A NEWERA - Sequana · ings in Fiat, SGS, ... that open up whole new vistas for growth and profi...

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Sequana Capital

19, avenue Montaigne 75008 ParisFrance

+33 1 56 88 78 00

E-mail : [email protected]

www.sequanacapital.fr

Antalis122, rue Edouard Vaillant 92300 Levallois-Perret Francewww.antalis.com

Arjowiggins117, quai du Président Roosevelt 92442 Issy-les-MoulineauxFrancewww.arjowiggins.com

Printed on Arjowiggins papers distributed by Antalis (60% recycled fi bres and 40% FSC-certifi ed virgin fi bres)

ANNUALREPORT

2007

A NEWERA

Contents

Profi le

Diversity is our strengthWinning is our motivationCorporate responsibility is our core value

Setting our sights on the number one slot in every marketMessage from the ChairmanTransparent, effective corporate governanceKey fi gures: growth in all our marketsInterview with the CEO: a Group with renewed momentumTwo complementary businesses focused on paperA strategy geared to investment and leadershipGetting stronger in growth markets around the world

A commitment to sustainable, balanced growthThe global state of the paper industryHow is paper made and distributed?Antalis: enhanced performance and stronger positionsArjowiggins: a successful strategy combining innovationand environmental protectionMaking corporate social responsibility a realityPromoting culture and community development

Creating valueSequana and its shareholdersConsolidated income statementConsolidated balance sheetConsolidated cash fl ow statement

Glossary

1

246

810111214161820

2224262832

3640

4244464748

49

1

21_Cover: Maine gloss green 350g. Maine gloss green is a bright wood-free coated paper composed of 60% recycled fi bres and 40% FSC-certifi ed virgin fi bres.

2_Inside: Satimat green 115g.Satimat green is a semi-matte wood-freecoated paper composed of 60% recycled fi bresand 40% FSC-certifi ed virgin fi bres.

All of the paper used in this document is manufactured by Arjowiggins and distributed by Antalis.

Because Sequana Capital has ceased to be a diversifi ed holding company following its move to refocus on the paper business, it has been decided to shorten the corporate name to Sequana.To that end, this report refers to Sequana in lieu of Sequana Capital.

Maine gloss green and Satimat green are the answer for clients looking for coated papersthat offer the highest level of quality while communicating environmental sensitivity.

ANNUAL REPORT 2007 — SEQUANA 48 — 49Glossary

General— Cellulose: the main component of wood. When cellulose fi bre is suspended in water, it breaks up into sub-

microscopic fi brils used in making paper.

— RFID (Radio Frequency Identifi cation): method for storing and remotely retrieving data with devices called

RFID tags, which use radio waves as a means of identifi cation. Whether applied as a sticker or incorporated into

a product, an RFID tag generally includes an antenna and an integrated circuit.

— FSC (Forest Stewarship Council): international independent, not-for-profi t, non-governmental organisation

founded in 1993 in order to encourage socially, ecologically and economically responsible forest management

and give visibility and credibility to efforts in that direction with a label proving that labelled products come from

certifi ed forests.

— PEFC (Programme for the Endorsement of Forest Certifi cation schemes): eco-certifi cation label created in

1999 at the instigation of private forest owners.

— IFIL (Istituo Finanziare Industriale): Italian investment company and subsidiary of the Agnelli Group, with hold-

ings in Fiat, SGS, SanPaolo IM and the Juventus football club.

— DLMD: Lebard family investment company, 51% owned by Sequana CEO Pascal Lebard.

Financial— EBITDA: recurring operating income, before depreciation and amortisation.

— Capital employed: aggregate of net fi xed assets and working capital requirements.

— Recurring operating income: operating income before non-recurring items.

— ROCE: Recurring operating income/Capital employed.

— Cash-fl ows from operating activities: algebraic sum of EBITDA, changes in working capital requirements

and investments.

Printed in France in June 2008© Sequana Capital ® All rights reserved

Photo credits:Vincent Leroux; Louvre - Angèle Dequier; Corbis; Getty-Images: Thomas Barwick,

Maren Caruso, Martin Diebel, Michael Duva, Britt Erlanson, Adam Gault, Jamie Grill, Leukos, Antony Nagelmann Veer, Sean Murphy, James Randklev.

Designed by W PRINTEL

Printer SIC-2GCAr

PROFILE

SEQUANA – AN ENTREPRENEURIAL VISIONFOR A SUSTAINABLE DEVELOPMENT

—

—

5.4 billionin pro-forma sales

16,000employees

3 milliontonnes of paperdistributed every year by Antalis

1.5 million tonnes of paper manufactured every year by Arjowiggins

—

Sequana is a worldwide player in the paper sector with a presence in the manufacturing and distribution of innovative, high-value, environmentally-friendly products.

With 16,000 employees in more than 80 countries, the Group holds major positions in two businesses:

> No. 1 in Europe and no. 4 worldwide in B2B distribution of paper and industrial packaging through its subsidiary Antalis.

> No. 1 worldwide in the manufacturing of creative and technical papers through its subsidiary Arjowiggins.

In keeping with its entrepreneurial outlook, Sequana actively supports the eff orts of its two subsidiaries to reinforce their leading positions in their markets. Creating shareholder value is a vital component of the Group’s strategy.

Ream of A4 80g Copyspeed

copier paper, distributed

by Antalis for offi ce printing

on laser and inkjet

machines

Antalis guarantees two

delivery runs a day in major

urban areas and next

day delivery everywhere else

A NEW ERA —

Th rough its two wholly-owned subsidiaries, Sequana has achieved leadership in two paper-industry segments that mutually support each other: B2B distribution of paper and industrial packaging through Antalis; production of creative and technical papers through Arjowiggins. Th e resulting business and brand diversity is a source of unparalleled strength. It provides the Group with unique positioning, reduces its exposure to the business cycle and generates synergies that add real value. In 2007, Antalis accounted for roughly two thirds of Sequana’s pro-forma sales, with Arjowiggins supplying around one third.

DIVERSITY IS OUR STRENGTH

Antalis boasts the broadest range of papers in the marketplace, with more than 12,000 product references

ANNUAL REPORT 2007 — SEQUANA — 02-03

Arjowiggins luxury packaging, Conqueror

Concept/Effects Iridescent,

pink dew - 250g

Arjowiggins business cards, Curious Touch,

soft milk – 300g

A NEW ERA —

Arjowiggins sterile environment –

an effective barrier against

bacteria

WINNINGIS OUR MOTIVATION Given the structural challenges facing the paper industry today, holding the number one position in all our markets is, more than ever, the core of our entrepreneurial strategy. Driving that strategy is our urge to win, our will to keep pushing back the frontiers of performance, along with our ability to stay one step ahead so that we can take the lead in new geographic areas and new business segments. In 2007, Sequana carried out strategic acquisitions representing additional sales of close to €1.5 billion.

04-05ANNUAL REPORT 2007 — SEQUANA —

Arjowiggins biometric passport

When it comes to corporate social responsibility, Sequana means business. In our view, sustainable development is all about balancing economic growth with environmental protection and social justice. Th e “green” range of papers manufactured by Arjowiggins and distributed by Antalis off ers clients just such a balance, delivering superb environmental credentials without sacrifi cing quality.Both companies have established environmental management principles for staff to abide by and implemented practices designed to prevent pollution and protect the water, air and sites where they operate. As they see it, respecting the environment is not only a major concern; it is also an essential component of business strategy.

CORPORATERESPONSIBILITY IS OUR CORE VALUE

FSC-certifi ed recycled pulp

produced at Arjowiggins’

Greenfi eld plant

A NEW ERA —

Plantation with FSC

certifi cation, the benchmark environmental

standard

06-07ANNUAL REPORT 2007 — SEQUANA —

Every year, Arjowiggins recycles

and reprocesses 450,000 tonnes of

paper at 3 facilities in France and Denmark

SETTING OUR SIGHTS

NUMBER

08-09

— Since its strategic turn to the paper sector in late 2006, Sequana has been boldly investing in its two subsidiaries with the unwavering aim of winning the number one slot in all markets. By infusing its demanding, performance-based culture into both companies, the Group has been helping them shift towards booming value-added markets that open up whole new vistas for growth and profi tability. In keeping with its entrepreneurial outlook, Sequana makes sure that both subsidiaries share its passion for excellence and commitment to creating value.

ON THE

ONE SLOT IN EVERY MARKET

Ladies and Gentlemen, Dear Shareholders,

Sequana has just completed its first year operating under its new colours – as a global player in the paper industry. In 2007, we performed well, proving that we have the right strategy, the right capabilities and the right people. We have successfully addressed the challenges associated with a competitive market in the process of consolidation.

Our strategy generates sufficient cash for us to expand our business while maintaining a sound financial structure. Our most recent acquisitions have raised pro-forma sales to about €5.4 billion.

By buying out Map, Antalis has significantly enhanced its presence in a number of

European markets and become the leading B2B distributor of paper and industrial packaging in Europe. At the same time, Arjowiggins has carried out a series of well-timed moves in its strategic business areas. In the recycled paper and high-grade recycled pulp segments, for example, we have taken over Dalum Papir and Greenfield. Those acquisitions were financed in part by the proceeds from our sale of Canson’s paper distribution division to Hamelin.

Sequana has entered 2008 in a confident, untroubled frame of mind. Even though the global stock market downturn has impacted the value of our assets, it won’t keep us from forging ahead – with determination and with appropriate risk control. If we see arbitrage opportunities that meet our requirements, we will

certainly take advantage of them. As before, our top priority is creating shareholder value. For 2007, the Board has proposed a dividend of €0.70 per share, up 17% from 2006.

This year was also marked by changes in corporate governance. I was appointed Chairman of the Board of Directors, and Pascal Lebard, with whom I’ve worked for many years, has taken over as Chief Executive Officer.

I would like to thank all the people in our Group for working so effectively to achieve excellence in their areas, for buying into the changes required in a difficult industry and for contributing to Sequana’s success in 2007.

Tiberto Ruy Brandolini d’Adda

Setting our sights on the number one slot in every market

“Our urge to win is what has made our external growth strategy so successful and accelerated our expansion in high-potential markets.Sequana has thus maintained its goal of achieving leadership in all its markets and creating shareholder value.”

MESSAGE FROM THE CHAIRMAN

ANNUAL REPORT 2007 — SEQUANA 10 — 1 1

Board of DirectorsChaired by Tiberto Ruy Brandolini d’Adda, the Board of Directors comprises ten members, fi ve of them independent, non-executive directors. During the 2007 fi nancial year, the Board met fi ve times, with an attendance rate of 84%. The appointment of an additional independent director, bringing the total to eleven, will be submitted to the shareholders for approval in 2008.— In 2007, the roles of Chairman and Chief Executive Offi cer were separated. Since 1 July 2007, Tiberto Ruy Brandolini d’Adda has been the Chairman of the Board, and Pascal Lebard the Group’s Chief Executive Offi cer.

— Ifi l Investissements SA (26.7% of the share capital) and DLMD (21.9% of the share capital) signed a shareholders’ agreement to act in concert for an initial period of three years.

The Audit Committee, chaired by Alessandro PotestàThe purpose of this committee is to review the fi nancial position of the Group and any risks to which it may be exposed, its internal control procedures and the accounting principles and policies it applies.

The Nominations and Compensation Committee, chaired by Luc ArgandThe purpose of this committee is to

Sequana’s corporate governance policies are based on the recommendations of the stock market authorities and current best market practices.

TRANSPARENT,

EFFECTIVE CORPORATE GOVERNANCE

make recommendations on compen-sation to be paid to corporate offi cers and executives and review share purchase or subscription plans and proposals for free share awards. It is also responsible for reviewing all matters relating to the composition of the Board and its committees, how they are organised and how their business is conducted.

The Strategy Committee, chaired by Carlo Sant’AlbanoThe purpose of this committee is to make recommendations on the Group’s strategic direction and consider the best investment opportunities.

1st row, from left to right: Nicolas Lebard, Tiberto Ruy Brandolini d’Adda, Luc Argand, Laurent Mignon 2nd row, from left to right: Alessandro Potestà, Pascal Lebard, Pierluigi Riches, Michel Taittinger, Pierre Martinet

Absent: Carlo Sant’Albano

On a like-for-like basis, management EBITDA increased by 5%, accounting for 5.1% of sales versus 4.9% in the previous year.(*) Recurring operating income before depreciation and amortisation.

EBITDA (*)

in millions of euros

195205

2006 2007 (2) 2007 (3)

244

KEY FIGURES IN 2007

GROWTH IN ALL OUR MARKETS


Salesin millions of euros

Reported sales were up 1.6% on a like-for-like basis (0.8% booked by Antalis and 1.3% by Arjowiggins).

Recurring operating income in millions of euros

On a like-for-like basis, recurring operating income increased by 25%, accounting for 2.9% of sales.

93116

2006 2007 (2) 2007 (3)

147

3,9794,042

2006 2007 (2) 2007 (3)

5,391

Net earnings per share attributable to parent company shareholders were €2.88 in 2007. Net income in 2006 included around €890 million in non-recurring capital gains.

Net income attributable to shareholders in millions of euros

958

153

2006 2007 (2) 2007 (3)

155

Over 1,500 fi ne paper product references in the Antalis Brainstore in France

January 2008: acquisition of Greenfi eldArjowiggins takes over the high-grade de-inked pulp producer, Greenfi eld. With output in 2006 of nearly 130,000 tonnes of FSC-certifi ed recycled pulp, Greenfi eld is the recognised European benchmark provider of premium de-inked commercial pulp.

December 2007: listing on two NYSE Euronext indicesThe Sequana share is listed on the SBF 250 and CAC MID100 indices of NYSE Euronext Paris.

November 2007: Permal Group disposal and earnoutSequana receives an earnout payment of $115 million from Legg Mason on the disposal of 70.5% of Permal Group’s share capital in No-vember 2005. Sequana also sells Legg Masson

5.36% of Permal Group for $78 million, retain-ing a 1% stake in the company.

October 2007: acquisition of Map Antalis acquires Map for €382 million, thereby becoming the number one paper distributor in Europe. As demanded by the European competition authorities, Antalis sells Premier Paper to Beswick Paper in the United Kingdom in March 2008. Map is the fourth biggest paper distributor in Europe, with sales of €1.4 billion and a workforce of 2,400 in 2006.

October 2007: Zanders acquisition agreementArjowiggins signs an agreement to acquire all the assets and inventories of the Refl ex factory of Zanders (M-real group), which manufactures carbonless paper and creative paper, along with the trade names associated with those

A year marked by success and growth

REPORTED, ADJUSTED AND PRO-FORMA INCOME STATEMENTS

(1) Reported fi nancial information: in accordance with reporting requirements, the fi nancial statements published for 2007 include the business of Dalum Papir as from 1 July 2007 and the business of Map as from 1 November 2007, the dates on which Sequana took control of those two entities.

(2) Adjusted fi nancial information: Sequana also presents an adjusted income statement that excludes the business of Dalum Papir and Map for the entire 2007 fi nancial year in order to facilitate comparison with the information in the 2006 fi nancial statements.

(3) Pro-forma fi nancial information: to facilitate comparison with fi nancial information in the years to come, Sequana also presents a pro-forma income statement, which includes the business of Dalum Papir and Map as from 1 January 2007.

ANNUAL REPORT 2007 — SEQUANA 12 — 13

Net debt in millions of euros

Net debt showed a €391 million increase year-on-year, due mainly to acquisitions carried out in 2007 amounting to €456 million, the settlement of the DG IV dispute for €62 million, and the dividend payout for €29 million. Those outfl ows were partially offset by proceeds from the Permal Group deal (€137 million) and the insurance reimbursement in connection with Fox River litigation in an amount of €47 million.

Group headcount (at 31 December) increased by 1,901 employees, chiefl y as a result of acquisitions carried out in 2007 (Dalum Papir and Map).

Group headcount

13,806

15,707

380

771

Arjowiggins coated paper plant

Shareholders’ equityin millions of euros

Equity attributable to shareholders increased by €44 million in 2007.

1,233

1,277

31 Dec. 2006

products and the licence to use the Zanders brand name. The agreement is subject to conditions precedent, the most important of which is approval by the European competition authorities.

August 2007: Dalum Papir acquisitionArjowiggins buys out Dalum Papir for €63.5 million. Dalum Papir is Europe’s number one producer of high-quality recycled coated paper, with sales of €93 million and a workforce of 310 in 2006. The company serves 23 countries in Europe, Asia and the United States.

July 2007: shareholders’ agreementIfil Investissements SA sells 21.9% of Sequana’s share capital to DLMD, a family investment company controlled by Pascal Lebard, the CEO of Sequana, for a total amount of €227 million.

Ifi l Investissements SA thus reduces its stake in Sequana from 48.7% to 26.7%, while retaining principal shareholder status. Ifi l Investissements SA and DLMD sign a shareholders’ agreement to act in concert for an initial period of three years.

April 2007: reduction of the DG IV fi neFollowing the European Commission’s charge of Europe-wide cartel activity in the carbonless paper market from 1992 to 1995 against Arjo Wiggins Appleton Ltd., a Sequana subsidiary, the Court of First Instance reduces the fi ne by €42.5 million.

April-May 2007Acquisition of Axelium in France and sale of Antalis Italy to PaperlinX.Acquisition of Paxor (industrial packaging).

In millions of euros 2007 (1) 2006Current and non-current fi nancial debt 1,015 687Cash and cash equivalents (199) (255)Marketable securities (a) (3) (52)Other (b) (42) Net debt 771 380

Reconciliation of net debt

(a) Marketable securities are recognised as current fi nancial assets.(b) Legg Masson shares and current account with

Premier Paper Group Limited.

31 Dec. 2007 (1)

31 Dec. 2006 (1)

31 Dec. 2007 (1)

31 Dec. 2006

31 Dec. 2007 (1)

What is your assessment of this past year?2007 was a year of renewed momentum. Our two subsidiaries,Antalis and Arjowiggins, once againshowed their ability to grow and theirpotential for higher margins. That growth was balanced, since sales were up at both companies, and profi table,since operating income increased substantially. The renewed momentum I mentioned comes from our acquisitionof Map. The merger has given us amuch broader recurring income base in our B2B paper distribution business.

INTERVIEW WITH THE CHIEF EXECUTIVE OFFICER

A GROUP WITH


“Our success is based on a clear industrial strategy, strong entrepreneurial culture, and socially responsible development. I’ll be pulling out all the stops to create value, both for myself and the other shareholders.”

Why turn to external growth?In a period of industry consolidation and rising prices for raw materials and energy, it is no longer enough to have an ongoing programme to cut costs, as we do. Economies of scale are crucial if we want to step up the expansion of our subsidiaries, consolidate market share and raise productivity. The rationale behind the strategic deals we made in 2007 is boosting margins.

What are your current operational priorities?We devoted a lot of effort in 2007 to supporting Antalis, a company now in the process of integrating Map, so we’ll be focusing on Arjowiggins in 2008. Implementing our “green” strategy, building our business high-growth markets such as India and China, gradually repositioning our creative papers offer, putting a few loss-making business lines back on a profi table footing and carrying on with our cost reduction programmes are among the issues that our management team will be addressing. We will also be assessing the opportunities for rebalancing our business portfolio.

What motivated you to become a shareholder executive?Having been with Sequana since 2004, I have gradually become better acquainted with our two subsidiaries. Convinced that they offered major upside potential, I purchased 22% of the company’s share capital from Ifi l in July 2007. My approach also involves choosing people and talent. With my entrepreneurial mindset to guide me, I’ve invested not only money, but also time and effort in our businesses to maximise results. I’ll be pulling out all the stops to create value, both for myself and the other shareholders.

Pascal Lebard


What targets have you set in terms of margins?Our goal is to improve both operating and fi nancial performance every year. Three years from now, Antalis should be booking an operating margin of at least 3.5%, versus 2.6% in 2007. In the same period, profi ts should also be heading upwards at Arjowiggins. Our focus is on improved procurement terms, production, new product launches and, as appropriate, adjusting our portfolio to give greater weight to high value-added products.

Is your fi nancial structure sound?At year-end, Sequana’s net debt totalled €771 million, as compared with €1.3 billion in equity. So the Group’s fi nancial structure remains healthy enough to enable us to contemplate further acquisitions if we need to. With a business model that generates considerable cash, we have the resources to match our ambition.Even so, we hope to reduce net debt in 2008, mainly by disposing of selected non-strategic assets.

RENEWED MOMENTUM

TWO COMPLEMENTARY

BUSINESSES FOCUSED ON PAPER

5 BUSINESS SEGMENTS

— PrintPaper and envelope products

— Offi cePaper and envelope products

— Visual communicationPaper, board and plastic products

— Industrial packagingSolutions for packaging and product protection

— Promotional products

LEADINGPOSITIONS

— No. 1 in France, Switzerland,Norway, Finland, Turkey,Slovakia, the Czech Republic,Poland, Romania, Hungary,the Baltic states, Belgium, Ireland,South Africa, Chile and Asia.

— No. 2 in the United Kingdom,Spain, Austria, the Netherlands,Denmark and Sweden.

— No. 3 in Portugal, Slovenia and Bulgaria.

ANTALIS

147distribution centres

30,000deliveries every day

3 milliontonnes of paper distributedper year

7,900employees in 44 countries

€3.6 billionin pro-forma sales in 2007

A BROAD RANGE OF CLIENTS

230,000 clients around the world• printers, publishers,• companies and government agencies,• professionals specialised in signage

systems and POS advertising materials,• industrial fi rms,• resellers of promotional products.

Pro-forma salesby business segment


Print paper 60%

Office paper 24%

Industrial packaging 5%

Promotional products 3%

Visual communication 2%

Other 6%

N° 1in Europe

N° 4worldwide in B2B distributionof paper andindustrial packaging

ANTALISB2B distribution

100 %

3 BUSINESS SEGMENTS:A WIDE VARIETY OF APPLICATIONS

— Graphic• Coated paper for printing and publishing (publishing, illustrated books, magazine covers, catalogues, dictionaries)• Recycled pulp

— Communication• Corporate communication and advertising• Luxury packaging and fi ne artpaper (bindings, advertising,luxury envelopes)• Thin paper (carbonless, snap-out sets of forms andpharmaceutical package inserts)

— Security and Technology• Security (banknotes, cheque books,biometric passports, labels,playing cards)• Industrial (decor paper, base paper for abrasive materials, transfer paper,packaging)• Medical (sterile packaging andsterilisation wraps)

RESPECTED BRANDS

— GraphicChromomat, Cyclus, Eural,Greenfi eld, Idéal, Maine Gloss,Maine gloss green, Reprint,Satimat, Maine green, Utopia

— CommunicationConqueror, Curious, Gateway,Keaykolour, Opale, Pop’Set, Rives,Thibierge & Comar, Arches, Guarro,Priplak, Elementa, Idem

— Security and TechnologyDiamone, Playper, Polyart,Arjofoil, Arjotop, Sterisheet

ARJOWIGGINSN° 1worldwideproducer ofcreative andtechnical paper

Pro-forma salesby business segment


7,700employeesin more than80 countries

3 R&D centresstaffed by220 engineers

€2.1 billionin pro-forma salesin 2007

Communication29%

Graphic37%

Security and Technology 34%

ARJOWIGGINSManufacturing

100 %

A STRATEGY

Sharing resources, sharing success Since its shift to an exclusive focus on the paper indus-try, Sequana has been pursuing a strategy that com-bines organic growth, continuous gains in operating effi ciency and expansion through acquisitions in tar-geted regions and high-potential markets. The Group’s entrepreneurial vision is underpinned by an unwaver-ing aim: build its businesses to the point that Sequana can achieve market leadership in every one of them.The Group’s operations are organised on a decen-tralised basis to ensure that each unit keeps a pulse on its local market and its clients’ specifi c needs. Subsid-iaries are encouraged to share knowledge, and even pool resources, whenever such a move can be ex-pected to improve performance. This unconventional approach is what drives their success.

Antalis: constantly enhancing client service

Antalis expects to raise operating margin to 3.5% in 2010

The strategic Map buyoutBy taking over Map, Antalis has accomplished a quantum leap. The company emerges from this deal with more than just an expanded geographic footprint in Europe and market leadership in every country in which it operates. Antalis now also possesses a broader product range and the means to serve clients more effectively than ever. This acquisition gives Antalis the critical mass it needs to negotiate better procurement terms, to be more selective in its sales targets and to optimise supply chain operations. Substantial synergies can be expected through both enhanced supply chain management and better procurement terms.

Gaining traction in industrial packagingIn the industrial packaging business in Europe, Antalis took a major step forward by acquiring Versel’s packag-ing division and Paxor, a recognised distributor of pack-aging products and equipment (both of them in France). These latest acquisitions provide Antalis with critical mass in what is still a highly fragmented business and a presence in 16 countries. The combined capabilities of the newly acquired companies, of Brangs & Heinrich in Germany and of Dekker Packaging in the Netherlands represent a major asset in boosting industrial packaging sales to printers and offi ce clients alike.

An ongoing drive for greater effi ciencyTo heighten effi ciency, Antalis has invested heavily in information systems while further pursuing a strategy of IT harmonisation. CRM tools have been implemented and the company’s warehouse and supply chain network have been optimised.The distribution network has been steadily improved. With twice as much warehouse capacity as before, Antalis Germany is now in a position to deliver enhanced customer service. In the United Kingdom, company


GEARED TO INVESTMENT AND

LEADERSHIP

ANTALIS

Leading-edge technology to access client information fast and effectively in the Iberian peninsula.

SEQUANA

warehouses were streamlined to obtain a 30% reductionof storage area, and delivery routes were optimised.In addition, supply chain management will be mademore effi cient in the 13 countries involved with integratingthe former Map operations. In Poland, the companystarted up its myantalis.com portal. By entering a singlecode, clients can now access a variety of online servicesthat include Antalink (to order products and samples)and Easycut (a visual communication large-formatcutting service) as well as useful information such asinvoice status and product documentation. The portal isscheduled for deployment soon in all other Antalismarkets.

In 2007, Arjowiggins invested nearly €25 million inTechnology & Innovation, an amount representingmore than 1% of sales – the highest ratio in theindustry.

The company’s business model encompasses fi vestrategic priorities:— Growth in high-potential regions.— New product development to meet environmental

and security needs.— Innovation.— Attainment or consolidation of leadership positions

in all markets. — Development of synergies to leverage Arjowiggins’

increasingly global scope.

Graphic: extending the “green” strategyArjowiggins continued with the implementation of its“green” strategy, developing a comprehensive range ofenvironmentally-friendly coated papers eventuallydestined to replace standard coated papers. The drivefor competitive edge – singled out as a key focus –has made considerable headway, thanks to synergiesfrom the Dalum Papir and Greenfi eld acquisitionsand to the company’s new conversion facility in theCzech Republic. Arjowiggins also plans to buildpartnerships in Asia.

Communication: gradually rebalancing the business portfolioProduct innovation is the key component of Arjowiggins’ ambitious growth programme. Environmentally-friendly papers have been rolled out, and the company has been gradually rebalancing its portfolio of corporate communication paper brands. Arjowiggins also looks forward to growth outside of Europe as the tracing paper plant in China ramps up to full speed and Image Paper Asia, a joint venture with Antalis, gains momentum.

Security and Technology: new solutions to meet new challengesTo address new market demand in the areas of security and traceability, Arjowiggins offers cutting-edge solutions, including RFID-embedded e-passports. High-growth regions have also become a major focus. Arjowiggins intends to boost sales in India, expand capacity at its Czech Republic medical paper conversion plant and manufacture decor and medical paper products in China. Arjowiggins will also be working hard to improve operating results in the decor paper business.

ARJOWIGGINS


The Arjowiggins business model is based on delivering innovative, environmentally-friendly products with a wide variety of industrial applications Curious Skin: a creative paper collection rolled out in 2007

Mexico

Brazil

Bolivia

Argentina

CChiC ilehi

United States

im wembabwimbabw

Botswswswanasw

South AfricacacaSoSo

MauritiusM

B2B DistributionANTALISZimbabweBotswana

South AfricaMauritius

GETTING STRONGER IN

GROWTH MARKETS AROUND THE WORLD

Production and conversion facilities ARJOWIGGINSUnited States• Combined Locks• Charlotte • Charleston

ArgentinaWitcel

BrazilSalto

B2B DistributionANTALISArgentina

BoliviaBrazilChile

MexicoPeru

AMERICASAntalis and xpedx, the leading paper and packag-ing distributor in North America, signed a cross-distribution agreement to provide greater support to their clients with international reach. The US clients of xpedx will now be served by Antalis in Europe, Asia, South Africa and Latin America, while the clients of Antalis in the United States and Mexico will be supplied by xpedx.

AFRICAAntalis, the leading distributor of paper, pre-press and printing equipment in South Africa, has further extended its business in that segment by taking over Kodak Nexpress. As a result, the com-pany can now offer its clients products and services for digital colour presses as well as black and white printing and publishing systems.


Hong Kongg

TThaThhahailanda

MalaysiaalayMalays

SingaporeSS

Pacific Ocean

ChinaghangShoughangghang

QingdaoQQ ooQuzhou

IndiaangladgladegladeeshesBangladesanglades

Pakistanananan

Sri LankanknkSri LanSri Lan

Indonesiadonesdonesi

Taiwanww

apanJapapouth KoreaSooSouSou

PhilippinesPhPhi

Irelandrelarelan

France

Porrtugort galg

Spain ItItaly It

itzitzSwiwititzerlandwitze

AustriaaaAAu a

Netherrlandserlaherther

Norway

Sweden

Denmarkmarkmarkmarmark

Lux.BelgelgiumBelg m

Germany

Poland

Finland

SlovvSloSlovvakiava

ch RepublicCzech Rch RCCC

Romaniianiaaa

ulgariaBBu

HungaHungaHuungunggarygaSlovSlSloovenialov niaenia

Ukraine

Turkey

Russia

United Kingdomited Kinnited Kin

Baltictiltistatesatestates

Production and conversion facilitie

ARJOWIGGINSChina

Shoughang, Qingdao, Quzhou

ASIA-PACIFICArjowiggins and Antalis established a joint venture, Image Paper Asia, to sell communication paper and carbonless paper across Asia, parti-cularly in China, Korea and Japan, as well as in Australia. The joint ventu-re’s 400 employees serve more than 20,000 clients. In China, Arjowiggins acquired a tracing paper plant in Quzhou and started up production at its new plant for laminate decors in Shoughang, as part of a joint ven-ture with Chenming, the leading Chinese paper company.

B2B Distribution ANTALIS

Austria, Belgium, Bulgaria, Czech Republic, Denmark, Estonia, Finland, France, Germany,

Hungary, Ireland, Italy (Promotional Products), Latvia, Lithuania, Luxembourg, Netherlands,

Norway, Poland, Portugal, Romania, Russia, Slovakia, Slovenia, Spain, Sweden,

Switzerland, Turkey, Ukraine and United Kingdom

Production and conversion facilitiesARJOWIGGINSFranceAnnonay, Arches, Bessé-sur-Braye, Bergerac, Rives Charavines, Château-Thierry, Crèvecœur, Le Bourray, Neuilly-en-Thelle, Palalda, Wizernes

United Kingdom Chartham, Clacton,Dartford, Ivybridge, Stoneywood

BelgiumVirginal

Netherlands Apeldoorn

Germany Dettingen

Czech Republic Bor, Brno

Italy Naples

Spain Gelida

Denmark Odense,Maglemølle

EUROPEArjowiggins carried out three projects this year in the Czech Republic. A con-version facility for medical paper started operating in Brno, a conversion platform for carbonless and coated papers was built in Bor and a customer service cen-tre opened for business in Prague.


IMAGE PAPER ASIA(an Antalis–Arjowiggins joint venture)

China, Hong Kong, Malaysia, Singapore, Thailand, Australia, Japan, Korea, Taiwan, Indonesia, Pakistan, the Philippines, India, Bangladesh, Sri Lanka, New Zealand & the Pacifi c islands

Pacific islandsNew Zealand d d

A COMMITMENT TO

SUSTAINABLE,

22-23

— Due to the nature of its business and its global scope, Sequana has a vital stake in maintaining overall economic, environmental and social balance. Th e Group works with its subsidiaries to make corporate social responsibility a reality, guided by a fi rm commitment to ethics, human rights and the preservation of our planet.Th at commitment is backed by serious involvement and specifi c targets in areas that include human resources and industrial security, community development and sponsorship, environmental stewardship and fi nancial performance.

BALANCED GROWTH

Sustained demand driven by emerging countriesPaper consumption around the world is strongly correlated with national GDP per capita.The regions with the most promising growth prospects today are Eastern Europe, Asia (above all China) and, to a lesser extent, Latin America, while growth is expected to be more moderate in the rest of the world. According to paper industry experts, global demand should increase by an average of 2% to 3% per annum between now and 2015, with printing and writing paper as well as environmentally-friendly, or “green” paper as the leading growth drivers.

Antalis plans to sell a steadily rising volume of recycled paper and FSC and PEFC certifi ed paper.

The trend in raw materials pricesAs with other raw materials (e.g. energy, agricultural produce), prices for pulp are trending upwards. The startup of pulp production in new Latin American eucalyptus plantations should eventually help, along with other factors, to stabilise prices or even reverse the trend. Waste paper prices, which experienced repeated decreases in the early 2000s, are now moderately back on the rise.

By gradually shifting up-market (e.g. towards medical paper products, banknotes and other security paper), Arjowiggins is working to reduce its vulnerability to rising pulp prices, since pulp represents only a fraction of the total cost of high value-added products.

260,000 employees worldwide

800 companies and 1,200 production facilities

€375 billion in sales, including 20% in Europe

2.6% average annual growth in paper consumption (over the past 15 years)

56% of all paper consumed comes from recycled fi bres

(Sources in 2006: CCE, Cepi)

A commitment to sustainable, balanced growth

THE GLOBAL STATE OF

THE PAPER INDUSTRY

An industry plagued by structural overcapacity?Newsprint, writing paper and graphic arts coated paperare by far the segments most subject to structuralovercapacity. For that reason, Europe’s major papermanufacturers have been focusing on restructuringthose segments to scale back capacity, adjust supply todemand and thereby raise profi t margins. The otherbusiness lines, notably creative and specialty paper,enjoy robust demand.

Structural overcapacity in the paper industry chiefl yaffects one third of Arjowiggins’s business (theGraphic segment). Arjowiggins has been strivingcontinuously to cut costs. Those efforts, combinedwith migration to “green” products, ensure that thecompany will maintain its competitive edge.

IS THE PAPER INDUSTRY RESPONSIBLE FOR DEFORESTATION?

Paper is made from a renewable natural resource: wood. The wood used to manufacture paper comes from thinning operations, which are vital to sustainable forest management, from forests specially planted for industrial use or from woodchips.

Paper is biodegradable, recyclable and recycled. Recovered waste paper represents a signifi cant and growing share of the raw materials used in paper making. In this way, cellulose fi bres – taken from a renewable natural resource – can be reused several times. By reducing waste products through this recycling process, the paper industry saves local governments the cost of eliminating them.

Which certifi cation label should be chosen?The principles and standards laid down by the FSC(Forest Stewardship Council) apply to all forests onEarth, whether primary, secondary or plantations.Supported by Greenpeace, the WWF and other similarNGOs, the FSC certifi cation scheme is the mostcomprehensive (protection of fauna, flora andbiodiversity), the most impartial (independent of forestowners) and the most stringent (social responsibility andrespect for native populations). PEFC is a less demandinglabel developed by forest landowners, manufacturersand distributors of wood and paper products.

Arjowiggins’ procurement function and productionplants have received the FSC Chain of CustodyCertifi cate, and 92% of all pulp purchased byArjowiggins is either FSC-certifi ed or designated asControlled Wood by the FSC. The company’s target isfor 100% of its products to carry the FSC seal ofapproval by 2012.


Pulp

1. THREE RESOURCESPaper is a natural product made from three basic resources.

2. A THREE-STEP PROCESSThe paper making process has undergone very little change for nearly 3,000 years. It involves macerating cellulose fi bres in water until they are completely separate, gradually and carefully eliminating the water and fi nally forming the intertwined fi bres into a homogeneous sheet.

3. MULTIPLE END PRODUCTSPaper can be treated in a variety of ways to improve its fi nish, quality and performance. It can be coloured, coated with one or more additional layers to achieve a specifi c kind of surface (e.g. photo paper), or calendered to obtain a smoother fi nish (as with coated paper).


Reel. Used directly in rotary press printing or cut into sheets with various formats.

Finished product

Recycled paper

Cellulose fibre(Commercial forests)

Water (Lakes and rivers)

Energy (Sometimes a

by-product of the manufacturing process)

Formation. A headbox uniformly dispenses the pulp from fibres previously suspended in water over a screen so that the water can gradually drain and the fibres can adhere to each other to form a web, or sheet.

Pressing. This step continues the water removal process while strengthening the bonds between fibres, thereby giving the sheet much of its future strength.

Drying. The sheet passes through a set of cylindrical steam-heated rolls so that any remaining water will evaporate.

HOW IS PAPER MADE?

A paper distributor is a service provider who operates as a middleman between supplier and end-user. Th e distributor’s business breaks down into three basic functions – all of them dedicated to customer service.

Brainstore(Showroom for clients)

Colour charts(Brochure, colour chart

and swatchbook for each line of paper)

Client service(Advisory,

order-taking, payment)

Shipping and delivery. To ensure timely delivery, a distributor needs a strategically located main warehouse (for easy access) and an extensive distribution network, including an adequate number of available vehicles (e.g. lorries, taxis).

What sets one distributor apart from the crowd is the range of service offered. Possibilities include sending samples, providing a delivery assistant, tailored storage and bespoke manufacturing, a returns policy, express after-sales service, catalogues and online payment service and showrooms.

Logistics management. Paper must be stored by product reference in warehouses in which humidity and light are strictly controlled.


Service

1. ADVICE AND EXPERTISEGuiding business clients in choosing the communication materials best suited to their production needs is the primary function of a distributor’s sales force. Each expert must inform clients on the technical specifi cations of a given paper, how to store it, how it is transformed and so on.

2. PROCUREMENT AND STORAGEProcurement policy involves selecting suppliers, ensuring that the distributor has a wide range of products and negotiating the best possible prices.

3. SHIPPING AND DELIVERYClient productivity depends heavily on delivery quality. Next-day delivery anywhere in the country and twice-daily deliveries in certain large urban areas are now standard industry practice.

— strength and durability: resistance to stretch, folding, tearing and abrasion

— optical properties: brightness, opacity, gloss, colour, printability

— texture: grammage, bulk, porosity

USEFUL VOCABULARY Paper may be analysed using three criteria:

HOW IS PAPER DISTRIBUTED?


In 2007, market conditions in Eastern Europe, Asia, South Africa and South America were conducive to high sales volume, whereas business slowed down in Western Europe. Prices in all segments except for coated papers trended upwards. Once again, Antalis succeeded in improving operating performance through a combination of strict cost control and positive performance in the high-margin Industrial Packaging and Visual Communication market segments. Growth was particularly robust outside of Europe, with operating margin in excess of 6%.

Europe – Positive performance as market conditions start to pick upAntalis performed well in the Iberian peninsula, Germany and Switzerland, as well as in France despite diffi cult market conditions and the process of integrating Axelium. The programmes to restructure the company’s UK operations and Promotional Products division initiated in 2006 began to pay off. In the United Kingdom, the sales function was reorganised and supply chain activities optimised. The Promotional Products sales function in particular underwent a major overhaul. Performance in other countries and the Industrial Packaging Division was satisfactory.

Rest of the World – Robust growth in all regionsIn Asia, Antalis and Arjowiggins established a joint venture, Image Paper Asia, so that the Group can go on distributing high value-added paper while gaining a foothold in regions such as India where it had no prior presence. With 400 employees serving 20,000 clients, Image Paper Asia draws on the sales and marketing resources of the two companies.

With a presence in 44 countries, Antalis off ers a wide range of products and services to more than 230,000 business clients in its fi ve market segments. In each of these markets, Antalis holds either a leadership or a joint-leadership position.

Same-day or next-day delivery in urban areas

ANTALIS ENHANCED PERFORMANCE AND STRONGER POSITIONS


Antalis performed well across South America. Its Brazilian unit, whose results in 2006 were weighed down by the startup of a Graphic Supplies business (pre-press and printing equipment distribution), is now on even keel and has added paper distribution to its product offer.

Performance was also good in South Africa. Antalis is the country’s leading paper distributor and, after the successful integration in 2006 of First Graphics, the top South African graphic supplies provider, the company further extended its business in that segment by taking over Kodak Nexpress. As a result, Antalis can now offer its clients products and services for digital colour presses as well as black and white printing and publishing systems. In order to seize new opportunities for growth in the region, Antalis completed deployment of new organisational arrangements in line with the country’s guidelines and regulations for Black Economic Empowerment (BEE).

To meet the needs of global companies more effectively,Antalis signed a sales agreement in January with xpedx,the leading paper and packaging distributor in NorthAmerica. The two partners are now in a better positionto support clients with international reach by offeringthem a wide range of paper, packaging products andrelated services, wherever their operations may be.xpedx, for example, can leverage the strength of Antalisin Europe, Asia, South Africa and South America to serveits own multinational clients. Likewise, the entire xpedxoffer is now available to Antalis clients in the UnitedStates and Mexico.

7,900 employees

147distribution centres

30,000deliveries every day

3 milliontonnes of paper distributed per year

AIMP, A TRAINING PROGRAMME TAILOR-MADE FOR MANAGERS

To provide its managers with a broader skill base and vision of the business, Antalis initiated a special Antalis International Management Programme (AIMP) in 2004 in conjunction with CEDEP. Although fi nance and management are the key components of the programme, additional courses are offered on sales, marketing and logistics. Held during a two-week period on the INSEAD campus in Fontainebleau, the sessions in 2007 were attended by 25 managers from various functional and geographic backgrounds.

The “class of 2008” will be enlarged to refl ect the Group’s expanding scope. This time, 50 managers will be attending, thus making the AIMP an essential tool in integrating Map into the company.

ANTALISMAP: AN ACQUISITION WITH MAJOR IMPACT


— Commercial alliance signed with xpedx, the leading paper and packaging distributor in North America.— Industrial packaging acquisitions in France, fi rst Versel’s packaging division, then Paxor. — Acquisition of France’s fi fth largest paper distributor Axelium and sale of Antalis’ paper operations in Italy to the Australian company PaperlinX.— Creation of the joint venture Image Paper Asia with Arjowiggins.— Acquisition of Map, Europe’s fourth largest paper distributor.

Highlights in 2007

#1 #1

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In millions of euros 2007 pro-forma 2007 reported 2007 adjusted 2006Sales 3,574 2,525 2,328 2,309

Management EBITDA 115 80 82 69

Margin in % 3.2% 3.2% 3.5% 3.0%

Recurring operating income 92 61 65 53Margin in % 2.6% 2.4% 2.8% 2.3%

Capital employed 907 nm 560 541

ROCE 10.2% nm 11.6% 9.8%

— Pierre Darrot – Chairman and CEO— Hervé Poncin – Executive Vice President— Stéphane Courtot – Managing Director, Benelux — Ian George – Managing Director, UK & Ireland— Marcus Gillioen – Managing Director, Marketing & Purchasing— Jesper Haase – Managing Director, Nordic Countries— Andrew Harvey – Deputy Managing Director, Human Resources — Jacek Nitecki – Managing Director, Central Europe— Gilles Raynaud – Managing Director, Human Resources— Xavier Roy-Contancin – Chief Financial Offi cer— Fred Schenker – Managing Director, Baltic & Eastern Europe— Marc Schoettel – Managing Director, Iberia & Promotional Products

Antalis Executive Board

Operations in 30 countries in Europe, n°1 in 15 of them

Market share (Paper distribution)

> 20%15-20%

10-15%

5-10%

0-5%

Key management fi gures


Since the Map buyout, 13 out of 30 countries in Europe possess two or more Map and Antalis distribution networks. To optimise sales and supply chain operations, create value and capture cost synergies, the company has been deploying a thorough and demanding integration programme in all those countries since 1 November 2007. A pragmatic approach has been adopted everywhere to refl ect the specifi c market conditions, competitive rank and history of each of the pre-merger companies.By January 2008, the new management structure was set in all countries. The process has entered the fi nalisation stage. Plans for optimising supply chain and warehousing, which are crucial to the successful integration of the two companies, will be a primary focus.

“Antalis has just taken a major step forward. Our buyout of Map makes us the leading paper distributor in Europe, and the integration process is moving along according to plan. With an enriched product and service offer, an enhanced skill set and greater geographical coverage, Antalis now has the resources it needs to serve a larger client base more effectively.”

Hervé Poncin, Executive Vice President of Antalis

By taking over Map Merchant Group, the paper distribution division of M-real, Antalis has become the number one paper distributor in Europe. This acquisition gives Antalis the critical mass it needs to negotiate better procurement terms, to be more selective in its sales targets and to optimise supply chain operations. The company plans to raise operating margin to 3.5% in 2010, and the fi rst few months of the integration process have been successful enough to make that forecast seem perfectly attainable. The synergies expected in both supply chain optimisation and procurement terms have materialised. And the company has confi rmed that it will be selling Premier Paper Group Ltd to Beswick Paper, as requested by the European Commission.

Acquisition of Map An integration process well under way

The 2000 merger of Metsä-Serla with Modo Merchant gives rise to Map Merchant Group.

Recognised brand names: tom&otto, Claro, 2u, Dito, Symbio, Image et Fashion.

MAP AT A GLANCE (2006)

€1.4 billion in sales

1,430 tonnes of paper distributed

2,400 employees in 23 countries

74 warehouses50,000 clients

The Graphic segment – A major foothold in the “green” paper marketIn 2007, the Graphic segment managed to maintain its contribution to operating income despite diffi cult market conditions marked by stagnant prices and substantially higher energy and pulp costs, both in Europe and the United States. To gain a major foothold in the market for environmentally-friendly coated papers, Arjowiggins has been implementing its “green” strategy. With the

Far from being a traditional paper manufacturer, Arjowiggins is a company with a focus on cutting-edge technology to provide its clients with the pioneering solutions best suited to their specifi c needs. Arjowiggins has been at the forefront of the move towards environmentally-friendly paper and paper incorporating security requirements.

THE WORLD’S NUMBER ONE PROVIDER OF PLAYING CARDS

Arjowiggins is the world’s leading provider of paper substrates used in making playing cards for casinos, secure prepayment cards and collectable cards. This business line enjoys strong demand now that Arjowiggins has rolled out its new “green” offer and its new secure cards, which are gradually replacing PVC cards.


successful rollout in Europe of a line of “green” coated papers, sold under the Maine Gloss Green and Satimat Green brand names, Arjowiggins has emerged as a leading provider of such products, which command higher prices than for standard coated papers. The takeover of Dalum Papir and of recycled pulp producer Greenfi eld marks a further step in the company’s strategic shift towards “green” coated papers in Europe. In North America, stagnant sales prices and rising raw materials prices were only partially offset by lower fi xed costs, and new cost-cutting programmes have been established.

Communication segment – Higher profi t marginsSales of paper media for corporate communications grew substantially in 2007. The Communication segment also moved during the year to reorganise its carbonless paper business. Marketing campaigns delivered a boost to the corporate paper business (the Opale and Conqueror brands), a repositioning that has improved profitability and spurred growth for Arjowiggins. Against a background of a market downturn and overcapacity, the company’s carbonless paper business was hurt by a strike related to the closure of the Nivelles plant in Belgium early in the year. At the same time, the successful launch of “green” communication papers, most notably Conqueror CarbonNeutral in the United Kingdom and FSC-certifi ed papers, further consolidated the company’s leading position in this segment. And now that its tracing paper plant in China has started operating, Arjowiggins, the global market leader in this segment, can supply its clients in Asia with top-quality products at competitive prices. Finally, following the sale of Canson’s consumer business in Europe to Hamelin, the agreement signed by Arjowiggins in 2006 to continue as Hamelin’s exclusive paper supplier was implemented in 2007.

ARJOWIGGINSA SUCCESSFUL STRATEGY COMBINING INNOVATION AND ENVIRONMENTAL PROTECTION

Security and Technology segment –Profi t margins rising sharply2007 was once again a year of growth for the Security and Technology segment, with sales and profi t margins higher than in 2006. Gradually increasing prices over the course of the year limited the impact of rising costs and allowed the company to gain market share. In the Security business, the sharp growth in sales and operating income was driven by technological innovation (e.g. trademark protection, e-documents) and high order backlog for banknote paper. In medical paper products, industrial redeployment efforts were initiated in late 2007 to fi ne-tune the company’s offer to meet the needs of end users, particularly in Asia, along with stepped-up marketing efforts in emerging countries. In the Industrial segment, while operating income from decor paper sales receded as competition heated up, the company’s other industrial products (abrasive paper, casting paper, transfer paper, battery separators, etc.) generated higher sales and income than in the previous year.

THE SECOND BIGGEST INDEPENDENT PRIVATE-SECTOR PRODUCER OF BANKNOTE PAPER

Over 10 billion banknotes are printed every year on paper produced by three Arjowiggins paper mills. For the company’s most technical papers, the engineers at Arjowiggins have developed high-security solutions (e.g. watermarks, iridescent coating, chemical sensitising, security threads) that include treatment to enhance resistance to soiling (DIAMONE) and bacteria and fungi (BIOGUARD). An offi cial partner of Interpol with recognised expertise in preventing counterfeiting, Arjowiggins supplies all of the world’s major consumers of currency paper (central banks, fi nance ministries, specialised printing plants).


7 800collaborateurs

33sites de production

1 500brevets déposés

219ingénieurs

3centres de R&D

7,700employees

33production facilities

1,500patents registered

220engineers

3R&D centres

GEP – THE E-DOCUMENT SPECIALIST

Arjowiggins offi cially inaugurated its GEP production facility in Italy, where RFID chips can be embedded in passports and other ID papers. Arjowiggins supplies biometric passports to Hong Kong, Italy, Brazil and many other countries.


ARJOWIGGINSBANKING ON INNOVATION

— Acquisition of Dalum Papir, Europe’s leading producer of 100% recycled paper, along with its brands Cyclus and Reprint.— Acquisition of a 51% stake in Heng Bau De, a tracing paper plant in Quzhou, China.— Acquisition of Greenfi eld, Europe’s leading producer of high-grade, recycled, FSC-certifi ed pulp (transaction completed in January 2008).— Creation of Image Paper Asia, a joint venture with Antalis to distribute communication paper in Asia.— Signing of a memorandum of agreement to acquire Zanders, a German manufacturer of carbonless and communication paper. This acquisition requires the approval of the European competition authorities.— Rollout of “green” paper offers in the Graphics segment (“green” coated paper sold under the Satimat Green and Maine Gloss Green brand names) and the Communication segment (the Conqueror Carbon-Neutral brand in the United Kingdom and FSC-certifi ed paper).— Startup of manufacturing facilities in high-growth markets: decor paper and tracing paper plants in China, conversion plants for carbonless and medical paper in the Czech Republic.— Security and traceability solutions developed with the startup of an RFID chip facility to produce e-passports, trademark protection and smart labelling in partnership with ST Microelectronics.

Highlights in 2007 Standing out from the crowd through innovation Research and development is a key component of the company’s strategy. The Arjowiggins R&D staff con-sistently strives to innovate and devise increasingly effi cient processes. To stay one step ahead of market demand, Arjowiggins focuses on developing products with exclusive textures and features that highlight the company’s benchmark status with regard to excellence and creativity. 23 new patents were registered in 2007, bringing the total portfolio of patents protecting the company’s unique know-how to 1,525. 8% of total sales were gen-erated by products launched in the past two years, and nearly 25% by products that have been out for less than fi ve years. Efforts to address environmental and global security issues account for the bulk of R&D investment in 2008.To drive and enhance effi ciency, creativity and syner-gies between locations and specialised functions, Arjowiggins has established a network structure of nearly 220 research workers at three centres, two in France and one in the United Kingdom. R&D work fo-cuses on three areas that are crucial to the company: breakthrough innovation and new product develop-ment; control over processes and technologies; and technical assistance to production plants.

— Charles Dehelly – Chairman— Guy Léonard – Chief Operating Offi cer— Mel de Vogue – Chief Financial Offi cer

Arjowiggins Executive Board

Arjowiggins R&D centre – Apprieu, France


Brands with worldwide recognition

In millions of euros 2007 pro-forma 2007 reported 2007 adjusted 2006Sales 2,054 2,001 1,950 1,926

Management EBITDA 147 143 141 142

Margin in % 7.2% 7.2% 7.2% 7.4%

Recurring operating income 75 73 73 64Margin in % 3.7% 3.6% 3.7% 3.3%

Capital employed 769 nm 701 814

ROCE 9.8% nm 10.3% 7.9%

Key management fi gures

R

“Our innovations emerge from the encounter between our R&D people and all our business partners (clients, suppliers, universities, other industrial firms). Driving them are the needs, expectations and dreams of our clients. Our goal is to offer clients technical solutions that help them showcase their know-how and stand out from the crowd.”

Philippe Bello, Arjowiggins

Chief Technical offi cer

biodiversity, taking action against climate change, recycling waste and obtaining environmental certifi cation for its products and processes. — Energy: Sequana promotes renewable energy sources and energy effi ciency.

Antalis – being the leader means committing to higher standardsContributing to sustainable development is one of Antalis’ key priorities, and the company strives to ensure that its economic growth goes hand in hand with environmental protection and social equality. The company’s Sustainability Charter – which was adopted in 2006 by top management – clearly illustrates Antalis’ commitment to corporate social responsibility. This Charter is reviewed on a regular basis and applies in all of the countries where Antalis operates.

End-to-end sustainabilityAt all stages, from ordering paper from suppliers to delivering it to clients, Antalis upholds the highest sustainability standards and encourages all its partners and stakeholders to act responsibly. Whenever possible, Antalis takes the following steps, which are just examples of the full range of commitments set forth in its Sustainability Charter:— It builds partnerships with suppliers who aim to cut back on their energy consumption and produce less toxic waste.— It selects suppliers of products that meet the highest environmental standards.— It groups shipments to optimise and reduce the use of transport vehicles. — It seeks partners who streamline their transport network.— It promotes the move from disposable to reusable packaging.

Achievements in 2007— Following a successful audit by an independent certifi cation body, Antalis France obtained chain-of-custody certifi cation (from the time the paper is ordered

Sequana and its subsidiaries work to make corporatesocial responsibility a reality, guided by a fi rmcommitment to ethics, human rights and the preservationof our planet.— Human resources: Sequana promotes staff diversityand equal opportunity, labour-management dialogueand ongoing employee development.— Industrial safety: Sequana strives to controltechnological risk and enhance workplace safety.— Local development: Sequana provides localcommunities with social and economic support andsponsors cultural initiatives.— Environment: Sequana is dedicated to preserving

Because Sequana has a vital stake in maintaining overall environmental and social balance, the Group ensures that its operations around the world further that goal.

PAPERTOUR 2007, A TRAVELLING EXHIBITION TO PRESENT NEW “GREEN” PRODUCTS

From 14 to 25 May 2007, the Antalis train travelled through Switzerland to introduce clients to its new recycled products, report on the environmental impact of paper, reveal a multitude of interesting facts about FSC- and PEFC-certifi ed papers and discuss a variety of ecological issues.


MAKING CORPORATE SOCIAL

RESPONSIBILITY A REALITY

from suppliers to the moment it is delivered to clients) for both the FSC and PEFC, two major sustainable forestry labels. The certifi cation process is also underway in Spain and Singapore.— Antalis International appointed a corporate sustainability manager and sustainability managers for each region.— Antalis took steps to raise ecological awareness during meetings with clients and rolled out targeted campaigns in Belgium, Germany, Switzerland and Hong Kong.— James McNaughton Paper (a UK unit of Map acquired by Antalis) set up a green energy policy in the United Kingdom. Since September 2007, 100% of the energy consumed comes from renewable energy sources, either wind farms or hydroelectric plants.

Arjowiggins – superb environmental credentials without compromising quality Caring for the environment is a fundamental component of Arjowiggins’ corporate strategy. The search for a balance between economic constraints and controlling the impact of its activities has encouraged the company to constantly improve its effi ciency in environmental issues. Mirroring its objective of constantly enhancing manufacturing processes, Arjowiggins has set itself the ongoing target of preserving water and air quality and responsibly managing natural resources, recycling and waste reprocessing.

In line with the company’s Environmental Charter, whichwas updated in 2007, efforts have been focused onreducing water consumption, optimising effl uenttreatment and waste management, as well as continuingto implement recycling processes to cut down theconsumption of raw materials and energy. Workinggroups that include representatives from the paper millsdevelop action plans in these priority areas. This hasenabled the company to compare best practices andbenefi t from the experience of the best-performingsites. Arjowiggins has implemented an EnvironmentalManagement Systems programme in its plants so it canconstantly monitor compliance with regulations, analysethe environmental impact of its current and futureactivities, and draw up action plans to improveenvironmental performance and prevent risks. 95% ofthe company’s paper manufacturing sites are alreadyISO 14001 certifi ed and the latest certifi cation isexpected to follow during the fi rst half of 2008.Arjowiggins has undertaken to apply environmentalcriteria when selecting its suppliers and raw materials.For instance, the company uses only paper pulp providedby forestry operations that have committed to obtainingcertifi cation for the sustainable management ofresources.


Antalis has worked for many years alongside its multiple partners to ensure that its operations are environmentally sound.

Antalis France recently took its efforts a step further by obtaining FSC (FCBA/CIC-0045) and PEFC (FCBA/07-00844) certifi cation on 7 December 2007.

This recognition is the guarantee that the certifi ed papers delivered by Antalis France were produced from certifi ed fi bres and that the chain of custody was secured from the forest to the consumer, through all stages of manufacturing and distribution. With this certifi cation, Antalis France has raised its standards another notch and rendered its environmental work more transparent. It is visible proof of the company’s commitment to join in the concerted effort that is gaining momentum each day in France.

ANTALIS FRANCE CERTIFICATION


Three directions of growth for environmentally-friendly papers For years, Arjowiggins has applied environmental management principles in all its businesses to preserve clean air, clean water and a clean environment, and to responsibly manage natural resources. The company is developing a new generation of high-grade “green” paper as part of the Group’s global strategy, which aims to:— Promote recycled fi bres that reuse waste papers and require less energy, water and chemicals to produce new paper. — Step up FSC eco-certifi cation, which is the most comprehensive, impartial and stringent set of forest management standards.— Reduce CO2 emissions.

A new line of “green” papersArjowiggins’ new line of “green” papers, featuring coated high-tech papers that combine recycled and FSC-certifi ed fi bres (Maine Gloss green, Maine green), 100% recycled papers (Cyclus, Eural) and creative papers (Conqueror CarbonNeutral), communicate a strong ecological commitment, positioning its clients favourably in the fast-growing, added-value market for environmentally-friendly papers.

Arjowiggins successfully launched the production of new environmentally-friendly coated papers in its Wizernes and Bessé plants in France. The acquisition of Greenfi eld completes the company’s integration of premium FSC-certifi ed recycled paper pulp producers and raises the number of de-inking plants in France and Denmark to three.

Although recycled paper has suffered from technically inferior performance compared to high-end coated paper, Arjowiggins’ research laboratories have developed a brand-new generation of coated paper with all the same whiteness, rigidity, opacity, gloss and printability characteristics as premium coated papers manufactured solely with virgin pulp, but featuring a substantial proportion of recycled pulp. Arjowiggins has estimated that demand in Europe for this next generation of coated paper could reach 1.5 million tonnes per annum by 2010, representing 15 to 20% of the current premium coated paper market.

GREENFIELD: THE EUROPEAN LEADER IN PREMIUM FSC-CERTIFIED RECYCLED PAPER PULP

becomes FSC-certifi ed

Conqueror, the world’s leading business commu-nications brand, signifi cantly boosts its environ-mental credentials to meet end user needs.Of unparalleled quality, Conqueror products have been FSC-certifi ed since October 2007. The brand also boasts a carbon-neutral imprint in the United Kingdom, where it offers the best environmental paper solution for businesses. To achieve this distinction, Conqueror drastically reduced its carbon imprint and worked in tandem with the Carbon Neutral Company to offset remaining emissions by investing in renewable energy projects.According to calculations by Arjowiggins, if all businesses used Conqueror CarbonNeutral® paper, UK companies alone could reduce CO2 emissions by 23,000 tonnes each year, as much as the annual emissions of nearly 4,200 households.


Arjowiggins developed the very fi rst environmentally sound magnetic stripe card (60% recycled and 40% FSC-certifi ed fi bres) for non-intensive use (gift cards, loyalty cards, etc.). The advantages of this material over plastic are low cost and biodegradability. It also offers opacity, fl exibility, and shape memory to prevent breaking or damage to the magnetic stripe when bent.

A wide variety of “green” applicationsArjowiggins and Oliver Medical jointly developed Ovantex™, a hybrid material made up of cellulose and synthetic fi bres, designed for use in sterile medical packaging. Featuring three times the tear strength of traditional medical packaging materials, it is expected to replace 100% synthetic substrates.

Dalum Papir has developed an exclusive ecological manufacturing concept that recovers all production residues and completely eliminates a range of emissions. Thanks to its brand-new 45 MW biomass-fuelled power plant, Dalum Papir now has the world’s lowest CO2 emissions and lowest energy consumption for fi ne paper production.

By using Cyclus 100% recycled paper instead of traditional paper, a company can diminish the environmental impact of its paper consumption as follows:

— CO2 emissions reductions of up to 90%— Energy consumption savings of up to 60% — Reduced discharge into water sources of up to 100%

The new biomass-powered plant will boost Dalum Papir’s competitiveness for three reasons:

— Currently, the wood chips used as fuel are cheaper than the natural gas they replace.— Since this biofuel is carbon-neutral, the entire CO2 quota allocated to Dalum Papir by the European Union can be put on the market. — Surplus heat from fl ue-gas condensation is sold to the neighbouring town for urban heating.

DALUM PAPIR: THE PAPER INDUSTRY’S ENVIRONMENTAL PIONEER

ArjoFoil F is a component product used in decorative recycled wood panels. It is the fi rst decor paper that can be applied to these panels without using melamine resin and, therefore, without emitting formaldehyde.

Sequana actively fulfi ls its role as an ethical, socially responsible business by undertaking sponsorship and solidarity initiatives.

Sponsorship For the third consecutive year, Arjowiggins was a Cor-porate Donor of the Louvre Museum and a Founding Member of the Louvre Corporate Circle. It makes obvi-ous sense for the Louvre, the largest museum in the world, to partner with a company whose high-quality

Ever since Beaumarchais bought the Arches papermills in 1784 to promote Voltaire’s avant-garde ideas,Arjowiggins has maintained close ties with the art pub-lication world. Today, it provides the paper on which theLouvre’s masterpieces are published, thereby ensuringthat they survive through the ages unaltered.

PROMOTING CULTUREAND COMMUNITY DEVELOPMENT


Arjowiggins – a corporate donor of the Louvre Museum and a partnerto cultural institutions

paper and worldwide renown provide a worthy setting for the works of art featured in the catalogues of all the museum’s temporary exhibitions – Ingres, Bieder-meier, Safavid Iran, Babylon and Marie d’Orléans are just a few examples.

Babylon exhibitionUntil 2 June 2008Louvre Museum

Partnerships Arjowiggins also partners with the Louvre’s Cabinet des Dessins, the Musée de la Vie Romantique, the Salon du Dessin and the Opéra National du Rhin, among others, for events that promote cultural diversity.On these occasions, it carefully selects the papers that will enhance the content featured in the cata-logues for these events, whether it be the genius of German Romantic drawings or photos taken by Alain Hanel for the Opéra National du Rhin.

An active ally in the humanitarian effort in Europe, Antalis frequently participates in initiatives to assist children or combat disease and handicap. It supports programmes to help underprivileged and disabled chil-dren in Switzerland, Germany and Poland, contributes to the fi ght against cancer in Belgium and Spain, and donates paper to UNICEF in Turkey and to the Red Cross in Spain.Certain initiatives were spectacularly effective in 2007, such as Antalis’s support for a breast cancer campaign in the United Kingdom, and an educational non-profi t organization in the Czech Republic, will be continued in 2008.

Antalis and the spirit of solidarity


Cabinet des Dessinscollection at the Louvre

Salon du Dessin9 to 13 April 2008, Paris

Musée de la Vie Romantique4 March–15 June 2008, Paris

Opéra National du Rhin“Un seul regard sur une saison” by Alain Hanel, 2007-2008 season

Thanks to papers donated by Antalis Spain, Ayuda en Acción, an NGO that works in Ecuador and Peru to develop health and education programmes

for children, was able to produce a greater volume of greeting card brochures and raise more funds.

The Golden Age of German Romanticism

CREATING VALUE

42-43

— Sequana actively supports the eff orts of its subsidiaries to expand their business and puts all of its energy into helping them prosper, thereby creating shareholder value. Strengthening ties with investors is one of the Group’s priorities.

Regular dialogue with investors

SEQUANA AND ITS SHAREHOLDERS

In July 2007, Sequana’s principal shareholder, Ifi l Investissements SA, sold 21.9% of the company’s share capital to DLMD, a family investment company controlled by Pascal Lebard, Sequana’s Chief Executive Offi cer.Ifi l Investissements SA thus reduced its

Th roughout the year, Sequana organises increasingly frequent meetings with both institutional and individual investors to encourage their active participation in the Group. Th e Sequana share is now listed on SBF 250 and CAC MID100, two indices of NYSE Euronext Paris.

A shareholders’ agreement between Ifi l Investissements SA and DLMD

Creating value

stake in Sequana from 48.9% to 26.7%. Ifi l Investissements SA and DLMD signed a shareholders’ agreement to act in concert for an initial period of three years, with the aim of ensuring shareholder stability.

Sequana provides the market with quarterly updates on sales results and publishes complete fi nancial statements twice a year. While the Group adjusts its communication work to the differing profi les of its shareholders and investors, all the relevant information is available on the Group website in French and English. Every quarter, a fi nancial notice in the form of a press release is published extensively in the French media. An e-mail alert system keeps all interested parties informed of the latest press releases.The Communications and Investor Relations Department pays constant attention to what financial analysts, individual shareholders and institutional investors have to say.In addition to information meetings that coincide with the publication of annual and interim results, senior management is committed to meeting regularly with investors in Europe and the United States.

Ownership structure at 31 December 2007

Free float 51.3%(including AGF – 11.8%)

DLMD21.9%

Treasury shares0.2%

Ifil Investissements SA26.7%

2008 TIMELINE

• 20 March 2007 annual results• 23 April Q1 2008 sales• 21 May Annual Shareholders’ Meeting• 25 July H1 2008 results• 29 October Q3 2008 sales

Annual Meeting

In millions of euros 2007 2006 2005Dividend (in euros) 0.70* 0.60 3.30

Share price (in euros)

• High 24.90 26.87 25.60

• Low 21.80 17.00 22.30

Closing 22.26 23.34 24.00

Number of shares at 31 December 49,545,002 49,119,739 105,959,024Market capitalisation (in millions of euros) 1,103 1,146 2,543

Share performance in 2007


Sequana on the stock market

• Listing: Eurolist of NYSE Euronext Paris (Segment A)

• Eligible for deferred settlement service

• Ticker symbol: VOR

• ISIN: FR0000063364

• Par value per share: €1.5

Share performance over the last 3 years

Website

Shareholders can obtain further informa-tion from the dedicated “Shareholders relation” section of the Group website, www.sequanacapital.fr.A shareholder’s guide provides the key information on how the shares are managed on a day-to-day basis.

Contacting Sequana

19, avenue Montaigne75008 Paris, [email protected]: +33 1 56 88 78 00

Share accounts are administered by:BNP Paribas Securities ServicesImmeuble Tolbiac75450 Paris Cedex 09Tel: 0 826 109 119 (France only)* Subject to shareholder approval at the Annual Meeting of 21 May 2008.

EurosAverage numberof shares per day

250,000

200,000

150,000

100,000

50,000

010

15

20

25

Jan.2007

Feb. March Apr. May June July Aug. Sep. Oct. Nov. Dec. Jan.2008

Feb. March

1 JuneCAC-40 at 6,168 points (high since November 2000)

11 MayDividend distribution:

0.60 per share

6 JulyDLMD acquires 21.9% of the Group’s share capital

Acquisitionof Map

31 JulyAcquisition ofDalum Papir

Subprimecrisis

(Source: NYSE Euronext)

23 JanuaryCAC-40 at 4,636 points

Creating value

CONSOLIDATED INCOME STATEMENT

Earnings per share data

- Weighted average number of shares outstanding 49,321,425 104,145,825

- Diluted number of shares 49,414,340 104,311,410

Basic earnings per share

- Earnings from continuing operations per share 0.70 0.05

- Earnings from discontinued operations per share 2.18 9.15

- Earnings per share 2.88 9.20

Diluted earnings per share

- Earnings from continuing operations per share – diluted 0.70 0.05

- Earnings from discontinued operations per share – diluted 2.18 9.13

- Earnings per share – diluted 2.88 9.18

In accordance with reporting requirements, the fi nancial statements published for 2007 include the business of Dalum Papir as from 1 July 2007 and the business of Map as from 1 November 2007, the dates on which Sequana took control of those two entities.

In millions of euros 2007 2006Sales 4,290 3,979

Other operating income 37 44

Purchases consumed and change in inventories (2,873) (2,622)

Personnel expenses (696) (671)

External expenses (512) (499)

Taxes other than income taxes (30) (37)

Depreciation and amortisation (92) (102)

Net (additions to) reversals of provisions 19 24

Other operating expenses (30) (23)

RECURRING OPERATING INCOME 113 93Other operating income and expenses, net (39) (66)

Operating income 74 27Income from cash and cash equivalents 3 15

Cost of gross debt (10) (42)

Other fi nancial income and expenses, net 10 45

Net fi nancial income 3 18Income tax expense (44) (40)

Net income from consolidated companies 33 5Share of earnings of associates - 1

Net income from continuing operations 33 6Net income from discontinued operations 108 952

Net income – total 141 958NET INCOME ATTRIBUTABLE TO SHAREHOLDERS 142 958Minority interests (1)

REPORTED FINANCIAL STATEMENTS


CONSOLIDATED BALANCE SHEET

ASSETS In millions of euros 31/12/2007 31/12/2006Non-current assets

Goodwill 857 763

Other intangible assets 63 65

Property, plant and equipment 666 684

Investments in associates 3 3

Non-current fi nancial assets 91 104

Deferred tax assets 13 14

Other non-current assets 33 19

TOTAL NON-CURRENT ASSETS 1,726 1,652Current assets

Inventories 646 538

Trade receivables 1,024 809

Other receivables 202 144

Current fi nancial assets 61 199

Cash and cash equivalents 199 255

TOTAL CURRENT ASSETS 2,132 1,945Assets held for sale 4 109

TOTAL ASSETS 3,862 3,706

EQUITY AND LIABILITIES In millions of euros 31/12/2007 31/12/2006Equity

Share capital 74 74

Additional paid-in capital 95 89

Cumulative translation adjustment (64) 23

Retained earnings and other consolidated reserves 1,030 89

Net income attributable to shareholders 142 958

SHAREHOLDERS’ EQUITY 1,277 1,233Minority interests 10 11

TOTAL EQUITY 1,287 1,244Non-current liabilitiesProvisions 221 275

Long-term debt 847 413

Deferred tax liabilities 51 51

Other non-current liabilities 9 6

TOTAL NON-CURRENT LIABILITIES 1,128 745Current liabilities

Provisions 93 287

Short-term debt 168 274

Trade payables 785 717

Other payables 401 407

TOTAL CURRENT LIABILITIES 1,447 1,685Liabilities related to assets held for sale 32

TOTAL EQUITY AND LIABILITIES 3,862 3,706

Creating value

CONSOLIDATED CASH FLOW STATEMENT

In millions of euros 2007 2006Cash fl ows from operating activitiesNet income – total 141 958

Elimination of non-cash and non-operating income and expenses:

+/- Depreciation, amortisation and provisions (except on current assets), net (41) 152

+/- Disposal gains and losses (160) (970)

+/- Other non-cash income and expenses (1) (2)

+/- Income tax expense and benefi ts (including deferred taxes) 44 41

- Share of earnings of associates (1)

- Share of earnings of associates held for sale (62)

Gross cash fl ows from operating activities (17) 116- Dividends received from non-Group companies (6) (3)

- Taxes paid (42) (7)

Change in operating working capital (73) 26

+/- Change in loans and guarantee deposits 104 15

NET CASH GENERATED FROM (USED IN) OPERATING ACTIVITIES (34) 147Cash fl ows from investing activities

- Expenditure on acquisitions of property, plant and equipment and intangible assets (101) (131)

+ Proceeds from disposals of property, plant and equipment and intangible assets 70 107

- Expenditure on acquisitions of fi nancial assets (4) (1)

+ Proceeds from disposals of fi nancial assets 13 187

+/- Impact of changes in scope of consolidation (40) (18)

+/- Impact of operations held for sale 172 29

+/- Other cash fl ows related to investing activities (38) 19

NET CASH GENERATED FROM INVESTING ACTIVITIES 72 192Cash fl ows from fi nancing activities

Dividends paid to parent company shareholders (29) (350)

Dividends received from associates and non-Group companies 6 3

Dividends received from associates held for sale 37

Increase (decrease) in share capital - minority interests 8

+ Payments received on exercise of stock options 6 13

+/- Purchases and sales of treasury shares (2)

+ Cash received on new borrowings 232 25

- Repayment of borrowings (337) (389)

+/- Change in marketable securities with maturities greater than three months 49 128

- Net interest paid (4) (1)

+/- Other cash fl ows related to fi nancing activities (7)

NET CASH GENERATED FROM (USED IN) FINANCING ACTIVITIES (86) (526)Effects of fl uctuations in foreign exchange rates (10) (6)

CHANGE IN NET CASH AND CASH EQUIVALENTS (58) (193)Net cash and cash equivalents at start of year 207 400

Net cash and cash equivalents at end of year 149 207

YEAR-ON-YEAR DECREASE IN NET CASH AND CASH EQUIVALENTS (58) (193)Analysis of net cash and cash equivalents at end of year

Cash and cash equivalents 199 255

Short-term bank borrowings and bank overdrafts (50) (48)

NET CASH AND CASH EQUIVALENTS AT END OF YEAR 149 207

Contents

Profi le

Diversity is our strengthWinning is our motivationCorporate responsibility is our core value

Setting our sights on the number one slot in every marketMessage from the ChairmanTransparent, effective corporate governanceKey fi gures: growth in all our marketsInterview with the CEO: a Group with renewed momentumTwo complementary businesses focused on paperA strategy geared to investment and leadershipGetting stronger in growth markets around the world

A commitment to sustainable, balanced growthThe global state of the paper industryHow is paper made and distributed?Antalis: enhanced performance and stronger positionsArjowiggins: a successful strategy combining innovationand environmental protectionMaking corporate social responsibility a realityPromoting culture and community development

Creating valueSequana and its shareholdersConsolidated income statementConsolidated balance sheetConsolidated cash fl ow statement

Glossary

1

246

810111214161820

2224262832

3640

4244464748

49

1

21_Cover: Maine gloss green 350g. Maine gloss green is a bright wood-free coated paper composed of 60% recycled fi bres and 40% FSC-certifi ed virgin fi bres.

2_Inside: Satimat green 115g.Satimat green is a semi-matte wood-freecoated paper composed of 60% recycled fi bresand 40% FSC-certifi ed virgin fi bres.

All of the paper used in this document is manufactured by Arjowiggins and distributed by Antalis.

Because Sequana Capital has ceased to be a diversifi ed holding company following its move to refocus on the paper business, it has been decided to shorten the corporate name to Sequana.To that end, this report refers to Sequana in lieu of Sequana Capital.

Maine gloss green and Satimat green are the answer for clients looking for coated papersthat offer the highest level of quality while communicating environmental sensitivity.

ANNUAL REPORT 2007 — SEQUANA 48 — 49Glossary

General— Cellulose: the main component of wood. When cellulose fi bre is suspended in water, it breaks up into sub-

microscopic fi brils used in making paper.

— RFID (Radio Frequency Identifi cation): method for storing and remotely retrieving data with devices called

RFID tags, which use radio waves as a means of identifi cation. Whether applied as a sticker or incorporated into

a product, an RFID tag generally includes an antenna and an integrated circuit.

— FSC (Forest Stewarship Council): international independent, not-for-profi t, non-governmental organisation

founded in 1993 in order to encourage socially, ecologically and economically responsible forest management

and give visibility and credibility to efforts in that direction with a label proving that labelled products come from

certifi ed forests.

— PEFC (Programme for the Endorsement of Forest Certifi cation schemes): eco-certifi cation label created in

1999 at the instigation of private forest owners.

— IFIL (Istituo Finanziare Industriale): Italian investment company and subsidiary of the Agnelli Group, with hold-

ings in Fiat, SGS, SanPaolo IM and the Juventus football club.

— DLMD: Lebard family investment company, 51% owned by Sequana CEO Pascal Lebard.

Financial— EBITDA: recurring operating income, before depreciation and amortisation.

— Capital employed: aggregate of net fi xed assets and working capital requirements.

— Recurring operating income: operating income before non-recurring items.

— ROCE: Recurring operating income/Capital employed.

— Cash-fl ows from operating activities: algebraic sum of EBITDA, changes in working capital requirements

and investments.

Printed in France in June 2008© Sequana Capital ® All rights reserved

Photo credits:Vincent Leroux; Louvre - Angèle Dequier; Corbis; Getty-Images: Thomas Barwick,

Maren Caruso, Martin Diebel, Michael Duva, Britt Erlanson, Adam Gault, Jamie Grill, Leukos, Antony Nagelmann Veer, Sean Murphy, James Randklev.

Designed by W PRINTEL

Printer SIC-2GCAr

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Sequana Capital

19, avenue Montaigne 75008 ParisFrance

+33 1 56 88 78 00

E-mail : [email protected]

www.sequanacapital.fr

Antalis122, rue Edouard Vaillant 92300 Levallois-Perret Francewww.antalis.com

Arjowiggins117, quai du Président Roosevelt 92442 Issy-les-MoulineauxFrancewww.arjowiggins.com

Printed on Arjowiggins papers distributed by Antalis (60% recycled fi bres and 40% FSC-certifi ed virgin fi bres)

ANNUALREPORT

2007

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