
coordinate its actions more effectively and so benefit from common industrial and commercial opportunities while
optimizing the development of new applications between the divisions.
The Ceramics, Refractories, Abrasives & Filtration business group has a wide range of extensive, high quality mineral
reserves. With expertise in all the techniques needed for transformation, it offers a diverse range of products that meet
the specific requirements of the industries it serves, especially in terms of mechanical strength, thermal and chemical
resistance and beverage filtration.
The Ceramics, Refractories, Abrasives & Filtration business group is now organized around 5 activities that carry out
their respective activities autonomously and have their own central resources:
• Minerals for Ceramics;
• Minerals for Refractories;
• Minerals for Abrasives;
• Minerals for Filtration;
• Graphite & Carbon.
On February 28, 2006, Imerys acquired the French group AGS, now part of the Minerals for Refractories division. AGS is
the European leader in chamottes and metakaolins.
The Ceramics, Refractories, Abrasives & Filtration business group’s sales to December 31, 2006 totaled €1,235 million,
which represents a 37% contribution to the Group’s consolidated sales.
2006 sales: €1,235 million
6,703 employees
2007 organization
2007 organization
31%
21%
22%
20%
6%
30%
22%
19%
25%
5%
Graphite & Carbon
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Graphite & Carbon
Activity
Products
Main
applications
Markets
FINE CERAMICS
Brands
Market
positions
Tableware
ECC: (SSP™, SSP05 ™, SP™,
Grolleg™, Regal™),
Treviscoe™
Clays
KPCL
Feldspar
Ceramics
Hobbycraft
Halloysite
Electro-Ceramics
Sanitaryware
Kaolin
Glazes
Tableware
Sanitaryware
in ceramic
Pegmatite
Sandstone
Fiberglass
Hycast Forza™, Hycast LR™,
bodies
Electro-metallurgy
Hycast Rapide™, Hycast VC™,
for
Ceramic bodies
Hycast Veloce™, Hycast Zodiac™,
porcelain
& glazes
Kernick™, KT Cast™, KTS-Classic™,
MINERALS FOR CERAMICS
Quartz
NZCC (Premium)
European #1
Martin #5™, MaxiCast™, Minspar 200™,
NSC™, Old Mine #4™, OptiKas T™,
Remblend™, Sancast™, Standard
Porcelain™, SuperCast™
Thaicast S1™, Thaicast S2™,
MRD-Turbocast ™, XtraCast™
MINERALS FOR
REFRACTORIES
TILES MINERALS
Kaolins
Raw materials
Ball clays
for bodies
Feldspar
Raw materials
Feldspathic sands
for glazes
Ground silica
& engobes
“Grès de Thiviers”
Stains for
Natural colors
porcelain tiles
Derived colors
Raw materials
European #2
Floor & wall tiles
Imerys Tiles Minerals
in raw
Cesar
materials for
floor tiles
Chamottes
Steel, glass and
Andalusite
aluminum
Argical™, Argirec™ , Clayrac™
Calcined kaolin
industries
Durandal™, Ecca Chamottes™,
Alumina
Casting
Kerphalite™, Kersand™,
in silico-
Electronics
Krugerite™, Molochite™
aluminous
Silica
Refractories
Alpha Star®, Andamul™
World #1
Bauxite
Ceramics
Mulcoa®, Purusite™
minerals for
Bentonite
Construction
Randalusite™, Teco-Sil®
refractories
Clays
Cement
Teco-Sphere®
Metakaolins
Drilling mud
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ANNUAL REPORT 2006
applications
Markets
Fused aluminum oxides
Surface
Automotive
Alodur®
Electrocast mullites
treatment
Machinery
in minerals
Products
MINERALS
FOR
ABRASIVS
Main
applications
Division
Market
positions
N°1 mondial
Silicon carbides
Sand blasting
Aerospace
for
Electrocast spinels
Refractories
Construction
abrasives
Diatomite
Filter aids
Functional additives
Beer, fruit juice
Celite®, DiaFil®
World #1
Edible oils
Diactive®, Primisil®
in minerals
Food
Kenite® Micro-Cel®
for filtration
Chemistry
Celpure®
Pharmaceuticals
Chromosorb®
Sweeteners
Cla-flo®, Silasorb™,
Water, Wine
Celkate®, Fibra-Cel®
Agriculture
CelTix™
World #1
Polymers
in diatomite-
Rubber, Polishes
based products
Paint
MINERALS FOR FILTRATION
Cosmetics
Insulation
Paper
Plastic films
Perlite
R-Series™
Filtration
Food
Harborlite®
Horticulture
Agriculture
Europerl®
Insulation and
Paint
World #1
Expanded perlite
in perlite-
soundproofing
Construction
based products
Construction
ActivBlock™
Paint
OpTiMat™
Refractories
Coatings, Roofing
Structured
Coatings
Polishes
alumino-silicate
Vermiculite
Insulation materials
Agriculture
Brake linings
Construction
Imerys Vermiculite™
Coatings
GRAPHITE & CARBON
Composites
Automotive
Natural graphite
Powders
Mobile energy
MC-Composite, Rollit®,
World #1
Synthetic graphite
Blends
Engineering
Timrex®, Timroc®,
in high
Carbon black
Aqueous
materials
Timworld®, Ensaco™,
performance
Cokes
dispersions
Carbon additives for
Super P™
graphite powders
Dispersions
Additives
polymers
Silicon carbide
Metallurgy
Hot metal forming
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6.2 Minerals for Ceramics
Through an extensive and varied portfolio of raw materials and ceramic bodies, the Minerals for Ceramics activity
provides customers with tailor-made solutions. In a highly technical field, the development of partnerships with
customers is essential in the tableware, sanitaryware, tiles, glass and electrometallurgy markets.
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PRODUCTS
In order to address and satisfy the ever-changing needs of their markets, the Minerals for Ceramics activity has access
to many high-quality raw material reserves from their operations all over the world. A number of these raw materials
have exceptional properties such as outstanding whiteness, high mechanical strength and excellent rheology. Their
conversion processes are adapted to the requirements of specific applications.
Raw materials & ceramic bodies
The main raw materials produced and marketed by the Minerals for Ceramics activity are ball clays, kaolins, feldspar,
quartz and natural colors for ceramics. For a detailed presentation of these minerals, please refer to section 4.3 Mineral
reserves and resources.
The activity also produces chamottes and ready-to-use ceramic bodies, glazes and engobes in spray-dried granulate
and slurry form. Product formulations are prepared with a combination of different raw materials in accordance with the
specific needs of the customer.
Applications
The activity offers premium-quality raw materials and ceramic bodies marketed primarily in Europe, Middle East, North
Africa, Asia and North America.
Applications include:
• Tableware
The division offers a comprehensive range of raw materials, ceramic bodies and glazes suitable for all types of
tableware applications, including SSP™, Standard Porcelain™ and Grolleg™ kaolins. Body types include porcelain,
bone china, vitreous china, stoneware and earthenware, for which properties such as fired color, translucency and
plasticity are crucial. The product portfolio also includes bodies for electro-porcelain.
• Sanitaryware
The division continues to develop its product portfolio of kaolins, ball clays, feldspars and ceramic bodies to meet the
increasing demands of sanitaryware manufacturing. Applications for these products include vitreous china and fine
fireclay, which are produced by conventional and pressure casting techniques.
• Tiles Minerals
Raw materials for tile bodies: Manufacturing floor or wall tile bodies requires primarily ball clays, feldspars, sands and
feldspathic sands. For high white applications, kaolins are used. Imerys supplies all these products to the main tile
manufacturers, which are concentrated in the Sassuolo (Italy) and Castellon (Spain) regions. It also serves other
European tile manufacturing markets, including France, Germany, Portugal and the Great Britain, as well as the
developing markets in Eastern Europe, the Mediterranean basin, the Middle East and South East Asia. The business
group is also present in American markets through its subsidiary K-T clays.
Blends: The Tiles Minerals offers its customers innovative solutions, such as new blends from its Modena and Ravenna
(Italy) or Castellon (Spain) blending plants, as well as specific products, including blends from raw materials sourced in
France, Spain, Portugal, Great Britain and Ukraine to serve Europe's fast-growing glaze porcelain tile market.
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Raw materials for glazes and engobes: In glazed tile technology, tile decoration is achieved by adding glazes and
engobes to the surface of the body. These products require a variety of high-value raw materials,: ground silica and
ground fluxes 1 , kaolins and ball clays. Most of these products are marketed under world-renowned brands.
Natural colors: Natural colors are used to stain floor and wall tiles. Imerys offers the widest range of pure or blended
natural colors for use in body stains. Over some 30 years, Imerys has built up great experience and know-how,
particularly through working with “Grès de Thiviers” sandstone and its naturally red color. Imerys Tiles Minerals is also
developing other coloring solutions based on existing colors to rival synthetic products.
Glass: Imerys' feldspars improve manufacturing processes for flat and container glass. Their properties make it possible
to melt quartz at a lower temperature and to control the viscosity of glass during manufacturing. In addition, feldspar's
alumina content gives the finished products firmness, flexibility, cohesion and chemical resistance.
Fiberglass: Some of the activity's kaolins are used as high performance raw materials for the manufacture of insulating
or reinforcing materials such as glass wool or fiberglass. Their benefit lies in their alumina content, the low amount of
iron, titanium or other impurities they contain and their specific particle size distribution.
Electrometallurgy: Imerys mines high-purity quartzes (> 99.8% silica) that are intended for the production of ferroalloys,
whether silicon, for which quartz is the basic raw material, or ferro-silicon. Silicon, an essential component of aluminum-based
alloys, is also the basic material for silicone and silane chemistry. Ferrosilicon is used in special steel alloys.
Innovation
An innovation team has been created for ceramics, focusing on developing new minerals and new applications. The
Ceramics Centre is based in Limoges, France, where the official European Ceramics Centre will also be located.
• Tableware
Efforts continued to enhance and broaden the product portfolio, with new technical ceramic bodies and electro-porcelain
bodies for which demand remains strong. Innovation work included studies on atomization parameters and the
pressability of bodies for isostatic pressing. Plasma projection of ceramics on a cold substrate is a new project targeting
new business gains. Extensive cost-saving exercises involving a number of small projects, especially on energy, were
conducted.
• Sanitaryware
The industry continued to show considerable interest in pressure casting. This type of automated casting process is
enjoying substantial global growth. A range of ball clays and kaolins has been developed for this market and has shown
demonstrable improvements in yield and productivity. In the light of rising energy prices, current innovation work
includes examining the effects of various flux systems to reduce firing temperatures. In the United States, attention
continues to be focused on the increased production of porcelain tiles. Specific market requirements for efficient flux
components as well as high strength clays remain critical as we engineer blends for customers' unique needs.
• Tiles Minerals
In October 2005, the acquisition of Denain-Anzin Mineraux contributed great synergy potential and significant additions
to the Tiles Minerals product range (quartz, feldspar and mica). As a result, positions were consolidated, particularly in
raw materials for ceramics bodies by the addition of white Montebras feldspars and French kaolins to the existing
portfolio. Consequently, tailor-made solutions were developed in traditional ceramic producing countries such as Italy
and Thailand. The product range was adapted to the needs of the growing segment of glazed porcelain tile bodies.
Imerys has now reached a position where it is able to offer on a global basis, a complete product range dedicated to the
fritts, glazes and engobes market. Leading products such as Kaolinor 1C, suspensive kaolin for glazes, and Hymods
HSM/E & 387 together with Hywite Superb, ball clays for engobes, are now well established. Development teams are
1
Fluxes: feldspar family product
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focusing on adding optimized regional solutions to this product range to address the substantial growth in low-cost tile
production in developing countries.
In response to the growing competition from Chinese stains (mostly present in Asia), address a larger market and to, a
new Derived Colors (blends of natural and synthetic products) line was developed in addition to the range of Natural
Colors launched in the previous year.
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MARKETS
The ceramics market decreased overall in Europe and North America; As these markets are also related to the
construction sector, they slowed down significantly in the 4th quarter in the United States.
Tableware
The market continues to decline both in Europe and in the United States. Following manufacturer bankruptcies and
many plant closures, production that was historically located in Western Europe is moving East (to Eastern Europe, but
more significantly to Asia, in particular China). Asia is gaining an ever-increasing share of the global tableware market,
mainly because of lower manufacturing costs. Eastern European tableware manufacturers' share of the European
market is also increasing thanks to improved quality. In the United States, the market continues to decline with falling
volumes and plant closures. North American tableware producers continue to source more products from Asia, driving
down local demand for raw materials.
Sanitaryware
The activity implemented its growth strategy in a highly competitive sanitaryware market. In high-cost manufacturing
regions such as Western Europe, the trend towards greater automation continued in order to reduce costs and increase
yields.
Lower-cost production areas such as the Middle East, Eastern Europe and North Africa continued their volume growth,
while Southeast Asian and Chinese manufacturing zones remained dynamic as a result of the new production capacities
started up by major customers.
Further rationalization of the Sanitaryware segment in North America is ongoing, while production capacity expansion in
Mexico, Latin and South America continues.
Tiles minerals
The upper and medium range glaze tile sectors, where the division has extensive presence, was particularly healthy in
Spain where white body tiles have replaced red bodies. However, the overall growth of the floor and wall tiles market
slowed down in Western Europe as the Italian and Spanish markets, which are traditionally exporters, suffered from the
euro’s appreciation against the US dollar and competition from developing countries.
Eastern Europe, the Middle East, Southeast Asia, India, China and South America, particularly Brazil, are growing
regions in floor and wall tile production. Significant porcelain tile growth continues for end markets together with
investment in local production in the US and Mexico.
Main competitors
AKW (Germany); Sibelco group (Belgium); Kaolin AD (Bulgaria); Burella and Ecesa (Spain); Zemex and Unimin (United
States); Soka (France); Maffei and Minerali (Italy); Mota (Portugal); Lasselberger and Sedlecky Kaolin (Czech Republic);
Goonvean (Great Britain); Stephan Schmidt (Germany) and various feldspar (Turkey) or clay (Ukraine) producers.
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A
The Minerals for Ceramics Division has the following industrial facilities:
Kaolin
Europe
Americas
Berrien, Finistère (France)
Langley, South Carolina (United States) Kerikeri (New Zealand)
Ploemeur, Morbihan (France)
Beauvoir, Allier (France)
Ranong (Thailand)
Obidos, Armoreira (Portugal)
Western Area Cornwall (Great Britain)
Belaya Balka (Ukraine)
Clays
Provins/Beaujard, Seine et Marne (France)
Crenshaw, Mississippi (United States)
Jiangmen, Guangdong (China)
Beaulon, Allier (France)
Gleason, Tennessee (United States)
Lampang (Thailand)
Charolais, Saône et Loire (France)
Mayfield, Kentucky (United States)
Littry, Calvados (France)
Nançay, Cher (France)
Neuvy St Sépulchre, Indre (France)
St Pierre le Moutier, Nièvre (France)
Tournon St Martin, Indre (France)
Bovey Tracy, Devon (Great Britain)
Wareham, Devon (Great Britain)
Popanianska (Ukraine)
Ceramic bodies
Kahla (Germany)
Dolores (Mexico)
Cong Hua, Guangdong (China)
Neustadt bei Coburg (Germany)
Monterrey (Mexico)
Jiangmen, Guangdong (China)
Schmelitz (Germany)
Wiesendorf (Germany)
Aixe sur Vienne, Haute Vienne (France)
Juriol, Haute Vienne (France)
Marcognac, Haute Vienne (France)
Civita Castellana (Italy)
Ilhavo (Portugal)
Sassari (Italy)
Karlovy Vary (Czech Republic)
“Grès de Thiviers”
sandstone
St Sulpice de Mareuil, Dordogne (France)
Feldspar
& feldspathic
sands
Nohfelden (Germany)
Montebras, Creuse (France)
Spruce Pine, North Carolina (United States)
Etang sur Arroux, Saône et Loire (France)
Lansac, Pyrénées Orientales (France)
Salvezines, Aude (France)
Acehuche, Caceres (Spain)
Alberto (Spain)
Mica
Quartz
Thiviers, Dordogne (France)
Etang sur Arroux, Saône et Loire (France)
Thédirac, Lot (France)
La Chapelle Agnon, Puy de Dôme (France)
Milling Plants
Nules, Valencia (Spain)
Castellon (Spain)
Caudiès, Pyrénées Orientales (France)
Port la Nouvelle, Aude (France)
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Europe
Blending Plants
Americas
Modena (Italy)
Ravenna (Italy)
Castellon (Spain)
Quality
The Minerals for Ceramics is strongly committed to quality improvement.
• Europe: all activities in the Great Britain are ISO 9001:2000 certified. Civita Castellana (Italy) and all European
ceramic body sites are also ISO 9001:2000 certified. The certification process is nearing completion for Tiles Minerals
sites. In France, the Feldspaths du Sud, Feldspath du Morvan and Kaolins de Bretagne (Ploemeur and Berrien) sites
are certified ISO 9001:2000. 2006 saw the César (St Sulpice de Mareuil) and Cératera (Châteauroux) sites both
achieve ISO 9001:2001 accreditation.
• North America: the Minerals for Ceramics Americas plants in Crenshaw, Mayfield, Langley, Spruce Pine (United
States) and Monterrey (Mexico) are certified ISO 9001:2000.
Sales Organization
The Minerals for Ceramics has strategic bases worldwide and its products are marketed either by its own sales teams or
by their networks of independent agents or distributors.
6.3 Minerals for Refractories
The Minerals for Refractories results from a series of acquisitions made by Imerys over the past 20 years in this field. It
is comprised of all the Group’s activities in the production and conversion of raw materials for acid and basic refractories,
in which the Group has a front-rank global position.
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PRODUCTS
The products made by the Minerals for Refractories result from the transformation of silico-aluminous minerals. They are
used by the refractory industry for their mechanical strength, chemical resistance and thermal properties. For a detailed
presentation of these minerals, please refer to section 4.3 Mineral Reserves and Resources.
Raw materials
Raw materials for acid refractories contain alumina and silica. The Minerals for Refractories activity has several very
high quality silico-aluminous deposits around the world:
• andalusite in Glomel (France) and South Africa;
• kaolins from Cornwall (Great Britain), Georgia and Alabama (United States);
• clays, chamottes and metakaolin in Clérac (France).
The activity offers the widest range of quality refractory raw materials: mullite produced in Georgia (United States),
calcined kaolin (Molochite™), fused silica and fused alumina, spherical silica, tabular alumina, bauxite and silicon
carbide.
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Applications
Refractory materials are natural or synthetic raw materials that resist extreme temperatures (> 1,500°C) under harsh
physical and chemical conditions.
The main applications for refractory minerals are:
• refractories for the steel, glass, cement, and aluminum industries;
• kiln furniture for the ceramics industry;
• investment casting;
• electronic components.
Demand is evolving towards products with increasingly stringent technical requirements for which the Minerals for
Refractories activity can draw full benefit from its specific strengths. Imerys can bring its technical expertise into play for
the very high-precision products with flawless quality required in segments such as minerals for electronic component
manufacturing and investment casting (e.g. fused or spherical silica).
Each entity in the Minerals for Refractories activity specializes in the production and marketing of specific minerals, with
global coordination:
• C-E Minerals, Inc. (United States) is the world leader in the production and supply of industrial refractory minerals,
including Mulcoa®, a mullite with high alumina content, white fused alumina, Teco-Sil® fused silica, Teco-Sphere®
spherical silica, Alpha Star® high density refractory bauxite, brown fused alumina, silicon carbide and tabular alumina
for refractory products, electronic components and investment casting;
• The Group acquired AGS (France), the European leader in calcined clay production, in February 2006. The wealth
and variety of Charentes basin clays (France), together with conversion processes, result in a wide product range
(clays, pulverized clays, calcined clays, metakaolins and chamottes) sold to many sectors of business, including
refractories, sanitaryware, floor tiles, glue, rubber, fertilizer and concrete, etc.
• Molochite™, produced by Imerys Minerals Ltd (Great Britain), is a unique abrasion-resistant alumino-silicate refractory
aggregate obtained by calcining specially selected kaolins. MolochiteTM is used predominately in kiln furniture,
investment casting and special refractory products;
• Damrec (France) is the world’s largest producer of andalusite, a silico-aluminous mineral used primarily in steelmaking
but also in the aluminum, glass and cement industries. Damrec offers a complete line of products under the brands
DurandalTM, KerphaliteTM, KersandTM, KrugeriteTM, PurusiteTM and Randalusite TM;
• Ecca Holdings (Pty) Ltd and Cape Bentonite (Pty) Ltd are South African producers of ceramic clays and bentonite,
respectively. Bentonite is used primarily in the casting, pelletizing, drilling mud and environmental fields. Ceramic clays
are sold to the local South African market, chiefly for floor tiles.
Innovation
The activity continues to work on refractory and non-refractory applications in close cooperation with CARRD, the Imerys
Center for Abrasives & Refractories Research & Development in Austria. This research will lead to both the marketing of
new products based on the division’s raw materials and to the development of new applications.
Moreover, AGS is currently developing new products, particularly metakaolins (clays calcined at 800°C) for new
applications (high performance concrete, additives for cements, etc.), particularly as a replacement for silica fumes.
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MARKETS
Refractory markets were healthy in 2006, supported by an overall rise in steel production in Europe (+ 6.2%), the United
States (+ 3.8%) and Asia (+ 12.6%) and by several new projects in aluminum.
The semi-conductors market, an outlet for fused silica, remains affected by production transfers from North America to
China. However, demand in the investment casting sector remained firm, particularly in North America, driven by
business developments in aeronautics, gas turbines and defense.
Main competitors
Various producers in China, Central Europe and South Africa.
A
The Minerals for Refractories division has the following facilities:
Americas
Clays
Fused silica
Greeneville, Tennessee (United States)
Sizing of alumina
Newell, West Virginia (United States)
Andalusite
Europe
Clérac (France)
Cyferfontein (South Africa)
Guiyang (China)
Zhanjiang (China)
Glomel (France)
Apiesdoring (South Africa)
Havercroft (South Africa)
Krugerpost (South Africa)
Thabazimbi (South Africa)
Bentonite
Heidelberg (South Africa)
Chamottes
Mullite
Clérac (France)
Bronkhorstpruit (South Africa)
Andersonville, Georgia (United States)
Molochite™
St Austell, Cornwall (Great Britain)
Quality
The Andersonville and Greeneville sits (United States), as well as all the sites in the Andalusite (France and South
Africa), AGS and Molochite TM activities are certified ISO 9001: 2000.
Sales organization
The Minerals for Refractories various entities are supported by common sales and distribution networks in order to serve
refractories markets worldwide as well as possible.
Europe Commerce Refractory (Luxembourg) sells the Group’s products on European refractories markets. In the United
States, the Imerys subsidiary C-E Minerals fulfills that role. Special attention is currently being given to emerging
markets (Commonwealth of Independent States, Asia, South America). These networks also market the products of
other Imerys activities that are sold in the refractories industry (e.g. fused alumina).
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ANNUAL REPORT 2006
6.4 Minerals for Abrasives
The activity converts calcined bauxite and alumina into high-performance materials (fused alumina grains) to fulfill the
specific requirements of the abrasives and, to a lesser extent, refractories industry.
A
PRODUCTS
Raw materials
Minerals for Abrasives mainly processe and market fused aluminum oxide. Its characteristics are superior hardness,
mechanical strength, thermal stability and chemical resistance.
These products, also known as corundum, are obtained by fusing alumina or bauxite in an electric arc furnace. During
fusion, the physical characteristics of aluminum oxide are transformed, resulting in higher density and different crystal
structure and particle size.
The main bauxite-based product is regular brown with high or low titanium oxide content.
White fused alumina is by far the most commonly used alumina-based product. Other products in this group include
mono-crystalline grain and various alumina grains containing performance-enhancing additives such as titanium,
chromium or zirconium.
For a detailed presentation of these minerals, please refer to section 4.3 Mineral Reserves and Resources.
Applications
Fused aluminum oxide is widely used in applications in both the abrasive and refractory industries because of its wear
resistance and thermal properties. Minerals for Abrasives products are differentiated by their chemical composition and
particle size distribution. A distinction is made between macro-grains and micro-grains (bigger or smaller than 70 microns,
respectively). Demand trends in recent years have been in favor of micro-grains, in which growth is likely to continue.
Markets for fused aluminum oxide products cover the following applications:
• bonded abrasives such as grinding and cutting wheels, segments, honing stones, etc.;
• coated abrasives such as paper, fiber discs, belts, etc.;
• sand-blasting;
• monolithic refractories and shaped refractory products, used for their superior mechanical performance and chemical
corrosion resistance;
• various other applications such as laminates, ceramics, lapping and surface treatment.
Innovation
In 2006, the activity added new products to its catalog to cover different markets, including crushing media (spheres or
small cylinders that crush material). In particular, the properties of Alodur TM KKD dense bubble were improved to serve
this market. Moreover, two new products were developed:
• Alodur TM KKV SAC, a low-density abrasive to be marketed in 2007,
• Alodur TM Rod 96, a cylindrical sintered abrasive obtained by extruding alumina mix, developed jointly with the Group’s
Kiln Furniture activity.
CARRD, the Center for Abrasives & Refractories Research & Development, filed five new patents, two of which were
developed in cooperation with other Group activities.
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A
MARKETS
Business was stable on abrasives markets. The slack automotive market was offset by the buoyant spare parts and
second-hand market and by growth in the US for industrial gas turbines and aircraft manufacturing.
The division’s main competitors:
Alcan (Canada), Almatis (Europe, United States), Washington Mills (United States), Motim (Hungary), Zaporozhye
Abrasives (Ukraine) and various Chinese producers.
A
The Minerals for Abrasives activity has the following industrial facilities:
Europe
Americas
Asia
Laufenburg (Germany)
Salto (Brazil)
Guiyang (China)
Zschornewitz (Germany)
Niagara Falls (United States)
Kaili (China)
Villach (Austria)
Puerto Ordaz (Venezuela)
Domodossola (Italy)
Sokolov (Czech Republic)
Ruse (Slovenia)
Quality
The Villach (Austria), Laufenburg and Zschornewitz (Germany), Domodossola (Italy), Sokolov (Czech Republic) and
Ruse (Slovenia) units are certified ISO 9001: 2000; the Salto (Brazil) site is certified ISO 9002. CARRD was certified ISO
9001: 2000 in October 2006.
Sales organization
Minerals for Abrasives products are marketed through the division’s network of sales units located in its main markets.
Products for the European refractory industry are sold through the Minerals for Refractories network.
6.5 Minerals for Filtration
The Minerals for Filtration activity, created with the acquisition of the World Minerals group (United States) in July 2005,
is the world's leading supplier of diatomite and expanded perlite-based products. These two natural raw materials have
exceptional qualities: low density, high contact surface and high porosity. Their unique properties mean that the Minerals
for Filtration's products are sought after in many applications, particularly as filtration aids.
Imerys Vermiculite joined the Minerals for Filtration activity in 2006. Its activities consist of mining and processing
vermiculite from the Group's deposits in Zimbabwe and Australia.
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ANNUAL REPORT 2006
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PRODUCTS
Raw materials
Diatomite is a mineral resulting from the fossilized remains of microscopic marine plants called diatoms.
Perlite is a volcanic rock. When heated, perlite ore explodes like popcorn, expanding up to 20 times its original volume
and creating a multi-cellular material with large surface areas and corresponding low density. This process enables
perlite to become a natural product for filtration. The Minerals for Filtration activity also supplies other products such as
calcium silicate-based and magnesium silicate-based products and vermiculite.
For a detailed presentation of these minerals, please refer to section 4.3 Mineral reserves and resources.
Applications
Diatomite products are used as filtration aids in many industrial applications. They are used particularly in the food (beer,
fruit juice, water, wine, edible oils), pharmaceutical and chemical sectors. As functional additives, their main applications
are in the paint and plastic film industries They are also used in agriculture, cosmetics, polish and rubber.
Perlite and expanded perlite products contain unique properties that make them suitable for a wide range of industries
and applications, including filtration, horticulture, heat and cryogenic insulation, soundproofing, building materials,
lightweight refractories, coatings (e.g. for swimming pools), roofing and dentistry.
The high surface area and absorption capabilities of calcium silicate-based and magnesium silicate-based products are
valuable properties for converting liquids, semi-solids or sticky ingredients into dry, flee-flowing powders used to make
rubber, sweeteners, flavorings and pesticides.
Vermiculite is sold worldwide, mainly to the heat insulation, soundproofing, fire protecting, agriculture, automotive,
construction and building industries.
Innovation
The division puts great effort into developing new innovative products.
In 2006, a new technology was developed to use surface modified diatomaceous earth to facilitate the removal of
mercury from aqueous and non-aqueous media. New products for coatings applications, specifically CelTiX™ and
OpTiMat™ continued to gain customer acceptance. CelTiX™ offers formulators excellent concealing power and
OpTiMat™ provides exceptional flatting efficiency versus traditional fillers in paints.
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MARKETS
The filtration and fillers markets slightly increased during the period, and more specifically in emerging countries.
Main competitors
Eagle Picher Minerals, Grefco (United States); CECA (France); S & B Minerals (Greece); Showa (Japan); Palabora
(South Africa).
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Industrial Facilities
The Minerals for Filtration activity has the following industrial facilities:
Diatomite
Americas
Europe
Arica (Chile)
Arequipa (Peru)
Murat, Cantal (France)
Alicante (Spain)
Changbai (China)
Linjiang (China)
Fernley, Nevada (United States)
Lompoc, California (United States)
Quincy, Washington (United States)
Guadalajara (Mexico)
Perlite
Paulinia (Brazil),
Wissembourg, Bas Rhin (France)
Santiago (Chile)
Antonito, Colorado (United States)
Dikili (Turkey)
El Ejido (Spain)
Escondido, California (United States)
Barcelona (Spain)
Green River, Wyoming (United States)
Corsico (Italy)
La Porte, Texas (United States)
Quincy, Florida (United States)
Superior, Arizona (United States)
Vicksburg, Michigan (United States)
Youngsville, North Carolina (United States)
Vermiculite
Alice Springs (Australia)
Shawa (Zimbabwe)
Quality
The Arica (Chile), Guadalajara (Mexico), Alicante, Almeria and Barcelona (Spain), Changbai and Linjiang (China),
Escondido, Lompoc, Quincy Florida, Quincy Washington, Vicksburg and Youngsville (United States), Murat (France) and
Corsico (Italy) facilities are certified ISO 9001:2000.
Sales Organization
To achieve excellent responsiveness in its customer service, the activity has sales offices in its main markets and is
supported by an international network of agents and distributors. The activity 's global and regional marketing
professionals provide further technical and strategic support for the sales organization. The activity is always focused on
adding value to its customers businesses through cost-effective, qualitatively superior products delivered through an
efficient and reliable supply chain.
6.6 Graphite & Carbon
The activity provides its global markets with a full range of graphite and carbon-based solutions such as synthetic
graphite, conductive carbon black, natural graphite, water based dispersions, petroleum coke and silicon carbide.
A
PRODUCTS
Through the Imerys subsidiary Timcal, Imerys' Graphite & Carbon activity is the world leader in technical applications for
high-performance graphite and carbon black, providing customers with an extensive range of products, with the addition
as required of other carbon-based materials, such as petroleum coke and silicon carbide.
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ANNUAL REPORT 2006
Raw materials
Timcal supplies its customers in natural graphite from Lac-des-Iles, Canada - the largest graphite mine in North America
– and from selected very high-quality external production sources. Timcal also develops its high-quality synthetic
graphite through a complex process of baking petroleum coke at very high temperatures.
With its carbon black facility in Belgium, Timcal is also able to supply its customers with highly conductive carbon black
powders, pellets or carbon-based solutions for use in the mobile energy and conductive polymer markets.
To meet the challenging needs of its customers in an industry that demands constant innovation, Timcal's products are
sold in various forms such as additives, powders, blends or aqueous dispersions.
Applications
The Graphite & Carbon activities are strictly market-driven, ensuring high-quality products and services for its customers
in every application field.
• Mobile energy
This sector covers alkaline batteries, Zn-C batteries, Lithium-ion rechargeable batteries, fuel cells, supercaps and can
coatings. In the fiercely contested portable energy market, Timcal is the world leader due to the variety of its products,
which range from graphite and carbon black powders to conductor coatings for battery cans. The use of an electrode
containing graphite or carbon black makes lithium-ion batteries safer and more efficient. These lithium-based hi-tech
rechargeable batteries are used for mobile telephones, laptop computers and video cameras.
Fuel cells (systems for converting chemical energy into electricity through a continuous fuel supply) are still in the
development process and require new graphites, carbon blacks and technically advanced graphite dispersions.
• Engineering materials
This sector includes, for the automotive industry, friction pads, clutch facings, seals, iron powder metallurgy, carbon
brushes and foils. Other applications include sintered ceramics, hard metals, pencil leads, powders for lubricants,
catalysts and synthetic diamonds. In the engineering market, Timcal's success is ensured by cutting-edge graphite
processing facilities that enable the company to satisfy customers’ strict requirements in terms of service as well as the
physical and chemical characteristics of products. Through its unique combinations of synthetic and natural graphite,
Timcal is able to provide its customers with tailor-made solutions.
• Additives for polymers
With the highly conductive carbon black and synthetic graphite product families, Timcal is able to offer a unique and
comprehensive range of products in the niche market of conductive polymers. Applications include conductive coatings,
plastics & resins, PTFE (Polytetrafluorethylne) elastomers, rubber, cables and flame retardants.
• Hot metal forming
In a sector that is heavily dependent on the oil drilling business, Timcal's continued leadership is based on its reputation
and experience in this field and, more specifically, on its extensive knowledge of graphite dispersions. Applications
include hot metal forming, descaling agents, casting and related application systems.
• Refractories and metallurgy
In the natural graphite processing sector, the refractories industry represents a significant outlet for the division in terms
of volume. Applications include bricks, monolithics, carbon raisers and hot metal topping.
Innovation
In 2006, Timcal improved its position on products launched in the previous years such as a new generation of synthetic
graphite powders (T-SLC) used for Lithium-ion batteries as an active material in the negative electrode.
Development of other graphite products for Li-ion batteries continues and innovative natural graphite-based products
designed for powder metallurgy are in the promotion stage.
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MARKETS
In 2006, Timcal’s markets were dynamic. The Li-ion battery segment expanded further, the electronics industry was
healthy and the lubricant industry segment was buoyant due to continued high oil prices.
Main competitors
Kropfmuehl (Germany), National de Graphite (Brazil). Asbury (USA), Nippon Kokuen (Japan), Superior Graphite (USA),
Chuetsu (Japan) and many Chinese producers.
A
The Graphite & Carbon activity has the following industrial facilities:
Europe
North America
Asia
Willebroek (Belgium)
Lac-des-Iles (Canada)
Changzhou (China)
Bodio (Switzerland)
Terrebonne (Canada)
Fuji (Japan)
Quality
The Changzhou operation is certified ISO 9002; Lac-des-Iles, Willebroek and Bodio are certified ISO 9001:2000.
Sales organization
Timcal is well represented around the globe by its own experienced commercial and technical teams, which are
organized by geographic region. In areas where Timcal does not have its own representation, selected agents are in
regular customer contact. This global representation provides customers with constant support, ensuring that adequate
product solutions can be found quickly to meet their requirements.
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7- INNOVATION
7.1 Research & Technology
As its customers’ technological partner, Imerys draws on in-depth knowledge of their manufacturing processes, products
and applications to deliver solutions that improve their performance and costs. This approach creates value for both the
Group and its customers.
A
DEVELOPMENT OF PRODUCTS AND SOLUTION PORTFOLIOS
Rather than just selling products, Imerys seeks to sell solutions. With this approach, the Group uses its knowledge of
mineral properties to serve its customers by understanding their expectations and technologies, but also those of their
own customers.
The Group’s diverse minerals portfolio, sound grasp of conversion technologies and technical dialogue between
research, marketing and customers, often combined with the development of solutions through research partnerships,
enable it to meet the needs of a wide range of applications more effectively. Imerys’ ability to combine mineral properties
means it can improve two or even three functions at the same time. This is for example the case for Arbocab™, a new
carbonate developed by Performance Minerals in the United States. Used in wood fiber-based composites, it reduces
the need for fiber and resin, improves the product’s final appearance (outside flooring, railings, doors) while maintaining
good mechanical characteristics. Diatomite-based products are used by the paint industry as matting agents, but the
unique pore structure of the diatomite also enhance paint brightness. Another example is Carboflex™ a blend of GCC
and PCC for paper. It replaces a more expensive conventional blend of GCC and glossing agent and perfectly meets the
technical requirements for high-quality printing papers.
The Group strives to develop real portfolios of solutions for several of its markets. This is the case for the paper,
porcelain and ceramics, abrasives, refractories and construction industries.
In 2006, existing ranges were enhanced by new products such as Rhôna 10, a new roof tile with a highly contemporary
look. Alodur™ KKW SAC and Alodur™ Rod 96 abrasives pave the way for innovative applications beyond the abrasives
sector itself. CelTiX™ and OpTiMat™, matting diatomites with high covering power, broaden the Group’s offering on the
paint market. Another example is a new refractory concrete developed by Calderys that significant extends the useful
lifespan of channel furnaces in the steel industry.
A
TECHNOLOGICAL LEADERSHIP
As the only group that masters such a wide range of mineral transformation technologies, many of which are wholly or
partly common to different minerals, Imerys’ technological and industrial leadership is well acknowledged.
Imerys’ size enables it to cooperate closely with makers of mineral processing equipment. The Group has several
exclusive, patented processes as well as cutting-edge expertise in crushing, surface chemistry, high-temperature
technology, energy efficiency, handling and packaging. This know-how is available to all operating divisions and is
swiftly transferred to new acquisitions.
For example, near infra-red process control techniques were initially developed by Performance Minerals but have been
extended to new applications on other product lines. Similarly, Building Materials, in cooperation with engineering
companies, developed the water-sealed furnaces that are now standard in the roof tile and brick industry. The new
vertical extrusion technique for clay bricks, which improves heat insulation and mechanical strength, is another
illustration of Imerys’ innovation capability.
The Group also builds partnerships with research institutes and universities to develop new conversion technologies and
set up cutting-edge analytical tools to help optimize its processes and understanding of mineral behaviour in end-use.
163
Imerys’ ongoing innovation drive is supported by a decentralized yet coordinated Research & Technology (R&T)
structure with 270 scientists and technicians. It is built around five main centers with the latest analysis and conversion
facilities:
• Par Moor (Great Britain)
• Sandersville, Georgia, and Lompoc, California (United States);
• Bodio (Switzerland);
• Villach (Austria).
14 regional laboratories dedicated to Imerys’ various activities complete its innovation capability by focusing on the
development of relevant solutions for every customer.
An Innovation Department was created in late 2006 to step up the generation of organic growth projects by fostering and
coordinating the mobilization of different divisions. Several projects in progress draw on the Group’s expertise in hightemperature technologies, ceramics, rheology, crushing and calcination.
In 2006, 0.9% of Imerys’ turnover was ploughed back into R & T.
7.2 Intellectual Property
Imerys innovation capital being essential to its performance, its protection is closely associated in the product
development process of each division.
An active campaign continues with the Intellectual Property Department raising the awareness among all employees
involved of the need for strict confidentiality of the work and innovation resulting from Research and Technical
assistance teams within Imerys. In 2006, several meetings were organized around the world by in-house intellectual
property legal specialists with research and marketing teams to bolster legal protection of the Group's rights on its
products and processes.
The Group's policy with regard to intellectual property is to continuously enrich and extend the protection of its essential
assets. The Group therefore has a broad, diversified portfolio of pending and registered trademarks and patents. It holds
more than 3073 trademark registrations and applications, 991 issued or pending patents, 173 industrial designs, and
3 utility models.
To ensure effective legal protection for its new name (since 1999), the "Imerys" brand name has been registered in over
90 countries. Furthermore, the Imerys Group has registered or filed for 809 domain names.
The Group also continues to evaluate and optimize the cost/benefit ratio of its intellectual property portfolio. This
involves selecting the most appropriate and cost effective IP rights for the technology involved to maximize the resulting
competitive advantage from its innovations (e.g. patent filing, publication, secrecy). In addition, the Group periodically
rationalizes its patent, industrial design, and trademark portfolios to ensure its resources are applied to the technologies,
product designs, and brands that continue to have the most value to Imerys.
Imerys also intends to defend its intellectual property rights aggressively to maintain the competitive advantages they
provide.
To the best of Imerys' knowledge, no patent, license, trademark, brand name, industrial design or model has a decisive
bearing on the Group's overall business or profitability. In addition, to the best of Imerys' knowledge, there is no
intellectual property litigation or opposition that could either individually or in the aggregate have a material adverse
effect on the Group's activities or its financial position.
164
ANNUAL REPORT 2006
8 - SUSTAINABLE DEVELOPMENT
8.1 Imerys' Sustainable Development process
A
ORGANIZATION AND IMPLEMENTATION
Imerys Sustainable Development strategy is set by a Sustainable Development Steering Committee (the “SD Steering
Committee”). The SD Steering Committee meets quarterly and brings together several corporate departments including
Research & Technology, Internal & External Communication, Human Resources, Environment, Health & Safety, and
Legal. Three members of Imerys Executive Committee are on the SD Steering Committee. The SD Steering Committee
is supported by a Sustainable Development Working Group (the “SD Working Group”) consisting of EHS, SD and HR
professionals from throughout the Imerys operations. The Group Vice President Environment, Health & Safety is
responsible for coordinating efforts with the support of the Imerys Sustainable Development Manager.
A
SECOND SUSTAINABLE DEVELOPMENT REPORT
The second edition of the Imerys Sustainable Development was published in July 2006 referring to the 2005 Group
figures. This report reviews the actions taken in the past three years and sets out Imerys’ tangible Sustainable
Development goals for the years ahead. As with the previous report, this document gives an overview of the Group’s
environmental and social aspects: its impact on the environment, the actions taken in favor of its employees and its
Sustainable Development objectives. Designed to complement the Annual Report as an information tool, this document
was written for a broad spectrum of audiences: customers, the communities where the Group operates, employees,
shareholders, public authorities, financial analysts, suppliers, etc.
A
REPORTING METHODOLOGY AND KEY PERFORMANCE INDICATORS
Imerys global indicators are specifically tailored to Imerys businesses. The indicators are not intended to cover all the
main lines in the Global Reporting Initiative (GRI) 1 . The Group intends to progressively enlarge the publication of
indicators regarding its activities. For the sake of relevance to the Group’s activities, some definitions may differ from
those in the GRI. Energy consumption and CO2 emissions are reported according to the GRI Energy Protocol, the API
Compendium 2004 2 and WBCSD’s 3 GHG Protocol 4 , respectively. It should be noted that Group emissions of CO2
include emissions related to the production of purchased electrical energy.
The reporting scope includes all operations where Imerys has management control. For Environmental data, only the
Group’s manufacturing sites are taken into account under the current scope. Trading activities, sales agencies and
administrative offices, for which the majority of the chosen indicators would be irrelevant, have been excluded from the
scope of reporting. This exclusion is a minor alteration to data for energy consumption and CO2 emissions data.
Imerys also works with contractors at a number of its sites, mainly for mining and on-site transport. When the data on
fuel used are available, typically when Imerys purchased the fuel, the data have been included in the Group energy use.
However, where the Group’s contractor purchased the fuel, the figures have not been included, because they could not
be recorded with the required accuracy and reliability.
1
GRI is an independent institution whose mission is to develop and disseminate globally applicable Sustainability Reporting Guidelines; started in 1971, it is
2
API : American Petroleum Institute.
3
WBCSD: World Business Council for Sustainable Development.
4
GHG Protocol: Greenhouse Gas Protocol Initiative.
an official collaborating centre of the United Nations Environment Programme.
165
A
SECOND IN-HOUSE SUSTAINABLE DEVELOPMENT CHALLENGE
Imerys launched its second Sustainable Development Challenge in March 2006. The competition was open to every
division in all the countries in which the Group is based. Its purpose is to attest to the Group’s commitment and reward of
local actions and initiatives of Imerys operations, which demonstrate their determination to act as good citizens in the
communities where they operate. Thirty-seven projects of high quality were in competition. A jury, made up of one
representative of each Imerys business group and the members of the SD Steering Committee, defined the selection
process and selected the winners. Five award categories were created: Environment, Health & Safety, Innovation,
Human Resources and Community. Nine projects were rewarded and supported by Imerys through a financial
contribution between 15 to 50% of their total costs. For example, in the United Kingdom, the jury recognized the
“Woodland Project,” a 3.5 year project to improve the landscape and environmental of the Mid Cornwall Clay area
through planting native trees and improving existing woodland as a habitat for wildlife.
8.2 Environment
A
RESOURCES USE
The nature of surface mining means that it modifies the surface layer to extract underlying layers. Many of the deposits
mined by Imerys around the world are suited to on-going surface restoration. This continuous restoration is particularly
significant for most secondary kaolin and clay deposits, which are characterized by near-horizontal layers and a high
volume of covering material. In other words, mining can progress horizontally; the covering material initially stripped is
soon reused to fill the space left by extraction operations. This process makes it possible to restore soil to a natural
topographic state.
A
EMISSIONS AND EFFLUENTS
Imerys’ activities have a potential to generate dust emissions and water effluent containing inert mineral particles. The
Group continuously evaluates and improves its operations to minimize dust emissions.
Acid drainage – acidification of process or run-off water by some minerals – is a well-known and widespread source of
pollution in certain categories of the mining industry. Imerys has only experienced this phenomenon in a single location:
the Glomel, France andalousite mine (Minerals for Refractories division), where ore contains pyrite, which causes
acidification. This phenomenon has long been addressed by end-of-pipe treatment, and preventive measures have been
established for historical impacts.
Direct emissions of greenhouse gases by Imerys operations almost exclusively comprise carbon dioxide from
combustibles or fuel consumption. In some special cases, they may also concern process emissions, such as through
the decomposition of carbonates contained in clays in their natural state, when firing roof tiles or bricks, or when
producing synthetic graphite or carbon black. Precipitated calcium carbonate (PCC), which is obtained by reactionabsorption of carbon dioxide by lime, on the contrary, captures CO2. These absorptions, related to the PCC production
process, have not been subtracted from CO2 emissions in the reported figures. Imerys had set at the beginning of the
year a target of 5% improvement in its gas emissions, numbers show that this target was met, or close to be met by
many divisions.
A
WASTE
Production by the Group of industrial waste is extremely limited, unlike the generation of mining waste. The latter is
made up of stripping material and tailings. Stripping material is usually deposited on a provisional basis, awaiting use in
mining site restoration. Significant and increasing amounts of waste or overburden material are sold as secondary
aggregates for construction. Tailings result from the operations that separate the ore as such from other materials in the
deposit. Whenever they cannot be recovered, these materials are stored or used to fill the space left at the end of a pit's
lifespan. Imerys’ production processes do not entail important use of substances that are likely to cause major accidental
pollution of the soil, air or water.
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ANNUAL REPORT 2006
A
ENVIRONMENTAL REPORTING
Environmental Management System (EMS)
• Percentage (1) of manufacturing sites with EMS
ISO 14001 or EMAS certified sites
Total
(1)
Sites with EMS that are not ISO 14001 certified
2006
2005
2006
2005
29%
21%
21%
21%
Weighted by headcounts as on December 31
Compliance
20 environmental non-compliance cases gave rise to fines paid in 2006 totaling Euros 68 632 (as compared with Euros
23 451 in 2005).
CO2 emissions and energy use
• Total CO2 emissions (1) related to energy consumption and process
In thousand
of tons
Total
CO2 energy
2006
CO2 energy
2005
CO2 process
2006
2,898
2,754
200
(1)
Including emissions corresponding to purchased electricity.
(2)
CO2 energy + CO2 process.
(2)
CO2 process
2005
194
Total
2006
3,098
(2)
Total
2005
2,948
• Energy use (1)
Total direct energy consumption
In thousand of Gj
Total
(1)
2006
2005
39,271
39,083
Based on the definition of GRI indicator EN3.
In thousand of Gj
Total direct energy
consumption in 2006
of which
natural gas
of which
electricity
of which
other fossil fuel
of which
biomass
39,271
17,707
10,731
9,561
1,272
Total
8.3 Health & Safety
It is a core value of Imerys to protect the Health & Safety of its employees and require a safe working environment at all
Imerys locations. The mining and minerals processing industry involves daily operational work that requires employees
to be trained properly to use chemicals and explosives, to operate many types of mobile equipment -trucks, front-end
loaders, underground mining equipment and forklifts, work around conveyor belts- and to work at heights.
Due to this type of work, Imerys strives to have effective and strong Health & Safety programs that create safe working
practices and conditions. Imerys conducts periodic audits of its operating facilities to assess compliance with laws and
regulations and to drive continual improvement.
167
The workers’ health and safety in mining and minerals industry is strongly regulated on both a national and local level in
most of countries where Imerys is operating. Compliance with local regulations on workers’ safety and the observance
of exposure thresholds for regulated emissions are the minimum standard required across the Group. However, many
operations within the Group have implemented Health & Safety programs to go beyond this minimum standard and
Imerys has won national safety awards in the United States, the United Kingdom and Brazil.
A
HEALTH & SAFETY KEY PERFORMANCE INDICATORS
Imerys records all accidents involving contractors, temporaries and salaried employees. However, the frequency and
severity rates indicated below relate only to employees paid directly by Imerys.
Frequency rate (1)
(1)
Severity rate (1)
2006
2005
2006
2005
7.7
11.7
0.24
0.33
Frequency rate: (number of lost-time
accidents x 1,000,000) / number of work hours
(1)
Severity rate: (number of lost
days x 1,000) / number of work hours.
“Serious Six Initiative” Focuses On Most Important Safety Protections
Imerys is determined to build on the safety improvements of 2006 and therefore launched in January 2007 the “Serious
Six Initiative.” This key initiative focuses on the six areas where most severe industrial and mining accidents occur:
(1) electrical safety; (2) “Lockout/Tagout”; (3) machine guarding; (4) working at heights; (5) mobile equipment
(bulldozers, forklifts, haul tricks, etc.); and (6) ground control. Each operation will form a safety team consisting of
managers, workers and contractors to assess their site and begin implementation of the Serious Six Protocols. The
Group EHS intranet hosts a variety of tools supporting the Serious Six Initiative including training modules on each of the
Serious Six Protocols and checklists for the teams to use during their assessments. Progress in implementing the
Serious Six Protocols will be tracked by top management throughout the year and reviewed quarterly by the Chief
Executive Officer of Imerys to ensure continuous improvement.
8.4 Compliance
In every country where it operates, Imerys is subject to strict environmental, health and safety regulations. To ensure
compliance, periodic auditing of the Imerys operations is mandated by the Imerys EHS Charter signed by the Chief
Executive Officer. The Group Vice President Environment, Health & Safety is responsible for coordinating the EHS
Auditing program subject to a specific policy and procedure. Beyond the regulations, the EHS Audit program also
monitors compliance with a set of 25 global standards on Safety, Health, and on Environment such as air emissions,
water quality, waste management, and noise pollution.
8.5 Human Resources
Imerys Human Resources’ goal is to develop and implement principles and processes in phase with the Group’s
decentralized management method and in compliance with the relevant national legislation.
Human Resources professionals are responsible within their scope of responsibility – particularly their division – for the
entire function, reporting to a line manager.
The Human Resources function is also coordinated on the level of each country or region in which the Group operates in
order to manage employment or industrial relations, for example, but also Group programs designed by support
departments, such as the Employee Shareholder Plan in 2006.
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ANNUAL REPORT 2006
A
HUMAN RESOURCES PRINCIPLES AND MAIN AREAS OF ACTION
The Group has defined a Human Resources policy centered on the following principles: The Group has defined a
Human Resources policy centered on the following principles:
• Meet its employees’ expectations, particularly as regards working conditions and safety, benefits and personal development;
• Provide managers with management rules that comply with the Group’s spirit and ethics, especially in terms of
behavior, standards, dialogue and respect for other people;
• Foster harmonious integration with the environment through active involvement with local communities.
Furthermore, the Group is committed to complying with legislation in force in the countries where it is based, particularly
in terms of health and safety, non-discrimination, respect for private life, child labor, compensation and working hours.
These principles and processes apply to a number of key areas including the following.
• Recruitment: attract the most suitable profiles for both supporting organic growth and deploying new activities. A map
of the attitudes and skills required to join Imerys and develop a career in the Group is used to target candidate
profiles.
• Mobility: fill vacancies with existing skills within the Group. For that purpose, Imerys has set up common tools and
processes for all divisions, including annual performance reviews and succession planning meetings.
• Training: enable every employee to develop his or her talents and foster the sharing of best practices. In parallel to
the initiatives taken by divisions, the Group carries out more targeted actions for senior managers, advanced
professional expertise and/or new recruits.
• Compensation and benefits: have coordinated, competitive systems that take into account both the results of the
entity where employees work and their individual performance. While national competitiveness is favored, some of the
systems set up are designed as the basis for a common approach to performance, especially for executives and
senior managers (bonus system with identical choice and weighting of financial criteria across all divisions). Finally,
projects such as employee shareholding or the examination of benefit systems are carried out on the initiative of the
Group Human Resources Department.
• Industrial relations: the Group aims to build constructive relations with its employees and their representatives in
accordance with local regulations.
- European Works Council (EWC): created in 2001, the EWC meets once a year in plenary session. Fifteen countries
(Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Hungary, Italy, Netherlands, Portugal,
Slovenia, Spain, Sweden, United Kingdom) are represented by a 16-member employee delegation. The EWC now
has five officers who meet at least twice a year. The agreement organizing the workings of the Council was renewed
in late 2005 for four years by all employee representatives. It includes many points of progress in industrial dialog,
including expert assistance for personnel representatives.
- The need to improve the efficiency and productivity of the Group’s activities may lead to internal restructuring plans
and job cuts. In such situations, the Group’s policy is for divisions to give priority to finding in-house placement
solutions for the employees concerned and to set up retraining programs and support measures in order to provide
the help needed to look for a job or realize a personal project.
• Internal Communications: internal communication procedures define the responsibilities of the Group’s different
entities in this area and coordinate all actions. Information and Group news are circulated via a network of local
internal communication correspondents.
Appointment or organizational announcements up to a certain level in the chain of command are made by the Group
Internal Communications department through the Group intranet.
The company newspaper “Imerys News” is mainly designed to develop a feeling of belonging, share experience and
provide information. Special issues may be produced in line with major events such as the Sustainable Development
challenge.
169
• Human Resources Reporting: monthly Human Resources reporting for the entire Group has been organized since
June 2005. it includes highly detailed indicators (translated into five languages) concerning workforce by country,
contract type and activity. New indicators are regularly added to the reporting - e.g. on professional training, disability
or age structure - to allow the Group to assess its employee development efforts.
A Group organizational chart, published twice a year, shows the main reporting and functional relations within Imerys
and includes approximately 700 positions with the names of their incumbents. The chart is deliberately restricted to inhouse circulation.
A
HUMAN RESOURCES KEY PERFORMANCE INDICATORS 2005 AND 2006
Employee headcount
31/12/2006
Total Group
31/12/2005
31/12/2004
15,934
14,088
15,776
The Group headcount was stable overall from 2005 to 2006. There was a slight drop in employee numbers in the United
Kingdom (impact of industrial reorganization in Cornwall) and in the Americas (United States and Brazil). This decrease
was offset by a rise in Asia-Pacific and the consolidation of acquisitions, mainly the French company AGS.
The number of fixed-term contracts in that total was 814 as on December 31, 2006 (665 at year-end 2005). In addition,
1,450 people had temp and/or subcontractor status (1,125 at year-end 2005), more than 50% of whom worked in the
“Minerals for Refractories” and “Building Materials” divisions.
Employees by business group (scope: Imerys Group)
12/31/2006
12/31/2005
Specialty Minerals
4,826
5,160
Pigments for Paper
2,846
3,024
3,584
3,622
4,402
4,026
118
102
15,776
15,934
Holding companies
Total
Employees by geographic zone (scope: Imerys Group)
12/31/2006
Europe
12/31/2005
8,980
9,033
- of which France
3,666
3,433,
- of which United Kingdom
1,953
2,194,
3,042
3,192,
2,661
2,822
1,223
1,316
895,
979
North America
- of which United States
South America
- of which Brazil
Asia-Pacific
1,834
1,648
1,088
974
Africa
697
745,
Total
15,776
15,934
- of which China
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ANNUAL REPORT 2006
Employee turnover
• by business group
Specialty
Minerals
Pigments
for Paper
Materials &
Monolithics
Refractories,
Abrasives & Filtration
Total Group
Turnover 2005
17.8%
11.9%
9.2%
9.4%
13.1%
Turnover 2006
15.9%
14.8%
15.4%
16.9%
16.1%
2006 open-ended
14.9%
14.4%
9.3%
12.5%
13.2%
contract Turnover
The turnover rate is the number of departures in the year compared with the total headcount in the previous year (as on
12/31/2005). The second indicator corresponds to the same definition for employees on open-ended contracts only.
Internal mobility
343 moves took place in 2006 by internal transfer and/or as a result of operating reorganization. The total was 331 in 2005.
Diversity
• Percentage of women per country
12/31/2006
12/31/2005
All employees
Salaried employees
All employees
Salaried employees
Europe
14.4%
29.8%
13.7%
29.1%
North America
13.7%
32.4%
12.8%
30.9%
South America
11.3%
29.3%
10.3%
25.1%
Asia-Pacific
14.9%
30.9%
13.8%
27.6%
7.7%
11.3%
6.3%
16.9%
Africa
In total, women represent 13.8% of employees and 29.8% of salaried employees in 2006. This proportion increased from 2005
(12.9% and 28.7%, respectively). The proportion of women senior managers (members of support or line management teams)
at Imerys was 11% in 2006.
Percentage of disabled employees: according to the definition used in the Group (application of national law or regulations),
Imerys employs 200 people with disabilities.
Industrial relations
In 2005, 6,531 working hours were lost due to strikes (estimated from data entered in the new HR reporting system in
June-December 2005 for the scope of the whole Group).
In 2006, 5,155 working hours were lost due to strikes (whole Group).
For the first time, Imerys is reporting the number of agreements signed with the various employee representative bodies
in Group companies; 124 agreements were signed this year.
Training
Almost 200,000 training hours (with specific program and content) were given out during the year. Technical expertise
represented 47% of total hours and practical training to raise awareness of health & safety measures 39%. Management
training accounted for 14% of hours.
171
Employee Shareholding
In 2006, the Group mobilized to implement a new Employee Shareholder Plan. 13,287 employees (i.e. approx. 80% of
total employees) in 21 countries (compared with 15 in the previous plan in 2003) were given the opportunity to subscribe
on preferential terms to a maximum total of 50,000 Imerys shares to be issued through a capital increase reserved for
employees. The number of shares to which each participating employee could subscribe, whether directly or through the
company mutual fund FCPE Imerys Relais 2006, was limited to 30. Finally, an Imerys share subscription option was
attached to each of the first 15 subscribed shares (for more details, see Chapter 5, Section 2.5 of the Annual Report).
This operation, covering both internal communications and the involvement of employees in the overall performance of
the Group’s activities, took place in early November 2006. For the first time, the plan concerned Asia (Thailand, Malaysia
and Singapore), a high-growth region for Imerys, as well as Mexico, where the Group’s workforce increased with the
consolidation of companies in the World Minerals Group (Filtration division).
Employees’ particularly positive response to the 2006 Plan resulted in oversubscription by 7,735 shares, leading the
Company to implement the reduction arrangements defined by the Board of Directors on November 7, 2006. After
applying that mechanism, a total of 50,000 Imerys shares were issued under the 2006 Employee Shareholder Plan for
the benefit of 2,932 participating employees, who were also granted a total of 38,770 Imerys share options.
The Company is very satisfied with the 22% overall participation rate for the 2006 Employee Shareholder Plan, which
reflects employees’ attachment to the Group and their confidence in its development prospects. The Group is also
pleased to note the involvement of its Human Resources and line management teams in the success of this project,
which was defined well upstream during the year.
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ANNUAL REPORT 2006
• Number of employees shareholders as on December 31, 2006
2006
Number of employee
shareholders
2005
Percentage of shareholders
among total employees
as on 12/31/06
Number of employee
shareholders
Percentage of shareholders
among total employees
as on 12/31/05
1,592
43.40%
1,006
29.30%
United States
748
28.10%
351
12.44%
United Kingdom
434
22.20%
328
14.95%
Brazil
383
42.79%
192
19.61%
Germany
168
25.57%
78
11.66%
South Africa
131
23.60%
10
1.69%
Spain
97
21.32%
48
10.02%
Sweden
70
24.30%
35
10.84%
Portugal
58
85.29%
23
27.38%
Austria
66
16.38%
73
18.39%
Italy
64
21.91%
47
14.69%
Switzerland
17.68%
France
49
26.77%
32
Mexico
47
15.56%
Na
Belgium
47
23.85%
27
Malaysia
38
27.53%
Na
Canada
38
48.10%
18
Thailand
31
15.73%
Na
Netherlands
24
40.00%
5
Singapore
15
57.69%
Na
Slovenia
6
5.94%
Na
Hungary
2
0.67%
Na
4,108
26.04%
2,273
Total
14.59%
21.18%
8.47%
14.27%
8.6 Community relations
Most of Imerys’ pits are located in areas where mining has long been a key part of the local economic scene. Natural
slate has been mined in Trélazé (France) for 400 years; kaolin has been mined for 200 years in Cornwall (UK) and 40
years in Georgia (USA); and the andalusite site in Brittany (France) has been in operation for 35 years. Most sites are
located in industrialized countries and in zones that already have transport infrastructure that provides easy access to
the relevant markets. Imerys’ ore deposits are usually vast in relation to their markets and geological prospecting mostly
concerns extensions of active deposits, with the aim of processing the ore in existing facilities. For these reasons, mine
openings and closures – operations that can have a heavy impact on the communities concerned – are very limited in
number.
The mining or production units in Imerys’ divisions are medium-size: only the St Austell (United Kingdom) operation has
more than 500 employees. The Group’s units worldwide are closely integrated with their surrounding communities, all
the more so when Imerys is a major direct or indirect local employer.
173
A
ADAPTING ACTIONS TO LOCAL SITUATIONS
Rather than carrying out major flagship programs, the rule at Imerys is to adapt to the diverse situations and specific
concerns of every community. In that context, the Group‘s decentralized management principles apply effectively. Because
Imerys plant managers are in close relation with the communities in which they work, they are in the best position to address
local issues, choose suitable partners and build contacts with the relevant authorities or associations, in an action framework
that is adapted to local situations and concerns. Compelling examples of these local initiatives are provided by the social
initiatives with underprivileged populations in Brazil and South Africa.
Two programs in Brazil are exceptional. First, “Imerys do Brazil” will partner with a non-profit, non-government
organization to provide training in information and communication technologies. The aim is to enable employees and
underprivileged people in the local community to participate in the global digital community. Secondly, the RCC
operation is partnering with a non-profit, non-government organization to offer basic social and citizenship lessons to
underprivileged children (90% homeless).
In South Africa, three projects are particularly striking. First, Imerys has launched a five-year action plan to fight
HIV/AIDS covering training, free and confidential screening and an agreement with a healthcare provider (Lifeworks) to
bear medical expenses for employees who are living with AIDS. Secondly, the RHINO operation in Havercroft is
installing pumps and wells to address the issue of inadequate and unsafe water in a remote rural area in one of the
poorest provinces in South Africa. Finally, the Krugerpost Mine Community Housing Project consists of two elements.
One part consists of training a group of community members in the construction of houses. Once skilled, such people
can either join construction companies as employees or set up their own small businesses. The second element
involves assistance to community members, including mine employees, in building housing.
8.7 Report of Statutory Auditors
on the application of reporting procedures for a selection of environmental, safety
and human resources indicators
This is a free translation into English of the statutory auditors’ report issued in the French language and is provided solely for the
convenience of English speaking readers. This report should be read in conjunction with, and construed in accordance with, French
law and professional auditing standards applicable in France.
At your request and in our capacity as the Company’s statutory auditors, we have carried out the procedures described
below regarding the reporting process for environmental, safety and human resources indicators published in section 8
of Chapter 4 of the reference document (document de reference) for fiscal year 2006.
This reporting process has been defined and applied by the Imerys Group and is formalized through procedures.
A
NATURE AND SCOPE OF OUR WORK
We have performed for the selected indicators:
• a review of a selection of indicators (frequency and severity rate, total staff, employee turnover, proportion of women,
number of transfers between Group and sub-groups, number of shareholder employees, number of training hours,
number of sites covered by an Environmental Management System, number of environmental non-compliance
indicators related to a fine, total amount of fines related to non-compliance with environmental requirements , energy
consumption, CO2 emissions due to energy consumption, CO2 emissions due to processes) of the organization
implemented by Imerys Group for data collection, validation and consolidation, and of the reporting procedures based
on the principles of relevance, completeness, reliability, neutrality and understandability of the reporting framework;
174
ANNUAL REPORT 2006
• interviews with Imerys correspondents and personnel responsible for the collection and consolidation of the selected
indicators at Group, sub-group and division levels, and in a selection of Group industrial sites 1 in order to analyze the
understanding and application of Group procedures;
• arithmetical tests, performed on a sampling basis, with respect to the indicator calculation methodology used for the
sampled sites and consistency checks on the consolidation of indicators.
In order to assist us with this work, we called on the services of our own in-house environmental and sustainable development
experts.
The procedures we performed were not intended to provide moderate or reasonable assurance on the application of the
reporting procedures or the indicators themselves, and therefore do not include all the verifications that would have been
performed as part of an audit or a limited review; however, they have enabled us to report the following observations:
A
FINDINGS
The procedures carried out above resulted in the following observations:
• In 2006, the Imerys Group has extended its whole reporting process to the Asia Pacific region activities.
• The reliability of the data collection process has improved compared to fiscal year 2005 as a result of clarifications
made to reporting procedures.
• The internal contributors and validators of the required data have been made aware of their responsibility in their role
to control the reliability of provided data.
• As part of a continuous effort to improve the sustainable development reporting of Imerys Group, the reliability of
published data could be reinforced by implementing the following actions:
- Formalized environmental and “training hours” indicator controls should be documented and detailed in the procedures.
- Imreys uses, to calculate CO2 emissions, factors included in a standard issued by a professional association
operating in another activity sector (API 2004 compendium). Considering the activity and the international location of
Imerys operations, the use of other protocols should be considered in order to improve data representativeness.
ERNST &YOUNG Audit
Jean-Roch VARON
(1)
Nicholas L.E. ROLT
The IKF France site in Lamotte-Beuvron, France for the Specialty Minerals branch, the Calderys site in Neuwied, Germany for the Materials and
Monolithics branch, the Europerlita site in Barcelona, Spain for the Refractories, Abrasives and Filtration branch, the Imerys Minerals site in Pittong,
Australia for Pigments for the Paper branch.
175
A
APPENDIX:
list of indicators which were covered by our procedures
Performance indicators
Unit
2006
Number of accidents
for a million hours worked
7.7
Number of days leave
for 1,000 hours worked
0.24
Proportion of sites covered by an ISO 14001 or EMAS certified EMS
Proportion of covered employees (%)
29
Proportion of sites covered by a non certified EMS
Proportion of covered employees (%)
21
SAFETY
Frequency rate
Severity rate
ENVIRONMENT
Number of environmental non-compliance indicators related to a fine
Number
20
€
68,632
Thousands of GJ
39,271
Thousands of GJ
Thousands of GJ
Thousands of GJ
Thousands of GJ
10,731
17,707
9,561
1,272
CO2 emissions due to energy consumption
Thousands of tons
2,898
CO2 emissions due to processes
Thousands of tons
200
Number
15,776
Number
Number
Number
Number
Number
4,826
2,846
3,584
4,402
118
%
16.1
%
%
%
%
15.9
14.8
15.4
16.9
Total amount of fines related to to environmental non-compliance indicators
Overall energy consumption
Energy consumption by type
electricity
natural gas
other fossil fuels
biomass
HUMAN RESOURCES
Group total staff
Staff by branch
Specialty Minerals
Pigments for Paper
Materials and Monolithics
Refractories, Abrasives and Filtration
holdings
Overall employee turnover
Employee turnover by branch
Specialty Minerals
Pigments for Paper
Materials and Monolithics
Refractories, Abrasives and Filtration
Internal mobility (number of transfers between Group and sub-groups)
Proportion of women in the Group
Number
343
%
13.8
%
%
%
%
%
14.4
13.7
11.3
14.9
7.7
Hours
191,179
%
%
%
47
39
14
Number
4,108
Proportion of women by geographic zone
Europe
North America
South America
Asia-Pacific
Africa
Overall number of training hours
Breakdown of training hours per type
technical expertise
hygiene and safety
management
Number of shareholder employees
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ANNUAL REPORT 2006
5
General information
pages
178
1 - Information concerning the Company
181
2 - Information concerning the share capital
190
3 - Distribution of share capital and voting rights
193
4 - Imerys stock exchange information
195
5 - Parent company/subsidiaries organization
196
6 - Dividends
197
7 - Shareholder relations
177
CHAPTER 5 - General information
1 - INFORMATION CONCERNING THE COMPANY
A
CORPORATE NAME: IMERYS
This name was adopted by the Ordinary and Extraordinary Shareholders’ Meeting of September 22, 1999. Until then,
the Company’s corporate name was Imetal.
A
REGISTERED OFFICE
75007 Paris - France
Telephone: +33 (0) 1 49 55 63 00
Fax: +33 (0) 1 49 55 63 01
A
LEGAL STATUS AND LAW OF INCORPORATION
Imerys is a French Limited Liability Company (Société Anonyme) with Board of Directors (Conseil d’Administration)
governed by the provisions of articles L. 225-17 to L. 225-56 of the Code of Commerce.
The Company was incorporated in accordance with French law.
A
DATE AND TERM OF INCORPORATION
Imerys was incorporated on April 22, 1880. Its term of incorporation, initially set at fifty years, was extended until June
30, 2024 (article 5 of the by-laws).
A
CORPORATE PURPOSE
Imerys is the head company of an industrial and commercial group that is specialized in Minerals Processing.
Under the terms of article 3 of the by-laws, “The Company's purpose, in France and abroad, is as follows:
• the search for, the acquisition, the leasing, the sale and the operation of any mines and quarries, of any kind whatsoever;
• the processing and transformation of, and trading in, any minerals, metals, organic or non-organic materials and
mineral substances, as well as their by-products and alloys;
• the manufacturing of any processed products in which minerals, metals, organic or non-organic materials and mineral
substances are used;
• the purchase, obtaining, operation, concession and sale, in whole or in part, on a temporary or permanent basis, of
any patents, certificates or licenses pertaining to the above-mentioned purposes;
• the creation, acquisition, sale, concession of any buildings and plants, of any means of transportation and energy
sources;
• the participation in any country, in any mining, quarrying, commercial, industrial and maritime operations aimed at
favoring or developing the Company's own industries and businesses, through the creation of new companies,
alliances, holding companies or otherwise; and, generally, any mining, quarrying, commercial, industrial, maritime, real
estate, personal property and financial operations relating directly or indirectly, in whole or in part, to any of the abovespecified purposes or any other similar or related purposes.”
178
ANNUAL REPORT 2006
A
REGISTER OF COMPANIES
562 008 151 R.C.S. Paris
A.P.E. (main activity): 741 J
SIRET 562 008 151 00093
A
ACCESS TO CORPORATE DOCUMENTS
The by-laws, minutes of Shareholders' General Meetings, Company and consolidated financial statements, Auditors'
reports and all documents provided for shareholders may be consulted at the Company's registered office.
A
FINANCIAL YEAR (ARTICLE 28 OF THE BY-LAWS)
The financial year is 12 months. It begins on January 1 and ends on December 31 of each year.
A
ALLOCATION OF PROFITS (ARTICLE 30 OF THE BY-LAWS)
Income for each financial year is determined in accordance with legal and regulatory provisions in force, as follows:
• at least 5% of net earnings for the financial year, minus any previous losses, are withheld to make up the legal
reserve. This withholding ceases to be obligatory when such reserve is equal to 10% of the share capital;
• earnings for the financial year, minus the above and plus any earnings carried over, after deduction of any earnings
retained or sums assigned to one or more reserves by the Shareholders’ Meeting, are distributed among shares,
without distinction;
• the Shareholders' Meeting may grant to each shareholder, for all or part of the dividend being distributed, or for
advances on dividends, the option to be paid in cash or in shares.
A
IDENTIFIABLE BEARER SHARES (ARTICLE 9 OF THE BY-LAWS)
The Company is authorized, under the terms and conditions provided by current legal provisions, to ask Euroclear
France for the information needed to identify the owners of bearer shares that grant, whether immediately or at a later
date, voting rights in its Shareholders’ Meetings, as well as the quantity of shares or other securities held by each owner
and, as the case may be, any restrictions that may apply to such shares or other securities.
A
SHAREHOLDERS’ GENERAL MEETINGS (ARTICLES 21 AND 22 OF THE BY-LAWS)
Convening
Shareholders’ General Meetings are convened under the terms and conditions provided by current legal provisions and
are held either at the registered office or in any other place specified on the Notice of Meeting.
Conditions for admission
All shareholders have the right to take part in Shareholders’ General Meetings – whether in person, via a proxy or by
correspondence – subject to the obligation to prove their identity and, in the case of holders of bearer shares, to deposit
a share certificate. Registration or deposit formalities must be completed by the day before the meeting at the latest.
Any shareholder may also, by decision of the Board of Directors as notified in the Notice of Meeting, take part in General
Meetings and vote by data transmission and/or any other means of telecommunication, under the conditions provided by
current legal provisions.
179
Conditions for exercise of voting rights
All documents provided by articles 133 and 135 of Decree 67.236 of March 23, 1967, including a mail or proxy voting
form, are sent to shareholders on request. This form cannot be validly taken into consideration unless it is completed in
accordance with current legislation and returned to the registered office or to the address given on the Notice of Meeting.
Moreover, any shareholder may, by decision of the Board of Directors as notified in the Notice of Meeting, obtain and
return the form for voting by mail or proxy, by data transmission or any other means of telecommunication, under the
terms and conditions provided by current legal provisions.
Double voting rights
As of the Shareholders’ General Meeting of July 2, 1968, shares registered in the name of the same shareholder for at
least two years carry a double voting right. This right is authorized by law and provided by article 22 of the by-laws, and
is intended to reward the Company’s shareholders for their loyalty. The double voting right is also granted to new free
shares granted to shareholders under a capital increase operation, on the basis of the old shares for which they already
benefited from this right. The double voting right ceases ipso jure when a registered share is converted to a bearer share
or is transferred, except in cases of collateral assignment or transfer as life interest or by inheritance or family bequest.
Finally, the double voting right may be cancelled by decision of an Extraordinary Shareholders’ General Meeting with
prior authorization by the Special General Meeting of the holders of such right.
Restriction of voting rights: None
A
DISCLOSURE OF THRESHOLD CROSSINGS
Imerys' by-laws do not contain any clause imposing disclosure requirements in the case of holdings that cross certain
thresholds, other than those set down by the law.
Any shareholder, whether acting alone or with others, whose holding comes to rise above or fall below one of the
holding thresholds for the Company’s capital and/or voting rights provided by legislation in force must comply with the
provisions of articles L. 233-7 to L. 233-11 of the Code of Commerce and, more specifically, inform the Company or, as
the case may be, any person that the Company may have designated for that purpose, within five days of their holding
crossing the threshold in question. In the event of failure to comply with this obligation, the provisions of article L233-14
of the Code of Commerce shall apply.
180
ANNUAL REPORT 2006
2 - INFORMATION CONCERNING THE SHARE CAPITAL
2.1 Nominal amount of the share capital and number of voting rights
• On December 19, 2006, the Board of Directors cancelled 685,000 self-held shares bought directly on the market by
the Company during financial 2006 and assigned them in their entirety for cancellation under the share buyback
program approved by the Ordinary and Extraordinary Shareholders’ General Meeting of May 3, 2005 and the Ordinary
Shareholders’ General Meeting of May 2, 2006. This cancellation of self-held shares led to a reduction in the
Company’s capital by a nominal amount of €1,370,000.
• On December 21, 2006, the Chief Executive Officer noted that, under the capital increase reserved for employees as
decided by the Board of Directors at its meeting on November 7, 2006, 50,000 new Imerys shares were subscribed,
leading to an increase in the Company’s capital by a nominal amount of €100,000.
• On January 11, 2007, the Chairman of the Board of Directors noted that, on December 31, 2006, the share capital had
been increased by a nominal amount of €1,275,510 euros as a result of the exercise in 2006 of 637,755 subscription
options giving the right to the same number of Imerys shares.
As a result of those operations, Imerys’ fully-paid up share capital as on December 31, 2006 totaled €126,669,240; it
was made up of 63,334,620 shares with €2 par value of which 34,093,287 enjoyed double voting rights pursuant to
article 22 of Imerys’ by-laws. Finally, the total number of voting rights attached to existing shares was 97,427,907.
Shareholders should use these numbers, which were notified in the required legal and regulatory publications, when
calculating the percentage of the Company’s share capital and voting rights that they hold.
Share capital did not change and the number of voting rights did not change significantly between December 31, 2006
and the date of the present Annual Report.
Taking into account the 2,989,870 share subscription options granted to certain employees and executives and not yet
exercised on December 31, 2006 and the absence of any other securities that grant access to share capital, Imerys'
potential share capital – with all rights exercised – was €132,648,980 as on January 1, 2007.
No directly registered shares have been pledged by the Company.
181
2.2 Changes in share capital over the past five years
Changes in the number of shares and in the Company’s share capital over the past five years are as follows:
Year
Operation
2002
Cancellation of shares
Exercise of stock options
2003
Nominal
amount of
change in
capital
(€)
Issue
premium
(€)
(1,558,064)
(21,730,836)
Par
value of
Number
of securities securities
(€)
created
(194,758)
8
Successive
amounts of
theCompany’s
capital
(€)
Number
of shares
that make up
capital
125,695,400
320,200
3,295,762
40,025
8
126,015,600
(1,229,112)
(21,265,612)
(153,639)
8
124,786,488
15,711,925
(*),
15,751,950
15,598,311
(*),
2,179,472
28,555,087
272,434
8
126,965,960
Division of par value by 4
-
-
-
2
-
63,482,980
(1,280,000)
(29,963,700)
(640,000)
2
125,685,960
62,842,980
1,214,080
16,743,319
607,040
2
126,900,040
(*),
63,450,020
2005
1,043,690
14,580,282
521,845
2
127,943,730
(*),
63,971,865
2006
(2,650,000)
(80,805,619)
(1,325,000)
2
125,293,730
100,000
2,607,402
50,000
2
125,393,730
2004
Capital increases reserved for employees
1,275,510
17,689,386
637,755
2
126,669,240
15,870,745
62,646,865
62,696,865
(*),
63,334,620
(*)
As on December 31
2.3 Financial authorizations
A
SECURITIES REPRESENTING SHARES IN CAPITAL
General authorizations
A set of financial authorizations, in accordance with the new provisions of articles L. 225-129 et seq. of the Code of
Commerce, as introduced by the order of June 24, 2004 for the reform of securities, was granted to the Board of
Directors by the Ordinary and Extraordinary Shareholders' General Meeting of May 3, 2005. These financial
authorizations are intended to allow the Company, if necessary, to increase its permanent capital at the appropriate time
either by capitalization of reserves, income and issue, share or other premiums or by the issue of various securities
granting access, immediately or in the future, to Imerys’ share capital with or without preemptive subscription rights.
The maximum nominal amount
(*)
of the capital increases that may be carried out in this way was set at:
- €60 million for the issues carried out with preferential subscription right or with cancellation of preferential subscription
right, respectively;
- €90 million in total for all such issues.
Furthermore, the maximum nominal amount of loan securities that may be issued under these authorizations was set at
€2 billion.
(*)
To which amount shall be added, as the case may be, the additional mount of any shares to be issued to maintain, in accordance with the law, the rights
of holders or securities or rights giving access to capital.
182
ANNUAL REPORT 2006
Moreover, the Board of Directors was authorized by the Ordinary and Extraordinary Shareholders' General Meeting
of May 3, 2005 to:
- set the issue price of the various securities that may be issued in the event of discontinuation of shareholders’
preemptive subscription rights, within the limit of 10% of the Company’s share capital per year;
- carry out one or more capital increases, within the limit of 10% of the share capital, in order to compensate, except in
the case of a public exchange offer, contributions in kind made to the Company and comprised of securities that give
access to capital, including in a company of which the shares are not admitted for trading on a regulated market.
Pursuant to the power granted by the Shareholders’ General Meeting, the Board of Directors delegated to the Chief
Executive Officer the specific powers needed to carry out increases of the Company’s capital by capitalization of
reserves, income and issue, share or other premiums within the limit of a maximum nominal amount of €10 million.
These authorizations and the powers they offer are useful in giving Imerys access, within the best possible timeframe
and in line with the best possibilities on the financial market, to any new financial resources that may be necessary when
the time comes.
None of these general authorizations were used in financial 2006. To date, there are no securities issued by Imerys that
grant access, immediately or in the future, to its share capital.
As on the date of the present Annual Report, the Managing Board does not, for the time being, intend to exercise any of
the financial authorizations granted to issue securities representing shares in the Company’s capital. As all these
authorizations expire on July 2, 2007, their renewal will be proposed at the next Shareholders’ General Meeting, as will a
new authorization intended to empower the Board of Directors to issue compound securities.
Specific authorizations in favor of the Group’s employees or executives
• Capital increases reserved for Group employees
The Ordinary and Extraordinary Shareholders' General Meeting held on May 3, 2005 delegated to the Board of Directors
the powers needed to carry out capital increases reserved for employees that join the Group Savings Plan adopted on
September 1, 2000, as last amended on September 21, 2006. The maximum nominal amount of capital increases that
may be carried out in this way by the issue of shares is set at €1.6 million, i.e. a maximum of 800,000 shares; the price
of the shares to be issued must be determined in accordance with the provisions of article L. 443-5 of the Labor Code.
To date, the Board of Directors has used this authorization to enable Group employees who have joined the Group
Savings Plan to subscribe, under the Employee Shareholder Plan 2006 implemented on November 7, 2006, a maximum
of 50,000 new Imerys shares representing a maximum nominal capital increase of €100,000 (for more details on the
Employee Shareholder Plan 2006, see paragraph 2.5. below). As all of the 50,000 Imerys shares thus offered were
subscribed, the balance of the current authorization granted to the Board of Directors was, as on December 31, 2006,
€1.5 million, i.e. 750,000 shares.
As on the date of the present Annual Report, the Board of Directors does not plan to carry out a further capital increase
reserved for employees in 2007.
As this authorization expires on July 2, 2007, its renewal on a similar basis will be proposed at the next Shareholders’
General Meeting.
• Free share grants
(1)
The Ordinary and Extraordinary Shareholders’’ General Meeting of May 3, 2005 authorized the Board of Directors, in
accordance with articles L. 225-197-1 et seq. of the Code of Commerce, to grant free shares on a solely exceptional
basis to certain Group employees and corporate officers.
The maximum nominal amount of the free shares that may to be granted under this authorization, combined with the
shares likely to be allotted under stock subscription or purchase options granted by the Company, is set at €5.5 million,
i.e. a maximum number of 2,750,000 shares.
(1)
For more information on the framework for free share grants, see chapter6, section 5 of the Annual Report.
183
To date, the Board of Directors has used this authorization to grant 9,750 free shares to a limited number of the Group’s
executives.
As on the date of the present Annual Report, the Company plans to make new grants of free shares in 2007, on an
exceptional basis and to a limited number of beneficiaries, in accordance with the policy described in chapter 6, section
5 of the Annual Report.
This authorization will expire on July 2, 2008.
• Stock subscription or purchase options
( 2)
The Ordinary and Extraordinary Shareholders' General Meeting of May 3, 2005 delegated full powers to the Board of
Directors in order to grant options for the subscription of new shares or the purchase of existing shares to certain
employees and executives of the Group. The maximum nominal amount of the shares likely to be covered by the options
granted under this authorization, combined with that of the shares granted under free allotments by the Company, is set
at €5.5 million, i.e. a maximum number of 2,750,000 options.
In 2006, the Board of Directors used this authorization to grant 678,770 subscription options to Group employees (of
which 38,770 under the Employee Shareholder Plan 2006).
Consequently, allowing for the 9,750 free shares granted by the Company to date (see paragraph above), the balance of
the current authorization given to the Board of Directors au December 31, 2006 was €2,852,960, i.e. 1,323,520 share
subscription options or free shares.
As on the date of the present Annual Report, the Company plans to set up a new Imerys share subscription option plan
in 2007, pursuant to its general grant policy as described in chapter 6, section 4 of the Annual Report,
This authorization will expire on July 2, 2008.
Share buyback authorization
The Ordinary Shareholders' General Meeting of May 2, 2006 renewed the authorization previously granted by the
Ordinary and Extraordinary Shareholders' General Meeting of May 3, 2005 to allow the Company to buy back its own
shares, pursuant to the provisions of articles L. 225-209 et seq. of the Code of Commerce, within the limit of 10% of the
total number of shares issued and outstanding on January 1, 2006, i.e. 6,397,186 shares, and within the limit of a total
purchase volume of €703.7 million. At the same Shareholders' General Meeting, the maximum purchase price was set at
€110 per share and the minimum selling price at €40 per share.
The objective of this authorization is to enable the Company to make purchases or to have purchases made of its
own shares:
- through an investment services firm acting in the name and on behalf of the company under a liquidity contract in
accordance with a code of conduct recognized by Autorité des Marchés Financiers (“AMF”);
- for the purposes of granting stock purchase options or free shares to certain employees and executives of the Group;
- for the delivery or exchange of shares with respect to external growth operations;
- for the purposes of the subsequent cancellation of the shares acquired by reducing the Company’s capital, in order to
compensate any capital increases likely to result from the exercise of granted stock subscription options.
(2)
For more information on the framework for stock option plans, see chapter6, section 4 of the Annual Report.
184
ANNUAL REPORT 2006
Pursuant to that authorization, the Board of Directors delegated to the Chief Executive Officer the specific powers
needed to make purchases or have purchases made of the Company’s own shares, under the conditions and within the
limits set by the General Meeting (for details of the operations carried out under the share buyback programs in force
during the past financial year, see paragraph 2.4. of the present chapter).
As the authorization granted by the Ordinary and Extraordinary Shareholders' General Meeting of May 2, 2006 expires
on November 1, 2007, its renewal on a similar basis will be proposed at the next General Meeting (see chapter 8,
paragraph 1.4. and section 4 of the Annual Report).
Cancellation
The Ordinary and Extraordinary Shareholders' General Meeting of May 3, 2005 granted the Board of Directors the
authorization to cancel Company shares held with respect to the share buyback programs authorized by its
shareholders, within the limit of 10% of capital per 24-month period and to reduce the share capital accordingly.
The Board of Directors used this authorization to cancel:
- on January 17, 2006, 640,000 shares bought directly on the market by the Company in 2005, and
- on December 19, 2006, 685,000 shares bought directly on the market by the Company in 2006,
Representing a total of 1,325,000 cancelled shares.
As this authorization expires on May 2, 2007, its renewal on a similar basis will be proposed at the next General Meeting.
A
OTHER SECURITIES
As on the date hereof, the total nominal amount of ordinary bonds issued by the Company was €898.4 million (see note
33 to the consolidated financial statements).
As the decision to issue ordinary bonds is now within the competence of the Board of Directors, in accordance with
article L. 228-40 of the Code of Commerce the Board of Directors delegated full powers to the Chief Executive Officer on
July 26, 2005 for the purposes of carrying out such issues within the period of one year and the initial limit of a maximum
annual nominal amount of €1.5 billion and a maximum nominal amount per operation of €350 million.
In order to refinance the bond issues expiring in May and June 2007, the Board of Directors, at its meeting on February
14, 2007, fully empowered the Chief Executive Officer to issue, in or more times and on the French and/or international
market, ordinary bonds up to a maximal nominal amount of €500 million (or its equivalent value in any other currency)
and a maximum maturity of 10 years.
An overview of all the financial authorizations granted to the Board of Directors is set out in the table below.
185
TABLE SUMMARIZING EXISTING FINANCIAL AUTHORIZATIONS
Type of issue
Date of
authorization
Expiry of
authorization
(duration)
Nominal
maximum amount
of capital increase
that may result,
immediately
or in the future,
from the issue
(excluding
adjustments)
Maximum
amount
of issue of loan
instruments
Use of
existing
authorizations
(amount)
(1)
Potential
dilution that may
result from
the use of
authorizations
(%)
(2)
General authorizations
All securities, with preemptive
subscription rights
May 3, 2005
July 2, 2007
(26 months)
60 M€
2,000 M€
-
32.14%
All securities, without preemptive
subscription rights and with, as
the case may be, a priority period
granted by the Board of Directors
May 3, 2005
July 2, 2007
(26 months)
60 M€
2,000 M€
-
32.14%
Capitalization of reserves, earnings
and issue or share premiums
May 3, 2005
July 2, 2007
(26 months)
n/a
n/a
-
n/a
Compensation for contributions in
kind made of securities representing
shares in or giving access to capital
May 3, 2005
July 2, 2007
(26 months)
12.67 M€
2,000 M€
-
9.09%
90 M€
2,000 M€
-
41.54%
Overall limit
of general authorizations
(3)
Specific authorizations in favor of employees and executives
Shares reserved for Group
employees under the Group
Savings Plan without preemptive
subscription rights
May 3, 2005
July 2, 2007
(26 months)
1.6 M€
n/a
0.1 M€
1.25%
Share subscription options (4)
and free share grants
May 3, 2005
July 2, 2007
(26 months)
5.5 M€
n/a
2.647 M€
4.16%
7.1 M€
n/a
2.74 M€
5.31%
97.1 M€
2,000 M€
2.74 M€
43.39%
Overall limit
of specific authorizations in favor
of employees and executives
Authorized total
In accordance with the provisions of articles L. 225-138 I of the Code of Commerce and 155 et seq. of decree 67-236 of
March 23, 1967, the Board of Directors drew up an additional report on the definitive conditions of the capital increase
reserved for employees, as decided at its meeting of November 7, 2006 and the impact on the situation of existing
shareholders. A copy of this additional report and of the report drawn up by the Auditors may be obtained on request
from the Company’s head office.
(1)
Maximum nominal amount of securities representing debts of the Company that may give access to ordinary shares.
(2)
Based on current par value of €2 per share and the amount of share capital as on December 31, 2006.
(3)
i.e. 10% of share capital as on December 31, 2006.
(4
Potential dilution with respect to stock subscription options granted and not exercised as on the date of the present Annual Report is 4.51% (see chapter 6,
section 4 of the Annual Report).
186
ANNUAL REPORT 2006
2.4 Share buyback programs
A
LEGAL FRAMEWORK OF SHARE BUYBACK PROGRAMS IMPLEMENTED IN 2006
As described in paragraph 2.3. of the present chapter, the Ordinary Shareholders’ General Meeting of May 2, 2006
renewed, in favor of the Board of Directors and for a period of 18 months, i.e. until November 1, 2007, the authorization
previously granted by the Ordinary and Extraordinary Shareholders' General Meeting held on May 3, 2005 for the
Company to buy back its own shares, in accordance with articles L. 225-209 et seq. of the Code of Commerce.
The Board of Directors, at its meeting of May 3, 2005, delegated to the Chief Executive Officer all powers for the purposes
of making purchases or having purchases made of the Company’s shares, in the conditions and within the limits set by the
Shareholders’ General Meeting. Pursuant to that delegation, in 2006 the Chief Executive Officer, in the framework of the
programs authorized by the Shareholders’ General Meeting, carried out the operations described below.
Furthermore, as from June 1, 2004, the Company appointed Rothschild & Cie Banque to implement a new liquidity
contract, in compliance with the Association Française des Entreprises d’Investissement code of conduct, for a period of
one year, renewable by tacit agreement. The total cash amount allocated by the Company to the implementation of this
liquidity contract, initially set at €12 million, was increased to €24 million by an amendment entered into on September
28, 2005.
A
OPERATIONS CARRIED OUT IN 2006
(*)
The following operations were carried out with respect to the Company’s share buyback programs in 2006:
Details of purchase and sale transactions made out in 2006
Transactions made
from January 1 to May 1, 2006
Transactions made
from May 2 to December 31, 2006
May 3, 2005
May 2, 2006
Aggregate gross flow
Flux bruts cumulés
Date of Shareholders’ Meeting authorizing the program
Purchase
Sale
Purchase
Sale
153,230
-
531,770
-
Average price of transactions (€)
68.17
-
65,54
-
Total amount of transactions (€)
10,445,488
-
34,851,550
-
499,781
368,951
919,405
1,058,405
68.88
69.23
64.17
65.38
34,423,251
25,542,362
59,001,125
69,198,096
Transactions made by the Company
Number of shares
Transactions carried out via a liquidity contract
Number of shares
(*)
All prices and amounts are given excluding fees and commission.
187
Overview of purchase and sale transactions carried out in 2006
and number of self-held shares as on December 31, 2006
Transactions made from January 1 to December 31, 2006
Purchase
Sale
2,104,186
1,427,356
65.93
66.37
Montant total des transactions (€)
138,721,414
94,740,458
Number of shares
Taking into account the balance of the shares held by the Company in itself as on January 1, 2006, i.e. 648,170, the
cancellation on January 17 and December 19, 2006 of a total of 1,325,000 self-held shares, as well as the purchase and
sale transactions made during the year (see table above), the balance of shares held by the Company in itself, directly
or via the liquidity contract, as on December 31, 2006 was 0.
It is specified that all the Imerys shares acquired directly by the Company on the market in 2006 were assigned for the
purpose of cancellation.
All transactions by the Company with respect to its share buyback programs, whether directly or via the liquidity contract,
are made on a spot basis without any open purchasing or selling position being taken.
The bank fees relating to the purchase transactions made by the Company directly on the market in 2006 totaled €45,297.
A
OVERVIEW OF TRANSACTIONS MADE BY THE COMPANY FROM APRIL 1, 2006
TO FEBRUARY 28, 2007
In accordance with AMF recommendations, the period in question begins on the day after the date as on which the
report on the previous program was drawn up (see paragraph 5.2.4 of the Annual Report 2005).
Transactions made from April 1, 2006 to February 28, 2007
Open positions as on February 28, 2007
Open purchasing positions
Number of shares
Average maximum term
Average transaction price (€)
Average exercise price (€)
Purchases
Sales or
transfers
1,839,013
1,229,557
n.a
n.a
65.76
66.12
n.a
n.a
120,937,012
81,299,579
Forward
purchases
Call options
sold
Forward
sales
néant
néant
néant
néant
As on February 28, 2007, the results of the share buyback program in force were as follows:
- Percentage of capital directly or indirectly held by the Company itself: 0.32%
- Number of securities held in portfolio: 20,000, all assigned to the liquidity contract
- Number of shares cancelled in the past 24 months: 1,325,000
- Book value of portfolio: 14,060,975 euros
- Market value of portfolio: 13 484 000 euros
The Company did not use any derivatives with respect to the share buyback program in force.
188
Open selling positions
Call options
bought
ANNUAL REPORT 2006
A
RENEWAL OF SHARE BUYBACK PROGRAM
As the authorization granted by the Ordinary Shareholders’ General Meeting of May 2, 2006 expires on November 2,
2007, its renewal in favor of the Board of Directors for a further period of 18 months, i.e. until November 2, 2008, will be
proposed at the General Meeting of May 2, 2007 (see paragraph 1.4. and section 4 of chapter 8 of the Annual Report).
The number of shares that may be acquired under the new authorization may not exceed 10% of the number of issued
and outstanding shares as on January 1, 2007, i.e. 6,333,462 shares. The maximum purchase price will be €110 per
share and the minimum sale price €40 per share.
This new authorization will have the same objectives as previous programs, i.e. to enable the Company to make
purchases or to have purchases made of its own shares:
- through an investment services firm acting in the name and on behalf of the company under a liquidity contract in
accordance with a code of conduct recognized by AMF;
- with respect to employees’ participation in shareholding plans set up by the Company or for the purposes of granting
stock purchase options or free shares to certain employees and executives of the Group;
- for the delivery or exchange of shares with respect to external growth operations;
- for the purposes of the subsequent cancellation of the shares acquired by reducing the Company’s capital, in order
to remunerate any capital increases likely to result from the exercise of granted stock subscription options.
In accordance with the provisions of article L. 225-209 of the Code of Commerce and articles 241-1 to 242-7 of AMF’s
General Regulations, the description of this new program will be available on the Company’s website (www.imerys.com
– Financial Library – Regulated Information section) and on the AMF website (www.amf-france.org). A copy of this
description can also be obtained on request from the Company’s head office.
2.5 Employee shareholder plans
On November 7, 2006 the Board of Directors decided, in line with the principles approved by the Appointments and
Compensation Committee, to implement, in the framework of the Imerys Group Savings Plan, a new employee
shareholder plan for the Imerys Group in 2006 (“Employee Shareholder Plan 2003”) and to carry out a capital increase
reserved for employees. The definitive conditions for the operation were set out, in accordance with current regulations,
in an additional report by the Board of Directors and by the Auditors, a copy of which can be obtained on request from
the Company’s head office.
Under the 2006 Employee Shareholder Plan, the Group employees concerned were given the possibility of subscribing,
either directly or through a company mutual fund (FCPE Imerys Relais 2006), a maximum number of 50,000 new Imerys
shares to be issued with respect to a capital increase reserved for said employees. The subscription price for the new
shares was set, except in the case of specific local constraints, at €53.57, which corresponds to the reference price
(representing the average opening price for Imerys shares for the 20 trading days leading up to November 7, 2006), i.e.
€66.96, minus a 20% discount. The number of shares that may be subscribed individually by each employee was limited
to 30. For each of the first 15 shares subscribed, each participating employee was granted, except in the event of an
explicit waver by him or her, one share subscription option with an exercise price, except in the case of specific local
constraints, that is identical to the reference price, i.e. €66.96.
All the 50,000 new Imerys shares that could be issued under the 2006 Employee Shareholder Plan were taken up by
2,932 employees. In that respect, they were allocated a total number of 38,770 share subscription options (for more
information concerning the terms, conditions and results of the 2006 Employee Shareholder Plan, see chapter 4, section
8 of the Annual Report).
As on December 31, 2006, 0.39% of capital and 0.36% of voting rights in the Company were held by Group employees
under the Group Savings Plan.
189
3 - DISTRIBUTION OF SHARE CAPITAL
AND VOTING RIGHTS
3.1 Distribution of share capital and voting rights
Changes in the distribution of share capital and voting rights over the past three years are as follows:
As on 12/31/2004
As on 12/31/2005
As on 12/31/2006
Number
of shares
held
% of
share
capital
Voting
rights
attached
% of
voting
rights
Number
of shares
held
% of
share
capital
Voting
rights
attached
% of
voting
rights
Number
of shares
held
% of
share
capital
Voting
rights
attached
% of
voting
rights
PARGESA
17,191,712
27.09
34,383,424
42.53
17,141,712
26.80
34,283,424
42.47
17,091,712
26.99
34,183,424
35.09
(1)
16,744,028
26.39
16,744,028
20.71
16,744,028
26.17
16,744,028
20.74
16,744,028
26.44
33,488,056
34.38
33,935,740
53.48
51,127,452
63.24
33,885,740
52.97
51,027,452
63.21
33,835,740
53.43
67,671,480
69.47
238,950
0.38
338,953
0.42
216,355
0.34
328,967
0.41
248,118
0.39
352,253
0.36
4,208
ns
-
-
648,170
1.01
-
-
-
-
-
-
Public
29,271,122
46.14
29,385,611
36.34
29,221,600
45.68
29,373,519
36.38
29,250,762
46.18
29,404,174
30.18
Total
63,450,020
100.00
80,852,016
100.00
63,971,865
100.00
80,729,938
100.00
63,334,620
100.00
97,427,907
100.00
GBL
Sous-total
Group employees
(2)
Held by the Company
(1)
For the purposes of this table, GBL represents all the companies in Groupe Bruxelles Lambert; shares in the Company have been held since December 15,
2004 by Belgian Securities BV, a subsidiary of Groupe Bruxelles Lambert.
(2)
In accordance with the provisions of article L. 225-102 of the Code of Commerce, only shares held by Group employees under the Groups Savings Plan
appear in this table.
As on December 31, 2006 the members of the Board of Directors, including the Chief Executive Officer, held on a
personal basis 0.10% of the Company’s capital and 0.07% of voting rights (for more details, see chapter 6, paragraph
1.2 of the Annual Report).
3.2 Crossing of thresholds
- By a letter dated January 25, 2005, JP Morgan Chase & Co (JPMCC) notified the Company and declared to AMF that
on January 24, 2005 it had exceeded the threshold of a 5% holding in the Company’s capital with 3,210,205 shares,
representing 5.06% of capital and 3.98% of voting rights (Euronext notice 2005-0385, published on January 26, 2005).
As on December 31, 2005, JPMCC held 3,249,623 shares in the Company, representing 5.08% of capital and 4.02%
of voting rights. By a letter dated July 4, 2006, JPMCC notified the Company and declared to AMF that its holding
of the Company’s capital had fallen below the 5% threshold on July 3, 2006 (AMF decision and notice 206C1374 of
July 7, 2006).
- On December 20, 2006, the Pargesa-GBL group informed AMF that, following the allocation of double voting rights to
the Imerys shares held by Belgian Securities BV resulting from their being held in a registered account for more than
two years on December 15, 2006, the Pargesa-GBL group had exceeded the threshold of 2/3 voting rights in the
Company and Belgian Securities BV had directly exceeded the threshold of 1/3 voting rights (AMF decision and notice
207C0012). On January 9, 2007, AMF, at the request of Belgian Securities BV and based on article 234-9 6° of its
general regulations, granted the latter company a dispensation from the obligation to file a take-over bid plan for the
Company, as provided by article 234-2 of said regulations (AMF decision and notice 207C0065).
- By a letter dated February 28, 2007, M&G Investment Management Ltd notified the Company and declared to AMF
that on February 22, 2007 it had exceeded the holding threshold of 5% of the Company’s capital with 3,699,956
shares, representing 5.84% of outstanding capital and 3.8% of voting rights (AMF decision and notice 207C0401).
As of the date of the present Annual Report and to the best of Imerys’ knowledge, no shareholder other than those
mentioned in paragraph 3.1 above directly or indirectly holds more than 5% of voting rights.
190
ANNUAL REPORT 2006
3.3 Shareholders’ agreement
As of the date of the present Annual Report, the Company has not been informed of any agreement between the
Company’s shareholders.
3.4 Identification of bearer shareholders
Imerys asked Euroclear France to conduct a survey of identifiable bearer shares in the Company among financial
intermediaries with holding thresholds over 300,000 shares. This survey identified 1,005 bearer shareholders with over
400 shares that together represented 36.7% of share capital as on November 30, 2006 (of which 195 professional
investors holding 35.4% of share capital).
3.5 Group shareholding structure
The organizational chart showing relationships among Imerys shareholders with regard to share capital and voting rights
as of December 31, 2006 may be presented as follows:
Desmarais family
Frère-Bourgeois SA
control
Public
control
Power Group
Groupe Frère / CNP
50.00%(1) (2)
50.00%(1) (2)
Partjointco
54.10%(1)
62.90%(2)
Pargesa Holding SA
100 %(1) (2)
48.30%(1)
50.10%(2)
GBL
46.57%(1)
30.53%(2)
26.99%(1)
35.09%(2)
100%(1) (2)
Belgian Securities BV
26.44%(1)
34.38%(2)
Imerys
(1)
Percentage of share capital
(2)
Percentage of voting rights
191
Pargesa Holding SA is a company organized under the laws of Switzerland with registered offices located at 11 Grandrue, CH 1204 Geneva (Switzerland). Pargesa Netherlands BV is a company organized under the laws of the
Netherlands, with registered offices located at Herengracht 483, 1017 BT Amsterdam (Netherlands). Groupe Bruxelles
Lambert (GBL) is a company organized under the laws of Belgium, with registered offices located at Avenue Marnix 24,
1000 Brussels (Belgium). Belgian Securities BV is a company organized under the laws of the Netherlands, with
registered offices located at Herengracht 555, 1017 BW Amsterdam (Netherlands).
The direct tie-up of Imerys to the Pargesa-GBL group results from the merger of Parfinance into the Company, carried out
on June 30, 1998. Parfinance was then, and had already been for several years, the Company’s controlling shareholder.
Parjointco is a company organized under the laws of the Netherlands, with registered offices located at 3016 DERotterdam, Veerkade 5, Netherlands. It is held equally by Power Group, a Canadian group controlled by the family of
Mr. Paul Desmarais, Jr. and by Groupe Frère/CNP (Compagnie Nationale à Portefeuille), a Belgian group controlled by
the family of Baron Albert Frère.
Following the merger of Parfinance into the Company, the Pargesa-GBL group, then the majority shareholder of
Parfinance, declared on July 6, 1998 that, with respect to the concerted action that united them, it exceeded the
thresholds of one-third and one-half of share capital and voting rights in the Company. “Conseil des Marchés Financiers”
(CMF) acknowledged that said thresholds were exceeded as a result of the Company’s merger with Parfinance and
granted Pargesa-GBL group a dispensation from the obligation to file a take-over bid plan, pursuant to the provisions of
article 5-4-6 of its General Rules (notice 198C0696 of July 23, 1998).
192
ANNUAL REPORT 2006
4 - IMERYS STOCK EXCHANGE INFORMATION
Imerys shares are listed on the Euronext Paris Eurolist and are eligible for the deferred settlement system (“Système à
Règlement Différé” - SRD) (ISIN FR code 000012859-NK). Imerys is part of the SBF 120, which represents the 80
biggest stocks (in terms of float and liquidity) after the 40 stocks in CAC 40 index. The Imerys share is also part of “Dow
Jones Euro Stoxx 600,” the benchmark index for the euro zone, made up of 360 selected shares from the 11 countries in
the zone, as well as “FTSE4Good,” an index that identifies companies that are globally acknowledged for their good
corporate citizenship (respect for human rights and the environment, development of relationships with stakeholders).
No shares in an Imerys subsidiary are traded on any stock exchange.
4.1 High and low prices from 2002 to 2006
(euros)
Year
High
Low
Last price during financial year
2002
34.75
24.50
30.10
2003
42.95
23.25
41.73
2004
62.35
40.63
61.75
2005
65.00
54.15
61.10
2006
72.55
53.90
67.40
(Source: Euronext)
193
4.2 Trades since January 2005
(*)
Total monthly trading volume
Average daily trading
Highest price
(€)
Lowest price
(€)
Number
of shares
Capital
(M€)
Number
of shares
Capital
(M€)
Number
of trades
64.65
61.20
1,731,762
108.03
82,465
5.14
408
2005
January
February
65.00
60.90
1,651,511
104.41
82,576
5.22
565
March
62.90
55.90
2,923,588
173.24
139,218
8.25
730
April
59.95
54.80
3,344,590
191.56
159,266
9.12
554
May
59.90
54.15
4,239,280
239.63
192,695
10.89
623
June
60.00
54.95
2,572,722
149.45
116,942
6.79
590
July
61.30
55.25
2,692,885
156
128,233
7.43
620
August
62.65
58.65
2,297,014
140.73
99,870
6.12
539
September
62.75
60.00
1,510,360
92.86
68,653
4.22
447
October
64.50
56.00
3,903,893
237.46
185,900
11.31
763
November
59.45
56.10
3,308,468
191.13
150,385
8.69
623
December
61.40
59.10
1,923,814
116.45
91,610
5.55
511
32,099,887
1,900.95
Total 2005
2006
January
68.00
60.80
2,424,856
158.09
110,221
7.19
731
February
72.55
67.60
1,970,415
139.49
98,521
6.97
732
March
71.90
66.60
2,036,287
140.70
88,534
6.12
669
April
70.30
65.75
1,763,004
120.22
97,945
6.68
658
May
71.35
59.45
3,903,488
258.61
177,431
11.76
856
June
64.00
57.45
2,608,144
157.49
118,552
7.16
660
July
62.75
54.75
2,079,065
121.50
99,003
5.79
607
August
60.90
53.90
3,421,437
194.85
148,758
8.47
729
September
68.00
59.25
3,173,121
197.73
151,101
9.42
769
October
69.00
64.45
3,387,234
225.28
153,965
10.24
720
November
69.00
64.80
2,443,411
164.55
111,064
7.48
666
December
67.80
63.90
4,392,822
288.05
231,201
15.16
867
33,603,284
2,166.56
Total 2006
(Source : Euronext).
(*)
For the sake of historically consistent presentation, the prices given below were reprocessed to allow for the division by 4 of the par value
of the Imerys share on June 1, 2004.
194
ANNUAL REPORT 2006
5 - PARENT COMPANY/SUBSIDIARIES ORGANIZATION
As on December 31, 2006, the Group was made up of 330 companies in 48 countries.
Imerys, in its capacity as the Group’s head company, as well as some of its local holding companies (United States,
Brazil, United Kingdom, Asia-Pacific), provides all its subsidiaries with general assistance and with expertise in the
following areas: Purchasing; Insurance; Audit; Communication; Accounting & Financial Control; Environment, Health &
Safety; Tax; Information Technology; Innovation; Legal; Intellectual Property; Research & Development; Human
Resources; Strategy; Treasury.
These services include assistance and advice in response to case-by-case requests from its subsidiaries, more general
studies and analyses and recommendations or proposals on preventive actions.
Compensation for these services is determined on the basis of the related costs incurred by Imerys and its local holding
companies. These costs are allocated among the subsidiaries that benefit from the services, either in proportion to their
sales in relation to the total sales of the division they belong to or in proportion to the number of their employees. In
addition, external costs incurred specifically on behalf of a subsidiary and the cost of employees seconded to a
subsidiary are allocated separately to that subsidiary.
The Company invoiced a total amount of €23.2 million in financial 2006 with respect to services provided to its subsidiaries.
The Group’s main subsidiaries are listed in note 5.2 to the consolidated financial statements.
195
6 - DIVIDENDS
Imerys' policy with regard to distribution of dividends is based on earnings recorded for the financial year. Details of the
proposed dividend payout with respect to financial year 2006 are given in paragraph 1.1 and section 4.1 of chapter 8 of
the Annual Report. The dividends distributed with respect to financial years 2001 to 2005 were as follows:
2005
2004
2003
2002
2001
63,426,126
63,363,013
63,094,096
63,453,104
63,571,496
Group share of net income
from current operations, per share
4.53 €
4.12 €
3.48 €
3.11 €
2.69 €
1.65 €
1.50 €
1.25 €
1.07 €
0.92 €
Gross dividend per share
1.65 €
1.50 €
1.87 €
1.61 €
1.39 €
104.5 M€
95.0 M€
79.4 M€
67.5 M€
58.9 M€
Weighted average
number of outstanding shares
Total net distribution
Pursuant to articles 158-3 and 243 bis of the General Tax Code, the entire dividend proposed with respect to financial
2006 is eligible for the 40% discount from which private individuals domiciled in France for tax purposes may qualify.
Imerys does not usually make interim distributions. Dividends are paid once a year following the Shareholders’ General
Meeting called upon to approve the management and financial statements for the financial year just ended.
The right to claim dividends lapses five years from the date of payment. Unpaid amounts are deposited with the French
State in the first 20 days of January of the year following that lapse.
196
ANNUAL REPORT 2006
7-
SHAREHOLDER RELATIONS
Imerys seeks to establish a relationship of trust and openness with its shareholders and has created several
communication tools for informing them about the Group’s business, strategy, earnings and outlook, including:
• a corporate brochure, giving the key facts of the Annual Report about the Group’s business, development during the
financial year and financial results, published at the same time as the Group’s Annual Report;
• an Annual Report served as Document de Référence (Reference Document) and registered with AMF;
• a half-yearly report on the financial statements to June 30;
• four times a year, a Letter to Shareholders reviewing the Group’s news and financial performance;
• a Sustainable Development report that gives shareholders additional information on non-financial items.
All these documents are published in English and French and are sent regularly to every registered shareholder and to
the bearer shareholders who so request.
The financial community and individual shareholders are also informed on the Company’s business through financial
notices in the press each time results are published, including quarterly figures, and when annual Shareholders’ General
Meetings are convened.
Meetings and conference calls are held on a regular basis with financial analysts, financial intermediaries and
institutional investors in the leading financial markets in Belgium, France, Germany, Italy, the Netherlands, Switzerland
the United Kingdom and the United States. In 2006, more than 277 meetings were organized with approximately 370
investors and analysts.
Finally, the website www.imerys.com presents the Group’s activities and broadcast every results publication and the
annual General Meeting live. The online financial library groups together the information and documents that comprise
regulated information, as well as all the Group’s publications (results presentations, press releases, annual brochures
and reports, half-yearly reports and letters to shareholders).
Imerys also provides its registered shareholders with an online service for consulting their securities accounts through
the secure Internet site Olis@actionnaire (www.ct.olisnet.com — entry olis@actionnaire). This site gives shareholders
access to the value of their securities account, their latest security movements, the availability of their securities, their
voting rights and the prices and characteristics of the securities in their portfolio. Finally, it enables them to vote on line
and obtain all documentation concerning the Company’s General Meetings.
Financial Communications belongs to the Group Finance & Strategy Department:
Telephone: +33 (0) 1 49 55 66 55 / Fax: +33 (0) 1 49 55 63 98
Imerys shares are serviced by the following bank:
CACEIS Corporate Trust
14. rue Rouget de Lisle
92862 Issy les Moulineaux Cedex 9
Telephone: +33 (0) 1 57 78 34 44 / Fax: +33 (0) 1 57 78 34 00 / e-mail: [email protected]
CACEIS Corporate Trust is more specifically at the service of registered shareholders for the management of their
Imerys shares.
197
2
ANNUAL REPORT 2006
6
Corporate Governance
pages
200
1 - Board of Directors
223
2 - General Management
225
3 - Compensation
228
4 - Imerys stock options
231
5 - Free shares
232
6 - Corporate Officers’ transactions
in securities in the Company
234
7 - Regulated agreements and commitments
Since May 3, 2005, the Company has been organized as a Limited Liability Company (Société Anonyme) with a Board
of Directors. On that date, it also opted to dissociate the duties of Chairman of the Board of Directors and of Chief
Executive Officer, performed by Mr. Aimery Langlois-Meurinne and Mr. Gérard Buffière, respectively. This structure
keeps supervisory and management bodies separate and enables the Company to continue applying best practices in
terms of Corporate Governance, while simplifying the structure and internal workings of its line management bodies.
The Company complies with the French regulations to which it is subject with respect to Corporate Governance.
199
CHAPTER 6 - Corporate Governance
1 - BOARD OF DIRECTORS
1.1 Powers
Pursuant to legal and statutory provisions, the Board of Directors:
• Appoints and, as the case may be, dismisses the Chairman and the Chief Executive Officer and, as the case may be,
on the Chief Executive Officer’s proposal, one or more delegate Chief Executive Officers;
• Constantly controls the management of the Company by the Chief Executive Officer.
For the purposes of that control and in accordance with article 16 of the by-laws:
• The Board of Directors makes the checks and controls that it judges appropriate at any time of the year. It may obtain
any documents that it judges useful for carrying out its mission;
• The Chief Executive Officer periodically presents a report to the Board of Directors on the status and running of
Company affairs, which is drawn up in the conditions requested by the Board of Directors. The report includes the
presentation of the Group’s quarterly and half-yearly financial statements;
• Within three months of closing the financial year, the Chief Executive Officer presents the Company’s annual financial
statements, the Group’s consolidated financial statements and his report on the financial year just ended to the Board
of Directors for the purposes of checking and control. The Board of Directors settles those financial statements and
the terms of its management report to be presented to the annual Shareholders’ General Meeting;
• The Chief Executive Officer submits to the Board of Directors his annual operating objectives for the year ahead and,
periodically, his long-term strategic projects.
Furthermore, pursuant to the provisions of the Board of Directors’ Internal Charter, the Board examines and approves the
following prior to their implementation and with respect to the general powers granted to it by the law:
• The strategic orientations of the Company and Group and any operations likely to influence significantly such orientations;
it also examines periodically the long-term strategic plan (multiyear plan) drawn up or revised by the Chief Executive
Officer;
• The following operations, for which the amount per operation is greater than the threshold of €75 million set by the
Board of Directors:
- Any operations likely to modify the financial structure and scope of business of the Company and the Group, and
any commercial or industrial agreements that bind the future of the Company or the Group,
- The acquisition of an interest in, takeover or disposal - and any operation that may be considered, from an
economic point of view, as the acquisition of an interest, takeover or disposal - of any fixed asset;
• As the case may be, the allocation of management tasks between the various Delegate Chief Executive officers, as
proposed by the Chief Executive Officer;
• The permanent delegation by the Chief Executive Officer of part of his or her powers in favor of a third party (i.e. not
being a Director) with a view to carrying out one or more defined transactions;
• More generally, any commitment by the Company or the Group that may constitute a regulated agreement, in
accordance with the law.
Finally, the Board of Directors grants any specific delegations of its powers to the Chief Executive Officer, within the
limits and conditions set down by law, for the purposes of:
• The granting by the Company of any personal security (such as third-party guarantees and endorsements) or of any
security on its assets, within the limit of a total amount determined in principle every year;
• Making, pursuant to the authorizations granted to the Board of Directors by the Shareholders’ General Meeting,
purchases by the Company of its own shares or certain capital increase operations;
• Carrying out issues of ordinary bonds in one or more times.
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ANNUAL REPORT 2006
1.2 Composition
The Board of Directors is currently composed of fourteen members. Their term of office is three years and one third of
members are renewed each year.
The composition of the Board of Directors is designed to allow the Group to benefit from the diverse and international
professional experience of its members and to involve the representatives of Imerys’ controlling shareholders in the
definition and implementation of the Group’s strategy.
A CHANGES IN 2006
The Company’s shareholders, at their Ordinary General Meeting of May 2, 2006, approved the renewal for a further
period of three years of the terms of office as Directors of Mr. Jacques Drijard, Mr. Jocelyn Lefebvre and Mr. Eric Le
Moyne de Sérigny. At the same meeting, Mr. Gilbert Milan was appointed as a new Director of the Company for the
same statutory period of three years, in succession to Mr. Patrick Kron who had informed the Board of his wish not to
request the renewal of his term of office for personal reasons relating to his lack of availability with respect to his duties.
A COMPOSITION
On the date of the present Annual Report, the composition of the Board of Directors is as follows:
Name
Age
Nationality
Position
Date of 1
appointment
Year
of renewal
of term of
office (1)
st
Number
of shares Independent
member
owned
Aimery LANGLOIS-MEURINNE
63
French
Chairman
09/22/1987
2008
30,000
(2)
No
Paul DESMARAIS, Jr.
52
Canadian
Vice-Chairman
10/03/1991
2007
1,080
(2)
No
05/03/2005
2008
23,000
(4)
No
05/03/2005
2008
Gérard BUFFIERE
62
French
Director and
Chief Executive
Officer
Aldo CARDOSO
51
French
Director
Jacques DRIJARD
64
French
Jocelyn LEFEBVRE
49
Maximilien de LIMBURG STIRUM
35
FrancoCanadian
FrancoBelgian
Director
09/25/1996
(3)
700
2009
Yes
600
(2) (5)
No
No
No
Director
06/16/1994
2009
900
(2)
Director
05/03/2005
2008
600
(2)
Gilbert MILAN
54
French
Director
05/02/2006
2009
600
Yes
Eric Le MOYNE de SERIGNY
60
French
Director
06/12/1996
2009
680
Yes
Yves-René NANOT
70
French
Director
06/23/1996
2007
3,000
Yes
Grégoire OLIVIER
46
French
Director
05/06/2002
2007
600
Yes
Robert PEUGEOT
56
French
Director
11/04/2002
2007
600
Thierry de RUDDER
57
FrancoBelgian
Director
03/13/2000
2007
1,000
Jacques VEYRAT
44
French
Director
05/03/2005
2008
600
(6)
Total
No
Yes
63,960
(1)
The exact date of the renewal will be the date of the General Meeting called to rule on the Company’s financial statements for the previous year.
(2)
Director representing a majority shareholder in the Company.
(3)
Yes
(2)
Gérard Buffière also holds 51.34 units in FCPE Imerys Actions and 24.08 units in FCPE Imerys Relais 2006, created under employee shareholder plans
(see chapter 5, paragraph 2.5 of the Annual Report); the assets of these funds are mainly invested in Imerys shares.
(4)
Chief Executive Officer of the Company.
(5)
Former executive of the Company.
(6)
i.e. 0.10% of capital and 0.07% of voting rights as on December 31, 2006.
201
The minimum number of shares required to be a member of the Board of Directors is set at 100 by the by-laws. The
Board’s Internal Charter increased that number to 600. In that respect, the Company’s controlling shareholder groups,
which are represented on the Board of Directors by six members, together hold 33,835,740 shares (see chapter 5,
paragraph 3.1 of the Annual Report).
Pursuant to statutory provisions, the terms of office of Chairman and Vice-Chairman of the Board of Directors end ipso
jure following the General Meeting that rules on the financial statements and management for the financial year during
which the incumbent of either position reaches the age of 70.
Furthermore, four members of the Supervisory Board are not solely French nationals and seven are considered
“independent.” This proportion of independent members in the composition of the Board of Directors (6 out of 14 then,
following the General Meeting on May 2, 2007, 7 out of 14) is greater than the one-third recommended by the
consolidated AFEP-MEDEF report of October 2003 for companies with controlling shareholders.
The definition of independence retained by the Board of Directors at its meeting of May 3, 2005 on the proposal of its
Appointments & Compensation Committee and confirmed at its meeting on February 14, 2007 is “the lack of any
relationship between a member of the Board of Directors and Imerys, its Group or its management that could affect the
exercise of his or her freedom of judgment.”
In accordance with the recommendations of the consolidated AFEP-MEDEF report, the Board stated in its Internal
Charter that the independence criteria used (*) were neither exclusive of independent status if none of them was met, nor
necessarily sufficient for that status to be granted. A member’s independence must be appraised according to his or her
particular personal situation or that of the Company, with respect to his or her shareholding or for any other reason.
A CHANGES PLANNED IN 2007
After the examination and opinion given by the Appointments & Compensation Committee, the Board will put the
following to the Shareholders at the General Meeting of May 2, 2007 (see chapter 8, sections 1 and 4 of the Annual Report):
• Renewal of the terms of office as Directors of Mr. Paul Desmarais, Jr., Mr. Grégoire Olivier, Mr. Robert Peugeot and
Mr. Thierry de Rudder for a further period of three years, i.e. until the end of the General Meeting called in 2010 to rule
on the financial statements for financial 2009.
• Appointment of Mr. Jean Monville as a new Director, for the same statutory period of three years, in succession to
Mr. Yves-René Nanot whose term of office cannot be renewed because of his reaching the age limit set by the
Company’s by-laws.
In accordance with the principles used by the Company with respect to the qualification of its Directors as independent,
and after examination of their personal situation, the Appointments & Compensation Committee granted that status to
Mr. Olivier, Mr. Peugeot and Mr. Monville, and refused it for Mr. Desmarais, Jr. and Mr. de Rudder as representatives of
a controlling shareholder of the Company.
(*)
For its application, the Board decided that their being in one or more of the following situations was likely to affect that freedom of judgment:
- an employee, corporate officer or Director (or similar) of a subsidiary of Imerys, of its controlling shareholders or major shareholders (i.e. with a share of over
10% of its capital) or having been one in the past five years;
- a corporate officer or Director (or similar) of a company in which Imerys, one of its employees or another corporate officer of Imerys (now or in the past five
years) is a director (or similar);
- a significant customer, supplier or banker of Imerys or its Group;
- a close relation of a corporate officer of Imerys;
- an auditor of Imerys in the past five years;
- a Director (or similar) of Imerys for more than 12 years.
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ANNUAL REPORT 2006
1.3 Information on the Directors (*)
A MAIN ACTIVITY AND OTHER RESPONSIBILITIES OF THE MEMBERS
OF THE BOARD OF DIRECTORS IN 2006
Chairman of the Board of Directors
Born on May 27, 1943
Work address:
Pargesa Holding S.A.
11, Grande Rue – 1204 Geneva (Switzerland)
A doctor of law and graduate of Institut d'Etudes Politiques, Paris and Ecole Nationale d'Administration (Robespierre class), Paris,
Aimery Langlois-Meurinne began his career in 1971 with Paribas where, for 11 years, he was successively Consultant Engineer,
Industrial Delegate in Japan, Assistant Vice-President then Deputy Vice-President in charge of the Asia-Pacific department and, finally,
Deputy Vice-President in charge of the international financial operations department. He then joined AG Becker Paribas in New York as
Managing Director and member of the Executive Committee, then Merrill Lynch Capital Markets (New York) where he held the position
of Managing Director. In 1987, he joined Parfinance as Chief Executive Officer before becoming its Vice-Chairman & Chief Executive
Officer in 1990, when he was also appointed Director and Chief Executive Officer of Pargesa Holding S.A. (Switzerland).
List of activities and other responsibilities in French and foreign companies in 2006:
Main activities:
• Director-Chief Executive Officer: Pargesa Holding S.A. (holding company - Switzerland).
• Chairman of the Board of Directors: Imerys.
Other responsibilities:
•
•
•
•
Director-Chairman: Pargesa Luxembourg S.A. (Luxembourg), Pargesa Netherlands BV (Netherlands).
Director and Vice-Chairman of the Investment Committee and Management Committee: Sagard Private Equity Partners (France).
Chairman of the Investment Committee: Pascal Investment Advisers SA (Switzerland).
Director: Groupe Bruxelles Lambert S.A. (Belgium); Club Méditerranée, Eiffage, PAI Management (France).
Paul DESMARAIS, Jr.
Vice-Chairman of the Board of Directors
Born on July 3, 1954
Work address:
Power Corporation du Canada
751, Square Victoria – Montreal (Quebec)
Canada H2Y 2J3
After studies at McGill University, Montreal and an MBA from INSEAD, Fontainebleau, Paul Desmarais, Jr. began his career in 1979 with
SG Warburg in London before joining Power Corporation du Canada in 1982. In 1984, he was elected Vice-Chairman of Corporation
Financière Power, of which he became Chairman of the Board of Directors in 1990. In 1991, he was appointed Vice-Chairman of the
Board of Power Corporation du Canada. As of 1996, Paul Desmarais, Jr. is Chairman of the Board and Co-Chief Executive Officer of
Power Corporation du Canada.
Main activity:
• Chairman of the Board and Co-Chief Executive Officer: Power Corporation du Canada (holding company - Canada).
•
•
•
•
•
•
(*)
Chairman of the Executive Committee: Corporation Financière Power (Canada).
Delegate Director and Vice-Chairman of the Board: Pargesa Holding S.A. (Switzerland).
Vice-Chairman of the Board of Directors: Imerys.
Director and member of the Executive Committee: Great-West Lifeco Inc. (Canada) and its main subsidiaries; Société Financière IGM
Inc. (Canada) and its main subsidiaries.
Director: Groupe Bruxelles Lambert (Belgium); Suez, Total S.A. (France).
Member of the International Advisory Board of La Poste (France).
As notified individually to the Company by each of the Board of Directors members concerned.
203
Gérard BUFFIERE
Director and Chief Executive Officer
Born on March 28, 1945
Work address:
Imerys
75007 Paris (France)
A graduate of Ecole Polytechnique, Paris with a Master of Sciences from Stanford University (United States), Gérard Buffière began his
career in 1969 in the French group Banexi. After holding various positions with the American group Otis Elevator, in 1979 he joined the
international group Schlumberger, where he held various positions before becoming Chairman of the Electronic Transactions divisions in
1989. His career continued as Chief Executive Officer of the Industrial Equipment division of the French group Cegelec in 1996. He
joined the Imerys group in March 1998 where he was appointed Vice-President Building Materials then, in 1999, Vice-President Building
Materials and Ceramics & Specialties; in 2000 he took charge of the Pigments & Additives business group, then the Pigments for Paper
business group until 2003. Chief Executive Officer from January 1, 2003 to May 3, 2005, Gérard Buffière was appointed Director and
confirmed as Chief Executive Officer of Imerys as from that date.
Main activity:
• Director and Chief Executive Officer: Imerys.
• Chairman of the Board of Directors: Financière du Parc Duquesne (France).
• Manager: Société Immobilière Buffière (France).
Aldo CARDOSO
Director
Address:
45, boulevard de Beauséjour
A graduate of Ecole Supérieure de Commerce, Paris and holder of a Master of Law, Aldo Cardoso began his career in 1979 at Arthur
Andersen, where he became a partner in 1989. Vice-President Auditing and Consulting Europe in 1996, then Chairman of Andersen
France from 1998 to 2002, he was appointed Chairman of the Supervisory Board of Andersen Worldwide from 2000 to 2002, before
becoming Chairman of the Managing Board from 2002 to 2003. In that capacity, Aldo Cardoso managed the shutdown of Andersen’s
activities worldwide.
Responsibilities:
• Director: Mobistar (Belgium); Accor, Gaz de France, Imerys, Orange, Rhodia (France).
• Censor: Axa Investment Managers, Bureau Veritas (France).
Jacques DRIJARD
Director
Work address:
PGB S.A.
1, Rond-Point des Champs-Elysées
A Civil Engineering graduate of Ecole Nationale Supérieure des Mines, Paris, Jacques Drijard began his career in 1966 at DBA Group
Bendix Corp, before joining the Le Nickel Penarroya Mokta group in 1970. He joined Imetal (later renamed Imerys) in 1974 and in 1988
became Chief Financial Officer and Member of the Executive Committee until 1996. As of 1997, Jacques Drijard is Deputy Chief
Executive Officer of Pargesa Holding SA.
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ANNUAL REPORT 2006
Main activity:
• Deputy Chief Executive Officer: Pargesa Holding S.A. (holding company - Switzerland).
•
•
•
•
Chairman & Chief Executive Officer: PGB S.A. (France).
Chairman of the Board of Directors: Société Française Percier Gestion “SFPG” (France).
Delegate Director: Pargesa Compagnie S.A. (Switzerland).
Director: Imerys (France); Pargesa Netherlands B.V. (Netherlands).
Jocelyn LEFEBVRE
Director
Born on December 22 1957
Address:
11, Chemin Sous-Caran
1222 Vésenaz (Switzerland)
A business administration graduate of Hautes Etudes Commerciales (HEC) Montréal and a member of the Quebec order of chartered
accountants, Jocelyn Lefebvre began his career in 1980 at Arthur Andersen & Co. in Montreal, Brussels and Paris. In 1986, he joined
Société Générale de Financement du Québec and the Canadian industrial group M.I.L. Inc., where he was successively Assistant
Chairman, Vice-Chairman for administration and special projects then for corporate affairs while holding the position of Chairman of one
of its main subsidiaries (Vickers Inc.) until 1991.
In 1992, Jocelyn Lefebvre joined the Power Corporation du Canada group, where he has held various positions in Europe.
Main activity:
• Director: Power Corporation du Canada (holding company – Canada).
• Chairman: Sagard S.A.S. (France).
• Member of the Managing Board: Partjointco N.V., Power Financial Europe B.V. (Netherlands).
• Director: Suez-Tractebel S.A. (Belgium); Imerys (France).
Eric LE MOYNE DE SERIGNY
Director
Born on April 7, 1946
Work address:
Alternative Leaders France
43, avenue Marceau
With a postgraduate degree in law from the Paris law faculty, Eric le Moyne de Sérigny began his career in 1968 at Banque Rothschild,
where for 15 years he held various management positions before joining Chase Manhattan Bank as Director and Vice-President in 1984. In
1988, he joined Lloyds Bank S.A. where he was successively Chief Executive Officer then Chairman & Chief Executive Officer until 2002.
Since 2003, Eric le Moyne de Sérigny has been Chairman of the Managing Board of Alternative Leaders France S.A.
Main activity:
• Chairman of the Managing Board: Alternative Leaders France S.A. (portfolio management company - France).
• Director: Imerys, Istac S.A., Richelieu Finance (France).
205
Maximilien DE LIMBURG STIRUM
Director
Work address:
Compagnie Nationale à Portefeuille
12, rue de la Blanche Borne
6280 Loverval (Belgium)
A graduate of Solvay business school, Brussels, Maximilien de Limburg Stirum began his career in 1995 with Compagnie Nationale à
Portefeuille, where he has been Vice President Investments since 2003.
Main activity:
• Vice President investments, Compagnie Nationale à Portefeuille (holding company - Belgium).
• Director: Distripar, GB-INNO-BM, MESA (Molignée Energie), Quick Restaurants, Solvay Business School Alumni, Trasys,
•
•
•
Financière Trasys (Belgium); Entremont Alliance, Financière Flo, Imerys, Tikehau Capital Advisors, UNIFEM (France); Swifin
(Luxembourg).
Member of the Supervisory Board: Groupe Flo (France).
Permanent representative of Compagnie Immobilière de Roumont (Belgium) on the Board of Directors of: Belgian Sky Shops, GIB
Corporate Services, Ijsboerke Ice Cream International, Starco (Belgium).
Permanent representative of Fibelpar (Belgium) on the Board of Directors of: Château Rieussec (France).
Gilbert MILAN
Director
Address:
45 rue de Saint Nom – 78112 Fourqueux (France)
A civil engineering graduate of Ecole Nationale des Ponts et Chaussées (France) with an MBA from Harvard Business School (United
States), Gilbert Milan began his career at Boston Consulting Group in 1979 where he performed various consulting assignments before
becoming Managing Partner from 1984 to 1994. In 1995, he created Eveil et Jeux with his wife and was the company’s Chief Executive
Officer until its sale to FNAC in 2001. In 2003, he founded Deventis Conseil and Milinvest Ventures, for which he is general manager
and performs consulting assignments to private equity funds and co-investments.
Main activity:
• Chairman of Milinvest Ventures (Consulting and Management – France).
• Director: Imerys since May 2, 2006.
• Manager of Milinvest (France).
Yves-René NANOT
Director
Work address:
Ciments Français
Tour Ariane – 92088 Paris la Défense (France)
A graduate of Arts et Métiers engineering school, Paris with an MBA and a doctorate from the University of California (UCLA), YvesRené Nanot began his career in 1962 with DuPont de Nemours in the United States then held several positions in France and Europe
until 1983. From 1980 to 1983, he was Chairman of the Managing Board of DuPont de Nemours France. In 1983, he joined the Total
group where he was successively Chairman & Chief Executive Officer of Hutchinson SA, Chairman & Chief Executive Officer of Total
France, then Chief Executive Officer of Total Raffinage Distribution and Member of the Executive Committee of the Total group.
Since 1993, Yves-René Nanot has been Chairman & Chief Executive Officer of Ciments Français.
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ANNUAL REPORT 2006
Main activity:
• Chairman & Chief Executive Officer: Ciments Français (Cement manufacturing and marketing company - France).
• Chairman of the Board of Directors: Rhodia (France).
• Director: Suez Cement Co. (Egypt); Essroc (United States); Imerys, Provimi (France); Zuari Cement Ltd (India); Italcementi (Italy);
Cimar (Morocco); Asia Cement Public Co. Ltd (Thailand).
Grégoire OLIVIER
Director
Born on October 19, 1960
Work address:
Faurecia
2, rue Hennape
92735 Nanterre cedex (France)
A graduate of Ecole Polytechnique and Ecole des Mines engineering schools (France) with an MBA from the University of Chicago,
Grégoire Olivier began his career at the French Ministry of Industry from 1985 to 1989 before becoming Technical Advisor to the Prime
Minister on Industry, Energy and the Environment in 1990. In 1991, he joined the Pechiney group where he held various positions in
Europe and the United States until 1998. In 1998, he joined the Alcatel group where he was Division Vice President then Chief Executive
Officer of Saft. In 2001, Grégoire Olivier was appointed Chairman of the Managing Board of Sagem. On March 18, 2005, he became a
Member of the Managing Board of SAFRAN (resulting from the merger of Sagem and Snecma) and Chairman & Chief Executive Officer
of Sagem Communication until August 2006.
On September 8, 2006, he was appointed Chairman & Chief Executive Officer of Faurecia.
Main activities:
• Chairman & Chief Executive Officer as from September 8, 2006: Faurecia (automotive parts maker – France).
• Member of the Managing Board until August 21, 2006: SAFRAN.
• Chairman & Chief Executive Officer until August 21, 2006: Sagem Communication (France).
• Director: Imerys, Wendel Investissement (France).
• Member: Defense scientific committee, Strategic committee on information technology (France).
Robert PEUGEOT
Director
Work address:
PSA Peugeot Citroën
Route de Gizy – 78140 Vélizy-Villacoublay (France)
A graduate of Ecole Centrale de Paris engineering school and holder of an MBA from INSEAD, Fontainebleau (France), Robert Peugeot
began his career in 1975 with Peugeot, where he held several positions both in France and abroad. In 1985 he joined Citroën becoming
Vice President Quality and Organization from 1993 to 1998, when he was appointed Vice President Innovation & Quality of PSA
Peugeot Citroën and Member of the Executive Committee; since 2002, he has been Chairman & Chief Executive Officer of FFP.
Main activities:
• Chairman & Chief Executive Officer: F.F.P. (Société Foncière, Financière et de Participations - real estate, financial and holding
company - France).
• Member of the Executive Committee and Vice President Innovation & Quality: PSA Peugeot Citroën (vehicle manufacturer - France).
207
• Chairman & Chief Executive Officer: Simante, SL (Spain).
• Member of the Supervisory Board: Citroën Deutschland Aktiengesellschaft (Germany); Aviva France (France).
• Director: Citroën Danemark A/S (Denmark); B-1998, SL, Fomentos de Construcciones y Contratas, S.A. "FCC", FCC Construccion,
•
•
•
S.A. (Spain); Aviva Participations, E.P.F. (Etablissements Peugeot Frères), GIE Recherches et Etudes PSA Renault, Imerys,
Immeubles et Participations de l’Est, L.F.P.F. (La Française de Participations Financières), Sanef (France); Citroën UK Ltd (United
Kingdom).
Manager: CHP Gestion, Rodom (France).
Permanent representative of F.F.P. on the Supervisory Board of Zodiac (France).
Statutory representative of F.F.P.: Chairman of Financière Guiraud (France).
Thierry DE RUDDER
Director
Born on September 3, 1949
Work address:
Groupe Bruxelles Lambert
24, avenue Marnix
1000 Bruxelles (Belgium)
With degrees in mathematics from Geneva University and mathematics applied to business management from Brussels Université Libre
and an MBA from the Wharton School, Philadelphia, Thierry de Rudder began his career in the United States with First National Bank of
Chicago before joining Citibank in 1975 where he held several positions in New York than in Europe. In 1986, he joined Groupe
Bruxelles Lambert, becoming Delegate Director in 1993.
Main activity:
• Delegate Director: Groupe Bruxelles Lambert S.A. (holding company - Belgium).
• Director: Compagnie Nationale à Portefeuille S.A., Suez-Tractebel (Belgium); Imerys, Suez, Total (France).
Jacques VEYRAT
Director
Born on November 4, 1962
Work address:
Neuf Cegetel
40-42, Quai du Point du Jour
92100 Boulogne Billancourt (France)
A graduate of Ecole Polytechnique and Ecole des Ponts et Chaussées, Paris engineering schools, Jacques Veyrat began his career at
the French Treasury Department then held various positions on ministers’ staffs. In 1995, he joined the Louis Dreyfus group, where he
held several management positions, particularly with Louis Dreyfus Armateurs. From 1998 to 2005, Jacques Veyrat was Chairman &
Chief Executive Officer of Neuf Telecom before becoming Chairman & Chief Executive Officer of the Neuf Cegetel group (resulting from
the merger of Neuf Telecom et Cegetel) in 2005.
Main activity:
• Chairman & Chief Executive Officer: Neuf Cegetel (Telecommunications – France).
•
•
•
•
Chief Executive Officer: Louis Dreyfus Technologies (France).
Director: Imerys, Irise, SHD (Société du Haut Débit), Tajan (France).
Member of the Supervisory Board: Amboise Investissement, Jet Multimedia (France).
Permanent representative of Neuf Cegetel: Chairman of Wengo, Director of LD Collectivités (France).
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ANNUAL REPORT 2006
A LIST OF RESPONSIBILITIES HELD BY THE MEMBERS OF THE BOARD, 2002 - 2005
Aimery
LANGLOIS-MEURINNE
2005
2004
• Director-Chief Executive
Officer: Pargesa Holding S.A.
(Switzerland).
(Switzerland).
• Chairman of the Board:
(Netherlands).
(Switzerland).
• Chairman of the Board of
Directors: Imerys, as from
May 3, 2005, previously
Chairman of the Supervisory
Board.
• Chairman of the
Supervisory Board: Imerys.
(Switzerland).
• Chairman of the
• Director-Chairman: Pargesa
Luxembourg S.A.
(Luxembourg); Pargesa
Netherlands BV
(Netherlands).
• Director-Chairman: Pargesa
Luxembourg S.A.
(Luxembourg).
2003
• Chairman of the
2002
• Director: Groupe Bruxelles
Lambert S.A. (Belgium);
Corporation Financière Power
(Canada); Club Français du
Livre, Eiffage (France);Orior
Holding S.A. (Switzerland).
• Director and Vice-Chairman
of Investment Committee and
Management Committee:
Sagard Private Equity
Partners (France).
(Canada); Club Français du
Livre, Eiffage (France).
• Chairman of the Board and
Co-Chief Executive Officer:
Power Corporation of Canada
(Canada).
(Canada).
(Canada).
(Canada).
(Canada).
(Canada).
(Canada).
(Canada).
• Vice-Chairman of the Board
of Directors: Imerys, as from
May 3, 2005, previously of
the Supervisory Board.
• Vice-Chairman of the
• Delegate Director and ViceChairman of the Board:
(Switzerland).
• Director and member of the
Executive Committee:
S.A. (Belgium); Great-West
Lifeco Inc. (Canada) and its
main subsidiaries; Pargesa
Executive Committee:
S.A. (Belgium); Great-West
Lifeco Inc. (Canada) and its
main subsidiaries; Pargesa
• Director: Gesca Ltée, La
Presse Ltée, Les Journaux
Trans-Canada (1996) Inc.
(Canada); Suez, Total
(France).
• Director: Gesca Ltée, La
Presse Ltée, Les Journaux
Trans-Canada (1996) Inc.
(Canada); Suez, Total Fina
Elf (France).
• Chairman of the Managing
Board: Imerys.
Board: Imerys.
• Member of the Managing
Board: Imerys.
Directors: Financière du Parc
Duquesne (France).
Duquesne (France).
Duquesne (France).
• Manager: Société
Immobilière Buffière (France).
• Lecturer, Institut d'Etudes
Politiques de Paris.
• Lecturer, Institut d'Etudes
Politiques de Paris
• Chairman: Andersen
France.
• Director: Mobistar
(Belgium); Axa Investment
Managers, Gaz de France,
Imerys (as from May 3,
2005), Orange, Rhodia
(France).
• Director: Mobistar
(Belgium); Axa Investment
Managers, Gaz de France,
Orange, Penauille
Polyservices, Rhodia
(France).
• Executive Chairman:
Andersen Worldwide
(Switzerland).
• Director and Vice-Chairman
of Investment Committee and
Management Committee:
Sagard Private Equity
Partners (France).
Eiffage, PAI Management
(France).
Paul DESMARAIS, Jr.
• Delegate Director and ViceChairman of the Board:
(Switzerland).
Executive Committee: GreatWest Lifeco Inc. (Canada)
and its main subsidiaries;
Société Financière IGM Inc.
(Canada) an its main
subsidiaries.
Suez, Total (France).
Gérard BUFFIERE
• Director and Chief
Executive Officer: Imerys, as
from May 3, 2005, previously
Chairman of the Managing
Board.
Duquesne (France).
Executive Committee: GreatWest Lifeco Inc. (Canada)
and its main subsidiaries;
Société Financière IGM Inc.
(Canada) and its main
subsidiaries.
Aldo CARDOSO
• Censor: Bureau Veritas
(France).
209
• Director: Orange (France).
• Executive Chairman and
Chairman of the Supervisory
Board: Andersen Worldwide
(Switzerland).
Jacques DRIJARD
2005
2004
2003
2002
• Chief Executive Officer
Adjoint: Pargesa Holding S.A.
(Switzerland).
(Switzerland).
(Switzerland).
(Switzerland).
• Chairman & Chief Executive
Officer: P.G.B. S.A. (France).
Directors: Société Française
Percier Gestion "SFPG"
(France).
(France).
• Delegate Director: Orior
(France); Orior Compagnie
S.A. (Switzerland).
(France); Orior Compagnie
S.A. (Switzerland).
• Director: Imerys, as from
Member of the Supervisory
Board.
• Member of the Supervisory
Board: Imerys.
Supervisory Board: PLS
Venture Capital Partners
(France).
• Director: Pargesa
Netherlands BV
(Netherlands); Orior Food
S.A. (Switzerland).
Jocelyn LEFEBVRE
Board: Imerys.
• Director: Pargesa
Netherlands BV
(Netherlands); Orior Finance
S.A., Orior Food S.A.
(Switzerland).
Board: Imerys.
• Director: Orior Finance
S.A., Orior Food S.A.
(Switzerland).
• Director: Power Corporation
of Canada (Canada).
of Canada (Canada).
of Canada (Canada).
of Canada (Canada).
• Chairman: Sagard S.A.S.
(France).
(France).
(France).
• Chairman: PEP
Management S.A.S. (France).
Board: Partjoinco N.V., Power
Finan-cial Europe B.V.
(Netherlands).
Financial Europe B.V.
(Netherlands).
(Netherlands).
(Netherlands).
Board.
Board: Imerys.
Board: Imerys.
Board: Imerys.
• Director: Suez-Tractebel
S.A. (Belgium); AFE (France);
RTL Group (Luxembourg);
Project Sloane (United
Kingdom).
S.A. (Belgium); RTL Group
(Luxembourg); Project Sloane
(United Kingdom).
• Director: Tractebel S.A.
(Belgium); RTL Group
(Luxembourg).
Board: Alternative Leaders
France S.A. (France).
• Chairman &Chief Executive
Officer: Lloyds Bank S.A.
(France).
Board.
Board: Imerys.
Board: Imerys.
Board: Imerys.
• Director: Istac S.A.,
Richelieu Finance (France).
S.A. (Belgium); AFE (France);
RTL Group (Luxembourg);
Project Sloane (United
Kingdom).
Eric LE MOYNE
DE SERIGNY
• Director: Pargsa
Netherlands BV
(Netherlands); Orior Food
S.A. (Switzerland).
210
ANNUAL REPORT 2006
2005
Maximilien DE LIMBURG
STIRUM
• Vice President Investments:
Compagnie Nationale à
Portefeuille (Belgium).
• Director: GB-INNO-BM,
MESA (Molignée Ener-gie),
Quick Restaurants, Safe
Insurance, Sovay Business
School Alumni (Belgium);
Imerys (as from May 3,
2005), Société du Louvre,
UNIFEM (France); Swifin
(Luxembourg).
• Director: Disport
International, Editions Dupuis,
GB-INNO-BM, Gegotec,
Innofund, Quick Restaurants,
Safe Insurance (Belgium);
Finance et Management,
Société du Louvre (France);
Swifin (Luxembourg).
• Director: Disport
International, Editions Dupuis,
Exki, GB-INNO-BM, Gegotec,
Innofund, Quick Restaurants,
Safe Insurance (Belgium);
Finance et Management,
Swifin (Luxembourg).
Board: Groupe Entremont
(France).
(France).
• Permanent representative
of Compagnie Immobilière de
Roumont (Belgium) on the
Board of Directors of: Belgian
Sky Shops, GIB Corporate
Services, Ijsboerke Ice
Cream International
(Belgium).
Board of Directors of: GIB
Corporate Services, Ijsboerke
Ice Cream Interna-tional,
Starco (Belgium).
Board of Directors of: Belgian
Sky Shops, GIB Corporate
Services, Ijsboerke Ice
Cream International
(Belgium).
of Fibelpar (Belgium) on the
Board of Directors of:
Distripar (Belgium); Château
Rieussec (France).
Yves-René NANOT
Distripar (Belgium); Château
Rieussec (France).
Château Rieussec (France).
• Permanent representative of
GIB Corporate Services
(Belgium) on the Board of
Directors of Copy & Print
Center (Belgium).
2002
• Director: BSS Investments,
Disport International, Editions
Dupuis, Exki, GB-INNO-BM,
Gegotec, Innofund, Quick
Restaurants, Safe Insurance
(Belgium); Finance et
Management (France); Swifin
(Luxembourg).
(France).
Board of Directors of: GIB
Corporate Services, Ijsboerke
Ice Cream Interna-tional,
Starco (Belgium).
Château Rieussec (France).
of GIB Corporate Services
(Belgium) on the Board of
Directors of Copy & Print
Center (Belgium).
• Chairman: Milinvest
Ventures (France).
• Chairman: Milinvest
Ventures (France).
• Chief Executive Officer:
Deventis Conseil (France).
• Manager: Milinvest.
• Manager: Milinvest..
Officer: Ciments Français
(France).
(France).
(France).
(France).
Directors: Rhodia (France).
Directors: Rhodia (France).
• Vice-Chairman: Rhodia
(France).
Board.
Board: Imerys.
Board: Imerys.
Board: Imerys, Sidel
(France).
• Director: Suez Cement Co.
(Egypt); Essroc (United
States); Provimi (France);
Zuari Cement Ltd (India);
Italcementi (Italy); Cimar
(Morocco); Asia Cement
Public Co. Ltd (Thailand).
Board: SAFRAN (France).
Board: Sagem S.A. (France).
Officer: Sagem
Communication (France).
Board: Imerys.
Board: Imerys.
Board: Imerys.
• Director: Wendel
Investissement (France).
• Director: Wendel
• Director: Coficem, Wendel
• Member: Defense Scientific
Committee, Strategic
Committee on Information
Technology (France).
• Member of the Defense
Scientific Committee
(France).
• Member of the Defense
Scientific Committee
(France).
Grégoire OLIVIER
2003
(France).
Gilbert MILAN
2004
Board.
• Director: Sagem Défense
Sécurité, Snecma, Wendel
• Member: Defense Scientific
Committee, Strategic
Committee on Information
Technology (France).
211
States); Cereol, Rhodia
(France); Zuari Cement Ltd
(India); Italcementi (Italy;
Cimar (Morocco); Asia
Cement Public Co. Ltd,
Jalaprathan Cement Public
Co. Ltd (Thailand).
Robert PEUGEOT
2005
2004
2003
2002
Officer: F.F.P. (France).
• Member of the Executive
Committee and Vice
President Innovation &
Quality: PSA Peugeot Citroën
(France).
Committee and Vice
Quality: PSA Peugeot Citroën
(France).
Committee and Vice
Quality: PSA Peugeot
Citroën (France).
Committee: PSA Peugeot
Citroën (France).
Directors: Simante, SL
(Spain).
Directors: Simante, SL
(Spain).
Board: Citroën Deutschland
AG (Germany); Aviva France,
Groupe Taittinger (France).
Groupe Taittinger, Imerys
(France).
(France).
Board.
• Director: Citroën Danemark
A/S (Denmark); B-1998, SL,
Fomentos de Construcciones
y Contratas, S.A. "FCC", FCC
Construccion, S.A. (Spain);
Aviva Participations, E.P.F.
(Etablissements Peugeot
Frères), GIE Recherches et
Etudes PSA Renault,
Immeubles et Participations de
l’Est, I.F.P. (Institut Français
du Pétrole), L.F.P.F. (La
Française de Participations
Financières), Société du
Louvre (France); Citroën UK
Ltd, Peugeot Automobiles
United Kingdom Limited
(United Kingdom).
A/S (Denmark); B-1998, SL,
Fomentos de Construcciones
y Contratas, S.A. "FCC", FCC
Construccion, S.A. (Spain);
Aviva Participations, E.P.F.
Etudes PSA Renault,
Immeubles et Participations de
l’Est, I.F.P. (Institut Français
du Pétrole), L.F.P.F. (La
Française de Participations
Financières), Société du
Louvre (France); Citroën UK
Ltd, Peugeot Automobiles
United Kingdom Limited
(United Kingdom).
A/S (Denmark); Aviva
Participations, E.P.F.
Etudes PSA Renault,
Immeubles et Participations
de l’Est, I.F.P. (Institut
Français du Pétrole), L.F.P.F.
(La Française de
Participations Financières),
Citroën UK Ltd, Peugeot
Automobiles United Kingdom
Limited (United Kingdom).
• Manager: CHP Gestion,
Rodom (France).
(France).
A/S (Denmark); Aviva
Participations, E.P.F.
Etudes PSA Renault,
Immeubles et Participations
de l’Est, I.F.P. (Institut
Français du Pétrole), L.F.P.F.
(La Française de
Participations Financières),
Lisi (France); Citroën UK Ltd,
Peugeot Automobiles United
Kingdom Limited (United
Kingdom).
Rodom (France).
Rodom (France).
Rodom (France).
Thierry DE RUDDER
• Delegate Director: Groupe
Bruxelles Lambert S.A.
(Belgium).
(Belgium).
(Belgium).
(Belgium).
Board.
Board: Imerys.
Board: Imerys.
Board: Imerys.
• Director: Compagnie
Nationale à Portefeuille,
Suez-Tractebel (Belgium);
Total (France).
Petrofina, Société Générale
de Belgium, Tractebel
(Belgium); Total Fina Elf
(France).
Officer: Neuf Telecom
(France).
(France).
Réseau (France).
Louis Dreyfus Technologies
(France).
• Chairman: Rodart (France).
• Chief Executive Officer and
Vice-Chairman of the Board
of Directors: Neuf Telecom
(France).
Directors: Kaptech, Neuf
Telecom, Travocean
(France).
Jacques VEYRAT
• Director: Imerys (as from
May 3, 2005), Irise (France);
Louis Dreyfus
Communications Italy SpA
(Italy).
Supervisory Board, then
Director: Tajan (France).
Board: Jet Multimedia
(France).
of Neuf Telecom: Chairman
de Wengo (France).
of Louis Dreyfus Communications: Director of Louis
Dreyfus Collectivités
(France).
Supervisory Board: Tajan
(France).
• Director: Irise (France);
Louis Dreyfus
(Italy).
(France).
of Neuf Telecom: Chairman
de Wengo (France).
of Louis Dreyfus
Communications: Director of
Louis Dreyfus Collectivités
(France).
212
• Director: Irise (France);
Louis Dreyfus
(Italy).
(France).
of Neuf Telecom: Director of
Louis Dreyfus Câble
(France).
• Chairman: Geomar
(France).
• Chief Executive Officer and
Vice-Chairman: Louis Dreyfus
Communications (France).
• Manager non-associé:
Louis Dreyfus Armateurs
SNC (France).
• Director: Belgacom France,
Irise, SALD (France).
(France).
of Louis Dreyfus
Communications: Director of
Louis Dreyfus Câble and
Squadran (France).
ANNUAL REPORT 2006
Management expertise and experience of the members of the Board of Directors
The criteria used to select Directors include their management expertise and experience; this is particularly the case for
the member Directors of the Audit Committee, who are chosen for their financial competence.
The activities and responsibilities of the Directors (see chapter 6, paragraph 1.3 of the Annual Report) attest to their
individual expertise and experience in different areas such as finance, industry or services, which contributes to the
quality of Board’s work and to its correctly balanced composition.
Family ties between the members of the Board of Directors
To the best of the Company’s knowledge, there are no family ties between the members of the Board of Directors.
Potential conflicts of interest between the members of the Board of Directors
To the best of the Company’s knowledge, no potential conflicts of interest exist between the duties of the Directors with
respect to the Company and their private interests and/or other duties. It is specified that some Directors of the
Company also have executive responsibilities with the Company’s controlling shareholders (see chapter 6, paragraph
1.3 of the Annual Report).
Except for the regulated agreement mentioned below (see chapter 6, section 7 of the Annual Report), no Director has
been selected pursuant to any arrangement or agreement entered into with the main shareholders, customers, suppliers
or other parties.
Service contracts between the Company and its Directors
No service contract entered into by the Directors and the Company or any of its subsidiaries provides for the granting of
advantages upon expiry of their respective terms of office.
No sentence for fraud
No sentence for fraud has been pronounced against any member of the Board of Directors during the past five years.
Bankruptcy, sequestration or liquidation of companies in which a Director has been involved as
executive during the past five years
Yves-René Nanot was a Director of Moulinex (France) from July 2000 to September 2001. Moulinex is in the compulsory
liquidation process.
Maximilien de Limburg Stirum was the permanent representative of GCS (Belgium), a Director of Copy & Print
(Belgium), which was forced to declare bankruptcy on February 3, 2002 following the loss of its main customers.
To the best of the Company’s knowledge, the other Directors have not been involved as executives in any bankruptcy,
sequestration or liquidation of any company in the past five years.
Incrimination of and/or public sanction of the law against a Director by statutory or regulatory
authorities during the past five years.
Following an accident that occurred in a refinery belonging to Total Raffinage Distribution, of which Yves-René Nanot
was Chairman & Chief Executive Officer, Yves-René Nanot was sentenced by a judgment on April 24, 2002 of the court
of Aix en Provence, ruling as summary jurisdiction, to a suspended term of 18 months imprisonment and a €4,500 fine
for infringement of safety rules with respect to working conditions.
To the best of the Company’s knowledge, no incrimination and/or public sanction of the law has been pronounced
against the other Directors in the past five years.
213
1.4 Functioning
(*)
The Board of Directors meets as often as the interests of the Group require and at least three times a year. It is
convened by its Chairman by any written means with at least five days’ notice, unless the members of the Board
unanimously decide otherwise
2006
Number of meetings
7
Average actual attendance rate of members
83%
2007
Expected number of meetings
5
The provisional schedule of Board of Directors’ meetings for the year to come is set at the latest in the last meeting of
each year. The Chairman of the Board of Directors usually sets the agenda of each Board meeting after gathering the
suggestions of the Chief Executive Officer and the opinion of the Secretary of the Board. He runs meetings, facilitates
debates and reports on meetings in accordance with the law, the by-laws of the Company and the Corporate
Governance principles and practices that the Board has itself adopted, as set out in the following paragraph.
Notices of meeting are sent to every Director with the draft minutes of the previous meeting, drawn up by the Secretary
and approved by the Chairman of the Board, and all information and documents concerning the points on the agenda
that are necessary for members’ effective participation in debates. Such information and documents may also include,
as the case may be, the Group’s quarterly, semi-annual or annual (provisional or definitive) financial statements and the
presentation of the various business groups’ markets or any other specific items to be raised. Certain additional
documents may also be handed to the Directors in meetings, for example draft press releases on the Group’s regular
financial statements or information on trends in the price of the Company’s shares.
In order to allow them to carry out their duties in appropriate conditions, the Chairman and, on his request, the Chief
Executive Officer also send the Directors the following between Board meetings: any important information published,
including critical items, concerning the Group (particularly in the form of press articles and financial analysis reports) and,
if sufficiently important or urgent, any other relevant information on the Group’s situation, projects and economic or
market environment.
The work done by each of the specialized Committees since the previous meetings is regularly presented in a report to
the Board by its Chairman or, in his or her absence, another member of the Committee in question.
The Secretary of the Board is the Group General Counsel. His appointment and dismissal, as the case may be, are
within the sole competence of the Board. All the members of the Board may consult the General Counsel and benefit
from his services. He assists the Board and makes any useful recommendations on the procedures and rules that apply
to its functioning, and on their implementation and observance. The Secretary is empowered to certify copies or extracts
of minutes of Board meetings.
(*)
This section is taken from the Report of the Chairman of the Board of Directors, in accordance with article L. 225-37 of the Code of Commerce, on the conditions for the
preparation and organization of the work of the Board of Directors.
214
ANNUAL REPORT 2006
1.5 Implementation of best corporate governance practices
Internal charter of the Board of Directors
In the context of compliance with best Corporate Governance practices, the Board has adopted an Internal Charter that
contains all the principles for its members’ conduct and the functioning of the Board and its specialized Committees. The
Charter, of which the first version was adopted in 2002, is regularly updated in order to factor in : legal and regulatory
developments that apply to the Company; recommendations on Corporate Governance by AMF as well as trade and
associations bodies that represent French stock market-listed companies (AFEP, MEDEF, ANSA, etc.); and, finally, the
amendments made by the Board following the periodical assessments of its own functioning carried out to comply with best
practices.
In 2006, the Internal Charter was again amended to reflect the new legal and regulatory provisions that apply, in particular,
to obligations with respect to declaring dealings in the Company’s securities and their implementation arrangements
Following the adoption of those amendments, each Director of the Company was given a collection of the main texts and
provisions governing their duties and obligations, such as the Company’s by-laws, the Internal Charter of the Board of
Directors, the Procedure for the prevention of use or disclosure of insider information within the Group and various
useful documents and forms enabling the Directors to comply with their obligations.
The latest version of the Internal Charter of the Board of Directors is available on the Group’s website
(www.imerys.com), in the section “Our Group/Corporate Governance.”
Self-assessment by the Board of Directors
The Board of Directors carried out a formal assessment procedure based on an individual questionnaire handed to each
member of the Board of Directors in its last meeting in 2006 concerning the composition, functioning and efficiency of
the Board and its Committees. The conclusions of that assessment were presented and discussed at the Board of
Directors meeting of February 14, 2007.
In general, the functioning of the Board and its Committees is judged highly satisfactory by their members. Directors
particularly appreciate the quality of the information given to them in each meeting and the quality of efficiency of
debates by the Board and its Committees. Consequently, the Board did not see fit to amend the terms of its Internal
Charter, which were considered compliant with best Corporate Governance practices for French stock market-listed
companies, especially the recommendations resulting from the consolidated AFEP-MEDEF report of October 2003.
In order to improve its working methods still further, the Board saw fit to retain and implement a number of suggestions
made by Directors, including the following:
- enhancing the periodical information sent to each member (Imerys share price trends and consensus, financial
analysis notes and reports published by the Company, internal press roundup including all important or relevant
information on the Group’s economic or market environment);
- organization of an additional meeting of the Audit Committee to examine in greater depth the main risks facing the
Group and the related internal controls and insurance policies and, finally, the results of internal audit assignments;
- periodical presentation to the Board of the Group’s sustainable development policy and its main results, particularly as
regards industrial relations and workplace safety.
Finally, the Board reviewed the allotment scale for Directors’ attendance fees, taking into account the recommendations
made by a specialized outside firm on the basis of its benchmarking study on the attendance fee allocation practices of
French stock market-listed companies that are comparable to Imerys. This review led the Board to raise the fees paid to
the members of the Audit Committee, given that they are highly called upon for and significantly contribute to the Board’s
decisions. Furthermore, the Board saw fit to encourage the Directors’ participation in the work of Committees of which
they are not members by compensating their presence at those meetings (see chapter 6, paragraph 3.1 of the Annual Report).
215
A SPECIALIZED COMMITTEES
On May 3, 2005, the date on which the Company’s management structure was changed to a Board of Directors, the
Board confirmed the three specialized Committees previously formed by the Supervisory Board, which carry out their
activities under the responsibility of the Board and of which the Board defines the missions, composition and
compensation.
The members of the specialized Committees are chosen from among the members of the Board. The Chief Executive
Officer and, as the case may be, any Delegate Chief Executive Officers that are also Directors of the Company, may not
be members of any of the Committees. The term of the duties of Committee members is the same as their term of office
as Director.
The specialized Committees only have an advisory role and do not have any power of decision.
Each Committee determines the internal rules that apply to the performance of its work.
The Committees’ meetings give rise to minutes. These are provided to the members of the Committee concerned and, on
request to the Chairman of the Committee, to the other members of the Board of Directors. The Chairman of the Committee
concerned, or a member of the Committee appointed for that purpose, reports to the Board of Directors on the work of the
Committee.
Furthermore, each of the Committees reviews its activity and assesses its composition and its functioning during the
previous year; the results of such review and assessment are intended to appear in the Group’s Annual Report.
To provide the Board of Directors with the best possible information, at the start of each year each Director receives the
provisional schedule of Committees meetings so that any Director who is not a member may ask the Chairman of the
Committee concerned to attend its meetings, without however taking part in the vote on said Committee’s
recommendations.
A STRATEGIC COMMITTEE
(created on June 17, 1993 with the name Standing Committee)
Mission
The internal charter of the Board of Directors defines the Committee’s missions as follows:
“The mission of the Strategic Committee is, in particular, to examine and provide the Board of Directors with its opinions
and recommendations in the following areas:
1. Strategy
• Drafting and setting orientations for the Group’s industrial, commercial and financial strategy;
• Ensuring that the strategy implemented by the Chief Executive Officer complies with the orientations set by the
Board of Directors.
• For that purpose, it examines in depth and, as the case may be, makes recommendations to the Board on:
• The Group budget drawn up by the Chief Executive Officer;
• All the major Group projects that:
- are likely to modify its financial structure or consolidation structure,
- concern investment or divestiture transactions, or
- relate to the conclusion or carrying out of commercial or industrial agreements that bind the future of the Group.
216
ANNUAL REPORT 2006
The above-mentioned projects are considered as “major” if their implementation by the Chief Executive Officer
requires the prior approval of the Board of Directors (see paragraph 6.1.1. of the Annual Report) or, because they are
greater than the €20 million threshold set by the Board, must be brought to the prior knowledge of the Committee.
Every year, the Committee presents its expected schedule for the examination of major strategic issues for the future
of the Group for the current year.
2. Risks
• Questions relating to the identification, measurement and monitoring by the Chief Executive Officer of the main
possible risks for the Group in the following areas:
- External environment: investor relations, the Group’s market positions;
- Internal processes: management of financial resources, human resources potential, new product
development, potential of mineral reserves and resources, dependence and continuity of key industrial or
commercial activities, pricing policy;
- Management information: financial control and reporting, control of investment projects after completion.”
Composition
The Strategic Committee is made up of the following eight members, which must include the Chairman of the Board of
Directors, who is also Chairman of the Committee:
Name
Date of 1st appointment to the Committee
Independent member status
June 17, 1993
No
March 26, 1998
No
June 17, 1993
No
March 27, 1996
No
July 26, 2004
Yes
May 2, 2006
Yes
July 26, 2004
Yes
May 9, 2000
No
Aimery LANGLOIS-MEURINNE, Président
Jacques DRIJARD, Vice-Président
Paul DESMARAIS, Jr.
Jocelyn LEFEBVRE
Gilbert MILAN
Grégoire OLIVIER
Thierry de RUDDER
Functioning
The Committee debates with the majority of its members present and meets as often as its Chairman sees fit or at the
request of the Chief Executive Officer. In principle, it dedicates one meeting per year to the Group’s strategy and market
environment, to which all the Directors are invited.
2006
Number of meetings
8
74%
2007
7
217
To carry out its mission, the Committee hears the Chief Executive Officer, the Chief Financial Officer & Vice-President
Strategy, the Strategy & Development Manager and, on the initiative of the Chief Executive Officer or at the Committee’s
request to the Chief Executive Officer, depending on the items on the agenda for the Committee meeting, and the
relevant corporate department or line managers. The Committee may also make visits or hear any of the Group’s line
managers, as it judges useful for the performance of its mission.
The Secretary of the Committee is the Group Strategy & Development Manager, who drafts the minutes of its meetings.
Activity in 2006
At the start of the year, the Strategic Committee first examined, as in other years, the final consolidated items for the
2006 budget. Then, more generally, it focused on monitoring the management and development actions taken by the
Group’s general management to ensure that they were in line with the strategy defined by the Board of Directors. In that
context, it examined the evolution of Imerys’ markets and its monthly and quarterly financial statements and how they
reflected said actions.
The Strategic Committee reviewed and analyzed the Group’s new consolidated five-year plan, drawn up on the basis of
the individual plan prepared for each operating division. The Committee was able to observe on that occasion that by
keeping its current consolidation scope, Imerys should be able to maintain dynamic growth in its net income from current
operations while generating cash flow enabling it to implement an ambitious external growth policy, without undermining
the fundamental criteria for financial balance. The Committee also examined in greater depth the individual 5-year plans
of the Monolithics, Minerals for Refractories, Minerals for Abrasives, Specialty Minerals and Pigments for Paper
divisions.
The Committee also examined the growth projects in progress, which included the acquisition of AGS, completed in
February 2006. It was kept informed of the capital expenditure projects under examination throughout the year, and of
the status of projects in progress, of which it appreciated the quality.
Moreover, as usual the Strategic Committee was kept regularly informed of the evolution of the Group’s financial
structure and was consulted on the general financing strategy, including the interest rate and currency hedging strategy
and the securing of diversified long-term financial resources.
Finally, at its last session of the year, the Strategic Committee reviewed the Group’s 2007 budget on the basis of a
detailed presentation of the budget of each of the Group’s three new business groups by their respective managers.
A APPOINTMENTS AND COMPENSATION COMMITTEE
(formerly called Special Options Committee upon its creation on November 3, 1987, then renamed Stock Options and
Compensation Committee on March 27, 1996 and, finally, Compensation Committee from May 7, 1998 to January 27,
2003)
Mission
The Internal Charter of the Board of Directors defines the Committee’s missions as follows:
"The Appointments and Compensation Committee’s mission is to examine and provide the Board of Directors with its
opinions and any recommendations in the following areas:
1. Appointments
• The selection of candidates for Director positions and, on the proposal of the Chairman of the Board of
Directors, the Chief Executive Officer and, as the case may be, Delegate Chief Executive Officers and
Committee Chairman when they are renewed;
• The presentation of a succession plan for Directors and the Chief Executive Officer in the event of
unforeseeable vacancies;
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ANNUAL REPORT 2006
• The independent status of each of its members according to the definition of “independence” adopted by the
Board of Directors and any changes (or explanation of criteria) to be made to that definition.
2. Compensation
• The individual compensation of the Chief Executive Officer and, as the case may be, Delegate Chief Executive
Officers and their ancillary income (such as pension and healthcare plans or fringe benefits), as well as on any
other provisions relating to their employment contract;
• General compensation policy for the Group’s executives;
• General policy for granting options to subscribe to or purchase Imerys shares, the definition and fixing of the
beneficiaries of the option plan proposed by the Chief Executive Officer, and the fixing of individual allotments
for the Chief Executive Officer;
• The Group’s employee shareholder policy and the terms of its implementation as proposed by the Chief
Executive Officer;
• The amount and allotment of attendance fees (fixed and variable parts) for the Directors."
Composition
The Appointments and Compensation Committee is composed of the following three members, which must include the
Chairman of the Board of Directors who is also Chairman of the Committee:
Date of 1st appointment to the Comm
November 3, 198705
No
Robert PEUGEOT
May 3, 2005
Yes
Jacques VEYRAT
February 14, 20
Yes
Name
Aimery LANGLOIS-MEURINNE, Président
At its meeting of February 14, 2007, the Board confirmed that, following the appointment of Mr. Jacques Veyrat in
succession to Mr. Grégoire Olivier, the composition of the Committee complied with the proportion of 2/3 independent
members recommended by the consolidated AFEP-MEDEF report of October 2003.
Functioning
The Committee debates with at least two of its members present and meets as often as its Chairman sees fit or on the
request of the Chief Executive Officer.
2006
Number of meetings
2
100%
2007
2
To carry out its mission, the Committee hears the Chief Executive Officer and the Group Vice-President Human Resources.
The Secretary of the Committee is the Group Vice-President Human Resources, who draws up the minutes of its meetings.
219
Activity in 2006
The Appointments and Compensation Committee, as in other years, determined the amount of the variable part of the
Chief Executive Officer’s individual compensation with respect to 2005 and payable in 2006, according to the personal
and financial goals he had been set. It then made its recommendations on the setting of the quantitative and qualitative
goals of the Chief Executive Officer and of the members of the Executive Committee in order to determine the variable
part of their compensation for 2006. The Committee also examined the general compensation policy for the Group’s
other main executives, based on the findings of a benchmarking study on the compensation policies of stock marketlisted international groups of comparable size to Imerys, which it appointed a specialized outside firm to carry out.
The Committee was also consulted on the composition of the Board of Directors, particularly the proposed candidacy of
Mr. Gilbert Milan in succession to Mr. Patrick Kron, and the composition of its specialized Committees. On that occasion,
the Committee examined the situation of each member of the Board of Directors with respect to the definition of
“independence” adopted by the Board at its meeting of May 3, 2005. The Committee welcomed the fact that the
proportion of independent members (7 out of 14) on the Board of Directors was greater than the 1/3 minimum
recommended for stock market-listed companies with controlling shareholders. The Committee also verified that the
composition of the Audit Committee and of the Appointments and Compensation Committee complied with the required
proportion of 2/3 independent members.
Furthermore, the Committee recommended following the general policy for Imerys stock option grants that had previously
been adopted. In that respect, it examined the conditions and beneficiaries of the May 2006 option plan intended for the
Group’s executives and the holders of key positions. Also on the basis of a study conducted by a specialized outside
firm, the Committee recommended using the possibility that was newly offered under French law of granting conditional
free shares to a limited number of the Group’s executives. In that context, it examined the arrangements of the allocation
plan and the conditions and limits of the planned individual grants
Finally, the Appointments and Compensation Committee examined and approved the principles of the 2006 Employee
Shareholder Plan implemented by the Board of Directors on November 7, 2006.
A AUDIT COMMITTEE
(created on March 27, 1996)
Mission
The Internal Charter of the Board of Directors defines the Committee’s missions as follows:
“The Audit Committee’s mission is to examine and give the Board of Directors its opinion and any recommendations on
the following:
1. Financial Statements
• The Company and consolidated annual financial statements to be drawn up by the Board of Directors, together
with a note from the Group’s Chief Financial Officer, and the estimated and definitive half-yearly consolidated
financial statements.
• With respect to the definitive half-yearly consolidated financial statements, pursuant to the delegation granted
by the Board of Directors, the Committee must ask the Chairman of the Board of Directors to call a Board
Meeting to approve the statements if it observes a significant variance between the definitive audited
statements and the estimated statements that were previously approved by the Board and published. A
significant variance is appraised, in particular, according to the potential effect that the variance could have in
the Company’s share price;
• The scope of consolidation;
• The relevance and consistency of accounting methods, by verifying, in particular, the reliability of internal
information-gathering and information-control procedures, with the aim of ensuring that financial statements are
fairly presented and that they give an accurate image of the financial situation of the Company and the Group.
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ANNUAL REPORT 2006
2. External control
• Proposals to appoint or renew the Auditors. It examines and approves the contents of the requirements, the
schedule and the organization for the invitation to bid, with a view to the appointment and, as the case may be,
renewal of the Auditors, and checks that the invitation to bid proceeds correctly;
• The Auditors’ work program and any additional assignments that they or other members of their network may
be given, as well as the amount of the corresponding compensation, while ensuring that such assignments are
compatible with their obligations of independence;
• Supervision of the rules for the use of the Auditors for work other than auditing the financial statements and,
more generally, compliance with the principles guaranteeing the independence of the Auditors.
3. Internal control
• The results of the work of the internal and external auditors and the monitoring of any recommendations they
make, particularly in regard to the analysis and control of significant risks and off-balance sheet commitments,
as well as the organization of the internal audit teams and their annual work program;
• The drafting and content of the Annual Report of the Chairman of the Board of Directors on the Group’s internal
control.
4. Risks
• The status of major disputes;
• The identification, measurement and monitoring by the Chief Executive Officer of the possible major risks for
the Group in the following areas:
- external environment: legal or regulatory developments, crisis management or occurrence of disasters,
- internal processes: lawsuits and compliance with existing regulations (particularly Environment, Health &
Safety), access to mineral reserves and resources, codes of conduct and ethics;
• The orientations and implementation by the Chief Executive Officer of the Group’s general policy for risk
prevention (organization, policies and procedures, systems, etc.) and insurance;
• The work programs and results of internal auditors and any external experts that may be called upon to
analyze, audit or measure the Group’s performance in the above-mentioned areas;
• Any other subject likely to have significant financial and accounting impact."
Composition
The Audit Committee is comprised of the following four members, who are chosen for their financial competence. Its
Chairman must be an independent Director.
Name
Date of 1st appointment to the Committee
March 26, 1998
Yes
May 3, 2005
Yes
March 27, 1996
No
May 3, 2005
Yes
Yves-René NANOT, Président
Aldo CARDOSO
Jocelyn LEFEBVRE
Eric LE MOYNE DE SERIGNY
The Board confirmed that the Audit Committee was composed of a higher proportion of independent members than the
2/3 recommended by the consolidated AFEP-MEDEF report of October 2003.
Subject to the adoption by the Shareholders at the General Meeting of May 2, 2007 of the appointment of Mr. Jean
Monville as a new Director of the Company in succession to Mr. Yves-René Nanot (see chapter 6, paragraph 1.2 of the
Annual Report), the Board intends to appoint him as a member of the Audit Committee and to let the Committee name
its Chairman at its next meeting.
221
Functioning
The Committee debates with the majority of its members present and meets as often as its Chairman sees fit and, as far
as possible, at least two days before the Board of Directors draws up the definitive annual and half-yearly consolidated
financial statements. It may also meet at the request of two of its members or of the Chairman of the Board of Directors.
2006
Number of meetings
4
100%
2007
4
To carry out its mission, the Committee hears the Auditors and the Chief Financial Officer of the Group, and, on the
latter’s initiative or at the Committee’s request to him according to the items on the agenda for the Committee’s meeting,
other individuals who take part in drawing up or controlling the financial statements (Financial Department, Internal Audit
Department, Legal Department).
The Committee has unrestricted access to all available information on the Group. It may also make visits, hear any of
the Group’s line managers or the relevant managers of corporate or operating risks. The Committee may also request
that any internal or external audit be carried out on any subject that it judges within the scope of its mission. The
Chairman of the Committee informs the Board of Directors of any such audit.
The Secretary of the Committee is the Group’s Chief Financial Officer. He draws up the minutes of Committee meetings,
which are kept available to the Auditors.
Activity in 2006
As every year, the Committee conducted an in-depth examination of the annual Company and consolidated financial
statements for 2005 and the half-yearly Company and consolidated financial statements for 2006 and, in the latter case,
checked that there was no significant variance from the estimated statements published in July. It also inspected the
various items in the income statement, particularly the composition of net non-recurring items - mainly affected by the
announced restructuring in the United Kingdom -, the balance sheet and the statement of changes in financial position.
On that occasion it also checked, after hearing the Statutory Auditors, the relevance and consistency of the accounting
methods used by the Group. These examinations did not give rise to any particular observation by the Committee.
During its review of the semi-annual consolidated financial statements, the Committee was pleased to note the efforts
made by the Group to shorten the closing times for those statements in order to comply with best practices on the
market and make sure of compliance with future regulatory obligations applicable to the publication times for such
statements.
Early in the year, the Committee also reviewed the report of the Chairman of the Board of Directors on internal control
and heard the Statutory Auditors. This review did not give rise to any particular observation on its part.
The Committee also examined the quality and reliability of the internal control implemented in the Group for the
gathering, consolidation and monitoring of the accounting, financial and management information provided to the Board
of Directors. For that purpose, it read the reports issued by the internal auditors, whose manager presented his activity
report for 2005 to the Committee; no significant item of concern was observed. The Committee also expressed its
satisfaction with the ongoing enhancement of the internal auditing teams within the Group.
The Audit Committee also conducted a specific review of the main risks that the Group may face, the internal controls
involved in their prevention or management and the other measures taken to cover their possible effects. On that
occasion, it heard the managers of the Group’s legal, internal control and environmental, health and safety departments.
The Committee noted that the state of progress of the risk analysis and internal control system assessment program
seemed in line with the best practices of comparable groups to Imerys. The Committee also noted the efforts made by
the Group to improve its environment, health and safety performance and examined the status of the lawsuits in
progress concerning the Group and their provision conditions. Finally, it reviewed to its satisfaction the Group’s
insurance policy and the terms of the main coverage programs in force.
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ANNUAL REPORT 2006
2 - GENERAL MANAGEMENT
2.1 Powers
Pursuant to legal and statutory provisions, the Chief Executive Officer is vested with the most extensive powers to act on
behalf of the Company under any circumstances. He exercises his powers within the limits of the corporate purpose and
subject to the powers expressly vested in the Shareholders' General Meeting and the Board of Directors; he represents
the Company with respect to third parties.
Pursuant to article 18 of the by-laws, the Board of Directors may limit the powers of the Chief Executive Officer.
However, this limitation is void against third parties.
Chapter 6, paragraph 1.1. of the Annual Report describes the internal functioning arrangements for the Board of
Directors and, in particular, lists the operations that require the authorization of the Board of Directors prior to their
implementation by the Chief Executive Officer.
2.2 Composition
On the proposal of the Chief Executive Officer, the Board of Directors may appoint one or more natural persons to assist
the Chief Executive Officer, with the title of Delegate Chief Executive Officer. To date, no Delegate Chief Executive
Officer has been appointed.
As on the date of the present Annual Report, the General Management of the Company is solely composed of Gérard
Buffière; the duration of his term of office as Chief Executive Officer is the same as for his term of office as Director.
Information on the Chief Executive Officer’s duties and his capital interest in the Company is given in chapter 6,
paragraph 1.2 of the Annual Report.
2.3 Executive Committee
The Chief Executive Officer decided, with the support of the Board of Directors, to set up an Executive Committee
comprised of the Group’s main line and support managers to assist him in the general management of the Group.
Mission
The Executive Committee, under the responsibility of the Chief Executive Officer, is mainly in charge of:
• Implementing the Group’s strategy and all the measures determined by the Board of Directors;
• Monitoring the operating activities of each business group and ensuring, by defining any necessary corrective
measures, that they comply with their budgets and carry out the action plans approved by the Chief Executive Officer;
• Defining and monitoring the Group’s performance improvement goals in terms of the protection and safety of
individuals on their workplace and defining any corrective measures;
• Defining Group-wide policies and actions (purchasing; sustainable development, including environment, health & safety;
internal communications; internal control and risk management, innovation and research) and overseeing their rollout;
• Fostering the sharing and dissemination of best practices in all areas between the business groups; and,
• More generally, giving opinions and recommendations on all projects, operations or measures that may be submitted
to it by the Chief Executive Officer, particularly with a view to their subsequent presentation to the Board of Directors
or its specialized Committees.
223
Composition
The Executive Committee is comprised, in addition to the Chief Executive Officer, of the following:
line managers and Deputy CEOs
les responsables fonctionnels
Jens Birgersson
(Performance Minerals & Pigments)
Richard Bown
(1)
(Research & Technology)
Jérôme Pecresse
(Ceramics, Refractories, Abrasives & Filtration)
(1)
(Finance & Strategy)
(2)
Christian Schenck
Denis Musson
(Materials & Monolithics)
(Legal & Corporate Support)
Thierry Salmona
(Innovation & Business Support)
(1)
Bernard Vilain
(Human Resources)
(1)
As from January 1, 2007.
(2)
As from October 2, 2006.
Functioning
The Executive Committee meets as often as the interests of the Group require or at the request of the Chief Executive
Officer. It met 12 times in 2006.
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ANNUAL REPORT 2006
3 - COMPENSATION
3.1 Board of Directors
Amount
The maximum annual amount of attendance fees that may be allotted to the members of the Board of Directors, as
determined by the Shareholders’ General Meeting of May 3, 2005, is €800,000.
The total gross amount of attendance fees actually paid with respect to financial 2006 was €625,500 euros, compared
with €624,000 with respect to financial 2005.
The gross individual amount allocated to each of the Board members in office in 2006 was as follows:
Euros
2006
2005
209,500
212,000
29,500
29,500
-
-
A. CARDOSO
32,000
20,000
J. DRIJARD
39,000
39,000
(2)
10,500
25,000
J. LEFEBVRE
43,500
43,500
M. de LIMBURG STIRUM
25,000
15,500
E. Le MOYNE de SERIGNY
43,500
39,500
22,000
-
Y.R. NANOT
47,000
48,000
G. OLIVIER
35,000
35,000
R. PEUGEOT
26,000
25,500
T. de RUDDER
37,000
37,000
J. VEYRAT
26,000
15,500
A. LANGLOIS-MEURINNE, Président
P. DESMARAIS, Jr., Vice-Président
G. BUFFIERE
P. KRON
G. MILAN
(1)
(3)
With the exception of the compensation paid to Gérard Buffière in his capacity as Chief Executive Officer of Imerys,
these amounts represent all the compensation paid in 2006 by the Imerys group or by its controlling shareholders to
each of the members of the Board of Directors with respect to the offices, responsibilities or other duties performed
personally by those members within or on behalf of the Imerys group.
(1)
Chief Executive Officer - does not receive attendance fees.
(2)
Director until May 2, 2006.
(3)
Director as from May 2, 2006.
225
Allotment scale
The current allotment scale for attendance fees was determined by the Board of Directors at its meeting of February
14, 2007. This new scale, applicable as of January 1, 2007, is as follows:
Gross amounts in euros
Board of Directors
Strategic Committee
Chairman
150,000 fixed per year
All members
20,000 fixed per year - 1,000 per attended meeting
Chairman
All members and
(1)
1,500 per attended meeting
other Directors
Audit Committee
All members
Other Directors
Appointments
and Compensation Committee
(1)
Chairman
All members and
As from January 1, 2007.
(2)
Previously set at €15,000.
(3)
Previously set at €1,500.
(1) (3)
(1)
other
Directors
(1)
(1) (2)
Chairman
To encourage the participation of the Directors in the work of Committees of which they are not members, the Board
decided to award them a fixed attendance fee of €1,500 euros for each Committee meeting in which they take part.
In accordance with applicable tax regulations, the amounts paid to the non-French resident members of the Board of
Directors give rise to withholding tax in France. Payments are made semi-annually in arrears.
3.2 General management
Criteria
Compensation for the Chief Executive Officer is set annually by the Board of Directors, upon the Appointments and
Compensation Committee's recommendations. These recommendations are intended to ensure that compensation is
competitive within the marketplace and is based on external evaluations and comparisons provided by specialized
consultants.
The Chief Executive Officer’s compensation includes a fixed part and a variable part limited to 120% of the fixed amount
of his salary. The variable part of compensation owed with respect to the financial year is not paid until the following
year, when the items used to calculate it are known, following the drawing-up of the Group’s definitive financial
statements for the year in question. It is calculated solely on the basis of economic performance criteria related, on one
hand, to the change in net income from current operations per share compared with the previous year and, on the other
hand, to the achievement of an objective for the cash flow generated by the Group during the financial year.
The Chief Executive Officer does not receive any attendance fees with respect to his office as Director of the Company.
It is specified that the effects of the employment contract entered into by Gérard Buffière and the Company in 1998,
which are suspended during his terms of office as Chief Executive Officer and Director of the Company, will ipso jure
resume upon the end of those terms of office. This contract provides, in particular, for indemnity in the event of Gérard
Buffière’s departure on the Company’s initiative equal to two years' gross salary, including the year owed with respect to
the generally applicable legal and contractual framework.
Outside those provisions, the Company has not made any other commitments for the benefit of Gérard Buffière as a
result of the taking, ending or changing of his current responsibilities.
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ANNUAL REPORT 2006
Amount
The total gross amount of compensation and fringe benefits paid (fixed part) or owed (variable part) to the Chief
Executive Officer by the Group with respect to 2006 is €1,213,024, i.e.:
Financial 2006 (*)
Financial 2005
Financial 2004
Fixed part
550,000
550,000
550,000
Variable part
660,000
550,000
660,000
3,024
2,454
1,581
1,213,024
1,102,454
1,211,581
(euros)
Benefits
Total
(*)
The total amount of compensation and benefits effectively paid in financial 2006 (2006 fixed part and 2005 variable part) is €1,103,024
The above amounts include all the compensation paid or owed to Gérard Buffière by the Group with respect to financial
years 2004 to 2006, including those allocated by certain subsidiaries (particularly with respect to attendance fees for
participation in their corporate bodies), and the value of all the benefits received with respect to the financial year in
question.
Furthermore, when Gérard Buffière managed Imerys’ former Pigments & Additives business group (2000 – 2002), he
benefited from an exceptional bonus plan. This was based on the beneficiary’s undertaking a program of medium-term
actions that were priorities for the Group's future, the success and results of which could not be assessed on one year
alone. The bonus plan expired when Gérard Buffière was appointed Chief Executive Officer of Imerys on January 1,
2003. The entire amount owed (for which a full provision has been booked) i.e. €755,460, principal and interests, was
paid to him in February 2007.
All compensation and similar benefits granted to the Group’s principal executives (Executive Committee – including the
Chief Executive Officer) and recorded as expenses in the financial years concerned are indicated in note 47 to the
consolidated financial statements.
Furthermore, the amount of the five highest compensations paid by the Company with respect to financial 2006 was
certified by the Auditors.
Pension commitments
In 1985, Imerys set up a collective supplementary pension plan with defined benefits for the principal managers of the
Group’s French companies who met the restrictive eligibility criteria. The plan is managed by an external insurance
company (AXA).
The maximum amount of the life annuity that may be paid to the beneficiaries of the plan as from the liquidation of their
pension rights is calculated in order to guarantee them:
• a life annuity of a total gross amount (after allowing for pensions from obligatory and other supplementary plans)
equivalent to 60% of their reference salary, said reference salary being limited to 8 times the annual French social
security ceiling;
• subject to a pay-in ceiling equal to 25% of said reference salary.
The Chief Executive Officer and one Director (Jacques Drijard), in his capacity as a former executive of the Group, are
among the beneficiaries of this plan to whose rights the Group contributed in 2006.
According to the latest actuarial calculation, the current value of the estimated share of the two above-mentioned
corporate officers in the total amount of the Group’s commitment with respect to the past services of all the beneficiaries
of this supplementary pension plan amounts to €1,990,993 as at year-end 2006 (vs. €1,769,726 at year-end 2005).
227
4 - IMERYS STOCK OPTIONS (*)
4.1 Stock option plans in force
A GENERAL TERMS FOR THE GRANT OF STOCK OPTIONS
Grant policy
The general policy for the granting of Imerys stock options is set by the Board of Directors upon the Appointments and
Compensation Committee’s recommendations.
The main characteristics of the policy, excluding grants made under the Group’s employee shareholding operations, are
as follows:
• Grants take the form of share subscription options. This form was judged preferable to share purchase options as it
prevents the Company from having to tie up its capital before the option exercise period even opens, in order to
acquire on the market the number of shares needed to fulfill possible option exercises;
• As of 1999, stock options are granted once a year and the total number of options each year is adjusted according to
the Group’s overall performance or to specific events;
• The actual or likely beneficiaries of stock subscription options are the Group’s executives (Chief Executive Officer,
Executive Committee members, business group and division management committees, managers of the Group’s main
corporate departments) and, as of 2001, the holders of certain key positions reporting to them, as well as highpotential young managers and employees that make an outstanding contribution to the Company’s performance.
Characteristics of granted options
As of 1999, the option exercise price excludes any discount and is equal to the average Imerys share price for the last
20 stock market trading days prior to the grant date. The grant usually takes place just after the Annual General Meeting.
The duration of the options granted under the plans set up since May 2000 is between 9½ and 10 years, compared with
8 years for previously granted options.
The options granted since 1996 are definitively vested (except in the event of the beneficiary’s dismissal, resignation of
departure from the Group) after the end of the third year following their allotment or, if earlier, on the date of the
beneficiary’s retirement after the age of 60 (reference age included in plans from 2004), his/her cessation of activity for
incapacity or his/her death. The only exception concerns grants made within employee shareholding operations, for
which the options are dependent on the employee’s investment in Imerys shares with immediate vesting.
Option exercise conditions
Definitively vested options may be exercised at any time, except in the event of the beneficiary’s death or, as from the
2004 option plan, departure from the Group.
However, the beneficiary must bear any additional costs and taxes borne by the Company in the event that applicable
local regulations provide for a longer immobilization period than three years (this period is four years in France for plans
adopted as from April 2001).
Exercise by the beneficiary must comply with certain minimum amounts (currently set for all plans adopted as from 1998
at 1,000 options, any whole multiple of 1,000 or the balance of outstanding options if less than 1,000).
(*)
For the sake of consistency, all the figures given in the present section are based on the split into 4 of the nominal value of Imerys shares on June 1, 2004.
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ANNUAL REPORT 2006
Loss or maintaining of options
Options not exercised on expiry of their exercise period are automatically cancelled.
The beneficiary’s departure from the Group for any reason, including if the company employing him or her is excluded
from the Group, brings about:
- If the departure takes place before the vesting date of the options, their immediate cancellation;
- If the departure takes place after the vesting date of the options and only for plans adopted from 2004 onward, the
cancellation of said options failing their exercise by the beneficiary by the end of the third month following his or her
departure from the Group (except, however, in the event of his or her death, incapacity or retirement).
Date of record of shares resulting from the exercise of options
As of January 1, 2005, all Imerys shares resulting from the exercise of subscription options enjoy, from their creation, all
the rights attached to existing shares, to which they are be immediately assimilated.
Consequently, new and old shares are listed on the same line at Euronext Paris, regardless of their date of issue. The
new shares enjoy the same dividend rights as old shares, including with respect to the dividends approved and paid
during the year of creation of the shares with respect to results for the previous financial year.
A OPTION PLANS ADOPTED IN 2006
• 640,000 share subscription options (vs. 635,000 in 2005), at the exercise price of €68.27 per share were granted
on May 2, 2006 to 171 managers and executives of the Group residing in France or in other countries (identical
number to 2005).
Apart from the option granted to the Chief Executive Officer, 157,500 were granted to the 10 beneficiaries receiving
the most options.
• With respect to the 2006 Employee Shareholder Plan (see chapter 5, paragraph 2.5 of the Annual Report) 38,770 share
subscription options with an exercise price of €66.96 (except for Italy: €67.09 euros and the United Kingdom: €67.90),
were granted to 2,932 Group employees on November 7, 2006.
A CHANGES IN THE NUMBER OF OPTIONS IN 2006 (*)
The total number of share subscription options in existence on December 31, 2006 is 2,989,870, representing 4.51% of
Imerys’ share capital on that date after dilution; their weighted average exercise price is €48.93.
In 2006, 44,808 share subscription options were cancelled; 637,755 were exercised by 802 beneficiaries at a weighted
average price of €29.74.
4.2 Options granted by the Company to its corporate officers
A GRANTS IN 2006
The total number of stock options held by the incumbent corporate officers as on December 31, 2006 is 587,735 (vs.
591,076 on December 31, 2005), i.e. 0,89% of Imerys’ share capital on that date after dilution; their weighted average
exercise price is €47.86.
229
A HOLDINGS AND CHANGES
The total number of stock options held by the incumbent corporate officers as on December 31, 2006 is 587,735
(vs. 591,076 on December 31, 2005), i.e. 0,89% of Imerys’ share capital on that date after dilution; their weighted
average exercise price is €47.86.
Out of the options held by the incumbent corporate officers of Imerys as on December 31, 2006, 29,796 were exercised
during financial 2006 at a weighted average price of €30.24.
4.3 Details of option plans in force
The following table summarizes the history, status and main characteristics of the stock option plans in force as on
December 31, 2006:
Nov.
2006 (1)
May
2006
May
2005
May
2004
Oct.
2003 (1)
May
2003
Oct.
2002 (1)
May
2002
Oct.
2001 (1)
May
2001
Nov.
2000 (1)
May
2000
May
1999
Authorization: date
of Shareholders’
General meeting
05/03/05
05/03/05
05/03/05
05/06/02
05/06/02
05/06/02
05/06/02
05/06/02
05/09/00
05/09/00
05/09/00
05/09/00
05/07/98
Date of Board
of Directors /
Supervisory
Board or Managing
Board meeting
11/07/06
05/02/06
05/03/05
05/03/04
10/21/03
05/06/03
10/21/02
05/06/02
10/19/01
05/09/01
11/06/00
05/09/00
05/06/99
Opening date
of option exercise
period(2
02/01/07
05/02/09
05/03/08
05/03/07
10/22/06
05/06/06
10/22/05
05/06/05
10/20/04
05/09/04
11/07/03
05/10/03
05/07/02
Option
expiration date
11/06/16
05/01/16
05/02/15
05/02/14
10/21/13
05/05/13
10/21/12
05/05/12
10/19/11
05/08/11
11/06/10
12/31/09
12/31/06
Share
subscription price
€66.96 (3)
€68.27
€57.58
€48.89
€40.62
€28.31
€29.44
€32.75
€24.73
€28.50
€27.14
€32.18
€28.13
Total number of
initial beneficiaries
2,932
171
171
166
925
201
1,474
181
1,416
169
1,961
145
122
INITIAL GRANT
Total
Total number
of options granted
of which
38,770
640,000
635,000
840,000
37,424
747,720
68,328
652,000
73,784
711,240
72,808
570,520
605,000
5,692,594
- to G. Buffière (4)
15
90,000
80,000
260,000(5)
60
80,000
60
30,000
60
32,000
40
28,500
20,000
620,735
- to the ten
(or more) (6)
Group employees
who received
the most options
150
157,500
140,000
109,600
360
145,580
720
90,000
n.a
n.a
n.a
n.a
n.a
643,910
CHANGE DURING FINANCIAL 2006
Number of
options remaining
to be exercised
on 01/01/2006
n.a.
n.a.
625,000
778,700
37,244
650,060
65,664
324,000
54,128
201,855
37,876
127,080
76,300
2,987,703(7)
Number of shares
subscribed in 2006
of which:
n.a.
n.a.
n.a
n.a
952
197,060
15,876
148,200
16,924
95,655
7,972
72,020
73,300
637,755 (7)
- by G. Buffière (4)
-
-
-
-
-
-
-
-
-
-
-
13,000
7,000
29,796 (7)
- by the 10
(or more) (6)
Group employees
who exercised
the most options
-
-
-
-
-
76,020
-
9,000
-
37,520
-
28,500
-
151,040
Number of
options cancelled (8)
or reintegrated (9)
in 2006
-
(3,400)
(24,900)
(12,000)
(8)
-
(180)
-
(40)
(4,280)
80
3,880
2,000
(38,848)
38,770
636,600
600,100
766,700
36,284
453,000
49,608
175,800
37,164
101,920
29,984
58,940
5,000
2,989,870
Number of
options remaining
to be exercised
on 12/31/2006 (10)
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
Employee Shareholder Plans.
Not including longer immobilization periods that may be applicable locally.
Except for different subscription prices applicable locally.
Director, Chief Executive Officer.
Of which 200,000 subject to the Group’s achievement of economic and financial results in financial years 2004 to 2006.
This number may be greater than 10 in some years because an equal number of options was granted to several beneficiaries.
Of which 9,796 with respect to the March 1998 Plan, which expired on March 25, 2006.
Following the beneficiaries’ departure from the Group.
Following corrections to reporting errors.
Following cancellation and exercise of the aggregate number of options since the date of approval of the plan in question, and any reintegrations..
230
ANNUAL REPORT 2006
5 - FREE SHARES
A GRANT POLICY
Following a favorable recommendation by the Appointments & Compensation Committee, the Board of Directors may
grant free shares in the Company, solely on an exceptional basis, to a limited number of Group executives (which may
not include the Chief Executive Officer) in charge of carrying out specific medium-term actions that are judged as
priorities for the Group’s future.
A MAIN CHARACTERISTICS OF FREE SHARES
Vesting
• The granted shares are vested upon after a period that may not be less than two years from their grant date, subject
to the achievement of certain economic and financial goals that cannot be appraised on the basis of a single year; the
number of vested shares is subordinated and in proportion to the achievement of those goals.
• The beneficiary’s departure from the Group for any reason before the end of the vesting period entails his or her loss
of all rights to the vesting of the free shares.
Holding of vested shares
Beneficiaries must hold the shares for a period of not less than two years from their vesting date, after which period they
have free use of the shares.
A FREE SHARE PLAN 2006
In 2006, the Board of Directors made first use of the authorization granted by the Ordinary & Extraordinary General
Shareholders’ Meeting of May 3, 2005 to grant free shares. With respect to the plan approved by the Board of Directors
on May 2, 2006, a total of 9,750 free shares were granted to Group executives, representing 0.015% of Imerys’ share
capital on December 31, 2006 after dilution.
No corporate officer of Imerys benefited from free shares.
231
6 - CORPORATE OFFICERS’ TRANSACTIONS
IN SECURITIES IN THE COMPANY
The Board of Directors adopted a Procedure for the prevention of use or disclosure of insider information within the
Imerys Group. This policy was adopted in its initial version in July 2002 and is an appendix to the Internal Charter of the
Board of Directors.
The policy was recently amended to take into account the adaptation to French law of the European directive on “market
manipulation” and, in particular, the provisions of AMF’s General Regulations, defines permanent and occasional
insiders; sets out the Company’s obligation to draw up a list of insiders for the Group and determines the related
arrangements. It also reiterates the rules with respect to transactions by corporate officers on Imerys shares or, as the
case may be, any other securities issued by the Group or any financial instruments (“Imerys Actions” mutual fund,
MONEP, warrants, convertible bonds, etc.) that are related to Imerys shares (“Imerys securities”).
In accordance with the general principle that applies to Insiders, whether permanent or occasional, any corporate officer
and related persons must, in the event that they directly or indirectly hold privileged information, before the public has
knowledge of such information, refrain from carrying out any transaction, including forward transactions, on Imerys
securities (except, however, for subscription or purchase by the exercise of options).
This obligation to refrain from trading also covers any transaction in Imerys securities (including as hedging) during the
15 calendar days leading up to the announcement of the Group’s estimated or definitive annual, half-yearly or quarterly
results; it concerns corporate officers, but also the Group’s main support or line managers or any employees that directly
take part in drawing up those consolidated financial statements, who are considered as regularly or occasionally likely to
hold insider information because of their positions and responsibilities. Moreover, those rules prohibit such persons from
making any short or carry-over transactions (except hedging).
The annual schedule of announcements of the Group’s consolidated results is supplied to the Directors at the end of the
previous year; it may be consulted at any time on the Group’s website, is given regularly in the Chief Executive Officer’s
quarterly letter to shareholders and is available on request from the Group’s financial communications department.
Finally, under the same rules, the corporate officers and, under their personal responsibility, all related individuals, must:
• hold the Imerys shares they own in registered form, either directly in their names with the Company or its securities
manager or through management by the intermediary (bank, financial institution or broker) of their choice;
• declare individually to AMF and to the Secretary of the Board of Directors any transactions carried out on Imerys
securities within five trading days of such transactions.
Such declaration, in the form of a press release, is sent to AMF to be published on its website www.amf-france.org.
232
ANNUAL REPORT 2006
Pursuant to the provisions of article 222-15-3 of AMF’s General Regulations, the table below summarizes the
transactions made in securities in the Company by corporate officers and, as the case may be, any related persons in
2006, and published on the AMF website.
Person making declaration
or related person
Capacity
Number of
shares acquired /
subscribed
Weighted
average purchase /
subscription price
(euros)
Number of
shares sold
Weighted
average
selling price
(euros)
Aimery Langlois-Meurinne
Chairman
of the Board
(1)
50,000
30.57
50,000
67.84
Gérard Buffière
Chief Executive
Officer and Director
(2)
29,796
30.24
9;796
70.07
Jacques Drijard
Director
500
69.15
1,560
64.45
61,356
68.11
Patrick Kron
(3)
(2)
Director
60
24.73
Eric Le Moyne de Sérigny
Director
400
67.79
Maximilien de Limburg Stirum
Director
500
67.10
Gilbert Milan
Director
600
59.19
Robert Peugeot
Director
190
68.63
Thierry de Rudder
Director
920
67.50
82,966
31.78
Total
(1)
Following the exercise of share purchase options granted by Company shareholders.
(2)
Following the exercise of share subscription options.
(3)
Director until May 2, 2006.
233
7 - REGULATED AGREEMENTS AND COMMITMENTS
7.1 List of regulated agreements and commitments
• The strategic consulting services agreement with the Pargesa group, for an annual amount of 1,250,000 Swiss francs,
as authorized by the Supervisory Board in 1999 and modified by an amendment on July 25, 2002, continued in the
same terms and conditions in 2006.
• No other agreement coming under the provisions of article L. 225-38 of the Code of commerce was entered into and
no commitment coming under the provisions of article L. 225-42-14 of the Code of commerce was undertaken by the
Company in 2006 or have been entered into or undertaken since the end of that year.
7.2
Statutory Auditors’ Special Report
on Related Party Agreements and Commitments
This is a free translation of the original text in French for information purposes only. It should be understood that the
agreements reported on are only those provided by the French Company Law (Code de Commerce) and that the
report does not apply to those related party transactions described in IAS 24 or other equivalent accounting
standards.
ERNST & YOUNG Audit
Faubourg de l'Arche - 11, allée de l'Arche
92037 Paris-La Défense Cedex
92524 Neuilly-sur-Seine Cedex
In our capacity as statutory auditors of your Company, we hereby report on the agreements and commitments with related
parties.
We are not required to ascertain whether any other agreements and commitments exist but to inform you, based on information
provided to us, of the principal terms and conditions of those agreements and commitments brought to our attention, without
expressing an opinion on their usefulness and appropriateness. It is your responsibility, pursuant to Article 92 of the decree of
March 23, 1967, to evaluate the benefits resulting from these agreements and commitments prior to their approval.
A AGREEMENTS AND COMMITMENTS AUTHORIZED DURING THE YEAR
We hereby inform you that no agreement entered into during the year to which Article L.225-38 of the French Company Law
(Code de Commerce) would be applicable has been brought to our attention.
A AGREEMENTS AUTHORIZED DURING PREVIOUS YEARS AND HAVING
CONTINUING EFFECT DURING THE YEAR
In addition, pursuant to the Decree of March 23, 1967, we have been advised that the following agreement authorized in
previous years has had continuing effect during 2006.
With Pargesa Holding:
Your Company entered into a strategic consulting services agreement with the Pargesa Group for an annual amount of
1,250,000 Swiss francs.
We conducted our procedures in accordance with professional standards applicable in France; those standards require that
we perform the necessary procedures to verify that the information provided to us is consistent with the documentation from
which it has been extracted.
ERNST & YOUNG Audit
Jean-Roch VARON
Nicholas L.E. ROLT
234
ANNUAL REPORT 2006
7
Risk factors and internal Control
pages
236
1 - Risk factors
240
2 - Internal control
235
CHAPTER 7 - Risk factors and internal Control
1 - RISK FACTORS
1.1 Risks relating to financial markets
(SEE NOTE 33 ET SEQ. TO THE CONSOLIDATED FINANCIAL STATEMENTS)
1.2 Energy price risks
(SEE NOTE 37 TO THE CONSOLIDATED FINANCIAL STATEMENTS)
1.3 Industrial and environmental risks
(SEE NOTE 30 TO THE CONSOLIDATED FINANCIAL STATEMENTS AND CHAPTER IV, SECTION 8- SUSTAINABLE DEVELOPMENT)
1.4 Country risks
1.5 Legal risks governmental, legal or arbitration procedures
The Group is exposed to the risk of actions and claims arising from the ordinary course of its business. The most common
claims or actions concern allegations of personal injury or financial loss calling on the liability of Group companies with
respect (i) to the pursuit of their commercial or industrial activities (particularly claims by customers concerning the delivery
of defective products – in most cases covered by Group insurance programs – or by third parties concerning neighborhood
disturbances) or resulting from a possible breach of certain contractual obligations, or (ii) to failure to comply with certain
legal or environmental provisions that may apply in social, property or environmental matters.
Furthermore, Imerys is also bound by certain contractual obligations of compensation – or enjoys certain rights to
compensation – with respect to guarantees of liabilities made with respect to past divestments or acquisitions of assets.
Imerys’ Legal Department manages all claims involving the Group, with the assistance of local lawyers whom it appoints.
It draws up a summary report, the conclusions of which are reviewed with the Financial Department and the Group’s
auditors, and presented by the General Counsel to the Audit Committee as part of its semi-annual examination of the
risks facing the Group. The amount of provisions booked for management risks is €45 million as on December 31, 2006
(€49.4 million as on December 31, 2005). The likely term of these provisions is from 2007 to 2011.
Although the outcome of all outstanding actions and claims cannot be foreseen with certainty, taken individually or as a
whole, their settlement, even if adverse for the companies involved, is not likely to have any material impact on the
Company or Group’s financial statements
More generally, as on the date of the present Annual Report, to the best of Imerys’ knowledge, no governmental, legal or
arbitration proceedings are likely to affect significantly the Group’s business, financial position or cash flow.
1.6 Major contracts
To the best of Imerys’ knowledge, apart from the contracts entered into (i) in the ordinary course of business, including
contracts with respect to operating rights for mineral reserves and resources, and (ii) in relation to the business
acquisition or divestment operations or the financing operations mentioned in the present Annual Report:
• No other major contracts have been signed by any Group company in the two years prior to the date of the present
Annual Report that are still in force on that date,
• which contain provisions entailing an obligation or commitment likely to have significant impact on the Group’s business,
financial position or cash flow.
236
ANNUAL REPORT 2006
1.7 Customer and supplier relations
In 2006, sales to Imerys’ 10 largest customers represented 18.4% of the Group’s consolidated sales, with no customer
accounting for 4% of total sales
Purchases from Imerys’ 10 largest suppliers (including transport and energy) represented 14.8% of the Group’s purchases
in 2006, with no supplier accounting for 4% of the Group’s total purchases.
1.8 Risk insurance and coverage
The Group’s policy with regard to the protection of its earnings and assets against identifiable risks is to seek the most
suitable solutions on the insurance market that offer the best balance between their cost and the extent of the coverage
provided.
The coverage of major risks that are common to all the operating divisions’ activities is almost exclusively integrated into
“All Risks Except”-type international Group insurance programs taken out on the market with insurers having
internationally recognized reputations and financial solidity. This integration enables the Group to benefit from the most
extensive coverage with high limits while optimizing its cost. As part of the active external growth policy implemented by
the Group, steps are taken to ensure that acquired businesses are immediately integrated into Group insurance
programs or benefit from coverage terms that are at least equivalent while restricting their integration to the additional
coverage offered by those programs compared with the local insurance policies that apply to the acquired businesses.
The Group’s companies also use the market to cover the specific risks of some of their non-recurring activities or
operations through the services of the brokers in charge of managing the Group’s insurance programs, or when such
insurance is made obligatory by applicable local regulations.
The Group judges that it currently benefits from sufficient insurance coverage, in terms of both scope and insured
amounts or limits of guarantees, for the principal risks related to the pursuit of its activities worldwide.
The two main Group insurance programs cover civil liability as well as property damage and business interruption.
A
CIVIL LIABILITY
The purpose of this program is to cover the Group’s tort or contractual liability in the event of bodily injury, property
damage or consequential damage occurring during operations or after the delivery of products, and any damage
resulting from accidental pollution.
The Group’s activities are first covered by local policies issued in each country (“1st line”), then by a Master policy issued
in France and an additional policy in excess of the limit of cover of the Master policy (“Excess”).
The Master and Excess policies, taken out with a pool of insurers led by XL Global Risk, are regularly used in addition to
the limits and coverage of several specific sub-programs, particularly in North America to cover Automobile Civil Liability
and Workers Compensation, and in addition to the obligatory Employer’s Civil Liability policy issued in Great Britain.
The coverage provided by the Group Civil Liability program, subject to the exclusions that are common practice on the
insurance market for this type of risk and to sub-limits applied to certain defined events, amounts to €100 million per
claim and per year.
The current Group Civil liability Program, effective as from January 1, 2006, is renewable on July 1, 2007. Applicable
excess levels, which may vary according to local 1st line policies, are mostly around €15,000 euros per claim, except in
North America, where they are US $250,000.
The efforts kept up by divisions on risk prevention and product quality control enabled the Group to control the cost of its
Civil Liability insurance for the renewal period.
237
A
PROPERTY DAMAGE AND BUSINESS INTERRUPTION
This program is particularly intended to cover property damage caused suddenly and directly affecting the insured
property, as well as any resulting operating losses.
The Group’s activities are covered for property damage and business interruption under a Master policy that is issued in
France and applies directly in most European countries and in addition to local policies in other countries.
The significant increase in the amount of premiums recorded by the Group in 2002 and the raising of applicable excess
levels, which result from the overall trend among insurers of tightening their terms and conditions for taking out industrial
risk coverage, have led Imerys to transfer only risks of intensity to the insurers. As of January 1st, 2002, “frequency” risks
are retained in captive reinsurance that is consolidated in the Group’s accounts, for maximum amounts of €700,000 per
claim and €2 million in total per year.
The Master policy provides the Group, subject to the exclusions that are common practice on the insurance market for
this type of risk and the sub-limits applied to certain defined events, with coverage for property damage and business
interruption of €120 million per claim.
The current Group property damage and business interruption program was renewed on January 1, 2007 with FM
Global (United States) for a period of three years.
The enhanced risk prevention policy implemented by the Group and the absence of any significant claims since 2002
have enabled it to return to more reasonable premium rates that take better account of the moderate theoretical level of
risk associated with the Group’s activities and its historical average rate of claims.
In assigning its property damage and business interruption program under a multi-year framework to a company that is
renowned for its expertise in prevention engineering, Imerys intends to continue its enhanced risk awareness and
protection efforts in line with its overall Sustainable Development program. Insurance engineers conduct regular
preventive visits on virtually all the Group’s industrial sites, resulting in recommendations that enable the Group to
customize its prevention program and improve its management of property damage and business interruption risks.
Approximately 80 units were inspected in 2006. 46 units are now considered by FM Global as “Highly Protected Risks.”
The Group’s aim is to increase the proportion of its insured assets considered as Highly Protected Risks to 70%.
A
OTHER GROUP-WIDE RISKS
The Group’s other main insurance programs are intended to cover the following risks, which are common to all its legal
entities or several of its business groups: civil liability of corporate officers and executives; automotive fleet insurance
(Europe and the United States); shipping (marine cargo and charterer); work accidents (particularly in the United States
and Great Britain).
1.9 Risks relating to transport
A
SEA TRANSPORT
Given the geographic dispersal of its mineral reserves, industrial facilities and markets, as well as the nature of its
products, the Group makes extensive use of sea freight to optimize product transport costs. Almost all the business
groups use this method of transport, in bulk or container form.
The Group judges that its principal exposure to this risk is the sea transport of bulk kaolin from Brazil or the United
States and transport in the Mediterranean basin.
Transport is managed by general category at Group level. For very large flows, such as transport from Brazil, the Group
maintains a policy of long-term contracts in partnership with certain shipowners, which enables it to smooth out the
impact of market cost fluctuations and optimize the use of ships assigned to this activity.
238
ANNUAL REPORT 2006
A
RISKS RELATING TO RAIL TRANSPORT
The gradual opening of the European rail transport market plays a part in risk management of the cost increase for this
transport method.
The Group businesses that are most concerned are Pigments for Paper, Tiles Minerals and Graphite.
In general, Imerys’ exposure to these risks is limited, as customers commonly take on the cost of delivering the Group’s
products from production plant through to destination on a contractual basis.
239
2 - INTERNAL CONTROL
2.1 Report of the Chairman of the Board of Directors
A
INTRODUCTION
Context
Pursuant to the French law on financial security of August 1, 2003 (the “LSF law”) and in accordance with article L. 22537 of the Code of Commerce, on February 14, 2007 the Chairman of the Board of Directors drew up his report on the
conditions for preparing and organizing the Board’s work and on Imerys’ internal control procedures.
Detailed information on the conditions for preparing and organizing the Board of Directors’ work and, more generally, its
functioning, is given in chapter 6, section 1 of the Annual Report; the principles and rules set down by the Board of
Directors for determining the compensation and benefits of corporate officers are given in chapter 6, section 3. This
information should be considered as an integral part of the above-mentioned Chairman of the Board of Directors’ report.
The part of the report presented hereafter sets out the main findings of the work on internal control done by the Group in
2006 and examined by the Audit Committee. This part was drawn up under the responsibility of the Internal Audit
Manager and reviewed by the Chief Executive Officer, who confirmed that its content complied with existing mechanisms
in the Group. The report was then provided to the statutory auditors for review, prior to its definitive adoption by the
Chairman.
Internal control objectives
The Imerys Group’s internal control system is intended to ensure that all the operations carried out in the Group comply
with current laws and regulations and with the Group’s management principles and strategy.
It covers all the controlled companies in the Group’s scope of consolidation.
By implementing internal control mechanisms in all the Group’s activities, Imerys intends to ensure that it has the
resources needed to manage the risks that its activities face, guarantee the accuracy and thoroughness of its financial
information and organize the correct management of its operations. In this way, the internal control system helps to
protect the company’s value for its shareholders and employees and enable the Group to achieve the objectives it sets
itself.
To structure its approach and provide for the qualification of its system, the Group drew on the internal control referential
coming from the framework published in May 2006 by the workgroup organized by the AMF.
However, by its nature such a system cannot provide an absolute guarantee as to the total control of the risks that the
Group faces and the achievement of its goals.
Internal control principles
In line with the goals set, Imerys’ internal control system is founded on the following principles:
• a chosen, controlled organization comprised of skilled, responsible people;
• targeted communications;
• relevant control actions;
• des activités de contrôle adaptées ;
• regular review of internal control practices in the Group.
240
ANNUAL REPORT 2006
A
A CHOSEN AND CONTROLLED ORGANIZATION
The organizational model
Imerys’ internal control is based on the Group’s operating and management organization, which is comprised of four
business groups and 15 divisions, and on support departments that are directly or indirectly dedicated to the control of
the risks that the Group faces.
The control system set up in the Group is based on a tight governance structure that guarantees the transparency and
traceability of decisions while conserving the principles of subsidiarity and decentralization in the running of the Group’s
industrial and commercial activities, which are considered as essential to their optimum management. It requires great
commitment from every line or support manager as they are expected to grasp the policies and procedures defined at
Group level, contribute to their implementation and observance and enrich them through relevant measures for the
activities or fields under their charge.
Operating activities are controlled and monitored by the Chief Executive Officer with the help of his Executive Committee
On one hand, the framework for operations management is comprised of Group policies and the resulting delegations of
power to line managers, and of the specific controls by central support departments in their sphere of responsibility and
through periodical audits conducted by the Internal Audit Department. On the other hand, divisions’ management of
operations is continuously controlled and monitored by business group managers and, periodically, by the Chief
Executive Officer and the Chief Financial Officer through budget processes, quarterly result reviews and by monthly
management reporting, the main points and conclusions of which are commented on at Executive Committee meetings.
The longer-term orientations of the business groups’ or divisions’ activity and the resulting financial forecasts are
formalized and monitored under a multiyear strategic plan. This plan is drawn up under the control and supervision of
the Chief Executive Officer and its conclusions are reviewed by the Strategic Committee and presented to the Board of
Directors for approval.
The internal control players
• The Board of Directors and its specialized committees
The Board of Directors constantly controls the management of the Group by the Chief Executive Officer. In that framework, it
particularly makes sure that internal control mechanisms are set up correctly in the Group.
To assist the Board in its mission, three specialized committees were formed from its members: the Strategic
Committee, the Appointments and Compensation Committee and the Audit Committee. The Strategic Committee and
the Audit Committee have particular responsibilities with respect to identifying and managing risks and monitoring
certain internal control mechanisms as presented in chapter 6, section 1 of the Annual Report.
• The Chief Executive Officer and the Executive Committee
The Chief Executive Officer has operating and functional responsibility covering all the Group’s activities to implement
the strategy defined by the Board of Directors. In particular, he is in charge of the effective implementation of internal
control mechanisms within the Group.
The Chief Executive Officer is assisted in his mission by an Executive Committee of which he appoints the members.
The members represent each of Imerys’ business groups and main support departments. By delegation, Executive
Committee members are in charge of setting up and monitoring internal control systems in their field of responsibility.
• The business group and division management
In accordance with the Group’s decentralized operating principles, the managers of each business group have the
responsibility and necessary powers to organize, run and manage the operating activities of the business group in
question as Deputy Chief Executive Officer of the Group, and to delegate in similar conditions to the managers of the
divisions that make up their business group.
241
Each business group and division favors, through its respective segmentation into operating divisions and business
units, the most relevant organization to its markets, taking into account their commercial, industrial or geographic
specificities. It is, therefore, responsible for adopting internal control mechanisms that are consistent with, on one hand,
its organization and, on the other hand, the Group’s principles and rules.
• The Group’s support departments
The corporate Finance & Strategy, Legal, Human Resources, Research & Technology, Geology and Environment,
Health & Safety Departments have a twofold mission: organize and control the Group’s operations in their respective
spheres of expertise and provide technical assistance to the business groups and divisions in those fields when
necessary. This central support core, together with the cross-Group Departments (Innovation, Purchasing, Information
Systems) enables the Group not only to benefit from the economies of scale related to its size and from better sharing of
skills, but also to ensure that all the operations in their fields are carried out in a framework of secure, consistent
management and control.
Through their presence and organization, central support functions make a significant contribution to the Group’s internal
control mechanisms. The managers of these departments have functional authority over the managers whose missions
come under that scope of expertise in the business groups and divisions.
• The Internal Audit Department
The Internal Audit Department has a management support function and is independent of the operating and functional
activities that it audits. For that purpose, the Internal Audit Manager reports hierarchically to the Group’s Chief Executive
Officer and functionally to the Audit Committee.
The Internal Audit Department’s mission is to assess the Group’s internal control mechanism and make sure that they
comply with the principles and rules governing them. It must alert management to any internal control failings and takes part
in the drafting of the recommendations made to correct such failings.
It is also in charge of an internal unit centered on process modeling, which is particularly used to integrate key controls
into divisions’ operating and support processes.
The Department has a centralized organization with 2 auditors based in Atlanta (covering the Americas), 2 auditors in
Shanghai (covering Asia), 4 auditors in Paris (covering Europe and Africa as well as global information systems) and 1
consultant based in Paris.
• The Internal Control Department
The Internal Control Department reports to the Internal Audit Department. Its mission is to coordinate the continuous
improvement of internal control mechanisms in the Group. To do so, it is in charge of the three following activities:
• risk analysis;
• coordinating the drafting of Group policies and procedures and circulating them throughout the Group;
• systematic review of internal control practices in the Group.
All of this work is carried out in cooperation with the Group’s support departments and the main line managers in each
business group and division.
The Group rules
Imerys’ internal control policy is set down in a number of charters (Board of Directors charter, sustainable development
charter, environment, health & safety charter, internal audit charter) and codes (code of conduct, corporate
governance policy) that apply Group-wide. These sets of rules are intended to create a favorable control environment,
based on robust principles and the experienced practice of Corporate Governance, as well as on upright, ethical
behavior in compliance with laws, regulations and the Group’s strategic objectives.
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ANNUAL REPORT 2006
Furthermore, Group policies have been defined by the Finance & Strategy, Legal, Human Resources, Geology,
Environment, Health & Safety and Research & Technology central support departments and by the Innovation,
Purchasing and Information Systems cross-Group support departments. These departments draw up Group policies that
define the specific organization, responsibilities and working and reporting principles for the respective areas of
expertise that they supervise for Imerys. This initial body of rules forms the reference framework by which the Group’s
operating activities must abide. It applies to all the Group’s companies and activities.
Group policies are regularly updated to take account of changes in regulations and the Group’s needs. They are now
posted in the “Blue Book,” which all employees can consult online via intranet.
A second set of rules, drawn up by each business group or division, defines its working and reporting principles. These
arrangements are, in compliance with Group policies, adapted to their own internal organization, the management of
their specific mining, industrial and commercial activities and to the particular related risks. They take into account
specificities in terms of local laws and regulations.
The information systems
The effectiveness of information systems and tools contributes to the reliability and improvement of support and
operating processes. It enables the Group to benefit from all the information at its disposal in order to maximize profits,
capitalize on its experience, seize opportunities and increase its competitive edge.
The Group’s policy consists of integrating as much as possible of its value chain (particularly sales, distribution,
purchasing, inventory, fixed assets, production, the logistics chain and finance) via its computerized enterprise resource
planning (ERP) tools. Imerys strives to use integrated ERP control systems in order to ensure the optimum level of
control while meeting the specific requirements of better management of its operating activities. This use is regularly
checked through specialized information system assignments by the Internal Audit Department.
Imerys is organized around a small number of ERP systems selected by the Group to take account of the size of
operations and geographic zones in which they are to be deployed in order to achieve support and maintenance synergy
as well as satisfactory consistency. Consolidation and reporting software is deployed in all the Group’s entities and
sources the necessary data from the financial modules of the ERP systems used by those entities.
Furthermore, tools for consolidating and monitoring the most important non-financial data have been set up Group-wide.
Depending on the case, they are used to achieve the following goals:
• Obtaining better vision of the comparative performance of the Group’s different activities, preventing or solving any
difficulties and fostering or measuring improvement (e.g. consolidation and reporting of representative indicators for
managing human resources or environment, health and safety);
• Ensuring the accuracy of legal or administrative information concerning the Group’s subsidiaries and interests and
contributing to the monitoring of their compliance with applicable legal or regulatory obligations (e.g. consolidation and
reporting of data on the Group’s subsidiaries and interests and their corporate officers).
The Human Resources management principles
Human Resources management contributes to Imerys’ internal control system by enabling the Group to ensure that its
employees have a relevant skill level with respect to their responsibilities, that they are aware of those responsibilities
and their relevant limitations and that they are informed about and observe the Group’s rules.
In that respect, a set of rules has been drawn up to ensure that the decisions made comply with applicable laws and
agreements, control the integrity of salary determination and payment processes, supervise the setup of benefits and
process information. Other Human Resources policies have been drawn up, covering areas such as employee relations,
industrial relations, organizational development, international mobility and crisis management.
243
• Recruitment and development
To support its growth, the Group continues to recruit in every country and every function. To make sure that recruitments
are consistent and justified, the Group Human Resources Department defines standards and checks practices. In
addition, senior managers may not be recruited without the involvement of the Group Human Resources Department
and, as the case may be, the relevant support departments.
There are two parts to the career development procedure: Performance Appraisal and Career Development (P.A.D.),
through which individual goals are set and annual assessments carried out, and Organization and People Review
(O.P.R.), a framework for examining individual situations (e.g. identifying high-potentials or outstanding performance),
succession plans and key organizational questions.
• Compensation
Compensations are reviewed annually. The review particularly focuses on base salary and individual bonuses. Individual
compensations are revised according to a Group-wide policy intended to improve consistency in compensation amounts
and trends in the Group. It is henceforth based on an international classification of the main line and support manager
positions at Imerys. Furthermore, the bonus practices in force in the Group for managers have been surveyed and
compared with market practices. They are now homogenous and based, in particular, on comparable criteria in terms of
value and kind.
A
A TARGETED COMMUNICATION
Internal communication is organized around a central department that is part of the Group Human Resources
Department and a network of local correspondents in operating divisions. Its mission is to supervise the integration of
each of the Group’s activities and build a collective identity founded on its diversity.
The department has three main goals:
• Inform all the Group’s employees. For that purpose, tools such as the in-house newsletter “Imerys News” or the
intranet “Scooper” set out Imerys’ general orientations, strategy, organization and activities. Other tools, for example
the intranet “Blue Book,” are used to disseminate Group policies and procedures. Moreover, Imerys strives to give all
recruited managers an overview of the Group, including its organization, main businesses and strategy. The welcome
sessions organized every year for around 100 new arrivals contribute to this effort;
• Share experiences in order to foster dissemination of best practices, including for internal control mechanisms;
• Listen to personnel, especially in operating activities through the local correspondent network.
A A PERIODICAL ANALYSIS OF THE GROUP’S MAIN RISKS
Objectives
Analyzing risks enables Imerys to identify the events that represent a major threat in terms of achieving its strategic,
financial and operaing goals and complying with the law.
Through a structured process that enables the Group to appraise and analyze its main risks, Imerys can assess the
suitability of its existing internal control mechanisms, set up relevant action plans to improve their efficiency and, more
generally, increase the protection of the Group’s value in compliance with applicable laws and regulations.
Organization
The risk analysis process was redefined in 2006. It is henceforth structured as follows.
With respect to his or her duties, every support and line manager must constantly seek to identify, analyze and manage
risks in his or her areas of responsibility. The identification and management of these risks are periodically reviewed by
the Chief Executive Officer and Chief Financial Officer as part of the budget process, quarterly income statement
reviews and monthly management reporting.
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ANNUAL REPORT 2006
Furthermore, the Group has begun a new risk mapping process. The approach taken in 2006 was pragmatic and
consistent with the decentralized management organization of Imerys’ businesses. Risk analysis was initiated on the
level of each division, which was considered the most relevant level in the Group’s management and operating structure
for the purposes of the analysis.
Imerys’ Board of Directors supervises all the Group’s risk analysis processes. The Board has appointed two of its
specialized committees, the Strategic Committee and the Audit Committee, to examine questions relating to the Chief
Executive Officer’s analysis and monitoring of the major risks that come under their respective spheres of competence.
The Committees regularly report to the Board on the work done on the subject and their results.
Major risks
Details of the nature of the Group’s main risks are given in chapter 7, section 1 of the Annual Report.
The methods for managing and controlling the Group’s main financial market risks are set out in notes 35 and 36 to the
consolidated financial statements. The methods applied to the Group’s main non-financial risks are described hereafter.
• Environment, Health & Safety
Most of the industrial mining and minerals conversion activities that make up Imerys’ core business may have an impact,
albeit a limited one, on their environment. Moreover, these activities require the daily performance of tasks that entail
risks and, consequently, require relevant employee training, particularly in the use of chemicals or explosives, driving
heavy mobile equipment and work at heights.
The Group has a central Environment, Health & Safety (EHS) Department with the mission of guiding and assisting
operating entities and the Group in their development efforts and maintaining adequate protection of persons (Imerys or
third party employees), property and the environment.
As part of its mission, the EHS Department audits the programs implemented by those operating entities in order to
check their compliance with local regulations and with Imerys’ internal safety, health and environmental standards,
whenever these are more stringent.
The EHS audit policy provides for approximately 30 audits per year in order to check all the Group’s largest sites every
three years. The relevance of this program and its correct application are checked by an independent outside organization.
Furthermore, an innovative in-house training program, the Imerys Safety University, which trains participants in
professional risk assessment, the use of incident cause analysis tools and the key success factors for a safety culture
improvement program. Safety University courses enable participants to share their experience in the Group and form
strong, dynamic internal networks for safety.
• Mineral reserves and resources
Reported quantities of mineral reserves and resources are estimated from the size and quality of deposits based on the
technical, economic, market and other data available at a given time. Because of unforeseeable changes in those
parameters and the uncertainty naturally inherent in evaluating resources, no absolute guarantee can be given for
estimates of those reserves and resources.
For that reason, Imerys has set up an internal network of experts who are responsible for evaluating the Group’s mineral
resources and reserves for each of its divisions or operating entities. These experts must prove they have a recognized
qualification and at last five years’ geological experience in minerals and be members of a recognized trade organization.
Under the responsibility of the Group’s Chief Geologist, once a year these experts appraise the Group’s mineral
reserves and resources and, at the same time, review the related mining rights. This assessment is validated by the
Group Vice-President Research & Technology and presented to the Executive Committee. The status as at year-end
2006 and trends in that assessment are set out in chapter 4, section 3 of the Annual Report.
Furthermore, these estimates are audited over a three-year cycle, either by independent experts for the Group’s main
sites or internally for the remaining sites.
245
• Energy
Like any industrial group, Imerys is exposed to the risk of fluctuations in the prices of its different sources of energy
(primarily natural gas, electricity and oil products). The geographic distribution of its industrial facilities and the diversity
of its supply sources, however, tend to limit the potential impact of this risk for the Group.
As this risk and its potential impact for the Group are higher for natural gas and electricity, its financial management is
centralized in the Group Treasury Department. The Treasury Department is in charge of implementing a common
management policy that particularly includes appropriate recourse to the financial instruments available on the market.
Furthermore, research programs on alternative energy sources have been launched in the Group and energy
consumption reduction projects have been started.
• Sea transport
Given the geographic dispersal of its mineral reserves, industrial facilities and markets, as well as the nature of its
products, the Group makes extensive use of sea freight to optimize product transport costs. Its main risks are the sea
transport of bulk kaolin from Brazil or the United States and transport in the Mediterranean basin.
Consequently, sea transport gives rise to general category management at Group level in order to optimize flows and
set up best current practices in every division.
For very large flows, such as transport from Brazil, the Group maintains a policy of long-term contracts in partnership
with certain shipowners, which enables it to smooth out the impact of market cost fluctuations and optimize the use of
ships assigned to this activity.
• Countries
The nature of the Group’s activities, as well as their worldwide geographic location, exposes it to certain risks that could
in time have an impact on its activities, assets, financial position or results.
To identify at-risk countries, Imerys uses Coface country risk ratings, which indicate to what extent a company’s economic
and financial commitment is influenced by the economic, financial and political outlook for the country in question.
The Group’s strategy in terms of diversifying its supply sources and the location of its end markets, mainly in developed
countries, enables it to soften the effects of those global risks by limiting the potential impact for Imerys of the existence
of difficult local situations in certain countries.
• Disputes
merys and its subsidiaries are exposed to risks of claims or disputes occurring in the normal run of their business, like all
groups carrying out activities of a similar size and nature, particularly those with significant bases in the United States.
In order to control that risk, the Group Legal Department is informed of any dispute or event that may lead to a lawsuit
brought either by a Group company or by a third party. The Legal Department manages all claims brought against the
Group, with the assistance of local lawyers whom it appoints. At the end of every half-year, its draws up a consolidated
report on the biggest legal actions for review and discussion with the appropriate representatives of the Finance
function. The main conclusions are presented to the Audit Committee by the Group’s General Counsel as part of the
Committee’s annual examination of the main risks facing the Group.
• Property damage and business interruption
Since 2004, the Group has stepped up its efforts to raise awareness of and protect against the property damage and
business interruption risks likely to affect its operating entities. A specific audit program of its industrial facilities is
conducted by the prevention engineers of the insurance company that took out the Group’s policy covering those risks.
The main terms of that coverage are described in chapter 7, section 1 of the Annual Report.
The organization of that program and the monitoring of the resulting recommendations are the joint responsibility of the
Group’s Insurance Department (part of the Legal Department) and the EHS Department.
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ANNUAL REPORT 2006
A
RELEVANT CONTROL ACTIVITIES
Operating and support control activities
Within Imerys, control activities are determined according to the nature of the related goals and adapted to the issues in
each process.
The Group policies presented in the “Organization” part of this section form the rules that structure the Group’s control
environment. The resulting Group procedures, particularly those concerning the reliability of accounting and financial
information are, on the other hand, considered as control activities. Consequently, those procedures are set out below.
Control activities concerning the accuracy of accounting and financial information
The control mechanism and production procedures for accounting and financial information are uniform throughout the
Group. This mechanism is made up of a cross-Group accounting organization, consistent accounting standards, a single
consolidated reporting system and quality control of the internal and external financial and accounting information
produced.
• Organization of the accounting and financial function
Accounting and financial operations are managed by the Group’s Financial Department. Its central organization includes:
- An accounting and consolidation function, which is responsible for the preparation and presentation of Imerys SA’s
financial statements and the Group’s consolidated financial statements;
- A financial control and budget control function, responsible for preparing and compiling budget data, for monthly
reporting on the Group’s financial management and for analyzing operations’ performance in relation to budget targets
and to comparable periods during the previous year;
- A treasury and financing function, which is particularly in charge of preparing and consolidating data on financial debt and
on the Group’s financial income. Details of its main missions are given in chapter [3] of the Annual Report, in the notes to
the consolidated financial statements, particularly centralized financial management and optimization of the Group’s debt
and financial resources, and management of interest rate and currency risk. In that framework, “e-cash,” a management
tool for all the Group’s users was set up to group together the management of bank accounts and intra-Group financial
accounts on a single internet platform. This tool provides for centralized supervision of all the Group’s accounts;
- A tax function, which is particularly responsible for monitoring the tax consolidations made in the Group, estimating the
resulting amount of taxes and controlling their overall consistency.
Because of the decentralized organization of the accounting and financial functions, the financial controller of each
business group and each division has a key role. In particular, he or she is in charge of making sure at his or her local
level that the controllers in the divisions of his or her business group and in his or her division’s local entities correctly
apply internal accounting and financial control procedures. Each controller is assigned to the manager of the operating
entity in question, but also reports on a functional basis to the Group’s Financial Department.
• Accounting framework
The general rules described in the Blue Book apply to all Group subsidiaries. They include:
- A reminder of the general accounting principles and recommendations to observe;
- A detailed chart of accounts;
- A definition of the Group’s accounting methods that apply for the most important items and/or operations;
- Control procedures for the most important account categories, particularly the main accounting reconciliations to be
performed in order to control the information produced;
- Useful standard documents for carrying out those controls.
These documents are regularly updated with every amendment or application of new accounting standards, under the
responsibility of the Group Reporting and Consolidation Department.
247
• Annual budget and management reporting
Every year, Imerys implements a monthly reporting and budget process for all the Group’s entities for the purposes of
having an accurate and consistent management and information tool. The match between accounting data and the
management information derived from reporting is the key control principle intended to ensure the accuracy of
accounting and financial information.
Imerys’ budget preparation procedure is based on the involvement of crossfunctional teams in every business group and
division and on the control of the overall consistency of assumptions and methods by the Group Reporting and
Consolidation Department.
The reporting system enables the Group on a monthly basis to accurately monitor the results (income statement and
cash flow) and financial items of business groups and divisions, and to compare them with figures for the previous
period and the budget. Local line managers comment on management indicators and the main variations are analyzed
by the Group Reporting and Consolidation Department.
Following that, every month the Executive Committee examines the most recent summaries resulting from reporting,
analyzes significant variations compared with the previous year and the budget; it determines and monitors the
implementation of corrective actions whenever it judges necessary.
In principle, all these procedures make it possible to detect any anomalies in order to correct them quickly.
• Consolidation process
A single accounting consolidation system treats all information from every Group subsidiary.
To guarantee the quality and accuracy of its financial information, Imerys has set up the “Magnitude” unified reporting
system for both the feedback of management information and production of the consolidated financial statements. The
system is deployed in all the Group’s entities. It is sourced by local accounting data by interface, by retrieving the
necessary data in the financial modules of entities’ ERP systems or by manual input.
A detailed plan is drawn up for annual and interim (quarterly and semi-annual) account closings.
The consolidated financial statements are systematically reviewed by the Chief Executive Officer, assisted by his
Executive Committee. These statements are also reviewed by the Board of Directors and, for the semi-annual and
annual statements, approved by the Board of Directors after examination by its Audit Committee.
A
THE REVIEW OF INTERNAL CONTROL MECHANISMS
Audit of entities’ internal control practices
The mission of the Internal Audit Department is to assess internal control mechanisms in operating entities and to
ensure they comply with the principles and rules defined by the Group.
Internal auditors visit all those entities in a three-year auditing cycle. The auditing plan is validated annually by the Audit
Committee and may be changed according to circumstances.
Audit reports are passed on to the Chief Executive Officer and the main support and line managers concerned. A
complete activity report by the Internal Audit Department is presented and discussed every six months in an Audit
Committee meeting with the Statutory Auditors present. On that occasion, a copy of all the audit reports drawn up is
handed to participants.
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ANNUAL REPORT 2006
Overall review of the Group’s internal control systems
Under a three-year action plan adopted towards the end of 2005, Imerys has begun a process for the continuous
improvement of the efficiency of its internal control systems. Implementation of the plan is supervised by the Internal Control
Department and work is carried out in coordination with the managers of the relevant Group operating and support
organizations. The plan consists of setting up a structured, formalized process for the analysis of existing internal control
mechanisms in the Group, particularly with respect to the material nature of the related risks.
This process is structured in five main stages:
• prior identification of key processes in the organization, particularly according to its major risks;
• identification of critical control points for the risks in those processes;
• assessment of those controls by the main process managers;
• identification of any failings in internal controls;
• consolidation of the results obtained, definition and implementation of the necessary potential improvement or corrective
actions.
2006 was a pilot year given over to the production of analysis methods and tools for internal control mechanisms. An
initial test led to an analysis of the control mechanism relating to three pilot processes in the main operating entities of
four Group divisions.
A dedicated computer tool was set up at the end of the year. It will be used to collect, process and produce overviews for
all the information resulting from the various stages in the analysis of internal control mechanisms.
At the end, Imerys has the goal of covering, in its main divisions, all the critical operating and support processes that
may generate material risks for the Group.
2.2 Statutory auditors’ report
prepared in accordance with the last paragraph of Article L.225-235 of the French company law
(Code de Commerce) on the report prepared by the Chairman of the Board of Directors of Imerys
SA with respect to the internal control procedures for the preparation and treatment of financial
and accounting information
This is a free translation into English of the statutory auditors’ report issued in the French language and is provided solely for
the convenience of English speaking readers. This report should be read in conjunction with, and construed in accordance
with, French law and professional auditing standards applicable in France.
ERNST & YOUNG Audit
B.P . 136 - 92524 Neuilly-sur-Seine Cedex
Dear Shareholders,
In our capacity as statutory auditors of Imerys SA and in accordance with the last paragraph of Article L.225-235 of the
French Company Law (Code de Commerce), we hereby report to you on the report prepared by the Chairman of the Board
of Directors of your Company, in accordance with Article L. 225-37of the French Company Law (Code de Commerce) for
the year ended December 31, 2006.
It is for the Chairman to to give an account, in his report, notably of the conditions in which the duties of the Board of Directors
are prepared and organized and the internal control procedures in place within the Company.
249
It is our responsibility to report to you our observations on the information set out in the Chairman’s report on the internal
control procedures relating to the preparation and processing of financial and accounting information.
We performed our procedures in accordance with professional guidelines applicable in France. These require us to
perform procedures to assess the fairness of the information set out in the Chairman’s report on the internal control
procedures relating to the preparation and processing of financial and accounting information. These procedures notably
consisted of:
• obtaining an understanding of the objectives and general organization of internal control, as well as the internal control
procedures relating to the preparation and processing of financial and accounting information, as set out in the
Chairman’s report;
• obtaining an understanding of the work performed to support the information given in the report.
On the basis of these procedures, we have no matters to report in connection with the information given on the internal
control procedures relating to the preparation and processing of financial and accounting information, contained in the
report of the Chairman of the Board of Directors, prepared in accordance with the last paragraph of Article L. 227-37 of
the French company law (Code de Commerce).
ERNST & YOUNG Audit
Jean-Roch VARON
Nicholas L.E. ROLT
250
ANNUAL REPORT 2006
8
Ordinary and Extraordinary Shareholders’
General Meeting of May 2, 2007
pages
252
1 - Presentation of the resolutions by the Board of Directors
257
2 - Auditors’ reports
262
3 - Agenda
263
4 - Draft resolutions
251
CHAPTER 8 - Ordinary and Extraordinary Shareholders’ General Meeting of may 2, 2007
1 - PRESENTATION OF THE RESOLUTIONS
BY THE BOARD OF DIRECTORS
The resolutions that the Board of Directors drew up at its February 14, 2007 session and asks you to adopt fall within the
scope of the Ordinary General Meeting for resolutions 1 to 11 and 21 and within the scope of the Extraordinary General
Meeting for resolutions 12 to 20.
1.1 Financial year 2006 - annual financial statements,
regulated agreements, allocation of earnings
(four resolutions within the scope of the Ordinary General Meeting)
We first submit to your approval the Company’s financial statements for financial year 2006 (first resolution) and the
Group’s consolidated financial statements for financial year 2006 (second resolution).
The presentation of these financial statements and the description of the financial situation, business and results of the
Group and the Company for the financial year just ended, as well as the various items of information required by current
legal and regulatory provisions, appear in chapter 3 of the Annual Report, to which we ask you to refer.
You are also called upon to decide on the regulated agreements subject to the provisions of article L. 225-38 of the
Code of commerce, pertaining to limited liability companies with a Board of Directors (third resolution). When not part of
current operations, they are the subject, as usual, of an Auditors' special report on regulated agreements (see chapter 6,
section 7 of the Annual Report). The Auditors did not make any specific comments in this regard.
You are then called upon to decide on the allocation of the Company’s earnings for financial year 2006 (fourth resolution).
The Company’s net income for the financial year just ended is €113,398,742.64, to which we propose that retained
earnings appearing in the balance sheet of €420,284,974.37 be added in order to form a total distributable amount of
€533,683,717.01.
We propose that this amount be allocated to the payment of a dividend of €1.80 euro per share for the 63,334,620
shares that make up the share capital as on January 1, 2007 (see chapter 5, paragraph 2.1. of the of the Annual Report)
and that the remainder be allocated to the “Retained earnings” account. We also ask that you kindly authorize the Board
of Directors to deduct from the “Retained earnings” account the sums needed to pay the dividend attached to the shares
created following the exercise of share subscription options between January 1, 2007 and the dividend payment date.
The dividend will be paid from May 15, 2007.
With a net amount of €1.80 euro per share, compared with €1.65 in 2006, the dividend payout for this year represents a
9.1% increase. You are reminded that, in accordance with article 158-3 of the General Tax Code, all of the proposed
dividend with respect to 2006 is eligible for the 40% allowance from which private individuals domiciled in France for tax
purposes may benefit.
In accordance with article 243 bis of the General Tax Code, the amount of the dividend per share paid with respect to
the previous three financial years (as well as that of the corresponding tax credit for 2003) was as follows (taking into
account the division of the Imerys share’s par value by 4):
2005
2004
2003
1.65 €
1.50 €
1.25 €
-
-
0.62 €
1.65 €
1.50 €
1.87 €
63,529,260
63,307,376
63,429,132
Tax credit per share
Total payment per share
Number of shares compensated
252
ANNUAL REPORT 2006
1.2 Composition of the Board of Directors
(five resolutions within the scope of the Ordinary General Meeting)
A second set of resolutions concerns the composition of the Board of Directors. Information on the powers of the Board and its
specialized Committees, their current composition and the changes that occurred in 2006, their workings and activity during the
year just ended, the independent status of their members, personal information concerning them and their main activities and
corporate offices is given in chapter 6 of the Annual Report on Corporate Governance, to which we ask you to refer.
The term of office of the Directors is three years and one third of the offices are renewed every year.
The terms of office of Mr. Paul Desmarais, Jr., Mr. Yves-René Nanot, Mr. Grégoire Olivier, Mr. Robert Peugeot and Mr. Thierry
de Rudder will expire at the end of the present Meeting.
You are reminded that the term of office of Mr. Yves-René Nanot cannot be renewed because of the age limit set by
article 12 of the by-laws. The Board of Directors warmly thanks Mr. Yves-René Nanot and states its great recognition for
his action in favor of the Group and his remarkable contribution to the Board’s work since his appointment in 1996 and to
that of the Audit Committee, which he had chaired since 2002.
In accordance with the recommendations of the Appointments and Compensation Committee, the following is proposed:
appointing Mr. Jean Monville as a new Director in succession to Mr. Yves-René Nanot and renewing the terms of office
of Mr. Paul Desmarais, Jr., Mr. Grégoire Olivier, Mr. Robert Peugeot and Mr. Thierry de Rudder for the statutory period
of three years, i.e. until the Shareholders’ Meeting called in 2010 to rule on the management and financial statements for
financial 2009 (fifth to ninth resolutions).
A graduate of Ecole Polytechnique Paris and holder of an Economic Sciences degree, Mr. Jean Monville began his
career in 1969 in the financial department of Société Générale, in charge of the construction & public works sector and
concession projects. In 1974, he joined Isochem, a company specializing in chemistry and chemical engineering. He
joined the Spie Batignolles group in 1978 as export finance department manager for the group. From 1984 to 1992, he
successively held the positions of deputy chief executive officer and chief executive officer of Spie Capag, a subsidiary
specializing in oil projects. In 1992, he became vice-president marketing of the Spie Batignolles group before being
appointed director and chief executive officer in 1995. Since 1997, Jean Monville has been chairman of the Spie
Batignolles group, since renamed AMEC Spie then, in 2006, Spie.
In accordance with the principles used by the Company to determine the independent status of its directors, after
examining their personal situation, the Appointments and Compensation Committee acknowledged the “independence”
of Mr. Grégoire Olivier and Mr. Robert Peugeot as existing directors and of Mr. Jean Monville as candidate for that
position. However, independent status was not awarded to Mr. Paul Desmarais, Jr. and Mr. Thierry de Rudder, who
represent the Company’s controlling shareholders.
Following the Shareholders’ Meeting of May 2, 2007 and subject to its approval of the proposed changes:
- The Board of Directors will be made up as follows:
Year of end of term of office
2008
Name
Independent member
Gérard BUFFIERE
Aldo CARDOSO
Maximilien de LIMBURG STIRUM
Jacques VEYRAT
2009
Jacques DRIJARD
Jocelyn LEFEBVRE
Gilbert MILAN
2010
Paul DESMARAIS, Jr.
Jean MONVILLE
Grégoire OLIVIER
Robert PEUGEOT
Thierry de RUDDER
No
No
Yes
No
Yes
No
No
Yes
Yes
No
Yes
Yes
Yes
No
- The Board of Directors will appoint M. Jean Monville in succession to Mr. Yves-René Nanot as a new member of the
Audit Committee. The Audit Committee will appoint its Chairman at its next meeting.
253
1.3 Employee shareholding
(two resolutions, one within the scope of the Ordinary General Meeting and the other
of the Extraordinary General Meeting)
A
IMPLEMENTATION OF THE EMPLOYEE SHAREHOLDER PLAN 2006 IN THE UNITED STATES
In its November 7, 2006 meeting, the Board of Directors decided to set up a new employee shareholding plan for the Group
(For more details concerning this operation, see chapter 4, section 8 and chapter 5, paragraph 2.5 of the Annual Report). The
participation of employees residing in the United States comes under a specific framework (“Amended and Restated 2000
Employee Stock Purchase Plan”) that enables them to benefit from a favorable tax system for holding their Imerys shares. In
accordance with the provisions of the United States Internal Revenue code, this benefit is subject to your approval (tenth
resolution) of the terms of the “Amended and Restated 2000 Employee Stock Purchase Plan" amended by the Board of
Directors on November 7, 2006 (a copy of the plan may be obtained in request from the Company’s head office).
A
CAPITAL INCREASE RESERVED FOR EMPLOYEES
You are asked to renew, for a further period of 26 months, the authorization previously granted to the Board of Directors
by the Shareholders in the General Meeting of May 3, 2005 in order to carry out, in accordance with the provisions of
articles L. 443-1 et seq. of the Labor Code, L. 225-129-2, L. 225-129-6 and L. 225-138-1 of the Code of Commerce, capital
increases reserved for employees of Imerys and the French and foreign companies affiliated to it in the sense of article
L. 225-180 of the Code of Commerce that have joined the Group Savings Plan (eighteenth resolution). Subject to your
approval, this delegation shall replace the previous authorization you granted which shall thus be rendered null and void.
The other conditions of the existing authorization remain unchanged. The nominal maximum increase in share capital is
limited to €1.6 million and the minimum price of the shares to be issued shall not be more than 20% lower than the
average stock market price for Imerys shares during the period, under the conditions provided by applicable legal
provisions in force on the date of the issue decision.
1.4 Share buyback and self-held share cancellation program
(two resolutions, one within the scope of the Ordinary General Meeting and the other
of the Extraordinary General Meeting)
A
SHARE BUYBACK PROGRAM
As the authorization to buy back the Company’s shares on the market, previously given to the Board of Directors for a
period of 18 months by the Ordinary Shareholders’ General Meeting of May 2, 2006, expires before the 2008
Shareholders’ General Meeting, you are asked to renew it now in accordance with the provisions of articles
L. 225-209 et seq. of the Code of Commerce and articles 241-1 to 241-6 of the General Regulations of AMF (eleventh
resolution). For further information concerning the Company’s implementation in 2006 of its stock buyback program, you
are invited to refer to chapter 5, paragraph 2.4. of the Annual Report. Furthermore, in accordance with the provisions of
the above-mentioned articles, the description of the new program submitted for your approval will be available on the
Company’s website (http://www.imerys.com, Financial Library - Regulated Information section) and on the website
(http://www.amf-france.org).
You are reminded that the requested new authorization is intended to allow the repurchase of the Company’s own
shares, either by the Company itself or through an investment services firm acting in the name and on behalf of the
Company under a liquidity contract in accordance with a code of conduct recognized by AMF, for the purposes of:
• employees’ participation in shareholding plans set up by the Company or the grant of share purchase options or free
shares to employees and/or executives of the Company and/or the companies in its Group;
• the delivery or exchange of shares, particularly with respect to the issue of securities that give access, immediately or
in the future, to shares in the Company or with respect to external growth operations;
• the cancellation of the shares thus bought and, as the case may be, any shares bought under previous buyback
authorizations.
254
ANNUAL REPORT 2006
A
CANCELLATION OF SELF-HELD SHARES
You are also asked to renew the authorization previously granted to the Board of Directors by the Ordinary and
Extraordinary Shareholders’ General Meeting of May 3, 2005 for the purposes of cancelling all or part of the shares held
by the Company in itself under its share buyback program, within the limit of 10% of its capital per 24-month period, by
reducing its share capital accordingly and allocating the difference between the purchase value of the cancelled shares
and their par value to available premiums and reserves (nineteenth resolution).
1.5 Financial authorizations
(six resolutions within the scope of the Extraordinary General Meeting)
A set of financial authorizations was granted by the Shareholders’ General Meeting in 1989 and then regularly renewed
to enable the Company, at the appropriate time, to increase its permanent capital through the issue of various simple or
compound securities of any kind whatsoever that give access, immediately or in the future, to shares in the Company.
(convertible bonds, shares or bonds with equity warrants, equity notes, etc.).
As the delegations of authority granted to the Board of Directors by the Shareholders’ Meeting of May 3, 2005 in
compliance with the new regulations set down by the French order of June 24, 2004 intended to reform the framework
for securities, expire in 2007, you are asked to renew them.
The resolutions thus put to you were designed to give the Board of Directors for a further period of 26 months the greatest
leeway and flexibility in choosing the issue arrangements that are most favorable to the Company and its shareholders and
the most appropriate to the financial context of the time. These issues may, at the choice of the Board of Directors, be made
with preemptive subscription right (twelfth resolution) without preemptive subscription right (thirteenth resolution), or by the
capitalization of premiums, reserves, income or other items (twelfth resolution). The cancellation of the preemptive
subscription right makes it possible to call upon a greater number of investors, on both the French and international markets,
and makes the issue process easier, particularly because of the shorter implementation period. The Board of Directors may,
whatever the case, grant shareholders subscription priority for the period and according to the mechanism that it decides.
You are also asked to give full powers to the Board of Directors to set the issue price of the shares and/or securities
giving access to capital, in the event of the cancellation of the preemptive subscription right for shareholders, at the
closing price for Imerys shares on the Paris stock market the day before the issue, minus a possible 10% discount,
within the annual limit of 10% of the Company’s capital (fourteenth resolution). This possibility, provided by the order of
June 24, 2004, would enable the Company to carry out capital increases in the event of a downward trend in Imerys
share prices, which might not be possible under the thirteenth resolution.
Furthermore, it is specified that, with respect to the delegation of authority provided in order to increase the share capital
without preemptive subscription right, ordinary shares may be issued in compensation for securities that may be contributed to
the Company under a public exchange offer for securities in the conditions set by article L. 225-148 of the Code of Commerce.
Moreover, you are asked to authorize the Board of Directors to carry out one or more share capital increases in
compensation for contributions of securities in the event of contributions in kind made to the Company and comprised of
securities representing shares in or giving access to capital, within the limit of 10% of share capital (fifteenth resolution).
You are also asked to grant the Board of Directors the authority to issue, for a period of twenty-six months, compound
debt securities comprised of a primary security and a secondary security for a maximum amount of €2.5 billion to which
would be allocated the amounts of any issues made, as the case may be, with respect to the twelfth, thirteenth and
fourteenth resolutions (sixteenth resolution).
The maximum nominal amount of each increase in share capital that may be carried out by the issue of securities,
whether immediately or the future, pursuant to each of the above-mentioned authorizations, with the exception of capital
increases by capitalization of premiums, reserves, income or other items, would be set at €80 million. This initial ceiling
would be combined with an overall limit that you are asked to set at €110 million for the total nominal increase in share
capital that could result from the use of these authorizations. As the case may be, the nominal amount of the shares to
be issued because of any adjustments to be made in accordance with the law would be added to that limit. Given the
Company’s current financial structure and the evolution of the stock market, the maximum nominal amount of the debt
securities that may be issued is set at €2.5 billion pursuant to the proposed authorizations (seventeenth resolution).
255
Finally, it is also proposed that, in the event of a capital increase without or without preemptive subscription right, if the
Board of Directors notes excess demand it may increase the number of securities planned in the initial issue in the
conditions set down by legal and regulatory provisions in force at the time of issue.
These authorizations would replace the previous authorizations, which would thus be rendered null and void.
1.6 Amendments to by-laws
(one resolution within the scope of the Extraordinary General Meeting)
You are asked to incorporate into the by-laws the new provisions concerning the arrangements for shareholders’
participation in the Company’s General Meetings, resulting from the decree of December 11, 2006, which amended the
decree of March 23, 1967 on commercial companies, by amending article 21 of the by-laws accordingly (twentieth
resolution).
256
ANNUAL REPORT 2006
2 - AUDITORS’ REPORTS
représenté par Nicholas L.E. Rolt
92524 Neuilly-sur-Seine Cedex
first appointed by the Ordinary Shareholders’
General Meeting of June 11, 1986
ERNST & YOUNG Audit
représenté par Jean-Roch Varon
first appointed by the Ordinary and Extraordinary
2.1 Statutory auditors’ report on the issue
of shares and securities with retention and/or cancellation
of preferential subscription rights
Combined Shareholders ‘Meeting of May 2, 2007 (12th, 13th, 14th and 15th resolutions)
This is a free translation into English of the statutory auditors’ report issued in the French language and is provided
solely for the convenience of English speaking readers. This report should be read in conjunction with, and construed in
accordance with, French law and professional auditing standards applicable in France.
Dear Shareholders,
As statutory auditors of your Company and pursuant to the engagement set forth in the French Company Law (Code de
commerce) and notably Articles L. 225-135, L. 225-136, and L. 228-92, we hereby report to you on the proposed
delegation of powers to the Board of Directors to perform various issues of shares and securities, which are subject to
adoption by the shareholders.
Your Board of Directors proposes, based on its report:
- that shareholders delegate to it, for a period of 26 months, the power to decide on the following transactions and set the
final terms and conditions of these issues and, when necessary, asks that you waive your preferential subscription rights:
- issues of ordinary shares and/or securities conferring access to the common stock of the Company or, in accordance
with Article L. 228-93 of the French Company Law (Code de Commerce), of any company that holds directly or
indirectly more than half of its common stock or in which it holds directly or indirectly more than half of the common
stock, with retention of preferential subscription rights (12th resolution),
- issues of ordinary shares and/or securities conferring access to the common stock of the Company or, in accordance
with Article L. 228-93 of the French Company Law (Code de Commerce), of any company that holds directly or
indirectly more than half of its common stock or in which it holds directly or indirectly more than half of the common
stock, with cancellation of preferential subscription rights (13th resolution), it being noted that such securities may in
particular be issued to remunerate securities transferred to the Company as part of a share exchange bid for
securities satisfying the criteria set out in Article L. 225-148 of the French Company Law (Code de Commerce),
- that shareholders authorize it, by virtue of the 14th resolution and pursuant to the implementation of the delegation
granted pursuant to the 13th resolution, to set the issue price within the annual legal limit of 10% of the common stock,
- that shareholders delegate to it, for a period of 26 months, the power to set the terms and conditions of an issue of
ordinary shares and securities conferring access to the ordinary shares, to remunerate contributions in kind made to
the Company or securities conferring entitlement to the common stock of the Company (15th resolution), up to the limit
of 10% of the common stock.
257
The maximum nominal amount of potential share capital increases, immediately or in the future, may not exceed €80
million pursuant to the 12th, 13th and 15th resolutions, up to a maximum overall ceiling of €110 million (17th resolution).
The maximum nominal amount of debt instruments issued may not exceed €2.5 billion pursuant to the 12th, 13th, 14th and
16th resolutions.
The number of shares to be created in connection with the implementation of the delegations referred to in the 12th and
13th resolutions can be increased under the conditions set forth in Article L. 225-135-1 of the French Company Law, and
within the limits indicated above and within the limit of the percentage of the issue initially set forth by prevailing legal
and regulatory provisions at the time of the issue.
It is the responsibility of the Board of Directors to prepare a report in accordance with Articles 154 and 155 of the Decree
of March 23, 1967. Our role is to express an opinion on the fair presentation of the quantified information extracted from
the accounts, on the proposed cancellation of preferential subscription rights and on certain other information concerning
the issues, contained in this report.
We conducted our procedures in accordance with professional standards applicable in France. Those standards require
that we plan and perform procedures to verify the contents of the Board of Director’s report in respect of these
transactions and the terms and conditions governing the determination of the issue price of securities to be issued.
Subject to a subsequent review of the terms and conditions of proposed issues, we have no comment on the issue price
determination terms and conditions presented in the Board of Director’s report in respect of the 13th and 14th resolutions.
Furthermore, as this report does not specify the issue price determination terms and conditions for the shares to be
issued as part of the implementation of the 12th and 15th resolutions, we cannot express an opinion on the choice of
elements used to calculate the share issue price.
As the issue price of securities to be issued has not been set, we do not express an opinion on the final terms and
conditions under which the issues will be performed and, as such, on the proposed cancellation of preferential
subscription rights in the 13th and 14th resolutions.
In accordance with Article 155-2 of the Decree of March 23, 1967, we shall issue an additional report on the
performance by your Board of Directors of any issues with cancellation of preferential subscription rights or of any issues
of securities conferring access to the common stock.
ERNST & YOUNG Audit
Jean-Roch VARON
Nicholas L.E. ROLT
258
ANNUAL REPORT 2006
2.2 Statutory Auditors’ report on the issue of securities conferring
entitlement to the grant of debt instruments
Combined Shareholders’ Meeting of May 2, 2007 (16th resolution)
convenience of English speaking readers. This report should be read in conjunction with, and construed in accordance with,
French law and professional auditing standards applicable in France.
Dear Shareholders,
As statutory auditors of your Company and pursuant to the engagement set forth in Article L. 228-92 of the French
Company Law (Code de commerce), we hereby report to you on the proposed delegation of powers to the Board of
Directors to decide on the issue of securities conferring entitlement to the grant of debt instruments, a transaction which
is subject to adoption by shareholders.
The maximum nominal amount of the proposed issue is €2.5 billion, a ceiling which applies jointly to the 12th, 13th, 14th
and 16th resolutions.
Based on its report, the Board of Directors asks shareholders to delegate, for a period of 26 months, the necessary
powers to decide on this transaction. When necessary, the Board of Directors will set the final terms and conditions of
the debt instrument issue.
the accounts and on certain other information concerning the issue, contained in this report.
We conducted our procedures in accordance with professional standards applicable in France. Those standards require
that we plan and perform procedures to verify the contents of the Board of Director’s report relating to this transaction.
As the final terms and conditions of this issue have not been set, we do not express an opinion on the final terms and
conditions under which the issue will be performed.
In accordance with Article 155-2 of the Decree of March 23, 1967, we will issue an additional report, if necessary, when
your Board of Directors uses this authorization.
ERNST & YOUNG Audit
Jean-Roch VARON
Nicholas L.E. ROLT
259
2.3 Statutory Auditors’ report on the issue of shares
and/or securities with cancellation of preferential subscription
rights, reserved for employees
Dear Shareholders,
In our capacity as statutory auditors of your Company and pursuant to the engagement set forth in Articles L. 225-135 et
seq. and L. 228-92 of the French Company Law (Code de commerce), we hereby report to you on the proposed
delegation of powers to the Board of Directors to decide on a common stock increase via the issue of ordinary shares or
securities with cancellation of shareholders preferential subscription rights, reserved for employees and corporate
officers of the Company and/or French or foreign affiliated companies within the meaning of Article L.225-180 of the
French Company Law, which are members of a corporate savings plan and which satisfy the other possible conditions
required by the Board of Directors, a transaction which you have been requested to review. The total nominal amount of
common stock increases, pursuant to this delegation, may not exceed €1.6 million.
This proposed issue is subject to your approval pursuant to the provisions of Article L. 225-129-6 of the French Company
Law and Article L. 443-5 of the French Employment Code.
Based on its report, the Board of Directors asks shareholders to delegate, for a period of 26 months, the necessary
powers to decide on one or more issues and proposes that you waive your preferential subscription rights. When
necessary, the Board of Directors will set the final issue terms and conditions of this transaction.
the accounts and on certain other information concerning the issue, contained in this report.
We have performed our procedures in accordance with professional standards applicable in France. These standards
require that we perform procedures to verify the terms and conditions for determining the share issue price.
Subject to the subsequent review of the terms and conditions of the proposed issuance, we have no comment to make
on the terms and conditions for determining the share issue price as set forth in the Board of Directors’ report.
As the share issue price has not yet been set, we can express no opinion on the final terms and conditions under which
the issuance will be performed. As a result, we can express no opinion on the cancellation of your preferential share
subscription rights which the Board of Directors has proposed.
In accordance with Article 155-2 of the Decree of March 23, 1967, we will issue an additional report, if necessary, when
your Board of Directors uses this authorization.
ERNST & YOUNG Audit
Jean-Roch VARON
Nicholas L.E. ROLT
260
ANNUAL REPORT 2006
2.4 Statutory Auditors’ report on the on the decrease
in common stock via cancellation of shares purchased
by the Company
Dear Shareholders,
In our capacity as statutory auditors of Imerys SA and pursuant to the engagement set forth in paragraph 7 Article
L. 225-209 of the French Company Law (Code de Commerce) in respect of the common stock decreases by canceling
shares purchased, we hereby report to you on our assessment of the terms and conditions of the proposed common
stock decrease.
In our capacity as statutory auditors of Imerys SA and pursuant to the engagement set forth in paragraph 7 Article
L. 225-209 of the French Company Law (Code de Commerce) in respect of the common stock decreases by canceling
shares purchased, we hereby report to you on our assessment of the terms and conditions of the proposed common
stock decrease.
This transaction involves the purchase by the Company of its own shares, up to a maximum of 10% of the common stock,
pursuant to the terms and conditions set forth in Article L. 225-209 of the French Company Law (Code de Commerce). This
purchase authorization to be granted for a period of 18 months is subject to approval by the shareholders.
Shareholders are requested to confer all necessary powers on the Board of Directors, during a period of 2 years, to cancel
the shares purchased by the Company, pursuant to the share purchase authorization, up to 10% of the common stock
by 24-month period.
We have no comments on the reasons for or the terms and conditions of the proposed common stock decrease, which,
you are reminded, may only be performed subject to the prior approval by the Combined Shareholders’ Meeting of the
purchase by the Company of its own shares.
ERNST & YOUNG Audit
Jean-Roch VARON
Nicholas L.E. ROLT
261
3 - AGENDA
3.1 Ordinary Part
• Approval of the Company’s management and annual financial statements and the Group’s consolidated financial
statements for financial year 2006;
• Approval of the Auditors’ special report on regulated agreements;
• Allocation of earnings and determining of dividend;
• Renewal of the Directorships of Mr. Paul Desmarais, Jr., Mr. Grégoire Olivier, Mr. Robert Peugeot ad Mr. Thierry de Rudder;
• Appointment of Mr. Jean Monville as a new Director in succession to Mr. Yves-René Nanot;
• Approval of the purchase plan implemented in the United States with respect to the capital increase for employees
carried out in 2006;
• Authorization given to the Company to buy back its own shares.
3.2 Extraordinary Part
• Renewal of delegations of authority to the Board of Directors for the purposes of:
- increasing capital, either by the issue of securities giving access, immediately or in the future, to capital with
preemptive subscription right, whether by capitalization of premiums, reserves, income or other items,
- increasing capital by the issue of securities giving access, immediately or in the future, to capital without preemptive
subscription right,
- setting the issue price of securities giving access to capital, in the event of the cancellation of the preemptive
subscription right, within the limit of 10% of capital per year,
- carrying out one or more increases of the Company’s capital in compensation for contributions in kind comprised of
securities representing shares in or giving access to capital;
• Delegation of authority to the Board of Directors in order to carry out the issue of compound debt securities;
• Overall limitation of the nominal amount of share capital increases resulting from delegations of authority;
• Renewal of delegation of authority to the Board of Directors in order to increase share capital by the issue of shares
reserved for employees;
• Authorization to reduce share capital by cancelling shares held by the Company;
• Transposition into the Company’s by-laws of the decree of December 11, 2006 amending the decree of March 23,
1967 on commercial companies;
• Powers.
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ANNUAL REPORT 2006
4 - DRAFT RESOLUTIONS
Ordinary part
A
First resolution
Approval of management and financial statements for financial year 2006
The Shareholders’ General Meeting, ruling in the quorum and majority conditions required for ordinary Shareholders’
General Meetings, after examining the Board of Directors’ report and the Auditors' general report pertaining to the
Company’s financial statements for the financial year ended on December 31, 2006, approves, as presented, such
financial statements, as well as the transactions evidenced by such financial statements and summarized in such
reports.
A
Second resolution
Approval of consolidated financial statements for financial year 2006
General Meetings, after examining the Board of Directors' report and the Auditors' report pertaining to the Group’s
consolidated financial statements for the financial year ended on December 31, 2006 approves, as presented, such
financial statements as well as the transactions evidenced by such financial statements and summarized in such reports.
A
Third resolution
Approval of the Auditors’ special report on regulated agreements
General Meetings, after examining the Auditors’ special report on the agreements provided for in article L225-38 of the
Code of Commerce, approves the operations and agreements entered into or performed during the financial year ended
on December 31, 2006.
A
Fourth resolution
Allocation of earnings and determining of dividend
General Meetings, after examining the Board of Directors’ report, approves the allocation of earnings as proposed by the
Board of Directors:
The Company’s net income for the financial year just ended is
€113,398,742.64
• plus retained earnings appearing in the balance sheet of
€420,284,974.37
for a total distributable amount of
€533,683,717.01
We propose that you allocate it as follows:
• payment of a dividend of €1.80 euro to each of the 63,334,620 shares
that make up the share capital as on January 1, 2007, which represents
distribution of
• leaving retained earnings of
(€114,002,316.00)
€419,681,401.01
263
The Shareholders’ General Meeting also authorizes the Board of Directors, with the possibility of delegating in the
conditions provided for by law, to deduct from the “Retained earnings” account the sums needed to pay the dividend
attached to any shares created as a result of exercises of stock subscription options from January 1, 2007 to the
dividend payment date.
This dividend, which is eligible for the 40% allowance from which private individuals domiciled in France for tax purposes
may benefit as provided by article 158-3 of the General Tax Code, will be paid from May 15, 2007.
In accordance with article 243 bis of the General Tax Code, the amount of the dividend per share paid for the previous
three financial years, and the amount of the corresponding tax credit, were as follows (taking into account the division by
4 of the par value of Imerys shares):
2005
2004
2003
1.65 €
1.50 €
1.25 €
-
-
0.62 €
1.65 €
1.50 €
1.87 €
63,529,260
63,307,376
63,429,132
Tax credit per share
Total payment per share
Number of shares compensated
A
Fifth resolution
Renewal of Mr. Paul Desmarais, Jr.’s term as Director.
General Meetings, after examining the Board of Directors’ report, acknowledging that Mr. Paul Desmarais, Jr.’s . term of
office expires following the present General Meeting, resolves to renew such term for a period that, pursuant to statutory
provisions, will end at the conclusion of the Shareholders’ General Meeting called upon in 2010 to approve the
management and financial statements for financial year 2009.
A
Sixth resolution
Renewal of Mr. Grégoire Olivier’s term as Director
General Meetings, after examining the Board of Directors’ report, acknowledging that Mr. Grégoire Olivier’s term of office
expires following the present General Meeting, resolves to renew such term for a period that, pursuant to statutory
A
Seventh resolution
Renewal of Mr. Robert Peugeot’s term as Director
General Meetings, after examining the Board of Directors’ report, acknowledging that Mr. Robert Peugeot’s term of office
expires following the present General Meeting, resolves to renew such term for a period that, pursuant to statutory
A
Eighth resolution
Renewal of Mr. Thierry de Rudder’s term as Director
General Meetings, after examining the Board of Directors’ report, acknowledging that Mr. Thierry de Rudder’s term of
office expires following the present General Meeting, resolves to renew such term for a period that, pursuant to statutory
264
ANNUAL REPORT 2006
A
Ninth resolution
Appointment of Mr. Jean Monville as a new Director in succession to Mr. Yves-René Nanot
General Meetings, after examining the Board of Directors’ report, decides to appoint as from this day as a new Director,
in succession to Mr. Yves-René Nanot whose term of office expires following the present Meeting, Mr. Jean Monville,
residing 13 quater avenue Jean-Jacques Rousseau, 78600 Maisons Laffitte, France for a period that, in accordance with
the provisions of the by-laws, will end at the conclusion of the Shareholders’ General Meeting called upon in 2010 to
approve the management and financial statements for financial year 2009.
A
Tenth resolution
Approval of the purchase plan implemented in the United States with respect to the capital increase for employees
carried out in 2006
Approval of the purchase plan implemented in the United States with respect to the capital increase for employees
carried out in 2006 on the employee shareholding operation carried out by the Company in 2006 (“Employee
Shareholder Plan 2006”) and its implementation conditions for the benefit of employees of companies in the United
States that are affiliated to the Company in the sense of article L. 225-180 of the Code of Commerce, with respect to the
capital increase reserved for employees carried out in accordance with the plan adopted by the Board of Directors at its
session on November 7, 2006 (“Amended and Restated 2000 Employee Stock Purchase Plan”) that meets the
requirements of Section 423 of the Internal Revenue Code of 1986:
1)
approves the terms of the Amended and Restated 2000 Employee Stock Purchase Plan; and
2)
delegates all powers to the Board of Directors, with the possibility of subdelegating in the conditions provided by the
law, to make any additions or amendments to the provisions of the Amended and Restated 2000 Employee Stock
Purchase Plan and, more generally, take any useful measures and enter into any agreements for the
implementation or correct performance of the operations provided for therein.
A
Eleventh resolution
Authorization given to the Company to buy its own shares
General Meetings, after examining the Board of Directors’ report pursuant to the provisions of article L. 225-209 et seq.
of the Code of Commerce and articles 241-1 to 241-6 of the general regulations of Autorité des Marchés Financiers (AMF):
1)
authorizes the Board of Directors, with the possibility of subdelegating in the conditions provided by the law, to (i)
make purchases or (ii) have purchases made of the Company’s own shares, through an investment services firm
acting in the name and on behalf of the Company on a fully independent basis without being influenced by the
Company, under a liquidity contract in accordance with a code of conduct recognized by AMF or any other
applicable provision:
- for the purposes of employees’ participation in shareholding plans set up by the Company or of granting share
purchase options or free shares to employees and/or executives of the Company and/or the companies under its
control in the sense of article L. 233-3 of the Code of Commerce;
- for the delivery or exchange of shares, particularly with respect to the issue of securities that give access,
immediately or in the future, to shares in the Company or with respect to external growth;
- for the cancellation of the shares thus bought and, as the case may be, any shares bought under previous
buyback authorizations;
and for those purposes, hold the repurchased shares, or sell or transfer them by any means in the conditions
described below in accordance with regulations in force, particularly by sale on the stock market or by mutual
agreement;
265
2)
sets the following limits for the use of the present authorization by the Board of Directors:
- the maximum number of shares that may be purchased shall not exceed 10% of the total number of shares
issued and outstanding as of January 1, 2007, that is 6,333,462 shares;
- the maximum purchase price of the shares shall not be greater than €110;
- e minimum sale price of the shares shall not be less than €40;
- the maximum amount that the Company is liable to use for such repurchases shall not be greater than €696.7 million;
and resolves that, in the event that the par value of the stock is modified, the capital is increased by the
capitalization of reserves or free shares are granted, or in the event of a stock split or consolidation, the abovestated maximum amount to be used in these buybacks and the maximum number of shares to be repurchased will
be adjusted accordingly by a multiplier equal to the ratio between the number of shares that made up the capital
before the operation and the resulting number after the operation.
3)
sets at eighteen months from the date of this General Meeting the term of this authorization, which renders null and
void any previous authorizations granted to the Board of Directors with regard to the Company’s repurchase of its
shares;
4)
grants the Board of Directors, with the authority to delegate such powers in the conditions provided by law, to
implement this authorization and, in particular, to sign any stock purchase, sale, exchange or transfer agreements,
file any statements with Autorité des Marchés Financiers or any other agency, proceed with the adjustments set
forth above, observe any formalities and, generally, do what is necessary.
Extraordinary part
A
Twelfth resolution
Delegation of authority to the Board of Directors for the purposes of increasing the share capital, either
by the issue of common shares or of securities giving access to capital immediately or in the future with preemptive
subscription right, or by capitalization of premiums, reserves, income or other items.
The Shareholders’ Meeting, ruling in the quorum and majority conditions required for extraordinary general meetings,
after examining the Board of Directors’ report and the Auditors’ special report and in accordance with the provisions of
articles L. 225-127, L. 225-129, L. 225-129-2, L. 228-92 et seq. of the Code of Commerce:
1)
2)
delegates its authority to the Board of Directors to carry out the capital increase, in one or more times and on its
sole decision, in the proportions and at the times that it judges fit, on the French market and/or the international
market, in euros or any other currency by:
a)
the issue, with preemptive subscription right, of common shares and/or any other securities in the Company,
whether or not they represent debt, giving access by any means, immediately or in the future, at any time or on
set dates, to common shares in the Company or, in accordance with article L. 228-93 of the Code of
Commerce, in any company that directly or indirectly owns more than half its capital or of which it directly or
indirectly owns more than half the capital, whether by subscription, conversion, exchange, redemption,
presentation of a warrant of in any other way, such securities being issued in euros or in any monetary unit
determined by reference to several currencies;
b)
and/or the capitalization of premiums, reserves, income or other items, in the form of a free share grant or an
increase in the par value of existing shares;
resolves to set as follows the limits for the amounts of the authorized issues in the event of the Board of Directors
using the present delegation of authority:
- the total nominal amount of the common shares that may be issued, whether directly or on presentation of
securities that may or may not represent debt, pursuant to the present delegation as provided for in 1) a) shall not
be grater than €80 million, to which amount shall be added, as the case may be, the additional amount of any
shares to be issued to maintain, in accordance with the law, the rights of the holders of securities or rights giving
access to capital;
266
ANNUAL REPORT 2006
- the total nominal amount of the common shares that may be issued pursuant to the delegation provided in 1) b)
shall not be greater that the amount of the above-mentioned reserves, premiums or income accounts that exist at
the time of the capital increase, to which amount shall be added, as the case may be, the additional amount of
any shares to be issued to maintain, in accordance with the law, the rights of the holders of securities or rights
giving access to capital;
- the nominal amount of the securities representing debts of the Company that may be issued shall not be greater
than €2.5 billion or the equivalent amount in the event of an issue in other currencies;
3)
in the event of the use of the present delegation of authority with respect to the issues mentioned in 1) a) above:
a)
resolves that the issue or issues shall be preferentially reserved for shareholders who may subscribe on an
irreducible basis;
b) grants the Board of Directors the possibility of instituting a reducible subscription right;
c)
empowers the Board of Directors, if it notes excess demand, to increase the number of securities planned in
the initial issue under the conditions of article L. 225-135-1 of the Code of Commerce and within the percentage
limit of the initial issue provided by the legal and regulatory provisions in force at the time of the issue, it being
understood that the issue price shall be the same as that of the initial issue;
d)
resolves that, if the irreducible subscriptions and, as the case may be, any reducible subscriptions have not
taken up the whole of an issue as defined in point 1) a) above, the Board of Directors may use the possibilities
provided by the law and, in particular, limit the amount of the subscriptions, provided that such amount is at
least three-quarters of the intended issue;
e)
acknowledges that the present delegation ipso jure entails the explicit waiver by the shareholders of their
preemptive subscription right to the shares to which such securities shall give the right, for the benefit of the
holders of the issued shares;
4)
sets at twenty-six months as from the date of the present Shareholders’ Meeting the duration of the present
delegation, which renders null and void any previous delegation granted to the Board of Directors with respect to
the immediate and/or future issue of shares in the Company with preemptive subscription right and to the
capitalization of premiums, reserves, income or other items;
5)
resolves that the Board of Directors shall, within the limits set down above, the necessary powers to:
- set the terms and conditions of the issue or issues, acknowledge the completion of the resulting capital increases
and amend the by-laws accordingly;
- charge, on its sole initiative, the capital increase expenses to the amount of related premiums and take from that
amount the sums needed to increase the legal reserve to one-tenth of capital after each increase;
- make any adjustments required in accordance with legal provisions and determine the arrangements, as the case
may be, for maintaining the rights of the holders of securities or rights giving access to capital;
- as regards any capitalization of premiums, reserves, income or other items, resolves, as the case may be, that
any rights forming odd lots shall not be negotiable and that the corresponding shares shall be sold, with the sums
resulting from the sale allocated to the holders of rights within the timeframe set by legal provisions;
- in turn delegate the powers needed to carry out the issue, or to refrain therefrom, within the limits and according
to the terms and conditions that the Board of Directors may set down beforehand, to the Chief Executive Officer
or, in agreement with him, to one or more delegate Chief Executive Officers.
267
A
Thirteenth resolution
Delegation of authority to the Board of Directors for the purposes of increasing the share capital by the issue of
common shares or securities giving access immediately or in the future to capital, with cancellation of the preemptive
subscription right
after examining the Board of Directors’ report and the Auditors’ special report and in accordance with the provisions of
articles L. 225-127, L. 225-129, L. 225-129-2, L. 225-135, L. 228-92 et seq. of the Code of Commerce:
1)
delegates to the Board of Directors its authority to carry out the capital increase, in one or more times and upon its
sole decision, in the proportions and at the times that it sees fit, on the French market and/or the international
market, by making a public offering by the issue in euros or any other currency of common shares and/or securities
in the Company, which may or not represent debt, giving access by any means, immediately or in the future, at any
time or on set dates, to common shares in the Company or, in accordance with article L. 228-93 of the Code of
Commerce, in a company that directly or indirectly owns more than half its capital or of which it directly or indirectly
owns more than half the capital, whether by subscription, conversion, exchange, redemption, presentation of a
warrant of in any other way, such securities being issued in euros or in any monetary unit determined by reference
to several currencies; it being understood that common shares may be issued in compensation for the securities
that may be contributed to Company with respect to a public exchange offer for securities meeting the conditions
set down in article L. 225-148 of the Code of Commerce;
2)
resolves to set as follows the limits of the amounts of issues authorized in the event of the Board of Directors using
the present delegation of authority:
- the overall nominal amount of the shares that may be issued pursuant to the present delegation shall not be
greater than €80 million, to which amount shall be added, as the case may be, the additional amount of any
shares to be issued to maintain, in accordance with the law, the rights of the holders of securities or rights giving
access to capital;
- the nominal amount of the securities representing debts of the Company that may be issued shall not be greater
than €2.5 billion or the equivalent amount in the event of an issue in other currencies;
3)
resolves to cancel the preemptive subscription right of shareholders to the securities concerned by the present
resolution, while however giving the Board of Directors the possibility, in accordance with the provisions of article
L. 225-135 of the Code of Commerce, to grant shareholders, for a period and at the terms and conditions that it
shall set and for all or part of an issue, a subscription priority that does not give the right to the creation of
negotiable rights, which must be exercised in proportion to the number of shares owned by the shareholder and to
which may be added a reducible subscription, it being specified that following the priority period, any unsubscribed
securities shall be offered to the public;
4)
acknowledges that the present delegation ipso jure entails for the benefit of the holders of the issued securities the explicit
waiver by the shareholders of their preemptive subscription right to the shares to which those securities give the right;
5)
resolves that the sums received or to be received by the Company for each of the ordinary shares issued with
respect to the present delegation of authority, after taking into account, in the event of an issue of a detached
warrant, the issue price of said warrants, shall be at least equal to the minimum required by applicable legal and
regulatory provisions at the time of the Board of Directors’ implementation of the present delegation;
6)
sets at twenty-six months as from the date of the present Shareholders’ Meeting the duration of the present
delegation, which renders null and void any previous delegation granted to the Board of Directors with respect to
the immediate and/or future issue of shares in the Company with cancellation of the preemptive subscription right;
7)
resolves that the Board of Directors shall, within the limits set down above, have the powers needed to:
- set the terms and conditions of the issue or issues, acknowledge the completion of the resulting capital increases
and amend the by-laws accordingly;
- increase, if it notes excess demand, the number of securities planned in the initial issue under the conditions of
article L. 225-135-1 of the Code of Commerce and within the percentage limit of the initial issue provided by the
legal and regulatory provisions in force at the time of the issue, it being understood that the issue price shall be
the same as that of the initial issue;
268
ANNUAL REPORT 2006
- in the event of the issue of securities intended as compensation for securities contributed with respect to a public
exchange offer: draw up the list of securities contributed in exchange; set the terms and conditions of the issue,
the exchange rate and, as the case may be, the amount of the balancing cash adjustment to be made in cash;
and determine the arrangements for the issue;
- charge, on its sole initiative, the capital increase expenses to the amount of related premiums and take from that
amount the sums needed to increase the legal reserve to one-tenth of capital after each increase
- in turn delegate the powers needed to carry out the issue, or to refrain therefrom, within the limits and according
to the terms and conditions that the Board of Directors may set down beforehand, to the Chief Executive Officer
or, in agreement with him, to one or more delegate Chief Executive Officers.
A
Fourteenth resolution
Authorization for the purposes of setting the issue price of securities giving access to capital, in the event of
cancellation of the preemptive subscription right of shareholders and within the limit of 10% of share capital per year
after examining the Board of Directors’ report and the Auditors’ special report:
1)
authorizes the Board of Directors, with the possibility of subdelegating in the conditions provided by the law, in
accordance with the provisions of articles L. 225-129-2 and L. 225-136, subsection 2, paragraph 1 of the Code of
Commerce and within the limit of 10% of the share capital per year as at the end of the month prior to the date of
issue, to set the issue price according to the following arrangements:
a)
he issue price of the common shares shall be at least equal to the closing price for Imerys shares on the
Eurolist market of Euronext Paris on the trading day before the date of setting the issue price, minus a possible
10% discount;
b)
the issue price of the compound securities giving access to capital shall be such that the sum immediately
received by the Company plus, as the case may be, any sum that may be received later by the Company, is at
least equal to the amount indicated in a) above for every ordinary share issued as a result of the issue of those
securities.
2)
resolves that the nominal amount of the increase in the Company’s capital resulting from the present resolution
shall be charged to the nominal amount of the shares issued, whether or not directly, pursuant to the twelfth and
thirteenth resolutions;
3)
sets at twenty-six months from the date of the present Shareholders’ Meeting the duration of the present delegation;
4)
resolves that the Board of Directors, with the possibility of subdelegating in the conditions provided by the law, shall
have all powers to implement the present authorization in the conditions set by the law.
A
Fifteenth resolution
Authorization for the purposes of carrying out one or more capital increases in compensation for contributions
in kind made up of securities representing shares in or giving access to capital
The Shareholders’ General Meeting, ruling in the quorum and majority conditions required for extraordinary
Shareholders’ General Meetings, after examining the Board of Directors’ report, authorizes the Board of Directors, with
the possibility of subdelegating in the conditions provided by the law, in accordance with the provisions of article L. 225147 of the Code of Commerce, within the limit of the ceiling indicated in the twelfth resolution of the present Shareholder’
Meeting and for the same period of twenty-six months, to carry out one or more capital increases, upon an Auditor’s
report and within the limit of 10% of its share capital, in order to compensate contributions in kind granted to the
Company and comprised of securities representing shares in or giving access to capital, if the provisions of article
L. 225-148 of the Code of Commerce do not apply.
269
A
Sixteenth resolution
Delegation of authority to the Board of Directors to issue compound debt securities
1)
delegates to the Board of Directors its authority to issue, in one or more times, at the dates that it shall determine,
on the French market and/or the international market, any compound securities representing debts of the Company,
at fixed or variable rates, whether or not subordinated, for a determinate or indeterminate period, in euros, in foreign
currency or in any monetary unit determined by reference to several currencies;
2)
resolves that the maximum nominal amount of the issues, in the event of the Board of Directors using the present
delegation of authority, shall not exceed the ceiling of €2.5 billion or the equivalent amount, it being specified that
the nominal amount of the debt securities to be issued pursuant to the twelfth, thirteenth and fourteenth resolutions
of the present Shareholders’ Meeting shall be charged to that amount;
3)
sets at twenty-six months as from the date of the present Shareholders’ Meeting the duration of the present delegation
A
Seventeenth resolution
Overall limit of the nominal amount of the increase in share capital resulting from the delegations of authority
after examining the Board of Directors’ report resolves to set at
- €2.5 billion or the equivalent amount in the event of the issue in other currencies, the maximum nominal amount of the
debt securities that may be issued pursuant to the authorizations concerning the issue of securities giving access,
immediately or in the future, to a share of the Company’s capital, or compound debt securities, granted by the twelfth,
thirteenth, fourteenth and sixteenth resolutions of the present General Meeting;
- €110 million the maximum nominal amount of the capital increases that may be carried out, whether immediately or in
the future, pursuant to the authorizations granted by the twelfth and thirteenth resolutions of the present Shareholders’
Meeting, to the exclusion of the shares issued as part of a capital increase by capitalization of premiums, reserves,
income or other items, as provided in 1) b) of the twelfth resolution of the present Shareholders’ Meeting, it being
specified that the amount of any shares to be issued in addition to maintain, in accordance with the law, the rights of
the holders of securities or rights giving access to capital shall be added to that nominal amount.
A
Eighteenth resolution
Delegation of authority to the Board of Directors for the purposes of increasing the share capital by the issue of
shares reserved for employees
after examining the Board of Directors’ report and the Auditors’ special report, with respect to the provisions of articles
L. 443-1 et seq. of the Labor Code concerning employee shareholding and article L. 225-138-1 of the Code of Commerce
and pursuant to articles L. 225-129-2 and L. 225-129-6 of the Code of Commerce:
1)
resolves to delegate its authority to the Board of Directors for the purposes of increasing the share capital, in one or
more times and upon its sole decision, in the proportions and at the times that is sees fit, by the issue of common
shares in the Company or other securities giving access to capital reserved:
- for the employees and corporate officers of the Company and/or the French or foreign companies or groups
affiliated to it in the sense of article L. 225-180 of the Code of Commerce,
2)
3)
- if such employees join a company savings plan and also meet any other conditions imposed by the Board of
Directors;
resolves to cancel the preemptive subscription right of shareholders to the securities to be issued for the benefit of
the above-mentioned employees and corporate officers under the present delegation;
resolves that the subscription price of the shares issued pursuant to the present delegation shall be determined in
the conditions set down in the provisions of article L. 443-5 of the Labor Code;
270
ANNUAL REPORT 2006
4)
resolves that the nominal amount of the share capital increases that may be carried out pursuant to the present
delegation shall not exceed €1.6 million, to which amount shall be added the nominal amount of any shares that
may be issued to maintain, in accordance with the law, the rights of the holders of securities or rights giving access
to capital;
5)
sets at twenty-six months as from the date of the present Shareholders’ Meeting the term of validity of the present
delegation, which renders null and void any previous delegation concerning the increase of share capital by the
issue of values reserved for employees;
6)
grants all powers, with the possibility of subdelegating in the conditions provided by the law, to the Board of Directors
to implement the present delegation and, in particular, for the purposes of
- determining the companies of which the employees may benefit from the subscription offer for the issues coming
under the present delegation,
- set the conditions, particularly as regards length of service, that the beneficiaries of those subscription offers must meet,
- set down the dates, prices and conditions of the issues,
- determined the amounts to be issued,
- set the date of record, event retrospectively, of the securities to be issued,
- determine the time given to the beneficiaries to pay up their subscription,
- decide whether the subscriptions may be carried out directly and/or indirectly through mutual funds,
- set, for the issues coming under the present delegation, the arrangements and conditions for joining company
savings plan, draw up their regulations or, in the event of preexisting plans, modify the regulations,
- make, as the case may be, on its sole decision and if it sees fit, any charges to the premium or premiums related
to the capital increases, particularly for the expenses, fees and duties arising from the completion of the issues,
and take from these premiums the sums needed to increase the legal reserve to one-tenth of the new share
capital after each capital increase,
- acknowledge the capital increase or increases resulting from any issue made using the present delegation,
amend the by-laws accordingly and carry out or have carried out any acts or formalities for the purposes of
making those capital increase definitive, and
- generally take any useful measures and enter into any agreements to complete successfully the planned issues.
A
Nineteenth resolution
Authorization to reduce the share capital by cancelling self-held shares
1)
authorizes the Board of Directors, with the possibility of subdelegating in the conditions provided by the law, to
cancel, in one or more times, the shares held by the Company in itself within the limit of 10% of capital per twentyfour month period, and to reduce the share capital accordingly by charging the difference between the purchase
value and the nominal value of the cancelled shares to available premiums and reserves;
2)
sets at two years from the date of the present Shareholders’ Meeting the duration of the present authorization,
which renders null and void, up to the amount of any unused part, any previous delegation granted to the Board of
Directors with respect to the reduction of the share capital by cancellation of the self-held shares;
3)
grants all powers to the Board of Directors for the purposes of setting the definitive amount of the capital reduction
within the limits provided by law and by the present resolution, to set its arrangements, acknowledge its completion,
charge the difference between the purchase value and the nominal value of the cancelled shares to the available
premiums and reserves of its choice, carry out all acts, formalities or declarations in order to make the capital
increases carried out pursuant to the present authorization definitive and amend the by-laws accordingly.
271
A
Twentieth resolution
Transposition into the Company’s by-laws of the decree of December 11, 2006 amending the decree of March 23,
1967 on commercial companies
after examining the Board of Directors’ report, resolves to transpose into the by-laws the provisions of the decree of
December 11, 2006 amending the decree of March 23, 1967 on commercial companies and to amend accordingly
article 21 of the by-laws as follows:
- the following text is added to subsection three of the paragraph “Calling of Meetings”
"These periods shall be reduced to six days and four days, respectively, in the event of calling a meeting
pursuant to the provisions of article L. 233-32 of the Code of Commerce"
- the paragraph “Participation” is henceforth worded as follows:
"The right to take part in Shareholders’ Meetings is subject to the shares being recorded in accounts, in the
conditions and timeframe set by applicable law and regulations, in the name of the shareholder or the
intermediary registered on the shareholders’ behalf, either in the registered security accounts kept by the
Company or in the bearer security accounts kept by the authorized intermediary.
The registration or recording of the shares in the bearer security accounts kept by the authorized
intermediary is acknowledged by a certificate of holding issued by said intermediary, as the case may be, by
electronic means, in the conditions provided by law and delivered in the place and times indicated in the
notice of meeting.
Registration or recording in accounts gives the right to receive an admission card to shareholders wishing to take
part in the Meeting. Such participation and voting in Meetings may, by decision of the Board of Directors, take place
by videoconference and/or any other means of telecommunication, in the conditions provided by law.
A certificate is also issued to any shareholders wishing to take part in the Meeting in person that did not
receive an admission card in the time provided by law.
Shareholders may also take part and vote in Meetings by sending a proxy or postal vote form, either in paper form or,
on the decision of the Board of Directors, by electronic data transmission and/or any other means of
telecommunications, in the conditions provided by law. When the shareholder has voted by correspondence, sent
in a proxy or requested an admission card or a certificate of holding, he or she may no longer choose any
other method of participation at the Meeting.
A shareholder who has already voted by correspondence, sent in a proxy or requested an admission card or
a certificate of holding may dispose of all or part of his or her shares at any time. However, no disposal or any
other transaction made outside the timeframe set by law shall be notified by the authorized intermediary or
taken into consideration by the Company.”
The rest of article 21 is unchanged.
A
Twenty-first resolution
Powers
The Shareholders’ Meeting, ruling in the quorum and majority conditions required for ordinary Shareholders’ General
Meetings, fully empowers the bearer of a duplicate or an extract of the minutes of the present Meeting to carry out any
formalities with respect to registration or publication.
272
ANNUAL REPORT 2006
9
Table of concordance
In order to facilitate the reading of this Annual Report registered with Autorité des Marchés Financiers as a registration
document, the subject index below can be used to identify the main information required by Autorité des Marchés
Financiers with respect to its regulations and instructions.
Disclosure requirements as per Commission Regulation (EC) n°809/2004 of 29 April 2004 (Annex 1)
Pages
1. Persons responsible
1.1. All persons responsible for the information given in the registration document
4
1.2. Declaration by those responsible for the registration document
4
2. Statutory Auditors
5
3. Selected financial information
3.1. Selected historical financial information
21
3.2. Selected financial information for interim periods
n.a.
4. Risk factors
75 - 79; 91; 236 - 239; 251 - 253
5. Information about the issuer
5.1. History and development
116-117
5.1.1. Legal and commercial name
178
5.1.2 Place and number of registration
179
5.1.3. Date of incorporation and length of life of the issuer
178
5.1.4. Domicile and legal form
178
5.1.5. Important events in the development of the issuer's business
5.2. Investments
16 - 17
12 - 15; 80 - 81
6. Business overview
6.1. Main activities
121 - 162
6.2. Main markets
128 - 162
6.3. Exceptional factors
12 - 16; 119
6.4. Summary information regarding the extent to which the issuer is dependent
6.5. Basis for any statements made by the issuer regarding its competitive position
273
164; 236
116
CHAPTER 9 - Table of concordance
Pages
7. Organizational structure
7.1. Brief description of the Group
116 - 120
7.2. Main subsidiaries
43- 47
8. Property, plants and equipment
8.1. Information regarding any existing or planned material tangible fixed assets
8.2. Environmental issues that may affect the issuer's utilization of the tangible fixed assets
59
n.a.
9. Operating and financial review
9.1. Financial position
8 - 21; 28 - 32
9.2. Operating results
9 - 16; 49 - 51
9.2.1. Information regarding significant factors materially affecting
the issuer's income from operations
9.2.2. Where the financial statements disclose material changes in net sales or revenues,
provide a narrative discussion of the reasons for such changes
9.2.3. Strategy and external factors
75 - 78
8 - 11
117 - 118
10. Capital resources
10.1. Information concerning the issuer's capital resources
64
10.2. Explanation of the sources and amounts of the issuer's cash flows
30 - 31
10.3. Borrowing and funding structure of the issuer
71 - 75
10.4. Restrictions on use of capital resources
n.a.
10.5. Information regarding the anticipated sources of funds needed to fulfill commitments
11. Research and development, patents and licenses
71 - 73
163 - 164
12.Information on trends
12.1. Most significant recent trends in production, sales and inventory,
costs and selling prices
12.2. Information on any known trends, uncertainties, demands, commitments or events
that are reasonably likely to have a material effect on the issuer's prospects
13. Profit forecasts or estimates
8 - 16
17
17
14. Management and supervisory bodies
14.1. Description of management and supervisory bodies
14.2. Management and supervisory bodies conflicts of interests
200 - 225
213
15. Remuneration and benefits
15.1. Amount of remuneration paid and benefits in kind granted to such persons
by the issuer and its subsidiaries
15.2. Total amounts set aside or accrued by the issuer or its subsidiaries
to provide pension, retirement or similar benefits
274
225 - 227
65 - 67; 227
ANNUAL REPORT 2006
Pages
16. Board practices
16.1. Date of expiration of the current term of office
201
16.2. Information about members of the management and supervisory bodies' service
contracts with the issuer or any of its subsidiaries
213; 234
16.3. Information about the issuer's audit committee and remuneration committee
218 - 222
16.4.Corporate Governance
199 -234
17. Employees
17.1. Number of employees
170
17.2. Shareholdings and stock options
228 - 231
17.3. Description of any arrangements for involving the employees in the capital of the issuer
172; 189
18. Major shareholders
18.1. Name of any person who has an interest in the issuer's capital or voting rights
which is notifiable under the issuer's national law
190
18.2. Whether the issuer's major shareholders have different voting rights
180; 190
18.3. State whether the issuer is directly or indirectly owned or controlled
190 - 191
18.4. Description of any arrangements, known to the issuer, the operation of which
may at a subsequent date result in a change in control of the issuer
191
89 - 90
19. Related party transactions
20. Financial information concerning the issuer's assets and liabilities,
financial position, profits and losses
20.1. Historical financial information
21
20.2. Pro forma financial information
n.a.
20.3. Financial statements (both own and consolidated)
27 - 113
20.4. Auditing of historical annual financial information
4; 23 - 25
20.4.1. Statement that the historical financial information has been audited
20.4.2. Indication of other information in the Registration Document which
has been audited by the auditors
20.4.3. Where financial data in the Registration Document is not extracted from
the issuer's audited financial statements state the source of the data and state
that the date is unaudited
20.5. Age of latest financial information
4
168 - 177
n.a.
5; 23
20.6. Interim and other financial information
n.a.
20.7. Dividend policy
196
20.7.1. Dividend per share
32; 196
20.8. Legal and arbitration proceedings
236
20.9. Significant change in the issuer's financial or trading position
111
275
CHAPTER 9 - Table of concordance
Pages
21. Additional information
21.1. Share capital
181 - 194
21.1.1. Amount of issued capital
181
21.1.2. Shares not representing capital
n.a.
21.1.3. Shares held by the issuer itself
184 - 189
21.1.4. Convertible securities, exchangeable securities or securities with warrants
n.a.
21.1.5. Information about and terms of any acquisition rights and or obligations over
authorised but unissued capital or an undertaking to increase the capital
n.a.
21.1.6. Information about any capital of any member of the group which is under option
or agreed conditionally or unconditionally to be put under option
n.a.
21.1.7. History of share capital
182
21.2. Memorandum and articles of association
178 - 179
21.2.1. Description of the issuer's scope of business
21.2.2. Summary of any provisions of the issuer's articles of association with respect
to the members of the management and supervisory bodies
177
200 - 224
21.2.3. Description of rights, preferences and restrictions attaching to the existing shares
180
21.2.4. Change of the rights of holders of the shares
180
21.2.5. Description of the conditions governing the manner in which Annual General
Meetings of Shareholders are called including the conditions of admission
179
21.2.6. Change in control of the issuer
n.a.
21.2.7. An indication of the articles of association provisions, if any, governing
the ownership threshold above which shareholder ownership must be disclosed
180
21.2.8. Changes in the capital
n.a.
236
22. Material contracts
23. Third party information and statement by experts and declarations of any interest
174 - 176
24. Documents on display
179; 197
43 - 47; 112
25. Information on holdings
276
2
154 rue de l'Université - F - 75007 Paris
Telephone: + 33 (0) 1 49 55 63 00 - Fax: + 33 (0) 1 49 55 63 01 - www.imerys.com

annual report 2006 - Imerys, Transform to perform

Transcription

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