A Word from the President

Last year, 2013, did not bring much relief from a protracted macroeconomic situation that made our commercial endeavours rather difficult. The European debt-crisis and its negative consequences lingered; strife in many parts of the Middle East continued; and the rest of the world did not show the progress we had hoped for.

For CellMark, 2013 proved to be another very challenging year and regrettably, most of our operations did not achieve the goals we established. Overall, our results were less than satisfactory, although our Chemicals and Packaging Divisions performed well.

Because we do not foresee rapid or dramatic improvements to the global business environment, we acted more conservatively in 2013. This methodology led to substantial year-end financial allocations designed to protect us from unpleasant surprises. For example, in line with this more cautious view, we made reserves against bad debt, obsolete inventory, and unsettled quality claims. These moves had a significant negative impact on our 2013 financial result.

On a more positive note, we completed our integration of the Metals and Chemicals divisions in 2013. We managed this complex undertaking seamlessly and successfully and today, these new divisions operate as integral parts of our corporation.

Our development projects in energy and other disciplines are progressing well. For example, we completed a marketing and distribution agreement for residential wood pellets in the European market. Our Basic Chemicals activities also continue to take shape. Although we assumed some start-up costs in 2013, this business is now on solid footing and expanding its product portfolio and geographic reach. Moreover, we are pursuing additional acquisitions that will broaden our product and service offerings.

As always, we are most grateful for the cooperation we enjoyed in 2013 from our business partners. We rely heavily on continued support from our customers, suppliers, financial institutions and insurance providers. Without our partners, we would not prevail. Thank you!

As we have said many times, our business is all about people—CellMark people. We thank all of our dedicated employees, who continue to do their very best to overcome difficult circumstances and improve our organization at every turn. We truly appreciate their commitment to our common objectives, and to our core values: integrity, trust, transparency and accountability.

Sincerely,
Hans Kling