annual review 2014 - optigroup€¦ · 2 papyrus annual review 2014 this is papyrus papyrus and its...

Annual Review 2014

Head OfficePapyrus ABP.O. Box 1004SE-431 26 MölndalSwedenPhone: +46 1051 70 000Fax: +46 31 706 09 87

www.papyrus.com

Papyrus Holding AB

Production: SolbergCover: MultiArt Silk 300 g/m2

Insert: MultiArt Matt 150 g/m2

Print: GöteborgstryckerietPress: Komori Lithrone LS840PScreen: FMInks: Toyo Ink Flash Dry mediumPrinting plates: Fuji BrilliaExposure: Kodak Magnus 800 Qvantum IIBlankets: Böttcher BT4800Varnish: Novaset 7401/40Ink Sequence: KCMY

© Papyrus AB, 2015. All rights reserved.

At Papyrus, our mission is bigger than just ensuring a convenient supply of the right products. As a service com-pany, we create solutions that help companies and their employees to become more successful – even at an individual level.

We develop time-saving services that make your day-to-day work easier, offering the smartest e-service in the market and the logistics skills that always ensure availability and delivery precision. We make sure that you have easy access to support and expertise whenever you need it.

Contact your local Papyrus office to find out how we can support you, your people and your business.

Supporting youCONTENTS

The year in review 1

This is Papyrus 2

Interview with CEO 4

Goals and strategies 6

Papyrus markets 10

Graphical and business paper 15

Papyrus Supplies 19

Mission and core values 27

Papyrus employees 28

Sustainability 32

Three-year summary 36

Financial performance 37

Consolidated income statement 39

Consolidated balance sheet 40

Consolidated cash flow statement 42

Risk analysis 44

Corporate Governance 46

Papyrus Group Management 48

Board of Directors 49

The Papyrus Story 50

Contact 52

Papyrus is currently represented in 20 countries across Europe, employs 1,900 people and supports more than 65,000 customers.

20PAPYRUS IS REPRESENTED

IN 20 COUNTRIES ACROSS EUROPE

Papyrus Annual Review 2014 1

MAJOR STEPS TOWARDS A MORE FLEXIBLE BUSINESS MODEL Papyrus has created a base for a more flexible, streamlined and customer-oriented business model with a unique com-bination of value-adding services – all which is supported by efficient logistics solutions and a shared Group IT platform.

INCREASED OPERATING PROFIT Operating profit for Papyrus increased 2014 by 61 percent to EUR 37.0 million. The higher profit level was mainly due to reduced costs, offsetting the lower margins.

ROBUST FINANCIAL POSITION Papyrus continued to reduce its debt as a result of a strong cash flow. During the 2009–2014 period average working capital as a percentage of sales has decreased significantly and net debt was reduced by 95 percent. This acts to enhance the attractiveness of Papyrus to customers and suppliers, and ensures the long-term development of the company.

PAPYRUS SUPPLIES WITH STRONG PRESENCE IN TOP THREE REGIONS IN SWEDEN 2011–2013 Papyrus Supplies acquired three cash & carry specialists situated in Sweden’s top three regions when it comes to size and pace of growth – Stockholm, Gothen-burg and Malmö. In 2014, this was followed up with the acquisitions of Städshopen in Stockholm AB.

Office paper, 22

Sales by product area, %

Graphical paper, 51

Cleaning, hygiene and packaging, 11

Paper specialities, 16

1,400

1,200

500

1,800

1,600

3001,000

Net sales, EUR million

Sales per employee, EUR thousand

2012 2013 2014

900

Net sales and sales per employee

EUR million

2,000

EUR thousands

700

800

400

600

4,5%WORKING CAPITAL AS PERCENTAGE OF SALES

The year in review

The year in review

Key figures

EUR thousands 2014 2013 2012

Net sales 1,566,794 1,604,344 1,726,463

EBITDA excluding restructuring and divestments 57,013 50,014 48,246

EBITDA excluding restructuring and divestments, % 3.6 3.1 2.8

EBIT 36,988 22,984 21,241

Cash flow from operating activities 86,407 68,641 49,925

Number of employees at year-end 1,877 2,007 2,270

Deliveries, 1,000 tonnes 1,570 1,544 1,632

… a solid financial platform for Papyrus, allowing us to continue to implement our strategic agenda with a high level of intensity in the years ahead.Interview with CEO, Peter Sandberg, pages 4–5.

2 Papyrus Annual Review 2014

This is Papyrus

Papyrus and its some 1,900 employees operate in two separate areas of business, Graphical and Business paper, accounting for 88 percent of sales, and Papyrus Supplies, representing 12 percent of sales.

Graphical and Business paper Papyrus is a leading supplier of paper to the European graphical industry and a major distributor of office paper across Europe. The business area offers a com-prehensive range of coated and uncoated papers to the printing industry together with graphical board, substrates for digital printing machines and a broad range of paper specialities with a corresponding range of matching envelopes. Papyrus is also a leading provider of office paper, covering all printout requirements and copying needs.

During 2014, Papyrus delivered 1.6 million tonnes of paper to customers across Europe. Papyrus is number two in

A leading European merchant Papyrus is a leading European merchant in paper, facility management supplies and industrial packaging, with net sales of EUR 1,567 million in 2014. Papyrus is currently represented in 20 countries across Europe and supports more than 65,000 customers by providing products and services that enhance efficiency and contribute to a more successful business.

Europe and number one in Continental Europe in terms of market position.

Papyrus SuppliesThe Papyrus Supplies business satisfies the increasing need for efficient supply chain management among customers in the manufacturing and service industries and in the public sector. Papyrus Supplies offers an impressive assortment of clean-ing, hygiene and industrial packaging products – ensuring access to the best and most suitable products, delivered when and where they are needed. Papyrus Supplies is the market leader in industrial packaging and facility manage-ment supplies in the Nordic countries with the capacity to serve international customers across borders in a consistent and well- coordinated manner. The busi-ness area supports more than 16,000 customers in the Nordic countries.

THIS IS PAPYRUS

Broad product range from a single sourceThe Papyrus product range is carefully selected. The company brings together a vast array of products from leading manu-facturers and makes these products availa-ble from a single source. This broad range, in combination with leading services, out-sourcing solutions and high-precision deliveries, yields time and costs savings for Papyrus customers, and the reliability on which their businesses depend.

Uncompromising quality and sustainability approachPapyrus is committed to offering the products and service level its customers require and that best meet their needs in terms of function, quality and sustain -ability considerations. The company’s product range is continuously developed to ensure the best buying options for customers. In addition, Papyrus has strict

Industry

Denmark

Finland

Norway

Sweden

Belgium

France

Luxembourg

Netherlands

Switzerland

Denmark

Norway

Sweden

Estonia

Finland

Latvia

Lithuania

Czech Rep

Hungary

Italy

Poland

Romania

Slovakia

Austria

Germany

Graphical and Business paper Papyrus Supplies

Public Sector & Service

Western Cluster

Central Cluster

Industrial Packaging

Facility Supplies

Denmark

Finland

Latvia

Norway

Sweden

Switzerland

Denmark

Estonia

Finland

Latvia

Norway

Sweden

Croatia

Czech Rep

Hungary

Italy

Lithuania

Poland

Romania

Slovakia

Slovenia

Austria

Germany

Belgium

France

Luxembourg

Netherlands

Switzerland

Graphical and Business paper Papyrus Suppliers

Business Paper

Specialities Paper

Graphical Paper

Marketing & Supply Finance & IT

Sales Supply Chain


Management board

Central Cluster

Austria

Germany

Western Cluster

Belgium

France

Luxembourg

The Netherlands

Switzerland

Nordic and South Eastern Cluster

Denmark

Estonia

Finland

Latvia

Norway

Sweden

Croatia

Czech Rep.

Hungary

Italy

Lithuania

Poland

Romania

Slovakia

Slovenia

Graphical and Business paper

Human Resources Logistics


Steering Board

Papyrus SuppliesManagement Team

Denmark

Finland

Norway

Sweden

Denmark

Finland

Norway

Sweden

Papyrus Supplies

Industry Public Sector and Service

Marketing and Supply Finance

Nordic Cluster

South Eastern Cluster

A RELIABLE PARTNER FOR 65,000 CUSTOMERS

Papyrus operates in two separate business areas to ensure time and cost savings for customers, and the reliability on which their businesses depend.

Graphical and Business paper deals with specialist distribution of paper to the graphic industry.

Papyrus Supplies serves corp-orations and public institutions with facility management supplies and industrial packaging products.


This is Papyrus

Key figures – strengthened financial position in 2014

EUR thousands 2014 2013 2012 2011 2010

Net sales 1,566,794 1,604,344 1,726,463 1,887,304 1,896,098

EBITDA excluding restructuring and divestments 57,013 50,014 48,246 48,434 71,641

EBITDA excluding restructuring and divestments, % 3.6 3.1 2.8 2.6 3.8

EBIT 36,988 22,984 21,241 16,893 41,028

Cash flow from operating activities 86,407 68,641 49,925 50,448 66,125

Average number of employees 1,925 2,113 2,372 2,591 2,719

Sales per employee 814 759 728 728 697

Deliveries, 1,000 tonnes 1,570 1,544 1,632 1,770 1,839

Capital structure

EUR thousands 2014 2013 2012 2011 2010

Balance sheet total 627,051 659,943 722,797 805,951 877,235

Equity 182,610 182,214 180,963 35,447 42,668

Net debt 28,084 144,240 202,439 392,924 414,807

Equity/asset ratio, % 29.1 27.6 25.0 4.4 4.9

environmental policies and criteria for selecting suppliers and products.

To build and maintain the trust of cus-tomers, shareholders, employees and the general public, Papyrus maintains a one-company approach, meaning that it oper-ates according to the same values, code of conduct, sound business ethics and policies in all regions.

Efficient logistics across EuropeAt Papyrus, logistics is a core competence that enables the company to keep its prom ises to customers and ensure just- in-time deliveries. Papyrus has developed a fine-tuned distribution network consisting of leading systems for logistics man age ment, warehousing and delivery. With 38 ware-houses and cross-dock platforms strategi-cally located across Europe, Papyrus can ensure the same service levels and product portfolio wherever customers are located. These systems are designed to work to gether in harmony with every order to ensure total control throughout the logistics flow.

Simplifying for the customers through e-servicePapyrus e-Shop offers a 24/7/365 e-shop in 14 countries on a shared platform, pro-viding market coverage that represents 95 percent of sales. This ensures easy order-ing and purchasing, as well as easy access to product information, stock levels, statistics, reports and documentation of business transactions. In 2014, 25 percent of all orders were placed via an electronic channel.

With the Papyrus toolbox for Electronic Data Interchange, EDI, and system- to- system solutions, the systems of partner customers can be integrated with the Papyrus SAP IT platform to automatically transfer purchase orders, order acknow-ledgements, invoices and p ayments.

Papyrus also offers customised solutions for many of the leading calculation software tools available to the printer community.

Solid financial position – ensuring long-term capabilityPapyrus has strengthened its financial position in recent years, ensuring its long-term capability to implement its strategies and reach its overall objectives.

Sourcing and procure-ment from leading manufacturers

Cost and time-saving solutions to customers

Fine-meshed service- oriented European distribution network

One-stop shopStrategically located warehouses across Europe

The Papyrus Value Chain – saving costs and time for customers

LEADING POSITIONS IN BOTH BUSINESS AREAS

• Papyrus holds the number two position in Europe overall and the number one position in Continen-tal Europe in the graphical and office paper business.

• Papyrus Supplies is the market leader in the Nordic region in everyday products for cleaning, hygiene and industrial packaging.


Interview with CEO

Can you give a brief description of 2014? It was a good year for Papyrus. We can conclude that our strategies, business development and restructuring measures are starting to pay off in all critical areas. We grew faster than the market, improved customer satisfaction, continued to enhance productivity, such as sales per employee, increased earnings and reported an extremely strong cash flow. It is important to remember that we achieved this amid the extremely harsh conditions prevailing in the European paper market.

The favorable performance in 2014 has ensured a solid financial platform for Papyrus, allowing us to continue to imple-ment our strategic agenda with a high level of intensity in the years ahead.

Do you think that this is confirmation of the effectiveness of your business model?I would definitely say so. Our performance in recent years confirms that the actions we have taken to transform the company

Positive results in all critical areasIn recent years, Papyrus has been working to systematically transform the Group in line with its goal: to be the industry leader. In 2013, the company began reaping the benefits of implemented activities in the form of profit generation, a solid financial position and higher productivity. In 2014, this trend was strengthened even further, creating a solid foundation for the years to come during which Papyrus will continue its improvement efforts according to its overarching strategy.

are paying off. Accordingly, we did not make any drastic operational changes during the year, choosing instead to further develop different parts of the business, with good results. One example of this is the higher level of efficiency we have achieved in our supply chain. Another area – which in many ways is of primary importance – is the engagement we have seen among our employees. The commit-ment demonstrated today is much higher than a couple of years ago, when we set out on our journey. This is really positive and critical going forward.

In what way does this commitment manifest itself?Everyone in the organisation knows how they can contribute to the success of Papyrus and we are more dedicated and engaged when action in needed. We like to challenge each other and share ideas between different parts of the organisation. And most importantly, we see good ideas being realized. One example of this is the recent initiative to enhance the level of effi-ciency in our warehouses across the Group.

This shift in mindset does not occur by chance – all the fundamental elements must be in place before this kind of effect than be expected. By fundamental elements, I am referring to a thorough HR strategy that takes a methodical approach to development programs for leaders, specialists and talents as well as learning programs that enhance individual skills. We currently have a systematic appraisal process enabling employees to reach their full potential and be recognised for their achievements.

In combination, these elements provide a sound basis for fostering a positive attitude towards the company and in the individual work situations of employees, which is confirmed by the positive results received in our employee survey.

The financial position of the company was strengthened in 2013. How was progress in 2014?Actually, 2014 was even more solid than 2013 as a result of our ability to once again generate a very strong operating cash flow, totalling EUR 86 million. In fact,

INTERVIEW WITH CEO, PETER SANDBERG

As a consequence of our ability to generate a strong cash flow, 2014 was a solid year.200

0

Net debt

EUR million

500

300

400

100

20102009 2012 201420132011

4

2

8

6

0

Average operating working capital

%

14

10

12

20102009 2012 201420132011

Reinforced financial position. Net debt was reduced by 95 percent during the 2009–2014 period.

Capital efficiency has increased. Average working capital as a percentage of sales has decreased significantly.


Interview with CEO

we are virtually debt-free at present. This is a huge difference compared with the situation we faced in 2008, when our net debt was EUR 557 million. We have reduced this by 95 percent to EUR 28 million at the end of 2014. The bottom line here is that this would not have been possible without our strong focus on delivering efficiency and productivity gains, in line with our strategy and modernisation programme.

Another important aspect to keep in mind is that we have substantially increased the variable proportion of our total costs over the past number of years. This creates further financial stability and enhanced flexibility.

Is the paper market still weak?Yes, but we observed a new trend in 2014, with an almost flat market in terms of vol-umes, following years of decline. However, this does not change the underlying and fundamental challenge in our industry in the form of overcapacity and price pres-sure, as seen in 2014. On this basis, we are pleased that we have increased earnings and grown our market share.

Our view is that while the imbalance in supply and demand will continue in the years ahead, the situation is likely to improve, which is of course positive from a price perspective. This will be supported by the inevitable process of consolidation that will take place in the industry sooner or later.

What about Papyrus Supplies?Here we face a different situation, with the market displaying underlying growth. We are capitalizing on this trend and report-ing profitable growth, outperforming the market as a whole. Although the bulk of our growth is organic, we have also con-tinued to implement strategic acquisitions to further strengthen our Nordic footprint. For example, we have gone from having no presence in Finland to being the market leader in just a few years.

There is still much to do to fully leverage the possibilities in this growing market. But we know what we need to do and how to do it – from our cross-border offering to large pan-Nordic companies with com-plex needs to our cash & carry offering to smaller companies in Nordic growth regions.

What is your view on 2015?The market for printing and writing paper will certainly remain challenging, but as I said earlier, there are a considerable num-ber of opportunities that we can capitalise on in the years ahead. We have a clear strategy and the people and the resources that are required to develop our company, which will make us even better equipped to handle all future scenarios. Regardless of how the industry evolves, the ambition of Papyrus will always be to continue to deliver sustainable profit levels and healthy cash flows, while ‘going the extra mile’ for our customers.

Peter Sandberg, President and CEO

… a solid financial platform for Papyrus, allowing us to continue to implement our strategic agenda with a high level of intensity in the years ahead.“


Goals and strategies

The solid, and now proven, strategic plat-form of Papyrus puts the company on a stronger footing, enabling it to help cus-tomers realise new opportunities in an increasingly competitive environment. Customers can rely on a stable, yet dynamic and innovative Pan-European company that has the capabilities and commitment to support both their day- today activities and business as a whole.

A distinct vision Papyrus has a clear vision: to be Europe’s leading paper, facility management sup-plies and industrial packaging merchant.

Strategic direction Papyrus is focused on the development of leading positions in major European markets – leveraging the scale and synergy opportunities between markets – in areas such as sourcing and supplier relations,

The service company set on customer valueSince the launch of the new strategic platform in 2009, Papyrus has transformed its business model to meet the new challenges and opportunities in the market. As a result, Papyrus has become a truly Pan-European company with a more flexible cost structure and a sales plat-form that further leverages customer relationships and realises larger economies of scale in the operations. However, we still have a great deal of work to do before we are fully satisfied.

logistics, IT systems, administration and sales. The company’s size and market presence provide the necessary platform to achieve its overall goal.

The objective of Papyrus is to add value for stakeholders by continuously improv-ing the business system and transforming this into profitability. This objective will be achieved by:

GOALS AND STRATEGIES

• Focusing on the customer to deliver out-standing service wherever the company operates, providing solutions that make Papyrus customers more competitive.

• Creating higher efficiency for customers and Papyrus through deployment of a lean business system and infrastructure combined with efficient coordination of international sourcing.

Long-term financial goals

GoalOutcome

2014Outcome

2013Outcome

2012Outcome

2011Outcome

2010

EBITDA, excl. restructuring/Sales, % >5% 4.0 3.2 2.8 2.6 3.8

Cash conversion rate* >100% 137 134 103 104 92

* Cash conversion rate defined as Cash flow from operating activities/EBITDA excl. restructuring.

The overall goal of Papyrus is to generate profitable growth based on high efficiency and strong customer relationships.


Goals and strategies

• Expanding the business by advancing the position of Papyrus Supplies as the lead-ing Facility Management and Cleaning and Packaging wholesaler in the Nordic region.

Focusing on the customer – outstanding servicePapyrus continues to improve its commit-ment to customers. Understanding cus-tomer needs, keeping promises and “going the extra mile” are fundamental in this respect. Papyrus aims to provide the best services and availability of products from leading suppliers. Outstanding com-petence in products, logistics and cus-tomer operations are key factors in the development of solutions that help cus-tomers become more successful. Papyrus will be the preferred choice of customers by providing better service and support, reliability and solutions that address their challenges.

Papyrus is focused on securing an attractive assortment, including graphical paper, paper specialities, packaging prod-ucts and cleaning and hygiene supplies. In the logistics area, more advanced and dif-ferentiated transportation and paper man-agement services are being implemented, all aimed at helping customers become more efficient and competitive. Papyrus is also focused on the continued develop-ment of its customer service, where the advantages of e-services will save custom-ers even more time and make their day-to-day work even easier.

Creating higher efficiency – a lean business systemPapyrus operates in a highly competitive market where paper consumption is in decline due to structural drivers. As a con-sequence, the Group must seize all oppor-tunities to streamline and maintain a lean and cost-efficient business system. By focusing on activities that add value, and through standardised processes that can be replicated throughout the organisa-tion, Papyrus aims to establish a competi-tive, agile and flexible European platform.

In simple terms, the system must ensure efficient cost-to-serve for commodity products and, without adding unneces-sary complexity, growth in value-added segments.

Papyrus strives for the industry’s most cost-effective system to source, supply and sell commodities, thereby unlocking substantial value. Supply chain excellence is a key element of this ambition, which includes optimal infrastructure, supplier cooperation and integrated planning.

Pan-European harmonisation of the assortment, an attractive range of own

brands, streamlined cross-border logistics and comprehensive e-service solutions will also enable a leaner business system and optimised customer offering.

Expanding the business – Papyrus Supplies Papyrus is focused on reinforcing its posi-tion in attractive markets and expanding sales in value-added segments and growth markets. By focusing on expansion and aiming to achieve leading positions in markets in which Papyrus competes, the company has built a leading position in major European countries and segments.

Over the past number of years, growth activities at Papyrus have focused on further establishing Papyrus Supplies as a leading Nordic distributor of business consumables. For example, the company has completed several strategic acquisitions in the areas of hygiene, cleaning and packaging.

Papyrus United – strengthens the impact from strategic actions Papyrus United is a Group-wide pro-gramme that aims to enhance the effects of strategic actions, thereby gradually modernising Papyrus, enabling it to become the market leader in terms of effi-ciency and productivity and to accelerate growth. The programme, which includes cost elimination initiatives, was launched in 2011. It continued in 2014, yielding good results in terms of supporting the

GROWTH THROUGH ACQUISITIONS 2004–2014

• Städshopen i Stockholm AB, 2014 (Papyrus Supplies)

• INPA AB, Sweden, 2013 (Papyrus Supplies)

• Siisti-Piste Oy, Finland, 2012 (Papyrus Supplies)

• Arto Emballage AS, Norway, 2012 (Papyrus Supplies)

• XL Graphics, Belgium, 2011 (Graphical and Business paper)

• Städgrossimporten AB, Sweden, 2011 (Papyrus Supplies)

• Städcentralen AB, Sweden, 2011 (Papyrus Supplies)

• Papeteries de France, France, 2005 (Graphical and Business paper)

• Schneidersöhne Group, 11 countries, the largest markets being Germany and Switzerland, 2005 (Graphical and Business paper)

• Scaldia, Netherlands, 2004 (Graphical and Business paper)

ability of Papyrus to generate high-quality earnings. Papyrus United concentrates and gathers the collective strengths of the organisation and focuses on optimising key success factors. The programme includes key global processes and strate-gic directions and thereby helps to capi-talise on best practices and further lever-age the geographical footprint of Papyrus.

A solid platform securing long-term profitable growthGood profitability, financial stability and leadership in the markets and businesses in which Papyrus competes play a crucial role in efforts to ensure sustainable growth and long-term value creation. The overall goal of Papyrus is therefore to generate profitable growth and leading profitability after capital charges based on high productivity and efficiency, investments in value-added sales, effective capital management, business development and strong customer relationships.

STRATEGIC INITIATIVES IN 2014

• Streamlining and separation of Papyrus Supplies logistical network in Sweden to support efficient distribution of packaging and business consumables

• Acquisition of Städshopen in Sweden, a professional cleaning retailer special-ised in cleaning techniques and train-ing in cleaning methods

• Expansion of the Papyrus Supplies Cash&Carry concept in Sweden

• Supply chain and warehouse re-design in Germany to improve cost-to-serve

• Assortment harmonisation and ware-housing of paper specialities central-ised to Germany

• Supply chain initiatives with top sup-pliers and logistical improvements supporting efficient use of working capital

• Roll-out of sales tools for more effec-tive pricing and margin management

• Growth in service sales supported by extended paper management offering, third-party logistics sales and system-to-system e-service implementations

• Regional organisational structure implemented for the Benelux coun-tries and France

• The divestment of the logistics centre in Dintikon to increase logistical flexi-bility in the Swiss market

• Repayment of bank loan and further net debt reduction supported by strong cash flow

Papper 120 g/m2

MAJESTIC

Majestic® is an exclusive paper range that uses sophisticated combinations of pigmented and iridescent coatings to obtain shimmering metallic sur-faces and luxurious feel – a spark of glamour. Wide range of matching envelopes available. Majestic® is part of Specials®, Papyrus assortment brand for carefully selected creative papers from leading European manu-

facturers of finest papers.

Applications: Brochures, cards, packaging, shopping bags, stationary, tags.


VinjettMajestic® Snow White 120 g/m2



Papyrus markets

The challenging economic climate in recent years has accelerated the speed at which new technologies are penetrating more traditional media channels as com-panies look for different ways to optimise their budgets. However, financially strong paper merchants that can continue to improve their own operation have the potential to grow with profitability – even in a declining market such as the one cur-rently prevailing.

Improved market conditions for woodfree papersThe European market conditions for woodfree papers in 2014 behaved differ-ently than originally expected with a sur-prisingly strong demand over the course of the year. Uncoated woodfree papers, in particular, had a positive trend and enjoyed one of the best performing years since the start of its decline in 2008.

According to the EURO-GRAPH* statis-tics of paper shipments to Europe, the woodfree paper market declined slightly from the levels recorded in 2013. The fall-off in demand was the combined result of a 1.4-percent decline in coated woodfree (CWF) papers and a 1.0-percent growth in uncoated woodfree (UWF) papers.

During 2014, there was a minor drop in installed capacity linked to UWF paper for the year as a whole. In the short-term, this

Printing and writing paper

In the European market for printing and writing paper, Papyrus operates as a leading supplier of commercial printing paper to the graphical industry and as a major distributor of office paper across Europe. The market for printed media has been experiencing a declining trend since its peak in 2007. The decline was triggered by the rise of new technologies, changes in media consumption patterns and the difficult economic landscape in Europe. In this environment, Papyrus has chosen a focused and cost-competitive approach, resulting in long-term benefits for both Papyrus and its customers.

THE EUROPEAN MARKET FOR

has helped to maintain the current supply and demand balance, but not enough to support a reduction in the ongoing over-capacity problem and by that, the ability of the UWF market to cope with the projected decline in demand. For CWF, capacity was reduced in the market by some 5 percent. Western European operating rates in 2014 climbed steadily and have finally started to recover. However, to achieve a more bal-anced supply and demand situation, pro-ducers of coated and uncoated papers must continue to undertake significant capacity adjustments going forward.

Prices ended lower than in 2013 The continued decline in demand together with insufficient capacity reduc-tions were the driving forces behind the continued negative price trend noted for both coated and uncoated papers in 2014. The declining price trend for UWF paper prevailed for the majority of the year, with prices for office paper dropping slightly more than for UWF sheets. The rise in operating rates for CWF paper supported an upward movement of the prices by the end of the year. Although not covering the reductions seen early in the year com-pared with the end of 2013, paper prices for coated CWF declined some 2 percent, while prices for uncoated UWF declined 2–3 percent.

EURO-GRAPH – Statistics of total shipments of woodfree papers to Europe

Tons, millions 2014 2013 2012 2011 2010

Coated woodfree papers (CWF) 5.4 5.5 5.9 6.1 6.4

Uncoated woodfree papers (UWF) 6.3 6.2 6.4 6.6 6.9

Total woodfree papers 11.7 11.7 12.2 12.7 13.3

* EURO-GRAPH is the European Association of Graphic Paper Producers, which represents the industry sectors of Europe’s newsprint, magazine and fine paper grades.

MARKET DEVELOPMENT 2014 IN BRIEF

• The decline in paper demand in 2014 was less than the adjustments in capacity and mill closures, leading to slightly improved operating rates in the paper industry

• The European demand for coated woodfree paper (CWF) declined by 1.4 percent and uncoated woodfree paper (UWF) grew by 1.0 percent*

• Negative price trend resulting from continued decline in demand and production overcapacity

• Estimates by Papyrus show that the company’s market share increased slightly in 2014. This is an indication that Papyrus has been able to iden-tify selected areas of profitable growth in the paper market through its new, focused and cost-competitive approach

* According to EURO-GRAPH


Papyrus markets

Papyrus Supplies focuses on two major segments on the market, the facility man-agement supplies segment and the indus-trial packaging segment. The packaging and facility supplies distribution industry is fragmented and highly competitive, with both regional and local competitors. Most competitors generally offer a wide range of products at prices comparable to those Papyrus Supplies offers. However, few have service capabilities comparable to those of Papyrus Supplies. As markets are becoming more global, size matters and consolidation is expected to continue as a result of the pressure on prices and vol-umes and the need for economies of scale.

Facility management supplies segmentThe facility management supplies segment includes the sale and distribution of prod-ucts necessary to maintain large facilities, such as towels, tissues, wipers and dis-pensers, commercial cleaning chemicals, disinfectants, skin care products, safety and hazard supplies, bags and sacks, sanitary maintenance supplies, facilities maintenance equipment, office paper and logistic services. The downstream markets that drive growth in the facility manage-ment industry include janitorial and build-ing services, education and healthcare. Increased enrolment in education and an aging population have led to increased demand for janitorial supplies in institu-tional environments.

In the fragmented facility supplies market, Papyrus Supplies competes with a large number of local and regional distrib-

FM supplies and packaging products

Papyrus operates in the Nordic market for facility management supplies and packaging products through its separate business area, Papyrus Supplies. The business-to-business market for cleaning, hygiene and industrial packaging consists of multiple product categories and niches. The underlying demand for efficient supply solutions and outsourcing services from merchants yields long-term opportunities in relation to profitable growth. The distribution market is fragmented, leading to future opportunities for consolidation, thereby exploiting untapped efficiency potential.

THE NORDIC MARKET FOR

utors, as well as purchasing group affili-ates. Papyrus Supplies holds a strong market position in the segment, conduct-ing business with the leading facility man-agement companies and being the only merchant who can provide a truly pan-Nordic offering to its customers. The strong position of Papyrus Supplies in the facility management supplies segment also provides opportunities for cross- selling its products to packaging customers and leveraging its Nordic footprint to serve large customers. The segment normally shows steady levels of demand through-out a business cycle.

Industrial packaging segmentThe industrial packaging segment includes the design, sourcing, sale and distribution of customised packaging and the sale and distribution of custom and standard corrugated boxes, shrink and stretch films, tape, strapping, cushioning, labels, bags, mailers, and plastics and packaging equipment. The industrial packaging segment also includes various logistics services. The merchant-served share of the packaging market is low, giving a market participant that can bring high levels of value and service, along with access to many manufacturers, wide assortment and e-service capabilities, the opportunity to increase its share. Volume growth rate for the segment in 2014 is estimated at 2 percent in the Nordic coun-tries. Papyrus Supplies is one of the leading suppliers to the segment and gained market shares with its strong packaging supply concept and efficient logistics solutions.

MARKET DEVELOPMENT 2014 IN BRIEF

• The demand for corrugated boxes declined slightly in Western Europe

• The consumption of tissue in Western Europe grew by 0,6 percent

• Demand for efficient total-cost solu-tions with a high level of service is on the rise among large customers

• Buying decisions move upwards in large, complex organisations as indi-rect spend and total cost calculations become more important


Facts about Papyrus markets

Business Area Graphical and Business paper Papyrus Supplies

Market Printing and writing paper Facility management supplies and industrial packaging products

Customers Commercial printers

Converters

Publishers

Resellers/Retailers

Service sector

Public sector

Public sector

Facility Management companies

Contract cleaners

Private healthcare

Manufacturing industry

Transportation industry

Automotive industry

Wholesale traders

Resellers/Retailers

Products Coated Woodfree Paper (CWF sheets and reels)

Uncoated Woodfree Paper (UWF sheets and reels)

Coated wood-containing paper (CME sheets and reels)

Office paper

Recycled paper

Coloured paper

Substrates for digital printing

Graphical and packaging boards

Creative specialities incl. envelopes

Carbonless, self-adhesive sheets and synthetic substrates

Book paper

Facilities maintenance equipment and machines

Commercial cleaning chemicals

Bags and sacks

Towels, tissues, wipers and dispensers

Gloves and protection

Catering and food service items

Healthcare

Office paper

Custom and standard corrugated boxes

Stretch films and cushioning

Tape, wrap and strapping supplies

Packaging equipment

Competitors Antalis

Europapier

Igepa

Inapa

PaperlinX

Boxon

CC & CO

Maske

MultiLine

NorEngros

Nyblomgruppen

Procurator

Staples

Pamark

Wittusen & Jensen

Papyrus geographical presence

20 countries across Europe Nordic countries – Denmark, Finland, Norway and Sweden

Market characteristics Mature market that has experienced decline in recent years due to the economic downturn and changing media consumption patterns.

Operational effectiveness in combination with innovative and customer-oriented solutions from a focused portfolio of value-creating services and products yields competitive advantages and growth opportunities.

Growing market due to increasing needs of customers for an efficient supply chain.

Business remains fragmented with many local and regional merchants.

Offers advantages for companies that can consolidate the business through efficient logis-tic solutions, effective procurement and econo-mies of scale in combination with a customer-oriented approach.

Outlook The market is expected to continue to decline as a result of the weak economic outlook in Europe and changing paper consumption patterns.

Growth opportunities within selected segments of paper specialities.

Possibilities for merchants that can deliver focused portfolios of easy-to-use solutions that lead to higher efficiency for their customers. Financially strong paper merchants that can continue to improve their operation have the potential to grow with profitability despite a declining market.

The market is expected to continue to evolve and offer profitable growth for companies that can offer efficient and cost-saving supply solu-tions to customers.

Consolidation is expected to continue as a result of the pressure on prices and volumes and the need for economies of scale. The anticipated market consolidation offers opportunities for market leaders.

Papyrus markets

Papyrus Annual Review 2014 13 Papyrus Annual Review 2014 13

Papyrus markets

Graphical and business paper

83%PAPYRUS OVERALL

CUSTOMER SATISFACTION

RATING



Papyrus is a leading supplier to the print-ing industry and an ambassador of paper’s role in communication. The company’s core offering consists of sale and distribu-tion of an extensive range of high-quality commercial printing, writing, copying and digital printing paper to commercial print-ers, publishers, direct mail firms and the digital printing industry, as well as retail-ers, resellers, copy centres, in-plant print facilities, public authorities and other paper-intensive businesses.

Papyrus also provides a broad range of speciality papers, including a correspond-ing range of complementing envelopes. In addition, Papyrus is a major European dis-tributor of office paper and provides cus-tomers with a complete range of products covering all printout requirements and copying needs. Papyrus supports its cus-tomers, enabling them to add value to their businesses through a dynamic, pan-European operation providing graphical and office paper, technical know-how and services.

A leading supplier in Europe Papyrus is a leading supplier of paper to the European graphical industry and a major distributor of office paper across Europe. With annual sales of EUR 1,384 million, Papyrus serves more than 50,000 customers within the Graphical and Business paper business.

A more focused and cost- competitive approachPapyrus is continuously re-evaluating working methods and business models to increase cost competitiveness. As a result of a more targeted market approach, improved margin management and tight-ened credit policies, Papyrus has pur-posely moved away from unprofitable business and market segments. During the year, Papyrus finalised the closure of the unprofitable merchant operations in Croatia and Slovenia and is now serving the two markets from Hungary.

The more focused market approach, combined with a comparatively strong level of profitability and a stable financial position, yields several long-term benefits. It enables the company to continue to lev-erage economies of scale and invest in value-adding services for the benefit of customers and it creates higher creditabil-ity and attractiveness among suppliers, which also works in favour of Papyrus.

GRAPHICAL AND BUSINESS PAPER


A RANGE OF OWN HIGH-QUALITY BRANDS

Papyrus offers its own paper brands, among the best products in their categories, for any graphical application.

Major Papyrus paper brands: Multi™, Luxo®, TripleStar®, Plano®, Sky®, DigiGold®, Balance®, Specials®, Rainbow®, Focus®, Opti®.

Wide range of value-adding productsIn addition to providing services and paper-related products, Papyrus is gradu-ally expanding its product range to include corrugated boxes, stretch film, hygiene paper and professional cleaning items for graphical and office paper customers. This offers real value for cus-tomers, since they can rely on a compre-

Graphical paper


Coated Woodfree papers (CWF)

Uncoated Wood- free papers (UWF)

Coated Wood- Containing papers (CME)

Coloured papers

Recycled papers

Paper specialities Business paper

Creative specialities

Text and cover

Premium offset

Digital papers

Coloured papers

Envelopes

Graphical board

Self-adhesives

Synthetic substrates

Carbonless

Book papers

Cards

Drawing papers

Uncoated office papers

Coated office papers

Coloured office papers

Recycled office paper

Graphical paper


Coated Woodfree papers (CWF)

Uncoated Woodfree papers (UWF)

Coated Wood-Containing papers (CME)

Coloured papers

Recycled papers

Paper specialities Business paper

Creative specialities

Text and cover

Premium offset

Digital papers

Coloured papers

Envelopes

Graphical board

Self-adhesives

Synthetic substrates

Carbonless

Book papers

Cards

Drawing papers

Uncoated office papers

Coated office papers

Coloured office papers



SPECIALS® FINEST PAPER AWAKENS PURE EMOTION

Papyrus has a clear ambition to drive the share of own paper brands as part of the pan-European assortment har-monisation, as well as expanding sales in value-added product seg-ments. In 2014, Papyrus continued to successfully pursue this strategy with many of the flagship brands, such as the Multi™-family performing with double digit growth.

With Specials®, Papyrus further strengthened its position within the important value-added segment of paper specialities. Specials® is the Papyrus assortment-brand for a care-fully selected range of creative papers from the leading manufacturers of fin-est papers in Europe. The combination of an attractive assortment according to latest trends and needs, together with supportive marketing tools and solid product trainings, resulted in a significant volume growth for the Specials® brand in 2014.

The papers in the Specials® assort-ment are so unique with their sur-faces, structures, colours and special effects, that they emotionally under-line and support any message, even if nothing is printed on them. Specials® Finest Papers truly awake pure emo-tions and support corporations to differentiate and stand out from the mass – a customer demand that makes the further development of Specials® sales look promising.

hensive range of products from one single source and can take full advantage of an efficient operational structure.

Paper Management® realises considerable savingsPaper Management® is a service concept that is mainly offered to large print houses due to the need to reach a certain scale to attain real benefits. The Paper Manage-ment® concept enables large print houses to realise considerable savings – printing paper consumption is reduced by up to 5 percent and costs are lowered through optimised processes, simplified adminis-tration and a streamlined, standardised product range. By implementing this con-cept, customers can eliminate the need for their own warehouse and reduce costs for personnel and premises. This releases valuable floor space that can be used in a more profitable way and capital that is tied up in stock can be used to leverage other business opportunities.

Inspires advertising agencies and marketing departmentsGraphic designers and marketing profes-sionals are always on the lookout for unique, inspiring and expressive solutions to help communicate company profiles. To meet this demand, Papyrus offers pro-fessional paper consultancy to advertising agencies and marketing departments. This service helps the creative community to specify the optimal paper for their print projects according to the principle “a spe-cial creation deserves a special paper.” On

this basis, the Papyrus Specials® brand was born – a carefully selected range of exclu-sive text and cover papers from the lead-ing producers of finest papers in Europe.

Papyrus-branded products among the best Papyrus-branded paper products are among the best in their categories. They are carefully chosen for their excellent and stable properties, and are continuously tested and assessed. These quality prod-ucts are available in a wide range of surface finishes, shades, textures, substances and sheet sizes. With Papyrus-branded prod-ucts, customers also receive the highest degree of product availability. In 2014, the share of Papyrus own brands continued its positive development, supporting the Pan-European harmonisation of the assortment and streamlined cross-border logistics.

Increased customer satisfactionPapyrus regularly conducts customer sur-veys to improve its current position and generate activities that enhance interac-tion with customers. From a long-term perspective, the surveys provide input for strategic decisions and actions. In the short term, they provide insight into the hands-on improvements that can be made in daily processes. The surveys also enable bench marking between companies and facilitate the sharing of best practice.

In 2014, the survey covered the Nordic and Central Clusters, where the overall customer satisfaction rating increased from 78 to 81 percent compared with 2012.


…more focused market approach, combined with a com-paratively strong level of profitability and a stable financial position, yields several long-term benefits. It enables the company to continue to leverage economies of scale and invest in value-adding services for the benefit of customers.


Graphical and Business paper – an overview

Product areas Graphical paper Business paper

Key customer groups Commercial printers

Digital print shops

Publishers

Screen & Sign printers

Packaging printers

Visual Communication and LFP printers

Board converters

In-plant print facilities

Advertising agencies

Industry

Service companies

Public sector

Resellers

Retailers

Small/Home offices (SoHo)

In-plant print facilities

Key products Coated Woodfree Paper(CWF sheets and reels)

Uncoated Woodfree Paper (UWF sheets and reels)

Coated wood-containing paper (CME sheets and reels)

Coloured paper

Recycled paper

Creative specialities and Text & Cover

Premium offset

Substrates for digital print

Envelopes

Graphical and packaging boards

Carbonless, self-adhesive sheets and synthetic substrates

Book paper

Cards

Drawing papers

Uncoated office paper

Coated office paper

Coloured office paper


Share of Papyrus net sales, %

67 22

Key competitors Antalis

Europapier

Igepa

Inapa

PaperlinX

Niche paper manufacturers

Antalis

Europapier

Igepa

Inapa

PaperlinX

Office Supply Retail

Papyrus position and competitive advantages within the product area

Leading market position in Continental Europe

Efficient logistics solutions and supporting services

High product availability of an attractive and wide range of products

Papyrus own brands available in 20 countries

Strong supplier portfolio

Environmental responsibility

Paper consultancy and training seminars

Technical support

Papyrus e-Shop and system-to-system e-commerce capabilities

Market leader in western Continental Europe

Supporting services

Retail concepts

Papyrus own brands available in 20 countries

Environmental responsibility

Papyrus e-Shop and system-to-system e-commerce capabilities


Papyrus Supplies


50%PAPYRUS SUPPLIES

ACCOUNTS FOR MORE THAN 50% OF PAPYRUS GROUP

TOTAL SALES IN THE NORDIC COUNTRIES

Papyrus Supplies

In the Nordic countries, Papyrus Supplies accounts for more than 50 percent of the total sales of Papyrus Group and the busi-ness area has full geographic coverage in this region. In 2014, Papyrus completed a strategic acquisition to further enhance its offering to the Facility Management and Cleaning segment in the fast growing Stockholm region.

Business in briefPapyrus Supplies supports industry, service companies and the public sector by supplying items ranging from cleaning materials, hygiene paper and catering products to industrial packaging and copy paper.

There is a growing demand for enhanced operational cost efficiency, simplified administration and development of efficient sourcing processes among private busi-

Market leader in the Nordic countries Papyrus Supplies is one of the largest suppliers of cleaning, hygiene and industrial packaging products in the Nordic countries. With annual sales of EUR 183 million, and some 180 dedicated employees, Papyrus Supplies supports more than 16,000 customers in the Nordic countries. In 2014, Papyrus Supplies further reinforced its position by completing yet another strategic acquisition.

nesses and in the public sector, as a result of tighter budgets and a need to focus on core business. This is where Papyrus Sup-plies can contribute through its services and products. Consequently, Papyrus has been working to expand Papyrus Supplies in Sweden, Denmark, Norway and Finland over the past number of years, with the aim of facilitating further growth and development in selected markets.

Supported by the geographical reach of the Group’s paper business, the Papyrus Supplies business area is attracting major international customers looking for cross-border solutions and has a growing busi-ness also outside the Nordic countries.

Attractive service and product mixTo support customers in the manufactur-ing industry, Papyrus Supplies provides everything from corrugated boxes, strap-

PAPYRUS SUPPLIES

Industry

Papyrus Supplies

Manufacturing

Automotive

Transportation

Wholesale traders

Service companies Public sector

National and regional governments

Public authorities

Municipalities

Recycling and sanitation

Public healthcare

Facility Manage-ment companies

Contract cleaners

Major service sectors

Private healthcare

Industry

Papyrus Supplies

Manufacturing industry

Automotive

Warehouse and transport

Pharmaceutical

Furniture

Process industry

Service companies Public sector

National and regional governments

Recycling and sanitation

Public healthcare

Offices

Facility Manage-ment companies

Contract cleaners

Private healthcare


WE LOVE MONDAYS!

The business concept of Papyrus Supplies is designed to support the everyday operations of customers, enabling them to focus on their core business. To achieve this, Papyrus Supplies offers a broad range of distribution services and products from one single source – saving time, reducing costs and ensuring smooth day-to-day opera-tions for small, medium-sized and large companies. The working week begins on a Monday and the con-cept “We love Mondays” aims to support the message that Papyrus Supplies makes customers’ working days easier.

OVER 30 YEARS OF EXPERIENCE

The modern history of Papyrus S upplies started back in the 1980s. The journey from a collection of small wholesalers in the paper industry to becoming the company it is today reflects the corporate cul-ture of Papyrus, fostering various forms of entrepreneurship and expertise.

Over time, a new business area grew, which is currently a leading wholesaler in the Nordic region of packaging products, hygiene arti-cles and cleaning products.

Since March 2011, the business area is known as Papyrus Supplies to provide a clearer identity and better reflect the focus of the busi-ness in the market. In 2013, a new page was written in the history of Papyrus Supplies when the com-pany became a separate legal entity, creating the right foundation to continue to develop the busi-nesses based on current market opportunities. In 2014, the business has been further strengthened.

Papyrus Supplies

ping and tape to stretch film, cushioning, bags and tissue. In short, the offering of products and services includes design, sourcing, sale and distribution of custom-ised packaging and packaging equipment and the sale and distribution of custom and standard corrugated boxes. Solutions for these customers are usually tailored in terms of product selection, e-business support, workflow and logistics, providing customers with the means to run a more efficient packing operation and save time, cost, capital tie-up and space.

The facility supplies product range for the Service Companies and Public Sector segments includes professional cleaning systems, floorcare items, tissue and dis-pensers, skin care products and a wide range of catering products. The range also includes all products that would typically be found on a cleaning trolley, such as commercial cleaning chemicals, wipers, soap, trash bags and disposable gloves. With a full service platform and consulta-tive approach, Papyrus Supplies is serving major national accounts and regional customers, as well as customers in the public sector.

Extensive range of own-branded productsTo ensure long-term profitability, Papyrus Supplies has developed its own-branded range to continuously provide customers with the best buying option.

The own-branded assortment of Papyrus Supplies is easily recognised by its distin-guishable “We love Mondays” label and the unique “Monday” pattern. The focused and structured sourcing approach facilitates the continuous development of high-quality own-branded products at competitive prices compared with equiva-lent products from leading brand vendors.

Higher efficiency through e-businessE-service is an integrated part of the busi-ness. In fact, nearly 60 percent of all orders in 2014 were e-orders, which is a clear endorsement of the value of the e-business capabilities of Papyrus Supplies. Since its beginnings back in 1985 as the first e-business company in the industry, Papyrus has been raising the standard of its e-solutions. The company’s offering includes localised e-shops, cus-tomised portals and advanced EDI solu-tions, thereby helping customers to reduce costs in their purchasing processes and minimise the cost per transaction.

Papyrus segments and offeringsPapyrus Supplies focuses on two major market segments – the segment of facility management supplies and the industrial packaging segment. Within these seg-ments Papyrus Supplies offers value-add-ing solutions to service companies, the public sector and industrial companies.

Offering towards service companiesFacility Management companies and con-tract cleaners account for the majority of demand in this customer segment, which also includes other major service sectors. There is a growing trend toward consoli-dation in this customer segment, which is one of the most growth-oriented areas for Papyrus Supplies. In 2014, Papyrus Supplies signed a number of long-term Pan-Nordic contracts with market leaders in the Facility Management segment.

While the sales offering is based on competence and a high level of service, the efficient logistics solutions of Papyrus Supplies also plays a key role. Large Facil-ity Management companies handle thou-sands of contracts on a daily basis, which often leads to complex supply chains for cleaning materials. Working with Papyrus Supplies enables these companies to focus on their core business. With deliveries of products specially adapted to customers’ cleaning methods – and even specifically tailored to each cleaning object – waste in terms of costs and time is minimised. With predefined delivery plans available through customised e-portals, administration costs can be cut to a minimum. Papyrus Supplies has a proven and well-functioning concept that is highly valued by many leading Facility Management companies and an ability to conduct large-scale contract mobilisations when needed.

Cash & carry services have been identi-fied as a core area in efforts to further lev-erage the business area’s unique position among Facility Management companies and contract cleaners. Through the acqui-sitions carried out in 2011-2014, Papyrus Supplies has laid the foundation for a value-creating cash & carry concept. Cash & carry services will not only enhance the growth potential of Papyrus Supplies among small and medium-sized contract cleaners, they will also serve as valuable support for larger Facility Management companies with more complex customer structures and distribution needs.

By combining the strength of the core offering from Papyrus Supplies – with time

and cost-saving solutions supported by e-commerce capabilities, rapid contract mobilization and key account manage-ment with the certified cleaning compe-tence and training offered by the incor-porated cash & carry centres – bigger contract cleaners and Facility Manage-ment companies can truly benefit from an industry unique concept.

Offering towards public sector organisationsKey customers in the public sector are public authorities, municipalities, county councils, the sanitation industry and pri-vate geriatric care, all of which are dem-onstrating long-term stable growth in demand. The position of Papyrus Supplies varies in each market depending on the conditions prevailing in each country. In Sweden, Papyrus Supplies is one of the leading companies, with considerable sales of hygiene paper, bags and sacks, cleaning products and office paper.

Municipalities work extensively with their environmental objectives and its translation into local environmental plans and policies. In late March a selection of


Papyrus Supplies

In 2011–2013 Papyrus Supplies com-pleted five strategic acquisitions in the Nordic region. This was fol-lowed up in 2014 with the acquisi-tion of Städshopen, a Swedish retailer within professional cleaning with a strong local presence in the area of Stockholm. Today, Papyrus Supplies is one of a few companies with a Pan-Nordic offering.

Four out of the six acquisitions that Papyrus Supplies has done since 2011 has been executed in Sweden.

Strong presence in top three regions in Sweden2011–2013 Papyrus Supplies acquired three cash & carry specialists situated in Sweden’s top three regions when it comes to size and pace of growth – Stockholm, Gothenburg and Malmö. In 2014, this was followed up with another acquisition in Stockholm. The company, Städshopen in Stockholm

AB, is a professional cleaning retailer specialised in cleaning techniques and machines, as well as training and edu-cation in cleaning methods.

Through these acquisitions, Papyrus Supplies further strengthened its offer-ing in the three major regions of Swe-den with regular distribution and its cash & carry concept. This provides customers with ready access to the company’s cleaning assortment and expertise.

Consistency and well-coordi-nated Pan-Nordic serviceAcquisitions have also been conducted in Norway and Finland, expanding the reach in the Nordic region. This has resulted in Papyrus Supplies being one of a small number of companies with the capacity to serve interna-tional customers across borders in a consistent and well-coordinated manner.

Enhancing the offering through acquisitionsSTRATEGIC ACQUISITIONS

To extend the offering toward the Nordic manufacturing industry seg-ment, Papyrus acquired the Norwe-gian packaging supplier Arto Embal-lasje AS at the beginning of 2012. Arto Emballasje AS was founded in 1982 and specialises in industrial packaging and offers an extensive range of high-quality products. The company is situated in Oslo and is well known for its strong presence in the region.

Later in the same year, the Finnish company Siisti-Piste Oy was acquired. The company, which serves the public sector, cleaning companies and busi-nesses by offering direct deliveries and cash & carry, has a strong local pres-ence in southern Finland. Today, the company operates under the name Papyrus Supplies in Finland and through the acquisition, Papyrus Supplies has achieved the number one position in the Finnish market segment for cleaning and hygiene supplies.


16KGPER CAPITA

CONSUMPTION OF TISSUE IN

WESTERN EUROPE

Papyrus Supplies

“green” bags and sacks made from bio-based polyethylene were introduced to the market in response to the increasing need for environmentally friendly alterna-tives. The switching of approximately 200 tons of fossil based plastics to bio-based bags by the Västra Götaland Region in Sweden serves as a good example of how the product range is constantly developed to attract new business.

During 2014, Papyrus Supplies contin-ued to strengthen its position in the pub-lic sector. Not least through the frame-work agreement with Kammarkollegiet (Statens inköpscentral), the agency that provides national procurement services to local, regional and central government authorities in Sweden.

Offering towards industrial companiesPapyrus Supplies offers a highly competi-tive concept to large industrial corpora-tions, whereby all or parts of the purchas-ing service can be outsourced to Papyrus Supplies. By standardising and introduc-ing innovative packaging solutions, Papy-rus Supplies creates optimised purchasing procedures that result in a higher level of cost efficiency. With a customised e-portal as a base, the flow of packaging materials to various production units is efficiently handled. The result is a supply concept that cuts costs on a daily basis in such areas as the automotive industry. In addi-tion, Papyrus Supplies has expanded its support to large international customers by delivering packaging material across Europe.

Industrial customers are primarily large and medium-sized companies active in the manufacturing, transportation, ware-housing and automotive industries. To meet customer needs, bespoke solutions are often necessary. The segment is com-petitive and performance is directly linked to the trend in industrial production. Despite the sensitivity to changes in the global economy, the packaging segment is

rewarding for such companies as Papyrus. The distributor-served share of the pack-aging market is low, meaning that a mar-ket participant that can offer high levels of value and service, along with access to many manufacturers, has the opportunity to increase its share. Papyrus works along-side industry customers to identify key

areas where extra value can be created in order to support objectives and provide customers with the means to run a more efficient packing operation.

In a market estimated to grow by 2 per-cent, Papyrus Supplies displayed a healthy growth of industrial packaging products to industrial companies during 2014.


An extensive range of own branded products.

Papyrus Supplies

Papyrus Supplies – an overview

Customer group Industry Service companies Public sector

Customer facts Customers in the manufactur-ing, automotive, wholesale traders and transportation industries are primarily large and medium-sized companies located in the Nordic countries. Papyrus Supplies serves more than 2,900 companies – making it the market leader in the “Industry” segment.

Facility Management compa-nies and contract cleaners account for the majority of demand in this customer segment, which also includes financial service companies and other major service sectors.

The key customers in the Public sector are public authorities, municipalities, national and regional governments and pub-lic health care – all of which are demonstrating long-term stable growth in demand.

Key products Custom and standard corru-gated boxes

Mailers

Stretch films

Wrap and strapping supplies

Tape and sealing

Cushioning

Bags and plastics

Packaging equipment


Facilities maintenance equip-ment and machines

Commercial cleaning chemi-cals

Disinfectants

Mops and cloths

Bags and sacks




Skin care products

Office paper

Facilities maintenance equip-ment and machines

Commercial cleaning chemi-cals

Disinfectants

Mops and cloths

Bags and sacks




Skin care products

Office paper

Key competitors Boxon

CC & CO

Maske

NorEngros

Nyblomsgruppen

Wittusen & Jensen

MultiLine

NorEngros

Procurator

Staples

Pamark

MultiLine

NorEngros

Procurator

Staples

Pamark

Papyrus competitive advantages in the customer area

Broad product range

Packaging expertise

Leading logistics and outsourcing solutions

European warehousing and distribution infrastructure

e-Shop and S2S e-commerce capabilities

Key Account Management

Certified cleaning competence

Unique supply concept for contract cleaners and Facility Management companies

Full coverage in the Nordic countries

Rapid and large-scale contract mobilisations


Private label programme

Key Account Management

Unique tender competence

Product know-how and consultancy

Environmentally responsible logistic solutions



FUEGO

Fuego® is an assortment of finest structured papers with a unique combination of primal character and striking colours. Perfect for both creative and plain printed materials where structure is the priority. Wide range of matching envelopes availa-ble. Fuego® is part of Specials®, Papyrus assortment brand for care-fully selected creative papers from leading European manufacturers of finest papers.

Applications: Luxury packaging, tags and labels, folders, invitation and greeting cards, covers, bookend papers, stationary.


VinjettFuego Lines® White 120 g/m2



Mission and core values

Reliability every step of the wayReliability is the overall brand promise at Papyrus and thus the company’s single most important commitment to its customers. The company’s mission is to deliver value to its customers by providing efficient and reliable solutions for the supply of paper, facility management supplies and packaging products. Papyrus achieves this by offering an attractive product assortment, value-added services and superior logistics solutions.

MISSION AND CORE VALUES

THE CORE VALUES OF PAPYRUS

The core values of Papyrus form the basis for its operations, the manner in which employees interact with customers and each other, and the selection of strategies the company employs to fulfil its mission.

TRUSTWORTHYProving reliability by delivering on promises. Customers should trust Papyrus and feel confident every time they do business with the company.

FRIENDLYHaving respect for individuals, promoting cooperation and giving credit for achievements. This friendly approach is built on a positive attitude, an open mind, a smile and a can-do attitude.

PROFESSIONALA commitment to continuous improvements, generating financial results, being cost-conscious and carrying through on plans and decisions. Showing a mind for business and the ability to go from one-offs to repeat business.

RESPONSIVEAn eagerness to listen and respond quickly, based on a commit-ment to serve customers in the best way possible. Identifying needs and recommending solutions.

INSPIRINGContinuously innovating the offering to lead development in the industry and encouraging customers and colleagues to try new solutions and technologies.


Papyrus employees

Papyrus has some 1,900 employees with a wide variety of professions. Their assign-ments range from purchasing to customer service – supported by an effective IT and supply chain system. All of this takes place in an international arena. Papyrus is repre-sented in 20 countries across Europe.

Together, the employees serve more than 65,000 customers each year. Effec-tive cooperation between the different entities is required to successfully carry out this task. At the same time, the experi-

Geared towards meeting customers’ needsPapyrus aims to be an attractive employer and provide an environment in which employees enjoy work-ing together to deliver business success and where development is a top priority, at both an individual and organisational level. This approach improves the company’s ability to recruit, foster and retain the required competence, thus positively influencing the ability of Papyrus to create long-term value for its customers and, in doing so, strengthening its position as the profitable market leader.

PAPYRUS EMPLOYEES

ence gained by serving thousands of cus-tomers leads to the accumulation of com-petitive strength.

Competence – a key factor for successPapyrus strives to ensure that the com-pany can recruit and retain the right peo-ple. This is crucial as the business expands internationally and there is thus a growing need to have the right individuals and expertise in senior positions, middle man-agement and other key positions. Succes-

sion planning is systematically carried out to ensure that the company has the right competencies.

An important component in creating successful leadership is offering employees competence development in their particular areas. Papyrus places great emphasis on creating a workplace that encourages fur-ther development and independent drive of initiatives, while clearly staking out the goals and paths to be followed to achieve these.


Career opportunities are systematically created at Papyrus, enabling employees to test other positions in the Group. This results in a more dynamic organisation and good opportunities for individual development, which clearly represent a gain for Papyrus and its customers.

Developing Papyrus leadersPapyrus is continuously evaluating the need for structural support in the area of human resources. Leaders at Papyrus play an important role in the success of the company.

With the leadership@papyrus initiative launched in 2014, the company is target-ing all of its leaders. The training pro-gramme, which spans over two years, aims to inspire good leadership practises, thus also supporting the transformation of Papyrus in terms of its line of business. The programme covers important topics, such as communication, empowerment, goal-based leadership and individual development. It also offers an opportunity for leaders to network, learn practical tools and share best practices.

The Papyrus Leadership Programme, which is another Group initiative, contin-ued for the second year. The aim of the programme is to provide skills develop-ment to 16 employees annually over the next few years. The main target group is employees with the potential and skills to assume senior management positions and become part of the top 70 managers at Papyrus. The Leadership Programme extends over nine months and consists of four training modules covering leadership practises, strategic planning and execu-tion, in-depth understanding of the com-pany’s business model, profitability drivers and change management.

In autumn 2014, Papyrus launched the Papyrus Leadership Programme Top. The programme, which spans over nine months, aims to develop the next genera-tion of top leaders by networking and fostering business skills in cooperation with an external learning partner.

Papyrus employees

… a workplace that encourages further development and independent drive of initiatives, while clearly staking out the goals and paths to be followed to achieve these.

In 2015, the Group will launch the Papyrus Development Programme (PDP), where a selected number of specialists will be given the opportunity to further develop their skills in areas such as strat-egy and sales transformation, business finance and personal development. The ambition of the PDP is to continue to develop, engage and further energise high-performing experts who can impact organisational performance.

Structured approach towards developmentProviding people with the right skills and instilling the right attitude are central to achieving business objectives. The appraisal discussion is one of many impor-tant tools to promote the desired develop-ment on an individual level and for the team as a whole. Papyrus deploys a Group-wide appraisal discussion process called the Papyrus Performance Manage-ment Process (PPMp). It is based on inter-nal and external best practices as support in the creation of a winning structure by enabling employees to achieve their full potential and to be recognised for their achievements. An intranet-based Employee Performance Portal (EPP) has been established to facilitate the PPMp dialogue, track development and simplify documentation. The process, and its accompanying tools, is implemented in all parts of the organisation. More than 97 percent of employees completed an appraisal discussion with their manager in 2014.

New Learning Management SystemAt Papyrus, the idea is to learn while car-rying out everyday tasks. The company believes that it is important to identify the key lessons learned in different teams and to share these with other parts of the business. To expand the learning journey and to offer input from multiple sources, Papyrus rolled out a Learning Manage-ment System (LMS) in 2014. The LMS is integrated with the existing Employee

Performance Portal (EPP) and hosts e-learning courses. The purpose of the LMS is to serve as a critical tool to help close the gap in terms of behavioural and technical competencies among indi-vidual employees, in line with the appraisal discussion and the associated development plans and guidance on how to improve performance.

Employee Survey demonstrates a positive trendIt is the people of Papyrus who give the Group the edge over its competitors and engaged employees are a key success factor for the company. At Papyrus, there is a tradition of seeking the opin-ion of employees and using their feed-back to improve the organisation and work methods. The Employee Motiva-tion Survey is performed on a biennial basis and the 2014 survey followed up the one conducted in 2012. In total, 1,567 employees completed the survey, yielding a very high response rate of 83 percent. A positive trend was noted and the indexes for job satisfaction, engage-ment and leadership all improved. The results of the survey are used as a tool to further improve the organisational cli-mate and areas of improvement are addressed in a structured process.

97%MORE THAN 97 PERCENT

OF EMPLOYEES COMPLETED AN APPRAISAL

DISCUSSION 2014


Papyrus employees

We have a great teamVOICES FROM THE ORGANISATION

Having already extensive experience of logistics, I joined Papyrus France in 2007 as Team Leader and was tasked with manag-ing 20 warehouse workers dedicated to order picking. Over the years, I have been part of many interesting projects. The suc-cessful roll-out of SAP in France 2011, when we implemented a Group-wide SAP IT plat-form, is one good example. In that project, I was responsible for providing training and support to the logistics team during the intensive go-live period, and ever since then I have been an acknowledged SAP expert and key user.

Allows me to develop my skills every day.

In 2012, I was given new challenges by being entrusted with responsibility for the implementation of the new Customer Service Logistics, with the aim of improv-ing delivery accuracy while reducing inef-ficiencies and costs. Reliability in relation to customers is crucial for us, but to remain competitive, we also need to work in a smarter way. Today, I am also respon-sible for the coordination of our business flows across borders, working as the sin-gle point of contact for my colleagues in France, Germany, the Netherlands and Belgium.

PHILIPPE GOUVEIA Quality manager at Papyrus France

Agile organisation through diversityVariation contributes to new ideas, smarter ways of working and a higher level of flexi-bility when it comes to adjusting to new needs and demands from customers. This is why Papyrus requires diversity in terms of such factors as age, gender, language and background.

Papyrus emphasises the issue of gender equality so that both current and future managers at Papyrus can work towards more even gender distribution by achieving a better balance in the recruitment process.

The share of female employees in the Group was 33 percent in 2014.

Aiming for a sound work environmentThe work environment is a strategic issue for Papyrus. The aim is to create a physi-cally, mentally and socially sound and fulfilling workplace for all employees. Preventive measures are taken to elimi-nate the risk of occupational injury and work-related ill health. In 2014, the num-ber of hours lost due to accidents at the workplace declined by 0.9 percentage points to 12.1 hours per one million working hours. Continuous training is conducted to prevent accidents at the workplace. Total sickness absence at

Papyrus was 3.6 percent compared with 3.8 percent in the preceding year.

An occupational health and safety report is compiled twice a year and presented to the Senior Executive Team for review and decision on operational improvements. Countries experiencing above average sickness absence or work-place accidents compared with country benchmarks are requested to prepare actions plans to address the underlying reasons for the unfavourable figures.

I have really appreciated the diversity in my job and the trust the company has placed in me and my capabilities. Papyrus allows me to develop my skills every day and to meet inspiring people inside and outside the company. My experience is that if you are motivated and like to get involved in your work, Papyrus offers the opportunity to really enhance your pro-fessional development.


Papyrus employees

I joined Papyrus in 1983 and, throughout my years at the company, I have held the position of Secretary or Executive Assistant to the management at Papyrus in Denmark. Since December 2006, I have been the Executive Assistant to Søren Gaardboe, who is the Senior Vice President of the Nordic and Benelux France region. In addition to planning meetings, correspondence and travel book-ings for Sören, my work includes a variety of other important tasks and activities that facilitate our day-to-day operation.

For me personally, it has been interesting to follow the devel-opment of my company from a small-scale local paper merchant to becoming part of a leading Pan-European operation with a strong brand. The good reputation of the company really makes me proud to be a Papyrus employee.

Working at Papyrus has always been a pleasure and, over the years, I have gained many new friends and colleagues from all over Europe. For a younger person, 31 years might seem like an eternity, but I can assure them that Papyrus has always been an interesting workplace over the years, with supportive colleagues and new challenges every day.

TOVE RAVNBORG Executive Assistant at Papyrus Denmark

NATHALIE BAEYENS Team Leader internal sales at Papyrus Belgium

When I joined Papyrus in 1996, I started working as a member of the internal sales team and was the youngest member of the crew for a few years. I have always had a lot of energy and I soon discovered the need for more variation in my working tasks. I started to engage myself in smaller projects and to assume responsibility for solv-ing problems, wherever and whenever I could.

After a few years of serving the office paper market, it was time for a change. I transitioned into the role of a reselling specialist and subsequently into a back office coordinator for our outdoor sales. For the past three years, my job has been to lead the internal sales team for Graphical & Business paper. Issues like people manage-ment and time management can sometimes be challeng-ing, but last year I participated in the Papyrus Leadership Program, which has broadened and strengthened my leadership skills.

Throughout the years, I have received good support and beneficial coaching from my superiors, which has expanded my professional and personal experience. Papyrus has not only offered me the opportunity to dis-cover many competent and committed people in my organisation, but it has also helped me to uncover my talents. So for me, it’s a pleasure to work at Papyrus and I hope that I can pass on some of my passion to customers and my fellow colleagues.

Expanded my professional and personal experience.

Has always been an interesting workplace.


Responsibility and good corporate citizen-ship are fundamental to the sustainability of the business of Papyrus and its ability to create long-term value for stakeholders. With regard to sustainability, Papyrus takes a systematic approach at every stage of its operations, from purchasing to sales and delivery.

A commitment for a better tomorrowPapyrus customers continue to require cost-effective products and services that meet their end-users’ needs. When defining their procurement policies and make purchasing decisions, they also take into consideration the sustainability performance of suppliers and their supply chains. This is an aspect that Papyrus takes seriously and views positively.

A sustainable operationPapyrus uses sustainability as an umbrella term to describe responsible business operations that encompass economic, environmental and social responsibility. The company’s Code of Ethics, together with other Group policies, forms the basis for sustainability activities at Papyrus that are aimed at building and maintaining a

SUSTAINABILITY

Sustainability

relationship of trust with customers, shareholders, employees, suppliers and the general public.

Papyrus Code of Ethics Papyrus is committed to fair and ethical business practices. The Papyrus Code of Ethics contains all of the company’s major policies and includes, for example, princi-


CODE OF ETHICS

The Papyrus Code of Ethics contains all of the company’s major policies and principles that define the Group-wide approach to important topics. • Business Practice Policy – brings together the key elements for maintaining ethical business prac-tices and a responsible operation

• Communications Policy and Guide-lines – defines the company’s com-munication principles

• Competition Law Compliance Pro-gram – sets out the approach to free and fair competition at Papyrus

• Environmental Policy – forms the principals for the company’s envir-onmental work

• Occupational Health and Safety Pol-icy – defines the principals for activ-ities related to workplace health and safety

Sustainability

ples for environmental work and social responsibility. The principles and guide-lines for business practice support the enforcement of fair and ethical conduct in the company’s day-to-day business. Alongside the company’s core values, the Papyrus Code of Ethics sets the standard of conduct required of management and employees to ensure that the company’s affairs are managed in the highest ethical manner.

Supporting global principlesPapyrus honours and supports globally accepted human and labour rights, for which the minimum requirements are those defined by the United Nations (UN) and the eight core conventions of the International Labour Organization (ILO). The company also prioritises the creation of a healthy and safe workplace for all of its employees. Discrimination or harass-ment of any employee is neither permit-ted nor tolerated, and diversity is recog-nised as a strength.

As a company, Papyrus aims to be a responsible member of the communities in which it operates through focused part-nerships at local and national levels. All of the Group’s employees are encouraged to participate in local community work and raise funds for the local charities of their

choice. Where appropriate, Papyrus sup-ports charitable organisations by donating obsolete stock free of charge.

Papyrus products do not come from just anyonePapyrus is committed to offering its customers socially and environmentally sound products. Environmental per-formance and social responsibility thus rep resent key factors for Papyrus in the selection of products and suppliers. Accordingly, Papyrus never engages in spot buying paper from unaudited suppliers or unknown origins.

Papyrus recognises the established envi-ronmental labelling schemes and respects the validity of ISO 14001 and EMAS for audited environmental management sys-tems, FSC and PEFC for chain of custody, and Blauer Engel and FSC Recycling for recycled products.

Supporting customers to make informed purchase decisionsThe aim of Papyrus is to offer the products its customers require in terms of function, quality and sustainability-related consider-ations. In our ongoing dialogue with cus-tomers, we provide them with transparent and objective information about our offer-ing to help them make well-informed

decisions in all areas, including those connected to sustainability.

A more carbon-friendly operationInitiatives are continuously taken to reduce the environmental impact of Papyrus activities. For example, the Group’s vehicle fleet in Sweden has been running on bio-diesel fuel for more than ten years. Papyrus recycles and reuses whatever it can – the reuse of pallets is just one example of this approach. The transport and logistics operations of Papyrus in Switzerland and the Netherlands are carbon neutral as verified by independent CO2 audits, according to greenhouse gas protocol rules. Measures to reduce emissions are implemented on a yearly basis and the remaining emissions are offset.

Strict environmental standards in the industryEuropean paper manufacturers comply with strict environmental standards, continuously enhancing the equilibrium between environmental responsibility and energy use. The industry also assumes responsibility for raw material purchasing. In addition, ISO environmental certifica-tion is established practice. All parties involved in the production and supply of paper work continuously to further

Health and safety metrics 2014 2013 2012 2011

Gender distribution, female/male, % 33/67 34/66 32/68 32/68

Accidents at workplace* 17.1 17.6 21.9 20.0

Hours lost due to accidents* 12.1 13.0 13.8 13.6

Total sickness absence, % 3.6 3.8 4.2 4.4

* Accidents/Hours lost per one million working hours

58%PAPYRUS SHARE OF FSC AND PEFC- CERTIFIED

PRODUCTS SOLD IN 2014


improve the situation. While there may remain a lack of consensus on certain issues, all involved agree that for the paper industry to continue to flourish, production strategies must reflect the responsibilities of the sector.

Using 56 percent eco-friendly energyToday, European paper mills source 56 percent of their primary energy through eco-friendly, almost carbon neutral bio-mass. The paper sector is the largest industrial producer of bioenergy, generat-ing 20 percent of the biomass-based energy in Europe (source: CEPI). This is extremely important for Papyrus, which is why the use of biomass features promi-nently in the company’s environmental policy. Since 1990, CO2 emission to pro-duce 1 to of paper has been reduced by 45 percent (source: CEPI). However, car-bon emissions is only one of many factors when considering the environmental com-patibility of paper. Accordingly, Papyrus also actively promotes the use of raw materials from responsibly managed

forests as an important vehicle to prevent further climate change.

The European paper industry is a leading recycler By promoting products and applications based on fibres from sustainable sources as well as recycling paper, Papyrus con-tributes to an environmentally responsible way of using wood resources. The regen-eration of forest exceeds the logging rate, meaning that sustainably managed forests can be the best weapon to fight global warming, since trees bind carbon dioxide through photosynthesis. Furthermore, wood fibres can be reused up to seven times. In 2013, 72 percent of paper con-sumed in Europe was recycled. This achievement is remarkable, considering that the current paper consumption is at the same level as 1998 but the amount recycled is 1.5 times higher (source: CEPI).

Papyrus Environmental PolicyThe Papyrus Environmental Policy covers all aspects of the product lifecycle,

Since 1990, co2 emission to produce 1 ton of paper has been reduced by 45 percent.

A HELPING HAND TO YOUNG PATIENTS

The Katharinenhöhe rehabilitation clinic in Schwarzwald, Germany, specialises in easing the physical and mental burdens of young patients and their families on their path to recovery from often pains-taking treatments for severe chronic illnesses. Through a diverse thera-peutic offering, specialists at Kath-arinenhöhe succeed in offering new prospects to the affected children and teenagers despite the difficult situation. Papyrus in Germany has been supporting the clinic through donations since 1994.

Acting as the go-between for manufac-turers and users, Papyrus considers itself to have a special responsibility when it comes to sustainability. In its role as a buyer and seller of paper, packaging products and facility supplies, it is the obligation of Papyrus to work closely with producers. In its role as a business partner to customers, it is the duty of Papyrus to create transparency in areas that matter most to buyers and provide them with all the necessary information. Overall, the objective as a go-between is clear: to push environmental and social issues further up the agenda – encourag-ing producers and buyers to manufac-ture and use eco-friendly products. In so

doing, Papyrus must not neglect its role as a merchant, and must do everything within the company’s power to mini-mise its own carbon footprint.

ENCOURAGING FURTHER STEPS

Sustainability

including manufacturers, suppliers and customers. Through continuous improve-ments, Papyrus strives to minimise and prevent the negative impact on the envi-ronment. Papyrus complies with national legislation requirements that set the mini-mum standard for the company’s environ-mental performance and conduct. In fact, Papyrus strives to go further than legisla-tive requirements whenever possible, sup-porting a proactive and precautionary approach to environmental challenges.

The key elements of the policy• Carbon Footprint – Responsibly reduce

the carbon footprint (greenhouse gas emissions) related to the Group’s energy use, transportation activities and waste management.

• Environmental Supply Chain – Sustain-able use of natural resources, such as water, fibre and other raw materials.

• Communication – Meet the expecta-tions of customers and stakeholders.


MEMBER OF THE GLOBAL FOREST & TRADE NETWORK

The Global Forest & Trade Network (GFTN) is the WWF’s initiative to eliminate illegal logging and drive improvements in forest manage-ment while transforming the global marketplace into a force for saving the world’s valuable and threatened forests. First established in 1991, it is the world’s longest-running and largest forest and trade programme of its kind – providing assistance to hundreds of companies in many countries. Papyrus strategic pro-curement is located in Germany. Papyrus Deutschland GmbH is the only European paper merchant to be a member of the GFTN and thus fulfils the strict conditions of responsible paper sourcing.

ALL PAPYRUS COMPANIES FSC CERTIFIED

In 2003, Papyrus was the first Euro-pean merchant to receive FSC certifi-cation. Today, all Papyrus companies have chain-of-custody certification, which enables the Group to guaran-tee the origin of the raw material of the paper product. By end of 2014, the integration of all Papyrus com-panies into a single, shared FSC and PEFC multi-site (SQS-COC-100158, PEFC/34519) was finalised.

FSC stands for the Forest Steward-ship Council and PEFC for the Pro-gramme for the Endorsement of the Forest Certification schemes. In Europe, 32 percent of total paper, tissue and board is sold with a chain-of-custody certificate (source: CEPI, 2013). The Papyrus share of FSC and PEFC-certified sales of stock prod-ucts was 58 percent in 2014.

Sustainability


Three-year summary

Three-year summaryAs the graphs below show, 2014 was a year with improved efficiency, increased profit levels and a strong cash flow. This contributed to a contin-ued reduction in debt and a solid financial platform for the years ahead.

1,200 1.0

1,800 4.0

1,400 2.0

1,600

01,000


EBITDA, % (excl. restructuring and divestments)

5.0

Net sales and EBITDA %

EUR million

2,000

%

3.0

2012 2013 201410

30

40

0

Operating profit

EUR million

50

20

2012 2013 2014

25

50

02012 2013 2014

Operating cash flow

EUR million

100

75

80

0

Cash conversion rate

%

140

100

120

40

2012 2013 2014

20

60

0

Net debt

EUR million

400

200

300

100

2012 2013 2014

Net sales in 2014 were in line with the general market trend of competitive market conditions and lower paper consumption, driven mainly by new media consumption patterns.

In 2014, operating profit increased by 61 percent from EUR 23.0 million to EUR 37.0 million. The increase in operating profit was mainly due to reduced costs, which offset the loss in margins.

The ongoing modernisation programme resulted in a reduction in the number of employees, while the sales level remained more stable, resulting in an improvement in sales per employee.

Operating cash flow remained at a favour-able level due to a continued decline in working capital.

The cash conversion rate target is >100% and the Group remained ahead of target in 2014. Cash conversion rate is defined as Cash flow from operating activities divided by EBITDA excl. restructuring costs.

Net debt continued to decline on account of a positive cash flow.

1,400

1,200

500

1,800

1,600

3001,000


Sales per employee, EUR thousand

2012 2013 2014

900

Net sales and sales per employee

EUR million

2,000

EUR thousands

700

800

400

600


Financial Performance

cash and undrawn credit facilities amounted to EUR 168.1 million. At year-end 2014, consolidated equity amounted to EUR 182.6 million.

The positive development in the finan-cial performance is the result of the com-pany’s continuous improvement efforts in accordance with the established strategy. The stable financial situation creates a solid position for the years ahead.

Investments Total fixed assets declined by EUR 53.0 million in 2014 due, in part, to the divest-ment of real estate in Switzerland and the deconsolidation of real estate in Germany. Total capital expenditure during the year amounted to EUR 2.3 million, of which the entire amount was attributable to mainte-nance investments. Depreciation of exist-ing fixed assets amounted to EUR 6.5 million and amortisation of intangible assets, including impairments, amounted to EUR 12.6 million, together totalling EUR 19.1 million.

During 2014, Papyrus acquired one company in Sweden, in the Papyrus Supplies business area.

Sales in 2014 totalled EUR 1,566.8 million, which was EUR 37.6 million, or 2 percent, lower than in 2013. This was attributable to a 2-percent increase in volumes and a 4-percent reduction in average prices due to the competitive market conditions. Exchange rate movements had a limited impact on the sales and costs of Papyrus during the year.

Operating profit up 61 percentOperating profit for Papyrus increased by 61 percent to EUR 37.0 million from EUR 23.0 million. EBITDA, excluding restruc-turing costs and divestments, increased 14 percent from EUR 50.0 million to EUR 57.0 million.

The higher profit level was mainly due to reduced costs, which offset the lower margins. In 2014, the gross margin declined 0.6 percentage points to 14.7 percent as a result of the challenging trading conditions.

The Group’s modernisation programme continued to significantly impact costs during 2014. The cost trend was positive, with a decrease of EUR 21.9 million at current exchange rates, while the decline was EUR 19.6 million at fixed exchange rates. During the year, Papyrus divested the Dintikon warehouse in Switzerland and entered a lease arrangement for and deconsolidated the German Heimstetten building arrangement, which had a total positive impact on operating profit of EUR 5.8 million.

The ongoing reduction in the number of employees resulted in restructuring costs of EUR 14.2 million compared with EUR 14.6 million in the preceding year, thus negatively affecting EBITDA. Contri-butions and costs denominated in EUR increased, yielding a net negative foreign exchange impact of EUR 0.5 million on earnings. At year-end 2014, the number of employees was 1,877, down from 2,007 in the preceding year.

Net financial items amounted to EUR –19.6 million in 2014, compared with EUR –18.4 million in 2013. The result before

Increased operating profitWhile 2014 was a year characterised by a challenging business environment for paper products, it also demonstrated the effectiveness of the company’s systematic enhancements based on the established strategy, resulting in improved operating profit and continued cash flow generation.

FINANCIAL PERFORMANCE

tax totalled EUR 17.5 million compared with EUR 4.9 million in 2013, and the net result for the year was EUR 9.4 million compared with EUR 1.5 million in 2013.

Cash flow continued to strengthenCash flow from operating activities before investments totalled EUR 86.4 million compared with EUR 68.6 million in the preceding year. The strong internal focus on cash flow and, in particular, the reduc-tion in working capital continued to have a positive impact in 2014, leading to a decrease of EUR 45.5 million. The positive impact was mainly derived from a decrease in trade receivables and an increase in trade payables. Net cash from investing activities amounted to EUR 26.4 million and comprised the completion of one acquisition in the Papyrus Supplies business area and the divestment of the Dintikon warehouse in Switzerland. The cash flow generated was used to amortise loans totalling EUR 64.7 million.

The net increase in cash and cash equivalents amounted to EUR 49.4 million compared with EUR 6.7 million in 2013.

Financial position – solid platform for years ahead At 31 December 2014, cash and cash equivalents totalled EUR 114.9 million, while unutilised credits amounted to EUR 53.2 million. Accordingly, total available

The positive development in the financial performance is the result of the company’s continuous improvement efforts in accordance with the established strategy.


RAINBOW

Rainbow® is an inspiring assortment of tinted, uncoated papers in a wide range of amazing colours. The assort-ment comprises a variety of formats and substances in folio sheets, office papers and corresponding envelopes. Rainbow® brings impact, mood, value, systematics and highlight to your communication, and is also suit-able for direct food contact.

Applications: Posters, flyers, cards, envelopes, covers etc.

Rainbow® Light blue 120 g/m2


Consolidated income statement

Year ended December 31

EUR thousand 2014 2013 2012 2011 2010

Net sales 1,566,794 1,604,344 1,726,463 1,887,304 1,896,098

Other operating income 28,983 21,895 18,940 16,225 6,154

Materials and services –1,276,734 1,304,461 –1,406,188 –1,552,633 –1,535,956

Freight and commissions –59,736 –54,544 –55,311 –57,038 –52,749

Personnel expenses –129,876 –139,624 –147,006 –152,531 –151,991

Other operating expenses –80,717 –91,090 –101,525 –108,082 –103,231

Depreciation, amortisation and impairment charges –11,726 –13,536 –14,132 –16,352 –17,297

Operating profit 36,988 22,984 21,241 16,893 41,028

Financial income 219 326 940 2,231 7,811

Financial expense –19,842 –18,707 –26,360 –33,705 –42,286

Share of profit of investments 157 253 — — —

Result before tax 17,522 4,856 –4,179 –14,581 6,553

Income tax –8,151 –3,321 –1,931 4,878 –3,970

Result of the year 9,371 1,535 –6,110 –9,703 2,583

Extract of the Consolidated Financial StatementsThis financial information has been extracted from the audited financial statements.

Consolidated income statement


Consolidated balance sheet


EUR thousand 2014 2013 2012 2011 2010

Non-current assets

Goodwill 65,321 66,482 67,744 56,426 50,322

Other intangible assets 65,221 77,668 79,160 82,071 81,416

Property, plant and equipment 59,926 99,354 109,272 129,051 144,192

190,468 243,504 256,176 267,548 275,930

Other non-current assets

Investments in associated companies 1,443 1,389 1,182 1,182 1,182

Deferred tax assets 23,205 25,605 28,692 25,964 20,627

Other non-current receivables 3,084 2,180 2,290 1,786 1,591

Interest-bearing non-current receivables — — — 2,000 —

27,732 29,174 32,164 30,932 23,400

Current assets

Inventories 72,941 78,971 103,135 115,317 120,992

Trade receivables 191,968 204,341 232,065 262,901 282,519

Current tax receivables 2,179 3,244 3,645 4,364 2,349

Derivative assets — — — — 977

Other current receivables 26,816 35,071 34,682 64,291 59,120

Interest-bearing current receivables — 13 2,067 1,055 1,455

Cash and cash equivalents 114,947 65,625 58,863 55,543 110,493

408,851 387,265 434,457 503,471 577,905

Assets held for sales — — — 4,000 —

— — — 4,000 —

Total assets 627,051 659,943 722,797 805,951 877,235


Consolidated statement of financial position, assets


Consolidated balance sheet


EUR thousand 2014 2013 2012 2011 2010

Equity 182,610 182,214 180,963 35,447 42,668

Non-current liabilities

Post-employment benefit provisions 37,713 24,729 25,380 19,521 22,341

Other provisions 1,770 2,490 2,007 4,413 4,306

Other non-current liabilities 3,103 3,004 2,506 1,958 1,957

Deferred tax liabilities 24,637 28,515 31,266 32,797 33,976

Non-current financial liabilities 2,617 1,392 7,520 15,430 14,177

Shareholder loan — — — 141,335 128,226

Vendor loan note 55,840 53,800 82,368 74,205 70,794

Non-current interest-bearing borrowings, other 79,805 145,843 166,036 214,919 292,792

205,485 259,773 317,083 504,578 568,569

Current liabilities

Trade payables 179,802 165,084 162,836 201,558 182,777

Current interest-bearing borrowings 878 1,376 5,084 4,711 21,743

Derivative liabilities — 1,203 2,361 923 —

Other current liabilities 54,321 49,340 52,087 56,583 55,774

Income tax liabilities 3,955 953 2,383 2,151 5,704

238,956 217,956 224,751 265,926 265,998

Total equity and liabilities 627,051 659,943 722,797 805,951 877,235


Consolidated statement of financial position, equity and liabilities


Consolidated cash flow statement

Consolidated cash flow statement


EUR thousand 2014 2013 2012 2011 2010

Cash flow from operating activities

Result before tax 17,522 4,856 –4,179 –14,581 6,553

Non-cash items included in result before tax 26,189 22,630 29,143 38,363 31,803

Income taxes paid/received –2,849 –4,002 –3,202 –7,718 2,189

Net cash from operating activities before changes in working capital

40,862 23,484 21,762 16,064 40,545

Working capital adjustments

Change in trade and other current receivables 19,268 30,315 62,177 12,440 4,292

Change in inventories 5,699 24,384 13,743 3,653 1,761

Change in trade and other current liabilities 20,578 –9,542 –47,757 18,291 19,527

Change in net working capital 45,545 45,157 28,163 34,384 25,580

Net cash generated from operating activities 86,407 68,641 49,925 50,448 66,125

Cash flow from investing activities

Acquisition –2,759 –8,420 –20,877 –16,767 –6,859

Sale of subsidiary, net of cash — 474 — — —

Proceeds from sales of fixed assets 29,111 3,125 24,765 5,298 9,276

Net cash from investing activities 26,352 –4,821 3,888 –11,469 2,417

Cash flow from financing activities

Issue of shares/convertibles 100 909 153,610 2,105 —

Increase in borrowings 1,000 350 13,661 78,254 —

Net change, check account 196 –629 — — —

Amortisation –64,681 –57,742 –217,891 –170,430 –38,987

Paid bank fee — — — –3,858 —

Net cash from financing activities –63,385 –57,112 –50,620 –93,929 –38,987

Net change in cash and cash equivalents 49,374 6,708 3,193 –54,950 29,555

Cash and cash equivalents at beginning of the year 65,625 58,863 55,543 110,493 80,938

Net foreign exchange rate difference on cash and cash equivalents –52 54 127 — —

Cash and cash equivalents at year end 114,947 65,625 58,863 55,543 110,493



MULTIART MATT

MultiArt® Matt is a woodfree, white, coated fine paper, with a matt, non- reflecting surface, and is the pre-ferred choice to combine text-inten-sive content, uncompromising image reproduction, and a rich paper feel.

Applications: Picture-rich and colourful catalogues, annual reports, calendars, illustrated books, brochures, folders, magazines.

The Multi™ range from Papyrus covers all standard print applications and other family members include Multi Design®, a premium uncoated paper for corporate communication, and MultiOffset®, an uncoated offset paper for volume production.

MultiArt® Matt 150 g/m2


Risk analysis

Minimising risk exposurePapyrus is exposed to a series of risks that may affect the Group’s future profitability and performance. They are divided into three areas, covering financial, market and business related risks. Papyrus conducts systematic mapping and analysis of identified risks and reviews of its strategy to minimise the likelihood and impact of each of the risks.

RISK ANALYSIS

Market risksMarket risks refer primarily to risks associated with the external environment and the market, in other words, risks that the Board of Directors and management only have a limited opportunity to influence in the short term, but must nevertheless address in long-term planning for the business.

Risk factors Description

Macroeconomic trend

General macroeconomics and the specific performance of the economy in markets where Papyrus operates may impact the company’s performance and earnings. The fact that Papyrus operates in many countries across Europe, and is thus diversi-fied, is in itself a factor that mitigates risk. Papyrus continuously monitors the macroeconomic trend to enable timely strate-gic and operational adjustments.

Imbalances between supply and demand of paper

As a leading paper wholesaler, overall demand and supply is influenced by such aspects as installed paper production capacities, the demand trend in emerging markets and the export opportunities of paper producers to markets outside Europe. The demand situation also depends on regulatory issues affecting world trade and the impact of exchange rate fluctuations on the competitive-ness of various markets. Papyrus, with its systematic procurement approach, continuously monitors developments in supply and demand and adjusts its sourcing strategies accordingly to secure availability and optimal buying options for customers.

Structural changes

Structural changes in the supply chain create opportunities and risks in the form of mergers among merchants, suppliers and customers and in terms of suppliers’ alteration of channel strategies. Papyrus analyses the developments and its position in each market, and adjusts its strategic and operational directions accordingly.

Changed paper – consumption pattern

Paper merchanting is the core business of Papyrus, with the major part of the Group’s sales related to paper, and – as such – Papyrus is positioned in the supply chain between paper producers and paper consumers, which includes printers, the public sector, advertisers, media companies and book publishers. The behavioural patterns among media consumers are changing, which is impacting paper consumption. Papyrus is aware of this development and is adjusting its strategic direc-tions accordingly.

Financial risksThe Group is exposed to various types of financial risks through its activities. Financial risks refer to fluctuations in the Group’s result and cash flow due to changes in exchange rates, interest rates, and refinancing and credit risks. The overall objective of the finance function is to provide cost-effective financing and to minimise adverse effects on the Group’s result due to market fluctuations.


Liquidity risk Liquidity risk (also called funding risk) is the risk that funding cannot be obtained at all, or only at significantly higher costs. Group Finance manages risks related to overall financing of Papyrus in accordance with the funding and liquidity policy. Treasury management is carried out centrally by the holding company and the liquidity forecast is regularly updated to mitigate potential deviations.

Interest rate risk

At Papyrus, the interest rate risk is defined as the negative impact on earnings resulting from changes in interest rates. Papyrus monitors the sensitivity to interest rate changes, and the interest rate risk policy is designed to reduce the impact of interest rate changes on earnings. Derivative contracts are used for hedging the risk when appropriate.

Credit risk Credit risk can be viewed from two main perspectives, credit risk in financial activities (counterparty risks associated with receivables from banks and other counterparties) and credit risk in trade receivables (the risk of not receiving payments for trade receivables from customers). Papyrus manages customer credit risks through a Group-wide credit insurance pro-gramme. In addition, Papyrus works with strict processes for credit control and monitors its credit risks on an ongoing basis.

Currency risk As a consequence of its international activities, Papyrus is exposed to changes in foreign exchange rates. This exposure derives from sales and purchases in foreign currencies and from holdings of foreign net assets in currencies other than the reporting currency of Papyrus, which is EUR. The risk arising from currency exposure and exchange rate fluctuations is estimated to be limited, since the bulk of business is conducted in local currency with no transaction exposure.

Counterparty risks

Counterparty risk is the risk Papyrus faces in transacting with financial counterparts. For financial contracts, risk is mini-mised by making agreements only with leading financial institutions and companies with high credit ratings.


Risk analysis


Fluctuation in price of products

This relates to the capacity of Papyrus to pass on changes in purchase prices and operating costs to customers via selling prices or fees it charges for services. Papyrus works to continuously improve its sales processes to support more precise pricing of products and services, which includes regulated delegation and price-setting tools.

Ability to handle price pressure

This relates to the ability to balance margins on products sold and net contribution from services with increased transport costs for delivery services. Papyrus works to continuously improve its sales processes to support more precise pricing of products and services, which includes regulated delegation and price-setting tools.

Ability to retain customers

Papyrus serves a large customer base, which is broadly distributed in geographical terms, providing quality products, supply solutions and services. Each year, Papyrus conducts customer surveys to gain an understanding of its position and to initiate activities to improve the interaction with customers and maintain an attractive offering.

Financial reporting

The key risks related to financial reporting are mitigated by the accounting manual and other Papyrus Group Policies related to financial reporting. Papyrus employs a budgeting, reporting and forecasting schedule, and makes a distinction between financial reports for external and internal use. External reporting consists of the published annual report prepared in accord-ance with International Financial Reporting Standards (IFRS) and audited by external auditors. Business Review Meetings are carried out on a monthly basis with executives for each cluster for the purpose of monitoring performance. This provides a reasonable degree of assurance that the financial reporting does not contain any errors of material importance.

IT system dependency

For Papyrus, it is important to maintain a high-quality and robust IT system for storing and processing financial reporting and accounting records, and information related to warehousing and delivery service. Standardisation of business applica-tions, IT infrastructure and IT processes is an important cornerstone of IT risk management. Although the capacity of the company’s IT system has proven to be reliable, it is not possible to guarantee full identification and timely redressing of every single issue. Papyrus continuously tests and develops the capacity and reliability of its IT systems.

Disruption and property damage

Damage to the facilities from where we operate, as a result of factors such as fire, may have a negative impact, both in direct property damage and in business interruption, both of which would make it harder to fulfil the Group’s obligations to customers. Continuous efforts are being made to monitor and reduce the Group’s risk in this area through scheduled inspections and preventative security measures. The Group also has full insurance cover against business interruption such as property damage.

Antitrust risks Free and fair competition is a cornerstone of the market economy, which Papyrus fully supports, and competition laws have been designed to protect this situation. Papyrus is entirely committed to complying with all applicable competition laws. To address this risk, Papyrus has a Competition Law Compliance Programme in place, which explains the basic principles of competition law and is designed as a tool to support all Group employees. The objective of the Compliance Programme is to create awareness and ensure fulfilment of competition law. It should be noted that the Compliance Programme is a work in progress and Legal Services will continuously ensure that it is up to date and reflects develop-ments in competition law.

Compliance with laws and regulations

Papyrus is committed to fair and ethical conduct and expects its management and employees to adhere to the corporate policies of Papyrus in their work. The country management of each of the Papyrus entities is responsible for monitoring and enforcing the company’s policies as well as ensuring the compliance of operations with national laws and local legal requirements. Any violation of these polices, principles and guidelines will be closely examined and necessary action will be taken.

Papyrus Corporate Governance Certification ProcessPapyrus performs an annual Corporate Governance Certification Process that ensures that the Papyrus Group Polices are subject to yearly review and updated. Senior managers are to review and confirm their understanding of, and responsibility for, Group Policies by:

• Signing and submitting confirmation of compliance, including descriptions of any infractions or breaches of the policies known as of that date.

• Taking appropriate and necessary steps to ensure that the organisation reporting to them is aware of applicable and is notified if there are any changes made to them.

• Ensuring appropriate integration of Group Policies into local rules, guidelines and processes.

• Ensuring adherence to Group Policies and the local rules, guidelines and processes into which they have been integrated.

Business risksBusiness risks refer principally to the overall risks related to the day-to-day management and operation of the company.


Corporate Governance

Board of DirectorsThe Board supervises the operation and management of Papyrus, and approves significant matters related to business strategy, investments, organisation and finance. The Board appoints and deter-mines the remuneration of the CEO.

The Board has long and extensive expe-rience of wholesaling, finance, marketing, capital markets and large international corporations. Currently, the Board consists of seven ordinary members and two deputy members.

The Board’s work is supported through its committees: the Remuneration Com-mittee and the Audit Committee.

Board CommitteesRemuneration CommitteeThe Board has a Remuneration Committee that is responsible for recommending, evaluating and approving compensation for executives, and making recommenda-tions to the Board relating to general compensation issues.

Audit CommitteeThe Board has an Audit Committee to support the Board in maintaining the integrity of the company’s financial reporting and the Board control functions. It regularly reviews the system of internal control, management and reporting of financial risks, and the audit process. It makes recommendations regarding the appointment of external auditors.

Chief Executive Officer (CEO)The CEO participates in all Board meet-ings and is in charge of the strategic development agenda and day-to-day management of the company in accord-ance with the instructions issued by the Board. It is the duty of the CEO to ensure that the company’s accounting methods comply with legislation and that financial

Ensuring accountability and transparency The corporate governance of Papyrus refers to the manner in which the Group is governed, directed and managed. It is conducted by the Board of Directors and the relevant governance bodies. The aim is to ensure efficient implementation of key strategies and to support respon-sible and transparent management of the company by balancing individual and community goals in addition to economic and social goals. Thereby the Group is building long-term confidence among stakeholders, which is a critical success factor for the future.

CORPORATE GOVERNANCE

matters are handled in a reliable manner. In addition, the CEO supervises decisions regarding key personnel and other impor-tant operational matters.

The CEO is directly in charge of the following functions:• Business areas• Finance & IT (Accounting & Controlling,

Treasury, Risk Management, Taxes, Internal Audit, Corporate Finance, IT)

• Supply Chain• Marketing & Supply• Human Resources• Legal Services• Business Development• Corporate Communications

Group management and structurePapyrus operates in two separate business areas, which enables management to have the necessary focus to drive the Group’s strategic agenda, consistently improve cost efficiency of the operating model and maintain an attractive offering to each customer segment.• Graphical and Business paper, dealing

with specialist distribution of paper to the graphic industry

• Papyrus Supplies, serving corporations and public institutions with cleaning, hygiene and packaging products.

The business areas continuously share ideas and best practices in all respects. Cross-border and cross-function knowledge transfer represent a key enabler in realising Group synergies and development in sales, logistics, administration and IT.

Graphical and Business paper The decision-making body with responsi-bility for managing the graphical and office paper business comprises the CEO and the Management Board of Graphical and Business paper. The Management

Board meets approximately once a month or as required. Board members include the CEO, the CFO, the General Counsel and the heads of the Business Clusters and Supply Chain. Day-to-day operational responsibility rests with the management of the subsidiaries and their operational teams, supported by staff and service functions.

Papyrus Supplies The decision-making body with responsi-bility for managing the cleaning, hygiene and packaging business consists of the CEO and the Board of Papyrus Supplies. The members of the Board include the CEO, the CFO, the chairman of Papyrus Board of Directors, the General Counsel and the head of Papyrus Supplies.

The day-to-day operational responsibil-ity rests with the management of Papyrus Supplies. The Supplies Management Team is chaired by the head of Papyrus Supplies and the members include the managers of the two business units – Public Sector & Service and Industry – and representatives from Finance & Controlling, Business Development, Assortment & Purchasing, Human Resources and Logistics. The Sup-plies Management Team meets approxi-mately once a month or as required.

Senior Executive TeamThe Senior Executive Team (SET) is formed to provide the company with a top man-agement forum for planning operations, sharing information and aligning business targets. Papyrus SET meetings are chaired by the CEO and the members are appointed by the CEO. The team comprises Manage-ment Board members, the head of Papyrus Supplies, other key individuals representing the largest operations and key functional managers. SET meets on a quarterly basis.


Corporate Governance

PAPYRUS ORGANISATION


Sales Supply Chain

Management board

Central Cluster Western Cluster


Nordic Cluster South Eastern Cluster

Austria

Germany

Belgium

France

Luxembourg

Netherlands

Switzerland

Denmark

Norway

Sweden

Estonia

Finland

Latvia

Romania

Slovakia

Lithuania

Czech Rep.

Hungary

Italy

Poland

Human Resources Logistics


Papyrus Supplies Board

Papyrus SuppliesManagement Team

Papyrus Supplies

Assortment & Purchasing

Finance & Controlling

Denmark

Finland

Norway

Sweden

Denmark

Finland

Norway

Sweden

Industry Public Sector & Service

Business Development

Papyrus is organised into two business areas. Graphical and Business paper for specialist distribution of paper to the graphical industry and Papyrus Supplies, supporting the manu-facturing industry, service companies and the public sector by providing cleaning, hygiene and packaging products.

MEMBERS OF PAPYRUS SENIOR EXECUTIVE TEAM• Peter Sandberg, President and CEO

• Gunilla Andersson, CFO

• Sören Gaardboe, SVP Nordic, Benelux and France

• Stefan Syrén, SVP Marketing & Supply and Central Cluster

• Dan Andersson, SVP Papyrus Supplies

• Bob Woodburn, SVP Supply Chain

• Christian Carlsson, SVP Human Resources

The governance model enables the man-agement in each area to have the necessary focus to drive the Group’s strategic agenda, consistently improve cost efficiency of the operating model and maintain an attractive offering to each customer segment.

The business areas and functional units continuously share ideas and best practices in all respects. Cross-border and cross- function knowledge transfer represent a key enabler in realising Group synergies and development in sales, supply chain, administration and IT.

• Torbjörn Stockman, VP Business Development and Sales

• Allan Persson, VP Marketing & Supply

• Mattias Hallendorff, General Counsel

• Sorin Buga, VP South Eastern Cluster

• Stefan Peter, Managing Director Papyrus Germany

• Peter Meier, Managing Director Papyrus Switzerland

• Olivier Langlois, Managing Director Papyrus France, Papyrus Belgium and Papyrus Netherlands


Papyrus Group Management

Papyrus Group Management

SÖREN GAARDBOESenior Vice President, Nordic Cluster and Benelux France• Born 1964 • LL.M. from Copenhagen

University and M.Sc. in Finance and Economics from Copenhagen University

• Joined Papyrus in 2006 • Previous positions: Managing

Director Papyrus Denmark, Managing Director of various ISS subsidiaries

Group Management function• Member of Graphical and Busi-

ness paper Management Board. Geographical responsibility: Nordic Cluster, Benelux and France

• Member of Papyrus Senior Executive Team

STEFAN SYRÉNSenior Vice President, Marketing & Supply and Central Cluster• Born 1966 • M.Sc. in Chemical Engineering

from Chalmers University of Technology

• Joined Papyrus in 1999• Previous positions: General

Manager, Consumables Papyrus, Customer Marketing Manager, Procter & Gamble


ness paper Management Board. Geographical responsibility: Austria and Germany

• Member of Papyrus Senior E xecutive Team

BOB WOODBURNSenior Vice President, Supply Chain• Born 1968• MBA from Manchester Business

School and BA Economics from Cambridge University

• Joined Papyrus in 2012• Previous positions: Non-executive

Director of Waverley TBS, Global Supply Chain Director at Groupe Danone, Assistant Vice President, Supply Chain Development at M-real, Head of Supply Chain Sit-tingbourne and New Thames Mills


ness paper Management Board• Member of Papyrus Senior

Executive Team

MATTIAS HALLENDORFF General Counsel • Born 1969 • LL.M. from Gothenburg Univer-

sity and J.D. from the University of Minnesota

• Joined Papyrus in 2008 • Previous positions: Dorsey &

Whitney LLP

Group Management functions• Member of Graphical and Busi-

ness paper Management Board• Member of Papyrus Supplies

Board• Member of Papyrus Senior

Executive Team

PETER SANDBERGPresident and CEO• Born 1967 • M.Sc. in Business Administration

from Umeå University • Joined Papyrus in 2008• Previous positions: President and

CEO of Korsnäs AB, Executive Vice President at M-real, Chairman of the Board of INNVENTIA, Member of the Board of the Swedish Forest Industries Federation and CEPIFINE

Group Management function• Chairman of Graphical and Busi-

ness paper Management Board. Geographical responsibility: South Eastern Cluster and Switzerland

• Chairman of Papyrus Supplies Board

• Chairman of Papyrus Senior E xecutive Team

GUNILLA ANDERSSONCFO• Born 1965• Bachelor of Economics from

Gothenburg University• Joined Papyrus in 2012• Previous positions: CFO TA Hydronics,

CFO Tour & Andersson AB

Group Management function• Member of Graphical and Business

paper Management Board• Member of Papyrus Supplies Board• Member of Papyrus Senior

E xecutive Team

DAN ANDERSSONSenior Vice President, Papyrus Supplies • Born 1968• Bachelor of Economics from

Rice University• Joined Papyrus in 1999• Previous positions: Managing

Director Papyrus Hungary, Sales Director Graphical Papyrus Sweden

Group Management function• Member of Papyrus Supplies

Board• Member of Papyrus Supplies

Management Team• Member of Papyrus Senior

Executive Team


Board of Directors

Board of Directors

CHRISTOPH SANDER

Board Chairman since 2013 and Board member since 2011• Education: MA in Economics from

Cambridge University and MBA from Harvard Business School

• At present: Independent Advisor. Board appointments: Papyrus, United Authors Publishing Ltd

• Background: Member of the Board of ISS A/S, Member of the Board of Bunzl Plc, CEO and Managing Director Europe & Australasia, Managing Director Harpur Group, Boston Consulting Group, London

CHRISTIAN BERNER

Board member since 2012• Education: Economics diploma from the

U niversity of Hamburg• At present: Entrepreneur. Board appoint-

ments: Apetito AG, 4Flow AG, Foris AG, German Logistics Association (BVL)

• Background: CEO of Lekkerland Group, CEO of Kühne & Nagel Germany

CLAES EKSTRÖM

Board member since 2008 and Board Chairman 2008–2013• Education: M.Sc. in Mechanical

Engineering from Chalmers University of Technology, Bachelor of Economics and Law studies at the University of Gothenburg

• At present: Partner at Altor Equity Part-ners. Board appointments: Swedfund (chairman), Max Matthiessen (chairman), Northstar, Papyrus, Orchid Orthopedic Solutions, Norsk Gjenvinning in addition to several other non-profit commitments: Mentor (drug prevention), The Karolinska Institute, The Stella Foundation, World’s Children’s Prize

• Background: Senior Director at McKinsey & Co

ULF GUNDEMARK

Board member since 2008• Education: M.Sc. in Electrical Engineering

from Chalmers University of Technology• At present: Management Consultant.

Board appointments: Constructor Group, Ripasso Energy (chairman), AQ Group, Lantmännen, Scandinavian Standard, Papyrus

• Background: CEO of Elektroskandia/ Hagemeyer Nordics, Global Manager at IBM, Business Area Manager at ABB

LUC HENDRIKS

Board member since 2013 and deputy Board member 2012–2013 • Education: M.Sc. in Mechanical

E ngineering from the University of Tech-nology in Eindhoven

• At present: Operating Partner at West Park Management Services Germany Board appointments: Papyrus, Europart

• Background: Executive Director at Brambles, various positions at GE

MATS LINDSTRAND

Board member since 2008• Education: MBA Columbia Business

School in New York City and M.Sc. at the Royal Institute of Technology in Stockholm

• At present: Founder and CEO BioMass Capital AB. Board appointments: Sensec AB (Chairman), Sirva Inc., Papyrus, EA AB, MedWeb AB

• Background: Senior Director, McKinsey & Company, Engineer and surveyor at Det Norske Veritas

BENGT MAUNSBACH

Board member since 2013 and deputy Board member 2008–2013• Education: M.Sc. in Economics and

Business Administration from the Stockholm School of Economics

• At present: Partner at Altor Equity Part-ners. Board appointments: Piab, P apyrus, Ålö, Haarslev

• Background: Manager at The Boston Consulting Group

OSKARI ESKOLA

Deputy Board member since 2014• Education: M.Sc. in Industrial Engineering

and Management from Aalto University School of Science

• At present: Investment Advisory Profes-sional at Triton Advisers (Sweden) AB. Board appointments: Ovako, Papyrus

• Background: Bain & Company

NIKO MOKKILA

Deputy Board member since 2013• Education: M.Sc. in Mechanical

E ngineering from Helsinki University of T echnology and M.Sc. in Economics from Helsinki School of Economics

• At present: Senior Associate at Altor Equity Partners

• Background: Merrill Lynch

The board operates in an open and transparent way and is committed to constructively support the executive team in transforming Papyrus into the leading merchant of the future.CHRISTOPH SANDERBoard Chairman

OWNERS OF PAPYRUS

Papyrus is 51-percent owned by Altor (Altor Fund II) and 49-percent owned by Triton (Triton II Fund). Altor is a family of private equity funds focused on investing in and developing medium-sized com-panies anchored in the Nordic region.

Triton is a private equity invest-ment firm investing in medium-sized businesses in Northern Europe with the potential to create sustainable, long-term value through changing economic cycles.


The Papyrus story

From paper mill to leading merchantThe history of Papyrus began back in 1895 with the acquisition of a paper mill located in Mölndal on the Swedish west coast. Since then, the company has grown to become a leading European merchant in paper, facility supplies and industrial packaging.

THE PAPYRUS STORY

The first paper mill in Mölndal, just out-side Gothenburg in the west of Sweden, was established in 1653. Production was gradually industrialised and towards the end of the 19th century, Mölndal could boast the most technically advanced paper mill in Sweden.

Swedish dynasty Wallenberg bought the mill in 1895 and made it famous under the name Papyrus. In connection with the merger of Stora and Enso in 1998, the Papyrus brand was chosen as the name for the European merchant operation. The old mill in Mölndal has now been closed for many years and today, Papyrus is recognised as a leading European mer-chant offering customers efficient supply solutions of paper, cleaning, hygiene and packaging products.

Transition to a Pan-European organisationThe history of Papyrus clearly illustrates the development of the industry during the 20th century – a transition from small-scale business in a fragmented market to consolidation and pan-European opera-tions. This development gained momen-tum in the 1980s – partly because new EU rules paved the way for the shift and due to the opening of the markets in Eastern Europe. Papyrus had simply reached a point in history where the concept of a domestic market made no sense anymore.

Papyrus was not always a large com-pany; it was formed by an array of mer-chant operations that were significant in their home markets, but were too small to make any impact on a European scale.

A company of many success stories Today, Papyrus is a proud company with many success stories, competencies and a clear commitment to providing customers with first-class service. Papyrus respects and understands its customers’ business needs and offers support whenever and wherever the company can. This is a com-mitment shared throughout the organisa-tion, across Europe.


The Papyrus story

2014 Papyrus Supplies acquires Städshopen, a retailer within professional cleaning in Stockholm, Sweden.

2013 Papyrus Supplies acquires INPA, a cash & carry company in Malmö, Sweden.

2012 Papyrus acquires Arto Emballasje AS in Norway and Siisti-Piste Oy in Finland, which become part of the Papyrus Supplies business area.

2011 Papyrus Supplies is established as a standalone business area, supporting the manufacturing industry, service companies and the public sector by providing cleaning, hygiene and packaging products.

2010 Schneidersöhne in Germany and Sihl+Eika in Switzerland are renamed Papyrus, and the entire Group now operates under the Papyrus brand in all markets.

2009 Papeteries de France and Scaldia operate under the Papyrus brand.

2008 Altor Fund II acquires Papyrus from Stora Enso. Later the same year, Triton II Fund is invited to share ownership with Altor.

2007 Papyrus acquires the remaining 20 percent of Sihl+Eika.

2005 Papyrus acquires Schneidersöhne as well as Papeteries de France. The company is now Europe’s second largest merchant organisation.

2004 Papyrus acquires Scaldia Papier, strengthening its position in the Netherlands.

2002 Stora Enso sells the paper mill in Mölndal to Klippan AB. Papyrus is established as the name for Stora Enso’s merchants across Europe

2001 Schneidersöhne initiates operations in Italy with the founding of Schneider Papier Italia.

2000 Papyrus acquires Carl Emil in Norway and Paperi-Dahlberg in Finland, and becomes the leading paper merchant in the Nordic countries.

1999 Papyrus becomes the name for Stora Enso’s merchant division and all 13 companies in the division change their names to Papyrus.

1998 STORA and Enso announce their merger and the paper mill in Mölndal changes its name to Stora Enso Mölndal. Schneidersöhne acquires 80 percent of Sihl+Eika. Sihl+Eika acquires Giger Papier.

1997 Launch of the Schneidersöhne internet portal.

1996 STORA Merchants becomes an independent division for all merchant companies owned by the STORA group.

1987 The Papyrus mill in Mölndal is acquired by STORA, who becomes the sole owner of the previously jointly owned merchant organisation.

1985 Pappersgruppen, owned by the Papyrus paper mill in Mölndal, becomes the first European merchant to launch an e-commerce system.

1984 Merger of the two Swiss paper companies Sihl and Eika.

1982 The Papyrus paper mill in Mölndal and STORA become joint owners of the European sales and merchant organisation.

1966 The Papyrus paper mill in Mölndal acquires shares in several smaller Swedish paper merchants, selling two lines of products – fine paper and consumables. Ten years later, these merchants formed Pappersgruppen.

1957 The Papyrus paper mill in Mölndal sets out on its journey to establish a sales and merchant organisation in Europe.

1902 G.Schneider & Söhne is founded in Ettlingen in southern Germany.

1895 Marcus Wallenberg begins to expand operations at a Mölndal mill he has acquired and makes the mill famous under the name Papyrus.

THE STORY BEHIND THE NAME

Papyrus is the etymological root of the word “paper”, meant to evoke associations with ancient Egypt – a culture widely recognised as the cradle of western civilisation. The Papyrus reed itself was the raw material for the first paper as we know it in the western hemi-sphere. Papyrus also triggers asso-ciations with the tradition of think-ing, writing, printing and sharing thoughts and ideas across times and distances.

2012

2010

2004 1999

1985

1984

1957 1895

2014


Contact

Contact

Head OfficePapyrus ABP.O. Box 1004SE-431 26 MölndalSwedenPhone: +46 1051 70 000

GRAPHICAL AND BUSINESS PAPER

AustriaPapyrus Deutschland GmbH & Co. KGNiederlassung München Hürderstraße 5DE-85551 Kirchheim – Heimstetten GermanyPhone: +49 89 61565-0

BelgiumPapyrus nv/saInternationalelaan 55 b 33BE-1070 BrusselsBelgiumPhone: +32 2 529 85 11

Czech RepublicPapyrus Bohemia s. r. o.Prague GateTürkova 2319/5bCZ-149 00 Praha 4Czech RepublicPhone: +420 272 114 540

DenmarkPapyrus A/SOldenburg Allé 1DK-2630 TaastrupDenmarkPhone: +45 7022 3838

EstoniaPapyrus ASSõpruse pst 145EE-13417 TallinnEstoniaPhone: +372 6 788 670

FinlandPapyrus Finland OyP.O. Box 150FI-01721 VantaaFinlandPhone: +358 2077 49 49

FranceGroupe Papyrus France S.A.S.Les Diamants – Bat B41 rue DelizyFR-93500 PantinFrancePhone: +33 1 49 42 36 00

GermanyPapyrus Deutschland GmbH & Co. KGGehrnstraße 7-11DE-76275 EttlingenGermanyPhone: +49 7243 73 0

HungaryPapyrus Hungária Zrt.Könyves Kálmán körút 11/c.HU-1097 BudapestHungaryPhone: +361 452 98 00

ItalyPapyrus S.r.l.Via P. Vassanelli, 32 IT-37012 Bussolengo – VR ItalyPhone: +39 045 8630811

LatviaPapyrus SIADzelzavas iela 120s-13LV-1021 RigaLatviaPhone: +371 67 31 30 22

LithuaniaUAB Papyrus Lietuva R. Kalantos St. 59LT-52304 KaunasLithuaniaPhone: +370 37 400 330

NetherlandsPapyrus Groep Nederland bv P.O. Box 62NL-6500 AB NijmegenNetherlandsPhone: +31 88 65 65 222

NorwayPapyrus Norge ASP.O. Box 110 FurusetNO-1001 OsloNorwayPhone: +47 22 90 45 90

PolandPapyrus Sp. z o.o.Ul. Wołoska 5PL-02-675 WarszawaPolandPhone: +48 22 449 02 00

RomaniaPapyrus Romania SRLBdul. Timisoara Nr. 90RO-061334 BucharestRomaniaPhone: +40 372 462 400

SlovakiaPapyrus Bohemia s. r. o.Prague GateTürkova 2319/5bCZ-149 00 Praha 4Czech RepublicPhone: +420 272 114 540

SwedenPapyrus Sverige ABP.O. Box 1004SE-431 26 MölndalSwedenPhone: +46 1051 70000

SwitzerlandPapyrus Schweiz AGZürcherstraße 68CH-8800 ThalwilSwitzerlandPhone: +41 58 580 58 00

PAPYRUS SUPPLIES

DenmarkPapyrus Supplies A/SOldenburg Allé 1DK-2630 TaastrupDenmarkPhone: +45 7022 3838

NorwayPapyrus SuppliesP.O. Box 110 FurusetNO-1001 OsloNorwayPhone: +47 22 90 45 90

SwedenPapyrus Supplies ABP.O. Box 1004SE-431 26 MölndalSwedenPhone: +46 1051 70000

FinlandPapyrus Supplies OyOrikedonkatu 23FI-20380 TurkuFinlandPhone: + 358 225 10 231

Production: SolbergCover: MultiArt Silk 300 g/m2

Insert: MultiArt Matt 150 g/m2

Print: GöteborgstryckerietPress: Komori Lithrone LS840PScreen: FMInks: Toyo Ink Flash Dry mediumPrinting plates: Fuji BrilliaExposure: Kodak Magnus 800 Qvantum IIBlankets: Böttcher BT4800Varnish: Novaset 7401/40Ink Sequence: KCMY

© Papyrus AB, 2015. All rights reserved.

At Papyrus, our mission is bigger than just ensuring a convenient supply of the right products. As a service com-pany, we create solutions that help companies and their employees to become more successful – even at an individual level.

We develop time-saving services that make your day-to-day work easier, offering the smartest e-service in the market and the logistics skills that always ensure availability and delivery precision. We make sure that you have easy access to support and expertise whenever you need it.

Contact your local Papyrus office to find out how we can support you, your people and your business.

Supporting youCONTENTS

The year in review 1

This is Papyrus 2

Interview with CEO 4

Goals and strategies 6

Papyrus markets 10

Graphical and business paper 15

Papyrus Supplies 19

Mission and core values 27

Papyrus employees 28

Sustainability 32

Three-year summary 36

Financial performance 37

Consolidated income statement 39

Consolidated balance sheet 40

Consolidated cash flow statement 42

Risk analysis 44

Corporate Governance 46

Papyrus Group Management 48

Board of Directors 49

The Papyrus Story 50

Contact 52

Papyrus is currently represented in 20 countries across Europe, employs 1,900 people and supports more than 65,000 customers.

20PAPYRUS IS REPRESENTED

IN 20 COUNTRIES ACROSS EUROPE

Annual Review 2014

Head OfficePapyrus ABP.O. Box 1004SE-431 26 MölndalSwedenPhone: +46 1051 70 000Fax: +46 31 706 09 87

www.papyrus.com

Papyrus Holding AB

annual review 2014 - optigroup€¦ · 2 papyrus annual review 2014 this is papyrus papyrus and its...

Documents