Form 20-F 2005

29.3. Restructuring
Provisions for restructuring cover the following costs:
(in millions of euros) At December 31, 2005 At December 31, 2004
Employee expenses 84 102
Site closure costs 25 33
Total 109 135
Employee expenses include costs resulting from miscellaneous departure measures, including early retirement plans.
The plans set up include voluntary, i.e. proposed by the employer and accepted by the employee, or involuntary, i.e. at the employer’s sole
discretion, departure measures. The provisions relating to involuntary measures are recognized as soon as they are officially announced
by executive management to the employee representative bodies of the employees concerned by the detailed implementation plan.
The provisions relating to voluntary measures, which form part of restructuring plans, are recognized in the financial statements when
these measures are announced to the employees’ representatives.
Evolution in 2005
New measures represented €55 million and mainly corresponded to the following transactions:
In France
At the Polyamide unit for €6 million and corresponding to the closure of a textile production site in Arras.
At the Coatis unit, which launched in the last quarter of 2005 the “Horizon” project in order to reorganize its industrial platform in
Pont-de-Claix (Isère). This plan includes employee measures which provide for the departure of around 360 employees between now
and 2008 as part of the “asbestos” classification of the platform for approximately €8 million.
At the Silcea unit, on the Saint-Fons site (Rhône), following productivity measures in an amount of around €4 million,
which includes the loss of 75 jobs.
Foreign operations
At the Novecare unit, on the Oldbury site (UK), the main production site for European Phosphorus and Performance Derivatives,
and which notably includes the closure of unprofitable production sites and productivity measures for site support functions, leading to
the loss of around 35 jobs for a total cost of €5 million. In addition, the amalgamation of the former HPCII and PPD companies worldwide
in the Novecare unit lead to productivity measures within the marketing, commercial and industrial teams for around €4 million.
At the Pharma Solutions unit, productivity measures in UK production units as well as the closure of the U.S. research site resulted
in the payment of contractual termination penalties and dismantling costs for a total charge of €9 million. These measures concern
activities which are presented under discontinued operations in the income statement.
In addition, in 2005, changes in estimates with respect to previous plans resulted in an additional charge of €33 million.
The continuation of the Group’s reorganization plan, in particular in France, led to an additional charge of €16 million. Restructuring
cost re-estimates concerning the main production sites of the Organics unit in France led to an additional charge of €7 million.
Utilizations of provisions relating to employee expenses represent €(88) million and break down as follows:
€(70) million in France corresponding to support function plans (including research and development) initiated at the
end of 2003 for €(34) million and industrial restructuring plans including the closure of the textile production unit in Arras and
the streamlining costs of the Organics, Coatis, and Polyamide units mainly in France;
€(10) million in the UK corresponding mainly to streamlining costs at the Avonmouth and Oldbury sites as well as the industrial
restructuring plan at the sites of the Pharma Solutions unit launched in 2005.
Form 20 - F 2005 - Rhodia
F-61