Présentation PowerPoint 2006 Annual Results · 4 2006 Annual Results - 22 March 2007 Highlights...

PrésentationPowerPoint

2006 Annual Results

22 March 2007

2006 Annual Results - 22 March 20072

Table of Contents

1. Introduction

2. Market Environment

3. Consolidated Financial Results

4. Key Segment Reporting

5. Other Financial Information

6. Strategy and Outlook

3 2006 Annual Results - 22 March 2007

2006: A Major Crossroad for Sequana

2006 brought a major change to Sequana, leading to the distribution of over €1,960m to our shareholders

► €350m in the form of cash dividends (ordinary and exceptional)► c. €1,610m through a share buy-back

Every shareholder will thus have received a total of €19.3 per share:

● Exchange offer 57.3% x €28 = €16.0 per share● Dividend paid out in 2006 €3.3 per share

€19.3 per share


Highlights

2006: A Major Crossroad for Sequana

In 2006, Sequana Capital became a pure paper-sector player with two unlisted, 100%-owned subsidiaries► Arjowiggins, the world leader in creative and technical papers► Antalis, Europe's leading distributor of paper and visual communication products

This new strategic focus took effect on 18 December 2006, when Sequana Capital distributed its €1.6bn stake in SGS to its shareholders► The EGM of 30 October 2006 approved a buy-back of up to 57.6m (54.31%) of the

Company’s shares► As a result:

● 57 521 414 shares were bought back via an exchange for SGS shares● 125 566 shares were bought back for cash for €21 per share

Sequana’s new ownership breakdown is: IFIL (48.88%), AGF (13.66%), and public (37.46%)


Share Price Performance

Market capitalization as of 21/03/07: €1,145 mShare price as of 21/03/07: €23,31 / share

15

16

17

18

19

20

21

22

23

24

25

26

27

janv-06 févr-06 m ars-06 avr-06 m ai-06 ju in -06 ju il-06 août-06 sept-06 oct-06 nov-06 déc-06 janv-07 févr-07 m ars-070

100 000

200 000

300 000

400 000

500 000

600 000

700 000

800 000

900 000

1 000 000

1 100 000

1 200 000

Share Price - € VolumeDividend

Distribution 3,3€ / share

Share buy-back annoucement

Offer ClosingOffer

Opening


Europe's leading distributor of paper and visual communication productsPresent in 36 countries and providing 22,000 deliveries a day180,000 + customer base 6,000 employees, 73 warehouses

Sequana Today: A Diversified Paper Group

Global leader in creative and technical papersEstablished, prestigious brands: Arches, Conqueror, Maine Gloss, Rives, UtopiaPresent in 82 countries (sales)7,800 employees, 30 facilities

Sales: €2.0bn Sales: €2.3bn

Paper manufacturing Paper merchanting

Net Consolidated Sales: €4.0bn


2006 Sales Split by Geography2006 Sales Split by Segment


A revenue base well balanced between manufacturing and merchanting activities

Western Europe remains Sequana’s main market

A global player in specialty paper manufacturing and merchanting

European Union69%

RoW16%

US10%

Other European countries

5%

AW - Communication

14%

ANT - Printing35%

ANT - Other7%

AW - Security & Technology

16%

ANT - Office13%

AW - Graphic15%


Corporate communicationPromotion & advertisingLuxury packagingFine arts paperTechnical thin papers(carbonless, thin opaque)

Manufacturing: Arjowiggins

Communication

“Paper as a business and

communication means”

Graphic

“Paper as a printing and publishing

support”

Woodfree Coated Woodfree Coated with Recycled fibers

Security & Technology

“Technological solutions for

industry”

33% of SalesASP: €700-800/t

32% of SalesASP: €1,200-8,000/t

35% of SalesASP: €1,200-8,000/t

Product Portfolio Key Success Factors

ServiceLocal production (transportation cost / ASP)Pulp / paper integration

Brands and creativity R&D spending Worldwide availability for global customers

Decor papers, backings for abrasivesBanknotes, security documents and RFID, labellingHospital and Medical applications

Understanding of customers’ needsHigh R&D spending requiring leadership positionGlobal footprint

Key Figures (1)


___________________________1. ASP: Average Selling Price.


Worldwide Presence European Presence

7,800 people employed in 30 facilities and 3 R&D centersMajor European footprintRapid development in Eastern Europe and Asia

Arjowiggins: footprint

Comments

Naples

GelidaAnnonay

Rives/Charavines

Bessé-sur-BrayeLe Bourray

Brno (2006)

Arches

Dettingen

Virginal

ApeldoornDartford Clacton

Chartham

Ivybridge

Stoneywood

Wizernes

Bergerac

Crévecoeur

Neuilly en Thelle


CombinedLocks South Hadley

Charlotte

Salto

Witcel

Shouguang(2006-2007)

QingDaoQuzhou (2007)

Graphic Papers

Communication

Security and Technology


Print Paper65%

Visual Com.2%

Packaging5%

Office Paper24%

Prom. Products4%

Europe90%

RoW10%


Merchanting: Antalis

2006 Sales Split by End-Markets 2006 Sales Split by Geography

Europe is both Antalis’ first and most competitive market

The development in high growth regions like Latin America and Asia is key to margin expansion


Antalis: footprint

___________________________1. Number in brackets denotes Antalis’ ranking.


South Africa (#1)

Asia (#1)

Worldwide Presence European Presence (1)

Comments

Turkey (#1)Italy (#3)

Spain (#2)Portugal (#3)

Finland (#3)

Baltic States (#3)

Poland (#1)

Czech Republic (#3)

Romania (#2)

Slovakia (#1)

Austria

Switzerland (#1)

Ireland (#2)

France (#1)

Luxembourg (#1)

Belgium (#1) Netherlands (#5)

UK (#3)

Germany (#5)

6,000 people in 36 countriesBroad European footprint with leading market positionsLeading positions in fast growing countries as well



Strengths Weaknesses

Leadership positions on high value added, high technology and know-how intensive segmentsPrestigious brandsSuccessful expansion into low cost, high growth areas

Strongly exposed to Western EuropeLack of critical mass in coated woodfree, now a commoditized segment led by integrated players (Sappi, M-Real, UPM)

Opportunities Threats

Sound balance sheet allowing to seize external growth opportunitiesBe an active player in the consolidation of the market to strengthen leadership positions / dispose of activities lacking critical mass

Difficulty to pass through raw materials and other costs increases to customers (CWF)Risk of capacity closures in Western Europe being offset by decreases in exports to US and Asia (overcapacity in Asia)


Table of Contents

1. Introduction







Demand in Sequana’s various market segments and geographies showed contrasted trends:

► Growth in electronic media weighs on paper-related advertising spend (Coated Woodfree; Specialty Papers)

► Improvement in office printers connected to the Internet supports growth in office papers (‘Cut-size’) at the expense of carbonless forms, reports and brochures (Coated Woodfree) and of traditional corporate communication supports (Letterheads)

► Widespread relocation move towards low cost geographies (Eastern Europe, China) also affects the printing and publishing segments (apart from newspapers and periodicals)

Widespread increase in costs (wood, pulp, energy, chemical, transportation) affected all players and was particularly detrimental to those manufacturers purchasing their pulp externally

Market Environment: 2006


Market Environment: 2006

Prices followed contrasted trends on Sequana’s various segments:► They increased on those segments where demand grew strongly and/or

consolidation is highest (e.g., Cut-size, Specialty Papers)► They decreased on those segments facing the strongest overcapacity and where

exports are prominent and less and less profitable (Coated Woodfree)

Capacity closures announcements have multiplied in Western Europe

► The price increases they should allow by theoretically improving the supply/demand equation will face significant hurdles, in particular in Coated Woodfree● Decrease in export volumes (facing competition from Chinese exporters and

adversely affected by strong Euro)● Manufacturers implementing restructuring plans will find it difficult to raise prices

while keeping their volumes “in-house”● Poor health among Western European printers


Market Environment: Growth Factors

Setting up dedicated strategies towards emerging countries is essential; all sector players are re-evaluating their production and commercial networks accordingly Sequana’s markets exhibit contrasted levels of inertia (investments; know-how)«Cut-size» growth, boosted by substitution effects, remains in line with GDP growth in Western Europe

Paper Demand vs. GDP in Western Europe Paper Demand Forecasts by Region

1980 1983 1986 1989 1992 1995 1998 2001 2004 2007

GDP Paper Demand

___________________________Source: EMGE.

2,3%

7,3%

1,4%1,0%

5,8%

4,1%3,4%

2,8%

0%

2%

4%

6%

8%

Easter

n Euro

pe

ChinaAsia

(Other)

Rest O

f Wor

ldWorld

(avg

.)Weste

rn E

urope

North A

merica

Japan

Paper demand (printing & publishing) CAGR (2005-2010)


Market Environment: European Coated Woodfree

1,495

6,760

10,030 1,915

1,620

1,460

1,370

975

375240 580

700

1470

50

Deliveries Capacity Sappi M-RealStora EnsoLecta UPM Burgo Arjo-Wiggins

ScheufelenOthers

US Europe Asia

► Unfavorable currency effectthat prevents from exporting to the US

► Asian pressureespecially from Korea which has entered the US market and created overcapacity that would indirectly impact the European market

► Increase in Asian capacity preventing European manufacturers from exporting local overcapacity

Western Europe

Eastern Europe

Exports

Imports 8,980

Overcapacity of around 10%; exports threatened by increased capacity in Asia

___________________________Source: EMGE.

Worldwide coated woodfree capacity (kT)


Market Environment: Costs

In the meantime, electricity prices increased by 14% in 2006 compared to 2005

Comparison Between Recent Price Increase Announcements and Expectations as of end 2006Uncoated Woodfree Coated Woodfree

YoY growth expected in 2007 5-8% 3-5%

Recent price increase announcements since 2006

2-3% ~0%

___________________________Source: Broker research.

30%

40%

50%

60%

70%

80%

90%

1999 2000 2001 2002 2003 2004 2005 2006 2007

Ratio

Pulp / Coated Woodfree Price Ratio Selling Price Evolution – Distributors

+15%

- 8%

Coated paper, 100 grams A4 copier, C, gsm

04-04 08-04 12-04 04-05 08-05 12-05 04-06 08-06 12-06650

700

750

800

850

900


2,200

2,300

2,400

2,500

2,600

2003 2004 2005 2006650

750

850

950

2003 2004 2005 2006

Market Environment: Selling Prices

Selling prices – Coated Woodfree vs. Specialty PapersThe average selling price of Coated Woodfree has experienced a strong decline while that of Specialty Papers has increased sharply since 2004

€/t€/t

Coated Woodfree Average Selling Price (Manufacturers) Specialty Papers Average Selling Price

___________________________Source: Arjowiggins

+8,1%-16,5%


Growth drivers (volume and prices) have evolved negatively since the 2000 peak

Average selling price and volumes – European Paper Merchanting Sector

Market Environment

850

900

950

1,000

1,050

1,100

1,150

1,200

1,250

1999 2000 2001 2002 2003 2004 2005 2006

Price (€/t)

9,400

9,600

9,800

10,000

10,200

10,400

10,600

10,800

11,000

Volume (t m)

1,177€/t10.8 Mt

9.8 Mt

999€/t

(9.3%)

(15.7%)

Average Selling Price Volume (market)___________________________Source: Eugropa


Table of Contents

1. Introduction







Sequana: Consolidated Income Statement (IFRS)

€m, 31 Dec. Year End 2006 2005

Total Net Sales 3,979 3,998Growth in % (0.5%) -Recurring Operating Expenses (3,886) (3,886)Recurring Operating Income 93 112Margin in % 2.3% 2.8%Other Operating Expenses (66) (251)Operating Income 27 (139)Margin in % 0.7% (3.5%)Net Financial income 18 (30)Income Tax (40) (39)Net Result of Consolidated Companies 5 (208)Margin in % 0.1% (5.2%)Income from Associates 1 1Discontinued Operations 952 563Net Income (Total) 958 356Minority Interests 0 (8)

Net Income (Group Share) 958 348

Net Income per Share 9,20 3,29


Sequana: Consolidated Income Statement

€m, 31 Dec. Year End 2006 2005

3,998-

2195.6%

1122.9%

(30)

(22)

Misc. Recurring Items 5 9

691.7%

(268)Share of Associates 62 58

497(8)

348Net Income 958

Total Net Sales 3,979% Growth (0.5%)

EBITDA 187% Margin 4.7%

EBIT 93% Margin 2.3%

Net Financial Income (20)

Income Tax (9)

Recurring Net Income 69% Margin 1.7%

After Tax non-recurring Result (62)

Discontinued Operations 889Minority Interests 0

Comments

Flat turnover due to difficult paper markets in Western Europe, offset by fast growing emerging markets

Consolidated EBITDA margin at 4.7%

Decrease in non-recurring losses: ► Lower asset impairments► €25m capital gain on Legg

Mason shares sale► -€21m exit tax

Significant capital gain on SGS shares sale and distribution


Sequana: Consolidated Balance Sheet (IFRS)

€m, 31 Dec. Year End 2006 2005

Goodwill 763 815Equity stakes 3 626Other Fixed Assets 890 1,140

Trade Debtors 953 1 006

Cash & Equivalents 255 496

Other Liabilities 57 71

Total Liabilities 3,706 5,002

Shareholders Equity 1,244 2,193

Other Trading Liabilities 32 0

Inventories 538 550

Other Trading Assets 304 369

Total Assets 3,706 5,002

Provisions 562 592

Financial Debt 687 1,117

Trade Payables 1,124 1,029

Simplified Balance Sheet


€mn, 31 Dec. Year End 2006 2005

Goodwill 763 815Financial Investments 3 626Other Fixed Assets 990 1,279

Other Trading Assets 146 37

Other Liabilities 32 0

Total Liabilities 3,393 4,313

Equity 1,244 2,193

Net Debt 380 433

Inventories 538 550Trade Receivables 953 1,006

Total Assets 3,393 4,313

Trade Payables 1,124 1,029Other Trading Liabilities 51 66

Provisions 562 592

Sequana: Consolidated Balance Sheet

CommentsSimplified Balance Sheet

Reduction in shareholders equity due to capital reduction following SGS operation

Decrease in other fixed assets essentially related to the sale of Legg Mason shares and the impact of impairments

Reduction in consolidated group net debt reflects strict working capital management and asset base optimization (real estate and Legg Mason shares), despite €350m dividend payout


Sequana: Consolidated Cash Flow (IFRS)

(1) Of which €184m related to Legg Mason shares disposal.

€m, 31 Dec. Year End 2006

958

+/- Other (216) (386)

(842)

Funds From Operations 116 195

- Net Capital Expenditures (24) (59)

Cash Flow from Investing Activities 207 319

- Dividends Paid (350) (42)

Increase (Decrease) in Cash & Cash Equivalents (193) 128

Opening Cash 400 272

(7)26(3)

132

186(1)

45

40

(526)

(6)

207

+ Change in Working Capital 27

Cash Flow from Operations 209

+/- Net Acquisitions (1)

+ Dividends Received 14

Cash Flow from Financing Activities (414)

+/- FX Impact 14

Closing Cash & Cash Equivalents 400

Net Income 356

+/- Items Not Affecting Cash (161)

+/- Other 379

2005

- Taxes Paid (13)

+/- Other 0

Summary Cash Flow Statement


Sequana: Debt Variation

€m, 31 Dec. Year End 2006

Opening Net Cash (433)

Taxes paid (11)

Acq and sales of assets – nets 133

Dividends received 63

Dividends paid (350)

Closing Net Cash (380)

EBITDA 187Working Capital Movements 40

Acq. and sales of shares – nets 145

Capex (131)

Financing costs (23)

Summary Cash Flow Statement Comments

Cash Flow from operations was €96m

Exceptional dividend and acquisitions were financed through the sale of Legg Mason shares as well as the disposal of Antalis warehouses and of non-core assets across the group

Despite the exceptional dividend paid, Net Debt was reduced by €53m.


Table of Contents

1. Introduction







Key Segment Reporting


Arjowiggins: Strategy

Faced with lackluster demand and external costs increases difficult to pass through to customers on several key segments – the Arjowiggins team has devised an enterprise transformation plan based on five strategic priorities:

► Rapid expansion into high potential geographies (Eastern Europe, Asia)

► Research and Development focused on the integration of total solutions supporting our client’s own development

► Consolidation of the commercial organization to benefit from Arjowiggins’ Global Offer (“one face to customer”, key accounts, prescription)

► Implementation of enterprise-wide processes (IT, procurement, “Lean Manufacturing”, Supply Chain, etc.) to significantly improve productivity and extract underlying synergies – targeting €80m of identified savings over 3 years

► Execution of the perimeter changes which will enable Arjowiggins to be leader on all its activities


Arjowiggins: Key Events

Key new partnerships► Canson-Hamelin

● Sale of Canson’s conversion and B2C activities of (€90m sales, 420 p.)● Long term supply agreement with the Hamelin group● Brand sharing in drawing, tracing and inkjet papers

► Exclusive partnership with Thibierge & Comar (high-quality fine papers)► Increase of direct stake in GEP (84%) (e-passport software, smart labelling, etc.)

New commercial organisation in the Graphic and Communication segments (One face to customers)

Key restructuring measures► Closure of the Nivelles facility► Closure of one machine at the Rives facility► Important rationalizations in Dartford, Bessé and Wizernes

Expansion into Eastern Europe and Asia► Start of the Czech site (Medical & Hospital, Carbonless)► JV-Chenming construction (China, Decor)► HBD majority stake (China, Tracing paper)


Arjowiggins Competitive Landscape

Graphic

Communication

Medical & Hospital

Security &Technology

M Real Commercial Printing

Stora Enso Fine Paper

UPM Fine Paper

Sappi Fine Paper

Neenah

GlatfelterWausau

Ahlstrom

Munksjö

De La Rue

Fedrigoni(Fabriano)

Industrial Solutions

Security & Labelling

Neenah

Glatfelter


Arjowiggins: Key P&L Items

€mn, 31 Dec. Year End 2006 2005

Total Sales 1,926 1,935

EBITDA 142 164

Capital Employed 814 872ROCE 7.9% 8.2%

% Margin 7.4% 8.5%

% Growth (0%) -

EBIT 64 71% Margin 3.3% 3.6%

Comments

2005 figures are pro forma the Canson transaction

Flat sales► Positive price and mix: +2.4%► Lower volumes: -2.6%

€22m decrease in EBITDA ► Rise in external costs (+€44m)► Lower fixed costs (-€23m)

ROCE stable at around 8%


Arjowiggins: 2005-2006 EBITDA Bridge

(44)

23

(27)

142

164

(17)

(1)

0

50

100

150

200

2005 EBITDA Volume & Price Direct Costs Energy Fixed Costs 2006 EBITDA

€m


Arjowiggins: Key Cash Flow Items

€m, 31 Dec. Year End 2006 2005

Operating Cash Flow 106 165

EBITDA 142 164

Change in working capital 52 64

Capex (88) (63)

Net debt 251 291

Comments

Growth capex in high potential areas and sectors: decor paper mill in China (€30m), conversion unit in the Czech Republic

Sustained cash flow generation thanks to strict working capital management

New significant reduction in net debt


Papiers Fins Couchés Europe

46%

Papiers Fins Couchés Recyclés

7%

Coated Fine Paper US

45%

Arjowiggins: Graphic Segment

2006 Sales Split by End-Market Comments

► Efficiency: “Couchés Avenir” cost reduction program, €60/t; leverage our local presence through service to fight-off competitors

► Positioning: develop a “green”offering in Europe and the US

► Mid-term: to be the leader-consolidator in recycled paper; evaluate the global partnerships capable of bridging the gap with large integrated players

Segments in which Arjowiggins is the market leader#1

#2 Coated Fine Paper Europe

46%

Coated Fine Paper US 45%

Coated Recycled Fine Paper 7%


___________________________1. Operating cash flow defined as: Operating Income + Depreciation – Capital Expenditures - Change in Working Capital. Change in working capital amounted to

€25m and €10m in 2005 and 2006, respectively.2. ROCE defined as Operating Income / Capital Employed.3. Including non-recurring gain for €7m.

EBITDA Operating Income(3)Sales

Operating Cash Flow(1) ROCE(2)Capital Employed

667 646

2005 2006

Arjowiggins: Graphic Segment

17

7

2005 2006

52

27

2005 2006

2.4%

5.3%

2005 2006

52

36

2005 2006

300327

2005 2006

€m, except ROCE


Arjowiggins: Communication Segment

Segments in which Arjowiggins is the market leader


► Efficiency: margin expansion through productivity and restructuring efforts

► Renewed and better marketed offering: Thibierge & Comar, new organization, Hamelin

► Mid-term: expansion and partnerships into emerging countries, portfolio decisions if necessary

High cash flow generation and ROCE

Technical Thin Paper41%

Corporate Communication

20%

Luxury Packaging

10%

Fine Arts8%

Promotion & Advertising

21%

#1

#1

#1#1

#1

#1


657610

2005 2006

Arjowiggins: Communication Segment

20

26

2005 2006

75

57

2005 2006

13.4%

8.4%

2005 2006

49 48

2005 2006

198244

2005 2006

___________________________1. Operating cash flow defined as: Operating Income + Depreciation – Capital Expenditures - Change in Working Capital. Change in working capital amounted to

€47m and €35m in 2005 and 2006, respectively.2. ROCE defined as Operating Income / Capital Employed.

EBITDA Operating IncomeSales

Operating Cash Flow (1) ROCE(2)Capital Employed

€m, except ROCE


Security44%

Medical - Hospital

16%

Industrial40%

Arjowiggins: Security & Technology Segment

Segments in which Arjowiggins is the market leader


► Efficiency: low-cost developments (decor paper in China, Medical-Hospital in Czech Republic)

► Positioning: accelerate development of new technological solutions

► Mid-term: seize the opportunities that would strengthen leadership positions

Limited margin erosion related to non-recurring industrial issues

#1

#1

#1


612671

2005 2006

Arjowiggins: Security & Technology Segment

3431

2005 2006

38

22

2005 2006

9.6%11.2%

2005 2006

6358

2005 2006

316300

2005 2006___________________________1. Operating cash flow defined as: Operating Income + Depreciation – Capital Expenditures - Change in Working Capital. Change in working capital amounted to

(€9m) and €5m in 2005 and 2006, respectively.2. ROCE defined as Operating Income / Capital Employed.



€m, except ROCE


Arjowiggins: Outlook

H1 2007 results will reflect the continuing, very difficult environment in the Graphic sector, both in Europe and the US. They will most likely be down year-over-year on this segment. They should reflect better performance in the Communication and Safety and Security segments

The January strikes subsequent to the Nivelles site closure announcement as part of the restructuring plan of the “Carbonless” activity will have a negative impact on recurring operating income (approximately €2m)

The group’s ambitious transformation plan is ongoing, with each semester to record further benefits:

► Efficiency: go-to-market model; enterprise-wide processes; restructuring measures

► Positioning: resolution of the size/integration handicap; development of “client-centric” technological solutions

► Mid-term: evolution of the group’s perimeter to be the leader in every segment (several negotiations in progress)


Key Segment Reporting


Antalis: Key Events (1/2)

Markets have started to recover with volumes, but only partially in terms of prices

Increasing competition from direct mill sales and office supply dealers put pressure on margins

Loss making UK envelope manufacturing business has been divested

Further acquisitions completed in high growth markets and regions

► Dekker Packaging (packaging)

► Lapiz Lopez (Chili): graphic paper procurement JV


Antalis: Key Events (2/2)

Agreement reached with PaperlinX to acquire their French activities and sell them our Italian activities

Strengthening of the Customer Relationship Management (CRM) system and increased regions segmentation

Asset optimization: real estate assets transaction

► Operational sale and lease back of 22 warehouses across Europe for €103m

► Objective is to re-invest this sum into trade payables to get increased rebates forcash payments

► The transaction has and will generate improved cash position and operating profit


Ofiice Supply Dealers

Antalis: Competitive Landscape

Independent merchants

Integrated merchants Manufacturers

PaperlinXIgepaInapa

Map Merchant Group (M-Real)Papyrus (Stora-Enso)Europapier (Mondi)Torras (Lecta)Burgo merchants

Lyreco Office DépôtCorporate ExpressStaples

Stora EnsoBurgoSappiM-RealUPM-KymmeneHolmenLectaArjowiggins

Merchants not related to a manufacturer

Merchants subsidiaries of manufacturing groups

and acting as their primary distribution

channels

Manufacturers increasingly sell “direct” to certain types of traditional merchanting

customers

Distributors of office supplies who

frequently use paper as a loss

leader


€m, 31 Dec. Year End 2006 2005

Total Sales 2,309 2,344

EBITDA 2,309 2,344

Capital Employed 541 646ROCE 9.8% 8.2%

% Margin 3.0% 3.3%

% Growth (1.5%) -

EBIT 53 53% Margin 2.3% 2.3%

Antalis: Key P&L Items

Comments

Stable turnover► Lower European activity► Focus on margin vs. market

share gains policy► Strong growth in Asia

Decrease in EBITDA due to margin pressure in Western Europe and increasing competition in Eastern Europe

Antalis nevertheless managed to maintain its EBIT vs. 2005 and generated a nearly 1% ROCE in 2006


Antalis: 2005-2006 EBITDA Bridge

7

4

(13)

77

69(6)

0

10

20

30

40

50

60

70

80

90

2005 EBITDA Volume Gross Margin Direct Costs Fixed Costs 2006 EBITDA

€m


Antalis: Key Cash Flow Items

€m, 31 Dec. Year End 2006 2005

Operating Cash Flow 25 43

EBITDA 69 77

Change in working capital (12) (12)

Capex (32) (22)

Net debt 255 316

Comments

High Capex due in particular to CRM investments

Strict Working Capital management► €26m reduction in Working

Capital► Offset by €38m effect of early

payments to suppliers (against rebate)

Net Debt reduction thanks to real estate deal (€95m cash-in in 2006)


Antalis: Europe Segment

Western Europe excl. France

71%

Central and Eastern Europe

9%

France20%


Market down 1.1%

Increasing pressure on margins

Good results in Iberia, France and Switzerland, difficult situation in the UK

New CRM investments and logistics optimization




2,136 2,089

2005 2006

Antalis: Europe Segment

6154

2005 2006

38.3 39.2

2005 2006

539

435

2005 2006

3128

2005 2006

7.1%

9.0%

2005 2006

___________________________1. Operating cash flow defined as: Operating Income + Depreciation – Capital Expenditures - Change in Working Capital.2. ROCE defined as Operating Income / Capital Employed.

€m, except ROCE


Antalis: Rest of World Segment

South Africa50%

Asia20%

South America30%

Sales Split by End-Market Comments

Sustained activity in Asia and good outlook in South Africa

Difficult startup in Brazil

Joint venture set up with Lapiz Lopez in Chile

Significant variations in working capital due to the launch of new activities


Antalis: Rest of World Segment

208 220

2005 2006

16 15

2005 2006

15 14

2005 2006

106 107

2005 2006

12

(3)

2005 2006

13.7% 12.9%

2005 2006

___________________________1. Operating cash flow defined as: Operating Income + Depreciation – Capital Expenditures - Change in Working Capital.2. ROCE defined as Operating Income / Capital Employed.

€m, except ROCE




Antalis: Outlook

H1 2007 expected to be ahead of previous year thanks to a more favourable price environment in Cut-Size and to the fast growing regions

Real estate divestment program will continue, although to a lesser extent than in 2006, and will generate further operational improvements

External growth strategy based on targeted acquisitions in high-growth / high-margins areas will continue

Antalis is also ready to consider any major acquisition allowing it to consolidate the sector in the context of growing competition


Table of Contents

1. Introduction







€m, 31 Dec. Year End 2006 2005

Financial Assets 177 192

Net Provisions 386 399

DG IV 205 201

Fox River 121 139

Pensions 117 157

Restructuring Provisions 66 15

Other Provisions 54 79

Gross Provisions 563 591

Sequana: Split of Provisions

Comments

DG IV: first outcome of appeal expected late April 2007

Fox River: expenses have been reduced and insurance companies refunded around €30M in 2006

Restructuring provisions mainly relate to the Arjowiggins restructuring program

Other provisions relate to various social and environmental risks


Sequana: UK Pension Fund

Pensions for our UK subsidiaries are provided through a defined benefit pension scheme

► In 2004, the Pension Fund Trustee unilaterally decided to request a £ 49,5m contribution for the period 2004-2008 which the group agreed to pay

► As of December 2006, £ 19,8m remain to be paid while the fund is now over-funded according to IAS rules

End 2006, the Pension Fund Trustee unilaterally decided to request an additional contribution of £ 105m over 5 years, equivalent to a monthly payment of £ 1,75m beginning in January 2007

► The group has disagreed with this amount, perceived as totally unjustified, and has therefore refused to pay and requested a review by the UK Pension Regulator

► Following negotiations, the group obtained a change to the Funds governance rule and the nomination of two new Trustees alongside the historical Trustee

► This new Board of Trustees, operating under majority rule, is responsible for the general review our UK Pension Fund’s situation


Permal

We will dispose of the bulk of our remaining stake in Permal in November 2007

We may, at the same date, receive a material earn-out on top of the November 2005 transaction

Overall the two transactions could generate up to $200m of cash

Today, we believe it is reasonably likely – barring any major adverse market event –that we will perceive a very significant portion of this amount

Permal Earn-Out


Table of Contents

1. Introduction







Dividend Distribution Proposal Dividend Distribution 2004-2007 (1)

Sequana’s Board of Directors will propose to the shareholders Annual General Meeting a dividend for 2006 of €0.60 per Share

It will be paid on May, 15th

Dividends

___________________________(1) Year of payment.(2) 2006: SGS shares distributed to shareholders for c. €1,610m, or c. €16 per share.

Amounts paid

0,6 0,60,4

0,6

2,7

2003 2004 2005 2006

63.0 42.0 1,960 29.5

(1)

2004 2006 (2) 20072005

€m

€ / share


Key Developments

In 2006, Sequana devised a clear strategy and successfully implemented its transformation into a focused paper group

Key changes have been initiated at both Arjowiggins and Antalis, where the key managers now have stakes in their respective companies’ share capital through demanding yet motivating incentive plans► Both companies’ key managers are now shareholders in their respective companies

In a difficult market environment, the group managed to maintain a sustained cash-flow generation despite disappointing operating results, which is a cornerstone of our strategy and objectives


Outlook

Sequana is now ready to reach a new milestone in its ambitious development strategy in the paper sector

► Our strong balance sheet and significant cash flow generation allow us to consider external growth operations our two businesses

► In a structurally difficult market environment, our strategy is more than ever to be leaders in everything we do and everywhere we are

The remaining assets and liabilities relating to our former holding status will continue to be actively managed with a view to maximizing cash returns

PrésentationPowerPoint

2006 Annual Results

22 March 2007

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