Obligation AkzoNobel 1.75% ( XS1134519120 ) en EUR

Société émettrice AkzoNobel
Prix sur le marché 100 %  ▼ 
Pays  Pays-bas
Code ISIN  XS1134519120 ( en EUR )
Coupon 1.75% par an ( paiement annuel )
Echéance 07/11/2024 - Obligation échue



Prospectus brochure de l'obligation Akzo Nobel XS1134519120 en EUR 1.75%, échue


Montant Minimal 100 000 EUR
Montant de l'émission 500 000 000 EUR
Description détaillée Akzo Nobel est une entreprise mondiale spécialisée dans les revêtements et les produits chimiques spécialisés, active dans la peinture décorative, les revêtements industriels et les produits chimiques de performance.

L'Obligation émise par AkzoNobel ( Pays-bas ) , en EUR, avec le code ISIN XS1134519120, paye un coupon de 1.75% par an.
Le paiement des coupons est annuel et la maturité de l'Obligation est le 07/11/2024







Base Prospectus dated 4 April 2014
AKZO NOBEL N.V.
(incorporated in the Netherlands as a public company with limited liability having its corporate seat in
Amsterdam)
AKZO NOBEL SWEDEN FINANCE AB (PUBL)
(incorporated as a public limited liability company in the Kingdom of Sweden
(with registration number 556768-4062))
Guaranteed Euro Medium Term Note Programme
Under the Guaranteed Euro Medium Term Note Programme described in this Prospectus (the "Programme"), each of Akzo Nobel N.V. ("AkzoNobel") and
Akzo Nobel Sweden Finance AB (publ) ("AkzoNobel Sweden") (in such capacity, each an "Issuer") subject to compliance with all relevant laws, regulations
and directives, may from time to time issue Guaranteed Euro Medium Term Notes (the "Notes"). Notes issued by AkzoNobel will be guaranteed by AkzoNobel
Sweden and Notes issued by AkzoNobel Sweden will be guaranteed by AkzoNobel (respectively a "Guarantor" and a "Guarantee", as the case may be).
Application has been made to the Commission de Surveillance du Secteur Financier (the "CSSF") in its capacity as competent authority under the Luxembourg
Act dated 10 July 2005 relating to prospectuses for securities (the "Luxembourg Law"), for the approval of this Prospectus as a base prospectus for the purposes
of Article 5.4 of Directive 2003/71/EC, as amended (the "Prospectus Directive"). By approving the Prospectus, the CSSF assumes no responsibility as to the
economic or financial soundness of the Notes or the quality and solvency of the Issuers or the Guarantors in line with the provisions of article 7(7) of the
Luxembourg Law. Application has also been made to the Luxembourg Stock Exchange for the Notes issued under the Programme to be admitted to the official
list of the Luxembourg Stock Exchange (the "Official List") and to be admitted to trading on the Luxembourg Stock Exchange's regulated market. References in
this Prospectus to Notes being "listed" (and all related references) shall mean that such Notes have been admitted to the Official List and admitted to trading on
the Luxembourg Stock Exchange's regulated market. The Luxembourg Stock Exchange's regulated market is a regulated market for the purposes of Directive
2004/39/EC of the European Parliament and of the Council on markets in financial instruments. However, unlisted Notes may be issued pursuant to the
Programme. The relevant Final Terms in respect of the issue of any Notes will specify whether or not such Notes will be listed on the Official List and admitted
to trading on the Luxembourg Stock Exchange's regulated market (or any other stock exchange).
Each Series (as defined in "General Description of the Programme ­ Method of Issue") of Notes in bearer form will be represented on issue by a temporary
global note in bearer form (each a "temporary Global Note") or a permanent global note in bearer form (each a "permanent Global Note"). If the Global Notes
are stated in the applicable Final Terms to be issued in new global note ("NGN") form, the Global Notes will be delivered on or prior to the original issue date of
the relevant Tranche to a common safekeeper (the "Common Safekeeper") for Euroclear Bank S.A./N.V. ("Euroclear") and Clearstream Banking, société
anonyme ("Clearstream, Luxembourg"). Notes in registered form will be represented by registered certificates (each a "Certificate"), one Certificate being issued
in respect of each Noteholder's entire holding of Registered Notes of one Series. Registered Notes issued in global form will be represented by registered global
certificates ("Global Certificates"). If a Global Certificate is held under the New Safekeeping Structure (the "NSS") the Global Certificate will be delivered on or
prior to the original issue date of the relevant Tranche to a Common Safekeeper for Euroclear and Clearstream, Luxembourg.
Global notes which are not issued in NGN form ("Classic Global Notes" or "CGNs") and Global Certificates which are not held under the NSS will be deposited
on the issue date of the relevant Tranche with (i) in the case of a Series of Notes intended to be cleared through Euroclear and/or Clearstream, Luxembourg, a
common depositary on behalf of Euroclear and Clearstream, Luxembourg or (ii) in the case of a Series of Notes intended to be cleared through the Central
Moneymarkets Unit Service, operated by the Hong Kong Monetary Authority (the "CMU"), with a sub-custodian for the CMU.
The provisions governing the exchange of interests in Global Notes for other Global Notes and definitive Notes are described in "Overview of Provisions
Relating to the Notes while in Global Form".
As at the date of this Prospectus, AkzoNobel has a long term senior unsecured debt rating of "BBB+" by Standard & Poor's Credit Market Services Europe
Limited ("S&P") and "Baa1" by Moody's Investors Service Limited ("Moody's"). The Programme has been rated "BBB+" by S&P and "Baa1" by Moody's.
Each of Moody's and S&P is established in the European Union and is registered under Regulation (EC) No 1060/2009 on credit rating agencies as amended
(the "CRA Regulation"). Further information relating to the registration of rating agencies under the CRA Regulation can be found on the website of the
European Securities and Markets Authority. Notes issued pursuant to the Programme may be rated or unrated. Where an issue of Notes is rated, its rating will be
specified in the relevant Final Terms and may not necessarily be the same as the rating of the Programme. Whether or not a rating in relation to any Notes will be
treated as having been issued by a credit rating agency established in the European Union and registered under the CRA Regulation will be disclosed in the
relevant Final Terms. A rating is not a recommendation to buy, sell or hold Notes and may be subject to suspension, reduction or withdrawal at any time by the
assigning rating agency. A suspension, reduction or withdrawal of the rating assigned to any Notes may adversely affect the market price of the Notes.
Prospective investors should have regard to the factors described under the section headed "Risk Factors" in this Prospectus.
Arranger for the Programme
THE ROYAL BANK OF SCOTLAND
Dealers
BOFA MERRILL LYNCH
BARCLAYS
BNP PARIBAS
CITIGROUP
DEUTSCHE BANK
HSBC
ING
J.P. MORGAN
MIZUHO SECURITIES
MORGAN STANLEY
SANTANDER GLOBAL BANKING & MARKETS
SOCIÉTÉ GÉNÉRALE CORPORATE & INVESTMENT
BANKING
THE ROYAL BANK OF SCOTLAND


In this Prospectus, references to the "Issuer" or the "Guarantor" are to either AkzoNobel or AkzoNobel
Sweden, as the case may be, in their relevant capacities, as either the relevant issuer or relevant guarantor or
the relevant proposed issuer or the relevant proposed guarantor, of the Notes under the Programme as
specified in the relevant Final Terms and references to "Group" are to AkzoNobel and its subsidiaries and
affiliates, taken as a whole and references in this Prospectus to the "Issuer", the "Guarantor" and the
"Group" shall be construed accordingly.
This Prospectus comprises a base prospectus for the purposes of Article 5.4 of Directive 2003/71/EC, as
amended, to the extent that such amendments have been implemented in the relevant Member State of the
European Economic Area (the "Prospectus Directive") in respect of each Issuer and for the purpose of giving
information with regard to the Issuers, the Guarantors, the Group and the Notes which, according to the
particular nature of the Issuers, the Guarantors and the Notes, is necessary to enable investors to make an
informed assessment of the assets and liabilities, financial position, profit and losses and prospects of the
Issuers and the Guarantors.
The Issuers and the Guarantors (the "Responsible Persons") accept responsibility for the information
contained in this Prospectus. To the best of the knowledge of the Issuers and the Guarantors (each having
taken all reasonable care to ensure that such is the case) the information contained in this Prospectus is in
accordance with the facts and does not omit anything likely to affect the import of such information.
This Prospectus is to be read in conjunction with all documents which are incorporated herein by reference
(see "Documents Incorporated by Reference").
No person has been authorised to give any information or to make any representation other than those
contained in this Prospectus in connection with the issue or sale of the Notes and, if given or made, such
information or representation must not be relied upon as having been authorised by the Issuers, the
Guarantors or any of the Dealers or the Arranger or the Trustee (as defined in "General Description of
the Programme"). Neither the delivery of this Prospectus nor any sale made in connection herewith
shall, under any circumstances, create any implication that there has been no change in the affairs of
the Issuers or the Guarantors since the date hereof or the date upon which this Prospectus has been
most recently amended or supplemented or that there has been no adverse change in the financial
position of the Issuers or the Guarantors since the date hereof or the date upon which this Prospectus
has been most recently amended or supplemented or that any other information supplied in connection
with the Programme is correct as of any time subsequent to the date on which it is supplied or, if
different, the date indicated in the document containing the same.
In the case of any Notes which are to be admitted to trading on a regulated market within the European
Economic Area or offered to the public in a Member State of the European Economic Area in
circumstances which require the publication of a prospectus under the Prospectus Directive or where
the Issuer is Akzo Nobel N.V., the minimum specified denomination shall be 100,000 (or its equivalent
in any other currency as at the date of issue of the Notes).
The distribution of this Prospectus and the offering or sale of the Notes in certain jurisdictions may be
restricted by law. Persons into whose possession this Prospectus comes are required by the Issuers, the
Guarantors, the Dealers and the Arranger to inform themselves about and to observe any such
restriction. The Notes have not been and will not be registered under the United States Securities Act of
1933, (the "Securities Act") and include Notes in bearer form that are subject to U.S. tax law
requirements. Subject to certain exceptions, Notes may not be offered, sold or delivered within the
United States of America or to U.S. persons. For a description of certain restrictions on offers and sales
of Notes and on distribution of this Prospectus, see "Subscription and Sale".
This Prospectus does not constitute an offer of, or an invitation by or on behalf of the Issuers, the
Guarantors or the Dealers to subscribe for, or purchase, any Notes.
To the fullest extent permitted by law, none of the Dealers or the Arranger or the Trustee accept any
responsibility for the contents of this Prospectus or for any other statement, made or purported to be
made by the Arranger or a Dealer or on its behalf in connection with the Issuers, the Guarantors, or the
issue and offering of the Notes. The Arranger and each Dealer accordingly disclaims all and any
liability whether arising in tort or contract or otherwise (save as referred to above) which it might
otherwise have in respect of this Prospectus or any such statement. Neither this Prospectus nor any
other financial statements are intended to provide the basis of any credit or other evaluation and should
not be considered as a recommendation by any of the Issuers, the Guarantors, the Arranger or the
Dealers that any recipient of this Prospectus or any other financial statements should purchase the
Notes. Each potential purchaser of Notes should determine for itself the relevance of the information
2


contained in this Prospectus and its purchase of Notes should be based upon such investigation as it
deems necessary. None of the Dealers or the Arranger or the Trustee undertakes to review the financial
condition or affairs of the Issuers or the Guarantors during the life of the arrangements contemplated
by this Prospectus nor to advise any investor or potential investor in the Notes of any information
coming to the attention of any of the Dealers or the Arranger.
In connection with the issue of any Tranche (as defined in "General Description of the Programme ­
Method of Issue"), the Dealer or Dealers (if any) named as the stabilising manager(s) (the "Stabilising
Manager(s)") (or any person acting on behalf of any Stabilising Manager(s)) in the applicable Final
Terms may over-allot Notes or effect transactions with a view to supporting the market price of the
Notes at a level higher than that which might otherwise prevail. However, there is no assurance that the
Stabilising Manager(s) (or persons acting on behalf of any Stabilising Manager(s)) will undertake
stabilisation action. Any stabilisation action may begin on or after the date on which adequate public
disclosure of the terms of the offer of the relevant Tranche of Notes is made and, if begun, may be
ended at any time, but it must end no later than the earlier of 30 days after the issue date of the relevant
Tranche of Notes and 60 days after the date of the allotment of the relevant Tranche of Notes. Any
stabilisation action or over-allotment must be conducted by the relevant Stabilising Manager(s) (or
persons acting on behalf of any Stabilising Manager(s)) in accordance with all applicable laws and
regulations.
In this Prospectus, unless otherwise specified or the context otherwise requires, references to "",
"Euro", "EUR" or "euro" are to the single currency of the participating member states of the European
Union, references to "$", "USD" and "U.S. Dollars" are to the lawful currency of the United States of
America, references to "PRC" are to the People's Republic of China and references to "CNY", "RMB"
and "Renminbi" are to the lawful currency of the People's Republic of China.
3


TABLE OF CONTENTS
Page
DOCUMENTS INCORPORATED BY REFERENCE...................................................................................... 5
RISK FACTORS ................................................................................................................................................ 7
PROSPECTUS SUPPLEMENT ...................................................................................................................... 20
GENERAL DESCRIPTION OF THE PROGRAMME ................................................................................... 21
TERMS AND CONDITIONS OF THE NOTES ............................................................................................. 26
OVERVIEW OF PROVISIONS RELATING TO THE NOTES WHILE IN GLOBAL FORM ..................... 49
USE OF PROCEEDS....................................................................................................................................... 55
BUSINESS DESCRIPTION OF AKZONOBEL ............................................................................................. 56
BUSINESS DESCRIPTION OF AKZONOBEL SWEDEN............................................................................ 61
DESCRIPTION OF THE BUSINESS OF THE GROUP ................................................................................ 63
TAXATION...................................................................................................................................................... 67
PRC CURRENCY CONTROLS...................................................................................................................... 73
SUBSCRIPTION AND SALE ......................................................................................................................... 76
FORM OF FINAL TERMS.............................................................................................................................. 80
GENERAL INFORMATION........................................................................................................................... 89
4


DOCUMENTS INCORPORATED BY REFERENCE
This Prospectus should be read and construed in conjunction with:
(a)
the audited consolidated financial statements of AkzoNobel as at, and for the financial years ended, 31
December 2013 and 31 December 2012 respectively;
(b)
the audited consolidated financial statements of AkzoNobel Sweden as at, and for the financial years
ended, 31 December 2012 and 31 December 2011 respectively;
(c)
the unaudited financial statements of AkzoNobel Sweden as at, and for the six months from 1 January
2013 to and including 30 June 2013; and
(d)
the terms and conditions of the Notes set out in the Base Prospectus dated 1 March 2013,
which have been previously published or are published simultaneously with this Prospectus and which have
been approved by the CSSF or filed with it together with, in each case of audited financial statements, the
audit report thereon. Such documents shall be incorporated by reference in and form part of this Prospectus,
save that any statement contained in a document which is incorporated by reference herein shall be modified
or superseded for the purpose of this Prospectus to the extent that a statement contained herein modifies or
supersedes such earlier statement. Any statement so modified or superseded shall not, except as so modified
or superseded, constitute a part of this Prospectus.
Copies of documents incorporated by reference in this Prospectus may be obtained (without charge) from the
website of the Luxembourg Stock Exchange (www.bourse.lu) and from the website of AkzoNobel
(www.akzonobel.com).
The tables below set out the relevant page references for (i) the audited consolidated financial statements of
AkzoNobel for the financial years ended 31 December 2013 and 31 December 2012, respectively, as set out in
AkzoNobel's annual report for each relevant financial year, (ii) the audited consolidated financial statements
of AkzoNobel Sweden for the financial years ended 31 December 2012 and 31 December 2011, respectively,
as set out in AkzoNobel Sweden's report for the financial year then ended, (iii) the unaudited financial
statements of AkzoNobel Sweden as at, and for the six months ended, 30 June 2013, as set out in AkzoNobel
Sweden's report for the first half of 2013 and (iv) the terms and conditions of the Notes set out in the Base
Prospectus dated 1 March 2013. The parts of the above-mentioned reports which are not incorporated by
reference into this Prospectus are either not relevant for the investor or are covered elsewhere in this
Prospectus.
Audited consolidated financial statements of AkzoNobel for the financial year ended 31 December 2012
AkzoNobel Annual Report 2012
Statement of Income for the financial year ended 31 December
2012................................................................................................................................
Page 108
Balance Sheet as at 31 December 2012................................................................
Page 109
Statement of Cash Flows for the financial year ended 31 December
2012................................................................................................................................
Page 110
Statement of changes in equity................................................................
Page 111
Accounting Principles ................................................................................................
Pages 113-120
Notes ................................................................................................................................ Pages 112 and 121-157
Auditor's Report................................................................................................
Page 158
Audited consolidated financial statements of AkzoNobel for the financial year ended 31 December 2013
AkzoNobel Annual Report 2013
Statement of Income for the financial year ended 31 December
2013................................................................................................................................
Page 112
Balance Sheet as at 31 December 2013................................................................
Page 113
Statement of Cash Flows for the financial year ended 31 December
2013................................................................................................................................
Page 114
5


AkzoNobel Annual Report 2013
Statement of changes in equity................................................................
Page 115
Accounting Principles ................................................................................................
Pages 117-123
Notes ................................................................................................................................ Pages 116 and 124-159
Auditor's Report................................................................................................
Page 160
Audited consolidated financial statements of AkzoNobel Sweden for the financial year ended 31
December 2011
AkzoNobel Sweden Annual Report
2011
Statement of Income for the financial year ended 31 December
2011................................................................................................................................
Page 9
Balance Sheet as at 31 December 2011................................................................
Pages 10-11
Statement of Cash Flows for the financial year ended 31 December
2011................................................................................................................................
Page 13
Statement of changes in equity................................................................
Page 12
Accounting Principles ................................................................................................
Pages 19-21
Notes ................................................................................................................................
Pages 21-30
Auditor's Report................................................................................................
Page 31
Audited consolidated financial statements of AkzoNobel Sweden for the financial year ended 31
December 2012
AkzoNobel Sweden Annual Report
2012
Statement of Income for the financial year ended 31 December
2012................................................................................................................................
Page 7
Balance Sheet as at 31 December 2012................................................................
Pages 8-9
Statement of Cash Flows for the financial year ended 31 December
2012................................................................................................................................
Page 11
Statement of changes in equity................................................................
Page 10
Accounting Principles ................................................................................................
Pages 17-19
Notes ................................................................................................................................
Pages 19-29
Auditor's Report................................................................................................
Page 30
Unaudited financial statements of AkzoNobel Sweden for the six months ended 30 June 2013
AkzoNobel Sweden Half-yearly
Report 2013
Statement of Income for the six months ended 30 June 2013 ................................
Page 5
Balance Sheet as at 30 June 2013................................................................
Page 8
Statement of Cash Flows for the six months ended 30 June 2013 ................................
Page 10
Statement of changes in equity................................................................
Page 9
Notes (including segment information)................................................................
Pages 5-12
Terms and conditions of the Notes set out in the Base Prospectus dated 1 March 2013
Base Prospectus dated 1 March 2013
Terms and conditions of the Notes ................................................................
Pages 25-47
6


RISK FACTORS
The Issuers and the Guarantors believe that the following factors may affect their ability to fulfil their
respective obligations under the Notes (or the Guarantee) issued under the Programme. Most of these factors
are contingencies which may or may not occur and the Issuers and the Guarantors are not in a position to
express a view on the likelihood of any such contingency occurring. Risk factors which are specific to the
Notes are also described below.
The Issuers and the Guarantors believe that the factors described below represent the principal risks inherent
in investing in the Notes issued under the Programme, but the inability of the Issuers and Guarantors to pay
interest, principal or other amounts on or in connection with any Notes may occur for other reasons and the
Issuers and the Guarantors do not represent that the statements below regarding the risks of holding any
Notes are exhaustive. Prospective investors should also read the detailed information set out elsewhere in this
Prospectus (including any documents incorporated by reference herein) and reach their own views prior to
making any investment decision.
Words and expressions defined elsewhere in this Prospectus have the same meanings in this section. In this
Prospectus, references to "we", "us" or "our" refer to the Group.
Risk Factors Relating to AkzoNobel and its Businesses
Unless otherwise specified by reference to AkzoNobel, the risks described below apply in the Group context.
Strategic Risks
Economic Downturn
The Group operates in over 80 countries and is affected by the prevailing economic conditions in each,
including risks of continued economic slowdown and concerns regarding growth in emerging markets.
Macroeconomic factors that have an impact on expenditure by customers, demand for the Group's products
and the availability and cost of credit will have an effect on the Group's business and results of operations.
One of the principal uncertainties facing the Group is the development of the global economy, how this will
affect the Group's business and results of operations, and the timing of that impact. Economic recovery
remains fragile in many territories and it continues to be difficult to predict customer demands. In addition,
fiscal imbalances continue to drive instability in the financial markets, which may further adversely affect the
global, regional or national economies in the markets in which we operate.
A prolonged downturn, whether on a global basis or in regional or national markets, may adversely affect the
Group's business and results of operations.
By way of examples:
(a)
the Decorative Paints business area, which, as at 31 December 2013, accounted for 28 per cent. of our
revenue, is susceptible to downturns, in particular in what we call the Buildings and Infrastructure
market end-user segment. This segment uses a wide variety of AkzoNobel products to build, decorate,
protect, maintain and renovate building interiors and exteriors. The segment has experienced a
significant contraction since 2006 with limited recovery since then; and
(b)
the Specialty Chemicals business area, which, as at 31 December 2013, accounted for 34 per cent. of
our revenue, is susceptible to downturns, in particular in the Industrial end-user market segment.
Prolonged downturns could adversely affect the Group's business and results of operations.
Capital Market Conditions
Adverse conditions in the domestic and international debt and equity markets may result in a rise in the cost
of capital and the risk of not being able to access the global capital markets when capital is required to fund
the Group. In such circumstances, the Group's ability to raise capital in a timely and cost effective manner
could be adversely affected.
Adverse constraints in the supply of liquidity, including an increase in the cost of bank credit and a
contraction in the supply of bank credit, may adversely affect the cost of funding the Group and extreme
liquidity constraints may limit growth possibilities.
7


Counterparty risk
We contract with a large number of commercial and financial counterparties including customers, suppliers
and financial institutions. The global financial crises have placed strains on the global financial markets,
reduced liquidity and impacted business conditions generally. Our initial counterparty credit controls may not
prevent a material loss due to credit exposure to a major customer or financial counterparty. In addition,
customers, suppliers, contractors or joint venture partners may fail to perform against existing contracts and
obligations. Reduced liquidity and available sources of capital in financial markets may impact the cost and
ability to fund planned investments. These factors could negatively affect our financial condition and results
of operations.
Implementation of Strategic Agenda
A failure to properly and fully implement our strategic agenda could adversely affect the Group and its
businesses. As a result, we might not be able to improve our operations and/or grasp opportunities arising.
International Operations
We operate internationally in over 80 countries and we conduct business in many currencies. As a result, we
are exposed to a variety of risks, many of them beyond our control, which could adversely affect our business.
Growth of our business in emerging markets will further expose us to these risks. Risks associated with
international operations include, but are not limited to:
(a)
slowdown or recession in global, regional or national economic growth (as described further in
"Economic Downturn" above);
(b)
tariffs and trade barriers;
(c)
exchange controls;
(d)
fluctuations in national currencies (as described further in "Exchange Rate Fluctuations" below);
(e)
social and political risks;
(f)
national and regional labour disputes;
(g)
compliance with local laws, regulations and standards (as described further in "Legal and Regulatory
Risks" below); and
(h)
the difficulty of enforcing legal claims and agreements through some foreign legal systems.
Unfavourable developments in one or more of these areas could adversely affect the Group's business and
results of operations.
Stakeholder Support
We endeavour to define and implement a clear strategy and seek dialogue with internal and external
stakeholders, being amongst others, our customers, suppliers, investors and employees. Failure to obtain the
support of our stakeholders for our strategy and its execution could adversely affect the Group and its
business.
Acquisitions and Disposals
From time to time the Group makes acquisitions and disposals of businesses and brands. The rationale for
these may be based on incorrect assumptions or conclusions and they may not realise the anticipated benefits
or there may be other unanticipated or unintended effects. In addition, significant liabilities may not be
identified in due diligence or may come to light after the expiry of warranty or indemnity periods, or it may
not prove practicable to secure or enforce warranty or indemnity protection. (See "Description of the Issuer ­
Litigation ­ Antitrust cases and other claims and litigation"). These factors may adversely affect the Group's
business and results of operations.
Competition
We have a wide portfolio of business units competing across a diverse range of geographical and product
markets and we compete with other multinational corporations which have significant financial resources. We
may be unable to compete effectively if our competitors' resources are applied to change their areas of focus,
enter new markets, reduce prices, or to increase investments in marketing or the development and launch of
new products. Increased competition in the markets in which we operate may adversely affect the Group's
business and results of operations.
8


Technology
Our success depends upon sustainable growth of our business through research and development, production
and sale of new products. If we are not able to identify or exploit transforming technologies in a timely
manner, this may lead to the loss of our leadership positions and adversely affect the Group's business and
results of operations. This could also arise as a result of infringements in our intellectual property or loss of
key personnel and their technological knowledge.
Operational Risks
Loss of Customers
The future of our customers is an important consideration for the Group. Loss of major customers or many
small customers could adversely affect our businesses and results of operations.
The Price, Availability and Possible Discontinuation of Supply of Chemicals and Raw Materials
Our business and results of operations may be adversely affected by the price, availability and possible
discontinuation of our supply of chemicals and raw materials.
We use significant amounts of various chemicals and raw materials in manufacturing our products. Prices for
some of these chemicals and raw materials can be volatile and are affected by cyclical movements in
commodity prices, availability of such chemicals and raw materials, demand for a variety of products which
are produced using these chemicals and raw materials, levels of price competition among local and global
suppliers and general economic conditions. We are, to some extent, able to pass on higher input prices to our
customers, but this ability is, to a large extent, dependent on market conditions. However, there may be times
when we are not able to recover increases in the cost of chemicals and raw materials for some products due to
weakness in demand for such products or the actions of our competitors. We also may be impacted by
inability to access sufficient raw materials or business interruptions or product discontinuation at some of our
key suppliers.
The Price and Supply of Energy and Emission Trading Rights
The Group's Specialty Chemicals business operates two energy-intensive businesses, Pulp and Paper
Chemicals and Industrial Chemicals. The latter conducts its business primarily in Europe. A non-level playing
field for energy and emission trading rights on a global level can affect the competitive position of our
businesses but it also affects our customers' businesses. Although we have long-term purchase contracts and
hedging and other policies in place which seek to mitigate the effects of price increases from natural gas and
electricity, we are particularly sensitive to energy price movements which may adversely affect our business
and results of operations.
Seasonality
Seasonality may adversely affect our business and results of operations. A portion of our business is seasonal
due to weather conditions. In particular, the Decorative Paints business area is sensitive to seasonality, with
business often stronger in the second and third quarters of the calendar year than in the first or fourth quarters.
Consequently, seasonal lags in earnings may not be offset during the corresponding financial year and this
may affect our business and results of operations.
Reputation
Negative publicity could damage our brands. We have created a strong reputation over many years and many
of the businesses have a high local profile. However, any negative publicity could adversely affect our
business and results of operations.
Product Liability
Our operations in consumer markets expose us to legal risks, regulation and potential liabilities from product
liability claims asserted by consumers. Product liability claims could adversely affect our company's business
and results of operations. Unexpected long-term implications with a significant impact for our organization
could follow from usage of new technologies and compounds.
Other Operational Risks
Our revenues are dependent on the continued operation of our various manufacturing facilities. Operational
risks include:
(a)
equipment and systems failures, including, but not limited to, Information Technology (IT) platforms
and applications;
9


(b)
failure to comply with applicable regulations and standards and to maintain necessary permits and
approvals;
(c)
raw material and chemical supply disruptions;
(d)
labour force shortages or work stoppages typically referred to as industrial action;
(e)
events impeding or increasing the cost of transporting products;
(f)
extreme weather events or natural disasters; and
(g)
terrorist attacks.
While we maintain insurance at levels that we believe are appropriate, some of these operational risks could
result in losses and liabilities in excess of our insurance coverage, in respect of insurance that is not available
at commercially acceptable terms, or in uninsured losses or liabilities, which could adversely affect our
business and results of operations.
Environmental, Health and Safety Legislation
Our businesses use, and/or have used in the past, hazardous materials, chemicals and biological and toxic
compounds in several product development programmes and manufacturing processes and resultant waste
materials. We have been, and can be, exposed to risks of accidental contamination. We are subject to a broad
range of laws, regulations and standards in each of the jurisdictions where we operate, including those relating
to pollution, the health and safety of employees, protection of the public, protection of the environment and
the generation, storage handling, transportation, treatment, disposal and remediation of hazardous substances
and waste materials. These regulations and standards are becoming increasingly stringent in many
jurisdictions, and increasingly expose us to liability including in respect of damage to property and personal
injury. While it is not feasible to predict the outcome of all pending environmental exposures, it is possible
that there will be a need for future provisions for environmental costs. Provisions of this sort could be
material to the Group results of operations in any one accounting period. Moreover, there can be no assurance
that we will not be exposed to additional environmental liabilities in the future which could adversely affect
our business and results of operations.
Change Initiatives
In order to implement our strategy, we are changing AkzoNobel's operating model including by establishing a
Global Business Services department. We also undertake various restructuring projects which require
significant change and stakeholder management and project management expertise. Failure to manage such
projects appropriately, or to implement such projects, may lead to loss of key staff and/or knowledge or other
business disruption, which could have a negative effect on our productivity and levels of service and thereby
adversely affect our business and results of operations.
Cost Structure
Rapid changes in macroeconomic conditions (as described further in "Economic Downturn" above) may
require adjustments to the local cost structures of the Group. To the extent that these cost structures are fixed
in nature, such changes in macroeconomic conditions may adversely affect our business and results of
operations.
People
The Group depends on the continued contribution of its management team and operating staff. There can be
no guarantee that we will be able to attract, develop and retain high quality individuals at an appropriate cost
level and ensure that the capabilities of the Group's human resources meet its business needs. Any failure to
do so may adversely affect our business and results of operations.
Financial Risks
Exchange Rate Fluctuations
We have operations in more than 80 countries and report in Euros. Although we have a hedging policy which
seeks to mitigate certain currency exchange rate risks, our results of operations are sensitive to the
relationships between the Euro and U.S. dollar, pound sterling, Swedish krona and Latin American and Asian
currencies. Fluctuations in currency prices which are not successfully mitigated by our hedging policy could
adversely affect our capital structure, business and results of operations.
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