132
FINANCIAL INFORMATIONPATRICK BATAILLARD
Finance DirectorTel: +33 475 232 526
Fax: +33 475 031 877Shareholder’s Service Tel: + 33 475 235 878
Web site: www.norbert-dentressangle.com (browse FINANCE)
AUDITORSERNST & YOUNG AUDIT
Member of the Versailles Regional Accountants Association
CABINET ALAIN BONNIOT & ASSOCIESMember of the Lyon Regional Accountants Association
Appointed Auditors
GROUPE NORBERT DENTRESSANGLE
BP 98 - 26241 Saint-Vallier-sur-Rhône - France
RCS ROMANS 309 645 539
2
2005 ANNUAL REPORT
TRANSPORT AND LOGISTICS: A BUOYANT MARKET IN EUROPE
Strong prospects for mergers
in Europe
3
30%growth expected in transport and logistics
requirements between 2005 and 2015 (source UE).
4
2005 ANNUAL REPORT
TRANSPORT AND LOGISTICS: THE ISSUES
Cost controlA skill that requires professionalism and innovation
5
Controlling the supply chain in an economy based on tight delivery times.
A major issue for our customers
8
2005 ANNUAL REPORT
TURNOVERin millions of euros
OPERATING INCOMEin millions of euros
NET EARNINGSper share in euros
2001 2002 2003 2004 2005
1300
1200
1000
800
600
400
200
0
9721,053
1,3031,399
1,222
2001 2002 2003 2004 2005
60
55
50
40
30
20
10
0
50.648.7
64.3
51.550.6
2001 2002 2003 2004 2005
6.56.05.55.04.54.03.53.02.52.01.51.00.5
0
2.75 2.79
3.66
6.56
2.88
THE NORBERT DENTRESSANGLE GROUP KEY FIGURES
9
NET RESULTGroup share in millions of euros
NET GEARING AS A PERCENTAGE OF EQUITY
2001 2002 2003 2004 2004* 2005 2005*
100
80
60
40
20
0
24%
49%
81 %
- 7%*
61%
25%
* accouting method in line with years prior to 2004
2 %*
2001 2002 2003 2004 2005
60
50
40
30
20
10
5
0
26.0 26.3
36.2
62.7
27.2
10
THE NORBERT DENTRESSANGLE GROUP CONSOLIDATED FIGURES
2005 ANNUAL REPORT
Of which: Transport Logistics Outside France
22%
20 %
64 %
36%
1111TURNOVER
1.399 billion euros
STAFF
13,900
VEHICLE FLEET
5,100 tractor units
6,200 trailers
WAREHOUSING AREA
2,700,000 sq.m
BASED IN 15 COUNTRIES
190 facilities in Europe:
Germany Luxembourg
Belgium The Netherlands
Spain Poland
France Portugal
United Kingdom The Czech Republic
Hungary Romania
Italy Switzerland
China: Offices in Beijing and Shanghai
Outside France
12
2005 ANNUAL REPORT
ALLOCATION OF THE CAPITAL AND VOTING RIGHTS
CAPITALOn 28 February 2006, the capital of the Norbert Dentressangle Group stood at ¤ 19,574,986 divided
into 9,787,493 shares with a par value of ¤ 2.00.
61.77 %
30.65 %
0.75 %
5.57 %
1.26 %
Allocation of capital Allocation of voting rights
0.66 %
18.46 %6.70 %
74.17 %
On 28 February 2006 Number Number ofof Shares Voting rights
Dentressangle family 545,646 1,091,292Financière Norbert Dentressangle (1) 6,045,400 12,079,800Employees 73,895 107,902General Public 2,999,552 3,006,974Shares held by the Norbert Dentressangle Group 123,000 0
TOTAL 9,787,493 16,285,968
Dentressangle family
Financière Norbert Dentressangle (1)
Employees
General Public
Shares held by the Norbert Dentressangle Group
(1) The Dentressangle family wholly owns the capital of Financière Norbert Dentressangle
Price on 31 December in € 49.74 40.80 40.80 32.64Number of shares on 31 December (1) 9,923,306 9,766,706 9,766,706 9,728,706Market capitalisation in M€ 494 398 398 317Net earnings per share in €(2) 6.56 4.23 3.80 2.88Net dividend in € 0.89 0.84 0.84 0.70Distribution ratio in % (1) 14.1 22.7 22.7 25.2
(1) Including treasury stock. (2) After cancellation of treasury stock.
DIVIDENDIt is proposed that a dividend of ¤ 0.89 per shar e be distributed for 2005. It is up 6 % compared to
the 2004 dividend. The dividend shall be paid on 2 June 2006.
Stock market data 2005 2004 IFRS 2004 published 2003
STOCKEXCHANGE
13
Jan. 2004 34.19 31.75 33.01 3,305 110
Feb. 2004 39.3 33.1 37.3 9,915 365
March 2004 43.6 38 39.92 10,982 441
April 2004 43.8 40.81 41.82 12,666 531
May 2004 43 37 39.37 5,814 227
June 2004 43.3 40.11 41,49 5,668 236
July 2004 43.5 39.6 42.14 7,329 309
Aug. 2004 41.45 37.6 40.1 3,539 142
Sept.2004 41.39 37.6 40.34 7,347 294
Oct. 2004 39.95 38.02 38.77 12,204 474
Nov. 2004 41 37.1 39.4 4,842 191
Dec. 2004 40.99 38 39.93 6,725 267
Jan. 2005 54 40.85 46.96 10,578 493
Feb. 2005 51.6 46.3 49.73 5,223 263
March 2005 38 44.6 47.85 5,619 268
April 2005 36 40.61 44.62 6,186 275
May 2005 44.9 37.96 41.94 11,087 463
June 2005 43.2 38 40.53 16,187 650
July 2005 47 37.8 41.94 12,744 545
Aug. 2005 45.49 40.5 42.77 4,599 194
Sept.2005 46 39.5 41.89 9,545 395
Oct. 2005 46.5 42.2 44.86 16,885 763
Nov. 2005 45.3 41 42.76 4,623 198
Dec 2005 49.75 44 47.25 16,807 781
Jan. 2006 54.7 48.01 51.57 15,031 770
Feb. 2006 53 51 51.82 4,715 244
Jan. 2004
Jan. 20060
14,000
16,000
18,000
12,000
10,000
8,000
6,000
4,000
2,000
March 2004
May 2004
July
2004
Sept. 2004
Nov. 2004
Jan. 2005
March 2005
May 2005
July
2005
Sept. 2005
Nov. 2005
2004 - 2005
800
700
400
500
600
300
200
100
0
Jan. 2004
Jan. 2006
March 2004
May 2004
July
2004
Sept. 2004
Nov.2004
Jan. 2005
March 2005
May 2005
July
2005
Sept. 2005
Nov.2005
NUMBER OF SECURITIES TRADED (daily average)
AVERAGE CLOSING PRICE (in euros)
CAPITAL TRADED (daily average in thousands of euros)
0
10
20
30
40
50
60
Jan. 2004
Jan. 2006
March 2004
May 2004
July
2004
Sept. 2004
Nov.2004
Jan. 2005
March 2005
May 2005
July.
2005
Sept. 2005
Nov.2005
Highest share price
(in €)
Lowest share price
(in €)
Average closing
price(in €)
Number of
securities traded
(daily average)
Capital(daily
average inthousands
of €)
Transactions
2004 - 2005
2004 - 2005
Norbert Dentressangle: FR0000052870-GNDStock market: Euronext ParisMarket: Eurolist Compartment BMain index: CACMid 100Other indices: CACMid & small 190
14
2005 ANNUAL REPORT
SUMMARY
Transport and Logistics: a buoyant market in Europe2 4 6
14 16 18
28 30 32
84 124 129
Summary
Sustainable development: reducing greenhouse gas emissions
Transport and Logistics: the issues
The Group boards
Sustainable development: improving road safety
Key events in 2005 in the Norbert DentressangleGroup
The Supervisory Board
Sustainable development: environmental site management
Consolidated financial statements
Company financial statements
Draft resolutions
15
8 10 12
20 22 26
34 44 56
Key figures
The Executive Board
Logistics
The Group consolidated figures
Challenge 2008
Transport
Stock Exchange
Sustainable development: integration and internal promotion
Executive Board management report
16
2005 ANNUAL REPORT
THE NORBERT DENTRESSANGLE GROUP BOARDS
17
From left to right:
Jacques Gairard
Norbert Dentressangle / Supervisory Board Chairman
Evelyne Dentressangle / Vice-Chairman
Pierre-André Martel
Henri Lachmann
François-Marie Valentin
EXECUTIVE BOARD
From left to right:
Jean-Claude Michel CEOAged 53 / EM Lyon.Joined the Group in 1990 as General Goods division Director.Appointed as General Manager of the Group in 1994.Executive Board Chairman since 1998.
Patrick BataillardFinance DirectorAged 41 / EM LyonJoined the Group in 1998 as Group’s Finance Controller.Transport division Finance Director from 2000 to 2001.Group Finance Director since 2001.Member of the Executive Board since 2001.
François BertreauMD Logistics divisionAged 51 / ESCP / MBA INSEADJoined the Group in 1998 as Logistics division Director.Member of the Executive Board since 2002.
Hervé MontjotinMD Transport divisionAged 41 / Ecole Normale Supérieure. ESCP Masters.Joined the Group in 1995.Human Resources Manager from 1996 to 2001.Member of the Executive Board since 1998.General Manager in charge of Organisation and Human Resources from 2001 to 2004.Transport division Director since 2005.
Logistics Division Transport Division
SUPERVISORY BOARD
Supervisory Board
THE STEERING OF THE GROUP
Finance Director Patrick Bataillard
HR Director Vincent Lecerf
Communication Director Thierry Leduc
Executive Board
18
2005 ANNUAL REPORT
More than ever in 2005, our values of rigour, reactivity, commitment
and innovation have been visible everywhere, working to preserve what
is a key aspect of the culture of our Group: performance.”“
A MESSAGE FROM NORBERT DENTRESSANGLE
SUPERVISORY BOARD 19
I believe that the Norbert DentressangleGroup’s 2005 results are satisfactory asthey are above-average in terms of thefinancial performance demonstrated byEuropean companies operating in thetransport and logistics sector. The resultsare also satisfactory when we bear inmind the particularly difficult economicand competitive situation in 2005.It is true that the economic upturn,mainly brought about by growth in NorthAmerica and Asia, has mainly benefitedsea carriers, forwarding agents andoverseas logisticians with a worldwidenetwork and dealing with worldwidegoods flows.There is no doubt that the poor levels ofgrowth seen in France and Germany havehad a negative effect on the demand for
2005, our values of rigour, reactivity,commitment and innovation have beenvisible everywhere, working to preservewhat is a key aspect of the culture of ourGroup: performance. As a result, I amlooking to our management, structuresand policies to help to maintain a highlevel of motivation amongst ouremployees.In 2005, I also had the satisfaction ofsupporting the Group’s external growthoperations, with the acquisition ofVenditelli Transport and the takeover ofthe logistics activities and part of thetransport activities of TNT LogisticsFrance.In the months and years to come, oursector will be required to undergo manychanges. Here, the Norbert Dentressangle
growth in our activities combined withsignificantly improved profitability.Above and beyond all that, I believe thatthe Norbert Dentressangle Group haswhat it takes to involve itself indevelopment projects capable of creatinga major strategic advance in the transportand logistics sector in Europe.
Norbert DentressangleChairman of the Supervisory Board
transport and logistics servicesthroughout Europe. The sluggishEuropean economy, which can be seenmost clearly in the low rate ofconsumption in France, has helped tofurther disadvantage our massdistribution customers and massdistribution suppliers. This difficultenvironment has therefore had a directinfluence on the growth in sales of ourlogistics services.In addition, in the transport sector, wehad to cope with a strong increase in ourcosts as a result of the continuing rise inthe price of oil, along with the pressure ofcompetition from Central Europeancarriers in the international transportsegment.This is why I am keen to emphasise thecapacity for reaction and resilience thatour teams have shown. They havemanaged to contain the fall in operatingprofits from our transport activities andto keep operating profits from ourlogistics activities at a level very close tothe ambitions that we set out in“Challenge 2008”. More than ever in
Group has the ambition and the means tograsp the opportunities that arise. To thisend, the Group has a number of majorassets, including: - its structure, organised into two activitysectors operating under a strongtrademark and made up of specialistteams capable of retaining the specialfeatures of each of our tasks whileencouraging commercial synergies andeconomies of scale,- its financial soundness, with reduceddebt, and a culture, largely shared withinthe Group, of financial performance,which is the foundation of our strengthand credibility,- the distinctiveness of our model, whichis virtually unique in our market for thesize of the company; i.e. a Groupinvolved in managing resources that hasincorporated warehouse managementand road transport in order to serve itscustomers.I am confident, given the prospects forour markets in Europe and theeffectiveness of the action plansintroduced in 2006, that we will see a
Above all, I believe that the commitment shown by Norbert
Dentressangle Group employees in 2005 and their professionalism
are the best guarantee of our ability to achieve our Challenge 2008
objectives.
“
20
2005 ANNUAL REPORT
INTERVIEW WITH JEAN-CLAUDE MICHEL
”
21
How do you think 2005 went for theNorbert Dentressangle Group?2005 was satisfactory in terms of activity,as sales for the Norbert DentressangleGroup rose by 7.4 % in 2005 to reach1.399 billion euros. Internal salesgrowth, i.e. + 5.3 %, was in line with ourexpectations at the start of the year, while22.3 % of our sales were achievedoutside France.2005 will be a year in which we did notachieve our ambitions in terms ofoperating profit, which was 3.7 % ofsales, 21% down on the previous year.Operating profit for the NorbertDentressangle Group in 2005 was 51.5million euros and demonstrates, apartfrom the effects of the Group’sinvestments in information systems andtrademark image, the difficulties that weencountered throughout the year inpassing on heavy increases in the costprice of our transport activities.However, the Norbert DentressangleGroup considerably reinforced its
Staff in the Transport Divisionintroduced strong measures to controland reduce cost, reinforce our transportfleet based in Poland and increase theprices of our range of services. As aresult of these measures, we areconfident that we will see a recovery inthe operating margin from 2006.
Was the logistics segment in line withyour ambitions?In 2005, sales for our Logistics Divisionrose by 1 %, reflecting sluggish consump-tion in France last year and less demand,from manufacturers in particular, foroutsourced logistics activities. Logisticsaccounts for 36 % of total sales for theNorbert Dentressangle Group, with acontribution to profits in line with ourobjectives, as the 2005 operating profitfor the Logistics Division was 5 % of its sales, a level of profitability that still situates us amongst the highest-performing logisticians in Europe.
2005 was the first year of your“Challenge 2008” business plan; how isthe Group placed in relation to thisoperating plan?In 2005, we broadened our range ofservices, accelerated our internationaldevelopment and reinforced our basicoperations. We have begun, practically,to incorporate sustainable developmentinto the daily running of our operations.Overall, 2005 was therefore in line withmost first years of the NorbertDentressangle Group business plan andshould be viewed in the light of thepotential that it offers the Group forachieving its Challenge 2008 objectives.In this respect, I feel confident for thefollowing reasons:• growth in salesOur transport activities have maintainedtheir growth potential in their historicactivities and the arrival of Venditelli offersfurther opportunities for development.Our Logistics Division has now beenstrengthened by the addition of TNT
financial position in 2005 as a result ofexceptional factors linked to theacquisition of the logistics assets and partof the transport assets of TNT LogisticsFrance. The Norbert DentressangleGroup’s net profit was 62.7 millioneuros, but is not representative of thecompany’s operating performance. In addition, the Norbert DentressangleGroup has a low debt ratio, with net debtrepresenting only 61 % of equity capitalat the end of 2005.
The main transport event in 2005 wasthe increase in the cost of fuel; how didthe Group cope with the year in thetransport segment?Sales for our transport activities grew by11.3 % in 2005, and by 8.3 % incomparable terms. This strong growthshows that our transport service offer isin line with customer expectations and isalso a reflection of the price increasesthat we have begun to apply to ourservices.However, the strong, continuousincrease in fuel prices in 2005 andaggressive competition from carriers inCentral European countries in theinternational transport market cut intoour operating margin, which was 2.9 %of sales in the transport segment.
The transport and logistics sector saw a large number of mergers andacquisitions in 2005; what has been thesituation for the Norbert DentressangleGroup ?External growth forms an ongoingpart of our development ambitions,and I note that acquisitions havecontributed half of the growth in salesof the Norbert Dentressangle Groupsince it was quoted on the stockexchange in 1994.The Norbert Dentressangle Groupcompleted two strategic externalgrowth operations in 2005. In September, we acquired thedistribution transport companyVenditelli, which specialises in urbanand regional distribution “by thepallet”, an offer that is verycomplementary to the range oftransport services offered by theGroup.On 1st December 2005, we took overthe logistics activities and part of thetransport activities of TNT LogisticsFrance. This represents an annualcontribution to sales of around 100million euros, making the NorbertDentressangle Group the 2nd largestlogistics group in France and addingto its transport network.
Logistics France and is developingsolutions that use innovative engineeringand technology, and is once again on theroad to internal growth.• operating profitabilityThe measures taken in the TransportDivision and the conditions linked to theacquisition of the assets of TNT LogisticsFrance are likely to bring significantimprovements to the operating marginfrom the next financial year.• the Group’s financial soundnessAs a result of its low level of debt and itscash flow level, the Norbert DentressangleGroup’s financial soundness andinvestment capacity increased in 2005.But above all, I believe that thecommitment shown by NorbertDentressangle Group employees in 2005and their professionalism are the bestguarantee of our ability to achieve ourChallenge 2008 objectives.
Jean-Claude MichelChairman of the Executive Board
EXECUTIVE BOARD
Challenge 2008
WHAT COULD BE MORE APPEALING THAN A WORLD THAT MAKES LIFE EASIER?22
2005 ANNUAL REPORT
23APPEALING THAN A WORLD THAT MAKES LIFE EASIER?
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24
2005 ANNUAL REPORT
WITH CHALLENGE 2008THE NORBERT DENTRESSANGLE GROUPIS SETTING ITSELF A NEW GROWTH TARGETThe Group’s latest business plan, Challenge 2008, establishes a new platform for development through abroadening of the range of services, an acceleration in our international expansion and the incorporation ofsustainable development in our core business practices.
transport and logistics services“A successful European
CHALLENGE 2008 25
STRONG AMBITION FOR INTERNALAND EXTERNAL GROWTH
+53 % in three years, reaching a turnoverof 2 billion euros.
n Internal growthExploit the development potential of the
European transport and logistics market bytaking advantage of:- Economic growth in Europe and the
expansion of the European Union,- The externalisation of transport and logistics
operations management on the part ofindustrial manufacturers and largedistributors,
- The concentration of transport and logisticsdemand among an increasingly smallernumber of service providers,
PERPETUATE AND DEVELOP THESTRENGTHS AND ASSETS OF THENORBERT DENTRESSANGLE GROUP
- A specific economic model based on themanagement and control of resources.
- A range of offerings that differentiate us fromthe competition, with a strong added valuecontent.
- Continued innovation in all fields of thebusiness.
- A continuous search for savings and costreduction opportunities.
- Human resources: strengthen themanagement model of the Group based oncreating a strong sense of responsibility amongemployees.
n A commitment to sustainable developmentThe Group’s commitment to sustainable
development gives it an advantage over thecompetition in terms of its commercialpositioning. In addition, it helps to improvethe Group’s financial competitiveness, andis a factor of pride and motivation for theteams.
The sustainable development policy hasbeen built around four main operating aimsthat have been chosen to meet the keyexpectations of our customers, society at largeand our employees. The NorbertDentressangle Group wants to set the examplein four areas:- reduced greenhouse gas emissions,- environmental management of sites,- road safety,- integration and internal promotion.
- The increasing distance between productionareas and consumption areas.
n External growthGoal: To be a participant in the future
concentration of the European transport andlogistics market.
The Norbert Dentressangle Group has theaim of being a key player in the Europeanacquisition trail, and possesses the financial andhuman resources to integrate a considerablevolume of external growth over the next threeyears.
COMBINE GROWTH WITHPROFITABILITY
The issue here is to maintain the economicperformance achieved by the NorbertDentressangle Group, with an operating incometarget of 5 % of turnover.
THREE DRIVERS OF GROWTH
n An expanded service offering due tomastery of new business lines
- Distribution: network of “palletised” nation-wide transport.
- Reverse logistics: all of the logistics operationsnecessary to buy back unsold products, andrecycle products at the end of their life andeven the maintenance of damaged products(mobile phones, microcomputers…).
n International development at a fasterpace
Transport:- Consolidation of our leadership in Cross-
Channel transport.- Strengthening of our presence in the Central
and Eastern European countries.
Logistics:- Consolidation of our European positions.- Establishment in China.
In each of these areas, the Group has set a benchmark indicator, measured itsperformance in July 2005 set a target for thenext three years. In addition, due to theintroduction of monitoring indicators, eacharea has an operating action plan whose effectscan be measured.
services
which integrates sustainable development into the practice of its activities.”provider,
INTEGRATION AND INTERNAL PROMOTION,THE DRIVING FORCE BEHINDHUMAN RESOURCES
SUSTAINABLE DEVELOPMENT
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26
“Giving people responsibility, trust, an understanding of the need to keep costs down,a taste for effort, rigour, reactivity and a desire to do the job:
2005 ANNUAL REPORT
27
In the service industry, the quality of theservices provided and their profitability aredirectly linked to every employee’s motivation,skills and understanding of the business plan.The Norbert Dentressangle Group has takenevery possible measure to ensure that all of itsemployees behave in a truly responsible way interms of the service level they provide and his orher contribution.
Since they are accessible to low-qualifiedpeople with strong development prospects, ourtransport and logistics businesses offer realopportunities for personal and companyadvancement to our employees who want to takeadvantage of them.
Giving people responsibility, trust, anunderstanding of the need to keep costs down, ataste for effort, rigour, reactivity and a desire todo the job: these are the values upheld by the
Norbert Dentressangle Group’s HumanResources Policy. They encourage everyone toprogress in line with their talent and personalinvestment.
The indicator that the Group has chosen forcompany integration and promotion is the levelof internal promotion, i.e. the percentage ofemployees who have been promoted during theyear. It summarises the Group’s “companyladder” dimension. In 2005, the level was 4.7 %.The Group aims to raise this to 8 % by the endof 2007.
TO ACHIEVE THIS OBJECTIVE, THEGROUP IS SETTING UP AN AMBITIOUSHUMAN RESOURCES POLICY:
n Monitor individual careers and increaseinternal mobility in order to betteridentify talents and encourage personaldevelopment
- introduce skills tables, evaluate all operatives anddraw up individual development plans,
- systematically introduce annual appraisalinterviews,
- increase internal mobility by introducing monthlymobility meetings.
n Reinforce the apprenticeship policyThe Group is a signatory to the apprenticeshipcharter and undertakes to increase the number ofsandwich course contracts by 20 % (increasingfrom 75 to 100 contracts). In the last few years ithas introduced a sandwich course training sectionspecific to the profession of transport operator.
The aim is to open up these professions to younggraduates who might not initially see themselvesworking in the sector. Special agreements havebeen signed with a number of trainingorganisations.
n Integrate unqualified and disabledemployees
The Group encourages the integration ofunqualified and disabled employees. This can beseen in its recruitment activities. When two newsites were created, the Group worked with the localemployment office to set up a selection systembased on the so-called “skills” method, which isused to detect individual abilities outside any initialtraining criteria. The Group has also hosted ororganised sessions to raise awareness of the issuessurrounding the integration of disabled employees.
n Training policyIn 2005, the Group’s training policy enabled overone person in two to benefit from a training action.By investing 3 % of its payroll in training, the Groupis developing an offer that supports employees intheir development. Within the Group, no less than250 people dedicate all or part of their time totraining their colleagues. Here are just a fewexamples:- the Logistics Division has developed a system
known as “Skills Plus”, which formalises the idealtraining scenario supporting the professionaldevelopment of warehouse staff,
- the Dutch subsidiary has introduced aqualifications-based training scheme for orderpreparers and fork-lift truck drivers,
- the Transport Division is offering a trainingsequence for transport “operators”, at differentpoints in their careers, to help them reinforce theirtechnical and managerial skills,
- management teams are given systematic training.
upheld by the Norbert Dentressangle Group’s Human Resources Policy.”these are the values
Vincent LECERF
Aged 41 / EDHEC & Advanced StudiesDiploma in Organizational Sociology.Joined the Group in 2004 as Human Resources Director.
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2005 ANNUAL REPORT
There’s no doubt about it: greenhouse gases make a major contribution to global warming. Because transportemits 28 % of these gases, it is very much under the microscope in this matter.
REDUCING GREENHOUSE GAS EMISSIONS
In 2005,the Transport Division’s average fuel consumption was reduced by compared to 2004.
In road transport, greenhouse gasemissions are in direct proportion to theamount of diesel consumed. A commitmentto reduce greenhouse gas emissionstherefore means a commitment to consumeless – which also means spending less – forthe same quantity of goods transported.
The indicator chosen by the NorbertDentressangle Group is the number of gramsof CO2 emitted per tonne transported and
per kilometre. This indicator best illustratesthe impact of goods transport on globalwarming, linked to greenhouse gases. Theway to improve the indicator in operationalterms is to reduce vehicle consumption,reduce the mileage covered without a loadand optimise the loading of vehicles. Ouraim in this area is to achieve an emissionlevel of 50g per T per Km by the end of2007.
The greenhouse gas emission indicator,calculated for 2005 and the result of ananalysis of data carried out in each of theGroup’s transport branches, is 54g per T perKm – a favourable development, mainlyobtained by reducing fuel consumption.
In November 2005, the NorbertDentressangle Group signed a partnershipagreement with ADEME (the FrenchEnvironmental and Energy Management
Agency) entitled “Controlling greenhousegas emissions caused by goods transport andlogistics activities.”
With this agreement, ADEME undertakesto place its expertise, resources and systemsfor supporting decision-making, investmentand research at the disposal of the NorbertDentressangle Group. For its part, the NorbertDentressangle Group undertakes to use theseresources to look for effective ways ofreducing greenhouse gas emissions and,generally, of protecting the environment.
Action plans aimed at reducing greenhousegas emissions are:
CONTROLLING AND REDUCING FUELCONSUMPTION
• Training all truck drivers to drive morerationally,
• Mobilising teams and introducing systems forsharing in the profits on savings in fuelconsumption,
• A detailed analysis of the fuel consumption ofeach truck driver using the on-boardcomputer,
• Limiting the maximum speed of vehicles.Here, the Group has worked out thecircumstances in which this approach would
have a positive impact, and has then drawn upa targeted policy to apply the solution.
TESTS ON NEW TECHNICAL SOLUTIONS
As part of its partnership agreements, theGroup is implementing tests to help reduceconsumption and take a more caring approachto the environment. In 2005, the Group tested,in particular, new solutions in the followingareas:- fuel additives,- tyres,- bio-fuels.
Once validated by these tests, the solutionsare then systematically deployed within theGroup.
In addition, the Group’s transport salesteams now have a tool for evaluating theenvironmental gains provided by a NorbertDentressangle transport solution as part of theircommercial offer.
Independently of the reduction ingreenhouse gases, the Norbert DentressangleGroup has made further progress to reduceparticle emissions (Nox).
As a result of its policy to renew its fleet oftrucks rapidly and automatically, the Group canoffer its customers an efficient fleet and transportsolutions that discharge an average of 30 %fewer particles into the atmosphere.
Finally, the Group is a step ahead ofstatutory requirements and is already testing afleet of vehicles that comply with Euro 4standards, with the aim of achieving a soundunderstanding of this technology.
SPLIT OF THE GROUP’S ROAD TRACTOR FLEET
29
compared to 2004.
Euro 3 : 94 %
Euro 2 : 5 %
Euro 1 : 1 %
94 %
5 % 1 %
1 litre per 100 km
The indicator chosen by the Group is thenumber of kilometres travelled by a driverwithout an accident with a third party beingdeclared and for which our driver is responsible.The figure stood at 500,000 km in 2004.
The Group aims to achieve 550,000 km in2007.
In 2005, the Group had already exceededthe target with a performance of 593,000 kmwithout an accident with a third party for whichour driver was responsible.
ROAD SAFETY AND “SAFE DRIVINGPLAN”
The “Safe Driving Plan” is a strongcommitment on the part of the management ofthe Norbert Dentressangle Group.
Its goal is to prevent road accidents, basedon the observation that 70 % of accidents arepreventable insofar as they result from an errorin the behaviour of the driver.
The basic concept of the “Safe Driving Plan”is based on defensive driving, in other words adriving system aimed at preventing accidentsfrom happening.
The key points of the “Safe Driving Plan” areto:- Involve the entire hierarchy, from the manager
to the driver,
- Recruit drivers with good profiles,- Train the recruited drivers in Norbert
Dentressangle defensive driving,- Check the application of defensive driving by
drivers and organise regular refresher courses,- Analyse every accident to understand its causes
and determine the appropriate corrective action.
IMPROVING ROAD SAFETYWith its commitment to managing road safety the Norbert Dentressangle Group is improving safety for roadusers, customers and people living near its sites. At the same time, it is reducing occupational risks andimproving the working conditions of its employees. Finally, the Group is improving its control of theenvironmental hazards associated with road accidents and industrial accidents.
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2005 ANNUAL REPORT
0.0
0.2
0.4
0,6
0.8
1.0
1.2
1990 1993 1996 1999 2002 2005
Improvement in the number of accidents when at fault / driver / year
SUSTAINABLE DEVELOPMENT
550,000 kmObjective:travelled per driver without an accident
for which our driver is responsible.
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33
ENVIRONMENTALLY FRIENDLY SITESAND BUILDINGS
The Norbert Dentressangle Group has set astandard for environmental management, whichcovers a number of aspects:
n Compliance with regulations
n Monitoring and measuring energyconsumption
- systematic recording of consumption andreporting to head office every month for sitesinvolved in the environmental approach.
- changes to lighting and heating equipment toreduce the various forms of consumption.
n Monitoring and measuring discharges and waste
There was an increase in the level of wasterecovery on the Group’s sites between 2004 and2005. As an annual average, the level rose from23 % to 37 % of the volume of waste generated bythe site.
n Internal training and externalcommunication with third parties
As an example, to raise awareness amongstLogistics Division employees, 1,366 hours ofenvironment management training were given in2005.
A few examples of training themes:• Waste recycling;• Tour of a landfill site and a waste sorting centre;• Raising awareness of sorting, recovery and the
future of waste generated on the site ;• Training in the use of equipment related to
waste ;• Raising awareness of energy saving ;• An introduction to good environmental
practices (turning off the tap, checking thewater meter, turning off the lights, adjusting theair conditioning and heating to reasonablelevels) ;
• An introduction to tree planting as part of aplanting operation on site ;
• Training in the handling of dangerous products.
The Norbert Dentressangle Group monitorsthe percentage of sites that have achieved theinternal environmental standard. At the end of2005, 32 sites (of the 77 assessed) fulfilled thisinternal requirement.
Between now and the end of 2007, theGroup aims to ensure that 100 % of its transportand logistics sites reach this standard.
The first stage of the action plan is to assesseach of the sites. This has been done on 92 % ofthe logistics sites and should be completed for thewhole Group by the end of 2006. Action plans arethen drawn up, implemented and monitored siteby site.
The Group has also begun an ISO 14001certification approach for all its recent sites. This isautomatic for new sites.
At the end of 2005, 19 warehouses –equivalent to 50 % of Logistics Division sales –were ISO 14001 certified.
At the end of 2005, were ISO 14001 certified.
*(equivalent to 50 % of Logistics Division sales)
ENVIRONMENTAL SITE MANAGEMENT The Group has nearly 190 sites, each of which use energy, produce waste and interact with their environment.Controlling energy consumption is a key factor in controlling operating costs. Reducing waste and managing itsrecycling helps to make savings and motivate employees.In addition, care for the environment helps to create constructive relations with institutions and local authorities.
The Niederbipp site (Switzerland)commissioned in October 2005 forConforama
A NEW WAREHOUSE TO MEET THE REQUIREMENTS
OF THE HIGH ENVIRONMENTAL QUALITY APPROACH
The sites outer gates have been lifted toallow for the movement of local wildlife.A reptile corridor has been created andonly local plant species have beenchosen. Solar panels have been installedto reduce electricity consumption andpre-heat water in the washrooms.Rainwater is recovered for thewashrooms. Inside the warehouse, theaisle lights come on only when one of thehandling staff approaches.
SUSTAINABLE DEVELOPMENT
19 warehouses*
A WORLD OF LOGISTICS SOLUTIONS TRANSCENDING SPACE AND TIME.
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2005 ANNUAL REPORT
Logistique
35
Logistics
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2005 ANNUAL REPORT
2,570,000 sq.m
LOGISTICS: KEY FIGURES 37
of warehouse space and
116 operations sites in France, Great Britain, Hungary, Italy,the Netherlands, the Czech Republic and Switzerland.
Vehicle fleet:316 trailers
215 tractor units
CzechRepublic
Hungary
Italy Romania
FranceSwitzerland
GreatBritain Netherlands
Sales split per activity
5,617 staffOustide France 25.5 %
502 million euros of sales in 2005Outside France 29 %Logistics share in total
Group 2005 sales 36 %
24%
Distribution
76%
Logistics
5,617 employees
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2005 ANNUAL REPORT
LOGISTICS MANAGEMENT COMMITTEE
LOGISTICS MANAGEMENT COMMITTEE 39
Christophe Tchordjallian (1)
Aged 39 / Graduate of the Institute of Transportand Logistics Management.Joined the Group in 2004 as Contracts Director.Sales Director, Logistics division.
Jean-Luc Bessade (2)
Aged 39 / Computing degree.Joined the UTL Logistics company in 1994.Joined the Group in 1997.ND Logistics Northern Area Manager since 2000.
Jean-Luc Declas (3)
Aged 45 / Sales Techniques Degree.Joined the Group in 2004 as ND LogisticsGeneral Manager in charge of Development.
François Bertreau (4)
Gilles Favellet (5)
Aged 53 / Accountant degree.Joined the UTL Logistics company in 1993.Joined the Group in 1997.ND Logistics Administrative and Financial Director.
Stéphane Point (6)
Aged 42 / EM Lyon.Joined the Group in 2003 as ND Logistics Central/West Area Manager.
Richard Noël (7)
Aged 51 / Distribution, commerce and businessadministration diploma.Joined the Group in 2003 as ND Logistics Technical Director.
Thierry Ranson (8)
Aged 45 / EM Lyon.Joined the Group in 2002.ND Logistics Paris Area Manager.
Alessandro Gokinajew (1)
Aged 57. Joined the Group in 1999 as ND Logistics Italia General Manager.
Pascal Leroux (2)
Aged 40 / Paris Transport College.Joined the Group in 2000 as International key account.ND Logistics Central Europe Area Managersince 2003.
Richard Cawston (3)
Aged 32 / HND Building Engineering.Joined the Groupe in 2003 as warehouse manager.ND Logistics UK General manager since 2005.
Georges Laurent (4)
Aged 45 / Industrial Art Engineer.Joined the Group in 1998 as Logistics divisiondata base manager.IT System Manager since 2004.
Dominique De La Cruz (5)
Aged 56 / High-school diploma.Joined the UTL Logistics company in 1996.Joined the Group in 1997.ND Logistics South/Eastern Area Manager.
Paul Legras (6)
Aged 47 / Mechanical engineering degree.Joined the Group in 2002.ND Logistics Carrefour Textile warehouseManager.
Frédéric Lavergne (7)
Aged 48 / Private law Masters’ degree.Joined the Group in 2000.ND Logistics Human Resources Director.
Kees Van Ginkel (8)
Aged 43 / Business College - CommercialEconomics.Joined the Group in 2003 as ND LogisticsNederland General Manager.
Gérard Martin (9)
Aged 53 / Transport Diploma. Joined the Group in 1989.ND Logistics Orleans/Val de Loire AreaManager.
1 2 3
4 5 6
7 9
8
1 2
3 4 5
6 7 8
PACKED GOODS LOGISTICS:OUR AREA OF EXPERTISELogistics sales accounted for 36 % of the Norbert Dentressangle Group’s total activity in 2005 and increased by1 % to 502 million euros.A breakdown shows that 52 % of our sales in logistics come from retailers and 48 % from consumer goods brandsand manufacturers.Operating profit was 5 % of sales. With such a level of profitability, the Norbert Dentressangle Group is one ofEurope’s most efficient logisticians.
LOGISTICS
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2005 ANNUAL REPORT
41
TAKEOVER OF THE LOGISTICS ASSETSOF TNT LOGISTICS FRANCE IN 2005
On 1st December 2005, the NorbertDentressangle Group took over most of thelogistics activities of TNT Logistics France.
The takeover has allowed the Group toincrease its warehouse capacity by 22 %, from2,200,000 sq.m to 2,700,000 sq.m.
With this operation, the Group hasreinforced its presence in two strategic regionsin France : the south-east, with its highpopulation density and the nearby port ofMarseille, and the Paris region, the key to anylogistics organisation.
Finally, the Norbert Dentressangle Grouphas acquired new customers in the toy,cosmetics, telephones and industrial sectors.
LOGISTICS AT NORBERTDENTRESSANGLE
As the art of combining and orchestratingall of the links in the supply chain, logisticsresponds to the demands of industry andsupermarket distribution when they decide torefocus on their business so as to best adapt tothe internationalisation of trade and thespecialisation of consumer expectations.
The logistics activities have been developedto serve our ambition to be a service providermanaging responsibly their flow of goods withthe view of optimising their supply chain.
The supply chain covers all of the necessaryprocesses from the manufacture of the finishedproduct to its delivery to the final consumer.
Stock management, order preparation,distribution, quality control, packing,customisation, subassembly, co-packing,delivery to the end user, informationmanagement and real-time traceability controlare all missions integrated, managed and carriedout by the Logistics Division of the NorbertDentressangle Group.
n Key figures concerning the activities wehave taken over
- 490,000 sq.m of warehouse space,- a fleet of 50 trucks and 50 articulated lorries,- 25 logistics sites in France, mainly in the Paris
region and the PACA (Provence-Alpes-Côted’Azur) region,
- a full range of services : handling, stockmanagement, order preparation, distribution.
n The challenges involved in integratingthese activities
Integrating these new activities into the NorbertDentressangle Group’s Logistics Division willrely on the experience acquired by the Groupduring previous external growth operations,especially the integration of Stockalliancebetween 2003 and 2005. There are three mainchallenges:- to relaunch the activity, using the impetus and
reputation of the Norbert Dentressangletrademark,
- to set out the Norbert Dentressangle Groupmanagement policies and principles withregard to:
• information systems,• management rigour,• fleet management,• quality, safety and environmental policies.- rapidly integrating teams into the Logistics
Division’s regional structure and encouragingthem to join in with the ideals of the NorbertDentressangle Group.
FOLLOWING THE TAKEOVER
OF THE LOGISTICS ACTIVITIES
OF TNT LOGISTICS FRANCE IN 2005,
THE NORBERT DENTRESSANGLE
GROUP IS NOW THE 2ND BIGGEST
LOGISTICS GROUP IN FRANCE.
France’s 2nd largest logistics group
LOGISTICS
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2005 ANNUAL REPORT
THE STRENGTHS OF THE LOGISTICSDIVISION OF THE NORBERTDENTRESSANGLE GROUP
n OrganisationBoth simple and characterized by a short
decision-making circuit, it endows the logisticsdivision with true flexibility and thus allows it toexercise a degree of proactivity, in step withmarket demands for rapid responsiveness.
n EngineeringThe solutions developed by the engineering
department of the Logistics Division areincreasingly being recognised as fully adapted byour customers, with for instance total control oftechnologies such as voice command, successivesorting and even radiofrequency identification(RFID).
n IT SystemsThe Logistics Division has responded well
to changing market needs in relation to thecontrol of IT systems. The tools are sufficiently
adaptable to be able to respond to theinternationalisation of our activities.
n Working knowledgeThe know-how and control of logistics
processes developed in recent years by thelogistics division are widely recognised in today’smarket.
n QualityThe recording of monthly indicators
reported to the Senior Management underlinesthe commitment of all of the European teams toa quality-optimising approach.
The different ISO 9001 v2000 (all activitiesin France, the Netherlands and Italy) and ISO14001 (50% of activities in France and 100% ofactivities in the Netherlands) certificationsobtained in recent years confirm that theLogistics Division has reached the level requiredin its field.
STRONG STRATEGIC POSITIONS INEUROPE
In its market, the Logistics Division of theNorbert Dentressangle Group covers the whole ofFrance, with a particularly strong presence in threemajor strategic regions: the Paris, Orléans andLyons regions.
The European coverage of the LogisticsDivision is growing unceasingly. Not only are there116 operations sites managed in France, but alsosites in the United Kingdom, Italy, Romania,Hungary, the Czech Republic and the Netherlands.
By multiplying its international turnover by afactor of four between 2001 and today, theLogistics Division has confirmed its ability todevelop its expertise outside of France rapidly andin a controlled manner. In 2005, 29 % of thelogistics turnover of the Norbert DentressangleGroup are achieved outside of France.
29 % of the Norbert Dentressangle Group’s logistics salesare achieved
Countries Number of warehouses operated Warehouse space exploited
Great Britain 4 200,000 sq.m
Italy (including Switzerland) 16 225,000 sq.m
Netherlands 3 200,000 sq.m
Central and Eastern Europe 3 55,000 sq.m
THE LOGISTICS DIVISION OUTSIDE FRANCE:
43
outside Franceare achieved
44
2005 ANNUAL REPORT
Transport
TRANSPORT SOLUTIONS SERVING BUSINESS DEVELOPMENT.
45
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2005 ANNUAL REPORT
employees, 15.8 % outside France8,164
TRANSPORT: KEY FIGURES 47
Transport sales split per market
Trailer fleet
tractor units
Transport sales split per activity
2005 sales898 million euros
130,000 sq.m warehousing
72 % Transport of packed goods
22 % Transport of goods in bulk
6 % Temperature controlled transport
Domestic and international full loads 50 %
Transport solutions 19 %
Contract distribution 16 %
International groupage 8 %
Logistics services 4 %
Distribution 3 %
3,970 curtainsiders and box trailers
979 powder bulk tipping tankers
305 liquid chemical tankers
304 refrigerated trailers
175 hydrocarbon products tankers
150 swap bodies and containers
103 tippers
34 liquid foodstuff tankers
Generated outside France 18 %
Transport share in total 64 %Group 2005 sales
4,830
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2005 ANNUAL REPORT
TRANSPORT MANAGEMENT COMMITTEE
TRANSPORT MANAGEMENT COMMITTEE 49
Daniel Guilbot (1)
Aged 45 / Certificate in Commercial EnglishTranslation. Joined the Group in 1989 as manager of the road train divison in Great Britain.Manager of the Central and Eastern Europedivision since 2005.
Jérôme Burtin (2)
Aged 45 / EM Lyon.Joined the Group in 1998 as Company Secretary.Bulk Goods transport and logistics divisionDirector from 1999 to 2002.Transport Division Commercial Manager since 2003.
Nathalie Delbreuve (3)
Aged 33 / ESCP.Joined the Group in 2003 as International Financial Controller.Transport Division Financial Manager since 2005.
Philippe Venditelli (4)
Aged 41 / Postgraduate diploma in Transport and Logistics. Managing Director of Venditelli Transportfrom 1992 to 2005.Joined the Group in 2005 as Distribution division Manager.
Hervé Montjotin (5)
Damien Chapotot (6)
Aged 37 / ISGIA Tours. Joined the Group in 1996 as assistant manager of the Rantigny transport branch.Manager of the Controlled Temperature division since 2005.
Emmanuel Saminada (7)
Aged 44 / University Technology Diploma &College of Transportation Technicians.Joined the Group in 2004 as Manager of the Bulk liquid division.
Jacques Dauteuille (1)
Aged 48 / Civil engineering diploma.Joined the Group in 1984 and contributed to develop the Road train division.Manager of the Road train division since 2000.
Michel Perrin (2)
Aged 50 / Advanced graduate diploma in industrial psychology. Joined the Group in 1995 as HumanResources Manager for the Road train division.Transport Division Human Resources Directorsince 2005.
Henri Linière (3)
Aged 45 / EFREI engineer.Joined the Group in 2001 as IT Systems Director.
Daniel-Elie Létard (4)
Aged 54 / Self-taught.Joined the Group in 1975 and directed thefirst Group subsidiary in London in 1978.Western Europe Area Manager since 2003.
Antoine Vermersch (5)
Aged 47 / Nantes Business School. Joined the Group in 1982 and developed the first transport subsidiary in Novara(Milan) in 1986.Northern Area Manager since 1999.
David Walkowiak (6)
Aged 38 / Logistics Operations Administration.Joined the Group in 1993 as Transport Operator.Manager of the Bulk powder division since 2003.
Bernard Dumas (7)
Aged 58 / “Ecole Supérieure du Transport”.Managing Director of Savam from 1996 to 2000.Joined the Group in 2001 as Manager of the Savam division until 2005.Runs the Norbert Dentressangle Franchise.
Yves Montignot (8)
Aged 51 / Economics science Masters. Joined the Group in 1990 as Director of the Angers facility.Southern/Eastern Europe Area Manager since 2003.
1 2 3
4 5 6
7 8
1 2
3 4
5 6 7
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2005 ANNUAL REPORT
STRONG INTERNALGROWTH AND ADAPTATION TO THE MARKET SITUATIONThe Norbert Dentressangle Group’s transport sales reached 898 million euros in 2005, up by 11.3 %, and 8.3 %in comparable terms. This strong growth reflects not only that the Group is well positioned in the transportmarket but also that it has adapted its range of services to meet the expectations of European customers. This high level of activity was achieved against an unfavourable background and the operating margin is around2.9 % of sales, weighed down by the continuing rise in the cost of fuel and increasingly ferocious competition inthe international transport market from carriers based in the countries of Central Europe.However, action taken to reduce costs and raise the price of services will bear fruit from 2006.
On the road to growth
51
L’ACQUISITION DES TRANSPORTSVENDITELLI
En septembre 2005, le Groupe NorbertDentressangle a acquis la totalité du capital del’entreprise de transports Venditelli. Cetteopération s’inscrit dans une logique d’extensionde la gamme de services transport du Groupevers le transport de distribution urbaine etrégionale “à la palette”.
Jean-Claude Michel, Président duDirectoire, déclarait à cette occasion :
“Les savoir-faire de Venditelli sont trèscomplémentaires des nôtres : ils renforcent etcomplètent notre offre de services transport touten nous apportant la capacité de développerune offre complète de transport et logistiquedans le domaine des produits blancs. Cetteacquisition va également nous permettre denous développer sur le métier de la reverselogistique en tirant partie des flux générés parces produits blancs.”
THE ACQUISITION OF VENDITELLITRANSPORT
In September 2005, the NorbertDentressangle Group acquired the total capitalin the transport company Venditelli. Theoperation forms part of a policy to extend theGroup’s range of transport services into urbanand regional distribution transport “by thepallet”.
Jean-Claude Michel, Chairman of theExecutive Board, said: “Venditelli’s expertise ishighly complementary to ours: it reinforcesand supplements our transport services offerand gives us the capacity to develop a fulltransport and logistics offer in the field of
white goods. The acquisition will also enableus to develop our reverse logistics business bybenefiting from the flows generated by thesewhite goods.”
GEOGRAPHICAL COMPLEMENTARITYAND SYNERGIES WITH THE TAKEOVEROF PART OF THE TRANSPORTACTIVITIES OF TNT LOGISTICS FRANCE
On 1st December 2005, the NorbertDentressangle Group took over part of thetransport activities of TNT Logistics France. Theseactivities are proving to be highly complementaryto the operations already run by the Group inFrance.
The Group has thus added to the density ofits network, as can be seen in the Nord-Pas-de-Calais region, where it has become the leader, andwith a depot in the Auvergne.
Alongside this, the Group has added to therange of services carried out for some of itscustomers and reinforced its distribution anddedicated contract distribution offer for the retailsector.
n Key figures for the activities taken over- 240 trucks,- 336 articulated lorries,- 3 transport sites: Valenciennes, Clermont-
Ferrand and Vitrolles, - dedicated transport, contract distribution,
distribution.
VENDITELLI TRANSPORT: BECOMING THE LEADING PALLET
DISTRIBUTION TRANSPORTOPERATOR IN FRANCE
Founded in 1946, Venditelli operatesin the supply chain, specialising in palletdistribution. It has an integrated networtkof 9 branches and 13 local distributioncentres in France. With 61 million euros insales in 2004, 51% of which were in thehousehold electrical sector, Venditelli hasbecome the leading French operator for thetransport of white goods.
The company has 650 employees andruns a fleet of 670 vehicles.
n the road to growth
TRANSPORT
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2005 ANNUAL REPORT
for transport between Europe andGreat Britain, with 157,000 Channelcrossings in 2005.
EUROPEAN MARKET LEADER FOR THE ROAD TRANSPORT
OF GOODS BETWEEN GREAT BRITAINAND THE EUROPEAN CONTINENT
WITH 157,000 CHANNEL CROSSINGSIN 2005, I.E. 630 A DAY
OVER 1,420 VEHICLES OPERATEDUNDER CONTRACT
Your customers
Your company
Our logistics partners
Your suppliers
Europeanmarket leader of its customers’ supply chains. This portal isaccessible to all participants in the supply chainand is secured via the use of state-of-the-artwebsite security technologies.
n The six main functions of the informationexchange portal are:- The exchange of digital data.- Online order monitoring.- Standard activity reporting.- The online availability of proof of delivery.- Management of logistics partners.- Management of supplier flows.
THE RANGE OF TRANSPORT SERVICESOF THE NORBERT DENTRESSANGLEGROUP
The differentiating position of the Group inthe European transport market comes from thefact that it considers transport to be afundamental lever of optimisation and supplychain management for its customers.
The transport activities have beendeveloped at the service of our ambition to be aservice provider managing responsibly the flowof goods to our customers with the view ofoptimising their supply chain.
In transport, the Group intervenes at allstages of the supply chain, in transport andtransport organisation for packed, bulk ortemperature controlled goods, with a completerange of services.
n Transport solutionsThe Norbert Dentressangle Group is the
single contact partner of its customers for themanagement of all of their transport needs.
n International groupageThe Norbert Dentressangle Group
organises transport throughout Europe fromone pallet.
n Urban and regional distribution The Norbert Dentressangle Group
organises for its customers the palletdistribution of goods to manufacturers, retailersand also caters for home deliveries.
Thus, the Group’s teams define acompletely customised transport solution forevery customer.
It is also because it invests in research anddevelopment, with its engineering departmentteams and its mastery of strategic simulationsoftware that the Group is such an innovator intransportation and can commit to results. Itsability to commit to transport results comesfrom the fact that it combines an ability toinnovate with operational control, with an ownfleet of 4,830 vehicles.
STRONG CAPACITY TO COORDINATEAND MANAGE INFORMATION FLOWS
One of the key aspects of the transportservices offering of the Norbert DentressangleGroup is its complete range of information flowmanagement services. These services allow themanagement of the flow of goods.
The Norbert Dentressangle Group hasdesigned and implemented an informationexchange portal dedicated to the management
n Outsourcing customer fleetsThe Norbert Dentressangle Group buys
back and optimises the transport resources ofcustomers who have not externalised theirtransport management.
n Contract distributionThe Norbert Dentressangle Group
dedicates a fleet of vehicles to the exclusive useof a customer.
n Logistics on customer sitesThe Norbert Dentressangle Group manages
logistics services on the industrial sites of itscustomers.
n Domestic and international transport offull loads
The Norbert Dentressangle Grouporganises and manages full load movementsthroughout Europe.
THE KEY FACTORS FOR SUCCESS AREINNOVATION, COMMITMENT ANDMANAGEMENT OF MEANS
Innovation and commitment to resultscharacterise the Norbert Dentressangle Group.
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2005 Financial Report
55
2005 FINANCIAL REPORT 56
I - GROUP ACTIVITY, PRESENTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS
Activity - ResultsFor the 2005 financial year, consolidated revenue was 1,399 million euros, up 7.4 % compared to the 2004 financial year, i.e. 5.3 % on a comparable
scope. Growth was high for Transport activities (+8.3 %) and low for Logistics activities (+0.3 %). This revenue figure was inflated by 30 million euros generated byacquisitions made during 2005: 19 million euros for Venditelli and Vendilog, included in the scope of consolidation as from 1 September 2005, and 11 million eurosin respect of certain French Transport and Logistics activities of the TNT Group, which were only consolidated within the Group for December 2005.
For Transport activities, 2005 revenue was 898 million euros. As for the previous two financial years, the growth of this activity can be explainedby the increase in personalised transport solutions services for our customers.
This growth can also be explained by the stepping-up of our activities in the countries of Central and Eastern Europe and, particularly, in Poland,which enables the Norbert Dentressangle Group to assist its customers and meet their increasing requirements in these countries.
The inclusion of Venditelli (acquired at the end of August 2005 and consolidated as from 1 September 2005) in the scope of consolidation, andcertain French activities acquired from the TNT Group, and consolidated as from 1 December 2005, explains the 3 % growth in 2005.
Finally, the price impact may be estimated at an average of 2.5 % for 2005, with significant variations between the various business lines,including lower rates for some “international long distance” traffic, where we were subject to stiff competition from new “low cost” competitors from the countriesof Central and Eastern Europe.
Essentially, price increases enabled us to offset, fairly insignificantly during the first half-year, and in a much more sustained manner during thesecond half-year, the significant increases in costs (approximately +20 %) recorded during the year for fuel procurement. In France, price increases were alsointroduced to offset the major payroll increase, under the Collective Bargaining Agreement (around 5 %), on 1 July 2005.
In Logistics activities, the lack of revenue growth in 2005 was due to the general slackness of the market, in particular in France and Italy, wherethe Norbert Dentressangle Group has its strongest presence. In these circumstances, the choice was made to temporarily focus on profitability to the detrimentof growth. The Norbert Dentressangle Group chose not to cut the prices of its tenders which, in certain cases, would have enabled it to win contracts against itscompetitors, but for prices which are not in line with its operating margin targets (5 %).
The proportion of revenue recorded outside France was stable at 30 %.Finally, the inclusion, in the scope of consolidation of the Logistics Division, of TNT’s French activities, as from 1 December 2005, represents a
strategic move enabling, in particular, the Norbert Dentressangle Group to become the French number 2, owing to the extent of its warehousing capacity, andto cater for new prestigious customers. In 2005, these activities only generated 7 million euros of additional revenue (for the month of December alone).
Clearly, the impact of this acquisition will be much more significant in 2006 and will enable the Logistics activities to reach two-figure growthlevels, as from this year.
The Ordinary Operating Income/(Loss) (before restructuring costs, non-recurring capital gains and losses on assets, excluding operations, andreversals of provisions) was 48.4 million euros at the end of 2005.
The activities of the TNT Group which were taken over in France generated an ordinary operating loss of 3.7 million euros. Without takingaccount of this loss, the current operating result would have been 52.1 million euros, representing a significant 20 % fall compared to 2004 levels (65.9 millioneuros under the IFRS; 64.1 million euros published under French standards), but which was in-line with the observed trends which were announced to themarket following the first half-year of 2005.
The Operating Result (EBITA, Earnings Before Interest, Taxes and Amortization) was 51.5 million euros (and 51.6 million euros, not includingthe activities taken-over from TNT, meaning that the reversals of provisions carried out in December 2005 enabled almost all the operating loss recorded on thisscope to be offset in the books). This result represents 3.7 % margin in revenue, a percentage which is exactly the same as that recorded following the first half-year of 2005.
n M€
Ordinary operating result 48.4 - Restructuring costs (2.7) + Non-recurring capital gains and losses on property + 2.1 + Reversal of provisions + 3.8 Earnings Before Interest, Taxes and Amortization (EBITA) 51.5
The breakdown of this operating result between the two operational divisions is as follows:
n M€ Transport Logistics Consolidated total
Revenue 897.5 501.8 1,399.3Operating result 26.3 25.2 51.5Operating margin 2.9 % 5.0 % 3.7 %
EXECUTIVE BOARD MANAGEMENT REPORT
YEAR ENDED 31 DECEMBER 2005
2005 FINANCIAL REPORT 57
In Transport activities, the 2005 operating margin experienced a significant slump compared with the very satisfactory 2004 figures (4.9 %).Several different factors explain this slump:
- The continuous increase in the price of fuel (+20 % over the year, with a more rapid increase as from June). The impact of thisincrease, on a like-for-like basis as regards mileage, is 20 million euros in absolute value, and approximately 1 million euros in relativevalue (taking account of the reduced average consumption of one litre per 100 km, and a pass-through rate on the sale prices whichagain became total at the year-end). At the end of 2005, the fuel item represented an average of 28 % of the cost of vehicles, comparedto 25 % at the end of 2004.
- The increase in the vehicle cost, not including fuel, was approximately 1 % for the first half of 2005, and an additional 1.5 % for thesecond half-year, with the increase in the minimum wage of French drivers. The stiff competition in the long-distance sector in general(50 % of Transport turnover), and the international long-distance sector in particular (on account of the vigorous competition fromEastern European carriers) led to insufficient cost pass-through for 2005.
- Restructuring costs, totalling 3 million euros, incurred during the last quarter in order to discontinue certain activities, had an impactwhich became highly negative.
These three factors were partially offset by firm control of variable costs (other than fuel) and fixed costs (in particular costs relating todrivers and overheads), and motor and driver productivity which remained at its 2004 level.
Finally, the reduction of resources, (-100 vehicles on a comparable scope during 2005) which was initiated following the end of thefirst quarter of 2005, and the consequential increased use of freight chartering (+27.5 % of turnover at the end of 2004, compared with +32.4 % ofturnover at the end of 2005) led to significant pressure on subcontracting and a progressive development of operating structures.
In a climate of lower profitability levels, crisis measures were introduced during the year, with the Group reaping the benefits as fromthe 2005 year-end:
- Unilateral pass-through of the additional cost of diesel,- Revaluation of sale prices, not including diesel,- Closure of “loss-making” branches in “long-distance sector” and “short distance sector” activities,- Reduction of structural costs,- Development of haulage resources in Poland (approximately 400 vehicles at 2005 year-end).
Globally, as regards Transport activities, the difficulties experienced during 2005 had a direct impact on the ordinary operating margin(3.3 % of turnover, not including the activities taken-over from TNT), and an even greater impact on the operating margin which, at 2.9 % of turnover,in particular included the abovementioned restructuring costs. The implementation of this restructuring work should nevertheless facilitate the returnof these Transport activities to higher levels of profitability during 2006.
However, compared to the 2004 financial year, the profitability of the Logistics Division remained at a high level during 2005 althoughrevenue did not increase this year. These high performance levels represent an ordinary operating margin of 4.6 % of turnover (not including theactivities taken-over from TNT), plus non-recurring profits from property transactions, bringing its EBITA margin to 5.1 % (not including the activitiestaken-over from TNT).
The Group booked badwill estimated at 35.1 million euros, which exceptionally increased EBIT (Earnings Before Interest and Taxes).This entry reflects the recognition of the acquisition of certain French activities taken-over from the TNT Group, after the accounting revaluation ofthe taken-over assets at the market value, the booking of acquisition expenses, the recording of known liabilities at the acquisition date, an allowanceto provisions for potentially lost contracts and the recognition of deferred tax assets on these provisions and liabilities.
Moreover, the 2005 financial year, with difficulties experienced in the Transport activities, caused us to record an impairment allowancefor two goodwill elements (Mani and Thier) following impairment tests, for their residual values, i.e. 0.7 and 0.9 million euros.
The consolidated net financial result represented an expense of 5.8 million euros, down in relation to the 2004 figure (-7.5 millioneuros), in spite of increased rates at 2005 year-end.
The main explanation for this reduction is the 2005 booking of a 0.9 million euro foreign-exchange gain, whereas in 2004 a foreign-exchange loss of 0.7 million euros was recorded.
Corporate income tax amounted to 16.8 million euros, i.e. 21.2 % of pre-tax net income. This percentage is exceptionally low: indeed,it is more than 13.7 % lower than the standard French rate for 2005 (34.93 %). This difference is essentially due to the fact that the significant badwillrecorded on the takeover of certain activities of the TNT Group is an accounting entry which is not directly subject to corporate income tax (15.7 %impact on the tax rate), and as, again in 2005, the losses posted for our Belgian and Spanish subsidiaries did not give rise, under the principle ofprudence, to the booking of deferred tax assets in our consolidated financial statements (-2.1 %).
2005 FINANCIAL REPORT 58
Consolidated Net Income for the 2005 financial year was 62.7 million euros, up 56 % compared to the 2004 net income (40.2 millioneuros under the IFRS).
In spite of the extent of this net income, these figures bear witness to a year which was difficult on the whole for Transport activities,in terms of operational performance levels.
Consolidated balance sheet and cashflow statementAt 31 December 2005, the total consolidated balance sheet amounted to 1,153 million euros, compared to 958 million euros in 2004
(IFRS standards). The main changes to the Group’s balance sheet and asset base are as follows:
Consolidated net worth was 260 million euros, up more than 56 million euros compared to the end of 2004, taking account of netincome for 2005 of 62.7 million euros and the payment of an 8 million euro dividend in respect of 2004.
The “Provisions” item increased from 19 million euros at the 2004 year-end to 81 million euros at the end of 2005, taking account ofthe recognition of some of TNT’s French activities acquired in December 2005, as previously mentioned. The 61 million euros of provisions (for knownliabilities and risks of the loss of customers) cover foreseeable losses during future financial years and, as regards the logistics activity, the risk of havingto pay rent and charges for sites not in operation.
The consolidated net financial debt stood at 158 millions euros, i.e. 302 million euros represented by gross debt, less 144 million eurosof cash. This net debt represented gearing of 61 % of equity as at 31 December 2005. The debt of 302 million euros at the 2005 year-end should becompared with the figure of 269 million euros at the end of 2004 (under IFRS), i.e. an increase of 33 million euros owing to the inclusion in the scopeof consolidation of Venditelli, the activities taken over from TNT, and new financing facilities relating to road and truck tractors renewed or acquiredduring the year.
Cash, at 144 million euros, was increased by the inclusion in the scope of consolidation, as from December, of the companies havingbeen used to take over certain French activities from TNT. This balance was also affected by the disbursement required for the acquisition of Venditelliin August. Finally, it was also significantly impacted by the increase in Working Capital Requirements booked during the 2005 financial year.
Indeed, at 16 million euros at the end of 2005, Working Capital Requirements should be compared to a resource (negative WCR) of11 million euros at the end of 2004. During 2005, this increase therefore amounted to 28 million euros. This phenomenon was aggravated at the year-end (as an example, the calendar had a negative effect as on 31 December, which was a bank holiday, a payment of 6 million euros was received froma major customer, but only booked in 2006). At 31 December 2005, the average timeframe for customer payments was 72 days, 5 days more than atthe 2004 year-end. Similarly, supplier payment timeframes increased by 2.7 days in 2005.
At 31 December 2005, goodwill represented 70.7 million euros. In 2005, this was impacted by the acquisition of Venditelli (16 millioneuros of goodwill) and the impairment allowance booked following impairment tests (-1.6 million euros). It was not however impacted by the acquisitionof some of TNT’s French activities, as this operation generated badwill which, under IFRS 3, was fully booked to results as from December 2005.
Property, plant and equipment stood at 396 million euros, up 42 million euros during 2005, including the impact of the acquisitions made.Finally, the balance of deferred tax assets increased significantly in 2005 (+18 million euros) owing to the consolidation of TNT’s French
activities. Indeed, the provisions made represent deductible expenses over time, when they are disbursed.
The cash-flow statement was significantly impacted by the acquisition of TNT’s French activities:The cash flow from operating activities was 60 million euros, compared to 107 million euros in 2004. This significant fall was due to
the low level of net income recorded in 2005, once the badwill recorded during the take-over of part of TNT’s French activities had been restated.The cash flow from investing activities, not including the impact of the acquisitions recognised in 2005, reflected capital expenditure
of 84 million euros in 2005 (net of disposals related to renewals). Acquisitions and disposals of companies, net of cash acquired or transferred, reflected the impact of the inclusion in the Group’s scope
of consolidation of the Venditelli companies and its subsidiary, Vendilog, and the acquisition of the assets and equity in the activities taken over fromthe TNT Group.
Finally, cash flow from financing activities was stable at +0.9 million euros.
Overall, the variation in cash was +44 million euros for the 2005 financial year, 65 million euros of which was related to the TNT operation.At 31 December 2005, the balance of available cash was 144 million euros, from which funds will essentially be used during the 2006
and 2007 financial years to fund the restructuring of the activities taken over from TNT at the end of 2005.
2005 FINANCIAL REPORT 59
As regards the use of financial instruments and the management of the related risks (exchange rate risks, interest rate risks, liquidityand UCITS investment risks), these are described in note III v) to the consolidated financial statements. Financial instruments are only used by GroupeNorbert Dentressangle S.A, and not by the Group’s other companies.
We draw your attention to the fact that our Company did not feel that it was necessary to implement a hedging policy as regards fuelprocurement, as it believes that the risk relating to purchasing these instruments is too significant, bearing in mind the excessive amount of pricevolatility.
Changes in the scope of consolidation Several changes occurred during the 2005 financial year:In August 2005, the Group acquired the shares of the French companies Venditelli and its subsidiary, Vendilog. The main business
activity of Venditelli is distribution transport “by the pallet” in France, with specific expertise in the area of distribution of household appliances.Vendilog’s business activity relates to warehouse management.This operation generated goodwill of 16 million euros.By acquiring Venditelli, the Norbert Dentressangle Group has extended its range of services pursuant to the strategic targets set forth in
the “Challenge 2008” business plan. In particular, this acquisition will enable it, in a business line such as household appliances, to be able to offer itscustomers a full range of services such as warehousing, order preparation, procurement and, now, delivery to final customers. 630 employees at thesecompanies thus joined the Group (at 31 August 2005).
On 30 November 2005, the Group acquired part of the Transport activities, and all of the French logistics activities, of the TNT Group,with the exception of automobile logistics.
Logistics relate to the goodwill and assets of Aixor, Copal and Cemga.Transport relates to the goodwill and assets of Nord Mendy, the Clermont-Ferrand site of Nicolas, and shares in LRF and Barco.This operation generated badwill of 35 million euros.1,473 employees at these companies thus joined the Group (at 31 December 2005).This acquisition opportunity is also in-line with the Group’s strategic targets as it will enable it:- in Logistics, to become the number 2 in the French market and to increase its presence in the Provence-Alpes-Côtes d’Azur and Ile-
de-France regions, vis-à-vis prestigious customers,- in Transport, to increase its geographical presence in its traditional business lines in the Auvergne (Clermont-Ferrand) and Nord
regions.
Moreover, a certain number of legal simplifications were carried out during 2005 within the Group’s scope of consolidation. Theseoperations are described in note III x) to the consolidated financial statements.
Finally, OMEGA III (a subsidiary of the Norbert Dentressangle Group), OMEGA IV and OMEGA V (subsidiaries of NDT), were createdat the end of 2005. To date, these companies have no business activity.
Labour aspectsAt 31 December 2005, the Norbert Dentressangle Group had a workforce of 13,903 employees, up 15 % compared to 31 December
2004:18 % of said employees are employed by foreign subsidiaries.Staff costs amounted to 408 million euros in 2005, compared to 394 million euros in 2004. The increase in the payroll, which is less
rapid than that of the workforce, can be explained in particular by the fact that the acquisition operations carried out during 2005 had a particularlysignificant impact at the year-end. For information, the discretionary and obligatory profit-sharing items accounted for 4.7 million euros in 2005,compared with 5.9 million euros in 2004.
There was no major labour dispute within the Group during the 2005 financial year, although a poorly-followed disagreement was seenin May 2005, with several employees criticising the Group’s policy of cutting-back use of “international long-distance” drivers based in France in favourof drivers based in the countries of Central and Eastern Europe.
Changes in the organisationOn 1 January 2005, a dedicated Management team was set up to facilitate the development of the various Transport activities.Mr Hervé Montjotin, a member of the Executive Board and a General Manager, was appointed to manage this Division, and he
established a team from amongst the members of the sales, human resources, quality and finance areas.
2005 FINANCIAL REPORT 60
Major events since year-endThe Group instituted legal proceedings against the French Tax Authorities for the repayment of VAT paid on French toll roads from 1996 to
2000. These proceedings, which have actually been ongoing since 2001, have generated a certain number of regulatory and legal developments. In March2006, part of the amount being claimed from the State was effectively repaid to the Group following an enforceable legal ruling in its favour. Nevertheless,as the French Finance Ministry has appealed against the decision, no accounting revenue was booked in this respect in the consolidated financial statementsclosed on 31 December 2005. Moreover, at the date when this report is being prepared, it is impossible to state the final impact of these proceedings for theNorbert Dentressangle Group.
Adoption of IFRSUnder the “2005 IFRS” regulations adopted by the European Community in 2002, the Norbert Dentressangle Group has presented its 2005
and 2004 consolidated financial statements in accordance with the International Financial Reporting Standards, or “IFRS”.
As the 2004 consolidated financial statements were published, at the start of 2005, in accordance with French standards (CRC 2004-03),the notes to the consolidated financial statements include a transition table between the published 2004 consolidated financial statements 2004 and thesesame consolidated financial statements for 2005, drawn up according to the IFRS.
The impact of this change, as mentioned in these notes, has turned out to be fairly insignificant as regards the structure of the NorbertDentressangle Group’s asset base at 31 December 2004 (-0.3 million euros, including the application of IAS 32 and IAS 39, as from 1 January 2005).
As regards the consolidated profit and loss account, the only significant impact of this change in accounting system relates to the treatmentof goodwill and the discontinuation of straight-line impairment which was previously applied to goodwill items.
In 2004, this change improved the consolidated result by 3.8 million euros.
Group outlook2006 will be the second year covered by the Group’s three-year Business Plan called, “Challenge 2008”.
This ambitious development plan:- reiterates the strong ambition for growth: target to be achieved +53 % growth in revenue, to reach invoicing of 2 billion euros within 3 years,- demonstrates the determination to continue combining growth and profitability: the Norbert Dentressangle Group wishes to maintain high
performance levels, i.e. an operating margin of 5 % of turnover,- takes increased account of sustainable development in the carrying on of the Group’s businesses.
This Business Plan is in line with the previous three-year Business Plans. Indeed, it is based on the current key factors of the Group’s success:- the perpetuation of a specific model based on the management of resources (own or subcontracted),- differentiating offers, with a high concentration of services,- continuous innovation in all the company’s businesses,- permanent search for savings and cost-reduction,- the Group’s entrepreneurial culture.
It is also based on growth drivers, such as:- an extended range of services due to expertise in new business lines: Transport: logistics on customer site, domestic distribution,Logistics: “reverse logistics”, hazardous goods’ logistics and temperature-controlled logistics,- more rapid international development,- a stronger commitment to sustainable development, an instrument for differentiation and expansion, and an employee-motivation aspect.
Specifically, for 2006, the investments made in 2005 will be continued:- deployment of the new ERP information system,- the continuation of the policy of opening commercial representation offices in China, with the aim of launching logistics services in this
country during 2006.
Against this background, the Group therefore forecasts internal growth of around 5 %, and an improved operating result compared to 2005,in particular in Transport activities, due to the effect of the restructuring and price revaluation work carried out at the end of 2005.
II – PARENT COMPANY ACTIVITY, PRESENTATION OF THE CORPORATE FINANCIAL STATEMENTS
Activity - ResultsThe revenue of Groupe Norbert Dentressangle S.A. stood at 21.2 million euros on 2005, compared to 22.5 million euros in 2004. This near
stability in revenue can be explained by the fact that in 2005, as in 2004, the company focused on its role as the Group’s holding company, with the specificactivities of carrying on the Group’s businesses of Transport and Logistics now being managed respectively by NDT, a Transport sub-holding company, andND Logistics, a Logistics sub-holding company and operational structure for France.
2005 FINANCIAL REPORT 61
Operating expenses represented 22.5 million euros in 2005, compared with 19.9 million euros in 2004. Income from operationstherefore stood at – 1.3 million euros.
The net financial result represented revenue of 9.8 million euros, taking account of 10.6 million euros of dividends received fromsubsidiaries: this result level is significantly higher than 2004 figures (7.4 million euros), owing to the increase in dividends following a very satisfactory2004 for the majority of operational subsidiaries.
There was no non-recurring result in 2005.As the holding company for the Group’s tax consolidation, Groupe Norbert Dentressangle S.A. posted corporate income tax savings of
5.8 million euros for 2005, whereas for the previous year, tax consolidation generated a corporate income tax expense of 3.4 million euros.
It is essentially this change, and the amount of dividends received, which explain the variation in net income between 2004 and 2005,i.e. an increase from 6 million euros to 15 million euros.
Balance sheet Equity increased from 162.8 million euros at 31 December 2004 to 172.8 million euros in 2005, taking account of the amount of dividends
paid out in 2005, in respect of 2004, that is 8 million euros.
The Company’s assets are mainly comprised of investments in the three companies which it owns directly:- NDT, the Transport activities sub-holding company, with an asset value of 100 million euros,- ND LOGISTICS (France), the Logistics activities sub-holding company, with an asset value of 59 million euros,- STOCKALLIANCE, a company bought at the end of 2002, with an asset value of 10 million euros.
At the end of 2005, net debt consisted of current bank overdrafts, amounting to 25 million euros. At 31 December 2004, the Companyhad cash of 11.6 million euros.
Working Capital Requirements significantly increased between 2004 and 2005, on account of the Company’s tax position which wasvery different as holding company for the Norbert Dentressangle Group’s tax consolidation:At 31 December 2004, the Company owed 6.6 million euros of corporate income tax to the State,However, at 31 December 2005, payments on account of corporate income tax represented an advance of 8.6 million euros to the State.All information relating to the Company’s use of financial instruments is provided in section I of this report, under the heading “Consolidated balance sheetand statement of cash-flow”.
Non tax-deductible expensesIn accordance with the provisions of Article 223 (4) of the French General Tax Code, you are hereby informed that no amount relating
to the expenses referred to in Article 39-4 of said Code has been re-included in the taxable income.
Major events and amendments to the Articles of Association during the financial year Major events
The Combined General Meeting of 24 May 2005:- duly noted the resignation of Mrs Thérèse Dentressangle from her position as a Member of the Supervisory Board and, consequently,
appointed Mr Pierre-André Martel to this position,- appointed ERNST AND YOUNG AUDIT as regular joint statutory auditor and Mr Pascal Rhoumy as alternate joint statutory auditor,
following the expiry of the terms of office of PRICEWATERHOUSECOOPERS AUDIT and Mr Pierre COLL.
Amendments to the Articles of Association On the same occasion, deliberating in an extraordinary capacity, the Meeting decided to amend Article 9, “Rights attaching to each
share”, of the Articles of Association so as to bring it into compliance with the most-recent applicable legislation.
Key events and amendments to the Articles of Association since the year-endKey events
We hereby specify to you that the terms of office of the members of your Executive Board, which expired last March, have been renewedfor all members for a two-year term. Mr Jean-Claude Michel’s term of office as Chairman has been renewed. Mr Hervé Montjotin’s term of office asGeneral Manager, responsible for the Transport Division, has been renewed. Finally, Mr François Bertreau, appointed as General Manager, remainedin charge of the Logistics Division.
No event has had a major impact on the financial statements of Groupe Norbert Dentressangle S.A. since 31 December 2005.
2005 FINANCIAL REPORT 62
Amendments to the Articles of Association As its meeting of 16 January 2006, the Executive Board:- duly noted the exercising of 61,600 share subscription options granted by the Executive Board on 9 October 2000, under
authorisation from the Combined Ordinary and Extraordinary General Meeting of 24 May 2000,- duly noted the exercising of 95,000 warrants allotted by the Executive Board on 30 June 2003, under a delegation from the Combined
General Meeting of 27 May 2003, so that at 31 December 2005, our Company’s share capital was 19,846,612 euros, divided into 9,923,306 shareswith face value of 2 euros each.
- duly noted the exercising of 21,600 share subscription options granted by the Executive Board on 9 October 2000, underauthorisation from the Combined General Meeting of 24 May 2000,
- under the authorisation granted by the Combined General Meeting of 24 May 2005, resolved to cancel 160,913 treasury sharesacquired within the context of the share buyback programmes authorised by the General Meeting.
Therefore, on 16 January 2006, the share capital was down by 278,626 euros to 19,567,986 euros, divided into 9,783,993 shares withpar value of 2 euros, all of the same category.
Consequently, Article 6, “Contributions – Share capital”, of our Articles of Association has been amended.
ProspectsIn 2006, Groupe Norbert Dentressangle S.A. will have the same sources of revenue and expenses as in 2005. There should not be a
significant change in its results and net worth compared to figures posted for 2005.
Activity and results of subsidiaries and controlled companiesThe revenues and results of subsidiaries and sub-subsidiaries, which are all included in the scope of consolidation, are set forth in the
notes to the financial statements. Moreover, the activity of the Norbert Dentressangle Group, as described above, summarises their activity.
Acquisition of company interests In accordance with the provisions of Article L.233-6, 1st paragraph of the French Commercial Code, you are hereby informed that, as
from 15 November 2005, our Company has fully owned the French simplified joint stock company (société par actions simplifiée), OMEGA II, whichhas capital of 1.8 million euros. This company was used as the vehicle for the takeover of certain activities of the TNT Group. Previously, this company,which is a subsidiary of NDT, only had capital of 3,000 euros and no business activity.
When it was incorporated in December 2005, the Group also subscribed for all the capital of OMEGA III, in the sum of 10,000 euros.At 31 December 2005, this company had no business activity.
Information pursuant to Section L.225-100 and L.225-102-1 of the French Commercial Code In accordance with legislation, we hereby inform you that four statements relating to the previous financial year are appended to this report, on:• currently-valid delegations granted by your General Meetings to the Executive Board,• the terms of office and duties held and carried out by your senior corporate officers from 1 January to 31 December 2005,• compensation and benefits paid to the Company’s senior officers over the same period and for the previous financial year,• achievements and undertakings of the Company in relation to labour and environment policy, with this report covering all the risks
and questions faced by the Company, owing to the business sectors in which it operates.
Share subscription or call options – Transactions reserved for employees – Warrants At 31 December 2005, certain employees or corporate officers of the Company, or its subsidiaries, had been granted share subscription
and/or call options. On said date, the following options or warrants had not been exercised:• 65,300 share subscription options, 57,300 of which may be exercised until 9 October 2006 and 8,000 from 4 September 2006 to
4 September 2007,• 111,500 share call options, which may be exercised as from 2008,• 10,000 warrants, which may be exercised until 31 May 2006.
In accordance with the provisions of Article L.225-102 of the French Commercial Code, we hereby inform you that no fraction of ourcapital was held on 31 December 2005 by employees of the Company or affiliated companies under the Company Savings Plan provided for by ArticlesL.443-1 to L.443-9 of the French Labour Code or as part of the company mutual fund governed by chapter 3 of the Act of 23 December 1988.
Allocation of the capital and voting rights On 1 January 2006, Financière Norbert Dentressangle held more than half of the shares, and 74.28 % of the voting rights. During the year,
said company did not cross any threshold set by legislation or the Articles of Association. On 31 December 2005, the Dentressangle family held 5.50 %of the shares and 6.71 % of the voting rights; Mr Norbert Dentressangle personally held less than 5 % of the shares, but held 5.71 % of the voting rights.
In accordance with the provisions of Article L.225-102 of the French Commercial Code, we hereby specify to you that the number ofsecurities held directly by employees represented, at the end of the previous financial year 0.69 % of the capital and 0.66 % of the voting rights. Nosecurities were held by employees under a company savings scheme.
2005 FINANCIAL REPORT 63
Net income appropriation You must decide on the appropriation of the net income for the financial year, to wit:
Income for the financial year € 14,990,689.92 Plus amounts carried forward from previous years € 28,185,511.87 Representing a total available amount of € 43,176,201.79 Appropriated as follows:- to the statutory reserve, to bring it up to 10 % of the share
capital at 31 December 2005 € 126,623.67 - to a special reserve in accordance with the provisions of Article 238 bis AB
of the French General Tax Code (corporate patronage) € 7,166.00 - to shareholders by way of dividends € 8,707,753.77 - to the non-restricted reserve to bring it up to 90 million euros € 4,000,000.00 - the balance, to “Retained earnings” € 30,334,658.35 i.e. a total of: € 43,176,201.79
Therefore, each share shall provide entitlement, in respect of the financial year, to a dividend of 0.89 euros, which grants individualsresident in France the 40 % allowance provided for by Article 158, 3-2° and 4° of the French General Tax Code. Said dividend shall be paid toshareholders on 2 June 2006. It is hereby reiterated that the amounted of dividends paid in respect of the last three financial years, and the amountof the corresponding tax credit per share, were as follows:
Financial Year Net amount Tax credit Allowance Number of shares2004 € 0.84 - € 0.42 9,539,7932003 € 0.70 € 0.35 - 9,490,7742002 € 0.64 € 0.32 - 9,432,558
Dividends not paid under Article L.225-210 of the French Commercial Code, i.e. those related to treasury shares, shall be appropriatedto the “retained earnings” account.
Renewal of the term of office of a regular joint statutory auditor and of an alternate joint statutory auditorAs the terms of office of Cabinet ALAIN BONNIOT & ASSOCIES, regular joint statutory auditor, and Mr Pascal VUAILLAT, alternate
joint statutory auditor, are expiring, we request you to renew their terms of office for six financial years.
Trading by the Company in its own shares – Renewal of previously granted authorisation You have granted your Company the authorisation to trade its own shares on the stock market. During the 2005 financial year, our
Company bought 60,000 shares. However, 29,005 shares were sold following the exercising of call options by the Group’s employees or seniorcorporate officers. At the 2005 cut-off date, the total amount of treasury shares thus amounted to 283,913 securities, representing 2.86 % of our sharecapital at 31 December 2005.
The average price of shares acquired during the financial year was 39.61 euros and the average price of those sold was 30 euros. Intotal, 9,765 euros of trading fees were incurred in this respect.
These shares are used for the following purposes:• the allocation of share call options or free shares to employees or senior corporate officers in respect of 123,000 securities,• the cancellation of 160,913 securities. These securities were cancelled by a capital reduction on 16 January 2006.
We propose, by means of the eighth resolution, that you authorise the Executive Board, for a period of 18 months, to acquire theCompany’s shares within the legal limit of 10 % of the number of shares making up its capital (5 % for shares acquired so as to be kept or providedin exchange or as payment for acquisition operations), and taking account of shares already acquired. In all cases, this authorisation shall expire at theGeneral Meeting convened to adopt the financial statements for the financial year ended 31 December 2006. The maximum purchase price would be80 euros per share. Said new authorisation cancels the previous authorisation (eleventh resolution of the Combined General Meeting of 24 May 2005).Kindly note that said shares without voting rights, which must be registered, shall obviously not provide entitlement to dividends.
2005 FINANCIAL REPORT 64
III – SUNDRY EXTRAORDINARY DECISIONS SUBMITTED TO YOUR APPROVAL
Authorisations granted in respect of the Company’s securities Following a review of the special reports from your Statutory Auditors, we propose:
- that you authorise the Executive Board to cancel the Company’s treasury stock within the limit of 10 % of its share capital (ninthresolution). Said authorisation is requested for 18 months and shall expire at the Annual General Meeting held in 2007;
- that you authorise the Company to issue 115,000 equity warrants for the benefit of designated persons, who are all members of theExecutive Board (tenth resolution). Each warrant shall provide entitlement to subscription to one share. This issue is intended tostimulate the Company’s performance levels, with the exercising of said warrants being subject, in particular, to the economicperformance level conditions approved at the Supervisory Board Meeting of 9 March 2006. The unit exercise price is set at the averageprice during the last 50 trading sessions prior to the Supervisory Board Meeting of 9 March 2006, i.e. 51.68 euros, and the unit issueprice of 0.50 euros, i.e. a final global cost of 52.18 euros per share. These values were calculated so as to bring this global cost intoline with the market value of the shares. It is further specified that, so as to comply with Article 155-1 of France’s Order in Councilof 23 March 1967 on Commercial Companies, that the theoretical impact of the exercising of the 2006 equity warrants on the shareprice (average of the last 20 prices) at 9 March 2006, whether or not the shares which may be issued are taken into account, is lessthan half a cent (euro). The maximum amount of the capital increase which may follow on therefore would be 230,000 euros, andthe exercising of the 115,000 equity warrants would lead to a 1.16 % dilution for each shareholder, by only taking account of currentshares, and also approximately 1.17 %, taking account of shares to be issued in respect of previous share subscription optionprogrammes.
- As the issuing of the 2006 equity warrants represents a long-term capital increase, it is requested, so as to comply with the provisionsof Article L.225-129-6 of the French Commercial Code, that you decide upon a capital increase of our Company reserved for“members of a Company Savings Plan” (twelfth resolution). This increase, which would relate to the creation of a maximum of195,500 new shares (2 % of the capital), with par value of 2 euros each, would have to be carried out by 30 September 2006 at thelatest, with shareholders stating that they expressly waive their pre-emptive subscription right.
You are requested to bestow all powers on the Executive Board, so as to set the issue price in accordance with the provisions of the 3rdparagraph of Article L.443-5 of the French Labour Code, and to set the other terms and conditions of this reserved capital increase, to ensure its dueand proper completion and, should it be carried out, to make the consequential amendments to Articles 6 and 7 of the Articles of Association.
You should decide upon this proposed reserved capital increase on the basis of a special report from the Statutory Auditor.
As already stated to you, this proposed reserved capital increase is required by legislation, but we request that you reject it as it iscurrently unsuitable, since the Combined General Meeting of 24 May 2005 already granted a delegation to your Executive Board, for 26 months, whichis still valid, so as to carry out capital increases reserved for employees (eighteenth resolution).
Proposed amendments to the Articles of Association In the eleventh resolution, it is suggested that the current Articles of Association be amended so as to:- on the one hand, unambiguously reiterate the fact that paragraph c) of Article 9 only refers to obligations under the Articles of
Association in terms of information regarding the crossing of thresholds,- on the other hand, take account of France’s Economic Confidence and Modernisation Act Nº 2005-842 of 26 July 2005, which now
enables the Supervisory Board to meet using means of telecommunication other than only videoconferencing.
IV – PROPOSED RESOLUTIONS
The texts of the resolutions which we propose to submit to you for your approval are appended to this report.All documents provided for under effective regulations are also appended hereto. We thank you in advance for the trust that you will
surely place in your Executive Board.
The Executive Board
2005 FINANCIAL REPORT 65
NOTES TO THE EXECUTIVE BOARD REPORT
TERMS OF OFFICE AND DUTIES CARRIED OUT BY CORPORATE OFFICERS FROM 1 JANUARY 2005 TO 31 DECEMBER 2005
1. Members of the Supervisory Board
• Evelyne DENTRESSANGLE
Company Term of office
NORBERT DENTRESSANGLE GROUP Member of the Supervisory Board and Vice Chairman
FINANCIERE NORBERT DENTRESSANGLE Director and Deputy General Manager
FINAIXAM Member of the Supervisory Board and Vice Chairman
FELIX POTIN GCI Permanent representative of FINANCIERE NORBERT DENTRESSANGLE, Director
MEGA PRODUCTIONS Director
SOFADE Chairman
TOURS NORD TRANSIT Manager
CAVAILLON TRANSIT Manager
LONGUEIL TRANSIT Manager
SAINT-RAMBERT TRANSIT Manager
BEAUSEMBLANT IMMOBILIER Manager
BORDEAUX TRANSIT Manager
CHAMBERY TRANSIT Manager
LILLE TRANSIT Manager
ND COULOGNE ENTREPOT Manager
PORT CHAMPAGNE Manager
SAINT-VALLIER CALAIS Manager
SAT 3D IMMOBILIER Manager
SAT 3E IMMOBILIER Manager
SAT 3G IMMOBILIER Manager
PLA 2F IMMOBILIER Manager
OTHER OFFICES AND DUTIES CARRIED OUT DURING THE LAST FIVE YEARS
AIXAM MEGA Director
2005 FINANCIAL REPORT 66
• Norbert DENTRESSANGLE
Company Term of office
NORBERT DENTRESSANGLE GROUP Chairman of the Supervisory Board
FINANCIERE NORBERT DENTRESSANGLE Chairman of the Board of Directors and General Manager
FINAIXAM Chairman of the Supervisory Board
SEB Director
SOGEBAIL Director
FINANCIERE EGNATIA Permanent representative of FINANCIERE NORBERT DENTRESSANGLE, Director
EMIN LEYDIER Member of the Supervisory Board
SOFADE General Manager
NDI Manager
PLA 2A IMMOBILIER Manager
PLA 2B IMMOBILIER Manager
PLA 2C IMMOBILIER Manager
PLA 2E IMMOBILIER Manager
FINANCIERE DE LA GALAURE Manager
TEXIM Joint manager
TEXMAT Joint manager
OTHER OFFICES AND DUTIES CARRIED OUT DURING THE LAST FIVE YEARS
SIPAREX CROISSANCE Member of the Supervisory Board
EGNATIA Director
VIA LOCATION Permanent representative of FINANCIERE NORBERT DENTRESSANGLE, Director
MICHAUX GESTION SA Director
LAFUMA Director
SOCIETE NOUVELLE D’ALIMENTATION PHILIPPE POTIN - SNAPP Director
IDB IMMOBILIER Permanent representative of FINANCIERE NORBERT DENTRESSANGLE, Chairman
SAT IMMOBILIER Manager
SAT 3 C IMMOBILIER Manager
SAT 3 D IMMOBILIER Manager
SAT 3 E IMMOBILIER Manager
VALSANGLE Manager
VIA LOCATION ILE DE FRANCE Permanent representative of FINANCIERE NORBERT DENTRESSANGLE, Director
VIA LOCATION FRANCE PROVINCES Permanent representative of FINANCIERE NORBERT DENTRESSANGLE, Director
SAINT-RAMBERT TRANSIT Manager
PORT CHAMPAGNE Manager
BEAUSEMBLANT IMMOBILIER Manager
BORDEAUX TRANSIT Manager
CHAMBERY TRANSIT Manager
ND COULOGNE ENTREPOTS Manager
LILLE TRANSIT Manager
• Jacques GAIRARD
Company Term of office
NORBERT DENTRESSANGLE GROUP Member of the Supervisory Board
BONGRAIN Director
SEB Director
LA MAISON ROUGE (Foundation for Contemporary Art) Director
OTHER OFFICES AND DUTIES CARRIED OUT DURING THE LAST FIVE YEARS
AESCRA - EM Lyon Chairman of the Board of Directors
• Henri LACHMANN
Company Term of office
NORBERT DENTRESSANGLE GROUP Member of the Supervisory Board
SCHNEIDER ELECTRIC SA Chairman
SCHNEIDER ELECTRIC INDUSTRIES SAS Chairman
Various companies of SCHNEIDER ELECTRIC Group Director
AXA Member of the Supervisory Board
Various companies of AXA Group Director
VIVENDI UNIVERSAL Member of the Supervisory Board
FIMALAC Independent advisor
TAJAN Independent advisor
CENTRE CHIRURGICAL MARIE LANNELONGUE Chairman of the Board of Directors
OTHER OFFICES AND DUTIES CARRIED OUT DURING THE LAST FIVE YEARS
VIVENDI UNIVERSAL Director
Various companies of SCHNEIDER ELECTRIC Group Director
FINAXA Director
ETABLISSEMENTS DE DIETRICH & CIE Director
• Pierre-André MARTEL
Company Term of office
NORBERT DENTRESSANGLE GROUP Member of the Supervisory Board
CARAVELLE SA Chairman of the Board of Directors
XRT Chairman of the Supervisory Board
COOPER SAS Chairman
MARREL SAS Chairman
PX HOLDING SAS Chairman
INNODEC SA Member of the Board of Directors
SOPRA GMT SA Member of the Board of Directors
LEGRIS INDUSTRIES SA Member of the Supervisory Board
SOPRA GROUP SA Member of the Supervisory Board
SONOVISION-ITEP SAS Member of the Supervisory Board
FRUEHAUF SAS Member of the Supervisory Board
KLEBER AVIATION SNC Legal representative of the CARAVELLE company, Joint manager
OTHER OFFICES AND DUTIES CARRIED OUT DURING THE LAST FIVE YEARS
DUPLI 31 Director
2005 FINANCIAL REPORT 67
2005 FINANCIAL REPORT 68
• François-Marie VALENTIN
Company Term of office
NORBERT DENTRESSANGLE GROUP Member of the Supervisory Board
FMV & ASSOCIES SARL Manager
VAUCRAINS PARTICIPATIONS Director
FINAIXAM SA Member of the Supervisory Board
OTHER OFFICES AND DUTIES CARRIED OUT DURING THE LAST FIVE YEARS
EGNATIA Director
ELCO BRANDT SA Member of the Supervisory Board
2. Members of the Executive Board
• Patrick BATAILLARD
Company Term of office
NORBERT DENTRESSANGLE GROUP Member of the Executive Board
LOCAD 05 Director
LOCAD 06 Director
ND GESTION Joint manager
NDT General Manager
OMEGA II Chairman
OMEGA III Manager
OMEGA IV Manager
OMEGA V Manager
SCI DES VOLCANS Manager
SCI GYVES Joint manager
SCI IMOTRANS Manager
SCI LOGIS-TRANS EUROPE Manager
STOCKALLIANCE Permanent representative of ND LOGISTICS, Director
TEXLOG Manager
TRANSIMMO PICARDIE Joint manager
UTL LOCATION Joint manager
ND SILO IBERICA Director
NORBERT DENTRESSANGLE HOLDINGS LIMITED Director
OTHER OFFICES AND DUTIES CARRIED OUT DURING THE LAST FIVE YEARS
COMPAGNIE DES ENTREPOTS ET MAGASINS GENERAUX DE CHAMPAGNE Permanent representative of ND LOGISTICS, Director
FINANCIERE DE VSG Director
LMDI Permanent representative of ND LOGISTICS, Director
LOCAD 02 Director
LOCAD 03 Director
LOCAD 04 Director
SOCIETE D’EXPLOITATION DES MAGASINS GENERAUX DE CHAMPAGNE Permanent representative of ND LOGISTICS, Director
SOCIETE DE TRANSPORTS SA CELANO Director
TND RHONE-ALPES Chairman
TRANSLITTORAL Chairman
TRANSPORTS CROULLET AFFRETEMENT Director
TRANSPORTS HARDY Permanent representative of FINANCIERE DE VSG, Director
TRANSPORTS LAURENT Manager
TRANSPORTS VOLUMINEUX NORBERT DENTRESSANGLE Chairman
UNITED SAVAM Permanent representative of FINANCIERE DE VSG, Director
VOLUTRANS Chairman of the Board of Directors
COREND Director
NAVAMAR Permanent representative of ND IBERICA, Director
TRANSDUC Permanent representative of ND IBERICA, Director
• François BERTREAU
Company Term of office
NORBERT DENTRESSANGLE GROUP Member of the Executive Board
STOCKALLIANCE Chairman of the Board of Directors and General Manager
ND LOGISTICS Chairman
LE TRAIT D’UNION PACKAGING CONDITIONNEMENT Manager
AIXOR LOGISTICS Chairman
CEMGA LOGISTICS Chairman
COPAL LOGISTICS Chairman
BARLATIER CAMIONNAGE ORGANISATION Joint manager
ND LOGISTICS ITALIA Chairman of the Board of Directors
ND LOGISTICS UK Director
ND LOGISTICS SWITZERLAND Manager
ND LOGISTICS HUNGARY General Manager
OTHER OFFICES AND DUTIES CARRIED OUT DURING THE LAST FIVE YEARS
LMDI Permanent representative of STOCKALLIANCE, Director
COMPAGNIE DES ENTREPOTS ET MAGASINS GENERAUX DE CHAMPAGNE Permanent representative of STOCKALLIANCE, Director
SOCIETE D’EXPLOITATION DES MAGASINS GENERAUX DE CHAMPAGNE Permanent representative of STOCKALLIANCE, Director
CIDEM Chairman of the Board of Directors
2005 FINANCIAL REPORT 69
2005 FINANCIAL REPORT 70
• Jean-Claude MICHEL
Company Term of office
NORBERT DENTRESSANGLE GROUP Chairman of the Executive Board
STOCKALLIANCE Permanent representative of the NORBERT DENTRESSANGLE GROUP, Director
NDT General Manager
OMEGA II General Manager
LES ROUTIERS FRANÇAIS – L.R.F. SAS Chairman
ND BELGIUM Permanent representative of NDT, Director
ND SILO IBERICA Director
NORBERT DENTRESSANGLE HOLDINGS LIMITED Director
NORBERT DENTRESSANGLE IBERICA Director
NORBERT DENTRESSANGLE UK Director
SCHEDDICK TRANSPORT LIMITED Director
OTHER OFFICES AND DUTIES CARRIED OUT DURING THE LAST FIVE YEARS
AROLAZ Manager
CIDEM Director
COMPAGNIE DES ENTREPOTS ET MAGASINS GENERAUX DE CHAMPAGNE Permanent representative of the NORBERT DENTRESSANGLE GROUP, Director
FINANCIERE DE VSG Permanent representative of NDT, Director
LMDI Permanent representative of the NORBERT DENTRESSANGLE GROUP, Director
SCI PGT3 Manager
SCI PGT4 Manager
SOCIETE D’EXPLOITATION DES MAGASINS GENERAUX DE CHAMPAGNE Permanent representative of the NORBERT DENTRESSANGLE GROUP, Director
SOCIETE DE TRANSPORTS SA CELANO Permanent representative of NDT, Director
TRANSPORTS CROULLET AFFRETEMENT Permanent representative of NDT, Director
TRANSPORTS HARDY Permanent representative of NDT, Director
UNITED SAVAM Permanent representative of NDT, Director
VOLUTRANS Permanent representative of NDT, Director
AJG INTERNATIONAL TRANSPORT Director
GTPI DE TRANSPORTES Director
COREND Chairman of the Board of Directors
NAVAMAR Permanent representative of the NORBERT DENTRESSANGLE GROUP, Director
ND SAVAM IBERICA Director
ND SILO BELGIUM Permanent representative of NDT, Director
NORBERT DENTRESSANGLE IBERICA OESTE Chairman
NORBERT DENTRESSANGLE IBERICA ESTE Chairman
NORBERT DENTRESSANGLE ITALIA Director
SAVAM LUX Permanent representative of NDT, Director
TRANSDUC Permanent representative of the NORBERT DENTRESSANGLE GROUP, Director
TRANSPORTES PENYAFORT Chairman of the Board of Directors
• Hervé MONTJOTIN
Company Term of office
NORBERT DENTRESSANGLE GROUP Member of the Executive Board and General Manager
AIR ND Joint manager
ND FRANCHISE Joint manager
ND INFORMATIQUE Joint manager
ND MAINTENANCE Joint manager
ND SERVICES Joint manager
NDT Chairman
SNN CLERMONT Chairman
SNM VALENCIENNES Chairman
UNITED SAVAM Chairman
VENDITELLI TRANSPORTS Chairman
VENDILOG Chairman
OTHER OFFICES AND DUTIES CARRIED OUT DURING THE LAST FIVE YEARS
FINANCIERE DE VSG Chairman of the Board of Directors
LMDI Permanent representative of LOGIBAL, Director
MNS Permanent representative of NDT, Director
ND FORMATION Joint manager
SOCIETE DE TRANSPORTS SA CELANO Permanent representative of ND SILO, Director
STOCKALLIANCE Permanent representative of ND SERVICES, Director
TRANSPORTS CROULLET AFFRETEMENT Permanent representative of ND LOCATION, Director
TRANSPORTS HARDY Permanent representative of UNITED SAVAM, Director
UNITED SAVAM Chairman
VOLUTRANS Permanent representative of TVND, Director
NAVAMAR Company secretary
ND SAVAM IBERICA Director
NORBERT DENTRESSANGLE HOLDINGS LIMITED Director
TRANSDUC Company secretary
2005 FINANCIAL REPORT 71
2005 FINANCIAL REPORT 72
NOTES TO THE EXECUTIVE BOARD REPORT (continued)
REMUNERATION AND BENEFITS PAID TO CORPORATE OFFICERS (*)
The set remuneration paid to Mr. Jean-Claude Michel, Chairman of the Executive Board, in respect of his contract of employment for2005, amounted to € 342,966 compared to € 327,016 for 2004.
The remuneration paid in respect of his corporate post was € 5,488 in 2005, the same as for 2004.Moreover, he received a premium of € 147,500 in 2006 for the 2005 results compared to € 144,800 in 2005 for the 2004 results. Lastly, the amount of his benefits in kind was assessed at € 7,759 in 2005 compared to € 11,172 for 2004.
The set remuneration paid to Mr. Hervé Montjotin, member of the Executive Board and General Manager, in respect of his contract ofemployment for 2005, amounted to € 235,378 compared to € 219,910 for 2004.
The remuneration paid in respect of his corporate post was € 3,659 for 2005 compared to € 3,659 for 2004.Moreover, he received a premium of € 82,000 in 2006 for the 2005 results compared to € 96,500 in 2005 for the 2004 results.Lastly, the amount of his benefits in kind was assessed at € 2,410 in 2005 compared to € 6,561 for 2004.
The set remuneration paid to Mr. Patrick Bataillard, member of the Executive Board, in respect of his contract of employment for 2005,amounted to € 223,935 compared to € 194,813 for 2004.
The remuneration paid in respect of his corporate post was € 3,659 for 2005 compared to € 3,659 for 2004.Moreover, he received a premium of € 73,500 in 2006 for the 2005 results compared to € 87,800 in 2005 for the 2004 results.Lastly, the amount of his benefits in kind was assessed at € 1,754 in 2005 compared to € 6,210 for 2004.
The set remuneration paid to Mr. François Bertreau, member of the Executive Board, in respect of his contract of employment for 2005,amounted to € 234,497 compared to € 219,887 for 2004.
The remuneration paid in respect of his corporate post was € 3,659 for 2005 compared to € 3,659 for 2004.Moreover, he received a premium of € 110,000 in 2006 for the 2005 results compared to € 98,300 in 2005 for the 2004 results.Lastly, the amount of his benefits in kind was assessed at € 5,072 in 2005 compared to € 8,302 for 2004.
The variable proportion of their remuneration is based on the Group’s consolidated net income, the performance levels of the twooperational divisions, and the assessment of their individual performances.
The managers do not receive any benefits or remuneration other than those mentioned hereinabove.
The remuneration paid to Mr. Norbert Dentressangle, for this term of office as Chairman of the Supervisory Board, in 2005, amountedto € 113,400 compared to € 108,000 for 2004.
The attendance fees paid to Mrs. Evelyne Dentressangle, member of the Supervisory Board, amounted to € 10,350 for 2005 comparedto € 9,500 for 2004.
The attendance fees paid to Mr. Pierre-André Martel, member of the Supervisory Board, amounted to € 6,370 for 2005.
The attendance fees paid to Mr. Jacques Gairard, member of the Supervisory Board, amounted to € 10,850 for 2005 compared to€ 9,500 for 2004.
The attendance fees paid to Mr. Henri Lachman, member of the Supervisory Board, amounted to € 9,850 for 2005 compared to € 9,500for 2004.
The attendance fees paid to Mr. François-Marie Valentin, member of the Supervisory Board, amounted to € 10,350 for 2005 comparedto € 10,000 for 2004.
The Shareholder’s General Meeting set the total amount of attendance fees for 2005 at € 51,750. The Supervisory Board shall allocateattendance fees on the basis of criteria that provide for a set share for all members of the Board, apart from the Chairman, as well as a share related toactual attendance at meetings of the Supervisory Board.
(*) All amounts in respect of remuneration mentioned are gross figures.
2005 FINANCIAL REPORT 73
NOTES TO THE EXECUTIVE BOARD REPORT (continued)
ACHIEVEMENTS AND COMMITMENTS OF THE COMPANY IN RELATION TO LABOUR AND ENVIRONMENTAL POLICYFROM 1 JANUARY TO 31 DECEMBER 2005
The Norbert Dentressangle Group has taken the problems related to sustainable development into account as from 2002 and is nowreinforcing its commitment.
To this end, the Group has chosen to focus on four areas:• role of social integrator,• reduction of greenhouse gas emissions,• environmentally-friendly sites and buildings,• control of road-safety issues.
1. Human resources: role of social integratorAs at 31 December 2005, the Norbert Dentressangle Group had 13,903 employees, including 2,727 outside France.
As at 31 December 2005, the breakdown of employees of the Norbert Dentressangle Group by country was as follows:
The male / female ratio, all business areas combined, is 79 % men and 21 % women. The average length is service is 6.4 years and average age 39, with 96 % of jobs being permanent.The Group currently has 130 disabled employees.
The indicator chosen by the Group as regards this social integration and promotion focus is the internal promotion rate, i.e. thepercentage of employees having been promoted during the year. It reflects the Group’s “upwardly mobile” dimension. In 2005, this rate was 4.7 %.
The Norbert Dentressangle Group aims to increase this rate to 8 % at the end of 2007.
So as to reach this target, the Group has introduced the following Human Resources policy:
a. Monitoring individual career paths and increasing internal mobility so as to better identify in-house talent and favour individualdevelopment:
• implementation of a skills table, assessment of all operational staff, and establishing individual development programmes,• systematic deployment of annual interviews,• increasing internal mobility with the introduction of monthly “mobility meetings”.
b. In 2005, the training policy enabled more than one person out of two to benefit from training activities.The Group invested 3 % of the payroll in training, and developed training sessions to accompany the progress of employees. Within the Group, 250 people spend all or part of their time training their colleagues.
c. Reinforcement of the apprenticeship policy:• the Group is a signatory of the apprenticeship charter and has committed itself to increasing the number of sandwich contracts (contrats
d’alternance) (from 75 to 100 contracts),• In recent years, the Group has established a specific training network of sandwich courses in respect of the haulage business, so as to
open up these business lines to young graduates who were originally set to work in other sectors, and has developed specific agreementswith several training organisations,
• In partnership with the local job centre, the Group has introduced a selection procedure based on the so-called “abilities” method.
Germany 0.8 %Belgium 0.5 %Spain 1.3 %France 80.4 %
UK 6.5 %Netherlands 2.7 %Hungary 0.0 %Italy 1.7 %
Luxembourg 1.3 %Poland 2.6 %Portugal 0.6 %Czech Republic 1.6 %
2005 FINANCIAL REPORT 74
2. Reduction of greenhouse gas emissionsGreenhouse gases contribute significantly to global warming.Transport emits 28 % of these gases, and is strongly involved in these areas. The emission of greenhouse gases as a result of carriage by
road is directly proportional to diesel consumption.The indicator chosen by the Norbert Dentressangle Group is the number of grammes of CO2 emitted per metric ton transported and per
kilometre.The operational levers to improve this indicator are the fuel consumption of vehicles, kilometres covered by empty trucks, and
optimisation as regards vehicle load levels.The greenhouse gas emission indicator calculated for 2005, following the analysis of data carried out in all the Group’s transport
agencies, was 54 g/ T/ km, i.e. a reduction of 1 gramme compared to 2004.This positive development was achieved essentially as the result of a reduction in fuel consumption.
In November 2005, the Norbert Dentressangle Group signed a partnership agreement for “control of greenhouse gas emissions fromlogistics and goods transport activities” with France’s Environment and Energy Control Agency (Agence de l’Environnement et de la Maîtrise del’Energie, or “ADEME”).
Under this agreement, the ADEME undertakes to provide the Norbert Dentressangle Group with its investment, research and decision-making know-how, tools and assistance systems. For its part, the Norbert Dentressangle Group undertakes, using these tools, to examine all efficientmeans which would enable it to reduce its emissions of greenhouse gases and, generally, to protect the environment.
The action plans aimed at reducing greenhouse gases are:a. Control and reduction of fuel consumption:• training of all truck drivers in rational driving,• mobilisation of teams and implementation of incentive systems for savings in terms of fuel consumption,• detailed analysis of the fuel consumption of truck drivers using an electronic calculator, directly connected to the vehicle,• limiting the maximum speed of vehicles. The Group has determined the circumstances in which this approach has a positive effect
and has introduced a targeted policy to apply this solution.
b. Tests on new technical solutions:• within the context of partnerships, the Group is testing new technical solutions which enable consumption to be reduced, and respect
for the environment to be improved. In particular, during 2005, the Norbert Dentressangle Group tested new solutions in the following fields:* fuel additives,* tyres,* bio-fuel.• solutions which are validated by the tests are systematically deployed within the Group.
In 2005, the Transport Division’s average fuel consumption was cut by 1 litre/100 km compared to 2004.
Independently of the reduction of greenhouse gases, the Norbert Dentressangle Group has capitalised on its advance in the reductionof particle emissions (NOx).
As a result of its policy to rapidly and systematically renew its motor vehicles, the Group provides its customers with a fleet whichdischarges significantly fewer particles and offers them transport solutions which, on average, discharge 30 % fewer particles into the atmosphere.
Ahead of regulatory requirements, the Group is currently testing a fleet of Euro 4 vehicles so as to have a better understanding of thistechnology.
Euro 3 : 94 %
Euro 2 : 5 %
Euro 1 : 1 %
94 %
5 %
1 %
Breakdown of the Norbert Dentressangle Group’s road tractor fleet as at 31/12/2005
2005 FINANCIAL REPORT 75
3. Site environmental management The Group has 150 establishments which consume energy, discharge waste and interact with the environment.
Controlling energy consumption is a major factor in controlling operating costs.Waste reduction and its recycling provide savings and mobilise teams. Taking account of environmental issues facilitates the establishment of constructive relations with institutions and local authorities.
The Norbert Dentressangle Group has identified a multi-dimensional environmental management standard covering:• regulatory compliance,• monitoring and measuring energy consumption.
Every month, in sites having adopted the environmental policy, systematic recording of consumption is carried out and a report is sentto general management. There was an increase in the amount of waste recycled in the Norbert Dentressangle Group’s sites between 2004 and 2005,from 23 % to 37 % of the average annual volume of waste per site.
Moreover, 1,366 hours of environmental training were given during 2005.
The Norbert Dentressangle Group monitors the percentage of sites achieving the internal environmental standard. At the end of 2005,32 sites (out of the 77 assessed) met this internal standard. By the end of 2007, the Group’s aim is that all the Transport and Logistics sites will meetthis standard.
The first stage of this action plan involves assessing all the sites. This approach has been applied to 92 % of the Logistics sites and shouldbe completed by the end of 2006 for the whole Group.
The action plans are then drawn up, implemented and monitored for each site.
In addition, the Group has begun an ISO 14001 certification procedure, which is more demanding than the environmental managementstandard, for all recent sites, with this procedure being systematic for all new sites.
At the end of 2005, 19 warehouses, representing 50 % of the turnover of the Logistics Division, were ISO 14001-certified.
4. Control of road safety issuesWith its commitment to managing road safety, the Norbert Dentressangle Group is improving safety for road users, customers and people
living near to its sites. At the same time, it is reducing risks in the workplace and improving employees’ working conditions. Finally, the Group isincreasing its control of the environmental hazards associated with road and industrial accidents.
The indicator chosen by the Group is the number of kilometres driven by a driver without a declared accident with a third party whenat fault. In 2004, this figure was 500,000 km and it was 593,000 km in 2005.
The “Safe Driving Plan” represents a firm commitment by the management of the Norbert Dentressangle Group.Its aim is to avoid road accidents, based on the observation that 70 % of accidents can be avoided as they result from an error in the
behaviour of the driver.
The basic concept of the “Safe Driving Plan” is defensive driving, i.e. a driving standard intended to avoid accidents.
The key points of the “Safe Driving Plan” are to:• involve the entire hierarchy, from the manager to the driver,• recruit drivers with good profile,• train the recruited drivers in Norbert Dentressangle defensive driving,• check the application of defensive driving by drivers and organise regular refresher courses,• analyse every accident to understand its causes and determine the appropriate corrective action.
The frequency of accidents when at fault was 0.17 per annum and per vehicle in 2005 (0.19 in 2004).
TABLE SUMMARISING THE CURRENTLY-VALID DELEGATIONS GRANTED BY GENERAL SHAREHOLDERS’ MEETINGS TOTHE EXECUTIVE BOARD IN RESPECT OF CAPITAL INCREASES UNDER ARTICLES L.225-129-1 AND L.225-129-2 OF THEFRENCH COMMERCIAL CODE
Date of Meeting Content of the authorisation Validity end date Actual use of granting the authorisation these authorisations
24 May 2005 (13th resolution) Issue of ordinary shares, sundry securities, giving access 23 July 2007 -to the equity or giving entitlement to debt securities, with maintenance of the shareholders’ pre-emptive subscription rights.
24 May 2005 (14th résolution) Issue of ordinary shares, sundry securities, giving access 23 July 2007 -to the equity or giving entitlement to debt securities, with waiver of the shareholders’ pre-emptive subscription rights.
24 May 2005 (15th résolution) Delegation to increase the share capital by capitalising premiums, 23 July 2007 -reserves, profits or others.
24 May 2005 (16th résolution) Issue of ordinary shares or securities, giving access to the equity, 23 July 2007 -without shareholders’ pre-emptive subscription right, as compensation for contributions in kind relating to equity securities or securities giving access to equity.
24 May 2005 (17th résolution) Delegation to increase the number of securities to be issued 23 July 2007 -in the event of a capital increase, with or without pre-emptive subscription rights.
2005 FINANCIAL REPORT 76
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1990 1993 1996 1999 2002 2005
Change in the frequency of accidents when at fault at Norbert Dentressangle
2005 FINANCIAL REPORT 77
SPECIAL REPORT BY THE EXECUTIVE BOARD ON SHARE SUBSCRIPTION OR PURCHASE OPTIONSALLOCATED OR EXERCISED FROM 1 JANUARY TO 31 DECEMBER 2005
• Options granted:
To corporate officers: none
To employees, non corporate officers: none
• Options exercised:
By corporate officers:
General Date Type Beneficiary Number Date PriceMeeting of allocation of maturity in €
27/05/2003 30/06/2003 warrant M. Jean-Claude MICHEL 50,000 31/05/2006 22.31 27/05/2003 30/06/2003 warrant M. Hervé MONTJOTIN 25,000 31/05/2006 22.31 27/05/2003 30/06/2003 warrant M. Patrick BATAILLARD 10,000 31/05/2006 22.31 28/05/1998 21/06/1999 purchase M. Patrick BATAILLARD 5,000 31/07/2005 30.00
By employees, non corporate officers:
General Date Type Beneficiary Number Date PriceMeeting of allocation of maturity in €
27/05/2003 30/06/2003 warrant 1 10,000 31/05/2006 22.31 28/05/1998 21/06/1999 purchase 10 21,005 31/07/2005 30.00 24/05/2000 09/10/2000 subscription 13 39,000 09/10/2006 15.11
(*) : 10 or more biggest allottees if a same quantity was allocated to several of them.
2005 FINANCIAL REPORT 78
Ladies and Gentlemen,
The Supervisory Board has read the report presented by the Executive Board for 2005.
In 2005, in a particularly difficult economic climate and faced with stiff competition, the Norbert Dentressangle Group recordedsatisfactory results which mean that it is still one of the leading European companies in the transport and logistics sector.
The morose economic climate in Europe had a direct impact on the revenue of our Logistics Division, but the operating marginremained at a high level, in accordance with the targets set in the “Challenge 2008” business plan.
There were high levels of internal growth in our Transport Division, but its activities suffered from significantly increased costs andstiff competition from Central European carriers in the international transport sector.
In 2005, our Group made two major acquisitions, that of the transport company, Venditelli, and by taking over the logisticsactivities and part of the transport activities of TNT Logistics France, with the latter operation being carried out in financial conditions whichwere favourable for our Group.
Consequently, at the end of 2005, our Group had a healthy and solid financial situation with, in particular, net debt having beenreduced to 61 % of equity.
The prospects for our markets in Europe, and the effectiveness of the operational action plans implemented, mean that we areconfident that the growth of our activities during 2006 will be combined with a significant improvement in profitability levels.
The Supervisory Board invites you to adopt the company and consolidated financial statements for the financial year ended31 December 2005, and to adopt the resolutions put forward by the Executive Board, which propose, inter alia, the distribution of a dividendrepresenting a 6 % increase compared to last year.
These resolutions also include those deliberated in an extraordinary capacity, and especially those relating to:- the authorisation requested by the Executive Board to cancel securities held by the Company by reducing the share capital,- the authorisations to be granted to issue warrants in favour of designated persons,- finally, a proposal to amend Articles 9 and 23 of our Articles of Association as required by legislative provisions.
We thank you in advance for the trust that you will surely place in your Executive Board and in your Supervisory Board.
The Supervisory Board
COMMENTS BY THE SUPERVISORY BOARD
2005 FINANCIAL REPORT 79
REPORT BY THE CHAIRMAN OF THE SUPERVISORYBOARD ON THE CONDITIONS IN WHICH THE BOARD’S PROCEEDINGS WERE PREPARED AND ORGANISED AND ON IN-HOUSE AUDIT PROCEDURES SET-UP BY THE COMPANY
The purpose of this report, in accordance with the last paragraph of Article L.225-68 of the French Commercial Code, arising from ActNº 2003-706 of 1 August 2003, is to describe to the Annual General Meeting the conditions in which the proceedings of the Supervisory Board areprepared and organised, as well as the in-house audit procedures.
This report was established by myself with the assistance of the Executive Board and, in particular, of your Company’s Finance Department.
• Conditions in which the proceedings of the Supervisory Board are prepared and organised
The Supervisory Board, in order to fulfil its legal role of permanent supervision of your Company’s management, implements therecommendations of the AMF as well as those of the joint report by the “Association Française des Entreprises Privées” and the MEDEF of October2003.
However, since our Company’s decision, in March 1998, to operate with both an Executive Board and a Supervisory Board, internalregulations have governed the relations between the Executive Board and the Supervisory Board. In particular, said regulations specify the ExecutiveBoard’s obligations in terms of providing information to the Supervisory Board and its Chairman, and the decisions which require an authorisationfrom, or the prior opinion of, the Supervisory Board.
Notably, disposal or acquisition transactions relating to business activities, interests, buildings, and investments which have not beenbudgeted for, and which are over-and-above a defined threshold, in particular require prior authorisation from the Supervisory Board.
Similarly, the terms and conditions under which the Executive Board provides information to the Supervisory Board and its Chairmanrelating, in particular, to decisions and events deemed to be the most important, and also to operational activities and financial considerations, are setforth in the internal regulations.
These regulations also contain the provisions of a professional code of ethics and reiterate the Executive Board’s involvement in the in-house audit procedures.
The members of the Supervisory Board of Groupe Norbert Dentressangle S.A. act in compliance with the rules that govern the holdingand trading of securities by the corporate officers of listed companies and, in particular, the registering or depositing of shares they own, compliancewith periods for abstaining from conducting transactions on the Company’s securities and the real-time declaration of trading in the Company’ssecurities.
During the past year, the Supervisory Board met each quarter to discuss matters within its remit and also to listen to the report by theExecutive Board on the activity of the Company and its subsidiaries. All members of the Executive Board, and at least one of the Company’s statutoryauditors, attend said meetings. In all cases, all the statutory auditors attend meetings related to the financial statements for the first half year and forthe year elapsed.
As a rule, the Executive Board invites the Chairman of the Supervisory Board to meetings of the Executive Board that are held prior tomeetings of the Supervisory Board, in particular, to discuss the establishment of the financial statements.
So as to ensure the effective participation of members of the Supervisory Board, a complete file is sent out to them prior to each meeting.This contains all useful and generally required information needed to ensure that discussions during said meetings are as fruitful as possible, and toensure that said meetings make decisions with full knowledge of the facts.
• Audit environment
In 2005, the Norbert Dentressangle Group maintained strong organic growth on the transport markets and experienced stability on themorose logistics markets. Two major acquisitions were made during the year.
The Group’s aim in relation to in-house audits throughout said year was thus to continue applying its principles of management auditand rigour and to continue improving the existing systems.
It should be underlined that no matter how complete in-house audit procedures are, they can only offer a reasonable assurance, butunder no circumstances provide an absolute guarantee, that the risks that the Group faces can be totally eliminated.
2005 FINANCIAL REPORT 80
Observance of rules of ethics and procedures, provided and relayed to all employees, in particular via our commitment charter and codeof ethics, continued to be a Group priority in 2005.
Moreover, the Group increasingly uses an intranet as a special tool for the publication of its procedures and its management rules. Mostdepartments now have one or more databases that are constantly fed and developed.
The Group’s operational organisation is decentralised but centralised communication tools such as the intranet are used to distributeclear audit procedures to the entire network; these procedures are relayed by the Group’s Management. The improvement and sophistication of our ITfacilities thus helps to structure our in-house control.
Beyond the improvement of tools, during the year, the Group also regularly and precisely verified the performances of each managementunit, one of the tenets of its in-house audit procedures.
The Group’s activities are divided into two Divisions, Transport and Logistics, under the responsibility of two separate ManagementCommittees.
At the end of 2004, the Group decided to reinforce the Management of the Transport Division to maintain, in a context of growth, astrong level of control over said activity. The Management teams of the Transport Division are now completely separate from the Group Managementteams, such that each of them can devote itself entirely to its tasks. The hierarchical management line is short and this ensures considerableresponsiveness in decision-making and correcting any weaknesses detected.
The strengthening of the in-house audit procedures was a major concern for the Group during 2005, continuing to reinforce itsprocedures through, notably, increased documentation of the procedures and the introduction of additional indicators.
Moreover, the Group has risk-mapping, which is updated on an annual basis by the Group’s Finance Department, and establishedfollowing interviews with the operational and functional departments of each Division, and with the cross-disciplinary functional departments.
• Players in the Group’s in-house audit and operational and functional procedures
The Supervisory Board and the Executive BoardThe Group operates with a Supervisory Board and an Executive Board. The presence of independent Board members (3 out of 6), and
the system of delegation between the Supervisory Board and the Executive Board is one of the strong and structuring elements of the Group’s in-houseaudit. Management considers advice from and verifications carried out by Board members to be important for the purpose of defining the Group’sstrategic guidelines.
Divisional Management Committees and Divisional Steering CommitteesImportant operations and events, and the performance levels of the various management units are reviewed, in each Division, at monthly
Steering Committee meetings, attended by the members of the Divisional Management Committee, the operational managers and their managementcontrollers.
Important operations and events, and the performance levels of each Division are reviewed at Divisional Steering Committee meetingsevery month, with said meetings being attended by the Division’s General Managers, Finance Directors and Human Resources Managers, on the onehand, and the Group’s Chairman, Finance Director and Human Resources Manager, on the other hand. Where applicable, audits of specific proceduresare ordered by Group Management, following these Steering Committee meetings. Action plans and audits are followed up at the next SteeringCommittee meetings.
Moreover, the Management Committee of each Division meets every two months to discuss and plan the strategic guidelines of the twobusiness activities.
Group Investment and Commitment CommitteeThe Group Investment and Commitment Committee pursued its task of approving significant investments and contractual
commitments. For the record, said Committee is comprised of members of the Executive Committee and myself, and it usually meets every two weeks.Investment and commitment requests are presented by the operational managers and first undergo a rigorous financial analysis by the Group FinancialDepartment, before being validated by the Divisions’ Purchasing and Legal Departments.
The Committee’s approval criteria have been reviewed to take account of the growth of our activities (which has an impact oninvestments and contractualised volumes) and the structuring of the Group’s Central Departments, in particular, the Legal Departments (which has animpact on the need to approve contractual commitments).
At the same time, there is a Divisional Investment and Commitment Committee in each Division as regards investments which do notmeet the criteria for validation by the Group Investment and Commitment Committee. These meet at the same time as the Divisional ManagementCommittees.
2005 FINANCIAL REPORT 81
Divisional legal departments and insuranceEach Division’s centralised legal department is responsible for control of contractual and legal commitments. The Group continued
reinforcing said departments in 2005, by increasing the specialisation of its members. Moreover, said departments continued to structure and refinetheir procedures and are involved as from the outset in trade negotiations or supplier contacts.
Moreover, the management of our insurance policies, taken-out with well-known insurance brokers, having an international network,is centralised by the Group Legal Department.
Divisional Operational Management Control The Divisional Operational Management Control Department, which reports to the Divisional Finance Department, is composed of
management controllers, who are decentralised vis-à-vis the various operational managers in each Division. Operational Management Control is a keyelement in the Group’s in-house audit procedures.
The Operational Management Control Department is responsible for the budgetary process. Every month, it is involved in establishingthe various financial reports to be sent to the Group and, in particular, participates in the accounts reporting / management reporting reconciliationprocedure. The Management Control Department comments on the results at Steering Committee meetings, in particular, as regards the analysis of theactual / budgeted figure and the actual / historical figure divergences. Where applicable, audits of procedures, analyses and other specific studies maybe ordered by the Divisional Department following these Steering Committee meetings.
Conclusions are followed up at the next Steering Committee meetings.
Credit ManagementThe control of the Group’s commitments to third parties is centralised in each Division, under the responsibility of the Finance
Department.The procedures and key indicators set up by the Group’s Credit Management Department (regular credit analyses, determination of
authorised commitment thresholds, prohibited customers, etc.) maintain a permanent watch over our customer receivables and ensure satisfactoryresponsiveness in the event of a customer’s default. The key indicators are provided to managers in order to alert them and to ensure co-ordinatedaction by all.
Purchases Each Division has a centralised Purchasing Department, which guarantees quality and optimises strategic purchases. Said Departments
are also responsible for diversifying our exposure to suppliers.
Quality – Safety – EnvironmentControl of quality and safety are key facets of our two activities, Transport and Logistics. The Quality – Safety – Environment
Departments report to the respective Managers of the two Divisions and guarantee said control. In the Logistics Division, the teams of “quality andsafety” co-ordinators are responsible for deploying safety and prevention procedures at each warehouse.
In 2005, the Group continued its certification process and, in particular, its target concerning the certification of its entire network underthe ISO 14001 environmental standard.
The efforts focused on the “Safe Driving Plan” were intensified, with the major aims being to reduce the accident rate and maintain ahigh level of quality in our transport services.
In the Logistics Division, the Group continued to focus on leasing new property and limited its commitments over time in order toensure a certain rotation of its “property assets”.
ITEach Division’s IT department continued to operate and perpetuate our systems and its role has been increased with the
dematerialisation of relations with our customers (EDI, customers’ portal, etc.), relations within the Group (intranet, e-mails, etc.), and the integrationof IT systems, in general. The security of on-line systems and the capacity of our networks to deal with failures are becoming increasingly importantand are subject to close surveillance and strict procedures (protection, back-up, etc.).
The Statutory AuditorsServices provided by our statutory and other auditors are additional controls in relation to the reliability of our financial information
and the suitability of our audit procedures. By virtue of their permanent assignment, they thus participate in the audit process of the Group.
• Procedures relating to accounting and financial information
Financial control and the generation of financial and accounting information are structured around the Group’s operational organisation.
Cash and financing transactions Existing procedures have been maintained and consolidated. The Group’s Cash team has been reinforced to manage the growth of
volumes to be handled, and to maintain the strong level of control that it provides.- Payments and the financing of the activities of French and foreign subsidiaries are centralised at the level of each Division.- Credit lines and loans, as well as cash investment options, are negotiated by the Group’s Cash Department and approved by the
Executive Board.
2005 FINANCIAL REPORT 82
The Group’s Cash Department also manages the Group’s interest-rate and foreign-exchange risks based on the thresholds set by theFinance Division, with recourse to the market deliberately limited.
Members of the Executive Board review the full reports established by the Cash Department every quarter.
Management reporting and Group Management Control The reporting procedure is a key facet of the Group’s management and in-house audit.The Group Management Control Division consolidates management reporting, drawn up on a monthly basis by the Operational
Management Control Department, in a single tool. The reporting is reconciled with accounting results, compared with the budgetary and historicaldata, every month.
The data (operational and financial indicators) is constantly available for the Group and Divisional Departments and operationalmanagers and operational management controllers on the Group’s intranet, together with comparative budgetary and historical data.
Management reporting is systematically reconciled with the audited accounting data. Every month, the Finance Department presents monthly management reports to the Executive Board.Where applicable, audits of procedures, analyses and other specific studies may be ordered by the Finance Department or the Executive
Board.
Regulatory consolidation A consolidated balance sheet, a profit and loss account and cash-flow table are produced each quarter and published each half-year.The Group’s consolidation unit gives instructions each quarter, setting the timetable for tasks and reiterating the methods for preparing
consolidation bundles, for the accounting departments / shared accounting department centres of each country.The consolidation bundles are verified by the consolidation unit prior to integration. Every quarter, the results are reconciled with those
of the management reporting together with the Group Management Control Division.
The Executive Board submits the management reporting and consolidation to the Supervisory Board every quarter. The consolidation ispublished and thus approved by the Statutory Auditors every half-year.
Moreover, for the last two years, the Group has published a Reference Document. This document is approved by the Statutory Auditorsand certified by the “Autorité des Marchés Financiers”.
2005 FINANCIAL REPORT 83
REPORT BY THE STATUTORY AUDITORS, DRAWN UPACCORDING TO ARTICLE L.225-235 OF THE FRENCHCOMMERCIAL CODE, ON THE REPORT BY THE CHAIRMANOF THE SUPERVISORY BOARD OF GROUPE NORBERTDENTRESSANGLE S.A, CONCERNING THE IN-HOUSE AUDIT PROCEDURES RELATING TO THE PREPARATIONAND PROCESSING OF ACCOUNTING AND FINANCIALINFORMATION FINANCIAL YEAR ENDED 31 DECEMBER 2005
Ladies and Gentlemen,
In our capacity as Statutory Auditors of Groupe Norbert Dentressangle S.A. and pursuant to the provisions of Article L.225-235of the French Commercial Code, we hereby submit our report on the report drawn up by the Chairman of your Company under the provisionsof Article L.225-68 of the French Commercial Code, for the financial year ended 31 December 2005.
In his report, the Chairman of the Supervisory Board is responsible for reporting, inter alia, on the conditions in which theproceedings of the Supervisory Board were prepared and organised and on the in-house audit procedures set up within the Company.
It is our duty to comment on the information given in the Chairman’s report on the in-house audit procedures relating to thepreparation and processing of accounting and financial information.
We conducted our audit in accordance with the professional accounting principles applicable in France, which require theimplementation of procedures to assess the accuracy of the information given in the Chairman’s report on in-house audit procedures relating tothe preparation and processing of accounting and financial information. Said procedures involve, inter alia:
- becoming acquainted with the goals and general organisation of the in-house audits, as well as of in-house audit proceduresrelating to the preparation and processing of accounting and financial information submitted in the Chairman’s report;
- becoming acquainted with the work underlying the information thus given in the report.
Based on said procedures, we have no comments to make on the information given relating to the in-house audit procedures of theCompany relating to the preparation and processing of accounting and financial information contained in the report by the Chairman of theSupervisory Board, drawn up under the provisions of the last paragraph of Article L.225-68 of the French Commercial Code.
Lyon, 29 March 2006
The Statutory Auditors
Alain Bonniot & Associés Alain Bonniot
Ernst & Young AuditDaniel Mary-Dauphin
2005 FINANCIAL REPORT 84
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEET UNDER IFRS
ASSETS
n K€ Note 31/12/2005 31/12/2004
Goodwill j 70,700 55,510Intangible assets h 6,643 6,229Property, plant and equipment i 394,727 354,031Investments in associates k 1,148 710Other non-current financial assets l 19,835 16,464Deferred tax assets s 26,090 8,264
n NON-CURRENT ASSETS 519,143 441,208
Inventories m 6,366 5,955Customers n 345,983 286,118Other accounts receivable n 85,549 65,938Other current financial assets o 396Cash and equivalents o 194,627 159,015
n CURRENT ASSETS 632,921 517,026
Non-current assets held for sale i 990
n TOTAL ASSETS 1,153,054 958,234
EQUITY AND LIABILITIES
n K€ Note 31/12/2005 31/12/2004
Share capital p 19,847 19,533Share premium 21,852 19,116Foreign-exchange differences (225) (627)Consolidated reserves 156,265 125,145Net income/(loss) for the financial year 62,708 40,209Minority interests 511
n EQUITY 260,447 203,887
Long-term borrowings q 187,439 170,094Long-term provisions r 54,595 19,423Deferred tax liabilities s 36,902 37,516
n NON-CURRENT LIABILITIES 278,936 227,033
Short-term provisions 26,366 0Trade payables t 229,707 197,384Short-term borrowings q 114,867 99,404Bank overdrafts o 50,922 58,514Current tax payable 3,715 3,640Other accounts payable t 188,094 168,372
n CURRENT LIABILITIES 613,671 527,314
Liabilities directly associated with non-current assets held for sale 0 0
n TOTAL EQUITY AND LIABILITIES 1,153,054 958,234
2005 FINANCIAL REPORT 85
CONSOLIDATED INCOME STATEMENT UNDER IFRS
n K€ note 31/12/2005 % 31/12/2004 %
n REVENUE 1,399,316 100.0 1,303,440 100.0
Operating expenses before allowances and reversals c (1,281,019) (91.5) (1,177,774) (90.4)Allowances for (reversals of) amortisation, depreciation and provisions c (66,789) (4.8) (60,604) (4.6)
n OPERATING RESULT (EBITA) 51,508 3.7 65,062 5.0Amortisation of goodwill and negative goodwill j 33,492 2.4 (1,088) (0.1)
n OPERATING RESULT* (EBIT) 85,000 6.1 63,974 4.9Financial income d 5,764 0.4 5,500 0.4Finance costs d (11,553) (0.8) (13,035) (1.0)
n INCOME BEFORE TAX 79,211 5.7 56,439 4.3
Income tax expense e (16,794) (1.2) (17,759) (1.4)Share of profit of associates 291 0.0 264 0.0Net income from discontinued operations and held-for-sale assets 0.0 1,311 0.1
n NET INCOME/(LOSS) 62,708 4.5 40,255 3.1
Minority interests 0 (46)Group share 62,708 40,209
n EARNINGS PER SHARE fBasic EPS for financial year 6.56 4.23Basic EPS from continuing operations 6.56 4.09Diluted EPS for financial year 6.51 4.12Diluted EPS from continuing operations 6.51 3.99
* After amortisation of goodwill and negative goodwill.
2005 FINANCIAL REPORT 86
CONSOLIDATED CASH FLOW STATEMENT UNDER IFRS
n K€ 31/12/2005 31/12/2004
n Group share of net income 62,708 40,209
• Amortisation, depreciation and provisions 68,859 61,963• Gain/(loss) on disposal of non-current assets (3,788) (2,727)• Minority interests in income/(loss) 46• Deferred tax charges/(income) 1,172 (6,016)• Share of profit of associates (291) (264)• Cancellation of negative goodwill (35,094)
Elimination of expenses and revenues not affecting cashflow 30,858 53,002
Change in operating assets and liabilities excluding effect of acquisitions (including impact of interest-rate fluctuations) (33,185) 13,672Of which:• Inventories (160) (367)• Accounts receivable (58,472) (19,984)• Current liabilities 25,447 34,023
CASH FLOW FROM OPERATING ACTIVITIES 60,381 106,883
• Disposal of non-current assets 65,184 90,053• Acquisition of property, plant and equipment and non-current financial assets (144,911) (137,476)• Acquisitions of companies, net of cash acquired 62,038 (1,831)• Disposals of companies, net of cash transferred (2,298)
CASH FLOW FROM INVESTING ACTIVITIES (17,689) (51,552)
• New loans 93,200 100,731• Dividends paid to parent company shareholders (7,979) (6,644)• Net purchase and sale of treasury shares (1,506) 76• Loan repayment (85,857) (122,547)• Issue of share capital and share premiums 3,050 990
CASH FLOW FROM FINANCING ACTIVITIES 908 (27,394)
CHANGES IN CASHFLOW OVER THE FINANCIAL YEAR 43,600 27,937
n Increase (decrease) in cashflow• Opening cashflow 100,501 72,564• Closing cashflow 144,101 100,501
43,600 27,937
The reconciliation with the balance sheet cash position can be found in Note o).The caption “Acquisitions of companies, net of cash acquired” corresponds to the purchase of the companies Venditelli and Vendilog as
well as part of the French activities of the TNT group (the assets and goodwill of the companies Aixor, Copal, Cemga and Nord Mendy, the assets andgoodwill of the Clermont-Ferrand branch of the company Nicolas and investments in the companies Barco and LRF and three real-estate companies),net of cash.
2005 FINANCIAL REPORT 87
STATEMENT OF CHANGES IN CONSOLIDATED EQUITYUNDER IFRS
n K€ Share Share Treasury Retained Other Minority Totalcapital premium shares earnings interests
1 JANUARY 2004 15,566 22,111 (6,892) 137,653 (500) 465 168,403
Net income for the financial year 2004 40,209 46 40,255Total period income and expenses recognised directly in equityTotal period income and expensesDividends paid for 2003 (6,644) (6,644)Cancellation of treasury shares acquired (435) (435)Increase in share face value from € 1.60 to € 2 3,907 (2,995) (912) 0Share issues for share subscription options 60 924 984Cost of share option based payment 485 485Change in financial instrument revaluation reserve 0Effect of variations in the scope of consolidation 0Foreign-exchange differences (127) (127)Minority interest purchase commitments 0Other variations 967 967
31 DECEMBER 2004 19,533 19,116 (7,327) 172,197 (142) 511 203,888
Net income for the financial year 2005 62,708 62,708Total period income and expenses recognised directly in equityTotal period income and expensesDividends paid for 2004 (7,979) (7,979)Cancellation of treasury shares acquired (1,533) (1,533)Increase in share face value from € 1.60 to € 2 0Share issues for share subscription options 314 2,736 3,050Cost of share option based payment 434 434Change in financial instrument revaluation reserve 257 257Effect of variations in the scope of consolidation 0Foreign-exchange differences 402 402Minority interest purchase commitments (511) (511)Other variations (269) (269)
31 DECEMBER 2005 19,847 21,852 (8,860) 226,926 682 0 260,447
2005 FINANCIAL REPORT 88
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSUNDER IFRS
I - GENERAL INFORMATION ON THE ISSUER
Name: Norbert Dentressangle Group.Registered office: “Les Pierrelles” 26240 BEAUSEMBLANT.Legal form: public limited company (Société Anonyme) with an Executive Board and Supervisory Board, subject to the provisions of the FrenchCommercial Code (Code de Commerce) and Order In Council N°67-236 of 27 March 1967 on Commercial Companies.The parent company of the Group is Groupe Norbert Dentressangle S.A.It is subject to French law.The General Meeting that is to adopt the financial statements for 2005 shall be held on 23 May 2006.The consolidated financial statements were established by the Executive Board on 28 March 2006.The businesses of the Group involve transport and logistics.
Three types of company can be distinguished within the Norbert Dentressangle Group:- Logistics operating companies, of which the role in France and abroad is to provide warehousing services, to which can be added
complementary up-stream activities (order preparation, product customisation and tracing, return management, quality control and so on) anddownstream services (distribution channel management and reverse logistics).
- Transport operating companies, of which the role is to operate a fleet of vehicles with drivers to carry physical merchandise flows inaccordance with customer requirements.
- Service companies, of which the task is to provide the operating companies with services enabling them to focus on their core activities.These include the holding company and country holding companies, which have the role of providing assistance, particularly in the communicationstrategy.
The weightings of the two Group businesses can be assessed using the segment information contained below in the Notes.
II - ACCOUNTING POLICIES AND METHODS
a) Consolidation principles• Context and basis for preparation of consolidated financial statements
In application of the European Regulation 1606/2002 of 19 July 2002 on international standards, the consolidated financial statementsof the Norbert Dentressangle Group for the year ended 31 December 2005 have been prepared in accordance with the international accountingstandards IAS/IFRS (hereinafter, “IFRS”) applicable on that date as adopted by the European Union on the preparation date of the financial statements.
Some of these standards may be subject to changes or interpretations of which the application may be retrospective. As a result of suchmodifications, the Group may subsequently restate the consolidated financial statements to comply with IFRS.
In preparing its accounts, the Group has to make certain estimates and assumptions that can affect the financial statements. The Groupreviews its estimates and assessments regularly to take into account past experience and other factors considered relevant in respect of economicconditions. Depending on changes in these various assumptions or conditions, the amounts appearing in its future financial statements may differ fromthe current estimates.
The main financial statement captions that may be subject to estimates are as follows:- impairment of doubtful accounts receivable;- fair value of identifiable assets and liabilities acquired as part of a business combination;- goodwill impairment;- valuations of options associated with share subscription plans granted to employees and financial instrument valuations; and- deferred taxes and tax expenses.
The financial statements reflect the best estimates based on information available on the balance sheet date.
They have been prepared using the historical cost principle, except for certain items, in particular financial assets and liabilities, whichhave been measured at fair value.
The separate financial statements of each Group company are prepared in accordance with the accounting policies and regulations inforce in their respective countries. They are adjusted to comply with the consolidation principles in force at the Group.
The Norbert Dentressangle Group has chosen to apply IAS 39 “Financial Instruments: Recognition and Measurement” and IAS 32“Financial Instruments: Disclosure and Presentation” as from 1 January 2005.
The effects of the first-time adoption of these standards after tax effects can be summarised as follows:- recognition of the commitment to purchase the minority interests in the company Thier (cancellation of minority interests in the
amount of K€ 511 and the recognition of both a K€ 1,411 debt and K€ 900 goodwill); and- recognition of the fair value of cash flow hedges with a net effect of K€ 552 on net worth.
2005 FINANCIAL REPORT 89
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSUNDER IFRS
The Norbert Dentressangle Group has not chosen early application, as from 31 December 2005, of standards that must be applied asfrom 1 January 2006.
• Scope of consolidationThe consolidated financial statements include the financial statements of companies controlled exclusively, whether directly or indirectly,
by the company Groupe Norbert Dentressangle S.A, parent company of the Group.
Control is considered as the ability to govern, directly or indirectly, the financial and operating policies of an enterprise such as to obtainbenefits from it. Control is generally presumed to exist if the Group holds more than half of the voting rights in the enterprise controlled. The financialstatements of subsidiaries are included in the consolidated financial statements as from the date of effective transfer of control and until control ceasesto exist.
The Group consolidates French special purpose entities serving solely to finance road tractors (see Note III-y).
All material transactions between the consolidated companies, as well as Group transfer income, have been eliminated.
The balance sheet dates of the various companies are the same as that of the Group.
The scope of consolidation is presented in Note III z.
Companies in which the Group exercises significant influence are accounted for by the equity method.
Group investments in joint ventures are recorded using proportional consolidation.
Purchases of minority interests are not currently covered by the IFRS system and the IASB's deliberations in progress on accounting forthis type of transaction fall within the scope of expected amendments to IFRS 3 “Business Combinations”. In the absence of specific rules, meanwhile,the Group has maintained the method applied under French legislation. In the event of acquiring additional ownership interests in a subsidiary, thedifference between the price paid and the carrying amount of minority interests acquired, as calculated from the Group consolidated financialstatements prior to the acquisition, is recognised as goodwill.
In accordance with the current wording of IAS 27 and of IAS 32, groups must currently recognise firm commitments for the purchaseof minority interests as a debt, with an offsetting reduction in minority interests.
When the value of the commitment exceeds the amount of minority interests, the difference is recognised as goodwill.On each balance sheet date, the fair value of minority interest purchase commitments is reviewed. The resulting debt is adjusted with
an offsetting entry in goodwill.The work of the IFRIC and IASB may result in restatement of the above accounting information.
There are no companies in which the Group owns majority control that are not consolidated.
b) Foreign exchange translationThe functional and presentation currency of the Norbert Dentressangle Group is the euro.
Foreign-currency transactions recorded on the profit and loss account are converted at the exchange rate on the transaction date.Foreign-currency monetary items recognised on the balance sheet and not subject to hedging are translated at the exchange rate on the balance sheetdate. Any resulting foreign exchange differences are taken to the profit and loss account.
The balance sheets of foreign companies are translated into euros at the exchange rate on the balance sheet date and their incomestatements at the average rate for the financial year. Any translation differences arising are taken to equity, under the heading “Foreign-exchangedifferences”.
In the event of disposal of an entity, the foreign-exchange differences are recognised in period results.
Goodwill is monitored in the currency of the subsidiary concerned.
None of the Group’s fully consolidated subsidiaries are located in a high-inflation country.
c) GoodwillGoodwill is measured at cost, this being the excess cost of the investment in consolidated companies over the acquirer's proportional
ownership of the net fair value of identifiable assets, liabilities and contingent liabilities.
From 1 January 2004 onwards, goodwill is no longer amortised on a straight-line basis but subject to impairment tests at least onceannually, or more often when events or changes in circumstances indicate impairment may have occurred. Any impairment recognised is irreversible.
2005 FINANCIAL REPORT 90
Negative differences between the purchase cost and the acquirer's ownership interest in the net fair value of identifiable assets andliabilities (negative goodwill) is recognised directly in period results after verification of its amount.
Goodwill for equity reported companies is recognised in the item "Investments in associates".
d) Intangible assetsIntangible assets consist essentially of software, which is amortised over between 12 to 60 months on a straight-line basis.Internally developed software is recorded on the balance sheet when the following two conditions apply:- it is probable that the entity shall receive the corresponding future economic benefits; and- its cost or value can be measured with sufficient reliability.The conditions defined by IAS 38 regarding the capitalisation of development costs must be respected, in particular the technical
feasibility of the project, as well as the intention and availability of resources to conclude the software.
Two types of cost are used for internally developed software:- outside expenses, such as for licences and specialist firms; and- the direct costs of employees associated with the project in the design, parameterisation and delivery stages.
The total cost thus recorded is carried as the recoverable amount of the software. This analysis may give rise to impairment.
e) Property, plant and equipment Investments in property, plant and equipment are initially recognised at purchase cost.
Depreciation is calculated in accordance with the straight-line method based on the estimated economic life of the various categoriesof non-current assets.
The following principal depreciation periods are applied:
- Buildings: straight-line over between 15 and 30 years- Building fixtures and fittings: straight-line over 10 years- Plant, machinery and equipment: straight-line over 5 years- Haulage equipment: see note below- Other property, plant and equipment: straight-line over between 5 and 10 years
Non-current items acquired under finance lease agreements are reported on the balance sheet as assets and depreciated over the sameperiods as those described above if the Group expects to obtain ownership of the asset at the end of the contract. Otherwise, depreciation is calculatedover the lesser of the economic life of the asset and term of the contract.
With regard to haulage equipment, the Group assesses market conditions and the buy-back terms agreed by its suppliers each year.These terms depend on the year of purchase and type of vehicle, for example tractors, trailers and truck tractors.
In accordance with these criteria, the estimated economic life of the vehicles is projected on a straight-line basis and a depreciationperiod thus obtained.
Accordingly, vehicles are depreciated on a straight-line basis currently over between 85 months and 150 months.
Residual values of other non-current assets are reviewed each year. Impairment tests are conducted when there are signs that animpairment loss may have occurred (in respect of the market value for capitalising it).
f) Lease contractsThe Group recognises its finance lease contracts in balance sheet assets on inception of the lease.
The balance sheet carrying amount is the lesser of the fair value of the asset and the discounted value of the minimum lease payments.
Finance leases are those that transfer substantially all risks and benefits inherent in ownership to the lessee. They comply with the mainindicators applying under IAS 17, that is:
- option for transfer of ownership at the end of the lease term, with exercise conditions such that the transfer of ownership appearshighly probable on the date of concluding the contract;
2005 FINANCIAL REPORT 91
- the term of the lease covers most of the life of the asset in the usage conditions of the lessee; and- the discounted value of minimum lease payments is similar to the fair value of the leased asset on conclusion of the lease.
Lease payments are broken down into the finance charge and the reduction of the outstanding liability, in order to obtain a constantperiodic interest rate on the remaining balance of the liability. The finance charges are taken directly to the income statement.
Contracts qualifying as operating leases are not restated.Operating lease payments are recognised in expenses, in most cases on a straight-line basis until the end of the contract.
g) Impairment testsIAS 36 defines the procedures an enterprise must follow to ensure that the net carrying value of its assets does not exceed their
recoverable amount, that is, the amount that would be recovered from their use or sale.
Apart from goodwill and intangible assets with an indefinite life that must be subject to systematic annual impairment tests, therecoverable amount of an asset is estimated each time there are signs it may have experienced an impairment loss.
The recoverable amount of an asset is the larger of the fair value less costs to sell and its value in use.
The net sale price is the amount that can be obtained from selling an asset in an arm's length transaction between informed and willingparties, less the costs of disposal.
The value in use is the discounted value of the estimated future cash flows expected from the continued use of the asset and its disposalat the end of its economic life.
The recoverable amount is estimated for each asset individually.If this is not possible, the assets are grouped by cash generating unit (CGU) for which the recoverable amount can then be determined.
A CGU is the smallest asset group of which the continued use generates cash inflows largely independent of those generated by otherassets or group of assets.
For this purpose, all profit centres arising from past acquisitions of companies have been identified and the developments in the relatedassets tracked.
The recoverable amount of a CGU is the larger of its fair value less costs to sell and the value in use.
The value in use is determined from cash flows estimated based on plans or budgets.These cash flows are projected over five years in accordance with the historical organic growth rates observed for the Group or a specific
business plan if one exists.
The residual value of a CGU is a multiple of the last cash flow.The discount rate is based on a level calculated for the entire Group. It is determined from intrinsic and market data and supported by
work of financial analysts.The risk component of this rate is identical for the Logistics and Transport businesses.
The recoverable amount is then compared with the carrying amount of the CGU.
If this amount is greater than the net carrying amount of the CGU on the balance sheet date, no impairment is recorded.
If on the other hand this value is less than the net carrying amount, impairment is recognised for the difference and this must berecorded on a priority basis in goodwill, with such impairment being considered definitive.
For other intangible and tangible assets with a determinate economic life, a previously recognised impairment loss is reversed if therehas been a change in the estimates used to determine the recoverable amount since an impairment loss was last recognised. If so, the carrying amountof the asset is increased to its recoverable amount. A carrying amount increased due to reversal of an impairment loss should not exceed the carryingvalue that would have applied net of depreciation or amortisation if no impairment loss had been recognised for this asset in prior periods. Impairmentloss reversals are recognised in results, unless the asset is recognised at its revalued amount, in which case the impairment loss is considered as apositive revaluation. After an impairment loss reversal is recognised, the allocation to amortisation and depreciation is adjusted for future periods sothat the revised carrying amount of the asset, reduced by any possible residual value, is apportioned systematically over the remaining economic life.
2005 FINANCIAL REPORT 92
h) InventoriesInventories are recognised at purchase cost using the average weighted cost method. An allowance for impairment is recognised when
the purchase cost exceeds the market value.
i) Trade and other receivablesTrade receivables are valued at their nominal value. Impairment is recorded for these via an allowance based on risks of non-recovery,
assessed on a case-by-case basis.
j) ProvisionsProvisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that
an outflow of resources embodying economic benefits will be required to settle the obligation and its amount can be estimated reliably.Provisions are discounted if the effect is considered material. The effects of this discounting are recognised in operating results.Provisions for restructuring are recognised in accordance with IAS 37, that is:- if there is a detailed formal plan, identifying at least:• the business or part of business concerned;• the location;• the function and approximate number of employees who are to be compensated;• expenditures to be undertaken;• when the plan is to be implemented; and- if the enterprise has raised a valid expectation in those affected that it will carry out the restructuring.
k) Employee benefitsThere are various Group retirement benefit plans for certain employees. Retirement plans, related payments and other employee benefits
considered as defined-benefit plans, that is, where the Group commits itself to guarantee a certain amount or level of defined benefit, are recognisedon the balance sheet based on an actuarial valuation of the commitments on the balance sheet date, less the fair value of the related assets.
Payments made for plans considered as defined-contribution, that is, when the Group has no obligation after paying the contribution,are recognised in period expenses.
Defined-benefit retirement and related commitments contracted by the Norbert Dentressangle Group companies are:- termination benefit plans for all French companies in accordance with collective agreements in force (road transport, automobile
services, knowledge-based economic sectors and cleaning companies);- bonus plans for payments made on granting long-service awards, this being only for the French companies in the Logistics business;
and- end-of-service benefits for the Italian companies (trattamento di fine rapporto).
Only the termination benefit plan of the company ND Inter-Pulvé is financed via an insurance contract.
On first-time adoption of IFRS on 1 January 2004, actuarial gains and losses were recognised with an entry in equity.
Pursuant to IAS 19, actuarial gains and losses based on experience adjustments or changes to actuarial assumptions are amortised infuture expenses for each company over the average probable remaining period of service of the employees concerned, after applying a 10 % corridorof the greater of the value of the commitments and the plan assets.
The past service cost is recognised in expenses on a straight-line basis over the average time remaining until the corresponding rightsbecome vested for the employees. If benefit entitlements are already vested on adoption or modification of the retirement plan the past service cost isrecognised immediately.
Under IFRS, the Group maintained the treatment for individual training rights used under French standards in accordance withOpinion N° 2004-F of 13 October 2004 of the Emergency Committee of France's National Accounting Council (Conseil National de la Comptabilité,or "CNC") relating to the accounting of individual training rights. Expenses incurred for these entitlements represent a period cost and so do not giverise to any provision. The Notes include information on the volume of hours for the used portion of rights, as well as the volume of hours not havingbeen requested by employees.
2005 FINANCIAL REPORT 93
In certain limited cases where these expenses can not be considered as remuneration for future services, the resulting short-termcommitment is provisioned in the financial statements for the year, as soon as the commitment to the employee becomes probable or certain.
Payment commitments for serving employees in the form of long-service bonuses are recognised as provisions.
l) Loans and borrowing costsOn initial recognition, bond loans and other debts are measured at fair value, to which are allocated transaction costs directly
attributable to the issuance of the liability.The fair value generally corresponds to the proceeds received.After initial recognition, loans are accounted for based on amortised cost and using the effective interest method.Loan issue premiums and expenses as well as bond redemption premiums are taken into account in the calculation of amortised cost,
using the effective interest method, and so recorded in results on a discounted basis over the term of the liability.Loan interest is recorded in period expenses.
m) Share-based paymentCertain Group employees and senior company officers hold warrants, call share options and share subscription options.
These operations are valued on the allotment date using the Black-Scholes model, a valuation model enabling the fair value to beobtained on the allotment date and in particular taking into account in various specific parameters such as the share price, exercise price, expectedvolatility, forecast dividends, risk-free interest rate and the term of the option.
The cost thus determined is recorded in expenses in the period the rights are vested, with an offsetting entry in a separate balance sheetaccount.
No expenses are recognised for instruments that are not ultimately acquired, except for those of which the acquisition depends onmarket conditions. These are considered acquired, whether market conditions are met or not, if the other performance criteria are fulfilled.
If the terms of any remuneration in the form of equity instruments are amended, an expense is recorded, at a minimum, for the amountthat would have been recognised had no change taken place.
An expense is also recognised to take into account the effects of changes that increase the total fair value of the share-based paymentagreement or are favourable to personnel in another way. This is measured on the date of modification.
In accordance with the transitional provisions of the standard, only option plans after 7 November 2002 have been recognised and aresubject to valuation pursuant to the principle described above.
n) Deferred taxesDeferred tax assets and liabilities are measured at the tax rate expected to be applied for the year in which the asset shall be realised or
liability settled, based on the tax rates and regulations enacted or substantially enacted on the balance sheet date.
Deferred tax is calculated on all temporary differences that occur between the tax base and carrying amount of assets and liabilitiesappearing on the consolidated balance sheet.
Deferred tax receivables relating to tax loss carryforwards are only recorded to the extent there is a reasonable likelihood they will berealised or recovered.
Deferred tax assets are recognised for tax loss carryforwards in accordance with the criteria defined in IAS 12, that is, when:- the entity has sufficient taxable temporary differences relating to the same taxation authority and taxable entity which will result in
taxable amounts against which the unused tax losses or credits can be utilised before they expire;- it is probable that the entity will generate taxable profits before the unused tax losses or credits expire;- the unused tax losses result from identifiable causes which are unlikely to recur; and- tax planning opportunities are available to the entity that will create taxable profit in the period in which the unused tax losses or
credits can be utilised.To the extent it is not probable that taxable profit will be available against which the unused tax losses or credits can be utilised, the
deferred tax asset is not recognised.
2005 FINANCIAL REPORT 94
o) Derivative financial instrumentsThe Group has chosen to apply IASs 32 and 39 as from 1 January 2005.
Pursuant to these standards, when derivatives are designated as hedging instruments, their treatment depends on whether they aredesignated as a:
- fair-value hedge;- cash flow hedge; or- hedge of a net investment in a foreign entity.
All derivative financial instruments are measured at fair value. Fair value is either the market value, for instruments listed on a securitiesexchange, or a value provided by financial institutions using traditional criteria (over-the-counter market).
Derivative financial instruments consist mainly of interest-rate swap contracts.
The special purpose entities' debts are contracted at variable rates and rents invoiced by these entities also benchmarked to a variablerate, so the Group has set up hedging instruments to limit its exposure to interest-rate risk.
Derivatives qualifying as cash flow hedges are recognised on the balance sheet in current financial assets or liabilities with an offset inequity.
p) Other financial assetsFinancial assets are classified in four categories depending on their nature and the reasons for holding them:- held-to-maturity investments;- financial assets at fair value through profit and loss;- available-for-sale financial assets; and- loans and receivables (excluding clients).
Financial assets are initially recognised at cost, corresponding to the fair value of the price paid plus purchase expenses.
Other financial assets consist mainly of deposits and guarantees paid to lessors of premises where the Group conducts its business.
q) Non-current assets held-for-sale and discontinued operationsWhen assets are held for sale under the principles of IFRS 5, that is, when their carrying amount is recovered mainly through a sale
transaction rather than continuing use, the Group values these assets at the lesser of the carrying amount and fair value less costs to sell and ceases toamortise or depreciate them.
Held-for-sale assets are presented separately in the balance sheet and income statement.
A discontinued operation is a component that the Group has disposed of or is classified as held for sale. These activities are, inparticular, presented in a specific caption of the income statement.
r) Treasury sharesWhatever the purpose of treasury shares, they are eliminated from equity in consolidation.No profit or loss should be recognised in the income statement upon the purchase, sale, issuance or cancellation of Group equity
instruments.
s) Cash and equivalentsCash corresponds to bank accounts (credit balances and overdrafts) and cash at hand.Cash equivalents are mainly UCITS, relating to very liquid short-term investments that can easily be converted into a known amount
of cash and are subject to a negligible risk of a loss in value.They are classified in balance sheet assets in the caption "Cash and equivalents" and in liabilities in "Bank overdrafts".
t) Earnings per shareNet earnings per share are obtained by dividing net income for the financial year by the number of shares outstanding at year-end, less
the number of treasury shares.Consolidated diluted net earnings per share take into account shares issued as a result of the exercise of share subscription options less
treasury shares.
u) RevenueRevenue is recognised when it is probable that future economic benefits shall flow to the Group and this revenue can be measured
reliably. Revenue items are measured at the fair value of the consideration to be received.
2005 FINANCIAL REPORT 95
Revenues for services rendered as part of the logistics business are recognised when the contractually agreed tasks are completed.Transport business revenues are recognised when the service has been rendered.
v) Special purpose entitiesSpecial purpose entities are legal structures used by the Group to finance its French fleet of vehicles.These are called "Locad" entities, are in the form of economic interest groupings (EIGs) and belong mainly to a banking pool.They buy a fleet of vehicles corresponding to Group requirements and finance them through loans from a banking pool. The vehicles
are leased exclusively to the various French companies that use them.Pursuant to SIC 12, these special purpose entities for vehicle financing have been consolidated globally as from 1 January 2004.The Group has firm vehicle buy-back commitments from the manufacturers of its motor vehicles.
w) EBITAEarnings Before Interest, Taxes and Amortisation: earnings before depreciation, amortisation and impairment (including that of
goodwill), net financial results and income taxes.
x) EBITEarnings Before Interest and Taxes: earnings before net financial results and income taxes. This equals EBITDA less depreciation,
amortisation and impairment (including that of goodwill).
III - NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2005
a) Events in the yearThe main events in the year relate to the external growth operations. These involve the acquisition by the Norbert Dentressangle Group of:- the Venditelli group; and- part of the French Logistics and Transport business of the TNT group.The breakdown of these acquisitions is given in Note III x - Variations in the scope of consolidation.
b) Segment informationAs mentioned in the first part of the notes, the two Group businesses are Transport and Logistics.Transport activities include transport solutions (management of all of a customer's transport flows), international groupage, domestic
distribution, outsourcing of customer fleets, contract distribution and logistics on customer sites.The main Logistics activities cover share management, quality control, order preparation, distribution, packing, customisation, sub-
assembly, co-packing, delivery to the end user, information management and real-time traceability control, as well as reverse logistics.The Group presents detailed primary segment information on the two businesses of transport and logistics since these involve differing
markets and levels of capital intensity.They also correspond to the internal organisation of the Group.
The presentation of a distinction between the euro zone and non-euro zone business enables an overview of the foreign-exchange riskborne by the Group.
Meanwhile, a presentation by business allows a more in-depth view by activity and enables the various areas of Group expertise to bedistinguished.
• Primary segment, by business:Information by business
n K€ Transport Logistics Total
Revenue31/12/2005 898,052 501,264 1,399,31631/12/2004 807,078 496,362 1,303,440
Segment net income/(loss)31/12/2005 25,679 37,029 62,70831/12/2004 23,360 16,849 40,209
Segment assets, net of amortisation, depreciation and impairment31/12/2005 372,288 99,782 472,07031/12/2004 316,397 99,373 415,770
Segment liabilities31/12/2005 275,051 27,255 302,30631/12/2004 243,298 26,200 269,498
2005 FINANCIAL REPORT 96
Transport Logistics Total
Employees at end-period31/12/2005 8,587 5,309 13,89631/12/2004 7,276 4,816 12,092
Sq.m of warehousing31/12/2005 139,475 2,532,201 2,671,67631/12/2004 55,744 2,224,813 2,280,557
Number of motor vehicles31/12/2005 4,730 215 4,94531/12/2004 4,219 264 4,483
Segment vehicle financing liabilities are distributed on a statistical basis in proportion to vehicle numbers.
The year's acquisitions can be broken down as follows:- Venditelli group: the company Venditelli was included in the Transport business and the firm Vendilog in Logistics.- Part of TNT's business in France: the companies SNN Clermont, SNM Valenciennes, BARCO and Les Routiers Français were included
in Transport, the other companies - CEMGA Logistics, AIXOR Logistics and COPAL Logistics - in the Logistics business.
Impairment tests conducted for 2005 resulted in recognising K€ 1,602 impairment of goodwill for the transport business.
• Secondary segment, by geographical area:Segment assets
Revenue net of amortisation in K€ Employees at end-period depreciation and impairment
31/12/2005 31/12/2004 31/12/2005 31/12/2004 31/12/2005 31/12/2004
Euro zone 1,294,020 1,208,762 12,420 10,873 430,644 394,360Outside euro zone 105,296 94,678 1,476 1,219 41,426 21,411
n TOTAL 1,399,316 1,303,440 13,896 12,092 472,070 415,770
• Other supplementary information by business:Revenue in K€ Employees at end-period
31/12/2005 31/12/2004 31/12/2005 31/12/2004
General Cargo Transport 506,494 574,084 4,631 4,656Bulk Transport 329,018 178,449 2,570 1,619Temperature Controlled Transport 52,156 45,434 490 452Logistics 501,778 496,362 5,623 4,816Services and Real Estate 9,870 9,111 582 549
n TOTAL 1,399,316 1,303,440 13,896 12,092
c) Operating expenses
n K€ 31/12/2005 31/12/2004
Other purchases and external services (845,461) (750,636)Staff costs (408,328) (394,272)Other taxes and similar payments (38,350) (38,272)Income from disposals of operating assets 3,882 568Share of income/(loss) from joint ventures 63 11Other revenue 10,792 4,946Other expenses (3,617) (119)
n Total operating expenses (1,281,019) (1,177,774)
Depreciation and amortisation charges (70,020) (64,765)Allocation to (reversal of) provisions 3,231 4,161Allocation to (reversal of) amortisation, depreciation and provisions (66,789) (60,604)
Other revenues and expenses include numerous items of which the individual amounts are not material.
2005 FINANCIAL REPORT 97
d) Net financial results
n K€ 31/12/2005 31/12/2004
Interest and similar financial income 1,672 2,103Foreign-exchange gains 2,919 2,113Income from disposal of short-term investments 1,172 1,208Reversals of provisions for securities and non-current financial assets 1 76
n Total financial income 5,764 5,500
Interest and similar financial expense (9,490) (10,211)Foreign-exchange losses (2,063) (2,815)Amortisation and depreciation charges and transfers to provisions 0 (9)
n Total finance costs (11,553) (13,035)
n TOTAL (5,789) (7,535)
e) Income tax expense
n K€ 31/12/2005 31/12/2004
Net current income tax (expense) / revenue (15,622) (24,828)Net deferred income tax (expense) / revenue (1,172) 6,351Tax on discontinued operations and held-for-sale assets 718
n TOTAL (16,794) (17,759)
n K€ 31/12/2005 % 31/12/2004 %
Income/(loss) before tax 79,211 100 56,439 100Theoretical tax calculated at standard rate applicable in France (27,668) (34.93) (19,996) (35.43)Non-deductible expenses and non-taxable income 11,872 14.99 843 1.47Capitalisation of prior-year tax loss carryforwards 188 0.24 1,005 1.75Non-capitalisation of losses (2,085) (2.63) (195) (0.34)Difference in tax rate 899 1.13 584 1.02Other 0 0.00 0 0.00
n TOTAL (16,794) (20.78) (17,759) (30.88)
In 2004, the amount of tax, that is K€ 17,759, includes tax on assets disposed of or held for sale in the amount of K€ 718.Tax losses not giving rise to the calculation of a deferred tax asset amount to K€ 9,193.When there is no certainty that the tax loss of a subsidiary can be calculated against its future tax charge, no deferred tax asset is
recognised.The change in the tax rate is due to developments in applicable tax regulations.The amount of deferred taxes noted in assets and liabilities corresponds to the application of IAS 39, in the amount of K€ 139.
2005 FINANCIAL REPORT 98
f) Earnings per share
n K€ 31/12/2005 31/12/2004
Consolidated net income/(loss) 62,708 40,209Net income from continuing operations 62,708 38,898Average number of shares 9,812,773 9,766,953Average number of treasury shares (258,857) (252,918)Earnings per share 6.56 4.23Earnings per share from continuing operations 6.56 4.09Warrants 10,000 129,900Share subscription options 65,300 105,000Diluted total average number of shares 9,629,216 9,748,935Diluted earnings per share 6.51 4.12Diluted earnings per share from continuing operations 6.51 3.99
Earnings per share are calculated based on the post-tax net income of the Group.The calculation method used is that of IAS 33.On 16 January 2006, the Executive Board authorised a reduction of share capital in the amount of 160,913 shares.The 2004 earnings per share and diluted earnings per share for discontinued operations and held-for-sale assets respectively totalled
€ 0.14 and € 0.13.
g) Workforce
At year-end 31/12/2005 31/12/2004
Managers 866 805 Employees and supervisors 3,177 2,791 Drivers 6,112 5,533 Manual workers 3,741 2,963
n TOTAL 13,896 12,092
h) Intangible assets
n K€ 31/12/2005 31/12/2004
Concessions, patents, licences and software 16,279 12,964Other intangible assets 815 1,430
n GROSS VALUES 17,094 14,394Concessions, patents, licences and software (10,419) (8,171)Other intangible assets (32) 6
n AMORTISATION AND DEPRECIATION (10,451) (8,165)
n NET VALUES 6,643 6,229
Changes in non-current assets
n K€ Gross values Amortn/depn Net values
GoodwillGross value on 1 January 56,599 56,599Acquisitions/(allocations) (1,088) (1,088)(Disposals)/reversals 112 (112) 0Foreign-exchange differences (2) 1 (1)Variations in the scope of consolidation 0
Value on 31 December 2004 56,709 (1,199) 55,510Acquisitions/(allocations) 16,707 (1,602) 15,105(Disposals)/reversals 0Foreign-exchange differences 140 (55) 85Variations in the scope of consolidation 0
Value on 31 December 2005 73,556 (2,856) 70,700
2005 FINANCIAL REPORT 99
Intangible assetsValue on 1 January 2004 12,632 (9,049) 3,583Acquisitions/(allocations) 4,501 (1,429) 3,072(Disposals)/reversals (1,378) 950 (428)Foreign-exchange differences (38) 40 2Variations in the scope of consolidation 18 (18) 0
Value on 31 December 2004 15,735 (9,506) 6,229Acquisitions/(allocations) 2,716 (2,323) 393(Disposals)/reversals (314) 247 (67)Foreign-exchange differences 21 (19) 2Variations in the scope of consolidation (653) 739 86
Value on 31 December 2005 17,505 (10,862) 6,643
The change in intangible assets mainly corresponds to the installation of an ERP.There are no restrictions on the Group's use of its non-current assets.Apart from goodwill items, there are no intangible assets with an indefinite life.
i) Property, plant and equipment Changes in property, plant and equipment
n K€ Gross values Amortn/depn Net values
Land and site developmentn Gross value on 1 January 2004 13,368 (803) 12,565
Acquisitions/(allocations) 858 (1) 857(Disposals)/reversals (4,459) 349 (4,110)Foreign-exchange differences 0Variations in the scope of consolidation 114 114
n Value on 31 December 2004 9,880 (455) 9,425Acquisitions/(allocations) 775 (13) 762(Disposals)/reversals (740) 2 (738)Foreign-exchange differences 0Assets held for sale (490) (490)Variations in the scope of consolidation 620 620
n Value on 31 December 2005 10,045 (466) 9,579
Buildingsn Value on 1 January 2004 113,406 (50,149) 63,257
Acquisitions/(allocations) 6,753 (3,818) 2,935(Disposals)/reversals (57,293) 18,771 (38,522)Foreign-exchange differences (125) 6 (119)Variations in the scope of consolidation 2,787 (504) 2,283
n Value on 31 December 2004 65,528 (35,694) 29,834Acquisitions/(allocations) 14,198 (4,262) 9,936(Disposals)/reversals (7,793) 1,382 (6,411)Foreign-exchange differences 182 (28) 154Assets held for sale (3,255) 2,799 (456)Variations in the scope of consolidation 19,133 (1,869) 17,264
n Value on 31 December 2005 87,993 (37,672) 50,321
2005 FINANCIAL REPORT 100
n K€ Gross values Amortn/depn Net values
Plant, machinery and equipmentn Gross value on 1 January 2004 41,013 (25,520) 15,493
Acquisitions/(allocations) 9,440 (5,343) 4,097(Disposals)/reversals (12,130) 4,323 (7,807)Foreign-exchange differences 53 (20) 33Variations in the scope of consolidation 20,963 (13,681) 7,282
n Value on 31 December 2004 59,339 (40,241) 19,098Acquisitions/(allocations) 17,674 (9,459) 8,215(Disposals)/reversals (8,060) 5,617 (2,443)Foreign-exchange differences 69 (37) 32Variations in the scope of consolidation 644 25 669
n Value on 31 December 2005 69,666 (44,095) 25,571
Haulage equipmentn Gross value on 1 January 2004 344,639 (113,669) 230,970
Acquisitions/(allocations) 93,503 (43,834) 49,669(Disposals)/reversals (82,875) 42,589 (40,286)Foreign-exchange differences (29) 28 (1)Variations in the scope of consolidation 38,571 (14,009) 24,562
n Value on 31 December 2004 393,809 (128,895) 264,914Acquisitions/(allocations) 96,005 (47,529) 48,476(Disposals)/reversals (95,737) 51,899 (43,838)Foreign-exchange differences 1,311 (150) 1,161Variations in the scope of consolidation 21,155 (7,601) 13,554
n Value on 31 December 2005 416,543 (132,276) 284,267
Other property, plant and equipmentn Gross value on 1 January 2004 43,877 (27,721) 16,156
Acquisitions/(allocations) 13,129 (8,289) 4,840(Disposals)/reversals (5,909) 2,358 (3,551)Foreign-exchange differences 5 (5) 0Variations in the scope of consolidation 4,500 (35) 4,465
n Value on 31 December 2004 55,602 (33,692) 21,910Acquisitions/(allocations) 10,212 (7,473) 2,739(Disposals)/reversals (3,931) 2,765 (1,166)Foreign-exchange differences 20 (11) 9Assets held for sale (288) 244 (43)Variations in the scope of consolidation (1,404) 659 (745)
n Value on 31 December 2005 60,211 (37,508) 22,704
Advance paymentsn Gross value on 1 January 2004 2,440 2,440
Acquisitions/(allocations) 8,878 8,878(Disposals)/reversals (244) (244)Foreign-exchange differences 33 33Variations in the scope of consolidation tre (2,257) (2,257)
n Value on 31 December 2004 8,850 0 8,850Acquisitions/(allocations) 4,349 4,349(Disposals)/reversals (6,367) (6,367)Foreign-exchange differences 11 11Variations in the scope of consolidation (4,557) (4,557)
n Value on 31 December 2005 2,286 0 2,286
2005 FINANCIAL REPORT 101
These two tables include non-current assets held for sale.There are no restrictions on the Group's use of its non-current assets.As referred to in III-aa, there are buy-back commitments from the manufacturers for the motor vehicles.
Capitalised and leased assetsGross values Amortisation and depreciation
n K€ 31/12/2005 31/12/2004 31/12/2005 31/12/2004
Land and site development 3,695 3,695 0 0
Buildings 10,349 10,261 (6,104) (6,024)
Plant, machinery and equipment 2,754 2,754 (1,660) (1,109)
Haulage equipment 21,099 12,716 (10,004) (7,364)
Other property, plant and equipment 42 42 (42) (42)n TOTAL 37,939 29,468 (17,810) (14,539)
j) Non-current asset impairment testsThe assumptions used for the impairment test valuations are as follows:
n % 31/12/2005 31/12/2004
Risk-free rate 3.40 4.16Discount rate 4.50 4.75Growth rate 2.50 3.00Beta 1.16 0.76Cost of borrowings 4.00 3.90Tax rate 35.00 35.00Long-term profitability rate 2.60 2.60
Beta is the coefficient of the share's return to its volatility. This is a sector ratio calculated on a statistical basis.
The residual value of a CGU is calculated to be a multiple of the last cash flow.
The calculations for 2005 resulted in recognising K€ 1,602 impairment of goodwill for the Transport business.
n K€ Net Variation Impairment Net Variation Impairment Foreign- Net goodwill in goodwill 2004 goodwill in goodwill 2005 exchange value
on 2004 on 2005 differences on01/01/2004 31/12/2004 31/12/2005
Goodwill for Transport 13,441 112 (3,497) 10,056 17,273 (1,602) 85 25,812Goodwill for Logistics 45,313 141 45,454 (566) 44,888
n TOTAL 58,754 112 (3,356) 55,510 16,707 (1,602) 85 70,700
Variations in the scope of consolidation in the year resulted in recognising K€ 15,807 additional goodwill for the acquisition of thecompany Venditelli.
Negative goodwill of K€ 35,094 was also recognised, arising from the purchase of part of the TNT group's French business.The K€ 33,492 goodwill impairment item on the income statement relates to the K€ 35,094 badwill booked for TNT, less the
K€ 1,602 period impairment recognised.Pursuant to the principles defined in Note II-a, a K€ 900 item was recognised on 1 January 2005 for the commitment to buy the
minority interests in Thier.
The impairment tests conducted on other non-current assets did not result in any additional impairment.
2005 FINANCIAL REPORT 102
k) Information on investments in associates on 31/12/2005
Investments in Company Revenue Net associates equity income/
(loss)
n K€
CSND 277 531 6,612 155
Centrale des Franchisés 22 44 3,530 6
NDB Logistica Romania 198 395 2,496 143
Salto 26 77 9,182 8
LGL 604 1,239 5,309 269
MNS 21 51 233 11n Investments in associates 1,148
l) Other financial assets
n K€ Due in less Due in one Due in more31/12/2004 31/12/2005 than one year to five years than five years
Loans 1,776 1,835 323 1,365 147
Deposits and guarantee deposits/other accounts receivable 14,561 17,854 14,700 3,154
Shares of non-consolidated undertakings 127 146 N.A N.A N.A n TOTAL(Net value) 16,464 19,835 323 16,065 3,301
The loans bear interest, whereas deposits and guarantee deposits do not.
m) InventoriesInventories amounted to K€ 6,366 on 31 December 2005 (K€ 5,955 on 31 December 2004). They consist mainly of diesel (K€ 1,273
on 31 December 2005, against K€ 1,326 on 31 December 2004), parts and supplies for vehicle and wagon maintenance (K€ 1,828 on 31 December2005, K€ 1,711 on 31 December 2004) and miscellaneous supplies (film for palettes, listings, etc) (K€ 559 on 31 December 2005 and K€ 561 on31 December 2004).
n) Trade and other receivables
n K€ 31/12/2005 31/12/2004
Trade receivables 351,325 290,089Provisions for impairment (5,342) (3,971)Customers 345,983 286,118Tax and social security 67,086 49,291Advance payments 3,251 4,336Prepaid expenses 6,743 6,195Other miscellaneous accounts receivable 8,469 6,116Other receivables 85,549 65,938
Accounts receivable in more than one year totalled K€ 2,400 on 31 December 2005 (K€ 2,248 on 31 December 2004).Tax receivables mainly relate to deductible VAT and tax paid on account.
o) Cash and equivalents
n K€ 31/12/2005 31/12/2004
Short-term investments 119,086 82,133Cash at bank and at hand 75,541 76,882Cash and equivalents 194,627 159,015Banks (credit balances) (50,922) (58,514)Net cash 143,705 100,501
The K€ 144,101 net cash figure in the cash flow table includes K€ 396 for derivatives.Short-term investments include units in money market Sicav vehicles - open-ended investment companies - at their daily NAV.There are no restrictions on the Group's use of its cash.
2005 FINANCIAL REPORT 103
p) Capital issued and reserves
n Year Nature of operation Variation in capital Capital after operation Number Face value Share Amount Number of shares € premiums € € of shares
1 January 2004 15,565,930 9,728,706
January 2004 Exercise of warrants 38,000 60,800 922,640 15,626,730 9,766,706
May 2004 Increase in face value from € 1.66 to € 2 3,906,682 19,533,412 9,766,706
31 December 2004 19,533,412 9,766,706
June 2005 Exercise of warrants 10,000 2 204,100 20,000 9,776,706
August 2005 Exercise of warrants 75,000 2 1,530,750 150,000 9,851,706
October 2005 Exercise of warrants 10,000 2 204,100 20,000 9,861,706Exercise of share subscription options 42,600 2 558,486 85,200 9,904,306
November 2005 Exercise of share subscription options 9,300 2 121,923 18,600 9,913,606
December 2005 Exercise of share subscription options 9,700 2 127,167 19,400 9,923,306
31 December 2005 19,846,612 9,923,306
January 2006 Exercise of share subscription options 21,600 2 283,176 43,200 9,944,906Cancellation of shares (160,913) 2 (4,557,628) (201,826) 9,783,993
The capital consists of shares with a face value of € 2 each.
Each share gives the right to one vote. Meanwhile, a double voting right - compared with that of other shares in respect of the portionof share capital represented - is allocated for:
a) all fully paid-up shares in registered form and recorded in the name of the same shareholder for at least four years; and
b) registered shares allocated free to a shareholder in the event of a capital increase through the capitalisation of reserves, income orshare premiums by virtue of existing shares owned carrying this entitlement.
This double voting right shall be fully discontinued for any share converted into bearer form - if the shares were admitted to tradingon an official securities exchange - or for shares of which ownership has changed. However, the above period shall not be curtailed or the right shallbe maintained through transfer by inheritance, liquidation of communal estate of husband and wife, donations between living persons in favour of apartner or a person within a degree of relationship carrying title to share in intestate estate.
As well as voting rights, each share gives an interest proportional to the number and value of existing shares in the company assets,income or merger premium.
In order for all shares to receive the same net sum indistinctly and be listed as the same investment, and unless legally prohibited, thecompany assumes responsibility for the proportional amount of tax that may be due only for certain shares on the occasion of, in particular, thewinding-up of the Company or a capital reduction; however, it shall not do so when the tax applies to all shares in the same category in the sameconditions, if there are several categories of shares with which the various rights are associated.
Whenever a certain number of shares must be owned to exercise a right, it falls to the owners not individually in possession of thisnumber to group together the required shares.
If any shareholders acting alone or with others and holding at least 2 % of equity in the Company or a multiple of this percentage, upto 50 %, crosses one of these thresholds, they must inform the Company of this within five share market business days of doing so by recorded deliveryletter with proof of delivery.
Failure to respect this obligation may result in being deprived of voting rights for the shares exceeding the undeclared fraction for allshareholder meetings to be held within two years as from the date of regularising the notification.
This measure may only be exercised on a request recorded in the minutes of the General Meeting by one or more shareholders owningat least 5 % of the equity or voting rights in the Company.
All shareholders are also required to inform the Company in the same manner within a five-day period when their shareholding in theequity decreases to less than one of the above thresholds.
These provisions were adopted by the Combined Ordinary and Extraordinary General Meeting of 23 December 1998 and amended bythe Meetings of 29 May 2002, 25 May 2004 and 24 May 2005.
2005 FINANCIAL REPORT 104
n In € 2004 2003 2002 2001 2000
Net dividend 0.84 0.70 0.64 0.60 0.40Tax assets 0.35 0.32 0.30 0.20
n Total income 0.84 1.05 0.96 0.90 0.60
n K€ 31/12/2005 31/12/2004
Treasury shares (8,860) (7,327)Retained earnings 226,657 172,197Foreign-exchange differences (225) (627)Cost of share option based remuneration 919 485Fair value of cash flow hedges 257 0
n Total consolidated reserves 218,748 164,728
q) Financial liabilities Maturities Maturities Maturities
n K€ 31/12/2004 31/12/2005 up to one year one to five years more than five years
CURRENT
Short-term borrowings 97,464 109,820 109,820
Finance leases 354 4,055 4,055
Other borrowings 1,361 729 729
Employee profit sharing 225 263 263n TOTAL CURRENT 99,404 114,867 114,867
NON CURRENT
Long-term borrowings 155,606 169,335 148,970 20,365
Finance leases 11,654 14,470 11,336 3,134
Other borrowings 204 372 324 48
Employee profit sharing 2,630 3,262 3,009 253n TOTAL NON-CURRENT 170,094 187,439 163,639 23,800
n TOTAL 269,498 302,306 114,867 163,639 23,800
On 31 December 2005, 90 % of loans agreed with financial institutions were benchmarked to variable rates and 10 % to fixed rates (in2004, respectively 98 % and 2 %).
All loans are expressed in euros, with the exception of one loan in GBP with a countervalue of K€ 834 (K€ 1,697 in 2004).
r) Provisions
n K€ Accidents Social Employee Fines Other Totalsecurity and benefits provisionstax disputes
Value on 1 January 2004 8,971 5,637 5,376 413 2,649 23,046Allocations 1,832 1,579 483 172 3,002 7,068Reversals (3,285) (3,041) (12) (161) (4,213) (10,712)Variations in the scope of consolidation 21
Value on 31 December 2004 7,518 4,175 5,868 424 1,438 19,423Allocations 3,274 2,366 1,068 67 1,314 8,089Reversals (3,316) (1,976) (265) (211) (6,917) (12,685)Variations in the scope of consolidation (758) (54) 187 32 66,727 66,134
n Value on 31 December 2005 6,718 4,511 6,858 312 62,562 80,961
The amount of employment risks is estimated on a case-by-case basis in accordance with expert opinions.Amounts provisioned for accidents are also estimated on a case-by-case basis by the accident manager. These mainly involve road
accidents and customer litigation.Retirement benefits are estimated by an actuary, an appointed expert.
2005 FINANCIAL REPORT 105
Provisions for fines mainly relate to infringements of traffic regulations and employment regulations.In particular, the sum of K€ 66,134 includes K€ 51,700 in identifiable contingent liabilities recognised on acquiring part of the French
business of TNT.
As part of this acquisition of TNT's activities, the Group recognised a number of contingent liabilities of which the valuation method isbased on a statistical approach. The recognition of these contingent liabilities, recorded only as part of a business combination, complies with IFRS 3.
Being a potential obligation resulting from past events and of which the existence shall only be confirmed by uncertain future eventsnot entirely in the control of the Group, contingent liabilities are only provisioned as part of business combinations. They relate to possible expensesfor breach of logistics or transport contracts.
Provisions for variations in the scope of consolidation correspond mainly to provisions for identifiable known and contingent liabilitiesresulting from acquisitions in the year.
This is a current provision in the amount of K€ 26,366.
s) Deferred taxes
n K€ 31/12/2005 31/12/2004
Deferred tax assets 26,090 8,264Deferred tax liabilities (36,902) (37,516)
n Net deferred tax (10,812) (29,252)
The year's external growth operations resulted in recognising deferred tax assets and liabilities in the net amount of K€ 19,699.Most deferred tax liabilities are generated by differences in vehicle depreciation periods between the company and consolidated
accounts.
t) Trade and other payables
n K€ 31/12/2005 31/12/2004
Trade payables 229,707 197,384n Suppliers 229,707 197,384
Other tax and social security payables 166,518 150,202Other miscellaneous accounts payable 21,576 18,170
n Other payables 188,094 168,372
u) Information on related partiesRelated parties are:- parent companies;- entities exercising joint control or significant influence over the Company;- subsidiaries;- associates; - joint ventures; and- members of the Executive Board and Supervisory Board.
1. Transactions between the Group and companies belonging directly or indirectly to the majority shareholder of Groupe Norbert Dentressangle S.A, thecompany Financière Norbert Dentressangle S.A, are concluded in arm's length conditions. These involve rental charges relating to land and buildingsin the amount of K€ 25,339 on 31 December 2005 (K€ 22,038 on 31 December 2004).
2. Amounts for enterprises over which the Norbert Dentressangle Group exercises significant influence, recognised using the equity method.
Freight revenues Other revenues Holding company Other expenses and similar expenses
CSND 114,014 945LGL 303NDB Logistica Romania 74SALTO 1984 156 52MNS 140
The balance sheet amounts on 31 December 2005 were not material in respect of the size of the Group.
2005 FINANCIAL REPORT 106
3. Gross remuneration awarded to the managerial bodies
n K€ 31/12/2005 31/12/2004
n Nature of expenseShort-term employee benefits 1,632 1,267Post-employment benefits 38 38Other long-term benefits 0 0Termination benefits 0 0Share-based payment 146 351Attendance fees 51 48
4. Remuneration granted to managers in the form of shares Quantity
31/12/2005 31/12/2004
Subscription in the yearShare subscription options 0 0Call share options 0 0Warrants 0 0Exercise in the yearShare subscription options 28,000Call share options 5,000Warrants 85,000Share held at year-endShare subscription options 0 0Call share options 0 5,000Warrants 10,000 95,000
v) Financial instruments and risk management• Financial instruments
The debt of the special purpose entity financing structures is agreed at the floating three-month Euribor rate. Accordingly, the Grouphas set up hedging instruments to limit its exposure to interest-rate risk. The hedges were still in place on 31 December 2005.
The hedging portfolio consists exclusively of rate swaps, exchanging a variable rate in the form of the three-month Euribor for a fixedrate, covering a total notional amount of K€ 102,622 (K€ 90,245 on 31 December 2004). These contracts mature in periods of between one andthree years. There are no embedded derivatives.
Any income or expense arising from the difference between the rates given and received is taken to the profit and loss for that financialyear. The result thus recorded for the 2005 period equalled a loss of K€ 946.
The fair value of hedging instruments recognised in accordance with IAS 39, net of taxes and recorded as an increase in equity, equalledK€ 257 on 31 December 2005.
• Risk managementForeign-exchange differenceGroup exposure to foreign-exchange risk is limited by its geographical positioning, which is mostly in the euro zone (7.52 % of
consolidated sales are from outside).The Group generally uses self-hedging to limit its recourse to the market: in as much as it can, it aims for a balance between collections
and disbursements in each non-euro currency using centralised cash flow management and giving latitude for certain suppliers and sub-contractors tochoose the invoicing currency. Possible residual positions are sold using forward-based contracts.
In 2005, the Group had no need to use market hedging for its foreign-exchange risk.Residual foreign-exchange differences affecting the income statement mainly result from foreign-exchange differences for foreign-currency
assets and liabilities without specific hedging on the balance sheet date (K€ 856 on 31 December 2005).For each subsidiary, foreign-currency transactions are recorded in specific accounts. The Group's centralised cash department
subsequently conducts weekly reporting and balancing of these accounts.
2005 FINANCIAL REPORT 107
Interest-rate riskInterest-rate risk is managed centrally for all Group positions.
Borrowings are concentrated in certain Group companies: Groupe Norbert Dentressangle S.A, ND Location, ND Logistics and UTLLocation. All contracts are negotiated by the Group's cash department and validated by the Group Finance Director.
On 31 December 2005, 90 % of loans agreed with financial institutions were benchmarked to variable rates and 10 % to fixed rates.
The maturity schedule for borrowings (K€ 302,306 on 31 December 2005) is presented in section q). The amounts for “Trade payables”(K€ 229,707) and “Other accounts payable” (K€ 21,576) are due in less than one year, except for K€ 4,694 in prepaid income due in between oneand five years.
Meanwhile, accounts receivable (K€ 345,983 for trade accounts and K€ 18,463 for the others) mature in less than one year, exceptfor K€ 2,400 to be received in more than one year.
Based on the present outstandings, a 1 % increase in interest rates would affect results in the amount of K€ 2,690.
Liquidity riskGroup financing is based mainly on medium-term repayable loans, as well as leases, finance leases or similar and overdrafts that – given
the Group's net cash situation – are used occasionally.
The Group does not use revolving credit or securitisation.
In June 2003, the Group took out a K€ 7,578 loan over 60 months (of which K€ 3,789 was outstanding on 31 December 2005). Thisfinancing was subject to a maximum consolidated debt to equity gearing ratio of 100 %, excluding special purpose entities. An amendment negotiatedto the contract in August removed this covenant.
In June 2003, the Group obtained an opening of credit which was still unused in the amount of K€ 21,875, on 31 December 2005.This financing is subject to a maximum consolidated debt to equity ratio of 100 %, excluding special purpose entities, and a Group
undertaking not to dispose of any subsidiaries, with the exception of Stockalliance. The Group may draw on this financing line at any time.
Risk on UCITS investmentsTaking into account the composition of its short-term securities portfolio, the Group is not exposed to price risks, apart from on treasury
shares. Nevertheless, a large change in the Group share price would not result in any capital loss to the extent these treasury shares are eliminated in theconsolidated net situation.
w) Employee benefits• Retirement
The main actuarial assumptions used to value the retirement benefits are as follows:Discount rate: in application of the IFRS recommendations, the discount rate used is based on the long-term private sector bond yields
on the valuation date and equalled 4 %, against 4.5 % on 31 December 2004.Rate of return on insurance fund: this corresponds to the estimate of interest to be generated by the insurance funds in the year if the
plan is financed by an insurance contract and equalled 4 %, against 4.5 % on 31 December 2004.Salary growth rates:• Transport: drivers 3 % and others 2.5 % for the years 2004 and 2005; and• Logistics: 3 % for the years 2004 and 2005.Retirement ages: these take into account measures to increase the active working life envisaged by the Fillon Act of 21 August 2003
(Loi Fillon), as well as the possibility for drivers to retire as from 55.Mobility rates: these were established based on statistics for recent years (17.1 % in 2005 against 18 % in 2004 for Transport, with an
average of 15.6 % in 2005 compared with 7.8 % in 2004 for Logistics).
n In % 31/12/2005 31/12/2004
Discount rate 4.00 4.50Rate of return on insurance funds 4.00 4.50Salary growth rates- Transport 3.00 3.00- Logistics 3.00 3.00
Mobility rates- Transport 17.10 18.00- Logistics 15.60 7.80
2005 FINANCIAL REPORT 108
n K€ 31/12/2005 31/12/2004
Opening net provision 5,868 5,376Additions to scope 187Current service cost 860 700Discount cost 261 248Expected return on insurance fund (10) (11)Amortisation of plan changes 2 1Amortisation of actuarial gains and losses 22 0Use in the year (333) (445)Closing net provision 6,858 5,868
Long-service bonuses totalled K€ 22 on 31 December 2005.The amount of actuarial gains and losses still to be amortised in future years equalled K€ 328 and K€ 630 respectively on 31 December
2004 and 31 December 2005.The fair value of the assets was K€ 222 on 31 December 2005.
• Call share option and share subscription option plansCall share options
n Date Amount Unit Amount Cancellation Balance Option of call prices exercised expiry
options
21/06/1999 179,500 30.00 121,400 (58,100) 0 31/07/200529/03/2004 116,500 39.64 (15,000) 101,500 30/04/200909/09/2004 3,000 39.88 3,000 10/09/200913/12/2004 8,500 39.99 (1,500) 7,000 15/01/2010
307,500 121,400 (74,600) 111,500
Share subscription options n Date Amount Unit Amount Cancellation Balance Option
of subscription prices exercised expiry options
09/10/2000 176,000 15.11 61,600 (57,100) 57,300 09/10/200603/09/2001 8,000 21.00 0 0 8,000 03/09/2007
184,000 61,600 (57,100) 65,300
Warrants n Date Warrants Warrants Unit Amount Cancellation Balance Warrant
(issues) (subscriptions) prices exercised expiry
30/06/2003 105,000 105,000 22.31 95,000 0 10,000 31/05/2006105,000 105,000 95,000 0 10,000
The share option plans granted on 27 May 2003, 7 September 2004 and 13 December 2004, as well as the warrant plan of 30 June2003, were valued in respect of the services rendered.
The plan's overall cost was established using the Black-Scholes formula and the gross annual charge thus deducted.
This formula takes into account:- the share price on the allotment date;- the exercise price;- the vesting period;- the market risk-free investment rate (the rate for risk-free zero coupon bonds with the same maturity); and- the security's volatility (the Group's historical volatility).
These calculations gave a charge of K€ 209 affecting the net situation for 2003, as well as a charge of K€ 485 for 2004 and one ofK€ 437 for 2005.
2005 FINANCIAL REPORT 109
Historical share option overviewn Share Share Share Warrants Share Share Share
purchases subscriptions subscriptions purchases purchases purchases
Date of Meeting 28-may-98 24-may-00 24-may-00 27-may-03 29-may-02 25-may-04 25-may-04
Date of Executive Board meeting 21-june-99 09-oct-00 03-sept-01 30-june-03 29-march-04 09-sept-04 13-dec-04
Total number of shares that may be subscribed or bought 179,500 176,000 8,000 105,000 116,500 3,000 8,500
Total number of shares that may be subscribed or bought by senior Company officers 54,000 0 0 105,000 0 0 0
First ten employee allottees (1) 37,600 41,000 8,000 0 32,000 3,000 8,500
Option/warrant exercise period commencement date 01-july-04 10-oct-05 04-sept-06 01-june-05 30-march-08 11-sept-08 15-dec-08
Expiry date 31-july-05 09-oct-06 03-sept-07 31-may-06 30-apr-09 11-oct-09 15-jan-10
Subscription/purchase price 30.00 € 15.11 € 21.00 € 22.31 € 39.64 € 39.88 € 39.99 €
Warrants/options cancelled on 31/12/2005 (2) 58,100 57,100 0 0 15,000 0 1,500
Warrants/options exercised on 31/12/ 2005 121,400 61,600 0 95,000 0 0 0
Warrants/options outstanding on 31/12/2005 0 57,300 8,000 10,000 101,500 3,000 7,000
(1) First ten allottees, or more if the same quantity has been allotted to several employees(2) after departure of beneficiaries
• Other benefits:Neither Group employees nor management receive any other benefits. There are no supplementary defined-benefit salary-based
pensions for senior management.
x) Variations in the scope of consolidation• Changes in 2004
Acquisition of new companiesAs part of the development of a major customers' supply chain, the Group acquired the companies Loget et Jacquemain, Pont Monthion
and Dicivrac in January 2004. These specialise in transport of bulk building materials.The operation generated no goodwill.These companies have been fully consolidated since 1 January 2004.
First-time consolidation of special purpose entitiesPursuant to SIC 12, the special purpose entities (see below) for vehicle financing – Locad 98, Locad 99, Locad 01, Locad 02, Locad 03,
Locad 04 and Locad 05 – have been consolidated globally as from 1 January 2004.This operation has not generated any goodwill. It appeared in the consolidated financial statements as follows:- on the consolidated balance sheet, the recognition of property, plant and equipment and the corresponding financing ;- on the consolidated income statement, replacement of a rental charge (paid to these special purpose vehicles) with a vehicle
depreciation charge and the financial expenses associated with their financing costs.
Consolidation of the special purpose entities has had no impact on the Group’s net income or loss.
2005 FINANCIAL REPORT 110RestructuringIn Italy, the logistics activities have been consolidated in ND Logistics Italia through the merger of SGI and Cidem.In addition, as part of the rationalisation of the Group’s real estate management, the company Immotrans absorbed the companies
Leclercq and Laurent in December 2004.Moreover, the activities of SEMGCA and CEMGCA, arising from the acquisition of the Stockalliance Group, were regrouped in the
company TND Rhône-Alpes, through a merger in December 2004, which was renamed MGCA.In order to consolidate all transport activities within a single company, NDT took over Financière de VSG, the SAVAM Group holding
company, in December 2004.Lastly, Stockalliance transferred its business to ND Logistics.
Company disposals ND Aéroservices, ND Vrac Inter-Régions, Les Landes de Cassantin and La Courtine Transit were wound up in November 2004.Corend, a captive reinsurance company which had ceased to be a strategic part of the Group’s business, was disposed of in November
2004. The resulting capital gain was K€ 2,029. It is included on the income statement as a business disposal.
• Changes in 2005Company acquisitionsIn July 2005, the Group acquired ownership interests in the French companies Venditelli and Vendilog. Venditelli's main business is
distribution transport “by the pallet” in France with specific expertise in electrodomestical goods.Vendilog focuses on warehouse management.This operation generated positive goodwill of K€ 15,807.The results of these companies have been consolidated globally since 1 September 2005.In the last 12-month financial period applicable to them, these companies reported revenues of K€ 62,601 and their balance sheets
totalled K€ 15,352 at year-end. On 31 December 2005, the fair value of their assets was estimated at K€ 13,300 and they employed 599 people.
In December, furthermore, the Group acquired part of the transport and logistics activities of the TNT Logistics France group.In respect of logistics, this involves the assets and goodwill of the companies Aixor, Copal and Cemga.In transport, meanwhile, the deal concerned the assets and goodwill of the company Nord Mendy, the Clermont-Ferrand site of the
company Nicolas and the shares in the companies LRF and Barco.The operation generated negative goodwill of K€ 35,094.The results of these companies have been globally consolidated as from 1 December 2005.On 31 December 2005, the fair value of their assets was estimated at K€ 22,168 and they employed 1,473 people.The amount of provisions recorded in respect of the various acquirees for known liabilities totalled K€ 12,020, with K€ 51,700 for
customer risks. The relating net deferred tax asset equals K€ 20,033.
RestructuringAs part of rationalising its transport and service activities, the following operations were conducted:All companies restructured are 100 % owned and are, or were in the case of absorbed companies, globally consolidated.- The company Transports Norbert Dentressangle absorbed Loget et Jacquemain and Entr’Alp Logistique. The merger took place on
14 November 2005 with retrospective effect to 1 January 2005.- The company United Savam absorbed Pont Monthion. This took place on 14 November 2005 with retrospective effect to 1 January 2005.- The company ND Iberica Este absorbed ND Iberica Oeste on 31 December 2005 with retrospective effect as from 1 January 2005.- All assets and liabilities of the companies Gyves and ALVI were transferred to Sonecovi on 19 November 2005.- Furthermore, all assets and liabilities of the company NDNF were transferred to TFND on 26 October 2005.
y) Special purpose entitiesThe special purpose entities of the Group are structures it uses to finance its French fleet of vehicles.These are called "Locad" entities, are in the form of economic interest groupings (EIGs) and mainly belong to a banking pool.Their purpose is to buy a fleet of vehicles corresponding to Group requirements, financing them through loans from a banking pool,
and to lease them exclusively to the various French companies using them in the Group.At end-2005, their residual outstanding debts totalled K€ 120,656.
z) ScopeThe balance sheet date of all companies in the scope of consolidation is 31 December.
2005 FINANCIAL REPORT 111
Percentage Percentage Tax interest control integration
2005 2004 2005 2004
TRANSPORTAJG (UK) 100 100 100 100 GBGreenfold Way commerce park Greater Manchester WN7 LEIGH CSND (Czech Republic) 50 50 50 50Tr Marsala Malinovského 874 686 01 UHERSKE HRADISTEDICIVRAC Siren 690 802 079 100 100 100 100 FLes Pierrelles 26240 BEAUSEMBLANT HEINRICH THIER Gmbh (Germany) 100 90 100 90Nikolaus Otto Str. 6 Postfach 630 46282 DORSTENINTERSILOS Siren 380078 360 100 100 100 100Les Pierrelles 26240 BEAUSEMBLANT OMEGA 2 Siren 479 885 725 100 100 100 100 F Les Pierrelles 26240 BEAUSEMBLANT MNS Siren 480 073 766 42 42 42 42Les Pierrelles 26240 BEAUSEMBLANT LOGET ET JACQUEMAIN Siren 302 278 288 (merger with the company Transports Norbert Dentressangle) 100 100Les Pierrelles 26240 BEAUSEMBLANT LOGIBAL Siren 425 018 975 100 100 100 100 FLes Pierrelles 26240 BEAUSEMBLANT MARQUISE BENNE Siren 399 099 936 100 100 100 100Les Pierrelles 26240 BEAUSEMBLANT ND ALIMENTAIRE Siren 377 722 814 100 100 100 100Les Pierrelles 26240 BEAUSEMBLANT ND BELGIUM (Belgium) 100 100 100 100INDUSTRIE Zone de Blauwe Toren Monnikenwerve 85 8000 BRUGGEND CHIMIE Siren 352 621 601 100 100 100 100Les Pierrelles 26240 BEAUSEMBLANT ND EASTERN EUROPE Siren 410 211 916 100 100 100 100 F Les Pierrelles 26240 BEAUSEMBLANT ND IBERICA ESTE (Spain) 100 100 100 100 ESPCalle Buena Ventura Munoz 13-15 entresuelo 2A 08018 BARCELONAND IBERICA OESTE (Spain) (merger with the company ND IBERICA ESTE) 100 100 ESPCalle Buena Ventura Munoz 13-15 entresuelo 2A 08018 BARCELONAND INTER-PULVE Siren 328 802 913 100 100 100 100 FLes Pierrelles 26240 BEAUSEMBLANT ND ITALIA (Italy) 100 100 100 100Sede in viar Vittor Pisani N16 20124 MILANOND MEDITERRANEE Siren 425 060 951 100 100 100 100Les Pierrelles 26240 BEAUSEMBLANT ND NATIONAL FRIGORIFIQUE Siren 399 510 189 (merger with the company TRANSPORTS FRIGORIFIQUES ND) 100 100ZA Bords des Durances 880 av. de la 1ère division blindée 84300 CAVAILLONND PETRONALP Siren 326 445 392 100 100 100 100Les Pierrelles 26240 BEAUSEMBLANT ND PETRONORD Siren 425 090 735 100 100 100 100Les Pierrelles 26240 BEAUSEMBLANT ND POLSKA (Poland) 100 100 100 100UL GORNICZA 18/36 91765 LODZND PORTUGAL (Portugal) 100 100 100 100Terminal tir do Freixieiro ed Mastosinhos 4 PISO 4460 PERAFITAND SILO Siren 352 619 845 100 100 100 100Les Pierrelles 26240 BEAUSEMBLANT ND SILO BELGIUM (Belgium) 100 100 100 100INDUSTRIE Zone de Blauwe Toren Monnikenwerve 85 8000 BRUGGE
2005 FINANCIAL REPORT 112
ND SILO IBERICA (Spain) 100 100 100 100 ESPCarretera Taraganone KM 293.3E 08730 LA RAPITA MONJOSND TANKERS (UK) 100 100 100 100 GBGreenfold Way commerce park Greater Manchester WN7 LEIGH ND UK LTD (UK) 100 100 100 100 GBGreenfold Way commerce park Greater Manchester WN7 LEIGH NDB Siren 414 642 249 100 100 100 100Les Pierrelles 26240 BEAUSEMBLANT NDB LOGISTICA ROMANIA (Romania) 50 50 50 50Parcul Industrial DN 7 Centura ARADNDFI LOGISTICA Y TRANSPORTES SL (Spain) 100 100 100 100 ESPNave 8 Calle Mitjera Polygono ind MASALFASAR VALENCIAPONT MONTHYON Siren 662 026 152 (merger with the company UNITED SAVAM) 100 100Les Pierrelles 26240 BEAUSEMBLANT SALTO Siren 441 587 888 34 34 34 34Zone Industrielle de Seyssuel 38200 VIENNESAVAM Lux (Luxembourg) 100 100 100 1001 Zone du Scheleck 3225 BETTEMBOURG SHEDDICK (UK) 100 100 100 100 GBGreenfold Way commerce park Greater Manchester WN7 LEIGH TFND Siren 352 210 640 100 100 100 100 FZA Bords des Durances 880 av. de la 1ère division blindée 84300 CAVAILLONTND BRETAGNE Siren 380 677 369 100 100 100 100Les Pierrelles 26240 BEAUSEMBLANT TND ILE-DE-FRANCE Siren 425 090 966 100 100 100 100Les Pierrelles 26240 BEAUSEMBLANT TND NORD Siren 380 631 929 100 100 100 100Les Pierrelles 26240 BEAUSEMBLANT TND NORMANDIE BRETAGNE Siren 311 686 703 100 100 100 100Les Pierrelles 26240 BEAUSEMBLANT TND OUEST Siren 414 642 272 100 100 100 100Les Pierrelles 26240 BEAUSEMBLANT TND PACA Siren 343 189 460 100 100 100 100 FLes Pierrelles 26240 BEAUSEMBLANT TND PICARDIE Siren 527 221 030 100 100 100 100Les Pierrelles 26240 BEAUSEMBLANT TND SUD EST Siren 327 861 506 100 100 100 100Les Pierrelles 26240 BEAUSEMBLANT TND SUD OUEST Siren 692 720 477 100 100 100 100Les Pierrelles 26240 BEAUSEMBLANT TND VOLUME Siren 341 152 833 100 100 100 100Les Pierrelles 26240 BEAUSEMBLANT TRANSPORTS HARDY Siren 390 548 667 100 100 100 100 FLes Pierrelles 26240 BEAUSEMBLANT TRANSPORTS NORBERT DENTRESSANGLE Siren 332 588 995 100 100 100 100 FLes Pierrelles 26240 BEAUSEMBLANT UNITED SAVAM Siren 716 280 433 100 100 100 100 FZI Rue Les Moines 02200 VILLENEUVE-SAINT-GERMAINVENDITELLI Siren 429 660 822 100 10042 Route de Saint Symphorien d’Ozon 69800 SAINT-PRIESTSNM VALENCIENNES Siren 484 833 827 100 100ZI 1 Rue Galilée 59224 THIANT SNN CLERMONT Siren 484 829 262 100 100Les Pierrelles 26240 BEAUSEMBLANT BARCO Siren 379 852 742 100 10055 avenue Louis Breguet 31029 TOULOUSELes Routiers Français Siren 399 008 838 100 1005-7 Voie les cosmonautes 94310 ORLY
2005 FINANCIAL REPORT 113
LOGISTICSAUTOLOG Siren 393 072 277 100 100 100 100Les Pierrelles 26240 BEAUSEMBLANT ENTR’ALP LOGISTIQUE Siren 415 002 146 (merger with the company Transports Norbert Dentressangle) 100 100Zone Industrielle des Grives 74150 MARIGNY SAINT MARCELLGL (Switzerland) 49 49 49 49Via Mulini 6934 BIOGGIOMGCA Siren 425 091 014 100 100 100 100 FLes Pierrelles 26240 BEAUSEMBLANT LMDI Siren 315 884 684 100 100 100 100 FLes Pierrelles 26240 BEAUSEMBLANT LTU Siren 382 727 089 100 100 100 100 FLieudit Saint Paul Epagnay 74330 LA BALME DE SILLINGYND LOGISTICS Siren 378 992 895 100 100 100 100 F 55 avenue Louis Breguet 31029 TOULOUSEND LOGISTICS BV (Netherlands) 100 100 100 100Markermer 1 5347 - 0 OSSND LOGISTICS CZESKA (Czech Republic) 100 100 100 100Tr. Marsala Malinovskeho 874 68601 UHERSKE HRADISTEND LOGISTICS HUNGARY (Hungary) 100 100 100 100Tablas U 36-38 1097 BUDAPESTND LOGISTICS ITALIA (Italy) 100 100 100 100Calepio di Settala via E. Fermi N 7 20090 CALEPPIOND LOGISTICS NEDERLAND BV (Netherlands) 100 100 100 100Markermer 1 5347 - 0 OSSND LOGISTICS SWITZERLAND 100 100 100 100World Trade Center – c.p. 317 - 6982 AGNOND LOGISTICS UK (UK) 100 100 100 100 GBDistribution Center West Moor Park Yorkshire Way - Armthorpe DN3 3FB DONCASTERND LOGISTICS POLSKA (Poland) 100 100U. Niciarnina 50/52 92230 LODZSTOCKALLIANCE Siren 558 800 033 100 100 100 100 F55 avenue Louis Breguet 31029 TOULOUSEUTL LOCATION Siren 434 043 766 100 100 100 10055 avenue Louis Breguet 31029 TOULOUSEVENDILOG Siren 453 196 370 100 100ZI Nord 32 R Galilée 13200 ARLES CEMGA Logistics Siren 484 833 876 100 10055 avenue Louis Breguet 31029 TOULOUSEAIXOR Logistics Siren 379 852 742 100 10055 avenue Louis Breguet 31029 TOULOUSECOPAL Logistics Siren 484 833 884 100 10055 avenue Louis Breguet 31029 TOULOUSESERVICES GROUPE NORBERT DENTRESSANGLE Siren 309 645 539 100 100 100 100 FLes Pierrelles 26240 BEAUSEMBLANT AIR ND Siren 380 397 695 100 100 100 100 FLes Pierrelles 26240 BEAUSEMBLANT ALVI Siren 378 525 182 (merger with the company SONECOVI) 100 100ZAC de l’Anjoly Ilot n°384 13127 VITROLLESND DEUTSCHLAND HOLDING (Germany) 100 100 100 100Nikolaus Otto Str. 6 Postfach 630 46282 DORSTENND FORMATION Siren 400 646 386 100 100 100 100Les Pierrelles 26240 BEAUSEMBLANT ND GESTION Siren 440 339 265 100 100 100 100Les Pierrelles 26240 BEAUSEMBLANT ND HOLDINGS (UK) 100 100 100 100 GBGreenfold Way commerce park Greater Manchester WN7 LEIGH
2005 FINANCIAL REPORT 114
ND TRANSPORTS LTD (UK) 100 100 100 100 GBGreenfold Way commerce park Greater Manchester WN7 LEIGH ND IBERICA (Spain) 100 100 100 100 ESPCalle Buena Ventura Munoz 13-15 entresuelo 2A 08018 BARCELONAND INFORMATIQUE Siren 403 283 591 100 100 100 100Les Pierrelles 26240 BEAUSEMBLANT ND LOCATION Siren 329 414 858 100 100 100 100 FLes Pierrelles 26240 BEAUSEMBLANT ND MAINTENANCE Siren 378 619 209 100 100 100 100Les Pierrelles 26240 BEAUSEMBLANT ND SERVICES Siren 323 016 766 100 100 100 100Les Pierrelles 26240 BEAUSEMBLANT NDT Siren 386 220 123 100 100 100 100 FLes Pierrelles 26240 BEAUSEMBLANT SONECOVI Siren 315 199 448 100 100 100 100 FZone Portuaire Avenue de Rhone 69360 TERNAYTEXLOG Siren 424 670 321 100 100 100 100Les Pierrelles 26240 BEAUSEMBLANT OMEGA III Siren 487 565 012 100 100Les Pierrelles 26240 BEAUSEMBLANT OMEGA IV Siren 487 564 973 100 100Les Pierrelles 26240 BEAUSEMBLANT OMEGA V Siren 487 565 046 100 100Les Pierrelles 26240 BEAUSEMBLANT ND FRANCHISE Siren 479 885 717 100 100 FLes Pierrelles 26240 BEAUSEMBLANT LOCAD 98 Siren 417 625 860 100 100Les Pierrelles 26240 BEAUSEMBLANT LOCAD 99 Siren 422 184 358 100 100Les Pierrelles 26240 BEAUSEMBLANT LOCAD 01 Siren 433 062 619 100 100Les Pierrelles 26240 BEAUSEMBLANT LOCAD 02 Siren 441 333 432 100 100Les Pierrelles 26240 BEAUSEMBLANT LOCAD 03 Siren 445 037 948 100 100Les Pierrelles 26240 BEAUSEMBLANT LOCAD 04 Siren 452 071 467 100 100Les Pierrelles 26240 BEAUSEMBLANT LOCAD 05 Siren 452 071 467 100 100Les Pierrelles 26240 BEAUSEMBLANT REAL ESTATE SCI GYVES Siren 351 922 257 (merger with the company SONECOVI) 100 100ZAC de l’Anjoly Ilot n°384 13127 VITROLLESSCI IMMOTRANS Siren 333 600 625 100 100 100 100 FLes Pierrelles 26240 BEAUSEMBLANT SCI LA TARNOSIENNE Siren 410 082 077 100 100 100 100Les Pierrelles 26240 BEAUSEMBLANT SCI TOURS TRANSIT Siren 349 020 354 100 100 100 100Les Pierrelles 26240 BEAUSEMBLANT SCI TRANSGEDO Siren 345 318 331 100 100 100 100Les Pierrelles 26240 BEAUSEMBLANT SNC BRIVE TRANSIT Siren 423 803 758 100 100 100 100Les Pierrelles 26240 BEAUSEMBLANT SNC CAVAILLON ENTREPOTS Siren 334 719 671 100 100 100 100Les Pierrelles 26240 BEAUSEMBLANT SNC PORT DE BOUC Siren 384 375 515 100 100 100 100Les Pierrelles 26240 BEAUSEMBLANT SCI IMOTRANS Siren 414 322 396 100 100ZI du Brezet Rue Pierre Boulanger 63100 CLERMONT-FERRANDSCI LOGIS TRANS EUROPE Siren 353 565 963 100 100ZI du Brezet Rue Pierre Boulanger 63100 CLERMONT-FERRANDSCI LES VOLCANS Siren 339 504 052 100 100ZI du Brezet Rue Pierre Boulanger 63100 CLERMONT-FERRAND
2005 FINANCIAL REPORT 115
aa) Commitments and contingenciesThe Group’s commitments break down as follows:
Commitments given:• Bank guarantees
Bank guarantees amounted to K€ 15,528 on 31 December 2005, compared with K€ 2,620 on 31 December 2004 and K€ 8,014 on31 December 2003.
The Group had issued comfort letters to various partners in the sum of K€ 1,961 on 31 December 2005, against K€ 5,478 on31 December 2004 and K€ 4,432 on 31 December 2003.
• Commitments for property rentsCommitments for property lets amounted to K€ 273,108. These concern rents falling due between 1 January 2006 and the earliest
legally possible opportunity of withdrawing from the lease agreement.The schedule is as follows:
In K€
- one year 70,142 years one to five 178,090 more than five years 24,876
• Financial liability commitmentsIn June 2003, the Group took out a K€ 7,578 loan over 60 months (of which K€ 3,789 was outstanding on 31 December 2005). This
financing was subject to a maximum consolidated debt to equity gearing ratio of 100 %, excluding special purpose entities. This clause was removedfrom the contract in August 2005.
• Vehicle commitmentsOperating lease commitments not consolidated on the balance sheet on 31 December 2005 equalled K€ 54,966 and could be broken
down as follows:In K€
- one year 16,646 years one to five 30,817more than five years 7,503
• Individual training right commitmentsAn accumulated total of 336,418 training hours for individual training rights have been acquired by employees. No applications were
received from employees in the financial year under review.
• Minority interest purchase commitmentsThe minority shareholders in the Group's 90 % owned subsidiary Thier Gmbh have a put option to sell the remaining 10 % as from
1 July 2008. The acquisition price of these minority interests varies on the basis of criteria set out in the contract and may not be less than K€ 1,715or more than K€ 2,369.
Pursuant to paragraph 23 of IAS 32, the Group recognised a debt on 1 January 2005 to represent such a purchase commitment inrespect of one globally consolidated subsidiary.
With IASs 32 and 39 being applied prospectively, the debt shall be discounted as from 1 January 2005.On this basis, the discounted liability totals K€ 1,411.This accounting treatment may be modified to take into account future developments relating to the standards.
Commitments received:• Commitments from manufacturers
The Group benefits from firm vehicle buy-back commitments from the manufacturers of some of its motor vehicles. On 31 December2005, these commitments, involving the financing structures of the French special purpose entities, were estimated at K€ 41,940.
• Liabilities guaranteesThe Group benefits from liabilities guarantees in relation to the acquisition of Loget et Jacquemain, Dicivrac, Pont Monthion, Cidem,
Venditelli, Vendilog and the activities purchased from TNT Logistics France.
• BanksIn June 2003, the Group obtained an opening of credit that was still unused in a residual amount of K€ 21,875 on 31 December 2005.This financing is subject to a maximum consolidated debt to equity gearing ratio of 100 % excluding the special purpose entities, as well as a
Group undertaking not to dispose of any subsidiaries, with the exception of Stockalliance.
2005 FINANCIAL REPORT 116
bb) Events after the balance sheet dateOn 16 January 2006, the Executive Board authorised the company Groupe Norbert Dentressangle S.A. to conduct a capital reduction in the amount of 160,913
securities through the cancellation of treasury shares.Subsequent to this operation, the Company's capital amounts to € 19,567,986, that is, 9,783,993 shares each with a face value of € 2.
IV - TRANSITIONAL NOTE ON CHANGEOVER TO IFRS
Reconciliation of December 2004 income statement
INCOME STATEMENT
n K€ 31/12/2004 31/12/2004
French Finance IFRS 2 IAS 16 IAS 17 IAS 19 IAS 36 Foreign- IAS/IFRS accounting lease Share- Cancellation of Capitalised Pensions and Cancellation exchange
principles under depreciation based deferred finance retirement of GW amortn differencesIAS/IFRS period payment expenses leases and impairment
presentation test methods
Net revenue 1,303,440 1,303,440Operating expenses before allowances and reversals (1,178,414) (485) 6 1,129 (10) (1,177,774)Allowances and reversals (60,725) 940 26 (901) 51 5 (60,604)n EBITA 64,301 940 (485) 32 228 51 0 (5) 65,062
Impairment of goodwill (4,965) 3,867 10 (1,088)n EBIT 59,336 940 (485) 32 228 51 3,867 5 63,974
Net finance costs (7,296) (234) (5) (7,535)Discontinued operations 2,029 2,029n GROUP INCOME/(LOSS) BEFORE TAX 54,069 940 (485) 32 (6) 51 3,867 0 58,468
Income tax expense (18,125) (328) (10) 3 (17) (18,477)Share of profit of associates 264 264
n NET INCOME/(LOSS) 36,208 612 (485) 22 (3) 34 3,867 0 40,255
Minority interests (46) (46)
n GROUP NET INCOME/(LOSS) 36,162 612 (485) 22 (3) 34 3,867 0 40,209
2005 FINANCIAL REPORT 117
RECONCILIATION OF BALANCE SHEET ON 31.12.2004 – IG63 FORMAT
ASSETS
n K€ 31/12/2004 31/12/2004 01/01/2005
French Finance IFRS 2 IAS 16 IAS 17 IAS 19 IAS 36 IAS/IFRS IAS 39 TOTALaccounting lease Share Cancellation Capitalised Pensions Cancellation IAS 32
principles under depreciation options of deferred finance and retirement of GW amortn IAS/IFRS period expenses leases and impairment
presentation test methods
Goodwill on acquisition 53,199 2,311 55,510 900 56,410Intangible assets 6,229 6,229 6,229Property, plant and equipment 350,189 445 (167) 3,564 354,031 354,031Investments in associates 710 710 710Other non-current financial assets 16,464 16,464 16,464Deferred tax assets 8,214 (328) (10) 108 281 8,265 297 8,562
n NON-CURRENT ASSETS 435,005 117 0 (177) 3,672 281 2,311 441,209 1,197 442,406Inventories 5,955 5,955 5,955Trade receivables 286,118 286,118 286,118Other receivables 65,937 65,937 65,937Cash and equivalents 159,015 159,015 159,015
n CURRENT ASSETS 517,025 0 0 0 0 0 0 517,025 0 517,025Non-current assets held for sale n TOTAL ASSETS 952,030 117 0 (177) 3,672 281 2,311 958,234 1,197 959,431
EQUITY AND LIABILITIES
n K€ 31/12/2004 31/12/2004 01/01/2005
French Finance IFRS 2 IAS 16 IAS 17 IAS 19 IAS 36 IAS/IFRS IAS 39 TOTALaccounting lease Share Cancellation Capitalised Pensions Cancellation IAS 32
principles under depreciation options of deferred finance and retirement of GW amortn IAS/IFRS period expenses leases and impairment
presentation test methods
Share capital 19,533 19,533 19,533Share premiums 19,116 19,116 19,116Treasury shares 0 0Financial instrument revaluation reserve 0 0Foreign-exchange differences (631) 4 (627) (627)Consolidated reserves 128,436 (495) 485 (199) (262) (1,264) (1,556) 125,145 (552) 124,593Net income/(loss) for the financial year 36,162 612 (485) 22 (3) 34 3,867 40,209 40,209Minority interests 511 511 (511) 0
n EQUITY 203,127 117 0 (177) (261) (1,230) 2,311 203,887 (1,063) 202,824Long-term borrowings 164,892 5,195 170,087 170,087Long-term provisions 17,517 1,910 19,427 19,427Deferred tax liabilities 37,918 (399) 37,519 37,519
n NON-CURRENT LIABILITIES 220,327 0 0 0 5,195 1,511 0 227,033 0 227,033
Short-term liabilities 0 0Trade payables 197,384 197,384 197,384Other payables 172,012 172,012 1,411 173,423Debts 100,666 (1,262) 99,404 849 100,253Banks 58,514 58,514 58,514
n CURRENT LIABILITIES 528,576 0 0 0 (1,262) 0 0 527,314 2,260 529,574Liabilities directly associated
with non-current assets held for sale
n TOTAL EQUITY AND LIABILITIES 952,030 117 0 (177) 3,672 281 2,311 958,234 1,197 959,431
2005 FINANCIAL REPORT 118
RECONCILIATION OF BALANCE SHEET ON 01.12.2004 – IG63 FORMAT
ASSETSn K€ 01/01/2004 01/01/2004
French accounting Restatement for Finance IAS 16 IAS 17 IAS 19 IAS 36 IAS/IFRSprinciples using pro forma special lease Cancellation Capitalised Pensions and Cancellation
IAS/IFRS presentation purpose entities depreciation of deferred finance retirement of GW amortn methods period expenses leases impairment test
Goodwill 58,155 (1,556) 56,599Intangible assets 3,582 3,582Property, plant and equipment 207,609 159,213 (495) (199) 3,253 369,381Investments in associates 435 435Other non-current financial assets 17,311 17,311Deferred tax assets 5,543 (838) 112 693 5,510
n NON-CURRENT ASSETS 292,635 158,375 (495) (199) 3,365 693 (1,556) 452,818Inventories 5,521 5,521Trade receivables 268,046 268,046Other receivables 59,116 2,642 61,758Cash and equivalents 130,017 969 130,986
n CURRENT ASSETS 462,700 3,611 0 0 0 0 0 466,311Non-current assets held for sale
n TOTAL ASSETS 755,335 161,986 (495) (199) 3,365 693 (1,556) 919,129
EQUITY AND LIABILITIES n K€ 01/01/2004 01/01/2004
French accounting Restatement for Finance IAS 16 IAS 17 IAS 19 IAS 36 IAS/IFRSprinciples using pro forma special lease Cancellation Capitalised Pensions and Cancellation
IAS/IFRS presentation purpose entities depreciation of deferred finance retirement of GW amortn methods period expenses leases impairment test
Share capital 15,566 15,566Share premiums 22,111 22,111Treasury shares 0Financial instrument revaluation reserves 0Foreign-exchange differences (513) 13 (500)Consolidated reserves 105,531 1,832 (495) (199) (262) (1,264) (1,556) 103,587Net income/(loss) for the financial year 27,174 0 27,174Minority interests 465 465
n EQUITY 170,334 1,832 (495) (199) (249) (1,264) (1,556) 168,403Long-term borrowings 87,082 159,539 3,614 250,235Long-term provisions 21,140 1,957 23,097Deferred tax liabilities 42,859 424 43,283
n NON-CURRENT LIABILITIES 151,081 159,963 0 0 3,614 1,957 0 316,615Short-term liabilities 0Trade payables 204,699 (15,468) 189,231Other payables 143,134 5,093 148,227Debts 38,231 38,231Banks 47,856 10,566 58,422
n CURRENT LIABILITIES 433,920 191 0 0 0 0 0 434,111Liabilities directly associated with non-current assets held for sale
n TOTAL EQUITY AND LIABILITIES 755,335 161,986 (495) (199) 3,365 693 (1,556) 919,129
2005 FINANCIAL REPORT 119
a) General context for introduction of IFRSIn accordance with the European Regulation 1606/2002 of 19 July 2002 on international accounting standards, the Norbert Dentressangle Group prepared
its consolidated financial statements for the year ended 31 December 2005 under the applicable IAS/IFRS system on that date as adopted by the European Union.The first accounts published are the 2005 consolidated statements (including those relating to the first half of the year), presented for comparison purposes
with those of 2004 prepared under the same system.In accordance with the recommendation of France's Financial Market Authority (Autorité des Marchés Financiers, or “AMF”) on disclosures during the
changeover, the Norbert Dentressangle Group has prepared the following financial information for 2004 on the transition to IAS/IFRS:
- a reconciliation between the income statement under French standards on 31 December 2004 and the income statement under IFRS;- a reconciliation between the balance sheet under French standards and the opening balance sheet under IFRS on 1 January 2004; and- a reconciliation between the balance sheet on 31 December 2004 under French standards and one under IFRS.
This 2004 financial information was prepared using IAS/IFRS and the related interpretations that the Norbert Dentressangle Group considers must be appliedin its consolidated financial statements, as adopted by the European Union on 31 December 2005.
The basis for preparing the 2004 financial information described below therefore results from:- obligatorily applicable IFRS and interpretations on 31 December 2005 as known at this date;- the outcome expected by the Group on this date to projects in progress and technical questions being deliberated by the IASB and IFRIC and possibly
applicable on the issue of the consolidated financial statements for 2005;- choices and exemptions used that the Group selected for preparing its first IFRS-compliant consolidated financial statements for 2005.
Some of these standards may be subject to changes or interpretations of which the application may be retrospective. As a result of these changes, the Groupmay restate the 2004 and 2005 consolidated financial statements subsequently to comply with IFRS.
b) Presentation of standards and options applied for preparing first IFRS numerical informationThe Group has adopted the standards forming part of the obligatorily applicable stable platform for periods beginning as from 1 January 2005.
The IFRS affecting the Group accounts are as follows, with the effects presented in each note appearing net of deferred taxes:
• IFRS 1: First-time adoption of IFRSThe Norbert Dentressangle Group has chosen the following options defined in IFRS 1:- Business combinations prior to 1 January 2004 have not been restated;- Property, plant and equipment is measured using the amortised historical cost method;- Actuarial gains and losses concerning post-employment benefits are recognised on 1 January 2004 with an offsetting entry in consolidated equity;- The retrospective nature of share-based payment shall only be applied for equity instruments granted after 7 November 2002 of which the definitive vesting
date is after 1 January 2005;- IASs 32 and 39 are applied as from 1 January 2005,- Foreign-exchange differences have been maintained in the opening balance sheet.
• IFRS 2: Share-based paymentBenefits granted to Group employees and taking the form of equity instruments in Group companies allotted on preferential terms are henceforth considered
an addition to other remuneration and recognised in expenses at the fair value recorded on the allotment date, with an offsetting entry in equity.IFRS 2 is obligatory for financial periods beginning as from 1 January 2005. The Group did, meanwhile, decide to adopt IFRS 2 early for the year ended
31 December 2004. It has thus applied IFRS 2's transitional provisions regarding deferred remuneration granted in the form of equity instruments allotted after 7 November 2002.These benefits include four plans falling in the scope of IFRS 2, with the other plans being before the date of retrospective application of the standard:- the warrant plan allotted on 30 June 2003 (retrospective application); and- the share option plans allotted on 29 March 2004, 9 September 2004 and 13 December 2004.
n K€ 01/01/2004 31/12/2004
Net position 485Net income (485)
• IFRS 3: Business combinationsGoodwillThe Norbert Dentressangle Group has applied IFRS 3 as from 1 January 2004. Goodwill has therefore no longer been amortised on a straight-line basis since
1 January 2004.
2005 FINANCIAL REPORT 120
Acquisition of minority interests after the date of acquiring controlThe Norbert Dentressangle Group has chosen to recognise the additional goodwill as goodwill itself.
In addition, in accordance with IAS 32, the parent company having agreed a put option with minority interests in one subsidiary, asfrom 1 January 2005 it has recognised a debt in the estimated amount of the put option's exercise price, a debt that has been discounted to the likelysettlement date.
As a result, the Norbert Dentressangle Group has recognised this debt with an offsetting entry for its carrying amount in minority interestsand another in goodwill for the difference. Any subsequent variation in the put exercise price shall be recognised through an adjustment of goodwill.
Goodwill is subject to an annual impairment test by Cash Generating Unit, or "CGU". Goodwill impairment is recognised in theoperating results when the carrying amount of a CGU exceeds its value in use, that is, the discounted value of future cash flows.
No previous badwill existed in the opening balance sheet.
Lastly, as referred to above, the Group has chosen not to restate business combinations from before 1 January 2004.
• IAS 1: Presentation of Financial StatementsPursuant to IAS 1, the Group has chosen a balance sheet presentation distinguishing between current and non-current assets and
liabilities.
Captions not appearing directly, such as current and deferred tax assets and liabilities, are referred to in the supplementary notes.
In parallel, captions not appearing directly on the income statement, such as amortisation, depreciation and provisions, are also referredto in the separate notes.
The Group has chosen to adopt the "by nature" income statement format.
• IAS 7: Cash Flow StatementsThe Group has decided to present its cash flow statements for operating activities using the indirect method. This presentation does
not differ materially from the previous form.The opening and closing cash amounts consist of bank accounts (available balances and overdrafts), cash at hand, time deposits and
UCITS investments recognised under IAS 7 (less than three months and not bearing risk).
• IAS 12: Income taxesDeferred taxes are calculated using methods similar to those used in French standards. Taxes arising from restatements for the transition
to IFRS on 1 January 2004 are taken to equity.
• IAS 16: Property, plant and equipmentThe Group has decided to value the vehicles it uses at historical amortised cost.On each balance sheet date, the Group assesses whether there are signs that an asset may have experienced impairment. If signs of an
impairment loss exist, the Group estimates the asset's recoverable value.If an asset's carrying amount exceeds its recoverable value, it is considered as having experienced an impairment loss and additional
impairment is recognised.For all other property, plant and equipment meeting the definitions in the standard, the Group has chosen the historical amortised cost
method.The forms and periods have not changed in comparison with the French system.
n K€ 01/01/2004 31/12/2004
Net position (199) (199)Net income/loss 22
• IAS 17: LeasesIAS 17 distinguishes between operating leases and finance leases. To classify all its contracts, the Norbert Dentressangle Group reviewed
them based on the financial reality of the transaction rather than the legal form of the contract. Certain operating leases resulting in the transfer ofsubstantially all risks and benefits from the lessor to the lessee have been reclassified as finance leases.
2005 FINANCIAL REPORT 121
n K€ 01/01/2004 31/12/2004
Net position (262) (262)Net income/loss (3)
• IAS 19: Employee BenefitsThe Norbert Dentressangle Group already provisioned substantially all its employee commitments under French standards.The actuarial method used is that of projected unit credit.The actuarial assumptions are based on the discount rate, revenue, expected long-term inflation, growth in salaries and welfare costs,
mortality and the expected period of service.As referred to above, actuarial gains and losses prior to 1 January 2004 are taken to equity in the opening balance sheet on 1 January
2004.
n K€ 01/01/2004 31/12/2004
Net position (1264) (1264)Net income/loss 34
• IAS 27 – SIC 12: Special purpose entitiesAs a result of the entry into force of France's Financial Security Act in August 2003 (Loi de Sécurité Financière), as well as the new
wording of Regulation Nº 99-03 of the French Accounting Regulation Committee (Comité de Réglementation Comptable, or "CRC"), the Group hasfor the first time globally consolidated the French special purpose entities serving to finance the French road tractors and financing vehicles abroadusing the same principles.
IAS 27 is based on the same criteria (decision-making authority and majority of economic benefits and risks) and is applicable to the Group.
• IASs 32 and 39: Financial instrumentsThe Group has chosen to apply IASs 32 and 39 as from 1 January 2005. In this respect, it presents a reconciliation between 31
December 2004 under IFRS (excluding IASs 32 and 39) and 1 January 2005 (with IASs 32 and 39) for the income statement and balance sheet.Treasury shares are recognised as a reduction to equity, whatever their purpose. This method was already applied before the
introduction of IFRS.The impact of the first-time adoption of these standards can be summarised as follows, after tax effects:- Recognition of the purchase commitment for the minority interests in Thier (cancellation of K¤ 511 in minority inter ests and
recognition of a K¤ 411 debt and K¤ 900 goodwill).- Recognition of the fair value of cash flow hedges with a net effect of K¤ 552 on the net situation.
n K€ 01/01/2004 01/01/2005
Net position (1,063)Net income/loss
• IAS 28 and IAS 31These standards have had little effect on the scope of consolidation and the consolidation method for the various companies therein.Jointly controlled companies are consolidated proportionally.
• IAS 36IAS 36 defines the procedures an enterprise must follow to ensure that the net carrying value of its assets does not exceed their
recoverable amount, that is, the amount that would be recovered from their use or sale.
Apart from goodwill and intangible assets with an indefinite life that must be subject to systematic annual impairment tests, therecoverable amount of an asset is estimated each time there are signs it may have experienced an impairment loss.
The recoverable amount of an asset is the larger of the fair value less costs to sell and its value in use.
The net sale price is the amount that can be obtained from selling an asset in an arm's length transaction between informed and willingparties, less costs of disposal.
The value in use is the discounted value of the estimated future cash flows expected from the continued use of the asset and from itsdisposal at the end of its economic life.
The recoverable amount is estimated for each asset individually.If this is not possible, the assets are regrouped by cash generating unit (CGU) for which the recoverable amount can then be determined.
2005 FINANCIAL REPORT 122
A CGU is the smallest asset group of which the continued use generates cash inflows largely independent of those generated by otherassets or group of assets.
For this purpose, all profit centres arising from past acquisitions of companies have been identified and the developments in the relatedassets followed.
The recoverable amount of a CGU is the larger of its fair value less costs to sell and the value in use.
The value in use is determined from cash flows estimated based on plans or budgets.These cash flows are projected over five years in accordance with the historical organic growth rates observed for the Group or a specific
business plan if one exists.
The residual value of a CGU is a multiple of the last cash flow.The discount rate is based on a level calculated for the entire Group. It is determined from intrinsic market data and backed up by
financial analysts.The risk component of this rate has been maintained for the Logistics and Transport businesses.
The recoverable amount is then compared to the carrying amount of the CGU.
If this amount is greater than the net carrying amount of the CGU on the balance sheet date, no impairment is recorded.If on the other hand, this value is less than the net carrying amount, impairment is recognised for the difference and this must be
recorded in priority on the goodwill, with such impairment being considered definitive.
For other intangible and tangible assets with a limited economic life, a previously recognised impairment loss can be reversed if therehas been a change in the estimates used to determine the recoverable amount since the last time an impairment loss was recognised. If so, the carryingamount of the asset is increased to its recoverable amount. A carrying amount increased due to a reversal of an impairment loss should not exceed thecarrying value that would have applied net of depreciation if no impairment loss had been recognised for these assets in the course of prior periods.Impairment loss reversals are recognised in results, unless the asset is recognised at a revalued amount, in which case the impairment loss is consideredas a positive revaluation. After an impairment loss reversal is recognised, the allowances for amortisation or depreciation are adjusted for future periodsso that the revised carrying amount of the asset, reduced by any possible residual value, is apportioned systematically over the remaining economiclife.
For the purposes of the transition, the Group performed a test in relation to 1 January 2004.The methodology applied in respect of IAS 36 is slightly different from that which the Group used previously in the French system.
The main difference is in the definition of a Cash Generating Unit and the valuation methods for future cash flows.
n K€ 01/01/2004 31/12/2004
Net position (1556) (1556)Net income/loss 3,867
2005 FINANCIAL REPORT 123
REPORT OF THE STATUTORY AUDITORS ON THECONSOLIDATED FINANCIAL STATEMENTS
FINANCIAL YEAR ENDED 31 DECEMBER 2005
Dear Shareholders,
In performance of the task entrusted to us by the General Meetings, we have audited the accompanying consolidated financialstatements of Groupe Norbert Dentressangle S.A. for the financial year ending on 31 December 2005.
The consolidated financial statements were established by the Executive Board. Our responsibility is to express an opinion on thesefinancial statements based on our audit work. These financial statements have been prepared for the first time in accordance with the IFRS systemadopted by the European Union. For comparison purposes, they include information relating to 2004 restated using the same rules, except forIASs 32 and 39, which are only applied by the Company as from 1 January 2005 pursuant to the option offered by IFRS 1.
I. Opinion on the consolidated financial statementsWe conducted our audit in accordance with the professional standards applicable in France. These standards require that we perform
the audit so as to obtain reasonable assurance that the consolidated financial statements are free of any material misstatement. An audit includes theexamination, by means of selective tests, of the documentation supporting the information contained in the financial statements. It also includes anevaluation of the accounting principles applied and any significant estimates made in preparing the financial statements, as well as an evaluation oftheir presentation as a whole. We believe that our audit provides a reasonable basis for our opinion expressed below.
We certify that with regard to the IFRS system adopted by the European Union the consolidated financial statements for the year areaccurate and regular and present a true and fair view of the net worth, financial position and results of the companies and persons subject toconsolidation.
II. Justification of our evaluationsIn application of the provisions of article L.823-9 of the Commercial Code regarding the justification of our evaluations, we bring
to your attention the following:
In preparing its financial statements, the Group made certain estimates and assumptions to determine goodwill items and to valuethe recoverable amount of non-current assets, as well as contingent liabilities as part of business combinations and provisions for liabilities andcharges. We examined all the documentation available for the entirety of these estimates and verified the reasonableness of the assumptions usedand resulting valuations.
Assessments thus made constitute part of our audit of the consolidated financial statements taken as a whole and so contributed toour opinion expressed in the first section of this report.
III. Specific verificationsIn accordance with professional standards applicable in France, we also examined the information presented in the Group’s
management report.
We have no comment to make as to the accuracy of this information or its consistency with the consolidated financial statements.
Lyon, 29 March 2006
The Statutory Auditors
Alain Bonniot & Associés Alain Bonniot
Ernst & Young AuditDaniel Mary-Dauphin
2005 FINANCIAL REPORT 124
ASSETS
n K€ 31/12/2005 31/12/2004 31/12/2003
Gross amount 511 493 1,103Amortisation and impairment (505) (493) (1,102)
n INTANGIBLE ASSETS 6 0 1
Gross amount 79 11 91Depreciation and impairment (13) (8) (64)
n PROPERTY, PLANT AND EQUIPMENT 66 3 27
Gross amount 181,356 178,114 177,907Impairment 0 0 0
n FINANCIAL NON-CURRENT ASSETS 181,356 178,114 177,907
n TOTAL NON-CURRENT ASSETS 181,428 178,117 177,935
Trade receivables 4,708 2,767 5,497Other receivables 36,280 4,028 24,502Cash 2,754 46,342 23,183
n TOTAL CURRENT ASSETS 43,742 53,137 53,182
n TOTAL ASSETS 225,170 231,254 231,117
EQUITY AND LIABILITIES
n K€ 31/12/2005 31/12/2004 31/12/2003
Share capital 19,847 19,533 15,566Reserves 137,975 137,223 128,827Net income/(loss) for the financial year 14,991 6,029 18,023
n EQUITY 172,813 162,785 162,416
Provisions for liabilities and charges 0 68 44Provisions for tax 0 0 0
n PROVISIONS AND OTHER LONG-TERM LIABILITIES 0 68 44
Bond loan 0 0 0Debt 0 0 0
n LONG-TERM BORROWINGS 0 0 0
Debt 0 0 0Convertible bond loan 0 0 0Trade payables 5,123 5,330 4,425Other payables 19,298 28,335 27,455Banks 27,936 34,736 36,777
n CURRENT LIABILITIES 52,357 68,401 68,657
n TOTAL EQUITY AND LIABILITIES 225,170 231,254 231,117
SUMMARY OF THE COMPANY FINANCIAL STATEMENTSAND NOTES
BALANCE SHEET(before appropriation of income)
2005 FINANCIAL REPORT 125
INCOME STATEMENT
n K€ 31/12/05 % 31/12/04 % 31/12/03 %
n NET REVENUE 21,157 100 22,523 100 26,869 100
Operating expenses (22,546) (106.6) (19,895) (88.3) (21,387) (79.6)
n INCOME FROM OPERATIONS (1,389) (6.6) 2,628 11.7 5,482 20.4
Other operating revenues and expenses 88 0.4 31 0.1 51 0.2
n OPERATING PROFIT (1,301) (6.1) 2,659 11.8 5,533 20.6
Share of profit of associates and subsidiaries 612 2.9 341 1.5 856 3.2Net financial costs 9,889 46.7 5,778 25.7 8,431 31.4Non-recurring items 32 0.2 673 3.0 (111) (0.4)
n INCOME BEFORE TAX 9,232 43.6 9,451 42.0 14,709 54.7
Income taxes 5,759 27.2 (3,422) (15.2) 3,314 12.3
n NET INCOME 14,991 70.9 6,029 26.8 18,023 67.1
EQUITY AND CHANGES IN NET POSITION
Changes in the net position over the financial year have been as follows:
n K€ 31/12/04 Appropriation Payment Other Net 31/12/05 before of 2004 net of movements income/(loss) before
appropriation income/(loss) dividends for 2005 appropriation
Capital 19,533 313 19,846Share premiums 10,833 2,747 13,580Legal reserve 1,506 302 50 1,858Non-restricted reserves 85,011 989 86,000Retained earnings 31,461 (3,275) 28,186Merger premium 3,878 3,878Contribution premium 4,394 4,394Warrants 11 (10) 1Dividends 0 8,013 (8,013) 0Reserves for long-term capital gains 50 (50) 0Restricted reserves 79 79Net income/(loss) 2004 6,029 (6,029) 0Net income/(loss) 2005 14,991 14,991
n NET POSITION 162,785 0 (8,013) 3,050 14,991 172,813
We remind you that the net income for 2004 was appropriated by the General Meeting in accordance with the proposals of the ExecutiveBoard, that is, a dividend of € 0.84 per share was distributed.
On 31 December 2005, the share capital was fully paid-up and represented by 9,923,206 shares each with a face value of € 2.00.
2005 FINANCIAL REPORT 126
n K€ 31/12/01 31/12/02 31/12/03 31/12/04 31/12/05
CAPITAL AT YEAR-END Share capital 15,544,784 15,544,784 15,565,930 19,533,412 19,846,612Number of ordinary shares 9,715,490 9,715,490 9,728,706 9,766,706 9,923,306Number of non-voting preference shares Maximum number of shares to be created: By bond conversion 0 0 0 0 0By subscription rights 255,300 415,500 279,200 234,900 75,300
OPERATIONS AND INCOME/(LOSS) Revenue (exc. tax.) 18,636,258 23,244,881 26,869,366 22,523,332 21,156,880Income/(loss) after tax, profit-sharing and allowancesfor amortisation, depreciation and provisions 24,680,167 10,658,193 14,003,662 9,477,091 9,180,875Income tax (2,403,478) (2,673,089) (3,314,326) 3,421,813 (5,758,846)Employee profit sharing Net income/(loss) 30,064,904 13,428,173 18,023,274 6,028,891 14,990,689Income distributed 5,829,294 6,217,913 6,810,094 8,204,033 8,707,754*
EARNINGS PER SHARE Income/(loss) after tax and investments and before allowances for amortisation, depreciation and provisions 2.79 1.37 1.83 0.64 1.55Income/(loss) after tax, investments and allowancesfor amortisation, depreciation and provisions 3.09 1.38 1.91 0.63 1.56Dividend paid 0.60 0.64 0.70 0.84 0.89*
EMPLOYEES Average number of employees 43 30 30 26 29Total payroll 2,994,018 2,497,753 3,087,130 3,015,324 3,876,452Amounts paid to social security agencies 1,065,339 903,856 1,100,735 1,069,359 1,400,200
* Proposed to the General Meeting on 23 May 2006 based on the number of shares on the balance sheet date. This dividend may be increased to takeinto account new shares resulting from the exercise of subscription options in favour of employees before 15 May 2006 and shall be reduced by theamount of dividends relating to any treasury shares. It shall be distributed on 2 June 2006.
As from 2003, earnings per share are calculated by deducting the amount of the treasury shares held by the Norbert Dentressangle Group. If thismethod had been used in previous financial years, the results would have been as follows:
- Earnings after tax and before allowances 2.87 1.41 - Earnings after tax, allowances and provisions 3.19 1.42
SUBSIDIARIES AND PARTICIPATING INTERESTS
Subsidiaries Share Other % Gross Net value Current-account Guarantees Revenue Net Dividends capital equity owned value of of advances income/ collected
investment investment and loans (loss)
NDT 38,850 126,614 100 99,639 99,639 20,800 0 22,522 15,616 6,993 ND LOGISTICS 31,171 35,515 100 59,303 59,303 0 0 337,976 8,134 3,663 STOCKALLIANCE 30,569 (16,859) 99 9,962 9,962 (13,870) 0 391 323 0 OMEGA 2 1,800 (56) 100 1,800 1,800 0 0 0 (56) 0 TOTAL 102,390 145,214 170,704 170,704 6,930 0 360,889 24,017 10,656
The investment portfolio of Groupe Norbert Dentressangle S.A. is regularly valued to establish whether there is any need to allocate anallowance for impairment.
This is based on the consolidated value of the company, its present and future contribution to Group consolidated income and its presentand future capacity to generate positive cash flow.
An allowance is allocated when the valuation based on these different criteria gives rise to a value for the balance sheet securities inexcess of the company's contributive capacity.
The full company financial statements of Groupe Norbert Dentressangle S.A. and notes thereto are available upon request. Theaccompanying statutory auditors' reports refer to the abovementioned full company financial statements.
SUMMARY OF NET INCOME AND OTHER KEY COMPANY ASPECTS IN THE LAST FIVE FINANCIAL YEARS
2005 FINANCIAL REPORT 127
REPORT OF THE STATUTORY AUDITORS ON THEANNUAL FINANCIAL STATEMENTS
FINANCIAL YEAR ENDED 31 DECEMBER 2005
Dear Shareholders,
In performance of the task entrusted to us by the General Meetings, we hereby present our report for the financial year ending on31 December 2005 on:
- the audit of the accompanying annual financial statements of the company Groupe Norbert Dentressangle S.A;- the justification of our evaluations; and- the specific verifications and information required by law.
The annual financial statements were established by the Executive Board. Our responsibility is to express an opinion on these financialstatements based on our audit work.
1. Opinion on the financial statementsWe conducted our audit in accordance with the professional standards applicable in France. These standards require that we
perform the audit so as to obtain reasonable assurance that the annual financial statements are free of any material misstatement. An auditincludes the examination, by means of selective tests, of the documentation supporting the information contained in the financial statements. Italso includes an evaluation of the accounting principles applied and any significant estimates made in preparing the financial statements, as wellas an evaluation of their presentation as a whole. We believe that our audit provides a reasonable basis for our opinion expressed below.
We certify that with regard to French accounting principles and rules, the financial statements are accurate and regular and presenta true and fair view of the results of the Company’s operations for the financial year ending as well as its financial position and net worth at theend of that financial year.
2. Justification of our evaluationsIn application of the provisions of article L.823-9 of the Commercial Code regarding the justification of our evaluations, we bring to
your attention the following:
Investments in subsidiaries have been valued in accordance with the accounting methods described in the Notes.As part of our task, we reviewed the appropriateness of these accounting methods and, as regards estimates, we verified the
reasonableness of the assumptions used and the resulting valuations.
The assessments thus made constitute part of our audit of the consolidated financial statements taken as a whole and so contributedto our opinion expressed in the first section of this report.
3. Specific information and verificationsIn accordance with professional standards applicable in France, we also performed the specific verifications required by law.
We have no comment to make as to the accuracy and consistency with the financial statements of the information presented in themanagement report and the documents sent to shareholders concerning the Company’s financial position and annual financial statements.
As required by law, we have ensured that the management report contains the requisite information relating to the acquisition ofownership and controlling interests and the identity of the owners of the Company capital.
Lyon, 29 March 2006
The Statutory Auditors
Alain Bonniot & Associés Alain Bonniot
Ernst & Young AuditDaniel Mary-Dauphin
2005 FINANCIAL REPORT 128
REPORT OF THE STATUTORY AUDITORS ON REGULATED AGREEMENTS
FINANCIAL YEAR ENDED 31 DECEMBER 2005
Dear Shareholders,
In our capacity as statutory auditors, we hereby present our report on the regulated agreements.
Our remit is not to establish whether any such agreements exist but to inform you, on the basis of information we have been given, of the featuresand principle terms and conditions of those agreements of which we have been informed. We are not required to express an opinion on the usefulness or meritsof those agreements. It is incumbent on you, pursuant to the provisions of Article 117 of France’s Order in Council of 23 March 1967, to assess the interest ofentering into any such agreements with a view to approving them.
Agreements authorised during the financial yearWe have been informed of no agreement referred to in Section L.225-68 of the Commercial Code that was entered into over the course of the
financial year.
Agreements approved in previous financial years and remaining in effect in this financial yearFurthermore, pursuant to the Order in Council of 23 March 1967, we have been informed that the following agreements, approved in previous
financial years, remained in effect during the financial year ending:
1. Trademark and logoIn July 2005, Mr. Norbert Dentressangle granted to “Financière Norbert Dentressangle” the right to use the trade mark “Norbert Dentressangle”
and the logo “ND”, registered in his name and previously assigned free of charge.As in the past, the company “Financière Norbert Dentressangle” has authorised your Company to use this trademark and logo free of charge.For this purpose, on 13 July 2005, these two companies signed a trade mark licence agreement for which no charge accrues and which lasts for
three years and is renewable.
2. With the company Financière Norbert DentressangleSupply to your Company and invoicing by “Financière Norbert Dentressangle” of a range of services and in particular:- advice on development opportunities in France and abroad;- administrative assistance and support in public and other relations;- assistance to the human resources department;Total expenses recorded in this respect in the financial year ending 31 December 2005 amounted to € 1,255,700.
3. With FMV et AssociésAs part of its business alliance and external growth advisory activity, the company FMV et Associés, of which Mr. François-Marie Valentin is
manager, continued to provide assistance and advice to your Company.
Total expenses recorded in this respect in the financial year ending on 31 December 2005 were as follows:- fees for consultancy services: € 42,300;- reimbursement of actual expenses: € 10,194.
We conducted our work in accordance with the professional standards applicable in France. These standards require the performance ofprocedures intended to verify that the information supplied to us is consistent with the statements from which it is taken.
Lyon, 29 March 2006
The Statutory Auditors
Alain Bonniot & Associés Alain Bonniot
Ernst & Young AuditDaniel Mary-Dauphin
2005 FINANCIAL REPORT 129
DRAFT RESOLUTIONS PROPOSED BY THE EXECUTIVE
I - ORDINARY RESOLUTIONSFirst resolution
(Adoption of the Company’s financial statements for the financial year 2005)The General Meeting, fulfilling the quorum and majority conditions required for Ordinary Meetings, having taken note of the reports
of the Executive Board, the Supervisory Board and the Statutory Auditors, adopts in their entirety the report of the Executive Board and the companyfinancial statements for the year ending 31 December 2005, as presented, and all the operations reflected or summarised therein.
The meeting approves the management activities by the Executive Board in the financial year elapsed and takes note that no expensesas stipulated in articles 39-4 and 213 quarter of the General Tax Code have been added back for tax purposes.
Second resolution(Adoption of the consolidated financial statements for the financial year 2005)The General Meeting, fulfilling the quorum and majority conditions required for Ordinary Meetings, having taken note of the reports
of the Executive Board, the Supervisory Board and the Statutory Auditors, adopts in their entirety the report of the Executive Board and the consolidatedfinancial statements for the financial year ending 31 December 2005, as presented, and the operations reflected or summarised therein.
Third resolution(2004 agreements envisaged by article L.225-86 of the Commercial Code – this resolution corresponds to the third resolution that was submitted
to the Combined Ordinary and Extraordinary General Meeting of 24 May 2005 but could not be put to the vote due to insufficient quorum)The General Meeting, fulfilling the conditions of quorum and majority required for Ordinary Meetings, having taken note of the special
report of the Statutory Auditors on agreements in 2004 envisaged in articles L.225-86 et seq. of the Commercial Code, adopts in their entirety the termsof this report and the operations reflected therein.
Fourth resolution(Agreements for 2005 covered by Section L.225-86 of the Commercial Code)The General Meeting, fulfilling the conditions of quorum and majority required for Ordinary Meetings, having taken note of the special
report of the Statutory Auditors on agreements in 2005 envisaged in articles L.225-86 et seq. of the Commercial Code, adopts in their entirety the termsof this report and the operations reflected therein.
Fifth resolution(Appropriation of earnings)The General Meeting, fulfilling the conditions of quorum and majority required for Ordinary Meetings, adopts the appropriation of
Company income proposed by the Executive Board and resolves, as a result, that this Company income for the year of € 14,990,689.92 shall beappropriated as follows:
Income for the financial year € 14,990,689.92Plus amounts carried forward from previous years € 28,185,511.87Representing a total available amount of € 43,176,201.79Appropriated as follows:• to the statutory reserve to bring it up to 10 % of the share capital on 31 December 2005 € 126,623.67• to a special reserve account in accordance with the provisions
of article 238 bis AB of the General Tax Code € 7,166.00• to shareholders by way of dividends € 8,707,753.77• to the non-restricted reserve to bring it up to M¤ 90 € 4,000,000.00• the balance, to ‘Retained earnings” € 30,334,658.35That is, a total of: € 43,176,201.79
Accordingly, each share shall be entitled for the year to a dividend of € 0.89, fully eligible if applicable to the 40 % tax reduction envisagedin article 158.3-2ºand 4º of the General Tax Code.
This dividend shall be distributed to shareholders on 2 June 2006.The Meeting notes that the amounts of dividends per share distributed for the last three financial years and the corresponding tax credits
are as follows:
Financial Year Net amount Tax credit Allowance Number of shares2004 € 0.84 - € 0.42 9,539,7932003 € 0.70 € 0.35 - 9,490,7742002 € 0.64 € 0.32 - 9,432,558
The dividends not paid by virtue of article L.225.210 of the Commercial Code, that is, those relating to treasury shares, shall beappropriated to “Retained earnings”.
2005 FINANCIAL REPORT 130
Sixth resolution(Mandate of Alain Bonniot & Associés, Joint Statutory Auditor)The General Meeting, fulfilling the conditions of quorum and majority required for Ordinary Meetings, having taken note that the
mandate of Alain Bonniot & Associés, Regular Joint Statutory Auditor, is coming to an end, hereby resolves to re-appoint it for a period of six yearsending on the date of the General Meeting called to adopt the financial statements for the financial year ending on 31 December 2011.
Seventh resolution(Mandate of Mr. Pascal Vuaillat, Alternate Joint Statutory Auditor)The General Meeting, fulfilling the conditions of quorum and majority required for Ordinary Meetings, having taken note that the
mandate of Mr. Pascal Vuaillat, Alternate Joint Statutory Auditor, is coming to an end, hereby resolves to re-appoint him for a period of six years endingon the date of the General Meeting called to adopt the financial statements for the financial year ending on 31 December 2011.
Eighth resolution(Authorisation granted to the Executive Board to allow the Company to trade in its own shares on the share market)The General Meeting, fulfilling the quorum and majority conditions required for Ordinary Meetings, having taken note of the report of
the Executive Board and in accordance with the provisions of articles L.225-209 and L.225-210 of the Commercial Code, authorises the ExecutiveBoard to proceed with the purchase by the Company of its own shares, with a view to:
• the allotment of share purchase options or free shares to its employees and senior company officers and/or those of its relatedundertakings in the conditions and according to the arrangements required by law;
• the cancellation of shares, subject to the adoption of the Ninth Resolution, of the Extraordinary General Meeting;• the holding and remittance of shares in exchange or payment as part of external growth transactions; and• the remittance of shares to ensure coverage for debt securities convertible or exchangeable for shares within the framework of current
legislation.
The General Meeting sets the maximum purchase price at € 80 per share and the total number of shares to be purchased at 10 % of thetotal amount of shares forming the share capital at the present date, or 5 % if involving shares acquired by the Company with a view to holding andremitting them as part of external growth transactions. It is specified that the overall amount allocated to the share buyback programme may not exceed€ 77,287,944.
In the event of a capital increase through the capitalisation of reserves and allotment of free shares as well as, if applicable, a share splitor a reverse split, the € 80 price would be adjusted arithmetically in the required proportion to take into account the total number of shares establishedby the operation.
These shares may be purchased by any appropriate means on the market, off the market or over the counter, in particular through theacquisition of blocks of shares, possibly through any third party acting on behalf of the Company in accordance with the provisions of the last paragraphof Section L.225-206 of the Commercial Code. The portion of the programme that may be effected through block trading is unlimited.
Shares may be purchased at any time, save during a public offering period.
The shares acquired may be disposed of or transferred by any means on the market, off the market or over the counter.
Dividends associated with own shares shall be appropriated to retained earnings.
This authorisation is granted for a period of 18 months as of the date of this Meeting and shall expire, in any event, at the end of theGeneral Meeting called to adopt the financial statements for the financial year ending as at December 2006.
The General Meeting grants full authorisation to the Executive Board, which may delegate this to its Chairman, to enter into anyagreements, conduct any and all formalities and make any disclosures to all authorities, in particular to the AMF, and in general, to take any and allaction required to implement decisions taken within the framework of this authorisation.
This authorisation cancels and replaces that granted by the Annual General Meeting of 24 May 2005 (Eleventh Resolution) for the partunused at this date.
2005 FINANCIAL REPORT 131
II - EXTRAORDINARY RESOLUTIONS
Ninth resolution(Authorisation granted to the Executive Board for the Company to cancel its own shares)The General Meeting, fulfilling the quorum and majority conditions required for Extraordinary Meetings, having taken note of the
reports of the Executive Board, the Supervisory Board and the special report of the Statutory Auditors, pursuant to the provisions of article L.225-209of the Commercial Code and subject to adoption by the General Meeting of the Eighth Resolution relating to authorisation for the Company to conducttransactions on its own shares, authorises the Executive Board at its sole discretion and on one or more occasions to cancel all or part of the treasuryshares it holds by virtue of the authorisation for the purchase of Company shares.
This authorisation is granted for a period of 18 months as from the date of this General Meeting, with a limit of 10 % of the share capitalper period of 24 months. It shall in any case expire at the end of the General Meeting called to adopt the financial statements for the financial yearending 31 December 2006.
The General Meeting grants full authorisation to the Executive Board to settle the outcome to any objections, decide as to thecancellation of shares, record any capital reduction, record the difference between the purchase value of the shares cancelled and their face value againstshare premiums and available reserves, to amend the Articles of Association accordingly and in general, to take any appropriate measures and conductall related formalities.
Tenth resolution(Issue of warrants in favour of the persons named)The General Meeting, fulfilling the quorum and majority conditions required for Extraordinary Meetings, having taken note of the
reports of the Executive Board, the Supervisory Board and the special report of the Statutory Auditors pursuant to the provisions of article L.228-92 ofthe Commercial Code and article 155-3 of the Order in Council on Commercial Companies, having been reminded that the share capital of theCompany is fully paid-up:
- resolves to issue 115,000 warrants on Company shares (the "2006 warrants”) in favour of the current members of the Executive Boardof the Company, that is, 40,000 warrants to Mr. Jean-Claude Michel and 25,000 warrants each to Mr. Patrick Bataillard, Mr. FrançoisBertreau and Mr. Hervé Montjotin, at a unit price of € 0.50;
- resolves to waive the pre-emptive subscription rights reserved for shareholders for all the 115,000 warrants in favour of theabovementioned persons;
- resolves that each of the warrants shall give the right to an exercise price of € 51.68, including subscription to a share with € 2 facevalue and unit share premium equal to € 49.68, with these shares carrying the same rights as the previous ones except for the dateddate;
- resolves that these warrants may only be exercised if certain conditions adopted by the Supervisory Board of 9 March 2006 are met,in particular with regard to performance;
- resolves on the principle of a capital increase in a maximum nominal amount of € 230,000 through the issue of 115,000 new sharesof € 2 face value each in the event that all the warrants of which the issue is hereby authorised are exercised;
- resolves expressly to waive the pre-emptive subscription rights of shareholders to the 115,000 shares that may be issued on exerciseof the 115,000 warrants in favour of the abovementioned beneficiaries;
- resolves that the 115,000 2006 warrants may be subscribed at any time after the Executive Board conducts the issue, including up to30 September 2006. The 2006 warrants subscribed may be exercised from 1 June 2008 to 31 May 2009 inclusive; warrants notexercised in this period shall automatically become invalid;
- delegates full authorisation to the Executive Board, with possibility of sub-delegation to its Chairman, to implement the presentresolution and take all measures to protect the warrantholders in the event of financial operations concerning the Company inaccordance with legal and regulatory provisions in effect, to record share issues arising from the exercise of the warrants, to modify theArticles of Association as a result and generally take all necessary measures.
Members of the Executive Board concerned may not take part in voting on this resolution and their shares may not be taken into accountfor the calculations of the required quorum and majority.
Eleventh resolution(Share issue reserved for employees under the provisions of the Commercial code and articles L.443-1 et seq. of the Labour Code).The General Meeting, fulfilling the conditions of quorum and majority required for Extraordinary Meetings, having taken note of the
reports of the Executive Board, the Supervisory Board and the special report of the Statutory Auditors, resolves to implement a capital increase throughthe issue of a maximum of 195,500 new shares, representing 2 % of the current share capital.
This increase, in accordance with the provisions of article L.225-129-6 of the Commercial Code, shall be reserved for “members of aCompany Savings Plan”.
The new shares, with a face value of € 2 each, shall be issued for cash at a price fixed by the Executive Board.The subscription price should comply with the provisions of L.443-5 of the Labour Code.Full authorisation shall be given to the Executive Board to establish the other conditions of the reserved share issue, to conclude it
satisfactorily by at the latest 30 September 2006 and, in this event, to modify articles 6 and 7 of the Company Articles of Association as a result.Accordingly, the shareholders state expressly that they waive their pre-emptive subscription rights.
Twelfth resolution(Amendment of Article 9 of the Articles of Association “Rights attaching to each share” and of Article 23 “Deliberations of the Board - Minutes”)The General Meeting, fulfilling the quorum and majority conditions required for Extraordinary Meetings, resolves:
- to add to the first paragraph of Article 9 c) of the Articles of Association “Rights attaching to each share”: “Notwithstanding anyprovision related to legal information requirements,” such that Article 9 c) refers unambiguously to an information requirement of theArticles.
- to enable the Supervisory Board to meet using telecommunication means, in accordance with provisions of France's EconomicConfidence and Modernisation Act N°2005-842 of 26 July 2005 (Loi pour la Confiance et la Modernisation de l’Économie), replacingthe eighth paragraph of Article 23 of the Articles of Association “Deliberations of the Board - Minutes” by “for quorum and majoritycalculations, except in circumstances legally excluded, Board members participating in the meeting by means of videoconferencing andtelecommunications of which the nature and conditions of use are established in applicable regulations are considered present.”
III - COMBINED ORDINARY AND EXTRAORDINARY RESOLUTIONThirteenth resolution
(Power of attorney to carry out formalities)The bearer of a copy of this document is hereby granted full authorisation to carry out any publication or other formalities required by
law.
The Executive Board
2005 FINANCIAL REPORT 132
