Annual Report • Mar 28, 2014
Annual Report
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P. 26-41 Dig deeper into our businesses
P. 42-190 Full sustainability and fi nancial statements
Consult the online report www.umicore.com/reporting
About Umicore 1-3 Key fi gures 4-5
CEO & Chairman's review 6-7 Economic 8-13 Great place to work 14-17 Eco-effi ciency 18-21 Stakeholder engagement 22-25
Catalysis 26-29 Energy Materials 30-33 Performance Materials 34-37 Recycling 38-41
Economic and fi nancial statements 42-118 Environmental statements 119-130 Social statements 131-147 Corporate governance statements 149-173 Board, Executive Committee & Senior Management profi les 174-177 Assurance reports 178-179 Glossary 180-183 GRI index 184-188
This Annual Report is an integrated view of our economic, social and environmental performance in 2013. To access the full web-based report please visit our dedicated reporting centre via the link below. For mobile users the QR codes will direct you to relevant parts of our on-line report.
Our report is externally verifi ed and reaches the GRI reporting level B+. A full overview of the scope of our reporting can be found on page 190.
Consult the online report www.umicore.com/reporting
About us
We are a global materials technology and recycling company. We focus on application areas where our expertise in chemistry, materials science, metallurgy and recycling makes a real difference.
Our activities are centred on four business groups – Catalysis, Energy Materials, Performance Materials and Recycling. Each business group is composed of market-focused business units offering materials and solutions that are at the cutting edge of new technological developments that are essential to everyday life.
Umicore's strategy, Vision 2015, is shaped by global economic, social and environmental megatrends. Our competencies, market positions and expertise in metallurgy, materials science, application know-how and recycling give us strong growth potential in the following areas:
Resource scarcity: in today's world metals are in greater demand but are becoming ever scarcer. Umicore's recycling capabilities recover 26 elements including precious and other metals.
Clean air: the drive towards stricter emissions standards provides global growth opportunities in automotive catalysts for both light and heavy duty vehicles.
Vehicle electrifi cation: the growing market for lithium ion batteries used in electrifi ed vehicles is driving demand for our rechargeable battery cathode materials.
Clean energy: Umicore develops materials that form the heart of highly effi cient photovoltaic technologies and which enable other energy effi cient products.
Our Vision 2015 objectives cover our economic ambitions and also challenging goals for environmental and social performance:
About us 3
Growth and returns: our key growth projects have the potential to achieve double digit revenue growth. Our long-term goal is to generate an average return on capital employed of 15-20%.
Safety: we aim to have zero lost time accidents.
Occupational exposure: we will reduce the body concentrations of specifi c metals to which our employees have an exposure: Cd, Pb, Co, Ni, As, Pt.
People development: all employees worldwide will receive an annual appraisal to discuss individual development.
Preferred employer: we will target specifi c actions based on the results of the 2010 People Survey.
Reduce carbon footprint: we aim to reduce our CO2 emissions by 20% vs the level of 2006 and using the same scope of activities as 2006.
Emission reduction: we aim to reduce by 20% the impact of metal emissions to water and air vs 2009 levels.
Product sustainability: we will invest in tools to better understand and measure the life cycles and impacts of our products.
Sustainable procurement: we will implement our new sustainable procurement charter throughout our business.
Local community: all our sites will be expected to make further steps in identifying key stakeholders and engaging with the local community.
| Economic performance (in million € unless stated otherwise) |
2009 | 2010 | 2011 | 2012 | 2013 |
|---|---|---|---|---|---|
| Turnover | 6,937.4 | 9,691.1 | 14,480.9 | 12,548.0 | 9,819.3 |
| Revenues (excluding metal) | 1,723.2 | 1,999.7 | 2,318.6 | 2,427.4 | 2,390.0 |
| Recurring EBIT | 146.4 | 342.5 | 416.1 | 372.1 | 304.0 |
| of which associates | (6.1) | 30.1 | 22.9 | 22.2 | 11.8 |
| Total EBIT | 141.2 | 324.0 | 432.7 | 328.6 | 260.0 |
| Recurring EBIT margin (in %) | 8.9 | 15.6 | 16.9 | 14.4 | 12.2 |
| Return on Capital Employed (ROCE) (in %) | 8.1 | 17.5 | 18.6 | 16.7 | 13.6 |
| Recurring net profi t, Group share | 139.7 | 158.0 | 304.6 | 275.2 | 218.0 |
| Net profi t, Group share | 73.8 | 248.7 | 325.0 | 233.4 | 179.0 |
| R&D expenditure | 119.5 | 119.2 | 136.7 | 149.0 | 140.6 |
| Capital expenditure | 181.6 | 156.6 | 196.2 | 235.7 | 279.6 |
| Net cash fl ow before fi nancing | 258.4 | (68.2) | 308.6 | 150.3 | 185.9 |
| Consolidated net fi nancial debt of continued operations, end of period |
176.5 | 360.4 | 266.6 | 222.5 | 215.0 |
| Gearing ratio of continued operations, end of period (in %) | 11.4 | 18.6 | 13.4 | 11.0 | 11.1 |
| Group shareholders' equity, end of period | 1,314.2 | 1,517.0 | 1,667.5 | 1,751.7 | 1,677.1 |
| Recurring EPS (in €/share) | 0.73 | 2.33 | 2.69 | 2.47 | 1.96 |
| EPS including discontinued operations, basic (in €/share) | 0.66 | 2.20 | 2.87 | 2.09 | 1.61 |
| Gross dividend (in €/share) | 0.65 | 0.80 | 1.00 | 1.00 | 1.00 |
| Great place to work | 2009 | 2010 | 2011 | 2012 | 2013 |
|---|---|---|---|---|---|
| Total workforce (incl. associates) | 13,728 | 14,386 | 14,572 | 14,438 | 14,057 |
| of which associates | 4,415 | 4,828 | 4,408 | 4,042 | 3,867 |
| Lost Time Accidents (LTA) | 48 | 56 | 60 | 49 | 35 |
| LTA frequency rate | 3.12 | 3.54 | 3.61 | 2.86 | 2.08 |
| LTA severity rate | 0.08 | 0.13 | 0.11 | 0.11 | 0.10 |
| Exposure ratio 'all biomarkers aggregated' (in %) | - | - | 5.15 | 4.32 | 2.60 |
| Average training hours per employee | 44.05 | 43.30 | 51.94 | 50.72 | 45.18 |
| Voluntary leavers - ratio | 2.59 | 3.78 | 3.84 | 3.20 | 3.33 |
| Eco-effi ciency | 2009 | 2010 | 2011 | 2012 | 2013 |
|---|---|---|---|---|---|
| CO2 e emissions (scope1+2) (in tonne) |
529,628 | 543,807 | 695,733 | 701,898 | 693,839 |
| Metal emission to water (load in kg) | 5,915 | 6,495 | 5,781 | 5,701 | 5,560 |
| Metal emission to water (impact units) | 442,575 | 389,676 | 306,627 | 245,935 | 313,883 |
| Metal emission to air (load in kg) | 11,950 | 13,582 | 13,867 | 16,614 | 12,533 |
| Metal emission to air (impact units) | 214,650 | 184,066 | 129,900 | 135,059 | 140,349 |
| Stakeholder engagement | 2009 | 2010 | 2011 | 2012 | 2013 |
|---|---|---|---|---|---|
| Total donations (in € thousand) | 1,106.5 | 1,009.4 | 1,751.0 | 1,759.2 | 1,612.8 |
The application of the R&D and Capex defi nitions have been reviewed and fi gures have been restated for comparability reasons. The new defi nitions are explained in the glossary p. 181-182.
Umicore Chairman, Thomas Leysen and CEO, Marc Grynberg look back on 2013 and give their view on the prospects and priorities for 2014 and beyond.
As we anticipated this time last year, 2013 turned out to be a challenging period for several of Umicore's businesses. We generated a recurring EBIT of € 304 million, which was some way below the record profi ts we generated in 2011. The main reasons for this decrease were the impact of lower metal prices and the sluggish economy in Europe. The metal price tailwind of the last few years turned into a headwind, reducing the profi tability of our Recycling activities. Despite this, the Recycling activities continued to produce by far the most signifi cant level of returns of all our businesses. In Catalysis, a less favourable product and regional mix in addition to higher start-up costs continued to impact profi tability. The results of Energy Materials improved from the lows of 2012 while Performance Materials overall posted a robust performance, considering an economic context that remained highly challenging. The diffi cult but necessary cost reduction efforts initiated in 2012 and continued in 2013 helped to improve our competitiveness and profi tability in a number of business units.
In 2013 we continued to invest strongly in our Vision 2015 growth initiatives. We spent € 280 million on capital expenditures with a clear emphasis on those businesses offering the highest growth potential. In Catalysis we continued to deploy new production infrastructure to enable our customers to meet more stringent emission norms around the world. These investments included new production lines for heavy duty diesel catalysts and technology development centres in Japan and South America. In Energy Materials the focus was on a further expansion of production capabilities for rechargeable battery materials to cater for emerging demand in automotive applications. In Recycling a series of investments in the Hoboken facility neared completion and we announced a major project to expand the capacity at the plant which should receive fi nal approvals in the course of 2014. We also continued to invest strongly in research and development programmes, although the absolute level of spending was lower than the previous years as some of our key projects are moving to a commercialization phase. While these
investments confi rm the confi dence we have in our growth prospects, they also placed a burden on short term fi nancial performance through increased depreciation charges and start-up costs.
Operational cashfl ows remained very positive during the year. Despite the high level of investments that we outlined above and paying for a medium-sized acquisition in the Energy Materials business, we were still able to show a year-on-year increase in net cashfl ow before fi nancing. We continued to buy back our own shares during the year and returned some € 85 million to shareholders in the process. The Board of Directors has recommended a stable dividend pay-out of € 1.00 a share which represents a dividend yield in excess of 3%. Together the buyback and proposed dividend represent a return to shareholders of close to € 200 million for the year.
"The metal price tailwind of the last few years turned into a headwind, reducing the profi tability of our Recycling activities. "
The continued ability of the business to produce these strong cash-fl ows means that Umicore's fi nancial position remains very solid. Notwithstanding the lower earnings and high level of investments, net fi nancial debt decreased further in 2013. This will allow us to continue funding our various growth projects and also provides us with the fi nancial fl exibility to look at larger acquisition opportunities should they provide a compelling strategic fi t and, of course, be available at the right price.
In terms of sustainability performance we again made good progress. On the environmental front we further reduced our CO2 emissions compared to the baseline year. The most signifi cant part of the improvement is sustainable and is the result of targeted energy effi ciency measures that are now bearing fruit. Although metal emissions to air and water increased, largely as a result of increased activity levels, the overall environmental impact of these emissions is still well below the challenging targets that we have set ourselves for 2015. In terms of product sustainability we have now conducted sustainability assessments for a broad sample of our products and services. The challenge in the coming years will be to harness the results to generate value for our customers and to provide a more complete view on our sustainability contribution as a Group.
Our initiatives to promote sustainability in the supply chain moved to another level. We attained confl ictfree smelter status for our main recycling operations with other
activities scheduled to be certifi ed during 2014. We also continued to deploy our own Sustainable Procurement Charter to our suppliers with over 1,000 key suppliers having signed up to the charter by the end of the year. Although engagement with some suppliers to address areas for improvement is, in some cases, a diffi cult and complex process we are pleased with the overall level of progress made.
We also continued to make strides in being recognized as a great place to work with the vast majority of our employees now working in sites that have received preferred employer recognition. We will conduct the next edition of our employee survey in 2014 and this will provide a barometer of the progress that we've made since the last survey in 2011 and will also give us an indication of where we can make further improvements. Our efforts in the area of employee health – particularly in the area of workplace exposure to metals – also made excellent progress in 2013.
Umicore's safety performance in 2013 improved further with the number of accidents dropping by more than a quarter and the vast majority of our operations ending the year accident free. The tragic accident in Olen in January 2014, in which two of our employees lost their lives, has removed all satisfaction that we had derived from these improvements. We have started an initiative to intensify the focus on process safety company-wide and we are adamant that the necessary lessons will be learned from the accident. Wherever needed, improvements
will be made to further reduce the risk of a similar accident happening in future, either in Olen or elsewhere in Umicore. More than ever we remain committed to our goal of making Umicore a zero accident workplace.
Looking forward to 2014, there are positive signs but uncertainties remain. There are indications that some of our key markets are starting to show signs of recovery and the European economy has recently moved out of recession and is expected to grow modestly. Many of our businesses are set to benefi t from this trend and are better positioned from a competitive perspective than before the economic crisis. In addition, a number of recent investments will start their contribution to Group revenues and earnings. Conversely, the global economy remains in a state of fl ux and the impact of shifting monetary policy on emerging market growth has recently become an area of attention. It remains to be seen how all these factors will play out on metal prices.
In the 2014 outlook that we gave in February we indicated that full year recurring EBIT could end up slightly
below that of 2013 if current metal prices persist. While we expect a defi nite improvement in the performance of our product businesses, this may not be suffi cient to fully offset the impact of lower metal prices on the profi tability of the Recycling business group.
The longer term prospects of Umicore are sound and well recognized. We have the fi nancial strength, the products, the technologies and the people to succeed. By focusing on the right priorities, 2014 will bring us closer to realizing our Vision 2015 objectives. Our ultimate aim is to deliver on these objectives and to improve our performance from one economic cycle to the next. It's not a question of focusing on either long term growth or managing the current economic conditions capably – to succeed we must do both.
We would like to take this opportunity to extend our thanks and appreciation to Umicore's employees for their commitment in 2013, to our shareholders for their continued support and to our customers, suppliers and other business partners for their continued loyalty.
While some businesses started to show signs of recovery during the year, this was not enough to offset the impact of lower metal prices on recycling revenues and margins. Earnings were lower year-on-year due to a combination of this metal price effect, mix effects and higher costs linked to our Vision 2015 growth initiatives. Some business units did see profi tability recover somewhat as a result of the benefi ts of selective cost reduction measures taken in previous periods as well as in 2013.
From a fi nancial perspective Umicore's position remained very strong. Cash fl ows were strong and we were able to reduce net debt further, even after a buying back more than 2% of our own shares during the year and making an acquisition.
Revenues were down 2% compared to 2012, reaching € 2.4 billion. An increase in Catalysis and Energy Materials was more than offset by a decrease in Recycling.
Turnover (which includes metal values) was 22% lower year-on-year.
This was due to the signifi cant decrease in the prices of most precious and specialty metals from the second quarter onwards. For Umicore, revenue is a more meaningful metric of "top-line" performance than turnover as it excludes the price of metals passed through to customers.
Recurring EBIT was 18% lower than in 2012 at € 304 million. This primarily refl ected the impact of lower precious and specialty metals prices and this effect was most pronounced in the second half of the year. Some of our activities felt the effects of a less favourable product and regional mix while others saw profi tability recover
somewhat as a result of the benefi ts of selective cost reduction measures. In Catalysis, recurring EBIT was 19% lower as a result of a less favourable mix as well as higher costs related to the start-up of new growth investments and additional depreciation charges. Revenues in Energy Materials grew strongly, driven by the increasing sales of materials for use in rechargeable batteries. Recurring earnings in Energy Materials recovered largely as a result of the cost reduction programmes that had been implemented from 2012. In Performance Materials, although revenues were down 3%, recurring EBIT was at the same level as 2012 with the benefi ts of cost
resulting from lower metal prices, accounted for € 2 million. The impact of non-recurring charges on the net result (Group share) amounted to € 39 million.
Depreciation charges on property, plant & equipment and intangible assets totalled € 159 million compared to € 152 million in 2012. This was due to the completion of more new growth investments in 2013. Overall recurring EBITDA decreased by 12% to € 463 million.
Average capital employed was slightly above the levels of 2012 with higher fi xed assets more than offsetting the effects of lower working capital requirements. Umicore generated a return on capital employed (ROCE) of 13.6% compared to 16.7% in 2012. This was below our Vision 2015 target of generating a return on capital employed of above 15%.
Net recurring fi nancial charges totalled € 23 million, similar to the level of 2012, with negative foreign exchange results offsetting the effect of lower interest charges. The average weighted net interest rate decreased further to 1.61% (compared to 1.92% in 2012).
The recurring tax charge for the period amounted to € 57 million. The overall recurring effective tax rate for the period was 21.3%, compared to 20.6% in 2012 .
Cashfl ow from operations increased by 8.7% to € 523 million, including a release of working capital of € 97 million partly as a result of lower metal prices.
Net cashfl ow before fi nancing increased to € 186 million, including
reduction measures counterbalancing the economic headwinds experienced by several business units. Recycling revenues and recurring EBIT were down 13% and 23% respectively as a result of a sharp drop in metal prices. Lower demand in certain end-markets of Jewellery & Industrial Metals and a lower contribution from its recycling activities also had a negative impact on revenues and performance of the business group. Net recurring corporate costs were at roughly the same level as those of 2012 at € 48 million. For a full discussion of segment economic performance see pages 26 to 41.
Non-recurring items had a negative impact of € 43 million on EBIT. Restructuring charges accounted for € 31 million, the majority of which related to the closure of Element Six Abrasives' plant in South Africa and the closure of Zinc Chemicals' plant in Melbourne, Australia, as well as the implementation of cost reduction measures in Building Products. Umicore also booked environmental provisions of € 8 million related to the remediation of historical pollution on site surroundings. Impairments on permanently tied-up metal inventories,
CAPITAL EXPENDITURE
the amount paid for the Palm Commodities International acquisition. Total net cashfl ow for the period stood at € -33 million, including € 196 million of cash returned to shareholders in the form of share buybacks and dividends, which corresponded to 38% of cashfl ow generated from operations.
At 31 December 2013 Umicore's net fi nancial debt stood at € 215 million versus € 222 million at the start of the year. Group equity stood at € 1,723 million and the gearing ratio (net debt / net debt + equity) was 11.1%. The average net debt to recurring EBITDA ratio stood at 0.4x.
Capital expenditures totalled € 280 million. The vast majority of capital expenditures relates to Vision 2015 growth projects. Compared to 2012, investments were up in Catalysis, linked to the addition of light duty and HDD production capabilities in Asia and Europe and the construction of the technology development centres in Japan and Brazil. Investments were also up in Energy Materials with capacity investments for cathode materials in Korea and China and the construction of a new precursor facility in Korea. In Recycling, capital expenditure continued to run at a high level as a result of the expansion of the sampling facilities and new water and gas cleaning equipment in Hoboken, Belgium. Investments were stable in Performance Materials. Umicore revised its defi nition of capital expenditures in 2013 and capital expenditures now excludes capitalized R&D costs (see glossary for the new defi nition). The fi gures for previous periods have been restated accordingly.
R&D expenditure in fully consolidated companies was € 141 million, corresponding to an R&D spend to revenue ratio of 6%. Overall net R&D spending for 2013 was slightly lower than in 2012 as a result of some projects moving to commercialization and a higher level of grants received.
The main areas of product R&D spending are in automotive catalysis, fuel cell catalysis and rechargeable battery materials. The majority of process-related R&D spending was dedicated to recycling technologies as well as processes for the production of catalysts and rechargeable battery materials. From 2013 Umicore decided to deduct any research grants that are received from third parties from its reported R&D fi gures. We also applied the internationally recognized Frascati Manual defi nitions
for R&D expenditure. The R&D expenditure fi gures for previous periods have been restated accordingly. The reported R&D expenditure in this report also exclude R&D of associates.
Our fuel cell materials joint venture, SolviCore, continued to develop its presence in projects for sustainable mobility.
A total of 36 new patent families were fi led in the course of 2013, compared to 45 in 2012.
We have prioritized R&D programmes to offer the best possible support to our Vision 2015 ambitions with a focus on the development of innovative materials and processes in Catalysis, Recycling and Energy Materials. The Executive Committee focuses its technology reviews on the top ten innovation projects that form part of these Vision 2015 growth ambitions to ensure quality of implementation and speed of execution. These top
Umicore awarded the € 10,000 Umicore Scientifi c Award for 2013 to Dominik Berg, a German physicist, for his PhD work in the fi eld of thin fi lm photovoltaics when studying at the Laboratory for Photovoltaics of the University of Luxembourg. Dominik's entry was one of 35 submitted from all over Europe.
Marc Grynberg, CEO of Umicore, commented: "It was a pleasure to hand over the 2013 Umicore Scientifi c Award to Dominik for his brilliant PhD thesis. I attach great value to this award as it rewards scientifi c research of a very high level and it contributes to our mission to develop materials for clean technology applications."
The main Award is granted to a PhD graduate who, through his or her research, contributes to science in those fi elds that are crucial both to the growth of Umicore's business and the development of a sustainable society.
These areas are: fi ne particle technology and applications; technology for metal-containing compounds such as recycling; sustainable energy related topics; catalysis and fi nally, economic or societal issues linked to metalcontaining compounds.
Since its launch 6 years ago, Umicore and its partners have judged over 200 entries and awarded approximately € 120,000 to 28 scientists across Europe.
LEDs are the biggest thing in lighting since the light bulb. They last a long time, save their owners money, and are environmentally friendly. Making LEDs shine brighter is a great example of how Umicore can improve a customer's product performance.
An LED (Light Emitting Diode) is a semiconductor device which glows when an electric current is passed through it. The LED semiconductor crystals need carrier systems to refl ect the light to the outside, and this is where Umicore plays a key role.
With the market for LEDs expected to show signifi cant growth, Umicore is set to play a leading role in creating a brighter future. LED carrier systems coated with Umicore's new ARGUNA® 630 and ARGUNA® 4500 silver electrolytes refl ect like mirrors. This enables displays of smartphones and tablet PCs to shine incredibly brilliantly – even at low power consumption. In TV sets, ARGUNA®-coated high-performance LEDs enable pictures and movies to be shown
in brilliant colour at extremely high resolution.
"Our detailed electroplating knowledge helps customers improve their overall process performance," explains Thomas Engert, Vice-President Electroplating. "For example, our know-how has enabled us to improve the process stability and thermal stability of the silver layer on LED carrier systems, which helps LEDs shine brighter." This not only means a better product, it also reduces a customer's cost.
Customers choose Umicore for its reliability and competence in precious metal electroplating. Shenzhen ChongHui Surface Technology Development in
China works closely with our Electroplating division in China. Mr. Zheng Jianguo, Managing Director, comments: "Besides the good performance of the fi nal coatings, Umicore's local team in China provides me with the fi eld service I need to adjust electroplating processes to the specifi c needs of our production environment. This helps us make the whole process more effi cient."
Electroplating is a technique to put a thin metal layer on a product to change its appearance or surface behaviour. The coating protects the product against corrosion or adds value through its brilliant metallic surface. The challenging aspect is to get the formulation of chemical ingredients exactly right for the particular application and process conditions. Umicore's considerable expertise and experience in electroplating gives customers a valuable helping hand in this respect.
An everyday example is electroplating a metal necklace with a layer of gold to impart a richer colour or hide surface defects. The coated layer is exceptionally thin: an electroplated layer of gold is typically 50 times thinner than a human hair. Apart from jewellery and LEDs, you can see electroplating applications everywhere: car bumpers and tyre rims, offi ce furniture, bathroom equipment, telecom switchgear, electronic devices.
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case study
ten projects cover product technologies in automotive catalysis, fuel cell catalysis and rechargeable battery materials. They also include recycling technologies as well as processes for the production of catalysts, rechargeable battery materials and thin fi lm materials. In 2013 the Executive Committee undertook six dedicated technology reviews.
From an open innovation perspective, we continued to develop our collaboration network with universities and research institutes around the world in 2013. We continued to host close to one hundred internships for students as part of their masters and bachelors' studies and directly sponsor 26 PhD students over the course of their studies. Umicore holds four guest professorships at universities and Umicore research and technical staff conducted numerous lectures at universities around the world. We also have numerous university partnerships for research and the sharing of services and infrastructure.
In May we awarded the Umicore Scientifi c Award to Dominik Berg, a German physicist, for his PhD work in the fi eld of thin fi lm photovoltaics when studying at the Laboratory for Photovoltaics of the University of Luxembourg. Dominik's entry was one of 35 submitted from all over Europe.
The main Award is granted to a PhD graduate who, through his or her research, contributes to science in those fi elds that are crucial both to the growth of Umicore's business and the development of a sustainable society. These areas are: fi ne particle technology and applications; technology for metal-containing compounds such as recycling; sustainable energy related topics; catalysis and fi nally, economic or societal issues linked to metal-containing compounds. Since its launch in 2007 Umicore
and its partners have judged over 200 entries and awarded approximately € 120,000 to 28 scientists across Europe.
Equity markets in general recovered during the course of 2013. Although the global economy remained rather unpredictable and Europe's recovery slow and erratic, confi dence in equities was buoyed by monetary stimulus and growing optimism about global growth.
In 2013 Umicore's share price decreased by 18.6%, from € 41.69 to € 33.96, which was in contrast to the 8.5% increase in the Dow Jones Specialty Chemicals Index in relative and currency-adjusted terms. The share price was down 31% compared to our "home" Bel20 Index. This decrease can be primarily linked to the negative evolution of precious metals prices during the course of the year. During the year we retained our place in the FTSE4Good sustainability index and a number of other sustainability oriented funds.
At the end of 2013 4 investment companies had holdings in Umicore that were above the declaration threshold of 3%. These companies had combined declared holdings of 16.06% at year's end. In the course of 2013, Umicore bought back 2,437,385 of its own shares. During the year 296,912 shares were used in the context of exercised stock options, while another 21,900 were used as share grants to the members of the Board of Directors and Executive Committee. At the end of the year we held 10,228,661 or 8.5% of our own shares in treasury.
If the appropriation of profi t proposed to shareholders is approved, a stable gross dividend of € 1.00 per share will be paid for the fi nancial year 2013. Taking into account the gross interim dividend of € 0.50 paid in September 2013, a balance gross amount of € 0.50 would be paid in May 2014.
In September, Umicore was recognised by tyre manufacturer Michelin for its exceptional contribution as a supplier of cobalt salts and zinc oxides. Umicore is one of six suppliers from around the world to receive such an award, which is the result of many years of dedicated customer service and supply of the highest quality cobalt and zinc products.
Guy Beke, Senior Vice-President Zinc Chemicals commented: "Getting such a prestigious award from a leading tyre manufacturer in the world is a great honour. Reaching this level of recognition would not have been possible without our people's high level of dedication each and every day for over 20 years."
Jan Vliegen, Senior Vice-President Cobalt & Specialty Materials added: "For more than ten years we have been supplying high-quality cobalt products to the Michelin Group. I am proud
of our colleagues who deliver a dedicated customer service. Thanks to their commitment Michelin has grown into a top fi ve customer for our cobalt products."
Zinc oxide is used as an accelerator in a process called vulcanization, which makes rubber resistant enough to use in a tyre. Cobalt salts are used as a 'rubber adhesion promoter' to help the rubber bind to the steel wires that reinforce the tyre.
Michelin used the EcoVadis scorecard which showed an outstanding level of maturity for Umicore in terms of corporate social responsibility.
In 2013 Umicore's safety performance made further improvements. We recorded 35 lost time accidents compared to 49 the year before – a reduction of more than 25%. This resulted in a frequency rate of 2.1 (compared to 2.9 in 2012) and a severity rate of 0.10 (compared to 0.11 in 2012). Interestingly, close to 80% of all our sites were accident-free in 2013 while two sites accounted for half of the lost time accidents in the whole company.
An increasing number of sites and business units have defi ned indicators to measure the effectiveness
of their accident prevention efforts, such as the number of action items fi nalised following safety audits, remediation measures following near miss reports, safety training hours or preventive measures suggested by staff. These measures are being used as leading indicators of safety in sites to provide site management with an improved ability to diagnose the level of risk and take the necessary action. A range of other safety initiatives are being implemented in the business units, involving both in-house developed initiatives as well as external programmes such as SafeStart®. More details on some of these initiatives can be found in the business group reviews between pages 26 and 41.
We held the third edition of our Safety Award in 2013 with the winner, the Maintenance Team of the Automotive Catalysts site in
Tulsa, being chosen by a jury from a fi eld of 62 submissions covering more than 500 people. The jury was most impressed by the way
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"I like to work for Umicore because Umicore gives us the chance to grow. " Mykhailo Guch, Markham, Canada
the nine-person team integrates safety in all aspects of their work and by the way they combine careful risk evaluation with a strong customer focus. Their attitude was also a factor in infl uencing safety performance in the Tulsa plant as a whole, which has not had lost time accident for staff in 5 years. The award is designed to encourage all employees to take ownership of safety in their own workplace and to encourage the sharing of best practices throughout Umicore. In addition to individual awards we recognize sites that have achieved the benchmark of three years or fi ve years with no lost time accidents or recordable injuries to Umicore staff and no lost time accidents involving contractors. At the end of 2013, 11 sites had achieved the three year benchmark and fi ve of these sites had also achieved the fi ve year benchmark.
In January 2014 an accident at the Olen plant in Belgium cost the lives of two Umicore employees. Preliminary fi ndings indicated that the accident was due to an unexpected accumulation of hydrogen in the storage tank on which the two employees were carrying out maintenance work. A preliminary report was submitted to the Health and Safety Inspectorate and a process was launched to share the learning from the accident through the Group.
As an employer we have a responsibility to give our colleagues opportunities to develop and grow. This can cover many aspects - from learning and development possibilities, regular feedback, to talent management and succession planning. One of the objectives to be achieved by 2015 is to ensure that all employees receive an appraisal at least once a year regarding their personal development.
ACCIDENT SEVERITY RATE 2009 2010 2011 2012 2013 0.00 0.05 0.10 0.15 0.20 0.08 0.13 0.11 0.11 0.10
Our initial fi ndings in 2011 showed that 87% of all employees already receive such an appraisal. In 2013 we made further progress in this area and by the end of the year 96% of employees had received an appraisal.
One indication of people development is the intensity of training. In 2013, the average training hours per employee was 45.18 compared to 50.72 hours in 2012. The reduction from the highs of 2011 / 2012 can be partially attributed to a signifi cantly reduced level of on-boarding training resulting from lower levels of recruitment and the fact that no major new sites came on-stream during the year. In 2013 we continued to strengthen our focus on on-the-job training where learning is focused on hands-on practical experience and / or integrated into the dayto-day work environment. We held more than 50 "Lunch & Learn" seminars throughout the year, covering a wide range of topics.
In 2013 we deployed a new learning management platform (My Campus). The initial scope of the roll out was the sites in Belgium and the larger sites in Germany followed by sites in Brazil, US and China. This platform aims to create a more collaborative workplace – an aspect that was identifi ed as a key development area in the 2010 People Survey. My Campus provides an on-line platform for blended learning where employees can access many different types of training and personal development possibilities, including e-learning modules such as for sustainable procurement and performance management. The platform also supports the talent and performance management processes and hosts a collaborative networking tool.
In 2013 our management population of some 1,900 people completed the biennial Talent Review, the Group-wide talent mapping exercise. This process enables managers to express their career and mobility aspirations and have these reviewed in a career panel. We also completed specifi c competence and talent exercises in North America and Asia Pacifi c. The new platform for commercial functions at Umicore held two summit meetings in Europe and Asia, one aim of which was to further develop the sales and marketing competences within the company .
Attracting and retaining people is becoming an ever-greater challenge, particularly in technologyintensive sectors such as the ones in which Umicore is present. We have based our 2015 preferred employer objectives on the results of the 2010 People Survey. Each site is expected to have a plan in place to be considered as a preferred employer in its own operating context. In some countries preferred employer programmes exist that offer high levels of visibility and recognition – this is particularly the case in the European Union.
All the sites in Belgium, France and Brazil as well as the largest sites in Germany obtained national recognition as a Top Employer. By the end of 2013, 73% of employees worked in a site that was considered as a preferred employer in its local context. This compares to a level of 68% in 2012. By the end of 2013, 82% of the sites had a plan to be considered as a preferred employer, compared to a level of 76% in 2012. The Hanau site was once again awarded the Berufundfamilie certifi cate in recognition of its family-conscious approach. The site has been granted this recognition every year since 2007.
In 2013 the employee turnover rate remained quite stable at 3.3% compared to a level of 3.2% in 2012. As in previous years – and in line with regional patterns – the turnover ratio was highest in Asia Pacifi c where many countries have a highly competitive and fl uid labour market.
As part of the Sustainable Development Agreement with the international union IndustriALL, we participated in a Monitoring Committee meeting at the IndustriALL headquarters in Geneva where we shared information on topics such as working conditions, training, education and social policies.
We took further steps to refi ne our approach to diversity management in 2013. We introduced a pilot mentoring programme that pairs mid-career women managers with senior management mentors. This is designed to share experiences, increase the exposure of mid-career women managers to senior management and raise awareness of the possible career paths in the company. Gender diversity at senior management level has increased steadily in recent years and there are now more nationalities represented in senior management. Umicore was selected as one of the two best
"Safety is number one. We make sure that whatever we are doing, it's is going to be safe. " Steve Kotsiris, Auburn Hills, USA
performers in Belgium in the Vigeo Assessment on discrimination prevention and diversity promotion.
The next edition of the Umicore People Survey is scheduled for 2014 and an overview of the results will be provided in the 2014 Annual Report .
Umicore is making all efforts to eliminate occupational-related illness and to promote wellbeing in the workplace. The main occupational health risks are related to exposure to hazardous substances (particularly arsenic, cadmium, cobalt, lead, nickel and platinum salts) as well as physical hazards (mainly noise). We have established target reference levels for occupational exposure to potentially hazardous substances. These are inspired by the American Conference of Government and Industry Hygienists (ACGIH) and are at least as strict as any legal limits in force in countries where we operate. The Vision 2015 objective in respect of occupational exposure is to reduce to zero the number of individual readings that indicate an exposure for an employee that is higher than the internal target levels. While these excess readings do not necessarily indicate a risk for the person concerned they are
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Employees at the Automotive Catalysts plant in Burlington (Canada) came up with innovative ideas to create a safety culture, which led to them being nominated for the Umicore Safety Award.
Posters and slogans One idea that has really taken off in Burlington is that every time the plant holds a family day or family event, employees make a poster and all family members put their stamp on it. This could be their handprint or footprint and their name. The posters are then hung up around the plant.
"The posters remind employees to stay safe at work because we all have families at home and we want to return home safe to them," says Hilsia Ponce, Production Support Administrator.
Another idea was to hold a contest in which everyone at the plant was invited to come up with safety ideas and slogans. Winners were selected, and the winning slogans were displayed all over the plant so that everyone can read and see them on a daily basis.
The Burlington plant has implemented the SafeStart safety awareness programme, which helps people develop a habit of thinking about what leads to accidents in the fi rst place, and provides tools and techniques to prevent them.
SafeStart kicked off at Burlington when external consultants visited the plant and trained facilitators for two days. Facilitators are internal people from all departments and levels with good communication skills. Once trained, they were then able to lead groups of 20-25 people in half-day safety sessions. A large part of the agenda at these sessions is about people sharing their personal stories on accidents and near misses; what led to them and how they could be avoided.
"If we can incorporate this way of thinking into our everyday life at home and at work, it allows us to self-trigger; to work on habits and to analyse those close calls that had the potential to cause an injury," explains Steve De Rubeis, EHS Specialist.
Safety awareness continues to improve year over year at Burlington. As a result, the plant was nominated for the Umicore Safety Award. "It was an honour to be nominated for this award as it comes from the people we work with," says Sean Gahagan, Account Manager. "It is not coming from somebody telling you what to do, but from our peers."
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"My favourite Umicore value is openness: the willingness to give an honest opinion about things that can be improved. "
Gordson Cheung, Burlington, Canada
important indicators of recent or lifetime exposure and are used as the basis for further improvements in that specifi c workplace. All employees with a potential workplace exposure to one of the target metals (arsenic, cadmium, cobalt, nickel, lead and platinum salts) or other metals are monitored by an occupational health programme.
At group level we detected an excess rate of 2.6% in 2013 which was a signifi cant improvement on the 2012 level of 4.3%. This means that, of the 4,461 readings from employees who have a workplace exposure to the metals mentioned above (excluding platinum salts), 118 individuals returned at least one reading that indicated a metal exposure that was above our target level. Most employees are tested at least twice a year. The most signifi cant reductions came in the Energy Materials business group and were related to exposure to cobalt and nickel. This has been brought about through the systematic implementation of engineering improvements and workplace hygiene programmes at a number of sites in the Cobalt & Specialty Materials and Rechargeable Battery Materials business units.
In 2013 four employees were diagnosed with a platinum salt sensitization and either moved to a workplace with no platinum salt exposure or provided with workplace clothing and equipment that offers an even higher level of protection.
In 2013 a US National Toxicology Program study concluded that cobalt metal is presumed to have carcinogenic potential for humans. This more recent understanding of toxicity has led to a stricter classifi cation. Umicore – together with industry groups – is participating in additional studies to look at what further initiatives might be required in the areas of workplace exposure and product stewardship. Umicore and the US National Institute for Occupational Safety & Health (NIOSH) continued work on a project to evaluate the effectiveness of preventive measures to control employee exposure to Indium Tin Oxide (ITO) at our plant in Providence, USA.
We further reduced our CO2 emissions and tested the sustainability profi le of more of our products.
Public policies in many regions of the world are responding to climate change and the challenge to reduce society's carbon footprint. This is apparent from international agreements such as the Kyoto protocol and is supplemented with multiple national or regional initiatives and commitments. Umicore is present in many product and service areas that can make a positive contribution to the world's energy and carbon footprint challenges and our Vision 2015 strategy identifi es
signifi cant growth opportunities in industries that are linked to the response to these challenges, for example electrifi ed cars, photovoltaics and recycling.
In terms of our operations we have chosen to pursue specifi c actions to reduce our carbon footprint and to further increase energy effi ciency. In order to frame this approach we introduced an energy effi ciency and carbon footprint policy in 2011.
The main pillar of this policy is the Group objective to achieve by 2015 a 20% reduction in CO2 equivalent emissions compared to the reference year 2006 and using the same scope of activities as 2006 (see note E3 for more details) .
Other aspects covered by the policy are:
By the end of 2013 we had achieved a 17% reduction compared to the 2006 benchmark year. This means that for equivalent production levels we emitted 17% less in carbon equivalent. This compares to a reduction of 12% that we had achieved by the end of 2012. The improvement in 2013 is almost
to air
entirely due to the Hoboken site in Belgium. Here, the raw materials mix plays a signifi cant role in determining CO2 e emissions with the recycling process for some residue streams requiring more energy and emitting more CO2 equivalent than for other residue streams. The input mix in 2013 was positive in this regard. We also saw a reduction of emissions from the blast furnace due to adaptations made in previous years, the benefi ts of which are now being fully felt (see our 2012 report). We also made some further overall progress in the 24 other sites which, together with Hoboken, have the highest
emissions in the Group. For those sites that were part of Umicore at the end of 2010 and excluding the activity adjustment for measuring progress against the objective we have recorded a 4% reduction in absolute emissions since 2006, compared to a reduction of 3% registered at the end of 2012. Please see the environmental statement E3 for full details.
Next to the process improvements introduced at sites which have the highest levels of absolute emissions, our ability to reach the 20% reduction objective by 2015 depends on the evolution of both
the raw materials mix in Hoboken and the electricity mix as Europe moves away from lower-carbon sources. (see our 2012 report).
We continued to implement initiatives at some of our larger sites to promote a lower carbon footprint from employees' transportation. These include the use of electric vehicles at our sites in Olen, Hanau and Brussels. These zero-emission vehicles can be reserved by employees for use in work-related journeys or at weekends .
As part of our environmental management approach we have for many years been monitoring and taking steps to reduce emissions of metals into the environment – both to water and air. Our sites operate well within the established regulatory and permitting requirements in the countries where we are present.
Each of the metals that we emit has a very different level of potential toxicity for the environment and human health. With this in mind we developed an objective for 2015 that seeks a 20% reduction in the environmental impact of the metals we emit compared to the levels emitted in 2009. Although our focus is on minimizing the emissions of those metals with the highest potential toxicity we are also taking steps to reduce the emission volumes of other metals.
We have used a specifi c methodology for establishing the environmental impact of metals both to air and to water. For air emissions we have been inspired by the workplace threshold limit values of the American Conference of Government and Industry Hygienists (ACGIH) benchmarks to calculate the impact factors as they relate to human health. For water emissions the impact factors are based on the predicted no-effect concentrations (PNEC) that are, among others, used in the EU's REACH regulation.
In 2013 metal emissions to air in terms of load were 12,533 kg. This represented a 25% decrease compared to 2012 and was almost exclusively due to lower emissions of zinc in our Zinc Chemicals business unit where we benefi ted from initiatives to improve bag fi lter management across all sites. Of all
A new waste water treatment facility at Umicore's precious metals recycling plant in Hoboken will be able to remove 99% of any selenium and nitrate present in waste water. It puts Hoboken's water purifi cation process among the most effi cient in the industry.
"At Hoboken we are totally committed to meet or exceed the most stringent regulatory requirements for the removal of nitrate, selenium and other metals from waste water," says Peter Van Herck, Manager Environmental Affairs, Umicore Hoboken.
"With this in mind, we started experimenting with new water treatment technologies back in 2008, and conducted long-term tests of possible candidates. Finally we selected a biological process, developed by GE, which is totally in line with our environmental philosophy."
The new water treatment facility will come on stream in February 2014 and can treat up to 160 cubic metres per hour of waste water.
"This low-energy, biological technology helps us meet the new, challenging regulations that came into force in Europe, and demonstrates our commitment to ecofriendly operations," adds Peter. "A further advantage is that we can re-use the metals captured from the waste water."
The system is based on GE's Advanced Biological Metals Removal Process (ABMet) bioreactor technology. ABMet comprises naturally occurring, non-pathogenic microbes seeded in a bed of activated carbon that acts as a growth medium so that the microbes can create a biofi lm.
Waste water passes through the biofi lm and a reduction reaction occurs. Soluble selenium is converted into elemental selenium, which is then removed along with other metals and nitrate. A molasses-based product is used as a nutrient for the microbes. Other than this nutrient, the system is self-sustaining once established.
the metals emitted by Umicore, zinc has the lowest impact on human health and therefore the signifi cantly lower emissions of zinc did not have a material effect on the overall environmental impact of our emissions to air which increased 4% vs 2012. This was due to higher emissions of metals with a more elevated impact such as cobalt and cadmium. The higher cobalt emissions were the result of higher activity levels in the Energy Materials activities. The higher cadmium emissions were partly due to a change in raw material feed in the Sancoale plant in India as well as process ineffi ciencies in the plant that are currently being addressed. Despite this year-on-year increase, in comparison to the reference year of 2009, by the end of 2013 the overall impact of our emissions to air had been reduced by 35% (37% at the end of 2012), which remains well ahead of the 20% reduction target which was defi ned as part of Vision 2015.
In 2013 metal emissions to water in terms of load were 5,560 kg. This represented a 2.5% decrease compared to 2012. The Catalysis, Energy Materials and Recycling business groups all registered a decrease in emission load which was partly offset by higher emissions of zinc to water in Performance Materials. In terms of impact of metal emissions to water, our emissions increased by 28% compared to 2012. This was mainly due to a higher level of arsenic and thallium emissions at the Hoboken plant. The commissioning of the new biological water treatment plant in Hoboken in 2014 is expected to to drive metal emission impacts to water down further in the coming years (see the case study on the opposite page). Despite this increase, in comparison to the benchmark year of 2009, by the end of 2013 the overall impact of our emissions to water had been reduced by 29% (44% at
the end of 2012), which remains well ahead of the 20% reduction target that was defi ned as part of Vision 2015.
For more information on the reduction efforts in each business group please see pages 26-41.
We believe that it is essential to develop a full understanding of the impact that our products have on the world from an ecological, social and economic standpoint. With this in mind we established a specifi c product sustainability objective as part of our Vision 2015 strategy. This objective requires us to invest in tools to better understand and measure the life cycles and impacts of our products. This understanding can play a critical role in helping us demonstrate the sustainability of our product offering, something that is at the core of product differentiation and competitive advantage for certain applications.
Over the last four years, Group R&D and Corporate EHS have been developing a methodology specifi c to Umicore for assessing the sustainability of products and services. This methodology is called Assessment of Product (and services) Sustainability (APS). The methodology uses a tool consisting of a set of preformatted questions and answers with scoring and weighting factors and organized around eight themes. During 2011 a dedicated team of R&D, EHS and business unit experts ran three pilot assessments to establish the workability of APS. Our aim is to test six products or services each year between 2012 and 2015 with each business unit submitting two cases to the study. This will provide us with a sustainability profi le
for a representative portion of our activities.
In 2013 six further cases were assessed in the business units Cobalt & Specialty Materials, Precious Metals Management, Electroplating, Platinum Engineered Materials, Zinc Chemicals and Jewellery & Industrial Metals. The sixteen cases assessed in the period 2011-2013 comprise products and services deployed in niche markets, 'fl agship' products and services as well as a product under development. By the end of 2013 the number of products and services screened using the tool amounted to the equivalent of just above 10% of Umicore's revenues.
Through our membership of the Life Cycle Chair established by the University of Montreal (www.ciraig.com) we continued to seek scientifi c advice and peer review for our aproach. This included an assessment of the potential carbon savings of recycling metals at our Hoboken facility compared to mining.
In 2013, 41% of Umicore's incoming materials were of primary origin. 59% of the materials were from secondary origin or end-of-life products. These levels are comparable to 2012.
By June 2013, the second REACH registration deadline, Umicore had submitted another 21 registrations for 17 different substances to the European Chemicals Agency (ECHA). The fi les were either jointly prepared with other companies acting in consortia or by Umicore alone. About a third of all dossiers were updated in 2013 with additional information or newly available data. In total, the Umicore products sold that contain
substances that are on the REACH Candidate List account for less than 0.5% of Umicore's revenues. For comments on our on-going REACH compliance efforts please refer to Environmental note E6.
Umicore has calculated the upstream greenhouse gas (GHG) savings realized by the raw materials mix at our recycling facility in Hoboken, Belgium, compared to the equivalent amount of metals produced exclusively from primary production. Depending on the variations in the raw materials feed, going from end-of-life materials and industrial by-products to primary materials, the potential GHG savings of the Hoboken process varied from 657,000 tonnes of CO2 e emissions in 2010 to 1,085,000 tonnes in 2011.
Our operations in Hoboken and Pforzheim successfully passed an independent audit and were certifi ed as "confl ictfree smelters" in 2013.
Umicore's commitment to its suppliers in terms of conduct and practices is outlined in the Sustainable Procurement Charter. In return Umicore requests that suppliers adhere to specifi c standards in terms of environmental stewardship, labour practices and human rights, business integrity and supply chain engagement.
Umicore's Purchasing & Transportation function was selected as the most appropriate entity in Umicore to carry out the fi rst phase of intensive and systematic application of the charter. This process provided experience and learning to help the business units in their application of the charter.
In the course of 2013, our regional procurement centres continued to select key suppliers based on criteria such as size, geographical location and type of product or service provided (including whether critical to the functioning of a Umicore entity). Several business units also defi ned their key suppliers and asked the selected suppliers to acknowledge the principles of the Sustainable Procurement Charter ('the charter').
The companies selected by the regional procurement centres included many suppliers of goods and services and some suppliers of raw materials (eg.metals). In total, 671 suppliers have now been selected, compared to 642 at the end of 2012. By the end of 2013, 84% of these 671 suppliers had formally acknowledged their adherence to the terms of the charter. In addition the business units selected 396 suppliers, of which 86% had formally acknowledged their adherence to the terms of the charter by the end of 2013. The supplier acknowledgement rate in the business units that sent the request for
adherence to the charter is now about the same as that of the regional procurement centres suppliers. The total spend with suppliers who adhered to the charter in 2013 is some € 800 million.
Umicore asked Ecovadis to assess the sustainability performance of 272 of the 1,067 suppliers highlighted above. The selection of those suppliers was made based on a risk assessment carried out by Ecovadis in relation to critical dependency, duration of relationship and spend with these suppliers. The result of the assessment is a score card with an overall score and
In June, the Umicore Precious Metals Refi ning operations in Hoboken, Belgium, received two important certifi cations regarding the sourcing of the materials that it recycles. It passed the Responsible Gold audit of the London Bullion Market Association, a leading trade association for the silver and gold industry. It was also recognised as a Confl ict-free Smelter by the Electronics Industry Citizenship Coalition. Both recognitions uphold Umicore's commitment to conduct business honestly and ethically, and will further reinforce customer confi dence in the origin of its materials.
Of the 272 selected suppliers, 57 suppliers did not respond to the questionnaire. Of the 215 received score cards, 152 companies had a score of 3 or 4, meaning that they have taken basic steps on sustainability issues. Only 4 companies had a score equal to or below 2, representing a high risk regarding sustainability issues. 55 companies scored, overall, higher than 4, meaning that they have "an appropriate sustainability management system" and 4 companies scored higher, showing advance practices on sustainability. As to the average score in each category, the suppliers attained the highest average score in environment, while scoring the lowest in promoting
sustainability in their own supply chain.
The Umicore Group has been assessed by Ecovadis and was scored 6.7, which classifi es the company in the advanced category with a "structured and proactive CSR approach, engagements / policies and tangible actions on major issues with detailed implementation information and signifi cant CSR reporting on actions & performance indicators".
In the course of 2013 several business units launched a program with low-scoring suppliers to develop an action plan for improvement. With regard to the regional procurement centres, a number of improvement plans were put into action with suppliers to the Belgian, Brazilian and French regional procurement centres.
In order to increase awareness of sustainable procurement within the company a web-based learning tool was made available on the newly-deployed My Campus platform in 2013. In 2013, 337 people participated in this e-learning module. In Brazil, a specifi c training programme was deployed over 11 on-site learning sessions. This resulted in 122 employees being trained on sustainable procurement.
In 2012 the U.S. Securities and Exchange Commission (SEC) issued a fi nal rule on confl ict minerals based on section 1502 of the Dodd-Frank Act. This rule obliges US stock listed companies to declare whether the tin, tantalum, tungsten and gold in their products have originated from the Democratic Republic of Congo or an adjoining country. While Umicore is not itself subject to the reporting requirements of Dodd-Frank, we use the above rulings as a guideline for our business. In this regard, our Precious Metals Refi ning operations in Hoboken and Guarulhos successfully passed
an independent audit and were certifi ed as "confl ict-free smelters" in 2013 for their operations of the previous year by the London Bullion Market Association (LBMA) see news items here. The Jewellery & Industrial Metals operations in Pforzheim and Bangkok were certifi ed as part of the Responsible Jewellery Council's (RJC) Chain of Custody programme for three years. Similar independent audits are either underway or scheduled at two other Umicore operations.
In addition to existing policies and charters such as the Umicore Code of Conduct, Human Rights Policy and Sustainable Procurement Charter, in 2013 Umicore published a specifi c policy regarding "Responsible global supply chain of minerals from confl ict-affected and high-risk areas".
www.umicore.com/ sustainability/stakeholders/ Confl ictMineralsPolicy/ confl ictMineralsPolicy.htm
Umicore's 2006-2010 objective in this area required all industrial sites to develop and implement a plan to address accountability to the local community. In the context of Vision 2015 it was decided that community engagement was suffi ciently important to continue working towards further improvements in our dialogue with the communities within which we operate. More focus was placed on the depth of stakeholder analysis and the engagement processes that the sites employ. Some 65% of our sites had an engagement plan in place by the end of 2013. This was slightly higher than the level of 2012. In 2013, the number of sites
As part of its sustainability objectives, Umicore has developed a partnership with UNICEF to fund education projects. One of the projects receiving Umicore's support is in Jaipur, the capital of the Indian state of Rajasthan. Here, women and girls face harsh discrimination, resulting in a severe educational gender gap. The UNICEF programme aims to get girls into school and enable them to continue their studies. The programme also helps to improve the knowledge and skills of offi cials and teachers.
Much of the work involves community dialogue to change attitudes, by attending village meetings and bringing up the topic of village girls not being in school. Theatre, street games and puppet shows are also effective. Local community workers explain the advantages of education, for example how welleducated girls with jobs will be able to take better care of elderly parents later in life.
In the so-called tribal areas, where people are most marginalised and there are very few female teachers, UNICEF is working with master trainers who are training teachers to become more gender sensitive.
employing structured communications as part of these engagement plans with their local community remained stable. Depending on the size of the site, these communications include newsletters, public hearings, meetings with local authorities, plant visits for the local community and press releases provided to local media.
Of our larger sites, Hoboken (Belgium) hosted some 200 visits by members of the local community in 2013. Initiatives included the Ecomagie magic show on environmental awareness that was run in 100 regional schools as well as the sponsorship of the Antwerp Museum aan de Stroom among others. The site also supported the Engage+ initiative of the City of Antwerp to combat youth unemployment. The Olen site (Belgium) continued its programme of visits for local schools and neighbours "Umicore te kijk" and hence welcomed 1,300 visitors to an open event for Flemish Science Day and invited neighbours to observe a major SEVESO safety training exercise. The site also initiatied an art project called Glamuur in which local artists and school children
painted murals on the perimeter walls of the site. In Guarulhos (Brazil) we continued to engage with the local authorities regarding the issue of soil and groundwater pollution around the site and supported the "Better Life" projects for more than 100 disadvantaged children in the community. The Hanau site (Germany) hosted a number of internships for students in local schools. The site also registered a high level of employee participation in local sporting events such as the JP Morgan Corporate Challenge and Hanau City Run with Umicore being main sponsor of the latter. The site also provided support to the provincial Albert Schweitzer-Kinderdorf that is situated in Hanau. These establishments provide education to children who, for whatever reason, cannot grow up in their own families.
Charitable donations make up part of the community engagement programmes of the sites. Each business unit is expected to contribute approximately one third of one percent of its average annual recurring consolidated EBIT for the previous three years to charitable projects – either in cash, volunteer time
Umicore donated € 40,000 to support the relief efforts in the wake of the three natural disasters that struck the Philippines in late 2013: Typhoons Usagi and Haiyan, and the Bohol earthquake. Half of this amount went to Médecins sans Frontières.
or in goods or services. Each site then defi nes its own initiatives and contributions using the guidance of its parent business unit. Overall the business units contributed a total amount of € 1,044,840 in 2013 compared to € 1,016,860 in 2012 with some 15% of this amount coming in the form of volunteering and donations in kind (down from 23% in 2012 when there was a signifi cant donation of materials for use in solar energy projects in Belgium, Benin, Congo and Tanzania). More information on the various business unit donations can be found in the business group review between pages 26 and 41 of this report.
In addition to the business units' contribution, the Group donated € 567,960, the vast majority of
Stakeholder engagement
Umicore works with WorldLoop to provide an environmentally sound solution for waste electronics collected and dismantled in Africa. The partnership was one of the fi nalists at the Belgian Business Awards for the Environment in the category 'international business cooperation'.
The jury at the Belgian Business Awards commented: "This project – based on solid economic environment-friendly logic – makes it possible to break away from the negative image of trade relations between the North and the South and to promote the philosophy of the best of both worlds".
The partnership involves WorldLoop connecting local dismantling and sorting entrepreneurs with Umicore's best-in-class recycling technologies. The objective is to avoid the uncontrolled dumping of e-waste and its improper dismantling, burning and leaching, which causes environmental and health issues in the developing world.
The focus is on ICT material that has reached its end of use in the developing world. E-waste recycling facilities have been constructed in Kenya, Tanzania, Rwanda and Chile, accounting
for over 750 tonnes of e-waste. Of this, 50 tonnes of hazardous fractions have been sent to Europe to be treated using more effi cient recycling processes with lower environmental impact than local treatment or landfi ll. This includes 25 tonnes of printed circuit boards shipped to Umicore's recycling facility in Hoboken. Umicore processes the waste and recovers precious and other metals, the value of which is reinvested to fi nance further collection and recycling.
Umicore donates its own used PCs to Close the Gap, a strategic partner of WorldLoop. Close the Gap collects computers from donor companies, refi ts them for use and then offers this IT equipment to socio-educational projects (such as schools and hospitals) in Africa. Once these PCs reach the end of their life, WorldLoop makes sure they are collected and dismantled by local recyclers and the hazardous fractions are transported back to Umicore… to be recycled.
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which came in the form of fi nancial contributions. In contrast to donations at site level, which have a local focus, the Group level donations have a global reach. We seek to channel most of these contributions to initiatives that have an educational focus or raise awareness of sustainable technologies.
In 2011 we entered into a threeyear partnership with UNICEF to support educational projects in different parts of the world. The initial projects that we are supporting are an initiative to improve the access to quality education for underprivileged girls in the Rajasthan province of India as well as the "Back to School" campaign in Haiti where we are funding the building of a school for child victims of the 2010 earthquake. You can read a case study on the UNICEF project in Rajasthan on the page 24.
We continued to support the initiatives of Entrepreneurs for Entrepreneurs (www.cfp.be) in the Philippines, Cambodia and Tanzania and Humasol's programmes for groups of engineering students to install solar energy in remote areas of Uganda and Senegal (www.humasol.be). We established a new initiative to support student sustainability projects in various universities. Called "Powered by Umicore", this initiative provides fi nancial and other support to student projects to develop vehicles powered by batteries, solar energy or fuel cells. You can fi nd out more about Powered by Umicore on our website.
We made several donations to initiatives in the Philippines – where Umicore has a production site – to support the relief efforts following the devastation caused by typhoons Usagi and Haiyan.
Business group review
Catalysis plays a signifi cant role in the abatement of global automotive emissions. Umicore provides automotive catalysts for gasoline and diesel light duty vehicles as well as for heavy duty diesel applications including trucks and other large vehicles. The business group also produces precious metals based compounds for use in the fi ne chemicals, life science and pharmaceutical industries.
Precious Metals Chemistry
Revenues were up by 3% for the business group as a result of volume growth and the fi rst time consolidation of Umicore Shokubai Japan, more than offsetting lower pass-through costs. Recurring EBIT was 19% lower due to a less favourable product and regional mix as well as costs related to new product introduction and infrastructure. Capital expenditures continued to increase as we invested in new production and technology capabilities. Overall R&D expenditure was
lower as a number of projects moved to commercialization.
In Automotive Catalysts , car production worldwide increased by 3% in 2013. Growth in China and the Americas more than offset a decrease in South Korea and Japan while the production level in Europe was stable year on year. Excluding the effect of the consolidation of Umicore Shokubai and lower pass through costs, Umicore's global catalyst revenues were up year on year. Margins, however, were negatively impacted by the above mentioned mix effects, costs related to the introduction
of heavy duty diesel catalysts and products for Euro 6 compliant light duty vehicles as well as the expansion of the technology development infrastructure.
After a decline in the fi rst half of the year, European car production stabilized in the second half of the year and showed a modest year-on-year increase towards the end of the year. Full year production was at a similar level to 2012. The purchasing trend towards smaller vehicles continued and the share of diesel cars produced stabilized at around 45% of the total market. Umicore's sales volumes
were in line with car production while revenues were lower due to a less favourable product mix.
North American car production was up 5%, with small and medium-sized vehicles gaining market share. Umicore's sales volumes followed the same trend while revenues grew slightly less due to the platform mix. In South America, car production was up 4% despite the slowdown observed at the end of the year. Umicore's sales volumes in the region grew in line with the market.
Overall Asian car production was up. In China car production grew 13% year on year. Umicore's catalyst revenues in China continued to grow faster than the market. In South Korea and Japan, car production was down by 2% and 4% respectively with lacklustre domestic sales in contrast with the success of Korean and Japanese production in overseas markets. Umicore Shokubai has improved its position with Japanese car manufacturers which resulted in additional global business awards.
Umicore inaugurated two dedicated production lines for heavy duty diesel catalysts in Florange, France, in 2013. The construction of a third line started towards the end of the year and should be completed towards the end of 2014. The construction of the HDD production facility in Suzhou, China, made good progress and will start production in the fi rst half of 2014. New technology development centres were commissioned in Japan and Brazil and further progress was made in the new production capabilities in Onsan, South Korea, and in Suzhou, China, which are expected to come on stream in the fi rst half of 2014. The facility in Bad Säckingen, Germany, with two new lines for the production of catalysts that meet the Euro 6 standard for light duty diesel vehicles became fully operational during 2013.
open in 2014, will manufacture the business unit's entire portfolio of precious metal-based catalysts and chemicals including advanced products such as ruthenium metathesis catalysts and palladium cross-coupling catalysts. The costs related to these development projects weighed on the overall performance of the business unit.
Although the Catalysis business group continued to report by far the best safety performance of all of our business groups, the performance in 2013 was not as strong as in 2012. The total of four lost time accidents and frequency rate of 1.1 accidents per million hours worked were the same as in 2012, while the severity rate was worse in 2013 (0.11 compared to 0.05 in 2012). This was due to a severe accident in the Hanau site, Germany. Both Automotive Catalysts and Precious Metals Chemistry continued to implement the SafeStart® safety approach to help reduce accidents to zero by 2015. The South Plainfi eld site in the US had achieved more than fi ve years with no lost time accidents or recordable
The costs for the fi nalization and start-up of these new operations, as well as the higher depreciation charges that they bring, weighed on the profi tability of the business unit in the second half of 2013.
In Precious Metals Chemistry , although sales volumes were well up compared to 2012, revenues were lower as a result of a less fa-
vourable product and regional mix.
Demand for precursors for both catalytic and non-catalytic applications was higher. The same trend was observed for products used in bulk chemical applications. In contrast, sales of organometallic
catalysts for the life science sector were lower. Sales of APIs (Active Pharmaceutical Ingredients) continued to show strong growth and sales started outside South America to customers in Asia and Europe and production capacity was therefore increased at the plant in Argentina. A pilot line for compounds used in MOCVD (Metal Organic Chemical Vapour Deposition) applications was started up in Germany. These compounds are mainly used in the production of higher-performance microprocessors. The construction of the new production facility in Tulsa, Oklahoma made good progress in 2013. This facility, which is set to
injuries to Umicore staff and no lost time accidents to contractors at the end of 2013, while the sites in Americana (Brazil), Auburn Hills (USA), Tsukuba (Japan) and Suzhou (China) had reached the three year milestone.
In terms of occupational health, no activities in the Catalysis business group involve an exposure to the fi ve hazardous metals that are the focus of our Vision 2015 objective. The main occupational health issue for the Catalysis business is that of platinum salt sensitization potentially leading to occupational asthma. In 2013 two employees developed such a sensitization – the same number as in 2012. These employees resumed work in another part of their site where there was no platinum salt exposure.
In terms of carbon emissions the Catalysis business group is the lowest emitter, accounting for a total of 12.5% of our CO2 equivalent emissions in 2013 or 86,928 tonnes of CO2 equivalent. This compares to 87,135 tonnes emitted in 2012.
Catalysis does not have an industrial profi le that involves signifi cant impact of metals on either water or air with both representing less than half a percent of the total group impact. The business units were able to reduce the overall load of metals emitted to air and water in 2013.
The business units made further progress in deploying the Sustainable Procurement Charter. In 2012 the proportion of selected suppliers to whom the charter had been sent and who had signed up stood at 26%. By the end of 2013 this proportion had increased to
88%. The Automotive Catalysts business unit has a system in place of supplier audits that cover all major suppliers on a global basis with a frequency of every three years and focusing on quality, environment, health and safety issues.
In terms of accountability to the local community the business group contributed € 190,390 in charitable donations in 2013. Major projects included support for the SOS Children's Village and Umicare Schooling project in Port Elizabeth, South Africa and the Boai School for children with special educational needs in Suzhou, China. The Burlington site celebrated 20 years of support for the United Way – an organization that engages individuals and mobilizes collective actions to generate funds for those that are most vulnerable in the community. Over the past 20 years the site has donated half a million Canadian dollars to the United Way.
The need for clean air has never been greater. Regulators continue to tighten vehicle emission standards around the world. Umicore technologies are ensuring that these improvements happen.
The number of vehicles on our roads has grown enormously in recent years. Since the 1970's governments have introduced air quality standards to reduce the harmful effects of automotive emissions on human health and today almost all new cars produced in the world contain an automotive catalyst. In Europe the Euro VI standards for heavy duty diesel have been enforced since January 2014. A new legislation to reduce emissions of NOx (nitrogen oxides) in diesel cars by more than 50% will come into force in September 2014. It is likely that target emissions of soot particles in gasoline engines will also be introduced in a next phase.
In 2013 Umicore commissioned a new production line for heavy duty diesel (HDD) catalysts in Florange, France. The construction of a second production line was also announced at the European Commission's Green Week on "Clean Air" held in Brussels in May. Plant manager Nicolas Clerc explained: "The demand for automotive catalysts is increasing and, in response to that demand, Umicore is investing around the world. Here in France we will now be able to deliver highquality products not only for cars but also for heavy duty vehicles".
Production also started in 2013 at Umicore's new automotive catalyst plant in Bad Säckingen, Germany. This facility will focus on producing particulate fi lters and lean NOx traps for diesel passenger cars.
Umicore produced its fi rst automotive catalyst back in 1968. Since then its catalyst technology has removed billions of tonnes of pollutants, making our air safer to breathe and benefi ting the environment. This is a source of great pride for the people who make the products. David Cunha, an operator at Umicore's Florange site, is particularly enthusiastic: "It's really exciting to work for Umicore. Everybody uses our products in everyday life, in their cars, even if they are not aware of it. It's very satisfying to work actively for a better environment and cleaner air."
30 Business group review
The materials produced by Energy Materials can be found in a number of applications used in the production and storage of clean energy including rechargeable batteries and photovoltaics, as well as in a range of other applications. The majority of the products are high-purity metals, alloys, compounds and engineered products based on cobalt, germanium, nickel and indium.
(See the charts on p. 31)
Revenues for Energy Material s were up 10%, primarily refl ecting the growth in the Rechargeable Battery Materials and Cobalt & Specialty Materials business units. Overall profi tability of the business group also benefi ted from the cost reduction measures that were initiated at the end of 2012.
Capital expenditure was signifi cantly higher than in 2012 as a number of signifi cant investments were made, notably in Rechargeable Battery Materials. R&D expenditure for the business group increased
as the efforts to develop new generations of rechargeable battery materials intensifi ed.
Revenues for the Cobalt & Specialty Materials business unit were up year on year, driven mainly by an increased contribution from cobalt and nickel refi ning and recycling. Earnings were impacted by lower average premiums as a result of increased competitive pressure in different end-markets. The ceramics and chemicals business recorded higher revenues, with an increase in sales volumes for both cobalt and nickel compounds more than offsetting lower premiums. Sales of metal carboxylates further increased due to the expansion of
the product portfolio and successful introduction of the products in new markets. Sales volumes in tool materials were fl at year on year, as volume growth in Asia was offset by a decrease in demand from the European and North American construction markets.
At the end of 2013 the business unit acquired Palm Commodities International, a leading manufacturer and distributor of materials to the surface treatment industry in North America. This acquisition will enable Umicore to expand its reach into the North American plating market.
In Rechargeable Battery Materials , sales volumes and revenues were up considerably. The strong demand for polymer cells used in high-end portable electronics, such as smart phones, tablets and ultrabooks, drove demand for high energy density cathode materials. Umicore's proprietary High Energy LCO technology and broad customer portfolio enabled the business unit to further strengthen its leadership position in this segment. Overall sales of NMC (nickel-manganese-cobalt) cathode materials were down year on year, as a result of lower demand for traditional notebook PCs which use the more standard NMC-grades. The demand for NMC-products used in automotive applications benefi ted from the gradual increase in sales of electrifi ed vehicles. This trend is set to continue with more car OEMs launching new hybrid and electric models. Umicore successfully qualifi ed for additional platforms which will further support its growth in this segment. The capacity investments for cathode materials in Korea and China were successfully completed in the course of 2013 as was the commissioning of the precursor plant in Korea.
enues were down year on year mainly due to adverse market conditions in blank optics and the substrates activities. The effect of the downturn in revenues was mitigated by cost reduction measures that were initiated in 2012, selective price increases in certain segments and a higher contribution from the refi ning and recycling activities. The decrease of revenues in the germanium substrates business was largely attributable to a further deterioration in the terrestrial CPV (Concentrator Photovoltaics) market. Sales to the LED industry were also lower. Deliveries of space certifi ed substrates were up as Umicore secured a number of
contracts with various customers in this segment. Within the substrate market, a migration is taking place to larger germanium wafers and Umicore is strongly positioned to benefi t from this trend. The high purity chemicals business benefi ted from a strong increase in demand for Umicore's germanium tetrachloride used in optical fi bres. Sales of fi nished optics were also higher year on year while demand for germanium blanks remained low in a highly competitive market.
In Thin Film Products , revenues increased compared to the previous year due to higher revenues for large area display applications. The overall business also benefi ted from the cost reductions that were initiated at the end of 2012. Sales volumes for ITO (Indium Tin Oxide) targets were up year on year driven by the success of the high effi ciency rotary sputtering technology. The increased demand came mainly as a result of new investments in large area display production installations in Asia and retro-fi tting of existing installations in the touch panel industry switching from planar to rotary targets. Lower revenues for optical evaporation materials refl ected a somewhat slower demand, while demand from the micro-electronics industry remained largely stable year on year.
The safety performance of the Energy Materials business group improved further in 2013. Six lost time accidents were recorded compared to 9 in 2012. This represented a frequency rate of 2.0, compared to 3.0 in 2012. The severity rate for these accidents of 0.12 was higher than in 2012 (0.05). The business unit Rechargeable Battery Materials implemented a safety leadership program based on a behaviour-based
32
In terms of the metal exposure aspects of occupational health the main substances that represent a potential health risk in Energy Materials are arsenic, cobalt and nickel. There was a signifi cant reduction in excess readings for cobalt and nickel in 2013 while the excess readings for arsenic also fell. This has been brought about through the systematic implementation of engineering improvements and workplace hygiene programmes. The work with regards to the occupational health effects of indium tin oxide and workplace exposure reduction at the Providence plant continued in 2013.
In terms of carbon emissions the Energy Materials business group accounted for 25.5% of our CO2 equivalent emissions in 2013 or a total of 176,723 tonnes, compared to 169,995 tonnes in 2012. The main reason for the increase was higher production volumes in Rechargeable Battery Materials. Of all the sites in Energy Materials the Olen site (Belgium) and Cheonan site (South Korea) contribute the highest level of emissions. Since its inclusion in the Flemish Benchmarking Covenant in 2003 the Olen site has implemented a number of energy effi ciency initiatives that apply the best international standards.
A product family from Cobalt & Specialty Materials was part of the third wave of product sustainability assessments conducted using Umicore's APS tool. This is part of the on-going process to assess the sustainability of a representative sample of Umicore's products and services (see p. 20-21).
In terms of metal emissions, Energy Materials' emissions to air were up by 1.6% in load compared to 2012. In terms of impact, an increase of 17% was recorded compared to 2012, The main reasons for the increase was a higher level of production in the Cobalt & Specialty Materials and Rechargeable Battery Materials business units. Despite this activity-related increase the emission impact was 45% below that of the benchmark year of 2009. Water emission load was down 22.5% year-on-year while emissions impact increased by 9% due to an increase in silver emission at the Olen plant. Impact levels have shown a drop of 71% compared to the benchmark year of 2009.
The business units made further progress in deploying the Sustainable Procurement Charter. In 2012 the proportion of selected suppliers to whom the charter had been sent and who had signed up stood at 9%. By the end of 2013 this proportion had increased to 84%. The Cobalt & Specialty Materials business unit has further refi ned its sustainable supply chain approach and engaged a third party auditor. The framework includes several tools to screen these suppliers on a regular basis and to mitigate the risks or uncertainties related to their supply chain practices.
The business units in Energy Materials contributed a combined total of € 132,040 in charitable donations in 2013. A sizeable proportion of this amount was related to support by Cobalt & Specialty Materials for a schooling project in Lubumbashi, Democratic Republic of Congo, which provides education to 800 children between the ages of 6 and 14. The business unit also provided support for the relief efforts following the typhoons Usagi and Haiyan that hit the Philippines in the autumn. Other initiatives included support for the Youchouang educational fund in Jiangmen and a bursary for a high school technology student in Quapaw. The Fort Saskatchewan site was recognized by the Alberta authorities as a Envirovista Champion for its environmental performance.
Business group review
Performance Materials applies its technology and know-how to the unique properties of metals, offering materials that enable its customers to develop better, more sophisticated and safer products. Its zinc products are renowned for their protective properties while its precious metals-based compounds and materials are essential for applications as diverse as high-tech glass production, electrics and electronics. Performance Materials is organized around fi ve business units.
(See the charts on. p. 35)
Revenues in Performance Materials were 3% lower year on year. Recurring EBIT was at the same level as 2012 with the benefi ts of the cost reduction measures that were introduced during the year counterbalancing the economic headwinds experienced in several business units. Capital expenditures were at similar levels to 2012 while R&D spending was down slightly.
Sales volumes and revenues in Building Products were fl at year on year. Sales started particularly slowly in the fi rst part of the year due mainly to the long and harsh winter in Umicore's main European markets. Although there was some improvement in certain markets, activity levels in the European building industry remained subdued. Demand for zinc building materials in the newer markets outside Europe showed further growth. The share of surfacetreated products in the mix grew further and construction of the new plant in Viviez, France, for surfacetreated products neared completion. Measures to reduce costs and improve competiveness were
implemented through the business in late 2013.
In Electroplating , revenues were stable with higher sales volumes in all product categories compensating for pressure on premiums in some segments. Sales for decorative applications such as fashion jewellery were up and the market remained supportive throughout the year. Sales of electrolytes used in the manufacture of printed circuit boards were well above those of 2012 while sales of non-precious metals based products for wear protection applications also increased. Competitive price pressure
was most evident in the market for less complex precious metals based compounds. Sales of Umicore's silver plating solutions for LEDs continued to benefi t from growing customer demand, particularly in Asia (see case study on page 12).
Materials , revenues were fl at while the business unit benefi ted from the cost reduction measures and production effi ciency improvements. Demand for glass industry applications was at a similar level to 2012 with an uplift in revenues in the second half, particularly in the technical glass market. Revenues for performance catalysts remained at a high level, driven by a solid demand for platinum-based ammonia oxidation catalyst gauzes and getters used in the fertilizer and chemical intermediates industries.
In Technical Materials , revenues were up slightly year on year and the business unit benefi ted from cost reduction measures implemented during the year. Overall demand for brazing alloys remained subdued. This was primarily due to the recession in Europe and intensifi ed competition from local players in China. Sales of contact and power technology materials were stable and there was little change to demand patterns from the electrical equipment industry. Order levels for sealing materials used in medium voltage applications as well as materials used in energy-effi cient lighting picked up during the year. The business unit implemented a streamlining of its product offering in China towards the end of the year.
Zinc Chemicals ' revenues were at similar levels to the previous year. The availability of zinc containing residues remained low and, in combination with a lower zinc price, this led to lower recycling margins. Demand for fi ne zinc powders
used in anti-corrosive paint was lower and the regional mix was less supportive to margins. Sales of materials for chemical applications were fl at. In Europe, sales volumes for zinc oxide were down due to lower order levels from the tyre and chemical industries. This was partly compensated by higher sales for feed-grade materials and ceramics applications. Sales volumes of zinc powders used in primary batteries increased. The production facility in Australia was closed in December with production capacity in Malaysia being increased to cater for demand from customers in Asia Pacifi c.
In Element Six Abrasives (a 40% associate) sales volumes and revenues were lower year-on-year. In Hard Materials, challenging conditions persisted in the markets for mining and wear parts. Revenues for Oil & Gas were ahead of the previous year with the uplift being driven mainly by the introduction of new products while revenues for Advanced Materials improved in the second half as a result of a pick-up in sales of products used in precision machining. In 2013, Element Six Abrasives closed its Advanced Materials plant in South Africa and opened the world's largest and most sophisticated synthetic diamond research and development facility the Global Innovation Centre (GIC) at Harwell, near Oxford.
The safety performance of the Performance Materials business group was slightly better than the Umicore average. Nine lost time accidents were recorded compared with 10 in 2012. This represented a frequency rate of 2.00 and severity rate of 0.09. Six of the 9 lost time accidents occurred in the Zinc Chemicals business unit. The business unit continued to
implement and improve its 'safety for a better life' programme with active involvement of all staff under the guidance of a safety committee. Key elements of the programme include safety observation tours involving the business unit leadership team, training and the implementation of standards on key safety aspects. At the end of 2013 the site in Vicenza (Italy) had achieved more than fi ve years with no lost time accident or recordable injury to Umicore staff and no lost time accident to contractors on site while the site in Vilvoorde (Belgium) had achieved the three year milestone.
In terms of the metal exposure aspects of occupational health the overall excess readings for Performance Materials was well below the Umicore average at 0.7%. This represented a decrease from the level of 1.4% in 2012. The trend towards cadmiumfree products coupled with even
more stringent workplace controls continues to drive the reduction in excess cadmium readings, primarily in the Technical Materials business unit.
In terms of carbon emissions the Performance Materials business group accounted for a total of 23% of the Group's CO2 equivalent emissions in 2013 or 162,017 tonnes of CO2 equivalent. This compares to 158,417 tonnes in 2012. The emissions are spread over around 30 industrial sites with those in Zinc Chemicals accounting for the majority of the business group total.
Products from Zinc Chemicals, Electroplating and Platinum Engineered Materials were part of the third wave of product sustainability assessments conducted using Umicore's APS tool. This is part of the on-going process to assess the sustainability of a representative sample of Umicore's products and services (see p. 20-21).
In terms of metal emissions, Performance Materials' emissions to air were down by 29% in load compared to 2012. This decrease is mainly due to lower emissions of zinc in the Zinc Chemicals business unit where we benefi ted from initiatives to improve bag fi lter management across all sites. In terms of impact an increase of 39% was recorded compared to 2012 due to higher cadmium emissions linked to a change in raw material feed in our Sancoale plant in India as well as process ineffi ciencies in the plant that are currently being addressed. At the end of the year a 41% reduction had been achieved compared to our benchmark year of 2009. Water emission loads and impact increased by 16% compared to 2012 due to higher zinc emissions at the Viviez plant. At
year-end the emissions impact was 31% below that of the benchmark year of 2009.
The business units made further progress in deploying the Sustainable Procurement Charter. In 2012 the proportion of selected suppliers to whom the charter had been sent and who had signed up stood at 38%. By the end of 2013 this proportion had increased to 86%.
In terms of community engagement, the soil remediation project close to the Building Products operation in Viviez made further progress in 2013. The project was visited by several groups including local residents and the media and Umicore worked with the public authorities (national and municipal) to consolidate a public road to give access to the project. Overall, the business units in Performance Materials contributed € 163,610 in charitable donations in 2013. This was the result of numerous actions at the 30 sites that are part of these business units. Examples include support for the Metallurgy Museum in Liège by the Angleur site (Belgium), contributions to the St Jude Children's Hospital by the site in Attleboro (USA) and providing work experience opportunities for school children at the site in Vienna (Austria).
Umicore Technical Materials business line BrazeTec delighted its customers in 2013 with the launch of BlueBraze. This innovative silver brazing alloy has a 10% lower proportion of silver, which gives customers a signifi cant cost reduction.
It has always been regarded as an undisputable fact that if the silver content of a brazing alloy is reduced, the brazing temperature increases – with negative cost and environmental consequences. But the BrazeTec business line decided to re-question this fact by addressing it through fresh eyes.
A combined R&D team of Technical Materials in Hanau (Germany) and Group R&D in Olen (Belgium) came together to share "out-of-the-box" ideas. Collaboration sparked innovation. A number of interesting possibilities were put on the table, and the most promising idea was sent for trials. After an intense period of testing, a fi rst silver brazing alloy with lower silver content and a melting range comparable to existing alloys was developed.
This innovative new brazing alloy was launched under the product
family name BlueBraze at the Joining Cutting Surfacing international trade fair in Essen, Germany in mid-September to widespread amazement from customers and competitors. "We always dreamed of developing and launching this kind of product," says Hartmut Schmoor, Business Line Manager BrazeTec. "None of our competitors has something similar. BlueBraze created a big stir in Essen."
The reason for the commotion is that compared to conventional brazing alloys, BlueBraze has 10% less silver, which leads to signifi cant cost and environmental benefi ts. At the same time, Umicore's engineers ensured that the quality and properties of this new product remained at the same high level as conventional alloys. It is the fi rst time that a brazing alloy manufacturer has managed to reduce the level of silver
signifi cantly while maintaining all existing properties. BlueBraze also fully complies to RoHS and REACH.
For customers using BlueBraze the product offers a signifi cant cost reduction through the reduced silver content, and more rods per kilogram due to a lower density of substitute metals. Additionally, BrazeTec's innovative brazing alloy offers more planning certainty as a result of reduced customer exposure to silver price fl uctuations.
BlueBraze is also sustainable – BrazeTec sources a large part of silver for brazing alloys from its inhouse precious metals recycling. By both reducing the proportion of silver in BlueBraze alloys and using recycled sources BrazeTec is helping save precious resources.
BlueBraze alloys are suitable for use in the HVACR industry (heating, ventilation, air conditioning and refrigeration). Examples of applications inclu de the production of stationary and mobile air conditioning systems as well as refrigerators, freezers and compressors.
"An ambitious plan has been developed to sell considerable volumes of BlueBraze over the next fi ve years – signifi cantly increasing Umicore's sales of silver brazing alloys," adds Hartmut. "Production will start in Hanau with only minor modifi cations to the manufacturing equipment necessary and a rollout to other Technical Materials sites will be considered in a later stage."
Business group review
Recycling treats complex waste streams containing precious and other non-ferrous metals. The operations can recover some 20 of these metals from a wide range of input materials ranging from industrial residues to end-of-life materials. Recycling is unique in the range of materials it is able to recycle and the fl exibility of its operations.
Although lower metal prices led to lower profi tability, the supply environment remained positive and the return on capital continued to be the highest of all our businesses.
(See the charts on p. 39)
Recycling revenues and recurring EBIT were down 13% and 23% respectively as a result of a sharp drop in metal prices. Lower demand in certain end-markets of Jewellery & Industrial Metals and a lower contribution from its recycling activities also had a negative impact on revenues and performance of the business group. Capital expenditure was well up compared to 2012, as a result of increased investments in the Hoboken plant
as well as investments in silver recycling and refi ning in Germany and Thailand. R&D spending stayed at similar levels to those of 2012.
revenues decreased year on year as a result of the severe decline in metal prices. Despite a second maintenance shutdown of the Hoboken smelter, the business processed higher volumes than in 2012 leading to higher income from refi ning charges.
In industrial by-products, processed volumes increased compared to
the previous year driven by higher arrivals of residues from the nonferrous metal industry. While this market segment has become more competitive, Umicore managed to secure additional supply streams and expand its client portfolio. The intake of end-of-life materials was down year on year. The lower availability of electronic scrap refl ected increasing competition, particularly in the market for less complex materials. Umicore remained well positioned in the high-end of the market. The supply volumes and commercial conditions of spent automotive catalysts remained
38
subdued, while Umicore continued to position itself strongly on the market for industrial catalysts.
With the exception of palladium, metal prices were substantially down compared to the previous year. For some precious metals the impact on Umicore' earnings was partly mitigated as a result of Umicore having secured longer term pricing in previous periods. Lower spot prices for certain specialty metals, such as selenium, tellurium, ruthenium and iridium, which cannot be hedged, continued to have an impact on margins.
The investments to debottleneck the Hoboken plant made good progress with the second phase of the upgrade and expansion of the sampling facility and the investments to further enhance the environmental performance of the plant all nearing completion. In line with the strategy to grow its recycling activities, Umicore announced its intention to expand the treatment capacity in Hoboken to 500,000 tonnes a year – an increase of some 40%. Umicore engaged with the authorities to obtain the necessary permits (see case study on page 40).
Revenues in Precious Metals Management decreased year on year. This was mainly a consequence of a lower contribution from the trading activity, which was impacted by unfavourable price volatility and lower metal prices. Demand for investor bars increased in 2013 as lower gold and silver prices presented an attractive entry point for some investors. Physical demand for precious metals remained largely stable, with a higher demand for silver used in industrial applications and palladium for the automotive industry compensating for a lower industrial demand for platinum.
REVENUES (EXCLUDING METAL)
million €
METALS EMISSIONS
With supplies of complex residues set to increase in the coming years, Umicore's Hoboken facility will be the focus of major growth investments between 2014 and 2016.
at Hoboken and targets a treatment capacity of around 500,000
The plan entails investments of around € 100 million over two years, primarily to enhance the capabilities of the smelter and the blast furnace. The initial focus of the expansion is on complex
for a substantial part of the input at Hoboken and their availability years. Why? As resources become scarcer this requires the mining of ing in concentrates with a higher impurity content. The processing of these complex concentrates by Umicore's suppliers in turn gives
Metals Refi ning Luc Gellens explains the rationale of the investment: "By investing in Hoboken we can build on our unique ability to treat the most complex materials from around the world. We have all the competences in Hoboken to recover the valuable not just about the economics though. We're proud of our envithe plan enables us to grow in a sustainable way. We've recently completed big investments in biological water treatment and gas standards in terms of air and
Luc adds: "We'll continue to explore other avenues for long-term growth including possible further enhancements in Hoboken as well
Final board approval and operatobtained in 2014.
The Jewellery & Industrial Metals business unit recorded lower revenues year on year, primarily as a result of a lower contribution from the recycling activities. Refi ning volumes and revenues in Europe were down compared to the previous year, as a sharp decline in precious metal prices reduced the overall availability of gold and silver containing residues with the market for gold scrap showing the most signifi cant contraction. Umicore's silver recycling activities in Thailand continued to grow and capacity enhancements are being made to fulfi l demand. The expansion of silver recycling capacity in Pforzheim, Germany, progressed according to plan and production start-up is anticipated for the second half of 2014. Sales for silver-based industrial applications were also lower year on year. Sales of products to the jewellery industry were somewhat lower than in the previous year in both the luxury and silverbased fashion segments. Lower metal prices did encourage investor demand for gold and silver bars,
while the order levels for silver coin blanks from the German market were down year on year.
In Battery Recycling , Umicore successfully strengthened its position with (H)EV manufacturers for the processing of used rechargeable batteries. A number of technical enhancements were made to the UHT (Ultra High Temperature) smelter based on the results of the testing campaigns for spent batteries and other supply streams. These technical modifi cations should enable Umicore to further improve its processes and operational effi ciency in this long term market development opportunity.
While the Recycling business group continued to account for a high percentage (43%) of the total lost time accidents in Umicore, the total number of accidents decreased sharply in 2013, with 15 lost time accidents compared to 23 in 2012.
40
The business group's accident frequency (4.20 vs 6.24) also showed a marked improvement, while accident severity (0.15 vs 0.25) was also better. The Precious Metals Refi ning business unit has adopted the SafeStart® programme to drive safety improvements, particularly at the Hoboken site where it is also deploying a SafeMap® leadership training for all its managers and supervisors. The business unit Jewellery & Industrial Materials fi nalised the implementation of a safety programme focusing on four axes: roles and responsibilities, standards and training, safety dialogues, incident investigation.
In terms of the metal exposure aspects of occupational health the Recycling business performed better than the Umicore average with an excess rate of 0.8%. The main substances that represent a potential health risk in Recycling are lead, arsenic, nickel, cobalt and cadmium. No excess readings were detected for nickel or cobalt. The excess rate for cadmium was 0.7%, compared to 2.5% in 2012. The excess rate for arsenic was stable while there was a slight increase in excess rate for lead from 0.6% to 1.0%. Two employees were diagnosed with a platinum salt sensitization and were provided with workplace clothing and equipment that offers an even higher level of protection .
The Recycling operations accounted for a total of 39% of the Group's CO2 equivalent emissions in 2013 or 267,678 tonnes of CO2 equivalent. This compares to 285,879 tonnes in 2012. The improvement in 2013 is almost entirely due to the Hoboken site in Belgium. Here, the raw materials mix plays a signifi cant role in determining CO2 emissions with the recycling process for some residue streams requiring more energy
and emitting more CO2 equivalent than for other residue streams. The input mix in 2013 was positive in this regard. We also saw a reduction of emissions from the blast furnace due to adaptations made in previous years, the benefi ts of which are now being fully felt.
The products and services from Jewellery & Industrial Metals and Precious Metals Management were included as part of the third wave of product sustainability assessments conducted using Umicore's APS tool. This is part of the ongoing process to assess the sustainability of a representative sample of Umicore's products and services (see p. 20-21). The Precious Metals Refi ning operation in Hoboken conducted a peer-reviewed assessment of the potential carbon savings of recycling metals at the facility compared to mining. A summary of the results can be found on p. 21.
Recycling's emissions to air in terms of load were down compared to 2012. In terms of impact, a decrease of 7% was recorded compared to 2012 due to lower emissions of arsenic at the Hoboken facility. Emission impact was down 26% compared to the 2009 baseline. While water emission loads decreased compared to 2012, in terms of impact emissions were 35% higher than the levels of 2012 This was mainly due to a higher level of arsenic and thallium emissions at the Hoboken plant. The commissioning of the new biological water treatment plant in Hoboken in 2014 is expected to drive metal emission impacts to
water down further in the coming years (see the case study on page 20). At year-end the emission impact stood at 25% above those of the benchmark year of 2009 .
Umicore Precious Metals Refi ning continued to implement strict supplier checks using an in-house system called Business Partner Screening (BPS) which covers all suppliers of raw materials. We also took further steps to provide comfort to our customers with regards to the confl ict-free nature of the gold we recycle and produce. In Precious Metals Refi ning we secured confl ict-free smelter status following an audit by the London Bullion Market Association (LBMA) of our processes and supply streams in Hoboken and Guarulhos while a similar process was completed by Jewellery & Industrial Metals operations in Bangkok and Pforzheim together with the Responsible Jewellery Council (RJC).
In 2013 the sites in the Recycling business group contributed a total of € 558,800, with by far the main contributor to this total being the site in Hoboken, Belgium. Initiatives included the Ecomagie magic show on environmental awareness that was run in 100 regional schools as well as the sponsorship of the Antwerp Museum aan de Stroom and support for the Casa Blanca festival in nearby Hemiksem. The site also supported the Engage+ initiative of the City of Antwerp to combat youth unemployment. Umicore Precious Metals Refi ning further developed its partnership with WorldLoop to provide an environmentally sound solution for waste electronics collected and dismantled in Africa. The partnership was one of the fi nalists at the Belgian Business Awards for the Environment in the category 'international business cooperation'. You can read a case study of this partnership on page 25.
Jewellery Council (RJC). The operation as a next step, this highly regarded
| (in million EUR unless stated otherwise) | Note | 2009 | 2010 | 2011 | 2012 | 2013 |
|---|---|---|---|---|---|---|
| Turnover | 6,937.4 | 9,691.1 | 14,480.9 | 12,548.0 | 9,819.3 | |
| Revenues (excluding metal) | 1,723.2 | 1,999.7 | 2,318.6 | 2,427.4 | 2,390.0 | |
| Recurring EBITDA | F9 | 262.7 | 468.7 | 553.0 | 524.1 | 462.6 |
| Recurring EBIT | F9 | 146.4 | 342.5 | 416.1 | 372.1 | 304.0 |
| of which associates | F9 | (6.1) | 30.1 | 22.9 | 22.2 | 11.8 |
| Non-recurring EBIT | F9 | (11.4) | (9.1) | 1.0 | (46.7) | (43.4) |
| IAS 39 effect on EBIT | F9 | 6.2 | (9.4) | 15.6 | 3.2 | (0.5) |
| Total EBIT | F9 | 141.2 | 324.0 | 432.7 | 328.6 | 260.0 |
| Recurring EBIT margin (in %) | 8.9 | 15.6 | 16.9 | 14.4 | 12.2 | |
| Return on Capital Employed (ROCE) (in %) | F31 | 8.1 | 17.5 | 18.6 | 16.7 | 13.6 |
| Average weighted net interest rate (in %) | F11 | 3.9 | 3.8 | 3.7 | 1.9 | 1.6 |
| Effective recurring tax rate (in %) | F13 | 20.7 | 19.1 | 19.9 | 20.6 | 21.3 |
| Recurring net profi t, Group share | F9 | 81.9 | 263.4 | 304.6 | 275.2 | 218.0 |
| Result from discontinued operations, Group share | (4.2) | 0 | (0) | 0 | 0 | |
| Net profi t, Group share | F9 | 73.8 | 248.7 | 325.0 | 233.4 | 179.0 |
| R&D expenditure | F9 | 119.5 | 119.2 | 136.7 | 149.0 | 140.6 |
| Capital expenditure | F34 | 181.6 | 156.6 | 196.2 | 235.7 | 279.6 |
| Net cash fl ow before fi nancing | F34 | 258.4 | (68.2) | 308.6 | 150.3 | 185.9 |
| Total assets of continued operations, end of period | 2,826.7 | 3,511.6 | 3,713.2 | 3,667.9 | 3,512.3 | |
| Group shareholders' equity, end of period | 1,314.2 | 1,517.0 | 1,667.5 | 1,751.7 | 1,677.1 | |
| Consolidated net fi nancial debt of continued operations, end of period |
F24 | 176.5 | 360.4 | 266.6 | 222.5 | 215.0 |
| Gearing ratio of continued operations, end of period (in %) | F24 | 11.4 | 18.6 | 13.4 | 11.0 | 11.1 |
| Average net debt / recurring EBITDA (in %) | 94.0 | 54.3 | 59.8 | 47.7 | 44.2 | |
| Capital employed, end of period | F31 | 1,781.1 | 2,181.8 | 2,168.8 | 2,259.4 | 2,233.6 |
| Capital employed, average | F31 | 1,797.7 | 1,961.6 | 2,233.0 | 2,224.5 | 2,241.3 |
The application of the R&D and Capex defi nitions have been reviewed and fi gures have been restated for comparability reasons. The new defi nitions are explained in the glossary p. 181-182 .
| DATA PER SHARE | ||||||
|---|---|---|---|---|---|---|
| (in EUR / share) | Note | 2009 | 2010 | 2011 | 2012 | 2013 |
| Earnings per share | ||||||
| Recurring EPS | F39 | 0.73 | 2.33 | 2.69 | 2.47 | 1.96 |
| EPS adjusted excluding discontinued operations | F39 | |||||
| basic | F39 | 0.69 | 2.20 | 2.87 | 2.09 | 1.61 |
| diluted | F39 | 0.69 | 2.19 | 2.85 | 2.08 | 1.60 |
| EPS including discontinued operations | F39 | |||||
| basic | F39 | 0.66 | 2.20 | 2.87 | 2.09 | 1.61 |
| diluted | F39 | 0.65 | 2.19 | 2.85 | 2.08 | 1.60 |
| Gross dividend | 0.65 | 0.80 | 1.00 | 1.00 | 1.00 | |
| Net cash fl ow before fi nancing, basic | F34 | 2.30 | (0.60) | 2.72 | 1.35 | 1.67 |
| Total assets of continued operations, end of period | 25.13 | 30.93 | 33.53 | 32.78 | 32.00 | |
| Group shareholders' equity, end of period | 11.68 | 13.36 | 15.06 | 15.66 | 15.28 | |
| Shareprice | ||||||
| High | 24.32 | 40.37 | 40.09 | 44.12 | 42.12 | |
| Low | 11.89 | 21.19 | 25.35 | 32.30 | 31.54 | |
| Average | 17.75 | 28.58 | 34.21 | 38.57 | 35.72 | |
| Close | 23.40 | 38.92 | 31.87 | 41.69 | 33.96 | |
| Note | 2009 | 2010 | 2011 | 2012 | 2013 | |
|---|---|---|---|---|---|---|
| Total number of issued shares, end of period | F39 | 120,000,000 | 120,000,000 | 120,000,000 | 120,000,000 | 120,000,000 |
| of which shares outstanding | F39 | 112,493,803 | 113,523,353 | 110,756,062 | 111,886,512 | 109,771,339 |
| of which treasury shares | F39 | 7,506,197 | 6,476,647 | 9,243,938 | 8,113,488 | 10,228,661 |
| Average number of shares outstanding, basic | F39 | 112,350,457 | 113,001,404 | 113,304,188 | 111,593,474 | 111,257,259 |
| Average number of shares outstanding, diluted | F39 | 112,884,977 | 113,724,891 | 114,208,275 | 112,346,081 | 111,733,165 |
Average net debt / recurring EBITDA
Effective recurring tax rate
| (in million EUR unless stated otherwise) | 2009 | 2010 | 2011 | 2012 | 2013 |
|---|---|---|---|---|---|
| Total turnover | 1,155.7 | 1,548.3 | 1,932.0 | 1,871.9 | 2,020.2 |
| Total revenues (excluding metal) | 585.8 | 698.7 | 814.2 | 866.1 | 893.5 |
| Recurring EBITDA | 39.5 | 104.6 | 119.4 | 124.4 | 112.8 |
| Recurring EBIT | 16.7 | 77.7 | 89.5 | 91.0 | 73.3 |
| of which associates * | (7.1) | 4.8 | 5.7 | 10.5 | 2.5 |
| Total EBIT | 13.2 | 72.4 | 96.8 | 83.8 | 73.7 |
| Recurring EBIT margin (in %) | 4.1 | 10.4 | 10.3 | 9.3 | 7.9 |
| R&D expenditure | 75.4 | 73.6 | 78.8 | 85.8 | 82.0 |
| Capital expenditure | 40.0 | 32.3 | 36.9 | 75.7 | 84.4 |
| Capital employed, end of period | 554.4 | 640.3 | 768.2 | 795.5 | 809.5 |
| Capital employed, average | 558.5 | 611.3 | 718.7 | 797.6 | 804.6 |
| Return on Capital Employed (ROCE) (in %) | 3.0 | 12.7 | 12.4 | 11.4 | 9.1 |
| Workforce, end of period | 1,903 | 1,921 | 2,182 | 2,281 | 2,340 |
| of which associates * | 241 | 225 | 239 | 161 | 167 |
* Automotive Catalysts: Ordeg Korea, ICT Co. Japan (until September 2012), ICT Inc. USA (until September 2012)
| (in million EUR unless stated otherwise) | 2009 | 2010 | 2011 | 2012 | 2013 |
|---|---|---|---|---|---|
| Total turnover | 541.4 | 702.3 | 729.3 | 763.7 | 825.7 |
| Total revenues (excluding metal) | 305.1 | 347.6 | 358.3 | 366.3 | 402.6 |
| Recurring EBITDA | 44.7 | 67.5 | 67.7 | 50.6 | 55.2 |
| Recurring EBIT | 23.9 | 43.9 | 41.0 | 18.2 | 24.7 |
| of which associates * | 7.4 | 5.7 | 6.3 | 4.2 | 2.7 |
| Total EBIT | 31.7 | 43.1 | 34.2 | (11.3) | 21.4 |
| Recurring EBIT margin (in %) | 5.4 | 11.0 | 9.7 | 3.8 | 5.5 |
| R&D expenditure | 11.2 | 12.1 | 16.9 | 15.8 | 16.2 |
| Capital expenditure | 50.1 | 37.0 | 64.4 | 52.8 | 64.3 |
| Capital employed, end of period | 346.2 | 390.1 | 457.4 | 476.3 | 470.2 |
| Capital employed, average | 353.9 | 371.5 | 430.2 | 475.2 | 476.2 |
| Return on Capital Employed (ROCE) (in %) | 6.7 | 11.8 | 9.5 | 3.8 | 5.2 |
| Workforce, end of period | 2,879 | 3,035 | 3,033 | 2,933 | 2,884 |
| of which associates * | 1,232 | 1,314 | 1,206 | 1,057 | 1,056 |
* Cobalt & Specialty Materials: Ganzhou Yi Hao Umicore Industries Co. Ltd., Todini and Co.; Rechargeable Battery Materials: Jiangmen Chancsun Umicore Industry Co. Ltd., beLife
| (in million EUR unless stated otherwise) | 2009 | 2010 | 2011 | 2012 | 2013 |
|---|---|---|---|---|---|
| Total turnover | 899.4 | 1,296.3 | 1,618.4 | 1,508.4 | 1,388.4 |
| Total revenues (excluding metal) | 404.2 | 446.3 | 519.5 | 523.2 | 509.7 |
| Recurring EBITDA | 61.1 | 101.3 | 93.6 | 82.9 | 83.4 |
| Recurring EBIT | 36.6 | 75.2 | 67.0 | 54.5 | 54.7 |
| of which associates * | 0.8 | 23.2 | 13.4 | 9.9 | 9.1 |
| Total EBIT | 38.5 | 78.6 | 65.1 | 57.1 | 24.9 |
| Recurring EBIT margin (in %) | 8.9 | 11.7 | 10.2 | 8.5 | 8.9 |
| R&D expenditure | 6.8 | 9.2 | 11.3 | 11.9 | 10.8 |
| Capital expenditure | 23.9 | 23.9 | 31.6 | 29.3 | 29.4 |
| Capital employed, end of period | 534.1 | 612.5 | 572.0 | 572.9 | 504.8 |
| Capital employed, average | 533.8 | 589.7 | 603.9 | 587.3 | 555.5 |
| Return on Capital Employed (ROCE) (in %) | 6.9 | 12.8 | 11.1 | 9.3 | 9.8 |
| Workforce, end of period | 5,687 | 6,121 | 5,845 | 5,629 | 5,331 |
| of which associates * | 2,888 | 3,244 | 2,915 | 2,775 | 2,594 |
* Zinc Chemicals: Rezinal; Building Products: Ieqsa; Element Six Abrasives
| (in million EUR unless stated otherwise) | 2009 | 2010 | 2011 | 2012 | 2013 |
|---|---|---|---|---|---|
| Total turnover | 4,323.0 | 6,120.9 | 11,649.3 | 9,589.6 | 6,663.3 |
| Total revenues (excluding metal) | 426.7 | 506.1 | 636.8 | 681.2 | 590.2 |
| Recurring EBITDA | 158.2 | 236.7 | 310.7 | 306.2 | 248.7 |
| Recurring EBIT | 117.7 | 195.5 | 267.2 | 258.8 | 199.6 |
| Total EBIT | 109.8 | 182.2 | 274.3 | 251.8 | 200.0 |
| Recurring EBIT margin (in %) | 27.6 | 38.6 | 42.0 | 38.0 | 33.8 |
| R&D expenditure | 7.7 | 9.1 | 14.2 | 18.6 | 18.4 |
| Capital expenditure | 52.9 | 49.6 | 55.1 | 67.8 | 87.0 |
| Capital employed, end of period | 273.8 | 421.0 | 321.4 | 327.3 | 397.2 |
| Capital employed, average | 288.6 | 301.8 | 383.0 | 294.2 | 342.8 |
| Return on Capital Employed (ROCE) (in %) | 40.8 | 64.8 | 69.8 | 88.0 | 58.2 |
| Workforce, end of period | 2,162 | 2,168 | 2,329 | 2,394 | 2,345 |
87.0
48 Financial statements
| Umicore Annual report 2013 | |
|---|---|
| F26 Liquidity of the fi nancial liabilities | 90 |
| F27 Provisions for employee benefi ts F28 Stock option plans granted by the company |
92 98 |
| F29 Environmental provisions | 99 |
| F30 Provisions for other liabilities and charges | 100 |
| F31 Capital employed | 101 |
| F32 Financial instruments by category | 102 |
| F33 Fair value of fi nancial instruments | 105 |
| F34 Notes to the cash fl ow statement | 108 |
| F35 Rights and commitments | 109 |
| F36 Contingencies | 110 |
| F37 Related parties | 111 |
| F38 Events after the end of the reporting period | 112 |
| F39 Earnings per share | 112 |
| F40 IFRS developments | 112 |
| F41 Auditors' remuneration | 114 |
| Parent company separate summarized fi nancial statements | 115 |
| Management responsibility statement | 118 |
| (EUR thousand) | |||
|---|---|---|---|
| Notes | 2012 | 2013 | |
| Turnover | F9 | 12,548,014 | 9,819,255 |
| Other operating income | F9 | 62,670 | 76,232 |
| Operating income | 12,610,684 | 9,895,487 | |
| Raw materials and consumables | F9 | (10,996,184) | (8,344,694) |
| Payroll and related benefi ts | F10 | (717,025) | (707,151) |
| Depreciation and impairments | F9 | (181,696) | (169,862) |
| Other operating expenses | F9 | (410,388) | (411,179) |
| Operating expenses | (12,305,293) | (9,632,886) | |
| Income from other fi nancial investments | F12 | 988 | (2,074) |
| RESULT FROM OPERATING ACTIVITIES | 306,379 | 260,527 | |
| Financial income | F11 | 3,288 | 4,332 |
| Financial expenses | F11 | (23,946) | (19,052) |
| Foreign exchange gains and losses | F11 | (10,345) | (8,131) |
| Share in result of companies using the equity method | F17 | 22,218 | (511) |
| Profi t (loss) before income tax | 297,594 | 237,165 | |
| Income taxes | F13 | (59,688) | (52,386) |
| PROFIT (LOSS) OF THE PERIOD | 237,905 | 184,779 | |
| of which: Group share | 233,444 | 179,029 | |
| Minority share | 4,461 | 5,750 | |
| (EUR) | |||
| Total basic earnings per share | F39 | 2.09 | 1.61 |
| Total diluted earnings per share | F39 | 2.08 | 1.60 |
| Dividend per share | 1.00 | 1.00 |
The notes on pages 54 to 117 are an integral part of these consolidated fi nancial statements
| (EUR thousand) | |||
|---|---|---|---|
| Notes | 2012 | 2013 | |
| Profi t (loss) of the period | 237,905 | 184,779 | |
| Items in other comprehensive income that will not be reclassifi ed to P&L | |||
| Changes in post employment benefi ts, arising from changes in actuarial assumptions | (57,316) | (1,319) | |
| Changes in deferred taxes directly recognized in other comprehensive income | 17,272 | 1,333 | |
| Items in other comprehensive income that may be subsequently reclassifi ed to P&L | |||
| Changes in available-for-sale fi nancial assets reserves | (10,788) | (12,102) | |
| Changes in cash fl ow hedge reserves | 7,400 | 1,914 | |
| Changes in deferred taxes directly recognized in other comprehensive income | (2,274) | (428) | |
| Changes in currency translation differences | (14,021) | (61,545) | |
| Other comprehensive income for the period | F23 | (59,726) | (72,146) |
| TOTAL COMPREHENSIVE INCOME FOR THE PERIOD | 178,179 | 112,633 | |
| of which: Group share | 176,265 | 112,108 | |
| Minority share | 1,914 | 524 |
The deferred tax impact on the consolidated statement of comprehensive income is due to the cash fl ow hedge reserves for EUR -0.3 million and to employee benefi t reserves for EUR 1.3 million.
The notes on pages 54 to 117 are an integral part of these consolidated fi nancial statements.
| Umicore Annual report 2013 | |||
|---|---|---|---|
| Consolidated balance sheet | (EUR thousand) | ||
| Notes | 31/12/2012 | 31/12/2013 | |
| Non-current assets | 1,478,168 | 1,551,228 | |
| Intangible assets | F14, F15 | 200,902 | 218,251 |
| Property, plant and equipment | F16 | 912,268 | 998,563 |
| Investments accounted for using the equity method | F17 | 214,015 | 201,391 |
| Available-for-sale fi nancial assets | F18 | 37,105 | 21,183 |
| Loans granted | F18 | 5,087 | 4,971 |
| Trade and other receivables | F20 | 17,019 | 16,339 |
| Deferred tax assets | F21 | 91,772 | 90,530 |
| Current assets | 2,189,731 | 1,961,069 | |
| Current loans granted | F18 | 4,960 | 5,933 |
| Inventories | F19 | 1,235,107 | 1,106,259 |
| Trade and other receivables | F20 | 788,377 | 716,405 |
| Income tax receivables | 29,861 | 33,227 | |
| Available-for-sale fi nancial assets | F18 | 3 | 0 |
| Cash and Cash equivalents TOTAL ASSETS |
F22 | 131,427 3,667,899 |
99,245 3,512,297 |
| Equity of the group | 1,805,805 | 1,723,428 | |
| Group shareholders' equity | 1,751,664 | 1,677,141 | |
| Share capital and premiums | 502,862 | 502,862 | |
| Retained earnings | 1,577,658 | 1,647,378 | |
| Currency translation differences and other reserves | F23 | (102,020) | (167,438) |
| Treasury shares | (226,836) | (305,661) | |
| Minority interest | 54,141 | 46,287 | |
| Non-current liabilities | 422,446 | 439,054 | |
| Provisions for employee benefi ts | F27 | 258,975 | 267,837 |
| Financial debt | F24 | 2,861 | 26,396 |
| Trade and other payables | F25 | 13,922 | 12,908 |
| Deferred tax liabilities | F21 | 36,417 | 28,164 |
| Provisions | F29, F30 | 110,271 | 103,749 |
| Current liabilities | 1,439,648 | 1,349,814 | |
| Financial debt | F24 | 351,047 | 287,839 |
| Trade and other payables | F25 | 1,022,363 | 966,767 |
| Income tax payable | 35,519 | 64,697 | |
| Provisions | F29, F30 | 30,719 | 30,511 |
| TOTAL EQUITY & LIABILITIES | 3,667,899 | 3,512,297 |
The notes on pages 54 to 117 are an integral part of these consolidated fi nancial statements.
(EUR thousand)
| Part of the Group | ||||||
|---|---|---|---|---|---|---|
| Share capital and premiums |
Reserves | Currency translation and other reserves |
Treasury shares |
Minority interest |
TOTAL EQUITY |
|
| Balance at the beginning of previous period | 502,862 | 1,461,047 | (43,620) | (252,760) | 54,179 | 1,721,707 |
| Result of the period | 233,444 | 4,457 | 237,901 | |||
| Other comprehensive income for the period | (57,183) | (2,543) | (59,726) | |||
| Total comprehensive income for the period | 233,444 | (57,183) | 1,914 | 178,175 | ||
| Changes in share-based payment reserves | 5,325 | 5,325 | ||||
| Capital increase | 6,283 | 6,283 | ||||
| Dividends | (122,929) | (6,882) | (129,810) | |||
| Transfers | 6,542 | (6,542) | 0 | |||
| Changes in treasury shares | 25,924 | 25,924 | ||||
| Changes in scope | (444) | (1,357) | (1,801) | |||
| Balance at the end of previous period | 502,862 | 1,577,658 | (102,020) | (226,832) | 54,141 | 1,805,805 |
| Result of the period | 179,030 | 5,749 | 184,779 | |||
| Other comprehensive income for the period | (66,921) | (5,225) | (72,146) | |||
| Total comprehensive income for the period | 179,030 | (66,921) | 524 | 112,633 | ||
| Changes in share-based payment reserves | 4,337 | 4,337 | ||||
| Capital increase | ||||||
| Capital decrease | (5,848) | (5,848) | ||||
| Change in accounting policies | 525 | (1,296) | (771) | |||
| Dividends | (111,373) | (3,764) | (115,137) | |||
| Transfers | 1,538 | (1,538) | 0 | |||
| Changes in treasury shares | (78,825) | (78,825) | ||||
| Other movements | 112 | 112 | ||||
| Changes in scope | 1,121 | 1,121 | ||||
| Balance at the end of the fi nancial year | 502,862 | 1,647,378 | (167,438) | (305,661) | 46,287 | 1,723,428 |
The legal reserve of EUR 50,000 thousand which is included in the retained earnings is not available for distribution.
The share capital of the Group as at 31 December 2013 was composed of 120,000,000 shares with no par value.
IAS 19 (revised) on Employee Benefi ts is effective for annual periods beginning on or after 1 January 2013 and was not early adopted by Umicore. Based on calculations performed by the actuaries, it has been concluded that the impact of IAS 19 (revised) is not material and consequently the impact of EUR 0.7 million has been recorded in the statement of changes in equity of 2013 and no restatement has been applied on 2012.
The change in scope in the minorities is linked to the sale of Foshan (China).
The notes on pages 54 to 117 are an integral part of these consolidated fi nancial statements.
| Umicore Annual report 2013 | |||
|---|---|---|---|
| Consolidated statement of cash fl ow | (EUR thousand) | ||
| Notes | 2012 | 2013 | |
| Profi t from continuing operations | 237,905 | 184,779 | |
| Adjustments for profi t of equity companies | (22,218) | 511 | |
| Adjustment for non-cash transactions | F34 | 166,220 | 188,618 |
| Adjustments for items to disclose separately or under investing and fi nancing cash fl ows | F34 | 64,922 | 51,811 |
| Change in working capital requirement | F34 | 34,060 | 96,873 |
| Cash fl ow generated from operations | 480,889 | 522,592 | |
| Dividend received | 27,015 | 15,249 | |
| Tax paid during the period | (93,788) | (37,556) | |
| Government grants received | 1,394 | 485 | |
| NET OPERATING CASHFLOW | F34 | 415,509 | 500,770 |
| Acquisition of property, plant and equipment | F16 | (227,770) | (266,741) |
| Acquisition of intangible assets | F14 | (25,688) | (26,970) |
| Acquisition in new subsidiaries (net of cash acquired) | (11,180) | (21,968) | |
| Acquisition of / capital increase in associates | (116) | (7,573) | |
| Acquisition in additional shareholdings in subsidiaries Acquisition of fi nancial assets |
F18 | (1,181) (70) |
0 (173) |
| New loans extended | F18 | (7,531) | (1,158) |
| Sub-total acquisitions | (273,535) | (324,583) | |
| Disposal of property, plant and equipment | 2,937 | 7,800 | |
| Disposal of intangible assets | 28 | 1,874 | |
| Disposal of subsidiaries and associates (net of cash disposed) | 2,062 | 11 | |
| Capital decrease in associates | 2,409 | 0 | |
| Disposal of fi nancial fi xed assets | 489 | 14 | |
| Repayment of loans | F18 | 381 | 7 |
| Sub-total disposals | 8,306 | 9,706 | |
| NET CASH FLOW GENERATED BY (USED IN) INVESTING ACTIVITIES | F34 | (265,229) | (314,877) |
| Capital increase/decrease minorities | 5,483 | (5,848) | |
| Own shares | 25,924 | (78,825) | |
| Interest received | 2,916 | 4,035 | |
| Interest paid | (15,950) | (6,607) | |
| New loans (repayment of loans) | (16,793) | (38,547) | |
| Dividends paid to Umicore shareholders | (122,468) | (111,427) | |
| Dividends paid to minority shareholders | (6,881) | (3,764) | |
| NET CASH FLOW GENERATED BY (USED IN ) FINANCING ACTIVITIES | F34 | (127,769) | (240,983) |
| Effect of exchange rate fl uctuations on cash held NET CASH FLOW FROM CONTINUING OPERATIONS |
8,271 30,783 |
22,415 (32,675) |
|
| Net cash and cash equivalents at the beginning of the period | F22 | 100,205 | 130,988 |
| Net cash and cash equivalents at the end of the period | F22 | 130,989 | 98,313 |
| of which cash and cash equivalents | 131,427 | 99,245 | |
| of which bank overdrafts | (438) | (932) |
The notes on pages 54 to 117 are an integral part of these consolidated fi nancial statements.
The company's consolidated fi nancial statements and the management report prepared in accordance with article 119 of the Belgian Companies Code set forth on pages 1 to 118, for the year ended 31 December 2013 were authorized for issue by the Board of Directors on 13 March 2014. They have been prepared in accordance with the legal and regulatory requirements applicable to the consolidated fi nancial statements of Belgian companies. They include those of the company, its subsidiaries and its interests in companies accounted for using the equity method.
The Group presents its annual consolidated fi nancial statements in accordance with all International Financial Reporting Standards (IFRS) adopted by the European Union (EU).
The consolidated fi nancial statements are presented in thousands of euros, rounded to the nearest thousand, and have been prepared on a historical cost basis, except for those items that are measured at fair value.
Umicore applies a full consolidation for its subsidiaries - entities over which the company has control - i.e. the power to govern the fi nancial and operating policies so as to obtain benefi ts from its activities. Control is presumed when Umicore owns, directly or indirectly through subsidiaries, more than 50% of the voting rights.
Subsidiaries are consolidated from the date on which control is transferred to the Group and are no longer consolidated from the date that control ceases.
Note F5 lists all signifi cant subsidiaries of the company at the closing date.
To account for an acquisition, the purchase method is used. The assets, liabilities and contingent liabilities of the acquired company are measured at their fair value at the date of acquisition. The cost of acquisition is measured as the fair value of assets given up, shares issued or liabilities undertaken at the date of acquisition, plus costs directly attributable to the acquisition. The excess of the cost of acquisition over the Group's share of the fair value of the net assets of the subsidiary is recognized as goodwill. (see Section 2.6. Intangible Assets). If the Group's share in the fair value of the net assets exceeds the cost of acquisition, the excess is recognized immediately as a profi t in the income statement.
Inter-company transactions, balances and unrealized gains on transactions between Group companies are eliminated. Unrealized losses are also eliminated, unless such losses are an indication of impairment. Where necessary, the subsidiaries' accounting policies have been changed to ensure consistency with the policies the Umicore Group has adopted.
An associate is an entity in which the company has a signifi cant infl uence over the fi nancial and operating policies, but no control. Typically this is evidenced by an ownership of between 20 to 50% of the voting rights. A joint venture is a contractual arrangement whereby the company and other parties undertake, directly or indirectly, an economic activity that is subject to joint control.
Both associates and joint ventures are accounted for using the equity method. Under this method, the Group's share of the post-acquisition profi ts or losses is recognized in the income statement, and its share of post-acquisition movements in reserves is recognized in reserves.
The company's investments in associates and joint ventures include the goodwill on acquisitions, net of impairment.
Unrealized gains on transactions between the company and its associates or joint ventures are eliminated to the extent of the company's interest in the associates and joint ventures. Unrealized losses are also eliminated, unless the transaction provides evidence of impairment.
Investments in companies that are not consolidated through the equity method or through the full consolidation method are recorded under "available-forsale fi nancial assets".
Note F17 lists all signifi cant associates and joint ventures of the company as at the closing date.
Note F7 provides the Company's segment information, in line with IFRS 8. Umicore is organised in business units. Operating segments under IFRS 8 at Umicore are differentiated by their growth drivers in the area's of Catalysis, Energy Materials, Performance Materials and Recycling.
The Catalysis segment produces automotive catalysts for emission abatement in light and heavy duty vehicles as well as catalyst products used in chemical processes such as the fi ne chemical and life science industries. These catalysts are mainly based on PGM metals. The Energy Materials segment is focused primarily on materials used in the growing markets of rechargeable batteries, in both portable electronics as well as in hybrid electric vehicles and solar energy. Its products are largely based on cobalt, germanium and indium. The Recycling segment recovers a large number of precious and other metals from a wide range of waste streams and industrial residues. The Recycling operations extend also to the production of jewellery materials (including recycling services) as well as the recycling of rechargeable batteries. The Performance Materials segment has a broad product portfolio used in various industries including construction, automotive, electrics and electronics. All these products apply precious metals or zinc to enhance specifi c product capabilities.
Operating segments are reported in a manner consistent with the internal reporting provided to the Board and the Executive Committee. The Executive Committee reviews the performance of the operating segments primarily based on Earnings before Interest and Tax (EBIT), Capital Employed and Return on Capital Employed.
The segment results, assets and liabilities include items directly attributable to the segment as well as those elements that can reasonably be allocated to a segment.
The pricing of inter-segment sales is based on an arm's length transfer pricing system. In the absence of relevant market price references, 'cost plus' mechanisms are used.
Associate companies are allocated to the business group with the closest fi t from a market segment perspective.
A geographical segment is engaged in providing products or services within a particular economic environment that are subject to risks and returns that are different from those of segments operating in other environments.
For the reported period, there is no subsidiary in the Umicore Group having a functional currency belonging to a hyperinfl ationary economy.
Functional currency: items included in the fi nancial statements of each entity in the Group are measured using the currency that best refl ects the economic substance of the underlying events and circumstances relevant to that entity. The consolidated fi nancial statements are presented in euros which is the functional currency of the parent. To consolidate the Group and each of its subsidiaries, the fi nancial statements are translated as follows:
* Assets and liabilities at the year-end rate as published by the European Central Bank.
* Income statements at the average exchange rate for the year.
* The components of shareholders' equity at the historical exchange rate.
Exchange differences arising from the translation of the net investment in foreign subsidiaries, joint ventures and associated entities at the period-end exchange rate are recorded as part of the shareholders' equity under "currency translation differences".
When a foreign operation is partially disposed of or sold, exchange differences that were recorded in equity are recognized in the income statement as part of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as local currency assets and liabilities of the foreign entity and are translated at the closing rate.
Foreign currency transactions are recognized during the period in the functional currency of each entity at exchange rates prevailing at the date of transaction. The date of a transaction is the date at which the transaction fi rst qualifi es for recognition. For practical reasons a rate that approximates the actual rate at the date of the transaction is used at some operations, for example, an average rate for the week or the month in which the transactions occur.
Subsequently, monetary assets and liabilities denominated in foreign currencies are translated at the closing rate at the end of the reporting period
Gains and losses resulting from the settlement of foreign currency transactions, and from the translation of monetary assets and liabilities denominated in foreign currencies, are recognized in the income statement as a fi nancial result.
In order to hedge its exposure to certain foreign exchange risks, the Company has entered into certain forward contracts (see Chapter 2.21, Financial instruments).
Property, plant and equipment is recorded at historical cost, less accumulated depreciation and impairment losses. Cost includes all direct costs and appropriate allocation of indirect costs incurred to bring the asset to working condition for its intended use.
Borrowing costs that are directly attributable to investments are capitalized together with the costs of the assets in accordance with IAS 23. All borrowing costs that cannot be linked directly to an investment are recognized as expenses in the period when incurred.
The straight-line depreciation method is applied through the estimated useful life of the assets. Useful life is the period of time over which an asset is expected to be used by the company.
Repair and maintenance costs are expensed in the period in which they are incurred, if they do not increase the future economic benefi ts of the asset. Otherwise they are classifi ed as separate components of items of property, plant and equipment. Those major components of items of property, plant and equipment that are replaced at regular intervals are accounted for as separate assets as they have useful lives different from those items of property, plant and equipment to which they relate. Umicore's PPE, being complex and highly customized industrial assets, typically do not have an individual resale value if put outside the overall context of the operations. Therefore no residual value is taken into account when determining the depreciable value.
The typical useful life per main type of property, plant and equipment are as follows:
| Land | Non-depreciable |
|---|---|
| Buildings | |
| - Industrial buildings | 20 years |
| - Improvements to buildings | 10 years |
| - Other buildings such as offi ces and laboratories | 40 years |
| - Investment properties | 40 years |
| Plant, machinery and equipment | 10 years |
| - Furnaces | 7 years |
| - Small equipment | 5 years |
| Furniture and vehicles | |
| - Vehicles | 5 years |
| - Mobile handling equipment | 7 years |
| - Computer equipment | 3 to 5 years |
| - Furniture and offi ce equipment | 5 to 10 years |
For material newly acquired or constructed assets, the useful life is separately assessed at the moment of the investment request and can deviate from the above standards.
Management determines the estimated useful lives and related depreciation charges for property, plant and equipment. Management uses standard estimates based on a combination of physical durability and projected product life or industry life cycles. These useful lives could change signifi cantly as a result of technical innovations, market developments or competitor actions. Management will increase the depreciation charge where useful lives are shorter than previously estimated, or it will write-off or write-down technically obsolete or non-strategic assets that have been abandoned or sold.
Expenses for formation and capital increase are deducted from the share capital.
Goodwill represents the excess of the cost of an acquisition of a subsidiary, associate or jointly controlled entity over the Group's share in the fair value of the identifi able assets and liabilities of the acquired entity at the date of acquisition. Goodwill is recognized at cost less any accumulated impairment losses.
Goodwill from associates and joint ventures is presented in the balance sheet on the line "Investments accounted for under the equity method", together with the investment itself.
To assess impairment, goodwill is allocated to a CGU. At each balance sheet date, these CGUs are tested for impairment, meaning an analysis is performed to determine whether the carrying amount of goodwill allocated to the CGU is fully recoverable. If the carrying amount is not fully recoverable, an appropriate impairment loss is recognized in the income statement. These impairment losses are never reversed.
The excess of the Group's interest in the fair value of the net identifi able assets acquired over the cost of acquisition is recognized in the income statement immediately.
Research costs related to the prospect of gaining new scientifi c or technological knowledge and understanding are recognized in the income statement as an incurred expense.
Development costs are defi ned as costs incurred for the design of new or substantially improved products and for the processes prior to commercial production or use. They are capitalized if, among others, the following conditions are met:
* the intangible asset will give rise to future economic benefi ts, or in other words, the market potential has been clearly demonstrated.
* the expenditures related to the process or product can be clearly identifi ed and reliably measured.
In case it is diffi cult to clearly distinguish between research or development costs, the costs are considered as being research. If development costs are capitalized they are amortized using a straight-line method over the period of their expected benefi t.
Within the framework of the Kyoto protocol, a second emission trading period started, covering 2008-2012. Therefore the Flemish Government granted emission rights to the Flemish sites of certain companies, including Umicore. Each year, at the end of February, one fi fth of these emission rights is put on an offi cial registry account. The release of emission rights to this registry account entails the capitalization in the intangible assets, which is in line with the guidance of the Belgian Accounting Standards Commission. Gains on the recognition of emission rights at fair value are deferred until the certifi cates are used. Emission rights owned are subject to impairment testing but are not depreciated. If, at a certain closing date, it appears that the closing market price is below the carrying value, a write-down is booked. At each closing date, the group estimates the actual use of rights for the period and recognizes a provision for the rights that will have to be restituted to the Government. The charge related to the impairment loss or the recognition of provisions are fully compensated in the income statement by the release of deferred revenue. Historically, Umicore owns the required rights to ensure its normal operating activities.
All of the following types are recorded at historical cost, less accumulated amortization and impairment losses:
Leases under which the company assumes a substantial part of the risks and rewards of ownership are classifi ed as fi nancial leases. They are measured at the lower of fair value and the estimated present value of the minimum lease payments at inception of the lease, less accumulated depreciation and impairment losses.
Each lease payment is allocated between the liability and fi nance charges so as to achieve a constant periodic rate of interest on the fi nance balance outstanding. The corresponding rental obligations, net of fi nance charges, are included in long-term payables. The interest element is charged to the income statement over the lease period. Leased assets are depreciated over the shorter of the useful life and the lease term.
Leases under which a substantial part of the risks and rewards of ownership are effectively retained by the lessor are classifi ed as operating leases. All payments or receipts under operating lease are recognized as an operating expense in the income statement using the straight-line method.
The group leases metals to and from third parties for specifi ed periods for which the group receives or pays fees. Metal lease contracts are typically concluded for less than 1 year. The metal leases from and to third parties are reported as off-balance sheet commitments.
All movements in available-for-sale fi nancial assets, loans and receivables are accounted for at trade date.
Financial assets available for sale are carried at fair value. Unrealized gains and losses from changes in the fair value of such assets are recognized in equity as available-for-sale fi nancial assets reserves. When the assets are sold or impaired, the accumulated fair value adjustments are included in the income statement as gains and losses. Financial assets are derecognised when the rights to receive cash fl ows from the investments have expired or have been transferred and the group has transferred substantially all risks and rewards of ownership.
Loans and receivables are carried at amortized cost less any impairment.
All write-downs are recorded on a separate account and are netted with the carrying amounts when all chances of recovery are depleted.
Own shares are deducted from equity.
Inventories are carried at the lower of cost or net realizable value. Cost comprises direct purchase or manufacturing costs and an appropriate allocation of overheads.
Inventories are classifi ed as:
Base products with metal hedging are metal-containing products on which Umicore is exposed to metal price fl uctuation risks and where Umicore applies an active and structured risk management process to minimize the potential adverse effects of market price fl uctuations on the fi nancial performance of the Group. The metal contents are classifi ed in inventory categories that refl ect their specifi c nature and business use: a.o. permanently tied up metal inventories and commercially available metal inventories. Depending on the metal inventory category, appropriate hedging mechanisms are applied. A weighted average is applied per category of inventory.
Base products without metal hedging and consumables are valued using the weighted-average cost method.
Write-downs on inventories are recognized when turnover is slow or where the carrying amount is exceeding the net realizable value, meaning the estimated selling price less the estimated costs of completion and the estimated cost necessary to make the sale. Write-downs are presented separately.
Advances paid are down-payments on transactions with suppliers for which the physical delivery has not yet taken place and are booked at nominal value.
Contracts in progress are valued using the percentage-of-completion method.
Trade and other receivables are measured at amortized cost, i.e. at the net present value of the receivable amount. Unless the impact of discounting is material, the nominal value is taken. Receivables are written down for irrecoverable amounts. All write-downs are recorded on a separate account and are netted with the carrying amounts when all chances of recovery are depleted.
Trade receivables of which substantially all the risks and rewards have been transferred are derecognized from the balance sheet.
The positive fair value of derivative fi nancial instruments is included under this heading.
Cash includes cash-in-hand and cash with banks. Cash equivalents are short-term, highly liquid investments that are readily convertible into known amounts of cash, have maturity dates of three months or less and are subject to an insignifi cant risk of change in value.
These items are carried in the balance sheet at nominal value or amortized cost. Bank overdrafts are included in the current liabilities on the balance sheet.
Property, plant and equipment and other non-current assets, including intangible assets and fi nancial assets not held for trading, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If any such indication exists, the recoverable amount of the asset is estimated.
The recoverable amount is the higher of an asset's net selling price and value in use. To estimate the recoverable amount of individual assets the company often determines the recoverable amount of the cash-generating unit (CGU) to which the asset belongs.
Whenever the carrying amount of an asset exceeds its recoverable value, an impairment loss is recognized as an expense immediately.
A reversal of impairment losses is recognized when there is an indication that the impairment losses recognized for the asset or for the CGU no longer exist or have decreased. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.
When the company purchases some of its own shares, the consideration paid ' including any attributable transaction costs net of income taxes ' is deducted from the total shareholders' equity as treasury shares. No gain or loss shall be recognized in profi t or loss on the purchase, sale, issue or cancellation of own shares. When such shares are subsequently sold or reissued, any consideration received is included in shareholders' equity.
B. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction from the proceeds of the issue, net of tax.
C. Dividends of the parent company payable on ordinary shares are only recognized as a liability following approval by the shareholders.
Minority interests include a proportion of the fair value of identifi able assets and liabilities recognized upon acquisition of a subsidiary that is attributable to third parties, together with the appropriate proportion of subsequent profi ts and losses.
In the income statement, the minority share in the Group's profi t or loss is presented separately from the Group's consolidated result.
Provisions are recognized in the balance sheet when:
A constructive obligation is an obligation that derives from company actions where, by an established pattern of past practice or published policies, the company has indicated that it will accept certain responsibilities and, as a result, the company has created a valid expectation that it will discharge those responsibilities.
The amount recognized as a provision is the best estimate of the expenditure required to settle the present obligation at the end of the reporting period and taking into account the probability of the possible outcome of the event. Where the effect of the time value of money is material, the amount of a provision is the present value of the expenditure expected to be required to settle the obligation. The result of the yearly discounting of the provision, if any, is accounted for as a fi nancial result.
The main types of provision are the following:
Environmental provisions are based on legal and constructive obligations from past events, in accordance with the company's environmental approach and applicable legal requirements. The full amount of the estimated obligation is recognized at the moment the event occurs. When the obligation is production/ activity related, the provision is recognized gradually depending on normal usage/production level.
Includes provisions for litigation, onerous contracts, warranties, exposure to equity investments and restructuring. A provision for restructuring is recognized when the company has approved a detailed and formal restructuring plan and the restructuring has either commenced or has been announced publicly before the end of the reporting period. Any restructuring provision only includes the direct expenditure arising from the restructuring which is necessarily entailed and is not associated with the ongoing activities of the Company.
These include wages, salaries and social security contributions, paid annual leave and sick leave, bonuses and non-monetary benefi ts, and are taken as an expense in the relevant period. All company managers are eligible for bonuses that are based on indicators including personal performance and key fi nancial targets. The amount of the bonus is recognized as an expense, based on an estimation made at the end of the reporting period.
The company has various pension and medical care schemes in accordance with the conditions and practices of the countries it operates in. The schemes are generally funded through payments to insurance companies or trustee-administered funds.
The company has accounted for all legal and constructive obligations both under the formal terms of defi ned benefi t plans and under the company's informal practices.
The amount presented in the balance sheet is based on actuarial calculations (using the projected unit credit method) and represents the present value of the defi ned benefi t obligations and reduced by the fair value of the plan assets.
Unrecognized past service costs result from the introduction of new benefi t plans or changes in the benefi ts payable under an existing plan. The past service costs are immediately recognized in the income statement since IAS 19 revised.
All actuarial gains and losses following changes in the actuarial assumptions of post-employment defi ned benefi t plans are recognized through other comprehensive income (OCI) in the period in which they occur and are disclosed in the statement of comprehensive income as post employment benefi t reserves.
The company pays contributions to publicly or privately administered insurance plans. The payments are recognized as expenses as they fall due and as such are included in personnel costs.
These benefi ts are accrued for their expected costs over the period of employment using an accounting methodology similar to that for defi ned benefi t pension plans. These obligations are in general valued annually by independent qualifi ed actuaries. All actuarial losses or gains are immediately recognized in the income statement.
These benefi ts arise as a result of the company's decision to terminate an employee's employment before the normal retirement date or of an employee's decision to accept voluntary redundancy in exchange for those benefi ts. When they are reasonably predictable in accordance with the conditions and practices of the countries the company operates in, future obligations are also recognized.
These benefi ts are accrued for their expected costs over the period of employment, using an accounting methodology similar to that for defi ned benefi t pension plans. In general, these obligations are valued annually by independent qualifi ed actuaries. All actuarial losses or gains are immediately recognized in the income statement.
Different stock option and share programs allow company employees and company senior management to acquire or obtain shares of the company. The option or share exercise price equals the market price of the (underlying) shares at the date of the grant. When the options are exercised, shares are delivered to the benefi ciaries from existing own shares. In both cases, the equity is increased by the amount of the proceeds received corresponding to the exercise price. For the share programs, shares are delivered to the benefi ciaries from existing own shares.
The options and shares are typically vested at the moment of the grant and their fair value is recognized as an employee benefi t expense with a corresponding increase in equity as share based payment reserves. For the options, the expense to be recognized is calculated by an actuary, using a valuation model which takes into account all features of the stock options, the volatility of the underlying stock and an assumed exercise pattern.
As long as the options granted have not been exercised, their value is reported in the Statement of Changes in Equity as 'share based payments reserve'. The value of the options exercised during the period is transferred to 'retained earnings'.
The impact of employee benefi ts on results is booked under operating results in the income statement, except for the interest and discount rate impacts which are classifi ed under fi nancial results.
All movements in fi nancial liabilities are accounted for at trade date.
Borrowings are initially recognized as proceeds received, net of transaction costs. Subsequently they are carried at amortized cost using the effective interest rate method. Amortized cost is calculated by taking into account any issue costs, and any discount or premium on issue. Any differences between cost and redemption value are recognized in the income statement upon redemption.
Trade payables are measured at amortized cost, i.e. at the net present value of the payable amount. Unless the impact of discounting is material, the nominal value is taken.
The negative fair value of derivative fi nancial instruments is included under this heading.
Taxes on profi t or loss of the year include current and deferred tax. Such taxes are calculated in accordance with the tax regulations in effect in each country the company operates in.
Current tax is the expected tax payable on the taxable income of the year, using tax rates enacted at the end of the reporting period, and any adjustment to tax payable (or receivable) in respect of previous years.
Deferred taxes are calculated using the liability method on temporary differences arising between the tax base of assets and liabilities and their carrying amounts in the fi nancial statements. These taxes are measured using the rate prevailing at the end of the reporting period or future applicable tax rates formally announced by the government in the country the Company operates in.
Deferred tax assets are only recognized to the extent that it is probable that future taxable profi t will be available against which the temporary differences can be utilized.
Deferred tax assets and liabilities are offset and presented net only if they relate to income taxes levied by the same taxation authority on the same taxable entity.
Revenue from the sale of goods in transformation activities is recognized when signifi cant risks and rewards of ownership have been transferred to the buyer, and no signifi cant uncertainties remain regarding recovery of the consideration due, associated costs or the possible return of the goods.
Revenue from refi ning activities and services rendered is recognized by reference to the stage of completion of the transaction when this can be measured reliably.
A government grant is accounted for in the balance sheet initially as deferred income when there is reasonable assurance that it will be received and that the company will comply with the conditions attached to it. Grants are recognized in the income statement over the period necessary to match them with the costs they are intended to compensate.
The company uses derivative fi nancial and commodity instruments primarily to reduce the exposure to adverse fl uctuations in foreign exchange rates, commodity prices, interest rates and other market risks. The company uses mainly spot and forward contracts to cover the metal and currency risk, and swaps to hedge the interest rate risk. The operations carried out on the futures markets are not of a speculative nature.
Derivative fi nancial and commodity instruments are used for the protection of the fair value of underlying hedged items (assets, liabilities and fi rm commitments) and are recognized initially at fair value at trade date.
All derivative fi nancial and commodity instruments are subsequently measured at fair value at the end of the reporting period via the "Mark-to-Market" mechanism. All gains and losses are immediately recognized in the income statement - as an operating result, if commodity instruments, and as a fi nancial result in all other cases.
The hedged items (physical commitments and commercial inventory, primarily) are valued at fair value when hedge accounting can be documented according to the criteria set out in IAS 39.
In the absence of obtaining fair value hedge accounting at inception as defi ned under IAS 39, the hedged items are kept at cost and are submitted to the valuation rules applicable to similar non-hedged items, i.e. the recognition at the lower of cost or market (IAS 2) for inventories, or the recognition of provisions for onerous contracts (IAS 37) for physical commitments (see also Chapter 2.22 - IAS 39 impact).
When there is a consistent practice of trading of metals through the use of commodity contracts by a dedicated subsidiary or a CGU of the Group and by which the entity takes delivery of the underlying commodity to sell it within a short period after delivery for the purpose of generating a profi t from short-term fl uctuations in price or trading margins, the inventory is valued at fair value through the income statement and the related physical and / or commodity commitments are classifi ed as derivatives and measured at fair value through the income statement.
Derivative fi nancial and commodity instruments used for the protection of future cash fl ows are designated as hedges under cash-fl ow hedge accounting. The effective portion of changes in the fair value of hedging instruments which qualify as cash fl ow hedges are recognized in the shareholders equity as hedging reserves until the underlying forecasted or committed transactions occur (i.e. affect the income statement). At that time the recognized gains and losses on the hedging instruments are transferred from equity to the income statement.
When the underlying hedged transactions are no longer probable or the hedges become ineffective, the corresponding hedging instrument will immediately be terminated and all profi ts or losses including those which were deferred in equity, are immediately recognized in the income statement.
In the absence of obtaining cash-fl ow hedge accounting at inception as defi ned under IAS 39, then the fair value of the related hedging instruments is recognized in the income statement instead of the equity and this prior to the occurrence of the underlying forecasted or committed transactions (see also Chapter 2.22 - IAS 39 impact).
Executory contracts (the "host contract") may sometimes contain embedded derivatives. Embedded derivatives cause some or all of the cash fl ows that would otherwise be expected from the host contract, to be modifi ed according to a specifi ed interest rate, fi nancial instrument price, commodity price, foreign exchange rate, or other variable. If it is concluded that such a derivative is not closely related to the host contract, it is separated from the host contract and accounted for under the rules of IAS 39 (fair value through profi t or loss). The host contract is accounted for using the rules applicable to executory contracts, which effectively means that such a contract is not recognized in the balance sheet or profi t and loss before delivery on the contract takes place. (see also Chapter 2.22 - IAS 39 impact).
Non-recurring results relate primarily to restructuring measures, impairment of assets and other income or expenses arising from events or transactions that are clearly distinct from the ordinary activities of the company
IAS 39 effect relates to non-cash timing differences in revenue recognition due to the non-application of or non-possibility of obtaining IAS 39 hedge accounting at inception to:
Each of the Group's activities is exposed to a variety of risks, including changes in metal prices, foreign currency exchange rates, certain market-defi ned commercial conditions, and interest rates as well as credit and liquidity risks. The Group's overall risk management programme seeks to minimize the adverse effects on the fi nancial performance of the Group by hedging most of these risks through the use of fi nancial and insurance instruments.
Umicore's currency risk can be split into three distinct categories: structural, transactional and translational risks.
A portion of Umicore's revenues are structurally related to the US dollar (USD), while many of the operations are located outside the USD zone (particularly in Europe and Asia). Any change in the USD exchange rate against the Euro or other currencies which are not pegged to the USD will have an impact on the company's results. The largest portion of this currency exposure derives from USD denominated metals prices, which have an impact on the value of surplus metal recovered from materials supplied for treatment.
Umicore has a policy of hedging forward its structural currency exposure, either in conjunction with the hedging of structural metal price exposure or in isolation, when the currency exchange rates or the metal price expressed in euros are above their historical average and at a level where attractive margins can be secured.
At prevailing exchange rates at the end of 2013 and with regard to the non-metal price related structural USD exposure at the end of 2013, a strengthening of the USD by 1 US cent towards the Euro is estimated to give rise to an increase in revenues and operating result of slightly more than EUR 1 million on an annual basis. Conversely, a weakening of the dollar by 1 US cent against the Euro gives rise to a decrease of the same magnitude on an annual basis.
The sensitivity level is a short-term guide and is somewhat theoretical since the exchange rate level often impacts changes in commercial conditions negotiated in USD and elements outside Umicore's control, such as the infl uence that the dollar exchange rate may have on dollar-denominated metals prices, movements in which have an effect on Umicore's earnings (see Metal Price Risk below). To a lesser extent, there is also a sensitivity to certain other currencies such as the Brazilian real, the Korean won, the Chinese Yuan and the South African rand.
Umicore has some structural currency hedging in place relating to its non-metal-price-related currency sensitivity: Euro/NOK and USD/NOK contracts at Umicore Norway, USD/KRW contracts at Umicore Korea and Euro/ZAR at Umicore AG KG in Germany.
The company is also subject to transactional risks in respect of currencies, i.e. the risk of currency exchange rates fl uctuating between the time the price is fi xed with a customer or supplier and the time the transaction is settled. The Group's policy is to hedge the transactional risk to the maximum extent possible, primarily through forward contracts.
Umicore is an international company and has foreign operations which do not have the Euro as their functional currency. When the results and the balance sheets of these operations are consolidated into Umicore's Group accounts the translated amount is exposed to variations in the value of such local currencies against the Euro, predominantly the USD, the Brazilian real, the Korean won, the Chinese yuan and the South African rand. Umicore principally does not hedge against such risk.
Umicore's metal price risk can be split into three distinct categories: structural, transactional and inventory risks.
Umicore is exposed to structural metals-related price risks. Those risks relate mainly to the impact that metal prices have on surplus metals recovered from materials supplied for treatment or any other revenue component that fl uctuates with the metal price. Umicore's policy allows to hedge such metal price exposure if forward metal prices expressed in the functional currency of the concerned businesses are above their historical average and at a level where attractive margins can be secured. The extent to which metal price risk can be hedged depends on the liquidity of the relevant markets.
The Recycling segment recycles platinum, palladium, rhodium, gold and silver and a wide range of other base and specialty metals. In this segment the short-term sensitivity of revenues and operating profi ts to metals prices is material. However, given the variability of the raw-material feed over time and the variable duration of the supply contracts negotiated, it is not suitable to provide a fi xed sensitivity to any particular metal. In general terms, higher metals prices tend to be earnings enhancing for the Recycling business. Umicore also has a metal price sensitivity linked primarily to the revenue components that are metal price related in its other business segments (Catalysis, Energy Materials and Performance Materials), and depending the metals used in these segments. Also in these cases a higher metal price tends to carry short term benefi ts for the profi tability of each business. However, other commercial conditions which are largely independent of the metals price, such as product premiums, are also signifi cant and independent drivers of revenues and profi tability.
For some metals quoted on futures markets Umicore hedges part of its forward metal exposure. This hedging is based on documentation demonstrating a high probability of future metal price based cash fl ows originating from commercial contracts. In prior years Umicore hedged part of its forward metal exposure for 2014. In the course of 2013, as a result of increased visibility on future commercial agreements, Umicore extended such hedges to cover part of the price risks for 2014 and 2015. These contracts relate primarily to recovery of palladium, gold, silver and copper.
The Group faces transactional price risks on metals. The majority of its metal-based transactions use global metal market references, like the London Metal Exchange. If the underlying metal price were to be constant, the price Umicore pays for the metal contained in the raw materials purchased would be passed through to the customer as part of the price charged for the product. However, because of the lapse of time between the conversion of purchased raw materials into products and the sale of products, the volatility in the reference metal price creates differences between the price paid for the contained metal and the price received. Accordingly, there is a transactional exposure to any fl uctuations in price between the moment raw materials are purchased (i.e., when the metal is "priced in") and the moment the products are sold (i.e., when the metal is "priced out").
The Group's policy is to hedge the transactional risk to the maximum extent possible, primarily through forward contracts.
The group faces metal price risks on its permanently tied up metal inventories. This risk is related to the market metal price moving below the carrying value of these inventories. Umicore tends not to hedge against this risk.
The Group's exposure to changes in interest rates relates to the Group's fi nancial debt obligations. At the end of December 2013, the Group's gross fi nancial debt stood at EUR 313 million, of which 26 million at fi xed rate. In January 2013 , the Group entered in a 5-year interest rate swap fi xing the rate for an amount of EUR 150 million.
Credit risk is the risk of non-payment by any counterparty in relation to sales of goods or metal lease operations. In order to manage its credit exposure, Umicore has determined a credit policy with credit limit requests, approval procedures, continuous monitoring of the credit exposure and dunning procedure in case of delays.
The credit risk resulting from sales is, to a certain extent, covered by credit insurance, letters of credit or similar secure payment means. One global credit insurance contract has been put in place on a world-wide basis. This contract protects the group companies against insolvency, political and commercial risks with an individual deductible per invoice of 5%. The global indemnifi cation cap is set at EUR 20 million per annum.
Umicore has determined that in a certain number of cases where the cost of credit insurance is disproportionate in relation to the risk to be insured, no such global credit insurance coverage will be sought. For those businesses, characterized by a signifi cant level of customer concentration or by a specifi c and close relationship with the customers, specifi c insurance contract may be set up for a certain period.
It should be noted that some sizeable transactions, such as the sales of precious metals by Recycling, have a limited credit risk as payment before delivery is a widely accepted practice.
Regarding its risk exposure to fi nancial institutions like banks and brokers, Umicore is also establishing internal credit lines. Specifi c limits are set, per fi nancial instrument, covering the various risks to which it is exposed when transacting with such counterparties.
Liquidity risk is addressed by maintaining a suffi cient degree of diversifi cation of funding sources. These include committed and uncommitted short-term bilateral bank facilities, two medium-term syndicated bank facilities and a commercial paper programme (with a maximum amount of EUR 300 million).
The tax charge included in the fi nancial statements is the Group's best estimate of its tax liability but, until such time as audits by tax authorities are concluded, there is a degree of uncertainty regarding the fi nal tax liability for the period. The Group's policy is to submit tax returns within the statutory time limits and engage tax authorities to ensure that the Group's tax affairs are as current as possible and that any differences in the interpretation of tax legislation and regulation are resolved as quickly as possible. Given the scale and the international nature of the Group's business, VAT, sales tax and intra-Group transfer pricing are an inherent tax risk as it is for other international businesses. Changes in tax laws or in their application with respect to matters such as transfer pricing, VAT, foreign dividends, R&D tax credits and tax deductions, could increase the Group's effective tax rate and adversely affect its net results.
The Group's objectives when managing capital are to safeguard its ability to continue as a going concern, to provide returns for shareholders and benefi ts for other stakeholders, and to maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may for example adjust the amount of dividends paid to shareholders, return capital to shareholders, buy back its own shares or issue new shares.
The group monitors its capital structure primarily on the basis of the gearing ratio. The ratio is calculated as net fi nancial debt divided by the sum of net fi nancial debt and total Group equity. Net fi nancial debt is calculated as non-current fi nancial debt plus current fi nancial debt less cash and cash equivalents. The fi gures for the presented periods are detailed under the note F24 on Financial Debt.
In an ordinary course of business operating environment, the group aims for a capital structure equivalent to investment-grade credit rating status. The group could consider to temporarily exceed the equivalent level of indebtedness in the case of an extraordinary event, such as for example a major acquisition.
Umicore faces certain strategic and operational risks that are not necessarily fi nancial in nature but which have the potential to impact the fi nancial performance of the Group. These include technology risk, supply risk and the risk of product substitution by customers. Please refer to the Risk Management pages of the Corporate Governance section (page 165-168) for a description of these risks and an outline of Umicore's general approach to risk management.
Estimates and judgments used in developing and applying the consolidated entity's fi nancial statements are continually evaluated and are based on historical experience and other factors, including the expectations of future events that may have a fi nancial impact on the entity and that are believed to be reasonable under the circumstances. The resulting accounting estimates will, by defi nition, seldom equal the related actual results.
Assumptions and estimates are applied when:
The critical estimates and judgments that have a signifi cant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next fi nancial year are listed below.
The recoverable amount of each cash generating unit is determined as the higher of the asset's fair value less costs to sell and its value in use in accordance with the accounting policy. These calculations, impairment testing, require the use of estimates and assumptions such as discount rates, exchange rates, commodity prices, future capital requirements and future operating performance. Internal estimates of future business performance are based on an analysis of a combination of factors including: market growth projections, market share estimates, competitive landscape, pricing and cost evolution. Such analysis combines both internally-generated estimates and data from external sources. As at 31 December 2013, the carrying amount of the goodwill for the consolidated entity is EUR 108,475 thousand (EUR 99,348 thousand in 2012).
Provision is made for the anticipated costs of future rehabilitation of industrial sites and surrounding areas to the extent that a legal or constructive obligation exists in accordance with accounting policy 2.15. These provisions include future cost estimates associated with reclamation, plant closures, waste site closures, monitoring, demolition, decontamination, water purifi cation and permanent storage of historical residues. These future cost estimates are discounted to their present value. The calculation of these provision estimates requires assumptions such as application of environmental legislation, plant closure dates, available technologies and engineering cost estimates. A change in any of the assumptions used may have a material impact on the carrying value of rehabilitation provisions. As at 31 December 2013, the carrying amount of rehabilitation provisions is EUR 76,732 thousand (EUR 80,441 thousand in 2012).
An asset or liability in respect of defi ned benefi t plan is recognized on the balance sheet in accordance with accounting policy 2.16. The present value of a defi ned benefi t obligation is dependent upon a number of factors that are determined on an actuarial basis. The consolidated entity determines the appropriate discount rate to be used at the end of each year. The consolidated entity's employee benefi t obligations are discussed in more detail in Note F27. At 31 December 2013, a liability with respect to employee benefi t obligations of EUR 267,837 thousand was recognized (EUR 258,975 thousand in 2012).
Deferred tax assets are recognized for deductible temporary differences, unused tax losses and fair value reserves entries only if it is probable that future taxable profi ts (based on Group operational plans) are available to use those temporary differences and losses. The actual tax results in future periods may differ from the estimate made at the time the deferred taxes are recognized.
Other assumptions and estimates are disclosed in the respective notes relevant to the item where the assumptions or estimates were used for measurement.
Below is a list of the main operating companies included in the consolidated fi nancial statements.
| % interest in 2012 | % interest in 2013 | ||
|---|---|---|---|
| Argentina | Umicore Argentina S.A. | 100.00 | 100.00 |
| Australia | Umicore Australia Ltd. | 100.00 | 100.00 |
| Umicore Marketing Services Australia Pty Ltd. | 100.00 | 100.00 | |
| Austria | Oegussa GmbH | 91.29 | 91.29 |
| Belgium | Umicore Financial Services (BE 0428.179.081) | 100.00 | 100.00 |
| Umicore Marketing Services Belgium (BE 0402.964.625) | 100.00 | 100.00 | |
| Umicore Abrasives (BE 0881.426.726) | 100.00 | 100.00 | |
| Umicore Specialty Materials Brugge (BE 0405.150.984) | 100.00 | 100.00 | |
| Umicore Finance | 100.00 | 100.00 | |
| Brazil | Coimpa Industrial Ltda | 100.00 | 100.00 |
| Umicore Brasil Ltda | 100.00 | 100.00 | |
| Clarex Ltda | 100.00 | 100.00 | |
| Umicore Shokubai Brasil Ltda | 60.00 | 60.00 | |
| Canada | Umicore Canada Inc. | 100.00 | 100.00 |
| Umicore Autocat Canada Corp. | 100.00 | 100.00 | |
| Umicore Precious Metals Canada Inc, | 100.00 | 100.00 | |
| China | Umicore Hunan Fuhong Zinc Chemicals Co., Ltd. | 100.00 | 100.00 |
| Umicore Marketing Services (Shanghai) Co., Ltd. | 100.00 | 100.00 | |
| Umicore Marketing Services (Hong Kong) Ltd. | 100.00 | 100.00 | |
| Umicore Shanghai Co., Ltd. | 75.00 | 75.00 | |
| Umicore Autocat (China) Co. Ltd. | 100.00 | 100.00 | |
| Umicore Technical Materials (Suzhou) Co., Ltd. | 100.00 | 100.00 | |
| Umicore Jubo Thin Film Products (Beijing) Co., Ltd. | 100.00 | 100.00 | |
| Umicore Shokubai China Co Ltd | 60.00 | 60.00 | |
| France | Umicore France S.A.S. | 100.00 | 100.00 |
| Umicore Building Products France S.A.S | 100.00 | 100.00 | |
| Umicore Climeta S.A.S. | 100.00 | 100.00 | |
| Umicore IR Glass S.A.S. | 100.00 | 100.00 | |
| Umicore Autocat France S.A.S. | 100.00 | 100.00 | |
| Germany | Umicore AG & Co. KG (*) | 100.00 | 100.00 |
| Umicore Bausysteme GmbH | 100.00 | 100.00 | |
| Umicore Metalle & Oberfl ächen GmbH | 100.00 | 100.00 | |
| Allgemeine Gold- und Silberscheideanstalt AG | 91.21 | 91.21 | |
| Umicore Galvanotechnik GmbH | 91.21 | 91.21 | |
| Hungary | Umicore Building Products Hungary kft. | 100.00 | 100.00 |
| Italy | Umicore Building Products Italia s.r.l. | 100.00 | 100.00 |
| Italbras S.p.A. | 100.00 | 100.00 | |
| India | Umicore Autocat India Pvt Ltd | 100.00 | 100.00 |
| Japan | Umicore Japan KK | 100.00 | 100.00 |
| Umicore Shokubai Japan Co Ltd | 60.00 | 60.00 | |
| Liechtenstein | Umicore Thin Film Products AG | 100.00 | 100.00 |
| Luxemburg | Umicore International | 100.00 | 100.00 |
| Umicore Autocat Luxembourg | 100.00 | 100.00 | |
| Umicore Shokubai | 60.00 | 60.00 | |
| Malaysia | Umicore Malaysia Sdn Bhd | 100.00 | 100.00 |
| Netherlands | Schöne Edelmetaal BV | 91.21 | 91.21 |
| Umicore Nederland BV | 100.00 | 100.00 | |
| Norway | Umicore Norway AS | 100.00 | 100.00 |
| Umicore Finance Norway | 100.00 | 100.00 | |
| Philippines | Umicore Specialty Chemicals Subic Inc. | 78.20 | 78.20 |
| Umicore Annual report 2013 | ||||
|---|---|---|---|---|
| % interest in 2012 | % interest in 2013 | |||
| Polska | Umicore Building Products Polska | 100.00 | 100.00 | |
| Portugal | Umicore Portugal S.A. | 100.00 | 100.00 | |
| Umicore Marketing Services Lusitana Metais Lda | 100.00 | 100.00 | ||
| South Africa | Umicore South Africa (Pty) Ltd. | 100.00 | 100.00 | |
| Umicore Marketing Services Africa (Pty) Ltd. | 100.00 | 100.00 | ||
| Umicore Catalyst South Africa (Pty) Ltd. | 65.00 | 100.00 | ||
| South Korea | Umicore Korea Ltd. | 100.00 | 100.00 | |
| Umicore Marketing Services Korea Co., Ltd. | 100.00 | 100.00 | ||
| Umicore Materials Korea Ltd | 100.00 | 100.00 | ||
| Spain | Umicore Building Products Iberica S.L. | 100.00 | 100.00 | |
| Sweden | Umicore Autocat Sweden AB | 100.00 | 100.00 | |
| Switzerland | Umicore Strub | 100.00 | 100.00 | |
| Allgemeine Suisse SA | 91.21 | 91.21 | ||
| Taiwan | Umicore Thin Fim Products Taiwan Co Ltd | 100.00 | 100.00 | |
| Thailand United Kingdom |
Umicore Precious Metals Thailand Ltd Umicore Coating Services Ltd. |
100.00 | 91.21 | 91.21 100.00 |
| Umicore Marketing Services UK Ltd | 100.00 | 100.00 | ||
| USA | Umicore USA Inc. | 100.00 | 100.00 | |
| Umicore Autocat USA Inc. | 100.00 | 100.00 | ||
| Umicore Building Products USA Inc. | 100.00 | 100.00 | ||
| Umicore Precious Metals NJ LLC | 100.00 | 100.00 | ||
| Umicore Precious Metal Chemistry USA LLC | 100.00 | 100.00 | ||
| Umicore Marketing Services USA Inc. | 100.00 | 100.00 | ||
| Umicore Optical Materials USA Inc. | 100,00 | 100,00 | ||
| Umicore Shokubai USA Inc, | 60,00 | 100,00 | ||
| Umicore Technical Materials North America | 100,00 | 100,00 | ||
| An exhaustive list of the Group companies with their registered offi ces will be fi led with the Belgian National Bank together with the consolidated fi nancial statements. (*) As a result of the integration of Umicore AG & Co. KG in the consolidated accounts of Umicore which is compliant with the Section 325 of the German Commercial Code (HGB), this company is exempted from issuing consolidated fi nancial statements according to Article 264b of the German Commercial Code. F6 Foreign currency measurement For the main currencies applicable within the Group's consolidated entities and investments, the prevailing rates used for translation into the Group's presentation currency (EUR), are as set out below. All subsidiaries, associates and joint-ventures have as functional currency the currency of the country in which they operate, except for Element Six Abrasives (Ireland) where the functional currency is the US dollar. |
||||
| Closing rates | Average rates | |||
| 2012 | 2013 | 2012 | 2013 | |
| American Dollar UK Pound Sterling |
USD 1.319 GBP 0.816 |
1.379 0.834 |
1.285 0.811 |
1.328 0.849 |
| Canadian Dollar | CAD 1.314 |
1.467 | 1.284 | 1.368 |
| Swiss Franc | CHF 1.207 |
1.228 | 1.205 | 1.231 |
| Japanese Yen | JPY 113.610 |
144.720 | 102.492 | 129.663 |
| Brazilian Real | BRL 2.696 |
3.231 | 2.511 | 2.866 |
| South African Rand | ZAR 11.173 |
14.566 | 10.551 | 12.833 |
| Chinese Yuan | CNY 8.221 |
8.349 | 8.105 | 8.165 |
| Thai Baht | THB 40.347 |
45.178 | 39.928 | 40.830 |
| Korean Won (100) | KRW 14.062 |
14.509 | 14.477 | 14.539 |
| Closing rates | Average rates | |||||
|---|---|---|---|---|---|---|
| 2012 | 2013 | 2012 | 2013 | |||
| American Dollar | USD | 1.319 | 1.379 | 1.285 | 1.328 | |
| UK Pound Sterling | GBP | 0.816 | 0.834 | 0.811 | 0.849 | |
| Canadian Dollar | CAD | 1.314 | 1.467 | 1.284 | 1.368 | |
| Swiss Franc | CHF | 1.207 | 1.228 | 1.205 | 1.231 | |
| Japanese Yen | JPY | 113.610 | 144.720 | 102.492 | 129.663 | |
| Brazilian Real | BRL | 2.696 | 3.231 | 2.511 | 2.866 | |
| South African Rand | ZAR | 11.173 | 14.566 | 10.551 | 12.833 | |
| Chinese Yuan | CNY | 8.221 | 8.349 | 8.105 | 8.165 | |
| Thai Baht | THB | 40.347 | 45.178 | 39.928 | 40.830 | |
BUSINESS GROUP INFORMATION 2012
(EUR thousand) Note Catalysis Energy Materials Performance Materials Recycling Corporate & Unallocated Eliminations Total Total segment turnover 1,871,884 763,694 1,508,441 9,589,561 28,797 (1,214,361) 12,548,014 External turnover 1,845,081 757,176 1,348,793 8,568,167 28,797 12,548,014 Inter-segment turnover 26,802 6,518 159,648 1,021,393 (1,214,361) 0 Total segment revenues 866,147 366,413 523,248 681,257 (9,500) 2,427,565 External revenues 865,347 366,413 523,248 672,557 2,427,565 Inter-segment revenues 800 8,700 (9,500) 0 Operating result F9 73,980 (15,505) 46,517 251,791 (50,403) 306,379 Recurring operating result 80,410 13,994 44,580 258,775 (47,905) 349,854 Non-recurring operating result (5,704) (29,975) 1,223 (7,859) (2,498) (44,813) IAS 39 effect (726) 476 714 875 0 1,339 Equity method companies F9 9,850 4,202 10,600 (2,433) 22,219 Recurring 10,546 4,202 9,930 (2,435) 22,243 Non-recurring (8) (1,834) 1 (1,841) IAS 39 effect (688) 2,504 1 1,817 EBIT F9 83,830 (11,303) 57,117 251,791 (52,836) 328,599 Recurring EBIT 90,956 18,196 54,510 258,775 (50,340) 372,097 Non-recurring EBIT (5,712) (29,975) (611) (7,859) (2,497) (46,654) IAS 39 effect on EBIT (1,414) 476 3,218 875 1 3,156 Depreciation and amortization F9 33,442 32,378 28,431 47,398 10,310 151,959 EBITDA F9 117,272 21,075 85,548 299,189 (42,526) 0 480,558 Recurring EBITDA 124,398 50,574 82,941 306,173 (40,030) 0 524,056 Consolidated total assets 1,201,072 765,669 802,992 945,081 441,704 (488,619) 3,667,899 Segment assets 1,153,830 731,683 677,105 945,081 429,896 (488,619) 3,448,976 Investments in associates 47,242 33,986 125,887 11,808 218,923 Consolidated total liabilities 415,472 285,383 244,936 616,138 2,594,588 (488,619) 3,667,899 Capital Employed at 31/12 of previous year F31 768,242 457,434 571,967 321,426 49,754 2,168,823 Capital Employed at 30/06 F31 813,419 483,506 602,240 264,060 71,636 2,234,861 Capital Employed at 31/12 F31 795,496 476,273 572,949 327,338 87,341 2,259,397 Average Capital Employed in fi rst half year F31 790,831 470,470 587,104 292,743 60,695 2,201,842 Average Capital Employed in second half year F31 804,458 479,890 587,595 295,699 79,489 2,247,129 Average Capital Employed in the year F31 797,644 475,180 587,349 294,221 70,092 2,224,486 ROCE F31 11.40% 3.83% 9.28% 87.95% (71.82)% 16.73% Capital expenditure F34 75,672 52,780 29,328 67,785 10,180 235,745 Total R&D expenditure F9 85,778 15,830 11,878 18,616 16,920 149,023 R&D recognised in operating expenses F9 72,663 11,232 11,878 18,616 16,920 131,309 R&D capitalised as intangible assets F34 13,115 4,598 17,713
| Umicore Annual report 2013 | ||||||||
|---|---|---|---|---|---|---|---|---|
| BUSINESS GROUP INFORMATION 2013 | ||||||||
| Energy | Performance | Corporate & | (EUR thousand) | |||||
| Note | Catalysis | Materials | Materials | Recycling | Unallocated | Eliminations | Total | |
| Total segment turnover | 2,020,189 | 825,732 | 1,388,441 | 6,663,286 | 33,020 | (1,111,413) | 9,819,255 | |
| External turnover | 1,990,567 | 820,108 | 1,256,605 | 5,718,955 | 33,020 | 9,819,255 | ||
| Inter-segment turnover | 29,622 | 5,624 | 131,836 | 944,330 | 0 | (1,111,413) | 0 | |
| Total segment revenues | 893,530 | 402,587 | 509,736 | 590,210 | 0 | (6,050) | 2,390,013 | |
| External revenues | 892,800 | 402,587 | 509,736 | 584,890 | 0 | 2,390,013 | ||
| Inter-segment revenues | 730 | 5,320 | (6,050) | 0 | ||||
| Operating result | F9 | 70,728 | 18,662 | 28,598 | 200,042 | (57,503) | 260,527 | |
| Recurring operating result | 70,800 | 22,028 | 45,602 | 199,552 | (45,848) | 292,134 | ||
| Non-recurring operating result | (324) | (3,569) | (16,832) | 1,767 | (11,655) | (30,613) | ||
| IAS 39 effect | 252 | 203 | (172) | (1,277) | 0 | (994) | ||
| Equity method companies | F9 | 2,962 | 2,702 | (3,709) | 0 | (2,467) | (512) | |
| Recurring | 2,534 | 2,702 | 9,064 | 0 | (2,467) | 11,833 | ||
| Non-recurring | (49) | 0 | (12,773) | 0 | 0 | (12,822) | ||
| IAS 39 effect | 477 | 0 | 0 | 0 | 0 | 477 | ||
| EBIT | F9 | 73,690 | 21,364 | 24,889 | 200,042 | (59,970) | 0 | 260,015 |
| Recurring EBIT | 73,334 | 24,730 | 54,666 | 199,552 | (48,315) | 0 | 303,967 | |
| Non-recurring EBIT | (373) | (3,569) | (29,605) | 1,767 | (11,655) | 0 | (43,435) | |
| IAS 39 effect on EBIT | 729 | 203 | (172) | (1,277) | 0 | 0 | (517) | |
| Depreciation and amortization | F9 | 39,427 | 30,452 | 28,702 | 49,122 | 10,919 | 158,622 | |
| EBITDA | F9 | 113,117 | 51,816 | 53,591 | 249,164 | (49,051) | 0 | 418,637 |
| Recurring EBITDA | 112,761 | 55,182 | 83,368 | 248,674 | (37,396) | 0 | 462,589 | |
| Consolidated total assets | 1,172,091 | 798,157 | 683,405 | 907,787 | 407,927 | (457,070) | 3,512,297 | |
| Segment assets | 1,118,681 | 764,139 | 571,945 | 907,787 | 405,362 | (457,070) | 3,310,843 | |
| Investments in associates | 53,410 | 34,018 | 111,460 | 0 | 2,565 | 0 | 201,454 | |
| Consolidated total liabilities | 396,070 | 332,953 | 210,786 | 517,347 | 2,512,211 | (457,070) | 3,512,297 | |
| Capital Employed at 31/12 of previous year |
F31 | 795,496 | 476,273 | 572,949 | 327,338 | 87,341 | 2,259,397 | |
| Capital Employed at 30/06 | F31 | 806,703 | 479,141 | 572,031 | 323,290 | 54,939 | 2,236,103 | |
| Capital Employed at 31/12 | F31 | 809,472 | 470,175 | 504,834 | 397,161 | 51,926 | 2,233,568 | |
| Average Capital Employed in fi rst half year |
F31 | 801,100 | 477,707 | 572,490 | 325,314 | 71,140 | 2,247,750 | |
| Average Capital Employed in second half year |
F31 | 808,088 | 474,658 | 538,433 | 360,226 | 53,433 | 2,234,836 | |
| Average Capital Employed in the year |
F31 | 804,594 | 476,183 | 555,461 | 342,770 | 62,286 | 2,241,293 | |
| ROCE | F31 | 9.11% | 5.19% | 9.84% | 58.22% | (77.57)% | 13.56% | |
| Capital expenditure | F34 | 84,423 | 64,283 | 29,432 | 87,015 | 14,440 | 279,614 | |
| Total R&D expenditure | F9 | 81,991 | 16,150 | 10,780 | 18,379 | 13,249 | 140,549 | |
| R&D recognised in operating expenses |
F9 | 71,565 | 13,047 | 10,741 | 18,379 | 12,722 | 126,453 | |
| R&D capitalised as intangible assets |
F34 | 10,427 | 3,103 | 39 | 0 | 527 | 14,096 |
| (EUR thousand) | ||||||||
|---|---|---|---|---|---|---|---|---|
| Note | Europe | of which Belgium |
Asia Pacifi c |
North America |
South America |
Africa | Total | |
| Total segment turnover | 9,463,047 | 332,547 | 1,170,643 | 1,282,130 | 424,937 | 207,257 | 12,548,014 | |
| Total non current assets | 948,379 | 541,625 | 255,944 | 106,141 | 19,193 | 14,095 | 1,343,752 | |
| Capital expenditure | F34 | 142,558 | 80,977 | 63,167 | 17,594 | 11,656 | 770 | 235,745 |
| (EUR thousand) | ||||||||
|---|---|---|---|---|---|---|---|---|
| of which | Asia | North | South | |||||
| Note | Europe | Belgium | Pacifi c | America | America | Africa | Total | |
| Total segment turnover | 6,881,672 | 258,911 | 1,450,249 | 949,677 | 383,466 | 154,191 | 9,819,255 | |
| Total non current assets | 905,679 | 415,162 | 325,828 | 137,207 | 56,156 | 9,188 | 1,434,060 | |
| Capital expenditure | F34 | 167,116 | 106,598 | 84,880 | 17,053 | 9,527 | 1,039 | 279,614 |
Segment information is presented in respect of the Group's business segments as defi ned below.
The segment results, assets and liabilities include items directly attributable to the segment as well as those elements that can reasonably be allocated to a segment.
The pricing of inter-segment sales is based on an arm's length transfer pricing system. In the absence of relevant market price references, 'cost plus' mechanisms are used. Segment turnover and revenue is taking into account intragroup operations. Those are mainly related to recycling services and sales of refi ned metal from the recycling segment to the other group segments and are important to assess the performance of the segments concerned.
Since these transactions cannot be considered as external operations, they are eliminated at the group level, to present a net view.
The Group is organized into the following reporting segments:
The segment comprises the Automotive Catalysts and Precious Metals Chemistry business units. Their activities centre on the development and production of catalyst formulations and systems that are used to abate emissions from combustion engines, as well as in chemical and life science applications. This segment includes the joint-venture Ordeg.
The segment comprises the Cobalt & Specialty Materials, Electro-Optic Materials, Rechargeable Battery Materials and Thin Film Products business units. These units develop and produce materials that are primarily used in energy storage (rechargeable batteries) and the production of clean energy. The refi ning of metals used in these applications and coming from secondary sources belongs to the scope of activity of these units. This segment includes the associates beLife, beLIfe Intermediates, Ganzhou Yi Hao Umicore Industries, Jiangmen Chancsun Umicore Industry and Todini.
The segment comprises the Building Products, Electroplating, Platinum Engineered Materials, Technical Materials and Zinc Chemicals business units. These units develop and produce functional materials that are used in decorative, electronic, electrical, high purity glass and construction applications, mainly. The Zinc Chemicals business unit also recycles secondary zinc products to secure part of its supply requirements. The segment also includes Umicore's shareholding in Element Six Abrasives, in Rezinal and IEQSA.
The segment consists of the business units Precious Metals Refi ning, Jewellery & Industrial Metals, Precious Metals Management and Battery Recycling. Their activities focus on the recycling of end-of-life products and the refi ning of industrial residues which contain precious and special metals.
Corporate covers corporate activities, shared operational functions and the Group's Research, Development & Innovation unit, which includes the Fuel Cells development program. This fuel cells activity includes the joint ventures Solvicore GmbH and Solvicore Management GmbH.
This disclosure only refers to continuing operations except for the balance sheet fi gures. In the secondary segment information, the fi gures presented as non current assets exclude the amounts for long term investments, non-current loans granted, non-current receivables, deferred tax assets and assets for employee benefi ts as required by IFRS 8. Performance of the segments is reviewed by the chief operating decision maker based on the recurring EBIT/ operating result. As illustrated in the table above, the difference between the recurring operating result and the operating result as presented in the Income Statement consists in the non-recurring operating result and the IAS 39 effect for which defi nitions are given in the glossary.
Umicore has revised its defi nition of capital expenditures in 2013 and capital expenditures now exclude capitalized R&D costs (refer to Umicore defi nition in the Glossary). The 2012 fi gures have been restated accordingly.
Moreover, as from 2013, Umicore has decided to deduct R&D income such as research grants that are received from third parties from its reported R&D expenditures and to exclude R&D from associates. Umicore has also applied the internationally recognized Frascati Manual defi nitions for defi ning R&D expenditures. The R&D expenditure fi gures for 2012 have been restated accordingly.
Associate companies are allocated to the business group with the closest fi t from a market segment perspective.
| (EUR thousand) | |
|---|---|
| Notes | Fair value |
| Non Current Assets | 5,733 |
| Current Assets | 9,335 |
| Non Current Liabilities | 2,258 |
| Current Liabilities | 8,572 |
| Net assets acquired | 4,238 |
| Goodwill F15 |
18,071 |
| Purchase price | 22,307 |
| Net cash & cash equivalent acquired | 336 |
| Net cash out for acquistion of subsidiaries | 21,972 |
Umicore acquired on 30th December 2013 Palm Commodities International, a leading manufacturer and distributor of materials to the surface treatment industry in North America. Palm Commodities, based in Nashville (USA) transforms nickel and cobalt into plating chemicals and provides an extended customer portfolio, excellence in logistics support and customer service. Palm Commodities is integrated in the Cobalt and Specialty Materials business unit and will enable Umicore to expand its reach into the important North American plating market where customers serve a variety of industries including automotive, construction and electronics.
| Umicore Annual report 2013 | |||
|---|---|---|---|
| F9 Result from operating activities | |||
| OPERATING INCOME AND EXPENSES | (EUR thousand) | ||
| 2012 | 2013 | ||
| Sales | 12,476,292 | 9,717,176 | |
| Services | 71,722 | 102,079 | |
| Turnover (1) | 12,548,014 | 9,819,255 | |
| Other operating income (2) | 62,670 | 76,232 | |
| OPERATING INCOME | 12,610,684 | 9,895,487 | |
| Raw materials and consumables used (3) | (10,996,184) | (8,344,694) | |
| Payroll and related benefi ts | (717,025) | (707,151) | |
| Depreciation of fi xed assets | (151,959) | (158,622) | |
| Impairment loss on fi xed assets | (29,856) | (11,392) | |
| Inventory and bad debt provisions | 119 | 151 | |
| Depreciation and impairment results (4) | (181,696) | (169,862) | |
| Services and outsourced refi ning and production costs Royalties, licence fees, consulting and commissions |
(396,188) (24,314) |
(380,095) (23,665) |
|
| Other operating expenses | (3,230) | (4,878) | |
| Increase and decrease in provisions | (2,980) | (20,820) | |
| Use of provisions | 20,269 | 21,217 | |
| Capital losses on disposal of assets | (3,945) | (2,938) | |
| Other operating expenses (5) | (410,388) | (411,179) | |
| OPERATING EXPENSES | (12,305,293) | (9,632,886) | |
| 1) Services mainly include the revenues from tolling contracts. | |||
| 2) Other operating income mainly include re-invoicing of costs to third parties (EUR 37.1 million), operating grants (EUR 5.3 million), royalties and licence fees for EUR 4.2 million, EUR 3.6 million linked to emission rights, EUR 2.5 million for insurance recovery, EUR 4.3 milllion for assets' sales and EUR 1.4 million for tax recovery fi les. |
|||
| 3) Raw materials and consumables used include water, gas and electricity for EUR 91.2 million in 2013 (EUR 80.8 million in 2012). | |||
| 4) Impairments of fi xed assets have been taken and transferred in non-recurring result. Those are mainly related to production footprint adjustments. | |||
| 5) Taxes other than income taxes included in other operating expenses amount to EUR 17.1 million (EUR 16.0 million in 2012). | |||
| R&D EXPENDITURE | (EUR thousand) | ||
| Note | 2012 | 2013 | |
| R&D recognised in Other operating expenses | 131,309 | 126,453 | |
| R&D capitalised as intangible assets | F14 | 17,713 | 14,096 |
| Total R&D expenditure | 149,023 | 140,549 |
| R&D EXPENDITURE | (EUR thousand) | ||
|---|---|---|---|
| Note | 2012 | 2013 | |
| R&D recognised in Other operating expenses | 131,309 | 126,453 | |
| R&D capitalised as intangible assets | F14 | 17,713 | 14,096 |
Total R&D expenditure was EUR 140.6 million in the fully consolidated companies. The part of the R&D expenditures that are going directly through the other operating expenses amounts for EUR 126.4 million.
From 2013, Umicore has decided to deduct R&D income such as research grants that are received from third parties from its reported R&D expenditures and to exclude R&D from associates. Umicore has also applied the internationally recognized Frascati Manual defi nitions for defi ning R&D expenditures. The R&D expenditure fi gures for 2012 have been restated accordingly.
| IAS 39 | ||||||||
|---|---|---|---|---|---|---|---|---|
| effect | ||||||||
| 12,548,014 | 12,548,014 | 9,819,256 | 9,819,194 | 61 | 0 | |||
| 62,670 | 61,071 | 1,861 | (262) | 76,232 | 74,555 | 423 | 1,254 | |
| 12,610,685 | 12,609,086 | 1,861 | (262) | 9,895,487 | 9,893,749 | 484 | 1,254 | |
| (10,996,184) | (10,985,023) | (3,116) | (8,045) | (8,344,695) | (8,342,134) | (168) | (2,394) | |
| (717,025) | (711,950) | (5,074) | 0 | (707,151) | (702,921) | (4,230) | 0 | |
| (181,696) | (160,775) | (24,986) | 4,065 | (169,862) | (165,476) | (5,423) | 1,037 | |
| (151,959) | (151,959) | (158,622) | (158,622) | 0 | 0 | |||
| (891) | ||||||||
| (12,305,293) | (12,260,220) | (46,674) | 1,600 | (9,632,887) | (9,602,222) | (28,417) | (2,248) | |
| 988 | 988 | (2,074) | 606 | (2,680) | 0 | |||
| 306,379 | 349,854 | (44,813) | 1,339 | 260,526 | 292,133 | (30,613) | (994) | |
| 22,218 | 22,243 | (1,841) | 1,817 | (511) | 11,833 | (12,822) | 477 | |
| 328,598 | 372,097 | (46,654) | 3,155 | 260,016 | 303,967 | (43,435) | (517) | |
| 480,556 | 524,055 | (46,654) | 3,155 | 418,638 | 462,589 | (43,435) | (517) | |
| F11 | (31,004) | (23,388) | 0 | (7,616) | (22,851) | (22,823) | 0 | (28) |
| F13 | (59,688) | (67,325) | 5,418 | 2,219 | (52,386) | (57,413) | 4,728 | 299 |
| 237,906 | 281,383 | (41,237) | (2,242) | 184,778 | 223,731 | (38,707) | (246) | |
| 4,461 | 6,148 | (1,733) | 46 | 5,749 | 5,689 | 158 | (99) | |
| 233,444 | 275,235 | (39,504) | (2,288) | 179,029 | 218,042 | (38,865) | (148) | |
| Note | 2012 Total (410,388) |
Recurring (402,471) |
Non recurring (13,497) |
IAS 39 effect 5,580 |
Total (411,179) |
2013 Recurring (391,692) |
Non recurring (18,595) |
Non-recurring items had a negative impact of EUR 43.4 million on EBIT. Restructuring charges accounted for EUR 30.6 million, the majority of which relates to the closure of Element Six Abrasives' plant in China, impairments of assets at the Element Six Abrasives' plant in South Africa, the closure of Zinc Chemicals' plant in Melbourne, Australia, as well as the implementation of cost reduction measures in Building Products. It also includes some impairments on the Pangaea shares under the line "Income from other fi nancial investments".
Umicore also booked environmental provisions of EUR 7.7 million related to the remediation of historical pollution on site surroundings. Impairments on permanently tied-up metal inventories, resulting from lower metal prices, accounted for EUR 1.5 million. The impact of non-recurring charges on the net result (Group share) amounted to EUR 38.9 million.
IAS 39 accounting rules had a negative effect of EUR -0.5 million on EBIT and a negative impact of EUR -0.2 million on the net result (Group share). These impacts concerns timing differences imposed by IFRS that relate primarily to transactional and structural metal and currency hedges. All IAS 39 impacts are non-cash in nature.
| Umicore Annual report 2013 | ||
|---|---|---|
| F10 Payroll and related benefi ts | ||
| PAYROLL AND RELATED BENEFITS | (EUR thousand) | |
| 2012 | 2013 | |
| Wages, salaries and direct social advantages | (524,350) | (515,260) |
| Other charges for personnel | (25,783) | (28,311) |
| Temporary staff | (10,435) | (11,867) |
| Share-based payments | (5,325) | (4,337) |
| Employee salaries | (565,893) | (559,775) |
| Employer's social security | (112,743) | (113,794) |
| Defi ned benefi t contributions | (14,438) | (11,411) |
| Contribution to defi ned contribution plan | (13,696) | (16,712) |
| Employer's voluntary contributions (other) | (5,526) | (3,662) |
| Pensions paid directly to benefi ciaries | (5,000) | (4,220) |
| Provisions for employee benefi ts (-increase / + use and reversals) | 272 | 2,420 |
| Pensions and other benefi ts | (38,388) | (33,585) |
| PAYROLL AND RELATED BENEFITS | (717,025) | (707,151) |
| AVERAGE HEADCOUNT IN CONSOLIDATED COMPANIES | ||
| 2012 | 2013 | |
| Executives and managerial staff | 1,872 | 1,901 |
| Non managers Total |
8,409 10,281 |
8,392 10,293 |
| 2012 | 2013 | |
|---|---|---|
| Executives and managerial staff | 1,872 | 1,901 |
| Non managers | 8,409 | 8,392 |
| SHARE-BASED PAYMENTS | (EUR thousand) | ||
|---|---|---|---|
| Notes | 2012 | 2013 | |
| Number of stock options granted | F28 | 603,375 | 589,250 |
| Valuation model | Present Economic Value | ||
| Assumed volatility (% pa) | 30.00 | 25.00 | |
| Risk-free interest rate (% pa) | 1.40 | 0.83 | |
| Dividend increase (% pa) | 0.10 | 0.10 | |
| Rate of pre-vesting forfeiture (%pa) | NA | NA | |
| Rate of post-vesting leaving (%pa) | 10.00 | 10.00 | |
| Minimum gain threshold (% pa) | 30.00 | 30.00 | |
| Proportion who exercise given minimum gain achieved (% pa) | 100.00 | 100.00 | |
| Fair value per granted instrument determined at the grant date (EUR) | 7.36 | 5.80 | |
| Total fair value of options granted | 4,439 | 3,416 | |
| 2,900 shares granted at 36.725 EUR | 107 | ||
| 19,000 shares granted at 36.36 EUR | 691 | ||
| 3,400 shares granted at 36.185 EUR | 123 | ||
| 2,700 shares granted at 37.51 EUR | 101 | ||
| 21,750 shares granted at 36.07 EUR | 785 | ||
| Total fair value of shares granted | 886 | 920 | |
| SHARE-BASED PAYMENTS | 5,325 | 4,337 |
The Group recognized a share-based payment expense of EUR 4,337 thousand during the year.
The part of this expense related to stock options is calculated by an external actuary using the Present Economic Value model which takes into account all features of the stock option plans and the volatility of the underlying stock. This volatility has been determined using the historical volatility of the Group shareholders' return over different averaging periods and different terms. No other market condition has been included on the basis of calculation of fair market value.
The free share part of the expense is valued at the market price of the shares at the grant date. In 2013, shares have been granted to top management resulting in an extra charge of EUR 920 thousand.
The cash discounts that the authorities give back to Umicore Belgium on the social security contributions, relating to incentives regarding a.o. shift premiums, overtime and R&D are disclosed under the item "Employer's social security".
| (EUR thousand) | ||
|---|---|---|
| 2012 | 2013 | |
| Interest income | 2,903 | 4,004 |
| Interest expenses | (9,006) | (6,613) |
| Discounting of non-current provisions | (10,937) | (8,601) |
| Foreign exchange gains and losses | (10,345) | (8,131) |
| Other fi nancial income | 385 | 328 |
| Other fi nancial expenses | (4,004) | (3,838) |
| Total | (31,004) | (22,851) |
The net interest charge in 2013 totaled EUR 2,609 thousand. This has decreased compared with the EUR 6,103 thousand of 2012, mainly because of a decreasing average weighted interest rate.
The discounting of non-current provisions relates mainly to employee benefi ts and, to a lesser extent to environmental provisions. This amount is infl uenced by the present value of these liabilities, which in turn is infl uenced by changes in the discount rate, by the cash-out profi le and by the recognition of new non-current liabilities. Most of the discounting results in 2013 are booked in Belgium, Germany and France.
Foreign exchange results include realized exchange results and the unrealized translation adjustments on monetary items using the closing rate of the period.
They also include fair value gains and losses on other currency fi nancial instruments (see Note F33).
Other fi nancial expenses include payment discounts, bank expenses and other fi nancial fees incurred.
| (EUR thousand) | ||
|---|---|---|
| 2012 | 2013 | |
| Capital gains and losses on disposal of fi nancial investments | (499) | 964 |
| Dividend income | 913 | 918 |
| Interest income from fi nancial assets | 43 | 9 |
| Impairment results on fi nancial investments | 531 | (3,965) |
| Total | 988 | (2,074) |
The impairment results on fi nancial investments mainly includes some impairments on the Pangaea shares.
| Umicore Annual report 2013 | ||
|---|---|---|
| F13 Income taxes | ||
| (EUR thousand) | ||
| 2012 | 2013 | |
| INCOME TAX EXPENSE | ||
| Recognized in the income statement | ||
| Current income tax | (58,734) | (63,490) |
| Deferred income tax | (954) | 11,104 |
| Total tax expense | (59,688) | (52,386) |
| RELATIONSHIP BETWEEN TAX EXPENSE (INCOME) AND ACCOUNTING PROFIT | ||
| Result from operating activities | 306,379 | 260,526 |
| Financial result | (31,004) | (22,851) |
| Profi t (loss) before income tax of consolidated companies | 275,375 | 237,676 |
| Weighted average theoretical tax rate (%) | (29.86) | (30.33) |
| Income tax calculated at the weighted average theoretical tax rate | (82,214) | (72,077) |
| Tax effect of | ||
| Expenses not deductible for tax purposes | (12,917) | (11,825) |
| Tax-exempted revenues | 1,371 | 5,134 |
| Tax-exempt dividends from consolidates companies & Associates | (1,116) | (331) |
| Gains & Losses taxed at a reduced rate | 0 | |
| Tax incentives deductible from the taxable base | 31,956 | 31,723 |
| Tax computed on other basis | (1,100) | (886) |
| Utilisation of previously unrecognised tax losses | 32,769 | 12,350 |
| Write down (or rev. of prev. write down) of DTA | (15,376) | (11,019) |
| Change in applicable tax rate | (65) | 484 |
| Tax holidays | 1,404 | 1,068 |
| Other tax credits (excluding R&D tax credits) | 230 | 1,137 |
| Non recoverable foreign withholding taxes | (6,831) | (5,023) |
| Previous years adjustments | (1,363) | (7,038) |
| Other | (6,436) | 3,916 |
| Tax expense at the effective tax rate for the year | (59,688) | (52,386) |
The weighted average theoretical tax rate evolved from 29.86% in 2012 to 30.33% in 2013.
Excluding the impact of non-recurring items and the IAS 39 effect, the recurring effective tax rate for 2013 is 21.3%. This is slightly higher than the level of 2012 and includes the effect from the change in the geographical earnings mix. The rate is infl uenced by the net positive impact of tax assets.
(EUR thousand) Development expenses capitalised Concessions, patents, licences, etc. Software CO2 emission rights Other intangible assets Total At the beginning of previous year Gross value 41,793 12,899 112,930 8,845 7,504 183,971 Accumulated amortization (2,585) (10,047) (76,838) (3,842) (5,586) (98,898) Net book value at the beginning of previous year 39,208 2,852 36,092 5,003 1,919 85,074 . acquisition through business combinations 2 2 5 . additions 17,414 19 1,506 6,748 25,688 . disposals (640) (17) 0 (2,257) (2,914) . amortization charged (included in "Depreciation and impairments") (5,585) (331) (8,557) (104) (14,577) . impairment losses recognized (included in "Depreciation and impairments") (401) (1,899) (2,300) . reversal of impairment losses (included in "Depreciation and impairments") 25 321 346 . emission rights allowances 2,419 2,419 . translation differences (229) (21) (376) (11) (636) . other movements 640 9,222 (1,408) 8,453 At the end of previous year 50,407 2,521 37,898 5,843 4,887 101,557 Gross value 58,959 12,889 122,068 9,522 10,568 214,006 Accumulated amortization (8,552) (10,368) (84,169) (3,679) (5,684) (112,452) Net book value at the end of previous year 50,407 2,521 37,898 5,843 4,884 101,554 . acquisition through business combinations 2,861 2,861 . additions 14,096 11 5,673 2,617 4,291 26,689 . disposals 0 0 0 (64) (64) . amortization charged (included in "Depreciation and impairments") (9,869) (446) (8,746) (99) (19,159) . impairment losses recognized (included in "Depreciation and impairments") (859) 0 (34) (549) 0 (1,442) . reversal of impairment losses (included in "Depreciation and impairments") 0 0 (569) 0 (569) . emission rights allowances 1,574 1,574 . translation differences (676) (36) (688) 0 (172) (1,572) . other movements 716 0 1,101 0 (1,917) (100) At the end of the year 53,816 2,050 35,205 8,916 9,787 109,775 Gross value 72,853 12,792 126,578 11,325 15,559 239,108 Accumulated amortization (19,037) (10,742) (91,373) (2,409) (5,772) (129,333) Net book value 53,816 2,050 35,205 8,916 9,787 109,775
"Additions" are mainly explained by capitalized expenses in new information systems and internally generated developments. EUR 15.9 million are linked to own productions, of which EUR 12.5 million are development expenses.
The other intangibles mainly include the customer portfolio acquired in Palm Commodities International and additions in R&D and information systems under construction.
The line 'other movements' mainly includes the transfer between intangible assets in progress (included under "other intangible assets") and the other categories of intangible assets.
There are no pledges on, or restrictions to, the title on intangible assets, other than disclosed in note F35.
| Umicore Annual report 2013 | |||||
|---|---|---|---|---|---|
| F15 Goodwill | |||||
| (EUR thousand) | |||||
| 31/12/2012 | 31/12/2013 | ||||
| At the end of the previous year | |||||
| Gross value | 100,273 | 101,353 | |||
| Accumulated impairment losses | (2,044) | (2,005) | |||
| Net book value at the end of previous year | 98,229 | 99,348 | |||
| . aquisition through business combinations | 993 | 18,071 | |||
| . impairment losses (included in "Depreciation and impairment results") | 0 | (5,958) | |||
| . translation differences | 127 | (2,986) | |||
| . other movements | |||||
| At the end of the year Gross value |
99,348 101,353 |
108,475 115,788 |
|||
| Accumulated impairment losses | (2,005) | (7,313) | |||
| Net book value | 99,348 | 108,475 | |||
| This table includes goodwill related to fully consolidated companies only. Goodwill relating to companies accounted for by the equity method is detailed in note F17. |
|||||
| The change of the period relates to the new goodwill linked to the acquisition of Palm Commodities International (disclosed in Note F8), to impairments in entities in Australia, France and China and to exchange differences. |
|||||
| The goodwill has been allocated to the primary segments as follows: | |||||
| (EUR thousand) | |||||
| Energy | Performance | ||||
| Catalysis | Materials | Materials | Recycling | Total | |
| 31/12/2012 | 37,238 | 27,650 | 16,038 | 18,421 | 99,348 |
| 31/12/2013 | 37,062 | 44,185 | 8,922 | 18,306 | 108,475 |
| (EUR thousand) | |||||
|---|---|---|---|---|---|
| Catalysis | Energy Materials |
Performance Materials |
Recycling | Total | |
| 31/12/2012 | 37,238 | 27,650 | 16,038 | 18,421 | 99,348 |
Management tests annually whether goodwill has suffered any impairment in accordance with the accounting policy stated in note F2. The recoverable amounts of cash-generating units to which goodwill is allocated have been determined based on value-in-use calculations by means of discounted cashfl ow modeling on the basis of the Group's operational plans which typically look forward 5 years. On macro economic indicators such as currency and metal prices, the testing uses typically prevailing market conditions. The 2013 modeling used an average tax rate of 25% (25% in 2012) and a weighted average cost of capital post-tax of 8.5% (same as in 2012) in line with prevailing expectations on effective tax rate and capital structure. Terminal values were determined on the basis of a perpetual growth rate of on average 2% (same as in 2012). Infl ation rates are based on guidance coming from national and international institutes like the NBB or ECB.
Land and buildings Plant, machinery and equipment Furniture and vehicles Other tangible assets Construction in progress and advance payments Total At the beginning of previous year Gross value 640,870 1,396,322 184,475 28,414 94,655 2,344,736 Accumulated depreciation (338,169) (991,926) (126,055) (24,250) (1,480,400) Net book value at the beginning of previous year 302,701 404,396 58,420 4,164 94,655 864,336 . aquisition through business combinations 42 6,898 569 128 7,636 . additions 32,530 48,246 10,911 566 135,611 227,864 . disposals (86) (3,365) (1,645) (273) 53 (5,316) . depreciations (included in "Depreciation and impairments") (27,322) (92,567) (16,539) (967) (137,395) . net impairment losses recognized (included in "Depreciation and impairments") (8,377) (18,785) (728) (27,890) . translation differences (1,749) (5,035) (1,022) (310) (657) (8,774) . other movements 23,268 71,806 8,456 994 (112,719) (8,195) At the end of previous year 321,008 411,595 58,420 4,174 117,070 912,268 of which leasing 1,565 87 1,652 Gross value 691,172 1,473,474 186,519 30,379 117,070 2,498,615 Accumulated depreciation (370,164) (1,061,879) (128,099) (26,204) (1,586,346) Net book value at the end of previous year 321,008 411,595 58,420 4,174 117,070 912,268 Leasing . aquisition through business combinations 2,872 2,872 . additions 7,886 36,030 10,077 187 212,610 266,790 . disposals (2,223) (810) (884) (74) (2,661) (6,653) . depreciations (included in "Depreciation and impairments") (28,341) (93,751) (16,829) (553) (139,474) . net impairment losses recognized (included in "Depreciation and impairments") (2,893) (454) (54) 0 (3,402) . translation differences (9,233) (16,149) (2,362) (559) (5,487) (33,790) . other movements 40,967 96,666 10,964 460 (149,105) (49) At the end of the fi nancial year 327,171 435,999 59,332 3,633 172,427 998,563 of which leasing 1,447 0 82 1,529 Gross value 715,044 1,528,248 192,939 29,965 172,427 2,638,623 Accumulated depreciation (387,874) (1,092,249) (133,606) (26,332) (1,640,060) Net book value 327,171 435,999 59,332 3,633 172,427 998,563 Leasing Gross value 2,406 59 140 2,606 Accumulated amortization (960) (59) (58) (1,077)
(EUR thousand)
The non-maintenance related additions to property, plant and equipment were up in Catalysis, linked to the addition of light duty and HDD production capabilities in Asia and Europe and the construction of the technology development centres in Japan and Brazil. Investments were also up in Energy Materials with capacity investments for cathode materials in Korea and China and the construction of a new precursor facility in Korea. In Recycling, capital expenditure continued to run at a high level as a result of the expansion of the sampling facilities and new water treatment and gas cleaning equipment in Hoboken, Belgium. Investments were stable in Performance Materials.
Net book value 1,447 0 82 1,529
The line 'other movements' mainly includes the transfer between tangible assets in progress and the other categories.
There are no pledges on, or restrictions to, the title on property, plant and equipment, other than disclosed in note F35.
| Umicore Annual report 2013 | ||||
|---|---|---|---|---|
| F17 Investments accounted for using the equity method | ||||
| The investments in companies accounted for using the equity method are composed mainly by the following associates and joint ventures: | ||||
| INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD | ||||
| Measurement | ||||
| Country | currency | Percentage | Percentage | |
| ASSOCIATES | 2012 | 2013 | ||
| Ganzhou Yi Hao Umicore Industries | China | CNY | 40.00 | 40.00 |
| IEQSA | Peru | PEN | 40.00 | 40.00 |
| Element Six Abrasives | Luxembourg | USD | 40.22 | 40.22 |
| Jiangmen Chancsun Umicore Industry Co., Ltd. | China | CNY | 40.00 | 40.00 |
| Todini | Italy | EUR | 48.00 | 48.00 |
| JOINT VENTURES | ||||
| ICT Japan ICT USA |
Japan USA |
JPY USD |
50.00 50.00 |
0.00 0.00 |
| Ordeg | South Korea | KRW | 50.00 | 50.00 |
| Rezinal | Belgium | EUR | 50.00 | 50.00 |
| SolviCore GmbH & Co KG | Germany | EUR | 50.00 | 50.00 |
| SolviCore Management GmbH | Germany | EUR | 50.00 | 50.00 |
| BeLife | Belgium | EUR | 49.00 | 49.00 |
| BeLife intermediate | Belgium | EUR | 51.00 | 51.00 |
| A capital increase has been done in the joint venture Ordeg (South Korea) for EUR 7.5 million. | ||||
| (EUR thousand) | ||||
| Net book value | Goodwill | Total | ||
| At the end of previous year | 166,928 | 47,088 | 214,017 | |
| . capital increase | 7,573 | 7,573 | ||
| . profi t for the year | (511) | (511) | ||
| . dividends | (14,331) | (14,331) | ||
| . additions | ||||
| . disposal | ||||
| . change in other reserves . translation differences |
381 (4,897) |
(697) | 381 (5,594) |
|
| . transfers | (143) | (143) | ||
| At the end of the year | 155,001 | 46,390 | 201,390 | |
| of which joint ventures | 64,451 | 355 | 62,806 | |
| Umicore's share in the aggregated balance sheet and profi t and loss items of the associates would have been as follows: | ||||
| (EUR thousand) | ||||
| 31/12/12 | 31/12/13 | |||
| Assets Liabilities |
230,903 106,261 |
220,395 109,314 |
||
| Turnover | 299,397 | 277,239 | ||
| Net result | 13,849 | 1,426 |
| (EUR thousand) | ||||
|---|---|---|---|---|
| Net book value | Goodwill | Total | ||
| At the end of previous year | 166,928 | 47,088 | 214,017 | |
| . capital increase | 7,573 | 7,573 | ||
| . profi t for the year | (511) | (511) | ||
| . dividends | (14,331) | (14,331) | ||
| . additions | ||||
| . disposal | ||||
| . change in other reserves | 381 | 381 | ||
| . translation differences | (4,897) | (697) | (5,594) | |
| . transfers | (143) | (143) | ||
| At the end of the year | 155,001 | 46,390 | 201,390 | |
| of which joint ventures | 64,451 | 355 | 62,806 |
| (EUR thousand) | ||
|---|---|---|
| 31/12/12 | 31/12/13 | |
| Assets | 230,903 | 220,395 |
| Liabilities | 106,261 | 109,314 |
| Turnover | 299,397 | 277,239 |
Umicore's share in the aggregated balance sheet items of the joint ventures would have been as follows:
| (EUR thousand) | ||
|---|---|---|
| 31/12/12 | 31/12/13 | |
| Current assets | 112,843 | 90,529 |
| Non-current assets | 24,438 | 27,158 |
| Current liabilities | 65,685 | 44,369 |
| Non-current liabilities | 7,853 | 7,279 |
Umicore's share in the aggregated profi t and loss items of the joint ventures would have been as follows:
| (EUR thousand) | ||
|---|---|---|
| 31/12/12 | 31/12/13 | |
| Operating result | 12,634 | (167) |
| Financial result | (1,359) | (1,069) |
| Tax | (2,906) | (700) |
| Net result Group | 8,369 | (1,936) |
| (EUR thousand) | ||
|---|---|---|
| Availale-for-sale fi nancial | Loans | |
| assets | granted | |
| NON-CURRENT FINANCIAL ASSETS | ||
| At the beginning of previous year | 47,730 | 1,095 |
| . Increase | 0 | 87 |
| . decrease | 70 | 3,858 |
| . impairment losses (included in "Income from other fi nancial instruments") | (399) | (7) |
| . reversals of impairment losses (included in "Income from other fi nancial | 505 | 0 |
| instruments") | ||
| . translation differences | (19) | 54 |
| . fair value recognized in equity | (10,788) | 0 |
| . other movements | 6 | 0 |
| At the end of previous year | 37,105 | 5,087 |
| . change in scope | ||
| . increase | 190 | 41 |
| . decrease | (12) | (7) |
| . impairment losses (included in "Income from other fi nancial instruments") (a) |
(3,967) | 0 |
| . translation differences | (29) | (149) |
| . fair value recognized in equity (b) |
(12,102) | 0 |
| . other movements | ||
| At the end of the fi nancial year | 21,183 | 4,971 |
| CURRENT FINANCIAL ASSETS | ||
| At the end of the preceding fi nancial year | 3 | 4,960 |
| . change in scope | 0 | (131) |
| . increase | 0 | 1,100 |
| . write-downs (included in "Income from other fi nancial instruments") | (3) | |
| . translation differences | 0 | (4) |
| . other At the end of the fi nancial year |
0 0 |
8 5,933 |
| (a) mainly related to impairment losses on the Nystar bond and to Pangaea. | ||
| (b) mainly related to the fair value adjustment on the Nyrstar shares and to Pangaea. |
| Umicore Annual report 2013 | ||
|---|---|---|
| F19 Inventories | (EUR thousand) | |
| 31/12/12 | ||
| 31/12/13 | ||
| ANALYSIS OF INVENTORIES | ||
| Base product with metal hedging - gross value | 1,053,766 | 962,710 |
| Base product without metal hedging - gross value | 143,951 | 129,497 |
| Consumables - gross value | 80,377 | 64,402 |
| Write-downs | (59,844) | (59,084) |
| Advances paid Contracts in progress |
11,047 5,811 |
1,866 6,869 |
Inventories have decreased by EUR 128.8 million, mainly driven by decreased quantities and lower metal prices. Impairments related to the devaluation of permanently tied up metal inventories have been taken for EUR 1.5 million.
Based on metal prices and currency exchange rates prevailing at the closing date, the value of metal inventory would be about EUR 707.4 million higher than the current book value. However, most of these inventories cannot be realized as they are tied up in manufacturing and commercial operations.
There are no pledges on, or restrictions to, the title on inventories.
| (EUR thousand) | |||
|---|---|---|---|
| Notes | 31/12/12 | 31/12/13 | |
| NON CURRENT | |||
| Cash guarantees and deposits | 8,304 | 8,193 | |
| Other receivables maturing > 1 year | 8,261 | 7,662 | |
| Assets employee benefi ts | 453 | 483 | |
| Total | 17,018 | 16,338 | |
| CURRENT | |||
| Trade receivables (at cost) | 671,963 | 622,472 | |
| Trade receivables (write down) | (10,202) | (8,275) | |
| Other receivables (at cost) | 82,782 | 71,488 | |
| Other receivables (write down) | (6,905) | (5,801) | |
| Interest receivable | 124 | 92 | |
| Fair value receivable fi nancial instruments held for cash-fl ow hedging | F33 | 8,452 | 9,248 |
| Fair value receivable other fi nancial instruments | F33 | 8,437 | 6,863 |
| Deferred charges and accrued income | 33,726 | 20,324 | |
| Total | 788,377 | 716,412 |
Current trade receivables have decreased by EUR 72.0 million. This decrease is mainly due to lower business activity.
The decrease in other current receivables is mainly due to VAT receivables.
Other non-current receivables include an amount of EUR 6,240 thousand related to "reimbursement rights" linked to medical plan liabilities that Umicore France took over from Nyrstar France in 2007 and which Nyrstar France will compensate over the lifetime of these liabilities (see also note F27 on Employee Benefi ts).
| Trade receivables (write-down) |
Other receivables (write-down) |
Total | |
|---|---|---|---|
| AT THE BEGINNING OF PREVIOUS YEAR | (12,309) | (7,508) | (19,813) |
| . Change in scope | |||
| . Impairment losses recognized in P&L | (994) | (994) | |
| . Reversal of impairment losses | 977 | 504 | 1,481 |
| . Impairment written off against asset carrying amount | 1,498 | 1,498 | |
| . Other movements | 89 | 97 | 186 |
| . Translation differences | 538 | 3 | 541 |
| At the end of previous year | (10,202) | (6,905) | (17,105) |
| AT THE BEGINNING OF THE FINANCIAL YEAR | (10,202) | (6,905) | (17,105) |
| . Change in scope | 70 | 70 | |
| . Impairment losses recognized in the P&L | (2,849) | (462) | (3,311) |
| . Reversal of impairment losses | 3,346 | 1,558 | 4,904 |
| . Impairment written off against asset carrying amount | 43 | 43 | |
| . Other movements | 413 | (3) | 410 |
| . Translation differences | 899 | 10 | 909 |
| At the end of the fi nancial year | (8,282) | (5,802) | (14,082) |
In principle, Umicore uses credit insurance as a means to mitigate the credit risk related to trade receivables. Two credit policies have been concluded with two different insurers. EUR 375 million of the group trade receivables are covered by a policy where indemnifi cation in case of non payment amounts to 95% with an annual maximum limit of EUR 20 million. The other policy covers EUR 102 million of trade receivables with a global annual deductible of EUR 5 million and a maximum indemnity per year of EUR 50 million.
Finally some of our businesses function without credit insurance and instead credit limits are set based on fi nancial information and business knowledge. Theses limits are duly approved by management.
| Umicore Annual report 2013 | ||||||
|---|---|---|---|---|---|---|
| F21 Deferred tax assets and liabilities | ||||||
| 31/12/2012 | (EUR thousand) 31/12/2013 |
|||||
| TAX ASSETS AND LIABILITIES Income tax receivables Deferred tax assets Income tax payable Deferred tax liabilities |
29,861 91,772 (35,519) (36,417) |
33,227 90,530 (64,696) (28,164) |
||||
| Assets | Liabilities | Net | ||||
| 2012 | 2013 | 2012 | 2013 | 2012 | 2013 | |
| At the end of preceding fi nancial year | 88,491 | 91,772 | (46,089) | (36,417) | 42,402 | 55,355 |
| Deferred tax recognized in the P&L | 2,509 | 3,567 | (3,463) | 7,537 | (954) | 11,104 |
| Deferred tax recognized in equity | 1,998 | 715 | 12,946 | 848 | 14,945 | 1,563 |
| Acquisitions through business combination Translation adjustments |
508 (1,720) |
(2,259) (3,820) |
105 | 0 430 |
508 (1,615) |
(2,259) (3,390) |
| Transfer | (16) | 561 | 83 | (562) | 67 | (1) |
| Other movements | 3 | (6) | 0 | 0 | 3 | (6) |
| At the end of fi nancial year | 91,772 | 90,530 | (36,417) | (28,164) | 55,355 | 62,366 |
| DEFERRED TAX IN RESPECT OF EACH TYPE OF | ||||||
| TEMPORARY DIFFERENCE | ||||||
| Intangible assets | 13,244 | 14,931 | (14,259) | (16,302) | (1,015) | (1,371) |
| Goodwill on fully consolidated companies | 186 | 174 | (1,515) | (1,657) | (1,329) | (1,483) |
| Property, plant and equipment | 4,595 | 4,379 | (22,925) | (21,998) | (18,330) | (17,619) |
| Investments accounted for using the equity method | 0 | 0 | 0 | 0 | 0 | 0 |
| Long term receivables | 414 | 339 | (3,075) | (3,318) | (2,661) | (2,972) |
| Inventories | 27,462 | 22,187 | (36,294) | (26,720) | (8,832) | (4,533) |
| Trade and other receivables | 12,455 | 6,052 | (5,243) | (6,808) | 7,212 | (756) |
| Group Shareholder's equity | 93 | 95 | (6,979) | (6,447) | (6,886) | (6,352) |
| Long Term Financial Debt and other payable | 448 | 331 | (1,483) | (1,335) | (1,035) | (1,004) |
| Provisions Employee Benefi ts Provisions for Environment |
49,761 19,289 |
50,725 19,120 |
(412) (2,749) |
(975) (2,828) |
49,349 16,540 |
49,750 16,292 |
| Provisions for other liabilities and charges | 7,970 | 7,673 | (942) | (612) | 7,028 | 7,061 |
| Current Financial Debt | 339 | 2,015 | 0 | 0 | 339 | 2,015 |
| Current Provisions for Environment | 4,510 | 5,135 | (153) | 0 | 4,357 | 5,135 |
| Current Provisions for Other Liabilities & Charges | 2,885 | 3,622 | (161) | (51) | 2,724 | 3,571 |
| Trade and other payables | 15,919 | 13,664 | (15,106) | (2,532) | 813 | 11,132 |
| Total deferred tax due to temporary differences | 159,570 | 150,442 | (111,296) | (91,583) | 48,274 | 58,859 |
| Tax losses to carry forward | 62,580 | 47,923 | 62,580 | 47,923 | ||
| Investments deductions | 5,023 | 3,771 | 5,023 | 3,771 | ||
| Notional interest carried forward | 17,506 | 10,425 | 17,506 | 10,425 | ||
| Exempted dividends carried forward | 1,603 | 1,117 | 1,603 | 1,117 | ||
| Other | (1,428) | (670) | (1,428) | (670) | ||
| Deferred tax assets not recognized | (78,203) | (59,059) | (78,203) | (59,059) | ||
| Total tax assets/liabilities | 166,651 | 153,949 | (111,296) | (91,583) | 55,355 | 62,366 |
| Compensation of assets and liabilities within same entity |
(74,879) | (63,419) | 74,879 | 63,419 | 0 | 0 |
| Net amount | 91,772 | 90,530 | (36,417) | (28,164) | 55,355 | 62,366 |
| 2012 | 2013 | 2012 | 2013 | |
|---|---|---|---|---|
| Base | Base | Tax | Tax | |
| AMOUNT OF DEDUCTIBLE TEMPORARY DIFFERENCES, UNUSED TAX LOSSES OR TAX CREDITS FOR WHICH NO DEFERRED TAX ASSET IS RECOGNIZED IN THE BALANCE SHEET |
||||
| Expiration date with no time limit | 241,120 | 207,629 | 78,203 | 59,059 |
The changes of the period in temporary differences are charged in the income statement except those arising from events that were recognized directly in the other comprehensive income.
The main movements in deferred tax recognized directly in the other comprehensive income are deffered taxes generated by temporary differences included within the lines "Trade and other payables" (negative by EUR 321 thousand) and "Provisions for employee benefi ts" (positive by EUR 1,851 thousand).
Deferred tax assets are only recognized to the extent that their utilization is probable, i.e. if a tax benefi t is expected in future periods. The Group assesses a recoverability in a range of 5 to 10 years. The actual tax results in future periods may differ from the estimate made at the time the deferred taxes are recognized.
Unrecognized deferred tax assets of EUR 59,059 thousand mainly arise from tax losses (EUR 39,367 thousand), notional interests carried forward (EUR 10,425 thousand), exempted dividends carried forward (EUR 1,060 thousand), deductions for investments (EUR 3,771 thousand) and temporary differences on property plant and equipment (EUR 3,753 thousand).
In accordance with IAS 12, a deferred tax liability, amounting potentially to EUR 56 million, has not been recognized on untaxed reserves of the Belgian companies because management confi rms that this liability will not be incurred in a foreseeable future.
| (EUR thousand) | ||
|---|---|---|
| 31/12/12 | 31/12/13 | |
| CASH AND CASH EQUIVALENTS | ||
| Short-term investments : bank term deposits | 11,826 | 13,636 |
| Short-term investments : term deposits (other) | 142 | (21) |
| Cash-in-hands and bank current accounts | 119,458 | 85,630 |
| Total cash and cash equivalents | 131,427 | 99,245 |
| Bank overdrafts | 439 | 932 |
| (included in current fi nancial debt in the balance sheet) | ||
| Net cash as in Cash Flow Statement | 130,988 | 98,313 |
All cash and cash equivalents are fully available for the Group.
Prudent liquidity risk management implies maintaining suffi cient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions.
Due to the dynamic nature of the underlying businesses, the group maintains fl exibility in funding by maintaining availability under committed credit lines. Excess liquidities are invested for very short periods and are spread over a limited number of banks, all enjoying a satisfactory credit rating.
(EUR thousand) Availablefor-sale fi nancial assets reserves Cash fl ow hedge reserves Deferred taxes directly recognized in OCI Changes in post employment benefi ts, arising from changes in actuarial assumptions Sharebased payment reserves Currency translation differences Total Balance at the beginning of previous year 23,674 (3,461) 18,440 (79,771) 31,620 (34,121) (43,620) Gains and losses recognized in other comprehensive income (10,788) (3,410) 18,829 (57,025) 5,325 (47,069) Gains and losses derecognized out of other comprehensive income 10,834 (4,063) 6,771 Transfer from/to retained earnings 655 (7,197) (6,542) Change in scope 43 43 Other movements Exchange differences (24) 32 370 (11,980) (11,602) Balance at the end of previous year 12,886 3,939 33,237 (135,728) 29,748 (46,101) (102,020) Balance at the beginning of the year 12,886 3,939 33,237 (135,728) 29,748 (46,101) (102,020) Gains and losses recognized in other comprehensive income (12,102) 6,306 (725) (2,701) 4,337 (4,884) Gains and losses derecognized out of other comprehensive income (4,459) 1,779 (2,680) Transfer from/to retained earnings 4 (1,538) (1,534) Change in accounting policies (1,296) (1,296) Change in scope Other movements (11) (12) Exchange differences 67 (100) 1,389 (56,368) (55,012) Balance at the end of the year 784 5,853 34,191 (138,343) 32,547 (102,469) (167,437)Umicore | Annual report 2013
The detail of the Group's share in currency translation differences and other reserves is as follows:
Gains and losses recognized in the other comprehensive income (OCI) on available-for-sale fi nancial assets relate to the fair value adjustments of the period on the Nyrstar shares and to the investment in Pangaea (refer to note F18 on available-for sale fi nancial assets).
The net gains recognized in the OCI regarding cash fl ow hedges (EUR 6,306 thousand) are the changes in fair value of new cash fl ow hedging instruments or existing ones at opening but which have not yet expired at year end. The net gains derecognized from OCI (EUR 4,459 thousand) are the fair values of the cash-fl ow hedging instruments existing at the opening which expired during the year. A gain of EUR 17.6 million went through the income statement, as a result of expired cash-fl ow hedges.
New net actuarial losses on the defi ned post-employment benefi t plans have been recognized in OCI for EUR 2,701 thousand. The adoption of IAS 19 revised has an impact of EUR 1,296 thousand on the OCI.
The 2013 shares and stock option plans have led to a share-based payment reserve increase of EUR 4,337 thousand (refer to note F10 on employee benefi ts). EUR 1,538 thousand, linked to exercized options, have been transfered to retained earnings.
The change in currency translation differences is mainly due to a weakening of the ZAR, CNY, USD, BRL, KRW, NOK, ARS, PEN, INR, CAD and JPY compared to the EUR currency.
| Bank loans | Other loans |
Total | |
|---|---|---|---|
| CURRENT PORTION OF LONG-TERM FINANCIAL DEBTS | |||
| At the end of the preceding fi nancial year | 100,000 | 930 | 100,930 |
| . Increase / decrease | (100,000) | (250) | (100,250) |
| At the end of the fi nancial year | 0 | 680 | 680 |
| Short term bank loans |
Bank overdrafts |
Short term loan : commercial paper |
Other loans | Total | |
|---|---|---|---|---|---|
| CURRENT | |||||
| At the end of the preceding fi nancial year | 32,387 | 438 | 213,565 | 3,727 | 250,117 |
| . Increase / decrease (including CTD's) | 40,164 | 493 | (7,771) | 4,156 | 37,042 |
| At the end of the fi nancial year | 72,551 | 932 | 205,794 | 7,882 | 287,159 |
Notwithstanding the EUR 78.8 million net shares bought back in 2013, the net fi nancial debt of the group has decreased by EUR 7 million mainly due to the positive operating cash fl ow generated during the year.
The bank loans mainly consist of:
• a EUR 20 million bank loan maturing in December 2018. The fair value of the bank loan was EUR 19.9 million on 31 December 2013 based on the DCF-method;
• short term borrowings for EUR 72.6 million. The maturity dates of these bank loans are very short term and are decided at the convenience of the treasury department at market conditions as part of its daily management of treasury operations.
The current fi nancial debt also includes EUR 205.8 million of Commercial Papers with a term of under one year.
On 31 December 2013, there were no outstanding advances under the EUR 250 million Syndicated Bank Credit Facility maturing in July 2016 nor under the new EUR 215 million Syndicated Bank Credit Facility maturing in September 2018.
The aforementioned Syndicated Bank Credit Facilities require the Company to comply with certain fi nancial covenants.
Umicore has not faced any breach of those covenants in 2013 or in previous years.
The long term debts mainly include Euro debts except for EUR 4.1 million which is originally a JPY loan.
The net gearing ratio end of 2013 of 11.1% (11.0% in 2012) is well within the group's targeted capital structure limits.
| Umicore Annual report 2013 | ||||
|---|---|---|---|---|
| GROSS OUTSTANDING DEBT | ||||
| 72% 25% 3% Other bank facilities Short term bank loans Commercial paper |
||||
| (EUR thousand) | ||||
| EUR | USD | Other | ||
| Euro | US Dollar | currencies | Total | |
| Analysis of long term debts by currencies (including current portion) | ||||
| Bank loans | 20,000 | 20,000 | ||
| Other loans Non-current fi nancial debts (including current portion) |
2,848 22,848 |
81 81 |
4,147 4,147 |
7,076 27,076 |
| (EUR thousand) | ||
|---|---|---|
| 2012 | 2013 | |
| Non current fi nancial debt | 2,861 | 26,396 |
| Current portion of non current fi nancial debt | 100,930 | 680 |
| Current fi nancial debt | 250,117 | 287,159 |
| Cash and cash equivalents | (131,427) | (99,245) |
| Net fi nancial debt | 222,481 | 214,990 |
| (EUR million) | ||
|---|---|---|
| 2012 | 2013 | |
| Net fi nancial debt | 222.5 | 215.0 |
| Equity | 1,805.8 | 1,723.4 |
| Total | 2,028.3 | 1,938.4 |
| Gearing ratio (%) | 11.0 | 11.1 |
| (EUR thousand) | ||
|---|---|---|
| Notes | 31/12/12 | 31/12/13 |
| NON-CURRENT | ||
| Long-term trade payables | 0 | 0 |
| Other long-term debts | 4,639 | 4,461 |
| Investment grants and deferred income from grants | 9,283 | 8,447 |
| 13,922 | 12,908 | |
| CURRENT | ||
| Trade payables | 728,311 | 710,729 |
| Advances received on contracts in progress | 21,564 | 17,937 |
| Tax payable (other than income tax) | 16,664 | 8,796 |
| Payroll and related charges | 125,835 | 118,271 |
| Other amounts payable | 18,067 | 16,639 |
| Dividends payable | 7,518 | 7,485 |
| Accrued interest payable | 600 | 373 |
| Fair value payable fi nancial instrument held for cash fl ow hedging F33 |
4,535 | 3,382 |
| Fair value payable other fi nancial instruments F33 |
8,708 | 7,938 |
| Accrued charges and deferred income | 90,559 | 75,218 |
| 1,022,361 | 966,767 |
Trade payables decreased by EUR 55.6 million, mainly due to lower volumes.
The tax payables (other than income tax) mainly include VAT payables.
| (EUR thousand) | |||||
|---|---|---|---|---|---|
| Total | |||||
| 2,535 | 5,635 | 24,218 | 32,387 | ||
| 219 | 220 | 439 | |||
| 213,565 | 213,565 | ||||
| 152 | 3,726 | (152) | 3,726 | ||
| 100,000 | 100,000 | ||||
| 39 | 78 | 813 | 930 | ||
| 2,861 | 2,861 | ||||
| 476,548 | 245,914 | 5,849 | 728,311 | ||
| 3,324 | 11,645 | 6,595 | 21,564 | ||
| 18,089 | (4,225) | 2,809 | 16,673 | ||
| 48,061 | 28,087 | 49,686 | 125,834 | ||
| 4,293 | 11,742 | 2,032 | 18,067 | ||
| 7,518 | 7,518 | ||||
| 11 | 571 | 18 | 600 | ||
| < 1 Month | 1 to 3 Months |
3 Months - 1 Year |
Earliest contractual maturity 1 to 5 Years |
> 5 years |
| Umicore Annual report 2013 | ||||||
|---|---|---|---|---|---|---|
| (EUR thousand) | ||||||
| Earliest contractual maturity | ||||||
| 1 to 3 | 3 Months - | 1 to 5 | ||||
| Previous fi nancial year | < 1 Month | Months | 1 Year | Years | > 5 years | Total |
| Fair value payable fi nancial instrument held for cash fl ow hedging |
2 | 499 | 3,326 | 708 | 4,535 | |
| Fair value payable other fi nancial instruments | 3,100 | 3,811 | 1,797 | 0 | 8,708 | |
| Accrued charges and deferred income | 71,918 | 9,341 | 9,300 | 90,559 | ||
| Non-current | ||||||
| Long-term trade payables | ||||||
| Other long-term debts | 4,639 | 4,639 | ||||
| Investment grants and deferred income from grants | 1,354 | 7,929 | 9,283 |
| (EUR thousand) | ||||||
|---|---|---|---|---|---|---|
| Earliest contractual maturity | ||||||
| 1 to 3 | 3 Months - | 1 to 5 | ||||
| Financial year | < 1 Month | Months | 1 Year | Years | > 5 years | Total |
| FINANCIAL DEBT | ||||||
| Current | ||||||
| Short term bank loans | 69,515 | 2,626 | 410 | 72,551 | ||
| Bank overdrafts | 932 | 932 | ||||
| Short-term loan: commercial paper | 50,840 | 20,206 | 134,748 | 205,794 | ||
| Other loans | 7,882 | 7,882 | ||||
| Current portion of long-term bank loans | ||||||
| Current portion of other long-term loans | 39 | 78 | 563 | 680 | ||
| Non-current | ||||||
| Bank loans | 20,000 | 20,000 | ||||
| Other loans | 6,396 | 6,396 | ||||
| TRADE AND OTHER PAYABLES | ||||||
| Current | ||||||
| Trade payables | 470,663 | 219,383 | 20,683 | 710,729 | ||
| Advances received on contracts in progress | 700 | 3,284 | 13,953 | 17,937 | ||
| Tax payable (other than income tax ) | 9,037 | (871) | 630 | 8,796 | ||
| Payroll and related charges | 44,777 | 26,709 | 46,785 | 118,271 | ||
| Other amounts payable | 6,100 | 1,765 | 8,774 | 16,639 | ||
| Dividends payable | 7,485 | 0 | 0 | 7,485 | ||
| Accrued interest payable, third parties | 14 | 356 | 3 | 373 | ||
| Fair value payable fi nancial instrument held for cash | 251 | 842 | 1,992 | 297 | 3,382 | |
| fl ow hedging | ||||||
| Fair value payable other fi nancial instruments | 1,842 | 4,391 | 1,656 | 49 | 7,938 | |
| Accrued charges and deferred income | 61,907 | 7,226 | 6,086 | 75,218 | ||
| Non-current | ||||||
| Long-term trade payables | ||||||
| Other long-term debts | 2,031 | 2,429 | 4,461 | |||
| Investment grants and deferred income from grants | 1,745 | 6,702 | 8,447 |
The Group has various legal and constructive defi ned benefi t obligations, the vast majority of them being "fi nal pay" plans situated in the Belgian, French and German operations.
| (EUR thousand) | |||||
|---|---|---|---|---|---|
| Post employment benefi ts, pensions and similar |
Post employment benefi ts - other |
Termination benefi ts early retirement & similar |
Other long-term employee benefi ts |
Total | |
| At the end of the previous year | 186,721 | 22,379 | 33,207 | 16,669 | 258,975 |
| . Change in accounting policies | 1,164 | 0 | (412) | 0 | 753 |
| . Increase (included in "Payroll and related benefi ts") | 16,784 | 337 | 6,741 | 1,944 | 25,806 |
| . Reversal (included in "Payroll and related benefi ts") | (1,101) | (399) | 0 | (343) | (1,844) |
| . Use (included in "Payroll and related benefi ts") | (14,633) | (469) | (9,840) | (1,528) | (26,470) |
| . Interest and discount rate impacts (included in "Finance cost - Net") |
6,492 | 652 | 653 | 473 | 8,270 |
| . Translation differences | (473) | (496) | (60) | (40) | (1,069) |
| . Transfers | (7) | (368) | 530 | (155) | 0 |
| . Recognized in other comprehensive income | 3,535 | (85) | 0 | 0 | 3,451 |
| . Other movements | (8) | (62) | 35 | 0 | (35) |
| At the end of the fi nancial year | 198,474 | 21,489 | 30,855 | 17,020 | 267,837 |
| Movements | |||
|---|---|---|---|
| 31/12/12 | 2013 | 31/12/13 | |
| Belgium | 39,688 | 4,309 | 43,997 |
| France | 27,476 | 184 | 27,660 |
| Germany | 173,933 | 8,660 | 182,593 |
| Subtotal | 241,097 | 13,153 | 254,250 |
| Other entities | 17,878 | (4,291) | 13,587 |
| Total | 258,975 | 8,862 | 267,837 |
| Reimbursement rights | |
|---|---|
| At the end of the previous year | 6,674 |
| Actual reimbursement | (407) |
| Expected return | 210 |
| Actuarial gains and losses on reimbursement rights | (237) |
| At the end of the fi nancial year | 6,240 |
The fi rst table shows the balances and the movements in provisions for employee benefi ts of the fully consolidated subsidiaries only. There is a difference in the line "Recognized in equity" compared to what is shown in note F23 as that note also includes associates and joint ventures that are accounted for according to the equity method.
As described in note F20, a non-current receivable has been recognized as "reimbursement rights" linked to medical plan liabilities that Umicore France took over from Nyrstar France in 2007 and which Nyrstar France will compensate over the lifetime of these liabilities. Whenever there is a change in these liabilities this change will affect the reimbursement rights under the non current receivables in the same way. When the change of the period is related to changes in actuarial assumptions, both the liability and the asset are adjusted through the statement of comprehensive income.
The following disclosure requirements under IAS 19 amended were derived from the reports obtained from external actuaries.
Umicore defi ned benefi t pension schemes for the 3 major countries are the following:
Belgium Characteristics of the Defi ned Benefi t plans Umicore companies in Belgium operate defi ned benefi t plans that provide retirement benefi ts which are related to salary, age and length of service. These retirement plans represent a defi ned benefi t obligation of EUR 163.1 million and assets for EUR 119.1 million. They foresee in a lump sum payment upon retirement and benefi ts in case of death or disability prior to retirement. Funding The plans are externally funded through either insurance companies or a self-administrated institution for occupational retirement provision ("IORP"). For the IORP, the necessary governance processes for risk management are in place. One of the risk measures is to perform on a regular basis a "Continuity Test" in which the consequences of strategic investment policies are analyzed in terms of riskand-return profi les and solvency measures. A statement of investment principles and funding policy are derived from this. The purpose is to have a well-diversifi ed asset allocation to control the risk. Fair values of plan assets The fair values of the equity and debt instruments are determined based on quoted market prices in active markets (level 1 fair value classifi cation). The plans hold no direct positions in Umicore shares or bonds, nor do they own any property used by an Umicore entity. Investments are well diversifi ed so that the failure of any single investment would not have a material impact on the overall level of assets. Germany Characteristics of the Defi ned Benefi t plans The post-employment benefi ts are mainly unfunded pension plans of defi ned benefi t type providing retirement, disability and death benefi ts. All benefi t plans are based on fi nal or fi nal average pay beside the deferred compensation plan. The benefi ts of the deferred compensation plan are based on annual converted salary and provide a guaranteed interest of 3.0% p.a. (6.0% p.a. for salary conversions before 2014). All retirement plans represent a defi ned benefi t obligation of EUR 189.9 million and assets for EUR 7.3 million. Funding As mentioned here above, the post-employment benefi ts are mainly unfunded plans. A minor part is funded by pledged reinsurance contracts. Fair values of plan assets All plan assets relate to pledged insurance contracts and have no quoted market price. France Characteristics of the Defi ned Benefi t plans In France, three main defi ned benefi t plans are in place. • The retirement plans: in addition to State plans, the company is legally required to pay lump sums to employees when they retire from service. The amounts are based on years of service in the company and on the base salary according to the collective bargaining agreement in force. This scheme covers all employees under permanent contract within the company. • The jubilee plan: An amount is paid at 20, 30, 35 and 40 years of seniority. This scheme covers all employees under permanent contract within the company. • The Medical plan: The employer pays a contribution for a healthcare plan for retirees. Benefi ts convert to the spouse when retirees die. All defi ned benefi t plans represent a defi ned benefi t obligation of EUR 29.5 million and assets for EUR 1.8 million. Funding The funding is done via a general EURO fund of a life insurance company. This fund is mainly composed by high quality fi x rate bonds (80%), shares (9%) and real estate (4%). Fair values of plan assets The fair values of the equity and debt instruments of the funds are determined based on quoted market prices in active markets. Plan curtailment or settlement A restructuring plan occurred as of December 18, 2013. This concerns 13 executive employees and 25 non-executive employees.
The most signifi cant risks related to the defi ned benefi t plans are:
Some additional risks are related to Germany only:
And some risks are related to Belgium only:
• Because of the Belgian legislation applicable to 2nd pillar pension plans (so-called "Law Vandenbroucke"), all Belgian Defi ned Contribution plans have to be considered under IFRS as Defi ned Benefi t plans. Law Vandenbroucke states that in the context of defi ned contribution plans, the employer must guarantee a minimum return of 3.75% on employee contributions and 3.25% on employer contributions.
| (EUR thousand) | ||
|---|---|---|
| 2012 | 2013 | |
| CHANGE IN BENEFIT OBLIGATION | ||
| Benefi t obligation at beginning of the year | 319,517 | 399,193 |
| Change in accounting policies | (835) | |
| Current service cost | 21,526 | 21,781 |
| Interest cost | 14,782 | 13,250 |
| Plan Participants' Contributions | 553 | 464 |
| Amendments | 899 | 0 |
| Actuarial (gain)/loss - changes in demographic assumptions | 1,346 | 3,088 |
| Actuarial (gain)/loss - changes in fi nancial assumptions | 59,602 | 27,421 |
| Actuarial (gain)/loss - experience adjustements | 5,515 | 5,274 |
| Benefi ts paid from plan/company | (24,241) | (25,056) |
| Expenses paid | (75) | (983) |
| Net transfer in/(out) (including the effect of any business combinations/divestitures) | (62) | 3 |
| Exchange rate changes | (169) | (2,843) |
| Benefi t obligation at end of the year | 399,193 | 440,757 |
| Umicore Annual report 2013 | ||
|---|---|---|
| (EUR thousand) | ||
| 2012 | 2013 | |
| CHANGE IN PLAN ASSETS | ||
| Fair value of plan assets at the beginning of the year | 125,785 | 139,573 |
| Change in accounting policies | 0 | (920) |
| Expected return on plan assets | 5,434 | 4,586 |
| Actuarial gain/(loss) on plan assets | 5,834 | 31,125 |
| Employer contributions | 26,397 | 26,036 |
| Member contributions | 553 | 464 |
| Benefi ts paid from plan/company | (24,241) | (25,056) |
| Expenses paid | (75) | (1,057) |
| Net transfer in/(out) (including the effect of any business combinations/divestitures) | 1 | 0 |
| Exchange rate changes | (115) | (1,797) |
| Fair value of plan assets at the end of the year | 139,573 | 172,954 |
Pension plans mainly in Belgium, France, Liechtenstein, Netherlands, USA, Japan and Norway are wholly or partly funded with assets covering a substantial part of the obligations. All other plans have no material funding or are unfunded.
| (EUR thousand) | ||
|---|---|---|
| 2012 | 2013 | |
| AMOUNT RECOGNIZED IN THE BALANCE SHEET | ||
| Defi ned benefi t obligations | 399,193 | 440,757 |
| Fair value of plan assets | 139,573 | 172,954 |
| Funded Status | 259,620 | 267,803 |
| Effect of asset ceiling/onerous liability | ||
| Net liability (asset) | 259,620 | 267,803 |
| COMPONENTS OF PENSION COSTS | ||
| Amounts recognized in profi t and loss statement | ||
| Current service cost | 22,485 | 21,781 |
| Interest cost | 14,782 | 13,250 |
| Interest income on plan assets | (5,434) | (4,586) |
| Expected return on reimbursement rights | (261) | (210) |
| Remeasurement of Other Long Term Benefi ts | 3,561 | 1,287 |
| Administrative expenses and taxes | 0 | 71 |
| Total pension cost recognized in P&L account | 35,133 | 31,593 |
| Amounts recognized in other comprehensive income | ||
| Cumulative actuarial gains and losses at opening | 55,906 | 110,872 |
| Change in accounting policies | 1,296 | |
| Actuarial gains and losses of the year | 54,872 | 3,689 |
| Transfer from/to retained earnings | ||
| Minorities | 669 | (96) |
| Actuarial gains and losses on reimbursement rights | 1 | |
| Other movements | (698) | 7 |
| Exchange differences | 121 | (360) |
| Total recognized in the OCI at subsidiaries | 110,872 | 115,408 |
| Actuarial gains and losses at associates and joint ventures | 24,856 | 22,934 |
| Total recognized in the OCI | 135,728 | 138,342 |
| Remeasurements (recognized in other comprehensive income) | ||
| Effect of changes in demographic assumptions | 662 | 2,984 |
| Effect of changes in fi nancial assumptions | 57,477 | 27,284 |
| Effect of experience adjustments | 4,767 | 4,205 |
| (Return) on plan assets (excluding interest income) * | (5,835) | (31,100) |
| (Return) on reimbursement rights (excluding interest income) | (826) | 237 |
| Changes in asset ceiling/onerous liability (excluding interest income) | 0 | 0 |
| Total remeasurements included in Other Comprehensive Income | 56,245 | 3,610 |
The interest cost and return on plan assets as well as the discount rate impact on the non-post employment benefi t plans, are recognized under the fi nance cost in the income statement (see note F11). All other elements of the expense of the year are classifi ed under the operating result in the "wages, salaries and direct social advantages".
Actuarial gains of the year recognized in equity originate mainly from a change in discount rates on the pension plans and differences between the expected and actual return on plan assets.
| 2012 | 2013 | |
|---|---|---|
| PRINCIPAL ACTUARIAL ASSUMPTIONS | ||
| Weighted average assumptions to determine benefi t obligations at year end | ||
| Discount rate (%) | 3.29 | 3.38 |
| Rate of compensation increase (%) | 2.95 | 2.99 |
| Rate of price infl ation (%) | 2.07 | 2.05 |
| Rate of pension increase (%) | 1.60 | 1.64 |
| Weighted average assumptions used to determine net cost | ||
| Discount rate (%) | 4.72 | 3.30 |
| Rate of compensation increase (%) | 3.08 | 2.96 |
| Rate of price infl ation (%) | 2.07 | 2.07 |
| Rate of pension increase (%) | 1.56 | 1.60 |
| 2013 | ||
|---|---|---|
| Fair value of all plan assets |
Fair Value of plan assets with quoted market price |
|
| Plan assets | ||
| Cash and cash equivalents | 4,517 | 4,419 |
| Equity instruments | 35,914 | 35,736 |
| Debt instruments | 64,751 | 63,291 |
| Real estate | 8,132 | 8,068 |
| Derivatives | ||
| Investment funds | ||
| Assets held by insurance company | 58,985 | |
| Other | 656 | 607 |
| Unallocated assets | ||
| Total plan assets | 172,955 | 112,121 |
Assumptions are recommended by the local actuaries in line with the IAS19 revised. The standard reference for the Eurozone is iBOXX AA Index yield and similar indexes are used for the other regions. Mortality tables used are country specifi c.
Other plan assets are predominantly invested in insurance contracts and bank term deposits. The expected long term rate of return on assets assumptions is documented for the individual plans as recommended by the local actuaries.
| Umicore Annual report 2013 | ||
|---|---|---|
| 2013 | ||
| Valuation | Valuation | |
| trend | trend | |
| +0,25% | -0,25% | |
| Sensitivity to trend rate assumptions on discount rate Effect on the defi ned benefi t obligation |
427,959 | 454,140 |
| Weighted average duration of benefi t obligation (in years) | 12,89 | 13,10 |
| Sensitivity to trend rate assumptions on infl ation rate | ||
| Effect on the defi ned benefi t obligation | 449,032 | 433,020 |
| Sensitivity to trend rate assumptions on salary increase rate | ||
| Effect on the defi ned benefi t obligation | 446,170 | 436,169 |
| (EUR thousand) | ||
| 2012 | 2013 | |
| BALANCE SHEET RECONCILIATION | ||
| Balance sheet liability (asset) as of previous year Change in accounting policies |
193,023 | 258,975 753 |
| Pension expense recognized in P&L in the fi nancial year | 35,132 | 31,593 |
| Amounts recognized in SoCI | 56,249 | 3,610 |
| Employer contributions via funds in the fi nancial year | (13,356) | (12,528) |
| Employer contributions paid directly in the fi nancial year | (13,042) | (13,508) |
| Credit to reimbursements | 1,087 | (27) |
| Net transfer in/(out) (including the effect of any business combinations/diversitures) | (65) | 0 |
| Exchange rate adjustment - (gain)/loss | (56) | (1,031) |
| Balance sheet liability (asset) as of end of the year | 258,975 | 267,837 |
| Credit to reimbursements | 1,087 | (27) |
|---|---|---|
| Net transfer in/(out) (including the effect of any business combinations/diversitures) | (65) | 0 |
| Exchange rate adjustment - (gain)/loss | (56) | (1,031) |
| At 31 December | 2009 | 2010 | 2011 | 2012 | 2013 |
|---|---|---|---|---|---|
| Present value of defi ned benefi t obligation | 294,378 | 312,573 | 319,517 | 399,193 | 440,757 |
| Fair value of plan assets | 110,898 | 120,945 | 125,785 | 139,573 | 172,954 |
| Defi cit (surplus) in the plan | 183,480 | 191,628 | 193,732 | 259,620 | 267,803 |
| Experience adjustments on plan assets | (2,734) | (780) | 6,871 | (5,834) | (31,125) |
| Experience adjustments on plan liabilities | 1,407 | (476) | 6,929 | 5,515 | 5,274 |
The impact of IAS 19 revised on 2012 fi gures was insignifi cant as compared to the provision for employee benefi ts and it was therefore decided not to change 2012 fi gures but to restate the opening on 1 January 2013 (under the line "Change in accounting policies").
| 2013 | |
|---|---|
| EXPECTED CASH FLOWS FOR FOLLOWING YEAR | |
| Expected employer contributions | 25,341 |
| Expected total benefi t payments | |
| Year 1 | 25,378 |
| Year 2 | 19,243 |
| Year 3 | 19,511 |
| Year 4 | 20,971 |
| Year 5 | 18,906 |
| Next 5 years | 102,020 |
| Exercise price EUR (the | Number of | |||
|---|---|---|---|---|
| exercice price may | options | |||
| be higher in certain | still to be | |||
| Plan | Expiry date | Exercise | countries) | exercised |
| ISOP 2006 | 02/03/2016 | all working days of | 22.55 | 92,000 |
| Euronext Brussels | 24.00 | 7,500 | ||
| 02/03/2013 | 22.55 | 0 | ||
| 99,500 | ||||
| ISOP 2007 | 16/02/2017 | all working days of | 26.55 | 168,500 |
| Euronext Brussels | 27.36 | 10,000 | ||
| 16/02/2014 | 26.55 | 4,500 | ||
| 183,000 | ||||
| ISOP 2008 | 14/04/2018 | all working days of | 32.57 | 205,250 |
| Euronext Brussels | 32.71 | 26,000 | ||
| 14/04/2015 | 32.57 | 177,750 | ||
| 32.71 | 1,250 | |||
| 410,250 | ||||
| ISOP 2009 | 15/02/2016 | all working days of | 14.44 | 266,000 |
| Euronext Brussels | 14.68 | 21,000 | ||
| 287,000 | ||||
| ISOP 2010 | 14/02/2017 | all working days of | 22.30 | 528,338 |
| Euronext Brussels | ||||
| 528,338 | ||||
| ISOP 2011 | 13/02/2018 | all working days of | 38.07 | 581,375 |
| Euronext Brussels | 39.25 | 65,000 | ||
| 38.54 | 31,000 677,375 |
|||
| ISOP 2012 | 12/02/2019 | all working days of | 35.32 | 514,500 |
| Euronext Brussels | 37.67 | 56,500 | ||
| 36.00 | 32,375 | |||
| 603,375 | ||||
| ISOP 2013 | 12/02/2020 | all working days of | 36.38 | 533,750 |
| Euronext Brussels | 37.67 | 55,500 | ||
| 589,250 | ||||
| Total | 3,378,088 | |||
| Umicore Annual report 2013 | ||||
|---|---|---|---|---|
| ISOP refers to "Incentive Stock Option Plan" (worldwide plan for managers). | ||||
| The stock options, which are typically vested at the time of the grant, are foreseen to be settled with existing treasury shares. Options which have not been exercised before the expiry date elapse automatically. |
||||
| (EUR thousand) | ||||
| 2012 Number of |
Weighted average |
2013 Number of |
Weighted average |
|
| DETAILS OF THE SHARE OPTIONS OUTSTANDING DURING THE YEAR | share options | exercise price | share options | exercise price |
| Outstanding at the beginning of the year | 3,593,375 | 26.35 | 3,090,750 | 29.17 |
| Granted during the year | 603,375 | 35.58 | 589,250 | 36.59 |
| Exercised during the year | 1,106,000 | 23.51 | 301,912 | 21.23 |
| Expired during the year | ||||
| Outstanding at the end of the year | 3,090,750 | 29.17 | 3,378,088 | 31.18 |
| Exercisable at the end of the year | 3,090,750 | 29.17 | 3,378,088 | 31.18 |
The options outstanding at the end of the year have a weighted average contractual life until January 2018.
| (EUR thousand) | |||
|---|---|---|---|
| Provisions for soil clean-up & site rehabilitation |
Other environmental provisions |
Total | |
| At the end of previous year | 80,441 | 2,549 | 82,990 |
| . Increase | 9,518 | 1,436 | 10,954 |
| . Reversal | (236) | (236) | |
| . Use (included in "Other operating expenses") | (11,523) | (733) | (12,256) |
| . Discounting (included in "Finance cost -Net") | 398 | 398 | |
| . Translation differences | (1,867) | (1,867) | |
| At the end of the fi nancial year | 76,732 | 3,252 | 79,984 |
| Of which - Non Current |
63,788 | 1,851 | 65,639 |
| - Current | 12,945 | 1,402 | 14,347 |
Provisions for environmental legal and constructive obligations are recognized and measured by reference to an estimate of the probability of future cash outfl ows as well as to historical data based on the facts and circumstances known at the end of the reporting period. The actual liability may differ from the amounts recognized.
Provisions decreased overall by EUR 3,006 thousand, with additional provisions being more than compensated by uses and reversals of existing provisions refl ecting overall the steady execution of identifi ed and committed rehabilitation programs.
The increase in provisions for soil and groundwater remediation is mainly related to the remediation of historical pollution caused on site and in surroundings in Brazil prior to Umicore's acquisition in 2003.
Most of the uses of provisions for the period are linked to the realization during the period of site remediation programs in Brazil (Guarulhos and in surrondings), in France (Viviez) and in Belgium (Hoboken, Olen and Angleur).
In 2013, no major movements occurred on the provisions that were taken to address the historical radioactive waste material in Belgium (Olen). Further negotiation with all competent authorities to fi nd a sustainable and acceptable storage solution are on-going, however, at a slow pace.
The movements of the other environmental provisions are mainly related to the need for and settlement of CO2 emission rights in Belgium.
Management expects the most signifi cant cash outfl ows on these projects to take place within 5 years.
(EUR thousand) Provisions for Provisions for other liabilities
| other liabilities | Total | |
|---|---|---|
| 58,000 | ||
| 11,520 | ||
| (2,434) | ||
| (3,375) | (4,655) | (8,030) |
| (4,681) | ||
| (105) | ||
| 54,270 | ||
| 11,459 | 26,650 | 38,109 |
| 3,372 | 12,793 | 16,165 |
| reorganization & restructuring 12,940 6,312 (750) (190) (105) 14,831 |
and charges 45,060 5,208 (1,684) (4,491) 0 39,443 |
Provisions for reorganization and restructuring and for tax, warranty and litigation risks, onerous contracts and product returns are recognized and measured by reference to an estimate of the probability of future outfl ow of cash as well as to historical data based on the facts and circumstances known at the end of the reporting period. The actual liability may differ from the amounts recognized.
Provisions decreased overall by EUR 3,730 thousand, the new provisions being more than compensated by the reversals, the uses and the translation differences.
Additional provisions for reorganization and restructuring have been taken mainly in France (Bagnolet site and Climeta).
The increases and decreases in provisions for other liabilities and charges concern liabilities that are mainly related to warranty risks, onerous contracts and litigations. They affect mainly France, Belgium and North America.
They also include provisions for onerous contracts related to the IAS 39 effect. The net increase of the period on these IAS 39 related provisions for onerous contracts is EUR 430 thousand, leaving a closing balance of EUR 4,857 thousand.
No assessment is possible regarding the expected timing of cash outfl ows related to the non-current part of the provisions for other liabilities and charges.
| Umicore Annual report 2013 | ||||
|---|---|---|---|---|
| F31 Capital employed | ||||
| CAPITAL EMPLOYED AND ROCE | (EUR thousand) | |||
| Note | 31/12/2012 | 30/06/2013 | 31/12/2013 | |
| Intangible assets | F14, F15 | 200,903 | 202,836 | 218,251 |
| Property, plant and equipment | F16 | 912,268 | 935,221 | 998,563 |
| Investments accounted for under the equity method | F17 | 214,015 | 199,683 | 201,391 |
| Available-for-sale fi nancial assets | F18 | 37,105 | 27,423 | 21,183 |
| Inventories | F19 | 1,235,107 | 1,114,535 | 1,106,259 |
| Non current receivable (excluding assets employee benefi ts) | F20 | 16,566 | 15,991 | 15,856 |
| Adjusted current accounts receivable | 774,633 | 894,555 | 705,591 | |
| Income tax receivable | 29,861 | 23,065 | 33,227 | |
| Assets included in capital employed | 3,420,458 | 3,413,309 | 3,300,319 | |
| Non-current trade and other payables | F25 | 13,921 | 13,629 | 12,907 |
| Adjusted current accounts payable | 1,017,827 | 1,049,498 | 963,385 | |
| Translation reserves | F23 | (46,103) | (68,233) | (102,471) |
| Non-current provisions | F29, F30 | 110,271 | 111,672 | 103,749 |
| Current provisions | F29, F30 | 30,720 | 35,147 | 30,511 |
| Income tax payable | 35,519 | 46,852 | 64,696 | |
| Liabilities included in capital employed | 1,162,155 | 1,188,564 | 1,072,778 | |
| Capital employed | 2,258,303 | 2,224,746 | 2,227,542 | |
| IAS 39 and eliminations | (1,094) | (11,358) | (6,026) | |
| Capital employed as published | 2,259,397 | 2,236,103 | 2,233,568 | |
| Average Capital Employed in half year preceding closing date | 2,247,129 | 2,247,750 | 2,234,836 | |
| Average Capital Employed in year preceding closing date | 2,224,486 | 2,241,293 | ||
| Recurring EBIT in year preceding closing date | F9 | 372,097 | 303,967 | |
| ROCE in year preceding closing date | 16.73% | 13.56% |
Current account receivable and payable included in 'Capital Employed' do no take into account margin calls and gains and losses booked on the mark-tomarket of strategic hedging instruments.
Average capital employed for the half years is calculated as the average of the capital employed at the end of the period and at the end of the preceding period. Average capital employed for the year is calculated as the average of the capital employed of both half years.
(EUR thousand) Carrying amount As at the end of previous year Level Fair value Held for trading no hedge accounting Cash Flow hedge accounting bles and payables Availablefor-sale ASSETS Available-for-sale fi nancial assets 37,108 37,108 Available-for-sale fi nancial assets – Shares 1 - 2 37,108 37,108 Loans granted 10,047 10,047 Loans to associates and non consolidated affi liates 2 10,047 10,047 Trade and other receivables 805,395 8,437 8,452 788,506 Non-current Cash guarantees and deposits 3 8,304 8,304 Other receivables maturing in more than 1 year 3 8,261 8,261 Assets employee benefi ts 3 453 453 Current Trade receivables (at cost) 3 671,963 671,963 Trade receivables (write-down) 3 (10,202) (10,202) Other receivables (at cost) 3 82,782 82,782 Other receivables (write-down) 3 (6,905) (6,905) Interest receivable 3 124 124 Fair value of fi nancial instruments held for cash-fl ow hedging 2 8,452 8,452 Fair value receivable other fi nancial instruments 2 8,437 8,437 Deferred charges and accrued income 3 33,726 33,726 Cash and cash equivalents 131,426 131,426 Short-term investments: bank term deposits 11,826 11,826 Short-term investments: term deposits (other) 142 142 Cash-in-hand and bank current accounts 119,458 119,458 TOTAL OF FINANCIAL INSTRUMENTS (ASSETS) 983,976 8,437 8,452 929,979 37,108 LIABILITIES Financial debt 354,899 353,909 Non-current Bank loans 2 0 0 Other loans 2 2,862 2,862 Current Short term bank loans 2 133,377 132,387 Bank overdrafts 2 439 439 Short term loan: commercial paper 2 213,565 213,565 Other loans 2 4,656 4,656 Trade and other payables 1,036,283 8,708 4,535 1,023,040 Non-current Long term trade payables Other long term debts 3 4,639 4,639 Investments grants and deferred income from grants 3 9,283 9,283 Current Trade payables 3 728,311 728,311 Advances received on contracts in progress 3 21,564 21,564 Tax - other than income tax - payable 3 16,664 16,664 Payroll and related charges 3 125,835 125,835
| Umicore Annual report 2013 | ||||||
|---|---|---|---|---|---|---|
| (EUR thousand) | ||||||
| Carrying amount | ||||||
| Held for | Loans, | |||||
| trading - | Cash Flow | receiva | ||||
| no hedge | hedge ac | bles and | Available | |||
| As at the end of previous year | Level | Fair value | accounting | counting | payables | for-sale |
| Other amounts payable | 3 | 18,067 | 18,067 | |||
| Dividends payable | 3 | 7,518 | 7,518 | |||
| Accrued interest payable | 3 | 600 | 600 | |||
| Fair value fi nancial instrument held for cash fl ow hedging | 2 | 4,535 | 4,535 | |||
| Fair value payable other fi nancial instruments | 2 | 8,708 | 8,708 | |||
| Accrued charges and deferred income | 3 | 90,559 | 90,559 | |||
| TOTAL OF FINANCIAL INSTRUMENTS (LIABILITIES) | 1,391,182 | 8,708 | 4,535 | 1,376,949 | 0 |
| (EUR thousand) | ||||||
|---|---|---|---|---|---|---|
| Carrying amount | ||||||
| Held for | Loans, | |||||
| trading - | Cash Flow | receiva | ||||
| no hedge | hedge ac | bles and | Available | |||
| As at the end of the fi nancial year | Level | Fair value | accounting | counting | payables | for-sale |
| ASSETS | ||||||
| Available-for-sale fi nancial assets | 21,183 | 21,183 | ||||
| Available-for-sale fi nancial assets – Shares | 1 - 2 | 21,183 | 21,183 | |||
| Loans granted | 10,904 | 10,904 | ||||
| Loans to associates and non consolidated affi liates | 2 | 10,904 | 10,904 | |||
| Trade and other receivables | 732,750 | 6,863 | 9,248 | 716,639 | ||
| Non-current | ||||||
| Cash guarantees and deposits | 3 | 8,193 | 8,193 | |||
| Other receivables maturing in more than 1 year | 3 | 7,662 | 7,662 | |||
| Assets employee benefi ts | 3 | 483 | 483 | |||
| Current | ||||||
| Trade receivables (at cost) | 3 | 622,472 | 622,472 | |||
| Trade receivables (write-down) | 3 | (8,275) | (8,275) | |||
| Other receivables (at cost) | 3 | 71,488 | 71,488 | |||
| Other receivables (write-down) | 3 | (5,801) | (5,801) | |||
| Interest receivable | 3 | 92 | 92 | |||
| Fair value of fi nancial instruments held for cash-fl ow hedging | 2 | 9,248 | 9,248 | |||
| Fair value receivable other fi nancial instruments | 2 | 6,863 | 6,863 | |||
| Deferred charges and accrued income | 3 | 20,324 | 20,324 | |||
| Cash and cash equivalents | 99,245 | 99,245 | ||||
| Short-term investments: bank term deposits | 13,636 | 13,636 | ||||
| Short-term investments: term deposits (other) | (21) | (21) | ||||
| Cash-in-hand and bank current accounts | 85,630 | 85,630 | ||||
| TOTAL OF FINANCIAL INSTRUMENTS (ASSETS) | 864,082 | 6,863 | 9,248 | 826,788 | 21,183 | |
| LIABILITIES | ||||||
| Financial debt | 314,136 | 314,236 | ||||
| Non-current | ||||||
| Bank loans | 2 | 19,900 | 20,000 | |||
| Other loans | 2 | 6,397 | 6,397 | |||
| Current | ||||||
| Short term bank loans | 2 | 72,551 | 72,551 |
| (EUR thousand) | ||||||
|---|---|---|---|---|---|---|
| Carrying amount | ||||||
| Held for trading - no hedge |
Cash Flow hedge ac |
Loans, receiva bles and |
Available | |||
| As at the end of the fi nancial year | Level | Fair value | accounting | counting | payables | for-sale |
| Bank overdrafts | 2 | 932 | 932 | |||
| Short term loan: commercial paper | 2 | 205,794 | 205,794 | |||
| Other loans | 2 | 8,562 | 8,562 | |||
| Trade and other payables | 979,676 | 7,938 | 3,382 | 968,356 | ||
| Non-current | ||||||
| Long term trade payables | 0 | |||||
| Other long term debts | 3 | 4,461 | 4,461 | |||
| Investments grants and deferred income from grants | 3 | 8,447 | 8,447 | |||
| Current | ||||||
| Trade payables | 3 | 710,729 | 710,729 | |||
| Advances received on contracts in progress | 3 | 17,937 | 17,937 | |||
| Tax - other than income tax - payable | 3 | 8,796 | 8,796 | |||
| Payroll and related charges | 3 | 118,271 | 118,271 | |||
| Other amounts payable | 3 | 16,639 | 16,639 | |||
| Dividends payable | 3 | 7,485 | 7,485 | |||
| Accrued interest payable | 3 | 373 | 373 | |||
| Fair value fi nancial instrument held for cash fl ow hedging | 2 | 3,382 | 3,382 | |||
| Fair value payable other fi nancial instruments | 2 | 7,938 | 7,938 | |||
| Accrued charges and deferred income | 3 | 75,218 | 75,218 | |||
| TOTAL OF FINANCIAL INSTRUMENTS (LIABILITIES) | 1,293,812 | 7,938 | 3,382 | 1,282,592 | 0 |
Loans and debt have been issued at market rate which would not create any major differences with effective interest expense. All categories of fi nancial instruments of Umicore are at fair value except the non-current bank and other loans for which the carrying amounts differ from the fair value (see note F24).
The fair value of fi nancial instruments traded in active markets is based on quoted market prices at the end of the reporting period.
The fair value of fi nancial instruments that are not traded in an active market is determined using valuation techniques, mainly discounted cash-fl ow, using for the market assumptions the ones existing at the end of the reporting period.
In particular, the fair value of interest rate swaps is calculated as the present value of the estimated future cash fl ows. The fair value of forward foreign exchange and metal contracts is determined using quoted forward exchange and metal rates at the end of the reporting period.
The fair value of quoted fi nancial assets held by the Group is their quoted market price at the end of the reporting period. The fair value of fi nancial liabilities is estimated by discounting the future contractual cash fl ows at the current market interest rate that is available to the Group for similar fi nancial instruments.
The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values.
The Group adopted the amendment to IFRS 7 for fi nancial instruments which are measured in the balance sheet at fair value, with effect from January 2009. This amendment requires disclosures of fair value measurements by level, based on the following fair value measurement hierarchy:
Level 1: fair value based on quoted prices in active markets for identical assets or liabilities.
Level 2: fair value based on inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly.
Level 3: fair value for the asset or liability valuation are based on unobservable inputs.
In the Group, the fair values on available-for-sale fi nancial assets are measured as level 1 except for the Nyrstar's bond which is level 2 (for an amount of EUR 5.0 millions). All the metal and foreign currency derivatives are measured as level 2.
| Umicore Annual report 2013 32.2 Sensitivity analysis on fi nancial instruments Umicore is sensitive to commodity prices, foreign currency and interest rate risk on its fi nancial instruments 32.2.1 Commodity prices The fair value on fi nancial instruments related to cash fl ow hedging sales would have been EUR 6.9 million lower/higher if the metal prices would strengthen/weaken by 10%. The fair value on fi nancial instruments related to cash fl ow hedging purchases would have been EUR 4.1 million higher/lower if the electricity prices would strengthen/weaken by 10%. The fair value on other commodity sales fi nancial instruments would have been EUR 11.8 million lower/higher and the fair value on other commodity purchases fi nancial instruments would have been EUR 11.8 million higher/lower if the metal prices would strengthen/weaken by 10%. 32.2.2 Foreign currency The fair value of forward currency contracts related to cash fl ow hedging would have been EUR 1.4 million higher if the Euro would strengthen against USD by 10% and would have been EUR 1.8 million lower if the Euro would weaken against USD by 10%. The fair value of forward currency contracts related to cash fl ow hedging would have been EUR 6.0 million higher if the Euro would strengthen against ZAR by 10% and would have been EUR 4.9 million lower if the Euro would weaken against ZAR by 10%. The fair value of forward currency contracts related to cash fl ow hedging would have been EUR 1.6 million lower if the USD would strengthen against KRW by 10% and would have been EUR 2.3 million higher if the USD would weaken against KRW by 10%. The fair value of other forward currency contracts sold would have been EUR 26.3 million higher if the Euro would strengthen against USD by 10% and would have EUR 32.1 million lower if the Euro would weaken against USD by 10%. The fair value of other forward currency contracts bought would have been EUR 5.3 million lower if the Euro would strengthen against USD by 10% and would have been EUR 6.4 million higher if the Euro would weaken against USD by 10%. The fair value of net position of current assets and liabilities exposed to USD would have been EUR 22.8 million lower if the Euro would strengthen against USD by 10% and would have been EUR 27.9 million higher if the Euro would weaken against USD by 10%. F33 Fair value of fi nancial instruments Umicore hedges its structural and transactional commodity (metal and energy), currency and interest rate risks using respectively commodity derivatives (mainly quoted on the London Metal Exchange), currency derivatives and Interest Rate Swaps with reputated brokers and banks. 33.1 Financial instruments related to cash-fl ow hedging (EUR thousand) Notional or Contractual amount Fair value 31/12/2012 31/12/2013 31/12/2012 31/12/2013 Forward commodities sales 97,164 76,635 6,232 8,051 Forward commodities purchases (22,201) (42,678) (1,857) (1,695) Forward currency contracts sales 88,980 121,471 (458) (377) Forward currency contracts purchases 3,115 0 Forward IRS contracts (113) Total fair value impact subsidiaries 3,917 5,866 Recognized under trade and other receivables 8,452 9,248 Recognized under trade and other payables (4,535) (3,382) Total fair value impact associates and joint ventures 22 (13) |
|||
|---|---|---|---|
| Total | 3,939 | 5,853 |
The principles and documentation on the hedged risks as well as the timing related to the Group's cash fl ow hedging operations are included in note F3 Financial risk management.
The fair values of the effective hedging instruments are in the fi rst instance recognized in the fair value reserves recorded in equity and are derecognized when the underlying forecasted or committed transactions occur (see note F23).
The forward commodities sales contracts are set up to hedge primarily the following commodities: gold, silver, palladium and copper.
The forward commodity purchase contracts are set up to hedge primarily the electricity price risks.
The forward currency contracts are set up to hedge USD towards EUR, KRW, BRL and NOK and EUR towards NOK and ZAR.
The average maturity date of fi nancial instruments related to cash-fl ow hedging is December 2014 for the forward commodities sold and November 2014 for the forward currency contracts.
The terms and conditions of the forward contracts are common market conditions.
In those circumstances whereby the hedge accounting documentation as defi ned under IAS 39 is not available, fi nancial instruments used to hedge structural risks for metals and currencies are measured as if they were held for trading. However, such instruments are being used to hedge future probable cash-fl ows and are not speculative in nature.
Umicore has not faced any ineffectiveness on cash fl ow hedging in P&L in 2012 and 2013.
| Notional or Contractual amount | Fair value | |||
|---|---|---|---|---|
| 31/12/2012 | 31/12/2013 | 31/12/2012 | 31/12/2013 | |
| Forward commodities sales | 99,771 | 139,201 | 953 | (591) |
| Forward commodities purchases | (118,934) | (120,116) | (4,785) | (2,002) |
| Forward currency contracts sales | 362,118 | 305,893 | 3,719 | 3,463 |
| Forward currency contracts purchases | (115,685) | (77,691) | (158) | (1,944) |
| Total fair value impact subsidiaries | (271) | (1,074) | ||
| Recognized under trade and other receivables | 8,437 | 6,863 | ||
| Recognized under trade and other payables | (8,708) | (7,938) | ||
| Total | (271) | (1,074) |
The principles and documentation related to the Group's transactional hedging are included in note F3 "Financial risk management". In the absence of hedge accounting documentation as defi ned under IAS 39, fi nancial instruments used to hedge transactional risks for metals and currencies are measured as if they were held for trading. However, such instruments are being used to cover existing transactions and fi rm commitments and are not speculative in nature.
The fair values are immediately recognized in the income statement under Other operating income for the commodity instruments and the Net Finance cost for the currency instruments.
| (EUR thousand) | |||||
|---|---|---|---|---|---|
| Earliest contractual maturity (undiscounted) | |||||
| 1 to 3 | 3 Months - 1 | ||||
| As at the end of previous year | < 1 Month | Months | Year | 1 to 5 Years | Total |
| FINANCIAL INSTRUMENTS ASSETS (FAIR VALUE) | |||||
| Commodity risk | |||||
| Total forward purchases (CFH) | 0 | 1,668 | 4,747 | 0 | 6,415 |
| Total forward sales (other) | 386 | 899 | 2,468 | 0 | 3,754 |
| Total forward purchases (other) | 699 | 266 | 19 | (27) | 957 |
| FX Risk | |||||
| Forward currency contracts sales (CFH) | 175 | 358 | 1,641 | 1 | 2,174 |
| Forward currency contracts sales (other) | 3,405 | (8) | 322 | 0 | 3,719 |
| Forward currency contracts purchases (other) | 4 | 3 | 0 | 0 | 7 |
| FINANCIAL INSTRUMENTS LIABILITIES (FAIR VALUE) | |||||
| Commodity risk | |||||
| Total forward sales (CFH) | 0 | 19 | (193) | 0 | (174) |
| Total forward purchases (CFH) | (2) | (52) | (1,112) | (708) | (1,873) |
| Total forward sales (other) | (1,329) | (1,288) | (5) | 0 | (2,621) |
| Total forward purchases (other) | (1,709) | (2,403) | (1,810) | 0 | (5,921) |
| FX Risk | |||||
| Forward currency contracts sales (CFH) | 0 | (466) | (2,166) | 0 | (2,632) |
| Forward currency contracts sales (other) | 0 | 0 | 0 | 0 | 0 |
| Forward currency contracts purchases (other) | (63) | (120) | 18 | 0 | (166) |
(EUR thousand)
| r | |
|---|---|
| Umicore Annual report 2013 (EUR thousand) |
|||||
|---|---|---|---|---|---|
| Earliest contractual maturity (undiscounted) | |||||
| 1 to 3 | 3 Months | ||||
| As at the end of the fi nancial year | < 1 Month | Months | - 1 Year | 1 to 5 Years | Total |
| FINANCIAL INSTRUMENTS ASSETS (FAIR VALUE) | |||||
| Commodity risk | |||||
| Total forward sales (CFH) | 578 | 577 | 3,538 | 3,336 | 8,029 |
| Total forward purchases (CFH) | |||||
| Total forward sales (other) | 91 | 1,168 | 19 | 0 | 1,278 |
| Total forward purchases (other) | 899 | 871 | 344 | 8 | 2,122 |
| FX Risk | |||||
| Forward currency contracts sales (CFH) | 116 | 216 | 861 | 26 | 1,219 |
| Forward currency contracts sales (other) | 2,033 | 444 | 541 | 445 | 3,463 |
| Forward currency contracts purchases (other) | 0 | 0 | 0 | 0 | 0 |
| FINANCIAL INSTRUMENTS LIABILITIES (FAIR VALUE) | |||||
| Interest rate risk | |||||
| Interest rate swaps | 0 | 0 | 0 | (113) | (113) |
| Commodity risk | |||||
| Total forward sales (CFH) | 0 | 2 | 8 | 13 | 23 |
| Total forward purchases (CFH) | 6 | 36 | (735) | (1,002) | (1,695) |
| Total forward sales (other) | (1,036) | (636) | (198) | 0 | (1,870) |
| Total forward purchases (other) | (720) | (3,401) | (2) | 0 | (4,124) |
| FX Risk | |||||
| Forward currency contracts sales (CFH) | (257) | (880) | (1,266) | 805 | (1,596) |
| Forward currency contracts purchases (CFH) | 0 | 0 | 0 | 0 | 0 |
| Forward currency contracts sales (other) | 0 | 0 | 0 | 0 | 0 |
| Forward currency contracts purchases (other) | (86) | (354) | (1,456) | (49) | (1,944) |
The cash fl ow statement identifi es operating, investing and fi nancing activities for the period.
Umicore uses the indirect method for the operating cash fl ows. The net profi t and loss is adjusted for:
| (EUR thousand) | ||
|---|---|---|
| 2012 | 2013 | |
| ADJUSTMENTS FOR NON CASH TRANSACTIONS | ||
| Depreciations | 151,959 | 158,622 |
| Adjustment IAS 39 | 6,278 | 1,022 |
| (Reversal) Impairment charges | 29,326 | 15,356 |
| Mark to market of inventories and commitments | (28,740) | 2,663 |
| Exchange difference on long-term loans | (341) | 742 |
| Inventories and bad debt provisions | 3,946 | 885 |
| Depreciation on government grants | (327) | (385) |
| Share-based payments | 5,325 | 4,337 |
| Change in provisions | (1,206) | 5,375 |
| 166,220 | 188,618 | |
| ADJUSTMENTS FOR ITEMS TO DISCLOSE SEPARATELY OR UNDER INVESTING AND FINANCING CASH FLOWS | ||
| Tax charge of the period | 59,688 | 52,386 |
| Interest (income) charges | 6,103 | 2,609 |
| (Gain) loss on disposal of fi xed assets | 43 | (2,267) |
| Dividend income | (913) | (918) |
| 64,922 | 51,811 | |
| CHANGE IN WORKING CAPITAL REQUIREMENT ANALYSIS | ||
| Inventories | 69,903 | 128,847 |
| Trade and other receivables | 63,969 | 69,310 |
| Trade and other payables | (149,473) | (27,432) |
| As in the consolidated balance sheet | (15,601) | 170,725 |
| Non-cash items (*) | 21,485 | (3,314) |
| Items disclosed elsewhere (**) | 39,665 | (24,746) |
| Impact of business combination | 9,131 | 6,509 |
| Currency translation differences | (20,620) | (52,300) |
| As in the consolidated cash fl ow statement | 34,060 | 96,873 |
(*) Non cash items are mainly linked to mark to market of inventories and commitments, strategic and transactional hedging and inventories and bad debt provisions. (**) Item disclosed elsewhere are mainly due to changes in interest, dividend and tax receivable and payable.
| (EUR thousand) | ||||
|---|---|---|---|---|
| Net cash and cash equivalent |
Loans (w/o bank overdrafts) |
Net fi nancial | debt | |
| At the end of previous year | 130,989 | 353,469 | 222,480 | |
| Cash fl ow of the period | (32,675) | (40,166) | (7,491) | |
| At the end of the fi nancial year | 98,313 | 313,303 | 214,990 |
| (EUR thousand) | ||
|---|---|---|
| 2012 | 2013 | |
| Acquisition of tangible assets | 227,770 | 266,741 |
| Acquisition of intangible assets | 25,688 | 26,970 |
| Acquisitions of assets | 253,458 | 293,711 |
| Capitalized R&D | 17,713 | 14,096 |
| Capital expenditure | 235,745 | 279,615 |
| Umicore Annual report 2013 | ||
|---|---|---|
| 34.2 Net cash fl ow generated by operating activities | ||
| Operating cash fl ow after tax is EUR 500.8 million. Working capital requirements decreased by EUR 96.9 million, resulting from lower quantities but also lower metal prices. |
||
| 34.3 Net cash fl ow used in investing activities | ||
| Net cash used in investing activities increased by EUR 49.6 million in 2013. Capital expenditure reached EUR 280 million if capitalized R&D costs are excluded as per the new Umicore defi nition of the capital expenditures (refer to Glossary). The vast majority of capital expenditures relates to Vision 2015 growth projects. Compared to 2012, investments were up in Catalysis, linked to the addition of light duty and HDD production capabilities in Asia and Europe and the construction of the technology development centres in Japan and Brazil. Investments were also up in Energy Materials with capacity investments for cathode materials in Korea and China and the construction of a new precursor facility in Korea. In Recycling, capital expenditure continued to run at a high level as a result of the expansion of the sampling facilities and new water treatment and gas cleaning equipment in Hoboken, Belgium. Investments were stable in Performance Materials. |
||
| The acquisitions include EUR 25.5 million of intangibles coming mainly from the capitalization of costs linked to new information systems and development expenses (see note F14). The acquisition of new subsidiaries (net of cash acquired) is linked to the acquisition of Palm Commodities International. |
||
| 34.4 Net cash fl ow used in fi nancing activities | ||
| The cash used in fi nancing activities is mainly the consequence of the net decrease of indebtedness (EUR 38.5 million), the buyback of own shares netted with the use of own shares to exercize the options (EUR 78.8 million), the capital decrease in minorities (EUR 5.8 million) and the payment of dividends (EUR 115.2 million) and of interest (EUR 2.6 million). |
||
| (EUR thousand) | ||
| 2012 | 2013 | |
| Acquisition of tangible assets | 227,770 | 266,741 |
| Acquisition of intangible assets Acquisitions of assets |
25,688 253,458 |
26,970 293,711 |
| Capitalized R&D | 17,713 | 14,096 |
| Capital expenditure | 235,745 | 279,615 |
| F35 Rights and commitments | (EUR thousand) | |
| 2012 | 2013 | |
| Guarantees constituted by third parties on behalf of the Group | 64,008 | 48,258 |
| Guarantees constituted by the Group on behalf of third parties | 8,516 | 4,746 |
| Guarantees received Goods and titles held by third parties in their own names but at the Group's risk |
105,356 414,793 |
103,955 293,442 |
| Commitments to acquire and sell fi xed assets | 225 | 2,060 |
| Commercial commitments for commodities purchased (to be received) | 74,178 | 100,312 |
| Commercial commitments for commodities sold (to be delivered) | 133,512 | 141,176 |
| Goods and titles of third parties held by the Group | 1,878,924 | 1,080,004 |
| Miscellaneous rights and commitments | 3,884 | 3,542 |
| Total | 2,683,396 | 1,777,495 |
are secured and unsecured guarantees given by third parties to the creditors of the group guaranteeing that the Group's debts and commitments, actual and potential, will be satisfactorily discharged.
are guarantees or irrevocable undertakings given by the Group in favour of third parties guaranteeing the satisfactory discharge of debts or of existing or potential commitments by the third party to its creditors.
There are no loan commitments given to third parties.
are pledges and guarantees received guaranteeing the satisfactory discharge of debts and existing and potential commitments of third parties towards the Group, with the exception of guarantees and security in cash.
The guarantees received are mainly related to supplier guarantees backed by bank institutions. Those guarantees are set up to cover the good execution of work by the supplier. Some guarantees received are related to customer guarantees, received mainly from a customer's mother company on behalf of one of its subsidiaries. A minor part of the received guarantees is related to rent guarantees.
All guarantees are taken at normal market conditions and their fair value is equivalent to the carrying amount. No re-pledge has been done on any of those guarantees.
represent goods and titles included in the Group balance sheet for which the Group bears the risk and takes the profi t, but where these goods and titles are not present on the premises of the Group . It concerns mainly inventories leased out to third parties or held under consignment or under tolling agreement by third parties.
are fi rm commitments to deliver or receive metals to customers or from suppliers at fi xed prices.
are goods and titles held by the group, but which are not owned by the Group. It concerns mainly third party inventories leased in or held under consignment or tolling agreements with third parties.
The Group leases metals (particularly gold and silver) from and to banks and other third parties for specifi ed, mostly short term, periods and for which the group pays or receives fees. As at 31 December 2013, there was a net lease-in position for EUR 248 million vs. EUR 631 million at end of 2012. This decrease is caused by lower quantities and lower prices of leased metals.
The Group has certain pending fi les that can be qualifi ed as contingent liabilities or contingent assets, according to the defi nition of IFRS.
As published last year, soil and groundwater pollution, including some caused by historical activities at the Guarulhos site (Brazil) before its acquisition by Umicore in 2003, was found in adjacent areas including an area originally intended for re-urbanization. In 2010, it was decided to address the contaminated groundwater on-site, in order to speed up the remediation. To that end, an hydraulic barrier was constructed accompanied by pilot tests in order to design the most effective full scale operations. Further, Umicore has assessed the impact the historical contamination had on the areas outside the operational plant and agreed with the local authorities to a program. In 2013, Umicore took some provisions to that effect (please refer to the note F29 on Environmental provisions).
Following the winding up of the Element Six Contributory Pension Plan in Ireland in 2011, certain members of the scheme have brought a claim against the trustees of the scheme. Element Six has provided an indemnity to the trustees, which includes this claim and any award of damages or costs which may be made by the Courts should the claim be proven. The trustees successfully defended the claim and a verdict in their favor was handed down in early February 2014. Although this verdict remains subject to appeal and further legal action on this matter cannot be ruled out, the status of the case does not warrant for any provision to be raised in the fi nancial statements for 2013.
| Umicore Annual report 2013 | ||
|---|---|---|
| 36.3 Others | ||
| In addition to the above, the Group is the subject of a number of claims and legal proceedings incidental to the normal conduct of its business. Management does not believe that such claims and proceedings are likely, on aggregate, to have a material adverse effect on the fi nancial condition of Umicore. |
||
| F37 Related parties | ||
| (EUR thousand) | ||
| 2012 | 2013 | |
| TRANSACTIONS WITH JOINT VENTURES AND ASSOCIATES | ||
| Operating income | 87,885 | 136,598 |
| Operating expenses | (62,788) | (77,285) |
| Financial income | 130 | 240 |
| Financial expenses Dividends received |
(62) (24,705) |
(47) (14,331) |
| 2012 | 2013 | |
| OUTSTANDING BALANCES WITH JOINT VENTURES AND ASSOCIATES | ||
| Current trade and other receivables | 4,752 | 2,558 |
| Current trade and other payables | 10,341 | 32,222 |
| A capital increase has been done in the joint venture Ordeg (South Korea) for EUR 7.5 million. | ||
| 2012 | (EUR) 2013 |
|
| BOARD OF DIRECTORS | ||
| Salaries and other compensation | 530,045 | 535,952 |
| Fixed portion | 220,000 | 230,833 |
| Variable portion (based on attended meetings) | 200,500 | 191,000 |
| Value of the share grant | 101,288 | 106,507 |
| Benefi t in kind company car chairman | 8,257 | 7,612 |
| No variable or other compensation element (apart from attendance-related fees) is associated with directorship. No loan or guarantees have been granted | ||
| by the company to members of the Board. | ||
| (EUR) | ||
| 2012 | 2013 | |
| EXECUTIVE COMMITTEE | ||
| Salaries and other benefi ts | 8,922,465 | 7,504,592 |
| Short-term employee benefi ts | 5,040,724 | 3,291,796 |
| Post-employment benefi ts Other long-term benefi ts |
908,448 864,521 |
1,576,470 877,512 |
| Share-based payments | 2,108,772 | 1,758,814 |
| 2012 | 2013 | |
|---|---|---|
| OUTSTANDING BALANCES WITH JOINT VENTURES AND ASSOCIATES | ||
| Current trade and other receivables | 4,752 | 2,558 |
| Current trade and other payables | 10,341 | 32,222 |
| (EUR) | ||
|---|---|---|
| 2012 | 2013 | |
| BOARD OF DIRECTORS | ||
| Salaries and other compensation | 530,045 | 535,952 |
| Fixed portion | 220,000 | 230,833 |
| Variable portion (based on attended meetings) | 200,500 | 191,000 |
| Value of the share grant | 101,288 | 106,507 |
| Benefi t in kind company car chairman | 8,257 | 7,612 |
| (EUR) | ||
|---|---|---|
| 2012 | 2013 | |
| EXECUTIVE COMMITTEE | ||
| Salaries and other benefi ts | 8,922,465 | 7,504,592 |
| Short-term employee benefi ts | 5,040,724 | 3,291,796 |
| Post-employment benefi ts | 908,448 | 1,576,470 |
| Other long-term benefi ts | 864,521 | 877,512 |
The data above shows the accounting view of the Board and Executive Committee remuneration and differs somewhat from the information provided in the Remuneration Report in the Corporate Governance section.
In the tables above, the employer social security contributions, if applicable, are included in the short-term employee benefi ts. These do not feature in the Remuneration Report.
With regards to share-based incentives the share grant fi gures included in share-based payments above represent the value of the shares granted in 2013 for services rendered in 2012. The remuneration Report shows the value of the shares granted in 2014 for services rendered in the reporting year i.e. 2013.
The fi gures related to the undeferred part of the variable cash remuneration linked to the individual performance for the reference year 2013, included in short-term employee benefi ts, represent the level of accruals at the end of reporting period. The Remuneration Report features the actual amounts paid.
Accruals booked for the deferred parts of the variable cash remuneration for the reference year 2013 are included in the other long-term benefi ts. The amounts to be paid in 2015 and 2016 will depend on long-term performance measures and the exact amounts paid will be included in the Remuneration Reports for the years in question.
Following the Board of Directors meeting of 5 February 2014, Umicore announced that a gross dividend of EUR 1.00 per share would be proposed to the Annual Shareholders Meeting, corresponding to a total dividend payment of EUR 110,381 thousand of which EUR 0.50 per share were already paid out as interim dividend in September 2013.
| EARNINGS PER SHARE | (EUR) | |
|---|---|---|
| 2012 | 2013 | |
| Excluding discontinued operations | ||
| EPS - basic | 2.09 | 1.61 |
| EPS - diluted | 2.08 | 1.60 |
| Including discontinued operations | ||
| EPS - basic | 2.09 | 1.61 |
| EPS - diluted | 2.08 | 1.60 |
| Recurring EPS | 2.47 | 1.96 |
The following earnings fi gures have been used as the numerator in the calculation of basic and diluted earnings per share:
| NUMERATOR ELEMENTS | (EUR thousand) | ||
|---|---|---|---|
| Note | 2012 | 2013 | |
| Net consolidated profi t, Group share | F9 | 233,444 | 179,029 |
| Without discontinued operations | 233,444 | 179,029 | |
| With discontinued operations | 233,444 | 179,029 | |
| Recurring net consolidated profi t, Group share | F9 | 275,235 | 218,042 |
The following numbers of shares have been used as the denominator in the calculation of basic and diluted earnings per share:
| 2012 | 2013 | |
|---|---|---|
| Total shares issued as at 31 December | 120,000,000 | 120,000,000 |
| of which treasury shares | 8,113,488 | 10,228,661 |
| of which shares outstanding | 111,886,512 | 109,771,339 |
| Weighted average number of outstanding shares | 111,593,474 | 111,257,259 |
| Potential dilution due to stock option plans | 752,607 | 475,906 |
| Adjusted weighted average number of outstanding shares | 112,346,081 | 111,733,165 |
Total outstanding shares are after deduction of treasury shares, which are held to cover existing stock option plans or are available for resale. The denominator for the calculation of diluted earnings per share takes into account an adjustment for stock options.
During 2013, no new shares were created as a result of the exercise of stock options with linked subscriptions rights. During the year Umicore used 296,912 of its treasury shares in the context of the exercise of stock options and 25,300 for shares granted. In the course of 2013, Umicore bought back 2,437,385 of its own shares. On 31 December 2013, Umicore owned 10,228,661 of its own shares representing 8.52%of the total number of shares issued as at that date.
The following new standards, amendments to standards and interpretations are mandatory for the fi rst time for the fi nancial year beginning 1 January 2013:
The following new standards and amendments to standards have been issued and have been endorsed by the European Union, but are not mandatory for the fi rst time for the fi nancial year beginning 1 January 2013:
The following new standard, amendments to standards and interpretation have been issued, but are not mandatory for the fi rst time for the fi nancial year beginning 1 January 2013 and have not been endorsed by the European Union:
| 114 | Financial statements | |
|---|---|---|
| Umicore Annual report 2013 | ||
| management personnel'. | • 'Annual improvements' with minor amendments to eight standards and is effective for periods beginning on or after 1 July 2014. The amendments relate to IFRS 2 'Defi nition of vesting condition, IFRS 3 'Accounting for contingent consideration in a business combination', IFRS 8 'Aggregation of operating segments', 'IFRS 8 'Reconciliation of the total of the reportable segments' assets to the entity's assets', IFRS 13 'Short-term receivables and payables', IAS 7 'Interest paid that is capitalised', IAS 16/IAS 38 'Revaluation method – proportionate restatement of accumulated depreciation', IAS 24 'Key |
|
| • 'Annual improvements' in response to four issues addressed during the 2011-2013 cycle and is effective for periods beginning on or after 1 July 2014. The amendments include IFRS 1 'Meaning of effective IFRSs', IFRS 3 'Scope exceptions for joint ventures', IFRS 13 'Scope of paragraph 52 (portfolio exception)' and IAS 40 'Clarifying the interrelationship of IFRS 3 Business Combinations and IAS 40 Investment Property when classifying property as investment property or owner-occupied property'. |
||
| • Amendment to IAS 19 'Defi ned benefi t plans', effective for periods beginning on or after 1 July 2014. The amendment seeks clarifi cation for the accounting of employee contributions set out in the formal terms of a defi ned benefi t plan. |
||
| • Amendment to IFRS 9 'fi nancial instruments' on general hedge accounting, effective date to be determined. The amendment incorporates the new general hedge accounting model which will allow reporters to refl ect risk management activities in the fi nancial statements more closely as it provides more |
The management is currently assessing the impact of these new standards and amendments on the Group's operations.
opportunities to apply hedge accounting.
The world-wide remuneration for the statutory auditor and its affi liated companies totalled EUR 2.4 million, including an amount of EUR 1.9 million for the statutory audit missions (EUR 0.5 million for the audit of the mother company) and EUR 0.5 million for non-statutory audit services including audit-related and other attestation services (EUR 0.1 million) and other non-audit related services (EUR 0.3 million).
| Umicore Annual report 2013 | |||
|---|---|---|---|
| Parent company separate summarized financial statements | |||
| The annual accounts of Umicore are given below in summarized form. In accordance with the Companies code, the annual accounts of Umicore, together with the management report and the statutory auditor's report will be |
|||
| deposited with the National Bank of Belgium. | |||
| These documents may also be obtained on request from: | |||
| UMICORE Rue du Marais 31 |
|||
| B-1000 Brussels (Belgium) | |||
| The statutory auditor did not express any reservations in respect of the annual accounts of Umicore. | |||
| The legal reserve of EUR 50,000 thousand which is included in the retained earnings is not available for distribution. | |||
| (EUR thousand) | |||
| SUMMARIZED BALANCE SHEET AT 31 DECEMBER | 31/12/2011 | 31/12/2012 | 31/12/2013 |
| 1. ASSETS | |||
| Fixed assets | 3,730,403 | 3,787,362 | 3,793,411 |
| I. Formation expenses |
|||
| II. Intangible assets |
72,409 | 79,483 | 84,042 |
| III. Tangible assets |
302,174 | 317,085 | 347,946 |
| IV. Financial assets |
3,355,820 | 3,390,794 | 3,361,423 |
| Current assets V. Amounts receivable after more than one year |
1,342,747 798 |
957,086 783 |
923,789 773 |
| VI. Stocks and contracts in progress |
566,508 | 465,396 | 394,039 |
| VII. Amounts receivable within one year |
508,993 | 259,283 | 220,493 |
| VIII. Investments |
259,349 | 219,265 | 299,215 |
| IX. Cash at bank and in hand |
546 | 1,348 | 1,131 |
| X. Deferred charges and accrued income |
6,553 | 11,011 | 8,134 |
| Total assets | 5,073,150 | 4,744,448 | 4,717,197 |
| 2. LIABILITIES AND SHAREHOLDERS' EQUITY Capital and reserves |
1,415,121 | 1,449,756 | 1,426,759 |
| I. Capital |
500,000 | 500,000 | 500,000 |
| II. Share premium account |
6,610 | 6,610 | 6,610 |
| III. Revaluation surplus |
91 | 91 | 91 |
| IV. Reserves |
446,295 | 419,413 | 497,318 |
| V. Result carried forward |
298,383 | 368,999 | 327,502 |
| Vbis. Result for the period |
156,153 | 146,723 | 87,990 |
| VI. Investments grants |
7,589 | 7,920 | 7,248 |
| Provisions and deferred taxation | |||
| VII.A. Provisions for liabilities and charges |
86,205 | 96,967 | 105,843 |
| Creditors VIII. Amounts payable after more than one year |
3,571,824 1,528,750 |
3,197,725 1,664,000 |
3,184,594 2,082,000 |
| IX. Amounts payable within one year |
1,963,445 | 1,464,758 | 1,053,194 |
| X. Accrued charges and deferred income |
79,629 | 68,967 | 49,400 |
| Total liabilities and shareholders' equity | 5,073,150 | 4,744,448 | 4,717,197 |
| (EUR thousand) | ||||
|---|---|---|---|---|
| 31/12/2011 | 31/12/2012 | 31/12/2013 | ||
| INCOME STATEMENT | ||||
| I. | Operating income | 4,579,923 | 4,473,315 | 3,157,820 |
| II. | Operating charges | (4,421,003) | (4,313,756) | (3,047,883) |
| III. | Operating result | 158,920 | 159,559 | 109,937 |
| IV. | Financial income | 115,398 | 78,640 | 103,076 |
| V. | Financial charges | (102,423) | (94,046) | (93,979) |
| VI. | Result on ordinary activities before taxes | 171,896 | 144,152 | 119,034 |
| VII. | Extraordinary income | 3,212 | 52,678 | 911 |
| VIII. | Extraordinary charges | (20,150) | (50,129) | (27,631) |
| IX. | Result for the period before taxes | 154,958 | 146,701 | 92,314 |
| X. | Income taxes | 1,195 | 22 | 4,324 |
| XI. | Result for the period | 156,153 | 146,723 | 87,990 |
| XII. | Transfer from/to untaxed reserve | |||
| XIII. | Result for the period available | 156,153 | 146,723 | 87,990 |
| (EUR thousand) | ||
|---|---|---|
| 2013 | ||
| 603,778 | ||
| 87,990 | ||
| 515,788 | ||
| (77,905) | ||
| 0 | ||
| (77,905) | ||
| 0 | ||
| 415,493 | ||
| 415,493 | ||
| (110,381) | ||
| APPROPRIATION ACCOUNT Profi t (loss) to be appropriated 1. Profi t (loss) for the fi nancial year 2. Profi t (loss) carried forward Appropriation to equity 2. To the legal reserve 3. To the reserve for own shares 4. To the capital Profi t (loss) to be carried forward (1) 2. Profi t (loss) to be carried forward Profi t to be distributed (1) |
2011 653,656 156,153 497,503 (87,322) 0 (87,322) 0 453,945 453,945 (112,389) |
2012 600,668 146,723 453,945 26,882 0 26,882 0 515,788 515,788 (111,762) |
(1) The total amount of these two items will be amended to allow for the amount of the company's own shares held by Umicore on the date of the Annual General Meeting of Shareholders on 29 April 2014; the gross dividend of EUR 1.00 will not change.
| (EUR thousand) | Number of shares | |||||
|---|---|---|---|---|---|---|
| STATEMENT OF CAPITAL | ||||||
| A. | Share capital | |||||
| 1. | Issued capital | |||||
| At the end of the preceding fi nancial year | 500,000 | 120,000,000 | ||||
| At the end of the fi nancial year | 500,000 | 120,000,000 | ||||
| 2. | Structure of the capital | |||||
| 2.1. | Categories of shares | |||||
| Ordinary shares | 500,000 | 120,000,000 | ||||
| 2.2. | Registered shares or bearer shares | |||||
| Registered | 6,544,778 | |||||
| Bearer | 113,455,222 | |||||
| E. | Authorized unissued capital | 50,000 | ||||
| % capital | Number of shares | Notifi cation date | ||||
| G. | Shareholder base (1) | |||
|---|---|---|---|---|
| Vanguard Precious Metals and Mining Fund | 3.02 | 3,620,000 | 07/12/2012 | |
| Franklin Templeton Institutional LLC | 3.08 | 3,691,759 | 31/10/2013 | |
| Family Trust Desmarais, Albert Frère & Groupe Bruxelles Lambert S.A. | 5.01 | 6,017,276 | 28/11/2013 | |
| BlackRock Inc. | 4.96 | 5,957,971 | 14/12/2012 | |
| Others | 75.40 | 90,484,333 | 31/12/2013 | |
| Own shares held by Umicore | 8.52 | 10,228,661 | 31/12/2013 | |
| 100.00 | 120,000,000 | |||
| of which free fl oat | 100.00 | 120,000,000 | ||
(1) At 31 December 2013, 3,378,088 options on Umicore shares are still to be exercized. This amount includes 3,378,088 acquisition rights of existing shares held by Umicore.
We hereby certify that, to the best of our knowledge, the Consolidated Financial Statements as of 31 December 2013, prepared in accordance with the International Financial Reporting Standards (IFRS) as adopted by the European Union, and with legal requirements applicable in Belgium, give a true and fair view of the assets, liabilities, fi nancial position and profi t or loss of the Group and the undertakings included in the consolidation taken as a whole, and that the management report includes a fair review of the development and performance of the business and the position of the group and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.
27 March 2014,
Marc Grynberg Chief Executive Offi cer
| Environmental key fi gures | 120 |
|---|---|
| Notes to the environmental key fi gures | 120 |
| E1 Scope of environmental statements | 120 |
| E2 Emissions to water and air | 121 |
| E3 Greenhouse gases | 122 |
| E4 Energy | 124 |
| E5 Water consumption | 125 |
| E6 Product and materials | 125 |
| E7 Waste | 127 |
| E8 Historical pollution | 127 |
| E9 Regulatory compliance and management system | 128 |
| E10 Biodiversity | 129 |
| unit | notes | 2009 | 2010 | 2011 | 2012 | 2013 | |
|---|---|---|---|---|---|---|---|
| Metal emission to water (load) | kg | E2 | 5,915 | 6,495 | 5,782 | 5,701 | 5,560 |
| Metal emission to water (impact units) | E2 | 442,575 | 389,676 | 306,627 | 245,935 | 313,883 | |
| COD (chemical oxygen demand) | kg | E2 | 235,266 | 258,309 | 252,681 | 278,131 | 297,490 |
| Metal emission to air (load) | kg | E2 | 11,950 | 13,582 | 13,867 | 16,614 | 12,533 |
| Metal emission to air (impact units) | E2 | 214,650 | 184,066 | 129,900 | 135,059 | 140,349 | |
| SOx emissions |
tonne | E2 | 408 | 468 | 511 | 487 | 702 |
| NOx emissions |
tonne | E2 | 369 | 426 | 412 | 399 | 462 |
| CO2 e emissions (scope1+2) |
tonne | E3 | 529,628 | 543,807 | 695,733 | 701,898 | 693,839 |
| Energy consumption | terajoules | E4 | 7,284 | 7,597 | 7,807 | 7,315 | 7,557 |
| Water consumption | thousand m3 | E5 | 4,670 | 4,617 | 4,567 | 4,310 | 4,337 |
| Product SD analysis | N° | E6 | - | - | 3 | 7 | 6 |
| Total waste produced | tonne | E7 | 54,300 | 63,993 | 71,426 | 69,702 | 68,520 |
| Hazardous waste | tonne | E7 | 34,555 | 38,533 | 43,588 | 47,789 | 45,668 |
| of which recycled | % | E7 | 6.5 | 7.7 | 9.8 | 7.5 | 16.9 |
| Non hazardous waste | tonne | E7 | 19,745 | 25,460 | 27,837 | 21,914 | 22,852 |
| of which recycled | % | E7 | 62.3 | 59.8 | 64.9 | 54.7 | 60.1 |
| Measurements exceeding limit | N° | E9 | 618 | 878 | 798 | 926 | 775 |
| Compliance excess rate | % | E9 | 1.1 | 1.4 | 1.4 | 1.1 | 0.8 |
| Environmental complaints | N° | - | - | - | 24 | 25 | |
| Sites ISO 14001 certifi ed | % | E9 | 86 | 86 | 92 | 93 | 97 |
| Sites having a potential environmental impact on an area of high biodiversity value |
N° | E10 | 8 | 8 | 11 | 15 | 16 |
The environmental key fi gures include data from consolidated manufacturing sites where Umicore has operational control. Compared to 2012, data of one site is no longer reported because of cessation of industrial activities at the site (Perafi ta, Portugal, Building Products). Two sites were added to the reporting scope: Himeji (Japan, Automotive Catalyst) and the testing centre in Suzhou (China, Automotive Catalyst). This brings the total number of reporting sites to 66 compared to 65 in 2012. The energy consumption data also includes the two main offi ce buildings in Brussels (Belgium) and Bagnolet (France).
Within the scope of Umicore's reporting framework, the majority of the sites report their environmental data at the end of the 3rd quarter together with a forecast for the 4th quarter. In January, the forecasted values are checked by the site for signifi cant deviations and, if needed, corrected. The fi ve sites with the largest environmental impact for 2013: Hanau (Germany, Catalysis, Performance Materials & Recycling), Olen (Belgium, Energy Materials & Group R&D), Hoboken (Belgium, Recycling & Group P&T), Changsha (China, Performance Materials) and Cheonan, (South Korea, Energy Materials) report their fullyear fi gures. A sensitivity analysis undertaken for the 2013 data on metals emissions to air and water and energy consumption indicate that the potential deviation of the Group environmental performance would be less than 5% in case of a 20% error in the forecasted data.
Please note that due to improved analytical and reporting methods, some of the data published in the 2012 annual report has been restated in the 2013 report (the majority of these restatements were less than 2%, with the exception of water consumption which was restated by some 8%).
More details on Umicore's management approach are available on www.umicore.com/sustainability/environment/
It is Umicore's objective to decrease the impact of metal emissions to air and water by 20% at Group level compared to the 2009 levels.
Metal emissions to water are defi ned as the total amount of metals emitted after treatment to surface water from effl uent(s) expressed in kg/year. If the site makes use of an external waste water treatment plant, the effi ciency of that treatment is taken into account if known to the site.
Metal emissions to air is defi ned as the total amount of metals emitted to air in solid fraction by all point sources expressed in kg/year. For mercury and arsenic, additional vapor/fume fractions are counted as well.
For each of the metals emitted to water and air, an impact factor is applied to account for the different toxicity and ecotoxicity levels of the various metals when they are emitted to the environment. The higher the impact factor, the higher the toxicity is to the receiving water body (for water emissions) or to human health (for air emissions).
The impact factors for water emissions are based upon scientifi c data generated ('predicted no effect concentrations' or PNECs) for the REACH regulation. An impact factor of 1 was attributed to the antimony PNEC of 113 μg/l. The impact factors for emissions to air are based upon the occupational exposure limits (OEL) (reference: American Conference of Industrial and Governmental Hygienists, 2011). An impact factor of 1 was attributed to the zinc (oxide) OEL of 2 mg/m³. Subsequently, an impact factor for all relevant metals was calculated based upon these references.
The metal impact to air and to water is expressed as 'impact units/year'. Metal emission data are not normalized for activity level.
SOx and NOx emissions are expressed in tonnes/year.
| unit | 2009 | 2010 | 2011 | 2012 | 2013 | |
|---|---|---|---|---|---|---|
| Metal emission to water (load) | kg | 5,915 | 6,495 | 5,782 | 5,701 | 5,560 |
| Metal emission to air (load) | kg | 11,950 | 13,582 | 13,867 | 16,614 | 12,533 |
The total metals emissions to water for the Group decreased slightly from 5,701 kg in 2012 to 5,560 kg in 2013, a reduction of 2.5%. However, the total metal impact rose from 245,935 impact units in 2012 to 313,883 impact units in 2013 due to an increased emission of metals with a high impact factor (arsenic, thallium and silver). This corresponds to a 28% increase in impact compared to 2012. Compared to the reference year 2009, we still see a reduction of 29% which remains well beyond the 20% reduction target. Further details per business group are given in the paragraphs below.
While the business group Catalysis was able to reduce its metal emissions for both load and impact, these are not a material component of the overall Group emissions to water (less than 0.5%).
The metal emissions to water from the business group Energy Materials were reduced by some 22% from 778 kg in 2012 to 603 kg in 2013. This was mainly due to lower reported nickel emissions at the site in Olen (Belgium). However, the total impact of metal emissions to water from the business group rose by 9% compared to 2012, mainly due to increased silver emissions at the Olen site.
The business group Performance Materials reported an increase of its metal emissions to water from 1,445 kg in 2012 to 1,682 kg in 2013, an increase of 16%. The impact of metal emissions to water also increased by 16% compared to 2012. The increase for both the load and impact is mainly due to increased zinc emissions to water at the site in Viviez (France, Building Products).
Metal emissions to water in the Recycling business group were down by some 6%, from 3,446 kg in 2012 to 3,253 kg in 2013. This was mainly caused by lower selenium emissions. However, the corresponding impact was signifi cantly increased by 35% compared to 2012, mainly due to an increase of thallium, a metal with a high impact factor in the effl uent. A signifi cant reduction of both the total metal load and impact to water is expected as soon as the new waste water treatement in Hoboken (Belgium, Recycling) becomes operational during the fi rst semester of 2014.
The total load of metal emissions to air for the Group decreased from 16,614 kg in 2012 to 12,533 kg in 2013, a reduction of 25%. However, the corresponding impact increased slightly from 135,059 in 2012 to 140,349 impact units in 2013, an increase of 4%. The increase in impact is mainly due to higher metal emissions with a high impact factor (cadmium and cobalt). Despite this, compared to the reference year 2009 the impact of metal to air emissions are down by 35% which remains well below the 20% reduction target. Further details per business group are given in the sections below.
Neither the metal load nor impact of the business group Catalysis are material components of the overall Group emissions to air (less than 0.5%).
The business group Energy Materials reported a total load of metal emissions to air of 708 kg, a slight increase of 2% compared to 2012. The corresponding metal impact increased by 17% from 31,572 impact units in 2012 to 36,932 impact units in 2013. This increase is mainly due to higher cobalt emissions at the site in Cheonan (South Korea, Rechargeable Battery Materials) caused by an increase in production volume.
The reported total load of metal emissions to air in the business group Performance Materials decreased from 13,468 kg in 2012 to 9,594 kg in 2013, a decrease of about 30%. This decrease is mainly due to lower zinc emissions to air in the Zinc Chemicals business unit: Angleur (Belgium), Eijsden (Netherlands), Changsha (China) where we benefi ted from initiatives to improve bag fi lter management across all sites. The site in Sancoale (India) reported an increase in zinc emissions to air because of an increased production volume. In contrast, the business group showed a 39% increase of its impact levels compared to 2012 due to an increased emission of cadmium at the site in Sancoale (Sancoale, Zinc Chemicals).
The business group Recycling saw a small decrease of metal emissions from 2,443 kg in 2012 to 2,224 kg in 2013 mainly caused by lower zinc emissions in Bangkok (Thailand, Jewellery & Industrial Materials) and lower emissions of arsenic and antimony to air in Hoboken (Belgium, Precious Metals Refi ning). The latter is also the key reason why the impact of metal emissions to air decreased by 7% compared to 2012.
| unit | Catalysis | Energy Materials |
Performance Materials |
Recycling | Umicore Group | |
|---|---|---|---|---|---|---|
| COD (chemical oxygen demand) | kg | 20,490 | 67,262 | 7,894 | 201,843 | 297,490 |
| SOx emissions |
tonne | 17 | 4 | 118 | 564 | 702 |
| NOx emissions |
tonne | 156 | 99 | 60 | 147 | 462 |
The total 'chemical oxygen demand' (COD) emissions were 297,490 kg, a slight increase compared to 278,131 kg in 2012. Total SOx emissions were 702 tonnes compared to 487 tonnes in 2012. NOx emissions were 462 tonnes in 2013 compared to 399 tonnes in 2012. Vision
We have chosen to pursue specifi c actions to reduce our carbon footprint and to further increase our energy effi ciency. In order to frame this approach we introduced an energy effi ciency and carbon footprint policy in 2011.
The main pillar of this policy is our group objective to achieve by 2015 a 20% reduction in our CO2 equivalent emissions compared to the reference year 2006 and using the same scope of activities as 2006 (see detailed explanation below).
Umicore also reports its absolute CO2 e emissions (ie as per the scope outlined in E1).
| unit | baseline 2006 in relation to 2013 |
2010 | 2011 | 2012 | 2013 | |
|---|---|---|---|---|---|---|
| CO2 e emissions (scope1+2, objective) |
tonne | 778,718 | 597,226(1) | 635,136(2) | 655,246(3) | 643,800 |
CO2E REDUCTION PERFORMANCE
Defi nition of the CO2 e emissions in the context of the CO2 reduction objective:
The CO2 equivalent (CO2 e) emissions are defi ned as the scope 1 emissions of CO2 e including the major process emissions (but limited to CO2 , CH4 and N2 O) and scope 2 emissions of CO2 . A limited number of adjustments that are allowed to be reported as optional information under the Greenhouse Gas Protocol have been taken into account (eg: the exclusion of steam sold to third parties). This metric is abbreviated as: CO2 e (scope1+2, objective).
In order to calculate the emission reduction in the context of our Vision 2015 objective, a 2006 baseline has been established for each site by multiplying the actual activity level of the reporting year (i.e. 2013) by the 2006 CO2 e emission intensity (see example). The group baseline 2006 is then calculated by adding all site-level baselines. Examples of activity parameters at sites are: tonnes produced per year, machine hours per year, tonnes of input material in recycling process per year.
(1) Baseline 2006 in relation to 2010 was 677,542, leading to a reduction of 12% in 2010 in comparison to 2006.
(2) Baseline 2006 in relation to 2011 was 740,886, leading to a reduction of 14% in 2011 in comparison to 2006.
(3) Baseline 2006 in relation to 2012 was 745,935, leading to a reduction of 12% in 2012 in comparison to 2006.
Example:
In 2006 site A produced 1,000 tonnes of metal X and emitted 100 tonnes of CO2 e = intensity of 0.1 tonnes CO2 e / tonne of metal X.
In 2013 site A produced 1,100 tonnes of metal X and emitted 100 tonnes of CO2 e = intensity of 0.09 tonnes CO2 e / tonne of metal X.
The 2006 baseline reported in 2013 is: activity level of 2013 (1,100 tonnes) x 2006 intensity of 0.1 tonne CO2 e / tonne = 110 tonnes CO2 e.
Therefore the measured 100 tonnes emitted in 2013 represents a reduction of 9% compared to what it would have been under 2006 operating conditions.
The baseline 2006 is re-calculated yearly. It is defi ned as the CO2 e emissions that would have been expected with the activity volumes of the reporting year (i.e. 2013) but with the CO2 e intensity of the reference year 2006. The performance for each year is expressed as a percentage in comparison to the calculated 2006 group baseline applicable to each year.
The calculation of this objective covers fully consolidated operations and activities that are part of the Group on 31 December of each reporting year (between 2011 and 2015) and that were also part of the Group on 31 December 2010. Performance is reported at Group level.
CO2 e emissions in 2013 using the objective scope were 643,800 tonnes. CO2 e emissions in 2006 using the objective scope were 673,801 tonnes. For the purpose of assessing progress on our objective this CO2 e emission level normalized for 2013 activity was 778,718 tonnes. By the end of 2013 we have therefore achieved a 17% reduction compared to our 2006 benchmark year. This means that for equivalent production levels we emitted 17% less in carbon equivalent. This compares to a reduction of 12% that we had achieved by the end of 2012. The progress in 2013 compared to 2012 is mainly due to reduced process emissions of CO2 and N2 O in the Hoboken operations. This reduction can be attributed to the mix of raw materials used in 2013 as well as process improvements made at the blast furnace. Other factors such as the CO2 footprint of electricity showed a mixed picture in 2013 with lower emissions in some sites compensated by higher emissions in other sites. Excluding the activity adjustment that we make as part of our objective we have recorded a 4% reduction in absolute emissions since 2006, compared to a reduction of 3% registered at the end of 2012.
In 2012 we concluded our assessment programme at the 25 sites with the highest contribution to our CO2 emissions and representing more than 90% of the CO2 e emissions, to identify further energy effi ciency improvements and CO2 reduction opportunities. In this process; over 100 energy effi ciency projects have been identifi ed that have the potential to both reduce energy intensity and reduce costs. Additional assessments have been completed and projects launched at sites with a smaller emissions footprint. While these projects will not make a signifi cant contribution to the overall Group CO2 reduction target, they bring effi ciency gains and cost savings at site and business unit level.
Next to the process improvements introduced at sites which have the highest levels of absolute emissions, our ability to reach the 20% reduction objective by 2015 depends on the evolution of both the raw materials mix and the electricity mix as Europe moves away from lower-carbon sources.
| unit | 2009 | 2010 | 2011 | 2012 | 2013 | |
|---|---|---|---|---|---|---|
| Absolute CO2 e emissions (scope1+2) |
tonne | 529,628 | 543,262 | 695,733 | 701,898 | 693,839 |
| unit | Catalysis | Energy Materials |
Performance Materials |
Recycling | Umicore Group | |
|---|---|---|---|---|---|---|
| Absolute CO2 e emissions (scope1+2) |
tonne | 86,928 | 176,723 | 162,018 | 267,678 | 693,839 |
Defi nition of Absolute CO2 e emissions (scope1+2) in the context of GHG reporting scope 1+2:
The absolute CO2 e emission volumes are communicated at Group and at business group level. The CO2 e emissions are calculated using the Greenhouse Gas Protocol defi nition and reporting methodology (WBCSD and WRI, revised edition 2004) for scope 1 and 2. Scope 2 for Umicore includes not only purchased electricity but also steam and compressed air purchased from third parties (eg. from industrial parks). CO2 e includes the greenhouse gases CO2 , N2 O and CH4 for scope 1 and major process emissions. Other greenhouse gases are not relevant in Umicore's operations. The scope 2 emissions take only CO2 into account.
The WBCSD Chemical Sector Working Group on GHG Measurement and Reporting in which Umicore actively contributed, established additional guidance to cope with observed anomalies in GHG reporting. As an active member of this working group, Umicore implemented these guidelines in the 2012 reporting. The publication of the sector guidelines can be found on their website (http://www.wbcsd.org/Pages/EDocument/EDocumentDetails.aspx?ID=15375&NoSe archContextKey=true).
By way of context, in 2011 Umicore adopted a strict implementation of the GHG protocol's revised version of 2004. Process emissions have been reported from 2011 and the average grid CO2 factor for electricity is used as the standard emission factor in cases where up to 2010 "green electricity" had been reported with a CO2 emission factor of 0 tonne CO2 /MWh.
Other minor corrections were implemented from 2011 with the aim to establish a clear and stable CO2 e reporting. We have invested in resources to provide clear guidelines to the sites for a common interpretation and implementation of the reporting rules. These changes to the reporting have been imposed with the aim to guarantee a long standing accurate and reproducible CO2 e reporting as a basis for the quantitative CO2 e reduction objective. The drawback of this decision is a discontinuity in the reported fi gures between 2011 and the previous years in the absolute values of CO2 e (scope1+2).
An additional modifi cation of the greenhouse gas emission reporting guidelines to take the Chemical Sector Guideline of the WBCSD into account affected the absolute CO2 e emission reporting in 2012.
The WBCSD Chemical Sector Working Group on GHG Measurement and Reporting, in which Umicore actively contributed, established additional guidance to cope with observed anomalies in GHG reporting. As an active member of this working group, Umicore implemented these guidelines in the 2012 reporting. Publication of the sector guidelines can be found on the WBCSD website.
By following this guideline a discontinuity exists between the 2011 and 2012 fi gures of energy consumption which makes the comparison of the energy consumption less valuable. The effect is about 300 terajoules occurring in the business group Energy Materials.
Energy effi ciency projects have been implemented in the most important sites in line with the sustainable development objective of the period 2006-2010. On top of these sustainable projects, new energy effi ciency projects have been identifi ed during the assessments in 2011 and 2012. Minor projects with limited investment needs but with limited effect could immediately be implemented. A few more important projects are still in the engineering phase and will only have an effect once fully implemented.
| Energy | Performance | Umicore | ||||
|---|---|---|---|---|---|---|
| unit | Catalysis | Materials | Materials | Recycling | Group | |
| Energy consumption | terajoules | 792 | 2,244 | 1,874 | 2,637 | 7,557 |
The most important energy effi ciency projects have been carried out in the Hoboken and Olen sites under the Flemish Energy Effi ciency Benchmarking Covenant to which these sites signed up at the end of 2003. The type of residues processed by the Recycling business group also played a role; higher volumes of materials are now received that require less energy to process.
Indirect energy consumption by primary energy source (purchased electricity, steam and compressed air) for production sites and offi ce buildings was 2,629 terajoules. Direct energy consumption by primary energy source (fuel, gas oil, natural gas, LPG, coal and cokes) was 4,928 terajoules.
Compared to 2012 energy consumption in Catalysis was up 9%, in Energy Materials up 2%, in Performance Materials up 2% and in Recycling up 4%. This moderate increase in energy consumption refl ects the overall increased activity levels.
Water consumption is defi ned as the total volume of water expressed in thousand m 3 /year from domestic water supply, groundwater wells, surface water and rainwater. Groundwater extraction for remediation purposes and cooling water returned to its original water body are not counted.
The total water consumption for the Group increased slightly, from 4,310 thousand m 3 in 2012 to 4,337 thousand m 3 in 2013. For the different business groups no signifi cant trends could be noted.
| unit | Catalysis | Energy Materials |
Performance Materials |
Recycling | Umicore Group |
|
|---|---|---|---|---|---|---|
| Water consumption | thousand m3 Vision |
316 | 1,751 | 697 | 1,574 | 4,337 |
| E6 Product and materials Group data |
2015 | |||||
| unit | 2009 | 2010 2011 |
2012 | 2013 | ||
| Product SD analysis | N° | - | - 3 |
7 | 6 | |
Over the last four years, Group R&D and Corporate EHS have been developing a methodology specifi c to Umicore for assessing the sustainability of our products and services. This methodology is called Assessment of Product (and services) Sustainability (APS). The methodology uses a tool consisting of a set of preformatted questions and answers with scoring and weighting factors and organized around eight themes. During 2011 a dedicated team of R&D, EHS and business unit experts ran three pilot assessments to establish the workability of APS.
Our aim is to test six products or services each year between 2012 and 2015 with each business unit submitting two cases to the study. This will provide us with a sustainability profi le for a representative portion of our activities.
In 2013 six further cases were assessed in the business units Cobalt & Specialty Materials, Precious Metals Management, Electroplating, Platinum Engineered Materials, Zinc Chemicals and Jewellery & Industrial Metals. The sixteen cases assessed in the period 2011-2013 comprise products and services deployed in niche markets, 'fl agship' products and services as well as a product under development. By the end of 2013 the number of products and services screened using the tool amounted to the equivalent of just above 10% of Umicore's revenues.
By June 2013, the second REACH registration deadline, Umicore has submitted another 21 registrations for 17 different substances to the European Chemicals Agency (ECHA). The fi les were either jointly prepared with other companies acting in consortia or by Umicore alone. About a third of all dossiers is being updated in 2013 with additional information or newly available data. All costs associated with REACH compliance, including the cost of registration, are covered under normal operating expenditures.
Umicore monitors closely all changes in interpretation as well as guidance documents which might affect its REACH implementation strategy. Umicore is actively involved in industry association working groups to make sure a consistent approach is followed and that the metal specifi cs are understood by the regulators and the companies.
While the regulatory landscape may shift in the future, only a few of our substances feature today on the Candidate list for potential REACH authorization. In total, the products sold that contain these substances account for less than 0.5% of Umicore's revenues. The placing of a substance on the REACH "Candidate List" is designed as a fi rst step in subjecting that substance to robust and detailed scientifi c evaluation of risk as a basis for its continued use or substitution if economically and technically feasible alternatives to that substance exist.
By the end of 2013, a total of 4,250 products had been integrated in IPDS, Umicore's Integrated Product Data System, resulting in some 300,000 Safety Data Sheets, covering 119 countries and 44 languages.
Primary materials Secondary materials End-of-life materials Primary raw materials: are those materials that have a direct relation to their fi rst lifetime hereby excluding streams of by-products.
Secondary raw materials: are by-products of primary materials streams.
End-of-life materials: are those materials that have ended at least a fi rst life cycle and will be re-processedthrough recycling leading to a 2nd, 3rd…life of the substance.
Incoming materials: are regarded as primary by default if their origin is unknown. The collected data are expressed in terms of total tonnage of incoming material.
In 2013, 41% of Umicore's incoming materials were of primary origin. 59% of the materials were from recycling or secondary origin. These levels are comparable to 2012.
Waste is defi ned as the total volume of generated waste expressed in tonnes/year.
The waste recycling rate is the ratio of the waste recovered by third parties (including waste recovered as energy through incineration) and the total waste.
The distinction between hazardous and non-hazardous waste is made on the basis of the local regulation for the region where the reporting entity is located.
In 2013, a total of 68,520 tonnes of waste were generated compared to 69,702 tonnes in 2012, a decrease of 1.7%.
The total volume of hazardous waste was reduced from 47,789 tonnes in 2012 to 45,668 tonnes in 2013, a decrease of 4.4%. The recycling rate of hazardous waste increased from 7.5% in 2012 to 16.9% in 2013. This increase is largely due to a notable increase in total hazardous waste in Eijsden (Netherlands), most of which was recovered.
The total volume of non-hazardous waste increased from 21,914 tonnes in 2012 to 22,852 tonnes in 2013. A total of 60% of non-hazardous waste was recycled in 2013 compared to 55% in 2012.
| Energy | Performance | Umicore | |||||
|---|---|---|---|---|---|---|---|
| unit | Catalysis | Materials | Materials | Recycling | Group | ||
| Total waste produced | tonne | 2,964 | 24,595 | 14,218 | 26,742 | 68,520 | |
| Hazardous waste | tonne | 1,531 | 14,769 | 8,946 | 20,422 | 45,668 | |
| of which recycled | % | 9.43 | 1.34 | 67.76 | 6.49 | 16.92 | |
| Non hazardous waste | tonne | 1,433 | 9,826 | 5,272 | 6,321 | 22,852 | |
| of which recycled | % | 48.22 | 32.47 | 74.52 | 93.87 | 60.14 |
Actively participating in the management and remediation of risks that are the result of historical operations is an integral part of the Umicore Way. Over the last ten years Umicore's pro-active programme for assessing and remediating (where necessary) soil and groundwater contamination has made signifi cant progress. The following section illustrates the main ongoing programmes and the progress made during 2013.
Background: On 23 April 2004, Umicore signed a Covenant with the regional waste authorities (OVAM) and the Regional Minister of the Environment in the Flemish Region of Belgium by which Umicore committed to spend € 62 million over 15 years to remediate the historical pollution at four sites, of which two - Balen and Overpelt - now belong to Nyrstar, a business divested by Umicore in 2007.
2013 Activities: In Hoboken, an agreement was reached with the competent authorities to extend the on-site storage facility, so that on-site remediation works (excavation) can restart. A fi nal remedial action plan for the groundwater has been completed and submitted to the authorities for approval.
In Olen, the active on-site groundwater remediation programme started in 2007 continued in 2013. Together with the authorities (FANC and NIRAS/ ONDRAF) Umicore has elaborated a vision document that would lay down the foundations for the development, approval and implementation of a general Waste Management Plan for radium-bearing waste stored at the plant.
Umicore continued with other actions as part of the Covenant including the excavation of zinc ashes from all private driveways in the entire 9 km perimeter covered by the covenant. The work is expected to be completed in 2014 with excavated material being stored safely at the Nyrstar plant in Balen.
In Viviez, Umicore continued with its large-scale remediation programme started in 2011. The project consists mainly of removing, rendering inert and restoring safely more than one million cubic metres of contaminated soil and waste. By the end of 2013, 600,000 m³ of contaminated soil and waste had been removed and treated. The project was visited by several groups in 2013 including local residents and the media. In 2013 Umicore worked with the public authorities (national and municipal) to consolidate a public road to give access to the project.
Umicore and its predecessor companies can look back on a long history of mining in Germany. While the last active mine near Cologne ceased its operations in 1978, a number of underground mining concessions remain in Umicore's possession to this day. Since 2009 they have been managed by Umicore Mining Heritage GmbH & Co. KG. All information regarding locations of old shafts and tunnels, have now been georeferenced and put in a GIS-system.
Umicore continued to treat drainage water at a former mining site in Colorado (USA). Umicore is reviewing alternative technologies aimed at decreasing the metal concentration in the discharge and thus decreasing the volume of solid waste material produced.
After the closing down of the Maxton plant in North-Carolina, soil and groundwater contamination was identifi ed. Umicore entered into a voluntary remediation program with the authorities.
Also in Arab, Alabama, Umicore entered into a voluntary remediation program after soil impact was detected.
During an environmental assessment that was performed following its acquisition, groundwater pollution was detected at the Guarulhos site in Brazil. This historical pollution dates from before 2003, when Umicore purchased these operations. After the initial investigation, Umicore took measures to stop the spreading of this contamination to the neighbouring areas. To that purpose, an hydraulic barrier to capture the contaminated groundwater at the property boundaries has been installed and put into operation in 2011. In 2012, it was decided to tackle the most contaminated parts of the groundwater on-site , in order to speed up the remediation. To that end, pilot tests have been performed and full scale operations have been initiated. Further, Umicore has assessed the impact the historical contamination had to areas outside the operational plant and has agreed in 2013 with the local authorities to a remediation program.
The compliance excess rate is the ratio between the total number of excess results and the total number of compliance measurements. An excess result is a monitoring result that violates a limit value defi ned in a permit, regulation or other relevant regulatory standard.
The total number of measurements is the total number of environmental impact measurements as required by the operational permit, environmental permit or comparable standard in the region the reporting entity is operating. The total number means the number of measurements times the number of parameters per measurement.
| unit | Catalysis | Energy Materials |
Performance Materials |
Recycling | Umicore Group | |
|---|---|---|---|---|---|---|
| Measurements exceeding limit | N° | 129 | 5 | 612 | 29 | 775 |
| Compliance excess rate | % | 0.38 | 0.04 | 1.44 | 0.25 | 0.78 |
In 2013, some 100,000 environmental measurements were carried out at all of Umicore's industrial sites compared to some 83,000 the year before. This increase is mainly due to an improved calculation method for the number of measurements at the site in Larvik (Norway, Performance Materials). These measurements are undertaken to verify environmental compliance with applicable regulatory requirements, permits and/or local standards. They typically include waste water sampling and ambient air monitoring as well as environmental noise measurements. The number of measurements that did not meet the regulatory or permit requirements was down to 0.78% compared to 1.1% in 2012. No signifi cant trends could be observed for the different business groups.
Three out of the 64 industrial sites are exempt from implementing a certifi ed environmental management system. This is based on a strict procedure that confi rms that the sites in question have no signifi cant environmental impacts and would therefore not benefi t substantially from installing such a system. Of the 61 remaining sites, 59 sites have put in place an environmental management system certifi ed against ISO 14001. The remaining 2 sites are planning the implementation of an environmental management system in 2014. All major sites with signifi cant environmental impacts have been certifi ed against the ISO 14001 management system for many years.
In total, 25 environmental complaints were received. These were mainly related to noise and odour. Twenty-two of the complaint fi les have already been closed.
| unit | 2009 | 2010 | 2011 | 2012 | 2013 | |
|---|---|---|---|---|---|---|
| Sites having a potential environmental impact on an area of high biodiversity value |
N° | 9 | 9 | 11 | 15 | 16 |
The biodiversity indicator reports the number of sites operating in or adjacent to an area of high biodiversity value as defi ned by regional, national authorities or international conventions.
The company believes that its current activities have little adverse impact on the biodiversity of the environment in which its sites are operating. The historical contamination caused by past activities is dealt with through specifi c soil and groundwater remediation projects (see note E8).
Sixteen sites reported that they are operating close to a classifi ed biodiversity sensitive area.
Umicore's policy includes performing a detailed environmental impact assessment as part of all major investments, acquisitions and transfers of land.
130 Social statements
| Social key fi gures | 132 |
|---|---|
| Notes to the social key fi gures | 132 |
| S1 Scope of social statements | 132 |
| S2 Workforce | 133 |
| S3 People development | 136 |
| S4 Preferred employer | 137 |
| S5 Accountability to local community | 138 |
| S6 Employee relations | 139 |
| S7 Code of Conduct | 140 |
| S8 Sustainable procurement | 140 |
| S9 Employees' health | 142 |
| S10 Occupational health | 143 |
| S11 Occupational safety | 145 |
| unit | notes | 2009 | 2010 | 2011 | 2012 | 2013 | |
|---|---|---|---|---|---|---|---|
| Total workforce (incl. associates) | N° | S2 | 13,728 | 14,386 | 14,572 | 14,438 | 14,057 |
| Temporary contracts | % of total workforce (fully consolidated) |
S2 | 3.83 | 4.01 | 4.77 | 4.21 | 3.42 |
| Average training hours per employee | hours/employee | S3 | 44.05 | 43.30 | 51.94 | 50.72 | 45.18 |
| Employees having a yearly appraisal | % of total workforce (fully consolidated) |
S3 | - | - | 87.16 | 91.80 | 95.65 |
| Voluntary leavers - ratio | % of total workforce (fully consolidated) |
S4 | 2.59 | 3.78 | 3.84 | 3.20 | 3.33 |
| Employees working in a site that has received an external recognition as preferred employer |
% of total workforce (fully consolidated) |
S4 | - | - | 52.64 | 68.31 | 72.63 |
| Total donations | € thousand | S5 | 1,106.48 | 1,009.38 | 1,751.02 | 1,759.18 | 1,612.80 |
| Sites having an external communications plan | % sites | S5 | - | - | 59.70 | 62.69 | 63.24 |
| Employees represented by union or Collective Labour Agreement (CLA) |
% of total workforce (fully consolidated) |
S6 | 71.15 | 68.92 | 69.81 | 70.80 | 71.33 |
| Sickness rate | % | S9 | 2.64 | 2.86 | 3.03 | 2.69 | 2.76 |
| Exposure ratio 'all biomarkers aggregated' (1) | % | S10 | - | - | 5.2 | 4.3 | 2.6 |
| Number of occupational linked diseases | N° | S10 | - | - | 22 | 20 | 14 |
| People with platinum sensitisation | N° | S10 | - | - | 4 | 6 | 4 |
| Fatal accidents | N° | S11 | 0 | 0 | 0 | 0 | 0 |
| Lost Time Accidents (LTA) | N° | S11 | 48 | 56 | 60 | 49 | 35 |
| Lost Time Accidents (LTA) for sub-contractors | N° | S11 | 26 | 20 | 17 | 33 | 22 |
| LTA frequency rate | LTA/million hours worked | S11 | 3.1 | 3.5 | 3.6 | 2.9 | 2.1 |
| LTA severity rate | lost days/thousand hours worked |
S11 | 0.08 | 0.13 | 0.11 | 0.11 | 0.10 |
(1) Ratio between the number of monitoring results exceeding the Umicore target value, defi ned for relevant hazardous substances, and the total number of monitoring results.
In total, 102 consolidated sites are included in the social reporting. The following new sites are added: for Catalysis, in Suzhou (China) and Bad Säckingen (Germany), for Energy Materials, a second site started operations in Cheonan (South Korea). Performance Materials opened a representative offi ce in Istanbul (Turkey) and closed its operations in Melbourne, Australia, towards the end of 2013 (social indicators for the Melbourne site are still included in the 2013 reporting.
34 small sites (sites with less than 20 employees) were exempt from reporting on the gender and employee category split concerning training hours and also on the status of the improvement plan for being considered a preferred employer or on the objective regarding stakeholder engagement.
The sites report full year data for the social indicators. Data linked to the progress towards the social objectives are reported in the third quarter with actions planned for the fourth quarter also indicated in this reporting.
The indicators presented are based on data from fully consolidated companies unless indicated otherwise. A note underneath the relevant table or chart has been provided to highlight indicators that have been added for the fi rst time in 2011 – these are mainly linked to the reporting scope of the Vision 2015 strategy. Categories of indicators that are specifi cally relevant to Vision 2015 are marked with a "Vision 2015" next to the title for easy reference. More information on the progress towards these objectives can be found in the management review between 8 and 25 and in the business group review between pages 26 and 41 of this report. Additional information on Umicore's social management approach can be found on our website: www.umicore.com/sustainability/social/
| unit | 2009 | 2010 | 2011 | 2012 | 2013 | |
|---|---|---|---|---|---|---|
| Total workforce (incl. associates) | N° | 13,728 | 14,386 | 14,572 | 14,438 | 14,057 |
| Workforce from fully consolidated companies | N° | 9,313 | 9,558 | 10,164 | 10,396 | 10,190 |
| Workforce from associated companies | N° | 4,415 | 4,828 | 4,408 | 4,042 | 3,867 |
| Employees men | N° | 7,353 | 7,546 | 7,972 | 8,121 | 7,996 |
| Employees women | N° | 1,960 | 2,012 | 2,192 | 2,275 | 2,194 |
| Employees full time | N° | - | - | 9,494 | 9,699 | 9,491 |
| Employees part time | N° | - | - | 670 | 697 | 699 |
| Employees <25 years | N° | - | - | 718 | 675 | 603 |
| Employees between 25 and 35 years | N° | - | - | 2,796 | 2,968 | 2,909 |
| Employees between 36 and 45 years | N° | - | - | 2,749 | 2,753 | 2,646 |
| Employees between 46 and 55 years | N° | - | - | 2,951 | 2,982 | 2,937 |
| Employees > 55 years | N° | - | - | 950 | 1,018 | 1,095 |
| Temporary contracts | % of workforce (fully consolidated) |
3.83 | 4.01 | 4.77 | 4.21 | 3.42 |
Total workforce: Number of employees on Umicore payroll at the end of the period in fully consolidated companies and associated companies. The number includes part-time and temporary employees but excludes employees with a dormant contract, employees on long term illness and sub-contracted employees.
Temporary contract: Umicore employees with a temporary contract, included in the workforce of fully consolidated companies.
Part time: Employees working a reduced number of shifts, working days or working hours due to voluntary work time reduction.
| North | South | Asia | Umicore | ||||
|---|---|---|---|---|---|---|---|
| unit | Europe | America | America | Pacifi c | Africa | Group | |
| Total workforce | N° | 7,730 | 864 | 1,139 | 3,026 | 1,298 | 14,057 |
| Workforce from fully consolidated companies |
N° | 6,631 | 839 | 702 | 1,698 | 320 | 10,190 |
| Workforce from associated companies | N° | 1,099 | 25 | 437 | 1,328 | 978 | 3,867 |
| Employees men | N° | 5,320 | 656 | 529 | 1,292 | 199 | 7,996 |
| Employees women | N° | 1,311 | 183 | 173 | 406 | 121 | 2,194 |
| Employees full time | N° | 5,960 | 828 | 702 | 1,681 | 320 | 9,491 |
| Employees part time | N° | 671 | 11 | 0 | 17 | 0 | 699 |
| Temporary contracts | % of workforce (fully consolidated) |
4.71 | 1.31 | 0.14 | 1.24 | 1.25 | 3.42 |
| Energy | Performance | Umicore | |||||
|---|---|---|---|---|---|---|---|
| unit | Catalysis | Materials | Materials | Recycling | Corporate | Group | |
| Total workforce | N° | 2,340 | 2,884 | 5,331 | 2,345 | 1,157 | 14,057 |
| Workforce from fully consolidated companies |
N° | 2,173 | 1,828 | 2,737 | 2,345 | 1,107 | 10,190 |
| Workforce from associated companies |
N° | 167 | 1,056 | 2,594 | 0 | 50 | 3,867 |
| Employees men | N° | 1,682 | 1,531 | 2,165 | 1,949 | 669 | 7,996 |
| Employees women | N° | 491 | 297 | 572 | 396 | 438 | 2,194 |
| Employees full time | N° | 2,065 | 1,707 | 2,579 | 2,165 | 975 | 9,491 |
| Employees part time | N° | 108 | 121 | 158 | 180 | 132 | 699 |
| Temporary contracts | % of workforce (fully consolidated) |
5.89 | 1.15 | 3.84 | 3.75 | 0.63 | 3.42 |
The total workforce decreased by 381 employees to a total of 14,057. For the fully consolidated companies, the workforce decreased by 206 people to 10,190. The decrease in headcount was spread over all business groups and Corporate services, with the exception of the business group Catalysis which employed 53 more people at the end of 2013. Amongst the associated companies there was a decrease of 175 employees as a result of production realignments.
The percentage of women was 21.5% as a proportion of the workforce of fully consolidated companies. It has remained in a narrow range of between 21% and 22% during the last fi ve years. Women are more represented in administrative and commercial functions, compared to functions in the industrial operations. There are signifi cant regional variations with Belgium, Northern Europe and North America having a lower percentage of women employees compared to the rest of the world.
Temporary contracts as a percentage of the workforce of fully consolidated companies decreased to 3.42% in 2013. Especially during the second half of the year a number of temporary contracts were not renewed.
While the total percentage of women employees has remained rather stable (see above), the percentage of women managers has shown a steady increase from 18% in 2007 to 21% in 2013. Also the percentage of women in senior management increased from 7.4% in 2012 to 8.7% in 2013.
| Productions sites | Other sites | Employees | |
|---|---|---|---|
| Europe | |||
| Austria | 1 | 140 | |
| Belgium | 8 (1) | 3 (2) | 3,111 (79) |
| Czech Republic | 1 | 2 | |
| Denmark | 1 | 13 | |
| France | 5 | 2 | 785 |
| Germany | 8 (2) | 3 (2) | 2,506 (395) |
| Hungary | 1 | 4 | |
| Ireland | 1 (1) | 240 (240) | |
| Italy | 1 | 3 (1) | 85 (21) |
| Liechtenstein | 1 | 86 | |
| Luxemburg | 1 | 10 | |
| Netherlands | 2 | 124 | |
| Norway | 1 | 54 | |
| Poland | 2 (1) | 12 (2) | |
| Portugal | 1 | 10 | |
| Russia | 1 | 7 | |
| Slovakia | 1 | 42 | |
| Spain | 2 (1) | 15 (3) | |
| Sweden | 2 (1) | 1 | 201 (159) |
| Switzerland | 1 | 2 | 30 |
| Turkey | 1 | 1 | |
| United Kingdom | 1 | 7 (4) | 248 (196) |
| Asia-Pacifi c | |||
| Australia | 1 | 2 | 18 |
| China | 11 (4) | 6 (1) | 1,994 (1,151) |
| India | 1 | 2 | 82 |
| Japan | 4 | 3 (1) | 176 (10) |
| Malaysia | 1 | 63 | |
| Philippines | 1 | 82 | |
| South Korea | 3 (1) | 1 | 474 (167) |
| Taiwan | 1 | 1 | 23 |
| Thailand | 1 | 1 | 114 |
| United Arab Emirates | 1 (1) | 4 (4) | |
| North America | |||
| Canada | 3 | 234 | |
| United States | 8 | 4 (2) | 630 (25) |
| South America | |||
| Argentina | 1 | 44 | |
| Brazil | 3 | 1 (1) | 659 (1) |
| Peru | 1 (1) | 436 (436) | |
| Africa | |||
| South Africa | 3 (1) | 1 | 1,298 (978) |
| Total | 76 (12) | 55 (17) | 14,057 (3,867) |
Figures in brackets denotes "of which associates and joint venture companies". Where a site has both production facilities and offi ces (eg Hanau, Germany) it is classifi ed as a production site only.
Group data
| unit | 2009 | 2010 | 2011 | 2012 | 2013 | |
|---|---|---|---|---|---|---|
| Sites having a development plan in place for people development | % of total sites | - | - | 59.60 | 70.10 | 73.53 |
| Employees having a yearly appraisal | % of workforce (fully consolidated) |
- | - | 87.16 | 91.80 | 95.65 |
| Average number of training hours per employee | hours/employee | 44.05 | 43.30 | 51.94 | 50.72 | 45.18 |
| Average number of training hours per employee – Men | hours/employee | - | - | 53.20 | 51.75 | 45.82 |
| Average number of training hours per employee – Women | hours/employee | - | - | 47.37 | 46.04 | 42.26 |
| Average number of training hours per employee – Managers | hours/employee | - | - | 61.84 | 64.15 | 41.41 |
| Average number of training hours per employee – Other employee categories |
hours/employee | - | - | 48.55 | 45.57 | 44.82 |
Training hours: Average number of training hours per employee, including all types of training (formal, training on the job, E-learning, etc.) in which the company provides support and which are relevant to the business unit or the company. The total number of training hours is divided by the total workforce of fully consolidated companies.
| unit | Europe | North America |
South America |
Asia Pacifi c |
Africa | Umicore Group |
|
|---|---|---|---|---|---|---|---|
| Average number of training hours per employee | hours/employee | 41.16 | 41.27 | 71.01 | 54.39 | 33.36 | 45.18 |
| Employees having a yearly appraisal | % of workforce (fully consolidated) |
98.56 | 94.68 | 100.00 | 81.42 | 100.00 | 95.65 |
| unit | Catalysis | Energy Materials |
Performance Materials |
Recycling | Corporate | Umicore Group |
|
|---|---|---|---|---|---|---|---|
| Average number of training hours per employee |
hours/employee | 60.51 | 47.26 | 34.11 | 48.53 | 32.98 | 45.18 |
| Employees having a yearly appraisal | % of workforce (fully consolidated) |
98.04 | 90.81 | 95.95 | 95.65 | 98.22 | 95.65 |
In 2013, the average training hours per employee reached 45.18 hours. This was below the levels of 2012, but in line with average training hours in 2009 and 2010. In the years 2011 and 2012 the average went up, infl uenced by a higher number of newly hired employees and the start-up of several new operations.
Data shows that managers receive a slightly lower number of training hours (41.41 hours) compared to other employees (44.82 hours). In 2013 a global Learning Management System was launched for all managers worldwide and other employees in Belgium and Germany. Further roll-out was prepared to gradually reach all employees.
In 2013 nearly 96% of all employees from fully consolidated companies have an appraisal interview to discuss their development at least once a year. Although this percentage is high, further efforts are being implemented to reach 100% coverage by 2015.
| unit | 2009 | 2010 | 2011 | 2012 | 2013 | |
|---|---|---|---|---|---|---|
| Sites having a plan regarding preferred employer in place | % of total sites | - | - | 70.15 | 76.12 | 82.35 |
| Voluntary leavers ratio | % of workforce (fully consolidated) |
2.59 | 3.78 | 3.84 | 3.20 | 3.33 |
| Voluntary leavers men | N° | - | - | 287 | 251 | 253 |
| Voluntary leavers women | N° | - | - | 96 | 81 | 89 |
| Voluntary leavers seniority < 3 year | N° | - | - | 222 | 214 | 217 |
| Voluntary leavers seniority > 3 year | N° | - | - | 161 | 118 | 125 |
| Employees working in a site that has received an external recognition as preferred employer |
% of workforce (fully consolidated) |
- | - | 52.64 | 68.31 | 72.63 |
| External recognitions related to preferred employer | N° | - | - | 18 | 31 | 33 |
Voluntary leavers: Number of employees leaving the company of their own will (excluding retirement and the expiry of a fi xed-term contract). This fi gure is related to the workforce from fully consolidated companies.
External recognition as a preferred employer: External recognitions or awards that enhance the reputation of the site or Umicore as an attractive employer.
| unit | Catalysis | Energy Materials |
Performance Materials |
Recycling | Corporate | Umicore Group |
|
|---|---|---|---|---|---|---|---|
| Voluntary leavers ratio | % of workforce (fully consolidated) |
3.99 | 5.84 | 2.32 | 1.65 | 4.10 | 3.33 |
In the last fi ve years, the percentage of voluntary leavers has fl uctuated between 2.6 and 3.8. The 3.3% for 2013 is within this range. As was the case in previous years, signifi cant regional differences can be observed with Asia Pacifi c reporting the highest turnover rate (9.3%) and Europe (1.4%) the lowest. The high turnover rate in Asia Pacifi c is not unique to Umicore, can be explained by a highly competitive and fl uid labour market in some of the growth markets.
26% of the voluntary leavers are women, which is a somewhat higher fi gure than the 21% presence of women in the workforce of fully consolidated companies. 63% of the voluntary leavers in 2013 left during their fi rst three years of service with the company.
Umicore stimulates its sites to seek external recognition as a preferred employer. In some countries where Umicore has a signifi cant workforce, preferred employer programmes exist that offer high levels of visibility and recognition – this is particularly the case in Europe. All the sites in Belgium, France and the main sites in Germany obtained national recognition as a Top Employer. In 2013, the sites in Brazil received the recognition of Top Employer. Many of Umicore's sites are small to medium sized operations and their recognition efforts are channeled to the local town or region where offi cial recognition schemes are seldom available. Recognition in such cases can come from local associations, like an industry association, or a local newspaper. In total 72.63% of the employees work at a site that received formal external recognition in 2013.
A global People Survey is carried out on a regular basis. The previous survey was held in 2010 with the next survey scheduled for 2014. In 2013 all major sites continued to implement the action plans related to the feedback of the 2010 survey, with the goal of further improving the engagement and wellbeing of the employees. Vision
2015
Donations: Each business unit is expected to allocate an annual budget that provides suffi cient donations and sponsorship support to each site's community engagement programme. By way of guidance this budget should equate to an amount corresponding to a third of a percent of the business unit's average annual consolidated recurring EBIT (i.e. excluding associates) for the three previous years.
As from 2009 the donations have been subdivided into cash donations, donations in kind and staff time. Group level donations are co-ordinated by a Donations Committee reporting to the CEO.
| North | South | ||||||
|---|---|---|---|---|---|---|---|
| unit | Europe | America | America | Asia-Pacifi c | Africa | Umicore Group | |
| Total donations | € thousand | 1,355.61 | 93.71 | 69.42 | 74.39 | 19.67 | 1,612.80 |
| unit | Catalysis | Energy Materials |
Performance Materials |
Recycling | Corporate | Umicore Group | |
|---|---|---|---|---|---|---|---|
| Total donations | € thousand | 190.39 | 132.04 | 163.61 | 558.80 | 567.96 | 1,612.80 |
In 2013, Umicore contributed a total of EUR 1,613 thousand in donations. For the business units the total amount of EUR 1,045 thousand is in line with the guidance of approximately one third of one percent of the unit's average annual recurring consolidated EBIT for the past three years. Additional group level donations were made for an amount of EUR 568 thousand.
Most of the donations of the units go to charity events close to their sites, in support of the local community. However, some business unit headquarters also support charity projects on other continents. At Group level the donations supervised by the Donations Committee have a global reach. The main areas for Group level donations in 2013 included support for two major UNICEF educational projects in Haiti and in India, disaster relief for the Philippines, three projects co-ordinated by Entrepreneurs for Entrepreneurs and support for student sustainable mobility projects.
63.24% of the sites have an external communication plan in place to ensure a suitable level of engagement with their local community. Depending on the size of the operation and its link to the local community these communication plans include: newsletters, public hearings, meetings with local authorities, plant visits for the local community and press releases provided to local media.
| unit | 2009 | 2010 | 2011 | 2012 | 2013 | |
|---|---|---|---|---|---|---|
| Employees represented by union or Collective Labour Agreement (CLA) |
% of workforce (fully consolidated) |
71.15 | 68.92 | 69.81 | 70.80 | 71.33 |
| unit | Europe | North America |
South America |
Asia Pacifi c |
Africa | Umicore Group |
|
|---|---|---|---|---|---|---|---|
| Employees represented by union or Collective Labour Agreement (CLA) |
% of workforce (fully consolidated) |
87.95 | 8.82 | 94.16 | 30.15 | 59.38 | 71.33 |
| unit | Catalysis | Energy Materials |
Performance Materials |
Recycling | Corporate | Umicore Group |
|
|---|---|---|---|---|---|---|---|
| Employees represented by union or Collective Labour Agreement (CLA) |
% of workforce (fully consolidated) |
62.95 | 51.48 | 76.21 | 89.64 | 69.74 | 71.33 |
In total, 71.3% of Umicore employees belong to a trade union organization and/or the level of their wages are negotiated through a collective bargaining agreement. On a regional basis, there are important differences in union representation, with the highest representation in South America and Europe and the lowest in North America and Asia Pacifi c.
In 2007, Umicore signed a Sustainable Development Agreement with the International union IndustriALL, which was renewed in 2011 for a period of four years. In this agreement, Umicore commits to a number of principles including: the banning of child labour and forced labour, recognizing the right to its employees to organize themselves and to participate in collective bargaining.
All sites are screened internally each year. This screening showed that none of Umicore's sites demonstrated a particular risk of infringement in any of the principles of the agreement.
In 2011, Umicore organized for the fi rst time a systematic Group-wide internal reporting on Code of Conduct issues. In 2013 a total of 21 cases were reported, involving a total of 28 employees. The type of action taken varies from a warning letter to dismissal.
2013 business group data
| Direct and indirect procurement | Indirect procurement |
|||||
|---|---|---|---|---|---|---|
| unit | Catalysis | Energy Materials |
Performance Materials |
Recycling | Corporate(2) | |
| Suppliers (1) that have agreed on the Sustainable Procurement Charter |
% suppliers | 88 | 84 | 86 | 84 | 84 |
(1) From those suppliers to whom Umicore has sent the Sustainable Procurement Charter (only to key suppliers of each business unit) (2) Corporate includes Procurement & Transportation department and UMS Taiwan
In the course of 2013, our regional procurement centres continued to select key suppliers based on criteria such as size, geographical location and type of product or service provided (including whether critical to the functioning of a Umicore entity). Several business units also defi ned their key suppliers and asked the selected suppliers to acknowledge the principles of the Sustainable Procurement Charter ('the charter').
The companies selected by the regional procurement centres included many suppliers of goods and services and some suppliers of raw materials (eg metals). In total, 671 suppliers have now been selected. By the end of 2013, 84% of these 671 suppliers had formally acknowledged their adherence to the terms of the charter. The business units selected 396 suppliers, of which 86% had formally acknowledged their adherence to the terms of the charter by the end of 2013. The supplier acknowledgement rate in the business units that sent the request for adherence to the charter is now about the same as that of the regional procurement centres suppliers. The total spend with suppliers who adhered to the charter in 2013 is some € 800 million euros.
1-2:
2%
issues
high sustainability risk 3-4: some basic steps made on sustainability
Umicore asked Ecovadis to assess the sustainability performance of 272 of the 1,067 suppliers highlighted above. The selection of those suppliers was made based on a risk assessment carried out by Ecovadis in relation to critically dependency, duration of relationship and spend with these suppliers. The result of the assessment is a score card with an overall score and a score for each of the four sustainability categories : environment, labour, fair business practices and supply chain. The scores ranged from 1 to 10 with 1 representing a high risk regarding sustainability issues.
7-8: advanced practices on sustainability 9-10: outstanding sustainability management
2%
0%
26%
5-6: appropriate sustainability management
system
systems
| Group | |
|---|---|
| Environmental | 4.4 |
| Labor practices | 4.0 |
| Fair business practices | 3.7 |
| Suppliers | 3.4 |
| Overall | 4.0 |
Of the 272 selected suppliers, 57 suppliers did not respond to the questionnaire. Of the 215 received score cards, 152 companies had a score of 3 or 4, meaning that they have taken basic steps on sustainability issues. Only 4 companies had a score equal to or below 2, representing a high risk regarding sustainability issues. 59 companies scored, overall, higher than 4. This means that they either have "an appropriate sustainibility management system" (55 companies) or show "advanced practices on sustainability" (4 companies). As to the average score in each category, the suppliers attained the highest average score in environment, while scoring the lowest in promoting sustainability in their own supply chain.
The Umicore Group has been assessed by Ecovadis and was scored 6.7, which classifi es the company in the advanced category with a "structured and proactive CSR approach, engagements / policies and tangible actions on major issues with detailed implementation information and signifi cant CSR reporting on actions & performance indicators".
Certain business units have adopted supplementary or alternative measures to checking the sustainability of their suppliers:
Umicore Precious Metals Refi ning Hoboken screens its suppliers using the Business Partner Screening process (BPS). Most of UPMR's 'suppliers' are, in fact, their end customers with UPMR providing a recycling service. The BPS is deemed to have a better scope to deal with this dual status of customer-supplier and covers aspects such as business ethics and security in more detail.
The Cobalt & Specialty Materials business unit has further refi ned its sustainable supply chain approach and engaged a third party auditor. The framework includes several tools to screen these suppliers on a regular basis and to mitigate the risks or uncertainties related to their supply chain practices.
In the course of 2013 several business units launched a program with low-scoring suppliers to develop an action plan for improvement. With regard to the regional procurement centres, a number of improvement plans were put into action with suppliers to the Belgian, Brazilian and French regional procurement centres.
In order to increase awareness of sustainable procurement within the company a web-based learning tool was made available on the newly-deployed My Campus platform in 2013. In 2013, 337 people participated in this e-learning module. In Brazil, a specifi c training programme was deployed over 11 on-site learning sessions. This resulted in 122 employees being trained on sustainable procurement.
In 2012 the U.S. Securities and Exchange Commission (SEC) issued a fi nal rule on confl ict minerals based on section 1502 of the Dodd-Frank Act. This rule obliges US stock listed companies to declare whether the tin, tantalum, tungsten and gold in their products have originated from the Democratic Republic of Congo or an adjoining country. While Umicore is not itself subject to the reporting requirements of Dodd-Frank, we aim to comply with the above rulings. In this regard, our Precious Metals Refi ning operations in Hoboken and Guarulhos successfully passed an independent audit and were certifi ed as "confl ict-free smelters" in 2013 for their operations of the previous year by the London Bullion Market Association (LBMA). The Jewellery & Industrial Metals operations in Pforzheim and Bangkok were certifi ed as part of the Responsible Jewellery Council's (RJC) Chain of Custody programme for three years. Similar independent audits are either underway or scheduled at two other Umicore operations.
In addition to existing policies and charters such as the Umicore Code of Conduct, Human Rights Policy and Sustainable Procurement Charter, in 2013 Umicore published a specifi c policy regarding "Responsible global supply chain of minerals from confl ict-affected and high-risk areas".
More information on Umicore's relationship with suppliers can be found in the Stakeholder Engagement section in the Corporate governance statements on page 169 and in the management review between pages 8 and 25.
| unit | 2009 | 2010 | 2011 | 2012 | 2013 | ||||
|---|---|---|---|---|---|---|---|---|---|
| Sickness rate | % | 2.64 | 2.86 | 3.03 | 2.69 | 2.76 | |||
| SICKNESS RATE | |||||||||
| Sickness rate: Total number of working days lost due to sickness. This excludes long-term sickness and days lost due to maternity leave. This number is related to the total number of working days per year. |
2.64% | 2.86% | 3.03% | 2.69% | 2.76% | ||||
| Long-term illness is defi ned as starting after three months of uninterrupted illness. | 2.5 2.0 1.5 |
||||||||
| 1.0 0.5 |
|||||||||
| 2013 regional data | 0.0 | 2009 | 2010 | 2011 | 2012 | 2013 | |||
| North | South | ||||||
|---|---|---|---|---|---|---|---|
| unit | Europe | America | America | Asia-Pacifi c | Africa | Umicore Group | |
| Sickness rate | % | 3.45 | 1.74 | 1.63 | 0.97 | 3.04 | 2.76 |
In the last fi ve years the sickness rate has fl uctuated between 2.64% and 3.03%. In 2013 the global sickness rate was 2.76%. We observe regional variations with a higher sickness rate in Europe and a lower sickness rate in Asia-Pacifi c.
All consolidated manufacturing sites where Umicore has operational control are included in the scope of the occupational health reporting. Compared to 2012, data of one sites is not reported anymore because of cessation of industrial activities at the site (Perafi ta, Portugal, Performance Materials). Two sites were added to the reporting scope: Himeji (Japan, Catalysis) and Suzhou (China, Catalysis - test center). This brings the total number of reporting sites to 64.
The information in this note only relates to Umicore's employees. Data on sub-contractors' occupational health are not included.
Additional information on Umicore's management approach on occupational health can be found on the website www.umicore.com/sustainability/social/
| unit | 2009 | 2010 | 2011 | 2012 | 2013 | |
|---|---|---|---|---|---|---|
| Exposure ratio 'all biomarkers aggregated' (1) | % | - | - | 5.2 | 4.3 | 2.6 |
| Exposure ratio lead (blood) (2) | % | - | - | 1.4 | 0.5 | 0.9 |
| Exposure ratio arsenic (urine) (2) | % | - | - | 2.2 | 1.4 | 1.6 |
| Exposure ratio cobalt (urine) (2) | % | - | - | 22.1 | 14.8 | 10.7 |
| Exposure ratio cadmium (blood) (2) | % | - | - | 0.8 | 1.7 | 0.6 |
| Exposure ratio cadmium (urine) (2) | % | - | - | 1.5 | 3.0 | 1.0 |
| Exposure ratio nickel (urine) (2) | % | - | - | 6 | 7.1 | 1.1 |
| People with platinum salts sensitisation | N° | - | - | 4 | 6 | 4 |
| People with noise induced hearing loss | N° | - | - | 9 | 4 | 3 |
| People with contact dermatitis | N° | - | - | 2 | 2 | 2 |
| People with occupational asthma other than Pt-salts | N° | - | - | 0 | 1 | 0 |
| People with muskulo-skeletal ailments | N° | - | - | 11 | 7 | 5 |
(1) Ratio between the number of monitoring results exceeding the Umicore target value, defi ned for relevant hazardous substances, and the total number of monitoring results.
(2) The exposure ratio of a specifi c metal is defi ned as the ratio between the number of employees with a biological monitoring result exceeding the Umicore target value for that specifi c metal and the total number of employees exposed to that metal. The Umicore target values are inspired by the biological exposure indices of the American Conference of Governmental Industrial Hygienists (ref. 2011) and are at least as strict as any legal limits in force in countries where we operate.
It is Umicore's objective to achieve in 2015 a biomarker of exposure concentration below the internal Umicore target value for each exposed individual. The following target values have been defi ned:
Cadmium: 2 microgramme per gramme of creatinine in urine and 0.5 microgramme per 100 ml of blood.
Lead: 30 microgramme per 100 ml of blood.
Cobalt: 15 microgramme per gramme of creatinine.
Arsenic and nickel: 30 microgramme per gramme of creatinine.
Platinum salts: no new cases of platinum salt sensitisation.
The number of occupational diseases is the number of employees with a newly-diagnosed occupational disease or occupationally linked symptoms during the reporting cycle.
In 2013, a total of 4,461 biological samples were taken from employees with an occupational exposure to at least one of the metals mentioned above (platinum salts excluded). 113 readings showed a result in excess of the internal target value. This brings the total excess rate to 2.6%, down from 4.3% in 2012. All occupationally exposed employees are regularly monitored by an occupational health physician.
Occupational lead exposure represents a potential health risk in the business groups Energy Materials, Performance Materials and Recycling. In total, 13 of the 1,416 occupationally exposed employees exceeded the target value of 30μg/100ml bringing the excess rate for lead exposure to 0.9%, similar to the 0.5% excess rate in 2012.
The majority of the excess readings were at the business group Recycling and were due to higher body burdens as a result of past exposures in the Hoboken site (Belgium, Recycling).
Employees with excess readings have been allocated to a different workplace and are further monitored by an occupational health physician.
Occupational exposure to arsenic is possible in the business groups Energy Materials, Performance Materials and Recycling. In total, 864 employees are occupationally exposed to arsenic of which 14 had an excess reading during 2013. This brings the excess rate for arsenic to 1.6%, slightly up compared to the 1.4% excess rate in 2012.
In total, 698 employees are occupationally exposed to cobalt, mainly in the business group Energy Materials. The number of employees exceeding the target value was 75 bringing the excess rate to 10.7%, signifi cantly lower compared to the excess rate of 14.8% in 2012.
All the excess readings were recorded in the business units Cobalt & Specialty Materials and Rechargeable Battery Materials. These business units have for many years been developing an occupational health approach for cobalt including biological monitoring. In 2011 the biological target value was lowered from 30 to 15 microgramme per gramme of creatinine in line with the most recent data in the scientifi c literature on cobalt toxicity and occupational exposure. The business units are implementing action plans to achieve a signifi cant reduction of the cobalt exposure at the workplace e.g. newly-installed cobalt furnaces at the site in Olen (Belgium, Energy Materials) have been designed to be operated without personal protective equipment.
Occupational exposure to cadmium represents a potential health risk in the business groups Performance Materials and Recycling.
Cadmium in urine is an excellent biomarker for lifetime exposure while cadmium in blood correlates to more recent occupational exposure.
In 2013, a total of 686 employees had an occupational exposure to cadmium.
7 employees recorded a cadmium in urine reading in excess of the target value resulting in an excess rate of 1.0% compared to 3.0% in 2012.
In the business group Performance Materials, 3 employees exceeded the internal target value for cadmium in urine. All these employees were employed in the business unit Technical Materials.
In the business group Recycling, 4 of the exposed employees exceeded the target values for cadmium in urine of which 3 in Hoboken (Belgium) while 1 excess reading was recorded in Amsterdam (Netherlands).
Additional technical measures are being implemented to further decrease exposure. In addition, workplace precautions such as employee rotation, strict adherence to respiratory protection programmes and personal hygiene measures are in place to minimize exposure.
Four employees exceeded the target value for cadmium in blood resulting in an excess rate of 0.6%. Cadmium in blood is a good biomarker of more recent cadmium exposure.
The business groups Energy Materials, Performance Materials and Recycling have occupational exposure to nickel. In 2013 a total of 797 employees were exposed to nickel, of which 9 exceeded the internal target level compared to 54 last year. This resulted in an excess rate of 1.1% compared to 7.1% in 2012.
This signifi cant improvement is mainly due to the implementation of an ambitious action plan at the site in Subic (Philippines, Energy Materials) focusing on improved engineering controls at the nickel carbonate and oxide installations while continuing campaigns on personal workplace hygiene.
The business groups Catalysis and Recycling have workplaces with exposure to platinum salts.
In 2013, 4 employees were newly diagnosed with a platinum salt sensitisation down from 6 in 2012. Two of these employees were employed in the business group Catalysis, the two others in the business group Recycling. These employees were moved to a workplace with no platinum salt exposure or provided with workplace equipment that offers an even higher level of protection. All workers exposed to platinum salts are monitored through an occupational health programme and regularly screened on allergy.
In 2013, a total of 3 employees were diagnosed with industrial noise-induced hearing loss. Two employees developed a contact dermatitis and 5 developed a musculo-skeletal disorder due to their occupation. All people concerned are followed by an occupational health physician and measures were taken to prevent further deterioration of their conditions.
In total, 78 consolidated sites are included in the occupational safety reporting. Compared to 2012, 1 site (Foshan, China, Recycling) is not included anymore in the safety reporting because of stopped activities while 5 new site were added (Bad Sackingen (Germany, Catalysis); Tokoname (Japan, Catalysis); Himeji (Japan, Catalysis); Cheonan (South Korea, Energy Materials); Raleigh (USA, administrative offi ce). Additional information on Umicore's management approach on safety can be found on the website www.umicore.com/sustainability/social/.
The Umicore information in this note only relates to Umicore's employees. Data on sub-contractors' occupational safety are reported separately.
It is Umicore's objective to have zero lost time accidents by 2015.
| unit | 2009 | 2010 | 2011 | 2012 | 2013 | |
|---|---|---|---|---|---|---|
| Fatal accidents | N° | 0 | 0 | 0 | 0 | 0 |
| Fatal accidents sub-contractors | N° | 0 | 0 | 0 | 0 | 0 |
| Lost Time Accidents (LTA) | N° | 48 | 56 | 60 | 49 | 35 |
| Lost Time Accidents (LTA) sub-contractors | N° | 26 | 20 | 17 | 33 | 22 |
| LTA frequency rate | 3.1 | 3.5 | 3.6 | 2.9 | 2.1 | |
| LTA frequency rate sub-contractors | 11.08 | 7.91 | 5.50 | 10.06 | 5.76 | |
| Calendar days lost | N° | 1,280 | 2,090 | 1,771 | 1,897 | 1,726 |
| LTA severity rate | 0.08 | 0.13 | 0.11 | 0.11 | 0.10 | |
| Recordable Injuries (RI) | N° | 352 | 210 | 221 | 160 | 146 |
| Recordable Injuries frequency rate | 22.9 | 13.3 | 13.3 | 9.3 | 8.7 | |
| Ratio N° of sites with no LTA / total N° of sites reporting | % | - | - | 77 | 85 | 79 |
| Sites OHSAS 18001 certifi ed | % | 14.5 | 28.0 | 30.0 | 32.0 | 32.8 |
Umicore employee: a person belonging to Umicore's total workforce. A Umicore employee can be a full-time, part-time or temporary employee.
Sub-contractor: a person not belonging to Umicore's total workforce, providing services to Umicore in one of its premises under terms specifi ed in a contract. Fatal accident: a work-related accident with fatal outcome.
Lost time accident: a work-related injury resulting in more than one shift being lost from work.
Recordable injury: a work- related injury resulting in more than one fi rst aid treatment or in a modifi ed working program but excluding lost time accidents. Frequency rate: number of lost time accidents per million hours worked.
Severity rate: number of lost calendar days due to a lost time accident per thousand hours worked.
Accidents to and from work are not part of the scope of the safety data.
| unit | Europe | North America |
South America |
Asia-Pacifi c | Africa | Umicore Group | |
|---|---|---|---|---|---|---|---|
| Lost Time Accidents (LTA) | N° | 26 | 4 | 1 | 4 | 0 | 35 |
| Energy | Performance | Umicore | |||||
|---|---|---|---|---|---|---|---|
| unit | Catalysis | Materials | Materials | Recycling | Corporate | Group | |
| Fatal accidents | N° | 0 | 0 | 0 | 0 | 0 | 0 |
| Lost Time Accidents (LTA) | N° | 4 | 6 | 9 | 15 | 1 | 35 |
| LTA frequency rate | per million hours worked |
1.1 | 2.0 | 2.0 | 4.2 | 0.5 | 2.1 |
| Calendar days lost | N° | 416 | 365 | 408 | 532 | 5 | 1,726 |
| LTA severity rate | per thousand hours worked |
0.11 | 0.12 | 0.09 | 0.15 | 0 | 0.10 |
In 2013, a total number of 35 lost time accidents were recorded compared to 49 in 2012. This resulted in a frequency rate of 2.1, down from 2.9 in 2012. In total, 1,726 calendar days were lost due to these lost time accidents. This resulted in a severity rate 0.10, compared to 0.11 in 2012.
The number of reported recordable injuries was 146 compared to 160 in 2012. The recordable injury frequency rate for 2013 was 8.7.
A total of 22 lost time accidents were registered for sub-contractors compared to 33 in 2012. This corresponded to a frequency rate of 5.8 compared to 10.0 in 2012.
During 2013, 79% of the reporting sites operated without a lost time accident compared to 77% in 2012. Twenty one of the 64 manufacturing sites are certifi ed using the occupational health and safety management system OHSAS 18001 compared to 20 in 2012.
Twenty-six lost time accidents, or 74% of the total number of lost time accidents, occurred in Europe. Of these 20 occured in Belgian and 5 in German sites. The Americas accounted for 5 accidents while 4 accidents happened in the Asia-Pacifi c region.
In January 2014 an accident at the Olen plant in Belgium cost the lives of two Umicore employees. Preliminary fi ndings indicated that the accident was due to an unexpected accumulation of hydrogen in the storage tank on which the two employees were carrying out maintenance work. A preliminary report was submitted to the Health and Safety Inspectorate and a process was launched to share the learning from the accident through the Group.
In 2013, the business group Catalysis recorded 4 lost time accidents of which 3 were in the Automotive Catalyst business unit. The total number of days lost was 416. This resulted in a frequency rate of 1.1 and a severity rate of 0.11. The business group continues to implement the SafeStart® programme in all its operating sites. This programme focuses on both habitual and unintentional safety behaviour. In addition, the business group invests heavily in sharing best safety practices and developed safety training matrices for each job. Progress is monitored through a set of leading safety indicators. All Automotive Catalyst production plants are certifi ed using the OHSAS 18001 management system. At year-end, the site in South Plainfi eld (USA, Recycling and Catalysis) had operated more than 5 years without a lost time accident or recordable injury to Umicore staff and no lost time accident to contractors on site. The sites in Americana (Brazil, Catalysis), Karlskoga (Sweden, Catalysis), Auburn Hills (USA, Catalysis), Tsukuba (Japan, Catalysis) and Suzhou (China, Catalysis) had operated at least 3 years without a lost time accident or recordable injury to Umicore staff and no lost time accident to contractors on site.
The business group Energy Materials recorded 6 lost time accidents compared to 9 in 2012. In total, 365 calendar days were lost. This resulted in a frequency rate of 2.0 and a severity rate of 0.12. Three accidents happened at the business unit Cobalt & Specialty Materials, Electro-Optic Materials recorded 2 accidents while Rechargeable Battery Materials had 1 accident. The business unit Thin Film Products operated without a lost time accident. The business unit Rechargeable Battery Materials has implemented a safety leadership program based on a behaviour observation and intervention technique as part of its safety ACCE program (Awareness, Competence, Compliance, Excellence) Three sites have been recognized for their excellent and sustained safety performance, recording at least 5 years with no lost time accident or recordable injury to Umicore staff and no lost-time accident to contractors on site: Dundee (UK, Energy Materials), Fort Saskatchewan (Canada, Energy Materials) and Hsinchu Hsien (Taiwan, Energy Materials).
The business group Performance Materials recorded 9 lost time accidents compared to 10 in 2012. A total of 408 calendar days were lost. The frequency rate was 2.0 and the severity rate 0.09. Six of the 9 lost time accidents occurred in the Zinc Chemicals business unit. The Technical Materials business unit recorded 2 lost time accidents. The Building Products business unit recorded 1 accident while the Platinum Engineered Materials and the Electroplating
business units operated without any accident. The business unit Zinc Chemicals continued to implement and improve its 'safety for a better life' programme with active involvement of all staff under the guidance of a business unit safety committee. Key elements of the programme include safety observation tours involving the business unit leadership team, training and the implementation of standards on key safety aspects. Progress is monitored through a set of leading and lagging safety indicators. The other business units are further deploying in-house safety programmes that are tailor made to their needs and priorities. Innovative elements of these programmes include business unit safety calendars and videos, safety gallery meetings and workshops. At the end of 2013 the site in Vicenza (Italy, Performance Materials) had achieved more than 5 years with no lost time accident or recordable injury to Umicore staff and no lost time accident to contractors on site. The site in Vilvoorde (Belgium, Building Products) operated at least 3 years without a lost time accident or recordable injury to Umicore staff and no lost time accident to contractors on site.
The business group Recycling had 15 lost time accidents, down from 23 in 2012. A total of 532 calendar days were lost. This represents a frequency rate of 4.2 and a severity rate of 0.15. The business unit Precious Metal Refi ning, with 13 lost time accidents, is further implementing the SafeStart® programme in all of its departments. The site in Hoboken (Belgium, Recycling) is also deploying a SafeMap® leadership training for all its managers and supervisors. The business unit Jewellery & Industrial Materials fi nalised the implementation of a safety programme focusing on four axes: roles and responsibilities, standards and training, safety dialogues, incident investigation.
An additional lost time accident occurred in Corporate at one of the Umicore Marketing Services offi ces.
148 Corporate governance statements
| Corporate governance review | 150 |
|---|---|
| G1 Corporate Governance framework | 150 |
| G2 Corporate structure | 150 |
| G3 Shareholders | 150 |
| G4 Board of Directors | 151 |
| G5 Executive Committee | 153 |
| G6 Relevant information in the event of a takeover bid | 153 |
| G7 Confl icts of interests (Art. 523 – 524ter Companies Code) | 155 |
| G8 Statutory auditor | 155 |
| G9 Code of Conduct | 155 |
| G10 Market Manipulation and Insider Trading | 155 |
| G11 Compliance with the 2009 Belgian Code on Corporate Governance 155 | |
| 2013 Remuneration Report | 156 |
| G12 Board of Directors' remuneration | 156 |
| G13 CEO and Executive Committee remuneration | 158 |
| G14 Share and share option ownership and transactions 2013 | 162 |
| G15 Changes to Remuneration since the end of 2013 | 163 |
| Risk management and internal control framework | 165 |
| G16 Risk management | 165 |
| G17 Risk categorization | 166 |
G18 Risk descriptions 166
| Umicore Annual report 2013 | |
|---|---|
| Stakeholder engagement | 169 |
| G19 Suppliers | 169 |
| G20 Customers | 169 |
| G21 Employees | 170 |
| G22 Investors and funders | 170 |
| G23 Society | 170 |
| G24 Associate and joint venture companies | 171 |
| G25 Public sector and authorities | 171 |
| G26 Distribution of economic benefi ts | 172 |
| Board of Directors | 174 |
| Executive Committee | 176 |
| Senior Management | 177 |
Umicore has adopted the 2009 Belgian Code on Corporate Governance as its reference code.
The English, Dutch and French versions of the Code can be found on the website of the Belgian Corporate Governance Committee ( www.corporategovernancecommittee.be ).
The Corporate Governance Charter describes in detail the governance structure of the Company, the policies and procedures of the Umicore Group. The Charter is available on the Umicore website ( www.umicore.com/governance ) and may be obtained on request from Umicore's Group Communications Department.
Umicore has articulated its mission, values and basic organizational philosophy in a document called "The Umicore Way". This document spells out how Umicore views its relationship with its customers, shareholders, employees and society.
In terms of organizational philosophy, Umicore believes in decentralization and in entrusting a large degree of autonomy to each of its business units. The business units in turn are accountable for their contribution to the Group's value creation and for their adherence to Group strategies, policies, standards and sustainable development approach.
In this context, Umicore believes that a good corporate governance structure is a necessary condition to ensure its long term success. This implies an effective decision-making process based on a clear allocation of responsibilities. It has to allow for an optimal balance between a culture of entrepreneurship at the level of its business units and effective steering and oversight processes. The Corporate Governance Charter deals in more detail with the responsibilities of the shareholders, the Board of Directors, the Chief Executive Offi cer and the Executive Committee and also the specifi c role of the Audit Committee and of the Nomination and Remuneration Committee. This Statement provides information on governance issues which relate primarily to the fi nancial year 2013.
The Board of Directors is the ultimate decision-making body of Umicore save for those matters reserved to the shareholders' meeting pursuant to the Belgian Companies Code or Umicore's articles of association. The Board is assisted in its role by an Audit Committee and a Nomination and Remuneration Committee. The day-to-day management of Umicore has been delegated to the Chief Executive Offi cer, who is also the chairman of the Executive Committee. The Executive Committee is responsible for elaborating the overall strategy of Umicore and for submitting it to the Board for review and approval. It is responsible for implementing such strategy and for ensuring the effective oversight of the business units and corporate functions. The Executive Committee is also responsible for screening the various risks and opportunities that the Company might encounter in the short, medium or longer term (see Risk Management section) and for ensuring that systems are in place to address these. The Executive Committee is jointly responsible for defi ning and applying Umicore's approach to sustainable development.
Umicore is organized in business groups which in turn comprise business units that share common characteristics in terms of products, technologies and enduser markets. Some business units are further subdivided into market-focused business lines. In order to provide a Group-wide support structure, Umicore has regional management platforms in South America, China, North America and Japan. Umicore's corporate centre is based in Belgium. This centre provides a number of corporate and support functions in the areas of fi nance, human resources, internal audit, legal and tax, as well as public and investor relations.
At 31 December 2013 there were 120,000,000 Umicore shares in issue. The history of the Umicore capital representation can be found at www.umicore.com/investorrelations . The identity of shareholders having declared a participation of 3% or more as of 31 December 2013 can be found in the chapter "parent company separate summarized fi nancial statements" (p. 115-117 ).
Also on 31 December 2013 Umicore owned 10,228,661 of its own shares representing 8.52% of its capital. Information concerning the shareholders' authorization for Umicore to buy back its own shares and the status of such buy-backs can be consulted in the Corporate Governance Charter and on Umicore's website respectively.
During the year 296,912 own shares were used in the context of the exercise of employee stock options and 25,300 shares were used for a share grant, of which 2,900 to the Board members, 19,000 to the Executive Committee members and 3,400 following a partial conversion into shares of the bonus of the Chief Executive Offi cer.
Umicore's policy is to pay a stable or gradually increasing dividend. There is no fi xed pay-out ratio. The dividend is proposed by the Board at the ordinary (or annual) general meeting of shareholders. No dividend will be paid which would endanger the fi nancial stability of the Company.
In 2013 Umicore paid a gross dividend of € 1.00 per share relating to the fi nancial year 2012. This equalled the gross dividend in respect of the fi nancial year 2011.
In August 2013 the Board, in line with the Umicore dividend policy, decided to pay an interim dividend, equal to 50% of the total dividend declared for the previous fi nancial year. As a result a gross interim dividend of € 0.50 per share was paid as from 5 September 2013. On 5 February 2014 the Board decided to propose to shareholders a total gross dividend of € 1.00 per share relating to fi nancial year 2013. If the appropriation of profi t proposed to shareholders is approved, the gross pay out of the dividend in May 2014 shall therefore amount to € 0.50 per share (i.e. the total dividend less the interim payment).
The System Paying Agent designated for the payment of the 2013 dividend is:
KBC Bank Havenlaan / Avenue du Port 2 1080 Brussels
According to Umicore's articles of association, the annual shareholders' meeting takes place on the last Tuesday of April at 5 p.m.
The annual shareholders' meeting of 2013 took place on 30 April 2013. At this meeting the shareholders approved the standard resolutions regarding the annual accounts, the appropriation of the results and the discharges to the directors and to the statutory auditor regarding their respective 2012 mandates. In addition Isabelle Bouillot was reappointed as director for a further three years, and Shohei Naito's mandate as independent director was renewed for one year. The shareholders appointed Frans van Daele as a new, independent director for three years, but he resigned in July 2013 following his appointment as chief of staff of HRH King Philippe. The shareholders also appointed Barbara Kux with effective date 1 January 2014 for a period expiring at the end of the annual shareholders' meeting of 2017. The annual shareholders' meeting furthermore approved the remuneration of the Board for 2013. Details of the fees paid to the directors in 2013 are disclosed in the Remuneration Report.
Finally, an extraordinary shareholders' meeting also held on 30 April 2013 renewed the authorization conferred to the Company and its subsidiaries to acquire, until 30 June 2015, Umicore shares on a regulated market within a limit of 10% of the subscribed capital, at a price per share between € 4 and € 75.
The Board of Directors, whose members are appointed by the shareholders' meeting resolving by a simple majority of votes without any attendance requirement, is composed of at least six members. The directors' term of offi ce may normally not exceed four years. In practice, directors are elected for a (renewable) period of three years.
Directors can be dismissed at any time following a resolution of a shareholders' meeting deciding by a simple majority of the votes cast. There are no attendance requirements for the dismissal of directors. The articles of association provide for the possibility for the Board to appoint directors in the event of a vacancy. The next general shareholders' meeting must decide on the defi nitive appointment of the above director. The new director completes the term of offi ce of his or her predecessor.
On 31 December 2013, the Board of Directors was composed of ten members: nine non-executive directors and one executive director. On the same date four directors were independent in accordance with the criteria laid down in Article 526ter of the Belgian Companies Code and provision 2.3 of the 2009 Belgian Code on Corporate Governance. Following the entry into force of the appointment of Barbara Kux as new, independent director on 1 January 2014 (as decided by the shareholders' meeting held on 30 April 2013), the Board of Directors will on that date consist of eleven members, including ten non-executivedirectors and fi ve independent directors.
Two (i.e. 20%) of the ten Board members in function on 31 December 2013 are women. Following the entry into force of the appointment of Barbara Kux as director on 1 January 2014, this number will increase to three (or 27.27%). Umicore is committed to reach the minimum representation threshold of one-thirdas imposed by the Belgian Companies Code and the recommendations of the Belgian Corporate Governance Committee well within the imposed time frame, i.e. before 1 January 2017. Both the Nomination and Remuneration Committee and the Board will in this respect seriously take into consideration the gender diversity requirement when examining Board mandate vacancies in the coming years.
The composition of the Board of Directors underwent the following changes in 2013:
The Board of Directors held fi ve regular meetings in 2013. This is a decrease by one compared to the previous year, but can be explained by the postponement of a Board meeting initially scheduled for December 2012 to early January 2014. On one occasion the Board also took decisions by unanimous written approval.
Major matters reviewed by the Board in 2013 included:
The Board also visited the Umicore automotive catalyst facility in Florange (France).
Every two years the Chairman conducts a performance review of the Board and its Committees.
The last performance review took place in 2013, on the basis of an individual evaluation form. The directors were asked to assess the following items: composition of the Board, selection and appointment of directors, functioning of the Board (agenda, meetings, chairmanship and secretariat), quality of information, culture within the Board, performance of duties by the Board, relations with the Executive Committee, and fi nally the Audit Committee and the Nomination and Remuneration Committee.
The outcome of the evaluation was fi rst discussed at the Board meeting held in September 2013 and was further discussed in depth during a Board meeting held in February 2014.
The Audit Committee's composition and the qualifi cations of its members are fully in line with the requirements of Article 526bis of the Belgian Companies Code and the 2009 Belgian Code on Corporate Governance.
The Audit Committee consists of three non-executive directors, two of them being independent. Isabelle Bouillot, since she was no longer considered an independent director from 30 April 2013 onwards, was replaced by Rudi Thomaes as Committee member with effective date 30 April 2013. All the members of the Audit Committee, have extensive experience in accounting and audit as demonstrated by their curriculum.
The Committee met four times in 2013. Apart from the review of the 2012 full year accounts and those of the fi rst half of 2013, the Committee also reviewed the following matters: the endorsement of the new head of the internal audit department, treasury items, the renewal of the statutory auditor's mandate, metal inventory methodology, the status on the minimum internal control requirements ("MICR"), an overview of the employee benefi ts liabilities in the Umicore Group and the internal audit activity reports. Furthermore, the Audit Committee conducted a review of the fees paid to the statutory auditor.
The Nomination and Remuneration Committee consists of three members who are all non-executive directors, two of them being independent. It is chaired by the Chairman of the Board. Isabelle Bouillot, since she was no longer considered an independent director from 30 April 2013 onwards, was replaced by Shohei Naito as Committee member with effective date 30 April 2013. Two Nomination and Remuneration Committee meetings were held in 2013. During the same period the Committee discussed the remuneration policy for the Board members, the Board Committees members and Executive Committee members and the rules of the stock grant and option plans offered in 2013.
The Nomination and Remuneration Committee was actively involved in the appointment of Frans van Daele (who resigned in July 2013) and Barbara Kux as new directors, and in the performance review of the Board and its Committees. The Committee also discussed the succession planning at the level of the Board and the Executive Committee.
The Executive Committee has the form of a "Comité de Direction/Directiecomité" as meant under Article 524bis of the Belgian Companies Code.
The Executive Committee is composed of at least four members. It is chaired by the Chief Executive Offi cer, who is appointed by the Board of Directors. The members of the Executive Committee are appointed by the Board of Directors upon proposal by the Chief Executive Offi cer and recommendation of the Nomination and Remuneration Committee.
On 31 December 2013 the Executive Committee consisted of seven members including the Chief Executive Offi cer.
A review of the performance of each Executive Committee member is conducted annually by the Chief Executive Offi cer and discussed with the Nomination and Remuneration Committee. The results are presented to the Board of Directors and discussed by the Board.
The Board also meets annually in non-executive session (i.e. without the Chief Executive Offi cer present) to review and discuss the performance of the Chief Executive Offi cer.
The above performance reviews took place on 6 February 2013.
Umicore's articles of association do not impose any restriction on the transfer of shares or other securities.
The Company is furthermore not aware of any restrictions imposed by law except in the context of market abuse regulations.
The options on Umicore shares as granted to the Chief Executive Offi cer, to the members of the Executive Committee and to designated Umicore employees in execution of various Umicore incentive programs may not be transferred inter vivos.
There are no such holders.
The Company's articles of association do not contain any restriction on the exercise of voting rights by shareholders, providing the shareholders concerned are admitted to the shareholders' meeting and their rights are not suspended. The admission rules to shareholders' meetings are laid down in Article 17 of the articles of association. According to Article 7 of the articles of association the rights attached to shares held by several owners are suspended until one person is appointed as owner vis-à-vis the Company.
To the Board's best knowledge none of the voting rights attached to the shares issued by the Company were suspended by law on 31 December 2013, save for the 10,228,661 shares held by the Company itself on that date (Article 622 §1 of the Belgian Companies Code).
The Company has not issued such employee stock plans.
To the Board's best knowledge there are no shareholders' agreements which may result in restrictions on the transfer of securities and/or the exercise of voting rights.
Save for capital increases decided by the Board of Directors within the limits of the authorized capital, only an extraordinary shareholders' meeting is authorized to amend Umicore's articles of association. A shareholders' meeting may only deliberate on amendments to the articles of association – including capital increases or reductions, as well as mergers, de-mergers and a winding-up – if at least 50% of the subscribed capital is represented. If the above attendance quorum is not reached, a new extraordinary shareholders' meeting must be convened, which will deliberate regardless of the portion of the subscribed capital represented. As a general rule amendments to the articles of association are only adopted if approved by 75% of the votes cast. The Belgian Companies Code provides for more stringent majority requirements in specifi c instances, such as the modifi cation of the corporate object or the company form.
The Company's articles of association were not amended in 2013.
The Company's share capital may be increased following a decision of the Board within the limits of the so-called "authorized capital". The authorization must be granted by an extraordinary shareholders' meeting; it is limited in time and amount and is subject to specifi c justifi cation and purpose requirements. The extraordinary shareholders' meeting held on 26 April 2011 (resolutions published on 10 June 2011) has authorized the Board to increase the Company's share capital in one or more times by a maximum amount of € 50,000,000. Up until 31 December 2013 this authorization had not been used. It will lapse on 9 June 2016.
Following a resolution of the extraordinary shareholders' meeting held on 30 April 2013 the Board is authorized to acquire own Company shares on a regulated market within a limit of 10% of the subscribed capital, at a price per share comprised between € 4.00 and € 75.00 and until 30 June 2015 (included). The same authorization was also granted to the Company's subsidiaries. A total of 2,437,385 own shares were purchased by the Company in 2013 in implementation of the above authorization (or of the previous authorization granted on 31 May 2012) during 2013.
All the senior vice-presidents of the Group are entitled to a compensation equivalent to 36 months base salary in the event of a dismissal within twelve months of a change of control of the Company. As far as the members of the Executive Committee are concerned, reference is made to the Remuneration Report (p. 163 ).
On 6 February 2013, prior to the Board discussing or taking any decision, Marc Grynberg declared that he had a direct confl icting interest of a proprietary nature in the implementation of the decisions taken by the Board relating to his performance assessment and to his remuneration (including the grant of shares and options).
In accordance with Article 523 of the Belgian Companies Code, Marc Grynberg did not take part in the Board's discussions concerning this decision and did not take part in the voting.
The fi nancial consequences of the above decisions are described in the Board's annual report on the statutory accounts in accordance with the Belgian Companies Code.
During 2013, no specifi c transactions or contractual commitments occurred between a Board member or an Executive Committee member on the one hand and Umicore or one of its affi liated companies on the other hand.
At the annual shareholders' meeting held on 26 April 2011 the statutory auditor's mandate of PricewaterhouseCoopers Bedrijfsrevisoren/Réviseurs d'Entreprises BCVBA/SCCRL was renewed for a period of three years. The statutory auditor is jointly represented by BVBA Marc Daelman, represented by Marc Daelman, and Emmanuèle Attout for the exercise of this mandate.
The Umicore policy detailing the independence criteria for the statutory auditor may be requested from the Company or accessed via www.umicore.com/governance/ .
Umicore operates a Code of Conduct for all employees, representatives and Board members. This Code of Conduct is fundamental to the task of creating and maintaining a relation of trust and professionalism with its main stakeholders namely its employees, commercial partners, shareholders, government authorities and the public.
The main purpose of Umicore's Code of Conduct is to ensure that all persons acting on behalf of Umicore carry out their activities in an ethical way and in accordance with the laws and regulations and with the standards Umicore sets through its present and future policies, guidelines and rules. The Code of Conduct contains a specifi c section on complaints and expressions of concern by employees and "whistle-blower" protection.
The Code of Conduct is published in Appendix 4 to Umicore's Corporate Governance Charter.
Umicore's policy related to market abuse including insider trading can be found in Appendix 5 to the Corporate Governance Charter.
Umicore's corporate governance systems and procedures are in line with the 2009 Belgian Code on Corporate Governance.
As a principle the remuneration of the non-executive members of the Board should be suffi cient to attract, retain and motivate individuals who have the profi le determined by the Board. The remuneration level should take into account the responsibilities and the commitment of the Board members as well as prevailing international market conditions. On the basis of the recommendation made by the Nomination & Remuneration Committee as to the form and structure of remuneration, the Board of Directors adopts the policy for remuneration of the non-executive Directors. The Nomination & Remuneration Committee bases its proposals on a review of prevailing market conditions for quoted companies which are part of the BEL 20 index as well as other European companies of similar size operating in the Chemicals, Metals and Materials sectors. The results of the survey are discussed within the Nomination & Remuneration Committee and the Board determines the remuneration for non-executive Directors and Board Committee's members to be proposed to the annual shareholders' meeting.
The remuneration of the non-executive Board members in 2013 was maintained at the same level as in the prior year and comprised the following elements:
• Chairman : annual fi xed fee: € 40,000 + € 5,000 per meeting attended + 300 Umicore shares.
• Director : annual fi xed fee: € 20,000 + € 2,500 per meeting attended + 300 Umicore shares.
The remuneration of the Board Committee members was as follows in 2013:
| Name (in €) Thomas Leysen (Chairman) Board |
attended |
|---|---|
| (non-executive director) Fixed annual fee 40,000 |
|
| Fee per attended meeting 5,000 |
5/5 |
| Value of 300 granted shares 11,018 |
|
| Nomination & remuneration Committee | |
| Fee per attended meeting 5,000 |
2/2 |
| Total remuneration 86,018 |
|
| Benefi ts in kind company car 7,612 |
|
| Marc Grynberg Board |
|
| (executive director) No remuneration as a director - |
5/5 |
| (see hereafter 2013 CEO remuneration) |
| Name | (in €) | Meetings attended |
|
|---|---|---|---|
| Isabelle Bouillot | Board | ||
| (independent, non-executive director) | Fixed annual fee | 20,000 | |
| Fee per attended meeting | 2,500 | 4/5 | |
| Value of 300 granted shares | 11,018 | ||
| Nomination & Remuneration Committee | |||
| Fee per attended meeting | 3,000 | 1/1 | |
| Audit Committee | |||
| Fixed annual fee | 1,667 | ||
| Fee per attended meeting | 3,000 | 2/2 | |
| Total remuneration | 51,685 | ||
| Uwe-Ernst Bufe | Board | ||
| (independent, non-executive director) | Fixed annual fee | 20,000 | |
| Fee per attended meeting | 2,500 | 5/5 | |
| Value of 300 granted shares | 11,018 | ||
| Total remuneration | 43,518 | ||
| Arnoud de Pret | Board | ||
| (non-executive director) | Fixed annual fee | 20,000 | |
| Fee per attended meeting | 2,500 | 5/5 | |
| Value of 300 granted shares | 11,018 | ||
| Audit Committee | |||
| Fixed annual fee | 10,000 | ||
| Fee per attended meeting | 5,000 | 4/4 | |
| Total remuneration | 73,518 | ||
| Ines Kolmsee | Board | ||
| (independent, non-executive director) | Fixed annual fee | 20,000 | |
| Fee per attended meeting | 2,500 | 5/5 | |
| Value of 300 granted shares | 11,018 | ||
| Audit Committee | |||
| Fixed annual fee | 5,000 | ||
| Fee per attended meeting | 3,000 | 4/4 | |
| Total remuneration | 60,518 | ||
| Board | |||
| Shohei Naito | |||
| (independent, non-executive director) | Fixed annual fee | 20,000 | |
| Fee per attended meeting | 2,500 | 5/5 | |
| Value of 300 granted shares | 11,018 | ||
| Nomination & Remuneration Committee | |||
| Fee per attended meeting | 3,000 | 1/1 | |
| Total remuneration | 46,518 | ||
| Jonathan Oppenheimer | Board | ||
| (non-executive director) | Fixed annual fee | 20,000 | |
| Fee per attended meeting | 2,500 | 5/5 | |
| Value of 300 granted shares | 11,018 | ||
| Total remuneration | 43,518 | ||
| Rudi Thomaes | Board | ||
| (independent, non-executive director) | Fixed annual fee | 20,000 | |
| Fee per attended meeting | 2,500 | 5/5 | |
| Value of 300 granted shares | 11,018 | ||
| Nomination & Remuneration Committee | |||
| Fee per attended meeting | 3,000 | 2/2 | |
| Audit Committee | |||
| Fixed annual fee | 3,333 | ||
| Fee per attended meeting | 3,000 | 2/2 | |
| Total remuneration | 58,851 |
| Name | (in €) | Meetings attended |
|
|---|---|---|---|
| Frans van Daele | Board | ||
| (independent, non-executive director) | Fixed annual fee | 10,833 | |
| Appointed by the AGM of 30 April 2013 - Resigned on 23 July 2013 | Fee per attended meeting | 2,500 | 1/1 |
| Value of 200 granted shares | 7,345 | ||
| Total remuneration | 20,678 | ||
| Klaus Wendel | Board | ||
| (non-executive director) | Fixed annual fee | 20,000 | |
| Fee per attended meeting | 2,500 | 5/5 | |
| Value of 300 granted shares | 11,018 | ||
| Total remuneration | 43,518 |
The Nomination & Remuneration Committee defi nes the remuneration policy principles for the CEO and Executive Committee and submits them to the Board of Directors for approval. It strives to have a fi xed remuneration to refl ect the level of responsibility and in line with market practices, as well as an attractive variable remuneration to reward the performance of the company against fi nancial and sustainability criteria.
The compensation & benefi ts package for the CEO and Executive Committee members includes the following components: fi xed remuneration, variable remuneration, share based incentives (share grant and incentive stock option plans) subject to a lock-up period, pension plans and other benefi ts.
The inclusion of Umicore shares and stock options as part of the remuneration of the CEO and the Executive Committee refl ects the commitment of the Board to create shareholder value. Shares and stock options are not linked to individual or business performance criteria. As a result the share based incentives should not be considered as a variable remuneration as meant under the Belgian Corporate Governance law of 6 April 2010 and are vested upon grant.
The remuneration of the CEO and Executive Committee members is reviewed on an annual basis by the Nomination & Remuneration Committee. A survey is conducted every year to assess the competitiveness of the remuneration packages. Umicore benchmarks the total remuneration of the Executive Committee members against BEL 20 companies and European peer companies.
In line with the Belgian law of 6 April 2010 on Corporate Governance, the payment of half of the variable remuneration is deferred and subject to multi-year targets or criteria.
The Nomination & Remuneration Committee of 1 February 2013 reviewed the remuneration package of the CEO based on a comparison with peer companies and BEL 20 companies. Given the challenging economic context and on proposal of the Nomination & Remuneration Committee, the Board of Directors of 6 February 2013 decided to leave the remuneration package of the CEO unchanged for 2013.
The Nomination & Remuneration Committee of 1 February 2013 reviewed the remuneration package of the Executive Committee members. As it was the case for the remuneration package of the CEO, the Board of Directors of 6 February 2013 followed the proposal of the Nomination & Remuneration Committee and decided to leave the remuneration package of the Executive Committee members unchanged for 2013.
For the reported year the individual data for the CEO related to remuneration components are reported in table on page 160of this remuneration report. For the other Executive Committee members the data regarding fi xed remuneration, variable remuneration, pension and other benefi ts are provided in aggregate while data related to share based incentives (shares and incentive stock option plans) are provided on an individual basis.
The CEO received a fi xed gross remuneration of € 660,000 in 2013.
As from the reference year 2012 the CEO's annual variable cash remuneration potential amounts to € 540,000, half of which relates to an undeferred payout based on the individual performance including the annual overall fi nancial performance of the Group, the progress achieved against Group strategic and sustainable development objectives, and adherence to the values of the Group.
The other half of the variable remuneration, for which the payout is deferred, is based on the Umicore Group profi tability criterion, i.e. the Return on Capital Employed (ROCE), as published in the annual report. The deferred payout is assessed over a multi-year timespan, with half of it paid after a period of two years based on the two year average ROCE. The other half is paid after a period of three years using as a reference the three year average ROCE. The ROCE range is set between 7.5% (= payout of 0%) and a maximum of 17.5% (= payout of 100%). When the achieved ROCE percentage falls between any of the above targets, the payout will be pro-rated. The payout percentage will be applied on the relevant annual variable cash remuneration potential i.e. a quarter of the annual variable cash remuneration potential of the reference year for each deferred payout year.
The variable cash remuneration may be converted partly or totally into Umicore shares at the discretion of the CEO.
There are no provisions allowing the Company to reclaim any variable remuneration paid to the CEO.
At the beginning of every reference year the individual objectives are discussed during a session of the Nomination & Remuneration Committee. During a Board session they are presented by the Chairman, discussed and approved by the Board.
The annual performance of the CEO is assessed by the Nomination & Remuneration Committee and the results of this assessment are presented by the Chairman and discussed during a Board session where the CEO is not present.
In 2014 the CEO will receive a gross cash variable remuneration totaling € 393,350. This total includes an amount of € 175,000 corresponding to the undeferred individual component of his variable cash remuneration in respect of the performance achieved in 2013. The balance corresponds to deferred payments from prior years, calculated as follows. An amount of € 114,400 will be paid out as the second half of the deferred payment of his variable cash remuneration for the reference year 2011 based on the three year average ROCE for the years 2011, 2012 and 2013. The Group ROCE averaged 16.3% over these 3 years, giving rise to a percentage payout of 88% which applies to one quarter of the annual variable cash remuneration potential for the year 2011. An amount of € 103,950 will be paid out as the fi rst half of the deferred payment of his variable cash remuneration for the reference year 2012 based on the two year average ROCE for the years 2012 and 2013. The Group ROCE averaged 15.2% over these two years, giving rise to a percentage payout of 77% which applies to one quarter of the annual variable cash remuneration potential for the year 2012.
Umicore shares are granted to the CEO at the discretion of the Board of Directors in recognition of services rendered in the previous year. The number of shares granted to the CEO in 2014 for services rendered in 2013 was 3,000 with a price at grant of € 31.595 per share and a total value at grant of € 94,785. The grant was decided by the Board of Directors on 5 February 2014. The shares are subject to a three year lock-up and are not subject to forfeiture conditions.
In 2013, 75,000 stock options were granted to the CEO as part of the Umicore Incentive Stock Option Plan 2013, implemented by the Board of Directors on 6 February 2013. These options have a strike price of € 36.375 and had a notional value (calculated on the basis of the Present Economic Value model) at grant of € 436,115. There is no vesting period and the options can be exercised from 1 March 2016 until 10 February 2020. Stock options allow the benefi ciary to acquire a specifi c number of Umicore shares at a fi xed price (the exercise price) within a specifi c period of time.
Pensions include both defi ned contribution plans and the service cost of defi ned benefi t plans. Other benefi ts are representation allowance, benefi ts in kind (company car), and insurance benefi ts.
All components of the remuneration earned by the CEO for the reported year are detailed in the table below:
| Total remuneration earned by the CEO Marc Grynberg - in € | 2012 | 2013 |
|---|---|---|
| Status of the CEO | Self-employed | Self-employed |
| Fixed Remuneration | 660,000 | 660,000 |
| Variable Remuneration | ||
| Current year | 150,000 | 175,000 |
| Deferred from previous year | 130,000 | 103,950 |
| Deferred from year prior to previous year* | 125,000 | 114,400 |
| Total gross cash remuneration | 1,065,000 | 1,053,350 |
| Non-cash elements | ||
| - Notional value of the free shares granted (services rendered in the ref. year) | 109,125 | 94,785 |
| - Notional value at grant of the incentive stock options | 551,768 | 436,115 |
| - Pension | ||
| Defi ned contribution plan | 195,030 | 201,630 |
| Defi ned benefi ts plan (service cost) | 52,807 | 92,290 |
| - Other Benefi ts : Representation allowance, company car, insurance | 47,092 | 47,519 |
| Total | 2,020,822 | 1,925,689 |
* On 25 March 2013 Marc Grynberg decided to convert the 2nd half of his deferred variable cash remuneration for the reference year 2010 or € 125,000 into 3,400 Umicore shares based on the closing share price of 25 March 2013 or € 36.185. The delta of the conversion or € 1,971 was paid in cash.
On 10 February 2014 Marc Grynberg decided to convert the 2nd half of his deferred variable cash remuneration for the reference year 2011 or € 114,400 into 3,400 Umicore shares based on the closing share price of 7 February 2014 or € 32.98 The delta of the conversion or € 2,268 was paid in cash.
The fi xed remuneration can be different for each Executive Committee member and depends on criteria such as experience. In aggregate in 2013 the Executive Committee (excluding the CEO) received € 2,330,000 in fi xed gross remuneration.
Umicore has adopted a variable cash remuneration scheme which aims to ensure that all Executive Committee members are rewarded in line with their annual individual performance as well as the overall performance of the Umicore Group. All the members of the Executive Committee are eligible for the same annual variable cash remuneration potential for the reference year 2013 amounting to € 300,000, half of which involves an undeferred payout based on the annual individual performance (including adherence to the values of the Group, environmental and social performance).
The other half, involving a deferred payout, is based on the Umicore Group ROCE profi tability criterion, i.e. the Return on Capital Employed (ROCE), as published in the annual report. The deferred payout is assessed over a multi-year timespan, with half of it paid after a period of two years, using the two years average ROCE as the reference. The other half is paid after a period of three years based on the three years average ROCE. The ROCE range is set between 7.5% (= payout of 0%) and a maximum of 17.5% (= payout of 100%). When the achieved ROCE percentage falls between any of the above targets, the payout will be pro-rated. The payout will be applied to the relevant annual variable cash remuneration potential i.e. a quarter of the annual variable cash remuneration potential of the reference year for each deferred payout year.
There are no provisions allowing the Company to reclaim any variable remuneration paid to the Executive Committee members.
At the beginning of every reference year the annual individual objectives of each Executive Committee member are fi xed by the CEO on basis of their areas of responsibility. The annual individual objectives are specifi c, measurable, agreed, realistic, time bound and take into account the group's sustainability objectives.
The annual performance of each Executive Committee member is initially assessed by the CEO. The results of the assessments and the individual variable cash remuneration proposals are presented by the CEO to the Nomination & Remuneration Committee before approval by the Board.
| Umicore Annual report 2013 | ||
|---|---|---|
| In 2014 the Executive Committee members will receive an aggregate variable cash remuneration totaling € 630,000 in respect to the undeferred individual component of their 2013 variable cash remuneration. |
||
| In addition to the undeferred individual payment, the Executive Committee members will also receive in 2014 the 2nd half of the deferred payment of their variable cash remuneration for the reference year 2011 based on the three year average ROCE for the years 2011, 2012 and 2013. The Group ROCE averaged 16.3% over these 3 years, giving rise to a percentage payout of 88% which applies to one quarter of the annual variable cash remuneration potential for the year 2011, corresponding to € 70,000 for each member of the Executive Committee having served as Executive VP for the full year 2011, or a pro-rata of that amount in case of an incomplete year of service. The aggregate amount is € 246,400. |
||
| The Executive Committee members will also receive in 2014 the fi rst half of the deferred payment of their variable cash remuneration for the reference year 2012 based on the two year average ROCE for the years 2012 and 2013. The Group ROCE averaged 15.2% over these years, giving rise to a percentage payout of 77% which applies to one quarter of the annual variable cash remuneration potential for the year 2012, corresponding to € 75,000 for each member of the Executive Committee having served as Executive VP for the full year 2012, or a pro-rata of that amount in case of an incomplete year of service. The aggregate amount is € 250,250. |
||
| Share based incentives (share grant and stock options) | ||
| Umicore shares are granted to the Executive Committee members at the discretion of the Board of Directors in recognition of services rendered in the previous year. The number of shares granted to the Executive Committee in 2014 for services rendered in 2013 was 18,000 (3,000 per member). The total aggregate value at grant was € 568,710. The price at grant was € 31.595 per share. The grant was decided by the Board of Directors on 5 February 2014 . The shares are subject to a three year lock-up and are not subject to forfeiture conditions. |
||
| In 2013, 87,500 stock options (17,500 options per member) were granted to the Executive Committee members as part of the Umicore Incentive Stock Option Plan 2013, implemented by the Board of Directors on 6 February 2013. The options have a strike price of € 36.375 for each Executive Committee members. The total notional value at grant (calculated on the basis of the Present Economic Value model) amounted to € 508,800. There is no vesting period and the options can be exercised from 1 March 2016 until 10 February 2020. |
||
| Pension and other benefi ts | ||
| Pensions include both defi ned contribution plans and the service cost of defi ned benefi t plans. Other benefi ts include representation allowances, company cars and insurance benefi ts. In aggregate the pension costs of the Executive Committee members amounted to € 623,913 in 2013. |
||
| Total aggregate Executive Committee remuneration for 2013 | ||
| Total remuneration earned, in aggregate, by members of the Executive Committee | ||
| in 2013 (not including the CEO) - in € | 2012 | 2013 |
| Fixed Remuneration (including termination indemnity) | 3,029,251 | 2,330,000 |
| Variable Remuneration Current year |
395,000 | 630,000 |
| Deferred from previous year | 350,000 | 250,250 |
| Deferred from year prior to previous year | 315,000 | 246,400 |
| Total gross cash remuneration | 4,089,251 | 3,456,650 |
| Non-cash elements | ||
| - Notional value of the free shares granted (services rendered in the ref. year) | 581,745 | 568,710 |
| - Notional value at grant of the incentive stock options | 772,476 | 508,800 |
| - Pension Defi ned contribution plan |
238,364 | 209,890 |
| Defi ned benefi ts plan (service cost) | 269,511 | 414,023 |
| - Other Benefi ts : Representation allowances, company car, insurance, benefi ts linked to expatriation | 394,701 | 361,926 |
| Total | 6,346,048 | 5,519,999 |
Executive Committee share option ownership and transactions 2013
| Name | Options at 31 Dec 2012 |
Options granted in 2013 |
Number of options exercised |
Average exercise price (in €) |
Year of grant of options exercised |
Number of options forfeited |
Options at 31 Dec 2013* |
|---|---|---|---|---|---|---|---|
| Marc Grynberg | 390,000 | 75,000 | 0 | 0 | 465,000 | ||
| Stephan Csoma ** | 21,000 | 0 | 5,000 | 22.30 | 2010 | 0 | 16,000 |
| Denis Goffaux | 46,000 | 17,500 | 0 | 0 | 63,500 | ||
| Hugo Morel | 67,500 | 17,500 | 25,000 | 22.30 | 2010 | 0 | 60,000 |
| Filip Platteeuw ** | 17,500 | 17,500 | 0 | 0 | 35,000 | ||
| Pascal Reymondet | 92,500 | 17,500 | 15,000 | 22.30 | 2010 | 0 | 95,000 |
| Marc Van Sande | 92,500 | 17,500 | 21,162 | 22.30 | 2010 | 0 | 88,838 |
* These options can be exercised at strike prices between € 14.44 and € 39.25
** The number of options at 31 Dec. 2012 were granted in their capacity prior to appointment to the Executive Committee
Details of all options exercised and other share-related transactions of Executive Committee or Board members can be found on www.fsma.be .
| Name | Shares owned at 31/12/2012 |
Shares owned at 31/12/2013 |
|---|---|---|
| Marc Grynberg | 146,000 | 152,400 |
| Stephan Csoma | 0 | 500 |
| Denis Goffaux | 4,500 | 7,500 |
| Hugo Morel | 6,000 | 9,000 |
| Filip Platteeuw | 1,000 | 1,500 |
| Pascal Reymondet | 17,750 | 20,750 |
| Marc Van Sande | 15,000 | 9,000 |
| Total | 199,500 | 200,650 |
| Name | Shares owned at 31/12/2012 |
Shares owned at 31/12/2013 |
|---|---|---|
| Thomas Leysen | 626,620 | 676,920 |
| Isabelle Bouillot | 600 | 900 |
| Uwe-Ernst Bufe | 600 | 900 |
| Arnoud de Pret | 5,600 | 5,900 |
| Ines Kolmsee | 505 | 805 |
| Shohei Naito | 600 | 900 |
| Jonathan Oppenheimer | 600 | 900 |
| Rudi Thomaes | 905 | 1,205 |
| Klaus Wendel | 7,725 | 8,025 |
| Total | 643,755 | 696,455 |
Taking into account Marc Grynberg's seniority in the Umicore Group, the Board resolved as follows in 2008:
Following a Board decision taken in 2007, in case the employment of an Executive Committee member should be terminated within twelve months of a change of control of the Company, that member would stand to receive a total compensation equivalent to 36 months' base salary. This applies for all Executive Committee members with the exception of Denis Goffaux whose employment agreement was signed on 1 July 2010, as well as Stephan Csoma and Filip Platteeuw whose employment agreements were signed on 1 November 2012.
Stephan Csoma and Filip Platteeuw were appointed Executive Committee members on 1 November 2012. Taking into account their seniority in the Umicore Group a total compensation equivalent to 18 months of their annual base salary will be paid in case of contract termination. In line with the Belgian Corporate Governance Law of 6 April 2010, these arrangements were approved by the Nomination & Remuneration Committee of 18 September 2012 subject to the absence of any objections of the Board, which were not formulated. It is at the Board of Directors' discretion as to whether the variable cash remuneration would form part of any fi nal indemnity.
Denis Goffaux was appointed Chief Technology Offi cer on 1 July 2010. Taking into account Denis Goffaux's seniority in the Umicore Group a total compensation equivalent to 18 months of his annual base salary will be paid in case of contract termination. In line with the Belgian Corporate Governance Law of 6 April 2010, the Nomination & Remuneration Committee recommended this arrangement and this was approved by the Board of Directors on 1 June 2010 . It is at the Board of Directors' discretion as to whether the variable cash remuneration would form part of any fi nal indemnity.
The contracts of Hugo Morel and Marc Van Sande were signed before the Belgian Corporate Governance Law of 6 April 2010 came into force. In case of termination the compensation is based on age, seniority in the Umicore Group and the total compensation and benefi ts.
Pascal Reymondet has a German employment agreement signed on 1 March 1989. There is no contractual arrangement in case of termination and German law will be applicable.
In order to determine adequate remuneration levels for its non-executive Directors Umicore conducted in 2013 a survey of director's fees of Umicore against those of quoted companies on the BEL 20 index as well as other European companies of similar size operating in the Chemicals, Metals and Materials sectors. The results of the survey which were reviewed by the Nomination & Remuneration Committee of 4 February 2014 demonstrated that as well as the positioning of the fees of the Chairman of the Board as those of the Board members are situated at the low end of the peer groups.
The Nomination & Remuneration Committee recommended to the Board to increase the number of Umicore shares granted to each non-executive director from 300 to 500, and for the Chairman of the Board from 500 to 1,000. The Board of Directors of 5 February 2014 followed this proposal and decided to submit these changes to the approval of the shareholders during the annual shareholders' meeting to be held on 29 April 2014.
On 4 February 2014 the Nomination & Remuneration Committee reviewed the remuneration package of the CEO based on a comparison survey with European peer companies and BEL 20 index companies.
On proposal of the Nomination & Remuneration Committee, the Board of Directors of 5 February 2014 decided to leave the fi xed gross remuneration of € 660,000 unchanged in 2014.
The Nomination & Remuneration Committee of 4 February 2014 reviewed the remuneration package of the Executive Committee members. On proposal of the Nomination & Remuneration Committee and taking into account that no salary increase was granted in 2013, the Board of Directors of 5 February 2014 decided to increase slightly the annual fi xed remuneration of the Executive Committee members.
The Nomination & Remuneration Committee of 4 February 2014 discussed the structure of the current variable cash remuneration of the CEO and the Executive Committee members.
In this context an analysis will be conducted and a proposal will be submitted to the Nomination & Remuneration Committee in the course of the 1st half-year 2014.
Taking calculated risks is an integral part of the development of any company. Umicore's Board of Directors is ultimately responsible for assessing the risk profi le of the company within the context of the company strategy and external factors such as market conditions, competitor positioning, technology developments etc and ensuring that adequate processes are in place to manage these risks. Umicore's management is tasked with successfully exploiting business opportunities whilst at the same time limiting possible business losses. In order to achieve this, Umicore operates a comprehensive risk management system. The aim of this system is to enable the company to identify risks in a proactive and dynamic way and to manage or mitigate these identifi ed risks to an acceptable level wherever this is possible. Internal control mechanisms exist throughout Umicore to provide management with reasonable assurance of the company's ability to achieve its objectives. These controls cover the effectiveness and effi ciency of operations, the reliability of fi nancial processes and reporting, the compliance with laws and regulations, and provide for the mitigation of errors and fraud risks.
Each of Umicore's business units operates in an environment which carries specifi c growth expectations and differing degrees of market and technological uncertainty. Therefore, the primary source of risk identifi cation lies with the business units themselves.
The fi rst step in the risk management process is to enable and channel the identifi cation of the various material risks. Umicore has established a business risk assessment process to be undertaken by each business unit and corporate department. The process requires that all units carry out a risk scan in order to identify all signifi cant risks (fi nancial and non-fi nancial) that might affect the ability of the business unit to meet its objectives as set out in its strategic plans. The process then requires that each of these risks be described in detail in a risk card. Besides the assessment of potential impact and likelihood, the risk card also contains information on the the status of any management action or mitigation plan and the ownership thereof.
These risk cards are then fed back to the member of the Executive Committee responsible for that peculiar business area. A consolidated review takes place at the level of the Executive Committee, the outcome of which is presented to the Audit Committee and to the Board of Directors. The Audit Committee, on behalf of the Board of Directors, carries out an annual review of the company's internal control and risk management systems and looks into specifi c aspects of internal control and risk management on an on-going basis.
Each business unit and corporate department is responsible for the mitigation of its own risks. The Executive Committee intervenes in cases where managing a certain risk is beyond the capacities of a particular business unit. The Executive Committee and the Chief Executive Offi cer are also responsible in a broader context for identifying and dealing with those risks that affect the broader group such as strategic positioning, funding or macroeconomic risks. A specifi c monitoring role is given to Umicore Internal Audit department in order to provide oversight for the risk management process.
Umicore adopted the COSO framework for its Enterprise Risk Management and has adapted its various controls constituents within its organization and processes. "The Umicore Way" ( www.umicore.com/en/aboutUs/umicoreWay/ ) and the "Code of Conduct" are the cornerstones of the Internal Control environment; together with the concept of management by objectives and through the setting of clear roles and responsibilities they establish the operating framework for the company.
Specifi c internal control mechanisms have been developed by business units at their level of operations, while shared operational functions and corporate services provide guidance and set controls for cross-organizational activities. These give rise to specifi c policies, procedures and charters covering areas such as supply chain management, human resources, information systems, environment, health and safety, legal, corporate security and research and development.
Umicore operates a system of Minimum Internal Control Requirements (MICR) to specifi cally address the mitigation of fi nancial risks and to enhance the reliability of fi nancial reporting.
Umicore's MICR framework requires all Group entities to comply with a uniform set of internal controls covering 165 control activities in 12 processes and 131 Group control entities. Within the MICR framework specifi c attention is paid to the segregation of duties and the defi nition of clear roles and responsibilities. A compliance threshold is established for each control activity with the ultimate goal being to achieve the target compliance level in all Umicore entities. The majority of entities made further progress in 2013 with the total average compliance scores improving by 2 percentage points. Priority was given to reach the target control maturity in those processes that are of particular importance to Umicore such as metal hedging and inventory management. MICR compliance is monitored by means of annual self assessments to be signed off by the senior management and their outcome is reported to the Executive Committee and to the Audit Committee of the Board of Directors. The compliance assessments are also reviewed by the Internal Audit department during its missions.
Umicore faces risks that in broad terms can be categorized as follows:
Strategic: including risks related to macro-economic and fi nancial conditions, technological changes, corporate reputation, political and legislative environment.
Operational: including risks related to changing customer demand, supply of raw materials, distribution of products, credit, production, labour relations, human resources, IT infrastructure, occupational health and safety, emission control, impact of current or past activities on the environment, product safety, asset and data security, disaster recovery.
Financial: including risks related to treasury, tax, forecasting and budgeting, accuracy and timeliness of reporting, compliance with accounting standards, metal price and currency fl uctuation, hedging.
Most industrial companies would normally expect to face a combination of the risks listed above. It is not the intention to provide exhaustive details on each risk posed to the company in this report. However, the most noteworthy strategic and operational risks either in their relevance to Umicore and its Vision 2015 targets or in the company's way of dealing with them have been highlighted below. Financial risks are discussed in greater detail in note F3 to the Consolidated Financial Statements.
Umicore has a diverse portfolio of activities serving a number of different market segments and in most of its business has a truly global presence. No one end-user market segment or industry accounts for more than 50% of Umicore's sales. In terms of overall exposure the main end markets served by Umicore are automotive, consumer electronics and construction. Umicore's business model also focuses on sourcing secondary or end-of-life materials for recycling. In many instances the availability of these materials is dependent on the levels of activity in specifi c industries or at specifi c customers where Umicore provides closed-loop recycling services. A diverse portfolio and wide geographical presence help to mitigate the risk of over-exposure to any one particular market.
Comments on 2013: Challenging economic conditions persisted in many of Umicore's end markets. Sales and revenues were below those of 2012. The main negative impact from a profi tability point of view was the effect of lower metals prices on the earnings of the Recycling business group.
Umicore is a materials technology Group with a strong focus on the development of innovative materials and processes. The choice and development of these technologies represents the single biggest opportunity and risk for Umicore. In order to manage this risk and to enhance the effectiveness of technology screening and implementation processes Umicore has implemented a Group-wide Technology Innovation Management process and carries out technology reviews at Executive Committee level every year. All business units are also expected to carry out an annual technology review. The purpose of these technology reviews is to verify the suitability, potential and risks of those technologies that are screened and pursued and to ensure that they are in line with Umicore's strategic vision. In 2009 Umicore adopted a system to track the quality of its research and development efforts. This system is primarily based on a self-assessment tool for the business units and Group R&D.
In terms of organization Umicore's R&D efforts comprise initiatives at both Group and business unit level. The position of Chief Technology Offi cer (CTO) was created in 2005 with the aim of stimulating the various R&D efforts through the Group, ensuring the alignment of the R&D roadmap with strategic priorities and achieving a balance between current technology needs and longer-term opportunities. Five R&D platforms provide a framework for those elements that have a high degree of relevance across the Group namely Fine Particle Technology, Recycling & Extraction Technology, Scientifi c and Technical Operations Support, Environment Health and Safety and Analytical Competences. Efforts are also made to promote best practice in knowledge management, information sharing, training and networking throughout the R&D community at Umicore.
To the greatest extent possible, the fi nancial support for the Group's R&D efforts is maintained irrespective of short-term fl uctuations in the fi nancial performance of the Group. With regard to intellectual property (IP) risk, a Group IP committee co-ordinates the protection of IP at Group level and promotes best practice in this regard at the level of the business units, which have their own IP committees.
Comments on 2013: Now that the main technology projects are well established, in 2013 the Executive Committee undertook six dedicated technology reviews compared to 14 reviews in 2012. These review focus on the technology developments that will be key to achieving Vision 2015 growth ambitions and cover both product and process developments in automotive catalysis, fuel cell catalysts, rechargeable battery materials and recycling technologies.
Umicore is reliant on supplies of certain metals or metals-containing raw materials in order to manufacture its products. Some of these raw materials are comparatively rare. In order to mitigate the risk of supplies becoming diffi cult to source Umicore enters into longer-term contracts with its suppliers wherever possible. In some cases the company holds strategic reserve stocks of certain key raw materials. The company also attempts to source its materials from a geographically diverse range of locations. Umicore's focus on recycling also means that its supply needs are only partially dependent on supplies of virgin material from mines – a signifi cant proportion of the company's feed coming from secondary industrial sources or end-of-life materials. Where possible Umicore seeks to partner with customers in a "closed-loop" business model thereby integrating sales and the recycling of the customer's residues in one package. Umicore has developed a Sustainable Procurement Charter that has been designed to drive further improvements in the company's approach to sustainable procurement and is being rolled out towards Umicore's suppliers.
Comments on 2013: Umicore made further progress in 2013 with regards to its efforts to demonstrate compliance with the Dodd Frank Act in the US. While Umicore does not source confl ict minerals and is not itself subject to the Dodd Frank Act, the company is proactively addressing the issue with a number of its customers and suppliers. In 2012 Umicore had already taken steps, together with relevant industry associations, to provide assurances to customers about the confl ict-free nature of the gold that it recycles or which is used in its products. In Precious Metals Refi ning the Hoboken and Guarulhos facilities were awarded the confl ict-free smelter certifi cation by the London Bullion Market Association (LBMA) following an audit of processes and supply streams. A similar process and certifi cation was undertaken by the Jewellery & Industrial Metals operations in Pforzheim and Bangkok together with the Responsible Jewelry Council (RJC). For more information see p.23. In 2013 Umicore formally adopted a confl ict minerals policy. For general comments on the progress in implementing Umicore's Sustainable Procurement Charter please see page 22and note S8.
Achieving the best cost-performance balance for materials is a priority for Umicore and its customers. There is always a risk that customers will seek alternative materials to integrate in their products should those of Umicore not provide this optimum balance. The risk is especially present in those businesses producing materials containing expensive metals (especially those with historically volatile pricing characteristics). Umicore actively seeks to pre-empt this search for substitute materials by developing such substitutes itself using less costly materials with lower pricing volatility and where possible without impacting the performance provided for the customer's product.
Comments on 2013: No specifi c developments took place with regards to substitution risk during 2013.
Like all companies, Umicore is exposed to the evolution of the regulatory environment in the countries or regions within which it does business. It should be noted that Umicore's businesses stand to benefi t from certain regulatory trends, notably those regarding more stringent emission controls for vehicles and enforced recycling of end-of-life products such as electronic goods.
However, some environmental legislation does present operational challenges. The REACH Directive came into force in the European Union in June 2007 and it introduced the need for new operational procedures regarding the registration, evaluation and authorization of chemical substances. Umicore has created an operational network of REACH managers from all of its business units, coordinated by a corporate REACH implementation manager.
Umicore monitors closely all changes in interpretation as well as guidance documents which might affect its REACH implementation strategy. Umicore is actively involved in industry association working groups to make sure a consistent approach is followed and that the metal specifi cs are understood by the regulators and the companies.
While the regulatory landscape may shift in the future, only a few of our substances feature today on the Candidate list for potential REACH authorization. In total, the products sold that contain these substances account for less than 0.5% of Umicore's revenues. The placing of a substance on the REACH "Candidate List" is designed as a fi rst step in subjecting that substance to robust and detailed scientifi c evaluation of risk as a basis for its continued use or substitution if economically and technically feasible alternatives to that substance exist.
Comments on 2013: By June 2013, the second REACH registration deadline, Umicore had submitted another 21 registrations for 17 different substances to the European Chemicals Agency (ECHA). The fi les were either jointly prepared with other companies acting in consortia or by Umicore alone. About a third of all dossiers is being updated in 2013 with additional information or newly available data.
As indicated above, Umicore has implemented a specifi c series of Minimum Internal Control Requirements to mitigate fi nancial risks. The 12 specifi c areas covered by MICR are: Internal Control Environment, Financial Closing & Reporting, Fixed Assets, Procure-To-Pay, Order-To-Cash, Inventory Management, Hedging, Treasury, Tax, Information Systems Management, Human Resources, Travel & Entertainment. An internal guide – the Umicore Financial Reporting Standard – provides the framework for common understanding of Umicore's accounting policies, application of IFRS, and general reporting practices. Below three of the most salient fi nancial risks have been summarized. A full description of pure fi nancial risks and their management can be found in note F3 to Consolidated Financial Statements.
Umicore aims to safeguard the business through sound fi nancial management and by maintaining a strong balance sheet. Although there is no fi xed target regarding debt levels the company aims to maintain an investment grade status at all times. We also seek to maintain a healthy balance between short term and longer term debt and between debt secured at fi xed and fl oating interest rates. Umicore has a monitoring process to screen banks for counterparty risk. Umicore is exposed to the risk of non-payment from any counterparty in relation to sales of goods or other commercial operations. Umicore manages this risk through application of a credit risk policy. Credit insurance is often used to reduce the overall level of risk but in certain businesses no insurance is used. This is primarily in those businesses with a signifi cant level of customer concentration or those with a specifi c and close relationship with their customers and where the cost of insurance is not deemed justifi able in proportion to the risks involved. Business managers are also encouraged to pay particular attention to the evolution of trade receivables. This is done in the broader context of working capital management and Group efforts to reduce capital employed. The largest part of the variable pay of managers is linked to return on capital employed (ROCE).
Umicore is exposed to structural, transactional and translational currency risks. Structural currency risk exists where the company generates more revenues in one currency compared to the costs incurred in that currency. The single biggest sensitivity of this nature exists for the US dollar. Transactional currency exposure is hedged systematically while the company sometimes engages in structural currency hedges that help secure future cash fl ows.
Umicore also faces translational currency risks where it consolidates the earnings of subsidiaries not using the Euro as their reporting currency. This risk is typically not hedged.
Umicore is exposed to risks relating to the prices of the metals which it processes or recycles. The structural metals-related price risks relate mainly to the impact that metal prices have on surplus metals recovered from materials supplied for treatment. Transactional metals price risks are linked to the exposure to any fl uctuations in price between the moment raw materials are purchased (i.e., when the metal is "priced in") and the moment the products are sold (i.e., when the metal is "priced out"). A risk also exists in the company's permanently tied up metal inventories. This risk is related to the market metal price moving below the carrying value of these inventories. Transactional metal price exposure is hedged systematically while the company sometimes engages in structural metal price hedges that help secure future cash fl ows.
The tax charge included in the fi nancial statements is the Group's best estimate of its tax. There is a degree of uncertainty regarding the fi nal tax liability for the period until completion of tax audits by the authorities. The Group's policy is to submit tax returns within the statutory time limits and engage tax authorities to ensure that the Group's tax affairs are as current as possible and that any differences in the interpretation of tax legislation and regulation are resolved as quickly as possible. Given the scale and the international nature of the Group's business, VAT, sales tax and intra-Group transfer pricing are an inherent tax risk as it is for other international businesses. Changes in tax laws or in their application with respect to matters such as transfer pricing, VAT, foreign dividends, R&D tax credits and tax deductions, could increase the Group's effective tax rate and adversely affect its fi nancial results.
Comments on 2013: No material changes took place with regards to the nature or management of the fi nancial risks faced by Umicore during 2013.
Umicore is a publicly listed company. As such, it interacts with a number of parties who have an interest in the way in which the company conducts business. The relationship that the company is able to foster with these parties or stakeholders has a direct impact on the company's success.
Stakeholder engagement at Umicore is, in the fi rst instance, based on a localized approach whereby all sites are required to identify their respective stakeholders and to establish suitable ways of engaging with local stakeholders. This approach is formalized in the Vision 2015 objective relating to local communities. In many instances, such as the dialogue with customers and suppliers, the stakeholder relationships are primarily managed by the business units themselves, in line with Umicore's de-centralized approach to managing its businesses.
At Group level the Vision 2015 objectives were developed partly from the lessons learned from an external sounding board in 2009 to review Umicore's sustainability approach and reporting. This sounding board complemented an internal exercise conducted with representatives of business units, shared operational functions and corporate departments.
Umicore is an active participant in various industry associations through which it engages with policy makers in order to contribute to the better understanding of industry-related issues. These associations are also important platforms for Umicore to contribute to broader, industry-wide action on sustainable development. On a less formal level, members of Umicore's senior management are often called upon or volunteer to participate in public fora to discuss Umicore's business performance and sustainable development approach. Such events provide the opportunity to interact with various groups including business leaders, academics and civil society.
Highlighted below are Umicore's main stakeholder groups. These have been categorized in broad terms using generic stakeholder categories that apply to most industrial organizations. Also shown are the nature of the transactions that occur and a brief description of how the dialogue between Umicore and the stakeholders operates.
Umicore operates through four business groups on fi ve continents. These business groups not only require materials to make their products but also energy, transportation and a range of other services. Overall Umicore has more than 10,000 suppliers world-wide. These suppliers benefi t from Umicore's presence as a customer; during 2013 Umicore paid these suppliers some € 8.8 billion (including the metal content of raw materials).
Umicore is engaged in constant dialogue with its suppliers, primarily to defi ne technical specifi cations as well as to ensure mutually acceptable terms and conditions for continued partnership such as prompt and uninterrupted delivery of materials / services and timely payment. The business units are primarily responsible for the purchases of raw materials while the corporate Purchasing and Transportation department is involved in ensuring the Group's transportation, energy and other provisioning needs are met.
Umicore's approach is shaped by its Sustainable Procurement Charter ( www.umicore.com/sustainability/sustProcCharter/ ). This charter forms the basis for the Vision 2015 objective on sustainable procurement. For information on the progress towards this objective please see page 22-23of this report.
Umicore's ambition is to produce "materials for a better life". The company's materials can be found in a wide variety of applications that make day-to-day life more comfortable and which help contribute to a cleaner environment.
Umicore has an international customer base, with 48% of 2013 revenues being generated outside Europe.
Umicore's customer base tends to be other industrial companies who use Umicore's materials to make products. Only in a very few instances does Umicore make products that are sold directly to the public. The business units are responsible for providing support to their customers in order to better understand
the hazards and risks of any products that are either in the market or in development. Interaction with customers is an on-going process and is managed by the business units. All business units have a customer feedback process where they are able to gauge periodically the level of customer satisfaction with their products and services. In the most technologically advanced businesses the relationship with the customer is often closely integrated. Developing advanced products often involves years of research and development work in direct collaboration with such customers.
Umicore and its associates employ some 14,000 people around the world. The company invests signifi cant resources in ensuring its status as an employer of choice in all the regions in which it operates. During 2013 Umicore paid a total of € 560 million in the form of salaries and other benefi ts to the employees of its fully consolidated companies. Social security payments totalled € 114 million.
Umicore is committed not only to providing competitive salaries and working conditions to its employees but also to providing the necessary occupational and professional training opportunities. Employees are expected to adhere to the principles and policies outlined in The Umicore Way and Umicore's Code of Conduct. Open dialogue is promoted between the company and its employees. This dialogue includes a three-yearly employee opinion survey.
Umicore respects the principle of collective bargaining wherever it is requested. While such practice is commonplace in Europe, in some other locations collective bargaining mechanisms and trade unions are less common or face local legal restrictions. Umicore has signed a sustainable development agreement with the international union IndustriALL on the global Group-wide implementation of its policies on human rights, equal opportunities, labour conditions, ethical conduct and environmental protection. The agreement allows both trade unions to participate constructively in the pursuit of these objectives. A joint monitoring committee composed of both parties sees to the implementation of the agreement.
Supplementary channels of company-wide communication include the Group intranet, company and business unit newsletters and a world-wide in-house magazine "umicore.link" published in six languages. In 2013 Umicore introduced a Group-wide learning management platform called "MyCampus" to support its Vision 2015 objectives of People Development and being considered a Preferred Employer. This platform also incorporates a social collaboration tool that facilitates knowledge sharing through the company.
Umicore's investor base is largely diversifi ed. At the end of 2013 the company's shareholders were primarily situated in Europe and North America. For the latest information on the shareholder base please see www.umicore.com/investorrelations .
Umicore strives to provide timely and accurate company information to the investment community. These communication efforts include management roadshows and site visits, conferences, investor fairs for individual investors, webcasts and conference calls. During 2013 Umicore's analyst coverage increased slightly 21 brokerage fi rms publishing equity research notes on Umicore.
Banks make up the vast majority of the company's creditors and debt investors. Umicore has credit lines with numerous banks both in Belgium and elsewhere.
Dialogue with the banks is primarily the responsibility of the corporate Finance Department although each legal entity within Umicore maintains business relationships with the banking community.
Through employment Umicore participates in the generation of wealth in the areas in which it operates. Although wealth generation is an obvious benefi t, the manner in which this wealth is generated is also of great importance. Ultimately Umicore can only continue operating if it has the licence to do so
from society. In order to maintain this licence, Umicore does the utmost to operate in a way which promotes sustainable development. This goes beyond operating within the legally defi ned boundaries set for all companies. Umicore sets its own standards which are applicable across the Group and which frequently surpass the demands of legislation in many areas where the company operates. In addition to this commitment to sound operating practices, Umicore also strives to develop materials which will enhance peoples' quality of life.
Contact with the communities in which Umicore operates is the most direct way in which the company can interact with society. Open and transparent dialogue with such communities is an integral part of Umicore's stakeholder engagement and makes up one of the Vision 2015 objectives. Certain civil society groups (known as non-governmental organizations) also periodically declare a stake in Umicore's operations and the way the company does its business. Umicore welcomes such interest and attempts to engage with such groups in an open and constructive manner.
Umicore makes voluntary contribution at site and Group level to a range of charitable causes in line with an internal policy and guidelines. Umicore manages Group-level engagement efforts through a Group Donations Committee which has the mandate of engaging with civil society groups and determining the extent of partnerships at Group level. For information on these initiatives in 2013 please see pages 23-25of this report.
Umicore has investments in various business activities over which it does not exercise full management control. Associate companies are those in which Umicore has a signifi cant infl uence over the fi nancial and operating policies, but no control. Typically this is evidenced by ownership of between 20% and 50% on the voting rights, while joint ventures usually entail a 50:50 split in ownership and control. Joining forces is seen as a way to speed up technological developments or gain access to specifi c markets. Umicore has effective management control in half of the ten associate and joint venture companies in which it holds a stake. Where management control is not exercised by Umicore, representation on the Board of Directors is the way in which Umicore is able to guide and control the management and monitor business developments. Although Umicore cannot impose its own policies and procedures on any associate (or indeed any joint venture where it does not possess majority voting rights) there is a clear communication of Umicore's expectation that the operations be run in accordance with the principles of the Umicore Way.
Umicore is rigorous in safeguarding any intellectual property that it shares with associate or joint venture partners. A full list of associate and joint venture companies can be found on page 81of this report.
Umicore paid a total of € 70 million in taxes as a result of its operations in 2013. Umicore and its employees also contributed a total of some € 114 million in social security payments. Umicore periodically enters into partnerships with public institutions such as universities with the primary aim of furthering certain research projects. Similarly, partnerships and research grants are occasionally contracted with public organizations. A total of some € 7 million of grants were awarded in 2013 relating primarily to planned R&D projects. Some € 5 million of cash relating to previously-awarded grants was received in 2013. The company has a policy of not making donations to political parties or organizations.
In 2013 Umicore further intensifi ed its efforts to guide public policy and foster contacts with public authorities worldwide. These efforts are co-ordinated through the Government Affairs department and focus primarily on Europe, North America and the People's Republic of China. Umicore aims to raise the profi le and understanding of Umicore's technologies, and to add its voice to the discourse about materials-related issues. In Europe this has centred on three main topics: the availability of critical raw materials (particularly from the perspective of a "circular" economy) through policies dealing with resource effi ciency and waste; advanced materials as a key enabling technology for low carbon technologies; material technologies for the purifi cation of exhaust gases from automobiles and trucks with combustion engines. Umicore's initiatives also encompass gaining access to EU and national government funding and innovation networks, particularly in the context of programmes that support the development of breakthrough technologies with environmental benefi ts.
In several cases Umicore experts are invited as members of working groups and panels initiated by European or national authorities. In this respect we play an active role, among others, in the European Innovation Partnership for Raw Materials, the European Resource Effi ciency Platform, the High Level Group on Key Enabling Technologies and the ERA-MIN network on industrial handling of raw materials for European Industries.
When specifi c issues arise which are of interest to Umicore the company usually communicates its position through the industry groups to which it is affi liated. The company is mindful of the sensitivity of taking positions on issues of public interest. With this in mind Umicore has developed Group-wide guidelines regarding how this should be done in a responsible way (these can be downloaded on the Group website). The main organizations of which Umicore is currently member (both at corporate and business unit level) are listed below:
Several of Umicore's business units are signatories of the "Responsible Care" programme for the chemicals industry and some are also members of the European Chemical Industry Council (CEFIC).
Of Umicore's total income, the most signifi cant portion was used to secure the metal component of raw materials (the cost of which is passed through to the customer). After subtracting other raw materials costs, energy-related costs and depreciation, the remaining economic benefi ts available for distribution stood at € 963 million.
The biggest portion ( € 707 million) was distributed to employees in the form of salaries and other benefi ts. The bulk of employee benefi ts were in the form of salaries, with the balance being in the form of national insurance contributions, pensions and other benefi ts. Net interest to creditors amounted to € 3 million, while taxes to the governments and authorities in the places where it operates, totalled € 70 million. The earnings attributed to minority shareholders were € 6 million.
Subject to approval by shareholders at the AGM in April 2014, a gross dividend of € 1.00 per share will be distributed for the year 2013, resulting in a total provisional pay-out of € 110 million (using the number of shares outstanding at the end of 2013). Of this fi gure a portion was already paid out in September 2013 in the form of an interim dividend, and the remainder will be paid out in 2014. This is in line with Umicore's policy of paying a stable or gradually increasing dividend. Umicore bought back 2.0 % of its own shares in 2013 for a total sum of € 85 million. Although this is not included in the distribution charts it can also been considered as an indirect return to shareholders. Umicore spent some € 1.5 million on charitable donations.
Thomas Leysen, 53
Chairman, Non-Executive Director
Thomas Leysen became Chairman of Umicore in November 2008 after having served as Chief Executive Offi cer of Umicore since 2000. Since 1 October 2011 he is Chairman of KBC Group, a banking and insurance group. He is also Chairman of Corelio, a Belgian media group, and a member of the supervisory Board of Bank Metzler (Germany).
10 May 2000 Expiry of mandate: Ordinary General Meeting of 2015 Chairman since: 19 November 2008 Chairman of the Nomination & Remuneration Committee since: 19 November 2008
Chief Executive Offi cer, Executive Director
Marc Grynberg was appointed Chief Executive Offi cer of Umicore in November 2008. He was head of the Group's Automotive Catalysts business unit from 2006 to 2008 and served as Umicore's Chief Financial Offi cer from 2000 until 2006. He joined Umicore in 1996 as Group Controller. Marc holds a Commercial Engineering degree from the University of Brussels (Ecole de Commerce Solvay) and, prior to joining Umicore, worked
for DuPont de Nemours in Brussels and Geneva.
19 November 2008 Expiry of mandate : Ordinary General Meeting of 2015 Chief Executive Offi cer since: 19 November 2008
Non-Executive Director
Isabelle Bouillot holds a diploma of the French "National School of Administration". She has occupied different positions in French public administrations, among them economic advisor for the President of the Republic between 1989 and 1991 and Budget Director at the Ministry of Economy and Finance between 1991 and 1995. She joined the Caisse des Dépôts et Consignations as Deputy Chief Executive Offi cer in 1995 and was in charge of fi nancial and banking activities. Between 2000 and 2003, she was Chief Executive Offi cer of the Investment Bank of the Group CDC IXIS. She is presently President of China Equity Links and a member of the Board of Saint-Gobain and Air France.
Director since: 14 April 2004 Expiry of mandate: Ordinary General Meeting of 2016
Uwe-Ernst Bufe, 69 Independent, Non-Executive Director
Uwe-Ernst Bufe was CEO of Degussa until May 2000. He is a member of the Supervisory Board of Akzo Nobel N.V. (Netherlands).
26 May 2004 Expiry of mandate: Ordinary General Meeting of 2014
Non-Executive Director
Arnoud de Pret was with Morgan Guaranty Trust Company in New York from 1972 until 1978. From 1978 until 1981 he was group treasurer of Cockerill-Sambre, and until 1990 he was group fi nance manager and member of the Executive Committee of UCB. He was Chief Financial Offi cer and member of the Executive Committee of Umicore from 1991 until May 2000. He is a member of the Board of Sibelco, UCB and L'Intégrale. He is a member of the Supervisory Board of Euronext N.V.
10 May 2000 Expiry of mandate: Ordinary General Meeting of 2014 Member of the Audit Committee since: 1 January 2001 (Chairman since 26 April 2011)
Ines Kolmsee, 43 Independent, Non-Executive Director
Ines Kolmsee holds several degrees in engineering (TU Berlin, Germany and Ecole des Mines de Saint-Etienne, France) as well as an MBA degree (Business School INSEAD – France/Singapore). Since 2004 she has been CEO of SKW Stahl-Metallurgie Group, a specialty chemicals company with operations worldwide. She is also a member of the Supervisory Board of Fuchs Petrolub AG. In the past she occupied different positions, including as CFO at Arques Industries AG.
26 April 2011 Expiry of mandate: Ordinary General Meeting of 2014 Member of the Audit Committee since: 26 April 2011
Independent, Non-Executive Director
Shohei Naito started his career at the Japanese Ministry of Foreign Affairs. At the Ministry he served as Director General for Consular Affairs & Migration and as Chief of Protocol. Mr Naito has fi lled several diplomatic functions overseas and he was appointed as Ambassador in 1996. Since that date he has served as Japan's ambassador to Cambodia, Denmark concurrently with Lithuania and Belgium.
He left the diplomatic service at the end of 2006.
Director since: 25 April 2007 Expiry of mandate: Ordinary General Meeting of 2014 Member of the Nomination and Remuneration Committee since: 30 April 2013
Jonathan Oppenheimer has responsibility for various Oppenheimer Family investment activities across different asset classes. Within the group he chairs Tana Africa Capital, an Africa-focused joint venture with Temasek, and sits on a number of other boards. He was an Executive Director of De Beers S.A. from 2006-2012 where he held a number of different roles.
5 September 2001 Expiry of mandate: Ordinary General Meeting of 2014
Rudi Thomaes, 61 Independent, Non-Executive Director
Mr. Thomaes studied law at the University of Antwerp. From 2004 until September 2012 he was the Chief Executive Offi cer of the Belgian employers' federation (FEB-VBO) and Regent of the National Bank of Belgium. He previously served as Managing Director and Chairman of the management committee of Alcatel Bell NV. He is currently Secretary General of the Belgian Chapter of the International Chamber of Commerce, Chairman of the Beheersmaatschappij Antwerpen Mobiel (BAM) NV, Chairman of Restore NV, an Antwerp based energy technology start-up company, and independent director at Armonea NV.
24 April 2012 Expiry of mandate: Ordinary General Meeting of 2015 Member of the Audit Committee since: 30 April 2013 Member of the Nomination and Remuneration Committee since: 24 April 2012
Klaus Wendel, 70 Non-Executive Director
Klaus Wendel, after a career in fi nancial management with General Electric (USA), Siemens, Cockerill-Sambre and CBR, joined Société Générale de Belgique in 1988 as member of the Executive Committee, responsible for group control. Since 2000 he has been an independent consultant.
Director since: 26 July 1989 Expiry of mandate: Ordinary General Meeting of 2014
Karel Vinck Honorary Chairman
Marc Grynberg, 48 Chief Executive Offi cer
Marc Grynberg was appointed Chief Executive Offi cer of Umicore in November 2008. He was head of the Group's Automotive Catalysts business unit from 2006 to 2008 and served as Umicore's CFO from 2000 to 2006. He joined Umicore in 1996 as Group Controller. Marc holds a Commercial Engineering degree from the University of Brussels (Ecole de Commerce Solvay) and, prior to joining Umicore, worked for DuPont de Nemours in Brussels and Geneva.
Executive Vice-President Recycling
Hugo Morel holds a Masters degree in Metallurgical Engineering from the University of Leuven. He joined Umicore in 1974 and held several positions in production, commercial, strategy and general management. He headed the Zinc Chemicals business unit from 1996 to 1997 and was appointed to his present position in 1998. He joined the Executive Committee in 2002. Besides heading the Recycling business group, he is also responsible for Purchasing & Transportation.
Executive Vice-President Energy Materials
Marc Van Sande holds a PhD in Physics from the University of Antwerp as well as an MBA. He joined Umicore in 1980, and held several positions in research, marketing and production. In 1993 he was appointed Vice-President of the Electro-Optic Materials business unit and he joined the Executive Committee as Executive Vice-President of Advanced Materials in 1999. He assumed the role of Chief Technology Offi cer between 2005 and 2010 after which he headed the Energy Materials business group.
Executive Vice-President Catalysis
Pascal Reymondet holds an MSc from Stanford University and an Engineering degree from the Ecole Centrale in Paris. He held different management positions within the Degussa group including management of the Port Elizabeth and Burlington automotive catalyst plants. He joined the Umicore Executive Committee in 2003 to be in charge of the Precious Metals Products group. In September 2007, he was appointed to head the Zinc Specialties business group. From June 2010 to October 2012
he assumed responsibility for the Performance Materials business group. In November 2012 he took up the function of EVP Catalysis.
Chief Technology Offi cer
Denis Goffaux holds a degree in mining engineering from the University of Liège. He joined Umicore Research in 1995 and has lived and worked in Belgium, Chile, China and South Korea. Denis was previously head of the Rechargeable Battery Materials business line and Country Manager Japan, where he laid strong foundations for Umicore to grow its industrial presence and commercial activities in the country. He was appointed to his present post in July 2010. Besides his position as Chief Technology Offi cer, he also is responsible for Environment, Health & Safety.
Executive Vice-President Performance Materials
Stephan Csoma joined Umicore in 1992. He holds diplomas in economics from the UCL University of Louvain and Chinese/Mandarin from Fudan University in Shanghai. He has extensive strategic and operational and commercial experience. He set up Umicore's
fi rst industrial operations in China in the mid-1990s and ran Umicore's former South African cobalt operations. Between 2001 and 2005 he led the Zinc Chemicals business unit and from 2005 to 2009 he was SVP for Umicore South America. Afterwards he became SVP Government Affairs. In November 2012 he took up the function of EVP of Performance Materials and retains oversight responsibility for Government Affairs.
Chief Financial Offi cer
Filip Platteeuw joined Umicore in 2004 and was instrumental in the Cumerio spin-off in 2005. He then led the project team for the creation of Nyrstar and its successful IPO in 2007. He became Vice President of Corporate Development in 2010. He took up the position of Chief Financial Offi cer (CFO) in November 2012. Filip holds a master's degree in Applied Economics from the University of Ghent and a master's degree in Financial Management from the Vlerick Management School. Filip has extensive fi nancial experience including nine years in investment banking, corporate banking and equity research with KBC bank. He is also responsible for Corporate Development.
Franz-Josef Kron Automotive Catalysts Operations Michel Cauwe Thin Film Products Egbert Lox Government Affairs Ignace De Ruijter Human Resources Ludo Vandervelden Information Systems Géraldine Nolens Legal Affairs Guy Ethier Environment, Health & Safety Wilfried Müller Group R&D Guy Beke Strategic Projects Catalysis Joerg Von Roden Automotive Catalysts Sales & Marketing Matthias Grehl Precious Metals Chemistry David Fong China Andreas Tiefenbacher Japan Bernhard Fuchs Marketing Services Marcos Lucchese South America Ravila Gupta North America Performance Materials Pierre Van de Bruaene Building Products Koen Demesmaeker Zinc Chemicals Joerg Beuers Technical Materials Jürgen Leyrer Platinum Engineered Materials Thomas Engert Electroplating Energy Materials Klaus Ostgathe Rechargeable Battery Materials Arjang Roshan Electro-Optic Materials Jan Vliegen Cobalt & Specialty Materials Recycling Luc Gellens Precious Metals Refi ning Dietmar Becker Jewellery & Industrial Metals Sybolt Brouwer Battery Recycling Ralf Drieselmann Precious Metals Management Corporate & Regions
STATUTORY AUDITOR'S REPORT TO THE GENERAL SHAREHOLDERS' MEETING ON THE CONSOLIDATED ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2013
In accordance with the legal requirements, we report to you on the performance of our mandate of statutory auditor. This report includes our opinion on the consolidated financial statements, as well as the required additional statement. The consolidated financial statements comprise the consolidated balance sheet as at 31 December 2013, the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flow for the year then ended, and notes, comprising a summary of significant accounting policies and other explanatory information.
We have audited the consolidated financial statements of Umicore ("the Company") and its subsidiaries (jointly "the Group"), prepared in accordance with International Financial Reporting Standards as adopted by the European Union, and with the legal and regulatory requirements applicable in Belgium. The total of the consolidated balance sheet amounts to EUR (000) 3.512.297 and the consolidated income statement shows a profit for the year (Group share) of EUR (000) 179.029.
Board of directors' responsibility for the preparation of the consolidated financial statements
The board of directors is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards as adopted by the European Union, and with the legal and regulatory requirements applicable in Belgium, and for such internal control as the board of directors determines, is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing (ISAs). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the statutory auditor's judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the statutory auditor considers internal control relevant to the Group's preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the board of directors, as well as evaluating the overall presentation of the consolidated financial statements.
We have obtained from the board of directors and the company's officials the explanations and information necessary for performing our audit.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Unqualified Opinion
In our opinion, the consolidated financial statements set forth on pages 49 to 114 of the Annual Report 2013 give a true and fair view of the Group's net equity and consolidated financial position as at 31 December 2013 and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union, and with the legal and regulatory requirements applicable in Belgium.
The board of directors is responsible for the preparation and the content of the annual report on the consolidated financial statements.
In the context of our mandate and in accordance with the Belgian standard which is complementary to the International Standards on Auditing (ISAs) as applicable in Belgium, our responsibility is to verify, in all material respects, compliance with certain legal and regulatory requirements. On this basis, we provide the following additional statement which does not impact our opinion on the consolidated financial statements:
x The directors' report on the consolidated financial statements set forth on pages 1 to 48 and 115 to 188 of the Annual Report 2013 includes the information required by law, is consistent with the consolidated financial statements and does not present any material inconsistencies with the information that we became aware of during the performance of our mandate.
Sint-Stevens-Woluwe, 27 March 2014
The Statutory Auditor PwC Bedrijfsrevisoren BCVBA Represented by
Marc Daelman* Emmanuèle Attout Registered Auditor Registered Auditor *Marc Daelman BVBA Board Member, represented by its fixed representative, Marc Daelman
PwC Bedrijfsrevisoren cvba, burgerlijke vennootschap met handelsvorm - PwC Reviseurs d'Entreprises scrl, société civile à forme commerciale - Financial Assurance Services Maatschappelijke zetel/Siège social: Woluwe Garden, Woluwedal 18, B-1932 Sint-Stevens-Woluwe T: +32 (0)2 710 4211, F: +32 (0)2 710 4299, www.pwc.com
BTW/TVA BE 0429.501.944 / RPR Brussel - RPM Bruxelles / ING BE43 3101 3811 9501 - BIC BBRUBEBB / RBS BE89 7205 4043 3185 - BIC ABNABEBR
This report has been prepared in accordance with the terms of our engagement contract dated 4 March 2011, whereby we have been engaged to issue an independent limited assurance report in connection with the Environmental and Social Statements as of and for the year ended 31 December 2013 in the accompanying Annual Report 2013 of Umicore and its subsidiaries (the "Report").
The Board of Directors of Umicore ("the Company") is responsible for the preparation of the information and data in the Environmental and Social Statements set forth in the Report of Umicore and its subsidiaries and the declaration that its reporting meets the requirements of the Global Reporting Initiative (GRI) G3.1 application level B+, as set out on pages 119 to 147 and 184 to 188 ("the Subject Matter Information"), in accordance with the criteria disclosed in the Environmental and Social Statements and with the recommendations of the GRI (the "Criteria").
This responsibility includes the selection and application of appropriate methods for the preparation of the Subject Matter Information, for ensuring the reliability of the underlying information and for the use of assumptions and estimates for individual sustainability disclosures which are reasonable in the circumstances. Furthermore, the responsibility of the Board of Directors includes the design, implementation and maintenance of systems and processes relevant for the preparation of the Subject Matter Information.
Our responsibility is to express an independent conclusion about the Subject Matter Information set forth in the Report based on the work we have performed. We conducted our work in accordance with the International Standard on Assurance Engagements (ISAE) 3000 "Assurance Engagements other than Audits or Reviews of Historical Financial Information". This standard requires that we comply with ethical requirements and that we plan and perform the engagement to obtain limited assurance as to whether nothing has come to our attention that causes us to believe that the Subject Matter Information is not fairly stated, in all material respects, based on the Criteria.
The objective of a limited-assurance engagement is to perform the procedures we consider necessary to provide us with sufficient appropriate evidence to support the expression of a conclusion in the negative form on the Subject Matter Information. The selection of such procedures depends on our professional judgement, including the assessment of the risks of management's assertion being materially misstated. The scope of our work comprised the following procedures:
We have evaluated the Subject Matter Information against the Criteria. The accuracy and completeness of the Subject Matter Information are subject to inherent limitations given their nature and the methods for determining, calculating or estimating such information. Our Limited Assurance Report should therefore be read in connection with the Criteria.
We have complied with the independence and other ethical requirements of the Code of Ethics for Professional Accountants issued by the International Ethics Standards Board for Accountants (IESBA), which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour. Our audit firm applies International Standard on Quality Control (ISQC) n° 1 and accordingly maintains a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.
Conclusion
Based on our work, as described in this Independent Limited Assurance Report, nothing has come to our attention that causes us to believe that the information and data presented in the Environmental and Social Statements as of and for the year ended 31 December 2013 on pages 119 to 147 of the Annual Report of Umicore and its subsidiaries, and Umicore's assertion that the report meets the requirement GRI G3.1 application level B+, is not fairly stated, in all material respects, in accordance with the Criteria.
Restriction on Use and Distribution of our Report
Our assurance report has been made in accordance with the terms of our engagement contract. Our report is intended solely for the use of the Company, in connection with their Environmental and Social Statements as of and for the year ended 31 December 2013 and should not be used for any other purpose. We do not accept, or assume responsibility to anyone else, except to the Company for our work, for this report, or for the conclusions that we have reached.
Sint-Stevens-Woluwe, 27 March 2014
PwC Bedrijfsrevisoren bcvba Represented by
Marc Daelman*
Registered auditor *Marc Daelman BVBA Board Member, represented by its fixed representative, Marc Daelman
Biologically active substance used in pharmaceutical products.
An entity in which Umicore has a signifi cant infl uence over the fi nancial and operating policies but no control. Typically this is evidenced by an ownership of between 20% and 50%. Associates are accounted for using the equity method.
A product that is close to its fi nished state and requires limited further working by the customer. Examples include germanium blanks that require further polishing for use in optical applications or silver coin blanks that require stamping.
A metal-joining process whereby a fi ller metal is heated above melting point and distributed between two or more metal parts.
Catalysis is a chemical process whereby one of the elements used in the reaction process, the catalyst, makes this chemical reaction possible, or speeds up this process, without being consumed in the reaction process, and therefore can be re-used.
A carboxylate is a salt of a carboxylic acid (see 'salts').
The cathode is the positive side in a (rechargeable) battery. In the charging phase ions are released from the cathode and migrate to the anode (negative side), thereby storing electricity. In the discharging phase, the ions move back to the cathode, thereby releasing electricity.
A donation to a not-for-profi t organization that is not for the commercial benefi t of Umicore. Donations can be in cash or in kind. Political donations are not permitted.
For Umicore a "closed loop" involves taking back secondary materials from customers (eg production residues) or end-of-life materials (eg used mobile phones, automotive catalysts) to recover the metals to be fed back into the economic cycle.
A technique to concentrate solar energy in a photovoltaic panel using magnifying lenses or mirrors.
Materials (usually containing silver) that are used for their conductive properties in electrical applications eg for switches.
A device designed to remove diesel particulate matter or soot from the exhaust gas of a diesel engine.
Full title: Dodd–Frank Wall Street Reform and Consumer Protection Act. The Dodd Frank Act aims to promote the fi nancial stability of
the United States by improving accountability and transparency in the fi nancial system.
In chemistry electrolysis is a method of using a direct electric current (DC) to drive an otherwise nonspontaneous chemical reaction.
Electroplating is a plating process in which metal ions in a solution (electrolyte) are moved by an electric fi eld to coat another material. The process is primarily used for depositing a layer of material to bestow a desired property on that other material.
European emission standard for exhaust emissions of heavy duty vehicles implemented in January 2014.
European emission standard for exhaust emissions of new passenger vehicles set for implementation in 2014.
Mass-produced jewellery.
The Frascati Manual is a document prepared and published by the Organisation for Economic Co-operation and Development that sets forth the methodology for collecting statistics about research and development.
Global domestic product (recognized indicator of economic growth).
Large diesel vehicles – either onroad, such as trucks and buses, or non-road such as heavy plant and mining equipment or locomotives and agricultural equipment.
Vehicle (passenger car or other) that runs fully or partially (hybrid) on electricity, rather than on conventional fuel.
A transparent conducting oxide used in specifi c layers for its electrical conductivity and optical transparency. It is used in diverse applications, such as fl atscreen displays, photovoltaics and architectural glass.
A contractual arrangement whereby Umicore and another party undertake an economic activity that is subject to joint control. Joint ventures are accounted for using the equity method.
Liquid crystal display.
Cathode material used in lithium ion rechargeable batteries, particularly suited for portable electronic applications. .
Primarily passenger cars – using either diesel or gasoline fuel, or other.
LEDs are a semiconductor-based light source offering many advantages over traditional incandescent light sources, among which long lifetime and energy effi ciency.
Also known as biotechnology industry: the fi eld of applied biology that involves the use of living organisms and bioprocesses in engineering, technology, medicine and other fi elds.
Lithium ion is a technology for rechargeable batteries in which lithium ions move from the positive electrode (the cathode) to the negative electrode (the anode) during the charging phase, thereby storing electricity. In the discharging phase, the lithium ions move back to the cathode, thereby releasing electricity.
Method used to produce single or polycrystalline thin fi lms on a substrate.
Relatively new type of cathode material, which is used in the emerging (H)EV market and also more and more in portable electronic applications.
Organization of Economic Co-operation and Development.
Platinum, palladium, rhodium, ruthenium, iridium and osmium (in Umicore's case it refers mainly to the fi rst three).
A combination of chassis and engine type that is used on one or more models of passenger car, sometimes between different manufacturers.
Chemical substance that participates in the chemical reaction that produces another compound.
Photovoltaics is a method of generating electrical power by converting solar radiation directly into electricity.
A surface onto which a layer of another substance is applied. In automotive catalysts the substrate is the honeycomb structure, which enhances the surface area, on which the catalytic solution is deposited. In photovoltaics, semiconductors such as germanium are used as substrates, on which the rest of the solar cell layers are deposited.
Umicore patented Ultra high temperature process (>3000°C) using plasma technology to treat and recycle materials using less energy than traditional processes.
For half years: average of capital employed at start and end of the period; For full year: average of the half year averages.
Total equity (excluding fair value reserves) + net fi nancial debt + provisions for employee benefi ts – deferred tax assets and liabilities – IAS 39 impact.
Capitalized investments in tangible and intangible assets, excluding capitalized R&D costs.
Net cash generated by (used in) operating activities + net cash generated by (used in) investing activities.
Operating profi t (loss) of fully consolidated companies, including income from other fi nancial investments + Group share in net profi t (loss) of companies accounted for under equity method.
Earnings per share for equity holders.
Net earnings, Group share / average number of outstanding shares.
Net earnings, Group share / (average number of outstanding shares + number of potential new shares to be issued under the existing stock option plans x dilution impact of the stock option plans).
Net fi nancial debt / (net fi nancial debt + equity of the Group).
Non-cash timing differences in revenue recognition in case of nonapplication of or non-possibility of obtaining IAS hedge accounting to:
a) transactional hedges, which implies that hedged items can no longer be measured at fair value, or
b) structural hedges, which implies that the fair value of the related
hedging instruments are recognized in the income statement instead of the equity and this prior to the occurance of the underlying forecasted or committed transactions, or
c) Derivatives embedded in executory contracts, which implies that the change in fair value on the embedded derivatives must be recognized in the income instatement as opposed to the executory component where the fair value change in the income statement cannot be recognized.
Closing price x total number of outstanding shares.
Non-current fi nancial debt + current fi nancial debt - cash and cash equivalents.
Includes non-recurring items related to restructuring measures, impairment of assets, and other income or expenses arising from events or transactions that are clearly distinct from the ordinary activities of the company. Any writedowns on those metal inventories permanently tied up in operations are part of the non-recurring EBIT of the business groups.
Issued shares– treasury shares.
EBIT - non-recurring EBIT - IAS 39 effect.
Recurring EBIT of fully consolidated companies / revenues excluding metals.
Recurring EBIT + recurring depreciation and amortization of fully consolidated companies.
Recurring tax charge / recurring profi t (loss) before income tax of fully consolidated companies.
Recurring net earnings, Group share / average number of (issued shares – treasury shares).
Recurring EBIT / average capital employed.
All revenue elements - value of purchased metals.
Group revenues attributable to a geographic destination, including associates and joint ventures revenues adjusted for Umicore's shareholding. This means that for recycling activities the revenue component is based on the location of the suppliers of raw materials, as determined by the refi ning charges.
Net research and development charges of fully consolidated activities (ie excluding R&D income such as research grants). Includes capitalized costs.
The above fi nancial defi nitions relate to non-IFRS performance indicators except for EPS, basic and EPS, diluted.
This Umicore specifi c methodology is used for assessing the sustainability of Umicore's products and services and uses a tool consisting of 58 preformatted questions and answers with scoring and weighting factors and organized around eight themes.
The variability among living organisms from all sources including, inter alia, terrestrial, marine, and other aquatic ecosystems and the ecological complexes of which they are part; this includes diversity within species, between species and of ecosystems.
A term relating to technology used to limit pollutant discharges.
Substance or its metabolite that is measured in biological fl uids (e.g. blood) to assess internal body exposure.
Indirect measure of the amount of organic pollution that cannot be biologically oxidized in a sample of water.
The universal unit of measurement to indicate the global warming potential (GWP) of each of the six greenhouse gases, expressed in terms of the GWP of one unit of carbon dioxide. It is used to evaluate releasing (or avoiding releasing) different greenhouse gases against a common basis.
The use of heat to generate electricity.
Ore or metal separated from its containing rocks or earth.
Minerals mined in conditions of armed confl ict or human rights abuses, particularly gold, tin, tungsten and tantalum in the context of the Dodd Frank Act (see above).
The Committee of Sponsoring Organizations of the Treadway Commission (COSO) is a voluntary private-sector organization which has established a common internal control model against which companies and organizations may assess their control systems.
A defi ned set of data on the physical, chemical and toxicological properties of a product.
Unit of noise level.
Environment, health & safety.
Expressed in terms of voluntary leavers: number of employees leaving at their own will (excluding lay-offs, retirement, and end of fi xed-term contract). This number is related to the total workforce.
A result of a biological monitoring analysis that exceeds the (internal) target level.
Number of lost time accidents per million hours worked. Accidents on the road to and from work are excluded.
A factor describing the radiative forcing impact (degree of harm to the atmosphere) of one unit of a given greenhouse gas relative to one unit of CO2 .
GHGs are the six gases listed in the Kyoto Protocol: carbon dioxide (CO2 ); methane (CH4 ); nitrous oxide (N2 O); hydrofl uorocarbons (HFCs); perfl uorocarbons (PFCs); and sulphur hexafl uoride (SF6 ).
Average number of training hours per employee - including internal and external training and training on-the-job. Training on-the-job can include the hours a person is being trained on the shop-fl oor, without being fully productive. The total number of training hours is divided by the total workforce.
A substance that is manufactured for and consumed in or used for chemical processing in order to be transformed into another substance.
'International Standards Organisation' specifi cation for environmental management systems (ref. ISO).
A protocol to the United Nations Framework Convention on Climate Change (UNFCCC). It requires countries listed in its Annex B
(developed nations) to meet reduction targets of GHG emissions relative to their 1990 levels during the period of 2008–12.
Assessment of the sum of a product's effects (e.g. GHG emissions) at each step in its life cycle, including resource extraction, production, use and waste disposal.
A work related injury resulting in more than one shift being lost from work.
Unit of metal content in urine .
Unit of metal content in blood.
'Occupational Health and Safety Assessment Series': a Health & Safety management system.
Emissions generated from manufacturing processes, such as the CO 2 that is arising from the breakdown of calcium carbonate (CaCO 3 ).
Safety issues related to the use and storage of hazardous chemical substances that may present a hazard to the employees, neighbouring people and the environment.
'Registration, Evaluation and Authorization of Chemicals'; EU chemicals policy.
A work related injury resulting in more than one fi rst aid treatment or in a modifi ed working programme but excluding lost-time accidents.
Materials that have ended a 1st life cycle and will be re-processed through recycling leading to a 2nd, 3rd… lifetime.
The evaluation of the risks of existing substances to man, including workers and consumers, and to the environment, in order to ensure better management of those risks.
An advanced safety awareness training and skills development program.
Scope 1 CO 2 e emissions: A reporting organization's direct GHG emissions.
Scope 2 CO 2 e emissions: A reporting organization's GHG emissions associated with the generation of electricity, heating/ cooling, compresses air or steam purchased for own consumption.
Scope 3 CO 2 e emissions: A reporting organization's indirect emissions other than those covered in Scope 2.
A process using air pollution control devices to remove some particulates and/or gases from industrial exhaust streams.
By-products of primary material streams.
Number of calendar days lost per thousand hours work. Accidents on the road to and from work are excluded.
Total number of working days lost due to sickness; excluding long term sickness and days lost due to maternity leave. This number is related to the total number of working days per year.
Umicore employees with a temporary contract. They are not considered part of the stable workforce, but are included in the total workforce.
Number of employees leaving at their own will (excluding lay-offs, retirement, and end of fi xed-term contract). This number is related to the total workforce.
| GRI Reference | Indicator | Page reference in Annual Report 2013 |
|---|---|---|
| General | ||
| Strategy and analysis | ||
| 1.1 | CEO and Chairman statement | 6-7 |
| 1.2 | Description of key impacts, risks, and opportunities. | 6-7; 3; Corporate governance statements: G18 |
| Organizational profi le 2.1 |
Name of the organization | Front cover |
| 2.2 | Primary brands, products and services | 1; 3; 5; 12-13; 26; 30; 34; 38 |
| 2.3 | Operational structure of the organization, including | 1; 3; 5; 26; 30; 34; 38; Corporate governance statements: G2; |
| main divisions, operating companies, subsidiaries, | Economic and fi nancial statements: F5, F17 | |
| and joint ventures | ||
| 2.4 | Location of organization's headquarters | Inside back cover; back cover |
| 2.5 | Number of countries where the organization operates | 5; Social statements: S2 |
| and names of countries with major operations | ||
| 2.6 | Nature of ownership and legal form | Back cover |
| 2.7 | Markets served | 1-3; 5; 8-9; 11-13; 25-29; 32; 34-37; 38-41 |
| 2.8 | Scale of the organization | 4-5; Social statements: S2; Economic and fi nancial statements: consolidated balance sheet |
| 2.9 | Signifi cant changes in size, structure or ownership | 10; 36; Social statements: S1, S10, S11; |
| Environmental statements: E1 | ||
| 2.10 | Awards received in 2013 | 1; 13; 16; 23; 25; 33; 41; Social statements: S4 |
| Report parameters 3.1 |
Reporting period | Front cover; Inside front cover; 190; Environmental statements: E2 |
| 3.2 | Date of most recent report | Annual reports: |
| http://www.umicore.com/reporting/Home/Archive/ | ||
| 3.3 | Reporting cycle | Front cover; Inside front cover; Annual reports: |
| http://www.umicore.com/reporting/Home/Archive/ | ||
| 3.4 | Contact points for questions regarding the report or | Inside back cover; |
| its content | General: [email protected]; | |
| Financial: [email protected]; | ||
| Social: [email protected]; Environmental: [email protected]; |
||
| 3.5 | Process for defi ning report content | 190; Corporate governance statements: Stakeholder engagement |
| 3.6 | Boundary of the report | 190; Social statements: S1, S8, S10, S11; Environmental statements: |
| E1, E3, E8, E9 | ||
| 3.7 | Limitations on the scope or boundary of the report | 190; Social statements: S1, S8, S10, S11; Environmental statements: E1, E3, E8, E9 |
| 3.8 | Basis for reporting on joint ventures & subsidiaries | 190; Social statements: S1; Environmental statements: E1; Economic and fi nancial statements: F17; Corporate governance statements: G24 |
| 3.9 | Data measurement techniques and the bases of calculations |
190; Social statements: S1-S11; Environmental statements: E1-E10; Economic and fi nancial statements: F1 |
| 3.10 | Explanation of the effect of any restatements of information provided in earlier reports, and the reason |
190; Social statements: S1, S10, S11; Environmental statements: E1; General management approach: |
| for such re-statement | http://www.umicore.com/sustainability/ | |
| 3.11 | Signifi cant changes from previous reporting period in scope, boundary or measurement |
190; Social statements: S1, S8, S10, S11; Environmental statements: E1, E2; E3 |
| GRI Reference | Indicator | Page reference in Annual Report 2013 |
|---|---|---|
| 3.12 | GRI Index | 190; This page |
| 3.13 | Assurance | 190; General management approach: |
| http://www.umicore.com/sustainability/; Supervision and | ||
| compliance: http://www.umicore.com/governance/en/supervision/ | ||
| Governance, commitments and engagement | ||
| 4.1 | Governance structure of the organization | Corporate governance statements: G2, G4, G5; General management |
| approach: http://www.umicore.com/sustainability/ | ||
| 4.2 | Non-executive status of Chairman | 174; Corporate governance statements: G2 |
| 4.3 | Number, gender and status of Board members as | 174-175; Corporate governance statements: G2, G4 |
| independent and executive / non-executive | ||
| 4.4 | Mechanisms for shareholders and employees to | Corporate governance statements: G3, G9, G10, G11, G21; |
| provide recommendations to the Board | Corporate Governance Charter and Code of Conduct: | |
| http://www.umicore.com/governance/en/ | ||
| 4.5 | Linkage between compensation and the organization's | Corporate governance statements: G12-G15; |
| performance (including social and environmental performance) |
Corporate Governance Charter and Code of Conduct: http://www.umicore.com/governance/en/ |
|
| 4.6 | Processes in place to ensure confl icts of interest are | Corporate governance statements: G7, G9-G11; |
| avoided | Corporate Governance Charter and Code of Conduct: | |
| http://www.umicore.com/governance/en/ | ||
| 4.7 | Process for determining the qualifi cations or expertise | Corporate Governance Charter: |
| of the members of the highest governance body | http://www.umicore.com/governance/en/charter/ | |
| 4.8 | Internal guidelines and policies | Corporate governance statements: G1; G9; |
| The Umicore Way: http://www.umicore.com/en/aboutUs/ | ||
| umicoreWay/; Corporate Governance Charter and Code of Conduct: | ||
| http://www.umicore.com/governance/en/ | ||
| 4.9 | Procedures for identifying risks and opportunities | Corporate governance statements: G16-G18 |
| 4.10 | Process for evaluating the Board's own performance | Corporate governance statements: G4, G5; Corporate Governance Charter: http://www.umicore.com/governance/en/charter/ |
| 4.11 | Explanation of how the precautionary principle is | Corporate governance statements: G16, G18 |
| addressed | ||
| 4.12 | Externally developed economic, environmental and | COSO; OECD Guidelines; ILO Human Rights; Responsible Care; SRI, |
| social charters, principles or other initiatives to which | FTSE; PACI; GRI | |
| the organization subscribes or endorses | ||
| 4.13 | Membership of industry associations | Corporate governance statements: G25 |
| 4.14 | List of stakeholder groups engaged by the organization | Corporate governance statements: G19-G26 |
| 4.15 | Basis for identifi cation and selection of stakeholders | Corporate governance statements: Stakeholder engagement, |
| G19-G26; Approach to Stakeholder engagement: | ||
| 4.16 | Approach to stakeholder engagement, including | http://www.umicore.com/sustainability/stakeholders/ Corporate governance statements: Stakeholder engagement, |
| frequency of engagement | G19-G26; Approach to Stakeholder engagement: | |
| http://www.umicore.com/sustainability/stakeholders/ | ||
| 4.17 | Key topics and concerns that have been raised through | Corporate governance statements: stakeholder engagement; General |
| stakeholder engagement, and how the organization | management approach: http://www.umicore.com/sustainability/; | |
| has responded to those key topics and concerns, | Approach to Stakeholder engagement: | |
| including through its reporting | http://www.umicore.com/sustainability/stakeholders/ | |
| Disclosure on management approach 5 |
Disclosures on management approach: | |
| http://www.umicore.com/sustainability/context/ | ||
| 186 | GRI Index | |
|---|---|---|
| ----- | ----------- | -- |
and weight
GRI Reference Indicator Page reference in Annual Report 2013 Economic indicators Economic performance EC1 (CORE) Economic value generated and distributed 4-5; 8-13; 26-41; Economic and fi nancial statements: F8, F9, F39; Corporate governance statements: G26 EC2 (CORE) Financial implications and other risks and opportunities for the organization's activities due to climate change 18-19; Corporate governance statements: G18; Environmental Management Approach: http://www.umicore.com/sustainability/ environment/Approach/; The Umicore Way: http://www.umicore.com/en/aboutUs/umicoreWay/ EC3 (CORE) Coverage of the organization's defi ned benefi t plan obligations Economic and fi nancial statements: F27 EC4 (CORE) Signifi cant fi nancial support received from government Corporate governance statements: G25 Indirect economic impacts EC8 (CORE) Development and impact of investments for public benefi t 4; 23-25; 29; 33; 37; 41; Social statements: S5; Environmental statements: E8; Corporate governance statements: G25 Environmental indicators Materials EN2 (CORE) Percentage of materials used that are recycled input materials 5; Environmental statements: E6 Energy EN3 (CORE) Direct energy consumption by primary energy source Environmental statements: E4 EN4 (CORE) Indirect energy consumption by primary energy source Environmental statements: E4 EN5 (ADDITIONAL) Energy saved due to conservation and effi ciency improvements Environmental statements: E4 EN6 (ADDITIONAL) Initiatives to provide energy-effi cient or renewable energy based products and services 10-12; 18-21; 31-32; Environmental statements: E4; Umicore's position statements on carbon foorprint reduction: http://www.umicore.com/sustainability/environment/ positionStatements/carbonReduction.htm (partially reported) EN7 (ADDITIONAL) Inititatives to reduce indirect energy consumption and reductions achieved 18-19; Social statements: S8; Umicore's position statements on carbon foorprint reduction: http://www.umicore.com/sustainability/ environment/positionStatements/carbonReduction.htm (partially reported) Water EN8 (CORE) Total water withdrawal by source Environmental statements: E5 Biodiversity EN11 (CORE) Location and size of operations in or adjacent to protected areas and areas of high biodiversity value outside protected areas Environmental statements: E10 (partially reported) Emissions, effl uents and waste EN16 (CORE) Total direct and indirect greenhouse gas emissions by weight Environmental statements: E3 EN17 (CORE) Other relevant indirect greenhouse emissions by weight Environmental statements: E3 EN18 (ADDITIONAL) Initiatives to reduce greenhouse gas emissions and reductions achieved 18-21; 29; 33; 36; 41; Environmental statements: E3 EN20 (CORE) NOx SOx and other signifi cant air emissions by type Environmental statements: E2
| GRI Reference | Indicator | Page reference in Annual Report 2013 |
|---|---|---|
| EN21 (CORE) | Total water discharge by quality and destination | Environmental statements: E2 |
| EN22 (CORE) | Total weight of waste by type and disposal method | Environmental statements: E7 |
| Products and services | ||
| EN26 (CORE) | Initiatives to mitigate environmental impacts of | 12; 18-21; 25; 29; 37; |
| products and services | Environmental statements: E2, E6 (partially reported) | |
| Labour practices and decent work | ||
| Employment | ||
| LA1 (CORE) | Total workforce by employment type and region | 4-5; Social statements: S2 |
| LA2 (CORE) | Total number and rate of employment turnover | 4-5; 16; Social statements: S4 |
| Labour/management relations | ||
| LA4 (CORE) | Percentage of employees covered by collective | Social statements: S6 |
| bargaining agreements | ||
| Occupational health and safety | ||
| LA7 (CORE) | Rates of injury, occupational diseases, lost days and | 4; 14-15; 27-29; 31-33; 35-36; 39-41; Social statements: S9, S10, S11 |
| absenteeism and number of work-related fatalities by | (partially reported) | |
| LA9 (ADDITIONAL) | region Health and safety topics covered in formal agreements |
16; Social statements: S6; Sustainable Development Agreement: |
| with trade unions | http://www.umicore.com/sustainability/social/sustDevAgreement/ | |
| 2011SDAgreement.pdf | ||
| Training and education | ||
| LA10 (CORE) | Average hours of training per year per employee by | 4; 15-16; Social statements: S3 |
| employment category | ||
| LA12 (ADDITIONAL) | Percentage of employees receiving regular | 16; Social statements: S3 (partially reported) |
| performance and career development reviews | ||
| Diversity and equal opportunity | ||
| LA13 (CORE) | Composition of governance bodies and breakdown | 174-177;Corporate governance statements: G4, G5; Social state |
| of employees per category according to gender, | ments: S2. Minority groups are not identifi ed in Umicore considering | |
| age group, minority group membership, and other | that in some countries where Umicore operates, it is forbidden to ask | |
| indicators of diversity | questions related to this topic (eg. U.S.A. and France) | |
| Human Rights | ||
| Investment and procurement practices | ||
| HR2 (CORE) | Percentage of signifi cant suppliers, contractors and | 22-23; Social statements: S8; Corporate governance statements: G18 |
| other business partners that have undergone human rights screening, and actions taken |
||
| HR3 (CORE) | Total hours of employee training on policies and | 15-16; Social statements: S8; All employees receive informal training |
| procedures concerning aspects of human rights | on the Code of Conduct: | |
| including percentage of employees trained | http://www.umicore.com/governance/en/CodeOfConduct/ | |
| Freedom of association and collective bargaining | ||
| HR5 (CORE) | Operations identifi ed in which the right to exercise | Social statements: S6, S8; Sustainable Development Agreement: |
| freedom of association and collective bargaining may | http://www.umicore.com/sustainability/social/sustDevAgreement/ | |
| be at signifi cant risk and actions taken | 2011SDAgreement.pdf | |
| Child labour | ||
| HR6 (CORE) | Operations identifi ed as having signifi cant risk for | Social statements: S6, S8; Sustainable Development Agreement: |
| incidents of child labour and measures taken to | http://www.umicore.com/sustainability/social/sustDevAgreement/ | |
| contribute to the elimination of child labour | 2011SDAgreement.pdf |
| 188 | GRI Index | |
|---|---|---|
| Umicore Annual report 2013 | ||
| GRI Reference | Indicator Page reference in Annual Report 2013 |
|
| Forced and compulsory labour | ||
| HR7 (CORE) | Operations identifi ed as having signifi cant risk for Social statements: S6, S8; Sustainable Development Agreement: incidents of forced or compulsory labour and measures http://www.umicore.com/sustainability/social/sustDevAgreement/ taken to contribute to the elimination of forced or 2011SDAgreement.pdf compulsory labour |
|
| Society | ||
| Local communities | ||
| SO1 (CORE) | Percentage of operations with implemented local 23-25; Social statements: S5 community engagement, impact assessments, and development programs |
|
| Corruption | ||
| SO2 (CORE) | Percentage and total number of business units Corporate governance statements: G15; G24; Umicore is signatory analysed for risks related to corruption of PACI |
|
| SO3 (CORE) | Percentage of employees trained in organization's All employees receive informal training on the Code of Conduct: anti-corruption policies and procedures http://www.umicore.com/governance/en/CodeOfConduct when joining the company |
|
| Public policy | ||
| SO5 (CORE) | Public policy positions and participation in public Corporate governance statements: G25 |
|
| SO6 (ADDITIONAL) | policy development and lobbying Total value of fi nancial and in-kind contribution to Corporate governance statements: G25 political parties, politicians and related institutions |
|
| Product responsibility | ||
| Customer health and safety | ||
| PR1 (CORE) | Life cycle stages in which health and safety impacts 20-21; Environmental statements: E6 (partially reported) of products and services are assessed for improvement and percentage of signifi cant products and service categories subject to such procedures |
|
| Product and service labeling | ||
| PR3 (CORE) | Type of product and service information required by 21; Environmental statements: E6 procedures and percentage of signifi cant products and service categories subject to such information requirements |
|
| Notes | 189 | |
|---|---|---|
| Umicore Annual report 2013 | ||
| Notes | ||
Umicore's Annual Report 2013 offers a comprehensive and integrated view of Umicore's economic, fi nancial, environmental and social performance for 2013.
The report consists of two sections – a Management Review and a statements section. The Management Review (pages 1 to 41) provides an introduction to Umicore and focuses on the key performance aspects of 2013 as they relate to Umicore's Vision 2015 strategy. The statements section (pages 42 to 190) includes full fi nancial, environmental, social & governance statements and notes. All elements of the Annual Report 2013 can be consulted at Umicore's on-line reporting centre at www.umicore. com/reporting.
One of the key objectives of Umicore's Annual Report has been to refl ect Umicore's strategic approach – Vision 2015. This strategy integrates clear economic, environmental and social objectives. Umicore's approach aims to integrate reporting on its economic, environmental and social performance. This approach to reporting is the result of a period of consultation with internal and external stakeholders between 2009 and 2011 and is inspired by the concept of "integrated reporting" as being developed by the International Integrated Reporting Council.
In terms of overall scope, Umicore's Annual Report 2013 covers Umicore's operations for the fi nancial / calendar year 2013. No major changes of scope took place in 2013. This report represents the third year in which Umicore reports on its progress towards its 2015 objectives. The scope of all objectives and a brief description of the methodology behind all performance indicators are included in the statements section of the report. Where data is available, the performance indicators in the document are reported with a comparison base going back fi ve years to 2009.
The economic scope of the report covers all fully consolidated operations. In addition, the fi nancial contributions of all associate and joint venture companies are included in the fi nancial reporting. The scope of the environmental and social elements of the report is limited to the fully consolidated entities – any divergence from this scope is explained in the relevant chapter or note in the report.
The data for the economic and fi nancial elements of the report are collected through the company's fi nancial management and consolidation process. The environmental and social data is collected through environmental and social data management systems and integrated into a central reporting tool, along with the economic and fi nancial data.
This report has been independently verifi ed by PwC Bedrijfsrevisoren/ Réviseurs d'Entreprises (PwC). PwC's audit of fi nancial information is based on full set of IFRS consolidated fi nancial statements on which it has expressed an unqualifi ed opinion. This full set of IFRS consolidated fi nancial statements and the auditor's report thereon, can be found on pages 50 to 117 and page 178 of the report. The social and environmental information included in this report has been prepared on the basis of the same recognition and measurement principles that have been used to prepare the environmental and social statements that can be found on pages 119 to 147. The independent auditor's report of PwC on the social and environmental statements can be found on page 179 of the report.
The report has achieved the B+ level of application of the Global Reporting Initiative (GRI). A full GRI index can be found on page 184 to 188. The Global Reporting Initiative (GRI) is a network-based organisation that pioneered the world's most widely used sustainability reporting framework which sets out the principles and performance indicators that organisations can use to measure and report their economic, environmental, and social performance .
Umicore seeks to improve its reporting through a continuous process of stakeholder engagement and dialogue. The key social elements of the report are presented to the international trade unions during the joint monitoring committee in March, while the entire document is presented to shareholders at the Annual General Meeting in late April. Umicore also commits to consider all improvement points recommended by the independent auditor (PwC) in its subsequent reporting cycles. General reader feedback is encouraged through the on-line version of the report (see facing page for details).
Other additional information includes a summary of Umicore's approach to economic, environmental and social management. These elements have been provided on Umicore's website (www.umicore.com/sustainability) and should be considered as part of this report.
General meeting of shareholders (fi nancial year 2013) Trading update for the fi rst quarter of 2014
7 May 2014 Payment of dividend starts
31July 2014 Interim results for the fi rst half of 2014
23 October 2014 Trading update for the third quarter of 2014
Send an E-mail to [email protected] .
Tim Weekes Phone: +32 2 227 73 98 E-mail: [email protected]
Evelien Goovaerts Phone: +32 2 227 78 38 E-mail: [email protected]
Mark Dolfyn Phone : +32 2 227 73 22 E-mail : [email protected]
Bert Swennen Phone: +32 2 227 74 45 E-mail: [email protected]
This report is also available in French and Dutch .
This report can be downloaded from the Umicore website: www.umicore.com/reporting .
Rue du Marais 31, B-1000 Brussels – Belgium Phone: +32 2 227 71 11 Fax: +32 2 227 79 00 Internet: www.umicore.com E-mail: [email protected] Company Number: 0401574852 VAT No: BE 0401 574 852
Umicore Group Communications Tim Weekes Phone: +32 2 227 73 98 E-mail: [email protected] Concept & realization The Crew
Dimitri Lowette, Jean-Michel Byl, Ronny Van Loock, Anka Van Raemdonck, Shutterstock, UNICEF Belgium, Umicore.
(1) Dates are subject to change. Please check the Umicore website for updates to the fi nancial calendar.
Umicore Société Anonyme / Naamloze Vennootschap Broekstraat 31 rue du Marais B-1000 Brussels, Belgium
Tel: +32 2 227 71 11 Fax: +32 2 227 79 00 E-mail: [email protected] www.umicore.com
VAT: BE 0401 574 852 Company Number: 0401574852 Registered Office: Broekstraat 31 rue du Marais B-1000 Brussels - Belgium
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