LA SEDA DE BARCELONA · positive adjustment to corporate income tax 2004 profit from the financial...
Transcript of LA SEDA DE BARCELONA · positive adjustment to corporate income tax 2004 profit from the financial...
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BALANCE SHEET AT 31 DECEMBER 2006 AND 2005
Notes 1 to 36 to the attached report are an inseparable part of the balance sheet at 31 December 2006.
31.12.2006
27,096
979 45,085 10,555 2,311 4,773
(6,133)57,570
31,449 156,562
1,185 676
5,788 (114,580)
81,080
428,998 187,878
2,450 86,511 21,499
35 727,371
893,117
11,720
93 6,906 3,051 3,183 3,213 (191)
16,255
153,528 44,758 8,828
103 8,286
(1,087)214,416
4,209 28,171
315 8
(10)32,693
2,135 4,570
14 270,083
1,174,920
31.12.2005
5,381
3.349 85
8,258 -
4,773 (4,434)12,031
51,434 202,631
1,222 5,350 5,158
(152,581)113,214
59,304 -
170 139
23,775 273
83,661 214,287
7,081
209 6,250 1,870
13.956 -
(227)22,058
157,319 37,814 2,786
101 1,596
(1,782)197,834
331 29,872
715 8.007
(10)38,915
223 5,710
109 264,849
486,217
ASSETSFIXEDPreliminary expenses (Note 6)
Intangible fi xed assets (Note 7)Research & development expensesConcessions, patents, licences, trademarks and similarComputer applicationsGreenhouse effect gas emission rightsRights to assets under fi nance leasesDepreciation
Tangible fi xed assets (Note 8)Land and buildingsTechnical plant and machineryOther plant, tools and fi ttingsAdvances and tangible fi xed assets in progressOther fi xed assetsDepreciation
Financial Investments (Note 9)Shares in group companies and affi liatesLoans to group companiesLong-term stock portfolio investmentOther loansLong-term debts with Public BodiesLong-term deposits and guarantees
DEFERRED EXPENSES (Note 10)
CURRENT ASSETS
Inventories (Note 11)Trade stocksRaw materials and other suppliesProducts in progress and semi-fi nishedFinished goodsAdvancesProvisions
DebtorsClients for services and salesGroup companies and affi liates, debtors (Note 12)Sundry Debtors (Note 13)StaffPublic BodiesProvisions
Short-term fi nancial investmentsLoans to group companiesShort-term securities portfolio (Note 9)Other loans (Note 9)Deposits and guarantees set up in the short-term (Note 9)Provisions (Note 9)
Short-term own shares (Note 14) Cash End-of-period adjustments
(Thousands of Euros)
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BALANCE SHEET AT 31 DECEMBER 2006 AND 2005
LIABILITIESSHAREHOLDERS’ EQUITY (Note 15)
Share Capital (Note 16)Issue Premium (Note 17)Reserves (Note 18)Losses from previous fi nancial years (Note 18) Fiscal period income/loss
DEFERRED INCOME Capital subsidies (Note 5.o)
PROVISIONS FOR RISKS AND EXPENSES Provision greenhouse gas effect emission (Note 19)
LONG-TERM CREDITORS Issue of Debenture Loans and Other Marketable Securities (Note 20) Convertible bonds
Bank borrowing Long-term bank debts (Note 21)Long-term fi nancial lease creditors (Note 7.1)
Debts with group and associate companies (Note 11)
Other creditors (Note 20)Long-term, Public BodiesOther liabilitiesLong-term deposits received
SHORT-TERM CREDITORSIssue of Debenture Loans and Other Marketable Securities (Note 20)Interests from bonds and other securities
Bank borrowing Loans and other debts (Note 21) Short-term fi nancial lease creditors (Note 7.1)Interest debts (Note 21)
Debts with group and associate companiesDebts with group and associate companies (Note 12)
Trade creditorsAdvances received for ordersDebts from purchases and services rendered
Other non-trade debts (Note 22)Public Bodies Other liabilitiesPayments pending
31.12.2006
416,787 175,662 86,248 (1,975)
5,343 682,065
1,036 1,036
1,275 1,275
2,258 2,258
388,250 2,124
390,374
--
478 3,320
9 3,807
396,439
44 44
3,791 1,416
136 5,343
10,415 10,415
-39,117 39,117
2,133 32,250 4,803
39,186 94,105
1,174,920
31.12.2005
101,599 26,918 86,911
-(1,868)
213,560
--
--
47,469 47,469
51,125 3,540
54,665
12,274 12,274
42,008 4,709
9 46,726
161,134
923 923
33,611 1,416
574 35,601
34,348 34,348
2,000 13,774 15,774
15,117 4,647 5,113
24,877 111,523
486,217
(Thousands of Euros)
6Notes 1 to 36 to the attached report are an inseparable part of the profi t and loss statement for the 2006 fi nancial year..
OPERATING EXPENSES
ProcurementConsumption of Raw Materials and Other Consumable Materials (Note 25) Other outside expenses
Personnel expenses (Note 26)Wages, salaries and assimilated expensesSocial security contributionsFixed Asset Depreciation/Amortisation
Changes in trade provisionsVariation in inventory provisionsVariation in provisions and bad-debt losses (Note 27)Other Operating ExpensesOutside servicesTaxesOther current operating expenses
OPERATING PROFITS
FINANCIAL AND ASSIMILATED EXPENSES
Financial and assimilated expensesFor debts with third parties and assimilated expensesChanges in fi nancial investment provisionsNegative change differences
NEGATIVE FINANCIAL RESULTS
EXTRAORDINARY EXPENSESLosses from intangible fi xed assets, tangible fi xed assets and control portfolioLosses from transactions with own bonds and sharesExtraordinary expenses
EXTRAORDINARY POSITIVE RESULTS
EXTRAORDINARY NEGATIVE RESULTSLOSSES FROM ORDINARY ACTIVITIESPROFIT BEFORE TAX
LOSS BEFORE TAXCORPORATE INCOME TAX (Note 23) - ACCRUED - ADJUSTMENTS TO TAX ON PROFITSPOSITIVE ADJUSTMENT TO CORPORATE INCOME TAX 2004 PROFIT FROM THE FINANCIAL YEAR
PROFIT & LOSS STATEMENT FOR THE YEAR-END 31 DECEMBER2006 AND 2005
31.12.2006
138,633 244
19,983 6,269
14,331
9,090 1,120
28,939 530
1,275 220,414 11,533 231,947
25,752 240 36
26,028
26,028
20,659 20,659
2,853 1
437
3,291 14,366 17,657
-9,126 5,240
14,366
-
5,171 (5,274)
-5,343
5,240
31.12.2005
123,902 211
23,210 5,463
10,765
70 7,547
31,365 546
-203,079 10,032 213,111
11,518 (2)24
11,540
11,540
11,428 11,428
111 1
1,433
1,545 -
1,545
685 1,396
-2,081
2,081
(106)
(107)-
1,868
(Thousands of Euros)
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OPERATING INCOME
Net turnover (Note 28) SalesProvision of servicesIncrease in stocks of fi nished products and work-in-progressWork carried out by the company for fi xed assetsOther Operating IncomeAccessory income and other current management income (Note 29)Subsidies
FINANCIAL AND ASSIMILATED INCOME
Share capital income From non-group companiesIncome from other negotiable securities and credit securities of fi xed assetsOther interests and assimilated income Other interestsPositive exchange differences
NEGATIVE FINANCIAL RESULTS
OPERATING PROFITLOSSES FROM ORDINARY ACTIVITIES
EXTRAORDINARY INCOME
Profi ts from transfer of intangible fi xed assets, tangible fi xed assets and control portfolioProfi ts from transactions with own bonds and sharesSubsidies for capital transferred to the profi t/loss for the fi nancial yearExtraordinary income
EXTRAORDINARY NEGATIVE RESULTS
EXTRAORDINARY POSITIVE RESULTSLOSS BEFORE TAX
PROFIT BEFORE TAXLOSS FOR THE FINANCIAL YEAR
31.12.2006
181,272 3,177 1,186 3,065
43,245 2
231,947
231,947
14 482
4,754 119
5,369 20,659 26,028
11,533 9,126
20,659
14,579 515
1,275 1,288
17,657 -
17,657
14,366 -
14,366
5,240 -
5.240
31.12.2005
197,243 5,389
859 9,552
68 -
213,111
213,111
12 -
70 30
112 11,428 11,540
10,032 1,396
11,428
130 201
-529 860 685
1,545
-2,081 2,081
-1,868
1.868
(Thousands of Euros)
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La Seda de Barcelona, S.A.
Notes to the balance sheet and profi t and loss statementat 31 December 2006
Note 1. Company Activity
The Company was set up on 23 May 1925, its duration is indefi nite and as stated in its memorandum of association of the same date, its
corporate purpose is the manufacture and sale of artifi cial silk in all its aspects and derivatives, the production, handling, processing and
sale of all kinds of fi bres and textile and technical threads and artifi cial and synthetic materials, including the construction of its own machi-
nery, the production of power and steam earmarked for its plants, as well as the carrying out of research in the aforesaid fi elds.
The aforementioned activities may also be carried out fully or partially in an indirect manner, through shareholdings in other companies with
identical or similar corporate purposes. Furthermore and as a result of the different merger processes described below, its corporate purpose
has been extended to include the manufacture and trading of polyester resin, polyester fi bre, polyethylene terephthalate (PET polymer), the
production of eicosapentaenoic acid (EPA), docosahexaenoic acid (DHA) and all kinds of polyunsaturated fatty acids.
The Company is registered in the Companies Register for Barcelona, on page 16,004, sheet 11, volume 209 and it has its registered offi ces
and carries out its activity at Avda. Remolar, 2, 08820 El Prat de Llobregat. The Company’s central offi ces are located at Pº de Gracia, 85,
08008 Barcelona.
On 2 June 1998 and by means of a public deed of the same date, the Company merged with the subsidiary company called Industrias Quí-
micas Asociadas-IQA, S.A.U. through the absorption and liquidation of the latter, thus assigning all its equity in a block and completely to
La Seda de Barcelona, S.A. The merger was carried out and came into effect on 1 January 1997. Furthermore, on 14 December 2001, the
Company took over, by means of the procedure of overall assignment of assets and liabilities, the whole of the equity of Hispano Química,
S.A.U and Viscoseda Barcelona, S.L.U.
On 1 October 2003, the spin-off was performed, by means of the provision of a branch of activity, for the industrial complex called “IQA”
in Tarragona to a company called Industrias Químicas Asociadas LSB, S.L.U., fully owned by the Company (see Note 5. h).
Subsequently, on 29 December 2004, the Annual General Meeting of Shareholders of La Seda de Barcelona, S.A. approved the merger by
absorption with effect on 1 January, whereby the Company took over the group companies: Catalana de Polímers, S.A.U., KD-IQA, S.L.U.,
Iberseda, S.L.U., Proyectos Voltak, S.L.U., Celtibérica de Finanzas, S.L.U. and Mendilau, S.L.U., of which it was the holder of 100% of
their share capital.
As regards the annual accounts for 2004, the Company Administrators proceeded to draw them up again on 7 July 2005 due to the fact
that the merger agreement described above was registered at the Companies Registry on 16 June 2005. The aforesaid new wording was
submitted to and approved by the Extraordinary General Meeting of Shareholders held on 21 October 2005, with the merger being entered
in the accounts of tax year 2005.
The accounting effects of the aforementioned transactions were described in the pertinent annual accounts.
La Seda de Barcelona, S.A. is the controlling company for the Seda Group, which includes several companies with common manage-
ment and shareholders.
Not3 2. Bases for Presentation of the Annual Accounts
a) True and fair view.
The enclosed balance sheet, profi t & loss statement and notes were drawn up on the basis of the Company’s accounting records at 31
December 2006, modifi ed by the effects of the update carried out according to Royal Decree-Act 7/1996, of 7 June, and they are presented
in line with generally accepted accounting principles. The said annual accounts are pending approval by the Company’s Annual General
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Meeting of Shareholders. The Administrators of La Seda de Barcelona, S.A. believe they will be approved without any modifi cations. The
annual accounts for 2005 were approved on 12 June 2006.
b) Comparison of the information.
The enclosed fi nancial statements for La Seda de Barcelona, S.A. closed on 31 December 2006 and 2005, are presented in accordance
with the schedules and regulations on accounting for Companies contained in Act 19/1989, of 25 July, for partial restatement and adap-
tation of company legislation to comply with European Economic Community directives in terms of Companies and the Revised Text of the
Public Limited Companies Act, approved by Legislative Royal Decree 1564/1989, of 22 December, with the aim of showing a true and fair
view of the net worth, the fi nancial situation and the Company’s profi ts/losses. However, and taking into account the effects of the asset
and the business operation resulting from the segregation and subsequent non-monetary contribution of the textile business (see Note
3.1), as well as the purchase of several foreign companies whose corporate purpose is the manufacture of PET polymer (see Note 3.2), the
comparable nature of the attached fi nancial statements is conditioned by this circumstance.
Note 3. Relevant facts
3.1 On 10 October 2006, the Board of Directors of La Seda de Barcelona, S.A. approved the non-monetary contribution of the branch of
activity made up by the assets and liabilities corresponding to the publication of polyester fi bre at the El Prat de Llobregat plant to Fibracat
Europa, S.L.U., the breakdown of which is as follows:
The accounting effects of this operation are shown under the “spin-off of the branch of activity” description in the corresponding notes of
this report.
Subsequently, on 30 November 2006 La Seda de Barcelona, S.A. sold 68.32% of the company shares of Fibracat Europa, S.L.U. to a
Mexican company. The remaining shares are given as a non-monetary contribution targeted at the incorporation of the company Fibras
Europeas de Poliéster, S.L. for a value of 2.28 million euros (see Note 9.5).
3.2 During 2006 and pursuant to the growth strategy of the Group in the PET sector, La Seda de Barcelona, S.A. acquired shares in di-
fferent foreign companies whose corporate purpose is the manufacture and distribution of PET polymer, with a breakdown as follows (see
Note 9.2):
ASSETS (Thousands of Euros)
FIXED ASSETS
Net Intangible Assets 822
Net tangible Assets 18,919
CURRENT ASSETS
CURRENT ASSETS 2,006
Trade Payables 55,520
77,267
LIABILITIES
LONG-TERM LIABILITIES 70,067
NON-REQUIRABLE LIABILITIES 7,200
77,267
- Artenius Portugal, Industria de Polimeros, S.A.
- Artenius Italia, S.p.A
- Artenius Holding, B.V.
- Artenius Romania, SRL
- Artenius Turkpet Kimyevi Maddeler
ve Pet Ambalat MalzemeleriSanayi Anonim Sirketi
- Artenius Hellas Holding, S.A.
- Simpe, S.p.A.
- Artenius Sines, S.A.
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For the purpose of tackling the growth and restructuring process of the resulting Group it has set up a syndicated loan for 405 million euros
(see Note 21) with a bank as the sole broker. This amount is to be targeted mainly at the restructuring of liabilities, by cancelling out all of
the debts held with banks and public authorities.
Note 4. Distribution of profi ts/losses
The distribution of the profi t from the tax year shall be decided at the Annual General Meeting of Shareholders.
The Administrators will propose the following allocation of profi ts:
BASIS OF THE SHARE-OUT (Thousands of Euros)
Results for the fi nancial year 5,343
5,343
Distribution
To legal reserve 534
To other reserves 2,834
To losses from previous periods 1,975
5,343
Note 5. Valuation Standards a) Preliminary expenses.
These basically correspond to the expenses incurred in relation to the incorporation and the setting up of new plants for the companies
included in the merger (see Note 1), as well as the share capital increases carried out by the Company (see Note 16).
Their depreciation is carried out using the straight-line method, at a rate of 20% per year.
b) Research & development expenses.
The expenses incurred in the individual research & development projects are valued at their acquisition price or direct production cost, with
their capitalization being carried out when there are credible reasons for their technical success and fi nancial and commercial profi tability,
which are entered as an expense otherwise.
Depreciation is carried out based on the straight-line method, within a term of 5 years.
c) Concessions, patents, licences, trademarks and similar.
They are valued at the acquisition price, including the cost for registration and arrangement of the pertinent patent or trademark.
Their depreciation is carried out using the straight-line method, at a rate of 10% per year.
d) Computer applications.
Computer applications are valued at the purchase price and/or production cost for the ownership of computer programmes and applications,
both those purchased from third parties and those produced by the Company itself, therefore the maintenance charges for the computer
applications would not appear.
Their depreciation is carried out using the straight-line method over a maximum term of fi ve years.
e) Greenhouse effect gas emission rights.
This corresponds to the greenhouse effect gas emission rights assigned by virtue of a National Plan through acquisition - generation. They
are valued at their purchase price, which is the price paid for the rights assigned free of charge by the Ministry of the Environment by virtue
of the National Allocation Plan, at the listing price of their corresponding secondary market on the date of incorporation. They are unders-
tood to form part of the company’s net assets at the start of the calendar year to which they correspond. These rights will be disposed of
once they are shown in the National Register of Emission Rights.
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f) Assets under fi nance leases, lease-back transaction.
In accordance with that stipulated in Temporary Provision 5 of Royal Decree 1643/1990, of 20 December, whereby the General Accoun-
tancy Plan was passed, the Company proceeded to enter the assets deriving from the lease-back contracts as intangible assets at the net
book value of the asset that was the object of the transaction, whilst entering on the liabilities side the total debt for the repayments plus
the sum total of the purchase option. The difference between the latter and the value of disposing of the asset that was the object of the
transaction, made up by the fi nancial charges for the transaction, is entered in the accounts under deferred expenses. Assets entered as
intangible assets are depreciated by taking into account the useful life of the asset that was the object of the contract. When the purchase
option is exercised, the value of the assets entered and their pertinent accumulated depreciation are removed from the accounts, since
they then go on to form part of the value of the purchased asset.
The deferred expenses are entered under profi ts/losses in accordance with a fi nancial criterion.
g) Tangible fi xed assets.
Tangible fi xed assets are valued at the cost price, production cost or transfer value, with the latter matching the book value of the elements
incorporated as a result of the takeover processes described in Note 1 above. The said cost is adjusted in accordance with the value re-
appraisal carried out in accordance with that set forth by Royal Decree-Act 7/1996 (see Note 8.1). The gains or net increases in the value
resulting from the aforesaid reappraisal transaction are amortised in the tax periods that are outstanding until the end of the useful life of
the reappraised elements.
Subsequent additions are valued at the cost price, which includes additional expenses until the asset is in proper working order.
Repairs that do not represent an increase in the useful life and the maintenance charges are charged directly to the profi t & loss statement.
The costs for extension or improvement that give rise to a greater duration for the asset or an increase in the productivity, capacity or effi -
ciency, are capitalized as the greater value thereof.
During the tax year and on its own behalf the Company carried out building works and works that may be entered as the greater cost of the
tangible fi xed assets for a sum total of 3.07 million euros.
Depreciation of the elements of the tangible fi xed assets is started in relation to their purchase and/or repair date, in a straight-line method
according to the estimated years of useful life and applying it to the cost values, as per the following breakdown:
Group of elements % Depreciation
Depreciation 1-5
Technical plant and machinery 1,5-15
Other plant, tools and fi ttingso 5-9,1
Other fi xed assets 7,2-12,5-16-25
If factors identifying obsolescence are detected which could affect these assets, the appropriate provisions are made for their depreciation.
There are no items of the tangible fi xed assets that appear on the assets side for a fi xed sum.
h) Negotiable securities and other similar investments
The Company uses the following criterion when entering its investments in negotiable securities:
1. Securities with offi cial listing. At cost or market price, the lower of the two. The offi cial average listing from the last quarter of the tax
year or the quotation at the close is deemed to be the market value, the lower of the two.
2. Securities without offi cial listing. Generally speaking, at cost and reduced, where applicable, by the necessary provisions for deprecia-
tion, by the excess of the cost as regards its reasonable value at the close of the tax year.
In relation to the criterion described above, certain specific circumstances should be stated relating to the following companys
hareholdings:
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• Petrolest, S.L. The shareholdings received, equivalent to 49% of the share capital, correspond to the valuation made for the contribu-
tion to the Company’s net worth from the branch of activity consisting of the distribution, logistics, loading, unloading and transportation
of the whole range of products that La Seda de Barcelona, S.A. manufactures and trades, made up by a number of tangible fi xed assets
that form an autonomous operating unit and the sum total of which amounts to 2.74 million euros (see Note 9.2).
• Industrias Químicas Asociadas LSB, S.L.U. The holdings acquired match the valuation made for the contribution to the net worth of
the company for the branch of activity consisting of the manufacture and trade of glycol and ethoxylates, made up by a number of assets,
rights and duties that form an autonomous fi nancial unit and the sum total of which amounts to 30.74 million euros (see Note 9.2).
• Fibras Europeas de Poliéster S.L. The holdings acquired match the valuation made for the contribution to the net worth of the com-
pany for the branch of activity consisting of the manufacture of polyester fi bres at the El Prat de Llobregat plant, made up of a number
of assets, rights and duties that form an autonomous fi nancial unit and the sum total of which amounts to 2.28 million euros (see Notes
3 and 9.5).
The capital losses between the cost and the market value, if they correspond to holdings that are quoted on an organised market, or otherwise
between the cost and the reasonable value at the close of the tax year that is taken from the last balance sheet approved at the Annual General
Meeting and/or drawn up by the Governing Body corresponding to each one of the non-quoted holdings, are entered, if they are correct, in
the account for “Provisions” under the heading for “Long-term fi nancial investments” and “Temporary fi nancial investments” on the enclosed
balance sheet.
Along this line, and as an exception to the criterion described above, the Company, with regard to its holding in Artenius Portugal, Industria
de Polimeros, S.A., Artenius Italia, S.p.A, Simpe, S.p.A., Artenius Hellas Holding, S.A. and Petrolest, S.L. has chosen not to make a
provision for the difference between the pertinent theoretical book value of the said holding (see Note 9.4) and their respective purchase
prices on the basis of the existence of reasonable expectations for achieving future profi ts that ensure the recovery of investment in the fi rst
fi ve and a saving in costs for the Group from the fact that Petrolest, S.L. will perform the transportation service for all its range of products
exclusively. In the aforementioned cases, the profi ts budgeted for and checked on drawing up these annual accounts justify this decision.
Non-trade loans, both in the short and the long term, to Group companies and other loans, are entered according to the sum total handed over.
The difference with the nominal value is deemed to be income from interest in the tax year in which it is accrued, following a fi nancial criterion.
The deposits and guarantees set up, both in the short- and in the long-term, are entered according to the sums actually paid over.
Short-term deposits are shown at their nominal value.
Along this line, as stated in Note 9.2., the Company is the majority shareholder or owns holdings of over 20% in the share capital of certain
companies.
The enclosed annual accounts do not refl ect the effect that would arise in the pertinent fi nancial statements if they were to include the said
holdings in the latter by applying the Standards for the Preparation of Consolidated Annual Accounts.
The Company has also drawn up its consolidated annual accounts and management report for the tax year ending on 31 December 2006.
13
(Thousands of Euros)
31.12.2006
Total assets 1,460,974
Net worth 690,658
- Controlling company 676,291
- Minority shareholders 14,367
Net turnover 644,564
Results for the year 2,743
- Controlling company 2,741
- Minority shareholders 2
i) Long-term debts with public bodies.
The following items are entered under this heading:
• As regards Assets, the tax credit for compensation of the taxable bases owed that the Company plans to recover in the coming tax
years, as well as the tax deductions and allowances pending application. An amount of 2.30 million euros has been registered in the
short-term for these items.
• With regard to liabilities, the deferred intragroup tax.
Pursuant to Law 35/2006 dated 28 November 2006, which amends the taxable rate of corporation tax, the Company has adjusted the tax
credits, advanced taxes and deferred taxes for a net amount of 2.28 million euros.
j) Deferred expenses.
This basically corresponds to the expenses from deferred charges for the postponement of debts, which are attributed to profi ts/losses
in accordance with a fi nancial criterion in the period for their duration, with a sum total of 8.01 million euros having been transferred to
profi ts/losses during the tax year.
k) Inventories.
Raw materials and other procurements. They are valued at the cost price in accordance with the weighted average price method. As an ex-
ception to the aforementioned criterion, the basic raw materials derived from petroleum are valued at the latest price agreed with the suppliers,
which is not signifi cantly different from the one that would be obtained from a valuation using the weighted average price method. The value
correction for reversible losses is deducted from the amount obtained. The estimate for such losses is made at the close of the tax year when
the market value of the raw materials and other procurement is lower than their cost price.
Work in progress, half-fi nished and fi nished goods. They are valued by means of a cost list per article and process that is established by the
company for this purpose.
The production cost defi ned by the price list is found by adding to the purchase price of the raw materials and other consumable materials,
the costs directly attributable to the product, as well as the part that corresponds from the costs indirectly attributable thereto insofar that
such costs correspond to the manufacturing process from the pertinent period.
The valuation of obsolete, defective or slow-moving products has been reduced to their possible realization value.
l) Debtors and creditors for trade transactions.
The debt and credit balances resulting from the Company’s trade transactions, both in the short and the long term, are entered at their no-
minal value. The interest charges included in the value of such transactions with maturity exceeding one tax year are deferred and accrued,
then they are attributed to the profi ts/losses following fi nancial criteria.
The main fi gures for the consolidated accounts for La Seda de Barcelona, S.A. for the 2006 tax year, drawn up in accordance with that
set forth in the fi nal Provision Eleven of Act 62/2003 of 30 December, by applying the International Financial Reporting Standards passed
by the European Commission regulations, are the following:
14
ll) Non-trade debts.
Non-trade debts, both short and long term, are registered for the amount received. The difference with the nominal value, if applicable, is
deemed to be income from interest in the tax year in which it is accrued, following a fi nancial criterion.
m) Provision for bad debts.
The provision for bad debts is allocated with a charge to the profi ts/losses for the tax year, and for the whole of the outstanding balance,
when the following circumstances coincide:
• Clients whose balances reveal a debt lasting for over 6 months.
• Clients declared to be undergoing bankruptcy proceedings.
• Clients tried for the crime of concealment of assets.
• Clients whose balances have been sued for, with the aim of going to court or arbitration proceedings.
n) Own shares.
They appear valued at their cost price, with the pertinent restricted reserve being entered under the heading for “Equity” for the same amount,
in accordance with Article 79.3. of the Revised Text of the Public Limited Companies Act (see Notes 14, 15 and 18).
At the year-end, if the purchase price of the securities is less than the lower of the listed price on the last day of the tax year or the avera-
ge listed price of the last quarter or of the book value of the shares, the following provisions shall be applied pursuant to the principle of
prudence. When the book value is the lower amount, the amount of the provision may be broken down into the defi ned as “market effect”
and effect resulting from the possible reduction of capital”, with the counter entries being the profi t and loss statement and the reserve’s
statement, respectively.
The purchase of the Company’s own shares was authorised by the Annual General Meeting of Shareholders held on 12 June 2006 and for
a maximum duration of eighteen months.
ñ) Undertakings with the staff.
Furthermore, in the 1998 tax year, the Company, applying the collective agreement signed with its workers, set up an external pension
fund which consists of the sum of 2.20% of each gross annual salary for each and every one of the participants. This annual contribution
began in the year 1998.
At the same time, on 23 October 2000 the Company, in compliance with Act 30/1995 and Royal Decree 1588/1999, proceeded to outsour-
ce its undertakings with its workers using the method of taking out insurance policies with the fi rm Norton Life M.P.S.
o) Subsidies.
For the purpose of entering the subsidies received into the books, the Company applies the following criteria:
1. Operating subsidies. These are entered as “Other operating expenses” as soon as notifi cation of the subsidy is received.
2. Subsidies linked to the greenhouse effect gas emission rights.
The non-repayable subsidies linked to the greenhouse effect gas emission rights, acquired free of charge or for a price substantially below
their vendible value are entered as “Income to be allocated over several years”, and are registered as extraordinary revenue. The expenses
stemming from gas emissions related to the subsidised emission rights are entered to results.
Depreciation that may affect the emission rights lead to the corresponding subsidy being attributed to results in proportion to the same, with
the part of these rights that has been funded free of charge considered to be of an irreversible nature.
15
p) Provisions for contingencies and expenses
Provision for greenhouse effect gas emission rights. The obligations that existed at 31 December 2006 are those that arose as a conse-
quence of the expense linked to the consumption of real emissions of greenhouse gases, concerning the emission rights transferred to the
Company. These are entered on to the balance sheet as best estimation provisions of the payment to be made in order to cancel out the
foregoing obligation.
q) Convertible bonds.
Convertible bonds appear on the liabilities side in the long-term on the balance sheet for the sum total to be handed over in accordance
with the nominal value of the bonds issued. The interest charges are acknowledged in the current liabilities, as and when they accrue.
The expenses for issuing bonds are amortised during the period in which the bonds are kept in circulation, in proportion to the maturity
there of.
r) Debts with banks.
The debts with banks for loans and credits received are entered in the accounts at their repayment value. The fi nancial interest charges
accrued and pending payment at the close of the tax year appear separately under the heading “Debts for interest charges” on the enclo-
sed balance sheet.
s) Revenues and expenses.
The income and expenses are attributed depending on the real fl ow of goods and services that they represent, and regardless of the time
at which the monetary or fi nancial fl ow deriving from them actually arises.
Nonetheless, following the principle of prudence, the Company only enters in its accounts the profi ts made at the close of the tax year, while
foreseeable risks and losses, which are still possible, are entered as soon as they are known.
The sales of goods and revenues from services provided are entered without including the amounts corresponding to the taxes that apply
to these transactions, deducting as the lowest amount of the transaction all the discounts, whether or not shown on invoices, which do not
belong to prompt payment. The latter are deemed to be fi nancial charges.
The sums of the taxes applicable to the purchases of merchandise and other goods for resale and other goods for their subsequent resale,
excluding Value Added Tax (VAT), are entered as the highest value of the goods or services acquired.
Discounts following the issue or reception, where applicable, of an invoice, brought about by defects in quality, breach of time limits for de-
livery or other similar causes, as well as discounts for volume, are entered by differentiating between the sums from the sales or purchases
of goods and the income or expenses from services, respectively.
t) Transactions in currencies other than the euro.
The conversion of transactions carried out in currencies other than the euro and their pertinent balances is carried out by applying the
following criteria:
1.Tangible and intangible fi xed assets. The conversion into euros is carried out by applying the exchange rate in force to the cost price or
production cost on the inclusion of the goods in the Company’s net worth.
2. Credits and debits. The conversion of credits and debits into currencies other than the euro is carried out by applying the exchange rate
in force on the transaction, then transferring the exchange gains/losses to the profi t and loss account that arise at the time of the pertinent
settlement or payment. At the close of the tax year the value of the debit and credit balances in currencies other than the euro was worked
out at the exchange rate in force on 31 December 2006, with the gains/losses obtained being entered onto the balance sheet. For this
purpose, the sum total entered for exchange gains was not signifi cant at 31 December 2006.
u) Corporation Tax.
So as to enter Corporation Tax in the accounts, the differences were taken into account that might arise between the book profi t/loss and the
tax profi t/loss, with the latter being understood to be the taxable base of the tax, as well as the allowances and deductions from the charge
16
for the tax that are deemed to be a lesser amount of the charge to be paid for Corporation Tax for the tax year in which that profi t is obtained,
providing that the taxable base for the tax is positive.
v) Transactions with Group companies.
Transactions between Group companies were carried out under the same conditions as those applied with third parties not linked to the
Company as regards shareholdings.
w) Classifi cation of the balances as short -and long-term.
On the enclosed balance sheet, transactions deemed to be long-term ones are those for which the maturity period at 31 December 2006
is over twelve months.
x) Instruments for risk hedging.
During the 2006 tax year the Company signed contracts for swaps as instruments for covering the risk in the change of the interest rate for
its fi nancial debts referenced at a variable interest rate. Since they are hedge transactions without any purpose for speculation, the profi ts/
losses arising from them are entered at the time of the settlement of the transactions.
At the close of the 2006 tax year the possible fi nancial risk was mitigated as a result of the rise in the interest rates on the inter-bank market.
y) Environment.
The expenses incurred through the purchase of systems, equipment, fi xtures and fi ttings, the purpose of which is the removal, restriction
or control of possible impact that the Company’s standard activity could have on the environment, are considered as investments in fi xed
assets.
The expenses concerning the environment, other than those carried out for the purchase of fi xed assets, are considered as expenses per-
taining to the year in which they accrue.
Note 6. Preliminary expenses
Analysis of the movement during the tax year. The movement recorded during the tax year ended on 31 December 2006, was the
following:
(Thousands of Euros)
Items for 2006
Balance at31.12.2005
TransfersBalance at31.12.2006Addition Provision D (H)
Formation expenses 3 - (3) - - -
Initial start-up expenses 798 - (295) - - 503
Capital increase costs 4,580 25,503 (3,490) - - 26,593
5,381 25,503 (3,788) - - 27,096
The charge to profi ts/losses for the period by way of allocation to depreciation of preliminary expenses amounted to 3.79 million euros.
17
(Thousands of Euros)
Items for 2006 Balance at 31.12.2006
Balance at31.12.2005
Branch spin-off of activity (*)
Transfers Accumulated
Additions Drops D (H) Cost Depreciation Net value
Research & development expenses 3,349 (1,580) 30 (820) - - 979 (232) 747
Concessions, patents, licences, trademarks and similar 85 - 45,000 - - - 45,085 (819) 44,266
Computerapplications 8,258 - 2.297 - - - 10,555 (4,662) 5,893
Greenhousegas effect emission rights - - 4,070 (1,759) - - 2,311 - 2,311
Rights to assetsunder fi nanceleases 4,773 - - - - - 4,773 (420) 4,353
16,465 (1,580) 51,397 (2,579) - - 63,703 (6,133) 57,570
(Thousands of Euros)
Items for 2006
Balance at31.12.2005
Branch spin-off of activity (*)
TransfersBalance at31.12.2006Additions Drops D (H)
Accumulated depreciation
Research & development expenses (1,070) 758 (462) 542 - - (232)
Accumulated depreciation
Concessions, patents, licences, trademarks and similar (66) - (753) - - - (819)
Accumulated depreciation
Computer applications (3,143) - (1,519) - - - (4,662)
Accumulated depreciation
Rights to assetsunder fi nanceleases (155) - (265) - - - (420)
(4,434) 758 (2,999) 542 - - (6,133)
Note 7. Intangible fi xed assets
Analysis of the movement during the tax year. The movement recorded during the tax year ended on 31 December 2006, was the following:
In 2006 the Company purchased trademarks, patents and licensing rights from Advansa BV, for the amount of 45 million euros. The sale
of the use of licensing rights has led to revenue of 36.44 million euros at 31 December 2006 (see Note 29).
The charge to profi ts/losses for the period by way of allocation to depreciation of intangible fi xed assets amounted to 3 million euros.
*: See Note 3
18
7.1. Assets under fi nance leases. In accordance with the criterion set forth in Note 5 f), the Company entered the goods included in the
lease-back transaction arranged during the 2005 tax year at their net book value. This transaction consisted of obtaining fi nance by means
of the sale to fi nancial institutions of a plant for the post-condensation of bottle granules, for a sum total of 5.29 million euros.
On the date for the maturity of the contract, 10 June 2009, the Company may exercise the purchase option for a sum total of 0.12
million euros.
(Thousands of Euros)
Date of contractNet book
valueTransfer (*)
valueFinancial (**)expensesELEMENT Start Maturity Total
Granule post-condensation plant 10-06-05 10-06-09 4,773 5,292 489 5,781
4,773 5,292 489 5,781
(*) Includes residual valuel (**) Financial expenses according to original fi nancial lease contract.
The maturity terms for the long-term liabilities are distributed as follows:
(Thousands of Euros)
2008 2009 Totals
1,416 708 2,124
7.2. Fully depreciated assets. The sum total for the assets fully depreciated at 31 December 2006 amounts to 0.46 million euros and their
breakdown is the following:
(Thousands of Euros)
Research & development expenses 50
Concessions, patents, trademarks and similar 63
Computer applications 344
457
(Thousands of Euros)
Pending maturity al 31.12.2006
Quotas paidejercicio 2006
Quotas paidin previous years
ELEMENTFinancialfexpenses
Short term
Long term Capital IInterest Total Capital Interest Total
Granule post-condensation plant 198 1,416 2,124 1,236 180 1,416 715 111 826
198 1,416 2,124 1,236 180 1,416 715 111 826
19
Note 8. Tangible fi xed assets
8.1. As stated in Note 5 g), the Company has carried out a restatement of the values of its tangible fi xed assets pursuant to Royal Decree-
Act 7/1996 of 7 June.
The accounts affected by the restatement pursuant to Royal Decree-Act 7/1996 of 7 June and their effect at 31 December 2006 are
as follows:
(Thousands of Euros)
IncreaseAccumulatedDepreciation Efect Net
Buildings 2,810 (1,153) 1,657
Technical plant and machinery 3,598 (3,425) 173
Other plant, tools and fi ttings 19 (19) -
Other fi xed assets 17 (17) -
6,444 (4,614) 1,830
The effect of the restatement on the depreciation in the period amounted to 0.29 million euros. For the 2007 tax year, this effect is estimated
to be 0.16 million euros.
Analysis of the movement during the tax year. Its composition and progress during the tax year ended on 31 December 2006 were
as follows:
(Thousands of Euros)
Items for 2006 Balance at 31.12.2006
Balance at31.12.2005
Branch spin-offof activity (*)
TransfersAccumulatedDepreciationAdditions Drops L (A) Cost Net Effect
Land and buildings 51,434 (15,364) - (7,500) 2,879 - 31,449 (10,196) 21,253
Technical facilities and machinery
202,631 (44,293) - (5,852) 4,076 - 156,562 (99,544) 57,018
Other facilities, toolingand fi xtures
1,222 (39) - - 2 - 1,185 (1,022) 163
Advancesand fi xedtangibleassetsin progress
5,350 (50) 2,992 - - (7,616) 676 - 676
Other fi xed assets 5,158 (29) - - 659 - 5,788 (3,818) 1,970
265,795 (59,775) 2,992 (13,352) 7,616 (7,616) 195,660 (114,580) 81,080
20
(Thousands of Euros)
Items for 2006
Balance at31.12.2005
Branch spin-offof activity (*)
Transfers Balance at
Additions Drops L (A) 31.12.2006
AccumulateddepreciationBuildings (14,486) 2,910 (668) 2,048 - - (10,196)
Accumulated depreciationTechnicalfacilities andmachinery (133,388) 37,.896 (6,691) 2,639 - - (99,544)
Accumulated depreciationOther facilities, toolingandfi xtures (1,021) 21 (22) - - - (1,022)
AccumulateddepreciationOther fi xed assets (3,686) 29 (161) - - - (3,818)
(152,581) 40,856 (7,542) 4,687 - - (114,580)
The charge to profi ts/losses for the period by way of depreciation of intangible fi xed assets amounted to 7.54 million euros.
*: See Note 3
8.2. Fully depreciated assets. The sum total for the assets fully depreciated at 31 December 2006 amounts to 54.75 million euros and
their breakdown is the following:
(Thousands of Euros)
Buildings 874
Technical plant and machinery 49,903
Other plant, tools and fi ttings 800
Other fi xed assets 3,169
54,746
21
Note 9. Financial investments9.1. Analysis of the movement during the tax year. Its composition and progress during the tax year ended on 31 December 2006
were as follows:
(Thousands of Euros)
Items for 2006
Balance at31.12.2005
Branch spin-off of activity (*)
TransfersBalance at
31.12.2006Additions Decreases L (A)
Long-term
Holdings in group com-panies and associated companies 59,304 7,200 392,188 (27,412) - (2,282) 428,998
Loans to companies inthe group - - 187,878 - - - 187,878
Long-term stock portfolio investment 170 - - (2) 2,282 - 2,450
Other loans 139 - 89,045 (2,673) - - 86,511
Long-term toPublic Bodies 23,775 - 3,091 (5,367) - - 21,499
Long-term depositsand guarantees 273 - - (238) - - 35
83,661 7,200 672,202 (35,692) 2,282 (2,282) 727,371
Short-term
Loans to companiesin the group 331 - 4,560 (682) - - 4,209
Short-term securities portfolio 29,872 - 354,631 (356,332) - - 28,171
Other loans 715 - - (400) - - 315
Short-term depositsand guarantees 8,007 - 10 (8,009) - - 8
Provisions (10) - - - - - (10)
38,915 - 359,201 (365,423) - - 32,693
*: See Note 3
22
Long term
9.2. Shares in Group companies and associated companies. The breakdown of this heading, as of the date of the close of the tax year, was
the following: te:
Group Companies (Thousands of Euros) Stake Direct
Artenius Holding, B.V. 210,430 100,00%
Artenius Italia, S.p.A. 58,704 100,00%
Artenius Turkpet Kimyevi Maddeler ve Pet Ambalat
MalzemeleriSanayi Anonim Sirketi 84.520 100,00%
Artenius Portugal, Industria de Polímeros, S.A. 22,014 100,00%
Artenius Romania, SRL 5,440 100,00%
Artenius Hellas Holding, S.A. 4,000 100,00%
Industrias Químicas Asociadas LSB, S.L.U. 30,742 100,00%
SLIR, S.L.U. 3,325 100,00%
Artenius Sines, S.A. 50 100,00%
ANERIQA, A.I.E.(*) - 10,00%
419,225
Associated Companies
Simpe, S.p.A. (**) 7,030 19,09%
Petrolest, S.L. 2,743 49,00%
9,773
428,998
(*) In addition, a 90% stake is held through Industrias Químicas Asociadas LSB, S.L.U.
(**) The undertaking to subscribe the majority share capital during 2007 was acquired as part of the purchase operation.
23
9.3. Investments covered by a guarantee. At the date of preparing these annual accounts the shares of Industrias Químicas Asociadas
LSB, S.L.U., Artenius Italia, S.p.A., Artenius Portugal, Industria de Polímeros, S.A., Artenius Holding BV, Artenius UK, Limited and
Artenius Turkpet Kimyevi Maddeler ve Pet Ambalat MalzemeleriSanayi Anonim Sirketi were pledged in favour of the bank that granted
the loan specifi ed in Note 21.
9.4 The most relevant information in relation to the previous heading is as follows:
% Holding in La Seda de
Barcelona, S.A.
Company Registered Offi ces
Direct andIndirect
Result
Main activity Direct
Subscribed capital Reserves last year Extraordinary
Group
Industrias QuímicasAsociadas LSB, S.L.(Sociedad Unipersonal) (*)Pº de Gracia, 8508008-Barcelona (1)
100% 100% 30,742 4,368 (175) 367
ANERIQA, A.I.E.Ctra. Nacional 340, Km.1157Polígono Industrial La Canonja (Tarragona) (2) 10% 100% 1 - - -
SLIR, S.L.(Sociedad Unipersonal)Carretera de Carcastillo a Figarol Carcastillo (Navarra) (3) 100% 100% 2,404 749 139 -
Artenius Holding B.V. (*)Kruisweg 829, 2132 NGHoofdorp (Netherlands) (4) 100% 100% 18 443,514 - -
Artenius Italia, S.p.A.Via Montereale 10/APordenone (Italy) (5) 100% 100% 12,750 4,953 (7,347) -
Artenius Turkpet Kimyevi Maddeler ve Pet Ambalat MalzemeleriSanayi Anonim SirketiTarsus 10th01322 Adana (Turkey) (6) 100% 100% 117.413 2,219 (11,518) -
Artenius Portugal, Industria de Polimeros, S.A.Quinta de Sao Vicente, Estrada Nacional 246Ribeira de Nisa, Portalegre (Portugal) (7) 100% 100% 10,000 5,040 (4,875) -
Artenius Romania, SRLBdul. Basarabiei 256, Anexa Tehnico-Sociala, etaj 1, sector 3Bucuresti (Rumanía) (8) 100% 100% 5,995 (165) (329) -
24
Company Main activity Main activityNet book
valueShare capital book value
Dividends received
during yearStock
market Price
Exclusion from perimeter of consolidation
Group
Industrias QuímicasAsociadas LSB, S.L.(Sociedad Unipersonal) (*)Pº de Gracia, 8508008-Barcelona (1) 34,935 30,742 - NO NO
ANERIQA, A.I.E.Ctra. Nacional 340, Km.1157Polígono Industrial La Canonja (Tarragona) (2) 1 - - NO NO
SLIR, S.L.(Sociedad Unipersonal)Carretera de Carcastillo a Figarol Carcastillo (Navarra) (3) 3,292 3,325 - NO NO
Artenius Holding B.V. (*)Kruisweg 829, 2132 NGHoofdorp (Netherlands)) (4) 443,532 210,430 - NO NO
Artenius Italia, S.p.A.Via Montereale 10/APordenone (Italy) (5) 10,356 58,704 - NO NO
Artenius Turkpet Kimyevi Maddeler ve Pet AmbalatMalzemeleriSanayi Anonim SirketiTarsus 10th01322 Adana (Turkey) (6) 108,114 84,520 - NO NO
Artenius Portugal, Industria de Polimeros, S.A.Quinta de Sao Vicente, Estrada Nacional 246Ribeira de Nisa, Portalegre (Portugal) (7) 10,165 22,014 - NO NO
Artenius Romania, SRLBdul. Basarabiei 256, Anexa Tehnico-Sociala, etaj 1, sector 3Bucuresti (Rumanía) (8) 5,502 5,440 - NO NO
(1) Any industrial or commercial activity related to the chemical industry.
(2) Electrical cogeneration plant.
(3) Recycling of agricultural waste and sale of organic manure.
(4) Chemical research; participation, fi nance and management of other companies and enterprises: provision of guarantees to group companies.
(5) Production and distribution of polymers, chemicals, plastics and similar materials.
(6) Commercialisation, export and import and marketing of chemicals, PET packaging materials and raw materials.
(7) Production and commercialisation of polymers and other by-products.
(8) Production and wholesale of plastic derivatives.
(9) Holding of securities.
(10) Production and commercialisation of purifi ed terephthalic acid and similar products.
(11) Specialised transport of chemicals and similar products
(12) Production of polyester polymers.
(*) Companies at the top of consolidation sub-groups
25
Company Main activityMain
activityNet book
valueShare capital book value
Dividends received
during yearStock
market Price
Exclusion from perimeter of consolidation
Group
Artenius Hellas Holding, S.A. (*)Meandron, 15Atenas (Greece) (9) 7 4,000 - NO NO
Artenius Sines, S.A.Quinta de Sao Vicente,Estrada Nacional 246Ribeira de Nisa, Portalegre (Portugal) (10) 108,114 50 - NO NO
724,018 419,225
Associated
Petrolest, S.L.Raset, 7 2º 3ª08021 - Barcelona (11) 1,692 2,743 - NO NO
Simpe, S.p.A.C/ PagliaroneAcerra (NA) ((Italy) (12) 5,814 7,030 - NO NO
7,506 9,773
731,524 428,998
% Holding in La Seda de
Barcelona, S.A.
Result
Company Main activityMain
activity Direct
Direct and
IndirectSubscribed
capital Reserves last year Extraordinary
Group
Artenius Hellas Holding, S.A. (*)Meandron, 15Atenas (Greece) (9) 100% 100% 60 - (53) -
Artenius Sines, S.A.Quinta de Sao Vicente, Estrada Nacional 246Ribeira de Nisa, Portalegre (Portugal) (10) 100% 100% 117,413 2,219 (11,518) -
Associated
Petrolest, S.L.Raset, 7 2º 3ª08021 - Barcelona (11) 49% 49% 118 3,241 94 1
Simpe, S.p.A.C/ PagliaroneAcerra (NA) (Italy) (12) 19% 19% 36,670 - (6,070) -
26
9.5. Securities portfolio. Under this heading, the Company has registered the equity shares it holds in Fibras Europeas de Poliéster, S.L.
for an amount of 2.28 million euros (see Note 3).
9.6.Other loans. The breakdown of this heading, as of the date of the close of the tax year, was the following:
(Thousands of Euros)
Fibracat Europa, S.L:U: 70,082
Debtors through sale of lands 16,311
Other 118
86,511
Fibracat Europa, S.L.U. A total amount of 69.6 million euros corresponds to Fibracat Europa, S.L.U. as a consequence of acceptance by
La Seda de Barcelona, S.A., of the non-transferred debt concerning the fi bre business unit contributed by the latter (see Note 3).
At the close of the tax year the sum total of the fi nancial charges accrued and not due amounted to 0.48 million euros.
This loan and its corresponding interest are underwritten with a real estate guarantee over the lands on which the Fibracat Europa, S.L.U.
facilities are located
Debtors through sale of lands. This corresponds to the amount pending payment for the sale made during 2006 of an estate that was
the property of La Seda de Barcelona, S.A. located in El Prat de Llobregat as stated in the Land Register for that municipal district, under
Volume 1,295, Book 655, Sheet 137, Estate No. 35,250, Entry four.
9.7. Long-term debts with public bodies. This heading records the tax credits for Corporation Tax to be compensated with future taxable
bases, as well as taxes paid in advance deriving from the tax deductions pending application.
Analysis of the movement during the tax year. The movements recorded during the tax year ended on 31 December 2006 are the
following:
(Thousands of Euros)
Tax credit for lossesto be compensated
Deductions pending application Total
Balance at 31.12.2005 23,065 710 23,775
Adjustment of tax credit tax rate application Act 35/2006 (2,363) - (2,363)
Activation negative taxable amounts from previous years (see Note 23) 7,639 - 7,639
Short-term transfer (2,184) - (2,184)
Adjustment declared negative taxable amounts (72) (16) (88)
Tax credit to be compensated applied in year (5,280) - (5,280)
Balance at 31.12.2006 20,805 694 21,499
27
Short term
9.8. Loans to Group companies. This corresponds to the interest accrued and pending payment from the loans to group companies
listed in Note 12.
9.9. Short-term securities portfolio. This is broken down as follows:
(Thousands of Euros)
Securities with offi cial listing 172
Investment fund 4,399
Treasury bills 2,200
Short-term attributions 21,400
28,171
The investments that make up the balance as of the date of the close of the tax year provide an average annual return of 2.20%.
Note 10. Deferred Expenses
The movements recorded during the tax year ended on 31 December 2006 are the following:
(Thousands of Euros)
Balance at 31.12.2005
Items for 2006Balance at 31.12.2006Additions Applications
Debt formalisation expenses 6,703 12,651 (7,832) 11,522
Deferred lease-back interest expenses 378 - (180) 198
7,081 12,651 (8,012) 11,720
Note 11. Inventories
Its breakdown at 31 December 2006 was the following:
(Thousands of Euros)
Goods 93
Raw materials and other procurement 4,261
Spare parts 2,645
Work in progress 3,051
Finished products 3,183
Supplier advances 3,213
Provision for depreciation (191)
16,255
In accordance with the criteria shown in Note 5 k), the corresponding depreciation of the value of inventories for an amount of 9.12 million
euros was recorded in 2006.
There is no kind of limitation on the availability of stocks due to guarantees, pledges, deposit guarantees or similar reasons.
No stock items appear in the enclosed annual accounts on the assets side for a fi xed sum.
There are no fi rm undertakings for the purchase or sale of stocks.
28
Note 12. Group companies and associated companies
With regard to short-term balances, these correspond to balances generated as a result of customary transactions between the compa-
nies specifi ed.
Long-term loans to group companies have been extended as intragroup fi nancing lines whose maximum maturity for repayment is six years
for Industrias Químicas Asociadas LSB, S.L.U. and seven years for the remaining companies. The loans accrue an interest rate pegged
to the euribor plus a 2% differential
Its breakdown at 31 December 2006 was the following:
(Thousands of Euros))
Short-term Long-term
Debit Credit Debit Credit
Group Companies
Artenius Portugal, Industria de Polimeros, S.A. 4,259 982 29,173 -
Artenius Italia, S.p.A. 1.674 - 49,000 -
Artenius Turkpet Kimyevi Maddeler ve Pet Ambalat MalzemeleriSanayi Anonim Sirketi 270 - - -
Artenius UK, Limited 2,819 1,456 50,782 -
Artenius Sines, S.A. 20,000 - - -
Artenius Hellas Holding, S.A. 10 - 13,032 -
Industrias Químicas Asociadas LSB, S.L.U. 3,219 6,204 45,891 -
SLIR, S.L.U. 598 - - -
ANERIQA, A.I.E. 16,114 - - -
48,963 8,642 187,878 -
Associated Companies
Petrolest, S.L. 4 1,773 - -
4 1,773 - -
48,967 10,415 187,878 -
Note 13. Sundry receivables
At the close of the tax year, its breakdown was the following:
(Thousands of Euros)
Sale of Fibracat Europa, S.L. shares (see Note 3) 4,921
Debtors through sale of lands 3,712
Others 195
8,828
Debtors through sale of lands: This corresponds to the amount pending payment for the sale of two properties belonging to La Seda de Barcelona,
S.A., by virtue of the deed of merger through absorption dated 31 May 2005. These properties are located in El Prat de Llobregat, as shown on the
Land Registry of that municipal district, in Volume 1,326, Book 686, Folio 137, Property No. 35,815, Entry one and Volume 1,295, Book 655, Folio
137, Property No. 35,250, Entry four.
29
Note 14. Own Shares
The Company’s own shares held by the Company at the close of the tax year represent an irrelevant percentage of the total share capital
(0.31%), transferring for this purpose and at its cost price the pertinent non-restricted reserve (see Notes 15 and 18), in accordance
with Article 79.3. of the Revised Text of the Public Limited Companies Act. The total number of own shares held directly by the Company
amounts to 1,310,000 with an average cost price of 2.40 euros/share. The stock market quotation for the Company’s shares at the close
of the tax year was 2.42 euros/share.
In accordance with the criteria shown in Note 5 n) the corresponding provisions through depreciation of treasury stock was registered in
2006 for the purpose of adjusting the value of own shares and of the corresponding non-available reserve at the book value of the Com-
pany for an amount of 1.01 million euros, with the difference between the purchase price and the average quoted price of the last quarter
charged to the profi t and loss statement for an amount of 0.24 million euros.
Note 15. Movement of shareholders’ equity
Trend.
Its composition and trend over the tax year closed at 31 December 2006 were as follows:
(Thousands of Euros)
Items for 2006
Balance at31.12.2005 Increase Reduction
TransfersBalance at31.12.2006(L) A
Share Capital 101,599 315,188 - - - 416,787
Issue Premium 26,918 148,744 - - - 175,662
Reserves:
- Legal reserve 11,719 - - - 11 11,730
- Reserve for own shares 223 - - (1,010) 2,922 2,135
- Voluntary reserves 22,195 - (770) (2,922) 1,106 19,609
- Reserve for depreciated capital 93,168 - - - - 93,168
- Reserve for assignment (14,432) - - - - (14,432)
- Reserve for merger (25,962) - - - - (25,962)
Losses from previous fi nancial years - - - (1,975) - (1,975)
Results fi nancial year 2005 (1,868) - - - 1.868 -
Results fi nancial year 2006 - - - - - 5.343
213,560 463,932 (770) (5,907) 5,907 682,065
30
Note 16. Share capital
On 27 June 2003, the Annual General Meeting of Shareholders of La Seda de Barcelona, S.A. authorised the Company’s Board so that within
a term of one year it could carry out a share capital increase of up to a maximum of 30,050,600 euros by means of the issue and sale of
10,000,000 new common shares, with an individual face value of 3.005060 euros.
On 1 April 2004, the Board of Directors, using the authorisation granted by the AGM, agreed to increase the full corporate share capital by
27,700,643.08 euros, by means of the issue and sale of 9,218,000 shares issued at par, with an individual face value of 3.005060 euros,
with a share in the company profi ts as from 1 January 2004. This share increase was subscribed by means of a cash outlay of 1.63 euros per
share that was supported by 1.37506 euros per share charged to the freely available reserves, and with the award to the shareholders of a
preferential subscription right in a proportion of ten new shares for every thirty-seven old shares (10 for 37).
Once both subscription periods ended, on 16 July and 26 July 2004, the whole of the share increase was covered, with a fi gure for the subs-
cribed share capital of 27,700,643.08 euros, divided into 9,218,000 shares, with an individual face value 3.005060 euros, by means of a cash
outlay from the shareholders of 15,025,340.00 euros plus 12,675,303.08 euros charged to the Company’s freely available reserves.
On 27 June 2005, the Ordinary and Extraordinary General Meeting of Shareholders unanimously approved, passed by the present and re-
presented shareholders with voting rights, a reduction in the share capital for a sum total of 87,107,802.50 euros by means of the reduction
of the face value of each one of the shares that make up the Company share capital and which was fi nally set at 1.00 euro per share, with
the pertinent restricted reserve being set aside for this purpose in accordance with Article 167.3. of the Revised Text of the Public Limited
Companies Act.
In accordance with the resolution unanimously adopted by the Extraordinary General Meeting of Shareholders held on 21 October 2005 and
the agreement for implementation passed on that same day by the Board of Directors, the increase of the share capital for La Seda de Bar-
celona, S.A. was passed for a sum total of 72,693,750.00 euros by means of the issue and sale of 58,155,000 new common shares, with an
individual face value of 1.00 and an issue premium of 0.25 euros per share, which will have a share in the Company profi ts as from 1 January
2005. The preferential subscription right for the new shares in a proportion of 5 new shares for every 7 old shares/convertible securities is
acknowledged in this share increase.
Once the fi rst subscription period ended, on 19 November 2005, the share capital increase was fully covered, with a fi gure for the subscribed
share capital of 58,155,000 euros, divided into 58,155,000 shares, each one with a face value of 1.00 euros plus an issue premium of 0.25
euros per share for an overall sum total of 14,538,750 euros, by means of a cash outlay by the shareholders of 72,693,750 euros.
On 10 February 2006, once the initial conversion period of the issue of convertible bonds agreed on 27 June 2005 by the company’s Board
of Directors had fi nalised (see Note 20), the right to convert 35,847,883 convertible bonds into shares was carried out, by dividing these
into 35,847,883 shares with an individual face value of 1.00 euro and an issue premium of 0.25 euros per share for an overall amount of
44,809,854 euros. .
On 12 June 2006, the shareholders present or represented with the right to vote at the Ordinary and Extraordinary General Meeting of
Shareholders of the company unanimously authorised the Board of Directors to enable this body to perform a share capital increase within
a maximum period of one year for a cash sum of 418,721,946.00 euros through the issue of 279,147,964 shares with an individual face
value of 1 euro, with an issue premium of 0.5 euros per share, which will participate in company profi ts from 1 January 2006 onwards.
Once the fi rst subscription period ended, on 3 August 2006, the share capital increase was fully covered, with a fi gure for the subscribed
share capital of 279,147,964.00 euros, divided into 279,147,964 shares, each with a face value of 1.00 euro plus an issue premium of 0.5
euros per share for an overall sum total of 139,573,982.00 euros, by means of a cash outlay by the shareholders of 418,721,946.00 euros
31
On 10 August 2006, once the initial conversion period of the issue of convertible bonds agreed on 27 June 2005 by the company’s Board
of Directors had fi nalised (see Note 20), the right to convert 320,509 convertible bonds into shares was carried out, by dividing these
into 192,569 shares with an individual face value of 1.00 euro and an issue premium of 1.08 euros per share for an overall amount of
400,543.52 euros.
The fi nal fi gure for the share capital after the share capital increase and the conversion of convertible bonds into shares stood at
416,787,398.00 euros, divided into 416,787,398 common shares, fully subscribed and paid up, each one with a face value of 1.00 euro,
belonging to the same single series and represented by means of book entries.
Holdings in the Company share capital equal to or over 3%, excluding the treasury stock (see Note 14), correspond to the following
breakdown:
Shareholder % Stake
Imatosgil Investimentos SPGS, S.A. 11,01
Liquidamar, Inversiones Financieras, S.L. 5,02
Caixa Geral de Depósitos, S.A. 5,00
Caixa Capital Sociedade de Capital Risco, S.A. 4,50
Note 17. Issue premium
As regards this sum total, the Revised Text of the Public Limited Companies Act expressly allows the use thereof for increasing the share
capital and does not establish any restriction as regards to its availability.
Note 18. Reserves
Their breakdown at the close of the tax year was as follows:
(Thousands of Euros)
Restricted reserves
Legal reserve 11,730
Reserves for own shares (see Note 14) 2,135
Reserve for depreciated capital 93,168
Reserve for assignment (14,432)
Reserve for merger (25,962)
Freely available reserves
Voluntary reserves 19,609
Losses from previous fi nancial years (1,975)
84,273
Legal reserve. In accordance with Article 214 of the Revised Text of the Public Limited Companies Act, the said reserve must be endowed
with 10% of the profi ts from the tax year, until the fund set up for the reserve reaches 20% of the share capital paid up. The legal reserve
may be used to increase the share capital to the extent that its balance exceeds 10% of the share capital already increased. Except for that
purpose and as long as it does not exceed 20% of the share capital, this reserve may only be used to offset losses and as long as there are
no other suffi cient reserves available for this purpose.
As of 31 December 2006, the sum total for the legal reserve did not cover 20% of the share capital.
Reserves for own shares. As stated in Note 14, the Company, pursuant to Article 79.3. of the Revised Text of the Public Limited Companies
Act, proceeded to endow the restricted reserve corresponding to the cost price of its own shares.
32
Reserve for depreciated capital. In accordance with Article 167.3. of the Revised Text of the Public Limited Companies Act, the Company
proceeded to endow a reserve for the face value of its own shares depreciated in 1996 (6.06 million euros) and which were acquired by
the Company in the said tax year for free.
During the 2005 tax year and as a result of the reduction in share capital approved by the Ordinary and Extraordinary General Meeting of
Shareholders held on 27 June 2005 (see Note 16), the Company, pursuant to the article mentioned in the preceding paragraph, endowed
a reserve for a sum total of 87.11 million euros as a result of the reduction in the face value of each one of the shares that make up the
Company share capital and which fi nally stood at 1.00 euro per share.
The endowed reserve may only be used with the same requirements as those demanded for the reduction of the share capital.
Reserve for assignment. As a result of the takeover by the Company of Hispano Química, S.A.U. and Viscoseda Barcelona, S.L.U. carried
out on 14 December 2001 (see Note 1), a reserve for assignment was set up for the difference between the assets and liabilities provided
by the companies that had been taken over.
Reserve for merger. This amount is recorded as a consequence of the merger process fi led with the Companies Register in the 2005 tax
year (see Note 1).
Note 19. Provisions for contingencies and expenses
The breakdown of movements under this heading of the balance sheet in 2006 was as follows:
(Thousands of Euros)
Items for 2006
Other provisionsBalance at31.12.2005
Provision2006
Application2006
Balance at31.12.2006
Provision for greenhouse effectgas emission rights - 2,585 (1,310) 1,275
At its meeting dated 21 January 2005, the Council of Ministers approved the defi nitive individualised assignment of the emission rights for
the premises included within the scope of application of Royal Decree Law 5/2005, dated 27 August, as well as the technical adjustments
required in RD 1866/2005 of the National Assignment Plan of emission rights.
This defi nitive assignment enables Spanish companies, including La Seda de Barcelona, S.A., to participate in the European CO2 emission
rights market, which was set up on 1 January 2005 as part of the effort to satisfy the undertakings to reduce greenhouse gases set forth
in the Kyoto Protocol.
The details of the 2005-2007 National Assignment, corresponding to the Company, are as follows:
Assignment (tonnes of CO2)
Activity Facility 2005 2006 2007
Cogeneration La Seda de Barcelona, S.A. 78,717 103,397 103,397
33
As a consequence of the merger process fi led with the Companies Registry on 16 June 2005 (see Note 1), the company did not have
the defi nitive concession of the 2005 rights until 5 September 2006, the date on which the Ministry of Industry and Environment of the
Catalonia Regional Government resolved the proceedings through which the preliminary authorisations conceded for the Seda Group
were unifi ed.
For accountancy purposes, the Company treats the emission rights in accordance with the Resolution dated 8 February 2006, from the
Accounting and Accounts Auditing Institute (ICAC), which implements the accounting aspects referred to in Law 1/2005, dated 9 March
which regulates the trade regime of emission rights of greenhouse gases.
Note 20. Issue of bonds and other negotiable securities
On 27 June 2005, the Company Board of Directors, using the authorisation granted by the AGM of Shareholders on the same date and pur-
suant to Article 153.1 a) of the Public Limited Companies Act, agreed to an issue of convertible securities for a sum total of 47,468,750.00
euros, by means of the issue of 37,975,000 convertible securities, each with a face value of 1.25 euros.
The conversion of the securities issued shall be carried out in the initial period at a fi xed rate of 1.25 euros, viz., a face value of 1.00 euro
plus an issue premium of 0.25 euro per share and in the ordinary periods for conversion, as well as in the exceptional ones, at a variable
rate equal to 90% of the average list price of the common shares in the Company in the 65 trading sessions prior to the date of the start
for each ordinary conversion period.
Once the initial conversion period and the fi rst period of ordinary conversion had fi nished -10 February and 10 August 2006 respectively-
the right to convert 35,847,883 and 320,509 convertible bonds into shares at an individual face value of 1.25 euros was exercised. The
valuation of the shares for the aforementioned conversion period was 1.25 and 2.08 euros, respectively (see Note 16).
The securities issued accrue a fi xed nominal interest of 5% payable half-yearly, as from the date of the outlay (11 August 2005) until the
redemption date (11 August 2010) or, where applicable, from conversion into Company shares. In accordance with the criterion set forth in
Note 5 q), for the item on the balance sheet “Interest from debenture loans and other securities” the Company enters the interest accrued
pending settlement, which, at the date of the close of the tax year, stood at 0.04 million euros.
On the date of preparing these annual accounts, the Company’s Board of Directors has opted for early redemption of all of the bonds exis-
ting 31 December 2006, and which represent 4.75% of the total issued. The aforementioned redemption will take place in August 2007,
to coincide with the fi nalisation of the interest period.
Note 21. Bank borrowing
The breakdown for this heading at 31 December 2006 was the following:
(Miles de Euros)
Credit Drawn Límit(1)
Type of transaction Short-term Long-term Granted Available
Loans 3,250 388,250 - -
Discounted bills 541 - 9,547 9,006
3,791 388,250 9,547 9,006
(1) This corresponds to short-term transactions.
34
The amount recorded as a loan corresponds to a syndicated loan from a bank (as the sole broker) for an amount of 405 million euros, the
maximum maturity date of which is nine years, ratifi ed in a contract dated 14 June 2006. This loan is guaranteed through the pledge of
shares of group companies (see Note 9.3) and through surety from Industrias Químicas Asociadas LSB, S.L.U. (see Note 24).
The maturity terms for the long-term liabilities are distributed as follows:
(Thousands of Euros)
2008 2009 2010 20112012 andfollowing Totals
Loans 5,200 10,400 26,059 41,068 305,523 388,250
The aforementioned operations are mainly pegged to the EURIBOR at one year plus a differential that ranges between 1.75%
and 2.5%.
At the close of the tax year the sum total of the fi nancial charges accrued and not due amounted to 0.14 million euros.
Note 22. Other accounts payable
22.1. Public bodies. Its breakdown at 31 December 2006 was the following:
(Thousands of Euros)
Main debtFinal demand surcharges
and interest Total debt
ShortTerm
LongTerm Total
ShortTerm
LongTerm Total
ShortTerm
LongTerm TotalFinanced debt
Electricity tax 1,358 - 1,358 - - - 1,358 - 1,358
-
Deferred intra-group tax 193 478 671 - - - 193 478 671
1,551 478 2,029 - - - 1,551 478 2,029
Current debt
Incometaxcorrespondingto the monthof December 2006,paid in January 2007 351 - 351 - - - 351 - 351
Social Security payablecorresponding to the monthof December 2006,paidin January 2007 231 - 231 - - - 231 - 231
2,133 478 2,611 - - - 2,133 478 2,611
At 31 December 2006, the balance for long-term debt with Public Bodies includes deferred tax amounting to 0.48 million euros by way of
the transactions within the Group, with 0.30 million euros having been applied in this tax year.
35
22.2. Other liabilities. The breakdown for this heading as at the close of the tax year is the following:
(Thousands of Euros)
Short-term Long-term
Purchase of a stake in Grupo Advansa 20,000 -
Purchase of a stake in Simpe, S.p.A. 6,000 -
Suppliers of fi xed assets 2,057 58
Staff-Salaries and wages pending payment 4,803 3,262
Loan to Industrias Químicas Textiles, S.A. 2,966 -
Others 1,227 -
37,053 3,320
The most signifi cant aspects as regards this heading are the following:
- Staff - Salaries and wages pending payment. Debts with staff basically correspond to compensation payments taken on by the Com-
pany as a result of the overall transfer of assets and liabilities from Hispano Química, S.A. (Single-member Company) and Viscoseda
Barcelona S.L. (Single-member Company) (see Note 1) and the restructuring process carried out by the Group, with the latter having
been generated between 2000 and 2006. The maturity terms for the long-term debt are distributed according to the following breakdo-
(Thousands of Euros)
2008 2009 2010 20112012 andfollowing Totals
1,918 1,105 67 56 116 3,262
- Loan to Industrias Químicas Textiles, S.A. This corresponds to the resulting balance of the settlement of payables and recei-
vables that exist between both companies prior to the sale of the stakes in Industrias Químicas Textiles, S.A. by La Seda de
Barcelona, S.A.
Note 23. Tax Situation
In the tax year ended on 31 December 2006, La Seda de Barcelona, S.A. and its companies, owned directly or indirectly with at least 75%
of their share capital (see Note 9.2.), were covered by the System for Consolidated Statements through forming part of the Consolidated
Group 236/03, with La Seda de Barcelona, S.A. being the Controlling Company.
The Companies that make up the Group covered by the said Tax System are:
- La Seda de Barcelona, S.A (which includes Catalana de Polímers, S.A.U., KD-IQA, S.L.U., Celtibérica de Finanzas, S.L.U., Mendilau,
S.L.U., Proyectos Voltak, S.L.U., Iberseda, S.L.U., taken over by means of a merger approved by the Extraordinary General Meeting of
Shareholders dated 29 December 2004 and registered on 16 June 2005 at the Companies Registry).
- SLIR, S.L.U.
- Industrias Químicas Asociadas LSB, S.L.U.
36
Application of the Consolidated Tax System means that the individual credits and debits for Corporation Tax are included within
the Controlling Company (La Seda de Barcelona, S.A.), hence the companies have to pay over to La Seda de Barcelona, S.A. the
settlement for this tax. The provision for Corporation Tax is entered under the heading for “Public Bodies” of the assets side of the
enclosed balance sheet and amounts to 33.7 thousand euros, corresponding to withholdings at source from the yield on movable
capital and interim payments. The controlled companies not included in the said Consolidated Group pay tax individually and directly
to the Tax Authorities.
Reconciliation of the book profi t/loss with the taxable base for corporation tax
(Thousands of Euros)
Increases Decreases Amount
Book profi t/loss for the year before tax 5,152
Permanent differences:
- Non-deductible expenses 525 - 525
- Inventories depreciation 9,115 - 9,115
Timing differences
- JV timing difference - (36) (36)
- Timing difference within group 594 - 594
Offsetting taxable bases
Previous years (15,085)
Taxable base -
Tax result 265
The amount from the tax year closed 31 December 2006 to be paid after withholdings and interim payments has been calculated in the following way:
(Thousands of Euros)
Taxable base 265
35% of taxable base 93
Withholdings and interim payments (23)
70
In accordance with the accounting criterion mentioned in Note 5 u), the sum total entered for the Corporation Tax accrued in the 2006 tax
year has been calculated by performing the following operations:
(Thousands of Euros)
Book profi t/loss for the year before tax 5,152
Permanent differences 9,641
Adjusted book profi t/loss 14,793
35% of adjusted book profi t/loss 5,178
Deductions from the individual instalment -
Accrued Corporation Tax 5,178
37
(Thousands of Euros)
Year to whichthe compensation correspond 31.12.1997 31.12.1998 31.12.1999
Balance before tax inspection
Effect of tax inspection
Balance after tax inspection
Application year
Final balance
Applicationyear
Additions year
La Seda deBarcelona, S.A.
Final balance
1991 8,722 (1,380) 7,342 (7,342) - - - -
1992 42,772 - 42,772 (3,281) 39,491 (7,950) - 31,541
1993 7,162 - 7,162 - 7,162 - - 7,162
1996 13,571 (118) 13,453 (625) 12,828 - - 12,828
1997 5,341 - 5,341 - 5,341 - - 5,341
1998 - - - - - - - -
1999 - - - - - - 13,754 13,754
2000 - - - - - - - -
2001 - - - - - - - -
2002 - - - - - - - -
2003 - - - - - - - -
2004 - - - - - - - -
77,568 (1,498) 76,070 (11,248) 64,822 (7,950) 13,754 70,626
(Thousands of Euros)
Year to whichthe compensation correspond 31.12.2000 31.12.2001 31.12.2002
Application year
Additions year
Final balance
Additionfor transfer
Applicationyear
Final balance
Applicationyear
Additions year
La Seda deBarcelona, S.A.
Final balance
1991 - - - - - - - - -
1992 (4,292) - 27,249 - (3,004) 24,245 (3,276) - 20,969
1993 - - 7,162 - - 7,162 - - 7,162
1996 (754) - 12,074 - (885) 11,189 (872) - 10,317
1997 - - 5,341 11,847 - 17,188 - - 17,188
1998 - - - 15,167 - 15,167 - - 15,167
1999 - - 13,754 6,084 - 19,838 - - 19.838
2000 - 1,063 1,063 2,622 - 3,685 (5) - 3,680
2001 1,530 - 1,530 - - 1,530
2002 - 15 15
2003
2004
(5,046) 1,063 66,643 37,250 (3,889) 100,004 (4,153) 15 95,866
23.1. The negative taxable amounts pending tax compensation are listed as follows:
38
(Thousands of Euros)
Year to whichthe compensation correspond 31.12.2003 31.12.2004
La Seda deBarcelona, S.A.
ApplicationIndividual
ApplicationTax group
Additions Individual
AdditionsTax group
Final balance
Applica-tion
Individual
Appli-cation
Tax group
Additi-ons
Indivi-dual
Additi-onsTax
groupFinal
balance
1991 - - - - - - - - - -
1992 (3,169) - - - 17,800 - - - - 17,800
1993 - - - - 7,162 - - - - 7,162
1996 (966) - - - 9,351 - - - - 9,351
1997 - - - - 17,188 - - - - 17,188
1998 - - - - 15,167 - - - - 15,167
1999 - - - - 19,838 - - - - 19,838
2000 (6) - - - 3.674 - - - - 3.674
2001 - - - - 1,530 - - - - 1,530
2002 - - - - 15 - - - - 15
2003 - - - 1 1 - - - - 1
2004 - (1,356) - 1,356 -
(4,141) - - 1 91,726 - (1,356) - 1,356 91,726
(Thousands of Euros)
Year to whichthe compensation correspond 31.12.2005
La Seda deBarcelona, S.A.
ApplicationIndividua
ApplicationTax group
AdditionsIndividual
Additi-ons
Tax groupFinal
balance
1991 - - - - -
1992 (363) - - - 17,437
1993 - - - - 7,162
1996 - - - - 9,351
1997 - - - - 17,188
1998 - - - - 15,167
1999 - - - - 19,838
2000 - - - - 3,674
2001 - - - - 1,530
2002 - - - - 15
2003 - - - - 1
2004 - - - - -
(363) - - - 91,363
39
(Thousands of Euros)
Year to whichthe compensation correspond 31.12.2006
La Seda deBarcelona, S.A.
ApplicationIndividual
ApplicationTax group
AdditionsIndividual
AdditionsIndividual
ApplicationTax group
Final balance
1991 - - - - - -
1992 (15,085) - - - - 2.352
1993 - - - - - 7,162
1996 - - - - - 9,351
1997 - - - - - 17,188
1998 - - - - - 15,167
1999 - - (205) - - 19,633
2000 - - - - - 3,674
2001 - - - - - 1,530
2002 - - - - - 15
2003 - - - - - 1
2004 - - - - - -
(15,085) - (205) - - 76,073
The restructuring of the Seda Group targeted at PET production and distribution, as well as the international projection achieved through
the purchase of stakes in non-resident companies, leads us to forecast that tax profi ts will be obtained that will enable us to offset the ne-
gative tax bases of previous years that have not as yet been activated, and to do so over the next 10 years. To this end, the Company has
recorded the corresponding activation of the aforementioned bases for an amount of 7,639 thousand euros in 2006 in accordance with
the Resolution dated 20 March 2002 from the ICAC. As a consequence of the change to the rate of Corporation Tax, and in application of
the Ruling from the ICAC dated 20 March 2002, the negative tax bases have been activated at the rate of 30% scheduled for tax years that
close from 2008 onwards.
Likewise, and pursuant to rule eight of the aforementioned ICAC Ruling, the Company has recorded the variation of the taxable rate in its
books, adjusting this to the amount of advanced and deferred taxes, as well as the credits of the activated taxable bases.
As set forth by the legislation in force, taxes cannot be deemed to have been fi nally settled until the declarations presented have been
inspected by the Tax Authorities, or the statute-barred period of four years has elapsed. For the tax year that closed on 31 December 2006,
the company has years 2002 to 2005 open for inspection, both inclusive, with regard to corporation tax. Years 2003 to 2006, both inclusive,
are open for inspection for other main taxes.
In 2006, the Tax Department fi nished the inspection notifi ed on 22 June 2005 with regard to the company Catalana de Polímers, S.A.U.
(see Note 1), which had been taken over.
As of 31 December 2006, the company has an amount pending of 0.73 million euros corresponding to allowances and deductions from
previous tax years and 7 thousand euros corresponding to allowances and deductions from this tax year. According to the Ruling of the
I.C.A.C. dated 15 March 2002, the deductions and allowances not applied in the declaration for the tax year because of insuffi cient tax
payable, must be entered in the accounts providing there are no reasonable doubts regarding their possible application in future tax years.
For this purpose, the allowances and deductions from the tax year were entered with payment to account 630 “Corporation Tax”, for a sum
total of 7 thousand euros, with their balancing entry being the account for “Short-term public bodies - Deductions pending application”.
40
At 31 December 2006, the following deductions were pending application:
Tax year of origin (Thousands of Euros)Maximum term
or compensation
1997 128 2007
1998 158 2008
1999 305 2009
2000 22 2010
2001 50 2011
2002 30 2012
2003 9 2013
2004 8 2014
2005 18 2015
2006 7 2016
735
23.2. According to the merger deed registered at the Companies Registry on 16 June 2005, the companies involved in the merger re-
corded their intent to be covered by the system of tax neutrality envisaged in Chapter VIII, under Heading VII, of Legislative Royal Decree
4/2004 of 5 March, whereby the Revised Text of the Corporation Tax Act was passed.
The breakdown by purchase date of the assets transferred that are liable to be amortised that have been included in the accounts for the
Controlling Company is the following:
Purchase Dates
Preliminary expenses 2000-2001
Research & development expenses 2000, 2001 y 2003
Concessions, patents and licences 2002
Computer applications 2001 y 2003
Buildings 1961-2003
Technical plant and machinery 1987-2003
Other plant, tools and fi ttings 1987-2001
Other fi xed assets 1996-2003
41
The latest fi nalised balance sheets corresponding to the companies transferring their assets which take part in the merger process descri-
bed in Note 1 are the following:
Catalana de Polímers, S.A. (*)
Celtiberica de Finanzas, S.L. (*)
Projects Voltak, S.L. (*)
Mendilau, S.L. (*)
KD-IQA,S.L. (*)
Iberseda,S.L. (*)
(Thousands of Euros) (Thousands of Euros) (Thousands of Euros) (Thousands of Euros) (Thousands of Euros) (Thousands of Euros)
Assets
Fixed
Preliminary expenses 1,238 - - - - -
Net intangible fi xed assets 6,907 - - - 694 -
Net tangible fi xed assets 92,002 - - - 3,111 -
Net investments 5,180 7,266 6,606 2,117 - -
Charges to be spreadoverseveral years 6,922 - - - - -
Current
Inventories 20,308 - - - 679 -
Debtors 91,944 - - - 2,608 3
Temporary
investments 1,691 - - - - 1
Cash 203 - - - 7 6
End-of-period adjustments 482 - - - - -
226,877 7,266 6,606 2,117 7,099 10
Liabilities
Non-requirable liabilities 56,851 58 24 712 2.292 (22)
Provisions for risks and expenses - - - - - -
Long-term requi-rable liabilities 34,036 7,208 6,581 1,405 - -
Long-term requi-rable liabilities 135,990 - 1 - 4,807 32
226,877 7,266 6,606 2,117 7,099 10
(*) Single-member Company
The purchasing Company, as a result of the merger process described in Note 1 above, has included the tax gains for the amount of 57
thousand euros from the Company taken over called Catalana de Polímers, S.A.U., corresponding to the deductions and allowances pen-
ding application.
Note 24. Guarantees arranged with third parties
As regards this point and in addition to that already stated in Note 9.3, at 31 December 2006 the Company had guarantees arranged with
third parties amounting to 7.31 and 3.58 million euros, respectively. The Company has also received a bond from Industrias Químicas
Asociadas LSB, S.L.U. for an amount of 405 million euros (see Note 21) and has received guarantees from banks for an amount of 24.12
million euros. ha recibido avales de entidades fi nancieras por importe de 24,12 millones de euros.
42
Note 25. Consumption of raw materials and other consumable materials
Its breakdown at the close of the tax year was the following:
(Thousands of Euros)
Purchase of goods 932
Consumption of raw materials and other consumable materials 142,657
Change in stocks (4,956)
138,633
The changing stocks include consumption from the date of spin-off of the branch activity (see Note 3) as well as the effect on the transfer
of fi nal stocks of the divided branch of activity (Fibracat Europa, S.L.U.) existing at 10 October 2006.
Note 26. Personnel expenses The breakdown for this heading at 31 December 2006 was the following:
(Thousands of Euros)
Wages and salaries 14.817
Indemnities 5.166
Social Security payable by the Company 3.865
Contributions to complementary pensions schemes 1.368
Other social welfare expenses 1.036
26.252
Average number of people employed in the tax year by professional category as per collective agreement
Categories Average number of Employees
Management staff and middle managers 15
Technical and administrative workers 82
Manufacturing staff 270
367
Note 27. Difference in provisions and losses from bad debts
Their breakdown at 31 December 2006 was the following:
(Thousands of Euros)
Losses through bad trade debts 406
Endowment for provision for trade debts 714
Application of provision for bad debts -
1,120
43
Note 28. Net sum for turnover
28.1. Its breakdown at the close of the tax year was the following:
(Thousands of Euros)
Sales 224,959
Refunds and volume discounts (43,687)
Provision of services 3,177
184,449
28.2. The breakdown for the net sum of the turnover for the 2006 tax year by markets and geographical activities is as follows:
(Thousands of Euros)
OtherCountriesDomestic UE Total
Polyester fi bre 5,917 9,627 448 15,992
PET polymer 68,444 82,085 12,615 163,144
Others 5,285 27 1 5,313
79,646 91,739 13,064 184,449
Note 29. Additional income and miscellaneous operating income
In 2006 the Company recorded sales corresponding to the license rights for installation of the PET and PTA production process and the
engineering services developed on each project, for an amount of 36,440 and 3,246 million euros, respectively. An amount of 3,278 million
euros has also been recorded for technology maintenance services and industrial property provided to group companies.
Note 30. Transactions carried out with Group companies and associated companies
Its breakdown at 31 December 2006 was the following:
(Miles de Euros)
Services Interest
Sales Purchases Rendered Received Charged Paid
Group Companies 2,082 31,031 1,573 30 4,199 -
Associated Companies - - 41 5,378 - -
2,082 31,031 1,614 5,408 4,199 -
44
Note 31. Transactions in currencies other than the euro
The volume of transactions in currencies other than the euro, basically for sales and purchases, amounts to 0.85 and 2.85 million euros,
respectively, with their breakdown as follows:
(Foreign Currency)
Currency Sales Purchases
US Dollar 87 2.931
Pound Sterling 535 309
Swiss Franc - 17
In this item, the trade payables and receivables in currencies other than the euro at 31 December 2006 amounted to 0.16 million euro and
0.34 million euro respectively, and their breakdown into currencies was the following:
(Foreign Currency)
Currency Debit Credit
US Dollar 1 40
Pound Sterling 108 -
Swiss Franc - 5
Note 32. Environment
In 2006, in order to apply the strategy defi ned by the Group, it continued to make investments in fi xed assets earmarked for protecting the
environment, the sum total of which amounted to 1 thousand euros. The most signifi cant aspects in the section for the Environment for
the present tax year were the following:
- The company has obtained environmental authorisation for all activities of La Seda de Barcelona, S.A. at its production plant in Prat de
Llobregat, including energy type activities, and therefore satisfi es the IPPC Act prior to the obligatory deadline.
- Recycled material continues to be used in the production of polyester fi bre, thus reducing the environmental impact of our activities
by reducing consumption of virgin raw materials.
- The company has commenced an ambitious project that will lead to the construction and operation of a new polygeneration plant in
2008 which will replace the current power station and which will largely improve energy effi ciency and enable the Company to reduce
atmospheric emissions.
- In 2006, La Seda de Barcelona, S.A. has been subject to the rules governing the trading of CO2 emission rights. In compliance with
current regulations, the annual report on the tracking of emissions correspond to 2006 has been prepared and verifi ed by an accredited
agency, and tonnage emitted has been lower than forecast.
The current expenses supported by the Company during the present tax year amount to 196 thousand euros. This includes the expenses
for transportation and external management of the waste, as well as those associated with the operation of the chemical waste plant.
45
Note 33. Other Information
Retribuciones y otras prestaciones a los Administradores. Durante el ejercicio fi nalizado al 31 de diciembre de 2006 las retribuciones
percibidas por los miembros del Consejo de Administración de la Sociedad se corresponden con el siguiente detalle:
(Thousands of Euros)
Wages and salaries 325
Expense allowances for attending board meetings 242
567
There were no credits, advances, loans or securities contracted in terms of pensions with regard to the Board of Directors.
In relation to the information demanded by new Article 127, section three, 4 of the Public Limited Companies Act, the shareholdings and
posts and/or functions that Company Directors hold and/or exercise in other companies with the same, similar or complementary kind of
activity that represents the Company’s corporate purpose, are the following:
- Mr Rafael Español Navarro holds the post of sole administrator at Artenius Italia S.p.A., in representation of La Seda de Barcelona, S.A.
at Artenius Portugal, Industria de Polímeros, S.A., Artenius UK Limited, Artenius Holding, B.V. and Artenius Sines, S.A., joint adminis-
trator at CARB-IQA de Tarragona, S.L., chairman and joint administrator at Artenius Hellas Holding, S.A., director of DOGI, S.A., Endesa
Internacional, S.L. and Enersis, S.L. adviser at FECSA-Endesa at the date of preparing their respective annual accounts.
- Mr Ramon Pascual Fontana holds the post of director at Petrolest, S.L. at the date of drawing up its annual accounts.
- The Company called Ibersuizas Alfa, S.L., fully owned by Ibersuizas Participadas, S.A., holds the post of Director in the fi rm called
Selenis, SGPS, S.A.
Note 34. Fee for the auditors
The fee for the auditors for carrying out the audit on the individual and consolidated annual accounts at 31 December 2006 amounts to
139,373 euros, being the only item for which they were paid.
Note 35. Events following the close of the tax year
On 6 February 2007 the company, together with Bionor Transformación, S.A., a subsidiary of Cie Automotive, S.A., incorporated Bio-
combustibles La Seda, S.L. for the purpose of developing biodiesel plants of the different industrial locations of the Seda Group. The new
company has been incorporated with a share capital of 3 million euros and 60% is held by La Seda de Barcelona, S.A.
Following the strategy defi ned by the Group, on 20 February 2007 the Company reached an agreement to purchase Eastman Chemical
Iberia, S.A. for 50 million euros, including working capital. The operation is pending approval by the fair trading commission. With this
purchase the Company will increase its PET production capacity by 175,000 tonnes.
As a consequence of the Group’s structural reorganisation procedure, La Seda de Barcelona, S.A. has focused the PET activity under the
ARTENIUS brand, which has led to an amendment of the trading name of the different subsidiaries in order to adapt to the aforementioned
brand.
On 6 March 2007 and for the purpose of closing the PET production process, the company reached an agreement to purchase 60% of the PET
recycling company Recuperaciones de Plásticos Barcelona for an amount of 2.6 million euros, and the agreement to subscribe to the full amount
of a capital increase of 1 million euros in order to raise its stake to 67.4%.
46
Applications
(Thousands of Euros)
Origins
(Thousands of Euros)
Year Year
31.12.2006 31.12.2005 31.12.2006 31.12.2005
Purchase of fi xed assets Resources from operations 21,312 31,642
• Preliminary expenses 25,503 3,675
• Intangible fi xed assets 47,327 277 Corresponding resources generated by effect
• Tangible fi xed assets 2,992 9,797 of the spin-off (see Note 3) 57,526 -
• Financial investments
Group companies 580,066 - Contributions from shareholders
Other fi nancial investments 89,045 94 • Increases in capital 418,722 72,694
Expenses to be deferred 12,651 6,070 Long-term debts
• Loans and other similar liabilities 391,500 105,461
Resources applied due to the effect
of the merger operation (see Note 1) - 22,898 Disposal of fi xed assets
• Intangible fi xed assets 1,074 -
Short-term cancellation or transfer • Tangible fi xed assets 19,688 31
of long-term debts • Financial investments
• Loans and other similar liabilities 101,002 31,233 Group companies and associated companies 28,921 -
• Fom other debts - 2,532 Other fi nancial investments 21 -
Total applications 858,586 76,576 Total origins 938,764 209,828
Increase in working capital 80,178 133,252
938,764 209,828 938,764 209,828
Change in working capital
(Thousands of Euros)
31.12.2006 31.12.2005
Increases Decreases Increases Decreases
Inventories - 5,803 22,058 -
Debtors 16,582 - 166,521 -
Temporary fi nancial investments - 6,222 37,478 -
Own Shares 1,912 - - 402
Creditors 17,418 - - 75,107
Cash - 1,140 5,493 -
End-of-period adjustments - 95 109 -
Increase in working capital due to the effect of the spin-off operation 57,526 - - 22,898
93,438 13,260 231,659 98,407
Change in working capital - 80,178 - 133,252
93,438 93,438 231,659 231,659
Note 36. Finance table
47
Reconciliation of the book profi t/loss with the funds generated by transactions
(Thousands of Euros)
31.12.2006 31.12.2005
Results for the fi nancial year 5,343 (1,868)
Transactions not related to the movement of funds:
Fixed Asset Depreciation/Amortisation 14,331 10,765
Net effect of deferred income and expenses 8,012 22,739
Application of tax credit to result and long-termadvance taxes 5.352 25
Losses in the transfer of intangible fi xed assets andcontrol portfolio 2,853 111
Profi ts in the transfer of intangible fi xed assets andcontrol portfolio (14,579) (130)
Resources from operations 21,312 31,642
48
Management Report
In compliance with that set forth in Article 171 of the Revised Text of the Public Limited Companies Act, the present management report for
the Company is drawn up in relation to the corporate tax year closed on 31 December 2006, including the matters required in Article 202
of the said legal corpus, as modifi ed by Article 107 of Act 62/2003 on Measures of a Tax, Administrative and Social nature.
1. Progress of the business and the Company’s situation. The progress of the Company’s activities during the 2006 tax year was the
following:
One of the objectives of La Seda de Barcelona, S.A. in 2006 was to increase its size through an Acquisitions Programme that has made
the group the biggest PET and PTA producer in Western Europe, with an installed capacity of 800,000 tonnes and 670,000 tonnes, res-
pectively. As a consequence of this acquisitions plan La Seda de Barcelona is present in Spain, Portugal, Italy, Greece, Turkey, Romania
and the UK.
Two large fi nancial operations also took place in 2006:
1) Capital increase of 418 million euros, the second-largest operation on the Spanish stock exchange in the last two years.
2) Syndicated loan of 405 million euros from Deutsche Bank, which has strengthened the fi nancial structure of the company to ensure
that it remains solvent during its expansion and growth stage.
This combination between the sources of funding provides fi nancial stability that enables new challenges associated to growth to be tackled
successfully.
INVESTMENT ACTIVITY.
In 2006 La Seda de Barcelona, S.A. made the following purchases which have increased installed capacity of the group to 800,000 and
670,000 tonnes per year of PET and PTA, respectively:
- 100% of Artenius Portugal, Industria de Polímeros, S.A., a factory located in Portalegre (Portugal) with annual production capacity of
70,000 tonnes of PET.
- 100% of Artenius Artenius Italia, S.p.A, two factories located in Udine (Italy) with annual production capacity of 200,000 tonnes of PET.
- 51% of Artenius Hellas, S.A., the sole producer of PET in the Balkans and located in Volos (Greece) with a strategic location that ena-
bles access to Europe, the Balkans, the Middle East and the Euro-Asian markets. Production capacity in 2006 was an annual 80,000
tonnes of PET.
- 100% of Artenius UK Limited, located in Wilton and comprising three production plants: two producing PTA and one producing PET.
The production capacity of PTA is 670,000 tonnes a year and the production capacity of PET is 150,000 tonnes a year.
- 100% of Artenius Turkpet Kimyevi Maddeler ve Pet Ambalat MalzemeleriSanayi Anonim Sirketi, located in Adana and which produces
PET and Preforms. The PET production capacity is 130,000 tonnes a year.
- 100% of Artenius Romania, SRL, located in Bucharest and which produces preforms. The preforms production capacity is 10,000
tonnes a year.
At the same time, building work has started on the 7.5 Mwh polygeneration plant in El Prat de Llobregat (Barcelona), which will make pos-
sible energy savings of around 35%. This facility will come into operation during the fi rst quarter of 2008 and will represent an investment
of 8 million euros.
49
PROGRESS OF THE PET MARKET.
PET is the Company’s main industrial project. It is a product with strong accumulated growth and great potential for development.
During the 2006 tax year, the PET market continued its ongoing growth of the last few years, with an annual average rate close to 10%.
This percentage may rise in the short-term with the defi nitive implementation of the PET pack on the market for fruit juices, milk products
and beer.
The use of PET has been consolidated on the market for mineral waters, carbonated drinks and oils and it is very quickly gaining ground
in new applications in the sectors for foodstuffs, cleaning products, cosmetics and pharmaceuticals, as well as in applications for industry
and engineering.
RESEARCH & DEVELOPMENT ACTIVITIES.
In 2006 the Company focused its R&D&i efforts on analysis of different technologies and production processes to which it has had access
through the aforementioned acquisitions, for the purpose of extending this know-how to all production plants and of setting up the best
practices of each of these at the remaining subsidiaries. This has been in detriment to the performance of other projects.
2. Risk factors. Any activity is subject to risks, not merely external ones but also those that are inherent to the activity itself. Economic
activities are no exception and competent management requires that the risks that might affect a company’s business not just in the short
term but also in the long term should be identifi ed, measured and assessed.
The Company’s top management is in charge of carrying out ongoing monitoring so as to identify, assess and prioritise current and po-
tential risks and take the pertinent measures to counteract as far as possible the threats to the business that might arise from the risks
that are identifi ed.
The main fi nancial risks are listed below and the measures taken by the Company’s management for dealing with them:
Interest rate risk:
La Seda de Barcelona, S.A. uses hedge instruments to cover this risk. The derivatives held by the group correspond mainly to interest rate
hedge operations and ensure the existing borrowing at a defi ned rate of interest. For bookkeeping purposes these are processed as cash
fl ow hedges in so far as they correspond to cash fl ow hedges that are attributable to a specifi c risk linked to a liability previously recognised,
viz., the loan granted for an amount of 405 million euros.
Risk in the management of raw materials:
The Company’s main risk in the management of the raw materials is the change in the price of PTA. This product comes under the aroma-
tics cut (BTX), with the composition of the latter being Benzene, Toluene and Xylene.
These three components are also used for manufacturing derivatives of gasolines with the aim of cheapening their cost. Due to the
rise in the price of oil, there is a rise in demand for Benzene, Toluene and Xylene from the fuel manufacturers.
One of the derivatives of Xylene, commonly known as paraxylene, is the base for obtaining PTA and its price ranges according to the supply
and demand for Xylene on the international market, which is closely linked to the price of fuel.
The price of the PTA, therefore, will depend on the end use that the producers of aromatic fractions decide for Benzene, Toluene
and Xylene.
There is no system for covering specifi c risks in this market segment.
50
Market risk:
During the 2006 tax year a new competitor on the international PET market was discovered in Lithuania, which caused a drop in prices
on the latter.
As of the date of the close of the tax year, no project is known to be underway for building new plants for PET by any possible competitors.
The risk of new competitors appearing in the next few years is mitigated by the need for a minimum of 2 years and a high fi nancial cost for
building new plants for manufacturing PET, apart from obtaining the pertinent permits related to the environment
Exchange rate risk:
Practically 90% of the purchase and sale transactions carried out by La Seda de Barcelona, S.A. are done so in Euros, which is why there
is no need for specifi c risk management in this fi eld.
Liquidity risk:
The liquidity policy followed by the Group ensures performance of the undertakings for payment without having to resort to fi nance from
third parties under exorbitant conditions.
Credit risk:
The credit risk deriving from the failure of a counterpart (client, supplier, partner or fi nancial institution) is properly controlled in the Seda
Group through different policies and risk limits in which requirements are established relating to:
• Suitable contracts in the transaction carried out.
• Proper internal or external credit rating for the counterpart.
• Additional guarantees where necessary.
• Limitation of the costs for bankruptcy and the fi nancial cost deriving from bad debts.
3. Important events occurring after the close of the tax year.
No other important events have arisen following the close of the tax year apart from those already stated in Note 35 above.
4. Foreseeable progress for the Company.
2007 will see the Company adopted the opportune measures and policies to consolidate the new structure of the Group’s focus mainly on
PET activity, which has become the core business of the group under the Artenius brand and has created a specifi c division for the PTA
raw material (purifi ed terephthalic acid).
With the purchase of the PET plant of Eastman Chemicals Ibérica in San Roque, La Seda de Barcelona Group will increase annual produc-
tion capacity by 175,000 tonnes of PET, raising the total production capacity of La Seda up to approximately 1 million tonnes per year.
5. Purchases and disposals of own shares.
At its meeting dated 12 June 2006, the General Meeting of Shareholders of La Seda de Barcelona, S.A., authorised the Company and its
subsidiaries to acquire own shares under the protection of the provisions set forth in article 75 and Additional Provision One of the Public
Limited Companies Act, for a period of 18 months from that date onwards and with a limit of 5% of the share capital under conditions of cash
sale and for a price equivalent to the applicable stock market listing price.
56
CONSOLIDATED BALANCE SHEET AT 31 DECEMBER 2006 AND 2005(International Financial Reporting Standards adopted)
ASSETS 31.12.2006 31.12.2005
NON-CURRENT ASSETS
Tangible fi xed assetsl (Note 5) 524,726 245,841
Goodwill (Note 6) 124,412 8,275
Other intangible assets (Note 7) 56,397 8,186
Non-current fi nancial assets (Note 8) 92,467 1,297
Investments entered using the shareholding method (Note 9) 9,869 2,794
Assets from deferred taxes (Note 17.2) 47,401 34,309
855,272 300,702
CURRENT ASSETS
Inventories (Note 10) 113,362 61,744
Trade debts and other accounts to be settled 406,784 150,407
Other current fi nancial assets (Note 11) 23,536 8,120
Assets from taxes on current revenue 414 19
Other current assets (Note 12) 22,330 2,606
Cash and other equivalent liquid assets 38,200 36,897
604,626 259,793
Non-current assets classifi ed as maintained for saleand discontinued activities 1,076 877
605,702 260,670
1,460,974 561,372
(Thousands of Euros)
Notes 1 to 32 to the attached consolidated report are an inseparable part of the consolidated balance sheet at 31 December 2006.
57
LIABILITIES AND NET ASSETS 31.12.2006 31.12.2005
NET WORTH (Note 13)
Capital 416,787 101,599
Other reserves 246,549 137,375
Accumulated revenue 12,125 13,608
Other net assets 23 1,855
Own securities (3,145) (223)
Exchange differences 3,952 -
Minority interest 14,367 482
690,658 254,696
NON-CURRENT LIABILITIES
Issue of Debenture Loans and Other Marketable Securities (Note 14) 2,086 42,936
Bank borrowing (Note 15.1) 403,825 54,143
Other fi nancial liabilities (Note 15.2) 6,257 69,686
Liabilities from deferred taxes (Note 17.3) 23,451 20,495
Provisions (Note 16) 44,594 -
Other non-current liabilities (Note 18) 11.018 449
491,231 187,709
CURRENT LIABILITIES
Issue of Debenture Loans and Other Marketable Securities (Note 14) 56 1,095
Bank borrowing (Note 15.1) 28,607 48,359
Trade creditors and other accounts to be paid 198,475 34,232
Other fi nancial liabilities (Note 15.2) 5,280 15,793
Other current liabilities (Note 18) 46,667 19.488
279,085 118,967
1,460,974 561,372
CONSOLIDATED BALANCE SHEET AT 31 DECEMBER 2006 AND 2005(International Financial Reporting Standards adopted)
(Thousands of Euros)
Notes 1 to 32 to the attached consolidated report are an inseparable part of the consolidated balance sheet at 31 December 2006.
58
CONSOLIDATED PROFIT & LOSS STATEMENT FOR THE YEAR-END31 DECEMBER 2006 AND 2005 (International Financial Reporting Standards adopted)
OPERATING INCOME
Net turnover (Note 20)
Other operating income
Variation in stocks of fi nished products and work-in-progress
OPERATING EXPENSES
Procurement (Noe 21.1)
Personnel (Note 21.2)
Fixed asset depreciation/amortisation
Other operating expenses
OPERATING PROFIT (LOSS)
FINANCIAL INCOME AND CHARGES
Financial income
Financial charges
Gain/loss on exchange differences
fi nancial instruments
Increase/decrease in provision (debtors and stock)asset impairment charges
Share of associated companies’profi t/losses
Gain (loss) on disposal of fi xed assets
Other income or losses
PROFIT (LOSS) BEFORE TAXFROM ONGOING ACTIVITIES
Corporation tax (Note17.1)
PROFIT (LOSS) FROM ONGOING ACTIVITIES
Profi t (loss) from the fi nancial year (Note 22)
BENEFICIO (PÉRDIDA) DEL EJERCICIO
Minority interest
PROFIT (LOSS) ATTRIBUTABLE TO PARENT COMPANY’SSHAREHOLDERS
31.12.2006
672,408
644,564
36,984
(9,140)
(643,774)
(491,346)
(42,263)
(25,222)
(84,943)
28,634
2,786
(20,196)
(793)
35
9,608
45
12,649
-
32,768
(245)
32,523
(29,565)
2,958
(2)
2,956
31.12.2005
296,005
255,976
13,906
26,123
(272,426)
(168,395)
(34,650)
(15,566)
(53,815)
23,579
560
(14,401)
(49)
2
(58)
17
144
(995)
8,799
(2,682)
6,117
-
6,117
(2)
6,115
Notes 1 to 32 of the attached consolidated report are an inseparable part of the consolidated profi t and loss statement for the fi nancial years closed at 31 December 2006 and 2005.
(Thousands of Euros)
59
CONSOLIDATED CASH FLOW STATEMENT FOR THE FINANCIAL YEARS 2006 AND 2005
Cash from activities
Net result after taxResult of consolidated companies in equityFixed asset depreciation/amortisationGoodwillAsset impairment charge Result of transfer of assets
Cash from operations
Accounts receivableOther current assetsAccounts payableOther current liabilitiesBanksOther items
Cash from circulating capital
Corporation tax
Cash from activities
Cash applied in investment activities
Purchase of tangible fi xed assetsPurchase of intangible fi xed assetsPurchase of other fi nancial assetsCash obtained/paid derivative contractsTransfers of tangible fi xed assetsTransfers of intangible fi xed assetsTransfers of subsidiaries and associated companiesTransfers of other fi nancial assetsDividends received
Net cash applied in investment activities
Cash applied in fi nance activities
Increases in capital Issue of bondsLoan withdrawalsLoan repaymentsFinancial lease payments
Net cash applied in fi nance activities Effect of exchange differences on cash and otherequivalent assets
Increase (reduction) in cash and other equivalent assets
Cash and other equivalent assets at start of year
Cash and other equivalent assets at end of year
Balance at31.12.2006
2,958 (45)
25,222 1,868
(11,476)12,649
31,176
46,594 49,213
(22,317)(41,586)(94,433)
-
(62,529)
245
(31,108)
(27,410)(56,089)
(481,233)-
42,532 --
3,331 -
(518,869)
418,722 -
391,500 (257,327)
(1.416)
551,479
-
1,502
37,774
39,276
Balance at31.12.2005
6,117 (17)
15,566 58
7,463 (144)
29,043
(22,660)(35,152)(40,982)(41,691)
-(453)
(140,938)
2.682
(109,213)
(15,423)(2,925)
(499)-
263 --
37 -
(18,547)
72,694 47,469 66,711
(30,159)4,466
161,181
-
33,421
4,353
37,774
(Thousands of Euros)
Notes 1 to 32 of the attached consolidated report are an inseparable part of the consolidated cash fl ow statements of the years 2006 and 2005
60
(Thousands of Euros)
Balance at 31.12.2005
Distribution of resultsModifi cation of perimeter
of consolidation
Balance at31.12.2006
Description Dividends Decreases Increases Decreases
Others adjustments Increases Decreases Transfers
Share Capital 101,599 - - - - - 315,188 - - 416,787
Issue Premium 26,918 - - - - - 148,744 - - 175,662
Other reserves 109,701 - 4,381 - - - - (44,925) 5,167 74,324
Reserves fi rst application IFRS 17,289 - - - - - - - 709 17,998
Other net asset instruments 1,855 - - - - - - (1,832) - 23
Own securities (223) - - - - - - (2,922) - (3,145)
Reserve for merger (18,192) - - - - - - - - (18,192)
Reserves in consolidated companies forglobal integration 9,118 - 1,716 - - - 916 - (5,876) 5,874
Reserves inequity companies 34 - 18 - - - - - - 52
Exchange differences - - - - - - 3,952 - - 3,952
Minority interest 482 - - 14,039 - - 2 (156) - 14,367
Profi t and loss 6,115 - (6,115) - - - 2,956 - - 2,956
254,696 - - 14,039 - - 471,758 (49,835) - 690,658
STATEMENT FOR CHANGES IN THE CONSOLIDATED NET WORTH IN THE FISCAL YEARS 2006 AND 2005
Notes 1 to 32 of the attached consolidated report are an inseparable part of the statements for changes in the consolidated net worth at 31 December 2006 and 2005
61
(Thousands of Euros)
Distribution of resultsModifi cation of perimeter
of consolidation
Balance at31.12.2004
Others adjustments
Balance at31.12.2005Description Dividends Reserves Increases Decreases Increases Decreases Transfers
Share Capital 130,552 - - - - - 58,155 - (87,108) 101,599
Issue Premium 12,.379 - - - - - 14,539 - - 26,918
Other reserves 24,476 - 1,289 - - (3,372) 200 - 87,108 109,701
Reserves fi rst application IFRS 17,998 - - - - - - (709) - 17,289
Other net asset instruments - - - - - - 1,855 - - 1,855
Own securities - - - - - - - (223) - (223)
Reserve for merger - - - - - 7,770 - (25,962) - (18,192)
Reserves in consolidated companies forglobal integration (11,230) - (1,900) 22,248 - - - - - 9,118
Reserves inequity companies 8 - - - - - 26 - - 34
Minority interest 637 - - - (155) - - - - 482
Profi t and loss (611) - 611 - - - 6,115 - - 6,115
174,209 - - 22,248 (155) 4,398 80,890 (26,894) - 254,696
STATEMENT FOR CHANGES IN THE CONSOLIDATED NET WORTH IN THE FISCAL YEARS 2006 AND 2005
Notes 1 to 32 of the attached consolidated report are an inseparable part of the statements for changes in the consolidated net worth at 31 December 2006 and 2005
62
La Seda de Barcelona, S.A.Consolidated Report at 31 December 2006
Note 1. Group information
a) Group activity
La Seda de Barcelona, S.A. is the controlling company for the Group, which includes several companies with common management and
shareholders. The Company was incorporated on 23 May 1925, its duration is open-ended and as stated in its memorandum of associa-
tion of the same date, its corporate purpose is the manufacture and sale of artifi cial silk in all its aspects and derivatives, the production,
handling, processing and sale of all kinds of fi bres and textile and technical threads and artifi cial and synthetic materials, including the
construction of its own machinery, the production of power and steam for use at its plants, as well as research into the aforesaid fi elds.
Furthermore and as a result of the merger process described below, its corporate purpose has been extended to include the manufacture
and trading of polyester resin, polyester fi bre, polyethylene terephthalate (PET polymer), the production of eicosapentaenoicacid (EPA),
docosahexaenoic acid (DHA) and all kinds of polyunsaturated fatty acids.
Through the companies in which La Seda de Barcelona, S.A. has a majority shareholding (see Note 1 b), the group’s main acti-
vities are:
- The manufacture and trading of continuous chemical fi bres, raw sliced and mass-dyed fi bres, granules for plastics, and sheets and
heat-moulded products in compounds made from synthetic polymers, as well as any industrial or commercial activity concerning the
chemical industry and the assembly of industrial plants, participation, management and operation of chemical fi rms.
- Manufacture and trading of resins and polyester fi bres.
- Manufacture and trading of purifi ed terephthalic acid (PTA).
- Manufacture and trading of polyethylene terephthalate (PET polymer).
- Manufacture and trading of PET packaging materials (preforms).
- Electrical production through a cogeneration plant.
- Production, distribution and sale of gases.
- Recycling of farm waste and sale of organic manures.
On 29 December 2004, the Annual General Meeting of Shareholders of La Seda de Barcelona, S.A. approved the merger by absorption
with effect on 1 January, whereby the Company took over the group companies: Catalana de Polímers, S.A.U., KD-IQA, S.L.U., Iberseda,
S.L.U., Proyectos Voltak, S.L.U., Celtibérica de Finanzas, S.L.U. and Mendilau, S.L.U., of which it was the holder of 100% of their share
capital, with its effect according to the companies being described in detail in Note 17.6.
b) Shareholding body
The companies that make up the Group fi le individual fi nancial statements in accordance with the applicable rules in the country in which
they operate.
The breakdown of the held companies at 31 December 2006 is shown on the following pages, classifi ed into the following categories:
• Subsidiary companies:Those companies in which the Controlling Company holds a majority of the voting rights or, even if this is not so,
has the power to manage the fi nancial and operating policies for the former.
• Joint management companies: Those companies managed jointly with another partner, by holding 50% of the shareholding and an
equal number of voting rights on the Board of Directors, without the individual power to manage the fi nancial and operating policies of
the company.
• Associated companies: Those companies in which the Controlling Company directly or indirectly has a shareholding of between 20% and
50% or, even without these stake percentages, holds a signifi cant infl uence over the management.
63
None of the companies that belong to the Group has been excluded from the consolidation perimeter and none of them is listed on the
stock exchange Moreover, no company has received dividends during the period in which they form part of the Group.
% Holding in La Seda de
Barcelona, S.A. Result
Company /Registered Offi ces
Mainactivity Direct
Direct and Indirect
Subscribed capital Reserves
Net accounting
valueCost value
of holding (*)Last
fi nancial year Extraordinary
Global integration
Industrias Químicas Asociadas LSB, S.L.(Single-member Company)Pº de Gracia, 85, 08008 - Barcelona (1) 100% 100% 30,742 4,367 (175) - 34,934 30,742
CARB-IQA de Tarragona, S.L.Ctra. Nacional 340, Km. 1157Polígono Industrial La Canonja (Tarragona) (2) - 50% 625 27 3 - 328 313
SLIR, S.L. (Sociedad Unipersonal)Carretera de Carcastillo a FigarolCarcastillo (Navarra) (3) 100% 100% 2,404 749 139 - 3,292 3,325
ANERIQA, A.I.E.Ctra. Nacional 340, Km. 1157Polígono Industrial La Canonja (Tarragona) (4) 10% 100% 1 - - - 1 1
Artenius Italia, SPAVia Montereale 10/A33179 - Pordenone (Italy) (5) 100% 100% 12,750 4,954 (7,347) - 10,357 58,702
Artenius Portugal, Industria de Polimeros, S.A. Apartado 23, Quinta de Sao Vicente, EstradaNacional, 246. 7300-952 Portalegre (Portugal) (5) 100% 100% 10,000 5,040 (4,875) - 10,165 22,614
Artenius Sines, S.A. Apartado 23, Quinta de Sao Vicente, EstradaNacional, 246. 7300-952 Portalegre (Portugal) (6) 100% 100% 50 - (4) - 46 50
Artenius Holding, B.V.Kruisweg, 8292132 NG - Hoofdorp (Netherlands) (7) 100% 100% 18 443,514 - - 443,531 -
Artenius Uk, LimitedDavies Offi ces, Wilton SiteRedcar, TS10 4XZ (United Kingdom) (5) / (6) - 100% 395,538 (192,290) 46,707 - 249,955 210,430
Artenius Pension Truste es, Ltd., Davies Offi ces, Wilton SiteRedcar, TS10 4XZ United Kingdom (8) - 100% - - - - - -
Artenius Turkpet Kimyevi Maddeler ve Pet Ambalat MalzemeleriSanayi Anonim SirketiTarsus Yolu 10. km. Sasa Fabrika içi SeyhanAdana (Turkey) (5) / (9) 100% 100% 120,386 2,275 11,810 - 134,471 84,520
Artenius Romania, SRLBulebardul Basarabiei, 256 AnexaTehnico-Sociala, etaj 1, sector 3. Bucharest (Rumania) (9) 100% 100% 6,266 (172) (343) - 5,751 5,440
Artenius Hellas Holdings, S.A.Meandrou, 15. 11528 - Atenas (Greece) (7) 100% 100% 60 - (53) - 7 7
Artenius Hellas, S.A., Volos Industrial Area B Zone37500 - Volos (Greece) (5) / (9) - 51% 24,615 3,427 609 - 14,612 18,542
907,450 434,686
64
c) Variation in the perimeter of consolidation
For the very fi rst time, the Controlling Company has used the global integration method to include the following companies within its peri-
meter of consolidation:
- Artenius Italia, S.p.A, formerly called Selenis Italia, SPA, incorporated into the perimeter on 31 January 2006, with headquarters
in Italy.
- Artenius Portugal, Industria de Polimeros, S.A. formerly called Selenis Industria de Polimeros, S.A., incorporated into the perimeter
on 31 January 2006, with headquarters in Portugal.
- Artenius Sines, S.A. formerly called Artensa – Produçao e Comercializaçao de Ácido Tereftálico Purifi cado e Productos Conexos, S.A.,
incorporated into the perimeter on 28 September 2006, with headquarters in Portugal.
- Artenius Holding, B.V., formerly called Advansa Holding, B.V., incorporated into the perimeter on 30 September 2006, with head-
quarters in the Netherlands.
- Artenius UK, Limited, formerly called Advansa UK Limited, incorporated into the perimeter on 30 September 2006, with headquarters
in the United Kingdom.
- Artenius Pension Trustees, Ltd., formerly called Advansa Pension Trustees Limited, incorporated into the perimeter on 30 September
2006, with headquarters in the United Kingdom.
- Artenius Romania, SRL formerly called Advansa Romania, SRL, incorporated into the scope on 30 September 2006, with headquar-
ters in Romania.
- Artenius Turkpet Kimyevi Maddeler ve Pet Ambalat MalzemeleriSanayi Anonim Sirketi, formerly called Artensa Kimyevi Maddeler ve
Pet Ambalaj Malzemeleri Sanayi Anonim Sirketi., incorporated into the perimeter on 30 September 2006, with headquarters in Turkey.
- Artenius Hellas Holding, S.A., formerly called Selenis Hellas Holding, S.A., incorporated into the perimeter on 31 December 2006,
with headquarters in Greece.
- Artenius Hellas, S.A., formerly called Volos Pet Industry, S.A., incorporated into the perimeter on 31 December 2006, with headquar-
ters in Greece.
(1) Industrial or commercial activity related to the chemical industry.(2) Production, distribution and sale of gases.(3) Recycling of farm waste and sale of organic manure.(4) Electrical cogeneration plant.(5) Manufacture and commercialisation of polyethylene terephthalate (PET polymer).(6) Manufacture and commercialisation of purifi ed terephthalic acid (PTA).
(7) Holding of securities.(8) Management of pension funds.(9) Manufacture and commercialisation of PET packaging materials (Preforms)..(10) Provision of services.(11) Specialised transport of chemical products and similar.(12) Manufacture and commercialisation of polyester fi bres and resins.
(*)The cos tvalue of the holding is not registered entirely with the parent company, but rather the reare companies that merely holds hares.In the case of the global take over of a group of companies, the cost value of the holding has been assigned in accordance with the economic criteria of income generation capacity.
% Holding in La Seda de
Barcelona, S.A. Result
Global integrationMain
activity DirectDirect and
IndirectSubscribed
capital Reserves
Net accounting
valueCost value
of holding (*)
Lastfi nancial
year Extraordinary
PROPORTIONAL INTEGRATION
Selenis Servicios Técnicos, SRLApartado 23, Quinta S.Vicente. Estrada Ncional 2467300-952 Portalegre (Portugal) (10) - 50% 100 1.064 23 - 594 200
EQUITY
Petrolest, S.L.Raset, 7 2º 3ª. 08021 - Barcelona (11) 49% 49% 118 3.240 91 - 1,690 2,743
Simpe, S.p.AContrada Pagliarone 80011 Acerra (NA) – Italy (12) 19% 19% 4,810 - (155) - 4,655 7,030
6,345 9,773
444,659
65
The company Selenis Servicios Técnicos, SRL, with headquarters in Portugal, joined the perimeter of consolidation on 31 January 2006
through the proportional integration method (50%).
In addition, and for the very fi rst time, the Controlling Company has included the company Simpe, SPA with headquarters in Italy -within
its perimeter of consolidation on 31 December 2006.
The company Industrias Químicas Textiles, S.A. has been excluded from the perimeter of consolidation by the Controlling Company on 30
June 2006 as a consequence of its disposal.
On 10 October 2006 the Board of Directors of Seda de Barcelona, S.A. approved the non-monetary contribution of the branch of activity
made up by the assets and liabilities corresponding to the manufacture of polyester fi bres at the El Prat de Llobregat plant to Fibracat Eu-
ropa, S.L.U. Subsequently, on 30 November 2006, La Seda de Barcelona, S.A. sold 68.32% of the company shares belonging to Fibracat
Europa, S.L.U. to a Mexican trading company. The remaining shares that it holds were applied as a non-monetary contribution targeted
at the incorporation of the company Fibras Europeas de Poliéster, S.L. for an amount of 2.28 million euros. As a consequence of the
foregoing operations, the company Fibracat Europa, S.L.U. does not fall within the sphere of consolidation as control of the held company
has been lost.
The breakdown of segregated assets and liabilities is as follows:
ASSETS (Thousands of Euros)
FIXED ASSETS
Net intangible fi xed assets 822
Net tangible fi xed assets 18,919
CURRENT ASSETS
Net inventories 2,006
Trade debtors 55,520
77,267
LIABILITIES LONG-TERM LIABILITIES 70,067
NON-REQUIRABLE LIABILITIES 7,200
77,267
Note 2. Bases for presentation of the consolidated annual accounts
a)ITrue and fair view.
The consolidated annual accounts for the 2006 tax year have been drawn up in accordance with that set forth by the International Financial
Reporting Standards (hereinafter “IFRS”), as passed by the European Union, in accordance with Regulation (EC) No. 1606/2002 of the
European Parliament and of the Council, taking into account all of the accounting principles and standards and the assessment criteria
that are obligatory to apply that have a signifi cant effect, as well as the alternatives that the regulations allow in this matter. Along this line,
in accordance with that set forth in IFRS 1, the Controlling Company in the Group as well as Industrias Químicas Asociadas LSB, S.L.U.,
have kept the restatements made in accordance with the legislation in force prior to 1 January 2004, in particular prior to the update carried
out pursuant to Royal Decree-Law 7/1996 of 7 June (see Note 5.1).
The enclosed consolidated annual accounts have been drawn up based on the individual accounting records of La Seda de Barce-
lona, S.A. and of each one of the Subsidiary Companies and show a true and fair view of the net worth, the fi nancial position at 31
December 2006 and of the results of their transactions, the changes in the statement of acknowledged income and expenses and of
the cash fl ows which arose in the consolidated Group during the tax year closed on the said date.
66
The fi rst consolidated annual accounts presented under IFRS criteria were those for the tax year that closed on 31 December 2005.
As a consequence, IFRS 1 “Initial use of the International Financial Reporting Standards” was applied on the transition date of 1
January 2004.
The Group has not adopted the standards approved by the European Union and the Interpretations Committee of the IFRS (CINIIF) in
advance, the application of which was not obligatory in 2006 and they shall be applied when they come into force. These standards shall
not have an impact on the fi nancial situation of the Group and only the following standards will involve additional breakdowns:
- IFRS 7 – Financial instruments: Information to be disclosed, which requires breakdowns that enable users to assess the importance
of the Group’s fi nancial instruments and the nature and scope of the risks that the aforementioned fi nancial instruments entail.
- Amendments to the IAS 1 – Presentation of fi nancial statements, which requires new breakdowns to be drafted that enable users to
assess the objectives, policies and procedures to manage the capital.
- IFRS 8 – Operative segments
The enclosed consolidated annual accounts, which have been drawn up by the Board of Directors of the Controlling Company, shall be
submitted for approval by the Ordinary Annual General Meeting of Shareholders. The Administrators of the Controlling Company believe
they will be approved without any modifi cation. The consolidated annual accounts of the Group corresponding to the tax year that ended
on 31 December 2005, drafted in accordance with the International Financial Reporting Standards, were approved by the General Meeting
of Shareholders on 12 June 2006.
b) Comparison of information.
As mentioned in Note 1, section c) of this note, the perimeter of consolidation of La Seda de Barcelona group has changed signifi cantly due
to the acquisitions carried out in Italy, Portugal, United Kingdom, Turkey, Rumania and Greece and the disposals from the scope of con-
solidation as a consequence of the sale of shareholdings in Industrias Químicas Textiles, S.A. and the segregation of the branch of activity
formed by the assets and liabilities given to Fibracat Europa, S.L. As a consequence, the comparable nature of the data corresponding to
the 2005 in 2006 tax year’s included in the attached balance sheet, the profi t and loss statement, the cash fl ow statement and the report
is conditioned.
c) Responsibility for the information and the estimates made.
The information contained in these annual accounts is the responsibility of the Group’s Administrators.
In the consolidated annual accounts corresponding to the 2006 tax year, estimates have been used occasionally that were made by the
Group’s Management and the other companies to quantify some of the assets, liabilities and undertakings that are recorded therein. Basi-
cally, these estimates refer to:
- The valuation of the assets and goodwill in order to determine the existence of losses through the impairment of these (see Note 6).
- The hypotheses used for calculating the actuarial value of liabilities.
- The useful life of the tangible and intangible assets (see Notes 5 and 7).
- The probability of occurring and the sum total for the indeterminate or contingent liabilities.
- Deferred taxes.
Despite the fact that these estimates were made according to the best information available on the date of drawing up these consolidated
annual accounts regarding the facts analysed, it is possible that events which may take place in the future may force them to be altered
(upwards or downwards) in forthcoming tax years, which would be done in a prospective way acknowledging the effects of the change in
the estimate on the pertinent future consolidated profi t and loss statements.
d) Consolidation methodology
• Consolidation methods. The criteria followed for deciding on the consolidation method applicable to each one of the companies that
make up the perimeter for consolidation were the following:
67
1. Global integration: This method was applied to the companies in which the Controlling Company controls the majority of the voting
rights or, even if this is not so, has the power to manage the fi nancial and operating policies for the former.
2. Proportional integration: This has been applied to those companies managed jointly with another partner, by holding 50% of the
shareholding and an equal number of voting rights on the Board of Directors, without the individual power to manage the fi nancial and
operating policies of the company.
3. Method of shareholding: This method was applied for the associated companies, with these deemed to be those in which the direct
or indirect holding in the share capital belonging to La Seda de Barcelona S.A. stands at between 20% and 50% or, even if it does not
reach the said percentages of shareholding it does have a signifi cant infl uence on the management. This method consists of entering
the shareholding on the balance sheet for the fraction of its net worth that the Group’s holding in its share capital represents once, where
applicable, the effect of the transactions performed with Group companies has been adjusted, plus the tacit capital gains that corres-
pond to the goodwill paid in the takeover of the company.
• Timing and appraisal uniformity. The annual accounts of all the companies included within the perimeter of consolidation are uniform
in their structure, year-end and accountancy principles applied.
• Removal of internal operations. All the sizeable balances and transactions between the companies included within the perimeter for
consolidation have been removed from the enclosed consolidated annual accounts, as well as the sum total of the shareholdings held
between them, except for the profi t margin obtained by the company selling them, which is included in the value of the stocks at the close
of the tax year, stemming from transactions between Group companies, since the said margin is of very little interest with regards the true
and fair view of the consolidated annual accounts.
• First consolidation differences. The items of goodwill acquired prior to 1 January 2004 are kept at their net value entered at 31 Decem-
ber 2003 in accordance with Spanish accounting criteria. As from 1 January 2004 goodwill is not amortised and at the close of each tax
year there is an estimate to see whether there has been any reduction that would cut the recovery price to an amount lower than the net
cost entered, then carrying out, where applicable, the pertinent write-off.
Elsewhere, for those business combinations incorporated into the group after the aforementioned date on the basis of satisfying IFRS 3,
the differences that arise in the removal of investment and shareholders’ equity have been assigned to assets, liabilities and contingent
liabilities, as far as feasible, whose reasonable value on the date of combination would differ from the value shown on the balance sheet
of the purchased company, with the exception of the subsidiary Artenius UK, Limited, whose value is being assessed at the date of draf-
ting these consolidated annual accounts and shall be updated over the course of the next tax year. The surplus amounts that cannot be
assigned are attributed to “Consolidation goodwill”, when the difference is positive and as “Other operating income” of the profi t and loss
statement if this amount is negative.
Notwithstanding the foregoing, the incorporations into the consolidation perimeter have been provisionally carried out in accordance with
IFRS 3, paragraph 62, insofar as the goodwill values shown could be modifi ed over the forthcoming year.
• Minority interests. The interests belonging to external shareholders represent the aliquot of the shareholders’ equity at 31 Decem-
ber 2006 for those Subsidiary Companies that are consolidated using the global integration method, in which ownership is shared
with third parties.
• Conversion of fi nancial statements in currencies other than the euro. The fi nancial statements of foreign companies, none of which
operate in a hyper-infl ationary economy, and designated in a functional currency other than the currency used in the consolidated fi nancial
statements, are converted into euros through the exchange rate method, by virtue of which:
- Capital reserves are converted at the historic exchange rate.
- The profi t and loss statement entries have been converted by applying the average exchange rate of the period as the approximate
rate of exchange on the transaction date.
68
(Thousands of euros)
BASIS OF THE SHAREOUTFinancial period income/loss 5,343
DISTRIBUTIONTo legal reserve 534
To other reserves 2,834
To losses from previous periods 1,975
5,343
Note 4. Valuation rules
a) Tangible fi xed assets
The tangible fi xed assets are valued at their purchase price or production cost, net of the corresponding depreciation or provisions that exist
over these, except for the restatement carried out on the lands on which the different production units are located, based on the provisions
set forth in IAS 16, as well as the restatements carried out under the auspices of Royal Decree-Law 7/1996, dated 7 June, by the Contro-
lling Company of the Group as well as Industrias Químicas Asociadas LSB, S.L.U. The IFRS 1 enables these restatements carried out in
accordance with the governing regulations to be maintained. Likewise, and prior to its incorporation into the perimeter of consolidation and
in accordance with the current regulations in Portugal, Artenius Portugal has proceeded to restate the elements registered under the “Tech-
nical installations and machinery” heading at the market value based on an independent expert’s report. The amount of the aforementioned
restatement is 14.40 million euros charged to net worth. Likewise, and in application of the “disinquinamento del cespiti” act published on
17 January 2003, Artenius Italia, S.p.A. has proceeded to restate its tangible fi xed assets for an amount of 5.91 million euros.
As we mentioned in Note 2, section d) and in compliance with IFRS 3, with regard to the business combinations incorporated into the peri-
meter of consolidation (see Note 1, section c) during 2006, the tangible fi xed assets have been valued in accordance with their reasonable
value based on independent expert appraisals, with the exception of Artenius UK, Limited, whose value is currently being assessed and
shall be restated over the course of the next fi nancial year.
The fi nancial charges corresponding to the loans granted by fi nancial institutions directly related with the construction of tangible fi xed
assets are entered as the highest value of the fi xed assets. This amount totals 581.28 thousand euros.
Repairs that do not represent an increase in the useful life and the maintenance charges are charged directly to the profi t & loss statement.
The costs for extension or improvement that give rise to a greater duration for the asset or an increase in the productivity, capacity or effi -
ciency, are capitalized as the greater value thereof.
Works performed for fi xed assets are valued according to the costs incurred for labour, materials and other indirect costs. Over the year,
- Remaining balance sheet entries have been converted at the year-end exchange rate.
As a consequence of the application of the foregoing method, the exchange rate differences are included under the “Conversion differen-
ces” of the net worth of the consolidated balance sheet heading.
Note 3. Distribution of profi ts/losses of the Controlling Company
The distribution of the profi t from the tax year for La Seda de Barcelona, S.A. shall be decided at the Annual General Meeting of
Shareholders.
The Board of Directors shall propose the following distribution of the profi t, in thousands of euros: :
69
the companies that make up the Group have carried out works and tasks for themselves which are susceptible to be recorded as cost
increase of tangible fi xed assets for an amount of 3.39 million euros, which appears under the “Other operating income” heading of the
consolidated profi t and loss statement.
Depreciation of the elements of the tangible fi xed assets is started in relation to their purchase and/or repair date, in a straight-line method
according to the estimated years of useful life and applying it to the cost values, as per the following breakdown:
% ofrepayment
Buildings 1 - 5
Technical plant and machinery 1,5 - 15
Other plant, tools and fi ttings 5 - 9,1
Other fi xed assets 7,2 - 25
The sum totals for the restatement carried out according to Royal Decree-Law 7/1996 are amortised in line with the years of useful life
remaining at 31 December 1996 for the pertinent elements of the equity restated.
The tangible fi xed assets acquired through leases or lease-back are entered under the heading for “Tangible fi xed assets” to which the
assets leased corresponds, which is amortised during its scheduled useful life following the same method as for assets which are owned or
within the term of the pertinent lease, should the said useful life be shorter. The sales transaction with a subsequent lease back arranged
by the Controlling Company in 2005 was entered by deferring and amortising the excess of the sum total of the sale over the book value for
the asset sold throughout the term of the lease.
b) Other intangible assets.
As with patents, computer applications have been valued at the purchase price and/or the owner’s production costs with regard to those
assets acquired from third parties as well as those manufactured by the Company itself. The corresponding maintenance costs are there-
fore not shown. Amortisation is computed on the straight-line method, over a maximum period of 5 and 10 years.
The research expenses are attributed to costs when they are incurred, while development expenses incurred in an individual project are
capitalised if the Group is able to prove that the product is feasible from a technical and commercial point of view, if suffi cient technical and
fi nancial resources are available to commence the project and the costs incurred can be reliably determined. The capitalised development
costs are depreciated over the period during which income or returns from the aforementioned project are expected.
The group registers the emission rights when it owns these. In the case of rights assigned free of charge to each installation within the Na-
tional Assignment Plan, the assessment corresponds to the market value at the date of concession. The emission rights are removed from
the balance sheet when they are disposed to third parties, handed over or expire.
c) Asset impairment.
At the close of each tax year, or on the date deemed necessary, the value of the assets is analysed to determine whether there is any sign
that they have undergone a loss through impairment. If there is a sign, an estimate is made of the sum total recoverable for the said asset
to determine, where applicable, the sum total of the write-off required. If this involves identifi able assets that do not generate cash fl ows
independently, the capacity for recovery is estimated for the unit generating cash to which the asset belongs.
In the case of units generating cash to which the items of goodwill with an indefi nite useful life have been assigned, the analysis of recovery
capacity is carried out in a systematic fashion at the close of each tax year or under the circumstances deemed necessary in order to per-
form such an analysis, with the exception of acquisitions of businesses carried out in 2006, the recovery capacity of which will be analysed
in the next fi nancial year.
70
The recoverable sum total is determined as the higher between the market value reduced by the cost required for its sale and the value of
use, with the latter being understood to be the current value of the estimated future cash fl ows.
The losses through impairment acknowledged in an asset in previous tax years are reverted when a change arises in the estimates regar-
ding its recoverable amount by increasing the value of the asset with the limit of the book value that the asset would have had if the write-off
had not been carried out. The reversion of the loss of value through impairment is immediately acknowledged as income on the profi t and
loss account, except in the case of goodwill, for which impairment cannot be reverted.
d) Financial instruments.
1. Non-current and current fi nancial assets. The following are entered under this heading:
1.1. Investments to be kept until their maturity. Investments are classifi ed as being non-current when they are the ones that the Group
intends to hold on to and is capable of holding on to until their maturity. These are entered at their amortised cost value.
1.2. Loans and accounts to be settled. These are entered, both in the long and short terms, at their amortised cost, corresponding to
the cash handed over, less the repayments made for the principal. In certain cases, they include the interest accrued and not due at
the date of closure.
1.3. Deposits and guarantees. These are entered, both in the long and short terms, for the amounts actually paid over.
2. Cash and other equivalent liquid assets. This heading on the consolidated balance sheet records the cash available and in banks, sight
deposits and other short-term investments with high liquidity and which do not have any risk of changes in their value.
3. Financial liabilities. Loans, undertakings and similar debts are entered at the sum total received, net of the costs incurred in the tran-
saction. Financial charges and transaction costs are entered on the profi t and loss account according to the criterion for accrual based on
the effective interest-rate method. The sum total accrued and not settled is entered as the higher amount to be paid.
Accounts payable are initially entered at market cost and then valued at the amortised value using the effective interest-rate method.
4. Compound fi nancial instruments. The issue of bonds that may be exchanged for shares carried out by the Controlling Company du-
ring the 2005 tax year meets the necessary requirements set forth by the IFRS to be considered as “Capital instruments”. That is why the
amount corresponding to the item of liability from the component of net worth, which represents the reasonable value of the option incor-
porated from this instrument, has been differentiated from the net amount received since the issue of the bonds.
5. Hedge instruments. The derivatives held by the group correspond mainly to interest rate hedge operations and ensure the existing
borrowing at a defi ned rate of interest. For bookkeeping purposes these are processed as cash fl ow hedges in so far as they correspond to
cash fl ow hedges that are attributable to a specifi c risk linked to a previously recognised liability.
The net variations in the reasonable value of these hedge operations have been recorded against net worth, as the fl ow hedging is consi-
dered effi cient (see Note 15.2).
e) Investments entered using the shareholding method.
This heading enters the shareholding that the Controlling Company holds in Petrolest, S.L. and Simpe S.p.a. (see Note 9). This
method consists of entering the shareholding on the balance sheet for the fraction of its net worth that the Group’s holding in its
share capital represents once, where applicable, the tacit capital gains that correspond to the goodwill paid in the takeover of the
company have been adjusted.
The profi ts/losses obtained by the associated company that correspond to the Group according to its shareholding are entered, net of their
tax result, on the profi t and loss account under the heading “Profi t/loss from companies using the shareholding method”.
71
f) Non-current assets maintained for sale.
Non-current assets kept for sale are entered at the lower amount between the book value and the reasonable value after deducting the
costs required for carrying out the sale, and are not depreciated.
Non-current assets are classed as kept for sale if their book value is expected to be recovered through their subsequent sale and not from
their continued use as part of the performance of the Company’s main activity. This condition is deemed to be met only when the sale is
highly probable and the asset is available for immediate sale in its current state. Management must undertake to carry out the sale, which
is likely to be acknowledged as a completed sale within the term of one year from the date of the classifi cation.
g) Inventories.
Raw materials and other procurement. These are valued at the purchase price in accordance with the average weighted price method,
with the exception of spare parts, which are recorded through the specifi c identifi cation method. The value correction for reversible losses
is deducted from the amount obtained. The estimate for such losses is made at the close of the tax year when the market value of the raw
materials is lower than their cost price.
Works in progress, half-fi nished and fi nished products. They are valued by means of cost sounding per article and processes established for
that purpose.
The production cost defi ned by the price list sounding is found by adding to the cost price of the raw materials and other consumable
materials the costs directly attributable to the product, as well as the part that corresponds from the costs indirectly attributable thereto in
so far that such costs correspond to the manufacturing process from the pertinent period.
The valuation of obsolete, defective or slow-moving products has been reduced to their possible realization value.
h) Trade debts and other accounts to be settled.
Trade debts and other accounts to be settled are entered at their nominal value, with those balances that the Group deems diffi cult to
recover being written off against the profi ts.
i) Other current assets
The balance recorded under this heading corresponds to the full amount of the debts pending settlement or offsetting with Public Bodies
and which are recorded for their nominal value.
j) Shares in the Controlling Company.
They appear valued at their cost price, with the pertinent restricted reserve being entered under the heading for “Equity” for the same
amount, in accordance with Article 79.3. of the Revised Text of the Public Limited Companies Act (see Note 13.3).
These shares appear as from 1 January 2005 and applying IAS 32 and 39 thus reducing the net worth for the Group.
k) Undertakings with the staff.
External pensions fund (La Seda de Barcelona, S.A. and Industrias Químicas Asociadas LSB, S.L. (Single-Member Company).
Monthly contributions are made to an external pensions plan in the mode of a fi xed contribution:
- Staff from La Seda de Barcelona, S.A.: 2.20% of the gross salary, excluding
- Staff from Industrias Químicas Asociadas LSB, S.L. (Sociedad Unipersonal): percentages of the pension-related salary, i.e., basic
salary plus time employed, which range between:
- 3.5%-10.5% as regards the Company’s contribution.
- Up to a maximum of 3.5% as regards the contribution payable by the employee.
72
Internal pension fund
- Fixed staff:
In compliance with Law 30/1995 and Royal Decree. 1588/1999, on 23 October 2000, La Seda de Barcelona, S.A. and Industrias
Químicas Asociadas LSB, S.L. (Single-Member Company) proceeded to outsource their undertakings with their fi xed workers using
the method of taking out insurance policies with the fi rm called Norton Life M.P.S.
- Fixed staff at the industrial plant in Tarragona (Industrias Químicas Asociadas LSB, S.L. (Single-Member Company).
This includes the staff who appear on the payroll for the company stated as of the date of the close and who joined the latter prior to 31
December 1994.
Whilst the Company does not outsource it, the employees who are entitled to any of the benefi ts envisaged by the pensions plan are
entitled to receive the full amount of the accumulated individual internal fund.
Its sum total is obtained from the pertinent actuarial study carried out by an independent expert, by means of individual capitalization.
The yield for the fund is linked to the one that is obtained by the external pensions plan mentioned in the previous point, equivalent to
6.25% per year at 31 December 2006.
On 13 November 2002 a plan was approved to restore a balance with the transfer and outsourcing of the internal fund. The starting date
for the transfer was 31 October 2002, with an interest rate of 4% being applied to the balance pending amortisation and which, at 31
December 2006, amounted to 0.34 million euros. The time limit for the transfer was set at 10 years.
Post-employment benefi ts
Post employments benefi ts comprise pension benefi ts provided to employees, primarily employed at the UK subsidiary, Artenius UK.
For the defi ned benefi t plan, the cost is calculated using the projected unit credit method and it is recognised over the average expected
remaining service lives of participating employees, in accordance with the advice of qualifi ed actuaries. All cumulative actuarial gains and
losses have been recognised in equity at the date of acquisition of the UK subsidiary.
For the cost charged to the income statement, costs consist of current service costs, interest costs, the expected return on the plan’s assets
and past service costs. Additionally, in respect of the actuarial gains and losses generated subsequent to the date of acquisition of Artenius
UK, to the extent they exceed 10% of the present value of the future obligations of the plan or of the fair value of the plan’s assets, the
corresponding portion is recognised in the income statement.
For defi ned contribution plans, the cost represents the Group’s contributions to the plans and they are charged to the income statement in
the period in which they fall due.
l) Provisions.
The provisions are recognised at the time when:
• The Group has a current obligation (whether legal or implicitly assumed) as a result of a past occurrence; and occurrence; and
• It is likely that the Group has to pay out to cancel the aforementioned obligation; and
• There is a reliable estimate of the amount of the obligation.
In cases in which the timing value of money is signifi cant, the amount of the provision is determined as the present value of future cash
fl ows that are expected to be necessary in order to cancel the obligation.
73
ll) Acknowledgement of income and expenses.
Income and expenses are attributed according to the criterion of accrual regardless of the time at which the monetary or fi nancial fl ow
deriving from them arose.
Revenue is recognised from the time which it is likely that the economic benefi ts corresponding to the transaction will be received by the
Group and can be reliably quantifi ed.
Income corresponding to the licence to use the right to the installation of the PET and PTA production process, as well as revenue through
the engineering services carried out on each project are recorded under the “Other income” heading”.
The sales of goods and revenues from services provided are entered without including the amounts corresponding to the taxes that apply
to these transactions, deducting all the discounts, whether or not included on invoices.
The sums of the taxes applicable to the purchases of merchandise and other goods for resale and other goods for their subsequent resale,
excluding Value Added Tax (VAT), are entered as the highest value of the goods or services acquired.
Discounts following the issue or reception, where applicable, of an invoice brought about by defects in quality, breach of time limits for de-
livery or other similar causes, as well as discounts for volume, are entered by differentiating between the sums from the sales or purchases
of goods and the income or expenses from services, respectively.
m) Result of discontinued operations.
A discontinued operation or interrupted activity is a business line that has been abandoned and/or disposed of, whose assets, liabilities and
results can be distinguished from a tax point of view, operationally and for fi nancial information purposes.
Income and expenses of discontinued operations are shown separately on the balance sheet under the heading “Post tax result of discon-
tinued activities” (see Note 22).
n) Capital subsidies.
Offi cial subsidies are shown for their reasonable value when there is certainty of complying with the conditions established in order to obtain
the subsidies, and that the aforementioned subsidies will be received. When this is a subsidy concerning a fl ow of expenses, it is systema-
tically recorded in the period required to match the subsidy against the expenses that the aforementioned subsidy is targeted at offsetting.
When the subsidy concerns an asset, the reasonable value is recognised as deferred income and is entered into results in accordance with
the expected useful life of this asset.
The non-repayable subsidies linked to the greenhouse effect gas emission rights, acquired free of charge or for a price substantially below
their vendible value are entered as “Income to be allocated over several years”, and are registered as income against the expenses resulting
from gas emissions related to the subsidised emission rights.
Depreciation that may affect the emission rights lead to the corresponding subsidy being attributed to results in proportion to the same, with
the part of these rights that has been funded free of charge considered to be of an irreversible nature.
ñ) Tax situation.
The expense for tax on earnings from the tax year is calculated by means of the sum of the expense for the current tax and the deferred
tax. The expense for current tax is calculated, in each one of the consolidated companies, according to the profi t/loss from the tax year
with the differences being taken into account that might exist between the book profi t/loss and the tax profi t/loss, with the latter unders-
tood as the taxable base for the tax, as well as allowances and deductions from the payment of tax deemed to be the lower amount of the
tax payment to be paid for Corporation Tax from the tax year in which profi t is obtained, providing the taxable base for the tax turns out to
be positive.
The assets and liabilities for deferred taxes come from the temporary differences defi ned as the sums envisaged that may be recovered or payable
in the future and which are derived from the difference between the book value for the assets and liabilities and their taxable base. Said sums
74
are entered by applying the tax rate at which it is expected they will be recovered or settled to the temporary difference. At the same
time, the latter also come from the taxable bases pending compensation and from credits for tax deductions and allowances generated
and not applied.
La Seda de Barcelona, S.A. La Seda de Barcelona, S.A. and its companies owned directly or indirectly with at least 75% of their share
capital and registered in Spain (see Note 1.b) are covered by the System for Consolidated Statements through forming part of the 236/03
Consolidated Tax Group, with La Seda de Barcelona, S.A. being the Controlling Company. Pursuant to Law 35/2006 dated 28 November
2006, the taxable rate of assets and liabilities for deferred taxes corresponding to companies with registered offi ces in Spain has been mo-
difi ed on the attached consolidated fi nancial statements. The end effect of this standardisation has entailed the negative impact of 2,377
thousand euros, broken down into a tax cost of 2,278 thousand euros and a reduction of reserves for an amount of 99 thousand euros.
o) Transactions in currencies other than the euro.
Transactions carried out in currencies other than the euro are entered at the exchange rates in force at the time of the transaction. During
the tax year, the differences that arise between the exchange rate entered and the one in force on the date of settlement or payment are
entered as fi nancial profi ts/losses on the consolidated profi ts/losses account.
p) Classifi cation of balances between current and non-current.
In general, assets and liabilities are classifi ed as current or non-current depending on the operating cycle, with the Group choosing to
consider as current assets and liabilities all those with maturity date equal to or prior to twelve months counting from the date thereof, and
as non-current those with a maturity date after the said period.
q) Per-share profi t.
Basic per-share profi t is calculated as the ratio between net profi t from the period attributable to the Controlling Company and average
number of common shares for the latter in circulation during the said period, not including the average number of shares in the Controlling
Company held by the Group.
To calculate diluted per-share profi t, the increase in the weighted average number of shares in circulation will be issued as a result of
conversion into common shares of the convertible bonds issued by the Group during the 2005 tax year and pending conversion at the
year-end (see Note 27).
r) Business actions with an impact on the environment.
The expenses incurred through the purchase of systems, equipment, fi xtures, and fi ttings, the purpose of which is the removal, restriction
or control of possible impact that the Group companies’ standard activity could have on the environment, are considered as investments
in fi xed assets.
The expenses concerning the environment, other than those carried out for the purchase of fi xed assets, are considered as expenses
pertaining to the year.
s) Statement of cash fl ows.
The following expressions are used in the statements of cash fl ows with the meanings that appear below:
- Cash fl ows: cash incomes and outgoings or those of other equivalent means, with the latter being understood to be investments with a
term of less than three months with fast liquidity and a low risk of change in their value.
- Operating activities: these are the activities that make up the main source of ordinary income for the Group, as well as other activities
that cannot be classed as being for investment or fi nancing.
- Investment activities: those for purchase, sale or disposal by other means of fi xed assets and other investments not included in the
cash at hand and its equivalents.
- Financing activities: activities that cause changes in the size and make-up of the net worth and the liabilities of a fi nancial nature.
Note 5. Tangible fi xed assets
5.1. As stated in Note 4 a), Industrias Químicas Asociadas LSB, S.L.U. and La Seda Barcelona, S.A. carried out a restatement of the value
75
of their tangible fi xed assets pursuant to different legal provisions, inter alia, Royal Decree 7/1996 of 7 June.
lThe accounts affected by the restatement pursuant to the Royal Decree-Act 7/1996 of 7 June and their effect at 31 December 2006 are
as follow:
(Thousands of Euros)
IncreaseCumulative amortisation
Net effect
Buildings 3,218 (1,153) 2,065
Technical plant and machinery 6,449 (5,923) 526
Other plant, tools and fi ttings 55 (55) -
Other fi xed assets 20 (20) -
9,742 (7,151) 2,591
The effect of the restatement on the amortisations in the period amounted to 0.42 million euros. For the 2007 tax year, this effect was
estimated to be approximately 0.28 million euros.
5.2. Analysis of the movement during the tax year. Its composition and progress during the tax year closed on 31 December 2006 were
as follows:
(Thousands of Euros)
Movements for fi nancial year 2006 Balance at 31.12.2006
Balance at31.12.2005
Modifi cation perimeter Transfers
ConversiondifferencescAdditions (*) Remvals (*) Additions Drops L (A) Depreciation
Accumulateddepreciation
Net value
Land andbuildings 119,034 67,086 (40,387) 13 (22,864) 3,106 - 172 126,160 (30,053) 96,107
Technical facilities and machinery 379,272 634,862 (24,290) 6,852 (59,828) 21,489 - 4,551 962,908 (522,504) 440,404
Other facilities, toolingand fi ttings 2,989 9,045 (189) 147 (3,486) 225 (150) 8 8.589 (7,046) 1,543
Advances and tangiblefi xedassetsin progress 8,784 14,257 (,063) 20,321 (52) - (25,444) 55 16,858 - 16,858
Other fi xed assets 6,353 400 (257) 78 (185) 774 - - 7,163 (4,917) 2,246
516,432 725,650 (66,186) 27,411 (86,415) 25,594 (25,594) 4,786 1,121,678 (564,520) 557,158
Provision for deterioration - (32.092) - - - - - (296) (32,432) - (3,432)
516,432 693,558 (66,186) 27,411 (86,415) 25,594 (25,594) 4,490 1,089,246 (564,520) 524,726
(*) See Note 1.c
76
(Thousands of Euros)
Movements for fi nancial year 2006
balance at31.12.2005
Perimeter TransfersConversionDifferences
Balance at 31.12.2006Additions (*) Drops( *) Additions Drops L (A)
Accumulateddepreciation Buildings (19,225) (18,629) 4.,557 (1,684) 4,958 - - (30) (30,053)
Accumulated depreciationTechnical facilitiesand machinery (244,337) (324,963) 21,908 (21,641) 48,461 (2) - (1,930) (522,504)
Accumulated depreciation Other facilities,toolingand fi ttings (2,225) (7,854) 180 (222) 3,075 - - - (7,046)
Accumulated depreciationOther fi xed assets (4,804) (94) 205 (261) 38 - - (1) (4,917)
(270,591) (351,540) 26,850 (23,808) 56,532 (2) - (1,961) (564,520)
(*) See Note 1.c
The charge to profi ts/losses for the current tax year by way of allocation to the depreciation of tangible fi xed assets amounted to
23.81 million euros.
The breakdown of the net additions to the perimeter by companies is as follows:
Company (Thousands of euros)
Artenius Hellas, S.A. 35,004
Artenius Italia, S.p.A 85,059
Artenius Portugal, Industria de Polimeros, S.A. 30,631
Selenis Servicios Técnicos, SRL 3
Artenius Turkpet Kimyevi Maddeler ve Pet Ambalat MalzemeleriSanayi Anonim Sirketi 40,624
Artenius Uk, Limited 147,449
Artenius Romania, SRL 3,248
342,018
The net disposals from the consolidation perimeter corresponds to Industrias Químicas Textiles, S.A. as a consequence of this disposal,
as shown in Note 1 c).
77
5.3. Fully amortised assets. The sum total for the assets fully amortised at the year-end amounted to 163.64 million euros and their
breakdown is the following:
(Thousands of euros)
Buildings 2,480
Technical plant and machinery 150,278
Other plant, tools and fi ttings 6,846
Other fi xed assets 4,038
163,642
5.4. Assets covered by a guarantee. The sum total for assets covered by a guarantee at 31 December 2006 corresponds to the following
breakdown (fi gures expressed in thousands of euros):
5.5. The most signifi cant transactions that took place in the 2006 tax year are described below:
Additions and disposals to and from the perimeter of consolidation (see modifi cations to the perimeter in Note 1, section c):
Additions of tangible fi xed assets:
• Finalisation, and therefore transfer from “Fixed assets in progress” to “Technical installations and machinery” of the investments in
progress are described in section 5.7 of this note.
• Investments made through the Buhler project at the company Artenius Italia, SpA.
• Investment in a new catalyser.
• Repairs and improvements to installations.
• Sundry investments for a lesser amount.
The disposals for the tax year correspond mainly to the contribution of the branch of activity described in foregoing Note 1 c) and to the sale
of an estate belonging to La Seda de Barcelona, S.A., located in El Prat de Llobregat as recorded in the Property Register of that municipal
district in Volume 1,295, Book 655, Folio 137, Estate No. 35,250, entry 4.
Type of charge
Sum total of the chargeArtenius Italia, SpA Benefi ciary
FactorieslocatedatCalleE.Fermi(sheetB/1-p lo tn .63-CategoryD/1)andatCa l leE .Majorana(sheetB/4-plotn.99-CategoryD/1) in San Giorgio (Italy).
Mortgage 1 10,742 Mortgage in favour of Mediocredito del Friuli Venezia Giulia.
Mortgage 2 15,000
Mortgage in favour of Banca Popolare Di Vicenza, Banca Popolare Friuladria, Banca Nazionale del Lavoro, Mediocredito del Friuli Venezia Giulia, Interbanca SPA, Banca Popolare di Milano and Veneto Banca Scarl.
Mortgage 3 11,840 Mortgage in favour of Unicredit - FRIE.
37,582
78
5.6. Analysis of the movement during the 2005 tax year. Its breakdown and progress during the tax year closed on 31 December 2005
were the following:
(Thousands of Euros)
Movements for fi nancial year 2005 Balance at 31.12.2005
Balance at31.12.2004
ApplicationIFRS
Transfers
Additions Drops L (A) CostAccumulated Depreciation Net value
Land and buildings 117,069 - 4 (6) 1,967 - 119,034 (19,225) 99,809
Technical facilitiesand machinery 372,172 5,292 49 (14,740) 16,499 - 379,272 (244,337) 134,935
Other facilities, toolingand fi ttings 2,975 - - (1) 15 - 2,989 (2,225) 764
Advances and tangiblefi xedassets in progress 15,838 1,004 15,370 (27) - (23,401) 8,784 - 8,784
Other fi xed assets 6,206 - - - 147 - 6,353 (4,804) 1,549
514,260 6,296 15,423 (14,774) 18,628 (23,401) 516,432 (270,591) 245,841
(Thousands of Euros)
Movements for fi nancial year 2005
Balance at31.12.2004
ApplicationIFRS
TransfersBalance at31.12.2005Additions Drops L (A)
Accumulated depreciation
Buildings (18,356) - (869) - - - (19,225)
AccumulateddepreciationTechnicalfacilitiesand machinery (246,247) (155) (12,590) 14,655 - - (244,337)
Accumulated depreciation Other facilities,toolingand fi ttings (2,141) - (84) - - - (2,225)
Accumulated depreciation
Other fi xed assets (4,561) - (243) - - - (4,804)
(271,305) (155) (13,786) 14,655 - - (270,591)
5.7. The most signifi cant transactions that took place in the 2005 tax year are described below:
Additions of tangible fi xed assets:
• Conversion of electrical equipment to comply with the regulations in force and renovation of the fi re-detection equipment.
• New well for getting better quality water, thus improving the environment and safety for the factory.
79
• New electrical control for the PTA crane, to make this equipment reliable, which is the one that ensures the entry of raw materials in
the factory.
• Sundry investments for a lesser amount.
Removals of tangible fi xed assets:
During the 2005 tax year the main items removed from the accounts were the plants called RX I and II and benches numbers 3 and 4 for stretching fi bres.
Investments from previous periods, not yet fi nished:
• The assembly of silencers and improvements to the CSSP-2 and CPU-2 installations.
• Several investments are being made at the production centre in Tarragona for plant meant to cut CO2 emissions.
• Lease-back transaction: This transaction consists of obtaining fi nancing by means of the sale to fi nancial institutions of a plant for the
post-condensation of bottle granules, for an overall sum total of 5.29 million euros plus Value Added Tax. According to the criterion set
forth in Note 4 a), this kind of transaction is entered under the heading for “Tangible fi xed assets”.
• Ongoing investment in the electrical drive of the PTA crane.
Note 6. Goodwill
Analysis of the movement during the tax year. Its composition and progress during the tax year closed on 31 December 2006 were
as follows:
(Thousands of Euross)
Balance at31.12.2005
Deteriorationof year
Balance at31.12.2006Increases
Catalana de Polímers, S.A.U. 6,406 - - 6,406
Celtibérica de Finanzas, S.L.U. 768 - (768) -
Proyectos Voltak, S.L.U. 669 - (669) -
Mendilau, S.L.U. 432 - (432) -
Artenius Portugal, Industria de Polímeros, S.A. - 18,193 - 18,193
Artenius Italia, S.p.A - 33,050 - 33,050
Artenius Uk, Limited - 52,260 - 52,260
Artenius Turkpet Kimyevi Maddeler ve Pet Ambalat MalzemeleriSanayi Anonim Sirketi - 10,572 - 10,572
Artenius Hellas, S.A. - 3,931 - 3,931
8,275 118,006 (1,869) 124,412
80
The cost of purchases made over 2006 were as follows:
Purchase cost
Artenius Portugal, Industrias de Polímeros, S.A. 22,614
Selenis Sevicios Técnicos, SRL 200
Artenius Hellas holding, S.A. 7
Artenius Hellas, S.A. 18,542
Artenius Italia, S.p.A 58,702
Artenius UK, Limited 210,430
Artenius Turkpet Kimyevi Maddeler ve Pet Ambalat Malzemeleri Sanayi Anonim Sirketi 84,520
Artenius Rumania, SRL 5,440
Artenius Sines, S.A. 50
400,505
As we mentioned in Note 2, section d) and in compliance with IFRS 3, with regard to the business combinations incorporated into the
perimeter of consolidation during 2006, the fi xed assets delivered and the liabilities acquired have been valued in accordance with their
reasonable value based on independent expert appraisals in the case of land and buildings, with the exception of Artenius UK, Limited,
whose value is currently being assessed and shall be restated over the course of the next fi nancial year.
The signifi cant differences between the reasonable value of identifi able assets and liabilities corresponding to the companies incorporated
into the business combinations with regard to the book value of the same are:
• Artenius UK, Limited. Recognition of a labour liability for an amount of 42.3 million euros, corresponding to the fl aw between the
current value of the liabilities contracted as future pension scheme commitments, an appraisal study carried out by an actuarial expert
and the reasonable value of the assets linked to the foregoing pension fund on the date of incorporation into the group, a fl aw calculated
on the basis of the “principle of total recognition” defi ned in IAS 19. Moreover, the trade payables have been reduced by 1.9 million
euros given the company is unlikely to receive these amounts.
• Artenius Italia, S.p.A. Increase to the value of lands and technical installations for amounts of 9.5 and 6.8 million euros, respectively.
• Artenius Turkpet Kimyevi Maddeler ve Pet Ambalat Malzemeleri Sanayi Anonim Sirketi. Restatement of the net book value of the
clients’ machinery on deposit for an amount of 1.8 million euros, by readjusting the depreciation period, formerly estimated as the useful
lifespan of the machinery and currently re-estimated as the period in which the machines are going to be owned by the group, as there
are fi rm sales contracts in future periods.
• Artenius Portugal, Industrias de Polímeros, SA. Certain assets have been re-stated for an amount of 10.8 million euros, considering
these as not realisable. Likewise, and as set forth in foregoing Note 4 a), prior to its incorporation into the perimeter of consolidation
and in accordance with the current regulations in Portugal, the company has proceeded to restate the elements registered under the
“Technical installations and machinery” heading at the market value based on an independent expert’s report. The amount of the afo-
rementioned restatement is 14.40 million euros charged to net worth.
The differences that arise between the purchase cost and the reasonable value of assets and liabilities detailed previously have been recor-
ded as goodwill, and provisionally entered into the books in accordance with IFRS 3, paragraph 62.
As a consequence of the segregation of the branch of activity described in Note 1, section c), during the 2006 tax year the goodwill linked
to disposed assets stemming from Industrias Químicas Textiles, S.A. has been cancelled.
81
Nota 7. Other intangible assets
7.1. Analysis of the movement during the tax year. Its composition and progress during the tax year closed on 31 December 2006 were
as follows:
(Thousands of Euros)
Items for 2006 Balance at 31.12.2006
Balance at 31.12.2005
Perimeter modifi cation Transfers
Conversión differences
Accumulateddepreciation
NetvalueAdditions (*) Removals (*) Additions Drops L (A) Cost
Development costs - - - 2,093 - - - - 2,093 - 2,093
Concessions, patents and licences,trademarksand similar - 49 - 45,016 - - - - 45,065 (789) 44,276
Computerapplications 11,543 753 (170) 2,358 - - - - 14,484 (5,405) 9,079
Other intangiblefi xed assets - 768 - 6,622 (5,016) - - - 2,374 (1,425) 949
11,543 1,570 (170) 56,089 (5,016) - - - 64,016 (7,619) 56,397
(Thousands of Euros)
Items for 2006
Balance at 31.12.2005
Perimeter modifi cation Transfers
Conversiondifferences
Balance at 31.12.2006Additions Drops L (A)Additions (*) Removals (*)
Accumulated depreciatiDevelopmen cost - - - - - - - - -
Accumulated depreciationConcessions, patents and licences, trademarksand similar - (34) - (755) - - - - (789)
Accumulated depreciationComputer applications (3,357) (657) 108 (2,156) - - - - (6,062)
Accumulated depreciation Other intangiblefi xed assets - (766) - (2) - - - - (768)
(3,357) (1,457) 108 (2,913) - - - - (7,619)
(*) See Note 1.c
82
In 2006 the Company purchased trademarks, patents and licensing rights from Advansa BV, for an amount of 45 million euros. The sale
of the use of licensing rights has led to revenue of 16.44 million euros at 31 December 2006.
The charge to profi ts/losses for the current tax year by way of allocation to the depreciation of intangible fi xed assets amounted to 2.91
million euros.
The breakdown of the additions to the perimeter by companies is as follows:
Company (Thousands of Euros)
Artenius Hellas, S.A. 95
Artenius Italia, S.p.A. 14
Artenius Portugal, Industria de Polimeros, S.A. 2
Artenius Romania, SRL 2
113
7.2. Analysis of the movement during the 2005 tax year. ts breakdown and progress during the tax year closed on 31 December 2005
were the following:
(Thousands of Euros)
Movements for fi nancial year 2005 Balance at 31.12.2005
Balance at31.12.2004
ApplicationIFRS
Transfers
Accumulateddepreciation
Net ValueAdditions Drops L (A) Cost
Computer applications 9,622 - 1,921 - - - 11,543 (3,357) 8,186
Advances and intangible fi xed assets in progress
- (1,004) 1,004 - - - - - -
Rights on assets underfi nancial lease - (4,773) - - 4,773 - - - -
9,622 (5,777) 2,925 - 4,773 - 11,543 (3,357) 8,186
(Thousands of Euros)
Movements for fi nancial year 2005
Balance at31.12.2004
ApplicationIFRS
TransfersBalance at31.12.2005Additions Drops L (A)
Accumulated depreciation Computer applications (1,729) - (1,628) - - - (3,357)
Accumulated depreciation
Accumulated depreciation Rights on assets under fi nancial lease - 155 (155) - - - -
(1,729) 155 (1,783) - - - (3,357)
83
7.3. Fully amortised assets. The sum total for the assets fully amortised at year end amounts to 1.1 million euros and their breakdown is
the following:
(Thousands of Euros)
Computer applications 344
Other intangible fi xed assets 768
1,112
Note 8. Non-current fi nancial assets
8.1. Analysis of the movement during the tax year. The breakdown during the fi nancial year closed at 31 December 2006 was the following:
(Thousands of Euros)
Balance at31.12.2005
Modifi cationperimeter Transfers
Balance at31.12.2006Additions (*) Removals (*) Increases Decreases L (A)
Non-current
Holdings in companiesexcluded from theconsolidation perimeter - - - 2,281 - - - 2,281
Long-term stock portfolio investment 509 112 (2,754) 2,747 (69) - - 545
Other loans 263 88 - 92,582 (2,964) - (525) 89,444
Long-term deposits andguarantees 525 27 (4) 33 (367) - (17) 197
1.297 227 (2.758) 97.643 (3.400) - (542) 92.467
(*) See Note 1.c)
The breakdown of the additions to the perimeter of consolidation is as follows:
Company (Thousands of Euros)
Artenius Hellas, S.A. 115
Artenius Italia, S.p.A 20
Artenius Portugal, Industria de Polimeros, S.A. 92
227
The disposals from the perimeter of consolidation corresponds to Industrias Químicas Textiles, S.A.
8.2. The “Shareholdings in companies excluded from the perimeter of consolidation” heading includes the stake in the company Fibras
Europeas de Poliéster, S.L. (see Note 1, section c).
84
8.3. The composition of the “Other credits” epigraph at the close of the fi nancial year is as follows:
(Thousands of Euros)
Fibracat Europa, S.L. 70,082
Debtors for sale of lands 16,311
Other loans 3.051
89,444
Fibracat Europa, S.L.U. A total amount of 69.6 million euros corresponds to Fibracat Europa, S.L. as a consequence of acceptance by La
Seda de Barcelona, S.A., of the non-transferred debt concerning the fi bre business unit contributed by the latter (see Note 1, section c)
as formalised loans.
At the close of the tax year the sum total of the fi nancial charges accrued and not due amounted to 0.48 million euros.
This loan and its corresponding interest are underwritten with a real estate guarantee over the lands on which the Fibracat Europa, S.L.U.
facilities are located.
Debtors through sale of lands: This corresponds to the amount pending payment for the sale made during 2006 of an estate that was
the property of La Seda de Barcelona, S.A. located in El Prat de Llobregat as stated in the Land Register for that municipal district, under
Volume 1,295, Book 655, Sheet 137, Estate No. 35,250, entry 4.
8.4. Investments covered by a guarantee. At the date of preparing these consolidated annual accounts the shares of Artenius Italia, SPA,
and Artenius Portugal, Industria de Polímeros, S.A., Industrias Químicas Asociadas LSB, S.L. (Single-Member Company), Artenius
Holding BV, Artenius UK, Limited and Artenius Turkpet Kimyevi Maddeler ve Pet Ambalat MalzemeleriSanayi Anonim Sirketi were
pledged in favour of the bank that granted the syndicated loan for 405 million euro (see Note 15.1).
8.5. Analysis of the movement during the 2005 tax year. Its breakdown and progress during the tax year closed on 31 December 2005
were the following:
(Thousands of Euros)
Movements for fi nancial year 2005
Balance at31.12.2004
Modifi cation perimeter
consolidationApplication
IFRS
IIncorporationjoint
venture (*)
TransfersBalance at31.12.2005Increases Decreases L (A)
Long-term
Holdings incom-paniesof the group excluded from theconsolidation perimeter 1 (1) - - - - - - -
Long-term stock portfolio investmen 509 - - - - - - - 509
Other loans 7,030 - - 4 156 (37) - (6,890) 263
Long-termdeposits andguarantees 38 - - 178 309 - - - 525
7,578 (1) - 182 465 (37) - (6,890) 1,297
85
Note 9. Shareholdings entered using the shareholding method.
9.1. Analysis of the movement during the tax year. Its composition and progress during the tax year closed on 31 December 2006 were
as follows:
Petrolest, S.L. The shareholdings equivalent to 49% of the share capital correspond to the fraction of net worth that represents the Group’s
shareholding in its capital. The different with regard to the valuation made of the contribution to the company’s net worth of the branch of
activity comprising the distribution, logistics, loading, unloading and transportation of the full range of products manufactured and marketed
by La Seda de Barcelona, S.A. totals 610 thousand euros and has been recorded as the higher cost of the shareholding.
Simpe, S.p.A. The shareholdings equivalent to 19% of the share capital were acquired by La Seda de Barcelona, S.A. on 22 December
2006 and are recorded for an amount corresponding to the fraction of its net worth that represents the Group’s shareholding in its capital,
with the difference concerning the value of the company’s net worth recorded as higher cost of the shareholding for an amount of 1,188
thousand euros. In this regard we must highlight the fact that the commitment to purchase the majority of share capital during the 2007
tax year was acquired as part of the purchase operation.
9.2. Analysis of the movement during the 2005 tax year. Its breakdown and progress during the tax year closed on 31 December 2005
were the following:
(Thousands of Euros)
Balance at31.12.2005
Perimeteradditions
Balance at31.12.2006Increases Decreases
Petrolest, S.L. 2,794 - 45 - 2,839
Simpe, S.p.A - 7,030 - - 7,030
2,794 7,030 45 - 9,869
(Thousands of Euros)
Balance at31.12.2004
Balance at31.12.2005Increases
Petrolest, S.L. 2,777 17 2,794
Note 10. Inventories
The breakdown at 31 December 2006 was the following:
(Thousands of Euros)
31.12.2006 31.12.2005
Goods - 209
Raw materials and other procurement 36,007 10,885
Spare parts 14,073 2,655
Work in progress 10,622 6,091
Finished products 48,279 42,131
Supplier advances 3,213 -
Others 2,001 -
Provision for depreciation (833) (227)
113,362 61,744
86
(Thousands of Euros)
31.12.2006 31.12.2005
Opening balance (227) (222)
Additions to the perimeter of consolidation (8,136) -
Endowment (20) (70)
Application 7,550 65
Closing balance (833) (227)
No stock items appear in the enclosed annual accounts on the assets side for a fi xed sum.
The movement of provision for impairment is as follows:
Note 11. Other current fi nancial assets
LThe composition of this epigraph at 31 December 2006 is as follows:
(Thousands of Euros)
Short-term taxes 1,250
Deposits and guarantees 21,000
Other loans 1,286
23,536
he breakdown by companies at year-end is as follows:
Company (Thousands of Euros)
Industrias Químicas Asociadas LSB, S.L.U. 1,229
La Seda de Barcelona, S.A. 21,022
Artenius Portugal, Industria de Polimeros, S.A. 1,285
23,536
Note 12. Other current assets
The balance of this heading corresponds mainly to the debt pending offsetting with Public Bodies. The breakdown by Company at year-end
is as follows:
Company (Thousands of Euros)
La Seda de Barcelona, S.A. 5,894
Industrias Químicas Asociadas LSB, S.L.U. 1,238
Artenius Turkpet Kimyevi Maddeler ve Pet Ambalat MalzemeleriSanayi Anonim Sirketi 11,605
Artenius Portugal, Industria de Polimeros, S.A. 1,676
Artenius Romania, SRL 994
Other companies 923
22,330
87
Note 13. Net worth
13.1. Capital social. On 27 June 2003, the Annual General Meeting of Shareholders of La Seda de Barcelona, S.A. authorised the
Company’s Board so that within a term of one year it could carry out a share capital increase of up to a maximum of 30,050,600 euros by
means of the issue and sale of 10,000,000 new common shares, with an individual face value of 3.005060 euros.
On 1 April 2004, the Board of Directors, using the authorisation granted by the AGM, agreed to increase the full corporate share capital by
27,700,643.08 euros, by means of the issue and sale of 9,218,000 shares issued at par, with an individual face value of 3.005060 euros,
with a share in the company profi ts as from 1 January 2004. This share increase was subscribed by means of a cash outlay of 1.63 euros
per share that was supported by 1.37506 euros per share charged to the freely available reserves, and with the award to the shareholders
of a preferential subscription right in a proportion of ten new shares for every thirty-seven old shares (10 for 37).
Once both subscription periods ended, on 16 July and 26 July 2004, the whole of the share increase was covered, with a fi gure for
the subscribed share capital of 27,700,643.08 euros, divided into 9,218,000 shares with an individual face value 3,005,060 euros,
by means of a cash outlay from the shareholders of 15,025,340.00 euros plus 12,675,303.08 euros charged to the Company’s freely
available reserves.
On 27 June 2005, the Ordinary and Extraordinary General Meeting of Shareholders unanimously approved, passed by the present and
represented shareholders with voting rights, a reduction in the share capital for a sum total of 87,107,802.50 euros by means of the
reduction of the face value of each one of the shares that make up the Company share capital and which was fi nally set at 1.00 euro
per share, with the pertinent restricted reserve being set aside for this purpose in accordance with Article 167.3. of the Revised Text
of the Public Limited Companies Act.
According to the decision passed unanimously by the Ordinary and Extraordinary General Meeting of Shareholders held on 21 October
2005 and the agreement for implementation passed on that same day by the Board of Directors, the increase of the share capital for
La Seda de Barcelona, S.A. was passed for a sum total of 72,693,750.00 euros by means of the issue and distribution of 58,155,000
new common shares, each one with a face value of 1.00 euro with an issue premium of 0.25 euros per share, which will have a share
in the Company profi ts as from 1 January 2005. The preferential subscription right for the new shares in a proportion of 5 new shares
for every 7 old shares/negotiable securities is acknowledged in this share increase.
Once the fi rst subscription period ended, on 19 November 2005, the share capital increase was fully covered, with a fi gure for the
subscribed share capital of 58,155,000 euros, divided into 58,155,000 shares, each with a face value of 1.00 euro plus an issue
premium of 0.25 euros per share for an overall sum total of 14,538,750 euros, by means of a cash outlay by the shareholders of
72,693,750 euros.
On 10 February 2006, once the initial conversion period of the issue of convertible bonds agreed on 25 June 2005 by the company’s Board
of Directors had fi nalised (see Note 14), the right to convert 35,847,883 convertible bonds into shares was carried out, by dividing these
into 35,847,883 shares with an individual face value of 1.00 euro and an issue premium of 0.25 euros per share for an overall amount of
44,809,854.00 euros.
On 12 June 2006, the shareholders present or represented with the right to vote at the Ordinary and Extraordinary General Meeting of
Shareholders of the company unanimously authorised the Board of Directors to enable this body to perform a share capital increase within
a maximum period of one year for a cash sum of 418,721,946.00 euros through the issue of 279,147,964 shares with an individual face
value of 1 euro, with an issue premium of 0.5 euros per share, which will participate in company profi ts from 1 January 2006 onwards.
Once the fi rst subscription period ended, on 3 August 2006, the share capital increase was fully covered, with a fi gure for the subscribed
share capital of 279,147,964.00 euros, divided into 279,147,964 shares, each with a face value of 1.00 euro plus an issue premium of
0.5 euros per share for an overall sum total of 139,573,982.00 euros, by means of a cash outlay by the shareholders of 418,721,946.00
euros.
88
On 10 August 2006, once the initial conversion period of the issue of convertible bonds agreed on 25 June 2005 by the company’s Board
of Directors had fi nalised (see Note 14), the right to convert 320,509 convertible bonds into shares was carried out, by dividing these
into 192,569 shares with an individual face value of 1.00 euro and an issue premium of 1.08 euros per share for an overall amount of
400,543.52 euros.
The fi nal fi gure for the share capital after the share capital increase and the conversion of convertible bonds into shares stood at
416,787,398.00 euros, divided into 416,787,398 common shares, fully subscribed and paid up, each one with a face value of 1.00 euro,
belonging to the same single series and represented by means of book entries.
Holdings in the Company share capital equal to or over 3%, excluding the treasury stock (see Note 13.3), correspond to the following
breakdown:
Shareholder % Shareholding
Imatosgil Investimentos SPGS, S.A. 11,014
Liquidambar Inversiones Financieras, S.L. 5,023
Caixa Geral de Depositos, S.A. 5,002
Caixa Capital Sociedade de Capital Risco, S.A. 4,502
13.2. Issue premium. As regards this sum total, the Revised Text of the Public Limited Companies Act expressly allows the use thereof for
increasing the share capital and does not establish any restriction as regards to its availability.
13.3. Reserves.
Legal reserve. In accordance with Article 214 of the Revised Text of the Public Limited Companies Act, the said reserve must be endowed with
10% of the profi ts from the tax year, until the fund set up for the reserve reaches 20% of the paid up share capital. The legal reserve may be
used to increase the share capital to the extent that its balance exceeds 10% of the already increased share capital. Except for that purpose
and as long as it does not exceed 20% of the share capital, this reserve may only be used to offset losses and as long as there are no other
suffi cient reserves available for this purpose. At the year-end, this amount totalled 11.73 million euros.
As of 31 December 2006, the sum total for the legal reserve did not cover 20% of the share capital.
Reserves for own shares. The Company, pursuant to Article 79.3. of the Revised Text of the Public Limited Companies Act, proceeded to
endow the restricted reserve corresponding to the cost price of its own shares held by the latter.
The Company’s own shares held by the Company at the close of the tax year represent an irrelevant percentage of the total share capital
(0.31%), transferring for this purpose and at its cost price the pertinent non-restricted reserve, in accordance with Article 79.3. of the
Revised Text of the Public Limited Companies Act. The total number of own shares held directly by the Company amounts to 1,310,000
with an average cost price of 2.40 euros/share. The stock market quotation for the Company’s shares at the close of the tax year was 2.42
euros/share. At the year-end, this amount totalled 3.05 million euros.
Reserve for depreciated capital. In accordance with Article 167.3. of the Revised Text of the Public Limited Companies Act, the Company
proceeded to endow a reserve for the face value of its own shares depreciated in 1996 (6.06 million euros) and which were acquired by the
Company in the said tax year for free. During the 2005 tax year and as a result of the reduction in share capital approved by the Ordinary
and Extraordinary General Meeting of Shareholders held on 27 June 2005 (see Note 13.1), the Company, pursuant to the article mentioned
in the preceding paragraph, endowed a reserve for a sum total of 87.11 million euros as a result of the reduction in the face value of each
one of the shares that make up the Company share capital and which fi nally stood at 1.00 euro per share. At the year-end, this balance
totalled 93.17 million euros.
The endowed reserve may only be used with the same requirements as those demanded for the reduction of the share capital.
89
Reserve for assignment. As a result of the takeover by the Company of Hispano Química, S.A.U. and Viscoseda Barcelona, S.L.U. ca-
rried out on 14 December 2001, a reserve for assignment was set up for the difference between the assets and liabilities provided by the
companies that had been taken over for an amount of 14.43 million euros.
Reserve for merger. This amount is recorded as a consequence of the merger process fi led with the Business Register in the 2005 tax year
(see Note 1.a).
Reserves for initial application of IFRS. As a result of the fi rst application of the IFRS in the Group’s fi nancial statements at 1 January
2004, certain assets and liabilities appeared which are explained in the annual accounts of the previous year and the effect of which on the
net worth is acknowledged in this heading.
Reserves in companies consolidated by global integration and by the shareholding method. The breakdown for undertakings in this
heading at 31 December 2006 and 2005 is the following:
(Thousands of Euros)
Balance at31.12.2006
Balance at31.12.2005Group Companies
Industrias Químicas Asociadas LSB, S.L. 5,876 3,291
Industrias Químicas Textiles, S.A. (Sociedad Unipersonal) - 6,032
SLIR, S.A. (Sociedad Unipersonal) (173) (215)
CAR B-IQA de Tarragona, S.L. 171 11
Other companies - (1)
5,874 9,118
Associated Companies
Petrolest, S.L. 52 34
13.4. Minority interest. The balance included in this heading on the enclosed consolidated balance sheet at 31 December 2006 shows
the value of the holding of the minority shareholders in the Consolidated Companies. Moreover, the balance shown on the enclosed
profi t and loss statement under the heading “Profi ts attributed to external shareholders” represents the shareholding for these minority
shareholders.
The breakdown of the interests belonging to the external shareholders in those Subsidiary Companies that are consolidated using the global
integration method in which the ownership is shared with third parties is the following:
(Thousands of Euros)
Balance at31.12.2005
Perimeter additions
Otheradjustments
Balance at31.12.2006
Breakdown at 31 December 2006
Company
Result attributed
to minority Capital Reserves Result Total
CARB-IQA de Tarragona, S.L. 482 - (156) 2 328 312 14 2 328
ArteniusHellas, S.A. - 14,039 - - 14,039 12,061 1,978 - 14,039
482 14,039 (156) 2 14,367 12,373 1,992 2 14,367
90
Note 14. Issue of bonds and other negotiable securities
On 27 June 2005, the Company Board of Directors, using the authorisation granted by the AGM of Shareholders on the same date and pur-
suant to Article 153.1 a) of the Public Limited Companies Act, agreed to an issue of convertible securities for a sum total of 47,468,750.00
euros, by means of the issue of 37,975,000 convertible securities, each with a face value of 1.25 euros.
The conversion of the securities issued shall be carried out in the initial period at a fi xed rate of 1.25 euros, viz., a face value of 1.00 euro
plus an issue premium of 0.25 euro per share and in the ordinary periods for conversion, as well as in the exceptional ones, at a variable
rate equal to 90% of the average list price of the common shares in the Company in the 65 trading sessions prior to the date of the start
for each ordinary conversion period.
Once the initial conversion period and the fi rst period of ordinary conversion had fi nished -10 February and 10 August 2006 respectively-
the right to convert 35,847,883 and 320,509 convertible bonds into shares at an individual face value of 1.25 euros was exercised. The
valuation of the shares for the aforementioned conversion period was 1.25 and 2.08 euros, respectively (see Note 13).
The securities issued accrue a fi xed nominal interest of 5% payable half-yearly, as from the date of the outlay (11 August 2005) until the
redemption date (11 August 2010) or, where applicable, from conversion into Company shares.
This issue meets the requirements required by the IFRS in order to be considered to be “Capital instruments”. That is why the amount
corresponding to the item of liability from the component of net worth, for a value of 23 thousand euros, which represents the reasonable
value of the option incorporated by this instrument, has been differentiated from the net amount received since the issue of the bonds.
The amount shown on the balance sheet at 31 December 2006 corresponds to the current net value of the future payments that will be
generated, restated at the effective interest rate.
On the date of preparing these annual accounts, the Board of Directors of La Seda de Barcelona, S.A. has opted for early redemption of
all of the bonds existing at 31 December 2006, and which represent 4.75% of the total issued. The aforementioned redemption will take
place in August 2007, to coincide with the fi nalisation of the interest period.
Note 15. Debt fi nanced
15.1. Debts with banks. The breakdown for this heading at 31 December 2006 was the following:
(Thousands of Euros)
Credit Drawn Limit (1)
Type of transaction Short-term Long-term Granted Available
Loans 11,654 401,789 - -
Lease 1,282 2.036 - -
Credits 12,695 - 16,197 4,742
Discounted bills 2,976 - 1,650 1,170
28,607 403,825 17,847 5,912
(1) This corresponds to short-term transactions.
The amount recorded as a loan corresponds to a syndicated loan from a bank (as the sole broker) for an amount of 405 million euros, the
maximum maturity date of which is nine years, ratifi ed in a contract dated 14 June 2006. This loan is guaranteed through the pledge of
shares of group companies (see Note 8.4) and through surety from Industrias Químicas Asociadas LSB, S.L.U. (see Note 19).
91
The maturity terms for the long-term debt correspond to the following breakdown:
(Thousands of Euros)
2012 andthereafter2008 2009 2010 2011 Total
Loans 9,746 13,629 28.,249 41,719 308,446 401,789
Lease 1,341 695 - - - 2,036
The aforementioned operations are mainly pegged to the EURIBOR at one year plus a differential that ranges between 1.75%
and 2.5%.
At the close of the tax year the sum total of the fi nancial charges accrued and not due amounted to 0.14 million euros.
15.2. Other fi nancial liabilities. The breakdown for this heading at 31 December 2006 was the following:
(Thousands of Euros)
Shortterm Longterm
Postponement of debt with Public Bodies 1,358 -
Indemnities 3,922 2,908
Derivatives - 3,349
5,280 6,257
The most signifi cant aspects as regards this heading are the following:
- Deferral of debt with Public Bodies. This corresponds fully to the debt assumed as a consequence of the extinction of “La Seda de
Barcelona-Courtaulds España, Central Energética, Unión Temporal de Empresas Law 18/82, dated 26 May”, with the Tax Authorities as
a consequence of payment of the electricity tax for the 2000 to 2004 tax years.
- Derivatives. The Group has 8 interest rate hedges contracted to cover variation of cash fl ows attributed to the risk linked to interest rate va-
riations affecting the loan granted for the amount of 405 million euros (see Note 15.1), the characteristics of which are shown hereunder:
(Thousands of Euros)
Notional Value Maturity
Loan 94,574 12/11/2012
Loan 25,000 14/08/2007
Loan 95,000 30/06/2014
Loan 95,000 30/06/2015
Loan 65,000 30/06/2013
Loan 10,000 30/06/2013
Loan 5,000 30/05/2011
Loan 5,000 30/12/2010
The interest rates contracted range between 1.75% and 2.5%. The repayments of these contracts follows a straight-line method over the
period of enforceability of the same.
The amount recorded under net worth over the tax year corresponding to cash fl ow hedging totals 3.35 million euros.
92
- Indemnities. These correspond to the indemnity payments assumed by the Company as a result of the overall transfer of assets and
liabilities from Hispano Química, S.A.U. and Viscoseda Barcelona S.L.U. and from the restructuring process carried out by the Group, the
latter generated between 2000 and 2006.
The long-term maturities of the indemnities are shown hereunder:
(Thousands of Euros)
2012 andthereafter2008 2009 2010 2011 Total
Indemnities 1,766 964 55 44 79 2,908
Note 16. Provisions
The composition of this epigraph at 31 December 2006 is as follows:
(Thousands of Euros)
Provisions for pensions and similar 43,557
Other provisions 1,037
44,594
The breakdown by Company at year-end is as follows:
Company (Thousands of Euros)
Artenius Hellas, S.A. 476
Artenius Italia, S.p.A 1,228
Artenius Turkpet Kimyevi Maddeler ve Pet AmbalatMalzemeleriSanayi Anonim Sirketi 1,286
Artenius Uk, Limited 40,567
Artenius Portugal, Industria de Polimeros, S.A. 1,037
44,594
The Group accounts for post-employment benefi ts in accordance with IAS 19 Employee Benefi ts.
However, the Group operates 2 retirement schemes that cover at least 25% of its employees (including senior management). Of these
schemes, only one is a defi ned benefi t plan that relates to the employees of the UK subsidiary, Artenius UK. This plan covers 263 current
employees and is closed to new employees who are covered by a defi ned contribution scheme. The other schemes in operation are of
a defi ned contribution nature. A defi ned contribution scheme requires that the employer pays pension contributions for each employee
covered by the scheme into an individual retirement account which is used to provide pension benefi ts at retirement. However, in the case
of the defi ned benefi t retirement plan, the retirement benefi ts are based on employees’ years of service and average fi nal remuneration
and the plan is funded through a separate trustee-administered fund. A full actuarial valuation of the UK defi ned benefi t plan is undertaken
regularly by independent qualifi ed actuaries on a triennial basis and adopting the projected unit method. The last full actuarial valuation was
obtained in 2004 and the next valuation is due in July 2007. In addition to this, a full accounting valuation as at 31 December is obtained
each year under IFRS.
93
Key fi nancial assumptions relating to the Artenius UK defi ned benefi t plan
The principal weighted average rates used at 31 December were:
2006 % p.a 2005 % p.a
Discount rate 5,1 4,9
Infl ation rate 2,8 2,5
Long-term expected rate of return on plan assets 6,7 6,4
Future salary increases 3,8 4,0
Pension increases 2,5-2,8 2,5
The rates are based on market expectations by asset classes, at the beginning of the period, for returns over the entire life of the related
obligations. The assumption setting process is based on short and long-term historical analysis and investment managers’ forecasts for
equities and for bonds.
Assumptions on mortality: Defi ned benefi ts plan, United Kingdom
The Group analyses the mortality experience for the Artenius UK fund in terms of the current mortality tables applied: PMA92CO5MC and
PFA92CO5MC. These tables have been applied as of the date of acquisition of the subsidiary. Previously the tables applied were not based on
short- to medium-term projections and consequently the defi cit assumed on acquisition has been increased by 18 million euros to account for
the increase in longevity for both male and female participants.
Defi ned contribution plan: information disclosure on pensions
Amounts recognised on the Group balance sheet
31.12.2006
Total fair value of Plan assets 107,242
Present value of defi ned obligations (148,046)
Net (defi cit) of the plan (40,804)
Unrecognised actuarial gain (1,507)
Net liability/asset recognised in the Group balance sheet (40,567)
Analysis of the amounts recognised in the Group income statement
Quarter to 31.December 2006,
thousands of euros
Current service costs 609
Interest costs 1,517
Expected return on plan assets (1,546)
Total amount charged to the income statement 580
94
Changes in the fair value of the defi ned benefi t obligations for the three months ended 31 December 2006
Movements the fair value of plan assets during the year
(Thousand of euros)
As at 30 September 2006 144,670
Current service cost 609
Interest cost 1,517
Plan participants contributions 222
Actuarial (gain)/loss 1,923
Benefi ts paid from the plan (718)
Expenses paid (97)
Premiums paid (80)
Benefi t obligation at 31 December 2006 148,046
(Thousand of euros)
Fair value of plan assets at 30 September 2006 102,357
Expected return on plan assets 1,546
Actuarial gain (loss) on plan assets 3,205
Employer contributions 807
Member contributions 222
Benefi ts paid from plan/company (718)
Expenses paid (97)
Premiums paid (80)
Fair value of plan assets at 31 December 2006 107,242
Investment policies and strategies
Currently the majority of the plan assets are represented by equity investments, though the current and future asset allocations are deter-
mined by the plan trustees.
Note 17. Tax Situation
In the tax year ended on 31 December 2006, La Seda de Barcelona, S.A. and its companies in Spain owned directly or indirectly with
at least 75% of their share capital (see Note 1.b), were covered by the System for Consolidated Statements through forming part of the
Consolidated Group 236/03, with La Seda de Barcelona, S.A. being the Controlling Company.
The Companies that make up the Group covered by the said Tax System are:
- La Seda de Barcelona, S.A (which includes Catalana de Polímers, S.A.U, KD-IQA, S.L.U., Celtibérica de Finanzas, S.L.U., Mendilau,
S.L.U., Proyectos Voltak, S.L.U., Iberseda, S.L.U., taken over by means of a merger approved by the Extraordinary General Meeting of
Shareholders dated 29 December 2004 and registered on 16 June 2005 at the Business Register).
- SLIR, S.L.U.
- Industrias Químicas Asociadas LSB, S.L.U.
95
Application of the Consolidated Tax System means that the individual credits and debits for Corporation Tax are included within the Contro-
lling Company (La Seda de Barcelona, S.A.), hence the companies have to pay over to La Seda de Barcelona, S.A. the settlement for this
tax. The controlled companies not included in the said Consolidated Group pay tax individually and directly to the Tax Authorities.
All the taxable bases calculated individually for each company belonging to the Group are initially added, and corrected for the tax effect
resulting from the special consolidated consideration of the “Tax Group”.
17.1. Reconciliation of the book profi t/loss with the taxable base for Corporation Tax. The following chart shows the reconciliation bet-
ween the result of applying the general tax rate in force in Spain to the consolidated book profi t/loss calculated according to the International
Financial Reporting Standards and the charge for tax on earnings entered in the 2006 and 2005 tax years.
(Thousands of Euros)
2006 2005
Consolidated result before tax 32,768 8,799
Permanent differences (4,828) 1,615
Adjusted result 27,940 10,414
Tax rate 35% 35%
Result adjusted by tax rate 9,779 3,645
Effect of the application of different tax rates 130 80
Deductions and bonuses (14) (149)
Compensation for negative taxable bases (49) (15)
IFRS application adjustments (1,962) (772)
Adjustments to the result of the previous year - (107)
Activation of negative taxable amountsfrom previous years (7,639) -
Accrued tax 245 2,682
17.2. Deferred tax assets. The following are entered under this heading: tax credits for Corporation Tax to be offset with future taxable
bases, taxes paid in advance deriving from tax deductions pending application, as well as temporary asset differences envisaged to be
recoverable in the future and which derive from the difference between the book value for the assets and liabilities and their tax base.
The movement recorded during the tax year ended on 31 December 2006 is the following:
(Thousands of Euros)
Modifi cation perimeterConversiondifferences31.12.2005 Additions Removals Increases Decreases 31.12.2006
Group tax credits 26,509 - (3,368) 11,554 (7,716) - 26,979
Deductions pending application 779 - - 41 (48) - 772
Advance taxes 7,021 2,088 - 10,615 (77) 3 19,650
34,309 2,088 (3,368) 22,210 (7,841) 3 47,401
96
The removals from the perimeter of consolidation correspond to the activation of taxable bases corresponding to the company Industrias
Quimicas Textiles, S.A. (see Note 1, section c).
The restructuring of the Seda Group targeted at PET production and distribution, as well as the international projection achieved through
the purchase of stakes in non-resident companies, leads us to forecast that tax profi ts will be obtained that will enable us to offset the ne-
gative tax bases of previous years that have not as yet been activated, and to do so over the next 10 years. To this end, the Company has
recorded the corresponding activation of the aforementioned bases for an amount of 11,554 thousand euros in 2006. The negative taxable
bases have been activated with the tax rate forecasts for the year-ends from 2008 onwards applicable to each company.
The different companies with registered offi ces in Spain have proceeded to enter the variation of the taxable rate into their books, adjusting
the amount of the advanced taxes and deferred taxes, as well as the credits of the activated taxable bases (see impact in Note 4,
section ñ).
The breakdown at 31 December 2006 is as follows:
(Thousands of Euros)
31.12.2006 31.12.2005
Group tax credits 26,979 26,509
Deductions amd bonuses pending application 772 779
Application IFRS 9,565 6,956
- Preliminary expenses 8,284 1,890
- Tangible fi xed assets 507 1,190
- Expenses to be deferred
- Accounts receivable and others
751 918
23 2,958
Others 10,085 65
47,401 34,309
The breakdown and movements recorded during the tax year ended on 31 December 2005 are the following:
(Thousands of Euros)
Balance at 31.12.2004
Temporary asset
differencesJoint
venture
Tax credit to be compensated
generatedin period
Tax credit to be compensated
applied in periodBalance at31.12.2005
Tax credit for losses to becompensated 25,920 - - 1,323 (734) 26,509
Advance tax 10,531 (3,575) 65 - - 7,021
Deductions pendingapplication 760 - - 19 - 779
Total 37,211 (3,575) 65 1,342 (734) 34,309
The breakdown of the additions to the perimeter by companies is as follows:
Company (Thousands of Euros)
Artenius Hellas, S.A. 947
Artenius Italia, S.p.A. 1,141
2,088
97
17.3. Liabilities for deferred taxes. The temporary differences of liabilities that are scheduled to be recovered in the future and which stem
from the difference between the book value of the assets and liabilities and their tax base are recorded under this heading.
The breakdown at 31 December 2006 is as follows:
(Thousands of Euros)
31.12.2006 31.12.2005
For intra-group transactions 671 973
Accelerated amortisation 2,232 17
Application IFRS 13,030 19,495
- Land update
- Debt update
- Lease-back application
12,811 19,382
143 88
76 25
Exemption for reinvestment - 10
Others 7,518 -
23,451 20,495
17.4. As set forth by the legislation in force, taxes cannot be deemed to have been fi nally settled until the declarations presented have been
inspected by the Tax Authorities, or the statute-barred period has elapsed.
In 2006, the Tax Department fi nished the inspection notifi ed on 22 June 2005 with regard to the company Catalana de Polímers, S.A.U.,
which had been taken over.
In relation to the tax years that are open to inspection, the Company Administrators do not expect, in the event of an inspection, any extra
sizeable liabilities to arise.
17.5. The negative taxable bases and the allowances that correspond to the companies that belong to the Spanish Tax Group and to the
rest of the group, pending tax offsetting, are listed hereunder:
Negative taxable amounts corresponding to the Spanish tax group.
Company Year of generation Year of prescription Thousands of Euros
La Seda de Barcelona, S.A. 1992 2007 2,352
1993 2008 7,162
1996 2011 9,352
1997 2012 17,188
1998 2013 15,167
1999 2014 19,632
2000 2015 3,674
2001 2016 1,530
2002 2017 15
2003 2018 1
Industrias Químicas Asociadas LSB, S.L.(Single-member Company) 2003 2018 216
SLIR, S.L. (Single-member Company) 1995 2010 158
1996 2011 472
1997 2012 396
1998 2013 520
1999 2014 61
2000 2015 550
2001 2016 569
98
Company Year of generation Year of prescription Thousands of Euros
Artenius Turkpet Kimyevi Maddeler ve PetAmbalat MalzemeleriSanayi Anonim Sirketi 2006 2011 11.659
Artenius Uk, Limited 2000 Indefi nite 109
2001 Indefi nite 51,141
2002 Indefi nite 5,762
2006 Indefi nite 32,908
Artenius Romania, SRL 2005 2010 167
2006 2011 217
Artenius Italia, S.p.A 2006 2011 6,478
2004 2009 3,526
Company Year of generation Year of prescription Thousands of Euros
La Seda de Barcelona, S.A. 1997 2007/08 128
1998 2008/09 158
1999 2009/10 305
2000 2010/11 22
2001 2011/12 51
2002 2012/13 29
2003 2013/14 9
2004 2014/15 8
2005 2015/16 18
2006 2016/17 7
Industrias Químicas Asociadas LSB, S.L. 1997 2007/2008 7
(Single-member Company) 2000 2010/2011 26
2003 2013/2014 0
2004 2014/2015 0
2005 2015/2016 2
2006 2016/2017 2
SLIR, S.L. (Single-member Company) 1998 2008 2
2001 2011 16
Negative taxable amounts corresponding to the rest of the group.
Deductions pending application.
99
17.6. According to the merger deed registered at the Business Register on 16 June 2005 (see Note 1.a), the companies involved in the
merger recorded their intent to be covered by the system of tax neutrality envisaged in Chapter VIII, under Heading VII, of Legislative Royal
Decree 4/2004 of 5 March, whereby the Revised Text of the Corporation Tax Act was passed.
The breakdown by purchase date of the assets transferred that are liable to be amortised that have been included in the accounts for the
Controlling Company is the following:
Purchase Dates
Preliminary expenses 2000 - 2001
Research & development expenses 2000, 2001 and 2003
Concessions, patents and licences 2002
Computer applications 2001 and 2003
Buildings 1961 - 2003
Technical plant and machinery 1987 - 2003
Other plant, tools and fi ttings 1987 - 2001
Other fi xed assets 1996 - 2003
The latest fi nalised balance sheets corresponding to the companies transferring their assets which take part in the merger process descri-
bed in Note 1 are the following:
(*) Single-member Company
Catalana de Polímers,S.A. (*)
Celtiberica de Finanzas,S.L. (*)
Proyectos Voltak,S.L. (*)
Mendilau,S.L. (*)
KD-IQA,S.L. (*)
Iberseda,S.L. (*)
(Thousands of Euros)
(Thousands of Euros)
(Thousands of Euros)
(Thousands of Euros))
(Thousands of Euros)
(Thousands of Euros)
Assets
Fixed
Start-up costs 1,238 - - - - -
Net intangible fi xed assets 6,907 - - - 694 -
Net tangible fi xed assets 92,002 - - - 3,111 -
Net investments 5,180 7,266 6,606 2,117 - -
Deferred charges 6,922 - - - - -
Current
Inventories 20,308 - - - 679 -
Debtors 91,944 - - - 2,608 3
Investments temporary 1,691 - - - - 1
Cash 203 - - - 7 6
End-of-period adjustments 482 - - - - -
226,877 7,266 6,606 2,117 7,099 10
Liabilities
Non-requirable liabilities 56,851 58 24 712 2,292 (22)
Provisions for risks and expenses - - - - - -
Long-term requirable liabilities 34,036 7,208 6,581 1,405 - -
Short-term requirable liabilities 135,990 - 1 - 4,807 32
226,877 7,266 6,606 2,117 7,099 10
100
The purchasing Company, as a result of the merger process described in Note 1 above, has included in its assets, for the sum total of
57,000 euros, the tax gains from the Company taken over called Catalana de Polímers, S.A.U., corresponding to the deductions and
allowances pending application.
Note 18. Other current and non-current liabilities
At the close of the tax year, its breakdown was the following:
(Thousands of Euros)
Short-term Long-term
Current debt with Public Bodies 5,737 -
Wages for staff pending payment 3,331 -
Suppliers of fi xed assets 4,335 58
End-of-period adjustments - 9,608
Purchase of shares Grupo Advansa 20,000 -
Purchase of shares Simpe, S.p.A. 6,000 -
Loan Industrias Químicas Textiles, S.A. 2,966 -
Others 4,298 1,352
46,667 11,018
The Prepayments and accrued income heading mainly includes amounts that correspond to subsidies, broken down hereunder:
The loan to Industrias Químicas Textiles, S.A. corresponds to the resulting balance of the settlement of payables and receivables that exist
between both companies prior to the sale of the stakes in Industrias Químicas Textiles, S.A. by La Seda de Barcelona, S.A.
Note 19. Guarantees arranged with third parties
As regards this point and in addition to that already stated in Notes 5.4 and 8.4, at 31 December 2006 the Controlling Company had gua-
rantees arranged with third parties amounting to 7.31 and 3.58 million euros, respectively.
La Seda de Barcelona, S.A. has also received a bond from Industrias Químicas Asociadas LSB, S.L.U. for an amount of 405 million euros
(see Note 15.1) and has received guarantees from banks for an amount of 24.12 million euros.
(Thousands of Euros)
Subsidies for gas emissions 1,919
Subsidies granted to Artenius UK Limited 3,338
Subsidies granted to Artenius Hellas, S.A. 4,301
9,608
101
The guarantees arranged with third parties corresponding to the remaining group companies are detailed here under:
Company (Thousands of Euros)
Artenius Portugal, Industria de Polimeros, S.A. 4,415
Artenius Uk, Limited 1,989
Artenius Turkpet Kimyevi Maddeler ve Pet Ambalat MalzemeleriSanayi Anonim Sirketi 204
SLIR, S.L. (Single-member Companyl) 6
6,614
Note 20. Sales
Its breakdown at the close of the tax year was the following:
(Thousands of Euros)
2006 2005
Sales of Polymers 478,864 139,498
Preform sales 12,028 -
PTA sales 80,695 -
Sales of chemical products 65,371 51,611
Sales of Fibres - 50,682
Other sales and services 7,606 14,185
644,564 255,976
Note 21. Operating expenses 21.1. Procurement. Its breakdown at the close of the tax year was the following:
21.2. Personnel. Its breakdown at 31 December 2006 was the following:
(Thousands of Euros)
Purchase of raw materials and other consumable materials 496,434
Change in stocks (5,088)
491,346
(Miles de Euros)
Wages and salaries 26,905
Social security contributions 7,154
Indemnities 5,715
Contributions to complementary pensions systems 309
Other social expenses 2,180
42,263
102
The number of persons employed at 31 December 2006, as well as the average number of persons employed during the year and allocated
by professional categories is as follows:
Categories Average number
of employeesEmployees at
31.12.06
Management staff and intermediate 94 236
Technical and administrative workers 199 276
Manufacturing staff 512 657
805 1,169
The results of operations interrupted in 2006 corresponds to the company Industrias Químicas Textiles, S.A. and to the branch of activity
made up of the assets and liabilities corresponding to the manufacture of polyester fi bres of the El Prat de Llobregat plant and which were
split and subsequently provided to the company Fibracat Europa, S.L. (See Note 1.c).
At 31 December 2005, the Group did not have any results from discontinued operations.
Note 23. Transactions in currencies other than the euro
he volume of transactions in currencies other than the euro, basically for sales and purchases, amounts to 29.99 million euros and 33.62
million euros, respectively, with their breakdown being the following:
Note 22. Discontinued activities The result of operations defi nitively interrupted that have been included in the consolidated balance sheet are shown hereunder:
(Thousands of Euros)31.12.06
Revenues 37,421
Expenses (60,209)
Net result attributable to discontinued operations (22,788)
Results of disposal of discontinued operations (6,777)
Discontinued operations (29,565)
(Thousands of Euros)
Sales Purchases
Swiss Franc - 17
Pound Sterling 797 487
US Dollar 29,196 33,112
29,993 33,616
103
(Thousands of Euros)
Accounts receivable Accounts payable
Swiss Franc - 49
Pound Sterling 160 -
US Dollar 8,167 16,015
8,327 16,064
In this item, the trade payables and receivables in currencies other than the euro at 31 December 2006 amounted to 8.33 million euros
and 16.06 million euros, and their breakdown into currencies was the following:
Note 24. Transactions carried out with associated companies
December 2006, the transactions carried out with Petrolest, S.L. by way of services provided and received by the said Company to the Group
amounted to 7.2 million euros and 0.04 million euros, respectively, with 0.03 million euros by way of fi nancial income.
Note 25. Balances and transactions with affi liated companies
At 31 December 2006, the Group had trade payables and trade receivables with companies of the Imatos Group for amounts of 13.15 and
2.68 million euros, respectively. In this regard, the transactions carried out as purchases, sales, services rendered and received totalled
1.17, 2.58, 1.41 and 3.93 million euros, respectively.
Note 26. Business and geographical segments
In accordance with directives from Group Management and internal reports, the information by segments is presented by business activity
and geographical zone:
26.1. Main business segments. The business lines described below were set up according to the Group’s organisational structure in force
at the close of the 2006 tax year, bearing in mind the nature of the products and services offered.
104
(Thousands of euros)
Polymers Preforms PTA
2006 2005 2006 2005 2006 2005
Net turnover 483,755 199,948 9,879 - 80,695 -
Net turnover - inter-segments 12,386 4,100 169 - 40,078 -
Other income 25,840 9,647 247 - 5,036 -
Variation in stocks of fi nished products and work-in-progress 1,789 25,681 (206) - (12,185) -
Procurement (405.842) (145,420) (8,777) - (94.281) -
Staff expenses (28,203) (26,685) (405) - (3,786) -
Allocation to depreciation (15,982) (11,165) (1,165) - (2,760) -
Other expenses (49,052) (37,761) (1,132) - (19,134) -
Operating profi t (loss) 24,691 18,345 (1,390) - (6,337) -
Financial income 6,080 555 172 - 651 -
Financial charges (21,129) (12,026) 29 - (419) -
Gain/loss on exchange difference (32) 49 127 - (906) -
Income (loss) fromfi nancial instruments 35 2 - - - -
Income (loss) fromnon-fi nancial assets - - - - - -
Asset impairment charges 2,275 (58) (19) - 7,581 -
Share of associated companies’profi t/losses - - - - - -
Gain (loss)on disposal offi xed assets 13,284 144 - - - -
Other income or losses - (994) - - - -
Profi t (loss) after tax from discontinued fromongoing activities 25,204 6,017 (1,081) - 570 -
Income tax cost 818 (1,938) 322 - - -
Profi t (loss) after tax from discontinuedoperations 26,022 4,079 (759) - 570 -
Profi t (loss) after tax from discontinuedoperations (29,565) - - - - -
Profi t (loss) from the fi nancial year (3,543) 4,079 (759) - 570 -
Minority interest - - - - - -
Profi t (loss) attributable toParent Company’sShareholders (3,543) 4,079 (759) - 570 -
BALANCE
Assets 1,032,103 487,017 46,069 - 225,978 -
Non-current 587,695 210,174 27,032 - 126,396 -
Current 444,408 276,843 19,037 - 99,582 -
Liabilities 1,032,103 487,017 46,069 - 225,978 -
Shareholders’ equity 461,081 200,778 38,786 - 142,513 -
Non-current 383,285 157,063 250 - 39,242 -
Current 187,737 129,176 7,033 - 44,223 -
105
(Thousands of euros )
Chemical Others Total
2006 2005 2006 2005 2006 2005
Net turnover 65,369 52,416 4,866 3,612 644,564 255,976
Net turnover - inter-segments 28,423 19,230 (81,056) (23.330) - -
Other income 5,781 2,659 80 1,600 36,984 13,906
Variation in stocks of fi nished products and work-in-progress 1,101 42 361 400 (9,140) 26,123
Procurement (56,318) (37,588) 73,872 14,613 (491,346) (168,395)
Staff expenses (7,839) (7,553) (2,030) (412) (42,263) (34,650)
Allocation to depreciation (5,121) (4,303) (194) (98) (25,222) (15,566)
Other expenses (24,296) (20,995) 8,671 4,941 (84,943) (53,815)
Operating profi t (loss) 7,100 3,908 4,570 1,326 28,634 23,579
Financial income 73 1 (4,190) 4 2.786 560
Financial charges (2,785) (2,353) 4,108 (22) (20,196) (14,401)
Gain/loss on exchange difference 18 (98) - - (793) (49)
Income (loss) fromfi nancial instruments - - - - 35 2
Income (loss) fromnon-fi nancial assets - - - - - -
Asset impairment charges (229) - - - 9,608 (58)
Share of associated companies’profi t/losses - - 45 17 45 17
Gain (loss) on disposal offi xed assets (634) - (1) - 12,649 144
Other income or losses - (1) - - - (995)
Profi t (loss) after tax from discontinued fromongoing activities 3,543 1,457 4,532 1,325 32,768 8,799
Income tax cost (1,223) (583) (162) (161) (245) (2,682)
Profi t (loss)from ongoing activities 2,320 874 4,370 1,164 32,523 6,117
Profi t (loss) after tax from discontinuedoperations - - - - (29,565) -
Profi t (loss) from the fi nancial year 2,320 874 4,370 1,164 2,958 6,117
Minority interest - - (2) (2) (2) (2)
Profi t (loss) attributable toParent Company’sShareholders 2,320 874 4,368 1,62 2,956 6,115
BALANCE
Assets 125,361 135,143 31,463 (60,788) 1,460,974 561,372
No corrientes 89,893 84.697 24,256 5,831 855,272 300,702
Corrientes 35,468 50,446 7,207 (66,619) 605,702 260,670
Liabilities 125,361 135,143 31,463 (60,788) 1,460,974 561,372
Shareholders’ equity 40,973 47,533 7,305 6,385 690,658 254,696
Non-current 53,564 30.387 14,890 259 491,231 187,709
Current 30,824 57,223 9,268 (67,432) 279,085 118,967
106
26.2. Secondary geographical segments. The group sales are carried out basically with countries that belong to the European Union and
other European countries. The following chart shows the breakdown of the turnover for the Group by the type of product, in accordance
with the geographical distribution in which its activities are carried out.
(Thousands of Euros)
OthercountriesDomestic Europe Total
PET 130,360 311,004 37,500 478,864
Preform - 382 9,497 9,879
PTA - 76,583 4,112 80,695
Chemicals 52,170 12,821 379 65,370
Fibre 1,838 - - 1.838
Others 6,424 1,785 (291) 7,918
190,792 402,575 51,197 644,564
The assets of the Seda Group are located in seven countries.
Note 27. Per-share profi t
Basic per-share profi t is calculated by dividing the net profi t (attributable to the Group) by the average weighted number of shares in circu-
lation during the period, excluding the average number of common shares purchased and kept by the Group.
The calculation of the basic per-share profi t for the 2006 and 2005 tax years is as follows:
Financial year
2006 2005
Net profi t, in thousands of euros 2,956 6,115
Number of weighted average shares in circulation 259,348,915 52,302,647
Profi t per share 0,01 0,12
The diluted per-share profi t is calculated by taking the total of fi nancial instruments that grant access to the share capital of the parent
company, both if they were issued by the company itself or by any of its subsidiaries. The dilution is calculated, instrument by instrument,
bearing in mind the conditions present on the date of the balance sheet, excluding the instruments for preventing dilution.
The calculation of the diluted per-share profi t for the 2006 and 2005 tax years is as follows:
Financial year
2006 2005
Net profi t, in thousands of euros 3,189 6,828
Number of weighted average shares in circulation 265,377,211 67,180,523
Profi t per share 0,01 0,10
107
Note 28. Subsequent occurrences
On 6 February 2007 the company, together with Bionor Transformación, S.A. a subsidiary of Cie Automotive, S.A., incorporated Bio-
combustibles La Seda, S.L. for the purpose of developing biodiesel plants at the different industrial locations of the Seda Group. The new
company has been incorporated with a share capital of 3 million euros and 60% is held by La Seda de Barcelona, S.A.
Following the strategy defi ned by the Group, on 20 February 2007 the Company reached an agreement to purchase Eastman Chemical
Iberia, S.A. for 50 million euros, including working capital. The operation is pending approval by the fair trading commission. With this
purchase the Company will increase its PET production capacity by 175,000 tonnes.
As a consequence of the Group’s structural reorganisation procedure, La Seda de Barcelona, S.A. has focused the PET activity under the
ARTENIUS brand, which has led to an amendment of the trading name of the different subsidiaries in order to adapt to the aforementioned
brand (see Note 1.c).
On 6 March 2007 and for the purpose of closing the PET production process, the company reached an agreement to purchase 60% of the
PET recycling company Recuperaciones de Plásticos Barcelona for an amount of 2.6 million euros, and the agreement to subscribe to the
full amount of a capital increase of 1 million euros in order to raise its stake to 67.4%.
Note 29. Environment
During the 2006 tax year, so as to apply the long-term strategy defi ned by the Group, it continued to make investments in fi xed assets
earmarked for protecting the environment, the sum total of which amounts to 3,704 euros.
The current expenses supported by the Company during the present tax year amount to 3,515 thousand euros. This includes the expenses
for transportation and external management of the waste, as well as those associated with the operation of the chemical waste plant.
The distribution of investments made and the common expenses paid by the different group companies this year is as follows:
(Thousands of Euros)
Costs Investments
Romania 6 -
UK 2,344 3,592
Italy 611 -
LSB 196 1
IQA 352 111
3,509 3,704
(Thousands of Euros)
Wages and salaries 325
Expense allowances for attending board meetings 242
567
Note 30. Other Information
Payments and other benefi ts for the Administrators. During the tax year ended on 31 December 2006 the payments received by the
members of the Controlling Company’s Board of Directors corresponded to the following breakdown:
108
There were no credits, advances, loans or securities contracted in terms of pensions with regards to the Board of Directors.
In relation to the information demanded by new Article 127, indent three, 4 of the Public Limited Companies Act, the shareholdings and
posts and/or functions that Company Directors hold and/or exercise in other companies with the same, similar or complementary kind of
activity that represents the Company’s corporate purpose are the following:
- Mr Rafael Español Navarro carries out the post of sole administrator at Artenius Italia S.p.A., in representation of La Seda de Bar-celona, S.A. at Artenius Portugal, Industria de Polímeros, S.A., Artenius UK Limited, Artenius Holding, B.V. and Artenius Sines, S.A., joint administrator at CARB-IQA de Tarragona, S.L., chairman and joint administrator at Artenius Hellas Holding, S.A., director
of DOGI, S.A., Endesa Internacional, S.L. and Enersis, S.L. adviser at FECSA-Endesa at the date of preparing their respective annual
accounts.
- Mr Ramon Pascual Fontana holds the post of director at Petrolest, S.L. on the date of drawing up its annual accounts.
- The Company called Ibersuizas Alfa, S.L., fully owned by Ibersuizas Participadas, S.A., holds the post of Director in the fi rm called
Selenis, SGPS, S.A.
Note 31. Fee for the auditors
The payment to the accounts auditors for carrying out the audit of the 2006 individual and consolidated annual accounts to 31 December
2006 totals 139.37 thousand euros.
The fee paid to the accounts auditor for other services rendered in 2006 totalled 150 thousand euros.
Note 32. Information on the companies included within the consolidation
The main impact on the balance sheet relating to the acquisition of subsidiary companies is summarised below:
(Thousands of Euros)
ArteniusPortugal, Industria de Polimeros, S.A.
Artenius Italia, S.p.A.
Artenius Uk, Limited
Artenius Turkpet Kimyevi Maddeler
ve Pet Ambalat Malzemeleri Sanayi
Anonim Sirketi
Artenius Hellas, S.A. (Subgroup) Other
Non-current assets 30,725 86,232 147,449 40,624 36,161 3,037
Current fi nancial investmentsand cashand other equivalentliquid assets 5,033 9,268 2,312 1,336 1,158 6,516
Other current assets 33,196 49,651 164,586 45,382 32,654 6,040
Current and non-current liabilities (64,533) (119,499) (156,177) (13,394) (41,315) (9,904)
Minority Interests - - - - (14,039) -
Reasonable value of net assets acquired 4,421 25,652 158,170 73,948 14,619 5,689
Goodwill 18,193 33,050 52,260 10,572 3,931 -
Consideration in cash 22,614 58,702 210,430 84,520 18,550 5,689
Consideration - other - - - - - -
Total consideration 22,614 58,702 210,430 84,520 18,550 5,689
The acquired companies involved an increase in the turnover of Euros 378.5 million and a net loss attributable to the controlling company
of Euros 7.4 million. If the acquisitions had taken place on January 1, 2006 and the perimeter of the consolidation had been that existing
as at December 31, 2006, the amount of the increase in the turnover involved and on the net profi t of the controlling company would have
been approximately Euros 1,144 and 1.1 million, respectively.
109
Consolidated management report at 31 December 2006
In compliance with that set forth in Article 171 of the Revised Text of the Public Limited Companies Act, the present management report for
the Company is drawn up in relation to the corporate tax year closed on 31 December 2006, including the matters required in Article 202
of the said legal corpus, as modifi ed by Article 107 of Act 62/2003 on Measures of a Tax, Administrative and Social nature.
1. Progress of the business and the Company’s situation. The progress of the Company’s activities during the 2006 tax year was the
following:
One of the objectives of La Seda de Barcelona, S.A. in 2006 was to increase its size through an Acquisitions Programme that has made
the group the biggest PET and PTA producer in Western Europe, with an installed capacity of 800,000 tonnes and 670,000 tonnes, res-
pectively. As a consequence of this acquisitions plan La Seda de Barcelona is present in Spain, Portugal, Italy, Greece, Turkey, Romania
and the UK. These strategic purchases lead to La Seda de Barcelona, S.A. being ranked top PET producer, at the same time as increasing
the global coverage of our clients.
Two large fi nancial operations also took place in 2006:
1) Capital increase of 418 million euros, the second-largest operation on the Spanish stock exchange in the last two years.
2) Syndicated loan of 405 million euros from Deutsche Bank, which has strengthened the fi nancial structure of the company to ensure
it remains solvent during its expansion and growth stage.
Investment activity.
In the 2006 tax year La Seda de Barcelona, S.A. made the following purchases that have increased the installed capacity of the group to
a yearly total of 800,000 tonnes:
- 100% of Artenius Portugal, Industria de Polímeros, S.A., a factory located in Portalegre (Portugal) with annual production capacity
of 70,000 tonnes of PET.
- 100% of Artenius Italia, S.p.A, two factories located in Udine (Italy) with annual production capacity of 200,000 tonnes of PET.
- 51% of Artenius Hellas, S.A., the sole producer of PET in the Balkans and located in Volos (Greece) with a strategic location that
enables access to Europe, the Balkans, the Middle East and the Euro-Asian markets. Production capacity in 2006 was an annual 80,000
tonnes of PET.
PET
Preform
PTA
Ethylene Oxide
Glycol and its derivatives
Fibr
Chemical
Aggregated sales %in euros
Sales % in tonnes 2006
Fibr2,08%
PET69,41%
Preform3,29%
PTA13,04%
Chemical12,19%
Gycol y derivado14,03%
Fibr1,49%
PET61,15%
Preform2,89%
PTA19,62%
EthyleneOxide6,36%
110
- 100% of Artenius UK Limited, located in Wilton and comprising three production plants: two producing PTA and one producing PET.
The production capacity of PTA is 670,000 tonnes a year and the production capacity of PET is 150,000 tonnes a year.
- 100% of Artenius Turkpet Kimyevi Maddeler ve Pet Ambalat MalzemeleriSanayi Anonim Sirketi, located in Adana and which pro-
duces PET and Preforms. The PET production capacity is 130,000 tonnes a year.
- 100% of Artenius Romania, SRL, located in Bucharest and which produces preforms. The preforms production capacity is 10,000
tonnes a year.
The Group has likewise made the following investments during the 2006 tax year:
• Building work started on a 7.5 Mwh polygeneration plant in El Prat de Llobregat (Barcelona), which will enable energy savings of around
35%. This facility will come into operation during the fi rst quarter of 2008 and will represent an investment of 8 million euros.
• The fi rst quarter of 2006 also saw fi nalisation of the investment in a post condensation unit at the factory in St Giorgio (Italy) which has
increased capacity by 35,000 tonnes/year, as well as achieving a reduction of energy and maintenance costs. This investment totalled
9.2 million euros has been complemented with different actions to enhance quality and security totalling an outlay of 570,000 euros. The
erection of new silos at the Italian plant has entailed an investment of 900,000 euros
• An investment in a second preforms injection machine at the Volos-VPI plant (Greece) has been made for an amount of 950,000 euros,
representing an increased capacity of 3,000 tonnes/year. The safety and oil heating systems have also been improved through an additional
outlay of 630,000 euros.
• At the Wilton plant (UK), there were investments in 2006 for an amount of 6.5 million euros that will fi nalise in 2007. These investments
are framed within the reduction of environmental impact policy which reduces dumping of sewage.
• Multiple actions of small individual amounts have taken place at the IQA plant in Tarragona, which jointly represent an investment in
excess of 5 million euros. These investments have entailed increased productivity, safety and equipment renewal.
Progress of the PET Market
PET is the Seda Group’s main industrial project. It is a product with strong accumulated growth and a great potential for development.
During the 2006 tax year, the PET market continued its ongoing growth of the last few years, with an annual average rate close to 10%.
This percentage may rise in the short-term with the defi nitive implementation of the PET pack on the market for fruit juices, milk products
and beer.
Expectations for the coming years indicate that PET will carry on with its rate of expansion. Its exceptional characteristics and properties
have turned this polymer into one of the most versatile plastics in the world with multiple and varied applications, both novel ones and those
replacing other materials.
111
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006E 2007E
PROGRESS OF WORLDWIDE-EUROPEAN CONSUMPTION OF PET POLYMERS
14.000
12.000
10.000
8.000
6.000
4.000
2.000
0
Thou
sand
s of
ton
nes
/ yea
r
2.8993.262
4.0064.800
6.0356.769
7.639
8.463
9.548
10.58411.291
12.146
13.064
791 864 1.097 1.2541.840
2.089 2.288 2.5002.986 3.173 3.309 3.535 3.817
European Consumption
Worldwide Consumption
The technological advances achieved in the manufacturing processes, as well as in the materials used in the sector for containers and
packaging, have allowed the exceptional properties of the PET polymer to be very widely assessed, and it is now gaining ground as an
essential raw material in the sector.
The use of PET has been consolidated on the market for mineral waters, gassy drinks and oils and it is very quickly gaining ground in new
applications in the sectors for foodstuffs, cleaning products, cosmetics and pharmaceuticals, as well as in applications for industry and
engineering.
Research & development activities. In 2006 the Seda Group focused its R&D&i efforts on analysis of different technologies and production
processes to which it has had access through the aforementioned acquisitions, for the purpose of extending this know-how to all production
plants and to set up the best practices of each of these at the remaining subsidiaries. This has been in detriment to the performance of
other projects.
2. Risk factors. Any activity is subject to risks, not just external ones but also those that are inherent to the activity itself. Economic activities
are no exception and competent management requires that the risks that might affect a company’s business not just in the short term but
also in the long term should be identifi ed, measured and assessed.
The Company’s top management is in charge of carrying out ongoing monitoring so as to identify, assess and prioritise current and potential
risks and take the pertinent measures to counteract as far as possible the threats to the business that might arise from the risks that are
identifi ed.
The main fi nancial risks are listed below and the measures taken by the Company’s management for dealing with them:
Interest rate risk
La Seda de Barcelona, S.A. uses hedge instruments to cover this risk. The derivatives held by the group correspond mainly to interest rate
hedge operations and ensure the existing borrowing at a defi ned rate of interest. For bookkeeping purposes these are processed as cash
fl ow hedges in so far as they correspond to cash fl ow hedges that are attributable to a specifi c risk linked to a liability previously recognised,
viz., the syndicated loan granted for an amount of 405 million euros.
Risk in the management of raw materials:
he Group’s main risk in the management of the raw materials is the change in the price of PX that comes from Xylene. This product
comes under the aromatics cut (BTX), with the composition of the latter being Benzene, Toluene and Xylene.
These three components are also used for manufacturing derivatives of gasolines with the aim of cheapening their cost. Due to the rise
in the price of oil, there is a rise in demand for Benzene, Toluene and Xylene from the fuel manufacturers.
112
One of the derivatives of Xylene, commonly known as paraxylene, is the base for obtaining PTA and its price ranges according to the
supply and demand for Xylene on the international market, which is closely linked to the price of fuel.
The price of the PTA, therefore, will depend on the end use that the producers of aromatic cuts decide for Benzene, Toluene
and Xylene.
There is no system for covering specifi c risks in this market segment.
Market risk:
During the 2006 tax year a new competitor on the international PET market was discovered in Lithuania, which caused a drop in prices
on the latter.
As of the date of the close of the tax year, no project was known to be underway for building new plants for PET by any possible competitors.
The risk of new competitors appearing in the next few years is mitigated by the need for a minimum of 2 years and a high fi nancial cost for
building new plants for manufacturing PET, apart from obtaining the pertinent permits related to the environment.
In addition to the foregoing we must add the increase of forecast demand.
Exchange rate risk:
Practically 90% of the purchase and sale transactions carried out by the Group are done so in euros, which is why there is no need for
specifi c risk management in this fi eld.
Liquidity risk:
The liquidity policy followed by the Group ensures performance of the undertakings for payment without having to resort to fi nance from
third parties under exorbitant conditions.
Credit risk:
The credit risk deriving from the failure of a counterpart (client, supplier, partner or fi nancial institution) is properly controlled in the Seda
Group through different policies and risk limits in which requirements are established relating to:
• Suitable contracts in the transaction carried out.
• Proper internal or external credit rating for the counterpart.
• Additional guarantees where necessary.
• Limitation of the costs for bankruptcy and the fi nancial cost deriving from bad debts.
3. Important events occurring after the close of the tax year. No other important events have arisen following the close of the tax year
apart from those already stated in Note 28 above.
4. Foreseeable progress for the Company. During the 2007 tax year the appropriate measures and policies are going to be taken in order
to back up the Group’s new structure that is mainly concentrated on the manufacture of PET which has become the core business of the
group under the Artenius brand, and has created a specifi c division for the PTA raw material (purifi ed terephthalic acid).
With the purchase of the PET plant of Eastman Chemicals Ibérica in San Roque, La Seda de Barcelona Group will increase annual produc-
tion capacity by 175,000 tonnes of PET, raising the total production capacity of La Seda up to approximately 1 million tonnes per year.
5. Purchases and disposals of own shares. At its meeting dated 12 June 2006, the General Meeting of Shareholders of La Seda de Barcelo-
na, S.A., authorised the Company and its subsidiaries to acquire own shares under the protection of the provisions set forth in article 75 and
Additional Provision One of the Public Limited Companies Act, for a period of 18 months from that date onwards and with a limit of 5% of the
share capital under conditions of cash sale and for a price equivalent to the applicable stock market listing price.
117
Main Offi ces
LA SEDA DE BARCELONAPasseig de Gràcia, 85
08008 Barcelona
T. +34 93 467 17 50
E-mail: [email protected]
Production Plants
ARTENIUS PRAT
Avda. Remolar, 2
08820 El Prat de Llobregat (Barcelona)
T. +34 93 401 75 00
IQA-LSB
Ctra. Nacional 340, Km. 1157
43006 Tarragona
T. +34 977 556 015
ARTENIUS SAN ROQUE
Poligono Industrial Guadarranque, 3
11369 San Roque (Cádiz)
T. +34 956 585 201
ARTENIUS ITALIA
Via E. Majorana, 10
33508 San Giorgio di Nogaro (Udine)
T. +39 0431 620 261
ARTENIUS PORTUGAL
Quinta de San Vicente - EN 246
7300 952 Portalegre
T. +351 245 339 200
ARTENIUS HELLAS
Area B’ Zone
37500 Volos (Greece)
T. +30 2425 061 200
ARTENIUS UK
P.O. Box 1923, Davies Offi ces
Wilton Internacional,
REDCAR TS10 4XZ
T. +44 (0)1642 451 000
ARTENIUS TURKPET
Tarsus Yolu Ozeri 10. Km PK.371
01322 Seyhan / Adana
T. +90 322 441 0253
Organize San Bölgesi 2 cadde
16400 Inegöl / Bursa
T. +90 224 714 8567
ARTENIUS ROMANIA
Bulervardul Basarabie 256
Sector 3
Burcherest
SHAREHOLDER’S OFFICE SERVICE
Tel. 902 10 49 15
e-mail: [email protected]
ADDRESSES OF THE LA SEDA DE BARCELONA
118
Realización y Diseño: Joker & Valls • Fotografías ESTUDIO PICAZO • Impresión Gràfi cas TL • D.L.: B. 33.578-2007