MAIN FINANCIAL FIGURES DefinitionS profit and loss account (noK mill) operating revenue gross operating earnings operating earni
The World of Norske Skog 2 Skogn Follum Headquarters Saugbrugs Walsum Parenco Golbey Steti Bruck Cheongwon Hebei Jeonju Shanghai
Contents 002 008 012 016 026 034 046 4 n o r s ke s ko g A nnuA l report INTRODUCTION 005 Events of 2007 006 A demanding year MA
IntroDuCtIon Events of 2007 January l September l Construction starts on the geothermal power station at kawerau, where norske s
A demanding year by continu 2007 was and low pr ed cost pre a demandin ices in man ssure, exce g year, cha ss capacity racterise
IntroDuCtIon In 2006, we introduced an ambitious improvement programme, which aimed to improve our result by NOK 3 billion per y
MArKet The world is using ever more The world’s consumptio publication paper n of p never been developme ublication in 2007. H m
MArKet at European newsprint mills. Further temporary curtailments of 200 000 tonnes have been decided for 2008. In November 200
leader in all markets For the first time ever, norske Skog tops the list of preferred newsprint suppliers in all of the company’
MArKet Norske Skog products This overview presents the complete product range, including printing methods and production sites.
proDuCtIon few years h overcapacit profitabilit that is not Cost increa More changes necessary ses and t d Fundamental cost impr
proDuCtIon production capacities 31 December 2007 (1 000 tonnes) MIll Country newSprInt other pAper SC unCoAteD pAper lwC MAGAzI
proDuCtIon Turnaround on track proDuKSJon profit (EBiT increase th programm The profit annually b dA) by NO e gross op e – aimin
proDuCtIon reports, benchmarking and statistics, and the global know-how directory. So far, the results of NSPS are encouraging.
CApItAl MArKet Norske Sko industry, w in a capita g operates l-intensive jor e cated A turbulent year in the financial markets T
CApItAl MArKet Financing Norske Skog is working to ensure good financial flexibility through a long-term instalment structure, g
CApItAl MArKet Financial risk management activities e Norske Sko ntail a com l and finan g’s global plex f tion between money ma
CApItAl MArKet where the company’ s cash flow is positive. However, the hedging will be arranged so that financial key figure re
long-term incentive programme During the general meeting on12 April 2007, it was decided to introduce a long-term incentive prog
CApItAl MArKet Weekly volume and share price 2007 30 120 105 24 Weekly volume in NOK 90 Weekly share price 75 18 60 12 45 30 6 1
trading of the norske Skog share The company’s shares have been listed on the oslo stock exchange since 1976, and the share has
CApItAl MArKet the stock market in 2007 The all-share index on the oslo stock exchange (oslo Benchmark Index) increased by 10 pe
principal shareholders 31 December 2007 ( > 0.5% ownerShIp) JPMorgAn CHAse BAnk, gBr (noM) UnIonen As VIken skog BA sTATe sTreeT
CApItAl MArKet Key figures related to shares 2007 nominal value (nok/share) Average number of shares ex. shares held in treasury
shareholde is to create the paper Norske Sko g’s goal CorporAte GovernAnCe r values in industry. orate s the best governanc Good
CorporAte GovernAnCe entail that the board will handle the company’s contractual relationships only in exceptional cases. FREELy
nomination committee 2007: l the evaluation. The board has established an audit committee and a remuneration committee. In cases
CorporAte GovernAnCe from making a bid for the company’s shares. During the year, the board has specified principles for its beh
The members of the board halvor bjørken (53) Board member since 2000. Forest owner. Chair of the board of Allskog BA, deputy cha
CorporAte GovernAnCe Corporate management of Norske Skog Christian rynning-tønnesen (48) preSIDent AnD Ceo With norske skog from
Members of corporate bodies Number of shares as of 31 december 2007 in parentheses. CORPORATE ASSEMBLy elected by shareholders:
CorporAte GovernAnCe Articles of association for Norske Skogindustrier ASA (Last amended by the general meeting 12.04.2007) Arti
Report of the Board of Directors Norske Skog has been through another demanding year, with implementation of temporary newsprint
report of the board of Directors Europe, in addition to a stronger NOK. The operating profit before special items was NOK 1 060
ous year-end. Fixed assets (including goodwill) were reduced by NOK 8 270 million as a result of currency effects, write-downs a
report of the board of Directors result for the Asian activities. This is related to low prices in China and several other Asian
been positive through many years, and Norske Skog has become one the best in the industry in this field. The H1 factor (the numb
report of the board of Directors Liability Companies Act, the board’s declaration relating to stipulation of wages and other rem
cent of expected consumption. Such long-term contracts usually have a price-reducing effect and thus contribute to reducing the
report of the board of Directors Skog. The all-share index on the Oslo Stock Exchange increased by 10 per cent through 2007, but
NSPS has up to now been implemented at six of Norske Skog’s 18 business units. The system will be implemented at another eight b
report of the board of Directors ENVIRONMENTAL REPORTING within national laws and regulations. There have been no incidents in 2
settlement. The amount is recorded as a tax cost in the 2007 accounts. Norske Skog has previously stated that the matter could r
report of the board of Directors a group contribution totalling NOK 220 million to Klosterøya AS and Oksenøen Eiendom AS. The gr
Income Statement noK million operating revenue Distribution costs Cost of materials Change in inventories employee benefit expen
aCCounts Group Balance Sheet noK million assets Deferred tax asset other intangible assets Property, plant and equipment Investm
caSh flow Statement noK million Cash flow from operating activities Cash generated from operations Cash used in operations Cash
aCCounts Group changeS In group equIty Statement noK million equity 1 January 2005 Fair value gains financial assets net investm
1. general InformatIon norske skogindustrier AsA (“the company”) and its subsidiaries (together “the group”) produce, distribute
aCCounts Group include the carrying amount of goodwill relating to the entity sold. goodwill is allocated to cash-generating uni
Tax on current taxable profit and deferred income tax are determined using tax rates enacted or currently enacted by the balance
aCCounts Group of cash flows and thereby also utility value within the cash-generating units. significant changes in trend price
3. BuSIneSS SegmentS At 31 December 2007, the group is organised on a worldwide basis into the two main business segments newspr
aCCounts Group operatinG revenue By marKet norway europe ex norway north America south America Australasia Asia Africa total ope
4. SpecIfIcatIon of Balance Sheet ItemS 31-12-2007 inventories raw materials and other production input semi-manufactured materi
aCCounts Group Includes special benefits, company cars, interest-free loans and so forth. Based on results achieved in 2006, pai
6. penSIon coStS and oBlIgatIonS norske skog has various pension schemes. Contributions to these schemes are made in accordance
aCCounts Group partly or Fully FunDeD pension plans Projected benefit obligations Plan assets at fair value plan assets in exces
8. fInancIal ItemS FinanCial inCome Dividends received Interest income realised / unrealised gain on foreign currency other fina
aCCounts Group DeFerreD tax 2007 Fixed assets, excess values and depreciations Pensions Provisions and other liabilities FX and
11. net caSh flow from operatIonS tHe relationsHip BetWeen proFit BeFore tax anD CasH FloW From operations is sHoWn BeloW. Profi
aCCounts Group otHer intanGiBle assets Acquisition cost 1 January Additions Disposals reclassified from asset under construction
plants anD BuilDinGs Acquisition cost 1 January Additions Disposals reclassified from asset under construction reclassification
aCCounts Group assumptions applied when estimating recoverable amounts operational non-current assets and intangible assets are
CurrenCy sHares in ForeiGn suBsiDiaries oWneD By tHe parent Company norske skog golbey, golbey, France Pan Asia Paper Company Lt
aCCounts Group sHares in ForeiGn suBsiDiaries oWneD By ConsoliDateD Companies norske skog CI Ltd, Caymen Island norske skog nort
16. receIvaBleS and other non-current aSSetS 2007 Accounts receivables Provision for bad debt other receivables Prepaid VAT Curr
aCCounts Group 19. mInorIty IntereStS Minority at 1 January Changes in minority owing to sales/purchases share of net earnings/(
21. IntereSt-BearIng current lIaBIlItIeS 2007 Current bank debt Bonds total The group has unused bank overdraft facilities of no
aCCounts Group 27. other gaInS and loSSeS 2007 gains and losses on non-current tangible assets Value changes energy contracts 1)
interest rate risk - fair value hedge In order to mitigate the risk of changes in fair value of the fixed income bonds denominat
aCCounts Group exchange rate risk translation risk - net investment hedge The group accounts are presented in nok. Translation r
assets net investment hedging1) Forward contracts Cross-currency contracts total Fair value hedging2) Interest-rate swaps total
aCCounts Group per 31 DeCemBer 2007 non-derivative financial instruments Principal paym. on interestbearing debt Projected inter
Commodity risk A major part of norske skog’s global commodity demand is hedged through longterm contracts. norske skog also uses
aCCounts Group 30. provISIonS At 31 December 2007, norske skog has recognised the following major provisions in the balance shee
32. capItal rISk management The group’s objective when managing capital is to safeguard the ability to continue as a going conce
aCCounts Group 79 n or s k e s kog a n n ual r e p ort
income statement noK million operating revenue Distribution costs Cost of materials Change in inventories employee benefit expen
aCCounts norsKe sKoGinDustrier asa Balance sheet noK million assets Deferred tax asset other intangible assets Property, plant a
cash flow statement noK million Cash flow from operating activities Cash generated from operations Cash used in operations Cash
aCCounts norsKe sKoGinDustrier asa 1. accounting principles The company accounts of norske skogindustrier AsA are prepared in ac
status oF pension plans reConCileD WitH tHe BalanCe sHeet: Projected benefit obligations Plan assets at fair value estimated net
aCCounts norsKe sKoGinDustrier asa DeFerreD tax 2006 Fixed assets, excess values and depreciations Pensions Provisions and other
maCHinery anD equipment Acquisition cost 1 January Additions Disposals reclassified from asset under construction acquisition co
aCCounts norsKe sKoGinDustrier asa 8. equity paiD-in equity equity at 31 December 2006 Change in own share holding Profit/(loss)
sHareHolDers on tHe BoarD oF DireCtors elected by the shareholders kim Wahl, Bærum, (chair) Øivind Lund, Drammen (deputy chair)
aCCounts norsKe sKoGinDustrier asa 12. derivatives assets net investmet hedging 1) Forward contracts Cross-currency contracts to
lonG-term interCompany liaBilities 4346799 Canada Inc. FC Industries Ltd. Lysaker Invest As nornews As norske skog Bruck gmbH no
aCCounts norsKe sKoGinDustrier asa 16. other current assets 31-12-2007 Total prepaid expenses Derivatives 1) short-term investme
20. other gains and losses Disposal of non-current tangible assets generated a gain of nok 24 million in 2007. other gains and l
auditor’s report for 2007 We have audited the annual financial statements of norske skogindustrier AsA as of December 31, 2007,
annual General MeetinG The annual general meeting will be held at 11.00 on Thursday 24 April, 2008 at Colosseum kino, Fr. nansen
Norske Skogindustrier ASA Oksenøyveien 80 P.O Box 329 NO-1326 Lysaker Telephone: + 47 67 59 90 00 Telefax:+ 47 67 59 91 81 www.n
Page 1:
Future on Paper NORSKE
Page 2:
MAIN FINANCIAL FIGURES DefinitionS profit and loss account (noK
Page 3:
The World of Norske Skog 2 Skogn Follum Headquarters Saugbrugs W
Page 4:
Contents 002 008 012 016 026 034 046 4 n o r s ke s ko g A nnuA
Page 5:
IntroDuCtIon Events of 2007 January l September l Construction s
Page 6:
A demanding year by continu 2007 was and low pr ed cost pre a de
Page 7:
IntroDuCtIon In 2006, we introduced an ambitious improvement pro
Page 8:
MArKet The world is using ever more The world’s consumptio publi
Page 9:
MArKet at European newsprint mills. Further temporary curtailmen
Page 10:
leader in all markets For the first time ever, norske Skog tops
Page 11:
MArKet Norske Skog products This overview presents the complete
Page 12:
proDuCtIon few years h overcapacit profitabilit that is not Cost
Page 13:
proDuCtIon production capacities 31 December 2007 (1 000 tonnes)
Page 14:
proDuCtIon Turnaround on track proDuKSJon profit (EBiT increase
Page 15:
proDuCtIon reports, benchmarking and statistics, and the global
Page 16:
CApItAl MArKet Norske Sko industry, w in a capita g operates l-i
Page 17:
CApItAl MArKet Financing Norske Skog is working to ensure good f
Page 18:
CApItAl MArKet Financial risk management activities e Norske Sko
Page 19:
CApItAl MArKet where the company’ s cash flow is positive. Howev
Page 20:
long-term incentive programme During the general meeting on12 Ap
Page 21:
CApItAl MArKet Weekly volume and share price 2007 30 120 105 24
Page 22:
trading of the norske Skog share The company’s shares have been
Page 23:
CApItAl MArKet the stock market in 2007 The all-share index on t
Page 24:
principal shareholders 31 December 2007 ( > 0.5% ownerShIp) JPMo
Page 25:
CApItAl MArKet Key figures related to shares 2007 nominal value
Page 26:
shareholde is to create the paper Norske Sko g’s goal CorporAte
Page 27:
CorporAte GovernAnCe entail that the board will handle the compa
Page 28:
nomination committee 2007: l the evaluation. The board has estab
Page 29:
CorporAte GovernAnCe from making a bid for the company’s shares.
Page 30:
The members of the board halvor bjørken (53) Board member since
Page 31:
CorporAte GovernAnCe Corporate management of Norske Skog Christi
Page 32:
Members of corporate bodies Number of shares as of 31 december 2
Page 33:
CorporAte GovernAnCe Articles of association for Norske Skogindu
Page 34:
Report of the Board of Directors Norske Skog has been through an
Page 35:
report of the board of Directors Europe, in addition to a strong
Page 36:
ous year-end. Fixed assets (including goodwill) were reduced by
Page 37:
report of the board of Directors result for the Asian activities
Page 38:
been positive through many years, and Norske Skog has become one
Page 39:
report of the board of Directors Liability Companies Act, the bo
Page 40:
cent of expected consumption. Such long-term contracts usually h
Page 41:
report of the board of Directors Skog. The all-share index on th
Page 42:
NSPS has up to now been implemented at six of Norske Skog’s 18 b
Page 43:
report of the board of Directors ENVIRONMENTAL REPORTING within
Page 44:
settlement. The amount is recorded as a tax cost in the 2007 acc
Page 45:
report of the board of Directors a group contribution totalling
Page 46:
Income Statement noK million operating revenue Distribution cost
Page 47:
aCCounts Group Balance Sheet noK million assets Deferred tax ass
Page 48:
caSh flow Statement noK million Cash flow from operating activit
Page 49:
aCCounts Group changeS In group equIty Statement noK million equ
Page 50:
1. general InformatIon norske skogindustrier AsA (“the company”)
Page 51:
aCCounts Group include the carrying amount of goodwill relating
Page 52:
Tax on current taxable profit and deferred income tax are determ
Page 53:
aCCounts Group of cash flows and thereby also utility value with
Page 54:
3. BuSIneSS SegmentS At 31 December 2007, the group is organised
Page 55:
aCCounts Group operatinG revenue By marKet norway europe ex norw
Page 56:
4. SpecIfIcatIon of Balance Sheet ItemS 31-12-2007 inventories r
Page 57:
aCCounts Group Includes special benefits, company cars, interest
Page 58:
6. penSIon coStS and oBlIgatIonS norske skog has various pension
Page 59:
aCCounts Group partly or Fully FunDeD pension plans Projected be
Page 60:
8. fInancIal ItemS FinanCial inCome Dividends received Interest
Page 61:
aCCounts Group DeFerreD tax 2007 Fixed assets, excess values and
Page 62:
11. net caSh flow from operatIonS tHe relationsHip BetWeen proFi
Page 63:
aCCounts Group otHer intanGiBle assets Acquisition cost 1 Januar
Page 64:
plants anD BuilDinGs Acquisition cost 1 January Additions Dispos
Page 65:
aCCounts Group assumptions applied when estimating recoverable a
Page 66:
CurrenCy sHares in ForeiGn suBsiDiaries oWneD By tHe parent Comp
Page 67:
aCCounts Group sHares in ForeiGn suBsiDiaries oWneD By ConsoliDa
Page 68:
16. receIvaBleS and other non-current aSSetS 2007 Accounts recei
Page 69:
aCCounts Group 19. mInorIty IntereStS Minority at 1 January Chan
Page 70:
21. IntereSt-BearIng current lIaBIlItIeS 2007 Current bank debt
Page 71:
aCCounts Group 27. other gaInS and loSSeS 2007 gains and losses
Page 72:
interest rate risk - fair value hedge In order to mitigate the r
Page 73:
aCCounts Group exchange rate risk translation risk - net investm
Page 74:
assets net investment hedging1) Forward contracts Cross-currency
Page 75:
aCCounts Group per 31 DeCemBer 2007 non-derivative financial ins
Page 76:
Commodity risk A major part of norske skog’s global commodity de
Page 77:
aCCounts Group 30. provISIonS At 31 December 2007, norske skog h
Page 78:
32. capItal rISk management The group’s objective when managing
Page 79:
aCCounts Group 79 n or s k
Page 80:
income statement noK million operating revenue Distribution cost
Page 81:
aCCounts norsKe sKoGinDustrier asa Balance sheet noK million ass
Page 82:
cash flow statement noK million Cash flow from operating activit
Page 83:
aCCounts norsKe sKoGinDustrier asa 1. accounting principles The
Page 84:
status oF pension plans reConCileD WitH tHe BalanCe sHeet: Proje
Page 85:
aCCounts norsKe sKoGinDustrier asa DeFerreD tax 2006 Fixed asset
Page 86:
maCHinery anD equipment Acquisition cost 1 January Additions Dis
Page 87:
aCCounts norsKe sKoGinDustrier asa 8. equity paiD-in equity equi
Page 88:
sHareHolDers on tHe BoarD oF DireCtors elected by the shareholde
Page 89:
aCCounts norsKe sKoGinDustrier asa 12. derivatives assets net in
Page 90:
lonG-term interCompany liaBilities 4346799 Canada Inc. FC Indust
Page 91:
aCCounts norsKe sKoGinDustrier asa 16. other current assets 31-1
Page 92:
20. other gains and losses Disposal of non-current tangible asse
Page 93:
auditor’s report for 2007 We have audited the annual financial s
Page 94:
annual General MeetinG The annual general meeting will be held a
Page 95:
Norske Skogindustrier ASA Oksenøyveien 80 P.O Box 329 NO-1326 Ly
Norske Skog
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