Annual Information Document
Annual Financial Report
Annual Information Document • Rhodia 2011
1
2
Annual Information Document • Rhodia 2011
A French business corporation (Société Anonyme)
with a capital of €107,062,580
Registered Office: Immeuble Coeur Défense, Tour A,
110, esplanade Charles de Gaulle – 92400 Courbevoie
Registered with the Company and Commercial
Registry of Nanterre, France, under number 352,170,161
A
n
n
u
a
l
I
n
f
o
A
Annual Information Document • Rhodia 2011
r
n
n
m
a
u
a
l
t
F
i
i
n
o
n
a
n
D
c
i
a
o
l
R
c
e
u
p
m
o
r
e
n
t
2
0
1
1
t
3
C
o
1
n
t
e
n
t
s
.
C
o
m
p
a
n
y
a
c
t
i
v
i
t
i
e
s
5
1.1. Presentation of the Business Clusters
2
6
1.2. Tangible assets of the Company
20
1.3. Innovation
21
1.4. Investments
24
2
.
S
3
u
s
t
a
i
n
a
b
l
e
d
e
v
e
l
o
p
m
e
n
2.1. Sustainable development at the heart of Rhodia’s culture
27
2.2. Environmental performance
30
2.3. Human resources & labor practices
40
2.4. Society
52
2.5. Product responsibility
55
2.6. External verification for environmental parameters
58
6
.
C
4
6
t
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
0
e
3.1. Composition of the Administrative and Management Bodies
61
3.2. Operation of the Administrative and Management Bodies
65
3.3. Compensation
69
.
R
i
s
k
m
a
n
a
g
e
m
e
n
t
7
7
4.1. Market & growth – Strategic risk
79
4.2. Supply chain and manufacturing risk
79
4.3. Regulatory, political and legal risk
80
4.4. Corporate governance and risks attached to internal procedures
81
4.5. Financial risk
82
4.6. Product risk
85
4.7. Risk to people
86
4.8. Environmental risk
86
4.9. Information and IT risk
86
4.10. Reputational risk
87
4.11. Important litigations
88
.
5
F
i
n
a
n
c
i
a
l
a
n
d
a
c
c
o
u
n
t
i
n
g
i
n
f
o
r
m
a
t
i
o
n
8
5.1. Analysis of 2011 Results
90
5.2. Financial statements
6
103
.
4
2
1
A
d
d
i
t
i
o
n
a
l
i
n
f
o
r
m
a
9
t
i
o
n
8
6.1. History of the Group
183
6.2. Legal structure of the Group
183
6.3. Capital and shareholders
184
6.4. Excerpt from the Company’s bylaws
194
6.5. Auditors
196
Annual Information Document • Rhodia 2011
1
Company activities
1
1
.
.
r
P
1.1.1.
1.1.2.
1.1.3.
1.1.4.
1.1.5.
1
.
2
.
1
.
3
.
.
4
.
e
s
n
t
a
t
i
o
n
o
f
t
e
h
u
B
i
s
n
e
s
C
s
l
u
s
t
e
r
s
6
Consumer Chemicals
Advanced Materials
Polyamide Materials
Energy Services
Acetow & Eco Services
a
T
I
n
n
1.3.1.
1.3.2.
1.3.3.
1.3.4.
1.3.5.
1
e
i
g
n
o
l
b
a
v
e
t
a
i
s
o
e
s
t
s
o
f
t
h
e
7
12
14
18
18
C
o
m
p
a
n
y
n
2
2
Innovation – one of the Company growth drivers
Innovation focused on sustainable development
Four platforms of breakthrough innovation
Open innovation boosting Rhodia’s R&D capabilities
Recognized innovation performance
I
n
v
e
s
t
m
e
n
0
t
s
1.4.1. Principal investments of the Company during
periods covered by historical financial statements
1.4.2. Investments in 2011
1.4.3. Future investments
Annual Information Document • Rhodia 2011
1
21
22
23
23
24
2
4
24
24
25
5
In recent years, Rhodia profiled itself as a strong and highly international chemicals group, growing in areas where it
held leading positions worldwide. This is why the chemical group, Solvay, was interested in it and acquired Rhodia on
September 7, 2011, following a successful friendly takeover bid on Rhodia which has doubled the size of the Solvay
Group, enriched its portfolio and extended its frontiers.
The growth strategy of Rhodia, embodied in a numerical goal of reaching a REBITDA of €1 billion by 2013-2015
excluding potential CERs (Certified Emission Reductions) or related revenues, was based on a management model
and a decentralized organization that promoted independence and entrepreneurial spirit. In 2011, Rhodia successfully
deployed its profitable and responsible growth strategy and reaped very positive first results.
The development of Rhodia is supported by three growth levers:
Organic growth in emerging markets and in promising, high added value businesses and markets, driven by the
•
challenges of sustainable development;
Innovation: all long-term research projects of Rhodia are aimed at developing technologies and solutions that meet
•
customers' requirements for responsible production and consumption;
Growth through targeted bolt-on acquisitions to consolidate leadership positions, complement the portfolio of
•
activities or innovation capacities, and capture opportunities for growth. The recent acquisitions of Feixiang
Chemicals, China's leading producer of specialty amines and surfactants and the technical plastics activity of PI
India fit into this perspective.
Rhodia bases its sustainable growth ambitions on solid grounds: a distinctive positioning in chemistry directed at
sustainable development, a historical presence in emerging markets, and leadership positions in growth markets.
The culture of continuous improvement and operating excellence, guaranteeing the competitiveness of the different
activities, is shared by all entities, with the stated goal of being among the top world references.
Finally, the commitment to social and environmental responsibility, embodied by the Rhodia Way® reference
framework, lies at the heart of all managerial processes.
Further the acquisition of the Rhodia Group by Solvay and the decision of Solvay to reorganize the legal structure of
the new Group, most of the Acetow Global Business Unit, comprising Rhodia Deutschland and its affiliates, were sold
to Solvay. Consequently, most of the Acetow operating segment was discontinued and is no longer included within the
consolidation scope. As a result, the cluster Acetow & Eco Services is no longer disclosed as a business segment.
The remaining activities of Acetow and the Eco Services Global Business Unit were reallocated to “Corporate &
Other”.
1
.
1
.
P
r
e
s
e
n
t
a
t
i
o
n
o
f
t
h
e
B
u
s
i
n
e
s
s
C
l
u
s
t
e
r
s
This Chapter presents the technologies, main markets and key events in 2011 of the Rhodia Global Business Units
(GBUs) grouped in Business Clusters. Mainstays of the Company’s growth, the GBUs benefit from a worldwide
presence as well as leading positions in their markets. Drivers of growth and differentiation, their capacity for
innovation is associated with issues pertaining to sustainable development.
The positions and market shares of the various GBUs presented below are based on estimates made by management.
6
Annual Information Document • Rhodia 2011
1
.
1
.
1
.
C
O
N
S
U
M
E
R
C
H
E
M
I
C
A
L
S
The offering of the Consumer Chemicals cluster is being developed in response to new consumption patterns
and demand for products that contribute to the better protection of health and the environment. This cluster
is one of the most dynamic drivers of growth in the Company. The three levers (organic growth, innovation
and targeted acquisitions) have proven their effectiveness and lie at the origin of the more than 30% increase
in profitability in 2011 compared to 2010. Consumer Chemicals, which serves mainly the consumer goods
market, is a highly resilient activity that should continue to grow profitably and responsibly. Consumer
Chemicals includes three GBUs: Novecare, Coatis and Aroma Performance.
2011 Key figures
•
Sales: €2,451 million.
•
Recurring EBITDA: €364 million.
NOVECARE
Novecare is a world leader in high performance chemicals for key industry segments (personal care,
detergents, agrochemicals and oil and gas, paints and industrial applications).
Business activity, technologies and main markets
Novecare supplies these major markets with solutions and formulations based on five core technologies:
•
Formulations and surfactants: Novecare offers a wide range of surfactants (cationic, anionic, nonionic and
amphoteric/betaine) with multiple functions tailored to specific applications (foam control, surface modification,
cleaning, emulsion, rheology, protection of the environment and health). Rhodia is developing innovative
surfactants-based formulations and systems that meet customers’ needs: products that perform and are cost
effective and environmentally friendly. Following the acquisitions of Feixiang chemicals in China end 2010 and
increased capacity in China, Novecare strengthens its position as the larger international surfactant player in AsiaPacific, and has leveraged Feixiang product portfolio in all zones and markets.
•
Polymers: Novecare offers a wide range of specialty polymers used primarily as manufacturing adjuvants or to
improve performance, which are intended for the industrial coatings and applications market (surface treatment,
polymerization, etc.).
Novecare also supplies natural, plant-based, water-dispersible polymers, such as guar derivatives. Their
properties are used to change texture or rheology, emulsify oils, stabilize complex preparations and extend the
effectiveness of the active agents or even change surfaces, and their applications cover a number of markets,
such as personal care and detergents, agrochemicals and oil drilling. In 2011, Novecare benefited from the
exploding demand of guar derivatives used in shale gas.
•
Phosphorus derivatives: phosphorus derivatives may be used for many applications, from water treatment to
agrochemicals and include oil drilling, fire protection (flame retardant solutions for textiles), fine chemistry,
industrial applications and metal processing.
•
Solvents-based formulations that are more environmentally-friendly: Novecare develops value-added
formulations based on these solvents that are safer for the environment and human health (easily biodegradable,
non-toxic, low Volatile Organic Compounds – VOC content, etc.). They have various applications, such as
cleaning of foundry resins, paint removal, and are also used in agrochemical preparations.
Annual Information Document • Rhodia 2011
7
Specialty amines: in 2010, Rhodia integrated the specialty amine technologies of Feixiang Chemicals in its
•
portfolio of activities. Rhodia uses them as raw materials to produce surfactants (upstream integration for
Novecare) and also sells them directly to certain large customers and for multiple applications.
Novecare is constantly strengthening its position by marketing new products and new formulations in response to
the specific needs of its major markets.
The beauty and detergent market: Novecare addresses three strategic market segments in which it is the
•
leader: specialty cleaners (hair and body), hair care (shampoos and conditioners) and performance additives for
household products and textile care. The acquisition of McIntyre in 2009 allowed Rhodia to strengthen its position
in these markets, and the acquisition of Feixiang Chemicals in 2010 allowed it to increase its presence in the
world’s fastest growing regions. Feixiang Chemicals supplies cutting edge technologies for amines and cationic
surfactants that help extend Novecare’s presence in hair and textile care and strengthen its competitiveness
through the upstream integration of the surfactants (amines) value chain. The GBU has solid skills for dealing with
issues in the beauty and detergent market: developing effective and lasting solutions that meet the specific needs
of the regional markets.
The agrochemicals market: Novecare’s objective is to continuously develop new “bio-activators” designed to
•
enhance the effectiveness of products intended for plant protection. Specific long-lasting solutions have been
successfully developed and marketed, particularly for the glyphosphate-based herbicide market. With the recent
launch of its unique, eco-friendly solvents intended for agrochemical formulations, Novecare is also well positioned
to capitalize on the growing demand for low-toxicity solvents. With its expertise in formulation and its network of
regional technical services laboratories, Novecare can help customers meet future agricultural challenges:
increasing yields to meet the growing demand for food, animal feed and bio-fuels and developing sustainable
agricultural practices (reduction of water consumption and greater respect for the environment) by developing
technologies for formulations that are more concentrated and therefore more profitable for the agrochemical
industry and farmers.
The oil and gas market: Novecare offers expertise tailored to the needs of all stakeholders in this sector. Global
•
1
energy demand is expected to increase (from 7% to 9% by 2015) due to population growth. Larger quantities of
chemical products are also needed to establish stocks of oil and gas that are increasingly difficult to mine (demand
for chemical products has increased by 50% in certain fields) and to decontaminate the water produced with oil.
Novecare is able to propose solutions to increase production and safeguard equipment, as for example guar
solutions increasingly used in the exploding fracking technologies used in shale formations. The product line
includes solutions for production systems, stimulation and fracturing, drilling and cementing, as well as assistance
from a dedicated technical service department. Rhodia is also developing services for capturing value in different
industry segments. Enhanced Oil Recovery – EOR aimed at maximizing the oil production capacities of reservoirs
developed by Novecare in partnership with the French Petroleum Institute is one example of an offer that targets a
demand that exceeds the demand for chemical products.
The coatings market: Novecare is one of the world’s leading suppliers of specialty surfactants and monomers for
•
the emulsion polymerization & coating industry. It is engaged in enabling the transformation towards more
sustainable coatings by enabling conversion to APE free and VOC free formulation while focusing on creating
novel ingredients that enhance significantly the coating performance in key areas: binder stability, adhesion, gloss,
freeze-thaw, recoating time limit, wetting properties, etc. Novecare is also developing new lasting additives
allowing formulators to solve the functional performance problems of the new water-borne formulations, while
satisfying the demand for longer-lasting and more profitable products.
1
Sources: SRI 2010 and US Energy Information Administration (EIA).
8
Annual Information Document • Rhodia 2011
•
The industrial applications market: Novecare is a leader in niche markets through its expertise in formulation
and its approach to sustainable development solutions used as lubricants and processing aids or active principles
(simplicity of handling and use, reduction of water and energy consumption, etc.).
Products
Markets
Trademarks
Competitors
Surfactants and
formulations
Cosmetics, detergents,
agrochemical formulations,
lubricants, emulsions,
polymerization, oil
Miranol®, Dermalcare®, Miracare
& Miracare SLB®, Mirasheen®,
Soprophor®, Lubrhophos®,
Supersol®, Abex®, Rhodafac®,
Geropon®, Antarox®, Supragil®,
Alkamuls®, Igepal®, Rhodacal®,
Supersol®, Rhodapex®,
Rhodoval™, Mackanate®,
Mackamide®, Mackaderm™,
Mackam® Mackadet®, Mackol®,
Mackterra™, Mackazoline®
Akzo Nobel, BASF, Clariant,
Cognis, Croda, Dow, Evonik,
Huntsman, Sasol, Shell,
Stepan
Natural polymers
Cosmetics, detergents,
agrochemical formulations,
industrial formulations, oil
Jaguar®, Rheozan®, Rhodopol®,
Rhodicare®
Hercules, Aqualon Economy
Polymers
Polymers and specialty
monomers
Cosmetics, detergents,
agrochemical formulations,
industrial formulations,
polymerization, emulsions,
coatings
Geropon®, Mirapol®, Polycare®,
Carbomer™, Glokill™, Albritect®,
Repel-O-Tex®, Sipomer®,
Rhodoline®, Mackconditioner™,
Mackine®, Mackalene®,
MackproPlus™, Mackernium®
BASF, Arkema, ISP, Dow-Rhom
& Haas, Evonik, Clariant
Phosphorus derivatives
Fine chemicals, agrochemicals, Proban®, Amgard®, Tolcide®,
water treatment, fire protection, Briquest®, Bricorr®, Albrite®,
oil
Aquarite®
Bayer, Solutia, Cytec,
Thermphos, Clariant, Ciba
Hercules
Solvents that are more
environmentally-friendly
Foundry resins, pre-varnish,
industrial cleaning, degreasing,
paint and graffiti stripping,
cleaning ink and textiles,
agrochemical preparations
Invista, Cytec, Clariant, BASF
Rhodiasolv RPDE®, Rhodiasolv®
IRIS, Rhodiasolv® STRIP,
Rhodiasolv® GRAFF, Rhodiasolv®
INFINITY, Rhodiasolv PolarClean
Key events in 2011
The quality of its product portfolio and the success of its latest innovations in the polymers and formulations fields
explain the high level of organic growth in volumes in 2011. In addition, the successful integration of Feixiang and its
continuing high (double digit) rate of sales growth place Novecare among the largest contributors of Rhodia’s growth
in 2011.
The most important developments include anti-dispersion additives for plant protection products to serve a highly
dynamic agrochemicals market and innovative formulations for gas and oil shale exploitation.
In the fourth quarter of 2011, Novecare announced the commissioning of a new surfactants product site at Zhuhai
(China), while the guar derivatives technology was strengthened by the acquisition of the Hipro Suzhou unit in China
and by capacity increases and process improvements at the Vernon (Texas, USA) plant. Similarly, a letter of intent
was signed with the Russian company Sibur to create a joint venture in speciality surfactants, to meet the growing
demand of the local market.
Annual Information Document • Rhodia 2011
9
COATIS
Based in Brazil, Coatis is the only producer in Latin America of phenol for industrial resins and automotive,
wood and construction applications. It is also the market leader in more environmentally friendly oxygenated
solvents. It has also developed a range of solvents from glycerine, a renewable raw material derived from
biodiesel, and sold under the Augeo™ brand.
Business activity, technologies and main markets
The only phenol producer in Latin America and leader in the field of oxygenated solvents, Coatis benefits from the
strong dynamic of this region. Additionally, the GBU exports 30% of its production to global markets that are growing,
2
approximately 3% to 5% per year. Coatis also owes its growth to its ability to innovate, develop and market new
products produced by using renewable resources to replace solvents that are harmful for the environment.
For oxygenated solvents and phenol and phenol derivatives manufactured in Brazil, Rhodia is one of the sector’s
leaders.
Phenol, produced from cumene, is an intermediate whose main applications are synthesis resins used for plywood
(furniture, construction), smelting (automotive) and abrasives. Its size, control of the manufacturing process and
competitive production costs rank Coatis among the main players of the sector. Furthermore, as the only producer in
Latin America, the geographic proximity to its customers gives it a major competitive advantage in this region.
Rhodia’s oxygenated solvents (acetone and its derivatives, acetic ester acid) serve the automotive (paints, metal
cleaning) and industrial goods (flexible packaging, coatings, adhesives, agro chemistry, textile and leathers) or
consumer goods (personal and home care) markets. They have high solvent power, low toxicity and their impact on
the ozone layer is low. Biodegradable, they are the main alternative to chlorinated or aromatic solvents. The leader in
eco-friendly solvents, Coatis holds a strong and durable position in Latin America, founded on its ability to develop
products focused on sustainable development and on the technical support is strives to provide to its customers.
In 2009, the GBU launched Augeo™, a new line of more eco-friendly solvents, in Brazil. Produced from glycerine, a
renewable raw material derived from the production of bio diesel, this solvent replaces products traditionally produced
using glycol ethers, which are more harmful to humans and nature. The first product of the line, Augeo SL191, was
met with great success in the paint and adhesives markets. Augeo™ Clean, launched in 2010 in the multipurpose and
industrial cleaners markets, benefits from a promising outlook.
Products
Markets
Trademarks
Competitors
Phenol
Resins and industrial goods,
automotive, lumber and
construction
Ineos, LG, Mistsui, Sunoco
Oxygenated solvents
Industrial paints, leather,
automotive, packaging, inks
Augeo™, Rhodialsolv®, RhodiaEco® BP, Celanese, Exxon, Dow,
Oxiteno, Shell
Key events in 2011
The company performed well in 2011 despite the unfavourable impact of the appreciation of the Brazilian real against
the euro, which reduced the competitiveness of local industry. Coatis's regional leadership positions and the success
of its innovative products explain the double-digit growth in sales and REBITDA from one year to another.
2011 saw an increase of phenol production capacity and the development of the Augeo™ range.
An alliance was concluded with Cobalt Technologies to develop the bio n-butanol market in Latin America.
2
Source: The Fridonia Group, Inc. Study, 2006 and the 6th ICIS Phenol-Acetone Conference 2010.
10
Annual Information Document • Rhodia 2011
AROMA PERFORMANCE
Aroma Performance designs flavours for the food market as well as synthesis intermediates for the
perfumery, food, pharmaceuticals and electronics markets. The Company holds a world market leader
position in vanilla aroma based on an integrated diphenols chain.
Business activity, technologies and main markets
Aroma Performance is the world’s leading producer of diphenols and fluorinated intermediates, comprising three main
market segments:
•
Aroma ingredients: flavourings and fragrances for the food and perfumery markets, produced via a fullyintegrated manufacturing chain from Catechol to its Rhovanil® and Rhodiarome® brands. As the world leader in
vanilla flavourings, the business produces vanillin and ethyl vanillin using innovative and reliable methods which
ensure strict environmental requirements and total Food Safety. The GBU is the only player in the sector to have
three diphenol production sites as close as possible to its customers needs: Saint-Fons (France), Baton Rouge
(USA) and Zhenjiang (China).
In the perfumery segment, Aroma Performance is one of the leaders in IBCH (sandalwood note) and
Cyclopentanone intermediates (jasmine note).
•
Crop protection, health and specialty: fluorinated derivatives specialties, for the crop protection, pharmaceutical
and electronics markets. The business holds a strong position in these markets thanks to innovative solutions such
as Lithium salt for electrical vehicles batteries or antistatic properties as well as Triflic acids for Pharmaceutical
applications. The main production site of these segments is based in Salindres, France.
•
Inhibitor solutions: monomer stabilizers and polymerization control agents for the petrochemical industry and for
polymers intended for such end-markets as the construction, automotive and consumer care markets. The
business manufactures three key inhibitors mainly used for production, storage and transport: Hydroquinone (HQ),
methyl hydroquinone (MeHQ, also referred to as PMP) and tertiary butylcatechol (TBC).These three stabilization
products are operated in plants located in Europe, Asia and North America and technical service and research
centres worldwide.
Products
Markets
Vanillin and ethyl-vanillin Vanilla flavors for the food and feed
products
industries.
Olfactory notes for, fine perfume, cosmetic
products and detergent industry.
Trademarks
Competitors
Rhovanil®, Rhovanil®
Natural, Rhodiarome®,
Rhodiantal™ Original,
Rhovea™
Borregaard, Jiaxing,
Odor-masking for tires
Fluorinated derivatives
High value-added products for agrochemistry, Triflic acids– LiTFSI
pharmaceuticals and human health.
Catechol – Guaiacol
Synthesis products for the electronics and
electrical products markets
Sinochem – SRF – Central
Glass
Monomer stabilizers and
polymerization control
agents
Stabilizer products for petrochemical
industry: Polymerization inhibitors,
antioxidants,
Mitsui, Ube, Eastman
Annual Information Document • Rhodia 2011
Hydroquinone, PMP, TBC
11
Key events in 2011
In 2011 Aroma Performance obtained FSSC 22000 (Food Safety System Certification) accreditation for the production
of vanillin and ethyl vanillin at its Saint Fons (France) and Baton Rouge (Louisiana) sites. The company has
repositioned its brands Rhovanil®, Rhovanil® Natural and Rhodiarome®, now exclusively dedicated to the food
market with a high priority to food safety. Rhovea™ has been created to answer feed market needs.
By moving its IBCH facility from Wuxi to Zhenjiang the company has strengthened its Chinese industrial platform
which now groups the manufacturing of products used in inhibitors markets, in agrochemicals and perfumery.
Aroma Performance is also the market leader in polymerization inhibitors used by major players in the petrochemical
industry and announced its worldwide hydroquinone capacity increase. It is continuing to reposition its product range
by signing long-term industrial cooperation agreements with its customers.
Finally the Company has successfully commercialized LiTFSI lithium salt for the Autolib electric vehicle developed by
France's Bolloré Group and continues to strengthen its commercial position on triflic acids for pharmaceutical and
electronic applications.
1
.
1
.
2
.
A
D
V
A
N
C
E
D
M
A
T
E
R
I
A
L
S
Another major growth driver for the Company, Advanced Materials, includes the Silica and Rare Earth
Systems businesses, serving industries such as low-energy tires, automotive catalysis and low-energy
lighting. The growth of this cluster, faster than the organic growth of the markets it serves, is driven by
Sustainable development issues. The Company's competitive advantage rests on its technological edge, its
economies of scale, its global footprint, and its ability to innovate and take advantage of regulatory changes.
Both businesses contributed to the excellent performance of the cluster during the year with, in the field of
rare earths, exceptional price conditions which gradually normalized after peaking in mid-2011. REBITDA
doubled as a result compared with the previous year. This cluster offers very promising potential.
2011 Key figures
•
Sales: €891 million.
•
Recurring EBITDA: €267 million.
SILICA
Silica is the leading global provider of highly dispersible silica, produced from sodium silicate and used
mainly by the tire industry, as well as in toothpaste, animal nutrition, battery separators and high
performance rubber products. Rhodia is the inventor of this technology that was developed in the 1990s.
Silica runs eight manufacturing facilities spread across four continents – Europe, Asia, North America and
South America - all operating at the highest quality standards to meet customers’ growth needs.
Business activity, technologies and main markets
Silica’s highly dispersible silicas are amorphous precipitation silicas with multiple features. They are produced from
sodium silicate, resulting from the very high-temperature fusion of sand and sodium carbonate. Obtained by a reaction
with sulfuric acid, the silica is then filtered, washed and dried. As the inventor of highly dispersible silica in the 1990s
and the world leader in this technology with a market share exceeding 50% in 2011, the GBU focuses primarily on the
market for low energy consumption tires manufactured today by most tire manufacturers worldwide. It also serves the
markets for high performance rubber products, battery separators, animal nutrition, toothpaste and silicones.
12
Annual Information Document • Rhodia 2011
Products
Markets
Trademarks
Competitors
High
performance
silicas
Tire industry, rubber technical parts, elastomers and
silicones, sports shoes, animal food and nutrition, oral
hygiene, etc.
Zeosil®,
Evonik, Huber, PPG, OSC
Zeosil® Premium, Tixosil®,
Tixosil SoftClean ™
Tixolex®
Key events in 2011
In 2011, the company fully benefited from the new production capacity of the Qingdao (China) site that has been
operational since the beginning of the year. Silica has, moreover, continued to invest in additional production capacity
at its plants at Chicago Heights (Illinois) (rolled out in the fourth quarter of 2011) and Collonges (France) (roll-out
scheduled for first half of 2012). All these three investments together increase the Group’s worldwide production
capacity by 40% in order to support the growth of local and international demand for low-energy tires.
RARE EARTH SYSTEMS
The world leader in formulations based on rare earths, Rare Earth Systems develops innovative solutions to
reduce vehicle emissions and achieve energy savings. Its products are used in automotive applications, in
energy saving light bulbs and LCD television screens, electronics and multilayer ceramic capacitors. Its
leading edge technology solutions, the rapid development of its production and R&D capacity in Asia and its
unique position in China based on long term partnerships with key customers, but also outside China, give it
an unequalled and durable strategic advantage.
Business activity, technologies and main markets
Rare earths are 17 natural, non-ferrous elements present in the earth’s crust as ore that are particularly sought after
for their unique catalytic, magnetic and luminescent, polishing and other properties. Rare Earth Systems separates
these elements through purification steps in order to produce high value-added formulations tailored to the needs of
the automotive, lighting and electronics markets it serves.
Rare Earth Systems is the market leader in the automotive catalysis market for emissions control. The GBU has
developed unique technologies for washcoat formulations, combining mixed oxides and aluminums. In the field of
Diesel particulate filter regeneration, Rare Earth Systems holds a leading position thanks to its Eolys catalytic
converter, and plays a major role in the market for the polymerization of butadiene for the manufacture of eco-friendly
tires.
The GBU provides its customers with a variety of rare earth-based luminophore powders intended for luminescent
applications. It is the market leader for eco-friendly phosphors used in energy-efficient light bulbs and LCD TV screens.
In the electronics market, Rare Earth Systems is on its way to becoming a major player in the segment for highprecision polishing of LCD screens and in the segment for Chemical Mechanical Planarization – (CMP) of semiconductors. Lastly Rare Earth Systems is the market leader for rare earth-based formulations, combining great purity
and high performance for multi-layer ceramic condensers. As part of Electronics market the GBU is also operating in
specialty applications requiring the highest purity level of rare earth based specialty chemicals.
In 2012 Rare Earth Systems has introduced recycling as a new pillar in its business strategy. To recycle Rare Earth
from fluorescent lamps is a first step moving forward on recycling business. The GBU is currently developing new
projects with selected partners on new end of life equipment streams.
Annual Information Document • Rhodia 2011
13
Products
Markets
Trademarks
Competitors
Rare earth-based mixed
oxides and alumina for
washcoats
Formulations for emissions controls for gasoline
or diesel engine vehicles
Actalys®, Optalys®,
Acilys®, Stabilys™,
DKK, MEL, Sasol
Catalytic converters for fuel
engines
Formulations for the regeneration of diesel
particulate automobile filters
Eolys®,
Eolys®Powerflex™
Innospec, Infineum
Phosphorous
Luminescent materials for energy-efficient light
bulbs and TV screens
Luminostar®
Nichia
Polishing
Abrasives for polishing glass, flat TV screens,
glass hard drives, semi-conductor wafers
Cerox®, Opaline®
Mitsui, Showa Denko
Ceramic electronic
components
Materials for multi-layer ceramic condensers
intended for electronics applications
Superamic®
NEO MATERIAL
Key events in 2011
In a market highly sensitive to China's policy on export quotas for rare earths, the company has over many years
developed a strategy to secure and diversify its sources of rare earths supply, including new recycling processes.
Looking forward, Rare Earth Systems should benefit from the recycling of rare earths from low energy light bulbs,
NiMH batteries and used magnets. In addition, Rare Earth Systems formed in 2011 a strategic alliance with China
Rare Metals and Rare Earth Co. covering the supply of rare earths as well as technology and market development,
capitalizing on each company's competitive advantages in the value chain.
To support the growth of the local market in China, a new production unit of rare-earth based compounds for
automotive emissions control was set up at Liyang in 2011.
Finally, Rhodia obtained the Pierre Potier Prize for Innovation in Chemistry for Sustainable development, awarded by
the French Ministry of Industry, for its Eolys PowerFlex™ catalytic additive for particulate filters, which is already fitted
to 1.5 million diesel vehicles across the world.
1
.
1
.
3
.
P
O
L
Y
A
M
I
D
E
M
A
T
E
R
I
A
L
S
Integrated production of the polyamide 6.6 chain gives the cluster a leading position in the most attractive
sectors. In addition, its vertical integration provides it with a strong, structural, competitive advantage. The
polyamide chain activities are grouped into three companies.
In the first half of 2011, the cluster benefited from strong demand and an environment marked by a tension
between supply and demand, resulting in an overall higher pricing power. However, in the second half, the
business suffered a downturn. This combined with a sharp and sudden fall in the prices of key raw materials
(butadiene and cyclohexane), resulted in significant pressure on margins over this period.
2011 Key figures
•
Sales: €1,802million.
•
Recurring EBITDA: €195 million.
14
Annual Information Document • Rhodia 2011
POLYAMIDE & INTERMEDIATES
Polyamide & Intermediates is number 3 worldwide in polyamide 6.6 and number 2 in adipic acid-based
intermediates.
Business activity, technologies and main markets
Polyamide & Intermediates is a global player in polyamide 6.6 chemistry mastering technology in chemical
intermediates and polymer production. Adipic acid (AA) and hexamethylene diamine (HMD) -intermediates
manufactured from petrochemical derivatives (principally natural gas, butadiene, and cyclohexane)- are essential
elements to produce polyamide 6.6 (PA 6.6).
One of the rare players to have a production line that incorporates the diverse manufacturing processes for various
types and grades of polyamides, the GBU produces PA 6.6 polymers for a wide range of applications. These
polymers are obtained from specific manufacturing processes, which differ depending on the raw materials used, and
each generates a series of intermediate products, primarily adipic acid, ADN, HMD, KA-oil and nylon salts.
Downstream in the nylon chain, the GBU develops ranges of high performance products with high added-value from
PA 6.6 polymers, such as engineering plastics, industrial fibers and yarns as well as textiles.
The following are products from the GBU’s polyamide chain and related markets:
•
Intermediates are manufactured from petrochemical derivatives (mainly natural gas, butadiene and cyclohexane).
They are essential elements for obtaining the PA 6.6 polymers required for manufacturing engineering plastics,
industrial fibers for tyre cord and airbags and textile yarns. With the Stabamid® brand, the GBU offers a full line of
PA 6.6 polymers that provides new features (UV protection or antistatic functions);
•
Intermediate products and derivatives from hexamethylene diamine (HMD) also have applications in paints,
coatings and surface treatments. With its Rhodiamine™ brand, the company offers an extensive range of amine
derived molecules to the market in oil & gas applications or in epoxy resins
•
Intermediate products from adipic acid: under the Rhodiacid™ flagship, the di-acid derivates allow the
manufacture of polyurethanes and thermoplastic polyurethanes, plasticizers, adhesives and coatings or moistureresistant products such as absorbent handkerchiefs or papers;
•
High performance fibers are mainly manufactured in Valence (France). The flagship line of polyamide fibers,
Passoréa®, intended for the automobile market, is exceptionally durable against wear and light-fastness
resistance.
Products
Markets
Intermediates products :
Rhodiamine™,
Industrial paints, coatings and inks,
adhesives, surface treatment, aeronautics, Rhodiacid™,
marine and wind energy, agrochemical
Stabamid®
formulations, water treatment, paper
industry, leather treatment, asphalt and
bitumen in road construction, textile, tires,
airbag, automotive, electronics
Invista, BASF, Ascend,
DuPont, Asahi, Radici
Automotive, tires, filtration, printing,
cordages, carpet, furniture, textile
Invista, Acordis, Asahi,
Dusa, Honeywell, Ascend,
Toray
•
HMD and its amine
derivatives
•
Adipic acid and its
di-acid derivatives
•
Polymers
Technical yarns and fibers
Annual Information Document • Rhodia 2011
Trademarks
Sylkharesse®, Noval®,
Passoréa®
Competitors
15
Key events in 2011
To enhance customer service, reliability improvement programmes were introduced at all sites, along with capacity
increases at the Freiburg (Germany) and Onsan (South Korea) sites.
ENGINEERING PLASTICS
Engineering Plastics specializes in high performance engineering plastics marketed under the Technyl
®
brand. These are used in place of metal in order to achieve significant weight savings, while allowing freedom
of design, in high-tech sectors such as the automotive industry, construction, energy, electronics and
consumption goods.
Business activity, technologies and main markets
Delivered to plastics manufacturers in the form or granules, Technyl® plastics are transformed by using injection,
extrusion or blowing technologies to serve high tech sectors, such as the automotive industry, electrical or electronic
components, industrial equipment, construction and sports and leisure. The mechanical, chemical, thermal and fireresistance performance of Technyl® plastics make it possible to manufacture high value-added applications. They are
often used as a substitute for metal to achieve significant weight savings while at the same time benefiting from great
design freedom.
The Technyl® product line is expanded regularly with innovations intended to reduce the environmental impact of the
application and limit the consumption of non-renewable resources, like the 4earth™ recycling solutions, the biosourced Technyl® eXten polyamides, the fire-resistant range for photovoltaic technologies and the Fuel’In™ line that
makes it possible to reduce emissions of volatile organic compounds. In addition, Rhodia Engineering Plastics
proposes a new generation of thermoplastic composite materials, Evolite™ by Technyl®, offering both lightweight and
high mechanical performance that meets the very demanding specifications of structural applications.
In order to support and optimize their customers’ developments, the Engineering Plastics teams also offer advanced
services covering the use of Technyl® materials, predictive simulation support for designing parts (MMI Confident
Design™), test bench qualification of parts in development, as well as life cycle analyses allowing an evaluation of the
environmental impact of an application.
Products
Markets
Trademarks
Competitors
Engineering plastics
Automotive and transport,
electrical, electronics
construction, industrial
equipment, consumer goods
Technyl®, Technyl® Star,
Technyl® eXten, Fuel’In by Technyl™,
Evolite by Technyl™,
MMI Confident Design™,
4earth™ by Technyl
DuPont, BASF, Lanxess,
DSM
Key events in 2011
In 2011, Engineering Plastics received several certifications and made the first sales of its new Technyl eXten partially
bio-sourced polyamide for braking systems. It also concluded a partnership with Faurecia to develop lightweight car
seat frames, using polyamide engineering plastics with high crash resistance. It increased production capacity at its
plants in Poland, Brazil and China, and also acquired the technical plastics business of the Indian company PI
Industries Ltd. to accelerate its growth in India.
16
Annual Information Document • Rhodia 2011
FIBRAS
Fibras is the leading Latin American producer of polyamide 6.6 yarns and fibers, used in the textile industry
(lingerie, sportswear, socks, fashion) and for certain industrial applications (tires, sewing yarn, airbags and
abrasives). The company has expertise in producing yarns for smart textiles with anti-UV, antibacterial, and
cellulite-reducing properties, marketed under the Emana® and Amni® brands.
Business activity, technologies and main markets
The main outlets for textile yarn are lingerie, sportswear and beachwear, socks and fashion. These markets require a
brand strategy as well as a strong capacity for innovation, such as the recent launch of the yarn Emana®. This
innovative yarn developed in the Rhodia research laboratories in Brazil contains a patented additive that, when
incorporated in an article of sportswear or an undergarment, gives it thermoregulation properties and improves blood
microcirculation. It offers a feeling of enhanced comfort and advances the treatment of cellulite, with improved skin
tone. This yarn is OEKO-TEX 100 certified, which attests that the product is free of all harmful substances for
consumers. In 2009, Fibras received the “Innovation and Technology Prize” from the Brazilian Chemical Industry
Association, Abiquim, for this innovation.
Amni® is another leading Fibras brand. Beyond the exception qualities it offers – comfort, ease of care, pleasant
texture and appearance corresponding to basic requirements of consumers and manufacturers – the Amni product
line occupies a choice position in the “intelligent textiles” market; for example, these textiles offer antibacterial
properties, UV protection, long-range infrared emissions protection and improved water management.
These two most recent consumer brands have given Fibras strong notoriety with its customers and end users.
Industrial yarn has applications in the tire, sewing thread, rope and fishing net markets. These markets require highquality products as well as technical expertise and effective logistical services. The GBU’s strength comes from its
proximity to, and solid knowledge of, its customers.
The applications for staple fibers are abrasives, mixtures with other fibers (cotton, wool, etc.) and filtration. The
manufacturing process for the staple fiber developed by Fibras is unique and eco-friendly.
Products
Markets
Trademarks
Competitors
Textile yarn
Lingerie, sportswear and beachwear, socks and
fashion
Nitya®, Amni®,
Emana®
Invista, Radici, Nilit
Industrial yarn
Tires, conveyor belts, sewing thread, ropes and
fishing nets
Rhodianyl®
CSM, Kordsa, Toray,
Hyosung
Staple fiber
Abrasives, mixtures of fibers, filtration
Rhodianyl®
Invista, Nexis
Key events in 2011
In 2011, Fibras experienced lower demand in a weak Brazilian textile market reflecting the eroded competitiveness of
the local textile industry.
Annual Information Document • Rhodia 2011
17
1
.
1
.
4
.
E
N
E
R
Y
G
E
S
I
V
R
C
E
S
2011 Key figures
•
Sales: €219 million, or 4% of the Company’s sales.
•
Recurring EBITDA: €175 million.
Energy Services has been part of Rhodia until the end of 2011. Following the acquisition of the Rhodia Group
by Solvay in September 2011, Solvay created, on January 1, 2012, Solvay Energy Services. The mission of
this new Solvay’s GBU, which is the first concrete outcome of the integration of the Rhodia and Solvay
groups, will be to optimize energy costs and CO2 emissions for Solvay and third parties.
Solvay finalized at the end of 2011 the acquisition of 100% of Orbeo, previously a joint venture owned equally with
Société Générale and a major operator in the carbon market. This acquisition, which illustrates Solvay's determination
to continue to develop the activities to reduce greenhouse gases emissions that Rhodia had initiated, will strengthen
its commitment to combat climate change by expanding its offerings in integrated energy and CO2 emissions
management.
In this way, Solvay Energy Services will draw on the combined key skills and expertise of Solvay, Rhodia and Orbeo
in order, on the one hand, to optimize the energy purchases of the new whole, totalling €1.2 billion a year and, on the
other, to support energy and CO2 management at all Group business units and production sites, knowing that Solvay
manages energy co-generation facilities worldwide with an installed production capacity to date equivalent to
1,000 MW. The GBU will also develop activities to help external clients reduce their environmental footprint. These will
include energy services, CO2 management and the development of renewable energies and biofuels.
Key events in 2011
In 2011, the GBU continued work on its first project to produce energy from biomass in Brazil in partnership with
Paraiso. In France, it launched a photovoltaic plant in Lyon, received the first deliveries of electricity via the Exeltium
consortium, of which Solvay and Rhodia have been members from the outset, and entered into a partnership with
Vattenfall, the SNCF and Arcelor Mittal to respond to tenders for the renewal of hydropower concessions. In Belgium,
the company has developed the Blue Sky project along with other electricity-intensive industries and GDF Suez to
obtain nuclear electricity linked with an investment in building a gas plant. It is also developing the Solwatt energy
efficiency projects to reduce energy consumption at the Group's sites and their carbon footprints.
In terms of activity, the annual volumes of CER (Certified Emission Reductions) and ERUs (Emission Reduction Units)
produced totalled 14 million tonnes in 2011, which is fairly stable compared to last year. Moreover, the long-term
hedging strategy has proven its effectiveness in enabling the Group to benefit from sale prices for its CERs well above
the annual average spot price. This long-term CER hedging strategy also covers a majority of the expected production
of CERs in 2012 and 2013.
1
.
1
.
.
5
A
C
E
T
O
W
&
E
C
O
S
E
R
V
I
C
E
S
Further the acquisition of the Rhodia Group by Solvay and the decision of Solvay to reorganize the legal
structure of the new Group, most of the Acetow Global Business Unit, comprising Rhodia Deutschland and
its affiliates, were sold to Solvay. Consequently, most of the Acetow operating segment was discontinued
and is no longer included within the consolidation scope. As a result, the cluster Acetow & Eco Services is no
longer disclosed as a business segment. The remaining activities of Acetow and the Eco Services Global
Business Unit were reallocated to “Corporate & Other”.
Acetow and Eco Services operate on very specific, mature and stable markets, where partnerships with
clients are built on reliability, service quality and security of supply.
18
Annual Information Document • Rhodia 2011
Both activities recorded strong performance in 2011 thanks to their operating excellence and increased
competitiveness. In the future, their high resilience is expected to continue.
ACETOW
The world’s third largest producer of acetate tow for cigarette filters, Acetow is also one of the principal
suppliers of cellulose acetate flakes for the textile industry.
Business activity, technologies and main markets
Cellulose acetate flakes are derived from the chemical reaction of acetic anhydride with wood pulp. To obtain acetate
tow, cellulose acetate flakes are put into a solution in acetone and extruded into strands that comprise the tow. The
tow is then supplied to tobacco companies to make cigarette filters.
The world’s third largest producer, the GBU holds approximately 16% of the global market for cigarette filters. Its main
markets are located in Europe, in the Confederation of Independent States (CIS), in Asia and in Latin America.
Products
Markets
Trademarks
Competitors
Acetate tow
Cigarette industry
RHODIA® Filter Tow™ Celanese, Eastman, Daicel, Mitsubishi
Cellulose acetate flakes
Textile industry
RHODIA® Acetol
Celanese, Eastman, Daicel, Pacetati
Key events in 2011
In 2011, Acetow continued optimization of the GBU’s competitiveness with the closure of its production site in
Venezuela and production increase in filter tow facilities through debottlenecking operations. Then, it inaugurated a
new cellulose acetate unit in Freiburg (Germany) to improve the competitiveness of the site and increase capacity. It
registered the best ever GBU annual operational performance.
Acetow starts to market three new innovative products for the filter tow business: Rhodia Coloured Tow, Rhodia
Filtersorb which is an additive to increase filters efficiency with less impact on the taste and Rhodia DE Tow which is a
high speed degradable filter tow (5 to 10 times faster than standard tow).
The GBU signed a Joint Development Agreement with the French company Roquette to develop new plant based
products like acetylated starches for several applications.
ECO SERVICES
Eco Services produces and regenerates sulfuric acid in North America, widely used in gasoline refining,
chemical manufacturing and other industrial applications.
Business activity, technologies and main markets
Eco Services GBU is focused exclusively on North America, where it is the market leader in producing and
regenerating sulfuric acid, one of the most widely used chemicals in manufacturing. Overall demand for sulfuric acid
generally tracks trends in U.S. Gross Domestic Product and the North American chemical industry.
Eco Services’ network of eight production units at six sites collectively serves as a key supplier to major refineries
along the U.S. Gulf Coast, West Coast and Mid-West regions, as well as Canada.
Annual Information Document • Rhodia 2011
19
As the main customer segment for the GBU’s regeneration service, refiners use sulfuric acid as a catalyst for
producing alkylate, an essential ingredient of high-octane gasoline. During gasoline production, sulfuric acid gathers
impurities that reduce its catalytic properties. The used or “spent” acid is transported to Eco Services sites which
purify or “regenerate” it in high-temperature furnaces and return it to refineries for re-use in a continuous, sustainable
cycle.
Beyond its key role in North America’s energy infrastructure, Eco Services also supplies virgin (made from sulfur)
sulfuric acid to other chemical manufacturers and end users in a wide variety of industrial markets. The GBU also
supplies aluminum sulfate primarily for certain West Coast water treatment markets, and provides chemical waste
treatment services at two sites for industrial customers in the U.S. Gulf Coast region.
Eco Services typically provides sulfuric acid and regeneration services under long-term contracts, some extending up
to 10 years. The GBU also produces sulfuric acid for spot market transactions.
Under terms of a 2007 agreement with the U.S. Environmental Protection Agency and three states, Eco Services
committed to reducing emissions of sulfur dioxide from certain production units by more than 90 percent by 2014.
When fully implemented, the sulfur dioxide air emissions from these facilities will be one-half of the levels allowed for
new sulfuric acid plants, eliminating more than 19,000 tons per year of emissions overall.
Products
Markets
Trademarks
Sulfuric acid, regeneration
services and other sulfur
derivatives
Oil refining, chemical and
petrochemical production
-
Competitors
Chemtrade, DuPont, General
Chemical, Marsulex
Key events in 2011
As of year-end 2011, new emission controls were completed at two of Eco Services production units, at Houston,
Texas, and Baton Rouge, Louisiana, where the expected emissions reductions have been achieved. Construction is
underway at two other units, with completion expected in late 2012.
1
.
2
.
T
a
n
g
i
b
l
e
a
s
s
e
t
s
o
f
t
h
e
C
o
m
p
a
n
y
The Group’s total gross property, plant and equipment as of December 31, 2011 was €5,071million, of which
€223 million was property, plant and equipment under construction. Their value was comprised mainly of materials
and equipment, which was €3,959 million, and buildings, which was €747 million.
The Group’s total net property, plant and equipment as of December 31, 2011 was €1,568 million, or 28.1% of the
consolidated balance sheet total as of December 31, 2011. Their value consisted of materials and equipment, which
was €1,007 million; buildings, which was €235 million; land, which was €103 million; and €223 million worth of
property, plant and equipment under construction.
See Note 10 (Property, plant and equipment) to the consolidated financial statements in Chapter 5.2.2 of this
document.
The following table shows the number of Rhodia sites by Cluster, GBU and Geographic Zones as of December 31,
2011. The size of the sites may vary considerably in terms of the number of employees and production capacity.
Of the 64 sites, 9 are shared by several GBUs. Each site mentioned in the table below is listed according to which
GBU uses it the most.
20
Annual Information Document • Rhodia 2011
Clusters
GBUs
Consumer Chemicals
Novecare
Asia
Pacific
Europe
Latin
America
North
America
Total
10
5
1
8
24
Coatis
Advanced Materials
Polyamide Materials
1
Aroma Performance
1
2
Silica
3
2
Rare Earth Systems
3
1
Polyamide & Intermediates
1
4
Engineering Plastics
2
1
3
1
Energy Services
Acetow
& Eco Services*
Acetow
7
1
5
1
4
2
2
1
1
2
3
Eco Services
Total
1
5
Fibras
Energy Services
1
21
19
6
1
4
7
7
18
64
* Most of the Acetow operating segment is presented in “Discontinued operations”. The remaining activities of Acetow and the Eco Services Global
Business Unit are reallocated to “Corporate & Other”.
The Company’s legal entities have the full ownership of nearly all of the assets that they operate. However, certain
assets are leased relating mainly to buildings in which the administrative offices of Group and GBUs are located.
1
.
3
I
.
n
n
o
v
a
t
i
o
n
R&D Personnel
985 people
Location of Research and Technology Centers
Aubervilliers and Lyons (France), Paulinia (Brazil),
Shanghai (China), Bristol (USA)
Location of joint research laboratories with the CNRS
and Universities
Bordeaux and Lyons (France), Bristol (USA),
Shanghai (China)
Expenses(1) dedicated to R&D (cash-flow total)
€ 117 million
R&D Capitalization
€ 19 million
Number of Registered Patents
123
(1) Gross Research and Development expenses before capitalization of the development costs and before deduction of subsidies (research tax credit).
’
1
.
3
.
1
P
.
I
N
N
O
V
A
T
I
O
N
–
O
N
E
O
F
T
H
E
C
O
M
A
N
Y
S
G
R
O
W
T
H
D
R
I
V
E
R
S
Innovation is a key factor of Rhodia’s growth strategy. In 2011, Rhodia generated 18.6% of its sales from products
less than five years old, and its researchers filed 123 patents.
Operational innovation, the result of the close collaboration between the GBUs’ marketing and R&D teams, creates
value through continuous improvement of product lines and processes, increasingly effective products and the support
provided by teams at technical centers located in proximity to customers.
Annual Information Document • Rhodia 2011
21
Rhodia’s innovation process, managed and maintained by the corporate R&D function, is applied by all GBUs. It
ensures both a scientific approach that helps overcome technological uncertainties and a thorough understanding of
market needs. This approach allows the necessary advances to be made, not only in the field of product and services
innovation, but also in the field of manufacturing processes. Operational innovation finally helps strengthen the GBUs’
leadership positions in their markets.
Being fully responsible for the outcome of their innovation portfolio, Rhodia’s GBUs manage all the R&D resources
dedicated to their innovation projects under their direct responsibility. Close cooperation between Marketing, Business
and R&D teams results in a constantly improved portfolio of highly efficient products & services with best-in class
processes, creating value in responding to customers’ needs as well as anticipating for the future.
The R&D core team is the guarantor of excellence (the innovation process and optimization of the competencies of
the entire R&D family); it aims to identify new growth areas based on the macro trends in society, including the need
for new eco-friendly production processes, and manages directly long term innovation projects accordingly.
Rhodia’s expertise, particularly in materials science, physical chemistry of fluids and surfaces, organic chemistry and
chemical engineering & intensification, combined with in-depth knowledge in the toxicological and regulatory fields
and of the environmental footprint of production processes are key success factors of innovation.
1
.
3
.
2
B
.
I
N
N
O
V
A
T
I
O
N
F
O
C
U
S
E
D
O
N
S
U
S
T
A
I
N
A
P
L
E
D
E
V
E
L
O
M
E
N
T
Meeting society’s major challenges, such as dwindling resources or reducing the environmental impact of products,
offers opportunities for innovation and potential markets for Rhodia, which has long been committed to sustainable
development. Today, all of Rhodia’s long-term research projects aim to address such challenges. These include
developing new products to help customers or consumers reduce their carbon footprint and processes with enhanced
environmental profiles.
The sustainable development dimension is taken into account from the earliest stages, then validated throughout the
whole life of the projects. In this respect, Rhodia has the expertise and the tools that allow assessing the sustainable
development impact of its products and activities. The methodology used, based on the principles of Life Cycle
Analysis and applied far upstream in the research process, confirms the continued development of a project if the
results reveal a clear improvement with respect to human health and environment.
In 2011, as a result of a range of research programs conducted for several years on the life cycle of its products,
Rhodia announced the development of an innovative process for the recovery and separation of rare earths contained
in used low-energy light bulbs, as well as in magnets, components largely used in windmills, electric vehicles and hard
disks. Moreover, Rhodia has partnered with Umicore to recycle rare earths from NiMH rechargeable batteries which
equip portable applications, hybrid electric vehicles, etc.
Rhodia is also pooling its expertise with CEA of France to develop innovative solutions for lithium batteries which
combine safety and performance to provide the energy needs of electro-mobility markets (electric vehicles and
portable electronic devices such as computers and mobile phones). Faurecia and Rhodia have also joined innovation
forces to develop lightweight seat structural components using polyamide-based high-performance engineering
plastics.
Finally, Rhodia announced a Memorandum of Understanding with Cobalt Technologies setting the basis for a
strategic alliance to develop bio n-butanol refineries throughout Latin America. Under the terms of this alliance, Cobalt
and Rhodia will proceed with a technical feasibility study of a technology for the conversion of sugar cane bagasse
and other non-food cellulose feedstock into n-butanol for the chemicals and fuels market.
Producing more efficiently and more responsibly is also the leitmotif for Rhodia’s production processes. To handle the
increasing scarcity of resources and reduce the impact of its activities on the environment and climate, Rhodia is
22
Annual Information Document • Rhodia 2011
developing technologies and processes that optimize the use of resources, whether in terms of raw materials, energy
or water, and make it possible to reduce effluents and wastes from production facilities.
The development in Brazil of Technylstar A205F is a recent example of process intensification. Combined with a new
product concept for unfilled polyamide grades for engineering plastics, it resulted in a better processing performance
as well as environmental advantages for customers.
1
.
3
.
3
B
P
.
F
O
U
L
R
T
A
O
F
M
R
O
S
F
E
R
K
A
T
-
H
O
R
U
H
G
I
N
N
O
V
I
T
A
O
N
The New Business Scouting team has identified new areas for growth based on the macro trends in society and
Rhodia’s skills in disruptive areas and has quantified the related business opportunities. Rhodia decided to organize
its long-term break-through growth projects around four platforms.
The Renewable Chemistry platform, based on two main pillars:
•
- Bio-sourced raw materials to produce bio- intermediates, -materials and -specialty chemicals ;
- Recycling of end of life and industrial wastes for intermediates or specialty chemicals.
The Advanced Materials and Formulations platform, aimed at maintaining technological leadership by developing
•
new polyamide composites, nanotechnologies for cerium oxide for catalysis solutions and silica for reinforced low
energy tires, by strengthening design through material modelling and by formulation modelling.
•
The Sustainable Energies platform including biomass to energy and new solutions in organic photovoltaics.
•
The Eco-Designed Processes platform aimed at break-through innovation in raw material and energy consumption,
elimination of waste by-products and the reduction of capital intensity.
’
1
.
3
.
4
B
P
.
O
E
N
I
N
N
O
V
A
T
I
O
N
B
P
O
O
S
T
I
N
G
R
H
O
D
I
A
S
R
&
D
C
A
A
I
L
I
T
I
E
S
Over the long-term, Rhodia’s ambition is to position itself in new markets and technologies with high potential. These
break-through projects involve teams of researchers, particularly advanced laboratories and the cutting edge joint
units with the CNRS, such as the Polymers and advanced materials laboratory (Technyl Innovation Center) in Lyon
(France), the Laboratory of the Future in Bordeaux (France) and the Franco-American Joint Research Unit on soft
matter located in Pennsylvania (USA). The latest of its kind, the Eco-efficient Products and Processes laboratory, a
collaboration between Rhodia, the Centre National de la Recherche Scientifique (France), the Ecole Normale
Supérieure de Lyon (France) and East China Normal University (China) dedicated to green chemistry, was
inaugurated on November 4, 2011 in Shanghai. These form part of Rhodia’s Open Innovation strategy aiming at
enhancing and speeding up time to market.
Rhodia teams are also involved in around fifty collaborative research projects including new partnerships established
through French Government initiatives to promote promising industries. These new projects will explore in particular
oil chain chemistry (the PIVERT project) and the development of increasingly environmentally friendly processes (the
IDEEL project).
In addition, Rhodia aims to strengthen its innovation capabilities by investing in venture capital funds targeting
innovative technology start-up companies. In 2011, it acquired stakes in the Europe-based Aster II venture fund
focused on energy, advanced materials and environment sectors, and in Phoenix Venture Partners LP, working
primarily on advanced materials, investing chiefly in North America. Through this approach, Rhodia will be in the
vanguard to monitor trends, identify breakthrough technologies and seize market opportunities.
Annual Information Document • Rhodia 2011
23
1
3
.
.
P
.
5
E
R
O
C
N
G
I
E
Z
I
D
N
N
O
V
I
T
A
O
N
E
R
O
F
M
R
N
A
E
C
In 2011, Rhodia was listed by Thomson Reuters among the “Top 100 Innovators”, a ranking based mainly on the
number of patents registered, their geographic spread and the rate of their quotation by third parties.
In France, Rhodia has been awarded the 2011 Pierre Potier Prize for “Innovation in Chemistry for Sustainable
development” for Eolys PowerFlex, a catalytic additive for particulate filters already used in 1.5 million diesel-powered
vehicles in Europe. Eolys PowerFlex helps carmakers reduce the environmental impact of their diesel-driven vehicles,
eliminating more than 99% of the released carbon soot. Added to the diesel fuel, it helps prevent the particulate filter
from plugging and ensures optimal engine performance, notably in the presence of bio fuel. The additive is
manufactured in Rhodia’s La Rochelle facility in an energy-efficient process using renewable raw materials.
1
.
1
4
.
I
.
4
.
1
n
e
v
t
s
m
e
P
.
n
t
s
P
I
R
N
P
I
C
L
A
I
N
E
V
M
T
S
E
N
T
O
S
H
T
F
E
O
C
M
P
A
N
Y
D
U
R
I
N
G
E
R
I
O
D
C
O
V
E
R
E
D
B
H
T
Y
E
H
I
O
T
S
I
R
C
L
A
F
I
N
N
A
I
C
A
L
S
T
A
T
E
M
E
N
T
2011
2010
102
74
Advanced Materials
51
44
Polyamide Materials
82
56
Energy Services
55
27
Corporate and Other*
89
69
379
270
(in millions of euros)
Consumer Chemicals
Total
*Including capital expenditures related to Eco Services and related to the remaining activities of Acetow.
In 2011, about 60% of the capital expenditures were used for the development of the Group’s activities and about
40% were realized in order to maintain the Group’s production assets.
See Note 3.1 (Information by operating segment) to the consolidated financial statements in section 5.2.2 of this
document for information by segment regarding investments Rhodia made during the year ended December 31, 2011
and 2010.
1
.
4
.
2
2
.
I
N
V
E
S
T
M
E
N
T
S
I
0
1
1
N
Rhodia maintained in 2011 its very selective policy in choosing its investments.
Capital expenditures (which include the acquisition of property, plant and equipment and the acquisition of other
elements of non-current assets) were €379 million as of December 31, 2011 compared to €270 million on
December 31, 2010, a 40% increase.
These capital expenditures were primarily acquisitions of property, plant and equipment in the amount of €343 million.
Acquisitions of other intangible assets totalled €36 million and involved acquisitions and start-up of software and
development costs.
The majority of capital expenditures during 2011 represented growth investments and primarily included:
•
completion of the construction of a the two new surfactant and guar sites in China and increases in production
capacity in the same sectors in the United States and Europe
24
Annual Information Document • Rhodia 2011
•
ongoing investment in the bagasse-based biomass project (Brazil),
•
ongoing investment for increase in silica capacity in the United States and Europe (Advanced Materials),
completion in first half 2012.
investment for recycling of rare earths from low-energy light bulbs, NiMH batteries and used magnets.
•
The balance, around 40% of the total capital expenditures, were investments made in order to maintain the Group’s
production assets, in keeping with its Health, Safety, and Environment policy.
1
.
4
.
3
.
F
U
T
U
R
E
I
N
V
E
S
T
M
E
N
T
S
The 2012 investment budget aims at continuing the strategic investments for sustainable development and capacity
increases in high growth potential regions.
Annual Information Document • Rhodia 2011
25
2
Sustainable development
2
1
.
.
u
S
a
2.1.1.
2.1.2.
2.1.3.
2.1.4.
2.1.5.
2.1.6.
2.1.7.
2
2
.
.
3
.
4
i
n
a
e
h
l
b
e
h
e
a
e
d
r
t
e
v
o
f
l
R
o
m
p
o
h
e
i
d
a
n
c
s
’
t
u
l
t
u
r
e
2
n
i
v
r
o
n
m
e
n
t
a
l
e
p
r
f
o
r
m
a
n
c
u
H
m
a
n
r
e
o
s
u
r
c
e
s
l
&
a
o
b
r
e
3
o
c
i
e
t
r
p
a
c
t
i
c
e
s
0
4
41
42
43
44
45
47
47
50
.
5
.
r
P
o
u
d
c
t
r
e
s
o
p
n
i
s
i
b
52
54
l
i
t
5
y
2.5.1. Regulations related to products
2.5.2. Sustainable consumption
2
26
.
6
.
E
x
t
e
r
n
2
5
y
2.4.1. Technology development
2.4.2. Awards & recognition
2
0
31
33
34
37
38
39
Employment
Training & education
Diversity & equal opportunity
Labor management relations
Occupational health
Occupational hygiene
Occupational safety
Process safety & property loss prevention
S
7
27
27
27
28
28
28
29
Energy & climate
Water resource
Emissions, effluents
Waste
Transport
Overall environmental management
.
.
t
E
.
2.3.1.
2.3.2.
2.3.3.
2.3.4.
2.3.5.
2.3.6.
2.3.7.
2.3.8.
2
t
a
Responsibility, rooted in the company’s culture
Rhodia Way®, a 360° commitment
An integrated management method
A strictly controlled process
ICEM: A global commitment to social and environmental responsibility
2011 Assessment: progression of the Sustainable development approach
Rhodia Way® Commitments
2.2.1.
2.2.2.
2.2.3.
2.2.4.
2.2.5.
2.2.6.
2
t
s
a
l
v
e
r
i
f
i
c
a
t
i
o
n
f
o
r
5
55
57
e
n
v
i
r
o
n
m
e
n
t
a
l
p
a
r
a
m
e
t
e
r
s
5
8
Annual Information Document • Rhodia 2011
Following the acquisition of Rhodia by Solvay in September 2011, a global 2011 sustainability indicators progress
report for the extended new Solvay (i.e.including Rhodia's results in that field) has been published by the Group
and is available at www.solvay.com. Further to the foregoing Rhodia's sustainable development policy and results in
2011 (on an stand alone basis) disclosed in this chapter, you may wish to consult the aforementioned new Solvay's
global 2011 sustainability indicators progress report.
2
1
.
u
S
.
t
s
a
i
n
a
l
b
e
e
d
e
v
l
o
m
p
e
n
t
a
t
t
e
h
e
h
a
r
t
o
f
R
o
h
i
d
a
’
c
s
u
l
t
u
r
e
Rhodia’s culture includes a long history of safety and social dialogue which has enabled Rhodia to forge ahead in the
®
field of sustainable development. The Rhodia Way
corporate social responsibility approach is integral to the
management processes as a cornerstone of Rhodia’s identity and a driver for continuous improvement. The results
obtained in social and environmental performance have led to the Rhodia’s ranking among the best enterprises
worldwide in the field of occupational safety, and it is listed in the 2012 Sustainability Yearbook presented at the World
Economic Forum in Davos, Switzerland. This edition realized by SAM, the leading extra-financial rating agency in the
world, lists only the top-scoring 15% in each of the 58 sectors assessed for the Dow Jones Sustainability Index.
Rhodia was also recognized by Vigeo, the first European extra financial agency, as one of the best chemical
companies for its CSR performance. Rhodia is also listed in the leading European indexes, Aspi Eurozone and the
Ethibel Index.
’
2
.
1
.
1
B
P
.
R
E
O
S
N
P
I
S
I
L
I
T
Y
O
R
,
O
E
T
I
D
N
H
T
E
O
C
M
N
A
Y
S
C
U
L
T
U
R
E
For Rhodia, responsibility means controlling our environmental, social and economic impact. Our historical culture of
safety is one of the building blocks for exercising this responsibility. Thanks to Rhodia’s HSE management system
(RCMS), our performance in the sphere of health safety & environment currently places Rhodia among the leading
chemical companies in the world. Since the end of the 1990s, Rhodia has taken a pioneering role in sustainable
development by investing in the fight against greenhouse gas emissions. In 2002, the Group intensified its approach
and set up a dedicated sustainable development department, represented in the executive Committee. A new
®
threshold was reached in 2007 with the global deployment of the Rhodia Way reference framework, defining the
Group’s responsibility commitments to its six stakeholder groups.
®
2
.
1
.
2
3
.
R
H
O
I
D
W
A
Y
A
6
0
°
A
,
O
C
M
M
I
®
Structured by its stakeholders, the Rhodia Way
M
T
E
N
T
aims to improve relationships with them consistent with the
21 commitments made by Rhodia, set out as 44 instances of good practice. Deployed in all the Rhodia’s sites, it gives
each entity the tools to assess and improve its practices, mobilize all employees and get stakeholders involved.
®
Created by Rhodia’s employees, the Rhodia Way framework of Commitments is both ambitious in its objectives and
pragmatic, anchored in the reality of the businesses. It incorporates existing indicators and operating processes
wherever possible, making it easier for the teams to embrace them. A strong sign of Rhodia’s commitment at the
highest level in 2011 is the fact that 10% of the bonus awarded to the Group’s 3,000 executives is tied to the social
and environmental responsibility targets defined by their entities.
2
.
1
.
3
.
A
N
I
N
T
E
G
R
A
T
E
D
M
A
N
A
G
E
M
E
N
T
M
E
T
H
O
D
®
The Rhodia Way is integrated in the managerial processes described in the in-house management book. Using grid
analysis and a scoring system, it helps managers assess the maturity of their unit’s corporate social responsibility
(CSR) and draw up improvement plans. Since the reference framework was launched, five self-assessments involving
all Group entities have been conducted (see below the spider).
Annual Information Document • Rhodia 2011
27
2
.
1
.
4
P
.
A
T
S
I
R
L
T
C
Y
O
C
N
T
O
R
L
L
E
D
O
R
E
C
S
S
®
To endorse the validity of this approach, Rhodia engaged external organizations. Reports about the Rhodia Way are
therefore submitted to representative staff organizations, audited by external organisations (like PWC in 2009 and
Vigeo in 2010) and integrated in the procedures evaluated by the international trade union ICEM. Rhodia is currently
the only chemical company to commit to its corporate social responsibility practices with a trade union organization
within an international agreement.
2
.
1
.
B
.
I
5
E
C
M
A
:
L
G
O
L
A
O
C
M
M
I
M
T
E
N
T
B
P
O
T
O
S
I
C
L
A
N
A
E
D
N
I
V
O
R
N
M
E
N
T
L
A
E
R
O
S
N
I
S
I
L
I
T
Y
In 2005, Rhodia signed a global social and environmental responsibility agreement with the international federation of
chemical industry workers (ICEM). This agreement, the only one of its kind in the chemical industry, gives tangible
expression to Rhodia’s determination to ensure that basic labor rights and the Group’s social standards in the areas of
heath, safety and environmental protection are respected on all its sites all over the world. This agreement applies to
all Rhodia employees in the 80 countries in which the Group pursues its activities.
Every year, an assessment is carried out on a Rhodia site chosen by ICEM to verify the correct application at a
grassroots level of the commitments made by Rhodia. These assessments have already been completed in China,
Brazil, the US and South Korea, and an annual review has been presented to an extra-national body representing the
Group’s employees (European Works Council).
This agreement – which was renewed in 2008 and again in February 2011 for a period of 5 years – has been
reinforced on each occasion. As a result, Rhodia and ICEM, which both make employee safety one of their central
priorities, have set up a new joint “Global Safety Panel” in order to widen the scope of the management/employee
dialogue to include the Group’s safety policy worldwide.
2
.
1
.
6
2
.
0
1
1
A
S
E
S
S
M
S
E
N
T
:
B
P
R
O
G
R
E
S
S
I
O
N
O
F
T
H
E
S
U
S
T
A
I
N
A
P
L
E
D
E
V
E
L
O
P
M
E
N
T
A
P
R
O
A
C
H
Deployment of Rhodia Way®
28
Annual Information Document • Rhodia 2011
For the fifth consecutive year, the entities of Rhodia have evaluated their practices in accordance with the Rhodia
®
Way framework. From industrial sites and business units to research centers and corporate functional departments
related to purchasing, finance, legal and public affairs, all of the Group’s entities evaluated their practices in 2011 in
relation to social and environmental responsibility. The objective of this approach was for each entity to define itself in
®
relation to Rhodia Way objectives, and then create a progress plan. The results of this fifth assessment confirm the
progress made and that the Group’s entities are moving in the right direction. Of the six fields of study (customers,
personnel, environment, investors, suppliers and communities), the responsibility profile was balanced overall and
continually improving. The evaluation involved 94% of the Group’s staff. Each GBU tracks its responsibility profile
based on this evaluation and defines a progress plan.
®
2
.
1
.
.
7
R
H
O
D
I
A
W
A
Y
C
O
M
M
I
T
Annual Information Document • Rhodia 2011
M
E
N
T
S
29
2
.
2
.
E
n
v
i
r
o
n
m
e
n
t
a
l
p
e
r
f
o
r
m
a
n
c
e
The preservation of the natural environment in which Rhodia's activities are located is an essential axis in the
®
sustainable development policy: it is one of its firm commitments in its Rhodia Way approach.
As a responsible chemical Company, Rhodia makes significant investments in health, safety and the environment to
control the risks linked to its activity and to improve its environmental footprint, particularly its emissions into the air,
water, and soil.
These objectives are taken into consideration very early on, at the research and development level, which includes,
among its missions, designing products and processes with less impact on the environment and that are more energy
efficient Implemented throughout the entire process, beginning from Rhodia's laboratories and ending at its
customers' sites, product risk management aims to limit incidents and accidents that impact the environment.
By equipping itself since 2005 with an ambitious environmental plan by 2015, Rhodia confirms its intention of staying
in the lead in its sector with respect to Corporate Social Responsibility (CSR) matters. The plan selected is oriented
around two major strategic axes: management of risks linked to accidental emissions and reduction of Rhodia's
environmental footprint With regard to the management of risks of accidental emissions, emphasis will be placed on
prevention by reinforcing risk analysis methods. To capitalize on its results as shown below in the indicators
performance Rhodia has resolved to continue its rate of progress on seven priority indicators, by renewing its goals of
reducing impacts by 2015, a challenge of great scope in the context of growth of production.
At the same time, Rhodia is strengthening its system with two indicators since 2010 regarding the impact of activities
on natural resources- energy efficiency and water intake- and adding a new axis to work on biodiversity, including
measurement of the impact on aquatic life.
Rhodia is demonstrating its desire to anticipate long term trends by currently addressing the issue of the increasing
scarcity of water and fossil fuel. On the first point, the objective is to reduce water intake by 10% at all sites combined
over the next five years. With respect to energy efficiency, the goal is to decrease the Rhodia's consumption of nonrenewable resources (-1.5% a year in the energy consumption per ton of product). Joint actions between the industrial
management and the research and development management have been brought to study processes and
technologies adapted to the new concerns.
®
The protection of the biodiversity of natural aquatic milieu integrated into the Rhodia Way framework requires impact
studies and a disclosure obligation going beyond the regulatory obligations at the 22 sites involved (sites not
integrated into a wastewater network shared with other industrial or community sites).
30
Annual Information Document • Rhodia 2011
Rhodia applies its integrated management system RCMS which is equivalent to ISO 14001 in all its production sites
and research centers. In addition in 2001, 25% of production sites have been externally certified according to ISO
14001 or EMAS.
2
.
2
.
1
.
E
N
E
R
G
Y
&
C
L
I
M
A
T
E
Energy consumption (GRI EN3 - EN4)
Breakdown of energy sources
Fossil fuels – 1,000 Terajoules
Electricity – 1,000 Terajoules
Thermal energy (steam) –
1,000 Terajoules
Total energy consumption* –
1,000 Terajoules
2006
2007
2008
2009
2010
2011
58.33
49.84
44.17
40.25
41.86
39.98
8.82
7.72
8.09
6.23
6.91
6.80
6.84
7.47
8.77
7.41
8.21
9.61
73.99
65.03
61.03
53.89
56.98
56.40
*Including substitution fuels.
Perimeter: equivalent to perimeter under operational control; historical data.
Energy efficiency
(in MWh/t)
2006
2007
2008
2009
2010
2011
Energy efficiency
2.06
1.88
1.9
1.95
1.81
1.76
Perimeter: equivalent to perimeter under operational control.
Data of the year with a historic perimeter.
To further increase energy efficiency (consumption of energy per ton produced), reaching additional energy
efficiency of 1.5% every year between 2010 and 2015 (8% over the period).
Energy Services handles Rhodia's supply of energy and manages Rhodia's projects in the field of greenhouse gas
emissions reductions in conformity with Rhodia's commitment to fighting global warming.
In the energy field, Energy Services directly manages energy purchases for the sector in France, as well as for
industrial third parties, representing 35% of natural gas and 50% of electricity purchased. In France, Rhodia is the
second largest industrial buyer of gas and is ranked among the 10 largest electricity buyers.
Energy Services' mission is also to optimize energy production assets. In this context, energy efficiency actions
focusing on improving the operation of cogeneration installations (installations allowing for both thermal energy and
electricity being produced with gas turbines) have been undertaken.
At a worldwide level, Rhodia uses less than 2% of coal for its production of heat and electricity, thus reducing its
carbon footprint.
Moreover, Energy Services is a founding member of Exeltium, the consortium of French electricity- intensive
industries buying electricity in France; Rhodia has been purchasing from Exeltium since May 2010 through a longterm electricity purchase agreement at prices based on nuclear production costs.
Finally, Rhodia is mobilizing its experts to constantly improve the performances of its processes. It has set itself the
goal of increasing its energy efficiency (consumption of energy per ton produced) by 1.5% every year between 2010
and 2015 (or 8% over the period).
Between 2010 and 2011, energy efficiency energy consumption pert produced has been improved by 2.9% for all
Rhodia production processes.
Annual Information Document • Rhodia 2011
31
Greenhouse gas emissions in relation to manufacturing activities (GRI EN16)
Kyoto Protocol – (CO2*, CH4, N2O, PFCs, HFCs) & other greenhouse gases
Direct & indirect emissions (Scope 1+2)
(in tons equivalent CO2)
CO2*
SF6
METHANE
2006
2007*
2008*
2009*
2010*
2011*
5,708,615
4,362,171
4,011,038
3,578,782
3,878,152
3,910,516
-
-
-
-
-
-
4,994
13,808
10,462
4,993
4,251
1,674
PFC
629,675
587,600
86,450
25,058
11,050
3,413
N2O
15,036,387
2,326,309
1,805, 638
1,681,776
589,296
353,180
12,652
HFC
Non-Kyoto gases
Total greenhouse gases
170,788
165,969
76,709
15,578
7,846
1,009,181
946,808
573,789
28,756
33,865
34,800
22,559,640
8,402,665
6,564,086
5,334,942
4,524,460
4,316,234
* After reprocessing (replacement of the coefficient used globally by Rhodia by national electricity coefficients)
Perimeter: equivalent to perimeter under operational control. Data of prior years unchanged (data corresponding to the perimeter of Rhodia for the
concerned year).
For all production units, Rhodia tracks all greenhouse gas emissions covered by the Kyoto Protocol, as well
as emissions of other gases with a greenhouse potential not covered by this Protocol.
40 million t of greenhouse gases have been avoided in the past 17 years. Since 2005, the date of its first commitment
to strongly decrease its emissions in absolute terms, Rhodia has reduced its greenhouse gas emissions by nearly
80%, thus surpassing its 2015 goal already (-66% compared to 2005).
Reductions have primarily been achieved with installations aimed at destroying nitrous oxide emissions (N2O, at the
sites Paulinia, Onsan, and Chalampé) or fluorinated gases (Salindres site). Reductions have led to a production of
approximately 14 million t of ERUs and CERs a year (units of value under the Kyoto Protocol representing 1 metric
teq C02).
Without this voluntary reduction of emissions started in 1997 (with the first N2O destruction unit at Chalampé),
emissions would have been approximately eleven times greater than they actually are, at 44 million teq C02 in 2011.
For 2011, the additional drop in emissions compared to 2010 is linked primarily to the full-year operation of an
additional investment at the Chalampé site intended to improve destruction of nitrous oxide (N2O) emissions. It very
largely offsets the increases in emissions resulting from the growth in production volume, the acquisition of the
Zhangjiagang Feixiang (CN) site and the start up of the silica unit at the Qingdao Chengyang (CN) site.
32
Annual Information Document • Rhodia 2011
Finally, Rhodia is committed to increase its energy efficiency (see 2.2.1 Energy consumption) which has a direct
positive impact on scope 1+2 emissions.
2
.
2
.
2
.
W
A
T
E
R
E
R
S
O
U
R
C
E
Water intake (GRI EN8)
Distribution of water draw-offs
(in thousands of m3)
2006
2007
2008
2009
2010
2011
Potable water
17,901
12,237
12,676
10,946
11,951
14,208
Ground water
218,000
179,815
171,313
144,591
140,304
125,287
Surface water
233,581
233,638
211,959
165,928
194,665
195,413
Total
469,482
425,690
395,948
321,466
346,920
334,907
Perimeter: equivalent to perimeter under operational control.
Data of prior years unchanged (data corresponding to the perimeter of Rhodia for the concerned year).
Specific water intake
(in m3per ton)
2006
2007
2008
2009
2010
2011
Specific water intake
45.9
43.8
44.4
45.6
43.0
40.6
Perimeter: equivalent to perimeter under operational control.
Data basis at December 31 of the year under consolidation.
As with energy, Rhodia is committed to reduce its specific water intakes by 10% between 2010 and 2015 by
working on all of its operating sites to optimize manufacturing processes and by promoting water-saving
behaviors.
In 2011, intakes of surface water, groundwater and municipal water, used mainly for cooling installations, have
3
declined by 3.4% between 2010 and 2011 (i.e. -12 million m , data of prior years unchanged). This corresponds to a
performance of 5.7% in water efficiency (m3/t) taken into account volume evolution (water usage).
Reductions are mainly due to groundwater savings. Note that these intakes include those from the new Zhangjiagang
Feixiang, Zhenjiang Novecare, and Qingdao Chengyang sites in China, reporting for the first time, with a contribution
3
of nearly 1.7 million m .
3
3
Although Rhodia's water intake amounts to 335 million m (2011), nearly 930 million m were recycled in self-cooling
closed-loop towers that Rhodia operates on its sites, so avoiding additional water abstraction from elsewhere for such
cooling purposes.
The inventory of Rhodia sites located in regions under water stress has been updated to take into account the change
of the models. There are eight sites operating in areas under high stress, and around ten sites in areas under
moderate hydric stress (representing under 30% of Rhodia's industrial sites). These sites are preparing their strategy
for better management of risks (increased costs, shortages, limits on intake, regulations).
Annual Information Document • Rhodia 2011
33
2
.
2
.
3
.
E
M
I
S
S
I
O
N
S
,
E
F
F
L
U
E
N
T
S
Emissions to air (GRI EN19 - EN20)
Effects on the ground, including acidification of the air
(in tons)
SOx
NOx (excluding N2O)*
Total S0x + NOx
Dust
Hx
2006
2007
2008
2009
2010
2011
21,951
19,470
17,946
11,345
11,899
7,990
7,141
5,801
5,098
3, 822
4,016
3,945
29,093
25,271
23,044
15,166
15,915
11,934
826
642
541
575
660
637
94
86
65
48
33
44
* NOx is also a precursor, by reaction with VOC’s, of tropospheric pollution (ozone).
Perimeter: equivalent to perimeter under operational control.
Data of prior years unchanged (data corresponding to the perimeter of Rhodia for the concerned year).
In 2005, Rhodia committed to significantly reduce its absolute emissions of gases responsible for
acidification of the air (SOx + NOx), by -20% by 2010. This objective was set again in late 2010 for a five year
period.
In late 2011, the drop recorded was 56% as compared to 2005. The improvement actions involved primarily
combustion equipment (improvements in burners, use of cleaner fuels, addition of catalysts) or abatement of SOJ
Emissions have been reduced by 4,000 t between 2010 and 2011 (-25%). This significant further decrease was
achieved thanks to the full-year operation of the SOx abatement unit No.2, started up in November 2010 at the Baton
Rouge site in the US (GBU Eco services). Rhodia Eco Services collects used sulfuric acid from refineries, where it is
used as a catalyst for producing alkylates an essential component of high-octane gasoline. In the refining process, the
sulfuric acid accumulates impurities which impair its catalytic capacity. Rhodia Eco Services purifies the used sulfuric
acid in high temperature ovens operated with natural gas then returns it to the refineries where it can be reused.
Tropospheric ozone effect
(in tons)
2006
2007
2008
2009
2010
2011
Volatile Organic Compounds (VOCs)
5,939
5,494
5,275
5,097
4,106
3,939
Perimeter: equivalent to perimeter under operational control.
Data of prior years unchanged (data corresponding to the perimeter of Rhodia for the concerned year).
Dust
Dust emissions were reduced by 4% in 2011 compared to 2010. This is due primarily to the efforts at the Collonges
site in France involving its precipitated amorphous silica filtration units (preventive maintenance).
Volatile Organic Compounds (VOC)
In 2005, Rhodia set an objective for the absolute reduction of its VOC emissions by 10% by 2010. VOCs are
precursors of tropospheric ozone (responsible for affecting the respiratory system).
The use of acetone as a solvent in the manufacture of acetate cables (GBU Acetow) is the primary source of
emissions and has been the focus of numerous reduction-at-source programs. The -10% objective has been renewed
in 2010 for another five years period. In late 2011, the drop recorded was 39% compared to 2005.
34
Annual Information Document • Rhodia 2011
In 2011, total discharges decreased 4% compared to 2010 (-170 t). This decrease was due, for the largest part, to the
shutdown of the Valencia unit in Venezuela (-320 t) of GBU Acetow, which ceased operation in May 2010.
The 2015 objective of decreasing VOC emissions by 20% over the current perimeter compared to 2005 has already
been exceeded with the realization of 39% decrease.
Ozone Depletion Substances (ODS)
(in tons equivalent CFC-11*)
2006
2007
2008
2009
2010
2011
110
103
65
4
3
3
ODS
* Reference: ozonic potential of R11 = 1
Perimeter: equivalent to perimeter under operational control.
Data of prior years unchanged (data corresponding to the perimeter of Rhodia for the concerned year).
The emissions in 2011, around 3 t, are on the same order of magnitude as those in 2010 after the sharp decrease in
2008 resulting from an investment in the Salindres site in France.
The Montreal Protocol of 1987 is an international agreement intended to reduce emissions of ozone depleting
substances. It required the elimination of the use of CFCs and now targets other ODS, including HCFC which are
longer be marketed as virgin products.
Emissions to water (GRI EN21)
Eutrophication
2006
2007
2008
2009
2010
2011
539
427
338
250
306
200
Nitrogen (N)
4,504
3,289
2,742
1,672
2,017
2,384
Total
5,043
3,717
3,080
1,921
2,323
2,583
(in tons)
Phosphorous (P)
Perimeter: equivalent to perimeter under operational control.
Data of prior years unchanged (date corresponding to the perimeter of Rhodia for the concerned year).
Degradation of the aquatic environment
(in tons)
Chemical Oxygen Demand (COD)
Suspended Materials (SM)
Soluble salts
2006
2007
2008
2009
2010
2011
13,389
10,289
8,868
7,148
9,138
8,111
3,734
3,664
2,626
2,008
1,848
2,318
311,899
287,184
257,625
184,654
211,086
253,748
Absorbable organic halides (AOX)
73
46
20
12
78
7
Heavy metals (in copper equivalent)
8.5
4.8
3.5
2.7
3.2
2.5
Perimeter: equivalent to perimeter under operational control.
Data of prior years unchanged (date corresponding to the perimeter of Rhodia for the concerned year).
Nitrogen (N) + Phosphorus (P)
Rhodia has committed to a program for nitrogen and phosphorus discharges causing eutrophication of
waters, aimed to reduce emission by 20% between 2005 and 2010, a commitment that has since been
renewed until 2015.
In late 2011, the recorded decrease was 48% (N+P) compared to 2005, achieved through reductions at source and
the by setting up higher performance treatments. In 2011, the decrease in emissions expressed in phosphorus was
Annual Information Document • Rhodia 2011
35
35% compared to 2010 (-50 t linked to the Oldbury site of GBU Novecare located in England, due to a different
product mix). For nitrogen the reduction at source (-200t) obtained at the Chalampé site (France, GBU Polyamides
intermediates) was thwarted by the increase (+408 t) in discharges at the La Rochelle site (France, GBU Rare Earth
Systems) which faced serious fouling in its recovery unit for ammonium nitrate for agricultural uses. So, in total, this
indicator (N+P) showed an increase by 11% in 2011. So, in total, this indicator showed an increase by 11% in 2011.
Chemical oxygen demand (COD)
Rhodia has set an objective of an absolute reduction of discharges (primarily organic materials) entailing increased
oxygen demand, of 20% between 2005 and 2010. This objective has been renewed for the 2010-2015 period.
With a 37% decrease compared to 2005, the objective of a 40% decrease by 2015 is almost achieved. This result was
obtained by implementing numerous projects aimed at reduction at source or optimization of existing treatments
designed by the experts in environmental R&D.
In 2010, the COD stemming from discharges by Rhodia declined by 11% as compared to 2010 (-1,030 t). The main
contributions came from the Chalampé site in France due to improved control of discharges and to a drop in activity
(-415 t) and from the Santo Andre Novecare site in Brazil with the separation of flows of concentrated organic matter
for transfer to the outside treatment station (-700 t).
Suspended matter (SM)
The Cincinnati site in the US and the Qingdao Chengyang site in China, reporting for the first time, contributed to the
increase in suspended matter discharges in the amount of 200 t.
Soluble salts
Soluble salt discharges increased by 20% in 2011 compared to 2010 (+42,700 t). The new Qindao Changyang site of
(China, GBU Silicas), started up in late 2010 and reporting for the first year, contributed heavily to the increase
(+29,000 t).
Adsorbable organohalogen (AO2)
Discharges of absorbable organic halogen compounds dropped drastically by 91% to 7t in 2011 compared to 78t in
2010 because of an improvement in process at the key contributing site in Salindres (France, GBU Aroma
Performance).
Heavy metals
Heavy metal discharges, expressed in copper equivalents, remains at the same level as in previous years.
36
Annual Information Document • Rhodia 2011
2
.
2
.
4
.
W
A
S
T
E
Waste (GRI EN22)
Breakdown of waste by category & incineration
2006
2007
2008
2009
2010
2011
243,384
246,986
225,976
172,333
211,568
164,710
Of which waste incinerated
by Rhodia with valorization
of the heat
174,487
177,736
153,219
114,637
145,019
95,283
Waste incinerated by third party
104,718
82,159
55,048
33,771
42,238
31,324
52,665
56,957
39,177
22,568
32,537
22,924
65%
70%
68%
67%
70%
60%
(in tons)
Waste incinerated by Rhodia
Of which waste incinerated
by third party with valorization
of the heat
Incineration rate with valorization of the
heat (internal and external)
Perimeter: equivalent to perimeter under operational control.
Data of prior years unchanged (date corresponding to the perimeter of Rhodia for the concerned year).
Breakdown of waste by category
Regarding waste, the policy of Rhodia is to implement the 3R approach (Reduce, Reuse, Recycle) which privileges
reduction at source by maximizing reaction yields, over reuse (agricultural application) or over the material recycling or
energy recovery. Teams of specialists in chemistry and chemical engineering constantly improve the processes to
make them cleaner and offer original routes for the recovery of waste and by-products (e.g. use as raw material for
the manufacture of solvents with a lower impact on the environment).
Incineration
In 2011, 60% of the waste has been recovered with energy recovery. This percentage has decreased in 2011 due to
the drop by 50 kt of waste incinerated by Rhodia at its Chalampé site in France because of optimization of the process
allowing for less by-products generated, of the increased material recovery of part of these by-products and a of
general decline in overall activity compared to 2010.
Hazardous & non-hazardous waste
(in tons)
Hazardous waste total
Non-hazardous waste total
Total waste
2006
2007
2008
2009
2010
2011
387,933
354,544
319,887
226,388
273,439
211,478
74,211
78,665
81,386
69,207
69,923
80,078
462,144
433,209
401,273
295,595
343,362
291,556
Data of prior years unchanged (date corresponding to the perimeter of Rhodia for the concerned year).
Waste reuse & recycling - Sludge reuse in land farming
2006
2007
2008
2009
2010
2011
Waste reuse & recycling*
75,811
61,715
86,069
50,006
38,885
45,857
Sluge reuse in land farming
26,721
32,951
29,981
29,351
23,188
32,685
(in tons)
* Reuse of ammonium nitrate as fertilizer, of silica and silicate muds in cement; recycle of solvents, oil, and catalyst.
Perimeter: equivalent to perimeter under operational control.
Data of prior years unchanged (date corresponding to the perimeter of Rhodia for the concerned year).
Annual Information Document • Rhodia 2011
37
Waste reuse & recycling
Beyond research to recycle its waste for energy recovery by the end disposal contractors, Rhodia sites also promote
reuse and recycling (solvents and oils to be regenerated, catalysts to be recycled, ammonium nitrate as fertilizer,
recycling of silica, and silicate sludge in cement, etc.). Nearly 46,000 t of products were recovered in 2011 (material
recovery, excluding energy recovery).
Sludge reuse in land farming
33,000 t of materials were spread in 2011, primarily from sludges from water treatment stations, the properties of
which comply with local regulations.
2
.
2
.
P
.
5
T
R
A
N
S
O
R
T
Accidents during transportation (GRI EN29)
Number of accidents*
2008
2009
2010
2011
22
24
22
21
(*) Accidents classified as High and Medium severity.
Perimeter: equivalent to perimeter under operational control.
Data of prior years unchanged (data corresponding to the perimeter of Rhodia for the concerned year).
Transport accidents reported by Rhodia involve accidents occurring all along the logistics chain (from the shipping site
to customers or to the disposal sites in the case of waste) and for raw materials when Rhodia is the charterer. Twentyone accidents (two classified as High Severity and 19 as Medium Severity according to the CHML (Catastrophic, High,
Medium and Low) of the Rhodia Care Management System (RCMS) management software) were reported in 2011.
Analysis of these accidents shows that:
•
-67% of accidents were still attributable to events occurring during transport: this is why information actions for
carriers will be continued in 2012.
•
-33% of accidents occurred during loading or unloading operations. This is why reminders of procedure are
carried out at the sites to help eliminate these problems.
Rhodia pays very particular attention to the choice of its carriers, relying on the data from the European Chemical
Industry Council (Cefic). Similarly, in the framework of Rhodia's Sustainable development approach, the Rhodia
Purchasing department set up and spread a questionnaire for the assessment of suppliers regarding Sustainable
development and Corporate Social responsibility (CSR), when selecting new suppliers. Finally, an annual
performance evaluation process was instituted worldwide.
With regard to maritime and river transport of bulk liquid chemicals (and butadiene in gas form), Rhodia practices
"vetting”, ensuring checks in addition to those performed by flag States, ship-owners, and classification societies.
For maritime shipment of containers, isotanks and chemical tankers, Rhodia has established a vessel geolocation
system. A real-time information system also permits rapid determination of the Rhodia products affected through
identification of the containers in any accident, and the access to the necessary information for both the maritime
Company and the response services.
Rhodia works with the emergency response service Carechem24, allowing any caller anywhere in the world to get a
response and a technical advice in his/her language in case of an emergency, 24 hours a day, 7 days a week. The
Carechem24, emergency information numbers are shown on the Safety Data Sheets as well as on the transport
documents and the labelling.
38
Annual Information Document • Rhodia 2011
2
.
2
.
6
.
O
V
E
R
A
L
L
E
N
V
I
R
O
N
M
E
N
T
A
L
M
A
N
A
G
E
M
E
N
T
Managing its health, safety, and environmental footprint is an important challenge for a chemical group and one in
which Rhodia has invested heavily. Rhodia has reached a very high level of safety performance at its production
facilities thanks to the continuous improvement of our management tools and processes. We have also managed,
year on year, to incrementally reduce its gas, water, and waste emissions and their impact on the environment. In fact
Rhodia have seen tangible progress across all of its environmental performance indicators this year because of
constant efforts that began more than 20 years ago.
Environmental analysis & priority management
Follow-up on environmental analysis
Realization of analysis of environmental aspects
conducted or reviewed within less than 5 years
2006
2007
2008
2009
2010
2011
79%
90%
86%
87%
87%
91%
Perimeter: equivalent to perimeter under operational control.
Current 2011 perimeter.
Analyses are based on a rigorous identification of the dangers and a precise evaluation of the risks and potential
impacts of Rhodia's activities on the environment. In 2011, 91% of its installations had undergone an environmental
study that had been performed, adapted, or reviewed within the past five years, compared to a rate of 87% in 2009
and 2010.
The environmental impact studies conducted by Rhodia showed the absence of significant environmental
consequences resulting from its activity in 2011.
The ecotoxicity of aqueous effluents and IBGN and IBD type biotic indicators concerning the receiving environment
involved have been measured at a number of sites (particularly in France). This approach will be followed, in the
context of the 2010-2015 plan, for all of the 22 sites that are not integrated into a sewage network shared with other
industries or collectivities.
Management of environmental priority sheets (P1-P2)
Rhodia has developed for more than 20 years its own system for managing Safety, Environment, Health, Hygiene,
Product and Transport safety, called RCMS (Rhodia Care Management System). This system was certified according
to ISO 14001 standard. Each operational entity of Rhodia must perform an audit every three years. All actions and the
Annual Information Document • Rhodia 2011
39
establishment of the RCMS integrated management system contribute to achieving the objectives and targets set by
Rhodia. Regular site compliance studies are performed, resulting in corrective upgrades. Regulatory monitoring allows
Rhodia to perform the necessary studies so as to comply with new requirements.
In addition to the environmental analysis conducted by the sites, permitting development of improvement plans, P1
and P2 files (1 & 2 action priorities) are being set up with the objective of resolving detected anomalies or dysfunctions.
The deviations, recorded in files, are classified according to three levels of priority of action (1: high, 2: medium,
3: low). The priority 1 deviation files must be resolved in less than one year after their identification/ recording. The
period is increased to two years for priority 2 files. Rhodia finished the 2011 year without a P1 file more than one year
old (aside from 3 files with exceptions, for which action plans have been drawn up) and with 72 P2 files (for an
objective of 87). Regarding this latter criterion, the objective is to have dealt with, by the end of 2014, all 116 P2 files
present at the end of 2010, the date on which the elimination of P2 was entered into the environmental progress plan.
In 2007, reporting of accidents I incidents having an impact on the environment (loss of containment, water, air, and
ground discharges) was implemented worldwide and refined in early 2011.
All accidental environmental events are recorded and analyzed to avoid their recurrence. Rhodia tracks the number of
these "accidents", based on their severity:
Severity: C (Catastrophic), H (High), M (Medium), and L (Low). In 2011, an accidental discharge of some 10 kg of
sulfur oxide required the temporary evacuation of a business located near the site and the intervention of outside
assistance. This category H accident had no significant consequence (no injuries, no media coverage).
Health, safety, environment provisions (GRI 1.2)
Provisions for occupational diseases & accidents, environmental rehabilitation
2006
2007
2008
2009
2010
2011
Occupational diseases & accidents
1.9
1.9
2.5
2.6
2.2
1.6
Environmental Rehabilitation
205
203
196
239
271
293
206.9
204.9
198.5
241.6
273.2
294.6
(in millions of euros)
Total
Perimeter: equivalent to perimeter under operational control.
Allowances at end of fiscal year.
Unjustified faults & environmental remediation
With regards to provisions for Occupational Diseases and Accidents, Rhodia makes provisions for inexcusable
negligence for cases related to its personnel and covers social liabilities related to cases of persons transferred in the
context of divestments. Provisions have been stable at around €2 million at the end of each fiscal year.
Regarding environmental provisions, Rhodia reflects within its financial accounts the amount of obligations identified
and annual changes are related to the variation of these obligations, as well as the impact of accretion rates. 2011
also represents the alignment with Solvay accounting rules.
2
.
3
.
H
u
m
a
n
r
e
s
o
u
r
c
e
s
&
l
a
b
o
r
p
r
a
c
t
i
c
e
s
Social performance is a cornerstone of Rhodia's competitiveness. These indicators are an essential part of the
Rhodia's Human Resources (HR) policy, which outlines how the HR function helps achieve the Company's objectives
while understanding employees' needs. It illustrates Rhodia's desire to continue developing employees' skills through
training and mobility. Throughout the world, open dialogue with employees and their representatives, together with
processes which have now been widely implemented, have helped employees to embrace Rhodia's culture of
responsibility.
40
Annual Information Document • Rhodia 2011
Rhodia's skills development policy aims to anticipate the Company’s needs by job category and develop the skills of
current employees. This data is supplemented by detailed knowledge of the skills acquired, or to be developed, by
each employee and his/her desire for advancement.
The challenge of the mobility policy is to encourage in-house transfers of employees while capitalizing on local
employees’ expertise and skills. Its implementation is based on coordinated international management of the different
job categories.
2
.
3
.
1
P
.
E
M
L
O
Y
M
E
N
T
As part of the launch of a new global Human Resources reporting tool in 2011, Rhodia clarified some of its core HR
indicators which may explain some of variances in the following parameters as well as comparisons to previous years.
Employment by region (GRI LA1)
Perimeter: whole Solvay Group, including Rhodia, the new sector of theSolvay Group since September 2011.
The Solvay Group efforts aim at a major objective, the creation of the new Solvay built for geographic expansion and
focused on Sustainable development. The Solvay Group, including Rhodia, headquartered in Brussels, employed by
end 2011 29,122 people in 55 countries.
The distribution chart shows that above 40% of Solvay employees are based outside of Europe including around
4,500 in Asia Pacific.
Solvay’s strategy aims at concentrating its deployment on a limited number of strategic chemicals and plastics
projects, directed primarily at geographic expansion outside Europe in order to reinforce its presence in the emerging
markets. The acquisition of Rhodia reflects the deployment of this strategy. The Asian population of Solvay has almost
tripled in the past year, from 6% to 16%. The proportion of employees in Mercosur has nearly doubled, from 7% to
13%.
Annual Information Document • Rhodia 2011
41
Distribution of managerial personnel by hierarchical level (GRI LA13)
Managers by job class (Hay system)
2011
Share
283
8%
Junior management
1,619
48%
Middle management
1,478
44%
Total
3,380
100%
Executive management
Perimeter: Europe, Nafta, Mercosur and Asia-Pacific.
The Rhodia system of job classification for its management is based on the Hay system. Rhodia's managerial
population represents around 22.5% of all employees.
2
.
3
.
2
.
T
R
A
I
N
I
N
G
&
E
D
U
C
A
T
I
O
N
Learning & development (GRI LA10)
(in euros)
Training investment per person
2007
2008
2009
2010
2011
357
290
186
380
385
Average number of training hours per year and per person
(in hours and per employee)
% employees following at least a training per year
2009
2010
2011
27
32
38.5
80%
85%
90%
2011
Non mandatory
Mandatory
Average number of training hours per person
28.8
41.6
Employees trained in the given category
86%
91%
In 2011, Rhodia maintained its effort at investing in training to meet its commitment of a minimum of
30 hours/employee on average. This budget is dedicated to increasing the offering of training courses per country but
also at a worldwide level, with deployment of programs intended to reinforce the operating excellence along strategic
lines in the context of Rhodia’s growth. Thus, in 2011:
•
135 key Account Managers took 2.5 day courses intended to reinforce their strategic dimension;
•
150 purchasing agents were trained in intercultural negotiation;
•
5,800 employees took the "acting responsibly” module intended to develop Rhodia's culture of responsibility.
On average, all employees took 38.5 hours of training, i.e., an increase of 20% over 2010. 89.7% of Rhodia's
personnel were trained in 2011, an increase of four points compared to 2010. In 2011, the proportion of nonmanagerial employees trained was greater than that of managers (91% of the non-managerial staff was trained
versus 86% of the managers). The training intended for non-management was longer: 45.5 hours for non-managers,
and 33.5 hours for a trained manager.
42
Annual Information Document • Rhodia 2011
Rhodia choose to pursue its approach to the positioning of internal training as the primary mode of transmission and
development of know-how in the organization. The outside training programs were thus reserved for the acquisition of
new skills or the enrichment of internal programs.
Out of the 38.5 hours taken per employee in 2011, more than half were provided by a network of internal trainers,
mobilized more particularly around occupational training.
Training to sustainable development
®
Training to Rhodia Way
Rhodia has developed a specific training on Sustainability intended to strengthen the culture of responsibility of all
employees. This training, called “Acting Responsibly" program, began at the end of 2009, with a special focus on the
industrial population. Relying on a network of in-house trainers, the program is currently being used in all the countries
®
with a level of employees trained of 60%. The last Rhodia Way Awards, which promote the best sustainability
projects, have rewarded 6 projects out of 240.
2
.
3
.
3
Q
.
D
I
V
E
R
S
I
T
Y
&
E
P
U
A
L
P
O
O
R
T
U
N
I
T
Y
Diversity & equal opportunity (GRI LA13)
Gender
Women & men repartition
2011
Women
Men
In all personnel
23%
77%
In management
29%
71%
Perimeter: Europe, Nafta, Mercosur and Asia-Pacific
The average proportion of 23% of female employees hides significant variations per functional domains. While female
employees are less represented in industrial functions, they have a stronger presence in functional support areas (e.g.
Human Resources, etc.) where they represent in some cases up to 60% or more of the staff.
Rhodia is committed to encourage diversity among employees, to reinforce its multinational, multicultural, and
multidisciplinary composition. Staff is recruited without any form of discrimination on the basis of job requirements
(expertise and competencies) and the ability and willingness of candidates to adopt the underlying Rhodia’s Values.
Equal opportunity -Women in management by job class (Hay system)
2011
Junior management
597
17.7%
Middle management
345
10.2%
Executive management
Total
37
1.1%
979
29.0%
Perimeter: Europe, Nafta, Mercosur and Asia-Pacific
Female employees represent 29% of the total population of managers.
Since 2008, 2002 global job families have been implemented for all employees. These job families apply worldwide,
providing standardized information about key responsibilities, competencies, and expertise required for each type of
job. In some more technical position a "double ladder" policy has also been deployed (R&D, Industrial).
Annual Information Document • Rhodia 2011
43
Age pyramid
2011
34
0.2%
60-69
591
3.9%
50-59
3,486
23.2%
40-49
4,730
31.5%
30-39
4,076
27.1%
20-29
2,030
13.5%
89
0.6%
>70
<20
As in many European companies, Rhodia's demography shows a mature profile that is ageing (273% of employees
are more than 50 years old versus 14.1% less than 30 years old). Nevertheless with sustained growth and associated
recruitments in Asia and Brazil, Rhodia ends 2011 with an average age of 42 years old.
Employee mobility- International mobility
2011
LTIM*
O+**
STM
Total
Energy
-
1
2
3
Engineering Plastics
3
3
-
6
Finance
-
1
2
3
Industrial
1
-
-
1
Information Systems
2
-
3
5
International Affairs
1
-
-
1
Novecare
4
3
-
7
Polymers & Intermediates
-
1
2
3
Purchasing
1
-
-
1
R&D
-
1
-
1
Rare Earth Systems
4
-
1
5
Silica
1
-
-
1
-
1
1
17
10
11
38
RBS
Total
* LTIM: Long-term International Assignment. The expatriation assignment consists of a long-term international experience of 18 months to 5 years. The
terms and conditions include a “Home Country” option, which makes it possible to maintain a standard of living comparable to that of the home country.
** “Opportunity +” allows Rhodia employees to go abroad more easily. It is a long-term international experience lasting 18 months to 5 years. The
“Opportunity+”option offers employment and compensation conditions similar to those of a local employee. The local compensation follows the practices
of the host country and, in principle; all of the compensation is paid in the host country. This policy is also offered to employees who have limited
professional experience (3-5 years) to whom Rhodia offers a position in another country.
Rhodia’s strategy is to ensure that employees develop their skills and move across countries in order to avoid the
creation of geographical and/or business silos. Such moves are decided on basis of a variety of elements such as the
competences and the expertise of the person, his/her specific aspirations and the Company's needs.
2
.
3
.
4
.
L
a
b
o
r
m
a
n
a
g
e
m
e
n
t
r
e
l
a
t
i
o
n
s
Performance & development appraisal (GRI LA12)
Rhodia staff – Annual reviews
2011
Objective
Managerial staff
98%
100%
Non-managerial staff
70%
100%
In the service of projected jobs management, Rhodia's skill development policy is based on processes intended to
identify the Group's needs by occupational family as early as possible. This data is supplemented by detailed
44
Annual Information Document • Rhodia 2011
knowledge of the skills acquired or to be developed by each of the employees and their desires regarding
development.
The basic process in the development of employees is the Annual Performance and Development Interview (APD).
98% of Rhodia's managerial staff goes through this process. It is estimated that approximately 70% of the nonmanagerial staff also go through this process. The long-term goal is to cover 100% of the personnel worldwide.
The APDI nourishes the process of managing the training and mobility of Rhodia. In effect, during this interview, the
manager and employee perform an in-depth analysis of behavioral skills and techniques, to identify their strong points
and tracks for improvement. This analysis allows them to reflect on professional development and determines the
lines of development necessary to individual performance in the current or future position. This development plan may
be based on a panel of actions such as internal or outside coaching, participation in conventions or training actions.
The individual training actions selected feed the training process. If professional development is envisioned, the
employee will become part of Rhodia's process of career mobility and management.
2
.
3
.
P
.
5
O
C
C
U
A
T
I
O
N
A
L
H
E
A
L
T
H
For Rhodia, the health and safety of its employees is a priority. Providing good working conditions and managing risk
are daily concerns for the Company. Since 2006 Rhodia has developed global safety frequency rates that include all
of the people working on our sites. This step was taken to ensure that all people affected by Health, Safety,
Environment (HSE) issues are treated uniformly.
Occupational diseases (GRI LA7)
Main types notified in Europe, NAFTA, Latin Amercia and Asia Pacific
(*) As defined in the Rhodia’s internal procedure (DRC 28) or the process of occupational diseases management.
Perimeter: equivalent to perimeter under operational control.
3
In 2011, Rhodia identified 30 occupational diseases, recognized or subject to subsequent recognition , at all sites
combined (compared to 48 in 2009 and 33 in 2010). With the exception of one pathology identified in Spain and two in
England, all of them were identified in France. The great majority of these diseases result from past exposures,
primarily to asbestos (67%), which took place prior to the creation of Rhodia. The latency periods for asbestos-related
pathologies are generally long between the first exposure and the first radio-clinical manifestations (most often
between 30 and 40 years). In many cases, Rhodia is nonetheless assuming the consequences of these pathologies.
3
Recognized or subject to subsequent recognition, as defined in Rhodia's internal procedure (DRC 28) on the process of handling work-related
diseases.
Annual Information Document • Rhodia 2011
45
For the past two years now, the number of work-related diseases has dropped significantly. This drop, linked to the
decrease in "asbestos" pathologies in France, could be the result of early actions taken since 1976 related to its
substitution when possible and precautionary measures when substitution was not an option.
Health prevention against Carcinogenic Mutagenic or Reprotoxic substances
(GRI LA8)
Programs follow-up on the use of Carcinogenic Mutagenic or Reprotoxic (CMR) substances
at Rhodia sites
2006
2007
2008
2009
2010
2011
Number of uses of CMRs on the sites Categories CLP 1A & 1B, IARC 1 and 2a
607
510
540
637
641
612
Number of activities involved
720
740
862
1,084
1,112
1,113
% of arguments against substitution or for
substitution drafted
25%
67%
98%
98%
99%
99%
% of in-depth evaluations carried out
27%
68%
98%
99%
99%
100%
% of CMR cases carried out
24%
63%
98%
97%
99%
99%
Perimeter: equivalent to perimeter under operational control.
At the current perimeter as of the end of 2011.
Rhodia has set up the Carcinogenic, Mutagenic, Reprotoxic (CMR) "red line"; a voluntary commitment throughout the
world. Since 2006, in relation to its defined "red line" described in its Management Book, Rhodia pursued a voluntary
global process to limit CMR substances. In 2006 a specific procedure concerning CMR substances has been
established. It involves all products brought to the market at the global level, whether they are CMR 1A or 1B
according to the European Regulation CLP (Classification, Labeling, and Packaging of substances) or belonging to
groups 1 and 2A according to classification of the International Agency for Research on Cancer (IARC). This "red line"
laid out at all Rhodia sites require an inventory of Rhodia CMR products, systematic research of alternatives and
adequate management and control of specific risks related to these substances.
At the end of December 2011, among all Rhodia sites, approximately 600 uses of CMR were declared, representing
more than 140 CMR substances, used in pure form or in preparations, for which:
•
100% of risk evaluations were carried out;
•
99% of arguments for non-substitution were drafted;
•
99% of files were finalized, with a goal of 100% by the end of 2011.
In accordance to the "red line: a series of CMR substances were replaced or eliminated in 2011.
In 2012, the "red line" will be extended to Substances of Very High Concern (SVHC). In addition to CMR substances,
complying with the expanded definition of Rhodia, it will encompass Endocrine Disruptors (ED), and substances that
are Persistant, Bioaccumulable, Toxic (PBT), and very Persistant and very Bioaccumulable (vPvB).
According to its Health and Safety policy, Rhodia asked all sites to carry out or update, at a minimum frequency of five
years, an evaluation of the Health and Safety risks related to its personnel. These evaluations are undertaken through
the application of Rhodia's own worldwide guidelines, such as those related to the Critical Tasks Analysis, to the semiquantitative or quantitative risks assessment. In 2011, 93% of functions had undergone such a risk assessment.
46
Annual Information Document • Rhodia 2011
2
.
3
.
6
P
.
O
C
C
U
A
T
I
O
N
A
L
H
Y
I
G
E
N
E
Occupational risk assessment & health prevention (GRI LA8)
Functions assessed for health risks & safety
since less than five years
2006
2007
2008
2009
2010
2011
84%
79%
91%
91%
92%
93%
Perimeter: equivalent to perimeter under operational control.
At the current perimeter as of the end of 2011.
Through procedures and guidelines applicable to all sites, Rhodia asks every work station to undergo a health and
safety risk assessment. Rhodia is currently working on developing two new guidelines, one related to the
improvement of the design and maintenance of sanitation systems, and a methodological guideline to define the
actions to be taken at each step of an investment project.
Rhodia has a Rhodia Occupational Exposure Limit Committee (ROEL) for many years, to define its own professional
exposure limit values for certain products, applicable to all its sites throughout the world.
2
.
3
.
P
.
7
O
C
C
U
A
T
I
O
N
A
L
S
A
F
E
T
Y
Behavioral safety program (GRI LA8)
Employees involved in a progress
campaign for safety *
2006
2007
2008
2009
2010
2011
79%
81%
77%
90%
90%
92%
* 5S, IGP: Scheduled Overall Inspections, HOSF programs (Human and organization safety factors: “Vigilance program”), BBS: Behavioral Based
Safety, STOP, or other risk evaluation process of the ATC type, suggestion box, Rhodia Way®, etc.
Perimeter: equivalent to perimeter under operational control.
At the current perimeter as of the end of 2011.
To promote the efficient implementation of safety related best practices, Rhodia has specific behavior-based methods.
In 2011, 91.6% of staff has been involved in progress activities regarding health, safety or the environment. The
development of actions in the sphere of Human and Organizational Safety Factors (HOSF) with the deployment of the
“VIGILANCE” program in France and with the hiring of an HOSF contact expert were two significant steps for Rhodia
towards its desire to maintain its current safety performance levels.
The STOP program based on Dupont approach consisting in preventive observation of safety in the workplace is
implemented for the French sites and for all the management lines (See section “Management systems & audits”
below).
Management systems & audits
Sites audited according to 3RHSE,
SIMSER+ or RCMS frameworks
within less than 3 years
Safety inspections performed
during the year by a member of
the GBU Management Committee
2006
2007
2008
2009
2010
2011
91%
94%
100%
98%
97%
99%
7.6
9.4
7.6
7.5
9.5
8.7
Perimeter: equivalent to perimeter under operational control.
At the current perimeter as of the end of 2011.
Annual Information Document • Rhodia 2011
47
A historic safety culture
Its culture of safety and its tradition of social dialog have placed Rhodia, and this goes back to its origins, as a cutting
edge player in regards to Corporate Social Responsibility (CSR). Since the 1970s, a voluntary policy has been
developed in the domains of hygiene, health, safety, products and transport, and environment that leads to the
implementation of a frame of reference integrated into the overall management system: the Rhodia Care Management
System (RCMS). In 2011, this single frame of reference (which includes the requirements of the standards ISO 14001
and OSHAS 18001 and the primary international regulations), includes 115 requirements, stemming from the two prior
frames of reference (SIMSER+ and 3RHSE) established by Rhodia. RCMS has been validated by the Executive
Committee in order to be implemented worldwide. In line with the enterprise project objectives, RCMS now includes
the evaluation of its implementation directly by operational managers. The fact that Hygiene, Security, Environment,
Product stewarship, and Transport (HSEPT) principles are now applied on a day to day basis improves the
sustainable performance in this area. Rhodia also had excellent performance in terms of Health, Safety, Environment
(HSE) audits with 98.6% of sites having been audited according to the adopted frameworks (3RHSE, SIMSER+ or
RCMS) in the past three years.
Drawing on the safety results and on the various useful returns on experience, Rhodia decided in 2011 to launch two
programs intended to improve safety performance by addressing individual behaviors: the STOP and VIGILANCE
programs.
STOP
The STOP program (Safety in the Workplace through Preventive Observation) is based on the Dupont approach and
methodology. This initiative is aimed at training all Rhodia managers of sites in France to an integrated and
sustainable standard of preventive behavior observation, in order to:
•
Strengthen knowledge and skills in safety management and integrate them into daily behavior.
•
Strengthen the daily involvement in the field of supervisors in terms of incident prevention.
•
Reduce at-risk situations and behavior through prevention.
VIGILANCE
The VIGILANCE program is currently being implemented at Rhodia sites in France. It allows increasing the
awareness of supervisory and operational staffs to individual safety attitudes and to make operators better understand
the factors influencing their behavior. Based on four individual values (discipline, cautiousness, responsibility, and
recognition), this awareness is accompanied by the implementation at sites of four simple tools to stimulate concrete
changes in safety culture.This program could be extended, in a second step, to other countries after adapting training
modules and training local personnel to act as local "catalysts': All of this would not be possible without a significant
commitment from GBUs.
The mobilization of Rhodia in the fields of health, safety and the environment also translates into a very concrete
commitment of managers in the field. "Safety" visits by members of the Exco and by members of the Management
Committee of Rhodia Companies, contribute to promoting awareness and to motivating teams. The average rate of
safety visits per member of the Management Committees of GBUs was of 8.7 in 2011.
48
Annual Information Document • Rhodia 2011
Accidents of people at the Solvay's sites, including Rhodia sites (GRI LA7)
Accident frequency rates, including Rhodia in 2011
Perimeter: equivalent to manufacturing perimeter under operational control, includes Rhodia for 2011.
Zero occupational accidents
The frequency rate of occupational accidents with lost time (LTAR) for Solvay's personnel and contractors' personnel
further decreased, from 3.1 in 2006 to 0.8 (including Rhodia) in 2011. By comparison, the average LTAR for the
European chemical industry is currently around 5.
Rhodia has been consolidated into the 2011 Group's performance for occupational safety. The frequency rate of
occupational accidents with and without lost time has further significantly improved in 2011.
On a long term basis, significant progress has been progressively obtained by implementing Behavior and Contractor
safety programs in the manufacturing sites. Further improvements will stem from the program of bottom-top
workshops on "Health Safety Environment (HSE) culture'; which started at the level of the Executive Committee.
For Solvay, the "zero accident" objective remains paramount. However, despite prevention efforts, accidental death, in
2011, of a person working on a conveyor belt is to be deplored on Solvay site Okorusu (NA).
Solvay’s policy and objective is to have a common safety level for both the Solvay's personnel and contractors
working on Solvay's sites.
Zero occupational safety at Rhodia
Rhodia has continuously been developing more precise indicators to track more closely the severity of accidents and
the profiles of the populations concerned. As an illustration of the commitment to consistently deal with all those
concerned with Health Safety Environment (HSE) problems, the overall frequency rates developed since 2006
encompass all people working on sites: Rhodia employees, temporary personnel, and contractors.
As of 2007, Rhodia decided to present more detailed results (two figures after the decimal points) that will allow to
better assess progress achieved in safety results.
In 2011, an MTAR (accidents with Medical Treatment) value of 0.82 has been achieved, thus better than the target set
(MTAR<1) and is Rhodia's best performance since its creation, ranking it among the leaders of chemical companies
worldwide. This performance was made possible particularly thanks to France's contribution, which significantly
improved, from an MTAR of 2.7 in 2010 to 1.6 in 2011. "Only action leads to results'; and France, the deployment of
Annual Information Document • Rhodia 2011
49
TM
the Vigilance program at the level of operators in 70% of the concerned plants together with Dupont's STOP
program for management (Safety Training Observation Program), were key elements in this progress.
The Group nonetheless deplores accidents with irreversible effects and accidents related to direct contact with
chemicals. The next objective is to lower the accidents by 35% in comparison to 2010.
Fatal accidents (GRI LA7)
2006
2007
2008
2009
2010
2011
0
1
0
0
1
0
Number of fatal accidents
Data of prior years unchanged (data corresponding to the perimeter of Rhodia for the concerned year.
Perimeter: equivalent to manufacturing perimeter under operational control.
A fatality is by essence the worst accidental situation.
The latest fatal accident at Rhodia was in 2010, when an accident occurred in India at a demolition site, involving a
person from an outside company. An analysis of this accident leads to the implementation of specific procedures
related to dismantling operations and Health, Safety, Environment requirements in calls for tenders for any extemal
Company willing to get involved.
Safety program for contractors (GRI LA8)
The safety of personnel at their workplace is an everyday concern for Rhodia. The results are summarized in above
section “Accidents of people at the Solvay’s sites, including Rhodia sites(GRI LA7)”. For many years, Rhodia
published integrated safety results for all personnel working at sites throughout the world, whether for its own
personnel, personnel from external companies or temporary personnel.
The improvement of safety results for contractors' personnel is largely due to the selection of the companies working
at Rhodia sites. For instance in France, these companies must be "Manuel d’Amélioration Sécurité des Entreprises"
(MASE) certified. Their personnel must have received training and qualification in regards to chemical risks in order to
work within the facilities. Furthermore, this personnel is trained at Rhodia sites to make them aware of the risks
inherent to its processes and products, and to risks inherent to the proximity of theses processes and products with
their own tasks.
2
.
3
.
.
8
P
P
R
O
C
E
S
S
S
A
F
E
T
Y
&
P
R
O
P
E
R
T
Y
L
O
S
S
R
E
V
E
N
T
I
O
N
Process safety management at manufacturing sites
Solved level 1 risk sheets (unacceptable risk) within 12 months*
2006
2007
2008
2009
2010
2011
Seveso process safety audits performed
within the last 5 years
93%
96%
99%
98%
98%
98%
Process safety audits performed or revised
within the last 5 years
80%
87%
89%
83%
87%
88%
*Indicator based on the cumulative percentages of coverage of each plant.
In 2011 there were no unsolved level 1 risk sheets older than 12 months. Control of Rhodia's industrial risks is based
on a precise evaluation of existing risks. To this end, all installations undergo a safety audit. These extremely detailed
"process safety" audits evaluate the potential risks connected with both products and processes and are reviewed
every five years ("red line" in the Rhodia Management Book). Another "red line" requires every level 1 risk sheets to
50
Annual Information Document • Rhodia 2011
be handled within the next 12 months. In 2011 it was decided that the risk sheets related to intermediate but disasters
risk (2 CD) should also be solved within 12 months and that this rule should apply as soon as 2011. This program
relies on a network of process safety experts, supported by process managers who are responsible for validating the
transition from one phase to another of projects both in respect to production and safety. The purpose of these
procedures is to analyze the prevention and protection measures required for all sites and installations and analyze all
the processes in action in order to evaluate the risks by detecting the key parameters.
The goal is to perform or review a safety audit for each installation suited to these risks at least every five years.
Process safety risk analysis has been conducted for 88% of the installations in the past five years. For Seveso sites or
similar installations (for countries outside the European Union) a coverage rate of 98% is achieved.
Furthermore, as of December 31, 2011, Rhodia identified in its reporting 27 'top or bottom tier" Seveso or similar sites
worldwide (including 12 in Europe) likely to present risks for the health or safety of neighboring populations and for
the environment due to dangers of explosion or emissions of hazardous products.
Protecting assets & business continuity
Tracking of process safety audits
Protecting assets
Perimeter: equivalent to perimeter under operational control.
At the current perimeter as of the end of 2011.
In process safety matters, Rhodia, in conformity with its commitment to Responsible Care"' progress, intends to
design, develop, and operate its manufacturing practices to master the risks, that is, to prevent accidents and to
master the possible consequences with regard to personnel, populations living in the vicinity and the environment
The essential requirement therefore is to master the risks associated with technically plausible scenarios derived
from the research into plausible causes of accidents according to Rhodia's risk analysis methods.
The methods selected must be adapted to the risks presented by each installation. Respect for the rules of the art, the
application of regulations in effect and risk analyses should permit risks to be reduced by appropriate prevention
and/or protection measures. Risk levels (1, 2 or 3) are selected according to the levels of severity of the
consequences and the probability of occurrence of each scenario. The risk assessment files where the residual risk is
of level 1 (unacceptable risk) and those assessed as 2C (intermediate but disastrous risk) must be reported into
®
Rhodia's Responsible Care Balance Sheet (BRC).
The feedback from process accidents, shared within Rhodia each month in the Responsible Care
®
letter, also
contributes to the global awareness of the sites managers.
This feedback is subject to analysis and discussion at team meetings at the production units each month, in
conformity with Rhodia Care Management System (RCMS) management software.
Annual Information Document • Rhodia 2011
51
The graph shows the efforts made by Rhodia to reduce its unacceptable risk files, thus improving the safety of its
processes. The five years safety review audit planning was conducted in the four zones, in application of the "red line"
related to this field. There was no record of a risk 1 file older than one year. 2011 also saw the handling of risk two Cd
files, and Rhodia ended 2011 with achieving its objective.
Business continuity
Rhodia, after having set up a plan for continuation of activity in case of a flu pandemic, is gradually establishing
continuation of activity plans in case of flood, hurricane, earthquake, or sandstorm, for example, wherever necessary.
2
2
.
.
4
4
.
o
S
.
1
c
i
e
t
y
P
.
T
E
C
H
N
O
L
O
G
Y
D
E
V
E
L
O
M
E
N
T
Innovation management
Open innovation (partnerships) & patents
Partnerships
Intellectual Property (IP) agreements
2009
2010
2011
649
620
674
In 2011, in a context of open innovation and co-development, Rhodia strengthened its contacts and partnerships with
labs and start-ups in the renewable raw materials
fields, in biomass as an energy source, recycling, chemical
recovery of C02 and materials of the future, particularly super-performing composites to replace metals.
Rhodia's innovation strategy is based on numerous outside scientific collaborations, particularly in the four Mixed
Research Units (MRU) set up in France, the US, and China. The Eco-efficient Products and Processes lab, dedicated
to green chemistry, is collaboration between Rhodia, the National Scientific Research Center (FR), the Higher Normal
School of Lyon, (FR) and the East Centre Normal University (CN) that was inaugurated on November 4, 2011, in
Shanghai.
The Rhodia teams are also engaged in some fifty collaborative research projects, including new partnerships set up
within the framework of French Government initiatives promoting industries of the future. These new projects will, in
particular, explore chemistry based on plant oils (the Pivert project) and the development of processes ever more
respectful of the environment (the IDEEL project).
All the long-term research projects in Rhodia are intended to develop solutions and technologies in harmony with the
requirements of production and responsible consumption by customers.
Patents
Rhodia filed 123 patents in 2011 and was listed by Thomson Reuters as among the "Top 100 Innovators,"
a classification based particularly on the number of patents, their geographic distribution and their rate of citation by
third parties.
52
Annual Information Document • Rhodia 2011
Sustainable innovation
Life cycle assessment (LCA)
Rhodia puts the protection of human health and the
environment at the very heart of its innovation
projects and processes.
Rhodia has built an integrated method for assessing the
environmental impact of products developed within
innovation projects. This method relies on an eco-design
tool: the Sustainability Index also developed by Rhodia.
This methodology and the structure of the Sustainable
Index tool have been reviewed by PwC.
This tool is specially designed to be able to follow the
evolution of knowledge gained as the project progresses.
From the earliest steps of the innovation process, the
Sustainability Index delivers, on a multi-criteria basis, key
features of the environmental impact of the future
product: C02
footprint, consumption of non-renewable
resources, impacts
quality as
well
on human health and eco-system
as
water footprint, and provides
recommendations for orientating the project towards more environmentally friendly solutions. The use of this tool is a
founding element of Rhodia good practices for project management: evaluation by the Sustainability Index is a
deliverable for project phase crossings. Moreover, such an assessment all along the project progress provides strong
roots for a full lifecycle assessment, that can then be submitted to a critical review in respect of the ISO 14040-44
standards, for supporting new product promotion.
Education & culture
Rhodia, a Company actively involved in its communities
®
Working through its Rhodia Way approach, the Company forges relationships with its local communities based on
an ongoing dialogue and open communications and it supports, whenever possible, opportunities to promote local
solidarity. Rhodia encourages the initiatives taken by its GBUs, sites and employees to help the disadvantaged, to
support the training and professional integration of young people, to protect the environment, etc.
Corporate philanthropy & charities
In 2007, the first corporate foundation was created, the lnstituto Rhodia, in Brazil. This institution, which works as an
independent organization, pursues social and environmental projects at national level: Alquimia Jovem ("Young
Alchemists") and Sustainable Schools.
In Asia, the Rhodia Energy GBU teamed up with the Albatross Association and launched a societal project in 2011
aimed at stimulating the awareness of local school children about the need to protect the environment.
®
In addition, within the framework of the Rhodia Way Awards, the winning French, Russian, Chinese, and Brazilian
teams donated their €10,000 prizes to local associations chosen in liaison with the Corporate Sustainable
development Department. In France for example, Rhodia is reintroducing endemic species on a disused site it owns
not far from the Lyon R&D center. The prize-winning Russian Serpukhov site has made a donation to the local
orphanage for the purchase of a medical imaging scanner for gastroenterological diagnoses.
Annual Information Document • Rhodia 2011
53
In China, the Purchasing Team, working in partnership with the Greenovate association, organized training for Rhodia
employees who volunteered to work with school children in Shanghai in order to sensitize them about the importance
of environmental protection. The initiative has been carried out in two stages: in Qingdao, on May 5, 20 volunteers
from Rhodia- who had previously been trained by Greenovate- met up with almost 200 Chinese middle-school
students in order to teach them about, and to organize games devoted to, issues related to the environment, energy,
and carbon emissions. The same event was staged in Shanghai, on May 28, where the meeting was organized under
the scope of the Rhodia Open Day. Young middle- school students were given the opportunity to tour the R&D Center
on the Rhodia site and to gain a more concrete idea about the Rhodia's approach to Sustainable development
®
Another project in China: the R&D team have dedicated the Rhodia Way prize to support the association Colors of
China, which since 1998 has established an education program for girls of ethnic minorities in Guangxi province (CN).
Through this partnership Rhodia sponsors particularly the education of children in this region. Today over 5 000
children, including more than 4,500 girls, have had access to education or continue their studies thanks to the
association Colors of China.
®
In line with its Rhodia Way approach, Rhodia Corporate has also concluded two partnerships recognized in France
(with France Active) and abroad (with Planet Finance). The Rhone Alpes French zone and China are two strategic
focus territories for Rhodia. Those two partnerships run on a two years period and are financing through microfinance
which is a societal commitment to Sustainable development DNA:
Planet Finance Project 2 Tongwei "From Isolation to Rural Market Integration".
•
Deployment in China: €100,000 allocated in 2011: €65,000 and €35,000 in 2012.
Rhodia is the first private funder of the project. The European Community funds up to 75%. The project aims to
increase access to renewable energy through micro-credit to local farmers in eight villages, and promote
environmental protection among farmers in the County Tongwei. One of the major projects is the creation and
facilitation and management of a Centre of Rural Innovation. This center of knowledge and technological
agricultural training on renewable energy will notably enhance the farmer as a major player in the supply chain.
The financial partnership with Rhodia allows Planet Finance to develop and equip the Innovation Center, and
then implement the necessary Human Resources for its coordination (training, events, visits, etc).
France Active: support the creation of enterprise worn by people suffering exclusion.
•
Deployment in 2011/2012: France - Rhone Alpes.
Rhodia finances €50,000 to 12 projects of entrepreneurship, their support and financial assistance to the
Guarantee Fund (bank loan guarantees made for 50 to 65% of bank loan for a project called "micro-credit
guaranteed”). Rhone France Active Fund was established in 1993. In 2010, 230 creative projects (individual and
collective) were supported by the Fund Rhone, allowing the creation of 464 jobs over the year. The survival rate
recorded was 78% at three years (at the Supreme National Avg 50%). France Active association was founded in
1988 in a context of increasing unemployment to act for the employment of people in difficulty. Several founders
were at the initiative of its creation: the Fondation de France, the Deposit and Consignment Office, Credit
Cooperative, the Macif Foundation and charities. The Association creates progressively France Active network
consists today of 40 independent local associations Fund (territorial) but sharing common values.
2
.
4
.
2
.
A
W
A
R
D
S
&
R
E
C
O
G
N
I
T
I
O
N
Awards & recognition (GRI 2.10)
Rhodia wins the Responsible Governance Award
Rhodia has received in October 2011 the "Responsible Governance Award" in the SBF 120 category at a ceremony
organized during the national week of Socially Responsible Investment. The award-giving ceremony was officially
54
Annual Information Document • Rhodia 2011
opened by Nathalie Kosciusko-Morizet, Minister for Ecology, Sustainable development, Transportation and Housing in
the French government.
Presented jointly by the Forum for Responsible Investment (Forum pour l'lnvestissement Responsable- FIR) and the
Vigeo social rating agency, this award recognizes companies that have been most successful in making
the
principles and demands of Corporate Social Responsibility (CSR) an integral part of their corporate governance
system.
Vigeo research: Rhodia is one of the top 3 most socially responsible European companies
Vigeo, the social rating agency, published in November 2011 its research findings on the social responsibility of
European companies as far as non-discriminatory practices in employment are concerned. The agency analyzed the
performance of 539 listed European companies with respect to non-discriminatory practices in employment on the
basis of criteria such as the access and continued participation in employment of the most vulnerable members of
society, improvement in working conditions, training, professional advancement, etc. The result is high marks for
French companies as a whole, with PSA Peugeot Citroen and Rhodia ranking just after the German E.ON AG in the
top 3 industrial Groups. This excellent ranking illustrates once again the high degree of responsibility assumed by
Rhodia through its agreement with ICEM.
Chemistry innovation prize in favour of Sustainable development
Rhodia was awarded the 2011 Pierre Potier Prize for Eolys Powerflex"". A catalytic additive for particulate filters first
launched in December 2009, this new product helps carmakers to reduce the environmental impact of their vehicles.
When added to the diesel (or biodiesel) fuel, it enables the particulate filter to function effectively and reliably. This
technology, which is already used to equip 1.5 million diesel-driven vehicles in Europe, makes it possible to eliminate
more than 99% of the carbon soot released by these vehicles. The production process used also makes it possible to
reduce energy consumption by 35% and to recycle all the different co-products. Used in conjunction with a detergent,
the engine's efficiency is maintained throughout the life of the vehicle and the C02 emissions produced during the
regeneration of the filter are reduced by a factor of4%.
®
Rhodia Way Awards: awards designed to motivate
®
Rewarding the best Sustainable development practices is a tradition at Rhodia. Created in 2008, the Rhodia Way
®
Awards recognize the best practices in the field that are in line with the commitments promoted by the Rhodia Way
Framework.
2010/2011 assessments: 240 projects submitted / More than 2000 employees involved worldwide, from the GBUs and
functions / 107 projects selected as finalists / 6 prize winners.
2
2
5
.
.
.
.
5
r
P
1
o
u
d
c
t
r
e
s
o
p
n
i
s
i
b
l
i
t
y
P
.
R
E
G
U
L
A
T
I
O
N
S
R
E
L
A
T
E
D
T
O
R
O
D
U
C
T
S
A key part of Rhodia's approach to product stewardship is the management of Health, Safety and Environment
throughout the product lifecycle, from design through to end of life. For each product, a Safety Data Sheet (SDS) is
available which provides information on health, safety, environment, and transportation.
Annual Information Document • Rhodia 2011
55
Product information - REACH & GHS / CLP implementation
Dossiers registered for the first REACH registration phase, 2010
Total
Number of
dossiers
Number of dossiers
at Lead Registrant
REACH dossiers
submitted to ECHA
by Nov. 30, 2010
Dossiers accepted
by ECHA
106
35
100%
100%
Perimeter: equivalent to European perimeter.
For Rhodia, 106 REACH dossiers which represented 85 different substances have been submitted and approved by
the European Chemicals Agency (ECHA) by November 30, 2010. Rhodia were Lead Registrants (LR) for 35 among
85 substances.
Dossiers scheduled for the second REACH registration phase, 2013
Total
Number of
dossiers
Number of dossiers
at Lead Registrant
ELINCS
to be updated
in 2011 - 2012
ELINCS
updated in 2011
128
46
9
7
Perimeter: equivalent to European perimeter.
For the second 2013 registration phase within REACH, Rhodia has to manage currently 128 dossiers for 126
substances. Rhodia has a leader role for 27 substances and registers alone for 19 substances. In 2011, seven
ELINCS European (List of Notified Chemical Substances) dossiers have been updated and five EINECS (European
Inventory of Existing Commercial chemical Substances) new registration dossiers have been made.
Product safety information
Numbers of commercial products manage in SAP-EHS
2011
All business areas
16
Engineering Plastics
1,274
Novecare
3,418
Polyamide Intermediates
1,845
Silica Systems
215
Diphenols
431
Salicylics
114
Fluoro-Organics
Rare Earth Systems
Fibras
COATIS
Tow
365
1,763
35
185
19
Corporate R&D
Rhodia interco
Total
3
526
10,217
Perimeter: equivalent to European perimeter.
In 2011, Rhodia emphasized the quality of communication of risk management measures towards customers through
the translation of REACH safety datasheets into the languages of its European customers. The REACH Regulation is
perceived by Rhodia as a real opportunity to get closer to its customers and to better anticipate their expectations or
constraints in terms of use of the products marketed.
Rhodia also transposed the labelling data of the standardized Globally Harmonized System (GHS) classification from
the United Nations program, broken down according to national standards for Brazil, China, Korea, Japan, and all
countries in Southeast Asia. The processes and EHS database established by Rhodia thus permits the countries
56
Annual Information Document • Rhodia 2011
outside the REACH zone to benefit from any "relevant" information or data on dangers generated within the
framework of Rhodia's REACH project.
Moreover, Rhodia continues to pursue the actions that will allow it to meet the requirements of the next REACH
deadline in 2013.
The number of commercial products managed in SAP-EHS enabling Safety Data Sheet (SDS) generation with GHS
classifications (CLP Regulation in Europe, GHS Brazil, GHS China, GHS Korea, GHS Japan) or DPD and transport
classification in 27 languages with GHS labels generation (transport included) represents about 45% of the overall
commercial products portfolio.
Carcinogenic, Mutagenic or Reprotoxic (CMR) substances
2004
2005
2006
2007
2008
2009
2010
2011
20
8
5
7
7
7
7
6
CMR substances put on the market
Perimeter: equivalent to perimeter under operational control.
The CMR "red line”, a voluntary commitment of Rhodia throughout the world
In relation to its Management Book, Rhodia implemented in 2006 a specific procedure regarding Carcinogenic,
Mutagenic, Reprotoxic (CMR) substances for all products brought to market. Rhodia thus defined its own CMR
classification rules to be used globally at its sites, with definitions that may vary from one country or one continent to
the other. A Rhodia CMR complies with CMR classification 1A and 1B of the European Union (CLP Regulation) and
the classification of the International Agency for Research on Cancer (IARC) for groups 1 and 2A.
This "red line" implemented at all sites of the Group requires:
•
An inventory of CMR products matching Rhodia CMR definitions;
•
A systematic search for alternatives;
•
And control of risks related to these products.
Year after year, replacement studies or even decisions to stop selling products are undertaken. Over seven years,
they allowed Rhodia to decrease from 20 to 6 the CMR substances (one substance removed from inventory in 2011,
after a project to improve procedures and to process impurities).
In 2012, Rhodia anticipates expanding this CMR "red line" to Substances of Very High Concern (SVHC).
2
.
.
5
2
B
.
S
U
S
T
A
I
N
A
P
L
E
C
O
N
S
U
M
T
I
O
N
Ecoprofile methodology
See section "Sustainable innovation" above.
Annual Information Document • Rhodia 2011
57
2
g
.
r
6
e
E
.
e
n
t
x
h
o
e
r
u
n
s
a
e
l
g
e
v
a
s
r
i
e
f
i
c
m
a
i
t
s
s
i
o
i
n
o
f
n
s
o
r
a
e
n
n
d
i
v
o
t
r
h
o
n
e
m
r
e
e
m
n
t
i
s
a
s
l
i
o
a
p
n
r
a
m
e
t
e
r
s
:
s
REVIEW REPORT BY ONE OF THE STATUTORY AUDITORS ON A SELECTION OF ENVIRONMENTAL INDICATORS
PUBLISHED IN THE "SUSTAINABILITY INDICATORS 2011" DOCUMENT FOR THE RHODIA SECTOR OF THE SOLVAY
GROUP
Patrick Cleret
Rhodia SA
Saint Fons Delta
20 rue Marcel Sembat
69191 Saint Fons
Further to your request and in our capacity as Statutory Auditor of Rhodia SA, we have carried out a review for the purpose of
enabling us to express moderate assurance on a selection of environmental indicators listed below, based on historical Group
structure for 2011 (all sites that belonged to Rhodia in 2011) and presented in section 3. - Environmental Performance, of the
"Sustainability Indicators 2011" document for the Rhodia sector of the Solvay Group:
o
Air: greenhouse gases expressed in CO2 equivalent, acidification (nitrogen and sulfur oxides) and tropospheric ozone
(volatile organic compounds- VOC);
o
Water: water withdrawals, eutrophication (nitrogen and phosphorus)
(chemical oxygen demand - COD).
and damage to the aquatic environment
The data are prepared under the responsibility of Rhodia SA's Senior Management in accordance with the Responsible Care
reporting procedures for the Rhodia sector of the Solvay Group (DRC 06 and the related glossary, DRC 06-01), which are available
for consultation at Rhodia SA's corporate headquarters.
Our responsibility is to express a conclusion on the data based on our review.
Nature and scope of our work
We conducted our work in accordance with professional standards applicable in France.
We carried out the procedures described below to obtain moderate assurance that no material irregularities exist with regard to the
data. We did not perform all of the procedures required to obtain reasonable assurance (a higher level of assurance).
Moreover, in addition to the request made by Rhodia in the framework of the implementation by Rhodia of the 3E method, assessing
the environmental impact of products developed within innovation projects (see section 5.1.2. of the "Sustainability Indicators 2011"
document), we conducted a peer review of the methodology developed by Rhodia and the structure of the Sustainable Index tools,
and made recommendations based on our findings.
Concerning the selected indicators, our work was conducted at corporate headquarters and at five major sites world wide,
representing four operating units of the Rhodia sector, selected on the basis of 2010 data. These units were major contributors to
environmental indicators or sites that had not been visited in previous years:
o
Chalampé, France;
o
Baltimore, United States;
o
Marcus Hook, United States;
o
Baton Rouge, United States;
o
Santo Andre, Brazil.
Our work was conducted between December 2011 and the end of January 2012.
Environmental data for the units visited cover, for each indicator, the following percentages of the total figures published by the
Rhodia sector:
58
Annual Information Document • Rhodia 2011
Rhodia SA
Review report by one of the Statutory Auditors on a selection of environmental indicators published in the
"Sustainability Indicators 2011" document for the Rhodia sector of the Solvay Group
Greenhouse gases (C02 equivalent, after elimination of intra-Group transfers) 2011
29%
Acidification (nitrogen and sulfur oxide emissions) 2011
38%
Tropospheric ozone (VOC emissions) 2011
35%
Water withdrawals 2011
53%
Eutrophication (nitrogen and phosphorus emissions) 2011
39%
Damage to the aquatic environment (COD emissions) 2011
40%
At corporate headquarters and prior to the site visits:
-
We assessed the reporting procedures in terms of their relevance, reliability, objectivity and understandability.
During site visits:
-
We checked that the Rhodia sector’s reporting rules were properly applied, particularly the definitions relating to the
Responsible Care indicators within the scope of this report.
-
Concerning environmental indicators:
o
We reviewed the calculation methods used to determine Responsible Care reporting data, in particular for
consistency and reliability;
o
We compared, on a test basis, the data entered in the reporting system by the operating units with information
obtained from a wide range of sources (including self-assessments, reports prepared for government agencies,
reports by outside organizations drawn up in the context of local regulations, internal control documents,
invoices and management reporting data);
o
We performed an analytic review of the raw data used to calculate the 2011indicators, compared with data from
the previous year;
o
Where discrepancies were identified, we determined the correct value based on discussions with the operating
unit and the Corporate Responsible Care team, and checked that the necessary adjustments had been made in
the operating unit’s reporting datasheet.
After the site visits, at corporate headquarters:
-
For the sites visited:
o
-
We checked that the data reviewed for the operating units visited had been properly included in the consolidated
data produced by the reporting managers in the Corporate Responsible Care Department.
For the sites that were not visited:
o
We reviewed, on a test basis, the work carried out by the reporting managers to follow-up and explain the
discrepancies between 2010 and 2011 data;
o
We reviewed, on a test basis, the consistency checks made by the reporting managers;
o
We reviewed, on a test basis, the significant corrections made by non-visited sites after discussions with the
reporting managers.
We were assisted in our work by experts from our Sustainable Development Department.
Conclusion
Based on our work, no material irregularities came to light causing us to believe that environmental data described in the first
paragraph of this review report do not comply, in all material respects, with the Responsible Care reporting procedures applicable in
2011 for the Rhodia sector of the Solvay Group.
Neuilly-sur-Seine, March 20, 2012
The Statutory Auditor
PricewaterhouseCoopers Audit
Stéphane Basset
Partner
Annual Information Document • Rhodia 2011
Sylvain Lambert
Partner of PricewaterhouseCoopers Advisory
59
3
Corporate Governance
3
.
1
C
o
.
m
M
o
p
a
n
a
i
s
e
g
t
i
m
o
n
e
o
n
f
t
t
o
B
e
h
A
i
d
e
m
d
i
n
i
t
s
r
a
t
i
e
v
a
n
d
s
3.1.1. The Board of Directors
3.1.2. General Management
3
.
2
.
O
e
p
M
a
r
n
a
a
t
i
o
e
g
n
o
m
e
f
n
t
t
e
h
B
o
A
d
61
64
m
d
i
e
1
6
i
n
i
s
t
r
a
t
i
v
e
a
n
d
s
5
6
3.2.1. Missions and principal duties of the Board of Directors 65
3.2.2. Mission and activities of the committees
of the Board of Directors
66
C
3
.
3
.
o
m
p
e
n
s
a
t
i
o
n
6
3.3.1. Compensation of the members
of the Executive Committee
3.3.2. Compensation of Executive Corporate Representatives
3.3.3. Compensation of non-Executive Corporate Officers
3.3.4. Share subscription or purchase option plans
and allocation of performance shares
60
9
69
70
72
73
Annual Information Document • Rhodia 2011
3
3
.
C
1
.
1
o
.
.
1
m
o
p
i
s
t
i
o
n
o
f
t
e
h
A
m
d
i
n
i
s
t
r
a
t
i
v
e
a
n
d
M
a
n
a
g
e
m
e
n
t
B
o
d
i
e
s
B
.
T
H
E
O
A
R
D
O
F
D
I
R
E
C
T
O
R
S
Composition of the Board of Directors
Rhodia’s Board of Directors is currently composed of six directors. The Company’s by-laws state that it must have a
minimum of three and a maximum of eighteen members. The directors are appointed for four-year terms.
Further to the acquisition of Rhodia by Solvay and as provided in the offer documentation, the following changes
occurred in October 2011:
•
The resignation of Mrs. Laurence Danon and Messrs. Patrick Buffet, Aldo Cardoso, Pascal Colombani, Michel de
Fabiani, Olivier Legrain, Francis Mer, Yves René Nanot and Henri Poupart-Lafarge;
•
The cooptation of Messrs. Gilles Auffret, Daniel Broens, Bernard de Laguiche, Michel Defourny and Dominique
Dussard. These cooptations have been ratified at the Shareholders General Meeting of December 16, 2011.
Furthermore, pursuant to the provisions of the by-laws of the Company, the appointment of Mr. Jacques Khéliff as
Director representing the employee shareholders automatically ended at the end of the offer initiated by Solvay on the
Rhodia shares.
In addition, the Board of Directors, at its meeting held on October 27, 2011, decided to separate the functions of
Chairman of the Board of Directors and Chief Executive Officer. It has then confirmed Jean-Pierre Clamadieu as
Chairman of the Board of Directors and appointed Gilles Auffret as Chief Executive Officer.
It is noted that all the Directors exercise executive functions within the Solvay Group.
Presentation of the members of the Board of Directors as of February 22, 2011
Among the criteria chosen for the selection of the directors are their expertise and their experience in management.
The biographies below, as well as the tables below, also give an indication of the experience and expertise of each
director.
Jean-Pierre Clamadieu has been CEO of the Solvay Group since May 11, 2012. He has been the Chaiman of the
Board of Directors of Rhodia since March 2008 and Deputy CEO of Solvay since September 2011. He served as CEO
of the Rhodia Group from October 2003 to October 2011. Between 1993 and 2003 he held several executive positions
in the Group, as President of Rhodia Chemicals, Latin America, President of the Eco Services Business, Senior VicePresident, Corporate Purchasing and President of the Pharmaceuticals & Agrochemicals Division. Earlier in his career,
he worked for nine years in various positions within the French Civil Service. Jean-Pierre Clamadieu is Chairman of
the Sustainable Development Commission of the French employers’ association MEDEF and he is a member of the
Boards of Directors of Faurecia and the SNCF. He graduated with honors from the Ecole Nationale Superieure des
Mines de Paris, a leading higher education institute.
Gilles Auffret has been the CEO of Rhodia since October 27, 2011 and member of the Executive Committee of
Solvay in charge of the Rhodia Sector since September 2011. He joined the Group Rhodia in 1999 as Deputy
President in charge of the Polyamide Division and held the position of Chief Operating Officer of Rhodia, Member of
the Group Executive Committee between 2001 and 2011. From 1982 to 1999 he held various positions within the
Pechiney Group including that of Director of the Aluminum Metals Department, Member of the Board Committee of
Cebal Directors. He then became Sales Director of Pechiney Aluminium Metal Department. He began his career in
1975 as an auditor at the Government Accounting Office. Then, he joined the Ministry of Industry as an Official
representative for the Director General of Industry. In 1982 he was appointed Public Auditor at the Government
Annual Information Document • Rhodia 2011
61
Accounting Office. Gilles Auffret is graduated of Ecole Polytechnique, Ecole Nationale d’Administration (ENA),
Science Politique, and the National School for Statistics and Economic Administration (ENSAE).
Daniel Broens is Director of Rhodia since October 2011 and is Group General Manager Human Resources of Solvay
since February 2001. From 1988 to January 2001, he was General Counsel of Solvay Pharmaceuticals B.V. and, in
addition, was appointed personnel and organisational manager in 1997. He started his career as lawyer within the law
firms Siméon, Macquet, Borde et Associés and Iacino & Partners. Daniel Broens graduated in law from the University
of Tilburg (Netherlands).
Bernard de Laguiche is Director of Rhodia since October 2011 and is Chief Financial Officer, member of the
Executive Committee and Member of the Board of Directors of Solvay since March 2006. From 2002 to 2006, he was
CEO of Solvay Solexis (Milan). Previously, he led the entity at the head of Corporate Planning Group (1995-2002) and
was appointed to the Executive Committee of Solvay in 1998. In 1994 he was appointed Deputy Chief Financial
Officer of Solvay after holding responsibilities from Solvay Pharmaceuticals. He joined Solvay in 1987 after starting his
career in Senior Auditor within the Sandoz group. Bernard de Laguiche graduated in economics from the University of
St. Gallen (Switzerland).
Michel Defourny has been Director of Rhodia since October 2011. He joined the Solvay Group end 1987 and
occupied since this date different positions at the Financial Central Direction, as well as in Chemical sector and Plastic
sector (Finance Manager). In November 2001, he has been assuming the function of Head of Corporate
Communications and Investor Relations. Since June 2010, he combines his function of Group Corporate Secretary
with his responsibility for Communications. Michel Defourny is Commercial engineer (ICHEC).
Dominique Dussard is Director of Rhodia since October 2011 and has been appointed Group General Counsel since
January 2007. He also created an organization in charge of the promotion and the monitoring of the compliance to
Solvay’s Code of Conduct within the Group. Since 1997, he has been Deputy Group General Counsel with direct
responsibilities for Europe and Asia Pacific as from 2000. Dominique Dussard is member of the “Institut des Juristes
d’Entreprise”. He was educated at the University of Namur and Louvain (LLN) and participated in the IEP at the
Insead in Paris and Singapore.
Information on the directors
Name and additional information
JEAN-PIERRE CLAMADIEU
(born on August 15, 1958)
Principal positions held in the Company:
Chairman of the Board of Directors
Status of the mandate:
Co-optation on October 3, 2003
Ratification on March 31, 2004
End of the mandate at the conclusion of the
General Shareholders’ Meeting called to rule on
the 2012 financial statements
Number of Rhodia shares held: 123,500
Other positions in French
or foreign companies
Chief Executive Officer of Solvay
since May 11, 2012
Deputy Chief Executive Officer of
Abroad:
Solvay since September 8, 2011
Director of Solvay Iberica (Spain), Solvay GmbH Chairman of the Board of Rhodia
(Germany), Solvay Finance (Luxembourg) SA et since October 27, 2011
Chairman and Chief Executive
Solvay America Inc (USA)
Officer of Rhodia from
March 17, 2008 to October 27,
2011
Chief Executive Officer of Rhodia
from October 3, 2003 to
March 17, 2008
In France:
Director of Faurecia and SNCF
GILLES AUFFRET
In France:
Chairman of the Supervisory Board of Azulis
(born on February 15, 1947)
Principal positions held in the Company:
President of Rhodia Opérations
Director and Chief Executive Officer
Status of the mandate:
Co-optation on October 27, 2011
Ratification on December 16, 2011
End of the mandate at the conclusion of the
General Shareholders’ Meeting called to rule on
the 2012 financial statements
Number of Rhodia shares held: 68 500
62
Principal professional
activities
Chief Executive Officer of Rhodia
since October 27, 2011
Member of the Executive
Committee of Solvay since
September 2011
Chief Operating Officer of Rhodia
from 2001 to 2011
Annual Information Document • Rhodia 2011
Other positions in French
or foreign companies
Name and additional information
Principal professional
activities
DANIEL BROENS
(born on June 16, 1957)
Principal positions held in the Company:
Director
Status of the mandate:
Co-optation on October 27, 2011
Ratification on December 16, 2011
End of the mandate at the conclusion of the
General Shareholders’ Meeting called to rule on
the 2012 financial statements
Number of Rhodia shares held: 0
Abroad:
Group General Manager Human
Director of Solvay Do Brazil Ltda (Brazil), Solvay Resources of Solvay since
February 2001
Specialty Polymers Management srl (Italy),
Solvay Imerica (Spain) and Solvay Quimica
(Spain)
Managing Director of 3S Solvay Shared
Services - Soc. De Servicos Partilhados
Unipessoal Lda (Portugal)
BERNARD DE LAGUICHE
(born on August 30, 1959)
Principal positions held in the Company:
Director
Status of the mandate:
Co-optation on October 27, 2011
Ratification on December 16, 2011
End of the mandate at the conclusion of the
General Shareholders’ Meeting called to rule on
the 2012 financial statements
Number of Rhodia shares held: 0
In France:
Director of Solvay Finance France SA,
Chairman of the Board of Directors of Solvay
Participations France SA
Member of the Executive
Committee and Chief Financial
Officer of Solvay since March
2006
Abroad:
Managing Director of Solvac SA (Belgium)
Director of Solvay SA (Belgium), Solvay Energy
SA (Belgium), Dacarto Benvic Ltda (Brazil),
Solvay Do Brasil Ltda (Brazil), Solvin Europe
GmbH (Germany), Solvay Specialty Polymers
Management srl (Italy), Solvay Finance
(Luxembourg) SA, Solvay Quimica (Spain),
Solvay UK Holding Company Ltd (UK), Solvay
America Inc (USA) et Solvay Chemicals
Management Inc (USA)
Chairman of the Board of Directors of Fonds
Ernest Solvay ASBL (Belgium), Hestia SA
(Belgium), Solvay Nafta Development and
Financing SA (Belgium), Blair International
Insurance (Cayman) Ltd (Cayman Islands),
Solvay GmbH (Germany) and Solvay Finance
(America) LLC (USA)
Chairman of the Supervisory Board of Solvay
Chemicals and Plastics Holding BV
(Netherlands)
Managing Director of 3S Solvay Shared
Services - Soc. De Servicos Partilhados
Unipessoal Lda (Portugal)
Vice-President of Solvay Iberica SL (Spain)
Representative of Solvay SA as Chairman of the
Board of Directors of Solvay CICC (Belgium)
Group Corporate Secretary of
Solvay since June 2010
MICHEL DEFOURNY
(born on June 21, 1962)
Principal positions held in the Company:
Director
Status of the mandate:
Co-optation on October 27, 2011
Ratification on December 16, 2011
End of the mandate at the conclusion of the
General Shareholders’ Meeting called to rule on
the 2012 financial statements
Number of Rhodia shares held: 0
Abroad:
Director of Solvay Specialty Polymers
Management srl (Italy) and Solvay Quimica
(Spain)
DOMINIQUE DUSSARD
(born on October 3, 1957)
Principal positions held in the Company:
Director
Status of the mandate:
Co-optation on October 27, 2011
Ratification on December 16, 2011
End of the mandate at the conclusion of the
General Shareholders’ Meeting called to rule on
the 2011 financial statements
Number of Rhodia shares held: 0
Abroad:
Group General Counsel of
Director of Solvay Specialty Polymers
Solvay since January 2007
Management srl (Italy), Solvay Imerica (Spain),
Solvay Quimica (Spain), Soi 51 Company Ltd
(Thailand), Thai Northeast Company Ltd
(Thailand), Vinythaï Public Company Ltd
(Thailand) et Solvay Chemicals Management Inc
(USA)
Annual Information Document • Rhodia 2011
63
3.1.1.2. Other information
Sanctions applicable to the directors and management
To the knowledge of the Company, none of the directors of the Company was, during the past five years, the subject:
•
of a ruling for fraud, nor associated with a bankruptcy, confiscation or liquidation;
•
of an accusation or an official public sanction delivered by legal or regulatory authorities or professional
organizations, nor barred by a court from acting as a member of an administrative body, management or
oversight of an issuer, or from intervening in the management or running of the business of an issuer.
Absence of conflicts of interests
To the knowledge of the Company, there is no conflict between the duties of the members of the administrative bodies
of the Group with regards to the Company and their private interests and other duties.
Absence of family ties
To the knowledge of the Company, there are no family ties between the individual members of the Board of Directors.
Service contracts
Rhodia has not signed any service contracts granting future benefits.
3
.
1
.
2
.
G
E
N
E
R
A
L
M
A
N
A
G
E
M
E
N
T
Until October 27, 2011, the Group was managed by an Executive Committee composed of the following members:
•
Jean-Pierre Clamadieu, Chairman and Chief Executive Officer;
•
Gilles Auffret, Chief Operating Officer;
•
Pascal Bouchiat, Group Executive Vice President and Chief Financial Officer;
•
Pascal Juery, Group Executive Vice President.
After the completion of the acquisition of Rhodia by Solvay, the Executive Committee of the Rhodia Sector was
reshuffled and is now composed of the following members:
•
Gilles Auffret, Chief Executive Officer;
•
Pascal Bouchiat, Group Executive Vice President and Chief Financial Officer (until April 15, 2012);
•
Pascal Juery, Group Executive Vice President;
•
Jean-Pierre Labroue, Group Executive Vice President, General Counsel and Corporate Secretary.
The Executive Committee of the Rhodia Sector, which acts collectively, sets Rhodia’s strategies, decides major
resource allocation within the Sector, ensures that Rhodia operates as a cohesive Sector (development of key skills
and talent, sharing of experience, coordination and effective dialogue) and follows Rhodia’s performance.
Beyond this first General Management layer of the Group, the Management Committee is made up of the Executive
Committee plus the Global Business Units, Function and Zone Leaders in charge within Rhodia Sector. The
Management Committee is a forum which allows information sharing, debate, and overall alignment of Rhodia’s key
leaders. The Management Committee meets once every quarter on the basis of a formal agenda.
64
Annual Information Document • Rhodia 2011
3
3
2
.
.
2
O
.
.
1
p
e
r
a
t
i
o
n
o
f
t
e
h
A
m
d
i
P
.
M
I
S
S
I
O
N
S
A
N
D
n
i
t
s
r
a
t
i
e
v
a
n
M
d
I
N
C
I
n
a
e
g
m
e
n
t
o
B
i
d
e
s
B
P
R
a
A
L
D
U
T
I
E
S
O
F
T
H
E
O
A
R
D
O
F
D
I
R
E
C
T
O
R
S
Powers
The powers of the Board of Directors are those provided for by the applicable legislation, in particular the following:
•
determining the business orientation of the Company and monitoring its implementation;
•
handling all issues regarding the progress of the Company’s operations subject to the powers expressly reserved
for shareholders’ meetings and within the limit of the stated purpose of the Company;
•
undertaking the controls and verifications which it considers useful;
•
deciding whether to set up Committees (specifying their composition and powers) and/or conferring to one of its
members or to third parties any special mandates necessary for one or more determined purposes;
•
moreover, it has certain specific powers attributed by law, specifically:
- convening general shareholders’ meetings and setting the agenda,
- approving the individual and, as the case may be, consolidated financial statements of the Company and the
management report,
- authorizing so-called “regulated transactions” within the meaning of the law,
- co-opting directors,
- appointing or dismissing the Chairman of the Board of Directors and the Chief Executive Officer (and if necessary
Deputy General Managers) and determining their compensation,
- determining Directors’ compensation, and
- increasing or decreasing the capital upon delegation of the Extraordinary Shareholders’ Meeting.
Activities of the Board of Directors in 2011
Number of meetings of the Board of Directors: 14
(8 in 2010 and 8 in 2009).
Rate of participation by the directors: 90%
(95% in 2010 and 95% in 2009).
The main events of the financial year occupying the Board and involving intense participation of the directors were
evaluations, studies and decisions relating primarily to:
•
•
the offer to purchase the Rhodia Shares and the OCEANEs initiated by Solvay;
the review of the annual, semi-annual and quarterly results, the regular follow-up of the Group’s business and
outlook,
•
the compensation of the corporate representatives : variable compensation of the Chairman and Chief Executive
Officer, fixed and variable compensation of the Chief Executive Officer, allocation of performance shares.
Annual Information Document • Rhodia 2011
65
3
2
.
2
.
B
.
M
O
F
D
I
R
I
E
C
S
T
S
O
I
O
R
N
A
N
D
A
C
T
I
V
I
T
I
E
S
O
F
T
H
E
C
O
M
M
I
T
T
E
E
S
O
F
T
H
E
O
A
R
D
S
During its meeting held on October 27, 2011, the Board of Directors decided to suppress the 3 committees of the
Board of Directors. This decision arose from the new situation of the Company which has been delisted and is
controlled by Solvay SA. In this context, the missions of the Board of Directors are limited to those provided by laws
and it doesn’t need to rely on committees to assume its role.
Until October 27, 2011, the Board of Directors had three Committees: the Audit and Risks Committee, the
Compensation, Selection and Governance Committee and the Strategic and Sustainable Development Committee.
The committees’ role was to study and prepare certain deliberations of the Board of Directors. They had to issue, in
their respective fields of competence, recommendations and advice. They had only advisory power and act under the
authority of the Board of Directors.
The Audit and Risks Committee
Composition
The Audit and Risks Committee was composed of three directors:
•
Mr. Henri Poupart-Lafarge (Chairman);
•
Mr. Aldo Cardoso;
•
Mr. Michel de Fabiani.
Powers
The Audit and Risks Committee had, in particular, the role of overseeing:
•
the process of how financial information is handled, and in particular, reviewing the individual and consolidated
annual, semi-annual and quarterly financial statements of the Company and the respective periodic financial
reports;
•
the effectiveness of internal control and risk management systems of the Company, and, in particular, reviewing
the risks and important off-balance sheet liabilities and examining the consistency between the internal audit
evaluation and the internal audit reports;
•
the statutory audit of the financial statements and, for this purpose, reviewing the general program of activities of
the Statutory Auditors and compliance with their observations and recommendations;
•
the independence of the statutory audit of the financial statements and, for this purpose, taking part in the
selection of the Statutory Auditors and issuing recommendations on the selection of the latter, scheduling regular
meetings with the Statutory Auditors, reviewing the fees paid to them and their network and the services provided
in connection with the assignment given to the Statutory Auditors (which are the subject of a prior approval
process by the Audit and Risks Committee, if necessary).
Activities of the Committee in 2011
Number of Audit and Risks Committee meetings: 3
(8 in 2010 and 7 in 2009).
Rate of participation of the directors: 100%
(100% in 2010 and 100% in 2009).
66
Annual Information Document • Rhodia 2011
Its work primarily involved the review of the key points regarding the preparation of the annual (consolidated and
individual), semi-annual and quarterly financial statements and closing options.
Other major work was related to:
•
internal control: assessment of the 2010 internal control;
•
internal audit: 2011 internal audit plan;
•
external audit: 2011 external audit plan;
•
detailed presentation of certain risks identified within the framework of the Group’s risk management procedure;
•
relations with the Statutory Auditors.
The compensation, selection and governance committee
Composition
The Compensation, Selection and Governance Committee was composed of four members:
•
Mr. Aldo Cardoso (Chairman);
•
Mr. Pascal Colombani;
•
Mr. Michel de Fabiani;
•
Mr. Olivier Legrain.
Powers
The purpose of this committee was as follows:
•
with regards to compensation: the Committee made recommendations on the compensation of the Chairman
and Chief Executive Officer. It was responsible, by referring to the general compensation practices of equivalent
French or foreign groups, for recommending each year to the Board the amount of fixed compensation, the
criteria of the variable part of the compensation and their annual application based on performance, and for
examining other forms of compensation and benefits in-kind. It was also involved in defining a general
compensation and benefits policy for the officers (Executive Committee), including retirement benefits. With
regards to stock subscription or purchase options and the free allocation of shares, it was involved in preparing
plans for the benefit of executives and officers, as well as deciding on the most appropriate allocation categories,
taking into consideration the practices at equivalent French or foreign groups, and, if necessary, eliminating any
discounts and defining in advance the vesting and holding periods. The committee was also involved in possible
increases in share capital reserved for employees;
•
with regards to appointments: the Committee made recommendations on the progression and succession of
the members of the Executive Committee and on plans for making significant changes in the organization of the
Group’s management. The search for and selection of future directors were also part of the work of the
Committee;
•
with regards to governance: the Committee primarily ensured that the internal rules of the Board of Directors
and the recommendations with regard to corporate governance found in the AFEP-MEDEF Code, which the
Company follows, were taken into account for the proper functioning of the corporate bodies. It reviewed the
composition of the Committees, prepared the annual procedure for evaluating the operation of the Board of
Directors and made recommendations on the independence of each of the Directors.
Annual Information Document • Rhodia 2011
67
Activities of the Committee in 2011
Number of meetings of the Compensation, Selection and Governance Committee: 2
(4 in 2010 and 4 in 2009).
Rate of participation of the members: 100%
(100% in 2010 and 100% in 2009).
Its work, opinions and recommendations mainly involved the following:
•
determination of the Group’s compensation policy in connection with the new organization of the Group
implemented in 2010;
•
determination of the compensation of the Chairman and Chief Executive Officer: analysis of the total
compensation (with the assistance of an external expert) and establishment of the fixed and variable parts;
•
performance shares plans for 2011 (please refer to Chapter 3.3.4 below);
•
composition of the Board of Directors: proposing a candidate with a concern towards diversifying the experience
of the members of the Board of Directors and adding more female members.
The Strategic and Sustainable Development Committee
Composition
The Strategic and Sustainable Development Committee was composed of five members:
•
Mr. Patrick Buffet (Chairman);
•
Mr. Pascal Colombani;
•
Mrs. Laurence Danon;
•
Mr. Olivier Legrain;
•
Mr. Francis Mer.
Powers
This Committee was responsible for the following main tasks:
•
with regards to strategy: the Committee reviewed and prepared all strategic proposals recommended by
General Management and submitted for approval by the Board of Directors; it reviewed all major acquisition, sale
and alliance transactions in conformity with the selected strategy and identified the impact of the strategic options
taken by the Group on Sustainable development;
•
with regards to Sustainable development: the Committee (i) prepared proposals aimed at defining, changing
and improving the policy and commitments in terms of the Group’s social and environmental responsibility (RSE )
and monitored the introduction and review of processes allowing an evaluation of the application of the RSE
policy and commitments of the Group, and (ii) reviewed the information published regarding Sustainable
development (Annual Report, Sustainable Development Report of the Group, etc.).
Activities of the Committee in 2011
Due to the take-over bid initiated by Solvay on the Rhodia shares, there was no meeting of the committee in 2011.
68
Annual Information Document • Rhodia 2011
C
3
3
.
.
3
3
o
.
.
1
m
e
p
n
a
s
t
i
o
n
B
P
.
C
O
M
E
N
S
A
T
I
O
N
O
F
T
H
E
M
E
M
E
R
S
O
F
T
H
E
E
X
E
C
U
T
I
V
E
C
O
M
M
I
T
T
E
E
General policy for compensation of the members of the Executive Committee
The Compensation, Selection and Governance Committee reviewed the compensation structure proposed by the
Chairman and Chief Executive Officer for the members of the Executive Committee. To do this, several studies were
presented to the Committee, in particular analyses of comparable companies’ market practices.
Based on these elements, the Chairman and Chief Executive Officer, then the Chief Executive Officer, determined the
fixed and variable compensation of the members of the Executive Committee.
In addition, in the framework of the overall compensation policy, the members of the Executive Committee benefited
from the allocation of performance shares (these plans are described in Chapter 3.3.4 below).
Annual compensation
The overall gross compensation amount owed to members of the Executive Committee of the Group for 2011 (taking
into consideration changes in the composition of the Executive Committee in the course of the year) was €4,511,149.
For reference, the gross compensation owed to members of the Executive Committee came to €4,871,865 in 2010
and €5,713,150 in 2009.
The overall gross compensation amount paid in 2011 (including the 2011 fixed compensation and the 2010 variable
compensation) to members of the Executive Committee (taking into consideration changes in the composition of the
Executive Committee in the course of the year) was €4,364,963. For reference, the gross compensation paid to
members of Executive Committee came to €4,130,293 in 2010 and €4,562,377 in 2009.
The overall gross amount of benefits in-kind paid to these individuals during 2011 came to €51,223, compared to
€67,930 in 2010.
For the 2011, 2010 and 2009 fiscal years, the compensation owed and paid to the members of the Executive
Committee was as follows:
Amounts
for financial year 2011*
(in euros)
Total compensation
Amounts
for financial year 2010**
Amounts
for financial year 2009***
due
paid
due
paid
due
paid
4,511,149
4,364,963
4,871,865
4,130,293
5,713,150
4,562,377
*
4 members
** 6 members from January 1 to June 30 and 4 members from July 1 to December 31.
*** 7 members including one member who left the Company in the course of the financial year.
Retirement obligations
There are two specific supplemental retirement plans for executive directors from which the members of the Executive
Committee can benefit:
•
the supplemental retirement plan with defined benefits called “GRCD.” Closed to all newly hired employees since
2001, this plan ensures the future payment of a retirement supplement to former and current members of
management who were part of the Management Committee before 2001;
•
the supplemental retirement plan for executive directors called “RSD” (defined benefits plan). This plan, created
after 2001 for new members of management, ensures the future payment of a retirement supplement, subject to
meeting the requirements of (i) having accumulated 10 years of service in the Group and one year as a member
of management (as an employee or corporate officer), and (ii) still being employed by Rhodia at the time of
retirement or having left Rhodia after the age of 55 without returning to work thereafter.
Annual Information Document • Rhodia 2011
69
The amount of retirement obligations at December 31, 2011 for the members of the Executive Committee of the
Group (based on its composition on December 31, 2011) was €14,651,545.
Commitments related to the termination of employment
The obligations undertaken for the benefit of the members composing the Executive Committee of the Group (based
on its composition on December 31, 2011), in the event of termination of their employment contract, were, as of
December 31, 2011, €4,797,932.
These obligations may apply in some cases of departure from the Company, with the exception of dismissal for
misconduct, or resignation.
3
.
3
.
2
P
.
C
O
M
P
E
N
S
A
T
I
O
N
O
F
E
X
E
C
U
T
I
V
E
C
O
R
P
O
R
A
T
E
R
E
R
E
S
E
N
T
A
T
I
V
E
S
Until October 27, 2011, the only executive corporate representative of the Company has been the Chairman and Chief
Executive Officer. Since October 27, 2011, there are two executive corporate representatives of the Company: the
Chairman of the Board of Directors and the Chief Executive Officer.
General compensation policy
The Board of Directors determines:
•
•
the fixed part of the compensation of the Chairman and Chief Executive Officer or the Chief Executive Officer;
the quantitative and qualitative criteria for determining the variable part of the compensation of the Chairman and
Chief Executive Officer or the Chief Executive Officer;
•
the compensation of the Chairman.
In addition, some corporate representatives could, within the limits provided for by law, benefit from plans for the
allocation of performance shares that may be decided by the Board of Directors.
Lastly, like all other executive managers and corporate representatives of the Group and its subsidiaries, Rhodia’s
executive corporate representatives benefit from civil liability insurance coverage for Directors and Officers.
Compensation and benefits of the Chairman and Chief Executive Officer
(until October 27, 2011)
Annual compensation of the Chairman and Chief Executive Officer
The gross amount of the fixed part of the compensation paid in 2011 to the Chairman and Chief Executive Officer was
€538,500.
The variable part of the compensation of the Chairman and Chief Executive Officer depended on the achievement of
quantitative objectives related to the performance of the Group and qualitative objectives related to attaining the
personal objectives. The variable part could vary between 0 and 180% of fixed compensation.
For financial year 2011, the Board of Directors approved a gross amount for the variable compensation of the
Chairman and Chief Executive Officer due for 2011 of €945,000.
Mr. Jean-Pierre Clamadieu also benefited from benefits in kind corresponding to a company car, health coverage and
a supplemental retirement plan, whose cost is borne by the Company, amounting to a total of €36,012 for 2011.
It results that the gross amount of the overall compensation owed to Mr. Jean-Pierre Clamadieu in respect of 2011 is
set at €1,519,512 (2011 fixed part, 2011 variable part and benefits in-kind) and that the gross amount of the overall
compensation paid to him in 2011 is set at €1,714,812 (2011 fixed part, 2010 variable part and benefits in-kind).
70
Annual Information Document • Rhodia 2011
The information relating to the allocation of performance shares to the Chairman and Chief Executive Officer is
presented in Chapter 3.3.4 of this document.
Commitments for the period following the mandate of the Chairman and Chief Executive Officer
In 2009, the Board of Directors decided to consolidate, in an agreement related to his mandate, all commitments for
the period following the mandate of the Chairman and Chief Executive Officer:
•
confirmation of the potential benefit of the “RSD” supplementary retirement plan;
•
acceptation by Mr. Jean-Pierre Clamadieu of a non-compete and non-solicitation obligation.
The commitments contained in this agreement are described in the 2010 Reference Document of the Company.
The mandate of Chairman and Chief Executive Officer of Rhodia of Mr. Jean-Pierre Clamadieu ended on October 27,
2011. Due to his appointment as Deputy Chief Executive Officer of Solvay, the non-compete and non-solicitation
obligation became non applicable and Mr. Jean-Pierre Clamadieu lost his rights related to the “RSD” supplementary
retirement plan.
As provided by this agreement in case of termination of his mandate of Chairman and Chief Executive Officer of
Rhodia, Mr. Jean-Pierre Clamadieu has kept the rights attached to the performance shares and the share subscription
options from which he benefited.
This agreement is now terminated.
Compensation and benefits of the Chief Executive Officer
(as from October 27, 2011)
Annual compensation of the Chief Executive Officer
The gross amount of the fixed part of the compensation paid in 2011 to Gilles Auffret, as Chief Executive Officer, was
€124,822.
The variable part of the compensation of the Chief Executive Officer depended on the achievement of quantitative
objectives related to the performance of the Group and qualitative objectives related to attaining the personal
objectives. The variable part could vary between 0 and 170% of fixed compensation.
For financial year 2011, the Board of Directors approved a gross amount for the variable compensation of the Chief
Executive Officer due for 2011 of €130,758.
Mr. Gilles Auffret also benefits from benefits in kind corresponding to a company car, amounting to a total of €794 for
the period from October 27, 2011 to December 31, 2011.
It results that the gross amount of the overall compensation owed to Mr. Gilles Auffret, as Chief Executive Officer, in
respect of 2011 is set at €256,374.
The information relating to the allocation of performance shares to the Chief Executive Officer is presented in
Chapter 3.3.4 of this document.
Retirement obligations
Mr. Gilles Auffret potentially benefits from the supplemental retirement plan with defined benefits called “GRCD”.
Annual Information Document • Rhodia 2011
71
3
.
3
.
3
P
.
C
O
M
P
E
N
S
A
T
I
O
N
O
F
N
O
N
-
E
E
X
C
U
T
I
V
E
C
O
O
R
R
A
T
E
O
F
F
I
C
E
R
S
Directors’ fees
The maximum annual amount of the Directors’ fees that Rhodia’s Board of Directors may distribute to its directors is
set at €600,000. This was last modified during the combined Annual Shareholders’ Meeting of May 3, 2007.
Within the limit of this ceiling, the Board of Directors distributed the Directors’ fees according to criteria specified in its
internal rules. These criteria provide for fixed and variable parts based on actual attendance at the meetings of the
Board of Directors and its committees.
Fixed part
•
each director receives a fixed part of €20,000;
•
each Committee Chairman receives a fixed part of €6,000.
In addition, the Board of Directors decided to allocate, as for fiscal year 2010, a fixed annual compensation of €6,000
in Directors’ fees for the Lead Independent Director position created at the end of 2009.
Variable part
•
€4,000 for participating in each Board of Directors meeting;
•
€4,000 for participating in each Committee meeting.
In 2011, the total amount of Directors’ fees Rhodia owed to its directors was €599,600. This amount was €599,500 in
2010 and €599,600 in 2009.
Among the directors composing the Board until October 27, 2011, Messrs. Jean-Pierre Clamadieu and Jacques
Khéliff did not receive any Directors’ fees during financial year 2011.
The table below shows the Directors’ fees owed to the members of the Board of Directors in 2011, 2010 and 2009:
Directors’ fees received by the directors
Directors’ fees due
for financial year 2011
Directors’ fees due
for financial year 2010
Directors’ fees due
for financial year 2009
-
-
-
Mr. Patrick Buffet
64,500
60,600
34,100
Mr. Aldo Cardoso
85,400
91,900
93,400
Mr. Pascal Colombani
66,200
69,300
64,600
Mrs. Laurence Danon
52,300
45,000
46,700
Mr. Michel de Fabiani
85,400
91,900
91,600
-
-
-
Mr. Olivier Legrain
59,300
69,300
64,600
Mr. Francis Mer
48,800
55,400
55,600
Mr. Yves René Nanot
62,700
41,600
43,100
Mr. Henri Poupart-Lafarge
75,000
74,500
48,500
(in euros)
Mr. Jean-Pierre Clamadieu
(Chairman and Chief Executive Officer)
Mr. Jacques Khéliff
st
* For the period from January 1 to September 7, Mr. Jacques Khéliff, as Sustainable Development manager of Rhodia, also received an overall
compensation of €262,188.
In its meeting held on October 27, 2011, the Board of Directors decided that after this date, the Directors will not
receive any directors’ fees. It also decided that the Chairman of the Board will not receive any compensation as
Chairman.
72
Annual Information Document • Rhodia 2011
Retirement Plans for non-executive corporate representatives
Current corporate representatives
There is no specific supplementary retirement plan in place for corporate representatives.
Former corporate representatives
Rhodia’s commitments for retirement plans for former corporate representatives (executive and non-executive) as of
December 31, 2011 amounted to €3,162,382.
Commitments to current non-executive corporate representatives in terms
of holding, ending or changing functions
Rhodia has not undertaken any commitments for the benefit of its non-executive corporate representatives, be they
current or former representatives, in terms of holding, ending or changing the functions of the corporate
representatives.
3
3
.
.
4
B
.
H
S
A
E
R
P
U
S
S
C
P
I
R
I
T
O
N
O
R
P
U
R
C
H
A
S
E
O
P
T
I
O
N
L
A
N
S
A
N
D
A
L
L
O
C
A
T
I
O
N
P
O
F
E
R
F
O
R
M
A
N
C
E
S
H
A
R
E
S
Due to the delisting of the Rhodia shares and as provided in the tender offer initiated by Solvay on the Rhodia shares,
Solvay has proposed to the beneficiaries of share subscription or purchase options and/or performance shares (that
could not be tendered into the public tender offer due to their unavailability) to sign a liquidity agreement.
This liquidity agreement provides for reciprocal promises to purchase and sell the shares when they are available at a
price equal to the Offer price (€31.60), indexed on the evolution of the Solvay share price.
A summary of the main terms and conditions of the liquidity agreement is available in the offer document (p. 20 of the
offer document dated May 10, 2011, available on the Solvay website).
Share subscription or purchase option plans
As of December 31, 2011, the number of outstanding share subscription or purchase options was 1,404,807
representing 1.32% of the Company’s capital if all share subscription or purchase options were exercised.
Information on the share subscription or purchase options for 2011
Allocation of share subscription or purchase options
In 2011, the Board of Directors did not authorize any share subscription or purchase options plan.
Exercise of share subscription or purchase options by the corporate representatives of the Company
The table below indicates the number and the price of the shares subscribed or purchased by the corporate
representatives in 2011:
Annual Information Document • Rhodia 2011
73
Name of the corporate
representative
Jean-Pierre Clamadieu
Yves René Nanot
Number
of shares
subscribed/
purchased
Subscription
or purchase price
(in €)
Share subscription or
purchase options plan
3,721
Plan 2003
28.08
9,977
Plan 2004
15.12
14,891
Plan 2004 B
15.12
11,552
Plan 2004 B
15.12
Country
France
France
Exercise of share subscription or purchase options by the Group employees
The table below indicates the number and the price of the shares subscribed or purchased in 2011 by each of the 10
employees of the Group (which are not also corporate representatives), whose number of shares thus subscribed or
purchased is the highest:
Share subscription or purchase options granted to the first ten employees
not holding a corporate office and options exercised by them
Total number of granted
options/subscribed or Weighted average Respective
purchased shares
price (in euros)
plan
Options held on the issuer and the companies specified above, and
options exercised during the financial year by the ten employees of
the issuer and its affiliated enterprises, whose number of options
thus subscribed or purchased is the highest (aggregate information)
276,221
€7.17
Plan 2003
Plans 2004
A+B
Plan 2009
Summary and features of current subscription option and share purchase plans
Please refer to Note 32.1 to the consolidated financial statements appearing in this document.
Allocation of performance shares
As of December 31, 2011, the number of shares to be allocated free of charge at the end of the acquisition period was
2,104,490, representing 1.98% of the capital of the Company after the final purchase of these shares, of which
1,862,040 are granted conditionally upon the attainment of certain performance conditions.
Information on the performance shares for 2011 (2011 Report on the share subscription or
purchase options provided by Article L225-184 of the French Commercial Code)
Performance shares granted during 2011
At its meeting on February 22, 2011, the Board of Directors authorized the following performance share plans, which
are dependent upon achieving certain economic performance objectives for financial years 2011 and 2012 (the 2+2
plans essentially benefit French tax residents and the 4+0 plans benefit foreign tax residents):
•
a first plan (Plan A 2+2) providing for the allocation of 274,350 shares to 130 beneficiaries, with a vesting period
that will end on March 31, 2013 (inclusive) and a holding period that will and on March 31, 2015 (inclusive);
•
a second plan (Plan A 4+0) providing for the allocation of 124,300 shares to 94 beneficiaries with a vesting period
that will end on March 31, 2015 inclusive;
The number of shares that may be allocated under these two plans depends on the level of recurring EBITDA for
financial years 2011 and 2012.
74
Annual Information Document • Rhodia 2011
•
a third plan (Plan B 2+2) providing for the allocation of 274,350 shares to 130 beneficiaries, with a vesting period
that will end on March 31, 2013 and a holding period that will end on March 31, 2005;
•
a fourth plan (Plan B 4+0) providing for the allocation of 124,300 shares to 94 beneficiaries, with a vesting period
that will end on March 31, 2015;
Acquisition of half of the performance shares allocated pursuant to these two plans is subject to achieving a recurring
EBITDA to sales ratio as shown in the Company’s consolidated financial statements as of December 31, 2011 two
points above the average ratio of a reference panel comprised of specialty chemistry companies (Arkema, Clariant,
DSM and Lanxess), the second half of the performance shares attributed may be acquired in the event this same
performance condition is achieved for financial year 2012.
At its meeting on May 4, 2011, the Board of Directors authorized the following performance share plans, which
supplement those authorized on February 22, 2011. These plans are subject to the same conditions and are therefore
dependent upon achieving certain economic performance objectives for financial years 2011 and 2012 (the 2+2 plans
essentially benefit French tax residents and the 4+0 plans benefit foreign tax residents):
•
a first plan (Plan A 2+2 2nd part) grants 17,100 shares to 8 beneficiaries, with a vesting period that will end on
May 4, 2013 (inclusive) and a holding period that will end on May 4, 2015 (inclusive);
•
a second plan (Plan A 4+0 2nd part) grants 3,300 shares to 3 beneficiaries with a vesting period that will end on
May 4, 2015 inclusive.
The number of shares that may be allocated under these two plans depends on the level of recurring EBITDA for
financial years 2011 and 2012.
•
a third plan (Plan B 2+2 2nd part) grants 17,100 shares to 8 beneficiaries, with a vesting period that will end on
May 4, 2013 inclusive and a holding period that will end on May 4, 2015 inclusive;
•
a fourth plan (Plan B 4+0 2nd part) grants 3,300 shares to 3 beneficiaries, with a vesting period that will end on
May 4, 2015 inclusive.
Acquisition of half of the performance shares allocated pursuant to these two plans is subject to achieving a recurring
EBITDA to sales ratio as shown in the Company’s consolidated financial statements as of December 31, 2011 two
points above the average ratio of a reference panel comprised of specialty chemistry companies (Arkema, Clariant,
DSM and Lanxess), the second half of the performance shares granted may be acquired in the event this same
performance condition is achieved for financial year 2012.
Performance shares granted to each executive corporate representative
Performance shares granted during 2011 to each executive corporate representative (at the moment of the allocation)
Number of
No. shares granted
during the
and date
of the plan
financial year
Jean-Pierre Clamadieu
(Chairman and Chief Executive Officer)
Plan A
2+2 2011
2/22/2011
Plan B
2+2 2011
2/22/2011
31,500
31,500
Vesting
Dates of
date availability
Performance
conditions
2/22/2013
Please refer to
the description
2/22/2015
of the plan
above
2/22/2013
Please refer to
the description
2/22/2015
of the plan
above
The value of these performance shares, according to the method adopted for the consolidated financial statement, is
€18.56 per share.
Annual Information Document • Rhodia 2011
75
In addition, in accordance with Article L.225-197-1 II 4° of the French Commercial Code, the Board of Directors of the
Company set at 25% the number of shares allocated under these two plans which the Chairman and Chief Executive
Officer must hold until his term of office ends.
Performance shares granted to the first ten employees of the Group who are not corporate
representatives (at the moment of the allocation)
Total number of allocated
performance shares
Performance shares granted during 2011 to the ten employees of the
Group whose number of shares thus granted is the highest
(aggregate information)
232,000
Affected plans
Plan A 2011 2+2
Plan B 2011 2+2
Plan A 2011 4+0
Plan B 2011 4+0
Plan A 2011 2+2 2nd part
Plan B 2011 2+2 2nd part
Plan A 2011 4+0 2nd part
Plan B 2011 4+0 2nd part
Information on other current performance share allocation plans
Plans for 2007
For performance share plans authorized by the Board of Directors in 2007, the 578,264 shares which had been
delivered to the beneficiaries on January 16, 2009 became available on January 17, 2011.
Plans for 2010 and 2011
Following the takeover of Rhodia by Solvay on September 7, 2011, the performance conditions, the achievement of
which could not be ascertained on the date of change of control, have been considered as satisfied in application of
the concerned plans rules.
Summary and features of the current plans for the free allocations of shares at December 31, 2011
Please to refer to Note 32.2 to the consolidated financial statement appearing in this document.
76
Annual Information Document • Rhodia 2011
4
Risk management
4
.
1
.
4
.
2
.
4
.
3
.
4
.
M
a
u
S
e
t
4
5
.
4.5.1.
4.5.2.
4.5.3.
4.5.4.
4.5.5.
4.5.6.
4.5.7.
4.5.8.
4
.
6
.
r
i
i
n
a
a
o
r
t
t
r
n
c
i
a
a
r
r
p
i
s
i
t
e
i
r
o
c
a
c
a
n
r
t
u
f
n
c
u
a
a
n
d
r
n
l
a
e
t
S
m
d
l
v
–
h
n
o
o
l
l
a
p
g
t
w
n
,
y
e
n
o
i
r
a
e
a
h
t
r
g
c
o
n
&
y
l
p
o
F
.
u
g
t
l
p
o
.
e
k
p
R
C
4
r
e
e
e
a
c
a
t
l
d
n
i
g
e
d
c
r
u
i
r
i
a
g
r
s
k
n
l
i
s
r
k
s
k
r
g
i
s
s
i
s
k
k
a
t
t
a
c
h
e
7
9
7
9
8
0
d
8
1
8
2
Liquidity risk
Foreign exchange risk
Interest-rate risk
Counterparty risk
Risk of funding pension obligations
Tax compliance risk
Transfer pricing risk
Litigation risk
r
P
o
u
d
c
t
r
i
s
k
82
83
83
83
83
84
84
85
8
4.6.1. Product liability risk
4.6.2. Product development risk
4
.
7
.
R
4
.
8
.
E
4
.
.
I
4
.
1
4
.
1
9
0
1
.
R
.
I
i
s
n
f
e
m
i
v
n
t
k
r
o
r
u
p
p
o
o
o
n
m
t
t
a
i
i
n
n
o
o
e
t
a
n
l
a
n
t
l
p
e
t
a
r
o
m
a
t
e
p
a
l
n
l
i
t
r
Annual Information Document • Rhodia 2011
g
s
i
a
k
I
d
r
i
i
s
r
T
i
k
t
i
o
n
s
s
k
5
85
85
8
6
8
6
8
6
8
7
8
8
77
Historically, the risk management process implemented within Rhodia aims at:
Gathering and assessing the principal risks which could affect the objectives of the different entities of the Rhodia
•
sector;
Ensuring the treatment of these risks.
•
Since 2009, a common risk management approach (Enterprise Risk Management – ERM method) has been
developed at the level of each Entity, Functional Management and Zone to strengthen the global view of the risks at
the level of the Rhodia sector.
In 2011, each Business Unit of Rhodia was requested to analyse the risks which could impact their business
objectives, using specific tools. The results of the individual analyses have been consolidated to a common Group risk
profile. The proper application of the tools implies that, for the most significant risks, actions plans should be
developed in order to manage the risks at the appropriate level.
Furthermore, the acquisition of Rhodia in 2011 by Solvay has modified the risk profile. The strategic (market) risk has
decreased as a result of the broadening of the business portfolio and the better diversification of the final markets in
which the Group is active. Finally, the risk linked to the integration of Rhodia within the Solvay Group is mainly related
to missing potential opportunities. The integration has not yet been fully completed in certain areas. During the
integration period, different processes, but with a similar objective, would be able to coexist. The objective is to align
these processes in the context of the governance of the Solvay Group.
While worldwide economic conditions improved in 2010 and part of 2011, uncertainties concerning the sovereign debt
of certain European countries have raised concerns of the possibility of a return of recession in at least some parts of
the world economy. These uncertainties have contributed to increased levels of market volatility, marked widening in
credit spreads, reduced levels of consumer and business confidence and a softening in overall economic activity in
certain regions of the world. Reductions in available cash and liquidity from providers of credit may adversely affect
our borrowing costs, and may materially affect our customers’ access to capital. It is not possible to predict the effect
that a continuation of the sovereign debt crisis and consequent adverse economic conditions could have on Solvay, or
on the value of the euro compared to other currencies. No assurances can be given that government responses to
financial market disruptions will increase liquidity and the availability of credit.
1
R
i
s
k
d
e
s
c
r
i
p
t
i
o
n
i
0
n
r
i
s
k
c
a
t
e
g
o
r
i
e
s
Solvay has defined ten categories of risks:
1.
Market & growth – Strategic risk
2.
Supply chain and manufacturing risk
3.
Regulatory, political and legal risk
4.
Corporate governance and risks attached to internal procedures
5.
Financial risk
6.
Product risk
7.
Risk to people
8.
Environmental risk
9.
Information and IT risk
10.
Reputational risk
78
Annual Information Document • Rhodia 2011
The purpose of this report is to describe the risks associated with each category and to outline the actions undertaken
by the Group to reduce that risk. The order in which these risk categories are listed is not an indication of their
importance or probability. The mitigation efforts described are no guarantee that risks will not materialize but
demonstrate the Group’s efforts to reduce risk exposures in an entrepreneurial way.
4
.
1
M
.
a
r
e
k
t
&
r
g
o
t
w
s
–
h
t
r
a
t
e
i
g
c
r
i
s
k
Strategic risk is exposure to adverse developments in our markets or our competitive environment as well as the risk
of making erroneous strategic decisions. Examples of such risks are technological leaps allowing the development of
substitute products or manufacturing processes, drastic changes in energy prices, the lack of success of a new
product, scarcity of key raw materials, reduction of demand in our main markets as a consequence of new legislation,
events affecting our most important customers, new entrants in a market, price war, significant imbalances between
supply and demand in our markets, and major social crises.
The diverse businesses within the Group generate a variety of risks, some of which could possibly affect the Group as
a whole. But diversification contributes to the reduction of the overall risk as the Group’s different businesses,
processes, policies and structures offset some risks against each other merely through a balanced portfolio of
products.
Prevention and mitigation efforts
The potential impact of adverse events is managed at Group level, and involves in particular:
•
managing activities and maintaining a balanced portfolio of products,
•
diversification of the customer base in different market segments,
•
adaptation of operations to the changing macroeconomic and market environment,
•
selective vertical integration to limit potential cumulative effects from raw material supply risks,
•
strict financial policy of controlling the net debt to equity ratio,
•
investment strategy.
Within Rhodia, the coordination of the 11 business units is organized based on a roadmap over 3-5 years which is
annually followed up in the business reviews and monthly or quarterly meetings aiming at assessing the short-term
results.
4
.
2
.
S
u
p
p
l
y
c
h
a
i
n
a
n
d
m
a
n
u
f
a
c
t
u
r
i
n
g
r
i
s
k
Supply chain and manufacturing risk in production units is exposure to risks with raw material, suppliers, production
and storage units and transportation, such as risks of major equipment failure or damage, transportation accidents,
drastic shortages of raw materials or energy, natural disasters or transportation strikes.
Prevention and mitigation efforts
Key risk areas are addressed with policies and risk control programs such as health and safety, process safety,
property loss prevention, integrated resource planning and supply chain optimization systems (ERP), emergency
response, central and local crisis management, business continuity planning, continuity planning for the case of a
pandemic, etc.
Rhodia buys insurance to reduce the financial impact of potential events causing extensive damage and
consequential interruption of supply above what is covered by the insurance Captive. Our plants are regularly subject
to external reviews and in this context the risks of damage to production units and consequential business interruption
events are identified and quantified by risk engineering experts from the insurance company.
Annual Information Document • Rhodia 2011
79
The geographic distribution of production units around the world reduces the overall impact of one production unit
being damaged or interrupted. Some specialty products are however, only produced in one single plant.
With reference to raw materials, the risk of disruption (availability, reliability and price) is reduced by a combination
of:
•
the use of medium and long-term contracts;
•
the diversity and the flexibility of the sources of raw materials as far as possible;
•
the development of partnerships with preferred suppliers;
•
processes to ensure REACH compliance up the supply chain and/or substitution, to minimize the risk of raw
materials disruption.
In the field of energy supply, programs to reduce energy consumption have been consistently implemented for many
years.
The securitization and the reliability of energy supply is very important. A number of strategic initiatives are realized to
reduce the effect of the volatility of energy markets:
•
technological leadership in processes, to minimize energy consumption;
•
high-performance industrial operations;
•
diversification and flexible use of the different types and sources of primary energy;
•
long-term partnerships or backward integration in steam and electricity generation (gas cogeneration, biomass or
secondary fuels cogeneration...);
a strategy of supply coverage with medium to long-term contracts.
•
On 1 January 2012, Solvay created Solvay Energy Services, a new GBU aiming at optimizing the energy cost and the
CO2 emissions for the Group and third parties, based on former Rhodia Energy Services.
Solvay Energy Services relies on the competencies and the key know-how of Solvay, Rhodia and Orbéo in order to
optimize the energy purchases for the new group and to assist all Business Units of the Group in their management of
energy and CO2.
The company will also continue to develop the “Climate Care” solutions as initiated by Rhodia, including the
production of renewable energy from biomass and the development of technologies/services aiming at reducing the
environmental footprint of its internal and external clients.
As permitted by the specific market conditions of each GBU, price increases are negotiated to offset the increase of
energy costs.
Rhodia is committed to reduce by 2015 the energy consumption by 8% compared to 2010 levels, and the greenhouse
gas emissions by 66% compared to the 2005 levels.
4
.
3
.
R
e
g
u
l
a
t
o
r
y
,
p
o
l
i
t
i
c
a
l
a
n
d
l
e
g
a
l
r
i
s
k
Regulatory risk is exposure to events like government price regulation, taxation, tariff policy, new regulations banning
a product, imposing manufacturing, marketing and use restrictions or making it uneconomical to produce, etc. Rhodia
could be required to incur important costs in case of the adoption of new regulations or government policies, or in
case of a more strict interpretation or application of the current regulations by courts or authorities.
Legal risk is the exposure to adverse consequences of non-compliance with regulations (for example anti-trust) or
contractual undertakings, or the loss of rights or benefits expected from protection by regulation or contract. This
includes various areas like product liability, administrative or criminal sanctions, contractual or intellectual property
disputes, as well as the potentially adverse outcome of ongoing litigation.
80
Annual Information Document • Rhodia 2011
The Group’s operations depend partly on the control of its key technologies and on the capacity to innovate. The
questioning by third parties regarding the right to use certain technologies could have an impact on its operations.
Furthermore, the insufficient protection of its innovations could limit the development perspectives.
Political risk is exposure to, for example, the destruction or loss of control of production means or the unavailability of
raw materials, utilities or logistic or transport facilities resulting from political decisions, civil war, nationalization,
terrorism or other circumstances where the normal exercise of public authority is disrupted.
Rhodia must obtain and retain regulatory approval for operating its production facilities, and for selling its products.
A significant number of substances manufactured or used require registration under the REACH Regulation, in
addition to the other requirements pre-existing to REACH. At the end of 2010, 77 substances were successfully
registered on schedule with the ECHA (European Chemicals Agency). The products are also subject to the
compliance with the new Regulation on classification, labelling and packaging.
Given the international scope of the Group, those regulatory approvals emanate from authorities or agencies in many
countries. The withdrawal of any previously granted approval or the failure to obtain an authorization may have an
adverse effect on our business continuity and operating results. This concerns both the manufactured products of the
Group as the raw materials purchased from our suppliers. The same could also apply in the case of regulatory
changes likely to cause us to incur additional costs.
The geographical spread of the Group around the world is a factor reducing some regulatory and political risks.
Rhodia has identified the development of the cost of CO2 emissions in Europe expected in the future as a potential
risk and is monitoring it carefully.
Prevention and mitigation efforts
Proper design of products and their production processes contributes to the management of regulatory and legal risks,
as do timely and thorough applications for necessary approvals.
Regulatory and political risk is reduced through the continuous work and interactions with Public Authorities by the
Public Affairs department.
To manage legal risk Rhodia maintains in-house legal and intellectual property and regulatory resources, and relies
on additional external professional resources as appropriate. The Group is managing this risk by relying on internal
and external resources and by making appropriate financial provisions. Awareness of legal risks is raised by
dedicated training, sharing of information, self-assessment procedures and internal auditing. The simple fact of doing
business exposes to disputes and litigation. Adverse outcome of such disputes or litigation is always possible (see
note on Important Litigation below).
In order to optimize coverage of these risks, the Group coordinates the activities of the various control functions.
In the Chemical Industry, technological know-how can remain protected by way of trade secret, which is often a good
substitute for patent protection Rhodia systematically considers patenting new products and processes and maintains
continuous efforts to preserve its proprietary information. Rhodia implements a dynamic policy to protect its
innovations and its knowhow and takes specific precautions to protect through its partner choice in R&D and through
the localization of its research operations.
In respect of political risks, Rhodia’s actions include risk-sharing with local or institutional partners as well as
monitoring of political developments in sensitive areas.
C
4
.
4
.
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
a
n
d
r
i
s
k
a
t
t
a
c
h
e
d
t
o
I
n
t
e
r
n
a
l
p
r
o
c
e
d
u
r
e
s
The risk attached to Internal Procedures is exposure to failure to comply with its own policies and standards (rules,
procedures and best practices.
Annual Information Document • Rhodia 2011
81
Prevention and mitigation efforts
In the field of Corporate Governance, Rhodia is committed to fully integrating the good corporate governance
practices, recommendations and provisions of listed companies with the operating processes of its administrative and
management bodies. Before the acquisition of Rhodia by Solvay, and for the major part of 2011, the Company was
refering to the latest consolidated version (December 2008) of the AFEP-MEDEF Code, as amended in 2010, in
particular with reference to the report required under Article L.225-37 of the French Commercial Code. The
Company’s practices were in conformity with the recommendations of such code and the Company did not circumvent
any of its provisions. The AFEP-MEDEF Code is available on the MEDEF website (www.medef.fr).
Rhodia also relied on the report of the working group established by the AMF with respect to the audit committee
(AMF recommendation dated July 22, 2010).
Since completion of Solvay's public tender on Rhodia shares, Rhodia is subject to the Solvay governance rules.
These rules are based on the 2009 Belgian Corporate Governance Code that Solvay has adopted as its reference
code in governance matters. Each year, Solvay issues a report included in its annual report (available on the Solvay
internet site (www.solvay.com) and presenting the application of the recommendations of this 2009 Belgian Corporate
Governance Code in accordance with the “comply or explain” principle. The said Code is available on the GUBERNA
internet site (www.guberna.be).
On the other hand, the Group defined and implemented, under its responsibility, an internal control system which aims
to ensure:
•
compliance with all rules and regulations,
•
the application of the guidelines and instructions outlined by the General Management
•
the smooth functioning of the Company’s internal processes, specifically those contributing to the protection of its
assets,
the reliability of financial information
•
and anything which, in more general terms, contributes to the management of the business, the effectiveness of its
operations and the efficient use of its resources.
Internal control thus contributes to identifying, preventing and controlling the risks that might affect the goals of the
Group. It should be noted however, that any control system, powerful and effective as it may be, can give only
reasonable but never absolute assurance that the objectives pursued will be reached.
Most policies and various standards of the Group (such as rules, procedures and best practices) which apply to all
subsidiaries may be accessed via the intranet of the Group.
They specifically include the Management Book, the Compliance Policy, the Fraud Reporting Procedure, the Rhodia
®
Way Standard, the Ethical Code for Financial Managers and the Internal Audit Charter of the Group.
4
5
.
i
F
.
n
a
n
c
i
a
l
r
i
s
k
Financial risk is Rhodia’s exposure to foreign exchange risk, liquidity risk, interest rate risk and counterparty risk
(credit risk).
As a result of the acquisition of Rhodia by Solvay, Rhodia financial risks are linked to the Solvay Group.
4
.
.
5
1
Q
.
L
I
U
I
D
I
T
Y
R
I
S
K
Liquidity risk relates to Rhodia’s ability to service and refinance its debt (including notes issued) and to fund its
operations. This depends on its ability to generate cash from operations and to have access to Solvay liquidity.
82
Annual Information Document • Rhodia 2011
Prevention and mitigation efforts
The Solvay Group is recognized as historically having a prudent financial profile, as illustrated by its BBB+ rating (S&P
BBB+; Moody’s Baa1). Its liquidity profile is strong, mainly supported by long-term bond issuance (for a total of €2.8
billion, with a first significant maturity of €500 million in 2014) and substantial liquidity reserves (cash and committed
credit lines, including two syndicated credit facilities of €1 billion and €550 million (refinanced in November 2011)
respectively and a credit line of €300 million with the European Investment Bank). Solvay maintains its objective of net
debt to equity ratio not durably exceeding 45% after the acquisition of Rhodia. The financial discipline will remain
conservative. Rhodia is also rated int the investment trade category after Solvay acquisition: “BBB+” by S&P and
“Baa2” by Moody’s.
4
.
.
2
.
5
O
F
E
R
I
N
G
E
X
H
C
N
A
E
G
I
R
K
S
Rhodia is exposed to foreign exchange risk as a consequence of its international activities. In its present structure,
Rhodia’s exposure is mainly associated with the EUR/USD and BRL/USD risk, as Rhodia‘s overall activities generate
a net positive USD flow. Consequently, a depreciation of the USD will generally result in lower revenues for Rhodia.
Prevention and mitigation efforts
The geographical diversification of production and sales provides a natural currency hedge because of the resulting
combination of an income stream and an expense base in local currency. Furthermore, Rhodia closely monitors the
foreign exchange market and enters into hedging measures for terms of between 6 and 12 months following Rhodia
hedging policy. In practice, Rhodia enters into forward and option contracts securing the EUR value of cash flows in
foreign currency during the following months.
4
.
.
3
.
I
5
N
E
T
E
R
T
S
-
R
E
T
A
I
R
K
S
Interest-rate risk is Rhodia’s exposure to fluctuating interest rates.
Prevention and mitigation efforts
In its present structure, Rhodia has locked in the largest part of its net indebtedness with fixed interest rates..
4
.
.
4
P
.
5
O
C
U
N
E
T
R
A
R
T
Y
R
I
K
S
Rhodia is exposed to Counterparty risk in its cash management and in its foreign exchange risk management as well
as in its commercial relationships with customers.
Prevention and mitigation efforts
Rhodia manages its financial counterparty risk by working with banking institutions of the highest caliber (selection
based on major rating systems) and minimizes the concentration of risk by limiting its exposure to each of these banks
to a certain threshold, set in relation to the institution’s credit rating.
In addition, Rhodia places money with highly rated money market funds.
Most critical clients of Rhodia are insured to a large extent on the credit insurance market.
4
.
.
5
B
P
.
5
R
I
S
K
O
F
F
U
N
D
I
N
G
E
N
S
I
O
N
O
L
I
G
A
T
I
O
N
S
With regard to the risk of funding pension obligations, Rhodia is exposed to a number of defined-benefit plans.
Fluctuations in discount rates, salaries and social security, longevity and asset / liability matching can have a major
impact on the liabilities of such pension plans. For funded plans, the risks related to the investment need to be
Annual Information Document • Rhodia 2011
83
managed, taking into account the risk-return balance. If plans are unfunded Rhodia is mostly exposed to inflation and
interest rate risk.
Prevention and Mitigation efforts
Following Solvay take-over, Rhodia is adopting Pension Corporate Governance guidelines from Solvay in order to
develop constructive dialogs over local pension fund decisions within the limits provided by local law, in particular,
decisions related to investment and funding, selection of advisors, appointments of employer-nominated trustees to
local pension fund boards and other cost management decisions.
Rhodia has developed guidelines and processes to better manage the pension risk related to funding, cost or liability
values.
Studies regarding the management of the plan assets and engagements have been conducted by Rhodia and Solvay
in order to determine the allocation of the plan assets to optimize the expected yield and the tolerance to the risk. The
exposure to the interest rate risk is managed actively (calendar, investments in instruments with long term interest
rates, etc.).
Refer to Note 25 (Post-employment benefits and similar obligations) to the consolidated financial statements in
Chapter 5.2.2 of this document.
4
.
.
6
P
.
T
5
X
A
O
C
M
L
I
N
A
E
C
I
R
K
S
Tax compliance risk relates to the consequences of failure to comply on time with legal and administrative regulations
(complementary assessments, interests and penalties). The tax charge supported by the Group depends from the
interpretation of the local tax regulation, the bilateral or multilateral international tax treaties and the administrative
doctrine in each jurisdiction.
Prevention and mitigation efforts
Rhodia stresses the importance of tax compliance with its tax and financial personnel. It monitors its procedures and
systems through internal reviews and through audits performed by reputed external consultants.
4
.
.
5
P
.
7
T
R
A
N
S
F
E
R
R
I
C
I
N
G
R
I
S
K
Tax authorities of all countries wish to ensure that the commercial operations between related entities reflect the fair
prices which would be agreed between independent parties in similar circumstances, especially in cross-border
situations.
Like all multinational groups, Rhodia has to respect detailed transfer pricing regulations and
documentation requirements issued by an ever growing number of countries, with specific high penalties in case of
non-compliance. Transfer pricing issues have become the frequent focus of aggressive tax audits, as they are seen
by many authorities as a major source of revenue loss.
Prevention and mitigation efforts
Rhodia has issued a transfer pricing policy and a procedure aimed at meeting the requirements of the authorities. A
detailed documentation is prepared for each business or country with the assistance of internal or external experts
and in line with OECD requirements, and updated every year, in order to demonstrate the fairness of cross-company
pricing. The existence and timeliness of the documentation are regularly audited by the internal audit department.
Internal transfer pricing specialists assist the business in setting intra-group prices compliant with the transfer pricing
policy.
84
Annual Information Document • Rhodia 2011
4
.
.
.
5
L
8
I
I
T
G
I
T
A
O
N
I
R
K
S
Litigation risk is the risk that the authorities do not share Rhodia’s analysis of its factual and tax position, possibly
leading to litigation. Changes in tax law, regulations or case law can also lead to litigation.
Prevention and Mitigation efforts
The prevention and mitigation efforts for the tax litigation risk are based on thorough analysis of mergers, acquisitions
and divestments, or proposed changes in the business organization and operations, with the assistance of external
experts or law-firms when the amounts at stake warrant it. Changes in laws and regulations are also monitored with
the aim to adapt to new situations.
4
4
.
.
6
6
.
r
P
.
1
.
o
u
d
c
t
r
i
s
k
B
P
R
O
D
U
C
T
L
I
I
A
L
I
T
Y
R
I
K
S
Product Liability risk is exposure stemming from injury or damage to third parties or their property arising from the use
of a product, as well as the resulting litigation. Product liability may arise from out-of-specification products,
inappropriate use, previously unidentified effects, manufacturing errors resulting in defective products, product
contamination, altered product quality or inappropriate safety and health recommendations. Consequences of a faulty
product could be exposure to liability for injury and damage, as well as having to recall a product.
Prevention and mitigation efforts
Product liability exposure is reduced by quality assurance and control, adequate information and technical assistance
to customers and by health and safety programs. The Group supplies information relating to the safe use and
handling of its products. For products with significant hazards, which in general are only sold directly to industrial
users, the GBUs involved have product stewardship programs including safety data sheets and regulatory compliance
statements. Regulatory watch and intelligence processes are aimed at ensuring product regulatory compliance in
each country where a market for a defined product is identified.
4
.
6
.
2
.
P
P
R
O
D
U
C
T
D
E
V
E
L
O
M
E
N
T
R
I
S
K
Product development risk is exposure to failure to develop new products and technologies or scale up a process.
Operating results depend, among other factors, on the innovation and development of commercially viable new
products and production technologies. Because of the lengthy development process, technological challenges and
intense competition, Rhodia cannot ensure that the products it develops will become market-ready or achieve
commercial success. If Rhodia is unsuccessful in developing new products and production processes in the future, its
competitive position and operating results will be harmed.
Prevention and mitigation efforts
Rhodia devotes substantial resources to Research and Development, and continuously improves the competitiveness
of its essential products over the long term through technological improvements and innovation. Innovation is the
cornerstone of the Group’s strategy, and Rhodia considers that managing the challenges related to product
development is more about opportunity than about risk for the company.
Management of R&D through programs and projects that are fully in line with Rhodia’s strategy enhances R&D
performance and reduces the risk of failure. Management by projects, with a conceptual and operational roadmap for
moving a new product project from idea to launch, also ensures that resources are used in an optimal way.
Annual Information Document • Rhodia 2011
85
4
.
7
.
i
R
s
t
k
o
e
p
o
l
p
e
Risk to People is the exposure of employees, contractors and the public to adverse effects from activities and
products, for example from plant processes or from transportation of hazardous chemicals. The professional diseases
identified by the Group are to a great extent consequences from past exposures. A major accident can injure people,
lead to the temporary closing of a plant and ultimately expose to significant liabilities.
Prevention and mitigation efforts
Rhodia considers the safety and health of people key aspects in the management of its activities. The Group has
consistently developed and implemented stringent safety and health programs. Rhodia has a long track record of
good safety performance. Process safety is also ensured in order to protect people against the consequences of
process incidents. Process Safety Management (PSM) supports safety in sites and especially those with major risks.
Special attention is given to the report and analysis of process incidents or near misses. Regular distribution of
Lesson Learning Events is organized to increase awareness and to avoid repetition of similar events.
The risk of hazardous chemicals transportation is reduced by optimizing transport routes, relying on selected and
audited transporters.
4
.
8
.
n
E
i
v
r
o
n
m
e
n
t
a
l
r
i
s
k
Environmental risk is exposure stemming from the accidental release of a chemical substance following a plant
equipment failure, a transport accident or production problems resulting in exceeding permitted emission levels. Many
sites are covered by regulations concerning major risk installations. Like most other industrial companies, Rhodia has
to manage and remediate historical soil contamination at some of its sites.
Authorities are increasingly requesting management of the soil and groundwater environmental legacy. In this context,
a number of administrative proceedings are under way to define the need and approach for remediation. Furthermore,
the Group could be required to incur important costs in case of the adoption of new regulations or government policies,
or in case of a more strict interpretation or application of the current regulations by courts or authorities.
Prevention and mitigation efforts
Rhodia considers environmental protection as a key aspect in the management of its activities. Well-defined pollution
and accident prevention measures have been in place for a long time. Rhodia implements environment management
systems of ISO type or equivalent in all plants concerned. Policies and risk control programs are applied in all
production units and other facilities, and are progressively implemented in newly acquired plants. The Group has, in
particular, taken the necessary steps to comply and even go beyond compliance with regulations concerning major
risks, which includes detailed accident prevention measures.
The historical soil contamination sites are carefully managed including setting appropriate provisions for monitoring
and remediation. The Group has developed internal expertise in soil management. It is Rhodia’s policy to have risk
characterization in all concerned sites. Hydrogeological studies and soil characterizations are conducted to diagnose
potential problems, evaluate risks to aquifers and discuss remediation or confinement actions with the authorities. A
number of such actions have been completed or are under way.
4
.
9
.
I
n
f
o
r
m
a
t
i
o
n
a
n
d
I
T
r
i
s
k
The implementation of management processes (e.g. « Order to Cash », « Procure To Pay », « Report to Record »…)
and the cooperation between employees is based to a great extent on Information Technology (IT). The risks related
to this usage are mainly:
•
86
interruption or deterioration of the service;
Annual Information Document • Rhodia 2011
•
loss of or non-availability of data;
•
fraud, abuse or theft of data.
Prevention and mitigation efforts
The majority of the critical information systems are housed and operated by external service suppliers. The choice of
suppliers, the contractual conditions and the level of service delivery are reviewed at the moment of renewal of
contracts. This procedure gives access to services of high standards regarding quality, safety and business continuity
plans.
Every employee is responsible for the appropriate management and use of information and material which are made
available, according to the laws and policies related to information and to the use of IT systems.
The internal IT organization aims at being certified for insuring the quality of the services rendered to the entities of the
Group.
4
.
1
0
.
R
e
p
u
t
a
t
i
o
n
a
l
r
i
s
k
Reputational risk arises from exposure to a deterioration of its reputation among its different stakeholders. Damage
may occur due to the materialization of any of the risks described in this section and subsequent publicizing of the
outcome. It may also arise from the occurrence of any event or action associated with the Rhodia name that would be
in breach of ethics, legislation, corporate governance principles and which, more generally speaking, fall short of
stakeholder expectations with regard to Rhodia.
Damage to corporate reputation can be accelerated and amplified by the Internet and social networking media.
Reputation is a key asset. Loss of reputation can result in competitive disadvantage. The reputational risk deals with
the subjective, composite perception of a company by its different stakeholders. Trust is a fundamental ingredient to
reputation.
Prevention and mitigation efforts
Besides overall good management, control practices and systems, efficient communication (transparent, consistent
and timely) and long-term solid relationships, both inside and outside the organization, contribute in the long run to
establishing trust, which is a fundamental ingredient to reputation.
Rhodia has established communication processes, systems, plans and programs to create, develop and maintain a
regular flow of two-way communication with the main stakeholders: shareholders and the financial community,
employees, customers, authorities, local communities and opinion leaders. Tools include a variety of internal and
external electronic and print media tailored for internal and external audiences. Rhodia maintains active press
relations at corporate and local level, with press releases, conferences and visits as well as open doors and other
events aimed at local residents around major sites. The Group has also adopted a clear set of guidelines and advice
for employee use of social networking media.
Clear values supported by the Compliance Policy, combined with a high level of Corporate Governance, are
instrumental in preventing behaviour that could contribute to reputational risk.
Rhodia is implementing effective management and communication systems designed to give early warning of
developing crises and to ensure an adequate response in the case of unexpected and sudden adverse events that
can potentially harm the Group’s reputation. Dedicated managers and employees are trained to face such situations.
Crisis simulations are organized on a regular basis in the different entities of the Group.
Annual Information Document • Rhodia 2011
87
4
.
1
1
.
I
m
p
o
r
t
a
n
t
l
i
t
i
g
a
t
i
o
n
With its variety of activities and its geographical reach, the Group is exposed to legal risks, particularly in the areas of
product liability, contractual relations, antitrust laws, patent disputes, tax assessments and HSE (Health, Safety and
Environment) matters. In this context litigation cannot be avoided and is sometimes necessary to defend the rights
and interest of the Group.
The outcome of proceedings cannot be predicted with certainty. It is therefore possible that adverse final court
decisions or arbitration awards could lead to liabilities (and expenses) that are not covered or fully covered by
provisions or insurance and could impact materially our revenues and earnings.
The most significant claims and lawsuits Rhodia is involved in are summarized below in Chapter 5 in Note 30 to the
consolidated financial statements.
88
Annual Information Document • Rhodia 2011
5
Financial and accounting
information
5
.
1
.
A
n
a
l
i
s
y
o
s
f
2
0
1
1
e
R
u
s
l
t
9
s
5.1.1. Net sales and profitability
5.1.2 Financial structure
5
.
2
.
F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s
5.2.1. Statutory Auditors’ Report on the consolidated
financial statements for the year ended
December 31, 2011
5.2.2. Consolidated financial statements
for the year ended December 31, 2011
Annual Information Document • Rhodia 2011
0
90
98
1
0
3
103
104
89
5
1
.
A
.
n
a
l
i
s
y
o
s
f
2
0
1
1
e
R
u
s
l
t
s
Further the acquisition of the Rhodia Group by Solvay on September, 7 2011 and the decision of Solvay to reorganize
the legal structure of the new Group, most of the Acetow Global Business Unit, comprising Rhodia Deutschland and
its affiliates, were sold to Solvay. Consequently, most of the Acetow operating segment was discontinued and is no
longer included within the consolidation scope. As a result, the cluster Acetow & Eco Services is no longer disclosed
as a business segment. The remaining activities of Acetow and the Eco Services Global Business Unit were
reallocated to “Corporate & Other”.
.
1
.
1
B
P
.
N
5
E
T
S
A
L
E
S
A
N
D
R
O
F
I
T
A
I
L
I
T
Y
Management analysis convention
This section contains information comparing year to year the performance of Rhodia and its Enterprises, specifically
unaudited accounting data derived from management reports on the impact of the following items on net sales and on
the principal line items of Rhodia’s income statement:
•
changes in scope of consolidation (for example, as a result of divestitures, changes in consolidation not
reclassified as discontinued activities and, with respect to comparisons of the results of the Enterprises, transfers
of activities between GBUs);
•
fluctuations in exchange rates affecting the translation into euros of net sales, expenses and other income
statement line items that are denominated in currencies other than the euro;
•
changes in average selling prices;
•
changes in volumes; and
•
the transactional effect of exchange rate fluctuations (defined as the difference arising from the exchange into
local currency of sales and purchases made in another currency).
Rhodia has implemented this measure and tracks its development based on quarterly reports submitted by its various
entities. Rhodia uses such measure for its internal analysis requirements. The same management information is used
for its financial communication. Within the framework of the comparison of profits from operations during two periods
(for example, the “prior” period, 2010, and the “current” period, 2011), Rhodia calculates the impact of these changes
as follows:
•
The impact of changes in the scope of consolidation is calculated (i) in the case of acquisitions, by including in the
prior year’s data the results generated by the acquired business for the months when the acquired business was
present in the current year and (ii) in the case of divestitures, by excluding the results from the prior period of any
activity included in the consolidated financial statements that were generated outside of the corresponding period
when the asset was held.
•
The impact of fluctuations in exchange rates is calculated by adjusting the prior period’s results for fluctuations in
exchange rates arising from the conversion into euros of items in the income statement denominated in
currencies other than the euro at the same average exchange rates used for the current period.
•
The impact of changes in average selling prices is calculated by comparing the current weighted average net unit
selling prices for each product in the current period (for example, the euro cost per ton) with the weighted average
net unit selling prices in the prior period, multiplied in both cases by volumes sold during the current period.
90
Annual Information Document • Rhodia 2011
•
The impact of changes in volumes is calculated by comparing quantities shipped in the current period with
quantities shipped in the prior period, multiplied in both cases by the weighted average net unit selling price in the
prior period.
Moreover, Rhodia uses for its analyses and financial communications non-GAAP
(1)
indicators, the definitions of which
are the following:
•
Recurring EBITDA is defined as operating profit or loss prior to depreciation and impairment, restructuring costs
and other operating income and expenses.
(in millions of euros)
2010
2011
552
706
64
89
(40)
(97)
(6)
(3)
256
271
824
966
Operating profit
Other operating expenses
Other operating income
Restructuring costs
Total depreciation(1)

Recurring EBITDA
(1)
Excluding depreciation recognized in restructuring costs and other operating income and expenses.
•
Free Cash Flow is calculated as cash from operating activities, excluding non-recurrent refinancing expenses and
before margin calls, less acquisitions of tangible fixed assets and other non-current assets.
2010
2011
510
608
(234)
(343)
Purchases of other non-current assets
(36)
(36)
Free Cash Flow
240
229
(in millions of euros)
(1)
Net cash from operating activities
Purchases of property, plant and equipment
(1)
Excluding margin calls and non-recurring refinancing expenses.
Rhodia believes that these measurements are useful tools for analyzing and explaining changes and trends in its
historical results of operations, as they allow performance to be compared on a regular basis. They are not, however,
subject to audit and are not performance measurements with regard to IFRS. The methods of calculating changes
used by Rhodia may differ from those used by other companies.
1
Generally accepted accounting principles.
Annual Information Document • Rhodia 2011
91
Net sales
The following table presents an analysis of Rhodia’s operating profit for the years ended December 31, 2010
and 2011:
(in millions of euros)
2010
2011
Changes in %
Net sales
4,793
5,862
30,5%
378
367
(2,9)%
(3,985)
(4,835)
(21,3)%
(536)
(608)
(13,4)%
(80)
(91)
(13,8)%
6
3
150,0%
Other operating income/(expenses)
(24)
8
133,3%
Operating profit/(loss)
552
706
27,9%
Other revenue
Cost of sales
Administrative and selling expenses
Research and Development expenditure
Restructuring costs
Change in net sales
(in millions of euros)
Rhodia
Exchange
2010
rate impact Volume Selling
net sales Structure (conversion) & mix
price
4,793
212
(47)
210
770
Exchange
2011
rate impact
(transaction) net sales
(76)
5,862
Change
in net sales
from 2010
to 2011
22.3%
Rhodia’s 2011 net sales amounted €5,862 million, compared to €4,793 million in 2010, an improvement of 22.3%.
Over the period, the Group recorded a positive scope impact of €212 million primarily due to the acquisition of
Feixiang Chemicals, China’s leader in specialty amines and surfactants, acquisition that was completed on November
30, 2010.
The economic context remained sustained throughout 2011 for most activities, as seen through the sales volume
increase that represented an increase in sales of €210 million. The activity was particularly dynamic in Advanced
Materials and in Consumer Chemicals. Their sales volumes at constant perimeter were up by 18.8% and 5.1%
respectively compared to the already high levels of activity in 2010. Polyamide Materials, however, was confronted
with a slowdown in demand particularly during the last months of the year.
Emerging countries continued to experience higher growth rates than developed regions. Owing to its strong presence
in emerging countries, Rhodia benefited from this growth and also continued to strengthen its production capacities in
these regions.
Furthermore, in a context of high raw material and energy costs, the Group confirms its ability to manage selling
prices favorably. Throughout 2011, the overall impact in sales from selling price increases amounted to €770 million or
a 16.6% increase compared to 2010 net sales level.
Operating expenses
Cost of sales
The cost of sales increased by €(850) million, or 21%, going from €(3,985) million in 2010 to €(4,835) million in 2011.
From this appreciable increase in costs, 20% is related to the change in perimeter, notably with Feixiang acquisition.
The rest of the increase in the cost of sales is essentially driven by the rise in the cost of raw materials and energy
impacting all activities. The higher volumes, especially in Consumer Chemicals and Advanced Materials, are partly
offset by a favourable foreign currencies impact.
92
Annual Information Document • Rhodia 2011
Administrative and selling expenses
Administrative and selling expenses rose by €(72) million or 13%, increasing from €(536) million in 2010 to
€(608) million in 2011. Beyond inflation impact, most of this increase is related to additional resources used by the
GBU’s and Corporate functions for the purpose of the Group’s growth objective.
Research and development expenditure
Research and development expenditures amounted to €(91) million at the end of 2011, up 14% compared to 2010.
These expenditures are presented net of the impact of the research tax credit, which amounted to €16 million in 2011.
Restructuring costs
Restructuring costs amounted to €3 million positive in 2011, compared to €6 million positive in 2010. In both years,
these figures reflect essentially downward revision of the provisions set up during previous financial years in Italy
(2010), the United Kingdom and France, particularly for the Novecare and Polyamide businesses. No new measures
were implemented in 2011.
Other operating income and expenses
Refer to Note 6 (Other operating income and expenses) to the consolidated financial statements in Chapter 5.2.2 of
this document.
Recurring EBITDA
Rhodia posted a strong year-on-year 17.2% progression to a record €966 million recurring EBITDA compared to
€824 million in 2010. The recurring EBITDA margin amounted to 16.5% in 2011, compared to 17.2% in 2010.
The acquisition of Feixiang Chemicals finalized on November 30, 2010 represented a positive impact of €41 million
from scope changes.
The improvement in recurring EBITDA illustrated the successful execution of Rhodia’s profitable growth strategy. The
company benefited from its resilient quality portfolio, its strong exposure to fast growing regions as well as its excellent
pricing power. Overall organic volume growth represented a €98 million expansion in recurring EBITDA. Also, the
Feixiang acquisition, consolidated since December 2010, continued growing at a double-digit pace. Furthermore, in a
context of global inflationary raw material and energy costs, Rhodia’s strong pricing power generated a net positive
impact in recurring EBITDA of €140 million in the year.
By segments, Consumer Chemicals and Advanced Materials, constituted powerful growth engines and posted
profitability improvements by over 30% respectively. Polyamide Materials, however, was down by (23)% suffering
from a demanding comparative base in 2010 and a weakened activity in the second half of the year. Energy Services
remained fairly stable.
In line with the satisfactory level of business developments and ongoing growth projects, fixed costs rose by
€(126) million year-on-year.
Operating profit/(loss)
The operating profit that increased by 27.9% over the year from €552 million in 2010 to €706 million in 2011 mainly
reflected the improvement of recurring EBITDA.
Annual Information Document • Rhodia 2011
93
Analysis of net sales and operating profit/(loss) by Cluster
The following table sets forth an analysis of change in net sales in 2011 compared to 2010:
Change in net sales
(in millions of euros)
Exchange
Net sales
rate impact
2010 Structure (conversion)
Volume
& mix
Exchange
Selling rate impact
price (transaction)
Net sales
2011
Change in
net sales
from 2010
to 2011
Rhodia
4,793
212
(47)
210
770
(76)
5,862
22.3%
Consumer Chemicals
1,883
220
(24)
105
313
(46)
2,451
30.2%
Advanced Materials
539
-
(2)
101
266
(13)
891
65.3%
Polyamide Materials
1,701
8
(4)
(65)
178
(16)
1,802
5.9%
Energy Services
203
-
1
64
(49)
-
219
7.9%
Corporate & Other
(after elimination
of inter-company sales)
467
(16)
(18)
5
62
(1)
499
6.9%
The following table sets forth the net contribution by Enterprise to Rhodia’s net sales in 2010 and 2011:
(in millions of euros)
2010
2011
Rhodia net sales
4,793
5,862
Consumer Chemicals
39%
42%
Advanced Materials
11%
15%
Polyamide Materials
36%
31%
4%
4%
10%
8%
100%
100%
Net contribution to Rhodia’s revenue by cluster (as a %):
Energy Services
Corporate & Other (after elimination of inter-company sales)
Total
The following table sets forth the contribution by geographic zone to total net sales in 2010 and 2011:
(in millions of euros)
2010
2011
Rhodia net sales
4,793
5,862
Europe
32%
31%
North America
21%
23%
Latin America
19%
17%
Asia and other countries
27%
29%
100%
100%
Rhodia’s net sales by destination (as a %):
Total
94
Annual Information Document • Rhodia 2011
Consumer Chemicals
Net sales
Consumer Chemicals represents one of the major growth engines of Rhodia. Its net sales increased by 30.2% in 2011
to €2,451 million, compared to €1,883 million in 2010.
The Business Cluster recorded a positive scope impact of €220 million arising from the acquisition of Feixiang
Chemicals, China’s leader in specialty amines.
Consumer Chemicals benefited over the year from successful price increases that represented a €313 million
increase in sales that more than compensated the increases in related raw material and energy costs. Good business
dynamics posted an organic growth impact of €105 million in sales. Within the Cluster, Novecare reported the largest
organic growth driven by its innovative solutions for shale Oil & Gas exploitation, coupled with highly successful new
product developments serving the Agro market. The Home & Personal Care segment benefited from a favorable
demand level while the Industrial segment registered a slight decline during the year. Coatis reported volume growth
as well as good pricing over the year. Aroma Performance, that started mid-2011 the implementation of a strategic
repositioning of its brands dedicated to the food market, showed favorable pricing power.
Recurring EBITDA
Consumer Chemicals’ recurring EBITDA increased by 31.9% to €364 million, compared to €276 million in 2010.
The recurring EBITDA margin, stable compared to the previous period, amounted to 14.9% in 2011.
This performance stems from the very strong pricing power of the Cluster and the acquisition of Feixiang Chemicals in
China, making Rhodia the international leader in surfactants in Asia. Furthermore, the high resilience of Consumer
Chemicals activities and the development of an innovative and environmentally friendly product offering contributed to
its profit expansion.
Operating profit/(loss)
The operating profit, that increased from €222 million in 2010 to €320 million in 2011, mainly reflected the
improvement of recurring EBITDA.
Advanced Materials
Net sales
With a net sales increase of 65.3% to €891 million in 2011, compared to €539 million last year, Advanced Materials
stands as another powerful growth engine of Rhodia.
Both of its comprising business segments, Silica and Rare Earth Systems, generated strong growth year-on-year,
benefiting from a product portfolio well-suited to global market sustainable mega trends and unmatched competitive
positioning. Silica benefited from significant market growth in the high dispersible silica segment as well as a
substantial contribution from its new Chinese site in Qingdao. Rare Earth Systems satisfied the growing demand
thanks to its unique optimized competitive sourcing that combines presence in China and outside China as well as
unmatched technological-edge recycling know-how.
Recurring EBITDA
Advanced Materials’ recurring EBITDA reached a record level in 2011 at €267 million, compared to €114 million in
2010. The recurring EBITDA margin amounted to 30.0%, compared to 21.2% in 2010.
Both segments, Silica and Rare Earths, contributed to the excellent recurring EBITDA performance of the Cluster
through double-digit organic growth, respectively. Furthermore, this sharp improvement in the Cluster’s profitability
Annual Information Document • Rhodia 2011
95
was primarily attributable to the exceptional pricing conditions and rise in margins, as a result of a favorable pricing
strategy and the competitiveness of Rhodia’s supply sources.
Operating profit/(loss)
The operating profit, nearly three times higher compared to last year, mainly reflected the improvement of recurring
EBITDA.
Polyamide Materials
Net sales
Net sales for Polyamide Materials stood at €1,802 million in 2011, compared to €1,701 million in 2010, an increase of
5.9%.
Polyamide Materials experienced very different business dynamics throughout the year. It benefited from steady
demand in a tight supply and demand environment during the first half of 2011 whilst it registered a slowdown of its
activities on the second half. Over the year, Polyamide Materials reported an overall decline in volumes of (3.8)% that
was largely offset by price increases of 10.5% in a context of higher raw materials and energy costs. By segments,
Polyamide & Intermediates’ volumes were affected by the Force Majeure of its production capacities during the first
half of 2011 that contributed to very favorable pricing conditions. A significant business slowdown however became
noticeable since September. Fibras suffered from the eroded competitiveness of Brazilian textile manufacturing
industry throughout the year. After a nine-month period of organic growth volumes, Engineering Plastics reported
volume decline over the fourth quarter due to weakened demand and cautious purchasing strategies.
Recurring EBITDA
The Polyamide Materials recurring EBITDA stood at €195 million in 2011, compared to €253 million in 2010. The
Business Cluster recurring EBITDA margin totaled 10.8% compared to 14.9% in 2010.
Profitability erosion resulted from low volumes registered by P&I and Fibras, as well as corresponding adverse
operating leverage effects. Weaker market dynamics translated into less favorable pricing conditions in a context of
higher raw materials and energy costs.
Operating profit/(loss)
The operating profit mainly reflected the improvement of recurring EBITDA.
Energy Services
Net sales
In 2011, Energy Services’ net sales amounted to €219 million compared to €203 million in 2010, a 7.9% increase.
(1)
These net sales resulted essentially from the income generated by the sale of CO2 emissions credits (CERUs ), with
a large share of production hedged forward.
Recurring EBITDA
Energy Services reported recurring EBITDA of €175 million in 2011 compared to €179 million in 2010, a slight
decrease of (2.2)%.
1
96
CERUs are Certified Emission Reduction Units. They include Certified Emission Reductions (CER) and Emission Reduction Units (UER).
Annual Information Document • Rhodia 2011
CER volumes sold during the year were higher than last year due to some carry-out, but this favourable effect was
offset by lower average selling prices that went down in 2011 to €10 per ton from €13.5 per ton in 2010.
Going forward into 2012, CER production levels are expected to remain stable at 14 million tons with 80% already
hedged at an average price of €11.5 per ton. In 2013, about 8 million tons of CER sales are expected, of which 65%
are hedged at an average price of €13 per ton CER. This coverage reflects the effectiveness of the Group’s long-term
hedging policy.
Operating profit/(loss)
The operating profit mainly reflected the recurring EBITDA developments.
Corporate & Other
Net sales
Net sales of Corporate & Other, composed essentially of the Eco Services, Acetow activities as well as residual
Salicylics, amounted to €499 million in 2011, are slightly up compared to the one recorded in 2010 at €467 million.
Recurring EBITDA
Corporate & Other recurring EBITDA is comprised of the margins on the Eco Services, Salicylics and remaining
Acetow business activities, as well as expenses related to the Group’s corporate services and functions.
Corporate & Other recurring EBITDA consisted of a loss of €(35) million in 2011, compared to a profit of €2 million
in 2010.
Corporate & Other recorded a positive evolution of business margins of €3 million driven essentially by favorable
pricing power in the Eco Services business in a context of inflationary raw material and energy costs. This favorable
impact was neutralized by a €(35) million increase in fixed expenses related essentially to Corporate services and
functions and due mainly to year on year evolution of non recurring items.
Operating profit/(loss)
The operating profit mainly reflected the recurring EBITDA developments. Its unfavorable evolution was however
mitigated by a positive €9 million impact primarily due to a decrease in depreciation and a positive evolution of other
operating income and expenses, reflecting higher capital gain with the sales of shares in relation with the Salycilic
business and favourable closing of litigation in 2011 offset by costs related to Solvay take-over.
Other income statement items
2010
2011
Changes in %
552
706
27.9%
(199)
(248)
-
1
(112)
(146)
241
313
21
847
Net profit/(loss) for the period
262
1,160
Group share
259
1,147
3
13
(in millions of euros)
Operating profit/(loss)
Profit/(loss) from financial items
Share of profit/(loss) of associates
Income tax expense
Profit/(loss) from continuing operations
Profit/(loss) from discontinued operations
Non-controlling interests
Annual Information Document • Rhodia 2011
nd
97
Profit/(loss) from financial items
Profit/(loss) from financial items amounted to €(248) million at December 31, 2011 compared to €(199) million for the
year ended on December 31, 2010. This change mainly corresponds to the expenses related to the refinancing
transactions in the amount of €(60) million.
Recurring interest expenses totaled €(119) million in 2011 as compared to €(114) million in 2010, or a increase of
€5 million arising from an increase in average financial debt between 2010 and 2011.
Income tax expense
For the year ended December 31, 2011, the Group recorded an income tax expense of €(146) million, compared to
€(112) million in 2010. This increase stems mainly from improvement in activity. This tax expense is largely equivalent
to the tax recorded by the US, Brazilian, French and Asian entities. For the French and British tax groups, the
Company has not changed its estimate of the likelihood of recovering deferred tax assets. Hence, their deferred tax
assets were recognized up to the amount of deferred tax liabilities so that the deferred tax position of the French and
British tax groups shows a zero value. See Note 16 (Deferred tax assets and liabilities) to the consolidated financial
statements in Chapter 5.2.2 of this document.
Assets held for sale and discontinued operations
See Note 9 (Assets held for sale and discontinued operations) to the consolidated financial statements in
Chapter 5.2.2 of this document.
Non-controlling interests
The share of income from non-controlling interests amounted to a profit of €13 million at the end of December 2011.
Income attributable to shareholders of Rhodia S.A.
The earnings attributable to Rhodia S.A.’s shareholders totalled €1,147 million as of December 31, 2011, compared to
a loss of €259 million on December 31, 2010.
.
5
1
.
2
F
I
N
A
N
C
I
A
L
S
T
R
U
C
T
U
R
E
Analysis of the consolidated balance sheet
Operating capital
The working capital requirement was €633 million at December 31, 2011, compared to €588 million on
December 31, 2010, mainly due to price increase.
Net consolidated debt
Gross borrowings, defined as the sum of current and non-current loans and borrowings, amounted to €1,313 million at
December 31, 2011, compared to €2,011 million on December 31, 2010.
Cash and cash equivalents and other current financial assets increased from €816 million on December 31, 2010 to
€922 million on December 31, 2011.
As a result, the net consolidated debt (defined as the sum of current and non-current loans and borrowings minus
cash and cash equivalents and other current financial assets) decreased to €392 million at December 31, 2011, from
€1,194 million on December 31, 2010.
98
Annual Information Document • Rhodia 2011
Post employment benefits and similar obligations
Rhodia’s obligations were evaluated and accounted in the balance sheet on December 31, 2011 in accordance with
amended standard IAS 19 – Employee benefits.
Post employment obligations consist of the payment of pensions, pension supplements, and indemnifications payable
upon retirement.
Other benefits awarded to employees mainly consist of bonuses based on seniority for employees in France, the
United States, and the United Kingdom.
Obligations appearing as liabilities on the balance sheet totaled €1,397 million on December 31, 2011, compared to
€1,510 million on December 31, 2010.
A detailed description of the analysis of post employment benefits and similar obligations can be found in Note 25
(Post employment benefits and similar obligations) to the consolidated financial statements in Chapter 5.5.2 of this
document.
Provisions
Provisions classified as current and non-current liabilities amounted to €527 million on December 31, 2011, down from
€557 million on December 31, 2010.
A breakdown of these provisions by type is as follows:
•
restructuring provision covering personnel costs and costs related to site suspensions;
•
environment provision. Rhodia evaluates its environmental liabilities and how they will be treated on a regular
basis. The provision is calculated based on discounted future cash flow;
•
other provisions.
A detailed description of the analysis of provisions by type can be found in Note 26 to the consolidated financial
statements in Chapter 5.2.2 of this document, in Note 26.3 with regard to restructuring and in Notes 26.4 and
26.5 with regard to the environmental and other provisions respectively.
Other non-current liabilities
Other non-current liabilities amounted to €76 million on December 31, 2011, as opposed to €27 million on
December 31, 2010.
Shareholders’ equity
Shareholders’ equity totaled €857 million on December 31, 2011, compared to €(288) million on December 31, 2010.
During 2011, share subscription options exercised resulted in the issuance of 354,719 new shares and the option for
payment of the dividend in shares upon issuance of 1,486,223 new shares.
During 2011, Rhodia exercised treasury share purchase options for 1,010,000 shares. After granting the free shares
and stock options to the beneficiaries the number of treasury shares amounts to 879,894 shares at December 31,
2011.
On December 31, 2011, Rhodia S.A.’s share capital was €106,411,910 divided into 106,411,910 shares with a par
value of €1 each.
Annual Information Document • Rhodia 2011
99
Consolidated cash flow
This section presents an analysis of consolidated cash flows as of December 31, 2011, compared to
December 31, 2010.
For the years ended
(in millions of euros)
December 31, 2010
December 31, 2011
Net profit/(loss)
259
1,147
Net cash flow from operations before change in working capital
602
584
(108)
(34)
9
13
503
563
Net cash from (used by) investing activities
(482)
236
Net cash from (used by) financing activities
44
(870)
Effect of foreign exchange rate changes
26
(7)
Net increase in cash and cash equivalents
91
(78)
Consolidated cash flow
Change in working capital
Margin calls
Net cash from operating activities
Net cash from operating activities
Net cash generated from operating activities totalled €563 million in 2011, compared to €503 million in 2010.
This change resulted in part from the decrease in net cash from operating activities before the change in working
capital, which went from €602 million in 2010 (of which €(16) million of refinancing costs) to €584 million in 2011 (of
which €(58) million of refinancing costs), offset by a decrease of the working capital (defined as the change in trade
receivables and other accounts receivable, plus change in inventories, minus change in trade and other accounts
payable, plus change in other current assets and liabilities).
Net cash from (used by) investing activities
Net cash from investing activities amounted to €236 million in 2011, compared to a cash utilization of €(482) million
in 2010.
The main factors explaining this €718 million increase are:
•
•
a €(109) million increase in acquisitions of property, plant and equipment and other non-current assets;
cash utilization for external growth operations in 2010 amounting to €(276) million particularly due to the
acquisition of Feixiang Chemicals, a leader in China in specialty amines and surfactants, for approximately
€270 million;
•
cash from disposals totalling € 591 million in 2011, mainly due to the disposal of Rhodia Deutschland and its
affiliates to Solvay.
Net cash from (used by) financing activities
Net cash used by refinancing activities represented €(870) million in cash utilization in 2011, compared to cash
generated in 2010 for €44 million in 2010. This cash utilization in 2011 was related to the reimbursement of
€ (651) million relating to the OCEANE and of €(229) million relating to the residual amount of the Floating Rate Note
(Refer to Note 22).
100
Annual Information Document • Rhodia 2011
Financing arrangements and cash resources
Rhodia’s financing arrangements
In 2011, Rhodia has completed the following operations:
Full redemption of the “Floating Rate Notes”
These High Yield notes in the form of Floating Rate Notes were issued in 2006 for a nominal amount of €1,100 million
at 3-month Euribor + 2.75%, maturing on October 15, 2013.
In 2008, 2009, May 2010 and October 2010, Rhodia undertook early redemptions for respective nominal amounts of
€33 million, €32 million €500 million and €306 million, thus reducing the nominal amount of the notes to €229 million
as of December 31, 2010.
On September 30, 2011, Rhodia exercised its option to fully repay the Floating Rate Notes. With a one-month notice
period, the reimbursement was effective as of October 30, 2011 for remaining nominal amounts of €229 million.
High Yield Notes and OCEANE
As a result of the public offer from Solvay to purchase shares of Rhodia, Solvay Finance France has acquired on
Semtember 7, 2011, 12 063 999 OCEANEs at a price of €52.32. After completion of the squeeze-out procedure, on
September 16, 2011, Solvay Finance France has acquired 308 637 OCEANEs at a price of €52.35.
Solvay Finance France as sole holder of the OCEANEs has expressed its intention to obtain early redemption of the
OCEANEs as provided in clause 4.8.5 (f) of the prospectus (Note d’Opération) in case Rhodia SA is not listed
anymore on the Euronext market in Paris.
In order to simplify the early redemption process, Rhodia SA has fully repaid the OCEANEs held by Solvay Finance
France, in respect of clause 4.8.2. of the prospectus under the following conditions :
•
€52.63 per OCEANE, corresponding to the early redemption price (“Prix de Remboursement Anticipé”) as
defined in clause 4.8.3. (1) of the prospectus plus accrued interests since last interests payment date. This price
is equivalent to the price that Solvay Finance France would have obtained by exercising its rights under article
4.8.5 (f) of the prospectus.
•
Date of payment: December 15, 2011.
As of December 31, 2011, Rhodia’s bond debt consists of:
•
•
High Yield notes, HY 2018, issued for a nominal amount of €500 million at 7% and maturing on May 15, 2018;
High Yield notes, HY 2020, issued for a nominal amount of $400 million at 6.875% and maturing on
September 15, 2020.
Cancelation of the syndicated credit line
In March 2007, Rhodia entered into a syndicated multicurrency revolving credit facility with a limited number of lending
banks for €600 million (Multicurrency Revolving Credit and Guaranty Facility or “RCF”) maturing on June 30, 2012.
This RCF has been cancelled on December 7, 2011. The facility was used only for guarantees which have been
previously cancelled or transferred on new bilateral uncommitted lines. The cancellation of the RCF was a condition to
the first drawing under the new €500 million Solvay syndicated revolving credit facility dated November 4, 2011.
Asset securitization programs
Rhodia has another financing source by which it sells certain of its uncollected trade receivables.
In fact, certain companies in the Group sell the uncollected trade receivables within the framework of multi-year asset
securitization agreements entered into with various financial institutions or within the framework of contracts to sell
Annual Information Document • Rhodia 2011
101
receivables. The sales are executed, either with a right of recourse, or to ad hoc entities. Rhodia assumes the
inherent property risks and benefits of the sold asset. Consequently, the receivables can still be recorded on the
balance sheet.
For more information, please refer to Note 22.1 (Breakdown of borrowings by type) and 22.4 (Comments on the
financing arrangements) to the consolidated financial statements in Chapter 5.2.2 of this document.
Unconfirmed financial arrangements of Rhodia and its subsidiaries
Rhodia and some of its subsidiaries, including its unconsolidated subsidiaries, entered into unconfirmed loans,
overdraft authorizations, and letters of credit with various financial institutions. Most of these arrangements are for
allowing working capital to be financed so that administrative and operating requirements will be covered. These
sources of financing do not mature on specific dates, and lenders generally have the right to terminate them at
relatively short notice.
The total of all unconfirmed credit lines and overdraft authorizations of the consolidated subsidiaries amounted to
€203 million as of December 31, 2011.
Off-balance sheet commitments and contractual obligations
Note 31 to the consolidated financial statements, appearing in Chapter 6.4.2, shows an overview itemizing off-balance
sheet commitments and contractual obligations.
When the “RCF” Multi-currency Revolving Syndicated Credit Facility was established in March 2007, Rhodia S.A.
provided collateral securities to the banks that signed the agreement consisting of a pledge of the securities of two of
its subsidiaries and a secured loan of another of its subsidiaries. These securities have all been released on
December 15, 2011.
Cash resources
Rhodia had €704 million in cash and cash equivalents as of December 31, 2011, compared to €782 million on
December 31, 2010.
Rhodia also had €8 million in other liquid current financial assets as of December 31, 2011.
Thus, Group’s cash resources as of December 31, 2011 were €712 million, compared to €1,324 million on
December 31, 2010. As a member of the Solvay Group and after the cancellation of the RCF, Rhodia can benefit from
intercompany financing resources.
102
Annual Information Document • Rhodia 2011
5
2
.
i
F
n
a
n
c
i
a
l
t
s
a
t
e
m
e
n
t
s
’
.
2
.
1
P
.
5
S
T
U
T
A
O
T
Y
R
U
A
I
D
O
T
R
S
E
R
O
R
O
T
N
H
T
E
S
T
A
T
E
M
E
N
T
S
F
O
R
T
H
E
Y
E
A
R
E
N
D
E
D
D
E
C
E
M
3
E
R
O
C
“
B
N
2
1
O
S
0
1
L
I
D
A
T
E
D
F
I
N
A
N
C
I
A
L
1
,
The independent auditors' report on Rhodia's consolidated financial statements is communicated to the Trustees
appointed under Rhodia's 2018 and 2020 High Yield indentures. This report is not available on the company's website
as it is established for the sole benefit of the Bond Holders under the above indentures.
Annual Information Document • Rhodia 2011
103
2
.
.
2
.
5
O
C
N
D
E
C
E
M
S
3
B
E
R
O
L
I
2
1
D
T
A
0
1
E
D
F
I
N
A
N
C
I
A
L
S
T
A
T
E
M
E
N
T
S
F
O
R
T
H
E
Y
E
A
R
E
N
D
E
D
1
,
A. CONSOLIDATED INCOME STATEMENTS ............................................................................................ 105
B. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME........................................................ 106
C. CONSOLIDATED BALANCE SHEETS ................................................................................................... 107
D. CONSOLIDATED STATEMENTS OF CASH FLOWS ............................................................................ 109
E. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY .................................................................. 110
F. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS............................................................ 111
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
31.
32.
33.
34.
104
The Group and its business ............................................................................................................. 111
Principal accounting methods .......................................................................................................... 111
Segment information ........................................................................................................................ 125
Employee expenses ......................................................................................................................... 128
Depreciation and impairment of property, plant and equipment and intangible assets ................... 128
Other operating income and expenses ............................................................................................ 130
Profit/(loss) from financial items ....................................................................................................... 131
Income tax ........................................................................................................................................ 131
Assets held for sale and discontinued operations ............................................................................ 132
Property, plant and equipment ......................................................................................................... 133
Goodwill ............................................................................................................................................ 134
Other intangible assets..................................................................................................................... 136
Investments in associates ................................................................................................................ 137
Investments in joint ventures ............................................................................................................ 137
Non-current financial assets ............................................................................................................. 138
Deferred tax assets and liabilities..................................................................................................... 138
Inventories ........................................................................................................................................ 140
Trade and other receivables............................................................................................................. 140
Other current financial assets........................................................................................................... 140
Cash and cash equivalents .............................................................................................................. 141
Equity................................................................................................................................................ 141
Borrowings........................................................................................................................................ 142
Fair value of financial instruments and accounting categories......................................................... 146
Financial risk management and derivatives ..................................................................................... 148
Post-employment benefits and similar obligations ........................................................................... 158
Provisions ......................................................................................................................................... 162
Trade and other payables ................................................................................................................ 166
Leases .............................................................................................................................................. 166
Off-balance sheet commitments....................................................................................................... 167
Litigation ........................................................................................................................................... 167
Related party transactions................................................................................................................ 170
Share-based payment ...................................................................................................................... 172
Subsequent events........................................................................................................................... 177
2011 Consolidation Perimeter .......................................................................................................... 178
Annual Information Document • Rhodia 2011
.
A
C
O
N
S
O
L
I
D
A
T
E
D
I
N
C
O
M
E
S
T
A
T
E
M
E
N
T
S
For the year ended December 31,
Note
2011
2010
Net sales
3
5,862
4,793
Other revenue
3
367
378
(4,835)
(3,985)
(608)
(536)
(91)
(80)
3
6
(in millions of euros)
Cost of sales
Administrative and selling expenses
Research and development expenditure
Restructuring costs
Other operating income
6
97
40
Other operating expenses
6
(89)
(64)
Operating profit
3
706
552
Finance income
7
114
103
Finance costs
7
(367)
(311)
Foreign exchange gains/(losses)
7
5
9
13
1
-
459
353
(146)
(112)
313
241
847
21
1,160
262
1,147
259
13
3
Share of profit/(loss) of associates
Profit/(loss) before income tax
Income tax expense
8
Profit/(loss) from continuing operations
Profit/(loss) from discontinued operations
Net profit/(loss) for the period
9
Attributable to:
Equity holders of Rhodia S.A.
Non-controlling interests
Annual Information Document • Rhodia 2011
105
B
P
.
C
O
N
S
O
L
I
D
A
T
E
D
S
T
A
T
E
M
E
N
T
O
F
C
O
M
R
E
H
E
N
S
I
V
E
I
N
C
O
M
E
For the year ended December 31,
(in millions of euros)
Note
Net profit/(loss) for the period
Currency translation differences and other movements
2011
2010
1,160
262
16
103
Gains/(losses) arising from cash flow hedges of commodities
24
35
(12)
Gains/(losses) arising from cash flow hedges of interest rates
24
7
17
Gains/(losses) arising from cash flow hedges of foreign currency portfolios
24
(31)
(17)
11
2
(63)
39
8
3
(17)
135
1,143
397
1,126
391
17
6
Deferred tax on cash flow hedges
Actuarial gains/(losses) arising from post-employment benefits
Deferred tax on actuarial gains/(losses)
Total other comprehensive income
Total comprehensive income
25
Attributable to:
Equity holders of Rhodia S.A.
Non-controlling interests
106
Annual Information Document • Rhodia 2011
B
.
C
C
O
N
S
O
L
I
D
A
T
E
D
A
L
A
N
C
E
S
H
E
E
T
S
ASSETS
Note
At December 31, 2011
At December 31, 2010
Property, plant and equipment
10
1,568
1,560
Goodwill
11
432
420
Other intangible assets
12
332
328
Investments in associates
13
38
12
Other non-current financial assets
15
279
135
Deferred tax assets
16
124
168
2,773
2,623
685
627
23
29
(in millions of euros)
Non-current assets
Inventories
17
Income tax receivable
Trade and other receivables
18
956
910
Derivative financial instruments
24
299
90
Other current financial assets
19
217
34
Cash and cash equivalents
20
704
782
9
6
36
Current assets
2,890
2,508
TOTAL ASSETS
5,663
5,131
Assets classified as held for sale
Annual Information Document • Rhodia 2011
107
EQUITY/(DEFICIT) AND LIABILITIES
Note
At December 31, 2011
At December 31, 2010
Share capital
21
106
105
Additional paid-in capital
21
1,336
1,290
325
303
(944)
(2,006)
823
(308)
34
20
(in millions of euros)
Other reserves
Deficit
Equity attributable to equity holders of Rhodia S.A.
Non-controlling interests
Total equity
857
(288)
Borrowings
22
865
1,672
Retirement benefits and similar obligations
25
1,320
1,419
Provisions
26
349
425
Deferred tax liabilities
16
40
62
76
27
2,650
3,605
Other non-current liabilities
Non-current liabilities
Borrowings
22
448
338
Derivative financial instruments
24
268
94
Retirement benefits and similar obligations
25
77
91
Provisions
26
178
132
26
40
27
1,159
1,113
9
-
6
Current liabilities
2,156
1,814
TOTAL EQUITY/(DEFICIT) AND LIABILITIES
5,663
5,131
Income tax payable
Trade and other payables
Liabilities associated with assets classified as held for sale
108
Annual Information Document • Rhodia 2011
.
D
C
O
N
S
O
L
I
D
A
T
E
D
S
T
A
T
E
M
E
N
T
S
O
F
C
A
S
H
F
L
O
W
S
For the year ended December 31,
(in millions of euros)
2011
2010
Net profit/(loss) for the period attributable to equity holders of Rhodia S.A.
1,147
259
Adjustments for:
Non-controlling interests
13
3
Depreciation and impairment of non-current assets
289
277
Net increase/(decrease) in provisions
(67)
(24)
-
3
Impairment of non-current financial assets
Share of profit/ (loss) of associates
(1)
-
Other income and expense
47
63
(872)
(9)
22
26
Gain/(loss) on disposal of non-current assets
Deferred tax expense/(income)
Foreign exchange losses
Net cash flow from operating activities before changes in working capital
6
4
584
602
(110)
(111)
(11)
(83)
13
65
Changes in working capital
• (Increase)/decrease in inventories
• (Increase)/decrease in trade and other receivables
• Increase/(decrease) in trade and other payables
74
21
550
494
13
9
563
503
(343)
(234)
Purchases of other non-current assets
(36)
(36)
Proceeds on disposals of entities, net of cash transferred, and non-current assets
591
8
4
(276)
20
56
236
(482)
9
38
• Increase/(decrease) in other current assets and liabilities
Net cash flow from operating activities before margin calls
Margin calls
(1)
Net cash flow from operating activities
Purchases of property, plant and equipment
Purchases of entities, net of cash acquired
(Purchases)/repayments of loans and financial investments
Net cash flow used by investing activities
Proceeds from issued shares, net of costs
Treasury share purchase costs
Dividends paid
New non-current borrowings, net of costs
(6)
-
(14)
(19)
16
811
(927)
(822)
52
36
(870)
44
(7)
26
Net increase/(decrease) in cash and cash equivalents
(78)
91
Cash and cash equivalents at the beginning of the year
782
691
Cash and cash equivalents at the end of the year
704
782
Repayments of non-current borrowings, net of costs
Net increase/(decrease) in current borrowings
Net cash flow from/(used by) financing activities
Effect of foreign exchange rate changes
(1) The margin call agreements are standardized credit risk reduction contracts, which are concluded with the clearing house of an organized market or
bilaterally by private contract with a counterpart.
Interest and income tax paid are presented in Note 20.2.
Annual Information Document • Rhodia 2011
109
Q
.
E
C
O
N
S
O
L
I
D
A
T
E
D
S
T
A
T
E
M
E
N
T
O
F
C
H
A
N
E
G
S
I
N
E
U
I
T
Y
Other reserves
Share
capital
Additional
paid-in
capital
Hedge
reserve
Translation
reserve
Legal
reserve
Treasury
shares
Accumulated
deficit
105
1,290
(5)
256
58
(6)
Dividends
1
40
-
-
-
Share capital
increase/(decrease)
-
6
-
-
-
Total
comprehensive
income
-
-
11
12
-
-
-
-
106
1,336
6
268
(in millions of euros)
At January 1, 2011
Other changes
(1)
At December 31,
2011
Total
Noncontrolling
interests
Total
(2,006)
(308)
20
(288)
-
(52)
(11)
(3)
(14)
-
-
6
-
6
-
-
1 103
1,126
17
1,143
-
(1)
11
10
-
10
58
(7)
(944)
823
34
857
Total
(1) Including free shares and stock options for €13.8 million (see Note 32)
Other reserves
(in millions of euros)
Share
capital
Additional
paid-in
capital
Hedge
reserve
Translation
reserve
Legal
reserve
Treasury
shares
Accumulated
deficit
Total
Noncontrolling
interests
At January 1, 2010
1,213
138
7
156
58
(8)
(2,299)
(735)
16
(719)
-
6
-
-
-
-
(25)
(19)
(2)
(21)
(1,108)
1,146
-
-
-
-
-
38
-
38
-
-
(12)
100
-
-
303
391
6
397
-
-
-
-
-
2
15
17
-
17
105
1,290
(5)
256
58
(6)
(2,006)
(308)
20
(288)
Dividends
Share capital
increase/(decrease)
Total
comprehensive
income
Other changes
(1)
At December 31,
2010
(1) Including free shares for €9.9 million (see Note 32)
110
Annual Information Document • Rhodia 2011
.
F
N
O
T
E
S
T
O
T
H
E
C
O
N
S
O
L
I
D
A
T
E
D
F
I
N
A
N
C
I
A
L
S
T
A
T
E
M
E
N
T
S
1. The Group and its business
Rhodia S.A. and its subsidiaries (“Rhodia” or “the Group”) produce market and develop chemicals. Rhodia is
the partner of major players in the automotive, tire, electronics, perfume, health & beauty and home care markets.
Rhodia has offices worldwide and specifically in Europe, the United States, Brazil and Asia.
Rhodia S.A. is a public limited company registered and domiciled in France. Its registered office is located
at Paris–La Défense.
The Company was listed on Euronext Paris until September 16, 2011. The Company is now held by Solvay Group.
Key events of the year are the followings:
On September 7, 2011, Solvay acquired 95.9% of the share capital and of the voting rights of Rhodia, together
•
with 97.51% of the convertible bonds “OCEANE”. Then, on September 15, 2011, Solvay implemented a squeezeout procedure for the remaining shares (4.1%) and convertible bonds; on December 15, 2011, Rhodia reimbursed
the OCEANE to Solvay (See Note 22);
On December 21, 2011, Rhodia Deutschland and its affiliates, the main part of the Acetow business, were sold to
•
Solvay for €595 million, out of which €500 million were paid in December 2011 (See Note 9);
2. Principal accounting methods
2.1.
Accounting standards
The Group’s consolidated financial statements for the year ended December 31, 2011 were prepared in accordance
with IFRS (International Financial Reporting Standards), as adopted by the European Union and applicable as from
December 31, 2011. These standards include international accounting standards (IAS and IFRS) and Interpretation
Committee interpretations (SIC and IFRIC).
The IFRS adopted by the European Union can be found on the website of the European Commission (EC)
at the following address: htpp://ec.europa.eu/internal_market/accounting/ias_en.htm#adopted-commission
These consolidated financial statements are also consistent with the IFRS issued by the IASB (International
Accounting Standards Board) and applicable as from December 31, 2011.
2.2.
Basis of preparation for the consolidated financial statements
The consolidated financial statements are presented in euros, the functional and presentation currency of the parent
company. Amounts are rounded up to the nearest million.
The Group’s consolidated financial statements were prepared on a historical cost basis, with the exception of
derivatives and financial assets held for trading or classified as available for sale, which are measured at fair value.
Non-current assets and groups of assets held for sale are measured at the lower of their net carrying amount and fair
value, less costs to sell.
The preparation of the financial statements requires the use of estimates and the formulation of judgments and
assumptions that have an impact on the application of accounting methods and the amounts shown in the financial
statements. The areas for which the estimates and assumptions are material with regard to the consolidated financial
statements are presented in the following notes:
•
Measurement of the recoverable amount of non-current assets (Notes 5, 11 and 12)
Annual Information Document • Rhodia 2011
111
•
Deferred tax assets and liabilities (Note 16)
•
Risk management and derivatives (Note 24)
•
Retirement benefits and similar obligations (Note 25)
•
Provisions (Note 26)
Standards, interpretations and amendments applicable as from 2011
IFRS 3 revised Business Combinations was applied for all the acquisitions which occurred within 2011.
No other standards, interpretations and amendments to standards adopted by the European Union and applicable as
from 2011 had significant impact on the consolidated financial statements.
Standards, interpretations and amendments to standards already published, but not yet applicable in 2011
According to the Group, the other standards, interpretations and amendments already adopted by the European
Union but not yet applicable to the year ended December 31, 2011 will have no significant impact on the consolidated
financial statements.
2.3.
Consolidation principles
Subsidiaries
Subsidiaries are those companies over which Rhodia exercises control directly or indirectly, i.e. it has the power to
govern the financial and operating policies so as to obtain benefits from their activities. Rhodia is presumed to
exercise control when it acquires, directly or indirectly, more than 50% of voting rights. To assess this control,
potential voting rights that are immediately exercisable or convertible held by Rhodia and its subsidiaries are taken
into consideration.
Special purpose entities that are, in substance, controlled by Rhodia and in which the Group does not have an equity
investment are considered as subsidiaries. Rhodia may, under trade receivable securitization programs, use special
purpose entities such as dedicated mutual funds.
Joint ventures
The companies over which Rhodia exercises a joint control in accordance with contractual arrangements are
proportionately consolidated. The consolidated financial statements include the Group’s share in the assets, liabilities,
income and expenses of these companies.
Associates
Associates are those companies over which Rhodia exercises significant influence, but not control, with generally an
investment representing between 20% and 50% of voting rights. They are initially recognized at cost under the equity
method. The carrying amount of the investment is then increased (decreased) to recognize the share of the profit
(loss) of the associate after acquisition.
When a change is recognized directly in the other comprehensive income of the associate, the Group recognizes its
share directly in its other comprehensive income.
In the event of impairment, the Group determines the recoverable amount of its net investment in the associate and
recognizes an impairment loss should its equity carrying value exceed such amount.
Changes of control / significant influence
Subsidiaries, joint ventures and associates are included in the financial statements as from the date of obtaining
control or significant influence. They are excluded from the financial statements as from the date of losing control or
significant influence.
In case of loss of significant influence or joint-control, Rhodia recognizes in profit or loss the difference between the:
112
Annual Information Document • Rhodia 2011
•
the fair value of any retained investment and any proceeds from disposing of the part interest in the associate or
jointly-controlled entity; and
•
the carrying amount of the investment at the date when significant influence or joint-controlled is lost.
Transactions eliminated in the consolidated financial statements
Transactions between subsidiaries are fully eliminated. Transactions with joint ventures are eliminated to the extent of
the investment reflected in the consolidated financial statements.
Unrealized gains arising from intra-Group transactions are eliminated in the same way as unrealized losses unless
they represent an impairment loss. Unrealized gains and losses arising from transactions between the Group and its
joint ventures or associates are eliminated in proportion to the Group’s investment in these entities.
2.4.
Translation of the foreign currency transactions and financial statements of foreign
companies
Translation of foreign currency transactions
The functional currency of the Group’s entities is generally the local currency. Foreign currency transactions are
translated in their functional currency using the exchange rate at the date of the transaction.
Monetary assets and liabilities denominated in a foreign currency are translated at the closing rate. The corresponding
exchange differences are recognized in finance income or costs.
The exchange differences relating to loans and borrowings with a foreign subsidiary, which, in substance, form part of
the net investment in the subsidiary, are recognized directly in equity, until the disposal of the net investment when
they are recognized in profit or loss.
Translation of the financial statements of foreign entities
The financial statements of the Group’s foreign entities, whose functional currency is not the euro, are translated as
follows:
•
Assets and liabilities (including goodwill and fair value adjustments on the date of acquisition) are translated at
the official closing rates;
•
Income and expenses are translated at the average rate for the period which, excluding major exchange rate
fluctuations, is considered as similar to the exchange rates at the date of the transactions;
•
All resulting exchange differences are recognized directly in equity.
In 2011, the economy of Venezuela continued to be qualified as hyperinflationary. Insofar as the Group’s investments
and activities in this country are insignificant, the accounting practices for hyperinflationary economies set forth in IAS
29 Financial Reporting in Hyperinflationary Economies were not adopted at December 31, 2011.
2.5.
Greenhouse gas emission allowances and Certified Emission Reductions
With respect to the mechanism set up by the European Union to encourage manufacturers to reduce their greenhouse
gas emissions, Rhodia was granted carbon dioxide (CO2) emission allowances for some of its installations. Rhodia
is also involved in Clean Development Mechanism (CDM) and Joint Implementation (JI) projects placed under
the authority of the United Nations Framework Convention on Climate Change (UNFCCC) under the Kyoto protocol.
Under these projects, Rhodia has deployed facilities in order to reduce greenhouse gas emissions at the relevant sites
in return for Certified Emission Reductions (CER) or Emission Reduction Units (ERU).
Annual Information Document • Rhodia 2011
113
Treatment of European Union Allowances (EUA)
These allowances are granted each year under the national allocation plans with an initial trading period of three
years beginning January 1, 2005, and the second trading period of 5 years beginning January 1, 2008. During the
second period, the allowances are delivered free of charge and are valid over the entire trading period if not used.
Allowances may be freely traded upon allocation and may be purchased or sold, especially if too few or too many
allowances are allocated with respect to actual emissions.
In the absence of specific IFRS guidance, Rhodia recognizes emission allowances using the following method:
•
Initial recognition: the allocated emission allowances, measured at market value at January 1, are recognized as
other intangible assets in consideration of a government grant recognized in liabilities;
•
Subsequent recognition: the grant is recognized in the income statement on a straight-line basis over the year (in
the absence of seasonal discharges). In addition, a liability corresponding to the allowances to be surrendered is
recognized for the actual gas emissions, with the related expense being recognized in the income statement. This
liability is measured at the initial value of allowances allocated or purchased and, where necessary, at market
value up to the number of allowances missing at the closing date over the number of allowances to be
surrendered. Excess allowances maintained in assets are tested for impairment annually and more frequently
should there be indications of impairment;
•
Allowances surrendered for the emissions for the period: at the effective date of surrender, the intangible asset
and the corresponding liability are derecognized;
•
Sales of allowances: the gains or losses arising on the sale of allowances are recognized in the income statement
under cost of sales.
Treatment of Certified Emission Reductions (CER)
Under the CDM projects, Rhodia has deployed facilities in order to reduce the greenhouse gas emissions at its Onsan
(South Korea) and Paulinia (Brazil) sites. Upon verification by independent experts, should these emissions fall below
the benchmark levels set by the UNFCCC, Rhodia receives Certified Emission Rights (CER) which are freely
transferable. As part of the development of Rhodia Energy Services and to organize the sale of the CERs arising from
the two projects, Rhodia has implemented Orbeo Climate Care, the subsidiary in charge of these projects.
Allocated CERs are recognized in inventories at the lower of cost and net realizable value. The cost of allocated CERs
mainly corresponds to the amortization of gas emission reduction units.
The CER sales realized between participants in CDM projects and in organized markets are recognized in net sales
upon delivery of the CERs, i.e. when they are recorded in the account of the transferee in the UNFCCC register.
In connection with the JI, Rhodia has set up in France similar, but smaller-sized projects aiming at obtaining ERUs.
ERU recognition is identical to CER recognition.
In order to manage exposure to future CER price fluctuations, Rhodia has set up forward CER sales contracts, with or
without guarantee of delivery. Based on their characteristics, when these contracts represent derivatives within the
meaning of IAS 39 Financial Instruments: recognition and measurement, they are recognized and measured
according to the rules described in Note 2.16. Otherwise, they represent off-balance sheet commitments.
Treatment of Orbeo Climate Care’s activities
In addition to selling CERs on behalf of the two shareholders, the Orbeo Climate Care subsidiary is involved in
developing CO2 instrument trading, arbitrage and hedging activities, and developing the “Origination” activity. The net
income or expense from these activities is recorded after elimination of intra-Group transactions:
•
in net sales or cost of sales for the “industrial” component, where Orbeo Climate Care sells the CERs generated
by Rhodia;
114
Annual Information Document • Rhodia 2011
•
in “other operating income” or “other operating expenses” for the “trading” component, where Orbeo Climate Care
purchases / sells CERs and EUAs;
•
in “other operating income and expenses” for the “Origination” component.
The margin calls relating to the derivative instruments contracted by Orbeo Climate Care are recognized in Other
current financial assets in respect of guarantee deposits paid, and in Borrowings in respect of guarantee deposits
received.
Cash flow movements arising from these margin calls have been isolated in a separate line in the Consolidated
Statements of Cash Flows under Net cash flow from operating activities.
2.6.
Property, plant and equipment
Initial recognition
The property, plant and equipment owned by Rhodia are recognized as assets at acquisition cost when the following
criteria are satisfied:
•
It is probable that the future economic benefits associated with the asset will flow to Rhodia;
•
The cost of the asset can be reliably measured.
Items of property, plant and equipment are carried on the balance sheet at cost less accumulated depreciation and
impairment. The cost of an item of property, plant and equipment comprises its purchase or production price and any
costs directly attributable to the location and condition necessary for its operation, including, where necessary, the
interim interest accrued during the construction period.
The components of an item of property, plant and equipment with different useful lives are recognized separately.
Items of property, plant and equipment are derecognized from the balance sheet on disposal or discontinuation. The
gain or loss arising from the derecognition of an item of property, plant and equipment is recognized in profit or loss
for the period of derecognition.
Subsequent expenditure
Subsequent expenditure incurred for the replacement of a component of an item of property, plant and equipment is
only recognized as an asset when it satisfies the general criteria mentioned above.
The carrying amount of replaced items is derecognized.
Repair and maintenance costs are recognized in the income statement as incurred.
On account of its industrial activity, Rhodia incurs expenditure for major repairs over several years for most of its sites.
The purpose of this expenditure is to maintain the proper working order of certain installations without altering their
useful life. This expenditure is considered as a specific component of the item of property, plant and equipment and is
amortized over the period during which the economic benefits flow, i.e. the period between the major repairs.
Annual Information Document • Rhodia 2011
115
Depreciation
Land is not depreciated. Other items of property, plant and equipment are depreciated using the straight-line method
over the estimated useful life. The estimated useful lives are as follows:
Buildings
10 – 40 years
Plant and equipment:
Machinery and equipment
5 – 15 years
Other equipment
3 – 15 years
Vehicles
4 – 20 years
Furniture
10 – 15 years
The residual values and useful lives are reviewed and, where necessary, adjusted annually or when there are
permanent changes in operating conditions.
Dismantling costs
Dismantling and restoration costs are included in the initial cost of an item of property, plant and equipment if the
Group has a legal or constructive obligation to dismantle or restore.
Generally, Rhodia does not have any current, legal or constructive obligation to dismantle and/or restore its operating
sites in accordance with IAS 37 Provisions, contingent liabilities and contingent assets, as such obligation is only likely
to arise upon the discontinuation of a site’s activities. To date, Rhodia has not therefore set aside any provisions for
dismantling costs or recognized the components relating to the dismantling of its operating installations.
However, the costs of dismantling discontinued sites or installations are provided when there is a legal obligation (due
to a request or injunction from the relevant authorities), or there is no technical alternative to dismantling to ensure the
safety compliance of the discontinued sites or installations.
Property, plant and equipment acquired under finance leases
Leases, including those falling within the scope of IFRIC 4 Determining whether an arrangement contains a lease, are
considered as finance leases if they transfer substantially to Rhodia all the risks and rewards inherent to the
ownership of the leased assets with the characteristics of an acquisition. An asset acquired by the Group under a
finance lease is recognized at fair value at the lease inception date, or if lower, the present value of the minimum
lease payments. The corresponding debt is recognized in borrowings. The recognized asset is depreciated using the
method described above.
Government grants
Government grants which cover totally or partially the cost of an item of property, plant and equipment are deducted
from the acquisition cost and transferred on a systematic basis to the income statement over the useful life of the
assets.
2.7.
Goodwill and business combinations
The acquisition method is used to account for the acquisition of subsidiaries, joint ventures and investments in
associates. Goodwill is the excess of the consideration transferred over the share acquired by the Group in the fair
value of the entity’s net identifiable assets at the acquisition date. The consideration transferred is measured at fair
value. It corresponds to the sum of the fair values of the assets transferred and liabilities incurred by the acquirer to
former owners of the acquiree and the equity interests issued by the acquirer. The identifiable assets acquired and
liabilities assumed in a business combination are initially measured at their acquisition-date fair values. If the fair value
of the Group’s interest in the net assets of the acquired subsidiary exceeds the cost of the acquisition, the difference is
recognized directly in profit or loss. The identification and measurement of acquired assets and liabilities are finalized
within a period of one year as from the acquisition date. Acquisition costs are expensed in the period.
116
Annual Information Document • Rhodia 2011
Goodwill is tested for impairment annually or more frequently when events or changes in circumstances indicate a
possible impairment (see Note 2.9).
2.8.
Other intangible assets
Research and development
Research expenditure is expensed as incurred.
Development expenditure arising from the application of research findings to a plan or design for the production of
new or substantially improved products and processes is recognized as an intangible asset when the Group can
demonstrate:
•
its intention and financial and technical ability to complete the development of the asset;
•
how the intangible asset will generate probable future economic benefits for the Group; and
•
the cost of the asset can be reliably measured.
Capitalized expenditure comprises employee expenses, the cost of materials and services directly attributed to the
projects, and an appropriate share of overheads including, and where necessary, the interim interest accrued. It is
amortized once the relevant products are sold or the relevant industrial processes are used over the estimated term of
the economic benefits expected to flow from the project. The expenditure is tested for impairment if there is indication
of a loss in value and annually for projects in the course of development (see Note 2.9).
Development expenditure which does not satisfy the above conditions is expensed as incurred.
Other intangible assets
Other intangible assets are carried at cost in the balance sheet including, where necessary, the interim interest
accrued during the development period, less accumulated depreciation and impairment losses. They mainly concern
patents, trademarks and software.
The expenditure incurred by the Group for the development of software intended for its own use is capitalized when
the economic benefits expected to flow from the use of the software over one year exceeds its cost.
Subsequent expenditure on intangible assets is capitalized only if it increases the future economic benefits associated
with the specific asset. Other expenditure is expensed as incurred.
Intangible assets with finite useful lives are amortized using the straight-line method over their expected period of use.
Amortization methods and useful lives are reviewed periodically. The estimated useful lives are as follows:
•
Patents and trademarks: 25 years on average;
•
Software: 3 to 5 years;
•
Development expenditure: 5 to 15 years.
2.9.
Impairment of property, plant and equipment, goodwill and other intangible assets
Impairment is tested annually and more frequently if there are indications of a loss in value for goodwill, intangible
assets in the course of development, and only if there is an indication of a loss in value for items of property, plant and
equipment and intangible assets with finite useful lives.
To test impairment, assets are grouped in cash-generating units (CGUs), in accordance with IAS 36 Impairment of
assets. A cash-generating unit is the smallest identifiable group of assets that generates cash inflows that are largely
independent of the cash inflows from other groups of assets. Goodwill is tested for groups of CGUs that benefit from
the synergies resulting from the business combinations that gave rise to the goodwill.
Annual Information Document • Rhodia 2011
117
These tests consist in comparing the carrying amount of the assets with their recoverable amount. The recoverable
amount of an asset is the higher of its fair value less costs to sell and its value in use. Value in use is the present
value of the future cash flows expected to be derived from a CGU or group of CGUs. The discount rate used reflects
the current market assessments of the time value of money and the risks specific to the asset, CGUs or groups of
CGUs tested. In absence of a rate specific to the asset tested, the rate used is calculated using the average cost of
capital.
The discount rates are post-tax rates applied to post-tax cash flows. Their use results in the calculation of recoverable
amounts identical to those obtained by applying pre-tax rates to pre-tax cash flows, as required by IAS 36.
An impairment loss is recognized in the income statement where the carrying amount of a CGU or group of CGUs
exceeds its recoverable amount. The impairment loss is first recognized for the goodwill allocated to the CGU or
groups of CGUs tested and then to the other assets of the CGU or group of CGUs on a pro rata basis to their carrying
amount.
This allocation should not reduce the carrying amount of an individual asset below the higher of its fair value, value in
use or zero.
Impairment losses recognized for goodwill cannot be reversed, contrary to the impairment of property, plant and
equipment and other intangible assets. For the reversal of an impairment loss, the carrying amount of the asset
should not exceed the carrying amount that would have been determined (net of amortization or depreciation) had no
impairment loss been recognized for the asset in prior years. After recognition of an impairment loss or a reversal of
an impairment loss, the subsequent depreciation (amortization) charge is calculated to allocate the asset’s revised
carrying amount, less its residual value (if any), on a systematic basis over its remaining useful life.
2.10. Non-derivative financial assets
Initial recognition
Purchases and sales of financial assets are recognized at the date of transaction on which Rhodia is committed to the
purchase or sale of the assets.
A financial asset is derecognized once the Group’s contractual rights to receive the future cash flows from the asset
have expired or the Group has transferred the financial asset to a third party without retaining control or substantially
all the risks and rewards.
At initial recognition, the financial assets are carried in the balance sheet at fair value plus the transaction costs
directly attributable to the acquisition or issue of the asset (except for the class of financial assets measured at fair
value through profit or loss for which such transaction costs are recognized in profit or loss).
A financial asset is classified as current when the cash flows expected to flow from the instrument mature within one
year.
Subsequent recognition
At initial recognition, Rhodia classifies financial assets into one of the four categories provided in IAS 39 Financial
Instruments: recognition and measurement according to the purpose of the acquisition. This classification determines
the method for measuring financial assets at subsequent balance sheet dates: amortized cost or fair value.
Amortized cost is the amount at which the financial asset is measured at initial recognition minus principal repayments,
plus or minus the cumulative amortization using the effective interest method of any difference between that initial
amount and the maturity amount.
For instruments quoted in an active market, the fair value corresponds to a market price (level 1). For instruments that
are not quoted in an active market, the fair value is determined using valuation techniques including reference to
recent arm’s length market transactions or transactions involving instruments which are substantially the same (level
118
Annual Information Document • Rhodia 2011
2), or discounted cash flow analysis including, to a maximum extent, assumptions consistent with observable market
data (level 3). However, if the fair value of an equity instrument cannot be reasonably estimated, it is measured at cost.
Financial assets at fair value through profit or loss
These are financial assets classified as held for trading that the Group has acquired principally for the purpose of
selling in the near term. They are measured at fair value and subsequent changes in fair value are recognized in profit
or loss.
Financial assets at fair value on option through profit or loss include cash and cash equivalents.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in a
regulated market. They are measured at amortized cost.
This category includes operating receivables, deposits and guarantees and loans. These assets are classified in the
balance sheet as non-current financial assets or other current financial assets if the repayment schedule is less than
one year (at origination) and the asset does not meet the definition of a cash equivalent. Operating receivables are
classified in the balance sheet as trade and other receivables.
Held-to-maturity investments
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed
maturity that Rhodia has the positive intention and ability to hold to maturity. They are measured at amortized cost.
Available-for-sale financial assets
These are non-derivative financial assets that are designated as available-for-sale or not classified under another
category. They are measured at fair value, with subsequent changes in fair value recognized directly in other
comprehensive income.
This category includes, among others, non-consolidated investments.
Impairment of financial assets (excluding financial assets at fair value through profit and loss)
A financial asset or group of financial assets is impaired and impairment losses are incurred if there is objective
evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset and
such events have a negative impact on the estimated future cash flows of the financial asset or group of financial
assets.
The impairment loss of a financial asset measured at amortized cost is equal to the difference between the carrying
amount and the estimated future cash flows, discounted at the initial effective interest rate. The impairment of an
available-for-sale financial asset is calculated with reference to its current fair value.
An impairment test is performed, on an individual basis, for each material financial asset. Other assets are tested as
groups of financial assets with similar credit risk characteristics.
Impairment losses are recognized in profit and loss. With respect to available-for-sale assets, in the event of an
impairment loss, the cumulative negative changes in fair value previously recognized in equity are transferred to profit
and loss.
The impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment
was recognized. For financial assets measured at amortized cost and available-for-sale financial assets which
represent debt instruments, the reversal is recognized in profit or loss. For available-for-sale financial assets which
represent equity instruments, the reversal is recognized directly in equity. Impairment losses relating to assets
recognized at cost cannot be reversed.
Annual Information Document • Rhodia 2011
119
2.11. Inventories
Inventories are measured at the lower of cost and net realizable value. The cost of inventories is determined by using
the weighted average cost or first-in, first-out (FIFO) method. Inventories having a similar nature are measured using
the same cost formula.
Finished goods and work-in-progress are measured at the cost of production which takes into account, in addition to
the cost of raw materials and supplies, the costs incurred in bringing the inventories to their present location and
condition and an allocation of overheads excluding administrative overheads. Net realizable value is the estimated
selling price in the ordinary course of business less the estimated costs of completion and the estimated costs
necessary to make the sale.
2.12. Non-current assets and liabilities held for sale
Non-current assets (or groups of assets and liabilities) held for sale are classified separately in the balance sheet
under Assets held for sale and Liabilities associated with assets held for sale and are measured at the lower of net
carrying amount and fair value less costs to sell.
They are no longer depreciated (amortized) when classified in this category.
2.13. Current and deferred tax
Current tax is the amount of income taxes payable in respect of the taxable profit for a period. It also includes the
adjustments in current tax for previous periods.
Deferred taxes are calculated by tax entity using the balance sheet liability method, for the temporary differences
between the carrying amount of assets and liabilities and their tax base, as well as for the carryforward of unused tax
losses and tax credits to the extent that it is probable that taxable profits will be sufficient to recover future tax
payables.
The following items do not give rise to the recognition of deferred tax:
•
the initial recognition of goodwill;
•
the initial recognition of an asset or liability in a transaction which is not a business combination and affects
neither accounting profit nor taxable profit; and
•
temporary differences associated with investments in subsidiaries and interests in joint ventures insofar as they
will not reverse in the foreseeable future.
The measurement of deferred tax assets and liabilities is based on how the Group expects to recover or settle the
carrying amount of the assets and liabilities, by using, under the liability method, tax rates enacted or substantively
enacted at the balance sheet date.
A deferred tax asset is recognized or maintained in assets only where it is probable that the tax entity will have future
taxable income to which the asset can be allocated.
Deferred tax assets and liabilities are offset for each tax entity when permitted by law.
2.14. Cash and cash equivalents
Cash and cash equivalents comprise cash funds, demand deposits, and short-term, highly liquid investments that are
readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value.
2.15. Non-derivative financial liabilities
Non-derivative financial liabilities are initially recognized at the fair value of the amount required to settle the
associated obligation, net of related costs. Subsequently (insofar as they are not designated as liabilities at fair value
120
Annual Information Document • Rhodia 2011
through profit or loss), these financial liabilities are recognized at amortized cost using the effective interest rate
method (as defined in Note 2.10).
This heading also includes the “debt” component of compound financial instruments.
In 2010 and until December 15, 2011 the compound financial instruments issued by the Group comprised bonds
convertible or exchangeable for new or existing shares (OCEANE). An OCEANE is a compound financial instrument
which grants the bondholder the option to convert and/or exchange a bond for a fixed number of Rhodia shares. On
initial recognition, the total fair value of the compound instrument was allocated between its “debt” and “equity”
components. The fair value of the “debt” component was calculated by discounting future flows at the interest rate
obtained by Rhodia for a similar bond with no conversion or exchange option. The “equity” component corresponded
to the difference between the total fair value of the compound instrument and the fair value of the “debt” component.
The value allocated to the conversion option has remained the same over the term of the bond. The “debt” component
was subsequently measured at amortized cost using the effective interest rate method. Issue costs were allocated
proportionately to the “debt” and “equity” components.
As at December 15, 2011 Solvay demanded the anticipated reimbursement of the OCEANE in accordance with the
Article 4.8.5 of the “Note d’information” (published as at April 23, 2011).
The reimbursement of the debt has been handled as a financial debt reimbursement.
In the balance sheet, non-derivative financial liabilities are classified under “Borrowings” and “Trade and other
payables” (with the distinction made between the current and non-current portions).
2.16. Risk management and derivatives
The Group uses derivatives (interest rate swaps and options, currency futures, commodity options and swaps and
energy purchase and sale contracts) to hedge its exposure to foreign exchange, interest rate and commodity risk
arising from its operating, financing and investing activities. Derivatives are initially recognized at fair value and
subsequently remeasured at fair value on each balance sheet date. Changes in fair value are recognized in the
income statement under financial income or expenses for derivative financial instruments hedging financial items, and
under other operating income or expenses for instruments hedging operating items, except in certain cases when
hedge accounting is applicable:
•
Cash flow hedges: the change in the fair value of the effective portion of the derivative is recognized directly in
equity. It is reclassified to profit or loss under a heading corresponding to the hedged item when the item is
recognized in profit or loss or the Group no longer expects the hedged transaction to be realized. The change in
the value of the ineffective portion of the derivative is recognized directly in financial income or expenses for
hedges of financial items, and in other operating income or other operating expenses for hedges of operating
items. When the expected transaction gives rise to the recognition of a non-financial asset or liability, the
cumulative changes in the fair value of the hedging instrument previously recognized in equity are included in the
initial measurement of the asset or liability;
•
Fair value hedge: the change in the fair value of the derivative is recognized in profit or loss under the same
heading as the change in fair value of the hedged item for the portion attributable to the hedged risk.
2.17. Provisions for post-employment benefits
The Group’s employees are offered various post-employment benefits as a result of legislation applicable in certain
countries and the contractual agreements entered into by the Group with its employees. These benefits are classified
under defined contribution or defined benefit plans.
Annual Information Document • Rhodia 2011
121
(a) Defined contribution plans
Defined contribution plans involve the payment of contributions to a separate entity, thus releasing the employer from
any subsequent obligation, as the entity is responsible for paying the amounts due to the employee. Once the
contributions have been paid, no liability is shown in the Rhodia financial statements.
(b) Defined benefit plans
Defined benefit plans concern all plans other than defined contribution plans. Rhodia is required to provide for the
benefits to be paid to active employees and pay those for former employees. Actuarial and/or investment risks fall, in
substance, upon the Group.
These plans mainly concern:
•
retirement benefits: pension plans, termination benefits, other retirement obligations and supplemental benefits;
•
medical plans.
Taking into account projected final salaries (projected unit credit method) on an individual basis, post-employment
benefits are measured by applying a method using assumptions involving the discount rate, expected long-term return
on plan assets specific to each country, life expectancy, turnover, wages, annuity revaluation, medical cost inflation
and discounting of sums payable. The assumptions specific to each plan take into account the local economic and
demographic contexts.
The amount recorded under post-employment benefits corresponds to the difference between the present value of
future obligations and the fair value of the plan assets intended to hedge them, less, where necessary, any
unamortized past service cost. If this calculation gives rise to a net commitment, an obligation is recorded in liabilities.
If the measurement of the net obligation gives rise to a surplus for the Group, the asset recognized for this surplus is
limited to the net total of any unrecognized past service cost and the present value of any future plan refunds or any
reduction in future contributions to the plan.
Rhodia has adopted the policy of recognizing the actuarial gains and losses on commitments or assets relating to
post-employment benefits and arising from experience adjustments and/or changes in actuarial assumptions directly
in equity in the period in which they occur in consideration for the increase or decrease in the obligation. They are
presented in the statement of comprehensive income.
The interest expenses arising from the reverse discounting of post-employment benefits and the financial income from
the expected return on plan assets are recognized in profit or loss from financial items.
The amendment or introduction of a new post-employment benefit plan may increase the present value of the defined
benefit obligation for services rendered in previous periods, otherwise known as past service cost. This past service
cost is recognized in profit or loss on a straight-line basis over the average period until the corresponding benefits are
vested by employees. The benefits vested upon adoption or amendment of the plan are immediately recognized in
profit or loss.
The actuarial calculations of post-employment benefits are performed by independent actuaries.
2.18. Share-based payment
Rhodia has set up various compensation plans for employees offering free shares, preferential stock subscription and
stock purchase and subscription options.
The fair value of services rendered by employees in consideration for the granting of shares or options represents an
expense. This expense is recognized on a straight-line basis in the income statement over the vesting periods relating
to these shares or options with the recognition of a corresponding adjustment in equity.
122
Annual Information Document • Rhodia 2011
The fair value of services rendered is measured in reference to the fair value of the shares or options on the grant
date. Where appropriate, the cost of the non-transferability of shares by the holder, determined using observable
market data on the grant date and the specific market characteristics of the Rhodia share, is taken into account.
At each balance sheet date, the Group re-estimates the number of shares or options likely to be vested. The impact of
the revised estimates is recognized in profit or loss against a corresponding adjustment in equity.
2.19. Provisions
A provision is recognized when Rhodia has a legal or constructive obligation as a result of a past event, which can be
reliably measured, and whose settlement is expected to result in an outflow of economic resources for Rhodia.
Provisions are discounted in order to take into account market assessments of the time value of money using risk free
inflated rates and specific to the relevant geographical areas. Changes to estimated future cash flows are recognized
in other operating expenses in the income statement. The interest expense (reverse discounting) and the changes in
discount rates are recognized as finance items in the income statement.
Environmental liabilities
Rhodia periodically analyzes all its environmental risks and the corresponding provisions. Rhodia measures these
provisions to the best of its knowledge of applicable regulations, the nature and extent of the pollution, clean-up
techniques and other available information.
Restructuring
Restructuring comprises all measures designed to permanently adapt structures, production and employees to
economic changes. A provision for restructuring is recognized when the Group has approved a detailed formal plan
and has either started to implement the plan, or announced its main features to the public.
2.20. Net sales and other revenue
Net sales and other revenue are measured at the fair value of the consideration received or receivable, net of returns,
rebates and trade benefits granted and sales tax.
Net sales comprise the sales of goods (goods and goods for resale) and value-added services corresponding to
Rhodia’s know-how.
Other revenue primarily includes commodity and utility trading transactions and other revenue deemed as incidental
by the Group (e.g. temporary contracts following the sale of businesses)
Net sales and other revenue are recognized when all the following conditions have been satisfied:
•
the entity has transferred to the buyer the significant risks and rewards of ownership of the goods or, with respect
to the rendering of services, the stage of completion can be measured reliably;
•
the entity retains neither continuing managerial involvement to the degree usually associated with ownership nor
effective control over the goods sold;
•
the amount of revenue can be measured reliably;
•
it is probable that the future economic benefits associated with the transaction will flow to the entity; and
•
the costs incurred or to be incurred in respect of the transaction can be measured reliably.
2.21. Restructuring costs
Restructuring costs include severance pay, compensation for the early termination of operating leases and all exit
costs arising from restructurings, including impairment losses recognized on discontinued assets due to the closure of
Annual Information Document • Rhodia 2011
123
a site or operation. They are recognized net of reductions in employee benefits already accrued, in case of loss of
these benefits by employees.
2.22. Other operating income and other operating expenses
Other operating income (other operating expenses) mainly comprises:
•
the gains and losses on disposal of non-current assets where they do not relate to operations sold or for sale
which are disclosed under Profit or loss from discontinued operations in the income statement;
•
in addition to “Orbeo Climate Care’s trading activities” (see Note 2.5 Treatment of Orbeo Climate Care’s activities),
positive (negative) changes in fair value of derivative instruments not designated for the hedging of operating
items, and positive (negative) changes in fair value corresponding to the ineffective portion of the derivative for
hedges of operating items;
•
other material operating income (operating expenses) resulting from unusual events and likely to distort the
analysis and comparability of the Group’s performance.
2.23. Operating profit or loss
Operating profit or loss corresponds to all income and expenses not arising from financing activities, associates,
discontinued operations and income tax.
2.24. Finance income and costs
Finance costs comprise the interest on borrowings calculated using the effective interest rate method, the systematic
amortization of transaction costs relating to credit lines, borrowing prepayment or credit line cancellation costs, the
cost of the reverse discounting of non-current non-financial liabilities and the impact of change in discount rates on
environmental liabilities and other long term employee benefits.
Finance income comprises the expected return on plan assets, cash income and dividends.
Net foreign exchange gains or losses and the changes in fair value of derivatives are presented respectively in finance
income or costs, with the exception of changes in fair value of derivatives which are recognized on the same line item
as the hedged transaction.
All interest on borrowings is recognized in finance costs as incurred, with the exception of interest arising from the
acquisition, construction and production of an eligible intangible asset or item of property, plant and equipment that is
capitalized in the cost of the asset in accordance with the alternative treatment authorized by IAS 23 Borrowing Costs.
2.25. Income tax expense
Tax expense or tax income for the period includes current tax and deferred tax. Tax is recognized in profit or loss
unless it relates to items that are directly recognized in other comprehensive income or in equity, in which case tax is
recognized respectively in other comprehensive income or equity.
2.26. Discontinued operations
A discontinued operation is a component of Rhodia that either has been disposed of, or is classified as held for sale,
and represents a separate major line of business or geographical area of operations or is a subsidiary acquired
exclusively with a view to resale. An operation is classified as discontinued at the time of its sale or beforehand if the
operation satisfies the criteria for classification as held for sale.
The net profit or loss from operations sold or for sale and, where necessary, disposal gains or losses and impairment
losses subsequent to the measurement of assets at fair value less costs to sell, are disclosed in the income statement
under “Profit or loss from discontinued operations”.
124
Annual Information Document • Rhodia 2011
When a component of the operation is classified in discontinued operations, the comparative income statements are
restated as if the component had been classified in discontinued operations at the beginning of each previous
comparative period.
2.27. Segment information
An operating segment is a component of the Group that engages in business activities from which it may earn
revenues and incur expenses, whose operating results are regularly reviewed by the entity’s chief operating decision
maker and for which discrete financial information is available. The Rhodia group’s chief operating decision maker is
the Executive Committee.
Notes to the consolidated income statement
3. Segment information
The following information concerns continuing operations.
On October 4, 2010, Rhodia announced its reorganization into 11 new operating segments, grouped within 5 clusters,
in order to support the Group’s growth. This new organization was reflected in internal reporting as from January 1,
2011. The five clusters are described below:
Consumer Chemicals primarily serves the consumer products markets. Its strategy is based on the development of
an offering suited to the major trends of these markets, particularly demographic growth, the appearance of new
modes of consumption depending on the regions and, in general, the demand for products offering better protection of
human health and the environment, and the development of products from renewable resources.
Advanced Materials are intended for high-performance industries such as energy-efficient tires, automotive catalysts
or energy-efficient lighting. The growth of this cluster, greater than the organic growth of the markets served, is driven
by the stakes tied to sustainable development.
Polyamide Materials brings together the polyamide chain activities. Their advantages stem from the integrated
polyamide 6.6 production line, their leading position in the most profitable sectors and excellent competitiveness. The
automobile industry is one of their major markets with solutions responding to the stakes of sustainable mobility.
Acetow & Eco Services operate in very specific, mature and stable markets, where partnerships with customers are
built on reliability, quality of service and dependable supply.
Energy Services relies on its expertise in energy optimization and the reduction of CO2 emissions to develop
“Climate Care” solutions that also help respond to the challenges of sustainable development through the generation
of renewable energies.
Following the disposal of the shares of Rhodia Deutschland and its affiliates in December 2011, most of the Acetow
operating segment was discontinued. Therefore, Eco Services and the remaining part of Acetow operating segment
was reallocated to Corporate & Other. At the end of December 2011, Rhodia is now presented into four clusters.
3.1.
Information by operating segment
Inter-cluster transactions are performed under normal market conditions.
Annual Information Document • Rhodia 2011
125
Consumer
Chemicals
(in millions of euros)
Advanced Polyamide
Materials Materials
Corporate
Energy
(2)
Services and Other
Group
For the year ended December 31, 2011
Net sales
2, 451
891
1,802
219
529
5,892
Other revenue
24
4
76
382
40
526
Inter-company sales - Net sales
(4)
(9)
(11)
-
(6)
(30)
Inter-company sales - Other revenue
(2)
-
(8)
(142)
(7)
(159)
2,447
882
1,791
219
522
5,862
External other revenue
22
4
68
241
32
367
Operating profit/(loss)
320
234
109
166
(123)
706
External net sales
Profit/(loss) from financial items
(248)
Income tax expense
(146)
Profit/(loss) from continuing operations
(1)
Recurring EBITDA
313
364
267
195
175
(35)
966
(1) Recurring EBITDA: Operating profit or loss before net depreciation and impairment, restructuring costs and other operating income and expenses.
(2) “Corporate and Other” mainly corresponds to the Eco Services, Salicylics and Acetate businesses and the Trading activity, involving the purchase
and resale by the Group's international sales network of products from the Group’s other segments or third-party partners in the chemicals industry.
“Other revenue” is generated from incidental businesses not directly related to the other companies and mainly comprises internal and third-party
industrial service sales. In addition to the net profit from these activities, operating profit comprises the expenses of the Group’s Corporate functions and
departments, other operating income and expenses relating to the environment and disposal gains and losses (see Note 6).
(in millions of euros)
Consumer
Chemicals
Advanced Polyamide
Materials Materials
Corporate
Energy
(2)
Services and Other
Group
For the year ended December 31, 2010
Net sales
1,883
539
1,701
203
485
4,811
Other revenue
24
4
102
389
40
559
Inter-company sales - Net sales
(4)
(4)
(9)
-
(1)
(18)
Inter-company sales - Other revenue
(5)
-
(12)
(157)
(7)
(181)
1,879
535
1,692
203
484
4,793
External other revenue
19
4
90
232
33
378
Operating profit/(loss)
222
82
174
171
(97)
External net sales
552
Profit/(loss) from financial items
(200)
Income tax expense
(112)
Profit/(loss) from continuing operations
Recurring EBITDA
(1)
240
276
114
253
179
2
824
(1) Recurring EBITDA: Operating profit or loss before net depreciation and impairment, restructuring costs and other operating income and expenses.
(2) “Corporate and Other” mainly corresponds to the Eco Services, Salicylics and Acetate businesses and the Trading activity, involving the purchase
and resale by the Group's international sales network of products from the Group’s other segments or third-party partners in the chemicals industry.
“Other revenue” is generated from incidental businesses not directly related to the other companies and mainly comprises internal and third-party
industrial service sales. In addition to the net profit from these activities, operating profit comprises the expenses of the Group’s Corporate functions and
departments, other operating income and expenses relating to the environment and disposal gains and losses (see Note 6).
126
Annual Information Document • Rhodia 2011
The analysis by cluster of capital employed is as follows:
Consumer
Chemicals
Advanced
Materials
Polyamide
Materials
Energy
Services
Corporate
(1)
and Other
Group
Property, plant, equipment, other
intangible assets and goodwill
Inventories
1,038
247
275
167
498
220
144
13
378
38
2,333
685
Trade receivables and advances
249
75
227
57
48
656
(251)
(62)
(196)
(60)
(145)
(714)
(1)
1
(14)
15
19
20
1,282
456
735
169
338
2,980
(in millions of euros)
For the year ended 31 December, 2011
Trade payables and advances
Other
Capital employed
(1) “Corporate and Other” mainly corresponds to the Eco Services, Salicylics and Acetate businesses and the Trading activity, involving the purchase
and resale by the Group's international sales network of products from the Group’s other segments or third-party partners in the chemicals industry.
(in millions of euros)
Consumer
Chemicals
Advanced
Materials
Polyamide
Materials
Energy
Services
Corporate
(1)
and Other
Group
1,004
265
496
70
473
2,308
230
91
211
16
79
627
For the year ended 31 December, 2010
Property, plant, equipment, other
intangible assets and goodwill
Inventories
Trade receivables and advances
Trade payables and advances
Other
Capital employed
239
80
224
50
100
693
(256)
(56)
(217)
(63)
(140)
(732)
(1)
-
(15)
15
19
18
1,216
380
699
88
531
2,914
(1) “Corporate and Other” mainly corresponds to the Eco Services, Salicylics and Acetate businesses and the Trading activity, involving the purchase
and resale by the Group's international sales network of products from the Group’s other segments or third-party partners in the chemicals industry.
Capital expenditure (acquisitions of intangible assets and property, plant and equipment) by cluster breaks down as
follows:
2011
2010
102
74
Advanced Materials
51
44
Polyamide Materials
82
56
Energy Services
55
27
Corporate and Other
89
69
379
270
(in millions of euros)
Europe
Of which France
North America
Of which United States
Latin America
Of which Brazil
Asia and other countries
Of which China
2011
2,167
781
1,371
1,291
1,008
816
1,683
558
2010
1,947
783
1,024
970
924
769
1,276
358
Total
6,229
5,171
(in millions of euros)
Consumer Chemicals
Total
3.2.
Information by geographical area
Total net sales and other revenue by geographical area break down as follows:
Annual Information Document • Rhodia 2011
127
Net sales by geographical area are determined according to the customer's geographical location.
Non-current assets
(1)
based on their geographical location break down as follows:
(in millions of euros)
Europe
Of which France
North America
Of which United States
Latin America
Of which Brazil
Asia and other countries
Of which China
2011
928
761
465
465
348
344
754
400
2010
864
619
431
431
301
298
724
367
Total
2,495
2,320
2011
2010
Wages
(570)
(528)
Social security contributions
(141)
(128)
Expenses for defined contribution plans
(53)
(66)
Other employee expenses
(44)
(48)
Retirement benefits and similar obligations
(62)
(82)
(1) Excluding deferred tax assets, non current financial instruments and retirement benefit surplus.
4. Employee expenses
(in millions of euros)
Share-based payments
Total
(14)
(16)
(884)
(868)
Other employee expenses mainly include training costs and lay-off compensation.
The heading “Share-based payments” includes the expenses relating to the free shares and stock purchase and
subscription option plans, and for 2010, to the capital increase reserved for employees (Avenir 2010 plan) (see Note
32).
5. Depreciation and impairment of property, plant and equipment and intangible
assets
The depreciation and impairment included in operating expenses concern the following assets:
(in millions of euros)
2011
2010
Property, plant and equipment - depreciation
(218)
(222)
Development expenditure - depreciation
(11)
(8)
Other intangible assets - depreciation
(35)
(26)
(7)
-
(271)
(256)
(18)
(21)
(289)
(277)
Property, plant and equipment - impairment
Total excluding items recognized in profit or loss from discontinued operations
Depreciation of items recognized in profit or loss from discontinued operations
Total depreciation and impairment
128
Annual Information Document • Rhodia 2011
The depreciation and impairment included in operating expenses and presented by function in the income statement
break down as follows:
(in millions of euros)
2011
2010
Cost of sales
(226)
(208)
Administrative and selling expenses
(29)
(31)
Research and development expenditure
(16)
(14)
-
(1)
Restructuring costs
Other operating income and expense
Total continuing operations
Discontinued operations
Total depreciation and impairment
5.1.
-
(2)
(271)
(256)
(18)
(21)
(289)
(277)
Impairment test assumptions
In accordance with the methodology adopted by the Group for the implementation of impairment tests (see Note 2.9)
and in the absence of fair value observable in an organized market, the recoverable amount of cash-generating units
(CGUs) or groups of CGUs corresponds to their value in use, which is defined as equal to the sum of net cash flows
from the latest forecasts for each CGU or group of CGUs and determined using the following methods:
5-year business plan prepared by management based on growth and profitability assumptions, taking into
•
account past performances, forecast changes in the economic environment and expected market development;
consideration of a terminal value determined by capitalizing a standard cash flow obtained by extrapolating the
•
most recent cash flow of the explicit business plan period, affected by a long-term growth rate deemed
appropriate for the activity and the location of the assets;
discounting of expected cash flows at a rate determined using the weighted average capital cost formula.
•
The main assumptions used in 2011 for annual impairment tests on goodwill and tests on other intangible assets and
property, plant and equipment on account of indications of impairment are as follows:
Discount rate
The weighted average cost of capital used to discount future cash flows was set at 8.7% in 2011 (7% in 2010).
Long-term growth rates
The long-term growth rates used for the main CGUs or group of CGUs in 2011 is 2%.
5.2.
Depreciation and impairment by operating segment
(in millions of euros)
Consumer
Chemicals
Advanced
Materials
Polyamide
Materials
Energy
Services
Corporate
and Other (1)
Group
For the year ended December 31, 2011
Impairment
-
-
(1)
(6)
Depreciation
(80)
(32)
(86)
(10)
(56)
(264)
Total depreciation and impairment
(80)
(32)
(87)
(16)
(56)
(271)
Consumer
Chemicals
Advanced
Materials
Polyamide
Materials
Energy
Services
Corporate
and Other (1)
Group
-
-
-
-
-
-
Depreciation
(61)
(30)
(86)
(10)
(69)
(256)
Total depreciation and impairment
(61)
(30)
(86)
(10)
(69)
(256)
(in millions of euros)
(7)
For the year ended December 31, 2010
Impairment
Annual Information Document • Rhodia 2011
129
The impairment tests conducted in 2011 led to the recognition of an impairment loss in the amount of €(7) million
(none in 2010) for property, plant and equipment mainly relating to Energy assets on projects which were abandoned.
The impairment tests performed at December 31, 2011 did not lead to any impairment of goodwill, as the recoverable
amounts of the groups of CGUs were significantly higher than their carrying amounts.
The sensitivity analyses carried out on the main assumptions (discount rate, long-term growth rate) did not change the
result of the impairment tests.
6. Other operating income and expenses
2011
2010
Gains on disposals of non-current assets
75
10
Other operating income
22
30
Total other operating income
97
40
Losses on disposals of non-current assets
(7)
(1)
Environmental expenses
(37)
(34)
Other operating expenses
(45)
(29)
Total other operating expenses
(89)
(64)
(in millions of euros)
In 2011, the disposal gains mainly comprise the following:
•
The proceed on disposal of 51% of Rhodia Italia;
•
The proceeds on disposal of Rhodia’s minority interest in Novacap;
•
The proceeds linked to the change of control in Orbeo Climate Care further the acquisition of the remaining 50%
shares (see Note 2.3).
In 2010, gains on disposals of non-current assets essentially concern the return of land in Wuxi (China), the disposal
of the Mississauga site (Canada) and the disposal of the Ceriano site (Italy).
In 2011 and 2010, other operating income mainly related to the payments linked to the compensation received
following Rhodia’s eviction from the Wuxi site. This compensation was granted by the Wuxi municipality in 2008 and
paid to Rhodia according to a pre-defined timetable until the eviction date. It was recorded in profit or loss as and
when the payments were received. The final payment was received in 2011.
Other operating income also comprise the changes in fair value of derivatives not qualified as hedges for operating
items, as was the case in 2010.
In 2011, other operating expenses mainly comprise the expenses related to Solvay’s tender offer. They also comprise
the expenses related to the Orbeo Climate Care activities, as noted for 2010. In 2010, they comprised acquisition
costs for Feixiang Chemicals.
Environmental expenses are analyzed in Note 26.4.
130
Annual Information Document • Rhodia 2011
7. Profit/(loss) from financial items
For the year ended December 31,
(in millions of euros)
2011
2010
Gross interest expense on borrowings
(119)
(114)
22
19
Income from cash equivalents
Gains/(losses) from interest rate derivatives
-
-
Income/(expenses) on financial transactions
(75)
(49)
(166)
(145)
81
79
Foreign exchange gains/(losses)
5
9
Proceeds from disposal of available-for-sale financial assets
0
2
Other
4
-
(248)
(199)
(367)
(311)
114
103
5
9
Discounting effects
Expected return on pension plan assets
Profit/(loss) from financial items
Of which:
Finance costs
Finance income
Foreign exchange gains/(losses)
The discounting effects mainly comprise the finance cost relating to retirement benefits and similar obligations (see
Note 25).
7.1.
Gross interest expense on borrowings
This heading corresponds to the gross interest expense on borrowings measured at amortized cost, including the
interest on interest rate derivatives eligible for cash flow hedge accounting (see Note 22).
7.2.
Income/(expenses) on financial transactions
These costs mainly correspond to the financial expenses on current transactions and the borrowing expenses not
calculated using the amortized cost method.
In 2011, income and expenses on financial transactions include € (60) million relating to refinancing operations,
including € (10) million related to discontinued interest rate hedge swaps following the early redemption of “Floating
Rate Notes” and € (48) million related to Oceane’s repayment (see Note 22).
8. Income tax
The recorded tax expense breaks down as follows:
(in millions of euros)
2011
2010
Current income tax expense
(124)
(92)
(22)
(20)
(146)
(112)
Deferred tax income / (expense)
Tax expense for the year
Annual Information Document • Rhodia 2011
131
The reconciliation between the theoretical tax expense at the statutory tax rate in France and the actual tax expense
after reclassification of discontinued operations is as follows:
2011
(in millions of euros)
Profit/(loss) before income tax
2010
459
353
36.10%
34.43%
(166)
(122)
Tax rate difference between France and other countries
14
13
Utilization of previously unrecognized deferred tax assets
29
35
Withholding tax
(10)
(13)
Other taxes
(21)
(16)
Unrecognized deferred tax assets
(34)
(9)
42
-
(146)
(112)
31.8%
32.0%
Statutory tax rate in France
Theoretical tax expense at the statutory rate in France
Permanent differences
Tax expense
Effective tax rate
The tax expense essentially corresponds to the income tax reported by US, Asian, Brazilian and French entities.
Other taxes mainly comprise tax risks (see Note 26.5).
In 2011, withholding tax mainly comprises withholding tax on dividends. This item also comprises in 2010 withholding
tax on royalties’ patents.
Management has not modified its estimate of the probability of recovering the deferred tax assets relating to the
French and British tax groups. Hence, their deferred tax assets were recognized up to the amount of deferred tax
liabilities so that the deferred tax position of the French and British tax groups show a nil value.
9. Assets held for sale and discontinued operations
9.1.
Profit/(loss) from discontinued operations
For the year ended December 31,
(in millions of euros)
Net sales
Other revenue
Net operating income /(expenses)
2011
2010
462
433
2
4
(393)
(381)
Net finance costs
(8)
(12)
Profit/(loss) from discontinued operations before tax and gains/(losses) on
disposals
63
44
Gains/(losses) on disposals
804
1
Tax effect
(20)
(24)
Profit/(loss) from discontinued operations
847
21
The gain from discontinued operations for the year ended December 31, 2011 and 2010 is mainly attributable to the
disposal of 100% of the shares of Rhodia Deutschland and its affiliates occurred in December 2011 (most of the
Acetow business).
132
Annual Information Document • Rhodia 2011
9.2.
Assets held for sale and associated liabilities
2011
2010
Property, plant and equipment
4
17
Goodwill
-
1
Other intangible assets
-
2
Inventories
-
13
Trade and other receivables
2
3
Assets held for sale
6
36
(in millions of euros)
Other non-current liabilities
-
2
Trade and other payables
-
4
Liabilities held for sale
-
6
In 2010, assets held for sale and associated liabilities mainly concern the disposal of the Salicylics activity. The
disposal was finalized end of October 2011.
Notes to the consolidated balance sheet
The movements presented in the notes to the consolidated balance sheet include those which impacted assets and
liabilities held for sale until their classification under separate headings in the balance sheet. The net flows
subsequent to this classification are presented in “Other movements”.
10. Property, plant and equipment
(in millions of euros)
Machinery
and
PPE under
equipment construction
Land
Buildings
Total
104
223
1,082
151
1,560
2
42
217
102
363
Year ended December 31, 2011
At January 1, 2011
Additions and assets under construction
(1)
Disposals and retirements
Depreciation
Impairment
-
(1)
1
(2)
(2)
(1)
(27)
(207)
-
(235)
-
-
(7)
-
(7)
(2)
(14)
(84)
(10)
(110)
1
12
4
(18)
(1)
At December 31, 2011
104
235
1,006
223
1,568
Gross value
142
747
3,959
223
5,071
Accumulated depreciation and impairment
(38)
(512)
(2,953)
-
(3503)
Net carrying amount at December 31, 2011
104
235
1,006
223
1,568
(2)
Changes in consolidation scope
Currency translation differences
(3)
movements
and
other
(1) Assets under construction represent €248 million in 2011.
(2) The changes in consolidation scope mainly correspond to the disposal of the Rhodia Deutschland and its affiliates (most of the Acetow business)
and the change of the consolidation method of Rhodia Italy to equity method.
(3) The foreign exchange gain generated in 2011 totaled €2 million.
Annual Information Document • Rhodia 2011
133
Land
Buildings
Machinery
and
equipment
102
214
1,017
125
1,458
2
20
201
15
238
Disposals and retirements
(4)
-
(2)
-
(6)
Depreciation
(1)
(29)
(210)
-
(240)
-
-
(1)
-
(1)
(3)
9
20
5
31
8
9
57
6
80
At December 31, 2010
104
223
1,082
151
1,560
Gross value
145
786
4,329
151
5,411
Accumulated depreciation and impairment
(41)
(563)
(3,247)
-
(3,851)
Net carrying amount at December 31, 2010
104
223
1,082
151
1,560
(in millions of euros)
PPE under
construction
Total
Year ended December 31, 2010
At January 1, 2010
Additions and assets under construction
(1)
Impairment
(2)
Changes in consolidation scope
Currency translation differences and other
(3)
movements
(1) Assets under construction represent €214 million in 2010.
(2) The changes in consolidation scope mainly correspond to the acquisition of Feixiang Chemicals as well as property, plant and equipment relating to
Salicylics activities reclassified as held for sale.
(3) The foreign exchange gain generated in 2010 totaled €82 million.
The impairment losses recognized in 2010 and 2011 are detailed in Note 5 for assets in continuing use and in Note 9
for assets classified as held for sale.
Finance-leased assets break down as follows:
Land and buildings
Machinery and
equipment
Total
Gross value
6
21
27
Depreciation
(4)
(18)
(22)
2
3
5
Gross value
7
26
33
Depreciation
(5)
(21)
(26)
2
5
7
(in millions of euros)
At December 31, 2011
Total finance-leased assets
At December 31, 2010
Total finance-leased assets
11. Goodwill
11.1. Segment allocation
(in millions of euros)
2011
2010
Consumer materials
354
342
Advanced materials
30
30
Polyamide materials
10
9
38
39
432
420
Corporate & Other
(1)
Total
(1) The goodwill relating to “Corporate and Others” mainly corresponds to the Eco Services business.
134
Annual Information Document • Rhodia 2011
The reorganization of Rhodia at January 1, 2011 did not result in any reallocation of goodwill.
11.2. Movements during the year
(in millions of euros)
Gross
Impairment
Net
At January 1, 2010
235
(20)
215
Acquisitions
199
-
199
(1)
-
(1)
Other movements
Currency translation differences
At December 31, 2010
Acquisitions
7
-
7
440
(20)
420
2
2
Disposal
(8)
5
(3)
Currency translation differences
13
-
13
447
(15)
432
At December 31, 2011
On April 14, 2011, Rhodia completed the acquisition of the engineering plastics business of Indian company PI
Industries Ltd (PIIL), after receiving approval from the country’s authorities. Rhodia Polymers & Specialties India
Private Ltd is the name of the legal entity created to host Rhodia’s newly integrated assets, including one industrial
facility based in Panoli (Gujarat state), R&D capabilities, as well as a logistics network in India. The goodwill
generated by this acquisition amounted to €1 million.
In 2011, the goodwill regarding the acquisition of Feixiang Chemicals in November 2010 was adjusted, amounting to
€199 million at December, 31, 2011, after a positive conversion effect in the amount of €6 million.
On December 30, 2011, the Group acquired 50% of the remaining shares and of the voting rights of Orbeo Climate
care previously owned by Société Générale.
Orbeo Climate Care is involved in selling Certified Emission Reductions (CER), developing CO2 instrument trading,
arbitrage and hedging activities.
The acquisition of the remaining 50% of Orbeo Climate Care is part of the development of Energy Services .The
goodwill generated by this acquisition amounted to €1 million.
Impairment
No impairment was recognized in 2011 and 2010 considering the results of the tests performed using the
methodology described in Note 2.9.
Annual Information Document • Rhodia 2011
135
12. Other intangible assets
(in millions of euros)
Trademarks
and
patents
Software
Development
costs
Other (4)
Total
59
32
80
157
328
5
13
20
(2)
36
-
-
-
-
-
(10)
(17)
(12)
(9)
(48)
Year ended December 31, 2011
At January 1, 2011
Additions and assets under construction
(1)
Disposals and retirements
Depreciation
Changes in consolidation scope
(2)
Currency translation differences and other movements (3)
At December 31, 2011
-
-
(7)
6
(1)
4
-
-
13
17
58
28
81
165
332
Gross value
106
211
111
193
621
Depreciation and impairment
(48)
(183)
(30)
(28)
(289)
58
28
81
165
332
Net carrying amount at December 31, 2011
(1) Assets under construction represent €36 million in 2011.
(2 The changes in consolidation scope mainly correspond to the disposal of the shares of Rhodia Deutschland and its affiliates (most of the Acetow
business), the acquisition of the remaining 50% of Orbeo Climate Care company and the change of the consolidation method of Rhodia Italia to equity
method.
(3) Other movements mainly include greenhouse gas emissions for €2 million and foreign exchange gain for €9 million.
(4) At the end of 2011, other intangible assets primarily comprise the customer relationships arising from the Mc Intyre Group Ltd and Feixiang
Chemicals acquisitions as well as greenhouse gas emission allowances to be surrendered in the amount of €19 million
(in millions of euros)
Trademarks
and
patents
Software
Development
costs
Other (4)
Total
27
40
72
54
193
-
9
19
8
36
-
-
-
(3)
(3)
(4)
(18)
(11)
(3)
(36)
37
-
(1)
91
127
Year ended December 31, 2010
At January 1, 2010
Additions and assets under construction
(1)
Disposals and retirements
Depreciation
Changes in consolidation scope
(2)
Currency translation differences and other movements
(3)
(1)
1
1
10
11
59
32
80
157
328
Gross value
101
215
107
183
606
Depreciation and impairment
(42)
(183)
(27)
(26)
(278)
59
32
80
157
328
At December 31, 2010
Net carrying amount at December 31, 2010
(1) Assets under construction represent €22 million in 2010.
(2) The changes in consolidation scope mainly correspond to the acquisition of Feixiang Chemicals.
(3) Other movements include greenhouse gas emissions for €5 million.
(4) At the end of 2010, other intangible assets primarily comprise the customer relationships arising from the Mc Intyre Group Ltd and Feixiang
Chemicals acquisitions as well as greenhouse gas emission allowances to be surrendered in the amount of €18 million.
136
Annual Information Document • Rhodia 2011
13. Investments in associates
Investments in associates break down as follows:
Share of profit/(loss)
of associates
Investments in associates
2011
2010
2011
2010
GIE Osiris
8
8
1
(1)
ENERGO-STIL SP Z O O
1
1
-
1
GIE Chimie Salindres
2
2
-
-
Qingdao Dongyue Rhodia Chemical Co Ltd
1
1
-
-
Rhodia Italia Spa
12
-
-
-
Total
24
12
1
-
(in millions of euros)
Further the disposal of 51% of the shares of Rhodia Italia to Solvay Group, the remaining 49% has become an
investment in associates at December 31, 2011.
The aggregate financial data relating to the main associates is shown below:
2011
2010
136
104
Total liabilities
85
72
Net sales
16
47
Net profit
1
-
(in millions of euros)
Total assets
14. Investments in joint ventures
The share of assets, liabilities and profit (or loss) of the main joint ventures are shown below:
2011
2010
Non-current assets
152
171
Current assets
185
250
Total assets
337
421
67
79
214
258
56
84
Total liabilities and equity
337
421
Net sales
664
473
Other revenue
24
49
Operating profit
58
16
Profit for the period
36
7
(in millions of euros)
Non-current liabilities
Current liabilities
Equity
Annual Information Document • Rhodia 2011
137
15. Non-current financial assets
2011
2010
Gross value
286
141
Impairment
(35)
(31)
251
110
27
24
1
1
279
135
(in millions of euros)
Loans and receivables
Net value
Available-for-sale financial assets
Retirement benefit surplus
Total
Non-current assets classified as loans and receivables break down as follows:
At December 31, 2011: loans in the amount of €129 million (of which a loan to Rhodia Deutschland for € 92
•
million), deposits and guarantees in the amount of €12 million and receivables in the amount of €111 million;
At December 31, 2010: loans in the amount of €22 million, deposits and guarantees in the amount of €16 million
•
and receivables in the amount of €72 million;
Available-for-sale financial assets comprise investments in non-consolidated companies, which break down as
follows:
2011
2010
% holding
Value
% holding
Value
Exeltium
4.27%
7
4.27%
7
One Carbon International B.V
100%
3
(in millions of euros)
Eight 19 Limited
30%
2
30%
3
Other (less than €2 million)
-
15
-
14
Total
-
27
-
24
(in millions of euros)
2011
2010
Deferred tax assets
124
168
16. Deferred tax assets and liabilities
The deferred taxes recognized as non-current assets or liabilities break down as follows:
Less than one year
32
22
More than one year
92
146
Deferred tax liabilities
(40)
(62)
Less than one year
(14)
(19)
More than one year
(26)
(43)
138
Annual Information Document • Rhodia 2011
The deferred taxes shown on the face of the balance sheet arise from:
Assets
Liabilities
Net
2011
2010
2011
2010
2011
2010
6
15
(127)
(128)
(121)
(113)
- retirement obligations
49
54
-
-
49
54
- provisions
50
104
(9)
(9)
41
95
- derivatives
-
1
(3)
(3)
(3)
(2)
- other items
94
34
(36)
(42)
58
(8)
Tax loss carryforwards and tax credits
60
80
-
-
60
80
259
288
(175)
(182)
84
106
(135)
(120)
135
120
-
-
124
168
(40)
(62)
84
106
(in millions of euros)
Differences between carrying and tax amounts of:
- assets
Deferred taxes
Netting effect
Net deferred taxes
At December 31, 2011, unrecognized deferred tax assets amount to €1,325 million and break down as follows:
•
€849 million in tax loss carry forwards (€884 million at December 31, 2010), of which €812 million in losses that
may be carried forward indefinitely in respect of French and British tax consolidation groups;
•
€ 476 million generated by the differences in carrying and tax amounts of assets and liabilities.
Since virtually all the French companies belonging to the tax group are currently undergoing tax audits, a portion of
the tax group’s loss carry forwards may therefore be challenged by French tax authorities.
At each period-end, Rhodia determines whether each tax entity is likely to generate taxable profits against which its
deferred tax assets may be offset or to benefit from unrecognized available tax credits. To assess this probability,
Rhodia considers in particular current and past results of the tax entities as well as projected taxable profits. In the
event of recent losses not relating to non-recurring items, Rhodia considers whether the entities are presumed not to
have future taxable profits available to reverse such tax assets or credits. This analysis led the Group not to recognize
net deferred tax assets for the French and British tax groups.
Movements in net deferred taxes recognized in the balance sheet break down as follows:
Maturity
(in millions of euros)
Less than one year
More than one year
At January 1, 2010
11
131
-
5
Recognition in other comprehensive income
Recognition in profit or loss
(10)
(16)
Change in scope
-
(30)
Currency translation differences and other movements
2
(13)
At December 31, 2010
3
103
Recognition in other comprehensive income
(1)
16
Recognition in profit or loss
24
(46)
Change in scope
(1)
(9)
Currency translation differences and other movements
(7)
2
At December 31, 2011
18
66
The breakdown of deferred taxes recognized in profit or loss is presented in Note 8 Income tax and Note 9.1
Profit/(loss) from discontinued operations.
Annual Information Document • Rhodia 2011
139
The movements in deferred taxes recognized directly in Other comprehensive income primarily concern actuarial
gains and losses and cash flow hedges recognized in Other comprehensive income (Refer to the “Consolidated
statement of comprehensive income”).
17. Inventories
At December 31, 2011
At December 31, 2010
347
280
22
42
Finished goods
357
333
Gross carrying amount
726
655
Impairment
(41)
(28)
Net carrying amount
685
627
(in millions of euros)
Raw materials
Work-in-progress
18. Trade and other receivables
At December 31, 2011
(in millions of euros)
Trade receivables
At December 31, 2010
639
667
86
85
Gross trade receivables
725
752
Impairment
(34)
(52)
Net trade receivables
691
700
2
3
106
156
Other trade receivables
Employees and social security
State and local authorities
Other receivables
(1)
171
68
Impairment
(14)
(17)
Net other receivables
265
210
Total Trade and other receivables
956
910
(1) At the end of December 2011, the heading “Other receivables” included a price adjustment receivable for Solvay GMBH for €95 million.
19. Other current financial assets
(in millions of euros)
Financial assets at fair value through profit or loss
Loans and receivables
(1)
Available-for-sale financial assets
Total
2011
2010
9
26
204
1
4
7
217
34
(1) At the end of December 2011,loans and other receivables included the short term part of a loan with Rhodia Deutschland for €200 million.
Other current financial assets primarily include short-term investments with an initial maturity of more than 3 months.
140
Annual Information Document • Rhodia 2011
20. Cash and cash equivalents
20.1. Analysis by type
At December 31, 2011
At December 31, 2010
Cash in banks
246
178
Cash equivalents
458
604
Total
704
782
(in millions of euros)
Cash and cash equivalents mainly include monetary notes, SICAV mutual funds and certificates of deposit with an
initial maturity of less than 3 months.
20.2. Consolidated statements of cash flows
In 2011, discontinued operations contributed to net cash from operating activities and net cash from investing
activities in the amount of €45 million and €478 million, respectively. They contributed to net cash used by financing
activities for €(30) million.
In 2011, the cash received from the disposal of non current asset arises mainly from the disposal of the shares of
Rhodia Deutschland and its affiliates to Solvay Group.
In 2010, discontinued operations contributed to net cash from operating activities and net cash from investing
activities in the amount of €40 million and €(15) million, respectively. They contributed to net cash used by financing
activities for €(24) million.
Excluding the disbursement of costs relating to financing activities, paid interest costs, net of interest received
(including impact of interest rate hedging), totaled €78 million in 2011, compared to €52 million in 2010.
Income taxes paid totaled around €139 million in 2011, compared to €69 million in 2010.
The cash and cash equivalents of acquired entities amounted to €34 million in 2011 and €19 million in 2010.
21. Equity
21.1. Share capital and additional paid-in capital
At December 31, 2011, Rhodia’s share capital totaled €106,411,910, comprising 106,411,910 shares, each with a par
value of €1.
At December 31, 2011, the exercise of share subscription options resulted in the issue of 354,719 shares, and the
option of share dividend payments gave rise to the issue of 1,486,223 new shares.
21.2. Dividends
As decided by shareholders at the General Meeting on May 18, 2011, Rhodia S.A. paid out dividends totaling
€52 million (€0.50 per share), with respect to the 2010 financial year.
21.3. Translation reserve
The €12 million movement in the translation reserve for 2011 is primarily attributable to the depreciation of the euro
against the US dollar partly compensated by the appreciation of the euro against the Brazilian real.
21.4. Treasury shares
During 2011, Rhodia exercised treasury share purchase options for 1,010,000 shares.
Annual Information Document • Rhodia 2011
141
Following the grant of free shares and stock options to the beneficiaries, the number of treasury shares amounts to
879,894 shares at December 31, 2011.
21.5. Other movements
During the first half of 2011, the Rhodia Board of Directors approved new free share allotment plans subject to
conditions governing Rhodia’s performance and the continued employment of the beneficiaries (see Note 32).
These plans were approved on February 22, 2011 and May 4, 2011, for respectively 224 beneficiaries (2 x 388,650
shares) and 11 beneficiaries (2 x 20,400 shares).
22. Borrowings
22.1. Breakdown of borrowings by type
At December 31, 2011
Amount at
amortized
cost
Redemption
value
Amount at
(1)
fair value
Maturity
Effective rates
(2)
before hedging
Bilateral credit facilities
223
223
223
2012
4% - 15%
Securitization of receivables
202
202
202
2012
2.36%
Other debts
6
6
6
2012
0% - 9.5%
Finance lease debts
2
2
2
2012
4%
15
15
15
-
-
Sub-total short term
448
448
448
2010 EUR senior notes
492
500
539
05/15/2018
7%
2010 USD senior notes
304
309
336
09/15/2020
6.875%
Bilateral credit facilities
8
8
8
2012-2014
4% - 11%
Finance lease debts
3
3
3
2012-2019
3.56% to 11.25%
58
58
58
2012-2018
<5%
(in millions of euros)
Accrued interest payable
Other debts
Sub-total long term
Total
865
878
944
1,313
1,326
1,392
(1) Senior notes are measured on the last day of the year. The redemption price was adopted for other borrowings.
(2) Libor/Euribor are mainly 1, 3 or 6 months.
142
Annual Information Document • Rhodia 2011
(in millions of euros)
At December 31, 2010
Amount at
amortized
Redemption
Amount at
(2)
(3)
(1)
value
fair value
cost
Bilateral credit facilities
Effective rates
before hedging
Maturity
(4) – (5)
227
227
227
2011
4% - 11%
66
66
66
2011
2.96%
4
4
4
2011
<5%
Other EUR notes
15
15
15
12/31/2011
Euribor 6M + 1.60%
Accrued interest payable
26
26
26
-
-
Sub-total short term
338
338
338
2006 EUR senior notes
227
229
229
10/15/2013
Euribor 3M + 2.75%
2010 EUR senior notes
491
500
505
05/15/2018
7%
2010 USD senior notes
294
300
315
09/15/2020
6.875%
OCEANE
569
595
608
01/01/2014
6.29%
31
31
31
2012-2014
4% - 11%
Securitization of receivables
Other debts
Bilateral credit facilities
Finance lease debts
5
5
5
2012-2019
3.56% à 11.25%
55
55
55
2012-2018
<5%
Sub-total long term
1,672
1,715
1,748
Total
2,010
2,053
2,086
Other debts
(1) The amortized cost of the OCEANE is determined after separate recognition in equity of the share conversion option for
€124 million.
(2) The amount shown for the OCEANE corresponds to the principal excluding the 13.22% redemption premium.
(3) Senior notes and the OCEANE are measured on the last day of the year. The redemption price was adopted for other borrowings.
(4) Effective interest rate before impact of hedges.
(5) Libor/Euribor are mainly 1, 3 or 6 months.
Annual Information Document • Rhodia 2011
143
22.2. Analysis of borrowings by maturity
At December 31, 2011
2013
(in millions of euros)
2014
2015
2016
2010 USD senior notes
Bilateral credit facilities
Finance lease debts
Total
After 2016
2010 EUR senior notes
492
492
304
304
4
4
8
2
-
-
-
1
3
Other debts
54
1
-
-
3
57
Sub-total long term
56
1
-
4
804
865
At December 31, 2010
2012
2013
2014
2015
After 2015
Total
2006 EUR senior notes
-
227
-
-
-
227
2010 EUR senior notes
-
-
-
-
491
491
2010 USD senior notes
-
-
-
-
294
294
OCEANE
-
-
569
-
-
569
23
3
5
-
-
31
(in millions of euros)
Bilateral credit facilities
Finance lease debts
1
2
2
-
-
5
Other debts
50
1
1
-
3
55
Sub-total long term
74
233
577
-
788
1,672
22.3. Analysis of borrowings by currency
2011
2010
Euro
780
1,377
US Dollar
(in millions of euros)
468
455
Chinese yuan
43
92
Brazilian real
18
69
4
17
1,313
2,010
Other
Total borrowings
22.4. Comments on the financing arrangements
Senior notes
Rhodia holds two High-Yield bonds:
•
High
Yield
2018:
Issued
in
May
2010
for
a
principal
amount
of
€500
million
maturing
on
May, 15, 2018 and bearing interest at 7%.
•
High Yield 2020: Issued in September 2010 for a principal amount of $400million (€306 million) maturing on
September 15, 2020 and bearing interest at 6.875%.
144
Annual Information Document • Rhodia 2011
Floating Rate Notes
Full redemption of the “Floating Rate Notes”
The Floating Rate Notes were issued for a nominal amount of €1,100 million at 3-month Euribor + 2.75%, maturing on
October 15, 2013. In 2008, 2009 and 2010 Rhodia undertook the early redemption of a portion of these notes for
respective nominal amounts of €33, €32 and €806 million, thus reducing the nominal amount of the notes to €229
million.
In October 2011, further Rhodia’s acquisition by Solvay, Rhodia exercised the call on its Floating Rate Notes and
reimbursed the outstanding amount of €229 million.
OCEANE
Repayment of the OCEANE bonds
On April 27, 2007, OCEANE bonds (bonds that can be converted or exchanged for new or existing shares), maturing
on January 1, 2014 and bearing interest at 0.5%, were issued for a nominal amount of €595 million. The issue price
amounted to €48.1 per bond. OCEANE bond holders may, at any time, exercise their conversion option on a 1.04 for
1 basis. OCEANE bonds carry a 13.22% redemption premium and a buyback option that may be exercised by Rhodia
under certain conditions. The debt and equity components were measured upon issue of the bonds. The debt
component was measured at amortized cost using a market interest rate for an equivalent non-convertible bond.
Further Rhodia‘s acquisition by Solvay, the Group decided to fully repay the OCEANE bonds at a price of €52.63 per
bond, corresponding to the early redemption price at the date of the repayment (December 15, 2011)
Syndicated credit line
Cancellation of the Syndicated credit line
On March 30, 2007, Rhodia entered into a multi-currency syndicated credit facility for €600 million ("Multicurrency
Revolving Credit and Guaranty Facility" or "RCF") maturing on June 30, 2012.
This line was cancelled on December 7, 2011.
Asset securitization programs
Rhodia has another financing source involving disposal of some of its uncollected receivables, in connection with two
securitization programs in Europe and North America, and sales of receivables program in Asia.
At December 31, 2011, the financing available under these securitization programs amounted to €140 million for the
Pan-European program, $100 million for the North American program and $12 million for the Asian program.
These securitization programs do not comprise covenants based on Rhodia’s financial performance, which, if not met,
would trigger early repayment. However, the securitization programs contain a cross-accelerated repayment clause in
the event of early repayment being demanded under the RCF facility or any other Rhodia S.A. financing arrangement
in an amount in excess of $35 million for the North American program and €35 million for the pan-European program.
At December 31, 2011, the financing provided by the securitization programs amounted to €202 million.
Annual Information Document • Rhodia 2011
145
23. Fair value of financial instruments and accounting categories
At December 31, 2011
Assets/liabilities
at fair value through
profit or loss
Fair Available
value -for-sale
assets
Trading
option
(in millions of euros)
Financial assets
172
713
(1)
Non-current financial assets
9
Other current financial assets
Liabilities at
amortized
Hedging
cost derivatives
0
2,189
2,189
27
251
278
278
4
204
217
217
691
691
691
299
299
704
704
127
704
Cash and cash equivalents
Fair
value
1,146
172
127
Total net
carrying
amount
31
Trade receivables
Derivative financial instruments
Loans and
receivables
Current financial assets
172
713
4
895
0
127
1,911
1,911
Financial liabilities
173
0
0
0
2,095
95
2,363
2,442
865
944
865
944
448
448
95
268
268
782
782
95
1,498
1,498
Liabilities at
amortized
Hedging
cost derivatives
Total net
carrying
amount
Fair
value
865
Borrowings
Non-current financial liabilities
0
0
0
0
865
0
448
Borrowings
Derivative financial instruments
173
782
Trade payables
Current financial liabilities
173
0
0
0
1,230
(1) Excluding retirement benefit surplus in the amount of €1 million.
At December 31, 2010
Assets/liabilities
at fair value through
profit or loss
Fair Available
value -for-sale
assets
Trading
option
(in millions of euros)
Financial assets
Loans and
receivables
49
808
31
811
-
41
1,740
1,740
-
-
24
110
-
-
134
134
Other current financial assets
-
26
7
1
-
-
34
34
Trade receivables
-
-
-
700
-
-
700
700
49
-
-
-
-
41
90
90
-
782
-
-
-
782
782
Current financial assets
49
808
7
701
0
41
1,606
1,606
Financial liabilities
53
-
-
-
2,783
41
2,877
2,953
Borrowings
-
-
-
-
1,672
-
1,672
1,748
Non-current financial liabilities
-
-
-
-
1,672
-
1,672
1,748
Borrowings
-
-
-
-
338
-
338
338
53
-
-
-
-
41
94
94
-
-
-
-
773
-
773
773
53
-
-
-
1,111
41
1,205
1,205
Non-current financial assets
(1)
Derivative financial instruments
Cash and cash equivalents
Derivative financial instruments
Trade payables
Current financial liabilities
(1) Excluding retirement benefit surplus in the amount of €1 million.
146
Annual Information Document • Rhodia 2011
The table below breaks down financial instruments carried at fair value by valuation method. The different levels have
been defined as follows:
•
•
Level 1: quoted prices (unadjusted) observed in active markets for identical assets or liabilities;
Level 2: inputs other than the quoted prices included within Level 1 that are observable for the asset or liability,
either directly (i.e. as prices) or indirectly (i.e. derived from prices);
•
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
At December 31, 2011
Level 1
Level 2
Level 3
Total
785
222
36
1,043
27
27
9
299
Financial Assets
Non-current financial assets
Other current financial assets
13
Derivative financial instruments
68
Cash and cash equivalents
13
222
704
704
Financial Liabilities
7
241
20
268
Derivative financial instruments
7
241
20
268
At December 31, 2010
Financial Assets
Level 1
Level 2
Level 3
Total
872
18
39
929
24
24
Non-current financial assets
Other current financial assets
33
Derivative financial instruments
57
18
782
-
Financial Liabilities
33
53
8
94
Derivative financial instruments
33
53
8
94
Cash and cash equivalents
33
15
90
782
The best indication of the fair value of a contract is the price which would be agreed to between a willing seller and
buyer in an arm's length transaction. At the trade date, it is generally the transaction price. Subsequently, the
measurement of the contract should be based on observable market data which provide the most reliable indication of
the fair value of a financial instrument.
The fair value of derivatives is determined as follows:
•
Interest rate swaps are measured by discounting contractual flows;
•
Options are measured based on valuation models (such as Black & Scholes) using quotes published on active
markets and/or by obtaining quotations from third party financial institutions;
•
Forward exchange contracts are measured by discounting net future cash flows;
•
Carbon derivatives (CER and EUA) and commodity-based derivatives are measured as follows:
-
Products traded on organized markets (futures): use of market quotes;
-
Products traded over-the-counter (swaps, forwards): discounting of future flows;
-
Options: use of mathematical models.
The fair value of the notes corresponds to the most recent market quote.
Annual Information Document • Rhodia 2011
147
The fair value of trade payables and trade receivables corresponds to their carrying amount. The discounting of cash
flows arising from “Trade payables” and “Trade receivables” had an immaterial impact on fair value due to the short
settlement periods applied.
24. Financial risk management and derivatives
Rhodia is exposed to market risks as a result of its business and financial transactions. This exposure is mainly
related to fluctuations in exchange and interest rates and commodity and carbon instrument prices.
24.1. Derivative financial instruments
At December 31, 2011, Rhodia held derivatives, some of which are designated as cash flow hedges, as well as nonhedging derivatives. Derivatives are recognized in the balance sheet at their fair value in the following amounts:
At December 31, 2011
At December 31, 2010
(in millions of euros)
Note
Current assets
Current liabilities
Current assets
Current liabilities
Interest rate instruments
24.2
-
1
-
20
Foreign exchange instruments
24.3
10
55
18
33
Commodities instruments
24.4
6
1
8
5
Carbon instruments
24.5
283
211
64
36
299
268
90
94
Total
24.2. Interest rate risk management
Rhodia’s exposure to interest rate risk mainly relates to its net indebtedness and interest rate derivatives portfolio.
The Group monitors its exposure to interest rate risk on a monthly basis.
Management of fixed and floating rates
The breakdown of net debt as defined by the Group between fixed and floating rates, and excluding its derivative
portfolio, is as follows:
2011
2010
Floating rate
464
526
Fixed rate
834
1,458
Borrowings excluding accrued interest payable
1,298
1,984
Cash and cash equivalents
(704)
(782)
(17)
(34)
15
26
592
1,194
(in millions of euros)
Other current financial assets
Accrued interest payable
Net indebtedness
Further to the repayment of the Floating Rate Note in October 2011, for a nominal amount of €229 million, Rhodia
cancelled the outstanding caps and interest rate swaps designated as cash flow hedge.
148
Annual Information Document • Rhodia 2011
The breakdown of the Group’s debt between fixed and floating rates, taking into account its hedging derivatives, is as
follows:
2011
2010
464
297
-
229
834
1,458
1,298
1,984
(in millions of euros)
Floating rate
Capped floating rate
Fixed rate
Borrowings excluding accrued interest payable
At December 31, 2011, the average rate of the fixed-rate debt was around 6.95%, compared to 6.7% at December 31,
2010.
Analysis of interest rate sensitivity
Interest rate sensitivity for floating-rate instruments was analyzed taking into account all the variable cash flows of
non-derivative and derivative instruments. The analysis is performed assuming that the amounts of debt and financial
instruments shown in the balance sheet at December 31, 2011 and 2010 remain constant during the year. For the
purposes of this analysis, all the other variables, particularly exchange rates, are considered to be constant.
An interest rate fluctuation by 100 basis points at the year-end would result in an increase (decrease) in equity and
profit or loss (prior to the tax impact) by the amounts shown in the table below.
2011
Net profit/(loss)
in millions of euros
(excluding taxes)
2010
Hedging reserves
(1)
Hedging reserves (1)
Net profit/(loss)
100bp
increase
100bp
decrease
100bp
increase
100bp
decrease
100bp
increase
100bp
decrease
100bp
increase
100bp
decrease
Floating-rate debt
(5)
5
-
-
(5)
5
-
-
Derivatives designated
as cash flow hedges
-
-
-
-
-
-
4
(5)
Cash equivalents
7
(7)
-
-
8
(8)
-
-
Total
2
(2)
-
-
3
(3)
4
(5)
(1) Corresponds to the change in fair value of derivatives designated as cash flow hedges following a sudden fluctuation in interest rates.
Analysis of interest rate hedges
Derivatives designated as cash flow hedges
At December 31, 2011, Rhodia does no longer hold any interest rate swaps and options (caps). The notional amounts
of the outstanding contracts and their fair value are detailed in the table below:
<1
year
1 to 5
years
2011
>5
years
Total
Fair
Value
Lender Floating rate
-
-
-
-
-
229
(7)
Purchase
-
-
-
-
-
229
-
-
-
-
-
-
-
(7)
(in millions of euros)
Currency EUR
Interest rate swaps
Cap
Total
2010
Nominal
Value
Fair
Value
The changes in fair value of hedging derivatives considered as effective are recognized in equity under the heading
“Cash flow hedge reserve”. For interest rate options (caps), only the intrinsic value of the option is considered as an
effective hedge. The time value is considered as ineffective on inception of the hedge.
The impact on profit or loss of the ineffective portion of cash flow hedges was immaterial in 2011 and 2010.
In 2011, the discontinued interest rate hedging instruments following the refinancing operations generated a €10
million expense (€26 million expense in 2010).
Annual Information Document • Rhodia 2011
149
The contractual flows related to interest rate swaps are paid at the same time as the contractual flows of floating-rate
borrowings and the amount deferred in equity is recognized in profit or loss for the period in which the fluctuations in
the debt’s interest rate impact profit or loss.
Changes in the hedging reserve for interest rate derivatives in fiscal 2011 and 2010 are shown in the following table:
in millions of euros (excluding taxes)
Carrying amount at January 1,
Amount transferred to profit or loss
(1)
Amount recorded directly in the hedging reserve
Carrying amount at December 31,
2011
2010
(7)
(24)
10
38
(3)
(21)
-
(7)
(1) The profit and loss entry impacts “Gross interest expense on borrowings” and “Income and expenses on financial transactions”
Derivatives not designated as hedges
At December 31, 2011, Rhodia entered into the following interest rate swaps not designated for hedging purposes:
2011
(in millions of euros)
< 1 year
> 5 years
Lender Floating rate
34
-
Lender Fixed rate
5
Currency EUR
Interest rate swaps
2010
1 to 5
years
Total
-
Total
Fair
Value
Nominal
Value
Fair
Value
-
34
(1)
521
(1)
-
5
-
502
(12)
(1)
-
(13)
The impact on profit or loss of these derivatives not designated for hedging was immaterial in 2011 and 2010.
Analysis of interest rate sensitivity
A sudden 100 basis point fluctuation in interest rates at the year-end would have no material impact on profit or loss,
since the other variables are considered to be constant.
24.3. Foreign exchange risk management
A significant portion of Rhodia’s assets, liabilities, expenses and income is denominated in currencies other than the
euro, mainly the US dollar, Brazilian real and, to a lesser extent, the pound sterling. Changes in these currencies
compared with the euro may have a material impact on the financial position and results of Rhodia.
Rhodia’s policy consists in limiting its exposure to short-term fluctuations in exchange rates by calculating on a daily
basis its net exposure to foreign currencies in its transactions, including both sales and purchases, and by using
derivatives to reduce such exposure. The main derivatives used by Rhodia are forward foreign exchange contracts
with terms of less than one year.
The financial instruments held by Rhodia, sensitive to changes in exchange rates, include financial instruments
(receivables and payables) denominated in foreign currencies and foreign exchange derivatives not designated for
hedging.
150
Annual Information Document • Rhodia 2011
At December 31, 2011, Rhodia’s foreign exchange risk (excluding foreign exchange derivatives designated as
hedges) by main currency breaks down as follows:
At December 31, 2011
(in millions of euros)
At December 31, 2010
(1)
JPY
USD
GBP
EUR(1)
JPY
Currency
USD
AUD
Financial receivables and (borrowings)
(205)
(35)
(41)
(53)
(117)
(33)
(62)
(1)
157
-
17
6
188
-
23
17
Foreign exchange contracts
98
35
15
50
(47)
33
31
(15)
Net exposure
50
-
(9)
3
24
-
(8)
1
Trade receivables and (payables)
EUR
(1) Foreign exchange exposure in euros of entities whose functional currency is different from the euro.
Analysis of foreign exchange risk sensitivity
At December 31, 2011, a sudden 10% fluctuation in the euro against the foreign currencies would have, in proportion
to the assets and liabilities recorded in the balance sheet, an immaterial impact on foreign exchange gains or losses.
For the purposes of this analysis, all the other variables, particularly interest rates, are considered to be constant.
At December 31, 2011
(in millions of euros)
Currency
10% increase in the euro against the foreign currency
10% decrease in the euro against the foreign currency
At December 31, 2010
USD
AUD
EUR
JPY
USD
GBP
EUR
JPY
(5)
-
(1)
-
(2)
-
(1)
-
6
-
1
-
2
-
1
-
Portfolio of foreign exchange derivatives not designated as hedges
The nominal amounts as well as the fair values of forward purchase and sale contracts in currencies other than the
euro and foreign exchange options are detailed below:
2011
2010
(in millions of euros)
Currency
Nominal
Fair Value
Nominal
Fair Value
Forward purchases
USD
267
6
170
(1)
GBP
21
JPY
85
BRL
24
Other
117
Total
Forward sales
14
2
54
-
9
-
2
129
1
514
10
376
-
USD
121
(4)
217
GBP
97
(2)
43
1
JPY
123
(9)
69
(3)
-
BRL
85
-
12
Other
113
(1)
96
539
(16)
437
(2)
33
-
Total
Call sales
USD
21
-
Call purchases
USD
10
-
TOTAL
(6)
(2)
Forward currency purchase and sale contracts are entered into by Rhodia S.A. to hedge its inter-company loans and
borrowings and operating cash flows denominated in foreign currencies.
The changes in fair value of foreign exchange instruments not designated as hedges are recorded in foreign
exchange gains or losses.
Annual Information Document • Rhodia 2011
151
Portfolio of foreign exchange derivatives designated as cash flow hedges
The nominal amounts as well as the fair values of forward currency purchase and sale contracts designated as cash
flow hedges are detailed below:
2011
(in millions of euros)
Forward purchases
Currency
Nominal
Fair Value
Nominal
Fair Value
USD
1
-
-
-
GBP
1
-
5
-
JPY
-
-
-
-
BRL
234
-
134
-
KRW
45
-
52
-
281
-
191
-
USD
386
(19)
230
6
JPY
76
(20)
92
(24)
462
(39)
322
(18)
USD
3
-
14
-
BRL
-
-
20
3
3
-
34
3
39
-
Total
Forward sales
Total
Call purchases
2010
Total
Call sales
USD
-
-
Put purchases
USD
-
-
64
2
Put sales
BRL
-
-
19
-
(39)
TOTAL
(13)
In connection with the hedging of Rhodia’s ordinary business transactions, future transaction exchange hedges are
regularly set up. At December 31, 2011, the changes in fair value of these forward exchange contracts considered as
effective were recognized in equity under the “Hedging reserve” heading in an amount of €(49) million.
Changes in the hedging reserve for foreign exchange derivatives in fiscal 2011 and 2010 are shown in the following
table:
in millions of euros (excluding taxes)
Carrying amount at January 1,
Amount transferred to profit or loss
(1)
2011
2010
(18)
(2)
(5)
7
Amount recorded directly in the hedging reserve
(26)
(23)
Carrying amount at December 31,
(49)
(18)
(1) Amount recognized in net sales, in other operating income and expenses, and in result on discontinued operations
In 2011 and 2010, no hedges on future net sales were discontinued.
The ineffective portion of cash flow hedges generated a financial gain of €12 million in 2011 and €10 million in 2010.
The contractual flows related to forward currency sales and the flows arising from the future sales transactions are
simultaneous; the hedging amount recorded in equity is transferred to profit or loss on the date the sales transaction is
recognized in the income statement.
152
Annual Information Document • Rhodia 2011
Sensitivity analysis of foreign exchange derivatives qualified as cash flow hedges
The following table shows the impact (prior to the tax impact) of a sudden 10% increase or decrease in the euro
against the foreign currencies.
10% decrease in the euro
10% increase in the euro
Hedging reserve
increase (decrease)
Net
profit/(loss)
Hedging reserve
increase (decrease)
Net
profit/(loss)
12/31/2011
(19)
-
16
-
12/31/2010
(16)
-
13
-
in millions of euros (excluding taxes)
The following table shows the impact (prior to the tax impact) of a sudden 10% increase or decrease in the Brazilian
real against the US dollar.
10% decrease in the real
10% increase in the real
Hedging reserve
increase (decrease)
Net
profit/(loss)
Hedging reserve
increase (decrease)
Net
profit/(loss)
12/31/2011
(45)
-
41
-
12/31/2010
(12)
-
13
-
in millions of euros (excluding taxes)
24.4. Management of risk related to fluctuations in the price of commodities
Rhodia’s exposure to the risks related to fluctuations in the price of commodities mainly arises from its purchases of
petrochemicals and natural gas.
Rhodia may hedge these risks by using (firm or indexed) swaps, options or futures and forward contracts depending
on its identification of market conditions and the expected trend in its contractual purchase prices.
At December 31, 2011, Rhodia does no longer hold any derivatives designated as cash flow hedges. At December
2010, the fair value of these derivatives was recognized in the balance sheet for less than €1 million under assets and
liabilities The fair value of derivatives not designated as hedges was recognized in the balance sheet for €6 million
under assets and for €1 million under liabilities (€8 million under asset and €5 million under liabilities at December 31,
2010).
Changes in the hedging reserve for commodity derivatives in 2011 and 2010 are shown in the following table:
in millions of euros (excluding taxes)
Carrying amount at January 1,
Amount transferred to profit or loss
(1)
2011
2010
-
(1)
-
1
Amount recorded directly in the hedging reserve
-
-
Carrying amount at December 31,
-
-
(1) Amount recognized in Cost of sales
Annual Information Document • Rhodia 2011
153
Sensitivity analysis of derivative instruments
The following table shows the impact (prior to the tax impact) of a sudden 10% increase or decrease in commodity
prices.
10% price increase
10% price decrease
Hedging reserve
increase (decrease)
Net
profit/(loss)
Hedging reserve
increase (decrease)
Net
profit/(loss)
12/31/2011
-
-
-
-
12/31/2010
-
(5)
-
6
in millions of euros (excluding taxes)
24.5. Carbon instrument risk management (EUA/CER)
CER future sale hedges
Rhodia hedges future selling prices of CERs (CO2 emissions reduction certificates) mainly through forward CER sales
via Orbeo Climate Care.
Orbeo Climate Care's policy is to maintain a residual exposure to CER prices close to zero, hence its purchases of
CER from Rhodia are systematically hedged by forward sales on the same maturity.
At December 31, 2011, Rhodia sold forward CERs with delivery guarantees in a notional amount of €192 million (€119
million at December 31, 2010). These derivatives were recognized under cash flow hedge accounting.
The fair value of these forward CER sales was recognized in the Rhodia balance sheet under assets in the amount of
€125 million (€28 million at December 31, 2010) and under liabilities in the amount of €55 million (€7 million at
December 31, 2010).
Changes in the hedging reserve for carbon derivatives in fiscal 2011 and 2010 are shown in the following table:
2011
2010
21
33
(13)
(29)
Amount recorded directly in the hedging reserve
47
17
Carrying amount at December 31,
55
21
in millions of euros (excluding taxes)
Carrying amount at January 1,
Amount transferred to profit or loss
(1)
(1) Amount recognized in Net sales.
Other activities of Orbeo Climate Care
Orbeo Climate Care also carry out trading transactions of primary or guaranteed carbon credits, whose residual price
exposure is also maintained close to zero. At December 31, 2011, the fair values of the derivatives contracted by
Orbeo Climate Care were recognized for €158 million in Rhodia’s assets and for €156 million in its liabilities (€36
million in assets and €29 million in liabilities at December 31, 2010).
These derivatives generated no material impact in 2011 and 2010.
154
Annual Information Document • Rhodia 2011
Sensitivity analysis of EUA/CER derivative instruments
The following table shows the impact (prior to the tax impact) of a sudden 10% increase or decrease in carbon
instrument prices:
10% price increase
10% price decrease
Hedging reserve
increase (decrease)
Net
profit/(loss)
Hedging reserve
increase (decrease)
Net
profit/(loss)
12/31/2011
(4)
-
4
-
12/31/2010
(10)
-
10
-
in millions of euros (excluding taxes)
24.6. Credit risk
The financial assets that may potentially expose Rhodia to credit risk are as follows:
•
short-term investments;
•
derivatives;
•
trade receivables;
•
loans granted.
The maximum exposure of financial assets to credit risk corresponds to their net carrying amount (see Note 23).
Cash investments and derivatives
Rhodia primarily makes its short-term investments and enters into its interest rate and currency swaps with banks or
financial institutions with S&P and Moody’s ratings that belong to the Investment Grade category. The maximum
concentration within one financial institution is less than 25%.
Trade receivables
Credit risk exposure mainly depends on the individual characteristics of customers, more particularly customer default
risk and country risk.
Rhodia’s customer portfolio is very diversified with more than 10,000 customers, with a limited concentration (the 30
largest customers represent less than one third of Group net sales).
Rhodia sells exclusively to industrial firms or distributors, the vast majority of which are from the private sector.
Most of Rhodia’s customers are regular, and net sales with new customers represent around 5%.
Rhodia’s financial management set up a customer risk management organization and procedures. In each country
where Rhodia is located, a financial team (credit management) is responsible for analyzing and preventing customer
credit risk as well as recovery.
Customer risk management procedures were set up at Group level:
a) Risk categories and credit lines:
A risk category and credit line are allocated to each customer:
•
the risk category is determined using a scoring method for which the criteria are the customer’s size, profitability
and indebtedness;
•
the credit line is assessed by credit management, according to the customer’s risk category, a financial analysis
of the customer and/or an external rating.
Annual Information Document • Rhodia 2011
155
b) Credit line guarantees:
Rhodia partially guarantees net sales through a credit insurance policy to hedge its financial exposure on its major
customers.
The authorizations granted by the credit insurer fully or partially guarantee the credit lines defined by credit
•
management;
When export sales cannot be insured, credit management can decide whether they should be guaranteed using
•
documentary credit or letters of credit;
Rhodia’s general terms and conditions of sale contain a reservation of ownership clause, so that the Group is
•
guaranteed in the event of default.
c) Management of exceeded credit lines and outstanding receivables:
The IT systems are configured so as to systematically report an exceeded credit line or an outstanding
•
receivable;
An exceeded credit line or outstanding receivable systematically blocks any new customer orders in the IT
•
systems;
Only credit management is authorized to accept the confirmation of a new order from a customer with an
•
exceeded credit line or outstanding receivable.
Trade receivables are impaired individually if it is highly probable that they will not be partially or fully recovered.
Trade receivables aging report
At December 31, 2011
At December 31, 2010
Not due
665
682
Overdue:
60
70
- less than 30 days
(in millions of euros)
30
16
- between 30 and 60 days
3
3
- between 60 and 90 days
0
-
27
51
Allowance
- more than 90 days
(34)
(52)
Total
691
700
Other receivables
The financial assets under the “State and local authorities" heading do not present any major credit risk.
The other headings mainly relate to non-recurring transactions monitored on an individual basis.
156
Annual Information Document • Rhodia 2011
24.7. Liquidity risk
Cash flows arising from financial liabilities by maturity date at December 31, 2011
The table below shows the contractual cash flows arising from financial liabilities including interest rate flows:
Carrying
amount
Contractual
cash flows
12 months
or less
1-2 years
2-5 years
More than 5
years
2,095
2,586
1,307
111
174
993
Non-secured bonds
796
1,264
56
56
168
984
Securitization of receivables
202
207
207
-
-
-
Bilateral credit facilities
231
248
239
0
4
5
5
6
2
2
1
1
(in millions of euros)
Non-derivative financial liabilities
Finance lease debts
Accrued interest payable
Trade payables
Other debts
Derivative financial liabilities
15
15
15
-
-
-
782
782
782
-
-
-
64
64
6
54
1
3
268
268
227
28
13
-
Of which foreign exchange derivatives
55
55
34
9
12
-
Disbursements
55
55
34
9
12
-
2,363
2,853
1,534
139
187
993
Collections
Total financial liabilities
Liquidity risk management
Rhodia limits its exposure to liquidity risk by pooling the liquidities generated by its subsidiaries and measuring their
amount on a regular basis in order to make them readily available. The excess cash is invested preferably with
Rhodia S.A. and in Brazil. The Group uses its cash pooling system to manage and invest excess available cash in
liquid instruments.
In addition, Rhodia regularly monitors its liquidity and uses levers to meet any major financial requirements.
At December 31, 2011 and 2010, the liquidity position breaks down as follows:
(in millions of euros)
2011
2010
8
8
Other liquid current financial assets
Non-utilized credit facilities
0
534
Cash and cash equivalents
704
782
Liquidity position
712
1,324
Further to Rhodia’s acquisition by Solvay Group, Rhodia cancelled its syndicated credit facility (“RCF”).
As a member of the Solvay Group, Rhodia can benefit from intercompany financing resources.
Annual Information Document • Rhodia 2011
157
25. Post-employment benefits and similar obligations
The obligations recognized in the balance sheet break down as follows:
(in millions of euros)
2 011
2 010
1,356
1,459
41
51
1,397
1,510
64
77
4
14
68
91
Obligations recognized in liabilities:
Post-employment benefits
Other employee benefits
Total
Of which:
Expenses recognized in profit or loss:
Post-employment benefits
Other employee benefits
Total
Actuarial assumptions
The main actuarial assumptions used to measure defined benefit plan obligations are as follows:
2011
2010
France
United States
United Kingdom
France
United States
United Kingdom
Discount rate
4.75%
4.75%
4.75%
4.50%
5.00%
5.40%
Salary increase rate
Retirement pension
increase rate
3.50%
3.00%
3.25%
3.50%
3.00%
3.80%
2.00%
n/a
2.75%
2.00%
n/a
3.30%
TGH 05 and
TGF 05
(INSEE
2004/2006)
RP 2000
Combined
114% PCA00
104% PCA00 MC
with 1% floor
TGH 05 and
TGF 05
(INSEE
2004/2006)
RP 2000
Combined
114% PCA00
104% PCA00
Mortality table
Assumptions relating to mortality rates are based on published statistical and historical data for each country.
The probability assumptions regarding the retention of employees in the Group, future salary increases and a
retirement age of between 60 and 67 years old are determined according to the countries and applicable laws.
Sensitivity of obligations to the actuarial assumptions
In the event of increases or decreases in the discount rates, the present value of the obligations at December 31,
2011 and cost of services rendered in 2011 would be as follows:
(in millions of euros)
December 31, 2011
discount rate
- 50 basis points
+ 50 basis points
2,639
2,810
2,484
22
23
21
Present value of the obligations
Cost of services rendered
A 50 basis point increase or decrease in the rate of return on plan assets would have a negligible impact on the profit
or loss component “Expected return on plan assets”.
A 100 basis point increase or decrease in the presumed medical cost rates would have a negligible impact on the
profit or loss components (cost of services rendered and interest cost) and the cumulative obligation in respect of
post-employment benefits relating to medical costs (€1 million).
The medical cost rates totaled 8% in the United States and 6% in the United Kingdom.
158
Annual Information Document • Rhodia 2011
Return on plan assets
Plan assets are comprised of the following:
(as a percentage)
2011
2010
Shares
28%
36%
Bonds
38%
37%
Liability Driven Investments (a)
16%
14%
Diversified funds (b)
12%
9%
Real estate
3%
3%
Other
3%
1%
(a) Assets portfolio (mainly floating-rate bonds) with interest and inflation rate swaps, structured to replicate the exposure of retirement obligations to
fluctuations in these rates, in order to reduce the volatility of the deficit.
(b) Funds having little correlation with the equity market, invested in widely diversified assets: convertible shares and bonds, high-yield bonds, hedge
funds, private equity, commodities, emerging markets, infrastructures, real estate, foreign currencies.
Plan assets do not include any financial instruments specific to Rhodia or real estate assets occupied by the Group.
The expected rates of return are determined based on the allocation of assets and expected yield projections, given
past trends.
2011
Expected return on
pension plan assets
2010
France
United States
United Kingdom
France
United States
United Kingdom
n/a
6.8%
5.53%
n/a
7.00%
6.23%
In France, retirement benefit obligations are not hedged through dedicated funds. Rhodia is fully responsible for
making these payments.
25.1. Post-employment benefits
Description of obligations in connection with defined benefit plans
Post-employment benefits include retirement plans and medical plans. The corresponding obligations mainly concern
current or retired employees in the United States, the United Kingdom and France. These three countries represent
90% of the Group’s total obligations.
In France, these obligations mainly include termination benefits, a closed “IRP RP” defined benefit plan, and an “ARS”
supplementary retirement plan. The main characteristics of these plans are as follows:
•
The “IRP RP” plan is for all current and retired employees who contributed to the plan prior to its closure. It offers
a full benefit guarantee compared with the end-of-career salary, and has no longer applied since the 1970s;
•
The “ARS” plan is for executives. It sets a level of benefits independently of the change in mandatory plan
benefits. It is subject to conditions of end-of-career salary, retirement age and seniority in the Group. This plan is
supplemented for executive managers depending on the potential rights arising from the plans specific to this
category.
In the United States, they are mainly related to the following plans:
•
The “Pension Equity Plan” enabling the acquisition of increasing capital according to age brackets. This plan was
closed in 2003 and replaced by a defined contribution plan;
•
The “Hourly Plan” providing for the acquisition of a percentage of salary by year of service (resulting from
negotiations with trade unions);
•
The “Restoration Plan” and “Senior Executive Retirement Plan” covering the portion of salary exceeding the limits
of the “Pension Equity Plan” or granting specific guarantees to a very small group of senior executives.
Annual Information Document • Rhodia 2011
159
In the United Kingdom, there is mainly a defined benefit plan with entitlement to a salary percentage acquisition rate
per year of service. This plan was closed in 2003 and replaced by a defined contribution plan. This plan provides for a
contribution rate according to age brackets.
An actuarial valuation of defined benefit obligations is performed at least once a year at the balance sheet date by
independent actuaries.
Obligations recognized in the balance sheet
The obligations recognized in the balance sheet break down as follows:
At December 31,
2011
2010
2009
2008
2007
949
1,136
1,166
1,040
1,012
Present value of funded obligations
1,639
1,514
1,406
1,092
1,423
Present value of total obligations
2,588
2,650
2,572
2,132
2,435
(1,229)
(1,185)
(1,064)
(946)
(1,234)
1,359
1,465
1,508
1,186
1,201
(7)
(7)
(8)
-
(3)
3
-
8
16
-
1,355
1,458
1,508
1,202
1,198
1
1
1
1
-
1,356
1,459
1,509
1,203
1,198
(in millions of euros)
Present value of unfunded obligations
Fair value of plan assets
Net value of obligations
Unrecognized past service cost
Assets not recognized in accordance with asset
ceiling rules
Net present value of recognized obligations
Balance sheet amounts:
Assets
Liabilities
In France, the agreement of November 6, 2009 revised upwards the scales for termination benefits under the National
Collective Bargaining Agreement governing the Chemicals Industry.
The past service cost not yet amortized relating to this plan amendment totaled €7million at December 31, 2011,
compared to €7 million at December 31, 2010.
In Brazil, the plan surplus of €3 million was not recognized in 2011 following the asset ceiling rules.
160
Annual Information Document • Rhodia 2011
Analysis of the present value of the recognized obligation
The present value of the obligations and the fair value of the assets break down as follows:
(in millions of euros)
2011
2010
Present value of obligations at the beginning of the period
2,650
2,571
Cost of services rendered
Interest cost
Benefits paid
Employee contributions
18
18
135
139
(155)
(151)
1
1
Past service cost
-
Actuarial gains and losses
56
1
Currency translation differences
30
75
-
(2)
Liabilities classified as held for sale (1)
Change in scope
(2)
(139)
-
(8)
(2)
Present value of obligations at the end of the period
2,588
2,650
Fair value of plan assets at the beginning of the period
1,185
1,064
Curtailments and settlements
Expected return on assets
81
79
Actuarial gains and losses on return on assets
(4)
31
Employer contributions
36
39
Employee contributions
1
1
(86)
(87)
16
58
Fair value of plan assets at the end of the period
1,229
1,185
Present value of the obligation
1,359
1,465
(7)
(7)
3
-
1,355
1,458
Benefits paid
Currency translation differences
Unrecognized past service cost
Assets not recognized in accordance with asset ceiling rules
Present value of the recognized obligation
(1) Salicylics activities.
(2) Disposal of the shares of Rhodia Deutschland and its affiliates and of 51% of Rhodia Italy Spa.
The present value of the obligation corresponds to the difference between the present value of the obligations and the
fair value of the plan assets.
The breakdown of obligations and assets by geographical area is as follows:
At December 31, 2011
Other
France
countries
Present value of the
obligation
Fair value of plan
assets
Total
Total
At December 31, 2010
Other
France
countries
Total
915
1,673
2,588
958
1,692
2,650
-
(1,229)
(1,229)
-
(1,185)
(1,185)
915
444
1,359
958
507
1,465
The actual return on plan assets amounted to €110 million in 2010 and €77 million in 2011. The expected return was
€79 million for 2010 and €81 million for 2011. Actuarial gains and losses were recognized to account for the difference
between these two amounts, i.e. a €31 million gain for 2010 and a €(4) million loss for 2011.
Annual Information Document • Rhodia 2011
161
The amount disbursed by the Group with respect to defined benefit plans corresponds to benefits paid to employees
(€155 million in 2011, compared to €151 million in 2010) and Rhodia's contributions to funds (€36 million in 2011,
compared to €39 million in 2010), less the benefits paid directly by these funds (€86 million in 2011, compared to
€87million in 2010). This amount totaled €105 million in 2011 and €103 million in 2010 and is expected to total around
€106 million in 2012.
Expense for the year
The expense relating to post-employment benefits breaks down as follows:
(in millions of euros)
Cost of services rendered
2011
2010
18
18
Interest cost
135
139
Expected return on plan assets
(81)
(79)
Amortization of past service cost
-
1
Curtailments and settlements
(8)
(2)
Total expense recognized on profit or loss
64
77
The cost of services rendered is recognized in operating profit or loss by destination. The interest cost and the
expected return on plan assets have been recognized respectively in finance costs and finance income.
The actuarial gains and losses relating to post-employment benefits recognized in the Consolidated statements of
recognized income and expense are as follows:
(in millions of euros)
2011
2010
2009
2008
2007
60
(30)
341
48
7
3
(9)
(8)
16
(3)
63
(39)
333
64
4
16
(36)
3
62
29
4
(31)
(22)
109
1
Actuarial gains and losses (1)
Application of assets ceiling rules
Total
(1)
Of which:
Experience adjustments on measurement of
obligations – loss/(gain)
Experience adjustments on measurement of plan
assets – loss/(gain)
26. Provisions
26.1 Analysis by type
(in millions of euros)
Restructuring
Environment
Other provisions
Total
162
At December 31, 2011
More than
Less than
one year
one year
3
Total
At December 31, 2010
More than
Less than
one year
one year
Total
6
9
5
16
21
247
45
292
225
46
271
99
127
226
195
70
265
349
178
527
425
132
557
Annual Information Document • Rhodia 2011
26.2 Movements over the year
Utilization
Currency
translation
differences
Other
movements
(7)
(1)
(1)
40
(35)
(7)
(2)
25
292
265
33
(87)
(5)
8
12
226
557
70
(129)
(13)
5
37
527
At
January 1,
2011
Net
charge
Restructuring
21
(3)
Environment
271
Other provisions for contingencies
and losses
Total
(in millions of euros)
Financial
charge (1)
At
December
31, 2011
9
(1) Financial charge includes the discounting charge and impacts in change in discounting rates.
26.3 Restructuring
Restructuring provisions cover the following costs:
(in millions of euros)
At December 31, 2011
At December 31, 2010
Employee expenses
2
12
Other costs
7
9
Total
9
21
Employee expenses include costs resulting from miscellaneous departure measures, including early retirement plans.
The plans set up include voluntary, i.e. proposed by the employer and accepted by the employee, or involuntary, i.e.
at the employer’s sole discretion, departure measures.
The provisions relating to involuntary measures are recognized as soon as they are officially announced by executive
management to the employee representative bodies of the employees concerned by the detailed implementation plan.
Changes in fiscal year 2011
No new measures have been implemented in 2011.
The decrease in the provision is mainly due to employee departures ((7) M€ paid in 2011). Departures mainly
occurred:
•
in France following competitive plans implemented in Polyamide, Novecare and Salicylic activity;
•
in United Kingdom on Leeds and Watford site;
•
in Venezuela following the site closure in Valencia.
Changes in fiscal year 2010
The new measures in 2010 represented a total estimated cost of €10 million and mainly correspond to the closure of
the Valencia site of Acetow in Venezuela as well as the transfer of specialty surfactants activities from Leeds to
Halifax (Novecare). The impairment of current and non-current assets related to the Valencia site closure amounted to
€4 million.
In addition, changes in estimates of previous plans mainly result from the review of provisions recorded in previous
years in France, Italy, the United Kingdom and the United States for the Polyamide, Novecare and Salicylics
businesses.
Utilizations of provisions relating to employee expenses and sites closures represented €(29) million and mainly
correspond to the closure of industrial activities at the Ceriano, Valencia, Saint Fons and Roussillon sites, as well as
productivity improvement plans in France, Germany, the United States and Brazil and in support functions in Europe.
Annual Information Document • Rhodia 2011
163
26.4 Environment
Rhodia periodically assesses its environmental liabilities and future possible remediation measures.
As indicated in Note 2.19, the provision is estimated by taking into account future discounted cash flows.
Three changes in the methodology used for assessing the level of environmental provisions have been implemented
in 2011:
•
recurring environmental expenses are accrued over 20 years (versus 15 as of December 31, 2010);
•
discount rates used for provision calculation include inflation since October 1 , 2011;
•
changes in discount rates are recognized as financial items in the income statement.
st
The discount rates used at December 31, 2011 are determined by geographical area based on risk-free inflated
interest rates (government bonds) over 10 years.
Inflated rates
Europe (except United Kingdom)
4.00%
United Kingdom
2.20%
North America
2%
Brazil
10.24%
At December 31, 2011, provisions related to environmental risks totaled €292 million, compared with €271 million at
December 31, 2010.
The main provisions by geographical area are as follows:
(in millions of euros)
South America
At December 31, 2011
At December 31, 2010
113
112
France
89
87
North America
41
40
United Kingdom
44
24
5
8
292
271
Europe (except France and United Kingdom)
Total environmental provisions
The South American area mainly covers sites located in Brazil, in particular the Cubatão, Paulinia and Santo Andre
sites.
In France, these provisions include the La Rochelle, Thann, Wattrelos, Mulhouse, Pont de Claix and Lille sites and
several former mining sites (Nancy, Sain Bel, Chizeuil).
The North American area principally covers the sites located in the United States, notably the Silverbow, New
Brunswick, Dalton, Charleston, Morrisville and Dominguez sites.
In the United Kingdom, the provisions mainly cover the Staveley, Whitehaven, Oldbury Rattlechain and Halifax sites.
European area mainly concerns Swiss sites (Widnau & Emmenweid) and Italy site (Castiglione).
The provisions mostly relate to sites or activities which have been shut down, some of them even before the creation
of Rhodia.
Changes in fiscal year 2011
A net charge of €40 million was recognized and breaks down as follows:
•
€29 million corresponding to additional provisions mainly for the following sites: Cubatão and Paulinia in Brazil
(€12 million), La Rochelle, Rhodia Osiris and STF Chimie in France, Oldbury Rattlechain, Staveley and
164
Annual Information Document • Rhodia 2011
Whitehaven in the United Kingdom, Silverbow, Martinez and New Brunswick in the United States and Widnau in
Switzerland;
•
€11 million corresponding to the changes in methodology mentioned above.
Utilizations of provisions amounted to € (35) millions and mainly concerned the sites of:
•
Cubatão, Paulinia and Santo Andre in Brazil, for respectively €(13) million, €(1) million, €(1) million;
•
Mulhouse for €(2) million, Wattrelos for €(1) million and La Rochelle for €(1) million in France;
•
Widnau for €(2) million and Castiglione for €(1) million in Europe (except France);
•
New Brunswick for €(2) million, Silverbow for €(1) million and Richmond for €(1) million in the United States.
A financial expense of €25 million was recognized and breaks down as follows:
•
changes in discount rates which concern all geographic areas for €15 million;
•
discount expense for €10 million including inflation expense.
Other movements for € (2) million related to the sale of the business and related environmental liabilities in Italy for
€(1) million and Germany for €(1) million.
Changes in fiscal year 2010
A net charge of €45 million was recognized and breaks down as follows:
•
€32 million corresponding to additional provisions mainly for the following sites: Cubatão, Santo Andre and
Paulinia in Brazil (€18 million), La Rochelle, Pont de Claix, Chizeuil, Wattrelos and Mulhouse in France, Olbury
Rattlechain in the United Kingdom, Rottweil in Germany, Silverbow and Dominguez in the United States and
Widnau in Switzerland;
•
€6 million corresponding to the change in the discount rate assumption;
•
and €7 million in charges linked to financial discounting.
Utilizations of provisions amounted to €(29) million and mainly concerned the sites of:
•
Cubatão, Paulinia and Santo Andre in Brazil, for respectively €(10) million, €(1) million, €(1) million;
•
La Rochelle for €(1.5) million and Pont de Claix, Wattrelos and Mulhouse, each for €(1) million in France;
•
Widnau for €(2) million and Castiglione for €(1) million in Europe (except France);
•
New Brunswick for €(1.5) million and Silverbow for €(1) million in the United States.
Contingent environmental liabilities and re-estimates
Based on current information, Rhodia’s management estimates that it does not have probable liabilities for
environmental matters other than those provided for at December 31, 2011. However, Rhodia may need to incur
additional expenditure if there are changes to existing laws, regulations or their interpretations.
Estimated contingent liabilities before discounting, which amounted to €197 million at December 31, 2010, increased
to €205 million at December 31, 2011.
The increase is mainly relating to the Freeport site in the United States following the re-estimated forecasted cost of
keeping the unit as mothballed. In addition to the Freeport site, contingent liabilities mainly relate to:
•
La Rochelle site in France for the forecasted cost of introducing waste or materials in a future storage center
designed for radioactive products and graphites;
•
the Cubatão site (Brazil) for the forecasted cost of a possible obligation to incinerate waste off site;
Annual Information Document • Rhodia 2011
165
the Silverbow site (Montana, United-States) for the re-estimated forecast cost of a possible obligation to
•
incinerate waste off site;
the Pont de Claix site in France for the possible containment of an internal landfill and the possible treatment of
•
pollution areas.
26.5 Other provisions
Other provisions mainly concern tax litigation and the provided risks and costs relating to operations sold.
Changes in 2011 relate essentially to the revaluation and settlement of various tax risks and provisions relating to sold
activities.
27. Trade and other payables
(in millions of euros)
At December 31, 2011
At December 31, 2010
742
751
Operating goods and services payable
Capital expenditure payable
39
22
189
201
State and local authorities (1)
86
86
Accrued expenses
31
11
Other
72
42
Total
1,159
1,113
Employees and social security
(1) At the end of December 2011, the heading “State and local authorities” included a liability with respect to CO2 allowances to be returned for
€17 million (€18 million at the end of December 2010).
28. Leases
28.1. Operating leases
The income and expenses relating to operating leases in 2011 and 2010 break down as follows:
(in millions of euros)
2011
2010
(26)
(31)
1
2
(25)
(29)
Minimum lease payments
Sublease payments
Total
Minimum future payments related to operating leases can be analyzed as follows:
At December 31, 2011
At December 31, 2010
Less than one year
36
34
From one to five years
98
64
More than five years
32
22
166
120
(in millions of euros)
Total
166
Annual Information Document • Rhodia 2011
28.2. Finance leases
The reconciliation between future finance lease payments and their present value is as follows:
(in millions of euros)
Less than 1 year
From 1 to 5 years
More than 5 years
Total
At December 31, 2011
Minimum future lease payments
2
3
1
6
Interest
-
(1)
-
(1)
Minimum future lease payments
excluding interest
2
2
1
5
Less than 1 year
From 1 to 5 years
More than 5 years
Total
Minimum future lease payments
-
6
-
6
Interest
-
(1)
-
(1)
Minimum future lease payments
excluding interest
-
5
-
5
(in millions of euros)
At December 31, 2010
29. Off-balance sheet commitments
At December 31, 2011
At December 31, 2010
Investment commitments
36
85
Firm orders for the acquisition of industrial assets
36
85
Guarantees given (1)
71
66
Supplies & Routing
53
42
Maintenance of operating sites
18
24
Assets pledged
30
30
(in millions of euros)
Non-financial assets
Financial assets
Total commitments
1
2
29
28
137
181
(1) Via bilateral credit lines (see Note 24.4).
At December 31, 2011, the Group did not include significant commitments given relating to its scope of consolidation
and its financing other than those identified in other notes to the financial statements.
30. Litigation
30.1. Legal proceedings
In the ordinary course of its business, Rhodia is involved in a certain number of judicial, arbitral and administrative
proceedings. These proceedings are mainly initiated by buyers of businesses sold by Rhodia or involve environmental
or civil liability compensation claims related to marketed chemicals. Rhodia is also subject to certain claims and
lawsuits which fall outside the scope of the ordinary course of its business, the most significant of which are
summarized below in this section.
Annual Information Document • Rhodia 2011
167
Provisions for the charges that could result from these procedures are not recognized until they are probable and their
amount can be reasonably estimated. The amount of provisions made is based on Rhodia’s assessment of the level
of risk on a case-by-case basis and depends on its assessment of the basis for the claims, the stage of the
proceedings and the arguments in its defense, it being specified that the occurrence of events during proceedings
may lead to a reappraisal of the risk at any moment.
In addition, certain of the Group’s US subsidiaries have potential liabilities under US Federal Superfund legislation and
environmental regulations. Given the nature of the proceedings, the number of plaintiffs, the volume of waste at issue
and the provisions that have already been recognized for these cases, Rhodia estimates that these claims will not
result in significant costs for the Group and will not give rise to significant additional provisions.
Finally, Rhodia believes that there is no litigation or exceptional issues that, taken individually or as a whole, could
have a material negative impact on its business, financial position or results, other than those detailed below.
Litigation with shareholders
Two suits brought in January 2004 before the Paris Commercial Court by certain shareholders were adjourned:
•
an individually brought (“ut singuli”) action challenges sanofi-aventis (formerly Aventis) and certain individuals
who were members of the Board of Directors of the Company at the time of the alleged facts. This action disputes
the terms and conditions of the acquisition of Albright & Wilson by Rhodia. The plaintiffs demand that the
defendants be ordered to pay the Company €925 million as compensation for the alleged harm the Company
suffered. These proceedings were adjourned on January 27, 2006;
•
the other suit challenges sanofi-aventis (formerly Aventis), certain individuals who were members of the Board of
Directors of the Company and the Statutory Auditors at the time of the alleged facts, as well as the Company on a
subsidiary basis. This action alleges that the information on environmental risks and deferred tax assets made
public by the Company in 2001 and until January 29, 2002 in respect of the acquisition by Rhodia of Albright &
Wilson and then Chirex, were inaccurate and misleading. Both plaintiffs demand that the defendants be ordered
to pay €131.8 million as a compensation for damages. These proceedings were adjourned on February 10, 2006.
Both proceedings were adjourned due to the existence of a criminal investigation conducted by examining magistrates
of the financial division of the Paris Court of First Instance concerning the same facts and pursuant to three criminal
proceedings instituted in 2003 and 2004 against an unspecified defendant by the same shareholders for misuse of
company assets, insider dealings, publication of false or misleading information, fraudulent balance sheet and
disclosure of inaccurate accounts. Rhodia decided to join the criminal investigation as a plaintiff claiming damages
(“partie civile”) on January 25, 2006. The investigation was still in progress as of December 31, 2011.
Commercial litigation
Innophos litigation
On November 8, 2004, Rhodia received from Innophos, a subsidiary of Bain Capital, a complaint originating from
Mexico’s National Water Commission relating to water use at the Coatzacoalcos site during the period from 1998 to
2002. The total claim amounted to approximately 1.5 billion Mexican pesos (around €100 million), including user fees,
interest and penalties. The Coatzacoalcos site was part of the specialty phosphates business that was sold in August
2004 to Bain Capital, giving rise to the creation of a new company, Innophos. To best protect its interests, Rhodia then
informed Bain that it was willing to assume direct responsibility, subject to certain legal reservations, for resolving this
matter with the Mexico National Water Commission. The amount of the initial claim was lowered following the
application made by Rhodia to the administrative authority to reconsider and materialized by a decision rendered in
August 29, 2005. The Mexican Federal Administrative and Fiscal Court rendered several decisions in favor of
Innophos in August 2008 and March 2009 that were partially invalidated by the Circuit Court in January and
September 2009. On October 6, 2009, in a ruling on the appeal filed by Rhodia (on behalf of Innophos), the Supreme
Court of Mexico affirmed the lower courts' rulings. Innophos, which will be indemnified by Rhodia pursuant to a 2004
168
Annual Information Document • Rhodia 2011
divestiture agreement and in application of a judgment rendered by the Courts in New-York, is therefore liable for the
higher rate due for the fresh water used during the period 1999-2002 at the Coatzacoalcos plant. As a result of
simultaneous discussions with the Mexican government regarding requests for partial surcharge relief and with
Innophos regarding Rhodia's alleged responsibility for water use fees for periods following the date of the divestiture,
Rhodia was able to resolve both the Mexican government claim and the Innophos claims through payments
aggregating approximately 16.9 million Euro. These matters are now definitely closed.
City of Metz litigation
At the request of the City of Metz, an expert was appointed by the Administrative Court of Nancy in 2002 in order to
review the regulatory compliance of chloride disposals involving Solvay Carbonate France and Novacarb (Rhodia
Chimie acting as guarantor for Novacarb in connection with Rhodia’s sale of certain basic chemicals industrial and
commercial activities to Bain Capital in 2002) and the financial loss which, according to the City of Metz, this chloride
waste would have caused by necessitating, in particular, investments for the supply and distribution of drinking water
in the early 1970s. The expert submitted his report on February 14, 2008. The report confirmed the chloride waste
compliance with the operation permits of the installations. The expert also concluded that the current installations for
the production of drinking water could supply drinking water to Metz and its suburbs and that, accordingly, the use of
new units, and particularly the treatment units, was not necessary, save as a potential back-up system. The expert did
not pronounce himself conclusively on the correlation between the City’s investments to supply drinking water in the
early 1970s and the chloride disposals at the time, or on the evaluation of the loss invoked. As his expertise was of a
technical nature, he did not conclude further on whether the actions of the City of Metz were time-barred or not. By
writ of summons dated December 30, 2008, the City of Metz nevertheless referred to the tribunal in Metz (tribunal de
grande instance) seeking joint and several damages and interest of €51.5 million from Solvay Carbonate France and
Novacarb to compensate for its alleged loss. Rhodia has decided not to recognize a provision.
Other proceedings
Rhodia litigation with the Securities and Exchange Board of India
Rhodia S.A. is involved in proceedings in India initiated by the Securities and Exchange Board of India (“SEBI”), which
is seeking to require Rhodia to initiate a public tender for 20% of the shares of Albright & Wilson Chemicals India
Limited (“AWCIL”), a listed subsidiary of the Group formerly known as Albright & Wilson, which Rhodia acquired in
2000 and of which it now owns 72.93%. These shares would be acquired at a price of 278 rupees per share, based on
the value of those shares at the time of our acquisition of Albright & Wilson, and increased by interest accrued since
2000. Such a decision by the SEBI would increase Rhodia’s holding of AWCIL from 72.93% to 92.93%. As its
shareholding would exceed 90%, Rhodia would then be required to initiate a mandatory public tender offer (or
“squeeze out”) for the remaining 7.07% of outstanding shares for the same price. In this case, all the shares not yet
held by Rhodia (27.07%) would be acquired for approximately €7 million. Rhodia is challenging the merits of SEBI’s
claim but this risk is provided in the financial statements. As of the date hereof, the High Court of Mumbai, which is
hearing the case on Rhodia’s appeal following an initial unfavorable judgment, has not made a final decision. However,
in the context of Solvay’s public offer over Rhodia, discussions are in course in order to reach an agreement to settle
the case through a Solvay/Rhodia joint offer for 27% of the shares of Rhodia Specialty Chemicals India Limited.
Significant proceedings entered into by the Company
Since 2004, the Company is pursuing various proceedings in France, in Brazil and in the United States against sanofiaventis (Rhône-Poulenc’s successor) in respect of environmental and other employee pension liabilities inherited from
its former parent company.
Annual Information Document • Rhodia 2011
169
Other
Valauret litigation
On March 19, 2005, SA Valauret, a shareholder, brought a suit (in an “ut singuli” proceeding) against the Chairman of
the Board of Directors and the Chief Executive Officer before the Nanterre Commercial Court alleging personal
mismanagement, in an attempt to have them repay Rhodia the amounts paid to Mr. Jean-Pierre Tirouflet upon his
departure in October 2003 (severance payment of €2.1 million and, if applicable, payments made under a
supplementary retirement plan for which no sums have been paid to date). By a decision dated May 10, 2010, the
Court of Appeal in Versailles has overturned the decision made by the Commercial Court in Nanterre in December
2008. The Court of appeal ruled that Yves-René Nanot and Jean-Pierre Clamadieu did not commit any fault by paying
severance benefits to Mr. Tirouflet as part of his employment contract. In addition, the Court of appeal has ruled that
the proceedings had been detrimental to Mr. Nanot and Mr Clamadieu, having called into question their integrity. This
justifies the awarding of damages to both of them. Finally, the Court of appeal ruled that Valauret must pay the legal
costs incurred by Mr. Nanot and Mr. Clamadieu as well as Rhodia. Valauret has decided to contest the decision of the
Court of Appeal of Versailles dated May 12, 2010 before the Cour de cassation but only regarding the awarding of
damages to Mr. Nanot and Mr. Clamadieu. Consequently, this litigation must be considered as definitely closed with
respect to Rhodia.
30.2. Commitments relating to disposals
In connection with disposals made in 2011 and prior years, Rhodia provided customary warranties related to
accounting, tax, employees and environmental matters.
Since the beginning of 2009, Rhodia has received notices of claims in the frame of said warranties but globally
concluded that there was no ground therefore or that the conditions of such warranties were not met. Rhodia therefore
decided not to account for any significant provision in relation to such claims. The examination of these claims is still
in progress on December 31, 2011. At last, for information, the Group has provided a guarantee of the consequences
of the on-going proceedings between Innophos Inc and the National Mexican Water Company (see Note 30.1).
31. Related party transactions
31.1. Transactions with joint ventures, associates and non-consolidated subsidiaries
Transactions with joint ventures, associates and non-consolidated subsidiaries are performed under normal market
conditions and break down in the income statement as follows:
(in millions of euros)
Revenue (1)
- Non-consolidated subsidiaries
- Associates
2011
2010
125
110
5
3
11
8
- Joint ventures
109
99
Cost of sales (1)
30
43
2
2
- Non-consolidated subsidiaries
- Associates
- Joint ventures
2
1
26
40
(1) Including transactions with related parties which were only related parties for a certain period during the year up to the date of their disposal or
liquidation.
170
Annual Information Document • Rhodia 2011
The assets and liabilities recognized in Rhodia’s balance sheet in respect of related parties are as follows:
(in millions of euros)
Trade and other receivables
- Non-consolidated subsidiaries
- Associates
2011
2010
29
29
1
2
2
2
- Joint ventures
26
25
Trade and other payables
17
28
- Non-consolidated subsidiaries
-
-
- Associates
-
-
17
28
Net cash (borrowings)
-
2
- Non-consolidated subsidiaries
-
2
- Associates
-
-
- Joint ventures
-
-
- Joint ventures
31.2. Compensation and benefits paid to key Group executives
Key Group executives are defined as being company officers (directors) of the Rhodia Group or members of
Executive Management.
For the purposes of this note, members of the Executive management refer to the 4 members of the executive
committee.
Amounts due in respect of the year (salary) or obligations existing at the end of the year (other elements):
(in thousands of euros, except for subscription options and free shares)
Wages, charges and short-term benefits
Total retirement and other post-employment benefits
Severance payments (1)
Total stock subscription options and free shares granted
2011
2010
5,165
5,842
14,652
27,034
4,798
1,902
575,239
618,874
(1) Severance payments acquired correspond to the commitments undertaken by Rhodia for the Group’s key executives in the event of employment
contract termination.
Amounts paid during the year:
(in thousands of euros, except for subscription options and free shares)
2011
2010
Wages, charges and short-term benefits
5,245
5,051
Severance payments
Total stock subscription options and free shares granted
-
-
165,000
340,000
31.3. Loans granted to key Group executives
At December 31, 2011, no loans were granted to any key Group executives.
Annual Information Document • Rhodia 2011
171
32. Share-based payment
The main changes in the stock option and free share plans occurring during the year were as follows:
Options
2011
Free
shares
Total
Options
2,030,752
1,995,030
4,025,782
2,574,938
1,381,745
3,956,683
-
818,100
818,100
-
1,010,870
1,010,870
Cancelled/expired
(11,658)
(53,220)
(64,878)
(468,694)
(78,615)
(547,309)
Exercised/vested
(614,287)
(655,420)
(1,269,707)
(75,492)
(318,970)
(394,462)
Outstanding at the year-end
1,404,807
2,104,490
3,509,297
2,030,752
1,995,030
4,025,782
Outstanding at the beginning of the year
Granted
2010
Free
shares
Total
As part of the acquisition, Solvay has signed a liquidity clause for Rhodia beneficiaries granted with non-vested and
vested (but restricted) share-based payments. According to this clause, at the date of exercise, Solvay will acquire the
shares granted at a price based upon the Solvay share price.
The liquidity agreement has no impact in the Rhodia stand alone consolidated statements since the obligation
is established between Solvay and the beneficiaries.
32.1. Stock option plans
Main changes in stock option plans during the year:
2011
Options outstanding at the beginning of the period
Options granted
Options forfeited
(1)
2010
Options
Weighted
average
exercise price
(in euros)
Options
Weighted
average
exercise price
(in euros)
2,030,752
30.02
2,574,938
37.36
-
-
-
-
(11,658)
57.22
(468,694)
62.98
Options exercised
(614,287)
14.34
(75,492)
15.12
Options outstanding at the end of the period
1,404,807
40.23
2,030,752
30.02
(1) Stock subscription options forfeited during the year.
The weighted average remaining contractual life of the stock subscription options outstanding at December 31, 2011
is 3 years (4 years at December 31, 2010).
In 2011, of all the plans granted by the Rhodia Board of Directors, 614 287 options related to 2003, 2004 A, 2004 B
and 2009 plans were exercised.
Current stock option plans
Rhodia S.A. has granted stock subscription options to certain of its executive managers and employees. All of these
option plans are payable in shares over the vesting periods mentioned below. The exercise of the stock subscription
options is subordinated to the beneficiary's continued employment within the Group on the date of said fiscal year,
with certain exceptions (such as retirement). The options vested may be exercised over a period limited in time. The
exercise period varies according to the reason for leaving the Group.
During 2011, the Board of Directors did not grant any new stock option plans.
Options granted under the 2004 plans are exercisable over an eight-year period, with a holding period of four years for
French tax residents and three years for foreign tax residents as from the grant date by the Board of Directors.
172
Annual Information Document • Rhodia 2011
Options granted under the 2001, 2002 and 2003 plans are exercisable over a twelve-year period, with a holding
period of four years for French tax residents and three years for foreign tax residents as from the grant date by the
Board of Directors.
In accordance with IFRS 2, only the plans granted after November 7, 2002, that were not yet vested at January 1,
2005, were measured and recognized under this standard.
Stock option purchase plan
In 2009, a total of 1,010,000 stock options (for the purchase of the same number of shares) were granted to 41
beneficiaries, at a subscription price of €5.62. The plan is subordinated to the beneficiary’s continued employment
within the Group and performance conditions based on the achievement of a level of cumulative Free Cash Flow for
2009 and 2010.
Options granted under the 2009 plan are exercisable over an eight-year period, with a holding period of four years for
French tax residents and two years for foreign tax residents as from the grant date by the Board of Directors.
The fair value of the stock options was estimated using the Black & Scholes model and the following assumptions:
2009 plan
Rhodia share price on the grant date
Term of the options
Estimated volatility
Expected dividend return rate
Risk-free interest rate
€8.86
8 years
43%
0%
2.4%
The estimated volatility was determined using the historical volatility of the Rhodia share price and the expectations of
market operators. The risk-free interest rate corresponds to the average risk-free interest rate prevailing on the option
grant date.
In 2011, the expense incurred for stock options totaled less than €1 million, whereas in 2010 it amounted to €2,8
million.
Annual Information Document • Rhodia 2011
173
Main features of the stock option plans outstanding at December 31, 2011
2001 Plan
2002 Plan
2003 Plan
2004 A Plan
2004 B Plan
Date of shareholders’ meeting approval
04/18/2000
04/18/2000
05/21/2002
05/21/2002
05/21/2002
05/03/2007
Date of grant as approved
by the Board of Directors
03/16/2001
03/20/2002
05/28/2003
06/17/2004
06/17/2004
05/20/2009
9 years from
03/16/2004
9 years from
03/20/2005
9 years from
05/28/2006
5 years from
06/17/2007
5 years from
06/17/2007
6 years from
05/21/2011
Options granted at inception
215,022
166,667
109,412
225,125
114,375
1,010,000
Of which granted
to key Group executives (b)
19,750
14,837
8,542
29,500
46,250
30,000
-
-
6.30
2.68
2.76
5.56
188.40
144.48(e)
66.00(e)
18.00
18.00
5.62
Maximum term (years)
12
12
12
8
8
8
Weighted-average remaining contractual
life at December 31, 2010 (years)
1.2
2.2
3.4
0.5
0.5
5.3
Adjusted exercise price (c)
80.16
61.44(e)
28.08(e)
15.12
15.12
5.62
Weighted average exercise price
80.16
62.76
31.44
15.12
15.12
5.62
Weighted average exercise price
of exercisable options
80.16
62.76
31.44
15.12
15.12
5,62
397,909
306,213
201,474
147,066
85,590
892,500
Options granted between
January 1 and December 31, 2011
-
-
-
-
-
-
Options forfeited between
January 1 and December 31, 2011
(4,005)
(4,454)
(1,113)
(2,086)
-
-
Options exercised between
January 1 and December 31, 2011
-
-
(132,012)
(124,748)
(80,027)
(277,500)
393,904
301,759
68,349
20,232
5,563
615,000
27,221
22,518
-
-
-
60,000
393,904
301,759
68,349
20,232
5,563
615,000
27,221
22,518
-
-
-
60,000
- Jean-Pierre Clamadieu
3,917
6,756
-
-
-
-
Number of beneficiaries
at December 31, 2011
529
362
216
33
6
25
Exercise period (a)
Fair value of the option
Original exercise price (in euros)
Options outstanding
at December 31, 2010
Options outstanding
at December 31, 2011
Of which granted
to the key Group executives (d)
Options exercised
at December 31, 2011
Of which granted
to the key Group executives (d)
2009 Plan
Of which corporate officers:
(a) Without taking into account the tax holding period for tax residents in France of 4 years as from 2001 and 5 years previously.
(b) Key Group executives on the stock option grant date, see definition in Note 31.2.
(c) After the capital increases which took place on May 7, 2004 and December 20, 2005, the Board of Directors adjusted the exercise price and the
number of options outstanding in accordance with the French Commercial Code and applicable regulations to stock option plans.
(d) Current key Group executives, see definition in Note 33.2.
(e) Due to a personal commitment, Mr. Tirouflet accepted that the exercise price of his options would be set at €15 (after the 2004 and 2005
adjustments, this price was reduced to €6.38 before the reverse share split or €76.56 after the reverse share split).
174
Annual Information Document • Rhodia 2011
32.2. Free share plans
In the first half of 2011, the Board of Directors approved two new free share allotment plans, subject to Group
performance criteria and the continued employment of the beneficiaries. These plans are measured at fair value on
the grant date and have the same performance criteria. They have the following characteristics:
Plans granted February 22, 2011
A Plans
Number of shares
Number of beneficiaries
"2+2"
"4+0"
"2+2"
"4+0"
274,350
114,300
274,350
114,300
130
94
130
94
Grant date
February 22, 2011
Vesting date
Minimum March 31,
2013
Minimum March 31,
2015
Minimum March 31,
2013
Minimum March 31,
2015
Holding period
Minimum March 31,
2015
-
Minimum March 31,
2015
-
17,100
3,300
17,100
3,300
8
3
8
3
Number of shares
Plans granted May 13, 2011
B Plans
Number of beneficiaries
Grant date
May 13, 2011
Vesting date
Minimum May 4,
2013
Minimum May 4,
2015
Minimum May 4,
2013
Minimum May 4,
2015
Holding period
Minimum May 4,
2015
-
Minimum May 4,
2015
-
Validation of vesting conditions
Performance criteria
Board of Directors
For the first half (50%) of shares assigned:
% of shares assigned according to the level
of recurring EBITDA as presented in the
consolidated financial statements of the
Company for the year ended
December 31, 2011
For the second half (50%) of shares assigned:
% of shares assigned according to the level
of recurring EBITDA as presented in the
consolidated financial statements of the
Company for the year ended
December 31, 2012
For the first half (50%) of shares assigned:
Recurring EBITDA / net sales ratio, as
presented in the consolidated financial
statements of the Company for the year
ended December 31, 2011, exceeding
by 2 points the average ratio
of a panel of competitors
For the second half (50%) of shares assigned:
Recurring EBITDA / net sales ratio, as
presented in the consolidated financial
statements of the Company for the year
ended December 31, 2012, exceeding
by 2 points the average ratio
of a panel of competitors
Following the takeover of Rhodia by Solvay on September 7, 2011, the performance conditions, the achievement of
which could not be ascertained on the date of change of control, have been considered as satisfied. This applies to
the free share plans granted in 2010 and 2011.
Annual Information Document • Rhodia 2011
175
Expense recognized
The share-based payment expense (IFRS 2) relating to all free share plans and stock options at December 31, 2011
totaled €13.1 million (€7.2 million at December 31, 2010), including €5 million for the new plans granted in 2011.
Main features of the free share plans outstanding at December 31, 2011
2007
« 4+0 »
Plan
2008 B
« 4+0 »
Plan
2009 A
« 2+2 »
Plan
2009 A
« 4+0»
Plan
2009 B
« 2+2 »
Plan
2009 B
« 4+0 »
Plan
2010 A
« 2+2 »
Plan (c)
2010 A
« 4+0 »
Plan (c)
2010 B
« 2+2 »
Plan (c)
2010 B
« 4+0 »
Plan (c)
Date of
shareholders’
meeting approval
05/03/2007
05/03/2007
05/03/2007
05/03/2007
05/03/2007
05/03/2007
05/20/2009
05/20/2009
05/20/2009
05/20/2009
Date of grant as
approved by the
Board of Directors
07/30/2007
03/17/2008
03/16/2009
03/16/2009
03/16/2009
03/16/2009
04/27/2010
04/27/2010
04/27/2010
04/27/2010
Vesting date
07/31/2011
03/20/2012
03/16/2011
03/16/2013
03/16/2011
03/16/2013
04/27/2012
04/27/2014
04/27/2012
04/27/2014
Free shares
granted at
inception
142,755
156,980
279,800
101,400
279,800
101,400
359,235
146,200
359,235
146,200
-
-
117,000
-
117,000
-
157,500
12,500
157,500
12,500
34.08
11.30
2.37
2.37
2.37
2.37
16.80
16.93
16.80
16.93
-
-
2 years
after the
vesting
period
-
2 years
after the
vesting
period
-
2 years
after the
vesting
period
-
2 years
after the
vesting
period
-
132,990
142,370
262,700
97,200
262,700
97,200
355,735
144,200
355,735
144,200
Free shares
granted between
January 1 and
December 31,
2011
-
-
-
-
-
-
-
-
-
-
Free shares
forfeited between
January 1 and
December 31,
2011
(2,970)
(5,050)
-
(2,600)
-
(2,600)
(13,600)
(4,000)
(13,600)
(4,000)
Free shares vested
between January 1
and December 31,
2011
(130,020)
-
(262,700)
-
(262,700)
-
-
-
-
-
Number of free
shares outstanding
at December 31,
2011
-
137,320
-
94,600
-
94,600
342,135
140,200
342,135
140,200
Of which granted
to the key Group
executives (b)
-
12,500
-
12,500
-
12,500
115,000
12,500
115,000
12,500
- Jean-Pierre
Clamadieu
-
-
-
-
-
-
50,000
-
50,000
-
Number of
beneficiaries
at December 31,
2011
-
133
-
65
-
65
134
106
134
106
Of which granted
to the key Group
executives (a)
Fair value of the
share
Period of nontransferability
Number of free
shares outstanding
at December 31,
2010
Of which corporate
officers:
(a) Key Group executives on the grant date, see definition in Note 31.2.
(b) Current key Group executives, see definition in Note 31.2.
(c) The performance criteria have been considered as satisfied for the free shares plans granted in 2010 and 2011.
176
Annual Information Document • Rhodia 2011
Main features of the free share plans outstanding at December 31, 2011
Q1 2011 A
« 2+2»
Plan
Q1 2011 A
« 4+0 »
Plan
Q1 2011 B
« 2+2»
Plan
Q1 2011 B
« 4+0 »
Plan
Q2 2011 A
« 2+2»
Plan
Q2 2011 A
« 4+0 »
Plan
Q2 2011 B
« 2+2»
Plan
Q2 2011 B
« 4+0 »
Plan
Date of shareholders’ meeting
approval
04/28/2010
04/28/2010
04/28/2010
04/28/2010
04/28/2010
04/28/2010
04/28/2010
04/28/2010
Date of grant as approved by the
Board of Directors
02/22/2011
02/22/2011
02/22/2011
02/22/2011
05/04/2011
05/04/2011
05/04/2011
05/04/2011
Vesting date
03/31/2013
03/31/2015
03/31/2013
03/31/2015
05/04/2013
05/04/2015
05/04/2013
05/04/2015
274,350
114,300
274,350
114,300
17,100
3,300
17,100
3,300
82,500
-
82,500
-
-
-
-
-
18,56
18,35
18,56
18,35
29,60
29,63
29,60
29,63
2 years
after the
vesting
period
-
2 years
after the
vesting
period
-
2 years
after the
vesting
period
-
2 years
after the
vesting
period
-
Number of free shares outstanding
at December 31, 2010
-
-
-
-
-
-
-
-
Free shares granted between
January 1 and December 31, 2011
274,350
114,300
274,350
114,300
17,100
3,300
17,100
3,300
Free shares forfeited between
January 1 and December 31, 2011
-
(2,400)
-
(2,400)
-
-
-
-
Free shares vested between
January 1 and December 31, 2011
-
-
-
-
-
-
-
-
Number of free shares outstanding
at December 31, 2011
274,350
111,900
274,350
111,900
17,100
3,300
17,100
3,300
Of which granted to the key Group
executives (b)
86,500
-
86,500
-
-
-
-
-
- Jean-Pierre Clamadieu
31,500
-
31,500
-
-
-
-
-
Number of beneficiaries
at December 31, 2011
130
91
130
91
8
3
8
3
Free shares granted at inception
Of which granted to the key Group
executives (a)
Fair value of the share
Period of non-transferability
Of which corporate officers
(a) Key Group executives on the grant date, see definition in Note 31.2.
(b) Current key Group executives, see definition in Note 31.2.
Annual Information Document • Rhodia 2011
177
33. Subsequent events
No post closing event has occurred.
34. 2011 Consolidation Perimeter
Changes during the year
Subsidiaries
Country
% beginning
Change of the period
RHODIA ACETOW GMBH
Germany
Disposal
100.00
14.58
RHODIA DEUTSCHLAND GMBH
Germany
Disposal
100.00
-
RHODIA GMBH
Germany
Disposal
100.00
-
RUOHAI (ZHEJIANG) FINE CHEMICALS CO. LTD
China
Liquidation
100.00
-
GUANGDONG PUHUA CHEMICALS CO LTD
China
Acquisition
90.00
100.00
RHODIA WUXI PHARMACEUTICAL CO. LTD
China
Disposal
100.00
-
Luxembourg
Liquidation
100.00
-
RHODIA SPECIALTY CHEMICALS INDIA LTD
India
Change name
72.93
72.93
RHODIA POLYMERS & SPECIALTIES INDIA PRIVATE LTD
India
Acquisition
-
100.00
Italy
Disposal
100.00
49.00
RHODIA ECO SERVICES LTD
United Kingdom
Liquidation
100.00
-
RHODIA FOOD UK LTD
United Kingdom
Liquidation
100.00
-
RHODIA HPCII UK LTD
United Kingdom
Liquidation
100.00
-
RHODIA INDUSTRIAL SPECIALTIES LTD
United Kingdom
Liquidation
100.00
-
Thailand
Disposal
100.00
-
OOO SERTOW
Russia
Disposal
100.00
-
Joint ventures
Country
% beginning
Change of the period
% end
of the period
WARMEVERBUNDKRAFTWERK FREIBURG GMBH
Germany
Disposal
49.90
-
France
Acquisition
50.00
100.00
Venezuela
Disposal
100.00
-
PARTICIPATIONS CHIMIQUES
RHODIA ITALIA S.p.A
RHODIA THAI INDUSTRIES LTD
ORBEO CLIMATE CARE
RHODIA ACETOW VENEZUELA C.A.
178
% end
of the period
Annual Information Document • Rhodia 2011
At December 31, 2011 the consolidated perimeter included 90 companies, of which 78 subsidiaries, 7 joint ventures
and 5 associates.
Subsidiaries
Country
% (control)
RHODIA CHEMICALS PTY LTD
Australia
100.00
RHODIA BELGIUM
Belgium
100.00
RHODIA BRASIL LTDA
Brazil
100.00
RHODIA ENERGY BRASIL LTDA
Brazil
100.00
RHODIA POLIAMIDA BRASIL LTDA
Brazil
100.00
RHODIA POLIAMIDA E ESPECIALIDADES LTDA
Brazil
100.00
RHOPART – PARTICIPAÇÕES, SERVI SERVIÇOS E COMÉRCIO LTDA
Brazil
100.00
COGERACAO DE ENERGIA ELECTRICA PARAISO SA
Brazil
100.00
Canada
100.00
RHODIA (SHANGHAI) INTERNATIONAL TRADING CO. LTD
China
100.00
RHODIA (CHINA) CO. LTD
China
100.00
RHODIA POLYAMIDE (SHANGHAI) CO. LTD
China
100.00
RHODIA SILICA QINGDAO CO. LTD
China
100.00
LIYANG RHODIA RARE EARTH NEW MATERIALS CO. LTD
China
96.32
RHODIA HENGCHANG (ZHANGJIAGANG) SPECIALTY CHEMICAL CO. LTD
China
70.00
BEIJING RP EASTERN CHEMICAL CO. LTD
China
60.00
BAOTOU RHODIA RARE EARTH CO. LTD
China
55.00
RHODIA (ZHENJIANG) CHEMICALS CO. LTD
China
100.00
RHODIA FINE CHEMICALS ADDITIVES (QINGDAO) CO., LTD
China
100.00
GUANGXI LAIBIN BIOQI NEW ENERGY CO LTD
China
100.00
RHODIA FEIXIANG SPECIALTY CHEMICALS CO LTD
China
100.00
ZHUHAI RHODIA SPECIALTY CHEMICALS CO LTD
China
100.00
RHODIA ENERGY ASIA PACIFIC CO. LTD
South Korea
100.00
RHODIA KOREA CO. LTD
South Korea
100.00
RHODIA SILICA KOREA CO. LTD
South Korea
100.00
Spain
100.00
ALCOLAC, INC.
United States
100.00
RHODIA FUNDING CORP.
United States
100.00
HEAT TREATMENT SERVICES INC.
United States
100.00
RHODIA FINANCIAL SERVICES INC.
United States
100.00
RHODIA HOLDING INC.
United States
100.00
RHODIA INC.
United States
100.00
RHODIA-INDIA HOLDING INC.
United States
100.00
ORBEO CLIMATE CARE
France
100.00
RHODIA CHIMIE
France
100.00
RHODIA ENERGY
France
100.00
RHODIA ENERGY GHG
France
100.00
RHODIA CANADA INC.
RHODIA IBERIA SL
Annual Information Document • Rhodia 2011
179
Subsidiaries
Country
% (control)
RHODIA FINANCE
France
100.00
RHODIA LABORATOIRE DU FUTUR
France
100.00
RHODIA OPERATIONS
France
100.00
RHODIA PARTICIPATIONS
France
100.00
RHODIA
France
100.00
RHOD V
France
100.00
RHOD W
France
100.00
RHODIANYL S.N.C.
France
100.00
Hong Kong
100.00
RHODIA SPECIALTY CHEMICALS INDIA LTD
India
72.93
RHODIA POLYMERS & SPECILATIES INDIA PRIVATE LTD
India
100.00
RHODIA JAPAN LTD
Japan
100.00
ANAN KASEI CO., LTD
Japan
67.00
RHODIA NICCA LTD
Japan
60.00
Luxembourg
100.00
BIOPOWER CLIMATE CARE SDN BHD
Malaysia
100.00
BIOPOWER CLIMATE CARE HOLDING SDN BHD
Malaysia
100.00
RHODIA DE MEXICO SA DE CV
Mexico
100.00
RHODIA ESPECIALIDADES SA DE CV
Mexico
100.00
New Zealand
100.00
Netherlands
100.00
Poland
100.00
HOLMES CHAPEL TRADING LTD
United Kingdom
100.00
RHODIA HOLDINGS LTD
United Kingdom
100.00
RHODIA INTERNATIONAL HOLDINGS LTD
United Kingdom
100.00
RHODIA LTD
United Kingdom
100.00
RHODIA ORGANIQUE FINE LTD
United Kingdom
100.00
RHODIA OVERSEAS LTD
United Kingdom
100.00
RHODIA PHARMA SOLUTIONS HOLDINGS LTD
United Kingdom
100.00
RHODIA PHARMA SOLUTIONS LTD
United Kingdom
100.00
RHODIA REORGANISATION LTD
United Kingdom
100.00
RHODIA UK LTD
United Kingdom
100.00
MC INTYRE GROUP LTD (UK)
United Kingdom
100.00
RHODIA ASIA PACIFIC PTE LTD
Singapore
100.00
RHODIA AMINES CHEMICALS
Singapore
100.00
Switzerland
99.98
RHODIA THAI HOLDINGS LTD
Thailand
100.00
ALAVER SOCIEDAD ANONIMA
Uruguay
100.00
FAIRWAY INVESTMENTS S.A.
Uruguay
100.00
RHODIA HONG KONG LTD
CAREDOR
RHODIA NEW ZEALAND LTD
RHODIA INTERNATIONAL HOLDINGS BV
RHODIA POLYAMIDE POLSKA SP.Z O.O
SOPARGEST – SOCIETE DE PARTICIPATION ET DE GESTION S.A.
180
Annual Information Document • Rhodia 2011
Subsidiaries
Country
% (control)
ZAMIN COMPANY S/A
Uruguay
100.00
Venezuela
100.00
Country
%
United States
50.00
BUTACHIMIE
France
50.00
COGENERATION CHALAMPE
France
50.00
HEXAGAS
France
50.00
RHODIGAZ
France
50.00
India
50.00
Indonesia
50.00
Country
%
China
30.00
GIE OSIRIS
France
34.80
GIE CHIMIE SALINDRES
France
50.00
Italy
49.00
Poland
25.00
RHODIA SILICES DE VENEZUELA C.A.
Joint ventures
PRIMESTER
HINDUSTAN GUM & CHEMICALS LTD
P.T. RHODIA MANYAR
Associates
QINGDAO DONGYUE RHODIA CHEMICAL CO LTD
RHODIA ITALIA S.p.A
ZAKLAD ENERGOELEKTRYCZNY “ENERGO-STIL” SP. Z O O
Annual Information Document • Rhodia 2011
181
6
Additional information
6
.
1
.
H
6
.
2
.
L
i
e
t
s
o
r
a
g
o
y
l
t
s
f
r
u
t
c
t
G
e
h
u
r
r
e
o
o
u
f
p
t
G
e
h
r
o
u
p
1
8
3
1
8
3
6.2.1. The Company’s subsidiaries and equity holdings
6.2.2. Parent company/Affiliate relations
C
6
.
3
a
.
i
p
t
a
l
a
n
s
d
a
h
r
e
o
h
l
d
e
r
183
184
1
s
6.3.1. Share capital
6.3.2. Shareholders
6.3.3. Life of the share
6
.
4
E
.
c
x
e
r
p
t
f
r
o
m
t
.
5
.
A
u
d
i
t
o
r
h
e
s
6.5.1. Statutory auditors
6.5.2. Alternate auditors
182
4
184
190
192
C
o
m
p
a
n
y
’
s
b
y
l
a
w
s
1
6.4.1. Company name
6.4.2. Company’s place of registration
and registration number
6.4.3. Date of incorporation and term
6.4.4. Registered office – regulations – legal form
6.4.5. Corporate purpose
6.4.6. Rights, privileges and restrictions attached
to the shares (article 9 of the bylaws)
6.4.7. Modification of the shareholders’ rights
6.4.8. General Shareholders’ Meetings
(article 18 of the bylaws)
6.4.9. Change of control
6.4.10. Modification of share capital
6
8
9
4
194
194
194
194
194
195
195
195
196
196
1
9
6
196
197
Annual Information Document • Rhodia 2011
6
1
.
i
H
.
t
s
o
r
o
y
f
t
G
e
h
r
o
u
p
The Company was incorporated on September 22, 1989, for a term of 99 years from its date of registration or until
September 21, 2088, barring early dissolution or extension.
The Company’s origins date to the 19th century, and, more precisely, to two chemical companies, Société Chimique
des Usines du Rhône and Entreprise de Produits Chimiques Étienne Poulenc, which merged in 1928 to create
Rhône-Poulenc. Over the years, Rhône-Poulenc developed its activities in the polyamide, polyester and life sciences
sectors and conducted important acquisitions in the chemical industry. During the 1990s, Rhône-Poulenc refocused
its strategy on life sciences and specialty chemicals.
Rhodia’s current name date from January 1, 1998, and result from a series of restructuring operations conducted by
Rhône-Poulenc and its subsidiaries.
Rhodia became a listed company on June 25, 1998, when 32.7% of Rhône-Poulenc’s stake in its capital was sold to
the public. Starting from October 1999, Rhône-Poulenc, which became Aventis and then sanofi-aventis, progressively
decreased its holdings in Rhodia’s share capital, and sanofi-aventis later declared that on October 17, 2006, it had
sold all its holdings in Rhodia.
Lastly, following the success of the tender offer initiated by Solvay on the Rhodia Shares in the second quarter 2011,
Solvay decided to implement a squeeze-out procedure for the Rhodia shares. Consequently, the Rhodia shares have
been delisted on September 16, 2011, the date on which the squeeze-out has been implemented. The Company is
now held by Solvay, which holds more than 99% of the share capital of Rhodia S.A.
6
2
.
L
.
e
g
a
l
t
s
r
u
c
t
u
r
e
o
f
t
G
e
h
r
o
u
p
’
6
.
2
.
1
T
H
E
C
O
M
Q
B
P
.
A
N
Y
S
S
U
S
I
D
I
A
R
I
E
S
A
N
D
E
U
I
T
Y
H
O
L
D
I
N
G
S
Rhodia’s scope of consolidation as of December 31, 2011 is shown in Note 34 to the consolidated financial
statements appearing in this document.
The organizational chart below presents the Group’s simplified structure in 2011 (including the Group’s main
companies).
Annual Information Document • Rhodia 2011
183
6
2
.
2
.
P
.
P
A
E
R
N
T
O
C
M
N
A
Y
A
/
F
I
F
L
I
A
T
E
R
E
L
A
T
I
O
N
S
Rhodia is the Group’s financial holding company and, therefore, has no direct operational or industrial activities. In its
capacity as the parent company, it also provides support, consulting, coordination and leadership services to its
subsidiaries.
Its equity holdings are indirect and are held through sub-holding companies present in different areas. This allocation,
in part a result of the Group’s history, responds to geographical and organizational needs. In general, the Group’s
legal entities support the activities of all of the Group’s companies in the countries where these legal entities operate.
However, certain subsidiaries are dedicated to specific projects or to certain Global Business Units.
Rhodia maintains a “Parent-Subsidiary” type relationship with its subsidiaries. These include:
centralized management of the Group’s financing;
•
re-invoicing of shared services or assistance by Rhodia S.A. provided to related business for an amount
•
of €10 million in 2011;
granting of guarantees by Rhodia S.A. in connection with certain bank financing and/or operating contracts for its
•
subsidiaries;
•
centralization of the Group’s foreign exchange risks and interest rate risks;
•
centralized management of the risks related to the raw materials and energy markets;
•
management of French tax consolidation.
See also Chapter 1.1 of this document for information on the activities of the subsidiaries as well as Note 31.1 to the
consolidated financial statements appearing in this document relating to transactions with joint business ventures,
associates and non-consolidated subsidiaries.
C
6
6
.
.
3
3
a
.
.
1
i
p
t
a
l
a
n
s
d
a
h
r
e
h
o
l
d
e
r
s
P
.
S
H
A
R
E
C
A
I
T
A
L
Share capital at December 31, 2011
At December 31, 2011, Rhodia’s share capital amounted to €106,411,910 divided into 106,411,910 shares of ordinary
shares with a nominal value of €1 per share, fully paid and of the same class. On December 31, 2010, it amounted to
€104,570,968 divided into 104,570,968 shares of ordinary shares with a nominal value of €1 each.
During fiscal year 2011, Rhodia’s share capital underwent the following changes:
•
a capital increase in the nominal amount of €1,486,223 (issue premium of €40,128,021) through the creation of
1,486,223 new shares with a nominal value of €1 each, delivered to the shareholders who opted for payment of
the dividend in shares (in accordance with the fourth resolution approved by the General Meeting of May 18,
2011);
•
a capital increase in a total nominal amount of €17,932 through the creation of 17,932 new shares with a nominal
value of €1 each resulting from the exercise of 215,184 share subscription warrants;
•
capital increases in the total nominal amount of €336,787 through the creation of 336,787 new shares with a
nominal value of €1 each resulting from the exercise of share subscription options.
The historical development of the share capital is found in Chapter 6.3.1.6 below.
184
Annual Information Document • Rhodia 2011
Securities not representing capital
As the Company’s bylaws do not grant this power to shareholders, the Board of Directors has the authority to issue
bonds.
In October 2011, further Rhodia’s acquisition by Solvay, Rhodia exercised the call on its Floating Rate Notes and
reimbursed the outstanding amount of €229 million.
Detailed information of the different prior and existing loans is given in Note 22 to the consolidated financial
statements appearing in this document.
The Company’s acquisition of treasury shares
Rhodia’s transactions with its own shares during 2011
Number of shares
• bought
• sold/transferred
Average price (in euros)
• purchase
• sale/transfer
Trading fees (in euros)
Number of securities held in the portfolio at December 31, 2011:
(2)
• treasury shares
• including call options
Percentage of its own capital
(3)
Portfolio value at December 31, 2011
1,010,000
(1)
932,920
5.61
879,894
879,894
0.83%
€6,752,402
(1) All of the treasury shares were transferred in connection with performance share and share purchase options plans.
(2) Par value of the shares, €1.
(3) Value estimated at the buying price
During 2011, the Company bought 1,010,000 Rhodia shares through the exercise of the call options acquired in May
2009 and transferred 932,920 shares in connection with the 2007 4+0 free shares plan, the 2009 2+2 performance
shares plans and the 2009 share purchase options plan.
All treasury shares held by the Company were assigned for the purposes of allocating or transferring shares pursuant
to the stock option plans or the grant of free shares or any other form of a grant to employees, former employees or
officers of the Company and its subsidiaries within the meaning of articles L.225-180 or L.233-16 of the French
Commercial Code.
The shares repurchased by the Company were not reallocated for any purpose other than the one set forth when they
were purchased.
Since January 1, 2012, the Company has not purchased any treasury shares or options on treasury shares.
On March 20, 2012, the Company transferred 134,620 Rhodia shares to the beneficiaries of the 2008 4+0 B
performance shares plan. At this date, the Company held 745,274 treasury shares.
Annual Information Document • Rhodia 2011
185
Status of authorizations and uses
Summary table of current authorizations
Transactions/Securities concerned
Maximum nominal amount
to be issued
Duration of
the authorization
Use (date) (and expiration)
Repurchase of the Company’s shares
General Shareholders’ Meeting 5/18/2011 – 5th resolution
10% of the capital
Purchase price: ≤ €30
Refer to section
“The Company’s
acquisition
of treasury
shares” above
18 months
(11/2012)
Capital reduction through cancellation of treasury stock
General Shareholders’ Meeting 5/18/2011 – 6th resolution
10% of the capital
None
24 months
(05/2013)
Capital increase all securities combined with preferential
subscription right (PSR)
General Shareholders’ Meeting 4/28/2010 – 10th resolution
Capital = €50 million
Borrowing = €800 million
None
26 months
(06/2012)
Capital increase all securities combined without PSR
General Shareholders’ Meeting 4/28/2010 – 11th resolution
Capital = €15 million
Borrowing = €800 million
None
26 months
(06/2012)
Increase in the number of shares to be issued in case of a
surplus of requests
General Shareholders’ Meeting 4/28/2010 – 12th resolution
Limited (i) to 15% of the initial
issue and (ii) the cap set forth
in the delegation used
None
26 months
(06/2012)
Capital increase in connection with the Group Savings Plan
General Shareholders’ Meeting 5/18/2011 – 7th resolution
Nominal value €4 million*
None
26 months
(07/2013)
Capital increase reserved for employees outside the Group
Savings Plan
General Shareholders’ Meeting 5/18/2011 – 8th resolution
Nominal value €4 million*
None
18 months
(11/2012)
1% of the capital (on the date
777,300
of the allocation(s)) performance shares
Subject to achievement of the
granted (02/2011)
performance conditions 40 800 performance
(except for 0.25% of the
shares granted
capital)
(05/2011)
26 months
(06/2012)
Allocations of free shares to employees and senior
executives (L. 225-197-1 and following of the French
Commercial Code) General Shareholders’ Meeting
4/28/2010 – 16th resolution
*
The two delegations concerning capital increases reserved for employees are subject to an overall limit of a nominal value of €4 million.
Shares, securities giving access to capital, options for the subscription or
purchase of shares and free allocation of shares
Recall of the existing authorizations
Authorization to reduce the share capital by cancelling shares held by the Company
The Combined General Meeting of May 18, 2011 authorized the Board of Directors, for a period of 24 months, to
cancel, in one or more instalments, within a limit of 10% of the Company’s share capital per 24-month period, all or
some of the shares held by the Company to reduce the resulting share capital.
Delegations of powers to the Board of Directors to proceed with capital increases through the
issue of ordinary shares and/or any securities giving immediate or future access to capital with or
without maintenance of the preferential subscription right
The combined general meeting of April 28, 2010 authorized the Board of Directors, for a period of 26 months, to
decide:
•
to increase the share capital, on one or more occasions, in the proportions and at the times that it determines, by
issuing, with maintenance of the shareholder pre-emptive subscription right, common shares of the Company or
any securities giving access by any means, immediately and/or in the future, to common shares of the Company
186
Annual Information Document • Rhodia 2011
up to a limit of a nominal amount of capital increase of €50 million and a nominal amount of €800 million for
issues of debt securities that may give access to capital;
•
to increase the share capital, on one or more occasions, in the proportions and at the times that it determines, by
issuing, with elimination of the shareholder pre-emptive subscription right and right to grant a priority period,
common shares of the Company, or any securities giving access by an means, immediately and/or in the future,
to common shares of the Company up to a limit of a nominal amount of capital increase of €15 million and a
nominal amount of €800 million for issues of debt securities that may give access to capital;
•
to increase, within the limits set forth by the regulations, the number of securities to be issued in the event of a
surplus of requests for each of the issues thus decided.
The Combined General Meeting of April 28, 2010 also decided in its thirteenth resolution to set an overall limit for the
issuances that could be carried out under the tenth and twelfth resolutions as a nominal amount of capital increase of
€65 million and a nominal amount of €1.6 billion for issues of debt securities that may give access to capital.
Authorization to proceed with the issue of shares and/or securities, immediately or in the future,
giving access to capital issued by the Company and reserved for current and/or former employees
The general meeting of May 18, 2011 authorized the Board of Directors to proceed with issues of shares and/or
securities giving access to capital issued by the Company and:
•
reserved for participants in the Group savings plan, for a maximum nominal amount of €4 million, for a period of
26 months;
•
reserved for employees of foreign companies, not included in the Group savings plan, for a maximum nominal
amount of €4 million for a period of 18 months;
These two authorizations are subject to an overall limit of a nominal amount of €4 million.
Authorization to proceed with the free allocations of shares
The General Shareholders’ Meeting held on April 28, 2010 authorized the Board of Directors to allocate, up to a
maximum of 1% of the share capital as of the date of the decision, shares free of charge. The shares potentially
allocated could be existing shares or shares to be issued by the Company.
The beneficiaries of the allotments may be employees of the Company and of companies and economic interest
groups that are related to it within the meaning of article L.225-197-2 of the French Commercial Code, as well as
certain corporate officers.
The authorization provides that the allocation of shares to their beneficiaries can only be at the end of:
•
a minimum two-year vesting period with the minimal time period during which the beneficiaries must hold their
shares (i.e. the lock-up period) also set at two years; or
•
a vesting period with a minimal duration of four years, with the lock-up period thus being waived.
The Board of Directors could provide for vesting and lock-up periods longer than these minimal periods.
The authorization also provides that these allocations must be accompanied by economic performance conditions,
except for a number of shares representing a maximum of 0.25% of the capital in the case of allocations to a large
majority of Group employees.
This authorization is valid for a period of 26 months and terminated the authorizations to allocate (i) performance
shares and (ii) stock subscription and/or purchase options granted by the General Meeting of shareholders of May 20,
2009.
Annual Information Document • Rhodia 2011
187
Detailed information concerning the different performance share allocations currently available at Rhodia is presented
in Chapter 3.3.4 above as well as in Note 32 of the notes to the consolidated financial statements appearing in this
document.
Securities giving access to Rhodia’s capital
Bonds convertible into and/or exchangeable for new or existing shares of the Company
(OCEANEs)
On April 27, 2007, Rhodia issued OCEANEs for a total nominal amount of €595 million, due January 1, 2014, with an
annual interest of 0.5%. The OCEANE bonds carried a 13.22% redemption premium. They include a repurchase
option that may be exercised by Rhodia under certain conditions.
Following the consecutive adjustments to the reverse share split of the Company’s shares decided on in 2007 and the
distribution of dividends since the OCEANE issuance, one OCEANE gives the right to obtain 1.04 shares of the
Company with the nominal value of €1.
Following the success of the public tender offer initiated by Solvay on the shares and OCEANE issued by Rhodia and
the implementation of a squeeze out procedure, Solvay held all the outstanding OCEANE. In this context, Rhodia
decided to fully repay the OCEANE bonds on December 15, 2011 at a price of €52.63 per bond, corresponding to the
early redemption price at the date of the repayment.
Share subscription warrants
At December 31, 2010, there were 215,193 outstanding share subscription warrants.
Following the reverse share split of the Company’s shares and consecutive adjustments on the dilutive instruments of
the Company, 12 subscription warrants give the right to the subscription of one post-reverse split share with the
nominal value of €12.
These subscription warrants were issued within the context of the capital increase reserved for employees and
executed on June 30, 2006 and have been attributed for the benefit of the employees of Rhodia’s subsidiaries located
in Germany, in place of a subscription discount, in order to offer them the economic equivalent of what was received
by employees of the subsidiaries located in other countries. These warrants are held by the Common Fund for
Placement of the Enterprise “Zukunft 2006” (Fonds Commun de Placement d’Entreprise). The employees of Rhodia’s
German subsidiaries who have subscribed for the reserved capital increase hold shares in this fund.
In 2011, all the share subscription warrants had been exercised, involving a capital increase in a total nominal amount
of €17,932 through the creation of 17,932 new shares with a nominal value of €1 each.
188
Annual Information Document • Rhodia 2011
History of the share capital
Date
12/31/2007
Amount of the Number of shares
capital
(nominal value)
€1,204,413,972
Nature of the transaction
100,367,831 (€12)
01/2008
€1,213,031,484
101,085,957 (€12)
2006 free share allotment plans A and B: capital increase in the
nominal amount of €8,617,512 through the issue of 718,126 new
Rhodia shares with a nominal value of €12 each (as a result of the
expiration of the vesting period)
12/2008
€1,213,044,816
101,087,068 (€12)
Exercise of share subscription options: recording of a capital
increase in the nominal amount of €13,332 through the issue of
1,111 shares with a nominal value of €12 each
05/2010
€101,087,615
101,087,615 (€1)
1/ Exercise of share subscription warrants: recording of a capital
increase in the nominal amount of €6,564 through the issue of
547 shares with a nominal value of €12 each2/ Capital reduction in
the amount of €1,111,963,765 through the reduction of the nominal
value of the shares from €12 to €1 each
06/2010
€101,495,997
101,495,997 (€1)
Payment of the dividend in shares: capital increase in the nominal
amount of €408,382 through the creation of 408,382 new shares
with a nominal value of €1 each
08/2010
€104,495,997
104,495,997 (€1)
Capital increases reserved for employees: capital increase in the
nominal amount of €3,000,000 through the creation of
3,000,000 new shares with a nominal value of €1 each
€104,570,968
104,570,968 (€1)
1/ Exercise of share subscription options: recording of a capital
increase in the nominal amount of €74,945 through the issue of
74,945 shares with a nominal value of €1 each
2/ Conversion of OCEANEs: recording of a capital increase in the
nominal amount of €26 through the issue of 26 shares with a
nominal value of €1 each
06/2011
€106,266,636
1/ Exercise of share subscription options: recording of a capital
increase in the nominal amount of €191,513 through the issue of
191,513 shares with a nominal value of €1 each
2/ Exercise of share subscription warrants: recording of a capital
106,266,636 (€1)
increase in the nominal amount of €17,932 through the issue of
17,932 shares with a nominal value of €1 each
3/ Payment of the dividend in shares: capital increase in the nominal
amount of €1,486,223 through the creation of 1,486,223 new shares
with a nominal value of €1 each
12/31/2011
€106,411,910
106,411,910 (€1)
12/31/2010
Annual Information Document • Rhodia 2011
Exercise of share subscription options: recording of a capital
increase in the nominal amount of €145,274 through the issue of
145,274 shares with a nominal value of €1 each
189
6
.
3
.
2
.
S
H
A
R
E
H
O
L
D
E
R
S
Distribution of the capital and voting rights
The changes in the distribution of Rhodia’s share capital during the last three financial years were as follows:
December 31, 2010 (1)
December 31, 2011
Number
of shares
% of
capital
% of
voting
rights
Solvay SA
10 637 102
9.99
9.99
-
Solvay Participations France
93 966 413
88.30
88.30
JP Morgan Asset
Management
-
-
Capital Group
Companies, Inc.
-
Henderson Global
Investors Ltd.
December 31, 2009 (1)
% of
voting
rights
Number
of shares
% of
capital
% of
voting
rights
-
-
-
-
-
-
-
-
-
-
-
-
7,310,811
7.00
7.04
7,722,290
7.64
7.73
-
-
3,371,267
3.22
3.25
5,120,833
5.07
5.12
-
-
-
418,198
0.40
0.40
888,872
0.88
0.89
Wellington Management
Company, LLP
-
-
-
74,925
0.07
0.07
1,571,786
1.55
1.57
Axiom International Investors
LLC
-
-
-
-
-
-
3,849,612
3.81
3.85
Other foreign institutional
investors
-
-
-
52,046,621
49.77
50.16
42,359,201
41.90
42.37
Groupama Holding S.A.
-
-
-
3,193,848
3.05
3.08
-
-
-
Other French institutional
investors
-
-
-
18,531,636
17.72
17.86
928 501(2)
0.87
0.87
12,391,339
11.85
11.94
20,221,395
20.00
20.23
-
-
-
6,429,509
6.15
6.20
3,738,692
3.70
3.74
879 894
0.84
0.84
802,814
0.77
0.00
1,121,784
1.11
0.00
106,411,911
100
100 104,570,968
100
100 101,087,068
100
100
Individual shareholders
Employees
(L. 225-102 C. com.)
Treasury shares
TOTAL
(1)
Number
% of
of shares capital
Sources: Euroclear France and Capital Precision.
(2) Shares obtained by beneficiaries of performance shares plan and/or share purchase option plan, that could not be tendered into the public tender
offer due to their unavailability. These shares are covered by a liquidity agreements between each beneficiary and Solvay
The main event that occurred relating to the control of the Company’s share capital since January 1, 2011 is the
acquisition by the Solvay Group of more than 99% of the Rhodia shares in the framework of the public tender offer
initiated by Solvay and the squeeze out implemented after the success of this tender offer.
To Rhodia’s knowledge:
•
the percentage of the capital and voting rights held by the members of the Rhodia Board of Directors and the
Executive Board is less than 5%;
•
no shareholders other than those mentioned in the table above directly or indirectly hold more than 5% of the
capital or voting rights of Rhodia.
190
Annual Information Document • Rhodia 2011
Different voting rights
There are no double voting rights. Each share entitles its holder to one vote.
Securities transactions conducted by Rhodia’s senior management
In accordance with the provisions of the recommendation of the Autorité des Marchés Financiers relating to the
prevention of insider trading by senior managers of listed companies, Rhodia had prudent rules providing that
directors and corporate officers must not conduct transactions on the Company’s financial instruments during a 30day period preceding the publication of the annual, semi-annual and quarterly results (including the actual day of
publication). Outside of these so-called black-out periods, they are free to carry out transactions on the Company’s
financial instruments provided that they do not possess insider information.
In accordance with article L.621-18-2 of the Monetary and Financial Code and articles 223-22A et seq. of the General
Regulations of the Autorité des Marchés Financiers, the transactions conducted on Rhodia’s financial instruments by
each of the members of its Board of Directors – including the Chairman and Chief Executive Officer – or people
related to them, had to be declared when the cumulative amount of the transactions conducted by each of these
senior executives exceeds €5,000 per calendar year.
In accordance with article 223-26 of the General Regulations of the Autorité des Marchés Financiers, the following
table presents the transactions declared by the Chairman and Chief Executive Officer and the other directors of
Rhodia or persons related to them, from January 1 to September 16, 2011 (date of the delisting of the Rhodia shares
from NYSE Euronext Paris):
Director’s name
Reference to the AMF
decisions and information
Declaration date (published on its web site)
Description of the
operation
Date of the
transaction
Yves René Nanot
Director
January 6, 2011
211D0055
Sale of 18,280 shares
at the unit price of €25
December 30,
2010
Yves René Nanot
Director
January 6, 2011
211D0056
Exercise of 9,977 share
subscription options
at the unit price of €15.12
December 30,
2010
Yves René Nanot
Director
January 6, 2011
211D0057
Exercise of 8,303 share
subscription options
at the unit price of €15.12
December 30,
2010
Jean-Pierre Clamadieu
Chairman & Chief Executive
Officer
June 22,2011
211D2835
Exercise of 3,721 share
subscription options
at the unit price of €28.08
June 10, 2011
Jean-Pierre Clamadieu
Chairman & Chief Executive
Officer
June 22,2011
211D2836
Exercise of 9,977 share
subscription options
at the unit price of €15.12
June 10, 2011
Jean-Pierre Clamadieu
Chairman & Chief Executive
Officer
June 22,2011
211D2837
Exercise of 14,891 share
subscription options
at the unit price of €15.12
June 10, 2011
June 30, 2011
Option for payment of the
dividend in shares.
211D3088
Subscription of 605 shares
at the unit price of €28.00
June 21, 2011
July 7, 2011
211D3022
Option for payment of the
dividend in shares.
Subscription of 2,945
shares at the unit price of
€28.00
June 21, 2011
July 27, 2011
211D3616
Exercise of 11,552 share
subscription options
at the unit price of €15.12
July 22, 2011
Jacques Khéliff
Director representing the
employee shareholders
Jean-Pierre Clamadieu
Chairman & Chief Executive
Officer
Yves René Nanot
Director
Person related to Jean-Pierre
Clamadieu
Chairman & Chief Executive
Officer
September 20, 2011
Annual Information Document • Rhodia 2011
211D4494
14,294 shares tendered to
the public offer initiated by
September 7, 2011
Solvay on the Rhodia
shares
191
Person related to Jean-Pierre
Clamadieu
Chairman & Chief Executive
Officer
September 20, 2011
211D4496
14,295 shares tendered to
the public offer initiated by
September 7, 2011
Solvay on the Rhodia
shares
Laurence Danon
Director
September 20, 2011
211D4495
1,017 shares tendered to
the public offer initiated by
September 7, 2011
Solvay on the Rhodia
shares
Patrick Buffet
Director
September 20, 2011
211D4497
200 shares tendered to the
public offer initiated by
September 7, 2011
Solvay on the Rhodia
shares
Michel de Fabiani
Director
September 20, 2011
211D4498
3,134 shares tendered to
the public offer initiated by
September 7, 2011
Solvay on the Rhodia
shares
Jean-Pierre Clamadieu
Chairman & Chief Executive
Officer
September 20, 2011
211D4499
67,521 shares tendered to
the public offer initiated by
September 7, 2011
Solvay on the Rhodia
shares
Jacques Khéliff
Director representing the
employee shareholders
September 20, 2011
211D4500
16,773 shares tendered to
the public offer initiated by
September 7, 2011
Solvay on the Rhodia
shares
Yves René Nanot
Director
September 20, 2011
211D4501
11,552 shares tendered to
the public offer initiated by
September 7, 2011
Solvay on the Rhodia
shares
Yves René Nanot
Director
September 20, 2011
211D4502
11,000 shares tendered to
the public offer initiated by
September 7, 2011
Solvay on the Rhodia
shares
211D4503
1,000 shares tendered to
the public offer initiated by
September 7, 2011
Solvay on the Rhodia
shares
211D4504
1,935 shares tendered to
the public offer initiated by
September 7, 2011
Solvay on the Rhodia
shares
211D4505
1,075 shares tendered to
the public offer initiated by
September 7, 2011
Solvay on the Rhodia
shares
Henri Poupart-Lafarge
Director
September 20, 2011
Aldo Cardoso
Director
September 20, 2011
Pascal Colombani
Director
6
.
3
.
3
September 20, 2011
.
L
I
F
E
O
F
T
H
E
S
H
A
R
E
Rhodia shares were listed on NYSE Euronext Paris in Paris from June 25, 1998 to September 15, 2011, date of their
delisting.
In addition, Rhodia shares were listed in the United States in the form of level 1 privately negotiable ADRs traded
over-the-counter on the International OTCQX. Each ADR was representative of one American Depositary Share
(ADS), representing itself a Rhodia share.
Rhodia S.A. stock identification sheet
ISIN Code FR0010479956
Bloomberg Code: RHA FP
Reuters Code: RHA.PA
Security eligible for Deferred Settlement Service: yes
PEA-eligible security: yes
Rhodia S.A. ADR identification sheet
192
Annual Information Document • Rhodia 2011
Ratio: 1 ADR for 1 Rhodia S.A. share
ISIN Code: US7623972061
Bloomberg Code: RHAYY US
Reuters Code: RHAYY.PK
The tables below trace the changes in 2010 in the price and the volume of trading of the Rhodia S.A. shares listed on
NYSE Euronext Paris and of the Rhodia S.A. ADRs listed on the international OTCQX.
Rhodia S.A. shares listed on NYSE Euronext Paris (until September 15, 2011)
Volume of transactions
(daily average)
Closing price
(in euros)
High
Low Number of shares Amount of capital
January 2011
25.725
21.78
1,074,132
25,007,569.00
February 2011
22.95
20.3
1,339,839
28,846,319.00
March 2011
21.10
18.66
1,480,756
29,775,850.16
April 2011
31.50
21.065
3,408,320
105,767,011.47
May 2011
31.66
31.15
575,929
18,142,155.45
June 2011
31.33
31.14
447,603
13,991,368.69
July 2011
31.55
31.295
379,671
11,899,908.87
August 2011
32.69
31.32
424,242
13,342,659.73
September 2011 (until September 15)
31.55
31.50
148,317
4,675,728.90
Source: Bloomberg
Rhodia S.A. American Depositary Receipts (ADR) listed on the international OTCQX
(until September 15, 2011)
Volume of transactions
(daily average)
Closing price
(in dollars)
High
Low Number of shares Amount of capital
January 2011
33.59
29.58
1,240
39,145.41
February 2011
31.35
27.72
1,774
52,852.05
March 2011
29.40
25.59
4,006
108,542.10
April 2011
46.57
43.90
11,280
501,378.90
May 2011
46.50
43.65
2,224
100,047.79
June 2011
45.64
44.00
4,031
180,524.05
July 2011
45.47
43.76
1,172
52,320.28
August 2011
45.35
43.58
457
20,226.01
September 2011 (until September 15)
45.12
41.52
424
18,115.78
Source: Bloomberg
Annual Information Document • Rhodia 2011
193
6
6
.
.
4
4
E
.
.
1
c
x
e
r
t
p
f
r
o
m
t
C
e
h
o
m
a
p
n
’
y
s
b
l
y
a
s
w
P
.
O
C
M
N
A
N
Y
M
A
E
The name of the Company is Rhodia.
’
6
.
4
.
2
P
.
O
C
B
P
M
N
A
Y
L
S
A
E
C
O
F
E
R
I
G
T
S
R
I
T
A
O
N
N
A
D
E
R
I
G
T
S
R
A
T
I
O
N
N
U
M
E
R
The Company is registered with the Company and Commercial Registry of Nanterre under number 352,170,161. Its
APE Code is 6420Z.
6
.
4
.
3
P
.
D
E
T
A
O
I
F
N
O
C
O
R
R
I
T
A
O
N
N
A
D
T
E
M
R
The Company was incorporated on September 22, 1989, for a term of 99 years from its date of registration or until
September 21, 2088, barring early dissolution or extension.
6
.
4
.
4
.
E
R
I
G
E
T
S
E
R
O
D
F
I
F
E
C
R
–
E
G
U
L
A
T
I
O
N
S
–
L
E
G
A
L
F
O
R
M
The Company’s registered office is located at Immeuble Cœur Défense – Tour A, 110, esplanade Charles de Gaulle –
92400 Courbevoie.
The Company’s telephone number is + 33 (0) 1 53 56 64 64.
Rhodia is a business corporation organized under the laws of France, société anonyme, and is subject to all of the
laws and regulations governing commercial companies, particularly the provisions of the French Commercial Code.
6
.
4
.
P
.
5
C
O
R
P
O
R
A
T
E
P
U
R
O
S
E
Pursuant to article 3 of the bylaws, the Company’s purpose, in France as well as abroad, is, either directly or
indirectly, to:
•
perform transactions in the fields of chemistry, fibers and polymers;
•
research, develop, manufacture, transform, market and supply goods and products, and to license, acquire, and
transfer all industrial and commercial property rights;
•
make investments in any form whatsoever, particularly through the formation of new companies, contributions,
subscription, purchase of stock or interests in any business, groups or companies relating directly or indirectly to
the corporate purpose and, if appropriate, for any other purpose;
•
issue any guarantee, first demand guarantees, surety bonds and other security interests in compliance with the
provisions of current laws and regulations, particularly to any company or entity of the Group, in connection with
their activities, as well as the financing or re-financing of their activities. The contracting of any loan and, more
generally, the use of any method of financing, in particular, by the issue or, where applicable, by the subscription
of financial instruments, with a view to facilitating the financing or re-financing of the Company’s operations;
•
to provide, as the parent company, support, consulting, coordination and management services to Rhodia’s
subsidiaries;
•
as well as, in general, undertake all financial, commercial, industrial, civil, real property, personal property or
service transactions that may be directly or indirectly related to one of the specified purposes or to any similar or
related purpose or which is likely to further the development of the Company’s assets.
194
Annual Information Document • Rhodia 2011
6
.
4
6
.
P
.
I
R
H
G
T
S
I
R
,
I
V
L
E
E
G
S
N
A
D
E
R
S
T
I
R
I
T
C
O
N
S
T
A
T
A
H
C
E
D
O
T
T
H
E
S
H
A
R
E
S
(
B
A
I
T
R
L
C
E
O
9
H
T
F
E
L
Y
W
A
S
)
Each share gives a right to ownership of the corporate assets and to the liquidation dividend equal to the portion of the
share capital it represents.
All the shares that make up or will make up the capital stock will be fully comparable with respect to tax liabilities.
Therefore all taxes and levies that, for any reason, may, due to repayment of the capital, become due and payable for
only some of them, either during the life of the Company or at the time of its liquidation, will be divided among all the
shares making up the capital at the time of this/these repayment(s) so that, while taking into account the par value and
unamortized amount of the shares and their respective rights, all the current or future shares confer on their owners
the same effective advantages and entitle them to receive the same net sum.
Whenever it is necessary to own a certain number of shares to exercise a right, it is up to the owners, who do not own
such number to, where relevant, consolidate and, potentially, buy or sell the number of shares or rights necessary.
’
6
.
4
.
.
M
7
O
I
D
I
F
C
I
T
A
O
N
O
H
T
F
E
H
S
A
E
R
H
O
L
E
D
R
S
I
R
H
G
T
S
Any modification of the voting rights attached to the shares is regulated by law, as the Company’s bylaws do not set
forth specific provisions.
(
’
6
.
4
.
.
8
B
1
G
E
N
E
R
A
L
S
H
A
R
E
H
O
L
D
E
R
S
M
E
E
T
I
N
G
S
A
R
T
I
C
L
E
8
O
F
T
H
E
Y
L
A
W
S
)
Ordinary or Extraordinary Shareholders’ Meetings are called and deliberated in accordance with the law.
Meetings are held at the registered office or any other place specified in the notice for meeting.
The right for shareholders to personally attend Shareholders’ Meetings, or to do so through a proxy holder or by mail,
is subject to the registration of the shares in the name of the shareholder by midnight (Paris time) on the third
business day prior to the meeting in registered securities accounts maintained by the Company.
Subject to the qualifications provided for by regulations, and in accordance with the procedures established therefore
by the Board of Directors, shareholders may attend and vote at any shareholders’ or special meetings by
videoconference or any electronic telecommunication or remote transmission means in accordance with applicable
laws and regulations. In such event, an electronic signature may be provided using a process that meets the
requirements listed in the first sentence of the second paragraph of article 1316-4 of the Civil Code. The shareholders
shall then be deemed present at said meetings for the calculation of quorum and majority.
The shareholders, in accordance with the conditions defined by current regulations, may send their proxy vote form or
mail vote form for all ordinary or extraordinary meetings, either on paper, or by remote transmission by decision of the
Board of Directors published in the notice of meeting.
To be accepted, all ballots and proxies must have actually been received at the Company’s principal office or at the
location stated in the meeting notice no later than two days prior to the date of the Shareholders’ Meeting, except if a
shorter period is stated in the notice of meeting or required by mandatory provisions reducing said period.
Instructions given by electronic means that contain a power of attorney or a proxy may be received by the Company in
accordance with the conditions and within the time limits defined by the current regulations.
The meeting’s proceedings may be transmitted live by videoconference and/or by remote transmission. Where
applicable, reference shall be made thereto in the notice of meeting.
The Chairman of the Board of Directors or, in his absence, a Director specifically delegated for said purpose by the
Chairman presides over the meetings. Failing that, the meeting shall appoint its own Chairman.
Annual Information Document • Rhodia 2011
195
The duties of tellers are fulfilled by the two members of the meeting with the highest number of votes and who accept
said duties.
The officers of the meeting appoint the secretary, who may be chosen among non-shareholders.
An attendance sheet, drawn up in accordance with the law, is kept at each meeting of the Annual General Meeting.
Said attendance sheet, duly signed by the shareholders and proxies, shall be certified true by the officers of the
meeting.
Each meeting participant shall have as many votes as shares held or represented, subject to statutory limitations.
At the request of one or more members of the meeting representing by themselves or as proxies at least one tenth of
the capital present or represented at the meeting, a secret ballot shall be held.
Minutes of the meetings are drawn up and copies thereof are certified in accordance with the law.
The right to vote attached to the share belongs to the beneficial owner at Ordinary Shareholders’ Meetings, as well as
at extraordinary or special meetings.
6
.
4
.
.
9
H
C
N
A
E
G
O
F
O
C
N
T
O
R
L
There are no provisions in the bylaws or in any other internal Rhodia document that might delay, defer or prevent a
change in control.
6
.
4
.
1
0
P
.
M
O
I
D
I
F
C
I
T
A
O
N
O
F
H
S
A
R
E
C
A
I
T
A
L
Any modification of the share capital or of the voting rights attached to Rhodia’s shares is subject to applicable legal
requirements, as the bylaws do not contain any specific provisions.
6
6
5
.
.
.
5
A
.
1
u
i
d
t
o
r
s
.
S
T
A
T
U
T
O
R
Y
A
U
D
I
T
O
R
S
PricewaterhouseCoopers Audit, member of the Regional Association of statutory auditors of Versailles.
63, rue de Villiers
92200 Neuilly-sur-Seine
Represented by Mr. Stéphane Basset
appointed on April 29, 2003 with a mandate, renewed at the Shareholders’ General Meeting of May 20, 2009 that will
end at the close of the Shareholders’ General Meeting called to approve the financial statements for the year ended
December 31, 2014.
KPMG S.A., member of the Regional Association of statutory auditors of Versailles.
Immeuble Le Palatin, 3, cours du Triangle
92939 Paris La Défense Cedex
Represented by Mr. Denis Marangé
appointed on May 16, 2008 with a mandate that will end at the close of the Shareholders’ General Meeting called to
approve the financial statements for the year ending December 31, 2013 (note that this appointment was made at the
end of the mandate of Salustro Reydel as regular statutory auditor, member of KPMG International since 2005, which
had begun on May 22, 2002).
196
Annual Information Document • Rhodia 2011
Deloitte et Associés, member of the Regional Association of statutory auditors of Versailles.
185 C, avenue Charles de Gaulle
92200 Neuilly-sur-Seine
Represented by Mr. Arnaud de Planta
appointed on December 16, 2011 with a mandate that will end at the close of the Shareholders’ General Meeting
called to approve the financial statements for the year ended December 31, 2016.
6
.
.
2
5
.
A
L
T
E
R
N
A
T
E
A
U
D
I
T
O
R
S
Mr. Yves Nicolas
63, rue de Villiers
92200 Neuilly-sur-Seine
appointed on April 29, 2003 with a mandate renewed at the Shareholders’ General Meeting of May 20, 2009 which will
end at the close of the Shareholders’ Meeting called to approve the financial statements for the year ending on
December 31, 2014.
Mr. Jean-Paul Vellutini
1, cours Valmy
92923 Paris La Défense Cedex
appointed on May 16, 2008 with a mandate that ends at the close of the Shareholders’ General Meeting called to
approve the financial statements for the year ending December 31, 2013.
BEAS
7-9 Villa Houssay
92200 Neuilly-sur-Seine
Represented by Mr. William di Cicco
appointed on December 16, 2011 with a mandate that will end at the close of the Shareholders’ General Meeting
called to approve the financial statements for the year ended December 31, 2016.
Annual Information Document • Rhodia 2011
197
198
Annual Information Document • Rhodia 2011
June 2012
Annual Information Document • Rhodia 2011
199
Rhodia
Cœur Défense – 110, esplanade Charles de Gaulle
F-92931 Paris La Défense Cedex
Tel. : + 33 (0)1 53 56 64 64
200
Annual Information Document • Rhodia 2011