1% - Imerys, Transform to perform

IMERYS IN 2007
Strengths + • The essential • 1 Profile • 2 Our customers’ global partner • 4 Corporate Governance •
10 Key figures • 2007 - our strategy in action • 14 Developing our resources • 16 Optimizing our mineral
processing • 18 Contributing to our customers’ performance • 20 Seizing opportunities for profitable growth •
22 Mobilizing potential • 24 The choice of responsible, sustainable management • 2007 - our performance •
28 Imerys on the stock market • 30 Results by business group • 32 Summary consolidated financial statements •
34 Glossary
We are enhancing
our profitable
growth potential.
In 2007,
2 new minerals
were added to Imerys’ product portfolio,
bringing the total to 29.
Richer
Imerys constantly enriches its mineral portfolio to meet its customers’
expectations more fully, move into new markets and consolidate its
world leadership in industrial minerals.
• Imerys became world #1 in zircon products in 2007 with two acquisitions: UCM, the main European and North American
producer of fused zircon and magnesium oxide, and Astron China (1), the Chinese leader in the production and sale of a wide
range of zircon products. These two companies are an excellent fit with Imerys’ existing range of solutions for refractories,
technical ceramics and investment casting.
• Through a policy of sustained capital expenditure and a dynamic approach to acquisitions, in 2007 Imerys strengthened its
mineral reserves and resources as well as its industrial and commercial capabilities in all its activities.
(1) Acquisition
of Astron China completed on February 5, 2008.
In 2007,
Imerys' sales in emerging countries
increased + 22%.
They now represent 20% of total sales.
More balanced
Imerys is developing in emerging economies to benefit from their
markets and growth momentum.
• With the construction of a second plant in India, the start-up of a third plant in Japan and the acquisition of new marble
reserves in China, Imerys is swiftly developing its ground calcium carbonate activity in Asia.
• In China, Imerys is making rapid progress by completing several acquisitions, developing its mineral reserves and investing
in new production units. This development concerns many of the Group’s businesses – Pigments for Paper, Minerals for
Refractories, Fused Minerals, Minerals for Filtration and Graphite – and covers the entire country.
• In India, Imerys is gaining significant presence with the purchase of ACE, the leader in monolithic refractories, and a feldspar
for ceramics producer.
• Imerys is also developing in Minerals for Refractories in Ukraine and Minerals for Filtration in Argentina.
Productivity gains,
product range improvements: Imerys consolidates
its technological leadership
and the value that its products add for customers.
More forceful
Imerys optimizes its industrial assets and its organization to adapt
them to market trends, increase competitiveness and boost innovation
capacity.
• By specializing its Cornwall (Great Britain) deposits in filler kaolins for paper and transferring coating kaolin production to
Brazil, Imerys makes substantial energy savings possible and establishes a more efficient production platform.
• By adapting World Minerals’ industrial assets, Imerys increases its leadership in the development and manufacture of filtration
processes.
• By creating an Innovation Department to boost and coordinate the combined efforts and creativity of several divisions, Imerys
stimulates its marketing and research people’s imagination and steps up organic growth.
An international recruitment campaign:
Imerys strengthens its management potential
to support its growth
and plan ahead.
More attractive
Worldwide, Imerys is bolstering its teams with research and production
engineers, geologists and marketing, human resources, financial,
safety and environmental specialists.
• Imerys aims for a multicultural environment, decentralized management, immediate responsibilities, broad scope for rapid
career development, a global playing field and a high-performance business model where individuals are only limited by
their energy and talent.
• To increase its power to attract talent, Imerys develops compensation, profit-sharing and benefit programs and invests
heavily in training. Employees are involved in value creation as they are regularly given the opportunity to become
shareholders.
• Entrepreneurship, responsibility, transparency, personal commitment: joining Imerys means sharing a state of mind that
encourages everyone to innovate, adapt and progress constantly towards ambitious goals.
Diverse markets
15%
Construction renovation
20%
Emerging countries
17%
41%
5%
Construction new
Consumer
goods
Japan /
Australia
2007 sales
by market (1)
55%
2007 sales
by geographic
zone
Western Europe
of which France 20%
20%
27%
North
America (2)
Industrial
supplies
(1) Imerys
29
minerals
(2) United
estimate
States and Canada.
260 47 17,552
sites
countries
employees
We improve
our customers’ products and processes.
In Europe, North and South America, Asia and Africa, Imerys mines industrial
minerals and turns these natural resources into value-added solutions that
contribute to its customers’ performance in industry and construction.
Imerys has a unique portfolio of minerals with a sure grasp of their potential properties and applications. The Group mines, purifies and
modifies them by its industrial processes to deliver the effects its customers require. Large-scale mining, conversion and logistics expertise
guarantee consistent quality standards worldwide.
Our people constantly strive to understand the needs of customer products’ end users and develop the Group’s global sales and technical
presence and innovation capability.
Imerys is listed on Euronext Paris.
€
3,402
million
sales
(1) Before
(2) Before
€
478
million
current operating income(1)
other operating revenue and expenses.
other operating revenue and expenses, net.
1
€
317
million
net income
from current operations(2)
to our customers worldwide
Argentina ● Australia ● Austria ● Belgium ● Brazil ● Canada ● Chile ● China ● Czech Republic ● Denmark ● Finland ● France ● Germany ● Great Britain ● Greece ●
Hungary ● India ● Indonesia ● Italy ● Japan ● Luxemburg ● Malaysia ● Mexico ● Netherlands ● New Zealand ● Peru ● Poland ● Portugal ● Romania ● Russia ●
Singapore ● Slovenia ● South Africa ● South Korea ● Spain ● Sweden ● Switzerland ● Taiwan ● Thailand ● Tunisia ● Turkey ● Ukraine ● United Arab Emirates ●
United States ● Venezuela ● Vietnam ● Zimbabwe
An integrated group from mineral deposit to market. More than 260 locations in 47 countries across every continent.
Global technical and sales networks.
Innovation capability. 7 Research & Technology centers. 18 specialized laboratories and technical centers. Numerous research
partnerships.
Tailor-made solutions. Implementation services. Proven technical expertise.
Comprehensive, efficient and competitive logistics. Worldwide just-in-time deliveries. Purpose-designed packaging.
Responsible management. World-class operating methods. Environment-friendly site restorations.
2
4 business groups
Leadership
in each segment
(1)
Minerals for Ceramics,
Refractories, Abrasives
& Foundry
• European #1 in ceramic bodies
With industrial reorganization programs implemented since 2006 nearing
completion, the Group will leverage commercial synergy between its activities
by changing operating organization in four business groups (1).
for porcelain
• European #2 in raw materials
for floor tiles
16%
• World #1 in minerals for refractory
Performance
& Filtration
Minerals
and abrasive applications
• World #1 in high performance graphite
Performance
& Filtration Minerals
• World #1 in minerals for plastic
polymer films
• World #1 in diatomite and perlite
for filtration
23%
31%
‘07 sales
by business group
(2008 organization
in 4 business
groups)
Minerals
for Ceramics,
Refractories,
Abrasives
& Foundry
Pigments
for Paper
Pigments for Paper
• World #1 in kaolin for paper
30%
• World #2 in ground calcium
Materials & Monolithics
carbonate
• World #3 in precipitated calcium
carbonate
Materials & Monolithics
• French #1 in clay roof tiles,
bricks and chimney blocks
and natural slate
• World #1 in alumino-silicate
monolithic refractories
(1)
7
18
Research
& Technology centers
Specialized laboratories
and technical centers
Group organization as from February 13, 2008.
3
Gérard Buffière
CEO
and Director
Age 63, French.
Joined the Group in 1998,
and member
of the Managing Board
since then.
Appointed Chairman
of the Managing Board
in 2003, he became CEO
upon the return to a Board
of Directors-based
management structure
in 2005.
Message from the Chief Executive Officer
Consistency, profitability, responsiveness
In 2007 our markets showed positive trends with a few exceptions but the general economic climate was volatile. We faced a depreciation in the US dollar
against the euro (- 9.1% on average in 2007 vs. 2006) and rises in some cost factors.
In those conditions, the results we posted once again bear out our sound business model: at comparable Group structure and exchange rates, our current
operating income rose + 7.9% and our sales + 4.2%; current operating margin and return on capital improved to 14.1% and 15%, respectively; net income
from current operations per share increased + 3%. 2007 was the 16th straight year of growth in net income from current operations. These results were made
possible by the efforts and responsiveness of all our people on all our operating sites and I want to thank them for that.
High operating performance, faster development
In 2007 we invested a record €367 million to maintain the excellence of our industrial assets, make our kaolin and minerals for filtration activities more
competitive, develop our capacities on growing markets for our Group and expand our mining reserves in strategic minerals or regions.
Moreover, we put a net amount of almost €310 million (1) into external growth. The 12 companies that joined us represent around €270 million in sales and
€30 million in operating income on a full year basis.
These acquisitions are full of promise for our Group’s future, as two of them give us leadership in applications for a new mineral – zircon – and ten of them
bolster our positions in emerging economies. Our presence in these high-growth zones accounts for 20% of the Group’s sales in 2007 and we grew + 22%
there from the previous year.
Powerful financial capability
Our group generated €325 million in free cash flow, after capital expenditure for industrial asset maintenance. This cash is availabe to fund strategic capital
expenditures, as well as acquisitions. Free cash flow totaled €279 million in 2006.
Furthermore, we took advantage of the favorable conditions in the first half of the year to ensure long-term financial resources. Our financial debt at year-end,
€1,343 million, represents 2.1 times the Group’s EBITDA, and we have total financial resources of more than €2,300 million, giving us all the flexibility we
need to seize external growth opportunities.
Optimized organization
We have reduced our cost base by around €20 million in our kaolin activity. This upgrading plan will be completed in the first quarter. In parallel, industrial
optimization in our Minerals for Filtration division is nearing completion. The acquisitions made in 2007 (1) will contribute approximately €20 million in additional
income in 2008.
Having optimized our fixed production costs in 2007, now is a good time to improve our product development, marketing and sales structures further in order
to leverage customer synergies between activities. With that aim in mind, our operating organization is structured in four business groups as from February
2008.
In addition, Jérôme Pecresse is appointed Chief Operating Officer of Imerys with the aim of helping me continue our development.
(1) Including
Astron China, of which acquisition was completed on February 5, 2008; net of divestitures over 2007.
5
EXECUTIVE
COMMITTEE
(1)
We view 2008 with confidence.
The + 5.6% increase in dividends that the Board of Directors will put to
the Shareholders’ General Meeting proves this.
Faced with an uncertain economic environment in the early part of this
year, we are now stronger and better equipped to continue improving our
performance.
Christophe Daulmerie
Vice-President Finance & Strategy
Age 39, French.
External factors will disrupt our businesses: the weak US dollar may
penalize our results in euros, but this is essentially the phenomenon of
converting our results from dollar or dollar-based zones into euros, rather
than a loss of our Group’s economic substance. Our major papermaker
customers are reorganizing, but the paper industry will come out of these
changes stronger. We may have to undergo rising costs, but I am confident
that our people’s creativity and responsiveness will enable us to manage
these hazards, which we have already experienced in recent years and
always overcome. Of course, we are not protected from a more extensive
crisis, but no such trend is reflected in our orders to date.
Joined Imerys in 2000 after holding various positions with the French Ministry
of Industry and the European Commission. Was in charge of strategy in Pigments
& Additives, sales & marketing in Pigments for Paper Americas and Pigments
for Paper operations then managed the business group in Europe.
Olivier Hautin
Pigments for Paper business group
Age 43, French.
Joined Imerys in 1995 after beginning his career in strategy consulting at Mars
& Co. he was successively in charge of Strategy & Development for the Group,
then in the United States (Atlanta). Since 2000, he held the position of VicePresident and General Manager in several profit centers in Europe and Asia
before. He was Vice-President and General Manager, Minerals for Ceramics
until February 2008.
Finally, we are only exposed to North American new housing construction
for 3% and took the necessary measures in 2007 to reduce the
corresponding fixed costs; more than 40% of the final outlets for our
customers’ products are in global household consumption and almost
30% are connected to industrial capital expenditure, which is driven
globally by growth in emerging countries. We benefit significantly from
that growth, whether directly through local bases or indirectly through
sales in Western countries to global customers that export heavily.
Daniel Moncino
Performance & Filtration Minerals business group
Age 45, American.
Joined Imerys in 2002 after holding various positions with the Siemens, BASF
and Schlumberger groups. Vice-President and General Manager Performance
Minerals North America, he was then Vice-President and General Manager
Minerals for Filtration until February 2008.
With its highly diverse markets, growing exposure to the vitality of emerging
economies, talented, experienced teams, powerful financial capability and
a strong performance culture, Imerys offers a limited risk profile, a sound
economic model and great potential for profitable growth.
(1) Group
organization as from February 13, 2008.
Christophe Daulmerie
6
Olivier Hautin
Daniel Moncino
Chaired by CEO Gérard Buffière,
the Executive Committee is comprised of Imerys’
principal line and support managers.
Denis Musson
Christian Schenck
General Counsel, Secretary of the Board
Age 44, French.
Executive Vice-President
Materials & Monolithics Business Group
Age 57, French.
Joined Imerys in 1999 as General Counsel. His career was previously with
Pechiney, where he started in the group’s Legal Department before taking over
its Corporate department.
Joined Imetal in 1977 and has remained in the Group throughout his career.
Initially uranium and manganese mining operations manager, he joined the
Group’s roof tiles & bricks activity in 1986. In 2002 he was appointed VicePresident for the Building Materials business group, which became Materials
& Monolithics in 2005 with the consolidation of Calderys.
Jérôme Pecresse
Chief Operating Officer
Minerals for Ceramics, Refractories, Abrasives & Foundry Business Group
Age 41, French.
Bernard Vilain
Vice-President Human Resources
Age 53, French.
Joined Imerys in 1998 as Vice-President Strategy & Development after holding
various positions with Crédit Suisse First Boston. Appointed to the Managing
Board in 2002. Was the Group’s Executive Vice-President Finance & Strategy
from early 2003 to March 2006.
Joined the Group in 2004 as HR Manager Continental Europe & Asia and
appointed Group Vice-President Human Resources in July 2005. Previously
held several HR positions with the Schlumberger, DMC and LVMH groups.
Thierry Salmona
Vice-President Innovation & Business Support, Research & Technology
Age 53, French.
After holding several positions in the French Ministry of Industry then at Thomson,
Sanofi and SKW Trostberg, he joined Imerys in 2000. Managed the Building
Materials & Ceramics, then Specialty Minerals business groups. Currently VicePresident Research & Technology, also in charge of innovation, geology, EH&S
and purchasing and energy coordination.
Denis Musson
Jérôme Pecresse
Thierry Salmona
Christian Schenck
7
Bernard Vilain
MESSAGE FROM THE CHAIRMAN
of the Board of Directors
In 2007, Imerys grew for the 16th year running, with a resumption of dynamic external growth. More
than €233 million(1) was invested in 11 acquisitions, mainly in fast-growing zones where Imerys will
now be more firmly established. Internal growth, supported by €367 million in capital expenditure(2),
Aimery
Langlois-Meurinne
was also stepped up with the creation of an Innovation Department, an initiative encouraged by the
Board of Directors. These achievements are the fruit of the Management team’s work, in accordance
Chairman of the Board
with the strategy set down by the Board of Directors in cooperation with the Strategic Committee.
of Directors
As regards Governance, the proportion of independent members on the Board is higher than the onethird minimum recommended for listed companies with controlling shareholders like Imerys. A new
independent Director, Mr. Jean Monville, replaced Mr. Yves-René Nanot from May 2, 2007. He also
joined the Audit Committee, which is now chaired by Mr. Aldo Cardoso.
The recommendations resulting from the self-assessment conducted by the Board of Directors in February 2007 to improve its operations and performance,
and those of its Committees, were put into practice. In particular, an additional meeting of the Audit Committee is now specifically dedicated every year to a
review of risks, internal audit and the results of the internal audit assignments.
The Board is also increasingly attentive to Sustainable Development risks and issues, which are examined by the Strategic Committee and the Audit Committee.
The Group’s Sustainable Development policy and results are now the subject of a comprehensive regular report to the Board of Directors. In 2008, they will
be covered by the Group’s third Sustainable Development report.
(1) Not
including Astron China, of which acquisition was finalized on February 5, 2008.
capital expenditures.
(2) Booked
Board of Directors
Imerys is governed by a Board of Directors. Control and management functions are separated as Chairman of the Board of Directors and Chief
Executive Officer (CEO) are two distinct positions.
The Board of Directors is comprised of 14 members as on December 31, 2007. Members are appointed for three years, with one-third of seats
renewed every year.
Non-independent members: 7
Independent members: 7
Aimery Langlois-Meurinne
Aldo Cardoso
Chairman
Eric Le Moyne de Sérigny (3)
Paul Desmarais, Jr.
Gilbert Milan
Vice-Chairman
Jean Monville
Gérard Buffière
Grégoire Olivier
Jacques Drijard
Robert Peugeot
Jocelyn Lefebvre
Jacques Veyrat
The Internal Charter of the Board of Directors was drawn up in accordance
with best Corporate Governance practices. The Charter:
• sets down the Directors’ individual rights and duties;
• defines a code of conduct and principles to be followed in certain areas
such as dealing in Imerys shares;
• specifies the missions of the Board and its Committees and their working
principles.
Role
The Board of Directors’ mission is, in particular, to constantly control the CEO’s
management of the Group.
Maximilien de Limburg Stirum
Thierry de Rudder
Activity
• 5 sessions in 2007
• Average attendance rate: 73%
• 5 sessions planned in 2008
(3) In
June 2008, Mr. Le Moyne de Sérigny will cease to have independent status because
of the length of his successive terms as Director of Imerys (more than 12 years).
8
Committees
Three specialized Committees with an advisory role support the Board of Directors in its missions and in preparing its decisions.
Strategic Committee
Non-independent members: 5
Aimery Langlois-Meurinne
Chairman
Jacques Drijard
Vice-Chairman
Paul Desmarais, Jr.
Jocelyn Lefebvre
Thierry de Rudder
Independent members: 3
Éric Le Moyne de Sérigny (4)
Role
• Assist the Board of Directors in defining the Group’s main strategic orientations.
• Control that the strategy implemented by the CEO complies with the orientations
laid down by the Board of Directors.
• Oversee risks with respect to the environment, health, safety and Sustainable
Development and action plans, in cooperation with the Audit Committee.
• Examine the main strategic risks for the Group.
Gilbert Milan
Aldo Cardoso
Activity
• 8 sessions planned in 2007
• Average attendance rate: 77%
• 8 sessions planned in 2008
(4) In
June 2008, Mr. Le Moyne de Sérigny will cease to have independent status because
of the length of his successive terms as Director of Imerys (more than 12 years).
Audit Committee
Non-independent member: 1
Jocelyn Lefebvre
Role
• Examine the half-yearly and annual Company and consolidated accounts.
• Control the relevance and consistency of accounting methods.
• Review the main risks to which the Group is exposed, whether financial, legal,
environmental or health and safety-related.
• Oversee environmental, health, safety and Sustainable Development risks
and action plans, in cooperation with the Strategic Committee.
• Examine the program and results of work done by internal auditors on risk
analysis and control.
• Select and recommend candidates for Statutory auditor positions.
Independent members: 3
Aldo Cardoso
Chairman
Éric Le Moyne de Sérigny (5)
Jean Monville
Activity
• 3 sessions in 2007
• Average attendance rate: 75%
• 5 sessions planned in 2008
(5) M.
Le Moyne de Sérigny informed the Board of his resignation from the Audit
Committee as from April 30, 2008, because he no longer had independent
member status.
Appointments & Compensation Committee
Non-independent member: 1
Aimery Langlois-Meurinne
Chairman
Independent members: 2
Jacques Veyrat
Robert Peugeot
Role
• Examine proposed appointments to the Board of Directors and the independent
status of each Director.
• Examine the CEO’s compensation, as well as the general compensation policy
for the Group’s other top managers and the Company stock option or free
share allocation policy.
Activity
• 2 sessions in 2007
• Average attendance rate: 83%
• 2 sessions planned in 2008
Statutory auditors
Ernst & Young Audit
Represented by Jean-Roch Varon
Alternate Jean-Marc Montserrat
Deloitte & Associés
Represented by Nicholas L.E.Rolt
Alternate Cabinet BEAS
9
KEY FIGURES 2007
Growth
combining organic
development
and acquisitions
At €3,402 million, sales rose + 3.5% compared with 2006. Exchange rates had heavy negative impact
(- €102 million, i.e. - 3.1%), while Imerys’ active acquisition policy over the period is reflected in a net contribution
of + €79 million (+ 2.4%).
Organic growth is firm with a + 4.2% increase in sales at comparable Group structure and exchange rates
(+ 4.4% in the 1st half, + 3.9% in the 2nd), reflecting higher volumes and a further improvement in the product
offering.
Operating
margin
remains high
At €478 million, the Group’s current operating income(1) increased + 4.3% compared with 2006. Restated from
Group structure and exchange rates it improved + €36 million or + 7.9%. Better product offering and increased
volumes more than compensated the inflation of some external costs.
In total, operating margin remains high (14.1% in 2007 vs. 14.0% in 2006) and return on capital (ROI)(2) improved
to 15.0% in 2007, compared with 14.5% in 2006. Imerys has again proved its ability to create value for its
shareholders.
Ongoing
growth
in results
At €317 million, the Group’s share of net income from current operations(3) increased + 2.7% compared with
2006. This growth takes into account:
• A significant increase in financial expenses, at - €56 million in 2007 compared with - €47 million in 2006.
This change is explained by the increase in average debt and in interest rates;
• A current tax charge of - €110 million (compared with - €106 million in 2006), resulting in a stable effective
tax rate at 26.0%.
At €5.00, net income from current operations per share increased + 3.0% over the period, with a weighted
average number of outstanding shares of 63,330,652.
The Group’s share of net income totals €284 million (compared with €187 million in 2006). It includes - €33 million
in other operating revenue and expenses, net of tax (restructuring of kaolins for Performance Minerals in the
United States) compared with - €121 million in 2006 (mainly with respect to the reorganization of the Group’s
kaolin for paper production).
Extensive
cash flow
generation
to fund growth
The Group’s businesses generate extensive current operating cash flow(4) – €523 million in 2007 – that it
reinvests in its organic growth in particular. In 2007, attesting to the Group’s confidence in its strategy, heavy
capex efforts were made, for a total of €353 million. They represented 186%(5) of depreciation expense.
In addition to the capital expenditure needed to maintain production facilities, €208 million was invested in:
• The acquisition of strategic reserves;
• The rollout of the major industrial improvement programs undertaken in kaolins for paper and in Minerals for
Filtration;
• Selected increase of production capacities to support growth on the Group’s markets and develop new products.
Sound financial
structure
The Group was particularly active on the acquisitions front in 2007, with 11 operations completed for a total
amount of €233 million(6).
As on December 31st, 2007, the Group’s net financial debt increased to €1,343 million i.e. 80.7% of shareholders’
equity and 2.1 times EBITDA (66% and 1.7 times respectively in 2006).
Following a further bond issue in April 2007 for €500 million, as on December 31, 2007 the Group had total financial
resources of €2.3 billion with average maturity 6.4 years (vs. 4.5 years as on Dec. 31, 2006). Consequently, the
Group continues to have all the flexibility needed to seize new external growth opportunities.
(1) Operating
income before other operating revenue and expenses.
operating income divided by average capital invested (including goodwill).
(3) Net income before other operating revenue and expenses, net.
(4) EBITDA minus tax on current operating income.
(5) Booked capital expenditure over depreciation expense.
(6) Excluding Astron China, of which the acquisition was completed on February 5, 2008.
(2) Current
10
+ 4.2%
2,729
2,871
03 (7)
04
3,045
3,288
3,402
Sales
(€ millions)
organic growth
434
14.7
04
07
459
478
Current
operating
income
(€ millions)
14.1
16 year
14.0
03 (7)
14.3
operating margin
422
06
372
13.6
14.1%
05
05
06
07
308
317
06
07
522
523
Current
operating
margin (%)
th
of growth in net income
from current operations
288
219
03 (7)
€
441
million
Net income
from current
operations,
Group share
(€ millions)
261
04
445
05
480
Current
operating
cash flow
(€ millions)
378
used for development(8)
03 (7)
04
05
06
07
1,343
03 (7)
(7) Consolidated
04
80.7
890
66.0
of total financial resources
Net debt
(€ millions)
1,086
67.6
billion
65.3
2.3
986
69.9
€
1,140
05
06
Debt
to equity ratio
(%)
07
financial statements drawn up under accounting standards R99-02. IFRS standards are applied
as from financial 2004.
(8) Development capital expenditure and acquisitions.
11
12
2007
Investment
Competitiveness
Innovation
Safety
13
DEVELOPING OUR RESOURCES
With 29 minerals, 120 mining sites(1) worldwide and more than 20 years of reserves on average(2), Imerys has the largest,
most diverse and geographically balanced set of industrial mineral deposits in the world. To manage, operate and renew
that portfolio in optimum conditions, Imerys has developed advanced geological expertise. This gives the Group a unique
competitive advantage.
Integrated management of reserves
Positioning
on the Chinese
refractories
market
With the fast-growing Chinese steel
industry driving substantial demand
for refractories, Imerys is positioning
itself as an essential supplier through
The diversity of needs and end applications demands a diverse portfolio in terms of mineral
nature and quality. Imerys’ mineral reserves are strategic assets as they can be rare and, in
some cases, unique, forming a strong barrier to entry.
Reserves are identified and appraised by a central team of a dozen experienced geologists and
mining engineers who can intervene swiftly around the world to analyze any opportunity. They
are supported in operating divisions by almost 100 geologists and mining engineers, including
around 30 senior professionals. This gives Imerys unique geological expertise.
Imerys assesses its projects’ total cost and profitability taking into account its sites’ future restoration
and all environmental costs. These data are updated throughout a site’s mining lifespan.
The Group is proficient in every mining technique and has powerful digital modeling tools. It is
also able to choose the best techniques, optimize mining planning to draw optimum benefit from
deposits, and adjust production to trends in demand. This expertise enables the Group to keep its
refining and conversion facilities supplied in real time and in optimum conditions with the right amounts
and grades of raw minerals, in order to deliver outstanding quality products to our customers.
A long-term vision
The Group strives at all times to have 20 years of reserves(2) for all its minerals on average in
order to secure its long-term growth. For that purpose, it keeps up constant efforts to optimize
deposits in the mining process, plan the mining of other deposits in its portfolio and prospect
for new resources. In 2007, for example, a new geological study of the Lac-des-Iles (Canada)
natural graphite mine was conducted to draw maximum value from the resource.
the acquisition of the Yilong (Korla,
(1)
Xinyiang Province) andalusite reserve.
(2) Reserves
The deposit offers high quality in terms
A mining site may include several mines and quarries.
and resources as defined by the “Code for Reporting of Mineral Exploration Results, Minerals
Resources and Mineral Reserves.”
of both alumina content and crystal
size.
Imerys’ reserves
and resources
in 2007
Reserves
566
Proven
408
Probable
158
Mt (millions of metric tons)
Resources
14
1,290
Mesured
151
Indicated
268
Inferred
871
The Yilong (Xinyiang Province, China) andalusite deposit, acquired in early 2007, was also
exhaustively mapped with a view to the long-term development of this high quality deposit and
the doubling of mined tonnage by 2009.
The extension work begun in 2006 continued on the Ipoh (Malaysia) and Yen Bai Banpu (Vietnam)
white marble reserves. State-of-the-art infrastructures and mining facilities are being set up for
safer, more profitable operation. In addition, the production capacity increase at RCC in Brazil
was also supported by substantial work to expand proven kaolin reserves and new authorizations
were obtained in France to expand clay for tiles and bricks deposits.
STRENGTHS
> Extensive, diverse,
Acquiring resources to strengthen our positions
In 2007, the Group acquired new reserves to gain access to the raw materials needed to serve
tomorrow’s markets.
Imerys significantly enhanced its marble reserves with the purchase of deposits in Greece,
Turkey and China. In China, the Dongshan reserve (Anhui Province) was acquired in addition to
the reserves acquired in 2006 in Zhongshan (Guanxi Province), where mining permits have been
obtained. With extensive white marble reserves(2) in Asia-Pacific, Imerys now has a key competitive
advantage for its development strategy on the region’s fast-growing carbonates market.
The Group also increased its reserves in feldspar, an essential material alongside clays and
kaolins in ceramic manufacturing through two acquisitions. In the United States, the feldspar
deposit operated by The Feldspar Corporation is a good fit since the Group already mines nearby
in North Carolina. In India, Jumbo Mining has first-rate mineral reserves and two units in the
Southeast of the country. These operations enabled Imerys to consolidate its positions on the
North American ceramic applications market with major prospects for industrial synergy and
gave it a base to develop on this vibrant segment in Asia and the Middle East. In parallel, a
strategic feldspar deposit was acquired in Turkey to serve the European floor tiles market. This
enabled Imerys to secure its access to the mineral.
Finally, the Group acquired extensive perlite reserves and an efficient industrial platform in
Argentina with the consolidation of Perfiltra. These reserves enable it to support high market
growth in beer, wine and fruit juice filtration in South America.
Overall, the actions taken by the Group’s people have enabled it to increase its mineral reserves
and resources in strategic areas.
New, more energy-efficient
mining methods
In Cornwall (Great Britain), wet processes based on the high pressure water cannons
traditionally used to mine kaolin are being replaced by dry methods that make
substantial energy savings possible.
15
high-quality reserves
> Advanced geological
expertise
> In-depth knowledge
of the properties of every ore
in its different grades
and applications
> World-class mining methods
> Compliance with strict
safety and environmental
procedures
OPTIMIZING OUR MINERAL
PROCESSING
Imerys converts its minerals to obtain the properties required for its customers’ specific industrial applications.
This transformation calls on complex, often exclusive know-how and processes that are constantly optimized, giving the
Group a decisive market advantage.
Cutting-edge know-how, exclusive processes
Process
and product
innovation
in Brazil
Imerys’ refining and conversion processes are used to obtain, on an industrial scale, the particle
purity, size, shape and distribution that will best deliver the properties needed for a given
application.
Whether directly or through research partnerships with renowned institutes and universities, the
Group has developed a great many processes and so has exclusive technologies and equipment.
Imerys strives to protect its intellectual property in all areas and on every continent. As at the
end of 2007, Imerys owned 3,350 registered or pending trademarks, 984 granted or filed
patents, 179 industrial designs and 3 utility models.
Production capacity has been
increased by more than 50%
whilst the total energy consumption
increased by less than 15%,
resulting in a 10% improvement
Imerys also has cutting-edge expertise in the grinding, particle sizing, surface chemistry,
calcination, high-temperature melting and packaging of its products. Several Group activities
may share technological advances. Newly acquired companies quickly gain access to this
knowledge. Databases, exchange networks and specific seminars speed up the dissemination
of innovations and best practices in key sectors.
of energy efficiency.
The world’s largest kaolin for paper
plant achieved this through
two energy-saving innovations:
an exclusive mechanical drying
Enhanced competitiveness
Imerys constantly improves its industrial assets to adapt them to its markets and increase its
competitiveness. This involves both selective production capacity increases and substantial cost
improvement efforts.
process and a granulated product
form that sharply reduces energy
consumption as well as dust
emissions during handling.
The global kaolin for paper restructuring program between Cornwall (Great Britain) and Brazil,
announced in July 2006, was carried out according to schedule. UK coating kaolin production
was stopped at the end of 2007 and the ongoing transition to Brazilian kaolin continues. The
reorganization required an approximately €100 million capital expenditure program to develop
capacities at the Barcarena (Brazil) unit, modernize Cornish units and build a new logistics
platform in Antwerp (Belgium) to distribute Brazilian coating kaolins in Europe. The Group now
has the world’s most effective platform for both coating and filler kaolins for the paper industry.
5th calcium carbonate plant
in Asia-Pacific
With the start-up in late 2007 of the ground calcium carbonate (GCC) for paper mill
in Niigata (Japan) under a joint venture contract with Hokuetsu Paper Mills, the Japanese
leader in coated paper, Imerys has now built five carbonate plants in Asia-Pacific to support
its growth strategy for the zone.
16
STRENGTHS
The industrial efficiency improvement drive in World Minerals’ filtration activity is nearing
completion. An important capital expenditure program was implemented in 2007, mostly in the
Lompoc (California, United States) plant to modernize production with new-generation processes
and equipments. The program has led to a significant improvement in the activity’s productivity
and operating flexibility.
In the United States, against the backdrop of a heavy downturn in the construction market, the
Group began to scale down capacity in kaolin for performance minerals in order to reduce the
fixed cost base.
leadership
> Complex, high value-added
conversion processes
> Exclusive know-how
> Efficient logistics
Further progress on energy efficiency
The energy directly used in manufacturing processes represented approximately 11% of the
Group’s production costs in 2007. Imerys aims for a 5% sustainable improvement in its plants’
energy productivity per year(1). In 2007, the Group improved its energy efficiency by 3%.
For kaolin, energy consumption can vary fourfold depending on the drying process. Efficient
mechanical processes have been rolled out in Europe and Brazil to improve energy efficiency.
For synthetic graphite, which calls for temperatures of 3,000°, process improvements have led
to a 20% reduction in energy consumption in 20 years as part of an ongoing trend.
Roles are being developed for biogas, biomass, cogeneration and alternative energies. In 2007,
biogas feeds came on stream for clay calcinations and brick firing in France and for kaolin
conversion in South Carolina. Use of biomass to produce clay products and chamottes has also
continued to grow. Finally, a 20-30 MW wind power project is being examined in Cornwall.
(1) Measured
> Industrial and technological
as energy consumption per production unit.
17
> Constantly optimized
cost base
CONTRIBUTING TO OUR CUSTOMERS’
PERFORMANCE
As an essential partner in its customers’ performance, Imerys provides them with technical solutions that improve their
manufacturing processes, reduce their costs and enhance the quality of their products. The Group commits substantial
resources to research and is stepping up its in-house development projects.
High value-added solutions
A new Ceramic
Research Centre
in Limoges,
France
A ceramic innovation team has been
set up in Limoges to focus on new
applications, particularly in technical
ceramics.
This new laboratory works
in synergy with the European
Thanks to its unique portfolio of minerals, in-depth knowledge of their properties and its industrial
expertise, Imerys designs solutions that meet its customers’ expectations for their products and
processes. The Group’s ability to combine different mineral properties enables it to improve
several parameters at once.
Imerys works in partnership with its customers to help them make better products more cheaply.
Many new products developed in 2007 achieve those goals.
This is the case for the new graphite TSC30™, used in lithium-ion batteries to extend their
absolute and reversible capacity and make them easier to produce. In Performance Minerals,
Helia Cal™ 3000 and Lumicarb™ 395 pigments, used as additives in paint and plastics, deliver
equivalent brightness for lower energy consumption.
In Monolithics, a new refractory, Kermag dry 6001 and 8010, improves sanitary and working
conditions as it does not give off odors or steam. Rodarox™ Dry 8015, a monolithic refractory
that is efficient from 1,350°C to 1,700°C is designed for foundries with a diverse production
range.
ceramic competitiveness center,
two engineering schools and
two specialized university laboratories.
Parkaolin, a new kaolin for sanitaryware that is perfectly suited to emerging industries, and
Optibric PV, a rectified brick with superior insulation and faster laying for small collective housing
units, are more examples of new products that add value every day for many Imerys customers.
Joining forces to satisfy our customers better
For a high number of customers, Imerys develops technical solutions on a multi-mineral, multiexpertise basis. This approach stimulates the innovation capability of Imerys’ people: closer to
their customers, they identify new expectations that give rise to new ideas for solutions. Major
projects were realized in this area in 2007.
Optimat:
incredible
matting power
Stemming from research on minerals for filtration,
this paint matting agent also ensures even colors,
makes formulations more stable and reduces drying time.
All thanks to a combination of properties created by the right
particle size distribution.
18
In Building Materials, for example, Label Home is one of Imerys’ responses to the demand for
greater energy efficiency in new housing. This range of HQE(1) housing products developed by
Imerys Structure combines the Group’s clay roof tile and brick offerings and guarantees optimum
insulation for low-consumption housing. The addition of photovoltaic roof tiles further reduces
the house’s greenhouse gas impact.
In Minerals for Abrasives, new zircon abrasive grains, Zr 40 UM, are given a surface treatment
that makes it easier to spray them onto substrates, resulting in more efficient and longer-lasting
tools. The market outlook for AlodurTM Rod 96 and Rod 92 abrasives led the business group
to build a new production line in Italy. Used to make large grinding wheels, these products
increase the amount of metal removed for a given abrasive consumption, saving both energy
and abrasives.
STRENGTHS
In another field, refractories for large industrial furnaces, the Group’s products and services
provide a complete turnkey solution for relinings and upgrades. The range of refractories it has
developed has been enhanced with specific products for high and low temperatures that are
especially convenient for repairs.
Sustained innovation efforts
The Group puts extensive resources into research, investing approximately 1% of its 2007 sales.
270 scientists and technicians work in 7 main centers in Europe (Par Moor, Great Britain; Bodio,
Switzerland; Villach, Austria; Limoges and St-Quentin Fallavier, France) and the United States
(Sandersville, Georgia; Lompoc, California) and in 18 regional laboratories to develop relevant
solutions for every customer and set up cooperation programs with research institutes and
universities.
The Group’s activities are responsible for managing their own Research & Development. They
demonstrate great ability in designing specific innovations for their areas of business and
expertise. Considerable potential for further innovations exist at the crossroads between several
activities. Identifying those opportunities and turning them into new businesses for the Group
is the mission of the new Innovation Department created in early 2007. Around 20 research
projects have already been identified and are being gradually implemented in nanomaterials,
ceramics and functional additives for building materials.
(1) High
> In-depth knowledge
of markets and
end applications
> Ongoing technical dialog
with customers
> Competitive solutions
that meet customers’ needs
> Substantial resources
committed to research
environmental quality label.
New, more energy-efficient
kiln furniture
The Kiln Furniture activity has developed a light cordierite composition for making
H-shaped kiln furniture with approximately 15% less weight, enabling roof tile makers
to save energy. Tests are in progress to verify the new products’ mechanical and thermal
strength.
19
SEIZING OPPORTUNITIES
FOR PROFITABLE GROWTH
Imerys’ activities generate substantial, recurring cash flow that the Group invests back into its development by combining
internal and external growth. Imerys' ability to integrate its acquisitions and improve and develop their performance swiftly
is a key feature of its value creation model.
A firm capital expenditure policy
Every year Imerys invests to uphold the quality of its industrial assets and to develop through organic
growth. Capital expenditure was particularly significant in 2007, reflecting the Group’s confidence
in its strategy, with €367 million invested, i.e. 186%(1) of depreciation expense.
In addition to the capital expenditure needed to keep production facilities in perfect working order,
important capital expenditure was invested to implement major industrial performance improvement
programs in kaolins for paper and Minerals for Filtration. The plans will lead to substantial
improvements in these activities’ cost bases in 2008. In parallel, industrial optimization actions
continued in all the Group’s activities.
Capitalizing
on high growth
in India
The acquisition of ACE, the Indian
leader in monolithic refractories,
will enable Imerys to draw full benefit
from the high growth on this market
in India (10% per annum in the coming
Production capacities were expanded to support growth on the Group’s markets and develop new
products: bottleneck removals at facilities in Minerals for Refractories, where production units had
been stretched by high sales volumes; start-up of new ground calcium carbonate (GCC) for paper
production unit in Niigata (Japan); construction in progress of a production unit for a new generation
of corundums for abrasives in the Domodossola (Italy) plant; the production capacity extension in
the Saint-Germer (France) clay roof tile plant and the Gironde sur Dropt (France) rectified clay bricks
plant.
The capital expenditure in bricks is part of the plan announced in June 2007: €100 million will be
invested by 2011 to address French growth in clay bricks (5% per year) and consolidate Imerys’
leadership in this market segment. Following production capacity increases at two existing rectified
brick plants by 2008, two new plants will enhance the activity’s industrial network in northern and
southern France.
Finally, mining reserves were increased significantly in strategic areas such as carbonates and
feldspar.
years). The operation will also enable
the Group to serve its Monolithics
(1) Booked
capital expenditure over depreciation expense.
customers in the Middle East
and Asia more effectively.
Capital
expenditure and
acquisitions
05
Industrial Capex (2) 229
06
226 367
Acquisitions
440
Total, of which
669 259 600
(€ million)
(2) Booked
33 233(3)
capital expenditure.
including Astron China, of which acquisition was completed
on February 5, 2008.
(3) Not
20
07
Faster external growth
The Group pursued a very active acquisitions policy in 2007 with 11 operations(4) completed for
a total of €233 million (5).
With the acquisition of UCM (April 2007) and Astron China (early February 2008), Imerys became
the world #1 in fused zircon products, an excellent addition to its offering in refractories, ceramics
and investment casting. These activities represent combined sales of approximately €170 million
on a full-year basis, mainly in China. UCM is also active in magnesia oxides.
In parallel, the Group significantly increased its exposure to growth in emerging countries by
carrying out most (9 out of 11) of its acquisitions in such zones in 2007. After full integration of
acquisitions implemented since the beginning of 2007(6), emerging countries will represent 23%
of Imerys’ sales, compared with 17% in 2006.
In China, the acquisition of Astron China gave Imerys the critical mass it needed with four modern
and efficient new plants and a distribution network with good geographic coverage. The operation
is in addition to the acquisition of Yilong and Xinlong (65% Imerys-owned), companies specializing
in andalusite and vermiculite production – Baotou (85% Imerys), a producer of natural highperformance graphite – and ZAF (60%), the Group’s third joint venture in brown corundums for
abrasives in China. Imerys also expanded its Chinese reserves of marble for calcium carbonates.
In India, the Group gained a firm foothold through the acquisitions of ACE, the Indian leader in
silico-aluminous monolithic refractories with two plants and five sales agencies in the
country’s major cities, and Jumbo Mining, an Indian feldspar producer. Imerys already
had an industrial base in pigments for paper in India.
The acquisitions of Perfiltra, the Argentinean leader in perlite for filtration, and the
takeover of Vatutinsky (stake raised from 26% to 86%), a Ukrainian company
specializing in the production of chamottes (calcined clays) for refractory markets,
positioned the Group on other high-growth markets.
In parallel, Imerys divested its clay roof tiles and bricks activities in Spain and
Portugal and a company that trades in ceramic products for craftsmen in France,
for a total amount of €41 million. These activities achieved sales of €38 million
in 2006.
(4) Not
including Astron China, which acquisition was finalized on February 5, 2008.
of divestitures.
(6) Pro forma 2007 basis including Astron China.
(5) Net
Stronger industrial base in chamottes
Imerys acquired a controlling stake in Vatutinsky, a Ukrainian company specializing
in the production of low and medium alumina chamottes (calcined clays) that mainly
serves Eastern European markets. The operation strengthens the Group’s production
base in chamottes, which also include facilities in the United States (C-E Minerals)
and France (AGS).
21
STRENGTHS
> Substantial recurring
cash flow to fund
development
> Organic growth sustained
by investment capacity
> Stronger positions
in emerging countries
> Proven ability to integrate
and develop acquisitions
MOBILIZING POTENTIAL
Developing employees’ entrepreneurship, skills and commitment, sharing knowledge and expertise, deploying the
resources needed to keep up strong international development: by strengthening its teams and helping them to express
their potential, Imerys strengthens its growth prospects.
Encouraging mobility, recruiting talent,
training our teams
From annual performance appraisals and individual career development to compensation &
benefits reviews, straightforward and efficient career management tools are used Group-wide.
Every year, succession plans are draw up with substantial input from our top managers. Internal
mobility is a global reality. In 2007, 613 vacancies in the Group were filled in-house.
Imerys strives to recruit, train and promote high-quality teams to support its growth. Towards
the end of 2007, a three-year campaign was designed to recruit 300 young graduates from all
backgrounds. Mobile, English-speaking candidates will be selected according to the values and
principles that define the attitudes and skills required to join Imerys and develop in the Group.
To develop managers in an international, decentralized context, the Imerys Training Center
enables experienced employees to gain new skills. After the “Geology Essentials” and “Finance
for Non-Specialists” modules created in 2006 and rolled out in the United States in 2007, a
new “Project Management” module has been launched. Marketing training for a broad management
population will also be carried out in 2008.
Welcome
to Imerys
In 2007, the Group organized three
induction days for its new managers
in Europe. A session also took place
in the United States for the first time.
In China, a special session brought
The Group’s goal is to enhance basic knowledge in selected areas while encouraging personnel
to learn common processes and to network.
Strengthening essential benefits
Imerys strives to develop competitive, consistent compensation & benefits programs. For example,
top managers’ annual bonuses are structured in the same way across all the Group’s activities.
A minimum benefits policy defined in 2007 for Latin America and China is being phased in from
January 2008. At the same time, a global assistance/insurance contract was set up to cover all
Group employees traveling for work.
together old and new managers
for a general presentation of Imerys.
Employees
in 2007
39%
Emerging
countries
44%
17,552
people
1%
Japan /
Australia
16%
North America(1)
22
(1) United
States & Canada.
Western
Europe
of which France 20 %
and
the Great Britain 9 %
Dialog and support for restructuring plans
In all locations, Imerys has regular dialog with personnel representation bodies and 50% of
the Group’s employees are covered by a collective agreement. The European Works Council,
which represents 7,922 employees in 17 countries (45% of all personnel), carefully organizes
its annual plenary meeting, chaired by the Chief Executive Officer. The 2007 session was held
in Germany.
Whenever restructuring is necessary, the Group strives to provide all possible internal and external
placement solutions, backed up by training and personalized support. This was the case in 2007
for employees on the Devon and Cornwall (Great Britain), Arcos (Brazil) and Lamotte-Beuvron
(France) sites.
Almost all the Group’s French subsidiaries have profit-sharing agreements and many subsidiaries
in other countries have set up equivalent schemes. As at the end of 2007, 20.8% of Imerys’
employees held shares in the Group through the successive employee shareholder plans
implemented since 2001.
STRENGTHS
> Decentralized management
fostering entrepreneurship
and excellence
> Common policies
in essential areas
Bolstering HR teams
Because the successful rollout of the Group’s human resources programs depends on highquality line managers, Imerys bolstered its HR teams in 2007, recruiting experienced managers
in China, the United States and Europe. The Group also brought in international mobility and
career development specialists to speed up implementation of the relevant programs.
> High internal mobility
> Group training on
crossfunctional subjects
> Demanding ethics
Community integration
> Solidarity with local
Imerys aims to work in harmony with the communities in which it is based and help to improve
living conditions. In 2007, the Group formalized its principles in terms of commitments to local
communities and trained site managers. Audiovisual training designed for managers in direct
contact with neighboring populations was launched towards the end of the year. It describes
and illustrates the Group’s commitment through tangible examples and completed projects. This
module also enables line managers to analyze local needs in order to address them more
effectively.
communities
The actions undertaken on illiteracy continue. Enabling its employees to grasp basic knowledge –
reading, writing and arithmetic – is a duty for the Group. Pragmatic training standards and
processes, based on successful experiences in Great Britain and Brazil, for example, will be
implemented in 2008.
The Imerys code
of business conduct and ethics
This document summarizes the main ethical behavior the Group expects of its employees, subcontractors, suppliers and other partners: everyone complies
with local legislation and abides by the principles of responsibility, integrity, fairness and openness that are the Group’s values. The code was translated
into 10 languages in 2007. It is circulated on the Group’s intranet and is now published on the website www.imerys.com.
23
THE CHOICE OF RESPONSIBLE,
SUSTAINABLE MANAGEMENT
Imerys views Sustainable Development as a crucial success and improvement factor for the long term. The Group takes
every step to ensure that its commitments are met and to improve the safety of everyone on its sites, its activities’
environmental footprint and relations with third parties, especially local communities.
Strong, group-wide commitment
Imerys’ Sustainable Development strategy is defined by a Steering Committee that includes
three Executive Committee members and meets quarterly. The Committee is assisted by a
Sustainable Development Workgroup comprised of Environment, Health & Safety (EHS) and
Human Resources professionals from all the Group’s activities. Efforts are coordinated by the
Vice-President EHS. Every operating division factors the Group’s Sustainable Development
principles into its action plans, guaranteeing that Imerys’ values and ethics are put into practice
wherever it is active.
The Group’s Sustainable Development action plans and performance are examined regularly by
the Group’s Audit and Strategy committees. The last assessment was conducted in December
2007.
The reporting scope now includes all Imerys’ subsidiaries, with indicators that are relevant to
the nature of its activities. New indicators were set up in 2007 for water and waste management.
The Imerys
Safety University
in Shanghai
Since 2005, the Group has had an EHS charter, together with detailed implementation procedures.
The charter was reviewed in 2007 and is based on integrated management systems that foster
continuous improvement processes. An EHS audit program regularly assesses units’ compliance
with regulations and the 25 protocols drawn up the Group. The program is carried out by a team
of 15 in-house experts who conducted 35 audits in 2007.
Safety: a prevention team on every site
The Group employs 3,100 people
on 44 sites in the Asia-Pacific region.
Imerys treats its employees’ safety and health as a top priority. The target of a lost-time accident
rate below 6(1) was reached in 2007, meaning that the Group has halved this rate since 2005.
By holding one of the 10 sessions
in 2007 of its Safety University,
(1) Number
of accidents causing lost time per million hours worked.
a program for line managers,
in Shanghai, Imerys asserted
its commitment to protecting
and improving safety in every country
where the Group operates,
particularly with recently acquired
companies.
Lost-time accidents
05
06
07
11.79
7.96
5.76
48
65
84
Per million hours worked
ISO 14001 certification
Number of sites certified
24
The Imerys Safety University is the cornerstone of that improvement. Since it was founded in
2005, the University has trained more than 400 people who in turn cascade skills down through
the Group’s entities. Safety awareness seminars are organized in newly consolidated companies
within a few months of their acquisition. In addition to these resources, in early 2007 Imerys
made extensive prevention efforts in the six areas that cause most serious accidents: work at
heights, isolating facilities, electrical installations, mobile equipment, ensuring stable ground
and protecting machines. In each of these areas, precise safety rules are deployed Group-wide
with the support of specialized training.
In 2007, every site also set up a Safety Prevention team comprised of managers, workers and
subcontractors. The team meets the site’s management every month. Training support tools are
available on the EHS intranet and a dedicated Safety Culture Improvement Team takes action
on sites as needed. Every division draws up a prevention action plan that it monitors monthly
and reports on quarterly to the Chief Executive Officer.
STRENGTHS
> An integrated Sustainable
Development process
> Quantified, measured and
published improvement
Environment: rolling out the imerys process
Beyond compliance with local environmental regulations, Imerys develops common minimum
standards for all its activities on air emissions, water quality, waste management, sound pollution
and post-mining site restoration. From the outset of any mine opening project, plans are made
for the site’s eventual restoration, which significantly influences mining methods. In 2007, several
sites in Brazil and France underwent model restorations, especially in terms of biodiversity.
To step up its improvement, in November 2007 the Group began an Environmental Action Plan
that draws on the experience and organization used for Safety. From January 2008, environmental
incidents will be reported in detail and environmental training is being set up on a regional basis.
Four sessions are scheduled for 2008. Special efforts will also be made on the rollout of the
five environmental protocols that the Group has made its priorities: air emissions; hazardous
substance storage; waste water and rain water; mining restoration; and solid mineral storage.
In parallel, Imerys strives to make its mining and conversion processes increasingly efficient in
terms of natural resource and energy consumption. The Group also offers its customers solutions
for their processes or products that in turn help to protect the environment.
3rd Imerys Sustainable Development Challenge
The competition rewards teams who show in the field that Imerys acts as a responsible industrial
citizen that cares about its environment. Since the initiative was launched in 2005, 87 projects have
taken part, 22 of which have won awards in the categories Environment, Innovation, Human
Resources and Community Relations.
25
targets
> A stringent EHS audit
program
26
Growth
Sales doubled in 10 years.
16 straight years of growth in net income
from current operations.
Robustness
Diverse, global markets.
A sound financial structure.
Profitability
Operating margin over 14%.
Dividend up 77% in 5 years.
Potential
Profitable markets with many projects
and the human and financial means
to carry them out.
27
IMERYS ON THE STOCK MARKET
Imerys share price trends
(in euros from 12.31.2006 to 29.02.08)
85
80
75
70
65
60
55
50
Imerys price
SBF 120 (Imerys share price on 29/12/06)
45
40
J 2007
F
M
A
M
J
J
A
S
O
N
D
J 2008
F 2008
Monthly trading volumes
(thousands)
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
J 2007
F
M
A
M
J
J
A
S
O
N
D
In 2007, Imerys stock went through contrasting trends. After reaching a record high of €78.30 on June 1, 2007, the share fell
sharply in the wake of companies in the building materials sector. At the closing rate for the year, €56.24, Imerys was valued at
11.3 times its forecast for 2007.
Daily trading volumes rose significantly in 2007 averaging 172,963 shares compared with 128,799 in 2006.
J 2008
F 2008
Shareholder information
Data per share
Net income from current operations
per share, Group share
Net dividend per share
Weighted average number
of shares outstanding
Shares outstanding
High
Low
Closing price
Market capitalization as on December 31
(1) Proposed
2007
2006
2005
€5.00
€1.90(1)
€4.86
€1.80
€4.53
€1.65
63,475,098
63,334,620
63,426,126
63,971,865
63,330,652
63,126,856
€78.30
€72.55
€65.00
€52.65
€53.90
€54.15
€56.24
€67.40
€61.10
€3,550 million €4,269 million €3,908 million
to the General Meeting on April 30, 2008. The dividend will be paid on May 13, 2008.
Share capital and voting rights
As on December 31, 2007, Imerys’ capital totaled €126,253,712, divided into 63,126,856
shares with par value €2, to which were attached a total of 97,048,499 voting rights, taking
into account the double voting rights intended to reward shareholder loyalty.
Imerys keeps its shareholders informed about its activities,
strategy and results. The Group publishes a Letter to
Shareholders four times a year, a semi-annual report,
an annual business report in brochure form and a
comprehensive annual report registered with stock market
authorities. The latest edition of the Sustainable Development
report, published every two years, provides further
information in non-financial areas and will be available in
June 2008. Finally, the website www.imerys.com, which
was overhauled in terms of both graphics and userfriendliness in May 2007, gives access at all times to the
latest information on the Group and to all Imerys’ regulated
financial information over the past five years.
For any information on the Group, the Imerys Shareholders
service can be contacted as follows:
Imerys
Financial Communications
154 rue de l'Université - 75007 Paris - France
Tel.: + 33 (0) 1 49 55 66 55
Fax: + 33 (0) 1 49 55 63 98
e-mail: [email protected]
Registrar service
The registrar service for Imerys shares is handled by:
Number
of shares
% of
capital
% of voting
rights
Pargesa Netherlands BV
Belgian Securities BV (GBL group)
17,246,462
16,898,778
27.32%
26.77%
35.38%
34.67%
Sub-total
Other shareholders (2)
34,145,240
28,981,616
54.09%
45.91%
70.05%
29.95%
As on December 31, 2007
(2) Including
CACEIS Corporate Trust
14 rue Rouget de Lisle
92862 Issy Les Moulineaux Cedex 9 - France
• Tel.: + 33 (0) 1 57 78 34 44
• Fax: + 33 (0) 1 49 08 05 80
• e-mail: [email protected]
Registering shares in the shareholders' own name eliminates
custody fees. It also entitles shareholders to double voting
rights after two years and lets them receive General
Shareholders’ Meeting notices and other relevant information
from the Group.
5,110,441 shares held by the Prudential Plc group.
The Imerys share
Listing market
Euronext Paris - Eligible for deferred settlement (SRD)
Par value: € 2
Capitalization as on 12.31.2007: €3.55 billion
Codes
ISIN: FR000012085
Reuters: IMTP.PA
Bloomberg: NK.FP
Indexes
• SBF 120
• DJ Eurostoxx 600
SRI indexes
• FTSE4Good
• ASPI Eurozone® index
• Forum Ethibel
29
Imerys provides registered shareholders with an online
service allowing them to consult their securities account
via www.ct.olisnet.com (login oils@actionnaire).
This secure website gives shareholders access to:
• The value of their securities account;
• Their latest stock movements;
• Their online exercise;
• The status of their rights and
• All documentation on General Shareholders’ Meetings.
To register in their own name, shareholders should contact
their financial intermediary, who will contact CACEIS
Corporate Trust. If necessary, CACEIS Corporate Trust will
send shareholders any documents needed for registration.
RESULTS BY BUSINESS GROUP
Market conditions
Performance
Minerals
& Pigments
Performance Minerals markets (paint, plastics, adhesives, etc.) were healthy in Europe. Business, however,
remained difficult throughout the year in North America, with a further downturn in the construction
segment in the 2nd half of 2007. In Pigments for Paper, global production of printing and writing paper
rose by an estimated + 1.4% in 2007, driven by high growth in Asia-Pacific (+ 6.1%). Restructuring
continues on European and North American markets (paper mill shutdowns), leading to a higher utilization
rate for remaining capacity.
Performance
Sales decreased - 3.1% from 2006, entirely because of the negative impact of exchange rates (- 4.3%).
At comparable structure and exchange rates, sales rose + 0.8% over the year (+ 0.9% in the 1st half;
+ 0.7% in the 2nd), with a slight improvement in product offering and volumes. The improvement in
paper fully offset the downturn in performance minerals.
At €105 million, current operating income increased + 1.3% (+ 14.3% at comparable structure and
exchange rates) and the operating margin improved slightly (9.5% vs. 9.1% in 2006).
Materials
& Monolithics
Market conditions
In Building Materials, the roofing segment was stable over the year, while in structure bricks clay products
continue to win market share from concrete blocks with + 2.7% growth.
The Monolithic Refractories market benefited from brisk business with a dynamic steel sector in Europe
and rapid growth on Asian markets.
Performance
Sales rose +9.7%. At comparable structure and exchange rates, sales grew + 9.1% over the year (+10.6%
in the 1st half; + 7.5% in the 2nd). This growth reflects the combined effect of higher sales volumes,
particularly in monolithic refractories, and an improved product offering in all the business group’s
activities.
At €235 million, current operating income increased + 9.8% (+ 9.0% at comparable structure and
exchange rates) and operating margin was stable at 22.9%.
Ceramics,
Refractories,
Abrasives
& Filtration
Market conditions
Minerals for Ceramic markets grew slightly in Europe but continued their heavy slump in the United
States because of the construction crisis. Minerals for Refractories markets improved significantly, thanks
to a vibrant steel industry. Fused Minerals markets, driven by the industrial equipment sector, were active
in both Europe and North America. In Minerals for Filtration, markets benefited from demand growth in
emerging economies.
Performance
The + 4.7% rise in sales takes into account a net structure effect of + 5.0%, with 9 transactions completed
since the beginning of the year, and heavy negative impact of exchange rates (- 3.8%).
At comparable structure and exchange rates, sales increased +3.5% over the period (+ 3.0% in the
1st half; + 4.0% in the 2nd), thanks to a better product offering and higher volumes.
At €173 million, current operating income rose + 1.1% (+ 2.6% at comparable structure and exchange
rates). Operating margin worked out at 13.3%, compared with 13.8% in 2006, reflecting the integration
of newly acquired companies whose profitability is not yet as high as the business group’s other activities.
30
‘07 sales: - 3.1%
33 %
€1,103 million
Performance
Minerals
‘07 sales
by activity
Current operating income: + 1.3%
€105 million
67%
Pigments
for Paper
32 %
of consolidated sales
‘07 sales: + 9.7%
€1,026 million
48%
‘07 sales
by activity
Refractory
solutions
52%
Building
Materials
Current operating income: + 9.8%
€235 million
30 %
of consolidated sales
5%
‘07 sales: + 4.7%
19%
Graphite
& Carbon
Minerals
for Filtration
€1,297 million
29%
Minerals
for Ceramics
‘07 sales
by activity
Current operating income: + 1.1%
25%
€173 million
Fused
Minerals
38 %
31
of consolidated sales
22%
Minerals
for Refractories
SIMPLIFIED FINANCIAL
STATEMENTS
Consolidated financial statement
(€ millions)
2007
2006
2005
Sales
EBITDA (1)
3,401.9
646.7
3,288.1
643.4
3,045.2
596.9
Current operating income(2)
Financial income (expense)
Current taxes
Equity method
Minority interests
478.3
(55.7)
(110.1)
6.9
(2.7)
458.8
(46.7)
(106.4)
5.2
(2.6)
434.0
(47.3)
(101.0)
4.6
(2.7)
Net income from current operations, Group share(3)
Other income and expense, net
316.7
(32.5)
308.3
(120.9)
287.6
21.8
Net income, Group share
284.2
187.4
309.4
2007
2006
2005
Assets
Fixed assets(4)
Inventories and receivables
Other assets
Cash
2,590.5
1,305.5
123.1
183.2
2,428.7
1,237.9
108.9
225.5
2,624.9
1,179.1
98.6
256.6
Total
4,202.3
4,001.0
4,159.2
Liabilities
Shareholders’ equity (including minority interests)
Provisions
Gross financial debt (5)
Other liabilities
1,663.6
343.0
1,526.2
669.5
1,646.4
417.9
1,311.6
625.2
1,686.2
410.9
1,396.6
665.5
Total
4,202.3
4,001.0
4,159.2
399.6
1,343.0
437.8
1,086.1
497.2
1,140.0
(1) Earnings
before interest, tax, depreciation and amortization.
income before other operating revenue and expenses.
(3) Net income before other operating revenue and expenses, net.
(2) Operating
Consolidated balance sheet
(€ millions)
(4) Of
which net mining reserves:
net financial debt:
(5) i.e.
32
Cash flow statement
(€ millions)
2007
2006
2005
EBITDA
Tax on current operating income
and other depreciation
646.7
643.4
596.9
(124.1)
(121.3)
(117.1)
522.6
522.1
479.8
Change in operating working capital (6)
Paid capital expenditure
(4.9)
(352.6)
(66.8)
(217.0)
(18.1)
(251.0)
Current free operating cash flow (7)
174.1
245.8
219.4
Financial income (expense)
Tax on financial income
Change in other working capital items,
deferred tax, other
(55.7)
14.5
(46.7)
12.1
(47.3)
12.4
(15.6)
(12.2)
10.6
Current free cash flow
117.4
199.0
195.1
External growth
Divestitures
Exceptional cash flow
Dividends
Share buybacks
Exchange rates / other flows
(232.8)
40.7
(41.2)
(116.0)
(39.9)
14.9
(33.0)
19.2
(31.2)
(106.2)
(21.6)
27.6
(439.6)
183.8
(30.4)
(96.3)
(22.6)
(40.2)
Change in net debt
(256.9)
53.8
(250.2)
9.0
7.5
8.7
Current operating cash flow
(6) Working
capital
divestments and subsidies
(7) Including
33
GLOSSARY
Abrasives: substances used for wearing or polishing.
ISO 14001: a standard defined by an international organization with the
aim of helping businesses to manage the environmental aspects of their
Alumina: aluminum oxide (Al2O3).
Andalusite: a natural alumino-silicate mineral, transforming into mullite,
an essential component in acid refractories, when fired. Contains around
60% alumina.
Biogas: gas resulting from the fermentation of animal or plant matter in
the absence of oxygen. Also called methanization, this process occurs
naturally in marshes or spontaneously in landfills containing organic waste.
Biomass: organic, non-fossil matter of biological origin forming a usable
source of energy.
activities, products and services effectively.
Kaolin: also known as china clay, kaolin is a natural white platy mineral
derived from the geological alteration of granite or similar rock. Kaolins
go through complex processing. When ground, they give a range of
products with controlled particle size and platiness.
Kiln furniture: shaped parts made from refractory materials (cordierite,
mullite or silicon carbide) that must provide good resistance to mechanical
and heat shock and be as light as possible to save energy during firing.
Monolithic refractories: made of natural or synthetic mineral raw
Cogeneration: simultaneous production of electricity and heat to improve
materials, including chamottes (calcined clays), andalusite, mullite, bauxite,
total energy yield.
tabular or fused alumina, spinel (alumino-silicate monolithics), magnesite,
dolomite and chromite (“basic” monolithics), to which are added binders,
Corundum (Fused aluminum oxide, fused bauxite): obtained by
melting alumina (white corundum) or bauxite (brown corundum) in an
e.g. refractory cement, clay and additives. Monolithic refractories are fitted
by casting, plugging or projection.
electric arc furnace. During fusion, the physical properties of aluminum
oxide are modified (higher density, different crystal size and structure).
Perlite: a volcanic rock containing 2-5% water which, when heated
quickly, turns to steam, dilating its rock matrix to up to 20 times its initial
Diatomite: a silica-based mineral formed from the fossilized remains of
microscopic aquatic plants. Diatomite is used as a filtration agent to make
beer, fruit juices, some food products and wine and to manufacture
volume. The result is a lightweight material with a high contact surface.
Perlite is used to filter beverages. It also has significant outlets in
construction (ceiling slabs) and horticulture (off-ground cultivation).
pharmaceuticals and chemicals. It is also used as a mineral filler, mainly
in paints, and as an anti-adhesive for plastic films.
Precipitated calcium carbonate (PCC): PCC is produced artificially
from natural limestone. This is burnt to form lime and then re-precipitated
EMAS - Eco-Management and Audit Scheme: an international
standard with the aim of promoting improvement in environmental
with carbon dioxide. The process can be controlled to give different particle
sizes and shapes.
performance (assessment, communication on results, training).
Refractories: materials that resist high temperatures. Depending on the
Feldspar: natural mineral used for the vitrification of ceramic bodies in
application, they can also bear heavy weights or resist corrosion.
porcelain and earthenware manufacturing.
Zircon: zircon is sold in different forms such as zircon sand or flour. Fused
Fillers and coatings: Fillers are added to paper web to fill up the empty
spaces. White pigments improve the paper’s appearance and printability.
Coating involves applying a thin film containing a mixture of kaolin, GCC,
PCC and selected chemical additives and binders to paper to make it
glossier, brighter and more opaque.
Ground calcium carbonate (GCC): GCC is obtained by grinding and
zircon is obtained by melting zircon sand in an electric arc furnace and
takes the form of precisely calibrated grains and powders with sizes
ranging from several millimeters down to less than a micron. Its unique
properties mean it is used as a high value-added raw material in a wide
range of applications, particularly on the refractories, friction and technical
ceramics markets.
grading marble to obtain particles with a precise size and shape. The
mineral is originally derived from sediments of shellfish and marine fauna,
exposed to various degrees of heat and pressure over time.
High-performance graphite: natural or synthetic crystallized carbon
used for applications including electrical batteries, friction products (e.g.
brake pads) and technical lubricants.
34
Financial Communication
Schedule 2008
1
• February 13
• April 30
Annual results 2007
Annual General Meeting
1st quarter 2008 results
• May 13
• July 31
• November 4
Payment of dividend
1st half 2008 results
3rd quarter results 2008
Contacts
2
Imerys
Financial Communications
• telephone + 33 (0) 1 49 55 66 55
• fax + 33 (0) 1 49 55 63 98
• e-mail: [email protected]
• post:
Imerys
Financial Communications
154-156 rue de l'Université
75007 Paris - France
3
4
French corporation (Société anonyme) with Board of Directors
and capital of 126,253,712 euros
Trade register: RCS Paris B 562 008 151
5
Minerals pictured
1 Andalusite
2 Vermiculite
3 Monolithic refractory
Design and production
Art Design
Fabrication
Photo credits
Michel Bost, Stan Celestian/Glendale Community
College Web, Christian Chamourat, Eddy Cervo,
Tom Growth, Dominique Lecuivre, Nicolas Richez,
Gilles Rolle/REA, Howard Spiers, DR.
4 “Thiviers” sandstone
5 Corundum
This report is printed on paper containing Imerys pigments.
154-156 rue de l'Université - F - 75007 Paris - France
Tel.: + 33 (0) 1 49 55 63 00 - Fax: + 33 (0) 1 49 55 63 01 - www.imerys.com