Making It Succeed

MAKING IT WORK MAKING IT SUCCEED

MAKING IT TOGETHER MAKING IT INSPIRING

MAKING IT CONVINCING

MAKING IT LASTING MAKING IT FIT

annual report 2008 MAKING IT WORK MAKING IT SUCCEED

MAKING IT TOGETHER MAKING IT INSPIRING

MAKING IT CONVINCING

MAKING IT LASTING MAKING IT FIT

annual report 2008 annual report 2008 Tessenderlo Group

The group in a few figures

The group in a few ﬁ gures over 10 years(*)

IFRS (millions EUR) 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999

Revenue 2,765.0 2,405.9 2,238.3 2,149.6 2,062.9 1,972.0 1,934.0 1,890.0 1,818.0 1,571.0 Rebitda 344.7 261.6 188.4 191.8 220.8 204.0 259.0 230.0 251.0 213.0 Rebit 239.1 152.3 72.3 67.4 106.2 82.0 115.0 109.0 135.0 102.0 Non-recurring items - 26.9 35.1 - 76.9 - 8.2 - 25.0 Ebit 212.2 187.4 - 4.6 59.2 81.2 Profi t (+) / loss (-) 140.4 128.7 - 24.3 35.1 53.6 43.0 71.0 65.0 90.0 70.0 Net cash fl ow 280.1 248.1 142.8 161.0 195.6 162.0 207.0 168.0 211.0 180.0 Profi t (+) / loss (-)/Revenue (%) 5.1 5.3 -1.1 1.6 2.6 2.2 3.7 3.4 5.0 4.4 Rebit/Revenue (%) 8.6 6.3 3.2 3.1 5.1 4.2 5.9 5.8 7.4 6.5 Net cash fl ow/Revenue (%) 10.1 10.3 6.4 7.5 9.5 8.2 10.7 8.9 11.6 11.5

Capital Employed (CE) 1,282.7 1,118.9 1,181.3 1,258.0 1,166.0 1,136.0 1,141.0 1,259.0 1,114.0 1,013.0 Working Capital 552.5 367.0 392.7 447.0 413.2 425.0 436.0 521.0 452.0 390.0 Roce (%) 18.6 13.6 6.1 5.4 9.1 7.2 10.1 8.7 12.1 10.1 Capital expenditure (PP&E) 94.2 98.6 119.3 172.5 171.1 119.0 110.0 133.0 137.0 133.0

Equity attributable to equity shareholders of the group 900.0 800.2 709.5 774.3 755.5 756.0 758.0 836.0 796.0 729.0 Return on equity (ROE) (%) 16.5 17.0 - 3.3 4.6 7.2 5.7 9.5 9.2 13.3 10.5 Net fi nancial liabilities 294.6 243.8 411.0 428.9 351.4 339.0 303.0 341.0 242.0 209.0 Net fi nancial liabilities/Equity (Gearing) (%) 32.7 30.4 57.8 55.4 46.5 44.8 40.0 41.0 30.0 28.0 Net fi nancial liabilities/Rebitda 0.9 0.9 2.2 2.2 1.6 1.7 1.2 1.5 1.0 1.0 Interest coverage 14.3 10.9 0.5 3.9 5.2 5.0 8.0 5.0 7.0 9.0

Dividend paid 36.9 35.0 33.3 32.7 32.7 30.7 30.6 30.5 30.3 26.8 Pay out ratio (%) 26.3 27.2 n/a 94.4 58.0 71.5 43.1 46.9 33.7 38.3

Headcount 8,237 8,121 8,124 8,123 8,181 8,223 7,934 7,849 7,087 6,847

(*) A ﬁ nancial glossary is available on pg 182 annual report 2008 Tessenderlo Group

The group in a few figures

The group in a few ﬁ gures over 10 years(*)

IFRS (millions EUR) 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999

Dividend paid 36.9 35.0 33.3 32.7 32.7 30.7 30.6 30.5 30.3 26.8 Pay out ratio (%) 26.3 27.2 n/a 94.4 58.0 71.5 43.1 46.9 33.7 38.3

Headcount 8,237 8,121 8,124 8,123 8,181 8,223 7,934 7,849 7,087 6,847

(*) A ﬁ nancial glossary is available on pg 182 Tessenderlo Group

Summary

1 The group in a few ﬁ gures Key ﬁ gures p. 2 Financial calendar p. 7

2 Message from the chairman p. 10

3 General presentation Company proﬁ le p. 14 Strategy p. 16 International presence p. 18 Markets and Applications p. 22

4 Activity Report Highlights of 2008 p. 26 Chemicals p. 28 Inorganics p. 30 PVC/Chlor-alkali p. 35 Plastics Converting p. 40 Proﬁ les p. 42 1 Plastic pipe systems p. 46 Compounds p. 50 Specialities p. 54 Fine chemicals p. 56 Gelatin p. 60 Natural derivatives p. 64

5 Commitments Human Resources p. 70 Environment, Quality, Safety and Risk Management p. 74 Corporate Governance p. 81

6 Information for shareholders p. 92

7 Financial report Annual accounts 2008 - Consolidated Financial Report p. 100 - Statutory Financial Report p. 168

8 General information Production units p. 172 Addresses of the plants and sales ofﬁ ces p. 175 Index p. 181 Financial Glossary p. 182 annual report 2008

Tessenderlo Group in a few charts

Revenue (millions EUR)

2,765 (%%% IFRS '*%%

'%%%

&*%%

&%%%

*%%

% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Rebitda (millions EUR)

345 (*%

(%%

'*% IFRS

'%%

&*%

&%%

% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Profit (+) / loss (-) (millions EUR)

&*% 140.5

&'%

.% IFRS +%

"(% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Tessenderlo Group

ROCE (%) Net financial liabilities/Equity (%)

IFRS '% 18.6 +%

*% &* )% 33 IFRS &% (%

'% * &%

% % 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Working capital / Revenue (%) Return on equity (%) 3

(% IFRS '% '* 16.5 20.0 &* '%

&* &% IFRS

&% *

* %

% "* 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Equity attributable to equity shareholders of the group Capital expenditure (PP&E) (millions EUR) (millions EUR)

IFRS IFRS 900

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 annual report 2008

Synthetic consolidated balance sheet

IFRS (millions EUR) 2008 % 2007 %

Property, plant and equipment 652.0 677.8 Goodwill 38.3 37.2 Intangible assets 39.9 36.9 Other non-current assets 79.9 71.9 Non-current assets 810.1 45 823.8 49 Inventories 473.7 339.9 Trade and other receivables 474.9 425.9 Cash and cash equivalents 53.5 93.6 Current assets 1,002.1 55 859.4 51 Non-current assets held for sale 0.7 0.0 Assets 1,812.9 100 1,683.2 100

Issued capital and share premium 181.3 179.0 Reserves 313.4 238.6 Retained earnings 405.3 382.6 Minority interests 2.0 2.0 Equity 902.0 50 802.2 48 4 Provisions and deferred taxes 171.9 146.7 Financial liabilities - Non-current 96.7 122.6 - Current 251.4 214.8 Other liabilities 390.9 396.9 Liabilities 910.9 50 881.0 52 Equity and Liabilities 1,812.9 100 1,683.2 100

Synthetic consolidated P&L account

IFRS (millions EUR) 2008 2007

Revenue 2,765.0 2,405.9 Cost of sales -2,165.9 -1,873.6 Gross profi t 599.1 532.3 Distribution expenses -144.6 -165.2 Sales and marketing expenses -62.7 -77.4 Administrative expenses -126.1 -125.2 Other operating income/expenses -26.6 -12.2 REBIT 239.1 152.3 Non-recurring items -26.9 35.1 EBIT 212.2 187.4 Finance costs -21.6 -17.6 Share of result of investements accounted for using the equity method 11.5 6.0 Profi t (+) / loss (-) before tax 202.1 175.8 Income tax expense -61.7 -47.1 Profi t (+) / loss (-) for the period 140.4 128.7 Attributable to : Equity holders of the group 140.5 128.9 Minority interests -0.1 -0.2 Tessenderlo Group

Distribution of the revenue 2008

Per business group Per destination

USA 11 % Chemicals Specialities 51 % 21 % Rest of the world Europe 12 % 77 %

Plastics Converting 28 % 5

Per country of production Per consumption market

Italy 4 % Other 5 % Household 5 % The Netherlands 6 % Health & Hygiene Belgium 14 % Building Industry 45 % & Public Works 32 % USA 10 %

Industry Great Britain 20 % 10 % Fertilisers & Animal Nutrition France 29 % 20 % annual report 2008

Key ﬁ gures per business group

Rebit

Specialities 13.6 % Chemicals 77.6 % Plastics Converting 8.8 %

Capital expenditures (PP&E) Headcount

Specialities Specialities 33 % Chemicals 33 % Chemicals 24 % 6 33 %

Plastics Converting 43 % Plastics Converting 34 %

Key ﬁ gures per share

EUR 2008 2007 Evolution of the net dividend per share (EUR) Basic earnings per share 5.08 4.69 (Basic EPS) 1.00 Net cash ﬂ ow per share 10.11 8.98 &#% IFRS Shareholders’ equity per 32.55 29.04 share %#- Net dividend per normal 1.00 0.95 %#+ share Net dividend per normal 1.13 1.08 %#) share with VVPR strips %#' Number of shares 27,713,288 27,626,444

%#% 2000 2001 2002 2003 2004 2005 2006 2007 2008 1999 Tessenderlo Group

Financial calendar

Results Tessenderlo Group publishes quarterly releases of its consolidated results through the news media. The dates of the releases will be as follows: • 31 December 2008 results March 12th, 2009 • 1st quarter 2009 results April 23th, 2009 • 1st half-year 2009 results August 27th, 2009 • 3 rd quarter 2009 results November 5th, 2009

General Meeting • Approval of the ﬁ nancial statements 2008 June 2nd, 2009 • Approval of the ﬁ nancial statements 2009 June 1st, 2010

Dividend • Payment dividend 2008 June 9th, 2009 7 (coupon n° 72)

News releases: see our website www.tessenderlogroup.com under ‘News & Media’ - ‘News’.

Contacts

Shareholders’ service Jo VERSPECHT Tel.: +32 2 639 18 31 - e-mail: [email protected]

Investor relations Christian VREBOSCH (CFO) Tel.: +32 2 639 18 87 - e-mail: [email protected]

Media relations Geert DUSAR Tel: +32 2 639 17 75 - e-mail: [email protected] MAKING IT TOGETHER To find out what our customers exactly need, we visit them. Together we find the answers to their specific questions. Not every type of feed phosphate is for every suitable 9 breed. To determine exactly which products the farmers need, our sales representatives provide guidance for cattle feed manufacturers and cattle farmers. annual report 2008

Message from the chairman

Gérard Marchand Chairman

In 2008, the group encountered variations In practice, the improvement came entirely in the prices of its primary raw materials from the Chemicals business, and more on a scale that had never seen before. The particularly from products intended for spectacular increases in the fi rst half of the the agricultural sector. Demand in this year reached historical records during the sector has remained very high, borne by summer. After that prices declined until the growth in the food needs of the world the end of the year, to return by the start of population. 2009 to more normal price levels. The group, one-third of whose activity is This exceptional context was constantly focused on these markets, historically in taken into account in the management Europe but now also in the United States, decisions of the group, which was therefore therefore benefi ted from this excellent able not only to bear these increases, but economic climate. even to raise its margins. The PVC & Alkalis activities recorded less The group thus recorded excellent results impressive performances than those for for 2008. Its revenue increased by around 2007, even if the sustained demand for 15 % and its recurring operating result by alkali products signifi cantly offset the 57 %. impact of the decline in PVC. Tessenderlo Group

The Specialities are also progressing. The harder-to-fi nd credit with a balance sheet good performance of gelatin, animal by- which is relatively unencumbered by debts. products and the continued recovery of the organic chlorine derivatives compensated We are also continuing the cost-cutting for a weak year in pharmaceutical efforts. The creation in the spring 2008 of intermediates. a shared service centre for the accounting operations on the European level is one At the end of the year, Plastics Converting example of this. Naturally these efforts will notably suffered from the diffi culties continue in 2009. of the construction sector. All building professions are affected, but it is once We are recording a net profi t of again that of profi les which has been 140.5 million EUR, which is a new historical 11 hardest hit. result for the group.

The events of 2008 and the economic crisis These good results make it possible for are not causing us to modify our strategy, your Board of Directors to propose to the which consists of having ultimately less General Meeting to raise the dividend to than 30 % of commodities in our activities 1.00 EUR net per ordinary share, i.e. an portfolio and retaining only the businesses increase of slightly more than 5 %. where one can obtain at least a 12 % return on capital employed. On behalf of the Board, I wish to thank all The acquisitions of the year in the sector of employees and managerial staff whose plastics converting and in the specialities excellent work has enabled us to present of our American subsidiary Tessenderlo these results. Kerley Inc. are in conformity with this line.

We are poised to seize the new growth opportunities which are certain to present themselves. However, the economic crisis has led us to be more selective, so as to get Gérard Marchand through this period of more expensive and Chairman MAKING IT FIT The products and services of Tessenderlo Group match the requirements of users perfectly. Whenever possible, we offer our customers a total solution. Like at Dyka Plastics. Our specialists use a plan to calculate which plastic pipes and 13 fittings are necessary for water, gas and electricity. The next morning, everything is ready to be picked up at a Dyka sales point of choice, as close to the customer as possible. annual report 2008

Company profile

Chemistry between better to the strategy of the group, the three business groups business groups will be reshuffeld as from 1 January 2009: Tessenderlo Group is a diversifi ed, international group active in many areas of • Chemicals will, in addition to sulfates, the chemical industry, plastics converting, phosphates and PVC/chlor-alkali, include gelatin, pharma and natural derivatives. the organic chlorine derivatives coming The group is characterised by an extensive from fi ne chemicals. Tessenderlo Kerley integration of its activities. moves to the Specialities business group. • Plastics converting remains the same; Tessenderlo Group’s activities are divided • Specialities adds Tessenderlo Kerley to 14 into three business groups: its portfolio. It also includes pharma, gelatin and products of natural origin. • Chemicals with two business units; inorganics and pvc/chlor-alkali; Present in everyday • Plastics converting and its business life units profi les, plastic pipe systems and compounds; Tessenderlo Group’s products form an • Specialities with its business units integral part of our everyday lives and fi ne chemicals, gelatin and natural are used in various applications, from derivatives. high-quality fertilisers and animal feed to medicine and car dashboards. A little bit To emphasise the cohesion of some of the of Tessenderlo Group can also be found group’s activities and to link them even in sweets, perfumes, batteries, blood Tessenderlo Group

bags, water treatment products, washing At the world level, the group is: powders and window proﬁ les – just to mention a few examples. • The largest producer of liquid sulphur-containing fertilisers, benzyl This explains the group’s motto: ‘Bringing acetate, benzyl chloride, and alpha- chemistry to life’. hexylcinnamaldehyde; • The second largest supplier of A few figures phosphates for animal feed, potassium sulphate for specialised fertilisers and of • A worldwide personnel count of triacetin; about 8,200. • The third largest manufacturer of high- • More than 100 establishments in over quality gelatins; 15 20 countries. • One of the leading suppliers of • Consolidated revenues of 2.8 billion EUR compounds for dashboard skins. in 2008. • A net dividend per share set at 1.00 EUR At the European level the group is: in 2008 . • The number one producer of caustic Tessenderlo group as a potash; market leader • The second largest supplier of ferric chloride Tessenderlo Group occupies a position of • The fourth largest manufacturer of PVC leadership in a number of diverse markets. compounds; • The ﬁ fth largest supplier of PVC. annual report 2008

Tessenderlo Group’s strategy

At the general meeting of 5 June 2007 - further developing the Plastics Tessenderlo Group’s strategy for the Converting activities in Europe coming years was modelled. - strengthening the gelatin activity’s This strategy can be summarised as top-three position in the world follows: - further developing the activities 16 that combine customer service and • Leading market positions in niche by-product valorisation. markets. • Continuously increase proﬁ tability. • Strengthening and further diversiﬁ cation of a balanced and • A return on capital employed integrated activity portfolio. (ROCE) of minimum 12 % for all businesses by 2012. • Increase of the specialities share to 70 % of the revenue by 2012 by: • Dividend policy aimed at stable growth. Tessenderlo Group

Tessenderlo Group’s assets

• World leadership and European • A sound ﬁ nancial situation; leadership for the vast majority of • Close to end-user markets and a its niche markets’ products; strong development of distribution • A large and diversiﬁ ed product networks in Plastics Converting;

range; 17 • Annual investments in the amount • The industrial integration of the of 100 million EUR average (excl. various production processes, acquisitions) focusing on valorisation of by- • The devotion of experienced and products, which in turn become raw highly qualiﬁ ed employees; materials for new products;

• Permanent focus on cost control in • The orientation to products with a order to maximise proﬁ tability high added value and a non-cyclical market; annual report 2008

International presence

59 Production units

1 Canada 11 United States of America 1 Argentina

4 Great Britain 7 Belgium 5 Netherlands 2 Poland 1 Germany 22 France 3 Italy

2 China 18 Sales offices & distribution centres

Belgium Chile China Czech Republic France Germany Great Britain Hong Kong Hungary Italy Lebanon Mexico Netherlands Peru Poland Romania Slovakia Spain Switzerland Turkey

Canada United States of America Argentina 1 11 1 Tessenderlo Group

42275123 Great Britain FranceBelgium Netherlands Germany Poland Italy

China 2 annual report 2008 Tessenderlo Group Tessenderlo Chemie NV

WYMAR TESSENDERLO NL TESSENDERLO TEFIPAR INTL. HOLDING BV HOLDING UK (FR) (BE) (NL) (GB)

PB LEINER DYNAPLAST ARGENTINA PB GELATINS EXTRUCO SAV (FR) SAPLAST (FR) (AR) UK (GB) 82 % (CA)

TC ROTTERDAM TESSENDERLO (NL) FINE CHEMICALS PC LOOS CALAIRE (GB) (FR) CHIMIE (FR)

DYKA BV EUROCELL (NL) (GB) PLASTIVAL CHEMILYL (FR) (FR) 20 John Davidson Pipes (GB) SOTRA- AKIOLIS SEPEREF (FR) GROUP (FR) TESSENDERLO FINANCE NV (BE)

THERMOPLASTIQUES FERSO COUSIN-TESSIER LVM 50 % (FR) LIMBURG (FR) (NL)

TESSENDERLO PROFEX TESSENDERLO CHEMIE (FR) SERVICES (FR) MAASTRICHT (NL)

PB GELATINS GmbH (DE)

PB GELATINS PINGYANG Co Ltd (CN)

TESSENDERLO TRADING SHANGHAI (CN)

NYLOPLAST EUROPE (NL) Tessenderlo Group

TESSENDERLO TESSENDERLO LVM PARTICIP (IT) USA (US) (BE)

IMMO TESSENDERLO PB LEINER WATRO ITALIA (IT) USA (US) (BE)

FARCHEMIA CHELSEA B.P. TAILE (CN) (IT) (US) JUPITER SULPHUR 50 % (US) TESSENDERLO TCT KERLEY (US) POLSKA (PL) 21 ALKEMIN 49 % (MX)

DYKA PLASTICS MPR (BE) SERVICES (US) DYKA POLSKA TESSENDERLO (PL) AGROCHEM (TR) H Holding ZEOLINE C Chemicals 50 % (BE)

K Plastics converting

S Specialities TERELUX (LU) D Service company

TCI (BE)

T-POWER 33 % (BE) annual report 2008

Markets and applications

Tessenderlo Group: Bringing Chemistry to Life

CONSTRUCTION INDUSTRY

PVC and Compounds C P plastic pipe systems, door and window proﬁ les, facade cladding, panelling, cable sleeves and cable insulation, ﬂ oor covering, conservatories Zeolites C double-glazing

AGRICULTURE

Ammonium, calcium and C liquid fertilisers for large-scale cultivation potassium thiosulphate Animal fats S animal nutrition 22 Caustic potash C horticulture, fertilisers for irrigation systems Cereal based by-products S animal nutrition Crop protection products C plant health of speciality crops Dehydrated proteins S fertilisers, composting Feed phosphates C animal feed ingredients Glycine and derivatives S animal feed, agrochemicals Organic chlorine derivatives S advanced intermediates for agrochemicals Potassium sulphate C specialised fertilisers, which are particularly suited for vegetable, ﬂ ower, fruit and tobacco growing and fertirrigation Sulphuric acid C fertilisers, crop protection products Triazone: slow release nitrogen C speciality and broadacre crops fertilisers

INDUSTRY

Acetates C antifreeze products, for e.g. runways Animal fats S biodiesel, lipochemistry, green energy (combustion) Benzyl alcohol S paints Caustic potash C batteries, oildrilling, biodiesel Caustic soda C aluminium, rayon, paper, pulp Dehydrated proteins S green energy Electrolysis products C photography, leather tanning, water treatment, mining Tessenderlo Group

Ferric chloride C water treatment Gelatin S photographic paper and -fi lm, paintballs, electro-plating Mono-ammonium phosphate C fi re extinguisher, fi re retardant Organic chlorine derivatives S paint, photography, coatings Potassium sulphate C plasterboards

PVC and Compounds C P automotive industry: dashboards skins, airbag covers, seals, interior trim other: road safety cones, furniture, shoe soles, tarpaulins, cables, fencing systems, Sulphuric acid C batteries, car windows, billiard balls

HEALTH AND HYGIENE

Active pharmaceutical ingredients S medicines Caustic soda C detergents, soaps Chlorine C water disinfection, disinfectants, PVC Gelatin S capsules for e.g. drugs, skin cream, treatment of wounds Glycine S pharmaceutical products eg. buffer in isotonic solutions Organic chlorine derivatives S various pharmaceutical products for people, plants and animals, perfumes, shampoo, UV stabilisers 23 Pharmaceutical intermediates S a wide range of medicines

PVC and Compounds C P blood bags, infusion bags and tubes, catheters, gloves, bottles for shower and bath foam, toothbrush grip Sodium hypochlorite C sanitiser, water treatment, bleaching

HOUSEHOLD

Animal fats S pet food Electrolysis products C detergents Dehydrated proteins S pet food Feed phosphates C pet food Gelatin S foodstuffs such as dairy and ‘light’ products, confectionery, energy bars and drinks Glycine S foodstuffs, aspics

PVC and Compounds C P packaging ﬁ lms, tablecloths, shower curtains, credit cards, furniture, inﬂ atable articles such as balls, swimming pools, boats, seals for refrigerators, tool handles. Caustic soda C detergents Zeolites C washing powders

C Chemicals P Plastics Converting S Specialities MAKING IT INSPIRING Tessenderlo Group looks ahead. Every day we work on products that make life more comfortable and benefit the environment. These range from recyclable plastics for cars 25 to low-calorie gelatins and environmental-friendly fertilisers. This is precisely why we want to inspire young people too. annual report 2008

Highlights of 2008

March its accounting processes and systems and standardise and harmonise them. Eurocell, a UK subsidiary company The expansion of SSC will take place of Tessenderlo Group and British gradually between 2008 and 2011. market leader for the production and

distribution of pvc proﬁ les, acquires September the distributor Peninsula Plastics and reinforces its position in the North West Tessenderlo Group announces of England. changes in management, effective as 26 from 1 January 2009. Frank Coenen

April is appointed Chief Operating Offi cer (COO) of Tessenderlo Group. He will Eurocell acquires the assets of Sprint lead the business groups Chemicals, 1233, formerly Plastmo Profi les Ltd Plastics Converting and Specialities, (Northampton, UK). This acquisition that respectively will be headed by will secure Eurocell’s position as the Pol Deturck, Albert Vasseur and Jan number one PVC-window profi les Vandendriessche extruder in the UK, as well as

complementing its existing product October range Tessenderlo Group acquires the Tessenderlo Group sets up a Shared Dutch company Nyloplast Europe Service Centre (SSC) in Leuven BV. Nyloplast manufactures (Belgium) to centralise its accounting large-diameter plastic ﬁ ttings for department at the European level. The pressureless pipe systems used for aim of the SSC is to further optimise all draining sewage and rain water. This Tessenderlo Group

acquisition enables the Plastic Pipe is extended for 20 years. Tessenderlo Systems Business Unit to extend its Group has made a clear choice for a range of products and services for total sustainable approach and will invest in water management and to strengthen additional environmental activities. its position in Europe. T-Power, a joint venture between

November Tessenderlo Chemie NV, Siemens Project Ventures GmbH, and Caillaud, a French subsidiary company International Power plc, achieved of Tessenderlo Group that specialises ﬁ nancial close of its 420 MW CCGT 27 in the collection, processing and (Combined Cycle Gas Turbine) power valorisation of organic by-products plant in Tessenderlo (Belgium). changes its name to Akiolis. This The power plant will commence is with a view to the international operation in 2011 and will increase the development of its activities. competitiveness of the production plant in Tessenderlo.

December The phosphates activities are clustered Eurocell Proﬁ les Ltd (UK) acquires in a new dedicated organisation named Cavalok Building Products. Aliphos. Cavalok manufactures window and door cavity closer systems made from post- consumer recycled PVC.

The environmental permit for the Ham and Tessenderlo plant (Belgium) annual report 2008

Chemicals The Chemicals business group is comprised of two business units: Inorganics and Chlor-alkali/PVC. It is characterised by an integrated production process in which the various end-products and by-products are utilised internally in order to create maximum added value. The business group’s products are used in industry and agriculture and have applications in a large number of aspects of everyday life, from batteries and paper to animal nutrition, speciality fertilisers and water treatment.

2008 in a nutshell 28

2008 was a record year for the Chemicals business group following a very successful year in 2007. The lower results in Chlor-alkali/PVC were amply compensated for by Inorganics. Despite the high raw material prices, among other things due to rising oil prices in the fi rst three quarters, profi tability was improved. The Inorganics business unit in particular was able to improve margins for agricultural products. For the Chlor-Alkali activity, the margins for caustic potash and caustic soda were higher than in 2007. However, this could not compensate for the decline in the PVC activity. The results of the latter were unsatisfactory in the last quarter. The new strategy whereby Tessenderlo Group and the Chemicals business group focus more on specialities and less on commodities, has resulted in excellent performance in the United States with Tessenderlo Kerley Inc. (TKI) recording strong fi gures. Tessenderlo Group

Key figures

2008 2007

Revenue (millions EUR) 1,402 1,027 REBIT (millions EUR) 197 83 ROCE (%) 33 18 Capital expenditures (PP&E) (millions EUR) 28 37 Headcount 1,965 2,009

Market leadership

• The largest producer of liquid sulphur- • The largest producer of caustic potash containing fertilisers (thiosulphates) at in Europe. world level. • The second largest producer of ferric 29 • The second largest supplier in the world chloride at European level. of phosphates for animal feed and of potassium sulphate for specialised fertilisers

Revenue breakdown over 10 years (millions EUR)

1,500 1,402

1,200

IFRS 900

600

300

0 99 00 01 02 03 04 05 06 07 08 annual report 2008

Inorganics

In 2008, the Inorganics business unit was confronted with a historical increase in raw material prices. However, these increases could be passed on to the market through higher sales prices. Margins for agricultural products were ﬁ nally restored after several difﬁ cult years. Sales of potassium sulphate for fertilisers remained at the level of 2007, while demand for animal feed phosphates fell in the second half of the year.

Activities and products Sulphur-based liquid fertilisers (including 30 ammonium, potassium, calcium and The Inorganics business unit operates in magnesium thiosulphate) are used in a variety of different markets. Potassium North America as fertilisers for cereal and sulphate is a fertiliser that is extremely broad-acre crops, and for arboricultural suited for use in dry areas and for and vegetable cultivation. Other sulphur highly sensitive crops such as ﬂ owers, derivatives are used for different industrial vegetables, fruit, and tobacco. Tessenderlo applications including mining, water and Group invested mainly in potassium-based waste-water treatment and in a wide range specialities for modern agriculture. of chemical processes.

Mineral phosphates are used in the animal Trends and facts in 2008 feed industry. The range of phosphate products is so diverse that Tessenderlo Raw material prices continued to rise until Group is able to offer the required quality September. In some cases, prices were for all kinds of feed applications. The 300 % higher than in 2007. Tessenderlo optimal digestibility of the animal feed Group succeeded in passing these price phosphates allows a perfect balance to be increases on to the market. struck between the development of the animal and respect for the environment. Tessenderlo Group

to drive its product range towards high- grade specialities. The range of Given that the majority of sales is in euros, fertilisers continues the exchange rate evolution of the American to evolve towards dollar had little impact on the results. high-grade

specialities Sales of animal feed phosphates dropped across Europe, with a dramatic fall in Central Europe. Due to the low prices for Potassium sulphate volumes remained at pork, East European farmers have reduced their 2007 level. SoluPotasse®, their pig inventories by 30 %. The shortage a highly water-soluble potassium fertiliser, of animal feed phosphates in the ﬁ rst strengthened its position as world leader quarter of 2008, combined with very high 31 in irrigation fertilisation. GranuPotasse®, prices, has led to many feed producers to that is used extensively by fertiliser use the phytase enzyme alongside mineral formulators, advanced strongly. phosphates. This success is helping Tessenderlo Group annual report 2008

NovaSource®, TKI’s crop protection Margins for business unit, enjoyed a year of strong agricultural products growth and above average profi tability in could be restored 2008 as the result of the Surround® and Sinbar® product acquisitions made in late 2007. In addition, good growth was A closer look at experienced in its existing business range. Tessenderlo Kerley Inc. In 2008, Tessenderlo Kerley Inc. acquired (US) the assets of Agrochem in Turkey. It also acquired an interest in Wolf Mountain Tessenderlo Kerley, Inc (TKI) and its Products. business units in the United States achieved solid performance under very MPR Services, Inc, TKI’s Solvent challenging conditions in the market place. Services Business that supplies Fertiliser volumes for 2008 were on an services to refi neries for the treatment 32 increase due to higher farm commodity of fl ue gasses and solvents, continued its prices in the fi rst half of the year. TKI was world-wide growth in both able to maintain margins in 2008. mobile services and permanently installed units. In addition to its international The speciality fertiliser products,KTS® sales agents, MPR became the operating (potassium thiosulphate), N-Sure® and company for MPR Middle East WLL (MME), Trisert® slow release nitrogen products as a joint venture between Gulf Technologies well as CaTs® (calcium thiosulphate) have WLL and Tessenderlo NL Holding BV., enjoyed a strong year in 2008. Demand has based in the Kingdom of Bahrain. been strong in all cropping areas and in MME will service the energy industry in the several cases exceeded supply in most of GCC and Egypt. the broadacre and speciality crop areas. The TKI Refi nery Services model is being Fertilisers and crop pursued with refi neries in the U.S.A. TKI protection products are has production plants linked to refi neries doing very well in the US to recover sulphur and other residuals that in 2008 are in turn used to manufacture sulphur- based fertilisers. Tessenderlo Group

Strategy and prospects It is yet to be seen how the world for 2009 fi nancial markets will affect Tessenderlo Kerley and its business The volumes for potassium sulphate unit’s performance in 2009. It will are expected to fall below 2008 levels in be a challenging year, one that will Europe. Farmers have trouble obtaining be infl uenced by commodity pricing, credit from their banks and will not be able availability of raw materials, declining to place orders. world oil prices and the availability of water in the Western US for agriculture Sales of SoluPotasse® will continue to enterprises. TKI will continue to rise. The growing shortage of water and develop and extend its activity model of agricultural land forces farmers to switch diversifi cation and profi table growth by to drip irrigation that requires more water- acquisitions and maintain its position as a soluble fertilisers. lower cost producer in its major markets.

Prices will probably remain stable or After a strong 2008, Thio-Sul® (ammonium 33 drop slightly. However, margins will be thiosulphate) fertiliser sales of TKI will maintained. come under pressure in the fi rst quarter of 2009 due to carry-over inventory on the With the set up of a dedicated division for dealer/distributor level and further fear feed ingredients, Aliphos, Tessenderlo of prices moving downward in the market Group wants to optimise its production place. Lower farm commodity prices facilities for animal feed phosphates. in relationship to input costs will be an infl uence in 2009. Demand for animal feed is declining fast due to dropping meat consumption, Allocation of speciality fertiliser products the result of the worldwide economic in the market place will continue through crisis. Phosphate prices are expected to 2009. The completion of the KTS® drop signifi cantly compared to late 2008. (potassium thiosulphate) and CaTs® Volumes will however be similar to 2008 (calcium thiosulphate) plant in Ham, levels because more mineral calcium will Belgium in 2009 will help in alleviating a again be used in animal feed instead of the portion of the supply situation. TKI’s plant phytase enzyme. nutrients main challenge will be the annual report 2008

availability of raw materials and the rising of the Specialities business group as from costs of these inputs. 1 January 2009.

The challenges for the crop protection business unit in 2009 will be to expand the cropping applications for the new Strategy for the products; striving to become the least-cost inorganics business producer in all of the NovaSource ® range unit and adding proﬁ table new products to its existing business base. • Reduce production costs throughout the value chain as Unlike the other products of the Chemicals much as possible. business group which can be considered as commodities, TKI products are specialised • Seek alliances in order to products for Tessenderlo Group and as strengthen our competitive 34 such constitute an area of growth for the position. future. For this reason, ﬁ nancial reporting about TKI activities will be part Tessenderlo Group

PVC / Chlor-Alkali

The PVC activity has experienced a difﬁ cult year. Until the start of the autumn, sales volumes were at the same level as in 2007. Prices were generally high but with gradually decreasing margins. Demand and margins plummeted in the fourth quarter.

Activities and products Netherlands and in Northern France. These two plants are among the largest Vinyl chloride monomer (VCM) is the main in Europe, with a total capacity of 480,000 raw material in the production of polyvinyl tonnes. chloride (PVC). VCM is produced from chlorine or hydrochloric acid and ethylene. PVC is one of the most versatile plastic 35 resins in the world. It has a very extensive Chlorine and hydrochloric acid are range of applications, ranging from plastic produced at the same site at Tessenderlo pipe systems, window and door profi les, (Belgium) making road transport fl exible and hard fi lms and sheathings for unnecessary. Ethylene is bought in cables and wires. externally and delivered via a specially designed secure and environmentally- Trends and facts in friendly pipeline network. 2008

Chlorine is produced in the group’s The crisis in the electrolysis units, while hydrochloric construction and acid is a by-product of the production of automotive industry has sulphates, allowing a unique integration of resulted in a sharp raw materials to be achieved. Tessenderlo decline in PVC use Group’s annual VCM production capacity is 550,000 tonnes. During the ﬁ rst six months of the year, The polymerisation of VCM to PVC occurs sales volumes were slightly higher than in at two locations, in the South of the 2007. Margins deteriorated as a result of annual report 2008

the continued increase of ethylene prices has resulted in a sharp downturn of the that follow the evolution of oil prices. construction industry in Eastern Europe as Demand quickly slowed down after the well. summer and the fourth quarter turned out to be a catastrophe. Sales dropped by In the long term, PVC will continue to an average of around 30 %, a reﬂ ection of be a competitive commodity business. the crisis in the most cyclically sensitive Therefore, Tessenderlo Group is continuing sectors, such as the construction and to focus on cost reduction, increased automotive industries. In addition, the productivity and the improvement of plummeting of raw material prices at the quality and service. This is the only way end of the year and scarce credit resulted for Tessenderlo Group to strengthen its in a general reduction of stocks. position as a specialist in the ﬁ eld of suspension PVC. Outlook for 2009

Forecasts remain unfavourable as long as Focus on low costs and 36 the general economic climate does not pick high productivity to up. This seems to be improbable for 2009. strengthen our market position Ethylene prices will probably be negotiated on a monthly basis instead of every quarter. This means PVC prices will ﬂ uctuate even more. Furthermore, imports from the United States and Asia, where production Strategy for the PVC costs are lower, also threaten prices. activity

• Keep costs throughout the value Forecasts for PVC chain as low as possible. for 2009 are not very bright • Offer maximum added value with existing products and resources. The European PVC market has become a mature market with minimal growth • Pursue maximum productivity. potential. The current ﬁ nancial crisis Tessenderlo Group

Chlor-Alkali / PVC

In 2008, the proﬁ tability of the Chlor-Alkali activity was mainly determined by caustic soda and caustic potash. Although the margins of these products were higher than in the previous year, they were not sufﬁ cient to compensate for the deteriorating margins of the PVC activity. The project for the construction of an electricity power station by 2011 is on schedule.

Activities and products From these electrolysis basic products, various products are derived which are The electrolysis departments of used in photography, the food sector, water Tessenderlo Group have an annual capacity purifi cation and the extraction of ores. 37 of 400,000 tonnes of chlorine. This is mainly used internally for the production Ferric chloride and aluminium chloride of vinyl chloride monomer (VCM), used to are also produced in addition to the classic make polyvinyl chloride (PVC), and in fi ne electrolysis products. Both products are chemicals. indispensable in the fast-growing water purifi cation sector. Caustic potash and caustic soda are released during the production of chlorine. Trends and facts in Caustic potash is used in food processing, 2008 fertilisers, alkali batteries, defrosting products for airports, detergents and The prices of caustic potash rose in the other processes within the chemical second half of the year above the level industry. Caustic soda is used for water of 2006-2007 due to the shortage of the purifi cation and in the manufacture of product in the United States. European soaps and detergents. In addition to these stocks were practically consistently below areas, there are many applications in the the long-term average. Demand remained chemical, the aluminium and the paper high until the autumn but dropped sharply industry. in the last two months of the year. annual report 2008

The prices of caustic This had no effect on the margins for the potash and caustic soda derivatives bleach and ferric chloride. were higher than in 2007 The prices for sodium sulphide lagged behind.

From the third quarter onwards, the prices of caustic potash rose to unprecedented The construction of heights, the result of an acute and our own electricity power worldwide shortage of the raw material plant in Tessenderlo potassium chloride. This meant demand has started could not be fully met.

The margins of caustic soda as well as The T-Power project has started for the caustic potash both rose in comparison construction of a 420 MW natural gas-ﬁ red with 2007. electricity installation at the Tessenderlo 38 Tessenderlo Group

site. Completion is targeted by 2011, has remains scarce and expensive. However, started. The modern, high-performance lower demand should soon restore the power plant will result in a reduction of balance. electricity transportation costs, and in addition, increase the competitiveness of The prices of caustic soda continued the site in Tessenderlo. to rise at the beginning of 2009, and a considerable price reduction is unlikely in Outlook for 2009 2009.

The expansion of the ferric chloride The margins for caustic potash are less capacity in Tessenderlo (Belgium) with predictable. They will mainly depend on 30,000 tonnes has been delayed slightly the evolution of supply and the price of and is sheduled for a spring start-up. This potassium chloride. expansion will help meet the growing European demand for ferric chlorides mainly used as coagulants in the treatment 39 of drinking water and the purifi cation of wastewater. This investment also Strategy for the strengthens the position of Tessenderlo Chlor-Alkali activity Group as the number two producer of ferric chlorides in Europe. • Reduce costs and offer maximum added value with existing products and Increased capacity resources. shall strengthen our position on the ferric • Maximise our competitive chloride market for water advantages. purifi cation • Invest in specifi c projects with a high added-value potential. The cost price of electricity may rise once again. Currently, potassium chloride used for the production of caustic potash annual report 2008

Plastics Converting For over twenty years, Tessenderlo Group has resolutely pursued a downstream integration policy. With this goal in mind, the group has taken over several PVC converters holding numerous patents and registered trademarks in Europe and the United States. The products, comprising profiles and plastic pipe systems, are almost all intended for the construction and renovation sectors. Another activity that is closely linked to PVC processing is the production of compounds for the injection and extrusion market. The Plastics Converting business group is also responsible for distribution to end-users in a number of countries. This enables it to improve its market position and profitability. 40

2008 in a nutshell

Overall, 2008 was a difﬁ cult year for the Plastics Converting business group. Total sales fell by 3 %. Plastic Pipe Systems were initially affected less than Proﬁ les and Compounds. However, the economic crisis also made its impact felt in this sector over the last quarter. The decline of the construction market which started in the United States in 2007, hit Great Britain and the European continent in the second half of 2008. Activities dropped while raw material prices remained high, in line with the cost of oil. Lower oil prices at the end of last year will only be felt in 2009, with lower raw material prices and higher margins. Tessenderlo Group

Key figures

2008 2007

Revenue (millions EUR) 776 816 REBIT (millions EUR) 22 49 ROCE (%) 7 13 Capital expenditures (PP&E) (millions EUR) 29 33 Headcount 3,517 3,349

Market leadership

• The number one producer of plastic • British market leader for pvc-proﬁ les pipe systems in Benelux and the third • One of the leading suppliers of largest in France compounds for dasboards (Marvyﬂ o®) 41 • The largest TPE compounder at world level. (thermoplastic elastomers) and the fourth largest producer of PVC compounds in Europe

Revenue breakdown over 10 years (millions EUR)

776 800 IFRS 600

400

200

0 99 00 01 02 03 04 05 06 07 08 annual report 2008

Proﬁ les

The sharp decline of the construction market in 2007 spread across the whole of Europe in 2008. Sales in the Proﬁ les business unit dropped as a result of this decline by 3 %. Lower sales were also accompanied by an increase of raw material prices which reduced proﬁ tability.

Activities and products • Eurocell, a subsidiary of Tessenderlo Group and the British market leader The Profi les business unit brings together in the production and distribution 42 the production of various PVC profi les for of PVC window and roofl ine profi les, the construction industry, such as door, acquired distributor Peninsula Plastics window and conservatory profi les, profi les in March. Peninsula Plastics recorded a for roofl ine, fences, the cladding of façades turnover of more than 3 million pounds and various fi nishing products. and has distribution branches in the northwest of England. The locations Trends and facts in 2008 complement the existing Eurocell branch network, resulting in the The market slowed down substantially in company strengthening its presence Great Britain, especially in the second half in this part of the country. of the year. Despite these unfavourable conditions, the Profi les business unit is • In April, Eurocell announced the continuing to invest in the development of acquisition of the assets of Sprint its activities. 1233, formerly known as Plastmo Profi les Ltd. based in Northampton. This is refl ected in the further growth of The acquisition and the transfer of the the distribution network that consisted activities to the Alfreton production of 90 depots at the end of the year, and a site increase production effi ciency and number of acquisitions: Eurocell’s market share. Tessenderlo Group

• In December, Eurocell acquired safety as well as looks. The Thermologik Cavalok Building Products. Cavalok window system was introduced on the produces window and door cavity market to meet the new standards for closer systems made from post- energy-friendly homes. Two new systems consumer recycled PVC. The range for rotating and vertically sliding windows complements Eurocell’s existing were also launched. products and serves to strengthen the company’s market position further. Thanks to the acquisitions and new products, sales – expressed in pound sterling - in the UK rose by over 9 %, despite a slowdown of the market. Due to Substantial expansion high raw material prices, proﬁ tability was of the product range and much lower than previous years. 43 distribution network in

Great Britain In Eastern and Central Europe, where the market also slowed down, we consciously The product offering in Great Britain was chose to scale down activities in regions further expanded to include a number where margins are too low. From the third of innovations. In 2008, the range of quarter, this was reﬂ ected by 10 % lower composite doors was expanded with new sales compared to the same period in 2007. products that do extremely well in terms of Proﬁ tability was also considerably lower. annual report 2008

In this context, the business unit The strategy of creating synergies between concentrated its activities on the European Wymar (Belgium) and Plastival (France) continent in Benelux and France. The gained momentum during 2008. introduction of new window systems and the improvement of existing products meet The situation in the United States was new market requirements with respect to even less favourable than in 2007. The durable and energy-effi cient construction number of new-build and renovation materials. projects alike dropped dramatically. With the introduction of new products, Chelsea Building Products (CBP) again succeeded New window systems in confi ning the sales decline to less than meet the demand 10 % while the market contracted overall for durable and by 20 %. Due to the dollar exchange energy-effi cient rate, high raw material prices in the building United States had a stronger impact on 44 profi tability than in Europe.

In 2008, efforts were made in the development of composite windows, Sales of Chelsea where metal is replaced with plastic. Building Products (US) This important innovation has the major fell less than the market beneﬁ t that own materials can be used and average purchasing of metal can be limited.

Wymar, which produces PVC profi les for In Canada, an oil-producing country, the windows and doors, as well as interior and impact of the economic crisis was only exterior fi nishing systems, is continuing felt at the end of the year, when oil prices to develop new, lead-free systems. The began to drop. Slightly higher sales could objective in the long term is to phase out not compensate for raw material price lead as a material to stabilise PVC. Thanks increases which meant profi tability also to the wider range of products, sales of decreased in this country. these new environment-friendly systems are increasing while the share of the In 2008, the merger of the production units traditional systems is dropping. in Jonquière and Montreal on one site Tessenderlo Group

in Montreal was completed. The site in material prices following the drop in oil Jonquière was closed. prices towards the end of 2008, will provide the leverage to restore margins. Innovations in 2008 included the The synergies between Wymar and Plastival development of new patio doors. These will will also bear fruits from 2009 onwards. be introduced onto the market in 2009.

Outlook for 2009 Strategy for the Due to the worldwide economic Profi les business unit uncertainty, it is very diffi cult to make predictions. Improvements in the • Increase the profi tability of construction sector are not predicted for the European continent region the immediate future. Low margin levels through operational excellence in Central and Eastern Europe should bring and synergies between the Tessenderlo Group to reveiw its position in production units. 45 these markets. • Expand and improve the distribution network in Great The development Britain to obtain further growth of new products and higher profi tability. continues • Continue to expand the product range in the United States To meet these challenges, the Profi les and Canada, and increase business unit will adjust its production profi tability by maximising capacity to market conditions where the synergies between the necessary. In the United States and Great production units. Britain, the development of new products will continue. The distribution network in Great Britain will also be expanded further.

The focus in 2009 will be on increasing proﬁ tability. In this respect, lower raw annual report 2008

Plastic Pipe Systems

The Plastic Pipe Systems business unit succeeded in limiting the drop in sales compared to 2008, despite the weak economic cycle. A slight increase during the ﬁ rst three quarters could not fully compensate the decline in the fourth quarter. Proﬁ tability fell slightly due to high raw material prices which could not be passed on to the market swiftly enough.

46 Activities and products Geographic expansion The Plastic Pipe Systems business unit and a wider product produces pipes and fi ttings for water range continue to be supply and drainage systems, and pipe the main growth pillars systems for gas, telecommunications and other applications. The raw materials are PVC, polyethylene, and polypropylene. In this respect, an important acquisition Trends and facts in 2008 was made in October. Tessenderlo Group acquired Nyloplast Europe BV, a subsidiary The business unit continued its strategic of Nyloplast NV. The Dutch company growth, based on the two known pillars: Nyloplast Europe BV in ’s Gravendeel geographic expansion and a wider product produces plastic fi ttings for pressureless range, especially in the fi eld of water piping systems in a large diameter for the management. European market. The systems are used Tessenderlo Group

for draining sewage and rainwater. This Conditions in France were extremely major addition to the product range of unfavourable. While the situation in the special fi ttings strengthens the position of beginning of the year was more or less the Plastics Piping Systems business unit respectable, the market plummeted in in Europe. the second half of the year. This had an extremely negative impact on sales as well With regard to Benelux, sales at Dyka as profi tability. Belgium to the construction and public works sectors rose by 4 %, despite a The market in Great Britain also decline of gas-related activities. These experienced the impact of the economic favourable results can be explained by the crisis. However, John Davidson Pipes (JDP) broadening of the product range. was able to maintain sales at the 2007 level in pound sterling. Despite the slight decline in profi tability, the situation in Great Britain 47 Dyka sales in continues to remain favourable. Belgium rose by 4 % despite the crisis Strong growth of activities in Central and Eastern Europe

In The Netherlands, activities were maintained at the satisfactory level of 2007 but proﬁ tability fell slightly. The product This also applies to the situation in Poland. offering was expanded here too. Services Operating out of the production units in to customers were also improved by Poland, activities in Central and Eastern developing e-business and adapting the Europe were able to be developed further, sales network. Speciﬁ cally, a number of thanks to higher product supply and a depots were transferred to more accessible larger distribution network. At the current locations and opening hours were adapted time, there are 13 depots in Poland, 3 to the customers’ requirements. in the Czech Republic and 1 in Slovakia. annual report 2008

Sales rose by 20 % and proﬁ tability also water management and interest in new increased, despite higher raw material developments. The Plastic Pipe Systems prices. For Plastic Pipe Systems, this business unit will therefore continue its region has the advantage that it is less trusted growth strategy as planned. subject to the worldwide crisis than Furthermore, the acquisition of Nyloplast Western Europe. Europe BV will contribute in full to our results from 2009 onwards. Outlook for 2009

The inﬂ uence of the recession on the Innovating construction and public works sectors systems available is difﬁ cult to forecast. The impact on in all countries the Plastic Pipe ystems is expected from 2009 to be less due to the strong focus on

48 Tessenderlo Group

The so-called biaxially oriented pipe for customers and develops water systems, which are produced by Sotra- management systems has been expanded. Seperef in France, have fi rmly established Important steps were made in research themselves on the French market. They and development to design new lead-free will also be available in other countries canalisation systems. Practically no lead is from 2009. The production process for this currently used to stabelise PVC. type of piping systems requires that the molecular structure of PVC is modifi ed in order to improve the mechanical properties of the pipe. In particular, a biaxially oriented pipe system withstands a higher internal pressure than a normal PVC pipe Strategy for the with the same wall thickness. This makes Plastic Pipe Systems it possible to reduce the amount of raw business unit materials required. • Further expand the distribution 49 Polyethylene pipe systems for geothermal network and improve customer applications is another innovative product service. that performs well on the French market. These will also be available in other • Offer complete systems countries from 2009. whenever possible by expanding the product range. Dyka Rainclean, a new high-performance system for the temporary collection and • Maximise synergies between storage of rainwater will be introduced in the production units. 2009. It fi lters and treats rainwater that is recovered from roads and car parks, before • Strengthen our presence and draining into the ground. growth in the Central and Eastern European markets. In order to offer optimal service in the fi eld of water management, the team that performs the necessary calculations annual report 2008

Compounds

Like the other activities in the Plastics Converting business group, Compounds also suffered in 2008 from the slowdown in the construction activity. Moreover, this business unit also suffered the impact of lower car sales. PVC compounds were hit the worst. The thermoplastic elastomers were also subject to the crisis. However, sales to the construction sector and the automotive industry rose.

Activities and products demand fell as a result of consolidation within the companies that process the 50 The Compounds business unit produces a compounds. variety of ready-to-use PVC mixtures and mixtures of thermoplastic elastomers. These are mainly intended for the injection Lower demand and and extrusion markets, with applications higher raw material in the construction industry (roller prices have an adverse blinds, façade cladding, window ﬁ ttings), effect on margins for the automotive sector (airbag covers, PVC compounds dashboard skins, interior trims and sealing systems) and the market for consumer goods (handles for household appliances, Lower sales volumes and increased pens and toothbrushes). supply in the market resulted in narrower margins. Efforts to restore them inevitably Trends and facts in 2008 had a negative impact on sales volumes. Saplast (France) suffered the most from With regard to PVC compounds, sales this, both on the home market and in volumes dropped by more than 10 %. A export countries. ﬁ rst explanation is the slowdown in the construction sector, but high raw material The margins for plasticised PVC prices also played a role. Furthermore, compounds were under even more Tessenderlo Group

pressure than those for non-plasticised. On the other hand, the profi tability of this Prices of softening agents used in these activity was lower as a result of higher raw products rose sharply during 2008. material prices. These could only be passed on in higher sales prices towards the end of The number of applications of the year. thermoplastic elastomers (TPEs) continued to rise despite the economic An important new compound was context affecting this activity too. However, introduced in 2008 to replace polyurethane TCT Polska (Poland) and Thermoplastiques for the covering of car steering wheels. Cousin-Tessier (France) managed to increase sales by 5 % in 2008, both in Marvyfl o®, a compound intended for the construction sector as well as the dashboards, was confronted with higher automotive industry. raw material prices and a drop in demand. The higher raw material prices could only 51 Number of be charged to the market during the second TPE applications half of the year. In addition, the separate increases thanks to management team for Marvyfl o® which innovation was created in 2007, was able to improve industrial performance and customers service.

annual report 2008

Outlook for 2009

The expectations for the PVC compounds Production structures market are not very favourable. There is for PVC compounds no indication that any of these sectors must be adjusted to will improve in the near future, and lower demand especially not in the construction industry. These activities are faced with two major challenges. Firstly, to increase margins Margins are also a major concern for the to an acceptable level as a result of the thermoplastic elastomers. It is expected decreasing raw material prices. Secondly, that they will reach their normal level the production structures must be adjusted in 2009, considering the higher sales to the lower volumes and the future prices and the lower raw material prices. evolution of the market. The impact of the economic crisis will

52 Tessenderlo Group

undoubtedly be felt. However, lower looks promising, with a growing share volumes will be avoided thanks to several of the dashboard skins market. In 2009, new applications. The compounds listed Tessenderlo Group hopes to considerably above for covering car steering wheels and increase its sales to the automotive a number of developments in the sealants industry in China. Although this sector sector are examples. is currently experiencing difﬁ culties, the growth prospects are still quite attractive. A new range of products will be introduced in 2009, based on the Dow Chemical’s ‘Infuse’ polymers which Tessenderlo Group is producing under licence for the European market. Strategy for the Compounds business unit Marvyﬂ o® is counting on interest from the • Reduce costs by producing 53 automotive sector, as effectively as possible and also in China through operational excellence.

• Focus on speciality compounds. Specifi cally for Marvyfl o®, increased demand from the automotive industry • Further strengthen our is key. Currently, preparations are being presence in the automotive made to have Marvyfl o®, certifi ed for industry by increasing our new car models that will be marketed presence in the United States in the near future. Although this activity and especially Asia. will decrease slightly in 2009 due to the contracting automotive market, the future annual report 2008

Specialities The Specialities business group consists of a number of diverse activities which differ by the added value that they create. The Fine Chemicals business unit deals partially with raw materials that are produced by Tessenderlo Group itself. These raw materials are transformed into specialist products for the agro-chemical, pharmaceutical and perfume industries. The Gelatin business unit turns the skins and bones of cattle and pigs into high-quality gelatin for use in the food and pharmaceutical industries. The Natural Derivatives business unit processes animal and vegetable by-products for use as raw materials in pet food and in the soap industry.

2008 in a nutshell

The Fine Chemicals business unit did not perform so well in 2008. While the operating result of organic chlorine derivatives was satisfactory, the intermediates and active ingredients for the pharmaceutical industry performed less favourably. On the other hand, the Gelatin business unit had an excellent year. Despite the economic crisis, demand for gelatin continues to grow, in part as a result of new applications and developments. The Natural Derivatives business unit recorded a satisfactory year. In the quest for new activities of a high added value, further diversiﬁ cation into the valorising by-products based on cereal crops was initiated. Tessenderlo Group

Key figures

2008 2007

Revenue (millions EUR) 587 563 REBIT (millions EUR) 35 32 ROCE (%) 10 10 Capital expenditures (PP&E) (millions EUR) 28 29 Headcount 2,755 2,763

Market leadership

• The largest producer of benzyl • The third largest manufacturer of high- acetate, benzyl chloride, alpha- quality gelatins worldwide 55 hexylcinnamaldehyde at world level • The number two producer of benzyl alcohol worldwide

Revenue breakdown over 10 years (millions EUR)

587 600 IFRS

500

400

300

200

100

0 99 00 01 02 03 04 05 06 07 08 annual report 2008

Fine Chemicals

The intermediates and active ingredients for the pharmaceutical industry did not perform so well in 2008. In addition, contrary to expectations, the ‘organic chlorine derivates’ activity was unable to sufﬁ ciently sustain the positive trend of 2007. The Fine Chemicals business unit was hardest hit by the impact of the weak dollar. The competitive loss and the lower margins which were the result of this in the ﬁ rst half of the year were compensated in the second half of the year.

56 Activities and products Tessenderlo Group units makes it possible to work in a highly fl exible manner A fi rst segment comprises the manufacturing of intermediates and active 1. Intermediates and active pharmaceutical ingredients. The business ingredients for the unit is the preferred supplier to important pharmaceutical industry international pharmaceutical companies. Tessenderlo Group’s glycine and glycine Trends and facts in 2008 derivates mainly have applications in the pharmaceutical industry. The results for the intermediates and active ingredients for the pharmaceutical The second segment comprises organic industry are lower than in 2007. However, chlorine derivatives, whose production is these activities performed much better mostly based on toluene combined with than planned in the fi rst half of 2008 chlorine produced by Tessenderlo Group because a number of customers ordered itself. Toluene derivatives are produced higher quantities than initially planned. On for customers in the agro-chemical, the other hand, demand in the second half pharmaceutical and perfume industries. of the year was lower for this very reason. Close cooperation between the various Furthermore, many customers delayed Tessenderlo Group

their purchases in view of the economic 2008. In the beginning of the year, imports situation. from China of glycine for the manufacture of additives for food and pet feed came to Tessenderlo Group is committed to a standstill. This meant that Tessenderlo providing quality on a continuous basis Group was able to produce large volumes to ensure that its products meet the of glycine, and sales doubled in comparison standards and guidelines in its various with the same period in 2007. markets. Within this context, the sites in Italy and France were audited in 2008 by The business poured further investments the Pharmaceutical and Medical Devices in the optimal treatment of waste ﬂ ows. Agency (PMDA) of the Japanese Ministry Speciﬁ cally, a number of incineration of Health. The PMDA inspections are installations were renovated or improved. known to be the strictest in the world. The outcome of these audits was excellent 57 - just like the other audits performed in 2008. Focus on waste treatment is key

With regard to food safety, all current in investment studies concerning HACCP (Hazard programme Analysis Critical Control Points) were completed at the Belgian site in Tessenderlo. Due to increasing demand, the Farchemia site in Italy has taken a new production unit for benzoyl peroxide into service. Benzoyl Strict and successful peroxide is used in the pharmaceutical audits conﬁ rm quality industry to produce ointments to treat acne guarantee for example.

Outlook for 2009 The sale of glycine for pharmaceutical applications – of which Tessenderlo Group The expiry of the patent protection for is the last remaining manufacturer in a very successful drug will cause sales Europe – was overall at a normal level in volumes to drop considerably in 2009. annual report 2008

The good news is that a number of other and the British pound during the ﬁ rst active ingredients have been in the half of the year. This resulted in lower development pipeline since 2007 and competitiveness and margins. Raw 2008. These products will not be able material prices were also unpredictable. to compensate for the decline in 2009. In a market with ample supply, these However, they do offer good prospects price increases could not be passed on from 2010 completely to customers.

Products in the Volatile exchange rates development portfolio and raw material can compensate for prices had an adverse patent loss as of 2010 effect on competitiveness and margins

In the meantime, Tessenderlo Group will continue to promote itself as a company The situation improved initially in the 58 that is not only strong in the fi eld of second half of the year. Sales prices and research and development, but can also margins rose. However, demand for all offer its customers pilot capacity. As such, products dropped drastically in December. the company can guarantee quality as well supply commitments. With regard to investments in 2008, the site in Pieve (Italy) decided that one of the 2. Organic chlorine derivatives two hydroelectric power stations will be renovated. Besides a slight increase of the Trends and facts in 2008 power capacity, the major advantage is the fact that the company will obtain green While 2007 saw a revival of the ‘organic energy certifi cates for this investment. chlorine derivatives’ activity, this positive Works are scheduled to begin in 2009 trend could not be benefi tted from and will be carried out during the winter suffi ciently in 2008. months for three years, in order to reduce interruptions in manufacturing to a Same as the intermediates for the minimum. pharmaceutical industry, organic chlorine derivatives also suffered from the volatile Contrary to earlier announcements exchange rates of the American dollar made as part of the industrial plan for Tessenderlo Group

the company, the electrolysis will not be but without affecting productivity or discontinued in Pieve. Sufﬁ cient sales production capacity. have materialised in the meantime for the electrolysis products, in line with the The products of the Organic Chlorine available capacity. Derivates business unit have evolved to become commodity products and are now However, the production of more closely related to the products, the chlorobenzenes will be discontinued as activities and the strategy of the Chemicals announced but this will be later than business group. As such, they will be part initially planned. An extra investment for of the latter as from 1 January 2009. the production of synthetic hydrochloric acid will be implemented ﬁ rst, as decided in 2008. The production of chlorobenzene Strategy for the Fine can then be discontinued at the end of Chemicals business 2009 or the beginning of 2010. unit

Intermediates and active 59 Improvement of cost • ingredients for the structure should not pharmaceutical industry infl uence productivity Strengthen the position as and capacity a supplier of intermediates and active ingredients for the pharmaceutical industry. Outlook for 2009 • Organic chlorine derivatives Competition from China and India is Reduce the cost structure expected to increase in all areas, from basic throughout the entire value chemicals to the advanced pharmaceutical chain and maximise added intermediates. In view of the economic value in order to increase situation and the fl uctuating raw material profi tability. prices, it is impossible to make any predictions for the future. Consolidate the activities and integrate them in the Chemicals However, next year we shall continue to business group as from 2009. work towards improving the cost structure annual report 2008

Gelatin

2008 was another outstanding year for the Gelatin business unit, despite the worldwide economic downturn in the second half of the year. The results rose sharply. The reversal that began in 2007 continued in this sector. This positive trend was strengthened by the continued growth of the demand for gelatin.

Activities and products good prices for the by-products fats and phosphates. In the beginning of the year, 60 The Gelatin business unit produces a wide sales prices of gelatin dropped due to range of quality gelatins based on the ample market supply. The second half of bones and skin of pigs and cattle. About the year was characterised by a shortage two thirds of the gelatin is intended for of rind as a raw material and this resulted the food industry. Gelatine is a gelling in lower production levels in Europe. This agent and an important source of protein, resulted in a lower supply of rind gelatin on and it contains no cholesterol, fat or the market with prices gradually rising and carbohydrates. It is also converted into payment terms tightening. speciﬁ c foodstuffs for diabetics and products with a low glycaemic index, and it is produced for the pharmaceutical Demand for industry (capsules) and a wide range gelatin rose of technical applications (such as despite the photography). economic crisis

Trends and facts in 2008 At the same time, demand in various The results of the Gelatin business unit markets evolved favourably. The estimated rose by 20 % in comparison with 2007. world production output grows by around This growth was mainly a result of the 4 % each year. Tessenderlo Group

• In the new economies, including China, technical assistance for the production the use of gelatin in the food sector and commercial activities, other market continues to rise. The use of gelatin in segments could be approached for the confectionery, which was initially only a gelatins of the Chinese production unit, European and American phenomenon, such as the food sector and capsules for is now more widespread in Asia too. the pharmaceutical industry.

• Demand from the pharmaceutical industry continues to grow due to the Chinese site will be gradual aging of the population. break-even in 2009. Quality improvement • The impact of digital photography opens new markets in the market for classic silver systems for fi lm has been dealt 61 with in the meantime. This is being Research into new applications and compensated by the growing demand product development continued in 2008. for photographic paper, although the quality requirements of the gelatin are • The important role that gelatin plays lower for these applications. to reduce calories, especially when combined with lower fat use, resulted Our American sites also experienced the in a number of new applications in the shortage of rind in the second half of the food industry, such as meat and cheese year, but to a lesser extent than in Europe. production, and bakery applications. Lower production levels and their impact The research into the healthy, biological on sales prices were less signifi cant there. role of gelatin and related products led to the fi rst upscaling steps. For the joint venture in China, further major efforts were made to improve the quality of the produced gelatin. This The role of resulted in higher sales prices. Although gelatin in healthy the results for the whole year are still food continues negative, positive fi gures were recorded to grow in the fourth quarter. Thanks to the annual report 2008

• The development of gelatins that of gelatin fi lms. These have been dissolve easily and are therefore more translated into the different production user-friendly is ongoing. preparations and will be used for a further qualifi cation in the pharma • The gelatin hydrolysates with a low sector. molecular weight are on the threshold of production. These types of gelatin • In 2008, the fi rst steps were made hydrolysates have a low gel strength towards technological innovation of the which means they dissolve more gelatin production process. This will be easily and are absorbed faster by the continued in 2009. body. This is extremely important for applications such as energy drinks. Outlook for 2009

• In the past year, new insights have been It is expected that sales prices will obtained into the dissolving behaviour continue to rise due to the growing 62 Tessenderlo Group

demand. This means that the higher raw material and energy prices will be compensated. In the second half of 2008, Strategy for the price increases were introduced with a Gelatin business unit delay which means that the adjusted sales prices will only have their full effect in the • To strengthen the position of ﬁ gures for 2009. Tessenderlo Group as one of the world’s top 3 players.

Impact of higher • To look out for new sales prices will only be opportunities in Asia and South felt fully in 2009 America.

• To put in place optimal There is a possibility that fewer cattle synergies between the six hides will be available on the raw materials production units with a focus on 63 market. The consumption of leather in the increased cost-efﬁ ciency. automotive sector has dropped as a result of the economic crisis and this means that skin by-products for the gelatin industry are more scarce. A solution is being sought for this.

Additional investments will be made in China in order to maintain quality at a high level. The joint venture in China is expected to break even in 2009.

The Gelatin business unit is striving towards further proﬁ t growth through acquisitions, the starting up of new sites and/or the optimal use of vertical integration opportunities. annual report 2008

Natural Derivatives

In 2008, the French subsidiary Caillaud was renamed the Akiolis Group, with its head offi ce in Le Mans. The new legal structure refl ects the various activities of the group and provides the foundation for the international development of Akiolis in the future. This also includes a new and complementary scope, i.e. the valorising of by-products based on cereal crops. This diversifi cation is possible thanks to the know-how of the group in the fi eld of collecting, processing and selling valorised animal by-products. This means Akiolis is able to expand its offering for producers of pet foods and animal feed.

Activities and products In this respect, Akiolis supplies:

Via the French subsidiary Akiolis, - bones for the extraction of gelatines Tessenderlo Group plays an important role - proteins and animal fats for use in in collecting and processing animal by- pet food products. Akiolis is the number two on the - animal fats for the soap industry and French market and the third largest player lipochemistry in Europe. - animal proteins for fertilisers

In the ﬁ eld of animal by-products, • As a rendering plant, it handles the Akiolis is active in two different but collection and the processing of risk complementary sectors. waste, and protects hygiene on cattle farms. The processed products are • The valorisation of animal by-products mainly used as fuel by the cement which are suitable for consumption. industry. Tessenderlo Group

As far as production is concerned, the Diversiﬁ cation towards market share in the fertiliser sector grew the valorisation considerably. The market prices for animal of by-products based fats remained high and this was very on cereal crops favourable for the results of the rendering plant activities for slaughterhouses that make use of the services of Akiolis. Since 2008, Akiolis is also active in the valorisation of the by-products of cereal In 2008, major restructuring took place crops from the food industry. These after sites were acquired or demergered. products are meant for the production of Furthermore, two production plants in the animal feed and pet food. west of France were closed. The rendering plant activities in this region and the Trends and facts in 2008 supply of raw materials to be rationalised, 65 increased the productivity of the collection The results of Akiolis are overall and processing installations. satisfactory, thanks to the combined effect of a number of contradictory developments: The rationalisation of rendering - a slight drop of volumes as a result plant activities led of a structural decline of cattle to higher farming in France; productivity - an improvement of the margins thanks to very high market prices for animal fats in the ﬁ rst ten months of Productivity also grew as a result of the year; better management of the industrial - higher production costs as a result processes, combined with the introduction of more expensive energy and the of new information technology systems, restructuring costs related to the and thanks to an improved approach to closing of four sites. collection in all subsidiaries. annual report 2008

Simultaneously, the group continued to were presented for existing products, such develop new markets. The collection and as the use of degreased bones for ﬁ ltering processing of used household oil from in the sugar industry. restaurants was extended to two additional regions: the west and the Paris region. Outlook for 2009 In addition, a manager was hired for the methanisation activity. Akiolis must adjust to the consequences of the worldwide crisis in raw materials. In Akiolis has focused extra attention on this respect, the market price for animal searching for markets that offer the fats dropped by more than 50 % at the highest possible added value for the end of 2008. However, the restructuring ﬁ nished products, especially within the pet efforts implemented in recent years should food industry. New markets were explored alleviate the impact of this crisis, especially abroad. Furthermore, new applications for the meat-related activities.

66 Tessenderlo Group

Restructuring efforts in recent years are helping Strategy for the to alleviate the impact Natural Derivatives of the crisis in raw business unit materials • Strengthen our market position in the sector of collection and Furthermore, the biofuel project using processing of animal by- animal fats is planned to start in 2009. This products. project was delayed in 2008 because the French government changed its subsidy • Develop new applications such policy for this activity. Government aid as the biofuel, pet food and continues. However in the future it will be methanising projects. linked to the environmental impact and 67 more speciﬁ cally to CO2 emissions. The subsidies will also focus on the production of second-generation biofuels. Akiolis meets both conditions.

In July 2009, the rendering plant activities were completely privatised and they will no longer be a public service.

Akiolis continues its policy of consolidation by dealing with ISO certiﬁ cation for the various sites in a straightforward manner, by implementing the new IT system across the entire group, and by focusing recruitment efforts.

Finally, our efforts in the ﬁ eld of methanising should result in speciﬁ c projects across the whole of France. MAKING IT LASTING Sustainable entrepreneurship is an ongoing assignment for Tessenderlo Group. We are committed to the environment, and the safety and health of our em- 69 ployees and the population, in all our activities. We constantly measure the impact of our activities on humans and nature, and strive to reduce this to a minimum. annual report 2008

Commitments

Human Resources

Employment Human Resources policy In 2008, the headcount rose from 8,121 to 8,237. The workforce mainly increased The Management Committee is strongly in Plastics Converting, through the convinced that high-performing employees acquisition of Nyloplast in the Netherlands are crucial for success and for achieving and the ongoing development of the the strategic objectives in a complex and Eurocell activities in Great-Britain. This ever-changing economic context. rise largely exceeded the slight drop of To implement this vision in concrete 70 the workforce in the other activities of the terms, the HR department has been group. developed further at group level and the roles of Corporate Talent Management, Within Chemicals headcount slightly Compensation & Beneﬁ ts, and Operational fell as a result of previously initiated Design & Development, and HR projects restructurings. As in Plastics Converting, have been created. the workforce in Specialities increased due to an acquisition. Additionally, organic The core mission consists of the following: growth of the activities positively inﬂ uenced • to attract and retain the best available the headcount in Plastics Converting. employees Tessenderlo Group

• to detect and develop talent in the Corporate Talent company for future management Management positions, and to develop and maintain the necessary know-how To accomplish this, a Performance • to support changes within the company Management Cycle for the entire and the organisation structure Tessenderlo Group will be implemented • to implement a remuneration policy that in 2009. This is a process of motivating motivates employees and that is in line and inspiring managers and employees with market conditions to perform actions that contribute to the • to strengthen constructive co-operation achievement of the team, department 71 within the entire company and organisations goals and to the

Employment per business group Employment per country 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 0 500 1,000 1,500 2,000 2,500

Chemicals 1,965 France 2,277 Belgium 2,073 Specialities 2,755 United Kingdom 1,393 North America 685 Plastics Converting 3,517 Netherlands 660 Total 8,237 Italy 289 South America 199 Germany 90 China 304 Others 267

Total 8,237 annual report 2008

implementation of its strategies in an personal leadership, personal mastery and effective and efﬁ cient way, with respect project management. for individual growth and aspirations and shared values. This Performance Moreover, many other training initiatives Management Cycle will be the basic tool exist for all employees at all levels for for Training and Development, Reward and acquiring technical knowledge and skills, Talent Review & Succession Planning. using IT tools, languages, communication In addition, the recruitment process is set techniques and people management skills. to be made more professional in light of the ongoing war for talent by promoting the Compensation & employer branding of the group and the Benefits introduction of competence management. In 2008, a variable pay system was Furthermore, the implementation of a introduced for the group’s top management Succession Planning cycle for the top as part of the implementation of the 72 management will also get underway, linked Performance Management project. In to the strategic objectives in the short and addition, preparations were made for the medium-long term of the Business. introduction in 2009 of a variable bonus plan for all managers. In addition, investments are also being made in Training Development. One of The salary house that was built for all the principal projects is the offering of an Business activities was benchmarked International Customised Management to ensure internal fairness and external Development Programme for our competitiveness of the remuneration executives. In co-operation with a number package. of external partners, including the Vlerick Leuven Ghent Management School we are The expatriation policy is constantly being offering an 18-day programme, spread over adapted to the ever-changing social trends a year. The programme is a tailor-made in this respect, and pension schemes mini-MBA and consists of 6 modules with are adapted to the changes of statutory a due focus on business understanding, regulations in the various countries. Tessenderlo Group

Organisation Design & Job classiﬁ cation which had already been Development developed for the top management and managers of the Chemicals business In 2008, the development of common tools group was also implemented in the other such as Job Descriptions and Job Grading business groups in 2008. began for all companies of the group, in order to optimise the change processes and the efﬁ ciency of the HR policy with regard to the ongoing evolution of the organisation.

Evolution of the average employment figures for Belgium and abroad 73

10,000

8,000 Total : 8,230

6,000 Abroad : 6,151

4,000

2,000 Belgium : 2,079

0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 annual report 2008

Environment, quality, safety and risk management

Manufacturing in a way that is To lend substance to this policy, environmentally responsible, taking into Tessenderlo Group relies on internationally account the health and safety of employees recognised principles, including and the population, is a fundamental Responsible Care, Best Available requirement for every industrial activity. Techniques, ISO 14001, OHSAS 18001 and NFPA standards. These serve as a guide for For this very reason, Tessenderlo Group optimisation. is committed to protecting people and the environment as a key consideration in its day-to-day policy. In this respect, we aspire to go further than the statutory 74 requirements. To accomplish this objective, the group makes available considerable funds each year.

Incidents must be avoided at any cost - Trends and facts in every accident can be prevented in theory. 2008 This can be achieved by putting in place the necessary precautions. Multi-disciplinary Environmental care teams analyse the situation in the fi eld on a continuous basis for this purpose. It is a Each year, extensive investments are key element of the ‘learning organisation’. made in environmental projects in each of the various sites. Thanks to this Strict health and safety and environmental policy, emission levels have already been standards apply for the various sites of substantially reduced in the past. the group, including those with a low-risk classifi cation. These standards are applied In 2008, Tessenderlo Group also invested through an active risk management policy, in various projects that benefi t the the company’s own audits and insurance environment. audits. Tessenderlo Group

Product stewardship Mobility and Transport with regard to the ADR regulations. As part of the preparations for REACH, the new chemicals policy of the European The voluntary commitment by the PVC Union, the focus in 2008 was on the industry, which has been signed by the so-called phase-in substances. A total group, delivered the expected results. For of more than 500 substances were pre- more information about the commitment, registered for 18 legal entities with the and the results, please log on to European Chemical Agency (ECHA). The www.vinyl2010.org. www.vinyl2010.org. highest number of registrations was for the pharmaceutical subsidiaries Calaire Chemie (France) and Farchemia (Italy).

In addition, within the framework of REACH, consortiums were set up where producers and importers jointly prepare 75 the applications for the registration of certain substances. One example is that Water, air and soil of the chlor-alkali products. Tessenderlo Group will play a leading role in a number In 2008, several of the group’s sites of consortiums, such as the consortium for carried out investments to further reduce caustic potash as just one example. emission levels into the atmosphere and efﬂ uent discharges to the lowest possible Risk analyses were carried out in levels. collaboration with the production units, on products that are used in food and animal The re-licensing application for the three feeds. sites of Tessenderlo Chemie in Limburg (Belgium) was successfully completed in In 2008, the Tessenderlo site was visited December 2008. The Flemish government by the Organisation for the Prevention of has renewed the environmental permits Chemical Weapons (OPCW). The inspection for a period of twenty years. This was was completed without remarks. A made possible thanks to the intensive successful audit was also carried out by dialogue between the company and the the Federal Government Department for government. annual report 2008

Under the terms of the agreements, Focus on energy salt discharges will be reduced to one tenth of current levels by 2014 at The necessary energy surveys were the latest. For this purpose, carried out in 2008 in the companies that 10 million EUR are being invested signed the Flemish Covenant on Energy in the modiﬁ cation of the production Benchmarking. These surveys serve as the installations in the plant at Ham. In basis for the energy plans for the period addition, 20 million EUR will be invested 2008-2012. in cleaning up sludge basins, and the company will co-operate to clean up the A better insight into the energy situation historic pollution of the banks of the local resulted in further energy savings in streams Laak and Winterbeek. several places.

Thanks to the new production process used Quality department in Ham, considerably less sludge needs 76 to be stored. This means that 30 hectares In 2008, the quality department continued of land will become available for new to assist the various departments in industrial estates. In joint agreement with implementing and maintaining the quality the Flemish and the Limburg authorities, management systems in accordance Tessenderlo Group is keen to convert the with the international standards, and vacant space in Ham into industrial land. maintaining the required certiﬁ cates for Its location along the Albert canal is an the marketing of products in the various important advantage. markets.

With regard to the historic soil Health, safety and risk management contamination of the factory sites in Limburg, the extent of the contamination The production units of Tessenderlo Group has been outlined in descriptive soil made major investments in health and surveys as agreed with the public safety in 2008. For example, a new digital authorities. These surveys specify the risks work permit system was introduced at as well as the necessity to clean up the soil. the sites in West-Limburg (Belgium). At the same time, the soil decontamination Preparations for maintenance works now activities that were already underway, are occur in a uniform and structured manner. being continued. Tessenderlo Group

These preparations are an important step year in the following plants: in the safe execution of any given project. • China: Taile Chemical Industry (Lianyungang) In the factory, a focus of attention is PB Gelatins (Ping Yang) made to go out to communicate on • Poland: health and safety, for example at the Dyka Warehouses (Wroclaw and Lotz) toolbox meetings. Small panel groups • The Netherlands : are put together to discuss specifi c Nyloplast (‘s-Gravendeel) health and safety topics on the shop fl oor. Opportunities for improving health and Many other sites were audited by safety are also discussed during the health an external insurance company, in and safety observation and communication collaboration with the Risk Management tours. Department. All of these served to confi rm that the initiatives of Tessenderlo Group The standard training for operators also to increase the health and safety of its focuses on health and safety. The so- employees, the company, the surroundings 77 called TOPS project (Training Operators) and the environment, are effective. Another also gives practical tips on working safely, very positive conclusion is that this is a alongside basic health and safety aspects. continuous and dynamic process. The following factories were audited in 2008: The Risk Management Department carried • United States: out health and safety audits in the past Jupiter Sulphur LLC (Ponca City) annual report 2008

Tessenderlo Kerley (Coffeyville) department also continued work on PB Leiner (Davenport) the development of health and safety • France: standards for Tessenderlo Group as a Caillaud (Saint Langis) whole. France Gras (Le Sourn) Point (Viriat) Community relations Plastival (Clerval) • The Netherlands: A crucial aspect of corporate social LVM Limburg BV (Beek) responsibility is good community relations Tessenderlo Chemie Maastricht in the way Tessenderlo Group maintains Tessenderlo Chemie Rotterdam with the local community around the • Italy: various sites. It is very important that Tessenderlo Italia (Pieve Vergonte, the company and local residents have a Ceppo Morelli and Megolo) good relationship. Openness and good Farchemia (Treviglio) communications play a key role in this 78 • Germany: respect. A good example of this are the PB Gelatins GmbH (Nienburg) open house days when local residents • Poland: are informed about the activities at the Dyka Polska (Wroclaw) production sites. TCT Polska (Sochaczew) • Belgium: The social role of the company goes even PB Gelatins (Vilvoorde) further than the immediate surroundings. It is especially important that youngsters The Risk Management Department receive objective information about primarily focused its attention on the chemical industry in general and prevention. For example, a DVD was Tessenderlo Group in particular. distributed with examples of good and bad They must be made aware of the major human conduct on the shop ﬂ oor. The DVD role this industry plays in their daily lives. is available to be used in all departments A close co-operation with educational of the group for training purposes. The authorities is important to accomplish this. department also gave presentations to This speciﬁ cally translates into company the commercial teams on product liability visits and a variety of initiatives that bridge and how problems can be avoided. The the gap between industry and education. Tessenderlo Group

Outlook for 2009 substances with production levels in excess of 1,000 tonnes. Environmental care The mandatory SIEF activities (Substance With respect to water, over the years ahead Information Exchange Forum) will also be the sites in Limburg will focus on adapting carried out and followed up. This forum the waste water circuit. This is the result has been set up for all manufacturers of changes to the production process in the and importers that have registered or Ham factory. Further investments will also pre-registered hazardous substances. be made for effl uent treatment at several They must exchange all available other sites of the group. information amongst themselves to prevent unnecessary tests on animals. They must The necessary soil decontamination also ensure that the classifi cation and projects are also getting underway for the labelling of substances occurs in a uniform sites of Tessenderlo Chemie in Limburg. manner. This is the follow-up to the descriptive 79 soil surveys that outline the historic soil The IT tools required to work effi ciently contamination. with the REACH regulations will be implemented in 2009 and the following Various measures to protect the soil years. Communication to customers and and further reduce emissions into the suppliers is also an important issue. atmosphere will also be implemented. Furthermore, several energy-saving Furthermore in respect to product measures are also scheduled. stewardship, the European integration of the Surround® crop protection products With regard to product stewardship, will also be continued in 2009. considerable efforts will be made in the context of the European REACH legislation The GHS regulations (Global Harmonised (Registration, Evaluation, Authorisation System) will also be implemented. This and limitations of Chemicals). The worldwide uniform system relates to the so-called Euclid documents detailing labelling and hazard signs on product physiochemical, toxic and ecotoxic labels. This is gradually being introduced characteristics are being prepared for the since1 January 2009. annual report 2008

Moreover, an electronic system will be programme with customised training developed to make the Material Safety sessions will be developed further. Special Data Sheets (MSDS) of hazardous products attention will be paid to emergency available to customers and to follow this up planning in 2009. within the organisation. The risk analysis that was started in 2008 Health, safety and risk management for the Chemicals business group, will be developed further in 2009 and extended In 2009, the health and safety theme to include other business groups and ‘Working together for more safety’ will business units. In this respect, efforts be launched. The importance of a good will be made to map out and evaluate co-ordination between maintenance and a large variety of risks. This will enable manufacturing when preparing work will Tessenderlo Group to reduce risks where be emphasised. possible and to manage these risks more effectively. 80 Next to the human aspects, and in particular the health and safety The internal audits will continue with the conduct of employees, the safety of the same frequency as in 2009, with new risk installations will also be reviewed in assessment visits and revisits. detail and further improved. The training Tessenderlo Group

Corporate Governance

Transparent Compliance with the recommendations management contained in the Belgian Corporate Governance Code and fi ne-tuning the Tessenderlo Chemie subscribes to the nine working of the Board of Directors, the principles of Corporate Governance stated special committees and the Management in the Belgian Corporate Governance Code. Committee (*) to fulfi l the requirements In fulfi lment of this, the Board of Directors of Corporate Governance is an ongoing approved its Corporate Governance Charter process. Tessenderlo Chemie undertakes, (the ‘Charter’) on 10 November 2005 therefore, to review the Charter at regular and an update on 8 November 2007. The intervals and to modify it where necessary. Charter can be consulted on our website 81 www.tessenderlogroup.com. Board of Directors

By introducing organisational and Role and responsibilities operational rules, the decision-making process within the Board of Directors, The Board of Directors is the highest admi- the special committees set up under the nistrative body of the company, which has auspices of the Board of Directors, and full powers under Article 18 of the Articles the Management Committee becomes of Association. The Board of Directors is a more transparent, taking into account the body with collective responsibility, which interests of the company, its shareholders reports to the General Meeting on its and others directly or indirectly involved in activities. events affecting the company, the so-called ‘stakeholders’.

(*) To date, it has been decided not to exercise the option offered under Article 524bis of the Belgian Companies Code to set up an Executive Committee. annual report 2008

The role of the Board of Directors con- Non-executive directors: sists in ensuring the long-term success • Michel Nicolas (June 2010) of Tessenderlo Chemie and Tessenderlo • François Schwartz (June 2011) Group. The Board of Directors promotes • Jacques Zyss (June 2010) and guarantees entrepreneurial leadership and ensures that risks can be assessed and Independent non-executive directors*: managed. The Board of Directors decides • Valère Croes (June 2009) on the values and the strategy of the com- • Paul de Meester (June 2011) pany, its risk proﬁ le, and the key elements • Jaak Gabriels (June 2011) of its policy. The Board of Directors also • Baudouin Michiels (June 2011) exercises major monitoring and compliance • Bernard Pache (June 2011) responsibilities. • Thierry Piessevaux (June 2011) • Alain Siaens (June 2010) The company is validly represented either • Karel Vinck (June 2011) by the Chairman of the Board of Directors 82 or by two directors acting jointly. The Board of Directors is supported by Adrien Carton de Wiart, in his capacity as Composition the Secretary General of the company.

At 31 December 2008, the Tessenderlo Remuneration policy Chemie Board of Directors was composed as follows: Pursuant to Article 21 of the Articles of Association, as modiﬁ ed by the Chairman, executive director: extraordinary meeting of 5 June 2007, it Gérard Marchand (appointment ends June is the responsibility of the Tessenderlo 2010) Chemie Board of Directors to make

(*) Pursuant to paragraph 4.10 of the Charter, a director is regarded as being independent, if he or she at the very least satisﬁ es the independence criteria contained in Article 526 ter of the Belgian Companies Code. When assessing independence, the conditions outlined in Annex A to the Belgian Corporate Governance Code will also be considered. According to the information at the disposal of the Board of Directors, the independent directors of Tessenderlo Chemie meet the above-mentioned independence criteria. No exceptions were reported to the Board. Tessenderlo Group

proposals concerning the remuneration and 3,000 EUR for the director chairing the granted to Board members. Committee.

A special committee set up within The executive director receives a the Board of Directors, namely the remuneration package consisting of three Remuneration Committee, formulates different components proposed by the proposals to the Board of Directors Remuneration Committee, namely: concerning: • A fi xed remuneration of 590,352 EUR in • The remuneration for participating in 2008 compared to 560,320 EUR in 2007; the four annual Board meetings; • A variable remuneration of 472,282 EUR • The remuneration granted for relating to 2008 compared to a bonus of assignments related to special 425,843 EUR in 2007; mandates. • The granting of stock options under the stock option plan for group The Remuneration Committee also topmanagement. 83 assesses the implementation of the various decisions taken on this matter. In common with all employees, the executive director also participates in the Non-executive directors receive fi xed company’s benefi ts plan. remuneration and reimbursement of travel expenses to meetings. Total annual Operation remuneration amounts to 53,679 EUR per mandate, excluding reimbursement Pursuant to Article 16 of the Tessenderlo of travel expenses. Attendance fees Chemie Articles of Association, the Board amounting to 1,240 EUR are also granted of Directors convenes whenever it deems per meeting of the Remuneration necessary, following notice given by the Committee and the Appointments Chairman or if requested by any two Committee and, if the situation arises, the directors. The Board of Directors may only Independent Directors Committee to be set validly deliberate if the majority of the up pursuant to Article 524 of the Belgian directors is present or represented. The Companies Code. With regard to the Board of Directors strives to take decisions Audit Committee, the attendance fees per by unanimous vote. If unanimity cannot be meeting amount to 2,000 EUR per director reached, the decision is taken by simple annual report 2008

majority, with the meeting Chairman recommendations of the special committee having the deciding vote. in question. During 2007, the Board of Directors Appointments Committee convened ﬁ ve times. Average attendance in 2008 was 75 % against 92 % in 2007. The task of the Appointments Committee consists in advising the Board of Directors Special committees on and assisting it with the appointment of directors, or assisting the CEO with and ad- General vising on the appointment of Management Committee members. The Appointments The Board of Directors may set up special Committee ensures that the (re)appoint- committees under its auspices to analyse ment procedures are carried out in a pro- certain speciﬁ c matters and to advise the fessional and objective manner. However, Board. However, the ultimate decision- the ultimate decision-making authority making authority remains with the Board of remains with the General Meeting or the 84 Directors in accordance with the statutory Board of Directors respectively. provisions and the Memorandum and Articles of Association. At 31 December 2008, the Appointments Committee was composed as follows: The Tessenderlo Chemie Board of Directors has set up an Appointments Committee, • Paul de Meester (Chairman) a Remuneration Committee, and an Audit • Baudouin Michiels Committee. • Jacques Zyss.

A special committee strives to take The Appointments Committee convened decisions by unanimous vote. If unanimity once during the year under review. As in cannot be reached, the decision is taken by 2007, the attendance rate was 100 %. simple majority. Remuneration Committee Following each committee meeting, the Board of Directors receives a verbal or The task of the Remuneration Committee written report of the deliberations and consists in advising the Board of Directors Tessenderlo Group

on and assisting it with formulating the obligation relates to Tessenderlo Group as remuneration policy for the executive and a whole and refers to ﬁ nancial reporting, non-executive directors and Management internal control and risk management, in Committee members. However, the ulti- addition to the internal and external audit mate decision-making authority remains process. with the General Meeting as far as the directors are concerned, and with the Board At 31 December 2008, the Audit Committee of Directors in the case of Management was composed as follows: Committee members. • Valère Croes (Chairman) At 31 December 2008, the Remuneration • Thierry Piessevaux Committee was composed as follows: • François Schwartz.

• Valère Croes (Chairman) The Financial Director, the Internal • Paul de Meester Auditor, the Management Controller and • Alain Siaens the Statutory Auditor may be invited to at- 85 • Jacques Zyss tend Audit Committee meetings.

The Remuneration Committee convened The Audit Committee convened three times once during the year under review. As in during the year under review. As in 2007 2007, the attendance rate was 100 %. the attendance rate was 100 %.

Audit Committee

The task of the Audit Committee consists in providing the Board of Directors with assistance with and advice on its supervisory responsibilities concerning compliance in the most general sense.

The compliance task of the Audit Committee and the associated reporting annual report 2008

Frank CoenenAlbert Vasseur Pol Deturck Jan Vandendriessche 86 Eddy Vandenbriele Adrien Carton de Wiart Christian Vrebosch Gérard Marchand

Management Committee • organising the internal audit, without prejudicing the supervisory function Role and responsibilities exercised by the Board of Directors; • preparing the budget and ﬁ nancial The operational management of the reporting, following these up, and company is entrusted by the Board of explaining them to the Board of Directors to the Chief Executive Ofﬁ cer Directors; (CEO). The CEO is assisted by the members • preparing the annual accounts in of the Management Committee. accordance with the company’s accounting principles and valuation The operational management of the rules. company includes, inter alia: • the day-to-day management of the Composition company; • preparing and implementing decisions At 31 December 2008, the Tessenderlo taken by the Board of Directors; Chemie Management Committee was Tessenderlo Group

composed as follows: composition thereof are analysed annually • Gérard Marchand – Chairman on the basis of a study conducted by a • Frank Coenen – Chemicals business specialised external agency, in order group to take into account prevailing market • Albert Vasseur – Plastics Converting conditions. business group • Jozef Housen – Gelatin business unit The fi xed remuneration must be situated at • Jan Vandendriessche – Fine Chemicals internationally competitive levels with the business unit objective of promoting complete motivation and loyalty of managers towards the group. As of 1 January 2009, the Tessenderlo The variable component amounting to Chemie Management Committee is on average 30 % of total remuneration composed as follows: sets quantitative and qualitative targets • Gérard Marchand – Chairman to be met by managers, taking into • Frank Coenen – Chief Operating Offi cer account the specifi c circumstances in • Albert Vasseur – Plastics Converting the sector of activities or business units, business group which they manage. In common with all 87 • Jan Vandendriessche – Organic senior executives at the subsidiaries, Specialities business group Management Committee members are • Pol Deturck – Chemicals business also entitled to participate in the annual group stock option plan. The apportionment of subscription rights is entrusted to the The ordinary meetings of the Management Remuneration Committee. Committee are also attended by the Secretary General, Adrien Carton de Wiart, The pension plan, in which the executive the Director ICT, Internal Audit and Human director and the Management Committee Resources, Eddy Vandenbriele and the members participate, is the same plan CFO, Christian Vrebosch. as that for all employees and executives of the company and is of the type Remuneration policy ‘defi ned benefi ts obligations’. The annual remuneration for the Management The remuneration of Management Committee, including remuneration for Committee members is determined on the the executive director, amounts to 2.555 basis of the recommendations made by the million EUR including the bonus for 2008. Remuneration Committee. In 2007 the remuneration amounted to The remuneration package and the 2.410 million EUR, bonus included. annual report 2008

Stock options in total, including 77,460 for Management Committee members and 181,135 for In 2007 the group issued a fi rst section of senior executives of the group. 160,000 warrants, as part of a fi ve-year plan relating to a maximum of 800,000 Operation warrants that could be subscribed for. These subscription rights can only be In principle, the Management Committee exercised after three years and this for two convenes once a month. The Management successive years. The list of benefi ciaries, Committee may only validly deliberate, namely the Management Committee and if half of its members are present or the senior executives of the group (the represented. The Management Committee ‘Executive Team’), is established by the strives to take decisions by unanimous vote. Board of Directors every year. The Board of Directors entrusts the Remuneration The Management Committee reports to Committee with apportioning subscription the Board of Directors on the principal 88 rights among benefi ciaries. The decisions it has taken. subscription rights are registered and non-transferable, except in the event of During the year under review, the death. This issue enables the group’s Management Committee convened eleven senior executives to be connected with times. Attendance was 100 %. its fi nancial results and this in the long term. The issued and offered subscription Conflict of interests rights needed to be accepted fully or regulation partially before 10 February 2009. The price at which the subscription rights can Paragraphs 4.9 and 6.6 of the Charter be exercised was set at 23.08 EUR. For the set out the confl ict of interests regulation subplans for France and the USA the prices applicable to the Board of Directors and are respectively 22.07 EUR and 22.09 EUR. the Management Committee respectively. During the year under review, the Board At 31 December 2008, the situation of of Directors was informed of a confl ict of the total of the number of warrants, interest affecting one of its members as it which can still validly be exerted by the was noted in the notarial deed concerning ‘Executive Team’, is the following: 258,595 the emission of warrants. Tessenderlo Group

Policy on inside audit committee and board of directors. information and market Worldwide audit and other audit related manipulation fees for 2008 in relation to services provided by KPMG Bedrijfsrevisoren Chapter 8 of the Charter sets out the amounted to 0.70 million EUR (2007: company’s policy on inside information and 0.47 million EUR), which was composed market manipulation. of audit services for the annual fi nancial The Board of Directors has appointed the statements of 0.39 million EUR (2007: Secretary General, Adrien Carton de Wiart, 0.32 million EUR) and audit related as Compliance Offi cer. In his absence, the services of 0.31 million EUR (2007: Director ICT, Internal Audit and Human 0.15 million EUR). Resources will perform the function of Audit and other fees for 2008 in relation Compliance Offi cer. to services provided by other offi ces of the KPMG network amounted to 0.64 million The Compliance Offi cer is responsible EUR (2007: 0.55 million EUR) which was for overseeing compliance with the composed of audit services for the annual 89 policy outlined by the company on inside fi nancial statements of 0.45 million EUR information and market manipulation and (2007: 0.47 million EUR), tax services of acts as a point of contact for enquiries 0.19 million EUR (2007: 0.08 million EUR). concerning the application of the policy. Dividends policy External Audit The dividend policy remains unchanged. In The position of statutory auditor is fulfi lled fact: one-third of the net consolidated profi t by Klynveld Peat Marwick Goerdeler average is paid out as dividend. However, Bedrijfsrevisoren (KPMG), represented by this policy can be adjusted in order to Ludo Ruysen. Its mandate will expire in ensure that the dividend grows or at least June 2010. remains stable.

Fees for auditing the annual ﬁ nancial For the ﬁ nancial year 2008, a net dividend statements of Tessenderlo Chemie NV of 1.00 EUR per share will be proposed to and its subsidiaries are determined by the General Meeting of June 2, 2009, which the general meeting of shareholders after is an increase of 5.3 % compared to last review and approval by the company’s year’s dividend. MAKING IT CONVINCING Tessenderlo Group inspires confidence. Among customers and also among shareholders and investors. For many products we are the market leader in Europe and even 91 in the world. In addition, Tessenderlo Group is financially a healthy company. Costs are monitored very closely. Our dividend policy is focused on stable growth. annual report 2008

Information for shareholders

Tessenderlo Chemie shares

Tessenderlo Chemie shares are listed on The shares are included in the the Brussels Stock Exchange with code ‘Kempen SNS Smaller European Social TESB. They are traded on the continuous Responsibility Index’. This index only market and are included in the following includes companies that fulﬁ ll stringent indices: BEL Mid and Next 150. criteria and practices in terms of business ethics and social and environmental performance. 92 Shareholder structure on 31 December 2008

Shareholder Share Last notiﬁ cation

SNPE SA (FR) 25.93 % 30 October 2008 M&G Investment Management Ltd (UK) 4.03 % 24 October 2008 ID Sparinvest A/S (DK) 3.03 % 31 October 2008 Sub-total 32,99 % Staff (Nominative shares) 1.28 % Free ﬂ oat (100 -25,93) 74,07 % Tessenderlo Group

The total number of shares constituting In 2008, JP Morgan Chase & Co that the issued capital of Tessenderlo Chemie ofﬁ cially notiﬁ ed to own a stake of at least NV is 27,713,288. Including the shares that 3 % in the share capital of Tessenderlo may be issued as a result of the exercise of Chemie NV, fell below the 3 % threshold. warrants, the total is 27,971,883.

Stock market data as at 31 December

2004* 2005 2006 2007 2008

Number of shares 27,210,399 27,269,568 27,419,876 27,626,444 27,713,288

Farthest prices 93 Fixed ordinary share (EUR) 27.24/33 36.00/25.75 26.03/32.53 31.27/47.2 20.05/38.21

Market continuous Closing price (EUR) 31.14 27.35 32.3 33.2 21.63 Average daily volume 35,536 59,890 64,063 97,787 103,308 Velocity (in %)** 51.38 56.44 59.58 90.26 95.43 Volume 9,203,713*** 15,391,688 16,336,185 24,935,571 26,446,820

* As from 2004 ﬁ gures are stated according to IFRS ** Sum of the velocities of the 12 months of the year *** Exclusive the sale of 4,693,794 shares of EMC Parbel

Financial data per share (consolidated accounts) on 31 December

2004* 2005 2006 2007 2008

Data per share (EUR) Value of shareholders’ equity 27.77 28.41 25.96 29.04 32.55 Proﬁ t (+) / Loss (-) 1.97 1.29 -0.89 4.69 5.08 Net cash ﬂ ow 7.19 5.91 5.21 8.99 10.11 Net dividend per ordinary share 0.90 0.90 0.90 0.95 1.00

Capital (millions EUR) 134.00 135.00 136.00 137.02 138.00

Capitalisation at the end of year (millions EUR) 847.30 745.80 885.70 917.20 599.40

* As from 2004 ﬁ gures are stated according to IFRS annual report 2008

Dividend

On 2 June 2009, a proposal will be put to The net dividend will be payable as the Annual General Meeting to approve a from June 9, 2009 either per transfer to net dividend of 1.00 EUR (coupon n° 72). registered and dematerialised shares, or This corresponds to a gross dividend against handing-over of the coupon for of 1.3333 EUR. The net dividend for materialised shares (and if necessary from shares with VVPR strips attached will be strips VVPR) to Belgian banks and fi nancial 1.1333 EUR. The net dividend of 1.00 EUR institutions, the fi nancial service being means an increase of 5.3 % compared with ensured by ING Belgium. fi nancial year 2007.

Financial communication and investor relations 94

Road shows and events

Each year, the ﬁ nancial managers work organises company visits and meetings with the Corporate Communication with the group management. department on a number of initiatives to raise awareness of Tessenderlo Group The group also invites analysts on a regular among institutional and private investors. base in order to comment on the results and future developments. In a ddition the Between ‘roadshows’, the group regularly group organises conferences calls for participates in events for investors and analysts to explain the quarterly results.

Financial calendar

Financial year 2008 Announcement of results 12 March 2009 General Meeting 2 June 2009 Payment of dividend 9 June 2009 First quarter 2009 Announcement of quarterly results 23 April 2009 First half year 2009 Announcement of quarterly results 27 August 2009 Third quarter 2009 Announcement of quarterly results 5 November 2009 Tessenderlo Group

Full ﬁ nancial and non-ﬁ nancial information Contacts about the group is available on the website at www.tessenderlogroup.com. Anyone The following people are available to wishing to receive Tessenderlo Group press answer any questions about Tessenderlo releases by e-mail may register on the Group: mailing list on this website. Investors and analysts The Tessenderlo Chemie share price is Christian Vrebosch (CFO) published on www.tessenderlogroup. Tel: +32 2 639 18 87 com and on the Euronext website: www. E-mail: euronext.com. [email protected]

Providers of financial Shareholders information Jo Verspecht Tel: +32 2 639 18 31 Providers of Tessenderlo Group ﬁ nancial E-mail: [email protected] 95 information publish under the following codes:

• Bloomberg: TESB BB “The stock market price of • Reuters: TESBt.BR Tessenderlo Chemie shares • Datastream: B:TES generally held its own in relation • TBM: 23IT081 to the Belgian or European stock • SEDOL: 4-884-006 exchange indices and continued to • ALPHA: TES do so until November 2008. As of • ISIN: BE 000 3 555 639 this time, prices of chemical shares sustained a downward sweep as a result of the uncertainty as to the performance of industrial businesses for the months ahead.”

Gérard Marchand CEO

annual report 2008

Shareholders equity & Stock market capitalisation (millions EUR)

2, 000

1,000 Shareholders’ equity

Stock market capitalisation

96 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Net dividend per share (EUR)

1.00 &#% IFRS

%#-

%#+

%#)

%#'

%#% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Tessenderlo Group

Return on dividends reinvested

200

150

100

2004 2005 2006 2007 97 Dec. 03 Dec. 08

Change in the Tessenderlo Chemie share price in 2008 (EUR)

10 Oct. 08 July 08 July May 08 Jan. 08 Feb. 08 Feb. Nov. 08 Nov. Dec. 08 Aug. 08 April 08 June 08 Sept. 08 March 08 March MAKING IT WORK Co-operation means working together. Effective communication between employees is the key 99 to success. Like at PB Gelatins in Vilvoorde. All maintenance works are discussed and planned at the weekly team meeting between the managers of maintenance and production. financial report 2008

CONSOLIDATED FINANCIAL REPORT

CONSOLIDATED INCOME STATEMENT

(Millions EUR) note 2008 2007

Revenue 2,765.0 2,405.9 Cost of sales -2,165.9 -1,873.6

Gross proﬁ t 599.1 532.3

Distribution expenses -144.6 -165.2 Sales and marketing expenses -62.7 -77.4 Administrative expenses -126.1 -125.2 Other operating income and expenses 4 -26.6 -12.2 Proﬁ t from operations before non-recurring items 239.1 152.3

Gain on disposals 5 12.8 58.4 Restructuring (incl. impairment losses) 5 -18.2 -15.6 Environmental provisions 5 -14.2 -2.8 Other 5 -7.3 -4.9 100 Proﬁ t (+) / loss (-) from operations 212.2 187.4

Finance expenses 8 -29.8 -23.9 Finance income 8 8.2 6.3 Finance expenses - net -21.6 -17.6

Share of result of investments accounted 13 11.5 6.0 for using the equity method

Proﬁ t (+) / loss (-) before tax 202.1 175.8

Income tax expense 9 -61.7 -47.1

Proﬁ t (+) / loss (-) for the period 140.4 128.7

Attributable to: - Equity holders of the Group 140.5 128.9 - Minority interests -0.1 -0.2

Basic earnings per share (EUR) 21 5.08 4.69 Diluted earnings per share (EUR) 21 5.08 4.68 Tessenderlo Group

CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE

(Millions EUR) note 2008 2007

Translation differences 20 -8.8 -12.4

Net income (+) / expense (-) recognised directly in equity -8.8 -12.4

Proﬁ t (+) / loss (-) for the period 140.4 128.7

Total recognised income (+) and expense (-) for the period 131.6 116.3

Attributable to: Equity holders of the Group 131.7 116.5 Minority interests -0.1 -0.2

Total recognised income (+) and expense (-) for the period 131.6 116.3

101 financial report 2008

CONSOLIDATED BALANCE SHEET

(Millions EUR) note 2008 2007

ASSETS Non-current assets 810.1 823.8 Property, plant and equipment 10 652.0 677.8 Goodwill 11 38.3 37.2 Intangible assets 12 39.9 36.9 Investments accounted for using the equity method 13 39.6 24.0 Investments 14 5.2 6.1 Deferred tax assets 15 17.7 26.3 Trade and other receivables 16 17.4 15.5

Current assets 1,002.1 859.4 Inventories 17 473.7 339.9 Trade and other receivables 16 469.5 424.0 Derivative ﬁ nancial instruments 25 5.4 1.9 Cash and cash equivalents 18 53.5 93.6 Non current assets classiﬁ ed as held for sale 19 0.7 0.0

Total assets 1,812.9 1,683.2

102 (Millions EUR) note 2008 2007

EQUITY & LIABILITIES Equity Equity attributable to equity holders of the Group 20 900.0 800.2 Issued capital 20 138.0 137.0 Share premium 20 43.3 42.0 Reserves 20 313.4 238.6 Retained earnings 20 405.3 382.6 Minority interests 20 2.0 2.0 Total equity 902.0 802.2

Liabilities Non-current liabilities 267.7 269.3 Financial liabilities 22 96.7 122.6 Employee beneﬁ ts 23 40.9 46.4 Provisions 24 85.7 63.1 Deferred tax liabilities 15 44.4 37.2 Current liabilities 643.2 611.7 Financial liabilities 22 251.4 214.8 Trade and other payables 25 388.9 385.9 Current tax liabilities 2.0 2.4 Provisions 24 0.9 8.6 Total liabilities 910.9 881.0

Total equity and liabilities 1,812.9 1,683.2 Tessenderlo Group

CONSOLIDATED CASH FLOW STATEMENT

(Millions EUR) note 2008 2007

OPERATING ACTIVITIES Profi t (+) / loss (-) from operations 212.2 187.4 Depreciation, impairment and amortisation 144.8 128.9 Changes in provisions 9.3 -5.7 Loss / (profi t) on sale of non-current assets -12.4 -56.2 Non cash items -1.4 0.5 Changes in inventories -149.1 -1.7 Changes in trade and other receivables -52.8 8.9 Changes in trade and other payables 2.6 18.1 Cash generated from operating activities 153.2 280.2 Interest paid -14.6 -17.9 Interest received 2.8 4.2 Income tax (paid) / received -57.6 -48.0 Dividends received from investments accounted for using the 30 10.2 4.9 equity method Cashfl ow from operating activities 94.0 223.4

INVESTING ACTIVITIES Acquisition of property, plant and equipment 10 -94.2 -98.6 Acquisition of intangible assets 12 -7.2 -5.5 103 Acquisition of investments accounted for using the equity method 3 -3.1 - Acquisition of businesses, net of cash acquired 3 -18.5 -25.8 Acquisition of investments -0.4 - Proceeds from sale of property, plant and equipment 15.1 11.0 Proceeds from sale of intangible assets - 1.0 Proceeds from sale of subsidiaries, net of cash disposed of 3 - 3.6 Proceeds from sale of investments accounted for using the equity 3 - 68.7 method Proceeds from sale of investments 0.1 - Proceeds from government grants - 12.5 Cashﬂ ow from investing activities -108.2 -33.1

FINANCING ACTIVITIES Increase/(decrease) of issued capital 20 2.3 6.5 Increase/(decrease) of fi nancial liabilities 10.1 -105.7 (Increase)/decrease of long term receivables -2.4 0.9 Dividends paid to shareholders 20 -35.0 -33.5 Cashfl ow from fi nancing activities -25.0 -131.8

Net increase/(decrease) in cash and cash equivalents -39.2 58.5 Effect of exchange rate differences -0.9 -1.2 Cash and cash equivalents at the beginning of the year 18 93.6 36.3 Cash and cash equivalents at the end of the year 18 53.5 93.6 financial report 2008

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Summary of signifi cant accounting policies 1 Segment reporting 2 Acquisitions and disposals 3 Other operating income and expenses 4 Non-recurring items 5 Payroll and related benefi ts 6 Additional information on operating expenses by nature 7 Finance income and expense 8 Income tax expense 9 Property, plant and equipment 10 Goodwill 11 Intangible assets 12 Investments accounted for using the equity method 13 Investments 14 Deferred tax assets and liabilities 15 Trade and other receivables 16 Inventories 17 Cash and cash equivalents 18 Non-current assets held for sale 19 Equity 20 Earnings per share 21 104 Financial liabilities 22 Employee benefi ts 23 Provisions 24 Trade and other payables 25 Financial instruments 26 Operating leases 27 Guarantees and commitments 28 Contingencies 29 Related parties 30 Information on the auditors’ assignment and related fees 31 Subsequent events 32 Consolidated companies 33 Critical accounting estimates and judgements 34 Tessenderlo Group

1. Summary of significant accounting policies

Tessenderlo Chemie NV (hereafter referred to as the « Company ») is a company domiciled in Belgium. The consolidated ﬁ nancial statements for the year ended 31 December 2008 comprise the Company and its subsidiaries (together referred to as the « Group ») and the Group’s interests in associates and jointly controlled entities.

The IFRS ﬁ nancial statements were authorised for issue by the Board of Directors of Tessenderlo Chemie NV on Thursday 12 March 2009.

(A) Statement of compliance

The consolidated ﬁ nancial statements have been prepared in accordance with International Financial Reporting Standards (formerly named IAS) issued by the International Accounting Standards Board (IASB) as adopted by the European Union.

(B) Basis of preparation

The ﬁ nancial statements are presented in euro, rounded to the nearest million. They are prepared on the historical cost basis except for derivative ﬁ nancial instruments and investments available-for-sale, which are stated at fair value. 105

Non-current assets and disposal groups held for sale are stated at the lower of carrying amount and fair value less costs to sell.

The preparation of ﬁ nancial statements in conformity with IFRSs requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Judgements made by management in the application of IFRS that have signifi cant effect on the fi nancial statements and estimates with a signifi cant risk of material adjustment in the next year are discussed in note 34.

The consolidated ﬁ nancial statements are presented before the effect of the proﬁ t appropriation of the Company proposed to the General Assembly of shareholders.

The accounting policies set out hereafter have been applied consistently by the Group to all periods presented in these consolidated ﬁ nancial statements. financial report 2008

Companies controlled by the Group (i.e. in which the Group has, directly, or indirectly, an interest of more than one half of the voting rights or is able to exercise control over the operations, further also “subsidiaries”) have been fully consolidated. In assessing control, potential voting rights that presently are exercisable or convertible are taken into account. The ﬁ nancial statements of subsidiaries are included in the consolidated ﬁ nancial statements from the date that control commences until the date that control ceases. Separate disclosure is made of minority interests.

Investments in associates and jointly controlled entities (joint ventures) are included in the consolidated fi nancial statements using the equity method. The investments in associates are those in which the Group has signifi cant infl uence over the fi nancial and operating policies, but which it does not control. In general, it is the case when the Group holds between 20 % and 50 % of the voting rights. The equity method is used as from the date that signifi cant infl uence commences until the date that signifi cant infl uence ceases. When the Group’s share of losses exceeds its interest in an associate, the Group’s carrying amount is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has incurred legal or constructive obligations in respect of the associate.

All intercompany transactions, balances and unrealised gains and losses on transactions between group companies have been eliminated. Unrealised gains arising from transactions with associates and jointly controlled entities are eliminated to the extent of the Group’s interest in the entity. Unrealised losses 106 are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

(D) Foreign currency

• Foreign currency transactions

Foreign currency transactions are accounted for at exchange rates prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at balance sheet date rate. The resulting gains and losses of these transactions are recognised in the income statement of the period.

Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated to euro at foreign exchange rates ruling at the dates the fair value was determined. For available for sale non-monetary assets, foreign exchange gains and losses are not separated from the total fair value changes.

• Foreign currency translation

Assets and liabilities of foreign entities included in the consolidation are translated to euro at the foreign exchange rates ruling at the balance sheet date. The income statement of the foreign entities is translated to euro at the annual average foreign exchange rates (approximating the foreign exchange rates prevailing at the dates of the transactions). The components of equity attributable to equity holders of the Group are translated at historical rates. Exchange differences arising from the translation of the equity attributable to the equity holders of the Group to euro at year-end exchange rates are taken to “Translation reserves” in Equity. Tessenderlo Group

• Exchange rates

The following exchange rates have been used in preparing the ﬁ nancial statements:

Closing rate Average rate 1 EUR equals : 2008 2007 2008 2007

Brazilian real 3.2332 2.7490 2.6701 2.6622 Canadian dollar 1.6998 1.4449 1.5600 1.4678 Chinese yuan 9.4956 10.7524 10.2211 10.4178 Czech crown 26.8750 26.6280 24.9519 27.7656 Hungarian forint 266.7000 253.7300 251.5800 251.3500 Polish zloty 4.1535 3.5935 3.5143 3.7837 Pound sterling 0.9525 0.7333 0.7969 0.6843 Slovak koruna 30.1260 33.5830 31.2576 33.7745 Swiss franc 1.4850 1.6547 1.5871 1.6427 US dollar 1.3917 1.4721 1.4705 1.3705

(E) Intangible assets

• Research and development 107 Expenditure on research activities, undertaken with the prospect of gaining new scientiﬁ c or technical knowledge and understanding, is recognised in the income statement as an expense as incurred.

Expenditure resulting from development activities, whereby research ﬁ ndings are applied to a plan or design for production of new or substantially improved products and processes, is capitalised if the product or process is technically and commercially feasible and the company has sufﬁ cient resources to complete development. The capitalised expenditure includes the cost of materials, direct labour and an appropriate proportion of overheads. Other development expenditure is recognised in the income statements as an expense as incurred. Capitalised development is stated at cost less accumulated amortisation (see below) and impairment losses (see accounting policy J).

• Emission allowances

The cost of acquiring emission allowances is recognised as intangible asset, whether they have been purchased or received free of charge (in the latter the acquisition cost is zero). A provision is set up to cover obligations to refund allowances depending on emissions if, during a given period, the number of allowances required exceeds the total number of allowances received. This provision is measured at the estimated amount of the expenditure required to settle the obligation.

• Other intangible assets

Other intangible assets, acquired by the Group, are stated at cost less accumulated amortisation (see below) and impairment losses (see accounting policy J). financial report 2008

• Subsequent expenditure

Subsequent expenditure on capitalised intangible assets is capitalised only when it increases the future economic beneﬁ ts embodied in the speciﬁ c asset to which it relates. All other expenditure is expensed as incurred.

• Amortisation

Intangible assets with a ﬁ nite life are amortised using the straight-line method over their estimated useful lives.

The estimated useful lives of the respective asset categories are as follows:

Development 5 years Software 3 to 5 years Concessions, licenses, patents and other 10 to 20 years

Intangible assets with an indeﬁ nite useful life are tested for impairment on an annual basis.

(F) Goodwill

108 • Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the company’s share of the net identiﬁ able assets of the acquired subsidiary, jointly controlled entity or associate at the date of acquisition.

All goodwill has been frozen on the 1st of January 2004 and is not amortised anymore, but tested at least annually for impairment and whenever there is an indicator that the unit to which the goodwill has been allocated may be impaired (see accounting policy J).

Goodwill is expressed in the currency of the subsidiary, jointly controlled entity or associate to which it relates.

• Negative goodwill

Negative goodwill represents the excess of the fair value of the company’s share of the net identiﬁ able assets acquired over the cost of acquisition. Any negative goodwill is recognised directly in the income statement.

• Subsequent measurement

Goodwill is measured at cost less accumulated impairment losses. In respect of equity accounted investees, the carrying amount of goodwill is included in the carrying amount of the investment. Tessenderlo Group

(G) Property, plant and equipment

• Owned assets

Items of property, plant and equipment (further also “PP&E”) are stated at cost less accumulated depreciation and impairment losses. Cost includes the purchase price and any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management (e.g. non refundable tax, transport and the costs of dismantling and removing the items and restoring the site on which they are located, if applicable). The cost of a self- constructed asset is determined using the same principles as for an acquired asset and includes the cost of materials, direct labour and an appropriate proportion of indirect costs. Borrowing costs directly attributable to the acquisition, construction or production of an asset, requiring a long preparation, are included in the cost of the asset.

Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment.

• Subsequent expenditure

Subsequent expenditure incurred in replacing or renewing components of some items of property, plant and equipment is accounted for as the acquisition of a separate asset and the replaced asset is written off. Capitalisation of subsequent expenditure is only done when it increases the future economic 109 beneﬁ ts embodied in the item of property, plant and equipment. Repair and maintenance, which do not increase the future economic beneﬁ ts of the asset to which they relate, are expensed as incurred.

• Depreciation

Depreciation is charged to the income statement as from the date the asset is available for use, on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment.

The estimated useful lives of the respective asset categories are as follows:

Improvements to land 10 to 20 years Buildings 20 to 40 years Building improvements 10 to 20 years Plant installations 6 to 20 years Machinery and equipment 5 to 15 years Furniture and ofﬁ ce equipment 4 to 10 years Extrusion and tooling equipment 3 to 7 years Laboratory and research – infrastructure 3 to 5 years Vehicles 4 to 10 years Computer equipment 3 to 5 years

Land is not depreciated as it is deemed to have an indeﬁ nite life. financial report 2008

• Government grants

Government grants relating to the purchase of property, plant and equipment are deducted from the carrying amount of the related asset when there is reasonable assurance that they will be received and the company will comply with the conditions attached to it. They are recognised in the income statement as other operating income on a straight-line basis over the estimated useful life of the associated asset.

(H) Leased assets

Leases of property, plant and equipment where the company assumes substantially all the risks and rewards of ownership are classiﬁ ed as ﬁ nance leases. Finance leases are capitalised at the lower of the fair value and the present value of the minimum lease payments at inception of the lease, less accumulated depreciation (see accounting policy G) and impairment losses (see accounting policy J).

Each lease payment is allocated between the liability and fi nance charges so as to achieve a constant periodic rate of interest on the outstanding fi nance balance. The corresponding obligations, net of fi nance charges, are included in other long-term payables. The interest element is charged to the income statement as a fi nance charge over the lease period. Property, plant and equipment acquired under fi nance lease contract is depreciated over the useful life of the asset (see accounting policy G).

Leases of assets under which the lessor substantially retains all the risks and rewards of ownership are 110 classiﬁ ed as operating leases. The payments made under operating leases are charged to the income statement on a straight-line basis over the term of the lease.

(I) Investments

Each category of investment is accounted for at trade date.

• Investments in equity securities

Investments in equity securities are undertakings in which the Group does not have signifi cant infl uence or control. This is generally evidenced by ownership of less than 20 % of the voting rights. Such investments are designated as available for sale fi nancial assets and are recorded at their fair value unless the fair value cannot be reliably determined in which case they are carried at cost less impairment losses. The fair value is the quoted bid price at balance sheet date. Changes in fair value are directly recognised in equity, except for impairment losses. On disposal of an investment, the cumulative gain or loss previously recognised directly in equity is recognised in profi t or loss.

• Other investments

The other investments mainly include cash guarantees.

(J) Impairment

At each balance sheet date, the Group reviews the carrying amounts of the Group’s assets, other than inventories (see accounting policy K) and deferred tax assets (see accounting policy R), to determine whether there is any indication of impairment. If such an indication exists, the asset’s recoverable Tessenderlo Group

amount is estimated. An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in the income statement.

Goodwill, intangible assets with indeﬁ nite useful life and intangible assets not yet available for use were tested for impairment at 1 January 2004, the date of transition to IFRS, even if no indication of impairment existed.

Impairment losses recognised in respect of cash-generating units are allocated ﬁ rst to reduce the carrying amount of any goodwill allocated to cash-generating units and then, to reduce the carrying amount of other assets in the unit on a pro rata basis.

• Calculation of recoverable amount

The recoverable amount is the higher of the fair value less costs to sell and its value in use. The value in use is the net present value of the estimated future cash fl ows from the use of an asset. The recoverable amount is calculated at the level of the cash-generating unit to which the asset belongs. In assessing the value in use, the estimated future cash fl ows are discounted to their present value using a discount rate that refl ects current market assessments of the time value of money and the risks specifi c to the asset, to the business etc.

• Reversal of impairment 111

If there has been a change in the estimates used to determine the recoverable amount on assets other than goodwill, the carrying amount is partially or totally re-established through the non-recurring items in the income statement, to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

An impairment loss in respect of goodwill cannot be reversed.

(K) Inventories

Inventories are stated at the lower of cost and net realisable value. The cost is determined by the weighted average cost method.

The cost of ﬁ nished goods and work in progress comprises raw materials, other production materials, direct labour, other direct cost and an allocation of ﬁ xed and variable overhead based on normal operating capacity. Cost of inventories includes the purchase, conversion and other costs incurred to bring the inventories to their present location and condition. Net realisable value represents the estimated selling price, less all estimated costs of making the product ready for sale.

(L) Trade and other receivables

Trade and other receivables are stated at amortised cost less appropriate allowances for non- recoverable amounts. financial report 2008

(M) Cash and cash equivalents

Cash includes cash in hand and cash with banks. Cash equivalents are short-term, highly liquid investments that are readily convertible into known amounts of cash, have a remaining maturity date of three months or less and are subject to an insigniﬁ cant risk of change in value.

(N) Issued capital

• Ordinary shares

Ordinary shares are classiﬁ ed as equity. Incremental costs directly attributable to the issue of ordinary shares and share options are recognised as a reduction from equity, net of any tax effects.

• Repurchase of issued capital

When share capital recognised as equity is repurchased, the amount of the consideration paid, including directly attributable costs, is recognised as a change in equity. Repurchased shares are classiﬁ ed as treasury shares and presented as a deduction from total equity. When treasury shares are sold or reissued subsequently, the amount received is recognised as an increase in equity, and the resulting surplus or deﬁ cit on the transaction is transferred to/from retained earnings.

112 • Dividends

Dividends are recognised as a liability in the period in which they are declared.

(O) Financial liabilities

Financial liabilities are recognised initially at cost, less attributable transaction costs. Subsequent to initial recognition, interest-bearing loans and borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in the income statement over the period of borrowings on an effective interest basis.

(P) Provisions

Provisions are recognised in the balance sheet when the company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outfl ow of resources embodying economic benefi ts will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If the effect is material, provisions are determined by discounting the expected future cash fl ows at a rate that refl ects current market assessments of the time value of money and, where appropriate, the risks specifi c to the liability.

• Restructuring

A provision for restructuring is recognised when the company has approved a detailed and formal restructuring plan, and the restructuring has either commenced or has been announced to those affected by it. Future operating costs are not provided for. Tessenderlo Group

• Environmental obligations

Environmental provisions are based on legal and constructive obligations from past events, in accordance with applicable legal requirements.

• Onerous contracts

A provision for onerous contracts is recognised when the expected beneﬁ ts to be derived by the company from a contract are lower than the unavoidable cost of meeting its obligations under the contract. Such provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Group recognises any impairment loss on the assets associated with that contract.

• Others

Includes provisions for litigations and warranties.

(Q) Employee benefits

• Post employment beneﬁ ts

Post employment benefi ts include pensions and medicare benefi ts. The Group operates a number of 113 defi ned benefi ts and defi ned contribution plans throughout the world, the assets of which are generally held in separate pension funds. Separate trusts and insurers generally hold the pension plans.

- Deﬁ ned contribution plans:

Contributions to deﬁ ned contribution pension plans are recognised as an expense in the income statement as incurred.

- Deﬁ ned beneﬁ t plans:

For defi ned benefi t plans, the pension accounting costs are assessed separately for each plan using the projected unit credit method. Under this method, the cost of providing pensions is charged to the income statement in order to spread the regular cost over the service lives of employees in accordance with the advice of qualifi ed actuaries who carry out a full valuation of the plans. The amounts charged to the income statement consist of current service cost, interest cost, the expected return on any plan assets, actuarial gains and losses and past service costs.

The pension obligation recognised in the balance sheet is determined as the present value of the deﬁ ned beneﬁ t obligation (using interest rates of high quality corporate bonds which have terms to maturity approximating the terms of the related liability) adjusted for unrecognised actuarial gains and losses, less unrecognised past service costs and less the fair value of the plan assets.

All actuarial gains and losses as at 1 January 2004, the date of transition to IFRS, were recognised. In respect of actuarial gains and losses that arise subsequent to 1 January 2004 in calculating the Group’s obligation in respect of a plan, to the extent that any cumulative unrecognised actuarial gain or loss financial report 2008

exceeds 10 % of the greater of the present value of the defi ned benefi t obligation and the fair value of plan assets, that portion is recognised in the income statement over the expected average remaining working lives of the employees participating in the plan. Otherwise, the actuarial gain or loss is not recognised. Where the calculation results in a benefi t to the Group, the recognised asset is limited to the net total of any unrecognised actuarial losses and past service costs and the present value of any future refunds from the plan or reductions in future contributions to the plan.

• Termination beneﬁ ts (pre-retirement plans, other termination obligations)

These beneﬁ ts arise as a result of the company’s decision to terminate the employment of an employee or group of employees before the normal retirement date or of an employee’s decision to accept voluntary redundancy in exchange for those beneﬁ ts.

These beneﬁ ts are accrued for at the moment of notiﬁ cation.

• Equity compensation beneﬁ ts

A stock option plan allows senior management to acquire shares of the Company. The option’s exercise price equals the lowest of the average market price of the underlying shares in the 30 trading days preceding the offer date or the market price on the last day preceding the offer date. These share-based payments are recognised in the ﬁ nancial statements based on the fair value of the awards measured at 114 grant date, spread over the vesting period. When the options are exercised, equity is increased by the amounts of the proceeds received.

• Short-term beneﬁ ts

Short-term employee beneﬁ t obligations are measured on an undiscounted basis and are expensed as the related service is provided.

A liability is recognised for the amount expected to be paid under short-term cash bonus or proﬁ t- sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

(R) Income tax

Income tax on the proﬁ t or loss for the year comprises current and deferred tax. Income tax is recognised in the income statement except to the extent that it relates to items recognised directly to equity, in which case it is recognised in equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.

Deferred tax is provided using the balance sheet liability method, for temporary differences arising between the carrying values of assets and liabilities for ﬁ nancial reporting purposes and the basis used for taxation purposes. The following temporary differences are not provided for: the initial recognition of assets or liabilities that affects neither accounting nor taxable proﬁ t and differences relating to Tessenderlo Group

investments in subsidiaries to the extent that will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.

A deferred tax asset is recognised only to the extent that it is probable that future taxable proﬁ ts will be available against which the deductible temporary differences, unused tax losses and credits can be utilised. A deferred tax asset is reduced to the extent that it is no longer probable that related tax beneﬁ t will be realised.

Additional income taxes that arise from the distribution of dividends are recognised at the same time as the liability to pay the related beneﬁ t.

(S) Trade and other payables

Trade and other payables are stated at cost.

(T) Income

• Revenue

For the sale of goods, revenue is recognised in the income statement when the signiﬁ cant risks and 115 rewards of ownership have been transferred to the buyer.

Revenue is recognised when there are no signiﬁ cant uncertainties regarding recovery of the consideration due, when the associated costs and possible return of goods can be estimated reliably and when there is no continuing management involvement with the goods and the amount of revenue can be estimated reliably.

• Financial income

Financial income comprises interest receivable on funds invested, dividend income, foreign exchange gains and gains on derivative ﬁ nancial instruments. Interest income is recognised in the income statement as it accrues, taking into account the effective yield on the asset. Dividend income is recognised in the income statement on the date the entity’s right to receive payments is established.

(U) Expenses

• Financial expenses

Financial expenses comprise interest payable on borrowings, foreign exchange losses and losses on derivative fi nancial instruments. All interest and other costs incurred in connection with borrowings are expensed as incurred as part of fi nancial expenses. The interest expense component of fi nance lease payments is recognised in the income statement using the effective interest rate method. financial report 2008

(V) Derivative financial instruments

The Group uses derivative fi nancial instruments to hedge its exposure to foreign exchange and interest rate risks arising from operational, fi nancial and investment activities. In accordance with its treasury policy, the Group does not hold or issue derivative fi nancial instruments for trading purposes.

Derivative fi nancial instruments are recognised initially at cost. Subsequent to initial recognition, derivative fi nancial instruments are stated at fair value. The gain or loss on remeasurement to fair value is recognised immediately in profi t or loss.

(W) Non-current assets held for sale and discontinued operations

Immediately before classiﬁ cation as held for sale, the remeasurement of the assets (and all assets and liabilities in a disposal group) is brought up-to-date in accordance with applicable IFRSs. Then, on initial classiﬁ cation as held for sale, non-current assets and disposal groups are recognised at the lower of carrying amount and fair value less costs to sell.

Impairment losses on initial classiﬁ cation as held for sale are included in the proﬁ t or loss. The same applies to gains and losses on subsequent remeasurement.

A discontinued operation is a component of the Group’s business that represents a separate major line 116 of business or a geographical area of operations or is a subsidiary acquired exclusively with a view to resale.

Classiﬁ cation as a discontinued operation occurs upon disposal or when the operation meets the criteria to be classiﬁ ed as held for sale, if earlier. A disposal group that is to be abandoned may also qualify.

(X) Earnings per share

The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the proﬁ t or loss attributable to equity holders of the Group by the weighted average number of ordinary shares outstanding during the period.

The diluted EPS is determined by adjusting the proﬁ t or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, which comprise share options granted to the management.

(Y) Segment reporting

A segment is a distinguishable component of the Group that is engaged either in providing products or services (business groups), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments.

Segment information is produced according to two different criteria: a primary segment reporting format is based on the Group’s sector of activity (business groups), a secondary segment reporting format is based on the main geographical regions. Tessenderlo Group

(Z) Recently issued IFRS

To the extent that new IFRS requirements are expected to be applicable in the future, they have been summarised hereafter.

• IFRS 8 Operating segments

IFRS 8 “Operating segments” introduces the “management approach” to segment reporting. IFRS 8, which becomes mandatory for the Group’s 2009 ﬁ nancial statements, will require the disclosure of segment information based on the internal reports regularly reviewed by the Group’s Chief Operating Decision Makers in order to assess each segment’s performance and to allocate resources to them. Currently the Group presents segment information in respect of its business and geographical segments (see note 2 “Segment reporting”). IFRS 8 is not expected to trigger a material change to the Group’s current segment reporting.

• Revised IAS 23 Borrowing costs

Revised IAS 23 “Borrowing costs” removes the option to expense borrowing costs and requires that an entity capitalises borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset. The revised IAS 23 will become mandatory for the Group’s 2009 ﬁ nancial statements and will not constitute a change in accounting policy for the Group. 117 • IFRIC 13 Customer Loyalty Programs

IFRIC 13 “Customer Loyalty Programs” addresses the accounting by entities that operate, or otherwise participate in, customer loyalty programs for their customers. It relates to customer loyalty programs under which the customer can redeem credits for awards such as free or discounted goods or services. The Group has not yet determined the potential impact of the interpretation, which becomes mandatory for the Group’s 2009 ﬁ nancial statements.

• Revised IAS 1 Presentation of ﬁ nancial statements

Revised IAS 1 Presentation of Financial Statements (2007) (endorsed by the European Union) introduces the term total comprehensive income, which represents changes in equity during a period other than those changes resulting from transactions with owners in their capacity as owners. Total comprehensive income may be presented in either a single statement of comprehensive income (effectively combining both the income statement and all non-owner changes in equity in a single statement), or in an income statement and a separate statement of comprehensive income. Revised IAS 1, which becomes mandatory for the Group’s 2009 consolidated ﬁ nancial statements, is not expected to have an impact on the presentation of the consolidated ﬁ nancial statements.

• Amendments to IAS 32 Financial Instruments: Presentation and IAS 1 Presentation of Financial Statements – Puttable Financial Instruments and Obligations Arising on Liquidation

Amendments to IAS 32 Financial Instruments: Presentation and IAS 1 Presentation of Financial Statements – Puttable Financial Instruments and Obligations Arising on Liquidation (endorsed by the financial report 2008

European Union) requires puttable instruments, and instruments that impose on the entity an obligation to deliver to another party a pro rata share of the net assets of the entity only on liquidation, to be classiﬁ ed as equity if certain conditions are met. The Group has not yet determined the potential impact of the amendments, which become mandatory for the Group’s 2009 consolidated ﬁ nancial statements, with retrospective application required.

• Revised IFRS 3 Business Combinations (2008)

Revised IFRS 3 Business Combinations (2008) incorporates the following changes that are likely to be relevant to the Group’s operations: - The defi nition of a business has been broadened, which is likely to result in more acquisitions being treated as business combinations. - Contingent consideration will be measured at fair value, with subsequent changes therein recognised in profi t or loss. - Transaction costs, other than share and debt issue costs, will be expensed as incurred. - Any pre-existing interest in the acquiree will be measured at fair value with the gain or loss recognised in profi t or loss. - Any non-controlling (minority) interest will be measured at either fair value, or at its proportionate interest in the identifi able assets and liabilities of the acquiree, on a transaction-by-transaction basis. The Group has not yet determined the potential impact of the revised IFRS 3, which becomes mandatory 118 for the Group’s 2010 consolidated fi nancial statements.

• Amended IAS 27 Consolidated and Separate Financial Statements (2008)

Amended IAS 27 Consolidated and Separate Financial Statements (2008) requires accounting for changes in ownership interests by the Group in a subsidiary, while maintaining control, to be recognised as an equity transaction. When the Group loses control of a subsidiary, any interest retained in the former subsidiary will be measured at fair value with the gain or loss recognised in profi t or loss. The amendments to IAS 27, which become mandatory for the Group’s 2010 consolidated fi nancial statements, are not expected to have any material impact on the Group’s consolidated fi nancial statements.

• Amendment to IFRS 2 Share-based Payment – Vesting Conditions and Cancellations

Amendment to IFRS 2 Share-based Payment – Vesting Conditions and Cancellations (endorsed by the European Union) clarifi es the defi nition of vesting conditions, introduces the concept of non-vesting conditions, requires non-vesting conditions to be refl ected in grant-date fair value and provides the accounting treatment for non-vesting conditions and cancellations. The amendments to IFRS 2, that will become mandatory for the Group’s 2009 consolidated fi nancial statements, with retrospective application, are not expected to have any material impact on the Group’s consolidated fi nancial statements.

• IFRIC 15 Agreements for the Construction of Real Estate

IFRIC 15 Agreements for the Construction of Real Estate concludes that revenues for real estate construction projects will have to be recognised using the completed contract method in many cases, Tessenderlo Group

except for specifi c situations where the percentage of completion method of revenue recognition can be applied. This is the case when a contract relates to the sale of assets, but during the construction of these assets revenue recognition criteria are met on a continuous basis (in relation to the completed part of the project). IFRIC 15, which becomes mandatory for the Group’s 2009 consolidated fi nancial statements, with retrospective application, is not expected to have any material impact on the Group’s consolidated fi nancial statements.

• IFRIC 16 Hedges of a Net Investment in a Foreign Operation

IFRIC 16 Hedges of a Net Investment in a Foreign Operation discusses a number of issues in relation to hedging currency risks on foreign operations (net investment hedges). IFRIC 16 specifi cally confi rms only the risk from differences between the functional currencies of the parent and the subsidiary can be hedged. Additionally, currency risks can only be hedged by every (direct or indirect) parent company, as long as the risk is only hedged once in the consolidated fi nancial statements. IFRIC 16 also determines the hedge instrument of a net investment hedge can be held by every group company, except for foreign operation itself. The Group has not yet determined the potential impact of IFRIC 16, which becomes mandatory for the Group’s 2009 consolidated fi nancial statements, with prospective application.

• IFRIC 17 Distributions of Non-cash Assets to Owners

IFRIC 17 Distributions of Non-cash Assets to Owners addresses the treatment of distributions in kind to shareholders. Outside the scope of IFRIC 17 are distributions in which the assets being distributed 119 are ultimately controlled by the same party or parties before and after the distribution (common control transactions). A liability has to be recognised when the dividend has been appropriately authorised and is no longer at the discretion of the entity, to be measured at the fair value of the non-cash assets to be distributed. IFRIC 17, which becomes mandatory for the Group’s 2010 consolidated ﬁ nancial statements, with prospective application, is not expected to have any material impact on the Group’s consolidated ﬁ nancial statements.

• IFRIC 18 Transfers of Assets from Customers

IFRIC 18 Transfers of Assets from Customers addresses the accounting by access providers for property, plant and equipment contributed to them by customers. Recognition of the assets depends on who controls it. When the asset is recognised by the access provider, it is measured at fair value upon initial recognition. The timing of the recognition of the corresponding revenue depends on the facts and circumstances. IFRIC 18, which becomes mandatory for the Group’s 2010 consolidated ﬁ nancial statements, with prospective application, is not expected to have any material impact on the Group’s consolidated ﬁ nancial statements.

• Amendments to IFRS 1 First-time Adoption of IFRSs and IAS 27 Consolidated and Separate Financial Statements – Cost of an Investment in a Subsidiary, Jointly-controlled Entity or Associate

Amendments to IFRS 1 First-time Adoption of IFRSs and IAS 27 Consolidated and Separate Financial Statements – Cost of an Investment in a Subsidiary, Jointly-controlled Entity or Associate (endorsed by the European Union) revises, amongst others, the accounting for ‘pre-acquisition dividends’ received from participating interests. Those dividends should be recognised as revenue, but such dividends may financial report 2008

imply an indicator for the impairment of the participating interest. The amendment, which becomes mandatory for the Group’s 2009 consolidated ﬁ nancial statements, with prospective application, is not expected to have any material impact on the Group’s consolidated ﬁ nancial statements.

• Amendment to IAS 39 Financial Instruments: Recognition and Measurement – Eligible Hedged Items

Amendment to IAS 39 Financial Instruments: Recognition and Measurement – Eligible Hedged Items provides additional guidance concerning speciﬁ c positions that qualify for hedging (‘eligible hedged items’). The Group has not yet determined the impact of the amendment to IAS 39, which becomes mandatory for the Group’s 2010 consolidated ﬁ nancial statements, with retrospective application.

• Improvements to IFRSs (2008)

Improvements to IFRSs (2008) (endorsed by the European Union) is a collection of minor improvements to existing standards. The Group has not yet determined the potential impact of this collection, which becomes mandatory for the Group’s 2009 consolidated ﬁ nancial statements.

120 Tessenderlo Group

2. Segment reporting

The segment reporting is based on two segment reporting formats. The primary reporting format represents the three business groups of the Group’s internal ﬁ nancial reporting, the secondary reporting format represents the Group’s two main geographical markets.

Segment assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

Segment capital expenditures include the cost of acquiring property, plant and equipment and intangible assets.

Inter-segment pricing is determined on an arm’s length basis.

Business segments

The Group is reporting three business segments (business groups). Each includes several business units:

- The “Chemicals” business group includes the Inorganics, Chlor-alkali and PVC business units. - The “Specialities” business group includes the Fine Chemicals, Gelatin and Natural Derivatives 121 business units. - The “Plastics Converting” business group includes the Proﬁ les, Plastic Pipe Systems and Compounds business units.

Geographical segments

The three business segments (business groups) operate worldwide, however mainly in two geographical areas, Europe and the USA.

Segment revenue is based on the geographical location of customers, while segment assets and liabilities are based on the geographical location of the assets. financial report 2008

Chemicals 2008 2007

KEY DATA BY PRIMARY REPORTING SEGMENT Revenue (internal and external) 1,502.5 1,122.8 Revenue (internal) 100.7 95.7 Revenue 1,401.8 1,027.1 Profi t (+) / loss (-) from operations before non-recurring items (REBIT) 197.5 82.7 Non-recurring items -15.0 -4.7 Profi t (+) / loss (-) from operations (EBIT) 182.5 78.0 Return on revenue (REBIT/revenue) 14.1% 8.1% Finance costs -- Share of result of investments accounted for using the equity method 7.7 2.9 Income tax expense -- Profi t (+) / loss (-) for the period - - Segment assets 776.8 627.2 Investments accounted for using the equity method 19.4 10.4 Investments -- Deferred tax assets -- Cash and cash equivalents - - Other unallocated receivables - - Total Assets -- 122 Segment liabilities 280.5 240.3 Financial liabilities -- Deferred tax liabilities -- Equity -- Total Equity & Liabilities - - Capital expenditures: PP&E and intangible assets 29.1 39.5 Amortisation and depreciation -40.9 -41.4 Impairment losses on intangible assets and property, plant and equipment - - Number of employees at year end (headcount) 1,965 2,009

Europe 2008 2007

KEY DATA BY SECONDARY REPORTING SEGMENT Revenue by market 2,125.2 1,881.4 Segment assets 1,470.2 1,376.3 Segment liabilities 488.3 472.9 Capital expenditures: PP&E and intangible assets 90.8 91.4

The unallocated segment assets mainly include the ofﬁ ce buildings and receivables within the holding companies. The unallocated segment liabilities comprise mainly the payables within those holding companies. Tessenderlo Group

Specialities Plastics Converting Unallocated Tessenderlo Group 2008 2007 2008 2007 2008 2007 2008 2007

593.8 569.2 776.5 831.7 - - 2,872.8 2,523.7 7.1 6.8 - 15.3 - - 107.8 117.8 586.7 562.4 776.5 816.4 - - 2,765.0 2,405.9 34.6 31.9 22.4 49.2 -15.4 -11.5 239.1 152.3 8.2 -9.8 -19.5 -1.8 -0.6 51.4 -26.9 35.1 42.8 22.1 2.9 47.4 -16.0 39.9 212.2 187.4 5.9% 5.7% 2.9% 6.0% - - 8.6% 6.3% ------21.6 -17.6 3.83.1----11.5 6.0 ------61.7 -47.1 ------140.4 128.7 413.5 401.5 454.3 491.3 51.6 13.2 1,696.2 1,533.2 15.6 13.6 - - 4.6 - 39.6 24.0 - - - - 5.2 6.1 5.2 6.1 - - - - 17.7 26.3 17.7 26.3 - - - - 53.5 93.6 53.5 93.6 - - - - 0.7 - 0.7 ------1,812.9 1,683.2 103.2 109.9 101.0 122.9 33.7 33.3 518.4 506.4 123 - - - - 348.1 337.4 348.1 337.4 - - - - 44.4 37.2 44.4 37.2 - - - - 902.0 802.2 902.0 802.2 ------1,812.9 1,683.2 30.8 31.5 32.4 33.5 9.1 - 101.4 104.5 -33.3 -40.8 -32.3 -34.8 -3.1 -2.8 -109.6 -119.8 -6.4 -12.3 - - - -12.3 -6.4 2,755 2,763 3,517 3,349 - - 8,237 8,121

USA Rest of the world Tessenderlo Group 2008 2007 2008 2007 2008 2007

296.7 260.2 343.1 264.3 2,765.0 2,405.9 185.0 120.4 41.0 36.5 1,696.2 1,533.2 23.1 27.3 7.0 6.2 518.4 506.4 7.0 9.8 3.6 3.3 101.4 104.5 financial report 2008

3. Acquisitions and disposals

Acquisitions – Activities / Subsidiaries

• In April 2008, Eurocell ltd, a UK subsidiary within the business unit Profi les, acquired the assets of Sprint 1233, formerly Plastmo Profi les Ltd (Northampton, UK). Taking over the interests of Plastmo will allow Eurocell to benefi t from improved production effi ciencies and economies of scale.

In December 2008, Eurocell ltd acquired the assets and operations of Cavalok Building Products. Cavalok Building Products is the only manufacturer of BBA-accredited cavity closure systems made from 100% post-consumer recycled PVC-u. This acquisition will extend the Eurocell product offering and will help deliver signifi cant operational effi ciency benefi ts.

As Plastmo and Cavalok were immediately integrated in the Eurocell operations, no separate reporting is maintained on their contributions to the proﬁ t of the Group, however in 2008 these are considered to have been immaterial.

• In June 2008, Akiolis Group, a French subsidiary within the business unit Natural Derivatives, acquired SR Collecte sas and Collectoco sarl. In August 2008, Akiolis Group also acquired Recup’Food Sarl. These acquisitions will allow Akiolis Group to realise economies of scale.

124 These acquisitions by Akiolis Group did not have a signifi cant contribution to the 2008 profi t of the Group. If the acquisition date of SR Collecte sas, Collectoco sarl and Recup’Food Sarl had been 1 January 2008, the impact on the revenue and profi t of the Group would have been insignifi cant as well.

• In September 2008, Tessenderlo Kerley acquired the assets, marketing and distribution channels of Agrochem (Izmir, Turkey). Agrochem has been a key distributor for Tessenderlo Kerley in the area for the past 14 years and has been manufacturing Tessenderlo Kerley plant nutrient solutions.

This acquisition did not have a signifi cant contribution to the 2008 profi t of the Group. If the acquisition date had been 1 January 2008, the impact of this acquisition on the revenue and the profi t of the Group would have been insignifi cant as well.

• In October 2008, the Group reached an agreement with Nyloplast NV to take over all shares of its subsidiary Nyloplast Europe BV (‘s Gravendeel, the Netherlands). Nyloplast Europe BV manufactures large diameter plastic ﬁ ttings for presureless pipe systems for the European market. The systems are used for draining sewage and rain water. This extension of the range of products and services will strengthen the position of the Plastic Pipe Systems business unit in Europe and further develop its strategy for growth.

The acquisition of Nyloplast Europe BV did not yet have a signiﬁ cant impact on the 2008 revenue or proﬁ t of the Group. If the acquisition date had been 1 January 2008, the revenue of the Group would be higher by approximately 11.7 million EUR. Tessenderlo Group

The table below summarises the impact of these agreements on the ﬁ nancial position of the Group:

Pre-acquisition Recognised Fair value carrying values on adjustments amounts acquisition

Property, plant and equipment 5.7 5.9 11.6 Intangible assets 0.1 2.1 2.2 Non-current assets 5.8 8.0 13.8 Inventories 4.5 -0.8 3.7 Trade and other receivables 4.2 - 4.2 Cash and cash equivalents -1.6 - -1.6 Current assets 7.1 -0.8 6.3 Trade and other payables 5.0 - 5.0 Current liabilities 5.0 0.0 5.0 Non-current liabilities 0.7 1.4 2.1

Net assets 7.2 5.8 13.0

Goodwill on acquisition 5.1 Negative goodwill on acquisition -1.2

Consideration (paid)/received, satisfi ed in cash -16.9 Cash acquired/(disposed) of -1.6 125 Net cash (outfl ow)/infl ow -18.5

The fair value adjustments performed at acquisition date are based on valuation studies performed as well internally as by external experts. The intangible assets at acquisition date mainly relate to the valuation of customer lists (note 12).

Acquisitions – Investments accounted for using the equity method

In October 2008 Tessenderlo Kerley acquired 30 % of the shares of Wolf Mountain Products LLC, Lindon, Utah (USA). Tessenderlo Kerley also has an option to purchase an additional 20 % interest in Wolf Mountain Products during the ﬁ rst half of 2014. Wolf Mountain Products offers a broad range of high quality bark and wood-based products used as soil amendments, ground covers and playground chips.

This acquisition did not yet have a signifi cant contribution to the 2008 profi t of the Group. If the acquisition date would have been 1 January 2008, the impact on the profi t of the Group would also have been insignifi cant. financial report 2008

The table below summarises the impact of this agreement on the ﬁ nancial position of the Group:

Pre-acquisition Recognised Fair value carrying values on adjustments amounts acquisition

Equity 2.4 8.0 10.4 Share Group (30%) 0.7 2.4 3.1

Goodwill on acquisition 0.0

Consideration (paid)/received, satisfi ed in cash -3.1 Cash acquired/(disposed) of 0.0 Net cash (outfl ow)/infl ow -3.1

Disposals

No disposals were made during 2008.

126 4. Other income and expenses

2008 2007

Release of provisions 3.6 - Additions to provisions - - Research cost -14.3 -7.4 Grants 0.3 0.1 Depreciation -2.2 -2.3 Gains on disposal of PP&E and intangible assets -0.4 0.2 Write down debtors -2.7 -2.7 Other -10.9 -0.1 Total -26.6 -12.2

“Other” mainly includes taxes other than income taxes. Tessenderlo Group

5. Non-recurring items

2008 2007

Gain on disposals 12.8 58.4 Restructuring (incl. impairment losses) -18.2 -15.6 Environmental provisions -14.2 -2.8 Other income and expenses -7.3 -4.9 Total -26.9 35.1

The non-recurring items for 2008 show an expense of 26.9 million EUR (2007: income of 35.1 million EUR). The gain on disposals mainly includes the sale of land in England. The land has been sold for 5.7 million GBP, while the land had no carrying amount. The non-recurring result of this sale amounts to 7.1 million EUR.

The impairment losses amount to 12.3 million EUR and are mainly related to property, plant and equipment of subsidiaries in the business group Plastics Converting (12.2 million EUR).

On December 10th 2008, the environmental permit of Tessenderlo Chemie NV (Belgium) was extended for a period of 20 years. Tessenderlo Chemie NV committed itself to invest in a new production process and to ﬁ nd a durable solution to its environmental problems in Limburg (Belgium). As a consequence 127 of these commitments additional discounted environmental provisions were recorded for an amount of 14.5 million EUR.

Other income and expenses in 2008 relate to several incurred charges, including expenses as a consequence of acquisitions, provisions on receivables and exceptional charges which are not covered by insurance.

The non-recurring items in 2007 mainly included the gain realised on the sale of Tessenderlo Davison Companies (TDC), a joint marketing venture with Davison Petroleum Products, (DDP), Ruston, United States. The non-recurring gain of this business disposal amounted to 52.0 million EUR. In addition, the sale of the subsidiary PB Gelatins France and the sale of land of Tessenderlo Kerley generated a non- recurring gain of 4.2 million EUR.

The restructuring provisions and expenses, as well as the environmental provisions, in 2007 mainly concerned the ﬁ nal phase of the Target 2007 restructuring plan (9.1 million EUR) in the business group Chemicals (7.5 million EUR) and the business unit Fine Chemicals (1.6 million EUR).

The impairment losses in 2007 amounted to EUR 8.4 million EUR and were mainly related to property, plant and equipment in the business unit Fine Chemicals (3.9 million EUR) and the business unit Gelatin (2.6 million EUR). financial report 2008

6. Payroll and related benefits

note 2008 2007

Wages and salaries -286.3 -285.6 Employer’s social security contributions -76.8 -77.8 Other personnel costs -43.1 -31.1 Contributions to defi ned contribution -3.8 -3.9 plans Increase in liability for defi ned benefi t 23 -4.6 -8.3 plans Movement in asset for defi ned benefi t 23 -0.5 -1.1 plans Total -415.1 -407.8

The average number of FTEs for 2008 amount to 7,878 (2007: 7,794).

128 Tessenderlo Group

7. Additional information on operating expenses by nature

Depreciation, amortisation and impairment losses are included in the following line items in the income statement in 2008:

Depreciation Amortisation and and impairment impairment losses on Total losses on PP&E intangible assets

Cost of sales -91.1 -3.8 -94.9 Administrative expenses -9.8 - -9.8 Sales and Marketing - -2.7 -2.7 Other operating (income)/expenses -2.2 - -2.2 Restructuring (incl. impairment losses) -12.3 - -12.3 Total -115.4 -6.5 -121.9

Total depreciation charges and impairment losses in 2008 amount to 124.4 million EUR (note 10 and 12). Taking into account the effect of government grants in 2008 (note 10), the net depreciation charges amount to 121.9 million EUR.

Depreciation, amortisation and impairment losses are included in the following line items in the 129 income statement in 2007:

Depreciation Amortisation and and impairment impairment losses on Total losses on PP&E intangible assets

Cost of sales -104.4 -4.1 -108.5 Administrative expenses -9.1 - -9.1 Other operating income/(expenses) -2.1 - -2.1 Restructuring (incl. impairment losses) -6.5 - -6.5 Total -122.1 -4.1 -126.2 financial report 2008

8. Finance income and expense

Finance expense:

2008 2007

Interest expense on ﬁ nancial liabilities measured at amortised -15.2 -17.7 cost Foreign exchange losses -12.1 -5.0 Other -2.5 -1.2 Total -29.8 -23.9

Finance income:

2008 2007

Interest income from cash and cash equivalents 2.8 4.2 Dividend income, non-consolidated companies 0.4 0.2 Revaluation to fair value of derivatives 5.0 1.9 Total 8.2 6.3

130 The net interest expense of 12.4 million EUR (2007: 13.5 million EUR) decreased by 1.1 million EUR thanks to the further decrease of the average outstanding net ﬁ nancial debt in 2008 compared to 2007 (see note 22). Tessenderlo Group

9. Income tax expense

2008 2007

RECOGNISED IN THE INCOME STATEMENT

Current tax expense -49.1 -50.3 Adjustment current tax expense previous periods 1.1 - Deferred tax expense -13.7 3.2

Total income tax expense in the income statement -61.7 -47.1

Proﬁ t (+) / loss (-) before tax 202.1 175.8 Less share of result of associates, net of taxes 11.5 6.0 Proﬁ t (+) / loss (-) before tax and before result from associates 190.6 169.8

Effective tax rate 32.4% 27.7%

RECONCILIATION OF EFFECTIVE TAX RATE

Proﬁ t (+) / loss (-) before tax and before results from 190.6 169.8 associates 131 Theoretical tax rate (*) 33.1% 35.2% Expected income tax at the theoretical tax rate -63.1 -59.9

Difference between theoretical and effective tax expenses 1.4 12.8

Adjustment on deferred taxes 0.1 -4.7 Change in tax rates 0.1 -1.4 Impairment (-) / reversal of an impairment (+) of a recognised - -3.3 deferred tax asset

Adjustment on tax expenses 1.3 17.5 Non deductible expenses -2.8 -2.8 Special tax regimes 5.7 4.8 Use or recognition of tax losses / tax credits not previously 0.4 18.1 recognised Tax losses for which no deferred tax asset has been recorded -5.6 -1.2 Impact of tax consolidation regimes - - Adjustment current tax expense previous periods 1.1 - Other 2.5 -1.4

(*) Theoretical aggregated weighted tax rate of all group companies

The impact of the change in tax rates amounts to 0.1 million EUR in 2008, which is related to the change in tax rates in Luxembourg. The impact in 2007 amounted to -1.4 million EUR and was related to the change in tax rates, announced or already effective, in Germany, Italy and the United Kingdom. financial report 2008

10. Property, plant and equipment

Plant, Furniture Land and machinery Under and Total buildings and construction vehicles equipment

ACQUISITION COST At 1 January 2008 416.7 1,860.4 110.7 23.0 2,410.8 . acquisitions through 5.5 5.9 0.2 - 11.6 business combinations (note 3) . capital expenditure 7.7 42.4 10.6 33.5 94.2 . sales and disposals -1.6 -14.8 -4.8 -0.6 -21.8 . transfers 0.6 23.3 1.3 -26.5 -1.3 . translation differences -5.8 -43.0 -1.0 -0.3 -50.1 At 31 December 2008 423.1 1,874.2 117.0 29.1 2,443.4

DEPRECIATION AND IMPAIRMENT LOSSES At 1 January 2008 -198.1 -1,431.1 -93.2 0.0 -1,722.4 . acquisitions through - - - - 0.0 business combinations 132 . depreciation -13.5 -84.5 -7.7 - -105.7 . sales and disposals 1.0 13.7 4.6 - 19.3 . impairment losses -1.4 -10.7 -0.1 - -12.2 . transfers 0.5 0.3 -0.2 - 0.6 . translation differences - 36.4 0.6 - 37.0 At 31 December 2008 -211.5 -1,475.9 -96.0 0.0 -1,783.4

CARRYING AMOUNTS BEFORE GOVERNMENT GRANTS Net government grants - -8.0 - - -8.0

CARRYING AMOUNTS At 1 January 2008 218.6 418.7 17.5 23.0 677.8 At 31 December 2008 211.6 390.3 21.0 29.1 652.0 Tessenderlo Group

Plant, Furniture Land and machinery Under and Total buildings and construction vehicles equipment

ACQUISITION COST At 1 January 2007 415.9 1,826.8 109.4 19.4 2,371.5 . acquisitions through - 6.5 - - 6.5 business combinations . capital expenditure 10.0 44.1 8.9 35.6 98.6 . sales and disposals -5.4 -18.4 -7.0 -0.3 -31.1 . transfers 1.7 27.9 0.7 -31.2 -0.9 . translation differences -5.5 -26.5 -1.3 -0.5 -33.8 At 31 December 2007 416.7 1,860.4 110.7 23.0 2,410.8

DEPRECIATION AND IMPAIRMENT LOSSES At 1 January 2007 -188.7 -1,362.9 -93.3 0.0 -1,644.9 . acquisitions through - - - - 0.0 business combinations . depreciation -14.2 -94.4 -7.1 - -115.7 133 . sales and disposals 4.4 13.0 6.2 - 23.6 . impairment losses -1.0 -5.4 - - -6.4 . transfers - 0.6 - - 0.6 . translation differences 1.4 18.0 1.0 - 20.4 At 31 December 2007 -198.1 -1,431.1 -93.2 0.0 -1,722.4

CARRYING AMOUNTS BEFORE GOVERNMENT GRANTS Net government grants - -10.6 - - -10.6

CARRYING AMOUNTS At 1 January 2007 227.2 463.9 16.1 19.4 726.6 At 31 December 2007 218.6 418.7 17.5 23.0 677.8

The capital expenditure amounts to 94.2 million EUR and is broken down per business segment, in the “Segment reporting” section (note 2).

An amount of 11.6 million EUR is disclosed as acquisition through business combinations. The detailed information is disclosed in “Acquisitions and disposals” (note 3).

Impairment losses for an amount of 12.2 million EUR were recognised during the second quarter of 2008 and are mainly related to impairment losses recognised on the property, plant and equipment of subsidiaries in the business group Plastics Converting. The market for the related companies’ products continued to deteriorate in 2008 as a consequence of the current economic difﬁ culties, which in turn caused the Group to reevaluate its projections and views of the market’s ability to improve. The recoverable amount of these assets has been determined based on value in use calculations, and was compared to the fair value of these assets. financial report 2008

The impairment losses of 2007 were recorded on property, plant and equipment in the business unit Fine Chemicals and the business unit Gelatin. The recoverable amount has been determined based on value in use calculations.

In 2007, the Flemish government granted Tessenderlo Chemie NV and Limburgse Vinyl Maatschappij NV 12.5 million EUR for large-scale environmental investments. The remaining net government grant as per 31 December 2008 amounts to 8.0 million EUR (2007: 10.6 million EUR).

No property, plant and equipment is pledged as security for liabilities.

Assets for an amount of 0.7 million EUR are classiﬁ ed as non-current assets held for sale (note 19).

The Group leases property, plant and equipment under a number of ﬁ nance lease agreements. At the end of each of the leases, the Group has the option to purchase the equipment at a beneﬁ cial price. As per 31 December 2008, the net carrying amount of leased property, plant and equipment amounted to 4.8 million EUR (2007: 5.8 million EUR). For an overview of the lease payables, we refer to note 22.

The ﬁ nance leases mainly consist of land and buildings (4.8 million EUR).

134 11. Goodwill

ACQUISITION COST At 1 January 2008 64.6 . acquisitions through business combinations 5.1 . sales and disposals - . transfers 0.7 . translation differences -6.5 At 31 December 2008 63.9

IMPAIRMENT LOSSES At 1 January 2008 -27.4 . acquisitions through business combinations - . sales and disposals - . transfers - . translation differences 1.8 At 31 December 2008 -25.6

CARRYING AMOUNTS As per 1 January 2008 37.2 As per 31 December 2008 38.3 Tessenderlo Group

ACQUISITION COST At 1 January 2007 69.5 . acquisitions through business combinations 0.2 . sales and disposals - . transfers - . translation differences -5.1 At 31 December 2007 64.6

IMPAIRMENT LOSSES At 1 January 2007 -29.4 . acquisitions through business combinations - . sales and disposals - . transfers - . translation differences 2.0 At 31 December 2007 -27.4

CARRYING AMOUNTS As per 1 January 2007 40.1 As per 31 December 2007 37.2

During the fourth quarter of 2008, the Group completed its annual impairment test for goodwill and concluded, based on the assumptions below, that no impairment charge was deemed necessary. 135 The Group cannot foresee whether an event that triggers impairment will occur, when it will occur or how it will affect the asset values reported. The Group believes that all of its estimates are reasonable. They are consistent with the internal reporting and reﬂ ect management’s best estimates.

Goodwill only accounts for approximately 2.1 % of the Group’s total assets as at 31 December 2008 (2007: 2.2 %). The impairment testing on goodwill, relies on a number of critical judgements, estimates and assumptions. Goodwill has been tested for impairment on company level or at the most relevant level based on value- in-use calculations. The key judgements, estimates and assumptions used in these calculations are as follows: - The cash fl ow projection of the fi rst year is based on the current year fi nancial budget (2009). - For the next four years (2010-2013), cash fl ow projections used are based on a long term plan for the coming 5 years. - In order to calculate the terminal value, the data of the fi fth year are extrapolated by using simplifi ed assumptions such as constant quantities sold, combined with constant costs. - Projections are made in the functional currency of the company and are discounted at the company level Weighted Average Cost of Capital.

Although the Group believes that its judgements, assumptions and estimates are appropriate, actual results may differ from these estimates under different assumptions or conditions. financial report 2008

12. Intangible assets

USEFUL LIFE

FINITE INDEFINITE

DEVELOPMENT CONCESSIONS, PATENTS, LICENSES SOFTWARE CUSTOMER LISTS OTHER OTHER TOTAL

ACQUISITION VALUE At 1 January 2008 3.7 27.8 12.5 10.6 19.0 1.8 75.4 . acquisitions through business - - - 2.2 - - 2.2 combinations (note 3) . capital expenditure - 3.9 2.1 1.0 0.2 - 7.2 . sales and disposals ------0.0 . transfers - 3.3 0.3 -0.2 -3.4 - 0.0 . translation differences - 0.3 -1.0 -0.4 0.7 - -0.4 136 At 31 December 2008 3.7 35.3 13.9 13.2 16.5 1.8 84.4

AMORTISATION AND IMPAIRMENT LOSSES At 1 January 2008 -1.1 -19.4 -9.4 -3.8 -4.8 0.0 -38.5 . acquisitions through business ------0.0 combinations . amortisation -0.7 -2.1 -1.5 -1.0 -1.2 - -6.5 . sales and disposals ------0.0 . transfers - -0.8 -0.2 - 1.0 - 0.0 . translation differences - -0.1 0.6 0.2 -0.2 - 0.5 At 31 December 2008 -1.8 -22.4 -10.5 -4.6 -5.2 0.0 -44.5

CARRYING AMOUNTS At 1 January 2008 2.6 8.4 3.1 6.8 14.2 1.8 36.9 At 31 December 2008 1.9 12.9 3.4 8.6 11.3 1.8 39.9 Tessenderlo Group

USEFUL LIFE

FINITE INDEFINITE

DEVELOPMENT CONCESSIONS, PATENTS, LICENSES SOFTWARE LISTS CUSTOMER OTHER OTHER TOTAL

ACQUISITION VALUE At 1 January 2007 3.7 22.2 12.2 6.8 9.8 2.1 56.8 . acquisitions through business - 3.6 - 2.4 9.7 - 15.7 combinations . capital expenditure - 2.5 0.3 1.5 1.2 - 5.5 . sales and disposals - -0.4 - - - - -0.4 . transfers - - 0.3 - - - 0.3 . translation differences - -0.1 -0.3 -0.1 -1.7 -0.3 -2.5 137 At 31 December 2007 3.7 27.8 12.5 10.6 19.0 1.8 75.4

AMORTISATION AND IMPAIRMENT LOSSES At 1 January 2007 -0.2 -19.0 -8.2 -3.3 -4.2 0.0 -34.9 . acquisitions through business ------0.0 combinations . amortisation -0.7 -0.8 -1.4 -0.3 -0.9 - -4.1 . sales and disposals - 0.2 - - - - 0.2 . transfers -0.2 0.2 - - - - 0.0 . translation differences - - 0.2 -0.2 0.3 - 0.3 At 31 December 2007 -1.1 -19.4 -9.4 -3.8 -4.8 0.0 -38.5

CARRYING AMOUNTS At 1 January 2007 3.5 3.2 4.0 3.5 5.6 2.1 21.9 At 31 December 2007 2.6 8.4 3.1 6.8 14.2 1.8 36.9

The capital expenditure amounts to 7.2 million EUR and is broken down per business segment, in the “Segment reporting” section (note 2).

An amount of 2.2 million EUR is disclosed as acquisition through business combinations. The detailed information is disclosed in “Acquisitions and disposals” (note 3).

The “other” intangible assets with ﬁ nite useful lives consist mainly of two non-competition agreements, know how, a product label and land-use rights. The non-compete agreements, the product label and the know-how are being amortised on a straight-line basis over 5-15 years. financial report 2008

The intangible assets with indefi nite useful life relate to trademarks which are considered to have an indefi nite life unless plans would exist to discontinue the related activity. The intangible assets with indefi nite useful life have been tested for impairment and no impairment charge was deemed necessary.

No intangible assets are pledged as security for liabilities.

13. Investments accounted for using the equity method

Investments accounted for using the equity method consist of joint ventures and associates.

The joint ventures of the Group are:

Ownership Country 2008 2007

Jupiter Sulphur US 50% 50% Zéoline Belgium 50% 50% Siram France 50% 50% 138 SH Capital (Groupe Fiso) France 50% 50% Ferso Bio (Groupe Fiso) France 50% 50% Fiso Developpement (Groupe Fiso) France 50% 50% Solagra (Groupe Fiso) France 50% 50% Labrousse (Groupe Fiso) France 50% 25% Ispac (Groupe Fiso) France 50% 25% MPR Middle East Bahrain 50% -

The associates of the Group are:

Ownership Country 2008 2007

Alkemin US 49.50% 49.50% T-Power Belgium 33.33% - Wolf Mountain Products US 30% - Bonnet (Groupe Fiso) France 25% 25% Michel (Groupe Fiso) France 25% 25%

Tessenderlo Group

The carrying amount of the investments accounted for using the equity method is as follows:

2008 2007

Alkemin 0.0 0.0 Groupe Fiso 14.8 12.8 Jupiter Sulphur 13.5 7.0 MPR Middle East 0.1 - Siram 0.8 0.9 T-Power 4.6 - Wolf Mountain Products 2.8 - Zéoline 3.0 3.3 Total 39.6 24.0

Summary ﬁ nancial information on investments accounted for using the equity method at 100 percent:

2008 2007

Current assets 123.6 56.7 Non-current assets 141.6 48.3 Current liabilities 68.8 30.6 Non-current liabilities 108.0 21.9 Revenue 121.0 105.8 139 Proﬁ t (+) / loss (-) from operations 38.5 21.0 Proﬁ t for the period (+) / loss (-) attributable to equity holders 23.0 12.0

The above ﬁ nancial information includes results of the new associates T-Power and Wolf Mountain Products as from December 2008. The results of MPR Middle East are insigniﬁ cant and are included as from January 2008.

14. Investments

2008 2007

Investments in equity securities 4.5 5.6 Cash guarantees / deposits 0.7 0.5 Total 5.2 6.1

Investments in equity securities 2008 2007

TC Nederland, Netherlands 0.8 0.8 Indaver, Belgium 0.6 0.6 TC Espana, Spain 0.6 0.6 GLOBE International, Belgium 0.5 0.5 LVM United Kingdom Ltd, United Kingdom 0.2 0.2 Polycoop, Argentina - 1.1 Ashdec Umwelt, Austria 0.4 - Other 1.4 1.8 Total 4.5 5.6 The investments in unquoted companies are measured at cost as their fair value can not be reliably determined. financial report 2008

15. Deferred tax assets and liabilities

ASSETS LIABILITIES NET 2008 2007 2008 2007 2008 2007

Property, plant & equipment 5.5 3.5 -31.1 -31.0 -25.6 -27.5 Goodwill 1.4 1.7 - - 1.4 1.7 Intangible assets 1.4 2.3 - - 1.4 2.3 Inventories 2.4 2.7 -8.3 -1.9 -5.9 0.8 Receivables - 0.1 - - 0.0 0.1 Derivative ﬁ nancial instruments - - -0.1 -0.2 -0.1 -0.2 Other current assets 0.8 0.5 - - 0.8 0.5 Employee beneﬁ ts 3.1 4.9 -3.2 -3.9 -0.1 1.0 Provisions 3.4 4.0 -16.2 -15.5 -12.8 -11.5 Other items - 0.1 -0.3 - -0.3 0.1 Losses carried forward 26.3 33.6 - - 26.3 33.6 Impairment of deferred tax assets -11.8 -11.8 - - -11.8 -11.8 Gross deferred tax assets / (liabilities) 32.5 41.6 -59.2 -52.5 -26.7 -10.9

Set off of tax -14.8 -15.3 14.8 15.3

Net deferred tax assets / (liabilities) 17.7 26.3 -44.4 -37.2 -26.7 -10.9 140 All movements of deferred tax assets and deferred tax liabilities are recorded through the income statement, except for conversion differences (-0.7 million EUR in 2008) and the existing deferred tax assets and deferred tax liabilities at date of acquisitions (-1.4 million EUR in 2008).

On 31 December 2008, a deferred tax liability of 18.6 million EUR (2007: 15.8 million EUR) relating to undistributed reserves within the subsidiaries of the Group has not been recognised because management believes that this liability will not be incurred in the foreseeable future.

Tax losses carried forward on which no deferred tax asset is recognised amount to 45.7 million EUR (2007: 78.8 million EUR). These tax losses have an indeﬁ nite life. Deferred tax assets have not been recognised on these items because it is not probable that future taxable proﬁ ts (within the next 5 years) will be available against which the unused tax losses can be utilised. Tessenderlo Group

16. Trade and other receivables

2008 2007

Non-current trade and other receivables Trade receivables 0.7 0.2 Gross trade receivables 0.7 0.2 Amounts written off - - Other receivables 2.2 5.1 Prepayments -- Receivables from related parties - - Assets related to employee beneﬁ t schemes 14.5 10.2 Total 17.4 15.5

2008 2007

Current trade and other receivables Trade receivables 401.7 378.5 Gross trade receivables 416.2 391.6 Amounts written off -14.5 -13.1 Other receivables 58.1 44.3 Prepayments 0.6 0.9 Receivables from related parties 9.1 0.3 Total 469.5 424.0 141

Receivables from related parties concern receivables on joint-ventures and associates (note 30).

17. Inventories

2008 2007

Consumables 132.3 95.1 Work in progress 23.2 21.4 Finished goods 274.3 184.3 Goods purchased for resale 43.9 39.1 Total 473.7 339.9

There are no inventories pledged for security.

The cost of inventories recognised as an expense in 2008, amounts to 1,414.7 million EUR (2007: 1,078.3 million EUR), included in cost of sales.

The carrying amount of inventory, which was set at net realisable value as per year-end 2008 amounts to 146.1 million EUR (2007: 38.0 million EUR). An amount of 22.7 million EUR was expensed in 2008 (2007: 3.7 million EUR) of which 19.4 million EUR relates to an inventory write-off during the fourth quarter of 2008. This inventory write-off was mainly the consequence of the strong decrease of sales prices in the beginning of 2009.

In 2008 an insigniﬁ cant income was recognised as a reverse of a write-off on inventories. financial report 2008

18. Cash and cash equivalents

2008 2007

Term accounts 0.5 0.2 Current accounts 53.0 93.4 Cash in hand -- Total 53.5 93.6

19. Non-current assets held for sale

2008 2007

Non-current assets held for sale 0.7 -

The non-current assets held for sale at 31 December 2008 include the land and buildings of two sites of a subsidiary in the Business Group Plastics Converting. Following a restructuring of its activities, these assets remain unused and are set for sale.

142 Tessenderlo Group

20. Equity

Reconciliation of movement in equity capital Issued premium Share Other reserves Translation reserves goodwill Negative Retained earnings Equity attributable to equity holders of the Group Minority interest Equity Total

Balance at 1 January 2007 136.0 36.5 238.9 -5.6 0.4 303.3 709.5 2.2 711.7 Total recognised income and - - - -12.4 - 128.9 116.5 -0.2 116.3 expense Shares issued 1.0 5.5 - - - - 6.5 - 6.5 Dividends paid to shareholders ------33.5 -33.5 - -33.5 Share based payments - - 1.2 - - - 1.2 - 1.2 Other movements - - 16.1 - - -16.1 0.0 - 0.0 Balance at 31 December 2007 137.0 42.0 256.2 -18.0 0.4 382.6 800.2 2.0 802.2

Balance at 1 January 2008 137.0 42.0 256.2 -18.0 0.4 382.6 800.2 2.0 802.2 Total recognised income and - - - -8.8 - 140.5 131.7 -0.1 131.6 expense 143 Shares issued 1.0 1.3 - - - - 2.3 - 2.3 Dividends paid to shareholders ------35.0 -35.0 - -35.0 Share based payments - - 0.8 - - - 0.8 - 0.8 Other movements - - 82.8 - - -82.8 0.0 0.1 0.1 Balance at 31 December 2008 138.0 43.3 339.8 -26.8 0.4 405.3 900.0 2.0 902.0

Issued capital and share premium Ordinary shares 2008 2007

On issue at 1 January 27,626,444 27,419,876 Issued for cash at 4 September 2007 206,568 Issued for cash at 1 September 2008 86,844 On issue at 31 December – fully paid 27,713,288 27,626,444

The number of shares comprised 7,602,211 registered shares (2007: 7,664,192) and 20,111,077 ordinary shares (2007: 19,962,252). The shares are without nominal value.

Translation reserves

The translation reserves comprise all foreign exchange differences arising from the translation of the ﬁ nancial statements of foreign operations.

Dividends

After the balance sheet date, the Board of Directors will propose to the shareholders at the Annual Shareholders’ meeting of 2 June 2009, to approve a dividend distribution of 36.9 million EUR or a net dividend per share of 1.00 EUR. The dividend has not been accounted for. financial report 2008

21. Earnings per share

Basic earnings per share

The calculation of the basic earnings per share is based on the proﬁ t attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding during the year.

The weighted average number of ordinary shares and the earnings per share are calculated as follows:

2008 2007

Number of ordinary shares at 1 January 27,626,444 27,419,876 Effect of shares issued 28,789 66,964 Weighted average number of ordinary shares 27,655,233 27,486,840 Proﬁ t (+) / loss (-) attributable to equity holders of the Group 140.5 128.9 (in million EUR) Basic earnings per share (in EUR) 5.08 4.69

Diluted earnings per share

The calculation of diluted earnings per share is based on the proﬁ t attributable to ordinary shareholders 144 and the diluted weighted average number of ordinary shares outstanding during the year.

The weighted average number of ordinary shares (diluted) and the diluted earnings per share are calculated as follows:

2008 2007

Weighted average number of ordinary shares at 31st December 27,655,233 27,486,840 Effect of share option on issue 6,622 35,898 Diluted weighted average number of ordinary shares at 31st December 27,661,855 27,522,738 Proﬁ t (+) / loss (-) attributable to equity holders 140.5 128.9 of the Group (in million EUR) Diluted earnings per share (in EUR) 5.08 4.68

22. Financial liabilities

2008 2007

Non-current fi nancial liabilities 96.7 122.6 Current fi nancial liabilities 251.4 214.8 Total fi nancial liabilities 348.1 337.4 Cash and cash equivalents -53.5 -93.6 Net fi nancial liabilities 294.6 243.8 Tessenderlo Group

The net debt equity ratio at the end of 2008 is 32.7 % (year end 2007: 30.4 %).

2008 2007

Non-current ﬁ nancial liabilities Lease payables 1.9 2.6 Credit institutions 94.8 120.0 Total 96.7 122.6

Terms and debt repayment schedule 2008:

other Effective currencies in EUR Total Rate (%) Maturity rate (%) in EUR

Credit institutions - 20.0 fl oating 3.59 June ‘10-’13 Credit institutions - 40.0 3.368 (fi xed) - Oct ‘10-’13 Credit institutions - 30.0 3.65 (fi xed) - Dec ‘10-’12 Credit institutions - 4.8 fl oating 0-4.5 ‘10-’15 Lease payables - 1.9 5,8 (fi xed) - ‘10-’16 Total 0.0 96.7 Total: equivalent in EUR 0.0 96.7 96.7 145

Terms and debt repayment schedule 2007:

other Effective currencies in EUR Total Rate (%) Maturity rate (%) in EUR

Credit institutions - 25.0 fl oating 5.18 June ‘09-’13 Credit institutions - 50.0 3.368 (fi xed) - Oct ‘09-’13 Credit institutions - 40.0 3.65 (fi xed) - Dec ‘09-’12 Credit institutions 0.8 4.2 fl oating 0-4.5 ‘09-’15 Lease payables - 2.6 5.8 (fi xed) - ‘08-’16 Total 0.8 121.8 Total: equivalent in EUR 0.8 121.8 122.6

Some covenants like balance sheet or interest coverage ratios or coverage of net debt by EBITDA may apply to long term debt and medium term facilities. All ratios have been respected in 2008.

2008 2007

Current ﬁ nancial liabilities Current portion long term ﬁ nancial liabilities 25.0 25.0 Lease payable within 1 year 0.1 0.1 Credit institutions and commercial paper 226.3 189.7 Total 251.4 214.8 financial report 2008

Of the current ﬁ nancial liabilities per 31 December 2008, 71.6 million EUR (2007: 51.6 million EUR) are represented by treasury bills (commercial paper) issued by Tessenderlo Finance (25.8 million EUR), a Belgian subsidiary and by Tessenderlo Nl Holding (45.8 million EUR), a Dutch subsidiary. The interest rate on this commercial paper amounts from Euribor +0.10% to Euribor +0.17%, depending on the duration of the loan. The Group uses short-term credit lines with credit institutions for the remaining part of the ﬁ nancing.

Analysis of non-current and current ﬁ nancial liabilities by currency (2008):

EUR USD GBP Others Total

Current fi nancial liabilities (*) 211.8 22.0 15.0 2.6 251.4 Non-current fi nancial liabilities 96.7 - - - 96.7 Total fi nancial liabilities 308.5 22.0 15.0 2.6 348.1 In percentage of total fi nancial liabilities 88.62% 6.32% 4.31% 0.75% 100.00%

Analysis of non-current and current ﬁ nancial liabilities by currency (2007):

EUR USD GBP Others Total

Current fi nancial liabilities (*) 180.2 22.8 3.7 8.1 214.8 146 Non-current fi nancial liabilities 121.8 - - 0.8 122.6 Total fi nancial liabilities 302.0 22.8 3.7 8.9 337.4 In percentage of total fi nancial liabilities 89.51% 6.76% 1.10% 2.64% 100.00% (*) Part of these loans are denominated in EUR and afterwards swapped in GBP (see also note 26). The original loan remains in EUR.

Terms and repayment schedule for ﬁ nance lease contracts for 2007 and 2008:

Lease Lease Interest Principal Interest Principal payables payables 2008 2008 2007 2007 2008 2007

Less than one year 0.2 0.1 0.1 0.3 0.2 0.1 Between one and ﬁ ve years 1.9 0.2 1.7 2.5 0.3 2.2 More than ﬁ ve years 0.2 0.0 0.2 0.5 0.1 0.4 Total 2.3 0.3 2.0 3.3 0.6 2.7 Tessenderlo Group

23. Employee benefits

The provision for early retirement and deﬁ ned beneﬁ t pension plans recognised in the balance sheet is as follows:

Early Deﬁ ned beneﬁ t retirement Total pension plan provision

Balance at 1 January 2008 16.8 29.6 46.4 Additions 0.6 1.6 2.2 Use of provision - -0.3 -0.3 Reversal of provision -4.6 -5.3 -9.9 Translation differences - -0.3 -0.3 Transfers 2.8 - 2.8 Balance at 31 December 2008 15.6 25.3 40.9

The entity’s accounting policy for recognising actuarial gains and losses

The recognition of actuarial gains and losses is determined separately for each defi ned benefi t plan. All actuarial gains and losses as at 1 January 2004, the date of transition to IFRSs, were recognised. All actuarial gains and losses subsequent to 1 January 2004 exceeding a corridor of 10 % of the higher of 147 the present value of the defi ned benefi t obligations and the fair value of plan assets are recognised in the income statement over the expected average remaining working lives of employees participating in the plan. Otherwise, the actuarial gain or loss is not recognised.

A general description of the type of plan

• Employee Benefi ts These provisions are recorded to cover the post employment benefi ts and cover the pension plans and other benefi ts in accordance with local practices and conditions, following an actuarial calculation taking into account the fi nancing of insurance companies and other pension funds. The most important pension plans are located in Belgium, the Netherlands, the United States of America, the United Kingdom, Germany and Italy.

• Defi ned contribution plans The defi ned contribution pension plans are plans for which the company pays pre-determined contributions to a legal entity or a separate fund, in accordance with the settings of the plans. The company’s legal or constructive obligation is limited to the amount contributed. The contributions are recognised as an expense in the income statement as incurred and are included in “Payroll and related benefi ts” (note 6).

• Defi ned benefi t plans These plans are fi nanced externally by pension funds or insurance companies. Independent actuaries perform an actuarial valuation on a regular basis. All actuarial gains and losses as at 1 January 2004, the date of transition to IFRSs, were recognised. financial report 2008

The amounts recognised in the balance sheet are as follows:

2008 2007 2006 2005 2004

Present value of wholly funded obligations 78.9 83.7 93.2 77.8 50.3 Present value of partially funded obligations 71.2 75.4 76.2 92.3 94.4 Present value of wholly unfunded obligations 18.0 18.9 17.3 19.4 18.2 Total present value of obligations 168.1 178.0 186.7 189.5 162.9 Fair value of plan assets 147.3 161.7 167.6 159.1 135.8 Deﬁ cit 20.8 16.3 19.1 30.4 27.1

Unrecognised actuarial gains (losses) -10.0 3.1 -2.5 -13.0 -3.1 Net liability 10.8 19.4 16.6 17.4 24.0

Unrecognised in % of funded obligations 5.95% -1,74% 1,34% 6,86% 1,90% Unrecognised in % of plan assets 6.79% -1.92% 1.49% 8.17% 2.28%

Amounts in the balance sheet: Liabilities 25.3 29.6 29.4 29.7 28.7 Assets (note 16) 14.5 10.2 12.8 12.4 4.7 Net liability 10.8 19.4 16.6 17.3 24.0

148 The amounts recognised in the income statement are as follows:

2008 2007

Current service cost 6.0 5.8 Interest cost 9.0 9.1 Expected return on plan assets -9.5 -9.5 Past service cost (beneﬁ t) -0.4 4.0 Total, included in ‘payroll and related beneﬁ ts’ (note 6) 5.1 9.4

The past service cost in 2007 was mainly related to a plan settlement in a US subsidiary, a plan curtailment in the Italian subsidiaries and a change in French law concerning employee beneﬁ ts. These items are presented under non-recurring items.

The net periodic pension cost is included in the following line items of the income statement:

2008 2007

Cost of sales 3.0 3.5 Distribution expenses 0.1 0.1 Sales and marketing expenses 0.7 1.0 Administrative expenses 1.3 0.8 Other operating income/(expenses) - - Non-recurring items, net - 4.0 Total 5.1 9.4 Tessenderlo Group

Changes in the present value of the deﬁ ned beneﬁ t obligation are as follows:

2008 2007

Opening defi ned benefi t obligation 178.0 186.7 Change in scope of consolidation - 4.0 Current service cost 7.3 7.2 Past service cost - 2.1 Interest cost 9.0 9.1 Actuarial losses (gains) -11.1 -10.3 Exchange differences on foreign plans -5.6 -3.0 Settlement - -7.7 Benefi ts paid -9.5 -10.1 Closing defi ned benefi t obligation 168.1 178.0

Changes in the fair value of plan assets are as follows:

2008 2007

Opening fair value of plan assets 161.7 167.6 Change in scope of consolidation - 0.7 Expected return 9.5 9.5 Actuarial gains and (losses) -21.9 -4.1 149 Contributions by employee 1.3 1.3 Contributions by employer 13.9 7.7 Exchange differences on foreign plans -7.7 -3.2 Settlement - -7.7 Beneﬁ ts paid -9.5 -10.1 Closing fair value of plan assets 147.3 161.7

The expected rates of return on individual categories of plan assets are determined by reference to relevant indices. The overall expected rate of return is calculated by weighting the individual rates in accordance with the anticipated balance in the total investment portfolio.

The actual return on plan assets in 2008 and 2007 was -15.1 million EUR and 5.2 million EUR respectively.

The Group expects to contribute 9.2 million EUR to its deﬁ ned beneﬁ t pension plans in 2009.

The major categories of plan assets as a percentage of total plan assets are as follows:

2008 2007

Equities 20% 26 % Fixed interest investments 11% 12 % Cash and deposits 11% 10 % Property 3% 2 % Insurance contracts 55% 50 % Total 100% 100% financial report 2008

The principal actuarial assumptions at the balance sheet date (expressed as weighted averages) are:

2008 2007

Discount rate at 31 December 6.1% 5.3 % Expected return on plan assets at 31 December 5.8% 5.7 % Future salary increases 3.4% 3.2 %

Termination beneﬁ ts (pre-retirement plans, other termination obligations)

Share based payments

A warrant plan has been created in order to increase the loyalty and motivation of the Group’s senior management. The plan gives senior management the opportunity to accept warrants which gives them the right to subscribe to shares. The Board of Directors yearly determines the list of beneﬁ ciaries. There exist no conditions on the number of years of service, however the beneﬁ ciaries may not have resigned 150 or been dismissed (and serving their notice), except for persons who retire or take pre-retirement.

The exercise price of the warrant equals the lower of the average market price of the underlying shares in the 30 trading days preceding the offer date or the market price on the last day preceding the offer date.

The table below gives an overview of the granted and accepted warrants at 31 December 2008.

Number of Last exercise Allocation date Exercise price outstanding date warrants

November ‘01 July ‘09 24.07 1,740 November ‘02 July ‘12 25.87 12,200 November ‘03 July ‘10 26.45 9,800 November ‘04 July ‘11 31.69 32,600 November ‘05 July ‘12 27.11 42,200 November ‘06 July ‘13 30.02 62,880 January ‘08 December ‘12 43.10 97,175 Total 258,595

IFRS 2 requires share based payments made to employees to be recognised in the ﬁ nancial statements based on the fair value of the warrants measured at grant date. According to the transition provisions included in IFRS 2, the warrants granted before 7 November 2002 and not yet vested at 1 January 2005 are not amortised through the income statement.

The fair value of the warrants granted is determined using the Black & Scholes valuation model. Tessenderlo Group

A new share based program was issued as per 8 November 2007. On December 12th 2008, the Board of Directors decided to offer a second tranche of warrants, which had to be accepted by their beneﬁ ciaries by February 10th 2009. On February 10th 2009, 130.750 warrants were granted to senior management (exercise price of 22.07 EUR for French residents, 22.09 EUR for American residents, 23.08 EUR for all others).

The weighted average fair value of the warrants and assumptions used in the measurement of the warrants, granted in 2008, are:

2008 2007

Fair value of warrants (EUR) 2.3 - Share price (EUR) 30.72 - Exercise price (EUR) 43.10 - Expected volatility 24.20% - Expected option life (years) 4.5 - Expected dividend yield 3.61% - Risk free interest rate 4.12% -

The number and weighted average exercise price of share warrants is as follows:

Weighted Weighted 151 average average exercise Number of exercise Number of price warrants price warrants 2008 2007

Outstanding at the beginning of the 29.10 167,420 29.00 259,240 period Forfeited during the period 31.69 6,000 44.63 4,080 Exercised during the period - - 28.10 87,740 Granted during the period 43.10 97,175 - - Outstanding at the end of the period 34.30 258,595 29.10 167,420 Exercisable at the end of the period 29.28 56,340 25.98 23,740

No warrants were exercised in 2008.

The weighted average remaining contractual life of the warrants outstanding as per 31 December 2008 amounts to 3.6 years (2007: 4.5 years). financial report 2008

24. Provisions

2008 2007

Non-current provisions 85.7 63.1 Current provisions 0.9 8.6 Total 86.6 71.7

ENVIRONMENT RESTRUCTURING OTHER TOTAL

Balance at 1 January 2008 12.9 5.7 53.1 71.7 Additions 14.5 - 9.1 23.6 Use of provision -1.0 -0.4 -2.3 -3.7 Reversal of provision -0.7 -2.3 -0.5 -3.5 Effect of discounting - - - 0.0 Other movements 4.8 -2.8 -3.5 -1.5 Balance at 31 December 2008 30.5 0.2 55.9 86.6

The increase of provisions can be mainly explained by the recording of additional environmental provisions, next to the ﬂ uctuations of provisions due to the normal business activities.

On December 10th 2008, the environmental permit of Tessenderlo Chemie NV (Belgium) was extended 152 for a period of 20 years. Tessenderlo Chemie NV committed itself to invest in a new production process and to ﬁ nd a durable solution to its environmental problems in Limburg (Belgium). As a consequence of these commitments additional discounted environmental provisions were recorded for an amount of 14.5 million EUR.

“Other” provisions include mainly a non-recurring provision of 37.0 million EUR set up following the investigations performed by the European Commission on feed phosphates. The European Commission performed an investigation in 2004 on pretended contra competitive practices in the segment of the feed phosphates. In relation with this investigation, the Group recorded a provision of 20,0 million EUR in 2004 and an additional 17,0 million EUR in 2006. This investigation is still ongoing.

For the majority of the non-current provisions, a cash-outﬂ ow is not expected to take place within 5 years.

25. Trade and other payables

2008 2007

Trade payables 290.1 290.1 Other amounts payable 41.6 43.5 Remuneration and social security 57.2 52.5 Total 388.9 386.1 Tessenderlo Group

26 Financial instruments

Exposure to foreign currency, credit risk and interest rate risk arises in the normal course of the Group’s business. Derivative ﬁ nancial instruments are used to reduce the exposure to ﬂ uctuations in foreign exchange rates. While these are subject to the risk of market rates changing subsequent to acquisition, such changes are generally offset by opposite effects on the hedged items.

Foreign currency risk

Currency risk is the risk that the value of a ﬁ nancial instrument will ﬂ uctuate due to changes in foreign exchange rates. The Group incurs foreign currency risks on sales, purchases, investments and borrowings that are denominated in a currency other than the company’s functional currency. The currencies giving rise to this risk are primarily GBP, USD, PLN, HUF, YEN and CHF.

Subsidiaries are required to submit information on their net foreign exchange positions when invoiced (customers, suppliers) to Tessenderlo Finance, a Belgian subsidiary created in January 2006. All the positions are netted at the level of Tessenderlo Finance and the net positions (long/short), which are very small, are then sold or bought on the market.

The main management tools are the spot, purchase and sales of currencies followed by currency- swaps. 153 Group borrowings are generally carried out by the Group’s holding and fi nance companies, which make the proceeds of these borrowings available to the operating entities. In principle, operating entities are fi nanced in their own local currencies, with this currency being obtained, where appropriate, by currency-swaps against the currency held by the fi nance company. In that way, there is no exchange risk either in the fi nance company or in the company fi nally using the funds. The cost of this currency-swap is included in the fi nance costs.

In emerging countries, it is not always possible to borrow in local currency because local ﬁ nancial markets are too narrow, or funds are not available or because the ﬁ nancial conditions are too onerous. Those amounts are relatively small for the Group.

• Exposure to foreign currency risk

The Group’s exposure to foreign currency risk was as follows based on nominal amounts (for the exchange rates used, we refer to note 1 “Summary of signiﬁ cant accounting policies”):

2008 2007 EUR USD GBP EUR USD GBP

Assets 4.3 29.2 77.7 10.6 79.6 92.7 Liabilities -9.8 -39.7 -8.5 -11.1 -52.1 -4.9 Gross exposure -5.5 -10.5 69.2 -0.5 27.5 87.8 Forward exchange contracts 3.6 12.5 -70.0 -5.7 -40.7 -89.8 Net exposure -1.9 2.0 -0.8 -6.2 -13.2 -2.0

Net exposure (in EUR) -1.9 1.4 -0.8 -6.2 -9.0 -1.5

financial report 2008

The difference between the amount covered and the amount in position is due to a mismatching between the recording and the value date of the operations. Coverage of exposure is done on a continuous basis.

Credit risk

The Group is high risk averse. In its strategy to increase shareholder value, the Group aims at a dynamic corporate portfolio management to develop confi dently new markets: corporate exposure, asset quality, portfolio diversifi cation are considered together with the maximisation of market shares, which requires effi cient processes, cost effective payment default protection and CRM good practices. The international fi nancial and economic crisis results in a deep crisis of confi dence. The Group focuses especially on its stable relationships with long term partners. Special and legitimate attention is given to new relationships, for which, if necessary, secured payment methods are used. A Corporate Credit Procedure, a quick and consistent credit decision process, appropriate payment terms, an effi cient collection tool and an accurate risk mitigation tool are used to accelerate the cash fl ow, to minimize bad debts and to increase sales. An in-house scoring model aims at defi ning, with the use of sector-based benchmarks, the portfolio in term of risks through an analysis of performance indicators and the fi nancial structure. When a risk cannot be assessed or when it is too high, the Group resorts to credit insurance or other forms of guarantees.

At 31 December 2008, no signiﬁ cant concentrations of credit risk existed. The liquidities available at the 154 end of the year are deposited at very short term at local ranking banks.

The maximum exposure to credit risk at the reporting date was:

2008 2007

Trade receivables 402.4 378.7 Gross trade receivables 416.9 391.8 Amounts written off -14.5 -13.1 Other receivables 60.3 49.4 Receivables from related parties 9.1 0.3 Assets related to employee beneﬁ t schemes 14.5 10.2 Derivative ﬁ nancial instruments 5.4 1.9 Cash & cash equivalents 53.5 93.6 Total 545.2 534.1

The maximum exposure to credit risk for trade receivables at the reporting date by business group was (see also note 16):

2008 2007

Chemicals 181.8 152.2 Specialities 105.1 93.1 Plastics Converting 112.8 132.1 Unallocated 2.7 1.6 Total 402.4 379.0 Tessenderlo Group

The aging of trade receivables at the reporting date was:

Amounts Amounts Gross written off Gross written off 2008 2008 2007 2007

Not past due 271.7 3.5 263.8 0.1 Past due 0-30 days 87.1 1.1 74.0 0.6 Past due 31-120 days 38.9 1.3 36.5 0.6 Past due 121-365 days 12.5 1.9 8.7 2.8 More than one year 6.6 6.6 9.1 9.0 Total 416.8 14.4 392.1 13.1

The movement in the allowance for impairment in respect of trade receivables during the year was as follows:

2008 2007

Balance at 1 January 13.1 11.6 Impairment loss recognised 4.3 3.9 Reversal of impairment loss -1.0 -1.6 Other movement -2.0 -0.8 Balance at 31 December 14.4 13.1 155

Interest risk

At the reporting date, the interest rate policy of the Group’s interest-bearing ﬁ nancial instruments was:

2008 2007

Fixed rate instruments Financial assets - - Financial liabilities note 22 92.0 112.7

Variable rate instruments Financial assets note 18 53.5 93.6 Financial liabilities note 22 256.1 224.7

On the total amount of ﬁ nancial liabilities at the end of 2008, 72.0 million EUR and 20.0 million EUR carry a ﬁ xed interest rate respectively until 2010-2016 and until 2009.

• Fair value sensitivity analysis for ﬁ xed rate instruments

The Group does not account for any fi xed rate fi nancial liabilities at fair value through profi t and loss, and the Group does not designate derivatives (interest rate swaps) as hedging instruments under a fair value hedge accounting model. Therefore a change in interest rates at the reporting date would not affect profi t or loss. financial report 2008

• Cash ﬂ ow sensitivity analysis for variable rate instruments

The average interest rate on the average debt in 2008 amounted to 4.7 % (2007: 4.8 %).

An increase (decrease) of 100 basis points in interest rates at the reporting date would have decreased (increased) proﬁ t and loss by 1.4 million EUR (2007: 1.3 million EUR). This analysis assumes that all other variables, in particular foreign currency rates, remain constant.

Liquidity risk

The Group will be able to meet its ﬁ nancial obligations as they fall due. The Group’s approach to manage liquidity is to ensure, as far as possible, that it will always have sufﬁ cient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.

The Group establishes forecasts on a regular base on short and longer term in order to be able to adapt ﬁ nancial means to forecasted needs. In addition, the Group maintains the following credit lines:

• A credit line of 420.0 million EUR, which is not conﬁ rmed. • A credit line of 30.0 million USD. This credit line is valid till June 2009, and the interest rate would 156 be libor + 0.55 %.

In addition, the Group uses a commercial paper program of maximum 200.0 million EUR.

The following are the contractual maturities of ﬁ nancial liabilities, including interest payments and excluding the impact of netting agreements.

between more Carrying Contractual less than 2008 1 and 5 than 5 amount cashﬂ ows one year years years

Non-Derivative Financial liabilities Credit institutions 25.0 27.3 5.8 21.5 - Credit institutions 50.0 55.1 11.7 43.4 - Credit institutions 40.0 43.7 11.5 32.2 - Credit institutions 231.1 233.1 228.1 3.3 1.7 Finance lease liabilities 2.0 2.3 0.2 1.9 0.2

Derivative Financial liabilities Forward exchange contracts 5.2 - - - - Inﬂ ow - -97.4 -97.4 - - Outﬂ ow - 92.5 92.5 - - Total 353.3 356.6 252.4 102.3 1.9 Tessenderlo Group

between more Carrying Contractual less than 2007 1 and 5 than 5 amount cashﬂ ows one year years years

Non-Derivative Financial liabilities Credit institutions 30.0 34.3 6.3 22.9 5.1 Credit institutions 60.0 67.1 12.0 44.8 10.3 Credit institutions 50.0 55.6 11.9 43.7 - Credit institutions 194.7 196.0 191.5 2.0 2.5 Finance lease liabilities 2.7 3.3 0.3 2.5 0.5

Derivative Financial liabilities Forward exchange contracts -1.5 - - - - Inﬂ ow - -170.6 -170.6 - - Outﬂ ow - 169.0 169.0 - - Total 335.9 354.7 220.4 115.9 18.4

Fair value of financial assets and liabilities

The fair values together with the carrying amounts shown in the balance sheet are as follows:

Carrying Fair Carrying Fair Note amount value amount value 157 2008 2008 2007 2007

Derivative fi nancial instruments 26 5.4 5.4 1.9 1.9 Cash and cash equivalents 18 53.5 53.5 93.6 93.6 Investments 14 5.2 5.2 6.1 6.1 Trade and other receivables 16 472.4 472.4 429.3 429.3 Non-current fi nancial liabilities 22 -96.7 -91.5 -122.6 -117.5 Leasing payables 22 -1.9 -1.8 -2.6 -2.5 Credit institutions 22 -94.8 -89.7 -120.0 -115.0 Current fi nancial liabilities 22 -251.4 -251.0 -214.8 -214.5 Current portion long term fi nancial 22 -25.0 -24.6 -25.0 -24.7 liabilities Leasing payables 22 -0.1 -0.1 -0.1 -0.1 Credit institutions and commercial paper 22 -226.3 -226.3 -189.7 -189.7 Trade and other payables 25 -388.9 -388.9 -364.6 -364.6 -200.5 -194.9 -171.1 -165.7

Estimation of fair values

• Derivative ﬁ nancial instruments

The fair value of a derivative ﬁ nancial instrument is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction.

The fair value of forward contracts is calculated as the discounted value of the difference between the contract rate and the current forward rate. financial report 2008

The fair value of these instruments generally reﬂ ects the estimated amounts that the Group would receive on settlement of favorable contracts or be required to pay to terminate unfavorable contracts at the reporting date, and thereby takes into account the current unrealised gains or losses on open contracts.

The fair value of forward exchange contracts used at 31 December 2008 was 5.2 million EUR recognised in the income statement on the line net revaluation to fair value of derivatives, which is included in the ﬁ nance income (2007: 1.5 million EUR).

The following table indicates the fair values of all outstanding derivative ﬁ nancial instruments at year- end:

Contractual Contractual amount Fair value amount Fair value 2008 2007

Forward exchange contracts 97.4 5.2 169.0 1.5

The contractual amount indicates the volume of outstanding derivatives at the balance sheet date and therefore does not reﬂ ect the group’s exposure to risks from such transactions.

158 In respect to the forward exchange contracts, the table below indicates the underlying contractual amount of the outstanding contracts per currency at year-end (selling of foreign currencies).

Amount Amount in foreign Amount in in foreign Amount in currency EUR currency EUR 2008 2007

GBP 70.0 78.2 93.9 128.1 USD 17.5 12.9 42.9 29.1 Other - 6.3 - 11.8 Total 97.4 169.0

The Group also holds a position in emission allowances of which the fair value as per 31 December 2008, amounted to 0.2 million EUR (2007: 0.4 million EUR).

• Interest-bearing loans and borrowings

The fair value is calculated based on discounted expected future principal and interest cash ﬂ ows.

The interest rates used to discount estimated cash ﬂ ows, where applicable, are based on the government yield curve at the reporting date plus an adequate credit spread, and were as follows:

2008 2007

Loans and borrowings 5.9-6.0% 5.0-5.2% Tessenderlo Group

• Financial lease payables

The fair value is estimated as the present value of future cash fl ows, discounted at market interest rates for homogeneous fi nancial lease agreements. The estimated fair values refl ect the change in interest rates.

The interest rates used to discount estimated cash ﬂ ows, where applicable, are based on the government yield curve at the reporting date plus an adequate credit spread, and were as follows:

2008 2007

Leases 8.0 % 8.0 %

• Trade and other receivables/payables

For current trade and other receivables/payables, the notional amount is deemed to reﬂ ect the fair value. Non-current receivables/payables are discounted to determine the fair value.

27. Operating leases 159 The non-cancellable operating leases are payable as follows:

2008 2007

Less than one year 4.8 3.6 Between one and ﬁ ve years 16.2 12.6 More than ﬁ ve years 5.5 4.7 Total 26.5 20.9

During the current year, 11.2 million EUR was recognised as an expense in the income statement in respect of operating leases (2007: 9.5 million EUR).

Operating leases mainly consist of land and buildings (7.8 million EUR), property, plant and equipment (15.0 million EUR) and furniture and vehicles (3.7 million EUR).

28. Guarantees and commitments

2008 2007

Guarantees given by third parties on our behalf 39.0 20.5 Guarantees given on behalf of third parties 4.3 6.9 Guarantees received from third parties 4.7 4.4 Total 48.0 31.8 financial report 2008

Guarantees given by third parties on our behalf mainly relate to the fulﬁ llment of our environmental obligations. The increase in 2008 can be explained by a new guarantee which was given on our behalf for an amount of 18.0 million EUR.

Guarantees given on behalf of third parties mainly relate to guarantees given for the proper execution of projects.

The guarantees received from third parties concern guarantees, which suppliers grant to the Group as guarantee for the proper execution of investment projects.

29. Contingencies

The Group could be confronted with a number of potential claims and disputes, which are a consequence of the daily operational activities. These claims and disputes are not of such nature that they could be subject today to a suitable provision.

It is the Group’s policy to recognise environmental provisions in the balance sheet, when the company has a present obligation (legal or constructive) as a result of a past event, when it is probable that an outﬂ ow of resources embodying economic beneﬁ ts will be required to settle the obligation and a when 160 reliable estimate can be made of the amount of the obligation.

These provisions are reviewed periodically and adjusted, if necessary, as assessments and cleanups proceed and additional information becomes available. Environmental liabilities can change substantially due to the emergence of additional information on the nature or extent of the contamination, a change in legislation or other factors of a similar nature.

As stated in note 24, the environmental provisions in accordance with the above policies aggregated to 30.5 million EUR at 31 December 2008 (2007: 12.9 million EUR).

While it is not feasible to predict the outcome of all pending environmental exposures, it is reasonably possible that there will be a need for future provisions for environmental costs which, in management’s opinion, based on information currently available, would not have a material effect on the Group’s ﬁ nancial position but could be material to the Group’s results in any one accounting period.

In order to acquire the remaining 50 % stake in Fiso Group, the Group has signed call agreements with the owner of that share. The call option may be exercised from 1 June 2009 until 30 September 2009. The exercise price is determined by a formula, which takes into account the ﬁ nancial ﬁ gures of Fiso Group.

In order to acquire an additional stake of 20 % in Wolf Mountain Products, the Group holds, as agreed with the current owners of that share, an option which may be exercised from 1 January 2014 until 30 June 2014. The exercise price is determined by a formula, which takes into account the ﬁ nancial ﬁ gures of Wolf Mountain Products.

The Group has been granted emission allowances for the period 2008-2012 (575 KT CO2 emission Tessenderlo Group

allowances per year). These granted emission allowances have been obtained free of charge. The total number of allowances which will be used by the Group in this period cannot yet be determined reliably.

30. Related parties

The Group has a related party relationship with its subsidiaries, associates, joint ventures and with its directors and its management committee.

Transactions with joint ventures

2008 2007

Revenue 2.2 1.8 Cost of sales -28.2 -13.3 Other operating income 0.1 0.1 Finance costs -0.1 -0.1 Current assets 0.4 0.3 Current liabilities 3.1 3.0 161 Transactions with associates

2008 2007

Revenue -- Cost of sales -- Other operating income - - Finance costs -- Current assets 8.7 - Current liabilities - -

Dividends were received from joint-ventures and associates for an amount of 10.2 million EUR (2007: 4.9 million EUR).

Transactions with joint ventures and associates are due to the ordinary course of business and are at arm’s length.

Transactions with the members of the management committee

2008 2007

Short-term employee beneﬁ ts 2.5 2.4 Post-employment beneﬁ ts 0.4 0.3 Share based payments 0.2 0.2 Total 3.1 2.9 financial report 2008

Short-term employee beneﬁ ts include salaries (including social security contributions), bonuses earned during the year, car leases and other allowances where applicable.

Director’s payments consist mainly of director’s fees (tantièmes).

31. Information on the auditor’s assignments and related fees

Our statutory auditor is KPMG Bedrijfsrevisoren / Réviseurs d’Entreprises, represented by Ludo Ruysen, engagement partner.

Fees for auditing the annual ﬁ nancial statements of Tessenderlo Chemie NV and its subsidiaries are ultimately determined by the general meeting of shareholders. Audit and audit related fees for 2008 in relation to services provided by KPMG Bedrijfsrevisoren amounted to 0.70 million EUR (2007 : 0.47 million EUR), which was composed of audit services for the annual ﬁ nancial statements of 0.39 million EUR (2007: 0.32 million EUR) and audit related services of 0.31 million EUR (2007: 0.15 million EUR). Audit related services mainly relate to services incurred in connection with consolidation and BPM.

Audit and other fees for 2008 in relation to services provided by other ofﬁ ces of the KPMG network 162 amounted to 0.64 million EUR (2007: 0.55 million EUR)which was composed of audit services for the annual ﬁ nancial statements of 0.45 million EUR (2007: 0.47 million EUR), tax services of 0.19 million EUR (2007 : 0.08 million EUR) and audit related services of 0.0 million EUR (2007: 0.0 million EUR).

32. Subsequent events

On January 7th 2009, Wymar International (Oeselgem, Belgium), a subsidiary of the Business Unit Profi les, in the Business Group Plastics Converting, has announced its intention to restructure its operations. The causes for this decision rest with the structural macroeconomic downturn on the various markets where Wymar operates, combined with the negative impact of the fi nancial crisis on the investment behaviour of end consumers (new-build and renovation). These adverse market conditions are also being felt on the Central and Eastern European markets in particular. To safeguard the future of Wymar’s activities at its Oeselgem plant, it could be that redundancies cannot be ruled out. The current plan could translate in a loss of 46 jobs at Wymar International in Oeselgem. At this moment the fi nancial impact of this restructuring of operations could not yet be determined reliably. Tessenderlo Group

33. Consolidated companies

Listed below are the most important Tessenderlo Group companies. A complete list of the Group companies is available at Tessenderlo Chemie NV, Troonstraat 130, 1050 Brussel. The total number of consolidated companies is 96.

List of the most important consolidated companies on 31 December 2008 accounted for by the full consolidation method

Europe

Belgium Dyka Plastics NV 3900 Overpelt 100% Belgium Immo Watro SA 1050 Brussels 100% Belgium Limburgse Vinyl Maatschappij NV 1050 Brussels 100% Belgium Tessenderlo Chemie NV 1050 Brussels 100% Belgium Tessenderlo Chemie International NV 1050 Brussels 100% Belgium Tessenderlo Finance NV 1050 Brussels 100% Belgium Wymar International NV 8720 Oeselgem 100% Czech Republic Dyka s.r.o. 27361 Velka Dobra 100% France Akiolis Group SAS 72000 Le Mans 100% France Calaire Chimie SAS 62100 Calais 100% France Chemilyl SAS 59120 Loos 100% France Collectoco SAS 67220 Neubois 100% France Ets Caillaud SAS 61400 Saint-Langis-Les-Mortagne 100% 163 France Ets. Point SAS 01440 Viriat 100% France France Gras SA 56300 Le Sourn 100% France Plastival SAS 25340 Clerval 100% France Produits Chimiques de Loos SAS 59120 Loos 100% France Profex SAS 62210 Avion 100% France Progilor-Bouvart SAS 55100 Charny sur Meuse 99.90% France Saplast SAS 67100 Strasbourg 100% France Société Artésienne de Vinyle SAS 59120 Loos 100% France Soleval SAS 61400 Saint-Langis-Les-Mortagne 100% France Soparcail SAS 61400 Saint-Langis-Les-Mortagne 100% France Sotra-Seperef SAS 69650 Quincieux 100% France SR Collecte SAS 67220 Neubois 100% France Teﬁ par SA 75009 Paris 100% France Thermoplastiques Cousin-Tessier SAS 85130 Tiffauges 100% France Union de la Boucherie Lyonnaise SA 69960 Corbas 94.20% Germany Dyka Gmbh 14513 Teltow 100% Germany PB Gelatins GmbH 31582 Nienburg/Weser 100% Italy Farchemia srl 24047 Treviglio (BG) 100% Italy Tessenderlo Italia srl 24047 Treviglio (BG) 100% Italy Tessenderlo Partecipazioni SpA 24047 Treviglio (BG) 100% Luxembourg Térélux SA GD 2633 Luxembourg 100% Poland Dyka Polska Sp.zo.o. 55-221 Jecz-Laskowice 100% Poland T.C.T. Polska Sp.zo.o. 96-500 Sochaczew 100% Poland Wymar Polska Sp.zo.o 62-100 Wagrowiec 100% Switzerland Tessenderlo Schweiz AG 5330 Zurzach 100% The Netherlands Dyka BV 8331 LJ Steenwijk 100% The Netherlands Tessenderlo NL Holding BV 4854 MT Bavel 100% The Netherlands LVM Limburg BV 6167 RZ Geleen 100% The Netherlands Nyloplast Europe BV 3295KG s-Gravendeel 100% financial report 2008

The Netherlands Tessenderlo Chemie Maastricht BV 6222 Maastricht 100% The Netherlands Tessenderlo Chemie Rotterdam BV 3133 KA Vlaardingen 100% United Kingdom Eurocell Building Plastics Ltd Alfreton-Derbyshire DE55 4 RF 100% United Kingdom Eurocell plc Alfreton-Derbyshire DE55 4 RF 100% United Kingdom Eurocell Proﬁ les Ltd Alfreton-Derbyshire DE55 4 RF 100% United Kingdom John Davidson Pipes Ltd Longtown-Carlisle CA6 5LY 100% United Kingdom PB Gelatins UK Ltd CF 375 SQ Treforest-Mid Glamorgan 100% United Kingdom Tessenderlo Fine Chemicals Ltd ST13 8UZ Leek; Staffordshire 100% United Kingdom Tessenderlo Holding UK Ltd CF 375 SU Treforest 100% United Kingdom Tessenderlo UK Ltd Widnes, Cheshire, WA8 ONY 100% United Kingdom Wymar Systems Ltd DY13 9EZ Worcestershire 100%

USA

USA Chelsea Building Products Inc Oakmont - Pennsylvania 15139 100% USA PB Leiner USA Corp Davenport - Iowa 52809 100% USA Tessenderlo Kerley Inc Phoenix - Arizona 85008-3279 100% USA Tessenderlo U.S.A. Inc. Phoenix - Arizona 85008-3279 100% USA Tessendelo Kerley Services Inc New Mexico-88 220 Carlsbad 100% USA MPR Services Inc Phoenix - Arizona 85008-3279 100%

Rest of the world

Argentina PB Leiner Argentina SA Santa Fe CC108-S3016WAC - Santo 100% 164 Tomé Canada Dynaplast-Extruco Inc. G7X OB6 Jonquière - Québec 82.17% China Lianyungang Taile Chemical Industry, Lianyungang City - 222023 Jiangsu 100% Co. Ltd. Province China PB Gelatins (Pingyang) Ping Yang County - 325401 Zhejiang 80% Province China Tessenderlo Asia Holding Ltd. Chine R.P. - Hongkong 100% China Tessenderlo Trading Shanghai Chine R.P. - 20021 Shanghai 100%

List of the most important consolidated companies on 31 December 2008 accounted for by the equity method

Europe

Belgium T-Power SA 1050 Brussels 33.33% Belgium Zéoline SA 4480 Engis 50% France Bonnet 34500 Beziers 25% France Ferso Bio SAS 47521 Le Passage 50% France Ispac 64130 Mauleon 50% France Labrousse 46120 Anglars 50% France Michel 31800 Villeneuve de Rivière 25% France Siram SARL 50390 Nehou 50% France SH Capital 47520 Le Passage 50% France Solagra SAS 40370 Rion Des Landes 50%

USA

Mexico Alkemin S de RL de CV Mexico D.F. 11700 49.50% USA Jupiter Sulphur LLC Phoenix -Arizona 85008-3279 50% USA Wolf Mountain Products LLC Lindon - Utah 84042 30% Tessenderlo Group

34. Critical accounting estimates and judgements

The preparation of the fi nancial statements in conformity with IFRS as adopted for use by the European Union requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the fi nancial statements and the reported amounts of revenue and expenses during the reporting period. Management bases its estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making the reported amounts of revenue and expenses that may not be readily apparent from other sources. Actual results could differ from those estimates. Estimates are used in accounting for allowances for uncollectible receivables, inventory obsolescence and lower of cost of net realisable value adjustments, depreciation, employee benefi ts, taxes, restructuring provisions and contingencies. Estimates and assumptions are reviewed periodically and the effects of revisions are refl ected in the fi nancial statements in the period they are determined to be necessary.

The Group has applied signifi cant estimates and judgements in order to prepare the consolidated fi nancial statements with respect to property, plant and equipment (note 10), goodwill (note 11), lower of cost of net realisable value adjustments with respect to inventories (note 17), provisions (note 24), income taxes (note 9 and 15), employee benefi ts (note 23) and contingencies (note 29).

Statement on the true and fair view of the consolidated financial statements and the fair overview of the management report 165

G. Marchand (Chairman of the Board of Directors and CEO) and C. Vrebosch (CFO) certify, on behalf and for the account of the company, that, to his/their knowledge, a) the consolidated fi nancial statements which have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union, give a true and fair view of the assets, liabilities, fi nancial position and profi t or loss of the company, and the entities included in the consolidation as a whole, b) the consolidated management report includes a fair overview of the development and performance of the business and the position of the company, and the entities included in the consolidation, together with a description of the principal risks and uncertainties which they are exposed to.

Report according to article 119 of the Belgian Companies Code

This annual report is prepared and includes the provisions as required in article 119 of the Company Law. financial report 2008

AUDITOR’S REPORT

166 Tessenderlo Group

167 financial report 2008

STATUTORY FINANCIAL REPORT

Balance sheet of Tessenderlo Chemie NV

(Millions EUR) 2008 2007

ASSETS Intangible assets 4.0 4.7 Tangible assets 202.1 205.9 Financial assets 428.2 420.3 Fixed assets 634.3 630.9 Stocks and orders in progress 189.2 73.5 Receivables due within on year 186.6 124.7 Investments 0.0 30.0 Cash and cash equivalents 5.5 1.4 Prepaid expenses and accrued income 0.8 0.5 Current assets 382.1 230.1 Total assets 1,016.4 861.0

LIABILITIES Share capital 138.0 137.0 Share premiums 43.4 42.0 168 Reserves 19.3 17.5 Retained earnings 314.4 264.8 Capital grants 8.0 8.7 Shareholders' equity 523.1 470.1 Provisions 95.4 77.5 Deferred taxes 1.4 0.5 Provisions and deferred taxes 96.8 78.0 Liabilities due in more than one year 60.2 75.2 Liabilities due within one year 334.4 237.0 Accrued expenses and deferred income 1.9 0.7 Current liabilities 396.5 312.9 Total liabilities 1,016.4 861.0 Tessenderlo Group

Proﬁ t and loss statement of Tessenderlo Chemie NV

(Millions EUR) 2008 2007

Sales and operating income Sales 931.9 643.8 Change in work in progress, fi nished goods and orders in 77.5 -15.3 progress (increase+/decrease-) Production capitalised 2.0 2.0 Other operating income 36.3 25.5 Total operating income 1,047.7 656.0 Cost of sales and operating charges (-) Raw materials and goods purchased for resale 1. Purchases 623.3 318.3 2. Changes in stocks (increase-/decrease+) -38.5 -0.5 Services and other goods 203.4 179.0 Wages, salaries, social charges and pensions 114.4 109.1 Depreciations and amortizations on formation expenses, tangible 25.3 28.8 and intangible assets Amounts written-off stocks and trade receivable ( charges+ / 0.1 -0.1 write-back- ) 169 Provision for liabilities and charges (charges less utilisations and 17.9 -4.8 write-backs) Other operating charges 5.0 6.2 Total operating charges 951.0 636.1 Operating result 96.8 19.9 Net fi nancial result 17.8 29.5 Ordinary profi t (+) / losses (-) before taxes 114.5 49.4 Extraordinary charges/income 0.1 0.0 Profi t before taxes 114.6 49.4 Income taxes -25.3 0.6 Deferred taxes -0.9 -0.2 Profi t (+) / losses (-) 88.4 49.8 Untaxed reserves -1.7 -0.4 Profi t (+) / losses (-) for the year to be allocated 86.7 49.4 financial report 2008

Allocations and distributions

(Millions EUR) 2008 2007

The Tessenderlo Chemie NV Board of Directors propose to allocate the - Proﬁ ts, being 86.7 49.4 - Increased by prior years' retained earnings 264.8 250.8 Totalling: 351.5 300.2

In the following manner: - Reserves 1.0 0.4 - Dividends 37.0 35 - Retained earnings 314.4 264.8 Totalling: 351.5 300.2

If the General Meeting of 2 June 2009 approves this proposed allocation, the gross dividend will be 1.3333 EUR or a net dividend of 1.0000 EUR for the 27 713 288 ordinary shares and for the VVPR dividend a net amount of 1.1333 EUR remittance of coupon n° 72.

170 Tessenderlo Group

Excerpt from the Tessenderlo Chemie NV separate (non-consolidated) ﬁ nancial statements prepared in accordance with Belgian GAAP

The following information is extracted from the separate Belgian GAAP fi nancial statements of Tessenderlo Chemie NV. These separate fi nancial statements, together with the management report of the Board of Directors to the general assembly of shareholders as well as the auditors’ report, will be fi led with the National Bank of Belgium within the legally foreseen time limits. These documents are also available on request from: Tessenderlo Chemie NV, Troonstraat 130, 1050 Brussel.

It should be noted that only the consolidated ﬁ nancial statements present a true and fair view of the ﬁ nancial position and performance of Tessenderlo Group.

Since Tessenderlo Chemie NV is essentially a holding company, which recognises its investments at cost in its non-consolidated fi nancial statements, these separate fi nancial statements present no more than a limited view of the fi nancial position of Tessenderlo Chemie NV. For this reason, the Board of Directors deemed it appropriate to publish only an abbreviated version of the non-consolidated balance sheet and income statement prepared in accordance with Belgian GAAP as at, and for the year ended 31 December 2008.

The statutory auditor’s report is unqualifi ed and certifi es that the non-consolidated fi nancial statements 171 of Tessenderlo Chemie NV prepared in accordance with Belgian GAAP for the year ended 31 December 2008 give a true and fair view of the fi nancial position and results of Tessenderlo Chemie NV in accordance with all legal and regulatory dispositions. annual report 2008

General information

Production Units

Chemicals

Inorganics Production Units Main Products

PB Gelatins (Vilvoorde) feed phosphates

feed phosphates, hydrochloric Belgium Tessenderlo Chemie Ham acid, potassium sulphate, sulphuric acid

Zeoline (Engis - Liège) zeolites

hydrochloric acid, potassium France Produits Chimiques de Loos sulphate 172 Tessenderlo Italia (Cologna Italy feed phosphates Veneta) (Italphos)

Netherlands Tessenderlo Chemie Rotterdam feed phosphates

liquid sulphur fertilisers: Tessenderlo Kerley (Phoenix) ammonium, calcium, magnesium North America 9 production sites and potassium thiosulphate extensive distribution network crop protection products, slow release nitrogen solutions

PVC / Chlor-alkali

LVM Tessenderlo vinyl chloride monomer (VCM)

caustic soda, caustic potash, Belgium chlorine, ferric chloride, hydrogen Tessenderlo Chemie Tessenderlo sulphide, potassium carbonte lye, sodium sulphide, sodium hypochlorite (bleach)

caustic potash, caustic potash ﬂ akes, mineral chlorides Produits Chimiques de Loos (aluminium, ferric and zinc), France sodium hypochlorite (bleach)

SAV - Mazingarbe PVC

Netherlands LVM Limburg Beek PVC

North America Tessenderlo Kerley (Phoenix) sulphurous products Tessenderlo Group

Plastics Converting

Proﬁ les Production Units Main Products

PVC proﬁ les for windows and Belgium Wymar International (Oeselgem) doors, as well as interior and exterior ﬁ nishing systems

PVC window and door proﬁ les and Canada Dynaplast Extruco (Montreal) proﬁ les for various sectors

window and door proﬁ les, proﬁ les France Plastival (Clerval) for fences, facade cladding

PVC profi les for windows, Eurocell Profi les doors and components for Great Britain Eurocell Building Plastics conservatories and foamed + 90 distribution centers profi les used as roofi ng components and facade cladding

Rigid and foamed PVC proﬁ les Chelsea Building Products for building products, moulding, United States (Oakmont) shutters, cladding and ﬂ ooring. Rigid and foamed PVC compounds

Plastic Pipe Systems

Dyka Plastics (Overpelt) plastic pipe systems in PVC, PE Belgium + 7 distribution centers in Belux and PP

Design and production of plastic 173 pipe systems for the construction Sotra-Seperef France and public works sector, the (St. Austreberthe and Quincieux) agricultural sector and the industry in general

Dyka BV (Steenwijk) + 20 distribution centers in The PVC pipe systems Netherlands Netherlands

Nyloplast ﬁ ttings

Dyka Polska (Jelcz-Laskowice) Poland PVC, PE and PP pipe systems + 13 distribution centers

John Davidson Pipes UK distribution of plastic pipe systems + 27 distribution centers

Compounds

ready for use PVC and TPE mixtures mainly for injection CTS - Cousin-Tessier (Tiffauges) mouldings and extrusions and thermoplastic elastomers for the car industry and for construction France PVC compounds for cable and CTS - Saplast (Strasbourg) construction

Marvyﬂ o® compound for Plastival (Clerval) dashboards for cars

Poland CTS - TCT Polska (Sochaczew) PVC and TPE compounds annual report 2008

Specialities

Fine Chemicals Production Units Main Products

Organic Chlorine Derivatives

benzyl chloride, benzylidene Belgium Tessenderlo Chemie Tessenderlo chloride benzotrichloride and derivatives

Taile Chemical Industry benzyl chloride, benzaldehyde (Lyanyungang) China Trading ofﬁ ce for all Tessenderlo Trading Shanghai Tessenderlo Group activities

acetic acid esters and triacetin Great Britain Tessenderlo Fine Chemicals (Leek) aromas benzyl acetate, hexylcinnamaldehyde

Italy Tessenderlo Italia (Pieve Vergonte) chlorotoluenes

Netherlands Tessenderlo Chemie Maastricht benzyl alcohol

Pharmaceutical Intermediates

Belgium Tessenderlo Chemie (Tessenderlo) glycine and derivatives

174 pharmaceutical intermediates Calaire Chimie (Calais) active pharmaceutical France ingredients

Chemilyl (Loos) oxalyl chloride and derivatives

pharmaceutical intermediates, Italy Farchemia (Treviglio) active pharmaceutical ingredients

Gelatins

PB Leiner Argentina (Santa Fé) Argentina gelatins + 2 collection centers

Belgium PB Gelatins (Vilvoorde) gelatins & ossein

China PB Gelatins (Pingyang) gelatins

Germany PB Gelatins Germany (Nienburg) gelatins

Great Britain PB Gelatins UK (Treforest) gelatins

USA PB Leiner USA (Davenport) gelatins

Natural Derivatives

4 rendering plants 9 plants for valorisation including: *15 units for valorisation of France Akiolis (Le Mans) animal materials *2 units for treatment of used vegetable oils 43 collection centers Tessenderlo Group Addresses

TESSENDERLO GROUP TESSENDERLO CHEMIE NV General Management, Industrieterrein Ravenshout 1010 – Zone 1 Corporate Secretary, Bergstraat, 32 - Entrance 1 Human Resources, IT and Organisation, BE-3945 Ham (Belgium) Finance and Accounting Management Tel.: +32 13 61 22 11 Corporate Communication Fax: +32 13 61 12 32 rue du Trône, 130 Website: www.tessenderlogroup.com BE-1050 Bruxelles (Belgium) Troonstraat 130 TESSENDERLO CHEMIE BE-1050 Brussel (Belgium) ROTTERDAM B.V. Tel.: + 32 2 639 18 11 Zevenmanshaven, 139 Fax: + 32 2 639 19 99 NL-3133 CA Vlaardingen (The Netherlands) Website: www.tessenderlogroup.com Tel.: +31 10 445 27 77 Fax: +31 10 445 27 38 TESSENDERLO CHEMIE NV Website: www.tessenderlogroup.com Headofﬁ ce Stationstraat - Entrance 2 TESSENDERLO ITALIA srl Industrieterrein Schoonhees – Zone 1 Feed Phosphate Plant – Division Italphos BE-3980 Tessenderlo Via Quari Destra 41 Tel.: + 32 13 61 22 11 IT-37044 Cologna Veneta (Verona) (Italy) Fax: + 32 13 66 81 40 Tel.: +39 0442 41 38 11 Website: www.tessenderlogroup.com Fax: +39 0442 41 38 28 Website: www.tessenderlogroup.com TESSENDERLO CHEMIE INTERNATIONAL NV SHARED SERVICE CENTER TESSENDERLO KERLEY Inc. 175 Ubicenter 2255 N° 44th Street, Suite 300 Philipssite 5 – 3rd ﬂ oor US-Phoenix - Arizona 85008 – 3279 (USA) BE-3001 Leuven (Belgium) Tel.: +1 602 889 83 00 Tel.: +32 16 70 72 00 Fax: +1 602 889 84 30 Fax: +32 16 70 72 80 Website: www.tkinet.com

ZEOLINE SA Chemicals rue J. Wauters, 144 BE-4480 Engis (Belgium) HEADOFFICE CHEMICALS Tel.: +32 42 73 92 63 H. Hartlaan 21 – Entrance 5 Fax: +32 42 75 79 60 Industrieterrein Schoonhees – Zone 1 BE-3980 Tessenderlo (Belgium) Sales ofﬁ ces Tel.: +32 13 61 22 11 Fax: +32 13 66 86 04 HGS Handelsgesellschaft für Website: www.tessenderlogroup.com Spezialfuttermittel mbH Mörkenstrasse 5 INORGANICS DE-22767 Hamburg (Germany) Tel.: +49 408 797987-0 PRODUITS CHIMIQUES Fax: +49 408 797987-60 DE LOOS SAS Website: www.tessenderlogroup.com BP 39 - FR-59374 Loos (France) rue Clémenceau TESSENDERLO CHEMIE ESPAÑA TCE SA FR-59120 Loos (France) POSTAL ADDRESS Tel.: +33 320 22 58 58 Apartado de Correos 134 Fax: +33 320 93 59 80 ES-28400 Collado Villalba (Madrid) (Spain) Website: www.tessenderlogroup.com Tel.: +34 91 357 32 04 Fax: +34 91 351 32 04 Website: www.tessenderlogroup.com annual report 2008

TESSENDERLO CHEMIE TESSENDERLO AGROCHEM TARIM VE KIMYA ROTTERDAM B.V. SAN. VE TIC. Ltd Zevenmanshaven, 139 Kustepe Mahallesi NL-3133 CA Vlaardingen (The Netherlands) Leylak Sokak, Murat Is Merkezi Tel.: +31 10 445 27 77 B. Blok, K:11 D:37 Fax: +31 10 445 27 38 TR-34387 H^ha^/Istanbul (Turkey) Website: www.tessenderlogroup.com Tel.: +90 212 217 56 26 Fax: +90 212 217 56 31 TESSENDERLO ITALIA srl Website: www.tkinet.com Feed Phosphate Plant – Division Italphos Via Quari Destra 41 PVC / CHLOR-ALKALI IT-37044 Cologna Veneta (Verona) (Italy) Tel.: +39 0442 41 38 11 PRODUITS CHIMIQUES Fax: +39 0442 41 38 28 DE LOOS SAS Website: www.tessenderlogroup.com BP 39 - FR-59374 Loos (France) rue Clémenceau TESSENDERLO KERLEY LATINOAMERICANA SA FR-59120 Loos (France) Andres de Fuenzalida 133 depto A Tel.: +33 320 22 58 58 CL-9358 Santiago (Chile) Fax: +33 320 93 59 80 Tel.: +56 2 334 65 71 Website: www.tessenderlogroup.com Fax: +56 2 334 88 12 Website: www.tkinet.com TESSENDERLO CHEMIE NV Stationsstraat – Entrance 2 TESSENDERLO KERLEY MEXICO SA de CV Industrieterrein Schoonhees - Zone 1 Blvd. Rodolpho Elias Calles 515-13 OTE BE-3980 Tessenderlo (Belgium) 176 Obregon, Sonora Tel.: +32 13 61 22 11 MX-Mexico 85000 (Mexico) Fax: +32 13 66 81 40 Tel.: +11 52 64 44 17 59 53 Website: www.tessenderlogroup.com Fax: +11 52 64 44 17 96 00 Website: www.tkinet.com TESSENDERLO ITALIA S.r.L. 30/32 Via Mario Massari TESSENDERLO KERLEY MIDDLE EAST IT-28886 Pieve Vergonte (VB) (Italy) Business Center/6th ﬂ oor Tel.: +39 0324 86 03 59 Box 2795 Fax: +39 0324 86 03 73 LA-Jounieh (Lebanon) Tel.: +961 99 34 635 Sales ofﬁ ces Fax: +961 96 43 125 Website: www.tkinet.com TESSENDERLO SCHWEIZ AG Zürcherstrasse 42 TESSENDERLO KERLEY PERU SAC CH-5330 Bad Zurzach (Switzerland) Parque Industrial Tel.: +41 56 249 09 69 Jacinto Ibanez 131 Fax: +41 56 249 09 67 PE-Arequipa (Peru) Website: www.tessenderlo.ch Tel.: +51 54 24 18 24 Fax: +51 54 23 28 55 PVC / CHLOR-ALKALI Website: www.tkinet.com LVM Limburgse Vinyl TESSENDERLO POLSKA Sp.z o.o. Maatschappij NV ul. Szarych Szeregów 7 H. Hartlaan, 21 – Entrance 5 PL-60-462 Poznan (Poland) Industrieterrein Schoonhees 2030 Tel.: +48 61 840 00 40 BE-3980 Tessenderlo (Belgium) Fax: +48 61 840 02 96 Tel.: +32 13 61 22 11 Website: www.tessenderlogroup.com Fax: +32 13 66 84 06 Website: www.lvm.be Tessenderlo Group

LVM Limburg B.V. EUROCELL PROFILES Ltd Koolwaterstofstraat 1 Clover Nook road NL-6161 RA Geleen (The Netherlands) Alfreton-Derbyshire Tel.: +31 464 76 81 48 GB-DE 55 4RF (Great Britain) Fax: +31 464 76 46 41 Tel.: +44 1773 842 100 Fax: +44 1773 842 109 R & D Polymers Website: www.eurocell.co.uk H. Hartlaan, 21 – Entrance 5 Industrieterrein Schoonhees 2030 PLASTIVAL SAS BE-3980 Tessenderlo (Belgium) 2, Route de Santoche Tel.: +32 13 61 22 11 FR-25340 Clerval (France) Fax: +32 13 67 20 18 Tel.: +33 381 99 18 18 Fax: +33 381 97 84 97 SAV SAS Plant Mazingarbe Website: www.plastival.fr Chemin des Soldats BP 49 WYMAR INTERNATIONAL NV FR-62160 Bully-les-Mines (France) Brugstraat 27 Tel.: +33 321 72 85 06 BE-8720 Oeselgem (Belgium) Fax: +33 321 72 82 60 Tel.: +32 9 388 95 71 Website: www.tessenderlogroup.com Fax: +32 9 388 64 95 Website: www.wymar.com Plastics Converting Sales ofﬁ ces

HEADOFFICE PLASTICS CONVERTING EUROCELL BUILDING PLASTICS Ltd rue du Trône, 130 Clover Nook road 177 BE-1050 Bruxelles (Belgium) Alfreton-Derbyshire Troonstraat 130 GB-DE 55 4RF (Great Britain) BE-1050 Brussel (Belgium) Tel.: +44 1773 842 100 Tel.: + 32 2 639 18 11 Fax: +44 1773 842 109 Fax: + 32 2 639 19 99 Website: www.eurocell.co.uk Website: www.tessenderlogroup.com PROFEX SAS PROFILES rue de Vimy - ZI les Quatorze FR-62210 Avion (France) CHELSEA BUILDING PRODUCTS Inc. Tel.: +33 321 08 57 20 565, Cedar Way Fax: +33 321 08 57 30 US-Oakmont, Pennsylvania 15139 (USA) Website: www.profex.fr Tel.: + 1 412 826 80 77 Fax: +1 412 826 80 96 WYMAR HUNGARIA Kft Website: www.chelseabuildingproducts.com Csepeli Út. 15 HU-2310 Szigetszentmiklos (Hungary) DYNAPLAST EXTRUCO Inc. Tel.: +36 24 444 800 10500, rue Colbert Fax: +36 24 443 553 Anjou Website: www.wymar.hu Montréal H1J 2H8 (Canada) Tel.: +1 514 355 68 68 WYMAR POLSKA Sp. z o.o. Fax: +1 514 355 03 52 Ul. Gnieznienska 47 Website: www.dynaplastextruco.com PL-62-100 Wagrowiec (Poland) Tel.: + 48 67 26 26 246 Fax: + 48 67 26 27 510 Website: www.wymar.com annual report 2008

PLASTIC PIPE SYSTEMS Sales ofﬁ ces

DE HOEVE DYKA B.V. – EXPORT KUNSTSTOFRECYCLING B.V. Deccaweg 25 De Nieuwe Haven, 16 NL-1042 AE Amsterdam (The Netherlands) NL-7772 BC Hardenberg (The Netherlands) Tel.: +31 20 50 60 081 Tel.: +31 523 28 83 89 Fax: + 31 20 61 35 646 Fax: +31 523 26 03 89 Website: www.dyka.com

DYKA B.V. DYKA GmbH Produktieweg, 7 Birkenweg, 5 NL-8331 LJ Steenwijk (The Netherlands) OT Wilhelmshorst Tel.: +31 521 53 49 11 DE-14552 Milchendorf (Germany) Fax: +31 521 53 43 35 Tel.: +49 33 205 24 25 11 Website: www.dyka.com Fax: +49 33 205 24 25 20 Website: www.dyka.com DYKA PLASTICS NV Nolimpark 4004 DYKA s.r.l. Stuifzandstraat 47 46, Grigore Cobalcescu Street BE-3900 Overpelt (Belgium) ap.9 Tel.: +32 11 80 04 20 RO- Bucharest, sector 1 (Romania) Fax: +32 11 64 42 46 Tel: + 40 364 262 803 Website: www.dyka.com Fax: + 40 364 262 803 Website: www.dyka.com DYKA POLSKA Sp. z o.o. 178 ul. Belgijska 5 DYKA SK s.r.o. PL-55-221 Jelcz-Laskowice (Poland) Nejedlého 49/9 Tel.: +48 71 301 00 00 SK-841 02 Bratislava (Slovak Republic) Fax: +48 71 301 00 01 Tel.: +421 918 973 286 Website: www.dyka.com Fax: +420 336 406 701 Website: www.dyka.com NYLOPLAST EUROPE B.V. Mijlweg 45 DYKA s.r.o. NL- 3295 KG ‘s Gravendeel (The Netherlands) Unhostská 505 Tel: +31 78 673 20 44 CZ-27361 Velká Dobrá (Czech Republic) Fax: + 31 78 673 44 89 Tel.: +420 312 666 011 Fax: +420 312 685 026 SOTRA-SEPEREF SAS Website: www.dyka.com 25, Route de Brévillers FR-62140 Ste Austreberthe (France) JOHN DAVIDSON PIPES Ltd Tel.: +33 321 86 59 00 Townfoot Industrial Estate Fax: +33 321 86 59 01 Longtown, Carlisle Website: www.sotra-seperef.com GB-Cumbria CA6 5LY (Great Britain) Tel.: +44 1228 79 15 03 SOTRA-SEPEREF SAS (2) Fax: +44 1228 79 20 51 Z.I. de Quincieux 2, BP 1 Website: www.jdpipes.co.uk FR-69650 Quincieux (France) Tel.: +33 472 26 29 72 COMPOUNDS Fax: +33 478 91 19 98 Website: www.sotra-seperef.com CTS - COUSIN-TESSIER SAS Zone Industrielle BP 3 FR-85130 Tiffauges (France) Tel.: +33 251 65 71 43 Fax: +33 251 65 71 61 Website: www.cts-compounds.com Tessenderlo Group

CTS - SAPLAST SAS CHEMILYL SAS 22-24, rue de la Rochelle BP 39 – FR-59374 Loos (France) Port du Rhin rue Clémenceau FR-67100 Strasbourg (France) FR-59120 Loos (France) Tel.: +33 388 65 82 00 Tel.: +33 320 22 58 58 Fax: +33 388 40 00 80 Fax: +33 320 93 59 80 Website: www.cts-compounds.com

CTS - TCT POLSKA Sp. z o.o. FARCHEMIA S.r.L. Ul. 15 Sierpnia 106 Via Bergamo, 121 PL-96-500 Sochaczew (Poland) IT-24047 Treviglio (BG) (Italy) Tel.: +48 46 863 13 60 Tel.: +39 0363 31 401 Fax: +48 46 863 13 80 Fax: +39 0363 45 985 Website: www.cts-compounds.com Website: www.farchemia.it Website: www.tct.pl TAILE CHEMICAL INDUSTRY PLASTIVAL SAS 188, Xinhai Road 2, Route de Santoche Lianyungang City, FR-25340 Clerval (France) CN-Jiangsu Province 222023 (China) Tel.: +33 381 99 18 18 Tel.: +86 518 85 25 20 50 Fax: +33 381 97 84 97 Fax: +86 518 85 25 56 86 Website: www.plastival.fr Website: www.taile.com

Sales ofﬁ ces TESSENDERLO CHEMIE NV H. Hartlaan 21 – Entrance 3-4 MARVYFLO Industrieterrein Schoonhees 2030 179 H. Hartlaan, 21 – Entrance 5 BE-3980 Tessenderlo (Belgium) Industrieterrein Schoonhees 2030 Tel.: +32 13 61 22 11 BE-3980 Tessenderlo (Belgium) Fax: +32 13 66 29 53 Tel.: +32 13 61 22 11 Website: www.tessenderlogroup.com Fax: +32 13 66 84 06 Website: www.tessenderlogroup.com TESSENDERLO CHEMIE MAASTRICHT B.V. Ankerkade, 111 NL-6222 NL Maastricht (The Netherlands) Tel.: +31 433 52 59 59 Specialities Fax: +31 433 52 59 55

HEADOFFICE SPECIALITIES TESSENDERLO FINE CHEMICALS Ltd rue du Trône, 130 Macclesﬁ eld Road BE-1050 Bruxelles (Belgium) GB-Leek, Staffs ST13 8LD (Great Britain) Troonstraat 130 Tel.: +44 1 538 39 91 00 BE-1050 Brussel (Belgium) Fax: +44 1 538 39 90 25 Tel.: + 32 2 639 18 11 Website: www.tessenderloﬁ nechemicals.co.uk Fax: + 32 2 639 19 99 Website: www.tessenderlogroup.com TESSENDERLO ITALIA S.r.L. Fine Chemicals Plant FINE CHEMICALS 30/32 Via Mario Massari IT-28886 Pieve Vergonte (VB) (Italy) CALAIRE CHIMIE SAS Tel.: +39 0324 86 03 59 Z.I. du Pont du Leu Fax: +39 0324 86 03 73 1, Quai d’Amérique, B.P. 215 FR-62104 Calais Cedex (France) Tel.: +33 321 46 21 21 Fax: +33 321 46 21 20 annual report 2008

Sales ofﬁ ces PB LEINER USA 7001 Brady Street TESSENDERLO CHEMIE NV – FINE CHEMICALS US-Davenport, Iowa 52806 (USA) Rue du trône 130 Tel.: +1 563 386 8040 1050 Bruxelles (Belgium) Fax: +1 563 391 1138 Troonstraat 130 Website: BE-1050 Brussel (Belgium) www.pbgelatins.com - www.gelatin.com Tel.: + 32 2 639 18 11 Fax: + 32 2 639 19 99 NATURAL DERIVATIVES

GELATIN AKIOLIS GROUP 72, av. Olivier Messiaen TESSENDERLO CHEMIE NV, AFDELING FR-72000 Le Mans (France) VILVOORDE Tel.: +33 2 44 81 50 10 PB GELATINS Fax: +33 2 44 81 50 12 Bedrijvenzone “Centrale” Marius Duchéstraat, 260 BE-1800 Vilvoorde (Belgium) Tel.: +32 2 255 62 21 Fax: +32 2 253 96 18 Website: www.pbgelatins.com General Sales Ofﬁ ce China TESSENDERLO TRADING SHANGHAI PB GELATINS GmbH Room 2201, Große Drakenburger Straße 43 Shanghai Times Square Ofﬁ ce Tower 180 DE-31582 Nienburg/Weser (Germany) Huai Hai Zhong Road, 93 Tel.: +49 50 21 60 100 CN-200021 Shanghai (China) Fax: +49 50 21 60 10 60 Tel.: +86 21 63 91 80 66 ext 15 Website: www.pbgelatins.com Fax: +86 21 63 91 80 77 Website: www.tessenderlogroup.com PB GELATINS (Pingyang) Co, LTD Fuqian Road, Wubanqiao, Aojiang Town, Pingyang County, Wenzhou City CN-Zhejiang Province 325401 (China) Tel.: +86 577 63 66 80 05 Fax: +86 577 63 66 81 83 Website: www.pbgelatins.com

PB GELATINS UK Ltd Treforest Industrial Estate Building A6, Severn road GB-Pontypridd CF37 5SQ (Great Britain) Tel.: +44 1443 849 300 Fax: +44 1443 844 209 Website: www.pbgelatins.com

PB LEINER ARGENTINA Parque Industrial Sauce Viejo S3017W16 - Sauce Viejo Post Ofﬁ ce: CC108-S3016WAC AR-Santa Fe (Argentina) Tel.: +54 342 450 1100 Fax: +54 342 450 1112 Website: www.pbgelatins.com - www.gelatin.com Tessenderlo Group

Index

page page Accounting Policies 105 Intangible assets 136 Addresses 175 International presence 18 Animal feed phosphates 30 Investor relations 94 Applications 22 Audit (committee) 85 Key ﬁ gures cover Auditor’s report 166 Leadership 15 Balance sheet NV 168 Liabilities (long-term) 144 Balance (consolidated) 102 Board of Directors 81 Management Committee 86 BEL Mid 92 Markets 22 Business Groups: Chemicals 28 Natural derivatives 64 Plastics Converting 40 Next 150 92 Specialities 54 Number of shares NV 93

Calendar (fi nancial) 7 Off-balance sheet commitment 159 Call warrants 88 Organisation chart companies 20 Capital 143 Cash fl ow cover Pension plan 147 Cash fl ow statement 103 Personnel (costs for) 128 Chart of the group 20 Pharmaceuticals 56 Committees 84 Plastics 40 181 Compounds (pvc/tpe) 50 Plastic Pipe Systems 46 Consolidated balance sheet 102 Press releases (dates) 7 Consolidated companies 163 Principles of consolidation 106 Consolidated income statement 100 Production units 172 Consolidated revenue cover Products 22 Contacts 7 Profi le 14 Corporate Governance 81 Profi les 42 Profi t distribution 144/170 Dividend 94 Provisions 152 PVC 35 Energy 76 Environment 74 Results (consolidated) 100 Equity (shareholders) 143 Results NV 169 Events (recent) 26 Revenue breakdown 5 Revenue (consolidated) cover Fertilisers 30 Risk Management 76 Figures over 10 years cover Financial communication 94 Safety 74 Financial assets 138 Sales offi ces 175 Financial notes 104 Segment Reporting 121 Financial ratios 2 Share Tessenderlo Chemie NV 92 Shareholders 92 Gearing 145 Stock Exchange data 93 Gelatin 60 Stock options 88 General Meeting 7 Strategy of the group 16 Goodwill 134 Subsidiary companies (consolidated) 163 Graphs 2 Guarantees 159 Tangible assets 132 Taxes 131 Headcount 71 Human resources 70 Vinyl 2010 75

IFRS 105 Water treatment 37 Important ﬁ gures cover www 184 Index (stock exchange) 92 annual report 2008

Financial Glossary

Basic earnings per share (Basic EPS) EBITDA

Proﬁ t (+) / loss (-) for the period attributable Earnings before interests, taxes, depreciation, to equity holders of the group divided by the amortisation and provisions weighted average number of ordinary shares. (Proﬁ t (+) / loss (-) from operations plus depreciation, amortisation and provisions).

Capital employed (CE) Gearing The carrying amount of property, plant and equipment (PP&E), intangible assets and Net ﬁ nancial liabilities divided by equity. goodwill together with working capital. Interest coverage

182 Profi t (+) / loss (-) for the period plus income Dividend per share (gross) tax expense and interest expense, divided by Total amount paid as dividend divided by the the interest expense. number of shares issued at closing date. Market capitalisation Diluted earnings per share (Diluted EPS) Number of shares issued (at the end of the Profi t (+) / loss (-) for the period attributable period) multiplied by the market price per to equity holders of the group divided by the share (at the end of the period). fully diluted weighted average number of Net cash fl ow ordinary shares. Profi t (+) / loss (-) for the period and all Diluted weighted average number of ordinary shares non cash fl ow items included in the income statement (provisions, amortisations, Weighted average number of ordinary shares, deprecation and impairment losses). adjusted by the effect of share options on Net fi nancial liabilities issue. Non-current and current fi nancial liabilities EBIT minus cash and cash equivalents. Earnings before interests and taxes (Profi t (+) / loss (-) from operations). Tessenderlo Group

Non-recurring items Theoretical aggregated weighted tax rate Items related to restructuring, impairment Calculated by applying the statutory tax rate losses, claims and other income or expenses, of each country on the profi t before tax of which do not occur regularly as part of the each entity and by dividing the resulting tax normal activities of the company. charge by the total profi t before tax of the group. Pay out ratio Weighted average number of ordinary shares Gross dividend divided by profi t for the period attributable to equity holders of the group. Number of shares outstanding at the beginning of the period, adjusted by the REBIT number of shares cancelled, repurchased or Recurring earnings before interests and taxes issued during the period multiplied by a time- (Profi t from operations before non-recurring weighting factor. 183 items). Working capital REBITDA Inventories, trade and other receivables Recurring earnings before interests, taxes, minus trade and other payables. depreciation, amortisation and provisions (Profi t from operations plus depreciation, amortisation and provisions).

Return on capital employed (ROCE)

REBIT divided by capital employed.

Return on equity (ROE)

Proﬁ t (+) / loss (-) for the period divided by average equity attributable to equity holders of the group. annual report 2008

Editor

M. Vandenbergen – Corporate Communication Tessenderlo Group Troonstraat 130 B-1050 Brussels (BE) Tel.: +32 2 639 18 11

Concept & Pre-press

Comﬁ & Publishing, www.comﬁ .be

Het jaarverslag is tevens beschikbaar in het Nederlands. Le rapport annuel est également disponible en français. 184

The Annual Report (in English, Dutch, French) may be viewed on our website: www.tessenderlogroup.com; see News & Media – Publications. A user-friendly interactive (html) version of the English Annual Report is also available on the website.

TESSENDERLO CHEMIE NV

Administrative Headquarters Troonstraat 130 B-1050 Brussels (Belgium) Tel. +32 2 639 18 11 Fax +32 2 639 19 99 BTW BE 0 412 101 728 RPR Hasselt Website: www.tessenderlogroup.com www.tessenderlogroup.com Making it together Making it FIT Making it LASTING

Making it INSPIRING Making it CONVINCING Making it WORK