Antalis : 2019 Annual financial report02/06/2020 - PDF - 8.99 Mo

General comments

KEY FIGURES ARE BASED ON THE FOLLOWING DEFINITIONS (WHERE NECESSARY AND IN THE INTERESTS OF COMPARABILITY, THE IMPACT OF THE FIRST-TIME APPLICATION OF IFRS 16 - LEASES, ON THESE INDICATORS IN 2019 IS RESTATED OR PRESENTED SEPARATELY):

Gross margin: sales minus the cost of goods and services sold, supplier rebates and cash discounts and movements in provisions for goods for resale inventories.

EBITDA: current operating income plus net additions to depreciation, amortisation and provisions.

Current operating income: operating income before "Other operating income and expenses" (see Chapter 4, Note 22).

Consolidated net debt: debt less cash and cash equivalents (see Chapter 4, Note 17b).

Capital employed: sum of net fixed assets and working capital requirements.

Current operating cash flow: algebraic sum of EBITDA, changes in working capital requirements and investment expenditure.

Gross margin rate: Gross margin divided by sales (expressed as a percentage).

EBITDA margin: EBITDA divided by sales (expressed as a percentage).

Current operating margin: current operating income divided by sales (expressed as a percentage).

"Antalis" or the "Group" refers to Antalis whose shares are admitted to trading on the Euronext Paris market, or to the Group comprising Antalis and all of its subsidiaries.

Information regarding Antalis' positions in its business sectors and its market share in volume and value terms is based on internal studies and competitors' publications available as of the date of this report.

The brands referred to in this report, whether registered or not, are those of Antalis Group companies or third parties which hold them.

This Annual Financial Report notably includes the (i) management report for 2019 prepared in accordance with Articles L. 225-100 et seq. of the French Commercial Code (Code de commerce) and (ii) the Board of Directors' report on corporate governance prepared in accordance with Article L. 225-37 of the French Commercial Code.

Reference herein to the Annual General Meeting of 30 June 2020 means any General Meeting called to deliberate on the same agenda as that submitted to said Annual General Meeting.

This is a free translation into English of the Company's 2019 Annual Financial Report published in French with the AMF (Autorité des marchés financiers). It is provided solely for information purposes and for the convenience of English speaking readers.

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PRESENTATION OF THE GROUP

9

• History .............................................................. 9

• Geographical markets .............................. 10

• Market sectors ............................................. 10

• Organisation ................................................. 14

• Strategy .......................................................... 16

• • Growth drivers

  and value creation ..................................... 18

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RISK FACTORS

157

• Financial risks ........................................... 158

• Operating risks .......................................... 161

• Legal risks .................................................. 164

• Insurance and risk management ....... 164

Message from the CEO ............................. 4

Overview ................................................................... 5

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CSR

23

CORPORATE GOVERNANCE

37

FINANCIAL STATEMENTS

75

• Organisational governance .................... 23

• Board of Directors ..................................... 37

• Key figures .................................................... 75

• Stakeholders ................................................ 23

• • Committees of the Board

  • Comments on the year ............................. 76

  • Main risks and challenges ...................... 24

  of Directors .................................................. 44

• Financial data for Q1 2020 ..................... 79

• • Environment

  • Corporate decision-making bodies ...... 46

  • Consolidated financial statements ....... 82

  and circular economy ................................ 25

• • Profiles of the Board members

  • • Statutory Auditors' report on

    • Product offering ......................................... 27

• and executive management ................... 47

  • the consolidated financial statements .. 134

    • Social responsibility ................................. 28

• • Report on corporate officer

  • • Parent company financial

    • • Human rights, corruption

• compensation .............................................. 53

  • statements .................................................. 137

    • and tax evasion ........................................... 31

• • Compliance with the AFEP-MEDEF

  • • Statutory Auditors' report on the parent

    • CSR reporting methodology ................. 32

• corporate governance code .................... 69

• company financial statements ................. 151

• • Report by an independent

  • Related-party agreements ...................... 70

  • Allocation of 2019 net income ............ 154

  third party .................................................... 34

• Statutory Auditors ..................................... 71

• • Statutory Auditors' special report

  on related-party agreements ..................... 72

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COMPANY INFORMATION

169

APPENDICES

181

• • General information about

  • • Person responsible for the Annualthe Company ............................................. 169

    Financial Report ......................................... 181

• • Information about the Company's

  • • Statement by the person responsible

• capital and ownership ............................. 171

• for the Annual Financial Report .......... 181

• Stock market information ..................... 177

• Auditors ....................................................... 182

• Tables of concordance ............................ 183

Message from the Chief Executive Officer

In 2019, Antalis had to contend with headwinds in many of the markets in which it operates. The business environment deteriorated in Europe, Asia and Latin America, especially during the second-half of the year. Political uncertainty has also weighed upon demand in countries in which the Group has strong market positions (i.e., United Kingdom, Chile, Hong Kong and France). In 2019, the European Papers market contracted sharply by a further 8% and prices - which had been rising - began falling in spring 2019. Moreover, the Group was negatively impacted by the failure of a strategic coated and recycled papers supplier, which accounted for approximately 4% of its 2018 purchases in value terms, and the Group's controlling shareholder went into liquidation. Industrial Packaging, particularly in the German auto sector was also impacted, albeit to a lesser extent.

Nevertheless, our Group proved its resilience in these difficult conditions: sales totalled €2,074 million, down 8.6% on a comparable basis, and EBITDA came in at €54 million, giving an EBITDA margin of 2.6%, thanks in particular to a major cost-cutting drive over the year. These operating performances have once again demonstrated our considerable resilience and expertise, the commitment of our teams, the diversity of our geographies and product portfolio, the support of our strategic suppliers and the steadfast loyalty of our customers. These strengths will almost certainly be tested again in 2020 in dealing with the fallout from the global Covid-19 pandemic.

HERVÉ PONCIN Chief Executive Officer

Consolidating our footprint in Packaging and Visual Communication

These higher value sectors contributed 39% of consolidated gross margin in 2019, two points higher than in 2018, underpinned by our ability to innovate and to anticipate our customers' expectations and constantly provide them with more value. They also vindicate our strategy to transform our business model.

In the industrial Packaging sector, we continue to deploy our commercial strategy of providing unique value in the market, with especially attractive prices for major international accounts. Following the opening of two design centres specialising in bespoke packaging solutions in 2019, our customers now have six centres across Europe catering to their specific requirements and sustainable development imperatives. We have also developed innovative digital customer solutions using the Connect'in initiative. Lastly, our own industrial Packaging brand, Master'in - launched in most European countries and comprising over 500 references - has been enthusiastically received by the market.

In Visual Communication, Antalis has consolidated its position as a leading market player in customised interior decoration. Over 500 candidates from more than 20 countries entered the second Antalis Interior Design Awards. We have expanded our range of eco-friendly products and we continued to grow our Coala range with the launch of Coala Interior Films.

Growing e-commerce

Innovation also guides our omni-channel strategy, particularly in the area of e-commerce. In 2019, we continued to deploy the new version of our e commerce website, with new features offering users an optimal customer journey. We generated sales of €308 million via our e-platforms (e-commerce websites and EDI) in 2019. The e-penetration rate in terms of stock lines ordered via the e-platforms continues to grow and now stands at around 37%. The new version of our e-commerce website, which went live in our main European countries in 2019, will continue to be rolled out to other geographies in 2020. The ramp-up of our digital services and a stronger presence on social networks will not only boost our performances in this area, but most importantly enhance the satisfaction of existing customers and attract new ones.

Drive for excellence

Our drive for excellence is at the heart of our sales strategy and is the foundation of our relationship with our stakeholders. It guides the development of our three businesses and underpins the Group's corporate social responsibility (CSR) commitments in terms of corporate governance, natural resources, human resources and our product and service offering. Most of the objectives of our 2016-2020 plan have been achieved or exceeded, and the 2020-2022 plan includes even more ambitious goals, especially in terms of eco-friendly products, reducing the Group's carbon footprint and employee training. These advances show that CSR is fully integrated into our business model and represents an important driver of success over the medium term for both our Group and its employees.

A new attractive outlook for Antalis with a new shareholding structure

As announced on 31 March 2020, Antalis' search for a new shareholding structure launched in 2019 has culminated in the signature of a binding put option agreement with Kokusai Pulp and Paper Co., Ltd ("KPP") for the purchase of all shares held by Sequana, and an agreement to buy all of the Antalis shares held by Bpifrance Participations (subject to the transfer of the shares held by Sequana to KPP) together with an agreement with its creditors to restructure the syndicated credit facility. This put option was exercised by Sequana on 15 May 2020 and a share purchase and sale agreement was finalised with KPP which should culminate in a change in control of Antalis effective in July 2020. This agreement, which is subject to the usual conditions precedent, paves the way for Antalis to become part of a global leader in the distribution of Papers, Packaging and Visual Communication across four continents, representing annual sales of approximately €5.3 billion. It gives fresh momentum to the development of our Group for the benefit of our customers, suppliers and teams.

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2019 Annual Financial Report