Annual report - Viscofan

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VISCOFAN ANNUAL REPORT 2006ConsolidationViscofan views reinforcement as achieving anentrenched position in the market, a more clearlyvisible leadership, and a greater contribution to thefood industry. On this view, the Company hasimproved its competitive position for over thirtyyears, until becoming the world leader in themanufactured casings market, with over 2,600customers.In 2006, Viscofan’s acquisition of Teepak changed thecompetitive environment in the artificial casingsindustry and gave the Group greater scale and thechance to attain major production and managementsynergies to provide enhanced profitability.Obtaining synergies is a key aspect of theconsolidation process that does not end with theacquisition deal, but involves full integration withinthe Group's production structure.Revenues were €497 million,32.7% up on 2005.The acquisition of Teepak, together with the takeoversof Koteks in Serbia and Tripasin in Sweden in 2005,signals Viscofan’s anticipation in the opportunities forconsolidation in the artificial casings market in orderto create higher value for shareholders.GlobalisationViscofan’s newly expanded size gives it a greaterpresence in strategic markets and an improved balanceof currencies in revenues and production costs.A wider global presence requires suitable coordinationamong Group subsidiaries to enable the Company toalign with its global strategic goals by making use ofthe advantages of a more local presence that comescloser to end-customers.Proximity to customers has become one of themainstays of Viscofan's strategy. The Group is in themidst of a process of relocation of its casingsmanufacturing and marketing capabilities in order todeliver faster, improved service and achieve better costsavings over the coming years in terms of logistics.In the cellulose casings segment, Europe will cater tothe European and Asian markets, the United Stateswill cater to the North America region, Mexico willattend to its domestic market and the rest of CentralAmerican countries, and Brazil will be the keyproducer and distributor in the South Americanmarket. After this relocation, the Company expectsto attain recurring annual savings of €2.5 million.As part of this restructuring drive, Viscofan isimplementing stringent quality standards to ensureproduct uniformity regardless of site of manufacture,thus enabling full interchangeability of productsmade at different Group facilities.ServiceViscofan places the customer at the core of itsoperating decisions. Therefore, the Companyprioritises quality in its manufactured casings toprovide our customers with higher productivity. Weoffer specialised technical support through ournetwork of specifically dedicated professionals.The artificial casings market – the cellulose segmentin particular – has become fiercely competitive in thepast few years. Prices have been hard-hit, decliningalmost 40% over the past decade, and allcompetitors' profitability has been hurt. Given risingraw material and energy costs, the situation isunsustainable over the long term.Viscofan is bringing about a change of trend in themarket by applying a more disciplined pricing policy14
consistent with the value our products provide. Theaim is to recover more rational prices on the marketand provide the meat industry with dependablesuppliers of manufactured casings who continue toadd value to the food sector through investmentsthat generate enhanced services and new productsredounding to the benefit of meat producers andconsumers in general.EfficiencyThe ongoing development of the market in artificialcasings for meat products, coupled with rising directproduction costs, makes it increasingly necessary toseek new, improved manufacturing practices thatmake better use of resources and lead to enhancedoperating profitability.The Viscofan Group has therefore established itselfin new regions offering more competitive costs.Suitable production management has brought aboutthe present balance of capacity and market demand.On the marketing side, the Company is structured bygeographical region. This speeds up information flowand decision-making, which garners closer control ofsales and improved service.Viscofan takes the view that operating efficiency isoptimised if best practices are shared across theGroup’s different companies and departments; thisalso improves the information available atsubsidiaries and the reporting of information fordecision-making purposes.Research, developmentand innovationViscofan’s leading position in the highly competitiveworld market must be sustained by cutting-edgeefforts in research, development and innovation sothat the Company can continue to lead the artificialcasings industry.The Company has therefore boosted its research,development and innovation capability as one ofthe strategic vectors of value creation whichenables Viscofan to build a distinctive profile in amarket that combines a high competitiveness witha very sophisticated technology.15
Page 1: Annual Report 2006
Page 4 and 5: VISCOFAN ANNUAL REPORT 2006Letter f
Page 7 and 8: In 2006, our initiatives, results a
Page 9 and 10: Milestones of Company history1975 1
Page 11 and 12: Financial highlightsViscofan’s pe
Page 13 and 14: Board of DirectorsChairmanDirectors
Page 15: Corporate strategyThe market in art
Page 19 and 20: 497.220052006374.783.657.446.626.7
Page 21 and 22: CasingsThe casings market showed a
Page 23 and 24: Performance bygeographical regionRe
Page 25 and 26: Preserved vegetables (IAN Group)In
Page 27 and 28: Today, Viscofan has twenty strategi
Page 29 and 30: Workforce evolution4.2132.9863.4442
Page 31 and 32: programme of control and monitoring
Page 33 and 34: applied throughout the production p
Page 35 and 36: Registro Mercantil de Navarra (Regi
Page 37 and 38: Directors' payThe articles of assoc
Page 39 and 40: Share price performance in 20061701
Page 41: CellulosePlastic casingsCellulose c
Page 44 and 45: VISCOFAN 2006 ANNUAL REPORTAnnual c
Page 50: VISCOFAN 2006 ANNUAL REPORTAnnual c
Page 53 and 54: B.1.10. Disclose, in aggregate term
Page 55 and 56: B.1.16. Indicate whether the role o
Page 57 and 58: If applicable, name the person(s) c
Page 59 and 60: B.1.31. Disclose any holdings of co
Page 61 and 62: The Audit Committee was created und
Page 63 and 64: company and company directors or ex
Page 65 and 66: With regard to market risk and risk
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Article 22(c) of the Rules and Regu
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1.- There were approved the balance
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E. 11. Indicate if the company is a
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Viscofan’s business andfinancial
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Consolidated income statements for
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Consolidated statements of changes
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3.2. Comparison of informationThe c
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Potential tax benefits from tax los
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Replacements of property, plant and
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4.7. Leases(a) Finance leases:The G
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Derivative financial instruments ar
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Recoverable amounts are calculated
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the accrued expense, an asset is re
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Current and deferred tax is recogni
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At 31 December 2006 the Group compr
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Amounts recognised at the date of a
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8. Other Intangible AssetsDetails o
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Details of non-current deferred tax
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Spain have open to inspection by th
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(b) Merger reservesThese reserves d
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At 31 December 2006 and 2005 detail
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The Group also contracts exchange r
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Pension liabilities comprise define
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19. Trade payables, Other Payables
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Canadian Pound Czech PolishUS Dolla
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The table below shows interest accr
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The average headcount of the Group
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Details of remuneration by director
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30. Subsequent EventsOn 30 January
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The Viscofan Group ends 2006 with f
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Operations with the board of direct
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ActivityRegistered officesManufactu
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Geographical segments Europe North
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Changes inTranslationconsolidated31
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IncorporacionesTranslationconsolida
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Retained earningsLegal Special Volu
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Viscofan’s business andfinancial
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Shareholders’ Equity and Liabilit
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Income 2006 2005Operating incomeNet
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4. Significant Accounting Principle
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(h) Compensation for termination of
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5. Intangible AssetsDetails and mov
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At 31 December 2006 plant and machi
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9. DebtorsDetails at 31 December 20
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During 1999 this revaluation was in
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The Company has credit and discount
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16. Other CreditorsDetails at 31 De
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During the year deductions of Euros
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22. Information Relating to the Dir
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The legally required cash flow stat
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Furthermore, the installation of ne
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Reserves1996Special Merger Voluntar
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Sources 2006 2005Funds generated fr
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United StatesVISCOFAN USA Inc.50 Co
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www.viscofan.com
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Annual report - Viscofan

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